<PAGE> 1
Page 1 of 95
Exhibit Index on Page 19
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Annual Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the fiscal year ended August 31, 1994 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)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
Common Stock ($1.00 Par Value) New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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 [ ]
Based upon the closing price as quoted on the New York Stock Exchange October
31, 1994 the aggregate market value of the voting stock held by nonaffiliates of
the registrant was $1,317,369,635.25.
The number of shares outstanding of the registrant's common stock, $1.00 par
value, was 49,247,463 shares as of October 31, 1994.
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K Incorporated Document
Part I, Item 1 1994 Annual Report
Part II, Items 5, 6, 7, and 8 1994 Annual Report
Part III, Items 10, 11, 12, and 13 1994 Proxy Statement
Part IV, Item 14 1994 Annual Report
<PAGE>
<TABLE>
PART I Page 2
ITEM 1. BUSINESS
The registrant, incorporated in Delaware in 1928, provides a wide variety of
products and services through its operating divisions, as follows:
<CAPTION>
Divisions Principal Products or Services Marketing Area
<S> <C> <C>
Products and services for industrial,
commercial, institutional, and healthcare
customers
TEXTILE RENTAL
National Linen Service Rented napkins and table Principally the southern,
National Uniform Service linens, bed linens, towels, southwestern, central,
National Healthcare Linen Service uniforms, specialized and northeastern
National Dust Control Service garments, sterilized United States
National Direct Source products, restroom
products, mats and mops,
and complimentary direct
sale products.
CHEMICAL
Zep Manufacturing Company Chemical products, Throughout the United
Zep Manufacturing Company of Canada primarily for maintenance, States, Canada,
Zep Alcare sanitation, and water Puerto Rico, and
Zep Europe treatment, including soaps, western Europe.
Selig Chemical Industries detergents, waxes, and
National Chemical disinfectants.
ENVELOPE
Atlantic Envelope Company Business and specialty South and Southwest.
ATENCO Filing Systems envelopes and records
R. P. Gillotte Co. storage and filing systems.
Lyon Folder Company
Techno-Aide/Stumb Metal Products Company
Products for the construction industry
LIGHTING EQUIPMENT
Lithonia Lighting Fluorescent fixtures for Throughout the United
Lithonia Fluorescent commercial, industrial, States, Canada and
Lithonia Hi-Tek Lighting and institutional overseas.
Lithonia Downlighting applications; high-intensity
Major Reflector Products discharge fixtures for
RELOC Wiring Systems industrial and commercial
Lithonia Controls Systems use; outdoor lighting;
Lithonia Emergency Lighting downlighting; track lighting;
Lithonia Lighting Canada vandal-resistant fixtures;
emergency lighting; lighting
and dimming controls; and
manufactured wiring systems.
INSULATION SERVICE
North Bros. Co. Commercial, industrial, and Principally in the
South Insulation Company institutional insulation southeastern United
Western State Insulation Company products, accessories, and States.
Merit Insulation Company contracting services.
Precision Foam Fabricators
Mid-State Insulation Co.
</TABLE>
<PAGE>
Page 3
<TABLE>
<CAPTION>
Divisions Principal Products or Services Marketing Area
<S> <C> <C>
Products and services for the consumer
LIGHTING EQUIPMENT
Home-Vue Lighting Fluorescent work lamps, recessed Throughout the United
Light Concepts and track lighting, and other States.
decorative fluorescent fixtures.
</TABLE>
Competition
While each of the registrant's businesses is highly competitive, the competitive
conditions and the registrant's relative position and market share vary widely
from business to business. A limited number of the competitors of each division
are large diversified companies, but most of the competitors of the principal
divisions are smaller companies than the registrant. Such smaller companies
frequently specialize in one industry or one geographic area, which in many
instances increases the intensity of competition. Management believes that its
lighting equipment division is the largest manufacturer of lighting fixtures in
the world and its textile rental division is one of the largest such companies
in the United States.
Raw Materials
There were no significant shortages of materials or components during the years
ended August 31, 1994, 1993, and 1992. No one commodity or supplier provided a
significant portion of the company's material requirements.
Total Employment
The registrant employs approximately 22,000 people.
Financial Information about Industry Segments
The financial information required by this item is included on page 32 of the
company's annual report for the year ended August 31, 1994, under the caption
"Business Segment Information" and is incorporated herein by reference.
<PAGE>
<TABLE>
Page 4
ITEM 2. PROPERTIES
The general offices of the company are located in Atlanta, Georgia. Because of
the diverse nature of the operations and the large number of individual
locations, it is neither practical nor significant to describe all of the
operating facilities owned or leased by the company. The following listing
summarizes the significant facility categories by division:
<CAPTION>
Number of Facilities
Division Owned Leased Nature of Facilities
<S> <C> <C> <C>
Lighting Equipment 9 3 Manufacturing plants
1 2 Distribution centers
- 30 Field warehouses
Textile Rental 71 19 Linen plants
17 42 Linen service centers
- 1 Distribution centers
Chemical 9 4 Manufacturing plants
22 48 Distribution centers
- 3 Sales offices
Insulation Service 2 - Fabrication plants
26 13 Warehouses
Envelope 6 4 Manufacturing plants
- 3 Warehouses
- 1 Sales office
Corporate Office 1 - Corporate headquarters
</TABLE>
<PAGE>
Page 5
ITEM 3. LEGAL PROCEEDINGS
The Registrant is neither a party to nor is its property subject to any material
pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this item is included on the inside back cover of
the company's annual report for the year ended August 31, 1994, under the
caption "Common Share Prices and Dividends per Share" and is incorporated herein
by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is included on pages 36 and 37 of the
company's annual report for the year ended August 31, 1994, under the caption
"Ten-Year Financial Summary" and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is included on pages 34 and 35 of the
company's annual report for the year ended August 31, 1994, under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is included on pages 25 through 33 of the
company's annual report for the year ended August 31, 1994, under the captions
"Consolidated Balance Sheets," "Consolidated Statements of Income," Consolidated
Statements of Stockholders' Equity," "Consolidated Statements of Cash Flows,"
"Notes to Consolidated Financial Statements," and "Report of Independent Public
Accountants" and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
<PAGE>
Page 6
<TABLE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item, with respect to directors, is included on
pages 2 through 4 under the caption "Information Concerning Nominees" of the
company's proxy statement for the annual meeting of stockholders to be held
January 4, 1995, filed with the Commission pursuant to Regulation 14A, and is
incorporated herein by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
Executive officers of the company are elected at the organizational meeting of
the Board of Directors in January.
<CAPTION>
Name and age of each executive officer Business experience of executive officers during the five
and positions held with the company years ended August 31, 1994 and term in office
<S> <C>
D. Raymond Riddle, age 61 Mr. Riddle served as President and Chief Executive
Chairman and Chief Executive Officer, Officer from January, 1993 to September, 1994 when he
Director, and member of the Executive was elected Chairman and Chief Executive Office. He
Committee of the Board served from 1985 until 1993 as an Executive Vice
President of Wachovia Corporation and from 1987 until
1993 as President and Chief Executive Officer and as a
director of Wachovia Corporation of Georgia and its lead
bank, Wachovia Bank of Georgia, N.A.
Don W. Hubble, age 55 Mr. Hubble was elected President effective September,
President and Chief Operating Officer 1994 and was designated Chief Operating Officer in
and Director September, 1993. He served as a Group Vice President
from 1980 until 1988, when he was elected Executive
Vice President.
David Levy, age 57 Mr. Levy was elected Executive Vice President,
Executive Vice President, Administration Administration in October, 1992. He served as Vice
and Counsel and Director President, Secretary and Counsel from 1975 until he was
elected Senior Vice President in 1982.
J. Robert Hipps, age 54 Mr. Hipps was elected Senior Vice President, Finance in
Senior Vice President, Finance March, 1990 and also served as Treasurer until June,
1992. Previously, he served General Signal Corporation as
Vice President and Treasurer and, from 1987, as Vice
President and Controller.
</TABLE>
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is included on pages 6 through 13 under
the captions "Compensation of Directors," "Other Information Concerning the
Board and its Committees," "Compensation Committee Interlocks and Insider
Participation," "Summary Compensation Table," "Option Grants in Last Fiscal
Year," "Aggregated Option Exercises and Fiscal Year-End Option Values," "Other
Agreements," and "Pension and Supplemental Retirement Benefits" of the company's
proxy statement for the annual meeting of stockholders to be held January 4,
1995, filed with the Commission pursuant to Regulation 14A, and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is included on page 5 under the caption
"Beneficial Ownership of the Corporation's Securities" of the company's proxy
statement for the annual meeting of stockholders to be held January 4, 1995,
filed with the Commission pursuant to Regulation 14A, and is incorporated herein
by reference.
<PAGE>
Page 7
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is included on page 5 under the caption
"Certain Transactions" of the company's proxy statement for the annual meeting
of stockholders to be held January 4, 1995, filed with the Commission pursuant
to Regulation 14A, and is incorporated herein by reference.
<TABLE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as a part of this report:
Financial Statements
The company's 1994 Annual Report contains the consolidated balance sheets as
of August 31, 1994 and 1993, the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in the
period ended August 31, 1994, and the related report of Arthur Andersen LLP.
The financial statements, incorporated herein by reference, include the
following:
Consolidated Balance Sheets - August 31, 1994 and 1993
Consolidated Statements of Income for the years ended August 31,
1994, 1993, and 1992
Consolidated Statements of Stockholders' Equity for the years ended
August 31, 1994, 1993, and 1992
Consolidated Statements of Cash Flows for the years ended August 31,
1994, 1993, and 1992
Notes to Consolidated Financial Statements
Financial Statement Schedules:
Report of Independent Public Accountants on Schedules
<CAPTION>
Schedule Number
<S> <C>
II Amounts Receivable from Related Parties and Underwriters,
Promoters, and Employees Other than Related Parties
V Property, Plant, and Equipment
VI Accumulated Depreciation and Amortization of Property, Plant,
and Equipment
VIII Valuation and Qualifying Accounts
IX Short-Term Borrowings
X Supplementary Income Statement Information
</TABLE>
Any of schedules I through XIV not listed above have been omitted because
they are not applicable or the required information is included in the
consolidated financial statements or notes thereto.
<PAGE>
Page 8
ITEM 14. (Continued)
3. Exhibits filed with this report
<TABLE>
<CAPTION>
Reference No. from
Reg. 229.601
Item 601 Description of Exhibit
<S> <C>
3 Restated Certificate of Incorporation and By-Laws
4 Shareholder Rights Plan Adopted May 9, 1988
10(i) Section 168 Agreement and Election dated as of
April 9, 1982, between National Service
Industries, Inc. and Oglethorpe Power Corporation
10(iii)A Management Contracts and Compensatory Arrangements:
(a) Directors' Deferred Compensation Plan
(b) Executives' Deferred Compensation Plan and
Amendment
(c) Restated and Amended Supplemental Retirement
Plan for Executives of National Service
Industries, Inc. and Amendment
(d) The National Service Industries, Inc. Senior
Management Benefit Plan and Amendments
(e) Severance Protection Agreement between National
Service Industries, Inc. and David Levy
(f) Severance Protection Agreements between
National Service Industries, Inc. and
(i) D. Raymond Riddle
(ii) Don W. Hubble
(iii) J. Robert Hipps
(g) Bonus Letter Agreements between National
Service Industries, Inc. and
(i) D. Raymond Riddle
(ii) Don W. Hubble
(iii) David Levy
(iv) J. Robert Hipps
(h) Long-Term Incentive Program and Amendment
(i) Incentive Stock Option Agreements between
National Service Industries, Inc. and
(i) D. Raymond Riddle
(ii) Don W. Hubble
(iii) David Levy
(iv) J. Robert Hipps
(j) Nonqualified Stock Option Agreement for
Corporate Officers between National Service
Industries, Inc. and
(i) D. Raymond Riddle
(ii) Don W. Hubble
(iii) David Levy
(iv) J. Robert Hipps
</TABLE>
<PAGE>
Page 9
ITEM 14. (Continued)
<TABLE>
<CAPTION>
3. Exhibits filed with this report (Continued)
Reference No. from
Reg. 229.601
Item 601 Description of Exhibit
<S> <C>
(k) Nonqualified Stock Option Agreement for
Corporate Officers Effective Beginning
September 21, 1994 between National Service
Industries, Inc. and
(i) D. Raymond Riddle
(ii) Don W. Hubble
(iii) David Levy
(l) Benefits Protection Trust Agreement and
Amendment
(m) Executive Benefits Trust Agreement
(n) Consulting Agreement between National Service
Industries, Inc. and Erwin Zaban
(o) Consulting Agreement between National Service
Industries, Inc. and Sidney Kirschner
(p) 1992 Nonemployee Directors' Stock Option Plan
Effective September 16, 1992
(q) Nonemployee Directors' Stock Option Agreement
between National Service Industries, Inc. and
(i) John L. Clendenin
(ii) Jesse Hill, Jr.
(iii) Robert M. Holder, Jr.
(iv) F. Ross Johnson
(v) James C. Kennedy
(vi) Donald R. Keough
(vii) Bryan D. Langton
(viii)Bernard Marcus
(ix) John G. Medlin, Jr.
(x) Dr. Betty L. Siegel
(xi) Erwin Zaban
(r) Summary of Incentive Bonus Program for
Executive Officers of National Service
Industries, Inc. ("NSI") for the Fiscal Year
Ending August 31, 1994
(s) National Service Industries, Inc. Executive
Savings Plan Effective September 1, 1994
(t) National Service Industries, Inc. Management
Compensation and Incentive Plan Effective
September 1, 1994, Subject to Approval by
Shareholders at Annual Meeting to be Held
January 4, 1995
11 Computations of Net Income per Share of Common
Stock
13 Information Incorporated by Reference from Annual
Report for the Year Ended August 31, 1994
21 List of Subsidiaries
23 Consent of Independent Public Accountants
24 Powers of Attorney
27 Financial Data Schedules
</TABLE>
<PAGE>
Page 10
ITEM 14. (Continued)
(b) No reports on Form 8-K were filed for the three months ended August 31,
1994.
(c) Exhibits 2, 9, 12, 18, 22, and 28 have been omitted because they are not
applicable.
(d) Not applicable.
<PAGE>
Page 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
NATIONAL SERVICE INDUSTRIES, INC.
Date: November 18, 1994 By: /s/ Kenyon W. Murphy
Kenyon W. Murphy
Secretary and Assistant Counsel
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title
<S> <C> <C>
D. Raymond Riddle* Chairman and Chief Executive Officer
J. Robert Hipps* Senior Vice President, Finance
(Principal Financial Officer)
John A. Bostater* Vice President and Controller
John L. Clendenin* Director
Jesse Hill, Jr.* Director
Robert M. Holder, Jr.* Director
Don W. Hubble* Director
F. Ross Johnson* Director - November 18, 1994
James C. Kennedy* Director
Donald R. Keough* Director
Bryan D. Langton* Director
David Levy* Director
Bernard Marcus* Director
John G. Medlin, Jr.* Director
Betty L. Siegel* Director
Erwin Zaban* Director
</TABLE>
*By /s/ David Levy Attorney-in-Fact
David Levy
<PAGE>
Page 12
Arthur Andersen LLP
Atlanta, Georgia
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To National Service Industries, Inc.:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in NATIONAL SERVICE
INDUSTRIES, INC. and subsidiaries' annual report to stockholders
incorporated by reference in this Form 10-K and have issued our report
thereon dated October 20, 1994. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedules
listed in Item 14 in this Form 10-K are the responsibility of the
Company's management and are presented for the purpose of complying with
the Securities and Exchange Commission's rules and are not part of the
basic consolidated financial statements. These schedules have been
subjected to the auditing procedures applied in the audit of the basic
consolidated financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
October 20, 1994
<PAGE>
Page 13
<TABLE>
SCHEDULE II
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTORS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED AUGUST 31, 1994, 1993, AND 1992
(In thousands)
<CAPTION>
Balance at
Beginning Amounts Balance at End of Period
Description of Period Additions Collected Current Noncurrent
<S> <C> <C> <C> <C> <C>
YEAR ENDED AUGUST 31, 1994:
Division Officers $ 119 $ - $ 26 $ 93 $ -
YEAR ENDED AUGUST 31, 1993:
Division Officers $ 109 $ 18 $ 8 $ 119 $ -
YEAR ENDED AUGUST 31, 1992:
Division Officers $ 250 (1),(2) $ - $ 141 $ 109 $ -
<FN>
(1) $150,000 promissory note receivable from Mr. Peele, secured by real property, originally due
November 15, 1991, with interest at prime rate announced by FNB-Atlanta adjusted at first of
month.
(2) $100,000 promissory note receivable from Mr. Gurbacki, secured by real property, originally
due December 31, 1991, with interest at prime rate announced by FNB-Atlanta adjusted on
first of month.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE V
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEARS ENDED AUGUST 31, 1994, 1993, AND 1992
(In thousands)
<CAPTION>
Balance at Other Balance at
Beginning Additions (1) Sales or Changes (2) End
Classification of Period at Cost Retirements Add (Deduct) of Period
<S> <C> <C> <C> <C> <C>
YEAR ENDED AUGUST 31, 1994:
Land $ 33,304 $ 295 $ 1,371 $ 9 $ 32,237
Buildings 173,288 3,715 7,495 296 169,804
Machinery and equipment 371,354 23,082 18,225 (479) 375,732
Delivery equipment 65,203 8,751 5,386 4 68,572
Furniture and fixtures 55,207 6,307 1,863 496 60,147
Service equipment 8,648 - 5,553 (138) 2,957
Leasehold improvements 17,034 368 255 (22) 17,125
$ 724,038 $ 42,518 $ 40,148 $ 166 $ 726,574
YEAR ENDED AUGUST 31, 1993:
Land $ 29,534 $ 4,392 $ 590 $ (32) $ 33,304
Buildings 154,606 21,809 2,685 (442) 173,288
Machinery and equipment 350,057 36,169 13,990 (882) 371,354
Delivery equipment 56,372 12,392 3,505 (56) 65,203
Furniture and fixtures 58,545 6,972 10,520 210 55,207
Service equipment 12,642 - 3,994 - 8,648
Leasehold improvements 17,781 437 1,126 (58) 17,034
$ 679,537 $ 82,171 $ 36,410 $ (1,260) $ 724,038
YEAR ENDED AUGUST 31, 1992:
Land $ 28,462 $ 1,492 $ 411 $ (9) $ 29,534
Buildings 148,066 11,690 4,274 (876) 154,606
Machinery and equipment 332,306 26,007 7,881 (375) 350,057
Delivery equipment 55,749 4,438 3,822 7 56,372
Furniture and fixtures 53,929 5,505 1,717 828 58,545
Service equipment 12,274 515 147 - 12,642
Leasehold improvements 18,520 142 856 (25) 17,781
$ 649,306 $ 49,789 $ 19,108 $ (450) $ 679,537
<FN>
(1) Additions during the year included property, plant, and equipment recorded in acquisitions and normal
replacements and purchases of property, plant, and equipment for divisions to meet operational
requirements.
(2) Transfers and foreign currency conversion.
