<PAGE>
Page 1 of 51
Index to Exhibits on Page 14
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, 1995 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 November
10, 1995 the aggregate market value of the voting stock held by nonaffiliates of
the registrant was $1,498,970,683.00.
The number of shares outstanding of the registrant's common stock, $1.00 par
value, was 48,353,893 shares as of November 10, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K Incorporated Document
Part I, Item 1 1995 Annual Report
Part II, Items 5, 6, 7, and 8 1995 Annual Report
Part III, Items 10, 11, 12, and 13 1995 Proxy Statement
Part IV, Item 14 1995 Annual Report
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Page 2
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
Table of Contents
Page No.
Part I
Item 1. Business 3-4
Item 2. Properties 5
Item 3. Legal Proceedings 5
Item 4. Submission of Matters to a Vote of Security Holders 5
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholders Matters 6
Item 6. Selected Financial Data 6
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Item 8. Financial Statements and Supplementary Data 6
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 6
Part III
Item 10. Directors and Executive Officers of the Registrant 7
Item 11. Executive Compensation 7
Item 12. Security Ownership of Certain Beneficial Owners and
Management 7
Item 13. Certain Relationships and Related Transactions 8
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 8-10
Signatures 11
Financial Statement Schedules 12-13
Index to Exhibits 14
<PAGE>
Page 3
PART I
ITEM 1. BUSINESS
The registrant, incorporated in Delaware in 1928, provides a wide variety of
products and services through its operating divisions, as follows:
<TABLE>
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
Lyon Folder Company storage and filing systems.
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, and States, Canada,
Lithonia Hi-Tek Lighting institutional applications; Mexico and overseas.
Lithonia Downlighting high-intensity discharge
Major Reflector Products fixtures for industrial and
RELOC Wiring Systems commercial use; architectural
Lithonia Controls Systems outdoor lighting; downlighting;
Lithonia Emergency Lighting sportslighting; track lighting;
vandal-resistant fixtures;
emergency lighting; lighting
and dimming controls; and
manufactured wiring systems.
INSULATION SERVICE
North Bros. Co. Commercial, mechanical Principally in the
South Insulation Company industrial and institutional southeastern United
Western State Insulation Company insulation products, accessories States.
Merit Insulation Company and contracting services.
Precision Foam Fabricators
Mid-State Insulation Co.
</TABLE>
<PAGE>
Page 4
<TABLE>
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, 1995, 1994, and 1993. No one commodity or supplier provided a
significant portion of the company's material requirements.
Total Employment
The registrant employs approximately 21,100 people.
Financial Information about Industry Segments
The financial information required by this item is included on page 30 of the
company's annual report for the year ended August 31, 1995, under the caption
"Business Segment Information" and is incorporated herein by reference.
<PAGE>
Page 5
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:
Number of Facilities
Division Owned Leased Nature of Facilities
Lighting Equipment 9 4 Manufacturing plants
1 2 Distribution centers
- 27 Field warehouses
Textile Rental 68 18 Linen plants
20 49 Linen service centers
- 1 Distribution centers
Chemical 9 4 Manufacturing plants
22 46 Distribution centers
- 2 Sales offices
Insulation Service 1 - Fabrication plants
24 11 Warehouses
Envelope 7 3 Manufacturing plants
- 3 Warehouses
- 1 Sales office
Corporate Office 1 - Corporate headquarters
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
No matters were submitted to a vote of security holders during the three months
ended August 31, 1995
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Page 6
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, 1995, under the
captions "Listing," "Shareholders of Record," and "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 34 and 35 of the
company's annual report for the year ended August 31, 1995, 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 32 and 33 of the
company's annual report for the year ended August 31, 1995, 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 20 through 31 of the
company's annual report for the year ended August 31, 1995, 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
Accountants" and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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Page 7
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 3, 1996, 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.
<TABLE>
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, 1995 and term in office
<S> <C>
D. Raymond Riddle, age 62 Mr. Riddle served as President and Chief Executive
Chairman and Chief Executive Officer, Officer from January, 1993 to September, 1994 when he
Director, and Chairman of the Executive was elected Chairman and Chief Executive Office. He
Committee and a member of the served from 1985 until 1993 as an Executive Vice
Strategic Planning and Finance President of Wachovia Corporation and from 1987 until
Committee of the Board 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 56 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 58 Mr. Levy was elected Executive Vice President,
Executive Vice President, Administration Administration in October, 1992. He served as Senior
and Counsel and Director Vice President, Secretary and Counsel from 1982 through
September, 1992.
J. Robert Hipps, age 55 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 5 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 3,
1996, 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 6 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 3, 1996,
filed with the Commission pursuant to Regulation 14A, and is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is included on page 6 under the caption
"Certain Transactions" of the company's proxy statement for the annual meeting
of stockholders to be held January 3, 1996, filed with the Commission pursuant
to Regulation 14A, and is incorporated herein by reference.
<PAGE>
Page 8
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:
(1) Financial Statements
The company's 1995 Annual Report contains the consolidated balance
sheets as of August 31, 1995 and 1994, the related consolidated
statements of income, stockholders' equity, and cash flows for each of
the three years in the period ended August 31, 1995, and the related
report of Arthur Andersen LLP. The financial statements, incorporated
herein by reference, include the following:
Consolidated Balance Sheets - August 31, 1995 and 1994
Consolidated Statements of Income for the years ended August 31, 1995,
1994, and 1993
Consolidated Statements of Stockholders' Equity for the years ended
August 31, 1995, 1994, and 1993
Consolidated Statements of Cash Flows for the years ended August 31,
1995, 1994, and 1993
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules:
Report of Independent Public Accountants on Schedule
Schedule Number
II Valuation and Qualifying Accounts
Any of schedules I through V 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.
(3) Exhibits filed with this report
Reference No. from
Reg. 229.601
Item 601 Description of Exhibit
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
<PAGE>
Page 9
ITEM 14. (Continued)
(3) Exhibits filed with this report (Continued)
Reference No. from
Reg. 229.601
Item 601 Description of Exhibit
(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
(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) 1992 Nonemployee Directors' Stock Option Plan
Effective September 16, 1992
(p) 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
<PAGE>
Page 10
ITEM 14. (Continued)
(3) Exhibits filed with this report (Continued)
Reference No. from
Reg. 229.601
Item 601 Description of Exhibit
(q) National Service Industries, Inc. Executive
Savings Plan Effective September 1, 1994
(r) National Service Industries, Inc. Management
Compensation and Incentive Plan Effective
September 1, 1994.
(s) Split-Dollar Agreement among National Service
Industries, Inc., D. Raymond Riddle, and
Wachovia Bank of Georgia N.A. dated January
4, 1993 and Amendment
(t) Letter Agreement between National Service
Industries, Inc. and D. Raymond Riddle
dated March 28, 1995
(u) Consulting Agreement between National Service
Industries, Inc. and D. Raymond Riddle
(v) Letter Agreement between National Service
Industries, Inc. and D. Raymond Riddle dated
April 10, 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 (a) Financial Data Schedule for the Year Ended
August 31, 1995
(b) Restated Financial Data Schedule for the Year
Ended August 31, 1994
(c) Restated Financial Data Schedule for the
Quarter Ended November 30, 1994
(b) No reports on Form 8-K were filed for the three months ended August 31,
1995.
(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 17, 1995 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.
