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): March 22, 2007

RURAL/METRO CORPORATION

(Exact name of registrant as specified in its charter)

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

9221 East Via de Ventura

Scottsdale, Arizona

85258

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s telephone number, including area code: (480) 994-3886

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 March 22, 2007, Rural/Metro Corporation (the “Company”) issued a press release announcing its unaudited financial results for the quarter ended December 31, 2006. The full text of the Company’s press release is attached hereto as Exhibit 99.1 and is incorporated in this Item 2.02 by reference. The press release contains forward-looking statements regarding the Company.

Item 7.01 Other Events.

FORWARD LOOKING STATEMENTS

The statements, estimates, projections, guidance or outlook contained in this report (including the exhibits furnished with this report) include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). When used in this report and in filings by us with the SEC, in our news releases, presentations to securities analysts or investors, and in oral statements made by or with the approval of one of our executive officers, the words or phrases “believes,” “anticipates,” “expects,” “plans,” “seeks,” “intends,” “will likely result,” “estimates,” “projects” or similar expressions are intended to identify such forward-looking statements. These statements are intended to take advantage of the “safe harbor” provisions of the PSLRA. These forward-looking statements involve risks, and uncertainties, including those described below under “Cautionary Statements”, that may cause our actual results to differ materially from the results discussed in the forward-looking statements. Any or all forward-looking statements in this report and in any other public filings or statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including those described below under “Cautionary Statements.” Forward-looking statements are not guarantees of future performance or results and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. Actual future results may vary materially from expectations expressed in this report or any of our prior communications.

Except to the extent otherwise required by federal securities laws, we do not undertake to address or update forward-looking statements in this report or any future filings or communications regarding our business or operating results.

CAUTIONARY STATEMENTS

The following cautionary statements update any risk factors filed by the Company with the Securities and Exchange Commission (the “SEC”).

Cautionary Statements Relating to Our Inventory Restatement Due to an Error and the Related Delay in Our Filings

As we announced on February 14, 2007, our historical financial information should no longer be relied upon.

On February 14, 2007, we announced that management of the Company had concluded, and the Audit Committee had approved the conclusion, that due solely to our error in improperly including certain durable medical supply items within inventory, the Company’s consolidated financial statements as of and for the years ended June 30, 2006, 2005 and 2004, and the interim periods therein, and the unaudited condensed consolidated financial statements as and for the three months ended September 30, 2006, and any related financial information, should no longer be relied upon.

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Until we are able to become current with our filings with the SEC, we may face several adverse consequences.

As described above, we have delayed filing our Quarterly Report on Form 10-Q for the quarter ended December 31, 2006 and, although we are working as quickly as possible to complete our restatement and return to current filing status, we cannot provide assurance as to when this process will be completed. Because we are not current with our filings with the SEC, investors in our securities do not have the information required by SEC rules regarding our business and financial condition with which to make decisions regarding investment in our securities. In addition, until we are current with our SEC filings, the SEC will not declare a registration statement covering a public offering of securities effective under the Securities Act of 1933, and we will not be able to make offerings pursuant to existing registration statements or pursuant to certain “private placement” rules of the SEC under Regulation D to any purchasers not qualifying as “accredited investors.” We also will not be eligible to use a “short form” registration statement on Form S-3 to make equity or debt offerings for a period of 12 months after the time we become current in our filings. These restrictions could adversely affect our ability to raise capital, as well as our business, financial condition and results of operations. In addition, as discussed in the risk factor below, if we are not able to make these filings by April 23, 2007, our ability to obtain immediate and continued access to additional liquidity would likely be impaired, unless we received waivers or amendments from our lenders. We cannot assure you that these amendments or waivers will be received.

In addition, due to the need for restatement of the financial statements identified above, the Company did not timely file the Quarterly Report on Form 10-Q for the quarter ended December 31, 2006, as disclosed on Form 12b-25 filed on February 12, 2007. As a result, the Company received a notice of default on February 22, 2007 from the trustee of its 9.875% Senior Subordinated Notes due 2015, and its 12.75% Senior Discount Notes due 2016. Any default under the Indentures that govern the notes also constitutes an “event of default” under the Company’s 2005 Credit Facility and could lead to an acceleration of the unpaid principal and accrued interest under the 2005 Credit Facility, unless a waiver is obtained. On March 13, 2007, the Company obtained a waiver of any defaults, including the event of default described above, under its 2005 Credit Facility. In addition, any default under the notes relating to the untimely filing of the Quarterly Report on Form 10-Q for the quarter ended December 31, 2006, will be cured within the 60-day cure period (April 23, 2007) upon the filing of such with the SEC. We cannot assure that we will be able to file the Quarterly Report on Form 10-Q for the quarter ended December 31, 2006 by April 23, 2007, or if we are not able to make these filings by April 23, 2007, that we will be able to obtain additional amendments or waivers.

Material weaknesses or deficiencies in our internal control over financial reporting could harm stockholder and business confidence on our financial reporting, our ability to obtain financing and other aspects of our business. Maintaining an effective system of internal control over financial reporting is necessary for us to provide reliable financial reports.

Management reevaluated the Management Report on Internal Control Over Financial Reporting included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006 (the “2006 Management Internal Control Report”). We concluded that we had a material weakness in our internal control related to inventory. The existence of a material weakness as of June 30, 2006 would preclude management from concluding that the Company’s internal control over financial reporting was effective as of June 30, 2006. The Company intends to amend its 2006 Management Internal Control Report. The existence of a material weakness is an indication that there is more than a remote likelihood that a material misstatement of our financial statements will not be prevented or detected. As a result of this material weakness, management’s assessment as of June 30, 2006 will conclude that our internal control over financial reporting is ineffective. It is also possible that additional material weaknesses will be identified in the future.

Because we will conclude that our internal control over financial reporting is not effective and because we expect our independent registered public accountants to issue an adverse opinion on the effectiveness of our internal controls over financial reporting, and to the extent we identify future weaknesses or deficiencies, there could be material misstatements in our financial statements and we could fail to meet our financial reporting obligations. As a result, our ability to obtain additional financing, or obtain additional financing on favorable terms, could be materially and adversely affected which, in turn, could materially and adversely affect our business, our financial condition and the market value of our securities. In addition, perceptions of us could also be adversely affected among customers, lenders, investors, securities analysts and

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others. This current material weakness or any future weaknesses or deficiencies could also hurt confidence in our business and consolidated financial statements and our ability to do business with these groups.

