Rollins Inc. (ROL) 2021年年度報告「NYSE」.pdf

《Rollins Inc. (ROL) 2021年年度報告「NYSE」.pdf》由會員分享，可在線閱讀，更多相關《Rollins Inc. (ROL) 2021年年度報告「NYSE」.pdf（72頁珍藏版）》請在三個皮匠報告上搜索。

1、Protecting Where You Live,Work,and Play2021 ANNUAL REPORT16,000MORE THANEMPLOYEES WORLDWIDEBoise,Idaho Branch Paints the TownMurray Pest Control,10 Year Service Anniversary PresentationAardwolf Pestkare,Excellent Service Award1Rollins,Inc.2021 Annual Report|2021 Financial HighlightsSummary of Operat

2、ions2021 Revenue Breakdown(by Service Lines)YEARS ENDED DECEMBER 3120212020Increase/(Decrease)2019Revenues$2,424,300$2,161,22012.2%$2,015,477 Income before income taxes 474,838 354,72033.9%261,160 Net income 350,687 260,824 34.5%203,347 Earnings per share Basic and Diluted 0.71 0.53 33.9%0.41 Divide

3、nds paid per share0.420.3327.3%0.31(in thousands except per share data)TERMITE&ANCILLARYREVENUES20%RESIDENTIALPEST CONTROL46%COMMERCIALPEST CONTROL34%2|Rollins,Inc.2021 Annual ReportFinancial Results 2021201920202021$203.3$260.8$350.7NETINCOME(in millions)$350.720202021$412.6$374.6 FREE CASHFLOW*(in

4、 millions)$374.6 20202021$454.8$546.4 ADJUSTEDEBITDA*(in millions)$546.4REVENUES(in millions)$2,424.3201920202021$2,015.5$2,161.2$2,424.3*Non-GAAP measures.Please refer to the reconciliations on page 68.201920202021$0.41$0.53$0.71DILUTED EARNINGS PER SHARE($)$0.71201920202021$319.6$435.8$401.8CASH F

5、ROMOPERATIONS(in millions)$401.8201920202021$22.11$39.07$34.21STOCK PRICE($)$34.212021REVENUE+12.2%2021NET INCOME+34.5%2021DILUTED EPS71PER SHARE2021DIVIDENDS42PER SHAREAllpest,Customer Service Representative AwardOrkin Canada,25 Year Service Anniversary PresentationWestern Pest Services,35 Year Ser

6、vice Anniversary PresentationClark Pest Control,Leadership Development Program Attendees4|Rollins,Inc.2021 Annual ReportIts our pleasure to share with you the Companys significant results from 2021,a year of continued growth for Rollins.We pride ourselves on our commitment to being the“worlds best s

7、ervice company”and strive to create value for our customers,the communities we serve,our employees,and our shareholders.That objective is what defines Rollins,and in the end,it comes down to our employees who deliver superior customer experiences every day.Our management understands the value of bui

8、lding strong teams to take great care of customers.Our team members drive continuous improvement and work hard to achieve our objectives.Our driving force is to provide superior pest control solutions to homes and businesses.We embrace diversity and prioritize being an exceptional corporate citizen.

9、Rollins and our family of pest control brands,and our more than 16,000 exceptional employees embody these values,which provide the foundation for our continued success.Solid Financial Results Rollins had an especially strong year financially and operationally in 2021.Our net income rose 34.5%to$350.

10、7 million and our revenue grew 12.2%to$2.4 billion.We experienced solid growth in all our business lines and the strength of our brands helped us continue to attract customers requesting our services.Compared to last year,residential pest control revenues grew by a record level of 12.9%,with strong

11、organic growth of 10%.Due to an increase in remote work and self-quarantine,we believe residential prospects have often noticed pest issues which confirmed the need for our services.Our termite control revenues increased by 14%and experienced organic growth of 11.9%as more customers desired to prote

12、ct their homes from termites and sought other offerings like insulation and moisture control to supplement our termite services.Commercial revenues rose by 10.2%with organic growth of 7.4%and we added new accounts in core segments,as the commercial sector began to recover from the impact of the pand

13、emic.Our earnings per share increased 34%to$0.71 per diluted share,our cash flows continued to improve,and our stockholders were provided$208.7 million in dividends.This included a special year-end cash dividend of$0.08 per share paid in December.Foundation for our Continued SuccessThis solid growth

14、 continues to be a direct result of our business model,the depth and breadth of services that we offer,the strength of our brands,and the continued application of technology to improve our customer experience.None of it would be possible without the contribution of the talented people who work for R

15、ollins.There are countless individuals within our organization who deserve recognition.We are uniquely privileged to work with so many outstanding,long-tenured employees,many of whom have enjoyed notable careers of more than 20 years at Rollins.This tenure can be found within all levels of the Compa

16、ny.We are fortunate that our Company is made up of skilled,dedicated,and caring employees who not only have excellent pest control experience but also excel within their particular positions.We never underestimate the positive impact employee retention has on providing a better customer experience a

17、nd better customer retention.For Rollins,we believe our employees long tenure makes an incredible difference in maintaining the highest standards for quality and excellence while providing superior customer service.To Our Shareholders,Employees&Valued Customers“Our team members drive continuous impr

18、ovement and work hard to achieve our objectives.Gary W.Rollins Chairman and Chief Executive Officer5Rollins,Inc.2021 Annual Report|People Development Rollins greatest asset is our people.Weve continued our long-standing commitment to attract the best talent,provide best-in-class training,promote fro

19、m within our Company,and create a nurturing work environment for all employees.We focus on hiring,developing,and retaining the best people and making sure every employee feels respected,valued and safe at work.We take pride in our training and developing each employee to reach his or her full potent

20、ial.In addition to ensuring the professional development of all our employees,each aspect of training also aligns with and supports Rollins overall strategic and operational business goals.In short,our employees are the backbone of our Company,and as a testament to the strength of our approach,were

21、pleased to be recognized again in 2021 for a Top Workplaces Award by The Atlanta Journal-Constitution.Management&Board Strength We are also incredibly proud of our management teams throughout our business and service lines.Their combined skills,industry knowledge and individual talents provide us wi

22、th the means to achieve high levels of customer service and sustainable,long-term growth.Our Board of Directors have always been an enormous resource for Rollins.We remain extremely grateful for their continued time commitment and business expertise.In April,Henry Tippie retired from our Board,leavi

23、ng behind an incredible legacy of leadership and service.Associated with the Rollins family for 68 years,he was the third Director in the Companys history,held this Director position longer than anyone in the company,and has the Companys record for the longest serving CFO to date.Without his financi

24、al knowledge and leadership,Rollins would not be where it is today.We will continue to honor his legacy and his example of hard work and dedication as we continue to grow and succeed.Were equally pleased to welcome several new individuals to the outstanding group of leaders on our Board including Gr

25、egory Morrison,Donald Carson,and Jerry Gahlhoff,Jr.We look forward to their future counsel and contributions to our Company.As mentioned earlier,our culture has undoubtedly been aided by solid employee retention.This same commitment is reflected in the long tenure of our Executive Steering Committee

26、 and their notable experience in the pest control industry.Their tenure within Rollins averages more than 23 years and that experience helps guide our decision making,and the investments we make for the Company to achieve our business goals.Our division and brand leaders who lead our family of compa

27、nies have impressive tenure of their own,averaging 22 years.Personally speaking,having the opportunity to work alongside these outstanding individuals is an honor and pleasure.“We focus on hiring,developing,and retaining the best people and making sure every employee feels respected,valued and safe

28、at work.We take pride in our training and developing each employee to reach his or her full potential.“Jerry E.Gahlhoff,Jr.Rollins President and Chief Operating OfficerOrkin Kazakhstan,Call Center Leader6|Rollins,Inc.2021 Annual ReportWorkplace InclusionRollins launched a Workplace Inclusion Initiat

29、ive,focusing on diversity,equity,and inclusion for all employees.We are fortunate to have two talented leaders,Ruby Swann and Karen Bradford,driving this initiative.With input from the Advisory Council,that represents leaders from all brands across Rollins companies,we formed a Taskforce to focus on

30、 education and recognition of the cultural diversity that exists in the Rollins workforce.We conducted awareness sessions for more than 1,000“people leaders.”This included listening sessions for non-management employees,which has helped us launch a dedicated Inclusion website that will feature resou

31、rces,news,and Company updates.We are encouraged by the past accomplishments of all of those who have had a part in this initiative thus far.The Inclusion initiative has now become integral to our long-term strategy at Rollins and will be incorporated into the fabric of our organization.We have no do

32、ubt that more successes are in store for Rollins as we continue our Inclusion journey.Karen BradfordAdvisory Council Chair,Orkin Northeast Division HR DirectorRuby SwannRollins Workplace Inclusion DirectorRollins United Way Game DayRollins United Way Breakfast7Rollins,Inc.2021 Annual Report|Gary W.R

33、ollinsChairman and Chief Executive OfficerJohn F.WilsonVice Chairman Jerry E.Gahlhoff Jr.Rollins President and Chief Operating OfficerFreeman ElliottPresident of OrkinSteven LeavittPresident of Rollins BrandsChris GoreckiVice President of Operational SupportKevin J.SmithChief Marketing OfficerThomas

34、 TeshChief Information OffficerJulie BimmermanInterim Chief Financial Officer and TreasurerElizabeth ChandlerCorporate Secretary and Chief Legal OfficerExecutive Steering Committee8|Rollins,Inc.2021 Annual ReportMoving Forward We experienced a very successful 2021,both financially and operationally,

35、and we are very excited about what the future holds for Rollins.Its clear were living in a time unlike any other we have experienced.We express our sincere thanks to our dedicated employees for their commitment and hard work.We could not be prouder as theyve continued to provide vital services to ou

36、r customers through very challenging times.We also wish to thank our Board members for their invaluable guidance,our valued customers for their confidence in us,and our investors for their continued support.We are excited about the future and look forward to sharing the new years accomplishments.Joh

37、n F.WilsonVice ChairmanJerry E.Gahlhoff Jr.Rollins President and Chief Operating OfficerGary W.RollinsChairman and Chief Executive OfficerFirst female technician at Orkin CambodiaMissQuito Employees9Rollins,Inc.2021 Annual Report|Henry Tippie was associated with the Rollins organization for more tha

38、n 68 years.He joined the Company in February 1953 as a young accountant,and from the beginning,Henry brought innovative ideas to Rollins and the world of business.He was an invaluable asset to the overall performance of Rollins.When Henry retired in April 2021 at the age of 94,he left behind a legac

39、y of numerable accomplishments.Rollins founding brothers,O.Wayne and John W.Rollins,hired Henry when the company operations consisted of four radio stations,with less than 50 employees,and an annual revenue of a hundred thousand dollars.Henry quickly became a trusted member of Rollins management bec

40、oming the third Director in the history of Rollins,following brothers O.Wayne and John.Henry held this position longer than anyone in the company56 years.By 1960,Henry was named Rollins Executive Vice President of Finance and Treasurer.To date,he holds the company record for the longest serving CFO

41、after serving 17 years and 9 months in the role.Henrys hard work and dedication to the organization led to a number of successes where he helped build and turn unprofitable projects into flourishing business successes.On February 14,1961,Henry attended the first listing of Rollins Broadcasting on th

42、e American Stock Exchange at$8 a share,when we became a publicly traded company.In September 1964,Henry was an instrumental part of the team that put together the purchase of Orkin Exterminating.With Rollins Broadcastings reported revenues at$9 million,and Orkins reported sales at$37 million,its con

43、sidered the countrys first-ever leveraged buyout.In 1997,Henry was involved in the decision to officially sell off all non-pest control businesses,making Rollins the single-focused organization we know today.Until his retirement,he continued to be part of key company decisions including the acquisit

44、ions of HomeTeam,Northwest and Clark Pest Control,which assisted in propelling Rollins to become a$2 billion company.In 2018,Henry and R.Randall Rollins were inducted into the New York Stock Exchange(NYSE)Wall of Leaders,being the only two Directors of a company present at both the initial listing o

45、n the NYSE and the Companys 50th anniversary.The NYSE Wall of Leaders is extremely limited,consisting of only 17 members.“Without the financial knowledge and leadership Henry provided,Rollins would not be where it is today.His expertise and meticulous eye for detail have enabled Rollins to become th

46、e largest pest control company in the world,”stated Gary W.Rollins,Chairman and CEO.“We are appreciative of Henry and everything he has done for our Company.We will continue to honor his legacy and the example he provided of hard work and dedication as we continue to grow and succeed.”Henry Tippie:A

47、 Lasting Legacy at Rollins Inc.Henry B.Tippie(second to left)at The American Stock Exchange,1961Henry B.Tippieii|Rollins,Inc.2021 Annual Report(Thispagehasbeenleftblankintentionally)UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15

48、(d)OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31,2021Commission file No.1-4422ROLLINS,INC.(Exact name of registrant as specified in its charter)Delaware51-0068479(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)2170 Piedm

49、ont Road,N.E.,Atlanta,Georgia30324(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(404)888-2000Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,$1 Par

