<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
<TABLE>
<C> <S>
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
<TABLE>
<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER 0-24762
------------------------
FIRSTSERVICE CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
ONTARIO, CANADA NOT APPLICABLE
(Province or other jurisdiction (I.R.S. employer identification
of incorporation or number, if applicable)
organization)
</TABLE>
1140 BAY STREET
SUITE 4000
TORONTO, ONTARIO
CANADA M5S 2B4
(416) 960-9500
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
FIRSTSERVICE CORPORATION
6300 PARK OF COMMERCE BLVD.
BOCA RATON, 33487
U.S.A.
(561) 989-5100
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE IN THE UNITED STATES)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate the number of shares outstanding of the registrant's common stock
as of the latest practicable date:
* Subordinate Voting Shares 12,266,133 as of September 30, 1999.
* Multiple Voting Shares 662,847 as of September 30, 1999.
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<PAGE>
FIRSTSERVICE CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
INDEX
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PAGE
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<S> <C> <C>
PART 1. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
a) Statements of Earnings
For the Three and Six Months Ended September 30, 1999,
and 1998.................................................... 3
b) Balance Sheets
As of September 30, 1999 and March 31, 1999.............. 4
c) Statements of Cash Flows
For the Six Months Ended September 30, 1999 and 1998..... 5
d) Notes to Financial Statements........................... 6
Management's Discussion and Analysis of Financial
Item 2. Condition and Results of Operations......................... 8
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders......... 13
Item 6. Exhibits and Reports on Form 8-K............................ 14
Signature........................................................................... 15
</TABLE>
2
<PAGE>
FIRSTSERVICE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
THREE MONTH PERIODS SIX MONTH PERIODS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues................................................... $96,547 $69,402 $181,454 $134,166
Cost of revenues........................................... 59,765 43,141 115,835 85,963
Selling, general and administrative expenses............... 19,783 13,844 37,376 26,600
Depreciation............................................... 1,615 1,320 3,085 2,512
Amortization............................................... 1,050 607 1,864 1,238
Interest................................................... 1,959 1,268 3,722 2,568
------- ------- -------- --------
Earnings before income taxes and minority interest......... 12,375 9,222 19,572 15,285
Income taxes............................................... 4,947 3,672 7,806 6,106
------- ------- -------- --------
Earnings before minority interest.......................... 7,428 5,550 11,766 9,179
Minority interest share of earnings........................ 1,242 754 1,996 1,144
------- ------- -------- --------
Net earnings............................................... $ 6,186 $ 4,796 $ 9,770 $ 8,035
------- ------- -------- --------
Earnings per share:
Basic.................................................... 0.48 0.38 0.76 0.65
Diluted.................................................. 0.45 0.36 0.71 0.60
Weighted average shares outstanding:
Basic.................................................... 12,933 12,496 12,929 12,421
Diluted.................................................. 13,733 13,228 13,769 13,604
</TABLE>
3
<PAGE>
FIRSTSERVICE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
1999 1999
------------- ---------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash........................................................ $ 5,616 $ 4,627
Accounts receivable, net.................................... 55,067 41,360
Inventories................................................. 10,100 7,969
Prepaids and other assets................................... 8,586 6,759
-------- --------
79,369 60,715
-------- --------
Other receivables........................................... 5,856 3,425
Fixed assets................................................ 28,132 25,847
Other assets................................................ 4,848 3,429
Deferred income taxes....................................... 636 1,264
Goodwill.................................................... 107,626 88,764
-------- --------
147,098 122,729
-------- --------
$226,467 $183,444
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current liabilities.............. $ 45,585 $ 27,194
Unearned revenue............................................ 3,332 6,099
Long-term debt -- current................................... 2,164 1,726
-------- --------
51,081 35,019
-------- --------
Long-term debt less current portion......................... 101,563 84,516
Minority interest........................................... 6,103 4,889
SHAREHOLDERS' EQUITY
Capital stock............................................... 53,636 53,654
