Rollins (ROL) 10-K risk factor changes: FY2017 vs FY2016

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 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

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| | | | | | | | | | | | | | % better/(worse) as compared to prior year | | | | |

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

| Years ended December 31, | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | 2016 | |

| Revenues | $ | 1,673,957 | | | $ | 1,573,477 | | | $ | 1,485,305 | | | 6.4 | % | | 5.9 | % |

| Cost of services provided | 819,943 | | | | 772,348 | | | | 735,976 | | | | (6.2 | ) | | (4.9 | ) |

| Depreciation and amortization | 56,580 | | | | 50,902 | | | | 44,522 | | | | (11.2 | ) | | (14.3 | ) |

| Sales, general and administrative | 503,433 | | | | 490,528 | | | | 463,742 | | | | (2.6 | ) | | (5.8 | ) |

| Gain on sales of assets, net | (242 | | ) | | (777 | | ) | | (1,953 | | ) | | (68.9 | ) | | (60.2 | ) |

| Interest income | (259 | | ) | | (160 | | ) | | (160 | | ) | | 61.9 | | | — | |

| Income before income taxes | 294,502 | | | | 260,636 | | | | 243,178 | | | | 13.0 | | | 7.2 | |

| Provision for income taxes | 115,378 | | | | 93,267 | | | | 91,029 | | | | (23.7 | ) | | (2.5 | ) |

| Net income | $ | 179,124 | | | $ | 167,369 | | | $ | 152,149 | | | 7.0 | % | | 10.0 | % |

General Operating Comments

2017 marked the Company’s 20th consecutive year of improved revenues and profits.

Revenues for the year rose 6.4 percent to $1.674 billion compared to $1.573 billion for the prior year.

Income before income taxes increased 13.0% to $294.5 million compared to $260.6 million the prior year.

Net income increased 7.0% to $179.1 million, with earnings per diluted share of $0.82 compared to $167.4 million, or $0.77 per diluted share for the prior year.

The Company’s 2017 net income was negatively affected by the 2017 Tax Cuts and Jobs Act (“TCJA”) which was signed in to law on December 22, 2017.

The estimated negative impact of the enactment of the TCJA was an $11.6 million increase to tax expense, which was a direct decrease to net income.

The $11.6 million increase in tax was as follows: $8.0 million from transition tax on foreign earnings, $2.9 million from the revaluation of deferred tax assets, and $0.7 million from reductions in tax benefits on stock compensation.

This resulted in a $0.05 per diluted share decrease in net income for the year.

Net income excluding the effect of the TCJA increased 13.9% to $190.7 million or $0.87 per share.

Net income and diluted earnings per share excluding the effect of the TCJA are non-GAAP financial measures.

Management believes these measures help investors understand the effect of these on reported results.

All of the Company’s business lines experienced growth for the year, with residential pest control revenues up 6.4%, commercial pest control revenues up 5.1% and termite and ancillary services revenues up 9.7%.

During the year, the Company increased its presence around the world with the addition of 11 new Orkin international franchises.

The Company is also subject to interest rate risk exposure through borrowings on its [removed: $175] [added: $175.0] million credit facility.

However, the Company does maintain approximately [removed: $35.0] [added: $29.4] million in Letters of Credit.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of internal controls over financial reporting, as of December 31, [removed: 2016] [added: 2017] 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, [removed: 2016.][added: 2017.]

The independent registered public accounting firm, Grant Thornton LLP has audited the consolidated financial statements as of and for the year ended December 31, [removed: 2016,] [added: 2017,] and has also issued their report on the effectiveness of the Company’s internal control over financial reporting, included in this report on page [removed: 23.][added: 26.]

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

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

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

We have audited the internal control over financial reporting of Rollins, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in the 2013 Internal [removed: Control—Integrated] [added: Control-Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (COSO).][added: (“COSO”).]

We conducted our audit in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in the 2013 Internal [removed: Control—Integrated] [added: Control-Integrated] Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (“PCAOB”),] the consolidated financial statements of the Company as of and for the year ended December 31, [removed: 2016,] [added: 2017,] and our report dated February [removed: 24, 2017] [added: 26, 2018,] expressed an unqualified opinion on those financial statements.

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

We have audited the accompanying consolidated [removed: statements of financial position] [added: balance sheets] of Rollins, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, [removed: 2016 and 2015,] [added: 2017] and [added: 2016,] the related consolidated statements of income, comprehensive earnings, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, [removed: 2016.][added: 2017 and the related notes and schedule (collectively referred to as the “financial statements”).]

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

Our responsibility is to express an opinion on [removed: these] [added: the Company’s] financial statements [removed: and financial statement schedule] based on our audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material [removed: misstatement.][added: misstatement, whether due to error or fraud.]

[removed: An audit includes] [added: Such procedures included] examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

[removed: An audit] [added: Our audits] also [removed: includes assessing] [added: included evaluating] the accounting principles used and significant estimates made by management, as well as evaluating the overall [added: presentation of the] financial [removed: statement presentation.][added: statements.]

In our opinion, the [removed: consolidated] financial statements [removed: referred to above] present fairly, in all material respects, the financial position of [removed: Rollins, Inc. and subsidiaries] [added: the Company] as of December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended December 31, [removed: 2016] [added: 2017,] in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (“PCAOB”),] the Company’s internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in the 2013 Internal [removed: Control—Integrated] [added: Control-Integrated] Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (COSO),] [added: (“COSO”),] and our report dated February [removed: 24, 2017] [added: 26, 2018] expressed an unqualified opinion.

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February 26, 2018

Opinion on internal control over financial reporting

Basis for opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Definition and limitations of internal control over financial reporting

February 26, 2018

Opinion on the financial statements

Basis for opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We have served as the Company’s auditor since 2004.

February 26, 2018

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February 24, 2017

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Our audits of the basic consolidated financial statements included the financial statement schedule listed in the index appearing under item 15(a)2.

Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

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

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

[removed: _Economic] [added: Economic] conditions may adversely affect our [removed: business_][added: business]

[removed: _Our] [added: 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 [removed: customers._][added: customers.]

Our strong brands, Rollins, Orkin, HomeTeam Pest Defense, Western Pest Services, [added: Northwest Exterminating,] The Industrial Fumigant Company, Crane Pest Control, Waltham Services, Trutech, [removed: Perma Treat,] [added: Permatreat,] Critter Control, Allpest, [removed: and] Safeguard Pest Control [added: and other strong brands] have significantly contributed to the success of our business.

[removed: _We] [added: We] may not be able to identify, complete or successfully integrate [removed: acquisitions._][added: acquisitions.]

[removed: _Our] [added: Our] operations are affected by adverse weather [removed: conditions._][added: conditions.]

[removed: _Our] [added: Our] inability to attract and retain skilled workers may impair growth potential and [removed: profitability._][added: profitability.]

