_______________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________
FORM 10-K
(Mark One)
/ X / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1998
OR
/___/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to ____________
Commission file number 1-5728
ROLLINS TRUCK LEASING CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0074022
(State of Incorporation) (I.R.S. Employer Identification Number)
ONE ROLLINS PLAZA, WILMINGTON, DELAWARE 19803
(Address of principal executive offices)
Registrant's telephone number including area code (302) 426-2700
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of each exchange on
which registered
Common Stock, $1 Par Value NEW YORK STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. / X /
The aggregate market value of the voting stock held by non-
affiliates of the registrant was $564,884,000 as of October 31, 1998.
The number of shares of registrant's common stock outstanding as
of October 31, 1998 was 58,432,281.
The following documents are incorporated by reference:
Part of this form into which
Document incorporated
Proxy Statement in connection with
Annual Meeting of Shareholders
to be held January 28, 1999 III
PART I
ITEM I. BUSINESS.
The Registrant, Rollins Truck Leasing Corp., together with its
subsidiaries, is referred to as the "Company" unless the context
clearly indicates otherwise.
(a) General Development of Business
There have been no significant changes in the business of the
Company since September 30, 1997.
(b) Financial Information about Industry Segments
The Company operates principally in one industry segment and
through its principal subsidiaries, Rollins Leasing Corp. ("Rollins")
and Rollins Logistics Inc., is engaged primarily in full-service truck
leasing and rentals and the provision and management of transportation
and logistics systems. All of the Company's operations currently are
conducted within the United States. The financial information
concerning this business is included in this 1998 Annual Report on Form
10-K.
(c) Narrative Description of Business
Full-service leasing accounts for the major portion of Rollins'
revenues. Under these leases, Rollins purchases vehicles and
components 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, Rollins arranges for licenses and insurance,
pays highway and use taxes and supplies a 24-hour-a-day emergency road
service to its customers.
Through Rollins Logistics, Inc. and its subsidiaries, the Company
provides and manages transportation and logistics systems for companies
in a wide range of industries throughout the United States. These
services are designed to meet the higher demand for the outsourcing of
transportation, distribution and logistics functions. Dedicated
Carriage Services analyzes a customer's specific distribution needs and
then custom-designs and operates a transportation/distribution system,
which can include any of the services mentioned previously plus
management, drivers and other operating personnel. The Company also
offers logistics management services and warehouse management to
companies that desire to outsource their distribution and warehousing
functions to a third-party provider. These services 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, 1998 consisted
of more than 9,000 units with payload capacities ranging from 4,000 to
45,000 pounds, offers tractors, trucks and 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 1998 averaged
in excess of 85%. Rollins does not offer services in the consumer one-
way truck rental market.
Rollins also furnishes a guaranteed maintenance service to private
fleet customers who choose to own their vehicles. This service
includes preventive maintenance, fuel procurement, tax reporting,
permitting, licensing and access to the Rollins 24-hour-a-day emergency
road service.
There are many companies engaged in all aspects of vehicle rental
and leasing, some of which also operate on a nationwide basis and are
larger than the Company's business. Ryder System, Inc. and Penske
Truck Leasing Co., L.P., Inc. are respectively the largest and second
largest competitors in the truck leasing industry. The Company
believes Rollins is the third largest competitor in the field of full-
service leasing and short-term rental of heavy duty trucks in the
United States. Since the unit cost of vehicles and the cost of the
borrowed funds used to purchase such vehicles are believed to be
similar for most vehicle leasing companies, successful competition is
based in part on service.
At September 30, 1998, a total of 3,934 persons were employed by
the Company.
ITEM 2. PROPERTIES.
The Company's headquarters is located in a modern 15-story office
building of approximately 245,000 square feet owned by the Company at
One Rollins Plaza, Wilmington, DE 19803. In addition to providing
administrative office space to the Company and its subsidiaries, a
lesser portion of the building is leased to Matlack Systems, Inc. for
its use as administrative offices and corporate headquarters.
The Company's principal operating properties consist of land and
buildings used in its truck leasing and rental business. These
properties generally consist of an equipment repair facility and
administrative offices. Rollins owns or leases 206 facilities in 42
states.
ITEM 3. LEGAL PROCEEDINGS.
Neither the Company nor any of its subsidiaries is a party to any
material legal proceedings. The Company and its subsidiaries are
engaged in ordinary routine litigation incidental to the business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NONE.
PART II
<TABLE>
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
STOCK PRICES AND DIVIDENDS
At September 30, 1998, there were 2,238 holders of record of the Common Stock.
The range of share prices for the Common Stock on the New York and Pacific Stock Exchanges
and per share dividends paid on Common Stock for the fiscal years ended September 30, 1998 and
1997 are as follows:
<CAPTION>
Prices (1) Dividends (1)
1998 1997 1998 1997
High Low High Low
Fiscal Quarter
<S> <C> <C> <C> <C> <C> <C>
First ........ $12 1/4 $10 5/16 $ 8 3/4 $ 7 $.037 $.033
Second ....... 14 5/16 11 7/16 9 5/16 8 1/16 .037 .033
Third ........ 14 11 1/4 10 8 1/2 .04 .033
Fourth ....... 13 3/8 8 7/8 11 11/16 9 1/4 .04 .033
(1) Adjusted for the three-for-two common stock split distributed on March 16, 1998.
</TABLE>
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
FIVE-YEAR SELECTED FINANCIAL DATA
(Dollars in Millions, Except Per Share Amounts)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Fiscal Year Ended September 30, 1998 1997 1996 1995 1994
Revenues 610.2 556.7 513.8 482.6 450.9
Earnings before income taxes 85.1 70.2 55.9 67.1 66.4
Net earnings 52.0 42.8 34.1 41.3 39.8
Earnings per share: Basic (1) .86 .68 .52 .61 .57
Earnings per share: Diluted (1) .85 .68 .52 .61 .57
Dividends per common share (1) .15 .13 .12 .11 .09
At September 30,
Total assets 1,296.5 1,191.8 1,125.2 1,027.0 909.7
Equipment on operating leases, net 924.9 847.9 784.3 727.9 637.8
Equipment financing obligations 749.9 671.8 641.4 574.2 499.2
Shareholders' equity 292.0 288.7 284.0 275.6 251.2
(1) Adjusted for the three-for-two common stock split distributed on March 16, 1998.
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Results of Operations
Items in Rollins Truck Leasing Corp.'s Consolidated Statement
of Earnings for the three years ended September 30, 1998 as a
percentage of revenues and the percentage changes in dollar amounts of
the items compared with the previous year are as follows:
Percentage
Percentage of Revenue Increase (Decrease)
Year ended September 30, Year 1998 Year 1997
1998 1997 1996 Over 1997 Over 1996
Revenues 100.0% 100.0% 100.0% 9.6% 8.4%
Expenses
Operating 40.0 41.1 41.2 6.7 8.0
Depreciation 30.1 30.5 30.8 7.9 7.3
Gain on sale (1.6) (2.2) (1.4) (20.0) 53.8
Selling and
administrative 9.1 9.1 9.3 10.1 5.1
77.6 78.5 79.9 8.3 6.5
Operating earnings 22.4 21.5 20.1 14.4 15.5
Interest expense 8.4 8.9 9.2 4.7 3.8
Earnings before
income taxes 14.0 12.6 10.9 21.2 25.5
Income taxes 5.5 4.9 4.3 20.7 25.7
Net earnings 8.5% 7.7% 6.6% 21.6% 25.4%
Fiscal Year 1998 vs. 1997
Revenues increased by $53.5 million as full-service lease, logistics
and commercial rental revenues all improved over the prior year. Full-
service lease, guaranteed maintenance and logistics revenues
represented approximately 74% of total revenues. The revenue increase
was in large part volume-related as competitive conditions limited
price increases. Commercial rental revenues, which represented the
remainder of total revenues, increased by 14.7% and was in part due to
improved pricing and the increased level of business experienced in
1998.
Operating expenses increased by $15.3 million reflecting the
increase in revenues. The more significant operating expense increases
resulted from increased drivers' wages of $9.0 million and increased
shop payroll of $3.1 million. The remainder of the operating expense
increase was broad-based and resulted from the overall higher level of
business.
Depreciation increased by $13.4 million principally due to the
increased investment in equipment on operating leases and related
transportation service facilities required to support the current level
of business.
Gain on sale of property and equipment decreased by $2.4 million to
$9.8 million when compared with the 1997 gain of $12.2 million. The
decrease resulted from lower unit selling prices realized on fewer
units of equipment sold.
Selling and administrative expenses increased by $5.0 million to
$55.5 million from $50.5 million in 1997. Increased salaries, wages
and sales commissions accounted for $3.0 million of the increase and
reflected the higher level of business in 1998. Increased advertising
costs of $1.1 million and increased information technology costs of $.9
million accounted for the most significant portion of the remainder of
the increase.
Interest expense increased by $2.3 million due to the higher level
of borrowings related to the purchase of additional equipment when
compared with the prior year. Interest rates remained essentially
unchanged during the year.
The effective income tax rate was 38.9% in 1998 and 39.0% in 1997.
Net earnings increased by $9.2 million to $52.0 million or $.85 per
diluted share from $42.8 million or $.68 per diluted share in 1997.
Higher revenues, which resulted from the increased volume of business,
produced the increased net earnings.
Fiscal Year 1997 vs. 1996
Revenues increased by $42.9 million as revenues from all areas of
operation improved over the prior year. The increase in full-service
lease, guaranteed maintenance and logistics revenues, which represent
approximately 75% of total revenues, was principally volume-related as
industry competition limited price increases. Commercial rental
revenues, which represent the remainder of total revenues, increased by
4.9% in large part due to improved pricing in 1997 when compared with
the competitive pricing effects experienced in 1996.
Operating expenses increased by $17.0 million reflecting the
increase in revenues. The more significant operating expense increases
resulted from the continued growth in the dedicated contract carriage
and logistics business in which drivers' wages increased by $8.9
million and vehicle expenses increased by $5.7 million. Operating
expenses as a percentage of revenues decreased to 41.1% in 1997 from
41.2% in 1996.
Depreciation expense increased by $11.6 million principally due to
the increased investment in equipment on operating leases required to
support the current level of business. Depreciation as a percentage of
revenues decreased to 30.5% in 1997 compared with 30.8% in 1996.
Gain on the sale of property and equipment increased by $4.3 million
to $12.2 million when compared with the 1996 gain of $7.9 million. The
increase resulted from the sale of more vehicles at higher selling
prices reflecting the stable market for used equipment in 1997.
Selling and administrative expenses increased by $2.5 million to
$50.5 million from $48.0 million in 1996. Increased salaries, wages
and sales commissions accounted for $2.3 million of the increase and
reflected the higher level of business in 1997. As a percentage of
revenues, selling and administrative expenses decreased to 9.1% in 1997
from 9.3% in 1996.
Interest expense increased by $1.8 million principally due to the
increase in average borrowings related to the purchase of additional
equipment offset in part by a lower average interest rate on the
Company's Collateral Trust Debentures.
The effective income tax rate for both 1996 and 1997 was 39.0%.
Net earnings increased by $8.7 million to $42.8 million or $.68 per
diluted share from $34.1 million or $.52 per diluted share in 1996.
The increased net earnings resulted from higher revenues, which were
reduced in part by the incremental costs associated with such revenues.
Liquidity and Capital Resources
The Company's primary operation is the full-service leasing and
rental of tractors, trucks and trailers, which requires substantial
amounts of capital and access to financing sources. At September 30,
1998, equipment on operating leases of $924.9 million represented 71.3%
of the Company's assets. Funds for the acquisition of this equipment
are provided principally by the cash flows from operations, the
proceeds from the sale of used equipment and borrowings under the
Company's revolving credit facility. Cash flows from operating
activities of $245.2 million were generated principally from net
earnings of $52.0 million and the noncash depreciation and amortization
totaling $183.8 million. Because existing leases provide the primary
source of funds from operations, the Company expects a similar amount
of funds to be generated in 1999.
Investing activities reflect the Company's capital expenditures of
$332.8 million in 1998 and $303.1 million in 1997. Proceeds from the
sale of equipment amounted to $67.5 million in 1998 and $75.6 million
in 1997. At September 30, 1998, the Company's commitment for the
purchase of revenue equipment was $166.1 million. Based on the current
level of business and including commitments already made at September
30, 1998, the Company anticipates spending approximately $325.0 million
for equipment and facilities in 1999.
Equipment financing obligations increased to $749.9 million at
September 30, 1998 from $671.8 million a year earlier. Borrowings from
external sources included equipment term loans, capitalized leases and,
in July 1998, the sale of $75.0 million of 6.52% Collateral Trust
Debentures, Series S, due July 15, 2005.
At September 30, 1998, the Company could sell an additional $155.0
million of Collateral Trust Debentures under its current shelf
registration statement. Based on its access to the debt markets and
relationships with current lending institutions and others who have
expressed an interest in providing financing, the Company expects to
continue to be able to obtain financing for its equipment and facility
purchases at market rates and under satisfactory terms and conditions.
The Company's principal subsidiary, Rollins Leasing Corp., has
revolving credit facilities available which aggregate $100.0 million at
September 30, 1998. These facilities, used primarily to finance
vehicle purchases on an interim basis pending placement of long-term
financing, require the maintenance of specified financial ratios and
restricts payments to the Company. At the option of the banks who
provide the facilities, the facilities and the Company's Collateral
Trust Debentures may be secured by certain leasing equipment.
During 1998, the Company's financing activities included an increase
in equipment financing obligations of $78.1 million, payment of
dividends of $9.2 million and the purchase and retirement of 3,090,900
shares of $1 par value common stock for $41.4 million. At September
30, 1998, the Company was authorized to purchase 1,010,000 additional
shares of its stock.
At September 30, 1998 and 1997, the debt to equity ratio of the
Company was 2.6 to 1 and 2.3 to 1, respectively.
Impact of Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income." This statement requires that
comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The
adoption of this standard on October 1, 1998, will not impact results
of operations or financial condition.
In February 1998, the FASB issued SFAS No. 132, "Employers'
Disclosures about Pension and Other Postretirement Benefits," which is
effective for financial statements issued for periods beginning after
December 15, 1997. This statement standardizes the disclosure
requirements of previous standards. The adoption of this standard will
not impact results of operations or financial condition.
Year 2000 ("Y2K") Issues
The Company is aware of the issues related to the approach of the
year 2000 and has assessed and investigated what steps must be taken to
ensure that its critical systems and equipment will function
appropriately after the turn of the century. The assessments included
a review of what systems and equipment need to be changed or replaced
in order to function correctly. The Company has further determined
that onboard computer systems in Company-owned vehicles are not
affected by the Y2K problem.
The Company's Y2K project was broken down into Corporate host-based
systems and field-based data collection processes. Overall, the
Company's work effort is allocated approximately 80 percent to host-
based systems and 20 percent to field-based data processes. The
Company expects that all host-based coding and testing will be
completed by the end of calendar year 1998 and that full production
implementation will have been completed with regard to 90 percent of
the remediated systems. The remaining production implementation is
planned for the first quarter of 1999.
