Page 1 of 12
Exhibit Index on Page 2
FORM 11-K
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 [FEE REQUIRED].
For the fiscal year ended: December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
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:
Zep Manufacturing Company Profit Sharing/
401(k) Retirement Plan
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
Page 2
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 Plan Benefits as of December
31, 1994 and December 31, 1993
Statements of Changes in Net Assets Available for Plan Benefits for
the Year Ended December 31, 1994 and the Four-Month Period Ended
December 31, 1993.
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.
Zep Manufacturing Company Profit Sharing/
401(k) Retirement Plan
Date: July 13, 1995 By: National Service Industries, Inc.
Plan Administrator
By: /s/ D. Raymond Riddle
Name: D. Raymond Riddle
Title: President and Chief Executive Officer
Page 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of
ZEP Manufacturing Company
Profit-Sharing 401(k) Retirement Plan:
We have audited the accompanying statements of net assets available for benefits
of ZEP MANUFACTURING COMPANY PROFIT-SHARING 401(k) RETIREMENT PLAN as of
December 31, 1994 and 1993 and the related statements of changes in net assets
available for benefits for the year ended December 31, 1994 and the four-month
period ended December 31, 1993. 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 ZEP
Manufacturing Company Profit-Sharing 401(k) Retirement Plan as of December 31,
1994 and 1993 and the changes in net assets available for benefits for the year
ended December 31, 1994 and the four-month period ended December 31, 1993 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 purposes 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, are fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
Arthur Andersen LLP
Atlanta, Georgia
July 5, 1995
Page 4 ZEP MANUFACTURING COMPANY
PROFIT-SHARING 401(K) RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1994 AND 1993
1994 1993
RECEIVABLES
Employer .......................... $ 0 $ 0
Employee .......................... 273,597 0
Total receivables ....... 273,597 0
INVESTMENTS, at market value (Note 1):
Stable Value Fund ................. 29,522,580 0
Balanced Fund ..................... 17,724,586 0
Loans to participants ............. 2,421,818 0
Diversified Equity Fund ........... 17,026,627 0
NSI Stock Fund .................... 3,710,350 5,923,897
NSI DC Fixed Income Fund .......... 0 40,253,727
NSI DC ZEP Equity Fund ............ 0 20,253,321
Total investments ....... 70,405,961 66,430,945
NET ASSETS AVAILABLE FOR BENEFITS .... $70,679,558 $66,430,945
Page 5
ZEP MANUFACTURING COMPANY
PROFIT-SHARING 401(k) RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1994
AND THE FOUR MONTH PERIOD ENDED DECEMBER 31, 1993
Diversified Stable NSI
Balanced Equity Value Stock
Fund Fund Fund Fund
NET ASSETS AVAILABLE FOR BENEFITS,
August 31, 1993 .................... $ 0 $ 0 $ 0 $ 5,895,000
CONTRIBUTIONS ...................... 0 0 0 0
NET GAIN FROM INVESTMENTS .......... 0 0 0 28,897
BENEFIT PAYMENTS ................... 0 0 0 0
OTHER .............................. 0 0 0 0
NET ASSETS AVAILABLE FOR BENEFITS,
December 31, 1993 .................. 0 0 0 5,923,897
CONTRIBUTIONS ...................... 1,489,545 1,872,239 1,632,958 379,698
NET GAIN FROM INVESTMENTS .......... 416,897 (220,545) 2,508,568 329,836
BENEFIT PAYMENTS ................... (282,977) (110,918) (3,286,005) (69,940)
ADMINISTRATIVE EXPENSES ............ (6,975) 0 (4,175) 0
INTRAPLAN TRANSFERS/TRANSFERS TO ZEP
CONTRACT EMPLOYEE PLAN ............. 16,185,963 15,587,575 28,742,871 (2,830,771)
OTHER .............................. 0 0 0 0
NET ASSETS AVAILABLE FOR BENEFITS,
December 31, 1994 .................. $17,802,453 $ 17,128,351 $ 29,594,217 $ 3,732,720
NSI DC
ZEP Fixed
Loan Equity Income
Fund Fund Fund Total
NET ASSETS AVAILABLE FOR BENEFITS,
August 31, 1993 .................... $ 0 $ 19,583,591 $ 39,153,272 $ 64,631,863
CONTRIBUTIONS ...................... 0 1,176,449 0 1,176,449
NET GAIN FROM INVESTMENTS .......... 0 290,617 1,100,455 1,419,969
BENEFIT PAYMENTS ................... 0 (862,370) 0 (862,370)
OTHER .............................. 0 65,034 0 65,034
NET ASSETS AVAILABLE FOR BENEFITS,
December 31, 1993 .................. 0 20,253,321 40,253,727 66,430,945
CONTRIBUTIONS ...................... 0 0 0 5,374,440
NET GAIN FROM INVESTMENTS .......... 84,752 1,344 2,300 3,123,152
BENEFIT PAYMENTS ................... (7,875) (448,249) 0 (4,205,964)
ADMINISTRATIVE EXPENSES ............ 0 0 0 (11,150)
INTRAPLAN TRANSFERS/TRANSFERS TO ZEP
CONTRACT EMPLOYEE PLAN .......... 2,279,662 (19,806,416) (40,256,027) (97,143)
OTHER .............................. 65,278 0 0 65,278
NET ASSETS AVAILABLE FOR BENEFITS,
December 31, 1994 .................. $ 2,421,817 $ 0 $ 0 $ 70,679,558
The accompanying notes are an integral part of these statements.
