UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 2004
OR
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 1-14762
--------------------------
THE SERVICEMASTER COMPANY
(Exact name of registrant as specified in its charter)
Delaware 36-3858106
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3250 Lacey Road, Suite 600, Downers Grove, Illinois, 60515-1700
(Address of Principal Executive Offices, Zip Code)
(630) 663-2000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
Common Stock New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
------------------
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 was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes X No
--- ---
The aggregate market value of shares of common stock held by non-affiliates
of the registrant as of June 30, 2004 was $3,499,983,798.
The number of shares of the registrant's common stock outstanding as of
February 25, 2005 was 292,005,365.
DOCUMENTS INCORPORATED BY REFERENCE
Certain parts of the registrant's Annual Report to Shareholders for the
year ended December 31, 2004 are incorporated into Part I and Part II of this
Form 10-K.
Certain parts of the registrant's Definitive Proxy Statement for the 2005
Annual Meeting of Shareholders are incorporated into Part III of this Form 10-K.
TABLE OF CONTENTS
PART I
Item 1. Business.............................................................................. 4
Item 2. Properties............................................................................ 10
Item 3. Legal Proceedings..................................................................... 11
Item 4. Submission of Matters to a Vote of Security Holders................................... 11
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities................................................................. 12
Item 6. Selected Financial Data............................................................... 12
Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations 12
Item 7A. Quantitative and Qualitative Disclosures about Market Risk........................... 13
Item 8. Financial Statements and Supplementary Data........................................... 13
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 13
Item 9A. Controls and Procedures.............................................................. 13
Item 9B. Other Information.................................................................... 13
PART III
Item 10. Directors and Executive Officers of the Registrant.................................... 14
Item 11. Executive Compensation................................................................ 16
Item 12. Security Ownership of Certain Beneficial Owners and Management........................ 16
Item 13. Certain Relationships and Related Transactions........................................ 16
Item 14. Principal Accounting Fees and Services................................................ 16
PART IV
Item 15. Exhibits and Financial Statement Schedules............................................ 17
Signatures...................................................................................... 18
Exhibit Index................................................................................... 22
FORWARD-LOOKING STATEMENTS
This Form 10-K contains or incorporates by reference statements concerning
future results and other matters that may be deemed to be "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The ServiceMaster Company ("ServiceMaster") intends that these
forward-looking statements, which look forward in time and include everything
other than historical information, be subject to the safe harbors created by
that legislation. ServiceMaster notes that these forward-looking statements
involve risks and uncertainties that could affect its results of operations,
financial condition or cash flows. Factors that could cause actual results to
differ materially from those expressed or implied in a forward-looking statement
include the following, among others:
o weather conditions that affect the demand for ServiceMaster's services;
o changes in competition in the markets served by ServiceMaster;
o labor shortages or increases in wage rates;
o unexpected increases in operating costs, such as higher insurance
premiums, self-insurance and healthcare claims costs;
o higher fuel prices;
o changes in the types or mix of service offerings or products;
o increased governmental regulation, including telemarketing;
o general economic conditions in the United States, especially as they
may affect home sales or consumer spending levels; and
o other factors described from time to time in documents filed by
ServiceMaster with the Securities and Exchange Commission.
PART I
ITEM 1. BUSINESS
ServiceMaster is a national service company serving both residential and
commercial customers. ServiceMaster's services include lawn care and landscape
maintenance; termite and pest control; home warranty and home inspection
services; plumbing, drain cleaning, heating, ventilation, air conditioning and
electrical services; and cleaning, disaster restoration and furniture repair. As
of December 31, 2004, ServiceMaster provided these services through a network of
over 5,400 company-owned and franchised locations operating under the following
leading brands: TruGreen ChemLawn, TruGreen LandCare, Terminix, American Home
Shield, AmeriSpec, ARS Service Express, Rescue Rooter, American Mechanical
Services, Merry Maids, ServiceMaster Clean and Furniture Medic. Incorporated in
Delaware in 1991, ServiceMaster is the successor to various entities dating back
to 1947.
ServiceMaster is organized into five principal operating segments:
TruGreen; Terminix; American Home Shield; American Residential Services and
American Mechanical Services; and Other Operations. All ServiceMaster
subsidiaries are wholly owned, except for The Terminix International Company
L.P., in which Allied Bruce-Terminix Companies, Inc. is a Class B limited
partner. The financial information for each operating segment for 2002, 2003 and
2004 contained in the Notes to the Consolidated Financial Statements included in
ServiceMaster's Annual Report to Shareholders for the year ended December 31,
2004 ("Annual Report to Shareholders for 2004") is incorporated by reference in
this Form 10-K.
4
SERVICES
The following table shows the percentage of ServiceMaster's
consolidated revenue from continuing operations derived from each of
ServiceMaster's operating segments in the years indicated:
Segment 2004 2003 2002
TruGreen 38% 38% 37%
Terminix 27% 26% 26%
American Home Shield 13% 13% 12%
American Residential Services and American Mechanical
Services 18% 19% 21%
Other Operations 4% 4% 4%
TruGreen Segment
The TruGreen segment provides lawn care services primarily under the
TruGreen ChemLawn brand name and landscape maintenance services primarily under
the TruGreen LandCare brand name, in each case, to residential and commercial
customers. Revenues derived from the TruGreen segment constituted 38%, 38% and
37% in 2004, 2003 and 2002, respectively, of the revenue from continuing
operations of the consolidated ServiceMaster enterprise. The TruGreen ChemLawn
and TruGreen LandCare businesses are seasonal in nature. Weather conditions,
such as a drought, affect the demand for lawn care and landscape maintenance
services and may result in a decrease in revenues or an increase in costs.
TruGreen ChemLawn. TruGreen ChemLawn is a leading provider of lawn care
services in the United States serving both residential and commercial customers.
As of December 31, 2004, TruGreen ChemLawn provided these services in 46 states
and the District of Columbia through 206 company-owned locations and 51
franchised locations. As of December 31, 2004, TruGreen ChemLawn also provided
lawn care services through a subsidiary in Canada and had entered into licensing
arrangements to provide these services in nine other countries, primarily in the
Middle East. In April 2004, TruGreen ChemLawn acquired the assets of Greenspace
Services Limited from FirstService Corporation. Greenspace Services Limited is
Canada's largest professional lawn care services company.
TruGreen LandCare. TruGreen LandCare is a leading provider of landscape
maintenance services in the United States serving both residential and
commercial customers. As of December 31, 2004, TruGreen LandCare provided these
services in 36 states and the District of Columbia through 104 company-owned
locations and had no international operations.
