UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-Q/A



            X    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
         -------
                 THE SECURITIES EXCHANGE ACT OF 1934

                    For the quarterly period ended March 31, 2002
                                                   --------------

                 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              (IRS Employer Identification No.)
 incorporation or organization)

3250 Lacey Road, Downers Grove, Illinois                     60515-1700
(Address of principal executive offices)                     (Zip Code)

                                  630-663-2000
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No    .
                                      ---  ---
Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock: 301,826,000 shares of common stock on May 7, 2002.

Explanatory Note:
This  amendment  is being  filed to reflect  the  restatement  of the  Company's
unaudited condensed  consolidated  financial statements,  as discussed in Note 2
thereto, and other information related to such restated financial statements.






<PAGE>




                                TABLE OF CONTENTS

                                                                            Page
                                                                             NO.

THE SERVICEMASTER COMPANY (Registrant) -

PART I.  FINANCIAL INFORMATION

Item 1 : Financial Statements

Condensed Consolidated Statements of Income for the three months
 ended March 31, 2002 (Restated) and March 31, 2001 (Restated)                 2

Condensed Consolidated Statements of Financial Position
   as of March 31, 2002 (Restated) and December 31, 2001 (Restated)            4

Condensed Consolidated Statements of Cash Flows for the three months
   ended March 31, 2002 (Restated) and March 31, 2001 (Restated)               5

Notes to Condensed Consolidated Financial Statements (Restated)                6

Item 2: Management Discussion and Analysis of Financial
   Condition and Results of Operations                                        16


PART II.  OTHER INFORMATION


Item 6:  Exhibits and Reports on Form 8-K                                     21

Signature                                                                     22

Exhibit 99.1:  Certification of Chief Executive Officer Pursuant
to Section 1350 of  Chapter 63 of Title 18 of the
United States Code                                                            25

Exhibit 99.2:  Certification of Chief Financial Officer Pursuant
to Section 1350 of Chapter 63 of Title 18 of the
United States Code                                                            26





                                       1
<PAGE>




<TABLE>






                          PART I. FINANCIAL INFORMATION

                            THE SERVICEMASTER COMPANY
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                               Three Months Ended
                                                                    March 31,
                                                               2002          2001
                                                            (Restated 4)  (Restated 4)
                                                            -----------   ---------------
<S>                                                          <C>          <C>
OPERATING REVENUE ........................................   $ 734,263    $ 722,861

OPERATING COSTS AND EXPENSES:
Cost of services rendered and products sold ..............     530,811      530,481
Selling and administrative expenses ......................     161,602      140,769
Goodwill, trade name and other intangible amortization (1)       2,154       17,282
                                                             ---------    ---------
Total operating costs and expenses .......................     694,567      688,532
                                                             ---------    ---------

OPERATING INCOME .........................................      39,696       34,329

NON-OPERATING  EXPENSE (INCOME):
Interest expense .........................................      22,541       34,574
Interest and investment income ...........................      (2,932)      (1,249)
Minority interest and other expense, net .................       1,570       (1,774)
                                                             ---------    ----------

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES ....      18,517        2,778
Provision for income taxes................................       6,659        2,044
                                                             ----------   ----------

INCOME FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY
     ITEMS................................................      11,858          734

Income from discontinued operations, net of income taxes (2)      (217)       5,258
Extraordinary gain, net of income taxes (3)...............           -        6,003
                                                             ----------   ----------
NET INCOME................................................   $  11,641    $  11,995
                                                             ==========   ==========

PER SHARE:
BASIC EARNINGS PER SHARE:
Income from continuing operations before extraordinary items     $0.04         $ -
Discontinued operations, net (2) .........................           -         0.02
Extraordinary gain (3)....................................           -         0.02
                                                             ----------   ----------
                                                                 $0.04        $0.04
                                                             ==========   ==========
SHARES                                                         300,173      297,790

DILUTED EARNINGS PER SHARE:
Income from continuing operations before extraordinary items     $0.04         $ -

Discontinued operations, net (2) .........................           -         0.02
Extraordinary gain (3)....................................           -         0.02
                                                             ----------   ----------
                                                                 $0.04        $0.04
                                                             ==========   ==========
SHARES                                                         307,085      301,731

Dividends per share.......................................       $0.10        $0.10
                                                             ==========   ==========




</TABLE>



                                       2
<PAGE>





(1) The Company adopted Statement of Financial  Accounting  Standards (SFAS) No.
142, "Goodwill and Other Intangible  Assets",  which eliminates the amortization
of goodwill and intangible  assets with indefinite  lives beginning in 2002. Had
the provisions of SFAS 142 been applied to 2001, amortization expense would have
been reduced by $14.8 million ($10.1 million, after-tax).

(2) In the fourth quarter of 2001, the Company's  Board of Directors  approved a
series of actions related to the strategic review of its portfolio of businesses
that commenced earlier in 2001. These actions included the sale in November 2001
of the Company's  Management  Services  business as well as the decision to exit
certain   non-strategic  and  under-performing   businesses  including  TruGreen
LandCareConstruction  and Certified  Systems,  Inc., as well as certain Terminix
operations  in Europe.  During the third  quarter of 2002,  the Company sold its
remaining  European  Terminix  operations.  These  operations  are classified in
"Discontinued operations" for all periods presented.

(3) In the first quarter of 2001, the Company  purchased a portion of its public
debt securities and recognized an extraordinary gain on the early extinguishment
of debt.  The  Company  intends  to adopt  SFAS 145  beginning  in fiscal  2003.
Adoption  of  SFAS  145 in  2003  will  result  in the  reclassification  of the
extraordinary gain into income from continuing operations.

(4) See Note 2 in the Notes to the Condensed  Consolidated  Financial Statements
for the basis of the restatement and the financial statement impact.



          SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



                                       3
<PAGE>




<TABLE>



                            THE SERVICEMASTER COMPANY
       CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

(IN THOUSANDS)                                                                 As of Mar. 31,         As of Dec. 31,
ASSETS                                                                       2002 (Restated 1)       2001 (Restated 1)
                                                                               -----------            -----------
CURRENT ASSETS:
<S>                                                                            <C>                    <C>
Cash and cash equivalents ................................................     $   318,858            $   402,644
Marketable securities ....................................................          68,884                 72,429
Receivables, less allowance of $29,247 and $28,397, respectively .........         340,447                340,935
Inventories ..............................................................          75,980                 68,036
Prepaid expenses, deferred costs and other assets ........................         140,735                 80,738
Deferred taxes and income taxes receivable ...............................         111,599                 90,200
Assets of discontinued operations ........................................          44,088                 64,068
                                                                               -----------            -----------
       Total Current Assets ..............................................       1,100,591              1,119,050
                                                                               -----------            -----------
PROPERTY AND EQUIPMENT:
   At cost ...............................................................         467,467                469,140
   Less: accumulated depreciation ........................................        (274,537)              (272,930)
                                                                               -----------            -----------
     Net property and equipment ..........................................         192,930                196,210
                                                                               -----------            -----------

OTHER  ASSETS:
Goodwill .................................................................       1,907,292              1,904,178
Intangible assets, primarily trade names .................................         260,489                261,136
Notes receivable .........................................................          59,177                 59,204
Long-term securities and other assets ....................................          84,470                 81,467
                                                                               -----------            -----------
       Total Assets ......................................................     $ 3,604,949            $ 3,621,245
                                                                               ===========            ===========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable .........................................................     $    94,984            $    97,251
Accrued liabilities:
   Payroll and related expenses ..........................................          77,323                 83,182
   Self-insured claims and related expenses ..............................          66,260                 63,819
   Other .................................................................         114,897                131,780
Deferred revenues ........................................................         422,139                343,873
Liabilities of discontinued operations ...................................          59,159                 50,449
Current portion of long-term debt ........................................          54,131                 34,944
                                                                               -----------            -----------
       Total Current Liabilities .........................................         888,893                805,298
                                                                               -----------            -----------

LONG-TERM DEBT ...........................................................       1,054,125              1,120,249

LONG-TERM LIABILITIES:
     Deferred taxes ......................................................         233,146                233,000
     Liabilities of discontinued operations ..............................          18,753                 50,600
     Other long-term obligations .........................................         103,021                102,234
                                                                               -----------            -----------
        Total Long-Term Liabilities ......................................         354,920                385,834
                                                                               -----------            -----------

MINORITY INTEREST ........................................................         102,165                102,677

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Common stock $0.01 par value, authorized 1 billion shares; issued
     314,992 and 314,538 shares, respectively ............................           3,150                  3,145
Additional paid-in capital ...............................................       1,046,448              1,039,228
Retained earnings ........................................................         304,342                322,103
Accumulated other comprehensive loss .....................................          (1,003)                (2,496)
Restricted stock .........................................................            (536)                  (581)
Treasury stock ...........................................................        (147,555)              (154,212)
                                                                               -----------            -----------
       Total Shareholders' Equity ........................................       1,204,846              1,207,187
                                                                               -----------            -----------
        Total Liabilities and Shareholders' Equity .......................     $ 3,604,949            $ 3,621,245
                                                                               ===========            ===========

(1) See Note 2 in the Notes to the Condensed  Consolidated  Financial Statements
for the basis of the restatement and the financial statement impact.

