Rollins (ROL) 10-K risk factor changes: FY2013 vs FY2012

[removed: Overview][added: Overview]

[removed: The Company][added: The Company]

Rollins, Inc. (the [removed: "Company")] [added: “Company”)] was originally incorporated in 1948 under the laws of the state of Delaware as Rollins Broadcasting, Inc. The Company is an international service company with headquarters located in Atlanta, Georgia, providing pest and termite control services through its wholly-owned subsidiaries to both residential and commercial customers in North America [added: and Australia] with international franchises in Central America, South America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa and Mexico.

[removed: RESULTS] [added: RESULTS] OF [removed: OPERATIONS][added: OPERATIONS]

| [removed: (in thousands)] | | [removed: 2012 | | | 2011 |] [added: 2013] | | [removed: 2010] | | [added: 2012] | [removed: 2012] | | | [removed: 2011] [added: 2011] | | |

| Revenues | | [removed: $] [added: $] | [removed: 1,270,909] [added: 1,337,374] | | [added: |] $ | [removed: 1,205,064] [added: 1,270,909] | | [added: |] $ | [removed: 1,136,890] [added: 1,205,064] | | | [removed: 5.5] | [removed: %] [added: 5.2] | [added: %] | [removed: 6.0] | [added: | 5.5 |] % |

| Cost of services provided | | | [removed: 647,578] [added: 678,459] | | | [removed: 616,842] | [added: 647,578] | | [removed: 583,089] | | [added: 616,842] | [removed: (5.0] | [removed: )] | | [removed: (5.8] [added: (4.8] | ) | [added: | | (5.0 | ) |]

| Depreciation and amortization | | | [removed: 38,655] [added: 39,571] | | | [removed: 37,503] | [added: 38,655] | | [removed: 36,408] | | [added: 37,503] | [removed: (3.1] | [removed: )] | | [removed: (3.0] [added: (2.4] | ) | [added: | | (3.1 | ) |]

| Sales, general and administrative | | | [removed: 407,488] [added: 428,288] | | | [removed: 388,710] | [added: 407,488] | | [removed: 373,288] | | [added: 388,710] | [removed: (4.8] | [removed: )] | | [removed: (4.1] [added: (5.1] | ) | [added: | | (4.8 | ) |]

| (Gain)/loss on sales/impairment of assets, net | | | [removed: (468] [added: (165] | [removed: )] [added: )] | | [removed: 405] | [added: (468] | [added: )] | [removed: 123] | | [added: 405] | [removed: 215.6] | | | [removed: 229.3] [added: (64.7] | [added: )] | [added: | | 215.6 | |]

| Pension Settlement | | | [removed: 1,000] [added: —] | | | [removed: —] | [added: 1,000] | | [added: | |] — | | | [added: |] N/M | | | [added: |] N/M | |

| Interest [removed: expense] [added: (income)/expense] | | | [removed: 14] [added: (385] | [added: )] | | [removed: 508] | [added: 14] | | [removed: 437] | | [added: 508] | [removed: 97.2] | | | [removed: (16.2] [added: N/M] | [removed: )] | [added: | | 97.2 | |]

| Income before income taxes | | | [removed: 176,642] [added: 191,606] | | | [removed: 161,096] | [added: 176,642] | | [removed: 143,545] | | [added: 161,096] | [removed: 9.7] | | | [removed: 12.2] [added: 8.5] | | [added: | | 9.7 | |]

| Provision for income taxes | | | [removed: 65,310] [added: 68,276] | | | [removed: 60,385] | [added: 65,310] | | [removed: 53,543] | | [added: 60,385] | [removed: (8.2] | [removed: )] | | [removed: (12.8] [added: (4.5] | ) | [added: | | (8.2 | ) |]

| Net income | | | [removed: 111,332] [added: 123,330] | | | [removed: 100,711] | [added: 111,332] | | [removed: 90,002] | | [added: 100,711] | [removed: 10.5] | | | [removed: 11.9] [added: 10.8] | [added: %] | [added: | | 10.5 | % |]

[removed: 2012] [added: The year 2013] marked the [removed: Company's 15th] [added: Company’s 16th] consecutive year of reporting improved [removed: results, with 2012 concluding with record revenues] [added: results of revenue] and [removed: profits.][added: profit.]

[removed: Last year (2012)] [added: In 2013] the [removed: Company's] [added: Company’s] revenue grew [removed: 5.5%,] [added: 5.2%,] with growth in all lines of service.

[removed: Results] [added: Results] of Operations—2012 Versus [removed: 2011][added: 2011]

The [removed: Company's] [added: Company’s] gross margin increased [added: slightly] to 49.0% for 2012 from 48.8% in 2011.

The Company experienced a reduction in its depreciation and amortization margin to 3.0% in 2012 versus 3.1% in [added: 2011 due to several assets being fully depreciated, partially offset by amortization of intangible assets acquired in] 2011.

The Company had net income of $111.3 million [removed: in 2012] compared to $100.7 million in 2011, a 10.5% increase.

Commercial pest control represented approximately 41.0% of the [removed: Company's] [added: Company’s] business in 2012 and grew 3.7% in 2012 due to increases in sales, bed bug revenues and [removed: an increase in the average sales price.][added: revenues from 2011 acquisitions.]

Residential pest control represented approximately [removed: 41.0%] [added: 41%] of the [removed: Company's] [added: Company’s] business and increased [removed: 8.0%] [added: 6.1%] driven by increased leads, closure and pricing as well as increased capture of TAEXX homebuilder installations and bed bug revenues.

The [removed: Company's] [added: Company’s] termite business, which represented approximately 18.0% of the [removed: Company's] [added: Company’s] revenue, grew 4.0% in 2012 due to increases in ancillary [removed: service] [added: services] sales as well as the [removed: Company's] [added: Company’s] expanded sales force and price increases.

_Interest [removed: Expense,] [added: (Income)/Expense,] Net_

The Company recognized gains from the sale of owned vehicles and property in Canada in 2012 while recognizing [removed: an] impairment on software related to terminated projects for approximately $0.5 million in 2011.

[removed: Results] [added: Results] of [removed: Operations—2011] [added: Operations—2013] Versus [removed: 2010][added: 2012]

The [removed: Company's] [added: Company’s] gross margin increased [removed: slightly] to [removed: 48.8%] [added: 49.3%] for [removed: 2011] [added: 2013] from [removed: 48.7%] [added: 49.0%] in [removed: 2010.][added: 2012.]

Sales, general and administrative expense decreased in [removed: 2011] [added: 2013] to [removed: 32.3%] [added: 32.0%] of revenue versus [removed: 32.8%] [added: 32.1%] in [removed: 2010.][added: 2012.]

The [removed: Company experienced a reduction in its depreciation and amortization margin to 3.1% in 2011 versus 3.2% in 2010] [added: increase is] due to [removed: several assets being fully depreciated, partially offset by] amortization of intangible assets acquired in [removed: 2010.][added: late 2012 and early 2013 partially offset by several fixed and intangible assets being fully depreciated or amortized.]

The Company had net income of [removed: $100.7] [added: $123.3] million [added: in 2013] compared to [removed: $90.0] [added: $111.3] million in [removed: 2010, an 11.9%] [added: 2012, a 10.8%] increase.

Revenues for the year ended December 31, [removed: 2011] [added: 2013] were [removed: $1.2] [added: $1.337] billion, an increase of [removed: $68.2] [added: $66.4] million or [removed: 6.0%] [added: 5.2%] from [removed: 2010] [added: 2012] revenues of [removed: $1.1] [added: $1.271] billion.

Commercial pest control represented approximately [removed: 42.0%] [added: 41%] of the [removed: Company's] [added: Company’s] business in [removed: 2011] [added: 2013] and grew [removed: 6.0%] [added: 4.9%] in [removed: 2011] [added: 2013] due to increases in [removed: sales,] [added: sales and] bed bug [removed: revenues and revenues from 2010 acquisitions.][added: revenues.]