Terminix Segment
The Terminix segment provides termite and pest control services primarily
under the Terminix brand name to residential and commercial customers. Revenues
derived from the Terminix segment constituted 27%, 26% and 26% in 2004, 2003 and
2002, respectively, of the revenue from continuing operations of the
consolidated ServiceMaster enterprise. The Terminix business is seasonal in
nature. The termite swarm season, which generally occurs in early spring but
varies by region depending on climate, leads to the highest demand for termite
control services and therefore the highest level of revenues. Similarly,
increased pest activity in the warmer months leads to the highest demand for
pest control services and therefore the highest level of revenues.
Terminix is a leading provider of termite and pest control services in the
United States serving both residential and commercial customers. As December 31,
2004, Terminix provided these services in 47 states and the District of Columbia
through 347 company-owned locations and 136 franchised locations. As of December
31, 2004, Terminix also provided termite and pest control services through a
subsidiary in Mexico and had entered into licensing arrangements to provide
these services in 29 other countries, primarily in the Caribbean and the Middle
East.
5
American Home Shield Segment
The American Home Shield segment provides home warranty contracts for
systems and appliances primarily under the American Home Shield brand name and
home inspection services primarily under the AmeriSpec brand name, in each case,
to residential customers. Revenues derived from the American Home Shield segment
constituted 13%, 13% and 12% in 2004, 2003 and 2002, respectively, of the
revenue from continuing operations of the consolidated ServiceMaster enterprise.
The American Home Shield and AmeriSpec businesses are seasonal in nature. Sales
volume in the American Home Shield segment depends, in part, on the number of
home resale closings, which historically has been highest in the spring and
summer months. American Home Shield's costs related to service call volume is
highest in the summer months, especially during periods of unseasonably warm
temperatures.
American Home Shield. American Home Shield is a leading provider of home
warranty contracts for systems and appliances in the United States. It provides
residential customers with contracts to repair or replace electrical, plumbing,
central heating and central air conditioning systems, hot water heaters and
appliances that break down due to normal wear and tear and administers those
contracts through independent repair contractors and American Residential
Services. As of December 31, 2004, American Home Shield issued and administered
home warranty contracts in 49 states and the District of Columbia and had no
international operations.
AmeriSpec. AmeriSpec is a leading provider of home inspection services in
the United States serving residential customers. As of December 31, 2004,
AmeriSpec provided these services in 47 states and the District of Columbia
through two company-owned locations and 231 franchised locations, and AmeriSpec
also provided home inspection services through a subsidiary in Canada.
American Residential Services and American Mechanical Services Segment
The American Residential Services and American Mechanical Services segment
provides plumbing, drain cleaning, heating, ventilation, air conditioning and
electrical services primarily under the ARS Service Express, American Mechanical
Services and Rescue Rooter brand names to residential and commercial customers.
Revenues derived from the American Residential Services and American Mechanical
Services segment constituted 18%, 19% and 21% in 2004, 2003 and 2002,
respectively, of the revenue from continuing operations of the consolidated
ServiceMaster enterprise. The American Residential Services and American
Mechanical Services businesses are seasonal in nature, with the greatest
activity occurring in May through August during the peak air conditioning
season.
American Residential Services. American Residential Services, which
includes the businesses of ARS Service Express and Rescue Rooter, is a leading
provider of plumbing, drain cleaning, heating, ventilation, air conditioning and
electrical services in the United States serving residential customers. As of
December 31, 2004, American Residential Services provided these services in 25
states and the District of Columbia through 63 company-owned locations and had
no international operations.
American Mechanical Services. American Mechanical Services is a leading
provider of heating, ventilation, air conditioning and electrical services in
the United States serving commercial customers. As of December 21, 2004,
American Mechanical Services provided these services in 7 states and the
District of Columbia through 20 company-owned locations and had no international
operations.
Other Operations Segment
The Other Operations segment provides residential and commercial disaster
restoration and cleaning services primarily under the ServiceMaster and
ServiceMaster Clean brand names, domestic house cleaning services primarily
under the Merry Maids brand name and on-site furniture repair and restoration
services primarily under the Furniture Medic brand name. The Other Operations
segment also includes ServiceMaster's headquarters functions. Revenues derived
from the Other Operations segment constituted 4%, 4% and 4% in 2004, 2003 and
2002, respectively, of the revenue from continuing operations of the
consolidated ServiceMaster enterprise.
6
ServiceMaster Clean. ServiceMaster Clean is a leading franchisor in the
residential and commercial cleaning field in the United States. As of December
31, 2004, ServiceMaster Clean provided these services in all 50 states and the
District of Columbia through 3,132 franchised locations. As of December 31,
2004, ServiceMaster Clean also provided disaster restoration and cleaning
services through subsidiaries in Canada, Ireland, the United Kingdom and Spain
and had entered into licensing arrangements to provide these services in 19
other countries, primarily in Asia and the Middle East.
Merry Maids. Merry Maids is a leading provider of domestic house cleaning
services in the United States. As of December 31, 2004, these services were
provided in 48 states and the District of Columbia through 62 company-owned
locations and 775 franchised locations. As of December 31, 2004, Merry Maids
also provided domestic house cleaning services through subsidiaries in Canada,
Denmark, Ireland and the United Kingdom and had entered into licensing
arrangements to provide these services in nine other countries, primarily in
Asia.
Furniture Medic. Furniture Medic is a leading provider of on-site furniture
repair and restoration services in the United States serving residential
customers. As of December 31, 2004, Furniture Medic provided these services in
48 states and the District of Columbia through 386 franchised locations. As of
December 31, 2004, Furniture Medic also provided on-site furniture repair and
restoration services through subsidiaries in Canada and the United Kingdom and
had entered into licensing arrangements to provide these services in France.
MARKETING AND DISTRIBUTION
ServiceMaster markets its services primarily through yellow pages
advertisements, telemarketing, television and radio advertising, print
advertisements, direct mail and door-to-door solicitation. Additionally,
American Home Shield markets its home service contracts through participating
real estate brokerage offices in conjunction with the resale of single-family
residences and through financial institutions and insurance agencies.
HEADQUARTER FUNCTIONS
The Business Support Center coordinates administration of payroll,
benefits, risk management, travel and certain procurement services for
ServiceMaster's internal operations. Various administrative support departments
also provide personnel, communications, marketing, government and public
relations, administrative, accounting, financial, tax, human resources,
information technology and legal services. The Business Support Center is
headquartered in Downers Grove, Illinois and has additional personnel located in
Memphis, Tennessee.
PATENTS, TRADEMARKS AND LICENSES
ServiceMaster holds various service marks, trademarks and trade names that
it deems particularly important to the advertising and franchising activities
conducted by each of its operating segments. These marks are registered in the
United States and over 97 other countries and are renewed at each registration
expiration date.
