PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED JANUARY 31, 2000)
$150,000,000
[LOGO]
$75,000,000 8.0% COLLATERAL TRUST DEBENTURES, SERIES V, DUE 2003
$75,000,000 8.375% COLLATERAL TRUST DEBENTURES, SERIES W, DUE 2007
MATURITY
o The Series V and W Debentures will mature on February 15, 2003 and February
15, 2007, respectively.
INTEREST
o The Series V and W Debentures bear interest at the rate of 8.0% and 8.375% per
year, respectively.
o We will pay interest on the Series V and W Debentures on February 15 and
August 15 of each year, beginning August 15, 2000.
REDEMPTION
o We may not redeem the Series V and W Debentures before maturity.
o The Series V and W Debentures do not have the benefit of any sinking fund.
LISTING
o We do not intend to list the Series V and W Debentures on any securities
exchange.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT
THIS PROSPECTUS SUPPLEMENT OR THE ATTACHED PROSPECTUS IS ACCURATE AND COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
==========================================================================================
| PER SERIES V | | PER SERIES W | |
| DEBENTURE | TOTAL | DEBENTURE | TOTAL |
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Public Offering Price (1) | 99.712% | $74,784,000 | 99.470% | $74,602,500 |
Underwriting Discount | .450% | $ 337,500 | .625% | $ 468,750 |
Proceeds, before expenses, | | | | |
to Rollins Truck Leasing | | | | |
Corp. | 99.262% | $74,446,500 | 98.845% | $74,133,750 |
- ------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest from February 15, 2000 if settlement occurs after that
date.
------------------------
The Underwriters listed below will purchase the Series V and W Debentures from
us on a firm commitment basis and offer them to you, subject to certain
conditions.
The Series V and W Debentures will be ready for delivery in book-entry form only
through The Depository Trust Company, on or about February 15, 2000.
CHASE SECURITIES INC. J.P. MORGAN & CO.
------------------------
The date of this prospectus supplement is February 10, 2000.
<PAGE>
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT:
Summary Financial Data...................................... S-3
Use of Proceeds............................................. S-4
Description of the Series V and W Debentures................ S-4
Underwriting................................................ S-6
Experts..................................................... S-7
Legal Matters............................................... S-7
PROSPECTUS:
About This Prospectus....................................... 3
Where You Can Find More Information......................... 3
Rollins Truck Leasing Corp.................................. 4
Summary Financial Data...................................... 5
Use of Proceeds............................................. 6
Description of Debentures................................... 6
General................................................... 6
Terms of a Particular Series.............................. 7
Our Covenants............................................. 7
Security Provisions....................................... 8
Modification of Indenture and Waiver of Certain
Covenants.............................................. 8
Defaults and Certain Rights on Default.................... 9
Plan of Distribution........................................ 10
Legal Matters............................................... 10
Experts..................................................... 10
------------------------
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.
S-2
<PAGE>
SUMMARY FINANCIAL DATA
($ IN THOUSANDS)
The following summary is qualified in its entirety by the detailed
information and financial statements available as described under "Where You Can
Find More Information" in the accompanying prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31, FISCAL YEAR ENDED SEPTEMBER 30,
----------------------- --------------------------------------------------------------
1999 1998 1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues....................... $ 169,622 $ 155,345 $ 627,397 $ 610,157 $ 556,704 $ 513,779 $ 482,612
---------- ---------- ---------- ---------- ---------- ---------- ----------
Expenses:
Operating.................... 66,341 60,327 239,162 244,260 228,957 211,919 194,073
Depreciation................. 53,832 49,066 199,342 183,465 170,039 158,407 146,777
Gain on sale of property and
equipment.................. (4,855) (4,202) (17,007) (9,787) (12,230) (7,950) (12,657)
Selling and administrative... 14,366 13,303 57,805 55,530 50,457 47,995 43,146
---------- ---------- ---------- ---------- ---------- ---------- ----------
129,684 118,494 479,302 473,468 437,223 410,371 371,339
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating earnings............. 39,938 36,851 148,095 136,689 119,481 103,408 111,273
Interest expense, net.......... 15,728 13,817 55,364 51,586 49,270 47,481 44,181
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings before income taxes... 24,210 23,034 92,731 85,103 70,211 55,927 67,092
Income taxes................... 9,440 8,960 36,258 33,080 27,417 21,811 25,756
