PROSPECTUS SUPPLEMENT
(To prospectus dated February 18, 1997)
$100,000,000
ROLLINS TRUCK LEASING CORP.
6 3/4% Collateral Trust Debentures, Series T, Due 2006
______________
The Series T Debentures bear interest at the rate of 6 3/4% per
year. Interest on the Series T Debentures is payable on April 5 and
October 5 of each year, beginning October 5, 1999. The Series T
Debentures will mature on April 5, 2006. The Series T Debentures are
not redeemable before maturity and do not have the benefit of any
sinking fund.
The Series T Debentures will be issued only in registered form in
denominations of $1,000. We do not intend to list the Series T
Debentures on any securities exchange.
Per
Debenture Total
Public Offering Price (1) . . . . 100% $100,000,000
Underwriting Discount . . . . . . .625% $ 625,000
Proceeds, before expenses, to
Rollins Truck Leasing Corp. . . . 99.375% $ 99,375,000
(1) Plus accrued interest from April 5, 1999 if settlement occurs after
that date.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or determined if this prospectus supplement and the accompanying
prospectus are truthful and complete. Any representation to the
contrary is a criminal offense.
The Series T Debentures will be ready for delivery in book-entry
form only through The Depository Trust Company, on or about April 5,
1999.
______________
Merrill Lynch & Co.
______________
The date of this prospectus supplement is March 29, 1999.
<PAGE>
TABLE OF CONTENTS
Page
Prospectus Supplement:
Where You Can Find More Information....................... S-3
Incorporation of Information We File with the SEC......... S-3
Use of Proceeds........................................... S-4
Summary Financial Data.................................... S-5
Underwriting.............................................. S-6
Description of the Series T Debentures.................... S-6
Experts................................................... S-9
Legal Matters............................................. S-9
Prospectus:
Available Information..................................... 2
Incorporation of Certain Documents by Reference........... 2
Rollins Truck Leasing Corp................................ 3
Summary Financial Data.................................... 4
Risk Factors.............................................. 5
Use of Proceeds........................................... 6
Plan of Distribution...................................... 6
Description of Debentures................................. 7
Experts................................................... 11
Legal Opinions............................................ 11
_____________________
You should read this Prospectus Supplement along with the
Prospectus that follows. Both documents contain information you should
consider when making your investment decision. You should rely only on
the information contained or incorporated by reference in this
Prospectus Supplement and the Prospectus. We have not, and the
underwriters have not, authorized any other person to provide you with
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and
the underwriters are not, making an offer to sell these securities in
any jurisdiction where the offer or sale is not permitted. You should
assume that the information appearing in this Prospectus Supplement and
the Prospectus is accurate as of the date on the front cover of this
Prospectus Supplement only. Our business, financial condition, results
of operations and prospects may have changed since that date.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission. Our SEC filings are also available
over the Internet at the SEC's web site at http://www.sec.gov. You may
also read and copy any document we file at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for more information on the
public reference rooms and their copy charges. You may also inspect
our SEC reports and other information at the New York Stock Exchange,
20 Broad Street, New York, New York 10005.
We have filed a registration statement on Form S-3 with the SEC
covering the Series T Debentures. For further information on Rollins
Truck Leasing Corp. and the Series T Debentures, you should refer to
our registration statement and its exhibits. This Prospectus
Supplement and the accompanying Prospectus summarize material
provisions of contracts and other documents that we refer you to.
Since the Prospectus Supplement and the accompanying Prospectus may not
contain all the information that you may find important, you should
review the full text of these documents. We have included copies of
these documents as exhibits to our registration statement.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to "incorporate by reference" the information we
file with them, which means:
- incorporated documents are considered part of the Prospectus
Supplement;
- we can disclose important information to you by referring you
to those documents;
- information that we file with the SEC will automatically update
and supersede this Prospectus Supplement and the accompanying
Prospectus; and
- any statement contained in a document incorporated or deemed to
be incorporated by reference in the Prospectus Supplement or
accompanying Prospectus shall be deemed to be modified or
superseded for the purposes of the Prospectus Supplement and
accompanying Prospectus to the extent that a statement
contained in the Prospectus Supplement or accompanying
Prospectus or in any subsequently filed document that also is
or is deemed to be incorporated by reference in the Prospectus
Supplement or accompanying Prospectus modifies or supersedes
such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of the Prospectus Supplement or accompanying
Prospectus.
We incorporate by reference the documents listed below which were
filed with the SEC under the Securities Exchange Act of 1934 ("Exchange
Act"):
- our Annual Report on Form 10-K for the year ended
September 30, 1998;
- our Proxy Statement relating to the Annual Meeting of
Shareholders held on January 28, 1999; and
- our Quarterly Report on Form 10-Q for the quarter ended
December 31, 1998.
We also incorporate by reference each of the following documents
that we will file with the SEC after the date of this Prospectus
Supplement but before the end of the debentures offering:
- reports filed under Sections 13(a) and (c) of the Exchange Act;
- definitive proxy or information statements filed under Section
14 of the Exchange Act in connection with any subsequent
stockholders' meeting; and
- any reports filed under Section 15(d) of the Exchange Act.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address:
Rollins Truck Leasing Corp.
