-----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, gvw0OhAgYWqSQ/O5Phs4HSqpbN5+CJWEWURAEOL9bVGIhBbfCkvHmc7gH6YsOdOi xD1UGICE2eWYcfnIa05mHQ== 0000950168-94-000268.txt : 19940819 0000950168-94-000268.hdr.sgml : 19940819 ACCESSION NUMBER: 0000950168-94-000268 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROLLINS INC CENTRAL INDEX KEY: 0000084839 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94542832 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 ROLLINS 10-Q 8-11-94 89855.1 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 June 30, 1994. 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 June 30, 1994, there were 35,771,758 shares of Common Stock $1 Par Value, outstanding. ROLLINS, INC. AND SUBSIDIARIES INDEX Part I Financial Information Page No. Statements of Financial Position - June 30, 1994 and December 31, 1993 1 Statements of Income and Earnings Retained - three months and six months ended June 30, 1994 and 1993 2 Statements of Cash Flows - six months ended June 30, 1994 and 1993 3 Notes to Financial Statements 4-5 Management's Discussion and Analysis of Financial Condition and Results of Operations 6-9 Part II Other Information 10 ROLLINS, INC. AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL POSITION (In thousands, except share data) (Unaudited)
June 30, December 31, 1994 1993 ASSETS Cash and Short-Term Investments $ 24,254 $ 18,102 Marketable Securities 51,556 50,991 Trade Receivables, Net 101,693 87,518 Materials and Supplies 19,454 15,829 Other Current Assets 13,090 12,092 Current Assets 210,047 184,532 Equipment and Property, Net 28,684 28,890 Intangible Assets 42,131 42,171 Other Assets 10,982 11,601 Total Assets $ 291,844 $ 267,194 LIABILITIES Accounts Payable $ 15,264 $ 12,279 Accrued Insurance Expenses 16,657 13,600 Accrued Payroll 16,239 15,519 Unearned Revenue 13,462 12,854 Other Expenses 15,243 12,752 Current Liabilities 76,865 67,004 Deferred Income Taxes 12,762 12,983 Long-Term Accrued Liabilities 21,590 26,699 Total Liabilities 111,217 106,686 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 191,077 171,862 232,509 213,294 Less--Common Stock In Treasury, At Cost, 5,660,056 in 1994 ; 5,758,619 shares in 1993 51,882 52,786 Total Stockholders' Equity 180,627 160,508 Total Liabilities and Stockholders' Equity $ 291,844 $ 267,194
The accompanying notes are an integral part of these statements. 1 of 11 ROLLINS, INC. AND SUBSIDIARIES STATEMENTS OF INCOME AND EARNINGS RETAINED (In thousands, except share data) (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 REVENUES Customer Services $ 171,874 $ 163,248 $ 308,317 $ 290,543 COSTS AND EXPENSES Cost of Services Provided 83,669 80,876 153,821 146,525 Sales, General and Administrative Expenses 52,342 49,866 105,903 100,620 Depreciation and Amortization 2,033 2,057 4,014 3,851 Interest Income (423) (560) (874) (1,002) 137,621 132,239 262,864 249,994 INCOME BEFORE INCOME TAXES 34,253 31,009 45,453 40,549 PROVISION (CREDIT) FOR INCOME TAXES: Current 12,681 12,026 17,820 16,065 Deferred 506 (88) (321) (454) 13,187 11,938 17,499 15,611 NET INCOME 21,066 19,071 27,954 24,938 EARNINGS RETAINED: Balance at Beginning of Period 174,409 144,244 171,862 141,999 Cash Dividends (4,475) (3,919) (8,935) (7,836) Employee Benefit Plans 77 264 196 559 BALANCE AT END OF PERIOD $ 191,077 $ 159,660 $ 191,077 $ 159,660 EARNINGS PER SHARE $ 0.59 $ 0.54 $ 0.78 $ 0.70 WEIGHTED AVERAGE SHARES OUTSTANDING 35,757,223 35,629,110 35,734,591 35,618,674
The accompanying notes are an integral part of these statements. 