SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

                  Annual Report Pursuant To Section 13 Or 15(d)
                     Of The Securities Exchange Act of 1934

   For the fiscal year ended December 31, 1997. Commission File number 1-14762


                            THE SERVICEMASTER COMPANY
           (Exact Name of Registrant as Specified in its Certificate)
                (Successor to ServiceMaster Limited Partnership)


        Delaware                                         36-3858106
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)


One ServiceMaster Way, Downers Grove, Illinois                        60515-1700
(Address of Principal Executive Offices)                              (Zip Code)

       Registrant's telephone number, including area code: (630) 271-1300

       Securities registered pursuant to Section 12(b) of the Act:  195,259,782

                                                           Name of Each Exchange
  Title of Each Class                                        On Which Registered
  -------------------                                    -----------------------
     Common Stock                                        New York Stock Exchange

         Securities registered pursuant to Section 12(g) of the Act: None

     Indicate  by Check Mark  Whether the  Registrant  (1) Has Filed All Reports
Required to Be Filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  Shorter  Period  That the
Registrant Was Required to File Such Reports),  and (2) Has Been Subject to Such
Filing Requirements for the Past 90 Days. Yes X No

     The  Aggregate  Market  Value  of  Shares  Held  by  Non-Affiliates  of the
Registrant As of March 24, 1998 was $4,965,812,051.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Certain parts of the  Registrant's  Annual Report to  Stockholders  for the
year ended December 31, 1997 are  incorporated  into Part I, Part II and Part IV
of this Form 10-K.

     Certain parts of the Registrant's Definitive Proxy Statement for the May 1,
1998 Annual Meeting of Stockholders  is incorporated  into Part III of this Form
10-K.

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                                     PART I

Item 1.  Business

The Company as Successor to ServiceMaster Limited Partnership

         This annual report on Form 10-K is filed by The ServiceMaster  Company,
a Delaware  corporation  (hereinafter  sometimes called the  "Registrant").  The
Registrant is the corporate successor to ServiceMaster  Limited  Partnership,  a
Delaware limited partnership (the "Parent Partnership").  For the period January
1, 1987 to December 26, 1997,  the Parent  Partnership  was the publicly  traded
parent entity in the ServiceMaster enterprise. On December 26, 1997, by means of
a statutory merger in which a subsidiary of the Registrant  merged with and into
the Parent Partnership (the "Reincorporating  Merger"), the Registrant succeeded
to and became  substituted  for the Parent  Partnership  as the publicly  traded
parent entity in the ServiceMaster  enterprise.  Pursuant to the Reincorporating
Merger,  on  December  26,  1997 the shares of limited  partner  interest in the
Parent  Partnership  converted to shares of common stock of the  Registrant on a
one-for-one  basis.  On January 1, 1998, the Parent  Partnership was merged with
and  into  the  Registrant  and  the  Parent  Partnership  thereby  went  out of
existence.

         This Form 10-K for the year  1997,  although  necessarily  filed by the
Registrant,  pertains to the  organization  and  business  of the  ServiceMaster
enterprise  as headed by the Parent  Partnership  for  virtually all of the year
1997.  However,  the  Reincorporating  Merger  provided  for a carryover  to the
Registrant of all directors and officers of ServiceMaster Management Corporation
(the managing general partner of the Parent Partnership), the Parent Partnership
and The  ServiceMaster  Company  Limited  Partnership.  Accordingly,  references
herein  to  directors  and  executive  officers  are to such  persons  in  their
capacities  as directors  and  officers of the  Registrant  and its  predecessor
entities. The Registrant and its affiliated entities are hereinafter referred to
as "ServiceMaster" or the "Company" or the "ServiceMaster enterprise".

Forward-Looking Statements

         In  accordance  with the Private  Securities  Litigation  Reform Act of
1995, the Company notes that  statements in this Annual Report on Form 10-K 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 that could cause actual results to differ
materially from the Company's plans or expectations include the following (among
others): weather conditions adverse to certain of the Company's businesses,  the
entry of  additional  competitors  in any of the markets  served by the Company,
labor shortages, consolidation of hospitals in the healthcare market, changes in
Medicare reimbursement regulations,  the condition of the United States economy,
and other  factors  listed from time to time in the  Company's  filings with the
Securities and Exchange Commission.

The Company; Principal Business Groups

         The Company  itself is a holding  company  whose shares of common stock
are traded on the New York Stock Exchange. Through its subsidiaries, the Company
is engaged in  providing  a variety of  specialty  services  to  homeowners  and
commercial  facilities and supportive  management  services in several  markets,
including the healthcare  market,  the education  market and certain segments of
the business and industry market.

         The  Company  is  organized  into  three  principal  operating  groups:
Consumer Services,  Management  Services,  and Employer Services.  Each of these
operating groups is headed by a limited  partnership or a corporation  which has
its own group of operating subsidiaries.  The parent companies for the operating
groups are ServiceMaster Consumer Services Limited Partnership, which was formed
in the summer of 1990;  ServiceMaster  Management Services Limited  Partnership,
which was formed in December 1991; and  ServiceMaster  Employer  Services,  Inc.
which was formed in August 1997. All of the parent companies for the operating

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groups are wholly owned by the Company.  All subsidiaries of the operating group
parent  companies are wholly owned.  Reference is made to the information  under
the caption  "Business Unit  Reporting" on page 34 of the  ServiceMaster  Annual
Report  to  Shareholders  for 1997  (the  "1997  Annual  Report")  for  detailed
financial information on these three groups.

Trademarks and Service Marks; Franchises

         The  Company's  trademarks  and  service  marks are  important  for all
elements  of the  Company's  business,  although  such  marks  are  particularly
important  in  the  advertising  and  franchising  activities  conducted  by the
operating  subsidiaries of ServiceMaster  Consumer  Services L.P. Such marks are
registered and are renewed at each registration expiration date.

         Within  ServiceMaster  Consumer Services,  franchises are important for
the TruGreen-ChemLawn,  Terminix,  ServiceMaster  Residential/Commercial,  Merry
Maids,  AmeriSpec and Furniture  Medic  businesses.  Nevertheless,  revenues and
profits derived from  franchise-related  activities  constitute less than 10% of
the revenue and profits of the consolidated ServiceMaster enterprise.  Franchise
agreements  made in the course of these  businesses  are generally for a term of
five  years.  ServiceMaster's  renewal  history  is that  most of the  franchise
agreements which expire in any given year are renewed.

ServiceMaster Consumer Services

     ServiceMaster  Consumer Services provides  specialty services to homeowners
and   commercial    facilities   through   eight   companies:    TruGreen   L.P.
("TruGreen-ChemLawn");  The Terminix  International  Company L.P.  ("Terminix");
ServiceMaster Residential/Commercial Services L.P. ("Res/Com"); Merry Maids L.P.
("Merry  Maids");  American Home Shield  Corporation  ("American Home Shield" or
"AHS"); AmeriSpec, Inc. ("AmeriSpec"); Furniture Medic L.P. ("Furniture Medic");
and Rescue  Rooter  L.L.C.  ("Rescue  Rooter").  Rescue  Rooter was  acquired by
ServiceMaster  Consumer  Services on January 1, 1998.  The services  provided by
these  companies  include:  lawn care,  tree and shrub services and indoor plant
maintenance  services under the  "TruGreen",  "ChemLawn" and "Barefoot"  service
marks;  termite and pest control  services  under the  "Terminix"  service mark;
residential and commercial cleaning and disaster  restoration services under the
"ServiceMaster"  service mark; domestic  housekeeping  services under the "Merry
Maids" service mark;  home systems and appliance  warranty  contracts  under the
"American  Home  Shield"  service  mark;  home  inspection  services  under  the
"AmeriSpec"  service mark;  on-site  furniture repair and restoration  under the
"Furniture  Medic" service mark; and plumbing and drain cleaning  services under
the "Rescue Rooter" service mark.

         The services provided by the eight Consumer Services companies are part
of the  ServiceMaster  "Quality  Service  Network" and are accessed by calling a
single toll-free  telephone  number:  1-800-WE SERVE.  ServiceMaster  focuses on
establishing  relationships  to  provide  one or more  of  these  services  on a
repetitive  basis to customers.  Since 1986,  the number of customers  served by
ServiceMaster  Consumer  Services  has  increased  from fewer  than one  million
domestic customers to more than 9.6 million worldwide customers.

         For most of 1997, the first-tier subsidiary of the ServiceMaster parent
entity was primarily responsible for overseeing the Consumer Services businesses
which  were  conducted  in  foreign  markets.  However,  at  the  end  of  1997,
responsibility for such businesses was transferred to the appropriate subsidiary
of ServiceMaster Consumer Services L.P.

         TruGreen-ChemLawn.  TruGreen-ChemLawn  is a wholly owned  subsidiary of
ServiceMaster Consumer Services L.P. As of December 31, 1997,  TruGreen-ChemLawn
had 206 company-owned  branches and 84 franchised branches.  With over 3 million
residential and commercial customers,  TruGreen-ChemLawn is the leading provider
of lawn care services in the United  States.  TruGreen-ChemLawn  provides  lawn,
tree and shrub care services in Saudi Arabia and Turkey through licensing

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arrangements and in Canada through a subsidiary. TruGreen-ChemLawn also provides
interior  plantscape  services to commercial  customers.  The  TruGreen-ChemLawn
businesses are seasonal in nature.