Attention: Investor Relations
One Rollins Plaza
P. O. Box 1791
Wilmington, Delaware 19899
Telephone: (302) 426-3409
USE OF PROCEEDS
The Company will advance a total of $100,000,000 to Rollins Leasing
Corp. ("Leasing") consisting of the net proceeds from the Series T
Debentures and other funds of the Company in exchange for the note of
that subsidiary. Leasing will use these funds to purchase
transportation equipment and repay existing indebtedness of $50,000,000
and invest the remaining $50,000,000 in anticipation of refinancing its
Series I 10.35% Collateral Trust Debentures, due May 15, 2000.
<PAGE>
SUMMARY FINANCIAL DATA
($ In Thousands)
<TABLE>
The following summary is qualified in its entirety by the detailed information and financial statements available as described
under "Incorporation of Information We File with the SEC".
<CAPTION>
Three Months Ended
December 31, Fiscal Year Ended September 30,
1998 1997 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 155,345 $ 149,022 $ 610,157 $ 556,704 $ 513,779 $ 482,612 $450,903
Expenses:
Operating 60,327 59,813 244,260 228,957 211,919 194,073 183,222
Depreciation 49,066 44,502 183,465 170,039 158,407 146,777 130,512
Gain on sale of property and equipment (4,202) (2,151) (9,787) (12,230) (7,950) (12,657) (8,530)
Selling and administrative 13,303 13,186 55,530 50,457 47,995 43,146 42,473
118,494 115,350 473,468 437,223 410,371 371,339 347,677
Operating earnings 36,851 33,672 136,689 119,481 103,408 111,273 103,226
Interest (income) - - - - - (272) (593)
Interest expense 13,817 12,499 51,586 49,270 47,481 44,453 37,429
Earnings before income taxes 23,034 21,173 85,103 70,211 55,927 67,092 66,390
Income taxes 8,960 8,276 33,080 27,417 21,811 25,756 26,562
Net earnings $ 14,074 $ 12,897 $ 52,023 $ 42,794 $ 34,116 $ 41,336 $ 39,828
Total assets $1,298,856 $1,187,458 $1,296,533 $1,191,791 $1,125,212 $1,027,029 $909,717
Equipment financing obligations $ 737,398 $ 654,321 $ 749,876 $ 671,822 $ 641,362 $ 574,186 $499,147
Shareholders' equity $ 298,610 $ 295,196 $ 292,044 $ 288,674 $ 284,048 $ 275,553 $251,197
Ratio of earnings to fixed charges (1) 2.57 2.59 2.55 2.34 2.10 2.41 2.64
_____________________
(1) For purposes of computing the ratio of earnings to fixed charges, fixed charges consist of interest, the portion of rental
expenses identified as interest and amortization of debt expense. Earnings are computed by adding the amount of such fixed
charges to earnings before income taxes.
</TABLE>
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to Merrill Lynch, Pierce,
Fenner & Smith Incorporated (the "Underwriter") and the Underwriter has
agreed to purchase the entire principal amount of the Series T
Debentures offered hereby.
Under the terms and conditions of the Underwriting Agreement, the
Underwriter is committed to take and pay for all of the Series T
Debentures, if any are taken.
The Underwriter has advised the Company that it proposes initially
to offer the Series T Debentures to the public at the public offering
price set forth on the cover page of this Prospectus Supplement and to
certain dealers at such price less a concession not in excess of .375%
of the principal amount of the Series T Debentures. The Underwriter
may allow, and such dealers may reallow, a discount not in excess of
.25% of the principal amount of the Series T Debentures to certain
other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
The Company has agreed to indemnify the Underwriter against certain
liabilities including liabilities under the Securities Act of 1933.
DESCRIPTION OF THE SERIES T DEBENTURES
The following description of the particular terms of the Series T
Debentures offered hereby supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions
of the Debentures set forth in the accompanying Prospectus under the
caption "Description of Debentures".
General
The Series T Debentures will mature on April 5, 2006, and will be
limited to $100,000,000 aggregate principal amount.
Interest at the annual rate set forth on the cover page of this
Prospectus Supplement will accrue from April 5, 1999 and is payable
semiannually on April 5 and October 5 commencing October 5, 1999, to
the persons in whose names the Series T Debentures are registered on
the Debenture registry books on the preceding March 20 and September
20, respectively, and may be paid by checks mailed to such persons.
Redemption
The Series T Debentures may not be redeemed prior to maturity.
Security
At the time of the issuance of the Series T Debentures, the Trustee
will receive a pledge of a $100,000,000 unsecured promissory note of
the Company's subsidiary, Leasing. After the issuance of the Series T
Debentures, there will be $715,000,000 principal amount of Debentures
outstanding. The Debentures will be secured by pledges of an aggregate
of $715,000,000 principal amount of unsecured promissory notes of
Leasing. Under certain circumstances set forth under "Description of
Debentures -- Security Provisions" in the accompanying Prospectus, the
promissory notes may be required to be secured by Leasing by liens on
their vehicles and vehicles leases.
Concerning the Trustee
The Series T Debentures will be issued under a Collateral Trust
Indenture dated as of March 21, 1983, as supplemented and amended by a
Third Supplemental Indenture thereto dated as of February 20, 1986, an
Eighth Supplemental Indenture dated as of May 15, 1990, a Seventeenth
Supplemental Indenture dated as of March 10, 1997, and as supplemented
by the Nineteenth Supplemental Indenture dated as of April 5, 1999
between the Company and First Union National Bank ("First Union"), as
Trustee (the "Trustee"). In the event that notes issued to the Trustee
by Participating Subsidiaries (as defined in the Eighth Supplemental
Indenture) become secured under the circumstances set forth under
"Description of Debentures -- Security Provisions" in the accompanying
Prospectus, First Union will act as security trustee for the security
interest of the Trustee, as holder of the Participating Subsidiary
notes, and the security interest of such other creditors of the
Participating Subsidiaries as may be entitled to share therein.
