-----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, ACanlWBdOpAsG7arpgbhhmB6fw6MaEybhN0nFjJ5hPG+fqfcRzmsVBhLf9JpW7XS oC5tL+TvJ+pjeNNz6C2ZdA== 0000070538-99-000015.txt : 19990701 0000070538-99-000015.hdr.sgml : 19990701 ACCESSION NUMBER: 0000070538-99-000015 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL SERVICE INDUSTRIES INC CENTRAL INDEX KEY: 0000070538 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 580364900 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-03208 FILM NUMBER: 99656533 BUSINESS ADDRESS: STREET 1: 1420 PEACHTREE ST NE CITY: ATLANTA STATE: GA ZIP: 30309 BUSINESS PHONE: 4048531000 MAIL ADDRESS: STREET 1: 1420 PEACHTREE ST NE CITY: ATLANTA STATE: GA ZIP: 30309 11-K 1 NSI RETIREMENT AND 401(K) PLAN Page 1 of 13 Exhibit Index on Page 2 FORM 11-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Annual Report Pursuant to Section 15(d) of the Securities Exchange Act of 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended: December 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to Commission file number 1- 3208 A. Full title of the plan and the address of the plan, if different from that of the issuer named below: National Service Industries Retirement and 401(k) Plan B. Name of issuer of the securities held pursuant to the plan and the address of the principal executive office: National Service Industries, Inc. 1420 Peachtree Street, NE Atlanta, Georgia 30309 Page 2 REQUIRED INFORMATION The following documents are filed as a part of this report: 1. Financial Statements Plan financial statements prepared in accordance with the financial reporting requirements of ERISA include the following: Report of Independent Public Accountants Statements of Net Assets Available for Benefits, with Fund Information, as of December 31, 1998 and 1997 Statement of Changes in Net Assets Available for Benefits for the Year Ended December 31, 1998 Notes to Financial Statements 2. Exhibits Sequentially Numbered The following exhibit is filed with this report: Page 23 Consent of Arthur Andersen LLP 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. National Service Industires Retirement and 401(k) Plan Date: June 30, 1999 By: National Service Industries, Inc. Plan Administrator By: /s/ James S. Balloun Name: James S. Balloun Title: Chairman and Chief Executive Officer Page 3 National Service Industries Retirement and 401(k) Plan Financial Statements as of December 31, 1998 and 1997 Together With Auditors' Report Page 4 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Plan Administrator of National Service Industries Retirement and 401(k) Plan: We have audited the accompanying statements of net assets available for benefits of NATIONAL SERVICE INDUSTRIES RETIREMENT AND 401(k) PLAN as of December 31, 1998 and 1997 and the related statement of changes in net assets available for benefits, with fund information, for the year ended December 31, 1998. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1998 and 1997 and the changes in net assets available for benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The fund information in the statement of changes in net assets available for benefits is presented for the purpose of additional analysis rather than to present the changes in net assets available for benefits of each fund. The fund information has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Atlanta, Georgia April 29, 1999 Page 5 NATIONAL SERVICE INDUSTRIES RETIREMENT AND 401(K) PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1998 AND 1997 1998 1997 INVESTMENT IN NSI DC TRUST, at fair value (Notes 2 and 3) ------------ ----------- Balanced Fund $ 266,963 $ 209,107 Diversified Equity Fund 642,548 442,215 Stable Value Fund 107,473 74,174 NSI Stock Fund--participant-directed 167,450 169,757 Loan Fund 86,445 45,319 International Fund 37,588 36,299 Index Fund 116,907 45,951 Small Company Fund 52,994 24,290 NSI Stock Fund--nonparticipant-directed 246,126 225,092 ------------ ----------- Total investment 1,724,494 1,272,204 ------------ ----------- CONTRIBUTIONS RECEIVABLE -- EMPLOYER 0 3,436 ------------ ----------- FUNDS PAYABLE: Employer (11,002) 0 Participant (11,665) 0 ------------ ----------- Total refunds payable (22,667) 0 ------------ ----------- NET ASSETS AVAILABLE FOR BENEFITS $ 1,701,827 $ 1,275,640 ============ ===========
The accompanying notes are an integral part of these statements. Page 6 NATIONAL SERVICE INDUSTRIES RETIREMENT AND 401(K) PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION, FOR THE YEAR ENDED DECEMBER 31, 1998 Nonparticipant- Participant-Directed Directed ------------------------------------------------------------------------------ ------------ Diversified Stable NSI Small NSI Balanced Equity Value Stock Loan Int'l Index Company Stock Fund Fund Fund Fund Fund Fund Fund Fund Fund Other Total -------- --------- --------- --------- -------- -------- --------- -------- --------- --------- ---------- CONTRIBUTIONS: Employer, net of forfeitures $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $118,312 $(14,438) $ 103,874 Participant 51,319 88,803 28,824 47,538 9,410 6,278 45,074 20,999 0 (11,665) 286,580 -------- --------- --------- --------- -------- -------- --------- -------- --------- --------- ---------- Total