-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, LZ7IffSU3s7tuVtddr5FjkMPQRItM3FxNU2+z4uMF2TGamtniUl+zgjQj9EbJESa 1qyIIlhYrS9YIMgWmtI7LQ== 0000806027-94-000004.txt : 19940330 0000806027-94-000004.hdr.sgml : 19940330 ACCESSION NUMBER: 0000806027-94-000004 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVICEMASTER LTD PARTNERSHIP CENTRAL INDEX KEY: 0000806027 STANDARD INDUSTRIAL CLASSIFICATION: 8741 IRS NUMBER: 363497008 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 34 SEC FILE NUMBER: 001-09378 FILM NUMBER: 94518542 BUSINESS ADDRESS: STREET 1: ONE SERVICEMASTER WAY CITY: DOWNERS GROVE STATE: IL ZIP: 60515 BUSINESS PHONE: 7089641300 11-K 1 PROFIT SHARING, SAVINGS AND RETIRMENT PLAN 11-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K __x__ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1993 OR ----- TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _____ to _____ Commission file number ______________________ ServiceMaster Profit Sharing, Savings and Retirement Plan ServiceMaster Limited Partnership One ServiceMaster Way Downers Grove, Illinois 60515 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Committee and the Trustee have duly caused this annual report to be signed by the undersigned thereunto duly authorized. SERVICEMASTER PROFIT SHARING, SAVINGS AND RETIREMENT PLAN By: /s/ Laine E. Malmquist --------------------------------------------- Laine E. Malmquist, Vice President, Benefits By: /s/ Deborah A. O'Connor ----------------------------------------------- Deborah A. O'Connor, Administrative Committee Member By: /s/ Barbara A. Schram ----------------------------------------------- Barbara A. Schram, Plan Manager FIRST CHICAGO BANK, TRUSTEE By: /s/ Frank D. Szymanek ----------------------------------------------- Frank D. Szymanek, Vice President Date: March 29, 1994. 1 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Administrative Committee and Trustee of the ServiceMaster Profit Sharing, Savings and Retirement Plan: We have audited the accompanying statements of net assets available for Plan benefits of the ServiceMaster Profit Sharing, Savings and Retirement Plan as of December 31, 1993 and 1992, the related statements of changes in net assets available for Plan benefits for each of the three years in the period ended December 31, 1993, and the related schedules of reportable transactions and assets held for investment as of December 31, 1993. These financial statements and schedules are the responsibility of the Plan's Administrative Committee. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and schedules are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedules. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and schedules referred to above present fairly, in all material respects, the net assets available for Plan benefits of the Plan as of December 31, 1993 and 1992 and the changes in its net assets available for Plan benefits, for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN & CO. Chicago, Illinois, March 25, 1994. 2
SERVICEMASTER PROFIT SHARING, SAVINGS AND RETIREMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS As of December 31, 1993 1992 ---------------- ----------------- ASSETS: Investments: First Chicago Money Market Funds, at market. . . . . . . . . . . . . . . . . . . . . . . . $ 682,778 $ 235,767 ServiceMaster Limited Partnership Shares, at market - Note 2. . . . . . . . . . . . . . . . . . . 51,052,102 39,682,139 Liberty Life Group Pension Contract, at market (net) - Note 2. . . . . . . . . . . . . . . . . . . . 80,124,621 51,907,843 Mortgage loan receivable, at cost which approximates market - Note 2. . . . . . . . . . . . . . . . . . -- 2,000,000 ----------- ----------- Total Investments . . . . . . . . . . . . . . . . . . . . . . . 131,859,501 93,825,749 Receivables: Due from employers. . . . . . . . . . . . . . . . . . . . . . . . 2,120,222 3,391,481 Participant contributions . . . . . . . . . . . . . . . . . . . . 179,836 -- Income tax refund . . . . . . . . . .. . . . . . . . . . . . . . 48,038 54,874 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,968 16,355 ----------- ----------- Total Assets. . . . . . . . . . . . . . . . . . . . . . . . . . 134,209,565 97,288,459 =========== =========== LIABILITIES: Payable to participants . . . . . . . . . . . . . . . . . . . . . 4,096,929 4,172,141 Due to ServiceMaster . . . . . . . . . . . . . . . . . . . . . . -- 116,435 Accounts payable - other . . . . . . . . . . . . . . . . . . . . 163,177 -- ----------- ----------- Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . 4,260,106 4,288,576 ----------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS . . . . . . . . . . . . . . . . . . . . . . . $ 129,949,459 $ 92,999,883 ============= ============ The accompanying Notes to Financial Statements are an integral part of these statements.