Book-entry, Delivery and Form
The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the Series T Debentures. The Series T
Debentures will be issued as fully registered securities registered in
the name of Cede & Co. (DTC's partnership nominee). One fully
registered global Debenture certificate will be issued for the Series
T Debentures in the aggregate principal amount of such issue, and will
be deposited with, or on behalf of, DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934. DTC holds
securities that its participants ("Direct Participants") deposit with
DTC. DTC also facilitates the settlement among Direct Participants of
securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Direct
Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect
Participants" and together with Direct Participants, "Participants").
The Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
Purchases of Series T Debentures under the DTC system must be made
by or through Direct Participants, which will receive a credit for the
Series T Debentures on DTC's records. The ownership interest of each
actual purchaser of the Series T Debentures ("Beneficial Owner") is in
turn to be recorded on the Participants' records. Beneficial Owners
will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of
their holdings, from the Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the
Series T Debentures are to be accomplished by entries made on the books
of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership
interests in the Series T Debentures, except in the event that use of
the book-entry system for the Series T Debentures is discontinued.
To facilitate subsequent transfers, all Series T Debentures
deposited by Direct Participants with DTC are registered in the name of
DTC's partnership nominee, Cede & Co. The deposit of Series T
Debentures with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Series T Debentures; DTC's records
reflect only the identity of the Direct Participants to whose accounts
such Series T Debentures are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may
be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Series T Debentures. Under its usual procedures, DTC would mail an
Omnibus Proxy to the Company as soon as possible after the record date.
The Omnibus Proxy would assign Cede & Co.'s consenting or voting rights
to those Direct Participants to whose accounts the Series T Debentures
are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Principal and interest payments on the Series T Debentures will be
made to DTC. DTC's practice is to credit Direct Participants' accounts
on the payable date in accordance with their respective holdings shown
on DTC's records unless DTC has reason to believe that it will not
receive payment on the payable date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the
accounts of customers in bearer form or registered in "street name",
and will be the responsibility of such Participant and not of DTC, the
Company or the Trustee, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of
principal and interest to DTC is the responsibility of the Company or
the Trustee, disbursement of such payments to Direct Participants is
the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners is the responsibility of Participants.
DTC may discontinue providing its services as securities depository
with respect to the Series T Debentures at any time by giving
reasonable notice to the Company or the Trustee. Under such
circumstances, in the event that a successor securities depository is
not obtained, definitive certificates are required to be printed and
delivered.
The Company may decide to discontinue use of the system of book-
entry transfers through DTC (or a successor securities depository). In
that event, definitive certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company believes to be
reliable (including DTC), but the Company takes no responsibility for
the accuracy thereof.
EXPERTS
The financial statements incorporated in this Prospectus Supplement
and the accompanying Prospectus by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1998 have
been so incorporated in reliance on the report of KPMG LLP, independent
certified public accountants, given on the authority of said firm as
experts in auditing and accounting.
LEGAL OPINIONS
Certain legal matters relating to the Series T Debentures will be
passed upon for the Company by J. Carlisle Peet, III, Esq., Assistant
General Counsel and Assistant Secretary of the Company and for the
Underwriter by Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York 10019. Mr. Peet owns beneficially 43,973 shares of Common
Stock of the Company.
<PAGE>
$100,000,000
ROLLINS TRUCK LEASING CORP.
6 3/4% Collateral Trust Debentures, Series T,
Due 2006
______________
PROSPECTUS SUPPLEMENT
______________
Merrill Lynch & Co.
March 29, 1999
<PAGE>
PROSPECTUS
ROLLINS TRUCK LEASING CORP.
COLLATERAL TRUST DEBENTURES
Rollins Truck Leasing Corp. (formerly RLC CORP. the "Company") from
time to time may offer its Collateral Trust Debentures (the
"Debentures") up to an aggregate principal amount of $230,000,000. The
Debentures may be offered as separate series in amounts, at prices and
on terms to be set forth in supplements to this Prospectus. The
Company may sell the Debentures to or through one or more underwriters,
and also may sell the Debentures directly to other purchasers or
through agents or dealers. See "Plan of Distribution".
The terms of the Debentures, including, where applicable, the
specific designation, aggregate principal amount, denominations,
maturity, rate (which may be fixed or variable) and time of payment of
interest, any terms for redemption at the option of the Company, any
terms for sinking fund payments, the initial public offering price, the
names of, and the principal amounts to be purchased by, underwriters
and the compensation of such underwriters, any listing of the
Debentures on a securities exchange and the other terms in connection
with the offering and sale of the Debentures in respect of which this
Prospectus is being delivered, are set forth in the accompanying
Prospectus Supplement (the "Prospectus Supplement").
