Rural/Metro Reports Fiscal 2009 Third-Quarter Results

SCOTTSDALE, AZ, May 11 (MARKET WIRE) --
Rural/Metro Corporation (NASDAQ: RURL)

Highlights:

-- Year-to-date net revenue up 3.2% to $371.3 million; quarterly net
revenue up 0.6% from the year-ago period to $125.9 million.
-- Year-to-date net income of $2.8 million, or $0.11 diluted earnings per
share (EPS); quarterly net income of $1.0 million, or $0.04 diluted EPS.
-- Year-to-date earnings before interest, taxes, depreciation and
amortization (EBITDA) from continuing operations up 13.2% to $43.6 million;
quarterly EBITDA from continuing operations up 9.2% to $14.4 million.
-- Quarterly Average Patient Charge (APC) improved 6.6% or $23 per
transport to $373 from $350 in the same prior-year period.
-- Days Sales Outstanding (DSO) improved 7 days to 55 days, down from 62
days for the same prior-year period.
-- Cash provided by operating activities up 52.2% to $37.3 million from
$24.5 million for the same prior-year period.

Rural/Metro Corporation (NASDAQ: RURL), a leading provider of
ambulance and private fire protection services, announced results today
for its fiscal 2009 third quarter and nine months ended March 31, 2009,
highlighting strong cash flows and positive trends in key operating and
financial metrics.

"We are pleased with our results this quarter as we continue to
demonstrate the effectiveness of our efforts to enhance revenue quality,
improve rates, reduce uncompensated care, and drive strong free cash
flow," said Jack Brucker, President and Chief Executive Officer. "Cash on
hand at the close of the third quarter was $27.8 million. This includes
the $5.0 million voluntary principal payment made in March to further
reduce the outstanding balance of our Term Loan B."

Mr. Brucker continued, "We look forward to additional progress in these
areas as we move toward completion of our electronic patient care record
system in fiscal 2010 and make continued investments in industry-leading
programs, processes and technologies."

Results of Operations for the Third Fiscal Quarter Ended March 31, 2009

Consolidated net revenue for the third quarter ended March 31, 2009
increased 0.6% to $125.9 million compared to $125.1 million for the same
period in fiscal 2008. Ambulance revenue for the period was up 0.9% to
$107.4 million compared to $106.5 million for the same prior-year period.
Other services revenue, which includes fire protection services revenue,
was $18.5 million compared to $18.7 million for the same prior-year
period. Net revenue results for the fiscal 2009 third quarter include a
$0.8 million increase in new emergency and non-emergency contracts. These
were offset by reduced transports from discontinued contracts in Tempe,
Arizona, and unincorporated Orange County, Florida, as well as some
decline in 911 transports due to fewer temporary residents and leisure
travelers in the Arizona, Florida and Southern California markets.

Continued efforts to reduce uncompensated care and effect rate increases
resulted in an increase in net medical transport APC to $373 in the third
quarter, compared to $350 for the same period of the prior year.

Payroll and employee benefits expense for the third quarter represented
61.5% of net revenue compared to 61.2% of net revenue for the same
prior-year period. The difference was driven primarily by an increase in
employee health insurance expenses.

The Company reduced other operating expenses by $2.6 million reduction in
the third quarter to $28.6 million, or 22.7% of net revenue, from $31.2
million, or 25.0% of net revenue, in the same period a year ago. The
decrease included lower expenses for fuel, operating supplies and
professional fees.

General and auto liability insurance expense for the third fiscal quarter
was $5.0 million compared to $4.1 million for the same prior-year period.
The increase was primarily due to a net $0.9 million increase in claims
reserves.

Net income for the third quarter was $1.0 million, or diluted EPS of
$0.04, compared to net income of $1.5 million, or diluted EPS of $0.06,
for the same prior-year period. The year-over-year difference in net
income was primarily driven by a higher effective tax rate.

EBITDA from continuing operations for the third quarter was $14.4 million
compared to $13.2 million in the same prior-year period. The $1.2 million
improvement was driven by reductions in uncompensated care, rate
increases, and overall cost-containment measures.