         On February 24, 1997,  the  Company's  predecessor,  for the benefit of
TruGreen-ChemLawn,  completed the acquisition of 99.38% of the outstanding stock
of Barefoot Inc.  ("Barefoot") through a tender offer. On February 26, 1997, the
remaining 0.62% of the Barefoot stock was acquired  through a statutory  merger.
In these transactions, Barefoot stockholders collectively received approximately
$84,800,000 in cash and 8,621,055 limited partner shares (post-June 1997 3-for-2
share split) of the Company's  predecessor.  For purposes of these transactions,
the Barefoot stock was valued at $16.00 per share and the Company's  shares were
valued at $16.9389 per share (post-June 1997 3-for-2 share split). The aggregate
value of the Barefoot  transaction  (including  the amount paid in redemption of
the  Barefoot   shareholders   rights  plan  and   transaction   expenses)   was
approximately  $237,000,000.  At the time of the  transaction,  Barefoot was the
second largest provider of professional lawn care services in the United States.
Subsequent  to the  completion  of this  acquisition,  a portion of the Barefoot
operations were  transferred to  TruGreen-ChemLawn;  the balance of the Barefoot
operations were placed in a new subsidiary corporation of ServiceMaster Consumer
Services  with  headquarters  in  Columbus,  Ohio,  from which  support has been
provided to certain holders of franchises granted by Barefoot.

         Terminix.  Terminix  is a  wholly  owned  subsidiary  of  ServiceMaster
Consumer Services L.P. With over 3 million residential and commercial customers,
Terminix,  through its company-owned  branches and through  franchisees,  is the
leading provider of termite and pest control  services in the United States.  As
of  December  31,  1997,  Terminix  was  providing  these  services  through 290
company-owned  branches  in 45 states  and  Mexico and  through  241  franchised
branches in 28 states. Terminix also manages the following European pest control
companies,  all of which are  subsidiaries  of  TMX-Europe  B.V., a wholly owned
subsidiary of the  Registrant:  Terminix  Peter Cox Ltd., a leading pest control
and wood  preservation  company  in the United  Kingdom  and  Ireland;  Terminix
Protekta  B.V.  and Riwa  B.V.,  each a  leading  pest  control  company  in the
Netherlands and Belgium;  Anticimex  Development B.V., a holding company for the
leading pest control  company in Sweden and which also  operates in Norway;  and
the Stenglein Group, a group of pest control companies in Germany. Terminix also
provides termite and pest control services through  licensing  arrangements with
local  service  providers in seven other  countries.  The  Terminix  business is
seasonal in nature.

         Res/Com. Res/Com is a wholly owned subsidiary of ServiceMaster Consumer
Services L.P.  ServiceMaster,  through Res/Com, is the leading franchisor in the
United States in the residential and commercial cleaning field. Res/Com provides
carpet and upholstery  cleaning and janitorial  services,  disaster  restoration
services and window cleaning  services.  As of December 31, 1997, these services
were provided to approximately 1.7 million residential and commercial  customers
worldwide  through a network  of over  4,500  independent  franchisees.  Res/Com
provides its services through subsidiaries in Canada,  Germany,  Ireland and the
United Kingdom, and through licensing  arrangements with local service providers
in six other countries.

         Merry Maids.  Merry Maids is a wholly owned subsidiary of ServiceMaster
Consumer  Services  L.  P.  Merry  Maids  is  the  organization   through  which
ServiceMaster  provides  domestic house cleaning  services.  With  approximately
352,000  worldwide  customers,  Merry Maids is the leading  provider of domestic
house  cleaning  services in the United States.  As of December 31, 1997,  these
services  were  provided  through  27  company-owned  branches  in 19 states and
through 797  licensees  operating  in all 50 states.  Merry Maids also  provides
domestic house cleaning  services through  subsidiaries in Canada and the United
Kingdom and through licensing arrangements with local service providers in three
other countries.

         American Home Shield. AHS is a wholly owned subsidiary of ServiceMaster
Consumer  Services L.P. AHS is a leading  provider of home systems and appliance
warranty  contracts  ("warranty  contracts")  in the  United  States,  providing
homeowners  with  contracts  covering  the  repair or  replacement  of  built-in
appliances,  hot water heaters and electrical,  plumbing,  central heating,  and
central air conditioning  systems which malfunction by reason of normal wear and
tear. Warranty contracts are sold through participating real estate brokerage

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offices in conjunction with resales of  single-family  residences to homeowners.
AHS also sells warranty contracts directly to non-moving  homeowners by renewing
existing  contracts and through  various other  distribution  channels which are
currently  being  expanded.  As of December  31, 1997,  AHS  warranty  contracts
provided for  services to  approximately  568,000  homes  through  approximately
13,000 independent repair maintenance  contractors in 49 states and the District
of Columbia,  with  operations in California,  Texas and Arizona  accounting for
27%,  18% and 6%,  respectively,  of gross  contracts  written by AHS.  AHS also
provides home service warranty  contracts  through  licensing  arrangements with
local service providers in three other countries.

         AmeriSpec.  AmeriSpec is a wholly owned subsidiary of AHS. AmeriSpec is
a leading  provider of home  inspection  services in the United  States.  During
1997,  AmeriSpec conducted  approximately  100,000 home inspections in 42 states
and Canada, with operations in California,  New York and Illinois accounting for
23%,  6%, and 5%,  respectively,  of the gross number of  inspections  conducted
through AmeriSpec.

         Furniture  Medic.  Furniture  Medic is a  wholly  owned  subsidiary  of
ServiceMaster  Consumer Services L.P. Furniture Medic provides on-site furniture
repair and  restoration  services in 47 states.  As of December 31, 1997,  these
services were provided through 513 licensees.  Furniture Medic also provides its
services  through  subsidiaries  in Canada and the United  Kingdom  and  through
licensing arrangements with local service providers in two other countries.

         Rescue  Rooter.   Rescue  Rooter  is  a   wholly-owned   subsidiary  of
ServiceMaster  Consumer  Services L.P.  Rescue Rooter  acquired the business and
assets of Rescue  Industries,  Inc. on January 1, 1998.  Rescue Rooter  provides
plumbing  and drain  cleaning  services in ten states  through 20  company-owned
branches  and one  franchise  location.  In 1997,  Rescue  Rooter's  predecessor
performed services for approximately 400,000 customers. ServiceMaster expects to
put into place in the Spring of 1998 a plan under which certain key employees of
Rescue Rooter will be afforded the opportunity to collectively  purchase up to a
10% equity interest in Rescue Rooter pursuant to a management  equity plan. Such
interest  will be subject to  reciprocal  put and call rights  which will become
exercisable on January 1, 2003 and which will be consummated on the basis of the
then fair market value.

ServiceMaster Management Services

         ServiceMaster pioneered the providing of supportive management services
to health care  facilities by instituting  housekeeping  management  services in
1962. Since then,  ServiceMaster  has expanded its management  services business
such that it now provides a variety of supportive  management services to health
care,  education and business and industrial customers (including the management
of housekeeping,  plant operations and maintenance,  laundry and linen,  grounds
and  landscaping,   clinical  equipment   maintenance,   food  service,   energy
management, and total facility management). ServiceMaster's general programs and
systems free the customer to focus on its core business activity with confidence
that the support  services  are being  managed  and  performed  in an  efficient
manner.

     Management  Services L.P. is organized into three divisions,  each of which
provides  service on a nationwide  basis within its market.  These  markets are:
Healthcare Management Services;  Education Management Services; and Business and
Industry Management Services.

         For most of 1997, the first-tier subsidiary of the ServiceMaster parent
entity  was  primarily   responsible  for  overseeing  the  Management  Services
businesses which were conducted in foreign markets. However, at the end of 1997,
responsibility  for such businesses was transferred to ServiceMaster  Management
Services L.P.

         As  of  December  31,  1997,  ServiceMaster  was  providing  supportive
management  services  to  approximately  1,568  health  care  customers  and  to
approximately  375  educational  and commercial  customers.  These services were
being  provided in all 50 states and the  District of  Columbia.  Outside of the
United  States,   ServiceMaster  was  providing   management   services  through
subsidiaries in Canada and Japan,  through an affiliated  company in Mexico, and
through  licensing  arrangements  with local service providers in nineteen other
countries.

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         ServiceMaster   Healthcare   Management  Services.   The  ServiceMaster
Healthcare Services division of ServiceMaster Management Services L. P. combines
the resources of the healthcare  segment of  ServiceMaster  Management  Services
L.P., Diversified Health Services,  and their respective  subsidiaries to form a
comprehensive health services organization which provides management services to
acute care and long-term  care  facilities;  freestanding,  hospital-based,  and
government-owned  nursing homes;  skilled  nursing  facilities;  assisted living
facilities;  and hospital-based home health care agencies (as well as the direct
operation of freestanding  home health care agencies).  Various other healthcare
related services are provided by operating units within the Healthcare  Services
division.  As of  December  31,  1997,  the  ServiceMaster  Healthcare  Services
companies  had  management  services  contracts  with 1,568  customers in all 50
states.

         ServiceMaster  Education Management Services. The Education division of
ServiceMaster  Management  Services L.P. is a leading  provider to the education
market of  maintenance,  custodial and grounds  services.  The facilities  which
comprise the education  market include primary  schools,  secondary  schools and
school districts, private specialty schools and colleges and universities. As of
December  31,  1997,   ServiceMaster  was  serving  273  educational  customers.
ServiceMaster  believes there is potential for expansion in the education market
due to its current  relatively  low  penetration of that market and the trend of
educational   facilities   to  consider   outsourcing   more  of  their  service
requirements.  However,  a majority of the  educational  facilities  continue to
assume direct responsibility for managing their support functions.

         ServiceMaster  Business & Industry Management Services.  The Business &
Industry  division  of  ServiceMaster  Management  Services  L.P.  is a  leading
provider of plant operations and maintenance,  custodial and grounds  management
services to business and industrial customers in selected markets.  Such markets
include the food processing, transportation,  healthcare products and automotive
markets.  ServiceMaster  believes that there is potential for expansion in these
business and industrial markets due to  ServiceMaster's  current low penetration
of those markets,  the trend of businesses to consider outsourcing more of their
service  requirements and the trend of governmental  units to privatize parts of
their  operations.  As of  December  31,  1997,  ServiceMaster  was  serving  in
approximately 100 business or industrial customers.

