6-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of: August 2004
Commission file number 0-24762

FIRSTSERVICE CORPORATION
(Name of Registrant)

1140 Bay Street, Suite 4000
Toronto, Ontario, Canada
M5S 2B4
(Address of Principal Executive Offices)

Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F o Form 40-F ý

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Indicate by check mark if the Registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes o No ý

If "Yes" is marked, indicate the file number assigned to the Registrant in connection with Rule 12g3-2(b): N/A

SIGNATURE

        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, hereunto duly authorized.

	FIRSTSERVICE CORPORATION
August 11, 2004	/s/  JOHN B. FRIEDRICHSEN Name: John B. Friedrichsen Title: Senior Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit	Description of Exhibit
99.1	Interim financial statements for the first quarter ended June 30, 2004

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EXHIBIT INDEX

EX-99.1

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Exhibit 99.1

FIRSTSERVICE CORPORATION

INTERIM FINANCIAL STATEMENTS

First Quarter
June 30, 2004

FIRSTSERVICE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)
(in thousands of US Dollars, except per share amounts)
in accordance with US generally accepted accounting principles

			Three month periods ended June 30
			2004		2003
Revenues			$	170,970	$	148,482
Cost of revenues				118,517		102,275
Selling, general and administrative expenses				34,178		30,581
Depreciation				3,289		3,123
Amortization				622		586
Operating earnings				14,364		11,917
Interest				2,236		2,055
Earnings before income taxes and minority interest				12,128		9,862
Income taxes				3,513		3,325
Earnings before minority interest				8,615		6,537
Minority interest share of earnings				1,383		1,134
Net earnings from continuing operations				7,232		5,403
Net earnings from discontinued operation, net of income taxes (note 3)				—		1,009
Gain on sale of discontinued operation, net of income taxes (note 3)				2,161		—
Net earnings			$	9,393	$	6,412
Net earnings per share (note 7):
	Basic
		Continuing operations	$	0.49	$	0.38
		Discontinued operation		—		0.07
		Gain on sale of discontinued operation		0.15		—
			$	0.64	$	0.45
	Diluted
		Continuing operations	$	0.48	$	0.38
		Discontinued operation		—		0.07
		Gain on sale of discontinued operation		0.14		—
			$	0.62	$	0.45

The accompanying notes are an integral part of these financial statements.

FIRSTSERVICE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)
(in thousands of US Dollars)
in accordance with US generally accepted accounting principles

	June 30, 2004			March 31, 2004
Assets
Current assets
Cash and cash equivalents	$	17,985		$	15,620
Accounts receivable, net of an allowance of $4,051(March 31, 2004 — $3,976)		105,968			97,367
Inventories		17,270			15,229
Prepaids and other assets		10,952			15,659
Deferred income taxes		3,329			3,358
		155,504			147,233
Other receivables		7,163			5,397
Interest rate swaps		—			6,805
Fixed assets		49,001			49,826
Other assets		2,765			2,829
Deferred income taxes		2,152			2,167
Intangible assets		37,987			37,717
Goodwill		187,226			185,579
		286,294			290,320
	$	441,798		$	437,553
Liabilities and shareholders' equity
Current liabilities
Accounts payable	$	30,115		$	20,526
Accrued liabilities		45,566			49,353
Income taxes payable		1,926			1,985
Unearned revenues		4,439			9,736
Long-term debt — current		17,950			3,502
Deferred income taxes		682			1,266
		100,678			86,368
Long-term debt — non-current		137,849			160,386
Interest rate swaps		993			—
Deferred income taxes		19,524			19,594
Minority interest		17,249			16,104
		175,615			196,084
Shareholders' equity
Capital stock		69,219			68,557
Contributed surplus		250			183
Receivables pursuant to share purchase plan		(2,148	)		(2,148	)
Retained earnings		91,365			81,972
Cumulative other comprehensive earnings		6,819			6,537
		165,505			155,101
	$	441,798		$	437,553

The accompanying notes are an integral part of these financial statements.

FIRSTSERVICE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)
(in thousands of US Dollars, except share information)
in accordance with US generally accepted accounting principles

		Issued and outstanding shares	Capital stock		Contributed surplus		Receivables pursuant to share purchase plan			Retained earnings		Cumulative other comprehensive earnings		Total shareholders' equity
Balance, March 31, 2003		14,164,190	$	60,571	$	—	$	(2,434	)	$	62,948	$	2,321	$	123,406
Comprehensive earnings:
	Net earnings	—		—		—		—			6,412		—		6,412
	Foreign currency translation adjustments	—		—		—		—			—		3,884		3,884
Comprehensive earnings															10,296
Subordinate Voting Shares:
	Stock options exercised	5,500		94		—		—			—		—		94
Balance, June 30, 2003		14,169,690	$	60,665	$	—	$	(2,434	)	$	69,360	$	6,205	$	133,796
Balance, March 31, 2004		14,749,865	$	68,557	$	183	$	(2,148	)	$	81,972	$	6,537	$	155,101
Comprehensive earnings:
	Net earnings	—		—		—		—			9,393		—		9,393
	Foreign currency translation adjustments	—		—		—		—			—		282		282
Comprehensive earnings															9,675
Subordinate Voting Shares:
	Stock option expense	—		—		67		—			—		—		67
	Stock options exercised	45,625		662		—		—			—		—		662
Balance, June 30, 2004		14,795,490	$	69,219	$	250	$	(2,148	)	$	91,365	$	6,819	$	165,505

The accompanying notes are an integral part of these financial statements.

