SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 2000
                                                 --------------

              -----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)

One ServiceMaster Way, Downers Grove, Illinois                 60515-1700
    (Address of principal executive offices)                   (Zip Code)

                                  630-271-1300

              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.  Yes    X    No         .
                                                    -------    --------

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
shares: 305,433,000 shares as of May 12, 2000.

This document consists of 13 pages, including the cover page.

<PAGE>

                                  TABLE OF CONTENTS

                                                                            Page

                                                                             No.

THE SERVICEMASTER COMPANY (Registrant) -


PART I.  FINANCIAL INFORMATION

Consolidated Statements of Income for the
   three months ended March 31, 2000 and March 31, 1999                        2

Consolidated Statements of Financial Position
   as of March 31, 2000 and December 31, 1999                                  3

Consolidated Statements of Cash Flows for the
   three months ended March 31, 2000 and March 31, 1999                        4

Notes to Consolidated Financial Statements                                     5

Management Discussion and Analysis of Financial Position
   and Results of Operations                                                   7


PART II.  OTHER INFORMATION

Item 1: Legal Proceedings                                                     11

Item 6(a): Exhibits                                                           12

Signature



                                       1
<PAGE>

                          PART I. FINANCIAL INFORMATION

                            THE SERVICEMASTER COMPANY

                        CONSOLIDATED STATEMENTS OF INCOME

                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>


                                                                           Three Months Ended
                                                                                March 31,
                                                                        2000                  1999
                                                                     -----------          --------
<S>                                                                 <C>                 <C>
OPERATING REVENUE..............................................     $  1,346,505        $   1,115,062

OPERATING COSTS AND EXPENSES:
Cost of services rendered

and products sold..............................................        1,085,416              899,815
Selling and administrative expenses............................          166,386              136,619
                                                                     -----------          -----------

Total operating costs and expenses.............................        1,251,802            1,036,434
                                                                     -----------          -----------

OPERATING INCOME...............................................           94,703               78,628

NON-OPERATING EXPENSE (INCOME):

Interest expense...............................................           31,865               21,948
Interest and investment income.................................           (4,023)              (3,621)
                                                                     -----------          -----------

INCOME BEFORE INCOME TAXES.....................................           66,861               60,301
Provision for income taxes.....................................           27,850               24,692
                                                                     -----------          -----------

NET INCOME.....................................................     $     39,011        $      35,609
                                                                     ===========          ===========

PER SHARE: (1)

BASIC..........................................................            $ .13                $ .12
                                                                           =====                =====

DILUTED........................................................            $ .13                $ .12
                                                                           =====                =====

DIVIDENDS......................................................            $ .09                $ .09
                                                                           =====                =====
</TABLE>


 (1)Basic earnings per share are calculated  based on 305,668 shares in 2000 and
    299,602 shares in 1999 while diluted earnings per share are calculated based
    on 310,138 shares in 2000 and 307,959 shares in 1999.

                            SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




                                       2
<PAGE>
                            THE SERVICEMASTER COMPANY
                  CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                     As of
                                                                           March 31,       December 31,
                                                                             2000             1999
                                                                        ------------        ---------
ASSETS

CURRENT ASSETS:
<S>                                                                   <C>             <C>
Cash and cash equivalents............................................ $      43,330   $       59,834
Marketable securities................................................        53,213           54,376
Receivables, less allowances of $36,648
   and $39,011, respectively.........................................       552,854          558,842
Inventories..........................................................        95,212           82,861
Prepaid expenses and other assets....................................       271,782          203,325
                                                                       ------------    -------------
    Total current assets.............................................     1,016,391          959,238
                                                                       ------------    -------------

PROPERTY AND EQUIPMENT:
   At cost...........................................................       669,667          659,810
   Less:  accumulated depreciation...................................       346,370          341,712
                                                                       ------------    -------------
    Net property and equipment.......................................       323,297          318,098
                                                                       ------------    -------------
INTANGIBLE ASSETS, PRIMARILY TRADE NAMES AND GOODWILL,
   net of accumulated amortization of $361,187
   and $343,316, respectively........................................     2,494,986        2,461,389
NOTES RECEIVABLE, LONG-TERM SECURITIES, AND OTHER ASSETS.............       153,712          131,490
                                                                       ------------    -------------

