Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 15, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | ROLLINS INC | |
Entity Central Index Key | 84,839 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 218,590,333 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,015 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 134,310 | $ 108,372 |
Trade receivables, net of allowance for doubtful accounts of $10,470 and $10,944, respectively | 90,782 | 77,854 |
Financed receivables, short-term, net of allowance for doubtful accounts of $1,677 and $1,748 respectively | 14,211 | 12,234 |
Materials and supplies | 12,964 | 14,078 |
Deferred income taxes, net | 42,141 | 42,764 |
Other current assets | 24,695 | 28,656 |
Total Current Assets | 319,103 | 283,958 |
Equipment and property, net | 115,731 | 101,669 |
Goodwill | 248,792 | 255,563 |
Customer contracts and other intangible assets, net | 142,640 | 133,472 |
Deferred income taxes, net | 8,308 | 7,881 |
Financed receivables, long-term, net of allowance for doubtful accounts of $1,523 and $1,402, respectively | 14,217 | 11,787 |
Other assets | 13,548 | 13,832 |
Total Assets | 862,339 | 808,162 |
LIABILITIES | ||
Accounts payable | 21,092 | 22,878 |
Accrued insurance | 31,192 | 24,204 |
Accrued compensation and related liabilities | 74,138 | 74,090 |
Unearned revenues | 105,725 | 94,056 |
Other current liabilities | 32,727 | 37,451 |
Total current liabilities | 264,874 | 252,679 |
Accrued insurance, less current portion | 21,866 | 30,946 |
Accrued pension | 24,538 | 29,558 |
Long-term accrued liabilities | 31,631 | 32,303 |
Total Liabilities | $ 342,909 | $ 345,486 |
Commitments and Contingencies | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, without par value; 500,000 shares authorized, zero shares issued | ||
Common stock, par value $1 per share; 250,000,000 shares authorized, 218,790,533 and 218,482,907 shares issued and outstanding, respectively | $ 218,791 | $ 218,483 |
Treasury Stock, par value $1 per share; 200,000 and 200,000 shares, respectively | (200) | (200) |
Paid in capital | 66,806 | 62,839 |
Accumulated other comprehensive loss | (80,428) | (65,488) |
Retained earnings | 314,461 | 247,042 |
Total Stockholders' Equity | 519,430 | 462,676 |
Total Liabilities and Stockholders' Equity | $ 862,339 | $ 808,162 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Trade receivables, short-term, allowance for doubtful accounts (in dollars) | $ 10,470 | $ 10,944 |
Financed receivables, short-term, allowance for doubtful accounts (in dollars) | 1,677 | 1,748 |
Financed receivables, long-term, allowance for doubtful accounts (in dollars) | $ 1,523 | $ 1,402 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, no par value (in dollars per share) | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 218,790,533 | 218,482,907 |
Common stock, shares outstanding | 218,790,533 | 218,482,907 |
Treasury Stock, par value | $ 1 | $ 1 |
Treasury Stock, Shares | 200,000 | 200,000 |
CONDENSED CONSOLIDATED STATEME4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
REVENUES | ||||
Customer services | $ 399,746 | $ 384,870 | $ 1,122,805 | $ 1,067,615 |
COSTS AND EXPENSES | ||||
Cost of services provided | 195,489 | 188,810 | 553,741 | 532,760 |
Depreciation and amortization | 11,156 | 11,437 | 33,182 | 32,259 |
Sales, general and administrative | 121,944 | 118,765 | 346,141 | 330,349 |
Gain on sale of assets | (1,255) | (86) | (1,504) | (564) |
Interest (income)/expense, net | (21) | 24 | (134) | (138) |
INCOME BEFORE INCOME TAXES | 72,433 | 65,920 | 191,379 | 172,949 |
PROVISION FOR INCOME TAXES | 27,387 | 24,799 | 70,979 | 65,202 |
NET INCOME | $ 45,046 | $ 41,121 | $ 120,400 | $ 107,747 |
NET INCOME PER SHARE - BASIC AND DILUTED (in dollars per share) | $ 0.21 | $ 0.19 | $ 0.55 | $ 0.49 |
DIVIDENDS PAID PER SHARE (in dollars per share) | $ 0.08 | $ 0.07 | $ 0.24 | $ 0.21 |
Weighted average participating shares outstanding - basic and diluted (in shares) | 218,594 | 218,700 | 218,583 | 218,832 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
NET INCOME | $ 45,046 | $ 41,121 | $ 120,400 | $ 107,747 |
Other comprehensive earnings (loss), net of tax | ||||
Foreign currency translation adjustments | (8,719) | (6,689) | (14,940) | (2,449) |
Other comprehensive earnings (loss) | (8,719) | (6,689) | (14,940) | (2,449) |
Comprehensive earnings | $ 36,327 | $ 34,432 | $ 105,460 | $ 105,298 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Common Stock [Member] | Treasury Stock | Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total | |
Balance at Dec. 31, 2013 | $ 218,797 | $ 53,765 | $ (31,771) | $ 197,464 | $ 438,255 | ||
Balance (in shares) at Dec. 31, 2013 | 218,797,000 | ||||||
Increase (Decrease) in Shareholders' Equity | |||||||
Net Income | $ 137,664 | 137,664 | |||||
Pension Liability Adjustment | (25,575) | (25,575) | |||||
Foreign Currency Translation Adjustments | $ (8,142) | (8,142) | |||||
