EX-99.1 3 ex99-1.txt PRESS RELEASE DATED 02/13/2003 Exhibit 99.1 CONTACT: Liz Merritt, Rural/Metro Corporation, (480) 606-3337 FD Morgen-Walke, Investor Relations Jim Byers (investors), (415) 439-4504 Christopher Katis (media), (415) 439-4515 FOR IMMEDIATE RELEASE RURAL/METRO FISCAL 2003 SECOND QUARTER REFLECTS INCREASES IN REVENUE AND SAME-SERVICE AREA GROWTH SCOTTSDALE, ARIZ. (Feb. 13, 2003) - Rural/Metro Corporation (Nasdaq: RURL), a leading national provider of medical transportation and fire protection services, reported results for its fiscal 2003 second quarter today, highlighted by gains in net revenue and same-service-area growth. For the quarter that ended December 31, 2002, the company reported an 8-percent increase in net revenue to $123.5 million, compared to $114.3 million for the same period of the prior year. The company continued to experience the benefit of its same-service-area growth strategies, marking an 8 percent increase in revenue from ongoing operations over the same period a year ago. The company reported $148,000 in net income for the quarter ended December 31, 2002. This compares to net income of $3.2 million for the three months ended December 31, 2001. The change in net income is due to increased operating income of $2.2 million offset by an increase in interest expense of $1.8 million, an increase in income tax provision of $1.7 million, and a decrease in income from discontinued operations of $1.7 million. The increase in interest expense is due to the renegotiation of the company's credit facility effective September 30, 2002. The increase in the income tax provision is related to a $1.6 million refund received during the same period of the prior year, which was recorded as an income tax benefit. Effective September 27, 2002, the company disposed of its Latin American operations, which represented $1.7 million of net income for the three months ended December 31, 2001. For the six months ended December 31, 2002, the company reported an 8-percent increase in net revenue of $249.0 million, compared to $230.8 million for the six months ended December 31, 2001. For the six months ended December 31, 2002, the company reported net income of $16.3 million, or fully diluted earnings per share before the accretion of preferred stock of $0.91 cents. This compares to a net loss for the same period of the prior year of $47.5 million, or a loss of $3.13 per fully diluted share. The change in net income is due to increased operating income of $6.1 million offset by an increase in interest expense of $900,000, and an increase in the income tax provision of $1.7 million. The six months ended December 31, 2002 included a $12.5 million gain related to the disposition of the company's Latin American operations. The six months ended December 31, 2001 included a charge of $49.5 million relating to the cumulative effect of a change in accounting principle. The increase in interest expense for the six months is due to the renegotiation of the company's credit facility effective September 30, 2002. The increase in the income tax provision is related to a $1.6 million refund received during the same period of the prior year, which was recorded as an income-tax benefit. For the three months ended December 31, 2002, the company generated $11.0 million in earnings from continuing operations before interest, taxes, depreciation and amortization (adjusted EBITDA), representing a margin of 9 percent on net revenue, compared to $9.4 million of adjusted EBITDA for the three months ended December 31, 2001, or a margin of 8 percent. For the current six-month period, the company generated $24.2 million in adjusted EBITDA, compared to $19.3 million for the same period of the prior year, which represents a 25-percent increase in adjusted EBITDA year over year. The company has provided a reconciliation of net income to adjusted EBITDA in an attached table. Jack Brucker, President and Chief Executive Officer, said, "We are very encouraged by the continuing strides we make to expand our business in current service areas while we carefully explore new market opportunities. We believe our percentage