RURAL METRO CORP /DE/, S-8 POS, 1996-07-09

RURAL METRO CORP /DE/
S-8 POS, 1996-07-09
LOCAL & SUBURBAN TRANSIT & INTERURBAN HWY PASSENGER TRANS

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<PAGE> 1

As filed with the Securities and Exchange Commission on July 9, 1996
Registration No. 333-07457
===============================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------------

POST-EFFECTIVE AMENDMENT NO. 1
TO

FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------------

RURAL/METRO CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)

Delaware 86-0746929
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

8401 East Indian School Road, Scottsdale, Arizona 85251
- ------------------------------------------------- ----------
(Address of principal executive offices) (Zip code)

Rural/Metro Corporation Stock Grant Agreements
(Full Title of Plan)

James H. Bolin
Rural/Metro Corporation
8401 East Indian School Road
Scottsdale, Arizona 85251
---------------------------------------
(Name and address of agent for service)

(602) 994-3886
--------------------------------
(Telephone number, including
area code, of agent for service)

with a copy to:
Jean E. Harris, Esq.
O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears
One East Camelback, Suite 1100
Phoenix, Arizona 85012-1656

This Post-Effective Amendment No. 1 to the Registration Statement shall become
effective immediately upon filing with the Securities and Exchange Commission,
and sales of registered securities will begin as soon as reasonably practicable
after such effective date.

================================================================================

<PAGE> 2

A copy of the Company's S-3 Prospectus, as amended, is attached hereto.

<PAGE> 3
312,509 SHARES

RURAL/METRO CORPORATION

COMMON STOCK

This Prospectus is being used in connection with the offering from time to
time by stockholders of Rural/Metro Corporation (the "Company" or "Registrant"),
or their respective legatees, heirs, or legal representatives (collectively, the
"Selling Stockholders"), some of whom may be deemed "affiliates" of the Company
as defined in Rule 405 under the Securities Act of 1933 (the "Securities Act"),
of shares of the Company's common stock, par value $.01 per share ("Common
Stock"), previously received pursuant to restricted stock grants from the
Company. See "Selling Stockholders."

It is expected that sales made pursuant to this Prospectus will be
effected in broker's transactions, in transactions directly with market makers,
in negotiated sales or otherwise, with the timing and manner of sales to be
determined by the Selling Stockholders, in each case at market prices prevailing
at the time of sale, at prices related to prevailing market prices or at
negotiated prices. The Company will not receive any of the proceeds from the
sale of these shares. The Selling Stockholders may effect sales of shares of
Common Stock by selling shares to or through brokers and dealers and such
brokers and dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Stockholders and/or
purchasers of shares for whom they may act as agent (which compensation may be
in excess of customary commissions). The Selling Stockholders and the brokers
and dealers through whom sales of shares may be effected may be deemed to be
"underwriters" within the meaning of the Securities Act, and any commissions
received and any profits realized by them on the sale of shares may be
considered to be underwriting compensation.

Prospective investors should carefully consider the matters discussed
under "Risk Factors" beginning on page 5 of this Prospectus.

The shares of Common Stock are listed on the Nasdaq National Market under
the symbol "RURL." On June 28, 1996, the last reported sale price of the Common
Stock as reported on the Nasdaq National Market was $34.25 per share.

-------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

-------------------------

The date of this Prospectus is July 9, 1996.

<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, heretofore filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934 (the "Exchange Act"),
are hereby incorporated by reference, except as superseded or modified herein:

1. The Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1995;

2. The Company's Quarterly Reports on Form 10-Q for the fiscal quarters
ended September 30, 1995, December 31, 1995 and March 31, 1996;

3. The Company's two Current Reports on Form 8-K/A Amendments No. 2, each
dated August 1, 1995;

4. The Company's Current Report on Form 8-K dated August 18, 1995;

5. The Company's Current Report on Form 8-K/A, Amendment No. 1, dated
August 23, 1995;

6. The Company's Current Report on Form 8-K dated August 28, 1995;

7. The Company's Current Report on Form 8-K dated November 10, 1995; and

8. The Company's Registration Statement on Form 8-A filed July 8, 1993, as
amended by Form 8-A/A filed February 2, 1995, registering the Company's Common
Stock under 12(g) of the Exchange Act as it applies to the description of the
Company's Common Stock.

Each document filed subsequent to the date of this Prospectus pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering shall be deemed to be incorporated by reference in this
Prospectus and shall be part hereof from the date of filing of such document.

The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document described
above (other than exhibits). Requests for such copies should be directed to
Rural/Metro Corporation, 8401 East Indian School Road, Scottsdale, Arizona
85251, Attention: Investor Relations Department, telephone (602) 994-3886.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is (or is deemed to be)
incorporated by reference herein, modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.

2
<PAGE> 5
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements appearing elsewhere or
incorporated by reference in this Prospectus. This Prospectus contains forward-
looking statements which involve risks and uncertainties. The Company's actual
results may differ materially from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those discussed under "Risk Factors."

THE COMPANY

The Company provides "911" emergency and general transport ambulance
services, fire protection services, and other safety or health care related
services to municipal, residential, commercial, and industrial customers. The
Company believes that it is the only multi-state provider of both ambulance and
fire protection services in the United States and that it ranks as one of the
largest private-sector providers of ambulance services and the largest
private-sector provider of fire protection services. The Company currently
serves over 150 communities located in Alabama, Arizona, Florida, Georgia,
Indiana, Iowa, Kentucky, Louisiana, Nebraska, New York, Ohio, Oregon,
Pennsylvania, South Carolina, South Dakota, Tennessee, and Texas. Ambulance
services and fire protection services accounted for approximately 79% and 16%,
respectively, of the Company's revenue for the nine months ended March 31, 1996.

Founded in 1948, the Company has been instrumental in the development
of protocols and policies applicable to the emergency services industry. The
Company has grown significantly since the late 1970s both through internal
growth and through acquisitions. To manage this growth, the Company invested in
the development of management and operational systems that have resulted in
productivity gains and increased profitability. The Company believes its current
systems and controls position it to continue its growth internally as well as
through acquisitions and enable it to operate profitably in both large and small
communities. The Company completed four acquisitions in the fiscal year ended
June 30, 1993, eight acquisitions in the fiscal year ended June 30, 1994, eleven
acquisitions in the fiscal year ended June 30, 1995, and eighteen subsequent to
June 30, 1995.

Based on generally available industry data, the Company believes that
expenditures for ambulance services in the United States exceeded $4 billion in
1994. Various factors, including the growth and aging of the population, and
trends towards the use of outpatient services and specialized treatment
facilities in an effort to contain health care costs have increased the demand
for ambulance services. At the same time, industry factors have increased the
standards of pre-hospital emergency care and have required faster ambulance
response times, increasing the capital and technological resources necessary to
provide higher levels of service. These factors, combined with the fragmented
nature of the ambulance service industry, are contributing to consolidation
within the industry. Volunteer fire departments, tax- supported fire districts,
and municipal fire departments constitute the primary providers of fire
protection services in the United States. Since emergency medical response
represents a significant portion of fire response activity within fire
departments, the Company believes that its ambulance and fire protection
services operations are complementary. The Company believes that its integration
of such services can provide operating economies, optimal coordination of the
delivery of services, efficiencies in the use of personnel and equipment, and
enhanced levels of service, especially in lower-utilization communities.
Additionally, a variety of economic pressures on the public sector have
increased opportunities for privatization and public/private partnerships in
fire protection services.

The Company pursues a strategy designed to enable it to expand its
business in existing service areas, establish additional service areas, expand
fire protection services, integrate existing services, improve productivity, and
respond to the needs of the public sector and health care providers. This
strategy includes plans to (i) acquire additional ambulance service providers
operating in metropolitan areas and in communities surrounding the metropolitan
areas that the Company currently serves or plans to serve; (ii) expand its
emergency ambulance services through the pursuit of new contracts with
municipalities and fire districts and its general ambulance services through
increased marketing efforts to, and pursuit of other alliances with, managed
care providers and other health care providers; (iii) expand its fire protection
services into selected additional service areas through the pursuit of
opportunities to supplant or enhance services provided by volunteer fire
departments, expand its services to newly developed communities, and to
privatize or develop public/ private partnerships with tax supported fire
districts and municipal fire departments; (iv) continue the integration of its
fire protection and ambulance services to maximize operational efficiencies and
synergies; and (v) improve its productivity through the more efficient
utilization of equipment and personnel.
3
<PAGE> 6
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
Years Ended June 30, Nine Months Ended March 31,
(Unaudited)
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Operating Data
Revenue $ 84,081 $104,364 $171,583 $120,016 $181,586
Operating income 7,052 9,390 15,940 10,517 16,928
Interest expense, net 2,896 1,780 3,059 1,837 4,136
Net income(1) 2,685 4,726 6,900 5,144 7,487
Earnings per share(2) $ 0.61 $ 0.71 $ 0.84 $ 0.64 $ 0.79
Weighted average number of shares 4,414 6,668 8,249 8,063 9,522
</TABLE>

<TABLE>
<CAPTION>
March 31,
1996
---------
<S> <C>
Balance Sheet Data
Working capital $ 55,503
Total assets 206,173
Current portion of long-term debt 6,298
Long-term debt, net of current portion 87,062
Total stockholders' equity 77,729
</TABLE>
- --------------------

(1) Net income for the year ended June 30, 1995 reflects the effect of an
extraordinary loss of $693,000.

(2) Represents fully diluted earnings per share for the year ended June 30,
1993. Earnings per share for the year ended June 30, 1995 include the
effect of an extraordinary loss of $0.08.

The Company was incorporated in Arizona in 1948 and reincorporated in Delaware
in May 1993. Unless the context indicates otherwise, all references to the
"Company" refer to Rural/Metro Corporation and its subsidiaries. The Company
maintains its principal executive offices at 8401 East Indian School Road,
Scottsdale, Arizona 85251, and its telephone number is (602) 994-3886.

4
<PAGE> 7
RISK FACTORS

In evaluating the Company and its business, consideration should be given
to the following factors in addition to the other information included in this
Prospectus.

Dependence on Certain Business Relationships

The Company depends to a great extent on certain contracts with
municipalities or fire districts to provide "911" emergency ambulance services
and fire protection services. The Company's five largest contracts accounted for
approximately 37% and 30% of total revenue for the fiscal years ended June 30,
1994 and 1995, respectively, with one contract accounting for approximately 14%
and 9% of total revenue for the same periods. The loss or cancellation of any
one or more of these contracts could have a material adverse effect on the
Company and its operations. No assurance can be given that the Company will be
successful in retaining its existing contracts or in obtaining new contracts for
ambulance services or for fire protection services. The Company also faces the
risk that areas in which it provides fire protection services through
subscription arrangements with residents and businesses will be converted to
tax-supported fire districts or annexed by municipalities. See "Business --
Marketing and Sales," "Business -- Contracts" and "Business -- Competition."

Acquisition Strategy

The Company's strategy with respect to ambulance services depends in large
part on its continued ability to acquire and to operate successfully additional
ambulance service providers. The Company completed four acquisitions in fiscal
1993, eight acquisitions in fiscal 1994, eleven acquisitions in fiscal 1995, and
eighteen acquisitions subsequent to June 30, 1995. There can be no assurance
that the Company will be able to identify additional suitable acquisition
candidates, that it will be able to consummate any such acquisitions, or that it
will be able to integrate any such acquisitions successfully into its
operations. See "Risk Factors -- Dependence on Management and Other Key
Personnel." In addition, competition for acquisitions is increasing within the
ambulance service industry and may result in the escalation of purchase prices
for acquisitions and the decreased availability of attractive acquisition
candidates. The Company expects to use cash and securities, including Common
Stock, as the principal consideration for future acquisitions. The Company's
acquisition program could be adversely affected if the Company does not generate
sufficient cash for future acquisitions from existing operations or through
external financings. There can be no assurance that the Company's operations
will generate sufficient cash for acquisitions, that any additional financings
for acquisitions will be available if and when needed or on terms acceptable to
the Company, or that financing that is obtained will be able to be deployed on a
prompt basis. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

Possible Adverse Changes in Reimbursement Rates or Coverage

Payments received from third-party payors (including Medicare, Medicaid,
and private insurers) represent a substantial portion of the Company's ambulance
receipts. The Company derived approximately 83% and 85% of its net ambulance fee
collections from such third-party payors during fiscal 1994 and 1995,
respectively. The continuing efforts of third-party payors to control
expenditures for health care, including proposals to revise reimbursement
policies, may affect the revenue, cash flow, and profitability of the Company.
In addition, the financial instability of private third-party payors as well as
budget pressures and cost shifting by governmental payors may influence the
Company's receipt of reimbursements. A reduction in coverage or reimbursement
rates by third-party payors could have a material adverse effect on the
Company's results of operations. See "Business - - Billings and Collections,"
"Business -- Governmental Regulation" and "Business -- Reimbursement."

Impact of Rate Structures and Limitations on Rates of Return

State or local government regulations or administrative policies regulate
rate structures in most states in which the Company conducts ambulance
operations. In certain service areas in which the Company is the exclusive

5
<PAGE> 8
provider of services, the municipality or fire district sets the rates for
emergency service pursuant to a master contract and establishes the rates for
general ambulance services that the Company is permitted to charge. Rates in
most service areas are set at the same amounts for emergency and general
ambulance services. The State of Arizona establishes a rate of return on sales
the Company is permitted to earn in determining the ambulance service rates the
Company may charge in that state. Ambulance services revenue generated in
Arizona accounted for approximately 18% and 14% of total revenue for the fiscal
years ended June 30, 1994 and 1995, respectively. No assurance can be given that
the Company will be able to receive ambulance service rate increases on a timely
basis where rates are regulated or to establish or maintain satisfactory rate
structures where rates are not regulated. Under present coverage programs with
third-party payors, the Company faces the continuing risk of nonreimbursement to
the extent that uninsured individuals require ambulance service. Changes in
demographics in the Company's markets could increase the Company's risk of
doubtful accounts which, in turn, could have a material adverse effect on the
Company's operating results. See "Business -- Billings and Collections" and
"Business -- Governmental Regulation."