[removed: _Our operations could be affected if we fail to protect the security of personal information about our customers, employees and third parties, we] [added: We] could be subject to interruption of our business operations, private litigation, reputational damage and costly [removed: penalties._][added: 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 [removed: confidential] [added: this] information [removed: of customers, employees] and [removed: third parties, such as payment card and personal information.][added: data.]

[removed: 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, [removed: meeting] [added: meet] standards set by the payment card industry (“PCI”).

We continue to evaluate and modify our systems and protocols for [removed: PCI] [added: data security] compliance purposes, and such [removed: PCI] standards may change from time to time.

Any compromises, breaches or errors in applications related to our systems or failures to comply with [added: applicable] standards [removed: 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.

[removed: _Our] [added: Our] operations could be affected by pending and ongoing [removed: litigation._][added: litigation.]

[removed: _Our] [added: Our] operations may be adversely affected if we are unable to comply with regulatory and environmental [removed: laws._][added: laws.]

[removed: _The] [added: The] Company’s management has a 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: 57] [added: 56] percent of the Company’s outstanding shares of common stock.

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

[removed: _Provisions] [added: Provisions] in Rollins, Inc.’s certificate of incorporation and bylaws may inhibit a takeover of the [removed: Company._][added: Company.]

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

Unresolved Staff [removed: Comments][added: Comments]

Our operations could be affected if there is unauthorized access of personal, financial, or other data or information about our customers, employees, third parties, or of Company’s proprietary of confidential information.

Our information technology systems, as well as the information technology systems of our third party business partners and service providers, can contain personal, financial, health, or other information that is entrusted to us by our customers and employees.

Our information technology systems also contain Company’s and its wholly-owned subsidiaries’ proprietary and other confidential information related to our business, such as business plans and product development initiatives.

The systems currently used for transmission and approval of payment card

Also, a breach of data security could expose us to customer litigation and costs related to the reporting and handling of such a breach.

Our franchisees, subcontractors, and vendors could take actions that could harm our business.

Our franchisees, subcontractors, and vendors are contractually obligated to operate their businesses in accordance with the standards set forth in our agreements with them.

Each franchising brand also provides training and support to franchisees.

However, franchisees, subcontractors, and vendors are independent third parties that we do not control, and who own, operate and oversee the daily operations of their businesses.

As a result, the ultimate success of any franchise operation rests with the franchisee.

If franchisees do not successfully operate their businesses in a manner consistent with required standards, royalty payments to us will be adversely affected and our brands’ image and reputation could be harmed.

This could adversely impact our business, financial position, results of operations and cash flows.

Similarly, if subcontractors, vendors and franchisees do not successfully operate their businesses in a manner consistent with required laws, standards and regulations, we could be subject to claims from regulators or legal claims for the actions or omissions of such third‑party distributors, subcontractors, vendors and franchisees.

In addition, our relationship with our franchisees, subcontractors, and vendors could become strained (including resulting in litigation) as we impose new standards or assert more rigorous enforcement practices of the existing required standards.

These strains in our relationships or claims could have a material adverse impact on our reputation, business, financial position, results of operations and cash flows.

From time to time, we receive communications from our franchisees regarding complaints, disputes or questions about our practices and standards in relation to our franchised operations and certain economic terms of our franchise arrangements.

If franchisees or groups representing franchisees were to bring legal proceedings against us, we would vigorously defend against the claims in any

such proceeding.

Our reputation, business, financial position, results of operations and cash flows could be materially adversely impacted and the price of our common stock could decline.

Our brand recognition could be impacted if we are not able to adequately protect our intellectual property and other proprietary rights that are material to our business.

Our ability to compete effectively depends in part on our rights to service marks, trademarks, trade names and other intellectual property rights we own or license, particularly our registered brand names and service marks, Orkin®, Orkin Canada®, AcuridSM, Western Pest Services®, the Industrial Fumigant Company, HomeTeam Pest Defense®, TAEXX®, Critter Control®, Northwest Exterminating®, Allpest®, Murray®, Safeguard® and others.

We have not sought to register or protect every one of our marks either in the United States or in every country in which they are or may be used.

Furthermore, because of the differences in foreign trademark, patent and other intellectual property or proprietary rights laws, we may not receive the same protection in other countries as we would in the United States.

If we are unable to protect our proprietary information and brand names, we could suffer a material adverse impact on our reputation, business, financial position, results of operations and cash flows.

Litigation may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties that our products, services or activities infringe their intellectual property rights.

General

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, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, Canada, Australia, and Mexico.

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

Orkin, LLC.

(“Orkin”), a wholly-owned subsidiary of the Company founded in 1901, is the world’s largest pest and termite control company.

It provides customized services from over 400 locations.

Orkin either serves customers, directly or through 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.

Orkin operates under the Orkin®, and Orkin Canada® trademarks and the AcuridSM service mark.

The Orkin® brand name makes Orkin the most recognized pest and termite company throughout the United States.

The Orkin Canada brand name provides similar brand recognition throughout Canada.

Orkin Canada, a wholly-owned subsidiary of Orkin founded in 1952, was acquired by Orkin in 1999.

Orkin Canada is Canada’s largest pest control provider and a leader in the development of fast, effective and environmentally responsible pest control solutions.

Western Pest Services (“Western”), a wholly-owned subsidiary of the Company founded in 1928, was acquired by Rollins, Inc. in 2004.

Western is primarily a commercial pest control service company and its business complements most of the services Orkin offers focusing on the northeastern United States.

The Industrial Fumigant Company (“IFC”), a wholly-owned subsidiary of the Company founded in 1937, was acquired by Rollins, Inc. in 2005.

IFC is a leading provider of pest management and sanitation services and products to the food and commodity industries.

HomeTeam Pest Defense (“HomeTeam”), a wholly-owned subsidiary of the Company established in 1996, was acquired by Rollins, Inc. in April 2008.

At the time of the acquisition, HomeTeam, with its unique Taexx® tubes in the wall pest control system, was recognized as a premier pest control business and ranked as the 4th largest company in the industry.

HomeTeam services home builders nationally.

Rollins Australia (“Rollins Australia”), a wholly-owned subsidiary of the Company, acquired Allpest WA (“Allpest”), in February 2014.

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

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

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

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.

The Company has several smaller wholly-owned subsidiaries that in total make up less than 5% of the Company’s total revenues.

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

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 25 and 26.

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.

Common Stock Repurchase Program

All share and per share data presented have been adjusted to account for the three-for-two stock split effective March 10, 2015.

At the July 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, 2016 and 2015, the Company repurchased on the open market 0.8 million shares and 19 thousand shares at a weighted average price of $27.19 and $22.42, respectively.

In total, there are 5.1 million additional shares authorized to be repurchased under prior Board approval.

The repurchase program does not have an expiration date.

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Backlog

On December 2, 2014, Plaintiff Killian Pest Control sued Rollins, Inc. and its subsidiary HomeTeam Pest 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.