Signature Title
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
Jesse Hill, Jr.* Director
Robert M. Holder, Jr.* Director
Don W. Hubble* Director
F. Ross Johnson* Director - November 17, 1995
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
*By /s/ David Levy Attorney-in-Fact
David Levy
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Page 12
Arthur Andersen LLP
Atlanta, Georgia
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
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, 1995. 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, 1995
<PAGE>
Page 13
SCHEDULE II
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED AUGUST 31, 1995, 1994, AND 1993
(In thousands)
<TABLE>
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, 1995:
Deducted in the balance sheet
from the asset to which it applies-
Reserve for doubtful accounts $7,385 $3,170 $ (384) $3,704 $6,467
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
</TABLE>
(1) Recoveries credited to reserve and reserves recorded in acquisitions.
(2) Uncollectible accounts written off.
<PAGE>
Page 14
INDEX TO EXHIBITS
<TABLE>
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>
Page 15
INDEX TO EXHIBITS
<TABLE>
Page No.
<S> <C> <C>
(d) (iii) Second Amendment to National Service Reference is made to Exhibit 10(iii)A (d)(iii) of
Industries, Inc. Senior Management Benefit registrant's Form 10-K for the fiscal year
Plan, Dated September 16, 1994 ended August 31, 1994, which is incorporated
herein by reference.
(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.
(iiiJ. 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.
(iiiDavid 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 Reference is made to Exhibit 10(iii)A (h)(ii) of
Incentive Program, Dated September 20, registrant's Form 10-K for the fiscal year
1989 ended August 31, 1994, which is incorporated
herein by reference.
(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.
(iiiDavid 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
(iiiDavid Levy
(iv)J. Robert Hipps
(k)-Nonqualified Stock Option Agreement for Reference is made to Exhibit 10(iii)A (k) of
Corporate Officers Effective Beginning registrant's Form 10-K for the fiscal year
September 21, 1994 between National ended August 31, 1994, which is incorporated
Service Industries, Inc. and herein by reference.
(i) D. Raymond Riddle
(ii)Don W. Hubble
(iiiDavid 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>
Page 16
INDEX TO EXHIBITS
<TABLE>
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)-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.
(p)-Nonemployee Directors' Stock Option Reference is made to Exhibit 10(iii)A (q) of
Agreement between National Service registrant's Form 10-K for the fiscal year
Industries, Inc. and ended August 31, 1994, which is incorporated
(i) John L. Clendenin herein by reference.
(ii)Jesse Hill, Jr.
(iiiRobert M. Holder, Jr.
(iv)F. Ross Johnson
(v) James C. Kennedy
(vi)Donald R. Keough
(viiBryan D. Langton
(viiBernard Marcus
(ix)John G. Medlin, Jr.
(x) Dr. Betty L. Siegel
(xi)Erwin Zaban
(q)-National Service Industries, Inc. Executive Reference is made to Exhibit 10(iii)A (s) of
Savings Plan Effective September 1, 1994 registrant's Form 10-K for the fiscal year
ended August 31, 1994, which is incorporated
herein by reference.
(r)-National Service Industries, Inc. Management Reference is made to Exhibit 10(iii)A (t) of
Compensation and Incentive Plan Effective registrant's Form 10-K for the fiscal year
September 1, 1994. ended August 31, 1994, which is incorporated
herein by reference.
(s)-(i) Split Dollar Agreement among National Reference is made to Exhibit 10(iii)A (i) of
Service Industries, Inc., D. Raymond Riddle, registrant's Form 10-Q for the quarter ended
and Wachovia Bank of Georgia, N.A. dated February 28, 1995, which is incorporated
January 4, 1993. herein by reference.
(s)-(ii) First Amendment to Split Dollar Agreement Reference is made to Exhibit 10(iii)A (ii) of
among National Service Industries, Inc., registrant's Form 10-Q for the quarter ended
D. Raymond Riddle, and Wachovia Bank of February 28, 1995, which is incorporated
Georgia, N.A. dated March 30, 1995 herein by reference.
</TABLE>
<PAGE>
Page 17
INDEX TO EXHIBITS
<TABLE>
Page No.
<S> <C> <C>
(t)-Letter Agreement between National Service Reference is made to Exhibit 10(iii)A (b) of
Industries, Inc. and D. Raymond Riddle dated registrant's Form 10-Q for the quarter ended
March 28, 1995, amending as of September 21, February 28, 1995, which is incorporated
1994 the Incentive Stock Option Agreement herein by reference.
dated January 6, 1993, the Nonqualified Stock
Option Agreement dated January 6, 1993, and
the Nonqualified Stock Option Agreement dated
September 15, 1993 between National Service
Industries, Inc. and D. Raymond Riddle
(u)-Consulting Agreement between National Service Reference is made to Exhibit 10(iii)A (c) of
Industries, Inc. and D. Raymond Riddle dated registrant's Form 10-Q for the quarter ended
March 30, 1995 February 28, 1995, which is incorporated
herein by reference.
(v)-Letter Agreement between National Service Reference is made to Exhibit 10(iii)A (d) of
Industries, Inc. and D. Raymond Riddle dated registrant's Form 10-Q for the quarter ended
April 10, 1995, amending as of March 15, 1995, February 28, 1995, which is incorporated
the Incentive Stock Option Agreement dated herein by reference.
Janury 6, 1993, the Nonqualified Stock Option
Agreement dated January 6, 1993, the
Nonqualified Stock Option Agreement dated
September 15, 1993, and the Nonqualified Stock
Option Agreement dated September 21, 1994
between National Service Industries, Inc. and
D. Raymond Riddle
EXHIBIT 11 - Computations of Net Income per Share of 18
Common Stock
EXHIBIT 13 - Information Incorporated by Reference from 19
Annual Report for the Year Ended August 31,
1993
EXHIBIT 21 - List of Subsidiaries 36
EXHIBIT 23 - Consent of Independent Public Accountants 37
EXHIBIT 24 - Powers of Attorney 38
EXHIBIT 27 - (a) Financial Data Schedule for the Year 49
Ended August 31, 1995
(b) Restated Financial Data Schedule for the 50
Year Ended August 31, 1994
(c) Restated Financial Data Schedule for the 51
Quarter Ended November 30, 1994
</TABLE>
<PAGE>
Page 18
Exhibit 11
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATIONS OF NET INCOME PER SHARE OF COMMON STOCK
Years Ended August 31
1995 1994 1993
(In thousands, except per-share data)
Primary:
Weighted Average Number of Shares
(determined on a monthly basis) ........ 48,696 49,547 49,556
Net Income ............................... $ 94,097 $ 82,698 $ 75,116
Primary Earnings per Share ............... $ 1.93 $ 1.67 $ 1.52
Fully Diluted:
Weighted Average Number of Shares
Outstanding ............................ 48,696 49,547 49,556
Additional Shares Assuming Exercise of
Options:
Options exercised .................... 989 707 545
Treasury stock purchased with proceeds (835) (619) (478)
Average Common Shares Outstanding
(as adjusted) ......................... 48,850 49,635 49,623
Net Income ............................... $ 94,097 $ 82,698 $ 75,116
Fully Diluted Earnings per Share ......... $ 1.93 $ 1.67 $ 1.51
<PAGE>
Page 19
Exhibit 13
Consolidated Balance Sheets
<TABLE>
August 31
(In thousands, except share data) 1995 1994
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents ......................................................................... $ 79,402 $ 58,619
Short-term investments ............................................................................ 3,598 2,579
Receivables, less reserves for doubtful accounts of $6,467 in 1995 and $7,385 in 1994 ............ 266,056 256,051
Inventories, at the lower of cost (on a first-in, first-out basis) or market ...................... 185,789 178,590
Linens in service, net of amortization ............................................................ 88,605 90,037
Deferred income taxes ............................................................................. 10,221 7,978
Prepayments ....................................................................................... 6,739 8,933
Total Current Assets ............................................................................. 640,410 602,787
Property, Plant, and Equipment, at cost:
Land .............................................................................................. 31,016 32,237
Buildings and leasehold improvements .............................................................. 192,023 186,929
Machinery and equipment ........................................................................... 503,868 507,408
Total Property, Plant, and Equipment ............................................................. 726,907 726,574
Less-Accumulated depreciation and amortization .................................................... 377,003 378,262
Property, Plant, and Equipment-net ............................................................... 349,904 348,312
Other Assets:
Goodwill and other intangibles .................................................................... 101,410 112,286
Other ............................................................................................. 39,622 37,876
Total Other Assets ............................................................................... 141,032 150,162
Total Assets .................................................................................... $1,131,346 $1,101,261
</TABLE>
20/National Service Industries, Inc.
