-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PUYFP3oQke3gNFKE5rKYbk14UIfydneDUzZFA9M2bTsJs7W6fCN6qym/Qa2jumNt k52u6JEAU/GKTXD6dhBA2Q== 0000909518-05-000324.txt : 20050516 0000909518-05-000324.hdr.sgml : 20050516 20050516103633 ACCESSION NUMBER: 0000909518-05-000324 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050516 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050516 DATE AS OF CHANGE: 20050516 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RURAL METRO CORP /DE/ CENTRAL INDEX KEY: 0000906326 STANDARD INDUSTRIAL CLASSIFICATION: LOCAL & SUBURBAN TRANSIT & INTERURBAN HWY PASSENGER TRAINS [4100] IRS NUMBER: 860746929 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22056 FILM NUMBER: 05831891 BUSINESS ADDRESS: STREET 1: 8401 EAST INDIAN SCHOOL RD CITY: SCOTTSDALE STATE: AZ ZIP: 85251 BUSINESS PHONE: 4809943886 8-K 1 mv5-16_8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 16, 2005 ------------------ RURAL/METRO CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 0-22056 86-0746929 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 9221 East Via de Ventura Scottsdale, Arizona 85258 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (480) 606-3886 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On May 16, 2005, Rural/Metro Corporation (the "Company") issued a press release announcing its preliminary unaudited financial results for the quarter ended March 31, 2005. The full text of the Company's press release is attached hereto as Exhibit 99.1. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (C) EXHIBITS. Exhibit No. Description - ----------- ----------- 99.1 Press release, dated May 16, 2005. The information in this Form 8-K, including the exhibits, shall not be deemed to be "filed" for purposes of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities thereof, nor shall it be deemed to be incorporated by reference in any filing under the Exchange Act or under the Securities Act of 1933, as amended, except to the extent specifically provided in any such filing. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. RURAL/METRO CORPORATION Date: May 16, 2005 By: /s/ Michael S. Zarriello ------------------------------- Michael S. Zarriello Senior Vice President and Chief Financial Officer 2 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press release, dated May 16, 2005. 3 EX-99 2 mv5-168kex99_1.txt Exhibit 99.1 RURAL/METRO CORPORATION 50 Years of Serving Others CONTACT: Liz Merritt, Rural/Metro Corporation (480) 606-3337 Financial Dynamics, Investor Relations Jim Byers (Investors) (415) 439-4504 FOR IMMEDIATE RELEASE - --------------------- RURAL/METRO REPORTS STRONG THIRD QUARTER REVENUE AND OPERATING PERFORMANCE COMPANY ANNOUNCES $7 MILLION UNSCHEDULED DEBT PAYMENT SCOTTSDALE, ARIZ. (May 16, 2005) - Rural/Metro Corporation (Nasdaq/SC: RURL), a leading provider of medical transportation and private fire protection services, today announced financial results for its fiscal 2005 third quarter ended March 31, 2005. Net revenue for the fiscal 2005 third quarter increased 8.2% to $145.2 million, compared to $134.3 million in the prior year's third quarter. Net revenue for the nine months ended March 31, 2005 increased 6.4% to $418.9 million, compared to $393.8 million for the same period a year ago. Fiscal 2005 third-quarter and year-to-date revenue growth primarily reflects a combination of an increase in the number of medical transports and higher billing rates in both the company's medical transportation and fire protection businesses. For the fiscal 2005 third quarter, the company reported a loss of $3.0 million, or a loss of $0.13 per diluted share, compared to net income of $2.2 million, or $0.00 per diluted share for the prior year's third quarter. Third-quarter fiscal 2005 results include a loss on the early extinguishment of debt of $8.2 million, which represents an after-tax loss of $0.32 per diluted share. This loss is comprised of non-cash write-offs of $5.6 million in debt issuance costs and $0.1 million in unamortized discounts, as well as $2.5 million related to cash redemption premiums. Net income for the fiscal 2005 nine-month period was $4.5 million, or $0.19 per diluted share, compared to net income of $4.9 million, or $0.04 per diluted share for the same period a year ago. Fiscal 2005 nine-month results include a loss on the early extinguishment of debt of $8.2 million, which represents an after-tax loss of $0.32 per diluted share. The loss per share for the fiscal 2004 period included the impact of allocating net income to the company's former Series B and Series C preferred stock, as well as a related accretion charge. Rural/Metro today also announced that it made a $7.0 million unscheduled