<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
ANNUAL REPORT
(Mark One)
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
[FEE REQUIRED]
For the fiscal year ended December 31, 1995
/ / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
[NO FEE REQUIRED]
For the transition period from to
COMMISSION FILE NO. 1-4422
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ROLLINS, INC.
------------
INCORPORATED I.R.S. EMPLOYER
IN IDENTIFICATION NUMBER
DELAWARE 51-0068479
2170 PIEDMONT ROAD, N.E., ATLANTA, GEORGIA 30324
TELEPHONE NUMBER -- (404) 888-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH
TITLE OF EACH CLASS EXCHANGE ON WHICH REGISTERED
- ----------------------------------- -----------------------------------
Common Stock, $1 Par Value The New York Stock Exchange
The Pacific Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
The aggregate market value of Rollins, Inc. common stock, held by
non-affiliates on February 29, 1996 was $450,466,016, based on the closing price
on the New York Stock Exchange on such date of $22 per share.
Rollins, Inc. had 35,926,726 shares of common stock outstanding (excluding
5,505,088 Treasury shares) as of February 29, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Rollins, Inc.'s Annual Report to Stockholders for the calendar
year ended December 31, 1995 are incorporated by reference into Part I, Item
1(b) and 1(c), Part II, Items 5-8, and Part IV, Item 14.
Portions of the Proxy Statement for the 1996 Annual Meeting of Stockholders of
Rollins, Inc. are incorporated by reference into Part III, Items 10, 11, 12 and
13.
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PART I
ITEM 1. BUSINESS
(a) GENERAL DEVELOPMENT OF BUSINESS.
Since the beginning of the calendar year, Rollins, Inc. and its subsidiaries
have continued to operate and grow in the same principal services for homes and
businesses.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.
The response to Item 1.(b) is incorporated by reference from the table under
the caption "Business Segment Information," on page 22 of the 1995 Annual Report
to Stockholders.
(c) NARRATIVE DESCRIPTION OF BUSINESS.
(1)(i) The Registrant is a national company with headquarters located in
Atlanta, Georgia, providing services to both residential and commercial
customers. The four primary services provided are termite and pest control,
protective services, lawn care and plantscaping. Additionally, the revenues by
business segment are incorporated by reference to the table under the caption
"Business Segment Information" on page 22 of the 1995 Annual Report to
Stockholders.
Orkin Exterminating Company, Inc., a wholly owned subsidiary (Orkin),
founded in 1901, is one of the world's largest termite and pest control
companies. It provides customized services to approximately 1.6 million
customers through a network of 386 branches serving customers in 49 states, the
District of Columbia, the Bahamas, Canada, Mexico, and Puerto Rico. It provides
customized pest control services to homes and businesses, including hotels, food
service establishments, dairy farms and transportation companies. Orkin's
continuous regular service provides protection against household pests, rodents
and termites. Orkin's Lawn Care Division provides fertilization, weed and insect
control, seeding, aeration of lawns, and tree and shrub care from 23 branches
serving customers in nine states. Orkin's Plantscaping Division designs,
installs and maintains green and flowering plants from ten branches and services
customers in 21 states and the District of Columbia. It provides services to
hotels, shopping malls, restaurants, and office buildings.
Rollins Protective Services, a division of the Registrant, was established
in 1969. Services are provided from 51 branches serving customers in 41 states
and the District of Columbia. A pioneer in developing customized wired and
wireless electronic security systems, it provides full-service capabilities from
system design and installation to maintenance and monitoring services.
Full-service includes guaranteed maintenance programs, 24-hour emergency
repairs, and 24-hour alarm monitoring services.
(ii) The Registrant has made no announcement of, nor did any information
become public about, a new line of business or product requiring the investment
of a material amount of the Registrant's total assets.
(iii) Sources and availability of raw materials present no particular
problem to the Registrant, since its businesses are primarily in service-related
industries.
(iv) Governmental licenses, patents, trademarks and franchises are of minor
importance to the Registrant's service operations. Local licenses and permits
are required in order for the Registrant to conduct its termite and pest
control, protective services, lawn care and plantscaping operations in certain
localities. In view of the widespread operations of the Registrant's service
operations, the failure of a few local governments to license a facility would
not have a material adverse effect on the results of operations of the
Registrant.
(v) The business of the Registrant is affected by the seasonal nature of the
Registrant's termite and pest control, lawn care and plantscaping service
operations (Orkin Exterminating Company, Inc.). The metamorphosis of termites in
the spring and summer (the occurrence of which is determined by the timing of
the change in seasons) has historically resulted in an increase in the revenue
and income of the Registrant's termite and pest control operations during such
period. Lawn care services are seasonal and coincide with
2
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the growing seasons of lawns. Plantscaping operations experience seasonal
increases in revenues and operating income generated by the division's Exterior
Color and Holiday programs offered during the spring and late fall.
(vi) Inapplicable.
(vii) The Registrant and its subsidiaries do not have a material part of
their business that is dependent upon a single customer or a few customers, the
loss of which would have a material effect on the business of the Registrant.
(viii) The dollar amount of service contracts and backlog orders as of the
end of the Registrant's 1995 and 1994 calendar years was approximately
$15,508,000 and $16,063,000, respectively. Backlog services and orders are
usually provided within the month following the month of receipt, except in the
area of prepaid pest control and alarm monitoring where services are usually
provided within twelve months of receipt.
(ix) Inapplicable.
(x) The Registrant believes that each of its businesses competes favorably
with competitors within its respective area. Orkin Exterminating Company, Inc.
is one of the world's largest termite and pest control companies. Rollins
Protective Services is a pioneer and one of the leaders in residential and
commercial security. Orkin Lawn Care is one of the largest lawn care companies.
Orkin Plantscaping is the industry's second largest company with operations in
ten major markets.
The principal methods of competition in the Registrant's termite and pest
control business are service and guarantees, including the money-back guarantee
on termite and pest control, and the termite retreatment and damage repair
guarantee to qualified homeowners. Competition in the plantscaping and lawn care
businesses is based on providing customized services together with guarantees,
with the Registrant offering the same money-back guarantee for the services. The
principal method of competition in the residential protection business of the
Registrant is the provision of customized emergency protection services to meet
the particular needs of each customer.
(xi) Expenditures by the Registrant on research activities relating to the
development of new products or services are not significant. Some of the new and
improved service methods and products are researched, developed and produced by
unaffiliated universities and companies. Also a portion of these methods and
products are produced to the specifications provided by the Registrant.
(xii) The capital expenditures, earnings and competitive position of the
Registrant and its subsidiaries are not materially affected by compliance with
Federal, state and local provisions which have been enacted or adopted
regulating the discharge of materials into the environment, or otherwise
relating to the protection of the environment.
(xiii) The number of persons employed by the Registrant and its subsidiaries
as of the end of 1995 was 8,956.
(d) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
SALES.
Inapplicable.
ITEM 2. PROPERTIES.
The Registrant's administrative headquarters and central warehouse, both of
which are owned by the Registrant, are located at 2170 Piedmont Road, N.E.,
Atlanta, Georgia 30324. The Registrant owns or leases several hundred branch
offices and operating facilities used in its businesses. None of the branch
offices, individually considered, represents a materially important physical
property of the Registrant. The facilities are suitable and adequate to meet the
current and reasonably anticipated future needs of the Registrant.
ITEM 3. LEGAL PROCEEDINGS.
During November 1995, Orkin and the Attorney General of Missouri and private
plaintiffs reached an agreement in settlement of a class action regarding
treatments for termites for residential customers with basement homes contracted
for between January 1, 1987 and May 15, 1993. The Attorney General and the
3
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private plaintiffs raised concerns that Orkin's initial termite protection
treatment for these customers was incomplete. Orkin maintains that its customers
have received treatment consistent with industry practices. In order to best
serve its customers and to avoid the continued expense of litigation, Orkin has
agreed to reinspect the basement homes of all applicable customers and apply
additional termiticide, if needed. In the event a customer covered by this
agreement has suffered termite damage as a result of insufficient termiticide,
Orkin has agreed to repair the customer's basement home. The presiding judge of
the Circuit Court of the City of St. Louis approved the settlement on December
13, 1995. The resolution does not constitute an admission of wrongdoing by the
Company and did not have a material adverse effect on the Company's financial
position, results of operations, or liquidity.
