---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K/AAmendment No. 1

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the fiscal year ended March 31, 2003

Commission file number 0-24762

FIRSTSERVICE CORPORATION(Exact name of Registrant as specified in its charter)

|Ontario, Canada                                                                                                    |  | Not Applicable                      
|------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------
|(State or other jurisdiction of
incorporation or organization)                                                     |  | (I.R.S. employer identification no.)
|                                                                                                                   |  |                                     
|FirstService Building
1140 Bay Street, Suite 4000
Toronto, Ontario, Canada(Address of Principal Executive Offices) |  | M5S 2B4(Postal Code)                

Registrant's
telephone number, including area code:416-960-9500

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Subordinate Voting Shares

---

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 ý    No o

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ý

Indicate
by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act
Rule 12b-2). Yes ý    No o

The
aggregate market value of Subordinate Voting Shares held by non-affiliates of the Registrant as at May 9, 2003 was $173,897,000 U.S. The number of the
Registrant's Subordinate Voting Shares outstanding as at May 9, 2003 was 13,501,343 and the closing market price of such shares on that date was $12.88 U.S. The number of Multiple Voting
Shares outstanding on May 9, 2003 was 662,847.

---

---

---

Explanatory note

This Amendment No. 1 to our Annual Report on Form 10-K for the year ended March 31, 2003, initially filed with the
Securities and Exchange Commission ("SEC") on May, 23, 2003 (the "Originally Filed 10-K"), is being filed to reflect restatements of the consolidated financial statements for the years
ended March 31, 2003, 2002 and 2001.

The
restatements are the result of a detailed review of the accounting for certain intangible assets, including purchase accounting and accounting upon the adoption of FASB Statement of
Financial Accounting Standards No. 142,Goodwill and Other Intangible Assets. The restatements affect the following accounts: goodwill,
intangible assets, deferred income tax liabilities, minority interest, amortization expense and income tax expense. For a complete description of the restatements, please see note 3
to the consolidated financial statements included in Item 8.

This
Amendment No. 1 amends and restates Items 6, 7, 8, 14 (now Item 9A) and 15 of the Originally Filed 10-K, and no other information in the
Originally Filed 10-K is amended hereby. The explanatory caption at the beginning of each Item of this Amendment No. 1 sets forth the nature of the revisions to that Item.

We
did not amend our Annual Reports on Form 10-K or Quarterly Reports on Form 10-Q for periods affected by the restatements that ended
prior to March 31, 2003, and the consolidated financial statements, auditors' reports and related financial information for the affected periods should no longer be relied upon.

For
a discussion of events and developments subsequent to March 31, 2003, see:



2

---





FIRSTSERVICE CORPORATIONAnnual Report on Form 10-K/A  March 31, 2003

INDEX

|           |  |                                                                                       |  | Page
|---------- |  | ------------------------------------------------------------------------------------- |  | ----
|PART II    |  |                                                                                       |  |     
|ITEM 6.    |  | SELECTED FINANCIAL DATA                                                               |  | 4   
|ITEM 7.    |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 5   
|ITEM 8.    |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  | 12  
|ITEM 9A.   |  | CONTROLS AND PROCEDURES                                                               |  | 38  
|PART IV    |  |                                                                                       |  |     
|ITEM 15.   |  | EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND
REPORTS ON FORM 8-K                     |  | 39  
|SIGNATURES |  | 40                                                                                   

Unless otherwise indicated, all dollar amounts in this Form 10-K/A are expressed in U. S. Dollars.

3

---

ITEM 6.    SELECTED FINANCIAL DATA

The selected financial data for the years ended March 31, 2003, 2002 and 2001 set forth in this Item 6 has been revised to
reflect the restatements.

(in
thousands of U.S. Dollars, except per share amounts)
(unaudited)

|                                    |         | Year ended March 31
|----------------------------------- | ------- | -------------------
|
|
|OPERATIONS                          |         |                    
|Revenues                            |         | $                  
|Operating earnings                  |         |                    
|Net earnings                        |         |                    
|FINANCIAL POSITION                  |         |                    
|Total assets                        |         | $                  
|Long-term debt(3)                   |         |                    
|Shareholders' equity                |         |                    
|Book value per share                |         |                    
|OTHER DATA                          |         |                    
|EBITDA(4)                           |         | $                  
|SHARE DATA                          |         |                    
|Net earnings per share              |         |                    
|                                    | Basic   |                    
|                                    | Diluted |                    
|Weighted average shares (thousands) |         |                    
|                                    | Basic   |                    
|                                    | Diluted |                    
|Cash dividends per share            |         |                    

---

Notes

|                                    |  | Year ended March 31 |        
|----------------------------------- |  | ------------------- | -------
|
|EBITDA                              |  | $                   | 53,323 
|Less: depreciation and amortization |  |                     | (14,439
|                                    |  |                     |        
|Equals: operating earnings          |  |                     | 38,884 
|                                    |  |                     |        

4

---

ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") set forth in this Item 7 has
been revised to reflect the restatements and to update certain forward-looking statements to reflect current expectations, as well as to incorporate certain conforming changes. Apart from the
revisions outlined above, this MD&A does not reflect events and developments subsequent to March 31, 2003.

Results of operations  year ended March 31, 2003

Consolidated revenues for Fiscal 2003 were $542.7 million, a 6% increase from the $512.7 million reported for the year ended March 31, 2002
("Fiscal 2002"). Approximately $12.8 million of the increase resulted from tuck-under acquisitions completed during the year, resulting in internal growth of 3%.

During
Fiscal 2003, the value of the Canadian dollar appreciated 1.0% relative to the value of the U.S. dollar, based on the average annual exchange rate versus the prior year.
The impact of the foreign exchange rate movement on earnings was not material.

Operating
earnings decreased 12% from $44.2 million to $38.9 million in Fiscal 2003. EBITDA(1)
decreased 7%, to $53.3 million from $57.1 million in the prior year, while the EBITDA margin declined 130 basis points to 9.8% of revenues. Included in 2003 results were executive life
insurance proceeds of $4.2 million and a dilution gain upon the sale of shares of a Consumer Services subsidiary in the amount of $1.1 million. The decline in margins was the result of
weakness in the Residential Property Management and Business Services segments. Consumer Services experienced increased profitability, while Integrated Security Services' margin was stable
year-over-year.

---

Depreciation for the year ended March 31, 2003 was $12.4 million, up 9% from the previous year, due to a higher level of capital
expenditures in Fiscal 2002, as compared to Fiscal 2001 and 2001. Amortization of intangibles was $2.1 million, compared to $1.5 million in the previous year. The increase in
amortization was the result of the recognition and amortization of intangible assets on acquisitions completed subsequent to the adoption of Statement of Financial Accounting Standards ("SFAS")
No. 142,Goodwill and Other Intangible Assets("SFAS 142") on April 1, 2001.

Interest
expense decreased 30% relative to the prior year, to $9.0 million, due to the combined effects of lower interest rates, lower levels of indebtedness and the
$1.4 million write-off of deferred financing fees in the prior year. Weighted average interest rates were approximately 5.5% in Fiscal 2003 compared to 7.1% in Fiscal 2002,
excluding the write-off of deferred financing fees. The reduction in rates resulted from lower floating reference rates and from two interest rate swaps which convert the fixed rate on the
8.06% Senior Secured Notes (the "Notes") into variable interest streams.

In
October 2002, we entered into an interest rate swap agreement in which the interest stream on $25 million of the fixed-rate Notes was exchanged for the
variable interest rate of LIBOR + 4.450%. This was in addition to the December 2001 interest rate swap in which the interest stream on $75 million of the
fixed-rate Notes was exchanged for the variable interest rate of LIBOR + 2.505%. The swaps resulted in interest savings of $3.5 million for the current year and
$0.6 million in the prior year. Both swaps have maturities matched to the underlying Notes due June 29, 2011. The swaps are being accounted for as hedges in accordance with
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.

The
income tax provision for the year ended March 31, 2003 was approximately 28% of earnings before taxes, compared with 33% in the prior year. The decline in tax rate resulted
from two major factors: (i) continuing leverage from the cross-border tax structure implemented in Fiscal 2000 and (ii) $4.2 million of non-taxable life insurance
proceeds received during the year. The Company anticipates that the Fiscal 2004 tax rate will be approximately 30.5%, resulting from expected efficiencies from the cross-border tax structure.

5

---

The
minority interest share of earnings decreased to $3.2 million or 14.6% of earnings before minority interest from $3.8 million, or 18.2%, in the prior year. The
reduction was the result of minority share purchases completed during the year.

Net
earnings were $18.4 million, an 8% increase over the prior year, while diluted earnings per share increased 9% to $1.27. The extraordinary loss of $797,000, net of income tax
benefit of $578,000, reported in the prior year has been restated as increased interest expense of $1,375,000 and a reduction of income tax expense of $578,000 as a result of the adoption of
SFAS No. 145,Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13 and Technical Corrections as of
April 2002during Fiscal 2003.

The
Residential Property Management unit generated $215.0 million of revenues for the year, an increase of 5% over the prior year. Excluding the impact of acquisitions, segment
internal revenue growth was 4%.

Residential
Property Management reported EBITDA of $14.6 million, down $4.2 million or 22% relative to the prior year, primarily due to insurance cost increases and poor
results in painting & restoration activities. Insurance costs were approximately $2.0 million higher than the prior year, and little of the cost increase was passed on to clients. The
painting & restoration service line operating in South Florida, which accounted for $22.1 million or 10% of the segment's revenues experienced a loss for the year due to difficult market
conditions and several poorly performing projects. Also included in the current year's results is $1.0 million of executive life insurance proceeds received upon the death of a senior
management employee.

The
Integrated Security Services unit reported revenues of $107.5 million, representing growth of 13% over the prior year, all generated internally. Sales of systems and manpower
contributed approximately equally to the growth. EBITDA for the segment was $7.3 million, while the margin remained constant at 6.8%. Several low-margin initial systems
installations were completed during the second half of the year. We expect margins to be in the 7-8% range in Fiscal 2004, resulting from expected higher margins on systems installations.

Consumer
Services revenues were $93.4 million, up 11% relative to the prior year. Factoring in the two California Closets franchises acquired in October 2002, internal
revenue growth was 8%. EBITDA in Consumer Services was $16.4 million, and the margin was 17.6%. The margin increased 110 basis points relative to the prior year as a result of strong
performance in the College Pro, California Closets and lawn care businesses as well as the $1.1 million dilution gain experienced on the sale of 7.5% of the shares of Paul Davis
Restoration, Inc. to two of its managers, which was offset by $0.5 million of compensation expense related to the sale.

Revenues
for Business Services were $126.4 million, down 1% or $1.1 million relative to the prior year. Internal revenues declined 7% after considering the impact of
acquisitions. A major fulfillment client departed at the end of the third quarter, impacting annual revenues negatively by approximately $1.5 million. Client volumes in the customer support and
fulfillment areas were soft throughout the year, impacting revenues negatively and accounting for the remainder of the year-over-year decline.