Municipalities and fire districts negotiate the payments to be made to the
Company for fire protection services pursuant to master contracts. These master
contracts are based on a budget and on level of effort or performance criteria
desired by the municipalities and fire districts. No assurance can be given that
the Company will be successful in negotiating or maintaining profitable
contracts with municipalities and fire districts. See "Business - - Contracts."

Governmental Regulation

Numerous federal, state, and local laws and regulations govern various
aspects of the business of ambulance service providers, covering matters such as
licensing, rates, employee certification, environmental matters, and other
factors. Certificates of necessity may be required from state or local
governments to operate ambulance services in a designated service area. Master
contracts from governmental authorities are subject to risks of cancellation or
unenforceability as a result of budgetary and other factors and may subject the
Company to certain liabilities or restrictions which traditionally have applied
only to governmental bodies or to which they are otherwise immune. There can be
no assurance that federal, state, or local governments will not adopt laws or
regulations that would increase the Company's cost of doing business, lower
reimbursement levels, or otherwise have a material adverse effect on the
Company's business. See "Business -- Governmental Regulation" and "Business --
Reimbursement."

Industry Considerations

Numerous legislative proposals have been considered that would result in
major reforms in the United States health care system. The Company cannot
predict which, if any, health care reforms may be proposed or enacted or the
effect that any such legislation would have on the Company's business. In
addition, managed care providers are attempting to contain health care costs
through the use of outpatient services and specialized treatment facilities. No
assurance can be given that changing industry practices will not have an adverse
effect on the Company.

Competition

The ambulance service industry is highly competitive. The Company currently
encounters competition in providing ambulance services from governmental
entities (including fire districts), hospitals, other national ambulance service
providers, large regional ambulance service providers, and numerous local and
volunteer private providers. In addition, there can be no assurance that
municipalities, fire districts, or health care organizations that currently
contract for ambulance services will not choose to provide ambulance services
directly in the future. The Company is experiencing increased competition from
fire departments to provide emergency ambulance service. Some of the Company's
current competitors and certain potential competitors have greater capital and
other resources than the Company. Tax-supported fire districts, municipal fire
departments, and

6
<PAGE> 9
volunteer fire departments represent the principal providers of fire protection
services for residential and commercial properties. Private providers 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 the provision of fire protection services or has not assumed the
financial responsibility for fire protection. In these situations, the Company
provides services for a municipality or fire district on a contract basis or
provides fire protection services directly to residences and businesses on a
subscription basis. There can be no assurance that the Company will be able to
obtain additional fire protection businesses on a contractual or subscription
basis, that fire districts or municipalities will not choose to provide fire
protection services directly in the future, or that areas in which the Company
provides services through subscriptions will not be converted to tax-supported
fire districts or annexed by municipalities. See "Business -- Competition."

Dependence on Management and Other Key Personnel

The Company's success depends upon the retention of principal key personnel
and the recruitment and retention of additional key personnel. The loss of
existing key personnel or the failure to recruit and retain necessary additional
personnel would adversely affect the Company's business prospects. There can be
no assurance that the Company will be able to retain its current personnel or
attract and retain necessary additional personnel. The Company's internal growth
and its expansion into new geographic areas will require additional expertise,
such as marketing and operational management. These growth and expansion
activities will further increase the demand on the Company's resources and
require the addition of new personnel and the development of additional
expertise by existing personnel. The failure of the Company to attract and
retain personnel with the requisite expertise or to develop internally such
expertise could adversely affect the prospects for the Company's success. The
Company entered into three-year employment agreements with its executive
officers in May 1993, which were renewed in December 1995, and has entered into
similar agreements with certain other executive officers as they have joined the
Company. The Company maintains "key person" insurance on several of its key
executive officers. See "Business" and "Management."

Control by Certain Stockholders

The directors, executive officers, and their affiliates currently own
beneficially approximately 14%, and the Company's Employee Stock Ownership Plan
(the "ESOP") currently holds approximately 13%, of the outstanding shares of
Common Stock. Accordingly, these persons, if they act as a group, likely will be
able to significantly influence the election of the Company's directors and the
outcome of matters requiring approval by the stockholders of the Company. See
"Selling Stockholders."

Change in Control Provisions

The Company's Second Restated Certificate of Incorporation (the "Restated
Certificate") and the Delaware General Corporation Law (the "General Corporation
Law") contain provisions that may have the effect of making more difficult or
delaying attempts by others to obtain control of the Company, even when these
attempts may be in the best interests of stockholders. The Restated Certificate
also authorizes the Board of Directors, without stockholder approval, to issue
one or more series of preferred stock which could have voting and conversion
rights that adversely affect the voting power of the holders of Common Stock and
provides for a classified board of directors. The General Corporation Law also
imposes conditions on certain business combination transactions with "interested
stockholders" (as defined therein).

The Company has also adopted a Rights Plan whereby, if and when the Rights
become exercisable, holders of shares of Common Stock will be entitled to
purchase one one-thousandth of a share of Series A Junior Participating
Preferred Stock at a purchase price of $145 (subject to certain antidilution
adjustments). The Rights will expire 10 years after issuance, and will be
exercisable only if a person or group becomes the beneficial owner of 15% or
more of the Common Stock (such person or group, a "15% holder") or commences a
tender or exchange offer which would result in the offeror beneficially owning
15% or more of the Common Stock. If the

7
<PAGE> 10
Rights become exercisable, each Right, unless redeemed by the Company, entitles
the holder to purchase for $145 an amount of Common Stock of the Company, or in
certain circumstances a combination of securities and/or assets or the common
stock of the acquiror, having a market value of twice the purchase price.

The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors since the Rights may be redeemed by the Company at $.01
per Right prior to 10 days (as such period may be extended) after the public
announcement of the existence of a 15% holder.

Possible Volatility of Stock

The market price of the Company's Common Stock has increased since the
Company's initial public offering in July 1993. See "Price Range of Common
Stock." The period was marked by generally rising stock prices, favorable
industry conditions, and improved operating results by the Company. The trading
price of the Company's Common Stock in the future could be subject to wide
fluctuations in response to quarterly variations in operating results of the
Company and others in its industry, actual or anticipated announcements
concerning the Company or its competitors, including government regulations and
reimbursement changes, the announcement and implementation of health care reform
proposals, changes in analysts' estimates of the Company's financial
performance, general conditions in the health care industry, general economic
and financial conditions, and other events or factors. In addition, the stock
market has experienced extreme price and volume fluctuations which have affected
the market prices for many companies involved in health care and related
industries and which often have been unrelated to the operating performance of
such companies. These broad market fluctuations and other factors may adversely
affect the market price of the Company's Common Stock. See "Business --
Competition" and "Business -- Governmental Regulation." In addition, sales of
Common Stock in the public market could adversely affect prevailing market
prices. A total of approximately 600,000 restricted shares as that term is
defined under Rule 144 (the "Restricted Shares") of the Securities Act held by
non-affiliates are eligible for sale in the public market without restriction
pursuant to Rule 144(k) under the Securities Act, and approximately 2,900,000
Restricted Shares are eligible for sale in the public market subject to
compliance with the volume limitations and other requirements of Rule 144.
The Company has registered for offer and sale up to 3,200,000 shares of Common
Stock for issuance in connection with acquisitions (of which 1,354,102 shares
have been issued), which shares are generally freely tradeable after their
issuance under Rule 145 under the Securities Act, unless held by an affiliate,
in which case such shares will be subject to the volume and manner of sale
restrictions under Rule 144.

The Company has registered for offer and sale up to 3,965,625 shares of
Common Stock that are reserved for issuance pursuant to the Company's stock
option plans. Shares issued under such registration statement upon the exercise
of stock options issued under the Company's stock option plans generally will be
eligible for sale in the public market, except that affiliates of the Company
will continue to be subject to volume and manner of sale limitations. The
Company also has the authority to issue additional shares of Common Stock and
shares of one or more series of Preferred Stock. The issuance of such shares
could have a dilutive effect on earnings per share, and the sale of such shares
could depress the market price of the Company's Common Stock.

8
<PAGE> 11
PRICE RANGE OF COMMON STOCK

The Company's Common Stock has been traded on the Nasdaq National Market
under the symbol RURL since its initial public offering on July 16, 1993 at
$12.50 per share. The following table sets forth the high and low sales prices
of the Common Stock for the fiscal quarters indicated as reported on the Nasdaq
National Market.

<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
YEAR ENDED JUNE 30, 1994
Fourth quarter.................................... $17.25 $13.25

YEAR ENDED JUNE 30, 1995
First quarter..................................... 19.00 14.50
Second quarter.................................... 21.25 17.75
Third quarter..................................... 20.75 17.50
Fourth quarter.................................... 22.25 16.75

YEAR ENDING JUNE 30. 1996
First quarter..................................... 26.50 21.75
Second quarter.................................... 25.25 23.00
Third quarter..................................... 28.75 22.00
Fourth quarter.................................... 35.75 26.75
</TABLE>

On June 28, 1996, the closing sale price of the Common Stock was $34.25 per
share. On June 28, 1996, there were approximately 1,000 holders of record for
the Company's Common Stock.

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<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data for the fiscal years
ended June 30, 1991, 1992, 1993, 1994, and 1995 is derived from the consolidated
financial statements of the Company which have been audited by Arthur Andersen
LLP, independent public accountants. The selected consolidated financial data
for the nine months ended March 31, 1995 and 1996 has been derived from
consolidated financial statements that have not been subject to audit, but which
have been prepared on a basis consistent with the audited financial statements.
In the opinion of management, the unaudited consolidated financial data include
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair statement of the consolidated financial position and results of
operations for that period. The results of operations for the nine months ended
March 31, 1996 are not necessarily indicative of the results of operations for a
full fiscal year. The selected consolidated financial data provided below should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
of the Company and related notes thereto incorporated by reference in this
Prospectus.

<TABLE>
<CAPTION>
Nine Months Ended
Years Ended June 30, March 31,
------------------------------------------------------------ ----------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- -------- -------- -------- --------
(In thousands, except per share data) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Income Data
Revenue
Ambulance services................ $37,306 $38,656 $52,539 $ 68,942 $127,461 $ 87,566 $143,246
Fire protection services.......... 24,633 26,938 28,165 30,502 32,274 23,820 28,503
Other............................. 2,564 2,627 3,377 4,920 11,848 8,630 9,837
------- ------- ------- -------- -------- -------- --------
Total revenue....................... 64,503 68,221 84,081 104,364 171,583 120,016 181,586
Operating expenses
Payroll and employee benefits(1).. 36,451 37,541 44,178 54,750 90,843 64,498 98,198
Provision for doubtful accounts... 8,985 7,962 11,083 13,658 22,263 15,356 22,445
Depreciation...................... 2,196 2,628 3,522 4,369 6,654 4,593 7,063
Amortization of intangibles....... 577 380 448 584 2,074 1,312 2,574
Other operating expenses.......... 14,809 15,151 17,798 21,613 33,809 23,740 34,378
------- ------- ------- -------- -------- -------- --------
Operating income.................... 1,485 4,559 7,052 9,390 15,940 10,517 16,928
Interest expense, net............... 2,701 2,512 2,896 1,780 3,059 1,837 4,136
Other expense....................... 136 -- -- -- -- -- --
------- ------- ------- -------- -------- -------- --------
Income (loss) before income taxes
and extraordinary item............ (1,352) 2,047 4,156 7,610 12,881 8,680 12,792
(Provision for) benefit from income
taxes............................. 421 (713) (1,471) (2,884) (5,288) (3,536) (5,305)
------- ------- ------- -------- -------- -------- --------
Income (loss) before extraordinary
item.............................. (931) 1,334 2,685 4,726 7,593 5,144 7,487
Extraordinary item.................. -- -- -- -- (693) -- --
------- ------- ------- -------- -------- -------- --------
Net income (loss)................... $ (931) $ 1,334 $ 2,685 $ 4,726 $ 6,900 $ 5,144 $ 7,487
======= ======= ======= ======== ======== ======== ========
Net income (loss) available for
common stock...................... $ (931) $ 1,305 $ 2,610 $ 4,726 $ 6,900 $ 5,144 $ 7,487
======= ======= ======= ======== ======== ======== ========
Earnings (loss) per common stock and
common stock equivalent(2)
Income before extraordinary
item.............................. $ (0.26) $ 0.33 $ 0.63 $ 0.71 $ 0.92 $ 0.64 $ 0.79
Extraordinary item................. -- -- -- -- (0.08) -- --
------- ------- ------- -------- -------- -------- --------
Net income (loss).................. $ (0.26) $ 0.33 $ 0.63 $ 0.71 $ 0.84 $ 0.64 $ 0.79
======= ======= ======= ======== ======== ======== ========
Earnings per common stock and common
stock equivalent assuming full
dilution(2)....................... $ 0.61
=======
Weighted average number of common
stock and common stock equivalents
outstanding
Primary............................ 3,627 3,970 4,171 6,668 8,249 8,063 9,522
Fully diluted...................... 4,414
</TABLE>

10
<PAGE> 13
<TABLE>
<CAPTION>
June 30, March 31,
-------------------------------------------------------- ---------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- -------- -------- -------- --------
(In thousands) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data
Working capital............ $ 7,887 $ 3,279 $ 4,784 $ 23,915 $ 26,358 $ 25,712 $ 55,503
Total assets............... 34,464 37,963 45,816 88,247 159,430 140,383 206,173
Current portion of long-term
debt(3).................. 2,148 9,592 9,827 3,590 8,377 5,746 6,298
Long-term debt, net of current
portion(4)............... 22,323 14,313 15,382 13,339 53,282 46,508 87,062
Stockholders' equity (deficit) (2,982) (239) 4,093 47,349 65,648 56,018 77,729
</TABLE>

- ----------

(1) Includes the contribution of 435,375 shares of treasury stock to
the ESOP in fiscal 1991 valued at $2.4 million.

(2) Primary and fully diluted earnings (loss) per share are considered
to be the same in all periods presented except for the year ended June 30, 1993.

(3) Includes balances outstanding under the Company's revolving credit
facility of $5.3 million and $6.7 million at June 30, 1992 and 1993,
respectively.

(4) Includes balances outstanding under the Company's revolving credit
facility of $4.5 million and $34.9 million at June 30, 1991 and 1995,
respectively.

11
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction
with the Selected Consolidated Financial Data and the Consolidated Financial
Statements of the Company and related notes incorporated by reference in this
Prospectus.