In the normal course of business, the Company is a defendant in a number of
lawsuits which allege that plaintiffs have been damaged as a result of the
rendering of services by Company personnel and equipment. The Company is
actively contesting these actions. It is the opinion of Management that the
outcome of these actions will not have a material adverse effect on the
Company's financial position, results of operations, or liquidity.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Inapplicable.
ITEM 4.A. EXECUTIVE OFFICERS OF THE REGISTRANT.
Each of the executive officers of the Registrant was elected by the Board of
Directors to serve until the Board of Directors' meeting immediately following
the next annual meeting of stockholders or until his earlier removal by the
Board of Directors or his resignation. The following table lists the executive
officers of the Registrant and their ages, offices with the Registrant, and the
dates from which they have continually served in their present offices with the
Registrant.
<TABLE>
<CAPTION>
DATE FIRST
ELECTED TO
NAME AGE OFFICE WITH REGISTRANT PRESENT OFFICE
- ------------------------------ --- -------------------------------------------------- --------------
<S> <C> <C> <C>
R. Randall Rollins (1)........ 64 Chairman of the Board and Chief Executive Officer 10/22/91
Gary W. Rollins (1)........... 51 President and Chief Operating Officer 1/24/84
Gene L. Smith (2)............. 50 Chief Financial Officer, 1/22/91
Secretary, and Treasurer 1/26/93
</TABLE>
- ------------------------
(1) R. Randall Rollins and Gary W. Rollins are brothers.
(2) Gene L. Smith served as the Registrant's Vice President of Finance for the
period 12/30/85 to 1/21/91.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Information containing dividends and stock prices on page 12 and the
principal markets on which common shares are traded on page 25 of the 1995
Annual Report to Stockholders are incorporated herein by reference. The number
of stockholders of record on December 31, 1995 was 3,764.
ITEM 6. SELECTED FINANCIAL DATA.
Selected Financial Data on pages 10 and 11 of the 1995 Annual Report to
Stockholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of
Operations included on pages 13 through 15 of the 1995 Annual Report to
Stockholders is incorporated herein by reference. The effects of inflation on
operations were not material for the periods being reported.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following consolidated financial statements and supplementary data of
the Registrant and its consolidated subsidiaries, included in the 1995 Annual
Report to Stockholders, are incorporated herein by reference.
4
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Financial Statements:
Statements of Income for each of the three years in the period ended
December 31, 1995, page 17.
Statements of Earnings Retained for each of the three years in the period
ended December 31, 1995, page 17.
Statements of Financial Position as of December 31, 1995 and 1994, page
16.
Statements of Cash Flows for each of the three years in the period ended
December 31, 1995, page 18.
Notes to Financial Statements, pages 19 through 23.
Report of Independent Auditors, page 24.
Supplementary Data:
Quarterly Information, page 12.
5
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Inapplicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The response to Item 10, applicable to the Directors of the Registrant, is
incorporated herein by reference to the information set forth under the caption
"Election of Directors" in the Proxy Statement for the Annual Meeting of
Stockholders to be held April 23, 1996. Additional information concerning
executive officers is included in Part I, Item 4.A. of this Form 10-K.
Based solely on its review of copies of forms received by it pursuant to
Section 16(a) of the Securities Exchange Act of 1934, as amended, or written
representations from certain reporting persons, Registrant believes that during
the fiscal year ended December 31, 1995 all filing requirements applicable to
its officers, directors, and greater than 10% stockholders were complied with.
ITEM 11. EXECUTIVE COMPENSATION.
The response to Item 11 is incorporated herein by reference to the
information set forth under the caption "Executive Compensation" in the Proxy
Statement for the Annual Meeting of Stockholders to be held April 23, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The response to Item 12 is incorporated herein by reference to the
information set forth under the captions "Capital Stock" and "Election of
Directors" in the Proxy Statement for the Annual Meeting of Stockholders to be
held April 23, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The section entitled "Compensation Committee Interlocks and Insider
Participation" and "Executive Compensation" in the Proxy Statement for the
Annual Meeting of Stockholders to be held April 23, 1996, and related footnotes
and information are incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
The following are filed as part of this report:
(a) 1. Financial Statements
The following financial statements are incorporated herein by reference to
portions of the 1995 Annual Report to Stockholders included with this Form 10-K:
Statements of Income for each of the three years in the period ended
December 31, 1995, page 17.
Statements of Earnings Retained for each of the three years in the period
ended December 31, 1995, page 17.
Statements of Financial Position as of December 31, 1995 and 1994, page
16.
Statement of Cash Flows for each of the three years in the period ended
December 31, 1995, page 18.
Notes to Financial Statements, pages 19 through 23.
Report of Independent Auditors, page 24.
(a) 2. Financial Statement Schedule
II Valuation and Qualifying Accounts
Schedules not listed above have been omitted as either not applicable,
immaterial or disclosed in the financial statements or notes thereto.
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(a) 3. Exhibits
(3)(i) The Company's Certificate of Incorporation is incorporated
herein by reference to Exhibit (3)(a) as filed with its Form
10-K for the year ended December 31, 1992.
(ii) By-laws of Rollins, Inc. are incorporated herein by reference
to Exhibit 3(b) as filed with its Form 10-K for the year ended
December 31, 1993.
(10) Rollins, Inc. 1984 Employee Incentive Stock Option Plan is
incorporated herein by reference to Exhibit (10) filed with the
Company's Form 10-K for the year ended December 31, 1991.
Rollins, Inc. 1994 Employee Stock Incentive Plan is
incorporated herein by reference to Exhibit A of the March 18,
1994 Proxy Statement for the Annual Meeting of Stockholders
held on April 26, 1994.
(13) Portions of the Annual Report to Stockholders for the year
ended December 31, 1995 which are specifically incorporated
herein by reference.
(21) Subsidiaries of Registrant.
(23) Consent of Independent Public Accountants.
(24) Powers of Attorney for Directors.
(27) Financial Data Schedule.
(b) No reports on Form 8-K were required to be filed by the Company for the
quarter ended December 31, 1995.
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SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
ROLLINS, INC.
By: /s/ R. RANDALL ROLLINS
-----------------------------------
R. Randall Rollins
Chairman of the Board of Directors
(Principal Executive Officer)
March 27, 1996
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND
IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <C>
/s/ R. RANDALL ROLLINS /s/ GENE L. SMITH
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R. Randall Rollins Gene L. Smith
Chairman of the Board of Directors Chief Financial Officer, Secretary, and
(Principal Executive Officer) Treasurer
March 27, 1996 (Principal Financial and Accounting Officer)
March 27, 1996
</TABLE>
The Directors of Rollins, Inc. (listed below) executed a power of attorney
appointing Gary W. Rollins their attorney-in-fact, empowering him to sign this
report on their behalf.
Wilton Looney, Director
John W. Rollins, Director
Henry B. Tippie, Director
James B. Williams, Director
Bill J. Dismuke, Director
/s/ GARY W. ROLLINS
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Gary W. Rollins, As
Attorney-in-Fact
& Director, President and
Chief Operating Officer
March 27, 1996
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ROLLINS, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
CONSOLIDATED FINANCIAL STATEMENTS OF ROLLINS, INC. AND SUBSIDIARIES:
The Registrant's 1995 Annual Report to Stockholders, portions of which are
filed with this Form 10-K, contains on pages 16 through 24 the consolidated
financial statements for the years ended December 31, 1995, 1994 and 1993 and
the report of Arthur Andersen LLP on the financial statements for the years then
ended. These financial statements and the report of Arthur Andersen LLP are
incorporated herein by reference. The financial statements include the
following:
Statements of Income for each of the three years in the period ended
December 31, 1995.
Statements of Earnings Retained for each of the three years in the period
ended December 31, 1995.
Statements of Financial Position as of December 31, 1995 and 1994.
Statements of Cash Flows for each of the three years in the period ended
December 31, 1995.
Notes to Financial Statements.
REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE, Page 9.
SCHEDULE
<TABLE>
<CAPTION>
SCHEDULE
NUMBER
- ---------
<S> <C>
II Valuation and Qualifying Accounts, Page 10.
</TABLE>
Schedules not listed above have been omitted as either not applicable,
immaterial or disclosed in the financial statements or notes thereto.
