-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MTo5AIpy38GosNDDF+y2duKqTBPD1ghT0ZgIQ1kaLcI14SDC8ytWaHBW6wOFPCQF V8H9o+hYwpPINATHu2OUZg== 0000806027-97-000006.txt : 19970329 0000806027-97-000006.hdr.sgml : 19970329 ACCESSION NUMBER: 0000806027-97-000006 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970328 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVICEMASTER LTD PARTNERSHIP CENTRAL INDEX KEY: 0000806027 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 363497008 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09378 FILM NUMBER: 97566037 BUSINESS ADDRESS: STREET 1: ONE SERVICEMASTER WAY CITY: DOWNERS GROVE STATE: IL ZIP: 60515 BUSINESS PHONE: 7089641300 11-K 1 SERVICEMASTER LP MASTER TRUST - -------------------------------------------------------------------- - -------------------------------------------------------------------- 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, 1996 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 001-09378 ServiceMaster LP Master Trust 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 Plan administrators have duly caused this annual report to be signed by the undersigned thereunto duly authorized. SERVICEMASTER LP MASTER TRUST By: /s/Laine E. Malmquist ---------------------------------------------- Laine E. Malmquist, Vice President & Manager General Accounting By: /s/ Deborah A. O'Connor --------------------------------------------- Deborah A. O'Connor, Administrative Committee Member By: /s/Barbara Schram -------------------------------------------- Barbara Schram, Plan Manager Date: March 27, 1997 2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Administrative Committee of the ServiceMaster LP Profit Sharing, Savings and Retirement Plans and the Trustee of the ServiceMaster LP Master Trust: We have audited the accompanying statements of net assets available for Plan benefits of the ServiceMaster LP Master Trust as of December 31, 1996 and 1995, and the related statements of changes in net assets available for Plan benefits for each of the three years in the period ended December 31, 1996. These financial statements and the schedules referred to below are the responsibility of the Plans' 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 are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 referred to above present fairly, in all material respects, the net assets available for Plan benefits of the Master Trust as of December 31, 1996 and 1995, and the changes in its net assets available for Plan benefits, for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of Assets Held for Investment Purposes and Reportable Transactions are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Chicago, Illinois, March 27, 1997 3 SERVICEMASTER LP MASTER TRUST FEIN: #36-3497008 FINANCIAL STATEMENTS AND SCHEDULES AS OF DECEMBER 31, 1996 AND 1995 I N D E X --------- STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS AS OF DECEMBER 31, 1996 AND 1995 STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994 NOTES TO FINANCIAL STATEMENTS SCHEDULE A - ITEM 27d - SCHEDULE OF 5% REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1996 SCHEDULE B - ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1996 4
SERVICEMASTER LP MASTER TRUST FEIN: #36-3497008 STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS As of December 31, 1996 1995 ---- ---- ASSETS: Investments: Money market fund...................... $ 1,725,601 $ 167,027 ServiceMaster Limited Partnership Shares, at market.................... 70,751,462 56,145,361 Liberty Life Group Pension Contract, at market............................ 99,582,772 88,580,287 Loans to participants.................. 4,358,806 - ----------- ----------- Total Investments...................... 176,418,641 144,892,675 Receivables: Due from employer...................... 2,709,317 2,534,338 Participant contributions.............. 337,449 162,801 Other.................................. 258,254 5,415 ----------- ----------- Total Assets........................... 179,723,661 147,595,229 ------------ ----------- LIABILITIES: Accounts payable......................... 201,669 252,832 Refundable employee contributions........ - 785,622 ------------ ----------- Total Liabilities........................ 201,669 1,038,454 -------------- -------------- NET ASSETS AVAILABLE FOR PLAN BENEFITS........................ $ 179,521,992 $ 146,556,775 ============== ============== The accompanying Notes to Financial Statements are an integral part of these statements.