    Total assets.....................................................$    3,988,386   $    3,870,215
                                                                       ============    =============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
<S>                                                                  <C>              <C>
Accounts payable.....................................................$      137,472   $      145,237
Income taxes payable.................................................        30,651            6,479
Accrued liabilities..................................................       323,951          364,851
Deferred revenues....................................................       305,394          257,521
Current portion of long-term obligations.............................        66,577           71,716
                                                                       ------------    -------------
    Total current liabilities........................................       864,045          845,804
                                                                       ------------    -------------

LONG-TERM DEBT.......................................................     1,804,962        1,697,582
OTHER LONG-TERM OBLIGATIONS..........................................       120,982          121,113
COMMITMENTS AND CONTINGENCIES .......................................

SHAREHOLDERS' EQUITY:
Common stock $0.01 par value, authorized 1 billion shares; issued
    and outstanding 305,286 and 307,530 shares, respectively.........         3,053            3,075
Additional paid-in capital...........................................     1,036,023        1,033,568
Retained earnings....................................................       252,899          241,701
Accumulated other comprehensive income...............................         5,833           (1,821)
Restricted stock.....................................................        (2,390)          (2,577)
Treasury stock.......................................................       (97,021)         (68,230)
                                                                       -------------   --------------
    Total shareholders' equity.......................................     1,198,397        1,205,716
                                                                       ------------    -------------
    Total liabilities and shareholders' equity.......................$    3,988,386   $    3,870,215
                                                                       ============    =============
</TABLE>
                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                       3
<PAGE>

                            THE SERVICEMASTER COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                                     March 31,
                                                                               2000             1999
                                                                          ------------      --------
<S>                                                                     <C>                <C>
CASH AND CASH EQUIVALENTS AT JANUARY 1................................  $       59,834     $      66,400

CASH FLOWS FROM OPERATIONS:

NET INCOME............................................................          39,011            35,609
    Adjustments to reconcile net income
    to net cash flows from operations:
       Depreciation...................................................          18,086            14,893
       Amortization...................................................          17,871            14,680
       Deferred 1998 tax payment......................................               -           (78,500)
       Tax refund from 1999 payments..................................          22,000                 -
       Deferred income taxes..........................................          25,411            23,884
       Change in working capital, net of acquisitions:
         Receivables..................................................           6,930           (13,462)
         Inventories and other current assets.........................         (96,275)          (92,536)
         Accounts payable.............................................          (8,879)           (2,137)
         Deferred revenues............................................          46,889            40,500
         Accrued liabilities..........................................         (49,835)          (41,887)
         Other, net...................................................            (597)             (564)
                                                                         --------------     -------------
NET CASH PROVIDED FROM (USED FOR) OPERATIONS..........................          20,612           (99,520)
                                                                         --------------     -------------

NET CASH USED FOR OPERATIONS EXCLUDING UNUSUAL TAX ITEMS..............          (1,388)          (21,020)

CASH FLOWS FROM INVESTING ACTIVITIES:

     Business acquisitions, net of cash acquired......................         (36,424)         (172,445)
       Property additions.............................................         (19,238)          (24,731)
       Sale of equipment and other assets ...........................              424             2,821
     Proceeds from sale of minority interests.........................          12,259                 -
     Net purchases of investment securities...........................          (1,469)           (4,431)
     Notes receivable and financial investments.......................          (1,662)           (2,105)
     Payments to sellers of acquired businesses.......................          (9,147)           (3,525)
                                                                         --------------     -------------
NET CASH USED FOR INVESTING ACTIVITIES................................         (55,257)         (204,416)
                                                                         -------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Borrowings, net...................................................         117,546           415,991
    Payment of borrowings and other obligations.......................         (23,834)         (122,444)
    Shareholders' dividends...........................................         (27,813)          (25,705)
      Purchase of ServiceMaster stock.................................         (51,412)           (4,341)
      Proceeds from employee share plans..............................           3,741             5,023
    Other.............................................................             (87)              500
                                                                              --------         ---------
NET CASH PROVIDED FROM FINANCING ACTIVITIES...........................          18,141           269,024
                                                                         -------------      ------------

