Rollins (ROL) 10-K risk factor changes: FY2015 vs FY2014

[removed: You] [added: This discussion] should [added: be] read [removed: the following discussion] in conjunction with our audited financial statements and related notes included elsewhere in this document.

[removed: Overview][added: Overview]

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

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

| Years ended December 31, | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Revenues | | [removed: $] [added: $] | [removed: 1,411,566] [added: 1,485,305] | | | $ | [removed: 1,337,374] [added: 1,411,566] | | | $ | [removed: 1,270,909] [added: 1,337,374] | | | | [removed: 5.5] [added: 5.2] | % | | | [removed: 5.2] [added: 5.5] | % |

| Cost of services provided | | | [removed: 707,739] [added: 735,976] | | | | [removed: 678,459] [added: 707,739] | | | | [removed: 647,578] [added: 678,459] | | | | [removed: (4.3] [added: (4.0] | ) | | | [removed: (4.8] [added: (4.3] | ) |

| Depreciation and amortization | | | [removed: 43,509] [added: 44,522] | | | | [removed: 39,571] [added: 43,509] | | | | [removed: 38,655] [added: 39,571] | | | | [removed: (10.0] [added: (2.3] | ) | | | [removed: (2.4] [added: (10.0] | ) |

| Sales, general and administrative | | | [removed: 441,706] [added: 463,742] | | | | [removed: 428,288] [added: 441,706] | | | | [removed: 407,488] [added: 428,288] | | | | [removed: (3.1] [added: (5.0] | ) | | | [removed: (5.1] [added: (3.1] | ) |

| Gain on sales of assets, net | | | [removed: (618] [added: (1,953] | ) | | | [removed: (165] [added: (618] | ) | | | [removed: (468] [added: (165] | ) | | | [removed: 274.5] [added: 216.0] | | | | [removed: (64.7] [added: 274.5] | [removed: )] |

| Interest [removed: (income)/expense] [added: income] | | | [removed: (254] [added: (160] | ) | | | [removed: (385] [added: (254] | ) | | | [removed: 14] [added: (385] | [added: )] | | | [removed: (34.0] [added: (37.0] | ) | | | [removed: N/M] [added: 34.0] | |

| Income before income taxes | | | [removed: 219,484] [added: 243,178] | | | | [removed: 191,606] [added: 219,484] | | | | [removed: 176,642] [added: 191,606] | | | | [removed: 14.5] [added: 10.8] | | | | [removed: 8.5] [added: 14.5] | |

| Provision for income taxes | | | [removed: 81,820] [added: 91,029] | | | | [removed: 68,276] [added: 81,820] | | | | [removed: 65,310] [added: 68,276] | | | | [removed: (19.8] [added: (11.3] | ) | | | [removed: (4.5] [added: (19.8] | ) |

| Net income | | [removed: $] [added: $] | [removed: 137,664] [added: 152,149] | | | $ | [removed: 123,330] [added: 137,664] | | | $ | [removed: 111,332] [added: 123,330] | | | | [removed: 11.6] [added: 10.5] | % | | | [removed: 10.8] [added: 11.6] | % |

[removed: The year 2014] [added: 2015] marked the Company’s [removed: 17th] [added: 18th] consecutive year of [removed: reporting] improved [removed: revenue] [added: revenues] and [removed: profit.][added: profits.]

[removed: Results] [added: Results] of Operations—2014 Versus [removed: 2013][added: 2013]

The Company’s depreciation and amortization margin increased 0.1 point to [removed: 3.1 %] [added: 3.1%] in 2014 compared to 3.0% in 2013.

Less than [removed: 2.0%] [added: 2%] of the Company’s revenue increase came from pricing actions.

Gross margin for the year [removed: was] [added: increased to] 49.9% for 2014 [removed: and] [added: compared to] 49.3% for 2013 due to favorable termite and casualty claim development, reduced fleet costs and good cost controls across most spending categories.

The Company’s effective tax rate [removed: was] [added: increased to] 37.3% in 2014 compared to 35.6% in 2013, due primarily to state and foreign income taxes, and the release of certain deferred tax liabilities in 2013.

[removed: Results] [added: Results] of [removed: Operations—2013] [added: Operations—2015] Versus [removed: 2012][added: 2014]

The Company’s gross margin increased to [removed: 49.3%] [added: 50.4%] for [removed: 2013] [added: 2015] from [removed: 49.0%] [added: 49.9%] in [removed: 2012.][added: 2014.]

Sales, general and administrative expense decreased in [removed: 2013] [added: 2015] to [removed: 32.0%] [added: 31.2%] of revenue versus [removed: 32.1%] [added: 31.3%] in [removed: 2012.][added: 2014.]

Revenues for the year ended December 31, [removed: 2013] [added: 2015] were [removed: $1.337] [added: $1.485] billion, an increase of [removed: $66.4] [added: $73.7] million or 5.2% from [removed: 2012] [added: 2014] revenues of [removed: $1.271] [added: $1.412] billion.

Commercial pest control represented approximately 41% of the Company’s [removed: business] [added: revenue] in [removed: 2013] [added: 2015] and grew [removed: 4.9%] [added: 3.3%] in [removed: 2013] [added: 2015] due to increases in [removed: sales and] [added: sales, improvements in cancellations, increased] bed bug [removed: revenues.][added: revenue, an increase in commercial fumigations, and acquisitions.]

Residential pest control [added: which also] represented approximately 41% of the Company’s [removed: business and] [added: revenue,] increased [removed: 6.1%] [added: 6.6%] driven by increased leads, [removed: closure] [added: closures] and pricing as well as increased [removed: capture of] TAEXX® homebuilder [removed: installations.][added: installations, bed bug revenues and acquisitions.]

The Company’s termite business, which represented approximately 17% of the Company’s revenue, grew [removed: 4.5%] [added: 4.6%] in [removed: 2013] [added: 2015] due to increases in [added: drywood fumigations and] ancillary service [removed: sales as well as the Company’s expanded sales force] [added: sales,] and [removed: price improvement.][added: acquisitions.]

The Company implemented its traditional price increase program in June [removed: 2013 which had a positive impact on the year’s revenue.][added: 2015.]

Nearly 80% of the Company’s [added: pest control] revenue was recurring in [removed: 2013] [added: 2015] and [removed: 2012.][added: 2014.]

The Company’s foreign operations accounted for approximately [added: 7% and] 8% of total revenues for the years ended December 31, [removed: 2013] [added: 2015] and [removed: 2012.][added: 2014, respectively.]

Orkin had [removed: 80 and 79 total domestic] [added: 99] and [removed: international] [added: 92] franchises [added: (domestic and international)] at December 31, [removed: 2013] [added: 2015] and [removed: 2012,] [added: 2014,] respectively.

For the twelve months ended December 31, [removed: 2013] [added: 2015] cost of services provided increased [removed: $30.9] [added: $28.2] million or [removed: 4.8%,] [added: 4.0%,] compared to the twelve months ended December 31, [removed: 2012.][added: 2014.]

For the twelve months ended December 31, [removed: 2013,] [added: 2015,] depreciation and amortization increased [removed: $0.9] [added: $1.0] million, or [removed: 2.4%] [added: 2.3%] compared to the twelve months ended December 31, [removed: 2012.][added: 2014.]

For the twelve months ended December 31, [removed: 2013,] [added: 2015,] sales, general and administrative (SG&A) expenses increased [removed: $20.8] [added: $22.0] million, or [removed: 5.1%] [added: 5.0%] compared to the twelve months ended December 31, [removed: 2012 representing 32.0% of revenues compared to 32.1% of revenues in the prior year.][added: 2014.]

Interest [removed: (income)/expense,] [added: income,] net for the year ended December 31, [removed: 2013] [added: 2015] was [removed: $0.4 million income, an increase] [added: $0.2 million, a decrease] of [removed: $0.4] [added: $0.1] million compared to [removed: $14 thousand expense] [added: $0.3 million] in [removed: 2012.][added: 2014.]

Gain on sales of assets, net [removed: decreased] [added: increased] to [removed: $0.2] [added: $2.0] million [removed: gain] for the year ended December 31, [removed: 2013] [added: 2015] compared to [removed: $0.5] [added: $0.6] million gain in [removed: 2012.][added: 2014.]

The Company recognized gains from the sale of owned vehicles and property in [removed: 2013] [added: 2015] and [removed: 2012.][added: 2014.]

The Company’s effective tax rate [removed: was 35.6%] [added: increased to 37.4%] in [removed: 2013] [added: 2015] compared to [removed: 37.0%] [added: 37.3%] in [removed: 2012,] [added: 2014,] due primarily to differences in state [removed: tax rates] and foreign income [removed: taxes and the release of certain deferred tax liabilities.][added: taxes.]

