<PAGE>
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 Employee Share Purchase Plan
ServiceMaster Limited Partnership
One ServiceMaster Way
Downers Grove, Illinois 60515
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee and the Trustees have duly caused this annual report to be signed by
the undersigned thereunto duly authorized.
SERVICEMASTER EMPLOYEE SHARE PURCHASE PLAN
By: /s/S.D. Krause
------------------------------------
S.D. Krause,
Administrative Committee Member
By : /s/L.E. Malmquist
-------------------------------------
L.E. Malmquist,
Administrative Committee Member
Date: March 27, 1997
2
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the
ServiceMaster Employee Share Purchase Plan:
We have audited the accompanying statements of net assets of the ServiceMaster
Employee Share Purchase Plan as of December 31, 1996 and 1995, and the related
statements of changes in net assets for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Plan's Administrative Committee. Our responsibility is to express an opinion
on these financial statements 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 of the Plan as of December 31, 1996 and
1995 and the changes in net assets for each of the three years in the period
ended December 31, 1996 in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Chicago, Illinois
March 27, 1997
3
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<TABLE>
<CAPTION>
SERVICEMASTER EMPLOYEE SHARE PURCHASE PLAN
STATEMENTS OF NET ASSETS
As of December 31,
1996 1995
---------- ----------
<S> <C> <C>
ASSETS:
Cash $ 263,466 $ 306,912
Due from ServiceMaster 324,181 375,480
----------- -----------
NET ASSETS AVAILABLE $ 587,647 $ 682,392
=========== ===========
The accompanying Notes to Financial Statements
are an integral part of these statements.
</TABLE>
4
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<TABLE>
<CAPTION>
SERVICEMASTER EMPLOYEE SHARE PURCHASE PLAN
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended December 31,
1996 1995 1994
--------------- ---------------- ----------------
<S> <C> <C> <C>
TOTAL PLAN ASSETS AVAILABLE,
BEGINNING OF PERIOD $ 682,392 $ 513,635 $ 2,240,440
--------------- ---------------- ----------------
Additions:
Participant contributions - Note 3 6,321,820 5,448,271 5,522,397
ServiceMaster contributions 948,273 818,787 821,316
--------------- ---------------- ----------------
Total Additions 7,270,093 6,267,058 6,343,713
--------------- ---------------- ----------------
Deductions:
Shares issued to participants 7,364,838 6,098,301 8,066,934
Payments to terminated participants - - 3,584
--------------- ---------------- ----------------
Total Deductions 7,364,838 6,098,301 8,070,518
--------------- ---------------- ----------------
TOTAL PLAN ASSETS AVAILABLE,
END OF PERIOD $ 587,647 $ 682,392 $ 513,635
=============== ================ ================
The accompanying Notes to Financial Statements
are an integral part of these statements.
</TABLE>
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SERVICEMASTER EMPLOYEE SHARE PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
1. The Plan
The ServiceMaster Employee Share Purchase Plan (the "Plan") was created to
give eligible employees, wishing to do so, a convenient means of purchasing
ServiceMaster Limited Partnership shares through payroll deductions and
cash contributions, supplemented by contributions made by ServiceMaster
Limited Partnership ("ServiceMaster"). Employees of ServiceMaster or any
subsidiary or affiliate which has adopted the Plan on behalf of its
employees who regularly work nine months or more during the year, who have
an average work week of 32 hours or more during the period worked and who
have attained age 18 are eligible to participate in the Plan on the first
business day of the calendar quarter coinciding with or subsequent to the
first anniversary of their employment. As of December 31, 1996, 6,130
employees were participating in the Plan.
Details relating to shares issued by the Plan (reflecting all share splits)
from inception (July 1, 1972) through December 31, 1996, are as follows:
<TABLE>
<CAPTION>
Number
of Shares Total Cost
------------- -------------
<S> <C> <C>
Issued during the year ended
December 31, 1996 to participants 340,534 $ 7,364,838
Issued from inception through
December 31, 1995 12,561,329 62,181,381
------------- -------------
Total issued from inception through
December 31, 1996 12,901,863 $ 69,546,219
============= =============
</TABLE>
Effective July 1, 1994, an administrator (Harris Bank), instead of the
Plan, purchases and allocates the shares to the participants. Due to this
change, the Plan no longer maintains cash or share investments on behalf of
the participants. Shares are issued at the same price they were purchased
and are held by the Administrator in an account on behalf of the individual
participant. The participant may request deliverance of the shares, and
earnings thereon, directly from the administrator at any time.
2. Summary of Significant Accounting Policies
(a) The transactions of the Plan are accounted for on the accrual
basis of accounting.
(b) Expenses incurred by the Plan are paid by ServiceMaster.
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NOTES TO FINANCIAL STATEMENTS (Continued)
3. Contributions
The amounts contributed by the participants and ServiceMaster during 1996,
1995, and 1994 were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
Contributed by Contributed by Contributed by
--------------------------- --------------------------- ---------------------------
Participants ServiceMaster Participants ServiceMaster Participants ServiceMaster
------------ ------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Participant contributions
and ServiceMaster
required contributions
for the year $ 6,321,820 $ 37,500 $ 5,448,271 $ 37,500 $ 5,522,397 $ 37,500
ServiceMaster additional
contributions - 910,773 - 781,287 - 783,816
------------- ----------- ------------ ------------ ------------ -----------
Total contributions $ 6,321,820 $ 948,273 $ 5,448,271 $ 818,787 $ 5,522,397 $ 821,316
============= =========== ============ ============ ============ ===========
</TABLE>
Participant contributions and required ServiceMaster contributions are
accounted for on the accrual basis. The ServiceMaster contribution to the
Plan is equal to the lesser of 15% of total participant contributions or
$37,500. ServiceMaster may elect to make additional contributions to the
Plan as it deems appropriate. Participants may contribute a maximum of 10%
of their prior year compensation as defined in the Plan agreement.
The Board of Directors of ServiceMaster approved additional contributions
which, together with the required ServiceMaster contributions previously
made, were equivalent to a 15% matching of the participant contributions
made during 1996, 1995, and 1994, for participants as of each year end.
4. Federal Income Taxes
(a) Tax Status of the Plan - The Plan is considered a trust for tax
reporting purposes but does not qualify for tax exempt status under
Section 501 of the Internal Revenue Code. However, the Plan incurs no
tax liability since all Plan income is distributed to the
participants.
(b) Tax Status of Each Participant - Since the Plan does not qualify as
an "employee stock purchase plan" under Section 423 of the Internal
Revenue Code (the "Code") or as a "stock bonus plan" under Section
401 of the Code, the participant realizes income equal to his share
of the ServiceMaster contributions and cash distributions on shares
issued to the participant during the calendar year.
Through June 30, 1994, for federal income tax purposes, the cost basis of
the shares issued to the participant was the average cost of the shares at
the time it was allocated to the participant's account by the Plan. Due to
the changes in the Plan described in note 1, effective July 1, 1994, the
cost basis of the shares is the purchase price, which includes broker
commissions.
7
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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
Employee Share Purchase Plan 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
8