Cash Dividends | $ (75,750) | (75,750) | |||||
Common Stock Issued for Acquisitions | $ 585 | $ 290 | 15,831 | (292) | 16,414 | ||
Common Stock Issued for Acquisitions (in shares) | 585,000 | 290,000 | |||||
Common Stock Purchased | [1] | $ (920) | $ (590) | (15,831) | (12,004) | (29,345) | |
Common Stock Purchased (in shares) | [1] | (920,000) | (590,000) | ||||
Three-For-Two Stock Split | $ (100) | $ 100 | |||||
Three-For-Two Stock Split (in shares) | (100,000) | 100,000 | |||||
Stock Compensation | $ 439 | 10,286 | (146) | 10,579 | |||
Stock Compensation (in shares) | 439,000 | ||||||
Employee Stock Buybacks and Common Stock Options Exercised | $ (318) | (5,956) | $ 106 | (6,168) | |||
Employee Stock Buybacks and Common Stock Options Exercised (in shares) | (318,000) | ||||||
Excess Tax Benefit on Restricted Stock, Dividend Compensation and Non-Qualified Stock Options | 4,744 | 4,744 | |||||
Balance at Dec. 31, 2014 | $ 218,483 | $ (200) | 62,839 | $ (65,488) | $ 247,042 | 462,676 | |
Balance (in shares) at Dec. 31, 2014 | 218,483,000 | (200,000) | |||||
Increase (Decrease) in Shareholders' Equity | |||||||
Net Income | $ 120,400 | 120,400 | |||||
Foreign Currency Translation Adjustments | $ (14,940) | (14,940) | |||||
Cash Dividends | $ (52,436) | (52,436) | |||||
Common Stock Purchased | [1] | $ (19) | (416) | $ (435) | |||
Common Stock Purchased (in shares) | [1] | (19,000) | 19,000 | ||||
Stock Compensation | $ 635 | 8,958 | (219) | $ 9,374 | |||
Stock Compensation (in shares) | 635,000 | ||||||
Employee Stock Buybacks and Common Stock Options Exercised | $ (308) | (6,754) | $ 90 | (6,972) | |||
Employee Stock Buybacks and Common Stock Options Exercised (in shares) | (308,000) | ||||||
Excess Tax Benefit on Restricted Stock, Dividend Compensation and Non-Qualified Stock Options | 1,763 | 1,763 | |||||
Balance at Sep. 30, 2015 | $ 218,791 | $ (200) | $ 66,806 | $ (80,428) | $ 314,461 | $ 519,430 | |
Balance (in shares) at Sep. 30, 2015 | 218,791,000 | (200,000) | |||||
[1] | Charges to Retained Earnings are from purchases of the Company's Common Stock. |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
OPERATING ACTIVITIES | ||
Net Income | $ 120,400 | $ 107,747 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 33,182 | 32,259 |
Provision for deferred income taxes | 690 | (1,132) |
Provision for bad debts | 6,966 | 7,300 |
Gain on sale disposal of assets | (1,504) | (564) |
Stock based compensation expense | 9,374 | 7,954 |
Excess tax benefits from share-based payments | (1,763) | (4,533) |
Other, net | (188) | (694) |
Changes in operating assets and liabilities | (23,333) | 9,090 |
Net cash provided by operating activities | 143,824 | 157,427 |
INVESTING ACTIVITIES | ||
Cash used for acquisitions of companies, net of cash acquired | (31,391) | (59,660) |
Purchases of equipment and property | (28,613) | (22,694) |
Proceeds from sales of franchises | 365 | 271 |
Other | 2,055 | 1,062 |
Net cash used in investing activities | (57,584) | (81,021) |
FINANCING ACTIVITIES | ||
Cash paid for common stock purchased | (7,407) | (35,497) |
Dividends paid | (52,436) | (45,945) |
Excess tax benefits from share-based payments | 1,763 | 4,533 |
Net cash used in financing activities | (58,080) | (76,909) |
Effect of exchange rate changes on cash | (2,222) | (3,497) |
Net increase/(decrease) in cash and cash equivalents | 25,938 | (4,000) |
Cash and cash equivalents at beginning of period | 108,372 | 118,216 |
Cash and cash equivalents at end of period | $ 134,310 | $ 114,216 |
BASIS OF PREPARATION AND OTHER
BASIS OF PREPARATION AND OTHER | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PREPARATION AND OTHER | NOTE 1. BASIS OF PREPARATION AND OTHER Basis of Preparation The preparation of interim financial statements requires management to make estimates and assumptions for the amounts reported in the condensed consolidated financial statements. Specifically, the Company makes estimates in its interim condensed consolidated financial statements for the termite accrual which includes future costs including termiticide life expectancy and government regulations, the insurance accrual which includes self insurance and workers compensation, inventory adjustments, discounts and volume incentives earned, among others. In the opinion of management, all adjustments necessary for a fair presentation of the Companys financial results for the interim periods have been made. These adjustments are of a normal recurring nature. The results of operations for the three and nine month periods ended September 30, 2015 are not necessarily indicative of results for the entire year. The Company has only one reportable segment, its pest and termite control business. The Companys results of operations and its financial condition are not reliant upon any single customer, or a few customers, or the Companys foreign operations. Three-for-two stock split All share and per share information has been retroactively adjusted for the three-for-two stock split effective March 10, 2015 for shareholders of record February 10, 2015. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 2. RECENT ACCOUNTING PRONOUNCEMENTS New Accounting Standards Recently issued accounting standards to be adopted in 2015 or later In April 2014, the FASB issued ASU 2014-08, (Topic 205 and 360): Reporting Discontinued Operations and Disclosure of Disposals of Components of an Entity. ASU 2014-08 amends the definition for what types of asset disposals are to be considered discontinued operations, and amends the required disclosures for discontinued operations and assets held for sale. ASU 2014-08 also enhances the convergence of the FASBs and the International Accounting Standard Boards reporting requirements for discontinued operations. The amendments in this update are effective for fiscal periods beginning on or after December 15, 2014, and interim periods within annual periods beginning on or after December 15, 2015. The Company is currently evaluating the impact of this standard on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, (Topic 606): Revenue from Contracts with Customers. (ASU 2014-09) supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09, as amended by ASU 2015-14, is effective retrospectively for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018 with early application permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements. We do not expect this standard to have a material impact on the Companys reported results of operations or financial position. In January 2015, the FASB issued ASU No. 2015-01, (Topic 225): Income Statement-Extraordinary and Unusual Items. ASU 2015-01 eliminates the GAAP concept of extraordinary items. The new guidance eliminates the separate presentation of extraordinary items, net of tax and the related earnings per share, but does not affect the requirement to disclose material items that are unusual in nature or infrequently occurring. The amendments in this update are effective for fiscal periods beginning on or after December 15, 2015, and interim periods within annual periods beginning on or after December 15, 2015. The Company is currently evaluating the impact of this standard on its consolidated financial statements. We do not expect this standard to have a material impact on the Companys reported results of operations or financial position. In June 2015, the FASB issued ASU No. 2015-10, Technical Corrections and Improvements. ASU 2015-10 makes minor adjustments to the FASB Accounting Standard Codification. The technical corrections are divided into four main categories: Amendments to align codification wording with that in pre-Codification standards, corrections to references and clarification of guidance to avoid misapplication and misinterpretation, minor edits to simplify the codification and thereby improve its usefulness and minor enhancements to codification guidance that are not expected to have a significant effect on current practice. The amendments in this update are effective for fiscal periods beginning on or after December 15, 2015, and interim periods within annual periods beginning on or after December 15, 2015. The Company is currently evaluating the impact of this standard on its consolidated financial statements. We do not expect this standard to have a material impact on the Companys reported results of operations or financial position. In August 2015, the FASB issued ASU No. 2015-14 (Topic 606): Revenue from Contracts with Customers. ASU 2015-14 defers the effective date of Update 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities should apply the guidance in Update 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and 2 interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in Update 2014-09. We do not expect this standard to have a material impact on the Companys reported results of operations or financial position. In September 2015, the FASB issued ASU No. 2015-16 (Topic 805): Business Combinations. ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Update require that the acquirer record, in the same periods financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this Update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amendments in this Update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this Update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this Update with earlier application permitted for financial statements that have not been issued. We do not expect this standard to have a material impact on the Companys reported results of operations or financial position. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 3. EARNINGS PER SHARE The Company follows ASC 260, Earnings Per Share Basic and diluted earnings per share attributable to common and restricted shares of common stock for the period were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Basic and diluted earnings per share Common stock $ 0.21 $ 0.19 $ 0.55 $ 0.49 Restricted shares of common stock $ 0.21 $ 0.19 $ 0.55 $ 0.49 |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | NOTE 4. CONTINGENCIES In the normal course of business, certain of the Companys subsidiaries are defendants in a number of lawsuits, claims or arbitrations which allege that the subsidiaries services caused damage. In addition, the Company defends employment related cases and claims from time to time. We are involved in certain environmental matters primarily arising in the normal course of business. We are actively contesting each of these matters. Presently, the Company and a subsidiary, The Industrial Fumigant Company, LLC, are named defendants in Severn Peanut Co. and Meherrin Agriculture & Chemical Co. v. Industrial Fumigant Co., et al. Severn On April 29, 2014, Foster Poultry Farms sued Orkin, LLC and Orkin Services of California, Inc., for breach of contract, breach of covenant of good faith and fair dealing, and negligence. The lawsuit was filed in the United States District Court for the Northern District of California. The parties have settled the lawsuit; and the court has dismissed it with prejudice on October 14, 2015. On December 2, 2014, Plaintiff Killian Pest Control sued Rollins, Inc., and its subsidiary HomeTeam Pest Defense, and alleged that HomeTeams exclusive use of its tubes in the walls system violates the federal Sherman Antitrust Act, and Californias Cartwright Act and Business and Professions Code. Plaintiffs seek a declaratory judgment that the alleged misconduct violates the Sherman and Cartwright Acts, and the Business and Professions Code; a permanent injunction against continuing alleged violations; and monetary damages. The lawsuit is pending in the United States District Court, Northern District of California. The Company cannot currently estimate the reasonably possible loss, if any, because the lawsuit is at an early stage and involves unresolved issues of law and fact. The Company intends to defend this matter vigorously. On December 2, 2014, Plaintiff Jose Luis Garnica, on behalf of himself and a class of similarly situated customers, sued Rollins, Inc., its subsidiary HomeTeam Pest Defense, and alleged that HomeTeams exclusive use of its tubes in the walls system violates the federal Sherman Antitrust Act. The Plaintiff seeks a declaratory judgment that the alleged misconduct violates the Sherman Act; a permanent injunction against continuing violations; and monetary damages. The lawsuit is pending in the United States District Court, Northern District of California. The Company cannot currently estimate the reasonably possible loss, if any, because the lawsuit is at an early stage and involves unresolved issues of law and fact. The Company intends to defend this matter vigorously. Management does not believe that any pending claim, proceeding or litigation, either alone or in the aggregate will have a material adverse effect on the Companys financial position, results of operations or liquidity; however, it is possible that an unfavorable outcome of some or all of the matters, however unlikely, could result in a charge that might be material to the results of an individual quarter or year. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 5. FAIR VALUE OF FINANCIAL INSTRUMENTS The Companys financial instruments consist of cash and cash equivalents, trade receivables, notes receivable, accounts payable and other short-term liabilities. The carrying amounts of these financial instruments approximate their fair values. The Company has a Revolving Credit Agreement with SunTrust Bank and Bank of America, N.A. for an unsecured line of credit of up to $175.0 million, which includes a $75.0 million letter of credit subfacility and a $25.0 million swingline subfacility. There were no outstanding borrowings at September 30, 2015 and December 31, 2014. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 6. STOCKHOLDERS EQUITY During the nine months ended September 30, 2015 the Company paid $52.4 million or $0.24 per share in cash dividends compared to $45.9 million or $0.21 per share during the same period in 2014. During the third quarter ended September 30, 2015, the Company did not repurchase from the open market any of its $1 par value common stock compared to 1.2 million shares purchased at a weighted average price of $19.41 during the same period in 2014. For the nine month period ended September 30, 2015, the Company repurchased from the open market approximately 19 thousand shares of its $1 par value common stock at a weighted average price of $22.42 per share compared to 1.5 million shares purchased at a weighted average price of $19.46 during the same period in 2014. The Company did not repurchase any of its common stock for the third quarter ended September 30, 2015 compared to $0.1 million purchased during the same period in 2014 and repurchased $7.0 million and $6.2 million of common stock for