SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) February 14, 2002
Cross Country, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-33169 13-4066229
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(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification
incorporation) No.)
6551 Park of Commerce Blvd., N.W., Suite 200, Boca Raton, FL 33487
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(Address of Principal Executive Offices) (Zip Code)
(561) 998-2232
(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, If Changed Since Last Report.)
ITEM 5. Other Events.
Incorporated by reference is a press release issued by the Company
on February 14, 2002, which is attached hereto as Exhibit 1.1.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit Description
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1.1 Press release issued by the Company on February 14, 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CROSS COUNTRY, INC.
BY: /s/ Emil Hensel
------------------
Name: Emil Hensel
Title: Chief Financial Officer
Date: February 20, 2002
CROSS COUNTRY REPORTS 4TH QUARTER RESULTS; REVENUES UP 48%; INCOME FROM
CONTINUING OPERATIONS UP 235%
BOCA RATON, FL, Feb. 15 -- Cross Country, Inc. (Nasdaq: CCRN) today reported
revenue of $144.3 million for the three months ended December 31, 2001, an
increase of 48% over revenue of $97.2 million for the same period in the prior
year. Income from continuing operations for the three months ended December 31,
2001 was $6.5 million, or $0.21 per diluted share (EPS), compared to $1.9
million or $0.08 per diluted share for the three months ended December 31, 2000.
Including the effects of discontinued operations and the extraordinary loss from
the early extinguishment of debt resulting from funds received in Cross
Country's initial public offering in October 2001, net income for the fourth
quarter of 2001 was $2.1 million or $0.07 per diluted share. Earnings before
interest, taxes, depreciation, amortization and non-recurring indirect
transaction costs (EBITDA) for the three months ended December 31, 2001 was
$17.1 million compared to $12.3 million for the same period in the prior year,
an increase of 39%. The quarter was favorably impacted primarily by the strong
results contributed by the Company's Healthcare Staffing segment coupled with
reduced interest expense as a result of the paydown of approximately $134.5
million in debt, and a reduction in the company's effective corporate income tax
rate.
"We are very pleased with the strength of our fourth quarter and full year
results," said Joseph A. Boshart, President and Chief Executive Officer. "Each
of our mature businesses broke revenue records for the year and are positioned
to continue this growth into 2002. Our growth continues to be driven by the
strong results generated by our travel staffing business, but is augmented by
our complementary businesses. The strong recognition of the Cross Country brand
and our quality of customer service continue to make our businesses successful.
Additionally, our balance sheet is financially strong, sound and structured for
flexibility."
For the year ended December 31, 2001, Cross Country reported revenue of $500.5
million, an increase of 36% over the same period in the prior year. Income from
continuing operations and its associated diluted EPS for the year ended December
31, 2001 were $13.7 million and $0.54 compared to $6.7 million and $0.29,
respectively, for the year ended December 31, 2000. EBITDA for the full year
2001 was $56.2 million compared to $45.1 million for the same period in the
prior year, an increase of 24%.
HEALTHCARE STAFFING
In the fourth quarter, Cross Country's Healthcare Staffing segment, which
comprises travel staffing, clinical research trials staffing and per diem
staffing, had its strongest quarter of 2001. Revenue for the three months ended
December 2001 was $134.5 million, an increase
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of 45% over the same period in the prior year. This growth was driven primarily
by increased average hourly bill rates in all businesses, increased numbers of
field employees in both the travel nursing and allied health staffing as well as
revenue generated by the acquisition of ClinForce in March, 2001. Contribution
income, defined as earnings before interest, taxes, depreciation, amortization
and corporate expenses not specifically identified to a reporting segment, for
the three months ended December 31, 2001 was $21.8 million, an increase of 38%
over the same period in the prior year. This growth was primarily due to the
same factors that drove revenue growth, but partially offset by an increase in
field staff compensation and professional liability expense.
For the year ended December 31, 2001 revenue was $464.3 million, an increase of
32% over the same period in the prior year and contribution income was $73.2
million compared to $61.9 million for the year ended December 31, 2000.
OTHER HUMAN CAPITAL MANAGEMENT SERVICES
Cross Country's Other Human Capital Management Services segment, which comprises
the education and training, healthcare consulting services, physician search and
resource management services, generated revenue of $9.8 million for the three
months ended December 31, 2001, an increase of 113% over the same period in the
prior year. This increase was driven primarily by the business generated by the
Heritage Professional Education LLC and Gill/Balsano acquisitions in December
2000 and May 2001, respectively. Contribution income for the three months ended
December 31, 2001 was $0.1 million, an increase of $0.1 million over the same
period in the prior year, was driven primarily by the factors that drove revenue
growth and partially offset by expenditures associated with the start-up of
E-staff, Cross Country's new web-enabled scheduling technology, and the effects
of the slowing economy on the search business.