FRANCHISES
Franchises are important to TruGreen ChemLawn, Terminix, ServiceMaster
Clean, Merry Maids, AmeriSpec and Furniture Medic businesses. Total franchise
fees (initial and recurring) represented 2.7% of consolidated revenue in 2004,
and 2.6% of consolidated revenues in both 2003 and 2002, respectively. Related
franchise operating expenses were 1.7%, 1.6% and 1.7% of consolidated operating
expenses in 2004, 2003 and 2002, respectively. Total franchise fee profits
comprised 10.1%, 10.5% and 9.4% of consolidated operating income (without the
impairment charge in 2003) before headquarter overheads in 2004, 2003 and 2002,
respectively. Franchise agreements made in the course of these businesses are
generally for a term of five years. ServiceMaster renews the majority of its
franchise agreements prior to their expiration.
7
COMPETITION
ServiceMaster competes with many other companies in the sale of its
services, franchises and products. The principal methods of competition in
ServiceMaster's businesses include quality of service, name recognition,
pricing, assurance of customer satisfaction and reputation.
Lawn Care Services. Competition in the market for lawn care services is
strong, coming mainly from local, independently owned firms and from homeowners
who care for their own lawns.
Landscape Maintenance Services. Competition in the market for landscape
maintenance services is strong, coming mainly from small, owner-operated
companies operating in a limited geographic market and, to a lesser degree, from
a few large companies operating in multiple markets, and from property owners
who perform their own landscaping services.
Termite and Pest Control Services. Competition in the market for termite
and pest control services is strong, coming mainly from thousands of regional
and local, independently owned firms, from homeowners who treat their own
termite and pest control problems and from Orkin, Inc. which operates on a
national basis.
Home Warranty Contracts for Systems and Appliances. Competition in the
market for home warranty contracts for systems and appliances is strong, coming
mainly from regional providers of home warranties. Several competitors are
initiating expansion efforts into additional states. American Home Shield
competes with these companies for access to real estate brokers, financial
institutions and insurance agents that distribute its home warranty contracts.
Home Inspection Services. Competition in the market for home inspection
services is strong, coming mainly from regional and local, independently owned
firms.
Electrical, Heating, Ventilation and Air Conditioning Services. Competition
in the market for electrical, heating, ventilation and air conditioning services
is strong, coming mainly from local, independently owned firms throughout the
United States and a few national companies.
Plumbing and Drain Cleaning Services. Competition in the market for
plumbing and drain cleaning services is strong, coming mainly from local,
independently owned firms throughout the United States and a few national
companies.
Disaster Restoration and Cleaning Services. Competition in the market for
disaster restoration and cleaning services is strong, coming mainly from local,
independently owned firms and a few national companies.
House Cleaning Services. Competition in the market for house cleaning
services is strong, coming mainly from local, independently owned firms and a
few national companies.
Furniture Repair Services. Competition in the market for furniture repair
services is strong, coming mainly from local, independent contractors.
MAJOR CUSTOMERS
ServiceMaster has no single customer that accounts for more than 10% of its
consolidated operating revenue. Additionally, no operating segment has a single
customer that accounts for more than 10% of its operating revenue. None of
ServiceMaster's operating segments is dependent on a single customer or a few
customers, the loss of which would have a material adverse effect on the
segment.
8
REGULATORY COMPLIANCE
Government Regulations. ServiceMaster's operating segments are subject to
various federal, state and local laws and regulations, compliance with which
increases ServiceMaster's operating costs, limits or restricts the services
provided by ServiceMaster's operating segments or the methods by which
ServiceMaster's operating segments sell those services or conduct their
respective businesses, or subjects ServiceMaster and its operating segments to
the possibility of regulatory actions or proceedings.
These federal and state laws include laws relating to consumer protection,
wage and hour regulations, permit and license requirements, workers' safety
(e.g., the Occupational Safety and Health Act), environmental regulations and
employee benefits (e.g., the Consolidated Omnibus Budget Reconciliation Act of
1985 and the Employee Retirement Income Security Act of 1974). The TruGreen,
Terminix and American Residential Services and American Mechanical Services
segments must also meet the Department of Transportation and Federal Motor
Carrier Safety Administration requirements with respect to their fleets of
vehicles. American Home Shield is regulated by the Department of Insurance in
certain states and the Real Estate Commission in Texas.
Consumer Protection and Telemarketing Matters. ServiceMaster is subject to
numerous federal and state laws and regulations designed to protect consumers,
including laws governing consumer privacy and fraud, the collection and use of
consumer data, telemarketing and other forms of solicitation. Noncompliance with
these laws and regulations can subject ServiceMaster to fines or various forms
of civil or criminal prosecution, any of which could have an adverse effect on
its financial condition, results of operations and cash flows.
The telemarketing rules adopted by the Federal Communications Commission
pursuant to the Federal Telephone Consumer Protection Act and the Federal
Telemarketing Sales Rule issued by the Federal Trade Commission govern
ServiceMaster's telephone sales practices. In addition, many states have adopted
statutes and regulations targeted at direct telephone sales activities. The
implementation of do-not-call lists requires TruGreen, and, to a lesser extent,
ServiceMaster's other operating segments, to seek additional marketing methods
and channels.
Franchise Matters. TruGreen ChemLawn, Terminix, ServiceMaster Clean, Merry
Maids, AmeriSpec and Furniture Medic are subject to various federal and state
laws and regulations governing franchise sales and marketing and franchise trade
practices generally, including applicable rules and regulations of the Federal
Trade Commission. These laws and regulations generally require disclosure of
business information in connection with the sale of franchises. Certain state
regulations also affect the ability of the franchisor to revoke or refuse to
renew a franchise. ServiceMaster seeks to comply with regulatory requirements
and deal with franchisees in good faith. From time to time, ServiceMaster and
one or more franchisees may become involved in a dispute regarding the franchise
relationship, including, among other things, payment of royalties, location of
branches, advertising, purchase of products by franchisees, compliance with
ServiceMaster standards and franchise renewal criteria. There can be no
assurance that compliance problems will not be encountered from time to time or
that material disputes with one or more franchisees will not arise.
Environmental Matters. ServiceMaster's businesses are subject to various
federal, state and local laws and regulations regarding environmental matters.
Terminix, TruGreen ChemLawn and TruGreen LandCare are regulated under many
federal and state environmental laws, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Environmental Pesticide Control Act of
1972, the Federal Insecticide, Fungicide and Rodenticide Act of 1947, the
Resource Conservation and Recovery Act of 1976, the Emergency Planning and
Community Right-to-Know Act of 1986, the Oil Pollution Act of 1990 and the Clean
Water Act of 1977. American Residential Services and American Mechanical
Services are also regulated under many federal and state environmental laws,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the
Resource Conservation and Recovery Act of 1976, the Emergency Planning and
Community Right-to-Know Act of 1986, the Clean Water Act of 1977 and the Clean
Air Act of 1970. ServiceMaster cannot predict the effect on its operations of
possible future environmental legislation or regulations. During 2004, there
were no material capital expenditures for environmental control facilities, and
no such material expenditures are anticipated in 2005.
