_______________________________________________________________________
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, 1995
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. / X /
The aggregate market value of the voting stock held by non-affiliates of
the registrant was $359,901,000 as of October 31, 1995.
The number of shares of registrant's common stock outstanding as of
October 31, 1995 was 44,922,961.
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 25, 1996 III
PAGE
<PAGE>
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, 1994.
(b) Financial Information about Industry Segments
The Company operates principally in one industry segment and through
its principal subsidiaries, Rollins Leasing Corp. ("Rollins") and Rollins
Logistics Inc., is engaged primarily in full-service truck leasing and
rentals and the provision and management of complete truck transportation
and distribution systems. All of the Company's operations currently are
conducted within the United States. The financial information concerning
this business is included on pages 2 to 4 and 10 through 21 of this 1995
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.
Another service that the Company provides its customers through
Rollins Logistics Inc. and its subsidiaries is Logistics Services and
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.
Logistics Services addresses the needs of companies which desire to
outsource their distribution and warehousing functions to a third party
provider. These functions can range from freight bill auditing and
payment services, selection and negotiation of core carrier contracts to
selection of the most cost effective carrier for specific traffic lane
movements.
The commercial rental fleet which at September 30, 1995 consisted
of more than 7,500 units with payload capacities ranging from 4,000 to
45,000 pounds offers tractors, trucks and a limited number of trailers 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. The rental fleet's average age is approximately two
years. The utilization rate of the rental fleet during fiscal year 1995
was in excess of 80%. 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,
licensing and access to the Rollins 24-hour-a-day emergency road service.
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, 1995, a total of 3,129 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 201 facilities in 42 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.
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, 1995 and 1994 are as follows:
Prices Dividends
1995 1994 1995 1994
High Low High Low
Fiscal Quarter
First .......... $12 1/2 $11 $14 $11 1/4 $.04 $.033
Second ......... 14 1/2 11 3/8 14 3/8 11 1/2 .04 .033
Third .......... 12 5/8 10 3/8 12 3/8 11 1/8 .04 .033
Fourth ......... 11 3/4 10 1/4 12 1/2 10 7/8 .04 .033
At September 30, 1995, there were 2,663 holders of record of the Common
Stock.
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
FIVE YEAR SELECTED FINANCIAL DATA
(Dollars in Millions, Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
Year Ended September 30, 1995 1994 1993 1992 1991
Revenues 482.6 450.9 408.8 380.4 341.9
Earnings before income taxes 67.1 66.4 54.7 40.7 31.5
Net earnings 41.3 39.8 30.4 24.6 19.0
Earnings per share .91 .86 .66 .53 .45
Dividends per common share .16 .13 .12 .11 .09
At September 30,
Total assets 1,027.0 909.7 781.2 708.5 656.4
Equipment on operating
leases, net 727.9 637.8 543.4 468.3 441.1
Equipment financing obligations 573.6 498.4 427.3 390.3 378.9
Long-term debt .6 .8 .9 6.8 9.1
Shareholders' equity 275.6 251.2 216.8 191.0 169.4
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of Operations
Fiscal Year 1995 vs. 1994
Revenues increased by $31.7 million (7.0%) to $482.6 million from
$450.9 million as full-service leasing, commercial rental and dedicated
carriage service revenues all improved over the prior year. This revenue
improvement was realized despite a continuing sluggish economic climate.
Business conditions were excellent during the first fiscal quarter ended
December 31, 1994, but the economy weakened beginning in January, 1995
which affected the Company's short-term commercial rental business for the
remainder of the year.
Operating expenses increased by $10.9 million (5.9%) reflecting the
increase in revenues and the costs associated with opening new facilities
and making improvements to existing facilities. Operating expenses as a
percentage of revenues decreased to 40.2% in 1995 from 40.6% in 1994. The
increased revenues combined with lower maintenance costs on new equipment
and continued expense control efforts accounted for the lower operating
cost ratio.
Depreciation expense increased by $16.3 million (12.5%) due to the
increased investment in equipment on operating leases and related
transportation service facilities. The higher levels of investment in
property and equipment reflect, in addition to the higher level of
business, increased prices paid for recently acquired equipment.
Depreciation as a percentage of revenues was 30.4% in 1995 compared with
28.9% in 1994. The higher percentage in 1995 reflected both higher
equipment costs and the effects of competitive conditions which limited
price increases.
Gain on the sale of property and equipment was $12.7 million, an
increase of $4.2 million (49.4%) over the 1994 gain of $8.5 million.
During 1995, the Company sold more vehicles at higher prices resulting in
the increased gain.
Selling and administrative expenses increased by $.7 million and were
8.9% of revenues in 1995 compared with 9.4% of revenues in 1994.
Interest expense increased by $7.3 million (19.8%) principally due to
the increase in average borrowings related to the purchase of additional
equipment and higher short-term interest rates.
