Rural/Metro Announces Preliminary Third-Quarter Results.Business Editors SCOTTSDALE Scottsdale, city (1990 pop. 130,069), Maricopa co., central Ariz.; settled in 1895 by Winfield Scott, inc. 1951. It is a resort and retirement center in the Phoenix metropolitan area. , Ariz.--(BUSINESS WIRE)--June 16, 2003 Rural/Metro Corporation (Nasdaq:RURLE), a leading national provider of ambulance and fire protection services, announced today the preliminary unaudited results of its fiscal 2003 third quarter ended March 31, 2003. As previously announced, the company has identified the need to increase the provisions for doubtful accounts in certain prior periods by an aggregate amount in the range of $35 million to $45 million. The company now believes that its operating results for periods prior to fiscal 2002 will require adjustment and as a result, the financial statements for certain of those periods will require restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. . The company is continuing to determine the final amount of the required restatement adjustments as well as the amounts applicable to the respective fiscal periods. The company is providing its preliminary unaudited operating results for the three and nine months ended March 31, 2003 and 2002, as management does not currently believe that the operating results for those periods will be impacted by the restatement adjustments. However, until the company's work is complete, there is a possibility that such amounts will require revision. For the three months ended March 31, 2003, the company reported net revenue of $125.3 million, representing a $4.8 million, or 4%, increase over the $120.5 million reported for the corresponding period of the prior fiscal year. For the nine months ended March 31, 2003, the company reported net revenue of $374.3 million, representing a $23.0 million, or 6.5%, increase over the $351.3 million reported for the nine months ended March 31, 2002. Same-service-area medical transportation revenue increased 3.3% and 6.6% for the respective 2003 quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. periods compared to the corresponding periods in 2002. Cash collections averaged $1.8 million per day for the three- and nine-month periods ended March 31, 2003, compared to $1.7 million per day for the same periods of the prior year. The company reported net income of $1.7 million for the three months ended March 31, 2003, or $0.03 per share on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, compared to net income of $4.4 million for the three months ended March 31, 2002, or $0.28 per share on a fully diluted basis. The decline in net income between periods is primarily due to increased general liability, workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. , and health insurance costs, as well as increased interest expense on the company's amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. credit facility. On a year-to-date basis, the company reported net income of $17.9 million in 2003, or $0.88 per share on a fully diluted basis, compared to a net loss in the corresponding period in fiscal 2002 of $43.2 million, or $2.82 per share on a fully diluted basis. Year-to-date net income in 2003 included a $12.5 million gain related to the disposition of the company's Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of operations, while the net loss in 2002 included a charge of $49.5 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the adoption, effective July July: see month. 1, 2001, of the new goodwill accounting standard. For the nine months ended March 31, 2003, the company generated cash flow from operating activities of $3.8 million, which represents a $0.3 million or 7.3% increase over cash flow from operating activities in the 2002 year-to-date period. Jack Brucker, President and Chief Executive Officer, said, "Cash collections remain strong and demonstrate the efforts we have made to improve overall revenue quality. Our operating statistics, including average patient charge and average daily cash collections, also have trended positively as we continue to grow our business through new and renewal contracts and improve our operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. performance." For the nine months ended March 31, 2003, the company generated earnings before interest, income taxes, depreciation and amortization (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) of $49.0 million compared with negative EBITDA of $13.6 million in the corresponding period in 2002. EBITDA in the 2003 period included a $12.5 million gain from the disposal of the company's Latin American operations while the 2002 amount included a $49.5 million charge resulting from the adoption of the new goodwill accounting standard effective July 1, 2001. Excluding those items, the company's EBITDA for the nine months was $36.5 million in 2003 compared with $35.9 million in 2002. 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 a more comprehensive analysis of its ability to meet future debt service, capital expenditure, and working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. . Additionally, the company's management uses this information to evaluate the performance of its operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon . EBITDA is not intended to represent cash provided by operating activities as defined by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting 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 EBITDA to cash provided by operating activities in the accompanying table. During the third quarter of 2003, the company was awarded renewal contracts to remain the exclusive ambulance provider to medical facilities at Ohio State University Ohio State University, main campus at Columbus; land-grant and state supported; coeducational; chartered 1870, opened 1873 as Ohio Agricultural and Mechanical College, renamed 1878. There are also campuses at Lima, Mansfield, Marion, and Newark. in Columbus, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. , and to continue as the 911 provider in Jeffersontown, Kentucky Jeffersontown is a city in Jefferson County, Kentucky, United States. The population was 26,633 at the 2000 census. As of 2005, the population is estimated to be 26,100, making Jeffersontown the eleventh largest city in Kentucky. , which is near Louisville Louisville (l  `ēvĭl), city (1990 pop. 269,063), seat of Jefferson co., NW Ky., at the Falls of the Ohio; inc. 1780. . The company was also awarded a new contract to provide
ambulancebilling services to the City of Tucson, Arizona Tucson (pronounced /ˈtusɑn/, Spanish: Tucsón [tuk'son] .