9
EMPLOYEES
On December 31, 2004, ServiceMaster had a total of approximately 38,000
employees.
AVAILABLE INFORMATION
ServiceMaster maintains a website at http://www.svm.com that includes a
hyperlink to a website maintained by a third-party where ServiceMaster's Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K
and all amendments to those reports are available without charge as soon as
reasonably practicable following the time that they are filed with or furnished
to the Securities and Exchange Commission. A copy of each of ServiceMaster's
Corporate Governance Principles, Audit and Finance Committee Charter,
Compensation and Leadership Development Committee Charter, Governance and
Nominating Committee Charter, Financial Code of Ethics and Code of Conduct is
posted on ServiceMaster's website at http://www.svm.com under "Corporate
Governance" and is available in print to any shareholder who requests it by
writing to the Corporate Secretary at the following address: The ServiceMaster
Company, 3250 Lacey Road, Suite 600, Downers Grove, Illinois 60515.
ITEM 2. PROPERTIES
BUSINESS SUPPORT CENTER
ServiceMaster leases approximately 66,000 square feet of office space to
accommodate personnel from the Business Support Center in Downers Grove,
Illinois. The lease expires at the end of 2012, but ServiceMaster has an option
to terminate the lease as of December 31, 2007 by giving written notice to the
lessor by June 30, 2006. Additionally, ServiceMaster leases warehouse space in
Naperville, Illinois. ServiceMaster also leases office space in Memphis,
Tennessee as described below to accommodate Memphis-based personnel from the
Business Support Center. ServiceMaster believes that these office facilities and
warehouse are suitable and adequate to support the Business Support Center's
current needs in the Chicagoland and Memphis areas.
OPERATING SEGMENTS
The headquarters for TruGreen ChemLawn, TruGreen LandCare, Terminix,
American Residential Services and Rescue Rooter are located in leased premises
at 860 Ridge Lake Boulevard, Memphis, Tennessee. The headquarters for Furniture
Medic, American Home Shield and AmeriSpec are located in leased premises at 889
Ridge Lake Boulevard, Memphis, Tennessee. The headquarters for ServiceMaster
Clean and Merry Maids and a training facility are located in leased premises at
3839 Forest Hill Irene Road, Memphis, Tennessee. The headquarters for American
Mechanical Services are located in leased premises at 8039 Laurel Lakes Court,
Laurel, Maryland. In addition, ServiceMaster leases space for a call center
located at 6399 ShelbyView Drive, Memphis, Tennessee; offices located at 850 and
855 Ridge Lake Boulevard, Memphis, Tennessee; a training facility located at
1650 Shelby Oaks Drive North, Memphis, Tennessee; and a warehouse located at
1575 Two Place, Memphis, Tennessee. ServiceMaster believes that the
headquarters, call center facility, offices, training facilities and warehouse
are suitable and adequate to support the current needs of its operating segments
in the Memphis and Laurel areas.
ServiceMaster's operating companies own and lease a variety of facilities
principally in the United States for branch and service center operations and
for office, storage, call center and data processing space. The following chart
identifies for each operating company the number of owned facilities, the number
of leased facilities and the number of states represented by those owned and
leased facilities. ServiceMaster believes that these facilities, when considered
with the headquarters, call center facility, offices, training facilities and
warehouses described above are suitable and adequate to support the current
needs of its business.
10
Operating Owned Leased No. of
Company Facilities Facilities States
------- ---------- ---------- ------
TruGreen ChemLawn 5 302 42
TruGreen LandCare 1 176 26
Terminix 12 416 42
American Residential Services 3 73 23
American Mechanical Services 1 19 7
American Home Shield 1 8 4
ServiceMaster Clean 0 8 6
Merry Maids 0 62 27
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of conducting its business activities, ServiceMaster
becomes involved in judicial, administrative and regulatory proceedings
involving both private parties and governmental authorities. As of February 25,
2005 these proceedings included general and commercial liability actions and a
small number of environmental proceedings. ServiceMaster does not expect any of
these proceedings to have a material adverse effect on its financial condition,
results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fourth quarter of the fiscal year covered by this Form 10-K, no
matters were submitted to a vote of security holders.
11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
ServiceMaster's common stock is traded on the New York Stock Exchange under
the symbol "SVM." At February 25, 2005, ServiceMaster's common stock was held of
record by approximately 65,000 persons. ServiceMaster estimates that
approximately 44,000 persons held shares of its common stock in the names of
nominees as of that date.
The information contained in ServiceMaster's Annual Report to Shareholders
for 2004 under the headings "Consolidated Statements of Shareholders' Equity"
and "Quarterly Cash Dividends and Price Per Share Data" is incorporated by
reference in this Form 10-K.
In July 2000, ServiceMaster's Board of Directors authorized $350 million
for share repurchases. The following table summarizes ServiceMaster's common
stock share repurchases for the three months ended December 31, 2004 under its
share repurchase authorization. Decisions relating to any future share
repurchases will depend on various factors such as ServiceMaster's commitment to
maintain investment grade credit ratings and other strategic investment
opportunities.
ISSUER PURCHASES OF EQUITY SECURITIES
Total Approximate
Number Dollar Value
of Shares of Shares that
Purchased as May Yet Be
Total Number Average Price Part of Publicly Purchased
of Shares Paid per Announced Under the
Period Purchased Share Plan Plan
- ------------------------------------------------------------------------------------------------------------------------
October 1, 2004 through
October 31, 2004 - $ - - $ 90,000,000
November 1, 2004 through
November 30, 2004 140,100 $ 12.61 140,100 $ 88,000,000
December 1, 2004 through
December 31, 2004 495,400 $ 13.25 495,400 $ 81,000,000
---------------------------------------------------------
Total 635,500 $ 13.11 635,500
---------------------------------------------------------
ITEM 6. SELECTED FINANCIAL DATA
The information contained in ServiceMaster's Annual Report to Shareholders
for 2004 under the heading "Five-Year Financial Summary" in the Financial
Statements section is incorporated by reference in this Form 10-K.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information contained in ServiceMaster's Annual Report to Shareholders
for 2004 under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations" is incorporated by reference in this Form
10-K.