EBITDA from continuing operations is a key indicator used by management to
evaluate operating performance. While EBITDA from continuing operations is
not intended to replace presentations included in the Company's
consolidated financial statements under generally accepted accounting
principles (GAAP) and should not be considered an alternative to operating
performance or an alternative to cash flow as a measure of liquidity, the
Company believes this measure is useful to investors in assessing the
ability to meet future debt service, capital expenditure and working
capital requirements. This calculation may differ in the method of
calculation from similarly titled measures used by other companies. A
reconciliation of EBITDA to income/(loss) from continuing operations and
discontinued operations for the three months ended March 31, 2009 and 2008
is included with this press release and the related current report on Form
8-K.

Results of Operations for the Nine Months Ended March 31, 2009

Consolidated net revenue for the nine months ended March 31, 2009
increased 3.2%, or $11.5 million, to $371.3 million from $359.8 million
for the same period in fiscal 2008. Net ambulance revenue increased 3.5%,
or $10.5 million, to $315.1 million from $304.5 million for the same
prior-year period. Other services revenue, which includes fire protection
services revenue, was $56.3 million for the nine-month period, up
slightly compared to $55.2 million for the same prior-year period. The
increase in consolidated year-to-date net revenue was due to growth in
same-service-area revenue driven by improvements in net APC, as well as
new contract revenue in the Tennessee, Washington, Colorado and Oregon
markets.

Payroll and employee benefits expense for the nine-month period ended
March 31, 2009 represented 61.8% of net revenue compared to 62.4% of net
revenue in the same prior-year period. The decrease in payroll and
employee benefits as a percentage of net revenue was due to the Company's
continued management of ambulance unit hours and improvements in workers'
compensation claims expense.

A decrease in expenses for professional fees drove a $1.0 million
reduction in other operating expenses for the period. Other operating
expenses for the first nine months of fiscal 2009 were $86.3 million, or
23.3% of net revenue, compared to $87.3 million, or 24.3% of net revenue,
in the same period of fiscal 2008.

General and auto liability expense of for the first nine months of fiscal
2009 was $10.9 million, compared to $10.0 million for the same prior-year
period. The increase was due to a net $0.9 million increase in claims
reserves during the three months ended March 31, 2009.

Net income for the nine-month period ended March 31, 2009 was up slightly
to $2.8 million, or diluted EPS of $0.11, compared to net income of $2.6
million, or diluted EPS of $0.11 for the same prior-year period.

EBITDA from continuing operations for the nine-month period increased to
$43.6 million compared to $38.5 million for the same prior-year period.
The $5.1 million improvement was driven by reductions in uncompensated
care, rate increases, and overall cost-containment measures.

Net cash provided by operating activities for the nine months ended March
31, 2009 was $37.3 million, compared to $24.5 million for the same
prior-year period. Capital expenditures for the nine-month period were
$12.5 million, resulting in year-to-date free cash flow of $24.8 million.

Third-Quarter Operating Statistics

The following table provides results for medical transports, APC, and DSO
during each of the five most recent quarters. The Company noted that
discontinued contracts in Tempe, Arizona, and unincorporated Orange
County, Florida, accounted for approximately 60% of the decrease in
year-over-year transport volume, with the balance related to a reduction
in temporary residents and leisure travelers to markets in Arizona,
Florida and Southern California. Excluding the discontinued contracts,
transport volume for the nine months ended March 31, 2009 grew by 1%, or
approximately 8,400
transports.

Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09
(3/31/08) (6/30/08) (9/30/08) (12/3/08) (3/31/09)
--------- --------- --------- --------- ---------
Medical Transports (1) 282,737 269,899 271,407 263,220 270,462
--------- --------- --------- --------- ---------
Average Patient Charge
(APC) (2) $ 350 $ 368 $ 361 $ 363 $ 373
--------- --------- --------- --------- ---------
Days Sales Outstanding
(DSO) (3) 62 60 59 57 55
--------- --------- --------- --------- ---------

(1) Defined as emergency and non-emergency medical patient transports from
continuing operations.
(2) Net medical transport APC is defined as gross ambulance transport
revenue less provisions for contractual allowances applicable to
Medicare, Medicaid and other third-party payers and uncompensated care
divided by medical transports from continuing operations.
(3) DSO is calculated using the average accounts receivable balance on a
rolling 13-month basis and net revenue on a rolling 12-month basis and
has not been adjusted to eliminate discontinued operations.

Fiscal 2009 Financial Guidance Updated

The Company updated guidance for the fiscal year ending June 30, 2009,
expecting EBITDA from continuing operations to be in the range of $56.0
million to $58.0 million and capital expenditures to be in the range of
$16.0 million to $18.0 million.