Residential pest control represented approximately [removed: 40.0%] [added: 41.0%] of the [removed: Company's] [added: Company’s] business and increased [removed: 7.7%] [added: 8.0%] driven by increased leads, closure and pricing.

The [removed: Company's] [added: Company’s] termite business, which represented approximately [removed: 18.0%] [added: 17%] of the [removed: Company's] [added: Company’s] revenue, grew [removed: 2.8%] [added: 4.5%] in [removed: 2011] [added: 2013] due to increases in ancillary [removed: services] [added: service] sales as well as the [removed: Company's] [added: Company’s] expanded sales force and price [removed: increases.][added: improvement.]

The [removed: Company's] [added: Company’s] foreign operations accounted for approximately 8% of total revenues for the years ended December 31, [removed: 2011] [added: 2013] and [removed: 2010.][added: 2012.]

Orkin had [removed: 76] [added: 80] and [removed: 72] [added: 79] total domestic and international franchises at December 31, [removed: 2011] [added: 2013] and [removed: 2010,] [added: 2012,] respectively.

For the twelve months ended December 31, [removed: 2011] [added: 2013] cost of services provided increased [removed: $33.8] [added: $30.9] million or [removed: 5.8%,] [added: 4.8%,] compared to the twelve months ended December 31, [removed: 2010.][added: 2012.]

Gross margin for the year was [removed: 48.8%] [added: 49.3%] for [removed: 2011] [added: 2013] and [removed: 48.7%] [added: 49.0%] for [removed: 2010.][added: 2012.]

For the twelve months ended December 31, [removed: 2011,] [added: 2013,] depreciation and amortization increased [removed: $1.1] [added: $0.9] million, or [removed: 3.0%] [added: 2.4%] compared to the twelve months ended December 31, [removed: 2010.][added: 2012.]

| | | | | | | | | | | | | | | % better/(worse) as | | | | | | |

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| | | (in thousands) | | | | | | | | | | | | compared to prior year | | | | | | |

The Company’s revenue from bed bug service offering grew over 20% for the year and HomeTeam’s TAEXX homebuilder installations rose almost 36%.

We have also expanded Orkin’s international franchise portfolio to a total of 26 international franchises in 9 regions.

Further in February 2014 we expanded our international footprint by acquiring Allpest WA located in Perth, Australia.

Management is pleased with the 2013 accomplishments and recognizes many opportunities to improve our business in the future.

We feel we have a premium brand in Orkin® that is recognized around the world, as well as other brands that are well known in their respective markets.

We will continue to look for better ways to do what we do in providing our customers with premiere service that addresses their pest control needs.

The Company remained flat in its depreciation and amortization margin in 2013 at 3.0% in 2013 and 2012.

Net profit margin improved to 9.2% in 2013 from 8.8% in 2012.

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The Company implemented its traditional price increase program in June 2013 which had a positive impact on the year’s revenue.

Less than 2.0% of the Company’s revenue increase came from pricing actions.

Nearly 80% of the Company’s revenue was recurring in 2013 and 2012.

The Company established new franchises in Guam, Iraq, Trinidad and Tobago and St. Lucia in 2013 for a total of 26 international franchises at December 31, 2013 with 22 at December 31, 2012.

While most costs increased during the year due to the Company’s early 2013 and late 2012 acquisitions, service salaries, personnel related costs and materials and supplies increased due to increased sales, increased TAEXX installations and higher group medical insurance premiums.

These costs were partially offset by lower insurance and claims costs.

The reductions as a percentage of SG&A are partially offset by increases in professional services due to timing of various information technology projects and higher advertising expenses due to the Company’s new ad campaigns.

Interest income for the year is due to interest received on cash balances in the Company’s various cash accounts.

The Company recognized gains from the sale of owned vehicles and property in 2013 and 2012.

The Company’s effective tax rate was 35.6% in 2013 compared to 37.0% in 2012, due primarily to differences in state tax rates and foreign income taxes and the release of certain deferred tax liabilities.

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The following table sets forth the historical cash flows for the years ended December 31:

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In addition to the shares purchased on the open market, the Company repurchased $5.3 million, $3.5 million and $3.0 million of common stock for the years ended December 31, 2013, 2012 and 2011, respectively, from employees for the payment of taxes on vesting restricted shares.

The Company’s international business is expanding and we intend to continue to grow the business in foreign markets in the future through reinvestment of foreign deposits and future earnings as well as acquisitions of unrelated companies.

Repatriation of cash from the Company’s foreign subsidiaries is not a part of the Company’s current business plan.

The Company maintains a large cash position in the United States while having little third-party debt to service.

Rollins maintains adequate liquidity and capital resources, without regard to its foreign deposits, that are directed to finance domestic operations and obligations and to fund expansion of its domestic business for the foreseeable future.

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| | | Years ended December 31, | | | | | | | | | % better/(worse) as compared to prior year | | | | | |

Net profit margin improved to 8.4% in 2011 from 7.9% in 2010.

The Company established new franchises in China and two locations in Nigeria for a total of 18 and 16 international franchises at December 31, 2011 and 2010, respectively.

While all costs increased during the year due to the Company's 2010 acquisitions and fleet expenses were marginally better due to better routing and scheduling.

The increase is due to amortization of intangible assets acquired in 2010, partially offset by several assets being fully depreciated.

The Company recognized an impairment on software related to terminated projects for approximately $0.5 million in 2011.

The Company's effective tax rate was 37.5% in 2011 compared to 37.3% in 2010, due primarily to differences in state tax rates.

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| (in thousands) | | 2012 | | | 2011 | | | 2010 | | |

approximately $5.0 million during fiscal 2013.

In July 2010, President Obama signed into law the Dodd-Frank Act, which again led to changes in FDIC deposit guarantees.

Beginning January 1, 2011 and lasting through December 31, 2012, all funds held in noninterest-bearing transaction accounts at insured depository institutions were automatically fully insured, without limit.

This temporary unlimited insurance expired at the end of 2012 and has reverted to a $250,000 limit per bank.

As of December 31, 2012, the additional rate allocated was .75%.

| Business combination related liabilities | | $ | 9,447 | | $ | 6,531 | | $ | 2,858 | | $ | 58 | | $ | — | |

| Non-cancelable operating leases | | | 85,501 | | | 31,265 | | | 34,921 | | | 13,420 | | | 5,895 | |

| Total (2) | | $ | 95,849 | | $ | 38,697 | | $ | 37,779 | | $ | 13,478 | | $ | 5,895 | |

(1)

Uncertain tax positions of $0.7 million are not included due to the uncertainty of the final amount and settlement.

(2)

The Company is considering making contributions to its pension plans of approximately $5.0 million during 2013.

The reserve is established based on all these factors.

other specified performance conditions.

In December 2011, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU") _Disclosures about Offsetting Assets and Liabilities_ ("ASU 2011-11") to Topic 210, Balance Sheet.

The update requires new disclosures about balance sheet offsetting and related arrangements.

For derivatives and financial assets and liabilities, the amendments require disclosure of gross asset and liability amounts, amounts offset on the balance sheet, and amounts subject to the offsetting requirements but not offset on the balance sheet.

The guidance is effective December 1, 2013 and is to be applied retrospectively.

Such forward-looking statements include statements regarding the Company's belief that its levels of supplies will alleviate the potential short-term shortage in availability from its suppliers; management's belief that environmental remediation costs estimated to be incurred are not material to the Company's financial condition or operating results; the outcome of litigation, as discussed in the Legal Proceedings section and elsewhere, and the Company's belief that such litigation will not have a material adverse effect on the Company's financial condition, results of operations or liquidity; the Company's expectation to continue its payment of cash dividends; the adequacy of the

[removed: Market Risk][added: Market Risk]

However, the Company does maintain approximately [removed: $33.2] [added: $30.1] million in Letters of Credit.