CASH DECREASE DURING THE PERIOD.......................................         (16,504)          (34,912)
                                                                         -------------      ------------

CASH AND CASH EQUIVALENTS AT MARCH 31.................................  $       43,330     $      31,488
                                                                         =============      ============

</TABLE>

                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                       4
<PAGE>


                              THE SERVICEMASTER COMPANY
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Note 2: The consolidated financial statements included herein have been prepared
by the  Company  pursuant to the rules and  regulations  of the  Securities  and
Exchange  Commission.  Certain  information  and footnote  disclosures  normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations.  However, the Company believes that the disclosures are adequate to
make the  information  presented  not  misleading.  It is  suggested  that these
consolidated  financial  statements  be read in  conjunction  with the financial
statements and the notes thereto  included in the Company's latest Annual Report
to shareholders and the Annual Report to the Securities and Exchange  Commission
on Form  10-K for the year  ended  December  31,  1999.  In the  opinion  of the
Company, all adjustments,  consisting only of normal and recurring  adjustments,
necessary to present fairly the financial position of The ServiceMaster  Company
as of March 31, 2000 and December 31, 1999,  and the results of  operations  and
cash  flows for the  three  months  ended  March  31,  2000 and 1999,  have been
included.  The preparation of the financial  statements  requires  management to
make  certain  estimates  and  assumptions  required  under  generally  accepted
accounting  principles which may differ from the actual results.  The results of
operations for any interim period are not necessarily  indicative of the results
which might be obtained for a full year.

Note 3: For interim accounting purposes,  certain costs directly associated with
the  generation of lawn care revenues are initially  deferred and  recognized as
expense  as the  related  revenues  are  recognized.  All such  costs  are fully
recognized within the fiscal year in which they are incurred.

Note 4: Basic earnings per share  includes no dilution from options,  debentures
or other financial  instruments and is computed by dividing income  available to
common  stockholders  by the  weighted  average  number of  shares  outstanding.
Diluted  earnings  per share  reflects  the  potential  dilution  of  options to
purchase common stock. The following chart reconciles both the numerator and the
denominator  of the basic  earnings per share  computation  to the numerator and
denominator of the diluted earnings per share computation.

<TABLE>
<CAPTION>

                                                  Three months                      Three months
                                                 ended March 31, 2000              ended March 31, 1999
                                            -------------------------------    ------------------------------

(IN THOUSANDS, EXCEPT PER SHARE DATA)        Income      Shares      EPS        Income      Shares     EPS
                                             ------      ------      ---        ------      ------     ---
<S>                                          <C>         <C>        <C>         <C>         <C>       <C>
Basic earnings per share                     $39,011     305,668    $0.13       $35,609     299,602   $0.12
                                                                    ======                            ======
Effect of dilutive securities (options)            -       4,470                      -       8,357
                                            ----------  ----------             ----------  ---------
Diluted earnings per share                   $39,011     310,138    $0.13       $35,609     307,959   $0.12
                                           ==========  ==========  ======     ==========   =========  ======


</TABLE>



                                       5
<PAGE>

Note 5: In the Consolidated  Statements of Cash Flows, the caption Cash and Cash
Equivalents includes investments in short-term,  highly-liquid securities having
a maturity of three  months or less.  Supplemental  information  relating to the
Consolidated  Statements of Cash Flows for the three months ended March 31, 2000
and 1999 is presented in the following  table.  The increase in interest paid in
2000 is primarily  due to higher  levels of debt  outstanding  and the timing of
payments.  In 2000, the Company  received an income tax refund  relating to 1999
overpayments.  In 1999,  the Company  made the  payment of the 1998  federal tax
obligation.