50、 ValueROLThe New York Stock Exchange Securities registered pursuant to section 12(g)of the Act:None.Indicate by check mark YES NOIndicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSe

51、ction13orSection15(d)oftheAct.IndicatebycheckmarkwhethertheRegistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheRegistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsfor

52、thepast90days.Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuanttoRule405ofRegulationS-T(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).Indicate

53、bycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seethedefinitionsof“largeacceleratedfiler,”“acceleratedfiler,”“smallerreportingcompany,”andemerginggrowthcompanyinRule12b-2oftheExchangeAct.Large Accele

54、rated Filer Acceleratedfiler Non-acceleratedfiler Smallerreportingcompany Emerginggrowthcompany Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardspursuanttoSection13(a)oftheExchangeAct.I

55、ndicatebycheckmarkwhethertheregistranthasfiledareportonandattestationtoitsmanagementsassessmentU.S.C.7262(b)bytheregisteredpublicaccountingfirmthatpreparedorissueditsauditreport.Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).TheaggregatemarketvalueofRoll

56、ins,Inc.CommonStockheldbynon-affiliatesonJune30,2021was$7,888,772,207basedonthereportedlastsalepriceofcommonstockonJune30,2021,whichisthelastbusinessdayoftheregistrantsmostrecentlycompletedsecondfiscalquarter.Rollins,Inc.had492,085,707sharesofCommonStockoutstandingasofJanuary31,2022.DOCUMENTS INCORP

57、ORATED BY REFERENCEPortionsoftheProxyStatementforthe2022AnnualMeetingofStockholdersofRollins,Inc.areincorporatedbyreferenceintoPartIII,Items 10-14.ii|Rollins,Inc.2021 Annual Report(Thispagehasbeenleftblankintentionally)13Rollins,Inc.2021 Annual Report|ROLLINS,INC.Form 10-KFor the Year Ended December

58、 31,2021Table of ContentsPAGEPart IItem 1.Business.14Item 1.A.Risk Factors.19Item 1.B.Unresolved Staff Comments.24Item 2.Properties.24Item 3.Legal Proceedings .25Item 4.Mine Safety Disclosures .25Part IIItem 5.MarketforRegistrantsCommonEquity,RelatedStockholderMattersand Issuer Purchases of Equity S

59、ecurities.26Item 6.Reserved.28Item 7.ManagementsDiscussionandAnalysisofFinancialConditionand ResultsofOperations.28Item 7.A.Quantitative and Qualitative Disclosures about Market Risk.32Item 8.FinancialStatementsandSupplementaryData.33Item 9.Changes in and Disagreements with Accountants on Accounting

60、 and Financial Disclosures.60Item 9.A.Controls and Procedures.60Item 9.B.Other Information.60Item 9.C.DisclosureRegardingForeignJurisdictionsthatPreventInspections.60Part IIIItem 10.Directors,ExecutiveOfficersandCorporateGovernance.61Item 11.ExecutiveCompensation.61Item 12.SecurityOwnershipofCertain

61、BeneficialOwnersandManagement and Related Stockholder Matters.61Item 13.CertainRelationshipsandRelatedPartyTransactions,andDirectorIndependence.61Item 14.PrincipalAccountingFeesandServices.61Part IVItem 15.Exhibits and Financial Statement Schedules.62Signatures.65Schedule II.67Reconciliation of Non-

62、GAAP Measures.6814|Rollins,Inc.2021 Annual ReportPart I Item 1.Business14|Rollins,Inc.2021 Annual ReportPart IItem 1.BusinessGeneral OverviewRollins,Inc.(“Rollins,”“we,”“us,”“our,”orthe“Company”),isaninternationalservicescompanyheadquarteredinAtlanta,Georgia.Throughourfamilyofleadingbrands,weprovide

63、essentialpestandwildlifecontrolservicesandprotectionagainst termite damage,rodents and insects to more than two million residential and commercial customers from more than800Company-ownedandfranchisedlocationsinover70countries.Overthecourseofourlengthyoperatinghistory,wehavegarneredareputationforpro

64、vidinggreatcustomerservice.Thecontractedandrecurringnatureofourservicesprovideuswithvisibilityintoasignificantportionofourfutureearnings.In1964,brothersO.WayneandJohnRollinsacquiredOrkinExterminatingCompanyandin1965wechangedournamefromRollinsBroadcasting,InctoRollins,Inc.In1968,Rollinsbegantrading o

65、n the New York Stock Exchange under the symbol“ROL”.Sincethen,wehavegrownintoapremierconsumerand commercial services business with numerous industry leading brands including the world renowned Orkin,as well as HomeTeam Pest Defense,Clark Pest Control,Western Pest Services,Critter Control Wildlife,an

66、d Northwest Pest Control,among others.Weoperateunderonereportablesegmentwhichcontainsourthree business lines:Residential:Pestcontrolservicesprotectingresidentialpropertiesfromcommonpests,includingrodents,insectsandwildlife;Commercial:Workplacepestcontrolsolutionsforcustomersacross diverse end market

67、s such as healthcare,foodservice,logistics;and Termite:Traditionalandbaitingtermiteprotectionservicesand ancillary services for both residential and commercial customers.Our Competitive StrengthsRollinsisagloballeaderinpestcontrol.Wehaveestablishedaportfolioofpremierbrandswithextensiveservicecapabil

68、itiesacrossadeepoperatingnetwork.Ourscaleenablesdeliveryofgreatserviceandprovidesasignificantandreinforcingcompetitiveadvantagethrough(i)comprehensivecapabilitiesto win new residential and commercial accounts,(ii)technology investmentsforoperationsoptimizationandenhancedcustomerexperience,(iii)route

69、densitytomanagevariablecosts,and(iv)financialflexibilitytogenerateorganicgrowthandpursueM&A.Robust Operating Platform with Proprietary TechnologyOurextensivefootprintcreatesanefficientandscalableoperatingplatformtofacilitateexceptionalcustomerservicedelivery,increasedcross-sellingopportunities,andco

70、stefficiencies.Wehavestrategicallyinvestedinproprietaryroutingandschedulingtechnologiestoincreaseourcompetitiveadvantage,which includes real-time service tracking and customerInternetcommunicationtopersonalizethecustomerexperience.WealsodevelopedandlaunchedourproprietaryBranchOperatingSupportSystem(

71、“BOSS”),whichoffersaback-endinterfacetofacilitateservicetrackingandpaymentprocessingfortechnicians.BOSSalsoprovidesvirtualroutemanagementtoolstoincreaserouteefficiencyacrossournetwork,reducing miles driven and associated costs while increasingcustomerretentionthroughon-timeandrapidresponseservice.Di

72、fferentiated Employee Base and Service DeliveryOuremployeesarecriticaltodeliveringanoutstandingcustomerexperience,andwearehighlyfocusedonprovidingourteamwithbest-in-classtraininganddevelopmentopportunities.Weoperatethe27,000squarefootRollinsLearningCentertrainingfacility located in Atlanta,GA,which

73、is a distance-learning and global broadcast facility with simulated environments and classroomsfortraining.Inadditiontoin-persontraining,theRollins Learning Center offers on-demand training sessions thatemployeescanaccessfromanywhereintheworldthatareproducedatouron-site,state-of-the-artbroadcaststud

74、io.OuruniqueprogramscontributetoourpositionasanemployerofchoiceandhaveearnedusrecognitionfromTrainingmagazineamongtheTop125U.S.TrainingCompanies16timesinthepast19 years.We continuously monitor co-worker engagement and customer loyalty.Experienced Management TeamOur management team combines extensive

75、 business and consumerservicesexperiencewithrobustlocalpestcontrolleadership.Consistentwithourcultureofattracting,developingandprogressingtalentedindividuals,ourseniorleadershipteam consists of a combination of long-term internal leaders andstrategichiresfromwell-respectedexternalplatforms.OurChairm

76、an and CEO,Gary Rollins,is the son of Rollins,Inc.co-founderO.WayneRollinsandhasspenthisentirecareerwiththeCompany,servingasCEOsince2001.15Rollins,Inc.2021 Annual Report|Part I Item 1.Business15Rollins,Inc.2021 Annual Report|International BusinessWecontinuetoexpandourinternationalpresencethroughorga

77、nic growth,international acquisitions,and our international franchiseprograms.In2021,wesawrevenuegrowthinouroperationsinCanada,Australia,theUnitedKingdom,andSingapore.Webelievegeographicdiversityallowsustoincreasebrand recognition,meet demands of global customers,and drawonbusinessandtechnicalexpert

78、isefromteamsinseveralcountries,andoffersusanopportunitytoaccessnewmarkets.Franchising ProgramsWehavefranchiseprogramsthroughOrkin,CritterControland ourAustraliansubsidiaries.Wehadatotalof135,128and134domestic franchise agreements as of December 31,2021,2020 and2019,respectively.Internationalfranchis

79、eagreementstotaled103,101 and 104 as of December 31,2021,2020 and 2019,respectively.Transactionswithourfranchisesinvolvesalesofterritories and customer contracts to establish new franchises and thepaymentofinitialfranchisefeesandroyaltiesbyfranchisees.The territories,customer contracts and initial f

80、ranchise fees are typicallypaidforbyacombinationofcashandnotes.Acquisition StrategyWehaveextensiveexperienceacquiringcompaniesofallsizes.Overthelastthreeyears,wehavecompletedapproximately100acquisitions,including 39 acquisitions in 2021.Our acquisition strategytargetshighquality,profitablebusinesses

81、withstrongleadershipthatwouldbenefitfromincrementalgrowthcapitalandhavethepotentialtoachievemarginexpansionthroughcostand revenue synergies.SeasonalityOur business is somewhat affected by weather conditions,includingclimatechangeandtheseasonalnatureofourpestandtermitecontrolservices.Theincreaseinpes

82、tpresenceandactivity,aswellasthemetamorphosisoftermitesinthespringand summer(the occurrence of which is determined by the timing of the change in seasons),has historically resulted in an increaseintherevenueofourpestandtermitecontroloperationsduringsuchperiodsasevidencedbythefollowingchart.Consolida

83、ted Net Revenues(in thousands)202120202019First Quarter$535,554$487,901$429,069Second Quarter638,204 553,329 523,957Third Quarter 650,199583,698 556,466Fourth Quarter 600,343 536,292505,985Year to date$2,424,300$2,161,220$2,015,477Materials and SuppliesOurCompanyhasrelationshipswithavastnetworkofnat

84、ionalpestcontrolproductdistributors,manufacturersandothersuppliersforpestandtermitecontroltreatmentproducts.Wemaintainasufficientlevelofproducts,materials,andothersuppliestofulfillourimmediateservicingneedsandtomitigateanypotentialshort-termshortageinavailabilityfromournationalnetworkofsuppliers.Wea

85、lsohavequalifiedcomparableproductsandmaterialsforkeycategoriestohavealternativesreadyasneeded.However,atanytimesupplychaindisruptionsthataremorethanshort-terminnaturecouldimpactourlevelsofproducts,materialsandothersupplies.CompetitionWeoperateinahighlycompetitiveenvironment.Theprincipalfactorsofcomp

86、etitioninourpestandtermitecontrolmarketsarethedeliveryofhighqualityofservice,customerproximity,guaranteeterms,reputationforsafety,technicalproficiency,andprice.Duetoourstrongdirectpartnershipswithproductmanufacturers,distributors,and visibility into the inventories,orderinganddistributionofmaterials

87、andsupplies,weareabletoforeseepotentialsupplydisruptionsandtoquicklyadapt.Theuse of an innovative and industry changing distribution model andtechnologyenablesustomaintainadequatesuppliesforourfieldoperationswithoutasignificantinvestmentinwarehousing and inventory.We believe that,through our wholly-

88、owned subsidiaries,we competeeffectivelyandfavorablywithourcompetitorsasoneoftheworldslargestpestandtermitecontrolcompanies.OurmajorcompetitorsincludeTerminix,Ecolab,RentokilandAnticimex.Research and DevelopmentOurexpendituresonresearchactivitiesrelatingtothedevelopmentofnewproductsorservicesarenots

89、ignificant.Weutilizetherelationshipswithourmanufacturerandmaterialssupplierstoprovidenewandinnovativeproductsandservices,coupledwithin-depthreviewsbyourtenuredTechnicalServicesdepartmenttoensuretheymeetourstrictrequirements.Wealsoconducttestsofnewproductswiththespecificmanufacturersofsuchproductsand

90、werelyonresearchperformedbyleadinguniversities.In addition,we also work closely with leading scientists,educators,industryconsultantsandsupplierstoimproveserviceprotocolsandmaterials.Wemaintaincloserelationshipswithseveraluniversitiesforresearchandvalidationoftreatmentproceduresandmaterialselection.

