Rollins (ROL) 10-K risk factor changes: FY2016 vs FY2015

Presentation

This discussion should be read in conjunction with our audited financial statements and related notes included elsewhere in this document.

The following discussion (as well as other discussions in this document) contains forward-looking statements.

Please see “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of uncertainties, risks and assumptions associated with these statements.

The Company

Rollins, Inc. (the “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 and Australia with international franchises in Central America, South America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, and Mexico.

Services are performed through a contract that specifies the treatment specifics and the pricing arrangement with the customer.

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.

Overview

RESULTS OF OPERATIONS

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

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

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

| Revenues | | $ | 1,485,305 | | | $ | 1,411,566 | | | $ | 1,337,374 | | | | 5.2 | % | | | 5.5 | % |

| Cost of services provided | | | 735,976 | | | | 707,739 | | | | 678,459 | | | | (4.0 | ) | | | (4.3 | ) |

| Depreciation and amortization | | | 44,522 | | | | 43,509 | | | | 39,571 | | | | (2.3 | ) | | | (10.0 | ) |

| Sales, general and administrative | | | 463,742 | | | | 441,706 | | | | 428,288 | | | | (5.0 | ) | | | (3.1 | ) |

| Gain on sales of assets, net | | | (1,953 | ) | | | (618 | ) | | | (165 | ) | | | 216.0 | | | | 274.5 | |

| Interest income | | | (160 | ) | | | (254 | ) | | | (385 | ) | | | (37.0 | ) | | | 34.0 | |

| Income before income taxes | | | 243,178 | | | | 219,484 | | | | 191,606 | | | | 10.8 | | | | 14.5 | |

| Provision for income taxes | | | 91,029 | | | | 81,820 | | | | 68,276 | | | | (11.3 | ) | | | (19.8 | ) |

| Net income | | $ | 152,149 | | | $ | 137,664 | | | $ | 123,330 | | | | 10.5 | % | | | 11.6 | % |

General Operating Comments

2015 marked the Company’s 18th consecutive year of improved revenues and profits.

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.

Results of Operations—2015 Versus 2014

_Overview_

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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 $35.0 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.

For a discussion of the Company’s activities to manage risks relative to fluctuations in foreign currency exchange rates, see note 10 to the accompanying financial statements.

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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, 2016 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, 2016.

The independent registered public accounting firm, Grant Thornton LLP has audited the consolidated financial statements as of and for the year ended December 31, 2016, and has also issued their report on the effectiveness of the Company’s internal control over financial reporting, included in this report on page 23.

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| /s/ Gary W. Rollins | | | | /s/ Paul E Northen |

| Gary W. Rollins Vice Chairman and Chief Executive Officer | | | | Paul E. Northen Vice President, Chief Financial Officer and Treasurer |

Atlanta, Georgia

February 24, 2017

| | 22 | |

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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, 2016, 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.

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 [removed: America] [added: America, Australia,] and [removed: Australia] [added: Europe] with international franchises in Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, [added: Canada, Australia,] and Mexico.

Orkin either serves customers, directly or through [removed: franchises] [added: franchise] 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.

Rollins Wildlife Services, a wholly-owned subsidiary of the Company, acquired Critter Control [added: on] February 27, 2015.

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: 27.][added: 25 and 26.]

At the July [added: 24,] 2012 Board of Directors’ meeting, the Board authorized the purchase of 7.5 million shares of the Company’s common stock.

During the years ended December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] the Company repurchased on the open market [removed: 19 thousand] [added: 0.8 million] shares and [removed: 1.5 million] [added: 19 thousand] shares at a weighted average price of [removed: $22.42] [added: $27.19] and [removed: $19.46,] [added: $22.42,] respectively.

In total, there are [removed: 5.9] [added: 5.1] million additional shares authorized to be repurchased under prior Board approval.

| December 31, | | [removed: | 2015 |] [added: 2016] | | | [removed: 2014] | [added: 2015] | | | [removed: 2013] | [added: 2014] | | |

| Backlog | | [removed: |] $ | [removed: 4,352] [added: 5,303] | | | $ | [removed: 3,676] [added: 4,352] | | | $ | [removed: 3,286 |] [added: 3,676] | |

| Orkin Franchises | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Domestic Franchises | | | [removed: 51] [added: 50] | | | | [removed: 55] [added: 51] | | | | [removed: 54] [added: 55] | |

| International Franchises | | | [removed: 48] [added: 70] | | | | [removed: 37] [added: 48] | | | | [removed: 26] [added: 37] | |

| Total Franchises | | | [removed: 99] [added: 120] | | | | [removed: 92] [added: 99] | | | | [removed: 80] [added: 92] | |

Critter Control had [added: 94 franchises and] 108 franchises in the United States and Canada as of December 31, [removed: 2015.][added: 2016 and 2015 respectively.]

| Franchises | | [added: 2016 | | | |] 2015 | | |

| Critter Control Franchises | | | [added: 94 | | | |] 108 | |

| (in thousands) | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| First Quarter | | $ | [removed: 330,909] [added: 352,736] | | | $ | [removed: 313,388] [added: 330,909] | | | $ | [removed: 299,714] [added: 313,388] | |

| Second Quarter | | | [removed: 392,150] [added: 411,133] | | | | [removed: 369,357] [added: 392,150] | | | | [removed: 350,798] [added: 369,357] | |

| Third Quarter | | | [removed: 399,746] [added: 423,994] | | | | [removed: 384,870] [added: 399,746] | | | | [removed: 362,155] [added: 384,870] | |

| Fourth Quarter | | | [removed: 362,500] [added: 385,614] | | | | [removed: 343,951] [added: 362,500] | | | | [removed: 324,707] [added: 343,951] | |

| Years ended December 31, | | $ | [removed: 1,485,305] [added: 1,573,477] | | | $ | [removed: 1,411,566] [added: 1,485,305] | | | $ | [removed: 1,337,374] [added: 1,411,566] | |

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, Trutech, Permatreat, Rollins [removed: Australia and] [added: Australia,] Critter [removed: Control, competes] [added: Control and Safeguard Pest Control compete] favorably with competitors as the world’s largest pest and termite control company.