Receivables pursuant to company's share purchase plan....... (3,294) (3,294)
Retained earnings........................................... 15,938 6,168
Cumulative other comprehensive income....................... 1,440 2,492
-------- --------
67,720 59,020
-------- --------
$226,467 $183,444
======== ========
</TABLE>
4
<PAGE>
FIRSTSERVICE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
SIX MONTH PERIODS
ENDED SEPTEMBER 30
-------------------
1999 1998
-------- --------
(Unaudited)
<S> <C> <C>
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Net earnings for the period................................. $ 9,770 $ 8,035
Items not affecting cash
Depreciation and amortization............................. 4,949 3,750
Deferred income taxes..................................... 198 (40)
Minority interest share of earnings....................... 1,996 1,144
Other..................................................... 222 160
------- -------
17,135 13,049
------- -------
Changes in working capital, net of acquisitions
Accounts receivable....................................... (4,593) (12,140)
Inventories............................................... (2,130) 1,440
Prepaids and other........................................ (987) 921
Accounts payable and other current liabilities............ 12,228 4,006
Unearned revenue.......................................... (7,992) (5,119)
------- -------
Net cash provided by operating activities................... 13,661 2,157
------- -------
INVESTING ACTIVITIES
Acquisition of businesses................................... (14,646) (26,975)
Increase in fixed assets.................................... (4,401) (2,655)
(Increase) decrease in other assets......................... (930) 194
Increase in other receivables............................... (2,432) (428)
------- -------
Net cash used for investing................................. (22,409) (29,864)
------- -------
FINANCING ACTIVITIES
Net increase in long-term debt.............................. 11,656 20,849
Financing fees paid......................................... (543) (735)
Issuance of subordinate voting shares, net of repurchases... (18) 877
Dividends paid to minority shareholders of subsidiaries..... (166) (106)
------- -------
Net cash provided by financing.............................. 10,929 20,884
------- -------
Effect of exchange rate changes on cash..................... (1,192) 4,255
------- -------
Increase (decrease) in cash and cash equivalents during the
period.................................................... 989 (2,567)
Cash and cash equivalents, beginning of period.............. 4,627 2,630
------- -------
Cash and cash equivalents, end of period.................... $ 5,616 $ 63
======= =======
</TABLE>
5
<PAGE>
FIRSTSERVICE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
1. DESCRIPTION OF THE BUSINESS
FirstService Corporation (the "Company") is a provider of property and
business services to corporate, public sector and residential customers in
the United States and Canada, principally in Ontario. The Company's
operations are conducted through two principal operating divisions, Property
Services and Business Services. The Property Services division includes
community association management, security, franchising and lawncare and
represented approximately 80% of the Company's revenues for the year ended
March 31, 1999. The Business Services division provides outsourcing services
such as transaction processing and literature fulfillment for corporations
and government agencies.
2. SUMMARY OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by FirstService Corporation, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission for the
presentation of interim financial information. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with U.S. generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
not misleading. In the opinion of management, the condensed consolidated
financial statements contain all adjustments necessary to present fairly the
financial position of the Company as of September 30, 1999 and the results
of its operations for the three months and six months ended September 30,
1999 and 1998 and its cash flows for the six months ended September 30, 1999
and 1998. All such adjustments are of a normal recurring nature. The results
of operations for the three and six months ended September 30, 1999 are not
necessarily indicative of the results to be expected for the year ended
March 31, 2000. For further information, refer to the consolidated financial
statements and footnotes thereto for the year ended March 31, 1999 contained
in the Company's annual information form included as an Exhibit to its
Form 6-K for the month of August, 1999.
3. ACQUISITIONS
Effective June 1, 1999 the Company acquired American Pool Enterprises Inc.
("APE") which is the largest commercial swimming pool and recreation
facility management operation in the U.S. APE, headquartered in Beltsville,
Maryland, provides management, repair, maintenance and renovation services
to more than 1,100 apartment, condominium and community association swimming
pool and recreation facilities, through 11 branches in 9 States. APE
generated revenues of $20 million for the year ended December 31, 1998.
