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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Date of Report ( Date of earliest event reported) May 24, 2000
NATIONAL SERVICE INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-3208 58-0364900
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification Number)
Incorporation )
1420 Peachtree Street, N. E., Atlanta, Georgia 30309-3002
(Address of Principal Executive Offices) (Zip Code)
(404) 853-1000
(Registrant's Telephone Number, Including Area Code)
None
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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Item 5. Other Events.
See the Registrant's press release, dated May 24, 2000, which is attached
hereto as Exhibit 99 and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
(c) Exhibit 99 Press Release
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL SERVICE INDUSTRIES, INC.
By: /s/ Brock A. Hattox
Brock A. Hattox
Executive Vice President and
Chief Financial Officer
Date: May 25, 2000
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EXHIBIT INDEX
Exhibit 99. Registrant's press release dated May 24, 2000. See page 4.
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Company contact:
May 24, 2000 Chester J. Popkowski (Chet)
Vice President, Treasurer
(404) 853-1405
Web site: www.nationalservice.com
NSI
ANNOUNCES REVISED THIRD QUARTER EARNINGS OUTLOOK
Atlanta, GA -- National Service Industries (NYSE: NSI) today announced
that it expects diluted earnings per share (EPS) for the third quarter ending
May 31, 2000 to be lower than anticipated. Diluted EPS is expected to be 50 to
55 cents in the third quarter compared to 75 cents for the same period last
year. This revised forecast is primarily due to lower-than-anticipated operating
profits in the company's lighting equipment segment. The envelope segment is
also contributing to this shortfall. The company plans to report third quarter
results on June 27.
Net of any unusual items in both 1999 and 2000, this year's fourth
quarter diluted EPS is expected to exceed last year's fourth quarter diluted EPS
of 87 cents. For the total year, excluding any net unusual items in both time
periods, 2000 diluted EPS is expected to be 5 percent to 10 percent lower than
the 1999 total year diluted EPS of $2.72. Last year, the company reported an
unadjusted total year diluted EPS of $3.03.
James S. Balloun, NSI's chairman and chief executive officer, stated,
"Our markets remain strong. We expect to deliver double-digit third quarter
revenue growth over last year's third quarter. However, we are disappointed that
our diluted earnings per share for the third quarter is expected to be lower
than both our plan numbers and last year's results. While the third quarter has
not closed and the results are not final, a key factor contributing to
lower-than-anticipated diluted EPS for the third quarter and the year is lower
operating profits in our lighting segment."
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During the third quarter, Lithonia Lighting doubled production capacity
at its Monterrey, Mexico facilities from 200,000 to 400,000 square feet and
added staff accordingly. This expansion was in response to projected heavy
demand for its new SP8 and GT8 fluorescent lighting fixtures. These products,
which occupy up to 20 percent less space than conventional lensed troffers, are
the first fixtures specifically designed to take full advantage of the
performance characteristics of the highly efficient T8 lamp. The T8 fluorescent
lamp, one inch in diameter and one-third smaller than the conventional T12 lamp,
produces the same amount of light with an energy savings of 20 percent or
greater when using an electronic ballast.
Several problems caused the operating profit shortfall in the lighting
segment. First, order rates lagged behind expectations during the early part of
the quarter. In addition, problems encountered during the expansion at the
Monterrey facilities restrained production rates and in turn caused an
under-absorption of costs. In order to meet customer expectations, production
levels were expanded at the Cochran, Georgia plant. At the same time, the
Cochran plant was absorbing production from a California plant that was closed
during the first quarter. The combination of these factors slowed shipments and
led to the under-absorption of costs in Monterrey and to inefficiencies in
Cochran.
Management has largely resolved these production issues and expects to
be back on track in the fourth quarter. Lighting segment order rates are now at
an all-time high and are expected to remain strong in May due to continued
strength in the market. An announced price increase effective May 27 is expected
to improve margins in the fourth quarter.
Balloun stated, "Our issues at Lithonia are largely behind us. The new
SP8 and GT8 fixtures are being enthusiastically received in the market. We are
pleased to have the expansion in capacity to fulfill this demand."
Jim H. McClung, president of Lithonia Lighting, added, "With the
introduction of these innovative products, we have once again delivered on our
promise to give our customers the best value in lighting. I am proud of
Lithonia's ability to double capacity in Mexico for the production of these
troffers and to achieve acceptance from engineers, specifiers, and distributors
in a very short period of time."
The envelope segment experienced lower volumes in its direct mail
market. In addition, the segment's operating margin was adversely impacted by
production delays associated with both the start-up inefficiencies of new
equipment and the relocation of two plants and by increased paper prices. The
relocations have been completed. During the fourth quarter, profit margins are
expected to improve on forecasted increased volumes.
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Balloun concluded, "Despite our anticipated disappointing third quarter
results, we remain confident that our strategy and the aggressive actions we are
taking will result in stronger, more consistent revenue and earnings growth next
year. The expansion of factories to accommodate production of new products as
well as the shift from older operating facilities to newer, more cost-efficient
ones are important, albeit temporarily painful, steps toward our growth
objectives."
* * *
National Service Industries, Inc., with fiscal year 1999 sales of $2.2
billion, has four business segments -- lighting equipment, chemicals, textile
rental, and envelopes. Dividends have been increased for 38 consecutive years
and paid for the past 64 years without a decrease.
* * *
Certain information contained in this press release constitutes
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are inherently
uncertain and involve risks. Consequently, actual results may differ materially
from those indicated by the forward-looking statements. Statements made herein
that may be considered forward looking include statements concerning: (a) the
company's future revenue and earnings; (b) projected demand for new fluorescent
lighting products; (c) expectations regarding the resolution of production
issues in the lighting equipment segment; (d) expectations of continued strong
market conditions and order rates in the lighting equipment segment; (e) the
impact of price increases on future profit margins in the lighting equipment
segment; and (f) forecasted margin and volume increases in the envelope segment.
The following factors, in addition to those discussed in the Company's Annual
Report on Form 10-K for the year ended August 31, 1999, could cause results to
differ materially from the results suggested by the forward-looking statements:
(a) the uncertainty of general business and economic conditions, including the
potential for a slowdown in non-residential construction awards, interest rate
changes, and fluctuations in commodity and raw material prices; (b) the degree
of success of strategic initiatives related to increased productivity, new
product development, technological advances, and cost synergies; (c) the
successful completion of changes to manufacturing operations; and (d) the
market's acceptance of a price increase.