FIRSTSERVICE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
(in thousands of US Dollars)
in accordance with US generally accepted accounting principles

		Three month periods ended June 30
		2004			2003
Cash provided by (used in)
Operating activities
Net earnings		$	9,393		$	6,412
Less: net earnings from discontinued operation			—			(1,009	)
Less: gain on sale of discontinued operation			(2,161	)		—
Items not affecting cash:
	Depreciation and amortization		3,911			3,709
	Deferred income taxes		(612	)		471
	Minority interest share of earnings		1,383			1,134
	Other		83			155
Changes in non-cash working capital:
	Accounts receivable		(7,971	)		(4,740	)
	Inventories		(2,677	)		1,985
	Prepaids and other assets		1,969			851
	Accounts payable and other accrued liabilities		3,888			2,172
	Unearned revenues		397			613
Net cash provided by operating activities			7,603			11,753
Investing activities
Acquisition of businesses, net of cash acquired			(6,028	)		—
Purchases of minority shareholders' interests			(813	)		—
Purchases of fixed assets			(4,146	)		(3,789	)
Purchases of intangibles and other assets			(25	)		(135	)
Decrease (increase) in other receivables			171			(1,510	)
Net cash used in investing activities			(10,841	)		(5,434	)
Financing activities
Repayments of long-term debt			(446	)		(1,809	)
Issuance of Subordinate Voting Shares			662			94
Dividends paid to minority shareholders of subsidiaries			(103	)		(37	)
Net cash provided by (used in) financing activities			113			(1,752	)
Net cash provided by discontinued operation			4,679			196
Effect of exchange rate changes on cash and cash equivalents			811			2,107
Increase in cash and cash equivalents during the period			2,365			6,870
Cash and cash equivalents, beginning of period			15,620			5,378
Cash and cash equivalents, end of period		$	17,985		$	12,248

The accompanying notes are an integral part of these financial statements.

FIRSTSERVICE CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2004
(Unaudited)
(in thousands of US Dollars, except per share amounts)

1.

DESCRIPTION OF THE BUSINESS — FirstService Corporation (the "Company") is a provider of property and business services to commercial, residential and institutional customers in the United States and Canada. The Company's operations are conducted through four segments: Residential Property Management, Integrated Security Services, Consumer Services and Business Services.

2.

SUMMARY OF PRESENTATION — These condensed consolidated financial statements have been prepared by the Company in accordance with the disclosure requirements for the presentation of interim financial information pursuant to applicable Canadian securities law. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US and Canadian generally accepted accounting principles have been condensed or omitted in accordance with such disclosure requirements, although the Company believes that the disclosures are adequate to make the information not misleading. These interim financial statements follow the same accounting policies as the most recent annual financial statements. These interim financial statements should be read in conjunction with the consolidated financial statements for the year ended March 31, 2004.

In the opinion of management, the condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as at June 30, 2004 and the results of operations and its cash flows for the three months ended June 30, 2004. All such adjustments are of a normal recurring nature. The results of operations for the three months ended June 30, 2004 are not necessarily indicative of the results to be expected for the year ending March 31, 2005.

3.

DISPOSITION — On April 1, 2004, the Company sold substantially all of the assets of the company-owned lawn care operations carried on by its subsidiary Greenspace Services Ltd. to a third party. The sale proceeds were approximately $14,641, which was comprised of cash in the amount of $5,009, assumption of liabilities in the amount of approximately $5,895, and a note receivable with a face amount of $3,737. The note has been discounted at 7.5% with the principal amount repayable in five guaranteed annual instalments commencing April 1, 2005. A gain of $2,161, net of income taxes of $1,525, was recorded. The sale proceeds and the gain may be adjusted as certain contingencies are resolved. All contingencies are expected to be settled by December 2004. Prior year operating results of the lawn care operations which were previously included in the Consumer Services segment, have been reported as discontinued operations. The operating results for the three months ended June 30 and balance sheets of the discontinued operations are as follows:

Operating results		2004		2003		2002
Revenues		$	—	$	9,315	$	8,727
Earnings from discontinued operations before income taxes			—		1,009		1,201
Provision for income taxes			—		—		—
Net earnings from discontinued operations			—		1,009		1,201
Net earnings per share from discontinued Operations
	Basic	$	—	$	0.07	$	0.09
	Diluted		—		0.07		0.08

Balance sheets	June 30, 2004		March 31, 2004
Current assets	$	5,266	$	6,083
Fixed assets		—		3,090
Intangible assets		—		604
Goodwill		—		2,115
Total assets	$	5,266	$	11,892
Current liabilities	$	2,717	$	6,689
Long-term liabilities		—		790
Total liabilities	$	2,717	$	7,479

4.