the nine months ended September 30, 2015 and 2014, respectively, from employees for the payment of taxes on vesting restricted shares. As more fully discussed in Note 14 of the Companys notes to the consolidated financial statements in its 2014 Annual Report on Form 10-K, stock options, time lapse restricted shares (TLRSs) and restricted stock units have been issued to officers and other management employees under the Companys Employee Stock Incentive Plans. The Company issues new shares from its authorized but unissued share pool. At September 30, 2015, approximately 5.0 million shares of the Companys common stock were reserved for issuance. Time Lapse Restricted Shares and Restricted Stock Units The following table summarizes the components of the Companys stock-based compensation programs recorded as expense: Three Months Ended Nine Months Ended September 30, September 30, (in thousands) 2015 2014 2015 2014 Time lapse restricted stock: Pre-tax compensation expense $ 3,255 $ 2,587 $ 9,374 $ 7,954 Tax benefit (1,260 ) (996 ) (3,628 ) (3,062 ) Restricted stock expense, net of tax $ 1,995 $ 1,591 $ 5,746 $ 4,892 The Company recognized a deferred tax benefit of approximately $0.1 million during the third quarters ended September 30, 2015 and 2014 respectively. The Company recognized a deferred tax benefit of approximately $1.8 million and $4.5 million for the nine months ended September 30, 2015 and 2014, respectively, and recognized a deferred tax benefit of approximately $4.7 million for the year ended December 31, 2014 related to the vesting of restricted shares which have been recorded as increases to paid-in capital. The following table summarizes information on unvested restricted stock outstanding as of September 30, 2015: Number of Shares Weighted-Average Grant-Date Fair Value Unvested Restricted Stock Units at December 31, 2014 3,100 $ 14.44 Forfeited (48 ) 14.85 Vested (946 ) 12.04 Granted 682 22.43 Unvested Restricted Stock Units at September 30, 2015 2,788 $ 17.20 At September 30, 2015 and December 31, 2014, the Company had $34.6 million and $29.4 million of total unrecognized compensation cost, respectively, related to time-lapse restricted shares that are expected to be recognized over a weighted average period of approximately 4.0 years and 3.7 years, respectively. |
PENSION AND POST RETIREMENT BEN
PENSION AND POST RETIREMENT BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2015 | |
Pension and Other Postretirement Benefit Expense [Abstract] | |
PENSION AND POST RETIREMENT BENEFIT PLANS | NOTE 7. PENSION AND POST RETIREMENT BENEFIT PLANS The following table represents the net periodic pension benefit costs and related components in accordance with FASB ASC 715 Compensation - Retirement Benefits: Components of Net Pension Benefit Gain Three Months Ended Nine Months Ended September 30, September 30, (in thousands) 2015 2014 2015 2014 Interest and service cost $ 2,250 $ 2,375 $ 6,750 $ 7,125 Expected return on plan assets (3,197 ) (3,108 ) (9,591 ) (9,324 ) Amortization of net loss 940 610 2,820 1,830 Net periodic benefit $ (7 ) $ (123 ) $ (21 ) $ (369 ) During the nine months ended September 30, 2015 and 2014 the Company made $5.0 million and $3.3 million in contributions, respectively, to its defined benefit retirement plans (the Plans). The Company made $5.3 million in contributions for the year ended December 31, 2014. The Company is not planning on making further contributions to the Plans during the fiscal year ending December 31, 2015. |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
BUSINESS COMBINATIONS | NOTE 8. BUSINESS COMBINATIONS The Company made 12 acquisitions during the nine month period ended September 30, 2015, the largest of which was: Critter Control The Company completed the acquisition of Critter Control on February 27, 2015. Critter Control was established by Kevin Clark in 1983 and is headquartered in Traverse City, Michigan. The business is 100% franchised with 115 franchises operating in 40 states and two Canadian provinces. It is the largest wildlife control company in the United States. Acquisition of Allpest WA (Allpest) The Company completed the acquisition of Allpest on February 17, 2014. This was the Companys first acquisition outside of North America and placed the Company as the number one pest control provider in Western Australia. Acquisition of Wilco Enterprises, Inc. (sole holder of PermaTreat Exterminating Company, Inc. d/b/a PermaTreat Pest Control, Inc.) (PermaTreat) The Company completed the acquisition of PermaTreat effective August 1, 2014. PermaTreat is a leading pest control company located in Central and Northern Virginia and was founded in 1967. The Company issued 873,349 shares of its $1 par value common stock valued at $18.79 per share to Joseph R. Wilson and Jack Broome. Total cash purchase price for the Companys acquisitions for the nine months ended September 30, 2015 was $31.4 million. The preliminary values of