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): November 11, 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 November 11, 2004, Rural/Metro Corporation (the “Company”) issued a press release announcing its preliminary unaudited financial results for the quarter ended September 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 November 11, 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: November 11, 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 REPORTS $5 MILLION IMPROVEMENT IN

FIRST-QUARTER NET INCOME, FULLY DILUTED EPS OF $0.20

• Net income of $4.4 million, compared to $664,000 loss in prior year

• Net revenue up 6% to $136.5 million

• EBITDA up 24% to $14.9 million

SCOTTSDALE, Ariz. (Nov. 11, 2004) – Rural/Metro Corporation (OTCBB: RURL), the leading national provider of medical transportation and fire protection services, today reported net income of $4.4 million, or $0.20 cents per fully diluted share, for the fiscal 2005 first quarter ended September 30, 2004. This compares to a net loss of $664,000, or a loss per fully diluted share of $0.04, for the prior year’s first quarter.

The company reported fiscal 2005 first-quarter net revenue of $136.5 million, an increase of 6% over net revenue of $128.7 million for the prior year’s first quarter. Medical transportation and related service revenue increased $6.1 million, and fire and other revenue grew to $1.7 million over the prior year. First-quarter net revenue growth reflects a combination of rate increases and same-service-area transport expansion.

Jack Brucker, President and Chief Executive Officer, said, “Our strong first-quarter results underscore the benefit of our long-term focus on targeted, quality revenue growth within established regional service areas. We are successfully expanding our markets, effectively leveraging regional infrastructures, and reinforcing our billing and collections results.”

For the three months ended September 30, 2004, EBITDA was $14.9 million, representing an increase of 24% over EBITDA of $12.0 million for the same 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 used in operating activities in a table that accompanies this press release.

The company reported total operating expenses as a percent of net revenue of 91.1% for the three months ended September 30, 2004, down from 93.0% percent for the same period a year ago. Additionally, payroll and employee benefits as a percentage of net revenue decreased to 53.1%, compared to 53.9% for the same period a year ago. The company attributed the improvements primarily to an increase in operational efficiencies and a reduction in unscheduled overtime hours.

Key operating statistics held steady, and in certain instances trended positively, for the three months ended September 30, 2004:

• EMS transports grew by approximately 8,500 over the prior year, attributable to same-service-area expansion efforts as well as demographic growth in these areas.

• Net/Net Average EMS Patient Charge (APC) increased to $317, from $308 for the same period of the prior year. The company considers APC to be an approximation of cash collected per transport.

• Quarter-to-date days’ sales outstanding (DSO) averaged 45 days.

Brucker continued, “We are proud to be the quality leader in our industry. That quality encompasses patient care, employee training, documentation and billing practices, and the technology we develop to support all of these efforts. We believe this approach has contributed to improvements in our financial results and will continue to sustain our performance in the future.”

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

	Q1 ‘04 (9/30/03)		Q2 ‘04 (12/31/03)		Q3 ‘04 (3/31/04)		Q4’04 (6/30/04)		Q1’05 (9/30/04)
EMS Transports (1)		256,507		262,586		266,064		259,953		265,045
Net/Net Average EMS Patient Charge (2)	$	308	$	308	$	312	$	312	$	317
Average DSO (QTD) (3)		42		45		45		45		45

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

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(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 quarterly DSO is defined as average accounts receivable divided by net revenue per day, as calculated on a quarter-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 Thursday, November 11, 2004, beginning at 8 a.m. Pacific/9 a.m. Mountain/11 a.m. Eastern. The call will be broadcast live on the company’s web site at www.ruralmetro.com. A replay will be available from 2 p.m. Eastern on November 12, 2004 through midnight November 19, 2004. The replay can be accessed by dialing 888-203-1112 (domestic) or 719-457-0820 (international). Please use the confirmation code 967178 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 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 margin. Additional factors that could affect the company are described in its Form 10-K for the year ended June 30, 2004 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)

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RURAL/METRO CORPORATION

CONSOLIDATED BALANCE SHEET

(unaudited)

(in thousands)

	September 30, 2004			June 30, 2004
ASSETS
Current assets:
Cash	$	7,622		$	16,372
Accounts receivable, net of allowance for doubtful accounts of $64,500 and $59,430 at September 30, 2004 and June 30, 2004, respectively		66,893			65,348
Inventories		11,870			11,738
Prepaid expenses and other assets		8,722			8,512
Total current assets		95,107			101,970
Property and equipment, net		41,311			40,283
Goodwill		40,850			41,100
Insurance deposits		8,348			9,244
Other assets		11,528			12,644
	$	197,144		$	205,241
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	8,643		$	13,833
Accrued liabilities		48,938			57,273
Deferred revenue		19,588			18,650
Current portion of long-term debt		1,520			1,495
Total current liabilities		78,689			91,251
Long-term debt, net of current portion		303,702			304,057
Deferred income taxes		650			650
Total liabilities		383,041			395,958
Minority interest		1,818			1,509
Stockholders’ equity (deficit):
Common stock, $.01 par value 40,000,000 shares authorized, 21,972,169 and 21,890,816 shares issued and outstanding at September 30, 2004 and June 30, 2004, respectively		220			219
Additional paid-in capital		147,168			147,075
Accumulated deficit		(333,864	)		(338,281	)
Treasury stock		(1,239	)		(1,239	)
Total stockholders’ equity (deficit)		(187,715	)		(192,226	)
	$	197,144		$	205,241