<PAGE>
Page 20
Exhibit 13
Consolidated Balance Sheets (Continued)
<TABLE>
August 31
(In thousands, except share data) 1995 1994
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Current maturities of long-term debt .............................................................. $ 87 $ 667
Notes payable ..................................................................................... 6,399 5,098
Accounts payable .................................................................................. 81,524 81,969
Accrued salaries, commissions, and bonuses ........................................................ 43,944 42,624
Current portion of self-insurance reserves ........................................................ 16,276 16,727
Other accrued liabilities ......................................................................... 54,340 42,588
Total Current Liabilities ........................................................................ 202,570 189,673
Long-Term Debt, less current maturities ............................................................ 26,776 26,863
Deferred Income Taxes .............................................................................. 65,756 73,319
Self-Insurance Reserves, less current portion ...................................................... 67,830 61,081
Other Long-Term Liabilities ........................................................................ 24,010 22,940
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 1995 and 1994 57,919 57,919
Paid-in capital ................................................................................... 8,065 7,684
Retained earnings ................................................................................. 746,256 705,504
812,240 771,107
Less-Treasury stock, at cost (9,609,261 shares in 1995 and 8,678,666 shares in 1994) .............. 67,836 43,722
Total Stockholders' Equity ....................................................................... 744,404 727,385
Total Liabilities and Stockholders' Equity ...................................................... $1,131,346 $1,101,261
The accompanying notes to consolidated financial statements are an integral part of these balance sheets.
</TABLE>
National Service Industries, Inc./21
<PAGE>
Page 21
Exhibit 13
Consolidated Statements of Income
<TABLE>
Years Ended August 31
(In thousands) 1995 1994 1993
<S> <C> <C> <C>
Sales and Service Revenues:
Net sales of products .................................................... $1,424,180 $1,337,410 $1,257,906
Service revenues ......................................................... 546,447 544,454 546,916
Total Revenues .......................................................... 1,970,627 1,881,864 1,804,822
Costs and Expenses:
Cost of products sold .................................................... 908,869 875,055 832,264
Cost of services ......................................................... 299,687 286,519 281,551
Selling and administrative expenses ...................................... 601,754 577,291 557,011
Interest expense ......................................................... 3,820 3,668 4,961
Other expense, net ....................................................... 6,000 7,133 9,519
Total Costs and Expenses ................................................ 1,820,130 1,749,666 1,685,306
Income before Provision for Income Taxes .................................. 150,497 132,198 119,516
Provision for Income Taxes ................................................ 56,400 49,500 44,400
Net Income ................................................................ $ 94,097 $ 82,698 $ 75,116
Earnings per Share (in dollars) ........................................... $ 1.93 $ 1.67 $ 1.52
Weighted Average Number of Shares Outstanding ............................. 48,696 49,547 49,556
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
22/National Service Industries, Inc.
<PAGE>
Page 22
Exhibit 13
Consolidated Statements of Stockholders' Equity
<TABLE>
Common Paid-in Retained Treasury
(In thousands, except per-share data) Stock Capital Earnings Stock Total
<S> <C> <C> <C> <C> <C>
Balance, August 31, 1992 .......................................................... $57,919 $ 6,313 $ 652,717 $(33,995) $ 682,954
Treasury stock purchased(1) ...................................................... -- -- -- (837) (837)
Stock options exercised(2) ....................................................... -- 1,003 -- 241 1,244
Adjustment of treasury stock issued in connection with acquisition(3) ............ -- (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(4) ...................................................... -- -- -- (27) (27)
Stock options exercised(5) ....................................................... -- 385 -- 90 475
Treasury stock acquired in connection with divestiture(6) ........................ -- -- -- (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
Treasury stock purchased(7) ...................................................... -- -- -- (24,127) (24,127)
Stock options exercised(8) ....................................................... -- 380 -- 148 528
Adjustment of treasury stock issued in connection with acquisition(9) ............ -- 1 -- (1) --
Adjustment of treasury stock acquired in connection with divestiture(10) ......... -- -- -- (134) (134)
Net income ....................................................................... -- -- 94,097 -- 94,097
Cash dividends of $1.11 per share paid on common stock ........................... -- -- (54,156) -- (54,156)
Adjustment to recognize net increase in pension liability ........................ -- -- (3) -- (3)
Foreign currency translation adjustment .......................................... -- -- 814 -- 814
Balance, August 31, 1995 .......................................................... $57,919 $ 8,065 $ 746,256 $(67,836) $ 744,404
(1)34,100 shares. (2)58,359 shares. (3)723 shares. (4)992 shares. (5)21,705 shares. (6)341,840 shares.
(7)949,178 shares. (8)23,598 shares. (9)39 shares. (10)4,976 shares.
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
National Service Industries, Inc./23
<PAGE>
Page 23
Exhibit 13
Consolidated Statements of Cash Flows
<TABLE>
Years Ended August 31
(In thousands) 1995 1994 1993
<S> <C> <C> <C>
Cash Provided by (Used for) Operating Activities
Net income .............................................................................. $ 94,097 $ 82,698 $ 75,116
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization .......................................................... 57,130 60,548 62,097
Provision for losses on accounts receivable ............................................ 3,170 2,804 3,300
Loss (gain) on the sale of property, plant, and equipment .............................. 1,138 (76) (1,153)
Gain on the sale of business ........................................................... (5,726) (2,249) (1,379)
Change in noncurrent deferred income taxes ............................................. (3,663) (1,092) (5,794)
Change in assets and liabilities net of effect of acquisitions-
Receivables ........................................................................... (11,367) (8,425) (17,544)
Inventories and linens in service, net ................................................ (8,522) (23,095) (22,722)
Current deferred income taxes ......................................................... (2,243) 11,359 10,197
Prepayments ........................................................................... 2,086 4,635 (4,076)
Accounts payable and accrued liabilities .............................................. 11,945 5,796 (4,774)
Net Cash Provided by Operating Activities ............................................ 138,045 132,903 93,268
Cash Provided by (Used for) Investing Activities
Change in short-term investments ........................................................ (1,019) 2,197 3,736
Purchases of property, plant, and equipment ............................................. (58,768) (42,517) (35,513)
Sale of property, plant, and equipment .................................................. 8,491 4,552 4,399
Sale of business ........................................................................ 14,044 2,395 2,558
Acquisitions ............................................................................ (2,668) (569) (97,267)
Change in other assets ................................................................. (4,848) 52 (7,140)
Net Cash Used for Investing Activities ................................................. $ (44,768) $ (33,890) $(129,227)
</TABLE>
24/National Service Industries, Inc.
