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Roto-Rooter Inc. Reports Third-Quarter Earnings of $.32 per Share

CINCINNATI--(BUSINESS WIRE)--Oct. 16, 2003--Roto-Rooter Inc. (NYSE:RRR) (OTCBB:CHEQP) today reported net income of $.32 per share for the third quarter, ended September 30, 2003, as compared with net income of $.72 per share in the 2002 third quarter. Net income in the year-ago third quarter included $.40 per share from discontinued operations.

Service revenues and sales from continuing operations for the 2003 third quarter were $75.2 million as compared with $75.3 million in the 2002 third quarter. Revenues of Roto-Rooter's Plumbing and Drain Service segment grew 5.2% to $63.3 million as compared with $60.2 million in the same prior-year quarter.

For the third quarter, Roto-Rooter's net cash provided by operating activities--that is, cash provided by operations before capital expenditures and other investing and financing activities--totaled $5.5 million in 2003 versus $10.7 million in 2002 which included $2.2 million from discontinued operations.

Year to date, for the nine months ended September 30, 2003, Roto-Rooter's net income was $.86 per share as compared with $1.66 per share in the same prior-year period. Net income for year-to-date 2003 included capital gains on the sales of investments of $.34 per share and severance charges of $.24 per share. Net income for the comparable 2002 period included income from discontinued operations of $.60 per share and capital gains on the sales of investments of $.08 per share.

Service revenues and sales from continuing operations for year-to-date 2003 totaled $230.1 million versus $235.3 million in 2002. Net cash provided by operating activities for the first nine months of 2003 amounted to $17.0 million versus $29.2 million for the comparable 2002 period which included $5.3 million from discontinued operations.

Commenting on the company's operations, Roto-Rooter President and Chief Executive Officer Kevin J. McNamara said, "We're encouraged by the 5% growth in revenues at the Plumbing and Drain Service segment in the 2003 third quarter versus the 2002 third quarter. In addition, within that segment, revenues from Roto-Rooter's franchising activities and product and equipment sales increased by 14% to $2.0 million in the 2003 third quarter. Also, in early October, Roto-Rooter completed the acquisition of the New Orleans franchise, which serves areas with a population of 1.1 million.

"Net income from the Plumbing and Drain Service segment totaled $1.9 million in the 2003 third quarter, 19% below the year-ago third quarter's net income of $2.4 million. Insurance and legal costs, along with investments in marketing and training, continue to negatively impact margins.

"Service America, our appliance and heating/air-conditioning repair segment, recorded net income of $51,000 in the 2003 third quarter compared with $166,000 in the 2002 third quarter. Revenues at Service America totaled $11.8 million, 22% below the year-ago third quarter. Nonetheless, through the nine months ended September 30, 2003, Service America has generated $2.9 million in net cash flow for the company."

Commenting on the company's financial activities, Mr. McNamara said, "Corporate Investing and Financing activities generated $1.3 million of income in the 2003 third quarter as compared with $642,000 in the prior-year third quarter. Of the $1.3 million, the redemption of our Vitas Healthcare Corporation preferred stock generated an aftertax capital gain of $1.2 million in August. The subsequent loss of Vitas' dividend payment accounted for a $301,000 decline in dividend income for the third quarter of 2003. Interest income also declined substantially when compared with the 2002 third quarter during which the company received an aftertax interest refund of $530,000 related to a tax refund on our 1997 sale of The Omnia Group."

Continuing, Mr. McNamara said, "Importantly, in October, Roto-Rooter exercised a portion of its Vitas warrants, acquiring 4,158,000 shares of Vitas common stock at a cost of $18 million. Roto-Rooter's holdings in Vitas represent approximately 37% of Vitas' outstanding common stock. On this basis, Roto-Rooter anticipates recording equity earnings from Vitas beginning in the 2003 fourth quarter. On a full-year basis, we expect the equity income from the Vitas earnings to exceed the dividend income Roto-Rooter historically recorded from the Vitas preferred stock.

"Roto-Rooter continues to hold a warrant for an additional 1,636,000 shares of Vitas common stock at a total price of $9 million. Assuming Roto-Rooter would exercise this remaining warrant, our total investment in the common shares of Vitas would represent approximately 45% of Vitas' outstanding shares."