Conference Call to Discuss Results

The Company will discuss results in a conference call today beginning at 8
a.m. Pacific/11 a.m. Eastern. To access the conference call, dial
877-856-1962 (domestic) or 719-325-4762 (international). The call also
will be broadcast on the Company's web site at www.ruralmetro.com. A
telephone replay will be available from approximately 2 p.m. (Eastern)
today through midnight (Eastern) May 13, 2009. To access the replay, dial
888-203-1112. From international locations, dial 719-457-0820. The
required pass code is 1689049. An archived webcast will be available
following the call at www.ruralmetro.com.

About Rural/Metro

Rural/Metro Corporation provides emergency and non-emergency ambulance
services and private fire protection services in 22 states and
approximately 400 communities throughout the United States. For more
information, visit the Company's web site at www.ruralmetro.com.

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS

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

RURAL/METRO CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share data)

March 31, June 30,
2009 2008
--------- ---------
ASSETS

Current assets:
Cash and cash equivalents $ 27,812 $ 15,907
Accounts receivable, net 69,418 76,131
Inventories 8,873 8,456
Deferred income taxes 26,841 22,263
Prepaid expenses and other 17,040 18,946
--------- ---------
Total current assets 149,984 141,703

Property and equipment, net 49,419 46,938
Goodwill 37,700 37,700
Deferred income taxes 42,381 50,773
Insurance deposits 740 989
Other assets 13,874 16,108
--------- ---------
Total assets $ 294,098 $ 294,211
========= =========

LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable $ 14,526 $ 16,147
Accrued liabilities 58,108 55,139
Deferred revenue 21,521 21,901
Current portion of long-term debt 287 374
--------- ---------
Total current liabilities 94,442 93,561

Long-term debt, net of current portion 274,503 279,017
Other long-term liabilities 29,191 29,536
--------- ---------
Total liabilities 398,136 402,114
--------- ---------

Minority interest 2,785 1,966
--------- ---------

Stockholders' deficit:
Common stock, $0.01 par value, 40,000,000 shares
authorized, 24,842,726 and 24,822,726 shares
issued and outstanding at March 31, 2009 and
June 30, 2008, respectively 248 248
Additional paid-in capital 155,105 154,918
Treasury stock, 96,246 shares at both
March 31, 2009 and June 30, 2008 (1,239) (1,239)
Accumulated other comprehensive loss (410) (439)
Accumulated deficit (260,527) (263,357)
--------- ---------
Total stockholders' deficit (106,823) (109,869)
--------- ---------
Total liabilities, minority interest and
stockholders' deficit $ 294,098 $ 294,211
========= =========

RURAL/METRO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share amounts)

Three Months Ended Nine Months Ended
March 31, March 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Net revenue $ 125,914 $ 125,132 $ 371,310 $ 359,769
--------- --------- --------- ---------
Operating expenses:
Payroll and employee benefits 77,461 76,561 229,617 224,425
Depreciation and amortization 3,690 3,250 10,871 9,432
Other operating expenses 28,626 31,225 86,339 87,346
General/auto liability
insurance expense 4,984 4,051 10,867 9,971
Loss on sale of assets (168) (60) (414) (1,356)
--------- --------- --------- ---------
Total operating expenses 114,593 115,027 337,280 329,818
--------- --------- --------- ---------
Operating income 11,321 10,105 34,030 29,951
Interest expense (7,749) (7,988) (23,325) (23,748)
Interest income 107 73 255 307
--------- --------- --------- ---------
Income from continuing
operations before income
taxes and minority interest 3,679 2,190 10,960 6,510
Income tax provision (2,026) (879) (6,230) (3,288)
Minority interest (577) (132) (1,319) (896)
--------- --------- --------- ---------
Income from continuing
operations 1,076 1,179 3,411 2,326
Income (loss) from discontinued
operations, net of income
taxes (89) 290 (581) 308
--------- --------- --------- ---------
Net income $ 987 $ 1,469 $ 2,830 $ 2,634
========= ========= ========= =========
Income (loss) per share:
Basic -
Income from continuing
operations $ 0.04 $ 0.05 $ 0.13 $ 0.10
Income (loss) from
discontinued operations (0.00) 0.01 (0.02) 0.01
--------- --------- --------- ---------
Net income $ 0.04 $ 0.06 $ 0.11 $ 0.11
========= ========= ========= =========