</TABLE>

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



                                       4
<PAGE>


<TABLE>


                            THE SERVICEMASTER COMPANY
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)
                                                                                         Three Months Ended
                                                                                               March 31,
                                                                                       2002               2001
                                                                                    (Restated 1)      (Restated 1)
                                                                                    ------------       ----------

<S>                                                                                 <C>                <C>
CASH AND CASH EQUIVALENTS AT JANUARY 1 .......................................      $ 402,644          $  42,669

CASH FLOWS FROM OPERATIONS:
NET INCOME ...................................................................         11,641             11,995
     Adjustments to reconcile net income to net cash flows from operations:
        (Income) loss from discontinued operations ...........................            217             (5,258)
        Extraordinary gain ...................................................             -              (6,003)

        Depreciation expense .................................................         12,205             11,234
        Amortization expense .................................................          2,154             17,282
        Deferred income tax expense ..........................................          8,890              3,699

         Change in working capital, net of acquisitions:
            Receivables ......................................................         (5,835)           (14,519)
            Sale of receivables ..............................................             --             75,500
            Inventories and other current assets .............................        (70,938)           (72,708)
            Accounts payable .................................................         (1,293)           (10,583)
            Deferred revenues ................................................         78,265             71,999
            Accrued liabilities ..............................................        (11,299)           (24,977)
            Tax refund from prior years payments .............................             --             21,000
            Other, net .......................................................          1,830              2,245
                                                                                    ---------          ---------
NET CASH PROVIDED FROM OPERATIONS ............................................         25,837             80,906
                                                                                    ---------          ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Property additions .....................................................         (9,652)            (8,332)
      Sale of equipment and other assets .....................................            790              1,923
      Business acquisitions, net of cash acquired ............................         (4,412)           (13,825)
      Notes receivable, financial investments and securities .................          7,060             (6,292)
                                                                                    ---------          ---------
NET CASH USED FOR INVESTING ACTIVITIES .......................................         (6,214)           (26,526)
                                                                                    ---------          ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Net payments of debt ...................................................        (54,127)           (69,296)
      Purchase of ServiceMaster stock ........................................             --             (1,308)
      Shareholders' dividends ................................................        (29,402)           (29,837)
      Other, net .............................................................          6,354              3,557
                                                                                    ---------          ---------
NET CASH USED FOR FINANCING ACTIVITIES .......................................        (77,175)           (96,884)
                                                                                    ---------          ---------

                                                                                    ---------          ---------
CASH PROVIDED FROM (USED FOR) DISCONTINUED OPERATIONS ........................        (26,234)            17,919
                                                                                    ---------          ---------

CASH DECREASE DURING THE PERIOD ..............................................        (83,786)           (24,585)
                                                                                    ---------          ---------

CASH AND CASH EQUIVALENTS AT MARCH 31 ........................................      $ 318,858          $  18,084
                                                                                    =========          =========

</TABLE>

(1) See Note 2 in the Notes to the Condensed  Consolidated  Financial Statements
for the basis of the restatement and the financial statement impact.

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



                                       5
<PAGE>




                            THE SERVICEMASTER COMPANY
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1: The condensed  consolidated financial statements include the accounts of
ServiceMaster and its subsidiaries,  collectively  referred to as "the Company".
Intercompany transactions and balances have been eliminated in consolidation.

NOTE 2: The condensed  consolidated  financial  statements have been prepared by
the Company in accordance  with  generally  accepted  accounting  principles and
pursuant to the rules and regulations of the Securities and Exchange Commission.
The  Company  suggests  that  the  condensed  quarterly  consolidated  financial
statements be read in conjunction with the consolidated financial statements and
the notes  thereto  included  in the  Company's  most  recent  Annual  Report to
Shareholders and the Annual Report to the Securities and Exchange  Commission on
Form  10-K.  The  condensed   consolidated   financial  statements  reflect  all
adjustments,  which are in the  opinion of  management,  necessary  for the fair
presentation of the financial position, results of operations and cash flows for
the interim  periods.  The results of operations  for any interim period are not
necessarily indicative of the results which might be obtained for a full year.

RESTATEMENT
The Company has  restated its  consolidated  financial  statements  for the year
ended December 31, 2001 as well as the previously reported quarterly results for
2002  and  2001.   Subsequent  to  the  original  issuance  of  these  condensed
consolidated  financial  statements,  management  determined that the historical
accounting  treatment relating to the items below required  revision.  The table
below presents the net income impacts from the restatement.

                                       Three Months    Three Months
                                          Ended           Ended
(In millions, except per share data)  March 31, 2002  March 31, 2001
--------------------------------------------------------------------
Continuing Operations:
AHS deferred acquisition costs                 $  -          $ (4.2)
Trade name license fee                         (1.2)               -
Interim accounting (TruGreen)                 (11.8)          (14.9)
Other, net                                     (0.2)            3.0
Tax adjustment from reincorporation               -            (0.2)
--------------------------------------------------------------------
  Income Impact                             $ (13.2)        $ (16.3)
  Diluted EPS Impact                        $ (0.04)        $ (0.05)

Discontinued Operations:
  Income Impact                              $ (0.2)         $ (1.0)
  Diluted EPS Impact                         $    -          $    -

Cumulative effect of accounting
  change:
  Income Impact                               $ 44.6           $  -
  Diluted EPS Impact                          $ 0.15           $  -

A summary of the significant effects of the restatement is as follows:
<TABLE>

                                                    Three Months Ended                Three Months Ended
                                                      March 31, 2002                    March 31, 2001
                                              -----------------------------------------------------------------
                                               As Previously                      As Previously
(in thousands, except per share data)           Reported (1)    As Restated        Reported (1)    As Restated
--------------------------------------------- --------------- --------------- -- --------------- --------------
<S>                                                 <C>             <C>                <C>            <C>
Operating revenue                                   $733,385        $734,263           $719,591       $722,861

Operating income                                      60,762          39,696             58,197         34,329

Income  from  continuing  operations  before
  income taxes                                        40,298          18,517             28,915          2,778

Income from continuing operations before
  extraordinary  items and cumulative effect
  of accounting change                                25,027          11,858             17,006            734

Discontinued operations, net                            (43)           (217)              6,218          5,258
Extraordinary gain, net                                   -               -               6,003          6,003
Cumulative effect of accounting change, net         (44,577)
===============================================================================================================
Net income                                         $(19,593)         $11,641            $29,227        $11,995
===============================================================================================================

</TABLE>

                                       6
<PAGE>


<TABLE>


Diluted earnings per share:
Income from continuing operations before
  extraordinary  items and cumulative effect
<S>                                                   <C>             <C>                <C>            <C>
  of  accounting change                               $0.08           $0.04              $0.06          $   -

Discontinued operations, net                              -               -               0.02           0.02
Extraordinary gain, net                                   -               -               0.02           0.02
Cumulative effect of accounting change, net           (0.15)
===============================================================================================================
Diluted earnings per share                           $(0.06)          $0.04              $0.10          $0.04
===============================================================================================================

</TABLE>


<TABLE>

                                                          As of                              As of
                                                      March 31, 2002                   December 31, 2001
                                              -----------------------------------------------------------------
                                              As Previously                      As Previously
                                               Reported (1)    As Restated        Reported (1)    As Restated
                                              -----------------------------------------------------------------
<S>                                               <C>             <C>                <C>            <C>
Current assets                                    $1,140,556      $1,100,591         $1,131,824     $1,119,050
Net property, plant, and equipment                   178,198         192,930            180,937        196,210
Other long-term assets                             2,347,974       2,311,428          2,361,978      2,305,985

---------------------------------------------------------------------------------------------------------------
Total assets                                      $3,666,728      $3,604,949         $3,674,739     $3,621,245
===============================================================================================================

Current liabilities                                 $858,067        $888,893           $796,113       $805,298
Long-term debt                                     1,039,394       1,054,125          1,105,518      1,120,249
Long-term liabilities                                432,493         354,920            449,470        385,834
Minority interest                                    102,165         102,165            102,677        102,677

Total shareholders' equity                         1,234,610       1,204,846          1,220,961      1,207,187

---------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity        $3,666,728      $3,604,949         $3,674,739     $3,621,245
===============================================================================================================
</TABLE>

1)   During the third quarter of 2002, the Company sold its Terminix  operations
     in the United  Kingdom.  The financial  results from these  operations have
     been reclassified from "Continuing Operations" to "Discontinued Operations"
     for   all   periods   presented.   Amounts   as   restated   include   this
     reclassification. The amount for 2002 reflects the cumulative effect of the
     change in accounting principle at American Home Shield.

