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Page 1 of 59
Index to Exhibits on Page 16
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, 1997 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Based upon the closing price as quoted on the New York Stock Exchange October
31, 1997 the aggregate market value of the voting stock held by nonaffiliates of
the registrant was $1,911,956,610.75.
The number of shares outstanding of the registrant's common stock, $1.00 par
value, was 43,208,059 shares as of October 31, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K Incorporated Document
--------------------- ---------------------
Part I, Item 1 1997 Annual Report
Part II, Items 5, 6, 7, and 8 1997 Annual Report
Part III, Items 10, 11, 12, and 13 1997 Proxy Statement
Part IV, Item 14 1997 Annual Report
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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 7
Part IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 8-12
Signatures 13
Financial Statement Schedules 14-15
Index to Exhibits 16
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PART I
ITEM 1. BUSINESS
The registrant, incorporated in Delaware in 1928, provides a wide variety of
products and services through its operating segments, as follows:
Divisions Principal Products or Services Marketing Area
--------- ------------------------------ --------------
PRODUCTS AND SERVICES FOR INDUSTRIAL,
COMMERCIAL, INSTITUTIONAL, AND HEALTHCARE
CUSTOMERS
TEXTILE RENTAL
National Linen Service Rented napkins and table Principally the southern,
National Healthcare Linen Service linens, bed linens, bath southwestern, and central
National Facility Services towels, bar and shop towels, United States
National Direct Source sterilized products, mats,
and mops.
CHEMICAL
Zep Manufacturing Company Chemical products Throughout the United
Zep Manufacturing Company of Canada including cleaners, sanitizers, States, Canada,
Zep Europe disinfectants, polishes, floor Puerto Rico, and
Selig Chemical Industries finishes, degreasers, water Western Europe.
National Chemical treatments, pesticides,
insecticides, and herbicides.
ENVELOPE
Atlantic Envelope Company Custom business envelopes and South and Southwest.
ATENCO Filing Systems courier packages and specialty
Lyon Folder Company filing products.
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.
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Divisions Principal Products or Services Marketing Area
--------- ------------------------------ --------------
PRODUCTS AND SERVICES FOR THE CONSUMER
CHEMICAL
Enforcer Products, Inc. Pesticides, insecticides, rodenticides, Throughout the United States
herbicides, cleaners, plumbing
pipe and sewer drain cleaners
and clog removers
LIGHTING EQUIPMENT
Home-Vue Lighting Fluorescent work lamps, recessed Throughout the United States
Light Concepts and track lighting, and other
decorative fluorescent fixtures.
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 segment is the largest manufacturer of lighting fixtures in
the world and its textile Rental segment 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, 1997, 1996, and 1995. No one commodity or supplier provided a
significant portion of the company's material requirements.
Total Employment
The registrant employs approximately 16,100 people.
Financial Information about Industry Segments
The financial information required by this item is included on page 39 of the
company's annual report for the year ended August 31, 1997, under the caption
"Business Segment Information" and is incorporated herein by reference.
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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 business:
Number of Facilities
--------------------
Division Owned Leased Nature of Facilities
- -------- -------------------- --------------------
Lighting Equipment 7 5 Manufacturing plants
1 6 Distribution centers
-- 14 Field warehouses
Textile Rental 37 10 Linen plants
6 16 Linen service centers
-- 1 Distribution centers
Chemical 10 4 Manufacturing plants
22 49 Distribution centers
-- 2 Sales offices
Envelope 6 4 Manufacturing plants
-- 2 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, 1997.
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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, 1997, under the
captions "Listing," "Shareholders of Record," and "Common Share Prices and
Dividends per Share" and is incorporated here by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is included on pages 44 and 45 of the
company's annual report for the year ended August 31, 1997, 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 41 through 43 of the
company's annual report for the year ended August 31, 1997, under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and is incorporated herein by reference.