As part of the Company's remediation efforts, the field data
collection systems are being rewritten. The Company expects that 20
percent of this effort will be completed by the end of calendar year
1998 and that the remaining required remediation efforts will be
completed by the end of the first quarter of 1999.
With the exception of remediation and implementation consequences
not known to the Company at this time, the Company believes that all
systems should be fully implemented by the end of the second quarter of
1999.
As part of the Company's assessment of Y2K issues, consideration was
given to the possible impact upon the Company from using purchased
software, suppliers and outside service providers. The Company's
efforts with regard to Y2K issues are dependent in part upon
information received from such suppliers and vendors upon which the
Company has reasonably relied. While it is not possible for the
Company to predict all future outcomes and eventualities, the Company
is not aware, at this time, of any Y2K non-compliant situations with
regard to any of its purchased software or its use of suppliers and
outside service providers.
The Company estimates that it will spend approximately $1.5 million
to fully implement its Y2K compliance program. All Y2K costs have been
and will continue to be funded from operations.
The Company has formulated a contingency plan to deal with Y2K
issues. However, due to the complexity and widespread nature of such
issues, the contingency planning process of necessity must be an
ongoing one requiring possible further modification as more information
becomes known regarding (1) the Company's own systems and facilities,
and (2) the status and changes therein of the Y2K compliance efforts of
outside suppliers and vendors.
As significant Y2K uncertainties remain outside the control of the
Company, at this time the Company is unable to determine a most
reasonably likely worst case scenario.
Forward-Looking Statements
The Company may make forward-looking statements relating to
anticipated financial performance, business prospects, acquisitions or
divestitures, new products, market forces, commitments and other
matters. The Private Securities Litigation Reform Act of 1995 provides
a safe harbor for forward-looking statements. In order to comply with
the terms of the safe harbor, the Company notes that a variety of
factors could cause the Company's actual results and experience to
differ materially from the anticipated results or other expectations
expressed in the Company's forward-looking statements. Forward-looking
statements typically contain words such as "anticipates", "believes",
"estimates", "expects", "forecasts", "predicts", or "projects", or
variations of these words, suggesting that future outcomes are
uncertain.
Various risks and uncertainties may affect the operations,
performance, development and results of the Company's business and
could cause future outcomes to differ materially from those set forth
in forward-looking statements, including the following factors:
general economic conditions, competitive factors and pricing pressures,
shift in market demand, the performance and needs of industries served
by the Company, equipment utilization, management's success in
developing and introducing new services and lines of business,
potential increases in labor costs, potential increases in equipment,
maintenance and fuel costs, uncertainties of litigation, the Company's
ability to finance its future business requirements through outside
sources or internally generated funds, the availability of adequate
levels of insurance, success or timing of completion of ongoing or
anticipated capital or maintenance projects, management retention and
development, changes in Federal, State and local laws and regulations,
including environmental regulations, as well as the risks,
uncertainties and other factors described from time to time in the
Company's SEC filings and reports.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements of the Company, the
Independent Auditors' Report and the financial statement schedules
included in this report are shown on the Index to the Consolidated
Financial Statements and Schedules.
ITEM 9. DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
NONE.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Except as presented below, the information called for by this
Item 10 is incorporated by reference from the Company's Proxy Statement
to be filed pursuant to Regulation 14A for the Annual Meeting of
Shareholders to be held on January 28, 1999.
Executive Officers of the Registrant. As of October 31, 1998, the
Executive Officers of the registrant were:
Name Position Age Term of Office
Patrick J. Bagley Vice President-Finance and 51 7/87 to date
Treasurer 1/87 to date
I. Larry Brown President, 53 1994 to date
Rollins Leasing Corp.
Michael B. Kinnard Vice President-General 40 10/94 to date
Counsel and Secretary 10/94 to date
John W. Rollins Chairman of the Board and 82 1954 to date
Chief Executive Officer 10/74 to date
John W. Rollins, Jr. President and Chief 56 9/75 to date
Operating Officer and Director
Henry B. Tippie Chairman of the Executive 71 3/74 to date
Committee and Vice Chairman
of the Board
I. Larry Brown has been employed by Rollins Leasing Corp., a wholly
owned subsidiary of Rollins Truck Leasing Corp., since 1973. Mr. Brown
has been President of Rollins Leasing Corp. since 1994 and Chief
Executive Officer since 1996.
Michael B. Kinnard has been Vice President-General Counsel and
Secretary to the Company since 1994. Mr. Kinnard also serves as Vice
President-General Counsel and Secretary to Matlack Systems, Inc. and
Vice President-General Counsel to Dover Downs Entertainment, Inc.
Prior to 1995, Mr. Kinnard was a partner in the law firm of Baker,
Worthington, Crossley, Stansberry & Woolf (now known as Baker,
Donelson, Bearman & Caldwell).
The Company's Executive Officers are elected for the ensuing year
and until their successors are elected.
ITEM 11. EXECUTIVE COMPENSATION.
The information called for by this Item 11 is incorporated by
reference from the Company's Proxy Statement to be filed pursuant to
Regulation 14A for the Annual Meeting of Shareholders to be held on
January 28, 1999.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information called for by this Item 12 is incorporated by
reference from the Company's Proxy Statement to be filed pursuant to
Regulation 14A for the Annual Meeting of Shareholders to be held on
January 28, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the year ended September 30, 1998, the following
officers and/or directors of the Company were also officers and/or
directors of Matlack Systems, Inc.; Patrick J. Bagley, Michael B.
Kinnard, William B. Philipbar, Jr., John W. Rollins, John W. Rollins,
Jr. and Henry B. Tippie. John W. Rollins owns directly and of record
11.4% of the outstanding shares of Common Stock of Matlack Systems,
Inc. at October 31, 1998.
The following officers and/or directors of the Company were
also officers and/or directors of Dover Downs Entertainment, Inc.;
Patrick J. Bagley, Michael B. Kinnard, John W. Rollins, John W.
Rollins, Jr. and Henry B. Tippie. John W. Rollins owns directly and of
record 33.7% of the outstanding shares of Common Stock of Dover Downs
Entertainment, Inc. at October 31, 1998.
The description of transactions between the Company and Matlack
Systems, Inc. and between the Company and Dover Downs Entertainment,
Inc. appears under the caption "Transactions with Related Parties" of
this 1998 Annual Report on Form 10-K.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) Financial Statements, Financial Statement Schedules and
Exhibits.
(1) Financial Statements - See accompanying Index to Consolidated
Financial Statements and Schedules.
(2) Financial Statements Schedules - See accompanying Index to
Consolidated Financial Statements and Schedules.
(3) Exhibits:
(3)(a) Restated Certificate of Incorporation of Rollins Truck
Leasing Corp. as last amended on January 25, 1990, as
filed with the Company's Annual Report on Form 10-K for
the year ended September 30, 1997, is incorporated
herein by reference.
(3)(b) By-Laws of Rollins Truck Leasing Corp. as last amended
on October 30, 1997, as filed with the Company's Annual
Report on Form 10-K for the year ended September 30,
1997, is incorporated herein by reference.
(4)(a) Collateral Trust Indenture dated as of March 21, 1983,
between RLC CORP. (now known as Rollins Truck Leasing
Corp.) and Bank of America Illinois (formerly
Continental Illinois National Bank and Trust Company of
Chicago), as Trustee, as filed with the Company's
Registration Statement No. 33-40476 on Form S-3 dated
May 10, 1991, is incorporated herein by reference.
(4)(b) Third Supplemental Collateral Trust Indenture dated
February 20, 1986 to the Collateral Trust Indenture
dated March 21, 1983 between RLC CORP. (now known as
Rollins Truck Leasing Corp.) and Bank of America
Illinois (formerly Continental Illinois National Bank
and Trust Company of Chicago), as Trustee, as filed with
the Company's Registration Statement No. 33-40476 on
Form S-3 dated May 10, 1991, is incorporated herein by
reference.
(4)(e) Eighth Supplemental Collateral Trust Indenture dated May
15, 1990 to the Collateral Trust Indenture dated March
21, 1983 as supplemented and amended by a Third
Supplemental Indenture thereto dated as of February 20,
1986, between Rollins Truck Leasing Corp. and Bank of
America Illinois (formerly Continental Bank, N.A.), as
Trustee, as filed with the Company's Registration
Statement No. 33-67682 on Form S-3 dated August 20, 1993
is incorporated herein by reference.
(4)(f) Ninth Supplemental Collateral Trust Indenture dated
December 1, 1991 to the Collateral Trust Indenture dated
March 21, 1983 as supplemented and amended by a Third
Supplemental Indenture thereto dated as of February 20,
1986 and by an Eighth Supplemental Indenture dated May
15, 1990, between Rollins Truck Leasing Corp. and Bank
of America Illinois (formerly Continental Bank, N.A.),
as Trustee, as filed with the Company's Registration
Statement No. 333-21835 on Form S-3 dated February 14,
1997 is incorporated herein by reference.
(4)(g) Eleventh Supplemental Collateral Trust Indenture dated
March 15, 1993 to the Collateral Trust Indenture dated
March 21, 1983 as supplemented and amended by a Third
Supplemental Indenture thereto dated as of February 20,
1986 and by an Eighth Supplemental Indenture dated May
15, 1990, between Rollins Truck Leasing Corp. and Bank
of America Illinois (formerly Continental Bank, N.A.),
as Trustee, as filed with the Company's Registration
Statement No. 333-21835 on Form S-3 dated February 14,
1997 is incorporated herein by reference.
(4)(h) Twelfth Supplemental Collateral Trust Indenture dated
March 15, 1994 to the Collateral Trust Indenture dated
March 21, 1983 as supplemented and amended by a Third
Supplemental Indenture thereto dated as of February 20,
1986 and by an Eighth Supplemental Indenture dated May
15, 1990, between Rollins Truck Leasing Corp. and Bank
of America Illinois (formerly Continental Bank, N.A.),
as Trustee, as filed with the Company's Registration
Statement No. 333-21835 on Form S-3 dated February 14,
1997 is incorporated herein by reference.
(4)(i) Thirteenth Supplemental Collateral Trust Indenture dated
March 15, 1995 to the Collateral Trust Indenture dated
March 21, 1983 as supplemented and amended by a Third
Supplemental Indenture thereto dated as of February 20,
1986 and by an Eighth Supplemental Indenture dated May
15, 1990, between Rollins Truck Leasing Corp. and Bank
of America Illinois (formerly Continental Bank, N.A.),
as Trustee, as filed with the Company's Registration
Statement No. 333-21835 on Form S-3 dated February 14,
1997 is incorporated herein by reference.
(4)(j) Fourteenth Supplemental Collateral Trust Indenture dated
May 15, 1995 to the Collateral Trust Indenture dated
March 21, 1983 as supplemented and amended by a Third
Supplemental Indenture thereto dated as of February 20,
1986 and by an Eighth Supplemental Indenture dated May
15, 1990, between Rollins Truck Leasing Corp. and Bank
of America Illinois (formerly Continental Bank, N.A.),
as Trustee, as filed with the Company's Registration
Statement No. 333-21835 on Form S-3 dated February 14,
1997 is incorporated herein by reference.
(4)(k) Fifteenth Supplemental Collateral Trust Indenture dated
March 15, 1996 to the Collateral Trust Indenture dated
March 21, 1983 as supplemented and amended by a Third
Supplemental Indenture thereto dated as of February 20,
1986 and by an Eighth Supplemental Indenture dated May
15, 1990, between Rollins Truck Leasing Corp. and First
Trust of Illinois, National Association, as Trustee, as
filed with the Company's Registration Statement No. 333-
21835 on Form S-3 dated February 14, 1997 is
incorporated herein by reference.
(4)(l) Sixteenth Supplemental Collateral Trust Indenture dated
August 7, 1996 to the Collateral Trust Indenture dated
March 21, 1983 as supplemented and amended by a Third
Supplemental Indenture thereto dated as of February 20,
1986 and by an Eighth Supplemental Indenture dated May
15, 1990, between Rollins Truck Leasing Corp. and First
Trust of Illinois, National Association, as Trustee, as
filed with the Company's Registration Statement No. 333-
21835 on Form S-3 dated February 14, 1997 is
incorporated herein by reference.
(4)(m) Seventeenth Supplemental Collateral Trust Indenture
dated as of March 10, 1997 to the 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 the Eighth Supplemental
Indenture dated as of May 15, 1990 between Rollins Truck
Leasing Corp. and First Union National Bank, as Trustee,
as filed with the Company's Annual Report on Form 10-K
for the year ended September 30, 1997, is incorporated
herein by reference.
(4)(n) RLC CORP. (now known as Rollins Truck Leasing Corp.)
Rights Agreement dated as of June 14, 1989 as last
amended on February 13, 1998.
(4)(o) Eighteenth Supplemental Collateral Trust Indenture dated
as of July 16, 1998 to the 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, an Eighth Supplemental Indenture
thereto dated as of May 15, 1990 and by the Seventeenth
Supplemental Indenture dated as of March 10, 1997
between Rollins Truck Leasing Corp. and First Union
National Bank, as Trustee.
(10)(a) RLC CORP. (now known as Rollins Truck Leasing Corp.)
1982 Incentive Stock Option Plan, as filed with the
Company's Proxy Statement for the Annual Meeting of
Shareholders held on January 27, 1983, is incorporated
herein by reference.
(10)(b) RLC CORP. (now known as Rollins Truck Leasing Corp.)
1986 Stock Option Plan, as filed with the Company's
Proxy Statement for the Annual Meeting of Shareholders
held on January 29, 1987, is incorporated herein by
reference.
(10)(c) Rollins Truck Leasing Corp. 1993 Stock Option Plan, as
filed with the Company's Proxy Statement for the Annual
Meeting of Shareholders held on January 27, 1994, is
incorporated herein by reference.
(10)(d) Rollins Truck Leasing Corp. 1997 Stock Option Plan, as
filed with the Company's Proxy Statement for the Annual
Meeting of Shareholders held on January 29, 1998, is
incorporated herein by reference.
(21) Rollins Truck Leasing Corp. Subsidiaries at September
30, 1998.
(23) Consent of KPMG Peat Marwick LLP, Independent Auditors,
providing for incorporation by reference of their report
dated October 27, 1998 into Registration Statement No.
333-21835 filed on Form S-3.
(27)(a) Rollins Truck Leasing Corp. Financial Data Schedule at
September 30, 1998.
(b) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Quarter ended March 31, 1998.
(c) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Quarter ended December 31, 1997.
(d) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Year ended September 30, 1997.
(e) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Quarter ended June 30, 1997.
(f) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Quarter ended March 31, 1997.
(g) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Quarter ended December 31, 1996.
(h) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Year ended September 30, 1996.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DATED: December 9, 1998 ROLLINS TRUCK LEASING CORP.
(Registrant)
BY: /s/ John W. Rollins, Jr.
John W. Rollins, Jr.