91、Someofthenewandimprovedservicemethodsandproductsarealsoresearched,developedandproducedbyunaffiliateduniversitiesandcompanieswithaportionofthesemethodsandproductsbeingproducedtothespecificationsprovidedbyus.Environmental and Regulatory ConsiderationsOurbusinessissubjecttovariouslocalandnationallegisl

92、ativeand regulatory enactments including,but not limited to,environmentallaws,antitrustlaws,employmentlaws(includingwageandhourlaws,payrolltaxesandanti-discrimination16|Rollins,Inc.2021 Annual ReportPart I Item 1.Business16|Rollins,Inc.2021 Annual Reportlaws),immigration laws,motor vehicle laws and

93、regulations,human health and safety laws,securities laws including,but not limited to,SEC regulations,and federal,state and local lawsandregulationsgoverningworkersafetyandthepestandtermitecontrolindustry.Ifweweretofailtocomplywithanyoftheseapplicablelawsorregulations,wecouldbesubjecttosubstantialfi

94、nesordamages,beinvolvedinlawsuits,enforcementactionsandotherclaimsbythirdpartiesorgovernmentalauthorities,sufferlossestoourreputationandourbusinessorsufferthelossoflicensesorpenaltiesthatmayaffecthowthebusinessisoperated,which,inturn,couldhaveamaterialadverseeffectonourfinancialcondition,resultsofop

95、erationsandcashflows.Environmental,Health and Safety MattersSpecifically,ourbusinessesaresubjecttovariousinternational,federal,state and local laws and regulations regarding environmental,health and safety matters.Among other things,these laws regulate the emission or discharge of materials into the

96、environment,governtheuse,storage,treatment,disposal,transportationandmanagementofhazardoussubstancesandwastesandprotectthehealthandsafetyofouremployees.Theselawsalsoimposeliabilityforthecostsofinvestigatingandremediating,anddamagesresultingfrom,presentandpastreleasesofhazardoussubstances,includingre

97、leasesbypriorownersoroperatorsofsiteswecurrentlyownoroperate.Compliancewithenvironmental,healthandsafetylawsincreasesouroperatingcosts,limitsorrestrictstheservicesweprovideandsubjectsustothepossibilityofregulatoryorprivateactionsorproceedings.Consumer Protection,Privacy and Solicitation MattersAddit

98、ionally,wearesubjecttointernational,federal,state,provincialandlocallawsandregulationsdesignedtoprotectconsumers generally,including laws governing lending,debt collectionandconsumerfinance,consumerprivacyandfraud,the collection and use of consumer data,telemarketing and otherformsofsolicitation.The

99、telemarketingrulesadoptedbytheFederalCommunicationsCommissionpursuanttotheFederalTelephoneConsumerProtectionActof1991andthe Federal Telemarketing Sales Rule issued by the Federal Trade Commission,along with other legal authorities,govern ourtelephonesalespractices.TheCAN-SPAMActregulatesour email so

100、licitations and the Consumer Review Fairness Act regulatesconsumeropinionsonsocialmediaregardingourproductsandservices.TheCaliforniaConsumerPrivacyActprovidesconsumerstherighttoknowwhatpersonaldatawecollect,howitisused,andtherighttoaccess,deleteandoptoutofthesaleoftheirpersonalinformationtothirdpart

101、ies.Franchise MattersCertainofoursubsidiariesaresubjecttovariousinternational,federal,state,provincialandlocallawsandregulationsgoverning franchise sales,marketing and licensing and franchise tradepracticesgenerally,includingapplicablerulesandregulations of the Federal Trade Commission.These laws an

102、d regulations generally require disclosure of business information in connection with the sale and licensing of our franchises.Certain state regulations also affect our ability as a franchisor,to revoke or refuse to renew a franchise.From time to time,we and one or more franchisees have been,and may

103、 in the futurebecome,involvedinadisputeregardingthefranchiserelationship,includingpaymentofroyaltiesorfees,locationofbranches,advertising,purchaseofproductsbyfranchisees,non-competitioncovenants,compliancewithourstandardsorfranchiserenewalcriteria.Anysuchfranchisedisputecouldpossiblyhaveanadverseeff

104、ectonourreputation,financialcondition,resultsofoperationsandcashflows.Intellectual PropertyWerelyonacombinationofintellectualpropertyrights,includingpatents,trademarks,copyrights,tradesecrets,andcontractualprovisionstoprotectourintellectualproperty.Ourworldwideintellectualpropertyportfolioisstrength

105、enedthroughinnovationandbrandrecognition,andacomprehensiveapproachforprotectionandenforcement.RiskfactorsassociatedwithourintellectualpropertyarediscussedinItem1.A.“RiskFactors”.Weprotectandpromoteourintellectualpropertyportfolioandtakethoseactionswedeemappropriatetoenforceourintellectualpropertyrig

106、htsandtodefendourrightsbothdomestically and internationally.Although in the aggregate,ourglobalportfolioofmorethan450trademarksisavaluableassetthatisimportanttoouroperations,webelievethatourcompetitiveadvantageisalsolargelyattributabletothetechnical,marketing,andsalescompetenceandcapabilitiesofourem

107、ployees,ratherthanonanyindividualtrademark.Therefore,wedonotconsidertheexpirationorlossofanysingletrademarkorintellectualpropertyright,tobematerialtoourbusiness as a whole.Human CapitalWebelieveoneofthelargestcontributorstoourCompanyssuccessisthequalityofourpeople.Attracting,developingandretaininghi

108、gh-qualitytalentistheprimaryobjectiveofourhumancapitalmanagement.Thedevelopmentandretentionofhigh-qualitytalentleadstoabettercustomerexperienceandbettercustomerretention.Wedevelopandengageourpeoplethroughourtrainingatalllevelsofourorganization.AsofDecember31,2021,theCompanyhad16,482employees.Approxi

109、mately14,800ofouremployeeswerelocatedintheUnitedStates,withapproximately13,700employeesatU.S.branchoffices.OftheU.S.employees,lessthan2%arerepresentedbyalaborunionorcoveredbyacollectivebargaining agreement.December 31,202120202019Employees16,48215,61614,952Diversity,Equity and InclusionWemakeitaprio

110、ritytopromoteandcreateadiverse,equitableandinclusiveworkplacethatresultsinhigherlevelsof satisfaction and engagement,stronger staff retention,17Rollins,Inc.2021 Annual Report|17Rollins,Inc.2021 Annual Report|Part I Item 1.Businesshigherproductivity,andaheightenedsenseofbelonging.Ourmission is to hav

111、e a culture of inclusion,where all individuals feelrespected,aretreatedfairly,withanequitableopportunityto excel.To reinforce our mission,we launched a new global Diversity,Equity,and Inclusion(DEI)initiative in 2020.We createdanInclusionAdvisoryCouncilmadeupofemployeesfrom several different brands

112、across the United States and Canadaasacomponentofthisinitiative.In2021theExecutiveLeadershipteamapprovedafull-timemanagementlevelpositionthatwillspearheadtheWorkplaceInclusionStrategicPlan.WiththecontinuedinputfromtheAdvisoryCouncil,theDirectorsfocusisonimplementingtheplan,monitoring,evaluating and

113、measuring our efforts.Additionally,towards theendof2020,welaunchedMissQuito,whichisourfirstUSbasedcompanythatisledbyablackwoman.MissQuitobegan servicing customers in early 2021.Our goal is to create organizationalchangefocusingoninclusionforallemployeesand connection with all customers.Health and Sa

114、fety during COVID-19Wearecommittedtothehealthandsafetyofouremployees,customersandcommunitieswherewework,liveandplay.Duringfiscal2021,asaresultoftheCOVID-19pandemic,wecontinuedtoexecuteourpre-establishedbusinesscontinuityplansincludingourpandemic“SAFEWorkplace”procedurestomaintaincompliancewithstatea

115、ndlocaljurisdictions.Wecontinuetolimittrafficinandoutofourlocations.ManagementalsoregularlyupdatesouremployeesandcustomersonCOVID-19developmentsinaconsistentandtimelymannerwhichincludescontactinformationforourEmployeeAssistanceProgram.Community InvolvementWeofferemployeestheopportunitytoparticipatei

116、nvariouscommunityoutreachprogramsandbelievethatthiscommitmenthelpstheCompanytomeetitsgoalsofattracting,developingandretaininghigh-qualityemployees.WecreatedRollinsUnitedin2019tounifyourbrandsphilanthropicvisions and consolidate our community outreach efforts.Ouroverarchinggoalistocreateasignificanti

117、mpactinlocalcommunitiesoveranextendedperiodoftime.ThecoremissionofRollinsUnitedisthateveryonedeservesasafeplacetolive,work,andplay.Overthelast40years,wehavepartneredwiththeUnitedWayofGreaterAtlantathroughemployeeandcompany-matchingfunds,helpingmakeRollinsacommunityleaderformanyyears.Rollinsranked#11

118、inthetop25corporatecontributorsin2020comparedtoranking#14in2019.Alongwithpersonalcontributionsfromemployees,thecompanyhostsrallies,contests,and a silent auction to raise funds.Rollins has continuedtoincreaseitscontributionsfroma2020totalof$1.1milliontoa2021totalof$1.2million.Wealsohaveapartnershipwi

119、ththeGroveParkFoundation(the“Foundation”)tohelpserveourAtlantacommunity.ThepartnershipallowsouremployeestovolunteerandsupporttheFoundation,whichiscommittedtoneighborhoodrevitalizationtoimprovethequalityoflifeinNorthwestAtlanta.RepresentativesfromourAtlantafamilyofbrandsparticipateinvolunteeropportun

120、itiesintheGroveParkneighborhoodthroughouttheyear.Additionally,manyofouroperationsengageregularlywith their local community efforts throughout the year.Available InformationOurAnnualReportsonForm10-K,QuarterlyReportsonForm10-Q,CurrentReportsonForm8-Kandamendmentstothesereports,undertheheading“SECFili

121、ngs,”assoonasreasonablypracticableafterthosereportsareelectronicallyfiledwithorfurnishedtotheSecuritiesandExchangeCommission(“SEC”).Forward-Looking StatementsThisAnnualReportcontainsforward-lookingstatementswithinthe meaning of the Private Securities Litigation Reform Act of 1995.Such forward-lookin

122、g statements include,but are not limited to,statements regarding:(1)our visibility into our future earnings because of the contracted and recurring nature of our services;(2)our investments in proprietaryroutingandschedulingtechnologiestoincreaseourcompetitiveadvantage;(3)ourbeliefthatinternationale

123、xpansionandgeographicdiversityallowustoincreasebrandrecognition,meet demands of global customers and draw on business and technicalexpertisefromteamsinseveralcountries,aswellasaccessnewmarkets;(4)ourabilitytoquicklyadapttopotentialsupplydisruptionsbecauseofourstrongdirectpartnershipswithproductmanuf

124、acturers,distributors,andvisibilityintothe inventories,ordering and distribution of materials and supplies;(5)ourabilitytomaintainadequatesuppliesforourfieldoperationswithoutasignificantinvestmentinwarehousingand inventory because of the use of an innovative and industry changing distribution model

125、and technology;(6)our belief that theexpirationorlossofanysingletrademarkorintellectualpropertyrightwouldnotbematerialtoourbusinessasawhole;(7)ourbeliefthatwecompeteeffectivelyandfavorablywithourcompetitorsasoneoftheworldslargestpestandtermitecontrolcompanies;(8)ourbeliefthatwemaintainasufficientlev

126、elofproducts,materialsandothersuppliestofulfillourimmediateservicingneedsandtoalleviateanypotentialshort-termshortageinavailabilityfromournationalnetworkofsuppliers;(9)thesuitability and adequacy of our facilities to meet our current andreasonablyanticipatedfutureneeds;(10)ourbeliefthatthedevelopmen

127、tandretentionofhigh-qualitytalentleadstoabettercustomerexperienceandbettercustomerretention;(11)ourbeliefthatifwemakeitaprioritytopromoteandcreateadiverse,equitableandinclusiveworkplace,itwillresultinhigherlevels of satisfaction and engagement,stronger staff retention,higherproductivity,andaheighten

128、edsenseofbelonging;(12)ourgoalstocreateorganizationalchangefocusingoninclusionforallemployees;(13)ourbeliefthatourcommitmenttoofferemployeestheopportunitytoparticipateinvariouscommunityoutreachprogramswillhelpusmeetourgoalsofattracting,developingandretaininghigh-qualityemployeesandcreateasignificant

129、impactinlocalcommunitiesovertime;(14)ourbeliefthatnopendingclaim,proceedingorlitigation,eitheraloneor in the aggregate,will have a material adverse effect on our 18|Rollins,Inc.2021 Annual Report18|Rollins,Inc.2021 Annual Reportbusiness,resultsofoperations,financialcondition,cashfloworprospects;(15)

130、ourbeliefthatweestablishsufficientlosscontingencyreservesbaseduponoutcomesofsuchpendingclaims,proceedingsorlitigationthatwecurrentlybelievetobeprobableandreasonablyestimable;(16)ourbeliefthattheSECInvestigationisprimarilyfocusedonhowtheCompanyestablishedaccrualsandreservesatperiod-endsforperiodsbegi

131、nningJanuary1,2016throughDecember31,2018andtheimpactofthoseaccrualsandreservesonreportedearningspershare,specifically,inthefirstquarterof2016andthesecondquarterof2017andtheCompanysinabilitytopredicttheoutcomeoftheSECinvestigation,orthepossibilitythattheultimateamountofpotentialliabilitycouldbediffer