INTRODUCTION

The Company derives its revenue primarily from fees charged for
ambulance and fire protection services. The Company provides ambulance services
in response to emergency medical calls ("911" emergency ambulance services) and
non-emergency transport services (general transport services) to patients on
both a fee-for-service basis and nonrefundable subscription fee basis. Per
transport revenue depends on various factors, including the mix of rates between
existing markets and new markets and the mix of activity between "911" emergency
ambulance services and general transport services as well as other competitive
factors. Fire protection services are provided either under contracts with
municipalities or fire districts or on a nonrefundable subscription fee basis to
individual homeowners or commercial property owners.

Ambulance service fees are recorded net of Medicare, Medicaid, and
other reimbursement limitations and are recognized when services are provided.
Payments received from third-party payors represent a substantial portion of the
Company's ambulance service fee receipts. Provision for doubtful accounts is
made for the expected difference between ambulance services fees charged and
amounts actually collected. The Company's provision for doubtful accounts
generally is higher with respect to collections to be derived directly from
patients than for collections to be derived from third-party payors and
generally is higher for "911" emergency ambulance services than for general
ambulance transport services.

Because of the nature of the Company's ambulance services, it is
necessary to respond to a number of calls, primarily "911" emergency ambulance
service calls, which may not result in transports. Results of operations are
discussed below on the basis of actual transports since transports are more
directly related to revenue. Expenses associated with calls that do not result
in transports are included in operating expenses. The percentage of calls not
resulting in transports varies substantially depending upon the mix of general
transport and "911" emergency ambulance service calls in the Company's markets
and is generally higher in markets in which the calls are primarily "911"
emergency ambulance service calls. Rates in the Company's markets take into
account the anticipated number of calls that may not result in transports. The
Company does not separately account for expenses associated with calls that do
not result in transports.

Revenue generated under fire protection services contracts is
recognized over the life of the contract. Subscription fees received in advance
are deferred and recognized over the term of the subscription agreement, which
generally is one year.

Other revenue primarily consists of fees associated with alternative
transportation services and home health care services and are recognized when
the services are provided.

Other operating expenses primarily consists of rent and related
occupancy expenses, maintenance and repairs, insurance, fuel and supplies,
travel, and professional fees.

The Company's income before extraordinary item for the year ended June
30, 1995 was $7.6 million or $0.92 per share. This compares to net income of
$4.7 million and $2.7 million, or $0.71 and $0.61 per fully diluted share for
the years ended June 30, 1994 and 1993, respectively. The Company recorded an
extraordinary item of $0.7 million, net of a $0.5 million tax benefit, or $0.08
per share, in the year ended June 30, 1995 to reflect the loss on early
extinguishment of debt. During fiscal 1995, the Company completed the
acquisition of

12
<PAGE> 15
eleven ambulance service providers operating in Georgia, Nebraska, New York,
Ohio, Pennsylvania, South Carolina, Tennessee and Texas. The following
discussion provides greater detail of the Company's results of operations and
liquidity and capital resources.

RESULTS OF OPERATIONS

The following table sets forth for the years ended June 30, 1993, 1994,
and 1995 and for the nine months ended March 31, 1995 and 1996, certain items
from the Company's consolidated financial statements expressed as a percentage
of total revenue:

<TABLE>
<CAPTION>
Nine Months Ended
Years Ended June 30, March 31,
-------------------------- -----------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenue
Ambulance services ....................... 62.5% 66.1% 74.3% 73.0% 78.9%
Fire protection services ................. 33.5 29.2 18.8 19.8 15.7
Other .................................... 4.0 4.7 6.9 7.2 5.4
----- ----- ----- ----- -----
Total revenue ............................ 100.0 100.0 100.0 100.0 100.0
Operating expenses
Payroll and employee benefits ............ 52.5 52.4 52.9 53.7 54.1
Provision for doubtful accounts .......... 13.2 13.1 13.0 12.8 12.4
Depreciation ............................. 4.2 4.2 3.9 3.8 3.9
Amortization of intangibles .............. 0.5 0.6 1.2 1.1 1.4
Other operating expenses ................. 21.2 20.7 19.7 19.8 18.9
----- ----- ----- ----- -----
Operating income ........................... 8.4 9.0 9.3 8.8 9.3
Interest expense, net ...................... 3.5 1.7 1.8 1.6 2.3
----- ----- ----- ----- -----
Income before income taxes and extraordinary
item ..................................... 4.9 7.3 7.5 7.2 7.0
Provision for income taxes ................. 1.7 2.8 3.1 2.9 2.9
----- ----- ----- ----- -----
Income before extraordinary item ........... 3.2% 4.5% 4.4% 4.3% 4.1%
===== ===== ===== ===== =====
</TABLE>

NINE MONTHS ENDED MARCH 31, 1995 COMPARED TO NINE MONTHS ENDED
MARCH 31, 1996

Revenue

Total revenue increased $61.6 million, or 51.3%, from $120.0 million
for the nine months ended March 31, 1995 to $181.6 million for the nine months
ended March 31, 1996. Approximately $45.5 million of this increase resulted from
the acquisition of ambulance service providers during the last quarter of fiscal
1995 and the first three quarters of fiscal 1996. Fire protection services
revenue increased by $4.7 million and other revenue increased by $1.2 million.

Total ambulance transports increased by 203,000, or 64.0%, from 317,000
for the nine months ended March 31, 1995 to 520,000 for the nine months ended
March 31, 1996. The acquisition of eleven ambulance service companies during the
last quarter of fiscal 1995 and the first three quarters of fiscal 1996
accounted for 188,000 of these additional transports.

Fire protection services revenue increased due to revenue generated
from new fire protection contracts awarded to the Company through competitive
bidding and due to rate increases for fire protection services. The increase
also resulted from the acquisition of a fire service company during the first
quarter of fiscal 1996.

Operating Expenses

Payroll and employee benefit expenses increased $33.7 million, or
52.2%, from $64.5 million for the nine months ended March 31, 1995 to $98.2
million for the nine months ended March 31, 1996. This increase was primarily
due to the acquisition of eleven ambulance service providers during the last
quarter of fiscal 1995

13
<PAGE> 16
and the first three quarters of fiscal year 1996.

Provision for doubtful accounts increased $7.1 million, or 46.1%, from
$15.4 million for the nine months ended March 31, 1995 to $22.5 million for the
nine months ended March 31, 1996. Provision for doubtful accounts decreased from
12.8% of total revenue for the nine months ended March 31, 1995 to 12.4% of
total revenue for the nine months ended March 31, 1996 reflecting the effect of
the acquisition of ambulance service providers operating in markets with higher
receivable collections as a result of a greater mix of general transport
activity.

Depreciation increased $2.5 million, or 54.3%, from $4.6 million for
the nine months ended March 31, 1995 to $7.1 million for the nine months ended
March 31, 1996, primarily due to increased property and equipment from recent
acquisition activity.

Amortization of intangibles increased by $1.3 million, from $1.3
million for the nine months ended March 31, 1995 to $2.6 million for the nine
months ended March 31, 1996. This increase was the result of increased
intangible assets caused by recent acquisition activity. Amortization of
intangibles increased from 1.1% of total revenue for the nine months ended March
31, 1995 to 1.4% for the nine months ended March 31, 1996.

Other operating expenses increased approximately $10.7 million, or
45.1% from $23.7 million for the nine months ended March 31, 1995 to $34.4
million for the nine months ended March 31, 1996, primarily due to increased
expenses associated with the operation of the eleven ambulance service providers
acquired during the last quarter of fiscal 1995 and the first three quarters of
fiscal 1996. Other operating expenses decreased from 19.8% of total revenue for
the nine months ended March 31, 1995 to 18.9% of total revenue for the nine
months ended March 31, 1996 as a result of operational efficiencies.

Interest expense increased by $2.3 million from $1.8 million for the
nine months ended March 31, 1995 to $4.1 million for the nine months ended March
31, 1996. This increase was caused by higher debt balances, reflecting increased
borrowings on the Company's revolving credit facility.

YEAR ENDED JUNE 30, 1994 COMPARED TO YEAR ENDED JUNE 30, 1995

Revenue

Total revenue increased $67.2 million, or 64.4%, from $104.4 million
for the year ended June 30, 1994 to $171.6 million for the year ended June 30,
1995. Approximately $48.6 million of this increase resulted from the acquisition
of ambulance service providers during fiscal 1995 and during the last two
quarters of fiscal 1994. Fire protection services revenue increased by $1.8
million, and other revenue increased by $6.9 million.

Total ambulance transports increased by 235,000 from 234,000 for the
year ended June 30, 1994 to 469,000 for the year ended June 30, 1995. The
acquisition of ambulance service companies during fiscal 1995 and during the
last two quarters of fiscal 1994 accounted for 208,000 of these additional
transports. Ambulance transports in markets served by the Company in both of the
years ended June 30, 1994 and 1995 increased by approximately 27,000 transports,
or 11.5%.

Fire protection services revenue increased as a result of rate
increases for fire protection services and greater utilization of the Company's
services under fee-for-service arrangements. This increase was partially offset
by the effect of the loss of a municipal master fire protection contract as of
June 30, 1994. This contract represented fire protection services revenue of
$1.8 million for the year ended June 30, 1994. Revenue generated under fire
protection contracts covering markets served by the Company in both periods
increased 12.4%.

Other revenue increased by $6.9 million primarily because of the
acquisition of ambulance service providers with wheelchair transport and home
health care operations.

14
<PAGE> 17
Operating Expenses

Payroll and employee benefit expenses increased $36.0 million, or
65.7%, from $54.8 million for the year ended June 30, 1994 to $90.8 million for
the year ended June 30, 1995. This increase resulted primarily from the
acquisition of ambulance service providers during fiscal 1995 and during the
last two quarters of fiscal 1994.

Provision for doubtful accounts increased $8.6 million, or 62.8%, from
$13.7 million for the year ended June 30, 1994 to $22.3 million for the year
ended June 30, 1995. Provision for doubtful accounts decreased from 13.1% of
total revenue for the year ended June 30, 1994 to 13.0% of total revenue for the
year ended June 30, 1995, reflecting the effect of the acquisition of ambulance
service providers operating in markets with increased general transport services
and higher receivable collections.

Depreciation expense increased $2.3 million, or 52.3%, from $4.4
million for the year ended June 30, 1994 to $6.7 million for the year ended June
30, 1995 primarily as a result of increased property and equipment caused
primarily by recent acquisition activity. Depreciation decreased from 4.2% of
total revenue for the year ended June 30, 1994 to 3.9% of total revenue for the
year ended June 30, 1995.

Amortization of intangibles increased $1.5 million from $0.6 million
for the year ended June 30, 1994 to $2.1 million for the year ended June 30,
1995 primarily as a result of increased intangible assets caused by recent
acquisition activity. Amortization of intangibles increased from 0.6% of total
revenue for the year ended June 30, 1994 to 1.2% of total revenue for the year
ended June 30, 1995.

Other operating expenses increased $12.2 million, or 56.5%, from $21.6
million for the year ended June 30, 1994 to $33.8 million for the year ended
June 30, 1995 primarily as a result of increased expenses associated with the
operation of ambulance service providers acquired during fiscal 1995 and during
the last two quarters of fiscal 1994. Other operating expenses decreased from
20.7% of total revenue for the year ended June 30, 1994 to 19.7% of total
revenue for the year ended June 30, 1995 as a result of operational
efficiencies.

Other Expenses

Interest expense increased $1.3 million, or 72.2%, from $1.8 million
for the year ended June 30, 1994 to $3.1 million for the year ended June 30,
1995 primarily as a result of additional borrowings on the Company's revolving
credit facility to fund certain acquisitions.

Provision for Income Taxes

The Company's effective tax rate increased from 37.9% for the year
ended June 30, 1994 to 41.0% for the year ended June 30, 1995 primarily as a
result of the amortization of nondeductible goodwill associated with
acquisitions.

YEAR ENDED JUNE 30, 1993 COMPARED TO YEAR ENDED JUNE 30, 1994

Revenue

Total revenue increased $20.3 million, or 24.1%, from $84.1 million for
the year ended June 30, 1993 to $104.4 million for the year ended June 30, 1994.

Ambulance revenues increased $16.4 million, of which $9.7 million is
attributable to acquisitions made during fiscal 1994 and the first six months of
fiscal 1993. The remaining $6.7 million increase in ambulance revenue is
attributable to increased activity in markets served by the Company in both
fiscal years. Fire protection revenue increased $2.3 million and other revenue
increased by $1.5 million in 1994 compared to 1993.

15
<PAGE> 18
Ambulance transports increased by 52,000, or 29%, to 234,000 in fiscal
1994. The effect of acquisitions made during 1993 and 1994 accounted for 31,000
of the increased transports. The remaining increase of 21,000 transports is
attributable to increased volume in markets served by the Company in both fiscal
years, the largest increase being the result of the implementation of a newly
integrated ambulance services and fire protection services contract.

Fire protection services revenue increased primarily because of rate
increases under master fire contracts and increases in subscription revenue
resulting from efforts to increase subscription contract renewals and increased
marketing efforts focused on previously unsubscribed properties. A municipality
previously served under a master contract to provide fire protection did not
renew the contract with the Company at its June 30, 1994 expiration date.
Revenue generated under this contract was $1.7 million and $1.8 million for the
fiscal years ended June 30, 1993 and 1994, respectively.

Other revenue increased $1.5 million during the year ended June 30,
1994. This increase was caused primarily by the acquisition in 1994 of an
ambulance business with wheelchair transport and home health care operations.

Operating Expenses

Payroll and employee benefits increased by $10.6 million, or 24.0%, to
$54.8 million in fiscal 1994 primarily as a result of acquisitions.

Provision for doubtful accounts increased from $11.1 million in the
year ended June 30, 1993 to $13.7 million in the year ended June 30, 1994. The
provision decreased as a percentage of revenue during the fiscal year ended June
30, 1994 to 13.1% from 13.2% in fiscal 1993 because of continued improvement in
receivable collections, aided by the billing and collection system implemented
during prior fiscal years.

Depreciation expense increased by $0.9 million, or 25.7%, to $4.4
million in the year ended June 30, 1994. The increase was the result of
increased property and equipment caused primarily by 1994 acquisition activity
and a full year's depreciation and amortization of assets acquired during fiscal
1993.