9
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REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE
To the Directors and the Stockholders of Rollins Inc.:
We have audited, in accordance with generally accepted auditing standards,
the financial statements included in Rollins, Inc.'s annual report to
stockholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated February 12, 1996. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The schedule listed in
Item 14 of this Form 10-K is the responsibility of the Company's management and
is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 12, 1996
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ROLLINS, INC. AND SUBSIDIARIES
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ADDITIONS
-------------------------
BALANCE AT CHARGED TO CHARGED TO BALANCE AT
BEGINNING COSTS AND OTHER END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS (1) PERIOD
- ----------------------------------------------- ----------- ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995 --
Allowance for doubtful accounts............... $ 5,944 $ 22,101(2) $ -- $ 18,054 $ 9,991
----------- ------------ ----------- ------------- -----------
Year ended December 31, 1994 --
Allowance for doubtful accounts............... $ 4,548 $ 7,823 $ -- $ 6,427 $ 5,944
----------- ------------ ----------- ------------- -----------
Year ended December 31, 1993 --
Allowance for doubtful accounts............... $ 2,948 $ 6,734 $ -- $ 5,134 $ 4,548
----------- ------------ ----------- ------------- -----------
</TABLE>
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NOTE: (1) Deductions represent the write-off of uncollectible receivables, net
of recoveries.
(2) Includes a Special Charge of $12,000,000 ($7,440,000 after tax
benefit or $.21 per share) relating to the write off of doubtful
accounts at September 30, 1995, in the consumer finance operation,
Rollins Acceptance Company.
11
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EXHIBITS
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number
- --------------
<S> <C>
(3) (i) The Certificate of Incorporation of Rollins, Inc. is
incorporated herein by reference to Exhibit (3) (a) as
filed with its Form 10-K for the year ended December 31,
1992.
(ii) By-laws of Rollins, Inc. are incorporated herein by
reference to Exhibit (3) (b) as filed with its form 10-K
for the year ended December 31, 1993.
(10) Rollins, Inc. 1984 Employee Incentive Stock Option Plan is
incorporated herein by reference to Exhibit (10) filed
with the Company's Form 10-K for the year ended December 31,
1991.
Rollins, Inc. 1994 Employee Stock Incentive Plan is
incorporated herein by reference to Exhibit A to the March 18,
1994 Proxy Statement for the Annual Meeting of Stockholders
held on April 26, 1994.
(13) Portions of the Annual Report to Stockholders for the year
ended December 31, 1995 which are specifically
incorporated herein by reference.
(21) Subsidiaries of Registrant.
(23) Consent of Independent Public Accountants.
(24) Powers of Attorney for Directors.
(27) Financial Data Schedule.
</TABLE>
<PAGE>
EXHIBIT (13)
<PAGE>
<TABLE>
<CAPTION>
TEN - YEAR FINANCIAL SUMMARY
Rollins, Inc. and Subsidiaries
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1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS SUMMARY
(In thousands except per
share data)
Revenues $620,435 $605,327 $575,802 $527,666 $475,555 $436,398 $402,324 $380,834 $354,303 $320,030
Cost of Services Provided 325,889 311,315 293,499 271,518 247,994 230,107 211,604 193,829 180,513 158,216
Depreciation and Amortization 7,950 8,130 8,310 7,966 7,806 7,482 7,509 7,013 6,935 6,388
Special Charge 12,000 - - - - - - - - -
Sales, General and
Administrative 216,234 208,289 203,483 187,238 169,825 155,904 146,658 140,158 126,355 119,079
Interest Expense (Income), Net (4,988) (2,994) (2,390) (1,870) (2,134) (2,460) (2,215) (1,693) (781) 257
-------- -------- ------- -------- -------- -------- -------- -------- -------- --------
Income Before Income Taxes 63,350(1) 80,587 72,900 62,814 52,064 45,365 38,768 41,527 41,281 36,090
Income Taxes 24,073 31,026 28,431 24,812 20,565 17,919 15,236 16,819 19,177 18,095
-------- ------- ------- -------- -------- -------- -------- -------- -------- --------
Net Income $ 39,277(1) $ 49,561 $ 44,469 $ 38,002 $ 31,499 $ 27,446 $ 23,532 $ 24,708 $ 22,104 $ 17,995
-------- -------- ------- -------- -------- -------- -------- -------- -------- --------
-------- -------- ------- -------- -------- -------- -------- -------- -------- --------
Earnings per Share $ 1.10(1) $ 1.39 $ 1.25 $ 1.07 $ .89 $ .77 $ .67 $ .70 $ .63 $ .51
Dividends per Share $ .56 $ .50 $ .44 $ .40 $ .39 $ .37 $ .36 $ .34 $ .33 $ .32
Cash Provided by Operations $ 46,910 $ 39,340 $ 40,034 $ 33,319 $ 31,987 $ 36,350 $ 31,955 $ 24,323 $ 29,852 $ 28,695
Capital Expenditures $ 18,026 $ 8,368 $ 7,727 $ 7,042 $ 8,536 $ 8,929 $ 9,747 $ 7,825 $ 8,864 $ 5,940
Total Assets $314,925 $295,265 $267,194 $236,291 $204,577 $177,961 $160,121 $146,526 $130,953 $112,477
Long-Term Debt - - - - - - - - - -
Stockholders' Equity $214,318 $193,633 $160,508 $129,899 $105,137 $ 86,718 $72,228 $ 61,082 $ 48,455 $ 39,074
SELECTED RATIO ANALYSIS
(As a % of revenues except
return on average equity)
Cost of Services Provided 52.5% 51.5% 51.0% 51.5% 52.1% 52.7% 52.6% 50.9% 50.9% 49.4%
Sales, General and Administrative 34.9 34.4 35.3 35.5 35.7 35.7 36.5 36.8 35.7 37.2
Net Income 6.3(1) 8.2 7.7 7.2 6.6 6.3 5.8 6.5 6.2 5.6
Net Income without Special Charge 7.5 8.2 7.7 7.2 6.6 6.3 5.8 6.5 6.2 5.6
Return on Average Equity 19.3 28.0 30.6 32.3 32.8 34.5 35.3 45.1 50.5 50.9
SHARES OUTSTANDING
(In thousands)
Average 35,849 35,770 35,638 35,569 35,510 35,465 35,438 35,418 35,232 34,929
At Year End 35,858 35,826 35,673 35,592 35,532 35,478 35,453 35,426 35,412 34,968
</TABLE>
(1) INCLUDES A SPECIAL CHARGE OF $12,000,000 ($7,440,000 AFTER TAX BENEFIT OR
$.21 PER SHARE) AT SEPTEMBER 30, 1995.
10 11
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QUARTERLY INFORMATION
<TABLE>
<CAPTION>
------------------------------------------------------
STOCK PRICES AND DIVIDENDS
(Rounded to the nearest 1/8)
Stock Prices Dividends
High Low Paid
------------------------------------------------------
<S> <C> <C> <C>
1995
First Quarter $ 27 1/2 $ 22 $ .14
Second Quarter 28 5/8 22 1/8 .14
Third Quarter 25 1/4 23 .14
Fourth Quarter 25 18 7/8 .14
1994
First Quarter $ 30 3/4 $ 26 3/4 $ .12 1/2
Second Quarter 28 3/8 24 3/8 .12 1/2
Third Quarter 26 1/8 23 1/4 .12 1/2
Fourth Quarter 25 1/2 22 1/8 .12 1/2
</TABLE>
THE NUMBER OF STOCKHOLDERS OF RECORD AS OF DECEMBER 31, 1995 WAS 3,764.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
PROFIT AND LOSS INFORMATION
(In thousands except per share data) First Second Third Fourth
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Revenues $ 142,654 $175,350 $ 162,333 $ 140,098
Operating Income 14,901 35,217 6,842 (1) 13,233
Net Income 7,807 21,102 3,454 (1) 6,914
Earnings per share .22 .59 .09 (1) .20
1994
Revenues $ 136,443 $171,874 $ 158,002 $ 139,008
Operating Income 13,755 36,285 22,906 15,984
Net Income 6,888 21,066 13,011 8,596
Earnings per share .19 .59 .36 .25
1993
Revenues $ 127,295 $163,248 $ 151,808 $ 133,451
Operating Income 11,872 32,708 21,228 15,312
Net Income 5,867 19,071 11,688 7,843
Earnings per share .16 .54 .33 .22
</TABLE>
(1) INCLUDES A SPECIAL CHARGE OF $12,000,000 ($7,440,000 AFTER TAX BENEFIT OR
$.21 PER SHARE) AT SEPTEMBER 30, 1995.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
SELECTED INDUSTRY SEGMENT DATA % CHANGE FROM
PRIOR YEAR
increase/ (decrease)
--------------------
(In thousands) 1995 1994 1993 1995 1994
---- ---- ---- ---- ----
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES
Orkin $547,797 $530,099 $506,399 3.3% 4.7%
Rollins Protective 59,233 61,692 57,698 (4.0) 6.9
Other 13,405 13,536 11,705 (1.0) 15.6
------- ------- -------
$620,435 $605,327 $575,802 2.5 5.1
-------- -------- --------
-------- -------- --------
OPERATING INCOME
Orkin $ 76,754 $ 78,711 $ 70,720 (2.5) 11.3
Rollins Protective 4,476 6,579 5,896 (32.0) 11.6
Other (11,037) 3,640 4,504 N/M (19.2)
-------- -------- --------
$ 70,193 $ 88,930 $ 81,120 (21.1)% 9.6%
-------- -------- --------
-------- -------- --------
</TABLE>
GENERAL OPERATING COMMENTS
The 1995 operating income and profit margin results were a reflection of the
Company's decision to support major business investments in all areas of
operations. Competition and current business conditions support the Company's
decision to make major investments in marketing, customer service, and division
operations, in order to increase market share and profits. Due to the decrease
in normal revenue growth rates, expense control opportunities were identified in
all segments during the year. Improvement measures were implemented in the
fourth quarter, including the reduction of certain home office and field
administrative/managerial functions.