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SERVICEMASTER LP MASTER TRUST FEIN: #36-3497008 STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS Years Ended December 31, ----------------------------------- 1996 1995 1994 ---- ---- ---- Additions: Contributions: Participant...................... $ 8,201,701 $ 6,994,834 $ 8,464,954 Employer......................... 3,003,006 2,513,522 2,955,116 Loan interest...................... 79,222 - - Loan fees.......................... 12,775 - - Interest income.................... 95,082 108,580 64,276 ServiceMaster share distributions.. 1,816,487 1,668,424 1,703,467 Liberty Life Contract income....... 4,212,320 4,360,287 3,560,393 Realized/unrealized gains (losses) on investments................... 30,203,547 23,713,262 (13,072,194) ----------- ---------- ------------ Total Additions....................... 47,624,140 39,358,909 3,676,012 ----------- ---------- ----------- Deductions: Equity applicable to former participants.............. 13,755,216 17,850,022 10,906,520 Provision for income taxes......... 470,000 442,609 551,527 Administrative/investment expenses. 433,707 398,123 375,733 ----------- ---------- ---------- Total Deductions...................... 14,658,923 18,690,754 11,833,780 ----------- ---------- ---------- Net increase (decrease)................ 32,965,217 20,668,155 (8,157,768) Net assets available for Plan benefits: Beginning of year................... 146,556,775 125,888,620 134,046,388 ------------ ------------ ------------ End of year.........................$179,521,992 $146,556,775 $125,888,620 ============ ============ ============ The accompanying Notes to Financial Statements are an integral part of these statements.
6 SERVICEMASTER LP MASTER TRUST FEIN: #36-3497008 NOTES TO FINANCIAL STATEMENTS 1. Master Trust Effective January 1, 1994, the account balances of the ServiceMaster Limited Partnership ("ServiceMaster" or the "Company") service partner plans were transferred to newly established plans. All of the plans contain identical provisions. The financial statements of the Trust include all of the assets of the following plans, collectively referred to as "the Plan." 1. Service Partners Education Company Profit Sharing, Savings and Retirement Plan (formerly Service Partners East Company Profit Sharing, Savings and Retirement Plan) 2. Service Partners Aviation Company Profit Sharing, Savings and Retirement Plan (formerly Service Partners West Company Profit Sharing, Savings and Retirement Plan) 3. Service Partners Health Care Company Profit Sharing, Savings and Retirement Plan (formerly Service Partners Mid-America Profit Sharing, Savings and Retirement Plan) 4. Service Partners Long Term Care Company Profit Sharing, Savings and Retirement Plan (formerly Service Partners Southeast Company Profit Sharing, Savings and Retirement Plan) 5. Service Partners Food Service Company Profit Sharing, Savings and Retirement Plan 6. Service Partners ICMS Company Profit Sharing, Savings and Retirement Plan 7. Service Partner Diversified Health Services Company Profit Sharing, Savings and Retirement Plan 8. ServiceMaster Profit Sharing, Savings and Retirement Plan 2. Summary of Significant Accounting Policies Asset Valuation - The investments of 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. 7 NOTES TO FINANCIAL STATEMENTS (Continued) Expenses of the Plan - Certain administrative expenses of the Plan (including investment management fees and other plan expenses) were paid from the 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. 3. The Plan Purpose - The purpose of the Plan is to emphasize ownership and provide 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. Participation - The Plan was established as of January 1, 1976. As of December 31, 1996, there were 4,104 participants in the Plan. 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 to make contributions to the Plan are eligible to participate in the Plan. Participant Contributions - Participants may elect to contribute a minimum of 1% of pay and up to 15% of pay. Pretax contributions (basic contributions) up to the first 4% of pay (or $1,000, whichever is greater) are eligible for an employer matching contribution. 8 NOTES TO FINANCIAL STATEMENTS (Continued) Employer Contributions - 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 its key business units. The employer's discretionary profit sharing contribution was $3,003,006, $2,513,522 and $2,955,116 for 1996, 1995 and 1994, respectively. Vesting Policy and Payment of Benefits - Upon termination of employment and 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, they will receive, in addition to the balance of their 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 their basic contributions, that is pretax contributions up to the first 4% of pay (or $1,000 which ever is greater). Forfeitures - Forfeitures represent amounts forfeited by participants upon termination and are allocable to eligible participants in the same manner as employer profit sharing contributions. Participant Loans - In 1996, the Plan was amended to include a loan program available to all participants who are not former employees. Each loan is secured by the participant's vested account balance and must be greater than $500 but may not exceed the lesser of $50,000 or 50% of the participant's vested account balance. Loan terms may not exceed a period of five years. 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. 9 NOTES TO FINANCIAL STATEMENTS (Continued) 4. Plan Assets The Plan invests in ServiceMaster Limited Partnership shares. As of December 31, 1996 and 1995, the Plan was holding 2,708,190 and 2,784,068 shares, respectively. The year-end share price as of December 31, 1996 and 1995 was $26.13 and $20.17, respectively. The number of shares and share price as of December 31, 1995 reflect the three-for-two share split in June 1996. The Plan also invests in a Group Contract at Liberty Life Assurance Company. As of December 31, 1996 and 1995, the market value of assets in this contract consisted of ServiceMaster Limited Partnership shares ($65,051,250 and $50,215,000 in 1996 and 1995, respectively) and fixed income investments managed by the Wellington Management Company ($34,531,522 and $38,365,287 in 1996 and 1995, respectively). 5. Federal Income Taxes Tax Status of the Plan - One of the Plans obtained its latest determination letter on August 4, 1995, in which the Internal Revenue Service (the "IRS") stated that the Plan, as written, was in compliance with the requirements of the Internal Revenue Code (the "Code"). This Plan has been amended since August 4, 1995. The Plans have filed a request for a determination letter with the IRS. The Plan administrator believes that the Plans are currently designed and being operated in compliance with the requirements of the 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 only on the employer contributions and income related to pre-April 1, 1988 participant contributions upon distribution from the Plan. 10 NOTES TO FINANCIAL STATEMENTS (Continued) 6. Reconciliation of Financial Statements to Form 5500 The Form 5500 requires that net assets available for benefits exclude amounts allocated to withdrawing participants. (These are participants that have benefit claims which have not been paid, but have been processed and approved for payment prior to year-end).