<PAGE>
Page 24
Exhibit 13
Consolidated Statements of Cash Flows (Continued)
<TABLE>
Years Ended August 31
(In thousands) 1995 1994 1993
<S> <C> <C> <C>
Cash Provided by (Used for) Financing Activities
Repayment of long-term debt ............................................................. $ (667) $ (2,680) $ (2,521)
Recovery of investment in tax benefits .................................................. 1,329 2,080 1,820
Deferred income taxes from investment in tax benefits ................................... (3,900) (3,875) (3,070)
Issuance (purchase) of treasury stock, net .............................................. (23,733) 448 407
Change in self-insurance reserves and other long-term liabilities ....................... 7,819 576 8,062
Cash dividends paid ..................................................................... (54,156) (53,042) (51,041)
Net Cash Used for Financing Activities ................................................. (73,308) (56,493) (46,343)
Effect of Exchange Rate Changes on Cash .................................................. 814 246 (2,982)
Net Change in Cash and Cash Equivalents .................................................. 20,783 42,766 (85,284)
Cash and Cash Equivalents at Beginning of Year ........................................... 58,619 15,853 101,137
Cash and Cash Equivalents at End of Year ................................................. $ 79,402 $ 58,619 $ 15,853
Supplemental Cash Flow Information:
Income taxes paid during the year ....................................................... $ 34,614 $ 41,584 $ 35,620
Interest paid during the year ........................................................... 3,671 4,030 5,925
Noncash Investing and Financing Activities:
Noncash aspects of sale of business-
Receivables assumed or incurred ........................................................ $ (3,003) $ -- $ --
Liabilities assumed (removed) .......................................................... 1,064 (2,442) --
Treasury stock acquired ................................................................ -- (9,191) --
Noncash aspects of acquisitions-
Liabilities assumed or incurred ........................................................ $ 468 $ -- $ 31,594
Treasury stock returned ................................................................ (1) -- (20)
The accompanying notes to consolidated financial statements are an integral part of these statements.
</TABLE>
National Service Industries, Inc./25
<PAGE>
Page 25
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 sheets at market value. 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. The carrying
amounts of short-term investments at August 31, 1995 and 1994 approximate fair
value. At August 31, 1995, short-term investments consisted of preferred stocks.
In accordance with the criteria specified by Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," these investments were classified as "available for sale."
Concentrations of Credit Risk
Concentrations of credit risk with respect to receivables are limited due to the
wide variety of customers and markets into which the company's products and
services are provided, as well as their dispersion across many different
geographic areas. As a result, as of August 31, 1995, the company does not
consider itself to have any significant concentrations of credit risk.
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, 1995 and 1994:
(In thousands) 1995 1994
Raw materials and supplies ................... $ 87,470 $ 72,677
Work in progress ............................. 9,879 9,918
Finished goods ............................... 88,440 95,995
$185,789 $178,590
Linens in service are recorded at cost and are amortized over their estimated
useful lives of 15 to 60 months.
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 ($47,853,000 in 1995 and
$47,102,000 in 1994) and other intangible assets are being amortized on a
straight-line basis over various periods up to 40 years.
The company periodically evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of goodwill and
other long-lived assets or whether the remaining balance of goodwill should be
evaluated for possible impairment. The company uses an estimate of related
undiscounted net income over the remaining life of goodwill in measuring whether
the goodwill is recoverable.
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 or the useful life of the
improvement, whichever is shorter.
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, net of applicable income taxes,
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 a
gain of $201,000 in 1995 and losses of $379,000 in 1994 and $863,000 in 1993.
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.
26/National Service Industries, Inc.
<PAGE>
Page 26
Exhibit 13
Notes to Consolidated Financial Statements (Continued)
Net pension expense (income) for 1995, 1994, and 1993 included the following
components:
(In thousands) 1995 1994 1993
Service cost of benefits earned during the period .. $ 2,648 $ 2,466 $ 2,652
Interest cost on projected benefit obligation ...... 7,277 7,262 7,165
Return on plan assets .............................. (12,178) (1,929) (8,198)
Net amortization of transition amounts ............. 2,257 (8,215) (1,217)
Net pension expense (income) ....................... $ 4 $ (416) $ 402
The following schedule reconciles the funded status of the plans as of June 1,
1995 and 1994, with amounts reported in the company's balance sheets at August
31, 1995 and 1994:
<TABLE>
1995 1994
Plan Assets Accumulated Plan Assets Accumulated
Exceed Benefit Exceed Benefit
Accumulated Obligation Accumulated Obligation
Benefit Exceeds Benefit Exceeds
(In thousands) Obligation Plan Assets Obligation Plan Assets
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations
as of June 1:
Vested .......................................... $ (77,505) $(3,879) $ (76,845) $(3,861)
Nonvested ....................................... (6,585) (90) (6,036) (77)
Accumulated benefit obligation ................... (84,090) (3,969) (82,881) (3,938)
Effect of projected salary increases ............. (6,295) (1,731) (5,787) (1,523)
Total projected benefit obligation ............... (90,385) (5,700) (88,668) (5,461)
Fair value of plan assets ........................ 113,510 -- 106,031 --
Plan assets greater (less) than projected
benefit obligation ............................... 23,125 (5,700) 17,363 (5,461)
Unrecognized transition (asset) liability ........ (10,777) 86 (12,087) 98
Unrecognized prior service cost obligation ....... 2,847 2,262 3,058 2,514
Unrecognized net loss (gain) ..................... 13,549 (755) 16,814 (744)
Adjustment required to recognize minimum liability -- (426) -- (515)
Prepaid(accrued) pension expense at August 31 .... $ 28,744 $(4,533) $ 25,148 $(4,108)
</TABLE>
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, 1995, assets of the 401(k) plans included
shares of the company's common stock with a market value of approximately
$6,303,000. The company's cost of these plans was $3,810,000 in 1995, $3,133,000
in 1994, and $3,031,000 in 1993.
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.
Postemployment Benefits
During fiscal 1995, the company adopted Statement of Financial Accounting
Standards (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits,"
requiring the accrual of the estimated cost of benefits provided by an employer
to former or inactive employees after employment but before retirement. The
accrual, which is not material, relates primarily to severance agreements and
the liability for life insurance coverage for certain eligible employees.
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. A provision for claims under the self-insured program is recorded
based on the company's estimate of the aggregate liability for claims incurred.
Reclassifications
Certain amounts in the 1994 and 1993 financial statements and notes have been
reclassified to conform with the 1995 presentation.
NOTE 2: Long-Term Debt and Lines of Credit
Long-term debt at August 31, 1995 and 1994, consisted of the following:
<TABLE>
(In thousands) 1995 1994
<S> <C> <C>
7.0% to 13.0% mortgage notes, payable in installments through 2000
(secured in part by property, plant, and equipment having a net book
value of $1,169,000 at August 31, 1995) ........................... $ 244 $ 671
2.55% to 6.625% other notes, payable in installments to 2021 ........ 26,619 26,859
26,863 27,530
Less-Amounts payable within one year included in current liabilities 87 667
$26,776 $26,863
</TABLE>
National Service Industries, Inc/27
<PAGE>
Page 27
Exhibit 13
Notes to Consolidated Financial Statements (Continued)
The annual maturities of long-term debt are as follows:
(In thousands) Amount
Year Ending August 31
1996 ................................................... $ 87
1997 ................................................... 54
1998 ................................................... 5,501
1999 ................................................... 25
2000 ................................................... 28
Later years ............................................ 21,168
$26,863
The company has complimentary lines of credit totaling $152,000,000, of which
$110,000,000 has been provided domestically and $42,000,000 is available on a
multi-currency basis primarily from a European bank. At August 31, 1995, the
company had foreign currency short-term bank borrowings equivalent to $6,399,000
at an average interest rate of 6.8%.