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SERVICEMASTER PROFIT SHARING, SAVINGS AND RETIREMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, 1993 1992 1991 ----------- ----------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . $ 92,999,883 $ 80,762,486 $ 53,780,973 ----------- ----------- ----------- Additions: Contributions: Participant voluntary and rollover. . . . . . . . . . . . 4,860,582 3,742,280 2,807,164 Participant mandatory . . . . . . . . . . . . . . . . . . 1,109,594 1,148,002 1,034,507 Employer. . . . . . . . . . . . . . . . . . . . . . . . . 3,485,000 3,391,481 2,896,700 Interest income. . . . . . . . . . . . . . . . . . . . . . 145,215 302,954 1,078,921 ServiceMaster share distributions. . . . . . . . . . . . . . . . . . . . . 1,763,726 2,182,094 3,046,629 Liberty Life Contract income . . . . . . . . . . . . . . . . . . . . . . . . 2,296,446 1,632,612 -- Unrealized gains on investments. . . . . . . . . . . . . . 33,864,601 7,982,234 21,847,538 ----------- ----------- ----------- Total Additions. . . . . . . . . . . . . . . . . . . . . . 47,525,164 20,381,657 32,711,459 ----------- ----------- ----------- Deductions: Equity applicable to former participants (net of forfeitures of $162,629, $161,803 and $129,108 in 1993, 1992, and 1991, respectively). . . . . . . . . . . . . 10,034,894 7,584,794 5,304,496 Provision for income taxes - Note 1 . . . . . . . . . . . . 336,836 426,126 61,500 Administrative expenses . . . . . . . . . . . . . . . . . . 203,858 133,340 363,950 ----------- ----------- ----------- Total Deductions. . . . . . . . . . . . . . . . . . . . . . 10,575,588 8,144,260 5,729,946 ----------- ----------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . $129,949,459 $ 92,999,883 $ 80,762,486 =========== =========== =========== The accompanying Notes to Financial Statements are an integral part of these statements.
4 SERVICEMASTER PROFIT SHARING, SAVINGS AND RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Asset Valuation - The investments of the ServiceMaster Profit Sharing, Savings and Retirement Plan (the "Plan") are valued in the financial statements at their respective year-end market values. Basis of Accounting - The transactions of the Plan are accounted for on the accrual basis. Expenses of the Plan - Certain administrative expenses of the Plan (including investment management fees and other plan expenses) were paid from Plan assets. Income Taxes - The Plan is required to pay federal income taxes related to its share of taxable income from its direct holding of ServiceMaster Limited Partnership shares. Participating Employers - Employers participating in the Plan are various subsidiaries and affiliates of ServiceMaster, including ServiceMaster Management Services and ServiceMaster International and New Business Development. Prior to 1993, participating subsidiaries and affiliates also included ServiceMaster Residential/Commercial Services Limited Partnership, Merry Maids Limited Partnership and American Home Shield Corporation (see Note 2). 2. The Plan Purpose - The purpose of the Plan emphasizes ownership and opportunity as presented below: (a) to stimulate interest, ownership and committed participation in building the service foundation of the Company; (b) to share with Plan participants the economic benefits produced by their efforts; (c) to assist in providing Plan participants with retirement benefits. 5 SERVICEMASTER PROFIT SHARING, SAVINGS AND RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS (Continued) 2. The Plan (Continued) Participation - The Plan was established as of January 1, 1976. As of December 31, 1993, the distribution of participants by class is as follows:
Number of Number of Years of Service Class Participants -------------------------- ----- ------------ At least one, but less than 5 years. . . . . . . . . . . . . . . 1 1,485 5, but less than 10 years. . . . . . . . . . . . . . . . . . . . 2 1,189 10 or more years, if not qualified under Class 4. . . . . . . . . . . . . . . . . . . 3 864 15 or more years and has attained age 50 . . . . . . . . . . . . 4 130 3,668
All employees (other than employees covered by a collective bargaining agreement which does not provide for Plan participation or whose compensation is regulated under the Register of Wage Determinations maintained by the United States Department of Labor Standards Administration) of a participating employer which has adopted the Plan who have completed one year of service (defined as at least 1,000 hours of employment during the first 12 months of employment or any plan year thereafter), attained age 18 years and elected in writing to make contributions to the Plan are eligible to participate in the Plan. Participant Contributions - Mandatory contributions to the Plan are made by participants at a rate prescribed by the Plan, which is presently $75 per calendar quarter for each participant. Participants may also elect to contribute 1% to 15% of their compensation during the year. An election may be made to roll over account balances from previous qualified employer benefit plans. Employer Contributions - Participating employers contribute to the Plan depending on the profitability of ServiceMaster for the year. The Board of Directors of ServiceMaster determines the amount of the profits to be shared each year. The employers' discretionary profit sharing contribution was $3,485,000, $3,391,481, and $2,895,700 in 1993, 1992 and 1991, respectively. In 1993, the Company chose to reimburse the Plan for $1.3 million of expenses paid by the Plan in prior years. This reimbursement is included in the Company's 1993 contribution. 