Annual report pursuant to Section 13 and 15(d)

EMPLOYEE BENEFIT PLANS (Tables)

v2.4.0.8
EMPLOYEE BENEFIT PLANS (Tables)
12 Months Ended
Dec. 31, 2013
Description of New Accounting Pronouncements Recently Adopted  
Schedule of funded status of the Plans

The funded status of the Plans and the net amount recognized in the statement of financial position are summarized as follows as of:

 

 

December 31,   2013   2012
(in thousands)        
CHANGE IN ACCUMULATED BENEFIT OBLIGATION                
Accumulated Benefit obligation at beginning of year   $ 210,815     $ 196,911  
Service cost     112       100  
Interest cost     8,551       9,622  
Actuarial (gain) loss     (24,724 )     21,541  
Benefits paid     (8,807 )     (17,359 )
 Accumulated Benefit obligation at end of year     185,947       210,815  
 CHANGE IN PLAN ASSETS                
    Market value of plan assets at beginning of year     167,544       165,044  
 Actual return on plan assets     28,632       14,656  
 Employer contribution     5,000       5,203  
 Benefits paid     (8,807 )     (17,359 )
 Fair value of plan assets at end of year     192,369       167,544  
Funded status   $ 6,422     $ (43,271 )

 

 

Schedule of amounts recognized in the statement of financial position
                 
Amounts Recognized in the Statement of Financial Position consist of:        
December 31,     2013       2012  
(in thousands)                
Noncurrent assets/(liabilities)   $ 6,422     $ (43,271 )
                 
Schedule of amounts recognized in accumulated other comprehensive income
Amounts Recognized in Accumulated Other Comprehensive Income consists of:
December 31,     2013       2012  
(in thousands)                
Net actuarial loss   $ 56,742     $ 102,419  
Schedule of weighted-average assumptions used

The following weighted-average assumptions were used to determine the accumulated benefit obligation and net benefit cost:

 

 

December 31,   2013   2012   2011
ACCUMULATED BENEFIT OBLIGATION                        
Discount rate     5.20 %     4.17 %     5.01 %
Rate of compensation increase     N/A       N/A       N/A  
                         
NET BENEFIT COST                        
Discount rate     4.17 %     5.01 %     5.51 %
Expected return on plan assets     7.00 %     7.00 %     7.00 %
Rate of compensation increase     N/A       N/A       N/A  

 

 

Schedule of net periodic benefit cost and other amounts recognized in other comprehensive income

The components of net periodic benefit cost are summarized as follows:

 

 

Years ended December 31,   2013   2012   2011
(in thousands)            
Service cost   $ 112     $ 100     $ 158  
Interest cost     8,551       9,622       9,879  
Expected return on plan assets     (11,589 )     (12,106 )     (12,080 )
Amortization of net loss     3,910       3,606       1,800  
Net periodic loss/(benefit)   $ 984     $ 1,222     $ (243 )

 

The benefit obligations recognized in other comprehensive income for the years ended December 31, 2013, 2012 and 2011 are summarized as follows:

 

(in thousands)   2013   2012   2011
Pretax (income)/loss   $ (41,767 )   $ 18,991     $ 26,297  
Amortization of net loss     (3,910 )     (3,606 )     (1,800 )
Total recognized in other comprehensive income     (45,677 )     15,385       24,497  
Total recognized in net periodic benefit (income)/cost and other comprehensive income   $ (44,693 )   $ 16,607     $ 24,254  

 

Schedule of weighted average asset allocation along with target allocation

The Plans’ weighted average asset allocation at December 31, 2013 and 2012 by asset category, along with the target allocation for 2014, are as follows:

 

 

    Target   Percentage of plan assets as of
    allocations for   December 31,
Asset category   2014   2013   2012
Cash and cash equivalents     0% - 5%       0.6 %     0.2 %
Equity securities - Rollins stock     0% - 30%       19.3 %     15.9 %
Domestic equity - all other     0% - 30%       21.5 %     13.0 %
Global equity     0.0 %     0.0 %     12.5 %
International equity     10% - 30%       25.3 %     13.6 %
Debt securities - core fixed income     15% - 50%       20.4 %     17.1 %
Tactical composite     0.0 %     0.0 %     12.5 %
Real estate     0% - 20%       6.7 %     7.7 %
Real return     0% - 20%       6.2 %     7.5 %
Other     0% - 20%       0.0 %     0.0 %
Total
Schedule of plan assets using the fair value hierarchy

The following table presents our plan assets using the fair value hierarchy as of December 31, 2013. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. See note 7 for a brief description of the three levels under the fair value hierarchy.