Under one of the domestic lines of credit, up to $40,000,000 may be used for
letters of credit. At August 31, 1995, $17,966,000 in letters of credit
associated with the company's insurance program (Note 1) were outstanding and
$22,034,000 was available under the line of credit.
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.
NOTE 3: Common Stock and Related Matters
The company has 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, 1995.
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.
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.
Under both plans, the options outstanding at August 31, 1995, expire ten years
from the date of the grant and have an exercise price equal to the fair market
value on the date of the grant.
Stock option transactions for the stock option plans and stock option agreements
during the years ended August 31, 1995, 1994, and 1993 were as follows:
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
Options outstanding at September 1 ..... 820,752 680,139 473,415
Granted ................................ 325,400 214,700 365,900
Exercised .............................. 23,598 21,705 58,359
Canceled ............................... 33,781 52,382 100,817
Options outstanding at August 31 ....... 1,088,773 820,752 680,139
Option price range at August 31 ........ $19.75-$29.00 $19.75-$29.00 $19.75-$29.00
Options exercisable at August 31 ....... 513,665 316,024 176,625
Options available for grant at August 31 657,565 949,184 1,111,502
</TABLE>
Potential dilution of earnings per share applicable to these stock options is
not significant.
28/National Service Industries, Inc.
<PAGE>
Page 28
Exhibit 13
Notes to Consolidated Financial Statements (Continued)
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, 1995, are as follows:
(In thousands) Amount
Year Ending August 31
1996 ................................................... $9,298
1997 ................................................... 7,290
1998 ................................................... 5,376
1999 ................................................... 3,946
2000 ................................................... 2,538
Later years ............................................ 6,826
Total minimum lease payments ........................... $35,274
Total rent expense was $11,607,000 in 1995, $10,585,000 in 1994, and $11,230,000
in 1993.
NOTE 5: Quarterly Financial Data (Unaudited)
<TABLE>
Sales and Income
(In thousands, except Service Gross before Net Earnings
earnings per share) Revenues Profit Taxes Income per Share
<S> <C> <C> <C> <C> <C>
1995
1st Quarter ................. $480,984 $185,951 $ 33,735 $ 21,114 $ .43
2nd Quarter ................. 465,810 174,793 28,031 17,578 .36
3rd Quarter ................. 505,798 196,903 41,064 25,627 .53
4th Quarter ................. 518,035 204,424 47,667 29,778 .62
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
</TABLE>
NOTE 6: Income Taxes
Income taxes are reconciled with the Federal statutory rate as follows:
(In thousands) 1995 1994 1993
Federal income tax computed at statutory rate $ 52,674 $ 46,269 $ 41,433
Increase (decrease) in taxes:
State income tax, net of Federal
income tax benefit ....................... 4,308 4,693 4,230
Other, net ................................ (582) (1,462) (1,263)
$ 56,400 $ 49,500 $ 44,400
Provisions for income taxes include state income and franchise taxes of
$6,628,000 in 1995, $7,220,000 in 1994, and $6,478,000 in 1993.
The following summarizes the components of income tax expense:
(In thousands) 1995 1994 1993
Provision for current taxes ................ $ 62,549 $ 47,473 $ 41,710
Provision (credit) for deferred taxes:
Current-
Tax effect of linen book amortization
less than tax amortization ............. 6,996 3,339 9,877
Insurance costs .......................... (5,386) (1,745) (3,452)
Other temporary differences .............. (4,096) 1,525 2,059
Noncurrent-
Other (primarily tax effect of differences
between book depreciation and
tax depreciation on fixed assets) ...... (3,663) (1,092) (5,794)
$ 56,400 $ 49,500 $ 44,400
National Service Industries, Inc./29
<PAGE>
Page 29
Exhibit 13
Notes to Consolidated Financial Statements (Continued)
Components of net deferred income tax liability at August 31, 1995 and 1994
include:
(In thousands) 1995 1994
Deferred income taxes:
Noncurrent-
Depreciation ............................. $ 45,125 $ 43,443
Safe harbor lease ........................ 43,303 47,203
Self insurance ........................... (26,623) (22,804)
Foreign loss carryforwards ............... (4,414) (4,292)
Pension .................................. 7,522 7,614
Deferred compensation .................... (3,706) (3,876)
Other liabilities ........................ 4,549 6,031
65,756 73,319
Current-
Amortization of linens ................... 11,933 4,937
Self insurance ........................... (7,928) (6,044)
Bonuses .................................. (5,145) (5,701)
Other assets ............................. (13,729) (9,123)
Other liabilities ........................ 4,648 7,953
(10,221) (7,978)
Net deferred tax liability ................. $ 55,535 $ 65,341
At August 31, 1995, the company had foreign net operating loss carryforwards of
$14,942,000 expiring in fiscal years 1996 through 2001.
Current income taxes payable were $11,257,000 and $7,370,000 at August 31, 1995
and 1994, respectively.
NOTE 7: Divestitures and Acquisitions
During 1995, the company divested several unprofitable businesses, primarily in
the Textile Rental division, generating cash of $14,044,000.
In May, 1995, the company acquired the assets of Infranor Canada Inc., a
Canadian lighting products manufacturer based in Saint-Hyacinthe, Quebec. The
operating results of this acquisition were included in the Lighting Equipment
segment for the fourth quarter of fiscal 1995. Full-year acquisition spending of
$2.7 million also included several small purchases for the Textile Rental
segment.
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.
NOTE 8: Business Segment Information
<TABLE>
Depreciation Capital
Sales and and Expenditures
Service Operating Identifiable Amortization Including
(In thousands) Revenues Profit(Loss) Assets Expense Acquisitions
<S> <C> <C> <C> <C> <C>
1995
Lighting Equipment $ 851,363 $ 61,313 $ 340,187 $ 14,205 $ 23,098
Textile Rental ... 546,447 51,016 422,108 30,787 28,144
Chemical ......... 352,670 35,227 169,376 6,711 4,527
Other ............ 220,147 14,351 83,400 3,827 4,120
1,970,627 161,907 1,015,071 55,530 59,889
Corporate(1) ..... (7,590) 116,275 1,600 21
Interest Expense . (3,820)
Total ............ $ 1,970,627 $ 150,497 $ 1,131,346 $ 57,130 $ 59,910
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) 100,396 1,248 339
Interest Expense . (3,668)
Total ............ $ 1,881,864 $ 132,198 $ 1,101,261 $ 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 33,280 173,354 6,499 12,743
Other ............ 247,862 10,275 104,892 6,357 4,048
1,804,822 131,274 1,010,229 60,813 81,999
Corporate(1) ..... (6,797) 71,281 1,284 172
Interest Expense . (4,961)
Total ............ $ 1,804,822 $ 119,516 $ 1,081,510 $ 62,097 $ 82,171
(1)Operating profit (loss) includes income on short-term investments.
</TABLE>
30/National Service Industries, Inc.
<PAGE>
Page 30
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 judgements 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.
/s/ D. Raymond Riddle
D. Raymond Riddle
Chairman and Chief Executive Officer
/s/ J. Robert Hipps
J. Robert Hipps
Senior Vice President, Finance
/s/ John A. Bostater
John A. Bostater
Vice President and Controller
Report of Independent 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, 1995
and 1994 and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended August 31, 1995.