Cautionary Statements Relating to Our Business

We may fail to receive reimbursements from third-party payers.

We provide our medical transportation services on a fee-for-service basis and collect a substantial portion of our revenue from reimbursements from third-party payers, including government-funded healthcare programs such as Medicare and Medicaid and private insurance programs. We recognize revenue when we provide medical transportation services; however, the reimbursement process is complex and there can be lengthy delays before we receive payment. In addition, third-party payers may disallow, in whole or in part, requests for reimbursement based on assertions that certain amounts and services are not reimbursable or that additional supporting documentation is necessary. Retroactive adjustments made by third-party payers may change amounts realized from them. We received approximately 90 and 91 percent of our medical transportation fee collections from third-party payers during fiscal 2006 and 2005, respectively, including approximately 27 percent and 28 percent from Medicare during fiscal 2006 and 2005, respectively, and approximately 15 percent from Medicaid for both fiscal years. To the extent our claims are not reimbursed or allowed, it could have a material adverse effect on our financial condition, results of operations and cash flows.

We may not be able to successfully collect amounts billed directly to individual patients.

We are required to provide emergency medical transportation service regardless of the ability or willingness of the patient to pay. We face the risk of not being paid by individuals that require emergency medical transportation service and the risk of increased rates of non-payment should the number of such individuals using our services increase in our service areas. An increase in the number of uninsured individuals in the populations that we serve will increase these risks. Our failure to receive payments from a significant number of individual patients could result in a material adverse effect on our business, financial condition, results of operations or cash flows.

Claims against us could exceed our insurance coverage; we may not have coverage for certain claims.

We are subject to a significant number of accident, injury and patient care incident lawsuits as a result of the nature of our business and day-to-day operations. Some of these lawsuits may involve large claim amounts and substantial defense costs. In order to minimize the risk of our exposure, we maintain insurance coverage for workers’ compensation, general liability, automobile liability and professional liability claims. In certain limited instances we may not have coverage for certain claims. When we do have coverage, the coverage limits of our policies may not be adequate. Liabilities in excess of our insurance coverage could have a material adverse effect on our business, financial condition, results of operations or cash flows. Claims against us, regardless of their merit or outcome, also may have an adverse effect on our reputation and business.

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We may experience future increases in the cost of our insurance programs that could adversely affect our business, financial condition, results of operations or cash flows.

An increase in our claim experience may result in increases in our insurance premiums. If we experience increases in our premiums, it could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Two insurance companies with which we have previously done business are in liquidation proceedings and we may be required to cover a portion of claims covered by these insurers or lose deposits we have with them.

Two of our previous workers’ compensation and general liability programs insurers, Reliance Insurance Company (“Reliance”), from whom we purchased coverage for policy years 1992 through 2000, and Legion Insurance Company (“Legion”), from whom we purchased coverage in 2001 and 2002, are currently in liquidation proceedings in Pennsylvania. In the event that we incur workers’ compensation or general liability claims for the policy years covered by these insurers and they are not covered by the applicable insurer or state guaranty fund, we may be required to fund any losses related to such claims. As of June 30, 2006, we had letters of credit totaling $3.7 million issued on behalf of Reliance along with $1.3 million of cash on deposit with Mutual Indemnity, a Legion affiliate. The liquidation proceedings may result in the loss of all or part of the collateral and/or funds currently held by these insurers, and may result in restricted access to both insurance and reinsurance proceeds relating to our general liability program. A requirement to fund significant claims or the loss of some or all of the amounts posted as collateral could have a material adverse effect on our business, financial condition, result of operations and cash flows.

Our revenues may decline if Medicare reduces the reimbursements it pays to us or changes its programs.

Our revenues may decline if Medicare reduces its reimbursement rates or otherwise changes its current Medicare fee schedule. We received approximately 27 percent and 28 percent of our medical transportation fee collections from Medicare during fiscal 2006 and 2005, respectively. Any reductions in reimbursement rates or other changes to the Medicare fee schedule could result in a reduction in reimbursements we receive for our medical transportation services.

Some state and local governments regulate our rate structures and may limit our ability to increase our rates or maintain a satisfactory rate structure.

State or local government regulations or administrative policies regulate the rates we can charge in some states for medical transportation services. For example, the State of Arizona establishes the rates we may charge in the various communities we serve in that state. Medical transportation services revenue generated in Arizona accounted for approximately 33 percent and 31 percent of net revenue for fiscal 2006 and 2005, respectively. In some service areas in other states in which we are the exclusive provider of services, the municipality or fire district sets the rates for emergency medical transportation services pursuant to a master contract and establishes the rates for general medical transportation services that we are permitted to charge. In areas where we are regulated, there is no assurance that we will receive medical transportation service rate increases on a timely basis, or at all.

Due to budget deficits in many states, significant decreases in state funding for Medicaid programs have occurred or are proposed. Some states have reduced the scope of Medicaid eligibility and coverage. For example, patients covered by Medicare are required to make a 20 percent co-payment for medical transports. In most states, Medicaid makes this co-payment on behalf of its insureds (this is called a “cross-over payment”). Indiana recently passed legislation eliminating crossover payments by Medicaid and prohibiting medical transportation providers from collecting the 20 percent co-payment from patients. Other states have proposed taking similar steps.

If we are not able to charge satisfactory rates in one or more of the communities in which we operate it could have a material adverse effect on our revenues, results of operations or cash flows.

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Our business is subject to laws, rules and regulations that can impose fines, penalties or other liabilities, revoke necessary licenses or otherwise cause material adverse effects.

Numerous laws, rules and regulations govern the medical transportation and fire fighting service business covering matters such as licensing, rates, employee certification, environmental matters and radio communications. Certificates of Need that certain states may employ to award market rights to geographic areas may change. Master contracts from governmental authorities are subject to risks of cancellation or unenforceability as a result of budgetary and other factors and may subject us to certain liabilities or restrictions.

Any failure to comply with all, or any changes in, applicable laws, rules and regulations could result in the revocation of contracts or licenses to conduct business in the relevant jurisdictions, fines or cause other material adverse effects. Federal and state laws also can require the owner or operator of real property to clean up historic contamination (or pay for that cleanup), without regard to fault.

Changes to existing programs also can create unanticipated risks.

