Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Jan. 31, 2016 | Jun. 30, 2015 | |
Document and Entity Information | |||
Entity Registrant Name | ROLLINS INC | ||
Entity Central Index Key | 84,839 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 2,708,382,648 | ||
Entity Common Stock, Shares Outstanding | 218,806,458 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF FINA
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 134,574 | $ 108,372 |
Trade receivables, net of allowance for doubtful accounts of $10,348 and $10,944, respectively | 79,864 | 77,854 |
Financing receivables, short-term, net of allowance for doubtful accounts of $1,844 and $1,748, respectively | 13,830 | 12,234 |
Materials and supplies | 12,801 | 14,078 |
Deferred income taxes | 44,445 | 42,764 |
Other current assets | 28,365 | 28,656 |
Total Current Assets | 313,879 | 283,958 |
Equipment and property, net | 121,356 | 101,669 |
Goodwill | 249,939 | 255,563 |
Customer contracts, net | 92,815 | 104,657 |
Other intangible assets, net | 46,116 | 28,815 |
Financing receivables, long-term, net of allowance for doubtful accounts of $1,444 and $1,402 respectively | $ 13,636 | 11,787 |
Deferred income taxes | 7,881 | |
Other assets | $ 14,690 | 13,832 |
Total Assets | 852,431 | 808,162 |
LIABILITIES | ||
Accounts payable | 24,919 | 22,878 |
Accrued insurance | 24,874 | 24,204 |
Accrued compensation and related liabilities | 73,607 | 74,090 |
Unearned revenue | 96,192 | 94,056 |
Other current liabilities | 33,394 | 37,451 |
Total current liabilities | 252,986 | 252,679 |
Accrued insurance, less current portion | 30,402 | 30,946 |
Accrued pension | 9,735 | 29,558 |
Deferred income taxes | 3,780 | |
Long-term accrued liabilities | 31,499 | 32,303 |
Total Liabilities | $ 328,402 | $ 345,486 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, without par value; 500,000 authorized, zero shares issued | ||
Common stock, par value $1 per share; 250,000,000 shares authorized, 218,753,011 and 218,482,907 shares issued, respectively | $ 218,753 | $ 218,483 |
Treasury Stock, par value $1 per share ; 200,000 and 0 shares, respectively | (200) | (200) |
Paid-in-capital | 69,762 | 62,839 |
Accumulated other comprehensive loss | (71,178) | (65,488) |
Retained earnings | 306,892 | 247,042 |
Total Stockholders' Equity | 524,029 | 462,676 |
Total Liabilities and Stockholders' Equity | $ 852,431 | $ 808,162 |
CONSOLIDATED STATEMENTS OF FIN3
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Trade receivables, allowance for doubtful accounts (in dollars) | $ 10,348 | $ 10,944 |
Financed receivables, short-term, allowance for doubtful accounts (in dollars) | 1,844 | 1,748 |
Financed receivables, long-term, allowance for doubtful accounts (in dollars) | $ 1,444 | $ 1,402 |
Preferred Stock, No Par Value | ||
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 218,753,011 | 218,482,907 |
Treasury Stock, shares issued | 200,000 | 200,000 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
REVENUES | |||
Customer services | $ 1,485,305 | $ 1,411,566 | $ 1,337,374 |
COSTS AND EXPENSES | |||
Cost of services provided | 735,976 | 707,739 | 678,459 |
Depreciation and amortization | 44,522 | 43,509 | 39,571 |
Sales, general and administrative | 463,742 | 441,706 | 428,288 |
Gain on sales of assets, net | (1,953) | (618) | (165) |
Interest (income)/expense | (160) | (254) | (385) |
TOTAL COSTS AND EXPENSES | 1,242,127 | 1,192,082 | 1,145,768 |
INCOME BEFORE INCOME TAXES | 243,178 | 219,484 | 191,606 |
PROVISION FOR INCOME TAXES | |||
Current | 87,536 | 73,380 | 67,920 |
Deferred | 3,493 | 8,440 | 356 |
TOTAL PROVISION FOR INCOME TAXES | 91,029 | 81,820 | 68,276 |
NET INCOME | $ 152,149 | $ 137,664 | $ 123,330 |
INCOME PER SHARE - BASIC (in dollars per share) | $ 0.70 | $ 0.63 | $ 0.56 |
INCOME PER SHARE - DILUTED (in dollars per share) | $ 0.70 | $ 0.63 | $ 0.56 |
Weighted average shares outstanding - basic (in shares) | 218,583,000 | 218,695,000 | 219,121,000 |
Weighted average shares outstanding - diluted (in shares) | 218,583,000 | 218,695,000 | 219,121,000 |
DIVIDENDS PAID PER SHARE (in dollars per share) | $ 0.42 | $ 0.35 | $ 0.30 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
NET INCOME | $ 152,149 | $ 137,664 | $ 123,330 |
Other comprehensive earnings/(loss), net of tax | |||
Pension and other postretirement benefit plans | 9,070 | (25,575) | 28,102 |
Foreign currency translation adjustments | (14,760) | (8,142) | (2,906) |
Other comprehensive earnings/(loss) | (5,690) | (33,717) | 25,196 |
Comprehensive earnings | $ 146,459 | $ 103,947 | $ 148,526 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Treasury Stock [Member] | Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Retained Earnings [Member] | Total | |
Balance at Dec. 31, 2012 | $ 219,023 | $ 45,156 | $ (56,967) | $ 147,744 | $ 354,956 | ||
Balance (in shares) at Dec. 31, 2012 | 219,023,000 | ||||||
Increase (Decrease) in Shareholders' Equity | |||||||
Net Income | $ 123,330 | 123,330 | |||||
Pension Liability Adjustment | 28,102 | 28,102 | |||||
Foreign Currency Translation Adjustments | $ (2,906) | (2,906) | |||||
Cash Dividends | $ (65,658) | (65,658) | |||||
Common Stock Purchased | [1] | $ (512) | (7,856) | (8,368) | |||
Common Stock Purchased (in shares) | [1] | (512,000) | |||||
Stock Compensation | $ 612 | $ 10,020 | (205) | 10,427 | |||
Stock Compensation (in shares) | 612,000 | ||||||
Employee Stock Buybacks and Common Stock Options Exercised | $ (326) | (5,133) | 109 | (5,350) | |||
Employee Stock Buybacks and Common Stock Options Exercised (in shares) | (326,000) | ||||||
Excess Tax Benefit on Restricted Stock, Dividend Compensation and Non-Qualified Stock Options | 3,722 | 3,722 | |||||
Balance at Dec. 31, 2013 | $ 218,797 | 53,765 | $ (31,771) | 197,464 | 438,255 | ||
Balance (in shares) at Dec. 31, 2013 | 218,797,000 | ||||||
Increase (Decrease) in Shareholders' Equity | |||||||
Net Income | 137,664 | 137,664 | |||||
Pension Liability Adjustment | (25,575) | (25,575) | |||||
Foreign Currency Translation Adjustments | $ (8,142) | (8,142) | |||||
Cash Dividends | (75,750) | (75,750) | |||||
Common Stock Issued for Acquisitions | $ 585 | $ 290 | 15,831 | (292) | 16,414 | ||
Common Stock Issued for Acquisitions (in shares) | 585,000 | 290,000 | |||||
Common Stock Purchased | [1] | $ (920) | $ (590) | (15,831) | (12,004) | (29,345) | |
Common Stock Purchased (in shares) | [1] | (920,000) | (590,000) | ||||
Treasury Shares | $ (100) | $ 100 | |||||
Treasury Shares (in shares) | (100,000) | 100,000 | |||||
Stock Compensation | $ 439 | 10,286 | (146) | 10,579 | |||
Stock Compensation (in shares) | 439,000 | ||||||
Employee Stock Buybacks and Common Stock Options Exercised | $ (318) | (5,956) | 106 | (6,168) | |||
Employee Stock Buybacks and Common Stock Options Exercised (in shares) | (318,000) | ||||||
Excess Tax Benefit on Restricted Stock, Dividend Compensation and Non-Qualified Stock Options | 4,744 | 4,744 | |||||
Balance at Dec. 31, 2014 | $ 218,483 | $ (200) | 62,839 | $ (65,488) | 247,042 | 462,676 | |
Balance (in shares) at Dec. 31, 2014 | 218,483,000 | (200,000) | |||||
Increase (Decrease) in Shareholders' Equity | |||||||
Net Income | 152,149 | 152,149 | |||||
Pension Liability Adjustment | 9,070 | 9,070 | |||||
Foreign Currency Translation Adjustments | (14,760) | (14,760) | |||||
Cash Dividends | (91,755) | (91,755) | |||||
Common Stock Purchased | [1] | $ (19) | (416) | (435) | |||
Common Stock Purchased (in shares) | [1] | (19,000) | |||||
Stock Compensation | $ 597 | 11,731 | (218) | 12,110 | |||
Stock Compensation (in shares) | 597,000 | ||||||
Employee Stock Buybacks and Common Stock Options Exercised | $ (308) | (6,754) | 90 | (6,972) | |||
Employee Stock Buybacks and Common Stock Options Exercised (in shares) | (308,000) | ||||||
Excess Tax Benefit on Restricted Stock, Dividend Compensation and Non-Qualified Stock Options | 1,946 | 1,946 | |||||
Balance at Dec. 31, 2015 | $ 218,753 | $ (200) | $ 69,762 | $ (71,178) | $ 306,892 | $ 524,029 | |
Balance (in shares) at Dec. 31, 2015 | 218,753,000 | (200,000) | |||||
[1] | Charges to Retained Earnings are from purchases of the Company's Common Stock. |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
OPERATING ACTIVITIES | |||
Net Income | $ 152,149 | $ 137,664 | $ 123,330 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation, amortization and other non-cash charges | 42,139 | 42,277 | 39,304 |
Provision for deferred income taxes | 3,493 | 8,440 | 356 |
Stock based compensation expense | 12,110 | 10,579 | 10,427 |
Excess tax benefits from share-based payments | (1,946) | (4,744) | (3,722) |
Provision for bad debts | 10,113 | 11,197 | 10,388 |
Changes in assets and liabilities: | |||
Trade accounts receivables and other accounts receivables | (12,494) | (13,369) | (13,617) |
Financed receivables | (3,630) | (941) | (950) |
Materials and supplies | 814 | (1,525) | (118) |
Other current assets | (2,144) | (10,678) | (4,613) |
Other non-current assets | 154 | 7,200 | (1,343) |
Accounts payable and accrued expenses | (2,039) | 15,273 | 4,918 |
Unearned revenue | 2,822 | 2,497 | 3,561 |
Accrued insurance | 126 | 1,274 | (1,572) |
Pension funding | (5,000) | (5,250) | (5,000) |
Long-term accrued liabilities | (311) | (5,748) | 1,316 |
Net cash provided by operating activities | 196,356 | 194,146 | 162,665 |
INVESTING ACTIVITIES | |||
Cash used for acquisitions of companies, net of cash acquired | (33,462) | (63,335) | (12,632) |
Capital expenditures | (39,495) | (28,739) | (18,632) |
Cash from sales of franchises | 767 | 565 | 102 |
Proceeds from sales of assets | 2,752 | 2,038 | 372 |
Investment Tax Credits | (504) | ||
Net cash used in investing activities | (69,942) | (89,471) | (30,790) |
FINANCING ACTIVITIES | |||
Payment of Dividends | (91,755) | (75,750) | (65,658) |
Cash paid for common stock purchased | (7,407) | (35,513) | (13,723) |
Excess tax benefits from share-based payments | $ 1,946 | $ 4,744 | 3,722 |
Proceeds received upon exercise of stock options | 6 | ||
Net cash used in financing activities | $ (97,216) | $ (106,519) | (75,653) |
Effect of exchange rate changes on cash | (2,996) | (8,000) | (3,088) |
Net(decrease) increase in cash and cash equivalents | 26,202 | (9,844) | 53,134 |
Cash and cash equivalents at beginning of year | 108,372 | 118,216 | 65,082 |
Cash and cash equivalents at end of year | $ 134,574 | $ 108,372 | $ 118,216 |
Supplemental disclosure of cash flow information | |||
Cash paid for interest | |||
Cash paid for income taxes, net | $ 82,690 | $ 74,454 | $ 69,354 |
Supplemental Disclosures of Non-Cash Items | |||
Non-cash (increases) decreases in the minimum pension liability | 14,800 | (41,700) | 45,700 |
Non-cash acquisition of assets in business combinations | $ 100 | $ 24,200 | $ 3,300 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Description The Company is an international service company with headquarters located in Atlanta, Georgia, providing pest and termite control services through its wholly-owned subsidiaries to both residential and commercial customers in North America with international franchises in Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, and Mexico. Services are performed through a contract that specifies service frequency and the pricing arrangement with the customer. Orkin, LLC. (“Orkin”), a wholly-owned subsidiary of the Company founded in 1901, is the world’s largest pest and termite control company. It provides customized services from over 400 locations. Orkin serves customers, directly or through franchise operations, in the United States, Canada, Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, and Mexico providing essential pest control services and protection against termite damage, rodents and insects to homes and businesses, including hotels, food service establishments, food manufacturers, retailers and transportation companies. Orkin operates under the Orkin ® ® SM ® Orkin Canada, a wholly-owned subsidiary of Orkin founded in 1952, was acquired by Orkin in 1999. Orkin Canada is Canada’s largest pest control provider and a leader in the development of fast, effective and environmentally responsible pest control solutions. Western Pest Services (“Western”), a wholly-owned subsidiary of the Company founded in 1928, was acquired by Rollins, Inc. in 2004. Western is primarily a commercial pest control service company and its business complements most of the services Orkin offers focusing on the northeastern United States. The Industrial Fumigant Company (“IFC”), a wholly-owned subsidiary of the Company founded in 1937, was acquired by Rollins, Inc. in 2005. IFC is a leading provider of pest management and sanitation services and products to the food and commodity industries. HomeTeam Pest Defense (“HomeTeam”), a wholly-owned subsidiary of the Company established in 1996, was acquired by Rollins, Inc. in April 2008. At the time of the acquisition, HomeTeam, with its unique Taexx ® Rollins Australia (“Rollins Australia”), a wholly-owned subsidiary of the Company, acquired Allpest WA (“Allpest”), in February 2014. Allpest was established in 1959 and is headquartered in Perth, Australia. Allpest provides traditional residential, commercial and termite service as well as consulting services on border protection related to Australia’s biosecurity program and provides specialized services to Australia’s mining and oil and gas sectors. Rollins Wildlife Services, a wholly-owned subsidiary of the Company, acquired Critter Control February 27, 2015. Critter Control was established by Kevin Clark in 1983 and is headquartered in Traverse City, Michigan. The business is currently 100% franchised with operations in 40 states and 2 Canadian provinces. The Company has several smaller wholly-owned subsidiaries that in total make up less than 5% of the Company’s total revenues. The Company has only one reportable segment, its pest and termite control business. Revenue, operating profit and identifiable assets for this segment, includes the United States, Canada, Australia, Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, and Mexico. The Company’s results of operations and its financial condition are not reliant upon any single customer, few customers or foreign operations. Principles of Consolidation Subsequent Events Estimates Used in the Preparation of Consolidated Financial Statements Revenue Recognition Termite baiting revenues are recognized based on the delivery of the individual units of accounting. At the inception of a new baiting services contract, upon quality control review of the installation, the Company recognizes revenue for the installation of the monitoring stations, initial directed liquid termiticide treatment and servicing of the monitoring stations. A portion of the contract amount is deferred for the undelivered monitoring element. This portion is recognized as income on a straight-line basis over the remaining contract term, which results in recognition of revenue in a pattern that approximates the timing of performing monitoring visits. The allocation of the purchase price to the two deliverables is based on the relative selling price. There are no contingencies related to the delivery of additional items or meeting other specified performance conditions. Baiting renewal revenue is deferred and recognized over the annual contract period on a straight-line basis that approximates the timing of performing the required monitoring visits. Revenue received for conventional termite renewals is deferred and recognized on a straight-line basis over the remaining contract term; and, the cost of reinspections, reapplications and repairs and associated labor and chemicals are expensed as incurred. For outstanding claims, an estimate is made of the costs to be incurred (including legal costs) based upon current factors and historical information. The performance of reinspections tends to be close to the contract renewal date and while reapplications and repairs involve an insubstantial number of the contracts, these costs are incurred over the contract term. As the revenue is being deferred, the future cost of reinspections, reapplications and repairs and associated labor and chemicals applicable to the deferred revenue are expensed as incurred. The Company accrues for noticed claims. The costs of providing termite services upon renewal are compared to the expected revenue to be received and a provision is made for any expected losses. All revenues are reported net of sales taxes. The Company’s foreign operations accounted for approximately 7% of revenues for the year ended December 31, 2015, and 8% for the years ended December 2014, and 2013. Currency exchange translation is the cause of the decreased percentage. Interest income on installment receivables is accrued monthly based on actual loan balances and stated interest rates. Recognition of initial franchise fee revenues occurs when all material services or conditions relating to a new agreement have been substantially performed or satisfied by the Company, and initial franchise fees are treated as unearned revenue in the Statement of Financial Position until such time. Royalties from franchises are accrued and recognized as revenues as earned on a monthly basis. Gains on sales of pest control customer accounts to franchises are recognized at the time of sale and when collection is reasonably assured. Allowance for Doubtful Accounts Advertising Years ended December 31, 2015 2014 2013 (in thousands) Advertising $ 57,705 $ 54,909 $ 55,282 Cash and Cash Equivalents The Company’s $134.6 million of total cash at December 31, 2015, is primarily cash held at various banking institutions. Approximately $34.8 million is held in cash accounts at international bank institutions and the remaining $99.8 million is primarily held in Federal Deposit Insurance Corporation (“FDIC”) insured non-interest-bearing accounts at various domestic banks which at times may exceed federally insured amounts. The Company’s international business is expanding and we intend to continue to grow the business in foreign markets in the future through reinvestment of foreign deposits and future earnings as well as acquisitions of unrelated companies. Repatriation of cash from the Company’s foreign subsidiaries is not a part of the Company’s current business plan. The Company maintains a large cash position in the United States while having no third-party debt to service. Rollins maintains adequate liquidity and capital resources, without regard to its foreign deposits, that are directed to finance domestic operations and obligations and to fund expansion of its domestic business for the foreseeable future. At December 31, 2015 2014 (in thousands) (in US dollars) Cash held in foreign bank accounts $ 34,816 $ 35,065 Marketable Securities Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designations as of each balance sheet date. Debt securities are classified as available-for-sale because the Company does not have the intent to hold the securities to maturity. Available-for-sale securities are stated at their fair values, with the unrealized gains and losses, net of tax, reported as a separate component of stockholders’ equity. Realized gains and losses and declines in value judged to be other than temporary on available-for-sale securities are included as a component of interest income. The Company had no marketable securities other than those held in the defined benefit pension plan and the nonqualified deferred compensation plan at December 31, 2015 and 2014. See note 13 for further details. Materials and Supplies Income Taxes . The Company’s policy is to record interest and penalties related to income tax matters in income tax expense. Equipment and Property Years ended December 31, 2015 2014 2013 (in thousands) Depreciation $ 19,354 $ 16,627 $ 14,415 Goodwill and Other Intangible Assets - “Intangibles - Goodwill and other” Impairment of Long-Lived Assets - “Property, Plant and Equipment” Insurance Accrual for Termite Contracts Contingency Accruals “Contingencies,” Three-for-two stock split Earnings Per Share - “Earnings Per Share- Overall,” The Company has periodically issued share-based payment awards that contain non-forfeitable rights to dividends and therefore are considered participating securities. See note 14 for further information on restricted stock granted to employees. The basic and diluted calculations are the same as there were no stock options included in diluted earnings per share as we have no stock options outstanding. Basic and diluted earnings per share are computed by dividing net income by the weighted average number of shares outstanding during the respective periods. A reconciliation of weighted average shares outstanding along with the earnings per share attributable to restricted shares of common stock (participating securities) is as follows (in thousands except per share data). All share and per share information in the following chart are restated for the stock split effective March 10, 2015: Years Ended December 31, 2015 2014 2013 Net income available to stockholders $ 152,149 $ 137,664 $ 123,330 Less: Dividends paid Common Stock (90,631 ) (74,704 ) (64,571 ) Restricted shares of common stock (1,124 ) (1,046 ) (1,087 ) Undistributed earnings for the period $ 60,394 $ 61,914 $ 57,672 Allocation of undistributed earnings: Common stock $ 59,611 $ 61,001 $ 56,663 Restricted shares of common stock 783 913 1,009 Diluted allocation of undistributed earnings: Common stock $ 59,611 $ 61,001 $ 56,663 Restricted shares of common stock 783 913 1,009 Basic shares outstanding: Common stock 215,749 215,470 215,289 Restricted shares of common stock 2,834 3,225 3,832 218,583 218,695 219,121 Diluted shares outstanding: Common stock 215,749 215,470 215,289 Dilutive effect of stock options — — — 215,749 215,470 215,289 Restricted shares of common stock 2,834 3,225 3,832 218,583 218,695 219,121 Basic earnings per share Common stock: Distributed earnings $ 0.42 $ 0.35 $ 0.30 Undistributed earnings 0.28 0.28 0.26 $ 0.70 $ 0.63 $ 0.56 Restricted shares of common stock Distributed earnings $ 0.40 $ 0.32 $ 0.28 Undistributed earnings 0.28 0.28 0.26 $ 0.68 $ 0.60 $ 0.54 Diluted earning per share: Common stock: Distributed earnings $ 0.42 $ 0.35 $ 0.30 Undistributed earnings 0.28 0.28 0.26 $ 0.70 $ 0.63 $ 0.56 Translation of Foreign Currencies Stock-Based Compensation Compensation – Stock Compensation TLRSs provide for the issuance of a share of the Company’s Common Stock at no cost to the holder and generally vest after a certain stipulated number of years from the grant date, depending on the terms of the issue. Outstanding TLRSs vest in 20 percent increments starting with the second anniversary of the grant, over six years from the date of grant. During these years, grantees receive all dividends declared and retain voting rights for the granted shares. The agreements under which the restricted stock is issued provide that shares awarded may not be sold or otherwise transferred until restrictions established under the plans have lapsed. The fair value of these awards is recognized as compensation expense, net of forfeitures, on a straight-line basis over six years. Comprehensive Income (Loss) Franchising Program All domestic franchises have a guaranteed repurchase clause that the Orkin franchise may be repurchased by Orkin at a later date once it has been established; therefore, initial Orkin domestic franchise fees are deferred in accordance with the FASB ASC Topic 952-605 “Franchisor Revenue Recognition Royalties from Orkin franchises are accrued and recognized in accordance with the FASB ASC Topic 952-605 “Franchisor Revenue Recognition As of December 31, 2015, 2014 and 2013, Orkin had 48, 37, and 26 international franchises, respectively. Orkin’s international franchise program began with its first international franchise in 2000 and since has expanded to Central America, South America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa and Mexico. The Company’s maximum exposure to loss (notes receivable from franchises less deferred franchise fees) relating to the Orkin franchises was $1.9 million, $1.2 million, and $1.2 million for the years ended December 31, 2015, 2014, and 2013, respectively. Rollins’ wholly-owned subsidiary, Rollins Wildlife Services, had 108 Critter Control franchises in the United States and Canada as of December 31, 2015. Transactions with Critter Control franchises involve sales of territories to establish new franchises, initial franchise fees and royalties. The territories and initial franchise fees are typically sold for a combination of cash and notes. Notes receivable from franchises were $0.4 million at December 31, 2015. These notes are not guaranteed. The Company anticipates that should there be any losses from franchisees these losses would be recouped by removing the individual franchisee and re-selling the abandoned territory. These amounts are included as financing receivables in the accompanying Consolidated Statements of Financial Position. Royalties from franchises are accrued and recognized in accordance with the FASB ASC Topic 952-605 “Franchisor Revenue Recognition New Accounting Standards Recently adopted accounting standards In May 2015, the FASB issued ASU No. 2015-07 (“ASU 2015-07”) regarding ASC Topic 820 “Fair Value Measurement: Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” The amendments in ASU 2015-07 remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also limit certain disclosures to investments for which the entity has elected to measure at fair value using the net asset value per share practical expedient. The amendments in ASU 2015-07 are effective for annual and interim periods beginning after December 15, 2015. The adoption of this standard did not have a material impact on the Company’s reported results of operations or financial position. In June 2015, the FASB issued ASU No. 2015-10, Technical Corrections and Improvements. ASU 2015-10 makes minor adjustments to the FASB Accounting Standard Codification. The technical corrections are divided into four main categories: Amendments to align codification wording with that in pre-Codification standards, corrections to references and clarification of guidance to avoid misapplication and misinterpretation, minor edits to simplify the codification and thereby improve its usefulness and minor enhancements to codification guidance that are not expected to have a significant effect on current practice. The amendments in this update are effective for fiscal periods beginning on or after December 15, 2015, and interim periods within annual periods beginning on or after December 15, 2015. The adoption of this standard did not have a material impact on the Company’s reported results of operations or financial position. In September 2015, the FASB issued ASU No. 2015-16 (Topic 805): Business Combinations. ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments in this update were effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with earlier application permitted for financial statements that have not been issued. The adoption of this standard did not have a material impact on the Company’s reported results of operations or financial position. Recently issued accounting standards to be adopted in 2016 or later In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB approved a one-year deferral of this standard, with a revised effective date for fiscal years beginning after December 15, 2017. Early adoption is permitted, although not prior to fiscal years beginning after December 15, 2016. The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method and continue to evaluate the effect of the standard on our ongoing financial reporting. We do not expect this standard to have a material impact on the Company’s reported results of operations or financial position. In August 2015, the FASB issued ASU No. 2015-14 (Topic 606): Revenue from Contracts with Customers. ASU 2015-14 defers the effective date of Update 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and 2 interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in Update 2014-09. We do not expect this standard to have a material impact on the Company’s reported results of operations or financial position. In November 2015, the FASB issued ASU No (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this update apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. The amendments in this update are effective for the company’s financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments in this update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. If an entity applies the guidance prospectively, the entity should disclose in the first interim and first annual period of change, the nature of and reason for the change in accounting principle and a statement that prior periods were not retrospectively adjusted. If an entity applies the guidance retrospectively, the entity should disclose in the first interim and first annual period of change the nature of and reason for the change in accounting principle and quantitative information about the effects of the accounting change on prior periods. The Company is currently evaluating the impact of this standard on its consolidated financial statements. We do not expect this standard to have a material impact on the Company’s reported results of operations or financial position. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
ACQUISITIONS | 2. ACQUISITIONS The Company has made 12, 12, and 21 acquisitions that are not material individually or in total to the Company’s consolidated financial statements during the years ended December 31, 2015, 2014, and 2013, respectively. The largest acquisitions made during these periods are as follows: The Company completed its acquisition of Critter Control on February 27, 2015. Critter Control was established by Kevin Clark in 1983 and is headquartered in Traverse City, Michigan. The business is currently 100% franchised, operating in 40 states and 2 Canadian provinces. Rollins Australia, a wholly-owned subsidiary of the Company, acquired Allpest WA (“Allpest”), in February 2014. Allpest was established in 1959 and is headquartered in Perth, Australia. Allpest provides traditional commercial, residential, and termite service as well as consulting services on border protection related to Australia’s biosecurity program and provides specialized services to Australia’s mining and oil and gas sectors. Acquisition of Wilco Enterprises, Inc. (sole holder of PermaTreat Exterminating Company, Inc. d/b/a PermaTreat Pest Control, Inc.) (“PermaTreat”) – The Company completed the acquisition of PermaTreat effective August 1, 2014. PermaTreat is a leading pest control company located in Central and Northern Virginia and was founded in 1967. The Company issued 873,349 shares of its $1 par value common stock valued at $18.79 per share to Joseph R. Wilson and Jack Broome. Total cash purchase price for the Company’s acquisitions in 2015 and 2014 were $33.5 million and $63.3 million, respectively. The fair values of major classes of assets acquired and liabilities assumed along with the contingent consideration liability recorded during the valuation period of acquisition is included in the reconciliation of the total consideration as follows (in thousands): December 31, 2015 2014 Accounts receivable, net $ 1,711 $ 2,594 Materials and supplies 71 481 Equipment and property 948 4,516 Goodwill 196 48,477 Customer contracts 12,398 28,237 Other intangible assets 20,092 6,471 Current liabilities (2,329 ) (6,733 ) Other assets and liabilities, net 460 (2,725 ) Total consideration paid 33,547 81,318 Less: Common Stock Payment 0 (16,413 ) Less: Contingent consideration liability (85 ) (1,570 ) Total cash purchase price $ 33,462 $ 63,335 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
DEBT | 3. DEBT On October 31, 2012, the Company entered into a Revolving Credit Agreement with SunTrust Bank and Bank of America, N.A. for an unsecured line of credit of up to $175.0 million, which includes a $75.0 million letter of credit subfacility, and a $25.0 million swingline subfacility. The Credit Agreement was amended on October 30, 2014 to extend the maturity date to October 31, 2018 and add three optional one year extensions. On October 27, 2015 the Company exercised a one year extension option to extend the maturity date to October 31, 2019. As of December 31, 2015, no borrowings were outstanding under the line of credit or under the swingline subfacility. The Company maintains approximately $31.4 million in letters of credit. These letters of credit are required by the Company’s fronting insurance companies and/or certain states, due to the Company’s self-insured status, to secure various workers’ compensation and casualty insurance contracts coverage. The Company believes that it has adequate liquid assets, funding sources and insurance accruals to accommodate such claims. The Revolving Credit Agreement is guaranteed by certain of Rollins’ domestic-subsidiaries. The maturity date of the Credit Agreement is October 31, 2019, subject to up to two optional extensions of the Credit Agreement for one year each. Revolving loans under the Revolving Credit Agreement bear interest at one of the following two rates, at the Company’s election: · the Base Rate, which shall mean the highest of (i) the per annum rate which the Administrative Agent publicly announces from time to time as its prime lending rate, (ii) the Federal Funds rate, plus plus · with respect to any Eurodollar borrowings, the Adjusted LIBOR Rate plus an additional amount, which varies between .75% and 1.00%, based upon Rollins’ then-current debt-to-EBITDA ratio. As of December 31, 2015, the additional rate allocated was .75%. The Revolving Credit Agreement contains customary terms and conditions, including, without limitation, certain financial covenants including covenants restricting the Company’s ability to incur certain indebtedness or liens, or to merge or consolidate with or sell substantially all of its assets to another entity. Further, the Revolving Credit Agreement contains financial covenants restricting the Company’s ability to permit the ratio of the Company’s consolidated debt to EBITDA to exceed certain limits. The Company remained in compliance with applicable debt covenants at December 31, 2015 and expects to maintain compliance throughout 2016. |
TRADE RECEIVABLES
TRADE RECEIVABLES | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
TRADE RECEIVABLES | 4. TRADE RECEIVABLES The Allowance for Doubtful Accounts is principally calculated based on the application of estimated loss percentages to delinquency aging totals, based on contractual terms, for the various categories of receivables. Bad debt write-offs occur according to Company policies that are specific to pest control, commercial and termite accounts. December 31, 2015 2014 (in thousands) Gross Trade Receivables $ 90,212 $ 88,798 Allowance for Doubtful Accounts (10,348 ) (10,944 ) Net Trade Receivables $ 79,864 $ 77,854 At any given time, the Company may have immaterial amounts due from related parties, which are invoiced and settled on a regular basis. |
FINANCING RECEIVABLES
FINANCING RECEIVABLES | 12 Months Ended |
Dec. 31, 2015 | |
Financing Receivables | |
FINANCING RECEIVABLES | 5. FINANCING RECEIVABLES Rollins manages its financing receivables on an aggregate basis when assessing and monitoring credit risks. The Company’s credit risk is generally low with a large number of entities comprising Rollins’ customer base and dispersion across many different geographical regions. The credit quality of a potential obligor is evaluated at the loan origination based on an assessment of the individual’s beacon/credit bureau score. Rollins requires a potential obligor to have good credit worthiness with low risk before entering into a contract. Depending upon the individual’s credit score the Company may accept with 100% financing or require a significant down payment or turndown the contract. Delinquencies of accounts are monitored each month. Financing receivables include installment receivable amounts which are due subsequent to one year from the balance sheet dates. At December 31, 2015 2014 (in thousands) Gross Financing Receivables, short-term $ 15,674 $ 13,982 Gross Financing Receivables, long-term 15,080 13,189 Allowance for Doubtful Accounts (3,288 ) (3,150 ) Net Financing Receivables $ 27,466 $ 24,021 Total financing receivables, net were $27.5 million and $24.0 million at December 31, 2015 and December 31, 2014, respectively. Financing receivables are generally charged-off when deemed uncollectable or when 180 days have elapsed since the date of the last full contractual payment. The Company’s charge-off policy has been consistently applied during the periods reported. Management considers the charge-off policy when evaluating the appropriateness of the allowance for doubtful accounts. Gross charge-offs as a percentage of average financing receivables were 3.0% and 3.1% for the twelve months ended December 31, 2015 and December 31, 2014, respectively. Due to the low percentage of charge-off receivables and the high credit worthiness of the potential obligor, the entire Rollins, Inc. financing receivables portfolio has a low credit risk. The Company offers 90 days same-as-cash financing to some customers based on their credit worthiness. Interest is not recognized until the 91st day at which time it is recognized retrospectively back to the first day if the contract has not been paid in full. In certain circumstances, such as when delinquency is deemed to be of an administrative nature, accounts may still accrue interest when they reach 180 days past due. The repurchase of Orkin domestic franchises is guaranteed by the Company’s wholly-owned subsidiary, Orkin, Inc. Included in financing receivables are notes receivable from Orkin franchise owners. The majority of these notes are low risk as the repurchase price of the Orkin franchise is currently estimated and has historically been well above the receivable due from the Orkin franchise owner. Also included in notes receivables are franchise notes from other brands which are not guaranteed. The carrying amount of notes receivable approximates fair value as the interest rates approximate market rates for these types of contracts. Long-Term Installment receivables, net were $13.6 million and $11.8 million at December 31, 2015 and 2014, respectively. Rollins establishes an allowance for doubtful accounts to insure financing receivables are not overstated due to uncollectability. The allowance balance is comprised of a general reserve, which is determined based on a percentage of the financing receivables balance, and a specific reserve, which is established for certain accounts with identified exposures, such as customer default, bankruptcy or other events, that make it unlikely that Rollins will recover its investment. The general reserve percentages are based on several factors, which include consideration of historical credit losses and portfolio delinquencies, trends in overall weighted-average risk rating of the portfolio and information derived from competitive benchmarking. The allowance for doubtful accounts related to financing receivables was as follows: At December 31, 2015 2014 (in thousands) Balance, beginning of period $ 3,150 $ 3,200 Additions to allowance 965 748 Deductions, net of recoveries (827 ) (798 ) Balance, end of period $ 3,288 $ 3,150 The following is a summary of the past due financing receivables: December 31, 2015 2014 (in thousands) 30-59 days past due $ 721 $ 626 60-89 days past due 531 201 90 days or more past due 757 352 Total $ 2,009 $ 1,179 The following is a summary of percentage of gross financing receivables: December 31, 2015 2014 Current 93.5 % 95.7 % 30-59 days past due 2.3 % 2.3 % 60-89 days past due 1.7 % 0.8 % 90 days or more past due 2.5 % 1.2 % Total 100.0 % 100.0 % Rollins’ wholly-owned subsidiary, Rollins Wildlife Services, had 108 Critter Control franchises in the United States and Canada as of December 31, 2015. Transactions with franchises involve sales of territories to establish new franchises, initial franchise fees and royalties. The territories and initial franchise fees are typically sold for a combination of cash and notes. Notes receivable from franchises were $0.4 million at December 31, 2015. These notes are not guaranteed. The Company anticipates that should there be any losses from franchisees these losses would be recouped by removing the individual franchisee and re-selling the abandoned territory. These amounts are included as financing receivables in the accompanying Consolidated Statements of Financial Position. Royalties from franchises are accrued and recognized in accordance with the FASB ASC Topic 952-605 “Franchisor Revenue Recognition |
EQUIPMENT AND PROPERTY
EQUIPMENT AND PROPERTY | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
