EX-99.4 5 exh_994.htm EXHIBIT 99.4 exh_994.htm
EXHIBIT 99.4




 
FIRSTSERVICE CORPORATION
(to be renamed COLLIERS
INTERNATIONAL GROUP INC.)

 

 
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
 
(unaudited)
 

 

 

 
Year ended December 31, 2014 and
 
Quarter ended March 31, 2015
 

 
 
 
FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
(in thousands of US dollars, except per share amounts)
 
 
Year ended December 31, 2014
  
 
 
FirstService
    
Deduct New
    
Add (deduct)
    
 
   
 
 
 
 
pre-
    
FSV
    
pro forma
    
 
   
Colliers
  
   
arrangement
    
carve-out
    
adjustments
    
Note 2
    
pro forma
  
 
 
 
   
 
   
 
   
 
   
 
 
Revenues
   $ 2,714,273     $ 1,132,002     $ -    
 
    $ 1,582,271  
 
                         
 
         
Cost of revenues
     1,747,175       800,046       -    
 
      947,129  
Selling, general and administrative expenses
     758,436       258,678       -    
 
      499,758  
Depreciation
     38,117       17,730       -    
 
      20,387  
Amortization of intangible assets
     24,293       8,744       -    
 
      15,549  
Acquisition-related items
     11,825       1,183       -    
 
      10,642  
Operating earnings
     134,427       45,621       -    
 
      88,806  
 
                         
 
         
Interest expense, net
     14,237       6,932       -    
 
      7,305  
Other income, net
     (1,008 )     255       -    
 
      (1,263 )
Earnings before income tax
     121,198       38,434       -    
 
      82,764  
Income tax
     31,799       12,242       5,700       A       25,257  
Net earnings from continuing operations
     89,399       26,192       (5,700 )             57,507  
 
                                       
Net earnings from discontinued operations,
                                        
net of income tax
     1,537       -       -               1,537  
Net earnings
     90,936       26,192       (5,700 )             59,044  
 
                                       
Non-controlling interest share of earnings
     28,200       3,105       -               25,095  
Non-controlling interest redemption increment
     19,420       10,117       -               9,303  
Net earnings attributable to Company
   $ 43,316     $ 12,970     $ (5,700 )           $ 24,646  
 
                                       
Net earnings per common share
                             C          
 
                                       
Basic
                                        
Continuing operations
   $ 1.16                             $ 0.64  
Discontinued operations
     0.04                               0.04  
 
  $ 1.20                             $ 0.69  
 
                                       
Diluted
                                        
Continuing operations
   $ 1.15                             $ 0.64  
Discontinued operations
     0.04                               0.04  
 
  $ 1.19                             $ 0.68  
 
                                       
Weighted average common shares outstanding
                                        
Basic
     35,917                               35,917  
Dilutive effects of stock options
     392                               392  
Diluted
     36,309                               36,309  
 
 
Page 2 of 9
 
FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)
PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited)
(in thousands of US dollars, except per share amounts)
 
 
Three months ended March 31, 2015
  
 
 
FirstService
    
Deduct New
    
Add(deduct)
    
 
   
 
 
 
 
pre-
    
FSV
    
pro forma
    
 
   
Colliers
  
   
arrangement
    
carve-out
    
adjustments
    
Note 2
    
pro forma
  
 
 
 
   
 
   
 
   
 
   
 
 
Revenues
   $ 607,951     $ 272,189     $ -    
 
    $ 335,762  
 
                         
 
         
Cost of revenues
     405,428       197,307       -    
 
      208,121  
Selling, general and administrative expenses
     180,114       66,230       -    
 
      113,884  
Depreciation
     9,589       4,448       -    
 
      5,141  
Amortization of intangible assets
     5,977       2,550       -    
 
      3,427  
Acquisition-related items
     993       247       -    
 
      746  
Operating earnings
     5,850       1,407       -    
 
      4,443  
 
                         
 
         
Interest expense, net
     4,203       1,868       -    
 
      2,335  
Other income, net
     686       202       -    
 
      484  
Earnings before income tax
     961       (663 )     -    
 
      1,624  
Income tax
     (18 )     (229 )     1,600       A       1,811  
Net earnings from continuing operations
     979       (434 )     (1,600 )             (187 )
 