                                                       (IN THOUSANDS)
                                                      2000         1999
                                                     ------       ------
CASH PAID OR (RECEIVED FOR):
Interest expense................................  $   49,891  $   33,551
Interest and dividend income....................  $  (2,250)  $   (2,104)
Income taxes....................................  $ (19,771)  $   79,549

Note 6: Total comprehensive income for the three months ended March 31, 2000 and
1999 was $46.7 million and $31.6 million, respectively, which included primarily
net income, changes in unrealized gains on marketable securities and translation
balances.

Note  7:  The  business  of the  Company  is  primarily  conducted  through  the
ServiceMaster  Consumer and  Commercial  Services and  ServiceMaster  Management
Services  operating units. The Consumer and Commercial  Services unit provides a
variety of specialty  services to  residential  and  commercial  customers.  The
Management Services unit provides a variety of supportive management services to
health  care,   education,   and  commercial   accounts.   The  Company  derives
substantially  all of its revenues from customers in the United States with less
than five percent generated in foreign markets.

The Other Operations group includes primarily ServiceMaster Employer Services, a
professional  employer  organization  that provides clients with  administrative
processing  of  payroll,   insurance,   and  other  employee  benefit  programs,
Diversified  Health  Services  which  provides  services  and  products  to  the
long-term  care  industry,  the Company's  headquarters  operation,  and certain
businesses the Company sold in the second quarter of 1999.  Segment  information
as of and for the three months ended March 31 are as follows:
<TABLE>
<CAPTION>

     (IN THOUSANDS)         CONSUMER & COMMERCIAL       MANAGEMENT        OTHER
          2000                    SERVICES               SERVICES      OPERATIONS    CONSOLIDATED
-------------------------    ---------------          -------------    ----------    ------------
<S>                              <C>                    <C>            <C>            <C>
Operating Revenue                $   743,073            $ 469,904      $ 133,528      $ 1,346,505
Operating Income                 $    86,967            $  16,646      $  (8,910)     $    94,703
Total Assets                     $ 3,465,895            $ 231,453      $ 291,038      $ 3,988,386

          1999
-------------------------
Operating Revenue                $   461,722            $ 457,625      $ 195,715      $ 1,115,062
Operating Income                 $    67,390            $  18,861      $  (7,623)     $    78,628
Total Assets                     $ 2,819,610            $ 203,187      $ 423,012      $ 3,445,809

</TABLE>


Note 8: In  June  1998,  the  Financial  Accounting  Standards  Board  issued  a
Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  This statement was subsequently amended to
defer its effective date. The Company intends to adopt this statement in January
2001 as required by the amended  Statement.  Adoption of this  Statement  is not
expected to have a material impact on the Company's financial statements.


                                       6
<PAGE>


                              THE SERVICEMASTER COMPANY
                         MANAGEMENT DISCUSSION AND ANALYSIS

RESULTS OF OPERATIONS

FIRST QUARTER 2000 COMPARED TO FIRST QUARTER 1999

Revenues  increased  21  percent to $1.3  billion  in the first  quarter of 2000
through  a  combination  of   acquisitions   and  good  base  business   growth.
Approximately five percent of the revenue increase resulted from internal growth
and  small  roll-up  acquisitions  in  established  businesses;  while the newer
initiatives in; landscaping,  heating,  ventilation and air conditioning (HVAC),
and plumbing provided 23 percent of the growth. This growth was partially offset
by the sale of Premier and ServiceMaster  Energy Management and the wind-down of
certain  long-term care  businesses.  Operating  income  increased 20 percent to
$94.7 million.  Operating  margins  decreased to 7.0 percent of revenue from 7.1
percent as the initiatives in landscaping,  HVAC and plumbing,  which are highly
seasonal,   reported  margins  below  the  Company  average.  Operating  margins
excluding these businesses  increased 140 basis points  reflecting both improved
margins in the  individual  business  lines and faster  growth in the  Company's
higher margin businesses.  Diluted earnings per share increased eight percent to
$.13 compared to $.12 last year. Net income grew 10 percent to $39.0 million,  a
faster rate than  earnings  per share due to an  increase in shares  outstanding
resulting  from the  impact of  shares  issued  for  acquisitions.  Cash  income
(defined  by the  Company as net income with  amortization  expense  added back)
increased  13%, with cash income per share of $.18 compared to $.16 in the prior
year.