EQUIPMENT AND PROPERTY | 6. EQUIPMENT AND PROPERTY Equipment and property are presented at cost less accumulated depreciation and are detailed as follows: December 31, 2015 2014 (in thousands) Buildings $ 49,282 $ 48,440 Operating Equipment 83,591 79,235 Furniture and Fixtures 15,168 14,303 Computer Equipment and Systems 116,823 92,064 264,864 234,042 Less—Accumulated Depreciation (167,998 ) (156,940 ) 96,866 77,102 Land 24,490 24,567 Net equipment and property $ 121,356 $ 101,669 Included in equipment and property, net at December 31, 2015 and 2014, are fixed assets held in foreign countries of $3.4 million, and $3.8 million, respectively. Total depreciation expense was approximately $19.4 million in 2015, $16.6 million in 2014 and $14.4 million in 2013. |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | 7. FAIR VALUE MEASUREMENT The Company’s financial instruments consist of cash and cash equivalents, short-term investments, trade and notes receivables, accounts payable, and other short-term liabilities. The carrying amounts of these financial instruments approximate their fair values. The Company has financial instruments related to its defined benefit pension plan and deferred compensation plan detailed in note 13. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs. The following table presents our nonqualified deferred compensation plan assets using the fair value hierarchy as of December 31, 2015. Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 140 $ 140 $ — $ — Total $ 140 $ 140 $ — $ — The following table presents our nonqualified deferred compensation plan assets using the fair value hierarchy as of December 31, 2014. Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 62 $ 62 $ — $ — Total $ 62 $ 62 $ — $ — Cash and cash equivalents, which are used to pay benefits and deferred compensation plan administrative expenses, are held in Money Market Funds. At December 31, 2015 the Deferred Compensation Plan had 70 life insurance policies with a net face value of $42.2 million. The cash surrender value of these life insurance policies had a net realizable value of $12.9 million and $12.7 million at December 31, 2015 and 2014, respectively. The total deferred compensation plan assets, recorded in other assets on the Company’s consolidated statements of financial position, were $14.0 million and $13.7 million at December 31, 2015 and 2014, respectively. |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill, Carrying Amount in Foreign Countries | |
GOODWILL | 8. GOODWILL Goodwill represents the excess of the purchase price over the fair value of net assets of businesses acquired. The carrying amount of goodwill was $249.9 million as of December 31, 2015 and $255.6 million as of December 31, 2014. Goodwill decreased for the year ended December 31, 2015 due primarily to currency conversion of foreign goodwill. The carrying amount of goodwill in foreign countries was $36.9 million as of December 31, 2015 and $42.7 million as of December 31, 2014. The changes in the carrying amount of goodwill for the twelve months ended December 31, 2015 and 2014 are as follows: (in thousands) Goodwill at December 31, 2013 $ 211,847 Goodwill acquired 48,477 Goodwill adjustments due to currency translation (4,761 ) Goodwill at December 31, 2014 $ 255,563 Goodwill acquired and finalization of allocation of purchase price on previous acquisitions 196 Goodwill adjustments due to currency translation (5,820 ) Goodwill at December 31, 2015 $ 249,939 |
CUSTOMER CONTRACTS AND OTHER IN
CUSTOMER CONTRACTS AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
Current Income Tax Benefit Due to Release of Valuation Allowance | |
CUSTOMER CONTRACTS AND OTHER INTANGIBLE ASSETS | 9. CUSTOMER CONTRACTS AND OTHER INTANGIBLE ASSETS Customer contracts are amortized on a straight-line basis over the period of the agreements, as straight-line best approximates the ratio that current revenues bear to the total of current and anticipated revenues, based on the estimated lives of the assets. In accordance with the FASB ASC Topic 350 “Intangibles - Goodwill and other”, December 31, 2015 2014 (in thousands) Customer contracts $ 214,201 $ 214,125 Less: Accumulated amortization (121,386 ) (109,468 ) Customer contracts, net $ 92,815 $ 104,657 The carrying amount of customer contracts in foreign countries was $14.9 million as of December 31, 2015 and $16.8 million as of December 31, 2014. Other intangible assets include non-compete agreements, patents and finite lived and indefinite lived trade names. Non-compete agreements are amortized on a straight-line basis over periods ranging from 3 to 20 years and patents are amortized on a straight-line basis over 15 years. The carrying amount and accumulated amortization for other intangible assets were as follows: At December 31, 2015 2014 (in thousands) Other intangible assets $ 56,491 $ 41,327 Less: Accumulated amortization (10,375 ) (12,512 ) Other intangible assets, net $ 46,116 $ 28,815 The carrying amount of other intangible assets in foreign countries was $4.2 million as of December 31, 2015 and $4.1 million as of December 31, 2014. Included in the table above are trademarks and trade names of $32.8 million and $16.6 million at December 31, 2015 and 2014, respectively. Also included in the table above are non-amortizable, indefinite lived intangible assets of $29.7 million and $11.3 million at December 31, 2015 and 2014, respectively. The carrying amount of customer contracts and other intangible assets, net were as follows: December 31, 2015 2014 (in thousands) Customer contracts, net $ 92,815 $ 104,657 Other intangible assets, net 46,116 28,815 Customer contracts and other intangible assets, net $ 138,931 $ 133,472 Total amortization expense was approximately $25.2 million in 2015, $26.9 million in 2014 and $25.2 million in 2013. Estimated amortization expense for the existing carrying amount of customer contracts and other intangible assets for each of the five succeeding fiscal years are as follows: (in thousands) 2016 $ 22,419 2017 20,563 2018 17,113 2019 14,183 2020 $ 9,748 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 10. INCOME TAXES The Company’s income tax provision consisted of the following: For the years ended December 31, 2015 2014 2013 (in thousands) Current: Federal $ 68,667 $ 59,053 $ 54,778 State 11,335 9,936 9,259 Foreign 7,534 4,391 3,883 Total current tax 87,536 73,380 67,920 Deferred: Federal 1,286 6,123 (468 ) State 2,078 2,159 730 Foreign 129 158 94 Total deferred tax 3,493 8,440 356 Total income tax provision $ 91,029 $ 81,820 $ 68,276 The primary factors causing income tax expense to be different than the federal statutory rate for 2015, 2014, and 2013 are as follows: For the years ended December 31, 2015 2014 2013 (in thousands) Income tax at statutory rate $ 85,112 $ 76,820 $ 67,063 State income tax expense (net of federal benefit) 8,377 7,429 6,498 Foreign tax benefit (1,729 ) (1,760 ) (2,661 ) Other (731 ) (669 ) (2,624 ) Total income tax provision $ 91,029 $ 81,820 $ 68,276 Other includes the release of deferred tax liabilities, tax credits, valuation allowance, and other immaterial adjustments. The Provision for Income Taxes resulted in an effective tax rate of 37.4% on Income Before Income Taxes for the year ended December 31, 2015. The effective rate differs from the annual federal statutory rate primarily because of state and foreign income taxes. For 2014 and 2013 the effective tax rate was 37.3% and 35.6%, respectively. The effective income tax rate differs from the annual federal statutory tax rate primarily because of state and foreign income taxes and the release of certain deferred tax liabilities. During 2015, 2014, and 2013, the Company paid income taxes of $82.7 million, $74.5 million and $69.4 million, respectively, net of refunds. Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2015 and 2014 are as follow: December 31, 2015 2014 (in thousands) Deferred tax assets: Termite accrual $ 1,968 $ 1,887 Insurance and contingencies 24,991 26,316 Unearned revenues 15,026 15,086 Compensation and benefits 15,288 15,641 State and foreign operating loss carryforwards 10,629 10,454 Bad debt reserve 4,779 4,520 Other 4,133 1,217 Pension 3,768 11,439 Valuation allowance (3,969 ) (3,415 ) Total deferred tax assets 76,613 83,145 Deferred tax liabilities: Depreciation and amortization (10,985 ) (9,035 ) Intangibles and other (24,963 ) (23,465 ) Total deferred tax liabilities (35,948 ) (32,500 ) Net deferred tax assets $ 40,665 $ 50,645 Analysis of the valuation allowance: December 31, 2015 2014 (in thousands) Valuation allowance at beginning of year $ 3,415 $ 2,245 Increase in valuation allowance 554 1,170 Valuation allowance at end of year $ 3,969 $ 3,415 As of December 31, 2015, the Company has net operating loss carryforwards for foreign and state income tax purposes of approximately $188.4 million, which will be available to offset future taxable income. If not used, these carryforwards will expire between 2016 and 2029. Management believes that it is unlikely to be able to utilize approximately $18.0 million of foreign net operating losses before they expire and has included a valuation allowance for the effect of these unrealizable operating loss carryforwards. The valuation allowance increased by $0.6 million due to the foreign net operating losses. Earnings from continuing operations before income tax includes foreign income of $17.0 million, $16.2 million, and $17.0 million in 2015, 2014, and 2013, respectively. The Company’s international business is expanding and we intend to continue to grow the business in foreign markets in the future through reinvestment of foreign deposits and future earnings as well as acquisition of unrelated companies. Repatriation of cash from the Company’s foreign subsidiaries is not part of the Company’s current business plan. The total amount of unrecognized tax benefits at December 31, 2015 that, if recognized, would affect the effective tax rate is $0.0 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: December 31, 2015 2014 (in thousands) Balance at Beginning of Year $ — $ — Additions for tax positions of prior years 2,554 — Settlements — — Balance at End of Year $ 2,554 $ — The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. In addition, the Company has subsidiaries in various state and international jurisdictions that are currently under audit for years ranging from 2007 through 2013. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S., income tax examinations for years prior to 2011. It is reasonably possible that the amount of unrecognized tax benefits will increase in the next 12 months. The Company’s policy is to record interest and penalties related to income tax matters in income tax expense. Accrued interest and penalties were $0.9 million and $0.5 million as of December 31, 2015 and December 31, 2014, respectively. The Company recognized interest and penalties of $0.2 million, $0.1 million, and $0.9 million in 2015, 2014, and 2013, respectively. |
ACCRUAL FOR TERMITE CONTRACTS
ACCRUAL FOR TERMITE CONTRACTS | 12 Months Ended |
Dec. 31, 2015 | |
Loss Contingency [Abstract] | |
ACCRUAL FOR TERMITE CONTRACTS | 11. ACCRUAL FOR TERMITE CONTRACTS In accordance with the FASB ASC Topic 450 “Contingencies,” A reconciliation of changes in the accrual for termite contracts is as follows: For the years ended December 31, 2015 2014 (in thousands) Beginning balance $ 4,875 $ 7,075 Current year provision 4,384 1,286 Settlements, claims, and expenditures (4,174 ) (3,486 ) Ending balance $ 5,085 $ 4,875 The accrual for termite contracts is included in other current liabilities, $2.3 million and $1.9 million at December 31, 2015 and 2014, respectively and long-term accrued liabilities, $2.8 million and $3.0 million at December 31, 2015 and 2014, respectively on the Company’s consolidated statements of financial position. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES The Company leases buildings, vehicles and equipment under operating leases, some of which contain escalation clauses. The Company’s operating leases expire at various dates through 2028: For the years ended December 31, 2015 2014 2013 (in thousands) Rental Expense $ 60,508 $ 54,487 $ 51,605 Future commitments under operating leases are as summarized: (in thousands) Operating leases 2016 $ 23,441 2017 15,818 2018 12,298 2019 9,355 2020 7,654 Thereafter 16,592 Total minimum obligation $ 85,158 In the normal course of business, certain of the Company’s subsidiaries are defendants in a number of lawsuits, claims or arbitrations which allege that the subsidiaries’ services caused damage. In addition, the Company defends employment related cases and claims from time to time. We are involved in certain environmental matters primarily arising in the normal course of business. We are actively contesting each of these matters. The Company and a subsidiary, The Industrial Fumigant Company, LLC, were named defendants in Severn Peanut Co. and Meherrin Agriculture & Chemical Co. v. Industrial Fumigant Co., et al. Severn On December 2, 2014, Plaintiff Killian Pest Control sued Rollins, Inc., its subsidiary HomeTeam Pest Defense, and alleged that HomeTeam’s exclusive use of its “tubes in the walls” system violates the federal Sherman Antitrust Act, and California’s Cartwright Act and Business and Professions Code. Plaintiffs seek a declaratory judgment that the alleged misconduct violates the Sherman and Cartwright Acts, and the Business and Professions Code; a permanent injunction against continuing alleged violations; and monetary damages. The lawsuit is pending in the United States District Court, Northern District of California. The Company cannot currently estimate the reasonably possible loss, if any, because the lawsuit is at an early stage and involves unresolved issues of law and fact. The Company intends to defend this matter vigorously. On December 2, 2014, Plaintiff Jose Luis Garnica, on behalf of himself and a class of similarly situated customers, sued Rollins, Inc., its subsidiary HomeTeam Pest Defense, and alleged that HomeTeam’s exclusive use of its “tubes in the walls” system violates the federal Sherman Antitrust Act. The Plaintiff seeks a declaratory judgment that the alleged misconduct violates the Sherman Act; a permanent injunction against continuing violations; and monetary damages. The lawsuit is pending in the United States District Court, Northern District of California. The Company cannot currently estimate the reasonably possible loss, if any, because the lawsuit is at an early stage and involves unresolved issues of law and fact. The Company intends to defend this matter vigorously. Management does not believe that any pending claim, proceeding or litigation, either alone or in the aggregate will have a material adverse effect on the Company’s financial position, results of operations or liquidity; however, it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual quarter or year. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2015 | |
Description of New Accounting Pronouncements Recently Adopted | |
EMPLOYEE BENEFIT PLANS | 13. EMPLOYEE BENEFIT PLANS Defined Benefit Pension Plans Rollins, Inc. Retirement Income Plan The Company maintains several noncontributory tax-qualified defined benefit pension plans (the “Plans”) covering employees meeting certain age and service requirements. The Plans provide benefits based on the average compensation for the highest five years during the last ten years of credited service (as defined) in which compensation was received, and the average anticipated Social Security covered earnings. The Company funds the Plans with at least the minimum amount required by ERISA. The Company made contributions of $5.0 million, $5.3 million and $5.0 million to the Plans during the years ended December 31, 2015, 2014 and 2013 respectively. In 2005, the Company ceased all future benefit accruals under the Rollins, Inc. Retirement Income Plan, although the Company remains obligated to provide employees benefits earned through June 2005. In 2014, the Plan was amended to allow certain vested participants the ability to elect for a limited time the commencement of their benefit in the form of a single-sum payment, not to exceed $22,000, or an annuity starting date of December 1, 2014. In total $6.3 million was paid by the Plan during the year ended December 31, 2014, under this program. The Plan did not offer any options for the years ended December 31, 2015 and 2013. The Company includes the Waltham Services, LLC Hourly Employee Pension Plan in the Company’s financial statements. The Company accounts for these defined benefit plans in accordance with the FASB ASC Topic 715 “Compensation- Retirement Benefits”, and engages an outside actuary to calculate its obligations and costs. With the assistance of the actuary, the Company evaluates the significant assumptions used on a periodic basis including the estimated future return on plan assets, the discount rate, and other factors, and makes adjustments to these liabilities as necessary. In June 2005, the Company froze the Rollins, Inc. defined benefit pension plan. The Company currently uses December 31 as the measurement date for its defined benefit post-retirement plans. The funded status of the Plans and the net amount recognized in the statement of financial position are summarized as follows as of: December 31, 2015 2014 (in thousands) CHANGE IN ACCUMULATED BENEFIT OBLIGATION Accumulated Benefit obligation at beginning of year $ 221,721 $ 185,947 Service cost 86 74 Interest cost 8,915 9,427 Actuarial (gain) loss (20,283 ) 42,056 Benefits paid (10,064 ) (15,783 ) Accumulated Benefit obligation at end of year 200,375 221,721 CHANGE IN PLAN ASSETS Market value of plan assets at beginning of year 192,163 192,368 Actual return on plan assets 3,541 10,328 Employer contribution 5,000 5,250 Benefits paid (10,064 ) (15,783 ) Fair value of plan assets at end of year 190,640 192,163 Funded status $ (9,735 ) $ (29,558 ) Amounts Recognized in the Statement of Financial Position consist of: December 31, 2015 2014 (in thousands) Noncurrent liabilities $ (9,735 ) $ (29,558 ) Amounts Recognized in Accumulated Other Comprehensive Income consists of: December 31, 2015 2014 (in thousands) Net actuarial loss $ 83,667 $ 98,462 The accumulated benefit obligation for the defined benefit pension plans were $200.4 million and $221.7 million at December 31, 2015 and 2014, respectively. Accumulated benefit obligation and projected benefit obligation are materially the same for the Plans. Pre-tax (increases)/decreases in the pension liability which were (charged, net of tax) credited to other comprehensive income/ (loss) were $14.8 million, $(41.7) million, and $45.7 million in 2015, 2014, and 2013, respectively. The following weighted-average assumptions were used to determine the accumulated benefit obligation and net benefit cost: December 31, 2015 2014 2013 ACCUMULATED BENEFIT OBLIGATION Discount rate 4.70 % 4.15 % 5.20 % Rate of compensation increase N/A N/A N/A NET BENEFIT COST Discount rate 4.15 % 5.20 % 4.17 % Expected return on plan assets 7.00 % 7.00 % 7.00 % Rate of compensation increase N/A N/A N/A The return on plan assets reflects the weighted-average of the expected long-term rates of return for the broad categories of investments held in the plan. The expected long-term rate of return is adjusted when there are fundamental changes in the expected returns on the plan investments. The discount rate reflects the current rate at which the pension liabilities could be effectively settled at the end of the year. In estimating this rate, for fiscal year’s 2015, 2014, and 2013 the Company utilized a yield curve analysis. The components of net periodic benefit cost are summarized as follows: Years ended December 31, 2015 2014 2013 (in thousands) Service cost $ 86 $ 74 $ 112 Interest cost 8,915 9,427 8,551 Expected return on plan assets (12,788 ) (12,431 ) (11,589 ) Amortization of net loss 3,761 2,439 3,910 Net periodic loss/(benefit) $ (26 ) $ (491 ) $ 984 The benefit obligations recognized in other comprehensive income for the years ended December 31, 2015, 2014, and 2013 are summarized as follows: (in thousands) 2015 2014 2013 Pretax (income)/loss $ (11,035 ) $ 44,159 $ (41,767 ) Amortization of net loss (3,761 ) (2,439 ) (3,910 ) Total recognized in other comprehensive income (14,796 ) 41,720 (45,677 ) Total recognized in net periodic benefit (income)/cost and other comprehensive income $ (14,822 ) $ 41,229 $ (44,693 ) The Company expects to amortize a net loss of $3.0 million in 2016. At December 31, 2015 and 2014, the Plan’s assets were comprised of listed common stocks and U.S. government and corporate securities, real estate and other. Included in the assets of the Plan were shares of Rollins, Inc. Common Stock with a market value of $40.5 million and $37.3 million at December 31, 2015 and 2014, respectively. The Plans’ weighted average asset allocation at December 31, 2015 and 2014 by asset category, along with the target allocation for 2016, are as follows: Target Percentage of plan assets as of allocations for December 31, Asset category 2016 2015 2014 Cash and cash equivalents 0% -5% 1.9% 0.5% Equity securities - Rollins stock 0% -40% 21.2% 19.4% Domestic equity - all other 0% - 40% 20.5% 20.3% International equity 0% - 30% 22.2% 23.2% Debt securities - core fixed income 15% - 50% 24.0% 23.8% Real estate 0% - 20% 6.6% 8.9% Real return 0.0% 0.0% 1.6% Alternative/Opportunistic/Special 0% -20% 3.6% 2.3% Total 100.0% 100.0% 100.0% For each of the asset categories in the pension plan, the investment strategy is identical – maximize the long-term rate of return on plan assets with an acceptable level of risk in order to minimize the cost of providing pension benefits. The investment policy establishes a target allocation for each asset class which is rebalanced as required. The plans utilize a number of investment approaches, including individual market securities, equity and fixed income funds in which the underlying securities are marketable, and debt funds to achieve this target allocation. The Company and management are considering making contributions to the pension plans of approximately $3.3 million during fiscal 2016. Some of our assets, primarily our private equity , . Fair Value Measurements The Company’s overall investment strategy is to achieve a mix of approximately 70 percent of investments for long-term growth and 30 percent for near-term benefit payments, with a wide diversification of asset types, fund strategies and fund managers. Equity securities primarily include investments in large-cap and small-cap companies , The following table presents our plan assets using the fair value hierarchy as of December 31, 2015. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. See note 7 for a brief description of the three levels under the fair value hierarchy. (in thousands) Total Level 1 Level 2 Level 3 (1) Cash and Cash Equivalents $ 3,543 $ 3,543 $ — $ — (2) Fixed Income Securities 45,712 — 45,712 — Domestic Equity Securities Rollins, Inc. Stock 40,510 40,510 — — Other Securities 39,070 12,008 27,062 — (3) International Equity Securities 42,373 42,373 — (4) Real Estate 12,565 — — 12,565 (6) Alternative/Opportunistic/Special 6,867 — — 6,867 Total $ 190,640 $ 56,061 $ 115,147 $ 19,432 The following table presents our plan assets using the fair value hierarchy as of December 31, 2014. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. (in thousands) Total Level 1 Level 2 Level 3 (1) Cash and Cash Equivalents $ 1,016 $ 1,016 $ — $ — (2) Fixed Income Securities 45,768 18,322 27,446 — Domestic Equity Securities Rollins, Inc. Stock 37,271 37,271 — — Other Securities 38,982 12,066 26,916 — (3) International Equity Securities 44,559 — 44,559 — (4) Real Estate 17,067 — — 17,067 (5) Real Return 3,119 — 3,119 — (6) Alternative/Opportunistic/Special 4,381 — — 4,381 Total $ 192,163 $ 68,675 $ 102,040 $ 21,448 (1) Cash and cash equivalents, which are used to pay benefits and plan administrative expenses, are held in Rule 2a-7 money market funds. (2) Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades. (3) Some International equity securities are valued using a market approach based on the quoted market prices of identical instruments in their respective markets. (4) Real estate fund values are primarily reported by the fund manager and are based on valuation of the underlying investments, which include inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data. (5) Real Return funds invest in global equities, commodities and inflation protected core bonds that are valued primarily using a market approach based on the quoted market prices of identical instruments in their respective markets. (6) Alternative/Opportunistic/Special funds can invest across the capital structure in both liquid and illiquid securities that are valued using a market approach based on the quoted market prices of identical instruments, or if no market price is available, instruments will be held at their fair market value (which may be cost) as reasonably determined by the investment manager, independent dealers, or pricing services. The following table presents a reconciliation of Level 3 assets held during the year ended December 31, 2015. Net Net Balance at Net Realized Purchases, Transfers Balance at December 31, and Unrealized Issuances and In to/(Out of) December 31, (in thousands) 2014 Gains/(Losses) Settlements Level 3 2015 Real Estate UBS Trumbull Property Income $ 12,991 $ 799 $ (5,000 ) $ — $ 8,790 Garrison Real Estate Fund 4,076 859 (1,160 ) — 3,775 Alternative/Opportunistic/Special Marathon European Credit Opp Fund 4,381 347 2,139 — 6,867 Total $ 21,448 $ 2,005 $ (4,021 ) $ — $ 19,432 The following table presents a reconciliation of Level 3 assets held during the year ended December 31, 2014. Net Net Balance at Net Realized Purchases, Transfers Balance at December 31, and Unrealized Issuances and In to/(Out of) December 31, (in thousands) 2013 Gains/(Losses) Settlements Level 3 2014 Real Estate UBS Trumbull Property Income $ 12,831 $ 1,360 $ (1,200 ) $ — $ 12,991 Garrison Real Estate Fund — — 4,076 — 4,076 Alternative/Opportunistic/Special Marathon European Credit Opp Fund — 101 4,280 — 4,381 Total $ 12,831 $ 1,461 $ 7,156 $ — $ 21,448 The estimated future benefit payments over the next ten years are as follows: (in thousands) 2016 $ 10,588 2017 10,973 2018 11,467 2019 11,785 2020 12,143 Thereafter 64,521 Total $ 121,477 Defined Contribution 401(k) Savings Plan The Company sponsors a defined contribution 401(k) Savings Plan that is available to a majority of the Company’s full-time employees the first day of the calendar quarter following completion of three months of service. The Plan is available to non full-time employees the first day of the calendar quarter following one year of service upon completion of 1,000 hours in that year. The Plan provides for a matching contribution of fifty cents ($.50) for each one dollar ($1.00) of a participant’s contributions to the Plan that do not exceed 6 percent of his or her eligible compensation (which includes commissions, overtime and bonuses). The charge to expense for the Company match was approximately $10.2 million for the year ended December 31, 2015 and $8.5 million and $8.2 million for the years ended December 31, 2014 and 2013, respectively. At December 31, 2015, 2014, and 2013 approximately, 33.5%, 29.3%, and 34.9%, respectively of the plan assets consisted of Rollins, Inc. Common Stock. Total administrative fees paid by the Company for the Plan were less than $0.1 million each of the years ending December 31, 2015, 2014 and 2013, respectively. Nonqualified Deferred Compensation Plan The Deferred Compensation Plan provides that participants may defer up to 50% of their base salary and up to 85% of their annual bonus with respect to any given plan year, subject to a $2 thousand per plan year minimum. The Company may make discretionary contributions to participant accounts. The Company credited accounts of participants of long service to the Company with certain discretionary amounts (“Pension Plan Benefit Restoration Contributions”) in lieu of benefits that previously accrued under the Company’s Retirement Income Plan up to a maximum of $245 thousand. Accounts will be credited with hypothetical earnings, and/or debited with hypothetical losses, based on the performance of certain “Measurement Funds.” Account values are calculated as if the funds from deferrals and Company credits had been converted into shares or other ownership units of selected Measurement Funds by purchasing (or selling, where relevant) such shares or units at the current purchase price of the relevant Measurement Fund at the time of the participant’s selection. Deferred Compensation Plan benefits are unsecured general obligations of the Company to the participants, and these obligations rank in parity with the Company’s other unsecured and unsubordinated indebtedness. The Company has established a “rabbi trust,” which it uses to voluntarily set aside amounts to indirectly fund any obligations under the Deferred Compensation Plan. To the extent that the Company’s obligations under the Deferred Compensation Plan exceed assets available under the trust, the Company would be required to seek additional funding sources to fund its liability under the Deferred Compensation Plan. Generally, the Deferred Compensation Plan provides for distributions of any deferred amounts upon the earliest to occur of a participant’s death, disability, retirement or other termination of employment (a “Termination Event”). However, for any deferrals of salary and bonus (but not Company contributions), participants would be entitled to designate a distribution date which is prior to a Termination Event. Generally, the Deferred Compensation Plan allows a participant to elect to receive distributions under the Deferred Compensation Plan in installments or lump-sum payments. At December 31, 2015 the Deferred Compensation Plan had 70 life insurance policies with a net face value of $42.2 million. The cash surrender value of these life insurance policies were worth $12.9 million and $12.7 million at December 31, 2015 and 2014, respectively. The estimated life insurance premium payments over the next five years are as follows: (in thousands) 2016 $ 504 2017 1,097 2018 1,057 2019 952 2020 1,055 Total $ 4,665 Total expense/ (income) related to deferred compensation was $231 thousand, $207 thousand and $159 thousand in 2015, 2014, and 2013, respectively. The Company had $14.0 million and $13.7 million in deferred compensation assets as of December 31, 2015 and 2014, respectively, included within other assets on the Company’s consolidated statements of financial position and $14.1 million and $13.7 million in deferred compensation liability as of December 31, 2015 and 2014, respectively, located within long-term accrued liabilities on the Company’s consolidated statements of financial position. The amounts of assets were marked to fair value. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | 14. STOCK-BASED COMPENSATION Stock Compensation Plans Stock options and time lapse restricted shares (TLRSs) have been issued to officers and other management employees under the Company’s Employee Stock Incentive Plan. Stock Options The Company’s stock options generally vest over a five-year period and expire ten years from the issuance date. For the years ended December 31, 2015 and 2014, respectively, the Company did not issue any shares of common stock upon exercise of stock options by employees. In order to estimate the fair value of stock options, the Company used the Black-Scholes option valuation model, which was developed for use in estimating the fair value of publicly traded options, which have no vesting restrictions and are fully transferable. Option valuation models require the input of highly subjective assumptions and these assumptions can vary over time. Option activity under the Company’s stock option plan as of December 31, 2015, 2014 and 2013 and changes during the year ended December 31, 2015 were as follows: (in thousands except per share data) Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2012 1 $ 3.68 0.08 $ 17 Exercised (1 ) 3.68 Outstanding at December 31, 2013 — — — — Exercised — — Outstanding at December 31, 2014 — $ — — $ — Exercised — — Outstanding at December 31, 2015 — $ — — $ — Exercisable at December 31, 2015 — $ — — $ — The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of the year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on that day. The amount of aggregate intrinsic value will change based on the fair market value of the Company’s stock. There were no options exercised during the years ended December 31, 2015 or 2014. The aggregate intrinsic value of options exercised during the year ended December 31, 2013 was $0.1 million. Exercise of options during the year ended December 31, 2013 resulted in cash receipts of less than $10 thousand. Time Lapse Restricted Shares and Restricted Stock Units TLRSs provide for the issuance of a share of the Company’s Common Stock at no cost to the holder and generally vest after a certain stipulated number of years from the grant date, depending on the terms of the issue. TLRSs vest in 20 percent increments starting with the second anniversary of the grant, over six years from the date of grant. During these years, grantees receive all dividends declared and retain voting rights for the granted shares. The agreements under which the restricted stock is issued provide that shares awarded may not be sold or otherwise transferred until restrictions established under the plans have lapsed. The Company issued time lapse restricted shares of 0.7 million, 0.6 million, and 0.7 million for the years ended December 31, 2015, 2014, and 2013, respectively. The Company issues new shares from its authorized but unissued share pool. At December 31, 2015, approximately 5.1 million shares of the Company’s common stock were reserved for issuance. In accordance with the FASB ASC Topic 718, “ Compensation – Stock Compensation,” The following table summarizes the components of the Company’s stock-based compensation programs recorded as expense ($ in thousands): Years ended December 31, 2015 2014 2013 Time Lapse Restricted Stock: Pre-tax compensation expense $ 12,110 $ 10,579 $ 10,427 Tax benefit (4,687 ) (4,094 ) (4,014 ) Restricted stock expense, net of tax $ 7,423 $ 6,485 $ 6,413 As of December 31, 2015 and 2014, $31.3 million and $29.4 million, respectively, of total unrecognized compensation cost related to time-lapse restricted shares are expected to be recognized over a weighted average period of approximately 3.8 years at December 31, 2015 and approximately 3.7 years at December 31, 2014. The following table summarizes information on unvested restricted stock units outstanding as of December 31, 2015, 2014 and 2013: Number of Shares Weighted-Average Grant-Date Fair Value Unvested Restricted Stock Grants Unvested as of December 31, 2012 4,114 $ 10.94 Forfeited (84 ) 11.68 Vested (1,045 ) 8.89 Granted 695 16.19 Unvested as of December 31, 2013 3,680 12.50 Forfeited (178 ) 14.27 Vested (1,018 ) 10.31 Granted 616 19.16 Unvested as of December 31, 2014 3,100 14.45 Forfeited (85 ) 15.71 Vested (946 ) 12.04 Granted 682 22.43 Unvested as of December 31, 2015 2,751 $ 17.21 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) | 12 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) | 15. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) Accumulated other comprehensive income/ (loss) consist of the following (in thousands): Pension Liability Adjustment Foreign Currency Translation Total Balance at December 31, 2013 $ (34,400 ) $ 2,629 $ (31,771 ) Change during 2014: Before-tax amount (41,721 ) (9,934 ) (51,655 ) Tax benefit 16,146 1,792 17,938 (25,575 ) (8,142 ) (33,717 ) Balance at December 31, 2014 (59,975 ) (5,513 ) (65,488 ) Change during 2015 Before-tax amount 14,796 (14,760 ) 36 Tax benefit (5,726 ) — (5,726 ) 9,070 (14,760 ) (5,690 ) Balance at December 31, 2015 $ (50,905 ) $ (20,273 ) $ (71,178 ) |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 16. RELATED PARTY TRANSACTIONS The Company provides certain administrative services to RPC, Inc. (“RPC”) (a company of which Mr. R. Randall Rollins is also Chairman and which is otherwise affiliated with the Company). The service agreements between RPC and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months notice. The services covered by these agreements include administration of certain employee benefit programs, and other administrative services. Charges to RPC (or to corporations which are subsidiaries of RPC) for such services and rent totaled approximately $0.1 million for each of the years ended December 31, 2015, 2014, and 2013. The Company rents office, hanger and storage space to LOR, Inc. (“LOR”) (a company controlled by R. Randall Rollins and Gary W. Rollins). Charges to LOR (or corporations which are subsidiaries of LOR) for rent totaled $1.0 million, $1.0 million, and $1.1 million for the years ended December 31, 2015, 2014, and 2013, respectively. In 2014, P.I.A. LLC, a company owned by the Chairman of the Board of Directors, R. Randall Rollins, purchased a Lear Model 35A jet and entered into a lease arrangement with the Company for Company use of the aircraft for business purposes. The lease is terminable by either party on 30 days notice. The Company pays $100.00 per month rent for the leased aircraft, and pays all variable costs and expenses associated with the leased aircraft, such as the costs for fuel, maintenance, storage and pilots. The Company has the priority right to use of the aircraft on business days, and Mr. Rollins has the right to use the aircraft for personal use through the terms of an Aircraft Time Sharing Agreement with the Company. During the years ended December 31, 2015 and 2014, the Company paid approximately $0.7 million and $0.1 million in rent and operating costs for the aircraft respectively. During 2015, the Company accounted for 100 percent of the use of the aircraft. All transactions were approved by the Company’s Nominating and Governance Committee of the Board of Directors. |
UNAUDITED QUARTERLY DATA
UNAUDITED QUARTERLY DATA | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
UNAUDITED QUARTERLY DATA | 17. UNAUDITED QUARTERLY DATA (in thousands except per share data) First Second Third Fourth 2015 Revenues $ 330,909 $ 392,150 $ 399,746 $ 362,500 Gross profit (Revenues less cost of services provided) $ 162,866 $ 201,941 $ 204,257 $ 180,265 Net income $ 30,281 $ 45,073 $ 45,046 $ 31,749 Income per share: Income per share—Basic $ 0.14 $ 0.21 $ 0.21 $ 0.15 Income per share—Diluted $ 0.14 $ 0.21 $ 0.21 $ 0.15 2014 Revenues $ 313,388 $ 369,357 $ 384,870 $ 343,951 Gross profit (Revenues less cost of services provided) $ 152,080 $ 186,715 $ 196,060 $ 168,972 Net income $ 25,766 $ 40,860 $ 41,121 $ 29,917 Income per share: Income per share—Basic $ 0.12 $ 0.19 $ 0.19 $ 0.14 Income per share—Diluted $ 0.12 $ 0.19 $ 0.19 $ 0.14 |
CASH DIVIDEND
CASH DIVIDEND | 12 Months Ended |
Dec. 31, 2015 | |
Dividends, Cash [Abstract] | |
CASH DIVIDEND | 18. CASH DIVIDEND On October 27, 2015, the Board of Directors declared a special year-end dividend of $0.10 per share payable December 10, 2015 to stockholders of record at the close of business November 10, 2015. The Board of Directors, at its quarterly meeting on January 26, 2016, approved a 25.0% increase in the CompanyÂ’s quarterly dividend. The increased regular quarterly dividend of $0.10 per share will be payable March 10, 2016 to stockholders of record at the close of business February 10, 2016. |
THREE-FOR-TWO STOCK SPLIT
THREE-FOR-TWO STOCK SPLIT | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
THREE-FOR-TWO STOCK SPLIT | 19. THREE-FOR-TWO STOCK SPLIT On January 27, 2015, the Board of Directors at its quarterly meeting authorized a three-for-two stock split of the Company’s common shares by the issuance on March 10, 2015 of one additional common share for each two common shares held of record at February 10, 2015. The stock split increased the Company’s outstanding shares from 145,783,052 to 218,674,578 shares. Below are the effects of the stock split on the Company’s Stockholders’ equity: (in thousands) December 31, 2014 Adjustment December 31, 2014 STOCKHOLDERS’ EQUITY Preferred stock, without par value; 500,000 authorized, zero shares issued $ — $ — $ — Common stock, par value $1 per share; 250,000,000 shares authorized, 218,482,907 shares issued(1) 145,722 72,761 218,483 Treasury Stock, par value $1 per share; 200,000 and 0 shares, respectively (200 ) — (200 ) Paid-in-capital 62,839 — 62,839 Accumulated other comprehensive loss (65,488 ) — (65,488 ) Retained earnings 319,803 (72,761 ) 247,042 Total stockholders’ equity $ 462,676 $ — $ 462,676 (1) Shares issued increased as follows: 2014 - 72,760,969; 2013 - 72,932,222 Below are the effects of the stock split on the Company’s earnings per share: (in thousands, except per share amounts) December 31, 2014 Adjustment December 31, 2014 Net Income $ 137,664 $ — $ 137,664 Basic Earnings Per Share $ 0.94 $ (0.31 ) $ 0.63 Diluted Earnings Per Share $ 0.94 $ (0.31 ) $ 0.63 Shares used for computation: Basic 145,796 72,899 218,695 Diluted 145,796 72,899 218,695 |
SCHEDULE II-VALUATION AND QUALI
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2015 | |
Valuation and Qualifying Accounts [Abstract] | |