During the fourth quarter of 2003, the company was awarded a new, four-year exclusive contract in Las Cruces, New Mexico Las Cruces is a city in Doña Ana County, New Mexico, United States. As of the 2000 census, the city had a total population of 74,267. The population was 86,268 as of the 2006 census estimate, making it the second largest city in the state. , in which Rural/Metro's Southwest Southwest or south west is the ordinal direction halfway between south and west, the opposite of northeast. Southwest or south west may also refer to:
tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. communities. The Aurora, Colorado The City of Aurora is the third most populous city in the State of Colorado and the 59th most populous city in the United States.[5] The municipality is split between Arapahoe County and Adams County, with a small portion lying in Douglas County. , City Council also unanimously approved a two-year contract renewal for the company to continue as the city's exclusive emergency services emergency services Emergency care '…services …necessary to prevent death or serious impairment of health and, because of the danger to life or health, require the use of the most accessible hospital available and equipped to furnish those services' provider. As stated earlier, the company continues to work to complete its analysis with respect to the anticipated restatement of prior-period financial statements. Brucker continued, "The fundamental strength and improvements we have made in recent years remain unchanged, as the anticipated restatement adjustments will have no impact on current cash balances or previously reported cash flows from operating activities. We are making every effort to complete the filing of our Form 10-Q Form 10-Q See 10-Q. for the third quarter ended March 31, 2003 as soon as possible." As previously announced, the company remains out of compliance with certain of the reporting obligations contained in its amended credit facility and bond indenture Bond indenture Contract that sets forth the promises of a bond issuer and the rights of investors. bond indenture See indenture. due to delays in the filing of its Form 10-Q for the third quarter as well as any amendments to its previous public filings which may be required. The restatement adjustments will also cause the company to be out of compliance with one of the financial covenants contained in its amended credit facility. The company continues to work with its lenders on a variety of alternatives to address these issues. Additionally, Rural/Metro will appear before the Nasdaq Qualifications Panel to discuss the company's current noncompliance noncompliance failure of the owner to follow instructions, particularly in administering medication as prescribed; a cause of a less than expected response to treatment. noncompliance with the timely reporting requirements for continued listing on the Nasdaq SmallCap Market. The company currently remains in compliance with all other continued listing standards. The company's common stock will continue to be traded under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors "RURLE" pending the Panel's final determination or until the Form 10-Q for the fiscal 2003 third quarter is filed. Following is a summary of certain of the company's key operating statistics:
Q1 '02 Q2 '02 Q3 '02 Q4 '02
(9/30/01) (12/31/01) (3/31/02) (6/30/02)
-------------- ------------- ------------- ------------- -------------
Net Revenue $116.5 $114.3 $120.5 $120.3
million million million million
-------------- ------------- ------------- ------------- -------------
Average EMS
Patient
Charge (1) $267 $271 $281 $284
-------------- ------------- ------------- ------------- -------------
EMS
Transports (2) 265,076 256,292 265,207 259,090
-------------- ------------- ------------- ------------- -------------
Q1 '03 Q2 '03 Q3 '03
(9/30/02) (12/31/02) (3/31/03)
-------------- ------------- ------------- -------------
Net Revenue $125.6 $123.4 $125.3
million million million
-------------- ------------- ------------- -------------
Average EMS
Patient
Charge (1) $287 $291 $301
-------------- ------------- ------------- -------------
EMS
Transports (2) 263,194 256,710 261,627
-------------- ------------- ------------- -------------
(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. For the purpose of this calculation, revenue
related to capitated contracts is excluded.
(2) EMS transports are defined as actual patient transports, including
those under capitated contract arrangements.
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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . For more information, visit the company's web site at www.ruralmetro.com. Except for historical information herein, this press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, among others, the final determination of the restatement adjustments relating to the allowance for Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. , Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. and contractual discounts and doubtful accounts and the effect thereof, if any, on the company's third-quarter results reported herein; the company's ability to retain its Nasdaq SmallCap Market listing; the company's ability to collect its accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying ; competitors' actions; litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. matters; and the company's ability to sustain operating cash flow, secure new contracts, retain existing contracts, improve earnings and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , further enhance the efficiency of the collection process, effectively manage collateral collateral (kəlăt`ərəl), something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although requirements and costs related to its insurance coverage, and the company's ability to cure or obtain a waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. of covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the non-compliance or an amendment to its credit facility or indenture An agreement declaring the benefits and obligations of two or more parties, often applicable in the context of Bankruptcy and bond trading. The term indenture primarily describes secured contracts and has several applications in U.S. law. . Additional factors that could affect the company are described in its Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. as amended for the year ended June June: see month. 30, 2002 under the caption "Risk Factors" in the Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial 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.