Plaintiffs seek a declaratory judgment that the alleged misconduct violates the Sherman and Cartwright Acts, and the Business and Professions Code; a permanent injunction against continuing alleged violations; and monetary damages.

The lawsuit is pending in the United States District Court, Northern District of California.

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.

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

A second Plaintiff, Cora Potter, subsequently was added.

Plaintiffs seek a declaratory judgment that the alleged misconduct violates the Sherman Act; a permanent injunction against continuing violations; and monetary damages.

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.

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[removed: For the fiscal year ended December] [added: FOR THE FISCAL YEAR ENDED DECEMBER] 31, [removed: 2016][added: 2017]

[removed: Commission] [added: Commission] file No. [removed: 1-4422][added: 1-4422]

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

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

[removed: Registrant’s] [added: Registrant’s] telephone number, including area code: (404) [removed: 888-2000][added: 888-2000]

[removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| | | [removed: Name] [added: Name] of [removed: each] [added: each] |

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

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

[removed: Securities] [added: Securities] registered pursuant to section 12(g) of the Act: [removed: None.][added: None.]

Yes [removed: x] [added: ý] No o

Yes o No [removed: x][added: ý]

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: x]

[removed: Large accelerated filer x Accelerated filer o] [added: | |] Non-accelerated filer [added: |] o [added: | |] Smaller [removed: Reporting Company] [added: reporting company |] o [added: | (Do not check if a smaller reporting company) |]

The aggregate market value of Rollins, Inc. Common Stock held by non-affiliates on June 30, [removed: 2016] [added: 2017] was [removed: $2,781,648,386] [added: $3,875,558,068] based on the reported last sale price of common stock on June 30, [removed: 2016,] [added: 2017,] which is the last business day of the registrant’s most recently completed second fiscal quarter.

Rollins, Inc. had [removed: 218,032,223] [added: 218,209,925] shares of Common Stock outstanding as of January 31, [removed: 2017.][added: 2018.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the Proxy Statement for the [removed: 2016] [added: 2018] 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] [added: For] the Year Ended December 31, [removed: 2016 |] [added: 2017] | | | |

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

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

| [removed: Part I |] [added: Part I] | | | |

| [removed: [Item 1.](#i17072a001_v1) |] [added: Item 1.] | [removed: [Business.](#i17072a001_v1)] | [added: [Business.](#sD038EB20FDF6FD91EAE25542C2E134AB)] | [removed: 3] [added: [3](#sD038EB20FDF6FD91EAE25542C2E134AB)] |

| [removed: [Item 1.A.](#i17072a002_v1)] [added: Item 1.A.] | | [Risk [removed: Factors.](#i17072a002_v1) |] [added: Factors.](#s703F5ECCFBD3F2AD622C5542C3055078)] | [removed: 5] [added: [5](#s703F5ECCFBD3F2AD622C5542C3055078)] |

| [removed: [Item 1.B.](#i17072a003_v1)] [added: Item 1.B.] | | [Unresolved Staff [removed: Comments.](#i17072a003_v1) |] [added: Comments.](#s69D90612BB8ADCBC61515542C33584A1)] | [removed: 7] [added: [8](#s69D90612BB8ADCBC61515542C33584A1)] |

| [removed: [Item 2.](#i17072a004_v1) |] [added: Item 2.] | [removed: [Properties.](#i17072a004_v1)] | [added: [Properties.](#sDF4C1B62A29452D3F2275542C356E1BF)] | [removed: 8] [added: [9](#sDF4C1B62A29452D3F2275542C356E1BF)] |

| [removed: [Item 3.](#i17072a005_v1)] [added: Item 3.] | | [Legal [removed: Proceedings.](#i17072a005_v1) |] [added: Proceedings.](#s17B29B076D694D1913CD5542C388C3B8)] | [removed: 8] [added: [9](#s17B29B076D694D1913CD5542C388C3B8)] |

| [removed: [Item 4.](#i17072a006_v1)] [added: Item 4.] | | [Mine Safety [removed: Disclosures.](#i17072a006_v1) |] [added: Disclosures.](#s155C39EAB88FBD72FBA15542C3AB9929)] | [removed: 8] [added: [9](#s155C39EAB88FBD72FBA15542C3AB9929)] |

| [removed: [Item 4.A.](#i17072a007_v1)] [added: Item 4.A.] | | [Executive Officers of the [removed: Registrant.](#i17072a007_v1) |] [added: Registrant.](#s4EAF102B3537B948CE8B5542C3DC6F36)] | [removed: 9] [added: [10](#s4EAF102B3537B948CE8B5542C3DC6F36)] |

| [removed: Part II |] [added: Part II] | | | |

| [removed: [Item 5.](#i17072a008_v1)] [added: Item 5.] | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities.](#i17072a008_v1) |] [added: Securities.](#sAFF8FA4036F842A1DA275542C42F9E58)] | [removed: 10] [added: [11](#sAFF8FA4036F842A1DA275542C42F9E58)] |

| [removed: [Item 6.](#i17072a009_v1)] [added: Item 6.] | | [Selected Financial [removed: Data.](#i17072a009_v1) |] [added: Data.](#s1DF57A06B56297908F9E5542C451FE2F)] | [removed: 12] [added: [13](#s1DF57A06B56297908F9E5542C451FE2F)] |

| [removed: [Item 7.](#i17072a010_v1)] [added: Item 7.] | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations.](#i17072a010_v1) |] [added: Operations.](#s76AB714ED9994198DBE65542BD09EC68)] | [removed: 13] [added: [14](#s76AB714ED9994198DBE65542BD09EC68)] |

| [removed: [Item 7.A.](#i17072a011_v1)] [added: Item 7.A.] | | [Quantitative and Qualitative Disclosures about Market [removed: Risk.](#i17072a011_v1) |] [added: Risk.](#sA2064AA2A7F02B1E04735542C529D13B)] | [removed: 21] [added: [25](#sA2064AA2A7F02B1E04735542C529D13B)] |

| [removed: [Item 8.](#i17072a012_v1)] [added: Item 8.] | | [Financial Statements and Supplementary [removed: Data.](#i17072a012_v1) |] [added: Data.](#s1F78C3BC4D3713C697A65542C54BAFD5)] | [removed: 25] [added: [26](#s1F78C3BC4D3713C697A65542C54BAFD5)] |

| [removed: [Item 9.](#i17072a013_v1)] [added: Item 9.] | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosures.](#i17072a013_v1) |] [added: Disclosures.](#sE426A4FB4D51C75569435542CB059894)] | [removed: 52] [added: [52](#sE426A4FB4D51C75569435542CB059894)] |

| [removed: [Item 9.A.](#i17072a014_v1)] [added: Item 9.A.] | | [Controls and [removed: Procedures.](#i17072a014_v1) |] [added: Procedures.](#s5BFFA4D5EA48311AF1B35542CB26EC2D)] | [removed: 52] [added: [60](#s5BFFA4D5EA48311AF1B35542CB26EC2D)] |

| [removed: [Item 9.B.](#i17072a015_v1)] [added: Item 9.B.] | | [Other [removed: Information.](#i17072a015_v1) |] [added: Information.](#s6FEB3EB07B21C18767425542CB5BE1E0)] | [removed: 52] [added: [60](#s6FEB3EB07B21C18767425542CB5BE1E0)] |

10-K 1 rol-123117x10k.htm 10-K

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Yes ý No o

Yes ý No o

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| | Large accelerated filer | ý | | Accelerated filer | o | |

| | Emerging growth company | | | | | |

| | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. o | | | | | |

Yes o No ý

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| | | [Signatures.](#s514B90CF21C11DCA3F0B5542CCC7C549) | [64](#s514B90CF21C11DCA3F0B5542CCC7C549) |

Item 1.