AMERICAN HOME SHIELD DEFERRED ACQUISITION COSTS
In July 2002, the Company changed its method of accounting for deferred customer
acquisition  costs in its  American  Home  Shield  business  from  SFAS No.  60,
"Accounting  and  Reporting  by  Insurance  Enterprises,"  pursuant to which the
Company believed it was appropriate to amortize deferred  acquisition costs over
the expected customer life to FASB Technical Bulletin No. 90-1,  "Accounting for
Separately Priced Extended Warranty and Product Maintenance Contracts," pursuant
to which  deferred  acquisition  costs are amortized  over the initial  contract
life.

The new method of  accounting  reduced  after-tax  earnings  by $.03 per diluted
share in 2002,  but had no  material  impact on cash flow in  current  or future
years. In the second quarter of 2002, the Company retroactively  recorded to the
first  quarter of 2002 a  cumulative  charge of $45  million  ($.15 per  diluted
share) to effect this change.

Following  discussions with the Staff of the Securities and Exchange Commission,
the Company has restated prior years to account for deferred  acquisition  costs
in  accordance  with  FASB  Technical  Bulletin  No.  90-1.  The  effect of this
restatement is to eliminate the cumulative  charge for the accounting change and
reduce full year income from  continuing  operations by $8.5 million or $.03 per
diluted  share in 2001,  and $6.1 million or $.02 per diluted  share in 2000. In
addition, this change results in a reduction of retained earnings of $30 million
at January 1, 2000. This restatement  reduced income from continuing  operations
by $4.2 million for the first quarter of 2001.

TRADE NAME LICENSE FEE
In connection  with the sale of its Management  Services  business in the fourth
quarter of 2001,  the Company  entered into a three-year  licensing  arrangement
with  ARAMARK  Corporation  for the use of the  ServiceMaster  trade name.  This
agreement was valued at $15 million and accordingly, a like amount was allocated
from the purchase price.  The Company intended to recognize this amount over the
three-year  contractual  period,  and as such,  recognized  $2  million  related
thereto in each of the first and second  quarters of 2002. In November 2002, the
Company  announced that it had determined  that it was  appropriate to recognize
the entire $15 million  licensing fee in the fourth  quarter of 2001. The effect
of this correction is to increase full year income from continuing operations by
$9 million and diluted  earnings per share by $.03 in 2001, and to reduce income
from continuing operations by $1.2 million in the first quarter of 2002.


                                       7
<PAGE>


INSURANCE (TRUGREEN)
In January 2002, the Company reported that it had recognized a $9 million pretax
expense in 2001  relating to a revised  estimate of the 2000  insurance  reserve
requirements.  Net income has been  restated  for this item which  results in an
increase to full year  income from  continuing  operations  of $3.7  million (or
$.01) in 2001 and a decrease to income from  continuing  operations  of the same
amount in 2000.  The  remaining  adjustment  results in a decrease  to full year
income from  discontinued  operations of $1.1 million in 2000. This  restatement
impacted the fourth quarter of 2001.

REINCORPORATION TAX
Prior to 1997,  the  Company was in  partnership  form and  therefore  was not a
federal taxpayer. Consequently, the Company did not record deferred tax balances
reflecting  the  differences  between  the book and tax basis of its  assets and
liabilities. When the Company converted to corporate form in 1997, it realized a
significant step-up in the tax basis of its assets,  which was largely reflected
as an increase in the basis of the tax  intangibles and provided for significant
tax deductions over the next 15 years. In accounting for this event in 1997, the
Company recorded the net deferred tax asset associated with differences  between
the book and tax basis of its tangible assets and liabilities.  As it related to
intangible  assets,  the  Company  made a  determination  that the tax  basis of
intangibles  equaled  the  overall  book  balance  of  intangible  assets  on an
enterprise  basis.  Subsequently it was determined that intangible assets needed
to be  considered  at the  individual  business  unit level which  resulted in a
situation where tax basis exceeded book basis in certain units.  This difference
created an  additional  deferred tax asset.  The Company  restated the financial
statements to reflect the deferred tax asset as if it had been recorded in 1997.

This change results in an increase to retained earnings as of January 1, 2000 of
$92.6  million,  and an increase to the full year tax provision  for  continuing
operations of $.8 million in both 2001 and 2000 and an increase to the full year
tax  provision  for  discontinued  operations of $.8 million and $1.2 million in
2001 and 2000, respectively. This restatement also results in an increase to the
tax  provision  relating  to the gain on certain  businesses  sold in the fourth
quarter of 2001 of $45.8 million.  The net impact of these items was to increase
deferred tax assets by $33.4  million and equity by $43.2 million as of December
31, 2001. This  restatement  increased the tax provision in the first quarter of
2001 by $.2 million for continuing  operations and $.3 million for  discontinued
operations.

OTHER, NET
Other items primarily  relate to adjustments in accruals,  timing of revenue and
expense items and other miscellaneous  items. The Company also determined it was
appropriate to expense the costs associated with telephone directory  placements
when the directory is published rather than expensing the cost over the contract
period.  In addition,  certain  operating leases of constructed  properties have
been included in the balance sheet as assets with associated debt. The financial
statements  have been  restated from the amounts  previously  reported for these
items. The restatement related to these items resulted in income from continuing
operations  decreasing  by $.2 million and  increasing  by $3.0  million for the
first  quarter  of  2002  and  2001,  respectively.   Income  from  discontinued
operations  decreased  by $.2 million  and $.7 million for the first  quarter of
2002 and 2001, respectively.

INTERIM ACCOUNTING

TruGreen  ChemLawn  incurs  pre-season  advertising  costs and annual repair and
maintenance  procedures  in the first  quarter.  These  costs are  deferred  and
recognized as expense in proportion to the related  revenues.  Full-year results
are not affected.  The quarterly information for 2002 and 2001 has been restated
to treat certain costs that were previously  deferred,  as current period costs.
There was no impact on  full-year  results for 2002 and 2001 as a result of this
change. The restatement resulted in income from continuing operations decreasing
by $11.8  million  and $14.9  million  for the first  quarter  of 2002 and 2001,
respectively.

NOTE 3: The Company has  identified the most  important  accounting  policies in
order to portray its financial condition and results of operations. These relate
primarily to revenue recognition and the deferral of customer acquisition costs.
The following  revenue  recognition  policies  have not changed since  year-end.
Revenues  from  lawn  care,  non-baiting  termite,  pest  control,   heating/air
conditioning and plumbing  services are recognized as the services are provided.
Revenues from  landscaping  services are  recognized  based upon agreed  monthly
contract   payments  or  when  services  are   performed   for   non-contractual
arrangements.  Revenues from the Company's  commercial  installation  contracts,
primarily  relating to HVAC,  are


                                       8
<PAGE>


recognized  on the  percentage  of  completion  method in the ratio  that  total
incurred  costs  bear to total  estimated  costs.  Fees from home  warranty  and
termite  baiting  contracts  are  recognized  as  revenues  over the life of the
contract  in  proportion  to the direct  costs  (service  or  claim),  which are
expensed  as  incurred.  Franchised  revenues  (which  in  aggregate  represents
approximately three percent of consolidated totals) consist of initial franchise
fees and continuing monthly fees based upon the franchisee  revenue.  Revenue is
recognized when reported from the franchisee and collectibility is assured.

Customer  acquisition costs, which are incremental and direct costs of obtaining
the customer,  relating to several of the  Company's  contracts are deferred and
amortized  over the life of the contract,  in proportion to revenue  recognized.
These costs  include  sales  commissions  and direct  selling costs which can be
shown to have resulted in a successful sale.