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS ROLLINS, INC. AND SUBSIDIARIES For the years ended December 31, 2015, 2014 and 2013 (in thousands) Balance at Beginning of Period Charged to Costs and Expenses Net (Deductions) Recoveries Balance at End of Period Year ended December 31, 2015 Allowance for doubtful accounts $ 14,094 $ 10,113 $ (10,571) $ 13,636 Year ended December 31, 2014 Allowance for doubtful accounts $ 12,278 $ 11,197 $ (9,381) $ 14,094 Year ended December 31, 2013 Allowance for doubtful accounts $ 11,461 $ 10,388 $ (9,571) $ 12,278 |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Business Description | Business Description The Company is an international service company with headquarters located in Atlanta, Georgia, providing pest and termite control services through its wholly-owned subsidiaries to both residential and commercial customers in North America with international franchises in Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, and Mexico. Services are performed through a contract that specifies service frequency and the pricing arrangement with the customer. Orkin, LLC. (“Orkin”), a wholly-owned subsidiary of the Company founded in 1901, is the world’s largest pest and termite control company. It provides customized services from over 400 locations. Orkin serves customers, directly or through franchise operations, in the United States, Canada, Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, and Mexico providing essential pest control services and protection against termite damage, rodents and insects to homes and businesses, including hotels, food service establishments, food manufacturers, retailers and transportation companies. Orkin operates under the Orkin ® ® SM ® Orkin Canada, a wholly-owned subsidiary of Orkin founded in 1952, was acquired by Orkin in 1999. Orkin Canada is Canada’s largest pest control provider and a leader in the development of fast, effective and environmentally responsible pest control solutions. Western Pest Services (“Western”), a wholly-owned subsidiary of the Company founded in 1928, was acquired by Rollins, Inc. in 2004. Western is primarily a commercial pest control service company and its business complements most of the services Orkin offers focusing on the northeastern United States. The Industrial Fumigant Company (“IFC”), a wholly-owned subsidiary of the Company founded in 1937, was acquired by Rollins, Inc. in 2005. IFC is a leading provider of pest management and sanitation services and products to the food and commodity industries. HomeTeam Pest Defense (“HomeTeam”), a wholly-owned subsidiary of the Company established in 1996, was acquired by Rollins, Inc. in April 2008. At the time of the acquisition, HomeTeam, with its unique Taexx ® Rollins Australia (“Rollins Australia”), a wholly-owned subsidiary of the Company, acquired Allpest WA (“Allpest”), in February 2014. Allpest was established in 1959 and is headquartered in Perth, Australia. Allpest provides traditional residential, commercial and termite service as well as consulting services on border protection related to Australia’s biosecurity program and provides specialized services to Australia’s mining and oil and gas sectors. Rollins Wildlife Services, a wholly-owned subsidiary of the Company, acquired Critter Control February 27, 2015. Critter Control was established by Kevin Clark in 1983 and is headquartered in Traverse City, Michigan. The business is currently 100% franchised with operations in 40 states and 2 Canadian provinces. The Company has several smaller wholly-owned subsidiaries that in total make up less than 5% of the Company’s total revenues. The Company has only one reportable segment, its pest and termite control business. Revenue, operating profit and identifiable assets for this segment, includes the United States, Canada, Australia, Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, and Mexico. The Company’s results of operations and its financial condition are not reliant upon any single customer, few customers or foreign operations. |
Principles of Consolidation | Principles of Consolidation |
Subsequent Events | Subsequent Events |
Estimates Used in the Preparation of Consolidated Financial Statements | Estimates Used in the Preparation of Consolidated Financial Statements |
Revenue Recognition | Revenue Recognition Termite baiting revenues are recognized based on the delivery of the individual units of accounting. At the inception of a new baiting services contract, upon quality control review of the installation, the Company recognizes revenue for the installation of the monitoring stations, initial directed liquid termiticide treatment and servicing of the monitoring stations. A portion of the contract amount is deferred for the undelivered monitoring element. This portion is recognized as income on a straight-line basis over the remaining contract term, which results in recognition of revenue in a pattern that approximates the timing of performing monitoring visits. The allocation of the purchase price to the two deliverables is based on the relative selling price. There are no contingencies related to the delivery of additional items or meeting other specified performance conditions. Baiting renewal revenue is deferred and recognized over the annual contract period on a straight-line basis that approximates the timing of performing the required monitoring visits. Revenue received for conventional termite renewals is deferred and recognized on a straight-line basis over the remaining contract term; and, the cost of reinspections, reapplications and repairs and associated labor and chemicals are expensed as incurred. For outstanding claims, an estimate is made of the costs to be incurred (including legal costs) based upon current factors and historical information. The performance of reinspections tends to be close to the contract renewal date and while reapplications and repairs involve an insubstantial number of the contracts, these costs are incurred over the contract term. As the revenue is being deferred, the future cost of reinspections, reapplications and repairs and associated labor and chemicals applicable to the deferred revenue are expensed as incurred. The Company accrues for noticed claims. The costs of providing termite services upon renewal are compared to the expected revenue to be received and a provision is made for any expected losses. All revenues are reported net of sales taxes. The CompanyÂ’s foreign operations accounted for approximately 7% of revenues for the year ended December 31, 2015, and 8% for the years ended December 2014, and 2013. Currency exchange translation is the cause of the decreased percentage. Interest income on installment receivables is accrued monthly based on actual loan balances and stated interest rates. Recognition of initial franchise fee revenues occurs when all material services or conditions relating to a new agreement have been substantially performed or satisfied by the Company, and initial franchise fees are treated as unearned revenue in the Statement of Financial Position until such time. Royalties from franchises are accrued and recognized as revenues as earned on a monthly basis. Gains on sales of pest control customer accounts to franchises are recognized at the time of sale and when collection is reasonably assured. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts |
Advertising | Advertising Years ended December 31, 2015 2014 2013 (in thousands) Advertising $ 57,705 $ 54,909 $ 55,282 |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company’s $134.6 million of total cash at December 31, 2015, is primarily cash held at various banking institutions. Approximately $34.8 million is held in cash accounts at international bank institutions and the remaining $99.8 million is primarily held in Federal Deposit Insurance Corporation (“FDIC”) insured non-interest-bearing accounts at various domestic banks which at times may exceed federally insured amounts. The Company’s international business is expanding and we intend to continue to grow the business in foreign markets in the future through reinvestment of foreign deposits and future earnings as well as acquisitions of unrelated companies. Repatriation of cash from the Company’s foreign subsidiaries is not a part of the Company’s current business plan. The Company maintains a large cash position in the United States while having no third-party debt to service. Rollins maintains adequate liquidity and capital resources, without regard to its foreign deposits, that are directed to finance domestic operations and obligations and to fund expansion of its domestic business for the foreseeable future. At December 31, 2015 2014 (in thousands) (in US dollars) Cash held in foreign bank accounts $ 34,816 $ 35,065 |
Marketable Securities | Marketable Securities Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designations as of each balance sheet date. Debt securities are classified as available-for-sale because the Company does not have the intent to hold the securities to maturity. Available-for-sale securities are stated at their fair values, with the unrealized gains and losses, net of tax, reported as a separate component of stockholdersÂ’ equity. Realized gains and losses and declines in value judged to be other than temporary on available-for-sale securities are included as a component of interest income. The Company had no marketable securities other than those held in the defined benefit pension plan and the nonqualified deferred compensation plan at December 31, 2015 and 2014. See note 13 for further details. |
Materials and Supplies | Materials and Supplies |
Income Taxes | Income Taxes . The CompanyÂ’s policy is to record interest and penalties related to income tax matters in income tax expense. |
Equipment and Property | Equipment and Property Years ended December 31, 2015 2014 2013 (in thousands) Depreciation $ 19,354 $ 16,627 $ 14,415 |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets - “Intangibles - Goodwill and other” |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets - “Property, Plant and Equipment” |
Insurance | Insurance |
Accrual for Termite Contracts | Accrual for Termite Contracts |
Contingency Accruals | Contingency Accruals “Contingencies,” |
Three-for-two stock split | Three-for-two stock split |
Earnings Per Share | Earnings Per Share - “Earnings Per Share- Overall,” The Company has periodically issued share-based payment awards that contain non-forfeitable rights to dividends and therefore are considered participating securities. See note 14 for further information on restricted stock granted to employees. The basic and diluted calculations are the same as there were no stock options included in diluted earnings per share as we have no stock options outstanding. Basic and diluted earnings per share are computed by dividing net income by the weighted average number of shares outstanding during the respective periods. A reconciliation of weighted average shares outstanding along with the earnings per share attributable to restricted shares of common stock (participating securities) is as follows (in thousands except per share data). All share and per share information in the following chart are restated for the stock split effective March 10, 2015: Years Ended December 31, 2015 2014 2013 Net income available to stockholders $ 152,149 $ 137,664 $ 123,330 Less: Dividends paid Common Stock (90,631 ) (74,704 ) (64,571 ) Restricted shares of common stock (1,124 ) (1,046 ) (1,087 ) Undistributed earnings for the period $ 60,394 $ 61,914 $ 57,672 Allocation of undistributed earnings: Common stock $ 59,611 $ 61,001 $ 56,663 Restricted shares of common stock 783 913 1,009 Diluted allocation of undistributed earnings: Common stock $ 59,611 $ 61,001 $ 56,663 Restricted shares of common stock 783 913 1,009 Basic shares outstanding: Common stock 215,749 215,470 215,289 Restricted shares of common stock 2,834 3,225 3,832 218,583 218,695 219,121 Diluted shares outstanding: Common stock 215,749 215,470 215,289 Dilutive effect of stock options — — — 215,749 215,470 215,289 Restricted shares of common stock 2,834 3,225 3,832 218,583 218,695 219,121 Basic earnings per share Common stock: Distributed earnings $ 0.42 $ 0.35 $ 0.30 Undistributed earnings 0.28 0.28 0.26 $ 0.70 $ 0.63 $ 0.56 Restricted shares of common stock Distributed earnings $ 0.40 $ 0.32 $ 0.28 Undistributed earnings 0.28 0.28 0.26 $ 0.68 $ 0.60 $ 0.54 Diluted earning per share: Common stock: Distributed earnings $ 0.42 $ 0.35 $ 0.30 Undistributed earnings 0.28 0.28 0.26 $ 0.70 $ 0.63 $ 0.56 |
Translation of Foreign Currencies | Translation of Foreign Currencies |
Stock-Based Compensation | Stock-Based Compensation Compensation – Stock Compensation TLRSs provide for the issuance of a share of the Company’s Common Stock at no cost to the holder and generally vest after a certain stipulated number of years from the grant date, depending on the terms of the issue. Outstanding TLRSs vest in 20 percent increments starting with the second anniversary of the grant, over six years from the date of grant. During these years, grantees receive all dividends declared and retain voting rights for the granted shares. The agreements under which the restricted stock is issued provide that shares awarded may not be sold or otherwise transferred until restrictions established under the plans have lapsed. The fair value of these awards is recognized as compensation expense, net of forfeitures, on a straight-line basis over six years. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) |
Franchising Program | Franchising Program All domestic franchises have a guaranteed repurchase clause that the Orkin franchise may be repurchased by Orkin at a later date once it has been established; therefore, initial Orkin domestic franchise fees are deferred in accordance with the FASB ASC Topic 952-605 “Franchisor Revenue Recognition Royalties from Orkin franchises are accrued and recognized in accordance with the FASB ASC Topic 952-605 “Franchisor Revenue Recognition As of December 31, 2015, 2014 and 2013, Orkin had 48, 37, and 26 international franchises, respectively. Orkin’s international franchise program began with its first international franchise in 2000 and since has expanded to Central America, South America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa and Mexico. The Company’s maximum exposure to loss (notes receivable from franchises less deferred franchise fees) relating to the Orkin franchises was $1.9 million, $1.2 million, and $1.2 million for the years ended December 31, 2015, 2014, and 2013, respectively. Rollins’ wholly-owned subsidiary, Rollins Wildlife Services, had 108 Critter Control franchises in the United States and Canada as of December 31, 2015. Transactions with Critter Control franchises involve sales of territories to establish new franchises, initial franchise fees and royalties. The territories and initial franchise fees are typically sold for a combination of cash and notes. Notes receivable from franchises were $0.4 million at December 31, 2015. These notes are not guaranteed. The Company anticipates that should there be any losses from franchisees these losses would be recouped by removing the individual franchisee and re-selling the abandoned territory. These amounts are included as financing receivables in the accompanying Consolidated Statements of Financial Position. Royalties from franchises are accrued and recognized in accordance with the FASB ASC Topic 952-605 “Franchisor Revenue Recognition |
Recently issued accounting standards to be adopted in 2015 or later | New Accounting Standards Recently adopted accounting standards In May 2015, the FASB issued ASU No. 2015-07 (“ASU 2015-07”) regarding ASC Topic 820 “Fair Value Measurement: Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent).” The amendments in ASU 2015-07 remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also limit certain disclosures to investments for which the entity has elected to measure at fair value using the net asset value per share practical expedient. The amendments in ASU 2015-07 are effective for annual and interim periods beginning after December 15, 2015. The adoption of this standard did not have a material impact on the Company’s reported results of operations or financial position. In June 2015, the FASB issued ASU No. 2015-10, Technical Corrections and Improvements. ASU 2015-10 makes minor adjustments to the FASB Accounting Standard Codification. The technical corrections are divided into four main categories: Amendments to align codification wording with that in pre-Codification standards, corrections to references and clarification of guidance to avoid misapplication and misinterpretation, minor edits to simplify the codification and thereby improve its usefulness and minor enhancements to codification guidance that are not expected to have a significant effect on current practice. The amendments in this update are effective for fiscal periods beginning on or after December 15, 2015, and interim periods within annual periods beginning on or after December 15, 2015. The adoption of this standard did not have a material impact on the Company’s reported results of operations or financial position. In September 2015, the FASB issued ASU No. 2015-16 (Topic 805): Business Combinations. ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments in this update were effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with earlier application permitted for financial statements that have not been issued. The adoption of this standard did not have a material impact on the Company’s reported results of operations or financial position. Recently issued accounting standards to be adopted in 2016 or later In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB approved a one-year deferral of this standard, with a revised effective date for fiscal years beginning after December 15, 2017. Early adoption is permitted, although not prior to fiscal years beginning after December 15, 2016. The standard permits the use of either the retrospective or modified retrospective (cumulative effect) transition method. We are evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method and continue to evaluate the effect of the standard on our ongoing financial reporting. We do not expect this standard to have a material impact on the Company’s reported results of operations or financial position. In August 2015, the FASB issued ASU No. 2015-14 (Topic 606): Revenue from Contracts with Customers. ASU 2015-14 defers the effective date of Update 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and 2 interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in Update 2014-09. We do not expect this standard to have a material impact on the Company’s reported results of operations or financial position. In November 2015, the FASB issued ASU No (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this update apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. The amendments in this update are effective for the company’s financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments in this update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. If an entity applies the guidance prospectively, the entity should disclose in the first interim and first annual period of change, the nature of and reason for the change in accounting principle and a statement that prior periods were not retrospectively adjusted. If an entity applies the guidance retrospectively, the entity should disclose in the first interim and first annual period of change the nature of and reason for the change in accounting principle and quantitative information about the effects of the accounting change on prior periods. The Company is currently evaluating the impact of this standard on its consolidated financial statements. We do not expect this standard to have a material impact on the Company’s reported results of operations or financial position. |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Schedule of advertising costs expensed | Years ended December 31, 2015 2014 2013 (in thousands) Advertising $ 57,705 $ 54,909 $ 55,282 |
Schedule of cash and cash equivalents | At December 31, 2015 2014 (in thousands) (in US dollars) Cash held in foreign bank accounts $ 34,816 $ 35,065 |
Schedule of depreciation and amortization expense | Years ended December 31, 2015 2014 2013 (in thousands) Depreciation $ 19,354 $ 16,627 $ 14,415 |
Reconciliation of weighted average shares outstanding along with the earnings per share attributable to restricted shares of common stock (participating securities) | A reconciliation of weighted average shares outstanding along with the earnings per share attributable to restricted shares of common stock (participating securities) is as follows (in thousands except per share data). All share and per share information in the following chart are restated for the stock split effective March 10, 2015: Years Ended December 31, 2015 2014 2013 Net income available to stockholders $ 152,149 $ 137,664 $ 123,330 Less: Dividends paid Common Stock (90,631 ) (74,704 ) (64,571 ) Restricted shares of common stock (1,124 ) (1,046 ) (1,087 ) Undistributed earnings for the period $ 60,394 $ 61,914 $ 57,672 Allocation of undistributed earnings: Common stock $ 59,611 $ 61,001 $ 56,663 Restricted shares of common stock 783 913 1,009 Diluted allocation of undistributed earnings: Common stock $ 59,611 $ 61,001 $ 56,663 Restricted shares of common stock 783 913 1,009 Basic shares outstanding: Common stock 215,749 215,470 215,289 Restricted shares of common stock 2,834 3,225 3,832 218,583 218,695 219,121 Diluted shares outstanding: Common stock 215,749 215,470 215,289 Dilutive effect of stock options — — — 215,749 215,470 215,289 Restricted shares of common stock 2,834 3,225 3,832 218,583 218,695 219,121 Basic earnings per share Common stock: Distributed earnings $ 0.42 $ 0.35 $ 0.30 Undistributed earnings 0.28 0.28 0.26 $ 0.70 $ 0.63 $ 0.56 Restricted shares of common stock Distributed earnings $ 0.40 $ 0.32 $ 0.28 Undistributed earnings 0.28 0.28 0.26 $ 0.68 $ 0.60 $ 0.54 Diluted earning per share: Common stock: Distributed earnings $ 0.42 $ 0.35 $ 0.30 Undistributed earnings 0.28 0.28 0.26 $ 0.70 $ 0.63 $ 0.56 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Acquisitions Tables | |