Certain governmental actions could:

• change existing laws, rules or regulations;

• adopt new laws, rules or regulations that increase our cost of doing business;

• lower reimbursement levels; or,

• otherwise adversely affect our business, financial condition, results of operations or cash flows.

Our business is subject to substantial regulation and, if we fail to comply with all applicable laws and government regulations, we could suffer penalties or be required to make significant changes to our operations.

We are subject to extensive regulation at both the federal and state levels. The laws that directly or indirectly affect our ability to operate our business include the following:

• federal laws (including the Federal False Claims Act) that prohibit entities and individuals from knowingly or recklessly making claims to Medicare, Medicaid and other government programs, as well as third-party payers, that contain false or fraudulent information;

• a provision of the Social Security Act, commonly referred to as the “anti-kickback statute,” that prohibits the knowing and willful offering, payment, solicitation or receipt of any bribe, kickback, rebate or other remuneration in return for the referral or recommendation of patients for items and services covered, in whole or in part, by federal healthcare programs, such as Medicare and Medicaid;

• a provision of the Social Security Act that imposes criminal penalties on healthcare providers who fail to disclose or refund known overpayments;

• similar state law provisions pertaining to anti-kickback, self-referral and false claims issues which typically are not limited to relationships with federal payers;

• provisions of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) that prohibit knowingly and willfully executing a scheme or artifice to defraud any healthcare benefit program or falsifying,

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concealing or covering up a material fact or making any material false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services;

• federal laws that impose civil administrative sanctions for, among other violations, inappropriate billing of services to federally funded healthcare programs, and employing individuals who are excluded from participation in federally funded healthcare programs;

• reassignment of payment rules that prohibit certain types of billing and collection practices in connection with claims payable by the Medicare and Medicaid programs and some other payers programs and some other payers;

• provisions of HIPAA limiting how healthcare providers may use and disclose individually identifiable health information and the security measures taken in connection with that information and related systems, as well as similar state laws; and

• federal and state laws governing medical transport services, including the licensing or certification of medical transportation service providers, training and certification of medical personnel, the scope of services that may be provided by medical personnel, staffing requirements, medical control, medical procedures, communications systems, vehicles and equipment.

If our operations are found to be in violation of any of the laws and regulations described above or the other laws and regulations which govern our activities, we may be subject to penalties, including civil and criminal penalties, exclusion from federal healthcare programs, damages, fines and the curtailment of our operations. Any material penalties, individually or in the aggregate, would adversely affect our ability to operate our business and our financial results. The risk of our being found in violation of these laws and regulations is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are sometimes open to a variety of interpretations. Any action against us for violation of these laws or regulations, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

Healthcare laws and regulations may change significantly in the future. We monitor these developments and modify our operations from time to time where we perceive a need to do so in response to the regulatory changes. However, we cannot assure you that any new healthcare laws or regulations will not materially adversely affect our business. We cannot assure you that a review of our business by judicial, law enforcement, or regulatory authorities will not result in a determination that could adversely affect our operations or that healthcare regulation will not change in a way that may have a material adverse effect on our business, financial condition, results of operations or cash flows.

HIPAA regulations could have a material adverse effect on our business either if we fail to comply with the regulations or as a result of the costs associated with compliance.

The privacy standards under HIPAA took effect April 14, 2001 and cover all individually identifiable health information used or disclosed by a healthcare provider. HIPAA establishes standards concerning the privacy, security and the electronic transmission of patients’ health information. Under the statute, there are civil penalties of up to $100 per violation (not to exceed $25,000 per calendar year for each type of violation) and criminal penalties for knowing violations of up to $250,000 per violation. The enforcing agency, the Office of Civil Rights (the “OCR”) of the Department of Health and Human Services, has announced a compliance-based and compliance improvement type of enforcement program. We believe there is not sufficient basis to understand OCR’s enforcement posture and the potential for fines which may result from OCR’s finding of a violation of the privacy regulations. The significant costs associated with compliance and the potential penalties as a result of our failure to comply with the rule could result in a material adverse effect on our business, financial condition, results of operations or cash flows.

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HIPAA also mandates compliance with the approved HIPAA format when we submit claims electronically. We are filing claims in the approved HIPAA format with all of our Medicare plans. In addition, we await announcements from the commercial insurers regarding their compliance with the electronic claims submission requirements.

The final security rule, which became effective April 20, 2005, requires healthcare suppliers and other entities to set security standards for health information and to maintain reasonable and appropriate safeguards to ensure the integrity and confidentiality of this information. It also requires that we protect health information against unauthorized use or disclosure. We believe we have developed the appropriate policies and procedures to comply with the final security rule. Failure to do so could result in a material adverse effect on our business, financial condition, results of operations or cash flows.

We could experience a material adverse effect on our business, financial condition, results of operations, or cash flows due to: (i) significant costs associated with continued compliance under HIPAA or related legislative enactments, (ii) potential fines from our noncompliance, (iii) adverse affects on our collection cycle arising from non-compliance or delayed HIPAA compliance by our payers, customers and other constituents or (iv) impacts to the healthcare industry as a whole that may directly or indirectly cause a material adverse affect on our business.

Providers and suppliers in the health care industry, such as us, are the subject of federal and state investigations related to billing and other matters.

Both federal and state government agencies have pursued civil and criminal enforcement efforts related to billing and other matters as part of numerous ongoing investigations of healthcare companies and their executives and managers. Although there are a number of civil and criminal statutes that can be applied to healthcare providers, a significant number of these investigations involve the Federal False Claims Act. These investigations can be initiated not only by the government but also by a private party asserting direct knowledge of fraud. These “qui tam” whistleblower lawsuits may be initiated against any person or entity alleging such person or entity has knowingly or recklessly presented, or caused to be presented, a false or fraudulent request for payment from the federal government, or has made a false statement or used a false record to get a claim approved. Penalties for False Claims Act violations include fines ranging from $5,500 to $11,000 for each false claim, plus up to three times the amount of damages sustained by the federal government. A False Claims Act violation may provide the basis for exclusion from the federally-funded healthcare programs. In addition, some states have adopted similar insurance fraud, whistleblower and false claims provisions.