Page 14
</TABLE>
<PAGE>
<TABLE>
Page 15
SCHEDULE VI
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT, AND EQUIPMENT
FOR THE YEARS ENDED AUGUST 31, 1994, 1993, AND 1992
(In thousands)
<CAPTION>
Balance at Other Balance at
Beginning Charged to Sales or Changes (1) End
Classification of Period Expense Retirements Add (Deduct) of Period
<S> <C> <C> <C> <C> <C>
YEAR ENDED AUGUST 31, 1994:
Buildings $ 48,342 $ 5,880 $ 2,138 $ 191 $ 52,275
Machinery and equipment 213,945 25,351 13,705 (30) 225,561
Delivery equipment 38,740 7,374 4,974 5 41,145
Furniture and fixtures 38,014 7,035 1,488 159 43,720
Service equipment 7,624 482 5,540 (113) 2,453
Leasehold improvements 12,188 1,131 198 (13) 13,108
$358,853 $ 47,253 $ 28,043 $ 199 $378,262
YEAR ENDED AUGUST 31, 1993:
Buildings $ 42,260 $ 5,981 $ 1,600 $1,701 $ 48,342
Machinery and equipment 199,802 25,929 12,348 562 213,945
Delivery equipment 35,252 6,576 3,123 35 38,740
Furniture and fixtures 38,958 7,008 10,448 2,496 38,014
Service equipment 10,943 663 3,983 1 7,624
Leasehold improvements 11,972 1,282 1,058 (8) 12,188
$339,187 $ 47,439 $ 32,560 $4,787 $358,853
YEAR ENDED AUGUST 31, 1992:
Buildings $ 38,958 $ 5,150 $ 1,734 $ (114) $ 42,260
Machinery and equipment 181,135 23,734 4,884 (183) 199,802
Delivery equipment 32,821 5,625 3,185 (9) 35,252
Furniture and fixtures 32,489 8,005 1,572 36 38,958
Service equipment 10,229 803 89 0 10,943
Leasehold improvements 11,330 1,373 721 (10) 11,972
$306,962 $ 44,690 $ 12,185 $ (280) $339,187
<FN>
(1) Transfers, foreign currency conversion, and accumulated depreciation recorded in acquisitions.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VIII
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED AUGUST 31, 1994, 1993, AND 1992
(In thousands)
<CAPTION>
Balance at Additions Charged to Balance at
Beginning Costs and Other End
Description of Period Expenses Accounts (1) Deductions (2) of Period
<S> <C> <C> <C> <C> <C>
YEAR ENDED AUGUST 31, 1994:
Deducted in the balance sheet
from the asset to which it applies-
Reserve for doubtful accounts $7,170 $2,804 $ 923 $3,512 $7,385
YEAR ENDED AUGUST 31, 1993:
Deducted in the balance sheet
from the asset to which it applies-
Reserve for doubtful accounts $3,696 $3,300 $3,462 $3,288 $7,170
YEAR ENDED AUGUST 31, 1992:
Deducted in the balance sheet
from the asset to which it applies-
Reserve for doubtful accounts $3,443 $3,398 $ 49 $3,194 $3,696
<FN>
(1) Recoveries credited to reserve and reserves recorded in acquisitions.
(2) Uncollectible accounts written off.
</TABLE>
Page 16
<PAGE>
<TABLE>
Page 17
SCHEDULE IX
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
FOR THE YEARS ENDED AUGUST 31, 1994, 1993, AND 1992
(In thousands)
<CAPTIONS>
Maximum
Amount Average Weighted
Weighted Outstanding Amount Average
Balance at Average at Month End Outstanding Interest Rate
Category of Aggregate End Interest during during during
Short-Term Borrowings of Period Rate the Period the Period the Period
<S> <C> <C> <C>
YEAR ENDED AUGUST 31, 1994:
Banks (1) $5,098 5.90% $ 5,098 $ 4,481 7.41%
YEAR ENDED AUGUST 31, 1993:
Banks (1) $4,404 11.50% $42,732 $22,916 9.75%
YEAR ENDED AUGUST 31, 1992:
Banks (2) $ - - $ 1,372 $ 1,000 7.93%
<FN>
(1) Short-term borrowings under multi-currency lines of credit from a European bank.
(2) Short-term revolving credit assumed in connection with Canadian acquisition in January, 1991.
</TABLE>
<PAGE>
<TABLE>
Page 18
SCHEDULE X
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED AUGUST 31, 1994, 1993, AND 1992
(In thousands)
<CAPTION>
Charged to
Costs and
Item Expenses
<S> <C>
YEAR ENDED AUGUST 31, 1994:
Maintenance and Repairs $26,581
YEAR ENDED AUGUST 31, 1993:
Maintenance and Repairs $26,414
YEAR ENDED AUGUST 31, 1992:
Maintenance and Repairs $26,074
</TABLE>
<PAGE>
<TABLE>
Page 19
INDEX TO EXHIBITS
<CAPTION>
Page No.
<S> <C> <C>
EXHIBIT 3 - Restated Certificate of Incorporation Reference is made to Exhibit 3 of registrant's
Form 10-Q for the quarter ended May 31,
1992, which is incorporated herein by
reference.
- By-Laws as Amended and Restated June 21, Reference is made to Exhibit 3 of registrant's
1989 Form 10-K for the fiscal year ended August
31, 1989, which is incorporated herein by
reference.
EXHIBIT 4 - Shareholder Rights Plan Adopted May 9, 1988 Reference is made to Exhibit 1 of registrant's
Form 8-A as filed with the Commission on
May 11, 1988, which is incorporated herein by
reference.
EXHIBIT 10(i) - Section 168 Agreement and Election Dated Reference is made to Exhibit 10(i) of
April 9, 1982 between National Service registrant's Form 10-K for the fiscal year
Industries, Inc. and Oglethorpe Power ended August 31, 1982, which is incorporated
Corporation herein by reference.
EXHIBIT 10(iii)A Management Contracts and Compensatory Arrangements:
(a)-Director's Deferred Compensation Plan Reference is made to Exhibit 10(iii)A (b) of
registrant's Form 10-K for the fiscal year
ended August 31, 1982, which is incorporated
herein by reference.
(b)-(i) Executives' Deferred Compensation Plan Reference is made to Exhibit 19 of registrant's
Form 10-K for the fiscal year ended August 31,
1982, which incorporated herein by reference.
(ii) First Amendment To Executives' Reference is made to Exhibit 10(iii)A (b)-(ii)
Deferred Compensation Plan, Dated of registrant's Form 10-K for the fiscal year
September 21, 1989 ended August 31, 1989, which is incorporated
herein by reference.
(c)-(i)Restated and Amended Supplemental Reference is made to Exhibit 10(iii)A (c)-(i)
Retirement Plan for Executives of National of registrant's Form 10-K for the fiscal year
Service Industries, Inc. (Supplemental ended August 31, 1993, which is incorporated
Pension Plan) herein by reference.
(ii) Amendment to Restated and Amended Reference is made to Exhibit 10(iii)A (a) of
Supplemental Retirement Plan for Executives registrant's Form 10-Q for the quarter ended
of National Service Industries, Inc. February 28, 1994, which is incorporated
(Supplemental Pension Plan) herein by reference.
(d)-(i) The National Service Industries, Inc. Reference is made to Exhibit 10(iii)A (f) of
Senior Management Benefit Plan, Dated registrant's Form 10-K for the fiscal year
August 15, 1985 ended August 31, 1985, which is incorporated
herein by reference.
(ii) First Amendment to National Service Reference is made to Exhibit 10(iii)A (e)-(ii)
Industries, Inc. Senior Management Benefit of registrant's Form 10-K for the fiscal year
Plan, Dated September 21, 1989 ended August 31, 1989, which is incorporated
herein by reference.
</TABLE>
<PAGE>
<TABLE>
Page 20
INDEX TO EXHIBITS
<CAPTION>
Page No.
<S> <C>
(d) (iii) Second Amendment to National Service 23
Industries, Inc. Senior Management Benefit
Plan, Dated September 16, 1994
(e)-Severance Protection Agreement between Reference is made to Exhibit 10(iii)A (h) of
National Service Industries, Inc. and David registrant's Form 10-K for the fiscal year
Levy ended August 31, 1989, which is incorporated
herein by reference.
(f)-Severance Protection Agreements between Reference is made to Exhibit 10(iii)A (i) of
National Service Indus tries, Inc. and registrant's Form 10-K for the fiscal year
(i) D. Raymond Riddle ended August 31, 1989, which is incorporated
(ii) Don W. Hubble herein by reference.
(iii)J. Robert Hipps
(g)-Bonus Letter Agreements between Reference is made to Exhibit 10(iii)A (j) of
National Service Industries, Inc. and registrant's Form 10-K for the fiscal year
(i) D. Raymond Riddle ended August 31, 1989, which is incorporated
(ii) Don W. Hubble herein by reference.
(iii)David Levy
(iv) J. Robert Hipps
(h)-(i)Long-Term Incentive Program, Dated Reference is made to Exhibit 10(iii)A (k) of
September 20, 1989 registrant's Form 10-K for the fiscal year
ended August 31, 1989, which is incorporated
herein by reference.
-(ii)First Amendment to Long-Term 28
Incentive Program, Dated September 20,
1989
(i)-Incentive Stock Option Agreements between Reference is made to Exhibit 10(iii)A (l) of
National Service Industries, Inc., and registrant's Form 10-K for the fiscal year
(i) D. Raymond Riddle ended August 31, 1989, which is incorporated
(ii) Don W. Hubble herein by reference.
(iii)David Levy
(iv) J. Robert Hipps
(j)-Nonqualified Stock Option Agreement for Reference is made to Exhibit 10(iii)A (j) of
Corporate Officers between National Service registrant's Form 10-K for the fiscal year
Industries, Inc. and ended August 31, 1992, which is incorporated
(i) D. Raymond Riddle herein by reference.
(ii) Don W. Hubble
(iii)David Levy
(iv) J. Robert Hipps
(k)-Nonqualified Stock Option Agreement for 29
Corporate Officers Effective Beginning
September 21, 1994 between National
Service Industries, Inc. and
(i) D. Raymond Riddle
(ii) Don W. Hubble
(iii)David Levy
(l)-(i)Benefits Protection Trust Agreement Dated Reference is made to Exhibit 10(iii)A (n) of
July 5, 1990, between National Service Indus- registrant's Form 10-K for the fiscal year
tries, Inc. and Wachovia Bank and Trust ended August 31, 1990, which is incorporated
Company herein by reference.
</TABLE>
<PAGE>
<TABLE>
Page 21
INDEX TO EXHIBITS
<CAPTION>
Page No.
<S> <C> <C>
(l)-(ii)Amended Schedule 1 of Benefits Reference is made to Exhibit 10(iii)A (k)-(ii)
Protection Trust Agreement between of registrant's Form 10-K for the fiscal year
National Service Industries, Inc. and ended August 31, 1993, which is incorporated
Wachovia Bank and Trust Company herein by reference.
Dated September 15, 1993
(m)-Executive Benefits Trust Agreement Dated Reference is made to Exhibit 10(iii)A (o) of
July 5, 1990, between National Service Indus- registrant's Form 10-K for the fiscal year
tries, Inc. and Wachovia Bank and Trust ended August 31, 1990, which is incorporated
Company herein by reference.
(n)-Consulting Agreement between National Reference is made to Exhibit 10(iii)A of
Service Industries, Inc. and Erwin Zaban, registrant's Form 10-Q for the quarter ended
Dated December 30, 1991 November 30, 1991, which is incorporated
herein by reference.
(o)-Consulting Agreement between National Reference is made to Exhibit 10(iii)A (n) of
Service Industries, Inc. and Sidney Kirschner, registrant's Form 10-K for the fiscal year
Effective November 1, 1992 ended August 31, 1992, which is incorporated
herein by reference.
(p)-1992 Nonemployee Directors' Stock Option Reference is made to Exhibit 10(iii)A (o) of
Plan Effective September 16, 1992 registrant's Form 10-K for the fiscal year
ended August 31, 1992, which is incorporated
herein by reference.
(q)-Nonemployee Directors' Stock Option 35
Agreement between National Service
Industries, Inc. and
(i) John L. Clendenin
(ii) Jesse Hill, Jr.
(iii)Robert M. Holder, Jr.
(iv) F. Ross Johnson
(v) James C. Kennedy
(vi) Donald R. Keough
(vii)Bryan D. Langton
(vii)Bernard Marcus
(ix) John G. Medlin, Jr.
(x) Dr. Betty L. Siegel
(xi) Erwin Zaban
(r)-Summary of Incentive Bonus Program for Reference is made to Exhibit 10(iii)A (p) of
Executive Officers of National Service registrant's Form 10-K for the fiscal year
Industries, Inc. ("NSI") for the Fiscal Year ended August 31, 1993, which is incorporated
Ending August 31, 1994 herein by reference.
(s)-National Service Industries, Inc. Executive 40
Savings Plan Effective September 1, 1994
(t)-National Service Industries, Inc. Management 61
Compensation and Incentive Plan Effective
September 1, 1994, Subject to Approval by
Shareholders at the Annual Meeting to be
Held January 4, 1995
EXHIBIT 11 - Computations of Net Income per Share of 65
Common Stock
EXHIBIT 13 - Information Incorporated by Reference from 66
Annual Report for the Year Ended August 31,
1994
</TABLE>
<PAGE>
INDEX TO EXHIBITS
<TABLE>
Page 22
<CAPTION>
Page No.
<S> <C> <C>
EXHIBIT 21 - List of Subsidiaries 81
EXHIBIT 23 - Consent of Independent Public Accountants 82
EXHIBIT 24 - Powers of Attorney 83
EXHIBIT 27 - Financial Data Schedules 95
</TABLE>
<PAGE> 1
Page 23
Exhibit 10(iii)A(d)-(iii)
AMENDMENT NO. 2
TO
NATIONAL SERVICE INDUSTRIES, INC.
SENIOR MANAGEMENT BENEFIT PLAN
THE AMENDMENT made as of the 16th day of
September, 1994, by NATIONAL
SERVICE INDUSTRIES, INC., a Delaware Corporation (the
"Employer");
WITNESSETH:
WHEREAS, the Employer previously adopted the
National Service Industries, Inc.
Senior Management Benefit Plan ("Plan") for the
benefit of certain management and
highly compensated employees of the Employer; and
WHEREAS, the Employer now desires to amend the
Plan, as set forth below:
1.
Paragraph 5.5 of the Plan is hereby amended by
deleting the first paragraph of the
present provision and substituting the following in
lieu thereof:
"5.5 Payment of Retirement Benefits.
Benefits payable to a Participant
upon such Participant's retirement from full-
time employment with the
Employer, pursuant to the provisions of
Paragraphs 5.1, 5.2 or 5.3, hereof,
shall be payable on the Retirement Benefit
Commencement Date specified
by Participant in such Participant's Benefit
Payment Election. A Participant
may, however, no later than twenty-four (24)
months prior to such
<PAGE> 2
Page 24
Exhibit 10(iii)A(d)-(iii)
Participant's retirement, and with the
approval of the Plan Committee,
change the date on which payment of such
Participant's Retirement
Benefits shall commence and the method of
payment of such Retirement
Benefits, by executing a new Benefit Payment
Election, Schedule A,
provided, that (i) if a Participant satisfies
the requirements of Paragraph 5.2
for Early Retirement but incurs an interest
earnings rate reduction under
Paragraph 5.4(b), he may make an election
change up to six (6) months
prior to retirement, so long as such election
is made in the tax year prior to
retirement, (ii) the 24-month election period
shall not apply to election
changes relating to death benefits, and (iii)
the Plan Committee may, in its
sole discretion, permit a shorter election
period to allow a Participant to
accelerate the time and/or manner of payment
in the event of a Participant's
unforseen and severe financial hardship (as
described in Paragrah 7.6 and
as determined by the Plan Committee). In the
event a Participant fails to
execute a Benefit Payment Election, such
Participant's Retirement Benefits
shall by payable pursuant to the method
determined by the Plan
Committee, in its sole discretion, commencing
on the first day of the second
calendar month following the date of such
Participant's retirement. Such
Participant's Retirement Benefit shall be
payable pursuant to one of the
<PAGE> 3
Page 25
Exhibit
10(iii)A(d)-(iii)
following methods, as requested by such
Participant, in such Participant's
Benefit Payment Election:"
2.
Paragraph 6.1(a) is hereby amended by deleting
the second and third sentences of
the current section and substituting the following in
lieu thereof:
"The amount payable for the first year
hereunder shall be an amount that
will fully amortize the balance in the
Participant's Deferred Benefit Account,
as of the Participant's Benefit Determination
Date, over the fifteen (15) year
period, based on assumed interest earnings
using an interest rate equal to
the Moody's Seasoned Corporate Bond Yield
Index, as published monthly
by Moody's Investor's Service, Inc., or
successor thereto, or if such monthly
index is no longer published, a substantially
similar average as established
by the Plan Committee (such interest rate
being hereinafter referred to as
the "Moody's Interest Rate"), as of such
Benefit Determination Date.
Thereafter, annually, on the Anniversary Date,
the amount payable for the
following year shall be adjusted to an amount
that will fully amortize the
remaining balance in the Participant's
Deferred Benefit Account, on said
date, over the remaining years in the
aforesaid fifteen (15) year installment
period, based on the Moody's Interest Rate as
of said Anniversary Date."
<PAGE> 4
Page 26
Exhibit
10(iii)A(d)-(iii)
3.
Paragraph 6.2(a) is hereby amended by adding the
following at the end of the
present provision:
"(with interest determined in accordance with
Section 5.5(a))".
4.
Paragraph 7.4 is hereby amended by deleting the
reference to "Paragraph 6.2" in the
last line of the present provision and substituting
"Paragraph 7.3" in lieu thereof.
5.
Article VII is hereby amended by adding the
following new Paragraph 7.6 at the end
of the present provision:
"7.6 Hardship. A Participant (whether or not
actively employed) who is
suffering an unforeseen and severe financial
hardship as a result of (i) an
illness or accident of the Participant or his
immediate family, (ii) loss of
Participant's property due to casualty, or
(iii) for such other reasons as the
Plan Committee may establish, may file a
written request with the Plan
Committee for distribution of all or a
portion of the amount credited to his
Deferred Benefit Account. The Plan Committee
shall have the sole
discretion to determine whether to grant a
Participant's hardship request
and the amount to distribute to the
Participant. The Plan Committee shall
<PAGE> 5
Page 27
Exhibit
10(iii)A(d)-(iii)
have authority in connection with such
hardship request to accelerate the
date and method of payment of the
Participant's Deferred Benefit Account."
6.
Paragraph 9.1 of the Plan is hereby amended by
deleting the second and third
sentences of the present provision and substituting the
following in lieu thereof:
"The Plan Committee shall have the
exclusive discretionary authority to
construe and to interpret the Plan, to decide
all questions of eligibility for
benefits and to determine the amount of such
benefits, and its decisions on
such matters shall be final and conclusive on
all parties."
7.
This Amendment No. 2 shall be effective as of the
date hereof; provided that any
Participant who is age 55 or older on the date hereof
who makes an election change by
August 31, 1994, shall have such election change
recognized if it is made at least six
(6) months prior to his retirement. Except as hereby
modified, the Plan shall remain in
full force and effect.
IN WITNESS THEREOF, the Employer has caused this
Amendment No. 2 to be
executed as of the date first above written.
NATIONAL SERVICE
INDUSTRIES, INC.
BY:_____________________________
<PAGE> 1
Page 28
Exhibit 10(iii)A(h)-(ii)
AMENDMENT NO. 1 TO THE
NATIONAL SERVICE INDUSTRIES, INC.
LONG-TERM INCENTIVE PROGRAM
WHEREAS, The National Service Industries, Inc. Long-
Term Incentive Program (the "Long-Term Plan") was adopted by
the Board of Directors (the "Board") of National Service
Industries, Inc. ("NSI") and became effective on September
20, 1989, and was approved by stockholders on January 3,
1990; and
WHEREAS, paragraph 14(a) of the Plan permits the Board
to amend the Plan, subject to certain restrictions set forth
therein; and
WHEREAS, the Board desires to amend the Long-Term Plan
as set forth herein to enable the Corporation to grant
options transferable under certain circumstances;
NOW, THEREFORE, the Long-Term Plan is amended,
effective September 21, 1994, by deleting paragraph 6(c)
thereof in its entirety and substituting in lieu thereof the
following:
(c) Non-transferability. No Option granted
hereunder shall be transferable by the Optionee to
whom granted otherwise than (i) by will or the
laws of descent and distribution and (ii) if
permitted by the Committee, and upon such terms
and conditions as the Committee may establish, to
immediate family members of the Optionee or to a
trust, partnership or similar vehicle for the
benefit of such immediate family members
(collectively, the "Permitted Transferees"). An
Option may be exercised during the lifetime of
such Optionee only by the Optionee or his guardian
or legal representative or, if applicable, by
Permitted Transferees. The terms of such Option
shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs,
successors, and Permitted Transferees of the
Optionee.
