FOR: FIRSTSERVICE CORPORATION

COMPANY CONTACT:
Jay S. Hennick
President & Chief Executive Officer
FirstService Corporation
(416) 960-9500

INVESTOR RELATIONS:
Jeffrey Elliott
Jeffrey Elliott Communications
(416) 250-1078

FOR IMMEDIATE RELEASE

TSE: FSV
Nasdaq: FSRV

 

FIRSTSERVICE REPORTS US $0.36 EPS FOR SECOND QUARTER

 

TORONTO, Ontario (October 27, 1998) -- FirstService Corporation today announced financial results for the second quarter of the 1999 fiscal year.

Revenues for the three months ending September 30, 1998 were $105.1 million, an increase of 34% from the $78.4 million generated a year earlier while EBITDA increased 27% to $18.8 million from $14.8 million. Net earnings before income taxes and minority interest increased 19% to $14.0 million. Net earnings after income taxes and minority interest were $7.3 million compared to $7.1 million in the prior year, impacted by a higher effective tax rate for the quarter. Loss carryforwards utilized in the prior year period resulted in a tax provision of 29% compared to 40% in the current year period. Earnings per share were $0.58 compared to $0.76 in the prior year, as a result of an additional 3.1 million shares outstanding.

Diluted earnings per share expressed in U.S. dollars and under U.S. GAAP were $0.36 compared to $0.44 in the prior year, impacted by the 31% increase in the average number of shares outstanding and a weaker Canadian dollar relative to the prior year.

Revenues for the six months ended September 30, 1998 were $198.7 million, a 44% increase from the $138.3 million reported in the comparable prior year period. EBITDA was $32.0 million, up 32% over the $24.2 million reported last year and earnings were $12.8 million (Cdn. $1.03 per share, diluted US$0.60 per share) versus $13.1 million (Cdn.$1.39 per share, diluted US$0.72 per share) reported in the corresponding prior year period.

"The higher tax rate and increase in the number of shares outstanding reduced earnings per share in the first six months and, similarly, will reduce the seasonal loss per share in the final six months", said D. Scott Patterson, Senior Vice President and Chief Financial Officer. "Our operations continue to perform strongly and we remain on track to achieving our financial growth targets for the fiscal year", he concluded.

Revenue from the Property Services division for the quarter was $83.0 million, an increase of $17.1 million or 26% over the prior year. Approximately $7.0 million of the revenue increase resulted from the acquisitions of Paul Davis Systems and several tuck-under acquisitions, with the balance resulting from internal growth.

Revenue for the Business Services division was $22.1 million, an increase of 75% over the prior year, reflecting continued strong internal growth and the impact of the acquisitions of Harris Fulfillment and Direct Mail on April 1, 1998.

FirstService Corporation is a leader in the rapidly growing service sector, providing a variety of specialized Property and Business Services to corporate, government and residential customers throughout North America including community association management, security, lawn care, franchising, business outsourcing and specialized trade material fulfillment.

Certain statements included in this release constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, which will, among other things, impact demand for the Company's services, service industry conditions and capacity; the ability of the Company to implement its business strategy, including the Company's ability to acquire suitable acquisition candidates on acceptable terms and successfully integrate newly acquired businesses with its existing businesses; changes in or the failure to comply with government regulations (especially safety and environmental laws and regulations); and other factors which are described in the Company's filings with the Securities and Exchange Commission.


FIRSTSERVICE CORPORATION
($ CDN/CDN GAAP)

Consolidated Statement of Income
Three month
periods ended
September 30
Six month
periods ended
September 30
19981997
19981997
Revenue

Cost of services provided
Selling, general and administrative expenses

EBITDA

Depreciation & Amortization
Interest

Earnings before the following:
Income taxes

Earnings before minority interest
Minority interest share of earnings

Earnings

Basic earnings per share

Weighted ave. shares outstanding during period

$105,123,598

65,345,115
20,969,950

18,808,533

2,919,224
1,919,944

13,969,365
5,562,247

8,407,118
1,141,984

$7,265,134

$0.58

12,496,407

$78,395,696

47,924,655
15,692,056

14,778,985

1,703,844
1,261,170

11,813,971
3,454,925

8,359,046
1,225,009

$7,134,037

$0.76

9,444,605

$198,659,278

127,285,027
39,386,360

31,987,891

5,552,343
3,803,308

22,632,240
8,160,678

14,471,562
1,694,228

$12,777,334

$1.03

12,345,515

$138,325,775

83,407,368
30,681,783

24,236,624

3,119,665
2,202,653

18,914,306
3,999,082

14,915,224
1,828,781

$13,086,443

$1.39

9,436,195



Condensed Balance Sheet
As at September 30

Assets

Cash
Accounts receivable (net)
Inventory and other current assets
Current assets

Goodwill
Capital and other assets
Total assets

Liabilities and equity

Bank indebtedness
Accounts payable and other current liabilities
Unearned revenue
L.T. debt - current
Current liabilities

Long term debt net of current portion
Minority interest

Shareholder's equity
Total liabilities and equity

1998

$186,315
73,074,191
14,291,412
87,551,918

93,556,365
68,001,788
$249,110,071



90,212
44,676,217
3,798,462
4,091,571
52,656,462

97,917,560
9,613,505

88,922,544
$249,110,071

1997

$ 129,198
41,920,804
12,989,910
55,039,912

56,354,397
29,827,884
$141,222,193



577,584
26,736,331
4,089,435
6,998,484
38,401,834

53,879,789
7,730,238

41,210,332
$141,222,193

FIRSTSERVICE CORPORATION
($ US/US GAAP)

Three month
periods ended
September 30
Six month
periods ended
September 30
19981997
19981997
Revenue

Cost of services provided
Selling, general and administrative expenses

EBITDA

Depreciation & Amortization
Interest

Earnings before the following:
Income taxes

Earnings before minority interest
Minority interest share of earnings

$US/US GAAP Earnings

Diluted earnings per share

Diluted shares outstanding during the period

Average foreign exchange rate for the period

$69,402,257

43,140,632
13,844,293

12,417,332

1,927,262
1,267,541

9,222,529
3,672,177

5,550,352
753,934

$4,796,418

$0.36

13,338,234

1.5147

$56,611,566

34,607,636
11,331,641

10,672,289

1,230,390
910,724

8,531,175
3,202,574

5,328,601
884,611

$4,443,990

$0.44

10,200,000

1.3848

$134,165,785

85,962,739
26,599,824

21,603,222

3,749,810
2,568,588

15,284,824
6,105,678

9,179,146
1,144,207

$8,034,939

$0.60

13,304,185

1.4807

$99,838,163

60,200,193
22,144,917

17,493,053

2,251,653
1,589,789

13,651,611
5,131,059

8,520,552
1,319,943

$7,200,609

$0.72

10,065,000

1.3855

Foreign Exchange Translation
More than half of the company's revenues are denominated in U.S. dollars. To provide investors with information regarding the results of our operations for the period in U.S. dollars, we have translated the Consolidated Statement of Income into U.S. dollars at the weighted average exchange rate for the three and six month period respectively.

US GAAP Adjustment
The Consolidated Statement of Income has been adjusted for material differences between Canadian GAAP and US GAAP to reflect US dollar US GAAP disclosure.