The Consumer and  Commercial  Services  business unit  reported  revenue of $743
million,  an increase of 61 percent,  and operating income of $87.0 million,  29
percent  higher than last year.  The  segment's  revenue  growth  reflected  the
inclusion  of LandCare  USA (which was  acquired on March 18, 1999) and American
Residential  Services  (which  was  acquired  on April 27,  1999) for the entire
quarter.  The revenue  increase also reflected  internal growth of approximately
eight percent and smaller rollup acquisitions.  TruGreen ChemLawn, the Company's
lawn care  operations,  achieved  strong revenue and profit growth with improved
margins,  reflecting  accelerated  production  due to favorable  weather and the
benefits of modest price  increases.  Customer  counts were slightly  below last
year's  level,  partially  reflecting  a shift in focus  from  telemarketing  to
television and direct mail, which are more effective as later spring  campaigns,
as  well as the  impacts  from  the  prior  year  drought  conditions.  TruGreen
LandCare,  the Company's commercial  landscape business,  reported a significant
increase in revenue resulting from the LandCare USA acquisition and double-digit
growth from internal sources. Continued progress on integrating the LandCare USA
acquisition and increased seasonal  production are expected to positively impact
operating income in future quarters.  Terminix reported  double-digit  growth in
revenues and profits with improved margins,  reflecting strong growth in initial
termite completions and renewals resulting from continued favorable reception to
new termite baiting  systems.  American Home Shield reported strong increases in
both revenues and profits,  reflecting  strong growth in higher margin  customer
renewals and excellent growth in direct-to-consumer sales, partially offset by a
softness in real estate  sales due to a decline in home  resales.  The  combined
American  Residential   Services   (ARS)/Rescue  Rooter

                                       7
<PAGE>

operations  reported a  substantial  increase  in revenue as a result of the ARS
acquisition and strong internal growth. These operations have benefited from the
implementation of programs focused on improving pricing,  project management and
efficiency  levels.  In addition,  management  has turned around  several of the
largest branch locations that were having problems prior to the acquisition. The
franchise  operations,  ServiceMaster  Clean and Merry  Maids,  reported  strong
growth in revenues and profits due to increased  license sales and strong growth
in the franchise base and in the company owned operations.

The  Management  Services  business unit  reported a three  percent  increase in
revenues to $470 million and a twelve  percent  decrease in operating  income to
$16.6 million. The business was affected by large terminations which resulted in
a revenue  run rate that was 2% below the 1999 year end level.  The  decrease in
profits  reflects  the  temporary  costs to unwind  these  contracts  as well as
startup costs from a large new contract with a for-profit  hospital  chain.  The
unit also incurred investments in expanding new outsourcing initiatives.

The Company launched WeServeHomes.com in Dallas at the end of the quarter and is
currently  offering  all  of its  residential  services  over  the  Internet  to
customers  in the area.  In the  following  quarters,  it is  expected  that the
Company  will:  (i) expand the  functionality  of the  technology,  (ii)  pursue
additional target markets,  and (iii) expand its relationships  with third party
providers.


Cost of services rendered and products sold increased 21 percent,  due primarily
to general  business growth and  acquisitions,  but decreased as a percentage of
revenue to 80.6  percent from 80.7 percent in 1999.  The  landscaping,  HVAC and
plumbing  initiatives have significantly  affected this comparison because their
cost of services as a  percentage  of revenue is higher than the average for the
enterprise.  Excluding these initiatives, cost of services rendered and products
sold  decreased as a percentage  of revenue to 79.4 percent from 80.3 percent in
1999.  This decrease  primarily  reflects the changing mix of the  business,  as
TruGreen  ChemLawn and Terminix  increase in size in relationship to the overall
business of the Company. The TruGreen ChemLawn and Terminix businesses generally
operate at higher gross margin  levels than the rest of the  business,  but also
incur  somewhat  higher selling and  administrative  expenses as a percentage of
revenues.