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net earnings................... $ 14,770 $ 14,074 $ 56,473 $ 52,023 $ 42,794 $ 34,116 $ 41,336
========== ========== ========== ========== ========== ========== ==========
Earnings per share (1)
Basic........................ $ .26 $ .24 $ .98 $ .86 $ .68 $ .52 $ .61
========== ========== ========== ========== ========== ========== ==========
Diluted...................... $ .26 $ .24 $ .97 $ .85 $ .68 $ .52 $ .61
========== ========== ========== ========== ========== ========== ==========
Average common shares and
equivalents outstanding
(000's)(1)
Basic........................ 56,804 58,464 57,833 60,340 62,681 65,076 67,432
========== ========== ========== ========== ========== ========== ==========
Diluted...................... 57,255 59,113 58,369 61,130 63,362 65,595 68,048
========== ========== ========== ========== ========== ========== ==========
Total assets (2)............... $1,529,749 $1,300,071 $1,412,887 $1,297,474 $1,193,935 $1,126,981 $1,030,223
Equipment financing
obligations.................. $ 911,655 $ 737,398 $ 802,458 $ 749,876 $ 671,822 $ 641,362 $ 574,186
Shareholders' equity (2)....... $ 326,126 $ 298,610 $ 320,386 $ 292,985 $ 289,982 $ 285,127 $ 277,501
Ratio of earnings to fixed
charges (3).................. 2.45 2.57 2.55 2.55 2.34 2.10 2.41
</TABLE>
- ------------------
(1) Information for the fiscal years ended September 30, 1997 and prior have
been adjusted for the three-for-two common stock split distributed on March
16, 1998.
(2) Information for the fiscal years ended September 30, 1998 and prior have
been reclassified to reflect the effects of adopting the provisions of SFAS
No. 130, "Reporting Comprehensive Income," during 1999.
(3) 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.
S-3
<PAGE>
USE OF PROCEEDS
We will advance the net proceeds from the offering of the Series V and W
Debentures to our subsidiary Rollins Leasing Corp. together with other funds of
ours for a total of $150,000,000 in exchange for two $75,000,000 notes of
Rollins Leasing Corp. Rollins Leasing Corp. will use these funds to purchase
transportation equipment and repay existing revolving credit facility
indebtedness incurred to acquire transportation equipment. At January 31, 2000,
the indebtedness under our revolving credit facility was $143,000,000 and
carried an interest rate of 6.8%. This facility is renewable annually.
DESCRIPTION OF THE SERIES V AND W DEBENTURES
The following description of the particular terms of the Series V and W
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 V and W Debentures will mature on February 15, 2003 and February
15, 2007, respectively, and will each be limited to $75,000,000 aggregate
principal amount.
Interest at the annual rates set forth on the cover page of this Prospectus
Supplement will accrue from February 15, 2000 and is payable semiannually on
February 15 and August 15 of each year, commencing August 15, 2000, to the
persons in whose names the Series V and W Debentures, respectively, are
registered on the Debenture registry books on the preceding February 1 and
August 1, respectively.
We will issue the Series V and W Debentures only in registered form in
denominations of $1,000 and integral multiples thereof.
REDEMPTION
The Series V and W Debentures may not be redeemed prior to maturity and
will not have the benefit of any sinking fund.
SECURITY
At the time of the issuance of the Series V and W Debentures, the Trustee
will receive a pledge of two $75,000,000 unsecured promissory notes of our
subsidiary, Rollins Leasing Corp. After the issuance of the Series V and W
Debentures, there will be $950,000,000 principal amount of Debentures
outstanding. All of our Debentures will be secured by pledges of an aggregate of
$950,000,000 principal amount of unsecured promissory notes of Rollins Leasing
Corp. Under certain circumstances set forth under "Description of
Debentures--Security Provisions" in the accompanying Prospectus, the promissory
notes may be required to be secured by Rollins Leasing Corp. by liens on their
vehicles and vehicles leases.
CONCERNING THE TRUSTEE
The Series V and W 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 Twenty-first
and Twenty-second Supplemental Indentures dated as of February 15, 2000 between
us and First Union National Bank, as 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, or DTC, New York, NY, will act as securities
depository for the Series V and W Debentures. The Series V and W 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 each of the Series V and W Debentures in the aggregate
principal amount of each 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
S-4
<PAGE>
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 V and W Debentures under the DTC system must be made by
or through Direct Participants, which will receive a credit for the Series V and
W Debentures on DTC's records. The ownership interest of each actual purchaser
of the Series V and W 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 V and W 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 V and W Debentures, except in the event that use of the book-entry system
for the Series V and W Debentures is discontinued.