The number of persons employed by the Company as of January 31, [removed: 2016] [added: 2017] was approximately [removed: 11,000.][added: 12,000.]

| December 31, | | [removed: | 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Employees | | | [removed: | 11,268] [added: 12,153] | | | | [removed: 10,936] [added: 11,268] | | | | [removed: 10,649] [added: 10,936] | |

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

_The Company’s [removed: Management Has] [added: management has] a [removed: Substantial Ownership Interest; Public Stockholders May Have No Effective Voice In] [added: substantial ownership interest; public stockholders may have no effective voice in] the Company’s [removed: Management_][added: management._]

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

Critter Control was established by 1983 and has operations in 40 states and 2 Canadian provinces.

Rollins UK was formed as a wholly-owned subsidiary of the Company to acquire Safeguard Pest Control (“Safeguard”).

Safeguard, which was acquired in June 2016, is a pest control company established in the United Kingdom in 1991 with a history of providing superior pest control, bird control, and specialist services to residential and commercial customers.

| | 3 | |

The Company has purchased several Critter Control locations from its franchise owners while renaming and converting several TruTech locations to Critter Control.

The majority of Critter Control’s locations are franchised.

| | | At December 31, | | | | | | |

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Murray Pest Control Franchises

The Company has Australian franchises through Rollins Australia’s wholly-owned subsidiary, Murray Pest Control.

Murray Pest Control had four franchises as of December 31, 2016.

The Company purchased Murray Pest Control in 2016.

| Franchises | | 2016 | | |

| Murray Pest Control Franchises | | | 4 | |

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| | 5 | |

_Our business depends on our strong brands, and failing to maintain and enhance our brands could hurt our ability to retain and expand our base of customers._

Our strong brands, Rollins, Orkin, HomeTeam Pest Defense, Western Pest Services, The Industrial Fumigant Company, Crane Pest Control, Waltham Services, Trutech, Perma Treat, Critter Control, Allpest, and Safeguard Pest Control have significantly contributed to the success of our business.

Maintaining and enhancing our brands increases our ability to enter new markets and launch new and innovative services that better serve the needs of our customers.

Our brands may be negatively impacted by a number of factors, including, among others, reputational issues and product/technical failures.

Further, if our brands are significantly damaged, our business, operating results, and financial condition may be materially and adversely affected.

Maintaining and enhancing our brands will depend largely on our ability to remain a service leader and continue to provide high-quality, pest control products and services that are truly useful and play a meaningful role in people’s lives.

_Our operations could be affected if we fail to protect the security of personal information about our customers, employees and third parties, we could be subject to interruption of our business operations, private litigation, reputational damage and costly penalties._

We rely on, among other things, commercially available vendors, cyber protection systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential information of customers, employees and third parties, such as payment card and personal information.

The systems currently used for transmission and approval of payment card transactions, and the technology utilized in payment cards themselves, all of which can put payment card data at risk, meeting standards set by the payment card industry (“PCI”).

We continue to evaluate and modify our systems and protocols for PCI compliance purposes, and such PCI standards may change from time to time.

Activities by third parties, advances in computer and software capabilities and encryption technology, new tools and discoveries and other events or developments may facilitate or result in a compromise or breach of our systems.

Any compromises, breaches or errors in applications related to our systems or failures to comply with standards set by the PCI could cause damage to our reputation and interruptions in our operations, including our customers’ ability to pay for our services and products by credit card or their willingness to purchase our services and products and could result in a violation of applicable laws, regulations, orders, industry standards or agreements and subject us to costs, penalties and liabilities which could have a material adverse impact on our reputation, business, financial position, results of operations and cash flows.

Also, a breach of credit card data security could expose us to customer litigation.

_Our management has a substantial ownership interest, and the availability of the Company’s common stock to the investing public may be limited._

The availability of Rollins’ common stock to the investing public would be limited to those shares not held by the executive officers, directors and their affiliates, which could negatively impact Rollins’ stock trading prices and affect the ability of minority stockholders to sell their shares.

Future sales by executive officers, directors and their affiliates of all or a portion of their shares could also negatively affect the trading price of our common stock.

_Provisions in Rollins, Inc.’s certificate of incorporation and bylaws may inhibit a takeover of the Company._

Rollins, Inc.’s certificate of incorporation, bylaws and other documents contain provisions including advance notice requirements for stockholder proposals and staggered terms for the Board of Directors.

These provisions may make a tender offer, change in control or takeover attempt that is opposed by the Company’s Board of Directors more difficult or expensive.

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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.

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

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Critter Control is currently 100% franchised.

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| | 8 | |

| | 9 | |

On December 2, 2014, Plaintiff Killian Pest Control sued Rollins, [removed: Inc.,] [added: Inc. and] its subsidiary HomeTeam Pest [removed: Defense, and alleged] [added: Defense alleging] that HomeTeam’s exclusive use of its “tubes in the walls” system violates the federal Sherman Antitrust Act, and California’s Cartwright Act and Business and Professions Code.

On December 2, 2014, Plaintiff Jose Luis Garnica, on behalf of himself and a class of similarly situated customers, sued Rollins, [removed: Inc.,] [added: Inc. and] its subsidiary HomeTeam Pest [removed: Defense, and alleged] [added: Defense alleging] that HomeTeam’s exclusive use of its “tubes in the walls” system violates the federal Sherman Antitrust Act.

[removed: The Plaintiff seeks] [added: Plaintiffs seek] a declaratory judgment that the alleged misconduct violates the Sherman Act; a permanent injunction against continuing violations; and monetary damages.

[removed: Item 4] Mine Safety Disclosures.

Because discovery remains open and there are unresolved questions of fact and law, the Company cannot currently estimate the loss, if any, and intends to defend this matter vigorously.

A second Plaintiff, Cora Potter, subsequently was added.

On February 3, 2017, the Court issued an order denying Plaintiffs’ Motion for Class Certification.

At a hearing on February 9, 2017, the Court granted Plaintiffs leave to seek certification of a class of customers limited to their own geographic market, the Bakersfield, California area.

Because discovery remains open and there are unresolved questions of fact and law, the Company cannot currently estimate the loss, if any, and intends to defend this matter vigorously.

Item 4.

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The Company and a subsidiary, The Industrial Fumigant Company, LLC, were named defendants in Severn Peanut Co. and Meherrin Agriculture & Chemical Co. v.

Industrial Fumigant Co., et al.

The Severn lawsuit, a matter related to a fumigation service, 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.

The Company cannot currently estimate the loss, if any, because the lawsuit is at an early stage and involves unresolved issues of law and fact.