See "Risk Factors" commencing on page 5 for a discussion of certain
factors that should be considered by prospective purchasers of the
Collateral Trust Debentures.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 18, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Reports,
proxy statements and other information filed by the Company can be
inspected and copied at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's Regional Offices at 7 World Trade Center, Suite
1300, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can be obtained upon written request addressed to the
Commission, Public Reference Branch of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition,
such material may also be accessed electronically by means of the SEC's
home page on the Internet at http://www.sec.gov. The Company's Common
Stock is listed on both the New York and Pacific Stock Exchanges and
reports, proxy statements and other information concerning the Company
can be inspected at the offices of either Exchange.
The Company has filed with the Commission a registration statement
on Form S-3 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act
of 1933 (the "Securities Act"). This Prospectus does not contain all
of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is hereby made
to the Registration Statement which may be inspected without charge at
the Public Reference Branch of the Commission, 450 Fifth Street, N.W.,
Washington, D.C.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
are incorporated by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996;
2. The Company's Proxy Statement relating to the Annual Meeting
of Shareholders held on January 30, 1997;
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996;
4. All documents filed subsequent to the date of this Prospectus,
and prior to the termination of the offering of the Debentures,
by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act shall be deemed to be incorporated by
reference in this Prospectus.
The Company undertakes to provide without charge to each person to
whom this Prospectus is delivered, on the written or oral request of
any such person, copies of any or all of the documents incorporated by
reference herein, other than exhibits to such documents. Requests for
such copies should be directed to Rollins Truck Leasing Corp., P. O.
Box 1791, Wilmington, Delaware 19899, Attention of Patrick J. Bagley,
Vice President-Finance and Treasurer (Telephone: (302) 426-3409).
ROLLINS TRUCK LEASING CORP.
Rollins Truck Leasing Corp. ("the Company") is incorporated in the
State of Delaware. Its mailing address and telephone number for its
principal executive offices are One Rollins Plaza, P. O. Box 1791,
Wilmington, Delaware 19899, and (302) 426-2700. On January 25, 1990,
the name of the Company was changed from RLC CORP. to Rollins Truck
Leasing Corp.
The Company operates principally in one industry segment and
through its principal subsidiaries, Rollins Leasing Corp. ("Rollins")
and Rollins Logistics Inc., is engaged primarily in full-service truck
leasing and rentals and the provision and management of complete truck
transportation and distribution systems. All of the Company's
operations currently are conducted within the United States.
Full-service leasing accounts for the major portion of Rollins'
revenues. Under these leases, Rollins purchases vehicles and
components that are custom-engineered to the customer's requirements.
This equipment is then leased to the customer for periods usually
ranging from three to eight years. Rollins provides fuel, oil, tires,
washing and regularly scheduled maintenance and repairs at its
facilities. In addition, it arranges for licenses and insurance, pays
highway and use taxes and supplies a 24-hour-a-day emergency road
service to its customers.
Another service that the Company provides its customers through
Rollins Logistics Inc. and its subsidiaries is Logistics Services and
Dedicated Carriage Services ("DCS"). DCS analyzes the customer's
specific distribution needs and then designs and operates a customized
transportation service, which can include any of the services mentioned
previously plus management, drivers and other operating personnel.
Logistics Services addresses the needs of companies which desire to
outsource their distribution and warehousing functions to a third party
provider. These functions can range from selection and negotiation of
core carrier contracts to selection of the most cost effective carrier
for specific traffic lane movements.
The commercial rental fleet which at September 30, 1996 consisted
of more than 7,500 units with payload capacities ranging from 4,000 to
45,000 pounds offers tractors, trucks and a limited number of trailers
to customers for short periods of time ranging from one day to several
months. The Company's commercial rental fleet also provides additional
vehicles to full-service lease customers to handle their peak or
seasonal business needs. The rental fleet's average age is
approximately two years. The utilization rate of the rental fleet
during fiscal year 1996 was in excess of 83%. Rollins does not offer
services in the consumer one-way truck rental market.
Rollins also furnishes a guaranteed maintenance service to private
fleet customers who choose to own their vehicles. This service
includes preventive maintenance, fuel procurement, tax reporting,
permitting, licensing and access to the Rollins 24-hour-a day emergency
road service.
The Company, through its principal subsidiaries maintains more than
32,000 vehicles from 202 owned or leased facilities located throughout
the United States. The Company believes that Rollins is the third
largest competitor in the field of full-service, long-term leasing and
short-term commercial rental of heavy duty trucks in the United States.
<TABLE>
SUMMARY FINANCIAL DATA
($ In Thousands, except per share amounts)
The following summary has been prepared to reflect the operations of the Company and is qualified in its entirety by the
detailed information and financial statements available as described under "Incorporation of Certain Documents by Reference".