IN WITNESS WHEREOF, this AMENDMENT NO. 1 has been
executed on behalf of the Corporation, and the Corporation's
seal has been affixed hereto, pursuant to action taken by
the Board of Directors on September 21, 1994.
Attest: NATIONAL SERVICE INDUSTRIES, INC.
/s/ Kenyon W. Murphy By: /s/ D. Raymond
Riddle Kenyon W. Murphy,
Secretary D. Raymond Riddle
Chairman of the Board and
Chief Executive Officer
(CORPORATE SEAL)
<PAGE> 1
Page 29
Exhibit 10(iii)A(k)
NONQUALIFIED STOCK OPTION AGREEMENT
FOR CORPORATE OFFICERS
THIS AGREEMENT, made as of the _____ day of
_____________, 199___ (the "Grant Date"), between National
Service Industries, Inc., a Delaware corporation (the
"Company"), and ______________________ (the "Optionee").
WHEREAS, the Company has adopted the National Service
Industries, Inc. Long-Term Incentive Program (the "Program")
in order to provide additional incentive to certain officers
and employees of the Company and its Subsidiaries; and
WHEREAS, the Committee responsible for administration
of the Program for corporate officers has determined to
grant an option to the Optionee as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
1.1 The Company hereby grants to the Optionee the
right and option (the "Option") to purchase all or any part
of an aggregate of _____________ whole Shares subject to,
and in accordance with, the terms and conditions set forth
in this Agreement.
1.2 The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of
the Code.
1.3 This Agreement shall be construed in
accordance and consistent with, and subject to, the
provisions of the Program (the provisions of which are
incorporated herein by reference) and, except as otherwise
expressly set forth herein, the capitalized terms used in
this Agreement shall have the same definitions as set forth
in the Program.
2. Purchase Price.
The price at which the Optionee shall be entitled
to purchase Shares upon the exercise of the Option shall be
$_________ per Share.
3. Duration of Option.
The Option shall be exercisable to the extent and
in the manner provided herein for a period of ten (10) years
from the Grant Date (the "Exercise Term"); provided,
however, that the Option may be earlier terminated as
provided in Section 6 hereof.
<PAGE> 2
Page 30
Exhibit 10(iii)A(k)
4. Exercisability of Option.
Unless otherwise provided in this Agreement or the
Program, the Option shall entitle the Optionee to purchase,
in whole at any time or in part from time to time,
_________________________________, and each such right of
purchase shall be cumulative and shall continue, unless
sooner exercised or terminated as herein provided during the
remaining period of the Exercise Term.
5. Manner of Exercise and Payment.
5.1 Subject to the terms and conditions of this
Agreement and the Program, the Option may be exercised by
delivery of written notice to the Company at its principal
executive office. Such notice shall state that the Optionee
is electing to exercise the Option and the number of Shares
in respect of which the Option is being exercised and shall
be signed by the person or persons exercising the Option.
If requested by the Committee, such person or persons shall
(i) deliver this Agreement to the Secretary of the Company
who shall endorse thereon a notation of such exercise and
(ii) provide satisfactory proof as to the right of such
person or persons to exercise the Option.
5.2 The notice of exercise described in Section
5.1 shall be accompanied by the full purchase price for the
Shares in respect of which the Option is being exercised, in
cash, by check, or by transferring Shares to the Company
having a Fair market value on the day preceding the date of
exercise equal to the cash amount for which such Shares are
substituted.
5.3 Upon receipt of notice of exercise and full
payment for the Shares in respect of which the Option is
being exercised, the Company shall, subject to Section 17 of
the Program, take such action as may be necessary to effect
the transfer to the Optionee of the number of Shares as to
which such exercise was effective.
5.4 The Optionee shall not be deemed to be the
holder of, or to have any of the rights of a holder with
respect to any Shares subject to the Option until (i) the
Option shall have been exercised pursuant to the terms of
this Agreement and the Optionee shall have paid the full
purchase price for the number of Shares in respect of which
the Option was exercised, (ii) the Company shall have issued
and delivered the Shares to the Optionee, and (iii) the
Optionee's name shall have been entered as a stockholder of
record on the books of the Company, whereupon the Optionee
shall have full voting and other ownership rights with
respect to such Shares.
6. Termination of Employment.
6.1 Death, Disability, Retirement, or Change in
Control. If the employment of the Optionee is terminated as
a result of his death, Disability, Retirement,
<PAGE> 3
Page 31
Exhibit 10(iii)A(k)
or within two (2) years following a Change in Control, the
Option shall continue to be exercisable in whole or in part
(to the extent exercisable on the date of the Optionee's
termination of employment) at any time within three (3)
years after the date of such termination of employment, but
in no event after the expiration of the Exercise Term. In
the event of the Optionee's death, the Option shall be
exercisable, to the extent provided in the Program and this
Agreement, by the legatee or legatees under his will, or by
his personal representatives or distributees and such person
or persons shall be substituted for the Optionee each time
the Optionee is referred to herein.
6.2 Other Termination of Employment. If the
employment of the Optionee is terminated for any reason
other than the reasons set forth in Section 6.1 (including
the Optionee's ceasing to be employed by a Subsidiary or
Division as a result of the sale of such Subsidiary or
Division or an interest in such Subsidiary or Division), the
Option shall terminate on the date of the Optionee's
termination of employment, whether or not exercisable.
7. Effect of Change in Control.
Notwithstanding anything contained in this
Agreement to the contrary, in the event of a Change in
Control, (i) the Option shall become immediately and fully
exercisable, and (ii) the Optionee will be permitted to
surrender for cancellation, within sixty (60) days after
such Change in Control, the Option or any portion of the
Option to the extent not yet exercised and the Optionee
shall be entitled to receive immediately a cash payment in
an amount equal to the excess, if any, of (A) the greater of
(x) the Fair market value, on the date preceding the date of
the surrender, of the Shares subject to the Option or
portion of the Option surrendered or (y) the Adjusted Fair
Market value of the Shares subject to the Option or the
portion of the Option surrendered, over (B) the aggregate
purchase price for such Shares under the Option; provided,
however, that if the Option was granted within six (6)
months prior to the Change in Control and the Optionee may
be subject to liability under Section 16(b) of the Exchange
Act, the Optionee shall be entitled to surrender for
cancellation the Option or any portion of the Option during
the sixty (60) day period following the expiration of six
(6) months from the Grant Date and to receive the amount
described above with respect to such surrender for
cancellation.
8. Nontransferability.
The Option shall not be transferable other than-by
will or by the laws of descent and distribution.
Notwithstanding the foregoing, the Option may be
transferred, in whole or in part, without consideration, by
written instrument signed by the Optionee, to any members of
the immediate family of Optionee (i.e., spouse, children and
grandchildren), any trusts for the benefit of such family
members or any partnerships whose only partners are such
family members (the "Permitted Transferees"). Appropriate
<PAGE> 4
Page 32
Exhibit 10(iii)A(k)
evidence of any such transfer to the Permitted Transferees
shall be delivered to the Company at its principal executive
office. During the lifetime of the Optionee, the Option
shall be exercisable only by the Optionee, or, if
applicable, by the Permitted Transferees.
9. No Right to Continued Employment.
Nothing in this Agreement or the Program shall be
interpreted or construed to confer upon the Optionee any
right with respect to continuance of employment by the
Company, nor shall this Agreement or the Program interfere
in any way with the right of the Company to terminate the
Optionee's employment at any time.
10. Adjustments.
In the event of a Change in Capitalization, the
Committee may make appropriate adjustments to the number and
class of Shares or other stock or securities subject to the
Option and the purchase price for such Shares or other stock
or securities. The Committee's adjustment shall be made in
accordance with the provisions of Section 11 of the Program
and shall be effective and final, binding, and conclusive
for all purposes of the Program and this Agreement.
11. Terminating Events.
Subject to Section 7 hereof, upon the effective
date of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company (a
"Transaction"), the Option shall continue in effect in
accordance with its terms and the Optionee shall be entitled
to receive in respect of all Shares subject to the Option,
upon exercise of the Option, the same number and kind of
stock, securities, cash, property, or other consideration
that each holder of Shares was entitled to receive in the
Transaction.
12. Withholding of Taxes.
12.1 The Company shall have the right to deduct
from any distribution of cash to the Optionee an amount
equal to the federal, state, and local income taxes and
other amounts as may be required by law to be withheld (the
"Withholding Taxes") with respect to the Option. If the
Optionee is entitled to receive Shares upon exercise of the
Option, the Optionee shall pay the Withholding Taxes to the
Company in cash prior to the issuance of such Shares. In
satisfaction of the Withholding Taxes, the Optionee may make
a written election (the "Tax Election"), which may be
accepted or rejected in the discretion of the Committee, to
have withheld a portion of the Shares issuable to him or her
upon exercise of the Option, having an aggregate Fair Market
value on the date preceding the Tax Date (as defined below)
equal to the Withholding Taxes, provided that (i) if the
Optionee may be subject to liability under Section 16(b) of
the Exchange Act
<PAGE> 5
Page 33
Exhibit 10(iii)A(k)
(unless his or her employment was terminated due
to Disability or death), (A) the Optionee makes the Tax
Election at least six (6) months after the Grant Date and
(B) the Tax Election is made either at least six (6) months
prior to the date that the amount of the Withholding Taxes
are determined (the "Tax Date") or during the ten (10) day
period beginning on the third business day and ending on the
twelfth business day following the release for publication
of the Company's quarterly or annual statements of earnings,
(ii) the Tax Election is made prior to the Tax Date, and
(iii) the Tax Election is irrevocable; provided, however, in
the event that the Tax Date occurs subsequent to the
exercise of the Option, the Optionee shall tender back to
the Company on the Tax Date that number of Shares having a
Fair Market Value on the date preceding the Tax Date equal
to the Withholding Taxes.
13. Employee Bound by the Program.
The Optionee hereby acknowledges receipt of a copy
of the Program and agrees to be bound by all the terms and
provisions thereof.
14. Modification of Agreement.
This Agreement may be modified, amended,
suspended, or terminated, and any terms or conditions may be
waived, but only by a written instrument executed by the
parties hereto.
15. Severability.
Should any provision of this Agreement be held by
a court of competent jurisdiction to be unenforceable or
invalid for any reason, the remaining provisions of this
Agreement shall not be affected by such holding and shall
continue it full force in accordance with their terms.
16. Governing Law.
The validity, interpretation, construction, and
performance of this Agreement shall be governed by the laws
of the State of Delaware without giving effect to the
conflicts of laws principles thereof.
17. Successors in Interest.
This Agreement shall inure to the benefit of and
be binding upon each successor to the Company. This
Agreement shall inure to the benefit of the Optionee's legal
representatives and Permitted Transferees. All obligations
imposed upon the Optionee and all rights granted to the
Company under this Agreement shall be final, binding, and
conclusive upon the Optionee's heirs, executors,
administrators, successors, and Permitted Transferees.
<PAGE> 6
Page 34
Exhibit 10(iii)A(k)
18. Resolution of Disputes.
Any dispute or disagreement which may arise under,
or as a result of, or in any way relate to, the
interpretation, construction, or application of this
Agreement shall be determined by the Committee. Any
determination made hereunder shall be final, binding, and
conclusive on the Optionee and the Company for all purposes.
ATTEST: NATIONAL SERVICE INDUSTRIES,
INC.
/s/ Kenyon W. Murphy By: /s/ D. Raymond
Riddle
Secretary D. Raymond Riddle
Chairman of the Board
and Chief Executive
Officer
Name of Optionee:
<PAGE> 1
Page 35
Exhibit 10(iii)A(q)
STOCK OPTION AGREEMENT
FOR NONEMPLOYEE DIRECTORS
THIS AGREEMENT, made as of the ____ day of ___________,
199__ (the "Grant Date"), between National Service Industries,
Inc., a Delaware corporation (the "Company"), and
_________________ (the "Optionee").
WHEREAS, the Company has adopted the National Service
Industries, Inc. 1992 Nonemployee Directors' Stock Option Plan
(the "Plan") in order to provide additional incentive to
nonemployee directors to exert maximum efforts for the success of
the Company; and
WHEREAS, pursuant to the terms of the Plan, the Optionee is
entitled to the option grant provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
1.1 The Company hereby grants to the Optionee the
right and option (the "Option") to purchase all or any part of an
aggregate of ___________ whole Shares subject to, and in
accordance with, the terms and conditions set forth in this
Agreement.
1.2 The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422A of the
Code.
1.3 This Agreement shall be construed in accordance
and consistent with, and subject to, the provisions of the Plan
(the provisions of which are incorporated herein by reference)
and, except as otherwise expressly set forth herein, the
capitalized terms used in this Agreement shall have the same
definitions as set forth in the Plan.
2. Purchase Price.
The price at which the Optionee shall be entitled to
purchase Shares upon the exercise of the Option shall be
$_________ per Share.
3. Duration of Option.
The Option shall be exercisable to the extent and in
the manner provided herein for a period of ten (10) years from
the Grant Date (the "Exercise Term"); provided, however, that the
Option may be earlier terminated as provided in Section 6 hereof.
<PAGE> 2
Page 36
Exhibit 10(iii)A(q)
4. Exercisability of Option.
Unless otherwise provided in this Agreement or the
Plan, the Option shall entitle the Optionee to purchase, in whole
at any time or in part from time to time, the shares covered by
the option after the expiration of one (1) year from the Grant
Date.
5. Manner of Exercise and Payment.
5.1 Subject to the terms and conditions of this
Agreement and the Plan, the Option may be exercised by delivery
of written notice to the Company, at its principal executive
office. Such notice shall state that the Optionee is electing to
exercise the Option and the number of Shares in respect of which
the Option is being exercised and shall be signed by the person
or persons exercising the Option. If requested, such person or
persons shall (i) deliver this Agreement to the Secretary of the
Company who shall endorse thereon a notation of such exercise and
(ii) provide satisfactory proof as to the right of such person or
persons to exercise the Option.
5.2 The notice of exercise described in Section 5.1
shall be accompanied by the full purchase price for the Shares in
respect of which the Option is being exercised, in cash, by check
or by transferring Shares to the Company having a Fair Market
value on the day preceding the date of exercise equal to the cash
amount for which such Shares are substituted.
5.3 Upon receipt of notice of exercise and full
payment for the Shares in respect of which the Option is being
exercised, the Company shall, subject to Section 12 of the Plan,
take such action as may be necessary to effect the transfer to
the Optionee of the number of Shares as to which such exercise
was effective.
5.4 The Optionee shall not be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any
Shares subject to the Option until (i) the Option shall have been
exercised pursuant to the terms of this Agreement and the
Optionee shall have paid the full purchase price for the number
of Shares in respect of which the Option was exercised, (ii) the
Company shall have issued and delivered the Shares to the
Optionee, and (iii) the Optionee's name shall have been entered
as a stockholder of record on the books of the Company, whereupon
the Optionee shall have full voting and other ownership rights
with respect to such Shares.
6. Termination of Service.
6.1 Termination for Cause. If the Optionee's service
as a Director terminates for Cause, the Option shall immediately
terminate in full and no rights hereunder may be exercised.
6.2 Other Termination of Service. If the Optionee's
service as a Director is terminated for any reason other than for
Cause, the Option shall continue to be exercisable in whole or in
part (to the extent exercisable on the date of such termination)
at any time within
<PAGE> 3
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Exhibit 10(iii)A(q)
three (3) years after the date of such termination, but in no
event after the expiration of the Exercise Term. In the event of
the Optionee's death, the Option shall be exercisable, to the
extent provided in the Plan and this Agreement, by the legatee or
legatees under his will, or by his personal representatives or
distributees and such person or persons shall be substituted for
the Optionee each time the Optionee is referred to herein.
7. Effect of Change in Control.
Notwithstanding anything contained in this Agreement to
the contrary, in the event of a Change in Control, (i) theOption
shall become immediately and fully exercisable, and (ii) the
Optionee will be permitted to surrender for cancellation within
sixty (60) days after such Change in Control, the Option or any
portion of the Option to the extent not yet exercised and the
Optionee shall be entitled to receive immediately a cash payment
in an amount equal to the excess, if any, of (A) the greater of
(x) the Fair Market value, on the date preceding the date of the
surrender, of the Shares subject to the Option or portion of the
Option surrendered or (y) the Adjusted Fair Market Value of the
Shares subject to the Option or the portion of the Option
surrendered, over (B) the aggregate purchase price for such
Shares under the Option; provided, however, that if the Option
was granted within six (6) months prior to the Change in Control,
the Optionee shall be entitled to surrender for cancellation the
Option or any portion of the Option during the sixty (60) day
period following the expiration of six (6) months from the Grant
Date and to receive the amount described above with respect to
such surrender for cancellation.
8. Nontransferability.
The Option shall not be transferable other than by will
or by the laws of descent and distribution. During the lifetime
of the Optionee, the Option shall be exercisable only by the
Optionee.
9. No Right to Continuing Service.
Nothing in this Agreement or the Plan shall be
interpreted or construed to confer upon the Optionee any right
with respect to continuance of service as a director of the
Company, nor shall this Agreement or the Plan interfere in any
way with the right of the Company to terminate the Optionee's
service as a director at any time.
10. Adjustments.
In the event of a Change in Capitalization, the Board
shall make appropriate adjustments to the number and class of
Shares or other stock or securities subject to the Option and the
purchase price for such Shares or other stock or securities. The
Board's adjustment shall be made in accordance with the
provisions of Section 7 of the Plan and shall be effective and
final, binding, and conclusive for all purposes of the Plan and
this Agreement.
<PAGE> 4
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Exhibit 10(iii)A(q)
11. Terminating Events.
Subject to Section 7 hereof, upon the effective date of
(i) the liquidation or dissolution of the Company or (ii) a
merger or consolidation of the Company (a "Transaction"), the
Option shall continue in effect in accordance with its terms and
the Optionee shall be entitled to receive in respect of all
Shares subject to the Option, upon exercise of the Option, the
same number and kind of stock, securities, cash, property, or
other consideration that each holder of Shares was entitled to
receive in the Transaction.
12. Optionee Bound by the Plan.
The Optionee hereby acknowledges receipt of a copy of
the Plan and agrees to be bound by all the terms and provisions
thereof.
13. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only
by a written instrument executed by the parties hereto.
14. Severability.
Should any provision of this Agreement be held by a
court of competent jurisdiction to be unenforceable or invalid
for any reason, the remaining provisions of this Agreement shall
not be affected by such holding and shall continue in full force
in accordance with their terms.
15. Governing Law.
The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of Delaware without giving effect to the conflicts of
laws principles thereof.
16. Successors in Interest.
This Agreement shall inure to the benefit of and be
binding upon each successor to the Company. This Agreement shall
inure to the benefit of the Optionee's legal representatives.
All obligations imposed upon the Optionee and all rights granted
to the Company under this Agreement shall be final, binding and
conclusive upon the Optionee's heirs, executors, administrators
and successors.
<PAGE> 5
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Exhibit 10(iii)A(q)
17. Resolution of Disputes.
Any dispute or disagreement which may arise under, or
as a result of, or in any way relate to, the interpretation,
construction or application of this Agreement shall be determined
by the Board. Any determination made hereunder shall be final,
binding, and conclusive on the Optionee and the Company for all
purposes.
ATTEST: NATIONAL SERVICE INDUSTRIES, INC.
/s/ Kenyon W. Murphy By: /s/ D. Raymond Riddle
Secretary D. Raymond Riddle, Chairman
of the Board
and Chief Executive Officer
Name of Optionee:
<PAGE> 1
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Exhibit 10(iii)A(s)
NATIONAL SERVICE INDUSTRIES, INC.
EXECUTIVE SAVINGS PLAN
(Effective As of September 1, 1994)
<PAGE> 2
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Exhibit 10(iii)A(s)
NATIONAL SERVICE INDUSTRIES, INC.
