Exhibit 99.1
EMSC NEWS- FOR IMMEDIATE RELEASE
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Contact: | Deborah Hileman |
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| Vice President, Corporate Communications & Investor Relations |
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| 303-495-1210 |
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| Deborah.hileman@emsc.net |
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EMERGENCY MEDICAL SERVICES ANNOUNCES
SECOND QUARTER DILUTED EPS of $0.35
Highlights:
· Diluted earnings per share were $0.35 for the second quarter, an increase of 40% compared to the same quarter last year;
· Net revenue was $516.7 million for the second quarter, an increase of 8.0% compared to the same quarter last year;
· Adjusted EBITDA was $52.4 million for the second quarter, an increase of 16.4% compared to the same quarter last year.
Greenwood Village, Colorado (August 7, 2007) — Emergency Medical Services Corporation (NYSE: EMS) (EMSC or the Company) today announced results for the second quarter and six months ended June 30, 2007.
William A. Sanger, EMSC Chairman and Chief Executive Officer, said, “EMSC continues to produce year-over-year growth in diluted earnings per share, revenue and Adjusted EBITDA.
“We are particularly pleased with our recent acquisitions. At EmCare during the quarter, we acquired two emergency physician practices. In July, AMR expanded its presence in the growing Las Vegas market with the acquisition of MedicWest Ambulance, and entered a new market with the acquisition of Abbott Ambulance in St. Louis. These acquisitions, consistent with our strategies to expand in current markets and enter new markets, provide excellent potential for additional growth.”
Financial Statement Presentation Changes
The Company has modified its presentation of interest income derived from restricted funds held for its insurance programs, following communications with the Securities and Exchange Commission. Interest income related to these restricted funds, which was previously included as an offset to insurance expense, is now being recorded as a separate line item, “Interest income from restricted assets,” and is included in the Company’s presentation of Adjusted EBITDA. Prior periods have been reclassified for comparative purposes. The components included in Adjusted EBITDA are the same as the components included in EBITDA in prior presentations.
Results of Operations for the Three Months Ended June 30, 2007
For the quarter ended June 30, 2007, EMSC generated net revenue of $516.7 million, an increase of 8.0%, compared to the same quarter last year. The Company generated Adjusted EBITDA of $52.4 million, an increase of 16.4%, compared to the same quarter last year. A reconciliation of non-GAAP to GAAP financial measures is included in this news release.
EMSC generated net income of $15.1 million, or $0.35 per diluted share on 43.2 million weighted average diluted shares outstanding for the second quarter of 2007, compared to net income of $10.7 million, or $0.25 per diluted share on 42.4 million weighted average diluted shares outstanding, an increase of 40.0% over the same quarter last year. The improvement in earnings is due primarily to higher net revenues per patient encounter, an increase in patient encounters and favorable results from our risk mitigation programs.
Operating cash flows for the quarter ended June 30, 2007, were $23.1 million, compared to $75.6 million provided during the same quarter last year. Operating cash flows in the quarter ended June 30, 2007 were negatively impacted by increases in accounts receivable. These increases were the result of significant revenue growth at EmCare and collection delays in both operating segments. The collection delays are primarily related to the implementation of our new billing system in certain AMR operating markets, and delays by fiscal intermediaries in releasing physician provider numbers for EmCare provider billings. The intermediary delays are a recent industry issue that is being addressed by the Centers for Medicare and Medicaid Services (CMS). The Company expects to collect the receivables that have been delayed pursuant to both issues. Operating cash flows in the quarter ended June 30, 2006 were positively impacted by the collection of an $11.0 million 2005 income tax receivable.
Net cash used in investing activities was $17.2 million for the quarter ended June 30, 2007, compared to $22.6 million for the same quarter last year. The variance relates to lower insurance collateral and lower net capital expenditures.
Net cash used in financing activities was $6.3 million for the quarter ended June 30, 2007, compared to $22.3 million for the same quarter last year. The variance relates primarily to an unscheduled payment of approximately $10.0 million on the senior secured credit facility in May 2006.
Results of Operations for the Six Months Ended June 30, 2007
For the six months ended June 30, 2007, EMSC generated net revenue of $1.04 billion, an increase of 9.8% compared to the same period last year. The Company generated Adjusted EBITDA of $106.7 million, an increase of 27.1% compared to the same period last year. Adjusted EBITDA increased 28.4%, excluding restructuring charges of $2.2 million recorded during the six months ended June 30, 2007 and $0.9 million recorded during the same period in 2006.