<CAPTION>
Quarter Ended
December 31, Fiscal Year Ended September 30,
1996 1995 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 133,697 $ 125,021 $ 513,779 $ 482,612 $450,903 $408,778 $380,384
Expenses:
Operating 54,646 51,201 211,919 194,073 183,222 167,248 160,023
Depreciation 41,774 38,426 158,407 146,777 130,512 118,144 109,603
Gain on sale of property
and equipment (2,429) (1,899) (7,950) (12,657) (8,530) (6,139) (3,110)
Selling and administrative 11,498 11,904 47,995 43,146 42,473 40,440 37,855
105,489 99,632 410,371 371,339 347,677 319,693 304,371
Operating earnings 28,208 25,389 103,408 111,273 103,226 89,085 76,013
Interest income - - - 272 593 1,023 1,500
Interest expense (12,104) (11,803) (47,481) (44,453) (37,429) (35,451) (36,845)
Earnings before income taxes 16,104 13,586 55,927 67,092 66,390 54,657 40,668
Income taxes 6,281 5,230 21,811 25,756 26,562 24,241 16,029
Net earnings $ 9,823 $ 8,356 $ 34,116 $ 41,336 $ 39,828 $ 30,416 $ 24,639
Earnings per share $ .23 $ .19 $ .78 $ .91 $ .86 $ .66 $ .53
Average common shares and
equivalents outstanding 43,110 44,818 43,730 45,365 46,310 46,260 46,007
Total assets $1,110,866 $1,042,273 $1,125,212 $1,027,029 $909,717 $781,161 $708,483
Equipment financing obligations $ 620,308 $ 580,566 $ 640,854 $ 573,554 $498,365 $427,307 $390,256
Long-term debt $ 475 $ 601 $ 508 $ 632 $ 782 $ 922 $ 6,826
Shareholders' equity $ 280,689 $ 276,333 $ 284,048 $ 275,553 $251,197 $216,750 $191,027
Ratio of earnings to
fixed charges (1) 2.25 2.08 2.10 2.41 2.64 2.43 2.03
(1) For purposes of computing the ratio of earnings to fixed charges, fixed charges consist of interest, the portion of rental
expenses identified as interest and amortization of debt expense. Earnings are computed by adding the amount of such fixed
charges to earnings before income taxes.
</TABLE>
<PAGE>
RISK FACTORS
Prospective Debentureholders should carefully consider the
following factors, in addition to the other information in this
Prospectus, before purchasing Debentures. This Prospectus contains
certain statements of a forward-looking nature relating to future
events or the future financial performance of the Company. Prospective
Debentureholders are cautioned that such statements are only
predictions and involve a number of risks and uncertainties. Actual
events or results may differ materially. In evaluating such
statements, prospective Debentureholders should specifically consider
the following factors, and other information in this Prospectus, which
could cause actual results to differ materially from those indicated by
such forward-looking statements.
Redemption - In an environment of falling interest rates, any
provisions for the redemption of Debentures prior to maturity or for
optional additional sinking fund payments could adversely affect
Debentureholders whose securities were redeemed if they were unable to
reinvest their proceeds at comparable interest rates. See "Description
of Debentures - Redemption Provisions."
Limitation on Dividends - The Company may not, so long as any of
the Offered Debentures are outstanding, declare or pay any dividend or
make any distribution on any shares of its capital stock (other than
dividends or distributions payable in shares of capital stock of the
Company) or make or permit any subsidiary to make any payment to
purchase, redeem or otherwise acquire any shares of capital stock of
the Company if, upon giving effect thereto, the aggregate amount
expended for all such purposes subsequent to September 30, 1984 (the
"Applicable Date") would exceed the sum of Consolidated Net Earnings
since the Applicable Date and $10,000,000, except that the Company may
credit against such purchases, redemptions and retirements of capital
stock of the Company the net consideration received by the Company
subsequent to the Applicable Date from the issue or sale of additional
capital stock of the Company. See "Description of Debentures - Certain
Covenants of the Company - Limitation of Dividends." At December 31,
1996, the Company was permitted to pay dividends and make other
distributions of up to $183,691,000 pursuant to the limitation on
dividends covenant.
Limitation on Consolidated Indebtedness - As long as any of the
Offered Debentures are outstanding, the Company may not, nor may it
permit any of its subsidiaries to, create, incur or assume any
Indebtedness unless immediately after such creation, incurring or
assumption, and after giving effect to the utilization of the proceeds
thereof, the aggregate amount of Consolidated Indebtedness of the
Company shall be less than 400% of the Consolidated Net Worth of the
Company. See "Description of Debentures - Limitation on Consolidated
Indebtedness."
Other than the limitation on dividends and the limitation on
consolidated indebtedness described above, the Collateral Trust
Indenture contains no provisions that may afford Debentureholders
protection in the event of any restructuring, recapitalization or other
highly leveraged transaction.
Tender Offers - Although no such transaction is contemplated, the
Company will comply with any applicable tender offer rules, including,
but not limited to, Rule 14e-1 of the Securities Exchange Act of 1934,
with respect to any repurchase of securities by the Company.
USE OF PROCEEDS
The proceeds to be received by the Company from the sale of the
Debentures will be advanced to Rollins (the "Participating Subsidiary")
which will use such funds to purchase vehicles and related equipment,
reduce indebtedness under its individual revolving credit agreement or
retire other existing equipment financing obligations. Each Prospectus
Supplement will include the specific amount of the proceeds from the
sale of the Debentures offered thereby to be applied to asset purchases
or debt reductions as noted in the preceding sentence. Pending such
application by Rollins the proceeds may be temporarily invested in
short-term marketable securities.
PLAN OF DISTRIBUTION
The Company may sell the Debentures to or through one or more
underwriters, who will be named in the applicable Prospectus
Supplement, and also may sell the Debentures directly to other
purchasers or through agents or dealers. Only underwriters named in
the Prospectus Supplements are deemed to be underwriters in connection
with the Debentures offered thereby.
