ROLLINS INCROL

ROLLINS INC Fair Value Disclosure

10-KFiled Feb 12, 20262 min read
FAIR VALUE MEASUREMENT
Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:
•Level 1: observable inputs such as quoted prices in active markets for identical assets or liabilities;
•Level 2: inputs other than quoted prices in active markets in Level 1 that are either directly or indirectly observable; and
•Level 3: unobservable inputs for which little or no market data exists.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Debt Securities
As of December 31, 2025 and 2024, we had investments in international bonds of $6.2 million and $8.2 million, respectively. These bonds are accounted for as available for sale securities and are Level 2 assets under the fair value hierarchy. The bonds are recorded at their fair market values and reported within other current assets and other assets on our consolidated statements of financial position. The unrealized gain or loss activity during the twelve months ended December 31, 2025, 2024 and 2023 was not significant.
Contingent Consideration
As of December 31, 2025 and 2024, the Company had $37.1 million and $21.0 million of acquisition holdback and earnout liabilities payable to former owners of acquired companies, respectively. Holdback and earnout liabilities are considered Level 3 liabilities under the fair value hierarchy. The earnout liabilities were adjusted to reflect the expected probability of payout, and both earnout and holdback liabilities were discounted to their net present value on the Company’s consolidated statements of financial position. The table below presents a summary of the changes in fair value for these liabilities.
Years Ended
December 31,
(in thousands)202520242023
Beginning balance$21,008 $46,104 $13,496 
New acquisitions and measurement adjustments28,438 21,052 44,548 
Payouts(14,215)(43,948)(12,489)
Interest and fair value adjustments994 (1,099)2,981 
Charge offset, forfeit and other852 (1,101)(2,432)
Ending balance$37,077 $21,008 $46,104 
Other Fair Value Disclosures
The carrying amount of cash and cash equivalents, trade and financed receivables, accounts payable, and short-term liabilities, including short-term borrowings under our commercial paper program, approximate fair value due to their short-term nature. The carrying amounts of borrowings outstanding under our Revolving Credit Facility approximate fair value, as interest rates are variable and reflective of market rates.
The following table presents the aggregate fair value and carrying value of our 2035 Senior Notes, which are classified as Level 2 within the fair value hierarchy:
December 31, 2025December 31, 2024
(in thousands)Fair ValueCarrying ValueFair ValueCarrying Value
2035 Senior Notes$512,160 $486,147 $— $— 

Historical Timeline

Fiscal YearFiled
2025Feb 12, 2026Showing above
2024Feb 13, 2025
2023Feb 15, 2024
2022Feb 16, 2023
2021Feb 25, 2022
2020Feb 26, 2021
2019Feb 28, 2020
2018Mar 1, 2019
2017Feb 26, 2018
2016Feb 24, 2017
2015Feb 24, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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