EXECUTIVE SAVINGS PLAN
TABLE OF CONTENTS
ARTICLE I INTRODUCTION AND ESTABLISHMENT. . . . . . . . . 1
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . 1
2.1 Account. . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Beneficiary. . . . . . . . . . . . . . . . . . . . . 1
2.3 Bonus. . . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Change in Control. . . . . . . . . . . . . . . . . . 1
2.5 Class Year . . . . . . . . . . . . . . . . . . . . . 2
2.6 Class Year Account . . . . . . . . . . . . . . . . . 2
2.7 Code . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8 Company. . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Election Form. . . . . . . . . . . . . . . . . . . . 3
2.10 Employer . . . . . . . . . . . . . . . . . . . . . . 3
2.11 ERISA. . . . . . . . . . . . . . . . . . . . . . . . 3
2.12 Executive. . . . . . . . . . . . . . . . . . . . . . 3
2.13 Fiscal Year. . . . . . . . . . . . . . . . . . . . . 3
2.14 Interest Earnings Rate . . . . . . . . . . . . . . . 3
2.15 Participant. . . . . . . . . . . . . . . . . . . . . 3
2.16 Plan . . . . . . . . . . . . . . . . . . . . . . . . 3
2.17 Plan Administrator . . . . . . . . . . . . . . . . . 3
2.18 Plan Year. . . . . . . . . . . . . . . . . . . . . . 4
2.19 Prime Rate . . . . . . . . . . . . . . . . . . . . . 4
2.20 Termination for Cause. . . . . . . . . . . . . . . . 4
2.21 Termination of Service . . . . . . . . . . . . . . . 4
2.22 Total and Permanent Disability . . . . . . . . . . . 4
2.23 Valuation Dates. . . . . . . . . . . . . . . . . . . 4
ARTICLE III PARTICIPATION . . . . . . . . . . . . . . . . . 1
3.1 Eligibility to Participate . . . . . . . . . . . . . 1
3.2 Deferral Election. . . . . . . . . . . . . . . . . . 1
ARTICLE IV INTEREST OF PARTICIPANTS. . . . . . . . . . . . 1
4.1 Accounting for Participants' Interests . . . . . . . 1
4.2 Vesting of a Participant's Account . . . . . . . . . 1
4.3 Distribution of a Participant's Account. . . . . . . 1
4.4 Hardship . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE V PLAN ADMINISTRATOR. . . . . . . . . . . . . . . 1
5.1 Committee. . . . . . . . . . . . . . . . . . . . . . 1
5.2 Action . . . . . . . . . . . . . . . . . . . . . . . 1
5.3 Right and Duties . . . . . . . . . . . . . . . . . . 1
<PAGE> 3
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Exhibit 10(iii)A(s)
5.4 Compensation, Indemnity and Liability. . . . . . . . 2
5.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE VI CLAIMS PROCEDURE. . . . . . . . . . . . . . . . 1
6.1 Claims for Benefits. . . . . . . . . . . . . . . . . 1
6.2 Appeals. . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE VII AMENDMENT AND TERMINATION; CHANGE IN CONTROL. . 1
7.1 Amendments . . . . . . . . . . . . . . . . . . . . . 1
7.2 Termination of Plan. . . . . . . . . . . . . . . . . 1
7.3 Change In Control Provisions . . . . . . . . . . . . 1
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . 1
8.1 Limitation on Participant's Rights . . . . . . . . . 1
8.2 Benefits Unfunded. . . . . . . . . . . . . . . . . . 1
8.3 Other Plans. . . . . . . . . . . . . . . . . . . . . 1
8.4 Receipt or Release . . . . . . . . . . . . . . . . . 1
8.5 Governing Law. . . . . . . . . . . . . . . . . . . . 2
8.6 Gender, Tense, and Headings. . . . . . . . . . . . . 2
8.7 Successors and Assigns; Nonalienation of Benefits. . 2
APPENDIX A Election To Participate And Beneficiary
Designation . . . . . . . . . . . . . . . . . .A-1
APPENDIX B Election To Defer Distribution. . . . . . . . .B-1
<PAGE> 4
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Exhibit 10(iii)A(s)
ARTICLE I
INTRODUCTION AND ESTABLISHMENT
National Service Industries, Inc. ("Company") hereby establishes
the National Service Industries, Inc. Executive Savings Plan ("Plan")
for the benefit of eligible management and highly compensated
employees of the Company and its affiliated or related employers. The
Plan is designed to assist eligible employees in accumulating capital
and supplementing their retirement income.
The terms of this Plan are applicable only to eligible employees
who are actively employed on or after September 1, 1994. Any employee
who terminates his employment relationship prior to that date shall
not be covered by this Plan.
<PAGE> 5
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Exhibit 10(iii)A(s)
ARTICLE II
DEFINITIONS
When used in this Plan, the following terms shall have the
meanings set forth below unless a different meaning is plainly
required by the context:
2.1 "Account" means the records maintained by the Plan
Administrator to determine each Participant's interest under this
Plan. Such Account may be reflected as an entry in the Company's
records, or as a separate account under a trust, or as a combination
of both. Each Participant's Account shall consist of subaccounts for
each Class Year to reflect his deferral of Bonus (if any) for such
Class Year and earnings thereon. The Plan Administrator may establish
such additional subaccounts as it deems necessary for the proper
administration of the Plan.
2.2 "Beneficiary" means the person or persons last
designated in writing by the Participant to receive the amount in his
Account in the event of such Participant's death; or if no designation
shall be in effect at the time of a Participant's death or if all
designated Beneficiaries shall have predeceased the Participant, then
the Beneficiary shall be the Participant's estate.
2.3 "Bonus" means any performance or discretionary bonus
awarded by the Company to a Participant for a Fiscal Year.
2.4 "Change in Control" means any of the following events:
(i) The acquisition (other than from the Company) by
any "Person" (as the term person is used for purposes of
Sections 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934
Act) of twenty percent (20%) or more of the combined voting
power of the Company's then outstanding voting securities;
or
(ii) The individuals who, as of September 1, 1994, are
members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least two-thirds of the Board;
Provided, however, that if the election, or nomination for
election by the Company's stockholders, of any new director
was approved by a vote of at least two-thirds
<PAGE> 6
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Exhibit 10(iii)A(s)
of the Incumbent Board, such new director shall, for
purposes of this Plan, be considered as a member of the
Incumbent Board; or
(iii) Approval by stockholders of the Company of (1) a
merger or consolidation involving the Company if the
stockholders of the Company, immediately before such merger
or consolidation do not, as a result of such merger or
consolidation, own, directly or indirectly, more than
seventy percent (70%) of the combined voting power of the
then outstanding voting securities of the corporation
resulting from such merger or consolidation in substantially
the same proportion as their ownership of the combined
voting power of the voting securities of the Company
outstanding immediately before such merger or consolidation
or (2) a complete liquidation or dissolution of the Company
or an agreement for the sale or other disposition of all or
substantially all of the assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur pursuant to subsection (i) above, solely
because twenty percent (20%) or more of the combined voting
power of the Company's then outstanding securities is
acquired by (i) a trustee or other fiduciary holding
securities under one or more employee benefit plans
maintained by the Company or any of its subsidiaries, or
(ii) any corporation which, immediately prior to such
acquisition, is owned directly or indirectly by the
stockholders of the Company in the same proportion as their
ownership of stock in the Company immediately prior to such
acquisition.
2.5 "Class Year" means the Fiscal Year for which a deferral
of Bonus is elected.
2.6 "Class Year Account" means the subaccount set up to
reflect the Participant's deferral of Bonus for each Class Year and
any earnings thereon.
2.7 "Code" means the Internal Revenue Code of 1986, as
amended.
<PAGE> 7
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Exhibit 10(iii)A(s)
2.8 "Company" means National Service Industries, Inc., a
Delaware Corporation, or its successor or successors.
2.9 "Election Form" means the form prescribed by the Plan
Administrator on which a Participant may specify the amount of his
Bonus that is to be deferred pursuant to the provisions of Article
III.
2.10 "Employer" means the Company and any affiliated or
related employer designated by the Company to participate in the Plan.
2.11 "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
2.12 "Executive" means an officer of the Company or one of
the Company's Operating Divisions, and other designated employees.
Any dispute regarding any individual's classification shall be
determined by the Plan Administrator in its sole discretion.
2.13 "Fiscal Year" means the year commencing on September 1
and ending on August 31 of the following calendar year.
2.14 "Interest Earnings Rate" means an interest rate (i)
for the period October 1 to March 31 equal to one percent (1%) above
the average of the Prime Rates on October 1 and on January 1, and (ii)
for the period April 1 to September 30 equal to one percent (1%) above
the average of the Prime Rates on April 1 and July 1, provided that
for a Participant who on a valuation date is an executive officer of
the Company for whom disclosure of compensation information is
required by the Proxy Rules adopted by the Securities and Exchange
Commission, the Interest Earnings Rate credited on such Valuation Date
shall not exceed 120% of the Federal mid-term rate (as determined
under Section 1274(d) of the Code).
2.15 "Participant" means an Eligible Executive as defined
in Section 3.1 (or an individual who was an Eligible Executive), a
portion of whose Bonus for any Fiscal Year has been deferred pursuant
to the Plan and whose interest in the Plan has not been wholly
distributed.
2.16 "Plan" means the National Service Industries, Inc.
Executive Savings Plan as set forth herein and as it may be amended
from time to time.
2.17 "Plan Administrator" means the Committee appointed
pursuant to Article V to administer the Plan. In the absence of such
appointment, the Company shall be the Plan Administrator.
<PAGE> 8
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Exhibit 10(iii)A(s)
2.18 "Plan Year" means the Fiscal Year.
2.19 "Prime Rate" means the prime rate of interest on a
particular date, as established by the Wachovia Bank of Georgia, N.A.
(or its successor).
2.20 "Termination for Cause" means the Executive has
terminated employment and has been found by the Committee to be guilty
of theft, embezzlement, fraud or misappropriation of the Company's
property or of any action which, if the individual were an officer of
the Company, would constitute a breach of fiduciary duty.
2.21 "Termination of Service" or similar expression means
the termination of the Participant's employment as an Executive. A
Participant who is granted a temporary leave of absence, whether with
or without pay, shall not be deemed to have terminated his service.
In the event of a transfer of an Executive to a position in which he
would no longer be eligible to continue in this Plan, or in the event
of the disability of a Participant, the Plan Administrator in its sole
discretion, shall determine whether a Termination of Service has
occurred.
2.22 "Total and Permanent Disability" means the permanent
and lasting inability of a Participant due to illness, accident, or
other physical or mental incapacity, to perform his usual duties and
services for the Employer. The determination as to whether Total and
Permanent Disability exists shall be made by the Plan Administrator
based upon the information provided to it.
2.23 "Valuation Dates" mean March 31 and September 30 of
each year.
<PAGE> 9
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Exhibit 10(iii)A(s)
ARTICLE III
PARTICIPATION
3.1 Eligibility to Participate. Prior to the commencement
of each Fiscal Year, the Company (or its designee) shall specify the
Executives who are eligible to make deferral elections under the Plan
for the following Fiscal Year (an "Eligible Executive"). Such
eligibility designation may be made by establishing a minimum
compensation level for participation or by the use of such other
criteria as the Company (or its designee) deems appropriate from time
to time. An Eligible Executive shall become a Participant upon making
the deferral election described in Section 3.2 below.
3.2 Deferral Election. Each Eligible Executive may elect
on an Election Form to have a portion of the Bonus, if any, to be
received by him for the Fiscal Year commencing September 1, 1994, and
for any Fiscal Year thereafter in which he is eligible to participate,
irrevocably deferred in accordance with the terms and conditions of
the Plan. The amount that may be deferred for any Fiscal Year shall
not be less than $1,000, nor more than 100% of the Bonus for such
Fiscal Year.
An Executive desiring to exercise such election shall, prior
to the beginning of each such Fiscal Year (or prior to or coincident
with the beginning of the Eligible Executive's initial employment if
such employment is to commence other than at the beginning of a Fiscal
Year), complete an Election Form indicating the percentage or dollar
amount of his Bonus for such Fiscal Year that he elects to have
deferred. If the Eligible Executive's election would result in a
deferral greater than the maximum provided herein, any deferred amount
shall be reduced to the maximum limit provided herein.
An election to defer Compensation must be filed with the
Plan Administrator within the time period prescribed by the Plan
Administrator. If a Participant fails to file a properly completed
and duly executed Election Form with the Plan Administrator by the
prescribed time, he will be deemed to have elected not to defer any
Bonus under this Plan for the Fiscal Year, except to the extent the
Plan Administrator in its sole discretion permits an extension of the
election period. An Eligible Executive may not, after the applicable
election date discontinue his election to participate or change the
percentage of Bonus he has elected to defer for a Fiscal Year.
The Eligible Executive shall designate on the Election Form
(or on a separate form provided by the Plan Administrator) a
Beneficiary to receive payment of amounts in his Account in the event
of his death.
<PAGE> 10
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Exhibit 10(iii)A(s)
ARTICLE IV
INTEREST OF PARTICIPANTS
4.1 Accounting for Participants' Interests.
(a) Class Year Accounts. A Participant's Class Year
Account shall be credited as of the October 1 next following the end
of the Class Year for which the deferral election was made with the
dollar amount of Bonus deferred by the Participant for such Class Year
pursuant to Section 3.2.
(b) Account Earnings. Each Class Year Account of the
Participant shall be credited with earnings for the period from the
prior Valuation Date to the current Valuation Date (or the payment
date, where applicable) at the Interest Earnings Rate. The Interest
Earnings Rate on the current Valuation Date shall be applied to the
balance in each Class Year Account of the Participant as of such
Valuation Date.
4.2 Vesting of a Participant's Account.
(a) In General. Except as provided in (b) below, a
Participant's interest in the amount credited to each Class Year
Account shall at all times be 100% vested and nonforfeitable.
(b) Termination For Cause. Notwithstanding subsection (a),
if a Participant incurs a Termination for Cause, he shall forfeit all
earnings credited on all amounts deferred to Class Year Accounts that
have not yet been fully distributed to him under Section 4.3. The
final determination of whether a
Participant has incurred a Termination for Cause, as defined herein,
shall be made by the Plan Administrator.
4.3 Distribution of a Participant's Account. Subject to
Article VII, a Participant's Account shall be distributed as follows:
(a) Class Year Accounts. Except as provided in (b) and (c)
below, distribution of each Class Year Account of a Participant shall
be made in a single lump sum payment on the October 1 next following
five (5) full Fiscal Years after the Class Year. For example, the
distribution of the 1995 Class Year Account (the Participant's
deferral of Bonus credited to him on October 1, 1995) shall be made on
October 1, 2000 and for the 1996 Class Year Account on October 1,
2001, and so on.
(b) Election to Defer Distribution. A Participant who will
become eligible to receive distribution of a Class Year Account under
(a) above may elect to defer to the October 1 of a later year (subject
to the limitations provided below) the distribution of such Class Year
Account. The election to defer distribution of a Class Year Account
must be filed prior to the end of the Fourth Fiscal Year immediately
following the Class Year for such Class Year Account. For example,
for the 1995
<PAGE> 11
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Exhibit 10(iii)A(s)
Class Year Account, the election must be filed prior to
September 1, 1999. The Participant's deferral election for a Class
Year Account must indicate (i) the October 1 when he desires his
benefit to be paid or to commence, which date must be at least two (2)
years after the date he could initially have received a distribution,
and (ii) whether the distribution should be made in a lump sum or in
annual installments over a period of up to ten (10) years; provided
that the lump sum or the last installment payment shall be due not
later than 10 years after the Participant's retirement. A
Participant's Class Year Account for which a deferral election is made
under this subsection (b)
shall continue to be credited with earnings under Section 4.1(b) until
the amount is fully distributed.
(c) Death, Disability, Termination of Service.
(i) Notwithstanding the existence of a deferral election under Section
4.3(b), in the event prior to age 55 a Participant dies, becomes
Totally and Permanently Disabled, or has a Termination of Service for
any other reason, distribution of the balance credited to a
Participant's Account shall be made to the Participant (or his
Beneficiary in the event of death) as soon as practical. In the event
of Termination of Service or death, payment of the Participant's
Account shall be made in a lump sum; in the event a Participant
becomes Totally and Permanently Disabled, he shall receive a lump sum
payment, except for any Class Year Accounts he has previously elected
to receive in installments which shall be paid in installments
commencing upon his termination. In the event payments are made
pursuant to this subsection (c)(i), earnings shall be credited under
Section 4.1(b) to the day prior to the date of payment (except as
limited in the case of Termination for Cause).
(ii) In the event of a Participant's Termination of Service
on or after 55 (except for death or Total and Permanent Disability),
the balance credited to a Participant's Account shall be distributed
to him in a lump sum as soon as practical; provided, that any Class
Year Accounts as to which he has properly elected under subsection (b)
above a delayed distribution and/or payment in annual installments,
shall be distributed in accordance with such elections. A Participant
retiring on or after age 55 may elect at least one (1) year prior to
the date of his retirement to make the deferral election in Section
4.3(b) with respect to all Class Year Accounts which have not yet
become distributable.
(iii) In the event of death or Total and Permanent
Disability on or after age 55 (whether or not the Participant is then
employed by an Employer), all amounts credited to a Participant's
Account, whether such amounts are currently being paid in installments
or are subject to a deferral election under Section 4.3(b), shall be
paid in a lump sum to the Participant (or his Beneficiary in the event
of death); provided, that a participant who becomes Totally and
Permanently Disabled shall receive (or continue to receive), any
amount he elected to receive in installments in accordance with such
installment
<PAGE> 12
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Exhibit 10(iii)A(s)
election commencing on the later of his termination date or the date
he became Totally and Permanently Disabled.
4.4 Hardship. A Participant who is suffering an unforeseen
and severe financial hardship as a result of (i) an illness or
accident of the Participant or his immediately family, (ii) loss of
Participant's property due to casualty, or (iii) for such other
reasons as the Plan Administrator may establish, may file a written
request with the Plan Administrator for distribution of all or a
portion of the amount credited to his Account. The Plan Administrator
shall have the sole discretion to determine whether to grant a
Participant's hardship request and the amount to distribute to the
Participant. The Plan Administrator shall have authority in
connection with such hardship request to accelerate the payment of any
Class Year Accounts which have been deferred pursuant to Section
4.3(b).
<PAGE> 13
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Exhibit 10(iii)A(s)
ARTICLE V
PLAN ADMINISTRATOR
5.1 Committee. The Plan Administrator shall be the
Executive Resource and Nominating Committee of the Board of Directors
of the Company or such other committee as may be designated by the
Company to administer and manage the Plan, provided that, if no
committee is designated, the Company shall be the Plan Administrator
and shall have the duties of the Plan Administrator provided for
herein. Members of the committee shall not be required to be
employees of the Company or Participants.
5.2 Action. Action of the Plan Administrator may be taken
with or without a meeting of committee members. If a member of the
committee is a Participant in the Plan, he shall not participate in
any decision which solely affects his own Account.
5.3 Right and Duties. The Plan Administrator shall
administer and manage the Plan and shall have all powers necessary to
accomplish that purpose, including (but not limited to) the following:
(a) To construe, interpret, and administer this Plan;
(b) To make allocations and determinations required by this
Plan, and to maintain records regarding Participants' Accounts;
(c) To compute and certify to the Company the amount and
kinds of benefits payable to Participants or their beneficiaries, and
to determine the time and manner in which such benefits are to be
paid;
(d) To authorize all disbursements by the Company pursuant
to this Plan;
(e) To maintain (or cause to be maintained) all the
necessary records of the administration of this Plan;
(f) To make and publish such rules for the regulation of
this Plan as are not inconsistent with the terms hereof;
(g) To delegate to other individuals or entities from time
to time the performance of any of its duties or responsibilities
hereunder; and
(h) To hire agents, accountants, actuaries, consultants and
legal counsel to assist in operating and administering the Plan.