From time to time, the company may publish forward-looking statements relating
to such matters as anticipated financial performance, business prospects,
technological developments, new products, research and development activities
and similar matters. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements. In order to comply with
the terms of the safe harbor, the company notes that a variety of factors could
cause the company's actual results and experience to differ materially from the
anticipated results or other expectations expressed in the company's
forward-looking statements. The risks and uncertainties that may affect the
operations, performance, development and results of the company's business
include without limitation the following: (a) the uncertainty of general
business and economic conditions, particularly the potential for a slow down in
nonresidential construction awards; (b) the ability to achieve strategic
initiatives, including but not limited to: the ability to achieve sales growth
across the business segments through a combination of increased pricing,
enhanced sales force, new products and improved customer service; share
repurchases; and acquisitions.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is included on pages 26 through 40 of the
company's annual report for the year ended August 31, 1997, 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 Public
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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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 7, 1998, 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.
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, 1997 and term in office.
- --------------------------------------------------- ----------------------------------------------------------
James S. Balloun, age 59 Mr. Balloun was elected Chairman and Chief Executive
Chairman, President, and Officer effective February, 1996 and assumed the role
Chief Executive Officer of President in October, 1996. Previously, he served
and Director McKinsey & Company as a Director.
David Levy, age 60 Mr. Levy was elected Executive Vice President,
Executive Vice President, Administration in October, 1992. He served as Senior
Administration and Counsel Vice President, Secretary and Counsel from 1982 through
and Director September, 1992.
Brock A. Hattox, age 49 Mr. Hattox was elected Executive Vice President and
Executive Vice President and Chief Financial Officer effective September, 1996.
Chief Financial Officer Previously, he served McDermott International, Inc., as
Chief Financial Officer since 1991 and President of the
Engineering and Construction Group since 1995.
Stewart A. Searle III, age 46 Mr. Searle was elected Senior Vice President, Planning
Senior Vice President, and Development effective June, 1996. Previously, he served
Planning and Development four years with Equifax as Senior Vice President of
Development.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is included on pages 4 through 14 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,"
"Employment Contracts, Severance Arrangements, and Other Agreements," and
"Pension and Supplemental Retirement Benefits" of the company's proxy statement
for the annual meeting of stockholders to be held January 7, 1998, 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 7, 1998,
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 5 under the caption
"Certain Relationships and Transactions" of the company's proxy statement for
the annual meeting of stockholders to be held January 7, 1998, filed with the
Commission pursuant to Regulation 14A, and is incorporated herein by reference.
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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 1997 Annual Report contains the consolidated balance
sheets as of August 31, 1997 and 1996, the related consolidated
statements of income, stockholders' equity, and cash flows for each
of the three years in |the period ended August 31, 1997, and the
related report of Arthur Andersen LLP. The financial statements,
incorporated herein by reference, include the following:
Consolidated Balance Sheets - August 31, 1997 and 1996
Consolidated Statements of Income for the years ended August 31,
1997, 1996, and 1995
Consolidated Statements of Stockholders' Equity for the years ended
August 31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows for the years ended August 31,
1997, 1996, and 1995
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:
(1) Directors' Deferred Compensation Plan
(2) Executives' Deferred Compensation Plan and
Amendments
(3) Restated and Amended Supplemental Retirement
Plan for Executives of National Service
Industries, Inc., Amendments and Appendices
(4) The National Service Industries, Inc.
Senior Management Benefit Plan and Amendments
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ITEM 14. (Continued)
(3) Exhibits filed with this report (Continued)
Reference No. from
Reg. 229.601
Item 601 Description of Exhibit
-------- ----------------------
(5) Severance Protection Agreement between
National Service Industries, Inc.
