UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934
Date of Report (Date of earliest event reported) August 18, 2000
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ROLLINS, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-04422 51-0068479
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
2170 Piedmont Road, N.E., Atlanta, Georgia
(Address of principal executive offices)
30324
(Zip Code)
(404) 888-2000
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On May 14, 1999, a lawsuit was filed in the Circuit Court of
Macon County, Alabama against the Registrant's subsidiary,
Orkin Exterminating Company, Inc. (the "Company") alleging
breach of contract and fraud. The suit asserts a failure to
treat and inspect the residence of the plaintiff and to repair
the termite damage and alleges that the Company concealed
alleged misconduct by suppressing material facts. In
particular, the plaintiff alleges that the Company failed to
adequately perform the initial treatment; failed to tell her
about the extent of damages; failed to perform required
reinspections; and failed to perform repairs as required. In
general, the plaintiff claims to have been misled as to the
quality of work performed. The Company defended itself by
asserting that the plaintiff had not been misled, but had been
told about her damages initially and subsequently. The Company
also presented evidence that there was structural damage not
attributable to termites, that there were significant
conditions conducive to termites present in and around the
structure and that there was no evidence of live termites
found in the damaged areas since 1989. On August 18, 2000, the
jury in the matter of The Estate of Artie Mae Jeter v. Orkin
Exterminating Company, Inc. and Bill Maxwell, returned a
verdict of $80.8 million against the Company. The award
consisted of $800,000 in compensatory damages (including
property damage and mental anguish) and $80.0 million in
punitive damages. The jury found simply that the contract had
been breached and the Company had committed fraud. The judge
entered an order of judgment on August 28, 2000.
This case arose out of a contract entered into by the
plaintiff and the Company in 1977 for termite treatment and
control that carried a repair guarantee. In 1989, the Company
made repairs of $23,000 to the plaintiff's home. Since the
retreatment and repairs made to the home in 1989, there have
been no termites reported by the customer or found in
subsequent inspections. The plaintiff continued on as an Orkin
customer for the next ten years, never complaining of termite
problems to Orkin.
It is the Company's position that it complied with its
contractual obligations and that it did not attempt to conceal
alleged misconduct or suppress material facts. The Company
will vigorously pursue post-trial relief and its right to
appeal. The post-trial procedures are expected to take several
months. The Company believes it has valid issues and defenses
to raise in its post-trial efforts; however, if the verdict is
permitted to stand, it would have a material adverse impact on
the Registrant and the Company. Although it is the opinion of
management and their attorneys that this verdict will be
substantially reduced and that the ultimate resolution of this
litigation will not have a material impact on the Registrant
and the Company, there is no assurance that the verdict will
be reduced or reversed on appeal.
FORWARD LOOKING STATEMENTS
This Form 8-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements include statements
regarding the expected impact of the outcome of litigation in
the matter of The Estate of Artie Mae Jeter v. Orkin
Exterminating Company, Inc. and Bill Maxwell on the Company's
financial condition and management's expectations regarding
the potential reduction in the amount of the judgment. The
actual results of the Company could differ materially from
those indicated by the forward-looking statements because of
various risks and uncertainties including, without limitation,
the possibility of an appellate court ruling against the
Company in regard to the above mentioned litigation; the
potential inability of the Company to obtain a bond, letter of
credit or other type of surety and the possibility that the
cost of any bond, letter of credit or other surety, if
required as part of the appeals process could exceed the
Registrant's expectations. All of the foregoing risks and
uncertainties are beyond the ability of the Company to
control, and in many cases the Company cannot predict the
risks and uncertainties that could cause its actual results to
differ materially from those indicated by the forward-looking
statements.
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SIGNATURES
Pursuant to the requirements 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.
Date: September 13, 2000 By: /s/ Gary W. Rollins
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Gary W. Rollins
President and Chief
Operating Officer
