-----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, ImfOCsEqlQvzoMiHCOKODxm3222ouUNqPURlOSE/PXRxi2kRF5KkyYWAyeCkTaA4 aQBNQ6mxVHvqIkakhp5ScA== 0000070538-98-000007.txt : 19980415 0000070538-98-000007.hdr.sgml : 19980415 ACCESSION NUMBER: 0000070538-98-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980414 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-03208 FILM NUMBER: 98593298 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 10-Q 1 NATIONAL SERVICE INDUSTRIES, INC. 10-Q Page 1 of 48 Exhibit Index on Page 12 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For quarter ended February 28, 1998 Commission file number 1-3208 NATIONAL SERVICE INDUSTRIES, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 58-0364900 (State or Other Jurisdiction of (I.R.S. Employer Identification Number) Incorporation or Organization) 1420 Peachtree Street, N. E., Atlanta, Georgia 30309-3002 (Address of Principal Executive Offices) (Zip Code) (404) 853-1000 (Registrant's Telephone Number, Including Area Code) None (Former Name,Former Address and Former Fiscal Year,if Changed Since Last Report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes - X No - Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock - $1.00 Par Value - 42,438,799 shares as of March 31, 1998. Page 2 NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES INDEX Page No. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS - FEBRUARY 28, 1998 AND AUGUST 31, 1997 3 CONSOLIDATED STATEMENTS OF INCOME - THREE MONTHS AND SIX MONTHS ENDED FEBRUARY 28, 1998 AND 1997 5 CONSOLIDATED STATEMENTS OF CASH FLOWS - SIX MONTHS ENDED FEBRUARY 28, 1998 AND 1997 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6-7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8-9 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10 SIGNATURES 11 EXHIBIT INDEX 12 Page 3 NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except per-share data) February 28, August 31, 1998 1997 ASSETS (Unaudited) Current Assets: Cash and cash equivalents $ 69,030 $ 57,123 Short-term investments 58 205,302 Receivables, less reserves for doubtful accounts of $6,054 at February 28, 1998 268,988 258,689 and $4,302 at August 31, 1997 Inventories, at the lower of cost 193,136 179,046 (on a first-in, first-out basis) or market Linens in service, net of amortization 59,553 60,805 Deferred income taxes 21,684 13,077 Prepayments 9,986 6,716 Total Current Assets 622,435 780,758 Property, Plant, and Equipment, at cost: Land 20,442 19,911 Buildings and leasehold improvements 143,744 138,933 Machinery and equipment 463,928 434,194 Total Property, Plant, and Equipment 628,114 593,038 Less-Accumulated depreciation and amortization 374,416 356,308 Property, Plant, and Equipment-net 253,698 236,730 Other Assets: Goodwill and other intangibles 54,024 50,166 Other 38,122 38,698 Total Other Assets 92,146 88,864 Total Assets $ 968,279 $1,106,352 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of long-term debt $ 93 $ 116 Notes payable 6,534 5,773 Accounts payable 85,197 101,512 Accrued salaries, commissions, and bonuses 24,908 34,776 Current portion of self-insurance reserves 12,616 12,540 Accrued taxes payable -- 38,351 Other accrued liabilities 74,514 88,932 Total Current Liabilities 203,862 282,000 Long-Term Debt, less current maturities 26,157 26,197 Deferred Income Taxes 45,759 34,093 Self-Insurance Reserves, less current portion 49,201 57,056 Other Long-Term Liabilities 41,553 35,193 Stockholders' Equity: Series A participating preferred stock, $.05 stated value, 500,000 shares authorized, none issued Preferred stock, no par value, 500,000 shares authorized, none issued Common stock, $1 par value, 80,000,000 shares authorized, 57,918,978 shares issued 57,919 57,919 Paid-in capital 25,934 25,521 Retained earnings 864,209 841,045 948,062 924,485 Less-Treasury stock, at cost (15,645,861 shares at February 28, 1998 and 13,719,834 shares at August 31, 1997) 346,315 252,672 Total Stockholders' Equity 601,747 671,813 Total Liabilities and Stockholders' Equity $ 968,279 $1,106,352 The accompanying notes to consolidated financial statements are an integral part of these balance sheets. Page 4 NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollar amounts in thousands, except per-share data) THREE MONTHS ENDED FEBRUARY 28 (In thousands, except per-share data) 1998 1997 Sales and Service Revenues: Net sales of products $ 401,867 $ 371,384 Service revenues 77,544 127,852 Total Revenues 479,411 499,236 Costs and Expenses: Cost of products sold 247,415 235,313 Cost of services 45,947 75,197 Selling and administrative expenses 150,851 155,148 Interest (income) expense, net (402) 950 Other (income) expense, net (1,712) 441 Total Costs and Expenses 442,099 467,049 Income before Provision for Income Taxes 37,312 32,187 Provision for Income Taxes 13,824 11,842 Net Income $ 23,488 $ 20,345 Per Share: Basic earnings per share $ .55 $ .45 Weighted Average Number of Shares Outstanding (thousands) 42,765 44,994 Diluted earnings per share $ .54 $ .45 Adjusted Weighted Average Number of Shares Outstanding (thousands) 43,318 45,296 Cash dividends $ .31 $ .30 The accompanying notes to consolidated financial statements are an integral part of these statements. Page 4 NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollar amounts in thousands, except per-share data) SIX MONTHS ENDED FEBRUARY 28 (In thousands, except per-share data) 1998 1997 Sales and Service Revenues: Net sales of products $ 811,385 $ 753,147 Service revenues 155,610 257,982 Total Revenues 966,995 1,011,129 Costs and Expenses: Cost of products sold 496,506 471,917 Cost of services 91,095 150,775 Selling and administrative expenses 303,479 313,530 Interest (income) expense, net (2,404) 1,600 Other (income)expense, net (1,348) 1,780 Total Costs and Expenses 887,328 939,602 Income before Provision for Income Taxes 79,667 71,527 Provision for Income Taxes 29,511 26,348 Net Income $ 50,156 $ 45,179 Per Share: Basic earnings per share $ 1.16 $ .99 Weighted Average Number of Shares Outstanding (thousands) 43,260 45,468 Diluted earnings per share $ 1.15 $ .99 Adjusted Weighted Average Number of Shares Outstanding (thousands) 43,752 45,749 Cash dividends $ .61 $ .59 The accompanying notes to consolidated financial statements are an integral part of these statements. Page 5 NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollar amounts in thousands) SIX MONTHS ENDED FEBRUARY 28 1998 1997 Cash Provided by (Used for) Operating Activities Net income $ 50,156 $ 45,179 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23,817 29,507 Provision for losses on accounts receivable 1,904 2,283 Gain on the sale of property, plant, and equipment (2,691) (243) Gain on the sale of businesses (1,961) (924) Change in noncurrent deferred income taxes 11,666 1,383 Change in assets and liabilities net of effect of acquisitions and divestitures- Receivables (11,292) 12,220 Inventories and linens in service, net (13,103) 321 Deferred income taxes (8,525) (7,879) Prepayments and other (3,215) (5,370) Accounts payable and accrued liabilities (79,154) (17,426) Self-insurance reserves and other long-term liabilities (1,495) (2,280) Net Cash Provided by (Used for) Operating Activities (33,893) 56,771 Cash Provided by (Used for) Investing Activities Change in short-term investments 205,244 -- Purchases of property, plant, and equipment (38,418) (20,190) Sale of property, plant, and equipment 1,907 2,833 Sale of businesses 2,464 31,259 Acquisitions (6,077) (3,609) Change in other assets 1,755 729 Net Cash Provided by Investing Activities 166,875 11,022 Cash Provided by (Used for) Financing Activities Change in notes payable (544) (1,039) Change in long-term debt (309) 6,862 Recovery of investment in tax benefits -- 661 Deferred income taxes from investment in tax benefits -- (1,972) Purchase of treasury stock, net (93,230) (71,090) Cash dividends paid (26,684) (27,079) Net Cash Used for Financing Activities (120,767) (93,657) Effect of Exchange Rate Changes on Cash (308) (2,150) Net Change in Cash and Cash Equivalents 11,907 (28,014) Cash and Cash Equivalents at Beginning of Period 57,123 58,662 Cash and Cash Equivalents at End of Period $ 69,030 $ 30,648 Supplemental Cash Flow Information: Income taxes paid during the period $ 62,762 $ 38,296 Interest paid during the period 3,502 2,862 Noncash Investing and Financing Activities: Noncash aspects of sale of businesses-- Receivables incurred $ -- $ 347 Liabilities assumed 178 507 Noncash aspects of acquisitions-- Liabilities assumed or incurred $ 2,061 $ 886 The accompanying notes to consolidated financial statements are an integral part of these statements. Page 6 NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION: The interim consolidated financial statements included herein have been prepared by the company without audit and the condensed consolidated balance sheet as of August 31, 1997 has been derived from audited statements. These statements reflect all adjustments, all of which are of a normal, recurring nature, which are, in the opinion of management, necessary to present fairly the consolidated financial position as of February 28, 1998, the consolidated results of operations for the three months and six months ended February 28, 1998 and 1997, and the consolidated cash flows for the six months ended February 28, 1998 and 1997. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the company's Annual Report on Form 10-K for the fiscal year ended August 31, 1997. The results of operations for the three months and six months ended February 28, 1998 are not necessarily indicative of the results to be expected for the full fiscal year because the company's revenues and income are generally higher in the second half of its fiscal year and because of the uncertainty of general business conditions. 2. BUSINESS SEGMENT INFORMATION: Three Months Ended February 28 Sales and Service Revenues Operating Profit 1998 1997 1998 1997 (In thousands) Lighting Equipment $ 260,079 $ 223,721 $ 22,889 $ 20,645 Chemical 107,085 87,695 8,531 6,624 Textile Rental 77,544 127,852 6,687 7,301 Envelope 34,703 33,410 1,935 2,638 Other -- 26,558 -- (632) $ 479,411 $ 499,236 40,042 36,576 Corporate (3,132) (3,439) Interest income (expense), net 402 (950) Total $ 37,312 $ 32,187 Six Months Ended February 28 Sales and Service Revenues Operating Profit 1998 1997 1998 1997 (In thousands) Lighting Equipment $ 528,737 $ 451,168 $ 50,526 $ 42,017 Chemical 212,944 183,177 17,145 17,547 Textile Rental 155,610 257,982 12,818 15,438 Envelope 69,704 64,761 4,469 4,751 Other -- 54,041 -- 947 $ 966,995 $ 1,011,129 84,958 80,700 Corporate (7,695) (7,573) Interest income (expense), net 2,404 (1,600) Total $ 79,667 $ 71,527 Page 7 3. INVENTORIES: Major classes of inventory as of February 28, 1998 and August 31, 1997 were as follows: February 28, August 31, 1998 1997 (In thousands) Raw Materials and Supplies $ 73,875 $ 71,266 Work-in-Process 10,542 10,572 Finished Goods 108,719 97,208 Total $ 193,136 $ 179,046 4. NEW ACCOUNTING STANDARD During the quarter ending February 28, 1998, the company adopted Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share." SFAS No. 128 supersedes Accounting Principles Board Opinion No. 15, "Earnings per Share," and promulgates new accounting standards for the computation and manner of presentation of the company's earnings per share. The adoption of SFAS No. 128 did not have a material impact on the computation or manner of presentation of the company's earnings per share as previously presented under APB 15. Exhibit 11 represents a reconciliation of basic and diluted weighted average shares and a calculation of earnings per share using the guidelines of SFAS No. 128. Page 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and related notes. Financial Condition National Service Industries maintained a strong financial position at February 28, 1998. Net working capital was $418.6 million, compared with $498.8 million at August 31, 1997, and the current ratio was 3.1 versus 2.8 as of year end. Cash and short-term investments were $69.1 million, compared with $262.4 million at August 31. For the six months ended February 28, the company invested $44.5 million in capital expenditures and acquisitions. The company also spent $93.2 to repurchase 2.0 million shares of its common stock. Operating activities used $33.9 million in cash due largely to investment in inventories to support increased sales, the payment of taxes associated with the gain on the 1997 disposal of linen plants, and funding of restructuring activities. Cash provided by operating activities was $56.8 million for the first half last year. The percent of debt to total capitalization was 5.2 percent, up from 4.6 percent at August 31. Capital expenditures, exclusive of acquisition spending, were $38.4 million for the first half this year and $20.2 million for the same period a year ago. Current-year spending consisted primarily of facility expansions and manufacturing process improvements in the lighting equipment segment, efficiency improvements and replacements of processing equipment and information systems in the textile rental segment, and facility and machinery replacements in the envelope segment. In the prior-year first half, the lighting equipment segment invested in facilities improvements, equipment replacements, process improvements, and tooling for new products while textile rental segment spending consisted primarily of improvement of facilities and replacement of equipment. Current year acquisition spending of $6.1 million was due to the chemical segment's purchase of Pure Corporation, a specialty chemical company with its core businesses in Indiana, Pennsylvania, and New York. Acquisition spending of $3.6 million in the prior year was primarily the result of the chemical segment's purchase of chemical products companies in Ohio and Canada and the lighting equipment segment's acquisition of Lumaid, Inc., a small emergency lighting products manufacturer in Canada. During the first half of fiscal 1998, year-end restructuring reserves were reduced by $4.3 million primarily for exit costs associated with the disposal of facilities and consolidation of operations and severance-related costs. Dividend payments for the six months totaled $26.7 million, or 61 cents per share, compared with $27.1 million, or 59 cents per share, for the prior-year period. Effective January, 1998, the regular quarterly dividend rate was increased 3.3 percent to 31 cents per share, or an annual calendar year rate of $1.24 per share. During the first half of fiscal 1998, the company repurchased 2.0 million of its common shares. For the periods presented, capital expenditures, working capital needs, dividends, acquisitions, and share repurchases were financed primarily with internally generated funds. European operations were supplemented by short-term borrowings in the European market. Contractual commitments for capital and acquisition spending during the coming twelve months total $25 million. The company expects actual capital expenditures in 1998 to be somewhat higher than the 1997 level. Capital expenditures, excluding acquisition spending, were $49 million in 1997, $66 million in 1996, and $59 million in 1995. Late in fiscal 1996, the company negotiated a $250 million multi-currency committed credit facility with eleven domestic and international banks. The company has complimentary lines of credit totaling $62 million, of which $40 million is available domestically and $22 million is available on a multi-currency basis primarily from a European bank. Current liquid assets, internally generated funds, and credit, either through the existing facility or the capital debt markets, are expected to meet anticipated general operating cash requirements for the next twelve months. Over the past year, the company has devoted significant internal resources in addressing the expected impact of the Year 2000 issue on its information technology infrastructure. At this point in time, the company does not believe that its expenditures relating to the Year 2000 issue will have a material impact on its financial position, results of operations, liquidity, or future business strategy. Results of Operations National Service Industries' basic earnings per share for the second quarter ended February 28, 1998 increased 22.2 percent to .55 cents compared with the second quarter a year ago. Diluted earnings per share of .54 cents increased 20 percent over the prior year period. Second quarter sales, excluding divested businesses, increased 10.8 percent while reported sales of $479.4 million decreased 4.0 percent from the second quarter a year ago. Net income of $23.5 million was 15.4 percent higher than last year's reported earnings of $20.3 Page 9 million. Included in net income were pretax gains from the sale of uniform rental contracts of $1.8 million in 1998 and assets of $0.5 million in 1997. Higher net income and a 2.2 million reduction in average shares outstanding increased earnings per share 22.2 percent over the prior year's second quarter. For