___________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________________________
FORM 10-K
(Mark One)
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to _______________
Commission file number 1-5728
ROLLINS TRUCK LEASING CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0074022
(State of Incorporation) (I.R.S. Employer Identification Number)
ONE ROLLINS PLAZA, WILMINGTON, DELAWARE 19803
(Address of principal executive offices)
Registrant's telephone number including area code (302) 426-2700
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of each exchange on
which registered
Common Stock, $1 Par Value NEW YORK STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of
the registrant was $445,295,000 as of October 31, 1994.
The number of shares of registrant's common stock outstanding as of
October 31, 1994 was 45,776,154.
The following documents are incorporated by reference:
Part of this form into which
Document incorporated
Proxy Statement in connection with
Annual Meeting of Shareholders to be
held January 26, 1995 III
PART I
ITEM I. BUSINESS.
The Registrant, Rollins Truck Leasing Corp., together with its
subsidiaries, is referred to as the "Company" unless the context clearly
indicates otherwise.
(a) General Development of Business
There have been no significant changes in the business of the Company
since September 30, 1993.
(b) Financial Information about Industry Segments
The Company, through its principal subsidiary, Rollins Leasing Corp.
("Rollins") is engaged primarily in full-service leasing and short-term
rental of tractors, trailers and trucks and related services. The financial
information concerning this business is included on pages 2 to 6 and 14
through 26 of this 1994 Annual Report on Form 10-K.
(c) Narrative Description of Business
Full-service leasing accounts for the major portion of Rollins'
revenues. Under these leases, Rollins purchases vehicles and components
which are custom-engineered to the customer's requirements. This equipment
is then leased to the customer for periods usually ranging from three to
eight years. Rollins provides fuel, oil, tires, washing and regularly
scheduled maintenance and repairs at its facilities. In addition, it
arranges for licenses and insurance, pays highway and use taxes and supplies
a 24-hour-a-day emergency road service to its customers.
Rollins' commercial rental operations offer tractors, trailers and
trucks to customers for short periods of time ranging from one day to several
months. The Company's commercial rental fleet also provides additional
vehicles to full service lease customers to handle their peak or seasonal
business needs. Rollins does not offer services in the consumer one-way
truck rental market.
Rollins also furnishes a guaranteed maintenance service to private
fleet customers who choose to own their vehicles. This service includes
preventive maintenance, fuel procurement, tax reporting, permitting,
<PAGE>
licensing and access to the Rollins 24-hour-a-day emergency road service.
Another service that the Company provides its customers is Dedicated
Carriage Services ("DCS"). DCS analyzes the customer's specific distribution
needs and then designs and operates a customized transportation service,
which can include any of the services mentioned previously plus management,
drivers and other operating personnel.
There are many companies engaged in all aspects of vehicle rental and
leasing, some of which also operate on a nationwide basis and are larger than
the Company's business. Ryder System, Inc. and Penske Truck Leasing Co.,
L.P., Inc. are respectively the largest and second largest competitors in the
truck leasing industry. The Company believes Rollins is the third largest
competitor in the field of full-service leasing, long-term leasing and short-
term rental of heavy duty trucks in the United States. Since the unit cost
of vehicles and the cost of the borrowed funds used to purchase such vehicles
are believed to be similar for most vehicle leasing companies, successful
competition is based in part on service.
At September 30, 1994, a total of 2,924 persons were employed by the
Company.
ITEM 2. PROPERTIES.
The Company's headquarters is located in a building owned by the
Company at One Rollins Plaza, Wilmington, DE 19803.
The Company's principal operating properties consist of land and
buildings used in its truck leasing and rental business. Rollins owns or
leases 198 facilities in 41 states.
ITEM 3. LEGAL PROCEEDINGS.
Neither the Company nor any of its subsidiaries is a party to any
material legal proceedings. The Company and its subsidiaries are engaged in
ordinary routine litigation incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NONE.
<PAGE> PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER
MATTERS.
STOCK PRICES AND DIVIDENDS
The range of share prices for the Common Stock on the New York and
Pacific Stock Exchanges and per share dividends paid on Common Stock for the
fiscal years ended September 30, 1994 and 1993 are as follows:
Prices Dividends
1994 1993 1994 1993
High Low High Low
Fiscal Quarter
First ........... $14 $11 1/4 $10 5/8 $ 7 7/8 $.033 $.03
Second .......... 14 3/8 11 1/2 12 9 1/2 .033 .03
Third ........... 12 3/8 11 1/8 11 3/4 9 3/8 .033 .03
Fourth .......... 12 1/2 10 7/8 13 7/8 10 1/2 .033 .03
All stock prices and dividend amounts have been adjusted for the three-for-
two common stock split distributed on September 15, 1994.
At September 30, 1994, there were 2,580 holders of record of the Common
Stock.
ITEM 6. SELECTED FINANCIAL DATA.
FIVE YEAR SELECTED FINANCIAL DATA
(Dollars in Millions, Except Per Share Amounts)
Fiscal Year Ended September 30,
1994 1993 1992 1991 1990
Revenues 450.9 408.8 380.4 341.9 331.2
Earnings before income taxes 66.4 54.7 40.7 31.5 29.6
Earnings 39.8 30.4 24.6 19.0 18.0
Earnings per share (1) .86 .66 .53 .45 .43
Dividends per common share (1) .13 .12 .11 .09 .09
Total assets 909.7 781.2 708.5 656.4 658.5
Equipment on operating leases, net 637.8 543.4 468.3 441.1 453.8
Equipment financing obligations 498.4 427.3 390.3 378.9 407.2
Long-term debt .8 .9 6.8 9.1 22.6
Shareholders' equity 251.2 216.8 191.0 169.4 133.9
(1) Adjusted for the three-for-two common stock split distributed on
September 15, 1994.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
Fiscal Year 1994 vs. 1993
Revenues increased by $42.1 million (10.3%) as full-service lease,
commercial rental and dedicated contract carriage revenues all improved over
the prior year.
Operating expenses increased by $16.0 million (9.6%) reflecting the
higher revenues. Operating expenses as a percentage of revenues decreased to
40.6% in 1994 from 40.9% in 1993. This improved operating cost ratio
resulted from lower maintenance costs on new equipment and continued expense
control efforts.
Net depreciation expense increased by $10.0 million (8.9%) due to the
increased gross investment in equipment on operating leases and
transportation service facilities offset in part by increased gains on the
sale of equipment, which are shown as a reduction of depreciation expense.
Equipment sale gains increased to $8.5 million from $6.1 million in 1993 as
the used equipment market remained strong during 1994.
Selling and administrative expenses increased by $2.0 million (5.0%)
mainly due to higher payroll costs in the sales area and to continued
emphasis on sales and marketing programs. Selling and administrative
expenses decreased to 9.4% of revenues in 1994 from 9.9% of revenues in 1993.
Interest expense increased by $2.4 million (7.0%) due to the increase in
average borrowings and higher short-term interest rates offset in part by the
refinancing of certain higher interest rate debt.
The effective income tax rates for 1994 and 1993 were 40.0% and 44.4%,
respectively.
Net earnings increased by $9.4 million (30.9%) to $39.8 million or $.86
per share from $30.4 million or $.66 per share in 1993. The improvement in
net earnings was due mainly to increased revenues and the lower operating
cost ratio offset in part by higher depreciation, selling and administrative
and interest expenses.
Fiscal Year 1993 vs. 1992
Revenues increased by $28.4 million (7.5%) as full-service lease,
commercial rental, guaranteed maintenance and dedicated contract carriage
revenues all improved over the prior year. Part of the revenue improvement
resulted from the inclusion for a full year of the operations of several
small acquisitions made at various dates in fiscal 1992.