12
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information contained in ServiceMaster's Annual Report to Shareholders
for 2004 under the heading "Quantitative and Qualitative Disclosures about
Market Risk" is incorporated by reference in this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Statements of Financial Position as of December 31, 2004
and 2003, the Consolidated Statements of Operations, Consolidated Statements of
Cash Flows and Consolidated Statements of Shareholders' Equity for the years
ended December 31, 2004, 2003 and 2002 and the Notes to the Consolidated
Financial Statements contained in ServiceMaster's Annual Report to Shareholders
for 2004 are incorporated by reference in this Form 10-K. The reports of
Deloitte & Touche LLP dated February 28, 2005 on the Consolidated Financial
Statements and management's assessment of the effectiveness of internal control
over financial reporting contained in ServiceMaster's Annual Report to
Shareholders for 2004 are also incorporated by reference in this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Effectiveness of Disclosure Controls and Procedures. ServiceMaster's
Chairman and Chief Executive Officer, Jonathan P. Ward, and ServiceMaster's
President and Chief Financial Officer, Ernest J. Mrozek, have evaluated
ServiceMaster's disclosure controls and procedures as of the end of the period
covered by this Form 10-K. ServiceMaster's disclosure controls and procedures
include a roll-up of financial and non-financial reporting that is consolidated
in the principal executive office of ServiceMaster in Downers Grove, Illinois.
The reporting process is designed to ensure that information required to be
disclosed by ServiceMaster in the reports that it files with or submits to the
Securities and Exchange Commission is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms. Messrs. Ward and Mrozek have concluded that both
the design and operation of ServiceMaster's disclosure controls and procedures
are effective.
Management's Report on Internal Control over Financial Reporting. The
information contained in ServiceMaster's Annual Report to Shareholders for 2004
under the heading "Management's Report on Internal Control over Financial
Reporting" is incorporated by reference in this Form 10-K.
Changes in Internal Control over Financial Reporting. No change in
ServiceMaster's internal control over financial reporting occurred during the
fourth quarter of 2004 that has materially affected, or is reasonably likely to
materially affect, ServiceMaster's internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
13
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The information contained in ServiceMaster's Definitive Proxy Statement for
the 2005 Annual Meeting of Shareholders under the heading "Item 1 - Election of
Directors" is incorporated by reference in this Form 10-K.
EXECUTIVE OFFICERS OF SERVICEMASTER
The names and ages of the executive officers of ServiceMaster as of
February 25, 2005, together with certain biographical information, are as
follows:
First Became
Name Age Present Positions an Officer
- ---- --- ----------------- ----------
Jonathan P. Ward 50 Chairman and Chief Executive Officer 2001
Ernest J. Mrozek 51 President and Chief Financial Officer 1987
Steven C. Preston 44 Executive Vice President 1997
Steven B. Bono 52 Senior Vice President, Corporate Communications 2001
Albert T. Cantu 43 Group President, American Residential Services, ServiceMaster Clean 1991
and Merry Maids
Scott J. Cromie 48 President and Chief Operating Officer, American Home Shield 1990
Mitchell T. Engel 52 Chief Marketing Officer 2002
James A. Goetz 47 Senior Vice President and Chief Information Officer 2000
Jim L. Kaput 44 Senior Vice President and General Counsel 2000
Mr. Ward is also a director of ServiceMaster. For biographical information
with respect to Mr. Ward, see "Item 1 - Election of Directors" in
ServiceMaster's Definitive Proxy Statement for the 2005 Annual Meeting of
Shareholders.
Ernest J. Mrozek is President and Chief Financial Officer. He served as
President and Chief Operating Officer from April 2002 to January 2004. He served
as President of ServiceMaster Consumer and Commercial Services from November
1998 to April 2002.
Steven C. Preston is Executive Vice President. He served as Executive Vice
President and Chief Financial Officer from July 1998 to January 2004.
Steven B. Bono has served as Senior Vice President, Corporate
Communications since July 2001. He was on sabbatical from May 2000 to July 2001.
Mr. Bono served as Vice President, Communications Strategy of Jack Morton
Worldwide in Chicago, Illinois from September 1997 to May 2000.
Albert T. Cantu is Group President, American Residential Services,
ServiceMaster Clean and Merry Maids. He served as President and Chief Operating
Officer, Terminix from January 1999 to January 2005.
14
Scott J. Cromie has served as President and Chief Operating Officer,
American Home Shield since October 1996.
Mitchell T. Engel is Chief Marketing Officer. He served as Principal of
Engel Marketing Services from April 1998 to April 2002.
James A. Goetz is Senior Vice President and Chief Information Officer. He
served as Chief Information Officer of The ServiceMaster Home Service Center
L.L.C. from September 2000 to January 2002. From January 1999 to August 2000, he
was Director of Internet Services at IBM Global Services.
Jim L. Kaput is Senior Vice President and General Counsel of ServiceMaster.
From June 1994 until he joined ServiceMaster in April 2000, Mr. Kaput was a
partner at the law firm of Sidley & Austin in Chicago, Illinois.
FINANCIAL CODE OF ETHICS
ServiceMaster has a Financial Code of Ethics which applies to
ServiceMaster's Chief Executive Officer, Chief Financial Officer, Controller,
Treasurer, Business Unit Chief Financial Officers or persons performing similar
functions and other designated officers and employees. A copy of the Financial
Code of Ethics is posted on ServiceMaster's website at http://www.svm.com under
"Corporate Governance" and is available in print, at no charge, to any person
who requests it by writing to the Corporate Secretary at the following address:
The ServiceMaster Company, 3250 Lacey Road, Suite 600, Downers Grove, Illinois
60515.
AUDIT AND FINANCE COMMITTEE FINANCIAL EXPERT
The information contained in ServiceMaster's Definitive Proxy Statement for
the 2005 Annual Meeting of Shareholders under the heading "Board and Committees
of the Board" is incorporated by reference in this Form 10-K.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The information contained in ServiceMaster's Definitive Proxy Statement for
the 2005 Annual Meeting of Shareholders under the heading "Section 16(a)
Beneficial Ownership Reporting Compliance" is incorporated by reference in this
Form 10-K.
15
ITEM 11. EXECUTIVE COMPENSATION
The information contained in ServiceMaster's Definitive Proxy Statement for
the 2005 Annual Meeting of Shareholders under the headings "Compensation of
Directors," "Executive Officer Compensation" and "Agreements with Officers and
Directors" is incorporated by reference in this Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained in ServiceMaster's Definitive Proxy Statement for
the 2005 Annual Meeting of Shareholders under the headings "Ownership of Our
Common Stock" and "Equity Compensation Plan Information" is incorporated by
reference in this Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in ServiceMaster's Definitive Proxy Statement for
the 2005 Annual Meeting of Shareholders under the heading "Certain Transactions
and Relationships" is incorporated by reference in this Form 10-K.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information contained in ServiceMaster's Definitive Proxy Statement for
the 2005 Annual Meeting of Shareholders under the heading "Item 3 - Ratification
of Selection of Independent Auditors" is incorporated by reference in this Form
10-K.
