Exhibit 13
ROLLINS, INC. AND SUBSIDIARIES
(In thousands except per share data) 1999 1998 1997 1996 1995
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OPERATIONS SUMMARY
Revenues $ 586,639 $ 549,136 $ 538,639 $ 532,785 $ 529,788
Income (Loss) from Continuing
Operations After Income Taxes 7,150 3,177 (104,781) 22,386 38,661
Income From Discontinued
Operations After Income Taxes - 3,410 106,278 409 616
Net Income 7,150 6,587 1,497 22,795 39,277
Earnings (Loss) Per Share
Continuing Operations .24 .10 (3.09) .63 1.08
Discontinued Operations - .11 3.13 .01 .02
---------------------------------------------------------------------------
Basic and Diluted .24 .21 .04 .64 1.10
Dividends per Share .20 .50 .60 .58 .56
FINANCIAL POSITION
Total Assets $ 312,940 $ 327,265 $ 432,680 $ 296,656 $ 306,111
Noncurrent Capital Lease Obligations 2,450 6,090 9,239 12,163 7,422
Long-Term Debt 5,328 - - - -
Stockholders' Equity 71,790 80,235 145,644 190,290 214,318
Shares Outstanding at Year-End 29,881 30,489 33,279 34,594 35,858
-------------------------------------------------------------------------------------------------------------------------
Rollins, Inc. is one of the nation's largest consumer services companies.
Through its wholly-owned subsidiary, Orkin Exterminating Company, Inc., the
Company provides essential pest control services and protection against termite
damage, rodents and insects to approximately 1.7 million residential and
commercial customers. Orkin serves customers in the United States, Canada and
Mexico from over 400 locations. You can learn more about Orkin by visitng our
Web site at www.orkin.com.
QUARTERLY INFORMATION
ROLLINS, INC. AND SUBSIDIARIES
STOCK PRICES AND DIVIDENDS
(Rounded to the nearest 1/16)
Stock Prices Dividends Stock Prices Dividends
1999 High Low Paid 1998 High Low Paid
- ------------------------------------------------------------------------------------------------------------------------------------
First Quarter $17 3/4 $14 3/4 $.05 First Quarter $21 5/8 $19 1/2 $.15
Second Quarter 17 3/8 15 1/2 .05 Second Quarter 21 1/8 19 1/2 .15
Third Quarter 17 1/8 15 5/16 .05 Third Quarter 20 7/8 16 7/8 .15
Fourth Quarter 16 3/4 14 3/4 .05 Fourth Quarter 17 7/8 15 1/4 .05
- ------------------------------------------------------------------------------------------------------------------------------------
The number of stockholders of record as of December 31, 1999 was 2,759.
PROFIT AND LOSS INFORMATION
(In thousands except per share data) First Second Third Fourth
- ------------------------------------------------------------------------------------------------------------------------------------
1999
Revenues $ 129,886 $ 162,342 $ 154,102 $ 140,309
Income (Loss) from Continuing Operations 467 7,623 1,432 (2,372)
Income from Discontinued Operations - - - -
Net Income (Loss) 467 7,623 1,432 (2,372)
Earnings (Loss) per Share
Continuing Operations .02 .25 .05 (.08)
Discontinued Operations - - - -
---------------------------------------------------------------------------
Basic and Diluted .02 .25 .05 (.08)
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1998
Revenues $ 122,965 $ 155,050 $ 144,493 $ 126,628
Income (Loss) from Continuing Operations (1,764) 6,913 880 (2,852)
Income from Discontinued Operations - - - 3,410
Net Income (Loss) (1,764) 6,913 880 558
Earnings (Loss) per Share
Continuing Operations (.05) .21 .03 (.09)
Discontinued Operations - - - .11
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Basic and Diluted (.05) .21 .03 .02
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1997
Revenues $ 126,951 $ 154,371 $ 140,287 $ 117,030
Income (Loss) from Continuing Operations 5,095 6,219 (11,863) (104,232)
Income from Discontinued Operations 49 100 9,529 96,600
Net Income (Loss) 5,144 6,319 (2,334) (7,632)
Earnings (Loss) per Share
Continuing Operations .15 .19 (.36) (3.07)
Discontinued Operations - - .29 2.84
---------------------------------------------------------------------------
Basic and Diluted .15 .19 (.07) (.23)
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8
Management's Discussion and Analysis
ROLLINS, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
% Change From Prior Year
Increase (Decrease)
-------------------------
(In thousands) 1999 1998 1997 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues $ 586,639 $ 549,136 $ 538,639 6.8% 1.9%
Income (Loss) From Continuing
Operations After Income Taxes 7,150 3,177 (104,781) 125.1 103.0
Income From Discontinued
Operations After Income Taxes - 3,410 106,278 (100.0) (96.8)
Net Income 7,150 6,587 1,497 8.5 340.0
- ------------------------------------------------------------------------------------------------------------------------------------
GENERAL OPERATING COMMENTS
During the year, the Company expanded its presence in the pest and termite
control industry through several strategic acquisitions. These acquisitions,
along with the Company's continued emphasis on building recurring revenue and a
further expansion of its commercial operations, led to an increase in revenues
of 6.8%, the highest annual revenue growth in six years. The financial results
for the fourth quarter 1999 represent the seventh consecutive
quarter-over-quarter improvements in both revenues and income from continuing
operations. Income from continuing operations for the year ended December 31,
1999 increased to $7.2 million, a 125.1% increase over the prior year. This
improvement is primarily the result of the success of our new selling and
treatment programs and acquisition activity.
The acquisitions of PRISM, the nation's fourth largest commercial pest
control company; Redd Pest Control Company, Inc., a premier pest control
provider in the Southeastern United States; and PCO Services, Inc. (PCO),
Canada's leading pest control company, have clearly established the Company as
the largest commercial pest control provider in North America. In addition to
strategic acquisitions, the Company and Johnson Wax Professional entered into a
joint venture, Acurid Retail Services, L.L.C., created to sell and provide pest
elimination services to customers in the retail market.
CONTINUING OPERATIONS - 1999 VERSUS 1998
Revenues from both the Company's pest and termite control operations experienced
increases during the year. Factors contributing to the Company's overall 6.8%
revenue growth were increases in customer base and average sales price.