Operating expenses increased by $7.2 million (4.5%) reflecting the
higher revenues. Operating expenses as a percentage of revenues decreased to
40.9% in 1993 from 42.1% in 1992. Depreciation expense increased by $5.5
million (5.2%) due to the increased investment in equipment on operating
leases and transportation service facilities, offset in part by increased
gains on the sale of equipment. Gains on the sale of equipment, which are
shown as a reduction of depreciation expense, increased to $6.1 million from
$3.1 million in 1992 as the market for used equipment improved in 1993.
<PAGE>
Selling and administrative expenses increased by $2.6 million (6.8%) due
in part to higher payroll costs resulting from personnel additions and
increases in other compensation. In addition, data processing, bad debts and
office expenses were also higher in 1993. Selling and administrative
expenses were 9.9% of revenues in 1993 compared with 10.0% of revenues in
1992.
Interest expense decreased by $.9 million (2.6%) due mainly to the lower
interest rates on short-term bank borrowings and to the refinancing of
certain higher interest rate debt.
The effective income tax rates for 1993 and 1992 were 44.4% and 39.4%,
respectively. The 1993 tax rate includes the deferred tax adjustment of $2.3
million resulting from the increase in the federal income tax rate from 34%
to 35%. Excluding the deferred income tax adjustment, the effective income
tax rate for 1993 was 40.2%.
Net earnings increased by $5.8 million (23.4%) to $30.4 million or $.66
per share from $24.6 million or $.53 per share in 1992. The increase in
earnings was due mainly to the higher revenues and to the reduction in
interest expense, offset in part by the $2.3 million deferred income tax
adjustment.
Liquidity and Capital Resources
The Company's primary operation is the full-service leasing and rental
of tractors, trucks and trailers which requires substantial amounts of
capital and constant access to financing sources. At September 30, 1994,
equipment on operating leases of $637.8 million represented 70.1% of the
Company's assets. Funds for the acquisition of these assets are provided
principally by the cash flows from operations, the proceeds from the sale of
used equipment and borrowings under the Company's revolving credit facility.
Cash flows from operations arising from net earnings, depreciation and
changes in deferred income taxes and working capital were $173.7 million in
1994, a 4.3% increase from $166.5 million in 1993. Because the primary
source of funds from operations is from existing leases already under
contract, the Company expects to continue to generate a substantial amount of
funds from operations in 1995.
Equipment financing obligations and long-term debt increased to $499.3
million at September 30, 1994 from $428.4 million a year earlier. Borrowings
from external sources include equipment term loans furnished by
commercial banks and the issuance of Collateral Trust Debentures.
The Company's principal subsidiary, Rollins Leasing Corp., has a $100.0
million revolving credit facility of which $66.5 million was available at
September 30, 1994. This facility is used primarily to finance vehicle
purchases on an interim basis pending placement of long-term financing. On
March 21, 1994, the Company sold $60.0 million of 7% Series M Collateral
Trust Debentures due March 15, 2001. Additionally, on September 21, 1994,
the Company arranged for the private placement of $100.0 million of 8.27%
Series N Collateral Trust Debentures due March 15, 2002. Closing will occur
on March 15, 1995 with the proceeds used to refinance certain existing
indebtedness and for new equipment purchases committed for in the Spring of
1995.
<PAGE>
At September 30, 1994, the Company could sell an additional $140.0
million of Collateral Trust Debentures under its current shelf registration
statement. Based on its access to the debt markets and the relationships
with current lending institutions and others who have expressed an interest
in providing financing, the Company expects to continue to be able to obtain
financing for its equipment and facility purchases at market rates and under
satisfactory terms and conditions.
At September 30, 1994 and 1993, the debt to equity ratio of the Company
was 2.0 to 1.
Capital expenditures were $297.5 million in 1994 compared with $242.9
million in 1993. The level of economic activity, which in part dictates
demand for the Company's services, remained strong in 1994. At September 30,
1994, the Company's commitment for the purchase of revenue equipment was
$169.0 million. Based on the current level of business and including
commitments already made at September 30, 1994, the Company anticipates
spending approximately $300.0 million for equipment and facilities in 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company, the Independent
Auditors' Report and the financial statement schedules included in this
report are shown on the Index to the Consolidated Financial Statements and
Schedules on page 9.
ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL
DISCLOSURE.
NONE.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Except as presented below, the information called for by this Item 10
is incorporated by reference from the Company's Proxy Statement to be filed
pursuant to Regulation 14A for the Annual Meeting of Shareholders to be held
on January 26, 1995.
Executive Officers of the Registrant. As of October 31, 1994, the
Executive Officers of the registrant were:
Name Position Age Term of Office
Patrick J. Bagley Vice President-Finance and 47 7/87 to date
Treasurer 1/87 to date
David F. Burr Chairman and Chief Executive 56 10/92 to date
Officer, Rollins Leasing Corp.
Michael B. Kinnard Vice President-General Counsel 37 10/94 to date
and Secretary 10/94 to date
John W. Rollins Chairman of the Board and 78 1954 to date
Chief Executive Officer 10/74 to date
John W. Rollins, Jr. President and Chief Operating 52 9/75 to date
Officer and Director
Henry B. Tippie Chairman of the Executive 67 3/74 to date
Committee and Vice Chairman
of the Board
The Company's Executive Officers are elected for the ensuing year and
until their successors are elected.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by this Item 11 is incorporated by reference
from the Company's Proxy Statement to be filed pursuant to Regulation 14A for
the Annual Meeting of Shareholders to be held on January 26, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information called for by this Item 12 is incorporated by reference
from the Company's Proxy Statement to be filed pursuant to Regulation 14A for
the Annual Meeting of Shareholders to be held on January 26, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the year ended September 30, 1994, the following officers and/or
directors of the Company were also officers and/or directors of Rollins
Environmental Services, Inc.; Patrick J. Bagley, William B. Philipbar, Jr.,
John C. Peet, Jr. (retired effective September 30, 1994), John W. Rollins,
John W. Rollins, Jr. and Henry B. Tippie. The following officers and/or
directors of the Company were also officers and/or directors of Matlack
Systems, Inc.; Patrick J. Bagley, William B. Philipbar, Jr., John W. Rollins,
John W. Rollins, Jr. and Henry B. Tippie. John W. Rollins owns directly and
of record 6.2% and 12.0% of the outstanding shares of Common Stock of Rollins
<PAGE>
Environmental Services, Inc. and Matlack Systems, Inc.
October 31, 1994. The description of transactions between the Company and
Rollins Environmental Services, Inc. and between the Company and Matlack
Systems, Inc. appears under the caption "Transactions with Related Parties"
on page 21 of this 1994 Annual Report on Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) Financial Statements, Financial Statement Schedules and Exhibits.
(1) Financial Statements - See accompanying Index to Consolidated
Financial Statements and Schedules on page 12.
(2) Financial Statements Schedules - See accompanying Index to
Consolidated Financial Statements and Schedules on page 12.
(3)Exhibits:
(3) (a) Restated Certificate of Incorporation of Rollins Truck
Leasing Corp. as last amended on January 25, 1990 as filed
with the Company's annual report on Form 10-K for the fiscal
year ended September 30, 1992 is incorporated herein by
reference.
(3) (b) By-Laws of Rollins Truck Leasing Corp. as last amended on
November 25, 1987 as filed with the Company's annual report
on Form 10-K for the fiscal year ended September 30, 1992 is
incorporated herein by reference.
(4) (a) Collateral Trust Indenture dated as of March 21, 1983,
between RLC CORP. (now known as Rollins Truck Leasing Corp.)
and Bank of America Illinois (formerly Continental Illinois
National Bank and Trust Company of Chicago), as Trustee, as
filed with the Company's Registration Statement No. 33-40476
on Form S-3 dated May 10, 1991, is incorporated herein by
reference.