Diluted -
Income from continuing
operations $ 0.04 $ 0.05 $ 0.13 $ 0.10
Income (loss) from
discontinued operations (0.00) 0.01 (0.02) 0.01
--------- --------- --------- ---------
Net income $ 0.04 $ 0.06 $ 0.11 $ 0.11
========= ========= ========= =========

Average number of common
shares outstanding - Basic 24,843 24,823 24,830 24,775
========= ========= ========= =========
Average number of common
shares outstanding - Diluted 24,897 24,948 24,907 24,947
========= ========= ========= =========

RURAL/METRO CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

Nine Months Ended
March 31,
------------------
2009 2008
-------- --------
Cash flows from operating activities:
Net income $ 2,830 $ 2,634
Adjustments to reconcile net income to net
cash provided by operating activities -
Depreciation and amortization 10,871 9,629
Non-cash adjustments to insurance claims
reserves 129 (4,466)
Accretion of 12.75% Senior Discount Notes 7,334 6,481
Deferred income taxes 3,790 1,949
Tax benefit from the exercise of stock
options - (75)
Amortization of deferred financing costs 1,632 1,510
Loss on disposal of property and
equipment 58 296
Earnings of minority shareholder 1,319 896
Stock based compensation expense 185 -
Proceeds from property insurance
settlement - (70)
Change in assets and liabilities -
Accounts receivable 6,713 (3,934)
Inventories (417) 401
Prepaid expenses and other 3,240 3,213
Insurance deposits 249 (217)
Other assets 475 215
Accounts payable (1,921) 1,571
Accrued liabilities 1,769 4,994
Deferred revenue (380) (2,922)
Other liabilities (589) 2,373
-------- --------
Net cash provided by operating activities 37,287 24,478
-------- --------
Cash flows from investing activities:
Purchases of short-term investments - (5,000)
Sales of short-term investments - 5,000
Capital expenditures (12,485) (10,545)
Proceeds from the sale of property and
equipment - 22
Proceeds from property insurance
settlement - 70
-------- --------
Net cash used in investing activities (12,485) (10,453)
-------- --------
Cash flows from financing activities:
Repayment of debt (12,399) (8,905)
Issuance of debt - 3,800
Cash paid for debt issuance costs - (857)
Tax benefit from the exercise of stock
options - 75
Issuance of common stock 2 58
Distributions to minority shareholders (500) (500)
-------- --------
Net cash used in financing activities (12,897) (6,329)
-------- --------
Increase (decrease) in cash and cash
equivalents 11,905 7,696
Cash and cash equivalents, beginning of
period 15,907 6,181
-------- --------
Cash and cash equivalents, end of period $ 27,812 $ 13,877
======== ========

Supplemental disclosure of non-cash operating
activities:
Increase in current assets and accrued
liabilities for general liability insurance
claim $ 1,334 $ -
======== ========
Increase in accumulated deficit, other
liabilities and decrease in deferred taxes
upon adoption of FIN 48 $ - $ 12,826
======== ========

Supplemental disclosure of non-cash
investing and financing activities:
Property and equipment funded by liabilities $ 1,656 $ 1,897
======== ========
Note payable incurred for software licenses $ - $ 354
======== ========

RURAL/METRO CORPORATION
RECONCILIATION OF INCOME FROM
CONTINUING AND DISCONTINUED OPERATIONS TO EBITDA
(unaudited)
(in thousands)

Three Months Ended Nine Months Ended
March 31, March 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------

Income from continuing
operations $ 1,076 $ 1,179 $ 3,411 $ 2,326
Add (deduct)
Depreciation and
amortization 3,690 3,250 10,871 9,432
Interest expense 7,749 7,988 23,325 23,748
Interest income (107) (73) (255) (307)
Income tax provision 2,026 879 6,230 3,288
--------- --------- --------- ---------

EBITDA from continuing
operations 14,434 13,223 43,582 38,487
--------- --------- --------- ---------

Income from discontinued
operations (89) 290 (581) 308
Add (deduct)
Depreciation and
amortization - 36 - 197
Income tax provision
(benefit) 11 196 (368) 211
--------- --------- --------- ---------

EBITDA from discontinued
operations (78) 522 (949) 716
--------- --------- --------- ---------

Total EBITDA $ 14,356 $ 13,745 $ 42,633 $ 39,203
========= ========= ========= =========

(RURL/F)

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

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