ACQUISITIONS OF BUSINESSES AND PURCHASES OF MINORITY INTERESTS — During the three months ended June 30, 2004, the Company completed business acquisitions in the Residential Property Management segment for total consideration of $6,028. The purchase price allocations have not yet been finalized. There were no business acquisitions during the three months ended June 30, 2003.

Certain vendors, at the time of acquisition, are entitled to receive contingent consideration if the acquired businesses achieve specified earnings levels during the two — to four-year periods following the dates of acquisition. Such contingent consideration is issued at the expiration of the contingency period. As at June 30, 2004, there was contingent consideration outstanding of up to $19,300 ($16,200 as at March 31, 2004). The contingencies will expire during the period extending to August 2007. Vendors are entitled to receive interest on contingent consideration issued to them, which interest is calculated from the acquisition date to the payment date at interest rates ranging from 5% to 7%. The contingent consideration will be recorded when the contingencies are resolved and the consideration is issued or becomes issuable, at which time the Company will record the fair value of the consideration issued or issuable, including interest, as additional costs of the acquired businesses. There was no contingent consideration issued or issuable during the three-month periods ended June 30, 2004 or 2003.

During the three months ended June 30, 2004, the Company purchased minority interests from three minority shareholders for total consideration of $813. The purchase prices were allocated as follows: intangible assets $371; minority interest $228 and goodwill $214. There were no such purchases during the three months ended June 30, 2003.

5.

LONG-TERM DEBT — The Company has an amended and restated credit agreement with a syndicate of banks that provides a $90,000 committed senior revolving credit facility (the "Credit Facility") renewable and extendible in 364-day increments, and if not renewed, a two-year final maturity. The Credit Facility was most recently renewed and extended on May 11, 2004. The Credit Facility bears interest at 1.375% to 2.75% over floating reference rates, depending on certain leverage ratios. At June 30, 2004, the Company had not drawn on the Credit Facility and had letters of credit of $5,952 outstanding.

The Company has outstanding $100,000 of 8.06% fixed-rate Senior Secured Notes (the "8.06% Notes"). The final maturity of the 8.06% Notes is June 29, 2011, with equal annual principal repayments commencing on June 29, 2005. The Company also has outstanding $50,000 of 6.40% fixed-rate Senior Secured Notes (the "6.40% Notes"). The 6.40% Notes have a final maturity of September 30, 2015 with equal annual principal repayments commencing on September 30, 2012.

The Credit Facility and the Notes rank equally in terms of seniority. The Company has granted the lenders and Note-holders 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 covenants and other limitations within the amended and restated credit agreement and the Note agreements are substantially the same. The covenants require the Company to maintain certain ratios including leverage, fixed charge coverage, interest coverage and net worth. The Company is limited from undertaking certain mergers, acquisitions and dispositions without prior approval.

6.

FINANCIAL INSTRUMENTS — The Company has interest rate swap agreements to exchange the fixed rates on the Notes for variable rates. On the 8.06% Notes, one interest rate swap exchanges the fixed rate on $75,000 of principal for LIBOR + 250.5 basis points and a second exchanges the fixed rate on $25,000 for LIBOR + 445 basis points. The terms of the swaps match the term of the 8.06% Notes with a maturity of June 29, 2011. On the 6.40% Notes, two interest rate swap agreements exchange the fixed rate for a variable rate of LIBOR + 170 basis points. The terms of the swaps match the term of the 6.40% Notes with a maturity of September 30, 2015.

The interest rate swaps are being accounted for as fair value hedges in accordance with Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities. The swaps are carried at fair value on the balance sheet, with gains or losses recognized in earnings. The carrying value of the hedged debt is adjusted for changes in fair value attributable to the hedged interest rate risk; the associated gain or loss is recognized currently in earnings. So long as the hedge is considered highly effective, the net impact on earnings is nil. The fair value of the swaps is determined based on the present value of the estimated future net cash flows using implied rates in the applicable yield curve as of the valuation date. Due to changes in the yield curve, the fair values of the swaps fluctuate and at June 30, 2004, the fair values were a loss of $993 (March 31, 2004 — gain of $6,805).

The Company from time to time purchases and sells foreign currencies by using forward contracts, which have not been specifically identified as hedges. The values of these contracts are marked to market with resulting gains and losses included in earnings. At June 30, 2004 the Company had outstanding three foreign currency contracts to purchase a total of $Cdn8,132 at a rate of $Cdn1.3553 per $US1.0000 on various dates during the period from September 2004 to March 2005, the fair value of which represented a gain of $Cdn120 ($US88). The purpose of the contracts is to match expected future Canadian dollar denominated expenses at the Canadian Business Services operations to US dollar denominated revenues.

7.

NET EARNINGS PER SHARE — The following table presents a reconciliation of the denominators used in computing earnings per share:

	Three month periods ended June 30
(in thousands)
	2004	2003
Basic earnings per share — weighted average shares outstanding	14,780	14,164
Assumed exercise of stock options, net of shares assumed acquired under the Treasury Stock Method	320	106
Diluted earnings per share — weighted average shares outstanding	15,100	14,270

8.