Earnings were also negatively impacted by a one-time Special Charge of $12.0
million ($7.4 million after-tax or $.21 per share) relating to the write off of
doubtful accounts receivable in the consumer finance operation, Rollins
Acceptance Company (RAC). The charge was a result of management's actions and
assessment of the estimated realizable value of the financed receivables
portfolio versus the carrying amount at September 30, 1995. To more effectively
manage the financed receivables portfolio, the Company expanded RAC's physical
facility, acquired new computers and phone dialing equipment, and increased the
staffing of collectors. Exclusive of the Special Charge, 1995 earnings per share
would have been $1.31 compared to $1.39 in 1994 and $1.25 in 1993.
Rollins, Inc.'s consolidated revenues of $620.4 million were 2.5% higher than in
1994. Operating income decreased $18.7 million or 21.1% over the prior year.
As a result of the Special Charge, increased business investment activity, and
not reducing expenses to match the revenue growth rate decreases, operating
margins declined 23.1% (9.8% without the Special Charge) over 1994 compared to
1994's improvement over 1993 of 4.3%.
Orkin revenues increased 3.3% to $547.8 million with operating income and
operating margins decreasing 2.5% and 5.4%, respectively, over the prior
year. This compares to a 5.7% margin improvement from 1994 over 1993.
Rollins Protective Services' revenues declined 4.0%, along with operating
income 32.0% lower, while operating margins deteriorated 29.0% from 1994.
This compares to a 4.9% margin improvement from 1994 over 1993.
ORKIN 1995 VERSUS 1994
Orkin increased its pest control and termite sales dollars and customer base,
despite a second consecutive year of an unusual cold and wet spring that
negatively impacted the seasonal termite business. Orkin continues to be
encouraged by the positive results in its core business, monthly recurring pest
control. Residential pest control leads and sales, and termite renewals were up
over last year. The growing pest control business involves a coordinated
emphasis on commercial opportunities. This includes more focused leadership via
the creation of a Director of Commercial Pest Control, who will be
13
<PAGE>
identifying opportunities and strategies to expand this business.
Orkin's 1995 strategic investments in the pest control business include
increases in sales and service personnel, training, and value marketing
programs. The million dollar Rollins Customer Service Center (RCSC) was opened
during the first quarter. The RCSC is designed to centrally and proactively
monitor customer service quality and to generate additional sales by cross-
marketing our approximately 1.7 million customers. These investments will be
ongoing, with a primary focus on the following business fundamentals: Increase
Employee Sales and Service Staffing, Enhance Training, Target Marketing Efforts,
and Improve Customer Satisfaction. Additional future growth will come from
internal and external expansion, with a plan to double the number of new,
company-owned branch openings in 1996, expansion of the Franchise program, a
growing presence in Canada, and increasing acquisition activity.
In 1995, Orkin Plantscaping continued its "back to basics" program and reviewed
its fundamental operating practices. Technical training opportunities were
identified to improve sales and retain current customers. A major training
initiative to include all sales and service personnel will be implemented in
1996. In addition, a veteran senior Orkin executive took over the Division in
the fourth quarter.
After the December 1994 sale of the eleven Northern locations, Lawn Care
restructured its business, including management's span of control and sales and
service staffing, to fit a smaller, more tightly focused geographic market. On
a comparable unit basis, Orkin Lawn Care had revenue and customer base growth
and expects this positive momentum to carry forward into 1996 with increasing
revenue and profitability. The primary focus will be improving sales generation
activity and converting the increasing number of new customer leads, received by
the Rollins Customer Service Center.
ORKIN 1994 VERSUS 1993
Orkin revenues increased 4.7% to $530.1 million and operating income increased
11.3% to $78.7 million for the year ended December 31, 1994, compared to the
same period last year. Orkin experienced a disappointing pest season, unlike
any in its history; however Pest Control and Termite services increased their
sales dollars and customer base for the year. Orkin maintained its commitment
to expanding existing operations by entering new geographic markets with the
opening of nine new branches.
The fundamentals and financial position of the Pest Control business remained
very strong. Orkin was motivated to take full advantage of market opportunities
through alternative services such as the Agribusiness service, which produced
strong revenue gains in 1994. Success with other new marketing and service
programs also contributed to revenue and operating income improvements. These
programs included the introduction of a 24 hour 1-800-800-ORKIN service and a
neighborhood solicitation campaign. The neighborhood campaign was expanded
during the summer of 1994 in selected markets and exceeded sales expectations.
Orkin utilized its telemarketing program to make customer quality assurance
calls which provided customer satisfaction confirmation and the expansion of
Orkin services. Additionally, sales benefits of cross-marketing other Rollins'
services were achieved.
Orkin Plantscaping focused on sales and service basics in 1994, including
formalizing sales proposals, developing new sales brochures, and managing the
quality and selection of plant inventory. To address a soft year, Plantscaping
concentrated on training employees to better address the customer needs and
improve creative sales skills.
ROLLINS PROTECTIVE SERVICES (RPS) 1995 VERSUS 1994
RPS continues its investments in strategic programs that include customer
service and product development. In addition, the consolidation of the three
separate central alarm monitoring stations, and the customer support functions,
into a single, state-of-the-art, integrated, National Customer Support Center
was completed during the third quarter 1995. RPS continued to experience
difficulty in achieving an appropriate product sales mix; however, the recurring
revenue customer base continues to grow through customer service programs and
acquisitions. RPS completed seven modest acquisitions during the year which
allowed for the expansion of its services in existing markets, while providing
their customers continued access to quality service.
Future growth is planned to occur through the introduction of the new System VII
product, continuing business development activities, and enhancing the RPS
National Customer Support Center (consolidated customer service/alarm monitoring
center). System VII testing and technical training was completed and introduced
to the market in the fourth quarter 1995. Business development activities will
include additional acquisitions and
14
<PAGE>
investigating possible strategic partnerships and alliances in response to the
ever-changing technological options and advancements in the industry.
ROLLINS PROTECTIVE SERVICES (RPS) 1994 VERSUS 1993
RPS had 1994 revenues of $61.7 million, an increase of 6.9%, and operating
income improved 11.6% to $6.6 million. Revenue growth in 1994 was driven by the
expansion of the commercial and National Accounts programs and the opening of
two new locations. RPS enjoyed one of the highest customer retention rates in
the industry. RPS secured several large National Accounts, including
Blockbuster and Discovery Zone, and enhanced relationships with existing key
account customers.
OTHER 1995 VERSUS 1994
Other businesses revenue decreased 1.0% due to revisions of the Company's credit
and internal operating policies within the consumer finance area (RAC). The
volume of Company financed sales is slightly lower than last year, as the
revised policies redirected marketing efforts toward stronger customer
demographics in conjunction with the lower than anticipated termite demand. In
addition, the Special Charge, discussed in further detail under "General
Operating Comments", negatively impacted Operating Income.
OTHER 1994 VERSUS 1993
Other business' revenue increased 15.6% while operating income decreased 19.2%.
During the fourth quarter 1994, management performed a major evaluation of the
Company's credit and internal operating policies within the credit service
center. Management instituted a revision of these credit policies which refines
marketing efforts toward stronger customer demographics, while providing a
higher average contract price. The objectives of these changes were to increase
our average dollar sales unit purchased, and reduce doubtful account exposure.