of same-service-area growth provides a solid indicator for consistent growth potential and gains in market share." Cash collected from medical transports tracked favorably during the quarter. At the close of the second quarter ended December 31, 2002, cash collected in excess of net/net revenue was $3.0 million. Additionally, average days' sales outstanding (DSO) for the same period held steady at 71 days when compared to the prior quarter. Brucker continued, "Collectively, these metrics demonstrate continued progress in our billing and collections efforts and support the long-term effectiveness of our strategies to maximize and expedite reimbursement for the services we provide." Business activities during the quarter included the award of a new contract to provide exclusive emergency medical transportation services to Loudon County, Tennessee; renewal of a long-standing contract to provide 911 ambulance services to the City of Chandler, Arizona; and a renewal contract for firefighting services at Sikorsky Aircraft Corporation's helicopter testing facility in West Palm Beach, Florida. During the second quarter, the company also entered into new or expanded medical transportation contracts with a variety of facilities in established Rural/Metro service areas, representing combined additional net revenue of approximately $2.8 million annually. Brucker continued, "We are now halfway through fiscal 2003, and we believe we are on the right track to maintain the revenue and growth momentum necessary to achieve our plan and enhance long-term value to our stakeholders. " The company reaffirmed today that its fiscal 2002 annual stockholders' meeting will be held at 10 a.m. on March 12, 2003, during which stockholders will vote to re-elect two members to the Board of Directors. Previously, the company had anticipated it would present a proposal to increase authorized common shares in order to complete the conversion of preferred stock granted last year to the company's banks to common shares. Because the company's former independent auditor, Arthur Andersen L.L.P, is no longer available to provide its consent, the company will undergo a re-audit of its 2001 financial statements reflecting the presentation of its former Latin American operations as discontinued operations. This process will be completed prior to a stockholder vote on the proposal. To avoid a further delay of the upcoming annual meeting, the company will present the proposal following fiscal 2003. Rural/Metro Corporation provides emergency and non-emergency medical transportation, fire protection, and other safety services in 26 states and more than 400 communities throughout the United States.
Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 (9/30/01) (12/31/01) (3/31/02) (6/30/02) (9/30/02) (12/31/02) --------- ---------- --------- --------- --------- ---------- NET REVENUE $116.5 $114.3 $120.5 $120.3 $125.6 $123.4 million million million million million million AVG.EMS PATIENT CHARGE (NET/NET)(1) $267 $271 $281 $284 $287 $291 EMS TRANSPORTS(2) 265,076 256,292 265,207 259,090 263,194 256,710 AVERAGE DSO (YTD)(3) 76 75 74 74 71 71
(1) Average Emergency Medical Services (EMS) Patient Charge is defined as gross EMS transport revenue less provisions for Medicare, Medicaid and contractual discounts and bad debt expense divided by EMS transports. (2) EMS transports are defined as actual transports of patients and exclude calls for assistance where no transport was required. (3) Average year-to-date DSO is defined as average accounts receivable divided by net revenue per day, as calculated on a year-to-date basis. EXCEPT FOR HISTORICAL INFORMATION HEREIN, 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, COMPETITORS' ACTIONS; LITIGATION MATTERS; AND THE COMPANY'S ABILITY TO SUSTAIN OPERATING CASH FLOW, SECURE NEW CONTRACTS, RETAIN EXISTING CONTRACTS, IMPROVE EARNINGS AND OPERATING MARGINS, FURTHER ENHANCE THE EFFICIENCY OF THE COLLECTION PROCESS, EFFECTIVELY MANAGE COLLATERAL REQUIREMENTS AND COSTS RELATED TO ITS INSURANCE COVERAGE, AND MAINTAIN COMPLIANCE WITH COVENANT AND OTHER REQUIREMENTS OF ITS CREDIT FACILITY. ADDITIONAL FACTORS