<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
COMMISSION FILE NUMBER 1-12188
SODEXHO SAVINGS PLUS PLAN
-------------------------
(Full title of the plan)
9801 WASHINGTONIAN BOULEVARD, GAITHERSBURG, MARYLAND 20878
---------------------------------------------------- ----------
(Address of the plan) (Zip Code)
SODEXHO MARRIOTT SERVICES, INC.
------------------------------------------------------------
(Name of issuer of the securities held pursuant to the plan)
9801 WASHINGTONIAN BOULEVARD, GAITHERSBURG, MARYLAND 20878
---------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
<PAGE>
FINANCIAL STATEMENTS AND EXHIBITS
- ---------------------------------
(a) Financial statements and supplemental schedules as of December 31, 1998
and 1997 and for the year ended December 31, 1998, prepared in
accordance with financial reporting requirements of ERISA.
Beginning at the next page of this document.
(b) Exhibits
The following exhibit is furnished to this Form 11-K:
(23) Consent of Independent Accountants
SIGNATURES
----------
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the administrative committee (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
SODEXHO SAVINGS PLUS PLAN
Date: JUNE 29, 1999 /s/LAWRENCE E. HYATT
------------- --------------------------
Lawrence E. Hyatt
Senior Vice President and
Chief Financial Officer
Sodexho Marriott Services, Inc.
<PAGE>
THE SODEXHO
SAVINGS PLUS PLAN
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
DECEMBER 31, 1998
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
TABLE OF CONTENTS TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Financial Statements:
Report of Independent Accountants 1-2
Statement of Net Assets Available for Benefits as of December 31, 1998 and 1997 3
Statement of Changes in Net Assets Available for Benefits (with
Fund Information) for the year ended December 31, 1998 4-5
Notes to Financial Statements 6-10
Supplemental Schedules:*
Schedule I - Schedule of Assets Held for Investment Purposes
as of December 31, 1998 11-16
Schedule II - Schedule of Reportable Transactions for the year
ended December 31, 1998 17
<FN>
* Other schedules required by Section 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974 have been omitted because
they are not applicable.
</FN>
</TABLE>
<PAGE>
[PRICEWATERHOUSECOOPERS LLP LOGO]
PricewaterhouseCoopers LLP
1301 K Street, N.W. 800W
Washington, DC 20005-3333
Telephone (202) 414 1000
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
The Sodexho Savings Plus Plan
We have audited the accompanying statement of net assets available for benefits
of the Sodexho Savings Plus Plan (the "Plan") as of December 31, 1998 and 1997
and the related statement of changes in net assets available for benefits for
the year ended December 31, 1998. 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 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 report dated October 9, 1998, we were unable to, and did not, express an
opinion on the 1997 financial statements because, at the instruction of the plan
administrator, we did not perform any auditing procedures with respect to the
information summarized in Note 3 to those financial statements. In conjunction
with our audit of the 1998 financial statements, the plan administrator
instructed us to perform, and we did perform, an audit of the 1997 financial
statements in accordance with generally accepted auditing standards.
Accordingly, we are now able to express an opinion on the 1997 financial
statements.
In our opinion, the financial statements referred to in the first paragraph of
this report present fairly, in all material respects, the net assets available
for benefits of the Plan as of December 31, 1998 and 1997, and the changes in
net assets available for benefits for the year ended December 31, 1998 in
conformity with generally accepted accounting principles.
<PAGE>
[PRICEWATERHOUSECOOPERS LLP LOGO]
To the Participants and Administrator of
The Sodexho Savings Plus Plan
Page 2
Our audits were conducted 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 transaction 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
Labors' Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The fund information in the statement of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the changes in net assets available
for benefits of each fund. These supplemental schedules and the fund information
are the responsibility of the Plan's management. The supplemental schedules and
the fund information 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.
/s/PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Washington, D.C.