[removed: MANAGEMENT'S] [added: MANAGEMENT’S] REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of internal controls over financial reporting, as of December 31, [removed: 2012] [added: 2013] based on criteria established in [added: the 1992] Internal Control—Integrated framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, [removed: management's] [added: management’s] assessment is that Rollins, Inc. maintained effective internal control over financial reporting as of December 31, [removed: 2012.][added: 2013.]

The independent registered public accounting firm, Grant Thornton LLP has audited the consolidated financial statements as of and for the year ended December 31, [removed: 2012,] [added: 2013,] and has also issued their report on the effectiveness of the [removed: Company's] [added: Company’s] internal control over financial reporting, included in this report on page [removed: 32.][added: 25.]

| [removed: /s/ GARY W. ROLLINS] Gary W. Rollins [removed: _Vice] [added: Vice] Chairman and Chief Executive [removed: Officer_] [added: Officer] | | [removed: /s/ HARRY J. CYNKUS] [added: | |] Harry J. Cynkus [removed: _Senior] [added: Senior] Vice President, Chief Financial Officer and [removed: Treasurer_] [added: Treasurer] |

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL [removed: REPORTING][added: REPORTING]

We have audited the internal control over financial reporting of Rollins, Inc. (a Delaware corporation) and subsidiaries (the [removed: "Company")] [added: “Company”)] as of December 31, [removed: 2012,] [added: 2013,] based on criteria established in [added: the 1992] Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2012,] [added: 2013,] based on criteria established in [added: the 1992] Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as of and for the year ended December 31, [removed: 2012,] [added: 2013,] and our report dated February [removed: 27, 2013] [added: 26, 2014] expressed an unqualified opinion on those financial statements.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON [added: CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE]

We have audited the accompanying consolidated statements of financial position of Rollins, Inc. (a Delaware corporation) and subsidiaries (the [removed: "Company")] [added: “Company”)] as of December 31, [removed: 2012] [added: 2013] and [removed: 2011,] [added: 2012,] and the related consolidated statements of income, comprehensive earnings, [removed: shareholders'] [added: shareholders’] equity, and cash flows for each of the three years in the period ended December 31, [removed: 2012.][added: 2013.]

These financial statements and [removed: the] financial statement schedule are the responsibility of the [removed: Company's] [added: Company’s] management.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Rollins, Inc. and subsidiaries as of December 31, [removed: 2012] [added: 2013] and [removed: 2011,] [added: 2012,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2012] [added: 2013] in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the [removed: Company's] [added: Company’s] internal control over financial reporting as of December 31, [removed: 2012,] [added: 2013,] based on criteria established in [added: the 1992] Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February [removed: 27, 2013] [added: 26, 2014] expressed an unqualified opinion.

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| /s/ Gary W. Rollins | | | | /s/ Harry J. Cynkus |

February 26, 2014

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February 26, 2014

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February 26, 2014

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February 27, 2013

CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

The Company is an international service company with headquarters located in Atlanta, Georgia, providing pest and termite control services through its wholly-owned subsidiaries to both residential and commercial customers in North America [added: and Australia] with international franchises in Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa and Mexico.

Revenue, operating profit and identifiable assets for this segment, which includes the United States, Canada, [added: Australia,] Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa and Mexico are included in Item 8 of this document, [removed: "Financial] [added: “Financial] Statements and Supplementary [removed: Data"] [added: Data”] on pages [removed: 34] [added: 27] and [removed: 35.][added: 28.]

[added: During the years ended] December 31, [removed: 2012] [added: 2013] and [removed: 2011,] [added: 2012,] the Company repurchased [removed: 0.8] [added: on the open market 0.3] million and [removed: 1.5] [added: 0.8] million shares at a weighted average price of [removed: $20.93] [added: $24.56] and [removed: $18.68,] [added: $20.93,] respectively.

In total, there are [removed: 5.3] [added: 5.0] million additional shares authorized to be repurchased under prior Board approval.

| | | [removed: At] [added: At] December [removed: 31,] [added: 31,] | | | | | | | | | [added: | |]

| (in thousands) | | [removed: 2012] [added: 2013] | | | [removed: 2011] | [added: 2012] | | [removed: 2010] | | [added: 2011] | [added: | |]

| Backlog | | [removed: $] [added: $] | [removed: 2,876] [added: 3,286] | | [added: |] $ | [removed: 2,781] [added: 2,876] | | [added: |] $ | [removed: 2,966] [added: 2,781] | |

International franchise agreements also contain an optional buyback [removed: provision,] [added: provision;] however, the franchisee has the prior right of renewal of [removed: the] agreement.

| Franchises | | [removed: 2012] [added: 2013] | | | [removed: 2011] | [added: 2012] | | [removed: 2010] | | [added: 2011] | [added: | |]

| United States Franchises | | | [removed: 57] [added: 54] | | | [removed: 58] | [added: 57] | | [removed: 56] | | [added: 58 | |]

| International Franchises | | | [removed: 22] [added: 26] | | | [removed: 18] | [added: 22] | | [removed: 16] | | [added: 18 | |]

| Total Franchises | | | [removed: 79] [added: 80] | | | [removed: 76] | [added: 79] | | [removed: 72] | | [added: 76 | |]

[removed: Seasonality][added: Seasonality]

The increase in pest [removed: pressure] [added: presence] and activity, as well as 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 of the [removed: Company's] [added: Company’s] pest and termite control operations during such periods as evidenced by the following chart.

| | | [removed: Total] [added: Total] Net [removed: Revenues] [added: Revenues] | | | | | | | | | [added: | |]

| First Quarter | | [removed: $] [added: $] | [removed: 289,465] [added: 299,714] | | [added: |] $ | [removed: 271,643] [added: 289,465] | | [added: |] $ | [removed: 253,041] [added: 271,643] | |

| Second Quarter | | | [removed: 334,872] [added: 350,798] | | | [removed: 320,436] | [added: 334,872] | | [removed: 298,803] | | [added: 320,436 | |]

| Third Quarter | | | [removed: 340,179] [added: 362,155] | | | [removed: 323,929] | [added: 340,179] | | [removed: 305,118] | | [added: 323,929 | |]

| Fourth Quarter | | | [removed: 306,393] [added: 324,707] | | | [removed: 289,056] | [added: 306,393] | | [removed: 279,928] | | [added: 289,056 | |]

| Year ended December 31, | | [removed: $] [added: $] | [removed: 1,270,909] [added: 1,337,374] | | [added: |] $ | [removed: 1,205,064] [added: 1,270,909] | | [added: |] $ | [removed: 1,136,890] [added: 1,205,064] | |

[removed: Inventories][added: Inventories]

[removed: Rollins] [added: The Company] maintains a sufficient level of chemicals, materials and other supplies to fulfill its immediate servicing needs and to alleviate any potential short-term shortage in availability from its national network of suppliers.

[removed: Competition][added: Competition]

The principal methods of competition in the [removed: Company's] [added: Company’s] pest and termite control business are quality of service and guarantees, including [removed: money-back guarantees on pest and termite control,] [added: service quality,] and [removed: the termite re-treatment] [added: product availability, terms of guarantees, reputation for safety, technical proficiency] and [removed: damage repair guarantee to qualified homeowners.][added: price.]

[removed: Research] [added: Research] and [removed: Development][added: Development]

The Company also works closely with leading [removed: entomologists,] [added: scientists, educators,] industry consultants and suppliers to improve service protocols and materials.