The Company's continued efforts to provide services that best fit our
customers' needs, along with the positive impact of acquisitions, have led to an
increase in our residential and commercial pest control customer base.
The increase in termite control revenue is primarily a result of our new
service offering of directed liquid in conjunction with termite baiting.
Management believes this new treatment technique also creates the potential for
new recurring revenue as a result of the periodic monitoring of the termite
baiting stations. Termite baiting was implemented in selected markets during the
year, and is scheduled to be offered Company-wide in 2000.
Cost of Services Provided was approximately $14.1 million higher than the
prior year but improved to represent 58.2% of revenues compared to 59.6% for the
prior year. This improvement as a percentage of revenues was primarily due to
lower termite claim provisions, lower operating insurance costs and lower
material and supply costs as well as better leveraging of fixed costs due to
higher revenues.
Sales, General and Administrative expenses increased $9.1 million but
decreased as a percent of revenues to 38.1% compared to 39.0% for the prior
year. This improvement as a percentage of revenues resulted primarily from
better leveraging of our fixed costs due to higher revenues and improved
efficiencies in sales, fleet and telephone costs. These cost savings were
partially offset by additional costs related to various new service and
marketing programs throughout the Company.
Interest Income declined $5.9 million or 66.1% during the year primarily
due to a decrease in invested funds over the prior year. The decrease in
invested funds resulted primarily from the conversion of investments to cash to
fund acquisitions.
The Company's net tax provision of $4.4 million, as compared to $1.9
million in 1998, reflects increased taxable income in 1999.
New programs scheduled for 2000 include expanded customer preferred service
alternatives and the continued use of technological advances. Focus, our new
centralized computer system, should improve information flow to and from the
branches and the home office. The Company also plans to improve the logistics of
operations by introducing new routing and scheduling software and a new vehicle
tracking software application which will assist the technicians in becoming more
efficient, productive and safe.
The Company's financial results for 1999, along with consecutive quarterly
improvements and new operational programs, present an encouraging outlook for
2000.
CONTINUING OPERATIONS - 1998 VERSUS 1997
The Company's 1.9% increase in revenues in 1998 was due primarily to growth in
recurring pest control revenue resulting from the success of our more
consumer-friendly selling and treatment programs and to an increase in termite
renewal
9
Management's Discussion and Analysis (continued)
ROLLINS, INC. AND SUBSIDIARIES
revenue resulting from higher average renewal prices. Revenue was also impacted
positively by the Company's ten pest control acquisitions in 1998, including two
companies in Canada. These revenue increases were partially offset by a decline
in termite sales revenue caused by placing our emphasis on changing contracts
and sales practices that were initiated in response to the capabilities of
modern-day termiticides, new building materials and construction practices.
Cost of Services Provided decreased in 1998 on both a dollar and percentage
of revenues basis, primarily due to reductions in termite claims experience and
operating insurance costs. Sales, General and Administrative expenses also
decreased on both a dollar and percentage of revenues basis, primarily due to
reduced expenditures related to Year 2000 system modifications and to lower bad
debt expense. The Company's net tax provision of $1.9 million, as compared to a
benefit of $64.2 million in 1997, reflects increased taxable income in 1998.
Key programs implemented in 1998 included improved sales and service
programs to meet the changing demands of today's busy customers. We also
introduced a premium brand of service for our commercial customers, Acuridsm ;
related activities included the opening of additional commercial branches,
improved service technology, expanded guarantees, and new vehicle and uniform
identification. As a result of these programs, we achieved strong gains in
customer base and revenues in this division.
We implemented aggressive changes in sales policies, treatment standards
and guarantees offered in termite control. These internal enhancements, along
with extensive reinspection, retreatment and repair programs, in conjunction
with the establishment of our national quality control department, allow us to
more effectively provide termite control service to all our new and existing
customers. These termite remediation expenditures in 1998 were charged against
the Accrual for Termite Contracts. We provided an advanced termite training
course, developed exclusively by the Company in partnership with Texas A&M, to
Orkin employees who have previously completed both in-branch and classroom
termite control training. This comprehensive program provides the best termite
training in the industry.
DISCONTIUED OPERATIONS
In 1997, the Company estimated its liabilities associated with its divested
operations and recorded a Gain on Disposal, net of taxes, of $106.1 million on
the sales of the Orkin Lawn Care and Plantscaping businesses and the Rollins
Protective Services division. These divestitures were completed as part of the
Company's shift towards a single operational focus on its core pest control
business. In the fourth quarter of 1998, the Company recorded an additional
gain, net of taxes, of $3.4 million as a result of the reevaluation of the
Company's liabilities for costs associated with these discontinued operations.
YEAR 2000 ISSUES
Aware that the Year 2000 (Y2K) information technology programming issue could
have a significant potential impact on its future operations and financial
reporting, the Company began its assessment and remediation processes in 1997
regarding its primary financial and operating systems. The Company's assessment
activities included (1) identifying all software and operating systems - both
information technology (IT) systems and non-IT systems with embedded technology
which are critical to operations and/or financial reporting, (2) testing of such
software and systems for Y2K compliance, and (3) obtaining assurances from the
Company's vendors and its large commercial customers. The Company's remediation
activities included replacing certain software and operating systems, followed
by testing to ensure the Y2K compliancy of the replacements.
As of February 16, 2000, the Company has not experienced any material
adverse effects as a result of Y2K related problems. Although the Company has
not endured any material adverse Y2K effects and does not anticipate any such
problems, it is possible that certain Y2K problems may exist but have not yet
materialized. The total amount of Y2K expenditures as of December 31, 1999 was
approximately $19.5 million. Any additional Y2K expenditures are not expected to
have a material impact on the Company's results of operations, cash flows or
financial position.
MARKET RISK
The Company maintains an investment portfolio, comprised of U.S. government and
corporate debt securities, which is subject to interest rate risk exposure. This
risk is managed through conservative policies to invest in high-quality
obligations. The Company has performed an interest rate sensitivity analysis
using a duration model over the near term with a 10% change in interest rates.
The Company's portfolio is not subject to material interest rate risk exposure
based on this analysis, and no material changes in market risk exposures or how
those risks are managed are expected.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
In 1998, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities." In second quarter 1999, the Financial Accounting Standards Board
voted to delay the effective date of this standard to fiscal years beginning
after June 15, 2000. The adoption of this standard, effective for the Company as
of January 1, 2001, is not expected to materially impact the results of
operations or financial condition of the Company.