To facilitate subsequent transfers, all Series V and W Debentures deposited
by Direct Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Series V and W 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 V and W
Debentures; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Series V and W 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
V and W Debentures. Under its usual procedures, DTC would mail an Omnibus Proxy
to us 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 V and W Debentures are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Series V and W 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, Rollins 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 Rollins 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 V and W Debentures at any time by giving reasonable notice
to us 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.
We 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 we believe to be reliable (including DTC),
but we take no responsibility for the accuracy thereof.
S-5
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated February 10, 2000, we have agreed to sell to Chase Securities Inc. and
J.P. Morgan Securities Inc. (the "Underwriters") and the Underwriters have
agreed to severally purchase the principal amount of the Series V and W
Debentures offered hereby as set forth opposite their respective names in the
table below:
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF
UNDERWRITER SERIES V DEBENTURES SERIES W DEBENTURES
- ----------- ------------------- -------------------
Chase Securities Inc............. $48,750,000 $48,750,000
J.P. Morgan Securities Inc....... 26,250,000 26,250,000
----------- -----------
Total....................... $75,000,000 $75,000,000
=========== ===========
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of each of the Series V and W
Debentures, if any are taken.
The Underwriters have advised us that they propose initially to offer the
Series V and W 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 0.300% of the principal amount of the
Series V Debentures and 0.375% of the principal amount of the Series W
Debentures. The Underwriters may allow, and such dealers may reallow, a discount
not in excess of 0.250% of the principal amount of the Series V Debentures and
0.250% of the principal amount of the Series W Debentures to certain other
dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
We have agreed to indemnify the Underwriters against certain liabilities
including liabilities under the Securities Act of 1933.
The Series V and W Debentures are new issues of securities, and there is
currently no established trading market for the Series V and W Debentures. In
addition, we do not intend to apply for the Series V and W Debentures to be
listed on any securities exchange or to arrange for the Series V and W
Debentures to be quoted on any quotation system. The Underwriters have advised
us that they intend to make a market in the Series V and W Debentures, but they
are not obligated to do so. The Underwriters may discontinue any market making
in the Series V and W Debentures at any time in their sole discretion.
Accordingly, there can be no assurance that a liquid trading market will develop
for the Series V and W Debentures, that you will be able to sell your Series V
and W Debentures at a particular time or that the prices that you receive when
you sell will be favorable.
In connection with the offering of the Series V and W Debentures, the
Underwriters may engage in overallotment, stabilizing transactions and syndicate
covering transactions in accordance with Regulation M under the Securities
Exchange Act of 1934. Overallotment involves sales in excess of the offering
size, which creates a short position for the Underwriters. Stabilizing
transactions involve bids to purchase the Series V or W Debentures in the open
market for the purpose of pegging, fixing or maintaining the price of those
Debentures. Syndicate covering transactions involve purchases of the Series V
and W Debentures in the open market after the distribution has been completed in
order to cover short positions. Stabilizing transactions and syndicate covering
transactions may cause the price of the Series V and W Debentures to be higher
than it would otherwise be in the absence of those transactions. If the
Underwriters engage in stabilizing or syndicate covering transactions, they may
discontinue them at any time.
The Underwriters and their affiliates engage in various general financing
and banking transactions with us and our affiliates.
S-6
<PAGE>
EXPERTS
The financial statements incorporated in this prospectus supplement and the
accompanying prospectus by reference to our Annual Report on Form 10-K for the
fiscal year ended September 30, 1999 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 MATTERS
Certain legal matters relating to the Series V and W Debentures will be
passed upon for us by J. Carlisle Peet, III, Esq., Assistant General Counsel and
Assistant Secretary of the Company and for the Underwriters by Cravath, Swaine &
Moore, 825 Eighth Avenue, New York, New York 10019. Mr. Peet owns beneficially
43,973 shares of our Common Stock.
S-7
<PAGE>
[This page intentionally left blank]
<PAGE>
PROSPECTUS
ROLLINS TRUCK LEASING CORP.