RURAL/METRO CORPORATION
RECONCILIATION OF EBITDA TO CASH FLOW PROVIDED BY OPERATING ACTIVITIES
For the nine months ended March 31, 2003 and 2002
2003 2002
----------- ------------
(Unaudited) (Unaudited)
Net income (loss) $17,946 $(43,169)
Plus:
Depreciation and amortization 10,105 12,250
Interest expense, net 20,732 18,716
Income tax provision (benefit) 246 (1,405)
----------- ------------
EBITDA 49,029 (13,608)
Plus (minus):
Gain on disposal of Latin American
operations (12,488) -
Cumulative effect of change in accounting
principle - 49,513
----------- ------------
Supplemental EBITDA 36,541 35,905
Plus (minus):
Interest expense, net (20,732) (18,716)
Income tax provision (benefit) (246) 1,405
Gain on sale of property and equipment (162) (294)
Provision for doubtful accounts 55,332 51,662
Equity earnings net of distributions
received (1,640) (614)
Amortization of deferred financing costs 1,963 591
Amortization of debt discount 19 19
Changes in operating assets and
liabilities (67,262) (66,406)
----------- ------------
Cash flow provided by operating
activities $3,813 $3,552
=========== ============
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 a
more comprehensive analysis of its ability to meet future debt
service, capital expenditure, 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 $12.5 million gain on the disposal of the Latin American
operations in 2003 and the $49.5 million cumulative effect charge
resulting from the adoption of the new goodwill standard in 2002 are
required items in the determination of net income (loss) for the
respective periods under generally accepted accounting principles. The
company has provided a supplemental EBITDA measure which excludes
these items as it believes that such information is relevant and
useful to analysts, investors, creditors and other interested parties.
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For the three and nine months ended March 31, 2003 and 2002
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
March 31, 2003 March 31, 2002
2003 2002 2003 2002
--------- --------- --------- ---------
NET REVENUE $125,259 $120,508 $374,288 $351,315
--------- --------- --------- ---------
OPERATING EXPENSES
Payroll and employee
benefits 70,789 65,392 212,134 199,618
Provision for doubtful
accounts 17,590 18,146 55,332 51,517
Depreciation and
amortization 3,332 3,773 10,081 11,715
Other operating expenses 24,404 22,625 70,149 66,513
--------- --------- --------- ---------
Total operating expenses 116,115 109,936 347,696 329,363
--------- --------- --------- ---------
OPERATING INCOME 9,144 10,572 26,592 21,952
Interest expense, net (7,355) (6,241) (20,732) (18,716)
Other - - - 9
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES AND THE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 1,789 4,331 5,860 3,245
INCOME TAX (PROVISION)
BENEFIT (136) (200) (246) 1,405
--------- --------- --------- ---------
INCOME FROM CONTINUING
OPERATIONS BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 1,653 4,131 5,614 4,650
INCOME FROM DISCONTINUED
OPERATIONS (including gain on
disposal of Latin American
operations of $12,488 in
2002) - 233 12,332 1,694
--------- --------- --------- ---------
INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 1,653 4,364 17,946 6,344
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE - - - (49,513)
--------- --------- --------- ---------
NET INCOME (LOSS) 1,653 4,364 17,946 (43,169)
Less: Accretion of redeemable
preferred stock (1,202) - (2,403) -
--------- --------- --------- ---------
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCK $451 $4,364 $15,543 $(43,169)
========= ========= ========= =========
INCOME (LOSS) PER SHARE
Basic-
Income from continuing
operations before
cumulative effect of
change in accounting
principle less accretion
of redeemable preferred
stock $0.03 $0.27 $0.20 $0.31
Income from discontinued
operations - 0.02 0.77 0.11
--------- --------- --------- ---------
Income before cumulative
effect of change in
accounting principle less
accretion of redeemable
preferred stock 0.03 0.29 0.97 0.42
Cumulative effect of
change in accounting
principle - - - (3.28)
--------- --------- --------- ---------
Net income (loss)
applicable to each common
share $0.03 $0.29 $0.97 $(2.86)
========= ========= ========= =========
Diluted-
Income from continuing
operations before
cumulative effect of
change in accounting
principle less accretion
of redeemable preferred
stock $0.03 $0.27 $0.18 $0.30
Income from discontinued
operations - 0.01 0.70 0.11
--------- --------- --------- ---------
Income before cumulative
effect of change in
accounting principle less
accretion of redeemable
preferred stock $0.03 $0.28 $0.88 $0.41
Cumulative effect of
change in accounting
principle - - - (3.23)
--------- --------- --------- ---------
Net income (loss)
applicable to each common
share $0.03 $0.28 $0.88 $(2.82)
========= ========= ========= =========
AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC 16,153 15,120 16,096 15,084
========= ========= ========= =========
AVERAGE NUMBER OF
SHARES OUTSTANDING - DILUTED 17,243 15,626 17,680 15,331
========= ========= ========= =========
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