Business

General

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, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, Canada, Australia, and Mexico.

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

For a listing of the Company's Subsidiaries, see Note 1 - Summary of Significant Accounting Policies of Notes to the Financial Statements (Part II, Item 8, of this Form 10-k).

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

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 28 and 29.

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.

Common Stock Repurchase Program

All share and per share data presented have been adjusted to account for the three-for-two stock split effective March 10, 2015.

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

During the year ended December 31, 2017, the Company did not repurchase shares on the open market compared to 0.8 million shares at a weighted average price of $27.19 in 2016, respectively.

In total, there are 5.1 million additional shares authorized to be repurchased under prior Board approval.

The repurchase program does not have an expiration date.

Backlog

Backlog services and orders are usually provided within the month following the month of order receipt, except in the area of prepaid pest control and bait monitoring services, which are usually provided within twelve months of order receipt.

The Company does not have a material portion of its business that may be subject to renegotiation of profits or termination of contracts at the election of a governmental entity.

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10-K 1 i17072_rol-10k.htm

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

Each of the executive officers of the Company was elected by the Board of Directors to serve until the Board of Directors’ meeting immediately following the next Annual Meeting of Stockholders or until his [removed: earlier] [added: or herearlier] removal by the Board of Directors or his [added: or her] resignation.

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

| R. Randall Rollins (1) | [removed: 85] | [added: 86 | |] Chairman of the Board of Directors | [added: |] 10/22/1991 |

| Gary W. Rollins (1) (2) | [removed: 72] | [added: 73 | |] Vice Chairman and Chief Executive Officer | [added: |] 7/24/2001 |

| John Wilson (3) | [removed: 59] | [added: 60 | |] President and Chief Operating Officer | [added: |] 1/23/2013 |

| Paul E Northen (4) | [removed: 52] | [added: 53 | |] Vice President, Chief Financial Officer and Treasurer | [added: |] 1/26/2016 |

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

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

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

| [removed: |] (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. He previously held the positions of CFO of UPS’ Asia Pacific Region based in Hong Kong, and as Vice President of Finance in UPS’ Pacific and Western Regions. |

[removed: PART II][added: PART II]

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| Elizabeth Chandler (5) | | 54 | | Corporate Secretary and Chief Legal Officer | | 1/1/2018 |

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| (5) | Elizabeth (Beth) Brannen Chandler joined Rollins in 2013 as Vice President and General Counsel. In 2016, Beth assumed responsibility for the Risk Management and Internal Audit groups. She was appointed to Corporate Secretary in January 2018. Before joining Rollins, Mrs. Chandler was vice president, general counsel and corporate secretary for Asbury Automotive. Prior to working with Asbury, Mrs. Chandler served as city attorney for the City of Atlanta; and she served as vice president, assistant general counsel and corporate secretary for Mirant Corp. |

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

| Tom Luczynski (5) | 60 | Corporate Secretary | 5/4/2010 |

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

| | (5) | Tom Luczynski assumed responsibilities as Corporate Secretary in May 2010. Currently also serving as Group Vice President of Orkin international development and 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 | |

The high and low prices of the Company’s common stock and dividends paid for each quarter in the years ended December 31, [removed: 2016 and 2015, with all share] [added: 2017] and [removed: per share data adjusted for the Company’s three-for-two stock split effective March 10, 2015,] [added: 2016,] were as follows:

| | | Stock Price | | | | | | | | [removed: Paid] | | | [added: Stock Price] | | | [removed: Stock Price] | | | | | | | | [removed: Paid] | | |

| [removed: 2016] [added: 2017] | | High | | | | Low | | | | [removed: Per Share] | [added: 2016] | | [added: High] | [removed: 2015] | | [removed: High] | [added: Low] | | | [removed: Low] | | | | [removed: Per Share] | | |

| First Quarter | | $ | [removed: 29.11] [added: 37.29] | | | $ | [removed: 23.69] [added: 32.82] | | | $ | [removed: 0.10] [added: 0.12] | | | First Quarter | | $ | [removed: 25.00] [added: 29.11] | | | $ | [removed: 21.11] [added: 23.69] | | | $ | [removed: 0.08] [added: 0.10] | |

| Second Quarter | | $ | [removed: 29.27] [added: 43.75] | | | $ | [removed: 26.21] [added: 35.82] | | | $ | [removed: 0.10] [added: 0.12] | | | Second Quarter | | $ | [removed: 29.00] [added: 29.27] | | | $ | [removed: 23.88] [added: 26.21] | | | $ | [removed: 0.08] [added: 0.10] | |

| Third Quarter | | $ | [removed: 29.71] [added: 46.22] | | | $ | [removed: 27.29] [added: 39.90] | | | $ | [removed: 0.10] [added: 0.12] | | | Third Quarter | | $ | [removed: 30.42] [added: 29.71] | | | $ | [removed: 25.76] [added: 27.29] | | | $ | [removed: 0.08] [added: 0.10] | |

| Fourth Quarter | | $ | [removed: 34.24] [added: 48.29] | | | $ | [removed: 28.00] [added: 42.82] | | | $ | [removed: 0.20] [added: 0.22] | | | Fourth Quarter | | $ | [removed: 28.40] [added: 34.24] | | | $ | [removed: 25.51] [added: 28.00] | | | $ | [removed: 0.18] [added: 0.20] | |

As of January 31, [removed: 2017,] [added: 2018,] there were [removed: 2,200] [added: 2,496] holders of record of the Company’s common stock.

On January [removed: 24, 2017] [added: 23, 2018] the Board of Directors approved a [added: 21.7% increase in the Company's] quarterly cash dividend per common share [removed: of $0.115] [added: to $0.14] payable March [removed: 10, 2017] [added: 9, 2018] to stockholders of record at the close of business February [removed: 10, 2017.][added: 9, 2018.]

