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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8
AMENDMENT OF CURRENT REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of This Report: March 15, 1996
Amendment of Form 8-K dated January 15, 1996
SERVICEMASTER LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 1-9378 36-3497008
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or organization) dentification Number)
One ServiceMaster Way, Downers Grove, Illinois 60515
(Address of principal executive offices) (Zip Code)
(708) 271-1300
(Registrant's telephone number, including area code)
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Item 7. Financial Statements & Exhibits
---------------------------------------
In December, 1995, the Partnership issued 18,107,143 unregistered
Partnership shares, representing approximately 19% of the adjusted total
number of shares outstanding, in exchange for WMX Technologies, Inc.'s
(WMX) 27.76% ownership interest in ServiceMaster Consumer Services
L.P. WMX also received a five year option to purchase an additional
1,250,000 shares at $33.00 per share. The unregistered shares and the
option include a number of voting and trading restrictions, including
significant limitations on open market sales, with the Partnership retaining
a right of first refusal. WMX also agreed not to initiate any action that
would increase its ownership interest in the Partnership to more than 21%.
At the time of the acquisition of WMX's minority interest in ServiceMaster
Consumer Services L.P., it was impracticable to provide the required pro
forma financial information as part of the Registrant's Form 8-K dated
January 15, 1996 which covered such acquisition.
The required pro forma financial information are now available and are
filed herewith under cover of this Form 8.
Item 7(b). Pro Forma Financial Information Page 3
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Item 7(b). Pro Forma Financial Information:
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The following tables set forth the Partnership's pro forma consolidated
statement of income for the year ended December 31, 1995 and the pro
forma consolidated statement of financial position as of December 31,
1995. The "Pro Forma Adjustments" reflected in the Pro Forma
Consolidated Statement of Income give effect to the transaction and the
related purchase accounting adjustments as if the transaction had occurred
on January 1, 1995. Since the transaction was completed on December 31,
1995, its effects are already included in the historical December 31, 1995
balances in the accompanying Pro Forma Consolidated Statement of
Financial Position and no pro forma adjustments are necessary.
The Pro Forma Financial Information does not purport to represent
what the Partnership's results of operations for the year ended
December 31, 1995 would actually have been had the acquisition in
fact occurred at the beginning of the fiscal year indicated or to project
the Partnership's financial position or results from operations for any
future date or period. The transaction involved the issuance of a fixed
number of Partnership shares in exchange for WMX's minority
ownership interest in the Partnership's Consumer Services subsidiary,
the earnings of which have been increasing rapidly and are expected to
continue to increase in the future. In addition, as required by the
related rules of presentation, the Pro Forma Financial Information
does not anticipate any of the potential benefits which could be realized
from new strategic and cross-marketing initiatives between
ServiceMaster and WMX.
The transaction will be accounted for under the "purchase" method of
accounting. The pro forma adjustments are based upon currently available
information and certain assumptions which the Partnership believes are
reasonable in the circumstances. The preliminary purchase price
allocations are subject to modifications during 1996 as additional valuation
and other information becomes available, although any such modifications
are not expected to be material. The tables and accompanying notes should
be read in conjunction with the Partnership's historical financial statements
and the related notes thereto.