EMSC generated net income of $31.7 million, or $0.74 per diluted share ($0.77 per diluted share excluding restructuring charges) on 43.1 million weighted average diluted shares outstanding for the six months ended June 30, 2007, compared to net income of $18.0 million or $0.42 per
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diluted share ($0.44 per diluted share excluding restructuring charges) on 42.4 million weighted average diluted shares outstanding, an increase of 76.2% over the same period last year.
Operating cash flows for the six months ended June 30, 2007 were $19.3 million, compared to $112.4 million for the same period last year. Operating cash flows in the six months ended June 30, 2007 were negatively impacted by increases in accounts receivable. These increases were the result of significant revenue growth at EmCare and collection delays in both operating segments. The collection delays are primarily related to the implementation of our new billing system in certain AMR operating markets, and delays by fiscal intermediaries in releasing physician provider numbers for EmCare provider billings. The Company expects to collect the receivables that have been delayed pursuant to both issues. Operating cash flows in the six months ended June 30, 2006 were positively impacted by collection of approximately $24.0 million related to 2005 hurricane and income tax receivables.
Net cash used in investing activities was $23.2 million for the six months ended June 30, 2007, compared to $41.8 million for the same period last year. The variance relates to lower insurance collateral and lower net capital expenditures.
Net cash used in financing activities was $5.9 million for the six months ended June 30, 2007, compared to $19.0 million for the same period last year. The variance relates primarily to an unscheduled payment of approximately $10.0 million on the senior secured credit facility in May 2006.
Segment Results
EMSC operates two business segments: American Medical Response, Inc. (AMR), the Company’s healthcare transportation services segment, and EmCare Holdings Inc. (EmCare), the Company’s emergency department and hospital-based management services segment.
American Medical Response (AMR)
For the quarter ended June 30, 2007, AMR generated net revenue of $295.3 million, an increase of 0.5% compared to the same quarter last year. Adjusted EBITDA was $23.4 million, a decrease of 4.4% compared to the same quarter last year, or 7.9% excluding restructuring charges in 2006. The decrease is primarily the result of the loss of a portion of AMR’s 9-1-1 contract with Los Angeles County in June 2006 and the restructuring of our operations in that market in the first quarter of 2007, partially offset by the net impact of revenue growth during the period and lower insurance costs.
For the six months ended June 30, 2007, AMR generated net revenue of $603.4 million, an increase of 2.4% compared to the same period last year. Adjusted EBITDA was $48.3 million, an increase of 1.5% compared to the same period last year, or 4.2% excluding restructuring charges of $2.2 million recorded during the six months ended June 30, 2007, and $0.9 million recorded during the same period in 2006.
EmCare
For the quarter ended June 30, 2007, EmCare generated net revenue of $221.4 million, an increase of 19.9% compared to the same quarter last year, resulting primarily from volume and
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revenue increases on new and existing contracts. Adjusted EBITDA was $29.1 million, an increase of 41.2% compared to the same quarter last year. The increase in Adjusted EBITDA resulted primarily from the net impact of revenue growth during the period and from lower insurance costs.
For the six months ended June 30, 2007, EmCare generated net revenue of $436.6 million, an increase of 21.8% compared to the same period last year. Adjusted EBITDA was $58.4 million, an increase of 60.8% compared with the same period last year.
Guidance
The Company reaffirms its guidance of $205.0 to $210.0 million of Adjusted EBITDA, and diluted EPS of $1.30 to $1.37. This guidance does not include acquisitions.
Conference Call
EMSC management will host a conference call and live audio webcast on Tuesday, August 7, 2007, at 11:00 a.m. EDT, to discuss the Company’s financial results. A 30-day online replay will be available approximately one hour following the conclusion of the live broadcast. A link to the live broadcast and online replay is available on the Investor Relations section of the Company’s website at www.emsc.net.
About Emergency Medical Services Corporation
Emergency Medical Services Corporation (EMSC) is a leading provider of emergency medical services in the United States. EMSC operates two business segments: American Medical Response, Inc. (AMR), the Company’s healthcare transportation services segment, and EmCare Holdings Inc. (EmCare), the Company’s emergency department and hospital-based management services segment. AMR is the leading provider of ambulance services in the United States. EmCare is the nation’s leading provider of outsourced emergency department staffing and related management services. In 2006, EMSC provided services to nearly 10 million patients in more than 2,000 communities nationwide. EMSC is headquartered in Greenwood Village, Colorado. For additional information visit www.emsc.net.
