Exhibit 99.1
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2004
(dollars in thousands)
Rural/Metro Corp. | Pro Forma Adjustments | Pro Forma Rural/Metro Corp. | Pro Forma Rural/Metro Operating Company, LLC* | |||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash | $ | 10,109 | $ | (4,588 | )(1) | $ | 249 | $ | 249 | |||||||
(2,722 | )(2) | |||||||||||||||
(2,550 | )(3) | |||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $65,142 and $59,430 at December 31, 2004 and June 30, 2004, respectively | 67,421 | — | 67,421 | 67,421 | ||||||||||||
Receivable from insurers | 8,371 | — | 8,371 | 8,371 | ||||||||||||
Inventories | 12,017 | — | 12,017 | 12,017 | ||||||||||||
Prepaid expenses and other assets | 8,353 | — | 8,353 | 8,353 | ||||||||||||
Total current assets | 106,271 | (9,860 | ) | 96,411 | 96,411 | |||||||||||
Property and equipment, net | 41,904 | — | 41,904 | 41,904 | ||||||||||||
Goodwill | 40,850 | — | 40,850 | 40,850 | ||||||||||||
Insurance deposits | 6,453 | — | 6,453 | 6,453 | ||||||||||||
Other assets | 11,889 | 10,250 | (4) | 16,104 | 14,394 | |||||||||||
(6,035 | )(5) | |||||||||||||||
$ | 207,367 | $ | (5,645 | ) | $ | 201,722 | $ | 200,012 | ||||||||
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’/MEMBERS’ DEFICIT | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 9,520 | $ | (560 | )(6) | $ | 8,960 | $ | 9,520 | |||||||
Accrued liabilities | 55,208 | (4,588 | )(1) | 50,620 | 50,620 | |||||||||||
Deferred revenue | 19,008 | — | 19,008 | 19,008 | ||||||||||||
Current portion of long-term debt | 1,515 | 1,200 | (7) | 2,715 | 2,715 | |||||||||||
Total current liabilities | 85,251 | (3,948 | ) | 81,303 | 81,863 | |||||||||||
Long-term debt, net of current portion | 303,440 | (302,472 | )(8) | 309,768 | 259,768 | |||||||||||
308,800 | (9) | |||||||||||||||
Deferred income taxes | 650 | — | 650 | 650 | ||||||||||||
Total liabilities | 389,341 | 2,380 | 391,721 | 342,281 | ||||||||||||
Minority interest | 1,481 | — | 1,481 | 1,481 | ||||||||||||
Stockholders’ deficit | (183,455 | ) | (2,550 | )(3) | (191,480 | ) | ||||||||||
Members’ deficit | (6,035 | )(5) | (143,750 | ) | ||||||||||||
560 | (6) | |||||||||||||||
$ | 207,367 | $ | (5,645 | ) | $ | 201,722 | $ | 200,012 | ||||||||
(1) | To record the payment of accrued interest relating to the existing senior credit facility and existing senior notes. |
(2) | To record the payment of transaction fees and expenses. |
(3) | To record the estimated tender premium and consent solicitation fee related to the existing senior notes. |
(4) | To record deferred financing costs associated with our new indebtedness. |
(5) | To reflect the write-off of deferred financing costs associated with the existing credit facility and senior notes. |
(6) | To record the estimated tax benefit relating to the write-off of deferred financing fees and tender premium and consent solicitation fee on existing senior notes at an effective tax rate of 6.5%. |
(7) | To record the current portion of the new Term Loan B. |
(8) | To reflect the repayment of $152.6 million of long-term debt related to the existing senior secured credit facility and $149.9 million related to the existing 7 7/8% senior notes. |
(9) | To record $118.8 million of long-term debt related to the new senior secured credit facility, $140.0 million of long-term debt related to the new senior subordinated notes offered hereby and $50.0 million gross proceeds of new senior discount notes offered hereby. |
* | Reflects the elimination of the senior discount notes and related debt issuance costs retained by Rural/Metro Corp. |
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UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED JUNE 30, 2004
(dollars in thousands)
Rural/Metro Corp. | Pro Forma Adjustments | Pro Forma Rural/Metro Corp. | Pro Forma Adjustments | Pro Forma Rural/Metro Operating Company, LLC | ||||||||||||||||
Net revenue | $ | 526,603 | $ | — | $ | 526,603 | $ | — | $ | 526,603 | ||||||||||
Operating expenses | ||||||||||||||||||||
Payroll and employee benefits | 277,549 | — | 277,549 | — | 277,549 | |||||||||||||||
Provision for doubtful accounts | 87,268 | — | 87,268 | — | 87,268 | |||||||||||||||
