-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TcaJof4C8wH0bsEN4DitqnQej49ofUsbygtYpENsbXQrJORSNbS3357t4Rt8wPAk j4w/OYicsyzklH5ad1nI9g== 0000070538-97-000016.txt : 19970619 0000070538-97-000016.hdr.sgml : 19970619 ACCESSION NUMBER: 0000070538-97-000016 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970618 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL SERVICE INDUSTRIES INC CENTRAL INDEX KEY: 0000070538 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 580364900 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03208 FILM NUMBER: 97625611 BUSINESS ADDRESS: STREET 1: 1420 PEACHTREE ST NE CITY: ATLANTA STATE: GA ZIP: 30309 BUSINESS PHONE: 4048531000 MAIL ADDRESS: STREET 1: 1420 PEACHTREE ST NE CITY: ATLANTA STATE: GA ZIP: 30309 11-K 1 NSI RETIREMENT AND 401(K) PLAN Page 1 of 12 Exhibit Index on Page 2 FORM 11-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]. For the fiscal year ended: December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. For the transition period from to Commission file number 1- 3208 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: National Service Industries Retirement and 401(k) Plan B. Name of issuer of the securities held pursuant to the plan and the address of the principal executive office: National Service Industries, Inc. 1420 Peachtree Street, NE Atlanta, Georgia 30309 Page 2 REQUIRED INFORMATION The following documents are filed as a part of this report: 1. Financial Statements Plan financial statements prepared in accordance with the financial reporting requirements of ERISA include the following: Report of Independent Public Accountants Statements of Net Assets Available for Benefits, with Fund Information, as of December 31, 1996 and 1995 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 1996 Notes to Financial Statements 2. Exhibits Sequentially Numbered The following exhibit is filed with this report: Page 23 Consent of Arthur Andersen LLP 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. National Service Industires Retirement and 401(k) Plan Date: June 18, 1997 By: National Service Industries, Inc. Plan Administrator By: /s/ James S. Balloun Name: James S. Balloun Title: Chairman and Chief Executive Officer Page 3 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Plan Administrator of National Service Industries Retirement and 401(k) Plan: We have audited the accompanying statements of net assets available for benefits of NATIONAL SERVICE INDUSTRIES RETIREMENT AND 401(k) PLAN as of December 31, 1996 and 1995 and the related statement of changes in net assets available for benefits, with fund information, for the year ended December 31, 1996. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1996 and 1995 and the changes in net assets available for benefits for the year ended December 31, 1996 in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The fund information in the statement of changes in net assets available for benefits is presented for the purpose of additional analysis rather than to present the changes in net assets available for benefits of each fund. The fund information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Atlanta, Georgia June 12, 1997 Page 4 NATIONAL SERVICE INDUSTRIES RETIREMENT AND 401(k) PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1996 AND 1995 1996 1995 INVESTMENT IN NSI DC TRUST, at fair value (Note 2): Balanced Fund ...................................... $151,080 $120,197 Diversified Equity Fund ............................ 373,961 271,482 Stable Value Fund .................................. 51,777 26,259 NSI Stock Fund--participant-directed ............... 74,366 50,620 Loan Fund .......................................... 18,230 11,703 International Fund ................................. 25,350 21,464 NSI Stock Fund--nonparticipant-directed ............ 142,568 90,064 837,332 591,879 CONTRIBUTIONS RECEIVABLE: Employer ........................................... 11,997 0 Participant ........................................ 2,076 0 Total contributions receivable ........... 14,073 0 REFUNDS PAYABLE TO PARTICIPANTS ........................ (8,250) 0 NET ASSETS AVAILABLE FOR BENEFITS ...................... $843,155 $591,879 The accompanying notes are an integral part of these statements. Page 5 NATIONAL SERVICE INDUSTRIES RETIREMENT AND 401(k) PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION, FOR THE YEAR ENDED DECEMBER 31, 1996 Participant-Directed Nonparticipant- Diversified Stable NSI Directed Balanced Equity Value Stock Loan International NSI Stock Fund Fund Fund Fund Fund Fund Fund Other Total CONTRIBUTIONS: Employer ........................... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 45,175 $2,076 $ 47,251 Participant ........................ 42,923 111,563 20,042 23,721 0 12,676 0 3,747 214,672 Total contributions ...... 42,923 111,563 20,042 23,721 0 12,676 45,175 5,823 261,923 NET GAIN FROM INVESTMENT IN NSI DC TRUST 20,116 61,793 2,796 9,632 0 2,543 17,323 0 114,203 BENEFITS PAID TO PARTICIPANTS .......... (7,513) (44,297) (40,643) (16,492) (829) (13,290) (9,957) 0 (133,021) INTRAPLAN TRANSFERS .................... (25,657) (28,364) 42,077 2,992 7,032 1,957 (37) 0 0 OTHER .................................. 1,014 1,784 1,246 3,893 324 0 0 0 8,261 NET INCREASE ........................... 30,883 102,479 25,518 23,746 6,527 3,886 52,504 5,823 251,366 NET ASSETS AVAILABLE FOR BENEFITS, December 31, 1995 ...................... 120,197 271,482 26,259 50,620 11,703 21,464 90,064 0 591,789 NET ASSETS AVAILABLE FOR BENEFITS, December 31,1996 ....................... $ 151,080 $ 373,961 $ 51,777 $ 74,366 $ 18,230 $ 25,350 $ 142,568 $5,823 $ 843,155