THAT COULD AFFECT THE COMPANY ARE DESCRIBED IN OUR FORM 10-K AS AMENDED FOR THE YEAR ENDED JUNE 30, 2002 UNDER THE CAPTION " RISK FACTORS " IN THE MD&A SECTION, AND OTHER FACTORS AS DESCRIBED FROM TIME TO TIME IN OUR SEC FILINGS. THE COMPANY DISCLAIMS ANY OBLIGATION TO UPDATE ITS FORWARD-LOOKING STATEMENTS. (Tables to follow) RURAL/METRO CORPORATION CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2002 AND JUNE 30, 2002 (In Thousands) December 31, June 30, 2002 2002 ---------- ---------- (Unaudited) ASSETS CURRENT ASSETS Cash $ 8,963 $ 9,828 Accounts receivable, net 95,777 99,115 Inventories 12,074 12,220 Prepaid expenses and other 8,708 9,015 ---------- ---------- Total current assets 125,522 130,178 ---------- ---------- PROPERTY AND EQUIPMENT, net 45,873 48,532 GOODWILL 41,167 41,244 OTHER ASSETS 23,359 17,484 ---------- ---------- Total assets $ 235,921 $ 237,438 ========== ========== LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable $ 8,830 11,961 Accrued liabilities 57,870 73,719 Deferred subscription fees 15,234 15,409 Current portion of long-term debt 1,406 1,633 ---------- ---------- Total current liabilities 83,340 102,722 ---------- ---------- LONG-TERM DEBT, net of current portion 306,040 298,529 OTHER LIABILTIES 339 477 DEFERRED INCOME TAXES 650 650 ---------- ---------- Total liabilities 390,369 402,378 ---------- ---------- MINORITY INTEREST 379 379 ---------- ---------- REDEEMABLE PREFERRED STOCK 5,390 -- ---------- ---------- STOCKHOLDERS' EQUITY (DEFICIT) Common stock 164 159 Additional paid-in capital 138,791 138,470 Accumulated deficit (297,933) (313,025) Accumulated other comprehensive income (loss) -- 10,316 Treasury stock (1,239) (1,239) ---------- ---------- Total stockholders' equity (deficit) (160,217) (165,319) ---------- ---------- $ 235,921 $ 237,438 ========== ========== RURAL/METRO CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001 (Unaudited) (In thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, 2002 DECEMBER 31, 2002 ------------------------ ------------------------ 2002 2001 2002 2001 ---------- ---------- ---------- ---------- NET REVENUE $ 123,464 $ 114,333 $ 249,029 $ 230,807 ---------- ---------- ---------- ---------- OPERATING EXPENSES Payroll and employee benefits 70,233 65,905 141,345 134,226 Provision for doubtful accounts 19,017 16,633 37,742 33,371 Depreciation and amortization 3,309 3,911 6,749 7,942 Other operating expenses 23,211 22,358 45,745 43,888 ---------- ---------- ---------- ---------- Total operating expenses 115,770 108,807 231,581 219,427 ---------- ---------- ---------- ---------- OPERATING INCOME 7,694 5,526 17,448 11,380 Interest expense, net (7,491) (5,651) (13,377) (12,475) Other -- 9 -- 9 ---------- ---------- ---------- ---------- INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND THE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 203 (116) 4,071 (1,086) INCOME TAX (PROVISION) BENEFIT (55) 1,625 (110) 1,605 ---------- ---------- ---------- ---------- INCOME FROM CONTINUING OPERATIONS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 148 1,509 3,961 519 INCOME FROM DISCONTINUED OPERATIONS (including gain on disposal of Latin American operations of $12,488 in 2002) -- 1,661 12,332 1,461 ---------- ---------- ---------- ---------- INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 148 3,170 16,293 1,980 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE -- -- -- (49,513) ---------- ---------- ---------- ---------- NET INCOME (LOSS) 148 3,170 16,293 (47,533) Less: Accretion of redeemable preferred stock (1,201) -- (1,201) -- ---------- ---------- ---------- ---------- NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $ (1,053) $ 3,170 $ 15,092 $ (47,533) ========== ========== ========== ========== INCOME (LOSS) PER SHARE Basic- Income (loss) from continuing operations before cumulative effect of change in accounting principle less accretion of redeemable preferred stock $ (0.07) $ 0.10 $ 0.17 $ 0.03 Income (loss) from discontinued operations -- 0.11 0.77 0.10 ---------- ---------- ---------- ---------- Income (loss) before cumulative effect of change in accounting principle