ServiceMaster Employer Services

         ServiceMaster  Employer  Services,  through its  subsidiary,  Certified
Systems,   Inc.,  is  one  of  the  nation's   largest   professional   employer
organizations.  It provides more than 790 clients with administrative processing
of payroll,  worker's  compensation  insurance,  health insurance,  unemployment
insurance and other employee benefits.

International Operations

         Supportive  management  services and consumer services in international
markets are provided through licensing arrangements with local service providers
and  ownership of foreign  operating  companies.  Except as noted  below,  these
activities in Europe, Latin America and the Middle East are administered as part
of the operations of ServiceMaster  Management  Services L.P. and  ServiceMaster
Consumer  Services  L.P.,   respectively.   Operating  arrangements  and  market
expansion efforts in the Pacific Rim are administered by the parent company.

     In   1997,    ServiceMaster    disposed   of   its    interests    in   the
Tarmac/ServiceMaster  management  services joint venture in England and the Raab
Karcher/ServiceMaster  management  services  joint  venture  in  Germany.  These
dispositions resulted in a small profit on the Company's investment.

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Other Activities

         Supporting Departments. The Company has various departments responsible
for  technical,   engineering,   management  information,  planning  and  market
services, and product and process development activities. Various administrative
support  departments  provide  personnel,   public  relations,   administrative,
education, accounting, financial and legal services.

         Manufacturing  Division.  ServiceMaster  has a  manufacturing  division
which formulates, combines and distributes supplies, products and equipment that
are used internally in providing  management services to customers and which are
sold to licensees  for use in the operation of their  businesses.  ServiceMaster
has a small share of the market for the manufacture and distribution of cleaning
equipment, chemicals and supplies.

         Venture Fund.  ServiceMaster  Venture Fund L.L.C.,  a subsidiary of the
parent company (the "Venture Fund"),  invests in emerging growth companies which
show an ability to provide  innovative  service  technologies to ServiceMaster's
current and new customers. The Venture Fund is managed so as not to be intrusive
to the ongoing operations of the Company's operating units.

Industry Position, Competition and Customers

         The following  information  is based solely upon  estimates made by the
management   of   ServiceMaster   and  cannot  be   verified.   In   considering
ServiceMaster's industry and competitive positions, it should be recognized that
ServiceMaster  competes  with many other  companies in the sale of its services,
franchises  and products and that some of these  competitors  are larger or have
greater financial and marketing strength than ServiceMaster.

         The principal  methods of competition  employed by ServiceMaster in the
Consumer  Services   business  are  name  recognition,   assurance  of  customer
satisfaction  and a history of providing  quality  services to  homeowners.  The
principal  methods  of  competition  employed  by  ServiceMaster  in each of the
operating  units in the  Management  Services  business  are  price,  quality of
service and experience in providing management  services.  The principal methods
of competition  employed by ServiceMaster in the Employer  Services business are
name recognition, assurance of customer satisfaction and financial strength.

Consumer Services

         Subsidiaries of Consumer  Services provide a variety of residential and
commercial  services  under  their  respective  names on the  basis of their and
ServiceMaster's  reputation, the strength of their service marks, their size and
financial  capability,  and their training and technical support  services.  The
markets served by Terminix and TruGreen-ChemLawn are seasonal in nature.

         Lawn  Care  Services.  TruGreen-ChemLawn,  both  directly  and  through
franchisees,   provides  lawn  care  services  to  residential   and  commercial
customers. Competition within the lawn care market is strong, coming mainly from
regional and local,  independently  owned firms and from homeowners who elect to
care for their lawns through their own personal  efforts.  TruGreen-ChemLawn  is
the leading  national  lawn care company  within this market.  TruGreen-ChemLawn
also provides indoor plant maintenance to commercial customers.

         Lawn care  services are regulated by law in most of the states in which
TruGreen-ChemLawn  provides such services. These laws require licensing which is
conditional  on a showing of  technical  competence  and  adequate  bonding  and
insurance.  The lawn care  industry is regulated at the federal  level under the
Federal  Insecticide,  Fungicide and  Rodenticide  Act, and lawn care  companies
(such as TruGreen-ChemLawn)  which apply herbicides and pesticides are regulated
under the  Federal  Environmental  Pesticide  Control  Act of 1972.  Such  laws,
together  with a variety of state and local laws and  regulations,  may limit or
prohibit the use of certain herbicides and pesticides, and such restrictions may
adversely affect the business of TruGreen-ChemLawn.

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         Termite  and Pest  Control  Services.  The market for  termite and pest
control  services  to  commercial  and  residential   customers   includes  many
competitors.  Terminix is the leading  national termite and pest control company
within this market.  Competition  within the termite and pest control  market is
strong,  coming  mainly  from  regional  and local,  independently  owned  firms
throughout  the United States and from one other large company which operates on
a national basis.

         Termite and pest control  services are  regulated by law in most of the
states in which Terminix  provides such services.  These laws require  licensing
which is conditional on a showing of technical  competence and adequate  bonding
and  insurance.  The  extermination  industry is regulated at the federal  level
under the Federal  Insecticide,  Fungicide  and  Rodenticide  Act, and pesticide
applicators  (such as Terminix)  are regulated  under the Federal  Environmental
Pesticide  Control Act of 1972. Such laws,  together with a variety of state and
local laws and regulations, may limit or prohibit the use of certain pesticides,
and such restrictions may adversely affect the business of Terminix.

         House  Cleaning  Services.  The  market  for  domestic  house  cleaning
services  is highly  competitive.  In urban areas the market  involves  numerous
local companies and a few national  companies.  ServiceMaster  believes that its
share of the total potential market for such services is small and that there is
significant  potential  for  further  expansion  of its  housecleaning  business
through   continued   internal   expansion  and  greater   penetration   of  the
housecleaning  market.  Through its company-owned  branches and its franchisees,
ServiceMaster  has a small share of the market for the  cleaning of  residential
and commercial buildings.

         Home  Systems and  Appliance  Warranty  Contracts.  The market for home
systems and  appliance  warranty  contracts  is  relatively  new.  ServiceMaster
believes  that AHS  maintains a favorable  position in its  industry  due to the
system  developed  and used by AHS for  accepting,  dispatching  and  fulfilling
service  calls from  homeowners  through a  nationwide  network  of  independent
contractors.  AHS also has a computerized information system developed and owned
by AHS, and an electronic digital voice  communication  system through which AHS
handled more than 7.5 million calls in 1997.

         Home  Inspection  Services.  AmeriSpec  is a leading  provider  of home
inspection  services  in the United  States.  Competition  within this market is
strong, coming mainly from regional and local, independently owned firms.

         Furniture  Repair  Services.  The market for on-site  furniture  repair
services  is  relatively  new.   ServiceMaster  believes  that  Furniture  Medic
maintains  a  favorable   position  in  its   industry   due  to  its   patented
environmentally  sensitive  procedure for repairing  furniture in the customer's
home.

         Plumbing and Drain Cleaning Services. The market for plumbing and drain
cleaning  services is highly  competitive in both the residential and commercial
sectors. Rescue Rooter believes that its share of the total potential market for
such  services  is small and that  there is  significant  potential  for  future
expansion and penetration.  Plumbing is regulated by most states in which Rescue
Rooter  provides  such  services.  The level of  licensing  varies from state to
state.  There  are no state or  federal  guidelines  regulating  drain  cleaning
services.

Management Services

         Health  Care.  Within the market  consisting  of  general  health  care
facilities  having 50 or more beds,  ServiceMaster  is the  leading  supplier of
plant operations and maintenance,  housekeeping, clinical equipment maintenance,
and  laundry  and  linen   management   services.   As  of  December  31,  1997,
ServiceMaster   was  serving   approximately   1,568   customers   and  managing
approximately  1,900  health  care  facilities.  The  majority  of  health  care
facilities  within  this market not  currently  served by  ServiceMaster  assume
direct responsibility for managing their own non-medical support functions.

Page 7
<PAGE>
         ServiceMaster  believes  that its  management  services for health care
facilities  may expand by the addition of facilities  not presently  served,  by
initiating  additional  services at  facilities  which use only a portion of the
services now offered,  by the  development  of new services and by growth in the
size of facilities served. At the same time, industry consolidation,  changes in
use and methods of health care  delivery and payment for services  (including in
particular changes in Medicare reimbursement regulations) continue to affect the
health care environment.

         Education.  ServiceMaster is a leading provider to the education market
of maintenance,  custodial and grounds  services.  The facilities which comprise
the education market served by ServiceMaster include primary schools,  secondary
schools  and school  districts,  private  specialty  schools  and  colleges  and
universities.  As of December 31, 1997,  ServiceMaster was serving approximately
273  customers  and  managing  approximately  5,362  facilities.   ServiceMaster
believes  there is potential for  expansion in the  education  market due to its
current  relatively low  penetration of that market and the trend of educational
facilities to consider outsourcing more of their service requirements.  However,
a  majority  of  the   educational   facilities   continue   to  assume   direct
responsibility for managing their support functions.

         Business and  Industry.  ServiceMaster  is a leading  provider of plant
operations  and  maintenance,  custodial  and  grounds  management  services  to
business and industrial  customers in selected markets.  ServiceMaster  believes
that there is potential for expansion in those business and  industrial  markets
which  ServiceMaster has elected to emphasize due to ServiceMaster's low current
penetration  of those markets,  the trend of businesses to consider  outsourcing
more of  their  service  requirements  and the  trend of  governmental  units to
privatize  parts of their  operations.  The emphasized  markets include the food
processing,  transportation,  healthcare products, and automotive markets. As of
December 31, 1997,  ServiceMaster  was serving  approximately  100 customers and
managing approximately 530 business or industrial facilities.