and David Levy and Amendment
(6) Severance Protection Agreements between
National Service Industries, Inc. and
(a) James S. Balloun
(b) Stewart A. Searle III
(c) Brock A. Hattox
and Amendment
(7) Bonus Letter Agreements between National
Service Industries, Inc. and
(a) James S. Balloun
(b) David Levy
(c) Stewart A. Searle III
(d) Brock A. Hattox
and Supplemental Letter Agreement
(8) Long-Term Incentive Program and Amendment
(9) Incentive Stock Option Agreements between
National Service Industries, Inc. and
(a) D. Raymond Riddle
(b) Don W. Hubble
(c) David Levy
(d) J. Robert Hipps
(e) Stewart A. Searle III
(f) Brock A. Hattox
(10) Nonqualified Stock Option Agreement for
Corporate Officers between National Service
Industries, Inc. and
(a) James S. Balloun
(b) D. Raymond Riddle
(c) Don W. Hubble
(d) David Levy
(e) J. Robert Hipps
(f) Brock A. Hattox
(11) Nonqualified Stock Option Agreement for
Corporate Officers Effective Beginning
September 21, 1994 between National Service
Industries, Inc. and
(a) D. Raymond Riddle
(b) Don W. Hubble
(c) David Levy
(12) Benefits Protection Trust Agreement and
Amendments
(13) Executive Benefits Trust Agreement and
Amendment
(14) Consulting Agreement between National Service
Industries, Inc. and Erwin Zaban and Amendment
(15) 1992 Nonemployee Directors' Stock Option Plan
Effective September 16, 1992
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ITEM 14. (Continued)
(3)Exhibits filed with this report (Continued)
Reference No. from
Reg. 229.601
Item 601 Description of Exhibit
-------- ----------------------
(16) Nonemployee Directors' Stock Option Agreement
between National Service Industries, Inc. and
(a) John L. Clendenin
(b) Robert M. Holder, Jr.
(c) F. Ross Johnson
(d) James C. Kennedy
(e) Donald R. Keough
(f) Bryan D. Langton
(g) Bernard Marcus
(h) John G. Medlin, Jr.
(i) Dr. Betty L. Siegel
(j) Erwin Zaban
(17) National Service Industries, Inc. Executive
Savings Plan Effective September 1, 1994
and Amendment
(18) National Service Industries, Inc. Management
Compensation and Incentive Plan Effective
September 1, 1994
(19) Split-Dollar Agreement among National Service
Industries, Inc., D. Raymond Riddle, and
Wachovia Bank of Georgia N.A. Dated January
4, 1993 and Amendment
(20) Letter Agreement between National Service
Industries, Inc. and D. Raymond Riddle
Dated March 28, 1995
(21) Consulting Agreement between National Service
Industries, Inc. and D. Raymond Riddle
(22) Letter Agreement between National Service
Industries, Inc. and D. Raymond Riddle,
Dated April 10, 1995
(23) Employment Letter Agreement between National
Service Industries, Inc. and James
S. Balloun, Dated February 1, 1996
(24) Severance Agreement between National Service
Industries, Inc. and J. Robert Hipps,
Dated May 14, 1996
(25) Letter Agreement between National Service
Industries, Inc. and J. Robert Hipps,
Dated May 24, 1996
(26) National Service Industries, Inc. Nonemployee
Director Deferred Stock Unit Plan, Effective
June 1, 1996
(27) Severance Agreement between National Service
Industries, Inc. and Don W. Hubble, Dated
July 22, 1996
(28) Employment Letter Agreement between National
Service Industries, Inc. and Brock A.
Hattox, Dated August 26, 1996
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ITEM 14. (Continued)
(3)Exhibits filed with this report (Continued)
Reference No. from
Reg. 229.601
Item 601 Description of Exhibit
-------- ----------------------
(29) Incentive Stock Option Agreement Effective
Beginning September 17, 1996 between
National Service Industries, Inc. and
(a) James S. Balloun
(b) David Levy
(c) Stewart A. Searle III
(30) Nonqualified Stock Option Agreement for
Executive Officers Effective Beginning
September 17, 1996 between National Service
Industries, Inc. and
(a) James S. Balloun
(b) David Levy
(c) Stewart A. Searle III
(d) Brock A. Hattox
(31) National Service Industries, Inc. Long-Term
Achievement Incentive Plan Effective
September 17, 1996
(32) Aspiration Achievement Incentive Award
Agreements between National Service
Industries, Inc. and
(a) James S. Balloun
(b) Brock A. Hattox
(c) David Levy
(d) Stewart A. Searle III
[a confidential portion of which has been
omitted and filed separately with the
Securities and Exchange Commission]
(33) National Service Industries, Inc.
