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): February 9, 2010

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.)

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 February 9, 2010, Rural/Metro Corporation (the “Company”) issued a press release announcing its preliminary unaudited financial results for the quarter ended December 31, 2009. The full text of the Company’s press release is attached hereto as Exhibit 99.1. The press release contains forward-looking statements regarding the Company.

The Company provides all financial information required in accordance with generally accepted accounting principles (GAAP). To supplement its consolidated financial statements presented in accordance with GAAP, the Company is also providing in the attached press release non-GAAP Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) from continuing operations and net income and diluted EPS (earnings per share) attributable to Rural/Metro excluding the loss on debt extinguishment. Adjusted EBITDA from continuing operations and net income and diluted EPS attributable to Rural/Metro excluding the loss on debt extinguishment are not intended to replace or be displayed more prominently than the Company’s GAAP measurements. The Company has included information concerning this non-GAAP information in the release, including a reconciliation of such information to the most comparable GAAP measures, the reasons why the Company believes such information is useful to investors and the Company’s use of such information for additional purposes.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press release, dated February 9, 2010.

The information in this Current Report on 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: February 9, 2010	By:	/s/    KRISTINE B. PONCZAK
		Kristine B. Ponczak Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press release, dated February 9, 2010.

EX-99.1

Exhibit 99.1

CONTACT:	Liz Merritt, Rural/Metro Corporation
	(480) 606-3337
	Sharrifah Al-Salem, FD
	(415) 293-4414

RURAL/METRO ANNOUNCES STRONG SECOND-QUARTER RESULTS;

RAISES 2010 ADJUSTED EBITDA GUIDANCE TO $63.0-$65.0 MILLION

Highlights:

• Company completed $220.0 million debt refinancing to improve overall capital structure; second-quarter results include $13.8 million pre-tax loss on debt extinguishment.

• Quarterly net revenue increased 12.0% over the prior year to $133.5 million; year-to-date net revenue increased 9.4% over the prior year to $264.3 million.

• Quarterly net loss attributable to Rural/Metro, which included the loss on debt extinguishment, was $4.8 million.

• Quarterly Adjusted EBITDA from continuing operations increased 10.8% over the prior-year period to $16.5 million; year-to-date Adjusted EBITDA from continuing operations increased 17.3% from the first two quarters of fiscal 2009 to $34.3 million.

SCOTTSDALE, Ariz. (Feb. 9, 2010) – Rural/Metro Corporation (NASDAQ: RURL), a leading provider of ambulance and private fire protection services, today announced strong financial results for its fiscal 2010 second quarter ended December 31, 2009.

“The continued success of our business results from the strength of our business model, which drives our ability to generate solid revenue growth, improve operating margins and maintain positive momentum in key operating metrics,” said Conrad A. Conrad, interim President and Chief Executive Officer. “We believe we can continue to leverage our operating strengths in the future, and, therefore, are raising our guidance for Adjusted EBITDA from continuing operations.”

Guidance Revised Upward

The Company raised guidance for the fiscal year ending June 30, 2010 to reflect the continued strength of operational and financial performance reflected in second fiscal quarter results. The Company revised Adjusted EBITDA from continuing operations to a range of $63.0 million to $65.0 million. Adjusted EBITDA from continuing operations excludes the effect of the loss on extinguishment of debt and share-based compensation expense. Capital expenditure guidance remained unchanged in the range of $16.0 million to $19.0 million.

Results of Operations for the Fiscal 2010 Second Quarter Ended December 31, 2009

For the quarter ended December 31, 2009, Rural/Metro generated net revenue of $133.5 million, an increase of 12.0%, or $14.3 million, compared to $119.2 million for the same period last year. The growth was primarily attributable to same-service area revenue growth and new contract revenue.

1

Payroll and employee benefits for the second fiscal quarter were $81.1 million, or 60.7% of net revenue, compared to $74.4 million, or 62.4% of net revenue, in the same period of the prior year. The year-over-year increase in actual payroll dollars was driven primarily by additional labor hours deployed in response to a 5.2% increase in ambulance transport volume, higher expenses related to employee health and workers’ compensation insurance programs and annual merit raises.

Other operating expenses for the second fiscal quarter were $30.9 million, or 23.1% of net revenue, compared to $27.5 million, or 23.0% of net revenue for the same period of the prior year. The year-over-year increase is attributable primarily to increases in vehicle and equipment expense, as well as other station expenses.