Business
Services EBITDA was $19.8 million or 15.6% of revenues, down from $22.4 million or 17.6% of revenues in the prior year. Several factors contributed to this result.
The decline in volumes impacted margins because of lower contribution to cover fixed overhead costs, primarily rent. During the fourth quarter, we received proceeds of $3.2 million on a
executive life insurance policy on the retired CEO and former controlling shareholder of Herbert A. Watts Ltd. ("Watts"), Rip Gauthier, who passed away after a lengthy illness. Also during the
fourth quarter, we incurred costs to reorganize and streamline the operations of Business Services under group president Scott Patterson in the amount of $1.9 million.

Fiscal
2004 Business Services revenues are expected to be stable, with the exception of the full-year impact of the departure of the large fulfillment client, which will
impact segment revenues by approximately $5 million.

Corporate
expenses were $4.8 million, up from $4.5 million in fiscal 2002. We expended $0.5 million on the investigation of potential acquisitions that were not
completed during the year. Executive bonuses declined $0.7 million, to nil, for Fiscal 2003.

Results of operations  year ended March 31, 2002

Consolidated revenues for Fiscal 2002 were $512.7 million, a 21% increase from the $424.2 million reported for the year ended March 31, 2001
("Fiscal 2001"). Approximately $69.0 million of the increase resulted from the acquisitions of Watts in March 2001, VASEC Virginia Security and Automation, Inc. ("VASEC") in
July 2001, several smaller tuck-under companies and the full-year impact of other acquisitions completed in Fiscal 2001.

6

---

During
Fiscal 2002, the value of the Canadian dollar deteriorated 3.9% relative to the value of the U.S. dollar, based on the average annual exchange rate versus the prior year.
During Fiscal 2002, 33% of the Company's revenues were Canadian dollar denominated. Had the exchange rate been held constant year-over-year, the Company's revenues would have
been approximately $6.9 million higher, EBITDA would have been $0.6 million higher and diluted earnings per share would have been $0.02 higher.

Operating
earnings increased 25% to $44.2 million from $35.5 million. EBITDA increased 19%, to $57.1 million from $47.9 million in the prior year, while
EBITDA margins declined 15 basis points to 11.1% of revenue. The decline in margin is the result of lower sales of higher-margin residential property painting and restoration services, as well as
reduced levels of activity in the Business Services fulfillment operations, which typically carry 15% EBITDA margins.

Depreciation
for the year ended March 31, 2002 was $11.4 million, up 48% from the previous year, mainly due to the acquisition of Watts. Effective April 1, 2001, the
Company adopted SFAS 142, therefore, no goodwill amortization was recorded during the fiscal year. Amortization of intangibles was $1.5 million, compared to $1.6 million in the
previous year.

Interest
expense increased 33% over the prior year's level to $13.0 million, primarily as a result of a $1.4 million write off of deferred financing fees, increased
borrowings related to the acquisition of Watts completed in March 2001 and contingent acquisition payments made during the year. The Company's average indebtedness during the year increased
$41 million or 34% relative to the prior year. Weighted average interest rates were approximately 7.1% in Fiscal 2002 compared to 8.1% in Fiscal 2001, due to the combined effects of lower
floating interest rates, the issuance of the fixed-rate debt and the interest rate swap discussed below. In Fiscal 2001, the Company was subject to floating interest rates on the majority
of its debt. On June 29, 2001 the Company issued $100 million of 8.06% fixed-rate Notes and amended and restated its credit agreement for a new $140 million committed
senior revolving credit facility (the "Credit Facility") bearing interest at 1.50% to 3.00% above floating reference rates, depending on certain leverage ratios.

At
the time of the issuance of the Notes and the completion of the Credit Facility on June 29, 2001, the Company wrote off the financing fees related to its previous debt
arrangements. This resulted in a loss, recorded within interest expense, of $1.4 million.

In
December 2001, the Company entered into an interest rate swap agreement in which the interest stream on $75 million of the fixed-rate 8.06% Notes was
exchanged for the variable interest rate of LIBOR + 2.505%. The swap has a maturity matched to the underlying Notes due June 29, 2011. During the four months the swap was in
effect, interest savings of $0.6 million resulted.

The
income tax provision for the year ended March 31, 2002 was approximately 33% of earnings before taxes, compared with 39% in the prior year. The decline in tax rate resulted
from two major factors: (i) the increase in pre-tax earnings resulting from the non-amortization of goodwill due to the adoption of SFAS 142, which reduced the
effective tax rate and (ii) continuing leverage from the cross-border tax structure implemented in Fiscal 2000.

The
minority interest share of earnings increased to $3.8 million or 18.2% of earnings before minority interest from $3.0 million, or 19.1%, in the prior year. The
$0.8 million increase reflects the increase in earnings year-over-year, including the effects of the non-amortization of goodwill as per SFAS 142,
which impacted certain non-wholly owned subsidiaries with goodwill on their balance sheets. The decline in minority interest as a percentage of earnings before minority interest resulted
from the acquisition of minority interests during the year, including California Closet Company, Inc. and The Continental Group, Ltd.

Net
earnings were $17.0 million, an 11% increase over the prior year (adjusted for SFAS 142), while diluted earnings per share increased 6% to $1.17 (also adjusted for
SFAS 142). The increase in diluted earnings per share reflects a 3.8% increase in the weighted average share count as a result of shares issued upon the exercise of stock options and an
increase in dilution caused by the 77% increase in the average market price of the Company's shares relative to the prior year.

Residential
Property Management generated $205.4 million of revenues for the year, up 13% over the prior year due to internal growth and two small tuck-under
acquisitions. Residential Property Management EBITDA was $18.8 million, up 4% over the prior year. The EBITDA margin was 9.2% compared to 9.9% in the prior year. The decline in margin is
attributable to the slowdown in painting and restoration operations experienced in the second, third and fourth quarters.

7

---

Integrated
Security Services reported revenues of $95.5 million, representing growth of 18% over the prior year primarily due to the acquisition of VASEC in July 2001, as
well as the full-year impact of the Security Services and Technologies ("SST") acquisition completed in July 2000, combined with internal growth of 11%. EBITDA was
$6.5 million, up 9% over the prior year and EBITDA margins were 6.8% compared with 7.4% in Fiscal 2001. The margin decline is primarily due to mix change resulting from stronger relative
revenue growth in the low margin security guard operations, particularly since September 11, 2001.

Consumer
Services revenues advanced to $84.0 million, up 7% over the prior year due to the July 2001 acquisition of CC Seattle LLC, the Washington State franchise of
the Company's California Closets franchise system. EBITDA was $13.8 million, up 10% over the prior year. EBITDA margins rose from 15.9% in the prior year to 16.5% in Fiscal 2002 principally as
a result of overhead leveraging.

Revenues
for Business Services were $127.5 million, an increase of 55% or $45 million over Fiscal 2001. Approximately all of the revenue increase is attributable to the
March 2001 acquisition of Watts and the February 2002 acquisition of Right Choice. Internal growth was 2% after adjusting for the impact of foreign exchange. Business Services EBITDA
grew 41% to $22.4 million, while margins fell to 17.6% from 19.3%. The margin decline was primarily due to the inclusion of Watts, which carries margins of 13-14% due to its
lower-margin direct mail and customer contact operations. Margins at the DDS fulfillment operations were also down year-over-year due to the slowdown in clients' promotional
activities experienced in the second, third and fourth quarters.

Corporate
expenses decreased to $4.5 million in Fiscal 2002 from $4.6 million last year, primarily as a result of lower bonuses at the executive level.

Restatements

On January 27, 2004, we announced that as a result of a detailed review of the accounting for certain intangible assets, including purchase accounting at
the times of acquisition and accounting upon the adoption of Statement of Financial Accounting Standards ("SFAS") No. 142,Goodwill and Other Intangible
Assets, at April 1, 2001, certain restatements would be made. In particular, we recorded deferred income taxes with respect to franchise intangible assets acquired upon
the October 1998 acquisition of California Closet Company, Inc. ("CCC") and the October 1997 acquisition of Paul Davis Restoration, Inc. ("PDR"). In addition, we reevaluated the estimated useful lives
of the franchise intangible assets associated with CCC and PDR. It was determined that the amortization of franchise rights should follow the pattern of use, specifically the attrition rate of the
franchisees that were present at the dates of acquisition. The amortization of trademarks and trade names was determined to be 35 and 25 years for CCC and PDR, respectively. Previously, all of
these assets were treated as indefinite life intangible assets.

On
an annual basis, the impact upon net earnings for the years ended March 31, 2003 and 2002 is $0.4 million comprised of additional amortization expense of $0.8 million
less income tax and minority interest effects of $0.4 million. The annual impact on diluted earnings per share for each of these years is $0.03. The cumulative impact of the restatements upon
retained earnings as at March 31, 2003 was $1.0 million.

Quarterly results  years ended March 31, 2003 and 2002(in thousands of U.S. Dollars, except per share amounts)

|                        |         | Q1 |         | Q2   |   | Q3      |      | Q4 |         | Year
|----------------------- | ------- | -- | ------- | ---- | - | ------- | ---- | -- | ------- | ----
|
|FISCAL 2003             |         |    |         |      |   |         |      |    |         |     
|Revenues                |         | $  | 146,036 |      | $ | 145,209 |      | $  | 126,684 |     
|Operating earnings      |         |    | 15,103  |      |   | 17,669  |      |    | 4,582   |     
|Net earnings            |         |    | 7,308   |      |   | 8,795   |      |    | 1,335   |     
|Net earnings per share: |         |    |         |      |   |         |      |    |         |     
|                        | Basic   |    | $       | 0.53 |   | $       | 0.63 |    | $       | 0.10
|                        | Diluted |    |         | 0.50 |   |         | 0.60 |    |         | 0.09
|FISCAL 2002             |         |    |         |      |   |         |      |    |         |     
|Revenues                |         | $  | 136,575 |      | $ | 140,468 |      | $  | 117,809 |     
|Operating earnings      |         |    | 15,604  |      |   | 18,912  |      |    | 5,975   |     
|Net earnings            |         |    | 6,197   |      |   | 8,742   |      |    | 1,641   |     
|Net earnings per share: |         |    |         |      |   |         |      |    |         |     
|                        | Basic   |    | $       | 0.46 |   | $       | 0.65 |    | $       | 0.12
|                        | Diluted |    |         | 0.43 |   |         | 0.60 |    |         | 0.11
|OTHER DATA              |         |    |         |      |   |         |      |    |         |     
|EBITDAFiscal 2003      |         | $  | 18,510  |      | $ | 21,163  |      | $  | 8,180   |     
|EBITDAFiscal 2002      |         |    | 18,760  |      |   | 22,012  |      |    | 9,215   |     

Seasonality and quarterly fluctuations

Certain segments of our operations, which in the aggregate comprise approximately 15% of revenues, are subject to seasonal variations. Specifically, the demand
for lawn care services, exterior painting services and swimming pool maintenance in the northern United States and 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. We have historically generated lower earnings or net losses during our
third and fourth fiscal quarters, from October to March. Residential Property Management, Integrated Security Services, Business Services and most of the franchised Consumer Services generate revenues
approximately evenly throughout the fiscal year.

8

---

The
seasonality of the lawn care, painting and swimming pool maintenance operations results in variations in quarterly EBITDA margins. Variations in quarterly EBITDA margins can also be
caused by acquisitions that alter the consolidated service mix. Our non-seasonal businesses typically generate a consistent EBITDA margin over all four quarters, while our 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, we expect our quarterly EBITDA margin fluctuations to be reduced.