payment to reduce the principal balance of its Term Loan B from $135.0 million to $128.0 million. The company anticipates a resulting interest savings of approximately $350,000 per year. Jack Brucker, President and Chief Executive Officer, said, "We are pleased with our ongoing efforts to extend our presence in high-growth service areas and generate solid and consistent revenue growth. At the same time, we are deriving benefits from ongoing improved operating efficiencies that provide greater flexibility to selectively enter new markets. Each of these factors enable us to make progress toward our goal to improve the company's long-term liquidity through debt reduction." REVENUE BY SEGMENT - ------------------ Medical Transportation and Related Services: Same-service-area medical transportation revenue increased 7.3% for the third quarter ended March 31, 2005 and 5.5% year-to-date compared to the same prior year periods. Net revenue in this segment for the fiscal 2005 third quarter increased 7.9% to $125.1 million, compared to $115.9 million in the prior year's third quarter. For the nine months ended March 31, 2005, net revenue increased 5.9% to $358.5 million, compared to $338.4 million for the prior year period. The company attributed the growth in the segment to higher transport volume and increases in rates. Fire and Other: Fire and other revenue for the fiscal 2005 third quarter increased 9.7% to $20.1 million, compared to $18.4 million in 2004. For the nine months ended March 31, 2005, fire and other revenue increased 9.0% to $60.5 million, compared to $55.4 million for the prior year nine-month period. Revenue growth in the fire and other segment primarily reflects general rate increases and an increase in the number of new fire subscription customers. DEBT REFINANCING - ---------------- During the third quarter, the company refinanced its former amended credit facility and senior notes. The company entered into a new senior secured credit facility, consisting of a $135.0 million Term Loan B due 2011; a $20.0 million, undrawn revolving credit facility due 2010; and a $35.0 million letter of credit facility due 2011. Concurrently, the company issued $125.0 million of 9.875% senior subordinated notes due 2015 and the company issued $93.5 million aggregate principal amount at maturity (gross proceeds of $50.2 million) of 12.75% senior discount notes due 2016. Mr. Brucker continued, "With improved cash flows and an improving balance sheet, we have established a solid foundation to capitalize on the growing demand for our services and we believe our long-term business prospects are positive. Our new debt structure provides greater strength and flexibility to expand our operations in existing service areas and select new markets that are consistent with our strategic growth objectives." 2 EBITDA RESULTS - -------------- For the third quarter ended March 31, 2005, earnings before interest, taxes, depreciation and amortization ("EBITDA") was $6.9 million, compared to $12.3 million for the prior-year comparable period. Third-quarter fiscal 2005 EBITDA includes the $8.2 million loss on early extinguishment of debt. For the nine months ended March 31, 2005, EBITDA was $35.5 million, compared to $36.7 million for the same period a year ago. Fiscal 2005 nine-month EBITDA includes the $8.2 million loss on early extinguishment of debt. The company regards EBITDA, which is widely used by analysts, investors, creditors, and other interested parties, as relevant and useful information. The company provides this information to permit additional analysis of its ability to meet future debt service, capital expenditures, and working capital requirements. Additionally, the company's management uses this information to evaluate the performance of its operating units. EBITDA is not intended to represent cash provided by operating activities as defined by generally accepted accounting principles, and it should not be considered as an indicator of operating performance or an alternative to cash provided by operating activities as a measure of liquidity. The company has provided a reconciliation of net income to EBITDA in the attached tables. OPERATING METRICS - ----------------- The company's key operating metrics continued to trend positively in the fiscal 2005 third quarter. Medical transport volume grew 5.0% to 279,312 transports, compared to 266,064 in last year's third quarter. Additionally, net/net EMS average patient charge ("net/net EMS APC") grew 5.8%, or $18 per transport, to $330 compared to $312 for the third quarter of 2004. The company considers net/net EMS APC its best approximation of cash collected per transport. For the fiscal 2005 third quarter, average quarterly days sales outstanding ("DSO") dropped to 43 days compared to 45 days in the prior year's third quarter. Mr. Brucker continued, "We are committed to building on the positive momentum we have created in these and other key performance areas and we continue to focus on high-quality, low-risk growth in existing and select new markets while further enhancing our operational efficiencies and billing effectiveness." Following is a summary of certain of the company's key operating statistics. Medical transports and net/net EMS APC statistics have been adjusted to eliminate discontinued operations for all periods presented: 3