                                       
Net earnings from discontinued operations,
                                        
net of income tax
     -       -       -               -  
Net earnings
     979       (434 )     (1,600 )             (187 )
 
                                       
Non-controlling interest share of earnings
     2,518       1,119       -               1,399  
Non-controlling interest redemption increment
     (7,583 )     1,758       -               (9,341 )
Net earnings attributable to Company
   $ 6,044     $ (3,311 )   $ (1,600 )           $ 7,755  
 
                                       
Net earnings per common share
                             C          
 
                                       
Basic
                                        
Continuing operations
   $ 0.17                             $ 0.22  
Discontinued operations
     -                               -  
 
  $ 0.17                             $ 0.22  
 
                                       
Diluted
                                        
Continuing operations
   $ 0.17                             $ 0.21  
Discontinued operations
     -                               -  
 
  $ 0.17                             $ 0.21  
 
                                       
Weighted average common shares outstanding
                                        
Basic
     35,871                               35,871  
Dilutive effects of stock options
     392                               392  
Diluted
     36,263                               36,263  
 
 
Page 3 of 9
 
FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)
PRO FORMA CONSOLIDATED BALANCE SHEET
(Unaudited) (in thousands of US dollars)
 
 
December 31, 2014
  
 
  
FirstService
    
Deduct New
    
Add (deduct)
    
 
    
 
  
 
  
pre-
    
FSV
    
pro forma
    
 
    
Colliers
  
 
  
arrangement
    
carve-out
    
adjustments
    
Note 2
    
pro forma
  
Assets
 
    
 
    
 
    
 
    
 
  
Current Assets
 
    
 
    
 
    
 
    
 
  
Cash and cash equivalents
   $ 156,793     $ 66,790     $ -    
 
     $ 90,003  
Restricted cash
     3,657       3,657       -    
 
       -  
Accounts receivable, net of allowance
     409,317       115,143       -    
 
       294,174  
Income tax recoverable
     29,303       16,262       -    
 
       13,041  
Inventories
     18,950       9,489       -    
 
       9,461  
Prepaid expenses and other current assets
     44,176       20,715       -    
 
       23,461  
Deferred income tax
     45,623       18,667       -    
 
       26,956  
 
     707,819       250,723       -    
 
       457,096  
 
                          
 
          
Other receivables
     6,845       4,581       -    
 
       2,264  
Other assets
     19,487       155       -    
 
       19,332  
Fixed assets
     120,394       55,203       -    
 
       65,191  
Deferred income tax
     83,639       4,572       -    
 
       79,067  
Intangible assets
     197,689       82,877       -    
 
       114,812  
Goodwill
     503,554       217,433       -    
 
       286,121  
 
     931,608       364,821       -    
 
       566,787  
 
   $ 1,639,427     $ 615,544     $ -    
 
     $ 1,023,883  
 
                          
 
          
Liabilities and shareholders' equity
                          
 
          
Current Liabilities
                          
 
          
Accounts payable
   $ 107,349     $ 24,687     $ 9,000       B     $ 91,662  
Accrued liabilities
     434,819       55,563       -               379,256  
Income taxes payable
     15,249       5,650       -               9,599  
Unearned revenues
     23,571       16,079       -               7,492  
Long-term debt - current
     36,396       17,725       -       E       18,671  
Contingent acquisition consideration - current
     10,971       4,586       -               6,385  
Deferred income tax
     1,804       1,804       -               -  
 
     630,159       126,094       9,000               513,065  
 
                                        
Long-term debt - non-current
     456,952       221,632       -       E       235,320  
Contingent acquisition consideration
     16,165       1,509       -               14,656  
Other liabilities
     35,739       12,398       -               23,341  
Deferred income tax
     36,205       14,236       -               21,969  
 
     545,061       249,775       -               295,286  
Redeemable non-controlling interests
     230,992       80,926       -               150,066  
 
                                        
Shareholders' equity
                                        
Common shares
     310,401       -       -               310,401  
Contributed surplus
     46,931       -       -               46,931  
Deficit
     (118,242 )     -       (9,000 )     B       (284,740 )
 