the first half of fiscal year 1998, sales grew by 11.0 percent excluding divested operations. Reported sales decreased 4.4 percent to $967.0 million. Net income increased $5.0 million, or 11.0 percent, to $50.2 million. The 1998 first half pretax earnings included gains of $1.8 million from the sale of additional uniform rental contracts compared with $1.0 million from asset sales during the first half of 1997. Basic earnings per share for the first six months increased 17.2 percent to $1.16 per share, while diluted earnings per share increased 16.2 percent to $1.15. The lighting equipment segment once again led the company in performance with reported sales of $260.1 million for the second quarter and $528.7 million for the first half, increases of 16.3 percent and 17.2 percent, respectively. Operating income advanced 10.9 percent to $22.9 million for the quarter and 20.3 percent to $50.5 million for the first half. Sales growth continued to reflect strong demand in nonresidential construction and market acceptance of new products. Margins as a percent of sales decreased as a result of increased product development spending, marketing program expenses, and the ramping up of manufacturing resources necessary to meet anticipated summer shipment requirements. It is expected that margin rates will improve in the second half of the year. Chemical segment sales increased 22.1 percent to $107.1 million for the second quarter and 16.3 percent to $212.9 million for the first half due largely to the Enforcer acquisition in last year's third quarter. As a result of increased retail channel volume, operating income increased to $8.5 million from last year's $6.6 million for the second quarter, in spite of lower margin rates in the remaining operations; and operating income decreased to $17.1 million from $17.5 for the first half. This decline in margins resulted from higher manufacturing costs and continued initiatives underway to increase the effectiveness of the direct sales force. During the quarter, Enforcer successfully introduced Zep maintenance products to 600 home center stores throughout the United States. Sales of the textile rental segment declined 39.3 percent from $127.9 million for the second quarter and 39.7 percent from $451.2 million for the six months as a result of the divestiture of the segment's uniform plants late in fiscal 1997. Excluding the divested units, sales were slightly above last year. Operating income declined to $6.7 million from last year's $7.3 million for the second quarter and to $12.8 million from $15.4 million for the first half. Included in operating income were gains on additional sales of uniform rental contracts of $1.8 million in 1998 and asset sales of $0.5 million in 1997. Excluding the divested plants, year-to-year operating margins improved due to a number of cost reduction, sales, and pricing initiatives. Since the 1997 divestiture, the segment is operating more efficiently and is delivering positive economic profit. Envelope segment sales increased 3.9 percent to $34.7 million for the second quarter and 7.6 percent to $69.7 million for the six months. Operating profits decreased 26.6 percent to $1.9 million for the quarter and 5.9 percent to $4.5 million for the first half. The decline in profits was due partially to increased manufacturing costs resulting form the relocation of Atlanta operations into a new facility and costs of increasing production to meet forecasted sales demand. Margin rates are anticipated to recover in the last half of the year. Early in March, the company completed the purchase of Pennsylvania-based Allen Envelope Corporation, an action that increased geographical coverage and accelerated growth of the segment. Proceeds of approximately $300 million derived from the 1997 sale of the textile rental and insulation assets contributed to higher interest income and funded the repurchase of 2.0 million shares of company stock during the first half of the fiscal year. The provision for income taxes was 37.0 percent of pretax income for the quarter and the half, compared with 36.8 percent for each of the prior-year periods. From time to time, the company may publish forward-looking statements relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the company notes that a variety of factors could cause the company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the company's forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of the compan's business include without limitation the following: (a) the uncertainty of general business and economic conditions, particularly the potential for a slow down in nonresidential construction awards; (b) the ability to achieve strategic initiatives, including but not limited to the ability to achieve sales growth across the business segments through a combination of increased pricing, enhanced sales force, new products, and improved customer service; (c) share repurchases; and (d) acquisitions. Page 10 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the annual meeting of stockholders held January 7, 1998, all nominees for director were elected to the board without opposition and Arthur Andersen LLP was appointed as independent auditor for the current fiscal year. In addition, stockholders voted on the following: Votes Cast Affirmative Negative Abstentions Proposal to approve the National Service Industries, Inc. Employee Stock Purchase Plan 35,425,815 1,006,827 467,912 There were 1,500,000 treasury shares reserved for issuance under the plan. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits are listed on the Index to Exhibits (page 13). (b) There were no reports on Form 8-K for the three months ended February 28, 1998. Page 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NATIONAL SERVICE INDUSTRIES, INC. REGISTRANT DATE April 14, 1998 /s/David Levy DAVID LEVY EXECUTIVE VICE PRESIDENT, ADMINISTRATION AND COUNSEL DATE April 14, 1998 /s/Brock Hattox BROCK HATTOX EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Page 12 INDEX TO EXHIBITS Page No. EXHIBIT 3 Certification of Amendment and Restated Certificate of Incorporation 13 EXHIBIT 11 Computation of Net Income per Share of Common Stock 37 EXHIBIT 27 Financial Data Schedules (1) Financial Data Schedule for the Quarter Ended February 28, 1998 38 (2) Restated Financial Data Schedule for the Quarter Ended November 30, 1997 39 (3) Restated Financial Data Schedule for the Year Ended August 31, 1997 40 (4) Restated Financial Data Schedule for the Quarter Ended May 31, 1997 41 (5) Restated Financial Data Schedule for the Quarter Ended February 28, 1997 42 (6) Restated Financial Data Schedule for the Quarter Ended November 30, 1996 43 (7) Restated Financial Data Schedule for the Year Ended August 31, 1996 44 (8) Restated Financial Data Schedule for the Quarter Ended May 31, 1996 45 (9) Restated Financial Data Schedule for the Quarter Ended February 29, 1996 46 (10) Restated Financial Data Schedule for the Quarter Ended November 30, 1995 47 (11) Restated Financial Data Schedule for the Year Ended August 31, 1995 48 EX-3 2 CERT OF AMENDMENT & RESTATED CERT OF INCORPORATION Page 13 Exhibit 3 State of Delaware Office of the Secretary of State I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF "NATIONAL SERVICE INDUSTRIES, INC.", FILED IN THIS OFFICE ON THE SEVENTEENTH DAY OF DECEMBER, A.D. 1997, AT 2:01 O'CLOCK P.M. /s/ Edward J. Freel Edward J. Freel, Secretary of State 0241713 8100 AUTHENTICATION: 8821062 971434194 DATE: 12-18-97 Page 14 Exhibit 3 RESTATED CERTIFICATE OF INCORPORATION OF NATIONAL SERVICE INDUSTRIES, INC. This Restated Certificate of Incorporation of National Service Industries, Inc. (the "Corporation") was duly approved by the Board of Directors of the Corporation and only restates and integrates but does not further amend the provisions of the Corporation's Certificate of Incorporation as theretofore amended or supplemented; and there is no discrepancy between these amended and supplemented provisions and the provisions of the Restated Certificate of Incorporation set forth below except as permitted by Section 245 of the General Corporation Law. The Corporation was incorporated under the name National Linen Service Corporation. The original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on August 20, 1928. FIRST: The name of the Corporation is and shall be NATIONAL SERVICE INDUSTRIES, INC. SECOND: The registered office of the Corporation in the State of Delaware is and shall be located at 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The Corporation's