Depreciation and amortization | 11,404 | — | 11,404 | — | 11,404 | |||||||||||||||
Other operating expenses | 114,855 | — | 114,855 | — | 114,855 | |||||||||||||||
Total operating expenses | 491,076 | — | 491,076 | — | 491,076 | |||||||||||||||
Operating income | 35,527 | — | 35,527 | — | 35,527 | |||||||||||||||
Interest expense | (29,243 | ) | 25,952 | (1) | ||||||||||||||||
2,872 | (2) | |||||||||||||||||||
(26,380 | )(3) | |||||||||||||||||||
(1,276 | )(4) | (28,075 | ) | 6,445 | (6) | |||||||||||||||
155 | (7) | (21,475 | ) | |||||||||||||||||
Interest income | 97 | — | 97 | — | 97 | |||||||||||||||
Income from continuing operations before income taxes and minority interest | 6,381 | 1,168 | 7,549 | 6,600 | 14,149 | |||||||||||||||
Income tax provision | (300 | ) | (55 | )(5) | (355 | ) | (310 | )(5) | (665 | ) | ||||||||||
Minority interest | 475 | — | 475 | — | 475 | |||||||||||||||
Income from continuing operations | 6,556 | 1,113 | 7,669 | 6,290 | 13,959 | |||||||||||||||
Loss from discontinued operations | (345 | ) | — | (345 | ) | — | (345 | ) | ||||||||||||
Net income | $ | 6,211 | $ | 1,113 | $ | 7,324 | $ | 6,290 | $ | 13,614 | ||||||||||
(See accompanying notes)
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UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE LAST TWELVE MONTHS ENDED DECEMBER 31, 2004
(dollars in thousands)
Rural/Metro Corp. | Pro Forma Adjustments | Pro Forma Rural/Metro Corp. | Pro Forma Adjustments | Pro Forma Company, LLC | ||||||||||||||||
Net revenue | $ | 540,724 | $ | — | $ | 540,724 | $ | — | $ | 540,724 | ||||||||||
Operating expenses | ||||||||||||||||||||
Payroll and employee benefits | 285,967 | — | 285,967 | — | 285,967 | |||||||||||||||
Provision for doubtful accounts | 87,872 | — | 87,872 | — | 87,872 | |||||||||||||||
Depreciation and amortization | 11,478 | — | 11,478 | — | 11,478 | |||||||||||||||
Other operating expenses | 115,700 | — | 115,700 | — | 115,700 | |||||||||||||||
Total operating expenses | 501,017 | — | 501,017 | — | 501,017 | |||||||||||||||
Operating income | 39,707 | — | 39,707 | — | 39,707 | |||||||||||||||
Interest expense | (28,869 | ) | 25,670 | (1) | ||||||||||||||||
2,679 | (2) | |||||||||||||||||||
(26,956 | )(3) | |||||||||||||||||||
(1,275 | )(4) | (28,751 | ) | 6,445 | (6) | |||||||||||||||
155 | (7) | (22,151 | ) | |||||||||||||||||
Interest income | 225 | — | 225 | — | 225 | |||||||||||||||
Income from continuing operations before income taxes and minority interest | 11,063 | 118 | 11,181 | 6,600 | 17,781 | |||||||||||||||
Income tax provision | (634 | ) | (7 | ) | (641 | ) | (376 | )(5) | (1,017 | ) | ||||||||||
Minority interest | 966 | — | 966 | — | 966 | |||||||||||||||
Income from continuing operations | 11,395 | 111 | 11,506 | 6,224 | 17,730 | |||||||||||||||
Loss from discontinued operations | (491 | ) | — | (491 | ) | — | (491 | ) | ||||||||||||
Net income | $ | 10,904 | $ | 111 | $ | 11,015 | $ | 6,224 | $ | 17,239 | ||||||||||
(See accompanying notes)
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UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 2004
(dollars in thousands)
Rural/Metro Corp. | Pro Forma Adjustments | Pro Forma Rural/Metro Corp. | Pro Forma Adjustments | Pro Forma Rural/Metro Operating Company, LLC | ||||||||||||||||
Net revenue | $ | 273,680 | $ | — | $ | 273,680 | $ | — | $ | 273,680 | ||||||||||
Operating expenses | ||||||||||||||||||||
Payroll and employee benefits | 146,149 | — | 146,149 | — | 146,149 | |||||||||||||||
Provision for doubtful accounts | 42,054 | — | 42,054 | — | 42,054 | |||||||||||||||
Depreciation and amortization | 5,677 | — | 5,677 | — | 5,677 | |||||||||||||||
Other operating expenses | 57,083 | — | 57,083 | — | 57,083 | |||||||||||||||
Total operating expenses | 250,963 | — | 250,963 | — | 250,963 | |||||||||||||||
Operating income | 22,717 | — | 22,717 | — | 22,717 | |||||||||||||||
Interest expense | (14,834 | ) | 13,118 | (1) | ||||||||||||||||
1,339 | (2) | |||||||||||||||||||
(13,640 | )(3) | |||||||||||||||||||
(638 | )(4) | (14,655 | ) | 3,125 | (6) | |||||||||||||||
78 | (7) | (11,452 | ) | |||||||||||||||||
Interest income | 179 | — | 179 | — | 179 | |||||||||||||||