The Company’s cash and cash equivalents at December 31, [added: 2015,] 2014, [removed: 2013,] and [removed: 2012] [added: 2013] were [removed: $108.4] [added: $134.6] million, [removed: $118.2] [added: $108.4] million, and [removed: $65.1] [added: $118.2] million, respectively.

| | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

Presentation

The Company has only one reportable segment, its pest and termite control business.

The Company’s results of operations and its financial condition are not reliant upon any single customer or a few customers or the Company’s foreign operations.

Revenues for the year rose 5.2 percent to $1.485 billion compared to $1.412 billion for the prior year.

Income before income taxes increased 10.8% to $243.2 million compared to $219.5 million the prior year.

Net income increased 10.5% to $152.1 million, with earnings per diluted share of $0.70 compared to $137.7 million, or $0.63 per diluted share for the prior year.

All of our business lines experienced growth for the year, with residential pest control revenues up 6.6%, commercial pest control revenues up 3.3% and termite revenues up 4.6%.

We are pleased with the success we had with the rollout of our CRM system (BOSS) during the year.

We ended 2015 with 50 percent of our Orkin branches on the system.

We currently expect to have all Orkin locations on BOSS by the end of the third quarter of this year.

Orkin recently announced that we extended our presence in North America, South America, Europe, the Middle East and Asia, with the addition of nine new franchises.

Our new franchises are located in Mexico, Colombia, Republic of Georgia, Qatar, China, and South Korea.

As of December 31, 2015, Orkin has 48 international franchises.

We look to expand our domestic and international franchise footprint, while continuing to work closely with our current franchise partners to help them grow their businesses.

Strategic acquisitions remain a priority for Rollins, and as in the past, we will continue to seek out companies that are a “fit” for us in both, the pest control and wildlife areas of our business.

The Company’s depreciation and amortization margin decreased 0.1 point to 3.0 % in 2015 compared to 3.1% in 2014.

Rollins’ net income of $152.1 million in 2015 was an increase of $14.5 million or 10.5% over $137.7 million in 2014.

Net profit margin improved to 10.2% in 2015 from 9.8% in 2014.

| | 15 | |

Growth occurred across all service lines and brands with our foreign companies being hurt by unfavorable exchange rates.

Organic growth and pricing accounted for approximately 4.2% of our increase and our acquisitions contributed the remaining revenue growth.

Currency exchange translation is the cause of the decreased percentage.

The Company established new franchises in China, El Salvador, Mexico, Colombia, the Republic of Georgia, Bahrain, Qatar, Hong Kong, China, Macau, and South Korea in 2015 for a total of 48 international franchises at December 31, 2015 with 37 at December 31, 2014.

Gross margin for the year increased to 50.4% for 2015 compared to 49.9% for 2014 due to reduced fleet costs due to the drop in gasoline prices, favorable service salaries as we continue to improve our routing and scheduling to maximize efficiencies and favorable administrative salary margins as we continue to focus on efficiency.

The favorable margins were partially offset by our casualty claim development, increases in supplies as a result of increased sales and increases in personnel related costs as group premiums continue to increase.

We experienced good cost controls across most spending categories.

The dollar increase was due primarily to depreciation increasing $2.7 million as we depreciate our customer relationship management software “BOSS”, while amortization of intangible assets decreased as we fully amortized several intangible assets during the 12 month period.

SG&A decreased to 31.2% of revenues compared to 31.3% of revenues in the prior year.

As a percentage of revenues, SG&A decreased due to the Company’s leveraging our SG&A expenses against higher revenues, reducing our bad debt expense with our collections efforts and experiencing lower gasoline costs, partially offset by higher sales salaries.

The increase was due to the Company selling two buildings in 2015.

| | 16 | |

| | 17 | |

Cash from operating activities is the principal source of cash generation for our businesses.

The most significant source of cash in Rollins’ cash flow from operations is customer-related activities, the largest of which is collecting cash resulting from services sales.

The most significant operating use of cash is to pay our suppliers, employees, tax authorities and others for a wide range of material and services.

| | 18 | |

On October 27, 2015 the Company exercised a one year extension option to extend the maturity date to October 31, 2019.

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| Non-cancelable operating leases | | | 85,158 | | | | 23,441 | | | | 28,116 | | | | 17,009 | | | | 16,592 | |

| --- | --- |

| Pension Settlement | | | — | | | | — | | | | 1,000 | | | | N/M | | | | 100.0 | |

In 2014 the Company’s revenue grew 5.5%, with growth in all lines of service.

The Company’s revenue from its bed bug service offering grew over 18% for the year and HomeTeam’s TAEXX® homebuilder installations rose almost 5.5%.

We have also expanded Orkin’s international franchise portfolio to a total of 37 international franchises

Management is pleased with the 2014 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 pest control brands that are well known in their respective markets.

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

| 15 |

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The dollar increase was due primarily to amortization related to acquisitions that occurred over the previous 12 months.

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

The Company had net income of $123.3 million in 2013 compared to $111.3 million in 2012, a 10.8% increase.

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

| 16 |

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.

Gross margin for the year was 49.3% for 2013 and 49.0% for 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 increase is due to amortization of intangible assets acquired in late 2012 and early 2013 partially offset by several fixed and intangible assets being fully depreciated or amortized.

As a percentage of revenues, SG&A decreased due to reduced salaries as a percentage of revenues as the Company continues to maximize efficiency in its workforce and bad debt expense as the Company continues its focus on collections.

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.

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

| 17 |

| 18 |

| Non-cancelable operating leases | | | 81,898 | | | | 25,512 | | | | 27,511 | | | | 15,030 | | | | 13,845 | |

| Total (2) | | $ | 86,991 | | | $ | 27,970 | | | $ | 30,146 | | | $ | 15,030 | | | $ | 13,845 | |

The Company has improved the time required to report a claim by utilizing a “Red Alert” program that provides serious accident assessment twenty four hours a day and seven days a week and has instituted a modified duty program that enables employees to go back to work on a limited-duty basis.

| 19 |

The Company terminated the Waltham Services, LLC Salaried Pension Plan and all benefits have been settled via an annuity purchase or lump sum distribution in December 2012.

| 20 |

In February 2013, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02) to Comprehensive Income.

The guidance requires disclosure of significant amounts reclassified out of accumulated other comprehensive income by component and their corresponding effect on the respective line items of net income.

The provision of the new guidance was effective as of the beginning of our 2014 fiscal year.

In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force).

This guidance requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date.

This stipulates that (1) it will include the amount the entity agreed to pay for the arrangement between them and the other entities that are also obligated to the liability and (2) any additional amount the entity expects to pay on behalf of the other entities.

The objective of this update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements.

In July 2013, the FASB issued ASU No 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.

Topic 740, Income Taxes, does not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists.

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Market Risk

The Company maintains an investment portfolio subject to short-term interest rate risk exposure.

The Company is also subject to interest rate risk exposure through borrowings on its $175 million credit facility.

Currently, the Company has no outstanding borrowings.

However, the Company does maintain approximately $35.5 million in Letters of Credit.

The Company is also exposed to market risks arising from changes in foreign exchange rates.

The Company believes that this foreign exchange rate risk will not have a material effect upon the Company’s results of operations or financial position going forward.

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MANAGEMENT’S REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING

To the Stockholders of Rollins, Inc.:

The management of Rollins, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

Rollins, Inc. maintains a system of internal accounting controls designed to provide reasonable assurance, at a reasonable cost, that assets are safeguarded against loss or unauthorized use and that the financial records are adequate and can be relied upon to produce financial statements in accordance with accounting principles generally accepted in the United States of America.

The internal control system is augmented by written policies and procedures, an internal audit program and the selection and training of qualified personnel.

This system includes policies that require adherence to ethical business standards and compliance with all applicable laws and regulations.

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, 2014 based on criteria established in the 2013 Internal Control—Integrated framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management’s assessment is that Rollins, Inc. maintained effective internal control over financial reporting as of December 31, 2014.

The independent registered public accounting firm, Grant Thornton LLP has audited the consolidated financial statements as of and for the year ended December 31, 2014, and has also issued their report on the effectiveness of the Company’s internal control over financial reporting, included in this report on page 24.

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

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

| Gary W. Rollins Vice Chairman and Chief Executive Officer | | | Harry J. Cynkus Senior Vice President, Chief Financial Officer and Treasurer | |

Atlanta, Georgia

February 25, 2015

| 23 |

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Board of Directors and Stockholders’

Rollins, Inc.

We have audited the internal control over financial reporting of Rollins, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2014, based on criteria established in the, 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controls over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Orkin either serves customers, directly or [added: through] franchises operations, in the United States, Canada, Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, and Mexico providing essential pest control services and protection against termite damage, rodents and insects to homes and businesses, including hotels, food service establishments, food manufacturers, retailers and transportation companies.

Revenue, operating profit and identifiable assets for this segment, which includes the United States, Canada, Australia, Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, and Mexico are included in Item 8 of this document, “Financial Statements and Supplementary Data” on pages [removed: 26 and] 27.