- -------------------------------------------------------------------------------
FINANCIAL CONDITION
<TABLE>
<CAPTION>
% CHANGE FROM PRIOR YEAR
increase/(decrease)
-------------------
(Dollars in thousands) 1995 1994 1993 1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and Short-Term
Investments $ 33,623 $ 31,917 $ 18,102
Marketable Securities 65,743 51,820 50,991
-------- -------- --------
$ 99,366 $ 83,737 $ 69,093 18.7% 21.2%
Working Capital $151,756 $148,010 $117,528 2.5% 25.9%
Current Ratio 3.1 3.2 2.8 (3.1)% 14.3%
Cash Provided by
Operations $ 46,910 $ 39,340 $ 40,034 19.2% (1.7)%
</TABLE>
Rollins, Inc.'s financial position remained solid. The Company's operations
have historically provided a strong positive cash flow which represents the
Company's principal source of funds. Interest income increased 66.6% due to the
increase in average funds invested in short-term investments and marketable
securities, coupled with the increase in the average rate of return.
Net trade receivables decreased $13.4 million or 13.1% compared with December
31, 1994. Trade receivables include installment receivables which are due
subsequent to one year from the balance sheet date. These amounts were
approximately $26.2 million and $33.8 at the end of 1995 and 1994, respectively.
The decrease in receivables is primarily the result of the amounts written off
as doubtful accounts, including the Special Charge and the effect of the
revisions to the Company's credit and internal operating policies within the
consumer finance area.
During 1995, the Company invested $22.2 million in capital expenditures and
acquisitions compared to $9.0 million in 1994. Also, $20.1 million was paid out
in cash dividends. The Company maintains a $40.0 million unused line of credit.
This source of funds has not been used, but is available for future acquisitions
and growth, if needed.
15
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF FINANCIAL POSITION
Rollins, Inc. and Subsidiaries
- -------------------------------------------------------------------------------------------
At December 31, (In thousands except share data) 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and Short-Term Investments $ 33,623 $ 31,917
Marketable Securities 65,743 51,820
Trade Receivables, Net 88,542 101,900
Materials and Supplies 13,924 16,250
Deferred Income Taxes 7,447 4,445
Other Current Assets 13,486 8,567
------------ ------------
Current Assets 222,765 214,899
Equipment and Property, Net 37,799 27,989
Intangible Assets 42,013 42,092
Other Assets 12,348 10,285
------------ ------------
Total Assets $ 314,925 $ 295,265
------------ ------------
------------ ------------
LIABILITIES
Capital Lease Obligation $ 1,314 $ -
Accounts Payable 13,334 12,002
Accrued Insurance Expenses 14,314 14,258
Accrued Payroll 12,028 12,700
Unearned Revenue 14,695 15,567
Other Expenses 15,324 12,362
------------ ------------
Current Liabilities 71,009 66,889
Capital Lease Obligation 7,422 -
Long-Term Accrued Liabilities 15,936 22,538
Deferred Income Taxes 6,240 12,205
------------ ------------
Total Liabilities 100,607 101,632
------------ ------------
Commitments and Contingencies
STOCKHOLDERS' EQUITY
Common Stock, par value $1 per share; authorized
99,500,000 shares;41,431,814 shares issued 41,432 41,432
Earnings Retained 224,009 203,582
------------ ------------
265,441 245,014
Less--Common Stock in Treasury, at Cost,
5,573,589 shares in 1995; 5,605,412 shares 51,123 51,381
in 1994 ------------ ------------
Total Stockholders' Equity 214,318 193,633
------------ ------------
Total Liabilities and Stockholders' Equity $ 314,925 $ 295,265
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
16
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
Rollins, Inc. and Subsidiaries
- -----------------------------------------------------------------------------------------------------------
Years Ended December 31, (In thousands except per share data) 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Customer Services $ 620,435 $ 605,327 $ 575,802
-------- --------- ---------
COSTS AND EXPENSES
Cost of Services Provided 325,889 311,315 293,499
Depreciation and Amortization 7,950 8,130 8,310
Special Charge 12,000 - -
Sales, General and Administrative Expenses 216,234 208,289 203,483
Interest Income (4,988) (2,994) (2,390)
-------- --------- ---------
557,085 524,740 502,902
-------- --------- ---------
-------- --------- ---------
INCOME BEFORE INCOME TAXES 63,350 80,587 72,900
-------- --------- ---------
PROVISION (CREDIT) FOR INCOME TAXES
Current 31,919 30,201 30,339
Deferred (7,846) 825 (1,908)
-------- --------- ---------
24,073 31,026 28,431
-------- --------- ---------
NET INCOME $ 39,277 $ 49,561 $ 44,469
-------- --------- ---------
-------- --------- ---------
EARNINGS PER SHARE $ 1.10 $ 1.39 $ 1.25
-------- --------- ---------
-------- --------- ---------
AVERAGE SHARES OUTSTANDING 35,849 35,770 35,638
-------- --------- ---------
-------- --------- ---------
</TABLE>
STATEMENTS OF EARNINGS RETAINED
Rollins, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Years Ended December 31, (In thousands except per share data) 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at Beginning of Year $ 203,582 $ 171,862 $ 141,999
Net Income 39,277 49,561 44,469
Cash Dividends (20,076) (17,887) (15,680)
Other 1,226 46 1,074
-------- --------- ---------
Balance at End of Year $ 224,009 $ 203,582 $ 171,862
-------- --------- ---------
-------- --------- ---------
DIVIDENDS PER SHARE $ 0.56 $ 0.50 $ 0.44
-------- --------- ---------
-------- --------- ---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
17
<PAGE>
STATEMENTS OF CASH FLOWS
Rollins, Inc. and Subsidiaries
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Years Ended December 31, (In thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income $ 39,277 $ 49,561 $ 44,469
Noncash Charges (Credits) to Earnings:
Special Charge 12,000 - -
Depreciation and Amortization 7,950 8,130 8,310
Deferred Income Taxes (7,846) 825 (1,908)
Other, Net 4,461 2,382 3,152
(Increase) Decrease in Assets:
Trade Receivables 1,476 (14,257) (20,474)
Materials and Supplies 2,422 (421) 1,477
Other Current Assets (622) (3,183) 3,473
Other Non-Current Assets (1,167) (533) (612)
Increase (Decrease) in Liabilities:
Accounts Payable and Accrued Expenses 3,681 (2,676) 924
Unearned Revenue (1,040) 2,713 3,347
Long-Term Accrued Liabilities (6,602) (4,277) 3,643
Non-Current Deferred Income Taxes (7,080) 1,076 (5,767)
------------ ------------ ------------
Net Cash Provided by Operating Activities 46,910 39,340 40,034
------------ ------------ ------------
------------ ------------ ------------
INVESTING ACTIVITIES
Purchases of Equipment and Property (9,080) (8,256) (7,690)
Net Cash Used for Acquisition of Companies (4,373) (740) (397)
Marketable Securities, Net (12,463) (1,910) (20,334)
Proceeds from Sale of Equipment and Property 215 1,152 288
------------ ------------ ------------
Net Cash Used in Investing Activities (25,701) (9,754) (28,133)
------------ ------------ ------------
------------ ------------ ------------
FINANCING ACTIVITIES
Dividends Paid (20,076) (17,887) (15,680)
Treasury Stock Issued to Benefit Plans 573 2,116 1,820
------------ ------------ ------------
Net Cash Used in Financing Activities (19,503) (15,771) (13,860)
------------ ------------ ------------
------------ ------------ ------------
Net Increase (Decrease) in Cash
and Short-Term Investments 1,706 13,815 (1,959)
Cash and Short-Term Investments
at Beginning of Year 31,917 18,102 20,061
------------ ------------ ------------
Cash and Short-Term Investments
at End of Year $ 33,623 $ 31,917 $ 18,102
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
18
<PAGE>
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993, ROLLINS, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
BUSINESS DESCRIPTION - Rollins, Inc. is a national company with
headquarters located in Atlanta, Georgia, providing services to both residential
and commercial customers. The four primary services provided are termite and
pest control, protective services, lawn care, and plantscaping.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of Rollins, Inc. (the Company) and its subsidiaries. All
significant intercompany transactions and balances have been eliminated.
ESTIMATES USED IN THE PREPARATION OF FINANCIAL STATEMENTS - The preparation
of the financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
REVENUES - Revenue is recognized at the time services are performed.
