FirstService Reports Fourth Quarter and Annual Results

• Fourth quarter revenues up 12% and EBITDA up 21%
• Gains control of the Colliers International brand

TORONTO, Feb. 24, 2010 (GLOBE NEWSWIRE) -- FirstService Corporation (TSX:FSV) (Nasdaq:FSRV) (preferred shares - TSX: FSV.PR.U; convertible debentures – TSX: FSV.DB.U) today reported results for its fourth quarter and year ended December 31, 2009. All amounts are in U.S. dollars.

For the quarter ended December 31, 2009, revenues were $465.8 million, a 12% increase relative to the same period in the prior year, EBITDA (note 1) was $36.0 million, up 21% from $29.8 million and Adjusted EPS (note 2) was $0.27, versus $0.28 reported in the prior year period. GAAP EPS from continuing operations was a loss of $0.40 per share in the quarter, compared to a loss of $0.74 for the same quarter a year ago.

For the year ended December 31, 2009, revenues were $1.70 billion, an increase of 1% relative to the same period in the prior year, EBITDA (note 1) was $133.1 million, up 7% from $124.7 million in the prior year and Adjusted EPS (note 2) was $1.42, up from $1.37 reported in the prior year period. GAAP EPS from continuing operations was a loss of $1.85 for the year which included charges for goodwill impairment and the new non-controlling interests accounting standard totalling $2.03 per share, compared to a loss of $0.19 for the prior year.

"FirstService delivered solid results in 2009 on the strength of our resilient residential property management business, continued growth in our property services division and a better than expected finish from our commercial real estate operations," said Jay S. Hennick, Founder and Chief Executive Officer of FirstService Corporation. "We are optimistic about our prospects for 2010 and beyond, particularly as the global market for real estate services begins to recover," he added.

Recently, the members of Colliers International voted to align the governance structure of the Colliers International affiliation with the economic interests of the members, resulting in FirstService gaining control over the Colliers International brand. "Gaining control of privately-held Colliers International was the highlight of our year. With 228 Company-owned offices in 41 countries and affiliate partners in 20 more countries, Colliers International makes FirstService the third largest global player in commercial real estate and offers us a unique opportunity to expand our other services lines internationally", said Mr. Hennick.

About FirstService Corporation

FirstService Corporation is a global diversified leader in the rapidly growing property services sector, providing services in the following three areas: commercial real estate, residential property management; and property services. The industry-leading service platform includes Colliers International, the third largest global player in commercial real estate services; FirstService Residential Management, the largest manager of residential communities in North America; and TFC, North America's largest provider of property services through franchise and contractor networks.

FirstService generates more than US $1.7 billion in annualized revenues and over 18,000 employees worldwide. More information about FirstService is available at www.firstservice.com.

Segmented Quarterly Results

Commercial Real Estate Services revenues totalled $206.0 million for the quarter, up 13% relative to the prior year quarter; 7% on a local currency basis. Revenue growth was strong in the United States and the Asia Pacific region, compared to the weak fourth quarter experienced in 2008, while markets in Central and Eastern Europe continued to be affected by reduced transaction volumes due to the lingering economic downturn and tight credit markets in that region. Quarterly EBITDA, before a $5.7 million cost containment charge related to severance and lease termination, was $12.1 million, versus EBITDA of $9.0 million in the year-ago period, which was also before a cost containment charge of $4.5 million.

Residential Property Management revenues increased to $156.0 million for the quarter, up 8% versus the prior year period, primarily attributable to an increase in property management contract revenues. EBITDA for the quarter was $14.9 million, up 40% versus $10.6 million in the prior year period.

Property Services revenues totalled $103.8 million, an increase of 14% over the prior year period. The revenue increase was attributable primarily to the residential property preservation and foreclosure services operations, while revenues from the segment's consumer-oriented franchise operations, which had been reporting year-over-year declines through 2009, were flat for the quarter versus the prior year period. EBITDA in the fourth quarter was $11.1 million, an increase of 14% versus $9.7 million in the prior year.

Quarterly corporate costs were $2.8 million, relative to $0.8 million in the prior year period. The prior period's costs were impacted positively by a $1.1 million foreign currency translation gain and a $0.5 million insurance recovery.