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RURAL/METRO CORPORATION

CONSOLIDATED STATEMENT OF INCOME

For The Three Months Ended September 30, 2004 and 2003

(unaudited)

(in thousands, except per share amounts)

	Q1 FY ‘05			% of Net revenue		Q1 FY ‘04			% of Net revenue
Net revenue	$	136,463		100.0	%	$	128,656		100.0	%
Operating expenses
Payroll and employee benefits		72,488		53.1	%		69,398		53.9	%
Provision for doubtful accounts		21,562		15.8	%		20,237		15.7	%
Depreciation and amortization		2,988		2.2	%		2,840		2.2	%
Other operating expenses		27,337		20.0	%		27,176		21.1	%
Total operating expenses		124,375		91.1	%		119,651		93.0	%
Operating income		12,088		8.9	%		9,005		7.0	%
Interest expense		(7,320	)	-5.4	%		(8,014	)	-6.2	%
Interest income		130		0.1	%		29		0.0	%
Income from continuing operations before income taxes and minority interest		4,898		3.6	%		1,020		0.8	%
Income tax provision		(95	)	-0.1	%		(86	)	-0.1	%
Minority interest		(309	)	-0.2	%		(274	)	-0.2	%
Income from continuing operations		4,494		3.3	%		660		0.5	%
Loss from discontinued operations		(77	)	-0.1	%		(54	)	0.0	%
Net income	$	4,417		3.2	%	$	606		0.5	%
Less: Net income allocated to redeemable nonconvertible participating preferred stock under the two-class method		—					(69	)
Less: Accretion of redeemable nonconvertible participating preferred stock		—					(1,201	)
Net income (loss) applicable to common stock	$	4,417				$	(664	)
Income (loss) per share
Basic -
Income (loss) from continuing operations applicable to common stock	$	0.20				$	(0.04	)
Income (loss) from discontinued operations applicable to common stock		—					—
Net income (loss)	$	0.20				$	(0.04	)
Diluted -
Income (loss) from continuing operations applicable to common stock	$	0.20				$	(0.04	)
Income (loss) from discontinued operations applicable to common stock		—					—
Net income (loss)	$	0.20				$	(0.04	)
Average number of common shares outstanding - Basic		21,959					16,399
Average number of common shares outstanding - Diluted		22,679					16,399

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RURAL/METRO CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

For The Three Months Ended September 30, 2004 and 2003

(unaudited)

(in thousands)

	Q1 FY ‘05			Q1 FY ‘04
Cash flows from operating activities:
Net income	$	4,417		$	606
Adjustments to reconcile net income to cash used in operating activities -
Depreciation and amortization		3,237			3,363
Loss on sale of property and equipment		64			22
Provision for doubtful accounts		21,588			21,852
Earnings of minority shareholder		309			274
Amortization of deferred financing costs		670			735
Amortization of debt discount		6			6
Change in assets and liabilities -
Increase in accounts receivable		(23,133	)		(25,945	)
Increase in inventories		(132	)		(192	)
(Increase) decrease in prepaid expenses and other assets		(210	)		542
Decrease (increase) in insurance deposits		896			(337	)
Decrease in other assets		68			156
Decrease in accounts payable		(5,190	)		(3,120	)
Decrease in accrued liabilities and other liabilities		(8,335	)		(4,365	)
Increase in deferred revenue		938			949
Net cash used in operating activities		(4,807	)		(5,454	)
Cash flows from investing activities:
Capital expenditures		(3,708	)		(1,241	)
Proceeds from the sale of property and equipment		7			33
Net cash used in investing activities		(3,701	)		(1,208	)
Cash flows from financing activities:
Repayments on credit facility		—			(1,000	)
Repayment of debt and capital lease obligations		(336	)		(274	)
Cash paid for debt modification costs		—			(515	)
Proceeds from the issuance of common stock		94			169
Net cash used in financing activities		(242	)		(1,620	)
Decrease in cash		(8,750	)		(8,282	)
Cash, beginning of period		16,372			12,561
Cash, end of period	$	7,622		$	4,279

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RURAL/METRO CORPORATION

RECONCILIATION OF EBITDA

TO CASH FLOW USED IN OPERATING ACTIVITIES

For The Three Months Ended September 30, 2004 and 2003

(unaudited)

(in thousands)

	Q1 FY ‘05			Q1 FY ‘04
Net income	$	4,417		$	606
Add back:
Depreciation and amortization		3,237			3,363
Interest expense		7,320			8,014
Interest income		(130	)		(29	)
Income tax provision		95			90
EBITDA		14,939			12,044
Increase (decrease):
Interest expense		(7,320	)		(8,014	)
Interest income		130			29
Income tax provision		(95	)		(90	)
Loss on sale of property and equipment		64			22
Provision for doubtful accounts		21,588			21,852
Earnings of minority shareholder		309			274
Amortization of deferred financing costs		670			735
Amortization of debt discount		6			6
Changes in operating assets and liabilities		(35,098	)		(32,312	)
Net cash used in operating activities	$	(4,807	)	$	(5,454	)

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