Supplemental Deferred Savings Plan Effective
September 18, 1996
(34) Letter Agreement Between National Service
Industries, Inc. and Don W. Hubble Dated
October 18, 1996, amending as of that date
the Incentive Stock Option Agreement Dated
September 15, 1993, the Incentive Stock
Option Agreement Dated September 21, 1994,
the Nonqualified Stock Option Agreement
Dated September 21, 1994, the Incentive
Stock Option Agreement Dated September 20,
1995, and the Nonqualified Stock Option
Agreement Dated September 20, 1995.
(35) Stock Option Agreement for Nonemployee
Directors Dated March 19, 1997 between
National Service Industries, Inc. and
(a) John L. Clendenin
(b) Senator Sam Nunn
11 Computations of Net Income per Share of
Common Stock
13 Information Incorporated by Reference from
Annual Report for the Year Ended
August 31, 1997
21 List of Subsidiaries
23 Consent of Independent Public Accountants
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ITEM 14. (Continued)
(3) Exhibits filed with this report (Continued)
Reference No. from
Reg. 229.601
Item 601 Description of Exhibit
-------- ----------------------
24 Powers of Attorney
27 (1) Financial Data Schedule for the Year Ended
August 31, 1997 (for SEC use only)
(b) The registrant filed a report on Form 8-K dated July 14, 1997, which
reported the sale of certain assets of the Textile Rental segment to G & K
Services, Inc. The financial statements filed as an exhibit to the report
were:
Unaudited Pro Forma Balance Sheet as of February 28, 1997.
Unaudited Pro Forma Statement of Operations for the six months ended
February 28, 1997.
Unaudited Pro Forma Statement of Operations for the year ended August 31,
1996.
(c) Exhibits 2, 9, 12, 18, 22, and 28 have been omitted because they are not
applicable.
(d) Not applicable.
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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 20, 1997 By: /s/ Kenyon W. Murphy
----------------- -----------------------------------------------
Kenyon W. Murphy
Vice President, Secretary, and Associate 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
- ---------------- --------------------------
James S. Balloun* Chairman, President, and Chief Executive
Officer and Director
Brock Hattox* Executive Vice President and
Chief Financial Officer
Mark R. Bachmann* Vice President and Controller
John L. Clendenin* Director
Thomas C. Gallagher* Director
Robert M. Holder, Jr.* Director
James C. Kennedy* Director
--November 20, 1997
David Levy* Director
Bernard Marcus* Director
John G. Medlin, Jr.* Director
Samuel A. Nunn* Director
Herman J. Russell* Director
Betty L. Siegel* Director
Barrie A. Wigmore* Director
*By /s/ David Levy Attorney-in-Fact
-----------------------
David Levy
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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, 1997. Our
audit was made for the purpose of forming an opinion on those statements taken
as a whole. The schedule listed in Item 14 in this Form 10-K is the
responsibility of the company's management and is presented for the purpose of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly states 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.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
October 20, 1997
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SCHEDULE II
NATIONAL SERVICE INDUSTRIES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED AUGUST 31, 1997, 1996, AND 1995
(In thousands)
Additions Charged to
Balance at ---------------------------------- Balance at
Beginning Costs and Other End
Description of Period Expenses Accounts (1) Deductions (2) of Period
- ----------------------------- -------------- ------------ --------------- ---------------- ------------
YEAR ENDED AUGUST 31, 1997:
Deducted in the balance sheet
from the asset to which it applies-
Reserve for doubtful accounts $ 5,807 $ 2,276 $ (745) $ 3,036 $ 4,302
======== ========= ======== ======== ==========
YEAR ENDED AUGUST 31, 1996:
Deducted in the balance sheet
from the asset to which it applies-
Reserve for doubtful accounts $ 6,467 $ 2,708 $ (964) $ 2,404 $ 5,807
======== ========= ======== ======== ==========
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
======== ========= ======== ========= ==========
(1) Recoveries credited to reserve, reserves recorded in acquisitions, and
reserves removed in sale of businesses.
