PROSPECTUS SUPPLEMENT File pursuant
(To Prospectus dated September 8, 1993) to rule 424(b)(2)
Registration No. 33-67682
$60,000,000
ROLLINS TRUCK LEASING CORP.
6 7/8% Collateral Trust Debentures, Series Q, due August 1, 2001
______________
Interest on the Series Q Debentures accrues from August 7, 1996 and is
payable semiannually on August 1 and February 1, commencing February 1, 1997.
The Series Q Debentures may not be redeemed prior to maturity. See "Terms of
the Series Q Debentures" herein.
______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
______________
Price to Underwriting Proceeds to
Public (1) Discount (2) Company (1)(3)
Per Debenture 99.977% .60% 99.377%
Total $59,986,200 $360,000 $59,626,200
_________
(1) Plus accrued interest, if any, from August 7, 1996.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".
(3) Before deducting expenses of the Company estimated at $30,000.
______________
The Series Q Debentures are offered by the Underwriter, subject to prior
sale, when, as and if issued to and accepted by the Underwriter, subject to
approval of certain legal matters by counsel for the Underwriter. The
Underwriter reserves the right to withdraw, cancel or modify such offer and
to reject orders in whole or in part. It is expected that delivery of the
Series Q Debentures will be made in New York, New York on or about August 7,
1996.
______________
Merrill Lynch & Co.
______________
The date of this Prospectus Supplement is August 2, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
DEBENTURES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
______________
TERMS OF THE Series Q DEBENTURES
The following description of the particular terms of the Series Q
Debentures offered hereby supplements the description of the general terms
and provisions of the Debentures set forth in the Prospectus under the
caption "Description of Debentures".
General
The Series Q Debentures will mature August 1, 2001, will be limited to
$60,000,000 aggregate principal amount and will be issued only in fully
registered form, without coupons, in denominations of $1,000 and any integral
multiple thereof. Principal will be payable at the agency of Rollins Truck
Leasing Corp. (the "Company") in Chicago, Illinois or New York, New York.
Interest at the annual rate set forth on the cover page of this
Prospectus Supplement will accrue from August 7, 1996 and is payable
semiannually on August 1 and February 1 commencing February 1, 1997, to the
persons in whose names the Series Q Debentures are registered on the
Debenture registry books on the preceding July 15 and January 15,
respectively, and may be paid by checks mailed to such persons.
At June 30, 1996, the Company was permitted to pay dividends and make
other distributions of up to $180,769,000 pursuant to the limitation on
dividends covenant described in the accompanying Prospectus. See
"Description of Debentures -- Certain Covenants of the Company -- Limitation
on Dividends" in the accompanying Prospectus.
Other than the limitation on dividends and the limitation on consolidated
indebtedness, the Collateral Trust Indenture contains no provisions that may
afford debt holders protection in the event of any restructuring,
recapitalization or other highly leveraged transaction. See "Description of
Debentures -- Limitation on Consolidated Indebtedness" in the accompanying
Prospectus.
Although no such transaction is contemplated, the Company will comply
with any applicable tender offer rules, including, but not limited to, Rule
14e-1 of the Securities Exchange Act of 1934, with respect to any repurchase
of securities by the Company.
Redemption
The Series Q Debentures may not be redeemed prior to maturity.
Security
At the time of the issuance of the Series Q Debentures, the Trustee will
receive a pledge of a $60,000,000 unsecured promissory note of the Company's
subsidiary, Rollins Leasing Corp. ("Rollins"). After the issuance of the
Series Q Debentures, there will be $545,000,000 principal amount of
Debentures outstanding. The Debentures will be secured by pledges of an
aggregate of $545,000,000 principal amount of unsecured promissory notes of
Rollins. Under certain circumstances set forth under "Description of
Debentures -- Security Provisions" in the accompanying Prospectus, the
promissory notes may be required to be secured by Rollins by liens on their
vehicles and vehicles leases.
Concerning the Trustee
The Series Q Debentures will be issued under a Collateral Trust Indenture
dated as of 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 as of May 15, 1990, and as supplemented by the
Sixteenth Supplemental Indenture dated as of August 7, 1996, between the
Company and First Trust of Illinois, National Association (Successor Trustee
to Bank of America Illinois), as Trustee (the "Trustee").
USE OF PROCEEDS
The Company will advance a total of $60,000,000 to Rollins consisting of
the net proceeds from the Series Q Debentures and other funds of the Company
in exchange for the note of that subsidiary. Rollins will use these funds to
purchase transportation equipment and repay indebtedness.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following two paragraphs supersede the information under the heading
"Incorporation of Certain Documents by Reference" in the accompanying
Prospectus.