The effective income tax rates for 1995 and 1994 were 38.4% and 40.0%,
respectively. The 1995 effective tax rate was favorably impacted by the
resolution of certain state income tax matters.
Net earnings increased by $1.5 million (3.8%) to $41.3 million or $.91
per share from $39.8 million or $.86 per share in 1994. Net earnings as
a percentage of revenues was 8.6% in 1995 compared with 8.8% in 1994.
Higher depreciation and interest expenses combined with a lower level of
profitability from the commercial rental fleet, offset in part by a higher
gain on the sale of equipment, contributed to 1995's lower net profit
margin.
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.
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. Funds for the
acquisition of this equipment 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 $198.5 million in 1995, a 14.3%
increase from $173.7 million in 1994. Because the primary source of funds
from operations is from existing leases, the Company expects a similar
amount of funds to be generated in 1996.
At September 30, 1995, equipment on operating leases of $727.9 million
represented 70.9% of the Company's assets. The Company's equity in this
equipment after deducting equipment financing obligations increased by
$14.9 million (10.7%) to $154.3 million in 1995 from $139.4 million in 1994
as shown below (in millions):
September 30
1995 1994 Increase
Equipment on operating leases, net $727.9 $637.8 $90.1
Less equipment financing obligations (573.6) (498.4) (75.2)
Equity in equipment $154.3 $139.4 $14.9
The Company's principal subsidiary, Rollins Leasing Corp., has a $100.0
million revolving credit facility of which $86.0 million was available at
September 30, 1995. This facility is used primarily to finance vehicle
purchases on an interim basis pending placement of long-term financing.
On March 15, 1995, the Company closed on a private placement of $100.0
million of 8.27% Series N Collateral Trust Debentures due March 15, 2002
and on May 15, 1995, the Company sold $50.0 million of 7.25% Series O
Collateral Trust Debentures due May 15, 2005. Additionally, on June 7,
1995, the Company arranged for the private placement of $75.0 million of
6.89% Series P Collateral Trust Debentures due March 15, 2004. Closing
will occur on March 15, 1996 with the proceeds used to refinance certain
existing indebtedness and for new equipment purchases committed for
delivery in the Spring of 1996.
At September 30, 1995, the Company could sell an additional $90.0
million of Collateral Trust Debentures under its current shelf registration
statement. Based on its access to the debt markets and 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, 1995, the debt to equity ratio of the Company was 2.1
to 1.
Capital expenditures were $319.0 million in 1995 compared with $297.5
million in 1994. The level of economic activity, which in part dictates
demand for the Company's services, was strong during the Company's first
fiscal quarter. The economy weakened in early January 1995 and such
conditions continued for the remainder of the fiscal year. At September
30, 1995, the Company's commitment for the purchase of revenue equipment
was $102.6 million. Based on the current level of business and including
commitments already made at September 30, 1995, the Company anticipates
spending approximately $300.0 million for equipment and facilities in 1996.
During 1995, the Company purchased for cash and retired 962,500 shares
of its $1 par value common stock for $10.1 million. The Company is
authorized to purchase 2.1 million additional shares of its stock.
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 25, 1996.
Executive Officers of the Registrant. As of October 31, 1995, the
Executive Officers of the registrant were:
Name Position Age Term of Office
Patrick J. Bagley Vice President-Finance and 48 7/87 to date
Treasurer 1/87 to date
David F. Burr Chairman and Chief Executive 57 10/92 to date
Officer, Rollins Leasing Corp.
Michael B. Kinnard Vice President-General Counsel 38 10/94 to date
and Secretary 10/94 to date
John W. Rollins Chairman of the Board and 79 1954 to date
Chief Executive Officer 10/74 to date
John W. Rollins, Jr. President and Chief Operating 53 9/75 to date
Officer and Director
Henry B. Tippie Chairman of the Executive 68 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
25, 1996.
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
25, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the year ended September 30, 1995, the following officers
and/or directors of the Company were also officers and/or directors of
Rollins Environmental Services, Inc.; Patrick J. Bagley, Michael B.
Kinnard, William B. Philipbar, Jr., 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, Michael B. Kinnard, 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 Environmental Services, Inc. and Matlack Systems, Inc.,
respectively at October 31, 1995. 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 1995 Annual Report on Form 10-K.
<PAGE>
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 9.
(2) Financial Statements Schedules - See accompanying Index to
Consolidated Financial Statements and Schedules on page 9.
(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.
(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 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 21, 1994, is
incorporated herein by reference.
(4)(j) Thirteenth Supplemental Collateral Trust Indenture dated
March 15, 1995 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 10-Q dated April 26, 1995, is
incorporated herein by reference.