STOCK-BASED COMPENSATION — The Company has a stock option plan for officers and key full-time employees of the Company and its subsidiaries. Options are granted at the market price for the underlying shares on the date of grant. Each option vests over a four-year period and expires five years from the date granted and allows for the purchase of one Subordinate Voting Share.

Effective April 1, 2003, the Company is accounting for stock options as compensation expense in accordance with SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS 123"). SFAS No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment of SFAS 123 ("SFAS 148") provides alternative methods of transitioning to the fair value based method of accounting for employee stock options as compensation expense. The Company is using the prospective method under SFAS 148 and is expensing the fair value of new option grants awarded subsequent to March 31, 2003. The financial statements for the three months ended June 30, 2004 include $67 of stock option expense (2003 — nil).

Prior to April 1, 2003, the Company had accounted for stock options under the intrinsic value method under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, as permitted by GAAP. Had compensation expense been determined under the fair value method under SFAS 123 for all periods, pro forma reported net earnings and earnings per share would reflect the following:

		Three month periods ended June 30
		2004			2003
Net earnings, as reported		$	9,393		$	6,412
Less: Total stock-based compensation expense determined under fair value method, net of tax			(457	)		(544	)
Pro forma net earnings		$	8,936		$	5,868
Reported earnings per share:
	Basic	$	0.64		$	0.45
	Diluted		0.62			0.45
Pro forma net earnings per share:
	Basic	$	0.60		$	0.41
	Diluted		0.59			0.41

9.

CONTINGENCIES — The Company is involved in legal proceedings and claims primarily arising in the normal course of its business. In the opinion of management, the Company's liability, if any, would not materially affect its results of operations or financial condition.

10.

GUARANTEE — In connection with a contract, the Company has assumed risks associated with work to be performed by a third party. In the unlikely event of non-performance by the third party, the maximum exposure to the Company would be $7,497.

11.

SEGMENTED INFORMATION — The Company has four reportable operating segments. The segments are grouped with reference to the nature of services provided and the types of clients that use those services. The Company assesses each segment's performance based on operating earnings or operating earnings before depreciation and amortization. Residential Property Management provides property management, maintenance, landscaping, painting and restoration and other services to residential community associations in the United States. Integrated Security Services provides security systems installation, maintenance, monitoring and manpower to primarily commercial customers in Canada and the United States. Consumer Services provides franchised and Company-owned property services to consumers in the United States and Canada. Business Services provides marketing support and business process outsourcing services to corporate and institutional clients in Canada and the United States. Corporate includes the costs of operating the Company's headquarters.

OPERATING SEGMENTS

	Residential Property Management		Integrated Security Services		Consumer Services		Business Services		Corporate			Consolidated
Three-month period ended June 30, 2004
Revenues	$	71,143	$	34,125	$	30,261	$	35,420	$	21		$	170,970
Operating earnings		5,518		2,014		6,849		1,988		(2,005	)		14,364
Interest, net													(2,236	)
Income taxes													(3,513	)
Minority interest													(1,383	)
Net earnings from continuing operations													7,232
Net earnings from discontinued operations													2,161
Net earnings												$	9,393
Three-month period ended June 30, 2003
Revenues	$	62,121	$	30,192	$	22,959	$	33,120	$	90		$	148,482
Operating earnings		5,502		1,606		4,108		2,177		(1,476	)		11,917
Interest, net													(2,055	)
Income taxes													(3,325	)
Minority interest													(1,134	)
Net earnings from continuing operations													5,403
Net earnings from discontinued operations													1,009
Net earnings												$	6,412

GEOGRAPHIC INFORMATION

	Canada		United States		Consolidated
Three-month period ended June 30, 2004
Revenues	$	46,029	$	124,941	$	170,970
Total long-lived assets		49,715		224,499		274,214
Three-month period ended June 30, 2003
Revenues	$	39,081	$	109,401	$	148,482
Total long-lived assets		58,782		196,264		255,046

12.

RECONCILIATION TO CANADIAN GAAP — The following adjustments are required to reconcile these consolidated financial statements to generally accepted accounting principles ("GAAP") in Canada:

a.

Deficit elimination.    On September 15, 1997, the shareholders of the Company approved a reduction of the stated capital attributable to the Company's capital stock by $5,683, thereby eliminating the Company's deficit as at March 31, 1997. While permitted under Canadian GAAP, this elimination is not permitted under United States GAAP.

b.

Currency translation adjustments.    Under United States GAAP, currency translation and certain other transactions must be reported in an equity account called "other comprehensive earnings". Under Canadian GAAP, such an account does not exist, and currency translations are reported in an equity account called "currency translation adjustments". The Company's foreign currency translation adjustments account is similar to the other comprehensive earnings account in all material respects.

c.

Accounting for interest rate swaps.    Under Canadian GAAP, hedge accounting does not require interest rate swaps to be recorded on the balance sheet. However, the earnings impact of interest rate swaps is identical under Canadian and United States GAAP.