Major Customers

         ServiceMaster  has no single  customer which accounts for more than 10%
of its total  revenues.  No part of the  Company's  business is  dependent  on a
single  customer  or a few  customers,  the loss of which  would have a material
adverse effect on the Company as a whole. Revenues from governmental sources are
not material.

Employees

         On December 31, 1997, ServiceMaster had a total of approximately 45,825
employees.

         ServiceMaster  provides its employees  with annual  vacation,  medical,
hospital and life insurance  benefits and the right to participate in additional
benefit plans which are described in the Notes to Financial  Statements included
in the 1997 Annual Report.

Year 2000 Computer Program Compliance

         Certain computer programs use two digits rather than four to define the
applicable year and consequently  many systems may not function  properly beyond
the year 1999 unless they are remediated. In addition, certain computer programs
are  unable  to  recognize  the  year  2000 as a leap  year.  ServiceMaster  has
conducted a review of its  computer  systems to identify  systems  that could be
affected by the year 2000 problem and has determined  that the Company will need
to replace or  remediate  many of its  systems to  facilitate  their  continuing
reliable  operation.  The Company  currently  believes  that  expenses  directly
related to this  effort  will not have a material  impact on the  results of its
operations.

         Although the Company believes that critical remediation efforts will be
completed  prior to the year 2000,  the  untimely  completion  of these  efforts
could,  in  certain  circumstances,  have  a  material  adverse  effect  on  the
operations of the Company.

Page 8
<PAGE>
         In addition,  the Company is in the process of determining  whether the
external  parties and  systems  with which the Company  interacts  and  external
systems for which the Company has certain  maintenance  responsibilities  are in
compliance  and whether  non-compliance  of these  systems could have a material
adverse impact on the Company.


Item 2.  Properties

         The  headquarters  facility  of  ServiceMaster,  which  also  serves as
headquarters   for   ServiceMaster   Management   Services,   is  owned  by  The
ServiceMaster  Company and is located on a ten-acre  tract at One  ServiceMaster
Way, Downers Grove,  Illinois.  The initial structure was built in 1963, and two
additions  were  completed  in 1968  and  1976.  In  early  1988,  ServiceMaster
completed  construction  of a two-story  15,000  square foot addition for office
space, food service demonstrations and dining facilities.  The building contains
approximately  118,900  square feet of air  conditioned  office  space and 2,100
square feet of laboratory space. In the Spring of 1992,  ServiceMaster completed
the conversion of  approximately  30,000 square feet of space formerly used as a
warehouse  to offices  for  Management  Services  and for The  Kenneth and Norma
Wessner Training Center.

         ServiceMaster  owns a seven-acre,  improved  tract at 2500  Warrenville
Road, Downers Grove,  Illinois,  which is adjacent to its headquarters facility.
In 1993,  ServiceMaster  substantially  remodeled  the building  and  thereafter
leased approximately half the space (50,000 square feet) to a commercial tenant.
The balance of the space is utilized by ServiceMaster personnel.

         ServiceMaster  leases  a  50,000  square  foot  facility  near  Aurora,
Illinois which is used by ServiceMaster as a warehouse/distribution center.

         ServiceMaster  believes that the facilities  described in the preceding
three  paragraphs  will  satisfy  the  Company's  needs for  administrative  and
warehouse space in the Chicago area for the immediate future.

         ServiceMaster owns four properties in Cairo, Illinois,  consisting of a
36,000 square foot,  three-story building used for manufacturing and warehousing
equipment,  supplies and products used in the business;  a warehouse and package
facility   comprising   30,000   square  feet;  a   three-story   warehouse  and
manufacturing building consisting of 43,000 square feet; and a 2,500 square foot
building  used for a machine  shop.  ServiceMaster  leases a 44,000  square foot
manufacturing  facility  in  Lancaster,  Pennsylvania,  which is used to provide
products and  equipment  primarily to  customers of  Management  Services in the
eastern  part of the  United  States.  Management  believes  that the  foregoing
manufacturing and warehouse facilities are adequate to support the current needs
of ServiceMaster.

         The headquarters for  ServiceMaster  Consumer Services L.P. are located
in leased  premises at 860 Ridge Lake  Boulevard,  Memphis,  Tennessee.  The 860
Ridge  Lake   Boulevard   facility   also   serves  as  the   headquarters   for
TruGreen-ChemLawn,   Terminix,  Res/Com,  Merry  Maids,  American  Home  Shield,
AmeriSpec and Furniture Medic. The headquarters for Rescue Rooter are located in
leased premises at 4850 Pacific Highway, San Diego, California.

         TruGreen-ChemLawn  owns 5 buildings  which are used as branch sites for
lawn care  services.  These  facilities  are  located  in Texas (2  properties),
Colorado (1 property), Ohio (1 property), and Georgia (1 property).

         Terminix  owns 20 buildings  which are used as branch sites for termite
and pest control  services.  These  properties are all one-story  buildings that
contain  both  office and storage  space.  These  properties  are located in New
Jersey (2  properties),  California  (2  properties),  Florida (10  properties),
Georgia (1 property), Illinois (1 property) and Texas (4 properties).

Page 9
<PAGE>
         American  Home Shield has retained some leased space in the building at
90  South E  Street,  Santa  Rosa,  California,  for  administrative  and  sales
operations.  Certain of  American  Home  Shield's  service  and data  processing
departments are located in premises owned by the company in Carroll,  Iowa. This
facility consists of a 43,000 square foot building on a seven-acre site.

         American Home Shield owns approximately 56 acres of land in Santa Rosa,
California  of which 39 acres are under  contracts  for sales to occur in mid to
late  1998.  This  land is held for  investment  purposes  and has been and will
continue to be offered for sale,  with the timing of sales  being  affected  by,
among other things, market demand,  zoning regulations,  and the availability of
financing to purchasers.

         Rescue Rooter owns two buildings  which are used for branch  operations
to provide plumbing and drain cleaning  services.  These facilities are located,
respectively in Phoenix, Arizona and St. Louis, Missouri.

         In 1997,  Diversified  Health Services  completed the construction of a
new headquarters  facility at 3839 Forest Hill-Irene Road,  Memphis,  Tennessee.
This  facility  also  serves  as  the  headquarters  of  ServiceMaster  Employer
Services. DHS leases other administrative facilities in St. Augustine,  Florida;
Atlanta,  Georgia;  Minneapolis,   Minnesota;  Plymouth  Meeting,  Pennsylvania;
Memphis,  Tennessee;  and Dallas,  Texas.  As of December 31,  1997,  DHS had an
ownership   interest  in  a  nursing  home  facility  through  a  joint  venture
arrangement in which DHS has a 50% interest.

         The headquarters  for  ServiceMaster  Employer  Services are located at
3839 Forest  Hill-Irene  Road,  Memphis,  Tennessee.  The company  leases  other
administrative  facilities in Little Rock, Arkansas and Memphis,  Tennessee. Its
subsidiary,   Certified  Systems,  Inc.,  leases  administrative  facilities  in
Mesquite, Texas.

Item 3.  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.  As of March 6, 1998,
these   proceedings   included  a  number  of  general   liability  actions  and
employment-related proceedings.

         Environmental Matters.  Terminix was one of several defendants named in
a suit filed by the United States Environmental Protection Agency (the "EPA") on
November 3, 1986 in the United States District Court for the Western District of
Tennessee,  to recover the costs of remediation at two sites in Tennessee  which
had been  designated  by the EPA as  "Superfund  sites" under the  Comprehensive
Environmental  Response  Compensation  and Liability Act ("CERCLA").  In January
1992, the EPA issued a Unilateral  Administrative  Order for Remedial Design and
Remedial Action which required  Terminix and other initial  defendants and third
party defendants to clean up one of these sites.  Terminix agreed, on an interim
basis, to a 10% allocation of the cost of the  remediation  work. The parties to
the interim allocation  agreement remained in disagreement with the EPA over the
most appropriate remediation procedures to be followed at the site and they were
in   disagreement   among   themselves   regarding  the  final   allocations  of
responsibility.  With respect to the second site, the companies cited by the EPA
all  disclaimed  responsibility.  Two of the  defendant  parties  settled  their
disagreement  with the EPA but, until March 20, 1997,  Terminix had not resolved
its disagreement  with the other two defendant  parties as to Terminix's  proper
participation. However, on March 20, 1997, Terminix settled this matter with the
other two parties as to all past costs and agreed to arbitrate any  disagreement
over the  allocation of future costs.  On October 22, 1997,  the time expired in
which a demand for arbitration could be filed. Accordingly,  Terminix's share of
future  remediation  costs  was  established  at 10%.  The  aggregate  financial
commitment  of  Terminix  is  well  within  the  parameters  set  forth  in  the
discussions  of this matter in previous Form 10-K reports and is not material to
Terminix's business, financial condition or results of operations.


Item 4.  Submission of Matters to a Vote of Security Holders

         No matters were submitted  during the fourth quarter of the fiscal year
covered by this report to a vote of security holders.

Page 10
<PAGE>

                                     PART II

Item 5.  Market for Registrant's Shares and Related Shareholder Matters

         Except for the  information set forth in the second and third sentences
of this Item 5, the portions of the ServiceMaster  Annual Report to Shareholders
for 1997 under the captions  "Statements of Shareholders'  Equity" (page 33) and
"Cash  Distributions Per Share" and "Price Per Share" in the Quarterly Operating
Results  table (page 41) supply the  information  required by this item and such
portions are hereby incorporated herein by reference. The Registrant's shares of
common  stock are listed and  traded on the New York  Stock  Exchange  under the
symbol "SVM".  At March 6, 1998,  the  Registrant's  shares of common stock were
held of record by approximately 71,000 persons.