Liquidity and capital resources

Cash flow from operations and bank borrowings have historically been the primary funding sources for working capital requirements, capital expenditures and
acquisitions. Net cash provided by operating activities for Fiscal 2003 was $32.6 million, up 30% over the prior year, the result of improvements in working capital, lower interest and income
tax expenses and the receipt of non-taxable executive life insurance proceeds. Management believes that funds from these sources will remain available and are adequate to support ongoing
operational requirements and near-term acquisition growth.

The
Company has an amended and restated credit agreement that provides $140 million of committed revolving credit facility (the "Credit Facility") that is 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 7, 2003. The Credit Facility
bears interest at 1.50% to 3.00% over floating reference rates, depending on certain leverage ratios. The Company has outstanding $100 million of ten-year 8.06% Senior Secured
Notes. The Notes have a final maturity date of June 29, 2011, with equal annual principal repayments beginning at the end of the fourth year, resulting in a seven-year average life.
Covenants and other limitations within the amended credit agreement and the Notes are similar. As at March 31, 2003, the Company had drawn $52.0 million on the Credit Facility and was in
compliance with all covenants.

During
Fiscal 2003, capital expenditures totaled $10.7 million comprising approximately $2.6 million in expenditures on production equipment, $3.0 million on
vehicles, $4.2 million on computer equipment and software and $0.9 million for leasehold improvements. Looking forward to Fiscal 2004, capital expenditures are expected to be in the
$11.0 to $12.0 million range. Several office relocations and expansions are planned in Residential Property Management including offices in Fairfax, Virginia; Manhattan, New York; and
Dade County, Florida.

Acquisition
expenditures during the year totaled $16.3 million, comprised of $6.6 million for initial acquisition payments, $3.3 million of contingent consideration
payments, and $6.4 million related to the acquisition of minority interests of subsidiaries. All of the acquisition consideration was in the form of cash.

When
making acquisitions, we generally purchase executive life insurance policies on the principal managers of the acquired businesses. We believe this practice mitigates risk on
acquisitions. At March 31, 2003, the Company had 20 such life insurance policies in force.

In
relation to acquisitions completed during the past three years, we have contingent consideration outstanding totaling $12.7 million. 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. At March 31, 2002, there was contingent consideration outstanding of $21.3 million.

In
those operations where operating managements are also minority owners, 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 earnings 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 $26.0 million at
March 31, 2003. 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 $1.0 million, reduce income taxes by $0.3 million and reduce minority interest share of earnings by $3.2 million,
resulting in an approximate net increase to net earnings of $2.5 million.

9

---

The
following table summarizes our contractual obligations as at March 31, 2003:

Contractual obligations(In thousands of U.S. Dollars)

|                                   |  | Payments due by period
|---------------------------------- |  | ----------------------
|
|Long-term debt                     |  | $                     
|Capital lease obligations          |  |                       
|Operating leases                   |  |                       
|Unconditional purchase obligations |  |                       
|Other long-term obligations        |  |                       
|                                   |  |                       
|Total contractual obligations      |  | $                     
|                                   |  |                       

At
March 31, 2003, we had commercial commitments totaling $4.4 million comprised of letters of credit outstanding due to expire within one year.

During
Fiscal 2003, we reviewed and amended our insurance coverages in response to dramatic increases in premiums, which resulted from market-wide increases in the cost of
insurance. To manage costs, we have taken on additional risk in the form of higher deductibles on many of our coverages. We believe that this step will reduce overall costs in the long term, but may
cause fluctuations in earnings in the short term in the event of changes in the number of incidents (frequency) or changes in the cost per incident (severity) relative to our historical experience.

Discussion of critical accounting policies

Critical accounting policies are those that management deems to be most important to the portrayal of our financial condition and results, and that require
management's most difficult, subjective or complex judgments, due to the need to make estimates about the effects of matters that are inherently uncertain. We have identified four critical accounting
policies: goodwill impairment testing, acquisition purchase price allocations, amortization of intangible assets, and accounting for income taxes.

The
annual goodwill impairment testing required under SFAS 142 requires judgment on the part of management. Goodwill impairment testing involves making estimates concerning the
fair value of reporting units and then comparing the fair value to the carrying amount of each unit. Estimates of fair value can be impacted by sudden changes in the business environment or prolonged
economic downturns, and therefore require significant management judgment in their determination.

Acquisition
purchase price allocations require use of estimates and judgment on the part of management, especially in the determination of intangible assets acquired relative to the
amount that is classified as goodwill. For example, if different assumptions were used regarding the profitability and expected lives of acquired customer contracts and relationships, different
amounts of intangible assets and related amortization could be reported.

Amortization
of intangible assets requires management to make estimates of useful lives and to select methods of amortization. Useful lives and methods of amortization are determined at
the time assets are initially acquired, and then are reevaluated each reporting period. Significant judgment is required to determine whether events and circumstances warrant a revision to remaining
periods of amortization. Changes to estimated useful lives and methods of amortization could result in increases or decreases in amortization expense.

Income
taxes are calculated based the expected treatment of transactions recorded in the consolidated financial statements. In determining current and deferred components of income
taxes, we interpret tax legislation and make assumptions about the timing of the reversal of deferred tax assets and liabilities. If our interpretations differ from those of tax authorities or if the
timing of reversals is not as anticipated, the provision for income taxes could increase or decrease in future periods.

Impact of recently issued accounting standards

In April 2002, the Company adopted SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived
Assets. The adoption of this standard did not have a material impact on results of operations or financial condition.

10

---

In
April 2002, FASB issued SFAS No. 145,Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13
and Technical Corrections as of April 2002. Among other changes, this new standard impacts the reporting of gains and losses from extinguishment of debt and
accounting for leases, and is effective for the Company's fiscal year beginning April 1, 2003. The Company implemented this standard effective for the year ended March 31, 2003. The
impact of the change was to eliminate the Company's 2002 extraordinary loss on the early retirement of debt of $797, net of income tax benefit of $578, and report instead increased interest expense of
$1,375 and a reduction of income tax expense of $578.

In
July 2002, the FASB issued SFAS No. 146,Accounting for Costs Associated with Exit or Disposal Activities("SFAS 146"). This statement requires recording costs associated with such activities at their fair values when a liability has been incurred. Previously, certain exit costs were accrued upon
management's commitment to an exit plan, which is generally before an actual liability has been incurred. SFAS 146 is effective for such activities initiated after December 31, 2002. The
adoption of this standard had no impact on the results of operations.

In
November 2002, FASB Interpretation No. 45,Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (an interpretation of SFAS Nos. 5, 57 and 107 and rescission of FASB Interpretation No. 34)("FIN 45") was issued.
FIN 45 clarifies the requirements relating to a guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. FIN 45's provisions for initial recognition
and measurement were effective for guarantees issued or modified by the Company after December 31, 2002, and disclosure requirements were effective for financial statements issued after
December 15, 2002. The impact of the adoption of FIN 45 was not material.

In
December 2002, FASB issued SFAS No. 148,Accounting for Stock-Based CompensationTransition and Disclosure, an amendment of
SFAS No. 123("SFAS 148"). SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation, as well as amended disclosure requirements in annual and interim financial statements. The standard is effective for the Company's annual financial statements
for the year ended March 31, 2003. The adoption of this standard did not impact results of operations or financial condition as the Company elected to continue to account for its stock option
plan in accordance with APB 25.

In
January 2003, FASB Interpretation No. 46,Consolidation of Variable Interest Entities (an interpretation of ARB
No. 51)("FIN 46") was issued. FIN 46 addresses consolidation by business enterprises of variable interest entities having certain characteristics and
applies immediately to variable interest entities created after January 31, 2003. The adoption of FIN 46 had no impact on the Company's results of operations or financial condition.

Forward-looking statements

This annual report on Form 10-K/A contains or incorporates by reference certain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. We intend that such forward-looking statements be subject to the safe harbors created by such legislation. 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:



11

---



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.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The restated consolidated financial statements, including the notes thereto, set forth in this Item 8 have been revised to reflect
the restatements and, except for the revisions, do not reflect events and developments subsequent to March 31, 2003.

Set
forth below is the report of PricewaterhouseCoopers LLP dated May 9, 2003 and January 27, 2004, the consolidated balance sheets of FirstService Corporation as at
March 31, 2003 and 2002, the consolidated statements of earnings, shareholders' equity and cash flows for each year in the three year period ended March 31, 2003 and the notes to the
consolidated financial statements.

12

---



REPORT OF MANAGEMENT

To
the shareholders of FirstService Corporation:

Management
is responsible for the preparation of FirstService Corporation's consolidated financial statements. Management believes that the consolidated financial statements fairly
reflect the form and substance of transactions and that the consolidated financial statements reasonably present the Company's financial condition and results of operations. The consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States, in all material respects. Management has included in the Company's consolidated
financial statements amounts based on estimates and judgments that it believes are reasonable under the circumstances.

PricewaterhouseCoopers LLP,
the independent accountants of the Company, have audited the Company's consolidated financial statements in accordance with generally accepted auditing
standards, and they provide an objective, independent review of the fairness of reported operating results and financial position.

The
Board of Directors of the Company has an Audit Committee that meets with financial management and the independent accountants to review accounting, auditing, internal accounting
controls, and financial reporting matters.

|/s/ JAY S. HENNICK
President and CEO | /s/ JOHN B. FRIEDRICHSEN
Senior Vice President and CFO
|------------------------------------ | ------------------------------------------------------

REPORT OF INDEPENDENT ACCOUNTANTS

To
the shareholders of FirstService Corporation:

We
have audited the consolidated balance sheets of FirstService Corporation as at March 31, 2003 and 2002 and the consolidated statements of earnings, shareholders' equity and
cash flows for each year in the three-year period ended March 31, 2003. These consolidated financial statements and the financial statement schedules listed in the index appearing
under Item 15 are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and the financial statement schedules based on
our audits.

We
conducted our audits in accordance with United States generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In
our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at March 31, 2003 and 2002 and the
results of its operations and cash flows for each year in the three-year period ended March 31, 2003 in accordance with United States generally accepted accounting
principles. In addition, in our opinion, the financial statement schedules referred to above present fairly, in all material respects, the information set forth herein when read in conjunction with
the related consolidated financial statements.

As
described in note 3 to the consolidated financial statements, the accompanying consolidated financial statements as of March 31, 2003 and 2002 and for each year
in the three-year period ended March 31, 2003 have been restated.

We
also reported separately on May 9, 2003 (January 27, 2004 as to the effects of the restatements described in note 3) to the shareholders of the Company on
our audit, conducted in accordance with Canadian generally accepted auditing standards, where we expressed an opinion without reservation on the March 31, 2003 and 2002 consolidated financial
statements, prepared in accordance with Canadian generally accepted accounting principles.