On October [removed: 25, 2016,] [added: 24, 2017,] the Board of Directors declared its regular [removed: $0.10] [added: $0.115] per share as well as a special year-end dividend of $0.10 per share both payable December [removed: 9, 2016] [added: 11, 2017] to stockholders of record at the close of business November 10, [removed: 2016.][added: 2017.]

During the years ended December 31, [removed: 2016 and 2015,] [added: 2017,] the Company [removed: repurchased] [added: did not repurchase shares] on the open market [added: compared to] 0.8 million shares [removed: and 19 thousand shares] at a weighted average price of $27.19 [removed: and $22.42, respectively.][added: in 2016.]

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

| October 1 to 31, [removed: 2016 |] [added: 2017] | | — | | | $ | — | | | [removed: |] — | | | [removed: |] 5,073,611 | |

| November 1 to 30, [removed: 2016 |] [added: 2017] | | — | | | [removed: |] — | | | | — | | | [removed: |] 5,073,611 | |

| December 1 to 31, [removed: 2016 | |] [added: 2017] | [removed: —] | [added: 1,167] | | | [removed: —] [added: 46.53] | | | | — | | | [removed: |] 5,073,611 | |

| Total | | [removed: | —] [added: 1,167] | | | $ | [removed: — |] [added: 46.53] | | | — | | | [removed: |] 5,073,611 | |

| [removed: |] (1) | Includes repurchases from employees for the payment of taxes on vesting of restricted shares in the following amounts: [added: October 2017: 0; November 2017: 0; and December 2017: 1,167.] |

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

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

[removed: ][added: ]

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

| [added: Cumulative Total Shareholder Return $] at Fiscal Year End | [removed: | 2011 | | | |] 2012 | | | [removed: |] 2013 | | | [removed: |] 2014 | | | [removed: |] 2015 | | | [removed: |] 2016 | | | [added: 2017 | |]

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| | | | | | | | | | | Dividends Paid Per Share | | | | | | | | | | | | | | Dividends Paid Per Share | | |

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| Rollins, Inc. | 100.00 | | | 139.85 | | | 155.55 | | | 185.54 | | | 246.31 | | | 344.05 | |

| S&P 500 | 100.00 | | | 132.39 | | | 150.51 | | | 152.59 | | | 170.84 | | | 208.14 | |

| Peer Index | 100.00 | | | 130.77 | | | 146.46 | | | 159.68 | | | 185.38 | | | 227.58 | |

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

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

On January 27, 2015, the Board of Directors at its quarterly meeting authorized a three-for-two stock split of the Company’s common shares by the issuance on March 10, 2015 of one additional common share for each two common shares held of record at February 10, 2015.

The stock split increased the Company’s outstanding shares from 145,783,052 to 218,674,578 shares.

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

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

| | 10 | |

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| 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 | |

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

| STATEMENT OF OPERATIONS DATA: | | | | | | | | | | | | | | | | | | | | [removed: |]

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

| Years ended December 31, | [added: 2017] | [added: | | |] 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | [removed: | 2012 | | |]

| Revenues | [removed: |] $ | [removed: 1,573,477] [added: 1,673,957] | | | $ | [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] | |

| Income Before Income Taxes | [added: 294,502] | | [added: | |] 260,636 | | | | 243,178 | | | | 219,484 | | | | 191,606 | | | [removed: | 176,642 | |]

| Net Income | [added: 179,124] | | [added: | |] 167,369 | | | | 152,149 | | | | 137,664 | | | | 123,330 | | | [removed: | 111,332 | |]

| Earnings Per Share - Basic: | [added: 0.82] | | [added: | |] 0.77 | | | | 0.70 | | | | 0.63 | | | | 0.56 | | | [removed: | 0.51 | |]

| Earnings Per Share - Diluted: | [added: 0.82] | | [added: | |] 0.77 | | | | 0.70 | | | | 0.63 | | | | 0.56 | | | [removed: | 0.51 | |]

| Dividends paid per share | [added: 0.56] | | [added: | |] 0.50 | | | | 0.42 | | | | 0.35 | | | | 0.30 | | | [removed: | 0.29 | |]

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

| Net cash provided by operating activities | [removed: |] $ | [removed: 226,525] [added: 235,370] | | | $ | [removed: 196,356] [added: 226,525] | | | $ | [removed: 194,146] [added: 196,356] | | | $ | [removed: 162,665] [added: 194,146] | | | $ | [removed: 141,919] [added: 162,665] | |

| Net cash used in investing activities | [removed: |] [added: (154,175] | [removed: (76,842] | ) | | [added: (76,842] | [removed: (69,942] | ) | | [added: (69,942] | [removed: (89,471] | ) | | [added: (89,471] | [removed: (30,790] | ) | | [added: (30,790] | [removed: (42,693] | ) |

| Net cash used in financing activities | [removed: |] [added: (130,263] | [removed: (136,371] | ) | | [added: (136,371] | [removed: (97,216] | ) | | [added: (97,216] | [removed: (106,519] | ) | | [added: (106,519] | [removed: (75,653] | ) | | [added: (75,653] | [removed: (80,989] | ) |

| Depreciation | [added: 27,381] | | [added: | |] 24,725 | | | | 19,354 | | | | 16,627 | | | | 14,415 | | | [removed: | 15,212 | |]

| Amortization of intangible assets | [added: 29,199] | | [added: | |] 26,177 | | | | 25,168 | | | | 26,882 | | | | 25,156 | | | [removed: | 23,443 | |]

| Capital expenditures | [removed: |] $ | [removed: (33,081] [added: (24,680] | ) | | $ | [removed: (39,495] [added: (33,081] | ) | | $ | [removed: (28,739] [added: (39,495] | ) | | $ | [removed: (18,632] [added: (28,739] | ) | | $ | [removed: (19,040] [added: (18,632] | ) |

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

| Current assets | [removed: |] $ | [removed: 290,171] [added: 262,795] | | | $ | [removed: 269,434] [added: 290,171] | | | $ | [removed: 241,194] [added: 269,434] | | | $ | [removed: 234,924] [added: 241,194] | | | $ | [removed: 172,654] [added: 234,924] | |

| Total assets | [added: 1,033,663] | | [added: | |] 916,538 | | | | 848,651 | | | | 808,162 | | | | 739,217 | | | [removed: | 692,506 | |]

| Stockholders’ equity | [removed: |] $ | [removed: 568,545] [added: 653,924] | | | $ | [removed: 524,029] [added: 568,545] | | | $ | [removed: 462,676] [added: 524,029] | | | $ | [removed: 438,255] [added: 462,676] | | | $ | [removed: 354,956] [added: 438,255] | |

| Number of shares outstanding at year-end | [added: 217,992] | | [added: | |] 217,792 | | | | 218,553 | | | | 218,283 | | | | 218,797 | | | [removed: | 219,023 | |]

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| | 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.