(2) Uncollectible accounts written off.
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INDEX TO EXHIBITS
Page No.
--------
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, 1989 Reference is made to Exhibit 3 of registrant's
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:
(1) -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.
(2) -(a)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.
(b)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)Second Amendment to Executives' Reference is made to Exhibit 10(iii)A(a) of
Deferred Compensation Plan, registrant's Form 10-Q for the quarter ended
Effective as of September 1, 1994. November 30, 1994, which is incorporated herein
by reference.
(d)Amendment No. 3 to Executives' Reference is made to Exhibit 10(iii)A(2)(d) of
Deferred Compensation Plan dated registrant's Form 10-K for the fiscal year
August 31, 1996 ended August 31, 1996, which is incorporated
herein by reference.
(3) -(a)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.
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INDEX TO EXHIBITS
Page No.
--------
(b)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.
(c)Appendix B to Restated and Amended Reference is made to Exhibit 10(iii)A(e) of
Supplemental Retirement Plan for Executives registrant's Form 10-Q for the quarter ended
of National Service Industries, Inc. February 29, 1996, which is incorporated
(Supplemental Pension Plan), Effective herein by reference.
February 1, 1996
(d)Appendix C to Restated and Amended Reference is made to Exhibit 10(iii)A(d) of
Supplemental Retirement Plan for Executives of registrant's Form 10-Q for the quarter ended
National Service Industries, Inc. (Supplemental May 31, 1996, which is incorporated herein
Pension Plan), Effective May 31, 1996 by reference.
(e)Amendment No. 2 to Restated and Amended Reference is made to Exhibit 10(iii)A(3)(e)
Supplemental Retirement Plan for Executives of of registrant's Form 10-K for the fiscal year
National Service Industries, Inc. (Supplemental ended August 31, 1996, which is incorporated
Pension Plan) Dated August 31, 1996 herein by reference.
(4) -(a)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.
(b)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.
(c)Amendment No. 2 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.
(d)Amendment No. 3 to National Service Reference is made to Exhibit 10(iii)A(4)(d) of
Industries, Inc. Senior Management Benefit registrant's Form 10-K for the fiscal year ended
Plan, Dated August 31, 1996 August 31, 1996, which is incorporated herein
by reference.
(5) -(a)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.
(b)Amendment to Severance Protection Reference is made to Exhibit 10(iii)A(5)(b) of
Agreement between National Service Industries, registrant's Form 10-K for the fiscal year
Inc. and David Levy, Dated August 31, 1996 ended August 31, 1996, which is incorporated
herein by reference.
18
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(6) -(a)Severance Protection Agreements between Reference is made to Exhibit 10(iii)A(c) of
National Service Industries, Inc. and registrant's Form 10-Q for the quarter
(i) James S. Balloun (February 1, 1996) ended February 29, 1996, which is incorporated
(ii) Stewart A. Searle III (June 19, 1996) herein by reference.
(iii) Brock A. Hattox (September 9, 1996)
(b) Amendment to Severance Protection Reference is made to Exhibit 10(iii)A(6)(b) of
Agreements, Dated August 31, 1996 registrant's Form 10-K for the fiscal year ended
August 31, 1996, which is incorporated herein
by reference.