Income from continuing operations before income taxes and minority interest | 8,062 | 179 | 8,241 | 3,203 | 11,444 | |||||||||||||||
Income tax provision | (523 | ) | (12 | )(5) | (535 | ) | (208 | )(5) | (743 | ) | ||||||||||
Minority interest | 28 | — | 28 | — | 28 | |||||||||||||||
Income from continuing operations | 7,567 | 167 | 7,734 | 2,995 | 10,729 | |||||||||||||||
Loss from discontinued operations | (93 | ) | — | (93 | ) | — | (93 | ) | ||||||||||||
Net income | $ | 7,474 | $ | 167 | $ | 7,641 | $ | 2,995 | $ | 10,636 | ||||||||||
(See accompanying notes)
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UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 2003
(dollars in thousands)
Rural/Metro Corp. | Pro Forma Adjustments | Rural/Metro Corp. | Pro Forma Adjustments | Pro Forma Rural/Metro Operating Company, LLC | ||||||||||||||||
Net revenue | $ | 259,559 | $ | — | $ | 259,559 | $ | — | $ | 259,559 | ||||||||||
Operating expenses | ||||||||||||||||||||
Payroll and employee benefits | 137,731 | — | 137,731 | — | 137,731 | |||||||||||||||
Provision for doubtful accounts | 41,450 | — | 41,450 | — | 41,450 | |||||||||||||||
Depreciation and amortization | 5,603 | — | 5,603 | — | 5,603 | |||||||||||||||
Other operating expenses | 56,238 | — | 56,238 | — | 56,238 | |||||||||||||||
Total operating expenses | 241,022 | — | 241,022 | — | 241,022 | |||||||||||||||
Operating income | 18,537 | — | 18,537 | — | 18,537 | |||||||||||||||
Interest expense | (15,208 | ) | 13,400 | (1) | ||||||||||||||||
1,532 | (2) | |||||||||||||||||||
(13,065 | )(3) | |||||||||||||||||||
(638 | )(4) | (13,979 | ) | 3,125 | (6) | |||||||||||||||
78 | (7) | (10,776 | ) | |||||||||||||||||
Interest income | 51 | — | 51 | — | 51 | |||||||||||||||
Income from continuing operations before income taxes and minority interest | 3,380 | 1,229 | 4,609 | 3,203 | 7,812 | |||||||||||||||
Income tax provision | (189 | ) | (69 | )(5) | (258 | ) | (179 | )(5) | (437 | ) | ||||||||||
Minority interest | (463 | ) | — | (463 | ) | — | (463 | ) | ||||||||||||
Income from continuing operations | 2,728 | 1,160 | 3,888 | 3,024 | 6,912 | |||||||||||||||
Income from discontinued operations | 53 | — | 53 | — | 53 | |||||||||||||||
Net income | $ | 2,781 | $ | 1,160 | $ | 3,941 | $ | 3,024 | $ | 6,965 | ||||||||||
(See accompanying notes)
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Notes to Pro Forma Statements of Income
(1) | To eliminate interest expense from the existing senior credit facility and senior notes. |
(2) | To eliminate amortization of deferred financing costs from the existing senior credit facility and senior notes. |
(3) | Adjusted to record interest expense on: |
(a) | the new senior discount notes assuming gross proceeds of $50.0 million at a rate of 12.50% compounded semi-annually; |
(b) | the new senior subordinated notes assuming aggregate principal amount of $140.0 million at a rate of 9.75%; and |
(c) | the new senior secured credit facility assuming borrowings of $120.0 million and an effective rate of LIBOR + 3.50%, a commitment fee of 0.50% on the $20.0 million undrawn revolving credit facility and a participation fee at an effective rate of 3.65% of the $15.0 million aggregate amount of the prefunded letter of credit facility. |
(4) | To record amortization of $10.3 million of deferred financing costs associated with the new senior secured credit facility over 6 years and the senior subordinated notes and senior discount notes over 10 years and 11 years, respectively. |
(5) | To adjust income tax expense as a result of additional interest expense, at an effective rate of 4.7% for the year ended June 30, 2004, 5.7% for the last twelve months ended December 31, 2004, 6.5% for the six months ended December 31, 2004 and 5.6% for the six months ended December 31, 2003. |
(6) | To eliminate interest expense on the new senior discount notes issued by Rural/Metro and assuming gross proceeds of $50.0 million at a rate of 12.50% compounded semi-annually. |
(7) | To eliminate amortization of deferred costs associated with the new senior discount notes issued by Rural/Metro. |
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