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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, 1999
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, 1999 and 1998
Statement of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 1999
Notes to Financial Statements
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 28, 2000 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, 1999 and 1998
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, 1999 and 1998 and the related statement of changes in net
assets available for benefits for the year ended December 31, 1999. 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998 and the changes in its net assets available for
benefits for the year ended December 31, 1999 in conformity with accounting
principles generally accepted in the United States.
/s/ Arthur Andersen
Atlanta, Georgia
June 8, 2000
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LITHONIA LIGHTING
PROFIT SHARING AND RETIREMENT PLAN
FOR SALARIED EMPLOYEES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1999 and 1998
1999 1998
------------- ------------
INVESTMENT IN NSI DC TRUST,
at fair value (Notes 2 and 3) $101,350,350 $94,212,874
CONTRIBUTIONS RECEIVABLE:
Employer 1,065,826 1,202,162
Participant 54,118 40,075
------------- ------------
Total contributions receivable 1,119,944 1,242,237
------------- ------------
NET ASSETS AVAILABLE FOR BENEFITS $102,470,294 $95,455,111
============= ============
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
FOR THE YEAR ENDED DECEMBER 31, 1999
CONTRIBUTIONS:
Employer, net of forfeitures $ 2,240,028
Participant 5,022,998
-------------
Total contributions 7,263,026
NET GAIN FROM INVESTMENT IN NSI DC TRUST (Note 3) 7,753,475
BENEFITS PAID TO PARTICIPANTS (8,001,318)
-------------
NET INCREASE 7,015,183
NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 95,455,111
-------------
NET ASSETS AVAILABLE FOR BENEFITS, end of year $102,470,294
=============
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, 1999 and 1998
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 at least 21 years of age. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
Effective September 1998, the Employer acquired GTY Industries. Salaried
employees of GTY Industries were eligible to participate in the Plan effective
January 1, 1999. Effective April 10, 1999, NSI acquired Peerless Lighting
Corporation ("Peerless"). Employees of Peerless were granted prior service
credit for purposes of eligibility, vesting, and service credits.
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,
1999 was $2,149,390.
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Vesting
Participants are always fully vested in their voluntary contributions. Vesting
of employer contributions occurs on an increasing scale, ranging from 20% after
one year of service, as defined, to 100% after five 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. Effective November 19, 1999, the Employer
ceased operations in the manufacturing plant in City of Industry, California.
Eligible employees, as defined, who were employed at the plant as of November
19, 1999 became 100% vested in their respective plan accounts.
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, 1999.
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.
Investment in Master Trust
The Plan's assets are commingled in the National Service Industries, Inc.
Defined Contribution Plans Master Trust (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 the type and amount of securities held. Certain fund
assets are allocated to selected independent investment managers to invest under
these general guidelines.
Effective January 1, 1998, INVESCO Trust Company was appointed trustee of the
NSI DC Trust.
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.
The separate investment options offered by the Plan are as follows:
o Diversified Equity Fund. This fund is invested in a mutual fund that
is 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. The majority of this fund's assets are investment contracts
("GICs") and synthetic GICs with insurance companies and banks. This
fund is managed by INVESCO Trust Company or its affiliates.
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o Balanced Fund. This fund is invested in a commingled fund that invests
in a changing mix of high-quality stocks and bonds. The fund is
designed to provide capital growth and current income while limiting
the risk of principal loss. This fund is managed by INVESCO Trust
Company or its affiliates.
o NSI Stock Fund. This fund is invested primarily 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 a mutual fund that
invests in the stock of non-U.S. companies and is designed to provide
long-term growth.
o Index Fund. This fund is invested in a mutual fund that invests in all
of the stocks in the Standard & Poor's 500 Composite Stock Price
Index.
o Small Company Fund. This fund is invested in a mutual fund that
invests in small or emerging companies that show potential for
increased size and profitability. The fund seeks little or no current
income. This fund is managed by INVESCO Trust Company or its
affiliates.
o Bond Index Fund. This fund is invested in a collective trust that
invests in a well-diversified portfolio that is representative of the
domestic investment-grade bond market.