COLLATERAL TRUST DEBENTURES ($350,000,000)
------------------------
We plan to issue from time to time up to $350,000,000 of collateral trust
debentures. We will provide specific terms of these debentures and their
offering prices in supplements to this prospectus. You should read this
prospectus and any prospectus supplement carefully before you invest.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
This prospectus may not be used to consummate the sale of debentures unless
accompanied by a prospectus supplement.
------------------------
The date of this prospectus is January 31, 2000.
<PAGE>
TABLE OF CONTENTS
PAGE
----
About This Prospectus............................................ 3
Where You Can Find More Information.............................. 3
Rollins Truck Leasing Corp....................................... 4
Summary Financial Data........................................... 5
Use Of Proceeds.................................................. 6
Description of Debentures........................................ 6
General..................................................... 6
Terms of a Particular Series................................ 7
Our Covenants............................................... 7
Security Provisions......................................... 8
Modification of Indenture and Waiver of Certain Covenants... 8
Defaults and Certain Rights on Default...................... 9
Plan of Distribution............................................. 10
Legal Matters.................................................... 10
Experts.......................................................... 10
2
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process. We
may sell the debentures described in this prospectus in one or more offerings up
to a total dollar amount of $350,000,000.
This prospectus provides you with a general description of the debentures
we may offer. Each time we sell debentures, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described under the
heading "Where You Can Find More Information."
You should rely only on the information provided in this prospectus and in
any prospectus supplement including the information incorporated by reference.
We have not authorized anyone to provide you with different information. We are
not offering the debentures in any state where the offer is not permitted. You
should not assume that the information in this prospectus, or any supplement to
this prospectus, is accurate at any date other than the date on the front of
those documents.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the following SEC locations.
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, DC 20549 New York, NY 10048 Suite 1400
Chicago, Illinois
60661-2511
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, our
SEC filings are available to the public at the SEC's website at
http://www.sec.gov.
Our common stock is listed on both the New York and Pacific Stock
Exchanges. You can inspect our reports, proxy statements and other information
at the offices of either Exchange.
The SEC allows us to incorporate by reference the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference our documents listed below:
o our Annual Report on Form 10-K for the fiscal year ended September 30,
1999;
o our Current Report on Form 8-K dated January 18, 2000;
o our Proxy Statement relating to the Annual Meeting of Shareholders held
on January 27, 2000; and
o any future filings we make with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934 until we sell all of the
securities.
You may request a copy of these documents at no cost, by writing or
telephoning us at the following address:
Patrick J. Bagley
Vice President--Finance and Treasurer
Rollins Truck Leasing Corp.
P.O. Box 1791
Wilmington, Delaware 19899
(302) 426-3409
3
<PAGE>
ROLLINS TRUCK LEASING CORP.
We operate principally in one industry segment and through our principal
subsidiary, Rollins Leasing Corp., engage primarily in full-service truck
leasing and rentals. We currently conduct all of our operations within the
United States and Canada.
Full-service leasing accounts for the major portion of Rollins Leasing
Corp.'s revenues. Under these leases, Rollins Leasing Corp. 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 Leasing Corp. 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.
Our commercial rental fleet which at September 30, 1999 consisted of more
than 9,600 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. Our 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 1999 was in excess of 85%. Rollins Leasing Corp. does not offer services in
the consumer one-way truck rental market.
Rollins Leasing Corp. 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 Leasing Corp. 24-hour-a-day emergency road service.
On January 3, 2000, we acquired all of the issued and outstanding shares of
capital stock of UPS Truck Leasing, which provides full-service lease and rental
services on more than 10,000 vehicles to 4,000 customers throughout the United
States, from the UPS Logistics Group, a unit of United Parcel Service, Inc. UPS
Truck Leasing was then merged into Rollins Leasing Corp. Concurrently, we sold
our dedicated carriage and logistics subsidiary's assets and business to the UPS
Logistics Group.
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
our 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. We believe Rollins Leasing Corp. 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.
We are incorporated in the State of Delaware. Our mailing address and
telephone number for our principal executive offices are One Rollins Plaza,
P.O. Box 1791, Wilmington, Delaware 19899, and (302) 426-2700. On January 25,
1990, our name was changed from RLC CORP. to Rollins Truck Leasing Corp.
4
<PAGE>
SUMMARY FINANCIAL DATA
The following summary reflects our operations. It is qualified by the
information described under the heading "Where You Can Find More Information."