The Company intends to defend this matter vigorously.

| | 10 | |

10-K 1 [removed: e00081_rol-10k.htm][added: i17072_rol-10k.htm]

For the fiscal year ended December 31, [removed: 2015][added: 2016]

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

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

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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [removed: o][added: x]

The aggregate market value of Rollins, Inc. Common Stock held by non-affiliates on June 30, [removed: 2015] [added: 2016] was [removed: $2,708,382,648] [added: $2,781,648,386] based on the reported last sale price of common stock on June 30, [removed: 2015,] [added: 2016,] which is the last business day of the registrant’s most recently completed second fiscal quarter.

Rollins, Inc. had [removed: 218,806,458] [added: 218,032,223] shares of Common Stock outstanding as of January 31, [removed: 2016.][added: 2017.]

Portions of the Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Stockholders of Rollins, Inc. are incorporated by reference into Part III, Items 10-14.

[added: |] Rollins, Inc. [added: | | | | |]

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

[added: |] For the Year Ended December 31, [removed: 2015][added: 2016 | | | | |]

[added: |] Table of Contents [added: | | | | |]

| [Item [removed: 1.A.](#a_002)] [added: 1.A.](#i17072a002_v1)] | | [Risk [removed: Factors](#a_002)] [added: Factors.](#i17072a002_v1)] | | [removed: 9] [added: 5] |

| [Item [removed: 1.B.](#a_003)] [added: 1.B.](#i17072a003_v1)] | | [Unresolved Staff [removed: Comments](#a_003)] [added: Comments.](#i17072a003_v1)] | | [removed: 10] [added: 7] |

| [Item [removed: 4.](#a_006)] [added: 4.](#i17072a006_v1)] | | [Mine Safety [removed: Disclosures.](#a_006)] [added: Disclosures.](#i17072a006_v1)] | | [removed: 11] [added: 8] |

| [Item [removed: 4.A.](#a_007)] [added: 4.A.](#i17072a007_v1)] | | [Executive Officers of the [removed: Registrant.](#a_007)] [added: Registrant.](#i17072a007_v1)] | | [removed: 11] [added: 9] |

| [Item [removed: 5.](#a_008)] [added: 5.](#i17072a008_v1)] | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities.](#a_008)] [added: Securities.](#i17072a008_v1)] | | [removed: 12] [added: 10] |

| [Item [removed: 6.](#a_009)] [added: 6.](#i17072a009_v1)] | | [Selected Financial [removed: Data.](#a_009)] [added: Data.](#i17072a009_v1)] | | [removed: 14] [added: 12] |

| [Item [removed: 7.](#a_010)] [added: 7.](#i17072a010_v1)] | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations.](#a_010)] [added: Operations.](#i17072a010_v1)] | | [removed: 15] [added: 13] |

| [Item [removed: 7.A.](#a_011)] [added: 7.A.](#i17072a011_v1)] | | [Quantitative and Qualitative Disclosures about Market [removed: Risk.](#a_011)] [added: Risk.](#i17072a011_v1)] | | [removed: 23] [added: 21] |

| [Item [removed: 8.](#a_012)] [added: 8.](#i17072a012_v1)] | | [Financial Statements and Supplementary [removed: Data.](#a_012)] [added: Data.](#i17072a012_v1)] | | [removed: 27] [added: 25] |

| [Item [removed: 9.](#a_013)] [added: 9.](#i17072a013_v1)] | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosures.](#a_013)] [added: Disclosures.](#i17072a013_v1)] | | [removed: 56] [added: 52] |

| [Item [removed: 9.A.](#a_014)] [added: 9.A.](#i17072a014_v1)] | | [Controls and [removed: Procedures.](#a_014)] [added: Procedures.](#i17072a014_v1)] | | [removed: 56] [added: 52] |

| [Item [removed: 9.B.](#a_015)] [added: 9.B.](#i17072a015_v1)] | | [Other [removed: Information](#a_015)] [added: Information.](#i17072a015_v1)] | | [removed: 56] [added: 52] |

| [Item [removed: 10.](#a_016)] [added: 10.](#i17072a016_v1)] | | [Directors, Executive Officers and Corporate [removed: Governance.](#a_016)] [added: Governance.](#i17072a016_v1)] | | [removed: 56] [added: 53] |

| [Item [removed: 11.](#a_017)] [added: 11.](#i17072a017_v1)] | | [Executive [removed: Compensation.](#a_017)] [added: Compensation.](#i17072a017_v1)] | | [removed: 56] [added: 53] |

| [Item [removed: 12.](#a_018)] [added: 12.](#i17072a018_v1)] | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters.](#a_018)] [added: Matters.](#i17072a018_v1)] | | [removed: 57] [added: 53] |

| [Item [removed: 13.](#a_019)] [added: 13.](#i17072a019_v1)] | | [Certain Relationships and Related Party Transactions, and Director [removed: Independence.](#a_019)] [added: Independence.](#i17072a019_v1)] | | [removed: 57] [added: 54] |

| [Item [removed: 14.](#a_020)] [added: 14.](#i17072a020_v1)] | | [Principal Accounting Fees and [removed: Services.](#a_020)] [added: Services.](#i17072a020_v1)] | | [removed: 57] [added: 54] |

| [Item [removed: 15.](#a_021)] [added: 15.](#i17072a021_v1)] | | [Exhibits, Financial Statement [removed: Schedules.](#a_021)] [added: Schedules.](#i17072a021_v1)] | | [removed: 58] [added: 55] |

| | | [Schedule [removed: II.](#a_023)] [added: II.](#i17072a023_v1)] | | [removed: 62] [added: 60] |

| | | [Exhibit [removed: Index.](#a_033)] [added: Index.](#i17072a024_v1)] | | [removed: 63] [added: 61] |

| | | |

| | | |

| [Item 1.](#i17072a001_v1) | | [Business.](#i17072a001_v1) | | 3 |

| [Item 2.](#i17072a004_v1) | | [Properties.](#i17072a004_v1) | | 8 |

| [Item 3.](#i17072a005_v1) | | [Legal Proceedings.](#i17072a005_v1) | | 8 |

| | | [Signatures.](#i17072a022_v1) | | 58 |


| --- | --- |

| [Item 1.](#a_001) | | [Business](#a_001) | | 6 |

| [Item 2.](#a_004) | | [Properties](#a_004) | | 10 |

| [Item 3.](#a_005) | | [Legal Proceedings](#a_005) | | 10 |

| | | | | |

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

| | 5 | |

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

| R. Randall Rollins (1) | [removed: 84] [added: 85] | Chairman of the Board of Directors | 10/22/1991 |

| Gary W. Rollins (1) (2) | [removed: 71] [added: 72] | Vice Chairman and Chief Executive Officer | 7/24/2001 |

| John Wilson (3) | [removed: 58] [added: 59] | President and Chief Operating Officer | 1/23/2013 |

| Paul E Northen [removed: (5)] [added: (4)] | [removed: 51] [added: 52] | Vice President, Chief Financial Officer and Treasurer | 1/26/2016 |

| Tom Luczynski [removed: (6)] [added: (5)] | [removed: 59] [added: 60] | [added: Corporate] Secretary | 5/4/2010 |

| | [removed: (5)] [added: (4)] | 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. [removed: Previously, he was] [added: He previously held the positions of] CFO of UPS’ Asia Pacific Region based in Hong Kong, and [removed: he served] as Vice President of Finance in UPS’ Pacific and Western Regions. |

