PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED FEBRUARY 18, 1997
$75,000,000
ROLLINS TRUCK LEASING CORP.
7.30% COLLATERAL TRUST DEBENTURES, SERIES R, DUE MARCH 1, 2007
---------------------------
Interest on the Series R Debentures accrues from March 1, 1997 and is
payable semiannually on March 1 and September 1, commencing September 1, 1997.
The Series R Debentures may not be redeemed prior to maturity. The Debentures
will be represented by a global Debenture registered in the name of the nominee
of The Depository Trust Company. Beneficial interests in the global Debenture
will be shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. Except as described herein, Debentures
in definitive form will not be issued. The Debenture will be issued only in
registered form in denominations of $1,000 and integral multiples thereof. See
"Terms of the Series R Debentures", "Book-Entry, Delivery and Form" and
"Description of 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 TO WHICH IT RELATES. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
Goldman, Sachs & Co. has agreed to purchase from the Company the Series R
Debentures offered hereby for an aggregate purchase price of $74,462,250, plus
accrued interest from March 1, 1997 to date of delivery, before deducting
expenses payable by the Company, estimated to be approximately $30,000. Goldman,
Sachs & Co. propose to offer the Series R Debentures offered hereby from time to
time, in negotiated transactions or otherwise, at varying prices to be
determined at the time of each sale, subject to prior sale when, as and if
delivered to and accepted by Goldman, Sachs & Co. See "Underwriting".
---------------------------
The Series R Debentures are offered by Goldman, Sachs & Co., as specified
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that the Series R
Debentures will be ready for delivery in book-entry form only through the
facilities of DTC in New York, New York, on or about March 10, 1997, against
payment therefor in immediately available funds.
GOLDMAN, SACHS & CO.
---------------------------
The date of this Prospectus Supplement is March 5, 1997.
<PAGE>
---------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE DEBENTURES OFFERED
HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN
SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
S-2
<PAGE>
TERMS OF THE SERIES R DEBENTURES
The following description of the particular terms of the Series R
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 R Debentures will mature March 1, 2007, will be limited to
$75,000,000 aggregate principal amount and will be issued only in book-entry
form, 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
New York, NY.
Interest at the annual rate set forth on the cover page of this Prospectus
Supplement will accrue from March 1, 1997, and is payable semiannually on March
1 and September 1 commencing September 1, 1997, to the persons in whose names
the Series R Debentures are registered on the Debenture registry books on the
preceding February 15 and August 15, respectively, and may be paid by checks
mailed to such persons.
REDEMPTION
The Series R Debentures may not be redeemed prior to maturity.
SECURITY
At the time of the issuance of the Series R Debentures, the Trustee will
receive a pledge of a $75,000,000 unsecured promissory note of the Company's
subsidiary, Rollins Leasing Corp. ("Leasing"). After the issuance of the Series
R Debentures, there will be $620,000,000 principal amount of Debentures
outstanding. The Debentures will be secured by pledges of an aggregate of
$620,000,000 principal amount of unsecured promissory notes of Leasing. 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 Leasing by liens on their vehicles and vehicles leases.
CONCERNING THE TRUSTEE
The Series R 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 and amended by the
Seventeenth Supplemental Indenture dated as of March 10, 1997, between the
Company and First Union National Bank ("First Union"), as Trustee (the
"Trustee"). In the event that notes issued to the Trustee by Participating
Subsidiaries (as defined in the Eighth Supplemental Indenture) become secured
under the circumstances set forth under "Description of Debentures -- Security
Provisions" in the accompanying Prospectus, First Union will act as security
trustee for the security interest of the Trustee, as holder of the Participating
Subsidiary notes, and the security interest of such other creditors of the
Participating Subsidiaries as may be entitled to share therein.
S-3
<PAGE>
BOOK-ENTRY SYSTEM
The Depository Trust Company ("DTC"), New York, NY, will act as securities
depository for the Series R Debentures. The Series R Debentures will be issued
as fully-registered securities registered in the name of Cede & Co. (DTC's
partnership nominee). One fully-registered global Debenture certificate will be
issued for the Series R Debentures in the aggregate principal amount of such
issue, and will be deposited with, or on behalf of, DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Participants") deposit
with DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is owned by a number
of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The Rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
Purchases of Series R Debentures under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Series R
Debentures on DTC's records. The ownership interest of each actual purchaser of
the Series R Debentures ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial Owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Series R Debentures are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in the Series R Debentures, except in the event that
use of the book-entry system for the Series R Debentures is discontinued.