Forward-Looking Statements
Certain statements and information herein may be deemed to be “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. Any forward-looking statements herein are made as of the date of this press release, and EMSC undertakes no duty to update or revise any such statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are described in EMSC’s filings with the SEC from time to time, including in the section entitled “Risk Factors” in the Company’s most recent Annual Report on Form 10-K and subsequent periodic reports. Among the factors that could cause future results to differ materially from those provided in this press
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release are: the impact on our revenue of changes in transport volume, mix of insured and uninsured patients, and third party reimbursement rates and methods; the adequacy of our insurance coverage and insurance reserves; potential penalties or changes to our operations if we fail to comply with extensive and complex government regulation of our industry, both as it exists now and as it may change in the future; our ability to recruit and retain qualified physicians and other healthcare professionals, and enforce our non-compete agreements with our physicians; the loss of one or more members of our senior management team; the outcome of government investigations of certain of our business practices; our ability to generate cash flow to service our debt obligations and fund the cost of capital expenditures to maintain and upgrade our vehicle fleet and medical equipment; and the loss of existing contracts and the accuracy of our assessment of costs under new contracts.
Non-GAAP Financial Measures Reconciliation
This press release includes presentations of Adjusted EBITDA, which is defined as net income before equity in earnings of unconsolidated subsidiary, income tax expense, loss on early debt extinguishment, interest and other income, realized gain (loss) on investments, interest expense, interest income from restricted assets and depreciation and amortization. Adjusted EBITDA is commonly used by management and investors as a performance measure and a liquidity indicator. Adjusted EBITDA is not considered a measure of financial performance under U.S. generally accepted accounting principles (GAAP), and the items excluded from Adjusted EBITDA are significant components in understanding and assessing our financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to such GAAP measures as net income, cash flows provided by or used in operating, investing or financing activities or other financial statement data presented in our consolidated financial statements as an indicator of financial performance or liquidity. Reconciliations of non-GAAP financial measures are provided in this news release. However, reconciliation for the forward-looking Adjusted EBITDA projections presented herein is not being provided due to the number of variables in the projected Adjusted EBITDA range. Since Adjusted EBITDA is not a measure determined in accordance with GAAP and is susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies.
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EMERGENCY MEDICAL SERVICES CORPORATION
Consolidated Statements of Operations and Other Information
Including a Reconciliation of Income from Operations to Adjusted EBITDA(1)
(unaudited; in thousands, except shares, per share data and other information)
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| Three months ended June 30, |
| Six months ended June 30, |
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| 2007 |
| 2006 |
| 2007 |
| 2006 |
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Net revenue |
| $ | 516,712 |
| $ | 478,451 |
| $ | 1,040,031 |
| $ | 947,575 |
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Compensation and benefits |
| 357,309 |
| 330,927 |
| 712,241 |
| 656,974 |
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Operating expenses |
| 76,262 |
| 69,203 |
| 156,258 |
| 135,657 |
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Insurance expense |
| 17,476 |
| 20,566 |
| 37,777 |
| 44,796 |
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Selling, general and administrative expenses |
| 14,901 |
| 13,170 |
| 28,206 |
| 28,009 |
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Depreciation and amortization expense |
| 17,577 |
| 16,360 |
| 34,356 |
| 32,204 |
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Restructuring charges |
| — |
| 919 |
| 2,242 |
| 919 |
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Income from operations |
| 33,187 |
| 27,306 |
| 68,951 |
| 49,016 |
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Interest income from restricted assets |
| 1,660 |
| 1,362 |
| 3,375 |
| 2,685 |
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Interest expense |
| (11,395 | ) | (11,445 | ) | (22,629 | ) | (22,737 | ) | ||||
Realized gain (loss) on investments |
| 22 |
| (306 | ) | 59 |
| (525 | ) | ||||
Interest and other income |
| 532 |
| 780 |
| 1,189 |
| 1,132 |
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Loss on early debt extinguishment |
| — |
| (193 | ) | — |
| (193 | ) | ||||
Income before income taxes and equity in earnings of unconsolidated subsidiary |
| 24,006 |
| 17,504 |
| 50,945 |
| 29,378 |
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Income tax expense |
| (9,012 | ) | (6,788 | ) | (19,474 | ) | (11,416 | ) | ||||
Equity in earnings of unconsolidated subsidiary |
| 101 |
| 2 |
| 255 |
| 17 |
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Net income |