For the year ended December 31, 2001, revenue was $36.2 million, an increase of
115% over the same period in the prior year and contribution income was $3.6
million compared to $1.2 million for the year ended December 31, 2000.
EXPECTATIONS FOR 2002
The following statements are based on current expectations. These statements are
forward-looking, and actual results may differ materially.
With respect to Cross Country's financial targets for the full year 2002, the
company is projecting revenue to be between $610 and $640 million and EBITDA to
be between $67 and $70 million. First quarter 2002 earnings are expected to be
in the range of $0.19 to $0.20 per diluted share and grow sequentially
thereafter aggregating to a range of $0.98 to $1.02 per diluted share for the
full year 2002. EPS estimates include the effect of the adoption of the
Statement of Financial Accounting Standard (SFAS) No. 142, "Goodwill and Other
Intangible Assets", issued by the Financial Accounting Standards Board. The
effect of SFAS No. 142 is projected to have a $0.22 per share impact on the
Company's full year 2002 EPS estimates reducing annual pre-tax amortization
expense from $14.2 million to $3.1 million. It is Cross Country's intention to
update its guidance quarterly.
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SUBSEQUENT EVENTS:
On January 3, 2002, Cross Country announced the purchase of the assets of the
NovaPro healthcare staffing division (Tampa, FL) of HRLogic Holdings, Inc., a
professional employer organization for a purchase price of $7,125,000.
Cross Country, Inc. is a leading provider of healthcare staffing services in the
United States. The company has an active client base of over 2,500 hospitals,
pharmaceutical companies and other healthcare providers across all 50 states.
More information on Cross Country, Inc. can be obtained from our website,
www.crosscountry.com.
A listen-only simulcast of Cross Country's fourth quarter conference call will
be available online beginning at 10:00 EST on Friday, February 15th at
www.crosscountry.com, www.companyboardroom.com or by visiting any of the
investor sites in CCBN's Individual Investor Network such as America Online's
Personal Finance Channel, Fidelity Investments(R) (Fidelity.com) and others.
Institutional investors can access the call via CCBN's password-protected event
management site, StreetEvents (www.streetevents.com). A playback recording of
the call may be accessed by calling 1-800-405-2236, reservation #444013,
beginning at 12:00 p.m. on February 15th until 6:00 p.m. on Wednesday, February
20th.
This release contains forward-looking statements. Statements that are predictive
in nature, that depend upon or refer to future events or conditions or that
include words such as "expects," "anticipates", "intends", "plans", "believes",
"estimates", and similar expressions are forward-looking statements. These
statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results and performance to be materially different from any
future results or performance expressed or implied by these forward-looking
statements. These factors include the following our ability to attract and
retain qualified nurses and other healthcare personnel, costs and availability
of short-term leases for our travel nurses, demand for the healthcare services
we provide, both nationally and in the regions in which we operate, the
functioning of our information systems, the effect of existing or future
government regulation and federal and state legislative and enforcement
initiatives on our business, our clients' ability to pay us for our services,
our ability to successfully implement our acquisition and development
strategies, the effect of liabilities and other claims asserted against us, the
effect of competition in the markets we serve, and other factors set forth under
the caption "RISK FACTORS" in the Company's Prospectus dated October 24, 2001.
Although we believe that these statements are based upon reasonable assumptions,
we cannot guarantee future results. Given these uncertainties, the
forward-looking statements discussed on this press release might not occur.
While it is the Company's intention to update its guidance quarterly, it should
not be assumed that our silence over time means that actual events are occurring
as expressed or implied in such forward-looking statements.
For further information, please contact:
Brian Hekman, Director, Corporate Communications at 800-998-5187
Susan Eccher, Director, Investor Relations at 877-686-9779 both of Cross
Country, Inc.
Three financial charts follow.