contributions 51,319 88,803 28,824 47,538 9,410 6,278 45,074 20,999 118,312 (26,103) 390,454 NET GAIN (LOSS) FROM INVESTMENT IN NSI DC TRUST (Note 3) 29,806 142,132 6,147 (36,663) 0 (447) 20,825 6,367 (50,341) 0 117,826 BENEFITS PAID TO PARTICIPANTS (9,334) (27,596) (1,175) (15,662) (2,167) (1,475) (1,289) (333) (23,062) 0 (82,093) INTRAPLAN TRANSFERS (13,935) (3,006) (497) 2,480 33,883 (3,067) 6,346 1,671 (23,875) 0 0 -------- --------- --------- --------- -------- -------- --------- -------- --------- --------- ---------- NET INCREASE (DECREASE) 57,856 200,333 33,299 (2,307) 41,126 1,289 70,956 28,704 21,034 (26,103) 426,187 NET ASSETS AVAILABLE FOR BENEFITS, December 31, 1997 209,107 442,215 74,174 169,757 45,319 36,299 45,951 24,290 225,092 3,436 1,275,640 NET ASSETS AVAILABLE FOR -------- --------- --------- --------- -------- -------- --------- -------- --------- --------- ---------- BENEFITS, December 31, 1998 $266,963 $642,548 $107,473 $167,450 $86,445 $37,588 $116,907 $52,994 $246,126 $(22,667) $1,701,827 ======== ========= ========= ========= ======== ======== ========= ======== ========= ========= ==========
The accompanying notes are an integral part of this statement. Page 7 NATIONAL SERVICE INDUSTRIES RETIREMENT AND 401(K) PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 1. PLAN DESCRIPTION The following is a brief description of the National Service Industries Retirement and 401(k) Plan (the "Plan") of National Service Industries, Inc. of Georgia and NSI Enterprises, Inc. (together, the "Employer"). Both National Service Industries, Inc. of Georgia and NSI Enterprises, Inc. are wholly owned subsidiaries of National Service Industries, Inc. ("NSI"). This description is provided for informational purposes only. Participants should refer to the plan agreement for more complete information. General The Plan is a defined contribution plan established under the provisions of Section 401(a) of the Internal Revenue Code ("IRC"). The Plan covers nonunion, full-time, salaried employees of the Employer who have attained the age of 20.5 with at least six months of service and who are classified by the Employer as corporate office personnel or treasury function personnel. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. Contributions Participants may elect to contribute between 1% and 10% of before-tax compensation, as defined in the Plan, subject to certain limitations under the IRC. Matching contributions are made by the Employer in an amount equal to 50% of the participant's contribution up to the lesser of 4% of compensation or $1,000 in a plan year. Effective January 1, 1998, matching contributions are made by the Employer in an amount equal to 50% of the participant's contribution up to 6% of compensation. Additional discretionary amounts, as determined by the board of directors of NSI, may be contributed by the Employer and are allocated to each participant in the same proportion that each participant's annual compensation bears to annual compensation of all participants or at the discretion of the Employer on a per capita basis. No discretionary contributions were made for the year ended December 31, 1998. Vesting Participants are always fully vested in their individual contributions. Vesting of employer contributions occurs on an increasing scale, ranging from 10% vesting after two years of service, as defined, to 100% vesting after seven years of service. Effective January 1, 1998, vesting occurs at 20% for each year of service, with 100% vesting after five years of service. Nonvested employer contributions are forfeited upon a participant's withdrawal from the Plan and are used to reduce future employer contributions. Page 8 Administration All administrative expenses of the Plan were paid by the Employer during the year ended December 31, 1998. Participants' Accounts Individual accounts are maintained for each of the Plan's participants to reflect that particular participant's contributions and related employer contributions as well as the participant's share of the Plan's income and any related investment management fees and expenses. The Plan's investment fund balances are expressed in units. At December 31, 1998 and 1997, 177,040 and 119,436 units, respectively, were assigned to plan participants. Unit values for each investment fund were as follows at December 31, 1998 and 1997: 1998 1997 --------- --------- Balanced Fund $ 37.82 $ 33.18 Diversified Equity Fund 15.71 14.04 Stable Value Fund 12.84 12.07 NSI Stock Fund 15.47 19.61 International Fund 17.76 4.82 Index Fund 112.85 89.56 Small Company Fund 11.58 11.21 Bond Index Fund 11.16 N/A At December 31, 1998, the Plan had $0 investment in the Bond Index Fund. Thus, this fund is not presented in the accompanying financial statements. Investment in Master Trust Under a trust agreement dated September 1, 1993, as amended, Wachovia Bank of Georgia, N.A. was appointed trustee of the NSI Defined Contribution Plan's Master Trust (the "NSI DC Trust"). Effective January 1, 1998, INVESCO Trust Company was appointed trustee of the NSI DC Trust. The Plan's assets are commingled in the NSI DC Trust together with the assets of certain