8-K

UNITED STATES

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): September 2, 2004

RURAL/METRO CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	0-22056	86-0746929
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

8401 East Indian School Road

Scottsdale, Arizona

85251

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (480) 606-3886

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On September 2, 2004, Rural/Metro Corporation (the “Company”) issued a press release announcing its preliminary unaudited financial results for the quarter and fiscal year ended June 30, 2004. The full text of the Company’s press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits.

Exhibit No.	Description
99.1	Press release, dated September 2, 2004

The information in this Form 8-K, including the exhibits, shall not be deemed to be “filed” for purposes of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities thereof, nor shall it be deemed to be incorporated by reference in any filing under the Exchange Act or under the Securities Act of 1933, as amended, except to the extent specifically provided in any such filing.

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.

	RURAL/METRO CORPORATION
Date: September 2, 2004	By:	/s/ Michael S. Zarriello
		Michael S. Zarriello Senior Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

CONTACT:	Liz Merritt, Rural/Metro Corporation
	(480) 606-3337
	Financial Dynamics, Investor Relations
	Jim Byers (Investors)
	(415) 439-4504

For immediate release

    RURAL/METRO ANNOUNCES STRONG PRELIMINARY 2004 RESULTS

• Net Revenue Up 8.7% to $526.6 Million

• Income From Continuing Operations of $6.6 Million

• Full Year EBITDA of $48 Million

SCOTTSDALE, Ariz. (Sept. 2, 2004) – Rural/Metro Corporation (OTCBB: RURL), a leading national provider of medical transportation and fire protection services, announced today preliminary, unaudited results for its fourth quarter and fiscal year ended June 30, 2004.

For the fiscal year ended June 30, 2004, the company reported net revenue of $526.6 million, compared to $484.6 million for fiscal 2003, representing an increase in net revenue of 8.7%. For the three months ended June 30, 2004, net revenue was $132.8 million, compared to $122.8 million for the same period of the prior year, or an increase of 8.1%.

Medical transportation and related service revenue for the year ended June 30, 2004 was $452.3 million, which is a 9.9% increase from $411.4 million in fiscal 2003. For the three months ended June 30, 2004, medical transportation and related service revenue grew 8.9% to $113.9 million from $104.6 million for the same period of the prior year.

Same-service-area medical transportation and related service revenue for the fiscal year ended June 30, 2004 increased $36.1 million, or 8.8% from fiscal 2003. On a quarterly basis, same-service-area medical transportation and related service revenue increased $8.2 million, or 7.8% from the same period of fiscal 2003. The company attributes this to the continuing success of its strategy to expand within existing regional markets throughout the United States.

Fire and other revenue for the fiscal year and three months ended June 30, 2004 was $74.3 million and $18.9 million, respectively. This compares to $73.2 million and $18.2 million for the corresponding periods in fiscal 2003. Fire subscription revenue, increased by 9.6% for the fiscal year ended June 30, 2004 to $35.3 million, compared to $32.2 million in 2003. Fire subscription revenue totaled $9.3 million for three months ended June 30, 2004 compared to $8.3 million for the three months ended June 30, 2003, an increase of 12.0%. The company has identified its fire subscription business as one of the areas for future strategic growth potential.

Income from continuing operations was $6.6 million for the fiscal year ended June 30, 2004, compared to a loss from continuing operations of $7.4 million in 2003. For the three months ended June 30, 2004, the company reported income from continuing operations of $1.8 million, compared to a loss of $5.0 million for the same period of the prior year.

Fully diluted earnings per share for the fiscal year ended June 30, 2004 was $0.28. For the fiscal year ended June 30, 2003, earnings per share was $0.33 and included a $0.77 per share impact for the non-cash gain recorded on the disposition of the company’s Latin American operations. Fully diluted earnings per share for the three months ended June 30, 2004 was $0.06, compared to a loss per share of $0.33 for the three months ended June 30, 2003.

On June 10, 2004, stockholders voted to amend the company’s certificate of incorporation to authorize 17 million new shares of common stock. On June 30, 2004, the company settled its Series B and Series C preferred stock by issuing 4,955,278 shares of common stock to its lenders.

Jack Brucker, President and Chief Executive Officer, said, “We are very pleased with the progress we made during fiscal 2004 to strengthen and grow the company in order to produce earnings for our stockholders. We achieved solid profits for the full fiscal year and our objective is to continue to build long-term value in our enterprise by consistently achieving sequential yearly growth in financial and operational performance.”

For the fiscal year ended June 30, 2004, the company reported $48.0 million in earnings before interest, taxes, depreciation and amortization (EBITDA), compared to $50 million in 2003. EBITDA for the fiscal year ended June 30, 2003 included a $12.5 million non-cash gain related to the company’s disposition of its Latin American operations. For the three months ended June 30, 2004, EBITDA was $11.2 million, compared to $6.3 million for the comparable period of the prior year.