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated by reference in the accompanying
Prospectus:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1995;
2. The Company's Proxy Statement relating to the Annual Meeting of
Shareholders held on January 25, 1996;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1995;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996;
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996; and
6. All documents filed subsequent to the date of this Prospectus
Supplement, and prior to the termination of the offering of the
Debentures, by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 shall be deemed
to be incorporated by reference in the Prospectus.
The Company undertakes to provide without charge to each person to whom
the accompanying Prospectus is delivered, on the request of any such person,
copies of any or all of the documents incorporated by reference therein,
other than exhibits to such documents. Requests for such copies should be
directed to Rollins Truck Leasing Corp., One Rollins Plaza, P. O. Box 1791,
Wilmington, Delaware 19899, Attention of Patrick J. Bagley (Telephone: (302)
426-3409).
<TABLE>
<PAGE>
SUMMARY FINANCIAL DATA
($ in thousands)
The following summary is qualified in its entirety by the detailed information
and financial statements available as described under
"Incorporation of Certain Documents by Reference".
Nine Months Ended
<CAPTION> June 30, Fiscal Year Ended September 30,
1996 1995 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 377,936 $ 358,476 $ 482,612 $450,903 $408,778 $380,384 $341,882
Expenses:
Operating 157,347 143,623 194,073 183,222 167,248 160,023 141,154
Depreciation 117,153 108,431 146,777 130,512 118,144 109,603 97,770
Gain on sale of property and equipment (6,436) (10,346) (12,657) (8,530) (6,139) (3,110) (582)
Selling and administrative 36,091 32,079 43,146 42,473 40,440 37,855 33,694
304,155 273,787 371,339 347,677 319,693 304,371 272,036
Earnings before interest and income taxes 73,781 84,689 111,273 103,226 89,085 76,013 69,846
Interest income - 272 272 593 1,023 1,500 2,080
Interest (expense) (35,459) (32,735) (44,453) (37,429) (35,451) (36,845) (40,462)
Earnings before income taxes 38,322 52,226 67,092 66,390 54,657 40,668 31,464
Income taxes 14,792 20,211 25,756 26,562 24,241 16,029 12,497
Net earnings $ 23,530 $ 32,015 $ 41,336 $ 39,828 $ 30,416 $ 24,639 $ 18,967
Total assets $1,102,912 $1,006,529 $1,027,029 $909,717 $781,161 $708,483 $656,402
Equipment financing obligations $ 629,495 $ 564,765 $ 573,554 $498,365 $427,307 $390,256 $378,927
Long-term debt $ 540 $ 670 $ 632 $ 782 $ 922 $ 6,826 $ 9,093
Shareholders' equity $ 284,702 $ 274,078 $ 275,553 $251,197 $216,750 $191,027 $169,393
Ratio of earnings to fixed charges (1) 2.00 2.47 2.39 2.66 2.47 2.07 1.77
_____________________
(1) For purposes of computing the ratio of earnings to fixed charges, fixed charges consist of interest, the portion of rental
expenses identified as interest and amortization of debt expense. Earnings are computed by adding the amount of such fixed
charges to earnings before income taxes.
</TABLE>
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to Merrill Lynch, Pierce, Fenner &
Smith Incorporated (the "Underwriter") and the Underwriter has agreed to
purchase the entire principal amount of the Debentures offered hereby.
Under the terms and conditions of the Underwriting Agreement, the
Underwriter is committed to take and pay for all of the Debentures, if any
are taken.
The Underwriter has advised the Company that it proposes initially to
offer the Debentures to the public at the public offering price set forth on
the cover page of this Prospectus Supplement and to certain dealers at such
price less a concession not in excess of .35% of the principal amount of the
Debentures. The Underwriter may allow, and such dealers may reallow, a
discount not in excess of .25% of the principal amount of the Debentures to
certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.
The Company has agreed to indemnify the Underwriter against certain
liabilities including liabilities under the Securities Act of 1933.
EXPERTS
The financial statements incorporated in this Prospectus Supplement and
the accompanying Prospectus by reference to the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1995 have been so
incorporated in reliance on the report of KPMG Peat Marwick LLP, independent
certified public accountants, given on the authority of said firm as experts
in auditing and accounting.
