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Exhibit Index on Page 2
FORM 11-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Annual Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended: December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from to
Commission file number 1- 3208
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
Lithonia Lighting Profit Sharing and Retirement
Plan for Salaried Employees
B. Name of issuer of the securities held pursuant to the plan and
the address of the principal executive office:
National Service Industries, Inc.
1420 Peachtree Street, NE
Atlanta, Georgia 30309
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REQUIRED INFORMATION
The following documents are filed as a part of this report:
1. Financial Statements
Plan financial statements prepared in accordance with the financial
reporting requirements of ERISA include the following:
Report of Independent Public Accountants
Statements of Net Assets Available for Benefits as of December 31, 1996
and 1995
Statement of Changes in Net Assets Available for Benefits, with Fund
Information, for the Year Ended December 31, 1996
Notes to Financial Statements and Schedule
2. Exhibits
Sequentially
Numbered
The following exhibit is filed with this report: Page
23 Consent of Arthur Andersen LLP 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Lithonia Lighting Profit Sharing
and Retirement Plan for Salaried Employees
Date: June 30, 1997 By: National Service Industries, Inc.
Plan Administrator
By: /s/ James S. Balloun
Name: James S. Balloun
Title: Chairman and Chief Executive Officer
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Lithonia Lighting Profit Sharing and
Retirement Plan for Salaried Employees
Financial Statements as of December 31, 1997 and 1996
Together With
Auditors' Report
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of
Lithonia Lighting Profit Sharing and Retirement Plan for Salaried Employees:
We have audited the accompanying statements of net assets available for benefits
of LITHONIA LIGHTING PROFIT SHARING AND RETIREMENT PLAN FOR SALARIED EMPLOYEES
as of December 31, 1997 and 1996, and the related statement of changes in net
assets available for benefits, with fund information, for the year ended
December 31, 1997. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for benefits
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The fund information in the statement of
changes in net assets available for benefits is presented for the purpose of
additional analysis rather than to present the changes in net assets available
for benefits of each fund. The fund information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
Atlanta, Georgia
May 15, 1998
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LITHONIA LIGHTING PROFIT SHARING AND
RETIREMENT PLAN FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 AND 1996
1997 1996
INVESTMENT IN NSI DC TRUST, at fair value (Note 2):
Balanced Fund................................... $24,830,433 $20,258,600
Diversified Equity Fund......................... 27,957,667 21,415,464
Stable Value Fund............................... 20,356,688 22,780,355
NSI Stock Fund.................................. 2,605,352 1,136,979
Loan Fund....................................... 2,092,118 2,303,446
International Fund.............................. 450,366 642,374
Index Fund...................................... 2,329,063 0
Small Company Fund.............................. 942,323 0
Total investment...................... 81,564,010 68,537,218
CONTRIBUTIONS RECEIVABLE:
Employer........................................ 725,757 484,548
Participant..................................... 36,068 36,774
Total contributions receivable......... 761,825 521,322
NET ASSETS AVAILABLE FOR BENEFITS................... $82,325,835 $69,058,540
The accompanying notes are an integral part of these statements.
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LITHONIA LIGHTING PROFIT SHARING AND
RETIREMENT PLAN FOR SALARIED EMPLOYEES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION,
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
Diversified Stable NSI Small
Balanced Equity Value Stock Loan International Index Company
Fund Fund Fund Fund Fund Fund Fund Fund Other Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONTRIBUTIONS:
Employer
net of forfeitures.. $ 347,318 $ 453,437 $ 238,716 $ 79,748 $ 0 $34,230 $ 30,010 $ 9,959 $241,209 $1,434,627
Participant ......... 1,425,842 1,753,321 1,074,232 231,893 0 101,763 95,774 28,525 (706) 4,710,644
Total contributions 1,773,160 2,206,758 1,312,948 311,641 0 135,993 125,784 38,484 240,503 6,145,271
NET GAIN (LOSS)
FROM INVESTMENT IN
NSI DC TRUST ... 5,159,880 6,418,791 1,464,350 529,428 0 (1,514) 143,045 (3,891) 0 13,710,089
BENEFITS PAID
TO PARTICIPANTS ... (1,446,551) (1,906,506) (2,857,128) (72,234) (203,746) (101,843) (47) (10) 0 (6,588,065)
INTRAPLAN TRANSFERS ... (914,656) (176,840) (2,343,837) 699,538 (7,582) (224,644) 2,060,281 907,740 0 0
NET INCREASE (DECREASE) 4,571,833 6,542,203 (2,423,667) 1,468,373 (211,328) (192,008) 2,329,063 942,323 240,503 13,267,295
NET ASSETS AVAILABLE
FOR BENEFITS,
December 31, 1996 20,258,600 21,415,464 22,780,355 1,136,979 2,303,446 642,374 0 0 521,322 69,058,540
NET ASSETS AVAILABLE
FOR BENEFITS,
December 31, 1997 $24,830,433 $27,957,667 $20,356,688 $2,605,352 $2,092,118 $450,366 $2,329,063 $942,323 $761,825 $82,325,835
</TABLE>
The accompanying notes are an integral part of this statement.