| $ | 15,095 |
| $ | 10,718 |
| $ | 31,726 |
| $ | 17,979 |
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Basic earnings per common share |
| $ | 0.36 |
| $ | 0.26 |
| $ | 0.76 |
| $ | 0.43 |
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Diluted earnings per common share |
| $ | 0.35 |
| $ | 0.25 |
| $ | 0.74 |
| $ | 0.42 |
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Weighted average common shares outstanding, basic |
| 41,544,901 |
| 41,497,245 |
| 41,533,093 |
| 41,497,238 |
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Weighted average common shares outstanding, diluted |
| 43,211,661 |
| 42,356,192 |
| 43,120,416 |
| 42,377,804 |
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Other Information |
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EmCare patient encounters |
| 1,807,602 |
| 1,631,705 |
| 3,551,624 |
| 3,179,310 |
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AMR ambulance transports |
| 702,621 |
| 724,854 |
| 1,430,028 |
| 1,457,615 |
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AMR weighted transports |
| 715,462 |
| 740,816 |
| 1,457,132 |
| 1,488,876 |
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Reconciliation of income from operations to Adjusted EBITDA |
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Income from operations |
| $ | 33,187 |
| $ | 27,306 |
| $ | 68,951 |
| $ | 49,016 |
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Depreciation and amortization expense |
| 17,577 |
| 16,360 |
| 34,356 |
| 32,204 |
| ||||
Interest income from restricted assets |
| 1,660 |
| 1,362 |
| 3,375 |
| 2,685 |
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Adjusted EBITDA |
| $ | 52,424 |
| $ | 45,028 |
| $ | 106,682 |
| $ | 83,905 |
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(1) These statements provide a reconciliation of Adjusted EBITDA to income from operations; and a reconciliation of income from operations to net income.
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EMERGENCY MEDICAL SERVICES CORPORATION
Reconciliation of Adjusted EBITDA to Cash Flows Provided by Operating Activities
(unaudited; in thousands)
|
| Three months ended June 30, |
| Six months ended June 30, |
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| 2007 |
| 2006 |
| 2007 |
| 2006 |
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Adjusted EBITDA |
| $ | 52,424 |
| $ | 45,028 |
| $ | 106,682 |
| $ | 83,905 |
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Interest paid |
| (10,864 | ) | (10,922 | ) | (21,609 | ) | (21,671 | ) | ||||
Change in accounts receivable |
| (35,783 | ) | 11,903 |
| (63,934 | ) | 31,881 |
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Change in other operating assets/liabilities |
| 17,164 |
| 29,496 |
| (3,718 | ) | 18,164 |
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Equity based compensation |
| 400 |
| 329 |
| 800 |
| 629 |
| ||||
Dividends received |
| — |
| — |
| 416 |
| — |
| ||||
Gain on disposal of property, plant and equipment |
| (170 | ) | (670 | ) | (181 | ) | (717 | ) | ||||
Other |
| (45 | ) | 475 |
| 824 |
| 224 |
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Net cash provided by operating activities |
| $ | 23,126 |
| $ | 75,639 |
| $ | 19,280 |
| $ | 112,415 |
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EMERGENCY MEDICAL SERVICES CORPORATION
Reconciliation of Segment Income from Operations to Adjusted EBITDA
(unaudited; in thousands)
|
| Three months ended June 30, |
| Six months ended June 30, |
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| 2007 |
| 2006 |
| 2007 |
| 2006 |
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AMR |
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Income from operations |
| $ | 8,934 |
| $ | 10,782 |
| $ | 19,408 |
| $ | 20,720 |
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Depreciation and amortization expense |
| 13,711 |
| 13,051 |
| 27,461 |
| 25,661 |
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Interest income from restricted assets |
| 719 |
| 611 |
| 1,440 |
| 1,222 |
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Adjusted EBITDA(1) |
| 23,364 |
| 24,444 |
| 48,309 |
| 47,603 |
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EmCare |
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Income from operations |
| 24,253 |
| 16,524 |
| 49,543 |
| 28,296 |
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Depreciation and amortization expense |
| 3,866 |
| 3,309 |
| 6,895 |
| 6,543 |
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Interest income from restricted assets |
| 941 |
| 751 |
| 1,935 |
| 1,463 |
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Adjusted EBITDA |
| 29,060 |
| 20,584 |
| 58,373 |
| 36,302 |
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Total |
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Income from operations |
| 33,187 |
| 27,306 |
| 68,951 |
| 49,016 |
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Depreciation and amortization expense |
| 17,577 |
| 16,360 |
| 34,356 |
| 32,204 |
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Interest income from restricted assets |
| 1,660 |
| 1,362 |
| 3,375 |
| 2,685 |
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Adjusted EBITDA |
| $ | 52,424 |
| $ | 45,028 |
| $ | 106,682 |
| $ | 83,905 |
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(1) AMR Adjusted EBITDA includes $2.2 million of restructuring charges for the six months ended June 30, 2007, and $0.9 million for the three and six months ended June 30, 2006.