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA
Revenues.................................... $ 627,397 $ 610,157 $ 556,704 $ 513,779 $ 482,612
Expenses:
Operating................................. 239,162 244,260 228,957 211,919 194,073
Depreciation.............................. 199,342 183,465 170,039 158,407 146,777
Gain on sale of property and equipment.... (17,007) (9,787) (12,230) (7,950) (12,657)
Selling and administrative................ 57,805 55,530 50,457 47,995 43,146
---------- ---------- ---------- ---------- ----------
479,302 473,468 437,223 410,371 371,339
---------- ---------- ---------- ---------- ----------
Operating earnings.......................... 148,095 136,689 119,481 103,408 111,273
Interest expense, net....................... 55,364 51,586 49,270 47,481 44,181
---------- ---------- ---------- ---------- ----------
Earnings before income taxes................ 92,731 85,103 70,211 55,927 67,092
Income taxes................................ 36,258 33,080 27,417 21,811 25,756
---------- ---------- ---------- ---------- ----------
Net earnings................................ $ 56,473 $ 52,023 $ 42,794 $ 34,116 $ 41,336
========== ========== ========== ========== ==========
Earnings per share(1)
Basic..................................... $ .98 $ .86 $ .68 $ .52 $ .61
========== ========== ========== ========== ==========
Diluted................................... $ .97 $ .85 $ .68 $ .52 $ .61
========== ========== ========== ========== ==========
Average common shares and equivalents
outstanding (000's)(1)
Basic..................................... 57,833 60,340 62,681 65,076 67,432
========== ========== ========== ========== ==========
Diluted................................... 58,369 61,130 63,362 65,595 68,048
========== ========== ========== ========== ==========
BALANCE SHEET DATA
Total assets(2)............................. $1,412,887 $1,297,474 $1,193,935 $1,126,981 $1,030,223
Equipment financing obligations............. $ 802,458 $ 749,876 $ 671,882 $ 641,362 $ 574,186
Shareholders' equity(2)..................... $ 320,386 $ 292,985 $ 289,982 $ 285,127 $ 277,501
Ratio of earnings to fixed charges(3)....... 2.55 2.55 2.34 2.10 2.41
</TABLE>
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(1) Information for the fiscal years ended September 30, 1997 and prior have
been adjusted for the three-for-two common stock split distributed on March
16, 1998.
(2) Information for the fiscal years ended September 30, 1997 and prior have
been reclassified to reflect the effects of adopting the provisions of SFAS
No. 130, "Reporting Comprehensive Income", during 1999.
(3) 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.
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USE OF PROCEEDS
The proceeds we receive from the sale of the debentures will be advanced to
Rollins Leasing Corp., referred to as a "participating subsidiary". It will use
the 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 to be applied to these
asset purchases or debt reductions. Before this the proceeds may be temporarily
invested in short-term marketable securities.
DESCRIPTION OF DEBENTURES
This section describes the general terms and provisions of the debentures
to which any prospectus supplement may relate. The applicable prospectus
supplement will describe the specific terms of the debentures offered through
that prospectus supplement as well as any general terms described in this
section that will not apply to those debentures.
The offered debentures will be issued under a Collateral Trust Indenture
dated as of March 21, 1983, between us and Continental Bank, National
Association (formerly Continental Illinois National Bank and Trust Company of
Chicago) as trustee, as supplemented and amended by a Third Supplemental
Indenture dated February 20, 1986 and by the Eighth Supplemental Indenture dated
May 15, 1990 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 referred to as 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.
We have summarized certain provisions of the Collateral Trust Indenture
below. The summary is not complete. If we refer to particular provisions of the
indenture, the provisions, including definitions of certain terms are
incorporated by reference as a part of this summary.
As of the date of this prospectus, an aggregate of $800 million of
debentures are outstanding under the indenture. Reference is made to the
prospectus supplement for any subsequent series of debentures issued under the
indenture.
GENERAL
The offered debentures will be our obligations secured at the time of
issuance by the pledge of unsecured demand promissory notes issued by one or
more participating subsidiaries. These notes may in turn be secured by liens on
vehicles and vehicle leases under the circumstances described under the heading
"Security Provisions". We and Rollins Leasing Corp. are prohibited 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 ours
engaged primarily in the business of renting and/or leasing vehicles and/or
providing carriage by vehicles. A participating subsidiary has also executed and
delivered one or more loan agreements and issued one or more notes. As of the
date of this prospectus, Rollins Leasing Corp. is our only subsidiary that
qualifies as a participating subsidiary. As of the date of this prospectus, the
outstanding debentures are secured by the pledge of $800 million principal
amount of the unsecured demand promissory notes of Rollins Leasing Corp.