(4) (b) Third Supplemental Collateral Trust Indenture dated February
20, 1986 to the Collateral Trust Indenture dated March 21,
1983 between RLC CORP. (now known as Rollins Truck Leasing
Corp.) and Bank of America Illinois (formerly Continental
Illinois National Bank and Trust Company of Chicago), as
Trustee, as filed with the Company's Registration Statement
No. 33-40476 on Form S-3 dated May 10, 1991, is incorporated
herein by reference.
(4) (c) Sixth Supplemental Collateral Trust Indenture dated March 15,
1988 to the Collateral Trust Indenture dated March 21, 1983
as supplemented and amended by a Third Supplemental Indenture
thereto dated as of February 20, 1986, between RLC CORP. (now
known as Rollins Truck Leasing Corp.) and Bank of America
Illinois (formerly Continental Illinois National Bank and
Trust Company of Chicago), as Trustee.
<PAGE>
(4) (d) Seventh Supplemental Collateral Trust Indenture dated March
15, 1989 to the Collateral Trust Indenture dated March 21,
1983 as supplemented and amended by a Third Supplemental
Indenture thereto dated as of February 20, 1986, between RLC
CORP. (now known as Rollins Truck Leasing Corp.) and Bank of
America Illinois (formerly Continental Bank N.A.), as
Trustee.
(4) (e) Eighth Supplemental Collateral Trust Indenture dated May 15,
1990 to the Collateral Trust Indenture dated March 21, 1983
as supplemented and amended by a Third Supplemental Indenture
thereto dated as of February 20, 1986, between Rollins Truck
Leasing Corp. and Bank of America Illinois (formerly
Continental Bank, N.A.), as Trustee, as filed with the
Company's Registration Statement No. 33-67682 on Form S-3
dated August 20, 1993 is incorporated herein by reference.
(4) (f) Ninth Supplemental Collateral Trust Indenture dated December
1, 1991 to the Collateral Trust Indenture dated March 21,
1983 as supplemented and amended by a Third Supplemental
Indenture thereto dated as of February 20, 1986 and by an
Eighth Supplemental Indenture dated May 15, 1990, between
Rollins Truck Leasing Corp. and Bank of America Illinois
(formerly Continental Bank, N.A.), as Trustee, as filed with
the Company's report on Form 8-K dated December 12, 1991, is
incorporated herein by reference.
(4) (g) Tenth Supplemental Collateral Trust Indenture dated April 28,
1992 to the Collateral Trust Indenture dated March 21, 1983
as supplemented and amended by a Third Supplemental Indenture
thereto dated as of February 20, 1986 and by an Eighth
Supplemental Indenture dated May 15, 1990, between Rollins
Truck Leasing Corp. and Bank of America Illinois (formerly
Continental Bank, N.A.), as Trustee, as filed with the
Company's report on Form 8-K dated April 28, 1992, is
incorporated herein by reference.
(4) (h) Eleventh Supplemental Collateral Trust Indenture dated March
15, 1993 to the Collateral Trust Indenture dated March 21,
1983 as supplemented and amended by a Third Supplemental
Indenture thereto dated as of February 20, 1986 and by an
Eighth Supplemental Indenture dated May 15, 1990, between
Rollins Truck Leasing Corp. and Bank of America Illinois
(formerly Continental Bank, N.A.), as Trustee, as filed with
the Company's report on Form 8-K dated March 30, 1993, is
incorporated herein by reference.
(4) (i) Twelfth Supplemental Collateral Trust Indenture dated March
15, 1994 to the Colalteral Trust Indenture dated March 21,
1983 as supplemented and amended by a Third Supplemental
Indenture thereto dated as of February 20, 1986 and by an
Eighth Supplemental Indenture dated May 15, 1990, between
Rollins Truck Leasing Corp. and Bank of America Illinois
(formerly Continental Bank, N.A.), as Trustee, as filed with
the Company's report on Form 8-K dated March 21, 1994, is
incorporated herein by reference.
<PAGE>
(4) (j) RLC CORP. (now known as Rollins Truck Leasing Corp.) Rights
Agreement dated as of June 14, 1989 as filed as an Exhibit to
Form 8-A filed by Registrant on June 15, 1989 is incorporated
herein by reference.
(10) (a) RLC CORP. (now known as Rollins Truck Leasing Corp.) 1982
Incentive Stock Option Plan, as filed with the Company's
Proxy Statement for the Annual Meeting of Shareholders held
on January 27, 1983, is incorporated herein by reference.
(10) (b) RLC CORP. (now known as Rollins Truck Leasing Corp.) 1986
Stock Option Plan, as filed with the Company's Proxy
Statement for the Annual Meeting of Shareholders held on
January 29, 1987, is incorporated herein by reference.
(10) (c) Rollins Truck Leasing Corp. 1993 Stock Option Plan, as filed
with the Company's Proxy Statement for the Annual Meeting of
Shareholders held on January 27, 1994, is incorporated herein
by reference.
(21) Rollins Truck Leasing Corp. Subsidiaries at September 30,
1994.
(23) Consent of KPMG Peat Marwick LLP, Independent Auditors, for
incorporation by reference in Registration Statement No. 33-
67682 filed on Form S-3.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by Rollins Truck Leasing Corp.
during the last quarter of the period covered by this report. However, on
October 13, 1994, a report on Form 8-K was filed disclosing that effective at
the close of business September 30, 1994, Michael B. Kinnard was appointed
Vice President-General Counsel and Secretary to Rollins Truck Leasing Corp.
Mr. Kinnard succeeds John C. Peet, Jr., who previously held the same
positions and whose resignation was accepted effective at the close of
business September 30, 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
DATED: November 23, 1994 ROLLINS TRUCK LEASING CORP.
(Registrant)
BY: /s/ John W. Rollins, Jr.
John W. Rollins, Jr.
President and Chief Operating Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below
by the following persons on behalf of the registrant and in the capacities
and on the dates indicated:
/s/Patrick J. Bagley Vice President-Finance and Treasurer November 23, 1994
Patrick J. Bagley Chief Financial Officer
Chief Accounting Officer
/s/John W. Rollins Chairman of the Board and November 23, 1994
John W. Rollins Chief Executive Officer
/s/Gary W. Rollins Director November 23, 1994
Gary W. Rollins
/s/Henry B. Tippie Chairman of the Executive November 23, 1994
Henry B. Tippie Committee and Vice Chairman
of the Board
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
(1) Consolidated
Page(s)
Independent Auditors' Report on Financial Statements and
Financial Statement Schedules 14
Consolidated Statement of Earnings for the years ended
September 30, 1994, 1993 and 1992 15
Consolidated Balance Sheet at September 30, 1994 and 1993 16
Consolidated Statement of Cash Flows for the years ended
September 30, 1994, 1993 and 1992 17
Notes to the Consolidated Financial Statements 18 to 26
(2) Financial Statement Schedules
Rollins Truck Leasing Corp. (Parent)
Schedule III - Condensed Financial Information
Balance Sheet at September 30, 1994 and 1993 27
Statement of Earnings for the years ended
September 30, 1994, 1993 and 1992 28
Statement of Cash Flows for the years ended
September 30, 1994, 1993 and 1992 29
Notes to Financial Statements 30
Rollins Truck Leasing Corp. and Subsidiaries Consolidated
Schedule II - Amounts Receivable from Related Parties
and Underwriters, Promoters, and
Employees (Other Than Related Parties)
for the years ended September 30, 1994,
1993 and 1992 31
Schedule IV - Indebtedness of Related Parties -
Not Current for the years ended
September 30, 1994, 1993 and 1992 32
Schedule V - Property, Plant and Equipment for
the years ended September 30, 1994,
1993 and 1992 33
Schedule VI - Accumulated Depreciation of Property,
Plant and Equipment for the years ended
September 30, 1994, 1993 and 1992 34
Schedule VIII - Valuation and Qualifying Accounts
for the years ended September 30, 1994,
1993 and 1992 35
<PAGE>
Schedule X - Supplementary Income Statement Information for
the years ended September 30, 1994, 1993
and 1992 36
Any financial statement schedules otherwise required have been omitted
because they are not applicable or the required information is shown in the
financial statements or notes thereto.
