Exhibit 99.1
For Further Information Contact
Harry J. Cynkus
(404) 888-2922
FOR IMMEDIATE RELEASE
ROLLINS, INC. REPORTS CONTINUED IMPROVEMENT IN QUARTERLY EARNINGS
o Net Income for the quarter was $18.7 million compared to $20.9 million
for the same period in 2004, a 10.6% decrease
o After adjustment for gains on sales of assets and pension plan
curtailment, adjusted income for the quarter increased 24.2% from
$12.8 to $15.9 million, representing the 22nd consecutive quarter of
earnings improvement
o Earnings Per Share was $0.27 for 2005 compared to $.30 in 2004. After
the adjustment, EPS rose 21.1% to $0.23 from $0.19 in 2004
o Revenue rose 5.7%; excluding Western, revenues rose by 2.5%
o Balance Sheet remains strong; cash builds to $65.8 million
ATLANTA, GEORGIA, July 27, 2005: Rollins, Inc. (NYSE:ROL), a premier North
American consumer and commercial services company, today reported that revenue
for the second quarter grew 5.7% to $214.3 million compared to $202.7 million
for the second quarter ended June 30, 2004. Western Pest Services, acquired
April 30, 2004, had second quarter 2005 revenues of $21.2 million versus $14.3
million in 2004. Excluding Western Pest Services, revenues increased by 2.5%.
The Company recorded net income of $18.7 million or $0.27 per diluted share for
the second quarter ended June 30, 2005, compared to $20.9 million or $0.30 per
diluted share for the same period in 2004. In the second quarter of 2005, the
Company curtailed Rollins, Inc.'s pension plan effective June 30, 2005 and
recognized an additional $2.5 million, net of taxes, or $0.04 per diluted share
in the quarter. In second quarter 2004, the Company recorded gains from sale of
assets, net of taxes, of $8.1 million or $0.11 per diluted share. Excluding the
impacts of the pension curtailment in 2005 and the gains on sale of assets, the
Company's adjusted income for second quarter 2005 was $15.9 million, or $0.23
per diluted share, an increase of 21.1%, compared to adjusted income of $12.8
million, or $0.19 per diluted share for the same period last year. See attached
detailed reconciliation.
Rollins' balance sheet remains strong with total assets increasing to $444.2
million and stockholders' equity increasing to $175.2 million. Total cash and
cash equivalents rose to $65.8 million.
Commenting on the Company's results, Gary W. Rollins, President and Chief
Executive Officer of Rollins, Inc. said, "We've continued to make headway this
year in growing our revenues and increasing our profitability. The strength of
the Orkin brand nationwide, the breadth of our service initiatives, and our
dedication to providing extraordinary customer service are contributing to our
success."
"We are also proud of the progress of our relationship with the Centers for
Disease Control and Prevention (CDC). Approximately one year ago, we began this
initiative with the CDC on several public education programs involving health
risks associated with household pests. This collaboration has gone extremely
well, and our most recent activity involved assisting an Arizona community that
was experiencing an outbreak of tick-transmitted Rocky Mountain Spotted-Fever.
Together with the CDC and other volunteer organizations, we spent three and a
half days providing the services needed to control the ticks in the area. We are
extremely pleased to have been part of this effort to protect human lives from
this dangerous disease and look forward to our ongoing work with the CDC."
"We are positive about our progress and we expect 2005 to be another successful
year for the Company and our shareholders."
Rollins, Inc. is a premier North American consumer and commercial services
company. Through its wholly owned subsidiaries, Orkin, Inc. and Western Pest
Services, the Company provides essential pest control services and protection
against termite damage, rodents and insects to approximately 1.7 million
customers in the United States, Canada and Mexico from over 400 locations. You
can learn more about Orkin by visiting our Web sites at www.orkin.com,
www.westernpest.com and www.rollins.com. You can also find this and other news
releases at www.rollins.com by accessing the news releases button.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
The above release contains statements that constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995.These include statements regarding the success of 2005 for the Company
and its shareholders, and the ongoing work with the CDC. 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, general economic conditions; market risk; changes in industry
practices or technologies; the degree of success of the Company's pest and
termite process reforms and pest control selling and treatment methods; the
Company's ability to identify and integrate potential acquisitions; climate and
weather trends; competitive factors and pricing practices; expected benefits of
the commercial re-engineering project may not be realized, potential increases
in labor costs; uncertainties of litigation; 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. A more detailed discussion of potential risks facing
the Company can be found in the Company's Report on Form 10-K filed with the
Securities and Exchange Commission for the year ended December 31, 2004.