TruGreen ChemLawn has significant seasonality to its business. In the winter and
early spring,  this business  sells a series of lawn  applications  to customers
which are  rendered  primarily  in March  through  October.  The Company  incurs
incremental  selling  expenses at the beginning of the year that directly relate
to successful  sales in which the revenues will be recognized in later quarters.
This business also defers, on an interim basis, pre-season advertising costs and
annual  repairs  and  maintenance  procedures  that are  performed  in the first
quarter. These costs are deferred and recognized  approximately in proportion to
the contract revenue over the production season, and are not deferred beyond the
calendar year-end.

As noted  above,  TruGreen's  pre-season  advertising  costs  are  deferred  and
recognized  approximately  in proportion to the contract  revenue over the year.
These costs are not deferred  beyond the calendar  year-end.  Beginning in 2002,
the cost of direct-response advertising at Terminix is capitalized and amortized
over its expected period of future benefits.  This  direct-response  advertising
consists primarily of direct-mail promotions,  for which the cost is capitalized
and amortized over the one-year customer contract life.

The preparation of the financial  statements requires management to make certain
estimates  and  assumptions   required  under  generally   accepted   accounting
principles which may differ  materially from the actual results.  Disclosures in
the 2001 Annual Report  presented the significant  areas that require the use of
management's  estimates and discussed how  management  formed its judgment.  The
areas   discussed   included  the  allowance  for   receivables,   accruals  for
self-insured retention limits related to medical, workers compensation, auto and
general liability  insurance,  the possible outcome of litigation and the useful
lives for depreciation  and  amortization  expense and the valuation of tangible
and  intangible   assets.   There  have  been  no  changes  in  these  areas  or
methodologies in 2002.

NOTE 4: The  Company  carries  insurance  policies on  insurable  risks which it
believes to be appropriate.  The Company  generally has  self-insured  retention
limits and has obtained fully insured layers of coverage above such self-insured
retention  limits.  Accruals  for  self-insurance  losses  are made based on the
Company's claims experience and actuarial  assumptions.  The Company has certain
liabilities with respect to existing or potential  claims,  lawsuits,  and other
proceedings.  The Company accrues for these liabilities when it is probable that
future costs will be incurred and such costs can be reasonably estimated.

The  Company  believes  that  other  legal  proceedings  and  currently  pending
litigation  arising in the ordinary  course of business will not have a material
effect on the consolidated financial statements.

NOTE 5: In June 2001,  the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards  (SFAS) 142,  "Goodwill  and Other
Intangible  Assets".  SFAS 142 requires that after  December 31, 2001,  existing
goodwill  will no longer be  amortized  and  intangible  assets with  indefinite
useful lives will not be amortized until their useful lives are determined to be
no longer indefinite.  In accordance with SFAS 142, the Company discontinued the
amortization  of goodwill  and  indefinite  lived  intangible  assets  effective
January 1, 2002.  Goodwill  and  intangible  assets that are not  amortized  are
subject  to  at  least  an  annual  assessment  for  impairment  by  applying  a
fair-value-based  test. The Company  expects to complete its impairment  testing
during the second quarter of 2002.  Given the Company's past policy of assessing
enterprise-level  goodwill,  which utilized a discounted cash flow  methodology,
the Company does not expect any  impairment  charges upon its  completion of the
impairment  review.  Estimated fair value was determined for each reporting unit
by utilizing  the expected  present value of the future cash flows of the units.
In all instances, the estimated fair value of the reporting units exceeded their
book  values.  In  accordance  with  SFAS

                                       9
<PAGE>


142, the following table provides  summarized  transitional  information for the
periods ended March 31, 2002 and 2001, with the 2001 information presented on an
adjusted basis to reflect the elimination of amortization expense required under
SFAS 142:




                                                  Three Months Ended
                                                       March 31,
                                            --------------------------------
(in thousands, except per share data)            2002              2001
                                            ---------------    -------------

Reported operating income                          $39,696          $34,329
Add back:  Goodwill and trade name
  amortization                                           -           14,829
                                            ---------------    -------------
Operating income as adjusted under
   SFAS 142                                        $39,696          $49,158
                                            ===============    =============

Reported income from continuing
  operations before extraordinary
  gain                                             $11,858             $734
Add back:  Goodwill and trade name
  amortization, net of tax                               -           10,145
                                            ---------------    -------------
Income from continuing operations
  before extraordinary gain as
  adjusted under SFAS 142                           11,858           10,879
Discontinued operations, net of taxes                (217)            5,258
Extraordinary gain, net of taxes                         -            6,003
                                            ---------------    -------------
Net income as adjusted under SFAS 142              $11,641          $22,140
                                            ===============    =============

Reported basic earnings per share from
  continuing operations before
  extraordinary gain                                 $0.04              $ -
Add back:  Goodwill and trade name
  amortization, net of tax                               -             0.03
                                            ---------------    -------------

Basic earnings per share from continuing
  operations before extraordinary gain as
  adjusted under SFAS 142                             0.04             0.04
Discontinued operations, net                             -             0.02
Extraordinary gain, net                                  -             0.02
                                            ---------------    -------------
Basic earnings per share as adjusted
  under SFAS 142                                     $0.04            $0.07
                                            ===============    =============
Reported diluted earnings per share
  from continuing operations before
  extraordinary gain                                 $0.04              $ -
Add back:  Goodwill and trade name
  amortization, net of tax                               -             0.03
                                            ---------------    -------------
Diluted earnings per share from continuing
  operations before extraordinary gain as
  adjusted under SFAS 142                             0.04             0.04
Discontinued operations, net                             -             0.02
Extraordinary gain, net                                  -             0.02
                                            ---------------    -------------
Diluted earnings per share as adjusted
  under SFAS 142                                     $0.04            $0.07
                                             ===============    =============

The following table summarizes goodwill and intangible assets.

(IN THOUSANDS)                                As of              As of
                                            March 31,        December 31,
                                               2002              2001
                                           -------------    ----------------
Goodwill (1)                                 $1,907,292          $1,904,178
Trade names (1)                                 238,550             238,550

Other intangible assets                          75,719              74,197
Accumulated amortization (2)                   (53,780)            (51,611)
                                           -------------    ----------------
Net other intangibles                            21,939              22,586
                                           -------------    ----------------
Total                                        $2,167,781          $2,165,314
                                           =============    ================

(1)  Not subject to amortization.

(2)  Annual  amortization  expense of  approximately $6 - $8 million is expected
     over the next five years.


                                       10
<PAGE>


NOTE 6: In April 2002, the FASB issued SFAS 145,  "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections".  The primary impact to the Company of SFAS 145 is that it rescinds
SFAS 4 which required all material gains and losses from the  extinguishment  of
debt to be classified as  extraordinary  items.  SFAS 145 requires that the more
restrictive  criteria of APB Opinion  No. 30 will be used to  determine  whether
such gains or losses are extraordinary. The Company intends to adopt SFAS 145 in
its fiscal year 2003, as required by SFAS 145.  Adoption of SFAS 145 will result
in the  reclassification  of the  extraordinary  gains/losses  into  income from
continuing  operations  included  in  the  accompanying  Condensed  Consolidated
Statements of Income.

NOTE 7: On October 3, 2001 the Company's Board of Directors approved a series of
strategic  actions which were the culmination of an extensive  portfolio  review
process  that was  initiated  in the  first  quarter  of  2001.  The goal of the
portfolio  review was to  increase  shareholder  value by creating a focused and
aligned  company that  provides the greatest  return and growth  potential.  The
Company  determined  it could  best  achieve  these  goals with a  portfolio  of
businesses which support the business  strategy to become America's Home Service
Company and have  attractive  cash flow and return  characteristics.  As part of
this  determination,  in the  fourth  quarter  of  2001,  the  Company  sold its
Management  Services  business to ARAMARK  Corporation  for  approximately  $800
million.  Also in the fourth quarter of 2001,  the Company's  Board of Directors
approved the exit of non-strategic  and  under-performing  businesses  including
TruGreen LandCare Construction,  Certified Systems Inc. (CSI), and certain other
small operations. The Company sold its TruGreen LandCare Construction operations
to Environmental  Industries,  Inc. (EII) in certain markets and entered into an
agreement   with  EII  to  manage  the  wind-down  of   commercial   landscaping
construction  contracts in the remaining markets. In addition,  the Company sold
all of its  customer  contracts  relating  to the  exit  of CSI  (the  Company's
professional  employer  organization),  to AMS Staff  Leasing,  N.A.,  Inc.  The
Company  also  completed,  in the fourth  quarter  of 2001,  the sale of certain
subsidiaries of its European pest control and property services operations.  The
results of these discontinued  business units have been separated and classified
as Discontinued Operations in the accompanying financial statements.