There are no reconciling items between United States and Canadian GAAP that impact the consolidated statements of earnings. Below is a continuity schedule of retained earnings under Canadian GAAP:

	2004		2003
Balance, March 31	$	87,655	$	68,631
Net earnings		9,393		6,412
Balance, June 30	$	97,048	$	75,043

The tables below provide a reconciliation of the Company's affected consolidated balance sheet accounts from United States GAAP to Canadian GAAP.

As at March 31, 2004		United States GAAP		Reconciling adjustments			Canadian GAAP
Assets
	Interest rate swaps	$	6,805	$	(6,805	)	$	—
	Subtotal non-current assets		290,320		(6,805	)		283,515
Total assets		$	437,553	$	(6,805	)	$	430,748
Liabilities
	Long-term debt less current portion	$	160,386	$	(6,805	)	$	153,581
	Subtotal non-current liabilities		196,084		(6,805	)		189,279
Shareholders' equity
	Capital stock		68,557		(5,683	)		62,874
	Retained earnings		81,972		5,683			87,655
	Subtotal shareholders' equity		155,101		—			155,101
Total liabilities and shareholders' equity		$	437,553	$	(6,805	)	$	430,748

As at June 30, 2004		United States GAAP		Reconciling adjustments			Canadian GAAP
Liabilities
	Long-term debt less current portion	$	137,849	$	993		$	138,842
	Interest rate swaps		993		(993	)		—
	Subtotal non-current liabilities		175,615		—			175,615
Shareholders' equity
	Capital stock		69,219		(5,683	)		63,536
	Retained earnings		91,365		5,683			97,048
	Subtotal shareholders' equity		165,505		—			165,505
Total liabilities and shareholders' equity		$	441,798	$	—		$	441,798

There are no reconciling items between United States and Canadian GAAP that impact the consolidated statements of cash flows.

FIRSTSERVICE CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(in US Dollars)
August 6, 2004

Consolidated review

Operating results for the three months ended June 30, 2004, the first quarter of fiscal 2005, relative to the same period a year ago were improved, with higher revenues, operating earnings and net earnings generated through a combination of internal and acquired growth. All four of our operating segments reported gains in revenues, and two reported gains in operating earnings.

Included in this quarter's results is a gain on sale of the assets of the Greenspace Services Ltd. lawn care operations. These assets were sold at the beginning of the quarter and resulted in a gain on disposal of $2.1 million or $0.14 per diluted share. The Greenspace operations have been classified as discontinued operations for comparative purposes.

During the first quarter, we completed two business acquisitions, both in the Residential Property Management segment. The first is a property services company in Southwest Florida, and the second is Wolin-Levin, Inc., a Chicago residential property manager of 300 properties and 17,000 residential units.

On July 28, 2004, we updated our outlook for fiscal 2005, increasing the forecasts for revenues, EBITDA¹ and diluted earnings per share. The increases were a reflection of: (i) the operating results achieved in the first quarter; (ii) an acquisition completed after the previous outlook was issued and (iii) changes in our expectations for foreign exchange rates and interest rates. The updated outlook is for revenues of $660.0-680.0 million, EBITDA of $62.0-64.0 million and diluted earnings per share from continuing operations of $1.45 to $1.55. The previous outlook was for revenues of $650.0-675.0 million, EBITDA of $60.5-63.0 million and diluted earnings per share from continuing operations of $1.43 to $1.53.

(1)

EBITDA is defined as net earnings before extraordinary items, discontinued operations, minority interest share of earnings, income taxes, interest, depreciation and amortization. The Company uses EBITDA to evaluate operating performance and as a measure for debt covenants with its lenders. EBITDA is an integral part of the Company's planning and reporting systems. Additionally, the Company uses multiples of current and projected EBITDA in conjunction with discounted cash flow models to determine its overall enterprise valuation and to evaluate acquisition targets. The Company believes EBITDA is a reasonable measure of operating performance because of the low capital intensity of its service operations. The Company believes EBITDA is a financial metric used by many investors to compare companies, especially in the services industry, on the basis of operating results and the ability to incur and service debt. EBITDA is not a recognized measure of financial performance under United States or Canadian 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. A reconciliation of EBITDA to operating earnings appears below.

Three months ended June 30	2004		2003
EBITDA	$	18,275	$	15,626
Less: depreciation and amortization		3,911		3,709
Equals: operating earnings	$	14,364	$	11,917

Results of operations — three months ended June 30, 2004 and 2003

Revenues for our first quarter of fiscal 2005 were $171.0 million, 15% higher than the prior year quarter. Internal growth was 7%, while acquisitions and changes in foreign exchange rates contributed 7% and 1%, respectively.

During the quarter, 27% of our revenues were originally denominated in Canadian currency, and the balance in US dollars. Based on average foreign exchange rates, the Canadian dollar was 2.9% stronger relative to the US dollar during the quarter than in the comparable quarter last year. The Company's Canadian dollar denominated revenues and earnings benefit from a stronger Canadian dollar upon conversion to US dollars. This is offset by exchange losses incurred by certain of our Business Services operations based in Canada that sell services to US clients in US dollars. If exchange rates had stayed constant year-over-year, the current year's first quarter revenues would have been $1.3 million lower and and operating earnings would have been approximately $0.3 million higher.