10
Management's Discussion and Analysis (continued)
ROLLINS, INC. AND SUBSIDIARIES
Financial Condition
% Change From Prior Year
Increase (Decrease)
-------------------------
(Dollars in thousands) 1999 1998 1997 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and Short-Term Investments $ 5,689 $ 1,244 $ 125,842
Marketable Securities 12,967 110,229 75,037
------------------------------------------------
18,656 111,473 200,879 (83.3)% (44.5)%
Current Ratio 1.0 1.7 2.3 (41.2) (26.1)
Total Assets 312,940 327,265 432,680 (4.4) (24.4)
- ------------------------------------------------------------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
The Company believes its current cash balances, future cash flows from operating
activities and line of credit will be sufficient to finance its current
operations and obligations, and fund expansion of the business for the
foreseeable future. The Company experienced positive cash flow from operating
activities during the year in the amount of $8.2 million. This increase in cash
flow is an improvement over cash flow used in operating activities of $679,000
in 1998 and cash flow provided by operating activities of $5.7 million in 1997.
The 1999 increase resulted from favorable changes in working capital related
primarily to differences in the timing of accrued expenses and higher income
from continuing operations in 1999, adjusted for non-cash items.
The Company invested $79.8 million in acquisitions and capital expenditures
in 1999 and expects to invest between $25.0 and $30.0 million in 2000, inclusive
of improvements to its management information systems. Acquisition expenditures
consisted primarily of the acquisitions of PCO Services, Inc. and the commercial
pest elimination business operations of PRISM, both subsidiaries of Johnson Wax
Professional, and the acquisition of the pest control business operations of
Redd Pest Control Company, Inc. See Note 3 to the accompanying consolidated
financial statements for further discussion. Capital expenditures in 1999
consisted primarily of equipment replacements and upgrades and improvements to
the Company's management information systems.
A total of $6.1 million was paid in cash dividends in 1999. During the
year, a total of $11.8 million was paid for repurchases of 718,900 shares, or
2.4%, of the Company's Common Stock. These repurchased shares were retired in
1999; an additional 881,100 shares may be repurchased under the current
authorization. The capital expenditures, acquisitions, cash dividends and stock
repurchases were primarily funded through existing cash balances, marketable
securities and operating activities. The Company maintains a $40.0 million line
of credit, which is available for future acquisitions and growth, if needed.
In 1997 and 1998, Orkin and other pest control industry companies received
letters from the Federal Trade Commission (FTC) advising of its investigation of
the pest control industry - more specifically, the termite and moisture control
practices of the industry - and requesting certain information voluntarily from
the Company. Orkin has voluntarily provided the information requested and has
advised the FTC of the Company's intention to continue to cooperate fully with
this investigation. At this point in time, management does not believe this
investigation will have a material effect upon its results of operations or
financial condition. In addition, the Company is aggressively defending a class
action lawsuit filed in Dothan, Alabama. For further discussion, see Note 9 to
the accompanying consolidated financial statements.
FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements include statements regarding the expected impact of the outcome of
litigation arising in the ordinary course of business and the outcome of the
Helen Cutler and Mary Lewin v. Orkin Exterminating Company., Inc., et al.
("Cutler") litigation on the Company's financial condition, results of
operations and liquidity; the Company's potential for recurring revenue; and the
Company's projected 2000 performance. The actual results of the Company could
differ materially from those indicated by the forward-looking statements because
of various risks and uncertainties including, without limitation, the
possibility of a court ruling against the Company in litigation or in the Cutler
litigation; general economic conditions; market risk; changes in industry
practices or technologies; the degree of success of the Company's termite
process reforms and pest control selling and treatment methods; the Company's
ability to identify potential acquisitions; climate and weather trends;
competitive factors and pricing practices; the failure of the Company or its
major suppliers or customers to adequately address the Year 2000 programming
issue; potential increases in labor costs; and changes in various government
laws and regulations, including environmental regulations. All of the foregoing
risks and uncertainties are beyond the ability of the Company to control, and in
many cases the Company cannot predict the risks and uncertainties that could
cause its actual results to differ materially from those indicated by the
forward-looking statements.
11
consolidated statements of financial position
ROLLINS, INC. AND SUBSIDIARIES
At December 31, (In thousands except share data) 1999 1998
- -------------------------------------------------------------------------------------------------
ASSETS
Cash and Short-Term Investments $ 5,689 $ 1,244
Marketable Securities 12,967 110,229
Trade Receivables, Net 44,878 42,353
Materials and Supplies 13,429 13,335
Deferred Income Taxes 19,644 20,083
Other Current Assets 11,142 11,864
------------------------------------
Current Assets 107,749 199,108
Equipment and Property, Net 46,245 35,466
Goodwill and Other Intangible Assets 112,024 47,092
Deferred Income Taxes 45,015 44,369
Other Assets 1,907 1,230
------------------------------------
Total Assets $ 312,940 $ 327,265
====================================
LIABILITIES
Capital Lease Obligations $ 3,638 $ 3,419
Accounts Payable 15,275 10,890
Accrued Insurance 11,165 18,348
Accrued Payroll 23,100 18,400
Accrued Pension 6,523 5,635
Unearned Revenue 20,441 15,210
State Income Taxes Payable 6,295 7,188
Accrual for Termite Contracts 15,000 25,800
Other Expenses 10,004 10,203
------------------------------------
Current Liabilities 111,441 115,093
Capital Lease Obligations 2,450 6,090
Accrued Insurance 43,745 38,975
Accrual for Termite Contracts 54,352 66,350
Long-Term Accrued Liabilities 29,162 20,522
------------------------------------
Total Liabilities 241,150 247,030
------------------------------------
Commitments and Contingencies
STOCKHOLDERS' EQUITY
Common Stock, par value $1 per share; 99,500,000
shares authorized; 29,881,402 and 30,488,741
shares issued 29,881 30,489
Earnings Retained 41,909 49,746
------------------------------------
Total Stockholders' Equity 71,790 80,235
------------------------------------
Total Liabilities and Stockholders' Equity $ 312,940 $ 327,265
- -------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated financial
statements.