President and Chief Operating Officer
and Director
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated:
/s/ Patrick J. Bagley Vice President-Finance December 9, 1998
Patrick J. Bagley and Treasurer
Chief Financial Officer
Chief Accounting Officer
Director
/s/ John W. Rollins Chairman of the Board December 9, 1998
John W. Rollins and Chief Executive Officer
/s/ Gary W. Rollins Director December 9, 1998
Gary W. Rollins
/s/ Henry B. Tippie Chairman of the Executive December 9, 1998
Henry B. Tippie Committee and Vice Chairman
of the Board
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
(1) Consolidated
Page(s)
Independent Auditors' Report on Financial Statements
and Financial Statement Schedules 19
Consolidated Statement of Earnings for the years
ended September 30, 1998, 1997 and 1996 20
Consolidated Balance Sheet at September 30, 1998
and 1997 21
Consolidated Statement of Cash Flows for the years
ended September 30, 1998, 1997 and 1996 22
Notes to the Consolidated Financial Statements 24 to 35
(2) Financial Statement Schedules
Rollins Truck Leasing Corp. (Parent)
Schedule I - Condensed Financial Information
Balance Sheet at September 30, 1998 and 1997 36
Statement of Earnings for the years ended
September 30, 1998, 1997 and 1996 38
Statement of Cash Flows for the years ended
September 30, 1998, 1997 and 1996 39
Notes to the Financial Statements 41
Rollins Truck Leasing Corp. and Subsidiaries Consolidated
Schedule II - Valuation and Qualifying Accounts
for the years ended September 30, 1998,
1997 and 1996 42
Any financial statement schedules otherwise required have been
omitted because they are not applicable or the required information is
shown in the financial statements or notes thereto.<PAGE>
Independent Auditors' Report
The Shareholders and Board of Directors
Rollins Truck Leasing Corp.
We have audited the consolidated financial statements of Rollins
Truck Leasing Corp. and subsidiaries as listed in the accompanying
index. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedules as
listed in the accompanying index. These consolidated financial
statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these consolidated financial statements and consolidated financial
statement schedules based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Rollins Truck Leasing Corp. and subsidiaries as of September 30,
1998 and 1997, and the results of their operations and their cash flows
for each of the years in the three-year period ended September 30,
1998, in conformity with generally accepted accounting principles.
Also in our opinion, the related financial statement schedules, when
considered in relation to the basic consolidated financial statements
taken as a whole, present fairly, in all material respects, the
information set forth therein.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
October 27, 1998
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
Year Ended September 30,
1998 1997 1996
Revenues $610,157,000 $556,704,000 $513,779,000
Expenses
Operating 244,260,000 228,957,000 211,919,000
Depreciation 183,465,000 170,039,000 158,407,000
Gain on sale of property
and equipment (9,787,000) (12,230,000) (7,950,000)
Selling and administrative 55,530,000 50,457,000 47,995,000
473,468,000 437,223,000 410,371,000
Operating earnings 136,689,000 119,481,000 103,408,000
Interest expense 51,586,000 49,270,000 47,481,000
Earnings before
income taxes 85,103,000 70,211,000 55,927,000
Income taxes 33,080,000 27,417,000 21,811,000
Net earnings $ 52,023,000 $ 42,794,000 $ 34,116,000
Earnings per share (1)
Basic $ .86 $ .68 $ .52
Diluted $ .85 $ .68 $ .52
Average common shares and equivalents outstanding (1)
Basic 60,340,000 62,681,000 65,076,000
Diluted 61,130,000 63,362,000 65,595,000
(1) Adjusted for the three-for-two common stock split distributed on
March 16, 1998.
The Notes to the Consolidated Financial Statements are an integral part
of these statements.
CONSOLIDATED BALANCE SHEET
September 30,
1998 1997
ASSETS
Current assets
Cash $ 27,015,000 $ 17,637,000
Accounts receivable, net of
allowance for doubtful accounts:
1998-$2,452,000; 1997-$2,126,000 75,227,000 71,165,000
Inventories 7,394,000 8,659,000
Prepaid expenses 18,056,000 15,465,000
Refundable income taxes - 965,000
Deferred income taxes 7,034,000 7,152,000
Total current assets 134,726,000 121,043,000
Equipment on operating leases, net 924,887,000 847,910,000
Other property and equipment, net 219,343,000 204,745,000
Excess of cost over net assets of
businesses acquired 11,816,000 12,156,000
Other assets 5,761,000 5,937,000
Total assets $1,296,533,000 $1,191,791,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities (excluding equipment financing obligations)
Accounts payable $ 12,246,000 $ 10,451,000
Accrued liabilities 52,023,000 51,952,000
Income taxes payable 1,292,000 -
Total current liabilities 65,561,000 62,403,000
Equipment financing obligations
including maturities due within
one year: 1998-$51,699,000;
1997-$26,557,000 749,876,000 671,822,000
Other liabilities 14,144,000 13,955,000
Deferred income taxes 174,908,000 154,937,000
Commitments and contingent liabilities
(see Notes to the Consolidated
Financial Statements)
Shareholders' equity
Common stock, $1 par value,
outstanding: 1998-58,799,281 shares;
1997-61,601,112 shares 58,799,000 41,067,000
Additional paid-in capital 11,000 274,000
Retained earnings 233,234,000 247,333,000
Total shareholders' equity 292,044,000 288,674,000
Total liabilities and
shareholders' equity $1,296,533,000 $1,191,791,000
The Notes to the Consolidated Financial Statements are an integral part
of these statements.<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended September 30,
1998 1997 1996
Cash flows from
operating activities
Net earnings $ 52,023,000 $ 42,794,000 $ 34,116,000
Adjustments to reconcile
net earnings to net
cash provided by
operating activities:
Depreciation and
amortization 183,805,000 170,380,000 158,738,000
Net gain on sale of
property and equipment (9,787,000) (12,230,000) (7,950,000)
Changes in assets and
liabilities:
Accounts receivable (4,062,000) (8,776,000) (5,443,000)
Accounts payable and
accrued liabilities 1,866,000 8,787,000 2,210,000
Current and deferred
income taxes 22,346,000 18,866,000 20,032,000
Other, net (961,000) 1,754,000 666,000
Net cash provided by
operating activities 245,230,000 221,575,000 202,369,000
Cash flows from
investing activities
Purchase of property
and equipment (332,779,000) (303,058,000) (297,339,000)
Proceeds from sales
of equipment 67,526,000 75,621,000 63,090,000
Excess of cost over
net assets of business
acquired - - (1,150,000)
Net cash used in
investing activities (265,253,000) (227,437,000) (235,399,000)
Cash flows from
financing activities
Proceeds of equipment
financing obligations 186,930,000 140,150,000 171,406,000
Repayment of equipment
financing obligations (108,876,000) (109,690,000) (104,256,000)
Payment of dividends (9,244,000) (8,353,000) (7,974,000)
Proceeds of stock
options exercised 2,051,000 818,000 540,000
Common stock acquired
and retired (41,367,000) (30,633,000) (18,187,000)
Other (93,000) - -
Net cash provided by
(used in) financing
activities 29,401,000 (7,708,000) 41,529,000
Net increase (decrease)
in cash 9,378,000 (13,570,000) 8,499,000
Cash beginning of period 17,637,000 31,207,000 22,708,000
Cash end of period $ 27,015,000 $ 17,637,000 $ 31,207,000
Supplemental information
Interest paid $ 48,549,000 $ 49,212,000 $ 47,008,000
Income taxes paid $ 10,734,000 $ 8,551,000 $ 1,779,000
The Notes to the Consolidated Financial Statements are an integral
part of these statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Organization and Accounting Policies
Organization - Rollins Truck Leasing Corp. is engaged primarily in
full-service truck leasing and rentals and the provision and management
of transportation and logistics systems. All of the Company's
operations currently are conducted within the United States.
Consolidation - The consolidated financial statements include the
accounts of all subsidiaries. Intercompany transactions and balances
among these subsidiaries have been eliminated.
Revenue recognition - Lease, rental and other transportation service
revenues including contingent rentals, which represent the mileage
charges on full-service leases, are recognized over the terms of the
respective contracts.
Earnings per share - The number of weighted average shares used in
computing basic and diluted earnings per share (EPS) are as follows:
1998 1997 1996
Basic EPS 60,340,000 62,681,000 65,076,000
Effect of options 790,000 681,000 519,000
Diluted EPS 61,130,000 63,362,000 65,595,000
No adjustments to net earnings available to common shareholders were
required during the periods presented.
Inventories - Inventories of transportation equipment parts and
supplies are valued at the lower of first-in, first-out cost or market.
Property and equipment - Property and equipment is carried at cost,
net of applicable allowances. Tires placed in service on new equipment
are capitalized as part of the original equipment cost. Depreciation
is provided on a straight-line basis. Depreciable lives for equipment
on operating leases and other property and equipment range from 3 to 12
years and 3 to 45 years, respectively. The cost and related
accumulated depreciation of property and equipment sold or retired are
eliminated from the property accounts and the resulting gain or loss is
reflected in the Consolidated Statement of Earnings. Repairs and
maintenance are expensed as incurred. Replacement tires are expensed
when placed in service. Major additions and improvements are
capitalized and written off over the remaining depreciable lives of the
assets.
Goodwill - The excess of cost over net assets of businesses acquired
prior to October 30, 1970 amounting to $4,588,000 is not being
amortized since its value, in management's opinion, has not diminished.
The excess of cost over net assets of businesses acquired subsequently
is being amortized on a straight-line basis over 40 years.
Leasing operations - Leasing operations consist of the long-term
leasing and short-term rental of transportation equipment. All leases
are classified as operating leases and expire on various dates during
the next twelve years.
Claims and insurance reserves - The Company retains a specific
portion of insurable risks with regard to public liability and workers'
compensation claims. Retention levels are currently $500,000.
Reserves are established for claims incurred plus an estimate for
claims incurred but not reported. Reserve requirements are evaluated
and established utilizing historical trends, the Company's experience,
claim severity and other factors. Claims estimated to be paid within
one year have been classified in accrued liabilities with the remainder
included with other liabilities.
Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Fair values of financial instruments - The carrying amounts reported
in the balance sheet for current assets and current liabilities
approximate their fair value at September 30, 1998.
Stock-based compensation - The Company adopted the provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation," on October 1,
1996. SFAS No. 123 defines a fair value based method of accounting for
stock-based compensation plans, however, it allows the continued use of
the intrinsic value method under Accounting Principles Board Opinion
("APB"), No. 25, "Accounting for Stock Issued to Employees." The
Company has elected to continue to use the intrinsic value method.
Equipment on Operating Leases
The Company's investment in equipment on operating leases is as
follows:
September 30,
1998 1997
Transportation equipment $1,402,267,000 $1,265,407,000
Less accumulated depreciation (477,380,000) (417,497,000)
$ 924,887,000 $ 847,910,000
Commitments for the purchase of transportation equipment amounted to
$166,117,000 at September 30, 1998.
At September 30, 1998, minimum future revenues from non-cancelable
leases are as follows:
Year Ending September 30,
1999 $235,809,000
2000 196,112,000
2001 153,835,000
2002 113,522,000
2003 72,084,000
Later years 61,290,000
Total future minimum lease revenues $832,652,000
Other Property and Equipment
The Company's other property and equipment accounts are as follows:
September 30,
1998 1997
Land $ 61,190,000 $ 54,062,000
Transportation service facilities 205,923,000 188,628,000
Other operating assets 39,964,000 38,018,000
Less accumulated depreciation (87,734,000) (75,963,000)
$219,343,000 $204,745,000
Accrued Liabilities
Accrued liabilities are as follows:
September 30,
1998 1997
Employee compensation $15,018,000 $12,619,000
Interest 7,451,000 6,736,000
Taxes other than income 12,684,000 12,422,000
Insurance reserves 6,781,000 7,482,000
Environmental 3,213,000 2,769,000
Unbilled services and supplies 2,662,000 6,674,000
Other 4,214,000 3,250,000
$52,023,000 $51,952,000
Equipment Financing Obligations
Equipment financing obligations are as follows:
September 30,
1998 1997
Revolving Credit Agreement $ - $ 16,500,000
Collateral Trust Debentures:
Series I, 10.35 %, due 2000 50,000,000 50,000,000
Series J, 8 5/8 %, due 1998 30,000,000 30,000,000
Series L, 7 %, due 2003 70,000,000 70,000,000
Series M, 7 %, due 2001 60,000,000 60,000,000
Series N, 8.27 %, due 2002 100,000,000 100,000,000
Series O, 7.25 %, due 2005 50,000,000 50,000,000
Series P, 6.89 %, due 2004 75,000,000 75,000,000
Series Q, 6 7/8 %, due 2001 60,000,000 60,000,000
Series R 7.30 %, due 2007 75,000,000 75,000,000
Series S 6.52 %, due 2005 75,000,000 -
Capital lease obligations 66,330,000 39,389,000
Other equipment financing obligations 38,546,000 45,933,000
$749,876,000 $671,822,000
Credit available under the revolving credit facilities (the
"Revolver") provided by two banks amounted to $100,000,000 at September
30, 1998. At the option of the banks, the Revolver and the Collateral
Trust Debentures may be secured by certain leasing equipment.
Termination of the Revolver would result in repayment of the
outstanding balance over 48 months in equal installments; otherwise, no
repayments are required unless the financing value of the eligible
equipment available as security falls below the outstanding loan
balance. The Revolver provides for the maintenance of specified
financial ratios and restricts payments to the Company by a
consolidated subsidiary. Net assets of all subsidiaries not restricted
under the Revolver totaled $238,532,000 at September 30, 1998.
The Collateral Trust Debentures are secured by notes from Rollins
Leasing Corp.
Capital lease obligations due within one year totaled $8,052,000 at
September 30, 1998 with the balance payable through 2008. Interest
rates on these obligations averaged 5.4% at September 30, 1998. The
capital lease obligations are collateralized by certain leasing
equipment.
Other equipment financing obligations due within one year totaled
$13,647,000 at September 30, 1998 with the balance payable through
2002. Interest rates on these obligations averaged 6.3% at September
30, 1998. The other equipment financing obligations are collateralized
by certain leasing equipment.
Equipment financing obligations due within one year are not classified
as current liabilities as the Company intends and has the ability to
refinance them on a long-term basis through available credit
facilities.
Based on published bid prices at September 30, 1998, the estimated
fair value of the Company's Collateral Trust Debentures was
$667,125,000 compared with the recorded book amount of $645,000,000.
The fair value of the remaining $104,876,000 of equipment indebtedness
approximates its recorded amount.
The aggregate amounts of maturities for all indebtedness over the next
five years are as follows: 1999-$51,699,000; 2000-$66,113,000; 2001-
$136,417,000; 2002-$112,832,000 and 2003-$80,840,000.
Pension Plans
The Company maintains a noncontributory pension plan for eligible
employees not covered by pension plans under collective bargaining
agreements. Pension costs are funded in accordance with the provisions
of the Internal Revenue Code. The Company also maintains a
nonqualified, noncontributory defined benefit pension plan for certain
employees to restore pension benefits reduced by federal income tax
regulations. The cost associated with the plan is determined using the
same actuarial methods and assumptions as those used for the Company's
qualified pension plan.
