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) August 6, 2002
Cross Country, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-33169 13-4066229
(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
(Address of Principal Executive Office (Zip Code)
(561) 998-2232
(Registrant's telephone number, including area code)
Not Applicable
(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
August 6, 2002, which is attached hereto as Exhibit 1.1
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
Exhibit Description
1.1 Press release issued by the Company on August 6, 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
Dated: August 7, 2002 Title: Chief Financial Officer
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Exhibit 1.1
Cross Country Reports 2nd Quarter Results;
Revenues up 31%; Reaffirms 2002 EPS guidance
BOCA RATON, Fla., August 6, 2002 /PRNewswire/ -- Cross Country, Inc. (Nasdaq:
CCRN - news) today reported revenue of $156.0 million for the three month period
ended June 30, 2002, an increase of 31% over revenue of $118.8 million for the
same period in the prior year. Net income for the second quarter of 2002 was
$8.0 million or $0.24 per diluted share. Net income before discontinued
operations for the second quarter of 2002 was $8.5 million or $0.25 per diluted
share. Earnings before interest, taxes, depreciation, amortization and
non-recurring secondary offering costs (EBITDA), a key measure used by
management to evaluate the company's operations, for the three month period
ended June 30, 2002 was $16.3 million, an increase of 23% over the same period
in the prior year. The quarter was favorably impacted primarily by the strong
results generated by the Company's travel nurse staffing businesses and all of
the businesses comprising its Other Human Capital Management Services segment,
coupled with lower corporate expenses, specifically interest and amortization
expenses.
"We are very pleased with the continued strength of our businesses as
demonstrated by our second quarter 2002 results," said Joseph A. Boshart,
President and Chief Executive Officer. "Demand for our core travel nursing
business continues to benefit from a desire on the part of our hospital clients
to outsource a portion of their labor needs to better meet fluctuating patient
census and the national nursing shortage. We also had strong performances from
each of our Other Human Capital Management Services businesses."
For the six month period ended June 30, 2002, Cross Country reported revenue of
$310.8 million, an increase of 40% over the same period in the prior year. Net
income and its associated diluted EPS for the six month period ended June 30,
2002 were $15.0 million and $0.44 compared to $2.7 million and $0.12,
respectively, for the six month period June 30, 2001. EBITDA for the six month
period ended June 30, 2002 was $31.9 million compared to $23.7 million for the
same period in the prior year, an increase of 35%.
Healthcare Staffing
Cross Country's Healthcare Staffing segment, which comprises travel staffing,
clinical research trials staffing and per diem staffing, generated revenue for
the three month period ended June 30, 2002 of $142.8 million, an increase of 30%
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
incremental revenue generated by the January 2002 acquisition of NovaPro.
Contribution income, defined as earnings before interest, taxes, depreciation,
amortization and corporate expenses not specifically identified to a reporting
segment, for the three month period ended June 30, 2002 was $19.6 million, an
increase of 21% 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 selling expenses as well
as the increased expenses associated with recruiting nurses overseas.
4
For the six month period ended June 30, 2002 revenue was $286.4 million, an
increase of 39% over the same period in the prior year and contribution income
was $39.5 million compared to $30.1 million for the six month period ended June
30, 2001.
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 $13.2 million for the three
month period ended June 30, 2002, an increase of 41% over the same period in the
prior year. This increase was driven primarily by the strong double-digit
results in all businesses within the segment, which includes consulting business
generated by the Jennings Ryan & Kolb, Inc. acquisition in March 2002.
Contribution income for the three month period ended June 30, 2002 was $2.1
million, a 54% increase versus the year ago period.
For the six month period ended June 30, 2002, revenue was $24.4 million, an
increase of 44% over the same period in the prior year and contribution income
was $3.7 million compared to $2.8 million for the six month period ended June
30, 2001.
Expectations for 2002
The following statements are based on current management 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 maintaining its previous guidance of revenue to be between $625 and $650
million and EPS to be in the range of $1.02 - $1.06 per diluted share. Third
quarter and fourth quarter 2002 earnings before discontinued operations are
expected to be in the range of $0.26 - $0.27 and $0.28 - $0.31 per diluted
share, respectively. These EPS targets exclude discontinued operations and
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 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 first quarter conference call will be
available online beginning at 10:00 a.m. EST on Wednesday, August 7th 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, passcode 483099#, beginning
at 12:00 p.m. on August 7th until 11:59 p.m. on Monday, August 12th.
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
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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 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:
Susan Eccher, Director, Investor Relations at 877-686-9779
Brian Hekman, Director, Corporate Communications at 800-998-5187
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Cross Country, Inc.