The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500: December 31, ---------------------------------- 1996 1995 1994 ---- ---- ---- Net assets available for benefits per the financial statements.... $179,521,992 $146,556,775 $125,888,620 Amounts allocated to withdrawing participants........ (2,141,506) (3,155,616) (5,357,049) ----------- ----------- ----------- Net assets available for benefits per the Form 5500............... $177,380,486 $143,401,159 $120,531,571 ============ ============ ============
Amounts allocated to withdrawing participants for benefit claims that have been processed and approved for payment prior to December 31 but not yet paid as of that date, are recorded as benefits paid for that year on the Form 5500. 11 NOTES TO FINANCIAL STATEMENTS (Continued)
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500: Year Ended December 31, --------------------------------------- 1996 1995 1994 ---- ---- ---- Benefits paid to participants per the financial statements............ $ 13,755,216 $ 17,850,022 $10,906,520 Add: Amounts allocated to withdrawing participants in current year........ 2,141,506 3,155,616 5,357,049 Less: Amounts allocated to withdrawing participants from prior year........ (3,155,616) (5,357,049) (1,796,299) ------------- ------------- ------------ Benefits paid to participants per the Form 5500....................... $ 12,741,106 $ 15,648,589 $ 14,467,270 ============ ============= ============
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SERVICEMASTER LP MASTER TRUST SCHEDULE A-REPORTABLE TRANSACTIONS ITEM 27d - Schedule of 5% Reportable Transactions FEIN: #36-3497008 FOR THE YEAR ENDED DECEMBER 31, 1996 Current Value of Asset on No. of Purchase Sales Transaction Gain Transactions Price Proceeds Cost Date (Loss) ------------ -------- -------- ---------- ----------- ------ Money market fund - EB STIF Fund Purchases.... 107 $19,903,333 -- $19,903,333 $19,903,333 -- Sales........ 53 -- $18,344,759 $18,344,759 $18,344,759 --
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SERVICEMASTER LP MASTER TRUST SCHEDULE B-ASSETS HELD FOR INVESTMENT PURPOSES ITEM 27a - Schedule of Assets for Investment Purposes FEIN: #36-3497008 AS OF DECEMBER 31, 1996 COST OR MARKET DESCRIPTION BOOK VALUE VALUE ----------- ---------- ----- Money market fund - EB STIF Fund...............$ 1,725,601 $ 1,725,601 ServiceMaster Limited Partnership shares(a) (2,708,190)................ 20,733,357 70,751,462 Liberty Life Group Pension Contract(b)........ 53,264,470 99,582,772 Loans to participants........ 4,358,806 4,358,806 ---------------- ------------- TOTAL INVESTMENTS............. $ 80,082,234 $ 176,418,641 ============== ============= (a) Represents a party-in-interest. (b) Contract assets as of December 31, 1996 include ServiceMaster Limited Partnership shares (cost of $29,786,133 and market value of $65,051,250) and fixed income investments managed by the Wellington Management Company (cost of $23,478,337 and market value of $34,531,522).
14 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants we hereby consent to the incorporation by reference of our report, dated March 27, 1997, appearing in the ServiceMaster LP Master Trust Annual Report on Form 11-K for the year ended December 31, 1996, to the Company's previously filed Registration Statement Number 2-75851 on Form S-8. ARTHUR ANDERSEN LLP Chicago, Illinois, March 27, 1997 15 -----END PRIVACY-ENHANCED MESSAGE-----