The company regards EBITDA, which is widely used by analysts, investors, creditors, and other interested parties, as relevant and useful information. The company provides this information to permit a more comprehensive analysis of its ability to meet future debt service, capital expenditures, and working capital requirements. Additionally, the company’s management uses this information to evaluate the performance of its operating units. EBITDA is not intended to represent cash provided by operating activities as defined by generally accepted accounting principles, and it should not be considered as an indicator of operating performance or an alternative to cash provided by operating activities as a measure of liquidity. The company has provided a reconciliation of EBITDA to cash provided by operating activities in a table that accompanies this press release.

Cash collections for the three months ended June 30, 2004 totaled $113.3 million, compared to $112.1 million for the same period in fiscal 2003. For the year ended June 30, 2004, cash collections totaled $453.6 million, compared to $443.2 million for the same period in fiscal 2003.

Brucker continued, “We are pleased with the profitable growth we have achieved in fiscal 2004, and continue to identify opportunities to extend our market reach. In keeping with our growth strategy, in fiscal 2005 we will focus primarily on profitable expansion within existing regional service areas where we can further solidify our customer base, leverage our existing infrastructure and generate a sound margin of profit.”

“We have simultaneously developed and implemented billing, work force scheduling and risk management programs that have contributed to improved operating and financial performance. We believe these systems will continue to produce results in the future and look forward to providing further updates as the year progresses.”

Following is a summary of certain of the company’s key operating statistics. EMS transports and Average EMS Patient Charge statistics have been adjusted to eliminate discontinued operations:

	Q4 ‘03 (6/30/03)		Q1 ‘04 (9/30/03)		Q2 ‘04 (12/31/03)		Q3 ‘04 (3/31/04)		Q4’04 (6/30/04)
EMS Transports (1)		249,813		256,507		262,586		266,064		259,953
Net/Net Average EMS Patient Charge (2)	$	300	$	308	$	308	$	312	$	312
Average DSO (YTD) (3)		44		42		43		43		42

(1) EMS transports from continuing operations are defined as actual patient transports, excluding those under capitated contract arrangements.

(2) Net/Net Average Emergency Medical Services (EMS) Patient Charge is defined as gross EMS transport revenue minus provisions for Medicare, Medicaid and other third-party payers and doubtful accounts divided by EMS transports from continuing operations. For purposes of this calculation, revenue and transports related to capitated contracts are excluded.

(3) Average year-to-date DSO is defined as average accounts receivable divided by net revenue per day, as calculated on a year-to-date basis.

Rural/Metro Corporation provides emergency and non-emergency medical transportation, fire protection, and other safety services in 23 states and more than 400 communities throughout the United States. For more information, visit the company’s web site at www.ruralmetro.com.

The company will discuss these results in a conference call and webcast on Friday, September 3, 2004, beginning at 8 a.m. Pacific (11 a.m. Eastern). To access the conference call, dial 800-361-0912 (domestic), or 913-981-5559 (international). The call also will be broadcast live on the company’s web site at www.ruralmetro.com. A taped replay of the call will be available from 2 p.m. Eastern on September 3, 2004 through midnight Friday, September 10, 2004. The replay can be accessed by dialing 888-203-1112 (domestic) or 719-457-0820 (international). Please use the confirmation code 216236 when accessing the replay. An archived webcast also will be available at www.ruralmetro.com.

This press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, among others, timely completion of the fiscal 2004 audit reflecting results consistent with the unaudited results reported herein; the company’s ability to collect its accounts receivable; competitors’ actions; litigation and regulatory matters; and the company’s ability to sustain operating cash flow, secure new contracts, retain

existing contracts, improve earnings and operating margins, and effectively manage collateral requirements and costs related to its insurance coverage. Additional factors that could affect the company are described in its Form 10-K as amended for the year ended June 30, 2003 under the caption “Risk Factors” in the Management’s Discussion and Analysis section, and other factors as described from time to time in the company’s SEC filings. The company disclaims any obligation to update its forward-looking statements.