General and auto liability insurance expense for the second fiscal quarter was $5.2 million, compared to $2.4 million for the same period of the prior year. The year-over-year variance in this expense was driven primarily by $1.5 million in current-year increased claims costs and a $1.3 million net increase in actuarial adjustments during the quarter.

During the second quarter, the Company successfully concluded a $220.0 million debt refinancing transaction and achieved its goals to simplify the capital structure, gain flexibility to pre-pay debt and reduce the overall cost of capital. The current debt structure includes a $180.0 million term loan due 2014 and a $40.0 million revolving credit line. In connection with the refinancing, the Company recorded a loss on extinguishment of debt of $13.8 million.

Including the loss on extinguishment of debt, the second-quarter net loss attributable to Rural/Metro was $4.8 million, or a loss per share of $0.19, compared to net income of $1.1 million and earnings per share (EPS) of $0.04 for the second quarter of the prior year. Excluding the loss on debt extinguishment, net income attributable to Rural/Metro would have been $3.2 million, or diluted EPS of $0.13.

Adjusted EBITDA from continuing operations for the second quarter increased 10.8%, or $1.6 million, to $16.5 million compared to $14.9 million for the same period in fiscal 2009.

Results of Operations for the Six Months Ended December 31, 2009

For the six months ended December 31, 2009, Rural/Metro generated net revenue of $264.3 million, an increase of 9.4% compared to $241.7 million for the same period last year. The increase was primarily attributable to same-service-area revenue growth and new contract revenue.

Payroll and employee benefits for the six-month period were $162.4 million, or 61.4% of net revenue, compared to $149.5 million, or 61.9% of net revenue for the same period of the prior year. The year-over-year increase in actual payroll dollars was driven primarily by additional labor hours driven by a 3.2% increase in ambulance transport volume when compared to the prior year, higher expenses related to employee health insurance and workers’ compensation insurance programs and annual merit raises.

2

Other operating expenses for the six-month period were $58.8 million, or 22.2% of net revenue, compared to $56.8 million, or 23.5% of net revenue for the same period of the prior year. The year-over-year difference is attributable primarily to increases in vehicle and equipment expense, as well as other station expenses, offset by lower fuel costs.

General and auto liability insurance expense for the first six months of fiscal 2010 was $8.6 million, compared to $5.8 million for the same period of the prior year. The year-over-year variance in this expense was driven primarily by $1.5 million in current-year increased claims costs and a $1.3 million net increase in actuarial adjustments during the quarter.

Including the loss on debt extinguishment, net loss attributable to Rural/Metro was $1.9 million, or a loss per share of $0.07 during the first six months of fiscal 2010, compared to net income of $1.8 million and diluted EPS of $0.07 during the first six months of fiscal 2009. Excluding the loss on debt extinguishment, net income attributable to Rural/Metro for the fiscal 2010 six-month period would have been $6.1 million, or diluted EPS of $0.24.

Adjusted EBITDA from continuing operations for the six months ended December 31, 2009 increased 17.3%, or $5.1 million, to $34.3 million compared to $29.2 million for the same period in fiscal 2009.

Adjusted EBITDA from continuing operations and net income and diluted EPS attributable to Rural/Metro excluding the loss on debt extinguishment are key indicators management uses to evaluate operating performance. While Adjusted EBITDA from continuing operations and net income and diluted EPS attributable to Rural/Metro excluding the loss on debt extinguishment are not intended to replace presentations included in the Company’s 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, the Company believes these measures are useful to investors in assessing its ability to meet future debt service, capital expenditure and working capital requirements. This calculation may differ in the method of calculation from similarly titled measures used by other companies. A reconciliation of Adjusted EBITDA to income/(loss) from continuing operations and discontinued operations for the three and six months ended December 31, 2009 and 2008, as well as a reconciliation of net income and diluted EPS attributable to Rural/Metro excluding the loss on debt extinguishment to net loss attributable to Rural/Metro and diluted earnings per share for the three and six months ended December 31, 2009 and 2008, are included with this press release and the related current report on Form 8-K.

Second-Quarter Operating Statistics

The following table provides results for medical transports, Average Patient Charge (APC), and Days Sales Outstanding (DSO) during each of the five most recent quarters:

• The quarterly increase in transport volume when compared to the same prior-year period was driven equally by growth in emergency and non-emergency transports.

