Rural/Metro Corporation

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Rural/Metro Corporation

8401 E. Indian School Road
Scottsdale, Arizona 85281
U.S.A.
(602) 994-3886
Fax: (602) 481-3328
Web site: http://www.ruralmetro.com

Public Company
Incorporated : 1993
Employees : 12,250
Sales : $475.6 million (1998)
Stock Exchanges : NASDAQ
Ticker Symbol : RURL
NAIC : 621910 Ambulance Services, Air or Ground; 922160 Fire Departments

Rural/Metro Corporation is one of the leading providers of health and safety services in the United States. The company is a diversified emergency services company providing “911” emergency ambulance and general transport services, fire protection and training services, and other safety and healthcare-related services and equipment to municipal, residential, commercial, and industrial customers. The company is one of the only multi-state providers of both ambulance and fire protection services in the United States and ranks as one of the largest private-sector providers of ambulance and fire protection services in the world, serving over 450 communities in 26 states, the District of Columbia, Canada, and Latin America.

The company was founded on the premise that many communities could benefit from innovative ways of delivering emergency services. As a private company, Rural/Metro was not bound by traditional ways of doing business. The company has a history of finding better, more efficient ways of managing personnel and resources, pursuing prevention as a key strategy, and providing better training for its employees.

Fire!—Founding “The Rural Fire Department,”1948-72

In 1948 in an unincorporated area north of Phoenix, Arizona, after watching his neighbor’s house burn down one night “with no one there to officiate,” newspaper reporter Louis A. Witzeman, following in the footsteps of Benjamin Franklin nearly two centuries before, secured pledges from his neighbors to pay him $10 a year for subscription fire protection. The 21-year-old Witzeman invested his last $900 and made a down payment on a fire truck. Thus began the “Rural Fire Department,” a subscription fire service serving an area of about nine square miles. “There was no master planning or creative genius involved,” says Witzeman. “It happened because I needed fire protection for my neighborhood and I was determined to get it.” The first year in business, the company grossed $30,000.

“I never expected the company to grow so big,” Witzeman says on the company’s web site. “I just wanted to provide my neighborhood with fire protection. But soon I began to realize that I had really stumbled onto something. I found that the established ways of providing services were not as efficient as they could be. So Rural/Metro’s cause became to look for new and better ways to do the job ... for less money.” In order to succeed, Rural/Metro had to be better than traditional services. Witzeman encouraged creativity, and explored different methods to exactly meet each of his client communities’s particular needs. In fact, finding ways to deliver cost-effective service based on needs, rather than relying on traditional solutions, became Rural/Metro’s primary ethic, which has remained with the company throughout its history.

By 1951 Rural had grown to three stations and several vehicles. Rural’s firefighters were among the first in the country to receive extensive training in first aid, and put that training to work with the addition of an emergency rescue, first aid, and salvage unit. The company’s dependable, cost-effective service resulted in Rural’s first municipal fire contract with the city of Scottsdale, population 2,000, which remained in force until at least 1991, when the population had grown to 126,000.

In 1965 the company, noting that traditional red fire engines faded quickly in the Arizona sun and needed repainting often, began experimenting with white vehicles. A national study released in 1972 revealed that high-visibility “lime yellow”—the color of tennis balls—was the most visible color under all weather conditions, and at night, and provided the greatest amount of contrast to environmental colors. Rural cast tradition to the wind and adopted the color.

In 1969 the company began providing ambulance and emergency medical services independent of its fire operations, and was covering several hundred square miles in Arizona’s Maricopa, Pima, and Yuma counties, including the cities of Tucson and Yuma. Shortly thereafter, the company expanded into Tennessee, with the acquisition of the West Knoxville Fire Department, and five adjoining fire departments, and emergency medical and ambulance services grew into Texas and Florida.

Rural/Metro Growing Rapidly: 1970s-80s

The company grew significantly during the 1970s, through internal development and through acquisitions. As additional contracts were negotiated and more and more urban populations were being served, Rural changed its name in 1972 to Rural/Metro. In 1978, the company’s 30-year anniversary, the company was featured on “60 Minutes” when Mike Wallace paid a visit to Arizona and aired a story on CBS which brought waves of good publicity for Rural/Metro. That year, Witzeman retired from his post as president, selling some 63 percent of the company to its employees, for $1 million, and retaining his chairmanship until 1980.

In 1985 Rural/Metro began requiring homeowners in Scotts-dale, Arizona, to install in-home sprinkler systems, leading to a drop in fire losses by 1994 of 84 percent. In 1987 the company purchased the Arizona Medical Transport (AMT) ambulance company, and Rural/Metro became the largest provider of prehospital care and ambulance transportation in Arizona.

In 1988 the company brought in $50.25 million in revenue. That year a new president and CEO, Robert H. Manschot, was appointed. Holland-born Manschot, fluent in four languages and a veteran employee in nine countries, was previously a senior consultant and worldwide partner for The Hay Group and a manager for ITT Sheraton and Inter-Continental hotel chains. Vice-President of Emergency Services Tracy Skeen received the prestigious J. Walter Schaefer Memorial Award, given by the American Ambulance Association to the individual who exhibited the most exceptional leadership and guidance for the betterment of the ambulance industry as a whole.