[removed: Unless stated otherwise, all] [added: All] share and per share data [removed: are] presented [removed: prior] [added: have been adjusted] to [added: account for] the three-for-two stock split effective March 10, 2015.

At the July 2012 Board of Directors’ meeting, the Board authorized the purchase of [removed: 5.0] [added: 7.5] million shares of the Company’s common stock.

During the years ended December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] the Company repurchased on the open market [removed: 1.0 million] [added: 19 thousand shares] and [removed: 0.3] [added: 1.5] million shares at a weighted average price of [removed: $29.19] [added: $22.42] and [removed: $24.56,] [added: $19.46,] respectively.

In total, there are [removed: 4.0] [added: 5.9] million additional shares authorized to be repurchased under prior Board approval.

| | | [added: | |] (in thousands) | | | | | | | | | | |

| December 31, | | [removed: 2014] | [added: 2015] | | | [removed: 2013] | [added: 2014] | | | [removed: 2012] | [added: 2013] | | [added: | |]

| Backlog | | [removed: $] | [removed: 3,676] [added: $] | [added: 4,352] | | [added: |] $ | [removed: 3,286] [added: 3,676] | | | $ | [removed: 2,876] [added: 3,286] | | [added: |]

| [added: Orkin] Franchises | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| International Franchises | | | [removed: 37] [added: 48] | | | | [removed: 26] [added: 37] | | | | [removed: 22] [added: 26] | |

| Total Franchises | | | [removed: 92] [added: 99] | | | | [removed: 80] [added: 92] | | | | [removed: 79] [added: 80] | |

[removed: Seasonality][added: Seasonality]

| (in thousands) | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| First Quarter | | [removed: $] [added: $] | [removed: 313,388] [added: 330,909] | | | $ | [removed: 299,714] [added: 313,388] | | | $ | [removed: 289,465] [added: 299,714] | |

| Second Quarter | | | [removed: 369,357] [added: 392,150] | | | | [removed: 350,798] [added: 369,357] | | | | [removed: 334,872] [added: 350,798] | |

| Third Quarter | | | [removed: 384,870] [added: 399,746] | | | | [removed: 362,155] [added: 384,870] | | | | [removed: 340,179] [added: 362,155] | |

| Fourth Quarter | | | [removed: 343,951] [added: 362,500] | | | | [removed: 324,707] [added: 343,951] | | | | [removed: 306,393] [added: 324,707] | |

| Years ended December 31, | | [removed: $] [added: $] | [removed: 1,411,566] [added: 1,485,305] | | | $ | [removed: 1,337,374] [added: 1,411,566] | | | $ | [removed: 1,270,909] [added: 1,337,374] | |

[removed: Inventories][added: Inventories]

[removed: Competition][added: Competition]

The Company believes that Rollins, through its wholly-owned subsidiaries Orkin, Orkin Canada, HomeTeam Pest Defense, Western Pest Services, The Industrial Fumigant Company, Crane Pest Control, Waltham Services, [removed: TruTech,] [added: Trutech,] Permatreat, [removed: and] Rollins Australia [added: and Critter Control,] competes favorably with competitors as the world’s largest pest and termite control company.

The principal methods of competition in the Company’s pest and termite control [removed: business] [added: markets] are quality of [removed: service and guarantees, including service quality,] [added: service, customer proximity] and [removed: product availability, terms of guarantees,] [added: guarantee terms,] reputation for safety, technical proficiency, and price.

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

[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: 2015] [added: 2016] was approximately 11,000.

| Employees | | | [removed: 10,936] | [added: 11,268] | | | [removed: 10,649] | [added: 10,936] | | | [removed: 10,470] | [added: 10,649] | [added: |]

[removed: |] Item 1.A. [removed: | Risk Factors |]

Our operations are directly impacted by the weather conditions across the United [removed: States] [added: States, Canada,] and [removed: Canada.][added: Australia.]

Rollins, Inc.’s executive officers, directors and their affiliates hold directly or through indirect beneficial ownership, in the aggregate, approximately [removed: 57] [added: 56] percent of the Company’s outstanding shares of common stock.

[removed: | Item 1.B. |] Unresolved Staff [removed: Comments |][added: Comments]

Rollins Wildlife Services, a wholly-owned subsidiary of the Company, acquired Critter Control February 27, 2015.

Critter Control was established by Kevin Clark in 1983 and is headquartered in Traverse City, Michigan.

The business is currently 100% franchised with operations in 40 states and 2 Canadian provinces.

| | 6 | |

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

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

Franchising Programs

| Domestic Franchises | | | 51 | | | | 55 | | | | 54 | |

Critter Control Franchises

The Company expands its animal control growth through Critter Control’s franchise program.

Critter Control is currently 100% franchised.

Critter Control had 108 franchises in the United States and Canada as of December 31, 2015.

The Company purchased Critter Control in 2015.

| | | At December 31, | | |

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

| Franchises | | 2015 | | |

| Critter Control Franchises | | | 108 | |

| | 7 | |

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

| December 31, | | | 2015 | | | | 2014 | | | | 2013 | | |

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

| | 8 | |

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

Risk Factors

| | 9 | |

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

Item 1.B.

| --- | --- |

| 6 |

| --- |

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

| United States Franchises | | | 55 | | | | 54 | | | | 57 | |

| 7 |

| 8 |

| 9 |

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

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

The trial court dismissed all of Plaintiffs’ claims in 2014; and the court of appeals affirmed the rulings in December, 2015.

| | 10 | |

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

Item 4 Mine Safety Disclosures.

Not applicable.

| --- | --- |

The court dismissed plaintiffs’ claim for breach of contract on March 15, 2014, and it dismissed plaintiffs’ only remaining claim (negligence) on December 15, 2014.

Plaintiffs have appealed the rulings.

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 is pending in the United States District Court for the Northern District of California.

Foster Farms is seeking damages related to pest control services performed at its chicken processing facility during a nine month period.

The Company intends to defend this matter vigorously.

| 10 |

| --- |

10-K 1 [removed: e00088-rol_10k.htm][added: e00081_rol-10k.htm]

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

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

For the fiscal year ended December 31, [removed: 2014][added: 2015]

[removed: ][added: ]

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

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

| incorporation or organization) | | [removed: |]

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

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

| [removed: Common] [added: Common] Stock, $1 Par [removed: Value] [added: Value] | | [removed: The] [added: The] New York Stock [removed: Exchange] [added: Exchange] |

The aggregate market value of Rollins, Inc. Common Stock held by non-affiliates on June 30, [removed: 2014] [added: 2015] was [removed: $1,896,575,939] [added: $2,708,382,648] based on the reported last sale price of common stock on June 30, [removed: 2014,] [added: 2015,] which is the last business day of the registrant’s most recently completed second fiscal quarter.

Rollins, Inc. had [removed: 145,783,052] [added: 218,806,458] shares of Common Stock outstanding as of January 31, [removed: 2015.][added: 2016.]

Portions of the Proxy Statement for the [removed: 2014] [added: 2015] Annual Meeting of Stockholders of Rollins, Inc. are incorporated by reference into Part III, Items 10-14.

[removed: | Rollins, Inc. | | | | |][added: ROLLINS, INC.]

[removed: | Form 10-K | | | | |][added: FORM 10-K]

[removed: |] For the Year Ended December 31, [removed: 2014 | | | | |][added: 2015]

[removed: |] Table of Contents [removed: | | | | |]

| [removed: [Part I](#ria001_v1)] [added: Part I] | | | | |

| [Item [removed: 1.](#ria002_v1)] [added: 1.](#a_001)] | | [removed: [Business](#ria002_v1)] [added: [Business](#a_001)] | | 6 |

| [Item [removed: 1.A.](#ria003_v1)] [added: 1.A.](#a_002)] | | [Risk [removed: Factors](#ria003_v1)] [added: Factors](#a_002)] | | 9 |

| [Item [removed: 1.B.](#ria004_v1)] [added: 1.B.](#a_003)] | | [Unresolved Staff [removed: Comments](#ria004_v1)] [added: Comments](#a_003)] | | 10 |

| [Item [removed: 2.](#ria005_v1)] [added: 2.](#a_004)] | | [removed: [Properties](#ria005_v1)] [added: [Properties](#a_004)] | | 10 |

| [Item [removed: 3.](#ria006_v1)] [added: 3.](#a_005)] | | [Legal [removed: Proceedings](#ria006_v1)] [added: Proceedings](#a_005)] | | 10 |

| [Item [removed: 4.](#ria007_v1)] [added: 4.](#a_006)] | | [Mine Safety [removed: Disclosures.](#ria007_v1)] [added: Disclosures.](#a_006)] | | 11 |