Amortization of intangibles increased by $0.2 million or 50.0% to $0.6
million in the year ended June 30, 1994. The increase was the result of
increased intangible assets caused primarily by 1994 acquisition activity.

Other operating expenses were $21.6 million in fiscal 1994 compared to
$17.8 million in the prior fiscal year. The increase was the result of fiscal
1994 acquisitions as well as a full fiscal year's impact of acquisitions made
during 1993. Other operating expenses decreased from 21.2% of total revenue in
the fiscal year ended June 30, 1993 to 20.7% of total revenue in the fiscal year
ended June 30, 1994, primarily because of improved operating efficiencies.

Other Expenses

Interest expense decreased to $1.8 million in the year ended June 30,
1994 from $2.9 million in the preceding year. This decrease was caused by lower
debt balances during fiscal 1994 than during fiscal 1993, reflecting the
repayment of certain indebtedness with a portion of the proceeds of the
Company's public stock offerings.

16
<PAGE> 19
SEASONALITY AND QUARTERLY RESULTS

The following table reflects certain selected unaudited quarterly
operating results for each of the eight quarters including the quarter ended
March 31, 1996. The operating results of any quarter are not necessarily
indicative of results of any future period.
<TABLE>
<CAPTION>
JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31,
1994 1994 1994 1995 1995 1995 1995 1996
---- ---- ---- ---- ---- ---- ---- ----
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue
Ambulance service...... $20,833 $25,496 $28,911 $33,159 $39,895 $43,404 $48,053 $51,789
Fire protection
services............. 8,081 7,971 7,827 8,022 8,454 9,255 9,435 9,813
Other revenue.......... 2,060 2,804 3,221 2,605 3,218 3,104 3,351 3,382
------- ------- ------- ------- ------- ------- ------- -------
Total revenue............ 30,974 36,271 39,959 43,786 51,567 55,763 60,839 64,984
Operating income......... 3,132 2,912 3,340 4,265 5,423 4,814 5,339 6,775
Income before
extraordinary item..... 1,651 1,434 1,660 2,050 2,449 2,102 2,396 2,989
Net income............... 1,651 1,434 1,660 2,050 1,756 2,102 2,396 2,989
Earnings per share
Income before
extraordinary item..... $ 0.22 $ 0.18 $ 0.21 $ 0.25 $0.28 $ 0.23 $ 0.25 $ 0.31
Extraordinary item....... -- -- -- -- (0.08) -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net income............... $ 0.22 $ 0.18 $ 0.21 $ 0.25 $ 0.20 $ 0.23 $ 0.25 $ 0.31
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
The Company has historically experienced, and expects to continue to
experience, moderate seasonality in quarterly operating results. This
seasonality has resulted from a number of factors, including relatively higher
second and third fiscal quarter demand for transport services in the Company's
Arizona and Florida regions resulting from the greater winter populations in
those regions and annual rate increases on certain service contracts occurring
at different times during the Company's fiscal year. The effect of the
acquisition of ambulance service providers in the northeastern and midwestern
regions of the United States has reduced, and will continue to reduce, the
overall seasonality in operating results.

LIQUIDITY AND CAPITAL RESOURCES

Historically, the Company has financed its cash requirements
principally through cash flow from operating activities, term and revolving
indebtedness, capital equipment lease financing, and the sale of stock through
an initial public offering in July 1993, generating net proceeds of
approximately $19.5 million, a public stock offering in May 1994, generating net
proceeds of approximately $17.4 million, and a subsequent public stock offering
in April 1996, generating net proceeds of approximately $34.8 million.

During the nine months ended March 31, 1996, the Company used cash flow
of $2.7 million, compared with cash flow generated by operations of $1.5 million
for the nine months ended March 31, 1995. During the year ended June 30, 1995,
the Company generated $8.5 million in cash flow from operations compared with
$9.3 million in the preceding year.

During September 1995, the Company funded a fully underwritten credit
agreement for a $125 million revolving credit facility. The Company used the
proceeds from the facility to repay the Company's then existing revolving credit
facility and its notes payable. Approximately $75.5 million was outstanding on
the credit facility at March 31, 1996. This six-year revolving credit facility
is priced at the prime rate or a LIBOR-based rate. The LIBOR-based rates range
from LIBOR plus 0.75% to LIBOR plus 1.75% depending upon the Company meeting
certain financial covenants. Beginning September 30, 1998, the amount available
under the facility begins to reduce at three-month intervals until the
termination date at September 30, 2001. The facility is collateralized by the
Company's accounts and notes receivable, common stock of its subsidiaries and
partnership interests. Costs previously deferred related to certain indebtedness
resulted in an extraordinary charge to earnings of $693,000, net of a $480,000
tax benefit, or $.08 per share in the year ended June 30, 1995.

The Company repaid debt and capital lease obligations of $7.0 million
and $17.5 million for the nine months ended March 31, 1995 and 1996. The Company
repaid $6.8 million of notes payable and capital lease

17
<PAGE> 20
obligations during the year ended June 30, 1994 and $10.8 million during the
year ended June 30, 1995. The Company made capital expenditures of $8.0 million
and $13.8 million during the nine months ended March 31, 1995 and 1996,
respectively. Capital expenditures were $11.5 million during the year ended June
30, 1995 compared to $5.8 million during the prior year, of which $2.7 million
and $0.5 million were financed through capital lease obligations in each year,
respectively.

During the year ended June 30, 1995, the Company purchased either all
of the issued and outstanding stock or certain of the assets of eleven ambulance
providers operating in Georgia, Nebraska, New York, Ohio, Pennsylvania, South
Carolina, Tennessee and Texas for a combined purchase price was $65.1 million.
The Company paid cash of $32.9 million, issued notes payable to sellers
totalling $9.4 million, issued 1,091,526 shares of Common Stock to sellers
(507,692 shares were related to a pooling-of-interests transaction in Ohio and
the remaining 583,834 shares were valued at $7.8 million), and assumed $15.0
million of liabilities. The Company funded the cash portion of the acquisitions
from the proceeds of the May 1994 public stock offering and from the revolving
credit facility.

During the nine months ended March 31, 1996 the Company purchased the
stock of ambulance service providers operating in New York state and Alabama,
the assets of ambulance service providers operating in Ohio, Texas, South
Carolina and Georgia and the stock of a fire service company operating in
Oregon. The aggregate purchase price was $14.7 million. The Company paid cash of
$8.9 million, issued notes payable to sellers totaling $2.7 million, issued
67,606 shares of Rural/Metro common stock valued at $0.9 million and assumed
$2.2 million of liabilities. The cash portion of the acquisitions was funded
through operating cash flow and through the Company's revolving credit facility.
These transactions were accounted for as purchases in accordance with Accounting
Principles Board Opinion No.16 (APB16).

During October 1995 and March 1996, subsidiaries of the Company merged
with and into two ambulance service providers operating in Indiana and an
ambulance service provider operating in Ohio. The Company issued an aggregate of
405,077 shares of its common stock in exchange for all of the issued and
outstanding stock of the acquired companies. The transactions were accounted for
as pooling-of-interests in accordance with APB16.

During August 1995, the Company registered for offer and sale up to
2,283,658 shares of common stock under a shelf registration statement. As of
June 15, 1996, 437,760 shares had been issued in connection with acquisitions
under such shelf registration statement.

During April 1996, the Company issued 1,367,500 shares of its common
stock in a public stock offering. The Company used the net proceeds of
approximately $34.8 million to repay a portion of its revolving credit facility.

Subsequent to March 31, 1996, the Company purchased the assets of
ambulance service providers operating in New York, Indiana and Alabama and the
stock of ambulance service providers operating in South Dakota and Indiana. The
aggregate purchase price was $10.6 million. The Company paid cash of $7.9
million, issued notes payable to sellers of $1.9 million, issued 3,464 shares
of the Company's common stock valued at $0.1 million and assumed $0.7 million
of liabilities. These transactions were accounted for as purchases in
accordance with APB16.

During May 1996, a subsidiary of the Company merged with and into an
ambulance service provider operating in Ohio and northern Kentucky. The Company
issued 252,252 shares of its common stock in exchange for all of the issued and
outstanding stock of the acquired company. The transaction was accounted for as
a pooling-of-interests in accordance with APB16.

The Company expects that cash flow from operations and additional
borrowing capacity will be sufficient to meet its operating and capital needs
for existing operations as well as to fund certain service area expansion and
acquisitions for the twelve months subsequent to March 31, 1996. The Company is
engaged in an active acquisition program. The Company intends to fund any
acquisitions that it consummates through the use of cash from operations, credit
facilities, seller notes payable and the issuance of Common Stock. In addition,
the Company may seek to raise additional capital through public or private debt
or equity financing. The availability of these capital sources will depend upon
prevailing market conditions, interest rates and the financial condition of the
Company. See "Risk Factors -- Acquisition Strategy."

18
<PAGE> 21
BUSINESS

INDUSTRY CONSIDERATIONS

Public-sector entities, private companies, and hospitals provide
ambulance services. Public-sector entities generally serve as the first
responder to requests for such emergency ambulance services and often provide
emergency ambulance transport. When the public sector serves as first responder,
private companies often serve as the second responder and support the first
responder as needed. The private sector provides the majority of general
ambulance services. It is estimated that the ambulance service industry includes
more than 10,000 providers of service, 2,000 or more of which are private. Most
commercial providers are small companies serving one or a limited number of
markets. Several multi-state providers, including the Company, have emerged
through the acquisition and consolidation of smaller ambulance service providers
in recent years.

The growth in ambulance service expenditures has resulted from both an
increase in the number of transports and an increase in the average expenditures
per transport. The growth and aging of the population, the greater use of
outpatient care facilities and home care in response to health care cost
containment efforts, and increased patient travel between specialized treatment
health care facilities have increased the demand for emergency medical services
and general ambulance services. The increased availability of "911" emergency
service, the impact of educational programs on its use, and the practice of some
members of the population of utilizing a hospital's emergency room as the source
of their primary medical care also have increased the number of ambulance
transports. Industry considerations require ambulance service providers to
acquire more sophisticated emergency medical, dispatch, and communications
equipment, hire more highly trained personnel, and develop more sophisticated
dispatch and management systems to satisfy the faster response time and higher
quality of medical care assurance criteria required by municipalities and fire
districts for emergency ambulance services. Average expenditures per ambulance
transport have increased as a result of the additional costs to meet these
requirements. These requirements, combined with the fragmented nature of the
industry, are contributing to consolidation within the industry. Service
providers that do not have the financial or management resources to meet the
requirements for higher levels of service are candidates for acquisition.

Market reform continues to reshape the health care delivery system,
with a shift from fee-for-service providers to managed care providers. Managed
care providers are focusing on cost containment measures while seeking to
provide the most appropriate level of service at the most appropriate treatment
facility. Managed care providers are attempting to manage hospital utilization
by working with ambulance service providers to ensure transport of patients to
affiliated facilities and avoid unnecessary inter-facility transports.

Based on the Company's experience, the Company believes that its
ambulance and fire protection services

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<PAGE> 22
are complementary. Municipal fire departments, tax-supported fire districts, and
volunteer fire departments constitute the principal providers of fire protection
services in the United States. In most of the communities served by municipal
fire departments and tax-supported fire districts, the fire department is the
first to respond to a call for emergency medical services. Approximately 27,000
volunteer fire departments operate throughout the United States. Volunteer fire
departments range from departments comprised entirely of volunteer personnel to
departments that utilize one or more paid personnel located at each station
supplemented by volunteers who proceed directly to the fire scene. In addition
to providing fire protection services to municipalities and tax-supported fire
districts, the private sector also provides fire protection services to
industrial complexes, including airports, large industrial and petrochemical
plants, power plants, and other large self-contained facilities.

STRATEGY

The Company's strategy is to enhance its position as a leading provider
of emergency services in the United States. Key elements of this strategy
include the acquisition of ambulance service providers, increased marketing
efforts, expansion of fire protection services, integration of ambulance and
fire protection operations, improved productivity, and satisfying the needs of
the public sector and health care providers.

Acquisition of Ambulance Service Providers

The Company seeks acquisitions that enable it to establish new service
areas and acquisitions that enable it to expand its operations within its
existing service areas. The Company believes that the fragmented nature of the
industry, combined with the lack of capital and limited management systems that
characterize many providers, continues to provide an opportunity for the Company
to acquire additional ambulance service providers that would benefit from its
management and operational systems, resulting in productivity gains and enhanced
levels of service.

The Company considers a number of factors in evaluating a proposed
acquisition candidate, including the quality of its management and medical
personnel, its historical operating results and future earnings potential, the
size and anticipated growth of its market, its relative position within that
market, and the competition to be encountered in such market. The Company pays
special attention to those potential service areas in which it can achieve
maximum productivity by achieving market leadership over a regional area, by
utilizing its ambulances to provide both "911" emergency and general ambulance
services, and by integrating ambulance services with fire protection services.

Increased Marketing Efforts in Existing Ambulance Service Areas

In addition to expansion through acquisitions, the Company plans to
expand its general ambulance services through increased marketing efforts to
hospitals, health maintenance organizations, and other health care providers and
its emergency ambulance services through the pursuit of new contracts with
municipalities and fire districts. These efforts will focus on the increased
demand for emergency ambulance services caused by various factors, including the
growth and aging of the population, as well as on the increased use of general
ambulance services caused in part by increases in home health care, patient
travel between specialized health care facilities, and increased requirements
for transport to specific facilities operated by managed care providers. The
Company intends to respond to the needs of managed care providers by delivering
high quality, efficient, cost-effective services and the ability to transport
patients to the most appropriate treatment facility, particularly in those
geographic areas in which it has been able to achieve market leadership. The
Company expects to pursue alliances with health care providers through the
pursuit of service contracts, the development of relationships, and through
acquisitions of health care and safety related providers, which would provide
opportunities for the Company to integrate its services with such other service
providers.