Page 6
ZEP MANUFACTURING COMPANY
PROFIT-SHARING 401(k) RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accounts of the ZEP Manufacturing Company Profit Sharing 401(k) Retirement
Plan (the "Plan") of ZEP Manufacturing Company (the "Company"), a division of
National Service Industries, Inc. ("NSI"), 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.
Investment in NSI Defined Contribution Master Trust Fund
Beginning January 1, 1994, a portion of the Plan's assets were invested in a
Defined Contribution Master Trust Fund ("DC Master Trust"). Investments of the
DC Master Trust are reflected at market values determined by the custodian from
publicly stated price information. These investments 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 the general DC Master Trust guidelines.
Summarized financial information of the DC Master Trust for 1994 is presented as
follows:
Interest and dividend income ......................... $ 6,119,451
Net appreciation (depreciation) in market value ...... (387,149)
Investment management fees ........................... (221,747)
Net gain from investments in the NSI DC Master Trust . $ 5,510,555
Allocation to NSI plans:
ZEP Manufacturing Retirement Plan .................... $ 3,123,152
All other NSI plans .................................. 2,387,403
Total .............................................. $ 5,510,555
Page 7
NSI DC Master Trust Investments:
Equity investment funds .............................. $ 66,145,415
Guaranteed investment contracts ...................... 52,672,980
Loans receivable ..................................... 5,145,365
NSI common stock ..................................... 4,925,868
Master notes ......................................... 3,343,227
Cash ................................................. 0
132,232,855
Accrued interest income .............................. 74,167
Due to broker ........................................ (149,089)
Receivables .......................................... 7,738
Total investments .................................. $ 132,165,671
Allocation to NSI plans based on participant balances:
ZEP Manufacturing Retirement Plan .................... $ 70,405,961
All other NSI plans .................................. 61,759,710
Total ............................................... $ 132,165,671
Investment in NSI Defined Contribution Fixed Income Fund
As of January 1, 1993, a portion of the Plan's assets were commingled in a
Defined Contribution Fixed Income Fund (DC Fixed Income Fund) together with the
assets of certain profit sharing plans of other NSI divisions. Investments of
the DC Fixed Income Fund are reflected at market values determined by the
custodian from publicly stated price information. These investments 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 the general DC Fixed Income Fund guidelines.
Summarized financial information of the DC Fixed Income Fund for the four month
period ended December 31, 1993 is presented as follows:
Interest and dividend income ......................... $ 1,464,731
Investment management fees ........................... (6,775)
Net gain from investments in the NSI DC
fixed income fund .................................... $ 1,457,956
Page 8
Allocation to NSI plans:
ZEP Manufacturing Company profit ..................... $ 1,100,455
All other NSI plans .................................. 357,501
Total .............................................. $ 1,457,956
DC fixed income fund investments at December 31, 1993:
Guaranteed investment contracts ...................... $ 36,541,338
Master notes ......................................... 16,618,541
Cash ................................................. 22,953
Accrued investment income ............................ 9,817
Total investments .................................. $ 53,192,649
Allocation to NSI Plans, based on participant balances, at December 31, 1993:
ZEP Manufacturing Company
Profit-Sharing 401(k) Retirement Plan...... $40,253,727 75.68%
All other NSI plans ....................... 12,938,922 24.32
$53,192,649 100.00%
Investment in NSI Defined Contribution ZEP Equity Fund
As of January 1, 1993, a portion of the Plan's assets were placed in the Defined
Contribution ZEP Equity Fund (DC ZEP Equity Fund) together with the assets of
ZEP Manufacturing Company Profit Sharing 401(k) Retirement Plan. Investments of
the DC ZEP Equity Fund are reflected at market values determined by the
custodian from publicly stated price information. These investments 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 the general DC ZEP Equity Fund guidelines.