Item 6.  Selected Financial Data

         The portion of the ServiceMaster Annual Report to Shareholders for 1997
in the Financial  Statements and Management  Discussion section ("FSMD Section")
under the caption  "Eleven Year Financial  Summary"  (pages 26-27)  supplies the
information required by this item and such portion is hereby incorporated herein
by reference.


Item 7.  Management Discussion and Analysis of Financial Condition and Results
         of Operations

         Management  Discussion and Analysis of Financial  Condition and Results
of Operations  for the three years ended  December 31, 1997, is contained in the
FSMD Section of the  ServiceMaster  Annual  Report to  Shareholders  for 1997 on
pages 21-25 and is hereby incorporated herein by reference.


Item 8.  Financial Statements and Supplementary Data

         The consolidated  statements of financial  position of ServiceMaster as
of December 31, 1997 and 1996, and the consolidated  statements of income,  cash
flows and shareholders'  equity for the years ended December 31, 1997, 1996, and
1995 and notes to the  consolidated  financial  statements  are contained in the
FSMD Section of the  ServiceMaster  Annual  Report to  Shareholders  for 1997 on
pages 28-41 are incorporated herein by reference.  The report of Arthur Andersen
LLP thereon dated January 26, 1998,  and the summary of  significant  accounting
policies are contained in the FSMD Section of the ServiceMaster Annual Report to
Shareholders  for 1997 on pages  28-29  and are  hereby  incorporated  herein by
reference.


Item 9.  Disagreements on Accounting and Financial Disclosure

         None.


Page 11
<PAGE>

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant

Directors

         The information  contained under the heading "Election of Directors" in
the definitive  proxy  statement for the Company's May 1, 1998 Annual Meeting of
Stockholders is incorporated herein by reference.

Senior Management Advisers

         The  Bylaws of the  Company  provide  that the Board of  Directors  may
appoint  officers  of the Company or a  subsidiary  and other  persons  having a
special  relationship to ServiceMaster to serve as Senior  Management  Advisers.
Senior Management Advisers attend the meetings of the Board and advise the Board
but do not have the power to vote.  The Board has  determined  that  providing a
greater number of officers the opportunity to advise and interact with the Board
is in the best interest of ServiceMaster as well as the individual officers. The
Senior Management Advisers receive no special compensation for their services in
this capacity.

         The Board of Directors has appointed the persons listed below as Senior
Management  Advisers effective as of the 1997 annual meeting of the shareholders
of  ServiceMaster  Management  Corporation  to serve in such capacity  until the
annual  meeting  of  stockholders  of the  Company  in 1998 or  until  otherwise
determined by the Board of Directors.

         Robert  D.  Erickson,  age 54,  is an  Executive  Vice  President.  Mr.
Erickson  was a  director  of  ServiceMaster  from  May  1987  to May  1993.  He
previously served as a director of ServiceMaster  from May 1981 to June 1984. He
served  as  the  President  and  Chief  Operating  Officer  of   ServiceMaster's
International  business unit from October 1993 to December 1997,  Executive Vice
President  and  Chief  Operating  Officer  of  the  International   division  of
ServiceMaster from November 1992 to October 1993 and as Executive Vice President
and Chief Operating Officer, People Services, from January 1990 to October 1992.

         Donald K. Karnes, age 47, is Group President of  TruGreen-ChemLawn  and
Terminix.   He   served   as   President   and  Chief   Operating   Officer   of
TruGreen-ChemLawn  from January 1992 to December  1995.  From January 1, 1990 to
December 31, 1991, he was Senior Vice President, TruGreen Limited Partnership.

         Robert F. Keith,  age 41, is  President  and Chief  Operating  Officer,
ServiceMaster  Management  Services.  He served as President and Chief Operating
Officer, ServiceMaster Consumer Services from July 1994 to December 31, 1996 and
as Group President,  ServiceMaster Consumer Services, from November 1992 to July
1994.  He was Vice  President,  Treasurer  and Chief  Financial  Officer  of The
ServiceMaster Company L. P. from November 1989 to October 1992.

         Jerry D. Mooney,  age 44, is  President  and Chief  Operating  Officer,
ServiceMaster Employer Services.  Previously, he was President,  Health Care New
Business Initiatives, and President and Chief Executive Officer of ServiceMaster
Diversified Health Services,  Inc. He is also a director,  chairman of the audit
committee  and  member of the  compensation  committee  of  Concord  EFS,  Inc.,
Memphis, Tennessee, involved primarily in the electronic processing of debit and
credit card  transactions.  He also serves on an Advisory  Board for  SouthTrust
Corporation.

Page 12
<PAGE>
         Ernest J. Mrozek,  age 44, is President  and Chief  Operating  Officer,
ServiceMaster  Consumer  Services.  He served as Senior Vice President and Chief
Financial  Officer of the Registrant  from January 1, 1995 to December 31, 1996.
He served as Vice President and Chief  Financial  Officer of the Registrant from
May 1994 to December  1994, as Vice  President,  Treasurer  and Chief  Financial
Officer from November 1, 1992 to April 30, 1994, and as Vice President and Chief
Accounting Officer, from January 1, 1990 to October 31, 1992.

         Brian D. Oxley,  age 47, is  Executive  Vice  President,  New  Business
Initiatives. He served as President and Chief Operating Officer of ServiceMaster
Management  Services and ServiceMaster  Healthcare Services from January 1994 to
December 31, 1996.  From  November  1992 to December 31, 1993,  he served as the
President  and Chief  Executive  Officer of the  International  and New Business
Development  Group.  He  served  as  Executive  Vice  President,   New  Business
Development  from  January  1991  to  November  11,  1992  and as  President  of
International Services from January 1, 1988 to November 11, 1992.

         Steven C.  Preston,  age 37, has served as Senior  Vice  President  and
Chief Financial  Officer since April 1, 1997. From August 1993 to March 1997, he
was Senior Vice  President and Corporate  Treasurer for First Data  Corporation,
Atlanta,  Georgia.  From October 1985 to August 1993, he served as an investment
banker at Lehman Brothers, New York, New York.

Page 13
<PAGE>
Executive Officers of ServiceMaster

         The following table shows: (i) the names and ages (as of March 6, 1998)
of the present executive officers of the Company;  (ii) all positions  presently
held by each  officer;  and (iii) the year each person  became an officer.  Each
person named has served as an officer of the Company and its predecessor company
continuously  since the year shown.  There are no arrangements or understandings
between any executive officer and any other person pursuant to which the officer
was or is to be selected as an officer.
<TABLE>
<S>                        <C>      <C>                                                                        <C>


                                                                                                       First Became
 Name                      Age      Present Position                                                     An Officer

C. William Pollard         59       Chairman and Director                                                      1977

Carlos H. Cantu            64       President and Chief Executive Officer and Director                         1986

Charles W. Stair           57       Vice Chairman and Director                                                 1973

Phillip B. Rooney          53       Vice Chairman and Director                                                 1997

Ernest J. Mrozek           44       President and Chief Operating Officer, Consumer Services, and a
                                    Senior Management Adviser                                                  1987

Robert F. Keith            41       President and Chief Operating Officer, Management Services, and            1986
                                    a Senior Management Adviser

Robert D. Erickson         54       Executive Vice President and a Senior Management Adviser                   1976

Brian D. Oxley             47       Executive Vice President and a Senior Management Adviser                   1983

Vernon T. Squires          63       Senior Vice President and General Counsel                                  1987

Steven C. Preston          37       Senior Vice President and Chief Financial Officer                          1997

Eric R. Zarnikow           38       Vice President and Treasurer                                               1994

Deborah A. O'Connor        35       Vice President and Controller                                              1993
</TABLE>


     Messrs. Pollard, Cantu, Stair and Rooney are also Directors of the Company.
See "Election of Directors" in the definitive  proxy statement for the Company's
1998 Annual Meeting of Stockholders for biographical information with respect to
these persons.  Messrs.  Mrozek, Keith,  Erickson,  Oxley and Preston are Senior
Management Advisers.  See pages 12-13 for biographical  information with respect
to these persons.

         Vernon T.  Squires,  age 63, has served as Senior  Vice  President  and
General  Counsel since January 1, 1988. He served as Vice  President and General
Counsel  from April 1, 1987 until  December 31,  1987.  He was an associate  and
partner  with the law firm of Wilson &  McIlvaine  in Chicago,  specializing  in
corporate and tax law, from 1960 to April 1, 1987. He is presently of counsel to
that firm.

         Eric R.  Zarnikow,  age 38, has served as Vice  President and Treasurer
since May 1, 1994.  From August 1991 to April 1994, he served as Vice  President
and Treasurer of Gaylord Container Corporation.

Page 14
<PAGE>
         Deborah  A.  O'Connor,  age  35,  has  served  as  Vice  President  and
Controller  since  January 1, 1993.  From July 1991 to  December  1992,  she was
Manager of Financial  Projects.  She previously had practiced public  accounting
with Arthur Andersen LLP since 1984.

Compliance With Section 16(a) of The Exchange Act of 1934

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  officers and directors,  and persons who own more than ten percent of
ServiceMaster's  shares,  to file reports of ownership  and changes in ownership
with the Securities and Exchange  Commission (the "Commission") and the New York
Stock Exchange. The Commission's regulations require certain officers, directors
and  greater-than-ten-percent  shareholders  to furnish to the Company copies of
all Section 16(a) forms that they file.  During 1997, the Company's  predecessor
received Section 16(a) forms from such officers and directors.  As of January 1,
1998, the Company did not have any  shareholders  with an interest  greater than
ten percent.

