EXHIBIT 99.1
[Rural/Metro Corporation logo]
CONTACT: Liz Merritt, Rural/Metro Corporation
(480) 606-3337
Financial Dynamics, Investor Relations
Jim Byers (Investors)
(415) 439-4504
For immediate release
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RURAL/METRO ANNOUNCES STRONG, PRELIMINARY
FOURTH-QUARTER AND FISCAL 2005 RESULTS
>> Fourth-quarter net revenue up 10.1% to $137.4 million
>> Full-year net revenue up 7.6% to $531.1 million
>> 5% Growth in Quarterly Transport Volume
>> 7% increase in Quarterly Net/Net EMS Average Patient Charge
SCOTTSDALE, Ariz. (Sept. 13, 2005) - Rural/Metro Corporation (Nasdaq/SC: RURL),
a leading provider of medical transportation and private fire protection
services, announced today preliminary, unaudited financial results for its
fourth quarter and fiscal year ended June 30, 2005.
The company has issued preliminary financial results as it completes its
evaluation of internal control over financial reporting pursuant to Section 404
of the Sarbanes-Oxley Act of 2002, and expects to file its Form 10-K and final
results with the Securities and Exchange Commission on September 28, 2005. The
company expects final results will be consistent with preliminary, unaudited
results announced today.
For the fourth quarter ended June 30, 2005, net revenue increased 10.1% to
$137.4 million, compared to $124.8 million in the fourth quarter of the prior
year. For the fiscal year ended June 30, 2005, net revenue increased 7.6% to
$531.1 million, compared to $493.8 million for fiscal 2004. Revenue growth for
the quarter and fiscal year primarily reflects a growing demand for medical
transportation and subscription fire protection services, as well as increasing
rates in both the medical transportation and fire protection businesses.
Fourth quarter net income for 2005 was $73.4 million or $2.95 per diluted share
(including $71.5 million or $2.87 per diluted share relating to the deferred tax
adjustment described below) compared to net income of $1.3 million, or $0.06 per
diluted share in the prior year fourth quarter. For the fiscal year ended June
30, 2005, the company reported net income of $77.9 million or $3.23 per diluted
share (including $71.5 million or $2.96 per diluted share relating to the
deferred tax adjustment described below) compared to net income of $6.2 million,
or $0.28 per diluted share, in fiscal 2004. Fourth quarter and full year net
income for 2005 includes a $71.5 million deferred income tax benefit resulting
from the reversal of valuation allowances associated with the company's deferred
tax assets, primarily those relating to the company's net operating loss
carryfowards, as realization of such benefit is currently considered likely. In
addition to the deferred tax adjustment, fiscal year 2005 net income includes an
$8.2 million loss on early debt extinguishment reported in the third quarter of
2005.
Jack Brucker, President and Chief Executive Officer, said, "Our continued strong
financial performance reflects the targeted growth we have generated during the
year to meet the steadily increasing demand for our services combined with
operating improvements and cost-management initiatives that we have achieved.
Mr. Brucker continued, "We remain focused on continued market growth through the
addition of select, new 911 contracts and the retention of contracts in
locations where we have a well-established and growing operational base;
advancing the technologies to ensure high-quality, reliable services and to
protect the safety of our work force. Additionally, we continue to implement
programs to enhance cash-flow performance, which is a foundation of our
deleveraging strategy."
REVENUE TRENDING
Medical Transportation and Related Services: Fourth-quarter medical
transportation and related services net revenue increased 10.3% to $121.7
million, compared to $110.3 million in the prior year's fourth quarter.
For fiscal 2005, medical transportation and related services net revenue
increased 7.2% to $469.1 million, compared to $437.5 million for the prior year.
Same-service-area medical transportation and related service revenue increased
9.7% for the fourth quarter ended June 30, 2005, and 6.7% for the full fiscal
year, when compared to the same prior-year periods. The company attributed
approximately half of the revenue growth in this business to higher transport
volume and half of the growth to rate increases.
Fire Services: Fourth-quarter fire services net revenue increased 8.3% to $13.9
million, compared to $12.8 million in the prior year's fourth quarter.
For fiscal 2005, fire services revenue increased 9.3% to $53.6 million, compared
to $49.1 million for the prior year.
The company primarily attributes the quarterly growth in revenue as a result of
an increase in the number of new fire subscription customers and, to a lesser
extent, an increase in rates.