major classes of assets acquired and liabilities assumed recorded at the date of acquisition, as adjusted during the valuation period, are included in the reconciliation of the total consideration as follows (in thousands): Accounts receivable $ 1,492 Materials and supplies 57 Equipment and property 840 Goodwill 196 Customer contracts 10,226 Other intangible assets 20,039 Current liabilities (1,444 ) Other assets and liabilities, net 80 Total consideration paid $ 31,486 Less: Common Stock Payment Less: Contingent consideration liability (95 ) Total cash purchase price $ 31,391 Goodwill from acquisitions represents the excess of the purchase price over the fair value of net assets of businesses acquired. The carrying amount of goodwill was $248.8 million and $255.6 million at September 30, 2015 and December 31, 2014, respectively. Goodwill generally changes due to the timing of acquisitions, finalization of allocation of purchase prices of previous acquisitions and foreign currency translations. The carrying amount of goodwill in foreign countries was $35.8 million at September 30, 2015 and $42.7 million at December 31, 2014. The Company completed its most recent annual impairment analyses as of September 30, 2015. Based upon the results of these analyses, the Company has concluded that no impairment of its goodwill or other intangible assets was indicated. The carrying amount of customer contracts and other intangible assets was $96.0 million and $46.6 million, respectively, at September 30, 2015, and $104.7 million and $28.8 million, respectively at December 31, 2014. The carrying amount of customer contracts and other intangible assets in foreign countries was $15.0 million and $4.2 million, respectively, at September 30, 2015, and $16.8 million and $4.1 million, respectively, at December 31, 2014. Customer contracts and other amortizable intangible assets are amortized on a straight-line basis over their economic useful lives. The following table sets forth the components of intangible assets as of September 30, 2015 (in thousands): Carrying Useful Life Intangible Asset Value in Years Customer contracts $ 96,018 3 - 12.5 Trademarks and tradenames 32,913 0 - 20 Non-compete agreements 5,565 3 - 20 Patents 3,768 15 Other assets 2,012 10 Internet domains 2,227 n/a Know how 137 10 Total customer contracts and other intangible assets $ 142,640 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 9. SUBSEQUENT EVENTS On October 27, 2015, the Company announced that the Board of Directors declared a regular quarterly cash dividend on its common stock of $0.08 per share plus a special year-end dividend of $0.10 per share both payable December 10, 2015 to stockholders of record at the close of business November 10, 2015. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted earnings per share | Basic and diluted earnings per share attributable to common and restricted shares of common stock for the period were as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 Basic and diluted earnings per share Common stock $ 0.21 $ 0.19 $ 0.55 $ 0.49 Restricted shares of common stock $ 0.21 $ 0.19 $ 0.55 $ 0.49 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Components of the stock-based compensation programs recorded as expense | The following table summarizes the components of the Companys stock-based compensation programs recorded as expense: Three Months Ended Nine Months Ended September 30, September 30, (in thousands) 2015 2014 2015 2014 Time lapse restricted stock: Pre-tax compensation expense $ 3,255 $ 2,587 $ 9,374 $ 7,954 Tax benefit (1,260 ) (996 ) (3,628 ) (3,062 ) Restricted stock expense, net of tax $ 1,995 $ 1,591 $ 5,746 $ 4,892 |
Summarized information on unvested restricted stock units outstanding | The following table summarizes information on unvested restricted stock outstanding as of September 30, 2015: Number of Shares Weighted-Average Grant-Date Fair Value Unvested Restricted Stock Units at December 31, 2014 3,100 $ 14.44 Forfeited (48 ) 14.85 Vested (946 ) 12.04 Granted 682 22.43 Unvested Restricted Stock Units at September 30, 2015 2,788 $ 17.20 |
PENSION AND POST RETIREMENT B19
PENSION AND POST RETIREMENT BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Pension and Other Postretirement Benefit Expense [Abstract] | |
Schedule of Net Pension Benefit Gain | The following table represents the net periodic pension benefit costs and related components in accordance with FASB ASC 715 Compensation - Retirement Benefits: Components of Net Pension Benefit Gain Three Months Ended Nine Months Ended September 30, September 30, (in thousands) 2015 2014 2015 2014 Interest and service cost $ 2,250 $ 2,375 $ 6,750 $ 7,125 Expected return on plan assets (3,197 ) (3,108 ) (9,591 ) (9,324 ) Amortization of net loss 940 610 2,820 1,830 Net periodic benefit $ (7 ) $ (123 ) $ (21 ) $ (369 ) |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of purchase price allocation | The preliminary values of major classes of assets acquired and liabilities assumed recorded at the date of acquisition, as adjusted during the valuation period, are included in the reconciliation of the total consideration as follows (in thousands): Accounts receivable $ 1,492 Materials and supplies 57 Equipment and property 840 Goodwill 196 Customer contracts 10,226 Other intangible assets 20,039 Current liabilities (1,444 ) Other assets and liabilities, net 80 Total consideration paid $ 31,486 Less: Common Stock Payment Less: Contingent consideration liability (95 ) Total cash purchase price $ 31,391 |