On July 1, 1999, the Company acquired DDS Southwest Distribution Services
Limited ("Southwest") through it's 89% owned subsidiary, DDS Distribution
Services Limited. Southwest provides order processing and fulfillment, kit
preparation, invoicing and accounts receivable collection to customers in
the educational publishing industry. The acquired company generated revenues
of approximately $8 million for the year ended December 31, 1998.
The results of operations of these acquisitions have been included in the
condensed consolidated financial statements included herein since the
applicable date of acquisition. These acquisitions were accounted for using
the purchase method of accounting. As a result, the purchase prices has been
allocated to the assets acquired, including intangibles, based on their
respective fair values. The purchase price allocations are preliminary and
subject to adjustment.
4. LONG TERM DEBT
On April 1, 1999, the Company amended and restated its lending agreement
increasing credit availability by approximately U.S. $30.0 million and
splitting the facilities into tranches of Cdn. $50.0 million and U.S.
$130 million. The amended facilities which will be used for acquisitions,
capital expenditures and working capital, provide a more tax efficient
structure and more effectively match long-term U.S. dollar denominated
assets with U.S. dollar denominated debt.
The revolving facilities provide that the Company may borrow using Prime,
LIBOR or Bankers Acceptances interest rate options that vary within a range
depending on certain leverage ratios. Borrowings currently bear interest at
the lenders cost of funds rate plus 1.25%. The Company has an interest rate
swap contract to December 31, 2002 at a fixed rate of 5.3% in the amount of
Cdn.$20 million to hedge against interest rate exposure on a portion of its
revolving facilities.
As security for the revolving credit facilities, the Company has granted the
lenders various security including the following: an interest in all of the
assets of the Company including the Company's share of its subsidiaries, an
assignment of material contracts and an assignment of the Company's "call
rights" with respect to shares of the subsidiaries held by minority
interests. The Company is also required to comply with certain operating and
financial ratios.
6
<PAGE>
FIRSTSERVICE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1999
(UNAUDITED)
5. COMPREHENSIVE INCOME
Total comprehensive income was $5,570 and $3,871 for the three months ended
September 30, 1999 and 1998, respectively, and $8,719 and $10,460 for the
six months ended September 30, 1999 and 1998, respectively. Total
comprehensive income includes net earnings and foreign currency exchange
adjustments.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Revenues increased $27.1 million, or 39%, to $96.5 million in the second
quarter of fiscal 2000 from $69.4 million in the second quarter of fiscal 1999.
Approximately $18.0 million of the increase was attributable to acquired
companies owned less than one year including California Closets, American Pool
Enterprises ("APE") and DDS Southwest Distribution Services ("DDS Southwest").
The balance of the increase resulted from internal growth.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased 37% to $17.0 million from $12.4 million in the prior year period.
EBITDA margins for the three months ended September 30, 1999, were 17.6%
compared to 17.9% in the second quarter of fiscal 1999. The slight margin
decline reflects the continuing change in the seasonal mix of business impacted
by strong growth in the non-seasonal operations which generate consistent EBITDA
margins across four quarters relative to the seasonal businesses which generate
very high margins in the June and September quarters and losses in the December
and March quarters. This continuing mix change was somewhat offset in the second
quarter by the acquisitions of APE and DDS Southwest which are both seasonal
businesses and generate higher EBITDA margins in the September quarter.
Depreciation for the quarter ended September 30, 1999 was $1.6 million up
22% from the prior year quarter due largely to acquisitions. The increase also
reflected a sharp step-up in capital investment in management information
systems over the past year. Generally, these investments are depreciated over a
short time frame relative to the Company's other pool of assets. Amortization
was $1.1 million, up 73% due to the significant increase in goodwill resulting
from acquisitions completed during the past year.
Interest expense increased 54% over prior year levels to $2.0 million as a
result of increased borrowings related to acquisitions. All acquisitions
completed during the past year have been financed through the Company's credit
facilities.
The income tax provision for the second quarter was approximately 40.0% of
earnings before taxes, consistent with the prior year.