Selling  and  administrative  expenses  increased  22  percent,  due to  general
business  growth and  acquisitions,  and increased as a percentage of revenue to
12.4  percent from 12.3 percent in 1999.  The platform  initiatives  noted above
have lower selling and administrative expenses, as a percentage of revenue, than
the Company average.

Interest expense increased from the prior year,  primarily due to increased debt
levels  associated  with  acquisitions.  The tax  provision  reflects  a  higher
effective tax rate compared to last year, primarily due to the non-deductibility
of goodwill from acquisitions completed in 1999.

                                       8
<PAGE>


FINANCIAL POSITION

Net cash provided from operations of $21 million was  significantly  higher than
the first  quarter  level in 1999.  There are two  unusual tax items in the cash
flow  statements:  (i) a $22 million tax refund realized in the first quarter of
2000  and  (ii)  the  payment  of 1998  taxes  in the  first  quarter  of  1999.
Eliminating these items, cash used for operations was $1 million, an improvement
of $20 million over last year reflecting  higher levels of cash income and lower
working capital usage. The cash flows reflect improving  receivables  management
in both  TruGreen  LandCare and ARS, as well as higher  prepayments  in TruGreen
ChemLawn.  Due to the  seasonality of the lawn care,  landscape and pest control
operating cycles, the Company's working capital needs are the highest during the
first quarter.  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.

Accounts and notes  receivable  decreased from year end levels,  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.

Prepaids  and  other  assets  have   increased  from  year  end  reflecting  the
seasonality  in the lawn care  business  and the  increased  volume of  warranty
contracts  written at  American  Home  Shield.  The lawn care  operation  defers
certain  marketing  costs that are incurred  during the first  quarter,  but are
directly associated with revenues realized in subsequent quarters of the current
year.  These costs are then  amortized over the balance of the current lawn care
production  season,  as the related revenues are recognized.  Deferred  revenues
also grew significantly,  reflecting  increases in customer prepayments for lawn
care services.

Property and equipment  increased over year end due to general  business growth.
Capital  expenditures  grew,  reflecting  general  business growth and recurring
capital needs. The Company has no material capital commitments at this time.

Intangible assets increased $34 million from year end,  reflecting the effect of
acquisitions, primarily in the lawn care, landscape and pest control businesses.

Accrued  liabilities  decreased  from year end,  primarily  due to the timing of
interest  payments and certain other payables.  Debt levels increased due to the
seasonal nature of the Company's  operating cash flows combined with the effects
of  acquisitions,  property  additions,  dividends  and share  repurchases.  The
Company is party to a number of long-term  debt  agreements  which require it to
maintain compliance with certain financial covenants,  including  limitations on
indebtedness,  restricted payments, fixed charge coverage ratios, and net worth.
The  Company  is  in  compliance  with  the  covenants  related  to  these  debt
agreements.

In April 2000,  the Company  completed a senior  unsecured debt offering of $250
million,  8.45 percent  notes priced to yield 8.505  percent due April 15, 2005.
The net proceeds were used to repay a portion of the Company's  borrowings under
its revolving bank credit facility,  thereby, reducing the Company's exposure to
short term interest rate fluctuations.

                                       9
<PAGE>


Total  shareholders'  equity was $1.2 billion at March 31, 2000 and December 31,
1999,  reflecting  good earnings  growth  offset by cash  dividends and treasury
share  repurchases.  Cash  dividends paid directly to  shareholders  totaled $28
million or $.09 per share. In the quarter,  the Company  repurchased $51 million
of  shares  under the  repurchase  program  announced  last  year.  The Board of
Directors approved $150 million of share repurchases in 2000.