         Based solely on a review of the copies of Section 16(a) forms  received
by the Company and its  predecessor or on written  representations  from certain
reporting  persons that no Form 5 was required  for those  persons,  the Company
believes  that during 1997 the  officers  and  directors  of the Company and its
predecessor complied with applicable filing requirements, except that one report
covering  one  February  1997  transaction  for 943 shares was filed late by Mr.
Mrozek and one report  covering  one December  1997  transaction  for  3,194,609
shares was filed late by Mr. Peterson.

Item 11.  Executive Compensation

         The information  contained under the heading  "Executive  Compensation"
(except  those  portions  relating  to Item 13  below) in the  definitive  proxy
statement  for the  Company's  May 1, 1998  Annual  Meeting of  Stockholders  is
incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

         The information  contained under the heading  "Principal  Stockholders"
and "Management  Ownership" in the definitive  proxy statement for the Company's
May 1, 1998 Annual Meeting of Stockholders is incorporated herein by reference.

Item 13.  Certain Relationships and Related Miscellaneous Transactions

         The information  contained under the heading  "Executive  Compensation"
(except  those  portions   relating  to  Item  11  above)  and  the  subheadings
"Compensation of Directors" and "Ownership  Information" in the definitive proxy
statement  for the  Company's  May 1, 1998  Annual  Meeting of  Stockholders  is
incorporated herein by reference.

Page 15
<PAGE>
                                     PART IV


Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)   Financial Statements, Schedules and Exhibits

         1.  Financial Statements

                  The  documents  shown  below are  contained  in the  Financial
                  Statements and Management  Discussion and Analysis  section of
                  the  ServiceMaster  Annual Report to Shareholders for 1997, on
                  pages 21 - 41 and are incorporated herein by reference:

                           Summary of Significant Accounting Policies

                           Report of Independent Public Accountants

                           Consolidated Statements of Income for the three years
                           ended December 31, 1997, 1996 and 1995

                           Consolidated Statements of Financial Position as of
                           December 31, 1997 and 1996

                           Consolidated  Statements  of Cash Flows for the three
                           years ended December 31, 1997, 1996 and 1995

                           Consolidated  Statements of Shareholders'  Equity for
                           the three years ended  December  31,  1997,  1996 and
                           1995

                           Notes to the Consolidated Financial Statements

         2.  Financial Statements Schedules

                  Schedule  IV--Amounts  Receivable  from  Related  Parties  and
                  Underwriters,  Promoters,  and  Employees  other than  Related
                  Parties.  The items required by this Schedule are incorporated
                  into the  information  relating to Share  Grants on page 29 of
                  the definitive  proxy  statement for the Company's May 1, 1998
                  Annual Meeting of Stockholders.

                  Included in Part IV of this Report:

                         Schedule VIII--Valuation and Qualifying Accounts

                         Report of Independent Public Accountants on Schedules

                         Exhibit 23 -- Consent of Independent Public Accountants

         Other schedules are omitted because of the absence of conditions  under
which they are required or because the required  information is presented in the
financial statements or notes thereto.

Page 16
<PAGE>
         3.  Exhibits

                  The  exhibits  filed with this report are listed on pages 24 -
28 herein (the "Exhibit Index").

                  The  following  entries in the  Exhibit  Index are  management
                  contracts or compensatory  plans in which a director or any of
                  the named  executive  officers of the  Registrant  does or may
                  participate.  Reference  is made to the Exhibit  Index for the
                  filings with the  Commission  which contain such  contracts or
                  plans.
<TABLE>
<CAPTION>


                  Exhibit                   Contract or Plan
                  -------           ----------------------------------------------------------------------
                  <C>               <S>

                  10.2              Deferred Directors Fee Agreement.

                  10.3              Incentive Reward Compensation Plan.

                  10.4              ServiceMaster Profit Sharing, Savings & Retirement Plan as amended and
                                    restated effective January 1, 1987.

                  10.6              ServiceMaster 10-Plus Plan.  See also Item 10.11. *

                  10.8              Directors Deferred Fees Plan (ServiceMaster Shares Alternative).

                  10.11             ServiceMaster 10-Plus Plan as amended September 3, 1991. *

                  10.13             ServiceMaster 1994 Non-Employee Directors Share Option Plan.**

                  10.15             ServiceMaster 1997 Share Option Plan. *

                  10.17             ServiceMaster 1998 Equity Incentive Plan (subject to shareholder approval).

                  10.20             ServiceMaster  1998  Non-Employee  Directors
                                    Discounted  Stock  Option  Plan  (subject to
                                    shareholder approval).

                  10.21             ServiceMaster 1998 Long-Term Performance Award Plan (subject to
                                    shareholder approval).

                  ---------

                   *  To be superceded by Item 10.17
                  **  To be superceded by Item 10.20
</TABLE>

Page 17
<PAGE>
(b) Reports on Form 8-K filed during the last quarter of 1997

         1.  Current  Report  on  Form  8-K  filed  by   ServiceMaster   Limited
Partnership on December 27, 1997.

                  Announcement of (i) the adoption by The ServiceMaster  Company
                  of an Amended and Restated  Certificate of  Incorporation  and
                  the filing thereof with the Secretary of State of the State of
                  Delaware;  (ii)  adoption  by  The  ServiceMaster  Company  of
                  Bylaws, a Shareholders  Rights Plan and an Agreement of Merger
                  and  Reorganization  as amended and  restated as of October 3,
                  1997;   and  (iii)  the   filing  by   ServiceMaster   Limited
                  Partnership  of a certificate  of merger with the Secretary of
                  State of the State of Delaware.

                  Financial Statements:  none

         2.       Current  Report  on Form 8-K  filed by  ServiceMaster  Limited
                  Partnership   on   December   29,   1997  on   behalf  of  The
                  ServiceMaster Company.

                  Announcement  that The  ServiceMaster  Company  had become the
                  parent  entity  in  the  ServiceMaster   enterprise  effective
                  December 26, 1997 at 11:59 P.M.,  Eastern  Standard Time, that
                  limited partner units of ServiceMaster Limited Partnership had
                  converted  to  shares  of  common  stock of The  ServiceMaster
                  Company  on a  one-for-one  basis,  and  that no  exchange  of
                  certificates for partnership units for certificates for shares
                  of common stock is required.

                  Financial Statements:  none


Certain Undertakings With Respect To Registration Statements on Form S-8

         For the purpose of complying with the amendments to the rules governing
Form S-8  (effective  July 13,  1990)  under  the  Securities  Act of 1933,  the
Registrant hereby undertakes as follows, which undertaking shall be incorporated
by reference into each of the Registrant's  Registration Statements on Form S-8,
including No. 33-19763 and No. 2-75851:

         Insofar as indemnification for liabilities arising under the Securities
         Act of 1933 may be permitted  to  directors,  officers and  controlling
         persons of the  Registrant  pursuant to the  foregoing  provisions,  or
         otherwise,  the  Registrant has been advised that in the opinion of the
         Securities  and Exchange  Commission  such  indemnification  is against
         public  policy  as  expressed  in the  Securities  Act of 1933  and is,
         therefore, unenforceable. In the event that a claim for indemnification
         against such  liabilities  (other than the payment by the Registrant of
         expenses incurred or paid by a director,  officer or controlling person
         of the  Registrant  in the  successful  defense of any action,  suit or
         proceeding) is asserted by such director, officer or controlling person
         in connection  with the  securities  being  registered,  the Registrant
         will,  unless in the opinion of its counsel the matter has been settled
         by controlling precedent, submit to a court of appropriate jurisdiction
         the  question  whether  such  indemnification  by it is against  public
         policy  as  expressed  in the Act and  will be  governed  by the  final
         adjudication of such issue.

Page 18
<PAGE>
                                                                   SCHEDULE VIII

                            THE SERVICEMASTER COMPANY

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)
<TABLE>
<CAPTION>

                                                  Additions      Deductions
                                   Balance at    Charged to     Write-offs of
                                   Beginning of   Costs and     Uncollectible  Balance at
        Description                   Period      Expenses        Accounts     End of Period

<S>                                    <C>            <C>            <C>       <C>


AS OF DECEMBER 31, 1997:
 Allowance for doubtful accounts--

  Accounts receivable (current)        $24,117         20,183         16,756    $27,544
                                       -------        -------        -------    -------
  Notes receivable (current)           $ 2,170          2,507              0   $  4,677
                                       -------        -------        -------   --------


AS OF DECEMBER 31, 1996:
 Allowance for doubtful accounts--

  Accounts receivable (current)        $18,029        20,517          14,429    $24,117
                                       -------        ------          ------    -------
  Notes receivable (current)           $ 2,439            59             328   $  2,170
                                       -------       -------          ------   --------


AS OF DECEMBER 31, 1995
 Allowance for doubtful accounts--

  Accounts receivable (current)        $17,610         16,878        16,459     $18,029
                                       -------        -------        ------     -------
  Notes receivable (current)           $ 2,504            350           415    $  2,439
                                       -------        -------        ------     -------
</TABLE>

Page 19
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS






To the Shareholders of ServiceMaster Limited Partnership:

We have audited in accordance with generally  accepted auditing  standards,  the
financial  statements  included in The ServiceMaster  Company's annual report to
shareholders  incorporated  by reference in this Form 10-K,  and have issued our
report  thereon  dated  January 26, 1998.  Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedules  included
in Part IV in the Form 10-K are the  responsibility of the Company's  management
and are presented  for purposes of complying  with the  Securities  and Exchange
Commission's  rules and are not part of the basic  financial  statements.  These
supporting  schedules have been subjected to the auditing  procedures applied in
the audit of the basic financial statements and, in our opinion, fairly state in
all material  respects the  financial  data  required to be set forth therein in
relation to the basic financial statements taken as a whole.