(4)(k) Fourteenth Supplemental Collateral Trust Indenture dated May
15, 1995 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 May 16, 1995 is
incorporated herein by reference.
(4)(l) RLC CORP. (now known as Rollins Truck Leasing Corp.) Rights
Agreement dated as of June 14, 1989 as filed as an Exhibit
to Registration Statement on 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,
1995.
(23) Consent of KPMG Peat Marwick LLP, Independent Auditors, for
incorporation by reference in Registration Statement No. 33-
67682 filed on Form S-3.
(27) Rollins Truck Leasing Corp. Financial Data Schedule at
September 30, 1995.
(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.
<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: December 1, 1995 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 December 1, 1995
Patrick J. Bagley and Treasurer
Chief Financial Officer
Chief Accounting Officer
/s/ John W. Rollins Chairman of the Board and December 1, 1995
John W. Rollins Chief Executive Officer
/s/ Gary W. Rollins Director December 1, 1995
Gary W. Rollins
/s/ Henry B. Tippie Chairman of the Executive December 1, 1995
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 10
Consolidated Statement of Earnings for the years ended
September 30, 1995, 1994 and 1993 11
Consolidated Balance Sheet at September 30, 1995 and 1994 12
Consolidated Statement of Cash Flows for the years ended
September 30, 1995, 1994 and 1993 13
Notes to the Consolidated Financial Statements 14 to 20
(2) Financial Statement Schedules
Rollins Truck Leasing Corp. (Parent)
Schedule I - Condensed Financial Information
Balance Sheet at September 30, 1995 and 1994 21
Statement of Earnings for the years ended
September 30, 1995, 1994 and 1993 22
Statement of Cash Flows for the years ended
September 30, 1995, 1994 and 1993 23
Notes to the Financial Statements 24
Rollins Truck Leasing Corp. and Subsidiaries Consolidated
Schedule II - Valuation and Qualifying Accounts for the
the years ended September 30, 1995,
1994 and 1993 25
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, 1995 and 1994, and
the results of their operations and their cash flows for each of the years
in the three-year period ended September 30, 1995, 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
Philadelphia, Pennsylvania
October 24, 1995
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
Year Ended September 30,
1995 1994 1993
Revenues $482,612,000 $450,903,000 $408,778,000
Expenses:
Operating 194,073,000 183,222,000 167,248,000
Depreciation 146,777,000 130,512,000 118,144,000
Gain on sale of property
and equipment (12,657,000) (8,530,000) (6,139,000)
Selling and administrative 43,146,000 42,473,000 40,440,000
371,339,000 347,677,000 319,693,000
Earnings before interest
and income taxes 111,273,000 103,226,000 89,085,000
Interest income 272,000 593,000 1,023,000
Interest (expense) (44,453,000) (37,429,000) (35,451,000)
Earnings before income taxes 67,092,000 66,390,000 54,657,000
Income taxes 25,756,000 26,562,000 24,241,000
Net earnings $ 41,336,000 $ 39,828,000 $ 30,416,000
Earnings per share $ .91 $ .86 $ .66
Average common shares and
equivalents outstanding 45,365,000 46,310,000 46,260,000
The Notes to the Consolidated Financial Statements are an integral part
of these statements.
CONSOLIDATED BALANCE SHEET
September 30,
1995 1994
ASSETS
Current assets
Cash $ 22,708,000 $ 15,094,000
Accounts receivable, net of allowance
for doubtful accounts:
1995-$1,635,000; 1994 -$1,770,000 56,946,000 52,031,000
Inventory of parts and supplies 8,612,000 8,558,000
Prepaid expenses 14,366,000 12,726,000
Refundable income taxes 1,667,000 2,571,000
Deferred income taxes 6,241,000 11,472,000
Total current assets 110,540,000 102,452,000
Equipment on operating leases, at cost,
net of accumulated depreciation 727,893,000 637,768,000
Other property and equipment, at cost,
net of accumulated depreciation 171,343,000 146,618,000
Note receivable-Matlack, Inc. - 6,000,000
Excess of cost over net assets of
businesses acquired 11,677,000 11,903,000
Other assets 5,576,000 4,976,000
Total assets $1,027,029,000 $ 909,717,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding equipment
financing obligations)
Accounts payable $ 8,115,000 $ 7,205,000
Accrued liabilities 43,167,000 40,114,000
Current maturities of long-term debt 150,000 146,000
Total current liabilities 51,432,000 47,465,000
Equipment financing obligations including
maturities due within one year: 1995-
$21,469,000; 1994-$30,214,000 573,554,000 498,365,000
Long-term debt 632,000 782,000
Other liabilities 10,028,000 8,898,000
Deferred income taxes 115,830,000 103,010,000
Commitments and contingent liabilities (see
Notes to the Consolidated Financial Statements)
Shareholders' equity:
Common stock, $1 par value,
outstanding: 1995-44,954,679 shares;
1994-45,770,678 shares 44,955,000 45,771,000
Capital in excess of par value 11,453,000 20,319,000
Retained earnings 219,145,000 185,107,000
Total shareholders' equity 275,553,000 251,197,000
Total liabilities and
shareholders' equity $1,027,029,000 $ 909,717,000
The Notes to the Consolidated Financial Statements are an integral part of
these statements.<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended September 30,
1995 1994 1993
Cash flows from operating activities:
Net earnings $ 41,336,000 $ 39,828,000 $ 30,416,000
Reconciliation of net
earnings to net cash flows
from operating activities:
Depreciation and
amortization 147,003,000 130,741,000 118,366,000
Net gain on sale of
property and equipment (12,657,000) (8,530,000) (6,139,000)
Changes in assets and
liabilities:
Notes and accounts
receivable 1,085,000 (3,114,000) 9,769,000
Accounts payable and
accrued liabilities 3,963,000 3,856,000 3,892,000
Current and deferred
income taxes 18,956,000 12,946,000 11,542,000
Other, net (1,165,000) (2,072,000) (1,315,000)
Net cash provided by
operating activities 198,521,000 173,655,000 166,531,000
Cash flows from investing activities:
Purchase of property and
equipment (318,983,000) (297,492,000) (242,910,000)
Proceeds from sales of
equipment 70,013,000 58,376,000 48,953,000
Net cash used in investing
activities (248,970,000) (239,116,000) (193,957,000)
Cash flows from financing activities:
Proceeds of equipment
financing obligations 239,128,000 177,126,000 177,498,000
Repayment of equipment
financing obligations (163,939,000) (106,068,000) (140,447,000)
Repayment of long-term debt (146,000) (203,000) (7,414,000)
Payment of dividends (7,298,000) (6,092,000) (5,452,000)
Proceeds of stock options
exercised 446,000 780,000 759,000
Common stock acquired and
retired (10,128,000) - -
Other - (69,000) -
Net cash provided by
financing activities 58,063,000 65,474,000 24,944,000
Net increase (decrease) in cash 7,614,000 13,000 (2,482,000)
Cash beginning of period 15,094,000 15,081,000 17,563,000
Cash end of period $ 22,708,000 $ 15,094,000 $ 15,081,000
Supplemental information:
Interest paid $ 42,692,000 $ 36,425,000 $ 34,933,000
Income taxes paid $ 6,800,000 $ 13,616,000 $ 12,699,000
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
over the terms of the respective contracts.
Earnings per common share are computed assuming the conversion of all
potentially dilutive outstanding stock options.
The excess of cost over net assets of businesses acquired prior to
October 30, 1970 amounting to $4,588,000 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.
Property and equipment is carried at cost, net of applicable
allowances. Tires placed in service on new equipment are capitalized as
part of the original equipment cost. Depreciation is provided on a
straight-line, specific-item basis. Depreciable lives for equipment on
operating leases and other property and equipment range from 3 to 12 years
and 3 to 45 years, respectively. 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. Repairs and maintenance are expensed
as incurred. Replacement tires are expensed when placed in service. Major
additions and improvements are capitalized and written off over the
remaining depreciable lives of the assets.
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.
The Company retains a specific portion of insurable risks with regard
to public liability and workers' compensation claims. Retention levels are
currently $500,000. Reserves are established for claims incurred plus an
estimate for claims incurred but not reported. Reserve requirements are
evaluated and established utilizing historical trends, the Company's
experience, claim severity and other factors. Claims estimated to be paid
within one year have been classified in accrued liabilities with the
balance included with other liabilities.
Equipment on Operating Leases
The Company's investment in equipment on operating leases is as
follows:
September 30,
1995 1994
Transportation equipment $1,058,643,000 $ 951,349,000
Less accumulated depreciation (330,750,000) (313,581,000)
$ 727,893,000 $ 637,768,000
Commitments for the purchase of transportation equipment amounted to
$102,601,000 at September 30, 1995.
At September 30, 1995, minimum future revenues from non-cancelable
leases are as follows:
Year Ending September 30,
1996 $195,024,000
1997 166,187,000
1998 133,091,000
1999 95,901,000
2000 59,043,000
Later Years 45,926,000
Total future minimum lease revenues $695,172,000
Revenues include contingent rentals, which represent all commercial
rental revenues and the mileage charges on full-service leases, of
$183,399,000 in 1995, $169,755,000 in 1994 and $128,528,000 in 1993.