ROLLINS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)
2005 2004
At June 30 (Unaudited) (Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Cash and Cash Equivalents $ 65,179 $ 21,865
Marketable Securities 629 0
----------------- ---------------
Total Cash and Marketable Securities 65,808 21,865
Trade Receivables Short-Term, Net 48,556 51,941
Materials and Supplies 8,120 12,157
Deferred Income Taxes 29,496 30,123
Other Current Assets 10,979 10,441
----------------- ---------------
Current Assets 162,959 126,527
Equipment and Property, Net 57,873 45,313
Goodwill and Other Intangible Assets 190,085 196,019
Trade Receivables Long-Term, Net 10,604 10,824
Deferred Income Taxes 18,544 5,617
Prepaid Pension 0 24,964
Other Assets 4,142 5,944
----------------- ---------------
Total Assets $ 444,207 $ 415,208
================= ===============
- --------------------------------------------------------------------------------
LIABILITIES
Accounts Payable $ 12,405 $ 14,698
Accrued Insurance 16,437 13,050
Accrued Payroll 36,618 33,370
Unearned Revenue 84,448 84,936
Other Current Liabilities 41,939 44,944
----------------- ---------------
Current Liabilities 191,847 190,998
Accrued Pension 27,291 0
Long-Term Accrued Liabilities 49,867 62,608
----------------- ---------------
Total Liabilities 269,005 253,606
----------------- ---------------
- --------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Common Stock 68,603 68,457
Retained Earnings and Other Equity 106,599 93,145
----------------- ---------------
Total Stockholders' Equity 175,202 161,602
----------------- ---------------
Total Liabilities and
Stockholders' Equity $ 444,207 $ 415,208
================= ===============
ROLLINS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30
(In thousands except per share data)
Second Quarter Six Months
--------------------------- ---------------------------
2005 2004 2005 2004
(Unaudited) (Unaudited) (Unaudited) (Audited)
------------ ------------- ------------ -------------
REVENUES $ 214,326 $ 202,725 $ 398,241 $ 363,141
------------ ------------- ------------ -------------
COSTS AND EXPENSES
Cost of Services Provided 110,594 105,422 209,232 191,964
Depreciation and Amortization 6,045 5,764 12,008 10,421
Sales, General and Administrative 71,294 69,150 131,577 121,918
(Gain)/Loss on Sales of Assets (546) (14,143) (544) (14,142)
Pension Curtailment (4,176) - (4,176) -
Interest Income (354) (48) (816) (198)
------------ ------------- ------------ -------------
TOTAL COSTS AND EXPENSES 182,857 166,145 347,281 309,963
------------ ------------- ------------ -------------
INCOME BEFORE INCOME TAXES 31,469 36,580 50,960 53,178
PROVISION FOR INCOME TAXES 12,745 15,689 20,639 22,421
------------ ------------- ------------ -------------
INCOME BEFORE CUMULATIVE EFFECT CHANGE IN
ACCOUNTING PRINCIPLE 18,724 20,891 30,321 30,757
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET - - - (6,204)
------------ ------------- ------------ -------------
NET INCOME $ 18,724 $ 20,891 $ 30,321 $ 24,553
============ ============= ============ =============
NET INCOME PER COMMON SHARE-BASIC:
INCOME BEFORE CUMULATIVE EFFECT CHANGE
IN ACCOUNTING PRINCIPLE $ 0.28 $ 0.31 $ 0.45 $ 0.45
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET - - - (0.09)
------------ ------------- ------------ -------------
NET INCOME PER COMMON SHARE-BASIC $ 0.28 $ 0.31 $ 0.45 $ 0.36
============ ============= ============ =============
NET INCOME PER COMMON SHARE-DILUTED:
INCOME BEFORE CUMULATIVE EFFECT CHANGE
IN ACCOUNTING PRINCIPLE $ 0.27 $ 0.30 $ 0.43 $ 0.44
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET - - - (0.09)
------------ ------------- ------------ -------------
NET INCOME PER COMMON SHARE-DILUTED $ 0.27 $ 0.30 $ 0.43 $ 0.35
============ ============= ============ =============
AVERAGE SHARES OUTSTANDING - BASIC 67,937 68,133 67,940 68,040
AVERAGE SHARES OUTSTANDING - DILUTED 70,029 70,180 70,046 70,072
ROLLINS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30
(In thousands)
2005 2004
Unaudited Unaudited
--------------- --------------
Operating Activities
Net Income $ 30,321 $ 24,553
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Change in Accounting Priciple, Net - 6,204
Depreciation and Amortization 12,008 10,421
Pension Curtailment (4,176) -
Provision for Deferred Income Taxes 914 7,510
Other, Net 205 202
Gain on Sale of Assets (544) (14,142)
(Increase) Decrease in Assets:
Trade Receivables (3,826) (7,390)
Materials and Supplies 761 (655)
Other Current Assets (3,594) (2,666)
Other Non-Current Assets 297 (2,235)
Increase (Decrease) in Liabilities:
Accounts Payable and Accrued Expenses 4,555 10,172
Unearned Revenue 3,254 7,655
Accrued Insurance (1,967) (1,642)
Accrual for Termite Contracts 599 828
Long-Term Accrued Liabilities (315) (3,043)
--------------- --------------
Net Cash Provided by Operating Activities 38,492 35,772
--------------- --------------
Investing Activities
Purchases of Equipment and Property (14,203) (3,751)
Net Cash Used for Acquisition of Companies (1,606) (103,155)
Sales/(Purchases) of Marketable Securities, Net (629) 21,866
Proceeds From Sale of Assets 749 15,468
--------------- --------------
Net Cash Provided by (Used In) Investing Activities (15,689) (69,572)
--------------- --------------
Financing Activities
Dividends Paid (6,858) (5,451)
Common Stock Purchased (11,105) -
Other 4,446 1,563
--------------- --------------
Net Cash Used in Financing Activities (13,517) (3,888)
--------------- --------------
Effect of Exchange Rate Changes on Cash (844) 13
--------------- --------------
Net Increase/(Decrease) in Cash and Cash Equivalents 8,442 (37,675)
Cash and Cash Equivalents at Beginning of Year 56,737 59,540
--------------- --------------
Cash and Cash Equivalents at End of Period $ 65,179 $ 21,865
=============== ==============
Net Increase/(Decrease) in Cash and Marketable Securities 9,071 (59,541)
Cash and Marketable Securities at Beginning of Year 56,737 81,406
--------------- --------------
Cash and Marketable Securities at End of Period $ 65,808 $ 21,865
=============== ==============
FRB WEBER SHANDWICK
FINANCIAL COMMUNICATIONS
CONFERENCE CALL
Rollins, Inc.