12
consolidated statements of income
ROLLINS, INC. AND SUBSIDIARIES
Years Ended December 31, (In thousands except per share data) 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
REVENUES
Customer Services $ 586,639 $ 549,136 $ 538,639
------------------------------------------------------------
COSTS AND EXPENSES
Cost of Services Provided 341,487 327,353 362,161
Depreciation and Amortization 13,433 11,458 10,712
Provision for Termite Contracts - - 117,000
Sales, General and Administrative 223,235 214,182 225,356
Interest Income (3,048) (8,981) (7,588)
------------------------------------------------------------
575,107 544,012 707,641
------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 11,532 5,124 (169,002)
------------------------------------------------------------
PROVISION (BENEFIT) FOR INCOME TAXES
Current (2,694) (4,937) 6,021
Deferred 7,076 6,884 (70,242)
------------------------------------------------------------
4,382 1,947 (64,221)
------------------------------------------------------------
INCOME (LOSS) FROM CONTINUING OPERATIONS 7,150 3,177 (104,781)
------------------------------------------------------------
DISCONTINUED OPERATIONS
Operating Income, Less Income Tax Expense of $119 - - 192
Gain on Disposal, Less Income Tax Expense of
$2,090 and $70,214 in 1998 and 1997, Respectively - 3,410 106,086
------------------------------------------------------------
INCOME FROM DISCONTINUED OPERATIONS - 3,410 106,278
------------------------------------------------------------
NET INCOME $ 7,150 $ 6,587 $ 1,497
============================================================
EARNINGS (LOSS) PER SHARE
Continuing Operations $ .24 $ .10 $ (3.09)
Discontinued Operations - .11 3.13
------------------------------------------------------------
EARNINGS PER SHARE - BASIC AND DILUTED $ .24 $ .21 $ .04
- -------------------------------------------------------------------------------------------------------------------------
consolidated statements of earnings retained
ROLLINS, INC. AND SUBSIDIARIES
Years Ended December 31, (In thousands except per share data) 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
Balance at Beginning of Year $ 49,746 $ 112,365 $ 155,696
Net Income 7,150 6,587 1,497
Cash Dividends (6,076) (16,064) (20,360)
Common Stock Purchased and Retired (11,076) (53,429) (24,733)
Common Stock Issued for Acquisition of Companies 1,892 - -
Other 273 287 265
------------------------------------------------------------
Balance at End of Year $ 41,909 $ 49,746 $ 112,365
============================================================
DIVIDENDS PER SHARE $ .20 $ .50 $ .60
- -------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated
financial statements.
13
consolidated statements of cash flows
ROLLINS, INC. AND SUBSIDIARIES
Years Ended December 31, (In thousands) 1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net Income $ 7,150 $ 6,587 $ 1,497
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used in) Operating Activities:
Provision for Termite Contracts - - 117,000
Provision for Self-Insurance Reserves - - 15,000
Provision for Bad Debts - - 8,000
Depreciation and Amortization 13,433 11,458 10,712
Provision (Benefit) for Deferred Income Taxes 7,076 8,974 (69,228)
Discontinued Operations, Net of Taxes - (3,410) (106,278)
Other, Net 1,471 5,121 7,169
(Increase) Decrease in Assets:
Trade Receivables 2,243 7,087 7,505
Materials and Supplies 1,310 1,719 (3,388)
Other Current Assets (759) 1,638 (2,034)
Other Non-Current Assets (6,611) 520 (2,330)
Increase (Decrease) in Liabilities:
Accounts Payable and Accrued Expenses (1,186) (15,167) 11,608
Unearned Revenue 5,134 1,379 2,154
Accrued Insurance (2,413) 5,220 9,629
Accrual for Termite Contracts (22,798) (24,850) -
Long-Term Accrued Liabilities 4,112 (6,955) (1,336)
------------------------------------------------------------
Net Cash Provided by (Used in) Operating Activities 8,162 (679) 5,680
============================================================
INVESTING ACTIVITIES
Purchases of Equipment and Property (18,818) (10,402) (8,956)
Net Cash Used for Acquisition of Companies (60,964) (3,517) (1,440)
Net Proceeds from Sale of Discontinued Operations,
Net of Current Taxes Paid - - 156,469
Marketable Securities, Net 97,145 (35,033) 9,846
------------------------------------------------------------
Net Cash Provided by (Used in) Investing Activities 17,363 (48,952) 155,919
============================================================
FINANCING ACTIVITIES
Dividends Paid (6,076) (16,064) (20,360)
Common Stock Purchased and Retired (11,795) (56,195) (26,083)
Payments on Capital Leases (3,421) (2,868) (2,521)
Other 212 160 300
------------------------------------------------------------
Net Cash Used in Financing Activities (21,080) (74,967) (48,664)
============================================================
NET CASH PROVIDED BY DISCONTINUED OPERATIONS - - 757
------------------------------------------------------------
Net Increase (Decrease) in Cash and Short-Term Investments 4,445 (124,598) 113,692
Cash and Short-Term Investments at Beginning of Year 1,244 125,842 12,150
------------------------------------------------------------
Cash and Short-Term Investments at End of Year $ 5,689 $ 1,244 $ 125,842
- -------------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these consolidated
financial statements.
14
notes to consolidated financial statements
Years Ended December 31, 1999, 1998 and 1997 ROLLINS, INC. AND SUBSIDIARIES
1. SIGNIFICANT ACCOUNTING POLICIES
Business Description - Rollins, Inc. (the Company) is a national service company
with headquarters located in Atlanta, Georgia, providing pest and termite
control services to both residential and commercial customers.
In 1998, the Company adopted Statement of Financial Accounting Standards No.
131 (SFAS 131), "Disclosures About Segments of an Enterprise and Related
Information." As the Company has only one reportable segment - its pest and
termite control business - the majority of the disclosures required by SFAS 131
do not apply to the Company. In regard to the general disclosures required by
SFAS 131, the Company's results of operations and its financial condition are
not significantly reliant upon any single customer or the Company's foreign
operations.
Principles of Consolidation - The consolidated financial statements of the
Company include the accounts of Rollins, Inc. and its subsidiaries. All
significant intercompany transactions and balances have been eliminated.