Indebtedness
Equipment financing obligations are as follows:
September 30,
1995 1994
Revolving Credit Agreement $ 14,000,000 $ 33,500,000
Collateral Trust Debentures:
Series G, 9 7/8% - 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 60,000,000
Series N, 8.27 %, due 2002 100,000,000 -
Series O, 7.25 %, due 2005 50,000,000 -
Other equipment financing
obligations 74,554,000 79,865,000
$573,554,000 $498,365,000
At September 30, 1995, $21,469,000 of other equipment financing
obligations were due within one year with the balance payable through 2000.
Interest rates on these obligations averaged 6.9% at September 30, 1995.
The other equipment financing obligations are collateralized by certain
leasing equipment. The Collateral Trust Debentures are secured by notes
from a subsidiary. Two banks provide an unsecured $100,000,000 line under
a Revolving Credit Agreement ("the Revolver"). At the option of the banks,
the Revolver and the Collateral Trust Debentures may be secured by certain
leasing equipment. Termination of the Revolver would result in repayment
of the outstanding balance over 60 months in equal installments; otherwise,
no repayments are required unless the financing value of the eligible
equipment available as security falls below the outstanding loan balance.
At September 30, 1995, interest rates on borrowings under the Revolver
averaged 6.5%. The Revolver 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
Revolver totaled $167,193,000 at September 30, 1995.
Equipment financing obligations due within one year are not classified
as current liabilities as the Company intends and has the ability to
refinance them on a long-term basis through available credit facilities.
On June 7, 1995, the Company arranged for the private placement of
$75,000,000 of 6.89% Series P Collateral Trust Debentures due March 15,
2004. Closing will occur on March 15, 1996.
Based on published bid prices, at September 30, 1995, the estimated
fair value of the Company's Collateral Trust Debentures was $508,081,000
compared to the recorded book amount of $485,000,000. The fair value of the
remaining $88,554,000 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
6.0% to 9.0%. Land and buildings with a carrying value of $1,816,000 are
pledged as collateral.
The aggregate amounts of maturities for all indebtedness over the next
five years are as follows: 1996-$21,619,000; 1997-$69,055,000; 1998-
$15,377,000; 1999-$113,949,000 and 2000-$52,543,000.
Other Property and Equipment
The Company's other property and equipment accounts are as follows:
September 30,
1995 1994
Land $ 40,117,000 $ 35,376,000
Transportation service facilities 154,943,000 128,414,000
Other operating assets 34,580,000 33,951,000
Less accumulated depreciation (58,297,000) (51,123,000)
$171,343,000 $146,618,000
Income Taxes
The tax provisions for the three years ended September 30, 1995 are
comprised as follows:
Year Ended September 30,
1995 1994 1993
Current:
Federal $ 6,584,000 $ 8,692,000 $ 9,101,000
State 1,128,000 2,796,000 2,280,000
Deferred:
Federal 16,256,000 13,516,000 8,362,000
State 1,788,000 1,558,000 2,223,000
Rate change - - 2,275,000
Total income taxes $25,756,000 $26,562,000 $24,241,000
A reconciliation of the tax provisions for the three years ended
September 30, 1995 with amounts calculated by applying the statutory
federal income tax rate (35.0% in 1995 and 1994 and 34.75% in 1993) to
earnings before income taxes for those years is as follows:
Year Ended September 30,
1995 1994 1993
Federal tax at statutory rate $23,482,000 $23,236,000 $18,993,000
State taxes 1,896,000 2,830,000 2,939,000
Rate change - - 2,275,000
Other 378,000 496,000 34,000
Total income taxes $25,756,000 $26,562,000 $24,241,000
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
1995 1994
Depreciation $124,775,000 $111,833,000
Expenses deductible when paid (9,198,000) (8,214,000)
Alternative minimum tax credit carryforward (6,924,000) (12,861,000)
Other 936,000 780,000
Deferred income taxes, net $109,589,000 $ 91,538,000
At September 30, 1995, the Company had alternative minimum tax credit
carryforwards of $6,924,000 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 tax amounts.
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 19 years. Some of the leases are renewable at the Company's
option. Minimum future rental payments required under operating leases
having non-cancelable terms in excess of one year as of September 30, 1995
are as follows:
Year Ending September 30,
1996 $ 3,644,000
1997 2,657,000
1998 2,081,000
1999 1,508,000
2000 1,312,000
Later years 5,108,000
Total minimum payments required $16,310,000
Total rental expense for all operating leases except those with terms of
a month or less was $7,560,000 in 1995, $7,695,000 in 1994 and $8,134,000
in 1993.
