SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO.1 TO
FORM 10-Q/A
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
--- THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
TRANSITION REPORT PURSUANT TO SECTION 13 OR
--- 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-9378
SERVICEMASTER LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 36-3497008
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
One ServiceMaster Way, Downers Grove, Illinois 60515
(Address of principal executive offices) (Zip Code)
630-271-1300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ___X___ No ______.
Indicate the number of shares outstanding of each of the issuer's classes of
shares: 182,765,381 shares on July 29, 1997. (This reflects the repurchase of
40.7 million (post split) shares from WMX Technologies Inc. on April 1, 1997 and
the three-for-two share split declared May 9, 1997 and payable to shareholders
of record as of June 11, 1997.)
This document consists of 13 pages, including the cover page.
<PAGE>
TABLE OF CONTENTS
The Amendment No. 1 to Form 10-Q/A for the quarterly report under Section 13 or
15(d) of the Securities Exchange Act of 1934 is being filed by the Registrant
in order to adjust the filing date of such Form 10-Q. This Amendment No. 1
is identical to the previously filed Form 10-Q except for it filing date.
Page
No.
----
SERVICEMASTER LIMITED PARTNERSHIP (Registrant) -
Part I. Financial Information
Consolidated Statements of Income for the three and
six months ended June 30, 1997 and June 30, 1996 2
Consolidated Statements of Financial Position
as of June 30, 1997 and December 31, 1996 3
Consolidated Statements of Cash Flows for the six months
ended June 30, 1997 and June 30, 1996 4
Notes to Consolidated Financial Statements 5
Management Discussion and Analysis of Financial
Position and Results of Operations 6
Part II. Other Information
Exhibit 11 - Exhibit Regarding Detail of Income
Per Share Computation 11
Signature 12
1
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
SERVICEMASTER LIMITED PARTNERSHIP
Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Revenue ................. $ 1,010,794 $ 916,931 $ 1,827,930 $ 1,657,230
Operating Costs and Expenses:
Cost of services rendered
and products sold ................ 753,534 695,426 1,410,679 1,293,609
Selling and administrative expenses 158,823 138,597 260,214 230,376
------- ------- --------- ---------
Total operating costs and expenses 912,357 834,023 1,670,893 1,523,985
------- ------- --------- ---------
Operating Income .................. 98,437 82,908 157,037 133,245
Non-operating Expense (Income):
Interest expense .................. 20,800 9,904 31,192 18,822
Interest income ................... (2,746) (2,451) (5,313) (5,130)
Minority interest* ................ 2,015 2,761 4,163 4,598
----- ----- ------ ------
Income before Income Taxes ........ 78,368 72,694 126,995 114,955
Provision for income taxes ........ 2,661 1,430 4,428 3,178
----- ----- ------- -------
Net Income ........................ $ 75,707 $ 71,264 $ 122,567 $ 111,777
=========== =========== =========== ===========
Net Income Per Share .............. $ .40 $ .33 $ .60 $ .51
========= ========= ========= =========
Cash Distributions Per Share ...... $ .11 1/3 $ .10 2/3 $ .22 2/3 $ .21 1/3
========= ========= ========= =========
Net income per share is based on 187,135 shares and 217,254 shares for the three months ended
June 30, 1997 and 1996, respectively, and 203,873 shares and 217,748 shares for
the six months ended June 30, 1997 and 1996 respectively. All share and per
share data have been restated to reflect the three-for-two share split declared
May 9, 1997 and payable to shareholders of record as of June 11, 1997.
The Partnership is not currently subject to federal and state income taxes.
However, under current law, this tax status will expire at the end of 1997,
after which the Partnership will be taxed as a corporation. A reincorporating
plan has been approved by the shareholders and the Partnership currently expects
to reincorporate, on a tax-free basis to shareholders, by December 31, 1997. It
is currently estimated that the effective tax rate upon reincorporation will be
approximately 40 percent of pretax earnings. This estimate is necessarily
subject to change based on changes in circumstances, statutory tax rates, etc.
Proforma earnings per share would be $.25, and $.20 for the three months ended
June 30, 1997 and 1996, respectively and $.37 and $.31 for the six months ended
June 30, 1997 and 1996, respectively, assuming reincorporation had occurred at
the beginning of each respective year.
* Includes General Partners' interest of $1,553 and $1,453 for the three months
ended June 30, 1997 and 1996, respectively, and $2,489 and $2,271 for the six
months ended June 30, 1997 and 1996, respectively.