Minority interest expense increased 65% to $1.2 million or 16.7% of earnings
before minority interest compared to $0.75 million or 13.6% in the prior year
quarter. The minority interest in the current year more accurately reflects the
average equity interest in the Company's subsidiaries held by management and
more closely reflects the expected expense ratio in the future. The prior year
consolidated minority interest expense was lower due to the deficit position of
an 80% owned, profitable subsidiary of the Company which resulted in a lower
minority interest expense being reflected for the subsidiary. The deficit
position was eliminated during the second quarter of fiscal 1999.
Net income was $6.2 million, up 29% over the prior year, while diluted
earnings per share increased 25% to $0.45. Diluted earnings per share reflect a
4% increase in the weighted average number of shares outstanding.
Revenues for the Property Services division were $75.6 million, an increase
of approximately $20.8 million or 38% over the prior year. Approximately
$14.0 million of the revenue increase resulted from acquisitions including
California Closets and APE, which closed effective June 1, 1999. The balance of
the increase resulted from internal growth. Property Services EBITDA grew 31% to
$13.0 million or 17.2% of revenue compared to an EBITDA margin of 18.1% in the
prior year. The margin decline reflects a change in the seasonal mix of business
as discussed above.
Revenues for the Business Services division rose to $20.9 million for the
second quarter, a 43% increase over the prior year, reflecting the impact of the
acquisition of DDS Southwest and solid internal growth. Business Services EBITDA
was $5.0 million or 24.0% of revenue, up from $3.1 million and 21.0% of revenue
in the prior year impacted primarily by the acquisition of DDS Southwest which
is a seasonal business that generates a higher EBITDA margin in the September
quarter.
Corporate expenses increased to $1.0 million in the second quarter from
$0.6 million as a result of higher salary costs and increased travel relative to
the prior year.
8
<PAGE>
RESULTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Revenues for the first six months of fiscal 2000 increased 35% to
$181.5 million from $134.2 million in the first six months of fiscal 1999.
Approximately $29.0 million of the increase was attributable to acquired
companies owned less than one year. The remaining increase resulted from
internal growth.
EBITDA increased 31% to $28.2 million from $21.6 million in the prior year
period. EBITDA margins for the six months ended September 30, 1999, were 15.5%
compared to $16.0% for the six months ended September 30, 1998. The margin
decline primarily reflects a change in the seasonal mix of business as discussed
in the three month comparison.
Depreciation for the six month period was $3.1 million up 23% from the prior
year period due largely to acquisitions. However, as discussed in the
three month comparison, the increase also reflected a step-up in capital
investment relative to the prior year. Amortization was $1.9 million, up 51% due
to the increase in goodwill that has resulted from acquisitions completed during
the past year.
Interest expense increased 45% over prior year levels to $3.7 million as a
result of increased borrowings related to acquisitions.
The income tax provision for the six months ended September 30, 1999 was
approximately 40.0% of earnings before taxes, consistent with the prior year
period.
Minority interest expense increased 74% to $2.0 million or 17.0% of earnings
before minority interest compared to $1.1 million or 12.5% in the prior year
period. The minority interest in the current year more accurately reflects the
average equity interest in the Company's subsidiaries held by management and
more closely reflects the expected expense ratio in the future. As discussed in
the three month comparison, the prior year consolidated minority interest
expense was lower due to the deficit position of an 80% owned, profitable
subsidiary of the Company which resulted in no minority interest expense being
reflected for the subsidiary. The deficit position was eliminated during the
second quarter of fiscal 1999.
Net income for the first six months of fiscal 2000 was $9.8 million, up 22%
over the first six months of fiscal 1999, while diluted earnings per share
increased 18% to $0.71. Diluted earnings per share reflect a 3.5% increase in
the weighted average number of shares outstanding.
Six month revenues for the Property Services division were $144.6 million,
an increase of approximately $38.9 million or 37% over the prior year.
Approximately $25.0 million of the revenue increase resulted from acquisitions
including California Closets and American Pool Enterprises, which closed
effective June 1, 1999. The balance of the increase resulted from internal
growth. Property Services EBITDA margin for the six months was 15.4% compared to
16% in the prior year. The margin decline reflects a change in the seasonal mix
of business as discussed in the three month comparison.