| [Item [removed: 4.A.](#ria008_v1)] [added: 4.A.](#a_007)] | | [Executive Officers of the [removed: Registrant.](#ria008_v1)] [added: Registrant.](#a_007)] | | 11 |

| [removed: [Part II](#ria009_v1)] [added: Part II] | | | | |

| [Item [removed: 5.](#ria010_v1)] [added: 5.](#a_008)] | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities.](#ria010_v1)] [added: Securities.](#a_008)] | | 12 |

| [Item [removed: 6.](#ria011_v1)] [added: 6.](#a_009)] | | [Selected Financial [removed: Data.](#ria011_v1)] [added: Data.](#a_009)] | | 14 |

| [Item [removed: 7.](#ria012_v1)] [added: 7.](#a_010)] | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations.](#ria012_v1)] [added: Operations.](#a_010)] | | 15 |

| [Item [removed: 7.A.](#ria013_v1)] [added: 7.A.](#a_011)] | | [Quantitative and Qualitative Disclosures about Market [removed: Risk.](#ria013_v1)] [added: Risk.](#a_011)] | | [removed: 22] [added: 23] |

| [Item [removed: 8.](#ria014_v1)] [added: 8.](#a_012)] | | [Financial Statements and Supplementary [removed: Data.](#ria014_v1)] [added: Data.](#a_012)] | | [removed: 26] [added: 27] |

| [Item [removed: 9.](#ria015_v1)] [added: 9.](#a_013)] | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosures.](#ria015_v1)] [added: Disclosures.](#a_013)] | | [removed: 55] [added: 56] |

| [Item [removed: 9.A.](#ria016_v1)] [added: 9.A.](#a_014)] | | [Controls and [removed: Procedures.](#ria016_v1)] [added: Procedures.](#a_014)] | | [removed: 55] [added: 56] |

| [Item [removed: 9.B.](#ria017_v1)] [added: 9.B.](#a_015)] | | [Other [removed: Information](#ria017_v1)] [added: Information](#a_015)] | | [removed: 55] [added: 56] |

| [removed: [Part III](#ria018_v1)] [added: Part III] | | | | |

| [Item [removed: 10.](#ria019_v1)] [added: 10.](#a_016)] | | [Directors, Executive Officers and Corporate [removed: Governance.](#ria019_v1)] [added: Governance.](#a_016)] | | [removed: 55] [added: 56] |

| [Item [removed: 11.](#ria020_v1)] [added: 11.](#a_017)] | | [Executive [removed: Compensation.](#ria020_v1)] [added: Compensation.](#a_017)] | | 56 |

| [Item [removed: 12.](#ria021_v1)] [added: 12.](#a_018)] | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters.](#ria021_v1)] [added: Matters.](#a_018)] | | [removed: 56] [added: 57] |

| --- | --- |

| --- | --- |

| | | [Signatures.](#a_022) | | 60 |

| | 5 | |

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

| | | [Signatures.](#ria026_v1) | | 60 |

| 5 |

| --- |

| --- | --- |

| R. Randall Rollins (1) | [removed: 83] [added: 84] | Chairman of the Board of Directors | 10/22/1991 |

| Gary W. Rollins (1) (2) | [removed: 70] [added: 71] | Vice Chairman and Chief Executive Officer | 7/24/2001 |

| John Wilson (3) | [removed: 57] [added: 58] | President and Chief Operating Officer | 1/23/2013 |

| [removed: Harry J. Cynkus (4)] [added: Paul E Northen (5)] | [removed: 65] [added: 51] | [removed: Senior] Vice President, Chief Financial Officer and Treasurer | [removed: 5/28/1998] [added: 1/26/2016] |

| Eugene Iarocci [removed: (5)] [added: (4)] | [removed: 68] [added: 69] | Vice President | 2/22/2011 |

| Tom Luczynski [removed: (7)] [added: (6)] | [removed: 58] [added: 59] | Secretary | 5/4/2010 |

| | [removed: (5)] [added: (4)] | 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. 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: (7)] [added: (6)] | Tom Luczynski assumed responsibilities as Corporate Secretary [removed: on] [added: in] May [removed: 4,] 2010. Currently also serving as Group Vice President of Orkin international development and franchising including Rollins Australia, 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. |

| | (5) | Paul E. Northen joined Rollins in 2015 as CFO and Corporate Treasurer. He was promoted to Vice President of Rollins, Inc. in January 2016. He began his career with UPS in 1985 and brings a wealth of Tax, Risk Management and Audit experience as well as strong international exposure to Rollins. Prior to joining Rollins, Mr. Northen was Vice President of International Finance and Accounting-Global Business Services for UPS. Previously, he was CFO of UPS’ Asia Pacific Region based in Hong Kong, and he served as Vice President of Finance in UPS’ Pacific and Western Regions. |

| | 11 | |

| --- | --- |

Not applicable.

| Item 4.A. | Executive Officers of the Registrant. |

| Bob Wanzer (6) | 61 | Vice President | 2/22/2011 |

| | (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). He also previously served on FEI’s National Committee on Finance and Information Technology. |

| | (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. |

| 11 |

| --- |

The high and low prices of the Company’s common stock and dividends paid for each quarter in the years ended December 31, [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014, with all share and per share data adjusted for the Company’s three-for-two stock split effective March 10, 2015,] were as follows:

| [removed: 2014] [added: 2015] | | High | | | | Low | | | | Per Share | | | | [removed: 2013] [added: 2014] | | High | | | | Low | | | | Per Share | | |

As of January 31, [removed: 2015,] [added: 2016,] there were [removed: 2,135] [added: 2,322] holders of record of the Company’s common stock.

The stock split [removed: will increase] [added: increased] the Company’s outstanding shares from [removed: approximately] 145,783,052 to 218,674,578 shares.

On January [removed: 27, 2015] [added: 26, 2016] the Board of Directors approved a quarterly cash dividend per common share of [removed: $0.12] [added: $0.10] payable March 10, [removed: 2015] [added: 2016] to stockholders of record at the close of business February 10, [removed: 2015.][added: 2016.]

On October [removed: 28, 2014,] [added: 27, 2015,] the Board of Directors declared [added: its regular $0.08 per share as well as] a special year-end dividend of $0.10 per share [added: both] payable December 10, [removed: 2014] [added: 2015] to stockholders of record at the close of business November 10, [removed: 2014.][added: 2015.]

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

During the years ended December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] the Company repurchased on the open market [removed: 1.0 million] [added: 19 thousand shares] and [removed: 0.3] [added: 1.5] million shares at a weighted average price of [removed: $29.19] [added: $22.42] and [removed: $24.56,] [added: $19.46,] respectively.

In total, there remain [removed: 4.0] [added: 5.9] million additional shares authorized to be repurchased under prior Board approval.

| Period | | [added: |] Total Number of Shares Purchased (1) | | | | Weighted Average Price Paid per Share | | | | Total Number of Shares Purchased as Part of Publicly Announced Repurchase Plans (2) | | | | Maximum Number of Shares that May Yet Be Purchased Under the Repurchase Plans | | |

| | (1) | Includes repurchases from employees for the payment of taxes on vesting of restricted shares in the following amounts: October [removed: 2014:] [added: 2015:] 0; November [removed: 2014: 537;] [added: 2015: 0;] and December [removed: 2014:] [added: 2015:] 0. |

| | (2) | The Company has a share repurchase plan adopted in 2012, to repurchase up to [removed: 5.0] [added: 7.5] million shares of the Company’s common stock. The plan has no expiration date. |

[removed: PERFORMANCE GRAPH][added: PERFORMANCE GRAPH]

[removed: ][added: ]

| [removed: Cumulative] [added: Cumulative] Total Shareholder Return $ at Fiscal Year [removed: End] [added: End] | [removed: 2009] | [removed: 2010] [added: 2010] | [removed: 2011] | [removed: 2012] | [removed: 2013] | [removed: 2014] [added: 2011] | [added: | | | 2012 | | | | 2013 | | | | 2014 | | | | 2015 | | |]

| First Quarter | | $ | 25.00 | | | $ | 21.11 | | | $ | 0.08 | | | First Quarter | | $ | 20.47 | | | $ | 18.01 | | | $ | 0.07 | |

| Second Quarter | | $ | 29.00 | | | $ | 23.88 | | | $ | 0.08 | | | Second Quarter | | $ | 20.99 | | | $ | 19.55 | | | $ | 0.07 | |

| Third Quarter | | $ | 30.42 | | | $ | 25.76 | | | $ | 0.08 | | | Third Quarter | | $ | 20.41 | | | $ | 18.65 | | | $ | 0.07 | |

| Fourth Quarter | | $ | 28.40 | | | $ | 25.51 | | | $ | 0.18 | | | Fourth Quarter | | $ | 22.62 | | | $ | 18.41 | | | $ | 0.14 | |