From time to time, we receive requests and subpoenas for information from government agencies in connection with their regulatory and investigative authority, and are likely to be subject to such requests and subpoenas for information in the future. We review such requests and subpoenas and attempt to take appropriate action. We are also subject to requests and subpoenas for information in independent investigations. A determination by a regulatory or investigative authority in any of these investigations that we have violated the Federal False Claims Act or another civil or criminal statute could result in significant penalties or exclusion from federally-funded healthcare programs, which could result in a material adverse effect on our business, financial condition, results of operations or cash flows.

We are the subject of certain lawsuits, which if determined adversely to us, could harm our business.

We are a party to, or otherwise involved in, lawsuits, claims, proceedings and other legal matters that have arisen in the ordinary course of conducting our business. We cannot predict with certainty the ultimate outcome of any of these lawsuits, claims, proceedings and other legal matters to which we are a party to, or otherwise involved in, due to, among other things, the inherent uncertainties of litigation, government investigations and proceedings and legal matters generally. An unfavorable outcome in any of the lawsuits pending against us, including those described above, could result in substantial potential liabilities and have a material adverse effect on our business, consolidated financial condition and results of operations, our liquidity, our operations, and/or our ability to comply with any debt covenants. Further, these proceedings, and our actions in response to these proceedings, could result in substantial potential liabilities,

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additional defense and other costs, increase our indemnification obligations, divert management’s attention, and/or adversely affect our ability to execute our business and financial strategies.

We are dependent on maintaining our business relationships.

We depend to a great extent on contracts with municipalities or fire districts to provide emergency medical transportation services. Contracts or other agreements with municipalities, counties or fire districts may have certain budgetary approval constraints. Failure to allocate funds for a contract may adversely affect our ability to continue to perform services without suffering significant losses. In addition, most of our contracts are terminable by either party upon agreed notice periods or upon the occurrence of certain events of default. We may not be successful in retaining our existing contracts or in obtaining new contracts for emergency medical transportation or other services. The loss or cancellation of several of these contracts could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Areas in which we provide subscription fire protection services may be converted to tax-supported fire districts or annexed by municipalities.

We provide residential and commercial fire protection services on a subscription-fee basis to property owners in unincorporated areas who do not receive services through municipal fire departments, volunteer fire departments, or fire protection districts. If several of the areas in which we provide subscription services were to convert to tax-supported fire districts or be annexed by municipalities, the loss of those arrangements could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We may not accurately assess the costs of or revenues generated by new contracts, which could adversely affect our business, financial conditions, results of operations or cash flows.

Our new contracts increasingly involve a competitive bidding process. When we obtain new contracts, we must accurately assess the costs we will incur in providing services, as well as other factors such as expected transport volume, geographical issues affecting response time and the implementation of technology upgrades, in order to realize adequate profit margins or otherwise meet our financial and strategic objectives. Increasing pressures from healthcare payers to restrict or reduce reimbursement rates at a time when the costs of providing medical services continue to increase make assessing the costs associated with the pricing of new contracts, as well as maintenance of existing contracts, more difficult. In addition, integrating new contracts, particularly those in new geographic locations, could prove more costly, and could require more management time, than we anticipate. Our failure to accurately predict costs or to negotiate an adequate profit margin could have a material adverse effect on our business, financial condition, results of operations or cash flows. We face risks in attempting to terminate unfavorable contracts prior to their stated termination date because of the possibility of forfeiting performance bonds and the potential material adverse effect on our public relations, business, financial condition, results of operations or cash flows.

We are in a highly competitive industry. If we do not compete effectively, we could lose business or fail to grow.

The medical transportation service industry is highly competitive. We compete to provide our emergency medical transportation services with governmental entities, hospitals, local and volunteer private providers and private providers, including national and regional providers such as American Medical Response. In order to compete successfully, we must make continuing investments in our fleet, facilities, and operating systems. We believe that counties, fire districts and municipalities and health-care institutions consider the following factors in awarding a contract:

• quality of medical care;

• historical response time performance;

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• customer service;

• financial stability;

• personnel policies and practices;

• managerial strength; and

• cost.

Some of our current competitors and certain potential competitors may have access to greater capital and other resources than us. Counties, municipalities, fire districts, and healthcare organizations that currently contract for medical transportation services could choose to provide medical transportation services directly in the future. We may experience increased competition from fire departments in providing emergency medical transportation service. We cannot assure you that we will be able to successfully compete to provide our medical transportation services.

Municipal fire departments, tax-supported fire districts and volunteer fire departments represent the principal providers of fire protection services for residential and commercial properties. Private companies represent only a small portion of the total fire protection market and generally provide services where a tax-supported municipality or fire district has decided to contract for these services or has not assumed the financial responsibility for fire protection. In these situations, we provide services for a municipality or fire district on a contract basis or provide fire protection services directly to residences and businesses who subscribe for this service.

Private providers, such as Wackenhut Services, Inc., also provide fire protection services to airports and industrial sites. We cannot assure you that:

• we will be able to continue to maintain current contracts or subscriptions or to obtain additional fire protection business on a contractual or subscription-fee basis;

• fire districts or municipalities will not choose to provide fire protection services directly in the future; or

• we will be able to successfully compete with private providers of fire protection services.

The departure of our key management could adversely affect our business, financial condition, results of operations or cash flows.

Our success depends upon our ability to recruit and retain key management personnel. We could experience difficulty in retaining our current key management personnel or in attracting and retaining necessary additional key management personnel. We have entered into employment agreements with some, but not all of our executive officers and certain other key management personnel. Failure to retain or replace our key management may have an adverse effect on our business, financial condition, results of operations or cash flows.

We may not be able to successfully recruit and retain healthcare professionals with the qualifications and attributes desired by us and our customers.

Our ability to recruit and retain healthcare professionals significantly affects our business. Medical personnel shortages in some of our market areas currently make the recruiting, training and retention of full-time and part-time personnel more difficult and costly. Our internal growth will require the addition of new personnel. Failure to retain or replace our medical personnel or to attract new personnel may have an adverse effect on our business, financial condition, results of operations or cash flows.

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We may not pay dividends.

We have never paid any cash dividends on our common stock. We currently plan to retain any earnings for use in our business rather than to pay cash dividends. Payments of any cash dividends in the future will depend on our financial condition, results of operations and capital requirements as well as other factors deemed relevant by our Board of Directors. Our senior subordinated notes due 2015, senior discount notes due 2016 and our credit facilities contain restrictions on our ability to pay cash dividends, and any future borrowings may contain similar restrictions.

It may be difficult for a third party to acquire us and this could depress our stock price.