                     (157,498 )     D          
FirstService's net investment
     -       157,498       157,498       D       -  
Accumulated other comprehensive earnings
     (13,887 )     1,251       -               (15,138 )
Total Company shareholders' equity
     225,203       158,749       (9,000 )             57,454  
Non-controlling interests
     8,012       -       -               8,012  
Total shareholders' equity
     233,215       158,749       (9,000 )             65,466  
 
   $ 1,639,427     $ 615,544     $ -             $ 1,023,883  

 
Page 4 of 9
 
FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)
PRO FORMA CONSOLIDATED BALANCE SHEET
(Unaudited) (in thousands of US dollars)
 
 
March 31, 2015
  
 
 
FirstService
    
Deduct New
    
Add(deduct)
    
 
   
 
 
 
 
pre-
    
FSV
    
pro forma
    
 
   
Colliers
  
 
 
arrangement
    
carve-out
    
adjustments
    
Note 2
    
pro forma
  
Assets
 
   
 
   
 
   
 
   
 
 
Current Assets
 
   
 
   
 
   
 
   
 
 
Cash and cash equivalents
   $ 120,702     $ 45,142     $ -    
 
    $ 75,560  
Restricted cash
     2,762       2,762       -    
 
      -  
Accounts receivable, net of allowance
     354,500       106,315       -    
 
      248,185  
Income tax recoverable
     28,706       12,704       -    
 
      16,002  
Inventories
     25,581       11,128       -    
 
      14,453  
Prepaid expenses and other current assets
     49,494       19,086       -    
 
      30,408  
Deferred income tax
     43,198       18,644       -    
 
      24,554  
 
    624,943       215,781       -    
 
      409,162  
 
                         
 
         
Other receivables
     6,001       3,757       -    
 
      2,244  
Other assets
     20,622       154       -    
 
      20,468  
Fixed assets
     116,123       54,627       -    
 
      61,496  
Deferred income tax
     82,461       3,621       -    
 
      78,840  
Intangible assets
     190,303       85,493       -    
 
      104,810  
Goodwill
     482,356       214,902       -    
 
      267,454  
 
    897,866       362,554       -    
 
      535,312  
 
  $ 1,522,809     $ 578,335     $ -    
 
    $ 944,474  
 
                         
 
         
Liabilities and shareholders' equity
                          
 
         
Current Liabilities
                          
 
         
Accounts payable
   $ 86,294     $ 14,660     $ 9,000       B     $ 80,634  
Accrued liabilities
     332,344       58,329       -               274,015  
Income taxes payable
     4,209       4,988       -               (779 )
Unearned revenues
     23,579       19,475       -               4,104  
Long-term debt - current
     38,171       16,965       -       E       21,206  
Contingent acquisition consideration - current
     6,745       5,037       -               1,708  
Deferred income tax
     1,806       1,803       -               3  
 
    493,148       121,257       9,000               380,891  
 
                                       
Long-term debt - non-current
     517,526       230,009       -       E       287,517  
Contingent acquisition consideration
     15,740       2,053       -               13,687  
Other liabilities
     33,358       13,037       -               20,321  
Deferred income tax
     32,068       14,143       -               17,925  
 
    598,692       259,242       -               339,450  
Redeemable non-controlling interests
     213,892       75,071       -               138,821  
 
                                       
Shareholders' equity
                                        
Common shares
     315,125       -       -               315,125  
Contributed surplus
     49,658       -       -               49,658  
Deficit
     (115,798 )     -       (9,000 )     B       (243,183 )
 
                    (118,385 )     D          
FirstService's net investment
     -       118,385       118,385       D       -  
Accumulated other comprehensive earnings
     (40,551 )     4,380       -               (44,931 )
Total Company shareholders' equity
     208,434       122,765       (9,000 )             76,669  
Non-controlling interests
     8,643       -       -               8,643  
Total shareholders' equity
     217,077       122,765       (9,000 )             85,312  
 
  $ 1,522,809     $ 578,335     $ -             $ 944,474  
 
 
Page 5 of 9
 
FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)
PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOW FROM OPERATING ACTIVITIES
(Unaudited)
(in thousands of US dollars)
 
 
Year ended December 31, 2014
  
 
 
 
   
 
   
 
 
 
 
 
 
 
 