Concluding, Mr. McNamara said, "Vitas Healthcare is the leading provider of hospice services in the United States with revenues exceeding $359 million for its most recently completed fiscal year, ended September 30, 2002. Roto-Rooter has held its investment in Vitas since 1991 and expects that Vitas will provide substantial future growth."

Reflecting its confidence in Roto-Rooter's solid financial position and future earnings potential, in August, the Board of Directors declared a quarterly dividend of $.12 per share, which was paid in September. This represented Roto-Rooter's 129th consecutive quarterly dividend.

Roto-Rooter Inc. (www.RotoRooter.com), headquartered in Cincinnati, is a New York Stock Exchange-listed corporation operating in the residential and commercial repair-and-maintenance-service industry through two wholly owned subsidiaries. Roto-Rooter is North America's largest provider of plumbing and drain cleaning services. Service America Network Inc. provides major-appliance and heating/air-conditioning repair, maintenance, and replacement services.

Statements in this press release or in other Roto-Rooter communications may relate to future events or Roto-Rooter's future performance. Such statements are forward-looking statements and are based on present information Roto-Rooter has related to its existing business circumstances. Investors are cautioned that such forward-looking statements are subject to inherent risk that actual results may differ materially from such forward-looking statements. Further, investors are cautioned that Roto-Rooter does not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations.


ROTO-ROOTER, INC.
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)(unaudited)

                      Three Months Ended      Nine Months Ended
                         September 30,           September 30,
                      ------------------    -----------------------
                        2003       2002       2003           2002
                      -------    -------    --------       --------
Continuing Operations
 Service revenues
  and sales           $75,172    $75,322    $230,088       $235,257
                      -------    -------    --------       --------
 Cost of services
  provided and
  goods sold           44,215     44,314     135,978        139,446
 General and
  administrative
  expenses             14,138     11,537      45,194(c)      36,699
 Selling and marketing
  expenses             11,003     10,304      33,420         33,085
 Depreciation           2,983      3,424       9,025         10,402
                      -------    -------    --------       --------
    Total costs
     and expenses      72,339     69,579     223,617        219,632
                      -------    -------    --------       --------
    Income from
     operations         2,833      5,743       6,471         15,625
 Interest expense        (487)      (709)     (1,625)        (2,245)
 Distributions on
  preferred securities   (268)      (268)       (804)          (809)
 Other income--net      3,048(a)     268(b)    9,765(d)       3,810(e)
                      -------    -------    --------       --------
    Income before
     income taxes       5,126(a)   5,034(b)   13,807(c,d)    16,381(e)
 Income taxes          (1,910)    (1,856)     (5,246)        (5,953)
                      -------    -------    --------       --------
    Income from
     continuing
     operations         3,216(a)   3,178(b)    8,561(c,d)    10,428(e)
Discontinued
 Operations                 -      3,929           -          5,920
                      -------    -------    --------       --------
Net Income            $ 3,216(a) $ 7,107(b) $  8,561(c,d)  $ 16,348(e)
                      =======    =======    ========       ========

Earnings Per Share
 Income from
  continuing
  operations          $  0.32(a) $  0.32(b) $   0.86(c,d)  $   1.06(e)
                      =======    =======    ========       ========
 Net income           $  0.32(a) $  0.72(b) $   0.86(c,d)  $   1.66(e)
                      =======    =======    ========       ========
 Average number of
  shares outstanding    9,941      9,861       9,913          9,854
                      =======    =======    ========       ========

Diluted Earnings
 Per Share
  Income from
   continuing
   operations         $  0.32(a) $  0.32(b) $   0.86(c,d)  $   1.06(e)
                      =======    =======    ========       ========
  Net income          $  0.32(a) $  0.72(b) $   0.86(c,d)  $   1.65(e)
                      =======    =======    ========       ========
  Average number of
   shares outstanding   9,988      9,867       9,940          9,882
                      =======    =======    ========       ========

----------------------------------------------
(a) Amounts for the third quarter of 2003 include a pretax gain of
    $1,846,000 ($1,200,000 aftertax or $.12 per share) from the
    redemption of the Company's investment in Vitas Healthcare
    Corporation ("Vitas") preferred stock and pretax dividend income
    from Vitas preferred stock of $371,000 ($328,000 aftertax or $.03
    per share).