[removed: Environmental] [added: Environmental] and Regulatory [removed: Considerations][added: Considerations]

[removed: _Federal] [added: Federal] Insecticide Fungicide and Rodentcide Act [removed: ("FIFRA")_][added: (“FIFRA”)]

[removed: _Food] [added: Food] Quality Protection Act of 1996 [removed: ("FQPA")_][added: (“FQPA”)]

[removed: _Environmental Remediation_][added: Environmental Remediation]

[removed: Employees][added: Employees]

The number of persons employed by the Company as of January 31, [removed: 2013] [added: 2014] was approximately [removed: 10,500.][added: 10,650.]

| [added: December 31,] | | [removed: 2012] [added: 2013] | | | [removed: 2011] | [added: 2012] | | [removed: 2010] | | [added: 2011] | [added: | |]

| Employees | | | [removed: 10,470] | [added: 10,649] | | [removed: 10,112] | | [added: 10,470] | [removed: 10,088] | | [added: | 10,112 | |]

[removed: Item] [added: Item] 1.A.

_We may not be able to maintain our competitive position in the [removed: competitive] pest control industry in the future._

Our revenues and earnings may be affected by changes in [removed: competitive] [added: competitors’] prices, and general economic issues.

We believe that the principal competitive factors in the market areas that we serve are service [removed: quality] [added: quality,] and product [removed: and] availability, terms of guarantees, reputation for safety, technical proficiency and price.

Although we believe that our experience and reputation for safety and quality service is excellent, we cannot assure [added: investors] that we will be able to maintain our competitive position.

We cannot assure [added: investors] that we will be able to identify and acquire acceptable acquisition candidates on terms favorable to us in the future.

Rollins Australia (“Rollins Australia”), a wholly-owned subsidiary of the Company, acquired Allpest WA (“Allpest”), in February 2014 subsequent to Rollins 2013 fiscal year end.

Allpest was established in 1959 and is headquartered in Perth, Australia.

Allpest provides traditional commercial, residential, and termite service as well as consulting services on border protection related to Australia’s biosecurity program and provides specialized services to Australia’s mining and oil and gas sectors.

| 6 |

| --- |

| | | (in thousands) | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 7 |

| --- |

| December 31, | | | 2013 | | | | 2012 | | | | 2011 | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 8 |

| --- |

| 9 |

| --- |

During the years ended

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

In the normal course of business, certain of the [removed: Company's] [added: Company’s] subsidiaries are defendants in a number of lawsuits or [removed: arbitrations,] [added: arbitrations] which allege that plaintiffs have been damaged as a result of the rendering of services by the defendant subsidiary.

Orkin, Inc., et [removed: al.; Douglas F.][added: al.]

Additionally, the Company and a subsidiary, The Industrial Fumigant Company, LLC, are named defendants in [removed: _Severn] [added: Severn] Peanut Co. and Meherrin Agriculture & Chemical Co. v.

Industrial Fumigant Co., et [removed: al_.][added: al.]

The [removed: _Severn_] [added: Severn] lawsuit, a matter related to a fumigation service, has been filed in the Northern Division of the United States District Court for the Eastern District of [added: North Carolina.]

The Industrial Fumigant Company, LLC [removed: is] [added: was] also a named defendant in [removed: _Insurance] [added: Insurance] Company of the State of Pennsylvania as Subrogee of Archer-Daniels-Midland Company, Agrinational Insurance Company, Inc. as Subrogee of Archer-Daniels-Midland Company, and Archer-Daniels-Midland Company v.

The Industrial Fumigant Co., The Industrial Fumigant Company, LLC, and James [removed: Miller_.][added: Miller.]

Management does not believe that any pending claim, proceeding or litigation, either alone or in the [removed: aggregate,] [added: aggregate] will have a material adverse effect on the [removed: Company's] [added: Company’s] 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.

[removed: Item 4] Mine Safety Disclosures.

In addition, the Company defends employment related cases from time to time.

John Maciel v.

is a wage and hour related matter in which the plaintiffs sought certification of a class.

The Maciel lawsuit was filed in the Superior Court of Los Angeles County, California, and has now been settled resulting in a dismissal of the suit with prejudice on January 28, 2014.

This lawsuit has been settled resulting in a dismissal of the suit with prejudice on January 24, 2014.

| 10 |

| --- |

Item 4.

Some lawsuits have been filed (_John Maciel v.

Bracho, Jr. v.

Orkin, Inc.;__Jennifer M.

Welsh et al.

v.

Orkin, LLC, et al.:_ and _Jennifer Thompson and Janet Flood v.

Philadelphia Management Company, Parkway Associated, Parkway House Apartments, Barbara Williams, and Western Pest Services_) in which the plaintiffs are seeking certification of a class.

These cases originate in California (_Maciel and Bracho_), South Carolina (_Welsh_), and Pennsylvania (_Flood_), respectively.

The _Maciel_ lawsuit, a wage and hour related matter, was filed in the Superior Court of Los Angeles County, California.

The _Bracho_ lawsuit, a matter related to payroll deductions for use of Company vehicles, was filed in the Superior Court of Orange County, California.

In _Bracho_, the Court in early October approved a final resolution of this matter, and on October 15, 2012, it was dismissed.

The _Welsh_ lawsuit, a termite service related matter, was filed in the Court of Common Pleas Fourteenth Judicial Circuit, County of Beaufort, South Carolina.

The _Flood_ lawsuit, a bed bug service related matter filed by residents of an apartment complex, was filed in the Court of Common Pleas of Philadelphia County, Pennsylvania.

On October 26, 2012, the Court approved a settlement of the _Flood_ case, and it was dismissed with prejudice.

None of the remaining matters have been scheduled for a class certification hearing.

North Carolina.

The plaintiffs are seeking damages for breach of contract and negligence.

The _ADM_ lawsuit, a matter related to a fumigation service, has been filed in the State Court in Lucas County, Ohio.

The Company believes these matters are without merit and intends to vigorously contest certification and defend itself through trial or arbitration, if necessary.

[removed: UNITED] [added: UNITED] STATES

[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [removed: FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012]

[removed: ROLLINS,] [added: ROLLINS,] INC.

[removed: (Exact] [added: (Exact] name of registrant as specified in its charter)

| Delaware | [removed: |] 51-0068479 |

| (State or other jurisdiction of [removed: incorporation or organization)] | [removed: |] (I.R.S. Employer Identification No.) |

| 2170 Piedmont Road, N.E., Atlanta, Georgia | [removed: |] 30324 |

| (Address of principal executive offices) | [removed: |] (Zip Code) |

| Title of each class | | [removed: Name of each Exchange] [added: Exchange] on which registered |

Yes [removed: ý] [added: x] No o

Yes o No [removed: ý][added: x]

[removed: |] Large accelerated filer [removed: ý | |] [added: x] Accelerated filer o [removed: | |] Non-accelerated filer o [removed: | |] Smaller Reporting Company o [removed: |]

The aggregate market value of Rollins, Inc. Common Stock held by non-affiliates on June 30, [removed: 2012] [added: 2013] was [removed: $1,412,400,268] [added: $1,646,439,937] based on the reported last sale price of common stock on June 30, [removed: 2012,] [added: 2013,] which is the last business day of the [removed: registrant's] [added: registrant’s] most recently completed second fiscal quarter.

Rollins, Inc. had [removed: 146,309,001] [added: 146,093,456] shares of Common Stock outstanding as of January 31, [removed: 2013.][added: 2014.]

Portions of the Proxy Statement for the [removed: 2013] [added: 2014] Annual Meeting of Stockholders of Rollins, Inc. are incorporated by reference into Part III, Items 10-14.