/s/
PRICEWATERHOUSECOOPERS LLP
Chartered Accountants

Toronto,
Canada
May 9, 2003 (January 27, 2004 as to the effects of the restatements described in note 3)

13

---



FIRSTSERVICE CORPORATION        CONSOLIDATED STATEMENTS OF EARNINGS        (in thousands of U.S. Dollars, except per share amounts)in accordance  with United States generally
accepted accounting principles

|                                                      |         | For the years ended March 31
|----------------------------------------------------- | ------- | ----------------------------
|
|
|Revenues                                              |         | $                           
|Cost of revenues                                      |         |                             
|Selling, general and administrative expenses (note 6) |         |                             
|Other (income) expense (note 7)                       |         |                             
|Depreciation and amortization                         |         |                             
|                                                      |         |                             
|Operating earnings                                    |         |                             
|Interest                                              |         |                             
|                                                      |         |                             
|Earnings before income taxes and minority interest    |         |                             
|Income taxes (note 15)                                |         |                             
|                                                      |         |                             
|Earnings before minority interest                     |         |                             
|Minority interest share of earnings                   |         |                             
|                                                      |         |                             
|Net earnings                                          |         | $                           
|                                                      |         |                             
|Earnings per share (note 16)                          |         |                             
|Net earnings:                                         |         |                             
|                                                      | Basic   |                             
|                                                      | Diluted |                             
|                                                      |         |                             

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

14

---

FIRSTSERVICE CORPORATION        CONSOLIDATED BALANCE SHEETS        (in thousands of U.S. Dollars)in accordance with  United States generally accepted accounting principles

|                                              |                                                                  | As at March 31                                                                                                                              |        
|--------------------------------------------- | ---------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | -------
|
|
|Assets                                        |                                                                  |                                                                                                                                             |        
|Current assets                                |                                                                  |                                                                                                                                             |        
|                                              | Cash and cash equivalents                                        |                                                                                                                                             | $      
|                                              | Accounts receivable, net of an allowance of $5,343 (2002$4,084) |                                                                                                                                             |        
|                                              | Inventories (note 8)                                             |                                                                                                                                             |        
|                                              | Prepaids and other (note 8)                                      |                                                                                                                                             |        
|                                              | Deferred income taxes (note 15)                                  |                                                                                                                                             |        
|                                              |                                                                  |                                                                                                                                             |        
|                                              |                                                                  |                                                                                                                                             | 122,382
|                                              |                                                                  |                                                                                                                                             |        
|Other receivables (note 9)                    |                                                                  |                                                                                                                                             | 5,839  
|Interest rate swap (note 18)                  |                                                                  |                                                                                                                                             | 6,279  
|Fixed assets (note 10)                        |                                                                  |                                                                                                                                             | 46,600 
|Other assets (note 10)                        |                                                                  |                                                                                                                                             | 2,777  
|Deferred income taxes (note 15)               |                                                                  |                                                                                                                                             | 103    
|Intangible assets (note 11)                   |                                                                  |                                                                                                                                             | 31,427 
|Goodwill (note 12)                            |                                                                  |                                                                                                                                             | 173,624
|                                              |                                                                  |                                                                                                                                             |        
|                                              |                                                                  |                                                                                                                                             | 266,649
|                                              |                                                                  |                                                                                                                                             |        
|                                              |                                                                  | $                                                                                                                                           | 389,031
|                                              |                                                                  |                                                                                                                                             |        
|Liabilities                                   |                                                                  |                                                                                                                                             |        
|Current liabilities                           |                                                                  |                                                                                                                                             |        
|                                              | Accounts payable                                                 |                                                                                                                                             | $      
|                                              | Accrued liabilities (note 8)                                     |                                                                                                                                             |        
|                                              | Income taxes payable                                             |                                                                                                                                             |        
|                                              | Unearned revenue                                                 |                                                                                                                                             |        
|                                              | Long-term debtcurrent (note 13)                                 |                                                                                                                                             |        
|                                              | Deferred income taxes (note 15)                                  |                                                                                                                                             |        
|                                              |                                                                  |                                                                                                                                             |        
|                                              |                                                                  |                                                                                                                                             | 70,508 
|                                              |                                                                  |                                                                                                                                             |        
|Long-term debt less current portion (note 13) |                                                                  |                                                                                                                                             | 161,889
|Interest rate swap (note 18)                  |                                                                  |                                                                                                                                             |       
|Deferred income taxes (note 15)               |                                                                  |                                                                                                                                             | 19,404 
|Minority interest                             |                                                                  |                                                                                                                                             | 13,824 
|                                              |                                                                  |                                                                                                                                             |        
|                                              |                                                                  |                                                                                                                                             | 195,117
|                                              |                                                                  |                                                                                                                                             |        
|Shareholders' equity                          |                                                                  |                                                                                                                                             |        
|                                              | Capital stock (note 14)                                          |                                                                                                                                             |        
|                                              |                                                                  | Issued and outstanding 13,501,343 (200213,112,418) Subordinate Voting Shares and 662,847 (2002662,847) convertible Multiple Voting Shares |        
|                                              | Receivables pursuant to share purchase plan (note 14)            |                                                                                                                                             |        
|                                              | Retained earnings                                                |                                                                                                                                             |        
|                                              | Cumulative other comprehensive earnings (loss)                   |                                                                                                                                             |        
|                                              |                                                                  |                                                                                                                                             |        
|                                              |                                                                  |                                                                                                                                             | 123,406
|                                              |                                                                  |                                                                                                                                             |        
|                                              |                                                                  | $                                                                                                                                           | 389,031
|                                              |                                                                  |                                                                                                                                             |        

Commitments and contingencies (note 19)

On
behalf of the Board,

|/s/ JAY S. HENNICK
Director | /s/ PETER F. COHEN
Director
|--------------------------- | ---------------------------

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

15

---



FIRSTSERVICE CORPORATION        CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY        (in thousands of U.S. Dollars)in accordance with  United States generally accepted accounting
principles

Issued and outstanding shares (note 14)

Capital stock (note 14)

Receivables pursuant to share purchase plan

Retained earnings

Cumulative other comprehensive earnings (loss)

Total shareholders' equityBalance, March 31, 2000, as previously reported

12,989,530

$
53,849

$
(3,294
)
$
15,614

$
2,169

$
68,338Restatement adjustment










(160
)




(160
)Balance, March 31, 2000, as restated (see note 3)

12,989,530

$
53,849

$
(3,294
)
$
15,454

$
2,169

$
68,178Comprehensive earnings:Net earnings










12,631





12,631Foreign currency translation adjustments (note 17)













(2,352
)

(2,352
)Comprehensive earnings
















10,279Subordinate Voting Shares:Issued for purchase of minority interest

69,360


649











649Stock options exercised

158,850


580











580Purchased for cancellation

(49,500
)

(215
)




(349
)




(564
)Cash payments on share purchase plan







98








98Balance, March 31, 2001 (restatedsee note 3)

13,168,240


54,863


(3,196
)

27,736


(183
)

79,220Comprehensive earnings:Net earnings










17,029





17,029Foreign currency translation adjustments (note 17)













(443
)

(443
)Comprehensive earnings
















16,586Subordinate Voting Shares:Stock options exercised

607,025


2,849











2,849Cash payments on share purchase plan







566








566Balance, March 31, 2002 (restatedsee note 3)

13,775,265


57,712


(2,630
)

44,765


(626
)

99,221Comprehensive earnings:Net earnings










18,440





18,440Foreign currency translation adjustments (note 17)













2,947


2,947Comprehensive earnings
















21,387Subordinate Voting Shares:Stock options exercised

421,625


3,002











3,002Purchased for cancellation

(32,700
)

(143
)




(257
)




(400
)Cash payments on share purchase plan







196








196Balance, March 31, 2003 (restatedsee note 3)

14,164,190

$
60,571

$
(2,434
)
$
62,948

$
2,321

$
123,406


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

16

---

FIRSTSERVICE CORPORATION        CONSOLIDATED STATEMENTS OF CASH FLOWS        (in thousands of U.S. Dollars)in accordance with  United States generally accepted accounting principles

For the years ended March 312003

2002

2001(restated
see note 3)

(restated
see note 3)

(restated
see note 3)Cash provided by (used in)Operating activitiesNet earnings

$
18,440

$
17,029

$
12,631Items not affecting cash:Depreciation and amortization


14,439


12,879


12,328Deferred income taxes


2,804


153


748Minority interest share of earnings


3,163


3,782


2,973Write-off of financing fees on early debt retirement





1,375


Other


(287
)

471


451Changes in operating assets and liabilities:Accounts receivable


9,550


(6,746
)

(5,235
)Inventories


(4,239
)

(658
)

(450
)Prepaids and other


(918
)

(1,908
)

(1,270
)Accounts payable


(609
)

(2,047
)

3,304Accrued liabilities


(6,738
)

279


(4,103
)Income taxes payable


(914
)

489


2,520Unearned revenue


(2,137
)

(133
)

(1,607
)Net cash provided by operating activities


32,554


24,965


22,290Investing activitiesAcquisitions of businesses, net of cash acquired


(9,907
)

(15,363
)

(40,583
)Purchases of minority shareholders' interests


(6,352
)

(4,623
)

(4,070
)Purchases of fixed assets


(10,660
)

(15,611
)

(10,502
)Purchases of intangible assets


(743
)

(1,153
)

(221
)Decrease in other assets


2,069


683


130(Increase) decrease in other receivables


(578
)

80


(705
)Net cash used in investing activities


(26,171
)

(35,987
)

(55,951
)Financing activitiesIncreases in long-term debt


14,946


168,817


43,374Repayments of long-term debt


(28,683
)

(155,246
)

(7,006
)Financing fees paid





(3,030
)

Proceeds received on exercise of stock options


3,002


2,849


580Repayment of receivables pursuant to share purchase plan


196


566


98Repurchases of Subordinate Voting Shares


(400
)




(564
)Dividends paid to minority shareholders of subsidiaries


(191
)

(139
)

(475
)Net cash (used in) provided by financing activities


(11,130
)

13,817


36,007Effect of exchange rate changes on cash


2,793


(578
)

(528
)(Decrease) increase in cash and cash equivalents during the year


(1,954
)

2,217


1,818Cash and cash equivalents, beginning of year


7,332


5,115


3,297Cash and cash equivalents, end of year

$
5,378

$
7,332

$
5,115


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

17

---



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS        (in thousands of U.S. Dollars, except per share amounts)in accordance with  United States generally accepted accounting principles

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 significant accounting policies

The preparation of the financial statements in conformity with United States generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. The most significant estimates are related to goodwill, intangible assets and the collectibility of accounts receivable. Actual results could be
materially different from these estimates. Significant accounting policies are summarized as follows:

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and accounts are eliminated on
consolidation.

Cash and cash equivalents

Cash equivalents consist of highly liquid investments, which are readily convertible into cash and have original maturities of three months or less.

Inventories

Inventories are carried at the lower of cost and net realizable value. Cost is determined by the weighted average or first-in, first-out
methods. The weighted average and the first-in, first-out methods represent approximately 45% and 55% of total inventories, respectively (200230% and 70%).
Finished goods and work-in-progress include the cost of materials, direct labor and manufacturing overhead costs.