The  Company  continues  to carry  certain  assets on its  financial  statements
relating  to these  operations.  Management  is actively  selling the  remaining
equipment and collecting the outstanding receivables.  The Company believes that
the remaining  assets are presented at their net realizable  value. In addition,
reserves and accrual  balances  remain on the financial  statements  relating to
these  operations.   Cash  payments  incurred  for  the  wind-down  of  LandCare
construction contracts, lease termination costs, workers compensation and health
claims as well as  professional  service  fees have been made in the first three
months of 2002. The remaining balances are outlined in the table below.

In the  fourth  quarter  of  2001,  the  Company  recorded  a charge  for  asset
impairments  and  other  items  which  included   accruals  for  residual  value
guarantees on leased properties,  severance for former executives and terminated
employees,  and other  costs.  During the second  quarter of 2002,  the  Company
completed the sale of its ownership interest in five assisted living facilities.
These properties were financed through a synthetic lease  arrangement,  whereby,
the Company  guaranteed the residual  value of the  properties.  At year-end,  a
$13.5  million  reserve  was  established  representing  the amount by which the
residual value guarantees  exceeded the value of bids to purchase the facilities
at that time.  The final sales price was  significantly  greater  than these bid
levels  and the  Company  realized a gain of $3.6  million  from the sale on the
assisted living properties.

The table below  summarizes the activity during the three months ended March 31,
2002 for the  remaining  liabilities  from the  discontinued  operation  and the
reserves for items recorded in the fourth quarter of 2001. The Company  believes
that the remaining reserves continue to be adequate and reasonable.



                                       11
<PAGE>


<TABLE>


(IN THOUSANDS)                     Balance at          Cash                            Balance at
                                  December 31,       Payments          Income/          March 31,
                                      2001           or Other         (Expense)           2002
                                 ---------------    -----------       ----------      --------------
Remaining liabilities from
  discontinued operations
<S>                                     <C>             <C>              <C>                <C>
     LandCare Construction              $34,100         $7,300           $(300)             $27,100
     Certified Systems, Inc.             23,800          3,700                -              20,100
     Management Services                  7,400          1,300                -               6,100
     International businesses            19,600          6,400  (1)           -              13,200
     Other                               16,100          4,700                -              11,400
Reserves related to strategic
  actions in the fourth
quarter of 2001                         $36,000           $300              $ -             $35,700

</TABLE>

(1) The  liabilities  of this  business  were  assumed  by the buyer of the sold
operations. No cash payments were required.

NOTE 8: Basic  earnings  per share is computed by dividing  income  available to
common stockholders by the weighted-average number of shares outstanding for the
period.  The weighted  average common shares for the diluted  earnings per share
calculation includes the incremental effect related to outstanding options whose
market price is in excess of the exercise  price.  Shares  potentially  issuable
under convertible securities have not been considered outstanding in the diluted
earnings   per  share   calculations   for  both  periods  as  their  impact  is
anti-dilutive.

The following  table  reconciles  both the numerator and the  denominator of the
basic earnings per share from continuing operations computation to the numerator
and the denominator of the diluted earnings per share from continuing operations
computation.
<TABLE>


(IN THOUSANDS, EXCEPT PER SHARE DATA)                    Three Months                          Three Months
                                                     Ended March 31, 2002                  Ended March 31, 2001
                                               --------------------------------       ------------------------------
CONTINUING OPERATIONS:                          INCOME       SHARES      EPS           INCOME      SHARES     EPS
----------------------                         --------     --------   ------         --------    --------    ----
<S>                                              <C>         <C>        <C>             <C>        <C>         <C>
Basic earnings per share                         $11,858     300,173    $0.04           $734       297,790     $-
                                                                       ======                                 ====
Effect of dilutive securities, net of tax:
    Options                                                    6,912                                 3,941
                                               ----------   ---------                 ----------  ---------
Diluted earnings per share                       $11,858     307,085    $0.04             $734     301,731     $-
                                               ==========   =========  ======         ==========  =========   ====

</TABLE>


NOTE 9: In the Condensed Consolidated Statements of Cash Flows, the caption Cash
and  Cash  Equivalents   includes   investments  in  short-term,   highly-liquid
securities having a maturity of three months or less.  Supplemental  information
relating to the  Condensed  Consolidated  Statements of Cash Flows for the three
months ended March 31, 2002 and 2001 is presented in the following table:

                                               (IN THOUSANDS)
                                                2002        2001
                                           -----------  -----------
CASH PAID OR (RECEIVED) FOR:
Interest expense.........................  $   28,969   $   46,703
Interest and dividend income.............  $   (3,198)  $   (2,157)
Income taxes.............................  $   28,090   $  (19,761)

The decrease in interest  paid in 2002 is  primarily  due to reduced debt levels
reflecting debt  retirements  utilizing the proceeds from the sale of Management
Services.  The increase in interest  income received is also due to the proceeds
received from the Management Services sale as the Company maintained significant
cash levels  throughout the year. The tax payment in 2002 resulted from the gain
on the sale of the Management Services business which compared to the prior year
tax refund of $21 million related to prior year over-payments.

NOTE 10: Total  comprehensive  income was $13.1  million and $.3 million for the
three months ended March 31, 2002 and 2001,  respectively.  Total  comprehensive
income includes primarily net income,  changes in unrealized gains and losses on
marketable securities and translation balances.

NOTE 11: On March 23, 2001, the Company entered into an agreement which provides
for the ongoing  revolving sale of a designated  pool of accounts  receivable of
TruGreen and Terminix. At March 31, 2002,


                                       12
<PAGE>


there  were  no  outstanding  receivables  sold  to  third  parties  under  this
agreement.  However,  the Company may sell its  receivables  in the future which
would provide an alternative funding source.

Under this agreement,  the Company sells, on a revolving  basis,  certain of its
accounts   receivable   to   a   wholly-owned,   bankruptcy-remote   subsidiary,
ServiceMaster  Funding  Company  LLC  which has  entered  into an  agreement  to
transfer,  on a revolving basis, an undivided percentage ownership interest in a
pool of accounts receivable to an unrelated third party purchaser. ServiceMaster
Funding  Company LLC  retains an  undivided  percentage  interest in the pool of
accounts receivable.  Bad debt losses for the entire pool are allocated first to
this retained  interest.  This agreement is a 364-day facility  renewable at the
option of the purchasers.

For the three  months ended March 31, 2002,  there were no  receivables  sold to
Falcon Asset  Securitization  Corporation  under this  agreement.  For the three
months ended March 31, 2001, $127.9 million of net accounts  receivable had been
sold to ServiceMaster Funding Company LLC.  ServiceMaster Funding Company LLC in
turn sold an undivided interest to Falcon Asset Securitization Corporation under
this agreement.  Net cash proceeds of $75.3 million were received in 2001 on the
sale and were used to pay down bank revolving credit debt. As of March 31, 2001,
the amount of the retained interest in the receivables was $52.4 million and was
classified as accounts  receivable.  The above amounts include  receivables from
the sold Management Services segment, which were approximately two thirds of the
receivables  sold.  The retained  interest in the accounts  receivable  sold are
valued  at the  carrying  amount  of the  retained  accounts  receivable  net of
applicable loss reserves, which approximates fair value. Management monitors the
change  in the  outstanding  retained  interest  and  makes  adjustments  to its
carrying  amount based on actual and projected  losses.  Any changes in interest
rates would only have a minimal impact on the value of the residual interest due
to the short-term nature of the receivables.

The Company, as agent for the purchaser,  retains servicing responsibilities for
the sold receivables. The fees received by the Company for these services during
the first  quarter of 2001,  were at fair market  value,  therefore,  no related
assets or  liabilities  have been  recorded.  The loss on sale  arising from the
securitization transactions in the first quarter of 2001 was immaterial.

NOTE 12: In the first quarter of 2001, the Company  repurchased a portion of its
public debt securities and recognized a $6 million after-tax  extraordinary gain
on the early  extinguishment  of debt.  The  Company  intends  to adopt SFAS 145
beginning   in  fiscal   2003.   Adoption   of  SFAS  145  will  result  in  the
reclassification   of  the  extraordinary   gain  into  income  from  continuing
operations.