Six month revenues for the Business Services division were $36.7 million,
up 30% over the prior year, reflecting the impact of the acquisition of DDS
Southwest and solid internal growth. The Business Services EBITDA margin for the
first six months of fiscal 2000 was 22% of revenue, up from 20.7% in the prior
year impacted by the acquisition of DDS Southwest which is a seasonal business
that generates a higher EBITDA margin in the first two quarters, somewhat offset
by higher expenditures at our fulfillment operation during the period to expand
capacity.
Corporate expenses increased to $2.1 million in the first half of fiscal
2000 from $1.3 million as a result of higher salary costs and increased travel
relative to the prior year.
SEASONALITY AND QUARTERLY FLUCTUATIONS
Certain segments of the Company's operations, which in the aggregate
comprise approximately 15% of revenues, are subject to seasonal variations.
Specifically, the demand for residential lawn care services, exterior painting
services, and commercial pool maintenance in the northern United States and in
Canada is highest during late spring, summer and early fall and very low during
winter. As a result, these operations generate a large percentage of their
annual revenues between April and September. The Company has historically
9
<PAGE>
generated lower profits or net losses during its third and fourth fiscal
quarters, from October to March. The community association management, security,
business services and many of the franchise systems generate revenues
approximately evenly throughout the fiscal year.
The seasonality of the lawn care, painting and pool maintenance operations
results in variations in quarterly EBITDA margins. Variations in quarterly
EBITDA margins can also be caused by acquisitions which alter the consolidated
service mix. The Company's non-seasonal businesses typically generate a
consistent EBITDA margin over all four quarters, while the Company's seasonal
businesses experience high EBITDA margins in the first two quarters, offset by
negative EBITDA in the last two quarters. As non-seasonal revenues increase as a
percentage of total revenues, the Company's quarterly EBITDA margin fluctuations
should be reduced.
LIQUIDITY AND CAPITAL RESOURCES
Bank borrowings, proceeds from capital stock issues, and cashflow from
operations have historically been the funding sources for working capital
requirements, capital expenditures and acquisitions. Management believes that
funds from these sources will remain available and are adequate to support
ongoing operational requirements and near-team acquisition growth.
In December 1996, FirstService entered into a lending agreement with a
syndicate of chartered banks. The agreement -- amended and restated in
October 1997, again in June, 1998 and most recently on April 1, 1999,
- -- currently provides six-year committed revolving credit facilities for
acquisitions of Cdn $50 million and US $130 million. Outstanding indebtedness
under the facilities bears interest at a rate based on competitive floating
reference rates, as selected by the Company, such as LIBOR plus a margin of
1.00% to 1.50% per annum, depending on certain leverage ratios. The agreement
requires the Company to meet specific financial ratios and places certain
limitations on additional borrowing and the ability to pay dividends or sell
assets. As of September 30, 1999, the Company had drawn Cdn $4.0 million and US
$98.0 million.
FirstService is exposed to foreign currency exchange risk. The Company's
exposure to foreign exchange losses may be mitigated as the lending agreement
provides that it may borrow in Canadian or U.S. funds.
During the second quarter, capital expenditures were approximately
$2.2 million split approximately equally between management information systems
and vehicles and equipment.
FirstService does not anticipate paying dividends on its outstanding shares
in the foreseeable future. Management believes that it is in the best interest
of shareholders to retain all available funds to invest in its businesses with
the objective of building long-term shareholder value.
YEAR 2000
The Company is currently in the process of addressing the Year 2000 issue,
which is the result of computer programs being written using two digits rather
than four to define the applicable year. As a result, computer applications and
software may recognize an input of two zeros (00) as the year 1900. This
incorrect date recognition could cause systems and software malfunctions that
may have a material adverse effect on business operations. This potential
problem could affect not only the Company's internal information systems and
other infrastructure containing embedded technology, but also those of third
parties, such as customers and suppliers using systems that may interact with or
affect the Company's operations or, in the case of the Company's security
operation, systems supplied by the Company.