(Tables to Follow)

RURAL/METRO CORPORATION

CONSOLIDATED BALANCE SHEET

(in thousands)

	June 30, 2004			June 30, 2003
	(Unaudited)
ASSETS
Current assets:
Cash	$	16,372		$	12,561
Accounts receivable, net of allowance for doubtful accounts of $59,430 and $48,422 at June 30, 2004 and 2003, respectively		65,348			60,428
Inventories		11,739			11,504
Prepaid expenses and other assets		9,006			7,511
Total current assets		102,465			92,004
Property and equipment, net		40,283			43,010
Goodwill		41,100			41,167
Insurance deposits		9,244			7,937
Other assets		13,043			12,048
	$	206,135		$	196,166
LIABILITIES, MINORITY INTEREST, REDEEMABLE NONCONVERTIBLE PARTICIPATING PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	13,833		$	13,778
Accrued liabilities		58,167			57,698
Deferred revenue		18,650			17,603
Current portion of long-term debt		1,495			1,329
Total current liabilities		92,145			90,408
Long-term debt, net of current portion		304,057			305,310
Other liabilities		—			181
Deferred income taxes		650			650
Total liabilities		396,852			396,549
Minority interest		1,509			1,984
Redeemable nonconvertible participating preferred stock		—			7,793
Stockholders’ equity (deficit):
Common stock, $.01 par value 23,000,000 shares authorized, 21,890,816 and 16,207,830 shares issued and outstanding at June 30, 2004 and June 30, 2003, respectively		222			166
Additional paid-in capital		147,072			135,405
Treasury stock		(1,239	)		(1,239	)
Accumulated deficit		(338,281	)		(344,492	)
Total stockholders’ equity (deficit)		(192,226	)		(210,160	)
	$	206,135		$	196,166

RURAL/METRO CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

For The Year Ended June 30, 2004 and 2003

(Unaudited)

(in thousands, except per share amounts)

	2004			% of Net revenue		2003			% of Net revenue
						(*As Restated)
Net revenue	$	526,603		100.0	%	$	484,639		100.0	%
Operating expenses:
Payroll and employee benefits		277,549		52.7	%		266,713		55.0	%
Provision for doubtful accounts		87,268		16.6	%		77,184		15.9	%
Depreciation and amortization		11,404		2.2	%		12,587		2.6	%
Other operating expenses		114,855		21.8	%		107,767		22.2	%
Restructuring and other		—		0.0	%		(1,421	)	-0.3	%
Total operating expenses		491,076		93.3	%		462,830		95.5	%
Operating income		35,527		6.7	%		21,809		4.5	%
Interest expense		(29,243	)	-5.6	%		(27,819	)	-5.7	%
Interest income		97		0.0	%		197		0.0	%
Income (loss) from continuing operations before income taxes and minority interest		6,381		1.2	%		(5,813	)	-1.2	%
Income tax provision		(300	)	-0.1	%		(118	)	0.0	%
Minority interest		475		0.1	%		(1,507	)	-0.3	%
Income (loss) from continuing operations		6,556		1.2	%		(7,438	)	-1.5	%
Income (loss) from discontinued operations		(345	)	-0.1	%		16,404		3.4	%
Net income	$	6,211		1.2	%	$	8,966		1.9	%
Income (loss) per share
Basic -
Income (loss) from continuing operations applicable to common stock	$	0.54				$	(0.69	)
Income (loss) from discontinued operations applicable to common stock		(0.02	)				1.02
Net income	$	0.52				$	0.33
Diluted -
Income (loss) from continuing operations applicable to common stock	$	0.30				$	(0.69	)
Income (loss) from discontinued operations applicable to common stock		(0.02	)				1.02
Net income	$	0.28				$	0.33
Average number of shares outstanding - Basic		16,645					16,116
Average number of shares outstanding - Diluted		21,817					16,116

* We have restated our earnings per share calculations for the year ended June 30, 2003 to reflect earnings per share using the two-class method as defined in FASB Statement No. 128, Earnings per Share and clarified by EITF Issue No. 03-6, Participating Securities and the Two-Class Method.

RURAL/METRO CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

For The Three Months Ended June 30, 2004 and 2003

(Unaudited)

(in thousands, except per share amounts)

	2004			% of Net revenue		2003			% of Net revenue
						(*As Restated)
Net revenue	$	132,791		100.0	%	$	122,848		100.0	%
Operating expenses:
Payroll and employee benefits		69,819		52.6	%		67,690		55.1	%
Provision for doubtful accounts		22,962		17.3	%		19,641		16.0	%
Depreciation and amortization		2,670		2.0	%		3,046		2.5	%
Other operating expenses		29,269		22.0	%		30,744		25.0	%
Total operating expenses		124,720		93.9	%		121,121		98.6	%
Operating income		8,071		6.1	%		1,727		1.4	%
Interest expense		(7,137	)	-5.4	%		(7,367	)	-6.0	%
Interest income		30		0.0	%		116		0.1	%
Income (loss) from continuing operations before income taxes and minority interest		964		0.7	%		(5,524	)	-4.5	%
Income tax (provision) benefit		(23	)	0.0	%		58		0.0	%
Minority interest		873		0.7	%		489		0.4	%
Income (loss) from continuing operations		1,814		1.4	%		(4,977	)	-4.1	%
Income (loss) from discontinued operations		(551	)	-0.4	%		907		0.7	%
Net income (loss)	$	1,263		1.0	%	$	(4,070	)	-3.3	%
Income (loss) per share
Basic -
Income (loss) from continuing operations applicable to common stock	$	0.58				$	(0.38	)
Income (loss) from discontinued operations applicable to common stock		(0.03	)				0.05
Net income (loss)	$	0.55				$	(0.33	)
Diluted -
Income (loss) from continuing operations applicable to common stock	$	0.08				$	(0.38	)
Income (loss) from discontinued operations applicable to common stock		(0.02	)				0.05
Net income (loss)	$	0.06				$	(0.33	)
Average number of shares outstanding - Basic		16,910					16,177
Average number of shares outstanding - Diluted		22,561					16,177