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

| October 1 to 31, 2015 | | | | — | | | $ | — | | | | — | | | | 5,928,307 | |

| November 1 to 30, 2015 | | | | — | | | | — | | | | — | | | | 5,928,307 | |

| December 1 to 31, 2015 | | | | — | | | | — | | | | — | | | | 5,928,307 | |

| Total | | | | — | | | $ | — | | | | — | | | | 5,928,307 | |

| | 12 | |

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

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

| Rollins, Inc. | | | 100.00 | | | | 114.20 | | | | 115.41 | | | | 161.40 | | | | 179.51 | | | | 214.13 | |

| S&P 500 | | | 100.00 | | | | 102.11 | | | | 118.45 | | | | 156.82 | | | | 178.28 | | | | 180.75 | |

| Peer Index | | | 100.00 | | | | 112.08 | | | | 143.16 | | | | 187.21 | | | | 209.68 | | | | 228.61 | |

| | 13 | |

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

| --- | --- |

| First Quarter | | $ | 30.70 | | | $ | 27.01 | | | $ | 0.11 | | | First Quarter | | $ | 25.61 | | | $ | 22.34 | | | $ | 0.09 | |

| Second Quarter | | $ | 31.49 | | | $ | 29.32 | | | $ | 0.11 | | | Second Quarter | | $ | 26.09 | | | $ | 22.46 | | | $ | 0.09 | |

| Third Quarter | | $ | 30.61 | | | $ | 27.98 | | | $ | 0.11 | | | Third Quarter | | $ | 27.99 | | | $ | 24.09 | | | $ | 0.09 | |

| Fourth Quarter | | $ | 33.93 | | | $ | 27.62 | | | $ | 0.21 | | | Fourth Quarter | | $ | 30.63 | | | $ | 26.12 | | | $ | 0.18 | |

Our historical outstanding shares will be recast upon distribution.

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

| October 1 to 31, 2014 | | | — | | | $ | — | | | | — | | | | 3,952,205 | |

| November 1 to 30, 2014 | | | 537 | | | | 27.68 | | | | — | | | | 3,952,205 | |

| December 1 to 31, 2014 | | | — | | | | — | | | | — | | | | 3,952,205 | |

| Total | | | 537 | | | $ | 27.68 | | | | — | | | | 3,952,205 | |

| 12 |

| --- |

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

| Rollins, Inc. | 100.00 | 156.24 | 178.33 | 180.38 | 252.24 | 280.61 |

| S&P 500 | 100.00 | 115.06 | 117.49 | 136.30 | 180.44 | 205.14 |

| Peer Index | 100.00 | 117.14 | 131.28 | 167.69 | 219.29 | 245.61 |

| 13 |

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

| Years ended December 31, | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | |

| Revenues | | [removed: $] [added: $] | [removed: 1,411,566] [added: 1,485,305] | | | $ | [removed: 1,337,374] [added: 1,411,566] | | | $ | [removed: 1,270,909] [added: 1,337,374] | | | $ | [removed: 1,205,064] [added: 1,270,909] | | | $ | [removed: 1,136,890] [added: 1,205,064] | |

| Income Before Income Taxes | | | [removed: 219,484] [added: 243,178] | | | | [removed: 191,606] [added: 219,484] | | | | [removed: 176,642] [added: 191,606] | | | | [removed: 161,096] [added: 176,642] | | | | [removed: 143,545] [added: 161,096] | |

| Net Income | | | [removed: 137,664] [added: 152,149] | | | | [removed: 123,330] [added: 137,664] | | | | [removed: 111,332] [added: 123,330] | | | | [removed: 100,711] [added: 111,332] | | | | [removed: 90,002] [added: 100,711] | |

| Net cash provided by operating activities | | [removed: $] [added: $] | [removed: 194,146] [added: 196,356] | | | $ | [removed: 162,665] [added: 194,146] | | | $ | [removed: 141,919] [added: 162,665] | | | $ | [removed: 154,647] [added: 141,919] | | | $ | [removed: 124,053] [added: 154,647] | |

| Net cash used in investing activities | | | [removed: (89,471] [added: (69,942] | ) | | | [removed: (30,790] [added: (89,471] | ) | | | [removed: (42,693] [added: (30,790] | ) | | | [removed: (29,154] [added: (42,693] | ) | | | [removed: (47,645] [added: (29,154] | ) |

| Net cash used in financing activities | | | [removed: (106,518] [added: (97,216] | ) | | | [removed: (75,653] [added: (106,519] | ) | | | [removed: (80,989] [added: (75,653] | ) | | | [removed: (99,427] [added: (80,989] | ) | | | [removed: (65,497] [added: (99,427] | ) |

| Depreciation | | | [removed: 16,627] [added: 19,354] | | | | [removed: 14,415] [added: 16,627] | | | | [removed: 15,212] [added: 14,415] | | | | [removed: 15,112] [added: 15,212] | | | | [removed: 15,975] [added: 15,112] | |

| Amortization of intangible assets | | | [removed: 26,882] [added: 25,168] | | | | [removed: 25,156] [added: 26,882] | | | | [removed: 23,443] [added: 25,156] | | | | [removed: 22,391] [added: 23,443] | | | | [removed: 20,433] [added: 22,391] | |

| Capital expenditures | | [removed: $] [added: $] | [removed: (28,739] [added: (39,495] | ) | | $ | [removed: (18,632] [added: (28,739] | ) | | $ | [removed: (19,040] [added: (18,632] | ) | | $ | [removed: (18,652] [added: (19,040] | ) | | $ | [removed: (13,036] [added: (18,652] | ) |

| Current assets | | [removed: $] [added: $] | [removed: 283,958] [added: 313,879] | | | $ | [removed: 272,442] [added: 283,958] | | | $ | [removed: 205,992] [added: 272,442] | | | $ | [removed: 175,822] [added: 205,992] | | | $ | [removed: 151,021] [added: 175,822] | |

| Total assets | | | [removed: 808,162] [added: 852,431] | | | | [removed: 739,217] [added: 808,162] | | | | [removed: 692,506] [added: 739,217] | | | | [removed: 645,650] [added: 692,506] | | | | [removed: 619,014] [added: 645,650] | |

| Stockholders’ equity | | [removed: $] [added: $] | [removed: 462,676] [added: 524,029] | | | $ | [removed: 438,255] [added: 462,676] | | | $ | [removed: 354,956] [added: 438,255] | | | $ | [removed: 323,997] [added: 354,956] | | | $ | [removed: 297,970] [added: 323,997] | |

| Earnings Per Share - Basic: | | | 0.70 | | | | 0.63 | | | | 0.56 | | | | 0.51 | | | | 0.46 | |

| Earnings Per Share - Diluted: | | | 0.70 | | | | 0.63 | | | | 0.56 | | | | 0.51 | | | | 0.46 | |

| Dividends paid per share | | | 0.42 | | | | 0.35 | | | | 0.30 | | | | 0.29 | | | | 0.19 | |

| Number of shares outstanding at year-end | | | 218,553 | | | | 218,283 | | | | 218,797 | | | | 219,023 | | | | 219,376 | |

| | 14 | |

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

| --- | --- |

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

| Earnings Per Share - Basic: | | | 0.94 | | | | 0.84 | | | | 0.76 | | | | 0.69 | | | | 0.61 | |

| Earnings Per Share - Diluted: | | | 0.94 | | | | 0.84 | | | | 0.76 | | | | 0.69 | | | | 0.61 | |

| Dividends paid per share | | | 0.52 | | | | 0.45 | | | | 0.44 | | | | 0.28 | | | | 0.24 | |

| Line of credit | | | — | | | | — | | | | — | | | | — | | | | 26,000 | |

| Number of shares outstanding at year-end | | | 145,522 | | | | 145,864 | | | | 146,015 | | | | 146,251 | | | | 147,181 | |

| 14 |

| --- |

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

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

[removed: | (in] [added: _(in] thousands except share [removed: information) | | | | | | | | |][added: information)_]

| December 31, | | [added: 2015 | | | |] 2014 | | | | 2013 | | |

| Cash and cash equivalents [added: at beginning of year] | | [removed: $] | 108,372 | | | [removed: $] | 118,216 | | [added: | | 65,082 | |]

| Trade receivables, net of allowance for doubtful accounts of [removed: $10,944] [added: $10,348] and [removed: $9,078,] [added: $10,944,] respectively | | | [removed: 77,854] [added: 79,864] | | | | [removed: 72,849] [added: 77,854] | |

| [removed: Financed] [added: Financing] receivables, short-term, net of allowance for doubtful accounts of [removed: $1,748] [added: $1,844] and [removed: $1,777,] [added: $1,748,] respectively | | | [removed: 12,234] [added: 13,830] | | | | [removed: 12,220] [added: 12,234] | |

| Materials and supplies | | | [removed: 14,078] [added: 12,801] | | | | [removed: 12,251] [added: 14,078] | |