CASH AND SHORT-TERM INVESTMENTS - The Company considers all investments
with a maturity of three months or less to be cash equivalents. Short-term
investments are stated at cost which approximates fair value.
MARKETABLE SECURITIES - Effective January 1, 1994, the Company adopted
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Under this statement, the Company's
marketable securities are classified as "available for sale" and have been
recorded at current market value with an offsetting adjustment to stockholders'
equity. The adoption of this statement did not have a material effect on the
Company's financial position.
MATERIALS AND SUPPLIES - Materials and supplies are recorded at the lower
of cost (first-in, first-out basis) or market.
EQUIPMENT AND PROPERTY - Depreciation and amortization are provided
principally on a straight-line basis over the estimated useful lives of the
related assets. Annual provisions for depreciation are computed using the
following asset lives: buildings, 10 to 40 years; and furniture, fixtures, and
operating equipment, 3 to 10 years. The cost of assets retired or otherwise
disposed of and the related accumulated depreciation and amortization are
eliminated from the accounts in the year of disposal with the resulting gain or
loss credited or charged to income. Expenditures for additions, major renewals
and betterments are capitalized and expenditures for maintenance and repairs
are expensed as incurred.
INSURANCE - The Company self-insures, up to specified limits, certain risks
related to general liability, workers' compensation and vehicle liability. The
estimated costs of existing and future claims under the self-insurance program
are accrued based upon historical trends as incidents occur, whether reported or
unreported (although actual settlement of the claims may not be made until
future periods) and may be subsequently revised based on developments relating
to such claims. The non-current portion of these estimated outstanding claims
comprises most of the long-term accrued liabilities balance shown on the
Statements of Financial Position.
ADVERTISING - Advertising expenses are charged to income during the year
in which they are incurred. The total advertising costs were approximately
$27,292,000, $25,834,000, and $23,517,000 in 1995, 1994, and 1993, respectively.
INCOME TAXES - The Company follows the practice of providing for income
taxes based on Statement of Financial Accounting Standards No. 109 (SFAS 109),
"Accounting for Income Taxes". SFAS 109 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events that
have been included in the financial statements or tax returns.
COMMON STOCK - Earnings per share is computed on the basis of weighted-
average shares outstanding. Stock options outstanding do not have a significant
dilutive effect.
2. SPECIAL CHARGE
A special charge of $12,000,000 ($7,440,000 after tax benefit or $.21 per
share) was recorded in the third quarter 1995 to write off doubtful accounts
receivable in the consumer finance operation, Rollins Acceptance Company, (RAC),
as a result of management's actions and assessment of the estimated realizable
value of the financed receivables portfolio at September 30, 1995.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993, ROLLINS, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
3. TRADE RECEIVABLES
Trade receivables, net, at December 31, 1995, totalling $88,542,000 and at
December 31, 1994, totalling $101,900,000 are net of allowances for doubtful
accounts of $9,991,000 and $5,944,000, respectively. Trade receivables include
installment receivable amounts which are due subsequent to one year from the
balance sheet dates. These amounts were approximately $26,209,000 and
$33,849,000 at the end of 1995 and 1994, respectively. The carrying amount of
installment receivables approximates fair value because the interest rates
approximate market rates.
4. EQUIPMENT AND PROPERTY
Equipment and property are presented at cost less accumulated depreciation
and are detailed as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Buildings $ 9,238 $ 9,014
Operating equipment 55,339 59,168
Furniture and fixtures 12,018 10,688
Computer equipment under
Capital lease 8,736 -
--------- ---------
85,331 78,870
Less - accumulated depreciation 50,715 54,016
--------- ---------
34,616 24,854
Land 3,183 3,135
--------- ---------
$ 37,799 $ 27,989
--------- ---------
--------- ---------
</TABLE>
5. INTANGIBLE ASSETS
Intangible assets represent goodwill arising from acquisitions and are
stated at cost less accumulated amortization. Intangibles which arose from
acquisitions prior to November, 1970 are not being amortized for financial
statement purposes, since, in the opinion of management, there has been no
decrease in the value of the acquired businesses. Intangibles arising from
acquisitions since November, 1970 are being amortized over forty years.
6. INCOME TAXES
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes".
SFAS 109 requires recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between the
financial and tax basis using enacted tax rates in effect for the year in
which the differences are expected to reverse. These differences are more
inclusive in nature than differences determined under previously applicable
accounting principles.
A reconciliation between taxes computed at the statutory rate on the income
before income taxes and the provision for income taxes is as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- ----------------------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes
at statutory rate $ 22,172 $28,205 $25,515
State income taxes
(net of federal benefit) 3,015 3,286 3,137
Other (1,114) (465) (221)
-------- ------- -------
$ 24,073 $31,026 $28,431
-------- ------- -------
-------- ------- -------
</TABLE>
The provision for income taxes was based on a 38.0%, 38.5%, and 39.0%
estimated effective income tax rate on income before income taxes for the years
ended December 31, 1995, 1994, and 1993, respectively. The effective income tax
rate differs from the annual federal statutory tax rate primarily because of
state income taxes.
Income taxes remitted were $37,708,000, $33,915,000, and $25,796,000 for
the years ended December 31, 1995, 1994, and 1993, respectively.
The tax effect of the temporary differences which comprise the current and
non-current deferred income tax debits (credits) amounts is as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- --------------------------------------------------------------------
<S> <C> <C>
Deferred Tax Assets (Liabilities)
Insurance reserves $ 11,925 $ 13,801
Safe harbor lease (16,374) (16,955)
Bad debts 2,268 1,592
Other 3,388 (6,198)
-------- --------
$ 1,207 $ (7,760)
-------- ---------
-------- ---------
</TABLE>
During 1982, the Company entered into a twenty-year "Safe Harbor" lease
agreement under the Economic Recovery Tax Act of 1981 for the purchase of
federal income tax benefits. The Company has invested $29,096,000 in the lease.
The investment in tax benefits from the safe harbor lease agreement has been
allocated between investment tax credit benefits and tax deduction timing
benefits. The investment amount has been reflected as a reduction in non-
current deferred income taxes. Amortization of timing benefits into expense is
computed at a constant rate of return.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993, ROLLINS, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
7. COMMITMENTS AND CONTINGENCIES
The Company has a capitalized lease obligation and several operating
leases. The minimum lease payments under the capital lease and non-cancelable
operating leases with terms in excess of one year, in effect at December 31,
1995, are summarized as follows:
<TABLE>
<CAPTION>
Capitalized Operating
(In thousands) Lease Leases
- -------------------------------------------------------------------------------
<S> <C> <C>
1996 $ 1,687 $18,262
1997 2,024 13,997
1998 2,024 9,582
1999 2,024 6,947
2000 2,024 5,569
Thereafter 337 39,957
------- -------
$10,120 $94,314
-------
-------
Amount representing interest (1,384)
-------
Present value of obligation 8,736
Portion due within one year (1,314)
-------
Long-term obligation $ 7,422
-------
-------
</TABLE>
Total rental expense under operating leases charged to operations was
$25,701,000, $24,867,000, and $24,274,000 for the years ended December 31, 1995,
1994, and 1993, respectively.
During November 1995, Orkin and the Attorney General of Missouri and
private plaintiffs reached an agreement in settlement of a class action
regarding treatments for termites for residential customers with basement homes
contracted for between January 1, 1987 and May 15, 1993. The presiding judge of
the Circuit Court of the City of St. Louis approved the settlement on December
13, 1995. The resolution does not constitute an admission of wrongdoing by the
Company and did not have a material adverse effect on the Company's financial
position, results of operations, or liquidity.