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, 1995 and 1994 and the results of their
operations and their cash flows for each of the three years in the period ended
August 31, 1995 in conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP
Arthur Andersen LLP
Atlanta, Georgia
October 20, 1995
National Service Industries, Inc./31
<PAGE>
Page 31
Exhibit 13
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
National Service Industries' balance sheet strengthened during the year ended
August 31, 1995. Net working capital increased to $437.8 million from $413.1
million at August 31, 1994, and the current ratio was 3.2, the same as at last
year end. Cash and short-term investments climbed to $83.0 million from $61.2
million at the prior year end. During 1995, the company invested $61.4 million
in capital expenditures and acquisitions. Long-term liabilities were 13.7
percent of total capitalization at August 31, 1995 and 1994. Cash provided by
operating activities increased to $138.0 million from $132.9 million in 1994 and
$93.3 million in 1993. The improvement in 1995 resulted primarily from a lower
rate of investment in inventories and linens in service and a decrease in
prepayments. The improvement in 1994 was largely due to a reduced rate of
investment in accounts receivable, a reduction of prepayments, and lower charges
against insurance reserves due to improved claims experience. Capital
expenditures, exclusive of acquisition spending, were $58.8 million in 1995,
$42.5 million in 1994, and $35.5 million in 1993. During 1995, the Lighting
Equipment division invested in manufacturing equipment replacements and
improvements and the construction of its production facility in Monterrey,
Mexico, which began production in the fourth quarter. Textile Rental division
current-year expenditures included fleet upgrades, facility improvements, and
information system enhancements. Prior-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.
Cash payments in connection with acquisitions totaled $2.7 million in 1995, $.6
million in 1994, and $97.3 million in 1993. In May, 1995 the company acquired
the assets of Infranor Canada Inc., a Canadian lighting products manufacturer
based in Saint-Hyacinthe, Quebec. The operating results of this acquisition were
included in the Lighting Equipment segment for the fourth quarter of fiscal
1995. Full-year acquisition spending also included several small additions to
the Textile Rental segment.
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.
In the current year, the company divested several unprofitable businesses,
primarily in the Textile Rental division, generating cash of $14.0 million.
During 1995, the company spent $24.1 million on the repurchase of approximately
949,000 shares of its common stock.
Dividend payments totaled $54.2 million, or $1.11 per share, in 1995, $53.0
million, or $1.07 per share, in 1994, and $51.0 million, or $1.03 per share, in
1993. The fiscal 1995 dividend of $1.11 per share was a 3.7 percent increase.
For the periods presented, capital expenditures, working capital needs,
dividends, acquisitions, and share repurchases were financed primarily with
internally generated funds, supplemented by short-term borrowings in the
European market. The Infranor and Initial acquisitions were cash transactions.
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 1996
total $12.9 million. The company expects actual capital expenditures in 1996 to
be somewhat higher than the 1995 level. 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 $152 million, of which $110 million has been provided
domestically and $42 million is available on a multi-currency basis primarily
from a European bank.
32/National Service Industries, Inc.
<PAGE>
Page 32
Exhibit 13
Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Results Of Operations
Revenues for the fiscal year ended August 31, 1995 totaled a record $1.97
billion, an increase of 4.7 percent from 1994's $1.88 billion, as a result of
volume gains in the Lighting Equipment and Chemical divisions and pricing
improvements in the Envelope division. Adjusted for the divestiture of the
Marketing Services division, which contributed $32 million to 1994 sales, the
sales gain was 6.5 percent. Fiscal 1994 revenues rose 4.3 percent from 1993's
$1.80 billion due primarily to volume gains in the Lighting Equipment and
Chemical segments.
Net income for fiscal 1995 grew 13.8 percent to $94.1 million, or $1.93 per
share. An average of 850,000 fewer shares was outstanding for the year. Fiscal
1994 net income advanced 10.1 percent to $82.7 million, or $1.67 per share.
The Lighting Equipment division achieved all-time record fiscal year sales of
$851 million, an 11.5 percent increase from 1994. Both the fluorescent and
nonfluorescent operations benefited from increased U.S. construction activity.
Revenues for 1994 grew 10.4 percent to $764 million from $692 million in 1993.
Unit sales increases that began late in fiscal 1993 continued through 1994 and
1995 and accounted for the improvement in both years. Higher unit volumes more
than compensated for higher product and selling costs, resulting in a 22.4
percent increase in operating profit to 7.2 percent of revenues, compared with
6.6 percent in 1994 and 5.6 percent in 1993. For 1994, profit improvements were
largely the result of higher unit volumes and cost savings.
Textile Rental division revenues were $546 million in 1995, compared with $544
million in 1994 and $547 million in 1993. In both years pricing gains were
offset by declining volumes, particularly in the hospital market. Operating
income increased 4.5 percent to 9.3 percent of revenues, compared with 9.0
percent in both 1994 and 1993. The improvement was due to reduced labor and
workers' compensation costs and expenses eliminated through plant divestitures.
Merchandise costs as a percentage of revenues grew slightly in 1994, while
administrative expenses declined.
The Chemical division achieved a 1995 revenue increase of 6.1 percent to $353
million from $332 million in 1994. Revenues for 1994 rose 4.5 percent from $318
million in 1993. Gains in both years resulted from higher unit volumes,
predominantly in domestic operations. Operating profit was 10.0 percent of
revenues in 1995, down from 10.6 percent in 1994 and 10.5 percent in 1993. The
decline in 1995 resulted from the division's increased investment in recruiting
and training sales representatives and because of increases in some raw material
costs. In 1994, European and Canadian operating margins, although improved, fell
short of those achieved in the U.S.
The Insulation Service and Envelope businesses combined for a 5.1 percent sales
increase. Revenues were $220 million in 1995, down from $242 million in 1994 and
$248 million in 1993 as a result of the divestiture of Marketing Services.
Operating profit increased to $14.4 million from $8.8 million in 1994 and $10.3
million in 1993. The 1995 profit gain was due primarily to margin improvements
on pricing gains. In both prior 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, 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 $32 million in 1994 and an immaterial
operating loss.
Corporate income declined in 1995 mainly because of accruals for higher business
taxes. During 1995, the company benefited from higher levels of short-term
investments at improved interest rates. Income in 1994 was influenced primarily
by lower short-term investment levels and lower interest rates. Foreign currency
exchange rate fluctuations were favorable in 1995, compared with unfavorable
results in 1994 and 1993. Interest expense increased only slightly in 1995. For
1994 interest expense was less than in 1993 due to reductions in
acquisition-related debt.
Consolidated income before taxes grew 13.8 percent in 1995 compared with 10.6
percent in 1994. Net income for 1995 also increased 13.8 percent. The
improvement in 1994 net income was reduced to 10.1 percent due to a higher tax
rate. The provision for income taxes was 37.5 percent of pretax income in 1995,
compared with 37.4 percent in 1994 and 37.1 percent in 1993. Changes in the
year-to-year effective rates also result from variations in the relative amounts
of tax exempt income.
Outlook
Fiscal 1995 brought strong operating results as NSI benefited from sales gains
in its three core businesses. The 15 percent increase in earnings per share
exceeded expectations. The company enters 1996 confident in posting its first $2
billion year in sales and achieving all-time record earnings.