LEGAL OPINIONS
Certain legal matters relating to the Series Q Debentures will be passed
upon for the Company by J. Carlisle Peet, III, Esq., Assistant General
Counsel and Assistant Secretary of the Company and for the Underwriter by
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019.
Mr. Peet owns beneficially 16,216 shares of Common Stock of the Company.
No dealer, salesperson or other
individual has been authorized to give
any information or to make any
representations other than those
contained or incorporated by reference
in this Prospectus Supplement or the
Prospectus in connection with the offer
made by this Prospectus Supplement and
the Prospectus and, if given or made,
such information or representations
must not be relied upon as having been
authorized by the Company or the
Underwriter. Neither the delivery of
this Prospectus Supplement and the
Prospectus nor any sale made hereunder
and thereunder shall under any
circumstances create an implication
that there has been no change in the
affairs of the Company since the date
hereof. The Prospectus Supplement and
the Prospectus do not constitute an
offer or solicitation by anyone in any
state in which such offer or
solicitation is not authorized or in
which the person making such offer or
solicitation is not qualified to do so
or to anyone to whom it is unlawful to
make such offer or solicitation.
______________
TABLE OF CONTENTS
Prospectus Supplement
Page
Terms of the Series Q Debentures. .S-2
Use of Proceeds . . . . . . . . . .S-3
Incorporation of Certain Documents
by Reference. . . . . . . . . . .S-3
Summary Financial Data. . . . . . .S-5
Underwriting. . . . . . . . . . . .S-6
Experts . . . . . . . . . . . . . .S-6
Legal Opinions. . . . . . . . . . .S-6
Prospectus
Available Information . . . . . . . 2
Incorporation of Certain Documents
by Reference. . . . . . . . . . . 2
Summary Financial Data. . . . . . . 3
Rollins Truck Leasing Corp. . . . . 5
Use of Proceeds . . . . . . . . . . 5
Description of Debentures . . . . . 6
Plan of Distribution. . . . . . . . 10
Experts . . . . . . . . . . . . . . 11
Legal Opinions. . . . . . . . . . . 11
$60,000,000
ROLLINS TRUCK LEASING CORP.
6 7/8% Collateral Trust Debentures
Series Q,
due August 1, 2001
______________
PROSPECTUS SUPPLEMENT
______________
Merrill Lynch & Co.
August 2, 1996
<PAGE>
PROSPECTUS
ROLLINS TRUCK LEASING CORP.
COLLATERAL TRUST DEBENTURES
Rollins Truck Leasing Corp. (formerly RLC CORP. the "Company") from time
to time may offer its Collateral Trust Debentures (the "Debentures") up to an
aggregate principal amount of $200,000,000. The Debentures may be offered as
separate series in amounts, at prices and on terms to be set forth in
supplements to this Prospectus. The Company may sell the Debentures to or
through one or more underwriters, and also may sell the Debentures directly
to other purchasers or through agents or dealers. See "Plan of
Distribution".
The terms of the Debentures, including, where applicable, the specific
designation, aggregate principal amount, denominations, maturity, rate (which
may be fixed or variable) and time of payment of interest, any terms for
redemption at the option of the Company, any terms for sinking fund payments,
the initial public offering price, the names of, and the principal amounts to
be purchased by, underwriters and the compensation of such underwriters, any
listing of the Debentures on a securities exchange and the other terms in
connection with the offering and sale of the Debentures in respect of which
this Prospectus is being delivered, are set forth in the accompanying
Prospectus Supplement (the "Prospectus Supplement").
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is September 8, 1993.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at 7 World Trade Center, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511. Copies of such material can be obtained upon written request addressed
to the Commission, Public Reference Branch of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Company's
Common Stock is listed on both the New York and Pacific Stock Exchanges and
reports, proxy statements and other information concerning the Company can be
inspected at the offices of either Exchange.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act"). This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement which may be inspected
without charge at the Public Reference Branch of the Commission, 450 Fifth
Street, N.W., Washington, D.C.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1992;
2. The Company's Proxy Statement relating to the Annual Meeting of
Shareholders held on January 28, 1993;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1992;
4. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1993;
5. The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1993 and
6. All documents filed subsequent to the date of this Prospectus, and
prior to the termination of the offering of the Debentures, by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act shall be deemed to be incorporated by reference in this Prospectus.
The Company undertakes to provide without charge to each person to whom
this Prospectus is delivered, on the written or oral request of any such
person, copies of any or all of the documents incorporated by reference
herein, other than exhibits to such documents. Requests for such copies
should be directed to Rollins Truck Leasing Corp., P. O. Box 1791,
Wilmington, DE 19899, Attn: of Patrick J. Bagley, (Tele: (302) 426-3409).