Fixed assets

Fixed assets are stated at cost less accumulated depreciation. The cost of additions and improvements are capitalized, while maintenance and repairs are expensed
as incurred. Fixed assets are depreciated over their estimated useful lives as follows:

|Buildings                       |  | 5% declining balance and 20 to 40 years straight-line       
|------------------------------- |  | ------------------------------------------------------------
|Vehicles                        |  | 3 to 10 years straight-line                                 
|Furniture and equipment         |  | 20% to 30% declining balance and 3 to 10 years straight-line
|Computer equipment and software |  | 20% declining balance and 3 to 5 years straight-line        
|Enterprise system software      |  | 5 to 10 years straight-line                                 
|Leasehold improvements          |  | term of the leases to a maximum of 10 years                 

The
Company reviews the carrying value of fixed assets for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the
estimated future cash flows expected to result from its use and eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of the asset, an impairment loss is
recognized. Measurement of the impairment loss is based on the excess of the carrying amount of the asset over fair value calculated using discounted expected future cash flows.

18

---

Financial instruments

The Company uses interest rate swaps to hedge its interest rate exposure. 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.

Financing fees

Financing fees related to the revolving credit facility are amortized to interest expense on a straight-line basis over the term of the associated
debt. Financing fees related to the senior secured notes are amortized to interest expense using the effective interest method.

Goodwill and intangible assets

Goodwill and intangible assets are accounted for in accordance with Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards
("SFAS") No. 141,Business Combinations, ("SFAS 141") and SFAS No. 142,Goodwill and Other
Intangible Assets("SFAS 142"). Goodwill represents the excess of purchase price over the fair value of identifiable assets acquired in a business combination and is not
subject to amortization.

Intangible
assets are recorded at cost and are amortized over their estimated useful lives as follows:

|Management contracts and other   |  | straight-line over life of contract
|-------------------------------- |  | -----------------------------------
|Customer lists and relationships |  | straight line over 2 to 15 years   
|Trademarks and trade names       |  | straight-line over 25 to 35 years  
|Franchise rights                 |  | by pattern of use                  

The
Company reviews the carrying value of intangible assets for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the
estimated future cash flows expected to result from its use and eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of the asset, an impairment loss is
recognized. Measurement of the impairment loss is based on the excess of the carrying amount of the asset over fair value calculated using discounted expected future cash flows.

Goodwill
is tested for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired, in which case the carrying value of the asset is
written down to fair value. Impairment of goodwill is tested at the reporting unit level by comparing the reporting unit's carrying amount, including goodwill, to the fair value of the reporting unit.
The fair values of the reporting units are estimated using a discounted cash flows approach. If the carrying amount of the reporting unit exceeds its fair value, then a second step is performed to
measure the amount of impairment loss, if any.

Revenue recognition and unearned revenue

(a)   Company-owned services

Revenues from Residential Property Management, Company-owned Consumer Services, Integrated Security Services and Business Services are recognized at the time the
service is rendered or the product is shipped. Revenues from Integrated Security Services installation contracts and Residential Property Management painting and restoration contracts in process are
recognized on the percentage of completion method, generally in the ratio of actual costs to total estimated contract costs, unless the Company cannot reasonably estimate its gross margins in which
case the completed contract method is used. Amounts received from customers in advance of services being provided are recorded as unearned revenue when received.

(b)   Franchised services

The Company's franchised Consumer Services are conducted principally through subsidiaries California Closet Company, Inc., Paul Davis
Restoration, Inc., Certa ProPainters Ltd. and College Pro Painters Ltd. Royalties are charged as a percentage of revenues, as defined, where reported by the franchisees except for
Certa ProPainters Ltd., where the franchisees are charged either a fixed monthly amount or a percentage of revenues. Revenues from administrative and other support services, as applicable, are
recognized as the services are provided.

19

---

Advertising costs

Advertising costs are expensed as incurred except for prepaid direct-response advertising, which is recorded as a current asset and is amortized over the period
of expected sales revenue resulting from such advertising.

Foreign currency translation

Assets and liabilities of the Company's subsidiary operations that are measured in a functional currency other than the U.S. Dollar are translated into
U.S. Dollars at the exchange rates prevailing at year-end and revenues and expenses at the weighted average exchange rates for the year. Realized exchange gains and losses are
included in earnings. Currency translation adjustments are included in a separate component of shareholders' equity.

Income taxes

Income taxes have been provided using the asset and liability method whereby deferred tax assets and liabilities are recognized for the expected future tax
consequences of events that have been recognized in the financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the
period in which the change occurs. A valuation allowance is recorded when there is uncertainty regarding realization of a deferred income tax asset.

Income
taxes are not provided on the unremitted earnings of U.S. subsidiaries because it has been the practice and is the intention of the Company to reinvest these earnings
indefinitely in its U.S. subsidiaries.

Stock-based compensation

The Company applies Accounting Principles Board ("APB") Opinion No. 25,Accounting for Stock Issued to
Employees("APB 25"), and related interpretations in accounting for its stock option plan. No compensation expense is recognized when shares or stock options are issued
to employees or directors. Any consideration paid on the exercise of stock options is credited to share capital. However, the Company discloses pro forma earnings and earnings per share to
reflect compensation costs in accordance with the methodology prescribed under SFAS No. 123,Accounting for Stock-Based Compensation("SFAS 123").

3.     Restatements

As a result of a detailed review of the accounting for certain intangible assets, including purchase accounting at the times of acquisition and accounting upon
the adoption of SFAS 142 at April 1, 2001, the Company has made certain restatements. In particular, the Company recorded deferred income taxes with respect to franchise intangible
assets acquired upon the October 1998 acquisition of California Closet Company, Inc. ("CCC") and the October 1997 acquisition of Paul Davis Restoration, Inc. ("PDR"). In
addition, the Company reevaluated the estimated useful lives of the franchise intangible assets associated with CCC and PDR. It was determined that the amortization of franchise rights should follow
the pattern of use, specifically the attrition rate of the franchisees that were present at the dates of acquisition. The amortization of trademarks and trade names was determined to be 35 and
25 years for CCC and PDR, respectively. Previously, all of these assets were treated as indefinite life intangible assets.

20

---

The
following presents the impact on net earnings of the restatement adjustments for the years ended March 31, 2003, 2002, 2001 and prior years.

|                                    |                      | 2003 |        | 2002 |   | 2001   |      | Prior years |       
|----------------------------------- | -------------------- | ---- | ------ | ---- | - | ------ | ---- | ----------- | ------
|Net earnings as previously reported |                      | $    | 18,836 |      | $ | 17,414 |      | $           | 12,707
|Adjustments:                        |                      |      |        |      |   |        |      |             |       
|                                    | Amortization expense |      |        | (822 | ) |        | (800 | )           |       
|                                    | Income tax recovery  |      |        | 345  |   |        | 336  |             |       
|                                    | Minority interest    |      |        | 81   |   |        | 79   |             |       
|                                    |                      |      |        |      |   |        |      |             |       
|Restated net earnings               |                      | $    | 18,440 |      | $ | 17,029 |      | $           | 12,631
|                                    |                      |      |        |      |   |        |      |             |       

The
consolidated balance sheets as at March 31, 2003 and 2002 were restated to reflect the recognition of deferred income taxes related to the CCC and PDR franchise intangible
assets. This resulted in an increase to goodwill and an increase to deferred income taxes long-term liability. In addition, the balance sheets were restated to take into account the
amortization expense, income tax recovery, minority interest, and effect on retained earnings resulting from the restatement adjustments to net earnings described in the chart above. A reconciliation
of the consolidated balance sheets at March 31, 2003 and 2002 follows.

|                                    |                                             | As at March 31, 2003 |        
|----------------------------------- | ------------------------------------------- | -------------------- | -------
|
|Assets                              |                                             |                      |        
|Current assets                      |                                             |                      |        
|                                    | Cash and cash equivalents                   |                      | $      
|                                    | Accounts receivable                         |                      |        
|                                    | Inventories                                 |                      |        
|                                    | Prepaids and other                          |                      |        
|                                    | Deferred income taxes                       |                      |        
|                                    |                                             |                      |        
|                                    |                                             |                      | 122,382
|                                    |                                             |                      |        
|Other receivables                   |                                             |                      | 5,839  
|Interest rate swap                  |                                             |                      | 6,279  
|Fixed assets                        |                                             |                      | 46,600 
|Other assets                        |                                             |                      | 2,777  
|Deferred income taxes               |                                             |                      | 103    
|Intangible assets                   |                                             |                      | 33,539 
|Goodwill                            |                                             |                      | 164,610
|                                    |                                             |                      |        
|                                    |                                             |                      | 259,747
|                                    |                                             |                      |        
|                                    |                                             | $                    | 382,129
|                                    |                                             |                      |        
|Liabilities                         |                                             |                      |        
|Current liabilities                 |                                             |                      |        
|                                    | Accounts payable                            |                      | $      
|                                    | Accrued liabilities                         |                      |        
|                                    | Income taxes payable                        |                      |        
|                                    | Unearned revenue                            |                      |        
|                                    | Long-term debtcurrent                      |                      |        
|                                    | Deferred income taxes                       |                      |        
|                                    |                                             |                      |        
|                                    |                                             |                      | 70,508 
|                                    |                                             |                      |        
|Long-term debt less current portion |                                             |                      | 161,889
|Interest rate swap                  |                                             |                      |       
|Deferred income taxes               |                                             |                      | 11,277 
|Minority interest                   |                                             |                      | 14,032 
|                                    |                                             |                      |        
|                                    |                                             |                      | 187,198
|                                    |                                             |                      |        
|Shareholders' equity                |                                             |                      |        
|                                    | Capital stock                               |                      |        
|                                    | Receivables pursuant to share purchase plan |                      |        
|                                    | Retained earnings                           |                      |        
|                                    | Cumulative other comprehensive earnings     |                      |        
|                                    |                                             |                      |        
|                                    |                                             |                      | 124,423
|                                    |                                             |                      |        
|                                    |                                             | $                    | 382,129
|                                    |                                             |                      |        

21

---

|                                    |                                             | As at March 31, 2002 |        
|----------------------------------- | ------------------------------------------- | -------------------- | -------
|
|Assets                              |                                             |                      |        
|Current assets                      |                                             |                      |        
|                                    | Cash and cash equivalents                   |                      | $      
|                                    | Accounts receivable                         |                      |        
|                                    | Inventories                                 |                      |        
|                                    | Prepaids and other                          |                      |        
|                                    | Deferred income taxes                       |                      |        
|                                    |                                             |                      |        
|                                    |                                             |                      | 120,871
|                                    |                                             |                      |        
|Other receivables                   |                                             |                      | 4,908  
|Interest rate swap                  |                                             |                      |       
|Fixed assets                        |                                             |                      | 45,367 
|Other assets                        |                                             |                      | 5,411  
|Deferred income taxes               |                                             |                      | 972    
|Intangible assets                   |                                             |                      | 29,422 
|Goodwill                            |                                             |                      | 151,254
|                                    |                                             |                      |        
|                                    |                                             |                      | 237,334
|                                    |                                             |                      |        
|                                    |                                             | $                    | 358,205
|                                    |                                             |                      |        
|Liabilities                         |                                             |                      |        
|Current liabilities                 |                                             |                      |        
|                                    | Accounts payable                            |                      | $      
|                                    | Accrued liabilities                         |                      |        
|                                    | Income taxes payable                        |                      |        
|                                    | Unearned revenue                            |                      |        
|                                    | Long-term debtcurrent                      |                      |        
|                                    | Deferred income taxes                       |                      |        
|                                    |                                             |                      |        
|                                    |                                             |                      | 78,545 
|                                    |                                             |                      |        
|Long-term debt less current portion |                                             |                      | 158,418
|Interest rate swap                  |                                             |                      | 2,070  
|Deferred income taxes               |                                             |                      | 7,881  
|Minority interest                   |                                             |                      | 11,449 
|                                    |                                             |                      |        
|                                    |                                             |                      | 179,818
|                                    |                                             |                      |        
|Shareholders' equity                |                                             |                      |        
|                                    | Capital stock                               |                      |        
|                                    | Receivables pursuant to share purchase plan |                      |        
|                                    | Retained earnings                           |                      |        
|                                    | Cumulative other comprehensive loss         |                      |        
|                                    |                                             |                      |        
|                                    |                                             |                      | 99,842 
|                                    |                                             |                      |        
|                                    |                                             | $                    | 358,205
|                                    |                                             |                      |        

