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) May 7, 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)
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Not Applicable
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(Former Name or Former Address, If Changed Since Last Report.)
ITEM 5. Other Events and Regulation FD Disclosure.
Incorporated by reference is a press release issued by the Company on
May 7, 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 May 7, 2002
2
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: May 8, 2002
3
Exhibit 1.1
4
Cross Country Reports 1st Quarter Results;
Revenues up 49%: Raises 2002 Guidance
BOCA RATON, Fla., May 7 /PRNewswire/ -- Cross Country, Inc. (Nasdaq: CCRN -
news) today reported revenue of $154.9 million for the three months ended March
31, 2002, an increase of 49% over revenue of $103.9 million for the same period
in the prior year. Net income for the first quarter of 2002 was $7.0 million or
$0.21 per diluted share compared to breakeven for the same period in the prior
year, which included a $0.6 million after-tax charge related to expenses
associated with the Company's secondary offering in March 2002. Earnings before
interest, taxes, depreciation, amortization and non-recurring indirect
transaction costs (EBITDA), a key measure used by management to evaluate the
company's operations, for the three months ended March 31, 2002 was $15.7
million, an increase of 50% over the same period in the prior year. Net income
before secondary offering expenses, net of tax ("Adjusted Net Income") was $7.6
million, or $0.22 per diluted share (EPS) for the three months ended March 31,
2002. Overall, the quarter was favorably impacted primarily by the strong
results generated by the Company's Healthcare Staffing segment along with lower
interest expense, a reduction in the company's effective corporate income tax
rate and reduced amortization expense.
"We are very pleased with the strength of our first quarter 2002 results," said
Joseph A. Boshart, President and Chief Executive Officer. "These results reflect
not only the continued strength of our core travel staffing operations, but also
impressive results in our other human capital management services. Given the
better than expected performance in the first quarter, the continued strength in
our markets, and other corporate initiatives, management is confident in our
ability to deliver and exceed our previously stated 2002 financial guidance."
Healthcare Staffing
Cross Country's Healthcare Staffing segment, which is comprised of travel
staffing, clinical research trials staffing and per diem staffing, generated
revenue for the three months ended March 2002 of $143.6 million, an increase of
49% over the same period in the prior year. This growth was driven primarily by
increased numbers of field employees in both the travel nursing and allied
health staffing, average hourly bill rates in all businesses, as well as
incremental revenue generated by the acquisitions of NovaPro, Inc. and
ClinForce, Inc. in January 2002 and March 2001, respectively. 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 March 31, 2002 was $20.6 million, an increase of 44% 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.
Other Human Capital Management Services
Cross Country's Other Human Capital Management Services segment, which is
comprised of the education and training, healthcare consulting services,
physician search and resource management services, generated revenue of $11.2
million for the three months ended March 31, 2002, an increase of 48% over the
same period in the prior year. This increase was driven primarily by the strong
results of the seminars business and consulting business generated by the
Jennings Ryan & Kolb, Inc. and Gill/Balsano acquisitions in March 2002 and May
2001, respectively. Contribution income for the three months ended March 31,
2002 was $1.5 million, a 10% increase versus the prior year.
Corporate Items
During the quarter, the Company completed two acquisitions. In January, Cross
Country purchased the assets of the NovaPro healthcare staffing division (Tampa,
FL) of HRLogic Holdings, Inc., a professional employer organization for an
adjusted purchase price of $7.6 million. In March, the Company purchased the
stock of Jennings Ryan & Kolb, Inc., a healthcare management consulting company,
based in Atlanta, Georgia for $3.8 million, including the assumption of $0.3
million in debt, with half of the purchase price being paid in the form of a
three year earn-out.
In March, the Company completed its secondary offering of 9,000,000 shares of
common stock at an offering price of $26.75 per share. In April, the
underwriters of the secondary offering exercised their over-allotment option
with respect to an aggregate of 700,000 shares of common stock. No proceeds from
this offering were received by the Company.
Effective March 31, the Company made the decision to pursue strategic options
regarding its E-Staff technology, Cross Country's web-enabled scheduling
business. These options include, but are not limited to, the sale of the
technology to a software vendor. As a result of this decision, the assets and
liabilities of E-Staff are classified as a discontinued operation and prior year
results have been restated to reflect this treatment. The first quarter results
include a net loss of $0.2 million, or $0.01 per share, from the discontinued
E-Staff operations.
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 now
projecting revenue to be between $625 and $650 million and EBITDA before
discontinued operations to be between $69 and $72 million. Second quarter 2002
earnings before discontinued operations are expected to be in the range of $0.23
to $0.24 per diluted share and grow sequentially thereafter, aggregating to a
range of $1.02 to $1.06 per diluted share for the full year 2002. These EPS
targets exclude expenses associated with the Company's secondary offering. It is
Cross Country's intention to update its guidance quarterly.
Cross Country, Inc. is a leading provider of healthcare staffing services in the
United States. The company has an active client base of over 3,000 hospitals,
pharmaceutical companies and other healthcare providers throughout 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 first quarter conference call will be
available online beginning at 10:00 a.m. EST on Wednesday, May 8th 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 #465885,
beginning at 12:00 p.m. on May 8th until 11:59 p.m. on Monday, May 13th.
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 10-K for the year ended December 31,
2001.
Although we believe that these statements are based upon reasonable assumptions,
we can not 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:
Susan Eccher, Director, Investor Relations at 877-686-9779
Brian Hekman, Director, Corporate Communications at 800-998-5187
Cross Country, Inc.