The Plan Administrator shall have the exclusive
discretionary authority to construe and to interpret the Plan, to
<PAGE> 14
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Exhibit 10(iii)A(s)
decide all questions of eligibility for benefits and to determine the
amount and manner of payment of such benefits, and its decisions on
such matters shall be final and conclusive on all parties.
5.4 Compensation, Indemnity and Liability. The Plan
Administrator shall serve as such without bond and without
compensation for services hereunder. All expenses of the Plan and the
Plan Administrator shall be paid by the Company. If the Plan
Administrator is a committee, no member of the committee shall be
liable for any act or omission of any other member of
the committee, nor for any act or omission on his own part, excepting
his own willful misconduct. The Company shall indemnify and hold
harmless the Plan Administrator and each member of the committee
against any and all expenses and liabilities, including reasonable
legal fees and expenses, arising out of his membership on the
committee, excepting only expenses and liabilities arising out of his
own willful misconduct.
5.5 Taxes. If the whole or any part of any Participant's
Account shall become liable for the payment of any estate,
inheritance, income, or other tax which the Company shall be required
to pay or withhold, the Company shall have the full power and
authority to withhold and pay such tax out of any monies or other
property in its hand for the account of the Participant whose
interests hereunder are so liable. The Company shall provide notice
of any such withholding. Prior to making any payment, the Company may
require such releases or other documents from any lawful taxing
authority as it shall deem necessary.
<PAGE> 15
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Exhibit 10(iii)A(s)
ARTICLE VI
CLAIMS PROCEDURE
6.1 Claims for Benefits. If a Participant or beneficiary
(hereafter, "Claimant") does not receive timely payment of any
benefits which he believes are due and payable under the Plan, he may
make a claim for benefits to the Plan Administrator. The claim for
benefits must be in writing and addressed to the Plan Administrator or
to the Company. If the claim for benefits is denied, the Plan
Administrator shall notify the Claimant in writing within 90 days
after the Plan Administrator initially received the benefit claim.
However, if special circumstances require an extension of time for
processing the claim, the Plan Administrator shall furnish notice of
the extension to the Claimant prior to the termination of the initial
90-day period and such extension shall not exceed one additional,
consecutive 90-day period. Any notice of a denial of benefits shall
advise the Claimant of the basis for the denial, any additional
material or information necessary for the Claimant to perfect his
claim, and the steps which the Claimant must take to have his claim
for benefits reviewed.
6.2 Appeals. Each Claimant whose claim for benefits has
been denied may file a written request for a review of his claim by
the Plan Administrator. The request for review must be filed by the
Claimant within 60 days after he received the written notice denying
his claim. The decision of the Plan Administrator will be made within
60 days after receipt of a request for review and shall be
communicated in writing to the Claimant. Such written notice shall
set forth the basis for the Plan Administrator's decision. If there
are special circumstances which require an extension of time for
completing the review, the Plan Administrator's decision shall be
rendered not later than 120 days after receipt of a request for
review.
<PAGE> 16
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Exhibit 10(iii)A(s)
ARTICLE VII
AMENDMENT AND TERMINATION; CHANGE IN CONTROL
7.1 Amendments. Subject to Section 7.3, the Company (or
its designee) shall have the right in its sole discretion to amend
this Plan in any manner at any time; provided, however, that no such
amendment shall reduce the Participant's vested interest in his
Account under Section 4.2 at that time. Any amendment shall be in
writing and executed by a duly authorized officer of the Company. All
Participants shall be bound by such amendment.
7.2 Termination of Plan. The Company expects to continue
this Plan, but does not obligate itself to do so. Subject to Section
7.3, the Company reserves the right to discontinue and terminate the
Plan at any time, in whole or in part, for any reason (including a
change, or an impending change, in the tax laws of the United States
or any State). If the Plan is terminated, the Plan Administrator
shall be notified of such action in a writing executed by a duly
authorized officer of the Company, and the Plan shall be terminated at
the time therein set forth. Termination of the Plan shall be binding
on all Participants, but in no event may such termination reduce the
amounts credited at that time to any Participant's Account. If this
Plan is terminated, amounts theretofore credited to Participants'
Accounts, including interest from the last Valuation Date to the
termination date, shall either be paid in a lump sum immediately, or
distributed in some other manner consistent with this Plan, as
determined by the Plan Administrator in its sole discretion.
7.3 Change In Control Provisions.
(a) Amendment or Termination. Notwithstanding anything
contained in this Plan to the contrary, for a period of two (2) years
following a Change in Control this Plan shall not be terminated or
amended to reduce, suspend or eliminate any Eligible Executive's or
Participant's benefits or participation (or right to participate)
provided under this Plan, including,
without limitation, the benefits provided in Articles III and IV. Any
amendment or termination of this Plan which a Participant reasonably
demonstrates (i) was at the request of a third party who has indicated
an intention or taken steps reasonably calculated to effect a Change
in Control or (ii) otherwise arose in connection with or in
anticipation of a Change in Control, and which was not consented to in
writing by the Participant shall be null and void, and shall have no
effect whatsoever with respect to the Participant.
(b) Termination of Employment. Notwithstanding anything
contained in this Plan to the contrary, if a Participant's employment
is terminated by the Company (other than for "Cause" as defined in (c)
below) or by the Participant for any reason within two (2) years
following a Change in Control,
<PAGE> 17
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Exhibit 10(iii)A(s)
the Company shall, within five (5) days, pay to the Participant a
lump sum cash payment of the amount credited to his Account (including
any Class Year Accounts subject to a deferral election under Section
4.3(b)) with earnings determined under Section 4.1(b) credited thereto
to the date of payment. If a Participant's employment is terminated
(i) for Cause (as defined in (c) below) within two (2) years following
a Change in Control or (ii) for any reason more than two (2) years
after a Change in Control, the provisions of Article IV shall apply to
the distribution of the Participant's Account.
(c) Cause. For purposes of Section 7.3(b), a termination
for "Cause" is a termination of the Executive evidenced by a
resolution adopted in good faith by two-thirds of the Board of
Directors of the Company that the Participant (i) intentionally and
continually failed to substantially perform his duties with the
Company (other than a failure resulting from the Participant's
incapacity due to physical or mental illness) which failure continued
for a period of at least thirty (30) days after a written notice of
demand for substantial performance has been delivered to the
Participant specifying the manner in which the Participant has failed
to substantially perform, or (ii) intentionally engaged in conduct
which is demonstrably and materially injurious to the Company,
monetarily or otherwise; provided, however, that no termination of the
Participant's employment shall be for Cause as set forth in clause
(ii) above until (x) there shall have been delivered to the
Participant a copy of a written notice setting forth that the
Participant was guilty of the conduct set forth in clause (ii) and
specifying the particulars thereof in detail, and (y) the Participant
shall have been provided an opportunity to be heard by the Board (with
the assistance of the Participant's counsel if the Participant so
desires). No act, nor failure to act, on the Participant's part,
shall be considered "intentional" unless he has acted or failed to
act, with an absence of good faith and without a reasonable belief
that his action or failure to act was in the best interest of the
Company. Notwithstanding anything contained in this Agreement to the
contrary, in the case of any Participant who is a party to a Severance
Protection Agreement, no failure to perform by the Participant after a
Notice of Termination (as defined in the Participant's Severance
Protection Agreement) is given by the Participant shall constitute
Cause for purposes of this Plan.
<PAGE> 18
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Exhibit 10(iii)A(s)
ARTICLE VIII
MISCELLANEOUS
8.1 Limitation on Participant's Rights. Participation in
this Plan shall not give any Participant the right to be retained in
the Company's employ or the employ of any Employer, or any right or
interest in this Plan or any assets of the Company other than as
herein provided. The Company reserves the right to terminate the
employment of any Participant without any liability for any claim
against the Company under this Plan, except to the extent provided
herein.
8.2 Benefits Unfunded. The benefits provided by this Plan
shall be unfunded. All amounts payable under this Plan to
Participants shall be paid from the general assets of the Company, and
nothing contained in this Plan shall require the Company to set aside
or hold in trust any amounts or assets for the purpose of paying
benefits to Participants. This Plan shall create only a contractual
obligation on the part of the Company, and Participants shall have the
status of general unsecured creditors of the Company under the Plan
with respect to amounts of Compensation they defer hereunder or any
other obligation of the Company to pay benefits pursuant hereto. Any
funds of the Company available to pay benefits pursuant to the Plan
shall be subject to the claims of general creditors of the Company,
and may be used for any purpose by the Company.
Notwithstanding the preceding paragraph, the Company may at
any time transfer assets to a trust for purposes of paying all or any
part of its obligations under this Plan. However, to the extent
provided in the trust only, such transferred amounts shall remain
subject to the claims of general creditors of the Company. To the
extent that assets are held in a trust when a Participant's benefits
under the Plan become payable, the Plan Administrator shall direct the
trustee to pay such benefits to the Participant from the assets of the
trust.
8.3 Other Plans. This Plan shall not affect the right of
any Executive or Participant to participate in and receive benefits
under and in accordance with the provisions of any other employee
benefit plans which are now or hereafter maintained by the Company,
unless the terms of such other employee benefit plan or plans
specifically provide otherwise.
8.4 Receipt or Release. Any payment to a Participant in
accordance with the provisions of this Plan shall, to the extent
thereof, be in full satisfaction of all claims against the Plan
Administrator, the Company and any Employer, and the Plan
Administrator may require such Participant, as a condition precedent
to such payment, to execute a receipt and release to such effect.
<PAGE> 19
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Exhibit 10(iii)A(s)
8.5 Governing Law. This Plan shall be construed,
administered, and governed in all respects in accordance with
applicable federal law and, to the extent not preempted by
federal law, in accordance with the laws of the State of Georgia. If
any provisions of this instrument shall be held by a court of
competent jurisdiction to be invalid or unenforceable, the remaining
provisions hereof shall continue to be fully effective.
8.6 Gender, Tense, and Headings. In this Plan, whenever
the context so indicates, the singular or plural number and the
masculine, feminine, or neuter gender shall be deemed to include the
other. Headings and subheadings in this Plan are inserted for
convenience of reference only and are not considered
in the construction of the provisions hereof.
8.7 Successors and Assigns; Nonalienation of Benefits. This
Plan shall inure to the benefit of and be binding upon the parties
hereto and their successors and assigns; provided, however, that the
amounts credited to the Account of a Participant shall not (except as
provided in Section 5.5) be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution or levy of any kind, either voluntary or
involuntary, and any attempt to anticipate, alienate, sell, transfer,
assign, pledge, encumber, charge or otherwise dispose of any right to
any benefits payable hereunder, including, without limitation, any
assignment or alienation in connection with a separation, divorce,
child support or similar arrangement, shall be null and void and not
binding on the Plan or the Company. In addition to any obligations
imposed by law upon any successor to the Company, the Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to substantially all of the
business or assets of the Company to expressly agree to assume and
perform this Agreement in the same manner that the Company would be
required to perform it.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed by its duly authorized officers to be effective September 1,
1994.
NATIONAL SERVICE INDUSTRIES, INC.
By: \s\ D. Raymond Riddle
<PAGE> 20
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Exhibit 10(iii)A(s)
APPENDIX A
NATIONAL SERVICE INDUSTRIES, INC.
EXECUTIVE SAVINGS PLAN
ELECTION TO PARTICIPATE AND
DESIGNATION OF BENEFICIARY
To the Plan Administrator:
I hereby elect to participate in the NATIONAL SERVICE INDUSTRIES,
INC. EXECUTIVE SAVINGS PLAN (the "Plan") pursuant to the terms and
conditions of such Plan contained in the Plan document adopted by
NATIONAL SERVICE INDUSTRIES, INC. ("Company"), all of which terms and
conditions are incorporated herein by reference.
I. BONUS DEFERRAL ELECTION
a. Bonus Deferral: I hereby elect to defer the amount of
my Bonus indicated below for the Company's Fiscal Year
commencing September 1, ____: (indicate Fiscal Year for
which this election is effective).
_____% of my Bonus
$_____ of my Bonus (if my Bonus is less than this
amount, 100% of my Bonus will
be deferred).
_____% of my Bonus in excess of $
Other
b. Deferral Limitation: Notwithstanding my election in this
Section I, I understand that my annual deferral cannot be
less than $1,000 nor exceed 100% of my Bonus for the Fiscal
Year and, that in the event my election does not satisfy
these limitations, the Plan Administrator will adjust my
election in an appropriate manner.
II. Election Not To Participate
I hereby elect not to defer any portion of my Bonus for the Company's
Fiscal Year commencing September 1, ____: (indicate Fiscal Year).
<PAGE> 21
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Exhibit 10(iii)A(s)
III. BENEFICIARY DESIGNATION
I designate the following person(s) as Primary and
Contingent Beneficiaries under the Plan:
Primary Beneficiary:
______________________ __________________ __________________
Name % Benefit Relationship
______________________ __________________ __________________
Name % Benefit Relationship
______________________ __________________ __________________
Name % Benefit Relationship
Contingent Beneficiary(s): (will only receive benefits if none of the
Primary Beneficiary(ies) survives the Participant)
______________________ __________________ __________________
Name % Benefit Relationship
______________________ __________________ __________________
Name % Benefit Relationship
______________________ __________________ __________________
Name % Benefit Relationship
III. SIGNATURE
I retain the right, at any time, to change the Beneficiary
designation in Section III above by giving written notice of such
change to the Plan Administrator and to make such other changes to
this Election Form as may be permitted by the Plan. I hereby agree to
be bound by all of the terms and conditions of the Plan, as it may be
amended from time to time.
Dated: ____________________ ___________________________
S.S.N. __________________
Received By Company: _______________________
__________________ Signature
Date
<PAGE> 1
Page 61
Exhibit 10(iii)A(t)
NATIONAL SERVICE INDUSTRIES, INC.
MANAGEMENT COMPENSATION AND INCENTIVE PLAN
Effective as of September 1, 1994
1. ESTABLISHMENT AND EFFECTIVE DATE OF PLAN
National Service Industries, Inc. (the "Corporation") hereby
adopts the National Service Industries, Inc. Management
Compensation and Incentive Plan (the "Plan") for its executive
officers and certain other executives of the Corporation, its
Divisions and affiliates who are in management positions
designated as eligible for participation by the Executive Resource
and Nominating Committee (the "Committee") of the Board of
Directors of the Corporation or its designee. The Plan shall be
effective on September 1, 1994 and shall remain in effect, subject
to the rights of amendment and termination in Section 13, until
the Incentive Awards are paid for the Corporation's fiscal year
ending in 1999. Payments under the Plan shall only be made to
Named Executive Officers after the Plan is approved by the
stockholders of the Corporation.
2. PURPOSE OF THE PLAN
The purpose of the Plan is to further the growth and
financial success of the Corporation by offering performance
incentives to designated executives who have significant
responsibility for such success.
3. DEFINITIONS
(a) "Base Annual Salary" means the actual salary paid to a
Participant during the applicable Plan Year, increased by the
amount of any pre-tax deferrals or other pre-tax payments
made by the Participant to the Corporation's deferred
compensation or welfare plans (whether qualified or non-
qualified).
(b) "Board of Directors" means the Board of Directors of the
Corporation.
(c) "Change in Control" means any of the following events:
(i) The acquisition (other than from the Corporation)
by any "Person" [as the term person is used for purposes of
Sections 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")] of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the 1934
Act) of twenty percent (20%) or more of the combined voting
power of the Corporation's then outstanding voting
securities; or
(ii) The individuals who, as of September 1, 1994, are
members of the Board of Directors (the "Incumbent Board"),
cease for any reason to constitute at least twothirds of the
Board of Directors; provided, however, that if the election,
or nomination for election by the Corporation's stockholders,
of any new director was approved by a vote of at least
twothirds of the Incumbent Board, such new director shall,
for purposes of this Plan, be considered as a member of the
Incumbent Board; or
(iii) Approval by stockholders of the Corporation of
(1) a merger or consolidation involving the Corporation if
the stockholders of the Corporation, immediately before such
merger or consolidation do not, as a result of such merger or
consolidation, own, directly or indirectly, more than seventy
percent (70%) of the combined voting power of the then
outstanding voting securities of the corporation resulting
from such merger or consolidation in substantially the same
proportion as their ownership of the combined voting power of
the voting securities of the Corporation outstanding
immediately before such merger or consolidation or (2) a
complete liquidation or dissolution of the Corporation or an
agreement for the sale or other disposition of all or
substantially all of the assets of the Corporation.
Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur pursuant to subsection (i) above,
solely because twenty percent (20%) or more of the combined
voting power of the Corporation's then outstanding securities
is acquired by (i) a trustee or other fiduciary holding
securities under one or more employee benefit plans
maintained by the Corporation or any of its subsidiaries, or
(ii) any corporation which, immediately prior to such
acquisition, is owned directly or indirectly by the
stockholders of the Corporation in the same proportion as
their ownership of stock in the Corporation immediately prior
to such acquisition.
(d) "Chief Executive Officer" means the chief executive officer
of the Corporation, unless otherwise specified.
<PAGE> 2
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Exhibit 10(iii)A(t)
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the Executive Resource and Nominating
Committee of the Board of Directors or any other committee
designated by the Board of Directors which is responsible for
administering the Plan.
(g) "Corporation" means National Service Industries, Inc. and its
successors.
(h) "Division" means a separate business operating unit of the
Corporation with respect to which separate performance goals
are established hereunder.
(i) "Incentive Award" or "Award" means the bonus awarded to a
Participant under the terms of the Plan.
(j) "Maximum Award" means the maximum percentage of Base Annual
Salary which may be paid based upon the Relative Performance
during the Plan Year.
(k) "Named Executive Officer" means a Participant who as of the
date of payment of an Incentive Award is one of the group of
"covered employees" under Code Section 162(m) and the
regulations thereunder.
(l) "Participant" means an employee of the Corporation, a
Division or an affiliate who is designated by the Committee
to participate in the Plan.
(m) "Personal Performance Goals" means the goals established for
each Participant each year to improve the effectiveness of
the Participant's area of responsibility as well as the
Corporation as a whole.
(n) "Plan Rules" means the guidelines established annually by the
Committee pursuant to Section 4, subject to ratification by
the Board of Directors.
(o) "Plan Year" means the twelve month period which is the same
as the Corporation's fiscal year. The initial Plan Year
shall be September 1, 1994 through August 31, 1995.
(p) "Relative Performance" means the extent to which the
Corporation, or designated Division, as applicable, achieves
the performance measurement criteria set forth in the Plan
Rules.
(q) "Target Award" means the percentage (which may vary among
Participants and from Plan Year to Plan Year) of Base Annual
Salary which will be paid to a Participant as an Incentive
Award if the performance measurement criteria applicable to
the Participant for the Plan Year is achieved, as reflected
in the Plan Rules for such Plan Year.
(r) "Threshold Award" means the percentage of Base Annual Salary
which may be paid based on the minimum acceptable Relative
Performance during the Plan Year.
4. ADMINISTRATION OF THE PLAN
The Plan will be administered by the Committee, subject to
its right to delegate responsibility for administration of the
Plan as it applies to Participants other than Named Executive
Officers pursuant to Section 8. The Committee will have authority
to establish Plan Rules with respect to the following matters,
subject to the right of the Board of Directors to ratify such Plan
Rules:
(a) the employees who are to become Participants in the Plan;
(b) the Target Award, Maximum Award and Threshold Award that can
be granted to each Participant and the method for determining
such award, which the Committee may amend from time to time;
(c) performance targets and the measurement criteria to be used
in determining the Corporation's or a Division's Relative
Performance, which will include one or more of the following,
as determined by the Committee each year: net income,
earnings per share, return on equity, return on assets (or
net assets), profit before taxes, market value of the
Corporation's stock, and total shareholder return; and
(d) the time or times and the conditions subject to which any
Incentive Award may become payable.
The Plan Rules will be adopted by the Committee prior to, or
as soon as practical after, the commencement of each Plan Year.