22

---

4.    Adoption of SFAS 142

SFAS 142 was adopted effective April 1, 2001. Had the provisions of SFAS 142 been applied for the year ended March 31, 2001, the
Company's comparative earnings and earnings per share would be as follows:

2003

2002

2001Reported net earnings

$
18,440

$
17,029

$
12,631Goodwill amortization, net of income taxes








2,884Minority interest








(232
)Adjusted net earnings

$
18,440

$
17,029

$
15,283Net earnings per share:BasicReported

$
1.32

$
1.26

$
0.97Goodwill amortization, net of income taxes








0.22Minority interest








(0.02
)Adjusted

$
1.32

$
1.26

$
1.17DilutedReported

$
1.27

$
1.17

$
0.91Goodwill amortization, net of income taxes








0.21Minority interest








(0.02
)Adjusted

$
1.27

$
1.17

$
1.10


5.    Business acquisitions

2003 acquisitions:

The Company completed seven small acquisitions during the year, three in Consumer Services and two in each of Residential Property Management and Business
Services, which collectively are shown in the Acquisitions column below.

The
Company also acquired minority interests from several shareholders during the year comprised of shares of Herbert A. Watts Ltd. ("Watts"), The Wentworth Group, Inc.,
American Pool Enterprises, Inc., and BLW, Inc. d/b/a Security Services and Technologies ("SST").

2002 acquisitions:

In February 2002, an 87.5% owned subsidiary of the Company (DDS Distribution Services Ltd.) acquired 100% of the assets of the Fulfillment Division
of Right Choice Services, Inc. ("Right Choice") of Mascoutah, Illinois. Right Choice is a rebate processing and fulfillment business.

In
July 2001, an 80% owned subsidiary of the Company (SST) acquired an 80% voting equity interest of VASEC Virginia Security and Automation, Inc. ("VASEC") of Springfield,
Virginia. VASEC is a provider of integrated security services.

In
addition, the Company and its subsidiaries acquired three other businesses and acquired minority shareholdings in two subsidiaries.

23

---

Details
of the 2003 acquisitions are as follows:

2003Acquisitions

Purchases of minority shareholders' interestsCurrent assets

$
821

$
Long-term assets


1,347


Current liabilities


(1,389
)

Long-term liabilities


(942
)

(840
)Minority interest


(229
)

775(392
)

(65
)Cash consideration


6,599


6,352Acquired intangibles

$
2,226

$
2,064Acquired goodwill

$
4,765

$
4,353Contingent considerationat date of acquisition

$
4,074

$
1,000


The
purchase price allocations for the 2003 acquisitions have not yet been finalized. They will be finalized during 2004.

Details
of the 2002 acquisitions are as follows:

2002Right Choice

VASEC

Aggregate otherCurrent assets

$
2,212

$
841

$
441Long-term assets


219


86


433Current liabilities


(1,992
)

(539
)

(1,044
)Long-term liabilities





(191
)

(2,293
)Minority interest





(78
)

710439


119


(1,753
)Note consideration








1,720Cash consideration


3,300


1,700


7,287Acquired intangibles

$
527

$
286

$
3,084Acquired goodwill

$
2,334

$
1,295

$
7,676Contingent consideration at date of acquisition

$
3,300

$
860

$
1,985


In
2002, the Company finalized the allocation of the purchase price with respect to the March 2001 Watts acquisition. The final adjustment to this purchase equation and the
purchase equations on other acquisitions resulted in additional goodwill and accrued liabilities in the amount of $1,860, net of income taxes, principally to reflect costs to restructure operations of
one of the acquired Watts subsidiaries. At March 31, 2003, an accrual of $1,667 still exists relating to that acquired subsidiary.

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 March 31, 2003, there was contingent
consideration outstanding of up to $12,700 ($21,300 as at March 31, 2002).

24

---

The
contingencies will expire during the period extending to April 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. Contingent
consideration issued or issuable during the year ended March 31, 2003 was $3,143, net of deferred income tax of $165 (2002$7,425, net of deferred income tax of $273).

The
acquisitions referred to above were accounted for by the purchase method of accounting for business combinations. Accordingly, the accompanying consolidated statements of earnings do
not include any revenues or expenses related to these acquisitions prior to these respective closing dates. The cash portions of the acquisitions were financed through available cash and borrowings
from the Company's revolving credit facility.

Following
are the Company's unaudited pro forma results assuming the 2003 acquisitions and the acquisitions of Right Choice and VASEC occurred on April 1 of the respective
year of acquisition. The year immediately prior to the year of each respective acquisition also includes the pro forma results of that respective acquisition.

2003

2002(unaudited)Pro forma revenue

$
556,075

$
538,416Pro forma net earnings


19,066


18,680Pro forma earnings per share:Basic

$
1.37

$
1.39Diluted


1.31


1.29


These
unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of results of operations that would have actually resulted
had the combinations been in effect at the beginning of each year or of future results of operations.

6.    Unusual item

During the year, the Company received $4,228 (2002 and 2001nil) of executive life insurance proceeds upon the deaths of two senior management
employees, one in the Business Services segment in the amount of $3,228 and one in Residential Property Management in the amount of $1,000. The amounts received were recorded as reductions of selling,
general and administrative costs.

7.    Other income

In March 2003, the Company sold a 7.5% interest in Paul Davis Restoration, Inc. ("PDR") to two officers of PDR, resulting on a gain on sale of
$1,106. In 2002, the Company recorded gains totaling $196 relating to the sale of shares of two subsidiaries (2001nil).

8.    Components of working capital accounts

2003

2002InventoriesWork-in-progress

$
6,009

$
2,445Finished goods


4,560


4,642Supplies and other


4,222


3,143Small equipment


304


288$
15,095

$
10,518


25

---

2003

2002Prepaids and otherInsurance

$
3,108

$
2,562Advertising


2,441


2,467Transportation


1,248


234Security deposits


1,129


1,216Other


5,691


5,681$
13,617

$
12,160Accrued liabilitiesAccrued payroll and benefits

$
16,707

$
15,360Customer advances


10,663


14,838Costs to restructure operations of acquired subsidiary


1,667


2,089Other


5,233


5,982$
34,270

$
38,269


During
the year, the Company incurred $1,904 of severances and related costs in its Business Services segment as part of a plan to reduce overheads and more aggressively realize
synergies within the segment. Of this amount, $1,124 remained unpaid at March 31, 2003 and was included in accrued payroll and benefits within accrued liabilities. The expected date of
completion of the plan is September 2003.

9.    Other receivables

Other receivables are comprised of:



10.    Fixed assets and other assets

Cost

Accumulated depreciation/ Amortization

Net 2003Fixed assetsLand

$
2,234

$


$
2,234Buildings


7,228


1,156


6,072Vehicles


16,788


10,182


6,606Furniture and equipment


36,345


23,112


13,233Computer equipment and software


24,835


14,397


10,438Enterprise system software


4,549


2,402


2,147Leasehold improvements


11,612


5,742


5,870Total

$
103,591

$
56,991

$
46,600Other assetsInvestments

$
756

$


$
756Financing fees


3,119


1,098


2,021Total

$
3,875

$
1,098

$
2,777


26

---

Cost

Accumulated depreciation/ Amortization

Net 20022002Fixed assetsLand

$
2,209

$


$
2,209Buildings


6,790


834


5,956Vehicles


15,153


9,169


5,984Furniture and equipment


33,430


19,476


13,954Computer equipment and software


20,349


11,184


9,165Enterprise system software


4,377


1,669


2,708Leasehold improvements


10,034


4,643


5,391Total

$
92,342

$
46,975

$
45,367Other assetsFunds held in trust

$
1,892

$


$
1,892Investments


850





850Financing fees


3,030


361


2,669Total

$
5,772

$
361

$
5,411


Included
in fixed assets are vehicles under capital lease at a cost of $5,846 (2002$5,697) with a net book value of $3,130 (2002$2,542), furniture and equipment
under capital lease at a cost of $882 (2002$743) and net book value of $497 (2002$435) and computer equipment and software under capital lease at a cost of $822
(2002$757) with a net book value of $393 (2002$604).

11.    Intangible assets

Gross carrying amount

Accumulated amortization

Net 20032003Management contracts and other

$
2,085

$
1,067

$
1,018Customer lists and relationships


6,506


1,122


5,384Trademarks and trade names


11,327


970


10,357Franchise rights


16,464


1,796


14,66836,382


4,955


31,427


Gross carrying amount

Accumulated amortization

Net 20022002Management contracts and other

$
2,376

$
1,639

$
737Customer lists and relationships


2,536


733


1,803Trademarks and trade names


11,327


592


10,735Franchise rights


15,870


1,013


14,85732,109


3,977


28,132


During
the year ended March 31, 2003, the company acquired the following intangible assets:

Amount

Weighted average amortization period in yearsAmortized intangible assetsManagement contracts and other

$
259

12Customer lists and relationships


4,407

10Franchise rights


392

12$
5,058

10


27

---

The following is the estimated annual amortization expense for each of the next five years ending March 31:

2004

$
2,1002005


1,8412006


1,6322007


1,6322008


1,417


12.    Goodwill

Residential Property Management

Integrated Security Services

Consumer Services

Business Services

Corporate

ConsolidatedBalance, April 1, 2001

$
48,268

$
21,774

$
23,982

$
45,654

$


$
139,678Goodwill resulting from adjustments to purchase price allocations


101


(166
)

(255
)

2,180





1,860Goodwill resulting from contingent acquisition payments


3,363


1,853





2,209





7,425Goodwill resulting from purchases of minority shareholders' interests


2,143





2,056








4,199Goodwill acquired during year


1,608


1,351


1,775


2,372





7,106Balance, March 31, 2002


55,483


24,812


27,558


52,415





160,268Goodwill resulting from adjustments to purchase price allocations


(238
)

69


(143
)

19





(293
)Goodwill resulting from contingent acquisition payments


1,450


1,693











3,143Goodwill resulting from purchases of minority shareholders' interests


3,013


380





960





4,353Goodwill acquired during year


2,557





2,208








4,765Foreign exchange





34


149


1,205





1,388Balance, March 31, 2003

$
62,265

$
26,988

$
29,772

$
54,599

$


$
173,624


13.    Long-term debt

2003

2002Revolving credit facility of $140,000 U.S., of which up to $40,000 U.S. may be drawn in Canadian funds, $14,000 U.S. due June 24, 2005 and the balance due June 24, 2006

$
52,026

$
56,1608.06% Senior Secured Notes due June 29, 2011


100,000


100,000Adjustment to Senior Secured Notes resulting from interest rate swaps


6,279


(2,070
)Capital leases bearing interest ranging from 5% to 10%, maturing at various dates through 2007


3,478


3,132Other long-term debt bearing interest primarily at 8%, maturing at various dates through 2008


3,136


8,389164,919


165,611Less: current portion


3,030


7,193$
161,889

$
158,418


The
revolving credit facility at March 31, 2003 is comprised of borrowings of $35,281 U.S. and $24,578 Cdn. ($16,745 U.S.) (2002$44,681 U.S. and $18,300 Cdn. ($11,479
U.S.)).