3

• APC improvement of $33 per transport when compared to the same fiscal 2009 quarter was primarily due to further reductions in uncompensated care and secondarily to rate increases. Uncompensated care as a percentage of gross revenue decreased further to 13.4%, compared to 13.8% for the same period of the prior year. APC represents average cash collected per ambulance transport during the period.

• DSO improved by 11 days when compared to the same prior-year period and 3 days when compared to the first quarter of fiscal 2010. This improvement was related primarily to the Company’s ongoing national implementation of the electronic patient care records system and related billing and collections effectiveness.

	Q2 ‘09		Q3 ‘09		Q4 ‘09		Q1 ‘10		Q2 ‘10
	(12/31/08)		(3/31/09)		(6/30/09)		(9/30/09)		(12/31/09)
Medical Transports (1)		258,344		265,969		266,952		269,317		271,856
Average Patient Charge (APC) (2)	$	364	$	374	$	378	$	389	$	397
Days Sales Outstanding (DSO) (3)		57		55		52		49		46

(1) Defined as emergency and non-emergency medical patient transports from continuing operations.

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

(3) DSO is calculated using the average accounts receivable balance on a rolling 13-month basis 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 results in a conference call today beginning at 8 a.m. Pacific/11 a.m. Eastern. To access the conference call, dial 888-525-6276 (domestic) or 719-325-2115 (international). The call also will be broadcast and archived on the Company’s web site at www.ruralmetro.com. A telephone replay will be available from approximately 2 p.m. Eastern today through 11:59 p.m. Eastern Feb. 12, 2010. To access the replay, dial 888-203-1112. From international locations, dial 719-457-0820. The required pass code is 8428507.

About Rural/Metro

Rural/Metro Corporation provides emergency and non-emergency ambulance services and private fire protection services in 20 states and approximately 400 communities throughout the United States. For more information, visit the Company’s web site at www.ruralmetro.com.

4

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS

The foregoing reflects the Company’s views about its future financial condition, performance and other matters that constitute “forward-looking” statements as such term is defined by the federal securities laws. Many of these statements can be found by looking for words such as “believe”, “anticipate”, “expect”, “plan”, “intend”, “may”, “should”, “will likely result”, “continue”, “estimate”, “project”, “goals”, or similar words used herein in connection with any discussions of future operating or financial performance or business prospects. We may also make forward-looking statements in our earnings reports filed with the Securities and Exchange Commission (SEC), earnings calls and other investor communications. These forward-looking statements are subject to the safe harbor protection provided by federal securities laws. These forward-looking statements are subject to numerous risks, uncertainties and assumptions, including those relating to the Company’s future business prospects, uncompensated care, working capital, accounts receivable collection, liquidity, cash flow, EBITDA, adjusted EBITDA, capital expenditures, insurance coverage and claim reserves, capital needs, key operating metrics, future growth plans, future operating results, and future compliance with covenants in our debt facilities or instruments. In addition, the Company may face risks and uncertainties related to other factors that are listed in its periodic reports filed under the Securities Exchange Act. Although the Company believes the expectations reflected in its forward-looking statements are based upon reasonable assumptions, because the statements are subject to risks and uncertainties, the Company can give no assurance that its expectations will be attained or that actual developments and results will not materially differ from those expressed or implied by the forward-looking statements. Readers are cautioned not to place undue reliance on the statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.

###

(RURL/F)

5

RURAL/METRO CORPORATION

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except share data)