The indenture does not limit the amount of debentures that may be issued.
The indenture provides that debentures may be issued under it from time to time
in one or more series.
Principal and any premium will be payable at the our agency in Chicago,
Illinois, or New York, New York. You may present the debentures for registration
of transfer or exchange at those offices, subject to the limitations provided in
the indenture, without any service charge, but we may require you to pay a sum
sufficient to cover any tax or other governmental charge payable in connection
with the registration.
The indenture requires that funds equal to the principal amount of
debentures issued from time to time will be advanced to one or more
participating subsidiaries on the date of the issuance. In exchange, each
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participating subsidiary will issue us a promissory note in the principal amount
of any advances to it. We 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 the obligations to
pay principal premium, if any, and interest contained in all the notes are
sufficient, in the aggregate, to pay all principal, premium, if any, and
interest on all outstanding debentures after giving effect to the issue of
additional debentures and to any concurrent retirement of other debentures using
proceeds from that issue and money held by the trustee.
TERMS OF A PARTICULAR SERIES
The prospectus supplement relating to the particular series of offered
debentures will include the following terms of the offered debentures:
o the title;
o any limit on the aggregate principal amount;
o the price or prices;
o the maturity date or dates;
o the interest rate or rates and the method for calculating the interest
rate;
o the interest payment dates, the date on which interest payments will
commence and the regular record dates for the interest payments;
o the terms of any mandatory or optional sinking fund provisions; and
o the terms of any other optional redemption provisions.
OUR COVENANTS
Limitation on Equipment Indebtedness of Participating Subsidiaries. We
covenant 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, we
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%.
Certain Definitions. Equipment indebtedness means all indebtedness other
than:
o permitted indebtedness;
o indebtedness expressly subordinated to the prior payment of the
debentures or the notes, as the case may be;
o indebtedness secured by real estate or improvements on real estate (to
the extent that indebtedness does not exceed the greater of cost or
appraised value of the real estate and improvements); and
o 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:
(1) the fastest rate prescribed by any instrument at the time in
effect evidencing any indebtedness of the vehicle owner; and
(2) the rate then utilized for the purpose of financial statements
submitted to our stockholders.
Permitted indebtedness means:
(1) 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 the purchased vehicles; and
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(2) indebtedness secured by a lien on vehicles which predates our
acquisition of the business owning the vehicles.
Vehicle means 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.
Limitation on Dividends. We may not, so long as any of the offered
debentures are outstanding:
o declare or pay any dividend; or
o make any distribution on any shares of our capital stock (other than
dividends or distributions payable in shares of our capital stock); or
o make or permit any subsidiary to make any payment to purchase, redeem or
otherwise acquire any shares of our capital stock if the aggregate amount
expended for all purposes subsequent to September 30, 1984, referred to
as the "applicable date", would exceed the sum of consolidated net
earnings since the applicable date and $10,000,000.
However, we may credit against the purchases, redemptions and retirements
of our capital stock the net consideration we receive subsequent to the
applicable date from the issue or sale of additional capital stock.
Limitation on Consolidated Indebtedness. As long as any of the offered
debentures are outstanding, we may not, nor may we permit any of our
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 our consolidated
indebtedness is less than 400% of our consolidated net worth. Other than the
limitation on consolidated indebtedness, the indenture contains no provisions
that may afford debentureholders protection in the event of a highly leveraged
transaction.
SECURITY PROVISIONS
All offered debentures will be our obligations secured by notes pledged to
the trustee. Notes of participating subsidiaries pledged to the trustee will
secure any additional series of debentures. The notes will be unsecured
obligations of the subsidiaries. However, if any participating subsidiary grants
or allows any security interest in its vehicles or its vehicle leases (except
statutory liens), the indenture requires the creation of a security interest in
the vehicles or vehicle leases for the benefit of the trustee as holder of the
notes of the participating subsidiary ranking equally and ratably with, and
existing for at least the same length of time as, such other security interests.