Twelve of these franchises are located in China, while the others are located in Brazil, Mongolia, Pakistan, Kazakhstan, Mexico, Ecuador, Bolivia, Malaysia and the Kingdom of Cambodia.

All of these franchises will offer commercial and residential pest control as well as termite services where applicable.

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

| Rollins, Inc. and Subsidiaries | | | | | | | | [removed: |]

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

| December 31, | [added: 2017] | [removed: 2016] | | [added: 2016] | | [removed: 2015] | [added: 2015] | |

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

| Cash and cash equivalents [removed: | | $] [added: at beginning of year] | 142,785 | | | [removed: $] | 134,574 | | [added: | | 108,372 | | |]

| Trade receivables, net of allowance for doubtful accounts of [removed: $11,443] [added: $11,814] and [removed: $10,348,] [added: $11,443,] respectively | [removed: |] [added: 97,802] | [removed: 88,490] | | | [added: 88,490] | [removed: 79,864] | |

| Financing receivables, short-term, net of allowance for doubtful accounts of [removed: $1,727] [added: $1,535] and [removed: $1,844,] [added: $1,727,] respectively | [removed: |] [added: 17,263] | [removed: 15,968] | | | [added: 15,968] | [removed: 13,830] | |

| Materials and supplies | [removed: |] [added: 14,983] | [removed: 13,724] | | | [added: 13,724] | [removed: 12,801] | |

| Other current assets | [removed: |] [added: 25,697] | [removed: 29,204] | | | [added: 29,204] | [removed: 28,365] | |

| Total Current Assets | [removed: |] [added: 262,795] | [removed: 290,171] | | | [added: 290,171] | [removed: 269,434] | |

| Equipment and property, net | [removed: |] [added: 134,088] | [removed: 133,477] | | | [added: 133,477] | [removed: 121,356] | |

| Goodwill | [removed: |] [added: 346,514] | [removed: 255,665] | | | [added: 255,665] | [removed: 249,939] | |

| Customer contracts, net | [removed: |] [added: 152,869] | [removed: 117,466] | | | [added: 117,466] | [removed: 92,815] | |

| Other intangible assets, net | [removed: |] [added: 61,548] | [removed: 44,310] | | | [added: 44,310] | [removed: 46,116] | |

| Financing receivables, long-term, net of allowance for doubtful accounts of [removed: $1,430] [added: $1,357] and [removed: $1,444] [added: $1,430] respectively | [removed: |] [added: 20,414] | [removed: 16,748] | | | [added: 16,748] | [removed: 13,636] | |

| Deferred income taxes | [removed: |] [added: 18,420] | [removed: 41,877] | | | [added: 41,877] | [removed: 40,665] | |

| Other assets | [removed: |] [added: 19,420] | [removed: 16,824] | | | [added: 16,824] | [removed: 14,690] | |

| Total Assets | [removed: |] [added: 1,033,663] | [removed: 916,538] | | | [added: 916,538] | [removed: 848,651] | |

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

| Accounts payable | [removed: |] [added: 26,161] | [removed: 30,284] | | | [added: 30,284] | [removed: 24,919] | |

| Accrued insurance | [removed: |] [added: 28,018] | [removed: 26,201] | | | [added: 26,201] | [removed: 24,874] | |

| Accrued compensation and related liabilities | [removed: |] [added: 73,016] | [removed: 75,839] | | | [added: 75,839] | [removed: 73,607] | |

| Unearned revenue | [removed: |] [added: 109,029] | [removed: 99,820] | | | [added: 99,820] | [removed: 96,192] | |

| Other current liabilities | [removed: |] [added: 58,345] | [removed: 44,847] | | | [added: 44,847] | [removed: 33,394] | |

| Total current liabilities | [removed: |] [added: 294,569] | [removed: 276,991] | | | [added: 276,991] | [removed: 252,986] | |

| Accrued insurance, less current portion | [removed: |] [added: 34,245] | [removed: 32,023] | | | [added: 32,023] | [removed: 30,402] | |

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

| Long-term accrued liabilities | [removed: |] [added: 50,925] | [removed: 36,099] | | | [added: 36,099] | [removed: 31,499] | |

| Total Liabilities | [removed: |] [added: 379,739] | [removed: 347,993] | | | [added: 347,993] | [removed: 324,622] | |

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

| STOCKHOLDERS’ EQUITY | | | | | | | | [removed: |]

| Preferred stock, without par value; 500,000 authorized, zero shares issued | [removed: | |] — | | | | — | | [added: |]

| Common stock, par value $1 per share; 375,000,000 shares authorized, [removed: 217,791,511] [added: 217,992,177] and [removed: 218,753,011] [added: 217,791,511] shares issued, respectively | [removed: |] [added: 217,992] | [removed: 217,792] | | | [added: 217,792] | [removed: 218,753] | |

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

| Paid-in-capital | [removed: |] [added: 81,405] | [removed: 77,452] | | | [added: 77,452] | [removed: 69,762] | |

| Accumulated other comprehensive loss | [removed: |] [added: (45,956] | [removed: (70,075] | ) | | [added: (70,075] | [removed: (71,178] | ) |

| Retained earnings | [removed: |] [added: 400,483] | [removed: 343,376] | | | [added: 343,376] | [removed: 306,892] | |

| Total Stockholders’ Equity | [removed: |] [added: 653,924] | [removed: 568,545] | | | [added: 568,545] | [removed: 524,029] | |

| Total Liabilities and Stockholders’ Equity | [removed: |] $ | [removed: 916,538] [added: 1,033,663] | | | $ | [removed: 848,651] [added: 916,538] | |

| | | | | | | | |

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

| | | | | | | | |

| Cash and cash equivalents | $ | 107,050 | | | $ | 142,785 | |

| Prepaid Pension | 17,595 | | | | — | | |

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

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

| Years ended December 31, | 2017 | | | | 2016 | | | | 2015 | | |

| NET INCOME | $ | 179,124 | | | $ | 167,369 | | | $ | 152,149 | |

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

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

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

| Other Comprehensive Income, Net of Tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Common Stock Retired | (200 | ) | | (200 | | ) | | 200 | | | | 200 | | | | — | | | | — | | | | | | | | — | | |

| Net Income | | | | | | | | | | | | | | | | | | | | | | | | 179,124 | | | | 179,124 | | |

| Other Comprehensive Income, Net of Tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cash Dividends | — | | | — | | | | — | | | | — | | | | — | | | | — | | | | (122,017 | | ) | | (122,017 | | ) |

| Stock Compensation | 434 | | | 434 | | | | — | | | | — | | | | 11,965 | | | | — | | | | — | | | | 12,399 | | |

| Employee Stock Buybacks | (234 | ) | | (234 | | ) | | — | | | | — | | | | (8,012 | | ) | | — | | | | — | | | | (8,246 | | ) |

| Balance at December 31, 2017 | 217,992 | | | $ | 217,992 | | | — | | | | — | | | | 81,405 | | | | (45,956 | | ) | | 400,483 | | | | $ | 653,924 | |

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

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

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

| Years ended December 31, | 2017 | | | | 2016 | | | | 2015 | | |

| Net Income | $ | 179,124 | | | $ | 167,369 | | | $ | 152,149 | |

| Derivative Investments | (264 | | ) | | — | | | | — | | |

Northwest Exterminating, LLC, a wholly-owned subsidiary of the Company founded in 1951, was acquired by Rollins, Inc. in August 2017.