The distribution of the Debentures may be effected from time to
time in one or more transactions at a fixed price or prices, which may
be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
In connection with the sale of the Debentures, such underwriters
may receive compensation from the Company, or from purchasers of the
Debentures for whom they may act as agents, in the form of discounts,
concessions or commissions. Underwriters, dealers and agents that
participate in the distribution of the Debentures may be deemed to be
underwriters and any discounts or commissions received by them and any
profit on the resale of the Debentures by them may be deemed to be
underwriting discounts and commissions under the Securities Act. Any
such underwriter, dealer or agent will be identified, and any such
compensation will be described, in the Prospectus Supplement.
Under agreements which may be entered into by the Company,
underwriters, dealers and agents who participate in the distribution of
the Debentures may be entitled to indemnification by the Company
against certain liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments which the
underwriters, dealers or agents may be required to make in respect
thereof.
Delayed Delivery Arrangements
If so indicated in the Prospectus Supplement, the Company will
authorize dealers or other persons acting as the Company's agents to
solicit offers by certain institutions to purchase the Offered
Debentures from the Company pursuant to contracts providing for payment
and delivery on a specified future date. Institutions with which such
contracts may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such institutions
must be approved by the Company. The obligations of any purchaser
under any such contract will not be subject to any conditions except
that (i) the purchase of the Offered Debentures shall not at the time
of delivery be prohibited under the laws of the jurisdiction to which
such purchaser is subject, and (ii) if the Offered Debentures are also
being sold to underwriters, the Company shall have sold to such
underwriters the Offered Debentures not sold for delayed delivery. The
dealers or such other persons will not have any responsibility in
respect of the validity or performance of such contracts.
DESCRIPTION OF DEBENTURES
The following description of the Debentures sets forth certain
general terms and provisions of the Debentures to which any Prospectus
Supplement may relate. The particular terms of the Debentures offered
by any Prospectus Supplement (the "Offered Debentures") and the extent,
if any, to which such general provisions may apply to the Offered
Debentures will be described in the Prospectus Supplement relating to
such Offered Debentures.
The Offered Debentures will be issued under a Collateral Trust
Indenture dated as of March 21, 1983 (the "Collateral Trust
Indenture"), between the Company and Continental Bank, National
Association (formerly Continental Illinois National Bank and Trust
Company of Chicago) as Trustee (the "Trustee"), as supplemented and
amended by a Third Supplemental Indenture thereto dated as of February
20, 1986 (the "Third Supplemental Indenture") and by the Eighth
Supplemental Indenture dated as of May 15, 1990 (the "Eighth
Supplemental Indenture") and as supplemented and amended from time to
time, including supplemental indentures setting forth the terms of each
series of the Offered Debentures. The Collateral Trust Indenture, as
amended by the Third Supplemental Indenture and the Eighth Supplemental
Indenture, is herein called the "Indenture". The following statements
are subject to the detailed provisions of the Indenture, a copy of
which is incorporated by reference as an exhibit to the Registration
Statement. References appearing below are to the Collateral Trust
Indenture unless otherwise indicated and wherever particular provisions
are referred to such provisions are incorporated by reference as a part
of the statement made and the statement is qualified in its entirety by
such reference. Whenever a defined term is referred to and not herein
defined, the definition thereof is contained in the Indenture. As of
the date of this Prospectus, an aggregate of $545,000,000 of
Collateral Trust Debentures are outstanding under the Collateral Trust
Indenture. Reference is made to the Prospectus Supplement for any
subsequent Series of Debentures issued under the Indenture.
General
The Offered Debentures will be obligations of the Company secured
at the time of issuance by the pledge of unsecured demand promissory
notes issued by one or more Participating Subsidiaries, which notes may
in turn thereafter be secured by liens on Vehicles and vehicle leases
under the circumstances set forth below under "Security Provisions".
The Company and Rollins are prohibited (at their own volition) from
securing the Notes by creating a security interest in the Vehicles. A
Participating Subsidiary, as defined in the Indenture, means a
wholly-owned subsidiary of the Company engaged primarily in the
business of renting and/or leasing Vehicles and/or providing carriage
by Vehicles and which has executed and delivered one or more Loan
Agreements and issued one or more Notes. As of the date of this
Prospectus, Rollins is the only subsidiary of the Company that
qualifies as a Participating Subsidiary. As of the date of this
Prospectus the outstanding Debentures are secured by the pledge of
$545,000,000 principal amount of the unsecured demand promissory notes
of Rollins.
The Indenture does not limit the amount of Debentures that may be
issued thereunder and provides that Debentures may be issued thereunder
from time to time in one or more series.
Redemption Provisions
All or any part of the Debentures of any series may be redeemed
before maturity at such time or from time to time, and on such terms,
subject to the provisions of the Indenture, as the Board of Directors
of the Company may determine and as shall be expressed in the
Supplemental Indenture establishing the Debentures of such series. The
Supplemental Indenture establishing a series of Debentures may also
provide for mandatory and optional sinking fund payments to redeem the
Debentures including the amounts of such payments, the payment dates
and the redemption prices.
In an environment of falling interest rates, any provisions for the
redemption of Debentures prior to maturity or for optional additional
sinking fund payments could adversely affect Debentureholders whose
securities were redeemed if they were unable to reinvest their proceeds
at comparable interest rates.