Schedule of components of intangible assets | Customer contracts and other amortizable intangible assets are amortized on a straight-line basis over their economic useful lives. The following table sets forth the components of intangible assets as of September 30, 2015 (in thousands): Carrying Useful Life Intangible Asset Value in Years Customer contracts $ 96,018 3 - 12.5 Trademarks and tradenames 32,913 0 - 20 Non-compete agreements 5,565 3 - 20 Patents 3,768 15 Other assets 2,012 10 Internet domains 2,227 n/a Know how 137 10 Total customer contracts and other intangible assets $ 142,640 |
BASIS OF PREPARATION AND OTHER
BASIS OF PREPARATION AND OTHER (Details Narrative) | 9 Months Ended |
Sep. 30, 2015Number | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of Reportable Segment | 1 |
Stock Split Ratio | Three-for-two stock split |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Common Stock [Member] | ||||
Total shares of common stock, basic (in dollars per share) | $ 0.21 | $ 0.19 | $ 0.55 | $ 0.49 |
Total shares of common stock, diluted (in dollars per share) | 0.21 | 0.19 | 0.55 | 0.49 |
Restricted Stock [Member] | ||||
Total shares of common stock, basic (in dollars per share) | 0.21 | 0.19 | 0.55 | 0.49 |
Total shares of common stock, diluted (in dollars per share) | $ 0.21 | $ 0.19 | $ 0.55 | $ 0.49 |
FAIR VALUE OF FINANCIAL INSTR23
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Line of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit maximum borrowing capacity | $ 175,000 | |
Outstanding borrowings | 0 | $ 0 |
Letter of Credit [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit maximum borrowing capacity | 75,000 | |
Swingline Credit Facility [Member] | ||
Short-term Debt [Line Items] | ||
Line of credit maximum borrowing capacity | $ 25,000 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Cash dividend paid | $ 52,436 | $ 45,945 | ||||
Cash dividend per share (in dollars per share) | $ 0.08 | $ 0.07 | $ 0.24 | $ 0.21 | ||
Number of shares repurchased (in shares) | 1,200,000 | 19,000 | [1] | 1,500,000 | ||
Par value of common stock (in dollars per share) | $ 1 | $ 1 | $ 1 | |||
Weighted average stock price of shares repurchased (in dollars per share) | $ 19.41 | $ 22.42 | $ 19.46 | |||
Repurchase of common stock from employees | $ 100 | $ 7,000 | $ 6,200 | |||
Common stock reserved for issuance upon exercise of stock options (in shares) | 5,000,000 | 5,000,000 | ||||
Tax benefits from share-based payments | $ 100 | $ 100 | $ 1,800 | $ 4,500 | $ 4,700 | |
Restricted Stock Units (RSUs) [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Unrecognized compensation cost | $ 34,600 | $ 34,600 | $ 29,400 | |||
Unrecognized compensation cost, period for recognition | 4 years | 3 years 8 months 12 days | ||||
[1] | Charges to Retained Earnings are from purchases of the Company's Common Stock. |
STOCKHOLDERS' EQUITY (Details 1
STOCKHOLDERS' EQUITY (Details 1) - Time Lapse Restricted Shares and Restricted Stock Units - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Jun. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Time lapse restricted stock: | ||||
Pre-tax compensation expense | $ 3,255 | $ 2,587 | $ 9,374 | $ 7,954 |
Tax benefit | (1,260) | (996) | (3,628) | (3,062) |
Restricted stock expense, net of tax | $ 1,995 | $ 1,591 | $ 5,746 | $ 4,892 |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) - Restricted Stock Units (RSUs) [Member] | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Unvested restricted stock activity | |
Balance outstanding at the beginning of the period (in shares) | shares | 3,100 |
Forfeited (in shares) | shares | (48) |
Vested (in shares) | shares | (946) |
Granted (in shares) | shares | 682 |
Balance outstanding at the end of the period (in shares) | shares | 2,788 |
Weighted-Average Grant-Date Fair Value | |
Balance at the beginning of the period (in dollars per share) | $ 14.44 |
Forfeited (in dollars per share) | 14.85 |
Vested (in dollars per share) | 12.04 |
Granted (in dollars per share) | 22.43 |
Balance at the end of the period (in dollars per share) | $ 17.20 |
PENSION AND POST RETIREMENT B27
PENSION AND POST RETIREMENT BENEFIT PLANS (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Pension And Post Retirement Benefit Plans Details Narrative | |||
Contribution by employer | $ 5,000 | $ 3,300 | |