By 1989 the company was posting $60 million in revenue, a more than 20 percent jump from the previous year, and had increased revenues every year for the previous decade. Rural/Metro was now serving the emergency needs of more than five million people in over 50 communities throughout the United States. The company held contracts with such companies as St. Louis, Missouri-based Monsanto Chemical Company and Idaho-based Potlatch Paper Company. Rural/Metro also managed an air tanker base at Fort Huachuca, Arizona, near Sierra Vista, for Monsanto’s Wildland Fire Division, filling airline tanks with the latter’s fire retardant, used to combat wildfires in Arizona and New Mexico; and also joined in a venture with Holland-based Smit Fire & Loss Prevention Company to provide offshore firefighting in the western hemisphere. In December of that year, Rural/Metro’s emergency response team joined in fighting a fire burning on the 138,000 ton Norwegian tanker Mega Borg, in the Gulf of Mexico. They successfully extinguished the explosive blaze which killed four and injured 17, and kept the oil from leaking into the ocean.

The Roaring 1990s

In 1990, Rural/Metro responded to over 300,000 calls for assistance and annual revenues had grown to $65 million. A year later, in September 1991, the company joined with the Rotterdam International Safety Centre (RISC)—a joint venture between Smit International and Nederlandse Veiligheids-dienst—to form and operate a new company called RISC America. The new venture would provide sophisticated training for industrial, professional, and specialized firefighters and would operate fully-equipped emergency response teams available to respond anywhere in the world to combat unique emergency situations which required specific training and knowledge beyond the traditional firefighting realm, such as petrochemical and industrial fires. By the end of that year, the company operated ambulance/EMS services in over 30 communities throughout Arizona, Florida, Oregon, Tennessee, and Texas. Annual revenue in 1992 grew to $68.22 million, with a net income of $1.33 million.

The following year, in April, the company went public, with its stock being traded over the counter, and 29 percent of the company sold for some $22 million. A second public offering in July brought in another $19 million. That year, the company acquired the operations of four ambulance service providers and would go on to acquire more than 70 companies through 1998. Rural/Metro served more than 80 communities in nine states, including Arizona, Arkansas, Florida, Nebraska, New York, Ohio, Oregon, Tennessee, and Texas, and total revenue and net income grew again to $84.08 million and $2.69 million, respectively.

Company Perspectives

As guardians of our communities’s health, safety and property, we believe in maintaining high principles and ethical standards and in leading by example. Caring and respect for every individual is at the center of all we do.

In 1994, the company responded to over 500,000 service calls and continued to set performance records, increasing both revenue (by 24 percent to $104.36 million) and income (by 76 percent to $4.73 million). The company additionally completed two further public offerings of common stock, and acquired the operations of eight ambulance service providers, including the stock of an ambulance service provider operating primarily in Lincoln and Omaha, Nebraska; and the assets of ambulance service providers operating in the Dallas, Texas metropolitan area and in several communities in Ohio.

By 1995 the company was the fourth largest private sector ambulance company. That year, it acquired EMS Ventures, a leading ambulance service provider in Gainesville and Augusta, Georgia, and Columbia, South Carolina; and LaSalle Ambulance Inc. in Buffalo, New York, one of four Rural/Metro companies to have received accreditation from The Commission on Accreditation of Ambulance Services. The company had grown to 800 ambulances, fire trucks, and wheelchair vans in more than 80 communities in the United States and was responding to half a million calls per year.

In 1996, under the direction of President James H. Bolin, Rural/Metro made 18 acquisitions, and was the largest provider of privatized fire protection in the United States, and one of the largest in ambulance services. The company was contracted by FedEx for airport rescue and firefighting services at the Memphis, Tennessee hub. That year, the company was declared Private Ambulance Provider of the Year by The Texas Department of Health, for the quality of its care and the community services the company performed. It also received the American Ambulance Association’s Community Partnership Award.

Rural/Metro extended its reach in 1997 with 19 new acquisitions. New contracts in 1997 included airport firefighting and rescue services to the Municipal Airport of Morristown, New Jersey; Central Ohio Aerospace and Technology Center; John F. Kennedy International Airport in La Paz, Bolivia; Jorge Wilsterman International Airport in Cochabama, Bolivia; and Viru Viru International Airport in Santa Cruz, Bolivia; community fire services with North Tunica County Fire Protection in Tunica, Mississippi; fire protection, ambulance transportation, and rescue for Lockheed Martin Milan Army Ammunition Plant; emergency medical transportation in Aurora, Colorado; Gila Bend, Arizona; and Bellmead, Beverly Hills, Hewitt, Lacy-Lakeview, Northcrest, Robinson, Waco, and Woodway, Texas.

In 1998 the company entered into a joint venture in the greater Baltimore, Maryland and District of Columbia area, and a public/private alliance in the San Diego, California area. That year, Rural/Metro made 11 acquisitions, including Argentina-based Emergencias Cardio Coronarias, extending its reach into Central and South America. Ambulance services and fire protection services accounted for approximately 81 percent and ten percent, respectively, of the company’s revenue for the fiscal year ended June 30, 1998. A number of miscellaneous services accounted for the remaining nine percent. For the first time in its history, although net income rose 48.7 percent to $475.6 million, the company’s difficulties in absorbing its acquisitions led to lower profits ($7.5 million in net income, a 40.9 percent drop), layoffs, and an attempt by The International Brotherhood of Teamsters to unionize employees. John B. Furman took over as acting president and CEO.

As more and more government-run services continued to demonstrate inefficiency, continued privatization of these industries could similarly be expected. With its impressive 50-year history and continued growth, Rural/Metro appeared poised to dominate the industries in which it participated. Sales were expected to trend higher, with corresponding net income increases as the company sought to improve existing facilities and services into the 21st century.

Principal Subsidiaries

Aid Ambulance at Vigo County Inc.; American Medical Transport; Arizona Medical Transport; EMS Ventures of South Carolina Inc.; Physicians Ambulance Service Inc.; Rural/Metro Ambulance.