Expansion of Fire Protection Services

The Company plans to increase its efforts to expand its fire protection
services into areas not currently served by it, with particular emphasis on
areas contiguous to its existing fire protection service areas as well as on
certain areas in which the Company currently provides ambulance but not fire
protection services. In seeking to expand its fire protection services, the
Company plans to emphasize the benefits of its services in terms of

20
<PAGE> 23
lower per capita fire service costs, reduced insurance rates, and lower loss of
life and property resulting from its extensive experience, its fire prevention
initiatives, its management and operational systems, and its system utilizing
full-time fire fighters and part-time reservists. The Company's strategy
includes efforts to provide service to businesses and residences in newly
developed communities that have not yet arranged for fire protection services as
well as in areas served by volunteer fire departments, tax-supported fire
districts, and municipal fire departments. The Company plans to respond to the
economic pressures on the public sector to reduce taxes and expenditures for
emergency services by offering the opportunity for the privatization of tax-
supported fire districts and municipal fire departments or for the establishment
of public/private partnerships with fire districts and municipalities. The
Company also intends to pursue opportunities to provide fire protection services
to large industrial complexes, including airports, large industrial and
petrochemical plants, power plants, and other self-contained facilities.

Integration of Ambulance and Fire Protection Services

Building upon the Company's successful integration of ambulance and
fire services under its contract with the City of Scottsdale, the Company plans
to continue the integration of its fire and ambulance services in certain of its
service areas and to pursue opportunities to provide integrated services in new
service areas. The Company believes that its integration of such services can
provide operating economies, optimal coordination of the delivery of services,
efficiencies in the use of personnel and equipment, and enhanced levels of
service, especially in lower-utilization communities.

Productivity Improvement and Enhancement

The Company intends to utilize its management and operational systems
to achieve enhanced productivity and profitability in its existing operations
and in acquired operations. The centralization of key management and operating
systems permits the Company to achieve economies of scale at both the
operational and corporate levels.

The Company believes that the achievement of its goal of establishing
market leadership in its various service areas (through initial acquisitions,
follow-on acquisitions, alliances, and internal growth) will enable it to
continue to improve its productivity in those areas by enabling it to more
efficiently utilize its equipment and personnel, to better serve large regional
health care providers, and to more effectively market its services. In certain
cases, follow-on acquisitions in existing service areas enable the Company to
enhance its productivity in that service area to an extent greater than the size
of the acquisition itself.

CURRENT SERVICE AREAS

The following table sets forth certain information with respect to the
Company's current service areas. The Company provides its ambulance services
pursuant to a contract or certificate of necessity on an exclusive or
nonexclusive basis. It provides "911" emergency ambulance services primarily
pursuant to contracts or as a result of providing fire protection services.
Ambulance service contracts in some service areas provide for the payment of a
subsidy to the Company. In some service areas, the Company is the only provider
of both emergency and general ambulance services. In other service areas, the
Company competes for general ambulance services. In all service areas, the
Company responds to "911" emergency calls if requested by a municipality or fire
district, even in the absence of a contract. The Company provides fire
protection services under the name Rural/Metro Fire Department. Fire protection
services are provided pursuant to master contracts or on a subscription basis.

21
<PAGE> 24
<TABLE>
<CAPTION>
INCEPTION OF SERVICE OR
LOCATION TYPE OF SERVICE DATE OF ACQUISITION
-------- --------------- -----------------------
<S> <C> <C> <C>
ALABAMA Baldwin County ambulance 1996
Montgomery ambulance 1996
ARIZONA Scottsdale fire and ambulance 1951 and 1984
Maricopa County(1) fire and ambulance 1948 and 1976
Phoenix Metro Area ambulance 1984
Tucson Metro Area and fire and ambulance 1969 and 1972
Pima County
Yuma and Yuma County fire and ambulance 1969 and 1981
FLORIDA Orange County and Orlando
Metro Area ambulance 1984
Pensacola and Panhandle Area ambulance 1994
GEORGIA Gainesville/Northeast Georgia ambulance 1995
Augusta ambulance 1995
INDIANA Indianapolis Metro Area ambulance 1995
Terre Haute ambulance 1995
Anderson ambulance 1995
Richmond ambulance 1995
IOWA Council Bluffs Area ambulance 1994
KENTUCKY Covington ambulance 1996
LOUISIANA England Industrial Park fire 1995
NEBRASKA Lincoln/Omaha Metro Areas ambulance 1994
NEW YORK Syracuse Metro Area ambulance 1994
Rochester Metro Area ambulance 1994
Buffalo Metro Area ambulance 1995
Corning Metro Area ambulance 1995
Village of Rye Brook fire 1996
Niagara Falls ambulance 1996
OHIO Cleveland Metro Area ambulance 1994
Columbus Metro Area ambulance 1994
Port Columbus Airport fire 1995
Akron ambulance 1994
Youngstown/Eastern Ohio ambulance 1995
Cincinnati Metro Area ambulance 1996
OREGON Grants Pass Area fire 1995
PENNSYLVANIA Northwestern Pennsylvania ambulance 1995
SOUTH Columbia Metro Area ambulance 1995
CAROLINA
Charleston Metro Area ambulance 1996
SOUTH DAKOTA Sioux Falls ambulance 1996
TENNESSEE Knoxville Metro Area fire and ambulance 1977 and 1985
Anderson County ambulance 1995
Blount County ambulance 1985
Cocke County ambulance 1995
TEXAS Houston Metro Area ambulance 1988
Borger ambulance 1985
Pampa ambulance 1985
Waco ambulance 1982
Abilene ambulance 1992
Polk County ambulance 1992
Dallas Metro Area ambulance 1992
Montgomery County ambulance 1995
Arlington ambulance 1996
</TABLE>
- ----------

(1) Certain incorporated areas and a substantial portion of unincorporated
Maricopa County.

22
<PAGE> 25
AMBULANCE SERVICES

Emergency Medical Services

The Company generally provides emergency medical ambulance services
pursuant to contracts with counties, fire districts, and municipalities. These
contracts typically appoint the Company as the exclusive provider of "911"
emergency ambulance services in designated service areas and require the Company
to respond to every "911" emergency medical call in those areas. The Company
responds to virtually all "911" calls with advanced life support ("ALS")
ambulance units. The Company staffs its ALS ambulance units with two paramedics
or one paramedic and an emergency medical technician ("EMT") and equips such
units with ALS equipment (such as cardiac monitors, defibrillators, and oxygen
delivery systems) as well as pharmaceuticals and medical supplies.

Upon arrival at an emergency, the ALS crew members deploy portable life
support equipment, ascertain the patient's medical condition and, if required,
begin life support techniques and procedures that may include airway intubation,
cardiac monitoring, defibrillation of cardiac arrhythmias, and the
administration of medications and intravenous solutions. The crew also may
perform basic life support ("BLS") services which include basic airway
management, hemorrhage control, stabilization of fractures, emergency
childbirth, and basic vehicle extrication. As soon as medically appropriate, the
patient is placed on a portable gurney and carried into the ambulance. While a
paramedic monitors and treats the patient, the other crew member drives the
ambulance to a hospital designated either by the patient or the applicable
medical protocol. En route, the ALS crew alerts the hospital regarding the
patient's medical condition, and if necessary, the attending paramedic seeks
advice from a hospital emergency room physician as to treatment. Upon arrival at
the hospital, the patient generally is taken to the emergency room.

General Ambulance Services

The Company provides general ambulance services to patients requiring a
basic level of medical supervision during transfer to and from residences and
health care facilities. These services may be provided when a home-bound patient
requires examination or treatment at a health care facility or when a hospital
inpatient requires tests or treatments (such as MRI testing, CAT scans,
dialysis, or chemotherapy treatment) available at another facility. The Company
utilizes ALS or BLS ambulance units to provide general ambulance services
depending on the patient's needs and the proximity of available units. The
Company staffs its BLS ambulance units with two EMTs and equips such units with
medical supplies and equipment necessary to administer first aid and basic
medical treatment.

The Company also provides critical care transport services to medically
unstable patients (such as cardiac patients and neonatal patients) who require
critical care while being transported between health care facilities. Critical
care services differ from ALS services in that the ambulance may be equipped
with additional medical equipment and may be staffed by a medical specialist
provided by the Company or by a health care facility to attend to a patient's
special medical needs.

In addition to ambulance services, the Company provides nonmedical
transportation for the handicapped and the elderly in certain service areas.
Such transportation generally takes place between residences or nursing homes
and hospitals or other health care facilities. In providing this service, the
Company utilizes vans that contain hydraulic wheelchair lifts or ramps operated
by drivers who generally are trained in cardiopulmonary resuscitation ("CPR").

The Company provides general ambulance services, critical care
transports, and nonmedical transportation services pursuant to contracts with
health care facilities or at the request of a patient. Such services may be
scheduled in advance or provided on an as needed basis. Contracts with managed
care providers provide for reimbursement on a per transport basis or on a
"capitated" basis under which the Company receives a fixed fee per person per
month.

23
<PAGE> 26
Medical Personnel and Quality Assurance

Paramedics and EMTs must be state certified in order to transport
patients and to perform emergency care services. Certification as an EMT
requires completion of a minimum of 164 hours of training in a program
designated by the United States Department of Transportation and supervised by
state authorities. EMTs also may complete advanced training courses to become
certified to provide certain additional emergency care services, such as
administration of intravenous fluids and advanced airway management. In addition
to completion of the EMT training program, the certification as a paramedic
requires the completion of more than 800 hours of training in advanced patient
care assessment, pharmacology, cardiology, and clinical and field skills. Many
of the paramedics currently employed by the Company served as EMTs for the
Company prior to their certification as paramedics.

Local physician advisory boards develop medical protocols to be
followed by paramedics and EMTs in a service area. In addition, instructions are
conveyed on a case-by-case basis through direct communications between the
ambulance crew and hospital emergency room physicians during the administration
of advanced life support procedures. Both paramedics and EMTs must complete
continuing education programs and, in some cases, state supervised refresher
training examinations to maintain their certifications. Certification and
continuing education requirements for paramedics and EMTs vary among states and
counties.

The Company maintains a commitment to provide high quality pre-hospital
emergency medical care. In each location in which the Company provides services,
a medical director, who usually is a physician associated with a hospital the
Company serves, monitors adherence to medical protocol and conducts periodic
audits of the care provided. In addition, the Company holds retrospective care
audits with its employees to evaluate compliance with medical and performance
standards.

The Company was one of the first ambulance service providers to obtain
accreditation from the Commission on Accreditation of Ambulance Services, a
joint program between the American Ambulance Association and the American
College of Emergency Physicians. The process is voluntary and evaluates numerous
qualitative factors in the delivery of services. The Company believes
municipalities and managed care providers will consider accreditation as one of
the criteria in awarding contracts in the future.

FIRE PROTECTION SERVICES

Fire protection services consist primarily of fire prevention and fire
suppression. Other fire protection related activities include hazardous material
containment, underwater search and recovery, mountain and confined space rescue,
and public education. The Company provides various levels of fire protection
services ranging from fire stations that are fully staffed 24 hours per day to
unmanned reserve stations. The Company generally provides its services to
municipalities and other governmental bodies pursuant to master contracts or
certificates of necessity and to residences, commercial establishments, and
industrial complexes pursuant to subscription fee and other fee-for-service
arrangements. Federal and state governments contract with the Company from time
to time to suppress forest fires or wildfires on government lands.

The Company has placed fire prevention and education in the forefront
of its fire protection services and has developed a comprehensive program to
prevent and minimize fires rather than emphasizing a standing army to respond to
fires that occur. The Company believes that effective fire protection requires
the intensive training of personnel, the effective utilization of fire
equipment, the establishment of effective communication centers for the receipt
of emergency calls and the dispatch of equipment and personnel, the
establishment and enforcement of strict fire codes, and community educational
efforts.

The Company seeks to provide quality fire protection services at
reduced costs. The Company believes that it provides fire protection services at
a cost significantly lower than the national average as a result of its emphasis
on fire prevention, its advanced systems, and its use of a combination of
full-time fire fighters and part-

24
<PAGE> 27
time reservists. Based upon generally available industry data, the Company
believes that fire loss per capita in the areas serviced by the Company has been
substantially less than the national average.

Fire Protection Personnel

The Company's ability to provide its fire protection services at
relatively low costs results from its efficient use of personnel in addition to
its fire prevention efforts. Typically, personnel costs represent more than two-
thirds of the cost of providing fire protection services. The Company has been
able to reduce its labor costs through a system that utilizes full-time
firefighters complemented by paid part-time reservists as well as a modified
every other day shift schedule. By using trained reservists on an as needed
basis, the Company has the ability to utilize full-time fire fighters on a
cost-effective basis. Reservists comprise 45% of the Company's operational work
force.

All full-time and reservist firefighters undergo extensive training,
which exceed the standards established by the National Fire Protection
Association ("NFPA"), and must qualify for state certification before being
eligible for full-time employment by the Company. Since approximately 70% to 80%
of the Company's fire response activity consists of emergency medical response,
all of the Company's firefighters are trained EMTs and some firefighters are
paramedics. Ongoing training includes instruction in new fire service tactics
and fire fighting techniques as well as continual physical conditioning.

Fire Response

An alarm typically results in the dispatch of one or more engine
companies (each of which consists of an engine and two to four firefighters,
including a captain), a fire chief, and such other equipment as circumstances
warrant. The amount of equipment and personnel depends upon the type, location,
and severity of the incident. The Company generally responds to emergency
medical calls and small fires (such as grass or dumpster fires not involving the
risk of spreading) with a single engine staffed by two firefighters. The Company
utilizes its dispatch capabilities to reposition equipment and firefighters to
maximize the availability and use of resources in a cost-effective manner.

Fire Prevention

The Company believes that fire prevention programs result in both lower
fire loss and significant overall cost savings. The Company's fire prevention
programs include advice and recommendations for and the encouragement of various
fire prevention methods, including fire code design, building design to inhibit
the spread of fire, the design of automatic fire suppression sprinklers, fire
detector and smoke detector installations, the design of monitoring and alarm
systems, the placement and inspection of fire hydrants, fire code inspection and
enforcement, and the determination of fire cause and origin in arson suspected
fires. In addition, the Company's personnel perform community education programs
designed to reduce the risk of fire and increase the Company's community
profile.

The Company believes that its long standing public/private relationship
with the City of Scottsdale provides an example of an effective, cost-efficient
fire protection program. The Scottsdale program emphasizes the Company's
philosophy of fire prevention. With the cooperation and assistance of the
Company, the City of Scottsdale has designed comprehensive fire prevention
measures, including fire codes, inspections, and sprinkler and smoke detector
ordinances. The Company believes that as a result of strict fire codes, the
enactment of a sprinkler ordinance, and the effectiveness of the services
provided by the Company, Scottsdale's per capita cost for fire protection is 40%
lower than the national average and that its per capita fire loss is 80% less
than the national average for similar-sized cities.