(7) -(a)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) James S. Balloun (February 1, 1996) ended August 31, 1989 and to Exhibit
(ii) David Levy (October 1, 1989) 10(iii)A(d) of the registrant's Form 10-Q for the
(iii) Stewart A. Searle III (June 19, 1996) quarter ended February 29, 1996, which are
(iv) Brock A. Hattox (September 9, 1996) incorporated herein by reference.
(b)Supplemental Letter Agreement, Dated Reference is made to Exhibit 10(iii)A(7)(b) of
August 31, 1996 registrant's Form 10-K for the fiscal year
ended August 31, 1996, which is incorporated
herein by reference.
(8) -(a)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.
(b)Amendment No. 1 to Long-Term Reference is made to Exhibit 10(iii)A(h)(ii) of
Incentive Program, Dated September 21, registrant's Form 10-K for the fiscal year
1994 ended August 31, 1994, which is incorporated
herein by reference.
(9) -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
(a) D. Raymond Riddle ended August 31, 1989, which is incorporated
(b) Don W. Hubble herein by reference.
(c) David Levy
(d) J. Robert Hipps
(e) Stewart A. Searle III
(f) Brock A. Hattox
(10) -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
(a) James S. Balloun herein by reference.
(b) D. Raymond Riddle
(c) Don W. Hubble
(d) David Levy
(e) J. Robert Hipps
(f) Brock A. Hattox
19
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Page No.
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(11) -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.
(a) D. Raymond Riddle
(b) Don W. Hubble
(c) David Levy
(12) -(a)Benefits Protection Trust Agreement Reference is made to Exhibit 10(iii)A(n) of
Dated July 5, 1990, between National registrant's Form 10-K for the fiscal year
Service Industries, Inc. and Wachovia ended August 31, 1990, which is incorporated
Bank and Trust Company herein by reference.
(b)Amended Schedule 1 of Benefits Reference is made to Exhibit 10(iii)A(k)-(ii) of
Protection Trust Agreement between 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
(c)Amendment to Benefits Protection Reference is made to Exhibit 10(iii)A(12)(c) of
Trust Agreement between National registrant's Form 10-K for the fiscal year
Service Industries, Inc. and Wachovia ended August 31, 1996, which is incorporated
Bank and Trust Company and Adoption, herein by reference.
Dated August 31, 1996
(13) -(a)Executive Benefits Trust Agreement Reference is made to Exhibit 10(iii)A(o) of
Dated July 5, 1990, between National registrant's Form 10-K for the fiscal year
Service Industries, Inc. and Wachovia ended August 31, 1990, which is incorporated
Bank and Trust Company herein by reference.
(b)Amendment to Executive Benefits Reference is made to Exhibit 10(iii)A(13) of
Trust Agreement between National registrant's Form 10-K for the fiscal year
Service Industries, Inc. and Wachovia ended August 31, 1996, which is incorporated
Bank and Trust Company and Adoption, herein by reference.
Dated August 31, 1996
(14) -(a)Consulting Agreement between Reference is made to Exhibit 10(iii)A of
National Service Industries, Inc. and registrant's Form 10-Q for the quarter ended
Erwin Zaban Dated December 30, 1991 November 30, 1991, which is incorporated
herein by reference.
(b)Letter Agreement Dated March 21, Reference is made to Exhibit 10(iii)A(a) of
1996 amending the Consulting Agreement registrant's Form 10-Q for the quarter ended
between National Service Industries, Inc. May 31, 1996, which is incorporated herein
and Erwin Zaban, Dated December 31, 1991 by reference.
(15) -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.
20
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(16) -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
(a) John L. Clendenin herein by reference.
(b) Robert M. Holder, Jr.
(c) F. Ross Johnson
(d) James C. Kennedy
(e) Donald R. Keough
(f) Bryan D. Langton
(g) Bernard Marcus
(h) John G. Medlin, Jr.