<PAGE>
SUMMARY FINANCIAL DATA
($ In Thousands)
The following summary has been prepared to reflect the continuing operations
of the Company (see notes 1 and 3 below) and is qualified in its entirety by
the detailed information and financial statements available as described
under "Incorporation of Certain Documents by Reference".
<TABLE>
Nine Months Ended
<CAPTION> June 30, Fiscal Year Ended September 30,
1993 1992 1992 1991 1990 1989 1988
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $301,726 $279,704 $380,384 $341,882 $331,173 $312,025 $275,464
Expenses:
Operating 126,130 117,570 160,023 141,154 135,949 126,765 111,815
Depreciation, net 82,554 79,622 106,493 97,188 90,396 86,230 75,911
Selling and administrative 29,377 27,449 37,855 33,694 34,595 31,696 29,618
238,061 224,641 304,371 272,036 260,940 244,691 217,344
Earnings before interest expense
and income taxes 63,665 55,063 76,013 69,846 70,233 67,334 58,120
Interest expense, net 25,583 26,523 35,345 38,382 40,665 39,758 32,104
Earnings before income taxes and
cumulative effect of change in
accounting principle 38,082 28,540 40,668 31,464 29,568 27,576 26,016
Income taxes 15,233 11,416 16,029 12,497 11,535 10,778 10,345
Earnings from continuing operations
before cumulative effect of change
in accounting principle 22,849 17,124 24,639 18,967 18,033 16,798 15,671
Earnings from spun-off operations (1) _______ ________ ________ ________ ________ 501 1,412
Earnings before cumulative effect
of change in accounting principle 22,849 17,124 24,639 18,967 18,033 17,299 17,083
Cumulative effect (to September 30, 1987)
of adoption of SFAS No. 96 (2) ________ ________ ________ ________ ________ ________ 9,125
Net earnings $ 22,849 $ 17,124 $ 24,639 $ 18,967 $ 18,033 $ 17,299 $ 26,208
Total assets $771,162 $698,048 $708,483 $656,402 $658,451 $631,204 $586,793 (3)
Equipment financing obligations $434,304 $401,179 $390,256 $378,927 $407,170 $394,353 $362,317
Long-term debt $ 1,284 $ 6,982 $ 6,826 $ 9,093 $ 22,625 $ 31,718 $ 35,619 (3)
Shareholders' equity $210,375 $183,619 $191,027 $169,393 $133,899 $120,967 $106,687 (3)
Ratio of earnings to fixed charges (4) 2.40 2.01 2.07 1.77 1.69 1.65 1.75 (3)<PAGE>
(1)
On January 25, 1989 the Company spun-off its bulk trucking operations to
its common shareholders.
(2) As of October 1, 1987, the Company adopted SFAS No. 96 - Accounting for
Income Taxes under which deferred income taxes provided in prior periods
were adjusted to reflect current income tax rates.
(3) Excludes spun-off bulk trucking operations.
(4) For purposes of computing the ratio of earnings to fixed charges, fixed
charges consist of interest, the portion of rental expenses identified
as interest and amortization of debt expense. Earnings are computed by
adding the amount of such fixed charges to earnings before income taxes
and cumulative effect of change in accounting principle.<PAGE>
</TABLE>
ROLLINS TRUCK LEASING CORP.
Rollins Truck Leasing Corp. ("the Company") is incorporated in the State
of Delaware. Its mailing address and telephone number for its principal
executive offices are One Rollins Plaza, P. O. Box 1791, Wilmington, Delaware
19899, and (302) 426-2700. On January 25, 1990 the name of the Company was
changed from RLC CORP. to Rollins Truck Leasing Corp.
The Company has one principal subsidiary, Rollins Leasing Corp.
("Rollins"). Rollins is engaged primarily in full service leasing and
short-term rental of tractors, trailers and trucks and related services.
Prior to January 25, 1989 the Company was also engaged in the bulk
trucking business primarily through its subsidiary Matlack, Inc. ("Matlack").
On that date the Company spun-off its bulk trucking business to its common
shareholders. The operating results of the bulk trucking business are shown
as "Earnings from spun-off operations" in the Summary Financial Data on page
3.
Full service leasing accounts for the major portion of Rollins' revenues.
Under these leases, Rollins recommends and 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 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, licensing and
access to the Rollins 24-hour-a-day emergency road service.
Another service provided by the Company is Dedicated Carriage Service
("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.