                                                     Arthur Andersen LLP
Chicago, Illinois
January 26, 1998


Page 20
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned thereunto duly authorized.

                            THE SERVICEMASTER COMPANY
                                   Registrant




Date: March 20, 1998                         By   /s/ C. WILLIAM POLLARD
                                                 -----------------------
                                                     C. William Pollard
                                    Chairman


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in their capacities and on the date indicated.

<TABLE>
<CAPTION>
         Signature                               Title                                  Date

<C>                                         <S>                                 <C>

/s/ C. WILLIAM POLLARD                      Chairman and Director               March 20, 1998
---------------------------
  C. William Pollard



/s/ CARLOS H. CANTU                         President and Chief Executive       March 20, 1998
---------------------------
  Carlos H. Cantu                           Officer and Director



/s/ CHARLES W. STAIR                        Vice Chairman and Director          March 20, 1998
---------------------------
 Charles W. Stair



/s/ STEVEN C. PRESTON                       Senior Vice President and           March 20, 1998
---------------------------
  Steven C. Preston                         Chief Financial Officer (Principal
                                                 Financial Officer)


/s/ DEBORAH A. O'CONNOR                     Vice President and                  March 20, 1998
-----------------------
  Deborah A. O'Connor                       Controller (Principal
                                                 Accounting Officer)


/s/ PAUL W. BEREZNY, JR.                    Director                            March 20, 1998
   Paul W. Berezny, Jr.

Page 21
<PAGE>
/s/ HENRY O. BOSWELL                        Director                            March 20, 1998
----------------------
   Henry O. Boswell



/s/ BRIAN GRIFFITHS                         Director                            March 20, 1998
   Brian Griffiths



/s/SIDNEY E. HARRIS                         Director                            March 20, 1998
   Sidney E. Harris



/s/ HERBERT P. HESS                         Director                            March 20, 1998
---------------------------
   Herbert P. Hess



/s/ MICHELE M. HUNT                         Director                            March 20, 1998
---------------------------
   Michele M. Hunt



/s/ GUNTHER H. KNOEDLER                     Director                            March 20, 1998
-----------------------
   Gunther H. Knoedler



/s/ JAMES D. McLENNAN                       Director                            March 20, 1998
----------------------
   James D. McLennan



/s/ VINCENT C. NELSON                       Director                            March 20, 1998
----------------------
   Vincent C. Nelson



/s/ DALLEN W. PETERSON                      Director                            March 20, 1998
---------------------------
   Dallen W. Peterson

Page 22
<PAGE>
/s/  STEVEN S REINEMUND                     Director                            March 20, 1998
--------------------------------
   Steven S Reinemund



/s/ PHILLIP B. ROONEY                       Vice Chairman and Director          March 20, 1998
-------------------------------
   Phillip B. Rooney



/s/ BURTON E. SORENSEN                      Director                            March 20, 1998
------------------------------------
   Burton E. Sorensen



/s/ DAVID K. WESSNER                        Director                            March 20, 1998
-------------------------------
   David K. Wessner
</TABLE>


Page 23
<PAGE>


                                  EXHIBIT INDEX

Exhibit No.                     Description of
Exhibit

  1.1        Underwriting  Agreement  dated  as of  August  6,  1997  among  The
             ServiceMaster   Company  and  J.P.  Morgan   Securities   Inc.,  is
             incorporated  by  reference  to  Exhibit  1.1 to the  ServiceMaster
             Limited Partnership,  The ServiceMaster Company Limited Partnership
             and ServiceMaster  Incorporated of Delaware Registration  Statement
             on Form S-3 filed with the  Securities  and Exchange  Commission on
             July 28, 1997 (the "July 28, 1997 Registration Statement").

  1.2        Underwriting  Agreement  dated as of  February  25,  1998 among The
             ServiceMaster  Company and J.P. Morgan  Securities  Inc.,  Goldman,
             Sachs & Co., BancAmerica Robertson Stephens,  First Chicago Capital
             Markets,  Inc. and  NationsBanc  Mongtomgery  Securities  L.L.C. is
             incorporated  by  reference  to Exhibit 1 to the Current  Report on
             Form 8-K as filed by The ServiceMaster Company on February 27, 1998
             (the "Company February 27, 1998 8-K").

  2.1         Acquisition   Agreement  dated  December  5,  1996  by  and  among
              ServiceMaster  Limited  Partnership,   ServiceMaster   Acquisition
              Corporation  and  Barefoot  Inc. is  incorporated  by reference to
              Annex A-1 to the Offering  Circular/Prospectus included as part of
              the  Registration  Statement on Form S-4 as filed by ServiceMaster
              Limited Partnership on January 17, 1997 (SEC Registration No.
              333-17759).

  2.2         Plan and  Agreement of Merger dated  December 5, 1996 by and among
              ServiceMaster  Limited  Partnership,   ServiceMaster   Acquisition
              Corporation  and  Barefoot  Inc. is  incorporated  by reference to
              Annex A-2 to the Offering  Circular/Prospectus included as part of
              the  Registration  Statement on Form S-4 as filed by ServiceMaster
              Limited Partnership on January 17, 1997 (SEC Registration No.
              333-17759).

  2.3         Merger and  Reorganization  Agreement  as amended and  restated on
              October 3, 1997 is  incorporated  by reference to Exhibit 5 to the
              Current  Report  on Form  8-K as filed  by  ServiceMaster  Limited
              Partnership  on  December  29, 1997 (the "SMLP  December  29, 1997
              8-K") and to Exhibit 5 to the Current  Report on Form 8-K as filed
              by The  ServiceMaster  Company on Form 8-K on  February  26,  1998
              second of three  8-K  reports  filed on that  date  (the  "Company
              February 26, 1998 8-K, No. 2").

  2.4         Certificate of Merger of NewSub B, Inc. into ServiceMaster Limited
              Partnership  in  accordance  with  Section  17-211 of the Delaware
              Revised  Uniform  Limited  Partnership  Act (the  "Reincorporating
              Merger"),  the filing of which was  certified by the  Secretary of
              State of the  State  of  Delaware  on  December  17,  1997 and the
              effective  date and time of which was  December  26, 1997 at 11:59
              P.M., Eastern Standard Time.

  2.5         Certificate of Merger of ServiceMaster Limited Partnership and The
              ServiceMaster  Company  Limited  Partnership  with  and  into  The
              ServiceMaster Company, a Delaware corporation,  in accordance with
              the General  Corporation Law of the State of Delaware,  the filing
              of which was  certified by the  Secretary of State of the State of
              Delaware on December 18, 1997 and the  effective  date and time of
              which was January 1, 1998 at 12:01 A.M., Eastern Standard Time.

  3.1         Amended  and  Restated   Certificate  of   Incorporation   of  The
              ServiceMaster  Company, a Delaware corporation,  as filed with the
              Secretary  of State,  State of  Delaware,  on  November 6, 1997 is
              incorporated  by reference  to Exhibit 1 to the SMLP  December 29,
              1997 8-K and to Exhibit 1 to the  Company  February  26, 1998 8-K,
              No. 2.

Page 24
<PAGE>
  3.2         Bylaws of The ServiceMaster Company as adopted on November 3, 1997
              are  incorporated  by reference to Exhibit 2 to the SMLP  December
              29,  1997 8-K and to Exhibit 2 to the  Company  February  26, 1998
              8-K, No. 2.

  4.1         Shareholder Rights Agreement between The ServiceMaster Company and
              the Harris Trust and Savings  Bank as adopted on December  12,1997
              is incorporated by reference to Exhibit 3 to the SMLP December 29,
              1997 8-K and to Exhibit 3 to the  Company  February  26, 1998 8-K,
              No. 2.

  4.2         The ServiceMaster Company: Certificate of Designation, Preferences
              and Rights of Junior  Participating  Preferred Stock, Series A, is
              incorporated  by reference  to Exhibit 4 to the SMLP  December 29,
              1997 8-K and to Exhibit 4 to the  Company  February  26, 1998 8-K,
              No. 2.

  4.3        Indenture  dated as of August  15,  1997  among  The  ServiceMaster
             Company (as successor to ServiceMaster  Limited Partnership and The
             ServiceMaster Company Limited Partnership) and the Harris Trust and
             Savings Bank as trustee is incorporated by reference to Exhibit 4.1
             to the July 28, 1997 Registration Statement.

  4.4        First Supplemental  Indenture dated as of August 15, 1997 among The
             ServiceMaster   Company  (as  successor  to  ServiceMaster  Limited
             Partnership and The ServiceMaster  Company Limited Partnership) and
             the Harris Trust and Savings Bank as trustee.

  4.5         Second  Supplemental  Indenture  dated as of January 1, 1998 among
              The ServiceMaster  Company (as successor to ServiceMaster  Limited
              Partnership and The ServiceMaster Company Limited Partnership) and
              the Harris  Trust and Savings Bank as trustee is  incorporated  by
              reference to Exhibit 2 to the Current  Report on Form 8-K as filed
              by The  ServiceMaster  Company on Form 8-K on  February  26,  1998
              first of  three  8-K  reports  filed on that  date  (the  "Company
              February 26, 1998 8-K, No. 1").

  4.6        Third  Supplemental  Indenture  dated as of March 2, 1998 among The
             ServiceMaster  Company  and the Harris  Trust and  Savings  Bank as
             trustee is  incorporated by reference to Exhibit 4.3 to the Current
             Report  on  Form  8-K as  filed  by The  ServiceMaster  Company  on
             February 27, 1998 (the "Company February 27, 1998 8-K").

4.7  Form of 6.95% Note due August 14,  2007 is  incorporated  by  reference  to
     Exhibit 4.1 to the July 28, 1997 Registration Statement.