| Deferred income taxes | | | [removed: 42,764] [added: 44,445] | | | | [removed: 39,518] [added: 42,764] | |

| Other current assets | | | [removed: 28,656] [added: 28,365] | | | | [removed: 19,388] [added: 28,656] | |

| Total Current Assets | | | [removed: 283,958] [added: 313,879] | | | | [removed: 274,442] [added: 283,958] | |

| Equipment and property, net | | | [removed: 101,669] [added: 121,356] | | | | [removed: 87,215] [added: 101,669] | |

| Goodwill | | | [removed: 255,563] [added: 249,939] | | | | [removed: 211,847] [added: 255,563] | |

| Customer contracts, net | | | [removed: 104,657] [added: 92,815] | | | | [removed: 101,457] [added: 104,657] | |

| Other intangible assets, net | | | [removed: 28,815] [added: 46,116] | | | | [removed: 27,112] [added: 28,815] | |

| Deferred income taxes | | | [removed: 7,881] [added: —] | | | | [removed: 4,544] [added: 7,881] | |

| [removed: Financed] [added: Financing] receivables, long-term, net of allowance for doubtful accounts of [removed: $1,402] [added: $1,444] and [removed: $1,423,] [added: $1,402] respectively | | | [removed: 11,787] [added: 13,636] | | | | [removed: 11,608] [added: 11,787] | |

| Other assets | | | [removed: 13,832] [added: 14,690] | | | | [removed: 13,879] [added: 13,832] | |

| Total Assets | | [removed: $] | [removed: 808,162] [added: 852,431] | | | [removed: $] | [removed: 739,217] [added: 808,162] | |

| Accounts payable | | | [removed: 22,878] [added: 24,919] | | | | [removed: 23,194] [added: 22,878] | |

| Accrued insurance | | | [removed: 24,204] [added: 24,874] | | | | [removed: 25,631] [added: 24,204] | |

| Accrued compensation and related liabilities | | | [removed: 74,090] [added: 73,607] | | | | [removed: 66,175] [added: 74,090] | |

| Unearned revenue | | | [removed: 94,056] [added: 96,192] | | | | [removed: 91,014] [added: 94,056] | |

| Other current liabilities | | | [removed: 37,451] [added: 33,394] | | | | [removed: 29,778] [added: 37,451] | |

| Total current liabilities | | | [removed: 252,679] [added: 252,986] | | | | [removed: 235,792] [added: 252,679] | |

| Accrued insurance, less current portion | | | [removed: 30,946] [added: 30,402] | | | | [removed: 28,245] [added: 30,946] | |

| Accrued pension | | | [removed: 29,558] [added: 9,735] | | | | [removed: 691] [added: 29,558] | |

| Long-term accrued liabilities | | | [removed: 32,303] [added: 31,499] | | | | [removed: 36,234] [added: 32,303] | |

| Total Liabilities | | | [removed: 345,486] [added: 328,402] | | | | [removed: 300,962] [added: 345,486] | |

| Commitments and Contingencies | | | [added: —] | | | | [added: —] | |

| Common stock, par value $1 per share; 250,000,000 shares authorized, [removed: respectively, 145,721,938 and 145,864,443] [added: 218,482,907] shares [removed: issued, respectively] [added: issued(1)] | | | 145,722 | | | | [removed: 145,864] [added: 72,761] | | [added: | | 218,483 | |]

| Treasury Stock, par value $1 per share ; 200,000 and [removed: 0] [added: 200,000] shares, respectively | | | (200 | ) | | | [removed: —] [added: (200] | [added: )] |

| Paid-in-capital | | | [removed: 62,839] [added: 69,762] | | | | [removed: 53,765] [added: 62,839] | |

| Accumulated other comprehensive loss | | | [removed: (65,488] [added: (71,178] | ) | | | [removed: (31,771] [added: (65,488] | ) |

| Total Stockholders’ Equity | | | [removed: 462,676] [added: 524,029] | | | | [removed: 438,255] [added: 462,676] | |

| Total Liabilities and Stockholders’ Equity | | $ | [removed: 808,162] [added: 852,431] | | | $ | [removed: 739,217] [added: 808,162] | |

[removed: | CONSOLIDATED] [added: CONSOLIDATED] STATEMENTS OF [removed: INCOME | | | | | | | | | | | | |][added: INCOME]

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

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

| Years ended December 31, | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Deferred income taxes | | | 3,780 | | | | — | |

| Retained earnings | | | 306,892 | | | | 247,042 | |

| | 27 | |

| Weighted average shares outstanding - basic | | | 218,583 | | | | 218,695 | | | | 219,121 | |

| Weighted average shares outstanding - diluted | | | 218,583 | | | | 218,695 | | | | 219,121 | |

| | 28 | |

| NET INCOME | | $ | 152,149 | | | $ | 137,664 | | | $ | 123,330 | |

| | 29 | |

_Rollins, Inc. and Subsidiaries_

| Treasury Shares | | | (100 | ) | | | (100 | ) | | | 100 | | | | 100 | | | | — | | | | — | | | | — | | | | — | |

| Net Income | | | | | | | | | | | | | | | | | | | | | | | | | | | 152,149 | | | | 152,149 | |

| Common Stock Purchased (1) | | | (19 | ) | | | (19 | ) | | | — | | | | — | | | | — | | | | — | | | | (416 | ) | | | (435 | ) |

| Stock Compensation | | | 597 | | | | 597 | | | | — | | | | — | | | | 11,731 | | | | — | | | | (218 | ) | | | 12,110 | |

| Employee Stock Buybacks | | | (308 | ) | | | (308 | ) | | | — | | | | — | | | | (6,754 | ) | | | — | | | | 90 | | | | (6,972 | ) |

| Balance at December 31, 2015 | | | 218,753 | | | $ | 218,753 | | | | (200 | ) | | $ | (200 | ) | | $ | 69,762 | | | $ | (71,178 | ) | | $ | 306,892 | | | $ | 524,029 | |

_The accompanying notes are an integral part of these consolidated financial statements._

| | 30 | |

_Rollins, Inc. and Subsidiaries_

| Net Income | | $ | 152,149 | | | $ | 137,664 | | | $ | 123,330 | |

| Investment Tax Credits | | | (504 | ) | | | — | | | | — | |

_The accompanying notes are an integral part of these consolidated financial statements._

| | 31 | |

Rollins Wildlife Services, a wholly-owned subsidiary of the Company, acquired Critter Control February 27, 2015.

Critter Control was established by Kevin Clark in 1983 and is headquartered in Traverse City, Michigan.

The business is currently 100% franchised with operations in 40 states and 2 Canadian provinces.

As of filing date, February 24, 2016, there were no subsequent events that would affect the Company’s financial statements.

| | 32 | |

Currency exchange translation is the cause of the decreased percentage.

| | 33 | |

| (in thousands) (in US dollars) | | | | | | | | |

| | 34 | |

| | 35 | |

| Years Ended December 31, | | 2015 | | | | 2014 | | | | 2013 | | |

| Common stock | | $ | 59,611 | | | $ | 61,001 | | | $ | 56,663 | |

| Common stock | | | 215,749 | | | | 215,470 | | | | 215,289 | |

| Restricted shares of common stock | | | 2,834 | | | | 3,225 | | | | 3,832 | |

| | | | 218,583 | | | | 218,695 | | | | 219,121 | |

| Common stock | | | 215,749 | | | | 215,470 | | | | 215,289 | |

| | | | 215,749 | | | | 215,470 | | | | 215,289 | |

| Restricted shares of common stock | | | 2,834 | | | | 3,225 | | | | 3,832 | |

| --- | --- |

| Prepaid pension | | | — | | | | 7,113 | |

| Retained earnings | | | 319,803 | | | | 270,397 | |

| 26 |

| --- |

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

| Pension settlement loss | | | — | | | | — | | | | 1,000 | |

| Weighted average shares outstanding - basic | | | 145,796 | | | | 146,081 | | | | 146,299 | |

| Weighted average shares outstanding - diluted | | | 145,796 | | | | 146,081 | | | | 146,306 | |

| 27 |

| 28 |

| Balance at December 31, 2011 | | | 146,251 | | | $ | 146,251 | | | | — | | | $ | — | | | $ | 36,554 | | | $ | (48,090 | ) | | $ | 189,282 | | | $ | 323,997 | |

| Net Income | | | | | | | | | | | | | | | | | | | | | | | | | | | 111,332 | | | | 111,332 | |

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

| Common Stock Purchased (1) | | | (782 | ) | | | (782 | ) | | | — | | | | — | | | | — | | | | — | | | | (15,580 | ) | | | (16,362 | ) |

| Stock Compensation | | | 684 | | | | 684 | | | | — | | | | — | | | | 8,810 | | | | — | | | | — | | | | 9,494 | |

| Employee Stock Buybacks and Common Stock Options Exercised | | | (217 | ) | | | (217 | ) | | | — | | | | — | | | | (5,133 | ) | | | — | | | | — | | | | (5,350 | ) |

| 29 |

| Pension funding | | | (5,250 | ) | | | (5,000 | ) | | | (5,203 | ) |

| 30 |

On February 2, 2015 we announced that Harry J.