We are a Delaware company which has adopted a Shareholder Rights Plan pursuant to which we issued one preferred stock purchase right, or a Right, for each outstanding share of common stock. Our Shareholder Rights Plan could make it difficult for a third party to acquire us, even if doing so would benefit security holders. The rights issued under the plan have certain anti-takeover effects. The rights will cause substantial dilution to a person or group that attempts to acquire us in a manner or on terms not approved by our Board of Directors. Anti-takeover provisions in Delaware law, certain provisions of our charter and the Shareholder Rights Plan could depress our stock price and may result in entrenchment of existing management, regardless of their performance.

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

Exhibit No.	Description
99.1	Press release, dated March 22, 2007.

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.

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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: March 22, 2007	By:	/s/    KRISTINE A. BEIAN-PONCZAK
		Kristine A. Beian-Ponczak Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release, dated March 22, 2007.

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EX-99.1

Exhibit 99.1

CONTACT:	Liz Merritt, Rural/Metro Corporation (investors)
	(480) 606-3337
	Jeff Stanlis, Hayden Communications (media)
	(602) 476-1821

For immediate release

RURAL/METRO ANNOUNCES FISCAL 2007 SECOND QUARTER RESULTS

• Announces Withdrawal of Shelf Registration Statement

• $7.0 Million Unscheduled Principal Payment

• Effect of Inventory Restatement and Change in Revenue Recognition Policy

SCOTTSDALE, Ariz. (March 22, 2007) – Rural/Metro Corporation (Nasdaq: RURL), a leading provider of medical transportation and private fire protection services, today reported results for its Fiscal 2007 second quarter and six months ended December 31, 2006. The results reflect the Company’s previously announced decision to change its revenue recognition method to present gross revenue net of contractual discounts and uncompensated care, as previously disclosed in the Company’s press release and Form 8-K filed with the Securities and Exchange Commission (the “SEC”) March 19, 2007.

In addition, the results reflect the Company’s restatement related to errors identified in accounting for its inventory, as reflected in its consolidated financial statements for fiscal years 2006, 2005, and 2004, with selected financial data for fiscal years ended June 30, 2002 through June 30, 2006. The Company will be providing amended restated consolidated financial statements for these periods as soon as practicable pursuant to amendments to its Annual Report on Form 10-K for the fiscal year ended June 30, 2006, and its Quarterly Reports on Form 10-Q for the three-month periods ended, respectively, on March 31 and September 30, 2006. The Company also will be filing its Form 10-Q as soon as practicable for the quarter ended December 31, 2006.

Registration Statement Withdrawal

The Company also announced today that it would withdraw its Registration Statement on Form S-3, which was previously filed with the SEC on February 8, 2006 (“Registration Statement”), due to the Company’s desire to refocus its deleveraging strategies on non-dilutive refinancing opportunities.

Jack Brucker, President and Chief Executive Officer, said, “We now believe the Registration Statement may have affected our stock price, and it is not our desire to conduct a dilutive transaction. We are committed to deleveraging our balance sheet by remaining flexible and exploring what we believe to be the best available strategies. At the time we filed the Registration Statement, we believed it provided added flexibility and a shortened preparation time to raise capital and reduce debt through a potential equity offering. However, in our opinion, in light of our steady generation of free cash flow and our ability to pay down $42.0 million in unscheduled Term Loan B principal, refinancing at lower interest rates and reducing our overall cost of debt without diluting existing shareholders may be the optimal way to maximize value to our shareholders.”

Mr. Brucker continued, “It is our goal to manage our business to emphasize profitability and maximize free cash flow, with a strategic objective to reduce debt. We strive to be highly responsive to the improving economics of the capital markets and believe that a complete refinancing process within the next 12 to 24 months is the best strategy. As a result, we are in discussions with our lead agent from the March 2005 refinancing on this matter.”

The Registration Statement has not been declared effective by the SEC, and no securities were offered or sold in connection with the Registration Statement.

Unscheduled Principal Payment

The Company also announced today that it made a $7.0 million unscheduled principal payment from operating cash flows, to further reduce the outstanding balance of its Term Loan B to $93.0 million.

“We continue to benefit from a recurring, predictable revenue model supported by long-term contracts and an increasing demand for services,” Mr. Brucker said. “This model provides a fundamentally consistent cash flow stream that we will continue to apply toward deleveraging the enterprise.”

The Company has not yet filed its Quarterly Report on Form 10-Q for the quarter ended December 31, 2006, which as the Company has previously disclosed (in a press release in a Form 8-K dated February 28, 2007), resulted in its receipt of a notice of default from the trustee for its 9.875% Senior Subordinated Notes and its 12.75% Senior Discount Notes, which resulted in a default under the 2005 Credit Agreement. A waiver has been obtained for the credit agreement default. Any default under the notes relating to the untimely filing of the Quarterly Report on Form 10-Q for the quarter ended December 31, 2006 will be cured within the 60-day cure period, which expires April 23, 2007, upon the filing of such report with the SEC.

Inventory Restatement

The Company finalized the pre-tax effect of its restatement of previously issued financial statements related to inventories for fiscal years 2002 through 2006 and the three months ended September 30, 2006. Prior-period financial statements have been restated for the impact of expensing certain medical supply items, resulting in inventory adjustments as follows:

Cumulative For Restated Periods	3 Mos. Ended 9/30/2006			FY 2006			FY 2005			FY 2004		FY 2003		FY 2002		Beg. Retained Earnings
$(4.3 million)	($	0.07	)	($	0.04	)	($	0.5	)	$	0.1	$	0.3	$	0.7	($	4.8	)

Please refer to the Company’s summary reconciliation of inventory adjustments as contained in the table titled “Restatement Adjustments and Restated Balances” included with this press release and with the Company’s Form 8-K.

Results of Operations for the Three Months Ended December 31, 2006

As noted, all results disclosed in this press release are as restated. Also, growth rates reflect the presentation of revenue net of reserves for uncompensated care.

Second-quarter fiscal 2007 consolidated net revenue increased $3.5 million, or 3.1 percent, to $116.9 million, compared to revenue of $113.4 million in the prior year. Revenue growth was driven by a $3.1 million increase related to medical transport volume, a $1.3 million increase related to new contract revenue, $1.7 million increase related to growth in rates, and a $1.4 million increase in fire other services revenue, offset by a $4.0 million increase in uncompensated care in accordance with the Company’s change in revenue recognition policy (which is presented retrospectively over the periods covered as described above).