In the normal course of business, the Company is a defendant in a number of
lawsuits which allege that plaintiffs have been damaged as a result of the
rendering of services by Company personnel and equipment. The Company is
actively contesting these actions. It is the opinion of Management that the
outcome of these actions will not have a material adverse effect on the
Company's financial position, results of operations, or liquidity.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993, ROLLINS, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
8. BUSINESS SEGMENT INFORMATION
The Company operates two major business segments. Certain information with
respect to the Company's business segments is as follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Orkin $547,797 $530,099 $506,399
Rollins Protective 59,233 61,692 57,698
Other 13,405 13,536 11,705
-------- -------- --------
$620,435 $605,327 $575,802
-------- -------- --------
-------- -------- --------
OPERATING INCOME
Orkin $ 76,754 $ 78,711 $ 70,720
Rollins Protective 4,476 6,579 5,896
Other (11,037)(1) 3,640 4,504
-------- -------- --------
70,193 88,930 81,120
OTHER
Corporate expenses, net (11,831) (11,337) (10,610)
Interest income 4,988 2,994 2,390
-------- -------- --------
Income before
income taxes $ 63,350 (1) $ 80,587 $ 72,900
-------- -------- --------
-------- -------- --------
IDENTIFIABLE ASSETS
Orkin $167,037 $169,750 $161,850
Rollins Protective 22,618 21,236 18,420
Other 125,270 104,279 86,924
-------- -------- --------
$314,925 $295,265 $267,194
-------- -------- --------
-------- -------- --------
DEPRECIATION AND AMORTIZATION EXPENSE
Orkin $ 6,154 $ 6,654 $ 6,992
Rollins Protective 634 448 433
Other 1,162 1,028 885
-------- -------- --------
$ 7,950 $ 8,130 $ 8,310
-------- -------- --------
-------- -------- --------
CAPITAL EXPENDITURES
Orkin $ 14,413 $ 6,530 $ 5,919
Rollins Protective 1,923 466 413
Other 1,690 1,372 1,395
-------- -------- --------
$ 18,026 $ 8,368 $ 7,727
-------- -------- --------
-------- -------- --------
</TABLE>
(1) INCLUDES A SPECIAL CHARGE OF $12,000,000 ($7,440,000 AFTER TAX BENEFIT OR
$.21 PER SHARE) AT SEPTEMBER 30, 1995.
9. EMPLOYEE BENEFIT PLANS
The Company maintains a noncontributory tax-qualified defined benefit
retirement plan covering all employees meeting certain age and service
requirements. The qualified plan provides benefits based on the average
compensation for the highest five years during the last ten years of credited
service (as defined) in which compensation was received, and the average
anticipated Social Security covered earnings. The Company funds the Plan with
at least the minimum amount required by ERISA.
The Company's net pension expense for the past three years is summarized as
follows:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits
earned during the period $ 2,844 $ 2,749 $ 2,345
Interest cost on projected
benefit obligation 3,958 3,524 3,248
Actual return on plan assets (9,236) 1,445 (4,218)
Net amortization
of transition asset (1,181) (1,181) (1,099)
Deferral of net
investment gain (loss) 4,778 (5,718) 227
------- ------- -------
Net pension expense $ 1,163 $ 819 $ 503
------- ------- -------
------- ------- -------
</TABLE>
The funded status of the Plan is summarized as follows at December 31:
<TABLE>
<CAPTION>
(In thousands) 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation
including vested benefits of
$41,850 in 1995 and
$32,261 in 1994 $ (45,553) $(34,994)
Effect of projected future
compensation levels (9,131) (8,412)
--------- --------
Projected benefit obligation (54,684) (43,406)
Plan assets at fair value 52,056 44,837
--------- --------
Plan assets in excess of (less than)
projected obligation (2,628) 1,431
Unrecognized net loss 6,204 4,489
Unrecognized net asset at
transition being amortized over
10 years (1,725) (2,876)
Unrecognized prior service cost (325) (355)
--------- --------
Prepaid pension expense
included in other assets $ 1,526 $ 2,689
--------- --------
--------- --------
</TABLE>
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993, ROLLINS, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
At December 31, 1995, the Plan's assets were comprised of listed common
stocks and U.S. Government and corporate securities. Included in the assets of
the Plan were shares of Rollins common stock with a market value of $6,697,000.
The expected long-term rate of return on plan assets was 9.5% in 1995, 1994, and
1993. The weighted-average discount rate used in determining the projected
benefit obligation was increased from 8.0% in 1993 to 8.5% in 1994, and
decreased to 7.5% in 1995 to more closely approximate rates on high-quality,
long-term obligations. The assumed growth rate of compensation was 5.5% in
1993 and 1994, and 4.5% in 1995.
The Company sponsors a deferred compensation 401(k) plan that is available
to substantially all employees with six months of service. The charges to
expense for the Company match were $1,627,000 in 1995, $1,465,000 in 1994, and
$1,379,000 in 1993.
The Company has an Employee Incentive Stock Option Plan (1984 Plan),
adopted in October, 1984, under which 1,200,000 shares of common stock were
subject to options to be granted during the ten-year period ended October, 1994.
The options were granted at the fair market value of the shares on the date of
the grant and expire ten years from the date of the grant, if not exercised. No
additional options will be granted under this Plan.
Option transactions during the last three years for the 1984 Plan are
summarized as follows:
<TABLE>
<CAPTION>
(Number of shares) 1995 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at
January 1, 73,857 114,206 117,781
Granted - - 9,900
Exercised (6,696) (36,009) (9,965)
Cancelled (4,550) (4,340) (3,510)
------ ------- -------
Outstanding at
December 31, 62,611 73,857 114,206
Exercisable at
December 31, 50,501 46,857 70,976
------ ------ -------
Option price ranges per share:
Granted $ - $ - $ 25.50
Exercised 7.00-19.08 5.92-25.50 5.92-13.25
Cancelled 11.25-25.50 5.92-25.50 13.58-25.50
Outstanding 8.50-25.50 7.00-25.50 5.92-25.50
</TABLE>
On January 25, 1994, the Company adopted a new Employee Stock Incentive
Plan (1994 Plan) under which 1,200,000 shares of common stock are subject to
grants through January 25, 2004 under various stock incentive programs. The
options were granted at the fair market value of the shares on the date of the
grant and expire ten years from the date of the grant, if not exercised.
Grant and option transactions during the last two years for the 1994 Plan
are summarized as follows:
<TABLE>
<CAPTION>
(Number of shares) 1995 1994
- -----------------------------------------------------------------------------
<S> <C> <C>
Outstanding at
January 1, 193,100 -
Granted 17,000 200,900
Exercised - -
Cancelled (15,100) (7,800)
-------- -------
Outstanding at
December 31, 195,000 193,100
Exercisable at
December 31, 21,140 -
-------- -------
Option price ranges per share:
Granted $ 24.25 $ 28.38
Exercised -- --
Cancelled 24.25-28.38 28.38
Outstanding 24.25-28.38 28.38
</TABLE>
23
<PAGE>
REPORT OF MANAGEMENT
To the Stockholders of Rollins, Inc.:
We have prepared the accompanying financial statements and related
information included herein for the years ended December 31, 1995, 1994 and
1993. The opinion of Arthur Andersen LLP, the Company's independent auditors,
on those financial statements is included herein. The primary responsibility
for the integrity of the financial information included in this annual report
rests with management. Such information was prepared in accordance with
generally accepted accounting principles, appropriate in the circumstances,
based on our best estimates and judgements and giving due consideration to
materiality.
Rollins, Inc. maintains internal accounting control systems which are
adequate to provide reasonable assurance that assets are safeguarded from loss
or unauthorized use and which produce records adequate for preparation of
financial information. The system and controls and compliance therewith are
reviewed by an extensive program of internal audits and by our independent
auditors. There are limits inherent in all systems of internal accounting
control based on the recognition that the cost of such a system should not
exceed the benefits to be derived. We believe the Company's system provides
this appropriate balance.
The Board of Directors pursues its review and oversight role for these
financial statements through an Audit Committee composed of three outside
directors. The Audit Committee's duties include recommending to the Board of
Directors the appointment of an independent accounting firm to audit the
financial statements of Rollins, Inc. The Audit Committee meets periodically
with management and the Board of Directors. It also meets with representatives
of the internal and independent auditors and reviews the work of each to insure
that their respective responsibilities are being carried out and to discuss
related matters. Both the internal and independent auditors have direct access
to the Audit Committee.
R. Randall Rollins Gene L. Smith
CHAIRMAN OF THE BOARD AND CHIEF FINANCIAL OFFICER,
CHIEF EXECUTIVE OFFICER SECRETARY, AND TREASURER
Atlanta, Georgia
February 12, 1996
REPORT OF INDEPENDENT AUDITORS
To the Directors and Stockholders of Rollins, Inc.:
We have audited the accompanying statements of financial position of
Rollins, Inc. (a Delaware corporation) and subsidiaries as of December 31, 1995
and 1994 and the related statements of income, earnings retained and cash flows
for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rollins, Inc. and
subsidiaries as of December 31, 1995 and 1994 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Atlanta, Georgia
February 12, 1996
24
<PAGE>
Directors, Officers and Stockholders' Information
- --------------------------------------------------------------------------------
DIRECTORS
JOHN W. ROLLINS
Chairman of the Board and Chief Executive Officer of Rollins Truck Leasing Corp.