25
<PAGE> 28
FIRE TRAINING SERVICES AND PROTECTION SERVICES

The Company has instituted industrial fire training services and
protection services through its Rural/Metro Strategic Venture with Nederlandse
Veiligheidsdienst International, B.V. ("NVD"), a Dutch corporation, which is a
leading European security and industrial fire protection company. Through the
joint venture, the Company provides sophisticated training for industrial,
professional, and specialized firefighters using live burn training to simulate
realistic firefighting situations. The training permits fire brigade and
emergency response teams to meet increased federal training requirements, the
Occupational Safety and Health Act ("OSHA"), and other regulatory requirements
for work place safety and on-site response teams.

The Company anticipates that its training services to industrial,
petrochemical, and other large private concerns will enhance its ability to
enter into contractual relationships to provide fire protection, security, and
other safety related services to these concerns and permit the complexes to
replace their fire brigades with professional firefighters and emergency
response teams. These activities have not resulted in significant revenue to
date. The combination of fire protection services with security services in
large industrial complexes has the potential to provide for greater efficiency
and utilization in the delivery of such services and to result in greatly
reduced cost to the industrial complexes for such services.

The Company is testing the use of its communications centers for home
security and home fire alarm monitoring to complement the emergency services it
offers. The Company believes protection services can be integrated with fire
protection and ambulance services for optimal efficiency and maximum
cost-effectiveness.

MANAGEMENT SYSTEMS

The Company utilizes sophisticated management systems, which it
believes enhance the productivity and profitability of the Company's existing
operations and enable it to enhance the productivity and profitability of
acquired operations. These systems permit the Company to achieve economies of
scale at the local operational level through the proper utilization of personnel
and equipment and at the corporate level through centralized systems for
billings, collections, purchasing, accounting, cash management, human resources,
risk management, and third-party reimbursement.

The Company has developed measurement systems that permit management to
monitor the performance level of each operation on a continual basis. The
Company's centralized management and information systems permit managers to
direct their attention primarily to operations. The systems include centralized
billings and collections procedures that provide for more efficient tracking and
collection of accounts receivable. Centralized purchasing permits the Company to
achieve significant discounts in the purchase of equipment and supplies through
a Company-developed catalogue from which managers select items needed for their
operations. Centralized third-party reimbursement allows the Company to maximize
the utilization of its expertise in Medicare, Medicaid, and other third-party
payor reimbursement programs and to ensure the most favorable classification for
all of the Company's operations under such programs.

The Company believes its investment in management systems and its
effective use of such systems represent key components in its success. The
Company's financial reporting system facilitates the Company's successful
integration of acquired companies. The Company is committed to an ongoing
enhancement of its systems to provide productive, timely information, and
effective controls and believes that its management systems have the capability
to support sustained long-term growth.

HUMAN RESOURCES

The Company strives to maximize the operational autonomy of its
managers. Managers receive extensive training in the use of management systems,
customer service, and supervisory practices. The Company's centralized human
resources division increases the Company's ability to assign the most
appropriate personnel

26
<PAGE> 29
for a position within any given operation and to reassign personnel as necessary
to meet operational needs. The human resources department participates in all
areas of training, career development, and succession planning of employees and
assesses the Company's personnel needs.

DISPATCH AND COMMUNICATIONS

The Company uses system status plans and flexible deployment systems to
position its ambulances within a designated service area because effective fleet
deployment represents a key factor in reducing response time and increasing
efficient use of resources. In certain service areas with a large volume of
calls, the Company analyzes data on traffic patterns, demographics, usage
frequency, and similar factors with the aid of computers to help it determine
optimal ambulance deployment and selection. The center that controls the
deployment and dispatch of ambulances in response to calls for ambulance service
may be owned and operated either by the applicable county or municipality or by
the Company itself. Each control center utilizes computer hardware and software
and sophisticated communications equipment and maintains responsibility for
fleet deployment and utilization 24 hours a day, seven days a week.

Depending on the emergency medical dispatch system used in a designated
service area, the public authority that receives "911" emergency medical calls
either dispatches the Company's ambulances directly from the public control
center or communicates information regarding the location and type of medical
emergency to the Company's control center which in turn dispatches ambulances to
the scene. In most service areas, the Company's control center receives the
calls from the police after the police have determined the call is for emergency
medical services. When the Company receives the "911" call, it dispatches one or
more ambulances directly from its control center while the call taker
communicates with the caller. All call takers and dispatchers are trained EMTs
with additional training that enables them to instruct a caller about applicable
emergency medical procedures, if necessary. In the Company's larger control
centers, a computer assists the dispatcher by analyzing a number of factors,
such as time of day, ambulance location, and historical traffic patterns, in
order to recommend optimal ambulance selection. In all cases, a dispatcher
selects and dispatches the ambulance. While the ambulance is en route to the
scene, the ambulance receives information concerning the patient's condition
prior to the ambulance's arrival at the scene.

The Company's communication systems allow the ambulance crew to
communicate directly with the destination hospital to alert hospital medical
personnel of the arrival of the patient and the patient's condition and to
receive instructions directly from emergency room personnel on specific
pre-hospital medical treatment. These systems also facilitate close and direct
coordination with other emergency service providers, such as the appropriate
police and fire departments, that also may be responding to a call.

Deployment and dispatch also represent important factors in providing
non-emergency ambulance services. The Company implements system status plans for
these services designed to assure appropriate response times to non-emergency
calls.

The Company utilizes communication centers in its fire protection
activities for the receipt of fire alarms and the dispatch of equipment and
personnel that are the same as or similar to those maintained for its ambulance
services. Response time represents an important criteria in the effectiveness of
fire suppression. Depending upon the area served, the Company's response time
from the receipt of a call to the arrival on the scene generally varies from 4
to 15 minutes. Response times depend on the level of protection sought by the
Company's customers in terms of fire station spacing, the size of the service
area covered, and the amount of equipment and personnel dedicated to fire
protection.

BILLINGS AND COLLECTIONS

The Company currently maintains twelve billing and payment processing
centers and a centralized billing and collection system at its headquarters in
Arizona. Invoices are generated at the regional level, and the account

27
<PAGE> 30
is processed by the centralized system only if payment is not received in a
timely manner. Customer service is directed from each of the regional centers.

The Company derives a substantial portion of its ambulance fee
collections from reimbursement by third-party payors, including payments under
Medicare, Medicaid, and private insurance programs, typically invoicing and
collecting payments directly to and from those third-party payors. The Company
also collects payments directly from patients, including payments under
deductible and co-insurance provisions and otherwise. During fiscal 1993, 1994,
and 1995, the Company derived approximately 32%, 35%, and 33%, respectively, of
its net ambulance fee collections from Medicare, 12%, 11%, and 12%,
respectively, from Medicaid, 34%, 37%, and 40%, respectively, from private
insurers (including prepaid health plans and other non-government sources), and
22%, 17%, and 15%, respectively, directly from patients. Companies in the
ambulance service industry maintain high provisions for doubtful accounts
relative to companies in other industries. Collection of complete and accurate
patient billing information during an emergency service call is sometimes
difficult, and incomplete information hinders post-service collection efforts.
In addition, it is not possible for the Company to evaluate the creditworthiness
of patients requiring emergency transport services. The Company's allowance for
doubtful accounts generally is higher with respect to revenue derived directly
from patients than for revenue derived from third-party payors and generally is
higher for transports resulting from "911" emergency calls than for general
transport requests.

The Company has substantial experience in processing claims to
third-party payors and employs a collection staff specifically trained in
third-party coverage and reimbursement procedures. The Company uses specialized
proprietary software systems to specifically tailor the submission of claims to
Medicare, Medicaid, and certain other third-party payors and has the capability
to electronically submit claims to the extent third-party payors systems permit.
The Company's systems provide for accurate tracking of accounts receivable and
status pending payment, which facilitates the effective utilization of personnel
resources to resolve workload distribution and problem invoices. The Company
uses an automated dialer that preselects and dials accounts based on their
status within the billing and collection cycle, which optimizes the efficiency
of the collection staff. The Company believes that its experience in processing
third-party claims reduces the collection time of its receivables and results in
fewer rejected claims based on incomplete or inaccurate information.

State licensing requirements as well as contracts with counties,
municipalities, and health care facilities typically require the Company to
provide ambulance services without regard to a patient's insurance coverage or
ability to pay. As a result, the Company often does not receive compensation for
services provided to patients who are not covered by Medicare, Medicaid, or
private insurance. The anticipated level of uncompensated care and allowance for
uncollectible accounts may be considered in determining the Company's subsidy
and permitted rates under contracts with a county or municipality.

MARKETING AND SALES

Counties, fire districts, and municipalities generally award contracts
to provide "911" emergency services either through requests for competitive
proposals or bidding processes. In some instances in which the Company is the
existing provider, the county or municipality may elect to renegotiate the
Company's existing contract rather than re-bid the contract. The Company
believes that counties, fire districts, and municipalities consider the quality
of care, historical response time performance, and total cost, both to the
municipality or county and to the public, to be the most important factors in
awarding contracts.

The Company markets its non-emergency ambulance services to hospitals,
health maintenance organizations, convalescent homes, and other health care
facilities that require a stable and reliable source of medical transportation
for their patients. The Company believes that its status as a "911" provider in
a designated service area increases its visibility and enhances its marketing
efforts for non-emergency services in that area. Contracts for non-emergency
services usually are based on criteria (such as quality of care, customer
service, response time, and cost) similar to those in contracts for emergency
services. The Company has implemented

28
<PAGE> 31
customer service training for all its personnel in recognition of the increasing
awareness of managed care providers to the importance of customer service.

The Company markets its fire protection services to subscribers in
rural and suburban areas, volunteer fire departments, tax-supported fire
districts and municipalities, newly developed communities, and industrial
complexes, including airports, large industrial and petrochemical plants, power
plants, and other large self-contained facilities. The Company also provides
fire protection services to newly developed communities where the subscription
fee is included in the homeowner's association assessment.

CONTRACTS

The Company enters into contracts with counties, municipalities, and
fire districts to provide "911" emergency ambulance services in designated
service areas. These contracts typically specify maximum fees that the Company
may charge and set forth required criteria, such as response times, staffing
levels, types of vehicles and equipment, quality assurance, and insurance
coverage. Counties, municipalities, and fire districts also may require the
Company to provide a performance bond or other assurances of financial
responsibility. The amount of the subsidy, if any, that the Company receives
from a county, municipality, or fire district, and the rates that the Company
may charge for services under a contract for emergency ambulance services,
depend in large part on the nature of the services rendered and performance
requirements. The four largest ambulance contracts accounted for 33%, 29%, and
24% of total revenue for the fiscal years ended June 30, 1993, 1994, and 1995,
respectively, with the contract with Orange County, Florida accounting for 17%,
14%, and 9%, respectively, of total revenue for the same periods. Rates to be
charged under the Orange County contract are agreed upon between the Company and
the county. The Company does not receive any subsidy from the county under this
contract.

The Company provides fire protection services pursuant to master
contracts or on a subscription basis. Master contracts provide for negotiated
rates with governmental entities. Certain contracts are performance based and
require the Company to meet certain dispatch and response times in a certain
percentage of responses. These contracts also set maximum thresholds for
variances from the performance criteria. These contracts establish the level of
service required and may encompass fire prevention and education activities as
well as fire suppression. Other contracts are level-of-effort based and require
the Company to provide a certain number of personnel for a certain time period
for a particular function, such as fire prevention or fire suppression. The
largest of these contracts accounted for 7%, 8%, and 6% of total revenue for the
fiscal years ended June 30, 1993, 1994, and 1995, respectively.

The Company provides fire protection services on a subscription basis
in areas where no governmental entity has assumed the financial responsibility
for providing fire protection. The Company derived approximately 53% of its fire
protection service revenue from subscriptions for both fiscal 1993 and 1994 and
56% for fiscal 1995. The Company had subscription contracts with approximately
89,000 and 93,000 subscribing households as of June 30, 1994 and 1995,
respectively, and approximately 3,000 commercial subscribers as of both June 30,
1994 and 1995, primarily in Arizona and Knox County, Tennessee. Subscription
fees are collected annually in advance. Subscribers also pay a membership fee
upon subscribing for service. In the event that the Company provides service for
a nonsubscriber, the Company directly bills the property owner for the cost of
services rendered. The Company has developed a computerized fire subscription
billing system that allows the Company to monitor accounts. The Company
experienced renewal rates of approximately 88% during the prior three fiscal
years. Fire subscription rates are not currently regulated by any government
agency in the Company's service areas.

29
<PAGE> 32
The Company's contracts generally extend for terms of three to five
years, with several contracts having terms of up to ten years. The Company
attempts to renegotiate contracts substantially in advance of the expiration
date and generally has been successful in such renegotiations. The following
table sets forth certain information regarding the Company's five primary
contracts at June 30, 1995 with counties, fire districts, and municipalities for
ambulance services and for fire protection services.

<TABLE>
<CAPTION>
EXPIRATION
TERM IN YEARS DATE TYPE OF SERVICE(1)
------------- ----------- ------------------
<S> <C> <C> <C>
Ambulance
Orange County, Florida(2)........... 3 June 1997 911/General
Rochester, New York(3).............. 4 October 1996 911
Knox County, Tennessee(4)........... 4 June 1997 911
Tucson, Arizona(5).................. 3 July 1997 911
Integrated Fire and Ambulance
Scottsdale, Arizona(6).............. 5 July 2001 911
</TABLE>
- ----------
(1) Type of service for ambulance contracts indicates whether "911"
emergency or general ambulance services or both are provided pursuant to the
contract.

(2) The contract was first entered into in 1962 by a provider that was
acquired by the Company in July 1984.

(3) The contract was first entered into in 1988 by a provider that was
acquired by the Company in May 1994.

(4) The contract was first entered into in July 1985 by the Company.

(5) The contract was first entered into in July 1993 by the Company.

(6) The contract was first entered into in 1952 by the Company. The
contract has two five-year renewal options exercisable by the City of
Scottsdale.