* We have restated our earnings per share calculations for the three months ended June 30, 2003 to reflect earnings per share using the two-class method as defined in FASB Statement No. 128, Earnings per Share and clarified by EITF Issue No. 03-6, Participating Securities and the Two-Class Method.

RURAL/METRO CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

For The Year Ended June 30, 2004 and 2003

(in thousands)

	2004			2003
	(Unaudited)
Cash flows from operating activities:
Net income	$	6,211		$	8,966
Adjustments to reconcile net income to net cash provided by operating activities -
Non-cash portion of gain on disposition of Latin American operations		—			(13,732	)
Non-cash reversal of restructuring and other		—			(1,421	)
Depreciation and amortization		12,257			13,313
(Gain) loss on sale of property and equipment		39			(540	)
Provision for doubtful accounts		91,477			85,046
Earnings of minority shareholder		(475	)		1,507
Amortization of deferred financing costs		2,753			2,038
Amortization of debt discount		26			26
Other		—			(176	)
Change in assets and liabilities -
Increase in accounts receivable		(96,397	)		(81,589	)
(Increase) decrease in inventories		(235	)		656
Increase in prepaid expenses and other assets		(1,495	)		(476	)
(Increase) decrease in insurance deposits		(1,307	)		291
(Increase) decrease in other assets		(876	)		126
Increase in accounts payable		55			1,545
Increase (decrease) in accrued liabilities and other liabilities		1,421			(3,342	)
Increase in deferred revenue		1,047			908
Net cash provided by operating activities		14,501			13,146
Cash flows from investing activities:
Capital expenditures		(8,646	)		(9,400	)
Redeemable nonconvertible participating preferred stock		225			1,818
Net cash used in investing activities		(8,421	)		(7,582	)
Cash flows from financing activities:
Repayments on credit facility		(1,000	)		—
Repayment of debt and capital lease obligations		(1,248	)		(1,569	)
Distributions to minority shareholders		—			(914	)
Cash paid for debt modification costs		(515	)		(1,583	)
Proceeds from issuance of common stock		494			407
Net cash used in financing activities		(2,269	)		(3,659	)
Effect of currency exchange rate changes on cash		—			(21	)
Increase in cash		3,811			1,884
Cash, beginning of period		12,561			10,677
Cash, end of period	$	16,372		$	12,561

RURAL/METRO CORPORATION

RECONCILIATION OF EBITDA

TO CASH FLOW PROVIDED BY OPERATING ACTIVITIES

(in thousands)

	Year Ended June 30,						Three Months Ended June 30,
	2004			2003			2004			2003
Net income	$	6,211		$	8,966		$	1,263		$	(4,070	)
Add back:
Depreciation and amortization		12,257			13,313			2,789			3,208
Interest expense		29,243			27,819			7,137			7,367
Interest income		(97	)		(197	)		(30	)		(116	)
Income tax provision (benefit)		268			118			23			(58	)
EBITDA		47,882			50,019			11,182			6,331
Increase (decrease):
Interest expense		(29,243	)		(27,819	)		(7,137	)		(7,367	)
Interest income		97			197			30			116
Income tax provision (benefit)		(268	)		(118	)		(23	)		58
(Gain) loss on sale of property and equipment		39			(540	)		(65	)		(378	)
Non-cash portion of gain on disposal of Latin American operations		—			(13,732	)		—			—
Non-cash reversal of restructuring and other		—			(1,421	)		—			—
Provision for doubtful accounts		91,477			85,046			23,302			18,646
Earnings of minority shareholder		(475	)		1,507			(874	)		371
Deferred income taxes		—			—			—			—
Amortization of deferred financing costs		2,753			2,038			670			430
Amortization of debt discount		26			26			7			7
Other		—			(176	)		—			—
Changes in operating assets and liabilities		(97,787	)		(81,881	)		(17,357	)		(8,853	)
Net cash provided by operating actvities	$	14,501		$	13,146		$	9,735		$	9,361