COMPANY'S READINESS. Beginning in late fiscal 1997 the Company undertook a
comprehensive review of its software applications and computer infrastructure
and other infrastructure containing embedded technology that are likely to be
affected by the Year 2000 issue. The review was completed in fiscal 1999 using
the Company's employees and various computer consultants.
As a result of this review, new systems or upgrades were implemented at
several of the operations during fiscal 1998, fiscal 1999 and the first half of
fiscal 2000. The Company's objective is to complete all its Y2K readiness
programs by the fall of calendar 1999.
The Company presently believes that it is largely Y2K compliant and that the
Year 2000 issue will not pose significant operational problems for its computer
systems.
10
<PAGE>
The Company has identified its significant customers and suppliers that it
believes, at this time, to be critical to its various operations. Steps are
underway to ascertain their respective stages of readiness through the use of
questionnaires, interviews, and other available means to determine the progress
that those customers and suppliers are making in remediating their own
Year 2000 issues. The Company is requiring that significant customers and
suppliers certify those products and services to be Year 2000 compliant.
However, there can be no assurance that the information systems provided by or
utilized by other companies which affect the Company's operations will be timely
revised in such a way as to allow them to continue normal business operations or
furnish products, services or data to the Company without disruption.
COST OF COMPLIANCE. Many of the systems upgrades which are dealing with Y2K
issue would have occurred in the normal course of business. In other cases, the
Company is accelerating normal course systems replacements or upgrades in view
of the Y2K issue. The costs incurred to date to replace non-compliant systems
that would not otherwise have been replaced are not material and the Company
does not expect its future Year 2000 costs to be material. All Year 2000 costs
have been funded with cash from operations.
COMPANY RISK AND CONTINGENCY PLANS. The Company's systems identified as
non-compliant or in need of replacement are being upgraded or replaced. The
Company expects this remediation to be substantially completed by the fall of
calendar 1999. The Company has not made contingency plans to deal with any
failure to its systems or the systems of its significant customers or suppliers
as a result of the Year 2000 issue. If needed conversions to the Company's
information systems are not made on a timely basis or the Company's significant
customers or suppliers fail to make such remediations and conversions on a
timely basis, it could have a material adverse effect on the Company's results
of operation or financial condition.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Shareholders was held on September 15, 1999.
The matters voted upon and the results of voting were as follows:
To ratify the appointment of PricewaterhouseCoopers LLP, Chartered
Accountants, as the auditors of the Corporation and the authorization of the
directors to fix their renumeration.
<TABLE>
<CAPTION>
<S> <C>
For..................... 18,232,611
Against................. 5,786
</TABLE>
To re-elect the current Board of Directors of the Corporation to serve until
the next meeting called for the purpose of electing directors or until their
respective successors are duly appointed.
<TABLE>
<S> <C>
For..................... 18,233,895
Against................. 4,502
</TABLE>
To approve an amendment to the Company's Stock Option Plan No. 2 to reserve
an additional 500,000 subordinate voting shares. The amendment increases the
maximum number of shares issuable from the option plan pool from 2.35 million to
2.85 million subordinate voting shares.
<TABLE>
<S> <C>
For..................... 2,060,756
Against................. 1,039,369
Ineligible.............. 14,799,251
Not voted............... 339,021
</TABLE>
12
<PAGE>
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
3.1* Articles of Incorporation and Amendment
3.2* By-Laws and Amendments
10.1* Credit Facility dated April 1, 1999 among the company and a
syndicate of bank lenders
b) Reports on Form 8-K
None
- ------------
* Incorporated by reference to the company's report on Form 10-Q for the period
ended June 30, 1999 (Commission File number 0-24762)
13
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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.
DATE: NOVEMBER 12, 1999
<TABLE>
<S> <C> <C>
FIRSTSERVICE CORPORATION
By: /s/ D. SCOTT PATTERSON
----------------------------------------------
D. Scott Patterson
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER
(Principal Financial Officer & Authorized
Signatory)
</TABLE>
14