Estimates Used in the Preparation of Consolidated Financial Statements - The
preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires Management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Revenues - Revenue is recognized at the time services are performed.
Cash and Short-Term Investments - The Company considers all investments with a
maturity of three months or less to be cash equivalents. Short-term investments
are stated at cost which approximates fair market value. Marketable Securities -
The Company's marketable securities are classified as "available for sale" and
have been recorded at current market value with an offsetting adjustment to
stockholders' equity.
Materials and Supplies - Materials and supplies are recorded at the lower of
cost (first-in, first-out basis) or market.
Equipment and Property - Depreciation and amortization, which includes the
amortization of assets recorded under capital leases, are provided principally
on a straight-line basis over the estimated useful lives of the related assets.
Annual provisions for depreciation are computed using the following asset lives:
buildings, ten to forty years; and furniture, fixtures, and operating equipment,
three to ten years. The cost of assets retired or otherwise disposed of and the
related accumulated depreciation and amortization are eliminated from the
accounts in the year of disposal with the resulting gain or loss credited or
charged to income. Expenditures for additions, major renewals and betterments
are capitalized and expenditures for maintenance and repairs are expensed as
incurred.
Insurance - The Company self-insures, up to specified limits, certain risks
related to general liability, workers' compensation and vehicle liability. The
estimated costs of existing and future claims under the self-insurance program
are accrued based upon historical trends as incidents occur, whether reported or
unreported (although actual settlement of the claims may not be made until
future periods) and may be subsequently revised based on developments relating
to such claims. These estimated outstanding claims have been reflected in the
Consolidated Statements of Financial Position in the line items entitled Accrued
Insurance.
Advertising - Advertising expenses are charged to income during the year in
which they are incurred. The total advertising costs were approximately $28.3
million in 1999 and $27.5 million for each of the years 1998 and 1997.
Income Taxes - The Company follows the practice of providing for income taxes
based on SFAS 109, "Accounting for Income Taxes", which requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the consolidated financial statements or tax
returns.
Earnings Per Share - In 1997, the Company adopted SFAS 128, "Earnings Per
Share" (EPS), which requires companies to present basic EPS and diluted EPS.
Basic EPS is computed on the basis of weighted-average shares outstanding.
Diluted EPS is computed on the basis of weighted-average shares outstanding plus
common stock options outstanding during the year which, if exercised, would have
a dilutive effect on EPS. Basic and diluted EPS are the same for all years
reported.
A reconciliation of the number of weighted-average shares used in computing
basic and diluted EPS is as follows:
(In thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Basic EPS 30,325 31,973 33,896
Effect of Dilutive
Stock Options 7 30 28
-------------------------------------
Diluted EPS 30,332 32,003 33,924
- --------------------------------------------------------------------------------
Stock-Based Compensation - As permitted by SFAS 123, "Accounting for
Stock-Based Compensation," the Company accounts for employee stock compensation
plans using the intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees." See Note 10 to the
consolidated financial statements for additional information.
Comprehensive Income - In 1997, the Financial Accounting Standards Board
issued SFAS 130, "Reporting Comprehensive Income," effective for fiscal years
beginning after December 15, 1997. For the years ended December 31, 1999, 1998
and 1997, comprehensive income is not materially different from net
15
notes to consolidated financial statements (continued)
Years Ended December 31, 1999, 1998 and 1997 ROLLINS, INC. AND SUBSIDIARIES
income and, as a result, the impact of SFAS 130 is not reflected in the
Company's consolidated financial statements.
Reclassifications - Certain amounts for previous years have been reclassified
to conform with the 1999 consolidated financial statement presentation.
2. CHANGES IN ACCOUNTING ESTIMATES
In the fourth quarter of 1997, the Company made certain changes in accounting
estimates totaling $23.0 million due to 1997 events and new information becoming
available. The Company's provision for its self-insurance program for
automobile, workers' compensation, and general liability was increased by $15.0
million. This provision has been reflected in the Consolidated Statements of
Income in the line item entitled Cost of Services Provided. The provision for
bad debts was also increased by $8.0 million and has been reflected in the
Consolidated Statements of Income in the line item entitled Sales, General and
Administrative.
In the fourth quarter of 1997, a provision for termite contracts of $117.0
million was recorded related to the estimated costs of reinspections,
reapplications, repair claims and associated labor, chemicals, and other costs
incurred relative to termite work performed prior to December 31, 1997. These
anticipated costs reflected the Company's response to current trends in the
termite treatment area of its operations and the pest control industry. The
provision was reflected in the 1997 Consolidated Statements of Income in the
line item entitled Provision for Termite Contracts. The related liabilities at
December 31, 1999 and 1998, reflecting the estimated costs incurred but as yet
unpaid related to termite work performed prior to these dates, have been
reflected in the Consolidated Statements of Financial Position in the line items
entitled Accrual for Termite Contracts.
3. ACQUISITIONS AND JOINT VENTURE
On April 30, 1999, the Company and Johnson Wax Professional entered into a joint
venture, Acurid Retail Services, L.L.C. (Acurid Retail), created to sell and
provide pest elimination services to customers in the retail market and jointly
contributed existing customers to the joint venture. The Company owns 50% of the
joint venture, which is accounted for using the equity method. In addition, on
April 30, 1999, the Company's wholly-owned subsidiary, Orkin Exterminating
Company, Inc. (Orkin), acquired the remaining pest elimination business
operations of PRISM, a subsidiary of Johnson Wax Professional, for approximately
twenty-four million dollars. The acquisition was accounted for as a purchase
with the results of operations of the business acquired included from the
effective date of the acquisition. The acquisition resulted in excess costs over
net assets acquired of approximately sixteen million dollars which are being
amortized over a life of twenty years using the straight-line method.
On October 29, 1999, Orkin acquired PCO Services, Inc. (PCO), a subsidiary of
Johnson Wax Professional. Orkin acquired all the shares of capital stock of PCO
for approximately twenty-five million dollars. The acquisition was accounted for
as a purchase with the results of operations of the business acquired included
from the effective date of the acquisition. The acquisition resulted in excess
costs over net assets acquired of approximately five hundred thousand dollars
which are being amortized over a life of twenty years using the straight-line
method.