June 25, 1999
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
- ---------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 December 31, 1997
Non-participant Participant Non-participant Participant
Directed Directed Directed Directed
ASSETS Profit Sharing 401(k) Total Profit Sharing 401(k) Total
Investments, at fair value:
<S> <C> <C> <C> <C> <C> <C>
U.S. Government and
agency obligations $ 2,103,758 $ -- $ 2,103,758 $ 1,788,588 $ -- $ 1,788,588
Corporate bonds 3,201,628 -- 3,201,628 2,914,620 -- 2,914,620
Common stocks and
convertible issues 8,861,722 -- 8,861,722 7,638,699 800,556 8,439,255
Bank pooled funds 471,902 -- 471,902 308,113 -- 308,113
Pooled separate accounts:
CIGNA Lifetime 20 Fund -- 122,216 122,216 -- 39,781 39,781
CIGNA Lifetime 30 Fund -- 119,356 119,356 -- 52,045 52,045
CIGNA Lifetime 40 Fund -- 124,707 124,707 -- 56,931 56,931
CIGNA Lifetime 50 Fund -- 53,230 53,230 -- 23,146 23,146
CIGNA Lifetime 60 Fund -- 50,744 50,744 -- 23,747 23,747
Fidelity Advisor Growth
Opportunity Fund -- 13,329,754 13,329,754 -- 10,268,037 10,268,037
Fidelity Contrafund -- 7,800,012 7,800,012 -- 5,168,832 5,168,832
Fidelity Puritan Fund -- 4,312,681 4,312,681 -- 3,166,185 3,166,185
Invesco Total Return Fund -- 4,514,195 4,514,195 -- 3,818,896 3,818,896
Janus Worldwide Fund -- 564,778 564,778 -- 52,287 52,287
Neuberger & Berman Guardian
Trust Fund -- 122,491 122,491 -- 39,757 39,757
PBHG Growth Fund -- 114,057 114,057 -- 40,198 40,198
SSGA Intermediate Bond Fund -- 99,005 99,005 -- 22,713 22,713
Twentieth Century Ultra
Investors Fund -- 6,154,424 6,154,424 -- 3,620,709 3,620,709
Warburg Pincus International
Equity Fund -- 37,685 37,685 -- 6,195 6,195
Sodexho Marriott Services, Inc.
common stock -- 173,282 173,282 -- -- --
Participant loans -- 2,377,829 2,377,829 -- 1,723,359 1,723,359
CIGNA Charter Guaranteed
Income Fund -- 12,773,175 12,773,175 -- 10,542,784 10,542,784
----------- ----------- ----------- ----------- ----------- -----------
Total investments 14,639,010 52,843,621 67,482,631 12,650,020 39,466,158 52,116,178
----------- ----------- ----------- ----------- ----------- -----------
Receivables:
Employer contributions -- 728,387 728,387 -- 622,173 622,173
Participants' contributions -- 676,201 676,201 -- 758,342 758,342
Accrued investment income 95,673 -- 95,673 85,649 -- 85,649
----------- ----------- ----------- ----------- ----------- -----------
Total receivables 95,673 1,404,588 1,500,261 85,649 1,380,515 1,466,164
----------- ----------- ----------- ----------- ----------- -----------
Total assets 14,734,683 54,248,209 68,982,892 12,735,669 40,846,673 53,582,342
----------- ----------- ----------- ----------- ----------- -----------
LIABILITIES
Excess contributions payable
to participants -- -- -- 9,866 -- 9,866
Accrued expenses 2,000 2,000 4,000 2,000 2,000 4,000
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities 2,000 2,000 4,000 11,866 2,000 13,866
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for benefits $14,732,683 $54,246,209 $68,978,892 $12,723,803 $40,844,673 $53,568,476
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (WITH FUND INFORMATION)
FOR THE YEAR ENDED DECEMBER 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
Participant Directed
------------------------------------------------------------------------------------------------------
Non- Fidelity
Participant Advisor Invesco
Directed CIGNA CIGNA CIGNA CIGNA CIGNA Growth Fidelity Total Janus
Profit Lifetime Lifetime Lifetime Lifetime Lifetime Opportunity Fidelity Puritan Return Worldwide
Sharing 20 Fund 30 Fund 40 Fund 50 Fund 60 Fund Fund Contrafund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS
TO NET
ASSETS
ATTRIBUTED
TO
Interest
and
dividends $ 429,619 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Net
appreci-
ation in
fair value
of invest-
ments 2,734,272 11,050 11,880 12,662 4,772 5,037 2,548,292 1,806,964 587,665 534,482 62,113
Loan
repayments 2,280 2,946 2,721 423 29 24 225,146 164,774 104,998 99,146 11,205
Contributions:
Employer 121,069 14,227 8,270 9,609 2,678 3,281 504,837 401,492 246,125 228,575 35,453
Participant 10,491 49,914 34,021 32,385 10,777 14,534 1,444,805 1,229,551 772,050 662,103 143,909
Rollover - 6,459 3,793 6,512 - 1,227 116,134 118,423 106,548 14,805 23,256
----------- --------- --------- --------- -------- -------- ----------- ----------- ----------- ----------- --------
Total
additions 3,297,731 84,596 60,685 61,591 18,256 24,103 4,839,214 3,721,204 1,817,386 1,539,111 275,936
----------- --------- --------- --------- -------- -------- ----------- ----------- ----------- ----------- --------
DEDUCTIONS FROM
NET ASSETS
ATTRIBUTED TO
Benefit
payments (1,200,372) (4,946) (3,849) (3,593) (8,431) (191) (1,078,654) (786,962) (370,651) (513,944) (23,875)
Forfeitures (468) (561) (1,489) (476) - - (24,407) (22,999) (12,735) (13,795) (919)
Other
expenses (85,978) (89) (30) (113) - (61) (6,849) (4,306) (3,318) (3,088) (342)
Net
participant
loans issued (2,033) (3,688) (2,087) (2,511) (107) (725) (394,691) (232,787) (189,996) (180,817) (13,619)
----------- --------- --------- --------- -------- -------- ----------- ----------- ----------- ----------- --------