	December 31, 2009			June 30, 2009
ASSETS
Current assets:
Cash and cash equivalents	$	15,136		$	37,108
Restricted cash		4,560			—
Accounts receivable, net		59,869			64,355
Inventories		8,137			8,535
Deferred income taxes		24,851			25,032
Prepaid expenses and other		6,897			19,895
Total current assets		119,450			154,925
Property and equipment, net		47,040			49,096
Goodwill		37,700			37,700
Restricted cash		17,842			—
Deferred income taxes		42,754			41,678
Other assets		10,627			11,556
Total assets	$	275,413		$	294,955
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	15,187		$	14,883
Accrued liabilities		43,348			57,588
Deferred revenue		20,899			21,585
Current portion of long-term debt		4,859			199
Total current liabilities		84,293			94,255
Long-term debt, net of current portion		266,037			277,110
Other long-term liabilities		30,374			28,497
Total liabilities		380,704			399,862
Rural/Metro Stockholders’ deficit:
Common stock, $0.01 par value, 40,000,000 shares authorized, 25,244,914 and 24,852,726 shares issued and outstanding at December 31, 2009 and June 30, 2009, respectively		252			248
Additional paid-in capital		156,417			155,187
Treasury stock, 96,246 shares at both December 31, 2009 and June 30, 2009		(1,239	)		(1,239	)
Accumulated other comprehensive loss		(2,499	)		(2,597	)
Accumulated deficit		(260,182	)		(258,331	)
Total Rural/Metro stockholders’ deficit		(107,251	)		(106,732	)
Noncontrolling interest		1,960			1,825
Total stockholders’ deficit		(105,291	)		(104,907	)
Total liabilities and stockholders’ deficit	$	275,413		$	294,955

RURAL/METRO CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended December 31,						Six Months Ended December 31,
	2009			2008			2009			2008
Net revenue	$	133,513		$	119,204		$	264,335		$	241,677
Operating expenses:
Payroll and employee benefits		81,096			74,419			162,387			149,537
Depreciation and amortization		3,827			3,613			7,637			6,925
Other operating expenses		30,862			27,463			58,753			56,772
General/auto liability insurance expense		5,182			2,373			8,599			5,771
Gain on sale of assets		(240	)		(47	)		(403	)		(240	)
Total operating expenses		120,727			107,821			236,973			218,765
Operating income		12,786			11,383			27,362			22,912
Interest expense		(7,175	)		(7,763	)		(14,645	)		(15,576	)
Interest income		49			33			131			148
Loss on debt extinguishment		(13,842	)		—			(13,842	)		—
Income (loss) from continuing operations before income taxes		(8,182	)		3,653			(994	)		7,484
Income tax benefit (provision)		4,035			(2,077	)		398			(4,302	)
Income (loss) from continuing operations		(4,147	)		1,576			(596	)		3,182
Income (loss) from discontinued operations, net of income taxes		(293	)		(290	)		(220	)		(597	)
Net income (loss)	$	(4,440	)	$	1,286		$	(816	)	$	2,585
Net income attributable to noncontrolling interest		(330	)		(215	)		(1,035	)		(742	)
Net income (loss) attributable to Rural/Metro	$	(4,770	)	$	1,071		$	(1,851	)	$	1,843
Income (loss) per share:
Basic -
Income (loss) from continuing operations attributable to Rural/Metro	$	(0.18	)	$	0.05		$	(0.06	)	$	0.10
Loss from discontinued operations attributable to Rural/Metro	$	(0.01	)		(0.01	)	$	(0.01	)		(0.03	)
Net income (loss) attributable to Rural/Metro	$	(0.19	)	$	0.04		$	(0.07	)	$	0.07
Diluted -
Income (loss) from continuing operations attributable to Rural/Metro	$	(0.18	)	$	0.05		$	(0.06	)	$	0.10
Loss from discontinued operations attributable to Rural/Metro	$	(0.01	)		(0.01	)	$	(0.01	)		(0.03	)
Net income (loss) attributable to Rural/Metro	$	(0.19	)	$	0.04		$	(0.07	)	$	0.07
Average number of common shares outstanding - Basic		25,069			24,826			24,964			24,824
Average number of common shares outstanding - Diluted		25,069			24,910			24,964			24,913

RURAL/METRO CORPORATION

RECONCILIATION OF NET LOSS EXCLUDING LOSS ON DEBT EXTINGUISHMENT

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended December 31,					Six Months Ended December 31,
	2009			2008		2009			2008
Net income (loss) attributable to Rural/Metro	$	(4,770	)	$	1,071	$	(1,851	)	$	1,843
Loss on debt extinguishment		13,842			—		13,842			—
Tax effect of loss on debt extinguishment		(5,865	)		—		(5,865	)		—
Adjusted net income attributable to Rural Metro		3,207			1,071		6,126			1,843
Income per share:
Basic -
Net income attributable to Rural/Metro	$	0.13		$	0.04	$	0.25		$	0.07
Diluted -
Net income attributable to Rural/Metro	$	0.13		$	0.04	$	0.24		$	0.07
Average number of common shares outstanding - Basic		25,069			24,826		24,964			24,824
Average number of common shares outstanding - Diluted		25,324			24,910		25,264			24,913