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

| | 9 | |

| Eugene Iarocci (4) | 69 | Vice President | 2/22/2011 |

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

| | (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. |

| | 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: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] 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: 2015] [added: 2016] | | High | | | | Low | | | | Per Share | | | | [removed: 2014] [added: 2015] | | High | | | | Low | | | | Per Share | | |

| First Quarter | | $ | [removed: 25.00] [added: 29.11] | | | $ | [removed: 21.11] [added: 23.69] | | | $ | [removed: 0.08] [added: 0.10] | | | First Quarter | | $ | [removed: 20.47] [added: 25.00] | | | $ | [removed: 18.01] [added: 21.11] | | | $ | [removed: 0.07] [added: 0.08] | |

| Second Quarter | | $ | [removed: 29.00] [added: 29.27] | | | $ | [removed: 23.88] [added: 26.21] | | | $ | [removed: 0.08] [added: 0.10] | | | Second Quarter | | $ | [removed: 20.99] [added: 29.00] | | | $ | [removed: 19.55] [added: 23.88] | | | $ | [removed: 0.07] [added: 0.08] | |

| Third Quarter | | $ | [removed: 30.42] [added: 29.71] | | | $ | [removed: 25.76] [added: 27.29] | | | $ | [removed: 0.08] [added: 0.10] | | | Third Quarter | | $ | [removed: 20.41] [added: 30.42] | | | $ | [removed: 18.65] [added: 25.76] | | | $ | [removed: 0.07] [added: 0.08] | |

| Fourth Quarter | | $ | [removed: 28.40] [added: 34.24] | | | $ | [removed: 25.51] [added: 28.00] | | | $ | [removed: 0.18] [added: 0.20] | | | Fourth Quarter | | $ | [removed: 22.62] [added: 28.40] | | | $ | [removed: 18.41] [added: 25.51] | | | $ | [removed: 0.14] [added: 0.18] | |

As of January 31, [removed: 2016,] [added: 2017,] there were [removed: 2,322] [added: 2,200] holders of record of the Company’s common stock.

On January [removed: 26, 2016] [added: 24, 2017] the Board of Directors approved a quarterly cash dividend per common share of [removed: $0.10] [added: $0.115] payable March 10, [removed: 2016] [added: 2017] to stockholders of record at the close of business February 10, [removed: 2016.][added: 2017.]

On October [removed: 27, 2015,] [added: 25, 2016,] the Board of Directors declared its regular [removed: $0.08] [added: $0.10] per share as well as a special year-end dividend of $0.10 per share both payable December [removed: 10, 2015] [added: 9, 2016] to stockholders of record at the close of business November 10, [removed: 2015.][added: 2016.]

During the years ended December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] the Company repurchased on the open market [removed: 19 thousand] [added: 0.8 million] shares and [removed: 1.5 million] [added: 19 thousand] shares at a weighted average price of [removed: $22.42] [added: $27.19] and [removed: $19.46,] [added: $22.42,] respectively.

In total, there remain [removed: 5.9] [added: 5.1] million additional shares authorized to be repurchased under prior Board approval.

| Period | | [removed: |] 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: [removed: October 2015: 0; November 2015: 0; and December 2015: 0.] |

[removed: ][added: ]

[added: |] Rollins, Inc., S&P 500 Index and peer group composite index [added: | | | | | | | | | | | | | | | | | | | | | | | | |]

| [removed: Cumulative Total Shareholder Return $] at Fiscal Year End | | [removed: 2010 | | | |] 2011 | | | | 2012 | | | | 2013 | | | | 2014 | | | | 2015 | | | [added: | 2016 | | |]

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

| October 1 to 31, 2016 | | | — | | | $ | — | | | | — | | | | 5,073,611 | |

| November 1 to 30, 2016 | | | — | | | | — | | | | — | | | | 5,073,611 | |

| December 1 to 31, 2016 | | | — | | | | — | | | | — | | | | 5,073,611 | |

| Total | | | — | | | $ | — | | | | — | | | | 5,073,611 | |

October 2016: 0; November 2016: 0; and December 2016: 0.

| | 10 | |

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

| Cumulative Total Shareholder Return $ | | | | | | | | | | | | | | | | | | | | | | | | |

| Rollins, Inc. | | | 100.00 | | | | 101.06 | | | | 141.33 | | | | 157.19 | | | | 187.50 | | | | 248.91 | |

| S&P 500 | | | 100.00 | | | | 116.00 | | | | 153.57 | | | | 174.60 | | | | 177.01 | | | | 198.18 | |

| Peer Index | | | 100.00 | | | | 127.73 | | | | 167.03 | | | | 187.08 | | | | 203.97 | | | | 236.79 | |

| | 11 | |

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

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

| 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 | |

| Years ended December 31, | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |

| Revenues | | $ | [removed: 1,485,305] [added: 1,573,477] | | | $ | [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] | |

| Income Before Income Taxes | | | [removed: 243,178] [added: 260,636] | | | | [removed: 219,484] [added: 243,178] | | | | [removed: 191,606] [added: 219,484] | | | | [removed: 176,642] [added: 191,606] | | | | [removed: 161,096] [added: 176,642] | |

| Net Income | | | [removed: 152,149] [added: 167,369] | | | | [removed: 137,664] [added: 152,149] | | | | [removed: 123,330] [added: 137,664] | | | | [removed: 111,332] [added: 123,330] | | | | [removed: 100,711] [added: 111,332] | |

| Earnings Per Share - Basic: | | | [removed: 0.70] [added: 0.77] | | | | [removed: 0.63] [added: 0.70] | | | | [removed: 0.56] [added: 0.63] | | | | [removed: 0.51] [added: 0.56] | | | | [removed: 0.46] [added: 0.51] | |