2 of 11 ROLLINS, INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30 1994 1993 OPERATING ACTIVITIES Net Income $ 27,954 $ 24,938 Noncash Charges (Credits) to Earnings: Depreciation and Amortization 4,014 3,851 Other, Net 654 1,147 (Increase) Decrease in: Trade Receivables (14,103) (15,474) Materials and Supplies (3,625) (2,073) Other Current Assets (1,482) 1,240 Increase (Decrease) in: Accounts Payable and Accrued Expenses 9,461 7,321 Unearned Revenue 608 1,333 Non-Current Deferred Income Taxes 584 (3,226) Long-Term Accrued Liabilities (5,229) 588 Other Non-Current Assets (324) (270) Net Cash Provided by Operating Activities 18,512 19,375 INVESTING ACTIVITIES Purchases of Equipment and Property (4,329) (4,511) Net Cash Used for Acquisition of Companies (345) --- Proceeds from Sales of Equipment and Property 714 205 Purchases of Marketable Securities (565) (612) Net Cash Used in Investing Activities (4,525) (4,918) FINANCING ACTIVITIES Dividends Paid (8,935) (7,836) Treasury Stock Issued to Benefit Plans 1,100 959 Net Cash Used in Financing Activities (7,835) (6,877) Net Increase (Decrease) in Cash and Short-Term Investments 6,152 7,580 Cash and Short-Term Investments at Beginning of Period 18,102 20,061 Cash and Short-Term Investments at End of Period $ 24,254 $ 27,641 The accompanying notes are an integral part of these statements. 3 of 11 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, 1993. Certain prior year amounts have been reclassified to conform with the second quarter 1994 presentation. 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 June 30, 1994 and December 31, 1993, and the results of operations and cash flows for the six months ended June 30, 1994 and 1993. NOTE 2. INVESTMENT IN MARKETABLE SECURITIES During the first quarter of 1994, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The adoption of SFAS No. 115 did not have a material effect on the Company's financial position, results of operations, or liquidity for the six months ended June 30, 1994. NOTE 3. 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. 4 of 11 ROLLINS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 4. EARNINGS PER SHARE Earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the respective periods. 5 of 11 ROLLINS, INC. AND SUBSIDIARIES PART I. ITEM 2. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1994 RESULTS OF OPERATIONS
SELECTED INDUSTRY SEGMENT DATA Three Months Ended Six Months Ended June 30 June 30 (In thousands) 1994 1993 1994 1993 REVENUES Orkin $ 153,119 $ 146,519 $ 271,479 $ 257,212 Rollins Protective 15,299 13,954 30,171 27,930 Other 3,456 2,775 6,667 5,401 $ 171,874 $ 163,248 $ 308,317 $ 290,543 OPERATING INCOME Orkin $ 33,389 $ 30,305 $ 44,876 $ 40,252 Rollins Protective 1,504 1,311 2,834 2,479 Other 1,392 1,092 2,330 1,849 $ 36,285 $ 32,708 $ 50,040 $ 44,580
6 of 11 ROLLINS, INC. AND SUBSIDIARIES PART I. ITEM 2. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1994 General Operating Comments Rollins, Inc. reported another quarter of record earnings. These results dramatically illustrate Rollins' growing penetration in its markets. Revenue for the second quarter ended June 30, 1994 reached $171.9 million, an increase of $8.6 million or 5.3% from the prior year period ($17.8 million or 6.1% year-to-date). Operating income increased $3.6 million or 10.9% to $36.3 million for the quarter ($5.5 million or 12.2% year-to-date). Although seasonal termite business was negatively impacted by an extremely cold winter and spring, the Company produced consistent earnings results. This marks the 17th consecutive quarter of double-digit earnings increases. The Company as a whole is working hard to improve employee productivity and increase customer growth, while maintaining tight control of expenses. The investments in customer service and recurring revenue growth during the first half of the year should result in overall favorable earnings for the year. Net income for the quarter grew 10.5% to $21.1 million and earnings per share was 59 cents, compared to 54 cents a year ago, a 9.3% improvement. Year-to-date, net income increased 12.1% to $28.0 million and earnings per share was 78 cents, an increase of 11.4% from the previous year. For the quarter, the Orkin Group's operating income increased 10.2% to $33.4 million on revenues of $153.1 million which grew 4.5% over 1993. These results provided improved operating margins of 21.8%, compared to 20.7% in the prior year. Rollins Protective Services operating income increased 14.7% to $1.5 million on revenues of $15.3 million. For the six months ended June 30, 1994, Orkin revenues increased 5.5% with operating income improving 11.5%. Operating margins grew to 16.5% compared to 15.6% for the same period last year. Rollins Protective Services' revenue grew 8.0%; operating income improved 14.3% over last year, with operating margins increasing to 9.4%. Detail segment information follows. 