The Company also enters into contracts with hospitals, nursing homes,
and other health care facilities to provide non-emergency and critical care
ambulance services. These contracts typically designate the Company as the first
ambulance service provider contacted to provide non-emergency ambulance services
to those facilities and permit the Company to charge a base fee, mileage
reimbursement, and additional fees for the use of particular medical equipment
and supplies. The Company provides a discount in rates charged to facilities
that assume the responsibility for payment of the charges to the persons
receiving services.

COMPETITION

The ambulance service industry is highly competitive. The principal
participants include governmental entities (including fire districts), other
national ambulance service providers, large regional ambulance service
providers, hospitals, and numerous local and volunteer private providers. In
addition, there can be no assurance that counties, municipalities, fire
districts, hospitals, or health care facilities that presently contract for
ambulance services will not choose to provide ambulance services directly in the
future. The Company is experiencing increased competition from fire departments
to provide ambulance service. Several of the Company's current and potential
competitors have greater capital and other resources than the Company. Ambulance
service providers compete primarily on the basis of quality of service,
performance, and cost. The Company believes that counties, fire districts, and
municipalities consider quality of care, historical response time performance,
and cost to be the most important factors in awarding a contract, although other
factors, such as customer service, financial stability, and personnel policies
and practices, also may be considered. Although commercial providers often
compete

30
<PAGE> 33
intensely for business within a particular community, it is generally difficult
to displace a provider that has a history of satisfying the quality of care and
response time performance criteria established within the service area.
Moreover, significant start-up costs together with the long-term nature of the
contracts under which services are provided and the relationships many providers
have within their communities create barriers to providers seeking to enter new
markets other than through acquisition.

Fire protection services for residential and commercial properties are
provided primarily by tax-supported fire districts or municipalities, and
volunteer departments. Private providers represent a small portion of the total
fire protection market. The private sector provides fire protection services
primarily where a tax-supported fire district or municipality has decided to
contract for the provision of fire protection services. No assurance can be
given that fire districts or municipalities will continue to contract for fire
protection services. In areas where no governmental entity has assumed financial
responsibility for providing fire protection, the Company provides fire
protection services on a subscription basis. No assurance can be given that a
subscription area will not be annexed by a municipality or be converted to a
fire district that provides service directly rather than through a master
contract.

GOVERNMENTAL REGULATION

The Company's business is subject to governmental regulation at the
federal, state, and local levels. At the federal level, the Company is subject
to regulations under OSHA designed to protect employees of the Company. The
federal government also recommends standards for ambulance design and
construction, medical training curriculum, and designation of appropriate trauma
facilities. Various state agencies may modify these standards.

Each state in which the Company operates regulates various aspects of
its ambulance business. State requirements govern the licensing or certification
of ambulance 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, communication systems,
vehicles, and equipment. The Company's contracts in its current service areas
typically prescribe maximum rates that the Company may charge for services. The
process of determining rates includes cost reviews, analyses of levels of
reimbursement from all sources, and determination of reasonable profits. Rate
setting agencies may set rates to compensate service providers by requiring
paying customers to subsidize those who do not or cannot pay. Regulations
applicable to ambulance services may vary widely from state to state.

Applicable federal, state, and local laws and regulations are subject
to change. The Company believes that it currently is in substantial compliance
with applicable regulatory requirements. These regulatory requirements, however,
may require the Company in the future to increase its capital and operating
expenditures in order to maintain current operations or initiate new operations.

REIMBURSEMENT

The Company must comply with various requirements in connection with
its participation in Medicare and Medicaid. Medicare is a federal health
insurance program for the elderly and for chronically disabled individuals,
which pays for ambulance services when medically necessary. Medicare uses a
charge-based reimbursement system for ambulance services and reimburses 80% of
charges determined to be reasonable by Medicare, subject to the limits fixed for
the particular geographic area. The patient is responsible for paying the
balance of the bill, and Medicare requires the Company to expend reasonable
efforts to collect the balance. In determining reasonable charges, Medicare
considers and applies the lowest of various charge factors, including the actual
charge, the customary charge, the prevailing charge in the same locality, the
amount of reimbursement for comparable services, or the inflation-indexed charge
limit.

31
<PAGE> 34
Medicaid is a combined federal-state program for medical assistance to
impoverished individuals who are aged, blind, or disabled or members of families
with dependent children. Medicaid programs or a state equivalent exist in all
states in which the Company operates. Although Medicaid programs differ in
certain respects from state to state, all are subject to federal requirements.
State Medicaid agencies have the authority to set levels of reimbursement within
federal guidelines. The Company receives only the reimbursement permitted by
Medicaid and is not permitted to collect from the patient any difference between
its customary charge and the amount reimbursed.

Like other Medicare and Medicaid providers, the Company is subject to
governmental audits of its Medicare and Medicaid reimbursement claims. The
Company has not experienced significant losses as a result of any such audit.

Government funding for health care programs is subject to statutory and
regulatory changes, administrative rulings, interpretations of policy,
determinations by intermediaries, and governmental funding restrictions, all of
which could materially increase or decrease program reimbursements for ambulance
services. In recent years, Congress has consistently attempted to curb federal
spending on such programs. Congressional hearings in December 1994 addressed
efforts within the Health Care Financing Administration ("HCFA") to revise
reimbursements for ALS service. Reimbursement is currently permitted if, based
on an assessment of the patient's condition, it is determined that ALS service
is medically necessary or if ALS response is required under "911" contracts or
state or local law. The new proposal would reimburse at ALS rates only if ALS
services were medically necessary. The Company expects such a proposal to
receive substantial opposition and may require contract renegotiations or other
action by the Company to offset any negative impact of a change in reimbursement
policies. No assurance can be given that future funding levels for Medicare and
Medicaid programs will be comparable to present levels. Changes in the
reimbursement policies as a result of budget cuts or other government action
could adversely affect the Company's operations.

INSURANCE

The Company carries a broad range of automobile and general liability,
comprehensive property damage, malpractice, workers' compensation, and other
insurance coverages that the Company considers adequate for the protection of
its assets and operations. The Company operates in some states that adhere to
legal standards that hold emergency service providers to a gross negligence
standard in the delivery of emergency medical care, thereby subjecting them to
less exposure for tort judgments. The Company is subject to accident claims as a
result of the normal operation of its fleet of ambulances and fire vehicles.
There can be no assurance, however, that the coverage limits of the Company's
policies will be adequate. A successful claim against the Company in excess of
its insurance coverage could have a material adverse effect on the Company and
its financial condition. Claims against the Company, regardless of their merit
or outcome, also may have an adverse effect on the Company's reputation and
business. The Company has undertaken to minimize its exposure through an active
risk management program.

EMPLOYEES

At June 28, 1996, the Company employed approximately 3,600 full-time
and 2,700 part-time employees, including 3,950 involved in ambulance services,
550 in fire protection services, 500 in integrated ambulance and fire protection
services, and 1,300 in management, administrative, clerical, and billing
activities. Of these employees, 1,850 are paramedics and 2,700 are EMTs. The
Company is a party to a collective bargaining agreement relating to its
Rochester, New York operations. The Company considers its relations with
employees to be good.

32
<PAGE> 35
FACILITIES AND EQUIPMENT

The Company leases its principal executive offices in Scottsdale,
Arizona. The Company leases administrative facilities and other facilities used
principally for ambulance and fire apparatus basing, garaging and maintenance in
those areas in which it provides ambulance and fire protection services. The
Company also owns two administrative facilities and eleven other facilities
within its service areas. Aggregate rental expense was approximately $2.5 and
$4.0 million during fiscal 1994 and 1995, respectively. At June 28, 1996, the
Company's fleet included 1,156 owned and 73 leased ambulances, 133 owned and 15
leased fire vehicles and 172 owned and 10 leased other vehicles.

LEGAL PROCEEDINGS

The Company from time to time is subject to litigation arising in the
ordinary course of business. There can be no assurance that the Company's
insurance coverage will be adequate to cover all liabilities occurring out of
such claims. In the opinion of management, the Company is not engaged in any
legal proceedings expected to have a material adverse effect on the financial
condition or results of operations of the Company.

Rural/Metro Corporation of New Mexico-Texas d/b/a American Medical
Transport ("AMT"), a subsidiary of the Company that provides ambulance service,
has been named, among others, as a defendant in Civil Actions No. W93CA138, No.
W94CA089, No. W94CA157 and No. W94CA082 in Federal District Court in the Western
District of Texas, Waco Division. The claims assert negligence, breach of
contract and violation of state and federal statutes. The alleged causes of
action arise out of the raid of the Branch Davidian Compound outside of Waco,
Texas in February 1993 by agents of the Bureau of Alcohol, Tobacco and Firearms.
The plaintiffs are five agents injured or killed in the raid or their estates,
as well as 94 intervening plaintiffs. In October 1995, AMT filed a motion for
summary judgment. The court denied the motion on April 2, 1996. AMT's appeal of
the court's decision has also been denied. AMT is vigorously defending these
actions and the Company believes that these claims will not have a material
adverse effect on the Company.

33
<PAGE> 36
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information concerning each of the
directors and executive officers of the Company.
<TABLE>
<CAPTION>

NAME AGE POSITION
---- --- --------
<S> <C> <C>
Warren S. Rustand 53 Chairman of the Board and Director(1)(2)(3)
Cor J. Clement 47 Vice-Chairman of the Board and Director(1)(2)(4)(5)
James H. Bolin 44 President and Director(3)
Robert T. Edwards 56 Executive Vice President and Director(3)
Mark E. Liebner 43 Senior Vice President -- Chief Financial Officer and
Treasurer
John E. Stuart 55 Senior Vice President -- Marketing and New Business
Development
Tracy Bannon 36 Vice President -- Human Resources
William R. Crowell 36 Vice President -- Financial Services
Kurt R. Davis 34 Vice President -- Public Affairs and Corporate
Communications
Mark C. McConnell 43 Vice President -- Regional General Manager
James E. Stenger 52 Vice President -- Executive Assistant to the President
Michel A. Sucher, M.D. 48 Vice President -- Medical Affairs
Clinton C. Vardeman 43 Vice President -- Regional General Manager
Martin A. Yenawine 49 Vice President -- Assistant to the President
Louis G. Jekel 55 Secretary and Director
William C. Turner 66 Director(1)(2)(3)(4)(5)
Louis A. Witzeman 71 Director(2)(4)
Frank G. Zarb 61 Director
</TABLE>

- --------------------
(1) Member of the Human Resource/Compensation/Organization Committee.

(2) Member of the Nominating Committee.

(3) Member of the Executive Committee.

(4) Member of the Audit Committee.

(5) Member of the Senior Committee.

In March 1995, the Board of Directors established an Office of Chief
Executive; it is currently comprised of three members, Mr. Rustand, Mr. Bolin
and Mr. Edwards. The Office of Chief Executive oversees the operation and
management of the Company and develops and implements strategic and long-range
planning for the Company.

WARREN S. RUSTAND has been a member of the Board of Directors since August
1993, Chairman of the Board of Directors since May 1994, and a member of the
Office of Chief Executive since March 1995. Mr. Rustand has been Chairman and
Chief Executive Officer of The Cambridge Company, Ltd., a merchant banking and
management consulting firm, since 1987. He has served as Chairman of Health
Partners of Arizona, a managed care provider, since February 1996. Mr. Rustand
is also Chairman of an additional company and director of four companies,
including Varity Corporation, a New York Stock Exchange listed company. Mr.
Rustand served as appointments secretary to President Ford from 1974 to 1976,
and as special assistant to Mr. Ford while he was Vice President in 1973 and
1974.

COR J. CLEMENT has served as a member of the Board of Directors since May
1992, and as Vice Chairman of the Board of Directors since August 1994. Mr.
Clement has been the President and Chief Executive Officer

34
<PAGE> 37
of NVD, an international provider of security and industrial fire protection
services headquartered in the Netherlands, since February 1980.

JAMES H. BOLIN has served as the President of the Company since March 1995
and a member of its Board of Directors since February 1981. He also is a member
of the Office of Chief Executive. Mr. Bolin served as Senior Vice
President-Ambulance Services of the Company from October 1991 until March 1995,
Chief Financial Officer from October 1988 through September 1991, Senior Vice
President-Finance from August 1986 through September 1988, and Vice
President-Finance from April 1981 through July 1986. Mr. Bolin also is the
Chairman and Treasurer of the Rural/Metro ESOP Administrative Committee. Mr.
Bolin is a certified public accountant.

ROBERT T. EDWARDS has served as Executive Vice President since October 1995
and a member of its Board of Directors since May 1993. He is also a member of
the Office of Chief Executive. He served as Senior Vice President -- Fire
Protection Services of the Company from August 1991 until October 1995. He
served as Vice President and General Manager of the Company's Maricopa County
operations from February 1989 to August 1991 and as Vice President from July
1986 until August 1991. From 1978 to July 1986, Mr. Edwards served in various
capacities with the Company.

MARK E. LIEBNER has served as Senior Vice President of the Company since
August 1994 and as Chief Financial Officer of the Company since October 1991.
From October 1991 to August 1994, Mr. Liebner served as Vice President of the
Company. From July 1988 until September 1991, he was a Vice President of Van
Kampen Merritt, a Xerox financial services company, having served in a
consulting capacity to the Company in connection with its 1990 debt
restructurings.

JOHN E. STUART has served as Senior Vice President -- Marketing of the
Company since May 1993. Mr. Stuart served as Senior Vice President-Service
Establishments for American Express Travel Related Services, Inc. in London from
January 1990 until joining the Company in May 1993 and as Senior Vice
President-Marketing and Sales of that company from January 1988 through December
1989.

TRACY BANNON has served as Vice President -- Human Resources since November
1993. She served as Corporate Director of Human Resources for Doubletree Hotels,
Inc. from 1987 until joining the Company in November 1993.

WILLIAM R. CROWELL has served as Vice President -- Financial Services of
the Company since January 1993 after having served as Director of Financial
Services from July 1992 through December 1992. Mr. Crowell served as Vice
President -- Finance of Peter Piper, Inc., an international franchisor and
food-service retailer, from January 1990 through June 1992 and as Assistant
Corporate Controller of W.A. Krueger Co., a publicly held printing company, from
April 1988 through December 1989. Mr. Crowell is a certified public accountant.