Northwest specializes in residential and commercial termite control, pest control, mosquito control, wildlife services, lawn care, insulation, and HVAC services, focusing on the Southeast United States.

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

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| Years ended December 31, | 2017 | | | | 2016 | | | | 2015 | | |

| | | | | | | | |

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

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| | 25 | |

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| | 26 | |

| | 27 | |

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| Balance at December 31, 2013 | | | 218,797 | | | $ | 218,797 | | | | — | | | $ | — | | | $ | 53,765 | | | $ | (31,771 | ) | | $ | 197,464 | | | $ | 438,255 | |

| Common Stock Issued for Acquisitions | | | 585 | | | | 585 | | | | 290 | | | | 290 | | | | 15,831 | | | | — | | | | (292 | ) | | | 16,414 | |

| Common Stock Purchased (1) | | | (920 | ) | | | (920 | ) | | | (590 | ) | | | (590 | ) | | | (15,831 | ) | | | — | | | | (12,004 | ) | | | (29,345 | ) |

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

| Stock Compensation | | | 439 | | | | 439 | | | | — | | | | — | | | | 10,286 | | | | — | | | | (146 | ) | | | 10,579 | |

| Employee Stock Buybacks | | | (318 | ) | | | (318 | ) | | | — | | | | — | | | | (5,956 | ) | | | — | | | | 106 | | | | (6,168 | ) |

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

| Cash Dividends | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (109,002 | ) | | | (109,002 | ) |

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

| | 28 | |

| Excess tax benefits from share-based payments | | | 3,699 | | | | 1,946 | | | | 4,744 | |

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

| | 29 | |

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

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

| | 30 | |

| | 31 | |

| | 32 | |

| | 33 | |

| | 34 | |

These amounts are included as financing receivables in the accompanying Consolidated Statements of Financial Position.

The territories and initial franchise fees are typically sold for a combination of cash and notes.

These notes are not guaranteed.

The Company anticipates that should there be any losses from franchisees these losses would be recouped by removing the individual franchisee and re-selling the abandoned territory.

Royalties from franchises are accrued and recognized in accordance with the FASB ASC Topic 952-605 _“Franchisor Revenue Recognition_,” as revenues are earned on a monthly basis.

_New Accounting Standards_

In May 2015, the FASB issued Accounting Standards Update (“ASU”) 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (“ASU 2015-07”).

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.

In November 2015, the FASB issued ASU No. (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position.

None.

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

None

[removed: _Evaluation] [added: Evaluation] of Disclosure Controls and [removed: Procedures_—We] [added: Procedures—We] have established disclosure controls and procedures to ensure, among other things, that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who certify the Company’s financial reports and to other members of senior management and the Board of Directors.

Based on management’s evaluation as of December 31, [removed: 2016,] [added: 2017,] 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.

[removed: _Management’s] [added: Management’s] Report on Internal Control Over Financial [removed: Reporting_—Management’s] [added: Reporting—Management’s] Report on Internal Control Over Financial Reporting is contained on page [removed: 22.][added: 25.]

[removed: _Changes] [added: Changes] in Internal [removed: Controls_—There] [added: Controls—There] were no changes in our internal control over financial reporting during the fourth quarter of [removed: 2016] [added: 2017] 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.

None

PART III

Information concerning directors and executive officers is included in the Company’s Proxy Statement for its 2018 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 2018 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 2018 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: 25, 2017] [added: 24, 2018] is incorporated herein by reference.

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

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: 25, 2017] [added: 24, 2018] is incorporated herein by reference.

The following table sets forth certain information regarding equity compensation plans as of December 31, [removed: 2016.][added: 2017.]

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

| Equity compensation plans [added: not] approved by security holders | [removed: | | 2,260,620] [added: —] | | | $ | — | | | [added: —] | [removed: 4,708,460] | |

| Equity compensation plans [removed: not] approved by security holders | [removed: | | —] [added: 2,017,119] | | | $ | — | | | [added: 4,273,709] | [removed: —] | |

| [removed: |] (1) | Includes [removed: 4,708,460] [added: 4,273,709] 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. |

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| Total | 2,017,119 | | | $ | — | | | 4,273,709 | | (1) |

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| | 53 | |

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

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Information regarding principal accounting fees and services is set forth under “Independent Public Accountants” in the Company’s Proxy Statement for its [removed: 2017] [added: 2018] Annual Meeting of Stockholders, which information is incorporated herein by reference.

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| | 54 | |

[removed: | | (a) | _Consolidated] [added: (a)Consolidated] Financial Statements, Financial Statement Schedule and [removed: Exhibits._ |][added: Exhibits.]

| [removed: |] 1. | Consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements and Schedule are filed as part of this report. |

| [removed: |] 2. | The financial statement schedule listed in the accompanying Index to Consolidated Financial Statements and Schedule is filed as part of this report. |

| [removed: |] 3. | Exhibits listed in the accompanying Index to Exhibits are filed as part of this report. The following such exhibits are management contracts or compensatory plans or arrangements: |

| (10) (a) | | [removed: Rollins,] [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, [removed: 2005.] [added: 2005.](http://www.sec.gov/Archives/edgar/data/84839/000091406205000692/rollinss81105ex41.txt)] |

| (10) (b) | | [removed: Form] [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, [removed: 2005.] [added: 2005.](http://www.sec.gov/Archives/edgar/data/84839/000091406205000692/rollinss81105ex42.txt)] |

| (10) (c) | | [removed: Written] [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, [removed: 2013.] [added: 2013.](http://www.sec.gov/Archives/edgar/data/84839/000110465913033048/a13-10751_1ex10da.htm)] |

| (10) (e) | | [removed: 2008] [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, [removed: 2008.] [added: 2008.](http://www.sec.gov/Archives/edgar/data/84839/000104746908002942/a2183718zdef14a.htm)] |

| (10) (f) | | [removed: Form] [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, [removed: 2008.] [added: 2008.](http://www.sec.gov/Archives/edgar/data/84839/000008483908000071/exh10d.htm)] |

| (10) (g) | | [removed: Form] [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, [removed: 2012.] [added: 2012.](http://www.sec.gov/Archives/edgar/data/84839/000110465912029465/a12-8764_1ex10d1.htm)] |

| (10) (h) | | [removed: Summary] [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, [removed: 2010.] [added: 2010.](http://www.sec.gov/Archives/edgar/data/84839/000104746910001320/a2196759zex-10_q.htm)] |

| (10) (i) | | [removed: Summary] [added: [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, [removed: 2015.] [added: 2015.](http://www.sec.gov/Archives/edgar/data/84839/000155278115000273/e00088_ex10i.htm)] |