(NYSE: ROL)
Management will hold a conference call to discuss
second quarter results on:
- --------------------------------------------------------------------------------
Wednesday, July 27, 2005 at:
- --------------------------------------------------------------------------------
11:00 a.m. Eastern
10:00 a.m. Central
9:00 a.m. Mountain
8:00 a.m. Pacific
TO PARTICIPATE:
Please dial 800-218-0204 domestic;
303-262-2130 international
at least 5 minutes before start time.
REPLAY: through August 3, 2005 at 11:00 p.m.
Please dial 800-405-2236/303-590-3000, Passcode: 11033883
THIS CALL CAN ALSO BE ACCESSED THROUGH THE INTERNET AT
www.viavid.net
Questions?:
Janet Jazmin at FRB/Weber Shandwick at 212-827-3777 or
email to jjazmin@financialrelationsboard.com
640 Fifth Avenue T 212 445 8000
New York, NY 10019 F 212 445 8001
www.webershandwick.com
Reconciliation
Income Before Income Taxes, Adjusted Income and Earnings Per Share,
Excluding One-Time Gain on Sale of Assets and Pension Plan Curtailment
Second Quarter
---------------------------
2005 2004 $B/(W) %B/(W)
----------------------------------------------------------
Income Before Income Taxes $ 31,469 $ 36,580 $ (5,111) (14.0)%
Less:
Pension Curtailment 4,176 0 4,176
Gain on Sale of Assets 546 14,144 (13,598)
----------------------------------------------------------
Income Before Income Taxes, Excluding Gain on Sale of
Assets amd Pension Plan Curtailment $ 26,747 $ 22,436 $ 4,311 19.2 %
==========================================================
Net Income $ 18,724 $ 20,891 $ (2,167) (10.4)%
Less:
Gain on Sale of Assets 546 14,144 (13,598)
Pension Curtailment 4,176 0 4,176
Provision for Income Taxes on Gains (1,912) (6,063) 4,151
----------------------------------------------------------
Adjusted Income, Excluding Gain on Sale of Assets
and Pension Plan Curtailment $ 15,914 $ 12,810 $ 3,104 24.2 %
==========================================================
Earnings Per Share - Diluted $ 0.27 $ 0.30 $ (0.03) (10.0)%
Less:
Gain on Sale of Assets 0.00 0.20 (0.20)
Pension Curtailment 0.06 0.00 0.06
Provision for Income Taxes on Gains (0.02) (0.09) 0.07
----------------------------------------------------------
Earnings Per Share - Diluted, Excluding Gain on Sale of
Assets and Pension Plan Curtailment $ 0.23 $ 0.19 $ 0.04 21.1
==========================================================
Average Shares Outstanding - Diluted 70,029 70,180 (151)
Reconciliation
Revenue Excluding Western Pest Services and Rollins Supply and Dettelbach
Second Quarter
-----------------------------------
2005 2004 $B/(W) %B/(W)
---- ---- ------ ------
Total Net Revenues $ 214,326 $ 202,725 $ 11,601 5.7 %
Less:
Western Acquisition 21,170 14,286 6,884
------------------------------------------------------------------
Revenue Excluding Western Pest Services $ 193,156 $ 188,439 $ 4,717 2.5 %
Less:
Rollins Supply and Dettelbach 32 840 (808)
------------------------------------------------------------------
Revenue Excluding Western Pest Services
and Rollins Supply and Dettelbach $ 193,124 $ 187,599 $ 5,525 2.9 %
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