The accompanying notes are an integral part of this statement. Page 6 NATIONAL SERVICE INDUSTRIES RETIREMENT AND 401(k) PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 1. PLAN DESCRIPTION The following is a brief description of the National Service Industries Retirement and 401(k) Plan (the "Plan") of National Service Industries, Inc. of Georgia and NSI Enterprises, Inc. (together, the "Employer"). Both National Service Industries, Inc. of Georgia and NSI Enterprises, Inc. are wholly owned subsidiaries of National Service Industries, Inc. ("NSI"). This description is provided for informational purposes only. Participants should refer to the plan agreement for more complete information. General The Plan is a defined contribution plan established under the provisions of Section 401(a) of the Internal Revenue Code ("IRC"). The Plan covers all nonunion, full-time, salaried employees of the Employer who have attained the age of 20.5 with at least six months of service. Effective August 31, 1996, the Plan covers only full-time salaried employees who are classified by the Employer as corporate office personnel or treasury function personnel. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. Contributions Participants may elect to contribute between 1% and 10% of before-tax compensation, as defined in the Plan, subject to certain limitations under the IRC. Matching contributions are made by the Employer in an amount equal to 50% of the participant's contribution up to the lesser of 4% of compensation or $1,000 in a plan year. Additional discretionary amounts, as determined by the board of directors of NSI, may be contributed by the Employer and are allocated to participants at the discretion of the Employer. Vesting Participants are always fully vested in their individual contributions. Vesting of employer contributions occurs on an increasing scale, ranging from 10% vesting after two years of service, as defined, to 100% vesting Page 7 after seven years of service. Nonvested employer contributions are forfeited upon a participant's withdrawal from the Plan and are used to reduce future employer contributions. Administration All administrative expenses of the Plan were paid by the Employer during the year ended December 31, 1996. Participants' Accounts Individual accounts are maintained for each of the Plan's participants to reflect the particular participant's contributions and related employer contributions as well as the participant's share of the Plan's income and any related administrative expenses. The Plan assigns units to its participants. At December 31, 1996 and 1995, 79,302 and 60,829 units, respectively, were assigned to plan participants. Unit values for each investment fund were as follows at December 31, 1996 and 1995: 1996 1995 Balanced Fund .................. $ 26.40 $ 22.95 Diversified Equity Fund ........ 12.05 10.57 Stable Value Fund .............. 11.31 10.59 NSI Stock Fund ................. 14.52 12.39 International Fund ............. 5.01 4.59 Investment in Master Trust Under a trust agreement dated September 1, 1993, as amended, Wachovia Bank of Georgia, N.A. was appointed trustee of the NSI Defined Contribution Plans Master Trust (the "NSI DC Trust"). The Plan's assets are commingled in the NSI DC Trust together with the assets of certain defined contribution plans of other NSI divisions. The investments of the NSI DC Trust are subject to certain administrative guidelines and limitations as to type and amount of securities held. Certain fund assets are allocated to selected independent investment managers to invest under these general guidelines. Investment Options The separate investment options made available under the Plan may be changed, eliminated, or modified from time to time by the investment committee of the NSI DC Trust. Participants make their investment elections in 5% increments, with changes allowed on a daily basis. Participants may not direct the investment of employer matching or discretionary contributions. These are invested in the NSI Stock Fund discussed below. Page 8 The separate investment options offered by the Plan are as follows: o Diversified Equity Fund. This fund is a diversified stock fund designed to invest in a broad range of common stocks providing capital growth. o Stable Value Fund. This is a fixed income fund designed to provide a steady level of current income while focusing on preservation of principal. o Balanced Fund. This fund is invested in a changing mix of high-quality stocks and bonds. The fund is designed to provide capital growth and current income while limiting the risk of principal loss. o NSI Stock Fund. This fund is invested in NSI common stock, although it may hold other short-term investments from time to time. A participant may not direct more than 50% of his/her account balance to be invested in this fund. o International Fund. This fund is invested in the stock of non-U.S. companies and is designed to provide long-term growth. Loans to Participants The Plan permits loans to participants up to the lesser of 50% of the participant's vested account balance or $50,000. A participant has up to five years to repay the principal and interest, unless the loan is for the purchase of a primary residence, in which case the repayment period will be established at the time the loan is approved. Loan processing fees are charged directly to the participant's account. Interest rates on loans to participants are based on market rates, as determined by the plan administrator. Benefits A participant is entitled to receive the distribution of his/her vested account balance upon death, disability, or retirement (age 65). These benefits are payable in a lump-sum amount or can be paid in installments at the participant's election if his/her vested balance is greater than $3,500 and he/she is age 55 or older. A participant who terminated employment with the Employer for reasons other than these is entitled to receive his/her contributions in a lump sum as soon as administratively feasible. Benefits are payable in cash, except that any portion of a participant's account balance which is invested in the NSI Stock Fund may be distributed in the form of shares of NSI common stock, with fractional shares paid in cash. Hardship withdrawals may be made upon proven financial hardship of a participant, as defined in the plan agreement and as approved by the Plan's retirement committee. Plan Termination Although the Employer intends for the Plan to be permanent, the Plan provides that the Employer has the right to discontinue contributions or Page 9 to terminate the Plan at any time. In the event of plan termination, each participant shall be vested in the balance of his/her account and his/her proportionate share of any future adjustments. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accounts of the Plan are maintained by the trustee on the cash basis of accounting. The accompanying financial statements have been prepared using the accrual method of accounting by application of memorandum entries. The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan's management to use estimates and assumptions that affect the accompanying financial statements and disclosures. Actual results could differ from these estimates. Investment Valuation Investments of the NSI DC Trust, except for the guaranteed investment contracts ("GICs"), are stated at fair value as determined by the trustee from quoted market prices. Securities traded on a national exchange are valued at the last reported sales price on the last business day of the plan year; investments traded in the over-the-counter market and listed securities for which no sale was reported on the last day of the plan year are valued at the last reported bid price. GICs included in the NSI DC Trust are fully benefit-responsive and are therefore carried at contract value (cost plus accrued interest) in the accompanying financial statements in accordance with Statement of Position 94-4. At December 31, 1996 and 1995, contract value approximates fair value. At December 31, 1996, the weighted average crediting interest rate was 6.74%. For the year ended December 31, 1996, the annual yield on the GICs held by the NSI DC Trust was 6.9%. For certain of the GICs held by the NSI DC Trust, crediting interest rates may be changed if certain events occur, such as early retirements, plant closings, etc., but in no case are adjusted to a rate less than 0%. GICs are subject to credit risk based on the ability of the insurance company to meet interest or principal payments, or both, as they become due. Page 10 3. NSI DC TRUST Investment Income Investment income of the NSI DC Trust for the year ended December 31, 1996 is summarized as follows: Dividends on common stock .................... $ 360,166 Interest income .............................. 4,320,463 Net appreciation in fair value of common stock 1,031,354 Net income from mutual fund .................. 10,129,284 Net income from common/collective trust ...... 7,315,993 Net income from pooled separate account ...... 160,826 Total investment income ........ $23,318,086 The investment income of the NSI DC Trust for the year ended December 31, 1996 is allocated among participating plans as follows: National Service Industries Retirement and 401(k) Plan .............. $ 114,203 All other NSI plans ...................... 23,203,883 Total ...................... $23,318,086 Net Assets The net assets of the NSI DC Trust are as follows at December 31, 1996 and 1995: 1996 1995 Mutual fund ...................... $ 63,411,122 $ 47,636,487 Common/collective trust .......... 57,558,795 48,146,903 Guaranteed investment contracts .. 55,187,898 55,129,605 Loans receivable from participants 6,828,607 6,104,302 NSI common stock ................. 11,279,289 7,637,554 Money market fund ................ 3,704,985 1,377,443 Pooled separate account .......... 2,723,094 871,467 200,693,790 166,903,761 Cash ............................ 13,342 127,031 200,707,132 167,030,792 Accrued investment income ........ 100,534 76,779 Adjustments for pending trades ... (223,542) (211,964) Other ............................ (54,239) 49,961 Net assets ....................... $ 200,529,885 $ 166,945,568 Page 11 The allocation of the net assets of the NSI DC Trust to participating plans is based on participant units and is as follows as of December 31, 1996 and 1995: 1996 1995 Amount Percent Amount Percent National Service Industries Retirement and 401(k) Plan $ 837,332 0.42% $ 591,789 0.35% All other plans .......... 199,692,553 99.58 166,353,779 99.65 Total ........... $200,529,885 100.00% $166,945,568 100.00% Investment in NSI Common Stock As of December 31, 1996 and 1995, approximately 5.6% and 4.6%, respectively, of the NSI DC Trust's net assets were invested in the common stock of NSI, a party in interest to the Plan. 4. TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated October 25, 1995 stating that the Plan was designed in accordance with plan design requirements as of that date. The Plan has been amended since receiving the determination letter. However, the plan administrator believes that the Plan is currently designed and is being operated in compliance with the applicable requirements of the IRC. Therefore, the plan administrator believes that the Plan was qualified and that the related trust was tax-exempt as of December 31, 1996 and 1995. EX-23 2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Page 12 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 11-K into National Service Industries, Inc.'s previously filed Registration Statement covering the National Service Industries Retirement and 401(k) Plan. /s/ Arthur Andersen LLP Arthur Andersen LLP Atlanta, Georgia June 12, 1997 -----END PRIVACY-ENHANCED MESSAGE-----