<PAGE>
Independent Auditors' Report
The Shareholders and Board of Directors
Rollins Truck Leasing Corp.
We have audited the consolidated financial statements of Rollins Truck
Leasing Corp. and subsidiaries as listed in the accompanying index. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedules as listed in the accompanying
index. These consolidated financial statements and financial statement
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Rollins
Truck Leasing Corp. and subsidiaries as of September 30, 1994 and 1993, and
the results of their operations and their cash flows for each of the years in
the three-year period ended September 30, 1994, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material
respects, the information set forth therein.
KPMG Peat Marwick LLP
Wilmington, Delaware
October 25, 1994
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
Year Ended September 30,
1994 1993 1992
Revenues $450,903,000 $408,778,000 $380,384,000
Expenses:
Operating 183,222,000 167,248,000 160,023,000
Depreciation, net of gain
on disposition of property
and equipment 121,982,000 112,005,000 106,493,000
Selling and administrative 42,473,000 40,440,000 37,855,000
347,677,000 319,693,000 304,371,000
Earnings before interest expense
and income taxes 103,226,000 89,085,000 76,013,000
Interest expense, net 36,836,000 34,428,000 35,345,000
Earnings before income taxes 66,390,000 54,657,000 40,668,000
Income taxes 26,562,000 24,241,000 16,029,000
Net earnings $ 39,828,000 $ 30,416,000 $ 24,639,000
Earnings per share (1) $ .86 $ .66 $ .53
Average common shares and
equivalents outstanding 46,310,000 46,260,000 46,007,000
(1) Adjusted for the three-for-two common stock split distributed on
September 15, 1994.
The Notes to the Consolidated Financial Statements are an integral part of
these statements.
<PAGE>
CONSOLIDATED BALANCE SHEET
September 30,
1994 1993
ASSETS
Current assets
Cash $ 15,094,000 $ 15,081,000
Accounts receivable, net of allowance
for doubtful accounts: 1994-$1,770,000;
1993-$1,620,000 52,031,000 48,917,000
Inventory of parts and supplies 8,558,000 8,679,000
Prepaid expenses 12,726,000 10,147,000
Refundable income taxes 2,571,000 -
Deferred income taxes 11,472,000 7,331,000
102,452,000 90,155,000
Equipment on operating leases, at cost,
net of accumulated depreciation 637,768,000 543,396,000
Other property and equipment, at cost,
net of accumulated depreciation 146,618,000 124,170,000
Note receivable-Matlack, Inc.
(including $900,000 due within
one year) 6,000,000 6,000,000
Excess of cost over net assets of
businesses acquired 11,903,000 12,131,000
Other assets 4,976,000 5,309,000
$909,717,000 $781,161,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding equipment financing obligations)
Accounts payable $ 7,205,000 $ 5,153,000
Accrued liabilities 40,114,000 38,310,000
Current maturities of long-term debt 146,000 209,000
47,465,000 43,672,000
Equipment financing obligations
including maturities due within
one year: 1994-$30,214,000;
1993-$24,665,000 498,365,000 427,307,000
Long-term debt 782,000 922,000
Other liabilities 8,898,000 9,158,000
Deferred income taxes 103,010,000 83,352,000
Commitments and contingent liabilities (see Notes to the Consolidated
Financial Statements)
Shareholders' equity:
Common stock, $1 par value
Outstanding: 1994-45,770,678 shares;
1993-45,544,355 shares 45,771,000 30,363,000
Capital in excess of par value 20,319,000 35,016,000
Retained earnings 185,107,000 151,371,000
251,197,000 216,750,000
$909,717,000 $781,161,000
The Notes to the Consolidated Financial Statements are an integral part of
these statements.
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended September 30,
1994 1993 1992
Cash flows from operating activities:
Net earnings $ 39,828,000 $ 30,416,000 $ 24,639,000
Reconciliation of net earnings
to net cash flows from
operating activities:
Depreciation and amortization 130,741,000 118,366,000 109,828,000
Current and deferred income
taxes 12,946,000 11,542,000 7,687,000
Net (increase) decrease in notes
and accounts receivable (3,114,000) 9,769,000 (6,694,000)
Net increase in accounts payable
and accrued liabilities 3,856,000 3,892,000 6,581,000
Net gain on sale of property
and equipment (8,530,000) (6,139,000) (3,110,000)
Other (2,072,000) (1,315,000) 1,944,000
Net cash flows from operating
activities 173,655,000 166,531,000 140,875,000
Cash flows from investing activities:
Purchase of property and
equipment (297,492,000) (242,910,000) (202,689,000)
Proceeds from sales of
equipment 58,376,000 48,953,000 53,834,000
Net cash flows used in investing
activities (239,116,000) (193,957,000) (148,855,000)
Cash flows from financing activities:
Proceeds of equipment financing
obligations 177,126,000 177,498,000 167,822,000
Repayment of equipment financing
obligations (106,068,000) (140,447,000) (156,493,000)
Repayment of long-term debt (203,000) (7,414,000) (3,687,000)
Payment of dividends (6,092,000) (5,452,000) (4,831,000)
Proceeds of stock options
exercised 780,000 759,000 637,000
Preferred stock acquired and
retired - - (95,000)
Other (69,000) - 309,000
Net cash flows from financing
activities 65,474,000 24,944,000 3,662,000
Net increase (decrease) in cash 13,000 (2,482,000) (4,318,000)
Cash beginning of period 15,081,000 17,563,000 21,881,000
Cash end of period $ 15,094,000 $ 15,081,000 $ 17,563,000
Supplemental information:
Interest paid $ 36,425,000 $ 34,933,000 $ 34,581,000
Income taxes paid $ 13,616,000 $ 12,699,000 $ 8,341,000
The Notes to the Consolidated Financial Statements are an integral part of
these statements.
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Accounting Policies
The consolidated financial statements include the accounts of all
subsidiaries. Intercompany transactions and balances among these
subsidiaries have been eliminated.
Lease, rental and other transportation service revenues are recognized pro
rata from the date the vehicles are placed in service with the customer.
Expenses are recognized concurrently with revenues.
Earnings per common share are computed assuming the conversion of all
potentially dilutive securites, namely outstanding stock options and
convertible preferred shares prior to their redemption.
The excess of cost over net assets of businesses acquired prior to October
30, 1970 is not being amortized since its value, in management's opinion, has
not diminished. The excess of cost over net assets of businesses acquired
subsequently is being amortized on a straight-line basis over 40 years.
Inventories of transportation equipment parts and supplies are valued at
the lower of first-in, first-out cost or market.
Marketable securities are classified as current or noncurrent assets as
appropriate and are carried at the lower of cost or market.
Property and equipment is carried at cost, net of applicable allowances.
Depreciation is provided on a straight-line, specific-item basis net of
salvage or residual values. The cost and related accumulated depreciation of
property and equipment sold or retired are eliminated from the property
accounts and the resulting gain or loss is reflected in the Consolidated
Statement of Earnings as an adjustment of depreciation expense. Repairs and
maintenance are charged to expense as incurred. Major additions and
improvements are capitalized and written off over the remaining depreciable
lives of the assets.
As of October 1, 1991, the Company adopted SFAS No. 109 Accounting for
Income Taxes. The adoption of this accounting rule had no effect on net
earnings for the year ended September 30, 1992.