National Service Industries, Inc./33
<PAGE>
Page 33
Exhibit 13
Ten-Year Financial Summary
<TABLE>
(Dollar amounts in thousands, except per-share data)
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating Results
Net sales of products $1,424,180 $1,337,410 $1,257,906 $1,189,684 $1,164,181 $1,250,833 $1,183,666 $1,093,163 $1,032,145 $ 968,308
Service revenues ..... 546,447 544,454 546,916 444,127 437,534 396,981 355,845 321,025 294,713 314,614
Total revenues ...... 1,970,627 1,881,864 1,804,822 1,633,811 1,601,715 1,647,814 1,539,511 1,414,188 1,326,858 1,282,922
Cost of products sold. 908,869 875,055 832,264 810,552 791,355 832,867 800,385 741,383 690,689 643,936
Cost of services ..... 299,687 286,519 281,551 236,474 240,376 219,673 198,262 179,793 159,019 170,571
Selling and
administrative expenses 601,754 577,291 557,011 462,653 456,903 439,076 397,283 361,970 350,641 340,582
Interest expense ..... 3,820 3,668 4,961 2,690 3,834 3,864 4,963 4,234 4,149 3,999
Restructuring expense -- -- -- -- 63,467 -- -- -- -- --
Other income, net .... 6,000 7,133 9,519 4,534 (2,856) (3,381) (9,400) (6,414) (10,030) (3,507)
Income before taxes .. 150,497 132,198 119,516 116,908 48,636 155,715 148,018 133,222 132,390 127,341
Income taxes ......... 56,400 49,500 44,400 42,800 16,400 56,000 53,300 47,100 56,700 56,000
Net income ........... 94,097 82,698 75,116 74,108 32,236 99,715 94,718 86,122 75,690 71,341
Per-Share Data(1)
Net income ........... $ 1.93 $ 1.67 $ 1.52 $ 1.50 $ .65 $ 2.02 $ 1.92 $ 1.75 $ 1.54 $ 1.45
Cash dividends ....... 1.11 1.07 1.03 .99 .95 .90 .82 .73 .62 .54
Stockholders' equity . 15.41 14.77 14.21 13.79 13.33 13.68 12.44 11.33 10.31 9.39
Financial Ratios
Current ratio(2) ..... 3.2 3.2 2.9 3.5 3.4 4.5 4.8 5.0 5.1 4.6
Net income as a
percent of sales .... 4.8% 4.4% 4.2% 4.5% 2.0% 6.1% 6.2% 6.1% 5.7% 5.6%
Return on average
stockholders' equity(2) 13.0% 11.6% 10.9% 11.1% 4.8% 15.6% 16.3% 16.3% 15.7% 16.3%
Dividends as a percent of
current-year earnings 57.6% 64.1% 67.9% 66.3% 146.2% 44.6% 42.6% 41.8% 40.2% 37.0%
Long-term debt and other
long-term liabilities as
a percent of total
capitalization(2).... 13.7% 13.7% 13.7% 13.3% 12.2% 8.0% 8.1% 8.5% 8.5% 9.3%
</TABLE>
34/National Service Industries, Inc.
<PAGE>
Page 34
Exhibit 13
Ten-Year Financial Summary (Continued)
<TABLE>
(Dollar amounts in thousands, except per-share data)
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Other Data
Net working capital(2) $ 437,840 $ 413,114 $ 363,575 $ 399,893 $ 386,306 $ 447,800 $ 450,185 $ 439,990 $ 416,801 $ 369,111
Increase (decrease) in:
Cash and cash equivalents 20,783 42,766 (85,284) 27,617 (50,437) 23,433 14,612 (24,786) 16,318 63,315
Short-term investments 1,019 (2,197) (3,736) (5,551 12,813 (27,247) (19,633) 35,971 5,160 --
Capital expenditures
(including acquisitions) 59,910 42,508 82,171 49,789 90,229 82,932 66,491 55,394 45,258 53,968
Depreciation and
amortization ......... 57,130 60,548 62,097 53,816 50,249 42,821 36,260 31,037 27,333 26,707
Total assets(2) ...... 1,131,346 1,101,261 1,081,510 1,036,908 1,008,319 960,622 886,358 823,906 758,659 708,367
Long-term debt ....... 26,776 26,863 28,418 28,359 31,373 27,465 20,765 21,391 21,466 21,857
Deferred income taxes(2) 65,756 73,319 78,286 87,150 96,627 99,277 101,320 103,021 102,374 95,774
Self-insurance reserves(2) 67,830 61,081 56,335 47,638 38,428 15,222 15,213 15,016 13,574 15,945
Other long-term
liabilities .......... 24,010 22,940 27,110 28,677 22,015 16,067 17,964 15,330 12,042 9,794
Stockholders' equity .. 744,404 727,385 704,023 682,954 660,567 675,444 612,668 558,160 508,219 462,907
Weighted average number
of shares outstanding
(in thousands)(1)..... 48,696 49,547 49,556 49,539 49,540 49,389 49,255 49,258 49,278 49,280
Shareholders .......... 6,655 7,034 7,262 7,554 7,996 8,248 8,459 8,851 9,164 9,326
Employees ............. 21,100 22,000 22,200 20,100 0,900 21,800 20,800 20,400 19,400 19,300
Use of Total Revenues
Salaries and wages ....$ 568,616 $ 565,859 $ 572,163 $ 502,709 $ 501,502 $ 491,334 $ 465,522 $ 428,325 $ 399,968 $ 378,993
Materials and supplies 832,668 783,610 760,551 700,338 683,871 713,310 668,655 616,223 574,179 551,550
Other operating expenses 364,849 347,600 299,977 273,330 258,919 246,288 219,270 201,478 188,414 194,215
Restructuring expense . -- -- -- -- 63,467 -- -- -- -- --
Taxes and licenses .... 110,397 102,097 97,015 83,326 59,889 97,167 91,346 82,040 88,607 86,823
Dividends paid ........ 54,156 53,042 51,041 49,105 47,124 44,506 40,389 35,960 30,428 26,410
Retained earnings ..... 39,941 29,656 24,075 25,003 (13,057) 5,209 54,329 50,162 45,262 44,931
$1,970,627 $1,881,864 $1,804,822 $1,633,811 $1,601,715 $1,647,814 $1,539,511 $1,414,188 $1,326,858$1,282,922
(1) Restated to reflect stock splits of 3 for 2 effective January 13, 1987, and 4 for 3 effective January 13, 1986.
(2) Prior-year amounts have been restated to conform to current-year presentation.
</TABLE>
National Service Industries, Inc./35
<PAGE>
Page 35
Exhibit 13
Shareholder Information
Executive Offices
NSI Center
1420 Peachtree Street, N.E.
Atlanta, Georgia 30309
(404) 853-1000
Transfer Agent and Registrar
Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
P.O. Box 3001
Winston-Salem, North Carolina 27102
(800) 633-4236
Independent Accountants
Arthur Andersen LLP
133 Peachtree Street, N.E.
Atlanta, Georgia 30303
(404) 658-1776
Annual Meeting
10:00 a.m., Wednesday, January 3, 1996
High Museum of Art
1280 Peachtree Street, N.E.
Atlanta, Georgia 30309
Listing
New York Stock Exchange. Ticker Symbol: NSI.
Shareholders of Record
The number of shareholders of record holding NSI common stock was 6,655 as of
September 29, 1995.
Reports Available to Stockholders
Copies of the following company reports may be obtained, without charge: 1995
Annual Report to the Securities and Exchange Commission, filed on Form 10-K; and
Quarterly Reports to the Securities and Exchange Commission, filed on Form 10-Q.
Requests should be directed to:
National Service Industries, Inc.
