<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 26, 1999
------------------------------
RURAL/METRO CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-22056 86-0746929
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
8401 East Indian School Road, Scottsdale, Arizona 85251
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (480) 994-3886
----------------------------
N/A
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
Item 5. Other Events
Press Release dated August 26, 1999 regarding earnings
release.
RURAL/METRO REPORTS FISCAL FOURTH QUARTER AND FULL YEAR RESULTS
SCOTTSDALE, ARIZ. (Aug. 26, 1999) -- Rural/Metro Corporation (Nasdaq:
RURL) today reported net income of $3.1 million, or $0.21 per diluted share, on
revenue of $140.0 million for its fourth fiscal quarter ended June 30, 1999. The
results compare with a net loss of $8.9 million, or $(0.64) per diluted share,
on revenue of $136.7 million for the fourth fiscal quarter of 1998, which
included a non-recurring gain and restructuring and other charges, as well as a
charge to increase the provision for doubtful accounts. Operating margin on an
EBITDA basis was $19.0 million, or 13.6% of revenue, compared to $17.1 million,
or 12.9% of revenue for the same quarter in the prior year, excluding the
non-recurring gain and charges.
For fiscal 1999, net income was $15.5 million, or $1.06 per diluted
share, on revenue of $561.4 million. This compares with reported net income of
$7.5 million, or $0.54 per diluted share, on revenue of $475.6 million in fiscal
1998.
"We are pleased that our back-to-basics operating discipline -- which
includes continued focus on collections, more selectivity with regard to
non-emergency revenue, and increased provisioning for doubtful accounts, in
light of the difficult reimbursement environment -- has allowed us to close the
fiscal year largely on track with where we expected to be," said John B. Furman,
President and Chief Executive Officer. "The fourth fiscal quarter was seasonally
slow as expected. In addition, in keeping with our efforts to improve the
quality of revenue and to comply with more restrictive reimbursement guidelines,
we continued to reduce certain non-emergency transports, which had a
disproportionate impact on margins, a process that will continue. Given that in
the existing reimbursement environment even good quality revenue may not be
collected for 90 to 360 days after we make the transport, we must look to next
year before we will see the benefit of much of our efforts in fiscal 1999."
Furman continued, "In Argentina, where our business has met or exceeded
expectations since we first entered the market over one year ago, a particularly
severe winter flu season combined with a general economic slowdown hurt fourth
quarter results. Because our Latin American business is a capitated model, the
heavier utilization impacted profitability, while the general economic
conditions constrained subscriber growth. With our strong market presence in
Argentina, we believe the region will return to more normal profit levels as the
economic situation improves."
"Importantly, we believe the progress we have made during this last
fiscal year is an indication of our ability to work within a difficult and ever
changing worldwide healthcare environment. We believe that our operating
fundamentals are sound, and the need for medical transportation and mobile
health care services continues to increase. Despite the challenges of the
current environment in the healthcare industry, Rural/Metro continues to grow.
We
2
<PAGE> 3
continue to win new 911 contracts, and we are successfully increasing our
penetration of current service areas through outreach to hospitals and other
healthcare providers that are outsourcing their medical transportation needs.
While we can continue to improve, we believe that these initiatives, combined
with our disciplined operating and financial posture, will position us for
further growth in revenue and net income."
Rural/Metro Corporation provides mobile health services, including
"911" and general ambulance service, fire protection and other safety-related
services to municipal, residential, commercial and industrial customers in more
than 450 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 healthcare reimbursement, future revenue, operating results,
marketing, and collection efforts that could cause actual results to differ
materially. These risks include the quality of customer revenues, the rate and
extent of new contracting activity, reimbursement and collection issues and the
effect of other factors that impact the operating costs, cash collections and
the quality of the Company's services. These factors and other risks are
disclosed from time to time in the Company's SEC reports and filings.