Total
deductions (1,288,851) (9,284) (7,455) (6,693) (8,538) (977) (1,504,601) (1,047,054) (576,700) (711,644) (38,755)
----------- --------- --------- --------- -------- -------- ----------- ----------- ----------- ----------- --------
Interfund
transfers - 7,123 14,081 12,878 20,366 3,871 (272,896) (42,970) (94,190) (132,168) 275,310
----------- --------- --------- --------- -------- -------- ----------- ----------- ----------- ----------- --------
Net increase
in net assets 2,008,880 82,435 67,311 67,776 30,084 26,997 3,061,717 2,631,180 1,146,496 695,299 512,491
NET ASSETS
AVAILABLE
FOR BENEFITS
Beginning
of year 12,723,803 39,781 52,045 56,931 23,146 23,747 10,268,037 5,168,832 3,166,185 3,818,896 52,287
----------- --------- --------- --------- -------- -------- ----------- ----------- ----------- ----------- --------
End of year $14,732,683 $122,216 $119,356 $124,707 $53,230 $50,744 $13,329,754 $7,800,012 $4,312,681 $4,514,195 $564,778
============ ========= ========= ========= ======== ======== =========== =========== =========== =========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (WITH FUND INFORMATION) (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
PARTICIPANT DIRECTED TOTAL
------------------------------------------------------------------------------------------------------------
TWENTIETH WARBURG SODEXHO CIGNA
Neuberger SSGA Century Pincus MARRIOTT CHARTER
& Berman PBHG Inter- Inter- GUARAN-
Guardian mediate Ultra national SERVICES TEED PARTI- 401(K) TOTAL
Trust Growth Bond Investors Equity COMMON INCOME CIPANT COMMON PARTICIPANT
Fund Fund Fund Fund Fund STOCK FUND LOANS STOCKS OTHER DIRECTED
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADDI-
TIONS
TO NET
ASSETS
ATTRI-
BUTED
TO
Inter-
est
and
divi-
dends $ - $ - $ - $ - $ - $ - $ 674,106 $ - $ 9,385 $ - $ 683,491 $ 1,113,110
Net ap-
preci-
ation
(depre-
ciation)
in fair
value
of in-
vest-
ments (5,994) 2,795 3,571 1,462,030 (1,251) (8,835) - - 101,576 - 7,138,809 9,873,081
Loan
repay-
ments 6,655 6,055 115 128,494 275 1,626 271,499 (886,633) - - 139,498 141,778
Contri-
butions:
Em-
ploy-
er 17,172 10,985 4,005 384,727 4,835 967 661,597 - (603) 106,214 2,644,446 2,765,515
Parti-
cipant 62,490 53,572 19,846 1,096,863 18,381 10,674 1,811,882 - (22) (82,141) 7,385,594 7,396,085
Roll-
over 485 9,777 674 104,696 771 4,899 107,788 - - - 626,247 626,247
-------- -------- ------- ---------- ------- -------- ----------- ---------- --------- ---------- ----------- -----------
Total
addi-
tions 80,808 83,184 28,211 3,176,810 23,011 9,331 3,526,872 (886,633) 110,336 24,073 18,618,085 21,915,816
-------- -------- ------- ---------- ------- -------- ----------- ---------- --------- ---------- ----------- -----------
DEDUCTIONS
FROM NET
ASSETS
ATTRIBUTED
TO
Benefit
payments (3,951) (1,430) (727) (465,717) (1,170) - (1,425,388) - (100,274) - (4,793,753) (5,994,125)
Forfei-
tures (277) (162) (49) (22,926) (101) - (44,091) - (591) - (145,578) (146,046)
Other
expenses (241) (95) (38) (3,779) (6) (532) (13,547) - (748) - (37,182) (123,160)
Net
partici-
pant
loans
issued (21,220) (4,414) (691) (189,774) (154) (1,783) (534,805) 1,541,103 (7,270) - (240,036) (242,069)
-------- -------- ------- ---------- ------- -------- ----------- ---------- --------- ---------- ----------- -----------
Total
deduc-
tions (25,689) (6,101) (1,505) (682,196) (1,431) (2,315) (2,017,831) 1,541,103 (108,883) - (5,216,549) (6,505,400)
-------- -------- ------- ---------- ------- -------- ----------- ---------- --------- ---------- ----------- -----------
Interfund
transfers 27,615 (3,224) 49,586 39,101 9,910 166,266 721,350 - (802,009) - - -
-------- -------- ------- ---------- ------- -------- ----------- ---------- --------- ---------- ----------- -----------
Net in-
crease
(de-
crease)
in net
assets 82,734 73,859 76,292 2,533,715 31,490 173,282 2,230,391 654,470 (800,556) 24,073 13,401,536 15,410,416
NET ASSETS
AVAILABLE
FOR BENE-
FITS
Begin-
ning
of year 39,757 40,198 22,713 3,620,709 6,195 - 10,542,784 1,723,359 800,556 1,378,515 40,844,673 53,568,476
-------- -------- ------- ---------- ------- -------- ----------- ---------- --------- ---------- ----------- -----------
End of
year $122,491 $114,057 $99,005 $6,154,424 $37,685 $173,282 $12,773,175 $2,377,829 $ - $1,402,588 $54,246,209 $68,978,892
======== ======== ======= ========== ======= ======== =========== ========== ========= ========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
THE SODEXHO SAVINGS PLUS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following description of the Sodexho Savings Plus Plan (the "Plan")
established September 1, 1990 and most recently as amended and restated
on March 1, 1996, provides only general information. Participants
should refer to the Plan agreement for a more complete description of
the Plan's provisions. The amended and restated Plan is intended to
continue to qualify as a profit-sharing plan and trust under Internal
Revenue Code (the "Code") Sections 401(a) and Section 501(a), and the
cash or deferred arrangement part of the Plan is intended to continue
to qualify under Code Section 401(k).