First quarter EBITDA was $18.3 million, 17% higher than the $15.6 million reported in the prior year quarter. Our EBITDA margin was 10.7% of revenues, up 20 basis points. Operating earnings for the quarter were $14.4 million, up from $11.9 million in the prior year driven by higher revenues.

Interest expense was $2.2 million versus $2.1 million recorded in the prior year quarter. The average interest rate during the quarter was 5.8%, approximately 60 basis points higher than last year's quarter. The increase in rates is attributable to a change in the market yield curve at the beginning of the quarter that rendered our interest rate swaps less profitable. Substantially all of our indebtedness was at variable interest rates during the quarter.

The consolidated income tax rate declined to approximately 29.0% of earnings before income taxes and minority interest from 33.7% in the prior year's quarter. The reduction in tax rate is primarily the result of efficiencies generated from the cross-border tax structure we implemented in fiscal 2000.

Net earnings from continuing operations for the quarter were $7.2 million, compared to $5.4 million in the prior year quarter, the result of higher operating earnings from our Consumer Services and Integrated Security Services operations combined with lower income taxes, offset by lower operating earnings from Business Services, higher Corporate costs and higher interest costs.

We realized a $2.1 million gain on the sale of Greenspace, which was reported as a gain on sale of a discontinued operation. In the fiscal 2004 comparative column, Greenpace's prior period net earnings of $1.0 million are reported. Due to seasonality in the lawn care business, Greenspace's first quarter net earnings were not indicative of annual earnings; net earnings for the year ended March 31, 2004 were $0.2 million.

Net earnings per share and diluted net earnings per share were impacted by higher net earnings and the number of shares outstanding. Stock option exercises during the past twelve months caused the weighted average number of shares outstanding to increase 4.3% to 14.8 million. Diluted shares outstanding increased 5.8% to 15.1 million as a result of higher dilution under the Treasury Stock Method from currently outstanding stock options, as well as the impact of stock options exercised during the past twelve months.

Our Residential Property Management segment reported revenues of $71.1 million for the quarter, up 15% versus the prior year quarter. Internal growth in core contractual management revenues was 8%, and an additional 7% of growth came from acquisitions completed during the last twelve months. Residential Property Management EBITDA was $6.6 million, the same as in the prior year quarter. The margin declined for several reasons, including: (i) seasonal timing factors that are expected to reverse in the second quarter and (ii) a higher proportion of core management revenues versus other property services revenues. Core management, which comprises traditional administrative, bookkeeping and general management activities, generates lower margins than other property services such as grounds maintenance, swimming pool management, plumbing, and painting. Seasonal timing affected our outdoor swimming pool management operation because there were five less days of services provided in the current period as the traditional start of the season, Memorial Day, fell five days later than in the prior year.

The revenues of our Integrated Security Services segment rose 13% to $34.1 million. Internal growth was 5% (3% net of foreign exchange on our Canadian operations), while acquisitions accounted for 8% of growth. Integrated Security Services EBITDA was $2.6 million, an increase of 24% over the $2.1 million reported one year ago, and margins improved 60 basis points to 7.5%. The margin improvement was the result of higher gross profit margins on systems installations, and a shift in revenue mix from lower margin security officers to more profitable systems.

Consumer Services revenues were $30.3 million, an increase of 32% over the prior year period. Internal growth represented 13% of the revenue gain (12% net of foreign exchange on Canadian operations), while acquisitions accounted for 19%. Internal growth was especially strong at the California Closet Company franchise system and company-owned California Closet Company "branchise" stores. EBITDA in Consumer Services was $7.5 million compared to $4.6 million reported in the prior year period. Approximately half of the EBITDA increase was from the four acquisitions completed in October 2003.

First quarter revenues in Business Services were $35.4 million, an increase of 7% over the fiscal 2004 period. Internal growth accounted for 5% of the revenue increase, while foreign exchange represented the balance. Revenues were up due to new fulfillment client wins and higher volumes from existing business process outsourcing clients, but were offset by lower textbook fulfillment volumes at our Southwest operations headquartered in Dallas. Business Services EBITDA was $3.5 million, versus $3.8 million reported one year ago. A $0.6 million decline in EBITDA was attributable to lower textbook volumes, an activity that is extremely seasonal and carries high margins during the June to August textbook season to offset fixed costs in the off-season. We expect that textbook volumes will return to historic levels next season, in line with our expectations of higher textbook funding from state governments.

Corporate expenses for the quarter totaled $2.0 million. The $0.5 million increase relative to the prior year period was due to Sarbanes-Oxley 404 implementation costs, additional variable compensation expense and stock option expense.

