<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
June 11, 1998 June 19, 1998
(Date of earliest event reported)
RURAL/METRO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-22056 86-0746929
------------------------ -----------------------------------
(Commission File Number) (IRS Employer Identification Number)
8401 EAST INDIAN SCHOOL ROAD
SCOTTSDALE, ARIZONA
85251
(Address of principal executive offices)
(Zip Code)
(602) 994-3886
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5. OTHER EVENTS
The Company provided a preliminary outlook for its fourth quarter and
announced an addition to its provision for doubtful accounts as set forth in
its press release dated June 11, 1998. See Exhibit 99.1.
ITEM 7.c Exhibits
99.1 Press Release dated June 11, 1998
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RURAL/METRO CORPORATION
Date: June 19, 1998 By: /s/ Mark E. Liebner
--------------------------------------
Mark E. Liebner, Senior Vice President
and Chief Financial Officer
<PAGE> 1
FOR: RURAL/METRO CORPORATION
APPROVED BY: Mark Liebner
Chief Financial Officer
CONTACT: MORGEN-WALKE ASSOCIATES
Investor Relations: John Swenson, Elizabeth Snowdon
(415) 296-7383
Media Relations: Sheryl Seapy, Carol Lehrman
(415) 296-7383
Wire Services: Karen Amlong
(212) 850-5600
FOR IMMEDIATE RELEASE
RURAL/METRO PROVIDES OUTLOOK ON FOURTH QUARTER RESULTS
SCOTTSDALE, AZ/JUNE 11, 1998---Rural/Metro Corporation (Nasdaq: RURL) today
provided a preliminary outlook, based on current business trends, for its fourth
fiscal quarter ending June 30, 1998. Revenue for the period is expected to range
between $125 million and $130 million. Net income for the quarter, including the
effect of non-recurring charges and a non-recurring gain, is currently expected
to range between $3.5 million and $4.5 million, or $0.25 to $0.30 per fully
diluted share. Included in the quarter's anticipated results is a non-recurring
provision for severance payments of approximately $0.08 per fully diluted share,
a non-recurring gain realized in the fourth quarter of $0.18 per fully diluted
share resulting from the sale of stock of HBO & Co., which Rural/Metro had held
as a minority interest in a predecessor company, and a provision of
approximately $1 million, or $0.08 per fully diluted share, in the fourth
quarter to increase the Company's effective income tax rate. In the fourth
quarter of fiscal 1997, the Company reported revenue of $83.4 million and net
income of $975,000, or $0.08 per share, including non-recurring expenses of $3.9
million after-tax.
In addition, the Company intends, based on current business trends, to add to
its provision for doubtful accounts an amount estimated to be approximately $10
million after-tax, or approximately $0.69 per fully diluted share, during the
fourth quarter. The intention to incur this
-MORE-
<PAGE> 2
RURAL/METRO CORPORATION
PAGE TWO
charge in the fiscal fourth quarter reflects a more difficult medical
reimbursement environment that has begun to effect the delivery of health care
services nationally and has caused delays in collecting the Company's accounts
receivables. In future periods the bad debt provision, as compared to the levels
historically provided for, could increase as a result of this industry trend.
"Rural/Metro currently faces external and internal operating challenges," said
Warren S. Rustand, Chairman and CEO. "However, we have a long history of
operating excellence having successfully responded to both internal and external
challenges for more than five decades. We recognize the volatility of the health
care industry, and in particular, the difficulty of the current reimbursement
environment. During the past few months we have also experienced a mounting
challenge from the consolidation of billing functions from acquired companies
into our regional billing centers that has affected invoicing during start-up
periods. These operational issues have now been largely resolved through
overtime and temporary staffing assignments. In addition, we have changed the
leadership of our billing and collection operations and expanded our successful
predictive dialer collection system capacity by 75%. The recent results of cash
collections indicate that we are experiencing a record collection month in June.
"We believe that the current operating results reflect, in part, difficulties in
adaptation to the larger regional structures that were implemented during the
current fiscal year in response to the approximately $200 million of acquisition
activity of the last two years. As a result, early in this fiscal year the
Company accelerated the process of hiring operational management who have
experience in large system operations. We experienced productivity delays as new
hires learned new markets and systems. The potential payoff from the additional
talent is being leveraged by greater systems support, such as data warehousing
with query capabilities, that provides more current information on operational
statistics than those available under current monthly reports. Recently, we
implemented 'IMPACT' project teams that provide operational support and audit.
This effort will be expanded during fiscal 1999 to assure that every area
manager has sufficient
-MORE-
<PAGE> 3
RURAL/METRO CORPORATION
PAGE THREE
resources when faced with extraordinary challenges or opportunities.
Additionally, we have begun an organizational design effort to look at areas of
our cost structure to reduce redundant functions and to outsource where
possible, thereby creating a management team that is more responsive to the
changing environment.
"We must also acknowledge that the effect of the recent decline in our share
value will necessitate that the pace of acquisitions be slowed during the
foreseeable future. However, we believe that the opportunity for Rural/Metro to
conserve capital is completely in keeping with our long-term strategic goals of
broadening our market reach through contractual relationships. Notwithstanding
the longer sell cycles of these growth opportunities, we believe the results we
have recently started to experience in new contracts with hospital systems and
911 emergency service systems have the highest potential for sustainable EPS
growth. As such, we look forward to the start-up of our newest 911 contract in
Aurora, Colorado, and the chance to demonstrate our customer service ethics to
the hospital systems throughout the State of Colorado. Thus, the Company's
marketplace momentum should continue to build as we place greater emphasis on
operational efficiencies.
"In conclusion, I would like to reflect on those areas in which Rural/Metro
continues to excel. Most importantly, our 911 response systems continue to meet
or exceed performance requirements. Thus, our customers have received excellent
service during this period of industry-wide stress. The recent acquisition in
Argentina has proved to be everything we hoped for and more. Our local
management team has been able to combine redundant operation and back office
functions at a much more rapid pace than expected. At the same time, interest
from managed care insurance plans has been immediate, generating several new
opportunities within the first month of operations."
-MORE-
<PAGE> 4
RURAL/METRO CORPORATION
PAGE FOUR
Rural/Metro Corporation provides mobile health services, including "911" and
general ambulance services; fire protection and other safety-related services to
municipal, residential, commercial and industrial customers in more than 400
communities throughout the United States, Canada and Latin America.
Except for the historical information contained herein, this press release
contains forward looking statements that involve risks and uncertainties
regarding accounts receivable collection and operating results that could cause
actual results to differ materially. These factors include the rate and extent
of acquisition activity, the rate and extent of new contract activity, and the
effects of other factors that impact demand for the Company's services. These
factors and other risks are disclosed from time to time in the Company's SEC
reports and filings.
# # # #
