Rural/Metro CFO comfortable with liquidity, says cash losses not expected to continue

By Jennifer Lanning Drey

Portland, Ore., Feb. 11 - Rural/Metro Corp. is comfortable with its liquidity, which included cash and cash equivalents of $2.2 million at the Dec. 31 close of the second quarter of fiscal 2008, chief financial officer Kristine Ponczak said Monday during the company's quarterly earnings conference call.

The cash balance is down from $6.2 million at June 30, 2007.

"We've definitely had some hits in this six months that have driven our cash balances down somewhat, but I don't expect them to continue," she said.

Net availability under the company's $20 million revolving line of credit was "just shy of $20 million" at the end of the second quarter, Ponczak said.

The company's second-quarter results showed a 4.5% increase in consolidated net revenue but a $500,000 drop in net income, as compared to the previous year's second-quarter results. For the quarter ended Dec. 31, Rural/Metro posted net income of $800,000, compared with net income of $1.3 million in the same prior-year period.

"We believe these results reflect ongoing progress as we continue to execute on our business plan to generate sustainable revenue growth, minimize exposure to uncompensated care and enhance billing and collections performance," Jack Brucker, Rural/Metro's chief executive officer, said Monday.

May have financial adviser

Following management's prepared remarks, Brucker was asked whether Rural/Metro's management has any impetus to sell the company and whether it has considered hiring a financial adviser.

"We have not disclosed if we've retained a financial adviser to sell the company," Brucker said in response to the question.

During the call, Brucker also said Rural/Metro's stockholders will be asked to consider multiple proposals at the company's annual meeting next month, including the election of three directors, an amendment to the company's certificate of incorporation to enable stockholders holding 35% of the company's total outstanding shares to call special meetings and an amendment that would require stockholder approval of amendments to the company's bylaws.

As previously reported, Rural/Metro entered into a settlement agreement with its largest shareholder, Accipiter Capital Management LLC, in late January after the shareholder expressed displeasure with the company's performance and corporate governance.

Rural/Metro is a Scottsdale, Ariz., medical transportation company.

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