Annual report pursuant to Section 13 and 15(d)


12 Months Ended
Dec. 31, 2014
Financing Receivables  


Rollins manages its financing receivables on an aggregate basis when assessing and monitoring credit risks. The Company’s credit risk is generally low with a large number of entities comprising Rollins’ customer base and dispersion across many different geographical regions. The credit quality of a potential obligor is evaluated at the loan origination based on an assessment of the individual’s beacon/credit bureau score. Rollins requires potential obligor to have good credit worthiness with low risk before entering into a contract. Depending upon the individual’s credit score the Company may accept with 100% financing or require a significant down payment or turndown the contract. Delinquencies of accounts are monitored each month. Financing receivables include installment receivable amounts which are due subsequent to one year from the balance sheet dates.



At December 31,   2014     2013  
(in thousands)            
Gross Financing Receivables, short-term   $ 13,982     $ 13,997  
Gross Financing Receivables, long-term     13,189       13,031  
Allowance for Doubtful Accounts     (3,150 )     (3,200 )
Net Financing Receivables   $ 24,021     $ 23,828  


Total financing receivables, net were $24.0 million and $23.8 million at December 31, 2014 and December 31, 2013, respectively. Financing receivables are charged-off when deemed uncollectable or when 180 days have elapsed since the date of the last full contractual payment. The Company’s charge-off policy has been consistently applied and no significant changes have been made to the policy during the periods reported. Management considers the charge-off policy when evaluating the appropriateness of the allowance for doubtful accounts. Gross charge-offs as a percentage of average financing receivables were 3.1% and 2.7% for the twelve months ended December 31, 2014 and December 31, 2013, respectively. Due to the low percentage of charge-off receivables and the high credit worthiness of the potential obligor, the entire Rollins, Inc. financing receivables portfolio has a low credit risk.


The Company offers 90 days same-as-cash financing to some customers based on their credit worthiness. Interest is not recognized until the 91st day at which time it is recognized retrospectively back to the first day if the contract has not been paid in full. In certain circumstances, such as when delinquency is deemed to be of an administrative nature, accounts may still accrue interest when they reach 180 days past due. As of December 31, 2014, there were no accounts on a non-accrual status, and no financing receivables greater than 180 days past due.


Included in financing receivables are notes receivable from franchise owners. These notes are low risk as the repurchase of these franchises is guaranteed by the Company’s wholly-owned subsidiary, Orkin, Inc., and the repurchase price of the franchise is currently estimated and has historically been well above the receivable due from the franchise owner.


The carrying amount of notes receivable approximates fair value as the interest rates approximate market rates for these types of contracts. Long-Term Installment receivables, net were $11.8 million and $11.6 million at December 31, 2014 and 2013, respectively.


Rollins establishes an allowance for doubtful accounts to insure financing receivables are not overstated due to uncollectability. The allowance balance is comprised of a general reserve, which is determined based on a percentage of the financing receivables balance, and a specific reserve, which is established for certain accounts with identified exposures, such as customer default, bankruptcy or other events, that make it unlikely that Rollins will recover its investment. The general reserve percentages are based on several factors, which include consideration of historical credit losses and portfolio delinquencies, trends in overall weighted-average risk rating of the portfolio and information derived from competitive benchmarking.


The allowance for doubtful accounts related to financing receivables was as follows:



At December 31,   2014     2013  
(in thousands)            
Balance, beginning of period   $ 3,200     $ 3,250  
Additions to allowance     748       626  
Deductions, net of recoveries     (798 )     (676 )
Balance, end of period   $ 3,150     $ 3,200  

The following is a summary of the past due financing receivables:


December 31,   2014     2013  
(in thousands)            
30-59 days past due   $ 626     $ 1,185  
60-89 days past due     201       251  
90 days or more past due     352       355  
Total   $ 1,179     $ 1,791  


The following is a summary of percentage of gross financing receivables:



December 31,   2014     2013  
Current     95.7 %     93.4 %
30-59 days past due     2.3 %     4.4 %
60-89 days past due     0.8 %     0.8 %
90 days or more past due     1.2 %     1.4 %
Total     100.0 %     100.0 %