Consolidated Statement of Operations
(amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
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2002 2001 %Change
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Revenue from services $154,861 $103,872 49%
Operating expenses:
Direct operating expenses 117,156 79,002 48%
Selling, general and administrative expenses 21,766 13,993 56%
Bad debt expense 285 420 -32%
Depreciation 695 505 38%
Amortization 770 3,546 -78%
Secondary offering expenses 1,008 - 0%
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Total operating expenses 141,680 97,466 45%
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Income from operations 13,181 6,406 106%
Other expenses:
Interest expense, net 1,147 4,008 -71%
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Income before income taxes and
discontinued operations 12,034 2,398 402%
Income tax expense (4,799) (1,181) 306%
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Income before discontinued operations 7,235 1,217 494%
Discontinued operations (238) (1,208) -80%
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Net income $ 6,997 $ 9 NM
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Net income/(loss) per common share- basic:
Income before discontinued operations $ 0.23 $ 0.05
Discontinued operations $ (0.01) $ (0.05)
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Net income $ 0.22 $ 0.00
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Net income/(loss) per common share- diluted:
Income before discontinued operations $ 0.22 $ 0.05
Discontinued operations $ (0.01) $ (0.05)
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Net income $ 0.21 $ 0.00
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Weighted average common shares outstanding - basic 32,231 23,205
Weighted average common shares outstanding - diluted 33,995 23,205
Cross Country, Inc.
Adjusted Net Income Reconciliation
(Unaudited)
Three Months Ended
March 31,
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2002 2001 %Change
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Income before discontinued operations
and secondary offering expenses $ 7,840 $ 1,217 544%
Discontinued operations (238) (1,208) NM
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Adjusted net income (a) 7,602 9 NM
Secondary offering expenses, net of tax (605) - NM
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Net income $ 6,997 $ 9 NM
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Adjusted net income/(loss) per common share- diluted:
Income before discontinued operations
and secondary offering expenses $ 0.23 $ 0.05
Discontinued operations $ (0.01) $ (0.05)
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Adjusted net income (a) $ 0.22 $ 0.00
Secondary offering expenses, net of tax $ (0.01) $ -
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Net income $ 0.21 $ 0.00
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Weighted average common shares outstanding - diluted 33,995 23,205
(a) Adjusted net income represents net income adjusted for tax effected charges
related to the company's secondary offering in March 2002. Adjsuted net income
is presented because the company believes that it more accurately reflects its
operating performance. Adjusted net income is not intended to represent net
income nor has it been presented as an alternative to net income and should not
be considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles. As
defined, adjusted net income is not necessarily comparable to other similarly
titled captions of other companies due to potential inconsistencies in the
method of calcuation.
NM - Not meaningful
Cross Country, Inc.
Consolidated Condensed Balance Sheets
(amounts in thousands)
(Unaudited)
March 31, December 31,
2002 2001
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(Unaudited)
Current assets:
Cash $ 868 $ 2,736
Accounts receivable, net 95,276 87,415
Other current assets 18,365 18,944
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Total current assets 114,509 109,095
Property and equipment, net 9,182 8,037
Goodwill, net 225,354 218,749
Trademark, net 15,749 15,399
Other identifiable intangible assets, net 10,468 10,698
Other assets 119 2
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Total assets $ 375,381 $ 361,980
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Current liabilities:
Accounts payable and accrued expenses $ 4,328 $ 3,172
Accrued employee compensation and benefits 30,921 26,930
Current portion of long-term debt 6,058 2,425
Note payable 820 1,365
Other current liabilities 5,793 2,006
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Total current liabilities 47,920 35,898
Interest rate swap 1,919 2,509
Deferred income taxes 8,800 8,570
Long-term debt 39,192 45,076
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Total liabilities 97,831 92,053
Commitments and contingencies
Stockholders' equity:
Common stock 3 3
Additional paid-in capital 258,408 258,152
Other stockholders' equity 19,139 11,772
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Total stockholders' equity 277,550 269,927
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Total liabilities and stockholders' equity $ 375,381 $ 361,980
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Segment Data
(amounts in thousands)
(Unaudited)
Three Months Ended
March 31,
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2002 2001 %Change
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Revenues:
Healthcare staffing $143,634 $ 96,269 49%
Other human capital management services 11,227 7,603 48%
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$154,861 $103,872 49%
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Contribution income (a):
Healthcare staffing $ 20,550 $ 14,309 44%
Other human capital management services 1,534 1,392 10%
Unallocated corporate overhead (6,430) (5,244) 23%
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EBITDA (b) $ 15,654 $ 10,457 50%
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Financial Statistics
(Unaudited)
Three Months Ended
March 31,
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2002 2001
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EBITDA - ($000)(b) $ 15,654 $ 10,457
EBITDA as % of revenue 10.1% 10.1%
FTE's (c) 5,684 4,361
Weeks worked (d) 73,892 56,693
Average healthcare staffing revenue
per FTE per week (e) 1,944 1,698
(a) Defined as earnings before interest, taxes, depreciation, amortization and
corporate expenses not specifically identified to a reporting segment.
(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.
(d) Weeks worked is calculated by multiplying the FTE's by the number of weeks
during the respective period.
(e) Average healthcare staffing revenue per FTE per week is calculated by
dividing the healthcare staffing revenue by the number of weeks worked in the
respective periods. Healthcare staffing revenue includes revenue from permanent
placement nurses.