NOTE 13:  The  business  of the  Company is  conducted  through  five  operating
segments:   TruGreen,   Terminix,   American  Home  Shield,  ARS/AMS  and  Other
Operations.  Due to the Company's sale of its Management  Services business unit
and its exit from other businesses in 2001,  certain operations have become more
significant  for  segment  reporting  purposes.  As a result,  the  Company  has
expanded  its business  segment  reporting  which will allow for better  ongoing
visibility  into the components of the business.  The companies that  previously
were reported in the Home  Maintenance  & Improvement  segment have been further
broken  out into  American  Home  Shield and the  combination  of  ARS/AMS.  The
franchise operations,  ServiceMaster Clean and Merry Maids, formerly in the Home
Maintenance & Improvement segment, are reported in the Other Operations segment.
In  accordance  with  Statement of Financial  Accounting  Standards No. 131, the
Company's  reportable segments are strategic business units that offer different
services. The TruGreen segment provides residential and commercial lawn care and
landscaping  services  through  the  TruGreen  ChemLawn  and  TruGreen  LandCare
companies. As a result of the decision in the fourth quarter of 2001 to exit the
LandCare Construction business,  the results of the construction  operations are
now included in discontinued  operations for all periods.  The Terminix  segment
provides  termite and pest control  services to residential  and commercial U.S.
customers.  The  American  Home  Shield  segment  provides  home  warranties  to
consumers that cover heating, ventilation, air conditioning (HVAC), plumbing and
certain appliances. This segment also includes home inspection services provided
by AmeriSpec.  The American Residential Services,  (ARS) and American Mechanical
Services (AMS) segment  provides HVAC and plumbing  services  provided under the
ARS, AMS and Rescue Rooter brand names.  The Other  Operations  segment includes
the franchise  operations of ServiceMaster  Clean and Merry Maids, which provide
disaster restoration and cleaning services as well as the Company's headquarters
operations  which  provides  various  technology,  marketing,  finance and other
support services to the business units.



                                       13
<PAGE>

Segment  information is presented  below. As discussed in Note 2 in the Notes to
the Condensed  Consolidated  Financial Statements,  the information for 2002 and
2001 has been restated.

SFAS 142, "Goodwill and Other Intangible Assets", eliminates the amortization of
goodwill and  intangible  assets with  indefinite  lives  beginning in 2002. The
table  below also  presents  "Proforma"  information  for 2001 which  eliminates
amortization  expense related to goodwill and intangible  assets with indefinite
lives,  so that these  periods are  presented on a comparable  basis to the 2002
information.

                                       14
<PAGE>


<TABLE>




(IN THOUSANDS)                                                Three Months            Three Months            Three Months
                                                             Ended March 31,         Ended March 31,         Ended March 31,
                                                                  2002                    2001                    2001
                                                                Reported                Reported                Proforma
----------------------------------------------------------------------------------------------------------------------------
Operating Revenue:
<S>                                                             <C>                      <C>
  TruGreen                                                      $229,143                 $229,755
  Terminix                                                       220,273                  196,788
  American Home Shield                                            85,916                   73,162
  ARS/AMS                                                        165,091                  191,172
  Other Operations                                                33,840                   31,984
--------------------------------------------------------------------------------------------------
Total Operating Revenue                                         $734,263                 $722,861
==================================================================================================
</TABLE>
<TABLE>

Operating Income:
<S>                                                               <C>                      <C>                   <C>
  TruGreen                                                        $6,524                   $(458)                $6,137
  Terminix                                                        37,936                   29,925                34,307
  American Home Shield                                             3,355                    1,127                 1,736
  ARS/AMS                                                         (2,886)                   5,269                 7,488
  Other Operations                                                (5,233)                  (1,534)                 (510)
------------------------------------------------------------------------------------------------------------------------
Total Operating Income                                           $39,696                  $34,329               $49,158
========================================================================================================================
</TABLE>
<TABLE>

                                                                 As of                    As of
                                                            March 31, 2002            Dec. 31, 2001
------------------------------------------------------------------------------------------------------------------------
Identifiable Assets:
<S>                                                           <C>                      <C>
  TruGreen                                                    $1,170,483               $1,082,135
  Terminix                                                       835,984                  823,333
  American Home Shield                                           336,969                  323,229
  ARS/AMS                                                        503,240                  519,026
  Other Operations (and discontinued businesses)                 758,273                  873,522
--------------------------------------------------------------------------------------------------
Total Identifiable Assets                                     $3,604,949               $3,621,245
==================================================================================================

</TABLE>



The following table summarizes the previously amortized goodwill and trade names
by segment that, beginning on January 1, 2002 are no longer amortized.

                                        March 31,            December 31,
                                          2002                    2001
                                       ------------         -------------
TruGreen                                   $910,617              $910,573
Terminix                                    708,388               705,608
American Home Shield                         72,085                72,085
ARS/AMS                                     347,967               347,863
Other Operations                            106,785               106,599
                                       ------------         -------------
Total                                    $2,145,842            $2,142,728
                                       ============         =============


                                       15
<PAGE>







      MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                  OF OPERATIONS


RESULTS OF OPERATIONS

FIRST QUARTER 2002 COMPARED TO FIRST QUARTER 2001

CONSOLIDATED REVIEW

The  Company  has  restated  its  financial  statements  for 2001 as well as the
previously  reported  2002  quarterly  results.  See Note 2 of the  Notes to the
Condensed   Consolidated   Financial  Statements  for  the  description  of  the
restatement and the financial statement impact.  This Management  Discussion and
Analysis reflects the impacts of the restatement.

Revenue for the first quarter of 2002 was $734 million,  two percent above 2001,
and first quarter 2002 operating  income was $40 million compared to $34 million
in 2001. The Company  reported income from continuing  operations in 2002 of $12
million and a loss from discontinued  operations of $.2 million.  Net income was
$12  million in both 2002 and 2001 and diluted  earnings  per share were $.04 in
both 2002 and 2001.  The $.04 per diluted share  reported for 2001  consisted of
$.02 income from discontinued  operations and $.02  extraordinary  gain from the
early extinguishment of debt.

Diluted earnings per share from continuing operations were $.04 in 2002 compared
with a break-even  quarter in 2001. As discussed  further in Note 4 of the Notes
to the  Condensed  Consolidated  Financial  Statements,  Statement  of Financial
Accounting  Standards (SFAS) No. 142,  "Goodwill and Other  Intangible  Assets",
requires  that  beginning  in  2002,  goodwill  and  trade  names no  longer  be
amortized.  SFAS 142 does  not  permit  the  restatement  of the 2001  financial
information  to reflect the impact of SFAS 142.  The diluted  earnings per share
equivalent of reduced  amortization  expense under SFAS 142 is $.03 ($15 million
pretax) for the first quarter of 2001.

First quarter  operating  income in 2002 was $40 million compared to $34 million
in 2001. The 2001 figure includes $15 million of  amortization  expense that has
been  eliminated  under SFAS 142.  Operating  margins  after  adjusting  for the
amortization  expense  eliminated  under SFAS 142  decreased  to 5.4  percent of
revenue in 2002 from 6.8  percent in 2001.  The  decrease  in  operating  income
reflects  strong  growth at Terminix  and American  Home Shield  offset by lower
volume in the heating,  ventilation,  and air  conditioning  (HVAC) and plumbing
businesses of ARS and AMS, as well as increased  expenditures  for  Company-wide
initiatives.

Cost of services  rendered and products sold increased  slightly for the quarter
and  decreased  as a  percentage  of revenue  to 72.3  percent in 2002 from 73.4
percent in 2001.  Selling and  administrative  expenses increased 15 percent and
increased  as a  percentage  of  revenue to 22.0  percent  of revenue  from 19.5
percent in 2001. The increase in selling and  administrative  expenses  reflects
increases  in  sales  and  marketing   expenses  and   expenditures  on  certain
enterprise-wide initiatives.

Interest expense decreased from 2001,  primarily due to reduced debt levels as a
portion of the proceeds  received from the sales of the Management  Services and
certain  European pest control  businesses were used to pay down debt.  Minority
interest  and other  expense/income  reflected $3 million more expense than 2001
primarily due to minority  interest  income  related to the  ServiceMaster  Home
Service Center  initiative  that occurred in 2001. In the first quarter of 2001,
the operating losses totaling $4.5 million of ServiceMaster  Home Service Center
had been offset through  minority  interest  income (below the operating  income
line) because of investments in the venture made by Kleiner  Perkins  Caufield &
Byers.  In December  2001,  the Company  acquired the  minority  interest in the
ServiceMaster  Home Service Center held by Kleiner Perkins and  management.  The
operating losses incurred in the first quarter of 2002 from  ServiceMaster  Home
Service  Center have been  included  in the  accompanying  financial  statements
without an offset at minority interest income in the consolidated  statements of
income.