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CROSS COUNTRY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
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2001 2002 2001 2002
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(UNAUDITED)
Revenue from services $ 144,310 $ 97,230 $ 500,503 $ 367,690
Operating expenses:
Direct operating expenses 108,165 72,690 374,651 273,095
Selling, general and administrative expenses 19,080 12,480 68,393 49,027
Bad debt expense (44) (248) 1,274 433
Depreciation 789 382 2,579 1,324
Amortization 3,776 3,483 15,157 13,701
Non-recurring indirect transaction costs - 733 - 1,289
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Total operating expenses 131,766 89,520 462,054 338,869
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Income from operations 12,544 7,710 38,449 28,821
Other expenses:
Interest expense, net 1,515 3,804 14,422 15,435
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Income from continuing operations before income taxes 11,029 3,906 24,027 13,386
Income tax expense (4,506) (1,961) (10,364) (6,730)
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Income from continuing operations 6,523 1,945 13,663 6,656
Discontinued operations 337 (662) (207) (2,058)
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Net income before extraordinary items 6,860 1,283 13,456 4,598
Extraordinary loss on early extinguishment of debt (4,784) - (4,784) -
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Net income $ 2,076 $ 1,283 $ 8,672 $ 4,598
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Net income/(loss) per common share- basic:
Income from continuing oeprations $ 0.22 $ 0.08 $ 0.55 $ 0.29
Discontinued operations 0.01 (0.03) (0.01) (0.09)
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Net income before extraordinary items 0.23 0.05 0.54 0.20
Extraordinary loss from early extinguishment of debt (0.16) - (0.19) -
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Net income $ 0.07 $ 0.05 $ 0.35 $ 0.20
========== ========= ========== ==========
Net income/(loss) per common share- diluted:
Income from continuing operations $ 0.21 $ 0.08 $ 0.54 $ 0.29
Discontinued operations 0.01 (0.03) (0.01) (0.09)
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Net income before extraordinary items 0.22 0.05 0.53 0.20
Extraordinary loss from early extinguishment of debt (0.15) - (0.19) -
---------- --------- ---------- ---------
Net income $ 0.07 $ 0.05 $ 0.34 $ 0.20
========== ========= ========== ==========
Weighed average common shares outstanding - basic 29,852 23,205 24,881 23,205
Weighted average common shares outstanding - diluted 31,219 23,205 25,223 23,205
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CROSS COUNTRY, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
DECEMBER 31,
2001 2000
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Current assets:
Cash $ 2,644 $ -
Accounts receivable, net 87,415 65,087
Other current assets 15,005 11,614
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Total current assets 105,064 76,701
Property and equipment, net 11,399 6,169
Goodwill, net 217,606 199,373
Other identifiable intangible assets, net 27,835 35,242
Other assets 76 140
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Total assets $ 361,980 $ 317,625
========= =========
Current liabilities:
Accounst payable and accrued expenses $ 3,253 $ 10,246
Accrued employee compensation and benefits 27,023 17,431
Curent portion of long-term debt 2,425 12,400
Note payable 1,365 484
Other current liabilities 1,832 1,765
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Total current liabilities 35,898 42,326
Interest rate swap 2,509 -
Deferred income taxes 8,570 7,571
Long-term debt 45,076 144,388
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Total liabilities 92,053 194,285
Commitments and contingencies
Stockholders' equity:
Common stock 3 2
Additional paid-in capital 258,152 119,081
Other stockholders' equity 11,772 4,257
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Total stockholders' equity 269,927 123,340
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Total liabilities and stockholders' equity $ 361,980 $ 317,625
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SEGMENT DATA
(AMOUNTS IN THOUSANDS)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
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2001 2000 2001 2000
Revenues: ---------- --------- ---------- ----------
(UNAUDITED)
Healthcare staffing $ 134,494 $ 92,631 $ 464,343 $ 350,856
Other human capital management services 9,816 4,599 36,160 16,834
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$ 144,310 $ 97,230 $ 500,503 $ 367,690
========== ========= ========== ==========
Contribution income(a):
Healthcare staffing $ 21,762 $ 15,714 $ 73,196 $ 61,937
Other human capital management services 145 (1) 3,647 1,240
Unallocated corporate overhead (4,798) (3,405) (20,658) (18,042)
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EBITDA(b) $ 17,109 $ 12,308 $ 56,185 $ 45,135
========== ========= ========== ==========
Financial Statistics
(unaudited)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
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2001 2000 2001 2000
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EBITDA - ($000)(b) $ 17,109 $ 12,308 $ 56,185 $ 45,135
EBITDA as % of revenue 11.9% 12.7% 11.2% 12.3%
FTE's (c) 5,337 4,222 4,816 4,170
Weeks worked 69,381 54,886 250,432 216,840
Average contract revenue per week $ 1,934 $ 1,686 $ 1,851 $ 1,617
(a) Contribution income is computed by the Company as operating income, less
unallocated corporate overhead. Contribution income is not a measure of
financial performance under generally accepted accounting principles and is
only used by management when assessing segment performance.
(b) Defined as income before interest, income taxes, depreciation, amortization
and non-recurring indirect transaction costs. EBITDA should not be
considered a measure of financial performance under generally accepted
accounting principles. Items excluded from EBITDA are significant
components in understanding and assessing financial performance. EBITDA is
a key measure used by management to evaluate our operations and provide
useful information to investors. EBITDA should not be considered in
isolation or as an alternative to net income, cash flows generated by
operations, investing or financing activities, or other financial statement
data presented in the consolidated financial statements as indicators of
financial performance or liquidity. Because EBITDA is not a measurement
determined in accordance with generally accepted accounting principles and
is thus susceptible to varying calculations, EBITDA as presented may not be
comparable to other similarly titled measures of other companies.
(c) FTE's represent the average number of contract staffing personnel on a
full-time equivalent basis.
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