The following table sets forth the funded status and the amount
recognized in the Company's balance sheet for the plans:
September 30,
1998 1997
Actuarial present value of
accumulated benefit obligation:
Vested $42,348,000 $34,404,000
Non-vested 3,588,000 2,567,000
$45,936,000 $36,971,000
Projected benefit obligation $56,189,000 $43,679,000
Plan assets at market value 48,703,000 53,466,000
Projected benefit obligation in excess
of (under) plan assets 7,486,000 (9,787,000)
Unrecognized (loss) gain (2,758,000) 14,721,000
Unrecognized prior service costs (639,000) (678,000)
Unrecognized overfunding at adoption 140,000 211,000
Accrued pension liability $ 4,229,000 $ 4,467,000
At September 30, 1998, the assets of the pension plans were invested
73% in equity securities, 23% in fixed income securities and the
balance in other short-term interest bearing accounts.
The discount rate was 7.0% in 1998 and 8.0% for both 1997 and 1996.
The rate of assumed compensation increase and the expected long-term
rate of return on assets for 1998, 1997 and 1996 were 5.0% and 9.0%,
respectively.
The components of net periodic pension cost are as follows:
Year Ended September 30,
1998 1997 1996
Service cost $ 3,449,000 $ 2,735,000 $ 2,555,000
Interest cost 3,415,000 2,969,000 2,727,000
Loss (return) on plan assets 4,976,000 (13,043,000) (3,659,000)
Net amortization and deferral (10,378,000) 9,330,000 244,000
Net periodic pension cost $ 1,462,000 $ 1,991,000 $ 1,867,000
The Company also maintains a defined contribution 401(k) plan which
permits participation by substantially all employees not represented
under a collective bargaining agreement.
The Company expensed payments to multi-employer pension plans required
by collective bargaining agreements of $119,000 in 1998, $129,000 in
1997 and $85,000 in 1996. The actuarial present value of accumulated
plan benefits and net assets available for benefits to employees under
these plans are not available.
<TABLE>
Shareholders' Equity
Changes in the components of shareholders' equity are as follows:
<CAPTION>
<S> <C> <C> <C>
$1 Par Value Additional
Common Paid-in Retained
Stock Capital Earnings
Balance at September 30, 1995 $44,955,000 $11,453,000 $219,145,000
Net earnings 34,116,000
Dividends on common stock, $.12 per share (7,974,000)
Common stock acquired and retired (1,746,000) (11,818,000) (4,623,000)
Exercise of stock options 175,000 365,000
Balance at September 30, 1996 43,384,000 - 240,664,000
Net earnings 42,794,000
Dividends on common stock, $.13 per share (8,353,000)
Common stock acquired and retired (2,484,000) (377,000) (27,772,000)
Exercise of stock options 167,000 651,000
Balance at September 30, 1997 41,067,000 274,000 247,333,000
Net earnings 52,023,000
Dividends on common stock, $.15 per share (9,244,000)
Common stock acquired and retired (3,091,000) (1,937,000) (36,339,000)
Exercise of stock options 377,000 1,674,000
Three-for-two common stock split 20,446,000 (20,539,000)
Balance at September 30, 1998 $58,799,000 $ 11,000 $233,234,000
The Company is authorized to issue 100,000,000 shares of its $1 Par Value Common Stock
and 1,000,000 shares of Preferred Stock. The preferred shares are without par value, with terms
and conditions of each issue as determined by the Board of Directors.
Each share of common stock includes one common stock purchase right ("Right") which is
non-exercisable until certain defined events occur, including tender offers or the acquisition
by a person or group of affiliated or associated persons of 20% of the Company's common stock.
Upon the occurrence of certain defined events, the Right entitles the holder to purchase
additional stock of the Company or stock of an acquiring company at a 50% discount. The Right
expires on June 30, 1999 unless earlier redeemed by the Company at a price of $.0030 per Right.
</TABLE>
<TABLE>
<PAGE>
Stock Option Plans
Under the Company's stock option plans, options to purchase common stock of the Company may be
granted to officers and key employees at not less than 100% of the fair market value at the date
of grant. Generally, options granted vest ratably over a six-year period and have a maximum life
of eight years.
The Company accounts for these plans under APB No. 25. Accordingly, no compensation cost has
been recognized. Had compensation cost for these plans been determined consistent with SFAS No.
123, the Company's pro forma net earnings for 1998, 1997 and 1996 would have been reduced to
$51,365,000 ($.84 per diluted share), $42,524,000 ($.67 per diluted share) and $33,876,000 ($.52
per diluted share), respectively. Because the SFAS 123 method of accounting has not been applied
to options granted prior to October 1, 1995, the resulting pro forma compensation cost may not
be representative of that to be expected in future years.
As of September 30, stock option activity under the Company's plans, as adjusted for the March
16, 1998 three-for-two common stock split, is as follows:
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1998 1997 1996
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
Outstanding at
beginning of year 2,203,072 $ 6.57 2,374,119 $ 5.91 1,990,160 $ 5.27
Granted 721,900 10.73 150,000 10.83 722,700 6.34
Exercised (478,919) 4.28 (250,904) 3.26 (262,884) 2.05
Expired or cancelled (159,298) 7.53 (70,143) 5.26 (75,857) 7.13
Outstanding at
September 30 2,286,755 $ 8.30 2,203,072 $ 6.57 2,374,119 $ 5.91
Exercisable at
September 30 774,797 $ 6.85 984,880 $ 5.64 935,282 $ 4.57
The weighted average fair value of options granted during 1998, 1997 and 1996 was $3.20,
$3.43 and $2.24, respectively. The fair value for these options was estimated at the date of
grant using a Black-Scholes option pricing model with the following weighted average assumptions
for 1998, 1997 and 1996, respectively: risk-free interest rates of 4.3%, 6.1% and 6.0%; dividend
yields of 1.7%, 1.9% and 1.6%; expected volatility of .26, .26 and .27 and a weighted average
expected life of the option of 7 years, 6 years and 7 years.
</TABLE>
<TABLE>
The following table summarizes information regarding stock options outstanding and
exercisable at September 30, 1998:
<CAPTION>
Options Outstanding Options Exercisable
<S> <C> <C> <C> <C> <C> <C>
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Number Contractual Exercise Number Exercise
Prices Outstanding Life Price Exercisable Price
$5.04 - $ 6.33 745,557 3.2 years $6.00 345,957 $5.62
$7.33 - $10.88 1,541,198 4.4 years $9.41 428,840 $7.85
At September 30, 1998, a total of 1,382,150 shares of common stock were available for future
grants.
</TABLE>
Lease Commitments
The Company leases some of the premises and equipment used in its
operations. Leases classified as operating leases expire on various
dates during the next 16 years. Some of the leases are renewable at
the Company's option. Minimum future rental payments required under
operating leases having non-cancelable terms in excess of one year as
of September 30, 1998 are as follows:
Year Ending September 30,
1999 $ 6,946,000
2000 3,568,000
2001 2,193,000
2002 1,818,000
2003 1,330,000
Later years 2,611,000
Total minimum payments required $18,466,000
Total rent expense for all operating leases except those with
terms of one month or less was $7,919,000 in 1998, $7,624,000 in 1997
and $7,604,000 in 1996.
Income Taxes
The tax provisions for the three years ended September 30, 1998
are comprised as follows:
Year Ended September 30,
1998 1997 1996
Current:
Federal $11,113,000 $ 8,345,000 $ 2,514,000
State 1,824,000 747,000 15,000
Deferred:
Federal 17,507,000 15,138,000 16,413,000
State 2,636,000 3,187,000 2,869,000
Total income taxes $33,080,000 $27,417,000 $21,811,000
A reconciliation of the tax provisions for the three years ended
September 30, 1998 with amounts calculated by applying the statutory
federal tax rate to earnings before income taxes for those years is as
follows:
Year Ended September 30,
1998 1997 1996
Federal tax $29,786,000 $24,574,000 $19,574,000
State taxes, net of
federal benefit 2,899,000 2,557,000 1,875,000
Other 395,000 286,000 362,000
Total income taxes $33,080,000 $27,417,000 $21,811,000
The tax effect of temporary differences and the tax credit
carryforwards that comprise the current and non-current deferred tax
amounts shown on the balance sheet are as follows:
September 30
1998 1997
Depreciation $193,303,000 $172,922,000
Expenses deductible when paid (11,522,000) (10,960,000)
Alternative minimum tax
credit carryforward (14,130,000) (14,411,000)
Other 223,000 234,000
Deferred income taxes, net $167,874,000 $147,785,000
At September 30, 1998, the Company had alternative minimum tax credit
carryforwards of $14,130,000 which have no expiration date. The
Company has no tax credit carryforwards for financial reporting
purposes since all such credits have been considered in the
determination of deferred tax amounts.
Environmental Regulation
The Company is subject to certain regulations of the Environmental
Protection Agency in that it stores and dispenses petroleum products.
Most of these regulations address testing and replacement of
underground tanks. The Company's adherence to these regulations is
part of its normal business operations. These regulations have not had
any material adverse effect upon the Company.
Commitments and Contingent Liabilities
There are various routine claims and legal actions pending against the
Company incidental to the ordinary operation of its business. The
Company is of the opinion, based on the advice of counsel, that it is
only remotely likely that the ultimate resolution of these claims and
actions will be material.
Transactions with Related Parties
Certain directors and officers of the Company are also directors and
officers of Matlack Systems, Inc. and Dover Downs Entertainment, Inc.
The Company provided administrative services and rented office space
to Matlack Systems, Inc. for aggregate charges of $4,401,000 in 1998,
$3,600,000 in 1997 and $3,542,000 in 1996, which have been included in
revenues or offset against operating expense, as appropriate, in the
Consolidated Statement of Earnings.
The Company provided administrative services to Dover Downs
Entertainment, Inc. for aggregate charges of $430,000 in 1998, $204,000
in 1997 and $72,000 in 1996, which have been included in revenues or
offset against operating expense, as appropriate, in the Consolidated
Statement of Earnings.
An officer of the Company is the trustee of an employee benefits
trust, which provides certain insurance and health care benefits to
employees of the Company. Contributions to the trust, which were
charged to operating or selling and administrative expense, as
appropriate, were $12,897,000 in 1998, $12,497,000 in 1997 and
$10,892,000 in 1996.
In the opinion of management of the Company, the foregoing
transactions were effected at rates that approximate those the Company
would have realized or incurred had such transactions been effected
with independent third parties.
<TABLE>
<CAPTION>
Quarterly Results (Unaudited)
<S> <C> <C> <C> <C>
December March June September
1998 31 31 30 30
Revenues $149,022,000 $145,050,000 $155,215,000 $160,870,000
Gross profit $ 46,858,000 $ 42,419,000 $ 49,731,000 $ 53,211,000
Earnings before income taxes $ 21,173,000 $ 16,259,000 $ 22,570,000 $ 25,101,000
Net earnings $ 12,897,000 $ 9,936,000 $ 13,846,000 $ 15,344,000
Earnings per diluted share (1) $ .21 $ .16 $ .23 $ .26
December March June September
1997 31 31 30 30
Revenues $133,697,000 $132,376,000 $142,095,000 $148,536,000
Gross profit $ 39,706,000 $ 36,752,000 $ 44,741,000 $ 48,739,000
Earnings before income taxes $ 16,104,000 $ 12,503,000 $ 19,213,000 $ 22,391,000
Net earnings $ 9,823,000 $ 7,628,000 $ 11,767,000 $ 13,576,000
Earnings per diluted share (1) $ .15 $ .12 $ .19 $ .22
(1) Adjusted for the three-for-two common stock split distributed on March 16, 1998.<PAGE>
</TABLE>
SCHEDULE I - Condensed Financial Information
ROLLINS TRUCK LEASING CORP.
BALANCE SHEET
($000 Omitted)
Assets September 30,
1998 1997
Current assets (excluding notes
receivable from subsidiaries)
Cash $ 11,791 $ 1,173
Accounts receivable 2,761 121
Accounts receivable from subsidiaries* 72 20
Other current assets 559 76
Total current assets 15,183 1,390
Notes receivable from subsidiary* 645,000 570,000
Investments in subsidiaries, at equity* 330,709 309,310
Advances to subsidiaries* 15,275 14,627
Property and equipment, at cost,
net of accumulated depreciation 854 933
Other assets 150 183
Deferred income taxes 481 189
Total assets $1,007,652 $ 896,632
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable to subsidiaries* $ 15 $ 14
Accounts payable to others 649 189
Accrued liabilities 2,132 1,531
Income taxes payable (97) 895
Total current liabilities 2,699 2,629
Collateral Trust Debentures
10.35 % Series I, due 2000 50,000 50,000
8 5/8% Series J, due 1998 30,000 30,000
7 % Series L, due 2003 70,000 70,000
7 % Series M, due 2001 60,000 60,000
8.27% Series N, due 2002 100,000 100,000
7.25% Series O, due 2005 50,000 50,000
6.89% Series P, due 2004 75,000 75,000
6 7/8% Series Q, due 2001 60,000 60,000
7.30% Series R, due 2007 75,000 75,000
6.52% Series S, due 2005 75,000 -
Advances from subsidiaries* 67,399 34,869
Other liabilities 510 460
Commitments and contingent liabilities
(see Notes to the Financial Statements)
Shareholders' equity
Common stock $1 par value,
100,000,000 shares authorized;
issued and outstanding:
1998: 58,799,281; 1997: 61,601,112 58,799 41,067
Additional paid-in capital 11 274
Retained earnings 233,234 247,333
Total shareholders' equity 292,044 288,674
Total liabilities and
shareholders' equity $1,007,652 $ 896,632
* Eliminated in consolidation.
The Notes to the Financial Statements are an integral part of these
statements.
SCHEDULE I - Condensed Financial Information
(continued)
ROLLINS TRUCK LEASING CORP.
STATEMENT OF EARNINGS
($000 Omitted)
Year Ended September 30,
1998 1997 1996
Revenues:
Dividends from subsidiaries $30,000 $15,150 $12,300
Other income 8,200 7,191 6,322
38,200 22,341 18,622
Expenses:
Administrative 4,541 4,571 2,930
Depreciation and amortization 279 265 254
4,820 4,836 3,184
Earnings before interest
and income taxes 33,380 17,505 15,438
Interest income 44,708 43,286 40,085
Interest expense (47,031) (44,888) (40,307)
Earnings before income taxes 31,057 15,903 15,216
Income taxes 512 297 1,089
Net earnings of Rollins Truck
Leasing Corp. 30,545 15,606 14,127
Equity in undistributed net earnings
of subsidiaries 21,478 27,188 19,989
Net earnings $52,023 $42,794 $34,116
The Notes to the Financial Statements are an integral part of these
statements.
SCHEDULE I - Condensed Financial Information
(continued)
ROLLINS TRUCK LEASING CORP.