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<TABLE>
<CAPTION>
ServiceMaster Limited Partnership
Pro Forma Consolidated Statement of Income
(In thousands, except per share information)
Year ended December 31, 1995
Pro Forma ServiceMaster
ServiceMaster Adjustments Pro Forma
Historical (Unaudited) (Unaudited)
---------- ----------- -----------
<S> <C> <C> <C><C>
Operating Revenue $ 3,202,504 $ $ 3,202,504
Operating Costs and Expenses:
Cost of services rendered
and products sold 2,486,292 2,486,292
Selling and administrative
expenses 464,345 5,875 A 470,220
-------------- ------------- --------------
Total operating costs and
expenses 2,950,637 5,875 2,956,512
-------------- ------------- --------------
Operating Income 251,867 (5,875) 245,992
Non-operating Expense (Income):
Interest expense 35,855 205 B 36,060
Interest income (7,310) (7,310)
Minority interest 45,715 (37,099) C 8,616
-------------- ------------ --------------
Income before Income Taxes 177,607 31,019 208,626
Provision for income taxes 5,588 5,588
-------------- ------------ --------------
Net Income $ 172,019 $ 31,019 $ 203,038
============== ============ ==============
Partnership shares outstanding 79,313 18,107 D 97,420
Net Income Per Share $ 2.17 $ 2.08
============== ==============
</TABLE>
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SERVICEMASTER LIMITED PARTNERSHIP
Notes to Pro Forma Consolidated Statement of Income
Year Ended December 31, 1995
The pro forma adjustments to the historical income statement have been
computed assuming the transaction was consummated at the beginning of
the year. Pro forma adjustments consist of:
A. The Partnership shares issued in the transaction were recorded based
upon the average market price of the Partnership's unrestricted and
fully traded shares at the time the transaction was agreed to and
announced, adjusted to reflect the significant voting, trading and other
restrictions on the shares issued to WMX. The valuation of the
restricted shares was determined in part based on a review performed
by an international investment banking firm. The transaction resulted
in approximately $235 million in intangible assets, primarily
tradenames and goodwill, which are amortized on a straight line basis
over forty years.
B. Interest expense consists of the interest cost related to the dividends
due on the Partnership shares issued in the transaction. This expense is
partially offset by the fact that other distributions that would have been
made had WMX retained their minority interest in Consumer Services
will no longer be required. Interest expense is computed at an average
rate of 6.2%.
C. Reflects the elimination of minority interest expense associated with
WMX Technologies, Inc.'s prior status as a 27.76% minority partner
in ServiceMaster's Consumer Services subsidiary.
D. Reflects the 18,107,143 shares issued to WMX in exchange for their
minority ownership interest in Consumer Services.
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<TABLE>
<CAPTION>
ServiceMaster Limited Partnership
Pro Forma Consolidated Statement of Financial Position
(In thousands)
December 31, 1995
ServiceMaster Pro Forma ServiceMaster
Historical Adjustments Pro Forma
---------- ----------- ---------
(See Note)
<S> <C> <C> <C>
Assets
Current Assets:
Cash and marketable securities $ 49,429 $ $ 49,429
Accounts and notes receivable, net 243,649 243,649
Inventories 40,583 40,583
Prepaid expenses and other assets 59,578 59,578
------------- ------------ -------------
Total current assets 393,239 393,239
------------- ------------ -------------
Property and Equipment:
At cost 292,283 292,283
Less: accumulated depreciation 146,431 146,431
------------- ------------ -------------
Net property and equipment 145,852 145,852
------------- ------------ -------------
Trade names, goodwill, and other, net 1,021,050 1,021,050
Notes receivable, long-term
securities, and other assets 89,749 89,749
------------- ------------ -------------
Total assets $ 1,649,890 $ $ 1,649,890
============= ============ =============
Liabilities And Shareholders' Equity
Current Liabilities:
Accounts payable $ 50,456 $ $ 50,456
Accrued liabilities 193,799 193,799
Deferred revenues 115,244 115,244
Current portion of
long-term debt and obligations 13,431 13,431
------------- ------------ -------------
Total current liabilities 372,930 372,930
------------- ------------ -------------
Long-Term Debt 411,903 411,903
Other Long-Term Obligations 105,700 105,700
Commitments and Contingencies
Minority and General Partners' Interest 12,697 12,697
Shareholders' Equity 746,660 746,660
------------- ------------ -------------
Total liabilities and
shareholders' equity $ 1,649,890 $ $ 1,649,890
============= ============ =============
Note: Since the transaction was consummated on December 31, 1995, its effects have already been
reflected in the historical balance sheet on that date, and no pro forma adjustments are required. The
transaction resulted in an increase in shareholders' equity of $356 million, an increase in intangible
assets of $235 million, and a decrease in minority interest liability of $121 million.
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on behalf of the
undersigned thereunto duly authorized.
SERVICEMASTER LIMITED PARTNERSHIP
(Registrant)
By s/Ernest J. Mrozek
-------------------
Ernest J. Mrozek
Senior Vice President & Chief Financial Officer
(Principal Financial Officer)
Date: March 15, 1996
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