“Revenue growth in our medical transportation business continues to be driven by an increasing demand for services, as well as higher rates,” Mr. Brucker said. “We also continue to benefit from rate increases for fire protection services, as well as increases in the demand for subscription fire protection services. However, we also have experienced increasing levels of uncompensated care, which are reflected in our net revenue growth rates.”

Payroll and employee benefits increased $5.6 million over the same period of the prior year, with the difference primarily due to increased payroll expenses related to growth in transport volume, increases in employee health insurance expenses, and secondarily to competitive wages in markets where paramedic shortages exist.

Operating income for the three months ended December 31, 2006 decreased $2.4 million, or 17.6 percent, to $11.1 million, compared to operating income of $13.5 million for the same period last year. The decrease in operating income for the three months was affected by the increases in uncompensated care and payroll and employee benefits described above.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and adjusted EBITDA are key indicators used by management to evaluate operating performance. While EBITDA and adjusted EBITDA are not intended to replace any presentation included in our consolidated financial statements under generally accepted accounting principles (GAAP) and should not be considered an alternative to operating performance or an alternative to cash flow as a measure of liquidity, we believe this measure is useful to investors in assessing our ability to meet future debt service, capital expenditure and working capital requirements. This calculation may differ in method of calculation from similarly titled measures used by other companies. Adjusted EBITDA is defined as income from continuing operations before interest, taxes, depreciation and amortization adjusted for stock-based compensation, gains or losses on the sale of assets, impairment charges and other unusual or non-recurring transactional events. A reconciliation of EBITDA and Adjusted EBITDA to GAAP financial measures for the three and six months ended December 31, 2006 is included with this press release and with the Company’s related Form 8-K.

The Company reported second-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) of $13.9 million, compared to EBITDA of $16.1 million in the same prior-year period. On an adjusted basis, second quarter EBITDA was $14.0 million compared to adjusted EBITDA of $16.3 million for the same prior-year period.

Second-quarter net income was $1.3 million, or $0.05 per diluted share, compared to net income of $2.9 million, or $0.11 per diluted share for the same period in fiscal 2006. The difference is primarily due to year-over-year increases in uncompensated care and payroll and employee benefits described above.

3

Results of Operations for the Six Months Ended December 31, 2006

Consolidated net revenue for the six months ended December 31, 2006 increased $9.1 million, or 4.0 percent, to $233.8 million, compared to revenue of $224.7 million in the prior year. Revenue growth was driven by a $4.3 million increase related to medical transport volume, a $3.6 million increase in new medical transportation contract revenue, a $6.5 million increase related to growth in medical transportation rates, and a $3.5 million increase in fire other services revenue, offset by an $8.8 million increase in uncompensated care.

Payroll and employee benefits increased $12.6 million over the same period of the prior year, with the difference primarily due to increased payroll expenses related to growth in transport volume, increases in employee health insurance expenses, severance benefits relating to the former chief financial officer’s employment agreement, and secondarily to competitive wages offered in markets where paramedic shortages exist.

Other operating expenses for the six months decreased $1.1 million, or 1.8 percent, to $59.0 million, compared to $60.1 million for the same prior-year period. The decrease in other operating expenses was primarily related to a temporary reduction in overall professional fees.

Operating income for the six months ended December 31, 2006 decreased $4.4 million, or 15.6 percent, to $23.3 million, compared to operating income of $27.7 million for the same period last year. The decrease in operating income has been affected by increases in uncompensated care and payroll and employee benefits, including severance benefits under the former chief financial officer’s employment agreement, described above. Additionally, the Company recognized a pre-tax gain on the sale of real estate in the first quarter of fiscal 2006.

The Company reported year-to-date EBITDA of $28.4 million, compared to EBITDA of $32.9 million for the same prior-year period. On an adjusted basis, EBITDA for the first six months of fiscal 2007 was $29.6 million compared to adjusted EBITDA of $32.4 million for the same prior-year period.

Net income for the six months was $3.0 million, or $0.12 per diluted share, compared to net income of $6.4 million, or $0.25 per diluted share for the same period in fiscal 2006. The difference is primarily related to increases in uncompensated care, increases in payroll and employee benefits, and first-quarter executive severance benefits described above. Additionally, the Company recognized a $1.3 million gain on the sale of real estate in the first quarter of fiscal 2006.

Uncompensated Care

Uncompensated care is presented reflecting the Company’s change in accounting policy for revenue recognition, and comparisons to prior-year periods have been adjusted accordingly. Uncompensated care for the three months ended December 31, 2006 increased $4.0 million to $27.4 million, compared to $23.4 million for the same period of the prior year. Uncompensated care represented 14.7 percent of gross revenue, compared to 13.4 percent of gross revenue a year ago. The year-over-year increase is due to the following factors:

• $1.6 million related to the incremental increase in uncompensated care based on overall growth in medical transportation revenue across all payer classes.

4

• $1.5 million primarily related to rate increases and the challenge of collecting higher rates from self-pay patients, and to a year-to-date estimated increase of approximately 2.0 percent in the volume of uninsured patients as a percent of total transport mix.

• $0.9 million primarily related to continuing sustained disruptions in collections from the majority of Arizona Medicaid managed care payers and, to a lesser extent, Medicare Advantage; as well as recent disruptions in collections from Medicaid payers in Washington and Colorado. These extended payment cycles contributed to a two-day increase in days’ sales outstanding during the second quarter.

Mr. Brucker said, “We continued to experience an increase in third-party payers extending payment cycles. We specifically note that a portion of the second-quarter increase in uncompensated care is related to ongoing challenges in collecting receivables from Medicaid managed care payers in Arizona, and now in Washington and Colorado. We have been diligent in our efforts to obtain payment and will continue to work toward an acceptable resolution. Our dialogue with these providers is proactive and continuous.”

“Because we have experienced an overall decline in collection rates, we must remain focused on internal initiatives we have put in place to improve our billing and collection processes, some of which are long-term in nature,” Mr. Brucker said.

Key Operating Statistics

Following is a presentation of certain of the Company’s key operating statistics. Medical transports and net/net EMS APC statistics have been adjusted to eliminate discontinued operations.