STATEMENT OF CASH FLOWS
($000 Omitted)
Year Ended September 30,
1998 1997 1996
Cash flows from operating activities:
Earnings prior to equity in
subsidiaries' undistributed
earnings $30,545 $15,606 $ 14,127
Adjustments to reconcile earnings
to net cash provided by operating
activities:
Depreciation and amortization 279 265 254
Changes in assets and liabilities:
Accounts receivable (2,691) (123) 55
Accounts payable and
accrued liabilities 1,063 798 256
Current and deferred
income taxes (1,283) (1,419) 215
Other, net (403) 223 318
Net cash provided by
operating activities 27,510 15,350 15,225
Cash flows from investing activities:
Purchase of equipment (128) (18) (367)
Proceeds from sale of equipment 7 - -
Net cash used in investing
activities (121) (18) (367)
Cash flows from financing activities:
Proceeds of equipment
financing obligations 75,000 89,500 144,300
Notes receivable from subsidiary (75,000) (75,000) (135,000)
Repayment of note by subsidiary - 50,000 75,000
Repayment of equipment
financing obligations - (67,500) (81,300)
Payment of dividends (9,244) (8,353) (7,974)
Proceeds of stock options
exercised 2,051 818 540
Common stock acquired and retired (41,367) (30,633) (18,187)
Subsidiary advances and payments 31,882 25,754 8,158
Other (93) - -
Net cash used in financing
activities (16,771) (15,414) (14,463)
Net increase (decrease) in cash 10,618 (82) 395
Cash beginning of period 1,173 1,255 860
Cash end of period $11,791 $ 1,173 $ 1,255
Supplemental information:
Interest paid $43,528 $42,934 $ 39,377
Income taxes paid $ 9,595 $ 8,000 $ 1,655
The Notes to the Financial Statements are an integral part of these
statements.
SCHEDULE I - Condensed Financial Information
(continued)
ROLLINS TRUCK LEASING CORP.
Notes to the Financial Statements
Accounting Policies
The accounting policies of the Company and its subsidiaries are set
forth in the Organization and Accounting Policies note in the
consolidated financial statements of this 1998 Annual Report on Form
10-K.
The Company's principal sources of earnings are dividends and
management fees paid by its subsidiaries. Certain loan agreements
restrict payments to the Company by its subsidiaries. Net assets of
subsidiaries not restricted under such loan agreements totaled
$238,532,000 at September 30, 1998. The Company also realizes cash
receipts by assessing subsidiaries for federal taxes on income and
expends cash in payment of such taxes on a consolidated basis. Tax
assessments are based on the amount of federal income taxes which would
be payable (recoverable) by each subsidiary company based on its
current year's earnings (loss) reduced by that subsidiary's applicable
portion of any consolidated credits utilized currently in the
consolidated federal income tax return.
Interest income on notes receivable from a subsidiary, which are
pledged to secure the Collateral Trust Debentures (described in the
Equipment Financing Obligations note in the consolidated financial
statements of this 1998 Annual Report on Form 10-K), was $44,547,000,
$43,286,000 and $40,085,000 in 1998, 1997 and 1996, respectively.
Commitments and Contingencies
The Company is obligated to a subsidiary for $316,000 annually
($711,000 in the aggregate) of future rentals under a lease to 2001.
Rent expense was $302,000 in 1998, $284,000 in 1997 and $345,000 in
1996.
Commitments of the Company have been collateralized by bank letters
of credit issued on behalf of the Company in the amount of $7,750,000.
The aggregate amounts of maturities for the Collateral Trust
Debentures during the next five years are as follows: 1999 -
$30,000,000; 2000 - $50,000,000; 2001 - $120,000,000; 2002 -
$100,000,000 and 2003 - $70,000,000.
<TABLE>
ROLLINS TRUCK LEASING CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
($000 OMITTED)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
Balance at Charged to Charged Balance at
Year Ended Beginning Costs and to Other End of
September 30, Description of Period Expenses Accounts Deductions Period
<S> <C> <C> <C> <C> <C> <C>
1998: Allowance for
doubtful accounts $2,126 $1,529 $484 (1) $1,687 (2) $2,452
1997: Allowance for
doubtful accounts $1,928 $1,454 $695 (1) $1,951 (2) $2,126
1996: Allowance for
doubtful accounts $1,635 $2,207 $448 (1) $2,362 (2) $1,928
(1) Recoveries.
(2) Write-offs.
</TABLE>
<PAGE>
ROLLINS TRUCK LEASING CORP.
Exhibits to Form 10-K
For Fiscal Year Ended September 30, 1998
Index to Exhibits
Exhibit (4)(n) RLC CORP. (now known as Rollins Truck Leasing
Corp.) Rights Agreement dated as of June 14, 1989
as last amended on February 13, 1998.
Exhibit (4)(0) Eighteenth Supplemental Collateral Trust Indenture
dated as of July 16, 1998 to the 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 the Eighth Supplemental Indenture dated as of
May 15, 1990 and by the Seventeenth Supplemental
Indenture dated as of March 10, 1997 between
Rollins Truck Leasing Corp. and First Union
National Bank, as Trustee.
Exhibit 21 Rollins Truck Leasing Corp. Subsidiaries at
September 30, 1998
Exhibit 23 Consent of Independent Auditors
Exhibit 27(a) Rollins Truck Leasing Corp. Financial Data Schedule
at September 30, 1998
Exhibit 27(b) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Quarter ended March 31, 1998.
Exhibit 27(c) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Quarter ended December 31, 1997.
Exhibit 27(d) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Year ended September 30, 1997.
Exhibit 27(e) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Quarter ended June 30, 1997.
Exhibit 27(f) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Quarter ended March 31, 1997.
Exhibit 27(g) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Quarter ended December 31, 1996.
Exhibit 27(h) Restated Rollins Truck Leasing Corp. Financial Data
Schedule for the Year ended September 30, 1996.
<PAGE>
Exhibit 21
ROLLINS TRUCK LEASING CORP.
Subsidiaries of Registrant at September 30, 1998
JURISDICTION OF
NAME INCORPORATION
Rollins Logistics Inc. Delaware
Rollins Leasing Corp. Delaware
Rollins Properties, Inc. Delaware
Transrisk, Limited Bermuda
Concord Administrative Services, Inc. Delaware
<PAGE>
Exhibit 23
Consent of Independent Accountants
The Board of Directors
Rollins Truck Leasing Corp.:
We consent to incorporation by reference in the registration
statement (No. 333-21835) on Form S-3 of Rollins Truck Leasing Corp. of
our report dated October 27, 1998, relating to the consolidated balance
sheets of Rollins Truck Leasing Corp. and subsidiaries as of September
30, 1998 and 1997 and the related consolidated statements of earnings
and cash flows and related financial statement schedules for each of
the years in the three-year period ended September 30, 1998, which
report appears in the 1998 Annual Report on Form 10-K of Rollins Truck
Leasing Corp.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
December 8, 1998
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 27,015
<SECURITIES> 0
<RECEIVABLES> 77,679
<ALLOWANCES> 2,452
<INVENTORY> 7,394
<CURRENT-ASSETS> 134,720
<PP&E> 1,709,344
<DEPRECIATION> 565,114
<TOTAL-ASSETS> 1,296,533
<CURRENT-LIABILITIES> 65,561
<BONDS> 749,876
0
0
<COMMON> 58,799
<OTHER-SE> 233,245
<TOTAL-LIABILITY-AND-EQUITY> 1,296,533
<SALES> 610,157
<TOTAL-REVENUES> 610,157
<CGS> 0
<TOTAL-COSTS> 427,725
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51,586
<INCOME-PRETAX> 85,103
<INCOME-TAX> 33,080
<INCOME-CONTINUING> 52,023
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,023
<EPS-PRIMARY> .86
<EPS-DILUTED> .85
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 16,385
<SECURITIES> 0
<RECEIVABLES> 67,139
<ALLOWANCES> 1,995
<INVENTORY> 7,452
<CURRENT-ASSETS> 115,188
<PP&E> 1,602,464
<DEPRECIATION> 527,477
<TOTAL-ASSETS> 1,207,772
<CURRENT-LIABILITIES> 56,603
<BONDS> 688,113
0
0
<COMMON> 60,272
<OTHER-SE> 226,428
<TOTAL-LIABILITY-AND-EQUITY> 1,207,772
<SALES> 294,072
<TOTAL-REVENUES> 294,072
<CGS> 0
<TOTAL-COSTS> 209,424
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,061
<INCOME-PRETAX> 37,432
<INCOME-TAX> 14,599
<INCOME-CONTINUING> 22,833
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,833
<EPS-PRIMARY> .37
<EPS-DILUTED> .37<F1>
<FN>
<F1>This financial data schedule has been restated to include this footnote
reference indicating that the EPS numbers, as reported, reflect
the effects of the three-for-two common stock split
distributed on March 16, 1998.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 14,064
<SECURITIES> 0
<RECEIVABLES> 70,671
<ALLOWANCES> 2,153
<INVENTORY> 8,200
<CURRENT-ASSETS> 117,212
<PP&E> 1,568,316
<DEPRECIATION> 515,849
<TOTAL-ASSETS> 1,187,458
<CURRENT-LIABILITIES> 64,750
<BONDS> 654,321
0
0
<COMMON> 40,895
<OTHER-SE> 254,301
<TOTAL-LIABILITY-AND-EQUITY> 1,187,458
<SALES> 149,022
<TOTAL-REVENUES> 149,022
<CGS> 0
<TOTAL-COSTS> 104,315
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,499
<INCOME-PRETAX> 21,173
<INCOME-TAX> 8,276
<INCOME-CONTINUING> 12,897
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,897
<EPS-PRIMARY> .21
<EPS-DILUTED> .21<F1>
<FN>
<F1>EPS-Primary and EPS-Diluted have been restated to reflect the effects of
the three-for-two common stock split distributed on March 16, 1998.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 17,637
<SECURITIES> 0
<RECEIVABLES> 73,291
<ALLOWANCES> 2,126
<INVENTORY> 8,659
<CURRENT-ASSETS> 121,043
<PP&E> 1,546,115
<DEPRECIATION> 493,460
<TOTAL-ASSETS> 1,191,791
<CURRENT-LIABILITIES> 62,403
<BONDS> 671,822
0
0
<COMMON> 41,067
<OTHER-SE> 247,607
<TOTAL-LIABILITY-AND-EQUITY> 1,191,791
<SALES> 556,704
<TOTAL-REVENUES> 556,704
<CGS> 0
<TOTAL-COSTS> 398,996
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,270
<INCOME-PRETAX> 70,211
<INCOME-TAX> 27,417
<INCOME-CONTINUING> 42,794
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,794
<EPS-PRIMARY> .68
<EPS-DILUTED> .68<F1>
<FN>
<F1>EPS-Primary and EPS-Diluted have been restated to reflect the effects of
the three-for-two common stock split distributed on March 16, 1998
and the application of Financial Accounting Standard No. 128,
"Earnings Per Share."
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 23,103
<SECURITIES> 0
<RECEIVABLES> 69,785
<ALLOWANCES> 2,049
<INVENTORY> 8,634
<CURRENT-ASSETS> 120,909
<PP&E> 1,506,604
<DEPRECIATION> 480,319
<TOTAL-ASSETS> 1,165,688
<CURRENT-LIABILITIES> 57,581
<BONDS> 672,034
0
0
<COMMON> 41,146
<OTHER-SE> 237,425
<TOTAL-LIABILITY-AND-EQUITY> 1,165,688
<SALES> 408,168
<TOTAL-REVENUES> 408,168
<CGS> 0
<TOTAL-COSTS> 295,684
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,709
<INCOME-PRETAX> 47,820
<INCOME-TAX> 18,602
<INCOME-CONTINUING> 29,218
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,218
<EPS-PRIMARY> .46
<EPS-DILUTED> .46<F1>
<FN>
<F1>EPS-Primary and EPS-Diluted have been restated to reflect the effects of
the three-for-two common stock split distributed on March 16, 1998
and the application of Financial Accounting Standard No. 128,
"Earnings Per Share."
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 64,100
<SECURITIES> 0
<RECEIVABLES> 67,581
<ALLOWANCES> 2,026
<INVENTORY> 9,060
<CURRENT-ASSETS> 163,191
<PP&E> 1,480,489
<DEPRECIATION> 472,295
<TOTAL-ASSETS> 1,190,043
<CURRENT-LIABILITIES> 56,484
<BONDS> 700,774
0
0
<COMMON> 42,028
<OTHER-SE> 238,402
<TOTAL-LIABILITY-AND-EQUITY> 1,190,043
<SALES> 266,073
<TOTAL-REVENUES> 266,073
<CGS> 0
<TOTAL-COSTS> 195,264
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,980
<INCOME-PRETAX> 28,607
<INCOME-TAX> 11,156
<INCOME-CONTINUING> 17,451
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,451
<EPS-PRIMARY> .27
<EPS-DILUTED> .27<F1>
<FN>
<F1>EPS-Primary and EPS-Diluted have been restated to reflect the effects of
the three-for-two common stock split distributed on March 16, 1998
and the application of Financial Accounting Standard No. 128,
"Earnings Per Share."
</FN>
</TABLE>
AMENDMENT NO. 1
TO
RIGHTS AGREEMENT
BETWEEN
ROLLINS TRUCK LEASING CORP.
AND
REGISTRAR AND TRANSFER COMPANY
This Amendment No. 1 dated as of the 13th day of February, 1998
amending that certain Rights Agreement (the "Rights Agreement") dated
as of June 14, 1989 between Rollins Truck Leasing Corp. (the "Company")
and Registrar and Transfer Company (the "Rights Agent").
WHEREAS, Section 26 to the Rights Agreement provides that as long
as the Rights defined in and created by the Rights Agreement (the
"Rights") are redeemable, the Company may in its sole and absolute
discretion, and the Rights Agent shall if the Company so directs,
supplement or amend any provision of the Rights Agreement without the
approval of any holders of the Rights or the Common Stock of the
Company (the "Common Stock"), provided that no such supplement or
amendment shall be made which changes the Redemption Price (as defined
in the Rights Agreement), the Final Expiration Date (as defined in the
Rights Agreement) or the number of shares of Common Stock for which a
Right is exercisable; and
WHEREAS, the Company wishes to provide the Board of Directors with
discretion in redeeming the Rights; and
WHEREAS, the Company and the Rights Agent wish to amend the
Agreement to reflect the foregoing desire:
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Unless otherwise defined herein, terms used
herein which are defined in the Agreement shall have the meanings given
them in the Agreement.
<PAGE>
2. Amendments.
(a) Section 1 of the Agreement is hereby amended by
inserting a new clause "(ll)," reading as follows:
"Exempt Transaction" shall mean a
share exchange, consolidation, merger or
other transaction in respect of which
the Board of Directors has waived the
application of either Section 13 or
Section 11 (a) (ii), whichever is
applicable, pursuant to the provisions
of Section 23 (c)."
(b) Section 1(bb) of the Agreement is hereby amended by
inserting the following language after the word "hereof":
", provided however that a Section 11
(a) (ii) Event shall not include an
Exempt Transaction."
(c) Section 1 (dd) of the Agreement is hereby amended by
inserting the following language after the word "hereof":
", provided however that a Section 13
Event shall not include an Exempt
Transaction."
(d) Section 23 of the Agreement is hereby amended by adding
a new clause (c) to the end of the Section, reading as follows:
"The Board of Directors may, until
a Triggering Event shall have occurred,
upon written notice (including notice by
telecopy) to the Rights Agent, determine
to waive the application of either
Section 13 or Section 11 (a) (ii),
whichever is applicable, to a Triggering
Event."
3. Representations and Warranties of the Company.
The Company represents and warrants to the Rights Agent that
(i) this Amendment No. 1 is permitted under the terms of the Rights
Agreement, and (ii) this Amendment No. 1 does not change the Redemption
Price, the Final Execution Date or the number of shares of Common Stock
for which a Right is exercisable under the Rights Agreement.