Pension Plans
The Company maintains a noncontributory pension plan for eligible
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 following table sets forth the funded status and the amount
recognized in the Company's balance sheet for the plans:
September 30,
1995 1994
Actuarial present value of
accumulated benefit obligation:
Vested $27,081,000 $24,708,000
Non-vested 1,267,000 1,227,000
$28,348,000 $25,935,000
Projected benefit obligation $33,734,000 $31,190,000
Plan assets at market value 35,230,000 27,481,000
Projected benefit obligation (under)
in excess of plan assets (1,496,000) 3,709,000
Unrecognized gain 6,929,000 1,289,000
Unrecognized prior service costs (755,000) (998,000)
Unrecognized overfunding at adoption 351,000 421,000
Accrued pension liability $ 5,029,000 $ 4,421,000
At September 30, 1995, the assets of the pension plans were invested
74% in equity securities, 22% in fixed income securities and the balance
in other short-term interest bearing accounts.
The discount rate and the rate of assumed compensation increase for
all three years were 8.0% and 5.0%, respectively. The expected long-term
rate of return on assets was 9.0% for 1995 and 9.5% for 1994 and 1993.
The components of net periodic pension cost are as follows:
Year Ended September 30,
1995 1994 1993
Service cost $2,175,000 $2,283,000 $1,798,000
Interest cost 2,371,000 2,152,000 1,846,000
Return on plan assets (7,420,000) (947,000) (4,336,000)
Net amortization and deferral 4,907,000 (1,580,000) 2,271,000
Net periodic pension cost $2,033,000 $1,908,000 $1,579,000
Effective October 1, 1994, the Company established a defined
contribution 401(k) plan which permits participation by substantially all
employees not represented under a collective bargaining agreement.
The Company expensed payments to multi-employer pension plans required
by collective bargaining agreements of $131,000 in 1995, $172,000 in 1994
and $265,000 in 1993. The actuarial present value of accumulated plan
benefits and net assets available for benefits to employees under these
plans are not currently available.
Accrued Liabilities
Accrued liabilities are as follows:
September 30,
1995 1994
Employee compensation $ 7,491,000 $ 8,722,000
Interest 7,541,000 6,052,000
Taxes other than income 10,195,000 9,349,000
Insurance reserves 6,113,000 6,013,000
Environmental 2,817,000 2,178,000
Unbilled services and supplies 7,802,000 5,846,000
Other 1,208,000 1,954,000
$43,167,000 $40,114,000
Shareholders' Equity
Changes in the components of shareholders' equity are as follows:
<TABLE>
$1 Par Value Capital in
Common Excess of Retained
Stock Par Value Earnings
<S> <C> <C> <C>
Balance at September 30, 1992 $30,184,000 $34,436,000 $126,407,000
Net earnings 30,416,000
Dividends on common stock,
$.12 per share (5,452,000)
Exercise of stock options 179,000 580,000
Balance at September 30, 1993 30,363,000 35,016,000 151,371,000
Net earnings 39,828,000
Dividends on common stock,
$.13 per share (6,092,000)
Three-for-two common
stock split 15,252,000 (15,321,000)
Exercise of stock options 156,000 624,000
Balance at September 30, 1994 45,771,000 20,319,000 185,107,000
Net earnings 41,336,000
Dividends on common stock,
$.16 per share (7,298,000)
Common stock acquired and
retired (963,000) (9,165,000)
Exercise of stock options 147,000 299,000
Balance at September 30, 1995 $44,955,000 $11,453,000 $219,145,000
</TABLE>
The Company is authorized to issue 100,000,000 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.
Each share of common stock outstanding includes one common stock
purchase right (a "Right") which is non-detachable and nonexercisable 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 Rights expire on June 30, 1999
unless earlier redeemed by the Company at a price of $.0045 per Right as
permitted under certain conditions.
The terms of a credit agreement restrict the Company's dividend
payments to consolidated net income earned subsequent to September 30, 1984
subject to certain adjustments. At September 30, 1995, $163,242,000 of
retained earnings were available for the payment of cash dividends.
Stock Option Plans
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 is as follows:
Year Ended September 30,
1995 1994 1993
Number of options:
Outstanding at beginning
of year 1,121,499 1,368,005 1,388,700
Granted 359,500 7,515 261,900
Exercised (146,501) (226,321) (268,164)
Expired or canceled (7,725) (27,700) (14,431)
Outstanding at
September 30 1,326,773 1,121,499 1,368,005
At September 30:
Options available for
grant 954,014 1,305,789 85,604
Options exercisable 539,662 470,500 409,163
Per share prices:
Options granted $11.00 to $11.50 $12.08 $11.92
Options exercised $ 2.39 to $ 7.56 $ 2.39 to $7.56 $ 2.39 to $7.56
Options outstanding $ 2.39 to $12.08 $ 2.39 to $12.08 $ 2.39 to $11.92
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 $6,617,000 in 1995, $6,551,000 in
1994 and $7,359,000 in 1993.
The Company provided administrative services and rented office space
to Matlack, Inc. for aggregate charges of $3,286,000 in 1995, $2,949,000
in 1994 and $3,077,000 in 1993, which have been included in revenues or
offset against operating expense, as appropriate, in the Consolidated
Statement of Earnings. Interest charges to Matlack, Inc. were $272,000 in
1995, $593,000 in 1994 and $1,023,000 in 1993.