Summarized financial information of the DC ZEP Equity Fund for the four-month
period ended December 31, 1993 is presented as follows:
Interest and dividend income ....................... $ 405,744
Net realized and unrealized (depreciation)
appreciation in market value of investments ........ (90,708)
Investment management fees ......................... (2,412)
Net gain from investments in the DC ZEP equity fund
during the period .................................. $ 312,623
Page 9
Allocation to NSI plans:
ZEP Manufacturing Company Profit-Sharing 401(k)
Retirement Plan .................................... $ 290,617
ZEP Manufacturing Company Profit-Sharing 401(k)
Retirement Plan for Contract Employees ............. 22,006
Total ............................................ $ 312,623
DC ZEP Equity Fund Investments at December 31, 1993:
Common stock ....................................... $ 0
Master note ........................................ 199,058
Receivable from pending sales ...................... 21,474,407
Total investments ................................ $ 21,673,465
Allocation to NSI Plans, based on participant balances, at December 31, 1993:
ZEP Manufacturing Company Profit-Sharing 401(k)
Retirement Plan ............................... $20,253,321 93.45%
ZEP Manufacturing Company Profit-Sharing 401(k)
Retirement Plan for Contract Employees ........ 1,420,144 6.55
$21,673,465 100.00%
Investment in NSI Common Stock
As of December 31, 1994, approximately 5% of the Plan's net assets were invested
in common stock of NSI, a party-in-interest. The Plan's investment in NSI common
stock was reflected at market value in the accompanying financial statements.
Tax Status
The Plan has not received a favorable determination letter from the Internal
Revenue Service. However, the plan administrator believes that the Plan is
currently designed and is being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, the plan administrator
believes that the Plan was tax-exempt as of December 31, 1994.
2. TRUST AGREEMENT
Under a trust agreement dated September 1, 1993, as amended, Wachovia Bank of
Georgia, N.A. was appointed trustee of the NSI Defined Contribution Plans Master
Trust (which includes the DC Fixed Income Fund, DC ZEP Equity Fund and Common
Stock discussed in Note 1). Certain officers of NSI were appointed
administrators of the Plan's assets together with the income derived therefrom.
Prior to September 1, 1993, the assets of the Plan were included in the NSI
General Retirement Trust (GRT). Under a trust agreement dated March 1, 1978,
certain officers of NSI were appointed trustee of the GRT and were
administrators of the Plan's assets and Wachovia Bank of Georgia was the
custodian.
Page 10
3. PLAN DESCRIPTION
The following brief description of the Plan is provided for informational
purposes only. Participants should refer to the Plan agreement for more complete
information.
The Plan was established as a spin-off from the ZEP Manufacturing Company Profit
Sharing Retirement Plan (the "Prior Plan") to cover all eligible hourly paid
employees represented by a collective bargaining unit. The Plan is a voluntary,
defined contribution plan covering all union employees of the Company, who have
attained the age of 21, with at least six months of service, as defined.
Participants may contribute between 1% and 10% of before-tax compensation but
not to exceed $8,994 (or such larger amount as may be determined by the
Secretary of Treasury) for any participant in any calendar year. Contributions
are made by the Company in an amount equal to the same percentage of
compensation of participants under this Plan as employer contributions to the
Prior Plan bears to the total compensation of the eligible employees who are
participants under the Prior Plan. The Company contributes 5% of net profits, as
defined. The total of these amounts can be increased for any additional
discretionary amount determined by the Board of Directors of NSI. The maximum
compensation with respect to any participant for purposes of employer
contributions to the Plan is $40,000.
During December 1993, the Plan was amended and restated to allow participant
directed investments effective January 1, 1994. In addition, the Plan year end
was changed from August 31 to December 31. Thus, the accompanying financial
statements are for the year ended December 31, 1994 and the four month period in
the short plan year ended December 31, 1993. The Plan, as amended and restated,
does not permit employer contributions during the short plan year.
Non-vested employer contributions are forfeited upon withdrawal or termination,
as defined, from the Plan and are allocated to remaining participants. Vesting
of employer contributions occurs on an increasing scale ranging from 20% vesting
after three years of service, as defined, to 100% vesting after seven years of
service. Participants are always fully vested in their individual contributions.
Although the Company intends for the Plan to be permanent, the Plan provides
that the Company has the right to discontinue contributions or to terminate the
Plan at any time. In the event of termination, each participant shall be vested
with the balance of his account and his proportionate share of any future
adjustments or forfeitures.
Page 11
4. PLAN INVESTMENT OPTIONS
The separate investment funds made available under the Plan may be changed,
eliminated, or modified from time to time by the Investment Committee. The
separate investment funds offered by the Plan are as follows:
* Diversified Equity Fund-This fund is a diversified stock fund designed to
invest in a broad range of common stocks providing capital growth.
* Stable Value Fund This is a fixed income fund which is designed to provide a
steady level of current income while focusing on preservation of capital.
* 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.
* NSI Stock Fund-This fund is invested in NSI common stock, although it may hold
other short-term investments from time to time.
5. PLAN MERGER
Effective January 1, 1995, the ZEP Manufacturing Company Profit Sharing 401(k)
Retirement Plan for Contract Employees (the "ZEP Plan") was merged into the ZEP
Manufacturing Company Profit Sharing 401(k) Retirement Plan (the "Plan"). In
connection with such merger, all of the assets and liabilities of the ZEP Plan
were transferred to the Plan. All participants of the ZEP Plan shall be eligible
to participate in the Plan.