On March 27, 1998, the parent company of Sodexho USA, Sodexho Alliance
S.A., combined its food service businesses in North America with the
food service and facilities management business of Marriott
International, Inc. into a separate public entity named "Sodexho
Marriott Services, Inc." (the "Company").
GENERAL
The Plan is a defined contribution plan covering all full-time
employees of the Company who have one year of service and are age
twenty-one or older. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
CONTRIBUTIONS
401(K)
Each year participants may elect to contribute up to 16% of pretax
annual compensation as defined in the Plan in multiples of one
percentage subject to Internal Revenue Service limitations.
The Company makes, at its discretion, matching contributions in an
amount equal to 50% of a participant's elective contributions, but not
to exceed 2% of the participant's eligible compensation subject to
certain Internal Revenue Service limitations. The participant's must;
(a) have made elective contributions during the year, (b) worked at
least 1,000 hours during the year, and (c) be employed on the last day
of the Plan year.
PROFIT SHARING
Prior to March 1, 1996, Company profit sharing contributions to the
Plan were determined and invested at the discretion of the Board of
Directors for each Plan year.
Effective March 1, 1996, the profit sharing contribution was
discontinued except that certain employees are still be eligible for a
contribution of 2% of eligible Plan compensation, subject to the
Company's discretion.
6
<PAGE>
THE SODEXHO SAVINGS PLUS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
PARTICIPANT ACCOUNTS
401(K)
Each participant's account is credited with the participant's
contribution and allocations of (a) the Company's matching
contribution, (b) any increases or decreases in the value of the Plan's
investments, (c) expenses and, (d) increases or decreases related to
participant loan activity, if any. Forfeitures are used to reduce
future employer contributions. The benefit to which a participant is
entitled is that vested benefit that can be provided from the
participant's account.
PROFIT SHARING
Each participant's account is credited with an allocation of (a) the
Company's contribution, (b) any increases or decreases in the value of
the Plan's investments and (c) forfeitures of terminated participants'
nonvested accounts. Investment income or losses are allocated to
participants' accounts in proportion to each participant's percentage
interest in the entire account fund. Forfeitures are reallocated to
participant accounts. The benefit to which a participant is entitled is
the vested benefit that can be provided from the participant's account.
VESTING
Participants are immediately vested in any balances related to amounts
transferred in from other terminated employee retirement plans plus
actual earnings thereon. Vesting in the remainder of their account is
based on retirement or years of continuous service in accordance with
the following schedule:
PERCENTAGE
VESTED
Fewer than 3 years 0 %
3 years, but fewer than 4 years 60 %
4 years, but fewer than 5 years 80 %
5 or more years 100 %
INVESTMENT OPTIONS
401(K)
Assets are primarily invested in products sold by CG Life, an ultimate
wholly-owned subsidiary of Connecticut General Life Insurance Company
(CIGNA). Upon enrollment in the Plan, a participant may direct employee
contributions in 10 percent increments in the following investment
options:
CIGNA Lifetime Funds - funds invest in units of separate accounts that
invest in shares of registered investment companies. Each of the
Lifetime Funds represents a balanced portfolio of bonds, stocks, and
cash-equivalent instruments depending on progressive age groups, time
horizons, and investment risk tolerance. The CIGNA Lifetime Funds
sponsored by the Plan are as follows:
Lifetime - 20 Lifetime - 50
Lifetime - 30 Lifetime - 60
Lifetime - 40
7
<PAGE>
THE SODEXHO SAVINGS PLUS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Fidelity Advisor Growth Opportunity Fund - funds are invested in units
of the CIGNA Fidelity Advisor Growth Opportunity account which in turn
invests in the Fidelity Advisor Growth Opportunity Fund.
Fidelity Contrafund - funds are invested in units of the CIGNA Fidelity
Contrafund account which in turn invests in the Fidelity Contrafund.