Cynkus, CFO of Rollins, Inc. would retire in 2015.

Eddie Northen is expected to succeed Harry Cynkus as CFO effective May 1, 2015.

| 31 |

| 32 |

| 33 |

| 34 |

| Common stock | | | 143,646 | | | | 143,526 | | | | 143,499 | |

| | | | 145,796 | | | | 146,081 | | | | 146,299 | |

| | | | 143,646 | | | | 143,526 | | | | 143,506 | |

| | | | 145,796 | | | | 146,081 | | | | 146,306 | |

| Distributed earnings | | $ | 0.52 | | | $ | 0.45 | | | $ | 0.44 | |

| Undistributed earnings | | | 0.42 | | | | 0.39 | | | | 0.32 | |

| | | $ | 0.94 | | | $ | 0.84 | | | $ | 0.76 | |

| | | $ | 0.91 | | | $ | 0.82 | | | $ | 0.74 | |

| 35 |

The Company’s stock options generally vest over a five-year period and expire ten years from the issuance date.

The Company has not granted stock options since 2003.

| 36 |

The Company recognizes gains from the sale of customer contracts at the time they are sold to franchises and collection on the notes is reasonably assured.

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

Based on management’s evaluation as of December 31, [removed: 2014,] [added: 2015,] in which the principal executive officer and principal financial officer of the Company participated, the principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective, at the reasonable assurance level to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

_Management’s Report on Internal Control Over Financial Reporting_—Management’s Report on Internal Control Over Financial Reporting is contained on page [removed: 23][added: 24.]

_Changes in Internal Controls_—There were no changes in our internal control over financial reporting during the fourth quarter of [removed: 2014] [added: 2015] that materially affected or are reasonably likely to materially affect these controls.

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

[removed: PART III][added: PART III]

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

Information concerning directors and executive officers is included in the Company’s Proxy Statement for its [removed: 2015] [added: 2016] Annual Meeting of Stockholders (the “Proxy Statement”), in the section titled “Election of Directors”.

Information concerning the Audit Committee of the Company and the Audit Committee Financial Expert(s) is included in the Company’s Proxy Statement for its [removed: 2015] [added: 2016] Annual Meeting of Stockholders, in the section titled “Corporate Governance and Board of Directors’ Committees and Meetings – Audit Committee.” This information is incorporated herein by reference.

[removed: _Code] [added: _Code] of [removed: Ethics_][added: Ethics_]

[removed: _Section] [added: _Section] 16(a) Beneficial Ownership Reporting [removed: Compliance_][added: Compliance_]

Information regarding compliance with Section 16(a) of the Exchange Act is included under “Compliance with Section 16(a) of the Securities Exchange Act” in the Company’s Proxy Statement for its [removed: 2015] [added: 2016] Annual Meeting of Stockholders, which is incorporated herein by reference.

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

| 55 |

| --- |

The information under the captions “Compensation Committee Interlocks and Insider Participation,” “Director Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” and “Executive Compensation” included in the Proxy Statement for the Annual Meeting of Stockholders to be held April [removed: 28, 2015] [added: 26, 2016] is incorporated herein by reference.

| | 56 | |

The information under the captions “Capital Stock” and “Election of Directors” included in the Proxy Statement for the Annual Meeting of Stockholders to be held April [removed: 28, 2015] [added: 26, 2016] is incorporated herein by reference.

[removed: EQUITY] [added: EQUITY] COMPENSATION PLAN [removed: INFORMATION][added: INFORMATION]

The following table sets forth certain information regarding equity compensation plans as of December 31, [removed: 2014.][added: 2015.]

| [removed: Plan Category] [added: Plan Category] | | [removed: Number] [added: Number] of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights [removed: (A)] [added: (A)] | | | | [removed: Weighted] [added: Weighted] Average Exercise Price of Outstanding Options, Warrants and Rights [removed: (B)] [added: (B)] | | | | [removed: Number] [added: Number] of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A)) (C [removed: )] [added: )] | | |

| Equity compensation plans approved by security holders | | | [removed: 2,066,505] [added: 2,750,928] | | | $ | — | | | | [removed: 3,795,913] [added: 5,096,815] | |

| | (1) | Includes [removed: 3,795,913] [added: 5,096,815] shares available for grant under the 2008 Employee Stock Incentive Plan. The 2008 Employee Stock Incentive Plan provides for awards of the Company’s common stock and awards that are valued in whole or in part by reference to the Company’s common stock apart from stock options and SARs including, without limitation, restricted stock, performance-accelerated restricted stock, performance stock, performance units, and stock awards or options valued by reference to book value or subsidiary performance. |

| Total | | | 2,750,928 | | | $ | — | | | | 5,096,815 | (1) |

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

| Total | | | 2,066,505 | | | $ | — | | | | 3,795,913 | (1) |

| 56 |

| --- |

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

Information regarding principal accounting fees and services is set forth under “Independent Public Accountants” in the Company’s Proxy Statement for its [removed: 2015] [added: 2016] Annual Meeting of Stockholders, which information is incorporated herein by reference.

[removed: PART IV][added: PART IV]

| | 57 | |

| 57 |

| --- |

| [added: |] (10) (a) | [removed: |] Rollins, Inc. Amended and Restated Deferred Compensation Plan, incorporated herein by reference to Exhibit 4.1 filed with the registrant’s Form S-8 filed November 18, 2005. |

| [added: |] (10) (b) | [removed: |] Form of Plan Agreement pursuant to the Rollins, Inc. Amended and Restated Deferred Compensation Plan, incorporated herein by reference to Exhibit 4.2 filed with the registrant’s Form S-8 filed November 18, 2005. |

| [added: |] (10) (c) | [removed: |] Written description of Rollins, Inc. Performance-Based Incentive Cash Compensation Plan incorporated herein by reference to Exhibit 10(a) as filed with its Form 8-K dated April 23, 2013. |

| [added: |] (10) (d) | [removed: |] Forms of award agreements under the 2013 Cash Incentive Plan incorporated herein by reference to Exhibit 10(b) of its Form 8-K dated April 22, 2008. |

| [added: |] (10) (e) | [removed: |] 2008 Stock Incentive Plan incorporated herein by reference to Exhibit A of the March 17, 2008 Proxy Statement for the Annual Meeting of the Stockholders held on April 22, 2008. |

| [added: |] (10) (f) | [removed: |] Form of Restricted Stock Grant Agreement incorporated herein by reference to Exhibit 10(d) as filed with its Form 8-K dated April 22, 2008. |

| [added: |] (10) (g) | [removed: |] Form of Time-Lapse Restricted Stock Agreement incorporated herein by reference to Exhibit 10.1 as filed with its Form 10-Q for the quarter ended March 31, 2012. |

| [added: |] (10) (h) | [removed: |] Summary of Compensation Arrangements with Executive Officers, incorporated herein reference to Exhibit (10)(q) as filed with its Form 10-K for the year ended December 31, 2010. |

| [added: |] (10) (i) | [removed: |] Summary of Compensation Arrangements with Non-Employee [removed: Directors.] [added: Directors., incorporated herein by reference to Exhibit 10(i) filed with the Registrant’s 10-K filed February 25, 2015.] |

[removed: | |] (b) [removed: |] Exhibits (inclusive of item 3 above): [removed: |]

| [added: |] (3) (i) | [removed: |] (A) Restated Certificate of Incorporation of Rollins, Inc. dated July 28, 1981, incorporated herein by reference to Exhibit (3)(i)(A) as filed with the registrant’s Form 10-Q filed August 1, 2005. |

| | | [added: |] (B) Certificate of Amendment of Certificate of Incorporation of Rollins, Inc. dated August 20, 1987, incorporated herein by reference to Exhibit 3(i)(B) filed with the registrant’s 10-K filed March 11, 2005. |

| | | [added: |] (C) Certificate of Change of Location of Registered Office and of Registered Agent dated March 22, 1994, incorporated herein by reference to Exhibit (3)(i)(C) filed with the registrant’s Form 10-Q filed August 1, 2005. |

| | | [added: |] (D) Certificate of Amendment of Certificate of Incorporation of Rollins, Inc. dated April 25, 2006, incorporated herein by reference to Exhibit 3(i)(D) filed with the registrant’s 10-Q filed October 31, 2006 |

| [removed: (ii)] | [added: (ii)] | Revised By-laws of Rollins, Inc. dated October 28, 2014, incorporated herein by reference to Exhibit (3) (i) as filed with its Form 10-Q filed October 29, 2014. |