Schedule of assets acquired and liabilities | The fair values of major classes of assets acquired and liabilities assumed along with the contingent consideration liability recorded during the valuation period of acquisition is included in the reconciliation of the total consideration as follows (in thousands): December 31, 2015 2014 Accounts receivable, net $ 1,711 $ 2,594 Materials and supplies 71 481 Equipment and property 948 4,516 Goodwill 196 48,477 Customer contracts 12,398 28,237 Other intangible assets 20,092 6,471 Current liabilities (2,329 ) (6,733 ) Other assets and liabilities, net 460 (2,725 ) Total consideration paid 33,547 81,318 Less: Common Stock Payment 0 (16,413 ) Less: Contingent consideration liability (85 ) (1,570 ) Total cash purchase price $ 33,462 $ 63,335 |
TRADE RECEIVABLES (Tables)
TRADE RECEIVABLES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Schedule of trade receivables | December 31, 2015 2014 (in thousands) Gross Trade Receivables $ 90,212 $ 88,798 Allowance for Doubtful Accounts (10,348 ) (10,944 ) Net Trade Receivables $ 79,864 $ 77,854 |
FINANCING RECEIVABLES (Tables)
FINANCING RECEIVABLES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Financing Receivables | |
Schedule of financed receivables including installment receivable amounts which are due subsequent to one year | At December 31, 2015 2014 (in thousands) Gross Financing Receivables, short-term $ 15,674 $ 13,982 Gross Financing Receivables, long-term 15,080 13,189 Allowance for Doubtful Accounts (3,288 ) (3,150 ) Net Financing Receivables $ 27,466 $ 24,021 |
Schedule of allowance for doubtful accounts related to financing receivables | At December 31, 2015 2014 (in thousands) Balance, beginning of period $ 3,150 $ 3,200 Additions to allowance 965 748 Deductions, net of recoveries (827 ) (798 ) Balance, end of period $ 3,288 $ 3,150 |
Summary of the past due financing receivables | December 31, 2015 2014 (in thousands) 30-59 days past due $ 721 $ 626 60-89 days past due 531 201 90 days or more past due 757 352 Total $ 2,009 $ 1,179 |
Summary of the percentage of period-end gross past due financing receivables | December 31, 2015 2014 Current 93.5 % 95.7 % 30-59 days past due 2.3 % 2.3 % 60-89 days past due 1.7 % 0.8 % 90 days or more past due 2.5 % 1.2 % Total 100.0 % 100.0 % |
EQUIPMENT AND PROPERTY (Tables)
EQUIPMENT AND PROPERTY (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of equipment and property at cost less accumulated depreciation | December 31, 2015 2014 (in thousands) Buildings $ 49,282 $ 48,440 Operating Equipment 83,591 79,235 Furniture and Fixtures 15,168 14,303 Computer Equipment and Systems 116,823 92,064 264,864 234,042 Less—Accumulated Depreciation (167,998 ) (156,940 ) 96,866 77,102 Land 24,490 24,567 Net equipment and property $ 121,356 $ 101,669 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of nonqualified deferred compensation plan assets using the fair value hierarchy | The following table presents our nonqualified deferred compensation plan assets using the fair value hierarchy as of December 31, 2015. Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 140 $ 140 $ — $ — Total $ 140 $ 140 $ — $ — The following table presents our nonqualified deferred compensation plan assets using the fair value hierarchy as of December 31, 2014. Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 62 $ 62 $ — $ — Total $ 62 $ 62 $ — $ — |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill, Carrying Amount in Foreign Countries | |
Schedule of changes in the carrying amount of goodwill | (in thousands) Goodwill at December 31, 2013 $ 211,847 Goodwill acquired 48,477 Goodwill adjustments due to currency translation (4,761 ) Goodwill at December 31, 2014 $ 255,563 Goodwill acquired and finalization of allocation of purchase price on previous acquisitions 196 Goodwill adjustments due to currency translation (5,820 ) Goodwill at December 31, 2015 $ 249,939 |
CUSTOMER CONTRACTS AND OTHER 36
CUSTOMER CONTRACTS AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Current Income Tax Benefit Due to Release of Valuation Allowance | |
Schedule of carrying amount and accumulated amortization for customer contracts | December 31, 2015 2014 (in thousands) Customer contracts $ 214,201 $ 214,125 Less: Accumulated amortization (121,386 ) (109,468 ) Customer contracts, net $ 92,815 $ 104,657 |
Schedule of carrying amount and accumulated amortization for other intangible assets | At December 31, 2015 2014 (in thousands) Other intangible assets $ 56,491 $ 41,327 Less: Accumulated amortization (10,375 ) (12,512 ) Other intangible assets, net $ 46,116 $ 28,815 |
Schedule of customer contracts and other intangible assets | December 31, 2015 2014 (in thousands) Customer contracts, net $ 92,815 $ 104,657 Other intangible assets, net 46,116 28,815 Customer contracts and other intangible assets, net $ 138,931 $ 133,472 |
Schedule of estimated amortization expense for the existing carrying amount of customer contracts and other intangible assets | 2016 $ 22,419 2017 20,563 2018 17,113 2019 14,183 2020 $ 9,748 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax provision | For the years ended December 31, 2015 2014 2013 (in thousands) Current: Federal $ 68,667 $ 59,053 $ 54,778 State 11,335 9,936 9,259 Foreign 7,534 4,391 3,883 Total current tax 87,536 73,380 67,920 Deferred: Federal 1,286 6,123 (468 ) State 2,078 2,159 730 Foreign 129 158 94 Total deferred tax 3,493 8,440 356 Total income tax provision $ 91,029 $ 81,820 $ 68,276 |
Schedule of primary factors causing income tax expense to be different than the federal statutory rate | For the years ended December 31, 2015 2014 2013 (in thousands) Income tax at statutory rate $ 85,112 $ 76,820 $ 67,063 State income tax expense (net of federal benefit) 8,377 7,429 6,498 Foreign tax benefit (1,729 ) (1,760 ) (2,661 ) Other (731 ) (669 ) (2,624 ) Total income tax provision $ 91,029 $ 81,820 $ 68,276 |
Schedule of significant components of the deferred tax assets and liabilities | December 31, 2015 2014 (in thousands) Deferred tax assets: Termite accrual $ 1,968 $ 1,887 Insurance and contingencies 24,991 26,316 Unearned revenues 15,026 15,086 Compensation and benefits 15,288 15,641 State and foreign operating loss carryforwards 10,629 10,454 Bad debt reserve 4,779 4,520 Other 4,133 1,217 Pension 3,768 11,439 Valuation allowance (3,969 ) (3,415 ) Total deferred tax assets 76,613 83,145 Deferred tax liabilities: Depreciation and amortization (10,985 ) (9,035 ) Intangibles and other (24,963 ) (23,465 ) Total deferred tax liabilities (35,948 ) (32,500 ) Net deferred tax assets $ 40,665 $ 50,645 |
Schedule of valuation allowance | December 31, 2015 2014 (in thousands) Valuation allowance at beginning of year $ 3,415 $ 2,245 Increase in valuation allowance 554 1,170 Valuation allowance at end of year $ 3,969 $ 3,415 |
Reconciliation of the beginning and ending amount of unrecognized tax benefits | December 31, 2015 2014 (in thousands) Balance at Beginning of Year $ — $ — Additions for tax positions of prior years 2,554 — Settlements — — Balance at End of Year $ 2,554 $ — |
ACCRUAL FOR TERMITE CONTRACTS (
ACCRUAL FOR TERMITE CONTRACTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Loss Contingency [Abstract] | |
Reconciliation of changes in the accrual for termite contracts | For the years ended December 31, 2015 2014 (in thousands) Beginning balance $ 4,875 $ 7,075 Current year provision 4,384 1,286 Settlements, claims, and expenditures (4,174 ) (3,486 ) Ending balance $ 5,085 $ 4,875 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of operating leases | For the years ended December 31, 2015 2014 2013 (in thousands) Rental Expense $ 60,508 $ 54,487 $ 51,605 |
Schedule of future commitments under operating leases | (in thousands) Operating leases 2016 $ 23,441 2017 15,818 2018 12,298 2019 9,355 2020 7,654 Thereafter 16,592 Total minimum obligation $ 85,158 |
EMPLOYEE BENEFIT PLANS (Tables)
EMPLOYEE BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Description of New Accounting Pronouncements Recently Adopted | |
Schedule of funded status of the Plans | December 31, 2015 2014 (in thousands) CHANGE IN ACCUMULATED BENEFIT OBLIGATION Accumulated Benefit obligation at beginning of year $ 221,721 $ 185,947 Service cost 86 74 Interest cost 8,915 9,427 Actuarial (gain) loss (20,283 ) 42,056 Benefits paid (10,064 ) (15,783 ) Accumulated Benefit obligation at end of year 200,375 221,721 CHANGE IN PLAN ASSETS Market value of plan assets at beginning of year 192,163 192,368 Actual return on plan assets 3,541 10,328 Employer contribution 5,000 5,250 Benefits paid (10,064 ) (15,783 ) Fair value of plan assets at end of year 190,640 192,163 Funded status $ (9,735 ) $ (29,558 ) |
Schedule of amounts recognized in the statement of financial position | December 31, 2015 2014 (in thousands) Noncurrent liabilities $ (9,735 ) $ (29,558 ) |
Schedule of amounts recognized in accumulated other comprehensive income | December 31, 2015 2014 (in thousands) Net actuarial loss $ 83,667 $ 98,462 |
Schedule of weighted-average assumptions used | December 31, 2015 2014 2013 ACCUMULATED BENEFIT OBLIGATION Discount rate 4.70 % 4.15 % 5.20 % Rate of compensation increase N/A N/A N/A NET BENEFIT COST Discount rate 4.15 % 5.20 % 4.17 % Expected return on plan assets 7.00 % 7.00 % 7.00 % Rate of compensation increase N/A N/A N/A |
Schedule of net periodic benefit cost and other amounts recognized in other comprehensive income | Years ended December 31, 2015 2014 2013 (in thousands) Service cost $ 86 $ 74 $ 112 Interest cost 8,915 9,427 8,551 Expected return on plan assets (12,788 ) (12,431 ) (11,589 ) Amortization of net loss 3,761 2,439 3,910 Net periodic loss/(benefit) $ (26 ) $ (491 ) $ 984 The benefit obligations recognized in other comprehensive income for the years ended December 31, 2015, 2014, and 2013 are summarized as follows: (in thousands) 2015 2014 2013 Pretax (income)/loss $ (11,035 ) $ 44,159 $ (41,767 ) Amortization of net loss (3,761 ) (2,439 ) (3,910 ) Total recognized in other comprehensive income (14,796 ) 41,720 (45,677 ) Total recognized in net periodic benefit (income)/cost and other comprehensive income $ (14,822 ) $ 41,229 $ (44,693 ) |
Schedule of weighted average asset allocation along with target allocation | Target Percentage of plan assets as of allocations for December 31, Asset category 2016 2015 2014 Cash and cash equivalents 0% -5% 1.9% 0.5% Equity securities - Rollins stock 0% -40% 21.2% 19.4% Domestic equity - all other 0% - 40% 20.5% 20.3% International equity 0% - 30% 22.2% 23.2% Debt securities - core fixed income 15% - 50% 24.0% 23.8% Real estate 0% - 20% 6.6% 8.9% Real return 0.0% 0.0% 1.6% Alternative/Opportunistic/Special 0% -20% 3.6% 2.3% Total 100.0% 100.0% 100.0% |
Schedule of plan assets using the fair value hierarchy | The following table presents our plan assets using the fair value hierarchy as of December 31, 2015. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. See note 7 for a brief description of the three levels under the fair value hierarchy. (in thousands) Total Level 1 Level 2 Level 3 (1) Cash and Cash Equivalents $ 3,543 $ 3,543 $ — $ — (2) Fixed Income Securities 45,712 — 45,712 — Domestic Equity Securities Rollins, Inc. Stock 40,510 40,510 — — Other Securities 39,070 12,008 27,062 — (3) International Equity Securities 42,373 42,373 — (4) Real Estate 12,565 — — 12,565 (6) Alternative/Opportunistic/Special 6,867 — — 6,867 Total $ 190,640 $ 56,061 $ 115,147 $ 19,432 The following table presents our plan assets using the fair value hierarchy as of December 31, 2014. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. (in thousands) Total Level 1 Level 2 Level 3 (1) Cash and Cash Equivalents $ 1,016 $ 1,016 $ — $ — (2) Fixed Income Securities 45,768 18,322 27,446 — Domestic Equity Securities Rollins, Inc. Stock 37,271 37,271 — — Other Securities 38,982 12,066 26,916 — (3) International Equity Securities 44,559 — 44,559 — (4) Real Estate 17,067 — — 17,067 (5) Real Return 3,119 — 3,119 — (6) Alternative/Opportunistic/Special 4,381 — — 4,381 Total $ 192,163 $ 68,675 $ 102,040 $ 21,448 (1) Cash and cash equivalents, which are used to pay benefits and plan administrative expenses, are held in Rule 2a-7 money market funds. (2) Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades. (3) Some International equity securities are valued using a market approach based on the quoted market prices of identical instruments in their respective markets. (4) Real estate fund values are primarily reported by the fund manager and are based on valuation of the underlying investments, which include inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data. (5) Real Return funds invest in global equities, commodities and inflation protected core bonds that are valued primarily using a market approach based on the quoted market prices of identical instruments in their respective markets. (6) Alternative/Opportunistic/Special funds can invest across the capital structure in both liquid and illiquid securities that are valued using a market approach based on the quoted market prices of identical instruments, or if no market price is available, instruments will be held at their fair market value (which may be cost) as reasonably determined by the investment manager, independent dealers, or pricing services. |
Schedule of reconciliation of level 3 assets | The following table presents a reconciliation of Level 3 assets held during the year ended December 31, 2015. Net Net Balance at Net Realized Purchases, Transfers Balance at December 31, and Unrealized Issuances and In to/(Out of) December 31, (in thousands) 2014 Gains/(Losses) Settlements Level 3 2015 Real Estate UBS Trumbull Property Income $ 12,991 $ 799 $ (5,000 ) $ — $ 8,790 Garrison Real Estate Fund 4,076 859 (1,160 ) — 3,775 Alternative/Opportunistic/Special Marathon European Credit Opp Fund 4,381 347 2,139 — 6,867 Total $ 21,448 $ 2,005 $ (4,021 ) $ — $ 19,432 The following table presents a reconciliation of Level 3 assets held during the year ended December 31, 2014. Net Net Balance at Net Realized Purchases, Transfers Balance at December 31, and Unrealized Issuances and In to/(Out of) December 31, (in thousands) 2013 Gains/(Losses) Settlements Level 3 2014 Real Estate UBS Trumbull Property Income $ 12,831 $ 1,360 $ (1,200 ) $ — $ 12,991 Garrison Real Estate Fund — — 4,076 — 4,076 Alternative/Opportunistic/Special Marathon European Credit Opp Fund — 101 4,280 — 4,381 Total $ 12,831 $ 1,461 $ 7,156 $ — $ 21,448 |
Schedule of estimated future benefit payments | (in thousands) 2016 $ 10,588 2017 10,973 2018 11,467 2019 11,785 2020 12,143 Thereafter 64,521 Total $ 121,477 |
Schedule of estimated life insurance premium payments | (in thousands) 2016 $ 504 2017 1,097 2018 1,057 2019 952 2020 1,055 Total $ 4,665 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Options activity outstanding of stock option plan | (in thousands except per share data) Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding at December 31, 2012 1 $ 3.68 0.08 $ 17 Exercised (1 ) 3.68 Outstanding at December 31, 2013 — — — — Exercised — — Outstanding at December 31, 2014 — $ — — $ — Exercised — — Outstanding at December 31, 2015 — $ — — $ — Exercisable at December 31, 2015 — $ — — $ — |
Components of the stock-based compensation programs recorded as expense | Years ended December 31, 2015 2014 2013 Time Lapse Restricted Stock: Pre-tax compensation expense $ 12,110 $ 10,579 $ 10,427 Tax benefit (4,687 ) (4,094 ) (4,014 ) Restricted stock expense, net of tax $ 7,423 $ 6,485 $ 6,413 |
Summarized information on unvested restricted stock units outstanding | Number of Shares Weighted-Average Grant-Date Fair Value Unvested Restricted Stock Grants Unvested as of December 31, 2012 4,114 $ 10.94 Forfeited (84 ) 11.68 Vested (1,045 ) 8.89 Granted 695 16.19 Unvested as of December 31, 2013 3,680 12.50 Forfeited (178 ) 14.27 Vested (1,018 ) 10.31 Granted 616 19.16 Unvested as of December 31, 2014 3,100 14.45 Forfeited (85 ) 15.71 Vested (946 ) 12.04 Granted 682 22.43 Unvested as of December 31, 2015 2,751 $ 17.21 |
ACCUMULATED OTHER COMPREHENSI42
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Components of accumulated other comprehensive income (loss) | Pension Liability Adjustment Foreign Currency Translation Total Balance at December 31, 2013 $ (34,400 ) $ 2,629 $ (31,771 ) Change during 2014: Before-tax amount (41,721 ) (9,934 ) (51,655 ) Tax benefit 16,146 1,792 17,938 (25,575 ) (8,142 ) (33,717 ) Balance at December 31, 2014 (59,975 ) (5,513 ) (65,488 ) Change during 2015 Before-tax amount 14,796 (14,760 ) 36 Tax benefit (5,726 ) — (5,726 ) 9,070 (14,760 ) (5,690 ) Balance at December 31, 2015 $ (50,905 ) $ (20,273 ) $ (71,178 ) |
UNAUDITED QUARTERLY DATA (Table
UNAUDITED QUARTERLY DATA (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of unaudited quarterly data | (in thousands except per share data) First Second Third Fourth 2015 Revenues $ 330,909 $ 392,150 $ 399,746 $ 362,500 Gross profit (Revenues less cost of services provided) $ 162,866 $ 201,941 $ 204,257 $ 180,265 Net income $ 30,281 $ 45,073 $ 45,046 $ 31,749 Income per share: Income per share—Basic $ 0.14 $ 0.21 $ 0.21 $ 0.15 Income per share—Diluted $ 0.14 $ 0.21 $ 0.21 $ 0.15 2014 Revenues $ 313,388 $ 369,357 $ 384,870 $ 343,951 Gross profit (Revenues less cost of services provided) $ 152,080 $ 186,715 $ 196,060 $ 168,972 Net income $ 25,766 $ 40,860 $ 41,121 $ 29,917 Income per share: Income per share—Basic $ 0.12 $ 0.19 $ 0.19 $ 0.14 Income per share—Diluted $ 0.12 $ 0.19 $ 0.19 $ 0.14 |
THREE-FOR-TWO STOCK SPLIT (Tabl
THREE-FOR-TWO STOCK SPLIT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Three-for-two Stock Split Tables | |
Schedule of Pro Forma Effect of Stock Split on Shareholder's Equity | (in thousands) December 31, 2014 Adjustment December 31, 2014 STOCKHOLDERS’ EQUITY Preferred stock, without par value; 500,000 authorized, zero shares issued $ — $ — $ — Common stock, par value $1 per share; 250,000,000 shares authorized, 218,482,907 shares issued(1) 145,722 72,761 218,483 Treasury Stock, par value $1 per share; 200,000 and 0 shares, respectively (200 ) — (200 ) Paid-in-capital 62,839 — 62,839 Accumulated other comprehensive loss (65,488 ) — (65,488 ) Retained earnings 319,803 (72,761 ) 247,042 Total stockholders’ equity $ 462,676 $ — $ 462,676 (1) Shares issued increased as follows: 2014 - 72,760,969; 2013 - 72,932,222 |
Schedule of Pro Forma Effect of Stock Split on Earning Per Share | (in thousands, except per share amounts) December 31, 2014 Adjustment December 31, 2014 Net Income $ 137,664 $ — $ 137,664 Basic Earnings Per Share $ 0.94 $ (0.31 ) $ 0.63 Diluted Earnings Per Share $ 0.94 $ (0.31 ) $ 0.63 Shares used for computation: Basic 145,796 72,899 218,695 Diluted 145,796 72,899 218,695 |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - item | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Minimum number of locations from where customized services are provided by Orkin, LLC | 400 | ||
Revenue from smaller wholly-owned subsidiaries as percentage of total revenue, maximum | 5.00% | ||
Number of reportable business segments | 1 | ||
Principles of Consolidation | |||
Maximum ownership interest (as a percent) | 50.00% | ||
Revenue Recognition | |||
Initial contract term for pest control customers | 1 year | ||
Number of deliverables | 2 | ||
Revenues from foreign operations as percentage of total revenue | 7.00% | 8.00% | 8.00% |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Advertising cost | ||||
Advertising | $ 57,705 | $ 54,909 | $ 55,282 | |
Cash and Cash Equivalents | ||||
Maximum original maturity period of cash equivalents | 3 months | |||
Cash held at various banking institutions | $ 134,574 | 108,372 | $ 118,216 | $ 65,082 |
Cash held in non-interest-bearing accounts | 99,800 | |||
Cash held in foreign bank accounts | $ 34,816 | $ 35,065 |
SUMMARY OF SIGNIFICANT ACCOUN47