Deferred Income Tax Valuation Allowance

During the quarter, the Company recorded a net reduction in its valuation allowance with respect to deferred income tax assets, which decreased fourth quarter income tax expense by $1.2 million and increased GAAP earnings per share by $0.04. For the year ended December 31, 2009, there were net additions to the valuation allowance which increased income tax expense by $17.3 million and decreased GAAP earnings per share by $0.54. The valuation allowance relates to tax loss carry-forwards in the Company's North American Commercial Real Estate operations, which remain available to offset taxes over the next 20 years.

Conference Call

FirstService will be holding a conference call on Wednesday, February 24, 2010 at 11:00 a.m. Eastern Time to discuss results for the fourth quarter. The call will be simultaneously web cast and can be accessed live or after the call at www.firstservice.com in the "Investors / Newsroom" section.

Notes

1. Reconciliation of net earnings (loss) from continuing operations to EBITDA:

EBITDA is defined as net earnings from continuing operations before income taxes, interest, depreciation and amortization, stock-based compensation expense and other non-cash or non-recurring expenses. The Company uses EBITDA to evaluate its own operating performance and as an integral part of its planning and reporting systems. Additionally, the Company uses EBITDA in conjunction with discounted cash flow models to evaluate acquisition targets. The Company believes EBITDA is a reasonable measure of determining operating performance because of the low capital intensity of its service operations. EBITDA is a financial metric used by many investors to compare companies, especially in the services industry. EBITDA is not a recognized measure of financial performance under United States generally accepted accounting principles (GAAP), and should not be considered as a substitute for operating earnings, net earnings or cash flows from operating activities, as determined in accordance with GAAP. The Company's method of calculating EBITDA may differ from other issuers and accordingly, EBITDA may not be comparable to measures used by other issuers.

2. Reconciliation of net loss and net loss per common share from continuing operations to adjusted net earnings and adjusted net earnings per share:

The Company is presenting adjusted earnings measures to eliminate the impact of: (i) the non-controlling interest ("NCI") redemption increment in connection with new NCI accounting standards and related guidance adopted in 2009; (ii) amortization expense related to intangible assets recognized in connection with acquisitions; (iii) a non-recurring goodwill impairment charge; (iv) stock-based compensation expense; (v) cost containment expenses; (vi) any realized gains on sale or unrealized losses on impairment of available-for-sale securities and (vii) a deferred income tax valuation allowance related to tax loss carry-forwards.  All of the adjustments are considered "non-GAAP financial measures" under applicable securities regulatory authority policies and guidelines.

Forward-looking Statements

This press release includes or may include forward-looking statements. Forward-looking statements include the Company's financial performance outlook and statements regarding goals, beliefs, strategies, objectives, plans or current expectations. These statements involve known and unknown risks, uncertainties and other factors which may cause the actual results to be materially different from any future results, performance or achievements contemplated in the forward-looking statements. Such factors include: (i) general economic and business conditions, which will, among other things, impact demand for the Company's services and the cost of providing services; (ii) 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; (iii) changes in or the failure to comply with government regulations; and (iv) other factors which are described in the Company's filings with applicable Canadian and United States securities regulatory authorities (which factors are adopted herein).

Summary financial information is provided in this press release. This press release should be read in conjunction with the Company's full annual financial statements and MD&A to be made available on SEDAR at www.sedar.com.

Notes to Condensed Consolidated Statements of Earnings

(1) Income tax expense for the three months ended December 31, 2009 includes a $1,232 valuation allowance reversal related to deferred income tax assets (2008 – charge of $15,627); income tax expense for the year ended December 31, 2009 includes a $17,289 non-cash valuation allowance charge related to deferred income tax assets (2008 - $15,627).

(2) Reflects (i) the Integrated Security segment; (ii) the Canadian commercial mortgage securitization operation; and (iii) the Chicago-based U.S. mortgage brokerage and servicing operation.   Amounts shown are before NCI share. For the three months ended December 31, 2009, NCI share was $180 (2008 - $943) and for the year ended December 31, 2009 NCI share was $(95) (2008 - $2,751).

(3) Based on the implementation rules within the new NCI accounting standards and related guidance adopted January 1, 2009, comparative earnings per share for both the three-month and annual periods ended December 31, 2008 were not restated for the changes in accounting for NCI.

(4) Numerators for diluted earnings per share calculations have been adjusted to reflect dilution from stock options at a subsidiary. The adjustment for the three months ended December 31, 2009 was nil (2008 - nil) and year ended December 31, 2009 was nil (2008 - $530).

(5) See definition and reconciliation above.

(1) Includes goodwill impairment charge in the amount of $29,583 recorded in the Commercial Real Estate Services segment during the quarter ended March 31, 2009.