To facilitate subsequent transfers, all Series R Debentures deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Series R Debentures with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Series R Debentures; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Series R Debentures are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
S-4
<PAGE>
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the Series
R Debentures. Under its usual procedures, DTC would mail an Omnibus Proxy to the
Company as soon as possible after the record date. The Omnibus Proxy would
assign Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the Series R Debentures are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Series R Debentures will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on the payable
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on the payable date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name", and
will be the responsibility of such Participant and not of DTC, the Company or
the Trustee, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal and interest to DTC is the
responsibility of the Company or the Trustee, disbursement of such payments to
Direct Participants is the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depository with
respect to the Series R Debentures at any time by giving reasonable notice to
the Company or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, definitive certificates are
required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
definitive certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
USE OF PROCEEDS
The Company will advance a total of $75,000,000 to Leasing consisting of
the net proceeds from the Series R Debentures and other funds of the Company in
exchange for the note of that subsidiary. Leasing will use these funds to
purchase transportation equipment and repay existing indebtedness.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to Goldman, Sachs & Co. ("Goldman
Sachs") and Goldman Sachs have agreed to purchase the entire principal amount of
the Debentures offered hereby.
S-5
<PAGE>
Under the terms and conditions of the Underwriting Agreement, Goldman Sachs
are committed to take and pay for all of the Debentures, if any are taken.
Goldman Sachs propose to offer the Series R Debentures offered hereby from
time to time, in negotiated transactions or otherwise, at varying prices to be
determined at the time of each sale. In connection with the sale of the Series R
Debentures offered hereby, Goldman Sachs may be deemed to have received
compensation from the Company in the form of underwriting discounts. Goldman
Sachs may effect such transactions by selling Series R Debentures to or through
dealers, and such dealers may receive compensation in the form of discounts,
concessions or commissions from Goldman Sachs and/or the purchasers of such
Series R Debentures for whom they may act as agents or to whom they may sell as
principal.
During and after the offering, Goldman Sachs may purchase and sell Series R
Debentures in the open market. These transactions may include overallotment and
stabilizing transactions and purchases to cover short positions created in
connection with the offering. Goldman Sachs also may impose a penalty bid,
whereby selling concessions allowed to broker-dealers in respect of the Series R
Debentures sold in the offering for their account may be reclaimed by Goldman
Sachs if such securities are repurchased by Goldman Sachs in stabilizing or
covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the Series R Debentures which may be higher than the
price that might otherwise prevail in the open market. These transactions may be
effected in the over-the-counter market or otherwise, and these activities, if
commenced, may be discontinued at any time.
The Series R Debentures are a new issue of securities with no established
trading market. The Company has been advised by Goldman Sachs that they intend
to make a market in the Series R Debentures but are not obligated to do so and
may discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Series R Debentures.
The Company has agreed to indemnify Goldman Sachs against certain
liabilities including liabilities under the Securities Act of 1933.
LEGAL OPINIONS
Certain legal matters relating to the Series R 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 Goldman Sachs by Cravath, Swaine
& Moore, 825 Eighth Avenue, New York, New York 10019. Mr. Peet owns beneficially
12,516 shares of Common Stock of the Company and owns directly options to
purchase 41,438 shares of such stock.
S-6
<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 $230,000,000. 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").
See "Risk Factors" commencing on page 4 for a discussion of certain factors
that should be considered by prospective purchasers of the Collateral Trust
Debentures.
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 FEBRUARY 18, 1997.
<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 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at 7 World Trade Center,
Suite 1300, 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. In addition, such material may also be accessed
electronically by means of the SEC's home page on the Internet at
http://www.sec.gov. 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, 1996;
2. The Company's Proxy Statement relating to the Annual Meeting of
Shareholders held on January 30, 1997;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1996;
4. 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, Delaware 19899,
Attention of Patrick J. Bagley, Vice President--Finance and Treasurer
(Telephone: (302) 426-3409).
2
<PAGE>
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 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.
Full-service leasing accounts for the major portion of Rollins' revenues.
Under these leases, Rollins purchases vehicles and components that 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 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, 1996 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 1996 was in excess of 83%. 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.
The Company, through its principal subsidiaries maintains more than 32,000
vehicles from 202 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 commercial rental of
heavy duty trucks in the United States.
3
<PAGE>
SUMMARY FINANCIAL DATA
($ In Thousands, except per share amounts)
The following summary has been prepared to reflect the operations of the
Company and is qualified in its entirety by the detailed information and
financial statements available as described under "Incorporation of Certain
Documents by Reference".