registered agent at that location is The Corporation Trust Company. THIRD: The nature of the business, or objects, or purposes to be transacted, promoted, or carried on, are: To operate at wholesale or retail a linen supply and to provide the rental service for users of towels, aprons, jackets, overalls, sheets, napkins, table cloths, and linens of all kind; to carry on the business of a steam and general laundry for the purpose of washing, cleaning, purifying, scouring, bleaching, wringing, drying, ironing, dyeing, coloring, disinfecting, renovating, and preparing for use linens of all kinds and other articles to be rented to users; to buy, sell, hire, manufacture, repair, let, alter, improve, treat, and deal in all apparatus, machines, materials, and articles of all kinds which are capable of being used for any such purpose. Page 15 Exhibit 3 To manufacture, purchase, or otherwise acquire, own, mortgage, pledge, sell, assign, and transfer, or otherwise dispose of, and to invest, trade, deal in and deal with, goods, wares and merchandise, and real and personal property of every class and description. To acquire, and pay for in cash, stocks, or bonds of the Corporation, or otherwise, the good-will, rights, assets, and property, and to undertake to assume the whole or any part of the obligations or liabilities of any person, firm, association, or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage, or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of the Corporation. To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of shares of the capital stock of, or any bonds, securities, or evidence of indebtedness created by, any other corporation or corporations organized under the laws of this state or any other state, country, nation, or government, and while the owner thereof to exercise all the rights, powers, and privileges of ownership. To issue bonds, debentures, or obligations of the Corporation, from time to time, for any of the objects or purposes of the Corporation, and to secure the same by mortgage, pledge, deed of trust, or otherwise. To purchase, hold, sell, and transfer the shares of its own capital stock; provided it shall not use its funds or property for the purchase of its own shares of capital stock when such use would cause any impairment of its capital; and provided further that shares of its own capital stock belonging to it shall not be voted upon, directly or indirectly. To have one or more offices, to carry on all or any of its operations and business without restriction or limit as to amount, and to purchase or otherwise acquire, hold, own, mortgage, sell, convey, or otherwise dispose of real and personal property of every class and description in any of the States, Districts, Territories, or Colonies of the United States and in any and all foreign countries, subject to the laws of such State, District, Territory, Colony, or Country. Page 16 Exhibit 3 In general, to carry on any other business in connection with the foregoing, whether manufacturing or otherwise, and to have and exercise all the powers conferred by the laws of Delaware upon corporations formed under the act hereinafter referred to, and to do any or all of the things hereinbefore set forth to the same extent as natural persons might or could do. To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. The foregoing clauses shall be construed both as objects and powers; and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of the Corporation. FOURTH: (A) The total number of shares of stock which the Corporation shall have authority to issue is 81,000,000. (B) Of such stock, 80,000,000 shares shall be Common Stock of the par value of $1.00 each, amounting in the aggregate to $80,000,000. (C) Of such stock, 1,000,000 shares shall be No Par Preferred Stock which may be issued from time to time, by the Board of Directors, in one or more series. All shares of a series shall be of equal rank and shall be identical, but the shares of different series need not be of equal rank and need not be identical. The Board of Directors hereby is authorized to cause shares of Serial Preferred Stock to be issued in one or more series and with respect to each such series prior to issuance to fix: (1) voting rights. (2) The designation of the series, which may be distinguished by number, letter, or title. (3) The number of shares, which number the Board of Directors may increase or decrease. (4) The annual dividend rate. (5) The dates at which dividends, if declared, shall be payable, and the dates from which such dividends shall be cumulative, if at all. Page 17 Exhibit 3 (6) The terms and amount of the sinking fund, if any, provided for the purchase or redemption of shares. (7) The redemption rights and price or prices, if any, for shares. (8) The amounts payable and priorities of shares in the event of any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Corporation. (9) The number of shares of Common Stock into which such Preferred Stock is convertible, if any, the conversion price or prices, and all other terms and conditions upon which such conversion may be made, if at all. Designation, Preferences, and Rights of Series A Participating Preferred Stock Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Participating Preferred Stock," which shall have a stated value of $0.05 per share, and the number of shares constituting such series shall be 500,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Participating Preferred Stock to a number less than that of the shares then outstanding plus the number of shares issuable upon exercise of outstanding rights, options or warrants or upon conversion of outstanding securities issued by the Corporation. Section 2. Dividends and Distributions. (A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Participating Preferred Stock with respect to dividends, the holders of shares of Series A Participating Preferred Stock in preference to the holders of shares of Common Stock, par value $1.00 per share (the "Common Stock"), of the Corporation and any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of October, January, April and July in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Participating Preferred Stock in an amount per share (rounded to the nearest cent) equal to the greater of (a) $10.00, or (b) subject to the provision for adjustment hereinafter set forth, 1,000 times the aggregate per share amount of all cash dividends, and 1,000 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in shares of Common Stock or a subdivision of the Page 18 Exhibit 3 outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock, since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Participating Preferred Stock. In the event the Corporation shall at any time after May 1, 1988 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series A Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on the Series A Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Participating Preferred Stock unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Page 19 Exhibit 3 Section 3. Voting Rights. The holders of shares of Series A Participating Preferred Stock shall have the following voting rights: (A) Subject to the provision for adjustment hereinafter set forth, each share of Series A Participating Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters submitted to a vote of the shareholders of the Corporation; provided, however, that with regard to any election for the Corporation's Board of Directors (except as provided for in paragraph (C) of this Section 3), the maximum number of votes for the election of directors exercised by shares of Preferred Stock (including the Series A Participating Preferred Stock) shall not exceed the number of votes for the election of directors represented by authorized and issued shares of Common Stock entitled to vote less one, and the number of votes for the election of directors exercised by shares of Preferred Stock (including the Series A Participating Preferred Stock) shall be reduced as necessary on a pro-rata basis to effectuate this result. (B) Except as otherwise provided herein or by law, the holders of shares of Series A Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation. (C) (i) If at any time dividends on any Series A Participating Preferred Stock shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Participating Preferred Stock) with dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two (2) Directors. (ii) During any default period, such voting right of the holders of Series A Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C)or at any annual meeting of shareholders, and thereafter at annual meetings of shareholders, provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if, any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders Page 20 Exhibit 3 of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Participating Preferred Stock. (iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice-President or the Corporate Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 10 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the shareholders. (iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their Page 21 Exhibit 3 successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) In any default period, the total number of Directors on the Board of Directors shall not be less than five (5) Directors. (vi) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in, or pursuant to, the Restated Certificate of Incorporation or By-Laws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however to change thereafter in any manner provided by law or in the Restated Certificate of Incorporation or By-Laws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors, even though less than a quorum. (D) Except as set forth herein, holders of Series A Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not: (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock; Page 22 Exhibit 3 (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock except dividends paid ratably on the Series A Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Participating Preferred Stock provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Participating Preferred Stock; or (iv) purchase or otherwise acquire for consideration any shares of Series A Participating Preferred Stock or any shares of stock ranking on a parity with the Series A Participating Preferred Stock except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Conversion Rights. (A) Subject to the provision for adjustment hereinafter set forth, each one one-thousandth of a share of Series A Participating Preferred Stock shall, for a period of 90 days after issuance, be convertible at the option of the respective holders thereof, at the office of the Corporation and at such other place or places, if any, as the Board of Directors may determine, without the payment of further consideration, into one (1) share of Common Stock of the Corporation. (B) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding common Stock into a smaller number of shares, then in each such case the one (1) share of Common Stock into which each one one-thousandth of a share Page 23 Exhibit 3 of Series A Participating Preferred Stock shall be convertible shall be adjusted by multiplying such share by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (C) At such times as the conversion rights are exercised for Series A Participating Preferred Stock, the Corporation shall, to the extent that unreserved authorized and unissued or treasury shares of Common Stock are available, reserve sufficient shares of Common Stock to permit the conversion of such Series A Participating Preferred Stock into Common Stock. In the event that sufficient unreserved authorized and unissued or treasury shares of Common Stock are not available to permit such reservation and conversion, the Corporation shall use reasonable efforts to obtain shareholder approval of an increase in the number of authorized shares of Common Stock to permit the aforementioned reservation and conversion of Series A Participating Preferred Stock into Common Stock. Section 6. Reacquired Shares. Any shares of Series A Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 7. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Participating Preferred Stock shall have received, per share, the greater of 1,000 times the exercise price per Right or 1,000 times the payment made per share of Common Stock, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph (C) below to reflect such events as stock splits, stock dividends and Page 24 Exhibit 3 recapitalizations with respect to the Common Stock) (such number in clause (ii), the "Adjustment Number"). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Participating Preferred Stock and Common Stock, respectively, holders of Series A Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. (B) In the event there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of Preferred Stock, if any, which rank on a parity with the Series A Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. (C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case the shares of Series A Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to l,000 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that are outstanding immediately prior to such event. Page 25 Exhibit 3 Section 9. Redemption. The shares of Series A Participating Preferred Stock shall not be redeemable. Section 10. Ranking. The Series A Participating Preferred Stock shall rank junior to all other series of the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. Section 11. Amendment. The Restated Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds (66 2/3%) of the outstanding shares of Series A Participating Preferred Stock voting separately as a class. Section 12. Fractional-Shares. Series A Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holders fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Participating Preferred Stock. FIFTH: The amount of capital with which the Corporation will commence business is ten (10) shares of common stock which shares are without nominal or par value. SIXTH: The Corporation is to have perpetual existence. SEVENTH: The private property of the stockholders shall not be subject to the payment of corporate debts to any extent whatever. Page 26 Exhibit 3 EIGHTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized: To make and alter the by-laws of the Corporation, to fix the amount to be reserved as working capital over and above its capital stock paid in, to authorize and cause to be executed mortgages and liens upon the real and personal property of the Corporation. From time to time to determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation, (other than the stock ledger) or any of them, shall be open to inspection of stockholders; and no stockholder shall have any right of inspecting any account, book, or document of the Corporation except as conferred by statute, unless authorized by a resolution of the stockholders or Directors. By resolution or resolutions, passed by a majority of the whole Board, to designate one or more committees, each committee to consist of two or more of the Directors of the Corporation, which, to the extent provided in said resolution or resolutions or in the by-laws of the Corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation, and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Such Committee or Committees shall have such name or names as may be stated in the by-laws of the Corporation or as may be determined from time to time by resolution adopted by the Board of Directors. Pursuant to the affirmative vote of the holders of at least a majority of the stock issued and outstanding, having voting power, given at a stockholders' meeting duly called for that purpose, the Board of Directors shall have power and authority at any meeting to sell, lease, or exchange all of the property and assets of the Corporation, including its good will and its corporate franchises, upon such terms and conditions as its Board of Directors deem expedient and for the best interest of the Corporation. The Corporation may in its by-laws confer powers upon its Directors in addition to the foregoing, and in addition to the powers and authorities expressly conferred upon them by statute. Page 27 Exhibit 3 Both stockholders and Directors shall have power, if the by-laws so provide, to hold their meetings, and to have one or more offices within or without the State of Delaware, and to keep the books of the Corporation (subject to the provisions of the statutes) outside of the State of Delaware, at such places as may be, from time to time, designated by the Board of Directors. Except as otherwise provided in this Restated Certificate of Incorporation, no action may be taken by the stockholders, including, without limitation, amendment of this Restated Certificate or of the by-laws, except at a meeting duly called in accordance with the by-laws. NINTH: The Corporation reserves the right to amend, alter, change, or