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE>
<TABLE>
<CAPTION>
SERVICEMASTER LIMITED PARTNERSHIP
Consolidated Statements of Financial Position
(In thousands)
As of
June 30, December 31,
1997 1996
---------------- ---------------
<S> <C> <C>
Assets
Current Assets:
Cash and marketable securities, including cash and
cash equivalents of $38,972 and $72,009, respectively........................ $ 91,047 $ 114,413
Accounts and notes receivable, less allowances of $31,810
and $26,287, respectively.................................................... 320,851 270,401
Inventories..................................................................... 52,020 43,529
Prepaid expenses and other assets............................................... 115,505 70,991
----------------- -----------------
Total current assets....................................................... 579,423 499,334
----------------- -----------------
Property and Equipment:
At cost...................................................................... 339,010 320,713
Less: accumulated depreciation.............................................. 187,871 174,313
----------------- -----------------
Net property and equipment................................................. 151,139 146,400
----------------- -----------------
Intangible assets, primarily trade names and goodwill,
net of accumulated amortization of $190,658
and $170,623, respectively................................................... 1,356,840 1,098,466
Notes receivable, long-term securities, and other assets........................ 112,344 102,641
----------------- -----------------
Total assets............................................................... $ 2,199,746 $ 1,846,841
================= =================
Liabilities And Shareholders' Equity
Current Liabilities:
Accounts payable................................................................ $ 77,363 $ 66,025
Accrued liabilities............................................................. 226,044 205,567
Deferred revenues............................................................... 179,136 138,339
Current portion of long-term obligations........................................ 16,324 15,621
----------------- -----------------
Total current liabilities.................................................. 498,867 425,552
----------------- -----------------
Long-Term Debt.................................................................. 1,166,506 482,315
Other Long-Term Obligations..................................................... 128,875 125,299
Commitments and Contingencies ..................................................
Minority and General Partners' Interest
includes General Partners' interest of
$1,812 in 1997 and $1,604 in 1996............................................ 2,939 16,908
Shareholders' Equity............................................................ 402,559 796,767
----------------- -----------------
Total liabilities and shareholders' equity................................. $ 2,199,746 $ 1,846,841
================= =================
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
SERVICEMASTER LIMITED PARTNERSHIP
Consolidated Statements of Cash Flows
(In thousands)
Six Months Ended
June 30,
1997 1996
------------------ ----------------
<S> <C> <C>
Cash and Cash Equivalents at January 1.......................................... $ 72,009 $ 23,113
Cash Flows from Operations:
Net Income .................................................................... 122,567 111,777
Adjustments to reconcile net income
to net cash flows from operations:
Depreciation........................................................... 22,318 19,901
Amortization........................................................... 20,035 15,642
Change in working capital, net of acquisitions:
Receivables.......................................................... (41,729) (40,348)
Inventories and other current assets................................. (47,011) (54,213)
Accounts payable..................................................... 3,635 11,044
Deferred revenues.................................................... 34,473 19,905
Accrued liabilities.................................................. (4,667) 181
Minority interest and other, net....................................... (451) 4,268
------------------ ---------------
Net Cash Provided from Operations............................................... 109,170 88,157
------------------ ----------------
Cash Flows from Investing Activities:
Business acquisitions, net of cash acquired................................ (103,145) (30,718)
Property additions......................................................... (23,384) (23,470)
Notes receivable and financial investments................................. (7,939) 13
Sale of equipment and other assets ........................................ 2,727 863
Payments to sellers of acquired businesses................................. (2,102) (1,685)
Net purchases of investment securities..................................... (1,134) (10,463)
Proceeds from sale of businesses........................................... - 4,526
------------------ ----------------
Net Cash Used for Investing Activities.......................................... (134,977) (60,934)
------------------ ----------------
Cash Flows from Financing Activities:
Borrowings, net............................................................ 827,950 103,959
Purchase of Partnership shares............................................. (640,785) (44,219)
Payments of borrowings and other obligations............................... (150,170) (44,743)
Distributions to shareholders and shareholders' trust...................... (48,402) (45,027)
Proceeds from employee share option plans.................................. 4,701 2,917
Distributions to holders of minority interests............................. (524) (2,769)
------------------ -----------------
Net Cash Used for Financing Activities.......................................... (7,230) (29,882)
------------------ -----------------
Cash Decrease during the Period................................................. (33,037) (2,659)
------------------ ----------------
Cash and Cash Equivalents at June 30............................................ $ 38,972 $ 20,454
================== =================
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
SERVICEMASTER LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: The consolidated financial statements include the accounts of the
Partnership and its significant subsidiaries, collectively referred to as "the
Partnership". Intercompany transactions and balances have been eliminated in
consolidation.