4. Effect. Except as expressly modified hereby, all terms and
provisions of the Agreement remain unamended and in full force and
effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to the Rights Agreement to be duly executed, all as of the day
and year first above written.
Rollins Truck Leasing Corp.
By: /s/ John W. Rollins, Jr.
President and COO
Registrar and Transfer Company
By: /s/ Thomas L. Montrone
President and CEO
ROLLINS TRUCK LEASING CORP.
and
FIRST UNION NATIONAL BANK
as Trustee
EIGHTEENTH SUPPLEMENTAL INDENTURE
Dated as of July 16, 1998
to the
Collateral Trust Indenture
Dated as of March 21, 1983
6.52% COLLATERAL TRUST DEBENTURES, Series S, DUE JULY 15, 2005
<PAGE>
TABLE OF CONTENTS*
Page
PARTIES 1
RECITALS:
Execution of Collateral Trust Indenture Supplemental
Indentures 1
Issuance of Series S Debentures 1
Text of Forms:
Form of Face of Series S Debentures 1
Form of Trustee's Authentication Certificate
for Series S Debentures 3
Form of Reverse of Series S Debentures 3
All Things Done 6
GRANTING CLAUSES:
GRANTING CLAUSE I - Securities 7
GRANTING CLAUSE II - Agreements and Assignments 7
GRANTING CLAUSE III - Other Securities and Property 7
HABENDUM 7
GRANT IN TRUST 7
GENERAL COVENANT 7
SECTION 1. Series S Debentures: Terms and Provisions 8
SECTION 2. Authentication and Delivery of Series S Debentures 9
SECTION 3. Maintenance of Office or Agency; Authenticating
Agent for Series S Debentures 9
SECTION 4. Original Indenture Ratified 9
SECTION 5. Trustee Not Responsible 10
SECTION 6. Defined Terms 10
SECTION 7. Counterparts 10
SECTION 8. Applicable Law 10
TESTIMONIUM 11
EXECUTION 11
ACKNOWLEDGEMENTS 11
*Note: This Table of Contents has been inserted for convenience and
does not constitute a part of the Eighteenth Supplemental
Indenture.
EIGHTEENTH SUPPLEMENTAL INDENTURE (herein called the
"Eighteenth Supplemental Indenture"), dated as of July 16, 1998,
between Rollins Truck Leasing Corp., (formerly RLC CORP.) a Delaware
corporation (herein called the "Corporation"), and FIRST UNION
NATIONAL BANK, as Trustee (herein called the "Trustee").
WHEREAS, the Corporation and the Trustee have heretofore
executed and delivered 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, by an Eighth
Supplemental Indenture thereto dated May 15, 1990 and by a
Seventeenth Supplemental Indenture thereto dated as of March 10, 1997
(the "Original Indenture"; the Original Indenture, and as
supplemented by this Eighteenth Supplemental Indenture, being herein
called the "Indenture");
WHEREAS, the Original Indenture provides that the Corporation
and the Trustee may enter into indentures supplemental to the
Original Indenture, among other things, to provide for the issuance
from time to time of debentures (defined in the Original Indenture as
"Debentures") of the Corporation;
WHEREAS, the Corporation has determined to issue hereunder a
series of Debentures (herein called the "Series S Debentures") to be
designated as "6.52% Collateral Trust Debentures, Series S, Due July
15, 2005", to be in the aggregate principal amount of $75,000,000;
WHEREAS, the Series S Debentures and the Trustee's
certificate to be endorsed on the Series S Debentures are to be in
the following forms, with necessary or appropriate variations,
omissions and insertions as permitted or required by the Indenture:
(FORM OF FACE OF Series S DEBENTURES)
Rollins Truck Leasing Corp.
6.52% COLLATERAL TRUST DEBENTURE, Series S, DUE JULY 15, 2005
$____________________ PPN 775741 A# 8
No._____________________
Rollins Truck Leasing Corp., a corporation organized and
existing under the laws of the State of Delaware (herein called the
"Corporation", which term shall include any successor corporation to
the extent provided in the Indenture hereinafter referred to), for
value received, hereby promises to pay to , or
registered assigns, the principal sum of Dollars on July
15, 2005, in such coin or currency of the United States of America as
at the time of payment shall be legal tender for public and private
debts, and to pay interest on said principal sum at the rate of 6.52%
per annum (and at the rate of 8.52% per annum on any overdue
principal and, to the extent legally enforceable, overdue installment
of interest) in like coin or currency from the fifteenth day of
January or July, as the case may be, to which interest on the Series
S Debentures has been paid preceding the date hereof (unless the date
hereof is a January 15 or July 15 to which interest has been paid, in
which case from the date hereof, or unless no interest has been paid
on the Series S Debentures since the original issuance of this
Debenture, in which case from July 16, 1998), semiannually on each
January 15 and July 15 until payment of said principal sum has been
made or duly provided for. Notwithstanding the foregoing, if the
date hereof is after January 1 or July 1, as the case may be, and
before the following January 15 or July 15, this Debenture shall bear
interest from such January 15 or July 15; provided, however, that if
the Corporation shall default in the payment of interest due on such
January 15 or July 15, then this Debenture shall bear interest from
the next preceding January 15 or July 15 to which interest has been
paid or, if no interest has been paid on the Series S Debentures
since the original issuance of this Debenture, from July 16, 1998.
The interest so payable on any January 15 or July 15 will, subject to
certain exceptions provided in the Indenture referred to on the
reverse hereof, be paid to the person in whose name this Debenture is
registered at the close of business on January 1 or July 1, as the
case may be, next preceding such January 15 or July 15. Payment of
the principal of and interest on this Debenture will be made at the
office or agency of the Corporation in the Borough of Manhattan, The
City of New York, New York; provided, however, that interest may be
paid, at the option of the Corporation, by check mailed to the
registered holder hereof at such holder's address last appearing on
the registry books for the Series S Debentures, or in such other
manner as the Corporation may agree with the holder hereof as
contemplated by Section 1(d) of the Eighteenth Supplemental Indenture
referred to on the reverse hereof.
Additional provisions of this Debenture are contained on the
reverse hereof and such provisions shall for all purposes have the
same effect as though fully set forth at this place.
This Debenture shall not be entitled to any of the benefits
of the Indenture or any indenture supplemental thereto, or be valid
or obligatory for any purpose, unless the form of certificate of
authentication hereon shall have been executed by or on behalf of the
Trustee (referred to on the reverse hereof) or a successor trustee
thereto under the Indenture.
IN WITNESS WHEREOF, Rollins Truck Leasing Corp. has caused
this instrument to be signed in its name by its President or a Vice
President and by its Secretary or an Assistant Secretary, or by
facsimiles of any of their signatures, and its corporate seal, or a
facsimile thereof, to be hereto affixed.
DATED:
Rollins Truck Leasing Corp.
BY: ______________________________
(Title)
(SEAL)
ATTESTED:
______________________________
(Title)
(FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE)
TRUSTEE'S AUTHENTICATION CERTIFICATE
THIS IS ONE OF THE DEBENTURES, OF THE SERIES DESIGNATED
THEREIN, DESCRIBED IN THE WITHIN-MENTIONED INDENTURE.
FIRST UNION NATIONAL BANK,
AS TRUSTEE
BY: ______________________________
AUTHORIZED OFFICER
(FORM OF REVERSE OF Series S DEBENTURES)
This Debenture is one of the Debentures of the Corporation
(herein called the "Debentures"), all duly authorized or from time to
time to be duly authorized and not limited in aggregate principal
amount, all issued and to be issued in one or more series from time
to time under and equally secured by a Collateral Trust Indenture
dated as of March 21, 1983, between the Corporation and First Union
National Bank, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture as hereinafter
defined), as supplemented and amended by a Third Supplemental
Indenture thereto dated as of February 20, 1986, by an Eighth
Supplemental Indenture thereto dated as of May 15, 1990 and by a
Seventeenth Supplemental Indenture thereto dated as of March 10, 1997
and as last supplemented by the Eighteenth Supplemental Indenture,
dated as of July 16, 1998 (said Indenture, as so supplemented and
amended, being herein called the "Indenture"), to which Indenture and
all indentures supplemental thereto reference is hereby made for a
description of the property thereby pledged, the nature and extent of
the security, the rights of the holders of the Debentures in respect
of the security, the rights, duties and immunities of the Trustee and
the rights and obligations of the Corporation in respect of the
Debentures, and the terms and conditions upon which the Debentures
are, and are to be, secured. The Debentures may be issued in series,
for various principal sums, may mature at different times, may bear
interest at different rates and may otherwise vary as in the
Indenture provided. This Debenture is one of a series designated as
the "6.52% Collateral Trust Debentures, Series S, Due July 15, 2005"
of the Corporation (herein called the "Series S Debentures."), duly
authorized and lawfully issued in an aggregate principal amount of
$75,000,000 under and secured by the Indenture.
The provisions of the Indenture may be waived, or modified or
amended by supplemental indenture, to the extent and in the manner
provided in the Indenture, but in certain instances only with the
consent of the holders of a majority in aggregate principal amount of
all Debentures at the time outstanding, and of 66 2/3% in aggregate
principal amount of each series of the Debentures at the time
outstanding which is affected by such waiver or supplemental
indenture; provided, however, that, without the written consent of
the holder of this Debenture, no such modification or amendment shall
be made so as to (i) extend the fixed maturity of this Debenture or
the time of payment of interest hereon, or reduce or otherwise modify
the terms of payment of the principal of, or the rate of interest on,
this Debenture, or adversely affect the right of the holder hereof to
institute suit for the enforcement of any such payment, (ii) permit
the creation of any lien ranking prior to or on a parity with the
lien of the Indenture with respect to, or terminate the lien of the
Indenture on, any of the property covered thereby, or deprive the
holder hereof of the security afforded by the lien of the Indenture
or (iii) reduce the percentage of the aggregate principal amount of
Debentures, or of Series S Debentures, required to authorize any such
modification or amendment or any waiver of any provision of, or
default under, the Indenture.
In case an Event of Default (as defined in the Indenture)
shall occur, the principal of all the Debentures at any such time
outstanding under the Indenture may be declared or may become due and
payable upon the conditions and in the manner and with the effect
provided in the Indenture. The Indenture provides that in certain
events such Event of Default and its consequences may be waived and
such declaration may be rescinded by the holders of outstanding
Debentures in the manner provided in the Indenture.
Any request, demand, authorization, direction, declaration,
notice, consent, waiver or other action by the holder of this
Debenture shall bind the holder of every Debenture issued upon the
registration of transfer hereof or in exchange herefor or in lieu
hereof, in respect of anything done or suffered to be done by or on
behalf of the Trustee or the Corporation in reliance thereon, whether
or not notation of such action is made upon this Debenture.
The Series S Debentures may not be redeemed prior to
maturity.
The transfer of this Debenture may be registered by the
registered holder hereof or by his duly authorized attorney at the
office or agency of the Corporation in the Borough of Manhattan, the
City of New York, New York, upon surrender of this Debenture for
cancellation, accompanied by a written instrument of transfer in a
form approved by the Corporation, duly executed by the registered
holder of this Debenture or by his duly authorized attorney, and
thereupon one or more new Debentures of the same series and aggregate
principal amount will be issued in the name of the transferee or
transferees in exchange herefor without service charge, except that
the Corporation may require payment of a sum sufficient to pay any
stamp taxes or other governmental charges that may be required with
respect thereto, as provided in the Indenture.
The person in whose name this Debenture shall be registered
shall be deemed the absolute owner hereof for all purposes, and
payment of or on account of the principal of and interest on, this
Debenture shall be made only to or upon the written order of such
registered owner or his duly authorized attorney. All such payments
shall satisfy and discharge the liability upon this Debenture to the
extent of the amounts so paid.
No recourse shall be had for the payment of the principal of,
or interest on, this Debenture, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any
incorporator, stockholder, officer or director, as such, past,
present or future, of the Corporation or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
(END OF FORM OF REVERSE OF Series S DEBENTURES)
WHEREAS, the Debentures of any other series are to be
substantially in the forms herein provided for Series S Debentures,
with such omissions, insertions and variations as may be authorized
and permitted by this Indenture; and
WHEREAS, all acts and things prescribed by law, by the
Certificate of Incorporation and the By-laws of the Corporation, and
all other acts and things necessary to make the Series S Debentures,
when executed by the Corporation, and authenticated and delivered by
the Trustee as in this Eighteenth Supplemental Indenture provided,
the valid, binding and legal obligations of the Corporation, and to
make this Eighteenth Supplemental Indenture a valid, binding and
legal instrument for the security of the Series S Debentures, in
accordance with its terms, have been done and performed;
NOW, THEREFORE, THIS EIGHTEENTH SUPPLEMENTAL INDENTURE
WITNESSETH:
THAT the Corporation, in consideration of these premises, of
the acceptance by the Trustee of the trusts created hereby, of the
mutual covenants herein contained, of the purchase and acceptance of
the Debentures by the holders thereof, of the sum of $10 duly paid by
the Trustee to the Corporation at or before the ensealing and
delivery of this Eighteenth Supplemental Indenture and for other
valuable consideration, the receipt whereof is hereby acknowledged,
and in order to secure the payment of the principal of, and premium,
if any, and interest on, all Debentures at any time issued and
Outstanding under the Indenture, according to their tenor and effect,
and the performance and observance by the Corporation of all the
covenants and conditions herein and therein contained on its part to
be performed and observed, and to declare the terms and conditions
upon and subject to which the Debentures are, and are to be, issued
and secured, has executed and delivered this Indenture and has
granted, bargained, sold, remised, released, conveyed, assigned,
transferred, mortgaged, pledged, set over, confirmed and warranted,
and by these presents does grant, bargain, sell, remise, release,
convey, assign, transfer, mortgage, pledge, set over, confirm and
warrant, to the Trustee, and to its successors in the trusts and its
and their assigns forever, with power of sale, all and singular the
following:
GRANTING CLAUSE I
Securities
Note of Rollins Leasing Corp., a Delaware corporation, dated
July 16, 1998, in the aggregate principal amount of $75,000,000.
GRANTING CLAUSE II
Agreements and Assignments
The following agreements and assignments:
A. A Loan Agreement, dated as of July 16, 1998, between the
Corporation and Rollins Leasing Corp., which Loan Agreement shall be
in the form attached hereto as Exhibit A.
B. Assignment of Loan Agreement, dated as of July 16, 1998,
assigning the Loan Agreement described in Subparagraph A of this
Granting Clause II to the Trustee, which Assignment shall be in the
form attached hereto as Exhibit B.
GRANTING CLAUSE III
Other Securities and Property
All other securities and other property, including cash, and
any and all security therefor of whatsoever nature, that may, from
time to time hereafter, by delivery or by writing of any kind, be
subjected to the lien hereof by the Corporation or by anyone on its
behalf; and the Trustee is hereby authorized to receive the same as
additional security hereunder. Such subjection to the lien hereof of
such securities or other property, including cash, as additional
security hereunder may be made subject to any reservations,
limitations or conditions which shall not be prohibited by this
Indenture and which shall be set forth in a written instrument
executed by the Corporation or the person so acting on its behalf,
respecting the use and disposition of such property or the proceeds
thereof.