repeal any provision contained in this Certificate of Incorporation, in any manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. TENTH: This Restated Certificate of Incorporation only restates and integrates but does not further amend the provisions of the Corporation's Certificate of Incorporation, as heretofore amended, and there are no discrepancies between the provisions of the Certificate of Incorporation as heretofore amended and the provisions hereof. ELEVENTH: This Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation on December 17, 1997 pursuant to the provisions of Chapter I, Subchapter VIII, Section 245, of the General Corporation Law of Delaware, as amended. TWELFTH: (A) In addition to any approval of the Board of Directors or any stockholder vote or consent required by the laws of the State of Delaware or any other provision of this Restated Certificate of Incorporation or otherwise, the affirmative vote or consent of the holders of two-thirds of the shares of the stock of the Corporation entitled to vote in elections of directors shall be required to authorize, adopt, or approve a Covered Transaction; however, the provisions of this Article Twelfth shall not apply to any Covered Transaction referred to in this Article Twelfth with any Interested Person if (1) the Board of Directors of the Corporation has approved a memorandum of understanding with Page 28 Exhibit 3 such other Interested Person with respect to such transaction prior to the time that such Interested Person shall have become a beneficial owner of five percent (5%) or more of the shares of stock entitled to vote in elections of directors, or thereafter (2) if such Covered Transaction is otherwise approved by the Board of Directors of the Corporation, provided that a majority of the members of the Board of Directors voting for the approval of such transaction were duly elected and acting members of the Board of Directors prior to the time that such Interested Person shall have become a beneficial owner of five percent (5%) or more of the shares of stock of the Corporation entitled to vote in elections of directors. (B) For the purposes of this Article Twelfth: (1) "Affiliate" and "associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on November 1, 1977. (2) A person shall be the "beneficial owner" and "beneficially owns" shares of stock of the Corporation (other than shares of the Corporation's stock held in its treasury) (a) which such person and its affiliates and associates beneficially own, directly or indirectly, whether of record or not, (b) which such person or any of its affiliates or associates has the right to acquire, pursuant to any agreement upon the exercise of conversion rights, warrants or options, or otherwise, (c) which such person or any of its affiliates or associates has the right to sell or vote pursuant to any agreement, or (d) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its affiliates or associates has any agreement, arrangement, or understanding for the purposes of acquiring, holding, voting, or disposing of securities of the Corporation. (3) "Covered Transaction" is (a) any merger or consolidation of the Corporation or any subsidiary of the Corporation with or into any Interested Person (regardless of the identity of the surviving corporation); (b) any sale, lease, or other disposition of all or any substantial part of the assets of the Corporation or any subsidiary of the Corporation to any Interested Person for cash or securities or both; (c) any issuance or delivery of securities of the Corporation or a subsidiary of the Corporation (which the beneficial owner shall have the right to vote, or to vote upon exercise, conversion, or by contract) to an Interested Person in consideration for or in exchange of any securities or other property (including cash); or (d) the liquidation of the Corporation. Page 29 Exhibit 3 (4) "Interested Person" is any person which, as of the record date for the determination of stockholders entitled to notice of any Covered Transaction and to vote thereon or consent thereon, or as of the date of any such vote or consent, or immediately prior to the consummation of any Covered Transaction, beneficially owns, directly or indirectly, five percent (5%) or more of the shares of stock of the Corporation entitled to vote in elections of directors. (5) "Person" is any individual, partnership, or corporation or other entity. (6) "Subsidiary of the Corporation" is any corporation of which fifty percent (50%) or more of any class of stock is beneficially owned, directly or indirectly, by the Corporation. (C) No amendment to this Restated Certificate of Incorporation shall amend, alter, change, or repeal any of the provisions of this Article Twelfth unless such amendment, in addition to receiving any stockholder vote or consent required by the laws of the State of Delaware in effect at the time, shall receive the affirmative vote or consent of the holders of two-thirds of the shares of stock of the Corporation entitled to vote in elections of directors. THIRTEENTH: (A) In addition to any approval of the Board of Directors or any stockholder vote or consent required by the laws of the State of Delaware or any other provision of this Restated Certificate of Incorporation or otherwise, there shall be required for the approval, adoption, or authorization of a Business Combination with an Interested Person the affirmative vote or consent of the holders of a majority of the shares of stock of the Corporation entitled to vote in elections of directors considered separately for the purposes of this Article Thirteenth, which are not beneficially owned, directly or indirectly, by such Interested Person; provided, however, that said majority voting requirements shall not be applicable if all of the conditions specified in subparagraphs (1) and (2) below are met or if all of the conditions specified in subparagraph (3) are met: (1) The consideration to be received per share in such Business Combination by holders of the stock of the Corporation is payable in cash or Acceptable Securities, or a combination of both, and the Acceptable Securities (plus the cash, if any) have a fair market value per share of the Corporation's stock of not less than either: Page 30 Exhibit 3 (a) the highest price (including the highest per share brokerage commissions, transfer tax, and soliciting dealers fees) paid by said Interested Person in acquiring any of the Corporation's stock; or (b) a price per share obtained by multiplying the aggregate earnings per share of stock of the Corporation (appropriately adjusted for any subdivision of shares, stock dividend, or combination of shares during the period) for the four full consecutive fiscal quarters immediately preceding the record date for solicitation of votes or consents on such Business Combination by the figure obtained by dividing the highest per share price (including the highest per share brokerage commissions, transfer tax, and soliciting dealers fees) paid by such Interested Person acquiring any of the Corporation's stock by the aggregate earnings per share of the Corporation for the four full consecutive fiscal quarters immediately preceding the time when the Interested Person shall have become the beneficial owner of five percent (5%) or more of the stock of the Corporation entitled to vote in elections of directors. If any securities were issued by an Interested Person in exchange for stock of the Corporation prior to the proposed Business Combination, the fair market value of said securities at the time of issue shall be used in determining the per share price paid for said stock. (2) After the Interested Person has become the beneficial owner of five percent (5%) or more of the stock of the Corporation entitled to vote in the election of directors and prior to the consummation of such Business Combination, there shall have been no reduction in the rate of dividends payable on the Corporation's stock which would result in a quarterly dividend rate per share which is less than the average quarterly dividend rate per share for the four full consecutive fiscal quarters immediately preceding the time when the Interested Person shall have become the beneficial owner of five percent (5%) or more of the stock of the Corporation unless such reduction in the rate of dividends has been approved by the Board of Directors of the Corporation and a majority of the members of the Board of Directors approving such reduction were duly elected and acting members of the Board of Directors