(vehicle leasing and transportation), Chairman of the Board and Chief Executive
Officer of Rollins Environmental Services, Inc. (hazardous waste treatment and
disposal)
HENRY B. TIPPIE+
Chairman of the Board and Chief Executive Officer of Tippie Communications, Inc.
(radio stations)
R. RANDALL ROLLINS*
Chairman of the Board and Chief Executive Officer of Rollins, Inc., Chairman of
the Board and Chief Executive Officer of RPC, Inc. (oil and gas field
services, and boat manufacturing)
WILTON LOONEY+
Honorary Chairman of the Board of Genuine Parts Company (automotive parts
distributor)
JAMES B. WILLIAMS+
Chairman of the Board and Chief Executive Officer of SunTrust Banks, Inc. (bank
holding company)
GARY W. ROLLINS*
President and Chief Operating Officer of Rollins, Inc.
BILL J. DISMUKE
Retired President of Edwards Baking Company
*MEMBER OF THE EXECUTIVE COMMITTEE
+MEMBER OF THE AUDIT AND COMPENSATION COMMITTEES
OFFICERS
R. RANDALL ROLLINS
Chairman of the Board and Chief Executive Officer
GARY W. ROLLINS
President and Chief Operating Officer
GENE L. SMITH
Chief Financial Officer, Secretary, and Treasurer
STOCKHOLDERS' INFORMATION
ANNUAL MEETING
The Annual Meeting of the Stockholders will be held at 9:30 a.m. Tuesday, April
23, 1996, at the Company's corporate offices in Atlanta, Georgia.
TRANSFER AGENT AND REGISTRAR
For inquiries related to stock certificates, including changes of address, lost
certificates, dividends, and tax forms, please contact:
SunTrust Bank
Stock Transfer Department
P.O. Box 4625
Atlanta, Georgia 30302
Telephone: 1-800-568-3476
STOCK EXCHANGE INFORMATION
The Common Stock of the Company is listed on the New York and Pacific Stock
Exchanges and traded on the Philadelphia, Chicago and Boston Exchanges under
the symbol ROL.
DIVIDEND REINVESTMENT PLAN
This Plan provides a simple, convenient, and inexpensive way for stockholders
to invest cash dividends in additional Rollins, Inc. shares. For further
information, contact SunTrust Bank, Atlanta at the above address or write to
the Secretary at the Company's mailing address.
FORM 10-K
The Company's annual report on Form 10-K to the Securities and Exchange
Commission provides certain additional information. Stockholders may obtain a
copy by contacting the Secretary at the Company's mailing address.
CORPORATE OFFICES
Rollins, Inc.
2170 Piedmont Road, N.E.
Atlanta, Georgia 30324
MAILING ADDRESS
Rollins, Inc.
P.O. Box 647
Atlanta, Georgia 30301
TELEPHONE
(404) 888-2000
25
<PAGE>
EXHIBIT (21)
<PAGE>
EXHIBIT 21
List of Subsidiaries
of
Rollins, Inc.
The following list sets forth subsidiaries of Rollins, Inc. Each corporation
whose name is indented is a wholly-owned subsidiary of the corporation next
above which is not indented.
State/Country of
Name Incorporation
---- -----------------
Orkin Exterminating Company, Inc. Delaware
Orkin Systems, Inc. Delaware
Dettelbach Pesticide Corporation Georgia
Kinro Advertising Company Delaware
Orkin Expansion, Inc. Delaware
Orkin S.A. de C.V. Mexico
Orkin International, Inc. Delaware
Orkin Canada, Inc. Canada
Orkin (Bahamas) Limited Bahamas
Rollins Continental, Inc. New York
Rollins Expansion, Inc. Delaware
Rollins Supply, Inc. Delaware
Red Diamond Insurance Co. Vermont
<PAGE>
EXHIBIT (23)
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports, included (or incorporated by reference) in this Form 10-K, into
the Company's previously filed Form S-8 Registration Statement (No. 33-6404),
Form S-8 Registration Statement (No. 33-26056), Form S-8 Registration
Statement (No. 33-52355), and Form S-3 Registration Statement (No. 33-15360).
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 27, 1996
<PAGE>
EXHIBIT (24)
<PAGE>
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned constitutes and
appoints R. Randall Rollins and/or Gary W. Rollins, or either of them as his
true and lawful attorney-in-fact and agent in any and all capacities to sign
filings by Rollins, Inc. of Form 10-K Annual Reports and any and all
amendments thereto (including post-effective amendments) and to file the
same, with all exhibits, and any other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney,
in the capacities indicated, as of this 12th day of February, 1996.
/s/ WILTON LOONEY
-------------------------------
Wilton Looney, Director
Witness:
/s/ NORMA S. COOK
- -------------------------------
<PAGE>
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned constitutes and
appoints R. Randall Rollins and/or Gary W. Rollins, or either of them as his
true and lawful attorney-in-fact and agent in any and all capacities to sign
filings by Rollins, Inc. of Form 10-K Annual Reports and any and all
amendments thereto (including post-effective amendments) and to file the
same, with all exhibits, and any other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney,
in the capacities indicated, as of this 12th day of February, 1996.
/s/ JOHN W. ROLLINS
-------------------------------
John W. Rollins, Director
Witness:
/s/ CINDY ALFANO
- -------------------------------
<PAGE>
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned constitutes and
appoints R. Randall Rollins and/or Gary W. Rollins, or either of them as his
true and lawful attorney-in-fact and agent in any and all capacities to sign
filings by Rollins, Inc. of Form 10-K Annual Reports and any and all
amendments thereto (including post-effective amendments) and to file the
same, with all exhibits, and any other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney,
in the capacities indicated, as of this 12th day of February, 1996.
/s/ HENRY B. TIPPIE
-------------------------------
Henry B. Tippie, Director
Witness:
/s/ LINDA M. POTTS
- -------------------------------
<PAGE>
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned constitutes and
appoints R. Randall Rollins and/or Gary W. Rollins, or either of them as his
true and lawful attorney-in-fact and agent in any and all capacities to sign
filings by Rollins, Inc. of Form 10-K Annual Reports and any and all
amendments thereto (including post-effective amendments) and to file the
same, with all exhibits, and any other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney,
in the capacities indicated, as of this 12th day of February, 1996.
/s/ JAMES B. WILLIAMS
-------------------------------
James B. Williams, Director
Witness:
/s/ MARY A. WALDEN
- -------------------------------
<PAGE>
POWER OF ATTORNEY
Know All Men by These Presents, that the undersigned constitutes and
appoints R. Randall Rollins and/or Gary W. Rollins, or either of them as his
true and lawful attorney-in-fact and agent in any and all capacities to sign
filings by Rollins, Inc. of Form 10-K Annual Reports and any and all
amendments thereto (including post-effective amendments) and to file the
same, with all exhibits, and any other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney,
in the capacities indicated, as of this 12th day of March, 1996.
/s/ BILL J. DISMUKE
-------------------------------
Bill J. Dismuke, Director
Witness:
/s/ DONNA S. DISMUKE
- -------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION AND STATEMENTS OF
INCOME AND EARNINGS RETAINED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 33,623
<SECURITIES> 65,743
<RECEIVABLES> 98,533
<ALLOWANCES> 9,991
<INVENTORY> 13,924
<CURRENT-ASSETS> 222,765
<PP&E> 88,514
<DEPRECIATION> 50,715
<TOTAL-ASSETS> 314,925
<CURRENT-LIABILITIES> 71,009
<BONDS> 0
0
0
<COMMON> 41,432
<OTHER-SE> 172,886
<TOTAL-LIABILITY-AND-EQUITY> 314,925
<SALES> 0
<TOTAL-REVENUES> 620,435
<CGS> 0
<TOTAL-COSTS> 325,889
<OTHER-EXPENSES> 231,196
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 63,350<F1>
<INCOME-TAX> 24,073
<INCOME-CONTINUING> 39,277<F1>
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,277<F1>
<EPS-PRIMARY> 1.10<F1>
<EPS-DILUTED> 1.10<F1>
<FN>
<F1>Includes a Special Charge of $12,000,000 ($7,440,000 after tax benefit
or $.21 per share) relating to the write off of doubtful accounts at
September 30, 1995, in the consumer finance operation, Rollins Acceptance
Company.
</FN>
</TABLE>