132、entfrom the amount accrued under ASC 450;(17)our belief that norestatementofourpriorperiodfinancialstatementswillbe required as a result of the SEC Investigation or matters relatedthereto;(18)ourbeliefthatourcurrentcashandcashequivalentsbalances,futurecashflowsexpectedtobegeneratedfromoperatingactiv

133、ities,andavailableborrowingsunderour$175.0millionrevolvingcreditfacilityand$300.0milliontermloanfacility(asamendedJanuary27,2022)willbesufficienttofinanceourcurrentoperationsandobligations,andfundexpansionofourbusinessfortheforeseeablefuture;(19)ourexpectationtocontinueourpaymentofcashdividends,subj

134、ecttoourearningsandfinancialconditionandotherrelevantfactors;(20)ourbeliefthatwemaintainadequateliquidityandcapitalresources,withoutregardtoitsforeigndeposits,tofinancedomesticoperationsandobligationsandtofundexpansionofourdomesticbusiness;(21)ourprojected2022capitalexpenditures;(22)ourplanstoseekne

135、wacquisitions;(23)theplanstogrow the business in foreign markets through reinvestment of foreigndepositsandfutureearningsandthroughacquisitionsofunrelatedcompanieswithnoexpectationofrepatriationofcash from our foreign subsidiaries;(24)our belief that we have adequate liquid assets,funding sources an

136、d insurance accruals toaccommodatecertaininsuranceclaims;(25)ourexpectationthatwewillmaintaincompliancewiththecovenantscontainedin our Revolving Credit Agreement throughout 2022;(26)the expectedimpactandamountofourcontractualobligations;(27)ourexpectationsregardingtermiteclaimsandfactorsthatimpactfu

137、turecostsfromthoseclaims;(28)theexpectedcollectabilityofaccountsreceivable;(29)ourbeliefthatourtaxpositionsarefullysupportable;(30)ourbeliefsaboutouraccountingpoliciesandtheimpactofrecentaccountingpronouncements;(31)ourbeliefthatourexposuretomarketrisksarisingfromchangesinforeignexchangerateswillnot

138、haveamaterialimpactuponourresultsofoperationsgoingforward;(32)ourabilitytoutilizeallofourforeignnetoperatinglosses;(33)ourreasonablecertaintythatwewillexercisetherenewaloptionsonourvehicleleases;(34)expectationsregardingtherecognitionofcompensationcostsrelatedtotime-lapserestrictedshares;(35)ourabil

139、itytobeproactiveinsafetyandriskmanagementtodevelopandmaintainongoingprogramstoreduceandpreventincidentsandclaimsunderourinsuranceprogramsandarrangements;(36)ourpotentialsuspensionoffutureservicesforcustomerswithpastduebalances;and(37)managementsintentionthatourfloating-to-fixedinterestrateswapforana

140、ggregatenotionalamountof$100.0millionwillhedgeaportionoftheCompanysfloatingrateindebtedness under the Credit Facility.Our actual results could differ materially from those indicated by the forward-looking statements because of various risks,timing and uncertainties including,without limitation,the f

141、ailure tomaintainandenhanceourbrandsanddevelopapositiveclientreputation;ourabilitytoprotectourintellectualpropertyandotherproprietaryrightsthatarematerialtoourbusinessand our brand recognition;actions taken by our franchisees,subcontractors or vendors that may harm our business;general economiccondi

142、tions;theimpactoftheextentanddurationofeconomiccontractionrelatedtoCOVID-19ongeneraleconomicactivityfortheremainderof2022andbeyond;theimpactoffuturedevelopmentsrelatedtotheCOVID-19pandemicontheCompanysbusiness,resultsofoperations,accountingassumptionsandestimatesandfinancialcondition,including,witho

143、ut limitation,restrictions in customer discretionary expenditures,disruptionsincreditorfinancialmarkets,increasesinfuelprices,rawmaterialcostsorotheroperatingcosts;potentialincreasesinlaborcosts;laborshortagesand/orourinabilitytoattractandretainskilledworkers;competitivefactorsandpricingpractices;ch

144、angesinindustrypracticesortechnologies;thedegreeofsuccessofourtermiteprocessreformsandpestcontrolsellingandtreatmentmethods;ourabilitytoidentify,completeandsuccessfullyintegratepotentialacquisitions;unsuccessfulexpansionintointernationalmarkets;climate change and unfavorable weather conditions;a bre

145、ach of datasecurityresultingintheunauthorizedaccessofpersonal,financial,proprietary,confidentialorotherpersonaldataorinformationaboutourcustomers,employees,thirdparties,orofourproprietaryconfidentialinformation;damagetoourbrandsorreputation;possibilityofanadverserulingagainstusinpendinglitigation,re

146、gulatoryactionorinvestigation;theongoingSECinvestigationandanypotentialrelatedrisksand uncertainties;changes in various government laws and regulations,including environmental regulations;the adequacy ofourinsurancecoveragetocoverallsignificantriskexposures;theeffectivenessofourriskmanagementandsafe

147、typrogram;generalmarketrisk;managementssubstantialownershipinterestanditsimpactonpublicstockholdersandtheavailabilityoftheCompanyscommonstocktotheinvestingpublic;andtheexistenceofcertainanti-takeoverprovisionsinourgovernancedocuments,which could make a tender offer,change in control ortakeoverattemp

148、tthatisopposedbytheCompanysBoardofDirectorsmoredifficultorexpensive.Alloftheforegoingrisksanduncertainties are beyond our ability to control,and in many cases,wecannotpredicttherisksanduncertaintiesthatcouldcauseour actual results to differ materially from those indicated by the forward-lookingstate

149、ments.TheCompanydoesnotundertaketoupdateitsforward-lookingstatements.Part I Item 1.Business19Rollins,Inc.2021 Annual Report|19Rollins,Inc.2021 Annual Report|Part I Item 1.A.Risk FactorsItem 1.A.Risk FactorsAn investment in our common stock involves certain risks.Before making an investment decision,

150、you should carefully consider the following risks and all of the other information included in this AnnualReportonForm10-K.Ourbusiness,financialconditionorresultsofoperationscouldbemateriallyadverselyaffectedbyanyoftheserisks.Thetradingpriceofourcommonstockcoulddeclineduetoanyoftheserisks,andyoumayl

151、oseallorpartofyourinvestment.ThisAnnualReportonForm10-Kalsocontainsforward-looking statements that involve risks and uncertainties.Ouractualresultscoulddiffermateriallyfromthoseanticipatedin these forward-looking statements as a result of certain factors,including the risks faced by us described bel

152、ow and elsewhere in thisAnnualReportonForm10-K.Youarecautionedthattheriskfactors discussed below are not exhaustive.Risks Related to our Business,Brand,Industry and OperationsWe face risks regarding our ability to maintain our competitive position in the pest control industry in the future.Weoperate

153、inahighlycompetitiveindustry.Ourrevenuesandearningsareaffectedbychangesincompetitorspricesandgeneraleconomicissues.Wecompetewithotherlargepestcontrolcompanies,aswellasnumeroussmallerpestcontrolcompanies,forafinitenumberofcustomers.Webelievethattheprincipalcompetitivefactorsinthemarketareasthatweserv

154、earequalityofservice,customerproximity,termsofguarantees,reputationforsafety,technicalproficiencyandprice.Althoughwebelievethatourexperienceandreputationfor safety and quality service are excellent,we cannot assure investorsthatwewillbeabletomaintainourcompetitivepositioninthefutureandanycompetitive

155、pressureswemayfacecouldhaveamaterialadverseeffectonourreputation,financialcondition,resultsofoperationsandcashflows.We may not be able to identify,complete or successfully integrate acquisitions or guarantee that any acquisitions will achieve the anticipated financial benefits,all of which could hav

156、e a negative impact on our financial condition and results of operations.Acquisitionshavebeenandmaycontinuetobeanimportantelement of our business strategy.We cannot assure investors thatwewillbeabletoidentifyandacquireacceptableacquisition candidates on terms favorable to us in the future,orthatanya

157、cquisitionswillachievetheanticipatedfinancialbenefits.Ourinabilitytoachievetheanticipatedfinancialbenefitsfromanyacquisitiontransactionsmaynotberealizeddue to any number of factors,including,but not limited to,unsuccessfulintegrationefforts,unexpectedorunderestimatedliabilitiesorincreasedcosts,fees,

158、expensesandchargesrelated to such transactions.Such adverse events could result in a decrease in the estimated fair value of goodwill or other intangible assets established as a result of such transactions,triggeringanimpairment.Theseandotherfactorscouldhaveamaterialadverseeffectonourfinancialcondit

159、ionandresultsofoperations.Expanding into international markets presents unique challenges,and our expansion efforts with respect to international operations may not be successful.Anelementofourstrategyincludesfurtherexpansionintointernationalmarkets.Ourabilitytosuccessfullyoperateininternationalmark

160、etsmaybeadverselyaffectedbypolitical,economic and social conditions beyond our control,local laws and customs,and legal and regulatory constraints,including compliancewithapplicableanti-corruptionandcurrencylawsand regulations of the countries or regions in which we currently operateorintendtooperat

161、einthefuture.Risksinherentinourexistingandfutureinternationaloperationsalsoinclude,amongothers,thecostsanddifficultiesofmanaginginternationaloperations,difficultiesinidentifyingandgainingaccesstolocalsuppliers,sufferingpossibleadversetaxconsequencesfrom changes in tax laws or the unfavorable resolut

162、ion of tax assessmentsoraudits,maintainingproductqualityandgreaterdifficultyinenforcingintellectualpropertyrights.Additionally,foreign currency exchange rates and fluctuations could have an adverseeffectonourfinancialresults.Our business depends on our strong brands and failing to maintain and enhan

163、ce our brands and develop a positive client reputation could hurt our ability to retain and expand our base of customers.Our strong brands,Rollins,Orkin,HomeTeam,Clark Pest Control,Western,Northwest Exterminating,Trutech,Critter Control,IFC,Waltham,andothershavesignificantlycontributedtothe success

164、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 ourcustomers.Ourbrandsmaybenegativelyimpactedbyanumberoffactors,including,amongothers,reputationalissuesandproduct/technicalfailures.F

165、urther,ifourbrandsaresignificantlydamaged,ourbusiness,resultsofoperations,andfinancialconditioncouldbemateriallyadverselyaffected.Wecontinuetodevelopstrategiesandinnovativetoolstogainadeeperunderstandingofcustomeracquisitionandretentioninordertomoreeffectivelyexpandandretainourcustomerbase.Maintaini

166、ngandenhancingourbrandswilldependlargelyonourabilitytoremainaserviceleaderandcontinuetoprovidehigh-qualitypestcontrolservicesthataretrulybeneficialandplayameaningfulroleinpeopleslives.Our franchisees,subcontractors,and vendors could take actions that could harm our business.Our franchisees,subcontra

167、ctors,and vendors are contractually obligatedtooperatetheirbusinessesinaccordancewiththestandardssetforthinouragreementswiththemandapplicablelaws and regulations.Each of our brands that are franchised alsoprovidestrainingandsupporttofranchisees.However,20|Rollins,Inc.2021 Annual Report20|Rollins,Inc

168、.2021 Annual ReportPart I Item 1.A.Risk Factorsfranchisees,subcontractors,andvendorsareindependentthirdpartiesthatwedonotcontrol,andwhoown,operateandoverseethedailyoperationsoftheirbusinesses,andtheultimatesuccessofanybusinessoperationrestswiththebusinessowner.Iffranchiseesdonotsuccessfullyoperateth

169、eirbusinesses in a manner consistent with required standards,royaltypaymentsowedtouswillbeadverselyaffectedandourbrandsimageandreputationcouldbeharmed.Thiscouldmateriallyadverselyimpactourbusiness,financialcondition,resultsofoperationsandcashflows.Similarly,iffranchisees,subcontractors,andvendorsdon

170、otsuccessfullyoperatetheirbusinesses in a manner consistent with required laws,standards andregulations,wecouldbesubjecttoclaimsfromregulatorsorlegalclaimsfortheactionsoromissionsofsuchthird-partyfranchisees,subcontractors,and vendors.In addition,our relationshipwithourfranchisees,subcontractors,and

171、vendorscould become strained(including resulting in litigation)as we imposenewstandardsorassertmorerigorousenforcementpracticesoftheexistingrequiredstandards.Thesestrainsinourrelationshipsoranyresultingclaimscouldhaveamaterialadverseeffectonourreputation,financialcondition,resultsofoperationsandcash

172、flows.From time to time,we receive communications from our franchiseesregardingcomplaints,disputesorquestionsaboutourpracticesandstandardsinrelationtoourfranchisedoperationsandcertaineconomictermsofourfranchisearrangements.Iffranchiseesorgroupsrepresentingfranchiseesweretobringlegalproceedingsagains

173、tus,ourreputation,business,financialcondition,resultsofoperationsandcashflows could be materially adversely affected.Labor shortages and/or our ability to attract and retain skilled workers may impair growth potential and profitability.Ourabilitytoremainproductiveandprofitablewilldependsubstantially