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 $9,099,000 in
1995, $8,166,000 in 1994 and $7,068,000 in 1993.
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.
Environmental Regulation
The Company is subject to certain regulations of the Environmental
Protection Agency in that it stores and dispenses petroleum products. Most
of these regulations address testing and replacement of underground tanks.
The Company's adherence to these regulations is part of its normal business
operations. These regulations have not had any material adverse effect
upon the Company.
Commitments and Contingent Liabilities
There are various routine claims and legal actions pending against the
Company incidental to the ordinary operation of its business. The Company
is of the opinion, based on the advice of counsel, that it is only remotely
likely that the ultimate resolution of these claims and actions will be
material.
<TABLE>
Quarterly Results (Unaudited)
December March June September
1995 31 31 30 30
<S> <C> <C> <C> <C>
Revenues $119,079,000 $116,671,000 $122,726,000 $124,136,000
Gross profit $ 39,807,000 $ 36,924,000 $ 40,037,000 $ 37,651,000
Earnings before
income taxes $ 19,060,000 $ 15,356,000 $ 17,810,000 $ 14,866,000
Net earnings $ 11,509,000 $ 9,273,000 $ 11,233,000 $ 9,321,000
Earnings
per share $ .25 $ .20 $ .25 $ .21
1994
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 $ .21 $ .17 $ .23 $ .25
</TABLE>
SCHEDULE I - Condensed Financial Information
ROLLINS TRUCK LEASING CORP.
BALANCE SHEET
($000 Omitted)
Assets September 30,
1995 1994
Current Assets (excluding notes
receivable from subsidiaries)
Cash $ 860 $ 699
Accounts receivable 59 80
Accounts receivable from subsidiaries* 14 14
Other current assets 146 63
Total current assets 1,079 856
Note receivable - Matlack, Inc. - 6,000
Notes receivable from subsidiary* 485,000 379,000
Investments in subsidiaries, at equity* 262,291 234,263
Advances to subsidiaries* 16,830 18,430
Property and equipment, at cost, net of
accumulated depreciation 908 921
Other assets 195 173
Total assets $766,303 $639,643
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable to subsidiaries* $ 29 $ 37
Accounts payable to others 163 164
Accrued liabilities 488 571
Income taxes payable 1,500 769
Total current liabilities 2,180 1,541
Collateral Trust Debentures
9 7/8% Series - 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 60,000
8.27 % Series N, due 2002 100,000 -
7.25 % Series O, due 2005 50,000 -
Advances from subsidiaries* 3,160 1,450
Other liabilities - 81
Deferred federal income taxes 410 374
Commitments and contingent liabilities -
see notes to the financial statements
Shareholders' equity
Common shares $1 Par Value,
100,000,000 shares authorized; issued
and outstanding: 1995: 44,954,679;
1994: 45,770,678 44,955 45,771
Capital in excess of par value 11,453 20,319
Retained earnings 219,145 185,107
Total shareholders' equity 275,553 251,197
Total liabilities and shareholders'
equity $766,303 $639,643
* Eliminated in consolidation.
The Notes to the Financial Statements are an integral part of these
statements.
SCHEDULE I - Condensed Financial Information
(continued)
ROLLINS TRUCK LEASING CORP.
STATEMENT OF EARNINGS
($000 Omitted)
Year Ended September 30,
1995 1994 1993
Revenues:
Dividends from subsidiaries $12,501 $ 1,800 $ 4,800
Other income 5,301 4,502 171
17,802 6,302 4,971
Expenses:
Administrative 3,365 3,418 3,686
Depreciation and amortization 220 193 216
Loss (gain) on sale of property
and equipment 9 11 (5)
3,594 3,622 3,897
Earnings before interest and
income taxes 14,208 2,680 1,074
Interest income 36,995 31,700 29,451
Interest (expense) (36,995) (31,700) (29,451)
Earnings before income taxes 14,208 2,680 1,074
Income taxes (benefit) 980 825 (1,460)
Net earnings of Rollins Truck
Leasing Corp. 13,228 1,855 2,534
Equity in undistributed net earnings
of subsidiaries 28,108 37,973 27,882
Net earnings $41,336 $39,828 $30,416
The Notes to the Financial Statements are an integral part of these
statements.
SCHEDULE I - Condensed Financial Information
(continued)
ROLLINS TRUCK LEASING CORP.