RURAL/METRO CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended December 31, 2009 and 2008

(unaudited)

(in thousands)

	2009			2008
Cash flows from operating activities:
Net income (loss)	$	(816	)	$	2,585
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization		7,752			7,181
Non-cash adjustments to insurance claims reserves		2,149			(1,453	)
Accretion of 12.75% Senior Discount Notes		5,465			4,830
Accretion of Term Loan Due 2014		66			—
Deferred income taxes		(463	)		2,128
Excess tax benefits from share-based compensation		(491	)		—
Amortization of deferred financing costs		980			1,089
Non-cash loss on debt extinguishment		2,261			—
Loss on disposal of property and equipment		38			52
Gain on property insurance settlement		(119	)		—
Share-based compensation expense		304			117
Change in assets and liabilities -
Accounts receivable		4,486			5,801
Inventories		398			46
Prepaid expenses and other		(75	)		2,014
Other assets		(3,496	)		339
Accounts payable		184			(2,591	)
Accrued liabilities		(1,628	)		(1,686	)
Deferred revenue		(686	)		(441	)
Other liabilities		262			(680	)
Net cash provided by operating activities		16,571			19,331
Cash flows from investing activities:
Capital expenditures		(5,514	)		(8,191	)
Proceeds from property insurance settlement		119			—
Proceeds from the sale/disposal of property and equipment		8			—
Increase in restricted cash		(22,402	)		—
Net cash used in investing activities		(27,789	)		(8,191	)
Cash flows from financing activities:
Payments on Term Loan B		(66,000	)		(7,000	)
Payments on senior subordinated notes		(121,000	)		—
Payments on other debt and capital leases		(147	)		(207	)
Borrowings under Term Loan Due 2014		178,200			—
Debt refinancing costs		(1,837	)		—
Excess tax benefits from share-based compensation		491			—
Net proceeds from issuance of common stock under share-based compensation plans		439			2
Distributions to noncontrolling interest		(900	)		(250	)
Net cash used in financing activities		(10,754	)		(7,455	)
Increase (decrease) in cash and cash equivalents		(21,972	)		3,685
Cash and cash equivalents, beginning of year		37,108			15,907
Cash and cash equivalents, end of year	$	15,136		$	19,592
Supplemental disclosure of non-cash operating activities:
Increase (decrease) in other current assets and accrued liabilities for general liability insurance claim	$	(13,073	)	$	1,160
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment funded by liabilities	$	620		$	1,402
Supplemental cash flow information:
Cash paid for interest	$	11,693		$	9,656
Cash paid for income taxes, net	$	1,279		$	487

RURAL/METRO CORPORATION

RECONCILIATION OF INCOME (LOSS) FROM CONTINUING AND DISCONTINUED OPERATIONS TO EBITDA

(unaudited)

(in thousands)

	Three Months Ended December 31,						Six Months Ended December 31,
	2009			2008			2009			2008
Income (loss) from continuing operations	$	(4,147	)	$	1,576		$	(596	)	$	3,182
Add (deduct):
Depreciation and amortization		3,827			3,613			7,637			6,925
Interest expense		7,175			7,763			14,645			15,576
Interest income		(49	)		(33	)		(131	)		(148	)
Income tax provision (benefit)		(4,035	)		2,077			(398	)		4,302
Income attributable to noncontrolling interest		(330	)		(215	)		(1,035	)		(742	)
EBITDA from continuing operations attributable to Rural/Metro		2,441			14,781			20,122			29,095
Add (deduct):
Share-based compensation expense		168			72			304			117
Loss on debt extinguishment		13,842			—			13,842			—
Adjusted EBITDA from continuing operations attributable to Rural/Metro		16,451			14,853			34,268			29,212
Income (loss) from discontinued operations		(293	)		(290	)		(220	)		(597	)
Add (deduct):
Depreciation and amortization		46			172			115			256
Income tax provision (benefit)		(282	)		(190	)		(225	)		(476	)
EBITDA from discontinued operations attributable to Rural/Metro		(529	)		(308	)		(330	)		(817	)
Total adjusted EBITDA attributable to Rural/Metro	$	15,922		$	14,545		$	33,938		$	28,395