Subject to the provisions of the Plan and the Committee's right to
delegate its responsibilities, the Committee will also have the
discretionary authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, and to make all
other determinations deemed necessary or advisable in
administering the Plan. The determinations of the Committee on
the matters referred to in paragraphs (a) through (d) of this
Section 4 shall be submitted at least annually to the Board of
Directors for its consideration and ratification. For
Participants who are not Named Executive Officers, the Committee
may in its discretion establish performance measures not listed in
this Section 4 without obtaining shareholder approval.
<PAGE> 3
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Exhibit 10(iii)A(t)
5. PARTICIPATION
Eligibility for participation in the Plan is limited to
executive officers of the Corporation and certain other executives
of the Corporation and its Divisions or affiliates who hold key
management and staff positions. From among those eligible and
based upon the recommendations of the Chief Executive Officer and
other designees, the Committee will designate by name or position
the Participants each Plan Year. Any employee who is a
Participant in one Plan Year may be excluded from participation in
any other Plan Year. If, during the Plan Year, a Participant
other than a Named Executive Officer changes employment positions
to a new position which corresponds to a different award level,
the Committee may, in its discretion, adjust the Participant's
award level for such Plan Year. The Committee may, in its
discretion, designate employees who are hired after the beginning
of the Plan Year as Participants for such Plan Year and as
eligible to receive full or partial Incentive Awards for such
year.
6. INCENTIVE AWARDS
6.1 Determination of the Amount of Incentive Awards
At the end of each Plan Year, the Committee shall certify the
extent to which the performance targets and measurement criteria
established pursuant to Section 4 have been achieved for such Plan
Year based upon information prepared by the Corporation's finance
department. Subject to the right to decrease an award as
described in the next paragraph, the Participant's Incentive Award
shall be computed by the Committee based upon the achievement of
the established performance targets, measurement criteria and the
requirements of the Plan. The Committee may in determining
whether performance targets have been met adjust the Corporation's
financial results to exclude the effect of unusual charges or
income items, including gains and losses resulting from
divestitures, currency fluctuations or changes in accounting,
which are distortive of results year over year (either on a
segment or consolidated basis); provided, that for purposes of
determining the Incentive Awards of Named Executive Officers, the
Committee shall exclude unusual items whose exclusion has the
effect of increasing Relative Performance if such items constitute
"extraordinary items" under generally accepted accounting
principles. In addition, the Committee will adjust its
calculations to exclude the unanticipated effect on financial
results of changes in the Code or other tax laws, or the
regulations relating thereto.
The Committee may, in its discretion, decrease the amount of
a Participant's Incentive Award for a Plan Year based upon such
factors as it may determine, including the failure of the
Corporation or a Division to meet certain performance goals or of
a Participant to meet his Personal Performance Goals. The factors
to be used in reducing an Incentive Award may be established at
the beginning of a Plan Year and may vary among Participants.
In the event that the Corporation's or a Division's
performance is below the performance thresholds for the Plan Year
and the Incentive Awards are reduced or cancelled, the Committee
may in its discretion grant Incentive Awards to deserving
Participants, except for Participants who are Named Executive
Officers.
The Plan Rules and Incentive Awards under the Plan shall be
administered in a manner to qualify payments under the Plan to the
Named Executive Officers for the performance-based exception under
Code Section 162(m) and the regulations thereunder, except where
the Board of Directors determines such compliance is not
necessary. The maximum Incentive Award that may be paid to an
individual Participant for a Plan Year shall be the amount which
when added to the Participant's Base Annual Salary for such Plan
Year totals an aggregate of $1.5 million.
6.2 Eligibility for Payment of Incentive Award
No Participant will have any vested right to receive any
Incentive Award until such date as the Board of Directors has
ratified the Committee's determination with respect to the payment
of individual Incentive Awards, except where the Committee
determines such ratification is not necessary. No Incentive Award
will be paid to any Participant who is not an active employee of
the Corporation, a division or an affiliate at the end of the Plan
Year to which the Incentive Award relates; provided, however, at
the discretion of the Committee or its designee (subject to
ratification by the Board of Directors, where required), partial
Incentive Awards may be authorized by the Committee to be paid to
Participants (or their beneficiaries) who are terminated without
cause or who retire, die or become permanently and totally
disabled during the Plan Year. No Participant entitled to receive
an Incentive Award shall have any interest in any specific asset
of the Corporation, and such Participant's rights shall be
equivalent to that of a general unsecured creditor of the
Corporation.
<PAGE> 4
Page 64
Exhibit 10(iii)A(t)
6.3 Payment of Awards
Payment of the Incentive Awards will be made as soon as
practicable after their determination pursuant to Sections 6.1 and
6.2, subject to a Participant's right to defer payment pursuant to
applicable deferred compensation plans of the Corporation.
Payment will generally be made in a lump sum in cash, unless the
Committee otherwise determines at the beginning of the Plan Year.
7. DELEGATION OF AUTHORITY BY THE COMMITTEE
Notwithstanding the responsibilities of the Committee set
forth herein, the Committee may delegate to the Chief Executive
Officer or others all or any portion of its responsibility for
administration of the Plan as it relates to Participants other
than Named Executive Officers. Such delegation may include,
without limitation, the authority to designate employees who can
participate in the Plan, to establish Plan Rules, to interpret the
Plan, to determine the extent to which performance criteria have
been achieved, and to adjust Incentive Awards payable. In the
case of each such delegation, the administrative actions of the
delegate shall be subject to the approval of the person within the
Corporation to whom the delegate reports (or, in the case of a
delegation to the Chief Executive Officer, to the approval of the
Committee).
8. CHANGE IN CONTROL
Upon the occurrence of a Change in Control, unless the
Participant otherwise elects in writing, the Participant's
Incentive Award for the Plan Year, determined at the Target Award
level (without any reductions under Section 6.1) shall be deemed
to have been fully earned for the Plan Year, provided that the
Participant shall only be entitled to a pro rata portion of the
Incentive Award based upon the number of days within the Plan Year
that had elapsed as of the effective date of the Change in
Control. The Incentive Award amount shall be paid in cash within
thirty (30) days of the effective date of the Change in Control.
9. BENEFICIARY
Each Participant will designate a person or persons to
receive, in the event of death, any Incentive Award to which the
Participant would then be entitled under Section 6.2. Such
designation will be made in the manner determined by the Committee
and may be revoked by the Participant in writing. If a
Participant fails effectively to designate a beneficiary, then the
estate of the Participant will be deemed to be the beneficiary.
10. WITHHOLDING OF TAXES
The Corporation shall deduct from each Incentive Award the
amount of any taxes required to be withheld by any governmental
authority.
11. EMPLOYMENT
Nothing in the Plan or in any Incentive Award shall confer
(or be deemed to confer) upon any Participant the right to
continue in the employ of the Corporation, a Division or an
affiliate, or interfere with or restrict in any way the rights of
the Corporation, a Division or an affiliate to discharge any
Participant at any time for any reason whatsoever, with or without
cause.
12. SUCCESSORS
All obligations of the Corporation under the Plan with
respect to Incentive Awards granted hereunder shall be binding
upon any successor to the Corporation, whether such successor is
the result of an acquisition of stock or assets of the
Corporation, a merger, a consolidation or otherwise.
13. TERMINATION AND AMENDMENT OF THE PLAN; GOVERNING LAW
The Committee, subject to the ratification rights of the
Board of Directors, has the right to suspend or terminate the Plan
at any time, or to amend the Plan in any respect, provided that no
such action will, without the consent of a Participant, adversely
affect the Participant's rights under an Incentive Award approved
under Section 6.2. The Plan shall be interpreted and construed
under the laws of the State of Georgia.
<PAGE> 1
<TABLE>
Page 65
Exhibit 11
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATIONS OF NET INCOME PER SHARE OF COMMON STOCK
(In thousands, except per-share data)
<CAPTION>
Years Ended August 31
1994 1993
<S> <C> <C>
Primary:
Weighted Average Number of Shares
(determined on a monthly basis) 49,547 49,556
Net Income $ 82,698 $ 75,116
Primary Earnings per Share $1.67 $1.52
Fully Diluted:
Weighted Average Number of Shares
Outstanding 49,547 49,556
Additional Shares Assuming Exercise of
Options:
Options exercised 707 545
Treasury stock purchased with proceeds (619) (478)
Average Common Shares Outstanding
(as adjusted) 49,635 49,623
Net Income $ 82,698 $ 75,116
Fully Diluted Earnings per Share $1.67 $1.51
</TABLE>
<PAGE> 1
Page 66
Exhibit 13
Consolidated Balance Sheets
August 31
(In thousands, except share data) 1994 1993
Assets
Current Assets:
Cash and cash equivalents $ 58,619 $ 15,853
Short-term investments 2,579 4,776
Receivables, less reserves for doubtful
accounts of $7,385,000 in 1994
and $7,170,000 in 1993 256,051 249,958
Inventories, at the lower of cost
(on a first-in, first-out basis) or market 178,590 171,545
Linens in service, net of amortization 90,037 77,931
Prepaid income taxes 13,473 25,340
Prepayments 8,933 11,513
Total Current Assets 608,282 556,916
Property, Plant, and Equipment, at cost:
Land 32,237 33,303
Buildings and leasehold improvements 186,929 190,276
Machinery and equipment 507,408 500,459
Total Property, Plant, and Equipment 726,574 724,038
Less-Accumulated depreciation and amortization 378,262 358,853
Property, Plant, and Equipment-net 348,312 365,185
Other Assets:
Goodwill and other intangibles 112,286 127,387
Other 37,876 38,025
Total Other Assets 150,162 165,412
Total Assets $1,106,756 $1,087,513
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long-term debt $ 667 $ 1,792
Notes payable 5,098 4,404
Accounts payable 81,969 85,505
Accrued salaries, commissions, and bonuses 42,624 37,103
Self insurance reserves 77,680 71,888
Other accrued liabilities 42,716 42,981
Total Current Liabilities 250,754 243,673
Long-Term Debt, less current maturities 26,863 28,418
Deferred Income Taxes 78,814 84,289
Other Long-Term Liabilities 22,940 27,110
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 in 1994 and 1993 57,919 57,919
Paid-in capital 7,684 7,299
Retained earnings 705,504 673,399
771,107 738,617
Less- Treasury stock, at cost (8,678,666
shares in 1994 and 8,357,539 shares
in 1993) 43,722 34,594
Total Stockholders' Equity 727,385 704,023
Total Liabilities and
Stockholders' Equity $1,106,756 $1,087,513
The accompanying notes to consolidated financial statements are an
integral part of these balance sheets.
<PAGE>
Page 67
Exhibit 13
Consolidated Statements of Income
Years Ended August 31
(In thousands) 1994 1993 1992
Sales and Service Revenues:
Net sales of products $1,337,410 $1,257,906 $1,189,684
Service revenues 544,454 546,916 444,127
Total Revenues 1,881,864 1,804,822 1,633,811
Costs and Expenses:
Cost of products sold 875,055 832,264 810,552
Cost of services 286,519 281,551 236,474
Selling and administrative expenses 577,291 557,011 462,653
Interest expense 3,668 4,961 2,690
Other expense, net 7,133 9,519 4,534
Total Costs and Expenses 1,749,666 1,685,306 1,516,903
Income before Provision for Income Taxes 132,198 119,516 116,908
Provision for Income Taxes 49,500 44,400 42,800
Net Income $ 82,698 $ 75,116 $ 74,108
Earnings per Share (in dollars) $ 1.67 $ 1.52 $ 1.50
Weighted Average Number
of Shares Outstanding 49,547 49,556 49,539
Consolidated Statements of Stockholders' Equity
Common Paid-in Retained Treasury Performance
Stock Capital Earnings Stock Shares Total
(In thousands, except per-share data)
Balance August 31, 1991 $57,919 $ 7,631 $630,309 $(33,734) $(1,558) $660,567
Return of stock issued
under long-term
incentive program(1) - (1,300) - (258) 1,558 -
Adjustment of treasury
stock issued in connection
with acquisition(2) - (18) - (3) - (21)
Net income - - 74,108 - - 74,108
Cash dividends of $.99 per
share paid on common stock - - (49,105) - - (49,105)
Adjustment to recognize net
increase in pension
liability - - (1,721) - - (1,721)
Foreign currency
translation adjustment - - (874) - - (874)
Balance August 31, 1992 57,919 6,313 652,717 (33,995) - 682,954
Treasury stock purchased(3) - - - (837) - (837)
Stock options exercised(4) - 1,003 - 241 - 1,244
Adjustment of treasury
stock issued in connection
with acquisition(5) - (17) - (3) - (20)
Net income - - 75,116 - - 75,116
Cash dividends of $1.03 per
share paid on common stock - - (51,041) - - (51,041)
Adjustment to recognize net
increase in pension
liability - - (411) - - (411)
Foreign currency
translation adjustment - - (2,982) - - (2,982)
Balance August 31, 1993 57,919 7,299 673,399 (34,594) - 704,023
Treasury stock purchased(6) - - - (27) - (27)
Stock options exercised(7) - 385 - 90 - 475
Treasury stock acquired in
connection with
divestiture(8) - - - (9,191) - (9,191)
Net income - - 82,698 - - 82,698
Cash dividends of $1.07 per
share paid on common stock - - 53,042) - - (53,042)
Adjustment to recognize net
decrease in pension
liability - - 2,203 - - 2,203
Foreign currency
translation adjustment - - 246 - - 246
Balance August 31, 1994 $57,919 $ 7,684 $705,504 $(43,722) $ - $727,385
(1)63,612 shares. (2)748 shares. (3)34,100 shares. (4)58,359 shares.
(5)723 shares. (6)992 shares. (7)21,705 shares. (8)341,840 shares.
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
Page 68
Exhibit 13
Consolidated Statements of Cash Flows
Years Ended August 31
(In thousands) 1994 1993 1992
Cash Provided by (Used for) Operating Activities
Net income $ 82,698 $ 75,116 $ 74,108
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 60,548 62,097 53,816
Provision for losses on accounts receivable 2,804 3,300 3,398
Gain on the sale of property, plant,
and equipment (76) (1,153) (143)
Gain on the sale of business (2,249) (1,379) -
Provision for deferred income taxes (1,600) (4,363) (4,506)
Change in assets and liabilities net of
effect of acquisitions and sale of business-
Receivables (8,425) (17,544) (7,934)
Inventories and linens in service, net (23,095) (22,722) 17,761
Prepaid income taxes 11,867 9,698 (6,923)
Prepayments and other 4,667 (4,037) (459)
Accounts payable and accrued liabilities 10,542 3,923 (31)
Net Cash Provided by Operating Activities 137,681 102,936 129,087
Cash Provided by (Used for) Investing Activities
Change in short-term investments 2,197 3,736 5,551
Purchases of property, plant, and equipment (42,517) (35,513) (43,456)
Sale of property, plant, and equipment 4,552 4,399 7,067
Sale of business 2,395 2,558 -
Acquisitions (569) (97,267) (9,242)
Change in other assets 20 (7,179) (12,904)
Net Cash Used for Investing Activities (33,922) (129,266) (52,984)
Cash Provided by (Used for) Financing Activities
Repayment of long-term debt (2,680) (2,521) (3,949)
Recovery of investment in tax benefits 2,080 1,820 2,043
Deferred income taxes from investment
in tax benefits (3,875) (3,070) (3,148)
Issuance of treasury stock, net 448 407 -
Change in other long-term liabilities (4,170) (1,567) 6,547
Cash dividends paid (53,042) (51,041) (49,105)
Net Cash Used for Financing Activities (61,239) (55,972) (47,612)
Effect of Exchange Rate Changes on Cash 246 (2,982) (874)
Net Change in Cash and Cash Equivalents 42,766 (85,284) 27,617
Cash and Cash Equivalents at Beginning of Year 15,853 101,137 73,520
Cash and Cash Equivalents at End of Year $ 58,619 $ 15,853 $101,137
Supplemental Cash Flow Information
Income taxes paid during the year $ 41,584 $ 35,620 $ 51,142
Interest paid during the year 4,030 5,925 4,971
Noncash Investing and Financing Activities
Treasury stock returned for contingent
performance share grants under long-term
incentive program $ - $ - $ (258)
Noncash aspects of divestitures-
Liabilities removed $ (2,442) $ - $ -
Treasury stock acquired (9,191) - -
Noncash aspects of acquisitions-
Liabilities assumed or incurred $ - $ 31,594 $ 12,997
Treasury stock returned - (20) (21)
The accompanying notes to consolidated financial statements are an integral part
of these statements.
<PAGE>
Page 69
Exhibit 13
Notes to Consolidated Financial Statements
NOTE 1: Summary of Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the company and
all subsidiaries after elimination of significant intercompany transactions and
accounts.
Cash, Cash Equivalents, and Short-Term Investments
Cash in excess of daily requirements is invested in time deposits and
marketable securities, consisting primarily of tax exempt variable rate demand
notes, included in the balance sheet at the lower of cost or market value.
For financial statement purposes, the company considers time deposits and
marketable securities purchased with an original maturity of three months or
less to be cash equivalents. Investments purchased with a maturity of more than
three months are considered short-term investments. At August 31, 1994 and
1993, the carrying amounts of short-term investments equal fair value.
Inventories and Linens in Service
Inventories are valued at the lower of cost (on a first-in, first-out basis) or
market and consisted of the following at August 31, 1994 and 1993:
(In thousands) 1994 1993
Raw materials and supplies $ 72,677 $ 77,911
Work in progress 9,918 11,269
Finished goods 95,995 82,365
$178,590 $171,545
Linens in service are recorded at cost and are amortized over their estimated
useful lives.
Goodwill and Other Intangibles
Goodwill of $3,460,000 was recognized in connection with a 1969 acquisition
and is not being amortized. Remaining amounts of goodwill ($47,102,000 in 1994
and $48,284,000 in 1993) and other intangible assets are being amortized on a
straight-line basis over various periods up to 40 years. The company recorded
$54,235,000 of intangibles related to acquisitions in 1993 (Note 7).
Depreciation
For financial reporting purposes, depreciation is determined principally on a
straight-line basis using estimated useful lives of plant and equipment (20 to
45 years for buildings and 3 to 16 years for machinery and equipment) while
accelerated depreciation methods are used for income tax purposes. Leasehold
improvements are amortized over the life of the lease.
Foreign Currency Translation
The functional currency for the company's foreign operations is the local
currency. The translation of foreign currencies into U.S. dollars is performed
for balance sheet accounts using exchange rates in effect at the balance sheet
date and for revenue and expense accounts using a weighted average exchange
rate during the period. The gains or losses resulting from the translation are
included in retained earnings and are excluded from net income.
Gains or losses resulting from foreign currency transactions are included in
"Other expense, net" in the consolidated statements of income and amounted to
losses of $379,000 in 1994, $863,000 in 1993, and $430,000 in 1992.
Postretirement Healthcare and Life Insurance Benefits
The company's retiree medical plans are financed entirely by retiree
contributions; therefore, the company has no liability in connection with
them. Several programs provide limited retiree life insurance benefits. The
liability for these plans is not significant.
Pension and Profit Sharing Plans
The company has several pension plans covering hourly and salaried employees.
Benefits paid under these plans are based generally on employees' years of
service and/or compensation during the final years of employment. The company
makes annual contributions to the plans to the extent indicated by actuarial
valuations. Plan assets are invested primarily in equity and fixed income
securities.