Leasing operations consist of the long-term leasing and short-term rental
of transportation equipment. All leases are classified as operating leases
and expire on various dates during the next ten years.
Equipment to be sold within one year and equipment financing obligations
payable within one year are not classified as current assets or current
liabilities.
<PAGE>
Equipment on Operating Leases
The Company's investment in equipment on operating leases is as follows:
September 30,
1994 1993
Transportation equipment (1) $951,349,000 $833,232,000
Less accumulated depreciation (313,581,000) (289,836,000)
$637,768,000 $543,396,000
(1) Estimated useful life 3 to 12 years
The net gain on disposition of property and equipment was $8,530,000 in
1994, $6,139,000 in 1993 and $3,110,000 in 1992.
Commitments for the purchase of transportation equipment amounted to
$169,014,000 at September 30, 1994.
At September 30, 1994, minimum future revenues from non-cancelable leases
are as follows:
Year Ending September 30,
1995 $144,295,000
1996 114,944,000
1997 85,796,000
1998 55,552,000
1999 23,819,000
Later Years 1,110,000
Total future minimum lease revenues $425,516,000
Revenues include contingent rentals, which represent all commercial rental
revenues and the mileage charges on full-service leases, of $169,755,000 in
1994, $128,528,000 in 1993 and $118,787,000 in 1992.
Other Property and Equipment
The Company's other property and equipment accounts are as follows:
September 30,
1994 1993
Land $ 35,376,000 $ 30,291,000
Transportation service facilities (1) 128,414,000 101,784,000
Other operating assets (1) 33,951,000 35,769,000
Less accumulated depreciation (51,123,000) (43,674,000)
$146,618,000 $124,170,000
(1) Estimated useful life 3 to 45 years
Lease Commitments
The Company leases some of the premises and equipment used in its
operations. Leases classified as operating leases expire on various dates
during the next 20 years. Some of the leases are renewable at the Company's
option.
<PAGE>
Minimum future rental payments required under operating leases having non-
cancelable terms in excess of one year as of September 30, 1994 are as
follows:
Year Ending September 30,
1995 $ 3,556,000
1996 3,073,000
1997 2,298,000
1998 1,695,000
1999 1,110,000
Later years 4,388,000
Total minimum payments required $16,120,000
Total rental expense for all operating leases except those with terms of
a month or less was $7,695,000 in 1994, $8,134,000 in 1993 and $8,144,000 in
1992.
Income Taxes
The income tax provisions for the three years ended September 30, 1994 are
comprised as follows:
Year Ended September 30,
1994 1993 1992
Current:
Federal $ 8,692,000 $ 9,101,000 $ 6,668,000
State 2,796,000 2,280,000 1,547,000
Deferred:
Federal 13,516,000 8,362,000 6,470,000
State 1,558,000 2,223,000 1,344,000
Rate change - 2,275,000 -
Total income taxes $26,562,000 $24,241,000 $16,029,000
A reconciliation of the income tax provisions for the three years ended
September 30, 1994 with amounts calculated by applying the statutory federal
income tax rate (35.0% in 1994, 34.75% in 1993 and 34.0% in 1992) to earnings
before income taxes for those years is as follows:
Year Ended September 30,
1994 1993 1992
Federal tax at statutory rate $23,236,000 $18,993,000 $13,827,000
State income taxes 2,830,000 2,939,000 1,908,000
Rate change - 2,275,000 -
Other 496,000 34,000 294,000
Total income taxes $26,562,000 $24,241,000 $16,029,000
<PAGE>
The tax effect of temporary differences and the tax credit carryforwards
which comprise the current and non-current deferred income tax amounts shown
on the balance sheet are as follows:
September 30
1994 1993
Depreciation $111,833,000 $101,297,000
Expenses deductible when paid (8,214,000) (7,196,000)
Investment tax credit carryforward - (4,902,000)
Alternative minimum tax credit carryforward (12,861,000) (12,899,000)
Other 780,000 (279,000)
Deferred income taxes, net $ 91,538,000 $ 76,021,000
At September 30, 1994, the Company had alternative minimum tax credit
carryforwards of $12,861,000 which have no expiration date. The Company has
no tax credit carryforwards for financial reporting purposes since all such
credits have been considered in the determination of deferred income tax
amounts.
Shareholders' Equity
Changes in the components of shareholders' equity are as follows:
Capital in
Stated $1 Par Excess of
Value of Value Par of
Preferred Common Stated Retained
Stock Stock Values Earnings
Balance at 9/30/91 $ 51,000 $19,940,000 $43,778,000 $105,624,000
Net earnings 24,639,000
Dividends on preferred
stock $1.00 per share (24,000)
Dividends on common
stock $.16 per share (4,807,000)
3-for-2 common stock split 10,050,000 (10,109,000)
Investment valuation
allowance 975,000
Conversion of preferred
stock (45,000) 53,000 (8,000)
Preferred stock retired (6,000) (89,000)
Exercise of stock options 109,000 528,000
Other 32,000 336,000
Balance at 9/30/92 - 30,184,000 34,436,000 126,407,000
Net earnings 30,416,000
Dividends on common
stock $.18 per share (5,452,000)
Exercise of stock options 179,000 580,000
Balance at 9/30/93 - 30,363,000 35,016,000 151,371,000
Net earnings 39,828,000
Dividends on common
stock $.20 per share (6,092,000)
3-for-2 common stock split 15,252,000 (15,321,000)
Exercise of stock options 156,000 624,000
Balance at 9/30/94 $ - $45,771,000 $20,319,000 $185,107,000
<PAGE>
The Company is authorized to issue 50,000,000 shares of its $1 Par Value
Common Stock and 1,000,000 shares of Preferred Stock. The preferred shares
are without par value, with terms and conditions of each issue as determined
by the Board of Directors. On April 30, 1992, the Comp
its then outstanding 3,172 shares of Series C Preferred Stock for $30 per
share. No Preferred Stock is now outstanding.
Each share of common stock outstanding includes one common stock purchase
right (a "Right") which is non-detachable and non-exercisable until certain
defined events occur, including certain tender offers or the acquisition by
a person or group of affiliated or associated persons of 20% of the Company's
common stock. Upon the occurrence of certain defined events, the Right
entitles the registered holder to purchase one share of common stock of the
Company for $26.67 and may be modified to permit certain holders to purchase
common stock of the Company or common stock of an acquiring company at a 50%
discount. The Right expires on June 30, 1999 unless earlier redeemed by the
Company as permitted under certain conditions at a price of $.0045 per Right.
Under the terms of a credit agreement, $129,202,000 of retained earnings
was available for the payment of cash dividends at September 30, 1994.
