<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the year ended December 31, 1999
Commission File Number 1-13565
GroupMAC SAVINGS PLAN
(Full title of the plan)
ENCOMPASS SERVICES CORPORATION
3 GREENWAY PLAZA, SUITE 2000
HOUSTON, TEXAS 77046
(Name of issuer of securities held pursuant to
the plan and address of its principal executive office)
<PAGE>
GROUPMAC SAVINGS PLAN
Financial Statements and Schedule
December 31, 1999
(With Independent Auditors'
Report Thereon)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Independent Auditors' Report 1
Statement of Net Assets Available for Plan Benefits 2
Statement of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4
Schedule of Assets Held for Investment Purposes at End of Year 9
Signature 10
Exhibit 23.1--Consent of KPMG LLP, Independent Auditors I-1
</TABLE>
Schedules not listed above are omitted because of the absence of conditions
under which they are required.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Compensation Committee of the
Board of Directors of
Encompass Services Corporation:
We have audited the accompanying statement of net assets available for plan
benefits of the GroupMAC Savings Plan (the Plan) as of December 31, 1999, and
the related statement of changes in net assets available for plan benefits for
the year ended December 31, 1999. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides 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 Plan as
of December 31, 1999 and the changes in net assets available for Plan benefits
for the year ended December 31, 1999 in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The schedule of assets held for investment purposes
at end of year is presented for the purpose of additional analysis and is not a
required part of the basic financial statements but is supplementary information
required by the Department of Labor Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974. The
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
/s/ KPMG LLP
Houston, Texas
June 16, 2000
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GROUPMAC SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Assets:
Pooled separate accounts $ 76,682,981
Guaranteed income fund 16,734,756
Common stock 1,789,639
Self-directed accounts 2,383,557
Participant loans receivable 2,302,087
------------
Total investments 99,893,020
Receivables:
Employer's contributions 1,390,648
Participants' contributions 305,207
------------
Total receivables 1,695,855
------------
Total assets 101,588,875
Liabilities:
Excess contributions refundable 4,071
------------
Net assets available for plan benefits $101,584,804
============
</TABLE>
See accompanying notes to financial statements.
2
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GROUPMAC SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Additions to net assets attributed to:
Investment income:
Net realized and unrealized appreciation
in fair value of investments $ 15,117,147
Interest 424,229
------------
Total investment income 15,541,376
Contributions:
Employer's 4,099,763
Participants' 7,298,261
Rollovers 1,702,024
------------
Total contributions 13,100,048
Transferred assets 74,434,276
Loan principal transferred 1,717,704
------------
Total assets transferred 76,151,980
Total additions 104,793,404
------------
Deductions from net assets attributed to:
Benefits paid to participants 3,134,204
Administrative expenses 74,396
------------
Total deductions 3,208,600
------------
Net increase in net assets available
for plan benefits 101,584,804
Net assets available for plan benefits:
Beginning of year -
------------
End of year $101,584,804
============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
GROUPMAC SAVINGS PLAN
Notes to Financial Statements
December 31, 1999
(1) DESCRIPTION OF PLAN
The following description of the GroupMAC Savings Plan (the Plan) provides
only general information. Participants should refer to the Plan document
for a complete description of the Plan's provisions.
(A) GENERAL
Encompass Services Corporation (formerly known as Group Maintenance
America Corp.) (the Company) adopted the GroupMAC Savings Plan on January
1, 1999. The Plan is a defined contribution plan for which contributions
may be made by the Company and participants. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA). Several of the Company's subsidiaries previously maintained
other qualified profit sharing and 401(k) plans. Some of these plans
were merged into the Plan during 1999.
(B) ELIGIBILITY
All hourly and salaried active employees over the age of 18 are eligible
to participate in the Plan after 90 days of service, or one year for
employees not regularly scheduled to work at least 30 hours per week. The
Plan does not allow for labor union members to participate unless their
collective bargaining agreement (or contract) provides for coverage under
this Plan. Active employees employed at January 1, 1999 are eligible with
no age or service requirements.
(C) CONTRIBUTIONS
Participants of the Plan may contribute, on a tax-deferred basis, up to
15% of their compensation (as defined by the Plan document), subject to
certain limitations under the Internal Revenue Code ($10,000 per
participant in 1999). Participants may also contribute amounts
representing distributions from other qualified defined benefit or
defined contribution plans. The Company match varies for each
participating subsidiary (refer to the Plan document for more complete
information). The Company may make discretionary profit sharing
contributions to the Plan in amounts determined by the Company, amounts
may vary based on each participating subsidiary.