174、 on our ability to attract and retain skilled workers,createleadershipopportunitiesandsuccessfullyimplementdiversity,equityandinclusioninitiatives.Ourabilitytoexpandouroperationsisinpartimpactedbyourabilitytoincreaseourlaborforce.Thedemandforemployeesishigh,andthesupplyislimited.COVID-19hasexacerbat

175、edlaborshortagesandtheenforcementofCOVID-19mandatesmayresultinadditionallabor shortages which could negatively affect our ability to efficientlyoperateatfullcapacityorleadtoincreasedcosts,such as increased overtime to meet demand and increased wage ratestoattractandretainemployees.Asignificantincrea

176、seinthewagespaidandbenefitsofferedbycompetingemployerscould also result in a reduction in our labor force,increases in our labor costs,or both.Prolonged labor shortages,increased turnoverorlaborinflationcoulddiminishourprofitabilityandimpairourgrowthpotentialwhichcouldhaveamaterialadverseeffectonour

177、reputation,business,financialcondition,resultsofoperationsorcashflows.Climate change and unfavorable weather conditions could adversely impact our financial results.Ouroperationsaredirectlyimpactedbytheweatherconditionsworldwide,includingcatastrophicevents,naturaldisastersandpotentialimpactsfromclim

178、atechange.Climatechangecontinuestoreceiveincreasingglobalattention.Thepossibleeffects of climate change could include changes in rainfall patterns,watershortages,changingstormpatternsandintensities,changingtemperaturelevelsandchangesinlegislation,regulation,and international accords,all of which cou

179、ldadverselyimpactourcostsandbusinessoperations.ThebusinessofourCompanyisalsoaffectedbyseasonalityassociatedwithourpestandtermitecontrolservices.Theincreaseinpestpresenceandactivity,aswellasthemetamorphosisoftermitesinthespringandsummer(theoccurrence of which is determined by the timing of the change

180、 in seasons),has historically resulted in an increase in the revenue andincomeofourpestandtermitecontroloperationsduringsuchperiods.ThebusinessoftheCompanyisalsoaffectedbyextreme weather such as drought which can greatly reduce the pestpopulationforextendedperiods.Becauseoftheuncertaintyof weather v

181、olatility related to climate change and any resulting unfavorableweatherconditions,wecannotpredictitspotentialimpactonourbusiness,financialcondition,resultsofoperationsand cash flows.Risks Related to the Global Economy and Public Health CrisesOur business,results of operations and financial conditio

182、n are impacted by the coronavirus(COVID-19)pandemic and the restrictions put in place in connection therewith.WehaverespondedandcontinuetorespondtotheglobaloutbreakofCOVID-19bytakingstepstomitigatethepotentialrisksposedtousbyitsspreadandtheimpactoftherestrictionsputinplacebythelocal,stateandfederalg

183、overnmentstoprotectthepopulation.Wecontinuetoexecuteourcomprehensivesetofprotocolsforthehealthandsafetyofouremployees,customers,andbusinesspartners,suchaswearingmasks,gloves,andotherpersonalprotectiveequipment,socialdistancingandutilizingelectronicdocuments,amongothers.However,duetotheunprecedentedu

184、ncertaintysurroundingthedurationofCOVID-19,COVID-19variants,rapidlychanginggovernmentaldirectives,publichealthchallengesandprogress,macroeconomic consequences,and market reactions thereto,wearenotableatthistimetopredicttheextenttowhichtheCOVID-19pandemicmayhaveamaterialadverseeffectonourresultsofope

185、rationsorfinancialcondition,anditcontinuesto be challenging for our management to estimate the future performanceofourbusinessanddevelopstrategiestogenerategrowthorachieveourobjectivesfor2022andbeyond.InSeptember2021,thefederalgovernmentissuedanexecutiveorderrequiringUnitedStatesbasedemployees,contr

186、actors,andsubcontractorsthatworkonorinsupportofUnitedStatesgovernmentcontracts,tobefullyvaccinatedbyJanuary4,2022,anditonlypermitslimitedexceptionsformedicalandreligiousreasons(the“COVID-19ExecutiveOrder”).OnDecember7,2021,the United States District Court for the Southern District of Georgiaissuedap

187、reliminarynationwideinjunctionenjoiningtheenforcementoftheCOVID-19ExecutiveOrder.ThegovernmentappealedtheordertotheUnitedStatesCourtofAppealsfortheEleventhCircuitandbriefingisduetotheEleventhCircuitbyApril4,2022.21Rollins,Inc.2021 Annual Report|21Rollins,Inc.2021 Annual Report|Part I Item 1.A.Risk F

188、actorsAsaresultoftheCOVID-19ExecutiveOrder,wemaybeforcedtoterminaterelationshipswithvariousUnitedStatesgovernmentagenciesweprovideservicesto.Furthermore,certaincustomershaveissuedvaccinerequirementswithrespecttoourtechnicianswhoprovideon-siteservicesatourcommercialcustomersfacilities.TheCOVID-19Exec

189、utiveOrderalongwithanycustomer-specificmandatesorrulescouldresultinlaborshortagesaswellasdifficultysecuringfuturelaborneeds,whichcouldimpactourabilitytoprovideservicestoourcustomers,potentiallyresultinginmaterialadverseimpactstoourreputation,resultsofoperations,financialconditionandcashflows.Adverse

190、 economic conditions,including inflation and restrictions in customer discretionary expenditures,disruptions in credit or financial markets,increases in fuel prices,raw material costs,or other operating costs could materially adversely affect our business.Economic downturns may adversely affect our

191、commercial customers,includingfoodservice,hospitalityandfoodprocessingindustrieswhosebusinesslevelsareparticularlysensitivetoadverseeconomies.Forexample,wemaylosecommercial customers and related revenues because of consolidation or cessation of commercial businesses or becausethesebusinessesswitchto

192、alowercostprovider.Pestandtermiteservicesrepresentdiscretionaryexpendituresto many of our residential customers.If consumers restrict theirdiscretionaryexpenditures,duetoinflationorothereconomichardships,wemaysufferadeclineinrevenuesfromourresidentialservicelines.Disruptionsincreditorfinancialmarket

193、scouldmakeitmoredifficultforustoobtain,orincreasethecostofobtaining,financinginthefuture.Inaddition,therecanbenoassurancesthatfuelprices,rawmaterialcosts,orotheroperatingcosts,allofwhichmaybesubjecttoinflationarypressures,willnotmateriallyincreaseinfutureyearsandwecannotpredicttheextenttowhichanysuc

194、hfutureincreasescouldmateriallyadverselyaffectourfinancialcondition,resultsofoperationsandcashflows.Risks Related to Cybersecurity,Privacy Compliance and Business DisruptionsThe Company,its wholly-owned subsidiaries,third-party business partners and service providers have been subject to cybersecuri

195、ty incidents in the past and could be the targets of future attacks which could result in the disruption to the Companys business operations,economic and reputational damage,and possible fines,penalties and private litigation,if there is unauthorized access to or unintentional distribution of person

196、al,financial,proprietary,confidential,or other protected data or information the Company is entrusted to keep about its customers,employees,business practices,or third parties.Ourinternalinformationtechnology(“IT”)systemscontaincertainpersonal,financial,health,orotherprotectedandconfidentialinformat

197、ionthatisentrustedtousbyourcustomersandemployees.OurITsystemsalsocontaintheCompanysanditswholly-ownedsubsidiariesproprietaryandotherconfidentialinformationrelatedtoourbusiness,suchasbusinessplans,customerlistsandproductandservicedevelopmentinitiatives.From time to time,we have integration with new I

198、T systems due to organic growth and acquisitions.In addition,we grant third-partybusinesspartnersandserviceprovidersaccesstoconfidentialinformationinordertofacilitatebusinessoperationsandadministeremployeebenefits.Employees,third-partybusinesspartners,andserviceproviderscanknowinglyorunknowingly dis

199、seminate such information or serve as an entrypointforbadactorstoaccesssuchinformation.Forexample,inOctober2021,oneofourthird-partyinformationtechnologyManagedServiceProviders(“MSP”)wasthetargetofacybersecurityincident(the“Incident”)resultingintheshutdownofourthird-partyCustomerRelationshipManagemen

200、tsoftware used by certain subsidiaries whose aggregate annual revenuescompriselessthan11%ofourtotalrevenues.Therewasnoknownmaterialday-to-dayimpacttoourabilitytoprovidenormalservicetocustomersandtherewasnoknownindicationthattheinformationofourcustomersoremployeeswascompromisedasaresultoftheIncident.

201、TheIncidentdidnothaveamaterialadverseeffectonourbusiness,reputation,resultsofoperationorfinancialcondition;however,wemaycontinue to be the target of further cybersecurity incidents that couldpossiblyhaveamaterialadverseeffectonourbusiness,reputation,resultsofoperationorfinancialcondition.Wearealsosu

202、bjecttorisksassociatedwithattacksinvolvingoursupplychain,suchasthevulnerabilitiesofITinfrastructuremanagementsoftwareprovidedbySolarWindsCorporation.During 2021,we have observed an increase in ransomware attacksinoursupplychain.InDecember2021,avulnerabilitynamed“Log4Shell”wasreportedforthewidelyused

203、Javalogginglibrary,ApacheLog4j2.WehavereviewedtheuseofthislibrarywithinoursoftwareproductportfolioandinourITenvironmentandhavetakenstepstomitigatethevulnerability;however,there can be no assurances that other similar vulnerabilities or cybersecurity incidents may not occur in the future or may not h

204、ave a material adverse effect on our business,reputation,resultsofoperationorfinancialcondition.OurprivacycomplianceanddigitalriskmanagementinitiativesfocusonthethreatsandriskstoenterpriseinformationandtheunderlyingITsystemsprocessingsuchinformationaspartoftheimplementationofbusinessprocesses.TheCom

205、panyalsorelies on,among other things,commercially available vendors,cybersecurityprotectionsystems,software,toolsandmonitoringtoprovidesecurityforprocessing,transmissionandstorageofprotectedinformationanddata.Thesystemscurrentlyusedfortransmissionandapprovalofpaymentcardtransactions,andthetechnology

206、utilizedinpaymentcardsthemselves,allofwhichcanputpaymentcarddataatrisk,meetstandardssetbythepaymentcardindustry(“PCI”).Wehavealsoimplementedpoliciesandprocedures,internaltraining,systemcontrols,andmonitoringandauditprocessestoprotecttheCompanyfrominternalandexternalvulnerabilitiesandtocomplywithcons

207、umerprivacylawsintheareasinwhichweoperate.Further,theCompanylimitsretentionofcertaindata,encryptscertaindataandotherwiseprotectsinformationtocomplywithconsumerprivacylawsintheareasinwhichweoperate.Wecontinuetoevaluateandmodifyoursystemsandprotocolsfordatasecuritycompliancepurposes,andsuchstandardsma

208、ychangefromtimetotime.Wemonitorcertainthird-party22|Rollins,Inc.2021 Annual Report22|Rollins,Inc.2021 Annual ReportPart I Item 1.A.Risk Factorsbusinesspartnersandserviceprovidersforcomplianceandvulnerabilities.Activitiesbybadactors,changesincomputerandsoftwarecapabilitiesandencryptiontechnology,newt

209、oolsanddiscoveries,cloudapplications,changesinmulti-jurisdictionalregulations,andothereventsordevelopmentsmayresultinacompromiseorbreachofoursystems.Anycompromises,breaches,applicationerrorsorhumanmistakesrelatedtooursystemsorfailurestocomplywithapplicablestandardscouldnotonlydisruptourfinancialoper

210、ations,includingourcustomersabilitytopayforourservicesandproductsbycreditcardortheirwillingnesstopurchaseourservicesandproducts,butcouldalsoresultinviolationsofapplicablelaws,regulations,orders,industry standards or agreements and subjectustocosts,penaltiesandliabilitieswhichcouldhaveamaterialadvers

211、eimpactonourreputation,business,financialcondition,resultsofoperationsandcashflows.Abreachofdatasecurityorfailuretocomplywithrigorousmulti-jurisdictionalconsumerprivacyrequirementscouldexposeustocustomerlitigation,regulatoryactionsandcostsrelatedtothereportingand handling of such a violation or brea

212、ch.Furthermore,while we maintain cybersecurity insurance,our insurance may not cover all liabilities incurred due to a security breach or incident andthiscouldhaveamaterialadverseeffectonourreputation,financialcondition,resultsofoperationsandcashflows.Risks Related to Certain Intellectual Property R

213、ights 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.Ourabilitytocompeteeffectivelydependsinpartonourrightsto service marks,trademarks,trade names and other intellectual propert

214、yrightsweownorlicense,particularlyourregisteredbrandnames and service marks,Orkin,Orkin Canada,HomeTeam Pest Defense,TAEXX,Clark Pest Control,Western Pest Services,Northwest Exterminating,Critter Control,IFC,Trutech,Waltham Pest Services,OPC Services,Perma Treat Pest and Termite Control,Crane Pest C

215、ontrol,Murray Pest Control,Allpest,StatewidePestControl,SafeguardthePestControlPeople,AardwolfPestkare,AdamsPestControl,McCallandothers.Althoughwehavesoughttoregisterorprotectmanyofourmarks either in the United States or in the countries in which they areormaybeused,wehavenotsoughttoprotectourmarksi