Included
in capital leases at March 31, 2003 and 2002 are obligations in Canadian dollars of $2,478 ($1,689 U.S.) and $2,263 ($1,420 U.S.), respectively. Included in other
long-term debt at March 31, 2003 and 2002 are obligations in Canadian dollars of $1,569 ($1,069 U.S.) and $6,202 ($3,891 U.S.), respectively.

28

---

At
March 31, 2003, the estimated aggregate amount of principal repayments on long-term debt required in each of the next five fiscal years and thereafter to meet the
retirement provisions are as follows:

2004

$
3,0302005


1,7202006


29,8152007


52,5902008


14,343Thereafter


57,142


The
Company's amended and restated credit agreement provides a $140,000 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 7, 2003. The Credit Facility bears interest at 1.50% to
3.00% over floating reference rates, depending on certain leverage ratios. The average interest rate during fiscal 2003 was 3.90%. At March 31, 2003, the Company had drawn $52,026 on the Credit
Facility, had outstanding letters of credit in the amount of $4,436 and had $83,538 of available un-drawn credit.

The
Company has outstanding $100,000 of ten-year 8.06% fixed-rate Senior Secured Notes (the "Notes"). The Notes have a final maturity of June 29, 2011,
with seven equal annual principal repayments beginning on June 29, 2005, resulting in a seven-year average life. The Company has indemnified the holders of the Notes from all taxes
that are or may become applicable to any payments made by the Company on the Notes. The Company has two interest rate swap agreements related to the Notes. See note 17 for hedge
accounting.

The
Credit Facility and the Notes rank equally in terms of seniority. The Company has granted these lenders collateral including the following: an interest in all of the assets of the
Company including the shares of the Company's 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 Credit Facility and the Notes agreement 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 prohibited from undertaking certain mergers, acquisitions and dispositions without prior approval.

14.    Capital stock

The authorized capital stock of the Company is as follows:



The
following table provides a summary of total capital stock:

Subordinate Voting Shares

Multiple Voting SharesTotal AmountNumber

Amount

Number

Amount

Total NumberBalance, March 31, 2001

12,505,393

$
54,490

662,847

$
373

13,168,240

$
54,863Balance, March 31, 2002

13,112,418


57,339

662,847


373

13,775,265


57,712Balance, March 31, 2003

13,501,343


60,198

662,847


373

14,164,190


60,571


During
the year, the Company repurchased 32,700 (2002nil; 200149,500) Subordinate Voting Shares under a Normal Course Issuer Bid filed with the Toronto Stock
Exchange, which allows the Company to repurchase up to 5% of its outstanding shares on the open market during a twelve-month period.

The
Company has $2,434 ($3,439 Cdn.) (2002$2,630 ($3,714 Cdn.)) of interest bearing loans related to the purchase of 387,500 Subordinate Voting Shares
(2002412,500 shares). The loans, which are collateralized by the shares issued, have a fiveor ten-year term from the grant date, however, they are open for
repayment at any time. The maturities of these loans are as follows, for the years ending March 31.

2004

$
2862005


2006


2007


9162008


4672009


765$
2,434


29

---

The
Company has a stock option plan for officers, key full-time employees and directors 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 term and expires five years from the date granted and allows for the purchase of one Subordinate Voting Share.
Options are exercisable in either U.S. or Canadian Dollars. At March 31, 2003, there were 1,782,990 options outstanding to 54 individuals at prices ranging from $9.24 to $23.14 ($14.25 to
$36.89 Cdn.) per share, expiring on various dates through February 2008. At March 31, 2003, there were 54,030 options available for future grants.

The
number of Subordinate Voting Shares issuable under options and the average option prices per share are as follows:

Shares issuable under options

Weighted average price per share ($U.S.)2003

2002

2001

2003

2002

2001Shares issuable under optionsBeginning of year

2,119,115

2,119,640

1,879,200

$
13.20

$
8.57

$
8.02Granted

101,500

625,000

419,790


15.58


20.93


12.69Exercised for cash

(421,625
)
(607,025
)
(158,850
)

7.41


4.70


3.69Expired or forfeited

(16,000
)
(18,500
)
(20,500
)

19.00


7.25


10.28Shares issuable under optionsEnd of year

1,782,990

2,119,115

2,119,640

$
15.95

$
13.20

$
8.57Options exercisableEnd of year

876,506

925,498

1,117,624


|                                                |  | Weighted average price per share ($Cdn.)
|----------------------------------------------- |  | ----------------------------------------
|
|Shares issuable under optionsBeginning of year |  | $                                       
|Granted                                         |  |                                         
|Exercised for cash                              |  |                                         
|Expired or forfeited                            |  |                                         
|                                                |  |                                         
|Shares issuable under optionsEnd of year       |  | $                                       
|                                                |  |                                         

The
weighted average fair value of options granted in 2003, 2002 and 2001 was $5.10 ($7.90 Cdn.), $6.59 ($10.31 Cdn.) and $4.84 ($7.28 Cdn.) per share, respectively.

The
options outstanding as at March 31, 2003 to purchase Subordinate Voting Shares are as follows:

Options outstanding

Options exercisableRange of exercise prices ($U.S.)

Number outstanding

Weighted average remaining contractual life (years)

Weighted average exercise price
($U.S.)

Number exercisable

Weighted average exercise price
($U.S.)$9.24 to $11.68

574,165

1.72

$
11.10

371,156

$
11.08$11.96 to $14.62

564,825

2.25


13.45

349,450


13.15$15.70 to $23.14

644,000

3.56


22.46

155,900


22.411,782,990

2.50

$
15.95

876,506

$
13.92


30

---

Options outstanding

Options exercisableRange of exercise prices ($Cdn.)

Number outstanding

Weighted average remaining contractual life (years)

Weighted average exercise price
($Cdn.)

Number exercisable

Weighted average exercise price
($Cdn.)$14.25 to $17.25

574,165

1.72

$
16.29

371,156

$
16.27$18.00 to $22.50

564,825

2.25


19.75

349,450


19.30$25.00 to $36.89

644,000

3.56


32.97

155,900


32.891,782,990

2.50

$
23.41

876,506

$
20.43


SFAS 123
requires pro forma disclosures of earnings and earnings per share as if the fair value method of accounting for employee stock options had been applied.
Compensation cost is based on the fair value of the award using the Black-Scholes option pricing model. The disclosures in the table below show the company's earnings and earnings per share after
including the effect of the compensation cost.

2003

2002

2001Pro forma net earnings

$
16,261

$
15,885

$
11,661Pro forma net earnings per share:Basic

$
1.17

$
1.18

$
0.90Diluted


1.12


1.09


0.84Assumptions:Risk-free interest rate


4.5%


5.0%


5.5%Expected life in years


4.4


4.0


4.5Volatility


30%


30%


35%Dividend yield


0.0%


0.0%


0.0%


15.    Income taxes

Income taxes differ from the amounts that would be obtained by applying the statutory rate to the respective years' earnings before taxes. These differences
result from the following items:

2003

2002

2001Income tax expense using combined statutory rates of approximately 40% (200241%; 200144%)

$
11,925

$
12,791

$
11,201Non-deductible expenses:Amortization of goodwill and intangibles








1,085Loss not tax effected





443


Other


735


250


210Non-taxable proceeds of life insurance policies


(1,691
)




Foreign tax rate reduction


(2,720
)

(3,043
)

(2,340
)Provision for income taxes as reported

$
8,249

$
10,441

$
10,156


Earnings
before income taxes and minority interest by tax jurisdiction comprise the following:

2003

2002

2001Canada

$
15,180

$
12,537

$
7,494United States


14,672


18,715


18,266Total

$
29,852

$
31,252

$
25,760


31

---

The
provision for income taxes comprises the following:

2003

2002

2001CurrentCanada

$
2,212

$
3,426

$
2,664United States


5,129


6,862


6,7447,341


10,288


9,408DeferredCanada


585


(1,130
)

633United States


323


1,283


115908


153


748Total

$
8,249

$
10,441

$
10,156


The
significant components of deferred income taxes are as follows:

2003

2002Deferred income tax assetsExpenses not currently deductible

$
900

$
1,100Provision for doubtful accounts


410


507Inventory and other reserves


350


427Loss carry-forwards


1,251


1,5092,911


3,543Deferred income tax liabilitiesDepreciation and amortization


18,277


15,391Prepaid and other expenses deducted for tax purposes


865


583Financing fees


1,328


96220,470


16,936Net deferred income tax liability

$
(17,559
)
$
(13,393
)


Cumulative
undistributed earnings of U.S. subsidiaries approximated $39,933 as at March 31, 2003 (2002 -$31,078).

16.    Shares outstanding for earnings per share calculations

2003

2002

2001Shares issued and outstanding at beginning of year

13,775,265

13,168,240

12,989,530Weighted average number of shares:Issued in the year

148,141

397,077

117,728Repurchased in the year

(2,346
)


(33,396
)Weighted average number of shares used in computing basic earnings per share

13,921,060

13,565,317

13,073,862Assumed exercise of stock options, net of shares assumed acquired under the Treasury Stock Method

576,485

1,034,551

767,134Number of shares used in computing diluted earnings per share

14,497,545

14,599,868

13,840,996


32

---

17.    Other supplemental information

2003

2002

2001Products and services segmentationRevenueProducts

$
96,219

$
75,337

$
54,091Services


446,473


437,352


370,083Total


542,692


512,689


424,174Cost of revenueProducts

$
57,633

$
46,060

$
36,557Services


314,370


297,355


247,917Total


372,003


343,415


284,474Franchised operationsRevenue

$
57,497

$
54,173

$
55,661Operating earnings


11,121


9,283


7,999Initial franchise fee revenue


3,822


2,951


4,157Cash payments made during the yearIncome taxes

$
7,667

$
10,649

$
4,308Interest


7,916


9,633


9,616Non-cash financing activitiesIncreases in capital lease obligations

$
1,565

$
1,965

$
1,170Issuance of Subordinate Voting Shares to acquire minority interest








649Depreciation and amortization expenseFixed assets

$
12,369

$
11,394

$
7,708Goodwill








3,067Intangible assets


2,070


1,485


1,553$
14,439

$
12,879

$
12,328Other expensesAdvertising expense

$
12,066

$
9,582

$
8,264Rent expense


14,756


13,943


10,599


The
foreign currency translation adjustment for the year ended March 31, 2003 is net of current income taxes of nil on realized exchange gains for income tax purposes
(2002nil) (2001$444).