Under the Company's stock option plans, options to purchase common stock
of the Company may be granted to officers and key employees at not less than
100% of the fair market value at the date of grant. Option activity,
adjusted for the September 15, 1994 three-for-two common stock split, is
summarized as follows:
Year Ended September 30,
1994 1993 1992
Number of options:
Outstanding at beginning of
year 1,368,005 1,388,700 1,361,349
Granted 7,515 261,900 315,900
Exercised (226,321) (268,164) (220,302)
Expired or canceled (27,700) (14,431) (68,247)
Outstanding at September 30 1,121,499 1,368,005 1,388,700
At September 30:
Options available for grant 1,305,789 85,604 333,072
Options exercisable 470,500 409,163 416,639
Per share prices:
Options granted $12.08 $11.92 $7.56
Options exercised $2.39 to $7.56 $2.39 to $7.56 $2.39 to $4.59
Options outstanding $2.39 to $12.08 $2.39 to $11.92 $2.39 to $7.56
Accrued Liabilities
Accrued liabilities are as follows:
September 30,
1994 1993
Employee compensation $8,722,000 $ 7,608,000
Interest 6,052,000 5,641,000
Taxes other than income 9,349,000 9,265,000
Insurance 6,013,000 4,867,000
Unbilled services and supplies 8,024,000 8,572,000
Other 1,954,000 2,357,000
$40,114,000 $38,310,000
<PAGE>
Indebtedness
Equipment financing obligations are as follows:
September 30,
1994 1993
Revolving Credit Agreement $33,500,000 $28,000,000
Collateral Trust Debentures:
Series G, 9 7/8 %, due 1995 to 1998 50,000,000 50,000,000
Series H, 10.60 %, due 1999 75,000,000 75,000,000
Series I, 10.35 %, due 2000 50,000,000 50,000,000
Series J, 8 5/8 %, due 1998 30,000,000 30,000,000
Series K, 7 3/4 %, due 1997 50,000,000 50,000,000
Series L, 7 %, due 2003 70,000,000 70,000,000
Series M, 7 %, due 2001 60,000,000 -
Other equipment financing obligations,
at interest rates ranging from 5.1%
to 9.8%, of which $22,714,000 is due
within one year; payable through 1999 79,865,000 74,307,000
$498,365,000 $427,307,000
The $100,000,000 line under the Revolving Credit Agreement is unsecured.
During 1994, the quoted rates ranged from 3.4% to 6.3% and averaged 6.1% at
September 30, 1994. The Collateral Trust Debentures are secured by notes
from a subsidiary and Matlack, Inc., a former subsidiary. Certain other
equipment financing obligations are collateralized by certain leasing
equipment. At the option of the banks, the Revolving Credit Agreement and
the Collateral Trust Debentures may be secured by other leasing and bulk
transportation equipment. Termination of the Revolving Credit Agreement
would result in repayment of outstanding loans over 60 months in equal
installments; otherwise, no repayments are required except for repayments
which would be required if the financing value of the equipment falls below
the outstanding loan. The agreement provides for the maintenance of
specified financial ratios and restricts payments to the Company by a
consolidated subsidiary. Net assets of all subsidiaries not restricted under
the agreement totaled $139,728,000 at September 30, 1994.
On September 21, 1994, the Company arranged for the private placement of
$100,000,000 of 8.27%, Series N Collateral Trust Debentures due March 15,
2002. Closing will occur on March 15, 1995.
Based on published bid prices, at September 30, 1994, the estimated fair
value of the Company's Collateral Trust Debentures was $386,019,000 compared
to the recorded book amount of $385,000,000. The fair value of the remaining
$113,365,000 of equipment indebtedness approximates its recorded amount.
Long-term debt consists of real estate and other obligations payable in
installments over various periods to 2001, at interest rates ranging from
6.4% to 7.0%. Land and buildings with a carrying value of $1,585,000 is
pledged as collateral.
The aggregate amounts of maturities and sinking fund requirements for all
indebtedness over the next five years are as follows: 1995-$30,360,000;
1996-$26,618,000; 1997-$73,556,000; 1998-$38,350,000 and
1999-$109,143,000.
<PAGE>
Commitments and Contingent Liabilities
There are various claims and legal actions pending against the Company.
In the opinion of management, based on the advice of counsel, the outcome of
such litigation will not have a material adverse effect upon the Company's
financial position or results of operations.
Pension Plan
The Company maintains a noncontributory pension plan for full-time
employees not covered by pension plans under collective bargaining
agreements. Pension costs are funded in accordance with the provisions of
the Internal Revenue Code. The Company also maintains a nonqualified,
noncontributory defined benefit pension plan for certain employees to restore
pension benefits reduced by federal income tax regulations. The cost
associated with the plan is determined using the same actuarial methods and
assumptions as those used for the Company's qualified pension plan.
The components of net periodic pension cost are as follows:
Year Ended September 30,
1994 1993 1992
Service cost $2,283,000 $1,798,000 $1,548,000
Interest cost 2,152,000 1,846,000 1,658,000
Return on plan assets (947,000) (4,336,000) (2,558,000)
Net amortization and deferral (1,580,000) 2,271,000 706,000
Net periodic pension cost $1,908,000 $1,579,000 $1,354,000
The following table sets forth the funded status and the amount
recognized in the Company's balance sheet for the plans:
September 30,
1994 1993
Actuarial present value of
accumulated benefit obligation:
Vested $24,708,000 $22,010,000
Non-vested 1,227,000 1,102,000
$25,935,000 $23,112,000
Projected benefit obligation $31,190,000 $26,989,000
Plan assets at market value 27,481,000 25,976,000
Projected benefit obligation
in excess of plan assets 3,709,000 1,013,000
Unrecognized gain 1,289,000 2,383,000
Unrecognized prior service costs (998,000) 157,000
Unrecognized overfunding at adoption 421,000 492,000
Accrued pension liability $ 4,421,000 $ 4,045,000
At September 30, 1994, the assets of the pension plans were invested 73%
in equity securities, 24% in fixed income securities and the balance in other
interest bearing accounts.
The discount rate was 8.0% for 1994 and 1993 and 8.5% for 1992. The rate
of assumed compensation increase was 5.0% for all three years. The expected
long-term rate of return on assets was 9.5% for 1994 and 1993 and 10.0% for
1992.
<PAGE>
The Company expensed payments to multi-employer pension plans required
by collective bargaining agreements of $172,000 in 1994, $265,000 in 1993 and
$293,000 in 1992. The actuarial present value of accumulated plan benefits
and net assets available for benefits to employees under these plans are not
available.
Transactions with Related Parties
Certain directors and officers of the Company are also directors and
officers of Rollins Environmental Services, Inc. and Matlack Systems, Inc.
The Company sold materials (principally vehicle fuel) and services
(including data processing services) and rented transportation equipment and
office space to Rollins Environmental Services, Inc. The aggregate charges
for these materials and services, which have been included in revenues or
offset against operating expense, as appropriate, in the Consolidated
Statement of Earnings, were $6,551,000 in 1994, $7,359,000 in 1993 and
$6,579,000 in 1992.
The Company provided administrative services and rented office space to
Matlack, Inc. for aggregate charges of $2,949,000 in 1994, $3,077,000 in 1993
and $3,403,000 in 1992, which have been included in revenues or offset
against operating expense, as appropriate, in the Consolidated Statement of
Earnings. Interest charges to Matlack, Inc., which have been offset against
interest expense, were $593,000 in 1994, $1,023,000 in 1993 and $1,500,000
in
1992.
An officer of the Company is the trustee of an employee benefits trust
which provides certain insurance and health care benefits to employees of the
Company. Contributions to the trust, which were charged to operating or
selling and administrative expense, as appropriate, were $8,166,000 in 1994,
$7,068,000 in 1993 and $7,085,000 in 1992.
In the opinion of management of the Company, the foregoing transactions
were effected at rates which approximate those which the Company would have
realized or incurred had such transactions been effected with independent
third parties.
<PAGE>
Quarterly Results (Unaudited)
December March June September
1994 31 31 30 30
Revenues $107,444,000 $107,111,000 $115,823,000 $120,525,000
Gross profit $ 34,202,000 $ 33,409,000 $ 38,053,000 $ 40,035,000
Earnings before
income taxes $ 16,196,000 $ 13,811,000 $ 17,504,000 $ 18,879,000
Net earnings $ 9,474,000 $ 8,155,000 $ 10,450,000 $ 11,749,000
Earnings per
share(1) $ .21 $.17 $ .23 $ .25
1993
Revenues $100,095,000 $ 97,042,000 $104,589,000 $107,052,000
Gross profit $ 30,439,000 $ 28,758,000 $ 33,845,000 $ 36,483,000
Earnings before
income taxes $ 12,497,000 $ 10,823,000 $ 14,762,000 $ 16,575,000
Net earnings $ 7,498,000 $ 6,494,000 $ 8,857,000 $ 7,567,000
Earnings per
share(1) $ .16 $ .14 $ .19 $ .17
(1) Adjusted for the three-for-two common stock split distributed on
September 15, 1994.