prior to the time that such Interested Person shall have become a beneficial owner of five percent (5%) or more of the shares of the Corporation. For the purposes of this paragraph, "quarterly dividend rate per share" for any quarterly dividend shall be equal to the percentage said quarterly dividend per share bears to the earnings per share for the four full fiscal quarters immediately preceding the declaration of said quarterly dividend. Page 31 Exhibit 3 (3) The Board of Directors of the Corporation has approved a memorandum of understanding with such other Interested Person with respect to such Business Combination prior to the time that such Interested Person shall have become a beneficial owner of five percent (5%) or more of the shares of stock entitled to vote in elections of directors, or thereafter if such Business Combination is otherwise approved by the Board of Directors of the Corporation, provided that a majority of the members of the Board of Directors voting for the approval of such transaction were duly elected and acting members of the Board of Directors prior to the time that such Interested Person shall have become a beneficial owner of five percent (5%) or more of the shares of stock of the Corporation entitled to vote in elections of directors. (B) For the purposes of this Article Thirteenth: (1) "Affiliate" and "associate" shall have the respective meanings given those terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on November 1, 1977. (2) A person shall be the "beneficial owner" and "beneficially owns" shares of stock of the Corporation (other than shares of the Corporation's stock held in its treasury) (a) which such person and its affiliates and associates beneficially own, directly or indirectly, whether of record or not, (b) which such person or any of its affiliates or associates has the right to acquire, pursuant to any agreement upon the exercise of conversion rights, warrants, or options, or otherwise, (c) which such person or any of its affiliates or associates has the right to sell or vote pursuant to any agreement, or (d) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its affiliates or associates has any agreement, arrangement, or understanding for the purpose of acquiring, holding, voting, or disposing of securities of the Corporation. (3) "Business Combination" is (a) any merger or consolidation of the Corporation or any subsidiary of the Corporation with or into any Interested Person (regardless of the identity of the surviving corporation); Page 32 Exhibit 3 (b) any sale, lease, or other disposition of all or any substantial part of the assets of the Corporation or any subsidiary of the Corporation to any Interested Person for cash or securities or both; (c) any issuance or delivery of securities of the Corporation or a subsidiary of the Corporation (which the beneficial owner shall have the right to vote, or to vote upon exercise, conversion, or by contract) to an Interested Person in consideration for or in exchange of any securities or other property (including cash); (4) "Acceptable Securities" shall mean (a) securities of the same class or series, with the same rights, powers, and benefits and of the same denomination, term, and interest, or dividend, if any, as the securities issued and delivered by the Interested Person in exchange for the majority of the stock of the Corporation acquired by the Interested Person or (b) the class of common stock of the Interested Person which is beneficially owned by the most persons. (5) "Interested Person" is any person which, as of the record date for the determination of stockholders entitled to notice of any Business Combination and to vote thereon or consent thereto, or as of the date of any such vote or consent, or immediately prior to the consummation of any Business Combination, beneficially owns, directly or indirectly, five percent (5%) or more of the shares of stock of the Corporation entitled to vote in elections of directors. (6) "Person" is an individual, partnership, corporation, or other entity. (7) "Subsidiary of the Corporation" is any corporation of which fifty percent (50%) or more of any class of stock is beneficially owned, directly or indirectly, by the Corporation. (C) No amendment to this Restated Certificate of Incorporation shall amend, alter, change, or repeal any of the provisions of this Article Thirteenth unless such amendment, in addition to receiving any stockholder vote or consent required by the laws of the State of Delaware in effect at the time, shall receive the affirmative vote or consent of the holders of a majority of the shares of stock of the Corporation entitled to vote in elections of directors which are not beneficially owned, directly or indirectly, by any person which would be an Interested Person if the vote or consent on such amendment were a vote or consent on a Business Combination. Page 33 Exhibit 3 FOURTEENTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived any improper personal benefit. If the Delaware General Corporation Law is amended after approval by the stockholders of this Article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. Any repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. FIFTEENTH: (A) Each person who was or is made a party to or is threatened to be made a party to or is involved in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation or of a partnership, joint venture, trust, or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee, or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability, and loss (including attorneys' fees, judgments, fines, ERISA excise taxes, or penalties and amounts to be paid in settlement) reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of his or her heirs, executors, and administrators; provided, however, that except as provided in paragraph (B) hereof with respect to proceedings seeking to enforce rights to indemnification, the Corporation shall indemnify any such person seeking indemnification in Page 34 Exhibit 3 connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Article shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Article or otherwise. The right to indemnification conferred in this Article shall arise only with respect to conduct subsequent to the date this Article becomes effective. (B) If a claim under paragraph (A) of this Article is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, except in the case of a claim for expenses incurred in defending a proceeding in advance of its final disposition, in which case the applicable period shall be twenty days, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall also be entitled to be paid the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. (C) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article shall not be exclusive of any other right which any person may have or Page 35 Exhibit 3 hereafter acquire under any statute, provision of the Restated Certificate of Incorporation, by-law, agreement, vote of stockholders, or disinterested directors, or otherwise. (D) The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee, or agent of the Corporation or another corporation, Partnership, joint venture, trust, or other enterprise against any expense, liability, or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability, or loss under the Delaware General Corporation Law. (E) The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to be paid by the Corporation the expenses incurred in defending any proceeding in advance of its final disposition, to any employee or agent of the Corporation to the fullest extent of the provisions of this Article with respect to the indemnification and advancement of expenses of directors and officers of the Corporation. Page 36 Exhibit 3 IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which restates, integrates but does not further amend the provisions of the Corporation's Certificate of Incorporation, as theretofore amended or supplemented, having been duly adopted by the Board of Directors of the Corporation in accordance with the provisions of Section 245 of the General Corporation Law of the State of Delaware, has been executed this 17th day of December, 1997. NATIONAL SERVICE INDUSTRIES, INC. By: /s/ James S. Balloun Name: James S. Balloun Title: Chairman of the Board President & Chief Executive Officer EX-11 3 COMPUTATION OF NET INCOME / SHARE OF COMMON STOCK Page 37 Exhibit 11 NATIONAL SERVICE INDUSTRIES, INC. COMPUTATIONS OF NET INCOME PER SHARE OF COMMON STOCK (In thousands, except per-share