Note 2: The consolidated financial statements included herein have been prepared
by the Partnership pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. However, the Partnership believes that the disclosures are adequate
to make the information presented not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the financial
statements and the notes thereto included in the Partnership's latest Annual
Report to shareholders and the Annual Report to the Securities and Exchange
Commission on Form 10-K for the year ended December 31, 1996. In the opinion of
the Partnership, all adjustments, consisting only of normal and recurring
adjustments, necessary to present fairly the financial position of ServiceMaster
Limited Partnership as of June 30, 1997 and December 31, 1996, and the results
of operations for the three month and six month periods ended June 30, 1997 and
1996, and the cash flows for the six months ended June 30, 1997 and 1996 have
been included. The results of operations for any interim period are not
necessarily indicative of the results which might be obtained for a full year.
Note 3: For interim accounting purposes, certain costs directly associated with
the generation of lawncare revenues are initially deferred and recognized as
expense as the related revenues are recognized. All such costs are fully
recognized within the fiscal year in which they are incurred.
Note 4: On May 9, 1997, the Partnership's Board of Directors declared a
three-for-two share split effective June 25, 1997, for shareholders of record on
June 11, 1997. All share and per share data have been restated for all periods
presented to reflect this three-for-two split.
Note 5: In February 1997, the FASB issued Statement No. 128, "Earnings Per
Share" (SFAS 128). SFAS 128 is effective for financial statements for periods
ending after December 15, 1997. Therefore, the Partnership will adopt this
Statement and reflect its disclosure in the Partnership's 1997 annual report.
SFAS 128 requires dual presentation of basic and diluted earnings per share.
Basic earnings per share includes no dilution from options, debentures or other
financial instruments and is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution of securities
that could participate in the earnings of an entity. This Statement requires
that prior period earnings per share data presented be restated. Earnings per
share data on a restated basis would reflect basic earnings per share of $.42
and $.62 for the three and six months ended June 30, 1997, respectively and
diluted earnings per share of $.40 and $.59 for the three and six months ended
June 30, 1997, respectively.
Note 6: In the Consolidated Statements of Cash Flows, the caption Cash and Cash
Equivalents includes investments in short-term, highly-liquid securities having
a maturity of six months or less. Supplemental information relating to the
Consolidated Statements of Cash Flows for the six months ended June 30, 1997 and
1996 is presented in the following table. The increase in interest paid in 1997
from 1996 is primarily due to overall higher debt balances reflecting the WMX
share repurchase and acquisitions.
<TABLE>
<CAPTION>
(In thousands)
1997 1996
------------- ------------
<S> <C> <C>
Cash paid or received for:
- --------------------------
Interest expense.................................................................. $ 23,385 $ 17,890
Interest and dividend income...................................................... $ 3,901 $ 3,668
</TABLE>
5
<PAGE>
SERVICEMASTER LIMITED PARTNERSHIP
MANAGEMENT DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
SECOND QUARTER 1997 COMPARED TO SECOND QUARTER 1996
- ---------------------------------------------------
Revenues increased 10 percent to $1.0 billion in the second quarter of 1997,
reflecting solid growth from base operations and the effect of acquisitions.
Operating income increased 19 percent to $98.4 million while margins improved to
9.7 percent of revenue, reflecting the continued strong growth of our higher
margin businesses, productivity improvements, and the integration of the
acquired Barefoot operations. Net income was $75.7 million, reflecting a 6
percent increase over one year ago while net income per share was $.40,
representing an increase of 21 percent. Earnings per share grew at a higher rate
than net income due to the transaction with WMX Technologies, Inc. (WMX) in
which the Partnership repurchased WMX's 19 percent ownership interest (40.7
million shares) for $626 million on April 1, 1997. This transaction served to
significantly increase interest expense and reduce shares outstanding.
