Annual report pursuant to Section 13 and 15(d)

ACQUISITIONS

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ACQUISITIONS
12 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
ACQUISITIONS

2.          ACQUISITIONS

The Company has made 30 and 38 acquisitions during the years ended December 31, 2019, and 2018, respectively, some of which have been disclosed on various press releases and related Current Reports on Form 8-K. 

Acquisition of Clark Pest Control:

The Company completed the acquisition of Clark Pest Control on April 30, 2019. Clark Pest Control is a leading pest management company in California and was the nation’s 8th largest pest management company according to PCT 100 rankings at the time of the acquisition, making it the largest Rollins acquisition since the Company acquired HomeTeam Pest Defense in 2008. Clark Pest Control services its customers from 26 service locations in 2 states. Clark Pest Control recorded revenues of approximately $139.2 million for the fiscal year ended December 31, 2018. The Company’s consolidated statements of income include the results of operations of Clark Pest Control for the period beginning April 30, 2019 through December 31, 2019.

The Company engaged an independent valuation firm to determine the allocation of the purchase price to goodwill and identifiable intangible assets. The valuation resulted in the allocation of $191.9 million to goodwill, $112.7 million to customer contracts, and $49.8 million to other intangible assets, principally tradenames. The finite-lived intangible assets, principally customer contracts, are being amortized over periods principally ranging from 5 to 10 years on a straight-lined basis.

The fair values of Clark Pest Control's assets and liabilities, at the date of acquisition, were as follows:

 

(in thousands)   at April 30,
2019
 
Assets and liabilities:        
Trade accounts receivables   $ 6,974  
Materials and supplies     900  
Other current assets     5,367  
Equipment and property, net     65,535  
Goodwill     191,853  
Customer contracts     112,700  
Trademarks & tradenames     49,300  
Non-compete agreements     500  
Accounts payable     (1,929 )
Accrued compensation and related liabilities     (5,678 )
Unearned revenues     (879 )
Contingent Consideration, short-term     (6,777 )
Other current liabilities     (5,452 )
Other long term liabilities     (9,352 )
Accrued insurance, less current portion     (1,870 )
Contingent Consideration, long-term     (5,923 )
Total   $ 395,269  

The unaudited pro forma financial information presented below gives effect to the Clark Pest Control acquisition as if it had occurred as of the beginning of our fiscal year 2018. The information presented below is for illustrative purposes only and is not necessarily indicative of results that would have been achieved if the acquisition had actually occurred as of the beginning of such years or results which may be achieved in the future.

    12 Months Ended  
    December 31,  
(in thousands, except per share amounts)   2019     2018  
Revenues:                
Customer Services   $ 2,060,280     $ 1,960,741  
Costs And Expenses     1,798,984       1,640,120  
Income Before Income Taxes     261,296       320,621  
Provision For Income Taxes     57,813       79,070  
Net Income   $ 203,483     $ 241,551  
Net Income Per Share - Basic And Diluted   $ 0.62     $ 0.74  
Dividends Paid Per Share   $ 0.47     $ 0.47  
Weighted average participating shares outstanding - basic and diluted     327,477       327,291  

Total cash purchase price for the Company’s acquisitions in 2019 and 2018 were $430.6 million and $76.8 million, respectively. The fair values of major classes of assets acquired and liabilities assumed along with the contingent consideration liability recorded during the valuation period of acquisition is included in the reconciliation of the total consideration as follows (in thousands):

December 31,   2019     2018  
Accounts receivable   $ 7,728     $ 3,558  
Materials and supplies     1,378       556  
Equipment and property     68,704       7,374  
Goodwill     204,162       25,605  
Customer contracts     136,344       62,228  
Other intangible assets     50,650       6,936  
Current liabilities     (18,195 )     (21,536 )
Other assets and liabilities, net     (7,513 )     (3,089 )
Total consideration paid     443,258       81,632  
Less: Contingent consideration liability     (12,700 )     (4,863 )
Total cash purchase price   $ 430,558     $ 76,769