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LITHONIA LIGHTING PROFIT SHARING AND
RETIREMENT PLAN FOR SALARIED EMPLOYEES
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. PLAN DESCRIPTION
The following is a brief description of the Lithonia Lighting Profit
Sharing and Retirement Plan for Salaried Employees (the "Plan") of the
Lithonia Lighting Division of National Service Industries, Inc. of Georgia
and the Lithonia Lighting Division of NSI Enterprises, Inc. (together, the
"Employer"). Both National Service Industries, Inc. of Georgia and NSI
Enterprises, Inc. are wholly owned subsidiaries of National Service
Industries, Inc. ("NSI"). This description is provided for informational
purposes only. Participants should refer to the plan agreement for a
complete description.
General
The Plan, as amended and restated effective September 1, 1989, is a defined
contribution plan established under the provisions of Section 401(a) of the
Internal Revenue Code ("IRC"). The Plan covers all nonunion, salaried,
nonhourly employees of the Employer who have six months of service, as
defined, and who are 21 years of age. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended.
Contributions
Contributions are made by the participants and the Employer. Participants
may elect to contribute between 1% and 15% of before-tax compensation, as
defined in the Plan, subject to certain limitations under the IRC. The
Employer provides a matching contribution in an amount equal to 50% of each
participant's contributions up to 6% of compensation for the plan year. For
any plan year in which the Employer's net profits, as defined, equal or
exceed $6,000,000, the Employer shall make a profit-sharing contribution
equal to 2% of the net profits for the plan year, less the aggregate
matching contribution for the plan year.
If 2% of net profits plus any forfeitures of nonvested participant
accounts, less matching contributions, equals or exceeds 30% of the 2% of
net profits plus forfeitures, then such 30% is allocated among participants
on the basis of service credits, as defined. The remainder of the
profit-sharing contribution is allocated to participants who made elective
deferrals during the plan year and who are employed on the last day of the
plan year. This allocation is based on the relative elective deferrals up
to 6% of compensation. If the 30% criteria is not met, the entire
profit-sharing contribution is allocated to participants on the basis of
service credits. The total profit-sharing contribution to the Plan for the
year ended December 31, 1997 was $714,000.
Vesting
Participants are always fully vested in their voluntary contributions.
Vesting of employer contributions occurs on an increasing scale, ranging
from 10% after one year of service, as defined, to 100% after seven years
of service. Nonvested employer contributions are forfeited upon a
participant's withdrawal from the Plan and are added to the employer
contribution for allocation to remaining participants based on service
credits.
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Administration
The responsibility for administration of the Plan rests with the Plan's
retirement committee, which is appointed by the board of directors of NSI.
All administrative expenses of the Plan were paid by the Employer during
the year ended December 31, 1997.
Participants' Accounts
Individual accounts are maintained for each of the Plan's participants to
reflect the particular participant's contributions and related employer
contributions as well as the participant's share of the Plan's income and
any related investment management fees and expenses.