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EMERGENCY MEDICAL SERVICES CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
|
| June 30, |
| December 31, |
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| 2007 |
| 2006 |
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| (Unaudited) |
| (Audited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
| $ | 29,484 |
| $ | 39,336 |
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Trade and other accounts receivable, net |
| 481,123 |
| 416,450 |
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Other current assets |
| 137,669 |
| 76,703 |
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| 648,276 |
| 532,489 |
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Non-current assets: |
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Property, plant and equipment, net |
| 150,420 |
| 147,162 |
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Goodwill and other intangible assets, net |
| 337,028 |
| 339,117 |
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Other long-term assets |
| 269,662 |
| 299,449 |
| ||
Total assets |
| $ | 1,405,386 |
| $ | 1,318,217 |
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Liabilities and Equity |
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Current liabilities |
| $ | 300,186 |
| $ | 300,962 |
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Long-term debt |
| 480,481 |
| 475,616 |
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Insurance reserves and other long-term liabilities |
| 205,890 |
| 155,599 |
| ||
Total liabilities |
| 986,557 |
| 932,177 |
| ||
Total equity |
| 418,829 |
| 386,040 |
| ||
Total liabilities and equity |
| $ | 1,405,386 |
| $ | 1,318,217 |
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EMERGENCY MEDICAL SERVICES CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited; in thousands)
|
| Three months ended June 30, |
| Six months ended June 30, |
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| 2007 |
| 2006 |
| 2007 |
| 2006 |
| ||||
Cash Flows from Operating Activities |
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Net income |
| $ | 15,095 |
| $ | 10,718 |
| $ | 31,726 |
| $ | 17,979 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation, amortization, deferred taxes and other |
| 26,650 |
| 23,522 |
| 55,206 |
| 44,391 |
| ||||
Changes in operating assets/liabilities, net of acquisitions: |
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Trade and other accounts receivable |
| (35,783 | ) | 11,903 |
| (63,934 | ) | 31,881 |
| ||||
Insurance accruals |
| (5,020 | ) | 1,528 |
| 4 |
| 8,987 |
| ||||
Other assets and liabilities |
| 22,184 |
| 27,968 |
| (3,722 | ) | 9,177 |
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Net cash provided by operating activities |
| 23,126 |
| 75,639 |
| 19,280 |
| 112,415 |
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Cash Flows from Investing Activities |
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Purchases of property, plant and equipment, net |
| (14,256 | ) | (15,396 | ) | (22,452 | ) | (28,296 | ) | ||||
Acquisition of businesses, net of cash received |
| (477 | ) | (840 | ) | (477 | ) | (840 | ) | ||||
Insurance collateral |
| (2,123 | ) | (6,883 | ) | (3,033 | ) | (12,515 | ) | ||||
Other investing activities |
| (306 | ) | 563 |
| 2,715 |
| (194 | ) | ||||
Net cash used in investing activities |
| (17,162 | ) | (22,556 | ) | (23,247 | ) | (41,845 | ) | ||||
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Cash Flows from Financing Activities |
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EMSC issuance of class A common stock |
| 76 |
| — |
| 249 |
| — |
| ||||
EMSC equity issuance costs |
| — |
| (90 | ) | — |
| (912 | ) | ||||
Repayments of capital lease obligations and other debt |
| (1,058 | ) | (11,937 | ) | (3,391 | ) | (13,923 | ) | ||||
Increase in bank overdrafts |
| (5,330 | ) | (10,237 | ) | (2,743 | ) | (4,123 | ) | ||||
Net cash used in financing activities |
| (6,312 | ) | (22,264 | ) | (5,885 | ) | (18,958 | ) | ||||
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Change in cash and cash equivalents |
| (348 | ) | 30,819 |
| (9,852 | ) | 51,612 |
| ||||
Cash and cash equivalents, beginning of period |
| 29,832 |
| 38,841 |
| 39,336 |
| 18,048 |
| ||||
Cash and cash equivalents, end of period |
| $ | 29,484 |
| $ | 69,660 |
| $ | 29,484 |
| $ | 69,660 |
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Non-cash Activities |
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Re-financing of equipment under existing capital lease |
| $ | — |
| $ | — |
| $ | 8,038 |
| $ | — |
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10