Consolidated Statements of Operations
(amounts in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
` ------------------------- -------------------------
2002 2001 % Change 2002 2001 % Change
---------- ---------- --------- ----------- ---------- -------
Revenue from services $ 155,977 $ 118,835 31% $ 310,838 $ 222,707 40%
Operating expenses:
Direct operating expenses 115,849 88,097 32% 233,005 167,099 39%
Selling, general and administrative expenses 23,775 17,083 39% 45,541 31,076 47%
Bad debt expense 74 442 (83%) 359 862 (58%)
Depreciation 740 631 17% 1,435 1,136 26%
Amortization 785 3,856 (80%) 1,555 7,402 (79%)
Non-recurring secondary offering costs - - 0% 1,008 - 0%
---------- ---------- ----------- ----------
Total operating expenses 141,223 110,109 28% 282,903 207,575 36%
---------- ---------- ----------- ----------
Income from operations 14,754 8,726 69% 27,935 15,132 85%
Other expenses:
Interest expense, net 1,009 4,524 (78%) 2,156 8,532 (75%)
---------- ---------- ----------- ----------
Income before income taxes and discontinued operations 13,745 4,202 227% 25,779 6,600 291%
Income tax expense (5,292) (1,869) 183% (10,091) (3,050) 231%
---------- ---------- ----------- ----------
Income before discontinued operations 8,453 2,333 262% 15,688 3,550 342%
Discontinued operations (421) 332 (227%) (659) (876) (25%)
---------- ---------- ----------- ----------
Net income $ 8,032 $ 2,665 201% $ 15,029 $ 2,674 462%
========== ========== =========== ==========
Net income/(loss) per common share- basic:
Income before discontinued operations $ 0.26 $ 0.10 $ 0.49 $ 0.16
Discontinued operations $ (0.01) $ 0.01 $ (0.02) $ (0.04)
---------- ---------- ----------- ----------
Net income $ 0.25 $ 0.11 $ 0.47 $ 0.12
========== ========== =========== ==========
Net income/(Loss) per common share- diluted:
Income before discontinued operations $ 0.25 $ 0.10 $ 0.46 $ 0.16
Discontinued operations $ (0.01) $ 0.01 $ (0.02) $ (0.04)
---------- ---------- ----------- ----------
Net income $ 0.24 $ 0.11 $ 0.44 $ 0.12
========== ========== =========== ==========
Weighted average common shares outstanding - basic 32,400 23,206 32,316 23,206
Weighted average common shares outstanding - diluted 34,000 23,206 33,998 23,206
Cross Country, Inc.
Consolidated Condensed Balance Sheets
(amounts in thousands)
June 30, December 31,
2002 2001
------------ ------------
(Unaudited)
Current assets:
Cash $ 17,359 $ 2,736
Accounts receivable, net 93,008 87,415
Assets from discontinued operations, net 4,881 3,948
Other current assets 12,477 14,996
------------ ------------
Total current assets 127,725 109,095
Property and equipment, net 10,534 8,037
Goodwill, net 226,018 218,749
Trademark, net 15,749 15,399
Other identifiable intangible assets, net 8,467 9,308
Other assets 1,363 1,392
------------ ------------
Total assets $ 389,856 $ 361,980
============ ============
Current liabilities:
Accounts payable and accrued expenses $ 3,506 $ 3,172
Accrued employee compensation and benefits 31,408 26,930
Current portion of long-term debt 9,608 2,425
Note payable 273 1,365
Income taxes payable 5,416 -
Liabilities from discontinued operations 174 174
Other current liabilities 2,668 1,832
------------ ------------
Total current liabilities 53,053 35,898
Interest rate swap 1,505 2,509
Deferred income taxes 8,962 8,570
Long-term debt 35,620 45,076
------------ ------------
Total liabilities 99,140 92,053
Commitments and contingencies
Stockholders' equity:
Common stock 3 3
Additional paid-in capital 263,282 258,152
Other stockholders' equity 27,431 11,772
------------ ------------
Total stockholders' equity 290,716 269,927
------------ ------------
Total liabilities and stockholders' equity $ 389,856 $ 361,980
============ ============
Segment Data*
(amounts in thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
2002 2001 % Change 2002 2001 % Change
---------- ---------- --------- ----------- ---------- -------
Revenues:
Healthcare staffing $ 142,767 $ 109,484 30% $ 286,401 $ 205,753 39%
Other human capital management services 13,210 9,351 41% 24,437 16,954 44%
---------- ---------- ----------- ----------
$ 155,977 $ 118,835 31% $ 310,838 $ 222,707 40%
========== ========== =========== ==========
Contribution income (a):
Healthcare staffing $ 19,586 $ 16,161 21 $ 39,489 $ 30,083 31%
Other human capital management services 2,149 1,394 54% 3,683 2,786 32%
Unallocated corporate overhead (5,456) (4,342) 26% (11,239) (9,199) 22%
---------- ---------- ----------- ----------
EBITDA(b) $ 16,279 $ 13,213 23% $ 31,933 $ 23,670 35%
========== ========== =========== ==========
* Certain amounts in the 2001 segment information have been reclassified to
conform to the 2002 presentation.
Financial Statistics
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
2002 2001 2002 2001
---------- ---------- ----------- ----------
EBITDA - ($000)(b) $ 16,279 $ 13,213 $ 31,933 $ 23,670
EBITDA as % of revenue 10.4% 11.1% 10.3% 10.6%
FTE's(c) 5,475 4,657 5,579 4,509
Weeks worked(d) 71,175 60,541 145,054 117,234
Average healthcare staffing revenue per FTE per week(e) $ 2,006 $ 1,808 $ 1,974 $ 1,755
(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 secondary offering 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.