<TABLE>
<CAPTION>
QUARTER ENDED
DECEMBER 31, FISCAL YEAR ENDED SEPTEMBER 30,
------------------------ ---------------------------------------------------------
1996 1995 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues.................... $ 133,697 $ 125,021 $ 513,779 $ 482,612 $ 450,903 $ 408,778 $ 380,384
Expenses:
Operating................. 54,646 51,201 211,919 194,073 183,222 167,248 160,023
Depreciation.............. 41,774 38,426 158,407 146,777 130,512 118,144 109,603
Gain on sale of property
and equipment........... (2,429) (1,899) (7,950) (12,657) (8,530) (6,139) (3,110)
Selling and
administrative.......... 11,498 11,904 47,995 43,146 42,473 40,440 37,855
----------- ----------- ----------- ----------- --------- --------- ---------
105,489 99,632 410,371 371,339 347,677 319,693 304,371
----------- ----------- ----------- ----------- --------- --------- ---------
Operating earnings.......... 28,208 25,389 103,408 111,273 103,226 89,085 76,013
Interest income............. -- -- -- 272 593 1,023 1,500
Interest expense............ (12,104) (11,803) (47,481) (44,453) (37,429) (35,451) (36,845)
----------- ----------- ----------- ----------- --------- --------- ---------
Earnings before income
taxes..................... 16,104 13,586 55,927 67,092 66,390 54,657 40,668
Income taxes................ 6,281 5,230 21,811 25,756 26,562 24,241 16,029
----------- ----------- ----------- ----------- --------- --------- ---------
Net earnings................ $ 9,823 $ 8,356 $ 34,116 $ 41,336 $ 39,828 $ 30,416 $ 24,639
=========== =========== =========== =========== ========= ========= =========
Earnings per share.......... $ .23 $ .19 $ .78 $ .91 $ .86 $ .66 $ .53
=========== =========== =========== =========== ========= ========= =========
Average common shares and
equivalents outstanding... 43,110 44,818 43,730 45,365 46,310 46,260 46,007
----------- ----------- ----------- ----------- --------- --------- ---------
Total assets................ $ 1,110,866 $ 1,042,273 $ 1,125,212 $ 1,027,029 $ 909,717 $ 781,161 $ 708,483
Equipment financing
obligations............... $ 620,308 $ 580,566 $ 640,854 $ 573,554 $ 498,365 $ 427,307 $ 390,256
Long-term debt.............. $ 475 $ 601 $ 508 $ 632 $ 782 $ 922 $ 6,826
Shareholders' equity........ $ 280,689 $ 276,333 $ 284,048 $ 275,553 $ 251,197 $ 216,750 $ 191,027
Ratio of earnings to fixed
charges (1)............... 2.25 2.08 2.10 2.41 2.64 2.43 2.03
</TABLE>
- ------------------
(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.
RISK FACTORS
Prospective Debentureholders should carefully consider the following
factors, in addition to the other information in this Prospectus, before
purchasing Debentures. This Prospectus contains certain statements of a
forward-looking nature relating to future events or the future financial
performance of the Company. Prospective Debentureholders are cautioned that such
statements are only predictions and involve a number of risks and uncertainties.
Actual events or results may differ materially. In evaluating such statements,
prospective Debentureholders should specifically consider the following
4
<PAGE>
factors, and other information in this Prospectus, which could cause actual
results to differ materially from those indicated by such forward-looking
statements.
Redemption -- 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. See "Description of Debentures -- Redemption Provisions."
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. See "Description of Debentures -- Certain Covenants of the Company --
Limitation of Dividends." At December 31, 1996, the Company was permitted to pay
dividends and make other distributions of up to $183,691,000 pursuant to the
limitation on dividends covenant.
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. See "Description of Debentures -- Limitation on
Consolidated Indebtedness."
Other than the limitation on dividends and the limitation on consolidated
indebtedness described above, the Collateral Trust Indenture contains no
provisions that may afford Debentureholders protection in the event of any
restructuring, recapitalization or other highly leveraged transaction.
Tender Offers -- 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.
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.
5
<PAGE>
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.
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 Continental Bank, National
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Association (formerly Continental Illinois National Bank and Trust Company of
Chicago) as 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
$545,000,000 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. As of the date of this Prospectus, Rollins is the only subsidiary of the
Company that qualifies as a Participating Subsidiary. As of the date of this
Prospectus the outstanding Debentures are secured by the pledge of $545,000,000
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.
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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
either in Chicago, Illinois, or in 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. 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 than 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
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<PAGE>
(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
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<PAGE>
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,
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<PAGE>
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).
EXPERTS
The financial statements and financial statement schedules incorporated in
this Prospectus by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1996 have been so incorporated in reliance on
the report of KPMG Peat Marwick LLP, 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 Michael B. Kinnard, 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. Kinnard owns beneficially 1,500 shares of the Common Stock of the Company
and owns directly options to purchase 24,715 shares of such stock.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THE PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Terms of the Series R Debentures................ S-3
Book-Entry System............................... S-4
Use of Proceeds................................. S-5
Underwriting.................................... S-5
Legal Opinions.................................. S-6
PROSPECTUS
Available Information........................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Rollins Truck Leasing Corp...................... 3
Summary Financial Data.......................... 4
Risk Factors.................................... 4
Use of Proceeds................................. 5
Plan of Distribution............................ 6
Description of Debentures....................... 6
Experts......................................... 11
Legal Opinions.................................. 11
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$75,000,000
ROLLINS TRUCK LEASING CORP.
7.30% COLLATERAL TRUST DEBENTURES
SERIES R,
DUE MARCH 1, 2007
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PROSPECTUS SUPPLEMENT
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GOLDMAN, SACHS & CO.
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