7 of 11 ROLLINS, INC. AND SUBSIDIARIES PART I. ITEM 2. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1994 Orkin 1994 Versus 1993 Revenues increased 4.5% to $153.1 million and operating income increased 10.2% to $33.4 million for the second quarter ended June 30, 1994. For the six months ended June 30, 1994, Orkin had revenues of $271.5 million and operating income of $44.9 million (increases of 5.5% and 11.5%, respectively, from the prior year). Pest Control increased sales dollars and customer base for the quarter and year-to- date. The Company maintained its commitment to expanding its existing operations by entering new geographic markets with the opening of new branches. Lawn Care has continued to improve its operating income results with more efficient execution of operational programs. Orkin Plantscaping will continue its program of location standardization and employee training, while gaining a tighter control of expenses and resulting margins. Rollins Protective Services (RPS) 1994 Versus 1993 For the second quarter, Rollins Protective Services had revenues of $15.3 million, an increase of 9.6%, and operating income improving 14.7% to $1.5 million. For the first six months, RPS had revenues of $30.2 million, an increase of 8.0%, and operating income of $2.8 million, an increase of 14.3%. In the second quarter, RPS rolled out the national introduction of its Vision 2000, a home surveillance system. Vision 2000 allows customers to keep watch over their children or see who's at the door-all from their cable connected television sets. FINANCIAL CONDITION (In thousands) June 30, December 31, 1994 1993 Cash and Short-Term Investments $ 24,254 $ 18,102 Marketable Securities 51,556 50,991 Working Capital $ 133,182 $ 117,528 Current Ratio 2.7 2.8 Cash Provided From Operations $ 39,171 $ 40,034 (Twelve Months Ended) 8 of 11 ROLLINS, INC. AND SUBSIDIARIES PART I. ITEM 2. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1994 At June 30, 1994 cash and short-term investments were $24.3 million, an increase of $6.2 million from December 31, 1993. The investment in marketable securities at June 30, 1994, was $51.6 million. At June 30, 1994 the current ratio was 2.7 and working capital was $133.2 million (an increase of $15.7 million or 13.3% compared to December 31, 1993). 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. Trade receivables, net increased $14.2 million or 16.2% at June 30, 1994 compared with December 31, 1993. Trade receivables include installment receivables which are due subsequent to one year from the balance sheet date. These amounts were approximately $33.4 million and $28.7 million at the end of the June 30, 1994 and December 31, 1993, respectively. (Delinquency statistics, as a percentage of total receivables, have improved over the prior year). The increase in receivables is attributed to the continuing effect of a Orkin termite and Rollins Protective Services marketing programs, the increased average length and amount of an Orkin contract, and the overall increase in Company revenues of 5.3% for the quarter and 6.1% year-to- date. During the first quarter of 1994, the Company adopted Statement of Financial Accounting Standard No. 115 (SFAS 115), "Accounting for Certain Investments in Debt and Equity Securities". Future unrealized gains and losses will likely occur, although their magnitude cannot be predicted and the effects on the Company's results are not expected to be material. 9 of 11 ROLLINS, INC. AND SUBSIDIARIES PART II. OTHER INFORMATION ROLLINS, INC. AND SUBSIDIARIES ITEM 1. LEGAL PROCEEDINGS None 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 26, 1994. Results of that meeting were disclosed in the Company's Form 10-Q filed for the first quarter of 1994. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 10 of 11 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: August 11, 1994 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) 11 of 11 -----END PRIVACY-ENHANCED MESSAGE-----