TO HAVE AND TO HOLD the Pledged Property unto the Trustee and
its successors and assigns forever;
BUT IN TRUST, NEVERTHELESS, for the equal and proportionate
benefit and security of the holders from time to time of all the
Debentures issued hereunder and Outstanding, without any priority of
any of said Debentures over any of the others.
IT IS HEREBY COVENANTED, DECLARED AND AGREED that all the
Debentures are to be issued, authenticated and delivered, and that
all property, including cash, subject or to become subject hereto is
to be held, subject to the further covenants, conditions, uses and
trusts hereinafter set forth, and the Corporation, for itself and its
successors and assigns, hereby covenants and agrees to and with the
Trustee and its successors in said trust for the equal and
proportionate benefit and security of those who shall hold the
Debentures, as hereinafter set forth.
SECTION 1. Series S Debentures: Terms and Provisions.
Series S Debentures shall be designated as "6.52% Collateral Trust
Debentures, Series S, Due July 15, 2005" of the Corporation, and
shall have the following terms and provisions:
(a) Series S Debentures shall be in the form set forth in the
recitals hereto.
(b) The aggregate principal amount of Series S Debentures
which may be issued shall be $75,000,000, except Series S
Debentures issued in exchange for, in lieu of, in substitution
for, or upon the registration of transfer of, other Series S
Debentures pursuant to the provisions of Article II and Section
18.04 of the Original Indenture.
(c) Series S Debentures shall be dated July 16, 1998.
(d) Series S Debentures shall mature July 15, 2005 and shall
bear interest (calculated on the basis of a 360 day year of
twelve 30 day months) as provided in Section 2.06(b) of the
Original Indenture, payable semiannually on January 15 and July
15 in each year, commencing January 15, 1999 at the rate of 6.52%
per annum until the principal thereof shall become due and
payable (whether at the stated maturity, by declaration or
otherwise), and at the rate of 8.52% per annum on any overdue
principal, and (to the extent legally enforceable) any overdue
installment of interest. Payment of principal and interest shall
be made at the Corporate Trust Office or at the other office or
agency maintained by the Corporation as provided in Section
7.02(a) of the Original Indenture, in such coin or currency of
the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts;
provided, however, that interest may be paid, at the option of
the Corporation, by check mailed to the Person entitled thereto
at his address last appearing on the registry books required to
be kept pursuant to Section 2.05 of the Original Indenture.
Notwithstanding anything to the contrary above, the
Corporation may enter into a written agreement with any person
who is or is to become the holder of any of the Series S
Debentures providing for the making of all payments on the
account of such Series S Debentures directly to or for the
account of such holder in the manner specified in or pursuant to
such agreement without presentation or surrender thereof if there
shall be filed with the Trustee a copy of such agreement.
Notwithstanding any contrary provision hereof or of the
Debentures or the Original Indenture, the Trustee shall act in
accordance with any such agreement so filed with it.
(e) Series S Debentures shall be issued in denominations of
$100,000 and integral multiples thereof and may be fully printed
or printed on steel engraved borders or fully or partly engraved.
(f) Series S Debentures may not be redeemed prior to
maturity. All monies received by the Trustee as a result of any
prepayment of the Note made pursuant to Section 6(a) of the Loan
Agreement (as required by Section 7.14 of the Original Indenture)
shall be held by the Trustee as additional collateral security
for the Series S Debentures to be applied thereto at the maturity
thereof. Any monies so held may be invested or reinvested by the
Trustee pursuant to Section 9.02 of the Original Indenture.
SECTION 2. Authentication and Delivery of Series S
Debentures. On or after the date of execution and delivery of the
Eighteenth Supplemental Indenture and upon compliance with the
provisions of Article IV of the Original Indenture, Series S
Debentures shall be executed by the Corporation and delivered to the
Trustee, and the Trustee shall, upon request, authenticate and
deliver such Series S Debentures upon the written order of the
Corporation signed by its President or one of its Vice Presidents and
its Treasurer or Controller, an Assistant Treasurer or an Assistant
Secretary.
SECTION 3. Maintenance of Office or Agency; Authenticating
Agent for Series S Debentures. The provisions of Section 7.02 of the
Original Indenture shall apply in all respects to the Series S
Debentures to the same extent as if the words "Series S Debentures"
were substituted for the words "Series A Debentures" in each place in
which the latter quotation was employed in the aforesaid Section.
SECTION 4. Original Indenture Ratified. The Original
Indenture as amended by the Third Supplemental Indenture, dated as of
February 20, 1986, by the Eighth Supplemental Indenture, dated as of
May 15, 1990, and by the Seventeenth Supplemental Indenture, dated as
of March 10, 1997, and as supplemented by this Eighteenth
Supplemental Indenture is in all respects ratified and confirmed and
the Eighteenth Supplemental Indenture and all its provisions shall be
deemed a part thereof in the manner and to the extent herein
provided, and the Original Indenture, as modified in the manner and
to the extent herein provided, shall be deemed a part hereof as
though fully set forth herein.
SECTION 5. Trustee Not Responsible. The Trustee assumes no
responsibility for or in respect of the validity or sufficiency of
the Eighteenth Supplemental Indenture or the due execution hereof by
the Corporation or for or in respect of the recitals and statements
contained herein, all of which are made solely by the Corporation.
The Trustee accepts the trusts created by the Eighteenth Supplemental
Indenture upon the terms and conditions hereof and of the Original
Indenture.
SECTION 6. Defined Terms. All terms used in the Eighteenth
Supplemental Indenture which are defined in the Original Indenture
shall have the meanings assigned to them in the Original Indenture.
SECTION 7. Counterparts. The Eighteenth Supplemental
Indenture may be executed in any number of counterparts, each of
which when so executed and delivered shall be an original; and all
such counterparts shall together constitute but one and the same
instrument.
SECTION 8. Applicable Law. This Eighteenth Supplemental
Indenture shall be construed in accordance with and governed by the
laws of the State of Delaware.
IN WITNESS WHEREOF, Rollins Truck Leasing Corp. has caused
this Eighteenth Supplemental Indenture to be executed on its behalf
by its President or one of its Vice Presidents and its corporate seal
to be hereto affixed and said seal and this Eighteenth Supplemental
Indenture to be attested by its Secretary or Assistant Secretary, and
First Union National Bank, in evidence of its acceptance of the
trusts hereby created, has caused this Eighteenth Supplemental
Indenture to be executed on its behalf and its corporate seal to be
affixed by one of its Vice Presidents or Assistant Vice Presidents
and said seal and this Indenture to be attested by its Assistant
Secretary or one of its Assistant Vice Presidents, as of July 16,
1998.
Rollins Truck Leasing Corp.
(CORPORATE SEAL) BY:______________________________
Vice President-Finance
Title:
Attest:
______________________________
Secretary
FIRST UNION NATIONAL BANK,
as Trustee
(CORPORATE SEAL) BY:____________________________
Title:
Attest:
______________________________
EXHIBIT A
ROLLINS TRUCK LEASING CORP.
AND
ROLLINS LEASING CORP.
LOAN AGREEMENT
Dated as of July 16, 1998
<PAGE>
LOAN AGREEMENT (herein called the "Agreement") dated as of
July 16, 1998 between Rollins Truck Leasing Corp., a corporation
organized under the laws of the State of Delaware (herein called the
"Corporation"), and Rollins Leasing Corp., a corporation organized
under the laws of the State of Delaware (herein called the
"Borrower").
WHEREAS, the Borrower desires to borrow from the Corporation,
and the Corporation is willing to lend to the Borrower, a sum not
exceeding $75,000,000, all upon the terms, provisions and conditions
herein set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual undertakings and obligations herein contained and for other
good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Borrower and the Corporation do hereby
agree as follows:
SECTION 1. Certain Definitions. The Corporation proposes
to issue its 6.52% Collateral Trust Debentures, Series S, due July
15, 2005 (herein called the "Series S Debentures"), in an aggregate
principal amount not exceeding $75,000,000, pursuant to 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, by an Eighth Supplemental Indenture thereto dated
as of May 15, 1990 and by a Seventeenth Supplemental Indenture
thereto dated as of March 10, 1997 between the Corporation and First
Union National Bank, as Trustee (the "Original Indenture"; the
Original Indenture, as supplemented by the Eighteenth Supplemental
Indenture dated as of July 16, 1998, being herein called the
"Indenture"). A copy of the Indenture has been delivered to the
Borrower, receipt of which is hereby acknowledged.
The term "Note" shall mean the 6.52% Demand Promissory Note
issued by the Borrower pursuant to this Agreement, substantially in
the form attached hereto as Annex 1.
In addition to the foregoing, the following terms shall in
each case have the same meaning in this Agreement as they have in the
Indenture as amended: "Debentures", "Equipment Indebtedness",
"Note", "Outstanding", "Participating Subsidiary", "Permitted
Indebtedness", "Person", "Pledged Property", "Series S Debentures",
"Trustee" and "Vehicle".
SECTION 2. Sale of Note. Subject to the terms of this
Agreement, the Borrower will sell to the Corporation and the
Corporation will purchase from the Borrower the Note in the principal
amount of $75,000,000 at a price of 100% of such principal amount.
The sale of the Note will take place immediately after the
execution and delivery of this Agreement and upon the delivery,
(a) by the Borrower to the Corporation of the Note, duly
executed and dated July 16, 1998, together with all such
assignments, documents and other instruments as may be required
by the Corporation to enable it to effect the issuance of Series
S Debentures referred to in Section 1, and
(b) by the Corporation to the Borrower of a certified or
official bank check or checks in clearing house funds (or in such
other form as shall be acceptable to the Borrower) in an amount
equal to $75,000,000; provided, however, that the obligation of
the Corporation to purchase the Note shall be subject to the
condition that, concurrently with the closing in respect of such
purchase, the Corporation shall have issued and sold, and shall
have received payment for, Series S Debentures in an aggregate
principal amount equal to the sum of the principal amount of the
Note.
SECTION 3. Pledge and Assignment of Note and Agreement. In
consideration of the purchase of the Note by the Corporation and the
benefits to be derived by the Borrower as a result of the sale of the
Note, the Borrower hereby agrees and consents to the pledge and
assignment by the Corporation of the Note and this Agreement to the
Trustee under and pursuant to the Indenture as security for the
Debentures Outstanding and to be Outstanding thereunder.
SECTION 4. Particular Covenants of the Borrower. So long as
the Note shall be outstanding, the Borrower covenants, warrants and
agrees as follows:
(a) Payment of Principal and Interest. The Borrower will
duly and punctually pay, or cause to be paid, the principal of
and interest on, the Note according to its terms and the terms of
this Agreement.
(b) Maintenance of Corporate Existence. Subject to the
provisions of subsection (e) of this Section 4, the Borrower will
maintain and preserve its corporate existence and right to carry
on business.
(c) Borrower a Participating Subsidiary; Validity of Note.
The Borrower warrants that at the date of this Agreement it is a
Participating Subsidiary as defined in Section 4 of the Eighth
Supplemental Indenture dated as of May 15, 1990, and that the
Note, when delivered to the Corporation will be, and when pledged
and assigned to the Trustee as security under the Indenture, will
continue to be, a legal and valid outstanding obligation of the
Borrower.
(d) Further Assurance. The Borrower will execute and
deliver, or cause to be executed and delivered, all such
additional instruments and do, or cause to be done, all such
additional acts as (i) may be necessary or proper to carry out
the purposes of this Agreement and to subject the Note to the
lien of the Indenture, (ii) may be necessary or proper to effect
the transfer, pledge and assignment of the Note and this
Agreement to the Trustee or to any successor trustee and to
confirm the lien of the Indenture on the Note, (iii) may be
necessary or proper in connection with the granting of the
security interest under subsection (f) of this Section 4 or (iv)
the Trustee or the Corporation may reasonably request for any of
the foregoing purposes.
(e) Restrictions on Borrower's Disposition of Property,
Consolidation, Merger, etc. The Borrower will not sell, transfer
or otherwise dispose of the beneficial interest in all or
substantially all its property or assets, or be a party to any
consolidation, merger or amalgamation; provided, however, that
the Borrower may take any such action or be such a party if:
(i) the surviving corporation (if other than the
Borrower), or the person to whom all, or substantially all,
the property and assets of the Borrower shall have been
transferred, sold or otherwise disposed of, shall execute and
deliver to the Corporation and to the Trustee an agreement of
assumption in which such surviving corporation or person
shall expressly assume the due and punctual payment of the
principal of and interest on, the Note, according to its
tenor and effect, and the due and punctual performance and
observance of all the covenants and conditions of the Note
and this Agreement which are to be performed or observed by
the Borrower, with the same effect as if such surviving
corporation or person had been named herein as a party hereto
in lieu of the Borrower; and
(ii) immediately after such transfer, sale or other
disposition, or consolidation, merger or amalgamation, no
default shall have occurred and be continuing under this
Agreement; and
(iii) all the voting stock of the surviving corporation
shall be owned directly or indirectly by the Corporation.
(f) Creation of Security Interest. The Borrower will not
create or permit to exist any claim, lien, security interest or
other encumbrance on any of its Vehicles, or on its interest as
lessor in any lease agreement relating to its Vehicles, except:
(i) lessees' interests in Vehicles under any such lease
agreement; and
(ii) liens, security interests or other encumbrances
for taxes which are not delinquent or which are being
contested in good faith or of mechanics or materialmen
arising in the ordinary course of business in respect of
obligations which are not overdue or which are being
contested in good faith; unless (x) such claim, lien,
security interest or other encumbrance is for the benefit of
a holder or holders of Equipment Indebtedness and (y) prior
to or simultaneously with the inception of any such claim,
lien, security interest or other encumbrance, the Borrower
shall have executed and delivered to a Security Trustee (as
hereinafter defined), a security agreement or security
agreements and such other documents as the Security Trustee
may reasonably request, each in form and substance
satisfactory to the Trustee, granting to the Security Trustee
the right to perfect a security interest in such Vehicles of
the Borrower, such security interest, when perfected, to be
for the equal and ratable benefit of the Trustee, as holder
of the Notes, and such other holder or holders of Equipment
Indebtedness. Such security agreement or security agreements
may provide, at the option of the Borrower, that the security
interest granted to the Security Trustee shall terminate upon
the termination of all other claims, liens, security
interests and other encumbrances for the benefit of such
other holder or holders of Equipment Indebtedness. The
Security Trustee shall be such Person as may be selected by
the Borrower or any such holder of Equipment Indebtedness and
who shall be entitled to act without qualification or who
shall qualify to act as such under the Trust Indenture Act of
1939.
SECTION 5. Payments of Principal and Interest. So long as
the Note shall be pledged with the Trustee under the Indenture, any
payment of principal or interest on the Note, or any payments to be
made pursuant to Section 6(a), shall be paid to the Trustee in
Chicago Clearing House funds at least one business day prior to the
dates on which the Corporation would be required to make related
payments under the Indenture with respect to the relevant Debentures.
The Trustee shall apply such payments in accordance with the
provisions of the Indenture.
SECTION 6. Prepayment of Note.