An agreement among us, Rollins Leasing Corp. and the lenders under the
existing unsecured bank revolving credit agreement between Rollins Leasing Corp.
and those lenders requires Rollins Leasing Corp. 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 Leasing
Corp.), the lenders under Rollins Leasing Corp.'s bank revolving credit
agreement and the holders of such other indebtedness as may be entitled to share
in such security interests. Neither the trustee nor the debentureholders may
initiate the creation of such a security interest.
MODIFICATION OF INDENTURE AND WAIVER OF CERTAIN COVENANTS
We or the trustee may modify or waive any provision of the indenture or
modify the rights of the debentureholders with the consent of the following:
o the holders of a majority in aggregate principal amount of all
outstanding debentures which are affected by the modification or waiver;
and
o at least 66 2/3% in aggregate principal amount of each series of
outstanding debentures which are affected by the modification or waiver.
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<PAGE>
However, without the consent of the holder of each outstanding debenture of
any affected series, no modification or waiver will:
o extend the maturity of principal or interest;
o reduce or modify the principal, interest or any premium payable on
redemption;
o permit the creation of any prior or pari passu lien on any of the notes
or other pledged property or terminate the indenture lien on the notes or
other pledged property; and
o reduce the percentage of debentureholders whose consent is required for
modification.
DEFAULTS AND CERTAIN RIGHTS ON DEFAULT
An event of default is defined in the indenture as being:
o default for 30 days in payment of any interest on any debenture;
o default in payment of principal or of premium, if any, on any debenture;
o default in payment of any sinking fund installment required for any
debenture;
o default in the performance of the covenants described under "Our
Covenants--Limitation on Equipment Indebtedness of Participating
Subsidiaries", "Our Covenants--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;
o default for 60 days after written notice in performance of any other
covenant in the indenture or in the debentures;
o default with respect to other indebtedness or lease obligation of ours or
any subsidiary of ours continuing for 30 days;
o acceleration of the stated maturity of any indebtedness or lease
obligation in an aggregate principal amount of $2,000,000 or more; or
o certain events of bankruptcy, insolvency, receivership or reorganization
relating to us or any participating subsidiary.
We will be required to file with the trustee annually a written statement
as to the fulfillment of our obligations under the indenture. In case an event
of default occurs and is 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. The 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.
Except with respect to its duties in case of default, the trustee is not
obligated to exercise any of its rights or powers under the indenture at the
request or direction of any holders of the debentures, unless those holders have
offered to the trustee reasonable security or indemnity. Subject to those
indemnification provisions and 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
of any of the trustee's trusts or powers.
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PLAN OF DISTRIBUTION
We may sell the debentures as follows:
o to or through one or more underwriters, who will be named in the
applicable prospectus supplement;
o directly to other purchasers;
o through agents; or
o to dealers.
Only underwriters named in the prospectus supplements are deemed to be
underwriters in connection with the debentures offered thereby.
The distribution of debentures may be effected from time to time in one or
more transaction at:
o a fixed price or prices which may be changed;
o market prices prevailing at the time of sale;
o prices related to prevailing market prices; or
o negotiated prices.
Underwriters may receive compensation from us, or from purchasers of the
debentures, in the form of discounts, concessions or commissions. Underwriters,
dealers and agents that participate in the distribution of the debentures may be
underwriters as defined in the Securities Act and any discounts or commissions
they receive by us and any profit on the resale of the debentures by them may be
treated as underwriting discounts and commissions under the Securities Act. Any
underwriters, dealers or agents will be identified and their compensation will
be described in the prospectus supplement.
We may have agreements with the underwriters, dealers and agents to
indemnify them against certain liabilities, including liabilities under the
Securities Act, or to contribute with respect to payments which the
underwriters, dealers or agents may be required to make.
LEGAL MATTERS
Certain legal matters relating to the offered debentures will be passed
upon for us by Klaus M. Belohoubek, Esq., Vice President-General Counsel and
Secretary of the Company, and by any attorneys for the underwriters identified
in the prospectus supplement. As of the date of this prospectus, Mr. Belohoubek
owns beneficially 9,827 shares of our common stock and owns directly options to
purchase 49,000 shares of that stock.
EXPERTS
The consolidated financial statements and financial statement schedules of
Rollins Truck Leasing Corp. and subsidiaries as of September 30, 1999 and 1998,
and for each of the years in the three-year period ended September 30, 1999 have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
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