216、nevery country.Furthermore,because of the differences in foreign trademark,patentandotherintellectualpropertyorproprietaryrightslaws,wemaynotreceivethesameprotectioninothercountries as we would in the United States.If we are unable to protectourproprietaryinformationandbrandnames,wecouldsufferamater

217、ialadverseeffecttoourreputation,business,financialcondition,resultsofoperationsandcashflows.Litigationmaybenecessarytoenforceourintellectualpropertyrightsandprotectourproprietaryinformation,ortodefendagainstclaimsbythirdpartiesthatourproducts,servicesoractivitiesinfringetheirintellectualpropertyrigh

218、ts.Risks Related to Legal,Regulatory and Risk Management MattersWe are from time to time subject to lawsuits,investigations and other proceedings which could have a material adverse effect on our business,financial condition and results of operations,and our operations may be adversely affected if w

219、e fail to comply with applicable law or other governmental regulations,including environmental and other regulations relating to the pest control industry.In the normal course of business,we are involved in various claims,contractualdisputes,investigations,arbitrationsandlitigation,including claims

220、that our acts,omissions,services or vehiclescauseddamageorinjury,claimsthatourservicesdidnot achieve the desired results,claims related to acquisitions,allegations by federal,state or local authorities,including the SEC,of violations of regulations or statutes,claims related to wage and hour law vio

221、lations and claims related to environmentalmatters.Theseclaims,proceedingsorlitigation,either alone or in the aggregate,could have a material adverse effectonourbusiness,financialcondition,resultsofoperations,and cash flows.Additionally,ourbusinessissignificantlyaffectedbyandsubjecttoregulationbyvar

222、iousfederal,state,provincial,regionalandlocalgovernmentsinthecountriesinwhichweoperate,including,but not limited to,environmental laws,antitrust laws,consumerprotectionlaws,employmentlaws,includingwageandhourlaws,payrolltaxesandanti-discriminationlaws,immigration,human health and safety laws and oth

223、er regulationsrelatingtothepestcontrolindustry.Weareunabletopredictwhethersuchlawswill,inthefuture,materiallyaffectouroperationsandfinancialconditionorwhether any changes will require us to incur substantial increasesincostsinordertocomplywithsuchchanges.Penaltiesfornoncompliancewiththeselawsmayincl

224、udeinvestigations,criminal sanctions or civil remedies,including,but notlimitedto,cancellationoflicenses,fines,andothercorrectiveactions,whichcouldnegativelyaffectourreputation,financialcondition,resultsofoperationsandcashflows.The ongoing SEC investigation and any potential related litigation entai

225、l risks and uncertainties.Aswepreviouslydisclosed,theSECisconductinganinvestigation(the“SECInvestigation”).WebelievetheSECInvestigationisprimarilyfocusedonhowtheCompanyestablishedaccrualsandreservesatperiod-endsforperiodsbeginningJanuary1,2016throughDecember31,2018andtheimpactofthoseaccrualsandreser

226、vesonreportedearningspershare,specifically,inthefirstquarterof2016andthesecondquarterof2017.TheCompanyisinongoingdiscussionswiththeSECstaffregardingapotentialresolutionoftheSECInvestigation.Inlightoftheforegoing,in accordance with the accounting guidance in ASC 450,“Contingencies,”theCompanyrecorded

227、anaccrualfor$8.0million related to the SEC Investigation in the third and fourth quarters of 2021,which is reflected in other current liabilities in ourconsolidatedstatementsoffinancialposition.Theultimateamountofanyliabilityrelatedtothepotentialresolutionof23Rollins,Inc.2021 Annual Report|23Rollins

228、,Inc.2021 Annual Report|Part I Item 1.A.Risk FactorstheSECInvestigationcouldbedifferentfromthe$8.0millionaccruedasofDecember31,2021.TheCompanywillcontinuetocooperatewiththeSECinworkingtowardsafinalresolutionoftheSECInvestigation.Aswepreviouslyreportedduringthethirdquarterof2021,theAuditCommitteeofth

229、eCompanysBoardofDirectorsinitiatedarelated,supplementalinternalinvestigation.Thissupplementalinvestigationwasconcludedinthefourthquarterof2021.TheCompanybelievesthatnorestatementofitspriorperiodfinancialstatementswillberequiredasaresultoftheSEC Investigation or matters related thereto.There can be n

230、o assurance that the SEC or another regulatory bodywillnotmakefurtherregulatoryinquiriesorpursueactionagainsttheCompanyanditsdirectorsorseniorofficersthatcouldresultinpotentiallysignificantsanctionsandpenalties,orthatcouldrequiretheCompanytotakeadditionalremedialsteps,whichcouldincluderevisingorrest

231、atingportionsofourhistoricalnetincomeandearningspersharefortheimpactedquarterlyperiods.PotentialsanctionsagainsttheCompanyand/orindividualsincludepenalties,injunctions,andcease-and-desistorders.Inaddition,theCompanyanditscurrentorformerseniorofficersanddirectorsmaybesubjecttolitigation,includingbyth

232、eCompanysstockholders,relatedtothemattersunderreviewbytheSEC.Accordingly,theSECinvestigationandanypotentialrelated litigation in connection with the SEC Investigation entail risks and uncertainties the outcome of which could materially adverselyaffectourreputation,resultsofoperations,financialpositi

233、onandliquidity,andstockprice.Our insurance coverage may be inadequate to cover all significant risk exposures.Weareexposedtoliabilitiesthatareuniquetoourbusinessandtheservicesweprovide.Wemaintaincommercialliabilityinsurancethatextendstoproductsliability.Inaddition,wealsomaintain other insurance and

234、other traditional risk transfer tools torespondtocertaintypesofliabilitiesandrisks.However,suchtoolsaresubjecttotermssuchasdeductibles,retentions,limitsandpolicyexclusions,aswellasriskofdenialofcoverage,defaultorinsolvency.Ifwesufferunexpectedoruncoveredlosses,orifanyofourinsurancepoliciesaretermina

235、tedforanyreason or are not effective in mitigating our risks,we may incur losses that are not covered or that exceed our coverage limits whichcouldadverselyaffectourresultsofoperations,financialcondition,and cash flows.In addition,there can be no assurance thatthetypesorlevelsofcoveragemaintainedare

236、adequatetocoverthesepotentialsignificantandcatastrophicrisks.Further,we may not be able to continue to maintain our existing insurancecoverageorobtaincomparableoradditionalinsurancecoverageatareasonablecostintheeventasignificantproductor service claim arises.Our safety and risk management programs m

237、ay not have the intended effect of reducing our liability for employee-work related injuries,third party-liability claims or property loss.Oursafetymanagementsystemandperformancemeasuresarecriticaltoourreputation.Manyofourcustomersrequirethatwemeetcertainsafetycriteriatobeeligibletoprovideserviceand

238、bidforcontracts,andmanycontractsprovideforautomatictermination or forfeiture of some or all of our contract fees or profitintheeventwefailtomeetcertainmeasures.Accordingly,if we fail to maintain adequate safety standards,we could experiencereducedprofitabilityorthelossofprojectsorclients,whichcouldh

239、aveamaterialadverseeffectonourreputation,financialconditionandresultsofoperations.Weattempttomitigaterisksrelatingtoemployeework-relatedinjuries,third-partyliability,orpropertylossthroughtheimplementationofcompany-widesafetymanagementprogramsdesignedtofocusonpreventionanddecreasetheoccurrenceofaccid

240、entsoreventsthatmayoccur.Itisexpectedthatanysuchdecreasescouldalsohavetheeffectofstabilizingorreducingourinsurancecosts.However,incidentsinvolvinginjuryorpropertylossmaybecausedbymultiplepotentialfactors,asignificantnumberofwhicharebeyondourcontrol.Therefore,there is no guarantee that our safety and

241、 risk management andsafetyprogramswillhavethedesiredeffectofavoidingorcontrollingallpotentialexpensesandliabilityexposure.Risks Related to our Capital and Ownership StructureThe Companys management has a substantial ownership interest;public stockholders may have no effective voice in the Companys m

242、anagement.TheCompanyhaselectedthe“ControlledCompany”exemptionunderSection303AoftheNewYorkStockExchange(“NYSE”)ListedCompanyManual.TheCompanyisa“ControlledCompany”becauseagroupthatincludestheCompanysChairmanoftheBoardandChiefExecutiveOfficer,GaryW.Rollins,andcertaincompaniesunderhiscontrol(the“Contro

243、llingGroup”),controlsinexcessoffiftypercentoftheCompanysvotingpower.Asa“ControlledCompany,”theCompanyneednotcomplywithcertainNYSErules,including,withoutlimitation,therequirementsthattheCompanyhaveamajorityofindependentdirectors,andanindependentcompensationandnominatingcommitteeoftheBoard.Rollins,Inc

244、.sexecutiveofficers,directorsandtheiraffiliatesholddirectly,orthroughindirectbeneficialownership,intheaggregate,approximately53percentoftheCompanysoutstandingsharesof common stock as of December 31,2021.As a result,these personswilleffectivelycontroltheoperationsoftheCompany,includingtheelectionofdi

245、rectorsandapprovalofsignificantcorporatetransactionssuchasacquisitionsandapprovalofmattersrequiringstockholderapproval.ThisconcentrationofownershipcouldalsohavetheeffectofdelayingorpreventingathirdpartyfromacquiringcontroloftheCompanyatapremium.Our management has a substantial ownership interest,and

246、 the availability of the Companys common stock to the investing public may be limited.TheavailabilityofRollinscommonstocktotheinvestingpublicislimitedtothosesharesnotheldbytheexecutiveofficers,directorsandtheiraffiliates,whichcouldnegativelyimpactRollinsstocktradingpricesandaffecttheabilityofminorit

247、ystockholderstoselltheirshares.Futuresalesbyexecutiveofficers,directorsandtheiraffiliatesofalloraportionoftheirsharescouldalsonegativelyaffectthetradingpriceofourcommonstock.24|Rollins,Inc.2021 Annual Report24|Rollins,Inc.2021 Annual ReportPart I Item 1.A.Risk FactorsThe Controlling Group could take

248、 various actions or engage in certain transactions that could negatively impact our common stock price,cause volatility in the market for our common stock or have a material adverse impact on our results of operations and our financial condition.TheControllingGroupmayfromtimetotimeandatanytime,inthe

249、ir sole discretion,acquire or cause to be acquired,additional equityorotherinstrumentsoftheCompany,itssubsidiariesoraffiliates,orderivativeinstrumentsthevalueofwhichislinkedtoCompanysecurities,ordisposeorcausetobedisposed,suchequity or other securities or instruments,in any amount that the Controlli

250、ngGroupmaydetermineintheirsolediscretion,throughopenmarkettransactions,privatelynegotiatedtransactionsorotherwise.Inaddition,dependinguponavarietyoffactors,theControllingGroupmayatanytimeengageindiscussionswiththeCompanyanditsaffiliates,andotherpersons,includingretainedoutsideadvisers,concerningtheC

251、ompanysbusiness,management,strategic alternatives and direction,and in their solediscretion,consider,formulateandimplementvariousplansorproposalsintendedtoenhancethevalueoftheirinvestmentintheCompany,including,amongotherthings,proposingoreffecting any matter that would constitute or result in:(i)the

252、 acquisitionbyanypersonofadditionalsecuritiesoftheCompanyorthedispositionofsecuritiesoftheCompany,inadditiontothepossiblenormalcoursedissolutionofadditionalentitiesforestateortaxplanningpurposes;(ii)anextraordinarycorporatetransaction,suchasamerger,reorganizationorliquidation,involvingtheCompanyoran

253、ysubsidiarythereof;(iii)asaleortransferofamaterialamountofassetsoftheCompanyoranysubsidiarythereof;(iv)achangeinthepresentboardofdirectorsormanagementoftheCompany,includinganyplansorproposalstochangethenumberortermofdirectorsortofillany existing vacancies on the board;(v)a material change in the pre

254、sentcapitalizationordividendpolicyoftheCompany;(vi)othermaterialchangesintheCompanysbusinessorcorporatestructure;(vii)changesintheCompanyscharter,bylaws,orinstrumentscorrespondingthereto,orotheractionswhichmayimpedetheacquisitionofcontroloftheCompanybyanyperson;(viii)causingaclassofsecuritiesoftheCo

255、mpanytobedelistedfromanationalsecuritiesexchangeortoceasetobeauthorizedto be quoted in an inter-dealer quotation system of a registered national securities association;or(ix)a class of equity securities oftheCompanybecomingeligibleforterminationofregistrationpursuanttoSection12(g)(4)oftheSecuritiesE

256、xchangeActof1934,asamended.IntheeventtheControllingGroupweretoengage in any of the actions enumerated above,our common stockpricecouldbenegativelyimpacted,suchactionscouldcause volatility in the market for our common stock or could haveamaterialadverseeffectonourresultsofoperationsandourfinancialcon

257、dition.Certain provisions in Rollins,Inc.s certificate of incorporation and bylaws may inhibit a takeover of the Company.Rollins,Inc.scertificateofincorporation,bylawsandotherdocumentscontainprovisionsincludingadvancenoticerequirementsforstockholderproposalsandstaggeredtermsfortheBoardofDirectors.Th