	Q2 ‘06 (12/31/05)		Q3 ‘06 (3/31/06)		Q4 ‘06 (6/30/06)		Q1 ‘07 (9/30/06)		Q2 ‘07 (12/31/06)
Medical Transports (1)		260,697		263,157		262,580		267,255		269,939
Net EMS Average Patient Charge (APC) (2)	$	347	$	341	$	340	$	342	$	341
Days Sales Outstanding (DSO) (3)		57		60		64		66		68

(1) Medical transports from continuing operations are defined as actual emergency and non-emergency patient transports.

(2) Net EMS APC is defined as gross medical transport revenue less provisions for discounts applicable to Medicare, Medicaid and other third-party payers and uncompensated care divided by emergency and non-emergency transports from continuing operations.

(3) DSO is calculated using the average accounts receivable balance on a rolling 13-month average and net revenue on a rolling 12-month basis and has not been adjusted to eliminate discontinued operations.

Conference Call to Discuss Results

The Company will discuss first-quarter results in a conference call today beginning at 8 a.m. Pacific/ 11 a.m. Eastern. To access the conference call, dial (800) 819-9193 (domestic) or (913) 981-4911 (international). The call will be broadcast live on the Company’s web site at

5

www.ruralmetro.com. A telephone replay will be available from approximately 3 p.m. (Eastern) today through midnight (Eastern) March 24, 2007. To access the replay, dial 888-203-1112. From international locations, dial (719) 457-0820. The required pass code is 1461425. An archived webcast will be available for 90 days following the call at www.ruralmetro.com.

About Rural/Metro

Rural/Metro Corporation provides emergency and non-emergency medical transportation, private fire protection, and other safety services in 24 states and approximately 400 communities throughout the United States. For more information, visit the Company’s web site at www.ruralmetro.com.

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS

This press release may contain statements, estimates, projections, guidance or outlook that constitute “forward-looking” statements as defined under U.S. federal securities laws. Generally the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions, identify forward-looking statements, which generally are not historical in nature. These statements may contain information about financial prospects, economic conditions, trends and unknown certainties. We caution that actual results could differ materially from those that management expects, depending on the outcome of certain factors. These forward-looking statements involve risks and uncertainties that may cause our actual results to differ materially from the results discussed in the forward-looking statements. Some factors that could cause results to differ materially from the forward-looking statements include the Company’s ability to: successfully complete restated financial statements reflecting a change in accounting policy for revenue recognition and inventory adjustments, remain listed on the Nasdaq Capital Market, cure a notice of default with respect to certain of the Company’s debt securities, and the potential impact of each of these matters on our business, credit ratings and debt; to collect its accounts receivable, sustain operating cash flow, secure new contracts, retain existing contracts, and improve earnings and operating margins. Although Rural/Metro believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.

This list of important factors is not intended to be exhaustive. A further list and description of some of these risks and uncertainties can be found in our reports filed with the Securities and Exchange Commission from time to time, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including but not limited to the the current report on Form 8-K, dated March 22, 2007, which has been filed with the SEC today. Any or all forward-looking statements we make may turn out to be wrong. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Except to the extent otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements.

(RURL/F)

###

6

RURAL/METRO CORPORATION

CONSOLIDATED BALANCE SHEET

(unaudited)

(in thousands, except share data)

	December 31, 2006			June 30, 2006
ASSETS
Current assets:
Cash and cash equivalents	$	7,799		$	3,041
Short-term investments		—			6,201
Accounts receivable, net		86,556			83,367
Inventories		9,332			8,828
Deferred tax assets		7,514			9,574
Prepaid expenses and other		6,099			3,698
Total current assets		117,300			114,709
Property and equipment, net		47,565			45,970
Goodwill		38,362			38,362
Deferred tax assets		69,308			71,051
Insurance deposits		1,928			2,842
Other assets		18,299			23,454
Total assets	$	292,762		$	296,388
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	14,821		$	13,957
Accrued liabilities		37,087			38,590
Deferred revenue		21,233			21,342
Current portion of long-term debt		38			37
Total current liabilities		73,179			73,926
Long-term debt, net of current portion		288,089			291,337
Other liabilities		21,866			25,332
Total liabilities		383,134			390,595
Minority interest		2,540			2,065
Stockholders’ equity (deficit):
Preferred stock, $0.01 par value, 2,000,000 shares authorized, zero shares issued and outstanding at both September 30, 2006 and June 30, 2006		—			—
Common stock, $0.01 par value, 40,000,000 shares authorized, 24,556,070 and 24,495,518 shares issued and outstanding at September 30, 2006 and June 30, 2006, respectively		246			245
Additional paid-in capital		154,266			153,955
Treasury stock, 96,246 shares at both September 30, 2006 and June 30, 2006		(1,239	)		(1,239	)
Accumulated deficit		(246,185	)		(249,233	)
Total stockholders’ equity (deficit)		(92,912	)		(96,272	)
Total liabilities, minority interest and stockholders’ equity (deficit)	$	292,762		$	296,388

See accompanying notes

RURAL/METRO CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended December 31,						Six Months Ended December 31,
	2006			2005			2006			2005
Net revenue	$	116,941		$	113,396		$	233,782		$	224,729
Operating expenses:
Payroll and employee benefits		72,429			66,832			145,370			132,751
Depreciation and amortization		3,007			2,807			6,027			5,528
Other operating expenses		30,409			30,266			59,033			60,090
(Gain) loss on sale of assets		11			35			8			(1,307	)
Total operating expenses		105,856			99,940			210,438			197,062
Operating income		11,085			13,456			23,344			27,667
Interest expense		(7,986	)		(7,748	)		(15,771	)		(15,256	)
Interest income		140			172			260			325
Income from continuing operations before income taxes and minority interest		3,239			5,880			7,833			12,736
Income tax provision		(2,126	)		(2,412	)		(4,180	)		(5,916	)
Minority interest		(201	)		(153	)		(974	)		(315	)
Income from continuing operations		912			3,315			2,679			6,505
Income (loss) from discontinued operations, net of income taxes		383			(459	)		369			(70	)
Net income	$	1,295		$	2,856		$	3,048		$	6,435
Income per share
Basic -
Income from continuing operations	$	0.04		$	0.14		$	0.11		$	0.27
Income (loss) from discontinued operations		0.01			(0.02	)		0.01			(0.00	)
Net income	$	0.05		$	0.12		$	0.12		$	0.27
Diluted-
Income from continuing operations	$	0.04		$	0.13		$	0.11		$	0.26
Income (loss) from discontinued operations		0.01			(0.02	)		0.01			(0.01	)
Net income	$	0.05		$	0.11		$	0.12		$	0.25
Average number of common shares outstanding - Basic		24,581			24,330			24,546			24,281
Average number of common shares outstanding - Diluted		25,011			25,298			24,953			25,280