EBITDA RESULTS
For the fourth quarter, earnings before interest, taxes, depreciation and
amortization (EBITDA) grew by 8.0% to $12.1 million, compared to $11.2 million
for the prior-year comparable period. For the 12 months ended June 30, 2005,
EBITDA was $47.6 million, compared to $47.9 million for the same period a year
ago. Fiscal 2005 EBITDA includes the $8.2 million loss on early extinguishment
of debt.
EBITDA is defined as earnings from continuing operations before interest expense
(including costs related to early extinguishment of debt), interest income,
income taxes, depreciation and amortization. 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.
QUARTERLY OPERATING STATISTICS
Medical transport volume in the fourth quarter grew 5.1% to 272,556 transports,
compared to 259,275 transports provided in the same period of the prior year.
Net/net EMS average patient charge ("net/net EMS APC") for the fourth quarter
increased 7.3% to $334, compared to $311 for the fourth quarter of 2004. The
company considers net/net EMS APC its best approximation of cash collected per
transport. Average daily cash deposits for the fiscal year ended June 30, 2005
totaled $1.9 million, compared to $1.8 million for the same period in fiscal
2004.
Average quarterly days sales outstanding ("DSO") was 46 days for the three
months ended June 30, 2005, compared to 45 days for the same period a year ago.
The increase is primarily due to the company's exit in March 2005 from a
fixed-price contract in Fort Worth, Texas.
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:
- ----------------------- ----------------- ----------------- -------------- -------------- -------------
Q4 '04 Q1 '05 Q2 '05 Q3 '05 Q4 '05
(6/30/04) (9/30/04) (12/31/04) (3/31/05) (6/30/05)
- ----------------------- ----------------- ----------------- -------------- -------------- -------------
Medical Transports (1) 259,275 265,298 264,124 278,645 272,556
- ----------------------- ----------------- ----------------- -------------- -------------- -------------
Net/Net EMS APC (2) $311 $317 $324 $330 $334
- ----------------------- ----------------- ----------------- -------------- -------------- -------------
DSO (QTD) (3) 45 45 45 43 46
- ----------------------- ----------------- ----------------- -------------- -------------- -------------
(1) Medical transports from continuing operations are defined as actual
emergency and non-emergency medical transports.
(2) Net/net EMS APC is defined as gross medical transport revenue less
provisions for Medicare, Medicaid and other third-party payers, and
doubtful accounts, divided by emergency and non-emergency transports from
continuing operations.
(3) DSO is defined as average accounts receivable divided by consolidated net
revenue per day, as calculated on a quarter-to-date basis.
ABOUT RURAL/METRO
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 today beginning at 8
a.m. Pacific/11 a.m. Eastern. To access the conference call, dial 800-289-0496
(domestic) or (913) 981-5519 (international). The call also will be broadcast
live on the company's web site at www.ruralmetro.com. A replay will be available
from 12 Noon Eastern through midnight October 11, 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 4850307. 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, timely completion of the fiscal 2005
audit reflecting results consistent with the unaudited results presented herein;
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 margins. 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)
RURAL/METRO CORPORATION
CONSOLIDATED BALANCE SHEET
(unaudited)
(in thousands, except share data)
June 30, June 30,
2005 2004
--------------- ---------------
ASSETS
Current assets:
Cash $ 17,688 $ 16,372
Accounts receivable, net 71,986 65,348
Current portion of accounts receivable from insurers 2,831 4,000
Inventories 12,743 11,738
Current portion of deferred tax assets 6,647 -
Prepaid expenses and other 9,618 8,512
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TOTAL CURRENT ASSETS 121,513 105,970
Property and equipment, net 43,155 40,283
Goodwill 39,344 41,100
Deferred tax assets 66,031 -
Insurance deposits 9,037 9,244
Other assets 23,987 18,610
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TOTAL ASSETS $ 303,067 $ 215,207
=============== ===============
LIABILITIES, MINORITY INTEREST
AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 14,738 $ 13,833
Accrued liabilities 44,487 46,202
Deferred revenue 19,429 17,541
Current portion of long-term debt 1,497 1,495
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TOTAL CURRENT LIABILITIES 80,151 79,071
Long-term debt, net of current portion 305,478 304,057
Other liabilities 27,147 22,796
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TOTAL LIABILITIES 412,776 405,924
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Minority interest 1,456 1,509
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Stockholders' equity (deficit):
