-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jot5mqn79t6mXWAK9gViItNhdImZpIefrlhezGHkZTojt5lWwsmsmu1Lzw/bQkID 2ci218cs/oylxTiiUBVpyw== 0000912057-95-003607.txt : 19950517 0000912057-95-003607.hdr.sgml : 19950516 ACCESSION NUMBER: 0000912057-95-003607 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROLLINS INC CENTRAL INDEX KEY: 0000084839 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TO DWELLINGS & OTHER BUILDINGS [7340] IRS NUMBER: 510068479 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04422 FILM NUMBER: 95537454 BUSINESS ADDRESS: STREET 1: 2170 PIEDMONT RD NE CITY: ATLANTA STATE: GA ZIP: 30324 BUSINESS PHONE: 4048882362 MAIL ADDRESS: STREET 1: 2170 PIEDMONT ROAD NE CITY: ATLANTA STATE: GA ZIP: 30324 10-Q 1 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1995. Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 [ ] For the transition period from _____ to _____ Commission file number 1-4422 ____________________________ 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 ____________________________ 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 [ ] At March 31, 1995, there were 35,847,475 shares of Common Stock $1 Par Value, outstanding. ROLLINS, INC. AND SUBSIDIARIES INDEX Part I Financial Information Page No. -------- Statements of Financial Position - March 31, 1995 and December 31, 1994 1 Statements of Income and Earnings Retained - three months ended March 31, 1995 and 1994 2 Statements of Cash Flows - three months ended March 31, 1995 and 1994 3 Notes to Financial Statements 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 6-8 Part II Other Information 9 ROLLINS, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL POSITION (In thousands, except share data) (Unaudited)
March 31, December 31, 1995 1994 --------- ------------ ASSETS Cash and Short-Term Investments $ 48,054 $ 31,917 Marketable Securities 52,943 51,820 Trade Receivables, Net 100,578 101,900 Materials and Supplies 17,733 16,250 Deferred Income Taxes 4,575 4,445 Other Current Assets 8,911 8,567 --------- ------------ Current Assets 232,794 214,899 Equipment and Property, Net 28,609 27,989 Intangible Assets 42,072 42,092 Other Assets 10,278 10,285 --------- ------------ Total Assets $ 313,753 $ 295,265 ========== ============= LIABILITIES Accounts Payable $ 16,666 $ 12,002 Accrued Insurance Expenses 16,183 14,258 Accrued Payroll 12,844 12,700 Unearned Revenue 16,102 15,567 Other Expenses 16,607 12,362 --------- ------------ Current Liabilities 78,402 66,889 Deferred Income Taxes 12,289 12,205 Long-Term Accrued Liabilities 25,864 22,538 --------- ------------ Total Liabilities 116,555 101,632 --------- ------------ 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 206,954 203,582 --------- ------------ 248,386 245,014 Less--Common Stock In Treasury, At Cost, 5,584,339 in 1995; 5,605,412 shares in 1994 51,188 51,381 --------- ------------ Total Stockholders' Equity 197,198 193,633 --------- ------------ Total Liabilities and Stockholders' Equity $ 313,753 $ 295,265 ========== =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS. 1 of 10 ROLLINS, INC. AND SUBSIDIARIES STATEMENTS OF INCOME AND EARNINGS RETAINED (In thousands, except share data) (Unaudited)
Three Months Ended March 31, ------------------------- 1995 1994 ------------ ------------ REVENUES Customer Services $ 142,654 $ 136,443 ------------ ------------ COSTS AND EXPENSES Cost of Services Provided 73,238 70,152 Sales, General and Administrative Expenses 55,932 53,561 Depreciation and Amortization 1,839 1,981 Interest Income (946) (451) ------------ ------------ 130,063 125,243 ------------ ------------ INCOME BEFORE INCOME TAXES 12,591 11,200 ------------ ------------ PROVISION (CREDIT) FOR INCOME TAXES Current 5,340 5,139 Deferred (556) (827) ------------ ------------ 4,784 4,312 ------------ ------------ NET INCOME 7,807 6,888 ------------ ------------ EARNINGS RETAINED Balance at Beginning of Period 203,582 171,862 Cash Dividends (5,018) (4,460) Other 583 119 ------------ ------------ BALANCE AT END OF PERIOD $ 206,954 $ 174,409 ============ ============ EARNINGS PER SHARE $ 0.22 $ 0.19 ============ ============ WEIGHTED AVERAGE SHARES OUTSTANDING 35,837,688 35,678,930 ============ ============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS. 2 of 10 ROLLINS, INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Three Months Ended March 31, ---------------------- 1995 1994 -------- -------- OPERATING ACTIVITIES Net Income $ 7,807 $ 6,888 Noncash Charges (Credits) to Earnings: Depreciation and Amortization 1,839 1,981 Deferred Income Taxes (556) (827) Other, Net 1,341 709 (Increase) Decrease in: Trade Receivables 1,308 (1,033) Materials and Supplies (1,483) (2,336) Other Current Assets (152) (820) Increase (Decrease) in: Accounts Payable and Accrued Expenses 10,777 8,678 Unearned Revenue 535 1,327 Non-Current Deferred Income Taxes (200) 292 Long-Term Accrued Liabilities 3,326 (175) Other Non-Current Assets (207) (112) -------- -------- Net Cash