FirstService
    
Deduct New
    
Add(deduct)
  
 
 
 
 
 
 
pre-
    
FSV
    
pro forma
  
 
 
Colliers
  
   
arrangment
    
carve-out
    
adjustments
  
Note 2
  
pro forma
  
Cash provided by (used in)
 
   
 
   
 
 
 
 
 
 
 
 
 
   
 
   
 
 
 
 
 
 
Operating activities
 
   
 
   
 
 
 
 
 
 
Net earnings
   $ 90,936     $ 26,192     $ -  
 
  $ 64,744  
NCI share of earnings from discontinued operations
     321       -          
 
    321  
 
                       
 
       
Items not affecting cash:
                        
 
       
Depreciation and amortization
     62,516       26,474       -  
 
    36,042  
Deferred income tax
     (991 )     (2,479 )     -  
 
    1,488  
Other
     (1,999 )     2,056       -  
 
    (4,055 )
 
                       
 
       
Changes in non-cash working capital:
                        
 
       
Accounts receivable
     (22,052 )     3,231       -  
 
    (25,283 )
Inventories
     (3,415 )     72       -  
 
    (3,487 )
Prepaid expenses and other current assets
     (4,704 )     (3,327 )     -  
 
    (1,377 )
Payables and accruals
     55,792       (8,164 )     -  
 
    63,956  
Unearned revenues
     3,625       741       -  
 
    2,884  
Other liabilities
     (897 )     660       -  
 
    (1,557 )
Contingent acquisition consideration
     (20,064 )     (279 )     -  
 
    (19,785 )
Net cash provided by operating activities
   $ 159,068     $ 45,177     $ -  
 
  $ 113,891  
 
 
Page 6 of 9
 
FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)
PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOW FROM OPERATING ACTIVITIES
(Unaudited)
(in thousands of US dollars)
 
 
Three months ended March 31, 2015
  
 
 
 
   
 
   
 
 
 
 
 
 
 
 
FirstService
    
Deduct New
    
Add(deduct)
  
 
 
 
 
 
 
pre-
    
FSV
    
pro forma
  
 
 
Colliers
  
   
arrangment
    
carve-out
    
adjustments
  
Note 2
  
pro forma
  
Cash provided by (used in)
 
   
 
   
 
 
 
 
 
 
 
 
 
   
 
   
 
 
 
 
 
 
Operating activities
 
   
 
   
 
 
 
 
 
 
Net earnings
   $ 979     $ (434 )   $ -  
 
  $ 1,413  
 
                       
 
       
Items not affecting cash:
                        
 
       
Depreciation and amortization
     15,566       6,998       -  
 
    8,568  
Deferred income tax
     (451 )     880       -  
 
    (1,331 )
Other
     759       666       -  
 
    93  
 
                       
 
       
Changes in non-cash working capital:
                        
 
       
Accounts receivable
     53,381       9,695       -  
 
    43,686  
Inventories
     (6,631 )     (1,638 )     -  
 
    (4,993 )
Prepaid expenses and other current assets
     (5,543 )     1,629       -  
 
    (7,172 )
Payables and accruals
     (129,404 )     (3,162 )     -  
 
    (126,242 )
Unearned revenues
     8       3,396       -  
 
    (3,388 )
Other liabilities
     (2,379 )     640       -  
 
    (3,019 )
Net cash provided by operating activities
   $ (73,715 )   $ 18,670     $ -  
 
  $ (92,385 )
 

 
 
Page 7 of 9
 
FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands of US dollars)


1.           Background and basis of presentation

On March 11, 2015, the Board of Directors of FirstService Corporation (“FirstService”) unanimously approved a proposal to split FirstService into two independent companies, being (i) a Commercial Real Estate Services company operating principally as Colliers International and (ii) a Residential Real Estate Services and Property Services company operating principally as FirstService Residential and several franchise brand companies including California Closets, Paul Davis Restoration and CertaPro Painters.

The proposed corporate reorganization (the “Arrangement”) received shareholder approval on April 21, 2015. The Arrangement would be implemented through a court approved plan of arrangement and remains subject to certain conditions. The reorganization would result in two publicly traded entities with the Residential Real Estate Services and Property Services company named FirstService Corporation (“New FSV”), and FirstService renamed as Colliers International Group Inc. (“Colliers”). FirstService shareholders would receive one New FSV Multiple Voting Share or Subordinate Voting Share for each FirstService Multiple Voting Share or Subordinate Voting Share held, respectively.