Common stock, $.01 par value 40,000,000 shares authorized, 24,117,499
and 21,890,816 shares issued and outstanding at June 30, 2005 and 2004,
respectively 241 219
Additional paid-in capital 150,200 147,075
Treasury stock (1,239) (1,239)
Accumulated deficit (260,367) (338,281)
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TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (111,165) (192,226)
--------------- ---------------
TOTAL LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY (DEFICIT) $ 303,067 $ 215,207
=============== ===============
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For The Three Months Ended June 30, 2005 and 2004
(unaudited)
(in thousands, except per share amounts)
% of % of
2005 Net revenue 2004 Net revenue
-----------------------------------------------------
Net revenue $ 137,432 100.0% $ 124,815 100.0%
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Operating expenses:
Payroll and employee benefits 69,706 50.7% 64,049 51.3%
Provision for doubtful accounts 23,239 16.9% 22,802 18.3%
Depreciation and amortization 2,817 2.0% 2,569 2.1%
Other operating expenses 32,224 23.4% 28,327 22.7%
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Total operating expenses 127,986 93.1% 117,747 94.3%
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Operating income 9,446 6.9% 7,068 5.7%
Interest expense (7,540) -5.5% (7,137) -5.7%
Interest income 78 0.1% 30 0.0%
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Income (loss) from continuing operations before income
taxes and minority interest 1,984 1.4% (39) 0.0%
Income tax benefit (provision) 71,700 52.2% (11) 0.0%
Minority interest (62) 0.0% 873 0.7%
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Income from continuing operations 73,622 53.6% 823 0.7%
Income (loss) from discontinued operations (197) -0.1% 440 0.4%
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NET INCOME 73,425 53.4% 1,263 1.0%
Less: Net income allocated to redeemable nonconvertible participating
preferred stock under the two-class method - (286)
Less: Accretion of redeemable nonconvertible participating
preferred stock - (1,707)
Add: Credit related to settlement of redeemable nonconvertible
participating preferred stock with common shares - 10,066
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NET INCOME APPLICABLE TO COMMON STOCK $ 73,425 $ 9,336
============= =============
Income (loss) per share:
Basic -
Income from continuing operations applicable to common stock $ 3.14 $ 0.53
Income (loss) from discontinued operations
applicable to common stock (0.01) 0.02
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NET INCOME $ 3.13 $ 0.55
============= =============
Diluted -
Income from continuing operations applicable to common stock $ 2.96 $ 0.04
Income (loss) from discontinued operations
applicable to common stock (0.01) 0.02
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NET INCOME $ 2.95 $ 0.06
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Average number of common shares outstanding - Basic 23,475 16,910
============= =============
Average number of common shares outstanding - Diluted 24,910 22,561
============= =============
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
For The Year Ended June 30, 2005 and 2004
(unaudited)
(in thousands, except per share amounts)
% of % of
2005 Net revenue 2004 Net revenue
----------------------------- --------------------------
Net revenue $ 531,084 100.0% $ 493,773 100.0%
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Operating expenses:
Payroll and employee benefits 272,574 51.3% 254,757 51.6%
Provision for doubtful accounts 87,298 16.4% 86,717 17.6%
Depreciation and amortization 11,046 2.1% 10,990 2.2%
Other operating expenses 119,033 22.4% 111,217 22.5%
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Total operating expenses 489,951 92.3% 463,681 93.9%
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Operating income 41,133 7.7% 30,092 6.1%
Interest expense (29,579) -5.6% (29,243) -5.9%
Interest income 305 0.1% 97 0.0%
Loss on early extinguishment of debt (8,170) -1.5% - 0.0%
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Income from continuing operations before
income taxes and minority interest 3,689 0.7% 946 0.2%
Income tax benefit (provision) 71,318 13.4% (279) -0.1%
Minority interest (102) 0.0% 475 0.1%
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Income from continuing operations 74,905 14.1% 1,142 0.2%
Income from discontinued operations 3,009 0.6% 5,069 1.0%
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Net income 77,914 14.7% 6,211 1.3%
Less: Net income allocated to redeemable nonconvertible
participating preferred stock under the two-class method - (1,262)
Less: Accretion of redeemable nonconvertible participating
preferred stock - (6,320)
Add: Credit related to settlement of redeemable nonconvertible
participating preferred stock with common shares - 10,066