Rollins maintains more than 24,000 vehicles from nearly 200 owned or
leased facilities located throughout the United States. The Company believes
that Rollins is the third largest competitor in the field of full service,
long-term leasing and short-term rental of heavy duty trucks in the United
States.
USE OF PROCEEDS
The proceeds to be received by the Company from the sale of the
Debentures will be advanced to Rollins (the "Participating Subsidiary") which
will use such funds to purchase vehicles and related equipment, reduce
indebtedness under its individual revolving credit agreement or retire other
existing equipment financing obligations. Each Prospectus Supplement will
include the specific amount of the proceeds from the sale of the Debentures
offered thereby to be applied to asset purchases or debt reductions as noted
in the preceding sentence. Pending such application by Rollins the proceeds
may be temporarily invested in short-term marketable securities.
DESCRIPTION OF DEBENTURES
The following description of the Debentures sets forth certain general
terms and provisions of the Debentures to which any Prospectus Supplement may
relate. The particular terms of the Debentures offered by any Prospectus
Supplement (the "Offered Debentures") and the extent, if any, to which such
general provisions may apply to the Offered Debentures will be described in
the Prospectus Supplement relating to such Offered Debentures.
The Offered Debentures will be issued under a Collateral Trust Indenture
dated as of March 21, 1983 (the "Collateral Trust Indenture"), between the
Company and First Trust of Illinois, National Association, as Successor
Trustee (the "Trustee"), as supplemented and amended by a Third Supplemental
Indenture thereto dated as of February 20, 1986 (the "Third Supplemental
Indenture") and by the Eighth Supplemental Indenture dated as of May 15, 1990
(the "Eighth Supplemental Indenture") and as supplemented and amended from
time to time, including supplemental indentures setting forth the terms of
each series of the Offered Debentures. The Collateral Trust Indenture, as
amended by the Third Supplemental Indenture and the Eighth Supplemental
Indenture, is herein called the "Indenture". The following statements are
subject to the detailed provisions of the Indenture, a copy of which is
incorporated by reference as an exhibit to the Registration Statement.
References appearing below are to the Collateral Trust Indenture unless
otherwise indicated and wherever particular provisions are referred to such
provisions are incorporated by reference as a part of the statement made and
the statement is qualified in its entirety by such reference. Whenever a
defined term is referred to and not herein defined, the definition thereof is
contained in the Indenture. As of the date of this Prospectus, an aggregate
of $342,500,000 of Collateral Trust Debentures are outstanding under the
Collateral Trust Indenture. Reference is made to the Prospectus Supplement
for any subsequent Series of Debentures issued under the Indenture.
General
The Offered Debentures will be obligations of the Company secured at the
time of issuance by the pledge of unsecured demand promissory notes issued by
one or more Participating Subsidiaries, which notes may in turn thereafter be
secured by liens on Vehicles and vehicle leases under the circumstances set
forth below under "Security Provisions". The Company and Rollins are
prohibited (at their own volition) from securing the Notes by creating a
security interest in the Vehicles. A Participating Subsidiary, as defined in
the Indenture, means a wholly-owned subsidiary of the Company engaged
primarily in the business of renting and/or leasing Vehicles and/or providing
carriage by Vehicles and which has executed and delivered one or more Loan
Agreements and issued one or more Notes and (except for the purpose of a new
issue of Debentures) any corporation that was such a subsidiary for so long
as any such Loan Agreement remains undischarged or any such Note remains
unpaid. As of the date of this Prospectus, Rollins is the only subsidiary of
the Company that qualifies as a Participating Subsidiary. Matlack, a
subsidiary of the Company until January 25, 1989, remains a "Participating
Subsidiary" for all purposes of the Indenture other than as the issuer of a
Note in connection with a new issue of Debentures (Section 4 of the Eighth
Supplemental Indenture). As of the date of this Prospectus the outstanding
Debentures are secured by the pledge of $9,500,000 principal amount of the
unsecured demand promissory notes of Matlack and $333,000,000 principal
amount of the unsecured demand promissory notes of Rollins.
The Indenture does not limit the amount of Debentures that may be issued
thereunder and provides that Debentures may be issued thereunder from time to
time in one or more series.
Redemption Provisions
All or any part of the Debentures of any series may be redeemed before
maturity at such time or from time to time, and on such terms, subject to the
provisions of the Indenture, as the Board of Directors of the Company may
determine and as shall be expressed in the Supplemental Indenture
establishing the Debentures of such series. The Supplemental Indenture
establishing a series of Debentures may also provide for mandatory and
optional sinking fund payments to redeem the Debentures including the amounts
of such payments, the payment dates and the redemption prices.