18.    Financial instruments

Concentration of credit risk

The company is subject to credit risk with respect to its accounts receivable and other receivables. Concentrations of credit risk with respect to these
receivables are limited due to the large number of entities comprising the Company's customer base and their dispersion across many different service lines in two countries.

Interest rate risk

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 some 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.

33

---

The
Company has entered into two interest rate swap agreements to exchange the fixed rate on its 8.06% Notes for variable rates. The first swap, entered into in December 2001, has
a notional value of $75,000 and a variable interest rate of LIBOR + 250.5 basis points. The second swap, entered into in October 2002, has a notional value of $25,000 and a
variable interest rate of LIBOR + 445 basis points. The terms of the swaps match the term of the Notes with a maturity of June 29, 2011. The swaps are being accounted for as fair
value hedges in accordance with 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. The fair values of the swaps are 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 value of the swaps fluctuates and at March 31, 2003, the fair values represented a gain of $6,279
(2002a loss of $2,070).

Fair values of financial instruments

The carrying amounts for cash and cash equivalents, funds held in trust, accounts receivable, accounts payable and accrued liabilities approximate fair values due
to the short maturity of these instruments, unless otherwise indicated.

2003

2002Carrying amount

Fair value

Carrying amount

Fair valueOther receivables

$
5,839

$
5,784

$
4,908

$
4,829Long-term debt including current portion


158,640


166,892


165,611


168,941Interest rate swaps


6,279


6,279


(2,070
)

(2,070
)


19.    Commitments and contingencies

(a)    Lease commitments

Minimum operating lease payments are as follows:

Year ending March 312004

$
16,5852005


14,5892006


11,1832007


8,5802008


7,831Thereafter


12,296


(b)    Shareholder agreements

The Company has shareholder agreements with the minority owners of its subsidiaries. These agreements allow the Company to "call" the minority position for a
predetermined formula price, which is usually equal to the multiple of net earnings before extraordinary items, minority interest share of earnings, income taxes, interest, depreciation, and
amortization paid by the Company for the original acquisition. The minority owners may also "put" their interest to the Company at the same price subject to certain limitations. The purchase price
may, at the option of the Company, be paid primarily in Subordinate Voting Shares. Acquisitions of these minority interests would be accounted for using the purchase method. The total obligation if
all call or put options were exercised at March 31, 2003 was approximately $26,000 (2002$30,000). The acquisition of all outstanding minority interests would materially increase
net earnings.

(c)    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 financial condition or operations.

(d)    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 $6,813.

34

---

20.    Related party transactions

During the year, the Company paid $847 (2002$465) in rent to entities controlled by an officer and a director of the Company. In addition, the
Company paid $853 (2002$648) in rent to minority shareholders of subsidiaries. The transactions were completed at market rates.

21.    Segmented information



The Company has four reportable operating segments. The segments are grouped with reference to the types 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 customer support and fulfillment 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.

Residential Property Management

Integrated Security Services

Consumer Services

Business Services

Corporate

Consolidated2003Revenues

$
214,965

$
107,548

$
93,417

$
126,373

$
389

$
542,692Depreciation and amortization


4,089


1,502


3,078


5,620


150


14,439Operating earnings


10,531


5,834


13,344


14,153


(4,978
)

38,884Interest expense

















(9,032
)Income taxes

















(8,249
)Minority interest

















(3,163
)Net earnings
















$
18,440Total assets

$
107,998

$
64,803

$
83,923

$
117,432

$
14,875

$
389,031Total additions to long-lived assets

$
10,991

$
3,942

$
7,749

$
7,781

$
41

$
30,504


Residential Property Management

Integrated Security Services

Consumer Services

Business Services

Corporate

Consolidated2002Revenues

$
205,376

$
95,507

$
83,964

$
127,478

$
364

$
512,689Depreciation and amortization


3,716


1,377


2,706


4,964


116


12,879Operating earnings


15,118


5,158


11,140


17,412


(4,585
)

44,243Interest expense

















(12,991
)Income taxes

















(10,441
)Minority interest

















(3,782
)Net earnings
















$
17,029Total assets

$
106,268

$
57,515

$
77,060

$
117,874

$
7,212

$
365,929Total additions to long-lived assets

$
13,237

$
5,154

$
8,984

$
13,365

$
478

$
41,218


35

---

Residential Property Management

Integrated Security Services

Consumer Services

Business Services

Corporate

Consolidated2001Revenues

$
181,730

$
81,007

$
78,838

$
82,346

$
253

$
424,174Depreciation and amortization


4,505


1,371


2,954


3,397


101


12,328Operating earnings


13,546


4,654


9,548


12,491


(4,712
)

35,527Interest expense

















(9,767
)Income taxes

















(10,156
)Minority interest

















(2,973
)Net earnings
















$
12,631Total assets

$
84,332

$
42,033

$
63,818

$
124,580

$
7,420

$
322,183Total additions to long-lived assets

$
15,652

$
10,194

$
8,535

$
25,796

$


$
60,177


Geographic informationRevenues in each geographic segment are reported by customer location.

2003

2002

2001CanadaRevenues

$
169,135

$
168,669

$
119,372Total long-lived assets

$
68,710

$
53,082

$
49,651United StatesRevenues

$
373,557

$
344,020

$
304,802Total long-lived assets

$
182,941

$
180,685

$
155,834ConsolidatedRevenues

$
542,692

$
512,689

$
424,174Total long-lived assets

$
251,651

$
233,767

$
205,485


22.    Comparative amounts

Certain comparative amounts in the consolidated balance sheets and notes to the consolidated financial statements have been reclassified to conform with the
current year's presentation.

23.    Impact of recently issued accounting standards

In April 2002, the Company adopted SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived
Assets. The adoption of this standard did not have a material impact on results of operations or financial condition.

In
April 2002, FASB issued SFAS No. 145,Rescission of SFAS Nos. 4, 44 and 64, Amendment of SFAS No. 13
and Technical Corrections as of April 2002. Among other changes, this new standard impacts the reporting of gains and losses from extinguishment of debt and
accounting for leases, and is effective for the Company's fiscal year beginning April 1, 2003. The Company implemented this standard effective for the year ended March 31, 2003. The
impact of the change was to eliminate the Company's 2002 extraordinary loss on the early retirement of debt of $797, net of income tax benefit of $578, and report instead increased interest expense of
$1,375 and a reduction of income tax expense of $578.

36

---

In
July 2002, the FASB issued SFAS No. 146,Accounting for Costs Associated with Exit or Disposal Activities("SFAS 146"). This statement requires recording costs associated with such activities at their fair values when a liability has been incurred. Previously, certain exit costs were accrued upon
management's commitment to an exit plan, which is generally before an actual liability has been incurred. SFAS 146 is effective for such activities initiated after December 31, 2002. The
adoption of this standard had no impact on the results of operations.

In
November 2002, FASB Interpretation No. 45,Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (an interpretation of SFAS Nos. 5, 57 and 107 and rescission of FASB Interpretation No. 34)("FIN 45") was issued.
FIN 45 clarifies the requirements relating to a guarantor's accounting for, and disclosure of, the issuance of certain types of guarantees. FIN 45's provisions for initial recognition
and measurement were effective for guarantees issued or modified by the Company after December 31, 2002, and disclosure requirements were effective for financial statements issued after
December 15, 2002. The impact of the adoption of FIN 45 was not material.

In
December 2002, FASB issued SFAS No. 148,Accounting for Stock-Based CompensationTransition and Disclosure, an amendment of
SFAS No. 123("SFAS 148"). SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation, as well as amended disclosure requirements in annual and interim financial statements. The standard is effective for the Company's annual financial statements
for the year ended March 31, 2003. The adoption of this standard did not impact results of operations or financial condition as the Company elected to continue to account for its stock option
plan in accordance with APB 25.

In
January 2003, FASB Interpretation No. 46,Consolidation of Variable Interest Entities (an interpretation of ARB
No. 51)("FIN 46") was issued. FIN 46 addresses consolidation by business enterprises of variable interest entities having certain characteristics and
applies immediately to variable interest entities created after January 31, 2003. The adoption of FIN 46 had no impact on the Company's results of operations or financial condition.

37

---

ITEM 9A.    CONTROLS AND PROCEDURES

The disclosure below, included under Item 14 in the Originally Filed 10-K, has been updated to reflect recent SEC
pronouncements.



38

---





PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

(a)   Financial statements, schedules and exhibits

The
documents listed below are included herein under Part II and are also contained in the FirstService Annual Report to Shareholders for 2003:



Included
in Part IV of this report:



(b)   Reports on Form 8-K filed during the last quarter of Fiscal 2003

None.

39

---



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereto duly authorized.

|                  | FIRSTSERVICE CORPORATION
Registrant                                                          
|----------------- | ---------------------------------------------------------------------------------------------
|February 11, 2004 | /s/JOHN B. FRIEDRICHSENJohn B. Friedrichsen Senior Vice President and
Chief Financial Officer

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in their capacities and on
the date indicated.

|Name and signature                          |  | Title                                                                                          |  | Date             
|------------------------------------------- |  | ---------------------------------------------------------------------------------------------- |  | -----------------
|                                            |  |                                                                                                |  |                  
|/s/JAY S. HENNICKJay S. Hennick             |  | President, Chief Executive
Officer and Director (Principal executive officer)                  |  | February 11, 2004
|/s/JOHN B. FRIEDRICHSENJohn B. Friedrichsen |  | Senior Vice President and
Chief Financial Officer (Principal financial and accounting officer) |  | February 11, 2004
|/s/DAVID R. BEATTYDavid R. Beatty           |  | Director                                                                                       |  | February 11, 2004
|/s/BRENDAN CALDERBrendan Calder             |  | Director                                                                                       |  | February 11, 2004
|/s/PETER F. COHENPeter F. Cohen             |  | Director                                                                                       |  | February 11, 2004
|/s/STEVEN ROGERSSteven Rogers               |  | Director                                                                                       |  | February 11, 2004

40

---



INDEX TO EXHIBITS

Exhibit #

Description3.1

Articles of Incorporation and Amendment. Incorporated by reference to Form 10-Q for the period ended June 30, 1999, filed on August 12, 1999.3.2

By-Laws and Amendments. Incorporated by reference to Form 10-Q for the period ended June 30, 1999, filed on August 12, 1999.10.1

Credit Facility dated April 1, 1999 among the Company and a syndicate of bank lenders. Incorporated by reference to Form 10-Q for the period ended June 30, 1999, filed on August 12, 1999.10.2

FirstService Corporation Amended Stock Option Plan #2. Incorporated by reference to Form 10-K for the year ended March 31, 2000, filed on June 29, 2000.10.3

FirstService Corporation Amended Share Purchase Plan #2. Incorporated by reference to Form 10-K for the year ended March 31, 2000, filed on June 29, 2000.10.4

Amended and Restated Credit Agreement dated June 21, 2001 among the Company and a syndicate of bank lenders. Incorporated by reference to Form 10-Q for the quarter ended June 30, 2001 filed on August 14, 2001.10.5

Note and Guarantee Agreement$100 million U.S. 8.06% Guaranteed Senior Secured Notes due 2011. Incorporated by reference to Form 10-Q for the quarter ended June 30, 2001 filed on August 14, 2001.31.1-31.2

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a).32.1-32.2

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


41

---

QuickLinks