258、eseprovisionsmaymakeatenderoffer,changeincontrolortakeoverattemptthatisopposedbytheCompanysBoardofDirectorsmoredifficultorexpensive.Item 1.B.Unresolved Staff Comments None.Item 2.PropertiesTheCompanysadministrativeheadquartersareownedbytheCompany,andarelocatedat2170PiedmontRoad,N.E.,Atlanta,Georgia3

259、0324.TheCompanyownsorleasesover600branchofficesandoperatingfacilitiesusedinitsbusinessaswellastheRollinsTrainingCenterlocatedinAtlanta,Georgia,andthePacificDivision Administration and Training Center in Riverside,California.Noneofthebranchoffices,individuallyconsidered,representsamateriallyimportant

260、physicalpropertyoftheCompany.Thefacilities are suitable and adequate to meet the current and reasonablyanticipatedfutureneedsoftheCompany.25Rollins,Inc.2021 Annual Report|25Rollins,Inc.2021 Annual Report|Part I Item 3.Legal ProceedingsItem 3.Legal ProceedingsInthenormalcourseofbusiness,theCompanyand

261、itssubsidiariesareinvolvedin,andwillcontinuetobeinvolvedin,variousclaims,arbitrations,contractualdisputes,investigations,andregulatoryandlitigationmattersrelatingto,andarisingoutof,ourbusinessesandouroperations.Thesemattersmayinvolve,butarenotlimitedto,allegationsthatourservicesorvehiclescauseddamag

262、eorinjury,claimsthat our services did not achieve the desired results,claims related to acquisitions and allegations by federal,state or local authorities of violationsofregulationsorstatutes.Inaddition,wearepartiestoemployment-relatedcasesandclaimsfromtimetotime,whichmayincludeclaimsonarepresentati

263、veorclassactionbasisallegingwageandhourlawviolations.Wearealsoinvolvedfromtimetotimeincertainenvironmentalmattersprimarilyarisinginthenormalcourseofbusiness.Weevaluatependingandthreatenedclaimsandestablishlosscontingencyreservesbaseduponoutcomeswecurrentlybelievetobeprobableandreasonablyestimable.As

264、wepreviouslydisclosed,theSECisconductinganinvestigation(the“SECInvestigation”).WebelievetheSECInvestigationisprimarilyfocusedonhowtheCompanyestablishedaccrualsandreservesatperiod-endsforperiodsbeginningJanuary1,2016throughDecember31,2018andtheimpactofthoseaccrualsandreservesonreportedearningspershar

265、e,specifically,inthefirstquarterof2016andthesecondquarterof2017.TheCompanyisinongoingdiscussionswiththeSECstaffregardingapotentialresolutionoftheSECInvestigation.Inlightoftheforegoing,inaccordancewiththeaccountingguidanceinASC450,“Contingencies,”theCompanyrecordedanaccrualfor$8.0millionrelatedtotheS

266、ECInvestigationinthethirdandfourthquartersof2021,whichisreflectedinothercurrentliabilitiesinourconsolidatedstatementsoffinancialposition.TheultimateamountofanyliabilityrelatedtothepotentialresolutionoftheSECInvestigationcouldbedifferentfromthe$8.0millionaccruedasofDecember31,2021.TheCompanywillconti

267、nuetocooperatewiththeSECinworkingtowardsafinalresolutionoftheSECInvestigation.Aswepreviouslyreportedduringthethirdquarterof2021,theAuditCommitteeoftheCompanysBoardofDirectorsinitiatedarelated,supplementalinternalinvestigation.Thissupplementalinvestigationwasconcludedinthefourthquarterof2021.TheCompa

268、nybelievesthatnorestatementofitspriorperiodfinancialstatementswillberequiredasaresultoftheSECInvestigationormattersrelatedthereto.See“Item1A.RiskFactorsRisksRelated toLegal,RegulatoryandRiskManagementMattersTheongoingSECinvestigationandanypotentialrelatedlitigationentailrisks anduncertainties.”Manag

269、ementdoesnotbelievethatanypendingclaim,proceedingorlitigation,regulatoryactionorinvestigation,eitheraloneorintheaggregate,willhaveamaterialadverseeffectontheCompanysfinancialposition,resultsofoperationsorliquidity;however,itispossiblethat an unfavorable outcome of some or all of the matters could re

270、sult in a charge that might be material to the results of an individual quarter or year.Item 4.Mine Safety DisclosuresNotapplicable.26|Rollins,Inc.2021 Annual Report26|Rollins,Inc.2021 Annual ReportPart IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of

271、 Equity SecuritiesThecommonstockoftheCompanyislistedontheNewYorkStockExchangeandistradedonthePhiladelphia,ChicagoandBostonExchanges under the symbol ROL.AsofJanuary31,2022,therewere7,747holdersofrecordoftheCompanyscommonstock.However,alargenumberofourshareholdersholdtheirsharesin“streetname”inbroker

272、ageaccountsand,therefore,donotappearontheshareholderlistmaintainedby our transfer agent.Issuer Purchases of Equity SecuritiesDuringtheyearsendedDecember31,2021and2020,theCompanydidnotrepurchasesharesontheopenmarket.Intotal,thereremains11.4millionadditionalsharesauthorizedtoberepurchasedunderpriorBoa

273、rdapproval.Therepurchaseprogramdoesnothaveanexpirationdate.PeriodTotal number of shares purchased(1)Weighted-average price paid per share Total number of shares purchased as part of publicly announced repurchases(2)Maximum number of shares that may yet be purchased under the repurchase plan(2)Octobe

274、r 1 to 31,2021$11,415,625November 1 to 30,2021 2,429 39.34 11,415,625December 1 to 31,2021 11,415,625Total 2,429$39.34 11,415,625(1)Includesrepurchasesfromemployeesforthepaymentoftaxesonvestingofrestrictedshares.(2)In2012,theCompanysBoardauthorizedasharerepurchaseplantorepurchaseupto5.0millionshares

275、oftheCompanyscommonstock.Thesplit-adjustedauthorizedsharesunderthesharerepurchaseplanare16.9millionsharesPart II Item5.MarketforRegistrantsCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities27Rollins,Inc.2021 Annual Report|27Rollins,Inc.2021 Annual Report|Performance GraphThef

276、ollowinggraphsetsforthafive-yearcomparisonofthecumulativetotalstockholderreturnbasedontheperformanceofthestockoftheCompanyascomparedwithbothabroadequitymarketindexandanindustryindex.TheindicesincludedinthefollowinggrapharetheS&P500IndexandtheS&P500CommercialServicesIndex.12/1612/1712/1812/1912/2012/

277、21Rollins.Inc.S&P 500*$100 invested on 12/31/15 in stock or index,including reinvestment of dividends.Fiscal year ending December 31.Copyright2022 Standard&Poors,a division of S&P Global.All rights reserved.S&P 500 Commercial Services&Supplies$0$50$100$150$200$250COMPARISON OF 5 YEAR CUMULATIVE TOTA

278、L RETURN*Among Rollins Inc.,the S&P 500 Indexand the S&P 500 Commercial Services&Supplies Index$300Comparison of Five Year Cumulative Total Return*201620172018201920202021Rollins Inc.100.00 137.74 160.30 147.25 260.24227.86S&P 500100.00 119.42 111.97 144.31 167.77212.89S&P 500 Commercial Services&Su

279、pplies100.00118.67 117.37 162.24 193.66 252.11ASSUMES INITIAL INVESTMENT OF$100*TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS NOTE:TOTAL RETURNS BASED ON MARKET CAPITALIZATIONPart IIItem5.MarketforRegistrantsCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities28|Rollins,Inc.20

280、21 Annual Report28|Rollins,Inc.2021 Annual ReportItem 6.ReservedItem 7.Managements Discussion and Analysis of Financial Condition and Results of OperationsPresentationThisdiscussionshouldbereadinconjunctionwithourauditedfinancialstatementsandrelatednotesincludedelsewhereinthis document.Discussions o

281、f 2019 items and year-to-year comparisonsof2020and2019thatarenotincludedinthisForm10-Kcanbefoundin“ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations”inPartII,Item7onourAnnualreportonForm10-Kfortheyearended December 31,2020.The following discussion(as well as other discussion

282、s in this document)contains forward-looking statements.Pleasesee“CautionaryStatementRegardingForward-LookingStatements”foradiscussionofuncertainties,risksandassumptionsassociatedwiththesestatements.The CompanyRollins,Inc.(“Rollins,”“we,”“us,”“our,”orthe“Company”),isaninternationalservicescompanyhead

283、quarteredinAtlanta,Georgiathatprovidespestandtermitecontrolservicestobothresidential and commercial customers through its wholly-owned subsidiariesandindependentfranchisesintheUnitedStates,Canada,Australia,Europe,andAsiawithinternationalfranchisesinCanada,CentralandSouthAmerica,theCaribbean,Europe,t

284、heMiddleEast,Asia,Africa,andAustralia.Ourpestandtermitecontrolservicesareperformedpursuanttotermsofcontractsthatspecifythepricingarrangementwiththecustomer.TheCompanyoperatesasonereportablesegmentandtheresultsofoperationsanditsfinancialconditionarenotreliantuponanysingle customer.General Operating C

285、omments2021markedtheCompanys24thconsecutiveyearofincreasedrevenues.Revenuesfortheyearrose12.2%percentto$2.4billioncomparedto$2.2billionfortheprioryear.Incomebeforeincometaxesincreased33.9%to$474.8millioncomparedto$354.7milliontheprioryear.Netincomeincreased34.5%to$350.7million,withearningsperdiluted

286、shareof$0.71comparedto$260.8million,or$0.53perdilutedsharefortheprioryear.TheCompanyhascontinuedtoincreasedividendstoinvestorswith$0.42perdilutedsharepaidin2021ascomparedto$0.33perdilutedsharefortheprioryear,resultingina27%increaseindividendspershare.In2020,thedividendwasreduced due to the uncertain

287、ty surrounding the effects of the COVID-19pandemic(“COVID-19”)toourbusiness.Cybersecurity IncidentInOctober2021,athird-partyinformationtechnologyManagedServiceProvider(“MSP”)oftheCompanywasthetargetofacybersecurityincident(the“Incident”)resultingintheshutdownoftheCompanysthird-partyCustomerRelations

288、hipManagement software used by certain of our subsidiaries whose aggregateannualrevenuescompriselessthan11%ofourtotalrevenues.UponnoticeoftheIncidentfromtheMSP,theCompanyimmediatelyinitiateditsincidentresponseprotocols.Therewasnoknownmaterialday-to-dayimpacttoourabilitytoprovidenormalservicetocustom

289、ersandtherewasnoknownindicationthattheinformationofourcustomersoremployeeswascompromisedasaresultoftheIncident.TheIncidentdidnot have a material adverse effect on our business,results of operationorfinancialcondition;however,wemaycontinuetobethetargetoffurthercybersecurityincidentsthatcouldpossiblyh

290、aveamaterialadverseeffectonourbusiness,reputation,resultsofoperationorfinancialcondition.MoreinformationaboutourcybersecurityrisksisdiscussedunderItem1A.,“RiskFactors,”ofPartIofthisAnnualReportonForm10-K.COVID-19TheglobalspreadandunprecedentedimpactoftheCOVID-19pandemic(“COVID-19”)continuestocreates

291、ignificantvolatility,uncertaintyandeconomicdisruptionaroundtheworld.In2020,thepestcontrolindustrywasdesignatedas“essential”bytheDepartmentofHomelandSecurity.TheCompanyhasbeenabletoremainoperationalineverypartoftheworldinwhichitoperates.Withtheavailabilityofvaccinations,manyCOVID-19restrictionshavebe

292、enlifted;however,publichesitancyregardingthevaccinationsandthecontinuedspreadofCOVID-19,mayresultinadditionalrestrictionsandmandatesbeingimposed.ThesituationrelatedtoCOVID-19continuestobecomplexanddynamic.We cannot reasonably estimate the duration of the pandemicorfullyascertainitsimpacttoourfuturer

293、esults.WewillcontinuetoactivelymonitortherapidlyevolvingsituationrelatedtoCOVID-19andmaytakeactionsthatmayalterouroperations,includingthosethatmayberequiredbyfederal,state,or local authorities,or that we determine are in the best interestsofouremployees,customersandcommunities.Wedonotknowwhen,orif,i

294、twillbecomepracticaltorelaxoreliminatesome or all of these measures entirely as there is no guarantee thatCOVID-19willbefullycontained.TheCompanysconsolidatedfinancialstatementsreflectestimatesandassumptionsmadebymanagementthataffectthePart II Item 6.Reserved29Rollins,Inc.2021 Annual Report|29Rollin

295、s,Inc.2021 Annual Report|reportedamountsofassetsandliabilitiesandrelateddisclosuresasofthedateoftheconsolidatedfinancialstatements.TheCompanyconsideredtheimpactofCOVID-19ontheassumptionsandestimatesusedinpreparingtheconsolidatedfinancialstatements.Intheopinionofmanagement,alladjustmentsnecessaryfora