--------------- --------------
Net income applicable to common stock $ 77,914 $ 8,695
=============== ==============
Income per share:
Basic -
Income from continuing operations applicable to common stock $ 3.31 $ 0.28
Income from discontinued operations applicable to common stock 0.13 0.24
--------------- --------------
Net income $ 3.44 $ 0.52
=============== ==============
Diluted -
Income from continuing operations applicable to common stock $ 3.11 $ 0.05
Income from discontinued operations applicable to common stock 0.12 0.23
--------------- --------------
Net income $ 3.23 $ 0.28
=============== ==============
Average number of common shares outstanding - Basic 22,674 16,645
=============== ==============
Average number of common shares outstanding - Diluted 24,105 21,817
=============== ==============
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For The Year Ended June 30, 2005 and 2004
(unaudited)
(in thousands)
2005 2004
--------------- ---------------
Cash flows from operating activities:
Net income $ 77,914 $ 6,211
Adjustments to reconcile net income to cash provided by
operating activities -
Provision for doubtful accounts 88,030 91,477
Deferred income taxes (71,464) -
Depreciation and amortization 11,630 12,256
Non-cash insurance adjustments (6,725) (722)
Non-cash portion of loss on early extinguishment of debt 5,668 -
Amortization of deferred financing costs 2,604 2,753
Accretion of 12.75% Senior Discount Notes 2,066 -
Loss on sale of property and equipment 454 39
Earnings (losses) of minority shareholder 102 (475)
Tax benefit from the exercise of stock options 97 -
Amortization of debt discount 17 26
Change in assets and liabilities -
Accounts receivable (94,668) (96,397)
Accounts receivable from insurers 1,429 (1,195)
Inventories (1,005) (234)
Prepaid expenses and other (3,218) (1,957)
Insurance deposits (5,311) (2,449)
Other assets 81 (7,586)
Accounts payable 750 55
Accrued liabilities 2,168 (11,920)
Deferred revenue 1,888 1,227
Other liabilities 12,348 23,392
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NET CASH PROVIDED BY OPERATING ACTIVITIES 24,855 14,501
--------------- ---------------
Cash flows from investing activities:
Capital expenditures (12,521) (8,646)
Proceeds from the sale of property and equipment 149 225
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NET CASH USED IN INVESTING ACTIVITIES (12,372) (8,421)
--------------- ---------------
Cash flows from financing activities:
Repayment of credit facility due December 2006 (152,555) (1,000)
Repayment of 7.875% Senior Notes due March 2008 (150,000) -
Cash provided under Term Loan B 135,000 -
Issuance of 9.875% Senior Subordinated Notes 125,000 -
Issuance of 12.75% Senior Discount Notes 50,209 -
Repayment of debt (8,393) (1,248)
Cash paid for debt issuance costs (13,478) (515)
Issuance of common stock 3,050 494
--------------- ---------------
NET CASH USED IN FINANCING ACTIVITIES (11,167) (2,269)
--------------- ---------------
Increase in cash 1,316 3,811
Cash, beginning of year 16,372 12,561
--------------- ---------------
CASH, END OF YEAR $ 17,688 $ 16,372
=============== ===============
Non-cash investing activities:
Landlord funded leasehold improvements for new
corporate headquarters $ 1,828 $ -
=============== ===============
RURAL/METRO CORPORATION
RECONCILIATION OF EBITDA TO CASH FLOW
PROVIDED BY OPERATING ACTIVITIES
(unaudited)
(in thousands)
Three Months Ended Twelve Months Ended
------------------ -------------------
June 30, June 30,
-------- --------
2005 2004 2005 2004
--------------- --------------- -------------- ---------------
Net income $ 73,425 $ 1,263 $ 77,914 $ 6,211
Add back:
Depreciation and amortization 2,867 2,808 11,632 12,256
Interest expense 7,540 7,137 29,579 29,243
Interest income (83) (30) (310) (97)
Income tax (benefit) provision (71,654) 24 (71,257) 311
--------------- --------------- -------------- ---------------
EBITDA 12,095 11,202 47,558 47,924
Increase (decrease):
Interest expense (7,540) (7,137) (29,579) (29,243)
Interest income 83 30 310 97
Income tax benefit (provision) 71,654 (24) 71,257 (311)
Provision for doubtful accounts 23,429 23,302 88,030 91,477
Deferred income taxes (71,464) - (71,464) -
Non-cash insurance adjustments (6,725) (722) (6,725) (722)
Non-cash portion of loss on early extinguishment of debt - - 5,668 -
Amortization of deferred financing costs 672 670 2,604 2,753
Accretion of 12.75% Senior Discount Notes 1,586 - 2,066 -
Loss (gain) on sale of property and equipment 328 (65) 454 39
Earnings (losses) of minority shareholder 62 (873) 102 (475)
Tax benefit from the exercise of stock options (62) - 97 -
Amortization of debt discount - 7 17 26
Changes in operating assets and liabilities (7,440) (16,655) (85,540) (97,064)
--------------- --------------- -------------- ---------------
Net cash provided by operating actvities $ 16,678 $ 9,735 $ 24,855 $ 14,501
=============== =============== ============== ===============