 

 

(in thousands) Total   Level 1   Level 2   Level 3
(1)   Cash and Cash Equivalents   $ 1,067     $ 1,067     $ —       $ —    
(2)   Fixed Income Securities     39,273       —         39,273       —    
    Domestic Equity Securities                                
    Rollins, Inc. Stock     37,067       37,067       —         —    
    Other Securities     41,357       41,357       —         —    
(3)   International Equity Securities     48,780       —         48,780       —    
(4)   Real Estate     12,831       —         —         12,831  
(5)   Real Return     11,994       —         11,994       —    
    Total   $ 192,369     $ 79,491     $ 100,047     $ 12,831  

 

 

The following table presents our plan assets using the fair value hierarchy as of December 31, 2012. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value.

 

 

(in thousands)   Total   Level 1   Level 2   Level 3
(1)   Cash and Cash Equivalents   $ 289     $ 289     $ —       $ —    
(2)   Fixed Income Securities     28,624       —         28,624       —    
    Domestic Equity Securities             —         —         —    
    Rollins, Inc. Stock     26,644       26,644       —         —    
    Other Securities     21,779       21,779       —         —    
    Global Equity Securities     20,990       20,990       —         —    
(3)   International Equity Securities     22,758       10,805       11,953       —    
(6)   Tactical Composite     21,026       —         21,026       —    
(4)   Real Estate     12,890       —         —         12,890  
(5)   Real Return     12,544       —         12,544       —    
    Total   $ 167,544     $ 80,507     $ 74,147     $ 12,890  

 

 

 

  (1) Cash and cash equivalents, which are used to pay benefits and plan administrative expenses, are held in Rule 2a-7 money market funds.
  (2) Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades.
  (3) Some International equity securities are valued using a market approach based on the quoted market prices of identical instruments in their respective markets.
  (4) Real estate fund values are primarily reported by the fund manager and are based on valuation of the underlying investments, which include inputs such as cost, discounted future cash flows, independent appraisals and market based comparable data.
  (5) Real Return funds invest in global equities, commodities and inflation protected core bonds that are valued primarily using a market approach based on the quoted market prices of identical instruments in their respective markets.
  (6) Tactical Composite funds invest in stocks, bonds and cash, both domestic and international. These assets are valued primarily using a market approach based on the quoted market prices of identical instruments in their respective markets.
Schedule of reconciliation of level 3 assets

The following table presents a reconciliation of Level 3 assets held during the year ended December 31, 2013.

 

 

            Net   Net    
    Balance at   Net Realized   Purchases,   Transfers   Balance at
    December 31,   and Unrealized   Issuances and   In to/(Out of)   December 31,
(in thousands)   2012   Gains/(Losses)   Settlements   Level 3   2013
Real Estate   $ 12,890     $ 1,061     $ (1,120 )   $ —       $ 12,831  
Total   $ 12,890     $ 1,061     $ (1,120 )   $ —       $ 12,831  

 

 

 

The following table presents a reconciliation of Level 3 assets held during the year ended December 31, 2012.

 

 

            Net   Net    
    Balance at   Net Realized   Purchases,   Transfers   Balance at
    December 31,   and Unrealized   Issuances and   In to/(Out of)   December 31,
(in thousands)   2011   Gains/(Losses)   Settlements   Level 3   2012
Real Estate   $ 7,092     $ 997     $ 4,801     $ —       $ 12,890  
Total   $ 7,092     $ 997     $ 4,801     $ —       $ 12,890  

 

 

 

 

Schedule of estimated future benefit payments

The estimated future benefit payments over the next ten years are as follows:

 

(in thousands)    
2014     $ 9,877  
2015       10,364  
2016       10,794  
2017       11,251  
2018       11,724  
Thereafter       63,089  
Total     $ 117,099  

 

Schedule of estimated life insurance premium payments

The estimated life insurance premium payments over the next five years are as follows:

 

 

(in thousands)    
2014   $ 121  
2015     467  
2016     1,693  
2017     1,500  
2018     1,661  
Total   $ 5,442