(a) Prepayments Pursuant to Section 7.14 of the Original
Indenture. So long as the Note shall be pledged with the Trustee
under the Indenture, the Borrower shall pay, or cause to be paid,
to the Trustee, as prepayments on the Note, amounts which may be
required to be paid by the Borrower pursuant to Section 7.14 of
the Original Indenture. Any such amounts shall be paid as
provided in Section 5 of this Agreement and shall be applied as
payment or prepayment on the Note in accordance with subsection
(c) of this Section 6.
(b) Notice of Certain Prepayments. If the Corporation is
required to make payments pursuant to Section 7.14 of the
Original Indenture, the Corporation shall give notice thereof to
the Borrower, which notice shall state the circumstances under
which such payments are to be made. Such notice shall be given
not later than the first date on which the Corporation is
required to give notice to the Trustee or to take any other
action with respect to such payments. Failure to give any such
notice to the Borrower or any defect therein shall not, however,
affect the obligation of the Borrower to make the payments
required under subsection (a) of this Section 6.
(c) Prepayments on Principal Amount of Note. All payments
made by the Borrower, or for the account of the Borrower,
pursuant to this Section 6 shall be applied or credited as
prepayments on the principal amount of the Note on the date such
payments are received by the Trustee; provided, however, that to
the extent a portion of such payments or moneys shall be applied
or applicable by the Trustee, directly or indirectly, towards the
payment of any interest or premium in respect of Debentures, such
portion shall not be applied or credited as prepayments on the
principal amount of the Note. It is the intention of this
Section 6 that the principal amount of the Note shall be
appropriately adjusted at appropriate times in order that the
obligations to pay principal, premium, if any, and interest
contained in all the Notes of all Participating Subsidiaries
shall be sufficient, after giving effect to any moneys then held
by the Trustee under Section 9.01 of the Original Indenture, in
the aggregate, to pay all principal, premium, if any, and
interest on all Debentures then Outstanding as the same become
due and payable.
(d) Corporation To Make Certain Payments. When and if the
Borrower shall make any prepayments provided for in this Section
6, the Corporation shall promptly make such payments and take
such other action with respect to the Debentures as shall be
required to be made or taken by the Corporation in accordance
with and pursuant to this Agreement and the Indenture.
SECTION 7. Presentment of Note Not Required. So long as the
Note shall be pledged with the Trustee under the Indenture, payments
of principal thereof and interest thereon, shall be made without need
for any presentment of the Note, but payments of principal shall be
noted thereon by the Trustee.
SECTION 8. Amendments, Consents and Waivers. So long as the
Note shall be pledged with the Trustee under the Indenture (a) this
Agreement may be modified, altered, supplemented or amended upon the
execution and delivery of a written amendment by the parties hereto
pursuant to Article XVIII of the Original Indenture, (b) any covenant
or other condition of this Agreement may be waived as and to the
extent permitted in Section 11.02 of the Original Indenture and (c)
any default under this Agreement and its consequences may be waived
as and to the extent permitted in said Section 11.02 of the Original
Indenture.
SECTION 9. Loss, Theft, etc. of Note. Upon receipt of
evidence of the loss, theft, destruction or mutilation of the Note
and upon delivery of indemnity reasonably satisfactory to the
Borrower (it being understood that the written agreement of the
Trustee to indemnify the Borrower shall constitute such indemnity)
and, in the case of any such mutilation, upon surrender and
cancellation of the mutilated Note, and, in any case, upon
reimbursement to the Borrower of any reasonable expense incidental
thereto, the Borrower shall make and deliver a new Note of like
tenor, in lieu of such lost, stolen or destroyed Note or in exchange
for such mutilated Note.
SECTION 10. Remedies. The holder of the Note, being a party
to, or an assignee of, this Agreement, shall be entitled and
empowered to institute any suits, actions or proceedings at law, in
equity or otherwise, whether for the specific performance of any
covenant or agreement contained herein or in the Note or in aid of
the exercise of any power granted herein or in the Note, or may
proceed to enforce the payment of the Note after demand, or to
enforce any other legal or equitable right as the holder of the Note,
or may proceed to take any action authorized or permitted under the
terms of the Indenture with respect to the Note or under any
applicable law.
SECTION 11. Remedies Cumulative; Delay or Omission Not a
Waiver. Every remedy given hereunder to the holder of the Note shall
not be exclusive of any other remedy or remedies, and every such
remedy shall be cumulative and in addition to every other remedy
given hereunder or now or hereafter given by statute, law, equity or
otherwise. No course of dealing between the Borrower and the
Corporation or the Borrower and the holder of the Note or any delay
or omission on the part of the Corporation or such holder to exercise
any right, remedy or power accruing upon any default hereunder shall
impair any such right, remedy or power or shall be construed to be a
waiver of any such default or of any right of the Corporation or such
holder or acquiescence therein. Every right, remedy and power given
hereunder to the Corporation or to the holder of the Note may be
exercised from time to time and as often as may be deemed expedient
by the Corporation or such holder.
SECTION 12. Successors and Assigns. All the covenants,
warranties and agreements contained in this Agreement by or on behalf
of the Corporation, the Borrower or the holder of the Note shall bind
and inure to the benefit of their respective successors and assigns,
whether so expressed or not.
SECTION 13. Notices. All notices, presentments and demands
to or upon the Borrower in respect of the Note or this Agreement may
be delivered or mailed to the Borrower at One Rollins Plaza, P.O. Box
1791, Wilmington, Delaware 19899, or at such other address as the
Borrower may specify from time to time in writing to the Corporation
and the Trustee.
All notices to or demands upon the Corporation in respect of
the Note or this Agreement shall be delivered or mailed to the
Corporation at One Rollins Plaza, P.O. Box 1791, Wilmington, Delaware
19899, or at such other address as the Corporation may specify from
time to time in writing to the Borrower and the Trustee.
SECTION 14. Payment or Notice on Saturday, Sunday, Legal
Holiday. If the date of any payment or the giving of any notice
under the Note or this Agreement shall be (a) a Saturday, a Sunday or
a legal holiday at the place where payment is to be made or notice is
to be given or (b) a day on which banking institutions at the place
where payment is to be made or notice is to be given are authorized
by law to remain closed, then such payment or notice shall be made
not later than the next preceding business day which shall not be a
day specified in (a) or (b) above.
SECTION 15. Separability of Provisions. In case any one or
more of the provisions contained in this Agreement or in the Note
should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or
impaired thereby.
SECTION 16. Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and
delivered shall be an original, and all such counterparts shall
together constitute but one and the same instrument.
SECTION 17. Applicable Law. This Agreement shall be
construed in accordance with and governed by the laws of the State of
Delaware.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed on its behalf by its President or one
of its Vice Presidents and its corporate seal to be hereto affixed
and said seal and this Agreement to be attested by its Secretary or
one of its Assistant Secretaries, all as of the day and year first
above written.
Rollins Truck Leasing Corp.
BY:____________________________
Patrick J. Bagley
Title:
(CORPORATE SEAL)
Attest:
______________________________
Secretary
Rollins Leasing Corp.
BY:___________________________
President
(CORPORATE SEAL) Title:
Attest:
______________________________
Secretary<PAGE>
ANNEX 1
6.52% DEMAND PROMISSORY NOTE
$75,000,000
Date: July 16, 1998
Rollins Leasing Corp., a corporation organized under the laws
of Delaware, for value received, HEREBY PROMISES TO PAY to Rollins
Truck Leasing Corp., a Delaware corporation, or order, upon demand,
the principal sum of Seventy Five Million Dollars ($75,000,000),
either in one sum or in several sums upon demand made from time to
time (the receipt of any such sum to be noted hereon), in every case
in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and
private debts, at the corporate trust office of First Union National
Bank, in the City of Newark, New Jersey, AND TO PAY interest, at the
said office and in like coin or currency, on the unpaid portion of
the said principal sum from July 16, 1998, until the said principal
sum shall have been paid, such interest to be paid semiannually at
the rate of 6.52% per annum on the 15th day of January and July in
each year commencing on the 15th day of January, 1999 (calculated on
the basis of a 360-day year of twelve 30-day months). If any or all
installments of said principal sum shall not be paid when demanded,
such overdue principal and, to the extent that payment of interest on
overdue interest is enforceable under applicable law, any overdue
installment of interest on this Demand Promissory Note, shall bear
interest at the rate of 8.52% per annum until paid.
This Demand Promissory Note is the Demand Promissory Note
referred to in the Loan Agreement dated as of July 16, 1998, between
Rollins Truck Leasing Corp. and the maker hereof, and may be prepaid
only as provided in said Loan Agreement.
Rollins Leasing Corp.
BY:______________________________
Title:<PAGE>
Pay to the order of First Union National Bank, as Trustee
under the 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, by an Eighth Supplemental Indenture
thereto dated as of May 15, 1990 and by a Seventeenth Supplemental
Indenture thereto dated as of March 10, 1997 and as supplemented by a
Eighteenth Supplemental Indenture dated as of July 16, 1998, between
Rollins Truck Leasing Corp. and said Trustee, as from time to time
further amended and supplemented.
Rollins Truck Leasing Corp.
BY:______________________________
Title:
<PAGE>
EXHIBIT B
ROLLINS TRUCK LEASING CORP.,
FIRST UNION NATIONAL BANK
as Trustee
AND
ROLLINS LEASING CORP.
ASSIGNMENT OF LOAN AGREEMENT
Dated as of July 16, 1998
<PAGE>
ASSIGNMENT OF LOAN AGREEMENT
ASSIGNMENT OF LOAN AGREEMENT dated as of July 16, 1998,
among Rollins Truck Leasing Corp., a corporation organized under the
laws of the State of Delaware (herein called the "Corporation"),
First Union National Bank, as Trustee under the Indenture
hereinafter referred to (herein called the "Trustee"), and Rollins
Leasing Corp., a corporation organized under the laws of the State
of Delaware (herein called the "Borrower").
WHEREAS, the Trustee is Trustee under a Collateral Trust
Indenture dated as of March 21, 1983, (the "Original Indenture"; the
Original Indenture, as supplemented and amended by a Third
Supplemental Indenture thereto dated as of February 20, 1986, by an
Eighth Supplemental Indenture thereto dated as of May 15, 1990 and
by a Seventeenth Supplemental Indenture thereto dated as of March
10, 1997 and as supplemented by the Eighteenth Supplemental
Indenture dated as of July 16, 1998, being herein called the
"Indenture"), between the Corporation and the Trustee under and
pursuant to which there are being and have been issued certain
Collateral Trust Debentures of the Corporation (herein called the
"Debentures"); and
WHEREAS, pursuant to a Loan Agreement (herein called the
"Loan Agreement") dated as of July 16, 1998, between the Corporation
and the Borrower, the Borrower has borrowed from the Corporation,
and the Corporation has loaned to the Borrower, $75,000,000, which
is evidenced by a 6.52% Demand Promissory Note from the Borrower to
the Corporation in the principal amount of $75,000,000 (herein
called the "Note"); and
WHEREAS, in order to secure the payment of the principal of,
and premium, if any, and interest on, all Debentures at any time
issued and outstanding under the Indenture, as and to the extent
provided in the Indenture, and the performance and observance by the
Corporation of all the covenants and conditions in the Indenture and
the Debentures contained on its part to be observed and performed,
the Corporation has endorsed, assigned and delivered to the Trustee
the Note and is required to assign to the Trustee the Loan
Agreement;
NOW, THEREFORE, THIS ASSIGNMENT WITNESSETH:
1. The Corporation hereby assigns to the Trustee all the
right, title and interest of the Corporation in, to and under
the Loan Agreement in order to secure the payment of the
principal of, and premium, if any, and interest on, all
Debentures at any time issued and outstanding under the
Indenture, as and to the extent provided in the Indenture, and
the performance and observance by the Corporation of all the
covenants and conditions in the Indenture and the Debentures
contained on its part to be observed and performed.
2. The Trustee will hold the Loan Agreement and the Note
and the right, title and interest of the Corporation therein in
accordance with, and subject to, the terms of the Indenture.
3. The Borrower acknowledges notice of, and consents to,
the assignment of the Loan Agreement and the Note and of the
right, title and interest of the Corporation therein, all as
provided in, and subject to the terms of, the Indenture and this
Assignment.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Assignment to be executed on its behalf by its President or one
of its Vice Presidents or Assistant Vice Presidents and its
corporate seal to be hereto affixed and said seal and this
Assignment to be attested by its Secretary or one of its Assistant
Secretaries or Assistant Vice Presidents, all as of the day and year
first above written.
Rollins Truck Leasing Corp.
BY:____________________________
Patrick J. Bagley
Title:
(CORPORATE SEAL)
Attest:______________________________
Secretary
FIRST UNION NATIONAL BANK,
NATIONAL ASSOCIATION,
as Trustee
BY:___________________________
Title:
(CORPORATE SEAL)
Attest:______________________________
Title<PAGE>
Rollins Leasing Corp.
BY:___________________________
Title:
(CORPORATE SEAL)
Attest:__________________________
Title
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 10,940
<SECURITIES> 0
<RECEIVABLES> 70,372
<ALLOWANCES> 1,928
<INVENTORY> 9,618
<CURRENT-ASSETS> 112,376
<PP&E> 1,445,458
<DEPRECIATION> 465,188
<TOTAL-ASSETS> 1,110,866
<CURRENT-LIABILITIES> 58,795
<BONDS> 620,783
0
0
<COMMON> 42,463
<OTHER-SE> 238,226
<TOTAL-LIABILITY-AND-EQUITY> 1,110,866
<SALES> 133,697
<TOTAL-REVENUES> 133,697
<CGS> 0
<TOTAL-COSTS> 96,420
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,104
<INCOME-PRETAX> 16,104
<INCOME-TAX> 6,281
<INCOME-CONTINUING> 9,823
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,823
<EPS-PRIMARY> .15
<EPS-DILUTED> .15<F1>
<FN>
<F1>EPS-Primary and EPS-Diluted have been restated to reflect the effects of
the three-for-two common stock split distributed on March 16, 1998
and the application of Financial Accounting Standard No. 128,
"Earnings Per Share."
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 31,207
<SECURITIES> 0
<RECEIVABLES> 64,317
<ALLOWANCES> 1,928
<INVENTORY> 9,124
<CURRENT-ASSETS> 123,772
<PP&E> 1,426,975
<DEPRECIATION> 443,948
<TOTAL-ASSETS> 1,125,212
<CURRENT-LIABILITIES> 53,616
<BONDS> 641,362
0
0
<COMMON> 43,384
<OTHER-SE> 240,664
<TOTAL-LIABILITY-AND-EQUITY> 1,125,212
<SALES> 513,779
<TOTAL-REVENUES> 513,779
<CGS> 0
<TOTAL-COSTS> 370,326
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47,481
<INCOME-PRETAX> 55,927
<INCOME-TAX> 21,811
<INCOME-CONTINUING> 34,116
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,116
<EPS-PRIMARY> .52
<EPS-DILUTED> .52<F1>
<FN>
<F1>EPS-Primary and EPS-Diluted have been restated to reflect the effects of
the three-for-two common stock split distributed on March 16, 1998
and the application of Financial Accounting Standard No. 128,
"Earnings Per Share."
</FN>
</TABLE>