296、fairpresentationoftheCompanysfinancialresultsfortheyearhavebeenmade.TheseadjustmentsareofanormalrecurringnaturebutcomplicatedbytheuncertaintysurroundingtheglobaleconomicimpactofCOVID-19.TheresultsofoperationsfortheyearendedDecember31,2021arenot necessarily indicative of results for future years.The

297、severity,magnitude and duration,as well as the economic consequences ofCOVID-19,areuncertain,rapidlychanginganddifficulttopredict.Therefore,ouraccountingestimatesandassumptionsmaychangeovertimeinresponsetoCOVID-19andmaychangemateriallyinfutureperiods.Part II Item7.ManagementsDiscussionandAnalysisofF

298、inancialConditionandResultsofOperationsResults of Operations2021 Versus 2020Years ended December 31,VarianceAs a%of Revenue(in thousands)20212020$%20212020REVENUES Customer services$2424,300$2,161,220263,08012.2100.0100.0COSTS AND EXPENSES Cost of services provided(exclusive of depreciation and amor

299、tization below)1,162,6171,048,592 114,02510.948.048.5 Sales,general and administrative727,489 656,20771,28210.930.030.4 Depreciation and amortization 94,20588,3295,8766.73.94.1 Total operating expenses1,984,3111,793,128191,18310.781.983.0OPERATING INCOME439,989368,09271,89719.518.117.0 Interest expe

300、nse,net8305,082(4,252)NM0.00.2 Other(income)expense,net(35,679)8,290(43,969)NM1.50.4CONSOLIDATED INCOME BEFORE INCOME TAXES474,838 354,720120,11833.919.616.4PROVISION FOR INCOME TAXES 124,15193,896 30,25532.25.14.3NET INCOME$350,687$260,82489,86334.514.512.1RevenuesRevenuesfortheyearendedDecember31,

301、2021were$2.4billion,anincreaseof$263.1million,or12.2%,from2020revenuesof$2.2billion.Comparing2021to2020,residentialpestcontrolrevenueincreased13%,commercialpestcontrolrevenueincreased10%andtermiteandancillaryservicesgrew14%.TheCompanysrevenuemixfortheyearendedDecember31,2021consistedprimarilyof46%re

302、sidentialpestcontrol,34%commercialpestcontroland20%termiteandancillaryrevenues(such as moisture control,insulation,deck and gutterwork).TheCompanysforeignoperationsaccountedforapproximately8%and7%oftotalrevenuesfortheyearsendedDecember31,2021and2020,respectively.Cost of Services ProvidedFor the twel

303、ve months ended December 31,2021,cost of servicesprovidedincreased$114.0million,or10.9%,comparedto the twelve months ended December 31,2020.The increase wasdrivenbyincreasedpeoplecostsandmaterialsandsuppliesduetotheincreaseinrevenues.Additionally,fleetcostsincreased mainly driven by an increase in f

304、uel costs.Sales,General and AdministrativeFor the twelve months ended December 31,2021,sales,general andadministrative(SG&A)expensesincreased$71.3million,or10.9%,comparedtothetwelvemonthsendedDecember31,2020.Theincreasesweredrivenbyincreasedpeoplecostsmostlyduetosalespersonnel,directlyrelatedtoourin

305、creaseinrevenues.Additionally,SG&AincreasedduetotheaccrualrelatedtothepotentialsettlementoftheongoingSECmatterof$8.0million,increasedadvertisingcostsandthecharitabledonationofcertainexcesspersonalprotectionequipment.Depreciation and AmortizationForthetwelvemonthsendedDecember31,2021,depreciationanda

306、mortizationincreased$5.9million,or6.7%,comparedtothe twelve months ended December 31,2020.The increase was duetotheadditionalamortizationofcustomercontractsfromseveral acquisitions.Other(Income)ExpenseDuring the twelve months ended December 31,2021,other incomeincreased$44.0millionprimarilyduetotheC

307、ompanyrecognizingagainof$35.7millioncomparedtoalossof$1.6millionintheprioryear.Thecurrentyeargainisprimarilyrelatedtomultiplesale-leasebacktransactionswheretheCompanysoldandleasedbackpropertiesthatitacquiredin2019withtheClarkPestControlacquisition.Additionally,2020included$6.7millionofacceleratedsto

308、ckcompensationvestingexpensethatdid not occur in 2021.30|Rollins,Inc.2021 Annual Report30|Rollins,Inc.2021 Annual ReportInterest Expense,NetInterestexpense,netfortheyearsendedDecember31,2021and2020was$0.8millionand$5.1millionrespectively.Thedecreasewasprimarilydrivenbytheloweraveragedebtbalancein202

309、1comparedtothesameperiodin2020.Income TaxesTheCompanyseffectivetaxratedecreasedto26.1%in2021comparedto26.5%in2020.Therateislowerinthecurrentyearduetoanetincreaseinbeneficialdeductions,drivenbyanincreaseintheportionofofficerscompensationdeductionsthatwere allowable.Liquidity and Capital ResourcesCash

310、 and Cash FlowCashfromoperatingactivitiesistheprincipalsourceofcashgeneration for our businesses.Themostsignificantsourceofcashinourcashflowfromoperationsiscustomer-relatedactivities,thelargestofwhichiscollectingcashresultingfromservicessold.Themostsignificantoperatinguseofcashistopayoursuppliers,em

311、ployees,taxauthorities and others for a wide range of material and services.TheCompanyscashandcashequivalentsatDecember31,2021,and2020were$105.3millionand$98.5million,respectively.Part II Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsCash Provided by Operating Activ

312、itiesTheCompanysoperationsgeneratedcashof$401.8millionfortheyearendedDecember31,2021primarilyfromnetincomeof$350.7million,comparedwithcashprovidedbyoperatingactivitiesof$435.8millionin2020.During2021,theCompanypaidtheemployer-onlypayrolltaxesthatweredeferredunderthe Coronavirus Aid,Relief,and Econom

313、ic Security Act(the“CARES”Act)whichwassignedintolawonMarch27,2020.TheCARESActtaxdeferralsin2020andpaymentsin2021aretheprimarydriversforthedeclineinnetcashfromoperatingactivitiesin2021.TheCompanybelievesitscurrentcashandcashequivalentsbalances,futurecashflowsexpectedtobegeneratedfromoperatingactiviti

314、es,andavailableborrowingsunderits$175millionrevolvingcreditfacilityand$250milliontermloanfacility,(whichwasamendedinJanuary2022to$300million)willbesufficienttofinanceitscurrentoperationsandobligations,andfundexpansionofthebusinessfortheforeseeablefuture.Cash Used in Investing ActivitiesTheCompanyuse

315、d$99.0millionininvestingactivitiesfortheyearendedDecember31,2021andused$162.4millionfortheyearendedDecember31,2020.TheCompanyinvestedapproximately$27.2millionincapitalexpendituresduring2021comparedto$23.2millionduring2020.Capitalexpendituresfortheyearconsistedprimarilyofpropertypurchases,equipmentre

316、placementsandtechnology-relatedprojects.TheCompanyexpectstoinvestbetween$25.0millionand$35.0millionin2022incapitalexpenditures.Cashpaidforacquisitionstotaled$146.1millionfortheyearendedDecember31,2021ascomparedto$147.6millionfortheyearendedDecember31,2020.TheexpendituresfortheCompanysacquisitionswer

317、efunded through existing cash balances,borrowings on our line ofcredit,atermloan,andotheroperatingcashflows.TheCompanycontinuestoseeknewacquisitions.Tooffsettheuseofcashwehadapproximately$74.4millionrelatedto the sale of assets for the year ended December 31,2021,mostlyrelatedtotheClarkPestpropertys

318、aleleasebacks,ascomparedto$7.7millionofassetsalesfortheyearendedDecember 31,2020.Cash Used in or Provided by Financing ActivitiesTheCompanyused$290.2millioninfinancingactivitiesfortheyearendedDecember31,2021and$281.3millioninfinancingactivitiesfortheyearendedDecember31,2020.TheCompanyrepaid$48.0mill

319、ionofitsoutstandingdebtbalancethroughout2021,netofborrowings,comparedto$88.5millionduring2020,netofborrowings.Atotalof$208.7millionwaspaidincashdividends($0.42pershare)duringtheyearendedDecember31,2021includingaspecialdividendpaidinDecember2021of$0.08pershare,comparedto$160.5millionincashdividendspa

320、id($0.33pershare)duringtheyearendedDecember31,2020,includingaspecialdividendpaidinDecember2020of$0.09pershare.In2020,thedividendwasreduced due to the uncertainty surrounding the effects of the COVID-19pandemic(“COVID-19”)toourbusiness.In2012,theCompanysBoardofDirectorsauthorizedthepurchaseofupto5mil

321、lionsharesoftheCompanyscommonstock.Afteradjustmentsforstocksplits,thetotalauthorizedsharesunderthesharerepurchaseplanare16.9millionshares.TheCompanydidnotpurchasesharesontheopenmarketduringthe years ended December 31,2021,2020 and 2019.There remain11.4millionsharesauthorizedtoberepurchasedunderprior

322、Boardapproval.TheCompanyrepurchased$10.7million,$8.3million,and$10.0millionofcommonstockfortheyearsendedDecember31,2021,2020and2019,respectively,fromemployeesforthepaymentoftaxesonvestingrestrictedshares.Years ended December 31,Variance(in thousands)20212020$%Net cash provided by operating activitie

323、s$401,805$435,785(33,980)(7.8)Net cash used in investing activities(98,965)(162,395)63,430(39.1)Net cash used in financing activities(290,159)(281,273)(8,886)3.2 Effect of exchange rate on cash(5,857)12,084(17,941)NMNet increase in cash and cash equivalents$6,824$4,20131Rollins,Inc.2021 Annual Repor

324、t|31Rollins,Inc.2021 Annual Report|Contractual Obligations and Contingent Liabilities and Commitments TheimpactthattheCompanyscontractualobligationsasofDecember31,2021areexpectedtohaveonourliquidityandcashflowinfutureperiodsisasfollows:Payments due by periodContractual obligations(in thousands)Total

325、Less than 1 year2-3 years4-5 yearsMore than 5 yearsTerm loan(1)$300,000$15,000$285,000$Acquisition holdbacks and earnouts 25,156 23,614 1,542 Non-cancelable operating leases277,38482,959102,806 37,595 54,024Unrecognized tax positions(2)1,248 1,248 Total$603,788$121,573$390,596$37,595$54,024(1)Thesea

326、mountsrepresentexpectedpaymentsundertheJanuary27,2022amendedCreditAgreementasdetailedinNote4tothefinancialstatements.(2)TheseamountsrepresentexpectedpaymentswithinterestforunrecognizedtaxbenefitsasofDecember31,2021.Part II Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperati

327、onsTheCompanys$105.3millionoftotalcashatDecember31,2021isprimarilycashheldatvariousbankinginstitutions.Approximately$78.1millionisheldincashaccountsatinternationalbankinstitutionsandtheremaining$27.2millionisprimarilyheldinFederalDepositInsuranceCorporation(“FDIC”)insured non-interest-bearing accoun

328、ts at various domestic banks which at times may exceed federally insured amounts.TheCompanysinternationalbusinessisexpanding,andweintend to continue to grow the business in foreign markets inthefuturethroughreinvestmentofforeigndepositsandfutureearningsaswellasacquisitionsofunrelatedcompanies.Repatr

329、iationofcashfromtheCompanysinternationalsubsidiariesisnotapartoftheCompanyscurrentbusinessplan.Rollinsmaintainsadequateliquidityandcapitalresources,withoutregardtoitsforeigndeposits,thataredirectedtofinancedomesticoperationsandobligationsandtofundexpansionofitsdomesticbusiness.Inordertocomplywithapp

330、licabledebtcovenants,theCompanyisrequiredtomaintainatalltimesaleverage ratio of not greater than 3.00:1.00.The leverage ratio iscalculatedasofthelastdayofthefiscalquartermostrecentlyended.TheCompanyremainedincompliancewithapplicabledebtcovenantsatDecember31,2021andexpectstomaintaincompliancethrougho

331、ut2022.For Information regarding our Revolving Credit Agreement see Note 4 Debt of the Notes to Financial Statements(Part II,Item 8ofthisForm10-K).LitigationFordiscussionontheCompanyslegalcontingencies,seeNote13CommitmentsandContingenciestotheaccompanyingfinancialstatements,andPartI,Item3,LegalProce

332、edings.Critical Accounting EstimatesTheCompanyviewscriticalaccountingestimatestobethosethatareveryimportanttotheportrayalofourfinancialconditionandresultsofoperations,andthatrequiremanagementsmostdifficult,complexorsubjectivejudgments.Thecircumstancesthatmakethesejudgmentsdifficultorcomplexrelatetot

333、heneed for management to make estimates about the effect of matters that are inherently uncertain.We believe our critical accounting estimate to be as follows:Accrued InsuranceTheCompanyretains,uptospecifiedlimits,certainrisksrelatedtogeneralliability,workerscompensationand auto liability.Risks are managed through either high deductible insurance or,for Clark Pest Control only,a non-affiliatedgro