The Consumer Services business unit achieved double digit increases in revenues
and profits reflecting the successful integration of the Barefoot business and
good growth from base operations. The TruGreen-ChemLawn operations achieved
strong double digit growth in revenues and profits reflecting the Barefoot
acquisition, improved branch efficiencies, strong sales of ancillary products
and favorable weather conditions. On July 24, 1997, ServiceMaster purchased the
Orkin Plantscaping and Lawncare Divisions from Rollins, which increases the
Company's market penetration, expands geographic coverage of existing
plantscaping operations and provides the ability to integrate additional
lawncare customers into current operations. Terminix achieved modest growth in
revenues while profits were consistent with last year. The weather, which was
favorable for the lawncare business, provided challenges in the termite
operations as the cool weather produced lower termite activity. The impacts from
unfavorable weather and increased termite damage claims were offset by continued
strong growth in customer renewals and the benefits from productivity
initiatives. American Home Shield achieved very strong double digit increases in
both revenues and profits, with excellent increases in contract renewals and
direct to consumer sales. This is consistent with the overall strategy to reduce
the company's reliance on real-estate sales. Residential/Commercial reported
revenue and profit growth reflecting an increase in company owned distributors
and solid increases in fee income. Merry Maids achieved solid increases in
revenues, primarily due to growth in acquired branch operations, with modest
overall profit growth despite the impact of the extraordinarily tight labor
markets.
The Management Services business unit achieved a strong increase in revenues
primarily reflecting the Premier acquisition and, to a lesser degree, growth in
the base business. Management Services reported modest growth in net income,
excluding the effects of a non-recurring transaction gain recorded last year at
Diversified Health Services. Actual reported profits were slightly lower than
the prior year level. The health care market, which includes Diversified Health
Services, achieved solid revenue increases and good profit growth from base
6
<PAGE>
operations. These results reflect productivity gains and growth in the long term
care operations which offset the continued challenges experienced in the
traditional acute care business. Within the acute care sector, good growth was
realized from sales of the integrated service product which provides
comprehensive service solutions to clients. The business and industry group
achieved significant revenue and profit growth, resulting from the successful
integration of the Premier acquisition as well as modest growth in the base
business. Revenues and profits in the education market declined due to the
discontinuation of a large contract and margin pressures in certain accounts.
Revenues from the International operations were consistent with prior year while
profits were below last year's level, reflecting anticipated investments in the
facilities management joint venture in Germany and unfavorable currency exchange
rates. European pest control services, offered through Terminix Europe, achieved
good increases in revenues and profits.
Cost of services rendered and products sold increased 8 percent due to general
business growth, but decreased as a percentage of revenue to 74.5 percent in
1997 from 75.8 percent in 1996. This decrease primarily reflects the changing
mix of the business as Consumer Services becomes a larger portion of the overall
business of the Partnership as well as productivity improvements and the
successful integration of acquisitions. The Consumer Services companies
generally operate at higher gross profit levels than the other major business
units but also incur somewhat higher selling and administrative expenses.
Selling and administrative expenses increased 15 percent due to general business
growth and increased to 15.7 percent of revenue in 1997 from 15.1 percent in
1996. As described above, this increase as a percentage of revenue is primarily
attributable to the changing business mix of the Partnership.
Interest expense increased over the prior year primarily due to increased debt
levels associated with the repurchase of Partnership shares held by WMX and
acquisitions. The increase in the provision for taxes is attributable to strong
growth at American Home Shield (which is organized in corporate form and subject
to taxes).
SIX MONTHS ENDED JUNE 30, 1997 AS COMPARED TO JUNE 30, 1996
- -----------------------------------------------------------
Revenues for the six months increased 10 percent over 1996 to $1.8 billion
reflecting solid growth from base operations and the effect of acquisitions.
Operating income increased 18 percent to $157 million while margins improved to
8.6 percent of revenue from 8.0 percent in 1996, reflecting the continued strong
growth of our higher margin businesses, productivity improvements, and the
integration of the Barefoot operations. Net income was $122.6 million, an
increase of 10 percent over one year ago while net income per share was $.60,
representing an increase of 18 percent. The disparity between net income growth
and growth in earnings per share reflects the share repurchase from WMX which
increased interest expense and reduced the number of shares outstanding.
The Consumer Services business unit continued to achieve, double digit increases
in revenues and profits. The TruGreen-ChemLawn operations realized double digit
increases in revenues and profits during the first six months of the year
7
<PAGE>
reflecting strong internal growth and the successful integration of the Barefoot
customers. The lawncare operations experienced favorable weather conditions
throughout many parts of the country resulting in increased production, improved
efficiencies, and growth in ancillary products. Terminix achieved solid growth
in revenues and profitability for the six months. Strong growth in renewals and
slight margin improvements offset the adverse weather conditions experienced in
May and June of this year. American Home Shield achieved very strong double
digit increases in both revenues and profits, with good increases in gross
contracts written, as well as continued improvements in contract renewals.