[removed: For] [added: For] the Year Ended December 31, [removed: 2012][added: 2013]

[removed: Table] [added: Table] of [removed: Contents][added: Contents]

| | | | | Page | [removed: | |]

| [removed: [Part I](#dc15401_part_i) | |] [added: Part I] | | | | |

| [Item [removed: 1.](#dc15401_item_1._business) | | [Business](#dc15401_item_1._business)] [added: 1](#a_001).] | | [added: [Business](#a_001)] | [removed: [10](#dc15401_item_1._business)] | [added: 6] |

| [Item [removed: 1.A.](#dc15401_item_1.a._risk_factors)] [added: 1.A](#a_002).] | | [Risk [removed: Factors](#dc15401_item_1.a._risk_factors) | |] [added: Factors](#a_002)] | [removed: [13](#dc15401_item_1.a._risk_factors)] | [added: 9] |

| [Item [removed: 1.B.](#dc15401_item_1.b._unresolved_staff_comments)] [added: 1.B](#a_003).] | | [Unresolved Staff [removed: Comments](#dc15401_item_1.b._unresolved_staff_comments) | |] [added: Comments](#a_003)] | [removed: [15](#dc15401_item_1.b._unresolved_staff_comments)] | [added: 10] |

| [Item [removed: 2.](#dc15401_item_2._properties.) | | [Properties](#dc15401_item_2._properties.)] [added: 2](#a_004).] | | [added: [Properties](#a_004)] | [removed: [15](#dc15401_item_2._properties.)] | [added: 10] |

| [Item [removed: 3.](#dc15401_item_3._legal_proceedings.)] [added: 3](#a_005).] | | [Legal [removed: Proceedings](#dc15401_item_3._legal_proceedings.) | |] [added: Proceedings](#a_005)] | [removed: [15](#dc15401_item_3._legal_proceedings.)] | [added: 10] |

| [Item [removed: 4.](#aa1)] [added: 4](#a_006).] | | [Mine Safety [removed: Disclosures.](#aa1) | |] [added: Disclosures.](#a_006)] | [removed: [16](#aa1)] | [added: 11] |

| [Item [removed: 4.A.](#aa2)] [added: 4.A](#a_007).] | | [Executive Officers of the [removed: Registrant.](#aa2) | |] [added: Registrant](#a_007).] | [removed: [16](#aa2)] | [added: 11] |

| [removed: [] Part [removed: II](#de15401_part_ii) | |] [added: II] | | | | |

| [Item [removed: 5.](#de15401_item_5._market_for_registrant___ite04647)] [added: 5](#a_008).] | | [Market for [removed: Registrant's] [added: Registrant’s] Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities.](#de15401_item_5._market_for_registrant___ite04647) | |] [added: Securities](#a_008).] | [removed: [18](#de15401_item_5._market_for_registrant___ite04647)] | [added: 12] |

| [Item [removed: 6.](#de15401_item_6._selected_financial_data.)] [added: 6](#a_009).] | | [Selected Financial [removed: Data.](#de15401_item_6._selected_financial_data.) | |] [added: Data](#a_009).] | [removed: [20](#de15401_item_6._selected_financial_data.)] | [added: 14] |

| [Item [removed: 7.](#dg15401_item_7._management_s_discussio__ite03649)] [added: 7](#a_010).] | | [removed: [Management's] [added: [Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations.](#dg15401_item_7._management_s_discussio__ite03649) | |] [added: Operations](#a_010).] | [removed: [21](#dg15401_item_7._management_s_discussio__ite03649)] | [added: 15] |

| [Item [removed: 7.A.](#di15401_item_7a._quantitative_and_qual__ite02650)] [added: 7.A](#a_011).] | | [Quantitative and Qualitative Disclosures about Market [removed: Risk.](#di15401_item_7a._quantitative_and_qual__ite02650) | |] [added: Risk](#a_011).] | [removed: [30](#di15401_item_7a._quantitative_and_qual__ite02650)] | [added: 23] |

| [Item [removed: 8.](#fc15401_item_8._financial_statements_and_supplementary_data.)] [added: 8](#a_012).] | | [Financial Statements and Supplementary [removed: Data.](#fc15401_item_8._financial_statements_and_supplementary_data.) | |] [added: Data](#a_012).] | [removed: [34](#fc15401_item_8._financial_statements_and_supplementary_data.)] | [added: 27] |

| [Item [removed: 9.](#fw15401_item_9._changes_in_and_disagre__ite03607)] [added: 9](#a_013).] | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosures.](#fw15401_item_9._changes_in_and_disagre__ite03607) | |] [added: Disclosures](#a_013).] | [removed: [68](#fw15401_item_9._changes_in_and_disagre__ite03607)] | [added: 54] |

| [Item [removed: 9.A.](#fw15401_item_9a._controls_and_procedures)] [added: 9.A](#a_014).] | | [Controls and [removed: Procedures.](#fw15401_item_9a._controls_and_procedures) | |] [added: Procedures](#a_014).] | [removed: [68](#fw15401_item_9a._controls_and_procedures)] | [added: 54] |

| [removed: [] Part [removed: III](#fw15401_part_iii) | |] [added: III] | | | | |

| [Item [removed: 10.](#fw15401_item_10._directors,_executive___ite02317)] [added: 10](#a_016).] | | [Directors, Executive Officers and Corporate [removed: Governance.](#fw15401_item_10._directors,_executive___ite02317) | |] [added: Governance.](#a_016)] | [removed: [68](#fw15401_item_10._directors,_executive___ite02317)] | [added: 54] |

| [Item [removed: 12.](#fw15401_item_12._security_ownership_of__ite03985)] [added: 12](#a_018).] | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters.](#fw15401_item_12._security_ownership_of__ite03985) | |] [added: Matters](#a_018).] | [removed: [69](#fw15401_item_12._security_ownership_of__ite03985)] | [added: 55] |

| [Item [removed: 13.](#fw15401_item_13._certain_relationships__ite03313)] [added: 13](#a_019).] | | [Certain Relationships and Related Party Transactions, and Director [removed: Independence.](#fw15401_item_13._certain_relationships__ite03313) | |] [added: Independence](#a_019).] | [removed: [69](#fw15401_item_13._certain_relationships__ite03313)] | [added: 55] |

| [Item [removed: 14.](#fw15401_item_14._principal_accounting_fees_and_services.)] [added: 14](#a_020).] | | [Principal Accounting Fees and [removed: Services.](#fw15401_item_14._principal_accounting_fees_and_services.) | |] [added: Services](#a_020).] | [removed: [69](#fw15401_item_14._principal_accounting_fees_and_services.)] | [added: 55] |

10-K 1 e00043_rol-10k.htm

_______________________

For the fiscal year ended December 31, 2013

______________

| --- | --- |

| incorporation or organization) | |

| --- | --- |

_______________________

| | | Name of each |

Yes x No o

Yes x No o

Yes o No x

Rollins, Inc.