Loans to Participants
The Plan permits loans to participants up to the lesser of 50% of the
participant's vested account balance or $50,000. A participant has up to five
years to repay the principal and interest, unless the loan is for the purchase
of a primary residence, in which case the repayment period will be established
at the time the loan is approved. Loan processing fees are charged directly to
the participant's account. Interest rates on loans to participants are based on
market rates, as determined by the plan administrator. The interest rate as of
December 31, 1999 was 9%.
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 or his/her beneficiary is entitled to receive the distribution of
his/her vested account balance upon death, disability, retirement (age 65), or
other termination of employment. These benefits are payable in a lump-sum
amount.
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.
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.
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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.
Reclassifications
Statement of Position ("SOP") 99-3, "Accounting for and Reporting of Certain
Defined Contribution Plan Investments and Other Disclosure Matters," eliminates
the requirement for a defined contribution plan to disclose participant-directed
investment programs. SOP 99-3 was adopted for the 1999 plan year, and 1998
financial statement amounts have been reclassified to eliminate the
participant-directed investment program disclosures. In addition, unit
information presented in the prior year's financial statements has been
eliminated in accordance with SOP 99-3.
Investment Valuation
Investments of the NSI DC Trust, except for the 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) by the NSI DC Trust in
accordance with SOP 94-4, "Reporting of Investment Contracts for Welfare and
Pension Plans." At December 31, 1999 and 1998, contract value approximates fair
value. At December 31, 1999, the weighted average crediting interest rate was
6.18%. For the year ended December 31, 1999, the annual yield on the GICs held
by the NSI DC Trust was 6.4%. 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 issuers to meet
interest or principal payments, or both, as they become due.
Certain GICs included in the NSI DC Trust are synthetic; that is, the NSI DC
Trust owns certain fixed income securities, and the contract issuer provides a
"wrapper" that guarantees a fixed rate of return and provides benefit
responsiveness. At December 31, 1999 and 1998, the fair value of the underlying
assets of the synthetic GICs (determined from quoted market prices) was
$54,030,000 and $48,749,000, respectively, and the value of the related wrapper
contracts was $990,000 and $(1,232,000), respectively.
Page 10
3. NSI DC TRUST
Investment Income
Investment income of the NSI DC Trust for the year ended December 31, 1999 is
summarized as follows:
Interest income $ 4,392,012
Dividends on NSI common stock 492,305
Net depreciation in fair value of NSI common stock (3,126,435)
Net loss from common/collective trusts (389,640)
Net income from mutual funds 21,103,949
------------
Total investment income $22,472,191
============
Net Assets
The net assets of the NSI DC Trust are as follows at December 31, 1999 and 1998:
1999 1998
-------------- -------------
Mutual funds $150,101,844 $119,999,722
Common/collective trusts 61,734,231 72,307,360
Guaranteed investment contracts 62,398,546 59,224,919
NSI common stock 11,026,746 15,348,609
Loans receivable from participants 7,942,464 7,590,683
Cash equivalents 4,873,957 0
-------------- -------------
298,077,788 274,471,293
Accrued investment income 23,712 6,608
Adjustments for pending trades 219,969 19,658
Accrued expenses and other (28,248) 0
-------------- -------------
Net assets $298,293,221 $274,497,559
============== =============
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, 1999 and 1998:
1999 1998
Amount Percent Amount Percent
------------------------- ------------------------
Lithonia Lighting Profit Sharing and Retirement
Plan for Salaried Employees $101,350,350 33.98% $ 94,212,874 34.32%
All other plans 196,942,871 66.02 180,284,685 65.68
------------------------- ------------------------
Total $298,293,221 100.00% $274,497,559 100.00%
========================= ========================
Investment in NSI Common Stock
As of December 31, 1999 and 1998, approximately 3.7% 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.
Page 11
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, 1999 and 1998.