In an environment of falling interest rates, any provisions for the
redemption of Debentures prior to maturity or for optional additional sinking
fund payments could adversely affect Debentureholders whose securities were
redeemed if they were unable to reinvest their proceeds at comparable
interest rates.
Reference is made to the Prospectus Supplement relating to the particular
series of Offered Debentures offered thereby for the following terms of the
Offered Debentures: (i) the title of the Offered Debentures; (ii) any limit
on the aggregate principal amount of the Offered Debentures; (iii) the price
or prices at which the Offered Debentures will be issued; (iv) the date or
dates on which the Offered Debentures will mature; (v) the rate or rates
(which may be fixed or variable) per annum at which the Offered Debentures
will bear interest; (vi) the interest payment dates on which such interest
will be payable, the date on which payment of such interest will commence and
the regular record dates for such interest payment dates; (vii) the dates, if
any, on which, and the price or prices at which, the Offered Debentures will,
pursuant to any mandatory sinking fund provisions, or may, pursuant to any
optional sinking fund provisions, be redeemed by the Company, and the other
detailed terms and provisions of such sinking fund; and (viii) the date, if
any, after which, and the price or prices at which, the Offered Debentures
may, pursuant to any optional redemption provisions, be redeemed at the
option of the Company and the other detailed terms and provisions of such
optional redemption.
Principal and any premium will be payable at the agency of the Company
in Chicago, Illinois, or New York, New York. The Debentures may be presented
for registration of transfer or exchange at such offices, subject to the
limitations provided in the Indenture, without any service charge, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. (Sections 2.06, 2.08,
2.11, 2.12 and 7.02).
The Indenture requires that funds equal to the principal amount of
Debentures issued from time to time will, on the date of such issuance, be
advanced to one or more Participating Subsidiaries. In exchange, each
Participating Subsidiary will issue to the Company a promissory note (in the
aggregate, "Notes") in the principal amount of any advances to it. Matlack,
a subsidiary of the Company until January 25, 1989, remains a "Participating
Subsidiary" for all purposes of the Indenture other than as the issuer of a
Note in connection with a new issue of Debentures (Section 4 of the Eighth
Supplemental Indenture). The Company in turn will pledge the Notes to the
Trustee as security for all Debentures. Notes will be payable as to
principal on demand and will bear interest at the same rate, payable at the
same time, as interest on the Debentures being so issued. The Indenture
requires that after giving effect to the issue of additional Debentures and
to any concurrent retirement of other Debentures by use of any proceeds from
such issue and any moneys then held by the Trustee, the obligations to pay
principal, premium, if any, and interest contained in all the Notes shall be
sufficient, in the aggregate, to pay all principal, premium, if any, and
interest on all Outstanding Debentures. (Granting Clauses and Section 4.01).
Certain Covenants of the Company
Limitation on Equipment Indebtedness of Participating Subsidiaries. The
Company covenants that if the aggregate amount of the Equipment Indebtedness
of any Participating Subsidiary (which, for the purposes of this covenant
only, includes the wholly-owned subsidiaries of a Participating Subsidiary)
exceeds 90% of the Net Book Value of its Vehicles at the end of any fiscal
quarter, the Company will, on or before 45 days after the expiration of such
fiscal quarter, cause such Participating Subsidiary to prepay one or more of
its Notes to the extent necessary to reduce such percentage to not more that
90%. (Section 7.14).
Certain Definitions. Equipment Indebtedness means all indebtedness other
than (i) Permitted Indebtedness, (ii) indebtedness expressly subordinated to
the prior payment of the Debentures or the Notes, as the case may be, (iii)
indebtedness secured by real estate or improvements thereon (to the extent
such indebtedness does not exceed the greater of cost or appraised value of
such real estate and improvements) and (iv) trade indebtedness payable within
90 days from the date incurred. Net Book Value with respect to a Vehicle
means initial cost depreciated on a monthly basis at the faster of (x) the
fastest rate prescribed by any instrument at the time in effect evidencing or
pursuant to which there is outstanding any indebtedness of the Vehicle owner,
or (y) the rate then utilized for the purpose of financial statements
submitted to the Company's stockholders. Permitted Indebtedness means
indebtedness originally created in favor of a manufacturer or seller or
financial institution incurred to finance the purchase of vehicles and
secured by a lien on such purchased vehicles and indebtedness secured by a
lien on vehicles which predates the acquisition by the Company of the
business owning such vehicles. Vehicle means a self-propelled chattel and
all related equipment and accessories or a chattel which customarily moves
with a self-propelled chattel, including a truck, truck tractor, truck
trailer, container, automobile, bus, or other similar unit and materials
handling equipment, but does not include any such vehicle leased from another
or any vehicle which has been pledged to secure Permitted Indebtedness.