The tax provision in 2002 reflects a lower effective tax rate than 2001 based on
benefits   received   through  the   consolidation   for  tax  purposes  of  the
ServiceMaster  Home Service Center. As a result of the

                                       16
<PAGE>


Company's  acquisition of the minority  interest,  it was able to reorganize the
subsidiary  in  2002  and  utilize  prior  year  net  operating  losses  of this
subsidiary operation.

OTHER DEVELOPMENTS

The Company has  successfully  begun  implementing  Six Sigma,  a methodology to
support continuous improvement of business processes.  Over 2,500 employees have
received  varying  levels of  training  within the  program  with 27 black belts
devoted  full-time  to the program.  The initial wave of projects  will roll out
through June, with another group of black belts beginning  training in May and a
second wave of projects to follow.  By the end of the year, the Company projects
to have a run rate of approximately 100 Six Sigma projects.

In  February,  the  Company  launched a pilot  program  with Home Depot in three
markets  (Orlando,  Memphis  and  Sacramento)  as it  continues  to explore  new
channels  through  which to market home  services.  The pilot  program  services
include lawn care,  landscape  maintenance,  termite and pest control,  plumbing
repair, drain cleaning and fixture installation,  home warranties and carpet and
upholstery cleaning. Early results in this retail setting have been encouraging.
The pilot program is currently scheduled to end on December 31, 2002.

KEY PERFORMANCE INDICATORS

The table  below  presents  selected  metrics  related  to  customer  counts and
customer  retention  for the three most  profitable  businesses  of the Company.
These measures are presented on a rolling,  twelve month basis in order to avoid
seasonal anomalies.

                                                  KEY PERFORMANCE INDICATORS
                                                        As of March 31,

                                                  2002                2001
                                           -----------------    ----------------
TRUGREEN -
   Growth in Full Program Contracts                  0%                   0%
      (AS OF APRIL 19, 2002)
   Customer Retention Rate                        63.2%                62.3%
      (AS OF APRIL 19, 2002)

TERMINIX -
   Growth in Pest Control Customers                 11%                  16%
   Pest Control Customer Retention Rate           77.1%                75.9%

   Growth in Termite Customers                       8%                  20%
   Termite Customer Retention Rate                89.9%                88.4%

AMERICAN HOME SHIELD -
   Growth in Warranty Contracts                     15%                   9%
   Customer Retention Rate                        52.6%                50.5%


SEGMENT REVIEW

SEGMENT  RESULTS FOR 2002  REFLECT THE  ELIMINATION  OF GOODWILL  AND TRADE NAME
AMORTIZATION REQUIRED UNDER SFAS 142. THEREFORE,  FOR COMPARATIVE PURPOSES, 2001
RESULTS  HAVE  BEEN  PRESENTED  ON A  PROFORMA  BASIS AS IF SFAS 142 HAD BEEN IN
EFFECT FOR 2001 THEREBY  EXCLUDING THE AMORTIZATION  EXPENSE AFFECTED BY THE NEW
ACCOUNTING STANDARD. (SEE THE BUSINESS SEGMENT REPORTING IN NOTE 13 IN THE NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS).  MANAGEMENTS DISCUSSION AND
ANALYSIS FOCUSES ON THE 2002 REPORTED AND THE 2001 PROFORMA AMOUNTS.

The TruGreen segment includes lawn care operations  performed under the TruGreen
ChemLawn  brand  name and  landscape  maintenance  services  provided  under the
TruGreen  LandCare  brand name.  This  segment's  results for both 2002 and 2001
exclude the discontinued TruGreen LandCare Construction  business.  The TruGreen
segment reported revenue of $229 million,  slightly below 2001. Operating income
increased to $7 million from $6 million (proforma) in 2001, primarily reflecting
increased production in the


                                       17
<PAGE>


lawn  care  operations,  partially  offset by a  reduced  level of snow  removal
business  in the  landscape  operations.  Revenue  in  the  lawn  care  business
increased two percent over 2001. Although customer count levels in April 2002 do
not reflect growth from 2001 (see table above),  during the first four months of
2002 the business has overcome a four  percent  degradation  in customer  counts
that occurred from early 2001 to late in that year. These  improvements  reflect
new, more focused marketing  strategies and quality of service initiatives which
began during the fall of 2001,  resulting in higher sales of new  customers  and
improving retention of existing customers.  Telemarketing is the primary channel
employed by TruGreen  ChemLawn to sell its  services.  Increasing  telemarketing
restrictions have continued to present a challenge, but management is addressing
this  challenge by improving the quality of the call lists and by employing more
sophisticated segmentation techniques. The Company is also increasing its use of
direct mail marketing, with encouraging results. Operating income margins in the
lawn care  operations  improved,  reflecting the impact of the revenue growth in
the quarter.  Revenue in the landscape maintenance operations declined primarily
reflecting a reduction in snow removal services.  The core maintenance  business
experienced  a slight  increase  in the number of  contracts.  Operating  income
margins in the landscaping  business declined primarily reflecting the decreased
volume of higher  margin snow  removal  business.  This  business is focusing on
various  initiatives to improve its cost structure including more aggressive and
controlled  bidding of plants and materials,  a vehicle reduction  program,  and
labor efficiency programs.

The Terminix  segment,  which  includes  the  domestic  termite and pest control
services,  reported a 12 percent  increase in revenue to $220  million from $197
million in 2001 and  operating  income  growth of 11 percent to $38 million from
$34 million  (proforma)  in 2001.  Revenue  growth was  supported  by new sales,
improved customer  retention in both the termite and pest control business,  and
from the Sears  Termite  & Pest  Control  acquisition  completed  in the  fourth
quarter of 2001. The improved customer retention rates for both pest control and
termite  services  reflect the  benefits of training  and quality  programs  and
increased  customer service  representatives  in the branches.  Operating income
margins declined  slightly from 2001 primarily  reflecting the timing of certain
overhead  expenditures,  partially offset by improved  branch-level margins, the
integration  of  acquisitions,  and  continuing  growth and acceptance of higher
margin termite baiting treatments.

The American Home Shield  segment,  which provides home  warranties to consumers
that cover HVAC,  plumbing and other appliances,  reported a 17 percent increase
in revenue to $86  million  from $73  million in 2001.  The  increase in revenue
reflected  double-digit  growth  in all of its  sales  channels,  with  improved
customer  retention  rates.  The total  number of  customers  surpassed  the one
million mark for the first time in American  Home  Shield's  history.  Operating
income  increased 93 percent to $3 million from $2 million  (proforma)  in 2001.
Operating  margins improved  substantially  reflecting  increased  pricing and a
decrease in the incidence of claims.

The  ARS/AMS  segment  provides  direct  HVAC and  plumbing  services  under the
American  Residential  Services (ARS),  Rescue Rooter,  and American  Mechanical
Services (AMS) (for commercial  accounts)  brand names.  Revenue for the quarter
totaled $165  million in 2002, a decrease of 14% from $191 million in 2001.  The
segment reported an operating loss of $3 million in 2002 compared with operating
income of $7 million (pro forma) in 2001.  These  operations  experienced  lower
construction  activity in both the residential and commercial  sectors. A softer
economic  environment combined with mild weather led to lower demand for heating
and plumbing repairs and replacement service. With new leadership in place, this
business continues to focus on cost containment  initiatives and is implementing
significant  changes to its sales and marketing  programs.  The Other Operations
segment   includes  the  Company's   ServiceMaster   Clean,   Merry  Maids,  and
international operations as well as its headquarters functions. Reported segment
revenue of $34  million in 2002  compared  with $32  million in 2001,  primarily
reflecting  growth  in the  ServiceMaster  Clean  and  Merry  Maids  businesses.
Combined  these  franchise   businesses  achieved  revenue  and  profit  growth,
primarily driven by strong disaster  restoration results and increased franchise
sales at ServiceMaster  Clean and growth from  acquisitions at Merry Maids. This
segment reported an operating loss of $5 million in 2002 compared with a loss of
$1 million (proforma) in 2001, reflecting increased expenditures in Company-wide
initiatives including purchasing, marketing, and Six Sigma initiatives.