| --- | --- | --- | --- | --- |

| | | | | |

| [Item 9.B](#a_015). | | [Other Information](#a_015) | | 54 |

| | | | | |

| [Item 11](#a_017). | | [Executive Compensation](#a_017). | | 55 |

| | | | | |

| | | [Signatures](#a_022). | | 58 |

| | | [Schedule II](#a_023). | | 60 |

| | | [Exhibit Index](#a_024). | | 61 |

10-K 1 a2213058z10-k.htm 10-K

Use these links to rapidly review the document

[FINANCIAL STATEMENTS](#je15401_financial_statements)

| | | |

| --- | --- | --- |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| [Item 9.B.](#fw15401_item_9b._other_information) | | [Other Information](#fw15401_item_9b._other_information) | | | [68](#fw15401_item_9b._other_information) | |

| [Item 11.](#fw15401_item_11._executive_compensation.) | | [Executive Compensation.](#fw15401_item_11._executive_compensation.) | | | [69](#fw15401_item_11._executive_compensation.) | |

| | | [Signatures.](#aa3) | | | [73](#aa3) | |

| | | [Schedule II.](#aa4) | | | [75](#aa4) | |

| | | [Exhibit Index.](#aa5) | | | [76](#aa5) | |

| Name | [removed: |] Age | [removed: | |] Office with Registrant | [removed: |] Date First [removed: Elected to] [added: Elected to] Present Office | [removed: | |]

| R. Randall Rollins (1) | [removed: | | 81 |] [added: 82] | Chairman of the Board of Directors | [removed: | |] 10/22/1991 | [removed: |]

| Gary W. Rollins (1) (2) | [removed: | | 68 |] [added: 69] | Vice Chairman and Chief Executive Officer | [removed: | |] 7/24/2001 | [removed: |]

| Harry J. Cynkus [removed: (3) | | | 63] [added: (4)] | [added: 64] | Senior Vice President, Chief Financial Officer and Treasurer | [removed: | |] 5/28/1998 | [removed: |]

| John Wilson [removed: (4) | | | 55] [added: (3)] | [added: 56] | President and Chief Operating Officer | [removed: | |] 1/23/2013 | [removed: |]

| Eugene Iarocci (5) | [removed: | | 66 |] [added: 67] | Vice President | [removed: | |] 2/22/2011 | [removed: |]

| Bob Wanzer (6) | [removed: | | 59 |] [added: 60] | Vice President | [removed: | |] 2/22/2011 | [removed: |]

| Tom Luczynski (7) | [removed: | | 56 |] [added: 57] | Secretary | [removed: | |] 5/4/2010 | [removed: |]

[added: | | (1) | R.] Randall Rollins and Gary W. [added: Rollins are brothers. |]

[added: | | (2) | Gary W. Rollins was elevated to Vice Chairman Rollins in January 2013.] He was elected to the office of Chief Executive Officer in July 2001. [added: In February 2004, he was named Chairman of Orkin, LLC. |]

[added: | | (4) | Harry J. Cynkus joined Rollins in 1998 as CFO and Corporate Treasurer, was named Vice President in 2009 and elevated to Senior Vice President in 2010.] He began his career with Arthur Andersen & Co. in Boston and has held various financial and information technology positions with several companies throughout the U.S., including Tyco International, ARAMARK Services, Initial USA, Brach & Brock Confections and Mayer Electric Supply Co, Inc. His professional memberships include the American Institute of Certified Public Accountants and the Financial Executives Institute (FEI). [added: He also previously served on FEI's National Committee on Finance and Information Technology. |]

[added: | | (3) |] John Wilson joined the Company in 1996 and has held various positions of increasing responsibility, serving as a technician, sales inspector, branch manager, region manager, vice president and division president. [added: His most senior positions have included Vice President of Rollins, Inc., Southeast Division President, Atlantic Division Vice President and Central Commercial region manager. Mr. Wilson was elevated to President and Chief Operating Officer in January 2013. |]

[added: | | (5) |] Eugene Iarocci joined the Company in 2003 and has more than 20 years experience in multi-unit management with a number of service and manufacturing industries, including Union Carbide Corporation where he worked for 24 years. [added: He has served as Region Manager in Louisiana, Division Vice President and President of Orkin's Atlantic Division. Mr. Iarocci was elevated to Vice President in 2011 and also serves as Orkin North America’s President. |]

[removed: PART] [added: PART] II

| --- | --- | --- | --- |

______________

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| | (6) | Bob Wanzer joined the Company with the acquisition of HomeTeam Pest Defense in 2008. He joined HomeTeam Pest Defense as President in 1998, became Chief Operating Officer in 2003 and CEO in 2007. Prior to joining HomeTeam, Mr. Wanzer served as Regional Vice President and Regional Manager of Tru-Green / Chemlawn. Previously, Mr. Wanzer was employed as Regional General Manager for Emery Worldwide, a national provider of domestic and international airfreight delivery services. In addition, he has served on the Boards of Directors for both the Professional Pest Management Alliance and the National Pest Management Association. Mr. Wanzer was elevated to Vice President in 2011 and also serves as President of the Company’s Independent Brands and Corporate Administration. |

| --- | --- | --- |

| | (7) | Tom Luczynski assumed responsibilities as Corporate Secretary on May 4, 2010. Currently also serving as Vice President of Orkin international development, franchising and support services, Mr. Luczynski joined the Company in 1985 as manager of reporting and was promoted to Vice President of Orkin finance in 1995. Prior to joining Rollins, Mr. Luczynski held financial positions with Revere Copper and Brass and Keytek-Elco Corporation. Mr. Luczynski is active in the pest control industry and has previously served on various trade industry organization’s board committees. In addition, he has served as president of the Atlanta chapter of FEI and president of the Atlanta chapter of the Institute of Management Accountants. |

| --- | --- | --- |

| 11 |

| --- |

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

(1)

R.

Rollins are brothers.

(2)

Gary W.

Rollins was elevated to Vice Chairman Rollins in January 2013.

In February 2004, he was named Chairman of Orkin, LLC.

(3)

Harry J.

Cynkus joined Rollins in 1998 as CFO and corporate treasurer, was named vice president in 2009 and elevated to senior vice president in 2010.

He also previously served on FEI's National Committee on Finance and Information Technology.

(4)

His most senior positions have included Southeast Division president, Atlantic Division vice president and Central Commercial region manager.

Mr. Wilson was elected President and Chief Operating Officer in January 2013.

(5)

He has served as Region Manager in Louisiana, Division Vice President and President of Orkin's Atlantic Division.

Mr. Iarocci currently serves as Rollins wholly-owned subsidiary, Orkin's President.

(6)

Bob Wanzer joined the Company with the acquisition of HomeTeam Pest Defense in 2008.

He joined HomeTeam Pest Defense as President in 1998, became Chief Operating Officer in 2003 and CEO in 2007.

Prior to joining HomeTeam, Mr. Wanzer served as Regional Vice President and Regional Manager of Tru-Green / Chemlawn.

Previously, Mr. Wanzer was employed as Regional General Manager for Emery Worldwide, a national provider of domestic and international airfreight delivery services.

In addition, he has served on the Boards of Directors for both the Professional Pest Management Alliance and the National Pest Management Association.

Mr. Wanzer now serves as Rollins' Vice President of Independent Brands and Corporate Administration.

(7)

Tom Luczynski assumed responsibilities as corporate secretary on May 4, 2010.

Currently also serving as vice president of Orkin international development, franchising and support services, Mr. Luczynski joined the company in 1985 as manager of reporting and was promoted to vice president of Orkin finance in 1995.

Prior to joining Rollins, Mr. Luczynski held financial positions with Revere Copper and Brass and Keytek-Elco Corporation.

Mr. Luczynski is active in the pest control industry and has previously served on various industry board committees.

In addition, he has served as president of the Atlanta chapter of FEI and president of the Atlanta chapter of the Institute of Management Accountants.