| [removed: (4)] | [added: (4)] | Form of Common Stock Certificate of Rollins, Inc. incorporated herein by reference to Exhibit (4) as filed with its Form 10-K for the year ended December 31, 1998. |

| [added: |] (10) (j) | [removed: |] Revolving Credit Agreement dated as of October 31, 2012 between Rollins, Inc., SunTrust Bank and Bank of America, N.A., incorporated herein by reference to Exhibit 99.1 as filed with its Form 8-K dated November 1, 2012. |

| [added: |] (10) (k) | [removed: |] First Amendment to Revolving Credit Agreement dated as of October 30, 2014 by and among Rollins, Inc., the lenders party thereto and SunTrust Bank and Bank of America, [removed: N.A.] [added: N.A., incorporated herein by reference to Exhibit 10(k) filed with the Registrant’s 10-K filed February 25, 2015.] |

| [removed: (21)] | [added: (21)] | Subsidiaries of Registrant. |

| [removed: (23.1)] | [added: (23.1)] | Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm. |

| [removed: (24)] | [added: (24)] | Powers of Attorney for Directors. |

| [removed: (31.1)] | [added: (31.1)] | Certification of Chief Executive Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |

| [removed: (31.2)] | [added: (31.2)] | Certification of Chief Financial Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |

| [removed: (32.1)] | [added: (32.1)] | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

| [removed: (101.INS)] | [added: (101.INS)] | EX-101 Instance Document |

| [removed: (101.SCH)] | [added: (101.SCH)] | EX-101 Schema Document |

| [removed: (101.CAL)] | [added: (101.CAL)] | EX-101 Calculation Linkbase Document |

| [removed: (101.LAB)] | [added: (101.LAB)] | EX-101 Labels Linkbase Document |

| [removed: (101.PRE)] | [added: (101.PRE)] | EX-101 Presentation Linkbase Document |

| [removed: (101.DEF)] | [added: (101.DEF)] | [removed: EX-101] [added: Ex-101] Definition Linkbase Document |

[removed: SIGNATURES][added: SIGNATURES]

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

| [added: |] By: | /s/ Gary W. Rollins |

| [removed: Date:] | [added: |] Gary W. Rollins Vice Chairman and Chief Executive Officer (Principal Executive Officer) [removed: February 25, 2015] |

| [removed: By: |] /s/ Gary W. Rollins | | [removed: By:] | [removed: /s/ Harry J. Cynkus |]

| [removed: Date:] | Gary W. Rollins Vice Chairman and Chief Executive Officer (Principal Executive Officer) [removed: February 25, 2015] | | [removed: Date:] | [removed: Harry J. Cynkus] [added: Paul E. Northen] Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) [removed: February 25, 2015] |

| [added: By: |] /s/ Gary W. Rollins | | [added: By:] | [added: /s/ Paul E. Northen] |

| Gary W. Rollins As Attorney-in-Fact & Director February [removed: 25, 2015 |] [added: 24, 2016] | | |

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

[removed: INDEX] [added: INDEX] TO CONSOLIDATED FINANCIAL STATEMENTS AND [removed: SCHEDULE][added: SCHEDULE]

| | | |

| | | (E) Certificate of Amendment of Certificate of Incorporation of Rollins, Inc. dated April, 26, 2011, incorporated herein by reference to Exhibit 3(i)(E) filed with the Registrant’s 10-K filed February 25, 2015. |

| | | (F) Certificate of Amendment of Certificate of Incorporation of Rollins, Inc. dated April 28, 2015, incorporated herein by reference to Exhibit 3(i)(F) filed with the Registrant’s 10-Q filed on July 29, 2015. |

| | 58 | |

| | (10) (a) | Rollins, Inc. Amended and Restated Deferred Compensation Plan, incorporated herein by reference to Exhibit 4.1 filed with the registrant’s Form S-8 filed November 18, 2005. |

| | (10) (b) | Form of Plan Agreement pursuant to the Rollins, Inc. Amended and Restated Deferred Compensation Plan, incorporated herein by reference to Exhibit 4.2 filed with the registrant’s Form S-8 filed November 18, 2005. |

| | (10) (c) | Written description of Rollins, Inc. Performance-Based Incentive Cash Compensation Plan incorporated herein by reference to Exhibit 10(a) as filed with its Form 8-K dated April 23, 2013. |

| | (10) (d) | Forms of award agreements under the 2013 Cash Incentive Plan incorporated herein by reference to Exhibit 10(b) of its Form 8-K dated April 22, 2008. |

| | (10) (e) | 2008 Stock Incentive Plan incorporated herein by reference to Exhibit A of the March 17, 2008 Proxy Statement for the Annual Meeting of the Stockholders held on April 22, 2008. |

| | (10) (f) | Form of Restricted Stock Grant Agreement incorporated herein by reference to Exhibit 10(d) as filed with its Form 8-K dated April 22, 2008. |

| | (10) (g) | Form of Time-Lapse Restricted Stock Agreement incorporated herein by reference to Exhibit 10.1 as filed with its Form 10-Q for the quarter ended March 31, 2012. |

| | (10) (h) | Summary of Compensation Arrangements with Executive Officers, incorporated herein reference to Exhibit (10)(q) as filed with its Form 10-K for the year ended December 31, 2010. |

| | (10) (i) | Summary of Compensation Arrangements with Non-Employee Directors., incorporated herein by reference to Exhibit 10(i) filed with the Registrant’s 10-K filed February 25, 2015. |

| | 59 | |

| | Date: | February 24, 2016 |

| Date: | February 24, 2016 | | Date: | February 24, 2016 |

Pam R.

| | | |

| | 60 | |

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

| | | |

| | 61 | |

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

ROLLINS, INC. AND SUBSIDIARIES

| Allowance for doubtful accounts | | $ | 14,094 | | | $ | 10,113 | | | $ | (10,571 | ) | | $ | 13,636 | |

| | 62 | |

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

ROLLINS, INC. AND SUBSIDIARIES

| | (3) (i) | | (A) Restated Certificate of Incorporation of Rollins, Inc. dated July 28, 1981, incorporated herein by reference to Exhibit (3)(i)(A) as filed with the registrant’s Form 10-Q filed August 1, 2005. |

| | | | (E) Certificate of Amendment of Certificate of Incorporation of Rollins, Inc. dated April, 26, 2011, incorporated herein by reference to Exhibit 3(i)(E) filed with the Registrant’s 10-K filed February 25, 2015. |

| | | | (F) Certificate of Amendment of Certificate of Incorporation of Rollins, Inc. dated April 28, 2015, incorporated herein by reference to Exhibit 3(i)(F) filed with the Registrant’s 10-Q filed on July 29, 2015. |

| | (ii) | | Revised By-laws of Rollins, Inc. dated October 28, 2014, incorporated herein by reference to Exhibit (3) (i) as filed with its Form 10-Q filed October 29, 2014. |

| | (4) | | Form of Common Stock Certificate of Rollins, Inc. incorporated herein by reference to Exhibit (4) as filed with its Form 10-K for the year ended December 31, 1998. |

| | (10) (a) | | Rollins, Inc. Amended and Restated Deferred Compensation Plan, incorporated herein by reference to Exhibit 4.1 filed with the registrant’s Form S-8 filed November 18, 2005. |

| | (10) (b) | | Form of Plan Agreement pursuant to the Rollins, Inc. Amended and Restated Deferred Compensation Plan, incorporated herein by reference to Exhibit 4.2 filed with the registrant’s Form S-8 filed November 18, 2005. |

| | (10) (c) | | Written description of Rollins, Inc. Performance-Based Incentive Cash Compensation Plan incorporated herein by reference to Exhibit 10(a) as filed with its Form 8-K dated April 23, 2013. |

| | (10) (d) | | Forms of award agreements under the 2013 Cash Incentive Plan incorporated herein by reference to Exhibit 10(b) of its Form 8-K dated April 22, 2008. |

| | (10) (e) | | 2008 Stock Incentive Plan incorporated herein by reference to Exhibit A of the March 17, 2008 Proxy Statement for the Annual Meeting of the Stockholders held on April 22, 2008. |

| | (10) (f) | | Form of Restricted Stock Grant Agreement incorporated herein by reference to Exhibit 10(d) as filed with its Form 8-K dated April 22, 2008. |

| | (10) (g) | | Form of Time-Lapse Restricted Stock Agreement incorporated herein by reference to Exhibit 10.1 as filed with its Form 10-Q for the quarter ended March 31, 2012. |

| | | (E) Certificate of Amendment of Certificate of Incorporation of Rollins, Inc. dated April, 26, 2011. |

| 58 |

| --- |

| 59 |

| --- | --- |

Pamela R.

| | | | |

| 60 |

| 61 |

| Allowance for doubtful accounts | | $ | 9,738 | | | $ | 11,095 | | | $ | (9,372 | ) | | $ | 11,461 | |

| 62 |

| 63 |

| 64 |