<PAGE>
SCHEDULE III - Condensed Financial Information
ROLLINS TRUCK LEASING CORP.
BALANCE SHEET
($000 Omitted)
Assets September 30,
1994 1993
Current Assets (excluding notes receivable
from subsidiaries)
Cash $ 699 $ 413
Accounts receivable 80 91
Accounts receivable from subsidiaries* 14 31
Other current assets 63 67
856 602
Notes receivable - Matlack, Inc.
(including $900 due within one year) 6,000 6,000
Notes receivable from subsidiary* 379,000 319,000
Investments in subsidiaries, at equity* 234,263 196,368
Advances to subsidiaries* 18,430 20,680
Property and equipment, at cost, net of
accumulated depreciation 921 894
Other assets 173 365
$639,643 $543,909
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable to subsidiaries* $ 37 $ 11
Accounts payable to others 164 120
Accrued liabilities 571 632
Income taxes payable 769 417
1,541 1,180
Collateral Trust Debentures
9 7/8% Series G, due 1995 to 1998 50,000 50,000
10.60% Series H, due 1999 75,000 75,000
10.35% Series I, due 2000 50,000 50,000
8 5/8% Series J, due 1998 30,000 30,000
7 3.4% Series K, due 1997 50,000 50,000
7 % Series L, due 2003 70,000 70,000
7 % Series M, due 2001 60,000 -
Other liabilities 1,531 528
Deferred federal income taxes 374 451
Commitments and contingent liabilities -
see notes to the financial statements
Shareholders' equity
Common shares $1 Par Value, 50,000,000 shares
authorized; issued and outstanding:
1994: 45,770,678; 1993: 45,544,355 45,771 30,363
Capital in excess of par or stated values 20,319 35,016
Retained earnings 185,107 151,371
251,197 216,750
$639,643 $543,909
* Eliminated in consolidation.
<PAGE>
SCHEDULE III - Condensed Financial Information
(continued)
ROLLINS TRUCK LEASING CORP.
STATEMENT OF EARNINGS
($000 Omitted)
Year Ended September 30,
1994 1993 1992
Revenues:
Dividends from subsidiaries $ 1,800 $ 4,800 $ 4,800
Other income 4,502 171 470
6,302 4,971 5,270
Expenses:
Administrative 3,498 3,686 3,223
Depreciation and amortization, net of
gain (loss) on disposals 124 211 225
3,622 3,897 3,448
Earnings before income taxes 2,680 1,074 1,822
Income taxes (benefit) 825 (1,460) (1,625)
Net earnings of Rollins Truck Leasing Corp. 1,855 2,534 3,447
Equity in undistributed net earnings
of subsidiaries 37,973 27,882 21,192
Net earnings $39,828 $30,416 $24,639
<PAGE>
SCHEDULE III - Condensed Financial Information
(continued)
ROLLINS TRUCK LEASING CORP.
STATEMENT OF CASH FLOWS
($000 Omitted)
Year Ended September 30,
1994 1993 1992
Cash flows from operating activities:
Earnings prior to equity in
subsidiaries' undistributed earnings $ 1,855 $ 2,534 $ 3,447
Reconciliation of earnings to net
cash flows from operating activities:
Depreciation and amortization 193 216 231
Current and deferred income taxes 275 (176) (408)
Net decrease (increase) in
accounts receivable 28 74 (41)
Net increase (decrease) in
accounts payable and accrued
liabilities 9 (230) 253
Other (241) 87 97
Net cash flows from operating
activities 2,119 2,505 3,579
Cash flows from investing activities:
Purchase of equipment (152) (108) (54)
Proceeds from sale of equipment - 5 10
Net cash flows used in investing
activities (152) (103) (44)
Cash flows from financing activities:
Proceeds of equipment financing 60,000 70,000 80,000
Advances to subsidiaries (56,300) (68,072) (81,600)
Repayment of notes by subsidiary - 39,500 41,650
Repayment of notes by Matlack, Inc. - 7,750 2,250
Repayment of equipment financing - (47,250) (42,500)
Payment of dividends (6,092) (5,452) (4,831)
Proceeds of stock options exercised 780 759 637
Preferred stock acquired and retired - - (95)
Other (69) - (59)
Net cash flows used in financing
activities (1,681) (2,765) (4,548)
Net increase (decrease) in cash 286 (363) (1,013)
Cash beginning of period 413 776 1,789
Cash end of period $ 699 $ 413 $ 776
Supplemental information:
Interest paid, net $ - $ - $ -
Income taxes paid $10,660 $ 9,572 $ 6,236
<PAGE>
SCHEDULE III - Condensed Financial
(continued)
ROLLINS TRUCK LEASING CORP.
Notes to Financial Statements
Accounting Policies
The accounting policies of the Registrant and its subsidiaries are set forth
on page 14 of this 1994 Annual Report on Form 10-K.
The Company's principal sources of earnings are dividends and management
fees paid by its subsidiaries. Certain loan agreements restrict payments to
the Company by its subsidiaries. Net assets of subsidiaries not restricted
under such loan agreements totaled $139,728,000 at September 30, 1994. The
Company also realizes cash receipts by assessing subsidiaries for federal
taxes on income and expends cash in payment of such taxes on a consolidated
basis. Tax assessments are based on the amount of federal income taxes which
would be payable (recoverable) by each subsidiary company based on its
current year's earnings (loss) reduced by that subsidiary's applicable
portion of any consolidated carryforward or carryback of net operating
losses, investment tax credits, alternative minimum tax credits or similar
items utilized currently in the consolidated federal income tax return.
Interest income on notes receivable from a subsidiary and from Matlack, Inc.
which are pledged to secure the Collateral Trust Debentures (described on
page 19 of this 1994 Annual Report on Form 10-K) has been offset against
interest expense of $31,700,000, $29,451,000 and $29,298,000 in 1994, 1993
and 1992, respectively.
Commitments and Contingencies
The Company is obligated to an affiliated company for $398,000 annually
($2,886,000 in the aggregate) of future rentals under a lease to 2001. Rent
expense was $391,000 in 1994 and 1993 and $353,000 in 1992.
Commitments of the Company have been collateralized by bank letters of
credit issued on behalf of the Company in the amount of $4,950,000.
The aggregate amounts of maturities and sinking fund requirements for the
Collateral Trust Debentures during the next five years are $7,500,000 in
1995, $7,500,000 in 1996, $57,500,000 in 1997, $27,500,000 in 1998 and
$105,000,000 in 1999.
<PAGE>
<TABLE>
ROLLINS TRUCK LEASING CORP. AND SUBSIDIARIES
SCHEDULE II - Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees (Other
Than Related Parties)
For the Years Ended September 30, 1994, 1993 and 1992
($000 Omitted)
<CAPTION> Balance at
Deductions End of Period
Balance at
Year Ended Beginning Amounts Amounts
Not
September 30, Name of Debtor of Period Additions Collected Written-Off
Current Current
<S> <C> <C> <C> <C> <C> <C>
1994: Matlack, Inc. $900(1) $900(1)
Rollins Administrative
Services, Inc. $300 $300(3)
1993: Matlack, Inc. $750 $750
Rollins Administrative
Services, Inc. $388 $ 88 $300(3)
1992: Matlack, Inc. $750 $750(1) $750 $750(2)
Rollins Administrative
Services, Inc. $838 $450 $388(3)
<FN>
(1) Amounts due in one year
(2) Included in Notes receivable - Matlack, Inc.