- -------------------------- --------------------- ------------------- -------------------- --------------- ---------------- Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 (3/31/04) (6/30/04) (9/30/04) (12/31/04) (3/31/05) - -------------------------- --------------------- ------------------- -------------------- --------------- ---------------- MEDICAL TRANSPORTS (1) 266,064 259,953 265,045 264,724 279,312 - -------------------------- --------------------- ------------------- -------------------- --------------- ---------------- NET/NET EMS APC (2) $312 $312 $317 $324 $330 - -------------------------- --------------------- ------------------- -------------------- --------------- ---------------- DSO (QTD) (3) 45 45 45 45 43 - -------------------------- --------------------- ------------------- -------------------- --------------- ----------------
(1) Medical transports from continuing operations are defined as actual emergency and non-emergency medical transports, excluding those under fixed-fee arrangements. (2) Net/net EMS APC is defined as gross medical transport revenue minus provisions for Medicare, Medicaid and other third-party payers, and doubtful accounts, divided by emergency and non-emergency transports from continuing operations. For purposes of this calculation, revenue and transports related to fixed-fee arrangements are excluded. (3) DSO is defined as average accounts receivable divided by consolidated net revenue per day, as calculated on a quarter-to-date basis. Rural/Metro Corporation provides emergency and non-emergency medical transportation, fire protection, and other safety services in 22 states and approximately 365 communities throughout the United States. For more information, visit the company's web site at www.ruralmetro.com. The company will discuss these results in a conference call May 16, 2005, beginning at 8 a.m. Pacific/11 a.m. Eastern. The call will be broadcast live on the company's web site at www.ruralmetro.com. A replay will be available from 2 p.m. Eastern today through midnight June 13, 2005. The number to call for the replay is (888) 203-1112. From international locations, (719) 457-0820. The required pass code to access the replay is 6414742. An archived webcast also will be available at www.ruralmetro.com. This press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, among others the company's ability to collect its accounts receivable; competitors' actions; litigation and regulatory matters; and the company's ability to sustain operating cash flow, secure new contracts, retain existing contracts, improve earnings and operating margin. Additional factors that could affect the company are described in its Form 10-K for the year ended June 30, 2004 under the caption "Risk Factors" in the Management's Discussion and Analysis section, and other factors as described from time to time in the company's SEC filings. The company disclaims any obligation to update its forward-looking statements. (Tables to Follow) 4 RURAL/METRO CORPORATION CONSOLIDATED BALANCE SHEET (unaudited) (in thousands, except share data)
MARCH 31, JUNE 30, 2005 2004 ----------------- ---------------- ASSETS Current assets: Cash $ 10,663 $ 16,372 Accounts receivable, net of allowance for doubtful accounts of $65,584 and $59,430 at March 31, 2005 and June 30, 2004 respectively 71,681 65,348 Accounts receivable from insurers 8,280 9,966 Inventories 11,858 11,738 Prepaid expenses and other current assets 6,271 8,512 ----------------- ---------------- Total current assets 108,753 111,936 Property and equipment, net 44,237 40,283 Goodwill 40,850 41,100 Insurance deposits 6,356 9,244 Other assets 20,360 12,644 ----------------- ---------------- $ 220,556 $ 215,207 ================= ================ LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 12,372 $ 13,833 Accrued liabilities 57,928 67,239 Deferred revenue 18,002 17,249 Current portion of long-term debt 2,520 1,495 ----------------- ---------------- Total current liabilities 90,822 99,816 Long-term debt, net of current portion 310,235 304,057 Other liabilities 3,240 1,401 Deferred income taxes 650 650 ----------------- ---------------- Total liabilities 404,947 405,924 ----------------- ---------------- Minority interest 1,549 1,509 ----------------- ---------------- Stockholders' deficit: Common stock, $.01 par value 40,000,000 shares authorized, 23,135,290 and 21,890,816 shares issued and outstanding at March 31, 2005 and June 30, 2004, respectively 231 219 Additional paid-in capital 148,860 147,075 Accumulated deficit (333,792) (338,281) Treasury stock (1,239) (1,239) ----------------- ---------------- Total stockholders' deficit (185,940) (192,226) ----------------- ---------------- $ 220,556 $ 215,207 ================= ================