16
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements, Schedules and Exhibits.
1. Financial Statements
The documents shown below are contained in ServiceMaster's Annual
Report to Shareholders for 2004 and are incorporated by reference in
Part II, Item 8 of this Form 10-K:
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for the three years
ended December 31, 2004, 2003 and 2002
Consolidated Statements of Financial Position as of December
31, 2004 and 2003
Consolidated Statements of Cash Flows for the three years
ended December 31, 2004, 2003 and 2002
Consolidated Statements of Shareholders' Equity for the three
years ended December 31, 2004, 2003 and 2002
Notes to the Consolidated Financial Statements
2. Financial Statements Schedules
The following financial statement schedule is required to be filed by
Part II, Item 8 of Form 10-K and by Part IV, Item 15(d) of Form 10-K:
Report of Independent Registered Public Accounting Firm
Schedule II--Valuation and Qualifying Accounts
3. Exhibits
The exhibits filed with this report are listed on pages 22-25 (the
"Exhibits Index"). Entries marked by an asterisk next to the exhibit's
number identify management contracts or compensatory plans, contracts
or arrangements in which a director or any of ServiceMaster's
executive officers to be identified in the summary compensation table
included in ServiceMaster's Definitive Proxy Statement for the 2005
Annual Meeting of Shareholders participates or compensatory plans,
contracts or arrangements adopted without approval of security holders
pursuant to which ServiceMaster may award equity and in which any
ServiceMaster employee currently participates.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THE SERVICEMASTER COMPANY
Date: March 4, 2005 By /s/ JONATHAN P. WARD
--------------------
Jonathan P. Ward
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ JONATHAN P. WARD Chairman and Chief Executive March 4, 2005
- ---------------------- Officer and Director (Principal
Jonathan P. Ward Executive Officer)
/s/ ERNEST J. MROZEK President and March 4, 2005
- ----------------------------- Chief Financial Officer (Principal
Ernest J. Mrozek Financial Officer and Principal
Accounting Officer)
/s/ PAUL W. BEREZNY Director February 23, 2005
- ------------------------------
Paul W. Berezny, Jr.
__________________________ Director
John L. Carl
/s/ LOUIS J. GIULIANO Director February 23, 2005
- ------------------------------
Louis J. Giuliano
/s/ BRIAN GRIFFITHS Director February 23, 2005
- ------------------------------
Brian Griffiths
/s/ SIDNEY E. HARRIS Director February 23, 2005
- ---------------------------
Sidney E. Harris
/s/ ROBERTO R. HERENCIA Director February 23, 2005
- ---------------------------
Roberto R. Herencia
18
/s/ BETTY JANE HESS Director February 23, 2005
- ------------------------------
Betty Jane Hess
/s/ EILEEN A. KAMERICK Director February 23, 2005
- ---------------------------
Eileen A. Kamerick
/s/ JAMES D. MCLENNAN Director February 23, 2005
- ----------------------
James D. McLennan
/s/ COLEMAN H. PETERSON Director February 23, 2005
- ---------------------------
Coleman H. Peterson
/s/ DALLEN W. PETERSON Director February 23, 2005
- ---------------------------
Dallen W. Peterson
_________________________ Director
David K. Wessner
19
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
The ServiceMaster Company
Downers Grove, IL
We have audited the consolidated financial statements of The ServiceMaster
Company and subsidiaries (the "Company") as of December 31, 2004 and 2003, and
for each of the three years in the period ended December 31, 2004, management's
assessment of the effectiveness of the Company's internal control over financial
reporting as of December 31, 2004, and have issued our reports thereon dated
February 28, 2005; such consolidated financial statements and reports are
included in your 2004 Annual Report to Shareholders and are incorporated herein
by reference. Our audits also included the consolidated financial statement
schedule of the Company listed in Item 15. This consolidated financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/ DELOITTE & TOUCHE LLP
Chicago, IL
February 28, 2005
20
SCHEDULE II
THE SERVICEMASTER COMPANY
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Additions
Balance at Charged to
Beginning of Costs and Balance at
Period Expenses Deductions (1) End of Period
----------- -------------- -------------- --------------
AS OF AND FOR THE YEAR ENDING DECEMBER 31, 2004
Continuing Operations -
Allowance for doubtful accounts
Accounts receivable $23,071 $ 43,929 $ 44,030 $ 22,970
Notes receivable 3,149 557 1,493 2,213
Reserves related to strategic actions in the
fourth quarter of 2001 (2) 10,786 (2,319) 1,672 6,795
Remaining liabilities from discontinued operations
LandCare Construction 7,152 2,021 4,681 4,492
LandCare utility line clearing business 9,011 1,283 3,678 6,616
Certified Systems, Inc. 11,024 (303) 2,302 8,419
Management Services 283 479 696 66
International businesses 21,306 (9,151) 1,155 11,000
AS OF AND FOR THE YEAR ENDING DECEMBER 31, 2003
Continuing Operations -
Allowance for doubtful accounts
Accounts receivable $24,344 $ 38,494 $39,767 $23,071
Notes receivable 3,140 1,759 1,750 3,149
Reserves related to strategic actions in the fourth
quarter of 2001 (2) 15,494 (1,300) 3,408 10,786
Remaining liabilities from discontinued operations
LandCare Construction 13,974 - 6,822 7,152
LandCare utility line clearing business (3) 6,393 2,803 185 9,011
Certified Systems, Inc. 13,586 - 2,562 11,024
Management Services 1,569 - 1,286 283
International businesses 31,148 1,000 10,842 21,306
Other 636 - 636 -
AS OF AND FOR THE YEAR ENDING DECEMBER 31, 2002
Continuing Operations -
Allowance for doubtful accounts
Accounts receivable $26,151 $ 40,590 $ 42,397 $ 24,344
Notes receivable 2,084 1,056 - 3,140
Reserves related to strategic actions in the fourth
quarter of 2001 (2) 35,959 (5,600) 14,865 15,494
Remaining liabilities from discontinued operations
LandCare Construction 34,229 2,634 22,889 13,974
Certified Systems, Inc. 23,762 3,500 13,676 13,586
Management Services 7,400 (4,500) 1,331 1,569
International businesses (4) 29,404 21,900 20,156 31,148
Other 6,254 615 6,233 636
(1) Deductions in the allowance for doubtful accounts and notes receivable reflect write-offs of
uncollectible accounts
Deductions for the remaining items reflect cash payments, except
for the items noted in (3) and (4).
(2) Includes accruals for residual value guarentees on leased
properties, severance for former executives and terminated
employees, and transaction and other costs.
(3) The Company sold the assets and related operational obligations of Trees,
Inc, the utility line clearing operations of TruGreen LandCare.