On December 3, 1999, Orkin acquired the pest control business operations of
Redd Pest Control Company, Inc. (Redd) for approximately thirteen million
dollars, of which approximately seven million was paid in cash. Under the terms
of the agreement, Orkin acquired all the pest control customers of Redd,
together with certain assets. The acquisition was accounted for as a purchase
with the results of operations of the business acquired included from the
effective date of the acquisition. The acquisition resulted in excess costs over
net assets acquired of approximately eight million dollars which are being
amortized over a life of twenty years using the straight-line method.
4. DISCONTINUED OPERATIONS
In October 1997, the Company sold its Rollins Protective Services (RPS) business
segment for approximately $200.0 million in cash. In July 1997, the Company sold
its Lawn Care and Plantscaping divisions for approximately $37.0 million in
cash. In 1997, the Company estimated its liabilities associated with these
divested operations and recorded a gain from the sales of RPS and the Lawn Care
and Plantscaping divisions of $106.1 million, net of taxes. In the fourth
quarter of 1998, the Company reevaluated its liabilities associated with these
divested operations and recorded an additional gain of $3.4 million, net of
taxes.
The Company's results of operations for the year ended December 31, 1997 have
been restated for the divestitures of the RPS business segment and the Lawn Care
and Plantscaping divisions. The results of operations of these divested
operations and the gains on their disposal have been reflected in the
Consolidated Statements of Income in the section entitled Discontinued
Operations.
Summarized financial information for the discontinued operations is as
follows:
(In thousands) 1997
- --------------------------------------------------------------------------------
Revenues $ 64,721
Income Before Income Taxes 311
Net Income 192
Assets -
Liabilities -
Net Assets of Discontinued Operations $ -
- --------------------------------------------------------------------------------
16
notes to consolidated financial statements (continued)
Years Ended December 31, 1999, 1998 and 1997 ROLLINS, INC. AND SUBSIDIARIES
5. TRADE RECEIVABLES
Trade receivables, net, at December 31, 1999, totaling $44.9 million and at
December 31, 1998, totaling $42.4 million are net of allowances for doubtful
accounts of $4.9 million and $5.3 million, respectively. Trade receivables
include installment receivable amounts which are due subsequent to one year from
the balance sheet dates. These amounts were approximately $6.7 million and $9.0
million at the end of 1999 and 1998, respectively. The carrying amount of
installment receivables approximates fair value because the interest rates
approximate market rates.
6. EQUIPMENT AND PROPERTY
Equipment and property are presented at cost less accumulated depreciation and
are detailed as follows:
(In thousands) 1999 1998
- --------------------------------------------------------------------------------
Buildings $ 10,158 $ 9,759
Operating Equipment 56,445 44,805
Furniture and Fixtures 10,186 8,542
Computer Equipment Under
Capital Leases 7,787 8,736
-------------------------------
84,576 71,842
Less - Accumulated
Depreciation 41,912 39,704
-------------------------------
42,664 32,138
Land 3,581 3,328
-------------------------------
$ 46,245 $ 35,466
- --------------------------------------------------------------------------------
7. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill represents the excess of cost over net assets of businesses acquired
and is stated at cost less accumulated amortization. Goodwill which arose from
acquisitions prior to November 1970 is not being amortized for financial
statement purposes, since, in the opinion of Management, there has been no
decrease in the value of the acquired businesses. Goodwill arising from
acquisitions since November 1970 is being amortized from fifteen to forty years.
Other intangible assets include trademarks, customer contracts and
non-compete agreements and are being amortized from three to twenty years.
8. INCOME TAXES
A reconciliation between taxes computed at the statutory rate on the Income
(Loss) From Continuing Operations Before Income Taxes and the Provision
(Benefit) for Income Taxes is as follows:
(In thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Federal Income Taxes
at Statutory Rate $ 4,036 $ 1,595 $ (64,680)
State Income Taxes
(Net of Federal Benefit) 697 367 268
Other (351) (15) 191
----------------------------------------
$ 4,382 $ 1,947 $ (64,221)
- --------------------------------------------------------------------------------
The Provision (Benefit) for Income Taxes was based on a 38.0% estimated
effective income tax rate on Income (Loss) From Continuing Operations Before
Income Taxes for the years ended December 31, 1999, 1998 and 1997. The effective
income tax rate differs from the annual federal statutory tax rate primarily
because of state income taxes.
During 1999, the Company paid income taxes of $662,000, net of refunds
received. For 1998, the Company received a refund of income taxes of $2.4
million, net of payments. Income taxes remitted, related to both continuing and
discontinued operations, were $85.2 million for the year ended December 31,
1997.
Components of the net deferred income tax assets (liabilities) at December 31,
1999 and 1998 include:
(In thousands) 1999 1998
- --------------------------------------------------------------------------------
Termite Accrual $ 34,322 $ 40,125
Insurance Reserves 35,035 31,909
Safe Harbor Lease (9,847) (11,449)
Other 5,149 3,867
-------------------------------
$ 64,659 $ 64,452
- --------------------------------------------------------------------------------
9. COMMITMENTS AND CONTINGENCIES
The Company has capitalized lease obligations and several operating leases. The
minimum lease payments under the capital leases and non-cancelable operating
leases with terms in excess of one year, in effect at December 31, 1999, are
summarized as follows:
Capitalized Operating
(In thousands) Leases Leases
- --------------------------------------------------------------------------------
2000 $ 3,918 $ 22,618
2001 2,231 19,837
2002 307 14,239
2003 - 9,682
2004 - 6,751
Thereafter - 34,390
----------------------------
$ 6,456 $107,517
==========
Amount Representing Interest (368)
----------
Present Value of Obligations 6,088
Portion Due Within One Year (3,638)
----------
Long-Term Obligations $ 2,450
- --------------------------------------------------------------------------------
Total rental expense under operating leases charged to operations was $25.6
million, $25.4 million and $23.5 million for the years ended December 31, 1999,
1998 and 1997, respectively.