(tables to follow)
3
<PAGE> 4
RURAL/METRO CORPORATION
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS AND THE YEARS ENDED JUNE 30, 1999 AND 1998
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, YEAR ENDED JUNE 30,
--------------------------- -------------------
1999 1998 1999 1998
--------- --------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
REVENUE
Ambulance services $ 115,857 $ 112,395 $467,632 $ 387,041
Fire protection services 12,884 11,861 50,490 45,971
Other 11,308 12,404 43,244 42,546
--------- --------- -------- ---------
Total revenue 140,049 136,660 561,366 475,558
--------- --------- -------- ---------
OPERATING EXPENSES
Payroll and employee benefits 75,257 75,703 297,341 254,806
Provision for doubtful accounts 20,179 34,955 81,227 81,178
Depreciation 6,241 5,529 24,222 19,213
Amortization of intangibles 2,244 2,625 9,166 7,780
Other operating expenses 25,587 22,311 98,739 80,216
Restructuring charge -- 5,000 2,500 5,000
--------- --------- -------- ---------
Total expenses 129,508 146,123 513,195 448,193
--------- --------- -------- ---------
OPERATING INCOME 10,541 (9,463) 48,171 27,365
Interest expense, net 5,414 4,968 21,406 14,082
Other (68) (203) 70 (199)
--------- --------- -------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (BENEFIT) 5,195 (14,228) 26,695 13,482
INCOME TAXES (BENEFIT) 2,143 (5,279) 11,231 5,977
--------- --------- -------- ---------
NET INCOME (LOSS) $ 3,052 ($ 8,949) $ 15,464 $ 7,505
========= ========= ======== =========
BASIC EARNINGS (LOSS) PER SHARE $ 0.21 ($ 0.64) $ 1.07 $ 0.55
========= ========= ======== =========
DILUTED EARNINGS (LOSS) PER SHARE $ 0.21 ($ 0.64) $ 1.06 $ 0.54
========= ========= ======== =========
AVERAGE NUMBER OF
SHARES OUTSTANDING -BASIC 14,527 14,091 14,447 13,529
========= ========= ======== =========
AVERAGE NUMBER OF
SHARES OUTSTANDING - DILUTED 14,657 14,091 14,638 14,002
========= ========= ======== =========
</TABLE>
4
<PAGE> 5
RURAL/METRO CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND 1998
(In thousands)
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 7,180 $ 6,511
Accounts receivable, net 185,454 154,603
Inventories 16,371 13,128
Prepaid expenses and other 13,630 16,402
--------- ---------
Total current assets 222,635 190,644
PROPERTY AND EQUIPMENT, net 95,032 92,545
INTANGIBLE ASSETS, net 240,360 235,456
OTHER ASSETS 21,880 16,807
--------- ---------
$ 579,907 $ 535,452
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 17,782 $ 13,435
Accrued liabilities 58,159 58,115
Current portion of long-term debt 5,765 8,565
--------- ---------
Total current liabilities 81,706 80,115
LONG-TERM DEBT, net of current portion 268,560 243,831
NON-REFUNDABLE SUBSCRIPTION INCOME 14,909 13,682
DEFERRED INCOME TAXES 9,438 9,573
OTHER LIABILITIES 205 2,298
--------- ---------
Total liabilities 374,818 349,499
--------- ---------
MINORITY INTEREST 8,250 8,180
--------- ---------
STOCKHOLDERS' EQUITY
Common stock 148 144
Additional paid-in capital 137,792 134,078
Retained earnings 60,603 45,139
Deferred compensation -- (349)
Cumulative translation adjustment (465) --
Treasury stock (1,239) (1,239)
--------- ---------
Total stockholders' equity 196,839 177,773
--------- ---------
$ 579,907 $ 535,452
========= =========
</TABLE>
5
<PAGE> 6
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
RURAL/METRO CORPORATION
/s/ Dean P. Hoffman
Date: August 30, 1999 By: _________________________________
Dean P. Hoffman, Vice
President, Financial Services
and Principal Accounting Officer
6