The Company retained certain liabilities and recorded accruals in
connection with the sold operations. The beginning balance
represents the liabilities of the discontinued operations that
existed prior to their disposition. Additions reflect costs
recorded related to exiting the operations.
(4) The liabilities of this business assumed by the buyer of the sold operations
totaled $19.6 million. The Company recorded accruals in connection with the 2002 sold
operations and a cash adjustment to the purchase price of the
2001 disposition. The beginning balance represents the
liabilities of the discontinued operations that existed prior to
their disposition. Additions reflect costs recorded related to
exiting the operations.
21
Exhibits Index
Exhibit No. Description of Exhibit
- -------------------------------------------------------------------------------
3(i) The registrant's Amended and Restated Certificate of Incorporation is
incorporated by reference to Exhibit 1 to ServiceMaster Limited
Partnership's Current Report on Form 8-K dated December 23, 1997 (File
No. 1-09378) (the "1997 8-K").
3(ii) The registrant's Bylaws are incorporated by reference to Exhibit 3(ii)
to the registrant's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002 (File No. 1-14762).
4.1 Shareholder Rights Agreement between The ServiceMaster Company and the
Harris Trust and Savings Bank, as adopted on December 12, 1997, is
incorporated by reference to Exhibit 3 to the 1997 8-K.
4.2 First Amendment to Shareholders Rights Agreement between The
ServiceMaster Company and Harris Trust and Savings Bank, is
incorporated by reference to Exhibit 4.1 to the registrant's Current
Report on Form 8-K dated February 24, 2005 (File No. 1-14762).
4.3 Certificate of Designation, Preferences and Rights of Junior
Participating Preferred Stock, Series A, is incorporated by reference
to Exhibit 4 to the 1997 8-K.
4.4 Indenture dated as of August 15, 1997 between The ServiceMaster Company
and the Harris Trust and Savings Bank, as trustee, is incorporated by
reference to Exhibit 4.1 to the registrant's Registration Statement on
Form S-3 (File No. 333-32167) (the "1997 S-3").
4.5 First Supplemental Indenture dated as of August 15, 1997 between The
ServiceMaster Company and the Harris Trust and Savings Bank, as
trustee, is incorporated by reference to Exhibit 4.4 to the
registrant's Annual Report on Form 10-K for the year ended December 31,
1997 (File No. 1-14762) (the "1997 10-K").
4.6 Second Supplemental Indenture dated as of January 1, 1998 between The
ServiceMaster Company and the Harris Trust and Savings Bank, as
trustee, is incorporated by reference to Exhibit 2 to the registrant's
Current Report on Form 8-K dated February 26, 1998 (File No. 1-14762).
4.7 Third Supplemental Indenture dated as of March 2, 1998 between The
ServiceMaster Company and the Harris Trust and Savings Bank, as
trustee, is incorporated by reference to Exhibit 4.3 to the
registrant's Current Report on Form 8-K dated February 27, 1998 (File
No. 1-14762) (the "1998 8-K").
4.8 Fourth Supplemental Indenture dated as of August 10, 1999 between The
ServiceMaster Company and the Harris Trust and Savings Bank, as
trustee, is incorporated by reference to Exhibit 3 to the registrant's
Current Report on Form 8-K dated August 16, 1999 (File No. 1-14762)
(the "1999 8-K").
4.9 Indenture dated as of November 18, 1999 between The ServiceMaster
Company and the Harris Trust and Savings Bank, as trustee, is
incorporated by reference to Exhibit 4.16 to the registrant's
Registration Statement on Form S-3 (File No. 333-91381), filed on
November 19, 1999.
4.10 First Supplemental Indenture dated as of April 4, 2000 between The
ServiceMaster Company and Harris Trust and Savings Bank, as trustee, is
incorporated by reference to Exhibit 4.2 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2000 (File No.
1-14762) (the "2000 10-Q").
4.11 Forms of 6.95% Note due August 14, 2007 and 7.45% Note due August 14,
2027 are incorporated by reference to Exhibit 4.2 to the 1997 S-3.
4.12 Form of 7.10% Note due March 1, 2018 is incorporated by reference to
Exhibit 4.1 to the 1998 8-K.
4.13 Form of 7.25% Note due March 1, 2038 is incorporated by reference to
Exhibit 4.2 to the 1998 8-K.
4.14 Form of 7.875% Note due August 15, 2009 is incorporated by reference
to Exhibit 4 to the 1999 8-K.
22
4.15 Form of 7.875% Note due August 15, 2009 is incorporated by reference to
Exhibit 5 to the 1999 8-K.
4.16 Form of 8.45% Note due April 15, 2005 is incorporated by reference to
Exhibit 4.1 to the 2000 10-Q.
4.17 $500,000,000 Credit Agreement dated as of May 19, 2004 among The
ServiceMaster Company, the lenders, JPMorgan Chase Bank and Bank of
America, N.A. as syndication agents, SunTrust Bank, as administrative
agent, and U.S. Bank and Wachovia Bank, N.A. as documentation agents is
incorporated by reference to Exhibit 4.1 to the registrant's Current
Report on Form 8-K dated September 20, 2004 (File No. 1-14762).
10.1* Senior Executive Ownership Election Plan, as approved by the
registrant's Board of Directors on December 10, 1999, is incorporated
by reference to Exhibit 10.5 to the registrant's Annual Report on Form
10-K for the year ended December 31, 1999 (File No. 1-14762).
10.2* 10-Plus Plan, as amended September 3, 1991, is incorporated by
reference to Exhibit 10.21 to the ServiceMaster Limited Partnership
Annual Report on Form 10-K for the year ended December 31, 1991 (File
No. 1-09378) (the "1991 10-K").
10.3* Form of Option Agreement for the 10-Plus Plan, as amended September 3,
1991, is incorporated by reference to Exhibit 10.22 to the 1991 10-K.
10.4* 1994 Non-Employee Directors Share Option Plan is incorporated by
reference to Exhibit 4.2 to the ServiceMaster Limited Partnership
Registration Statement on Form S-8 (File No. 33-55761), filed on
October 4, 1994 (the "1994 S-8").
10.5* Form of Option Agreement for the 1994 Non-Employee Director Share
Option Plan is incorporated by reference to Exhibit 4.3 to the 1994
S-8.
10.6* 1997 Share Option Plan is incorporated by reference to Exhibit 10.28 to
the ServiceMaster Limited Partnership Annual Report on Form 10-K for
the year ended December 31, 1996 (File No. 1-09378) (the "1996 10-K").
10.7* Form of Option Agreement for the 1997 Share Option Plan is incorporated
by reference to Exhibit 10.29 to the 1996 10-K.