The Company is aggressively defending a lawsuit filed in Dothan, Alabama, in
which the plaintiffs seek compensatory damages for alleged breach of contract
arising out of alleged missed or inadequate reinspections. The attorneys for the
plaintiffs contend that the case is suitable for a class action and the court
has ruled that the plaintiffs would be permitted to pursue a class action
lawsuit against Orkin. The Company believes this
17
notes to consolidated financial statements (continued)
Years Ended December 31, 1999, 1998 and 1997 ROLLINS, INC. AND SUBSIDIARIES
case to be without merit and intends to defend itself vigorously at trial. At
this time, the final outcome of the litigation cannot be determined. However, it
is the opinion of Management that the ultimate resolution of this action will
not have a material adverse effect on the Company's financial position, results
of operations or liquidity.
The Company is involved in other litigation matters incidental to its
business. With respect to such other suits, Management does not believe the
litigation in which it is involved will have a material effect upon its results
of operations or financial condition.
10. EMPLOYEE BENEFIT PLANS
The Company maintains a noncontributory tax-qualified defined benefit retirement
plan (the Plan) covering all employees meeting certain age and service
requirements. The Plan provides 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 Plan with at least the minimum
amount required by ERISA.
The funded status of the Plan and the resulting accrued benefit liability are
summarized as follows at December 31:
(In thousands) 1999 1998
- --------------------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATION
Benefit Obligation at Beginning of Year $ 77,288 $ 66,908
Service Cost 4,379 3,611
Interest Cost 5,694 5,182
Actuarial (Gain) Loss (8,263) 4,258
Benefits Paid (3,672) (2,671)
-------------------------------
Benefit Obligation at End of Year 75,426 77,288
CHANGE IN PLAN ASSETS
Fair Value of Plan Assets at
Beginning of Year 63,258 59,741
Actual Return on Plan Assets 2,928 6,188
Employer Contribution 4,000 -
Benefits Paid (3,672) (2,671)
-------------------------------
Fair Value of Plan Assets at End of Year 66,514 63,258
-------------------------------
Funded Status (8,912) (14,030)
Unrecognized Net Actuarial Loss 2,546 8,621
Unrecognized Prior Service Cost (157) (226)
-------------------------------
Accrued Benefit Liability $ (6,523) $ (5,635)
- --------------------------------------------------------------------------------
Accrued benefit liabilities at December 31, 1999 and 1998 of $6.5 million and
$5.6 million, respectively, have been reflected in the Consolidated Statements
of Financial Position in the line item entitled Accrued Pension.
The weighted-average assumptions as of December 31 were as follows:
(In thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Discount Rate 8.0% 7.0% 7.5%
Expected Return on Plan Assets 9.5% 9.5% 9.5%
Rate of Compensation Increase 5.0% 4.0% 4.5%
- --------------------------------------------------------------------------------
The components of net periodic benefit cost for the past three years are
summarized as follows:
(In thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Service Cost $ 4,379 $ 3,611 $ 3,221
Interest Cost 5,694 5,182 4,437
Expected Return on
Plan Assets (5,751) (5,269) (5,007)
Net Amortizations:
Amortization of Net Asset - - (575)
Amortization of Net Loss 634 203 -
Amortization of Net
Prior Service Cost (69) (36) (31)
---------------------------------------
Net Periodic Benefit Cost $ 4,887 $ 3,691 $ 2,045
- --------------------------------------------------------------------------------
In 1998, the Company adopted SFAS 132, "Employers' Disclosures About Pensions
and Other Postretirement Benefits." The 1997 amounts shown in the tables above
have been restated in accordance with the disclosures required by SFAS 132.
At December 31, 1999, the Plan's assets were comprised of listed common
stocks and U.S. government and corporate securities. Included in the assets of
the Plan were shares of Rollins, Inc. Common Stock with a market value of $4.5
million.
The Company sponsors a deferred compensation 401(k) plan that is available to
substantially all employees with six months of service. The charges to expense
for the Company match were approximately $2.2 million in 1999, $1.5 million in
1998 and $1.7 million in 1997.
The Company has two Employee Incentive Stock Option Plans, the first adopted
in January 1994 (1994 Plan) and the second adopted in April 1998 (1998 Plan) as
a supplement to the 1994 Plan. An aggregate of 3.0 million shares of Common
Stock may be granted under various stock incentive programs sponsored by these
plans, at a price not less than the market value of the underlying stock on the
date of grant. Options may be issued under the 1994 Plan and the 1998 Plan
through January 2004 and April 2008, respectively, and expire ten years from the
date of grant, if not exercised.
18
notes to consolidated financial statements (continued)
Years Ended December 31, 1999, 1998 and 1997 ROLLINS, INC. AND SUBSIDIARIES
Options are also outstanding under a prior Employee Incentive Stock Option
Plan (1984 Plan). Under this plan, 1.2 million shares of Common Stock were
subject to options granted during the ten-year period ended October 1994. The
options were granted at the fair market value of the shares on the date of grant
and expire ten years from the date of grant, if not exercised. No additional
options will be granted under the 1984 Plan.
Option transactions during the last three years for the 1998, 1994 and 1984
Plans are summarized as follows:
(In thousands) 1999 1998 1997
- --------------------------------------------------------------------------------
Number of Shares Under
Stock Options:
Outstanding at
Beginning of Year 1,144,620 359,785 300,132
Granted 874,000 890,000 197,600
Exercised (246) (3,550) (7,657)
Cancelled (252,200) (101,615) (130,290)
----------------------------------------
Outstanding at End of Year 1,766,174 1,144,620 359,785
Exercisable at End of Year 263,834 106,960 80,405
Weighted-Average
Exercise Price:
Granted $ 16.31 $ 19.69 $ 19.25
Exercised 13.25 13.18 12.47
Cancelled 18.53 20.77 22.57
Outstanding at End of Year 18.66 20.42 22.29
Exercisable at End of Year 21.29 23.40 23.31
- --------------------------------------------------------------------------------
Information with respect to options outstanding and options exercisable at
December 31, 1999 is as follows:
Exercise Number Average Remaining Number
Price Outstanding Contractual Life Exercisable
$12.25 3,180 0.08 years 3,180
13.25 11,494 1.08 11,494
19.08 4,200 2.08 4,200
25.50 2,900 3.08 2,900
28.38 78,900 4.08 57,900
24.25 4,000 5.08 1,920
20.88 40,000 6.08 9,360
19.25 117,000 7.08 36,880
19.69 715,000 8.33 136,000
16.31 789,500 9.08 -
- --------------------------------------------------------------------------------
1,766,174 263,834
- --------------------------------------------------------------------------------
The Company applied Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees", in accounting for its stock options and,
accordingly, no compensation cost has been recognized for stock options in the
consolidated financial statements. Had the Company determined compensation cost
based on the fair value at the grant date of its stock options granted in 1999,
1998 and 1997 under SFAS 123 (See Note 1 to the consolidated financial
statements), the Company's net income, as disclosed on the Consolidated
Statements of Income, would have been reduced by approximately $1.2 million in
1999, $578,000 in 1998 and $103,000 in 1997. Earnings per share would have been
reduced by $.04 in 1999 and $.02 in 1998, with no earnings per share effect in
1997.