Fidelity Puritan Fund - funds are invested in units of the CIGNA
Fidelity Puritan account which in turn invests in the Fidelity Puritan
Fund.
Invesco Total Return Fund - funds are invested in units of the CIGNA
Invesco Total Return Account, which in turn invests in shares of the
Invesco Total Return Fund.
Janus Worldwide Fund - funds are invested in units of the CIGNA Janus
Worldwide Fund which in turn invests in the Janus Worldwide Fund.
Neuberger & Berman Guardian Trust Fund - funds are invested in units of
the CIGNA Neuberger & Berman Guardian Trust Fund which in turn invests
in the Neuberger & Berman Guardian Trust Fund.
PBHG Growth Fund - funds are invested in units of the CIGNA PBHG Growth
Fund which in turn invests in the PBHG Growth Fund.
SSGA Intermediate Bond Fund - funds are invested in units of the CIGNA
SSGA Intermediate Bond Fund which in turn invests in the SSGA
Intermediate Bond Fund.
Twentieth Century Ultra Investors Fund - funds are invested in units of
the CIGNA Twentieth Century Ultra Investors Account which in turn
invests in shares of the Twentieth Century Ultra Investors Fund.
Warburg Pincus International Equity Fund - funds are invested in units
of the CIGNA Warburg Pincus International Equity Fund which in turn
invests in the Warburg Pincus International Equity Fund.
CIGNA Charter Guaranteed Income Fund - funds are invested in the CIGNA
Charter Guaranteed Income Fund which provides a guaranteed rate of
return which is reset annually (See Note 3).
Effective October 1, 1998, participants have the option of directing
their 401(k) investments into Sodexho Marriott Services, Inc. common
stock.
The 401(k) Common Stock option represented former options of a plan
that were previously merged into the Plan. Balances were transferred to
the other options during 1998.
PROFIT SHARING
The profit sharing portion of the Plan is invested at the discretion of
the investment advisor as appointed by an investment committee.
Investments include: U.S. Government and agency obligations, corporate
bonds, common stock and convertible issues, and bank pooled funds.
State Street Bank and Trust Company ("SSBT") is the trustee for the
profit sharing portion of the Plan.
8
<PAGE>
THE SODEXHO SAVINGS PLUS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
PARTICIPANT LOANS
Participants may borrow from their 401(k) fund accounts a minimum of
$1,000 up to a maximum equal to the lesser of $50,000 or 50% of their
vested interest in their account. Loan terms can vary but cannot exceed
5 years unless the loan is being applied toward the purchase of a
principal residence. The loans are evidenced by a note, are secured by
the participant's vested interest in their account and bear interest at
a rate commensurate with local prevailing rates as determined by the
Plan administrator. Principal and interest are paid ratably over a
period not less frequently than quarterly through payroll deductions.
PAYMENT OF BENEFITS
On termination of service due to death, disability, retirement or other
reasons, a participant will be paid in a lump-sum amount equal to the
value of the participant's vested interest. In certain specified
circumstances, a participant may elect to receive an annuity.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual
basis of accounting.
USE OF ESTIMATES
The preparation of financial statements requires management to make
certain estimates regarding the amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Bank pooled funds and
general/pooled separate accounts are stated at net asset value per unit
as reported by the bank or insurance company. The Company 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.
EXPENSES
All expenses incurred in the administration of the Plan are charged to
and paid by the Plan, except for the audit fee which is charged to and
paid by the Company.
3. DEPOSITS WITH INSURANCE COMPANY
The Plan participates in contracts with CG Life investments via the
CIGNA Charter Guaranteed Income Fund. CG Life commingles the assets of
this investment with other assets. For the Plan's investment in the
CIGNA Charter Guaranteed Income Fund, the Plan is credited with
interest at the rate specified in the contract which was 5.9% at
December 31, 1998 and 1997. The CIGNA Charter Guaranteed Income Fund is
included in the financial statements at fair value which, principally
because of the periodic rate reset process, approximates contract
value.
9
<PAGE>
THE SODEXHO SAVINGS PLUS PLAN
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
4. INVESTMENT INCOME BY INVESTMENT CLASS
The profit sharing investments (including gains and losses on
investments bought and sold during the year) appreciated in value by
approximately $2,734,272 during the year ended December 31, 1998.
NET APPRECIATION IN THE
FAIR VALUE OF INVESTMENTS
U.S. Government and agency obligations $ 84,794
Corporate bonds 67,381
Common stocks and convertible issues 2,582,097
------------
$2,734,272
============
5. TAX STATUS
The IRS has determined and informed the Company by a letter dated
December 23, 1998, that the Plan is qualified and the trust established
under the Plan is tax-exempt, under the appropriate section of the
Code. The Plan administrator and the Plan's tax counsel believe that
the Plan is currently designed and being operated in compliance with
the applicable requirements of the Code. Therefore, they believe that
the Plan was qualified and the related trust was tax-exempt as of the
financial statement date.