Net pension (income) cost for 1994, 1993, and 1992 included the following
components:
(In thousands) 1994 1993 1992
Service cost of benefits
earned during the period $ 2,466 $ 2,652 $ 1,393
Interest cost on projected
benefit obligation 7,262 7,165 6,780
Return on plan assets (1,929) (8,198) (7,648)
Net amortization of
transition amounts (8,215) (1,217) (897)
Net pension (income) cost $ (416) $ 402 $ (372)
<PAGE>
Page 70
Exhibit 13
Notes to Consolidated Financial Statements
The following schedule reconciles the funded status of the plans as of June
1, 1994, with amounts reported in the company's balance sheet at August 31,
1994:
Plan Accumulated
Assets Benefit
Exceed Obligation
Accumulated Exceeds
Benefit Plan
(In thousands) Obligation Assets
Actuarial present value of benefit
obligations as of June 1, 1994:
Vested $ (76,845) $(3,861)
Nonvested (6,036) (77)
Accumulated benefit obligation (82,881) (3,938)
Effect of projected salary increases (5,787) (1,523)
Total projected benefit obligation (88,668) (5,461)
Fair value of plan assets 106,031 -
Plan assets greater (less) than
projected benefit obligation 17,363 (5,461)
Unrecognized transition
(asset) liability (12,087) 98
Unrecognized prior service
cost obligation 3,058 2,514
Unrecognized net loss (gain) 16,814 (744)
Adjustment required to
recognize minimum liability - (515)
Prepaid (accrued) pension
expense at August 31, 1994 $ 25,148 $ (4,108)
The discount rate used to determine the projected benefit obligation is 8
percent. The assumed growth rate of compensation is 5.5 percent. The expected
long-term rate of return on plan assets is 9.5 percent.
The company also has profit sharing and 401(k) plans to which both employees
and the company contribute. At August 31, 1994, assets of the 401(k) plans
included shares of the company's common stock with a market value of
approximately $4,703,000. The company's cost of these plans was $3,133,000 in
1994, $3,031,000 in 1993, and $3,193,000 in 1992.
Self Insurance
It is the policy of the company to self insure for certain insurable risks
consisting primarily of physical loss to property; business interruptions
resulting from such loss; and workers' compensation, comprehensive general, and
auto liability. Insurance coverage is obtained for catastrophic property and
casualty exposures as well as those risks required to be insured by law or
contract. Provision for claims under the self-insured program is recorded
based on the company's estimate of the aggregate liability for claims incurred.
NOTE 2: Long-Term Debt and Lines of Credit
Long-term debt at August 31, 1994 and 1993, consisted of the following:
(In thousands) 1994 1993
70% to 13.0% mortgage notes,
payable in installments through 2011
(secured in part by property, plant, and
equipment having a net book value
of $2,800,000 at August 31, 1994) $ 671 $ 1,930
2.55% to 6.625% other notes, payable
in installments through 2021 26,859 28,280
27,530 30,210
Less-Amounts payable within one year
included in current liabilities 667 1,792
$26,863 $28,418
The annual maturities of long-term debt are as follows:
(In thousands) Amount
Year Ending August 31
1995 $ 667
1996 88
1997 52
1998 5,497
1999 23
Later years 21,203
$27,530
The company has complimentary lines of credit totaling $124,000,000 of which
$82,000,000 has been provided domestically and $42,000,000 is available on a
multi-currency basis primarily from a European bank. At August 31, 1994 the
company had foreign currency short-term bank borrowings equivalent to
$5,098,000 at an average foreign currency interest rate of 5.9%.
Long-term debt recorded in the accompanying balance sheets approximates fair
value based on the borrowing rates currently available to the company for bank
loans with similar terms and average maturities.
<PAGE>
Page 71
Exhibit 13
Notes to Consolidated Financial Statements
NOTE 3: Common Stock and Related Matters
In 1988, the company adopted a shareholder rights plan under which one
preferred stock purchase right is presently attached to and trades with each
outstanding share of the company's common stock.
The rights become exercisable and transferable apart from the common stock
ten days after a person or group, without the company's consent, acquires
beneficial ownership of, or the right to obtain beneficial ownership of, 20
percent or more of the company's common stock or announces or commences a
tender offer or exchange offer that could result in 20 percent ownership
(unless such date is extended by the Board of Directors). Once exercisable, each
right entitles the holder to purchase one one-hundredth share of Series A
Participating Preferred Stock at an exercise price of $80, subject to adjustment
to prevent dilution. The rights have no voting power and, until exercised, no
dilutive effect on net income per common share. The rights expire on May 19,
1998, and are redeemable under certain circumstances.
If a person acquires 20 percent ownership, except in an offer approved by
the company under the plan, each right not owned by the acquirer or related
parties will entitle its holder to purchase, at the right's exercise price,
common stock or common stock equivalents having a market value immediately prior
to the triggering of the right of twice that exercise price. In addition, after
an acquirer obtains 20 percent ownership, if the company is involved in certain
mergers, business combinations, or asset sales, each right not owned by the
acquirer or related persons will entitle its holder to purchase, at the right's
exercise price, shares of common stock of the other party to the transaction
having a market value immediately prior to the triggering of the right of twice
that exercise price.
The company has 1,000,000 shares of preferred stock authorized, 500,000 of
which have been reserved for issuance under the shareholder rights plan. No
shares of preferred stock had been issued at August 31, 1994.
In 1990, the stockholders approved the National Service Industries, Inc.
Long-Term Incentive Program for the benefit of officers and other key employees.
There were 1,750,000 treasury shares reserved for issuance under the program.
The employee stock options granted under the program become exercisable in
four equal annual installments beginning one year from the date of the grant and
expire at the end of ten years.
In 1993, the stockholders approved the National Service Industries, Inc.
1992 Nonemployee Directors' Stock Option Plan under which a maximum of 100,000
shares were reserved for issuance. The shares become exercisable one year from
the date of the grant.
Stock option transactions for the stock option plans and stock option
agreements during the years ended August 31, 1994, 1993, and 1992 were as
follows:
(In thousands) 1994 1993 1992
Options outstanding at
September 1 680,139 473,415 339,831
Granted 214,700 365,900 164,744
Exercised 21,705 58,359 -
Canceled 52,382 100,817 31,160
Options outstanding at
August 31 820,752 680,139 473,415
Option price range at $19.75- $19.75- $19.75-
August 31 $29.00 $29.00 $29.00
Options exercisable at
August 31 316,024 176,625 111,943
Options available for
grant at August 31 949,184 1,111,502 1,276,585
Potential dilution of earnings per share applicable to these stock options
is not significant.
NOTE 4: Leases
The company leases certain of its buildings and equipment under noncancelable
lease agreements. Minimum lease payments under noncancelable leases for years
subsequent to August 31, 1994, are as follows:
(In thousands) Amount
Year Ending August 31
1995 $ 9,354
1996 7,666
1997 5,613
1998 3,856
1999 2,510
Later years 5,390
$34,389
Total rent expense was $10,585,000 in 1994, $11,230,000 in 1993, and
$8,953,000 in 1992.
<PAGE>
Page 72
Exhibit 13
NOTE 5: Quarterly Financial Data (Unaudited)
(In thousands, except earnings per share)
Sales and Income
Service Gross before Net Earnings
Revenues Profit Taxes Income per Share
1994
1st Quarter $459,900 $175,584 $30,803 $19,172 $.39
2nd Quarter 439,337 166,082 26,149 16,273 .33
3rd Quarter 481,001 187,031 36,849 22,928 .46
4th Quarter 501,626 191,593 38,397 24,325 .49
1993
1st Quarter $434,341 $168,946 $29,358 $18,586 $.38
2nd Quarter 426,993 161,897 23,181 14,634 .30
3rd Quarter 459,964 177,949 32,702 20,511 .41
4th Quarter 483,524 182,215 34,275 21,385 .43
NOTE 6: Income Taxes
Income taxes are reconciled with the Federal statutory rate as follows:
(In thousands) 1994 1993 1992
Federal income tax
computed at
statutory rate $46,269 $41,433 $39,748
Increase (decrease) in taxes:
State income tax,
net of Federal
income tax benefit 4,693 4,230 3,358
Tax exempt interest (330) (495) (1,184)
Other, net (1,132) (768) 878
$49,500 $44,400 $42,800
Provisions for income taxes include state income and franchise taxes of
$7,220,000 in 1994, $6,478,000 in 1993, and $5,088,000 in 1992. In 1994, 1993,
and 1992 income before taxes included $952,000, $5,149,000, and $413,000,
respectively, of losses generated by the company's foreign operations.
The following summarizes the components of income tax expense:
(In thousands) 1994 1993 1992
Provision for current taxes $47,473 $41,710 $44,763
Provision (credit) for
deferred taxes:
Current:
Tax effect of linen book
amortization less than
tax amortization 3,339 9,877 3,700
Restructuring costs 365 3,025 4,028
Insurance costs (1,745) (3,452) (4,182)
Other timing differences 1,668 (2,397) (1,003)
Noncurrent-
Other (primarily tax effect
of differences between
book depreciation and
tax depreciation on
fixed assets) (1,600) (4,363) (4,506)
$49,500 $44,400 $42,800
Components of net deferred income tax liability at August 31, 1994 and 1993
include:
(In thousands) 1994 1993
Deferred income taxes:
Safe harbor lease $ 47,203 $ 51,078
Depreciation 43,443 42,511
Self insurance (17,309) (16,108)
Other 5,477 6,808
78,814 84,289
Prepaid income taxes:
Self insurance (11,539) (9,400)
Deferred compensation, bonuses, etc. (3,700) (5,484)
Other 1,766 (10,456)
(13,473) (25,340)
Net deferred tax liability $ 65,341 $ 58,949
<PAGE>
Page 73
Exhibit 13
Notes to Consolidated Financial Statements
NOTE 7: Divestitures and Acquisitions
Effective August 31, 1994, the company sold its Marketing Services Division. A
small gain resulted from the transaction as the company received approximately
342,000 of its common shares in return for those assets transferred to the
purchasers. The Division had sales of approximately $32,000,000 in 1994 and an
immaterial operating loss.
Effective September 1, 1992, the company acquired Initial Services
Investments, Inc., an industrial uniform and dust control business known as
Initial USA. Initial was included in the results of operations of the Textile
Rental Division for the entire 1993 fiscal year.
Effective September 30, 1992, the company acquired Graham International, a
privately held, European specialty chemical business. Graham manufactures in the
Netherlands for industrial and institutional specialty chemical markets in
France, Italy, Belgium, the Netherlands, and Switzerland. Graham became a part
of Zep Manufacturing Company and the Chemical segment. Also in September, 1992,
the Chemical Division acquired Kleen Canada, Inc., a Canadian manufacturer of
specialty chemicals. The operating results of Graham and Kleen were included in
the Chemical segment beginning in October, 1992.
These and several small acquisitions, all of which were accounted for by the
purchase method, brought total 1993 acquisition spending to $97 million. 1993
results included revenues of approximately $162.5 million and pretax earnings of
approximately $5.2 million attributable to the 1993 acquisitions and to
Associated Textile Rental Services acquired at fiscal 1992 year end.
NOTE 8: Business Segment Information
Depreci- Capital
ation Expendi-
and tures
Sales and Identi- Amorti- Including
Service Operating fiable zation Acquisi-
(In thousands) Revenues Profit(Loss) Assets Expense tions
1994
Lighting Equipment $ 763,592 $ 50,092 $ 323,335 $15,460 $13,183
Textile Rental 544,454 48,840 432,994 31,656 20,986
Chemical 332,298 35,368 168,956 6,392 5,315
Other 241,520 8,822 75,580 5,792 2,695
1,881,864 143,122 1,000,865 59,300 42,179
Corporate(1) (7,256) 105,891 1,248 339
Interest Expense (3,668)
Total $1,881,864 $132,198 $1,106,756 $60,548 $42,518
1993
Lighting Equipment $ 691,946 $ 38,623 $ 298,575 $16,823 $10,193
Textile Rental 546,916 49,096 433,408 31,134 55,015
Chemical 318,098 33,280 173,175 6,499 12,743
Other 247,862 10,275 104,892 6,357 4,048
1,804,822 131,274 1,010,050 60,813 81,999
Corporate(1) (6,797) 77,463 1,284 172
Interest Expense (4,961)
Total $1,804,822 $119,516 $1,087,513 $62,097 $82,171
1992
Lighting Equipment $ 683,546 $ 35,355 $ 280,205 $18,275 $ 9,959
Textile Rental 444,127 42,781 343,332 24,140 28,156
Chemical 253,947 33,556 112,719 4,260 4,607
Other 252,191 13,581 101,564 6,238 5,085
1,633,811 125,273 837,820 52,913 47,807
Corporate(1) (5,675) 204,592 903 1,982
Interest Expense (2,690)
Total $1,633,811 $116,908 $1,042,412 $53,816 $49,789
(1)Operating profit (loss) includes income on short-term investments.
<PAGE>
Page 74
Exhibit 13
Report of Management
The management of National Service Industries, Inc. is responsible for the
integrity and objectivity of the financial information in this annual report.
These financial statements are prepared in conformity with generally accepted
accounting principles, using informed judgments and estimates where appropriate.
The information in other sections of this report is consistent with the
financial statements. The company maintains a system of internal controls and
accounting policies and procedures designed to provide reasonable assurance that
assets are safeguarded and transactions are executed and recorded in accordance
with management's authorization. The audit committee of the Board of Directors,
composed entirely of outside directors, is responsible for monitoring the
company's accounting and reporting practices. The audit committee meets
regularly with management, the internal auditors, and the independent
accountants to review the work of each and to assure that each performs its
responsibilities. Both the internal auditors and Arthur Andersen LLP have
unrestricted access to the audit committee allowing open discussion, without
management's presence, on the quality of financial reporting and the adequacy of
internal accounting controls.
D. Raymond Riddle J. Robert Hipps John A. Bostater
Chairman and Senior Vice President, Vice President and
Chief Executive Officer Finance Controller
Report of Independent Public Accountants
To the Stockholders of National Service Industries, Inc.:
We have audited the accompanying consolidated balance sheets of National Service
Industries, Inc. (a Delaware corporation) and subsidiaries as of August 31, 1994
and 1993 and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended August 31, 1994.
These financial statements are the responsibility of the company'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 financial position of National Service Industries,
Inc. and subsidiaries as of August 31, 1994 and 1993 and the results of their
operations and their cash flows for each of the three years in the period ended
August 31, 1994 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
October 20, 1994
<PAGE>
Page 75
Exhibit 13
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
National Service Industries maintained a strong financial position as it
completed fiscal 1994. Net working capital increased to $357.5 million from
$313.2 million at August 31, 1993, and the current ratio was 2.4, compared with
2.3 at last year end. Cash and short-term investments were $61.2 million, up
from $20.6 million at the prior year end. During 1994, the company invested
$43.1 million in capital expenditures and acquisitions. Long-term liabilities
were 6.4 percent of total capitalization, down from 7.3 percent at August 31,
1993. Cash provided by operations rose to $137.7 million from $102.9 million in
1993 and $129.1 million in 1992. The improvement in 1994 was largely due to a
reduced rate of investment in accounts receivable, the reduction of prepayments,
and lower charges against insurance reserves due to improved claims experience.
The decrease in 1993 resulted primarily from higher investment in accounts
receivable and inventories.
Capital expenditures, exclusive of acquisition spending, were $42.5 million in
1994, $35.5 million in 1993, and $43.5 million in 1992. Current-year spending
was primarily the result of facilities and manufacturing process improvements in
the Lighting Equipment Division, facilities additions and information systems
enhancements in the Chemical Division, and wastewater compliance projects and
fleet upgrades in the Textile Rental Division. Prior-year expenditures were
attributable to cost reduction spending in many divisions, information systems
enhancements in the Lighting Equipment Division, capacity expansion in the
Chemical Division, and fleet expansion in the Textile Rental Division.
Cash payments in connection with acquisitions totaled $.6 million in 1994,
$97.3 million in 1993, and $9.2 million in 1992. Effective September 1, 1992,
the company acquired Initial Services Investments, Inc., an industrial uniform
and dust control business known as Initial USA. Initial was included in the
results of operations of National Uniform Service, a business unit of the
Textile Rental Division, for the entire 1993 fiscal year.
Effective September 30, 1992, the company acquired Graham International, a
privately held, European specialty chemical business. Graham manufactures in the
Netherlands for industrial and institutional specialty chemical markets in
France, Italy, Belgium, the Netherlands, and Switzerland. Graham became part of
Zep Manufacturing Company and the Chemical segment. Also in September, 1992, the
Chemical Division acquired Kleen Canada, Inc., a Canadian manufacturer of
specialty chemicals. The operating results of Graham and Kleen were included in
the Chemical segment beginning in October, 1992.
In June, 1993, the Textile Rental Division acquired the linen supply business
of Heritage Linen Service, Inc. in Hickory, North Carolina.
The effect of the 1993 acquisitions on the consolidated income statements is
further discussed under "Results of Operations."
Dividend payments totaled $53.0 million, or $1.07 per share, in 1994, compared
with $51.0 million, or $1.03 per share, in 1993, and $49.1 million, or 99 cents
per share, in 1992. The fiscal 1994 dividend of $1.07 per share was a
3.9 percent increase.
For the periods presented, capital expenditures, working capital needs,
dividends, and acquisitions were financed primarily with internally generated
funds, supplemented by short-term borrowings in the European market. The Initial
acquisition was a cash transaction. The Graham acquisition in Europe was funded
primarily through short-term debt financing, which was repaid during the
remainder of the 1993 fiscal year. Contractual commitments for capital and
acquisition spending for fiscal 1995 total $12.1 million. The company expects
actual capital expenditures to be somewhat higher than levels of recent years.
Current liquid assets and internally generated funds are expected to be more
than adequate to meet anticipated cash requirements for the next twelve months,
although some interim borrowings might be incurred to meet short-term needs. The
company has complimentary lines of credit totaling $124 million, of which $82
million has been provided domestically and $42 million is available on a multi-
currency basis primarily from a European bank.
Results of Operations
For the fiscal year ended August 31, 1994, revenues moved ahead 4.3 percent to
$1.88 billion from $1.80 billion in 1993. The revenue increase was largely the
result of volume gains in the Lighting Equipment and Chemical segments. Fiscal
1993 revenues rose 10.5 percent from 1992's $1.63 billion due
<PAGE>
Page 76
Exhibit 13
primarily to volume gains in the Lighting Equipment, Textile Rental, and
Chemical segments.
Net income for fiscal 1994 advanced 10.1 percent to $82.7 million, or $1.67
per share. For fiscal 1993, net income reached $75.1 million, or $1.52 per
share, a 1.4 percent increase over the $74.1 million posted in 1992.
Lighting Equipment Division revenues for 1994 grew 10.4 percent to $764
million from $692 million in 1993. 1993 revenues were a 1.2 percent increase
over 1992. Unit sales increases that began late in fiscal 1993 continued through
1994 and accounted for the improvement in both years. Operating profit grew 29.7
percent to 6.6 percent of revenues, compared with 5.6 percent in 1993, and 5.2
percent in 1992. For 1994, profit improvements were largely the result of higher
unit volumes and cost savings. In 1993, previously implemented manufacturing
efficiencies were augmented by the closing of the division's 130,000 square foot
facility in Rancho Cucamonga, California. This action took advantage of excess
capacity by shifting production to plants in Crawfordsville, Indiana and
Louisville, Kentucky and further reduced manufacturing costs.
Revenues of the Textile Rental Division were $544 million in 1994, compared
with $547 million in 1993 and $444 million in 1992. Pricing gains in 1994 were
offset by declining volumes, particularly in the fine dining and hospital
markets. 1993 revenues improved on the strength of the acquisitions of Initial
USA early in 1993 and Associated Textile Rental Services, Inc. at fiscal 1992
year end. The acquisitions provided revenues of $109 million in 1993. Operating
income was 9.0 percent of revenues in 1994 and 1993, compared with 9.6 percent
in 1992. Merchandise costs as a percentage of revenues grew slightly in 1994,
while administrative expenses declined. For both 1994 and 1993 costs related to
acquisitions continued to take a higher percentage of revenues. Operating
margins in 1993 for the two acquired companies were 6.3 percent of related
revenues.
Chemical Division revenues rose 4.5 percent to $332 million from $318 million
in 1993, which was a 25.3 percent gain from 1992. Volume gains in domestic
operations contributed to the improvement in both years. In 1993, the European
and Canadian acquisitions accounted for $53.2 million of the gain. Operating
profit was 10.6 percent of revenues in 1994 and 10.5 percent in 1993, down from
13.2 percent in 1992. European and Canadian operating margins, although improved
in 1994, fell short of those achieved in the U.S. The European units' loss of
$1.8 million for 1993 was significantly reduced in 1994.