6 SERVICEMASTER PROFIT SHARING, SAVINGS AND RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS (Continued) 2. The Plan (Continued) Vesting Policy and Payment of Benefits - Upon termination of employment after completion of seven years of service or in the event of disability or death, the participant or his beneficiary is entitled to receive the full amount allocated to his account. If a participant's employment is terminated prior to the completion of seven years of service for any reason, other than death or disability, he will receive, in addition to the balance of his participant contribution accounts, including any rollovers or tax deductible voluntary contributions, that portion of the employer contribution account equal to 20% after the completion of three years of service and 20% for each additional full year of service (as defined in the Plan document), up to 100% after seven years of service. Benefits are distributed to participants in cash (in a lump sum or periodic payments) or ServiceMaster partnership shares, as provided by the Plan. Allocation of Employer Contributions - Employer profit sharing contributions are allocated to each participant on the basis of his mandatory contributions and years of service as of the beginning of each year. Forfeitures - Forfeitures represent amounts forfeited by participants upon termination and are allocable to eligible participants in the same manner as employer profit sharing contributions. Plan Assets - The Plan invests in ServiceMaster Limited Partnership shares. As of December 31, 1993 and 1992, the plan was holding 1,864,917 and 2,144,980 shares (post 1993 split), respectively. The year- end share price as of December 31, 1993 and 1992 was 273/8 and 181/2, respectively. In February 1992, assets (ServiceMaster Partnership shares and cash) were transferred from the First Chicago Bank to a Group Pension Contract at Liberty Life Assurance Company. In April 1992 and June 1993, additional assets were transferred to the Liberty Life Group Contract. At December 31, 1993, the market value of assets in this Contract consisted of ServiceMaster Limited Partnership shares ($48,248,438), S&P 500 Composite Price Index Fund ($12,227,542), SteinRoe Limited Maturity Income Fund ($4,648,641) and Fidelity Institutional Money Market Fund ($15,000,000). 7 SERVICEMASTER PROFIT SHARING, SAVINGS AND RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS (Continued) 2. The Plan (Continued) In August 1989, the Plan diversified its investment portfolio by agreeing to provide up to $2,000,000 in secured-mortgage-financing to an independent construction company that built a warehouse facility that it subsequently leased to ServiceMaster. At December 31, 1992, $2,000,000 was outstanding under this arrangement. The loan had a 9.35% interest rate and was secured by a first mortgage on the warehouse facility. Following discussions with the Department of Labor (see below), this loan was sold to ServiceMaster for $2,000,000 in May 1993. Effective January 1, 1993, three companies -- American Home Shield Limited Partnership, Merry Maids Limited Partnership and Residential/Commercial Services Limited Partnership -- and their respective participating employees, were transferred from the Plan to the Consumer Services Profit Sharing Plan. As of December 31, 1992, the value of these participants' assets was $2,267,425. These assets were transferred from the Plan to the Consumer Services Profit Sharing Plan in the form of 122,563 (post-split) ServiceMaster shares based on a year end 1992 per share price of $18.50. At the time of transfer (May 1993), the Plan also paid the Consumer Services Profit Sharing Plan $54,184 in cash, representing dividends and interest. Department of Labor Audit - In 1993, the Department of Labor (DOL) completed an audit of the plan which covered the years 1987 through 1990. The DOL raised several issues with which ServiceMaster did not agree, but after discussions with representatives of the DOL, ServiceMaster determined to address the DOL's concerns by a voluntary payment to the Plan, and by purchasing from the Plan the $2,000,000 promissory note and related first mortgage of an independent construction company that is described above. Participants' Equity - The aggregate value of each participant's Plan account is expressed in cash. Amendment or Termination - The Plan may be amended or discontinued by the Company (with respect to all participating Employers) or by a participating Employer (with respect to its eligible employees) at any time. If the Plan is discontinued, participants with respect to whom the Plan is terminated become fully vested in their allocated account balances. 