IN ACCORDANCE  WITH THE PRIVATE  SECURITIES  LITIGATION  REFORM ACT OF 1995, THE
COMPANY  NOTES  THAT  STATEMENTS  THAT  LOOK  FORWARD  IN  TIME,  WHICH  INCLUDE
EVERYTHING OTHER THAN HISTORICAL  INFORMATION,  INVOLVE RISKS AND  UNCERTAINTIES
THAT MAY AFFECT THE COMPANY'S ACTUAL RESULTS OF OPERATIONS.  FACTORS WHICH COULD
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY  INCLUDE THE FOLLOWING (AMONG OTHERS):
WEATHER  CONDITIONS  ADVERSE TO CERTAIN OF THE COMPANY'S CONSUMER AND COMMERCIAL
SERVICES BUSINESSES, LABOR SHORTAGES, THE ENTRY OF ADDITIONAL COMPETITORS IN ANY
OF THE  MARKETS  SERVED  BY  THE  COMPANY,  CONSOLIDATION  OF  HOSPITALS  IN THE
HEALTHCARE MARKET,  THE CONDITION OF THE U.S. ECONOMY,  AND OTHER FACTORS LISTED
FROM TIME TO TIME IN THE  COMPANY'S  FILINGS  WITH THE  SECURITIES  AND EXCHANGE
COMMISSION.



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                           PART II. OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS

In the ordinary  course of  conducting  its business  activities,  ServiceMaster
becomes involved in judicial and  administrative  proceedings which involve both
private  parties  and  governmental  authorities.

RAY D. MARTIN V.  SERVICEMASTER.  In June 1996, Ray D. Martin, a former salesman
employed by  ServiceMaster's  Management  Services unit,  filed a lawsuit in the
State Court of Fulton County, Georgia (Civ. Action File No. 96VS114677J),  which
as originally  filed contended that the Company had not paid him the full amount
of commission  due to him on a sale in which he was  involved.  In the course of
the pre-trial  proceedings,  the trial court entered a default judgement against
the  Company  (thereby  leaving  under the court's  orders only the  question of
damages to be considered at the trial).  On September 13, 1999, the jury awarded
the plaintiff  compensatory damages of approximately $1 million and on September
14,  1999,  a jury  awarded  the  plaintiff  punitive  damages  and fees of $135
million.  On September 29, 1999, the trial court entered final judgement for the
plaintiff on the basis of these verdicts in a total amount of  $136,259,418.  On
October 14, 1999, the Company filed a motion for judgement  notwithstanding  the
verdict or, in the  alternative,  for a new trial.  A hearing on this motion was
held on March 9, 2000. On May 11, 2000,  the trial court  conditionally  reduced
compensatory  damages to $461,440 and the punitive  damage award to $45 million.
Mr. Martin has 15 days to decide whether to accept or reject the  reduction.  If
he rejects the  reduction,  the court will hold a new trial on  damages.  If Mr.
Martin accepts the reduced award,  ServiceMaster  believes that the award of $45
million in punitive  damages is not  supportable  by the facts of the case or by
applicable  state law and that the  judgement  will be reversed by an  appellate
court.  Under Georgia law, a judgement  accrues  interest at the rate of 12% per
annum. The Company continues to not be able to reasonably  estimate the ultimate
outcome of this case, and accordingly, minimal expense has been recorded. In the
event that the adverse  judgement is sustained  after all appeals  (which is not
anticipated  by the Company),  it would be likely that the Company's  results of
operations for a particular year may be materially adversely affected.  However,
the Company  believes,  based on advice from legal  counsel,  that the  ultimate
outcome of this litigation is not expected to have a material  adverse effect on
the Company's financial condition or results of operations.

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ITEM 6(A): EXHIBITS

EXHIBIT NO.                    DESCRIPTION OF EXHIBIT
-----------       -----------------------------------------------------
      1           Distribution Agreement dated April 18, 2000
                  for Medium- Term Notes, Series A.

    4.1           Form of 8.45% Note due April 15, 2005
                  with principal sum of $250 million.

    4.2           First Supplemental Indenture dated as of April 4,
                  2000 among The ServiceMaster Company and the Harris
                  Trust and Savings Bank as Trustee.

     23           Consent of Arthur Andersen LLP


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