Overview

On October 28, 2009, Rollins, Inc. reported its 14th consecutive quarter of improved earnings of $22.7 million for the quarter ended September 30, 2009, as compared to $19.8 million for the prior year quarter, a 14.8% improvement. Revenues increased 3.2% to $286.9 million for the quarter while earnings for the quarter ended September 30, 2009 were $0.23 per diluted share, a 15.0% improvement over the $0.20 per diluted share reported the prior year quarter.

Rollins continues to be financially solid generating $92.2 million in cash from operations year to date. The Company has paid back, as of September 30, 2009, $45.0 million of the $90.0 million borrowed in April 2008 to finance the HomeTeam Pest Defense acquisition. In addition, the Company repurchased 146,300 shares of common stock at a weighted average price of $17.81 per share during the third quarter bringing the total number of shares repurchased year-to-date to 1,450,100 at a weighted average price of $16.28. In total, approximately 3.2 million additional shares may be repurchased under the Company's share purchase program.

The Board of Directors, at its quarterly meeting on January 27, 2009, approved a 12% increase in the Company's quarterly dividend. This marked the seventh consecutive year the Board has increased its dividend a minimum of 12% or greater. On October 28, 2009, the Company declared its regular quarterly cash dividend of $0.07 per share.

In July, 2009, the Company's Board of Directors announced the promotion of Glen Rollins to executive vice president of Rollins and CEO of Orkin, Inc. and Harry J. Cynkus to vice president of Rollins. Gary W. Rollins will continue as Chairman of Orkin, as well as president of Rollins Inc.

Rollins subsidiary, Orkin, was recognized by The Web Marketing Association as the winner of the 2009 Web Award for Best Diversified Business Website. The competition honors the best websites from companies in 96 industries around the world based on design, ease of use, use of technology, etc.

Results of Operations



                                                   %Better/                                %Better/
                                                  (worse) as                              (worse) as
                                                  compared to                              compared
                          Three Months Ended         same          Nine Months Ended       to same
                             September 30,        quarter in         September 30,        period in
(in thousands)             2009         2008      prior year       2009         2008      prior year
Revenues                $  286,852   $  277,911           3.2 % $  814,391   $  772,488          5.4 %
Cost of services
provided                   147,436      145,415          (1.4 )    414,440      401,444         (3.2 )
Depreciation and
amortization                 9,321        9,031          (3.2 )     28,124       24,347        (15.5 )
Sales, general and
administrative              93,233       91,440          (2.0 )    267,027      254,958         (4.7 )
Gain on sale of
assets                          30         (154 )      (119.5 )          7         (189 )     (103.7 )
Interest
(income)/expense               159          174           8.6          846         (152 )        N/M
Income before income
taxes                       36,673       32,005          14.6      103,947       92,080         12.9
Provision for income
taxes                       13,940       12,201         (14.3 )     39,924       35,699        (11.8 )
Net Income              $   22,733   $   19,804          14.8 % $   64,023   $   56,381         13.6 %

THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2008

Revenues for the third quarter ended September 30, 2009 increased $9.0 million to $286.9 million or 3.2% compared to $277.9 million for the quarter ended September 30, 2008. The Company was negatively impacted by the change in the Canadian foreign currency exchange rate and favorably impacted by the Crane acquisition which was completed on December 31, 2008. Crane Pest Control contributed $2.8 million in revenue for the quarter ended September 30, 2009. Foreign operations accounted for approximately 8% of total revenues during the third quarter of 2009 and 2008.

Commercial pest control continues to be the largest and fastest growing part of Rollins' business. Commercial pest control represents over 40% of the Company's revenues during the third quarter ended September 30, 2009 and grew 6.1% for the quarter compared to the quarter ended September 30, 2008. The Company has expanded its sales staff, and enjoyed a very strong quarter in commercial sales and national account sales. The cancellation rate improved for the quarter, as well. Commercial fumigations, a relatively small part of the Company's commercial business, were up 12.4% for the quarter ended September 30, 2009. Additionally, national account sales were aided by some one time events as well as further penetration of existing accounts and new customers.

Residential pest control service which represents approximately 40% of Rollins' revenues, increased slightly by 0.3% during the quarter ended September 30, 2009 compared to the same period in 2008. Residential leads were up for the quarter while cancellations remained flat.

Termite service revenue, which is nearly 18% of Rollins' business for the third quarter ended September 30, 2009, increased 3.4% compared to the same period in 2008. Additional sales people and improved productivity contributed to a 7.7% sales increase.

The revenues of the Company are affected by the seasonal nature of the Company's pest and termite control services. The increase in pest pressure and activity, as well as the metamorphosis of termites in the spring and summer (the occurrence of which is determined by the timing of the change in seasons), has historically resulted in an increase in the Company's revenue as evidenced by the following chart.