(i) Dr. Betty L. Siegel
(j) Erwin Zaban
(17) -(a)National Service Industries, Inc. Reference is made to Exhibit 10(iii)A(s) of
Executive Savings Plan Effective registrant's Form 10-K for the fiscal year
September 1, 1994 ended August 31, 1994, which is incorporated
herein by reference.
(b)Amendment No. 1 to National Service Reference is made to Exhibit 10(iii)A(17)(b) of
Industries, Inc. Executive Savings Plan, registrant's Form 10-K for the fiscal year
Dated August 31, 1996. ended August 31, 1996, which is incorporated
herein by reference.
(18) -(a)National Service Industries, Inc. Reference is made to Exhibit 10(iii)A(t) of
Management Compensation and Incentive registrant's Form 10-K for the fiscal year
Plan Effective September 1, 1994 ended August 31, 1994, which is incorporated
herein by reference.
(19) -(a)Split-Dollar Agreement among National Reference is made to Exhibit 10(iii)A(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.
(b)First Amendment to Split-Dollar Reference is made to Exhibit 10(iii)A(a)(ii) of
Agreement among National Service registrant's Form 10-Q for the quarter ended
Industries, Inc., D. Raymond Riddle, and February 28, 1995, which is incorporated
Wachovia Bank of Georgia, N.A. effective herein by reference.
March 30, 1995
(20) -(a)Letter Agreement between National Reference is made to Exhibit 10(iii)A(b) of
Service Industries, Inc. and D. Raymond registrant's Form 10-Q for the quarter ended
Riddle dated March 28, 1995, amending as February 28, 1995, which is incorporated
of September 21, 1994 the Incentive Stock herein by reference.
Option Agreement 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
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(21) -(a)Consulting Agreement between National Reference is made to Exhibit 10(iii)A(c) of
Service Industries, Inc. and D. Raymond registrant's Form 10-Q for the quarter ended
Riddle dated March 30, 1995 February 28, 1995, which is incorporated
herein by reference.
(22) -(a)Letter Agreement between National Reference is made to Exhibit 10(iii)A(d) of
Service Industries, Inc. and D. Raymond registrant's Form 10-Q for the quarter ended
Riddle dated April 10, 1995, amending as February 28, 1995, which is incorporated
of March 15, 1995 the Incentive Stock herein by reference.
Option Agreement dated January 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 Services Industries,
Inc. and D. Raymond Riddle
(23) -(a)Employment Letter Agreement between Reference is made to Exhibit 10(iii)A(a) of
National Service Industries, Inc. and James registrant's Form 10-Q for the quarter ended
S. Balloun, Dated February 1, 1996 February 29, 1996, which is incorporated herein
by reference.
[a confidential portion of which has been
omitted and filed separately with the
Securities and Exchange Commission]
(24) -(a)Severance Agreement between National Reference is made to Exhibit 10(iii)A(b) of
Service Industries, Inc. and J. Robert Hipps, registrant's Form 10-Q for the quarter ended
Dated May 14, 1996 May 31, 1996, which is incorporated herein
by reference.
(25) -(a)Letter Agreement between National Refrence is made to Exhibit 10(iii)A(c) of
Service Industries, Inc. and J. Robert Hipps regstrant's Form 10-Q for the quarter ended
Dated May 24, 1996, amending as of that May 31, 1996, which is incorporated herein
date the Incentive Stock Option Agreement by reference.
Dated September 19, 1990; the Incentive Stock
Option Agreement Dated December 18, 1991; the
Incentive Stock Option Agreement Dated September
16, 1992: the Nonqualified Stock Option
Agreement Dated September 16, 1992; the
Incentive Stock Option Agreement Dated September
15, 1993; the Nonqualified Stock Option
Agreement Dated September 15, 1993; the
Nonqualified Stock Option Agreement Dated
September 21, 1994; and the Nonqualified Stock
Option Agreement Dated September 20, 1995
(26) -National Service Industries, Inc. Reference is made to Exhibit 10(iii)A(26) of
Nonemployee Director Deferred Stock Unit registrant's Form 10-K for the fiscal year
Plan, Effective June 1, 1996 ended August 31, 1996, which is incorporated
herein by reference.