(Article 1).
Limitation on Dividends. The Company may not, so long as any of the
Offered Debentures are outstanding, declare or pay any dividend or make any
distribution on any shares of its capital stock (other than dividends or
distributions payable in shares of capital stock of the Company) or make or
permit any subsidiary to make any payment to purchase, redeem or otherwise
acquire any shares of capital stock of the Company if, upon giving effect
thereto, the aggregate amount expended for all such purposes subsequent to
September 30, 1984 (the "Applicable Date") would exceed the sum of
Consolidated Net Earnings since the Applicable Date and $10,000,000, except
that the Company may credit against such purchases, redemptions and
retirements of capital stock of the Company the net consideration received by
the Company subsequent to the Applicable Date from the issue or sale of
additional capital stock of the Company. (Section 7 of the Third
Supplemental Indenture).
Limitation on Consolidated Indebtedness. As long as any of the Offered
Debentures are outstanding, the Company may not, nor may it permit any of its
subsidiaries to, create, incur or assume any Indebtedness unless immediately
after such creation, incurring or assumption, and after giving effect to the
utilization of the proceeds thereof, the aggregate amount of Consolidated
Indebtedness of the Company shall be less than 400% of the Consolidated Net
Worth of the Company. (Section 7.13). Other than the limitation on
consolidated indebtedness, the Indenture contains no provisions that may
afford debt holders protection in the event of a highly leveraged
transaction.
Security Provisions
All Offered Debentures will be obligations of the Company secured by
Notes pledged to the Trustee. Any additional series of Debentures will be
secured by Notes of Participating Subsidiaries pledged to the Trustee. Such
Notes will be unsecured obligations of the makers thereof, except that if any
Participating Subsidiary grants or otherwise permits to exist any security
interest in its Vehicles or its vehicle leases (except statutory liens), the
Indenture requires that there be created a security interest in such Vehicles
or vehicle leases for the benefit of the Trustee as holder of the Notes of
such Participating Subsidiary ranking equally and ratably with, and existing
for at least the same length of time as, such other security interests.
(Sections 4.01 and 7.15 and Exhibit A to the Indenture).
An agreement among the Company, Rollins and the lenders under the
existing unsecured bank revolving credit agreement between Rollins and such
lenders requires Rollins to create, at the option of the relevant lenders
(and restricts them from otherwise creating), a security interest in its
Vehicles in favor of a trustee designated by such lenders and for the benefit
of the Trustee (as holder of the Notes of Rollins), the lenders under
Rollins' bank revolving credit agreement and the holders of such other
indebtedness as may be entitled to share in such security interests. Neither
the Trustee nor the Debentureholders may initiate the creation of such a
security interest.
An agreement among the Company, Matlack and the lenders under the
existing unsecured bank revolving credit agreement between Matlack and such
lenders requires Matlack to create, at the option of the relevant lenders
(and restricts them from otherwise creating), a security interest in its
Vehicles and vehicle leases in favor of a trustee designated by such lenders
and for the benefit of the Trustee (as holder of the Notes of Matlack), the
lenders under Matlack's bank revolving credit agreement and the holders of
such other indebtedness as may be entitled to share in such security
interests. Neither the Trustee nor the Debentureholders may initiate the
creation of such a security interest.
Modification of Indenture and Waiver of Certain Covenants
With the consent of the holders of a majority in aggregate principal
amount of all Outstanding Debentures, and of at least 66 2/3% in aggregate
principal amount of each series of Debentures then Outstanding which is
affected thereby, the Trustee and the Company may modify or waive any
provisions of the Indenture or modify in any manner the rights of the
Debentureholders, except that, without the consent of the holder of each such
Outstanding Debenture of any series so affected, no such modification or
waiver shall, among other things, (i) extend the maturity of principal or
interest on such Debenture, or reduce or modify the principal amount thereof
or the interest thereon or any premium payable upon the redemption thereof,
(ii) permit the creation of any prior or pari passu lien on any of the Notes
or other pledged property, if any, or terminate the lien of the Indenture
thereon or (iii) reduce the aforesaid percentage of holders of Debentures
whose consent shall be required for such modification or waiver. (Sections
11.02 and 18.02).