The per share weighted-average fair value of stock options granted during
1999, 1998 and 1997 was $4.30, $6.07 and $5.34, respectively, on the date of
grant, using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
1999 1998 1997
- --------------------------------------------------------------------------------
Risk-Free Interest Rate 5.12% 6.04% 5.69%
Expected Life, in Years 8 8 8
Expected Volatility 21.30% 23.22% 18.55%
Expected Dividend Yield 2.49% 2.37% 2.17%
- --------------------------------------------------------------------------------
19
REPORT OF MANAGEMENT
To the Stockholders of Rollins, Inc.:
We have prepared the accompanying financial statements and related information
included herein for the years ended December 31, 1999, 1998 and 1997. The
opinion of Arthur Andersen LLP, the Company's independent public accountants, on
those financial statements is included herein. The primary responsibility for
the integrity of the financial information included in this annual report rests
with management. Such information was prepared in accordance with generally
accepted accounting principles, appropriate in the circumstances, based on our
best estimates and judgments and giving due consideration to materiality.
Rollins, Inc. maintains internal accounting control systems which are adequate
to provide reasonable assurance that assets are safeguarded from loss or
unauthorized use and which produce records adequate for preparation of financial
information. The system and controls and compliance therewith are reviewed by an
extensive program of internal audits and by our independent public accountants.
There are limits inherent in all systems of internal accounting control based on
the recognition that the cost of such a system should not exceed the benefit to
be derived. We believe the Company's system provides this appropriate balance.
The Board of Directors pursues its review and oversight role for these financial
statements through an Audit Committee composed of three outside directors. The
Audit Committee's duties include recommending to the Board of Directors the
appointment of an independent accounting firm to audit the financial statements
of Rollins, Inc. The Audit Committee meets periodically with management and the
Board of Directors. It also meets with representatives of the internal auditors
and independent public accountants and reviews the work of each to insure that
their respective responsibilities are being carried out and to discuss related
matters. Both the internal auditors and independent public accountants have
direct access to the Audit Committee.
/s/ R. Randall Rollins /s/ Harry J. Cynkus
- ---------------------- -------------------
R. Randall Rollins Harry J. Cynkus
Chairman of the Board and Chief Financial Officer
Chief Executive Officer and Treasurer
Atlanta, Georgia
February 16, 2000
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Directors and Stockholders of Rollins, Inc.:
We have audited the accompanying statements of financial position of Rollins,
Inc. (a Delaware Corporation) and subsidiaries as of December 31, 1999 and 1998
and the related statements of income, earnings retained and cash flows for each
of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Rollins, Inc. and subsidiaries
as of December 31, 1999 and 1998 and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States.
/s/ Arthur Andersen LLP
- -----------------------
Arthur Andersen LLP
Atlanta, Georgia
February 16, 2000
20
directors, officers and stockholders' information
DIRECTORS
John W. Rollins
Chairman of the Board and Chief Executive Officer of
Rollins Truck Leasing Corp. (vehicle leasing and trans-
portation), Chairman of the Board of Dover Downs
Entertainment, Inc. (entertainment complex)
Henry B. Tippie +
Chairman of the Board and Chief Executive Officer of
Tippie Services, Inc. (management services)
R. Randall Rollins *
Chairman of the Board and Chief Executive Officer of
Rollins, Inc., Chairman of the Board and Chief Executive
Officer of RPC, Inc. (oil and gas field services, and boat
manufacturing)
Wilton Looney +
Honorary Chairman of the Board of Genuine Parts Company
(automotive parts distributor)
James B. Williams +
Chairman of the Executive Committee of SunTrust Banks,
Inc. (bank holding company)
Gary W. Rollins *
President and Chief Operating Officer of Rollins, Inc.
Bill J. Dismuke
Retired President of Edwards Baking Company
* Member of the Executive Committee
+ Member of the Audit and Compensation Committees
OFFICERS
R. Randall Rollins
Chairman of the Board and Chief Executive Officer
Gary W. Rollins
President and Chief Operating Officer
Harry J. Cynkus
Chief Financial Officer and Treasurer
Michael W. Knottek
Vice President and Secretary
STOCKHOLDERS' INFORMATION
Annual Meeting
The Annual Meeting of the Stockhoolders will be held
at 9:30 a.m. Tuesday, April 25, 2000, at the Company's
corporate offices in Atlanta, Georgia.
Transfer Agent and Registar
For inquiries related to stock certificates, including
changes in address, lost certificates, dividends and tax
forms, please contact:
SunTrust Bank
Stock Transfer Department
P.O. Box 4625
Atlanta, GA 30302
Telephone:1-800-568-3476
Stock Exchange Information
The Common Stock of the Company is listed on the
New York and Pacific Stock Exchanges and traded on
the Philadelphia, Chicago and Boston Exchanges under
the symbol ROL.
Dividend Reinvestment Plan
This Plan provides a simple, convenient and inexpensive
way for stockholders to invest cash dividends in additional
Rollins, Inc. shares. For further information, contact
SunTrust Bank, at the above address.
Form 10-K
The Company's annual report on form 10-K to the
Securities and Exchange Commission provides certain
additional information. Stockholders may obtain a copy by
contacting the Chief Financial Officer at the Company's
mailing address.
Corporate Offices
Rollins, Inc.
2170 Piedmont Road, N.E.
Atlanta, Georgia 30324
Mailing Address
Rollins, Inc.
P.O. Box 647
Atlanta, Georgia 30301
Telephone
(404) 888-2000
Design: Critt Graham + Associates, Atlanta/Boston
Printing: Corporate Printers, Cumming, GA