6. FORFEITURE ALLOCATION
As of December 31, 1998 and 1997 unallocated forfeitures included in
the Plan were approximately $96,380 and $155,905, respectively.
Subsequent to each year-end the recordkeeper allocated the respective
amount to the applicable participant accounts based on the Plan's
terms.
7. SUBSEQUENT EVENTS
On January 1, 1999, the Plan was frozen and all participants were made
participants in the Sodexho Marriott Services, Inc. 401(k) Employees
Retirement Savings Plan and Trust.
On April 9, 1999, the Plan was merged into the Sodexho Marriott
Services, Inc. 401(k) Employees Retirement Savings Plan and Trust.
10
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
ITEM 27A FORM 5500 - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES
DECEMBER 31, 1998 SUPPLEMENTAL SCHEDULE I
- -------------------------------------------------------------------------------------------------------------------------
SHARES/ CURRENT
DESCRIPTION PRINCIPAL COST VALUE
IDENTITY OF ISSUE
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
<S> <C> <C> <C> <C>
U.S. Treasury Notes 5.875% 2/15/04
DTD 2/15/94 $ 150,000 $ 147,391 $ 158,295
U.S. Treasury Notes 7.25% 8/15/04
DTD 8/15/94 150,000 152,695 168,705
U.S. Treasury Notes 6.875% 5/15/06
DTD 5/15/96 150,000 150,129 169,545
U.S. Treasury Notes 6.625% 5/15/07
DTD 5/15/97 200,000 201,469 224,940
U.S. Treasury Bonds 7.25% 5/15/16
DTD 5/15/86 125,000 126,133 151,638
U.S. Treasury Bonds 6.50% 11/15/26
DTD 11/15/96 125,000 123,809 145,475
Federal Home Loan Mtg. Corp. 6.13% 8/19/99
DTD 8/19/92 100,000 100,266 100,690
Tennessee Valley Authority 6.375% 6/15/05
DTD 6/20/95 125,000 123,428 132,188
Federal Nat'l Mtg. Assn. MTN 6.625% 3/21/06
DTD 3/21/96 200,000 199,494 216,880
Federal Nat'l Mtg. Assn. MTN 6.42% 7/14/08
Callable 2000 125,000 126,797 126,162
Tennessee Valley Authority 6.25% 12/15/17
DTD 12/15/97 200,000 202,472 202,760
Federal Home Loan Mtg. Corp. 6.005% 7/28/28
DTD 7/28/98 300,000 301,107 306,480
--------------- ----------------
1,955,190 2,103,758
--------------- ----------------
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
ITEM 27A FORM 5500 - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES (CONTINUED)
DECEMBER 31, 1998 SUPPLEMENTAL SCHEDULE I
- ----------------------------------------------------------------------------------------------------------------------
SHARES/ CURRENT
DESCRIPTION PRINCIPAL COST VALUE
IDENTITY OF ISSUE
CORPORATE BONDS
<S> <C> <C> <C> <C>
BellSouth Telecommunications, Inc. 6.375% 6/1/28
DTD 6/4/98 $ 250,000 $ 245,942 $ 260,000
US West Communications Inc. 6.625% 9/15/05
DTD 9/15/95 100,000 97,156 107,391
AT&T Corp. 7.50% 6/1/06
DTD 6/1/94 100,000 97,187 112,625
Ohio Power Co. MTN 6.875% 6/1/03
Callable 1998 100,000 100,000 101,062
Baltimore Gas & Electric Co. 6.125% 7/1/03
DTD 7/1/93 100,000 86,828 102,594
Duke Energy Corp. 6.25% 5/1/04
Callable 1998 125,000 124,801 126,406
WMX Technologies Inc. 8.25% 11/15/99
DTD 11/28/94 100,000 99,904 101,969
Pepsico, Inc. 6.25% 9/1/99
DTD 9/1/92 100,000 99,416 100,719
International Business Machines Corp. 6.375% 6/15/00
DTD 6/15/93 100,000 100,098 101,250
Sears Roebuck Accep. Corp. 6.70% 11/15/06
DTD 11/25/96 125,000 124,991 131,406
RJR Nabisco Inc. 7.625% 9/15/03
DTD 9/15/92 100,000 98,100 100,000
General Motors Corp. 7.10% 3/15/06
DTD 3/20/96 100,000 99,186 108,656
Union Pacific Corp. (Callable 1/15/01) 6.125% 1/15/04
DTD 1/25/94 100,000 99,270 99,672
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
ITEM 27A FORM 5500 - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES (CONTINUED)
DECEMBER 31, 1998 SUPPLEMENTAL SCHEDULE I
- -----------------------------------------------------------------------------------------------------------------------
SHARES/ CURRENT
DESCRIPTION PRINCIPAL COST VALUE
IDENTITY OF ISSUE
CORPORATE BONDS - (CONTINUED)
<S> <C> <C> <C> <C>
Keycorp 7.50% 6/15/06
DTD 6/10/96 $ 100,000 $ 99,121 $ 109,828
Chase Manhattan Corp. 6.375% 2/15/08