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Provisions for depreciation | |||
Depreciation | $ 19,354 | $ 16,627 | $ 14,415 |
Building [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Useful lives of the assets | 10 years | ||
Building [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Useful lives of the assets | 40 years | ||
Furniture Fixtures and Operating Equipment [Member] | Minimum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Useful lives of the assets | 2 years | ||
Furniture Fixtures and Operating Equipment [Member] | Maximum [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Useful lives of the assets | 10 years |
SUMMARY OF SIGNIFICANT ACCOUN48
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
EarningsPerShareBasicAndDilutedLineItems | |||||||||||
Net Income | $ 31,749 | $ 45,046 | $ 45,073 | $ 30,281 | $ 29,917 | $ 41,121 | $ 40,860 | $ 25,766 | $ 152,149 | $ 137,664 | $ 123,330 |
Less: Dividends paid | (91,755) | (75,750) | (65,658) | ||||||||
Undistributed earnings for the period | 60,394 | 61,914 | 57,672 | ||||||||
Allocation of undistributed earnings: | |||||||||||
Undistributed earnings | $ 60,394 | $ 61,914 | $ 57,672 | ||||||||
Basic shares outstanding: | |||||||||||
Basic shares outstanding | 218,583,000 | 218,695,000 | 219,121,000 | ||||||||
Diluted shares outstanding | |||||||||||
Basic shares outstanding | 218,583,000 | 218,695,000 | 219,121,000 | ||||||||
Weighted average participating shares outstanding - assuming dilution (in shares) | 218,583,000 | 218,695,000 | 219,121,000 | ||||||||
Basic earnings per share | |||||||||||
Total shares of common stock, basic (in dollars per share) | $ 0.15 | $ 0.21 | $ 0.21 | $ 0.14 | $ 0.14 | $ 0.19 | $ 0.19 | $ 0.12 | $ 0.70 | $ 0.63 | $ 0.56 |
Diluted earning per share: | |||||||||||
Total shares of common stock, diluted (in dollars per share) | $ 0.15 | $ 0.21 | $ 0.21 | $ 0.14 | $ 0.14 | $ 0.19 | $ 0.19 | $ 0.12 | $ 0.70 | $ 0.63 | $ 0.56 |
Common Stock [Member] | |||||||||||
EarningsPerShareBasicAndDilutedLineItems | |||||||||||
Less: Dividends paid | $ (90,631) | $ (74,704) | $ (64,571) | ||||||||
Undistributed earnings for the period | 59,611 | 61,001 | 56,663 | ||||||||
Allocation of undistributed earnings: | |||||||||||
Undistributed earnings | 59,611 | 61,001 | 56,663 | ||||||||
Diluted allocation of undistributed earnings | $ 59,611 | $ 61,001 | $ 56,663 | ||||||||
Basic shares outstanding: | |||||||||||
Basic shares outstanding | 215,749,000 | 215,470,000 | 215,289,000 | ||||||||
Diluted shares outstanding | |||||||||||
Basic shares outstanding | 215,749,000 | 215,470,000 | 215,289,000 | ||||||||
Dilutive effect of stock options (in shares) | |||||||||||
Weighted average participating shares outstanding - assuming dilution (in shares) | 215,749,000 | 215,470,000 | 215,289,000 | ||||||||
Basic earnings per share | |||||||||||
Distributed earnings basic (in dollars per share) | $ 0.42 | $ 0.35 | $ 0.30 | ||||||||
Undistributed earnings basic (in dollars per share) | 0.28 | 0.28 | 0.26 | ||||||||
Total shares of common stock, basic (in dollars per share) | 0.70 | 0.63 | 0.56 | ||||||||
Diluted earning per share: | |||||||||||
Distributed earnings diluted (in dollars per share) | 0.42 | 0.35 | 0.30 | ||||||||
Undistributed earnings diluted (in dollars per share) | 0.28 | 0.28 | 0.26 | ||||||||
Total shares of common stock, diluted (in dollars per share) | $ 0.70 | $ 0.63 | $ 0.56 | ||||||||
Participating Securities [Member] | |||||||||||
EarningsPerShareBasicAndDilutedLineItems | |||||||||||
Less: Dividends paid | $ (1,124) | $ (1,046) | $ (1,087) | ||||||||
Undistributed earnings for the period | 783 | 913 | 1,009 | ||||||||
Allocation of undistributed earnings: | |||||||||||
Undistributed earnings | 783 | 913 | 1,009 | ||||||||
Diluted allocation of undistributed earnings | $ 783 | $ 913 | $ 1,009 | ||||||||
Basic shares outstanding: | |||||||||||
Basic shares outstanding | 2,834,000 | 3,225,000 | 3,832,000 | ||||||||
Diluted shares outstanding | |||||||||||
Basic shares outstanding | 2,834,000 | 3,225,000 | 3,832,000 | ||||||||
Weighted average participating shares outstanding - assuming dilution (in shares) | 2,834,000 | 3,225,000 | 3,832,000 | ||||||||
Basic earnings per share | |||||||||||
Distributed earnings basic (in dollars per share) | $ 0.40 | $ 0.32 | $ 0.28 | ||||||||
Undistributed earnings basic (in dollars per share) | 0.28 | 0.28 | 0.26 | ||||||||
Total shares of common stock, basic (in dollars per share) | $ 0.68 | $ 0.60 | $ 0.54 |
SUMMARY OF SIGNIFICANT ACCOUN49
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative 2) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Franchise Program | |||
Notes receivable from franchises, maximum period | 5 years | ||
Notes receivable from franchises | $ 4,800 | $ 4,200 | |
Deferred franchise fees | 2,900 | 3,000 | $ 2,900 |
Revenue from franchises | 4,900 | 4,500 | 3,900 |
Maximum exposure to loss relating to the franchises | $ 1,900 | $ 1,200 | $ 1,200 |
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 5 years | ||
Time Lapse Restricted Shares Issued 2004 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 6 years | ||
Award amortization period | 6 years | ||
Vesting increment, starting with the second anniversary, over six years (as a percent) | 20.00% |
SUMMARY OF SIGNIFICANT ACCOUN50
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative 3) - item | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
UNITED STATES | |||
Franchisor Disclosure [Line Items] | |||
Number of franchises | 51 | 55 | 54 |
International franchises [Member] | |||
Franchisor Disclosure [Line Items] | |||
Number of franchises | 48 | 37 | 26 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Business acquisition, shares issued | 873,349 | ||
Share issue price per share | $ 18.79 | ||
Materials and supplies | $ 12,801 | $ 14,078 | |
Equipment and property, net | 121,356 | 101,669 | |
Goodwill | 249,939 | 255,563 | $ 211,847 |
Customer contracts | 92,815 | 104,657 | |
Other intangible assets | 46,116 | 28,815 | |
Current liabilities | 252,986 | 252,679 | |
Business Acquisitions [Member] | |||
Accounts receivable, net | 1,711 | 2,594 | |
Materials and supplies | 71 | 481 | |
Equipment and property, net | 948 | 4,516 | |
Goodwill | 196 | 48,477 | |
Customer contracts | 12,398 | 28,237 | |
Other intangible assets | 20,092 | 6,471 | |
Current liabilities | (2,329) | (6,733) | |
Other assets and liabilities, net | 460 | (2,725) | |
Total consideration paid | 33,547 | 81,318 | |
Less: Common Stock Payment | 0 | (16,413) | |
Less: Contingent consideration liability | (85) | (1,570) | |
Total cash purchase price for the Company's acquisitions | $ 33,462 | $ 63,335 |
DEBT (Details Narrative)
DEBT (Details Narrative) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015USD ($)item | Oct. 31, 2012USD ($) | |
Unsecured Line of Credit Facility [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit maximum borrowing capacity | $ 175,000 | |
Number of anniversaries for optional annual extensions of the credit agreement | item | 3 | |
Period of extension | 1 year | |
Number of options available for calculating variable interest rate | item | 2 | |
Line of credit amount outstanding | $ 0 | |
Letter of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit maximum borrowing capacity | 75,000 | |
Letter of credit amount maintained | 31,400 | |
Swingline Credit Facility [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit maximum borrowing capacity | $ 25,000 | |
Line of credit amount outstanding | $ 0 |
DEBT (Details Narraive 2)
DEBT (Details Narraive 2) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Instrument Variable Rate Base US Federal Funds [Member] | |
Short-term Debt [Line Items] | |
Description of variable rate | Federal Funds |
Basis spread on variable rate (as a percent) | 0.50% |
Debt Instrument Variable Rate Base Adjusted LIBOR [Member] | |
Short-term Debt [Line Items] | |
Description of variable rate | Adjusted LIBO Rate determined on a daily basis for an interest period of one |
Basis spread on variable rate (as a percent) | 0.75% |
Maximum [Member] | Debt Instrument Variable Rate Base Adjusted LIBOR [Member] | |
Short-term Debt [Line Items] | |
Basis spread on variable rate (as a percent) | 1.00% |
Minimum [Member] | Debt Instrument Variable Rate Base Adjusted LIBOR [Member] | |
Short-term Debt [Line Items] | |
Basis spread on variable rate (as a percent) | 0.75% |
TRADE RECEIVABLES (Details)
TRADE RECEIVABLES (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Receivables [Abstract] | ||
Gross Trade Receivables, short-term | $ 90,212 | $ 88,798 |
Allowance for Doubtful Accounts | (10,348) | (10,944) |
Net Trade Receivables | $ 79,864 | $ 77,854 |
FINANCING RECEIVABLES (Details)
FINANCING RECEIVABLES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Financed receivables include installment receivable amounts which are due subsequent to one year | ||
Gross Financed Receivables, short-term | $ 15,674 | $ 13,982 |
Gross Financed Receivables, long-term | 15,080 | 13,189 |
Allowance for Doubtful Accounts | (3,288) | (3,150) |
Net Financed Receivables | 27,466 | 24,021 |
Financing Receivable, Allowance for Credit Losses [Roll Forward] | ||
Balance, beginning of period | 3,150 | 3,200 |
Additions to allowance | 965 | 748 |
Deductions, net of recoveries | (827) | (798) |
Balance, end of period | $ 3,288 | $ 3,150 |
FINANCING RECEIVABLES (Details
FINANCING RECEIVABLES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Past due, financing receivables | $ 2,009 | $ 1,179 |
30 to 59 Days Past Due [Member] | ||
Past due, financing receivables | 721 | 626 |
60 to 89 Days Past Due [Member] | ||
Past due, financing receivables | 531 | 201 |
Equal to Greater than 90 Days Past Due [Member] | ||
Past due, financing receivables | $ 757 | $ 352 |
FINANCING RECEIVABLES (Detail57
FINANCING RECEIVABLES (Details 3) | Dec. 31, 2015 | Dec. 31, 2014 |
Percentage of period-end gross financing receivables | ||
Current (as a percent) | 93.50% | 95.70% |
30 - 59 days past due (as a percent) | 2.30% | 2.30% |
60 - 89 days past due (as a percent) | 1.70% | 0.80% |
90 days or more past due (as a percent) | 2.50% | 1.20% |
Total (as a percent) | 100.00% | 100.00% |
FINANCING RECEIVABLES (Detail58
FINANCING RECEIVABLES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Financing Receivables Details Narrative | ||
Percentage of financing done by the Company depending upon the individual's credit score | 100.00% | |
Number of days to elapse for financing receivables to be charged-off | 180 days | |
Charge-offs as a percentage of average financing receivables | 3.00% | 3.10% |
Number of days the Company offers cash financing to customers | 90 days | |
Period of past due loans that continue to accrue interest due to an administrative issue | 180 days | |
Long-Term Installment receivables, net | $ 13,636 | $ 11,787 |
EQUIPMENT AND PROPERTY (Details
EQUIPMENT AND PROPERTY (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment [Line Items] | |||
Net equipment and property | $ 121,356 | $ 101,669 | |
Depreciation expense | 19,354 | 16,627 | $ 14,415 |
Foreign Countries [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Net equipment and property | 3,400 | 3,800 | |
Building [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Gross equipment and property | 49,282 | 48,440 | |
Operating Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Gross equipment and property | 83,591 | 79,235 | |
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Gross equipment and property | 15,168 | 14,303 | |
Computer Equipment and Systems [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Gross equipment and property | 116,823 | 92,064 | |
Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Gross equipment and property | 264,864 | 234,042 | |
Less--Accumulated Depreciation | (167,998) | (156,940) | |
Net equipment and property | 96,866 | 77,102 | |
Land [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Gross equipment and property | $ 24,490 | $ 24,567 |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details) $ in Thousands | Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Number of life insurance policies | item | 70 | |
Life insurance policies, net face value | $ 42,200 | |
Cash surrender value of life insurance policies | 12,900 | $ 12,700 |
Deferred compensation assets | $ 14,000 | $ 13,700 |
Defined Contribution Pension [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | ||
Total fair value | ||
Defined Contribution Pension [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 140 | $ 62 |
Total fair value | 140 | 62 |
Defined Contribution Pension [Member] | Estimate of Fair Value, Fair Value Disclosure [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 140 | 62 |
Total fair value | $ 140 | $ 62 |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill, Carrying Amount in Foreign Countries | ||
Carrying amount of goodwill in foreign countries | $ 36,900 | $ 42,700 |
Changes in the carrying amount of goodwill | ||
Goodwill balance at the beginning of the period | 255,563 | 211,847 |
Goodwill acquired | 196 | 48,477 |
Goodwill adjustments due to currency translation | (5,820) | (4,761) |
Goodwill balance at the end of the period | $ 249,939 | $ 255,563 |
CUSTOMER CONTRACTS AND OTHER 62
CUSTOMER CONTRACTS AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Finite-lived intangible assets | |||
Finite-lived intangible assets, net | $ 92,815 | $ 104,657 | |
Other intangible assets | |||
Finite and infinite lived intangible assets, gross | 46,116 | 28,815 | |
Finite and infinite lived intangible assets, net | 138,931 | 133,472 | |
Total amortization expense | 25,200 | 26,900 | $ 25,200 |
Non-amortizable, indefinite lived intangible assets | 29,700 | 11,300 | |
Customer Contracts [Member] | |||
Finite-lived intangible assets | |||
Finite-lived intangible assets, gross | 214,201 | 214,125 | |
Less: Accumulated amortization | (121,386) | (109,468) | |
Finite-lived intangible assets, net | $ 92,815 | 104,657 | |
Patents [Member] | |||
Finite and Indefinite Lived Intangible Assets by Major Class [Domain] | |||
Useful life of intangible assets | 15 years | ||
Intangible Assets Excluding Goodwill and Customer Contracts [Member] | |||
Finite-lived intangible assets | |||
Less: Accumulated amortization | $ (10,375) | (12,512) | |
Other intangible assets | |||
Finite and infinite lived intangible assets, gross | 56,491 | 41,327 | |
Finite and infinite lived intangible assets, net | 46,116 | 28,815 | |
Trademarks and Tradenames [Member] | |||
Other intangible assets | |||
Finite and infinite lived intangible assets, net | 32,800 | 16,600 | |
International franchises [Member] | Customer Contracts [Member] | |||
Finite-lived intangible assets | |||
Finite-lived intangible assets, net | 14,900 | 16,800 | |
Other intangible assets | |||
Finite and infinite lived intangible assets, net | $ 4,200 | $ 4,100 | |
Minimum [Member] | Customer Contracts [Member] | |||
Finite and Indefinite Lived Intangible Assets by Major Class [Domain] | |||
Useful life of intangible assets | 7 years | ||
Minimum [Member] | Noncompete Agreements [Member] | |||
Finite and Indefinite Lived Intangible Assets by Major Class [Domain] | |||
Useful life of intangible assets | 3 years | ||
Maximum [Member] | Customer Contracts [Member] | |||
Finite and Indefinite Lived Intangible Assets by Major Class [Domain] | |||
Useful life of intangible assets | 20 years | ||
Maximum [Member] | Noncompete Agreements [Member] | |||
Finite and Indefinite Lived Intangible Assets by Major Class [Domain] | |||
Useful life of intangible assets | 20 years |
CUSTOMER CONTRACTS AND OTHER 63
CUSTOMER CONTRACTS AND OTHER INTANGIBLE ASSETS (Details 2) $ in Thousands | Dec. 31, 2015USD ($) |
Estimated amortization expense for the existing carrying amount of customer contracts and other intangible assets | |
2,016 | $ 22,419 |
2,017 | 20,563 |
2,018 | 17,113 |
2,019 | 14,183 |
2,020 | $ 9,748 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current: | |||
Federal | $ 68,667 | $ 59,053 | $ 54,778 |
State | 11,335 | 9,936 | 9,259 |
Foreign | 7,534 | 4,391 | 3,883 |
Total current tax | 87,536 | 73,380 | 67,920 |
Deferred: | |||
Federal | 1,286 | 6,123 | (468) |
State | 2,078 | 2,159 | 730 |
Foreign | 129 | 158 | 94 |
Total deferred tax | 3,493 | 8,440 | 356 |
TOTAL PROVISION FOR INCOME TAXES | 91,029 | 81,820 | 68,276 |
Reconciliation of primary factors causing income tax expense to be different than the federal statutory rate | |||
Income tax at statutory rate | 85,112 | 76,820 | 67,063 |
State income tax expense (net of federal benefit) | 8,377 | 7,429 | 6,498 |
Foreign tax benefit | (1,729) | (1,760) | (2,661) |
Other | (731) | (669) | (2,624) |
TOTAL PROVISION FOR INCOME TAXES | $ 91,029 | $ 81,820 | $ 68,276 |
Effective income tax rate (as a percent) | 37.40% | 37.30% | 35.60% |
Income taxes paid net of refunds | $ 82,690 | $ 74,454 | $ 69,354 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets: | |||
Termite Accrual | $ 1,968 | $ 1,887 | |
Insurance and Contingencies | 24,991 | 26,316 | |
Unearned Revenues | 15,026 | 15,086 | |
Compensation and Benefits | 15,288 | 15,641 | |
State and Foreign Operating Loss Carryforwards | 10,629 | 10,454 | |
Bad Debt Reserve | 4,779 | 4,520 | |
Other | 4,133 | 1,217 | |
Pension | 3,768 | 11,439 | |
Valuation allowance | (3,969) | (3,415) | $ (2,245) |
Total Deferred Tax Assets | 76,613 | 83,145 | |
Deferred tax liabilities: | |||
Depreciation and Amortization | (10,985) | (9,035) | |
Foreign Currency Translation | (24,963) | (23,465) | |
Total Deferred tax Liabilities | (35,948) | (32,500) | |
Net Deferred Tax Assets | $ 40,665 | $ 50,645 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Valuation allowance | |||
Valuation allowance, balance at the beginning of the period | $ 3,415 | $ 2,245 | |
Increase in valuation allowance | 554 | 1,170 | |
Valuation allowance, balance at the end of the period | 3,969 | 3,415 | $ 2,245 |
Foreign earnings from continuing operations before income tax | 17,000 | $ 16,200 | $ 17,000 |
State and Local and Foreign Jurisdiction [Member] | |||
Valuation allowance | |||
Net operating loss carryforwards | 188,400 | ||
Foreign Tax Authority [Member] | |||
Valuation allowance | |||
Net operating loss carryforwards, valuation allowance | 18,000 | ||
Increase in valuation allowance, net operating losses | $ 600 |
INCOME TAXES (Details 3)
INCOME TAXES (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Reconciliation of the beginning and ending amount of gross unrecognized tax benefits | |||
Balance at the beginning of the period | |||
Additions for tax positions of prior years | $ 2,554 | ||
Settlements | |||
Balance at the end of the period | $ 2,554 | ||
Accrued interest and penalties | 900 | $ 500 | |
Interest and penalties | $ 200 | $ 100 | $ 900 |
ACCRUAL FOR TERMITE CONTRACTS68
ACCRUAL FOR TERMITE CONTRACTS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of changes in the accrual for termite contracts | ||
Balance at the beginning of the period | $ 4,875 | $ 7,075 |
Current year provision | 4,384 | 1,286 |
Settlements, claims, and expenditures | (4,174) | (3,486) |
Balance at the end of the period | 5,085 | 4,875 |
Accrual for termite contracts, portion included in other current liabilities | 2,300 | 1,900 |
Accrual for termite contracts, portion included in long-term accrued liabilities | $ 2,800 | $ 3,000 |
COMMITMENTS AND CONTINGENCIES69
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Operating leases | |||
Rental Expense | $ 60,508 | $ 54,487 | $ 51,605 |
Future commitments under operating leases | |||
2,016 | 23,441 | ||
2,017 | 15,818 | ||
2,018 | 12,298 | ||
2,019 | 9,355 | ||
2,020 | 7,654 | ||
Thereafter | 16,592 | ||
Total minimum obligation | $ 85,158 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Period based on which benefits are based on the highest average compensation during last ten years | 5 years | ||
Company contributions to defined contribution plan | $ 10,200 | $ 8,500 | $ 8,200 |
Benefits paid | 10,064 | 15,783 | |
Retirement Income Plan [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Company contributions to defined contribution plan | 5,000 | $ 5,300 | $ 5,000 |
Single-sum payment for the ability to elect for a limited time the commencement of benefit | 22 | ||
Benefits paid | $ 6,300 |
EMPLOYEE BENEFIT PLANS (Detai71
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
CHANGE IN ACCUMULATED BENEFIT OBLIGATION | |||
Accumulated Benefit obligation at beginning of year | $ 221,721 | $ 185,947 | |
Service cost | 86 | 74 | $ 112 |
Interest cost | 8,915 | 9,427 | |
Actuarial (gain) loss | (20,283) | 42,056 | |
Benefits paid | (10,064) | (15,783) | |
Accumulated Benefit obligation at end of year | 200,375 | 221,721 | 185,947 |