5 RURAL/METRO CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
% OF % OF 2005 NET REVENUE 2004 NET REVENUE -------------------------- ------------------------- Net revenue $ 145,226 100.0% $ 134,252 100.0% ------------- ------------ Operating expenses Payroll and employee benefits 75,021 51.7% 69,998 52.1% Provision for doubtful accounts 22,522 15.5% 22,856 17.0% Depreciation and amortization 2,835 2.0% 3,130 2.3% Other operating expenses 32,564 22.4% 29,349 21.9% ------------- ------------ Total operating expenses 132,942 91.5% 125,333 93.4% ------------- ------------ Operating income 12,284 8.5% 8,919 6.6% Interest expense (7,205) -5.0% (6,898) -5.1% Interest income 48 0.0% 16 0.0% Loss on early extinguishment of debt (8,170) -5.6% - 0.0% ------------- ------------ Income (loss) from continuing operations before income taxes and minority interest (3,043) -2.1% 2,037 1.5% Income tax benefit (provision) 126 0.1% (88) -0.1% Minority interest (68) 0.0% 65 0.0% ------------- ------------ Income (loss) from continuing operations (2,985) -2.1% 2,014 1.5% Income from discontinued operations - 0.0% 153 0.1% ------------- ------------ Net income (loss) (2,985) -2.1% 2,167 1.6% Less: Net income allocated to redeemable nonconvertible participating preferred stock under the two-class method - (495) Less: Accretion of redeemable nonconvertible participating preferred stock - (1,706) ------------- ------------ Net loss applicable to common stock $ (2,985) $ (34) ============= ============ Income (loss) per share: Basic - Loss from continuing operations applicable to common stock $ (0.13) $ (0.01) Income from discontinued operations applicable to common stock - 0.01 ------------- ------------ Net loss $ (0.13) $ - ============= ============ Diluted - Loss from continuing operations applicable to common stock $ (0.13) $ (0.01) Income from discontinued operations applicable to common stock - 0.01 ------------- ------------ Net loss $ (0.13) $ - ============= ============ Average number of common shares outstanding - Basic 23,019 16,750 ============= ============ Average number of common shares outstanding - Diluted 23,019 16,750 ============= ============
6 RURAL/METRO CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS For The Nine Months Ended March 31, 2005 and 2004 (unaudited) (in thousands, except per share amounts)
% OF % OF 2005 NET REVENUE 2004 NET REVENUE -------------------------- ------------------------- Net revenue $ 418,906 100.0% $ 393,811 100.0% -------------- -------------- Operating expenses Payroll and employee benefits 221,170 52.8% 207,729 52.7% Provision for doubtful accounts 64,576 15.4% 64,306 16.3% Depreciation and amortization 8,512 2.0% 8,733 2.2% Other operating expenses 89,647 21.4% 85,587 21.7% -------------- -------------- Total operating expenses 383,905 91.6% 366,355 93.0% -------------- -------------- Operating income 35,001 8.4% 27,456 7.0% Interest expense (22,039) -5.3% (22,106) -5.6% Interest income 227 0.1% 67 0.0% Loss on early extinguishment of debt (8,170) -2.0% - 0.0% -------------- -------------- Income from continuing operations before income taxes and minority interest 5,019 1.2% 5,417 1.4% Income tax provision (397) -0.1% (277) -0.1% Minority interest (40) 0.0% (398) -0.1% -------------- -------------- Income from continuing operations 4,582 1.1% 4,742 1.2% Income (loss) from discontinued operations (93) 0.0% 206 0.1% -------------- -------------- Net income 4,489 1.1% 4,948 1.3% Less: Net income allocated to redeemable nonconvertible participating preferred stock under the two-class method - (964) Less: Accretion of redeemable nonconvertible participating preferred stock - (4,613) -------------- -------------- Net income (loss) applicable to common stock $ 4,489 $ (629) ============== ============== Income (loss) per share: Basic - Income (loss) from continuing operations applicable to common stock $ 0.20 $ (0.05) Income from discontinued operations applicable to common stock - 0.01 -------------- -------------- Net income (loss) $ 0.20 $ (0.04) ============== ============== Diluted - Income (loss) from continuing operations applicable to common stock $ 0.19 $ (0.05) Income from discontinued operations applicable to common stock - 0.01 -------------- -------------- Net income (loss) $ 0.19 $ (0.04) ============== ============== Average number of common shares outstanding - Basic 22,406 16,557 ============== ============== Average number of common shares outstanding - Diluted 23,837 16,557 ============== ==============