Residential/Commercial and Merry Maids reported modest profit growth for the six
months but achieved solid revenue growth, reflecting the continued conversion of
franchises and distributors to company owned operations.
The Management Services business unit achieved strong revenue growth for the six
months primarily related to the Premier acquisition as well as modest growth in
the base business. This unit achieved modest profit growth, excluding a
non-recurring gain at Diversified Health Services recorded last year. The health
care market reported a solid increase in revenues and good profit growth with
improved sales and customer retention. The business and industry group achieved
double digit revenue and profit growth, resulting from the Premier acquisition
as well as increased margins at several accounts. The gains achieved in the
health care and business and industry markets were partially offset by
challenges faced in the education market where the discontinuation of a large
contract and margin pressures in certain other accounts negatively impacted
revenues and profits.
The International operations achieved modest revenue growth with profits below
last year reflecting anticipated investments in the German joint venture and
unfavorable currency exchange rates.
Cost of services rendered and products sold increased 9 percent due to general
business growth, but decreased as a percentage of revenue to 77.2 percent in
1997 from 78.1 percent in 1996. This decrease primarily reflects the changing
mix of the business as Consumer Services becomes a larger portion of the overall
business of the Partnership as well as productivity improvements and the
successful integration of acquisitions. The Consumer Services companies
generally operate at higher gross profit levels than the other major business
units but also incur somewhat higher selling and administrative expenses.
Selling and administrative expenses increased 13 percent due to general business
growth and increased to 14.2 percent of revenue from 13.9 percent in 1996. As
described above, this increase as a percentage of revenue is primarily
attributable to the changing business mix of the Partnership.
Interest expense increased over the prior year primarily due to increased debt
levels associated with the repurchase of Partnership shares held by WMX and
acquisitions. Income taxes increased from the prior year reflecting strong
growth at American Home Shield and increases in certain state taxes.
8
<PAGE>
FINANCIAL POSITION
- -------------------
Net cash provided from operations of $109.2 million grew 24 percent compared to
the first six months of 1996, reflecting growth in net income, increased
prepayments for services in the lawncare operations and the favorable timing of
the Barefoot acquisition. Due to the seasonality of the lawncare and pest
control operating cycles, the Partnership's working capital needs are higher
during the first half of the year than in the second half, with a corresponding
impact on funds provided from operations. Management believes that funds
generated from operations and other existing resources will continue to be
adequate to satisfy the ongoing working capital needs of the Partnership.
On April 1, 1997, ServiceMaster repurchased the entire 19 percent ownership
interest that WMX had held in the Partnership for approximately $626 million.
WMX had owned 40.7 million restricted shares of ServiceMaster and also had an
option to purchase an additional 2.8 million shares which was canceled as part
of the transaction. This transaction was immediately additive to earnings per
share and will provide significant, incremental tax benefits to the company. The
transaction was financed with a new $1 billion multi-currency revolving credit
agreement, which provides a 364 day revolving credit facility of $250 million
with a one-year term loan option (two year total term) and a five-year revolving
credit facility of $750 million.
On July 28, 1997, ServiceMaster filed a Form S-3 shelf registration statement
with the Securities and Exchange Commission providing for the sale of up to $950
million in either unsecured senior debt securities or equity interests. The
registration statement proposes an offering of $150 million of unsecured 10-year
notes and $150 million of unsecured 30-year notes, subject to the effectiveness
of the registration statement. The net proceeds will be used to reduce
borrowings under bank credit facilities. Proceeds from future offerings will be
used for general corporate purposes, which may include repayment of debt,
repurchase of shares, acquisitions, capital expenditures and working capital
requirements. No decision has been made relating to the potential future sale of
other securities from the shelf. Any future decisions will depend on the
company's capital needs and market conditions at the time.
The increase in accounts and notes receivable over year end levels reflects
traditional seasonal buildups, as well as the impact from the Barefoot
acquisition. The increase in inventories is a result of normal seasonal
build-ups in the pest control and lawncare businesses as well as the acquired
inventory from Barefoot.
Prepaid expenses and other assets have increased from year end because the
lawncare operation defers certain marketing costs that are incurred during the
first six months but are directly associated with revenues that are realized in
subsequent quarters of the current year. These costs are then amortized over the
balance of the current lawncare production season, as the related revenues are
recognized. Deferred revenues also increased significantly, reflecting strong
growth and increases in customer prepayments for lawncare services.