DTD 2/11/98 200,000 198,894 206,969
Nations Bank Corp. 7.25% 10/15/25
DTD 10/23/95 100,000 97,065 108,656
Heller Financial Inc. 5.625% 3/15/00
DTD 9/20/93 100,000 98,476 99,484
Associates Corp. North America 6.25% 9/15/00
DTD 9/19/95 100,000 101,423 101,297
Ford Motor Cr. Corp. 6.25% 11/8/00
DTD 11/8/95 200,000 200,850 202,969
General Electric Cap Corp. 8.375% 3/1/01 100,000 98,750 106,187
Ford Motor Cr. Corp. 8.2% 2/15/02
DTD 2/24/95 100,000 99,983 107,344
Norwest Financial Inc. 7.00% 1/15/03
DTD 1/24/93 150,000 150,450 151,500
General Motors Accept. Corp. 6.625% 10/15/05
DTD 10/15/95 100,000 99,604 102,375
Hydro Quebec Deb. Ser. 7.375% 2/1/03
DTD 2/3/93 125,000 116,511 132,988
Svenska Handelsbanken NY Sub. 8.35% 7/15/04
DTD 7/9/92 100,000 103,699 111,203
ABN Amro BKN V Chicago Brh. 7.25% 5/31/05
DTD 5/31/95 100,000 101,931 107,078
--------------- ----------------
3,039,636 3,201,628
--------------- ----------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
ITEM 27A FORM 5500 - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES (CONTINUED)
DECEMBER 31, 1998 SUPPLEMENTAL SCHEDULE I
- ----------------------------------------------------------------------------------------------------------------------
SHARES/ CURRENT
PRINCIPAL COST VALUE
IDENTITY OF ISSUE
COMMON STOCK AND CONVERTIBLE ISSUES
<S> <C> <C> <C>
CISCO Systems, Inc. 3,750 $ 197,188 $ 348,047
MediaOne Group, Inc. 3,000 140,190 141,000
Microsoft Corp. 2,200 34,223 305,113
EMC Corp. 2,000 117,120 170,000
Lucent Technologies Inc. 1,900 33,432 208,881
Intel Corp. 1,800 26,738 213,413
Applied Materials Inc. 3,500 146,188 149,406
Dell Computer Corp. 1,600 51,900 117,100
General Electric 3,000 137,730 306,000
Illinois Tool Works Inc. 3,300 135,049 191,400
Air Products & Chemical Inc. 4,800 153,468 192,000
Aptargroup Inc. 6,600 122,494 185,213
Home Depot Inc. 4,400 65,068 269,225
Staples Inc. 7,000 100,150 305,813
WalMart Stores, Inc. 3,000 170,387 244,313
Walt Disney Co. 7,500 116,819 225,000
Pepsico Inc. 3,000 105,191 122,625
Automatic Data Processing, Inc. 2,000 88,890 160,375
Procter & Gamble Co. 2,700 97,250 246,544
Best Foods 4,200 93,933 223,650
Sysco Corp. 4,000 69,890 109,750
Carnival Corp. 4,000 142,240 192,000
Philip Morris Co., Inc. 3,000 132,565 160,500
Bristol Myers Squibb Co. 2,500 159,389 334,531
Elan Plc. ADR 2,000 93,352 139,875
Merck & Co. Inc. 1,700 71,290 250,750
Pfizer, Inc. 2,000 117,765 250,000
Air Touch Communications, Inc. 1,200 67,710 86,925
Johnson & Johnson 1,500 76,605 125,812
Exxon Corp. 2,300 68,061 168,187
Mobil Corp. 3,000 213,673 261,375
Northern Trust Corp. 3,600 143,468 314,325
BankAmerica Corp. 2,000 116,350 120,250
Associates First Capital Corp. 6,000 182,222 254,250
Vodafone Group Plc. ADR 600 18,679 96,675
Alltel Corp. 4,300 139,401 257,194
First Union Corp. 4,500 238,815 273,656
Halliburton Co. 4,500 84,224 133,312
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
ITEM 27A FORM 5500 - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES (CONTINUED)
DECEMBER 31, 1998 SUPPLEMENTAL SCHEDULE I
- ----------------------------------------------------------------------------------------------------------------------
SHARES/ CURRENT
PRINCIPAL COST VALUE
IDENTITY OF ISSUE
COMMON STOCK AND CONVERTIBLE ISSUES - (CONTINUED)
<S> <C> <C> <C>
Wells Fargo & Co. 7,000 $ 176,275 $ 279,562
T. Rowe Price & Assocs. 2,000 67,250 68,500
American International Group Inc 1,800 29,977 173,925
Century Tel Enterprises, Inc. 4,000 166,075 270,000
MCI Worldcom, Inc. 3,000 142,875 215,250
--------------- ---------------
4,851,559 8,861,722
--------------- ---------------
BANK POOLED FUNDS
State Street Daily Bond Market Fund* 9,195 150,000 150,211
State Street Short-Term Investment Fund for
Employee Trusts* 321,691 321,691 321,691
--------------- ---------------
471,691 471,902
--------------- ---------------
TOTAL PROFIT SHARING $ 10,318,076 $ 14,639,010
--------------- ---------------
</TABLE>
* Denotes party-in-interest.