Further contributions to defined benefit retirement plan during the fiscal year | $ 5,300 |
PENSION AND POST RETIREMENT B28
PENSION AND POST RETIREMENT BENEFIT PLANS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Components of net periodic pension benefit Gain | ||||
Interest and service cost | $ 2,250 | $ 2,375 | $ 6,750 | $ 7,125 |
Expected return on plan assets | (3,197) | (3,108) | (9,591) | (9,324) |
Amortization of net loss | 940 | 610 | 2,820 | 1,830 |
Net periodic loss/(benefit) | $ (7) | $ (123) | $ (21) | $ (369) |
BUSINESS COMBINATIONS (Details
BUSINESS COMBINATIONS (Details Narrative) $ / shares in Units, $ in Thousands | 9 Months Ended | |
Sep. 30, 2015USD ($)Number$ / sharesshares | Dec. 31, 2014USD ($) | |
Business Acquisition [Line Items] | ||
Carrying amount of goodwill | $ 248,792 | $ 255,563 |
Carrying amount of goodwill in foreign countries | 35,800 | 42,700 |
Carrying amount of finite lived intangible assets | $ 142,640 | 133,472 |
Critter Control | ||
Business Acquisition [Line Items] | ||
Acquisition date | Feb. 27, 2015 | |
No of Franchise | Number | 115 | |
No of States in which Franchise Operates | Number | 42 | |
Allpest WA | ||
Business Acquisition [Line Items] | ||
Acquisition date | Feb. 17, 2014 | |
Joseph R. Wilson and Jack Broome [Member] | ||
Business Acquisition [Line Items] | ||
Shares issued (in shares) | shares | 873,349 | |
Fair value of common stock issued (per share) | $ / shares | $ 18.79 | |
Acquisition [Member] | ||
Business Acquisition [Line Items] | ||
Total cash purchase price | $ 31,391 | |
Carrying amount of goodwill | 196 | |
Customer contracts | ||
Business Acquisition [Line Items] | ||
Carrying amount of finite lived intangible assets | 96,000 | 104,700 |
Carrying amount of finite lived intangible assets in foreign countries | 15,000 | 16,800 |
Other intangible assets | ||
Business Acquisition [Line Items] | ||
Carrying amount of finite lived intangible assets | 46,600 | 28,800 |
Carrying amount of finite lived intangible assets in foreign countries | $ 4,200 | $ 4,100 |
BUSINESS COMBINATIONS (Details)
BUSINESS COMBINATIONS (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | ||
Goodwill | $ 248,792 | $ 255,563 |
Acquisition [Member] | ||
Business Acquisition [Line Items] | ||
Accounts receivable, net | 1,492 | |
Materials and supplies | 57 | |
Equipment and property | 840 | |
Goodwill | 196 | |
Customer contracts | 10,226 | |
Other intangible assets | 20,039 | |
Current liabilities | (1,444) | |
Other assets and liabilities, net | 80 | |
Total consideration paid | $ 31,486 | |
Less: Common Stock Payment | ||
Less: Contingent consideration liability | $ (95) | |
Total cash purchase price | $ 31,391 |
BUSINESS COMBINATIONS (Detail31
BUSINESS COMBINATIONS (Details 1) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Business Acquisition [Line Items] | |
Finite lived intangible assets fair value | $ 142,640 |
Internet domains | |
Business Acquisition [Line Items] | |
Infinite lived intangible assets fair value | 2,227 |
Customer contracts | |
Business Acquisition [Line Items] | |
Finite lived intangible assets fair value | $ 96,018 |
Customer contracts | Minimum | |
Business Acquisition [Line Items] | |
Finite lived intangible assets useful life | 3 years |
Customer contracts | Maximum | |
Business Acquisition [Line Items] | |
Finite lived intangible assets useful life | 12 years 6 months |
Trademarks and tradenames | |
Business Acquisition [Line Items] | |
Finite lived intangible assets fair value | $ 32,913 |
Trademarks and tradenames | Minimum | |
Business Acquisition [Line Items] | |
Finite lived intangible assets useful life | 0 years |
Trademarks and tradenames | Maximum | |
Business Acquisition [Line Items] | |
Finite lived intangible assets useful life | 20 years |
Non-compete agreements | |
Business Acquisition [Line Items] | |
Finite lived intangible assets fair value | $ 5,565 |
Non-compete agreements | Minimum | |
Business Acquisition [Line Items] | |
Finite lived intangible assets useful life | 3 years |
Non-compete agreements | Maximum | |
Business Acquisition [Line Items] | |
Finite lived intangible assets useful life | 20 years |
Patents | |
Business Acquisition [Line Items] | |
Finite lived intangible assets fair value | $ 3,768 |
Finite lived intangible assets useful life | 15 years |
Other Assets | |
Business Acquisition [Line Items] | |
Finite lived intangible assets fair value | $ 2,012 |
Finite lived intangible assets useful life | 10 years |
Know How [Member] | |
Business Acquisition [Line Items] | |
Finite lived intangible assets fair value | $ 137 |
Finite lived intangible assets useful life | 10 years |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] | Oct. 27, 2015$ / shares |
Dividend declared quarterly (in dollars per share) | $ .08 |
Special Divdend payable | Special year-end dividend of $0.10 per share both payable December 10, 2015 to stockholders of record at the close of business November 10, 2015. |