The unaudited pro forma consolidated financial statements for the year ended December 31, 2014 have been prepared from the FirstService audited Consolidated Financial Statements for the year ended December 31, 2014, as well as the audited New FSV Carve-out Combined Financial Statements for the year ended December 31, 2014. The unaudited pro forma consolidated financial statements for the three months ended March 31, 2015 have been prepared from the FirstService unaudited Consolidated Financial Statements for the three months ended March 31, 2015 as well as the unaudited New FSV Carve-out Combined Financial Statements for the three months ended March 31, 2015. The New FSV Carve-out Combined Financial Statements were derived from the accounting records of FirstService on a carve-out basis and therefore include allocated costs, which may not be representative of the costs that may be incurred in the future as an independent, publicly-traded company.

These unaudited pro forma consolidated financial statements should be read in conjunction with the FirstService audited Consolidated Financial Statements for the year ended December 31, 2014 and unaudited Consolidated Financial Statements for the three months ended March 31, 2015 and related Management’s Discussion and Analysis, as well as the audited New FSV Carve-out Combined Financial Statements for the year ended December 31, 2014 and unaudited Carve-out Combined Financial Statements for the three months ended March 31, 2015 and related Management’s Discussion and Analysis.

These unaudited pro forma consolidated financial statements are for illustrative and information purposes only and may not be indicative of the results that actually would have occurred if the Arrangement had been in effect on the dates indicated or of the results that may be obtained in the future. In addition to the pro forma adjustments to the historical carve-out combined financial statements, various other factors may have an effect on the financial condition and results of operations after the completion of the Arrangement.

The unaudited pro forma consolidated balance sheets give effect to the Arrangement as if it had taken place on December 31, 2014 and March 31, 2015. The unaudited pro forma consolidated statements of earnings give effect to the Arrangement as if it had taken place on January 1, 2014 and January 1, 2015, the beginning of the most recent fiscal periods for which New FSV Carve-out Combined Financial Statements are available. Note 2 outlines the pro forma assumptions and adjustments that have been made.

For the year ended December 31, 2014 New FSV was allocated corporate general and administrative expenses of $10,680 (three months ended March 31, 2015 - $2,101). Corporate general and administrative expenses include costs related to finance, legal, treasury, insurance, corporate development and costs associated with being a public company. Effective with the Arrangement, New FSV will assume responsibility for all of these functions and related costs.

Colliers expects that its annual corporate general and administrative expenses will increase approximately $1,300 in 2015 compared to 2014 on account of incremental costs required to function as an independent public company. No pro forma adjustments have been made to the statement of earnings to reflect the incremental expenses described in this paragraph.

 
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2.           Pro forma assumptions and adjustments

A.  
Pro forma adjustment to income tax expense to reflect new legal and corporate structure after completion of the Arrangement.

B.  
Adjustments to increase accounts payable to accrue for the Colliers share of the estimated transaction costs to complete the Arrangement. This results from the pro forma consolidated balance sheet as of December 31, 2014 giving effect to the Arrangement as of December 31, 2014. The pro forma consolidated balance sheet as of March 31, 2015 gives effect to the Arrangement as of March 31, 2015.

C.  
Pro forma net basic and diluted earnings per common share is calculated using the same weighted average number of pre-arrangement FirstService basic and diluted common shares (Multiple Voting Shares and Subordinate Voting Shares) outstanding as at December 31, 2014 and March 31, 2015

D.  
The amount of the FirstService net investment in New FSV, which was recorded by New FSV as FirstService’s net investment in its Carve-out Combined Financial Statements, is reclassified to retained earnings. FirstService’s net investment in New FSV is subject to amendment in accordance with any adjustments arising from the transition agreement to achieve New FSV’s new capital structure post-split.

E.  
The long-term debt attributed to New FSV is subject to amendment at the time of the Arrangement in accordance with any adjustments arising from the transition agreement to achieve New FSV’s new capital structure post-split.

 
 
 
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