defined contribution plans of other NSI divisions. The investments of the NSI DC Trust are subject to certain administrative guidelines and limitations as to type and amount of securities held. Certain fund assets are allocated to selected independent investment managers to invest under these general guidelines. Page 9 Investment Options The separate investment options made available under the Plan may be changed, eliminated, or modified from time to time by the investment committee of the NSI DC Trust. Participants make their investment elections in 5% increments, with changes allowed on a daily basis. Participants may not direct the investment of employer matching or discretionary contributions. These are invested in the NSI Stock Fund discussed below. The separate investment options offered by the Plan are as follows: o Diversified Equity Fund. This fund is a diversified stock fund designed to invest in a broad range of common stocks providing capital growth. o Stable Value Fund. This is a fixed income fund designed to provide a steady level of current income while focusing on preservation of principal. This fund is managed by INVESCO Trust Company or its affiliates. o Balanced Fund. This fund is invested in a changing mix of high-quality stocks and bonds. The fund is designed to provide capital growth and current income while limiting the risk of principal loss. This fund is managed by INVESCO Trust Company or its affiliates. o NSI Stock Fund. This fund is invested in NSI common stock, although it may hold other short-term investments from time to time. A participant may not direct more than 50% of his/her account balance to be invested in this fund. o International Fund. This fund is invested in the stock of non-U.S. companies and is designed to provide long-term growth. During 1998, the investment committee of the NSI DC Trust changed the specific asset fund which serves as this investment option. o Index Fund. This fund (offered beginning June 1997) is invested in all of the stocks in the Standard & Poor's 500 Composite Stock Price Index. o Small Company Fund. This fund (offered beginning June 1997) is invested in small or emerging companies that show potential for increased size and profitability. The fund seeks little or no current income. This fund is managed by INVESCO Trust Company or its affiliates. o Bond Index Fund. This fund (offered beginning July 1998) is invested in a well-diversified portfolio that is representative of the domestic investment-grade bond market. Loans to Participants The Plan permits loans to participants up to the lesser of 50% of the participant's vested account balance or $50,000. A participant has up to five years to repay the principal and interest, unless the loan is for the purchase of a primary residence, in which case the repayment period will be established at the time the loan is approved. Loan processing fees are charged directly to the participant's account. Interest rates on loans to participants are based on market rates, as determined by the plan administrator. The interest rate as of December 31, 1998 was 9.25%. Page 10 Loan issuances and repayments are included in intraplan transfers in the accompanying statement of changes in net assets available for benefits. Interest on loans is included in the net gain from investment in the NSI DC Trust and is allocated to each investment fund based on participants' investment elections. Benefits A participant or his/her beneficiary is entitled to receive the distribution of his/her vested account balance upon death, disability, retirement (age 65), or other termination of employment. These benefits are payable in a lump-sum amount or can be paid in installments at the participant's election if his/her vested balance is greater than $5,000 and he/she is age 55 or older. Benefits are payable in cash, except that any portion of a participant's account balance which is invested in the NSI Stock Fund may be distributed in the form of shares of NSI common stock, with fractional shares paid in cash. If the equivalent number of shares to be distributed to a participant is less than 100, then the participant may elect to receive cash instead of shares as his/her distribution. Hardship withdrawals may be made upon proven financial hardship of a participant, as defined in the plan agreement and as approved by the Plan's retirement committee. Plan Termination Although the Employer intends for the Plan to be permanent, the Plan provides that the Employer has the right to discontinue contributions or to terminate the Plan at any time. In the event of plan termination, each participant shall be vested in the balance of his/her account and his/her proportionate share of any future adjustments. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The accounts of the Plan are maintained by the trustee on the cash basis of accounting. The accompanying financial statements have been prepared using the accrual method of accounting by application of memorandum entries. The preparation of financial statements in conformity with generally accepted accounting principles requires the Plan's management to use estimates and assumptions that affect the accompanying financial statements and disclosures. Actual results could differ from these estimates. Investment Valuation Investments of the NSI DC Trust, except for the guaranteed investment contracts ("GICs"), are stated at fair value, as determined by the trustee from quoted market prices. Securities traded on a national exchange are valued at the last reported sales price on the last business day of the plan year; investments traded in the over-the-counter market and listed securities for which no sale was reported on the last day of the plan year are valued at the last reported bid price. Page 11 GICs included in the NSI DC Trust are fully benefit-responsive and are therefore carried at contract value (cost plus accrued interest) in the accompanying financial statements in accordance with Statement of Position 94-4, "Reporting of Investment Contracts for Welfare and Pension Plans." At December 31, 1998 and 1997, contract value approximates fair value. At December 31, 1998, the weighted average crediting interest rate was 6.6%. For the year ended December 31, 1998, the annual yield on the GICs held by the NSI DC Trust was 7%. For certain of the GICs held by the NSI DC Trust, crediting interest rates may be changed if certain events occur, such as early retirements, plant closings, etc., but in no case are adjusted to a rate less than 0%. GICs are subject to credit risk based on the ability of the insurance company to meet interest or principal payments, or both, as they become due. Certain GICs included in the NSI DC Trust are synthetic; that is, the NSI DC Trust owns certain fixed income securities, and the contract issuer provides a "wrapper" that guarantees a fixed rate of return and provides benefit responsiveness. At December 31, 1998, the fair value of the underlying assets of the synthetic GICs (determined from quoted market prices) and the value of the related wrapper contracts were $48,749,180 and $(1,232,140), respectively. 3. NSI DC TRUST Investment Income Investment income of the NSI DC Trust for the year ended December 31, 1998 is summarized as follows: Dividends on common stock $ 363,675 Interest income 3,619,354 Net depreciation in fair value of NSI common stock (4,420,458) Net income from common/collective trust 23,084,929 Net income from mutual funds 12,167,659 Net income from pooled separate account 31,785 -------------- Total investment income $ 34,846,944 ============== The investment income of the NSI DC Trust for the year ended December 31, 1998 is allocated among participating plans as follows: National Service Industries Retirement and 401(k) Plan $ 117,826 All other NSI plans 34,729,118 -------------- Total $ 34,846,944 ============== Page 12 Net Assets The net assets of the NSI DC Trust are as follows at December 31, 1998 and 1997: 1998 1997 Mutual funds $ 91,469,061 $ 79,312,170 Common/collective trust 98,522,341 79,112,333 Guaranteed investment contracts 59,224,919 52,443,357 NSI common stock 15,348,609 18,045,789 Loans receivable from participants 7,590,683 7,564,684 Money market fund 0 1,740,602 Pooled separate account 2,315,680 2,385,857 -------------- -------------- 274,471,293 240,604,792 Cash 0 9,476 -------------- -------------- 274,471,293 240,614,268 Accrued investment income 6,608 112,870 Adjustments for pending trades 19,658 (199,191) Other 0 (47,759) -------------- -------------- Net assets $ 274,497,559 $ 240,480,188 ============== ==============
The allocation of the net assets of the NSI DC Trust to participating plans is based on participant units and is as follows as of December 31, 1998 and 1997: 1998 1997 -------------------------------- ---------------------------- Amount Percent Amount Percent ----------------- ---------------- ---------------- ----------- National Service Industries Retirement and 401(k) Plan $ 1,724,494 0.63% $ 1,272,204 0.53% All other plans 272,773,065 99.37 239,207,984 99.47 ----------------- ---------------- ---------------- ----------- Total $274,497,559 100.00% $240,480,188 100.00% ================= ================ ================ =========== Investment in NSI Common Stock As of December 31, 1998 and 1997, approximately 5.6% and 7.5%, respectively, of the NSI DC Trust's net assets were invested in the common stock of NSI, a party in interest to the Plan. 4. Tax Status The Plan has received a determination letter from the Internal Revenue Service dated October 25, 1995 stating that the Plan was designed in accordance with plan design requirements as of that date. The Plan has been amended since receiving the determination letter. However, the plan administrator believes that the Plan is currently designed and is being operated in compliance with the applicable requirements of the IRC. Therefore, the plan administrator believes that the Plan was qualified and that the related trust was tax-exempt as of December 31, 1998 and 1997.
EX-23 2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Page 13 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 11-K into National Service Industries, Inc.'s previously filed Registration Statement covering the National Service Industries Retirement and 401(k) Plan. /s/ Arthur Andersen LLP Arthur Andersen LLP Atlanta, Georgia June 25, 1999 -----END PRIVACY-ENHANCED MESSAGE-----