See accompanying notes

RURAL/METRO CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

(in thousands)

	Six Months Ended December 31,
	2006			2005
Cash flows from operating activities:
Net income	$	3,048		$	6,435
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization		6,028			5,720
Accretion of 12.75% Senior Discount Notes		3,772			3,349
Deferred income taxes		3,803			5,302
Insurance adjustments		(3,128	)		(2,387	)
Amortization of deferred financing costs		1,007			1,100
Earnings of minority shareholder		975			315
Gain on sale of property and equipment		(667	)		(1,307	)
Stock-based compensation (benefit) expense		(7	)		16
Change in assets and liabilities—
Accounts receivable		(3,189	)		(12,892	)
Inventories		(504	)		(142	)
Prepaid expenses and other		(2,401	)		2,368
Insurance deposits		914			1,779
Other assets		3,831			1,738
Accounts payable		762			(98	)
Accrued liabilities		(282	)		(6,196	)
Deferred revenue		(109	)		316
Other liabilities		(1,189	)		380
Net cash provided by operating activities		12,664			5,796
Cash flows from investing activities:
Sales of short-term investments		18,451			30,100
Purchases of short-term investments		(12,250	)		(37,700	)
Capital expenditures		(7,432	)		(9,096	)
Proceeds from the sale of property and equipment		687			1,559
Net cash used in investing activities		(544	)		(15,137	)
Cash flows from financing activities:
Repayment of debt		(7,019	)		(7,738	)
Distributions to minority shareholders		(500	)		(155	)
Issuance of common stock		226			595
Cash paid for debt issuance costs		(162	)		—
Tax benefit from the exercise of stock options		93			436
Net cash used in financing activities		(7,362	)		(6,862	)
Increase (decrease) in cash and cash equivalents		4,758			(16,203	)
Cash and cash equivalents, beginning of period		3,041			17,688
Cash and cash equivalents, end of period	$	7,799		$	1,485
Non-cash investing activities:
Property and equipment funded by liabilities	$	102		$	—

See accompanying notes

RURAL/METRO CORPORATION

RECONCILIATION OF EBITDA TO CASH FLOW

PROVIDED BY OPERATING ACTIVITIES

(unaudited)

(in thousands)

	Three Months Ended December 31,						Six Months Ended December 31,
	2006			2005			2006			2005
Income from continuing operations	$	912		$	3,315		$	2,679		$	6,505
Add back:
Depreciation and amortization		3,007			2,807			6,027			5,528
Interest expense on borrowings		5,463			5,374			10,992			10,807
Amortization of deferred financing costs		589			665			1,007			1,100
Accretion of 12.75% Senior Discount Notes		1,934			1,709			3,772			3,349
Interest income		(140	)		(172	)		(260	)		(325	)
Income tax provision		2,126			2,412			4,180			5,916
EBITDA from continuing operations	$	13,891		$	16,110		$	28,397		$	32,880
EBITDA from discontinued operations		583			(558	)		560			141
The items listed below have not been inculded as adjustements in the above calculation of EBITDA:
Stock-based compensation (benefit) expense		—			7			(7	)		16
(Gain) loss on sale of property and equipment		(664	)		41			(667	)		(1,307	)
Debt amendment fees		47			500			47			500
Debt issuance cost write-offs		172			213			172			213
Executive severance (1)		—			—			1,133			—
Adjusted EBITDA from all operations	$	14,029		$	16,313		$	29,635		$	32,443
Increase (decrease):
Items added back to arrive at EBITDA		(12,979	)		(12,795	)		(25,718	)		(26,375	)
Items added back to arrive at Adjusted EBITDA		445			(761	)		(678	)		578
Income tax benefit (provision) on discontinued operations		(200	)		199			(191	)		(19	)
Depreciation and amortization on discontinued operations		—			(100	)		—			(192	)
Provision for doubtful accounts		0			—			0			—
Depreciation and amortization		3,008			2,907			6,028			5,720
Accretion of 12.75% Senior Discount Notes		1,934			1,709			3,772			3,349
Deferred income taxes		2,175			2,136			3,803			5,302
Insurance adjustments		(3,128	)		(2,387	)		(3,128	)		(2,387	)
Amortization of deferred financing costs		589			665			1,007			1,100
Earnings of minority shareholder		202			153			975			315
(Gain) loss on sale of property and equipment		(664	)		41			(667	)		(1,307	)
Stock based compensation (benefit) expense		—			7			(7	)		16
Changes in operating assets and liabilities		2,511			(7,278	)		(2,167	)		(12,747	)
Net cash provided by operating activities	$	7,922		$	809		$	12,664		$	5,796

Rural/Metro Corporation

Restatement Adjustments and Restated Balances

As of December 31, 2006

Balance Sheet Account	12/31/06			9/30/06			06/30/06			06/30/05			06/30/04			06/30/03			06/30/02
Inventories
As filed	$	13,594		$	13,633		$	13,135		$	12,743		$	11,738		$	11,504		$	12,220
Adjustments		(4,262	)		(4,375	)		(4,307	)		(4,265	)		(3,764	)		(3,862	)		(4,163	)
Restated	$	9,332		$	9,258		$	8,828		$	8,478		$	7,974		$	7,642		$	8,057
Accumulated deficit	12/31/06			9/30/06			06/30/06			06/30/05			06/30/04			06/30/03			06/30/02
As filed	$	(242,831	)	$	(244,641	)	$	(246,433	)	$	(249,950	)	$	(338,281	)	$	(344,492	)	$	(353,458	)
Adjustments		(3,354	)		(2,839	)		(2,800	)		(2,772	)		(3,764	)		(3,862	)		(4,163	)
Restated	$	(246,185	)	$	(247,480	)	$	(249,233	)	$	(252,722	)	$	(342,045	)	$	(348,354	)	$	(357,621	)
																						Prior Periods
EBITDA Period Change	$	45		$	(68	)	$	(42	)	$	(501	)	$	98		$	301		$	660		$	(4,823	)