10.8* 1998 Equity Incentive Plan is incorporated by reference to
Exhibit 10.15 to the 1997 10-K.
10.9* Form of Option Agreement for the 1998 Equity Incentive Plan
(Non-Qualifying Stock Options) is incorporated by reference to Exhibit
10.20 to the 1997 10-K.
10.10* Form of Option Agreement for the 1998 Equity Incentive Plan (Incentive
Stock Options) is incorporated by reference to Exhibit 10.21 to the
1997 10-K.
10.11* 1998 Non-Employee Directors Discounted Stock Option Plan is
incorporated by reference to Exhibit 10.21 to the 1997 10-K.
10.12* 1998 Long-Term Performance Award Plan is incorporated by reference to
Exhibit 10.22 to the 1997 10-K.
10.13* 2000 Equity Incentive Plan is incorporated by reference to Exhibit 4.4
to the registrant's Registration Statement on Form S-8 (File No.
333-42680), filed on July 31, 2000 (the "2000 S-8").
10.14* Form of Option Agreement for the 2000 Equity Incentive Plan is
incorporated by reference to Exhibit 10.17 to the registrant's Annual
Report on Form 10-K for the year ended December 31, 2001 (File No.
1-4762) (the "2001 10-K").
23
10.15* Form of Restricted Stock Award Agreement for the 2000 Equity Incentive
Plan is incorporated by reference to Exhibit 10.31 to the 2001 10-K.
10.16* WeServeHomes.com 2000 Stock Option/Stock Issuance Plan is incorporated
by reference to Exhibit 10.21 to the registrant's Annual Report on Form
10-K for the year ended December 31, 2000 (File No. 1-14762) (the "2000
10-K").
10.17* Form of Stock Option Agreement for the WeServeHomes.com 2000 Stock
Option/Stock Issuance Plan is incorporated by reference to Exhibit
10.22 to the 2000 10-K.
10.18* Form of Stock Purchase Agreement for the WeServeHomes.com 2000 Stock
Option/Stock Issuance Plan is incorporated by reference to Exhibit
10.23 to the 2000 10-K.
10.19* 2001 Directors Stock Plan, as amended and restated effective January
24, 2003, is incorporated by reference to Exhibit 10.20 to the
registrant's Annual Report on Form 10-K for the year ended December 31,
2002 (File No. 1-14762) (the "2002 10-K").
10.20* Form of Option Agreement for the 2001 Directors Stock Plan is
incorporated by reference to Exhibit 4.4 to the registrant's
Registration Statement on Form S-8 (File No. 333-65520), filed on July
20, 2001.
10.21* Corporate Performance Plan, formerly known as the 2001 Long-Term
Performance Award Plan, as amended March 16, 2001, is incorporated by
reference to Exhibit 10.2 to the registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 2001 (File No. 1-14762).
10.22* Form of Change in Control Severance Agreement is incorporated by
reference to Exhibit 10.30 to the 2001 10-K.
10.23* ServiceMaster 2003 Equity Incentive Plan is incorporated by reference
to Exhibit 4.6 to the registrant's Registration Statement on Form S-8
(File No. 333-106365), filed on June 23, 2003.
10.24* Form of Stock Option Agreement for the ServiceMaster 2003 Equity
Incentive Plan is incorporated by reference to Exhibit 10.24 to the
registrant's Annual Report on Form 10-K for the year ended December 31,
2003 (File 1-14762) (the "2003 10-K").
10.25* Form of Restricted Stock Award Agreement for the ServiceMaster 2003
Equity Incentive Plan is incorporated by reference to Exhibit 10.25 to
the 2003 10-K.
10.26* Form of Stock Appreciation Right Agreement for the ServiceMaster 2003
Equity Incentive Plan is incorporated by reference to Exhibit 10.26 to
the 2003 10-K.
10.27* 2002 Directors Deferred Fees Plan, effective October 25, 2002, is
incorporated by reference to Exhibit 10.35 to the 2002 10-K.
10.28* ServiceMaster 2004 Employee Stock Purchase Plan is incorporated by
reference to Exhibit 4.5 to the registrant's Registration Statement on
Form S-8 (File No. 333-115972), filed on May 28, 2004.
10.29* ServiceMaster Deferred Compensation Plan, as amended and restated
effective October 24, 2002, is incorporated by reference to Exhibit
10.29 to the 2002 10-K.
10.30* Stock Option Agreement dated as of January 9, 2001 between The
ServiceMaster Company and Jonathan P. Ward is incorporated by reference
to Exhibit 10.20 to the 2000 10-K.
10.31* Stock Option Agreement dated as of February 8, 2002 between The
ServiceMaster Company and Jonathan P. Ward is incorporated by reference
to Exhibit 10.32 to the 2003 10-K.
24
10.32* Restricted Stock Unit Award Agreement dated as of December 18, 2003
between The ServiceMaster Company and Jonathan P. Ward is incorporated
by reference to Exhibit 10.33 to the 2003 10-K.
10.33* Employment Agreement dated as of April 1, 2002 between The
ServiceMaster Company and Mitchell T. Engel is incorporated by
reference to Exhibit 10.25 to the 2002 10-K.
10.34* Employment Agreement dated as of January 1, 2004 between The
ServiceMaster Company and Ernest J. Mrozek is incorporated by reference
to Exhibit 10.38 to the 2003 10-K.
10.35* Employment Agreement dated as of November 1, 2004 between The
ServiceMaster Company and Jonathan P. Ward is incorporated by reference
to Exhibit 10.1 to the registrant's Current Report on Form 8-K dated
November 3, 2004 (File No. 1-14762) (the "2004 8-K").
10.36* Restricted Stock Unit Award Agreement dated as of November 1, 2004
between The ServiceMaster Company and Jonathan P. Ward is incorporated
by reference to Exhibit 10.2 to the 2004 8-K.
13+ Annual Report to Shareholders for the year ended December 31, 2004 (the
"2004 Annual Report") The parts of the 2004 Annual Report which are
expressly incorporated into this report by reference shall be deemed
filed with this report. All other parts of the 2004 Annual Report are
furnished for the information of the Securities and Exchange Commission
and are not filed with this report.
14 Financial Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley
Act of 2002 is incorporated by reference to Exhibit 14 to the
2003 10-K.
21+ Subsidiaries of the registrant.
23+ Consent of Deloitte & Touche LLP.
31.1+ Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
31.2+ Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or
15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.
32.1+ Certification of Chief Executive Officer pursuant to Section 1350 of
Chapter 63 of Title 18 of the United States Code, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2+ Certification of Chief Financial Officer pursuant to Section 1350 of
Chapter 63 of Title 18 of the United States Code, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
- ----------------
* Indicates compensatory plan, contract or arrangement.
+ Filed herewith.
25