7 RURAL/METRO CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 31, 2005 AND 2004 (UNAUDITED) (IN THOUSANDS)
2005 2004 -------------------- -------------------- Cash flows from operating activities: Net income $ 4,489 $ 4,948 Adjustments to reconcile net income to cash provided by operating activities - Provision for doubtful accounts 64,601 68,175 Depreciation and amortization 8,762 9,423 Non-cash portion of loss on early extinguishment of debt 5,668 - Amortization of deferred financing costs 1,932 2,083 Accretion of 12.75% Senior Discount Notes 480 - Tax benefit related to the exercise of stock options 159 - Loss on sale of property and equipment 126 104 Earnings of minority shareholder 40 398 Amortization of debt discount 17 19 Change in assets and liabilities - Increase in accounts receivable (70,934) (75,047) Decrease (increase) in accounts receivable from insurers 1,686 (5,001) (Increase) decrease in inventories (120) 221 Decrease in prepaid expenses and other current assets 2,241 1,761 Decrease (increase) in insurance deposits 2,888 (362) Increase in other assets (3,850) (797) Decrease in accounts payable (1,461) (1,581) Decrease in accrued liabilities (9,311) (393) Increase in deferred revenue 753 732 Increase in other liabilities 11 83 -------------------- -------------------- Net cash provided by operating activities 8,177 4,766 -------------------- -------------------- Cash flows from investing activities: Capital expenditures (10,327) (6,182) Proceeds from the sale of property and equipment 14 92 -------------------- -------------------- Net cash used in investing activities (10,313) (6,090) -------------------- -------------------- Cash flows from financing activities: Repayments on credit facility due December 2006 (152,555) (1,000) Repayments of 7.875% Senior Notes due March 2008 (150,000) - Cash provided under Term Loan B 135,000 - Cash provided by issuance of 9.875% Senior Subordinated Notes 125,000 - Cash provided by issuance of 12.75% Senior Discount Notes 50,209 - Repayment of debt and capital lease obligations (1,027) (931) Cash paid for debt issuance costs (11,838) (515) Proceeds from the issuance of common stock 1,638 462 -------------------- -------------------- Net cash used in financing activities (3,573) (1,984) -------------------- -------------------- Decrease in cash (5,709) (3,308) Cash, beginning of period 16,372 12,561 -------------------- -------------------- Cash, end of period $ 10,663 $ 9,253 ==================== ==================== Non-cash investing activities: Landlord funded leasehold improvements for new corporate headquarters $ 1,828 $ - ==================== ====================
8 RURAL/METRO CORPORATION RECONCILIATION OF EBITDA TO CASH FLOW PROVIDED BY OPERATING ACTIVITIES (unaudited) (in thousands)
THREE MONTHS ENDED NINE MONTHS ENDED ------------------ ----------------- MARCH 31, MARCH 31, --------- --------- 2005 2004 2005 2004 --------------- --------------- -------------- ------------- Net income (loss) $ (2,985) $ 2,167 $ 4,489 $ 4,948 Add back: Depreciation and amortization 2,835 3,202 8,762 9,423 Interest expense 7,205 6,898 22,039 22,106 Interest income (48) (16) (227) (67) Income tax (benefit) provision (126) 91 400 289 --------------- --------------- -------------- ------------- EBITDA 6,881 12,342 35,463 36,699 Increase (decrease): Interest expense (7,205) (6,898) (22,039) (22,106) Interest income 48 16 227 67 Income tax benefit (provision) 126 (91) (400) (289) Provision for doubtful accounts 22,522 23,619 64,601 68,175 Non-cash portion of loss on early extinguishment of debt 5,668 - 5,668 - Amortization of deferred financing costs 593 669 1,932 2,083 Accretion of 12.75% Senior Discount Notes 480 - 480 - Tax benefit related to the exercise of stock options 30 - 159 - Loss on sale of property and equipment 49 94 126 104 Earnings (losses) of minority shareholder 68 (65) 40 398 Amortization of debt discount 4 6 17 19 Changes in operating assets and liabilities (21,253) (28,056) (78,097) (80,384) --------------- --------------- -------------- ------------- Net cash provided by operating actvities $ 8,011 $ 1,636 $ 8,177 $ 4,766 =============== =============== ============== =============
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