The high and low prices of the [removed: Company's] [added: Company’s] common stock and dividends paid for each quarter in the years ended December 31, [removed: 2012] [added: 2013] and [removed: 2011] [added: 2012] were as follows:

[removed: STOCK] [added: STOCK] PRICES AND DIVIDENDS

[removed: Rounded] [added: Rounded] to the nearest $.01

| | | Stock Price | | | | | | [removed: Dividends] [added: | |] Paid [removed: Per Share] | | | | | [added: |] Stock Price | | | | | | [removed: Dividends] [added: | |] Paid [removed: Per Share] | | |

| [removed: 2012] [added: 2013] | | High | | | [added: |] Low | | | [removed: 2011] | [added: Per Share] | [removed: High] | | | [removed: Low] [added: 2012] | | [added: High] | | | | [added: Low] | | | [added: | Per Share | | |]

| First Quarter | | $ | [removed: 23.04] [added: 25.61] | | [added: |] $ | [removed: 19.30] [added: 22.34] | | [added: |] $ | [removed: 0.08] [added: 0.09] | | [added: |] First Quarter | | $ | [removed: 20.31] [added: 23.04] | | [added: |] $ | [removed: 18.29] [added: 19.30] | | [added: |] $ | [removed: 0.07] [added: 0.08] | |

| Second Quarter | | $ | [removed: 22.48] [added: 26.09] | | [added: |] $ | [removed: 20.03] [added: 22.46] | | [added: |] $ | [removed: 0.08] [added: 0.09] | | [added: |] Second Quarter | | $ | [removed: 21.19] [added: 22.48] | | [added: |] $ | [removed: 18.87] [added: 20.03] | | [added: |] $ | [removed: 0.07] [added: 0.08] | |

| Third Quarter | | $ | [removed: 24.41] [added: 27.99] | | [added: |] $ | [removed: 22.08] [added: 24.09] | | [added: |] $ | [removed: 0.08] [added: 0.09] | | [added: |] Third Quarter | | $ | [removed: 21.60] [added: 24.41] | | [added: |] $ | [removed: 16.51] [added: 22.08] | | [added: |] $ | [removed: 0.07] [added: 0.08] | |

| Fourth Quarter | | $ | [removed: 23.80] [added: 30.63] | | [added: |] $ | [removed: 21.42] [added: 26.12] | | [added: |] $ | [removed: 0.20] [added: 0.18] | | [added: |] Fourth Quarter | | $ | [removed: 23.74] [added: 23.80] | | [added: |] $ | [removed: 17.30] [added: 21.42] | | [added: |] $ | [removed: 0.07] [added: 0.20] | |

As of January 31, [removed: 2013,] [added: 2014,] there were [removed: 2,056] [added: 2,045] holders of record of the [removed: Company's] [added: Company’s] common stock.

On January [removed: 23, 2013] [added: 28, 2014] the Board of Directors approved a quarterly cash dividend per common share of [removed: $0.09] [added: $0.105] payable March [removed: 8, 2013] [added: 10, 2014] to stockholders of record at the close of business February [removed: 8, 2013.][added: 10, 2014.]

On October [removed: 23, 2012,] [added: 22, 2013,] the Board of Directors declared a special year-end dividend of [removed: $0.12] [added: $0.09] per share payable December 10, [removed: 2012] [added: 2013] to stockholders of record at the close of business November [removed: 09, 2012.][added: 8, 2013.]

[removed: Issuer] [added: Issuer] Purchases of Equity [removed: Securities][added: Securities]

During the years ended December 31, [removed: 2012] [added: 2013] and [removed: 2011,] [added: 2012,] the Company repurchased [removed: 0.8] [added: on the open market 0.3] million and [removed: 1.5] [added: 0.8] million shares at a weighted average price of [removed: $20.93] [added: $24.56] and [removed: $18.68,] [added: $20.93,] respectively.

In total, there [removed: are 5.3] [added: remains 5.0] million additional shares authorized to be repurchased under prior Board approval.

| Period | | Total Number of Shares Purchased | | | [added: |] Weighted Average Price Paid per Share | | | [added: |] Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans | | | [added: |] Maximum Number of Shares that May Yet Be Purchased Under the Repurchase Plans | | |

There were no repurchases of the [removed: Company's] [added: Company’s] common stock during the fourth quarter ended December 31, [removed: 2012.][added: 2013.]

[removed: PERFORMANCE] [added: PERFORMANCE] GRAPH

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL [removed: RETURN*][added: RETURN*]

[removed: ][added: ]

| Cumulative Total Shareholder Return [removed: $ at] [added: $ at] Fiscal Year End | [removed: | 2007 | | |] 2008 | [removed: | |] 2009 | [removed: | |] 2010 | [removed: | |] 2011 | [removed: | |] 2012 | [removed: |] [added: 2013] |

| | | | | | | | | | | Dividends | | | | | | | | | | | | | | Dividends | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1 to 31, 2013 | | | — | | | $ | — | | | | — | | | | 4,957,484 | |

| November 1 to 30, 2013 | | | — | | | $ | — | | | | — | | | | 4,957,484 | |

| December 1 to 31, 2013 | | | — | | | $ | — | | | | — | | | | 4,957,484 | |

| Total | | | — | | | $ | — | | | | — | | | | 4,957,484 | |

| 12 |

| --- |

| --- | --- | --- | --- | --- | --- | --- |

| Rollins, Inc. | 100.00 | 108.43 | 169.42 | 193.37 | 195.59 | 273.52 |

| S&P 500 | 100.00 | 126.46 | 145.51 | 148.59 | 172.37 | 228.19 |

| Peer Index | 100.00 | 123.79 | 145.00 | 162.52 | 207.59 | 271.46 |

| 13 |

| --- |

| | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1 to 31, 2012 | | | — | | $ | — | | | — | | | 5,298,183 | |

| November 1 to 30, 2012 | | | — | | $ | — | | | — | | | 5,298,183 | |

| December 1 to 31, 2012 | | | — | | $ | — | | | — | | | 5,298,183 | |

| Total | | | — | | $ | — | | | — | | | 5,298,183 | |

Comparison of 5 Year Cumulative Total Return

Assumes Initial Investment of $100

December 2012

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Rollins, Inc. | | | 100.00 | | | 95.57 | | | 103.59 | | | 161.74 | | | 184.46 | | | 186.58 | |

| S&P 500 | | | 100.00 | | | 62.99 | | | 79.65 | | | 91.64 | | | 93.57 | | | 108.55 | |

| Peer Index | | | 100.00 | | | 63.38 | | | 78.46 | | | 91.90 | | | 103.00 | | | 131.57 | |

[removed: FIVE-YEAR] [added: FIVE-YEAR] FINANCIAL [removed: SUMMARY][added: SUMMARY]

| [added: | |] (in thousands except per share data) | | | | | | | | | | | | | | | | | [added: | |]

| [added: Years ended December 31,] | [removed: 2012] | [added: 2013] | | [removed: 2011] | | [added: 2012] | [removed: 2010] | | | [removed: 2009] [added: 2011] | | | [removed: 2008] | [added: 2010] | | | [added: | 2009 | | |]

| Revenues | | [removed: $] [added: $] | [removed: 1,270,909] [added: 1,337,374] | | [added: |] $ | [removed: 1,205,064] [added: 1,270,909] | | [added: |] $ | [removed: 1,136,890] [added: 1,205,064] | | [added: |] $ | [removed: 1,073,958] [added: 1,136,890] | | [added: |] $ | [removed: 1,020,564] [added: 1,073,958] | |

| Income Before Income Taxes | | | [removed: 176,642] [added: 191,606] | | | [removed: 161,096] | [added: 176,642] | | [removed: 143,545] | | [added: 161,096] | [removed: 126,291] | | | [removed: 112,954] [added: 143,545] | | [added: | | 126,291 | |]

| Net Income | | | [removed: 111,332] [added: 123,330] | | | [removed: 100,711] | [added: 111,332] | | [removed: 90,002] | | [added: 100,711] | [removed: 83,984] | | | [removed: 68,934] [added: 90,002] | | [added: | | 83,984 | |]

| Earnings Per Share [removed: –] [added: -] Basic: | | | [removed: 0.76] [added: 0.84] | | | [removed: 0.69] | [added: 0.76] | | [removed: 0.61] | | [added: 0.69] | [removed: 0.56] | | | [removed: 0.46] [added: 0.61] | | [added: | | 0.56 | |]

| Earnings Per Share [removed: –] [added: -] Diluted: | | | [removed: 0.76] [added: 0.84] | | | [removed: 0.69] | [added: 0.76] | | [removed: 0.61] | | [added: 0.69] | [removed: 0.56] | | | [removed: 0.45] [added: 0.61] | | [added: | | 0.56 | |]