KURT R. DAVIS has served as Vice President--Public Affairs and Corporate
Communications since August 1995. Mr. Davis joined the Company in February 1992
as Director of Governmental Relations. After an eighteen-month sabbatical as
Executive Assistant to Arizona Governor Fife Symington, Mr. Davis returned to
the Company in January 1995 as National Director of Public Affairs. Mr. Davis
served as Executive Director of the Arizona Republican Party from 1987 through
1991, and as Director of Intergovernmental Affairs and Issues Analysis in the
Arizona Attorney General's Office from 1991 until joining the Company.

35
<PAGE> 38
MARK C. MCCONNELL has served as a Vice President--Regional General Manager
of the Company since February 1995. From 1992 to 1995 Mr. McConnell served as
General Manager for the Company's operations in Tennessee. From 1990 to 1992 he
served as General Manager of the Company's American Medical Transport operations
in Florida.

JAMES E. STENGER has served as Vice President--Executive Assistant to the
President of the Company since February 1989. He served as Vice President and
General Manager of the Company's Pima and Yuma Counties operations from February
1989 through June 1991 and as a Vice President and General Manager of the
Company's Maricopa County operations from July 1987 through January 1989. He
served in various capacities with the Company from 1966 to June 1987.

MICHEL A. SUCHER, M.D., has served as Vice President--Medical Affairs of
the Company since January 1995. He served as National Medical Director for the
Company from 1984 to 1995. From 1974 to 1995, Dr. Sucher engaged in the private
practice of emergency medicine and held several positions at Scottsdale Memorial
Hospital, including the most recent position as President of the Medical Staff.
Dr. Sucher is board certified by the American Board of Emergency Medicine and is
a member of the American College of Emergency Physicians.

CLINT C. VARDEMAN has served as a Vice President--Regional General Manager
of the Company since August 1994. From 1992 to 1994 and from 1988 to 1990, Mr.
Vardeman served as General Manager for the Company's American Medical Transport
operations in Florida. From 1990 to 1992, he served as General Manager of the
Company's Arizona Medical Transport operations.

MARTIN A. YENAWINE has served as Vice President--Assistant to the President
since August 1995. Mr. Yenawine joined the Company in February 1994 as Assistant
to the President. Prior to joining the Company, Mr. Yenawine was President of
Eastern Paramedics, Inc., an ambulance service provider acquired by the Company
in February 1994. He currently serves as the president of the American Ambulance
Association.

LOUIS G. JEKEL has served as Secretary of the Company and as a member of
its Board of Directors since 1968. Mr. Jekel directs the Company's Wildland Fire
Protection Operations with the State of Arizona and the federal government. Mr.
Jekel is also the Secretary of the Rural/Metro ESOP Administrative Committee.
Mr. Jekel is a partner in the law firm of Jekel & Howard, Scottsdale, Arizona.

WILLIAM C. TURNER has been a member of the Board of Directors of the
Company since November 1993. Mr. Turner is currently Chairman and Chief
Executive of Argyle Atlantic Corporation, an international merchant banking and
management consulting firm; Chairman of the Avon International Advisory Council
for Avon Products, Inc.; a director of the Goodyear Tire & Rubber Company; a
director of Microtest, Inc. and a trustee and executive committee member of the
United States Council for International Business. Mr. Turner is also a former
United States Ambassador and permanent representative to the Organization for
Economic Cooperation and Development. Since returning to the United States from
his ambassador post in Paris, Mr. Turner has served on the boards of directors
and/or international advisory councils of ten major listed corporations.

LOUIS A. WITZEMAN is the founder of the Company. Mr. Witzeman has served as
a member of the Board of Directors since the Company's formation in 1948,
currently serving as Chairman of the Board Emeritus. Mr. Witzeman served as
Chief Executive Officer of the Company until his retirement in 1980.

FRANK G. ZARB joined the Board of Directors of the Company in February
1996. Mr. Zarb has been the Chairman, Chief Executive Officer, and President of
Alexander & Alexander, an international risk management, human resource
consulting, and insurance brokerage firm, since June 1994. From 1988 to 1994,
Mr. Zarb was with The Travelers, Inc., serving as Vice Chairman and Group Chief
Executive. He also served as Chairman and Chief Executive Officer of Smith
Barney, their investment banking and brokerage subsidiary during this period.
Mr. Zarb has served Presidents Nixon and Ford from 1972 through 1977 in various
capacities, including the senior official responsible for energy activities and
policy, Associate Director of the Office of Management and Budget and Assistant
Secretary of Labor.

36
<PAGE> 39
SELLING STOCKHOLDERS

The following table sets forth (i) the name of each Selling Stockholder,
all of whom are current or former employees or directors of the Company as set
forth herein or in "Management," (ii) the number of shares of Common Stock of
the Company beneficially owned by each Selling Stockholder as of June 28, 1996,
and (iii) the number of shares of Common Stock granted to each Selling
Stockholder, and which he may offer and sell pursuant to this Prospectus. The
shares to be offered hereunder may be sold from time to time subject to vesting
and other forfeiture restrictions.
<TABLE>
<CAPTION>

NUMBER OF SHARES
OF COMMON STOCK
ACQUIRED
NUMBER OF SHARES PURSUANT TO THE
OF COMMON STOCK AGREEMENTS AND WHICH
OWNED MAY BE OFFERED
NAME (1)(2)(3) PERCENT PURSUANT HERETO
---- --------------- ------- ---------------
<S> <C> <C> <C>
Warren S. Rustand(4)........... 49,250 * 27,500
James H. Bolin(5).............. 190,354 1.7 12,500
Robert T. Edwards(6)........... 99,299 * 12,500
Cor J. Clement(7).............. 30,500 * 12,500
Louis G. Jekel(8).............. 135,955 1.2 8,325
Louis A. Witzeman(9)........... 121,515 1.1 12,500
Mark E. Liebner(10)............ 95,177 * 52,500
John E. Stuart(11)............. 54,310 * 18,750
William R. Crowell (12)........ 40,984 * 15,000
Kenneth R. Kelley(13).......... 50,283 * 12,500
Mark C. McConnell(14).......... 15,085 * 12,500
James E. Stenger(15)........... 92,356 * 8,325
Clinton C. Vardeman(16)........ 15,000 * 12,500
C. Ian Sym-Smith (17).......... 140,282 1.3 40,427
Robert H. Manschot(18)......... 54,964 * 54,182
</TABLE>

- -------------------
* Less than one percent

(1) Except as indicated, and subject to community property laws when
applicable, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.

(2) Includes shares of Common Stock issuable to the identified person pursuant
to stock options that may be exercised within 60 days after June 28, 1996.
In calculating the percentage of ownership, such shares are deemed to be
outstanding for the purpose of computing the percentage of shares of
Common Stock owned by such person, but are not deemed to be outstanding
for the purpose of computing the percentage of shares of Common Stock
owned by any other stockholders.

(3) Excludes 29,264, 22,878, 5,656, 3,675, 3,271, 30,512, 3,255, and 11,493
fully vested shares held by the ESOP for the benefit of Messrs. Bolin,
Edwards, Jekel, Kelley, McConnell, Stenger, Vardeman, and Manschot,
respectively, and 986, 190 and 329 shares held by the ESOP for the benefit
of Messrs. Liebner, Stuart, and Crowell, respectively, that are 40%, 20%,
and 20% vested, respectively. Such persons have sole voting power with
respect to the shares held in their account by the ESOP.

(4) Includes 21,250 shares of Common Stock issuable upon exercise of stock
options.

37
<PAGE> 40
(5) Includes 93,334 shares of Common Stock issuable upon exercise of stock
options.

(6) Includes 68,334 shares of Common Stock issuable upon exercise of stock
options.

(7) Includes 18,000 shares held in trust for the benefit of Mr. Clement over
which he retains voting control. Excludes 294,099 shares owned by NVD. Mr.
Clement is the Chief Executive Officer of NVD. He does not have voting or
investment power with respect to the shares of NVD and disclaims any
beneficial ownership of the shares held by NVD. Includes 6,250 shares of
Common Stock issuable upon exercise of stock options.

(8) Includes 47,500 shares of Common Stock issuable upon exercise of stock
options.

(9) Includes 29,562 shares held by the Louis A. Witzeman, Jr. Family
Investment Limited Partnership, of which 150 shares are held for the
benefit of other family members. Also includes 41,875 shares of Common
Stock issuable upon the exercise of stock options.

(10) Includes 33,917 shares of Common Stock issuable upon exercise of stock
options.

(11) Includes 32,917 shares of Common Stock issuable upon exercise of stock
options.

(12) Includes 25,875 shares of Common Stock issuable upon exercise of stock
options.

(13) Includes 34,642 shares of Common Stock issuable upon exercise of stock
options.

(14) Includes 2,500 shares of Common Stock issuable upon exercise of stock
options.

(15) Includes 49,084 shares of Common Stock issuable upon exercise of stock
options.

(16) Includes 2,500 shares of Common Stock issuable upon exercise of stock
options.

(17) Includes 62,500 shares of Common Stock issuable upon exercise of stock
options. Mr. Sym-Smith was Chairman of the Board of the Company from 1988
through May 1994 and a member of the Board of Directors through December
1994.

(18) Mr. Manschot was President, Chief Executive Officer, and a member of the
Board of Directors of the Company from October 1988 until his resignation
in March 1995.

PLAN OF DISTRIBUTION

The Company is registering hereby 312,509 shares of Common Stock granted
the Selling Stockholders pursuant to stock grants in 1993, all of which shares
may be sold from time to time by the Selling Stockholders. The Company has
granted registration rights to certain of the Selling Stockholders, which the
Registration Statement of which this Prospectus forms a part is intended to
satisfy. Each Selling Stockholder may use this Prospectus as updated from time
to time to offer the shares of Common Stock for sale in transactions in which
the Selling Stockholder is or may be deemed to be an underwriter within the
meaning of the Securities Act. The Company will not receive any proceeds from
the sale of any shares of Common Stock by the Selling Stockholders. The Company
will not pay any compensation to an NASD member in connection with this
offering. Brokerage commissions, if any, attributable to the sale of the shares
of Common Stock offered hereby will be borne by the holders thereof.

Each share of Common Stock being registered for resale hereby may be sold
by the holder thereof in transactions that are exempt from registration under
the Securities Act or as long as the Registration Statement of which this
Prospectus forms a part is effective under the Securities Act, and as long as
there is a qualification

38
<PAGE> 41
in effect under, or an available exemption from, any applicable state securities
law with respect to the resale of such shares. The Selling Stockholders, in
addition to selling pursuant to the Registration Statement of which this
Prospectus is a part, also may sell under Rule 144 as promulgated under the
Securities Act, if applicable.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by O'Connor, Cavanagh, Anderson, Killingsworth & Beshears,
a professional association, Phoenix, Arizona.

EXPERTS

The consolidated financial statements of the Company as of June 30, 1994
and 1995 and for each of the three years in the period ended June 30, 1995
incorporated by reference in this prospectus and in the Registration Statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are incorporated herein in
reliance upon the authority of said firm as experts in auditing and accounting
in giving said reports.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy and
information statements filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: New York Regional Office, 7 World Trade Center, Suite 1300, New
York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60604. Copies of such material may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates. The Common Stock of the Company is quoted on The Nasdaq National Market.
In addition, reports, proxy statements and other information concerning the
Company (symbol: RURL) can be inspected and copied at the offices of the
National Association of Securities Dealers, Inc. at 1735 K Street, N.W.
Washington, D.C. 20006. The Commission also maintains a Web site that contains
reports, proxy and information statements and other materials that are filed
through the Commission's Electronic Data Gathering, Analysis, and Retrieval
system. This Web site can be accessed at http://www.sec.gov.

39
<PAGE> 42
================================================================================

NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT IS UNLAWFUL. UNDER
NO CIRCUMSTANCES SHALL THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE
PURSUANT TO THIS PROSPECTUS CREATE ANY IMPLICATION THAT INFORMATION CONTAINED
IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS.

--------------------

TABLE OF CONTENTS

<TABLE>
<S> <C>
Incorporation of Certain
Documents by Reference............................. 2
Prospectus Summary................................... 3
Risk Factors......................................... 5
Price Range of Common Stock.......................... 9
Selected Consolidated
Financial Data..................................... 10
Management's Discussion
and Analysis of Financial
Condition and Results
of Operations...................................... 12
Business............................................. 19
Management........................................... 33
Selling Stockholders................................. 36
Plan of Distribution................................. 37
Legal Matters........................................ 38
Experts.............................................. 38
Available Information................................ 38
</TABLE>

===============================================================================

312,509 SHARES

RURAL/METRO
CORPORATION

COMMON STOCK

--------------------
PROSPECTUS
--------------------

--------------------

JULY 9, 1996

===============================================================================
<PAGE> 43

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Post-Effective Amendment No. 1 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Scottsdale, State of Arizona on July 9, 1996.

RURAL/METRO CORPORATION

By: /s/Warren S. Rustand
-----------------------------------------
Warren S. Rustand, Chairman of the Board

By: /s/James H. Bolin
-----------------------------------------
James H. Bolin, President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement on Form S-8 has
been signed by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/Warren S. Rustand Chairman of the Board of Directors July 9, 1996
- ------------------------- (Principal Executive Officer)
Warren S. Rustand

/s/James H. Bolin President and Director (Principal July 9, 1996
- ------------------------- Executive Officer)
James H. Bolin

/s/Robert T. Edwards Executive Vice President and July 9, 1996
- ------------------------- Director (Principal Executive Officer)
*Robert T. Edwards

/s/Mark E. Liebner Senior Vice President, Chief July 9, 1996
- ------------------------- Financial Officer and Treasurer
*Mark E. Liebner (Principal Financial Officer)

/s/William R. Crowell Vice President - Financial Services July 9, 1996
- ------------------------- (Principal Accounting Officer)
*William R. Crowell

/s/Cor J. Clement Vice Chairman of the Board of July 9, 1996
- ------------------------- Directors
*Cor J. Clement

/s/Louis G. Jekel Director July 9, 1996
- -------------------------
*Louis G. Jekel

/s/William C. Turner Director July 9, 1996
- -------------------------
*William C. Turner

/s/Louis A. Witzeman Director July 9, 1996
- -------------------------
*Louis A. Witzeman

- ------------------------- Director July 9, 1996
Frank G. Zarb

*By /s/ James H. Bolin
---------------------
James H. Bolin
Attorney-in-Fact
</TABLE>