| Earnings Per Share - Diluted: | | | [removed: 0.70] [added: 0.77] | | | | [removed: 0.63] [added: 0.70] | | | | [removed: 0.56] [added: 0.63] | | | | [removed: 0.51] [added: 0.56] | | | | [removed: 0.46] [added: 0.51] | |

| Dividends paid per share | | | [removed: 0.42] [added: 0.50] | | | | [removed: 0.35] [added: 0.42] | | | | [removed: 0.30] [added: 0.35] | | | | [removed: 0.29] [added: 0.30] | | | | [removed: 0.19] [added: 0.29] | |

| Net cash provided by operating activities | | $ | [removed: 196,356] [added: 226,525] | | | $ | [removed: 194,146] [added: 196,356] | | | $ | [removed: 162,665] [added: 194,146] | | | $ | [removed: 141,919] [added: 162,665] | | | $ | [removed: 154,647] [added: 141,919] | |

| Net cash used in investing activities | | | [removed: (69,942] [added: (76,842] | ) | | | [removed: (89,471] [added: (69,942] | ) | | | [removed: (30,790] [added: (89,471] | ) | | | [removed: (42,693] [added: (30,790] | ) | | | [removed: (29,154] [added: (42,693] | ) |

| Net cash used in financing activities | | | [removed: (97,216] [added: (136,371] | ) | | | [removed: (106,519] [added: (97,216] | ) | | | [removed: (75,653] [added: (106,519] | ) | | | [removed: (80,989] [added: (75,653] | ) | | | [removed: (99,427] [added: (80,989] | ) |

| Depreciation | | | [removed: 19,354] [added: 24,725] | | | | [removed: 16,627] [added: 19,354] | | | | [removed: 14,415] [added: 16,627] | | | | [removed: 15,212] [added: 14,415] | | | | [removed: 15,112] [added: 15,212] | |

| Amortization of intangible assets | | | [removed: 25,168] [added: 26,177] | | | | [removed: 26,882] [added: 25,168] | | | | [removed: 25,156] [added: 26,882] | | | | [removed: 23,443] [added: 25,156] | | | | [removed: 22,391] [added: 23,443] | |

| Capital expenditures | | $ | [removed: (39,495] [added: (33,081] | ) | | $ | [removed: (28,739] [added: (39,495] | ) | | $ | [removed: (18,632] [added: (28,739] | ) | | $ | [removed: (19,040] [added: (18,632] | ) | | $ | [removed: (18,652] [added: (19,040] | ) |

| Total assets | | | [removed: 852,431] [added: 916,538] | | | | [removed: 808,162] [added: 848,651] | | | | [removed: 739,217] [added: 808,162] | | | | [removed: 692,506] [added: 739,217] | | | | [removed: 645,650] [added: 692,506] | |

| Stockholders’ equity | | $ | [removed: 524,029] [added: 568,545] | | | $ | [removed: 462,676] [added: 524,029] | | | $ | [removed: 438,255] [added: 462,676] | | | $ | [removed: 354,956] [added: 438,255] | | | $ | [removed: 323,997] [added: 354,956] | |

| Number of shares outstanding at year-end | | | [removed: 218,553] [added: 217,792] | | | | [removed: 218,283] [added: 218,553] | | | | [removed: 218,797] [added: 218,283] | | | | [removed: 219,023] [added: 218,797] | | | | [removed: 219,376] [added: 219,023] | |

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

| Current assets | | $ | 290,171 | | | $ | 269,434 | | | $ | 241,194 | | | $ | 234,924 | | | $ | 172,654 | |

| | 12 | |

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

| | Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |

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

Presentation

This discussion should be read in conjunction with our audited financial statements and related notes included elsewhere in this document.

The following discussion (as well as other discussions in this document) contains forward-looking statements.

Please see “Cautionary Statement Regarding Forward-Looking Statements” for a discussion of uncertainties, risks and assumptions associated with these statements.

The Company

Rollins, Inc. (the “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, Australia, and Europe with international franchises in Central America, South America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, and Mexico.

Services are performed through a contract that specifies the treatment specifics and the pricing arrangement with the customer.

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.

Overview

RESULTS OF OPERATIONS

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

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

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

| Years ended December 31, | | 2016 | | | | 2015 | | | | 2014 | | | | 2016 | | | | 2015 | | |

| Revenues | | $ | 1,573,477 | | | $ | 1,485,305 | | | $ | 1,411,566 | | | | 5.9 | % | | | 5.2 | % |

| Cost of services provided | | | 772,348 | | | | 735,976 | | | | 707,739 | | | | (4.9 | ) | | | (4.0 | ) |

| Depreciation and amortization | | | 50,902 | | | | 44,522 | | | | 43,509 | | | | (14.3 | ) | | | (2.3 | ) |

| Sales, general and administrative | | | 490,528 | | | | 463,742 | | | | 441,706 | | | | (5.8 | ) | | | (5.0 | ) |

| Gain on sales of assets, net | | | (777 | ) | | | (1,953 | ) | | | (618 | ) | | | (60.2 | ) | | | 216.0 | |

| Interest income | | | (160 | ) | | | (160 | ) | | | (254 | ) | | | — | | | | 37.0 | |

| Income before income taxes | | | 260,636 | | | | 243,178 | | | | 219,484 | | | | 7.2 | | | | 10.8 | |

| Provision for income taxes | | | 93,267 | | | | 91,029 | | | | 81,820 | | | | (2.5 | ) | | | (11.3 | ) |

| Net income | | $ | 167,369 | | | $ | 152,149 | | | $ | 137,664 | | | | 10.0 | % | | | 10.5 | % |

General Operating Comments

2016 marked the Company’s 19th consecutive year of improved revenues and profits.

Revenues for the year rose 5.9 percent to $1.573 billion compared to $1.485 billion for the prior year.

Income before income taxes increased 7.2% to $260.6 million compared to $243.2 million the prior year.

Net income increased 10.0% to $167.4 million, with earnings per diluted share of $0.77 compared to $152.1 million, or $0.70 per diluted share for the prior year.

All of our business lines experienced growth for the year, with residential pest control revenues up 7.3%, commercial pest control revenues up 4.4% and termite revenues up 6.3%.

The Company experienced growth in our Specialty Brands, Emerging Opportunity and Wildlife Brands all of which reported impressive growth numbers for the year.

These results underscore the value that the Company is experiencing in selectively acquiring, market-leading specialty pest control, and wildlife companies.