(b) Amounts for the third quarter of 2002 include pretax interest
    income of $816,000 ($530,000 aftertax or $.05 per share) from
    interest on a federal income tax refund relating to operations
    discontinued in 1997 and pretax dividend income from Vitas
    preferred stock of $712,000 ($629,000 aftertax or $.06 per share).

(c) Amounts for the first nine months of 2003 include a pretax charge
    of $3,627,000 ($2,358,000 aftertax or $.24 per share) from
    severance charges incurred in the first quarter of 2003.

(d) Amounts for the first nine months of 2003 include aggregate pretax
    gains of $5,390,000 ($3,351,000 aftertax or $.34 per share) from
    the redemption of Vitas preferred stock and the sales of
    investments and pretax dividend income from Vitas preferred stock
    of $1,794,000 ($1,585,000 aftertax or $.16 per share).

(e) Amounts for the first nine months of 2002 include a pretax gain of
    $1,141,000 ($775,000 aftertax or $.08 per share) from the sales
    of investments, pretax dividend income from Vitas preferred stock
    of $2,135,000 ($1,886,000 aftertax or $.19 per share) and pretax
    interest income of $816,000 ($530,000 aftertax or $.05 per share)
    from interest on a federal income tax refund relating to
    operations discontinued in 1997.


ROTO-ROOTER, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)

                                                      September 30,
                                                   ------------------
                                                     2003     2002(a)
                                                   --------  --------
Assets
     Current assets
         Cash and cash equivalents                 $ 72,607  $ 15,603
         Accounts receivable less allowances         13,310    13,453
         Inventories                                  8,548    10,111
         Statutory deposits                           9,852    12,304
         Current deferred income taxes                7,204     8,442
         Current assets of discontinued operations        -    36,555
         Prepaid expenses and other current assets   14,225     8,256
                                                   --------  --------
                Total current assets                125,746   104,724
     Investments of deferred compensation plans
      held in trust                                  16,832    14,746
     Other investments                                5,546    36,768
     Note receivable                                 12,500         -
     Properties and equipment, at cost less
      accumulated depreciation                       47,456    49,309
     Identifiable intangible assets less
      accumulated amortization                        2,450     3,042
     Goodwill less accumulated amortization         113,437   131,144
     Noncurrent assets of discontinued operations         -    43,485
     Other assets                                    16,908    13,399
                                                   --------  --------
                   Total Assets                    $340,875  $396,617
                                                   ========  ========

Liabilities
     Current liabilities
         Accounts payable                          $  5,033  $  6,464
         Current portion of long-term debt              463       366
         Income taxes                                 7,294     7,465
         Deferred contract revenue                   16,053    20,390
         Accrued insurance                           16,844    17,293
         Current liabilities of discontinued
          operations                                      -    11,071
         Other current liabilities                   20,347    20,677
                                                   --------  --------
                Total current liabilities            66,034    83,726
     Long-term debt                                  25,635    50,728
     Mandatorily redeemable convertible preferred
      securities of the Chemed Capital Trust         14,146    14,186
     Deferred compensation liabilities               16,824    14,721
     Noncurrent liabilities of discontinued
      operations                                          -     2,339
     Other liabilities                               10,105     9,620
                                                   --------  --------
                   Total Liabilities                132,744   175,320
                                                   --------  --------

Stockholders' Equity
     Capital stock                                   13,452    13,461
     Paid-in capital                                169,406   168,359
     Retained earnings                              137,790   152,265
     Treasury stock, at cost                       (110,492) (112,562)
     Unearned compensation                           (3,389)   (5,087)
     Deferred compensation payable in Company stock   2,294     2,266
     Notes receivable for shares sold                  (930)     (946)
     Accumulated other comprehensive income               -     3,541
                                                   --------  --------
                   Total Stockholders' Equity       208,131   221,297
                                                   --------  --------
                   Total Liabilities and
                    Stockholders' Equity           $340,875  $396,617
                                                   ========  ========

Book Value Per Share                               $  21.07  $  22.59
                                                   ========  ========

(a) Reclassified to conform to 2003 presentation


    CONTACT: Roto-Rooter Inc.
             Timothy S. O'Toole, 513-762-6702

    SOURCE: Roto-Rooter Inc.