data) THREE MONTHS ENDED FEBRUARY 28 1998 1997 Basic: Net Income $23,488 $20,345 Basic Weighted Average Number of Shares Outstanding (determined on a monthly basis), including Shares Contingently Issuable 42,765 44,994 $.55 $.45 Diluted: Net Income $23,488 $20,345 Basic Weighted Average Number of Shares Outstanding 42,765 44,994 Add: Shares of common stock assumed issued upon exercise of stock options using the "Treasury Stock" method as it applies to the computation of diluted earnings per share 553 302 Average Common Shares Outstanding (as adjusted) 43,318 45,296 Diluted Earnings per Share $.54 $.45 Page 37 Exhibit 11 NATIONAL SERVICE INDUSTRIES, INC. COMPUTATIONS OF NET INCOME PER SHARE OF COMMON STOCK (In thousands, except per-share data) SIX MONTHS ENDED FEBRUARY 28 1998 1997 Basic: Net Income $50,156 $45,179 Basic Weighted Average Number of Shares Outstanding (determined on a monthly basis), including Shares Contingently Issuable 43,260 45,468 $1.16 $.99 Diluted: Net Income $50,156 $45,179 Basic Weighted Average Number of Shares Outstanding 43,260 45,468 Add: Shares of common stock assumed issued upon exercise of stock options using the "Treasury Stock" method as it applies to the computation of diluted earnings per share 492 281 Average Common Shares Outstanding (as adjusted) 43,752 45,749 Diluted Earnings per Share $1.15 $.99 EX-27 4 FDS --
5 Page 38 Exhibit 27 Financial Data Schedule Quarter Ended February 28, 1998 Pursuant to Section 601(c) of Regulation S-K This schedule contains summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of February 28, 1998 and the consolidated statement of income for the six months ended February 28, 1998, and is qualified in its entirety by reference to such financial statements. 6-MOS AUG-31-1998 SEP-01-1997 FEB-28-1998 69,030 58 275,042 6,054 193,136 622,435 628,114 374,416 968,279 203,862 26,157 0 0 57,919 543,828 968,279 811,385 966,995 406,506 587,601 296,763 0 2,964 79,667 29,511 50,156 0 0 0 50,156 1.16 1.15
EX-27 5 FDS --
5 Page 39 Exhibit 27 Financial Data Schedule Quarter Ended November 30, 1997 Pursuant to Section 601(c) of Regulation S-K This schedule contains restated summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of November 30, 1997 and the consolidated statement of income for the three months ended November 30, 1997, and is qualified in its entirety by reference to such financial statements. 3-MOS AUG-31-1998 SEP-01-1997 NOV-30-1997 8,001 152,086 267,737 5,593 198,284 710,848 608,130 366,971 1,044,081 252,792 26,442 0 0 57,919 574,238 1,044,081 409,518 487,584 249,091 294,239 149,661 0 1,329 42,355 15,687 26,668 0 0 0 26,668 0.61 0.60
EX-27 6 FDS --
5 Page 40 Exhibit 27 Financial Data Schedule Year Ended August 31, 1997 Pursuant to Section 601(c) of Regulation S-K This schedule contains restated summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of August 31, 1997 and the consolidated statement of income for the year ended August 31, 1997, and is qualified in its entirety by reference to such financial statements. 12-MOS AUG-31-1997 SEP-01-1997 AUG-31-1997 57,123 205,302 262,991 4,302 179,046 780,758 593,038 356,308 1,106,352 282,000 26,197 0 0 57,919 613,894 1,106,352 1,542,644 2,036,179 945,794 1,228,818 622,159 0 6,124 179,078 71,800 107,278 0 0 0 107,278 2.37 2.36
EX-27 7 FDS --
5 Page 41 Exhibit 27 Financial Data Schedule Quarter Ended May 31, 1997 Pursuant to Section 601(c) of Regulation S-K This schedule contains restated summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of May 31, 1997 and the consolidated statement of income for the nine months ended May 31, 1997, and is qualified in its entirety by reference to such financial statements. 9-MOS AUG-31-1997 SEP-01-1996 MAY-31-1997 39,431 553 269,333 7,343 166,722 579,886 752,294 401,730 1,069,702 192,490 26,236 0 0 57,919 645,420 1,069,702 1,136,640 1,526,408 703,518 927,107 476,320 0 4,646 118,335 43,722 74,613 0 0 0 74,613 1.64 1.63
EX-27 8 FDS --
5 Page 42 Exhibit 27 Financial Data Schedule Quarter Ended February 28, 1997 Pursuant to Section 601(c) of Regulation S-K This schedule contains restated summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of February 28, 1997 and the consolidated statement of income for the six months ended February 28, 1997, and is qualified in its entirety by reference to such financial statements. 6-MOS AUG-31-1997 SEP-01-1996 FEB-28-1997 30,648 551 246,376 6,587 164,903 553,629 735,407 391,020 1,019,287 184,862 26,262 0 0 57,919 604,950 1,019,287 753,147 1,011,129 471,917 622,692 313,969 0 2,941 71,527 26,348 45,179 0 0 0 45,179 0.99 0.99
EX-27 9 FDS --
5 Page 43 Exhibit 27 Financial Data Schedule Quarter Ended November 30, 1996 Pursuant to Section 601(c) of Regulation S-K This schedule contains restated summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of November 30, 1996 and the consolidated statement of income for the three months ended November 30, 1996, and is qualified in its entirety by reference to such financial statements. 3-MOS AUG-31-1997 SEP-01-1996 NOV-30-1996 50,850 551 275,219 6,891 171,662 603,849 754,228 400,701 1,085,726 210,581 24,889 0 0 57,919 638,396 1,085,726 381,763 511,893 236,604 312,182 159,030 0 1,341 39,340 14,506 24,834 0 0 0 24,834 0.54 0.54
EX-27 10 FDS --
5 Page 44 Exhibit 27 Financial Data Schedule Year Ended August 31, 1996 Pursuant to Section 601(c) of Regulation S-K This schedule contains restated summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of August 31, 1996 and the consolidated statement of income for the year ended August 31, 1996, and is qualified in its entirety by reference to such financial statements. 12-MOS AUG-31-1996 SEP-01-1995 AUG-31-1996 58,663 551 275,779 5,807 169,813 606,381 765,337 407,941 1,094,646 197,426 24,920 0 0 57,919 660,089 1,094,646 1,482,937 2,013,562 933,405 1,237,786 609,025 0 4,903 161,848 60,700 101,148 0 0 0 101,148 2.11 2.10
EX-27 11 FDS --
5 Page 45 Exhibit 27 Financial Data Schedule Quarter Ended May 31, 1996 Pursuant to Section 601(c) of Regulation S-K This schedule contains restated summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of May 31, 1996 and the consolidated statement of income for the nine months ended May 31, 1996, and is qualified in its entirety by reference to such financial statements. 9-MOS AUG-31-1996 SEP-01-1995 MAY-31-1996 79,307 2,551 264,545 8,981 177,503 625,900 759,855 403,873 1,111,111 179,595 26,737 0 0 57,919 784,700 748,756 1,093,359 1,491,626 691,951 918,243 457,601 0 3,631 112,151 41,955 70,196 0 0 0 70,196 1.46 1.45
EX-27 12 FDS --
5 Page 46 Exhibit 27 Financial Data Schedule Quarter Ended February 29, 1996 Pursuant to Section 601(c) of Regulation S-K This schedule contains restated summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of February 29, 1996 and the consolidated statement of income for the six months ended February 29, 1996, and is qualified in its entirety by reference to such financial statements. 6-MOS AUG-31-1996 SEP-01-1995 FEB-29-1996 73,431 2,550 260,353 8,256 182,428 627,958 746,904 394,620 1,111,347 176,795 26,741 0 0 57,919 771,295 757,470 712,245 974,756 454,537 603,751 300,783 0 2,407 67,815 25,296 42,519 0 0 0 42,519 0.88 0.88
EX-27 13 FDS --
5 Page 47 Exhibit 27 Financial Data Schedule Quarter Ended November 30, 1995 Pursuant to Section 601(c) of Regulation S-K This schedule contains restated summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of November 30, 1995 and the consolidated statement of income for the three months ended November 30, 1995, and is qualified in its entirety by reference to such financial statements. 3-MOS AUG-31-1996 SEP-01-1995 NOV-30-1995 92,569 2,550 263,015 7,643 188,581 650,848 738,409 386,309 1,139,797 199,869 26,745 57,919 0 0 766,213 1,139,797 359,842 492,550 227,439 301,803 152,410 0 1,242 37,095 13,826 23,269 0 0 0 23,269 0.48 0.48
EX-27 14 FDS --
5 Page 48 Exhibit 27 Financial Data Schedule Year Ended August 31, 1995 Pursuant to Section 601(c) of Regulation S-K This schedule contains restated summary financial information extracted from National Service Industries, Inc. consolidated balance sheet as of August 31, 1995 and the consolidated statement of income for the year ended August 31, 1995, and is qualified in its entirety by reference to such financial statements. 12-MOS Aug-31-1995 Sep-01-1994 Aug-31-1995 79,402 3,598 272,523 6,467 185,789 640,410 726,907 377,003 1,131,346 202,570 26,776 57,919 0 0 686,485 1,131,346 1,424,180 1,970,627 908,869 1,208,556 601,143 0 4,431 150,497 56,400 94,097 0 0 0 94,097 1.93 1.93
-----END PRIVACY-ENHANCED MESSAGE-----