(D) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution and allocations of (a) the Company's matching and
discretionary contribution and (b) Plan earnings. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
(E) VESTING
Participants are immediately vested in their contributions plus actual
earnings thereon. Vesting in the Company's matching and discretionary
contribution portion of their accounts plus actual earnings thereon is
based on years of service. A participant is 100% vested after completing
one year of service, as defined in the Plan document. Additionally,
participants will fully vest upon reaching the normal retirement age, or
becoming permanently disabled.
4
<PAGE>
GROUPMAC SAVINGS PLAN
Notes to Financial Statements--(Continued)
December 31, 1999
(F) INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct contributions into
various investment options offered by the Plan. The Plan currently
offers 11 pooled separate accounts, a Guaranteed Income fund, Encompass
Services Corporation common stock, and CIGNA Direct, a self-directed
brokerage account. Participants may change their investment options at
any time.
(G) PARTICIPANT LOANS RECEIVABLE
Participants may borrow from their fund accounts a minimum of $500 up to
a maximum equal to the lesser of (a) $50,000 minus the highest
outstanding balance of their total Plan loans during the past 12 months,
or (b) 50% of their vested account balance. Loan transactions are treated
as a transfer to (from) the investment fund from (to) the participant
loans receivable fund. Loans are due in five years or up to 15 years if
used for the purchase of a primary residence. The loans are secured by
the balance in the participant's account and bear interest at a
reasonable and fair rate based on the prevailing rates charged by
reputable financial institutions. Principal and interest are paid at
least quarterly.
(H) PAYMENT OF BENEFITS
On termination of service due to death, disability or retirement, a
participant or his or her beneficiary may elect to receive their vested
interest in his or her account by (a) a lump-sum in cash or stock of the
Company if applicable, (b) a rollover to another qualified distributee,
or (c) a combination of the above. Upon determination of financial
hardship, as defined by the Plan document, participants may withdraw the
vested amount of their contributions and the employer matching and
discretionary contributions subject to certain restrictions.
(I) FORFEITED ACCOUNTS
At December 31, 1999, forfeited nonvested accounts totaled $62,018. Of
this amount $49,295 was used by the Company to pay Plan expenses, and
$12,723 was used to reduce 1999 employer contributions.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Plan to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the Plan's financial statements and the reported amounts of
changes in Plan net assets during the reporting period. Actual results
could differ from those estimates.
5
<PAGE>
GROUPMAC SAVINGS PLAN
Notes to Financial Statements--(Continued)
December 31, 1999
(B) INVESTMENTS VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value, based primarily on the
quoted market values of the underlying securities. The Company's common
stock is valued at its quoted market price. Participant notes receivable
are valued at cost, which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
(C) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(3) INVESTMENTS
In September 1999, the American Institute of Certified Public Accountants
issued Statement of Position 99-3, Accounting for and Reporting of Certain
Defined Contribution Plan Investments and Other Disclosure Matters (SOP 99-
3). SOP 99-3 simplifies the disclosure for certain investments and is
effective for plan years ending after December 15, 1999. The Plan adopted
SOP 99-3 during the Plan year ending December 31, 1999. Accordingly,
information previously required to be disclosed about participant-directed
fund investment programs are not presented in the Plan's 1999 financial
statements.
As of December 31, 1999, the following investments were in excess of 5% of net
assets available for plan benefits:
<TABLE>
<S> <C>
CIGNA Charter Guaranteed Income Fund $16,734,756
INVESCO Dynamics Account 18,074,903
Janus Worldwide Fund 15,666,625
CIGNA Charter Large Company Stock -
Growth Fund 23,628,203
CIGNA Charter Growth & Income Fund 11,405,634
</TABLE>
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) in
value by $15,117,147 as follows:
<TABLE>
<S> <C>
Pooled separate accounts $15,375,576
Common stock (437,142)
Self-directed accounts 178,713
-----------
$15,117,147
===========
</TABLE>
6
<PAGE>
GROUPMAC SAVINGS PLAN
Notes to Financial Statements--(Continued)
December 31, 1999
(4) INVESTMENT CONTRACT WITH INSURANCE COMPANY
The Guaranteed Income fund is classified as unallocated insurance contracts,
not a guaranteed investment contract. This fund is considered a Declared Rate
Fund and offers a full guarantee of principal and interest. Interest rates
are declared in advance and guaranteed for six-month periods (January 1
through June 30 and July 1 through December 31). CIGNA's Guaranteed Income
funds do not have maturity dates or penalties for early withdrawals. CIGNA
values the Guaranteed Income fund at contract value, which best approximates
fair market value.