Reference is made to the Prospectus Supplement relating to the
particular series of Offered Debentures offered thereby for the
following terms of the Offered Debentures: (i) the title of the Offered
Debentures; (ii) any limit on the aggregate principal amount of the
Offered Debentures; (iii) the price or prices at which the Offered
Debentures will be issued; (iv) the date or dates on which the Offered
Debentures will mature; (v) the rate or rates (which may be fixed or
variable) per annum at which the Offered Debentures will bear interest;
(vi) the interest payment dates on which such interest will be payable,
the date on which payment of such interest will commence and the
regular record dates for such interest payment dates; (vii) the dates,
if any, on which, and the price or prices at which, the Offered
Debentures will, pursuant to any mandatory sinking fund provisions, or
may, pursuant to any optional sinking fund provisions, be redeemed by
the Company, and the other detailed terms and provisions of such
sinking fund; and (viii) the date, if any, after which, and the price
or prices at which, the Offered Debentures may, pursuant to any
optional redemption provisions, be redeemed at the option of the
Company and the other detailed terms and provisions of such optional
redemption.
Principal and any premium will be payable at the agency of the
Company either in Chicago, Illinois, or in New York, New York. The
Debentures may be presented for registration of transfer or exchange at
such offices, subject to the limitations provided in the Indenture,
without any service charge, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. (Sections 2.06, 2.08, 2.11, 2.12 and 7.02).
The Indenture requires that funds equal to the principal amount of
Debentures issued from time to time will, on the date of such issuance,
be advanced to one or more Participating Subsidiaries. In exchange,
each Participating Subsidiary will issue to the Company a promissory
note (in the aggregate, "Notes") in the principal amount of any
advances to it. The Company in turn will pledge the Notes to the
Trustee as security for all Debentures. Notes will be payable as to
principal on demand and will bear interest at the same rate, payable at
the same time, as interest on the Debentures being so issued. The
Indenture requires that after giving effect to the issue of additional
Debentures and to any concurrent retirement of other Debentures by use
of any proceeds from such issue and any moneys then held by the
Trustee, the obligations to pay principal, premium, if any, and
interest contained in all the Notes shall be sufficient, in the
aggregate, to pay all principal, premium, if any, and interest on all
Outstanding Debentures. (Granting Clauses and Section 4.01).
Certain Covenants of the Company
LIMITATION ON EQUIPMENT INDEBTEDNESS OF PARTICIPATING SUBSIDIARIES.
The Company covenants that if the aggregate amount of the Equipment
Indebtedness of any Participating Subsidiary (which, for the purposes
of this covenant only, includes the wholly-owned subsidiaries of a
Participating Subsidiary) exceeds 90% of the Net Book Value of its
Vehicles at the end of any fiscal quarter, the Company will, on or
before 45 days after the expiration of such fiscal quarter, cause such
Participating Subsidiary to prepay one or more of its Notes to the
extent necessary to reduce such percentage to not more than 90%.
(Section 7.14).
CERTAIN DEFINITIONS. Equipment Indebtedness means all indebtedness
other than (i) Permitted Indebtedness, (ii) indebtedness expressly
subordinated to the prior payment of the Debentures or the Notes, as
the case may be, (iii) indebtedness secured by real estate or
improvements thereon (to the extent such indebtedness does not exceed
the greater of cost or appraised value of such real estate and
improvements) and (iv) trade indebtedness payable within 90 days from
the date incurred. Net Book Value with respect to a Vehicle means
initial cost depreciated on a monthly basis at the faster of (x) the
fastest rate prescribed by any instrument at the time in effect
evidencing or pursuant to which there is outstanding any indebtedness
of the Vehicle owner, or (y) the rate then utilized for the purpose of
financial statements submitted to the Company's stockholders.
Permitted Indebtedness means indebtedness originally created in favor
of a manufacturer or seller or financial institution incurred to
finance the purchase of vehicles and secured by a lien on such
purchased vehicles and indebtedness secured by a lien on vehicles which
predates the acquisition by the Company of the business owning such
vehicles. Vehicle means a self-propelled chattel and all related
equipment and accessories or a chattel which customarily moves with a
self-propelled chattel, including a truck, truck tractor, truck
trailer, container, automobile, bus, or other similar unit and
materials handling equipment, but does not include any such vehicle
leased from another or any vehicle which has been pledged to secure
Permitted Indebtedness. (Article 1).
LIMITATION ON DIVIDENDS. The Company may not, so long as any of
the Offered Debentures are outstanding, declare or pay any dividend or
make any distribution on any shares of its capital stock (other than
dividends or distributions payable in shares of capital stock of the
Company) or make or permit any subsidiary to make any payment to
purchase, redeem or otherwise acquire any shares of capital stock of
the Company if, upon giving effect thereto, the aggregate amount
expended for all such purposes subsequent to September 30, 1984 (the
"Applicable Date") would exceed the sum of Consolidated Net Earnings
since the Applicable Date and $10,000,000, except that the Company may
credit against such purchases, redemptions and retirements of capital
stock of the Company the net consideration received by the Company
subsequent to the Applicable Date from the issue or sale of additional
capital stock of the Company. (Section 7 of the Third Supplemental
Indenture).
LIMITATION ON CONSOLIDATED INDEBTEDNESS. As long as any of the
Offered Debentures are outstanding, the Company may not, nor may it
permit any of its subsidiaries to, create, incur or assume any
Indebtedness unless immediately after such creation, incurring or
assumption, and after giving effect to the utilization of the proceeds
thereof, the aggregate amount of Consolidated Indebtedness of the
Company shall be less than 400% of the Consolidated Net Worth of the
Company. (Section 7.13). Other than the limitation on consolidated
indebtedness, the Indenture contains no provisions that may afford debt
holders protection in the event of a highly leveraged transaction.