Rollins continued to make inroads in expanding brand recognition through growing the Company’s international presence in 2016 both through expansion in Australia and entry into the United Kingdom.

The Company also announced it established 23 new Orkin international franchises during the year.

| Current assets | | $ | 313,879 | | | $ | 283,958 | | | $ | 272,442 | | | $ | 205,992 | | | $ | 175,822 | |

[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: 2016 | | | |] 2015 | | | | 2014 | | |

| Cash and cash equivalents [added: at beginning of year] | | [removed: $] | 134,574 | | | [removed: $] | 108,372 | | [added: | | 118,216 | |]

| Trade receivables, net of allowance for doubtful accounts of [removed: $10,348] [added: $11,443] and [removed: $10,944,] [added: $10,348,] respectively | | | [removed: 79,864] [added: 88,490] | | | | [removed: 77,854] [added: 79,864] | |

| Financing receivables, short-term, net of allowance for doubtful accounts of [removed: $1,844] [added: $1,727] and [removed: $1,748,] [added: $1,844,] respectively | | | [removed: 13,830] [added: 15,968] | | | | [removed: 12,234] [added: 13,830] | |

| Materials and supplies | | | [removed: 12,801] [added: 13,724] | | | | [removed: 14,078] [added: 12,801] | |

| Deferred income taxes | | | [removed: 44,445] [added: 41,877] | | | | [removed: 42,764] [added: 40,665] | |

| Other current assets | | | [removed: 28,365] [added: 29,204] | | | | [removed: 28,656] [added: 28,365] | |

| Equipment and property, net | | | [removed: 121,356] [added: 133,477] | | | | [removed: 101,669] [added: 121,356] | |

| Goodwill | | | [removed: 249,939] [added: 255,665] | | | | [removed: 255,563] [added: 249,939] | |

| Customer contracts, net | | | [removed: 92,815] [added: 117,466] | | | | [removed: 104,657] [added: 92,815] | |

| Other intangible assets, net | | | [removed: 46,116] [added: 44,310] | | | | [removed: 28,815] [added: 46,116] | |

| Financing receivables, long-term, net of allowance for doubtful accounts of [removed: $1,444] [added: $1,430] and [removed: $1,402] [added: $1,444] respectively | | | [removed: 13,636] [added: 16,748] | | | | [removed: 11,787] [added: 13,636] | |

| [removed: Deferred income taxes] | [removed: | | — | | | | 7,881] [added: 11.] | [added: INCOME TAXES] |

| Other assets | | | [removed: 14,690] [added: 16,824] | | | | [removed: 13,832] [added: 14,690] | |

| Accounts payable | | | [removed: 24,919] [added: 30,284] | | | | [removed: 22,878] [added: 24,919] | |

| Accrued insurance | | | [removed: 24,874] [added: 26,201] | | | | [removed: 24,204] [added: 24,874] | |

| Accrued compensation and related liabilities | | | [removed: 73,607] [added: 75,839] | | | | [removed: 74,090] [added: 73,607] | |

| Unearned revenue | | | [removed: 96,192] [added: 99,820] | | | | [removed: 94,056] [added: 96,192] | |

| Other current liabilities | | | [removed: 33,394] [added: 44,847] | | | | [removed: 37,451] [added: 33,394] | |

| Total current liabilities | | | [removed: 252,986] [added: 276,991] | | | | [removed: 252,679] [added: 252,986] | |

| Accrued insurance, less current portion | | | [removed: 30,402] [added: 32,023] | | | | [removed: 30,946] [added: 30,402] | |

| Accrued pension | | | [removed: 9,735] [added: 2,880] | | | | [removed: 29,558] [added: 9,735] | |

| Long-term accrued liabilities | | | [removed: 31,499] [added: 36,099] | | | | [removed: 32,303] [added: 31,499] | |

| Common stock, par value $1 per share; [removed: 250,000,000] [added: 375,000,000] shares authorized, [removed: 218,753,011] [added: 217,791,511] and [removed: 218,482,907] [added: 218,753,011] shares issued, respectively | | | [removed: 218,753] [added: 217,792] | | | | [removed: 218,483] [added: 218,753] | |

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

| Paid-in-capital | | | [removed: 69,762] [added: 77,452] | | | | [removed: 62,839] [added: 69,762] | |

| Accumulated other comprehensive loss | | | [removed: (71,178] [added: (70,075] | ) | | | [removed: (65,488] [added: (71,178] | ) |

| Retained earnings | | | [removed: 306,892] [added: 343,376] | | | | [removed: 247,042] [added: 306,892] | |

| Total Stockholders’ Equity | | | [removed: 524,029] [added: 568,545] | | | | [removed: 462,676] [added: 524,029] | |

[removed: _The] [added: The] accompanying notes are an integral part of these consolidated financial [removed: statements._][added: statements.]

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

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

| Years ended December 31, | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Customer services | | $ | [removed: 1,485,305] [added: 1,573,477] | | | $ | [removed: 1,411,566] [added: 1,485,305] | | | $ | [removed: 1,337,374] [added: 1,411,566] | |

| Cost of services provided | | | [removed: 735,976] [added: 772,348] | | | | [removed: 707,739] [added: 735,976] | | | | [removed: 678,459] [added: 707,739] | |

| Depreciation and amortization | | | [removed: 44,522] [added: 50,902] | | | | [removed: 43,509] [added: 44,522] | | | | [removed: 39,571] [added: 43,509] | |

| Sales, general and administrative | | | [removed: 463,742] [added: 490,528] | | | | [removed: 441,706] [added: 463,742] | | | | [removed: 428,288] [added: 441,706] | |

| Cash and cash equivalents | | $ | 142,785 | | | $ | 134,574 | |

| Total Current Assets | | | 290,171 | | | | 269,434 | |

| Total Assets | | | 916,538 | | | | 848,651 | |

| Total Liabilities | | | 347,993 | | | | 324,622 | |

| Total Liabilities and Stockholders’ Equity | | $ | 916,538 | | | $ | 848,651 | |

| | 25 | |

| Rollins, Inc. and Subsidiaries | | | | | | | | | | | | |

The accompanying notes are an integral part of these consolidated financial statements

| | 26 | |

| Rollins, Inc. and Subsidiaries | | | | | | | | | | | | |

| NET INCOME | | $ | 167,369 | | | $ | 152,149 | | | $ | 137,664 | |

The accompanying notes are an integral part of these consolidated financial statements

| _Rollins, Inc. and Subsidiaries_ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