Property and equipment increased primarily due to business growth in the
Consumer and Management Services business units as well as the acquisition of
Barefoot in the first quarter of 1997.
9
<PAGE>
Intangible assets increased from year end, primarily reflecting the effect of
the Barefoot transaction.
Accounts payable and other liabilities increased from year end reflecting
seasonal activity in the Consumer Services businesses. Debt levels increased due
to the repurchase of WMX's 19 percent ownership in the Partnership and the cash
portion of the Barefoot acquisition. The Partnership is a party to a number of
long-term debt agreements which require it to maintain compliance with certain
financial covenants, including limitations on indebtedness, restricted payments,
fixed charge coverage ratios and net worth. The Partnership is in compliance
with the covenants related to these debt agreements.
Total shareholders' equity decreased to $403 million in 1997 from $797 million
at December 31, 1996, reflecting the repurchase of WMX's Partnership shares and
other treasury share repurchases and distributions, partially offset by strong
growth in earnings as well as the shares issued to acquire Barefoot. The
Partnership continues to repurchase shares in the open market or in privately
negotiated transactions per the authorization granted by the Board of Directors
in 1995. As of June 30, 1997, approximately $57 million (excluding the WMX
transaction) of the total $150 million amount authorized had not yet been
expended. Cash distributions paid directly to shareholders for the six months
ended June 30, 1997, totalled $45 million or $.23 per share, an increase of 6
percent.
10
<PAGE>
<TABLE>
<CAPTION>
Part II. OTHER INFORMATION
SERVICEMASTER LIMITED PARTNERSHIP
Exhibit 11
EXHIBIT REGARDING DETAIL OF INCOME PER SHARE COMPUTATION
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $ 75,707 $ 71,264 $ 122,567 $ 111,777
Interest on convertible debentures.............................. 465 465 931 938
-------- --------- ---------- ----------
Net income for fully diluted calculation........................ $ 76,172 $ 71,729 $ 123,498 $ 112,715
========= ========= ========== ==========
Shares used for computing
Primary Earnings per share
Shares outstanding on weighted
average basis.................................................. 181,737 211,403 198,927 211,761
Equivalent shares --
Options and subscriptions outstanding.......................... 5,398 5,851 4,946 5,987
------- ------- ------- -------
Weighted average and
equivalent shares for primary calculation...................... 187,135 217,254 203,873 217,748
======= ======= ======= =======
Primary earnings per share...................................... $ .40 $ .33 $ .60 $ .51
====== ====== ====== ======
Shares used for computing fully
diluted earnings per share--
Shares outstanding
(weighted average basis with
options and subscriptions)..................................... 187,607 217,706 204,798 218,105
Equivalent shares--
Shares issuable upon conversion of
convertible debentures.......................................... 3,626 3,626 3,626 3,626
------- ------- ------- -------
Weighted average and equivalent shares
for fully diluted calculation................................... 191,233 221,332 208,424 221,731
======= ======= ======= =======
Fully diluted earnings per share................................. $ .40 $ .32 $ .59 $ .51
====== ====== ====== ======
All share and per share data have been restated to reflect the three-for-two
share split declared May 9, 1997 and payable to shareholders of record as of
June 11, 1997.
</TABLE>
11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 1 report to be signed on
its behalf by the undersigned thereunto duly authorized.
Date: August 12, 1997
SERVICEMASTER LIMITED PARTNERSHIP
(Registrant)
By: /s/Steven C. Preston
-------------------------------------------------
Steven C. Preston
Senior Vice President and Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM SERVICEMASTER'S QUARTERLY REPORT TO SHAREHOLDERS
FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 38,972
<SECURITIES> 52,075
<RECEIVABLES> 352,661
<ALLOWANCES> 31,810
<INVENTORY> 52,020
<CURRENT-ASSETS> 579,423
<PP&E> 339,010
<DEPRECIATION> 187,871
<TOTAL-ASSETS> 2,199,746
<CURRENT-LIABILITIES> 498,867
<BONDS> 1,166,506
0
0
<COMMON> 0
<OTHER-SE> 402,559
<TOTAL-LIABILITY-AND-EQUITY> 2,199,746
<SALES> 0
<TOTAL-REVENUES> 1,827,930
<CGS> 0
<TOTAL-COSTS> 1,410,679
<OTHER-EXPENSES> 260,214
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,192
<INCOME-PRETAX> 126,995
<INCOME-TAX> 4,428
<INCOME-CONTINUING> 122,567
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 122,567
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.59
</TABLE>