Summary of quarterly results (unaudited)

(in thousands of US dollars except per share amounts)		Q1		Q2		Q3			Q4
FISCAL 2005
Revenues		$	170,970
Operating earnings			14,364
Net earnings from continuing operations			7,232
Net earnings from discontinued operation			—
Gain on sale of discontinued operation			2,161
Net earnings			9,393
Net earnings per share:
	Basic		0.64
	Diluted		0.62
FISCAL 2004
Revenues		$	148,482	$	157,393	$	148,704		$	155,215
Operating earnings			11,917		15,443		6,009			5,702
Net earnings from continuing operations			5,403		7,315		2,650			3,496
Net earnings from discontinued operation			1,009		1,654		(640	)		(1,863	)
Net earnings			6,412		8,969		2,010			1,633
Net earnings per share:
	Basic		0.45		0.63		0.14			0.11
	Diluted		0.45		0.62		0.14			0.11
FISCAL 2003
Revenues				$	137,794	$	123,931		$	124,093
Operating earnings					16,067		5,002			2,905
Net earnings from continuing operations					7,365		1,760			2,821
Net earnings from discontinued operation					1,430		(425	)		(1,819	)
Net earnings					8,795		1,335			1,002
Net earnings per share:
	Basic				0.63		0.10			0.07
	Diluted				0.60		0.09			0.07
OTHER DATA
EBITDA — Fiscal 2005		$	18,275
EBITDA — Fiscal 2004			15,626	$	19,072	$	9,873		$	9,723
EBITDA — Fiscal 2003					19,297		8,284			6,510

Seasonality and quarterly fluctuations

Certain segments of the Company's operations, which in the aggregate comprise approximately 10% of revenues, are subject to seasonal variations. Specifically, the demand for exterior painting and lawn care (Consumer Services segment) and swimming pool management in the northern United States and Canada (Residential Property Management segment) is highest during late spring, summer and early fall and very low during winter. In addition, the majority of textbook fulfillment activity (Business Services segment) occurs in the months of June to August. As a result, these operations generate most of their annual revenues and earnings between April and September.

The seasonality of swimming pool management, franchised exterior painting, franchised lawn care and textbook fulfillment 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

Net cash provided by operating activities for the three-month period was $7.6 million, versus $11.8 million in the prior year period. In the current quarter, cash of $4.4 million was consumed by working capital, especially in accounts receivable and inventories to fuel internal growth. Several large accounts receivable were collected after June 30, 2004 and as a result, we expect cash flow to improve in the second quarter. We believe that cash from operations and other existing resources will continue to be adequate to satisfy the ongoing working capital needs of the Company.

Net indebtedness as at June 30, 2004 was $138.8 million, down from $141.5 million at March 31, 2004. Net indebtedness is calculated as the current and non-current portion of long-term debt adjusted for interest rate swaps less cash and cash equivalents. The current portion of long-term debt increased $14.5 million versus March 31, 2004 primarily because a $14.3 million principal repayment on the 8.06% Senior Secured Notes is due on June 29, 2005. We are in compliance with the covenants within our financing agreements as at June 30, 2004 and, based on our outlooks for the balance of the year, we expect to remain in compliance with the covenants. We had $84.0 million of available un-drawn credit as of June 30, 2004.

For the three months ended June 30, 2004, capital expenditures were $4.1 million. Significant purchases were service vehicle fleet replacement and expansion for the Consumer Services and Residential Property Management operations. Capital expenditures for the year are expected to be approximately $13 million.

In relation to acquisitions completed during the past three years, we have outstanding contingent consideration totaling $19.3 million as at June 30, 2004 ($16.2 million as at March 31, 2004). The amount of the contingent consideration is not recorded as a liability unless the outcome of the contingency is determined to be beyond a reasonable doubt. The contingent consideration is based on achieving specified earnings levels, and is issued or issuable at the end of the contingency period. When the contingencies are resolved and additional consideration is distributable, we will record the fair value of the additional consideration as additional costs of the acquired businesses.

In those operations where management is also a minority owner, the Company is party to shareholders' agreements. These agreements allow us to "call" the minority position for a predetermined formula price, which is usually equal to the multiple of trailing two-year average EBITDA underlying the purchase price paid by the Company for the original acquisition. Minority owners may also "put" their interest to the Company at the same price, with certain limitations. The total value of the minority shareholders' interests, as calculated in accordance with shareholders' agreements, was approximately $35 million at June 30, 2004 (March 31, 2004 — $30 million). While it is not our intention to acquire outstanding minority interests, this step would materially increase net earnings. On an annual basis, the impact of the acquisition of all minority interests would increase interest expense by $1.4 million, increase amortization expense by $1.0 million, reduce income taxes by $0.4 million and reduce minority interest share of earnings by $3.5 million, resulting in an approximate increase to net earnings of $1.5 million.

The following table summarizes our contractual obligations as at March 31, 2004:

Contractual obligations
(In millions of US dollars)

	Payments due by period
(In millions of US dollars)	Total		Less than 1 year		1-3 years		4-5 years		After 5 years
Long-term debt	$	153.3	$	16.2	$	29.9	$	28.6	$	78.6
Capital lease obligations		3.5		1.8		1.7		—		—
Operating leases		74.7		16.8		24.4		17.7		15.8
Unconditional purchase obligations		—		—		—		—		—
Other long-term obligations		—		—		—		—		—
Total contractual obligations	$	231.5	$	34.8	$	56.0	$	46.3	$	94.4

At June 30, 2004, we had commercial commitments totaling $6.0 million comprised of letters of credit outstanding due to expire within one year.