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

| (3) (i) | | [removed: (A)] [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, [removed: 2005.] [added: 2005.](http://www.sec.gov/Archives/edgar/data/84839/000008483905000070/exhibit3ia.txt)] |

| | | [removed: (B)] [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, [removed: 2005.] [added: 2005.](http://www.sec.gov/Archives/edgar/data/84839/000008483905000028/f03ib.txt)] |

| | | [removed: (C)] [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, [removed: 2005.] [added: 2005.](http://www.sec.gov/Archives/edgar/data/84839/000008483905000070/exhibit3ic.txt)] |

| | | [removed: (D)] [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, [removed: 2006] [added: 2006](http://www.sec.gov/Archives/edgar/data/84839/000008483906000070/ex3id.htm)] |

| | | [removed: (E)] [added: | [(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, [removed: 2015. (F)] [added: 2015.](http://www.sec.gov/Archives/edgar/data/84839/000155278115000273/e00088_ex3ie.htm) [(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, [removed: 2015.] [added: 2015.](http://www.sec.gov/Archives/edgar/data/84839/000155278115000727/e00291_ex3.htm)] |

| (ii) | | [removed: Revised] [added: | [Revised] By-laws of Rollins, Inc. dated [removed: October 28, 2014,] [added: April 25, 2017,] incorporated herein by reference to Exhibit (3) (i) as filed with its Form 10-Q filed [removed: October 29, 2014.] [added: April 28, 2017.](http://www.sec.gov/Archives/edgar/data/84839/000117120017000223/i17220_ex3-ii.htm)] |

| [removed: (4)] [added: (4] | [added: )] | [removed: Form] [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, [removed: 1998.] [added: 1998.](http://www.sec.gov/Archives/edgar/data/84839/000104746999011738/0001047469-99-011738.txt)] |

| (10) (j) | | [removed: Revolving] [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 [removed: 1, 2012.] [added: 2, 2012.](http://www.sec.gov/Archives/edgar/data/84839/000110465912073726/a12-25937_1ex99d1.htm)] |

| (10) (k) | | [removed: First] [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, [removed: 2015.] [added: 2015.](http://www.sec.gov/Archives/edgar/data/84839/000155278115000273/e00088_ex10k.htm)] |

| [removed: (23.1)] [added: (23.1] | [added: )] | [removed: Consent] [added: | [Consent] of Grant Thornton LLP, Independent Registered Public Accounting [removed: Firm.] [added: Firm.](https://www.sec.gov/Archives/edgar/data/84839/000008483918000065/exhibit231.htm)] |

| [removed: (31.1)] [added: (31.1] | [added: )] | [removed: Certification] [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 [removed: 2002.] [added: 2002.](https://www.sec.gov/Archives/edgar/data/84839/000008483918000065/exhibit311.htm)] |

| [removed: (31.2)] [added: (31.2] | [added: )] | [removed: Certification] [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 [removed: 2002.] [added: 2002.](https://www.sec.gov/Archives/edgar/data/84839/000008483918000065/exhibit312.htm)] |

| [removed: (32.1)] [added: (32.1] | [added: )] | [removed: Certification] [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 [removed: 2002.] [added: 2002.](https://www.sec.gov/Archives/edgar/data/84839/000008483918000065/exhibit321.htm)] |

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

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

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

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

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

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

| | Date: | February [removed: 24, 2017] [added: 26, 2018] |

| Date: | February [removed: 24, 2017] [added: 26, 2018] | | Date: | February [removed: 24, 2017] [added: 26, 2018] |

| Financial statements and reports | [removed: |] Page Number From This Form 10-K | [removed: | |]

| Management’s Report on Internal Control Over Financial Reporting | [removed: | | 22 |] [added: [23](#s25D23A055EEC413173B55542C4D59177)] |

| Report of Independent Registered Public Accounting Firm On Internal Control Over Financial Reporting | [removed: | | 23 |] [added: [24](#s9475E255DA023236D6785542C4F71B5C)] |

| Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements and Schedule | [removed: | | 24 |] [added: [25](#sA2064AA2A7F02B1E04735542C529D13B)] |

| Consolidated Financial Statements | | [removed: | | |]

| Consolidated Statements of Financial Position as of December 31, [removed: 2016] [added: 2017] and [removed: 2015 | | | 25] [added: 2016] | [added: [26](#sAFA9BF93448D6E3627FE5542B803EC81)] |

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| (10) (d) | | [Forms of award agreements under the 2013 Cash Incentive Plan incorporated herein by reference to Exhibit 10(a) as filed with its Form 10-K dated February 27, 2017.](http://www.sec.gov/Archives/edgar/data/84839/000117120017000077/i17072_ex10-d1.htm) |

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| (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.](http://www.sec.gov/Archives/edgar/data/84839/000091406205000692/rollinss81105ex41.txt) |

| | | |

| (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.](http://www.sec.gov/Archives/edgar/data/84839/000091406205000692/rollinss81105ex42.txt) |

| (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.](http://www.sec.gov/Archives/edgar/data/84839/000110465913033048/a13-10751_1ex10da.htm) |

| (10) (d) | | [Forms of award agreements under the 2013 Cash Incentive Plan incorporated herein by reference to Exhibit 10(a) as filed with its Form 10-K dated February 27, 2017.](http://www.sec.gov/Archives/edgar/data/84839/000117120017000077/i17072_ex10-d1.htm) |

| (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.](http://www.sec.gov/Archives/edgar/data/84839/000104746908002942/a2183718zdef14a.htm) |

| (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.](http://www.sec.gov/Archives/edgar/data/84839/000008483908000071/exh10d.htm) |

| (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.](http://www.sec.gov/Archives/edgar/data/84839/000110465912029465/a12-8764_1ex10d1.htm) |

| (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.](http://www.sec.gov/Archives/edgar/data/84839/000104746910001320/a2196759zex-10_q.htm) |

| (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.](http://www.sec.gov/Archives/edgar/data/84839/000155278115000273/e00088_ex10i.htm) |

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| (21 | ) | | [Subsidiaries of Registrant.](https://www.sec.gov/Archives/edgar/data/84839/000008483918000065/exhibit21.htm) |

| (24 | ) | | [Powers of Attorney for Directors.](https://www.sec.gov/Archives/edgar/data/84839/000008483918000065/exhibit24.htm) |

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| February 26, 2018 | |

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

| | 55 | |

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

| | 56 | |

| (21) | | Subsidiaries of Registrant. |

| (24) | | Powers of Attorney for Directors. |

| | 57 | |

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

| February 24, 2017 | |

| | 58 | |

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