The Plan's investment fund balances are expressed in units. At December 31,
1997 and 1996, 6,817,486 and 6,997,921 units, respectively, were assigned
to plan participants. Unit values for each investment fund were as follows
at December 31, 1997 and 1996:
1997 1996
Balanced Fund............................... $33.18 $26.40
Diversified Equity Fund..................... 14.04 12.05
Stable Value Fund........................... 12.07 11.31
NSI Stock Fund.............................. 19.61 14.52
International Fund.......................... 4.82 5.01
Index Fund.................................. 89.56 N/A
Small Company Fund.......................... 11.21 N/A
Investment in Master Trust
Under a trust agreement dated September 1, 1993, as amended, Wachovia Bank
of Georgia, N.A. was appointed trustee of the NSI Defined Contribution
Plan's Master Trust (the "NSI DC Trust"). Effective January 1, 1998,
INVESCO Trust Company has been appointed trustee of the NSI DC Trust.
The Plan's assets are commingled in the NSI DC Trust together with the
assets of certain defined contribution plans of other NSI divisions. The
investments of the NSI DC Trust are subject to certain administrative
guidelines and limitations as to type and amount of securities held.
Certain fund assets are allocated to selected independent investment
managers to invest under these general guidelines.
Investment Options
The separate investment options made available under the Plan may be
changed, eliminated, or modified from time to time by the investment
committee of the NSI DC Trust. Participants make their investment elections
in 1% increments, with changes allowed on a daily basis.
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The separate investment options offered by the Plan are as follows:
o Diversified Equity Fund. This fund is a diversified stock fund
designed to invest in a broad range of common stocks providing capital
growth.
o Stable Value Fund. This is a fixed income fund designed to provide a
steady level of current income while focusing on preservation of
principal.
o Balanced Fund. This fund is invested in a changing mix of high-quality
stocks and bonds. The fund is designed to provide capital growth and
current income while limiting the risk of principal loss.
o NSI Stock Fund. This fund is invested in NSI common stock, although it
may hold other short-term investments from time to time. A participant
may not direct more than 50% of his/her account balance to be invested
in this fund.
o International Fund. This fund is invested in the stock of non-U.S.
companies and is designed to provide long-term growth.
o Index Fund. This fund (offered beginning June 1997) is invested in all
of the stocks in the Standard & Poor's 500 Composite Stock Price
Index.
o Small Company Fund. This fund (offered beginning June 1997) is
invested in small or emerging companies that show potential for
increased size and profitability. The fund seeks little or no current
income.
Loans to Participants
The Plan permits loans to participants up to the lesser of 50% of the
participant's vested account balance or $50,000. A participant has up to
five years to repay the principal and interest, unless the loan is for the
purchase of a primary residence, in which case the repayment period will be
established at the time the loan is approved. Loan processing fees are
charged directly to the participant's account. Interest rates on loans to
participants are based on market rates, as determined by the plan
administrator. The interest rate as of December 31, 1997 was 9.5%.
Loan issuances and repayments are included in intraplan transfers in the
accompanying statement of changes in net assets available for benefits.
Interest on loans is included in the net gain from investment in NSI DC
Trust and is allocated to each investment fund based on participants'
investment elections.
Benefits
A participant is entitled to receive the distribution of his/her vested
account balance upon death, disability, or retirement (age 65). These
benefits are payable in a lump-sum amount. A participant who terminates
employment with the Employer for reasons other than these is entitled to
receive his/her contributions in a lump sum as soon as administratively
feasible.
Benefits are payable in cash, except that any portion of a participant's
account balance which is invested in the NSI Stock Fund is distributed in
the form of shares of NSI common stock, with fractional shares paid in
cash.
Hardship withdrawals may be made upon proven financial hardship of a
participant, as defined in the plan agreement and as approved by the Plan's
retirement committee.
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Plan Termination
Although the Employer intends for the Plan to be permanent, the Plan
provides that the Employer has the right to discontinue contributions or to
terminate the Plan at any time. In the event of plan termination, the
participants are vested in the amounts allocated to their respective
accounts; however, the accounts shall continue to be held by the trustee
until such time as the participants terminate their employment or otherwise
become entitled to such vested benefits under the provisions of the Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accounts of the Plan are maintained by the trustee on the cash basis of
accounting. The accompanying financial statements have been prepared using
the accrual method of accounting by application of memorandum entries. The
preparation of financial statements in conformity with generally accepted
accounting principles requires the Plan's management to use estimates and
assumptions that affect the accompanying financial statements and
disclosures. Actual results could differ from these estimates.