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

| Net Income | | | | | | | | | | | | | | | | | | | | | | | | | | | 167,369 | | | | 167,369 | |

| Common Stock Purchased (1) | | | (836 | ) | | | (836 | ) | | | — | | | | — | | | | — | | | | — | | | | (21,883 | ) | | | (22,719 | ) |

| Treasury Shares | | | (200 | ) | | | (200 | ) | | | 200 | | | | 200 | | | | — | | | | — | | | | — | | | | — | |

| Stock Compensation | | | 388 | | | | 388 | | | | — | | | | — | | | | 12,027 | | | | — | | | | — | | | | 12,415 | |

| Employee Stock Buybacks | | | (313 | ) | | | (313 | ) | | | — | | | | — | | | | (8,036 | ) | | | — | | | | — | | | | (8,349 | ) |

| Balance at December 31, 2016 | | | 217,792 | | | $ | 217,792 | | | | — | | | $ | — | | | $ | 77,452 | | | $ | (70,075 | ) | | $ | 343,376 | | | $ | 568,545 | |

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

| Rollins, Inc. and Subsidiaries | | | | | | | | | | | | |

| Years ended December 31, | | 2016 | | | | 2015 | | | | 2014 | | |

| Net Income | | $ | 167,369 | | | $ | 152,149 | | | $ | 137,664 | |

The accompanying notes are an integral part of these consolidated financial statements

Critter Control was established by 1983 and has operations in 40 states and 2 Canadian provinces.

Rollins UK was formed as a wholly-owned subsidiary of the Company to acquire Safeguard Pest Control (“Safeguard”).

Safeguard, which was acquired in June 2016, is a pest control company established in the United Kingdom in 1991 with a history of providing superior pest control, bird control, and specialist services to residential and commercial customers.

| Years ended December 31, | | 2016 | | | | 2015 | | | | 2014 | | |

| Years ended December 31, | | 2016 | | | | 2015 | | | | 2014 | | |

| Years Ended December 31, | | 2016 | | | | 2015 | | | | 2014 | | |

| Undistributed earnings | | | 0.27 | | | | 0.28 | | | | 0.28 | |

Under the guidance, investments measured at NAV, as a practical expedient for fair value, are excluded from the fair value hierarchy.

Removing investments measured using the practical expedient from the fair value hierarchy is intended to eliminate the diversity in practice that currently exists with respect to the categorization of these investments.

The new guidance is effective in 2017, however early adoption is permitted.

We have elected to early adopt ASU 2015-07 retrospectively for the investments eligible for the NAV practical expedient.

We have elected to early adopt ASU 2015-17 retrospectively in the first quarter of 2016.

As a result, we have presented all deferred tax assets and liabilities as noncurrent on our consolidated balance sheets, and have reclassified current deferred tax assets and liabilities on our consolidated balance sheet as of December 31, 2015.

There was no net impact on our results of operations as a result of the adoption of ASU 2015-17.

The standard permits either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014 – 09 recognized at the date of adoption (which includes additional footnote disclosures).

| Total Current Assets | | | 313,879 | | | | 283,958 | |

| Total Assets | | | 852,431 | | | | 808,162 | |

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

| Total Liabilities | | | 328,402 | | | | 345,486 | |

| Total Liabilities and Stockholders’ Equity | | $ | 852,431 | | | $ | 808,162 | |

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

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

| Balance at December 31, 2012 | | | 219,023 | | | $ | 219,023 | | | | — | | | $ | — | | | $ | 45,156 | | | $ | (56,967 | ) | | $ | 147,744 | | | $ | 354,956 | |

| Net Income | | | | | | | | | | | | | | | | | | | | | | | | | | | 123,330 | | | | 123,330 | |

| Common Stock Purchased (1) | | | (512 | ) | | | (512 | ) | | | — | | | | — | | | | — | | | | — | | | | (7,856 | ) | | | (8,368 | ) |

| Stock Compensation | | | 612 | | | | 612 | | | | — | | | | — | | | | 10,020 | | | | — | | | | (205 | ) | | | 10,427 | |

| Employee Stock Buybacks and Common Stock Options Exercised | | | (326 | ) | | | (326 | ) | | | — | | | | — | | | | (5,133 | ) | | | — | | | | 109 | | | | (5,350 | ) |

| Proceeds received upon exercise of stock options | | | — | | | | — | | | | 6 | |

| Cash and cash equivalents at end of year | | $ | 134,574 | | | $ | 108,372 | | | $ | 118,216 | |

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

| Diluted allocation of undistributed earnings: | | | | | | | | | | | | |

| Diluted shares outstanding: | | | | | | | | | | | | |

| Dilutive effect of stock options | | | — | | | | — | | | | — | |

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

| Common stock: | | | | | | | | | | | | |

| Diluted earning per share: | | | | | | | | | | | | |

The adoption of this standard did not have a material impact on the Company’s reported results of operations or financial position.

In June 2015, the FASB issued ASU No. 2015-10, Technical Corrections and Improvements.

ASU 2015-10 makes minor adjustments to the FASB Accounting Standard Codification.

The technical corrections are divided into four main categories: Amendments to align codification wording with that in pre-Codification standards, corrections to references and clarification of guidance to avoid misapplication and misinterpretation, minor edits to simplify the codification and thereby improve its usefulness and minor enhancements to codification guidance that are not expected to have a significant effect on current practice.

In September 2015, the FASB issued ASU No. 2015-16 (Topic 805): Business Combinations.

ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined.

The amendments in this update require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date.

The amendments in this update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date.

The amendments in this update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with earlier application permitted for financial statements that have not been issued.

We have not yet selected a transition method and continue to evaluate the effect of the standard on our ongoing financial reporting.

We do not expect this standard to have a material impact on the Company’s reported results of operations or financial position.

If an entity applies the guidance prospectively, the entity should disclose in the first interim and first annual period of change, the nature of and reason for the change in accounting principle and a statement that prior periods were not retrospectively adjusted.

If an entity applies the guidance retrospectively, the entity should disclose in the first interim and first annual period of change the nature of and reason for the change in accounting principle and quantitative information about the effects of the accounting change on prior periods.

The business is currently 100% franchised, operating in 40 states and 2 Canadian provinces.

| Less: Common Stock Payment | | | 0 | | | | (16,413 | ) |

| | | | 264,864 | | | | 234,042 | |

| | | | 96,866 | | | | 77,102 | |

| Goodwill at December 31, 2013 | | $ | 211,847 | |

| | 2016 | | | $ | 22,419 | |

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

Based on management’s evaluation as of December 31, [removed: 2015,] [added: 2016,] 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: 24.][added: 22.]