Provided by Operating Activities 24,335 14,572 -------- -------- INVESTING ACTIVITIES Purchases of Equipment and Property (2,855) (2,234) Net Cash Used for Acquisition of Companies (324) (27) Proceeds from Sales of Equipment and Property 119 -- Marketable Securities, Net (541) (426) -------- -------- Net Cash Used in Investing Activities (3,601) (2,687) -------- -------- FINANCING ACTIVITIES Dividends Paid (5,018) (4,460) Treasury Stock Issued to Benefit Plans 421 290 -------- -------- Net Cash Used in Financing Activities (4,597) (4,170) -------- -------- Net Increase (Decrease) in Cash and Short-Term Investments 16,137 7,715 Cash and Short-Term Investments at Beginning of Period 31,917 18,102 -------- -------- Cash and Short-Term Investments at End of Period $ 48,054 $ 25,817 ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS. 3 of 10 ROLLINS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1. BASIS OF PREPARATION The consolidated financial statements included herein have been prepared by the Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the financial statements and related notes contained in the Registrant's annual report on Form 10-K for the year ended December 31, 1994. In the opinion of management, the consolidated financial statements included herein contain all normal recurring adjustments necessary to present fairly the financial position of the Registrant as of March 31, 1995 and December 31, 1994, and the results of operations and cash flows for the three months ended March 31, 1995 and 1994. NOTE 2. PROVISION FOR INCOME TAXES The book provision for income taxes includes the liability for state income taxes, net of the federal income tax benefit. The deferred provision for income taxes arises from the changes during the year in the company's net deferred tax asset or liability. NOTE 3. EARNINGS PER SHARE Earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the respective periods. 4 of 10 ROLLINS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 4. COMMITMENTS AND CONTINGENCIES On May 26, 1993, the Attorney General of Missouri and several Missouri residents who received termite treatment from Orkin, on behalf of themselves and an alleged class, filed an action in the City of St. Louis Circuit Court. The Attorney General has alleged violations of the Missouri Merchandising Practices Act. The private plaintiffs have alleged fraud and breach of certain termite extermination contracts. The Plaintiffs' claims are based on allegations that the Company failed to apply termiticides in accordance with termiticide labels and its advertising. Plaintiffs are collectively seeking restitution for claimed losses, civil penalties, compensatory and punitive damages, and litigation expenses, including attorneys' fees. On June 1, 1994, the Court ruled Plaintiffs' would be permitted to pursue a class action lawsuit against Orkin. The class was limited to those Missouri customers who purchased termite extermination services between January 1, 1987 and May 15, 1993, inclusively, and who have basement or crawl space foundation walls, in which an organophosphate termiticide was used. The Company is vigorously defending this lawsuit. Except for the class certification, the judicial system has not ruled on any substantive issues in this case. Due to the preliminary nature of this action, the final outcome of the litigation cannot be determined at this time. However, it is the opinion of management that the ultimate resolution of this action will not have a material adverse effect on the Company's financial position, results of operations, or liquidity and will take an extended time to resolve. 5 of 10 ROLLINS, INC. AND SUBSIDIARIES PART I. ITEM 2. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION FOR THE FIRST QUARTER ENDED MARCH 31, 1995 RESULTS OF OPERATIONS SELECTED INDUSTRY SEGMENT DATA
Three Months Ended March 31, ------------------------- (In thousands) 1995 1994 --------- --------- REVENUES Orkin $ 125,253 $ 118,360 Rollins Protective 14,218 14,872 Other 3,183 3,211 --------- --------- $ 142,654 $ 136,443 ========= ========= OPERATING INCOME Orkin $ 13,064 $ 11,487 Rollins Protective 1,341 1,330 Other 496 938 --------- --------- $ 14,901 $ 13,755 ========= =========
6 of 10 ROLLINS, INC. AND SUBSIDIARIES PART I. ITEM 2. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE FIRST QUARTER ENDED MARCH 31, 1995 GENERAL OPERATING COMMENTS Rollins, Inc. reported another quarter of record earnings. Despite the residual effect of 1994's disappointing pest season, revenues for the first quarter ended March 31, 1995 reached $142.7 million, an increase of $6.2 million or 4.6% from the prior year period. Operating income increased $1.1 million or 8.3% to $14.9 million for the quarter. Net income for the quarter grew 13.3% to $7.8 million and earnings per share was 22 cents, compared to 19 cents a year ago, a 15.8% improvement. For the quarter, the Orkin Group's operating income increased 13.7% to $13.1 million on revenues of $125.3 million which grew 5.8% over 1994. These results provided improved operating margins of 10.4%, compared to 9.7% in the prior year. Rollins Protective Services' operating income increased 0.8% to $1.3 million on revenues of $14.2 million. Detail segment information follows. ORKIN 1995 VERSUS 1994 Revenues increased 5.8% to $125.3 million and operating income increased 13.7% to $13.1 million for the first quarter ended March 31, 1995. Pest Control and Termite services increased their sales dollars and customer base for the quarter. During the first quarter, Orkin expanded the availability of it's 24-hour 1-800-800-ORKIN customer and prospect phone lead access service. Also, a sophisticated, $1 million Telecenter was opened, designed to centrally monitor customer service quality and generate additional sales by cross-marketing to our 1.6 million customers. Geographic expansion of the Agribusiness service to 15 new markets was accomplished during the first quarter, and should positively contribute to operating performance throughout 1995. ROLLINS PROTECTIVE SERVICES 1995 VERSUS 1994 For the first quarter, Rollins Protective Services (RPS) had revenues of $14.2 million, a decrease of 4.4%, however, operating income was relatively unchanged at $1.3 million, primarily due to a 5.6% improvement in operating margins. In the first quarter of 1995, RPS sales focus shifted to new product introductions, including the VIP 2000 marketed for the middle income homeowner and "Safe Start", a new homebuilder product. RPS will continue to focus marketing efforts on the new products as well as continuing successful programs tested in 1994 targeted at customer retention and National Accounts. 7 of 10 ROLLINS, INC. AND SUBSIDIARIES PART I. ITEM 2. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE FIRST QUARTER ENDED MARCH 31, 1995 OTHER 1995 VERSUS 1994 Other businesses revenue and operating income decreased 0.9% and 47.1%, respectively, due to revisions of the Company's credit and internal operating policies within the credit service center during the fourth quarter of 1994. The volume of Company financed sales is lower than last year, as the revised policies redirected marketing efforts toward stronger customer demographics. Also, Corporate management is continuing to monitor the implementation and effectiveness of these policy changes. FINANCIAL CONDITION
(In thousands) March 31, December 31, 1995 1994 ---- ---- Cash and Short-Term Investments $ 48,054 $ 31,917 Marketable Securities 52,943 51,820 Working Capital $ 154,392 $ 148,010 Current Ratio 3.0 3.2 Cash Provided By Operations (Twelve Months Ended) $ 49,103 $ 39,340
At March 31, 1995 cash and short-term investments increased $16.1 million from December 31, 1994. The investment in marketable securities at March 31, 1995, was $52.9 million. At March 31, 1995 the current ratio was 3.0 and working capital was $154.4 million (an increase of $6.4 million or 4.3% compared to December 31, 1994). The Company has been debt-free since 1987. Management believes that this liquidity, along with expected cash from operations, will support the company's continued growth, capital expenditures, cash dividends, and expansion plans. Net trade receivables decreased $1.3 million or 1.3% at March 31, 1995 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 $34.4 million and $33.8 million at March 31, 1995 and December 31, 1994, respectively. The decrease in receivables is attributed in part to the effect of a revision to the Company's credit and internal operating policies within the credit service center as discussed in the section, "Results of Operations". 8 of 10 ROLLINS, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ROLLINS, INC. AND SUBSIDIARIES ITEM 1. LEGAL PROCEEDINGS Refer to Note Number 4 to the Financial Statements, "Commitments and Contingencies" and Part I, Item 3. Legal Proceedings, of the Registrant's Form 10-K filed for the year ended December 31, 1994. ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS The Annual Stockholder's Meeting was held on April 25, 1995. The stockholders elected Wilton Looney and Bill J. Dismuke as Class III Directors for the three year term expiring in 1998. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K None 9 of 10 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. Date: May 12, 1995 ------------ Rollins, Inc. ------------- (Registrant) /s/ Gary W. Rollins --------------------- Gary W. Rollins President and Chief Operating Officer (Member of the Board of Directors) /s/ Gene L. Smith --------------------- Gene L. Smith Chief Financial Officer Secretary and Treasurer (Principal Financial and Accounting Officer) 10 of 10 EX-27 2 EXHIBIT 27
5 The 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. 1,000 3-MOS DEC-31-1995 JAN-01-1995 MAR-31-1995 48,054 52,943 107,393 6,815 17,733 232,794 83,459 54,850 313,753 78,402 0 41,432 0 0 155,766 313,753 0 142,654 0 73,238 56,825 0 0 12,591 4,784 7,807 0 0 0 7,807 0.22 0.22
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