Defaults and Certain Rights on Default
An Event of Default is defined in the Indenture as being: (i) default for
30 days in payment of any interest on any Debenture; (ii) default in payment
of principal or of premium, if any, on any Debenture; (iii) default in
payment of any Sinking Fund installment in respect of any Debenture; (iv)
default in the performance of the covenants described under "Certain
Covenants of the Company - Limitation on Equipment Indebtedness of
Participating Subsidiaries", "Certain Covenants of the Company - Limitation
on Dividends", and "Security Provisions" or default for 30 days in the
performance of certain covenants contained in a loan agreement relating to
any Note; (v) default for 60 days after written notice in performance of any
other covenant in the Indenture or in the Debentures; (vi) default with
respect to other Indebtedness or Lease Obligation of the Company or any
subsidiary of the Company continuing for 30 days or acceleration of the
stated maturity of any such Indebtedness or Lease Obligation in an aggregate
principal amount of $2,000,000 or more; or (vii) certain events of
bankruptcy, insolvency, receivership or reorganization relating to the
Company or any Participating Subsidiary. The Company will be required to
file with the Trustee annually a written statement as to the fulfillment of
its obligations under the Indenture. In case an Event of Default should
occur and be continuing, the Trustee or the holders of at least 25% in
principal amount of the Debentures then Outstanding (or 25% of any series of
Debentures as to which an event of Default in respect of principal, premium,
if any, interest or Sinking Fund installments has occurred) may declare the
principal of all the Debentures to be due and payable. Such declaration may,
under certain circumstances, be rescinded by the holders of a majority in
principal amount of the Debentures (and of any such series) at the time
Outstanding. (Article X and Section 7.11).
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an event of Default shall occur and be continuing, the
Trustee shall be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the holders of the
Debentures, unless such holders shall have offered to the Trustee reasonable
security or indemnity. Subject to such provisions for indemnification and
certain limitations contained in the Indenture, the holders of a majority in
principal amount of the Debentures at the time Outstanding shall have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee. (Sections 10.07, 10.08, 12.01 and 12.02).
PLAN OF DISTRIBUTION
The Company may sell the Debentures to or through one or more
underwriters, who will be named in the applicable Prospectus Supplement, and
also may sell the Debentures directly to other purchasers or through agents
or dealers. Only underwriters named in the Prospectus Supplements are deemed
to be underwriters in connection with the Debentures offered thereby.
The distribution of the Debentures may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of the Debentures, such underwriters may
receive compensation from the Company, or from purchasers of the Debentures
for whom they may act as agents, in the form of discounts, concessions or
commissions. Underwriters, dealers and agents that participate in the
distribution of the Debentures may be deemed to be underwriters and any
discounts or commissions received by them and any profit on the resale of the
Debentures by them may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter, dealer or agent
will be identified, and any such compensation will be described, in the
Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of the Debentures may
be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act, or to contribution with
respect to payments which the underwriters, dealers or agents may be required
to make in respect thereof.
Delayed Delivery Arrangements
If so indicated in the Prospectus Supplement, the Company will authorize
dealers or other persons acting as the Company's agents to solicit offers by
certain institutions to purchase the Offered Debentures from the Company
pursuant to contracts providing for payment and delivery on a specified
future date. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all
cases such institutions must be approved by the Company. The obligations of
any purchaser under any such contract will not be subject to any conditions
except that (i) the purchase of the Offered Debentures shall not at the time
of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject, and (ii) if the Offered Debentures are also being sold
to underwriters, the Company shall have sold to such underwriters the Offered
Debentures not sold for delayed delivery. The dealers or such other persons
will not have any responsibility in respect of the validity or performance of
such contracts.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-K for the fiscal year ended September
30, 1992 have been so incorporated in reliance on the report of KPMG Peat
Marwick, independent certified public accountants, which report is
incorporated by reference herein, given on the authority of said firm as
experts in auditing and accounting.
LEGAL OPINIONS
Certain legal matters relating to the Offered Debentures will be passed
upon for the Company by John C. Peet, Jr., Esq., Vice President-General
Counsel and Secretary of the Company, and by attorneys for the underwriters,
if any, who are identified in the Prospectus Supplement. As of the date of
this Prospectus, Mr. Peet owns beneficially 28,749 shares of the Common Stock
of the Company and owns directly options to purchase 7,500 shares of such
stock.