4.8  Form of 7.45% Note due August 14,  2027 is  incorporated  by  reference  to
     Exhibit 4.2 to the July 28, 1997 Registration Statement.

4.9  Form of 7.10%  Note due  March 1,  2018 is  incorporated  by  reference  to
     Exhibit 4.1 to the Company February 27, 1998 8-K.

4.10 Form of 7.25%  Note due  March 1,  2038 is  incorporated  by  reference  to
     Exhibit 4.2 to the Company February 27, 1998 8-K.

Page 25
<PAGE>
 10.1        $300,000,000  Credit Agreement  between  ServiceMaster  and certain
             Lenders dated August 31, 1995 and  amendment  thereto dated October
             15,  1996 is  incorporated  by  reference  to Exhibit  10.33 to the
             Registration  Statement  on  Form  S-4 as  filed  by  ServiceMaster
             Limited Partnership on January 17, 1997 (SEC Registration No.
             333-17759).

10.2          $750,000,000  Five-Year Credit Agreement dated as of April 1, 1997
              among The  ServiceMaster  Company Limited  Partnership,  the First
              National Bank of Chicago and Morgan Guaranty Trust Company.

10.3          $250,000,000  364-Day Credit  Agreement  dated as of April 1, 1997
              among The  ServiceMaster  Company Limited  Partnership,  the First
              National Bank of Chicago and Morgan Guaranty Trust Company.

10.4 Form of Deferred  Directors Fee  Agreement as assumed by The  ServiceMaster
     Company in the  Reincorporating  Merger is  incorporated  by  reference  to
     Exhibit  10(c)(4)  to the  Annual  Report on Form  10-K for the year  ended
     December 31, 1980 as filed by ServiceMaster  Limited Partnership (the "1980
     10-K").

10.5         Incentive Reward  Compensation Plan as assumed by The ServiceMaster
             Company in the Reincorporating  Merger is incorporated by reference
             to Exhibit 10(c)(6) to the 1980 10-K.

10.6          ServiceMaster  Profit  Sharing,  Savings  and  Retirement  Plan as
              assumed by The ServiceMaster Company in the Reincorporating Merger
              amended and restated  effective January 1, 1987 is incorporated by
              reference to the exhibit so captioned to the Annual Report on Form
              10-K  for  the  year  ended   December   31,   1987  as  filed  by
              ServiceMaster Limited Partnership (the "1987 10-K").

10.7         The Terminix  International  Company L.P. Profit Sharing Retirement
             Plan (previously known as Cook  International,  Inc. Profit Sharing
             Retirement  Plan) effective  January 1, 1984;  Amendment No. One to
             The Terminix  International  Company L.P. Profit Sharing Retirement
             Plan  effective  January 1, 1986 and April 1, 1986;  Amendment  No.
             Two,  effective  April 1,  1986;  Amendment  No.  Three,  effective
             January 1, 1987 and  January 1, 1988;  The  Terminix  International
             Company L.P.  Profit  Sharing  Retirement  Trust,  all of which are
             incorporated by reference to Exhibit 10.15 to the 1987 10-K.

10.8         ServiceMaster  10-Plus Plan as assumed by The ServiceMaster Company
             in the  Reincorporating  Merger is  incorporated  by  reference  to
             Exhibit 4.2 to the ServiceMaster  Limited Partnership  Registration
             Statement on Form S-8 (No. 33-39148) filed with the SEC on February
             26, 1991 (the "10-Plus Registration Statement").

10.9         Form of Option  Agreement  for the  ServiceMaster  10-Plus  Plan is
             incorporated   by   reference   to  Exhibit   4.3  to  the  10-Plus
             Registration Statement.

10.10        Form  of  Directors  Deferred  Fees  Plan   (ServiceMaster   Shares
             Alternative)  as  assumed  by  The  ServiceMaster  Company  in  the
             Reincorporating  Merger is  incorporated  by  reference  to Exhibit
             10.18 to the Annual Report on Form 10-K for the year ended December
             31, 1990 (the "1990 10-K")

10.11        Form of Directors  Deferred Fees  Agreement  (ServiceMaster  Shares
             Alternative)  as  assumed  by  The  ServiceMaster  Company  in  the
             Reincorporating  Merger is  incorporated  by  reference  to Exhibit
             10.19 of the 1990 10-K.

Page 26
<PAGE>
10.12Form of ServiceMaster Deferred Fees Plan Trust is incorporated by reference
     to Exhibit 10.20 of the 1990 10-K.

10.13        ServiceMaster  10-Plus  Plan as  amended  September  3, 1991 and as
             assumed by The ServiceMaster Company in the Reincorporating  Merger
             is  incorporated by reference to Exhibit 10.21 to the Annual Report
             on Form  10-K for the year  ended  December  31,  1991  (the  "1991
             10-K").

10.14Form of Option  Agreement  for the  ServiceMaster  10-Plus  Plan as amended
     September 3, 1991 is incorporated by reference to Exhibit 10.22 to the 1991
     10-K.

10.15         ServiceMaster  1994  Non-Employee  Directors  Share Option Plan as
              assumed by The ServiceMaster Company in the Reincorporating Merger
              is incorporated  by reference to Exhibit 4.2 to the  ServiceMaster
              Limited Partnership  Registration Statement on Form S-8 filed with
              the  Securities  and Exchange  Commission  on October 5, 1994 (the
              "Directors Share Plan Registration Statement").

10.16         Form of Option Agreement for the  ServiceMaster  1994 Non-Employee
              Director Share Option Plan is incorporated by reference to Exhibit
              4.3 to the Directors Share Plan Registration Statement.

10.17         ServiceMaster   1997   Share   Option   Plan  as  assumed  by  The
              ServiceMaster   Company   in   the   Reincorporating   Merger   is
              incorporated by reference to Exhibit 10.28 to the Annual Report on
              Form  10-K  for the  year  ended  December  31,1996  as  filed  by
              ServiceMaster Limited Partnership (the "1996 10-K").

10.18Form of Option  Agreement for the  ServiceMaster  1997 Share Option Plan is
     incorporated by reference to Exhibit 10.29 to the 1996 10-K.

10.19         ServiceMaster  1998 Equity  Incentive  Plan as adopted on December
              11, 1997  (subject to  shareholder  approval) is  incorporated  by
              reference to Exhibit A to the Definitive  Proxy  Statement for the
              Registrant's May 1, 1998 Annual Meeting of Stockholders (the "1998
              Proxy Statement").

10.20Form of Option Agreement for the  ServiceMaster  1998 Equity Incentive Plan
     (Non-Qualifying Stock Options)

10.21Form of Option Agreement for the  ServiceMaster  1998 Equity Incentive Plan
     (Incentive Stock Options)

10.22         ServiceMaster 1998 Non-Employee  Directors Discounted Stock Option
              Plan as adopted on  December  11,  1997  (subject  to  shareholder
              approval)  is  incorporated  by reference to Exhibit B to the 1998
              Proxy Statement.

10.23         ServiceMaster 1998 Long-Term  Performance Award Plan as adopted on
              December   11,  1997   (subject  to   shareholder   approval)   is
              incorporated   by  reference  to  Exhibit  C  to  the  1998  Proxy
              Statement.

11   Exhibit  regarding  detail of income per share  computation for each of the
     three years ended  December  31,  1997,  1996 and 1995 is  incorporated  by
     reference to the footnote on page 39 of the 1997 Annual Report  (defined in
     Ex. 13).

13           The ServiceMaster  Annual Report to Shareholders for the year ended
             December 31, 1997 (the "1997 Annual Report"). The parts of the 1997
             Annual Report which are expressly  incorporated into this report by
             reference  shall be deemed filed with this report.  All other parts
             of the 1997 Annual Report are furnished for the  information of the
             Commission and are not filed with this report.

Page 27
<PAGE>
21           Subsidiaries of Registrant

23           Consent of Arthur Andersen LLP

27           Financial Data Schedule (EDGAR filing only)

99.1         Amended  and  Restated   Agreement  of  Limited   Partnership   for
             ServiceMaster  Consumer Services Limited Partnership dated November
             8, 1990 is  incorporated by reference to Exhibit 4.4 to the Current
             Report on Form 8-K as filed by ServiceMaster Limited Partnership on
             November 21, 1990.

99.2         Amended  and   Restated   Agreement  of  Limited   Partnership   of
             ServiceMaster   Management   Services  Limited   Partnership  dated
             December 1991 is  incorporated by reference to Exhibit 28.10 to the
             1991 10-K.

99.3         Amended  and   Restated   Agreement  of  Limited   Partnership   of
             ServiceMaster  Consumer Services Limited Partnership effective June
             30,  1992 is  incorporated  by  reference  to Exhibit  28.12 to the
             Annual Report on Form 10-K for the year ended  December  31,1992 as
             filed by ServiceMaster Limited Partnership.


Page 28
<PAGE>
                                Graphics Appendix


         This  appendix  describes  the  graphics  which  could  not be put into
electronic  format and which have been filed with the  Securities  and  Exchange
Commission as a paper filing.

         A Performance Graph is set forth on page 28 of the Company's definitive
proxy statement for the Annual Meeting of Stockholders to be held on May 1, 1998
which  consists of a line graph which compares the yearly  percentage  change in
ServiceMaster's  cumulative  total  shareholder  return on its  limited  partner
shares  (computed  in  accordance  with the Item  302(d)  of Reg.  S-K) with the
cumulative  return on the stocks of the  companies  within the S&P 500 Index and
with the Dow  Jones  Consumer  Services  Index  over the five year  period  from
January  1, 1993 to  December  31,  1997.  The chart  shows  that  ServiceMaster
outperformed  both indices in 1993,  1994,  1995,  1996 and 1997 by wide margins
over the last four years.

Page 29