Security Provisions
All Offered Debentures will be obligations of the Company secured
by Notes pledged to the Trustee. Any additional series of Debentures
will be secured by Notes of Participating Subsidiaries pledged to the
Trustee. Such Notes will be unsecured obligations of the makers
thereof, except that if any Participating Subsidiary grants or
otherwise permits to exist any security interest in its Vehicles or its
vehicle leases (except statutory liens), the Indenture requires that
there be created a security interest in such Vehicles or vehicle leases
for the benefit of the Trustee as holder of the Notes of such
Participating Subsidiary ranking equally and ratably with, and existing
for at least the same length of time as, such other security interests.
(Sections 4.01 and 7.15 and Exhibit A to the Indenture).
An agreement among the Company, Rollins and the lenders under the
existing unsecured bank revolving credit agreement between Rollins and
such lenders requires Rollins to create, at the option of the relevant
lenders (and restricts them from otherwise creating), a security
interest in its Vehicles in favor of a trustee designated by such
lenders and for the benefit of the Trustee (as holder of the Notes of
Rollins), the lenders under Rollins' bank revolving credit agreement
and the holders of such other indebtedness as may be entitled to share
in such security interests. Neither the Trustee nor the
Debentureholders may initiate the creation of such a security interest.
Modification of Indenture and Waiver of Certain Covenants
With the consent of the holders of a majority in aggregate
principal amount of all Outstanding Debentures, and of at least 66 2/3%
in aggregate principal amount of each series of Debentures then
Outstanding which is affected thereby, the Trustee and the Company may
modify or waive any provisions of the Indenture or modify in any manner
the rights of the Debentureholders, except that, without the consent of
the holder of each such Outstanding Debenture of any series so
affected, no such modification or waiver shall, among other things, (i)
extend the maturity of principal or interest on such Debenture, or
reduce or modify the principal amount thereof or the interest thereon
or any premium payable upon the redemption thereof, (ii) permit the
creation of any prior or pari passu lien on any of the Notes or other
pledged property, if any, or terminate the lien of the Indenture
thereon or (iii) reduce the aforesaid percentage of holders of
Debentures whose consent shall be required for such modification or
waiver. (Sections 11.02 and 18.02).
Defaults and Certain Rights on Default
An Event of Default is defined in the Indenture as being: (i)
default for 30 days in payment of any interest on any Debenture; (ii)
default in payment of principal or of premium, if any, on any
Debenture; (iii) default in payment of any Sinking Fund installment in
respect of any Debenture; (iv) default in the performance of the
covenants described under "Certain Covenants of the Company -
Limitation on Equipment Indebtedness of Participating Subsidiaries",
"Certain Covenants of the Company - Limitation on Dividends", and
"Security Provisions" or default for 30 days in the performance of
certain covenants contained in a loan agreement relating to any Note;
(v) default for 60 days after written notice in performance of any
other covenant in the Indenture or in the Debentures; (vi) default with
respect to other Indebtedness or Lease Obligation of the Company or any
subsidiary of the Company continuing for 30 days or acceleration of the
stated maturity of any such Indebtedness or Lease Obligation in an
aggregate principal amount of $2,000,000 or more; or (vii) certain
events of bankruptcy, insolvency, receivership or reorganization
relating to the Company or any Participating Subsidiary. The Company
will be required to file with the Trustee annually a written statement
as to the fulfillment of its obligations under the Indenture. In case
an Event of Default should occur and be continuing, the Trustee or the
holders of at least 25% in principal amount of the Debentures then
Outstanding (or 25% of any series of Debentures as to which an event of
Default in respect of principal, premium, if any, interest or Sinking
Fund installments has occurred) may declare the principal of all the
Debentures to be due and payable. Such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal
amount of the Debentures (and of any such series) at the time
Outstanding. (Article X and Section 7.11).
Subject to the provisions of the Indenture relating to the duties
of the Trustee in case an event of Default shall occur and be
continuing, the Trustee shall be under no obligation to exercise any of
its rights or powers under the Indenture at the request or direction of
any of the holders of the Debentures, unless such holders shall have
offered to the Trustee reasonable security or indemnity. Subject to
such provisions for indemnification and certain limitations contained
in the Indenture, the holders of a majority in principal amount of the
Debentures at the time Outstanding shall have the right to direct the
time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on
the Trustee. (Sections 10.07, 10.08, 12.01 and 12.02).
EXPERTS
The financial statements and financial statement schedules
incorporated in this Prospectus by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1996 have
been so incorporated in reliance on the report of KPMG Peat Marwick
LLP, independent certified public accountants, which report is
incorporated by reference herein, given on the authority of said firm
as experts in auditing and accounting.
LEGAL OPINIONS
Certain legal matters relating to the Offered Debentures will be
passed upon for the Company by Michael B. Kinnard, Esq., Vice
President-General Counsel and Secretary of the Company, and by
attorneys for the underwriters, if any, who are identified in the
Prospectus Supplement. As of the date of this Prospectus, Mr. Kinnard
owns beneficially 1,500 shares of the Common Stock of the Company and
owns directly options to purchase 24,715 shares of such stock.