FINANCIAL POSITION

Net cash  provided  from  operations  for the quarter  totaled $26  million,  an
improvement  of $20  million  before  the  impact of the  Company's  prior  year
accounts  receivable   securitization   program.  This  reflects  a

                                       18
<PAGE>

significant  reduction  in the use of working  capital,  primarily  at  TruGreen
ChemLawn and American Home Shield as a result of increased customer  prepayments
and improved  management  of accounts  payable.  Management  believes that funds
generated  from  operations  and other  existing  resources  will continue to be
adequate to satisfy ongoing working capital needs of the Company.

Cash and marketable  securities totaled  approximately $388 million at March 31,
2002 reflecting a portion of the proceeds from the sale of Management  Services.
The Company expects to make approximately $30 million in after-tax cash payments
for the remainder of 2002 for items related to  discontinued  operations and the
restructuring  charge. In the first quarter,  the Company made approximately $70
million in tax payments relating to the sale of Management Services.  There were
other cash  payments  relating to the wind-down of the  discontinued  operations
which were offset by cash collected on assets  remaining from these  operations.
In addition to the $30 million in after-tax  cash  payments for the remainder of
2002,  the Company is expecting to make  approximately  $17 million in after-tax
cash payments beyond 2002. The remainder of the discretionary  cash is available
for the repayment of debt, which  management  continues to target for the second
quarter of 2002 for  completion.  Debt  levels  decreased  by $47 million in the
quarter primarily reflecting the repurchase of a portion of the Company's public
debt.

There  have been no  material  changes in the terms of the  Company's  financing
agreements  since December 31, 2001. As described in the Company's latest Annual
Report to  Shareholders,  the  Company  is party to a number of debt  agreements
which require it to maintain certain  financial and other  covenants,  including
limitations on indebtedness  and interest  coverage  ratio.  In addition,  under
certain  circumstances,  the agreements  may limit the Company's  ability to pay
dividends and  repurchase  shares of common  stock.  These  limitations  are not
expected to be a factor in the Company's  future  dividend and share  repurchase
plans.  Failure by the Company to maintain these  covenants  could result in the
acceleration  of the maturity of the debt. At March 31, 2002, the Company was in
compliance with the covenants  related to these debt agreements and based on its
operating  outlook  for the  remainder  of 2002,  expects to be able to maintain
compliance in the future.

The assets and  liabilities  relating to the  discontinued  companies  have been
classified  in separate  captions on the  Condensed  Consolidated  Statements of
Financial  Position.   Assets  of  the  discontinued  operations  have  declined
reflecting  cash  collections on receivables  and the sale of fixed assets.  The
liabilities from discontinued  operations has decreased reflecting cash outflows
related  to the  wind-down  of  contracts,  lease  termination  costs,  workers'
compensation payments and legal costs.

Receivables  are  approximately  at the same level as year-end,  reflecting good
collections   and  improved  days  sales   outstanding  at  several   companies.
Inventories  increased  over  year-end  levels as a result  of  normal  seasonal
build-ups in the lawn care business. Prepaid expenses,  deferred costs and other
assets  increased  from year end  reflecting  the  seasonality  in the lawn care
operations and the increased  volume of warranty  contracts  written at American
Home Shield. The lawn care operations incur incremental  selling expenses at the
beginning  of the year that  directly  relate to  successful  sales in which the
revenues will be recognized in later quarters.  This business also defers, on an
interim basis,  pre-season  advertising costs and annual repairs and maintenance
procedures that are performed in the first quarter. These costs are deferred and
recognized in proportion to the contract revenue over the production season, and
are not deferred  beyond the  calendar  year-end.  The Company also  capitalizes
sales  commissions and other direct contract  acquisition costs relating to home
warranty contracts. Deferred revenues grew significantly reflecting increases in
customer  prepayments  for lawn care  services  and  strong  growth in  warranty
contracts written at American Home Shield.

Capital  expenditures  which include  recurring  capital  needs and  information
technology  projects  are  approximately  at the same levels as prior year.  The
Company has no material capital commitments at this time.

Total  shareholders'  equity was $1.2 billion at March 31, 2002 and December 31,
2001,  reflecting  earnings  growth  which was  offset by cash  dividends.  Cash
dividends  paid directly to  shareholders  totaled $29 million or $.10 per share
for the three months ended March 31, 2002. In April, the Company  announced that
it has increased its quarterly  cash dividend to $.105 per share payable on July
31, 2002 to  shareholders  of record on July 12, 2002.  This quarterly  dividend
payment  represents  an increase of 5% over the dividend rate paid for the prior
eight quarters.  The Company approves its actual dividend payment on a quarterly
basis and continually reviews its dividend policy,  share repurchase program and
other capital

                                       19
<PAGE>

structure objectives.  The Company has not undertaken material share repurchases
during  the first  three  months of 2002 or for the year ended  2001.  Decisions
relating  to any  future  share  repurchases  will  take  various  factors  into
consideration  such as the  Company's  commitment to maintain  investment  grade
ratings,   general   business   conditions,   and  other  strategic   investment
opportunities.





FORWARD LOOKING STATEMENTS

THE COMPANY'S FORM 10-Q/A FILING CONTAINS  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 COMPANY
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  SUCH   LEGISLATION.   THE   COMPANY   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): EXTREME WEATHER
CONDITIONS THAT AFFECT THE DEMAND FOR THE COMPANY'S SERVICES; COMPETITION IN THE
MARKETS  SERVED BY THE  COMPANY;  LABOR  SHORTAGES  OR  INCREASES IN WAGE RATES;
UNEXPECTED  INCREASES IN OPERATING COSTS, SUCH AS HIGHER INSURANCE,  HEALTH CARE
OR FUEL PRICES;  INCREASED  GOVERNMENTAL  REGULATION OF  TELEMARKETING;  GENERAL
ECONOMIC  CONDITIONS  IN THE UNITED  STATES,  ESPECIALLY AS THEY MAY AFFECT HOME
SALES OR CONSUMER SPENDING LEVELS; TIME AND EXPENSES ASSOCIATED WITH INTEGRATING
AND WINDING DOWN  BUSINESSES;  AND OTHER FACTORS  DESCRIBED FROM TIME TO TIME IN
DOCUMENTS FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.



                                       20
<PAGE>


<TABLE>


PART II. OTHER INFORMATION

ITEM 6(A): EXHIBITS

EXHIBIT NO.   DESCRIPTION OF EXHIBIT

<S>           <C>
3(ii)         Bylaws of The ServiceMaster Company, as amended through April 26, 2002
10.1          Letter agreement with Phil Rooney dated as of April 18, 2002
15.1          Letter re:  unaudited interim financial information
99.1          Certification of Chief Executive Officer Pursuant to Section 1350 of Chapter 63
               of Title 18 of the United States Code
99.2          Certification of Chief Financial Officer Pursuant to Section 1350 of Chapter 63
               of Title 18 of the United States Code
</TABLE>


ITEM 6(B):    REPORTS ON FORM 8-K

A report on Form 8-K was filed on March 19, 2002, reporting under "Item 5. Other
Events".  The  purpose of the report  was to  provide  under Item 7,  previously
reported  quarterly  consolidated  income  statement  results  for 2001 and 2000
restated  to present  the  results of  continuing  operations  and  discontinued
operations,   as  well  as  to  disclose   quarterly  goodwill  and  trade  name
amortization by segment.


                                       21
<PAGE>




                                    SIGNATURE


Pursuant  to the  requirements  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.

Date:  May 14, 2003


                   THE SERVICEMASTER COMPANY
                   (Registrant)

                   By:                    /S/STEVEN C. PRESTON
                      ------------------------------------------------------

                                              Steven C. Preston
                   Executive Vice President and Chief Financial Officer













                                       22
<PAGE>






                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Jonathan P. Ward, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q/A of The  ServiceMaster
     Company;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report; and

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report.


Date:  May 13, 2003

                                            /S/ JONATHAN P. WARD
                                            ---------------------
                                            Jonathan P. Ward
                                            Chairman and Chief Executive Officer











                                       23
<PAGE>






                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Steven C. Preston, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q/A of The  ServiceMaster
     Company;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report; and

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report.



Date:  May 13, 2003

                           /S/ STEVEN C. PRESTON
                           ----------------------
                           Steven C. Preston
                           Executive Vice President and Chief Financial
                           Officer













                                       24
<PAGE>