(3) Non-interest bearing advance
</TABLE>
<PAGE>
<TABLE>
ROLLINS TRUCK LEASING CORP. AND SUBSIDIARIES
SCHEDULE IV - Indebtedness of Related Parties-Not Current
For the Years Ended September 30, 1994, 1993 and 1992
($000 Omitted)
<CAPTION>
Indebtedness
Year Ended Balance Beginning Balance End
September 30, Name of Debtor of Period Additions Deductions of Period
<S> <C> <C> <C> <C>
1994: Matlack, Inc. $ 6,000 $ 900 (1) $5,100
1993: Matlack, Inc. $13,000 $7,000 (2) $6,000
1992: Matlack, Inc. $15,250 $ 750 (1) $13,000
$1,500 (3)
<FN>
(1) Amounts due in one year
(2) Total Cash Receipt of $7,000 - $750 from Current, $6,250 from Non-Current
(3) Total Cash Receipt of $2,250 - $750 from Current, $1,500 from Non-Current
</TABLE>
<PAGE>
<TABLE>
ROLLINS TRUCK LEASING CORP. AND SUBSIDIARIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
($000 OMITTED)
<CAPTION>
Balance at Other Changes Balance at
Year Ended Beginning Sales and Add (Deduct) End of
September 30, Classification of Period Additions Retirements Describe Period
<S> <C> <C> <C> <C> <C>
1994: Property on Operating Leases
Transportation Equipment $833,232 $264,159 $146,042 $ $951,349
Other Property and Equipment
Land $ 30,291 $ 5,085 $35,376
Transportation Service
Facilities 101,784 25,732 $ 548 $ 1,446 (1) 128,414
Other Operating Assets 35,769 2,516 4,318 (16)(1) 33,951
$167,844 $ 33,333 $ 4,866 $ 1,430 $197,741
1993: Property on Operating Leases
Transportation Equipment $745,852 $227,471 $139,983 $ (108)(1) $833,232
Real Estate 13,336 (13,336)(1) -
$759,188 $227,471 $139,983 $(13,444) $833,232
Other Property and Equipment
Land $ 27,028 $ 2,587 $ 337 $ 1,013 (1) $ 30,291
Transportation Service
Facilities 92,443 10,388 503 (544)(1) 101,784
Other Operating Assets 21,789 2,464 443 11,959(1) 35,769
$141,260 $ 15,439 $ 1,283 $ 12,428 $167,844
1992: Property on Operating Leases
Transportation Equipment $674,493 $183,873 $112,386 $ (128)(1) $745,852
Real Estate 11,092 2,244 13,336
$685,585 $186,117 $112,386 $ (128) $759,188
Other Property and Equipment
Land $ 27,064 $ 269 $ 324 $ 19 (1) $ 27,028
Transportation Service
Facilities 79,193 14,540 1,430 140 (1) 92,443
Other Operating Assets 21,058 1,758 1,156 129(1) 21,789
$127,315 $ 16,567 $ 2,910 $ 288 $141,260
<FN>
(1) Adjustments and reclassifications.
</TABLE>
<PAGE>
<TABLE>
ROLLINS TRUCK LEASING CORP. AND SUBSIDIARIES
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
($000 OMITTED)
<CAPTION>
Additions
Balance at Charged to Other Changes Balance at
Year Ended Beginning Costs and Sales and Add(Deduct) End of
September 30, Classification of Period Expenses Retirements Describe Period
<S> <C> <C> <C> <C> <C> <C>
1994: Property on Operating Leases
Transportation Equipment $289,836 $122,014 $ 98,137 $ (132)(1) $313,581
Other Propety and Equipment
Transportation Service
Facilities $ 28,400 $ 6,093 $ 402 $ 1,136 (1) $ 35,227
Other Operating Assets 15,274 2,405 1,873 90(1) 15,896
$ 43,674 $ 8,498 $ 2,275 $ 1,226 $ 51,123
1993: Property on Operating Leases
Transportation Equipment $277,601 $110,544 $ 98,221 $ (88)(1) $289,836
Real Estate 4,534 (4,534)(1) -
$282,135 $110,544 $ 98,221 $(4,622) $289,836
Other Property and Equipment
Transportation Service
Facilities $ 24,286 $ 4,911 $ 477 $ (320)(1) $ 28,400
Other Operating Assets 8,597 2,689 393 4,381(1) 15,274
$ 32,883 $ 7,600 $ 870 $ 4,061 $ 43,674
1992: Property on Operating Leases
Transportation Equipment $237,195 $103,182 $ 62,689 $ (87)(1) $277,601
Real Estate 4,278 256 4,534
$241,473 $103,438 $ 62,689 $ (87) $282,135
Other Property and Equipment
Transportation Service
Facilities $ 21,359 $ 4,019 $ 1,149 $ 57 (1) $ 24,286
Other Operating Assets 7,002 2,146 423 (128)(1) 8,597
$ 28,361 $ 6,165 $ 1,572 $ (71) $ 32,883
<FN>
(1) Adjustments and reclassifications
</TABLE>
<PAGE>
<TABLE>
ROLLINS TRUCK LEASING CORP. AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
($000 OMITTED)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
Balance at Charged to Charged Balance at
Beginning Costs and to Other End of
September 30, Classification of Period Expenses Accounts Deductions Period
<S> <C> <C> <C> <C> <C> <C>
1994: Allowance for doubtful
accounts $1,620 $ 1,330 $ 693 (1) $1,873 (2) $1,770
1993: Allowance for doubtful
accounts $1,217 $ 2,343 $ 823 (1) $2,763 (2) $1,620
1992: Allowance for doubtful
accounts $1,185 $ 2,064 $ 486 (1) $2,518 (2) $1,217
Investment valuation
allowance $1,236 $(1,236)(3) -
<FN>
(1) Recoveries.
(2) Write-offs.
(3) Added $975 to retained earnings after tax effect of $261.
</TABLE>
<PAGE>
ROLLINS TRUCK LEASING CORP. AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 and 1992
($000 OMITTED)
COLUMN A COLUMN B
Item Charged to Costs and Expenses
1994 1993 1992
Maintenance and Repairs $ 83,039 $ 84,828 $ 82,113
Depreciation and Amortization $130,741 $118,366 $109,828
Taxes Other Than Payroll and
Income Taxes
Licenses and Titles $ 14,768 $ 13,062 $ 11,583
Federal Highway Use Tax $ 4,549 $ 4,920 $ 4,489
Other $ 5,121 $ 4,063 $ 3,844
<PAGE>
ROLLINS TRUCK LEASING CORP.
Exhibits to Form 10-K
For Fiscal Year Ended September 30, 1994
Index to Exhibits Page Nos.
Exhibit 21 Rollins Truck Leasing Corp.
Subsidiaries at September 30, 1994
Exhibit 23 Consent of Independent Auditors
<PAGE>
Exhibit 21
ROLLINS TRUCK LEASING CORP.
Subsidiaries of Registrant at September 30, 1994
JURISDICTION OF
NAME INCORPORATION
Rollins Dedicated Carriage Services, Inc. Delaware
Rollins Leasing Corp. Delaware
Rollins Properties, Inc. Delaware
Transrisk, Limited Bermuda
<PAGE>
Exhibit 23
The Board of Directors
Rollins Truck Leasing Corp.:
We consent to incorporation by reference in Registration Statement No.
33-67682 filed on Form S-3 by Rollins Truck Leasing Corp. of our report dated
October 25, 1994, relating to the consolidated balance sheets of Rollins
Truck Leasing Corp. and subsidiaries as of September 30, 1994 and 1993 and
the related consolidated statements of earnings and cash flows and related
schedules for each of the years in the three-year period ended September 30,
1994, which report appears on page 10 of this 1994 Annual Report on Form 10-K
of Rollins Truck Leasing Corp.
KPMG Peat Marwick LLP
Wilmington, Delaware
November 22, 1994