NSI's other businesses produced revenues of $242 million, down 2.6 percent
from $248 million in 1993, which was a 1.7 percent decline from 1992. Operating
profit declined to $8.8 million from $10.3 million in 1993 and $13.6 million in
1992. In both years, reduced volumes and pricing pressures experienced by the
Insulation and Marketing Services divisions more than offset improvements in the
Envelope Division.
Effective August 31, 1994, NSI sold its Marketing Services Division. A small
gain resulted from the transaction as the company received approximately 342,000
of its common shares in return for those assets transferred to the purchasers.
The Division had sales of $32 million in 1994 and an immaterial operating loss.
Corporate income was lower in both 1994 and 1993 due primarily to the effect
of lower short-term investments levels and lower interest rates. Foreign
currency exchange rate fluctuations in 1994 and 1993 were progressively less
unfavorable than in 1992. 1994 interest expense was less than in 1993 due to
reductions in acquisition-related debt. The increase in interest expense for
1993 resulted from the European acquisition.
Consolidated income before taxes improved 10.6 percent in 1994 and 2.2 percent
in 1993. The corresponding improvement in net income was reduced to 10.1 percent
and 1.4 percent, respectively, due to the higher Federal tax rate. The provision
for income taxes was 37.4 percent of pretax income in 1994, compared with 37.1
percent in 1993 and 36.6 percent in 1992. The 1994 and 1993 rates were increased
as a result of the Omnibus Budget Act of 1993. Changes in the year-to-year
effective rates also result from variation in the relative amount of tax exempt
income.
Outlook
The current-year earnings increase of 10.1 percent is indicative of the
commitment of each of NSI's operating divisions to the more aggressive plans
formulated for fiscal 1994. The momentum established in 1994 should propel
earnings forward at double-digit growth rates and produce gains for NSI's
stockholders in fiscal 1995 and beyond.
<PAGE>
Page 77
Exhibit 13
Ten-Year Financial Summary
(Dollar amounts in thousands,
except per-share data) 1994 1993 1992
Operating Results
Net sales of products $1,337,410 $1,257,906 $1,189,684
Service revenues 544,454 546,916 444,127
Total revenues 1,881,864 1,804,822 1,633,811
Cost of products sold 875,055 832,264 810,552
Cost of services 286,519 281,551 236,474
Selling and administrative expenses 577,291 557,011 462,653
Interest expense 3,668 4,961 2,690
Restructuring expense - - -
Other income, net 7,133 9,519 4,534
Income before taxes 132,198 119,516 116,908
Income taxes 49,500 44,400 42,800
Net income 82,698 75,116 74,108
Per-Share Data(1)
Net income $ 1.67 $ 1.52 $ 1.50
Cash dividends 1.07 1.03 .99
Stockholders' equity 14.77 14.21 13.79
Financial Ratios
Current ratio 2.4 2.3 2.7
Net income as a percent of sales 4.4% 4.2% 4.5%
Return on average stockholders' equity 11.6% 10.8% 11.0%
Dividends as a percent of current year earnings 64.1% 67.9% 66.3%
Long-term debt and other long-term liabilities as
a percent of total capitalization 6.4% 7.3% 7.7%
Other Data
Net working capital $ 357,528 $ 313,243 $ 357,759
Increase (decrease) in:
Cash and cash equivalents 42,766 (85,284) 27,617
Short-term investments (2,197) (3,736) (5,551
Capital expenditures (including acquisitions) 42,518 82,171 49,789
Depreciation and amortization 60,548 62,097 53,816
Total assets 1,106,756 1,087,513 1,042,412
Long-term debt 26,863 28,418 28,359
Deferred income taxes 78,814 84,289 92,654
Other long-term liabilities 22,940 27,110 28,677
Stockholders' equity 727,385 704,023 682,954
Weighted average number of shares outstanding
(in thousands )(1) 49,547 49,556 49,539
Shareholders 7,034 7,262 7,554
Associates 22,000 22,200 20,100
Use of Total Revenues
Salaries and wages $ 565,859 $ 572,163 $ 502,709
Materials and supplies 783,610 760,551 700,338
Other operating expenses 347,600 299,977 273,330
Restructuring expnse - - -
Taxes and licenses 102,097 97,015 83,326
Dividends paid 53,042 51,041 49,105
Retained earnings 29,656 24,075 25,003
$1,881,864 $1,804,822 $1,633,811
(1) Restated to reflect stock splits of 3 for 2 effective January 13, 1987, and
4 for 3 effective January 13, 1986.
<PAGE>
Page 78
Exhibit 13
1991 1990 1989 1988 1987 1986 1985
$1,164,181 $1,250,833 $1,183,666 $1,093,163 $1,032,145 $ 968,308 $ 887,340
437,534 396,981 355,845 321,025 294,713 314,614 303,865
1,601,715 1,647,814 1,539,511 1,414,188 1,326,858 1,282,922 1,191,205
791,355 832,867 800,385 741,383 690,689 643,936 599,687
240,376 219,673 198,262 179,793 159,019 170,571 167,381
456,903 439,076 397,283 361,970 350,641 340,582 312,665
3,834 3,864 4,963 4,234 4,149 3,999 3,376
63,467 - - - - - -
(2,856 (3,381) (9,400) (6,414) (10,030) (3,507) (3,565)
48,636 155,715 148,018 133,222 132,390 127,341 111,661
16,400 56,000 53,300 47,100 56,700 56,000 44,000
32,236 99,715 94,718 86,122 75,690 71,341 67,661
$ .65 $ 2.02 $ 1.92 $ 1.75 $ 1.54 $ 1.45 $ 1.37
.95 .90 .82 .73 .62 .54 .49
13.33 13.68 12.44 11.33 10.31 9.39 8.48
2.8 4.0 4.3 4.4 4.5 4.0 3.9
2.0% 6.1% 6.2% 6.1% 5.7% 5.6% 5.7%
4.8% 15.5% 16.2% 16.2% 15.6% 16.2% 17.1%
146.2% 44.6% 42.6% 41.8% 40.2% 37.0% 35.3%
7.5% 6.1% 5.9% 6.2% 6.2% 6.4% 3.9%
$ 351,559 $ 434,092 $ 436,450 $ 426,413 $ 404,886 $ 355,175 $ 301,163
(50,437) 23,433 14,612 (24,786) 16,318 63,315 20,267
12,813 (27,247) (19,633) 35,971 5,160 - -
90,229 82,932 66,491 55,394 45,258 53,968 47,679
50,249 42,821 36,260 31,037 27,333 26,707 22,939
1,012,000 962,136 887,836 825,345 760,318 710,376 617,726
31,373 27,465 20,765 21,391 21,466 21,857 8,577
100,308 100,791 102,798 104,460 104,033 97,783 79,673
22,015 16,067 17,964 15,330 12,042 9,794 8,218
660,567 675,444 612,668 558,160 508,219 462,907 417,958
49,540 49,389 49,255 49,258 49,278 49,280 49,277
7,996 8,248 8,459 8,851 9,164 9,326 8,406
20,900 21,800 20,800 20,400 19,400 19,300 18,700
$ 501,502 $ 491,334 $ 465,522 $ 428,325 $ 399,968 $ 378,993 $ 340,026
683,871 713,310 668,655 616,223 574,179 551,550 536,027
258,919 246,288 219,270 201,478 188,414 194,215 174,538
63,467 - - - - - -
59,889 97,167 91,346 82,040 88,607 86,823 72,953
47,124 44,506 40,389 35,960 30,428 26,410 23,899
(13,057) 55,209 54,329 50,162 45,262 44,931 43,762
$1,601,715 $1,647,814 $1,539,511 $1,414,188 $1,326,858 $1,282,922 $1,191,205
<PAGE>
Page 79
Exhibit 13
Directors, Officers, and Division Executives
Directors D. Raymond Riddle Chairman of the Board and Chief
Executive Officer
John L. Clendenin Chairman of the Strategic Planning and
Finance Committee; Chairman of
Board, President and Chief
Executive Officer, BellSouth
Corporation
Jesse Hill, Jr. Chairman and Chief Executive Officer
Atlanta Life Insurance Company
Robert M. Holder, Jr. Chairman of the Audit Committee;
Chairman of the Board, Holder
Corporation
Don W. Hubble President and Chief Operating Officer
F. Ross Johnson Chairman and Chief Executive Officer,
RJM Group, Inc.
James C. Kennedy Chairman and Chief Executive Officer,
Cox Enterprises, Inc.
Donald R. Keough Chairman of the Board, Allen & Company
Incorporated
Bryan D. Langton Chairman, Chief Executive Officer, and
President, Holiday Inns, Inc.
David Levy Executive Vice President,
Administration and Counsel
Bernard Marcus Chairman of the Board and Chief
Executive Officer, The Home
Depot, Inc.
John G. Medlin, Jr. Chairman of the Executive Resource and
Nominating Committee; Chairman,
Wachovia Corporation
Dr. Betty L. Siegel President, Kennesaw State College
Chairman Emeritus Erwin Zaban Retired Chairman of the Board
Associate Directors Gerald V. Gurbacki President, National Linen Service
Harry Maziar President, Zep Manufacturing Company
Jim H. McClung President, Lithonia Lighting Company
Officers D. Raymond Riddle Chairman of the Board and Chief
Executive Officer
Don W. Hubble President and Chief Operating Officer
David Levy Executive Vice President,
Administration and Counsel
J. Robert Hipps Senior Vice President, Finance
John A. Bostater Vice President and Controller
Howard S. Kaplan Vice President, Corporate Development
Melissa K. Meder Vice President, Taxes
Kenyon W. Murphy Secretary and Assistant Counsel
Walter H. Buce Staff Vice President-Risk Management
F. Andrew Logue Staff Vice President-Human Resources
Robert J. Mello Staff Vice President-Auditing
Bruce E. Dunkley, Jr. Assistant Vice President and Assistant
Controller-Financial Analysis
Helen D. Haines Assistant Vice President and Assistant
Controller-Financial Reporting
Carol Ellis Morgan Assistant Vice President-Legal and
Assistant Secretary
Donald A. Hundeby Assistant Vice President-Employee
Benefits
Margaret Shelfer Assistant Vice President-Taxes
William E. Statton Assistant Vice President-Claims
Administration
W. Russell Watson Assistant Treasurer
Division Executives Gerald V. Gurbacki President, National Linen Service
Dennis Harris President, North Bros. Co.
Lyons B. Joel, Jr. President, Selig Chemical Industries
Harry Maziar President, Zep Manufacturing Company
Jim H. McClung President, Lithonia Lighting Company
J. Randolph Zook President, Atlantic Envelope Company
<PAGE>
Page 80
Exhibit 13
Executive Offices
NSI Center
1420 Peachtree Street, N.E.
Atlanta, Georgia 30309
(404) 853-1000
Transfer Agent and Registrar
Wachovia Bank and Trust Company, N.A.
Corporate Trust Department
P.O. Box 3001
Winston-Salem, North Carolina 27102
(800) 633-4236
Listing
New York Stock Exchange
Independent Public Accountants
Arthur Andersen LLP
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
(404) 658-1776
Annual Meeting
10:00 a.m., Wednesday, January 4, 1995
High Museum of Art
1280 Peachtree Street, N.E.
Atlanta, Georgia
Common Share Prices and Dividends per Share
Dividends
Price per Share Paid
High Low per Share
1994
First Quarter $26-1/8 $23-1/8 $.26
Second Quarter 28-3/8 23-1/8 .27
Third Quarter 28-1/4 24-3/4 .27
Fourth Quarter 27-1/2 25-3/8 .27
1993
First Quarter $26-3/8 $23-5/8 $.25
Second Quarter 27-7/8 24-7/8 .26
Third Quarter 27 23-1/2 .26
Fourth Quarter 27 24-1/2 .26
The above common share prices are as quoted on the New York Stock Exchange.
Ticker Symbol: NSI
The number of shareholders of record of the company's common stock as of
September 29, 1994, was 7,034.
<PAGE> 1
Page 81
Exhibit 21
LIST OF SUBSIDIARIES
Registrant - National Service Industries, Inc.
Registrant owns all of the common stock of the following subsidiaries:
State or Other
Jurisdiction
of Incorporation
Subsidiary Principal Location or Organization
Corisma Group, Inc. Atlanta, Georgia Georgia
Lithonia Lighting Mexico,
S.A. de C.V. Monterrey, Nuevo Leon Mexico
Lithonia Lighting Products Co.
of Arizona Conyers, Georgia Arizona
Lithonia Lighting Products Co.
of Georgia Conyers, Georgia Georgia
Lithonia Lighting Products Co.
of Nevada Conyers, Georgia Nevada
National St. Louis Redevelopment
Corporation Atlanta, Georgia Missouri
NSI Holdings, Inc. Montreal, Quebec, Canada Canada
NSI Insurance (Bermuda) Ltd. Hamilton, Bermuda Bermuda
NSI Inversiones de Mexico,
S.A. de C.V. Monterrey, Nuevo Leon Mexico
NSI Leasing, Inc. Atlanta, Georgia Delaware
Productos Lithonia Lighting
de Mexico, S.A. de C.V. Monterrey, Nuevo Leon Mexico
Selig Company of Puerto Rico, Inc. Atlanta, Georgia Puerto Rico
South Insulation Co., Inc. Atlanta, Georgia Texas
I.A. Enterprises, Inc. which owns the Santa Clara, California California
stock of-
Keplime B.V. Bergen op Zoom, Holland Netherlands
Keplime Ltd. London, England United Kingdom
ZEP Europe B.V. which owns the Bergen op Zoom, Holland Netherlands
stock of-
ZEP FRANCE Paris, France France
Zep Industries S.A. Paris, France France
Resolve S.A. Paris, France France
Research Development Industries
S.A. Paris, France France
Chemical Continental Industries
S.A.R.L. Paris, France France
Zep Kem Italia S.r.l. Rome, Italy Italy
Zep Cerfact S.r.l. Rome, Italy Italy
Nobel Spain Madrid, Spain Spain
ZEP Belgium S.A. Brussels, Belgium Belgium
Research Development Industries
S.A. Bern, Switzerland Switzerland
Graham International B.V. Bergen op Zoom, Holland Netherlands
Kem Europa B.V. Bergen op Zoom, Holland Netherlands
Cerfact Europa B.V. Bergen op Zoom, Holland Netherlands
Chemical Specialties B.V. Bergen op Zoom, Holland Netherlands
NUS, Inc. which owns the stock of- Atlanta, Georgia Delaware
NUS Florida, Inc. Atlanta, Georgia Florida
Monroe Appearance Corp. Atlanta, Georgia North Carolina
The consolidated financial statements include the accounts of all subsidiaries.
<PAGE> 1
Page 82
Exhibit 23
Arthur Andersen LLP
Atlanta, Georgia
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference of our reports dated October 20, 1994, included or
incorporated by reference in National Service Industries, Inc. Form 10-K
for the year ended August 31, 1994, into the Company's previously filed
Registration Statement File Nos. 33-36980, 33-51339, 33-51341, 33-51343,
33-51345, 33-51347, 33-51349, 33-51351, 33-51355 and 33-51357.
ARTHUR ANDERSEN LLP
November 18, 1994
<PAGE> 1
Page 83
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the
undersigned hereby constitutes and appoints David Levy and
J. Robert Hipps, and each of them individually, his true and
lawful attorneys-in-fact (with full power of substitution
and resubstitution) to act for him in his name, place, and
stead in his capacity as a director or officer of National
Service Industries, Inc., to file a registrant's annual
report on Form 10-K for the fiscal year ended August 31,
1994, and any and all amendments thereto, with any exhibits
thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said
attorneys-in-fact, and each of them individually, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
\s\ D. Raymond Riddle
D. Raymond Riddle, Chairman of
the Board
and Chief Executive Officer, and
Director
\s\ Don W. Hubble
Don W. Hubble, President and
Chief Operating Officer, and
Director
\s\ J. Robert Hipps
J. Robert Hipps, Senior Vice
President, Finance
(Principal Financial and
Accounting Officer)
\s\ John A. Bostater
John A. Bostater, Vice President
and Controller
\s\ David Levy
David Levy, Executive Vice
President,
Administration and Counsel, and
Director
Dated: November 8, 1994
<PAGE>
Page 84
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, his true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for him in his name, place, and stead
in his capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ John L. Clendenin
John L. Clendinen
Dated: November 8, 1994
<PAGE>
Page 85
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, his true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for him in his name, place, and stead
in his capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ Jesse Hill, Jr.
Jesse Hill, Jr.
Dated: November 8, 1994
<PAGE>
Page 86
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, his true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for him in his name, place, and stead
in his capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ Robert M. Holder, Jr.
Robert M. Holder, Jr.
Dated: November 8, 1994
<PAGE>
Page 87
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, his true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for him in his name, place, and stead
in his capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ F. Ross Johnson
F. Ross Johnson
Dated: November 8, 1994
<PAGE>
Page 88
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, his true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for him in his name, place, and stead
in his capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ James C. Kennedy
James C. Kennedy
Dated: November 8, 1994
<PAGE>
Page 89
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, his true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for him in his name, place, and stead
in his capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ Donald R. Keough
Donald R. Keough
Dated: November 8, 1994
<PAGE>
Page 90
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, his true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for him in his name, place, and stead
in his capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ Bryan D. Langton
Bryan D. Langton
Dated: November 8, 1994
<PAGE>
Page 91
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, his true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for him in his name, place, and stead
in his capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ Bernard Marcus
Bernard Marcus
Dated: November 8, 1994
<PAGE>
Page 92
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, his true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for him in his name, place, and stead
in his capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ John G. Medlin, Jr.
John G. Medlin, Jr.
Dated: November 8, 1994
<PAGE>
Page 93
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, her true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for her in her name, place, and stead
in her capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as she might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
\s\ Betty L. Siegel
Betty L. Siegel
Dated: November 8, 1994
<PAGE>
Page 94
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints David Levy and J. Robert
Hipps, and each of them individually, his true and lawful
attorneys-in-fact (with full power of substitution and
resubstitution) to act for him in his name, place, and stead
in his capacity as a director or officer of National Service
Industries, Inc., to file a registrant's annual report on
Form 10-K for the fiscal year ended August 31, 1994, and any
and all amendments thereto, with any exhibits thereto, and
other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-
fact, and each of them individually, full power and
authority to do and perform each and every act and thing
requisite and necessary to be done in the premises, as fully
to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said
attorneys-in-fact or either of them, or their substitutes,
may lawfully do or cause to be done by virtue hereof.
/s/ Erwin Zaban
Erwin Zaban
Dated: November 8, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
<PAGE>
Page 95
Exhibit 27
Financial Data Schedules
Year Ended August 31, 1994
Persuant 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
August 31, 1994 and the consolidated statement of income for the year
ended August 31, 1994, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1994
<PERIOD-END> AUG-31-1994
<CASH> 58,619
<SECURITIES> 2,579
<RECEIVABLES> 263,436
<ALLOWANCES> 7,385
<INVENTORY> 178,590
<CURRENT-ASSETS> 608,282
<PP&E> 726,574
<DEPRECIATION> 378,262
<TOTAL-ASSETS> 1,106,746
<CURRENT-LIABILITIES> 250,754
<BONDS> 0
<COMMON> 57,919
0
0
<OTHER-SE> 713,188
<TOTAL-LIABILITY-AND-EQUITY> 727,385
<SALES> 1,337,410
<TOTAL-REVENUES> 1,881,864
<CGS> 875,055
<TOTAL-COSTS> 1,161,574
<OTHER-EXPENSES> 584,424
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,668
<INCOME-PRETAX> 132,198
<INCOME-TAX> 49,500
<INCOME-CONTINUING> 82,692
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82,698
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.67
</TABLE>