Investment Valuation
Investments of the NSI DC Trust, except for the guaranteed investment
contracts ("GICs"), are stated at fair value, as determined by the trustee
from quoted market prices. Securities traded on a national exchange are
valued at the last reported sales price on the last business day of the
plan year; investments traded in the over-the-counter market and listed
securities for which no sale was reported on the last day of the plan year
are valued at the last reported bid price.
GICs included in the NSI DC Trust are fully benefit-responsive and are
therefore carried at contract value (cost plus accrued interest) in the
accompanying financial statements in accordance with Statement of Position
94-4. At December 31, 1997 and 1996, contract value approximates fair
value. At December 31, 1997, the weighted average crediting interest rate
was 7%. For the year ended December 31, 1997, the annual yield on the GICs
held by the NSI DC Trust was 6.9%. For certain of the GICs held by the NSI
DC Trust, crediting interest rates may be changed if certain events occur,
such as early retirements, plant closings, etc., but in no case are
adjusted to a rate less than 0%. GICs are subject to credit risk based on
the ability of the insurance company to meet interest or principal
payments, or both, as they become due.
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Certain GICs included in the NSI DC Trust are synthetic; that is, the NSI
DC Trust owns certain fixed income securities, and the contract issuer
provides a "wrapper" that guarantees a fixed rate of return and provides
benefit responsiveness. At December 31, 1997, the fair value of the
underlying assets of the synthetic GICs (determined from quoted market
prices) and the value of the related wrapper contracts were $42,945,334 and
$(825,875), respectively.
3. NSI DC TRUST
Investment Income
Investment income of the NSI DC Trust for the year ended December 31, 1997
is summarized as follows:
Dividends on common stock.........................$ 454,559
Interest income................................... 4,303,571
Net appreciation in fair value of NSI common stock 4,046,711
Net income from common/collective trust........... 18,537,212
Net income from mutual funds...................... 14,708,000
Net loss from pooled separate account............. (104,200)
Total investment income............. $41,945,853
The investment income of the NSI DC Trust for the year ended December 31,
1997 is allocated among participating plans as follows:
Lithonia Lighting Profit Sharing
and Retirement Plan
for Salaried Employees.................... $13,710,089
All other NSI plans............................... 28,235,764
Total............................... $41,945,853
Net Assets
The net assets of the NSI DC Trust are as follows at December 31, 1997 and
1996:
1997 1996
Mutual funds...................... $ 79,312,170 $ 63,411,122
Common/collective trust........... 79,112,333 57,558,795
Guaranteed investment contracts... 52,443,357 55,187,898
NSI common stock.................. 18,045,789 11,279,289
Loans receivable from participants 7,564,684 6,828,607
Money market fund................. 1,740,602 3,704,985
Pooled separate account........... 2,385,857 2,723,094
240,604,792 200,693,790
Cash.............................. 9,476 13,342
240,614,268 200,707,132
Accrued investment income......... 112,870 100,534
Adjustments for pending trades.... (199,191) (223,542)
Other............................. (47,759) (54,239)
Net assets........................ $240,480,188 $200,529,885
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The allocation of the net assets of the NSI DC Trust to participating plans
is based on participant units and is as follows as of December 31, 1997 and
1996:
1997 1996
Amount Percent Amount Percent
Lithonia Lighting Profit Sharing
and Retirement Plan for
Salaried Employees $ 81,564,010 33.92% $ 68,537,218 34.2%
All other plans 158,916,178 66.08 131,992,667 65.8
Total $240,480,188 100.00% $200,529,885 100.0%
Investment in NSI Common Stock
As of December 31, 1997 and 1996, approximately 7.5% and 5.6%,
respectively, of the NSI DC Trust's net assets were invested in the common
stock of NSI, a party in interest to the Plan.
4. TAX STATUS
The Plan has received a favorable determination letter from the Internal
Revenue Service dated June 5, 1996 stating that the Plan was designed in
accordance with plan design requirements as of that date. The Plan has been
amended since receiving the determination letter. However, the plan
administrator believes that the Plan is currently designed and is being
operated in compliance with the applicable requirements of the IRC.
Therefore, the plan administrator believes that the Plan was qualified and
that the related trust was tax-exempt as of December 31, 1997 and 1996.
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 11-K into National Service Industries, Inc.'s
previously filed Registration Statement covering the Lithonia Lighting
Profit Sharing and Retirement Plan for Salaried Employees.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Atlanta, Georgia
June 25, 1998