(5) TAX STATUS
The Plan has not received a tax determination letter from the Internal
Revenue Service. The Plan will file for a tax determination letter on or
before October 15, 2000. The Plan Administrator and the Plan's tax counsel
believe that the Plan is designed and is currently being operated in
compliance with the applicable requirements of the Internal Revenue Code.
(6) RELATED PARTY TRANSACTIONS
The Plan engages in transactions involving the acquisition or disposition of
units of participation in funds managed by CG Trust Company, the trustee of
the Plan (the Trustee). Therefore, these transactions qualify as parties-in-
interest. These transactions are covered by an exemption from the "prohibited
transactions" provisions of ERISA and the Internal Revenue Code.
(7) PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will be entitled to receive payment of their vested
account balances.
(8) PROHIBITED TRANSACTION
During the year ended December 31, 1999, the Company remitted participant
contributions to the Trustee over a time period that exceeded 15 business
days past the end of the month in which the contributions were withheld. The
Company is in the process of taking corrective measures with the Department
of Labor and the Internal Revenue Service regarding these oversights.
7
<PAGE>
GROUPMAC SAVINGS PLAN
Notes to Financial Statements--(Continued)
December 31, 1999
(9) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for plan benefits
per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER 31,
1999
-----------------
<S> <C>
Net assets available for plan benefits per
the financial statements $101,584,804
Accrued benefit payments (5,539)
------------
Net assets available for plan benefits
per the Form 5500 $101,579,265
============
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1999
-----------------
<S> <C>
Benefits paid to participants per the financial
statements $ 3,134,204
Accrued benefit payments, end of year 5,539
------------
Benefits paid to participants per the
Form 5500 $ 3,139,743
============
</TABLE>
8
<PAGE>
SCHEDULE
GROUPMAC SAVINGS PLAN
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
IDENTITY OF ISSUE, BORROWER, CURRENT
LESSOR OR SIMILAR PARTY DESCRIPTION OF INVESTMENT VALUE
--------------------------------- ---------------------------------------------------------- ------------------
<S> <C> <C>
* Connecticut General Life Insurance CIGNA Charter Balance Fund $ 4,636,010
* Connecticut General Life Insurance CIGNA Charter Guaranteed Income Fund 16,734,756
* Connecticut General Life Insurance CIGNA Charter High Yield Bond 574,498
* Connecticut General Life Insurance INVESCO Dynamics Account 18,074,903
* Connecticut General Life Insurance Janus Worldwide Fund 15,666,625
* Connecticut General Life Insurance CIGNA Lifetime 20 615,766
* Connecticut General Life Insurance CIGNA Lifetime 30 869,429
* Connecticut General Life Insurance CIGNA Lifetime 40 550,163
* Connecticut General Life Insurance CIGNA Lifetime 50 451,825
* Connecticut General Life Insurance CIGNA Lifetime 60 209,925
* Connecticut General Life Insurance CIGNA Charter Large Company Stock - Growth Fund 23,628,203
* Connecticut General Life Insurance CIGNA Charter Growth & Income Fund 11,405,634
* CIGNA Financial Services CIGNA Direct 2,383,557
National Financial Services Corp. Encompass Services Corporation common stock 1,789,639
* Participants Outstanding loans (bearing interest rates between
7.0% to 11.0%) 2,302,087
-----------
$99,893,020
===========
</TABLE>
* Indicates party-in-interest transaction.
See accompanying independent auditors' report.
9
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Compensation Committee of the Board of Directors, the administrator of the
GroupMAC Savings Plan, has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
GroupMAC SAVINGS PLAN
By: /S/ VINCENT W. EADES
-------------------------
Name: Vincent W. Eades
Title: Chairman, Compensation Committee
Date: June 28, 2000
10