less accretion of redeemable preferred stock (0.07) 0.21 0.94 0.13 Cumulative effect of change in accounting principle -- -- -- (3.29) ---------- ---------- ---------- ---------- Net income (loss) applicable to each common share $ (0.07) $ 0.21 $ 0.94 $ (3.16) ========== ========== ========== ========== Diluted- Income (loss) from continuing operations before cumulative effect of change in accounting principle less accretion of redeemable preferred stock $ (0.07) $ 0.10 $ 0.15 $ 0.03 Income (loss) from discontinued operations -- 0.11 0.69 0.10 ---------- ---------- ---------- ---------- Income (loss) before cumulative effect of change in accounting principle less accretion of redeemable preferred stock $ (0.07) $ 0.21 $ 0.84 $ 0.13 Cumulative effect of change in accounting principle -- -- -- (3.26) ---------- ---------- ---------- ---------- Net income (loss) applicable to each common share $ (0.07) $ 0.21 $ 0.84 $ (3.13) ========== ========== ========== ========== AVERAGE NUMBER OF SHARES OUTSTANDING -BASIC 16,142 15,100 16,068 15,065 ========== ========== ========== ========== AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED 16,142 15,336 17,898 15,183 ========== ========== ========== ==========
RURAL/METRO CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001 (UNAUDITED) (IN THOUSANDS)
2002 2001 ---------- ---------- CASH FLOW FROM OPERATING ACTIVITIES Net income (loss) $ 16,293 $ (47,533) Adjustments to reconcile net income (loss) to cash used in operating activities-- Non-cash portion of gain on disposition of Latin American operations (13,732) -- Cumulative effect of a change in accounting principle -- 49,513 Depreciation and amortization 6,773 8,324 Gain on sale of property and equipment (359) (311) Provision for doubtful accounts 37,742 33,515 Undistributed losses of minority shareholders -- (9) Equity earnings net of distributions received (1,121) (393) Amortization of deferred financing costs 1,049 455 Amortization of debt discount 13 13 Change in assets and liabilities - Increase in accounts receivable (34,983) (29,980) (Increase) decrease in inventories 85 (77) (Increase) decrease in prepaid expenses 112 (16) (Increase) decrease in other assets 204 (2,055) Decrease in accounts payable (2,515) (1,331) Decrease in accrued liabilities and other liabilities (4,456) (3,609) Increase (decrease) in non-refundable subscription income (174) 135 ---------- ---------- Net cash provided by operating activities 4,931 6,641 ---------- ---------- CASH FLOW FROM INVESTING ACTIVITIES Capital expenditures (4,716) (2,864) Proceeds from the sale of property and equipment 474 965 ---------- ---------- Net cash used in investing activities (4,242) (1,899) ---------- ---------- CASH FLOW FROM FINANCING ACTIVITIES Repayments on revolving credit facility -- (1,263) Repayment of debt and capital lease obligations (748) (702) Cash paid for debt issuance costs (971) -- Issuance of common stock 186 153 ---------- ---------- Net cash used in financing activities (1,533) (1,812) ---------- ---------- EFFECT OF CURRENCY EXCHANGE RATE CHANGES ON CASH (21) (310) ---------- ---------- INCREASE (DECREASE) IN CASH (865) 2,620 CASH, beginning of period 9,828 8,699 ---------- ---------- CASH, end of period $ 8,963 $ 11,319 ========== ==========
RURAL/METRO CORPORATION RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA FROM CONTINUING OPERATIONS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2002 AND 2001
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, 2002 DECEMBER 31, 2002 ----------------------- ------------------------ 2002 2001 2002 2001 ---------- ---------- ---------- ---------- Net income (loss) $ 148 $ 3,170 $ 16,293 $ (47,533) Add back: Depreciation and amortization 3,309 3,911 6,749 7,942 Interest expense, net 7,491 5,651 13,377 12,475 Income tax provision (benefit) 55 (1,625) 110 (1,605) Income from discontinued operations -- (1,661) (12,332) (1,461) Cumulative effect of change in accounting principle -- -- -- 49,513 ---------- ---------- ---------- ---------- Adjusted EBITDA from continuing operations $ 11,003 $ 9,446 $ 24,197 $ 19,331 ========== ========== ========== ==========