Off-balance sheet arrangements

The Company does not have any material off-balance sheet arrangements other than those disclosed in notes 17 and 18 to the March 31, 2004 annual audited consolidated financial statements and notes 6, 9 and 10 to the June 30, 2004 unaudited consolidated financial statements.

Transactions with related parties

During the quarter, we paid rent to an entity controlled by an officer of the Company and to entities controlled by minority shareholders of subsidiaries of the Company. The business purpose of these transactions was to rent office and warehouse space. The amount of the transactions was $0.3 million (2003 — $0.3 million), and they were completed at market rates. The ongoing operating lease commitments associated with these transactions are included in the contractual obligations table above.

Critical accounting policies and estimates

There has been no change in the Company's critical accounting policies and estimates from those described in our annual report dated March 31, 2004.

Impact of recently issued accounting standards

There are no recently issued accounting standards affecting the Company in addition to those described in our annual report dated March 31, 2004.

Financial instruments

The Company uses financial instruments as part of its strategy to manage the risk associated with interest rates and currency exchange rates. We do not use financial instruments for trading or speculative purposes.

The Company maintains an interest rate risk management strategy that uses interest rate swaps to lower the long-term cost of borrowed funds. The Company's specific goals are to (i) manage interest rate sensitivity by modifying the characteristics of its debt and (ii) lower the long-term cost of its borrowed funds. Fluctuations in interest rates create an unrealized appreciation or depreciation in the market value of the Company's fixed-rate debt when that fair value is compared with the cost of the borrowed funds. The effect of this unrealized appreciation or depreciation in market value, however, will generally be offset by the gain or loss on the interest rate swaps that are linked to the debt.

As at June 30, 2004, we had interest rate swaps in place to convert $150 million of fixed rate debt into floating rate debt. With the swaps in place, substantially all of our debt was at floating rates. Gains and losses with respect to the interest on the notional debt are recorded as a reduction or increase to interest expense.

The Company from time to time uses foreign exchange contracts to fix Canadian dollar expenses relative to US dollar revenues. As at June 30, 2004 we had contracts in place to purchase $Cdn8.1 million at various periods from September 2004 to March 2005. Gains and losses on the contracts are included in earnings.

Outstanding share data

The authorized capital of the Company consists of an unlimited number of preference shares, issuable in series, an unlimited number of Subordinate Voting Shares and an unlimited number of Multiple Voting Shares. The holders of Subordinate Voting Shares are entitled to one vote in respect of each Subordinate Voting Share held at all meetings of the shareholders of the Company. The holders of Multiple Voting Shares are entitled to twenty votes in respect of each Multiple Voting Share held at all meetings of the shareholders of the Company.

As of the date hereof, the Company has outstanding 14,132,643 Subordinate Voting Shares, 662,847 Multiple Voting Shares and no preference shares. In addition, as at the date hereof, 1,098,690 Subordinate Voting Shares are issuable upon exercise of options granted under the Company's stock option plan.

Forward-looking statements

This interim report contains certain forward-looking statements. Such forward-looking statements involve risks and uncertainties and include, but are not limited to, statements regarding future events and the Company's plans, goals and objectives. Such statements are generally accompanied by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Our actual results may differ materially from such statements. Factors that could result in such differences, among others, are:

•

North American economic conditions, especially as they relate to consumer spending and business spending on customer relations and promotion.



•

Extreme weather conditions impacting demand for our services or our ability to perform those services.

•

Political conditions, including any outbreak or escalation of terrorism or hostilities and the impact thereof on our business.



•

Competition in the markets served by the Company.



•

Labor shortages or increases in wage and benefit costs.



•

The effects of changes in interest rates on our cost of borrowing.



•

Unexpected increases in operating costs, such as insurance, workers' compensation, health care and fuel prices.



•

Changes in the frequency or severity of insurance incidents relative to our historical experience.



•

The effects of changes in the Canadian dollar foreign exchange rate in relation to the US dollar on the Company's Canadian dollar denominated revenues and expenses.



•

Our ability to make acquisitions at reasonable prices and successfully integrate acquired operations.



•

Changes in government policies at the federal, state/provincial or local level that may adversely impact our student loans processing, firearms registration processing, or textbook fulfillment activities.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in such forward-looking statements will be realized. The inclusion of such forward-looking statements should not be regarded as a representation by the Company or any other person that the future events, plans or expectations contemplated by the Company will be achieved. We note that past performance in operations and share price are not necessarily predictive of future performance.

Additional information

Additional information regarding the Company, including our Annual Information Form, is available on SEDAR at www.sedar.com.

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Exhibit 99.1

FIRSTSERVICE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (in thousands of US Dollars, except per share amounts) in accordance with US generally accepted accounting principles
FIRSTSERVICE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of US Dollars) in accordance with US generally accepted accounting principles
FIRSTSERVICE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (in thousands of US Dollars, except share information) in accordance with US generally accepted accounting principles
FIRSTSERVICE CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of US Dollars) in accordance with US generally accepted accounting principles
FIRSTSERVICE CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2004 (Unaudited) (in thousands of US Dollars, except per share amounts)
FIRSTSERVICE CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in US Dollars) August 6, 2004