Attention: Investor Relations
1420 Peachtree Street, N.E.
Atlanta, Georgia 30309
(404) 853-1216
Dividend Reinvestment Plan
An automatic dividend reinvestment plan is available to all stockholders of
record. Common dividends can be automatically reinvested in NSI common stock.
Participants also may add cash for the purchase of additional shares.
Any stockholder who would like to enroll in the plan should contact NSI's Stock
Transfer and Recordkeeping Agent. Participants who have questions regarding
their dividend reinvestment accounts should contact:
Wachovia Bank of North Carolina, N.A.
Corporate Trust Department
P.O. Box 3001
Winston-Salem, North Carolina 27102
(800) 633-4236
Common Share Prices and Dividends per Share
Price per Share Dividends
Paid per
High Low Share
1995
First Quarter ..................... $27-3/8 $25-3/8 $ .27
Second Quarter .................... 27-3/8 24-7/8 .28
Third Quarter ..................... 29-1/8 26 .28
Fourth Quarter .................... 30-5/8 28-1/8 .28
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
The above common share prices are as quoted on the New York Stock Exchange.
Uretek Method(R) (p. 18) is a registered trademark of Uretek USA, Inc.
All other trademarks and service marks referenced in the text of this annual
report are owned by National Service Industries, Inc., or its subsidiaries.
<PAGE>
Page 36
Exhibit 21
LIST OF SUBSIDIARIES
Registrant - National Service Industries, Inc.
Registrant owns all of the common stock of the following subsidiaries:
<TABLE>
State or Other
Jurisdiction
of Incorporation
Subsidiary Principal Location or Organization
<S> <C> <C>
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
NSI Holdings, Inc. Montreal,Quebec,Canada Canada
NSI Insurance (Bermuda) Ltd. Hamilton, Bermuda Bermuda
NSI Leasing, Inc. Atlanta, Georgia Delaware
Productos Lithonia Lighting de Mexico,S.A.de C.V. Monterrey, Nuevo Leon Mexico
Lithonia Lighting Servicios, 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 stock of- Santa Clara, California California
Keplime B.V. Bergen op Zoom, Holland Netherlands
ZEP Europe B.V. which owns the stock of- Bergen op Zoom, Holland Netherlands
ZEP FRANCE Nogent-le-Roi, France France
Zep Industries S.A. Nogent-le-Roi, France France
Resolve S.A. Nogent-le-Roi, France France
Research Development Industries S.A. Nogent-le-Roi, France France
Chemical Continental Industries S.A.R.L Nogent-le-Roi, France France
Zep Italia S.r.l. Aprilia, Italy Italy
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
The consolidated financial statements include the accounts of all subsidiaries.
</TABLE>
<PAGE>
Page 37
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, 1995, included or incorporated by
reference in National Service Industries, Inc. Form 10-K for the year ended
August 31, 1995, into the Company's previously filed Registration Statement File
Nos. 33-36980, 33-51339, 33-51341, 33-51343, 33-51345, 33-51351, 33-51355,
33-51357, 31-60715, 33-63041, and 33-63043.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
November 17, 1995
<PAGE>
Page 38
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,
1995, 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 17, 1995
<PAGE>
Page 39
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,
1995, 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 17, 1995
<PAGE>
Page 40
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,
1995, 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 17, 1995
<PAGE>
Page 41
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,
1995, 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 17, 1995
<PAGE>
Page 42
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,
1995, 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 17, 1995
<PAGE>
Page 43
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,
1995, 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 17, 1995
<PAGE>
Page 44
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,
1995, 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 17, 1995
<PAGE>
Page 45
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,
1995, 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 17, 1995
<PAGE>
Page 46
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,
1995, 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 17, 1995
<PAGE>
Page 47
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,
1995, 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 17, 1995
<PAGE>
Page 48
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,
1995, 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 17, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Page 49
Exhibit 27(a)
Financial Data Schedule
Year Ended August 31, 1995
Pursuant to Section 601(c) of Regulation S-K
This schedule contains restated summary financial information extracted from
National Service Industries, Inc. consolidated balance sheet as of August 31,
1995 and the consolidated statement of income for the year ended August 31,
1995, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Aug-31-1995
<PERIOD-START> Sep-01-1994
<PERIOD-END> Aug-31-1995
<CASH> 79,402
<SECURITIES> 3,598
<RECEIVABLES> 272,523
<ALLOWANCES> 6,467
<INVENTORY> 185,789
<CURRENT-ASSETS> 640,410
<PP&E> 726,907
<DEPRECIATION> 377,003
<TOTAL-ASSETS> 1,131,346
<CURRENT-LIABILITIES> 202,570
<BONDS> 26,776
<COMMON> 57,919
0
0
<OTHER-SE> 686,485
<TOTAL-LIABILITY-AND-EQUITY> 1,131,346
<SALES> 1,424,180
<TOTAL-REVENUES> 1,970,627
<CGS> 908,869
<TOTAL-COSTS> 1,208,556
<OTHER-EXPENSES> 607,754
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,820
<INCOME-PRETAX> 150,497
<INCOME-TAX> 56,400
<INCOME-CONTINUING> 94,097
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 94,097
<EPS-PRIMARY> 1.93
<EPS-DILUTED> 1.93
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Page 50
Exhibit 27(b)
Financial Data Schedule
Year Ended August 31, 1994
Pursuant to Section 601(c) of Regulation S-K
This schedule contains restated summary financial information extracted from
National Service Industries, Inc. consolidated balance sheet as of August 31,
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-START> Sep-01-1993
<PERIOD-END> Aug-31-1994
<CASH> 58,619
<SECURITIES> 2,579
<RECEIVABLES> 263,436
<ALLOWANCES> 7,385
<INVENTORY> 178,590
<CURRENT-ASSETS> 602,787
<PP&E> 726,574
<DEPRECIATION> 378,262
<TOTAL-ASSETS> 1,101,261
<CURRENT-LIABILITIES> 189,673
<BONDS> 26,863
<COMMON> 57,919
0
0
<OTHER-SE> 669,466
<TOTAL-LIABILITY-AND-EQUITY> 1,101,261
<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> 82,698
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82,698
<EPS-PRIMARY> 1.67
<EPS-DILUTED> 1.67
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Page 51
Exhibit 27(c)
Financial Data Schedule
Quarter Ended November 30, 1994
Pursuant to Section 601(c) of Regulation S-K
This schedule contains restated summary financial information extracted from
National Service Industries, Inc. consolidated balance sheet as of November 30,
1994 and the consolidated statement of income for the three months ended
November 30, 1994, and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Aug-31-1995
<PERIOD-START> Sep-01-1994
<PERIOD-END> Nov-30-1994
<CASH> 82,430
<SECURITIES> 2,240
<RECEIVABLES> 254,679
<ALLOWANCES> 8,705
<INVENTORY> 188,769
<CURRENT-ASSETS> 617,483
<PP&E> 733,477
<DEPRECIATION> 386,270
<TOTAL-ASSETS> 1,109,420
<CURRENT-LIABILITIES> 190,990
<BONDS> 26,818
<COMMON> 57,919
0
0
<OTHER-SE> 677,299
<TOTAL-LIABILITY-AND-EQUITY> 1,109,420
<SALES> 334,882
<TOTAL-REVENUES> 480,984
<CGS> 219,187
<TOTAL-COSTS> 295,033
<OTHER-EXPENSES> 151,386
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 830
<INCOME-PRETAX> 33,735
<INCOME-TAX> 12,621
<INCOME-CONTINUING> 21,114
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,114
<EPS-PRIMARY> 0.43
<EPS-DILUTED> 0.43
</TABLE>