_Changes in Internal Controls_—There were no changes in our internal control over financial reporting during the fourth quarter of [removed: 2015] [added: 2016] that materially affected or are reasonably likely to materially affect these controls.

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

| | Item 9B. | Other Information |

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

None

| | 52 | |

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

PART III

| | Item 10. | Directors, Executive Officers and Corporate Governance. |

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

Information concerning directors and executive officers is included in the Company’s Proxy Statement for its 2017 Annual Meeting of Stockholders (the “Proxy Statement”), in the section titled “Election of Directors”.

This information is incorporated herein by reference.

Information about executive officers is contained on page 9 of this document.

_Audit Committee and Audit Committee Financial Expert_

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 2017 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.

_Code of Ethics_

The Company has adopted a Code of Business Conduct that applies to all employees.

In addition, the Company has adopted a Code of Business Conduct and Ethics for Directors and Executive Officer and Related Party Transaction Policy.

Both of these documents are available on the Company’s website at www.rollins.com and a copy is available by writing to Investor Relations at 2170 Piedmont Road, Atlanta Georgia 30324.

The Company intends to satisfy the disclosure requirement under Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of its code of ethics that relates to any elements of the code of ethics definition enumerated in SEC rules by posting such information on its internet website, the address of which is provided above.

_Section 16(a) Beneficial Ownership Reporting 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 2017 Annual Meeting of Stockholders, which is incorporated herein by reference.

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: 26, 2016] [added: 25, 2017] 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: 26, 2016] [added: 25, 2017] is incorporated herein by reference.

The following table sets forth certain information regarding equity compensation plans as of December 31, [removed: 2015.][added: 2016.]

| Equity compensation plans approved by security holders | | | [removed: 2,750,928] [added: 2,260,620] | | | $ | — | | | | [removed: 5,096,815] [added: 4,708,460] | |

| | (1) | Includes [removed: 5,096,815] [added: 4,708,460] 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. |

| | 53 | |

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

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

| Total | | | 2,260,620 | | | $ | — | | | | 4,708,460 | (1) |

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

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

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

Information regarding principal accounting fees and services is set forth under “Independent Public Accountants” in the Company’s Proxy Statement for its [removed: 2016] [added: 2017] Annual Meeting of Stockholders, which information is incorporated herein by reference.

| | 54 | |

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

| | 57 | |

| [removed: |] (10) (a) | [added: |] 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. |

| [removed: |] (10) (b) | [added: |] 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. |

| [removed: |] (10) (c) | [added: |] 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. |

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

| [removed: |] (10) (e) | [added: |] 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. |

| [removed: |] (10) (f) | [added: |] 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. |

| [removed: |] (10) (g) | [added: |] 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. |

| [removed: |] (10) (h) | [added: |] 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. |

| [removed: |] (10) (i) | [added: |] 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. |

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

| [removed: |] (3) (i) | [added: |] (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. |

| [removed: |] (ii) | [added: |] 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: |] 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. |

| [removed: |] (10) (j) | [added: |] 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. |

| [removed: |] (10) (k) | [added: |] 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, N.A., incorporated herein by reference to Exhibit 10(k) filed with the Registrant’s 10-K filed February 25, 2015. |

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

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

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

| [removed: |] (31.1) | [added: |] 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: |] 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: |] 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: |] EX-101 Instance Document |

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

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

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

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

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

| | | [removed: Gary W. Rollins] Vice Chairman and Chief Executive Officer [removed: (Principal Executive Officer)] |

| | Date: | February 24, [removed: 2016] [added: 2017] |

| Date: | February 24, [removed: 2016] [added: 2017] | | Date: | February 24, [removed: 2016] [added: 2017] |

[added: | | R.] Randall Rollins, Director [added: |]

[added: | | Henry B.] Tippie, Director [added: |]

[added: | | James B.] Williams, Director [added: |]

[added: | | Bill J.] Dismuke, Director [added: |]

[added: | | Thomas J.] Lawley, MD, Director [added: |]

[added: | | Larry L.] Prince, Director [added: |]

[added: | | John F.] Wilson, Director [added: |]

[added: | | Pam R.] Rollins, Director [added: |]

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

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

| (10) (d) | | Forms of award agreements under the 2013 Cash Incentive. |

| | 55 | |

| | 56 | |

| | 57 | |

| | | (Principal Executive Officer) |

| | | | | |

| --- | --- |

| /s/ Gary W. Rollins | |

| --- | --- |

| Gary W. Rollins | |

| February 24, 2017 | |

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

| | | | | |

| Year ended December 31, 2016 Allowance for doubtful accounts | | $ | 13,636 | | | $ | 11,257 | | | $ | (10,293 | ) | | $ | 14,600 | |

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

| --- | --- |

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

| (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) (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. |

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

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

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

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

R.

Henry B.

James B.

Bill J.

Thomas J.

Larry L.

John F.

Pam R.

| Year ended December 31, 2015 | | | | | | | | | | | | | | | | |

| Year ended December 31, 2014 | | | | | | | | | | | | | | | | |

| Year ended December 31, 2013 | | | | | | | | | | | | | | | | |

| Allowance for doubtful accounts | | $ | 11,461 | | | $ | 10,388 | | | $ | (9,571 | ) | | $ | 12,278 | |

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

| | | | (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. |

| | 63 | |

| | 64 | |

None

PART III

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

This information is incorporated herein by reference.

Information about executive officers is contained on page 11 of this document.

_Audit Committee and Audit Committee Financial Expert_

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 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.

_Code of Ethics_

The Company has adopted a Code of Business Conduct that applies to all employees.

In addition, the Company has adopted a Code of Business Conduct and Ethics for Directors and Executive Officer and Related Party Transaction Policy.

Both of these documents are available on the Company’s website at www.rollins.com and a copy is available by writing to Investor Relations at 2170 Piedmont Road, Atlanta Georgia 30324.

The Company intends to satisfy the disclosure requirement under Item 10 of Form 8-K regarding an amendment to, or waiver from, a provision of its code of ethics that relates to any elements of the code of ethics definition enumerated in SEC rules by posting such information on its internet website, the address of which is provided above.

_Section 16(a) Beneficial Ownership Reporting 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 2016 Annual Meeting of Stockholders, which is incorporated herein by reference.