Non-cash (increases) decreases in the minimum pension liability | $ 14,800 | $ (41,700) | $ 45,700 |
EMPLOYEE BENEFIT PLANS (Detai72
EMPLOYEE BENEFIT PLANS (Details 2) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CHANGE IN PLAN ASSETS | ||
Market value of plan assets at beginning of year | $ 192,163 | $ 192,369 |
Actual return on plan assets | 3,541 | 10,328 |
Employer contribution | 5,000 | 5,250 |
Benefits paid | (10,064) | (15,783) |
Fair value of plan assets at end of year | 190,640 | 192,163 |
Funded status | $ (9,735) | $ (29,558) |
EMPLOYEE BENEFIT PLANS (Detai73
EMPLOYEE BENEFIT PLANS (Details 3) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Amounts recognized in the statement of financial position | ||
Noncurrent liabilities | $ (9,735) | $ (29,558) |
Amounts recognized in accumulated other comprehensive income | ||
Net actuarial loss | $ 83,667 | $ 98,462 |
EMPLOYEE BENEFIT PLANS (Detai74
EMPLOYEE BENEFIT PLANS (Details 4) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
ACCUMULATED BENEFIT OBLIGATION | |||
Discount rate (as a percent) | 4.70% | 4.15% | 5.20% |
NET BENEFIT COST | |||
Discount rate (as a percent) | 4.15% | 5.20% | 4.17% |
Expected return on plan assets (as a percent) | 7.00% | 7.00% | 7.00% |
EMPLOYEE BENEFIT PLANS (Detai75
EMPLOYEE BENEFIT PLANS (Details 5) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Components of net periodic pension benefit Gain | ||||
Service cost | $ 86 | $ 74 | $ 112 | |
Interest cost | 8,915 | 9,427 | 8,551 | |
Expected return on plan assets | (12,788) | (12,431) | (11,589) | |
Amortization of net loss | 3,761 | 2,439 | 3,910 | |
Net periodic loss/(benefit) | (26) | (491) | 984 | |
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income | ||||
Pretax loss | (11,035) | 44,159 | (41,767) | |
Amortization of net loss | (3,761) | (2,439) | (3,910) | |
Total recognized in other comprehensive income | (14,796) | 41,720 | (45,677) | |
Total recognized in net periodic benefit cost and other comprehensive income | (14,822) | 41,229 | $ (44,693) | |
Market value of Common Stock of company included in Plan Assets | $ 40,500 | $ 37,300 | ||
Subsequent Event [Member] | ||||
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income | ||||
Amortization of net loss | $ (3,000) |
EMPLOYEE BENEFIT PLANS (Detai76
EMPLOYEE BENEFIT PLANS (Details 6) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 100.00% | |||
Total (as a percent) | 100.00% | 100.00% | ||
Total | $ 190,640 | $ 192,163 | $ 192,369 | |
Estimated employer contribution in next fiscal year | $ 3,600 | |||
Percentage of investments for long-term growth, investment strategy mix | 70.00% | |||
Percentage of investments for near-term benefit payments, investment strategy mix | 30.00% | |||
Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | $ 56,061 | 68,675 | ||
Fair Value, Inputs, Level 2 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | 115,147 | 102,040 | ||
Fair Value, Inputs, Level 3 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | $ 19,432 | $ 21,448 | ||
Cash [Member] | Minimum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 0.00% | |||
Cash [Member] | Maximum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 5.00% | |||
Common Stock [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 21.20% | 19.40% | ||
Total | $ 40,510 | $ 37,271 | ||
Common Stock [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | $ 40,510 | $ 37,271 | ||
Common Stock [Member] | Minimum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 0.00% | |||
Common Stock [Member] | Maximum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 40.00% | |||
Domestic Equity Securities Other [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 20.50% | 20.30% | ||
Total | $ 39,070 | $ 38,982 | ||
Domestic Equity Securities Other [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | 12,008 | 12,066 | ||
Domestic Equity Securities Other [Member] | Fair Value, Inputs, Level 2 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | $ 27,062 | $ 26,916 | ||
Domestic Equity Securities Other [Member] | Minimum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 0.00% | |||
Domestic Equity Securities Other [Member] | Maximum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 40.00% | |||
International equity [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 22.20% | 23.20% | ||
Total | $ 42,373 | $ 44,559 | ||
International equity [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | ||||
International equity [Member] | Fair Value, Inputs, Level 2 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | $ 42,373 | $ 44,559 | ||
International equity [Member] | Minimum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 0.00% | |||
International equity [Member] | Maximum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 30.00% | |||
Debt securities - core fixed income [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 24.00% | 23.80% | ||
Total | $ 45,712 | $ 45,768 | ||
Debt securities - core fixed income [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | 18,322 | |||
Debt securities - core fixed income [Member] | Fair Value, Inputs, Level 2 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | $ 45,712 | $ 27,446 | ||
Debt securities - core fixed income [Member] | Minimum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 15.00% | |||
Debt securities - core fixed income [Member] | Maximum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 50.00% | |||
Real Estate [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 6.60% | 8.90% | ||
Total | $ 12,565 | $ 17,067 | ||
Real Estate [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | $ 12,565 | $ 17,067 | ||
Real Estate [Member] | Minimum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 0.00% | |||
Real Estate [Member] | Maximum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 20.00% | |||
Real Return Funds [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 0.00% | |||
Total (as a percent) | 0.00% | 1.60% | ||
Total | $ 3,119 | |||
Real Return Funds [Member] | Fair Value, Inputs, Level 2 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | $ 3,119 | |||
Alternative/Opportunistic/Special [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 3.60% | 2.30% | ||
Total | $ 6,867 | $ 4,381 | ||
Alternative/Opportunistic/Special [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | $ 6,867 | $ 4,381 | ||
Alternative/Opportunistic/Special [Member] | Minimum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 0.00% | |||
Alternative/Opportunistic/Special [Member] | Maximum [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 20.00% | |||
Cash and Cash Equivalents [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total (as a percent) | 1.90% | 0.50% | ||
Total | $ 3,543 | $ 1,016 | ||
Cash and Cash Equivalents [Member] | Fair Value, Inputs, Level 1 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Total | $ 3,543 | $ 1,016 |
EMPLOYEE BENEFIT PLANS (Detai77
EMPLOYEE BENEFIT PLANS (Details 7) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of level 3 assets held | ||
Net Realized and Unrealized Gains/(Losses) | $ 3,541 | $ 10,328 |
Real Estate [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Reconciliation of level 3 assets held | ||
Balance at the beginning of period | 21,448 | 12,831 |
Net Realized and Unrealized Gains/(Losses) | 2,005 | 1,461 |
Net Purchases, Issuances and Settlements | $ (4,021) | $ 7,156 |
Net Transfers in to/(Out of) Level 3 | ||
Balance at the end of the period | $ 19,432 | $ 21,448 |
Real Estate [Member] | Fair Value, Inputs, Level 3 [Member] | UBS Trumbull Property Income [Member] | ||
Reconciliation of level 3 assets held | ||
Balance at the beginning of period | 12,991 | 12,831 |
Net Realized and Unrealized Gains/(Losses) | 799 | 1,360 |
Net Purchases, Issuances and Settlements | $ (5,000) | $ (1,200) |
Net Transfers in to/(Out of) Level 3 | ||
Balance at the end of the period | $ 8,790 | $ 12,991 |
Real Estate [Member] | Fair Value, Inputs, Level 3 [Member] | Garrison Real Estate Fund [Member] | ||
Reconciliation of level 3 assets held | ||
Balance at the beginning of period | 4,076 | |
Net Realized and Unrealized Gains/(Losses) | 859 | |
Net Purchases, Issuances and Settlements | $ (1,160) | $ 4,076 |
Net Transfers in to/(Out of) Level 3 | ||
Balance at the end of the period | $ 3,775 | $ 4,076 |
Real Estate [Member] | Fair Value, Inputs, Level 3 [Member] | Marathon European Credit Opp Fund [Member] | ||
Reconciliation of level 3 assets held | ||
Balance at the beginning of period | 4,381 | |
Net Realized and Unrealized Gains/(Losses) | 347 | $ 101 |
Net Purchases, Issuances and Settlements | $ 2,139 | $ 4,280 |
Net Transfers in to/(Out of) Level 3 | ||
Balance at the end of the period | $ 6,867 | $ 4,381 |
EMPLOYEE BENEFIT PLANS (Detai78
EMPLOYEE BENEFIT PLANS (Details 8) $ in Thousands | Dec. 31, 2015USD ($) |
Estimated future benefit payments | |
2,016 | $ 10,588 |
2,017 | 10,973 |
2,018 | 11,467 |
2,019 | 11,785 |
2,020 | 12,143 |
Thereafter | 64,521 |
Total | $ 121,477 |
EMPLOYEE BENEFIT PLANS (Detai79
EMPLOYEE BENEFIT PLANS (Details Narrative 2) | 12 Months Ended | ||
Dec. 31, 2015USD ($)item | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | |
Defined Contribution 401(k) Plan | |||
Requisite service period for full-time employees to participate in contribution plan | 3 months | ||
Period of service after which the non-full time employees are eligible to participate in defined contribution plan | 1 year | ||
Requisite service hours for non full-time employees to participate in contribution plan | 1000 hours | ||
Employer's matching contribution on each dollar for the first 6 percent of participant's contribution | 0.50 | ||
Participant's contribution to the plan, eligible for employer's matching contribution of fifty cents | 1 | ||
Maximum percentage of participant contributions eligible for employer contribution match towards defined contribution plan | 6.00% | ||
Company contributions to defined contribution plan | $ 10,200,000 | $ 8,500,000 | $ 8,200,000 |
Percentage of Rollins, Inc. Common Stock to plan assets | 33.50% | 29.30% | 34.90% |
Nonqualified Deferred Compensation Plan | |||
Maximum percentage of base salary to be deferred | 50.00% | ||
Maximum percentage of annual bonus to be deferred | 85.00% | ||
Minimum deferral amount per plan year | $ 2,000 | ||
Maximum discretionary contributions by employer | $ 245,000 | ||
Period of restoration contributions to be made by employer | 5 years | ||
Employees full years of vested service on June 30,2005 to qualify for Pension Plan Benefit Restoration Contributions | 5 years | ||
Number of life insurance policies | item | 70 | ||
Life insurance policies, net face value | $ 42,200,000 | ||
Cash surrender value of life insurance policies | 12,900,000 | $ 12,700,000 | |
Total expense/(income) related to deferred compensation | 231,000 | 207,000 | $ 159,000 |
Deferred compensation assets | 14,000,000 | 13,700,000 | |
Deferred compensation liability | 14,100,000 | $ 13,700,000 | |
Estimated future life insurance payments | |||
2,016 | 504,000 | ||
2,017 | 1,097,000 | ||
2,018 | 1,057,000 | ||
2,019 | 952,000 | ||
2,020 | 1,055,000 | ||
Total | $ 4,665,000 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares issued to employees | 72,760,969 | 72,932,222 | |
Aggregate Intrinsic Value | |||
Proceeds received upon exercise of stock options | $ 6 | ||
Employee Stock Option [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 5 years | ||
Expiration term | 10 years | ||
Shares issued to employees | 0 | 0 | |
Exercised (in shares) | (1,000) | ||
Options activity outstanding of stock option plan | |||
Balance outstanding at the beginning of the period (in shares) | 1,000 | ||
Exercised (in shares) | (1,000) | ||
Balance outstanding at the end of the period (in shares) | |||
Weighted-Average Exercise Price | |||
Balance at the beginning of the period (in dollars per share) | $ 3.68 | ||
Exercised (in dollars per share) | $ 3.68 | ||
Exercisable (in dollars per share) | |||
Balance at the end of the period (in dollars per share) | |||
Weighted-Average Remaining Contractual Term | |||
Balance at the beginning of the period | 29 days | ||
Balance at the end of the period | 29 days | ||
Aggregate Intrinsic Value | |||
Balance at the beginning of the period | $ 17 | ||
Balance at the end of the period | |||
Time Lapse Restricted Shares Issued 2004 [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 6 years | ||
Shares issued to employees | 700,000 | 600,000 | 700,000 |
Vesting increment, starting with the second anniversary, over six years (as a percent) | 20.00% | ||
Common stock reserved for issuance upon exercise of stock options (in shares) | 5,100,000 | ||
Stock-based compensation expense | |||
Pre-tax compensation expense | $ 12,110 | $ 10,579 | $ 10,427 |
Tax benefit | (4,687) | (4,094) | (4,014) |
Restricted stock expense, net of tax | 7,423 | 6,485 | $ 6,413 |
Unrecognized compensation cost | $ 31,300 | $ 29,400 | |
Unrecognized compensation cost, period for recognition | 3 years 9 months 18 days | 3 years 8 months 12 days | |
Unvested restricted stock activity | |||
Balance outstanding at the beginning of the period (in shares) | 3,100,000 | 3,680,000 | 4,114,000 |
Forfeited (in shares) | (85,000) | (178,000) | (84,000) |
Vested (in shares) | (946,000) | (1,018,000) | (1,045,000) |
Granted (in shares) | 682,000 | 616,000 | 695,000 |
Balance outstanding at the end of the period (in shares) | 2,751,000 | 3,100,000 | 3,680,000 |
Weighted-Average Grant-Date Fair Value | |||
Balance at the beginning of the period (in dollars per share) | $ 14.45 | $ 12.50 | $ 10.94 |
Forfeited (in dollars per share) | 15.71 | 14.27 | 11.68 |
Vested (in dollars per share) | 12.04 | 10.31 | 8.89 |
Granted (in dollars per share) | 22.43 | 19.16 | 16.19 |
Balance at the end of the period (in dollars per share) | $ 17.21 | $ 14.45 | $ 12.50 |
ACCUMULATED OTHER COMPREHENSI81
ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Components of accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | $ (65,488) | $ (31,771) | |
Change during the period | |||
Before-tax amount | 36 | (51,655) | |
Tax benefit/(expense) | (5,726) | 17,938 | |
Other comprehensive loss | (5,690) | (33,717) | $ 25,196 |
Balance at the end of the period | (71,178) | (65,488) | (31,771) |
Pension Liability Adjustment [Member] | |||
Components of accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | (59,975) | (34,400) | |
Change during the period | |||
Before-tax amount | 14,796 | (41,721) | |
Tax benefit/(expense) | (5,726) | 16,146 | |
Other comprehensive loss | 9,070 | (25,575) | |
Balance at the end of the period | (50,905) | (59,975) | (34,400) |
Foreign Currency Translation [Member] | |||
Components of accumulated other comprehensive income (loss) | |||
Balance at the beginning of the period | (5,513) | 2,629 | |
Change during the period | |||
Before-tax amount | $ (14,760) | (9,934) | |
Tax benefit/(expense) | 1,792 | ||
Other comprehensive loss | $ (14,760) | (8,142) | |
Balance at the end of the period | $ (20,273) | $ (5,513) | $ 2,629 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
RPC Inc [Member] | |||
Related Party Transaction [Line Items] | |||
Notice period for termination of service agreement | 6 months | ||
LOR Inc [Member] | |||
Related Party Transaction [Line Items] | |||
Administrative services and rent, charges to related party | $ 1,000 | $ 1,000 | $ 1,100 |
Maximum [Member] | RPC Inc [Member] | |||
Related Party Transaction [Line Items] | |||
Administrative services and rent, charges to related party | $ 100 | $ 100 | $ 100 |
UNAUDITED QUARTERLY DATA (Detai
UNAUDITED QUARTERLY DATA (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
UNAUDITED QUARTERLY DATA | |||||||||||
Revenues | $ 362,500 | $ 399,746 | $ 392,150 | $ 330,909 | $ 343,951 | $ 384,870 | $ 369,357 | $ 313,388 | $ 1,485,305 | $ 1,411,566 | $ 1,337,374 |
Gross profit (Revenues less cost of services provided) | 180,265 | 204,257 | 201,941 | 162,866 | 168,972 | 196,060 | 186,715 | 152,080 | |||
Net Income | $ 31,749 | $ 45,046 | $ 45,073 | $ 30,281 | $ 29,917 | $ 41,121 | $ 40,860 | $ 25,766 | $ 152,149 | $ 137,664 | $ 123,330 |
Income per share: | |||||||||||
Income per share Basic (in dollars per share) | $ 0.15 | $ 0.21 | $ 0.21 | $ 0.14 | $ 0.14 | $ 0.19 | $ 0.19 | $ 0.12 | $ 0.70 | $ 0.63 | $ 0.56 |
Income per share Diluted (in dollars per share) | $ 0.15 | $ 0.21 | $ 0.21 | $ 0.14 | $ 0.14 | $ 0.19 | $ 0.19 | $ 0.12 | $ 0.70 | $ 0.63 | $ 0.56 |
CASH DIVIDEND (Details)
CASH DIVIDEND (Details) - $ / shares | Jan. 26, 2016 | Dec. 10, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Dividends, Cash [Abstract] | |||||
Special year-end dividend (in dollars per share) | $ .10 | $ 0.42 | $ 0.35 | $ 0.30 | |
Increase in quarterly dividend approved on January 26, 2016 (as a percent) | 25.00% | ||||
Increased quarterly dividend approved (in dollars per share) | $ .10 |
THREE-FOR-TWO STOCK SPLIT (Deta
THREE-FOR-TWO STOCK SPLIT (Details) $ in Thousands | Mar. 10, 2015shares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013USD ($)shares | Dec. 31, 2015USD ($) | Dec. 31, 2012USD ($) |
Stock Split Ratio | .5 | ||||
Common Stock Outstanding | shares | 218,674,578 | ||||
STOCKHOLDERS' EQUITY | |||||
Preferred stock, without par value; 500,000 authorized, zero shares issued | |||||
Common stock, par value $1 per share; 250,000,000 shares authorized, 218,482,907 shares issued | $ 218,483 | $ 218,753 | |||
Treasury Stock, par value $1 per share ; 200,000 and 0 shares, respectively | (200) | (200) | |||
Paid-in-capital | 62,839 | 69,762 | |||
Accumulated other comprehensive loss | (65,488) | $ (31,771) | (71,178) | ||
Retained earnings | 247,042 | 306,892 | |||
Total Stockholders' Equity | $ 462,676 | $ 438,255 | $ 524,029 | $ 354,956 | |
Stock Issued During Period, Shares, Stock Splits | shares | 72,760,969 | 72,932,222 | |||
Pro forma [Member] (Unaudited) | |||||
STOCKHOLDERS' EQUITY | |||||
Preferred stock, without par value; 500,000 authorized, zero shares issued | |||||
Common stock, par value $1 per share; 250,000,000 shares authorized, 218,482,907 shares issued | $ 145,722 | ||||
Treasury Stock, par value $1 per share ; 200,000 and 0 shares, respectively | (200) | ||||
Paid-in-capital | 62,839 | ||||
Accumulated other comprehensive loss | (65,488) | ||||
Retained earnings | 319,803 | ||||
Total Stockholders' Equity | $ 462,676 | ||||
Adjustment [Member] | |||||
STOCKHOLDERS' EQUITY | |||||
Preferred stock, without par value; 500,000 authorized, zero shares issued | |||||
Common stock, par value $1 per share; 250,000,000 shares authorized, 218,482,907 shares issued | $ 72,761 | ||||
Treasury Stock, par value $1 per share ; 200,000 and 0 shares, respectively | |||||
Paid-in-capital | |||||
Accumulated other comprehensive loss | |||||
Retained earnings | $ (72,761) | ||||
Total Stockholders' Equity |
THREE-FOR-TWO STOCK SPLIT (De86
THREE-FOR-TWO STOCK SPLIT (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Net Income | $ 31,749 | $ 45,046 | $ 45,073 | $ 30,281 | $ 29,917 | $ 41,121 | $ 40,860 | $ 25,766 | $ 152,149 | $ 137,664 | $ 123,330 |
Income per share Basic (in dollars per share) | $ 0.15 | $ 0.21 | $ 0.21 | $ 0.14 | $ 0.14 | $ 0.19 | $ 0.19 | $ 0.12 | $ 0.70 | $ 0.63 | $ 0.56 |
Income per share Diluted (in dollars per share) | $ 0.15 | $ 0.21 | $ 0.21 | $ 0.14 | $ 0.14 | $ 0.19 | $ 0.19 | $ 0.12 | $ 0.70 | $ 0.63 | $ 0.56 |
Weighted average shares outstanding - basic (in shares) | 218,583,000 | 218,695,000 | 219,121,000 | ||||||||
Weighted average shares outstanding - diluted (in shares) | 218,583,000 | 218,695,000 | 219,121,000 | ||||||||
Pro forma [Member] (Unaudited) | |||||||||||
Net Income | $ 137,664 | ||||||||||
Income per share Basic (in dollars per share) | $ .94 | ||||||||||
Income per share Diluted (in dollars per share) | $ .94 | ||||||||||
Weighted average shares outstanding - basic (in shares) | 145,796,000 | ||||||||||
Weighted average shares outstanding - diluted (in shares) | 145,796,000 | ||||||||||
Adjustment [Member] | |||||||||||
Net Income | |||||||||||
Income per share Basic (in dollars per share) | $ (.31) | ||||||||||
Income per share Diluted (in dollars per share) | $ (0.31) | ||||||||||
Weighted average shares outstanding - basic (in shares) | 72,899,000 | ||||||||||
Weighted average shares outstanding - diluted (in shares) | 72,899,000 |
SCHEDULE II-VALUATION AND QUA87
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (Details) - Allowance for Doubtful Accounts [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
VALUATION AND QUALIFYING ACCOUNTS | |||
Balance at the beginning of Period | $ 14,094 | $ 12,278 | $ 11,461 |
Charged to Costs and Expenses | 10,113 | 11,197 | 10,388 |
Net (Deductions) Recoveries | 10,571 | (9,381) | (9,571) |
Balance at the end of Period | $ 13,636 | $ 14,094 | $ 12,278 |