15
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
ITEM 27A FORM 5500 - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES (CONTINUED)
DECEMBER 31, 1998 SUPPLEMENTAL SCHEDULE I
- ----------------------------------------------------------------------------------------------------------------------
SHARES/ CURRENT
PRINCIPAL COST VALUE
IDENTITY OF ISSUE
COMMON STOCK
<S> <C> <C> <C>
Sodexho Marriott Services, Inc.* 6,257 $ 181,710 $ 173,282
------------- -------------
POOLED SEPARATE ACCOUNTS
CIGNA Lifetime 20 Fund* 6,459 109,139 122,216
CIGNA Lifetime 30 Fund* 6,348 104,695 119,356
CIGNA Lifetime 40 Fund* 6,840 107,242 124,707
CIGNA Lifetime 50 Fund* 2,991 46,775 53,230
CIGNA Lifetime 60 Fund* 3,118 45,605 50,744
Fidelity Advisor Growth Opportunity Fund* 171,236 8,779,937 13,329,754
Fidelity Contrafund* 95,816 5,244,834 7,800,012
Fidelity Puritan Fund* 137,195 3,314,690 4,312,681
Invesco Total Return Fund* 114,696 2,909,772 4,514,195
Janus Worldwide Fund* 10,373 507,739 564,778
Neuberger & Berman Guardian Trust Fund* 6,249 122,714 122,491
PBHG Growth Fund* 4,465 108,113 114,057
SSGA Intermediate Bond Fund* 1,146 94,828 99,005
Twentieth Century Ultra Investors Fund* 114,736 4,372,629 6,154,424
Warburg Pincus International
Equity Fund* 1,605 38,685 37,685
------------- -------------
25,907,397 37,519,335
------------- -------------
CIGNA Charter Guaranteed Income Fund* 5.9% annual interest 430,355 12,773,175 12,773,175
------------- -------------
Participant loans* 8.25% annual interest N/A 2,377,829 2,377,829
------------- -------------
TOTAL $ 51,558,187 $ 67,482,631
============= =============
</TABLE>
* Denotes party-in-interest.
16
<PAGE>
<TABLE>
<CAPTION>
THE SODEXHO SAVINGS PLUS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS* (ITEM 27D - FORM 5500)
YEAR ENDED DECEMBER 31, 1998 SUPPLEMENTAL SCHEDULE II
- ------------------------------------------------------------------------------------------------------------------------------------
COST OF
COST OF PROCEEDS ASSETS CURRENT NET GAIN
DESCRIPTION OF ASSET PURCHASES FROM SALES DISPOSED VALUE (LOSS)
<S> <C> <C> <C> <C> <C>
CIGNA Guaranteed Income Fund $ 4,527,363 $ - $ - $ 4,527,363 $ -
CIGNA Guaranteed Income Fund - 2,971,079 2,971,079 2,971,079 -
Fidelity Contrafund 2,226,616 - - 2,226,616 -
Fidelity Contrafund - 1,484,155 1,148,934 1,484,155 335,221
Twentieth Century Ultra Investors Fund 2,006,460 - - 2,006,460 -
Twentieth Century Ultra Investors Fund - 937,801 754,496 937,801 183,305
Fidelity Advisor Growth Opportunity Fund 2,648,814 - - 2,648,814 -
Fidelity Advisor Growth Opportunity Fund - 2,135,494 1,561,862 2,135,494 573,632
Invesco Total Return Fund 1,507,844 - - 1,507,844 -
Invesco Total Return Fund - 1,346,817 1,174,867 1,346,817 171,950
State Street Short-Term Investment
Fund for Employee Trusts 2,703,519 - - 2,703,519 -
State Street Short-Term Investment
Fund for Employee Trusts - 1,327,318 1,327,347 1,327,318 (29)
<FN>
* Transactions or series of transactions in excess of 5 percent of the
current value of the Plan's assets as of December 31, 1997 as defined in
Section 2520.103-6 of the Department of Labor's Rules and Regulations for
Reporting and Disclosure under ERISA.
</FN>
</TABLE>
17
<PAGE>
INDEX TO EXHIBITS
-----------------
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
(23) Consent of Independent Accountants
Exhibits omitted are not required or not applicable.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of the Sodexho Savings Plus Plan of our report dated June
25, 1999 relating to the financial statements of the Sodexho Savings Plus Plan
for the year ended December 31, 1998 included with this Form 11-K.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Washington, D.C.
June 28, 1999