STATEMENT OF CASH FLOWS
($000 Omitted)
Year Ended September 30,
1995 1994 1993
Cash flows from operating activities:
Earnings prior to equity in
subsidiaries' undistributed
earnings $ 13,228 $ 1,855 $ 2,534
Reconciliation of earnings to net
cash flows from operating
activities:
Depreciation and amortization 220 193 216
Loss (gain) on sale of property
and equipment 9 11 (5)
Changes in assets and liabilities:
Accounts receivable 70 28 74
Accounts payable
and accrued liabilities (92) 9 (230)
Current and deferred
income taxes 767 275 (176)
Other, net (235) (252) 92
Net cash provided by operating
activities 13,967 2,119 2,505
Cash flows from investing activities:
Purchase of equipment (148) (152) (108)
Proceeds from sale of equipment 12 - 5
Net cash used in investing
activities (136) (152) (103)
Cash flows from financing activities:
Proceeds of equipment financing 150,000 60,000 70,000
Notes receivable from subsidiaries (150,000) (56,300) (68,072)
Repayment of notes by subsidiaries 45,600 - 39,500
Repayment of note by Matlack, Inc. 6,000 - 7,750
Repayment of equipment financing (50,000) - (47,250)
Payment of dividends (7,298) (6,092) (5,452)
Proceeds of stock options exercised 446 780 759
Common stock acquired and retired (10,128) - -
Notes payable to subsidiary 1,710 - -
Other - (69) -
Net cash used in financing
activities (13,670) (1,681) (2,765)
Net increase (decrease) in cash 161 286 (363)
Cash beginning of period 699 413 776
Cash end of period $ 860 $ 699 $ 413
Supplemental information:
Interest paid $ 35,291 $ 31,525 $ 29,979
Income taxes paid $ 6,710 $ 10,660 $ 9,572
The Notes to the Financial Statements are an integral part of these
statements.
SCHEDULE I - Condensed Financial Information
(continued)
ROLLINS TRUCK LEASING CORP.
Notes to the Financial Statements
Accounting Policies
The accounting policies of the Registrant and its subsidiaries are set
forth on page 14 of this 1995 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 $167,193,000 at September 30,
1995. 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 15 of this 1995 Annual Report on Form 10-K) was $36,995,000,
$31,700,000 and $29,451,000 in 1995, 1994 and 1993, respectively.
Commitments and Contingencies
The Company is obligated to an affiliated company for $404,000 annually
($2,523,000 in the aggregate) of future rentals under a lease to 2001. Rent
expense was $398,000 in 1995 and $391,000 in 1994 and 1993.
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 for the Collateral Trust Debentures
during the next five years are $50,000,000 in 1997, $105,000,000 in 1999 and
$50,000,000 in 2000.
ROLLINS TRUCK LEASING CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
($000 OMITTED)
<TABLE>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
Balance at Charged to Charged Balance
Year Ended Beginning Costs and to Other at End
September 30, Description of Period Expenses Accounts Deductions of Period
<S> <C> <C> <C> <C> <C>
1995: Allowance for doubtful accounts $1,770 $1,182 $707 (1) $2,024 (2) $1,635
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
</TABLE>
(1) Recoveries.
(2) Write-offs.
<PAGE>
ROLLINS TRUCK LEASING CORP.
Exhibits to Form 10-K
For Fiscal Year Ended September 30, 1995
Index to Exhibits Page Nos.
Exhibit 21 Rollins Truck Leasing Corp. 27
Subsidiaries at September 30, 1995
Exhibit 23 Consent of Independent Auditors 28
Exhibit 27 Rollins Truck Leasing Corp. 29
Financial Data Schedule at
September 30, 1995
<PAGE>
Exhibit 21
ROLLINS TRUCK LEASING CORP.
Subsidiaries of Registrant at September 30, 1995
JURISDICTION OF
NAME INCORPORATION
Rollins Logistics 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, 1995, relating to the consolidated balance sheets of
Rollins Truck Leasing Corp. and subsidiaries as of September 30, 1995 and
1994 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, 1995, which report appears on page 10 of this 1995 Annual
Report on Form 10-K of Rollins Truck Leasing Corp.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
November 29, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 22,708
<SECURITIES> 0
<RECEIVABLES> 58,581
<ALLOWANCES> (1,635)
<INVENTORY> 8,612
<CURRENT-ASSETS> 110,540
<PP&E> 1,288,283
<DEPRECIATION> (389,047)
<TOTAL-ASSETS> 1,027,029
<CURRENT-LIABILITIES> 51,432
<BONDS> 574,186
<COMMON> 44,955
0
0
<OTHER-SE> 230,598
<TOTAL-LIABILITY-AND-EQUITY> 1,027,029
<SALES> 482,612
<TOTAL-REVENUES> 482,612
<CGS> 0
<TOTAL-COSTS> 340,850
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,453
<INCOME-PRETAX> 67,092
<INCOME-TAX> 25,756
<INCOME-CONTINUING> 41,336
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,336
<EPS-PRIMARY> .91
<EPS-DILUTED> .91
</TABLE>