| Dividends paid per share | | | [removed: 0.44] [added: 0.45] | | | [removed: 0.28] | [added: 0.44] | | [removed: 0.24] | | [added: 0.28] | [removed: 0.19] | | | [removed: 0.17] [added: 0.24] | | [added: | | 0.19 | |]

| [removed: OTHER DATA:] [added: OTHER DATA:] | | | | | | | | | | | | | | | | | [added: | | | |]

| Net cash provided by operating activities | | [removed: $] [added: $] | [removed: 141,919] [added: 162,665] | | [added: |] $ | [removed: 154,647] [added: 141,919] | | [added: |] $ | [removed: 124,053] [added: 154,647] | | [added: |] $ | [removed: 110,846] [added: 124,053] | | [added: |] $ | [removed: 90,744] [added: 110,846] | |

| Net cash used in investing activities | | | [removed: (42,693] [added: (30,790] | [removed: )] [added: )] | | [removed: (29,154] | [added: (42,693 |] ) | | [removed: (47,645] | [added: (29,154 |] ) | | [removed: (26,562] | [added: (47,645 |] ) | | [removed: (166,717] | [added: (26,562 |] ) |

| Net cash [removed: provided by (used in)] [added: used in] financing activities | | | [removed: (80,989] [added: (75,653] | [removed: )] [added: )] | | [removed: (99,427] | [added: (80,989 |] ) | | [removed: (65,497] | [added: (99,427 |] ) | | [removed: (89,753] | [added: (65,497 |] ) | | [removed: 21,032] | [added: (89,753] | [added: ) |]

| Depreciation | | | [removed: 15,212] [added: 14,415] | | | [removed: 15,112] | [added: 15,212] | | [removed: 15,975] | | [added: 15,112] | [removed: 15,874] | | | [removed: 14,205] [added: 15,975] | | [added: | | 15,874 | |]

| Amortization of intangible assets | | | [removed: 23,443] [added: 25,156] | | | [removed: 22,391] | [added: 23,443] | | [removed: 20,433] | | [added: 22,391] | [removed: 21,295] | | | [removed: 19,238] [added: 20,433] | | [added: | | 21,295 | |]

| Capital expenditures | | [removed: $] [added: $] | [removed: (19,040] [added: (18,632] | [removed: )] [added: )] | [added: |] $ | [removed: (18,652] [added: (19,040] | ) | [added: |] $ | [removed: (13,036] [added: (18,652] | ) | [added: |] $ | [removed: (15,740] [added: (13,036] | ) | [added: |] $ | [removed: (14,815] [added: (15,740] | ) |

| [removed: BALANCE] [added: BALANCE] SHEET DATA AT END OF [removed: YEAR:] [added: YEAR:] | | | | | | | | | | | | | | | | | [added: | | | |]

| Current assets | | [removed: $] [added: $] | [removed: 205,992] [added: 272,442] | | [added: |] $ | [removed: 175,822] [added: 205,992] | | [added: |] $ | [removed: 151,021] [added: 175,822] | | [added: |] $ | [removed: 120,530] [added: 151,021] | | [added: |] $ | [removed: 116,838] [added: 120,530] | |

| Total assets | | | [removed: 692,506] [added: 739,217] | | | [removed: 645,650] | [added: 692,506] | | [removed: 619,014] | | [added: 645,650] | [removed: 566,496] | | | [removed: 572,517] [added: 619,014] | | [added: | | 566,496 | |]

| Line of credit | | | [removed: —] [added: —] | | | [added: |] — | | | [removed: 26,000] | [added: —] | | [removed: 30,000] | | [added: 26,000] | [removed: 65,000] | | [added: | 30,000 | |]

| Stockholders' equity | | [removed: $] [added: $] | [removed: 354,956] [added: 438,255] | | [added: |] $ | [removed: 323,997] [added: 354,956] | | [added: |] $ | [removed: 297,970] [added: 323,997] | | [added: |] $ | [removed: 264,566] [added: 297,970] | | [added: |] $ | [removed: 228,433] [added: 264,566] | |

| Number of shares outstanding at year-end | | | [removed: 146,015] [added: 145,864] | | | [removed: 146,251] | [added: 146,015] | | [removed: 147,181] | | [added: 146,251] | [removed: 148,357] | | | [removed: 150,062] [added: 147,181] | | [added: | | 148,357 | |]

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 14 |

| --- |

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Years ended December 31, | | | | | | | | | | | | | | |

CONSOLIDATED STATEMENTS OF FINANCIAL [removed: POSITION][added: POSITION]

[removed: _Rollins,] [added: | Rollins,] Inc. and [removed: Subsidiaries_][added: Subsidiaries | | | | | | | | | | | | | | | | | | | | | | | | |]

| [removed: ASSETS] [added: ASSETS] | | | | | | | | [added: |]

| Cash and cash equivalents [added: at beginning of year] | | [removed: $] | [removed: 65,082] [added: 65,082] | | [removed: $] | [added: |] 46,275 | | [added: | | 20,913 | |]

| Trade receivables, net of allowance for doubtful accounts of [removed: $8,211] [added: $9,078] and [removed: $6,738,] [added: $8,211,] respectively | | | [removed: 68,920] [added: 72,849] | | | [removed: 61,687] | [added: 68,920] | [added: |]

| Financed receivables, short-term, net of allowance for doubtful accounts of [removed: $1,842] [added: $1,777] and [removed: $1,691,] [added: $1,842,] respectively | | | [removed: 11,823] [added: 12,220] | | | [removed: 11,659] | [added: 11,823] | [added: |]

| Materials and supplies | | | [removed: 11,847] [added: 12,251] | | | [removed: 11,125] | [added: 11,847] | [added: |]

| Deferred income taxes | | | [removed: 33,338] [added: 39,518] | | | [removed: 31,272] | [added: 33,338] | [added: |]

| Other current assets | | | [removed: 14,982] [added: 19,388] | | | [removed: 13,804] | [added: 14,982] | [added: |]

| Total Current Assets | | | [removed: 205,992] [added: 274,442] | | | [removed: 175,822] | [added: 205,992] | [added: |]

| Equipment and property, net | | | [removed: 82,263] [added: 87,215] | | | [removed: 76,858] | [added: 82,263] | [added: |]

| Goodwill | | | [removed: 212,477] [added: 211,847] | | | [removed: 211,019] | [added: 212,477] | [added: |]

| Customer contracts, net | | | [removed: 113,400] [added: 101,457] | | | [removed: 108,348] | [added: 113,400] | [added: |]

| Other intangible assets, net | | | [removed: 28,389] [added: 27,112] | | | [removed: 29,178] | [added: 28,389] | [added: |]

| Deferred income taxes | | | [removed: 26,841] [added: 4,544] | | | [removed: 22,604] | [added: 26,841] | [added: |]

| Financed receivables, long-term, net of allowance for doubtful accounts of [removed: $1,408] [added: $1,423] and [removed: $1,309,] [added: $1,408,] respectively | | | [removed: 11,681] [added: 11,608] | | | [removed: 11,298] | [added: 11,681] | [added: |]

| Other assets | | | [removed: 11,463] [added: 13,879] | | | [removed: 10,523] | [added: 11,463] | [added: |]

| Total Assets | | [removed: $] [added: $] | [removed: 692,506] [added: 739,217] | | [added: |] $ | [removed: 645,650] [added: 692,506] | |

| [removed: LIABILITIES] [added: LIABILITIES] | | | | | | | | [added: |]

| Accounts payable | | | [removed: 24,854] [added: 23,194] | | | [removed: 22,584] | [added: 24,854] | [added: |]

| Accrued insurance | | | [removed: 24,164] [added: 25,631] | | | [removed: 21,844] | [added: 24,164] | [added: |]