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Page No.
(27) -Severance Agreement between National Reference is made to Exhibit 10(iii)A(27) of
Service Industries, Inc. and Don W. Hubble, registrant's Form 10-K for the fiscal year
Dated July 22, 1996 ended August 31, 1996, which is incorporated
herein by reference.
(28) -Employment Letter Agreement between Reference is made to Exhibit 10(iii)A(28) of
National Service Industries, Inc. and Brock registrant's Form 10-K for the fiscal year
A. Hattox, Dated August 26, 1996 ended August 31, 1996, which is incorporated
herein by reference.
(29) -Incentive Stock Option Agreement Reference is made to Exhibit 10(iii)A(5) of
Effective Beginning September 17, 1996 registrant's Form 10-Q for the quarter ended
between National Service Industries, Inc. November 30, 1996, which is incorporated
and herein by reference.
(a) James S. Balloun
(b) David Levy
(c) Stewart A. Searle III
(30) -Nonqualified Stock Option Agreement Reference is made to Exhibit 10(iii)A(6) of
for Executive Officers Effective Beginning registrant's Form 10-Q for the quarter ended
September 17, 1996 between National November 30, 1996, which is incorporated
Service Industries, Inc. and herein by reference.
(a) James S. Balloun
(b) David Levy
(c) Stewart A. Searle III
(d) Brock A. Hattox
(31) -National Service Industries, Inc. Long- Reference is made to Exhibit 10(iii)A(7) of
Term Achievement Incentive Plan registrant's Form 10-Q for the quarter ended
Effective September 17, 1996 November 30, 1996, which is incorporated
herein by reference.
(32) -Aspiration Achievement Incentive Award Reference is made to Exhibit 10(iii)A(8) of
Agreements between National Service registrant's Form 10-Q for the quarter ended
Industries, Inc. and November 30, 1996, which is incorporated
(a) James S. Balloun herein by reference.
(b) Brock A. Hattox
(c) David Levy
(d) Stewart A. Searle III
[a confidential portion of which has been
omitted and filed separately with the Securities
and Exchange Commission]
(33) -National Service Industries, Inc. Supple- Reference is made to Exhibit 10(iii)A(9) of
mental Deferred Savings Plan Effective registrant's Form 10-Q for the quarter ended
September 18, 1996 November 30, 1996, which is incorporated
herein by reference.
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Page No.
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(34) -Letter Agreement Between National Reference is made to Exhibit 10(iii)A(10) of
Service Industries, Inc. and Don W. registrant's Form 10-Q for the quarter ended
Hubble Dated October 18, 1996, amending November 30, 1996, which is incorporated
as of that date the Incentive Stock Option herein by reference.
Agreement Dated September 15, 1993, the
Incentive Stock Option Agreement Dated
September 21, 1994, the Nonqualified Stock
Option Agreement Dated September 21, 1994,
the Incentive Stock Option Agreement Dated
September 20, 1995, and the Nonqualified
Stock Option Agreement Dated September 20,
1995
(35) -Stock Option Agreement for Nonemployee Reference is made to Exhibit 10(iii)A of
Directors Dated March 19, 1997 between registrant's Form 10-Q for the quarter ended
National Service Industries, Inc. and May 31, 1997, which is incorporated herein
(a) John L. Clendenin by reference.
(b) Senator Sam Nunn
EXHIBIT 11 - Computations of Net Income per Share of 24
Common Stock
EXHIBIT 13 - Information Incorporated by Reference from
Annual Report for the Year Ended August 31,
1997 25
EXHIBIT 21 - List of Subsidiaries 46
EXHIBIT 23 - Consent of Independent Public Accountants 47
EXHIBIT 24 - Powers of Attorney 48
EXHIBIT 27 - Financial Data Schedule for the Year
Ended August 31, 1997 (for SEC use only) 59