8 SERVICEMASTER PROFIT SHARING, SAVINGS AND RETIREMENT PLAN NOTES TO FINANCIAL STATEMENTS (Continued) Effective January 1, 1994, certain provisions of the Plan were amended which revise the participant contribution requirement and the company contribution allocation. Participants may elect to contribute a minimum of 1% of pay and up to 15% of pay. Pretax contributions up to the first 4% of pay (or $1,000 whichever is greater) will be eligible for the Company matching contribution. All participants will receive the same percentage match based upon their actual dollar contribution. The company contribution will continue to be discretionary. The amount of contribution from profits will be determined each year by the Board of Directors after a review of the overall financial performance of ServiceMaster and the key business units. 3. Federal Income Taxes Tax Status of the Plan - The Plan obtained its latest determination letter on June 14, 1990, in which the IRS stated that the Plan, as written, was in compliance with the requirements of the Internal Revenue Code. The Plan has been amended since that date. The Plan administrator believes that the Plan is currently designed and being operated in compliance with the requirements of the Internal Revenue Code and that the trust is tax-exempt as of the financial statement dates. Although the Plan is a tax-exempt entity, it is required to pay federal income taxes related to its share of taxable income from its direct holding of ServiceMaster Limited Partnership shares. Tax Status of Each Participant - Participant contributions made on or after April 1, 1988 are deductible for federal income tax purposes when made to the Plan. Participants will be subject to tax on the participant contributions, employer contributions and income credited to their plan accounts when an actual distribution from the Plan is received. However, participant contributions made prior to April 1, 1988 were not deductible for federal income tax purposes when made to the Plan. Therefore, participants will be subject to tax on the employer contributions and income related to pre-April 1, 1988 participant contributions upon distribution from the Plan. 9
SERVICEMASTER PROFIT SHARING, SAVINGS AND RETIREMENT PLAN SCHEDULE A-REPORTABLE TRANSACTIONS ITEM 30 A - Schedule of 5% Reportable Transactions EIN# 38-2873710 Plan # 001 FOR THE YEAR ENDED DECEMBER 31, 1993 Purchases Sales ---------------------------- ------------------------------------------- No. of Aggregate No. of Aggregate Gain Transactions Cost Transactions Proceeds (Loss) ------------ ----------- ------------ ---------- ------ First Chicago Money Market Funds . . . . . . . . . . . . . 63 $16,026,937 86 $15,344,160 $ -- Franklin U.S. Government Securities Fund. . . . . . . . . . . . 4 7,930,000 6 7,935,743 5,743 Liberty Life Group Pension Contract . . . . . . . . . . . 1 7,000,000 -- -- -- -- ----------- -- ----------- ------- 68 $30,956,937 92 $23,279,903 $ 5,743 == =========== == ========== ======
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SERVICEMASTER PROFIT SHARING, SAVINGS AND RETIREMENT PLAN SCHEDULE B-ASSETS HELD FOR INVESTMENT ITEM 30 A - Schedule of Assets Held for Investment Purposes EIN# 36-2873710 Plan # 001 FOR THE YEAR ENDED DECEMBER 31, 1993 COST OR MARKET DESCRIPTION BOOK VALUE VALUE - ------------ ----------------- ---------------- First Chicago Money Market Funds . . . . . . . . . . . . . . . . . . . . . . . . . . $ 682,778 $ 682,778 ServiceMaster Limited Partnership shares (1,864,917) . . . . . . . . . . . . . . . . . . . . . . . 18,602,769 51,052,102 Liberty Life Group Pension Contract . . . . . . . . . . . . . . . . . 56,474,988 (a) 80,124,621 (b) ---------- ---------- TOTAL INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,760,535 $ 131,859,501 ========== =========== (a) Assets transferred into Liberty account included ServiceMaster Limited Partnership shares ($30,974,988) and cash ($25,500,000, net of withdrawals). (b) Contract assets as of December 31, 1993 included ServiceMaster Limited Partnership shares ($48,248,438) S&P 500 Composite Price Index Fund ($12,227,542), SteinRoe Limited Maturity Income Fund ($4,648,641) and Fidelity Institutional Money Market Fund ($15,000,000).
11 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants we hereby consent to the incorporation by reference of our report, dated March 25, 1994, appearing in the ServiceMaster Profit Sharing, Savings and Retirement Plan Annual Report on Form 11-K for the year ended December 31, 1993, to the Company's previously filed Registration Statement Number 2-75851 on Form S-8. ARTHUR ANDERSEN & CO. Chicago, Illinois, March 29, 1994. 12 -----END PRIVACY-ENHANCED MESSAGE-----