Adds Approximately $25 Million and $0.05 per Diluted Share to 2008 Revenue and Earnings, Respectively TUCSON, Ariz., Aug. 2 /PRNewswire-FirstCall/ -- The Providence ServiceCorporation (Nasdaq: PRSC) today announced that its wholly-ownedsubsidiary, PSC of Canada Exchange Corp. (PSC), has acquired WCGInternational Consultants Ltd. (WCG), a Victoria, British Columbia basedworkforce initiative company with operations in communities across BritishColumbia. The acquisition expands Providence's services beyond the U.S. andprovides a base of multi-year contracts in Canada. The purchase price consisted of approximately US $9.8 million in cash(CD $10.5 million) inclusive of Sellers investment banking fees which arebeing reimbursed by Providence, and the balance in 287,576 exchangeableshares issued by PSC. The shares are exchangeable at the shareholder'soption, for no additional consideration, into unregistered shares ofProvidence's common stock on a one-for-one basis (Exchangeable Shares). Inaddition, Providence may make an earn out payment of up to CD $10.8 millionbased on WCG's financial performance through December 31, 2008. If earned,approximately one third of the earn out payment will be paid in cash andtwo thirds in additional Exchangeable Shares of PSC valued at the price ofProvidence's common stock at the closing date of the transaction. In 2008, Providence expects the acquisition to add approximately US $25million in revenue and be accretive to earnings by approximately US $0.05per diluted share after debt service and the ramp up of recent contractawards to WCG. Providence does not expect any material impact to dilutedearnings per share in 2007. Federal and provincial governments in Canada are expected to expendover CD $1.0 billion to identify, train and place welfare recipients intomeaningful employment, not unlike the workforce initiative programs in theUnited States. "The business combination with Providence will assist WCG with itsstrategic growth strategy," said WCG President Ian Ferguson. "By joiningforces with Providence, we will continue the kind of innovative servicesthat have improved thousands of lives in Canada, and will now look for newopportunities to introduce Providence's home based service model toprovincial government. This should only enhance our existing relationshipswith clients and payers." "The acquisition of WCG is an excellent opportunity to partner with asuccessful and highly respected management team while gaining a foothold inCanada, where we believe there are increasing opportunities to work withthe Canadian government on a variety of programs," commented FletcherMcCusker, Chairman and CEO of Providence. We are pleased that WCG'smanagement team has agreed to stay on and continue to build on theirhistorical success," added McCusker. Scotia Capital Inc. acted as exclusive financial advisor to WCG in thetransaction. WCG is an award-winning, internationally recognized leader incustomized workforce, consulting and technology solutions. From 1995 to2006 the number of British Columbians dependent upon income assistance fellby over 230,000, saving taxpayers hundreds of millions of dollars. WCG madea substantial contribution to this success by assisting clients to attainover 65,000 job placements. WCG recently renewed its fee for servicecontracts with the British Columbia government for a six year term. Foradditional information visit http://www.wcginternational.com. Providence Service Corporation, through its owned and managed entities,provides home and community based social services to government sponsoredclients under programs such as child welfare, juvenile justice, Medicaidand corrections. Providence operates no beds, treatment facilities,hospitals, or group homes preferring to provide services in the client'sown home or other community setting. Through its owned and managedentities, Providence maintains 905 government contracts in 37 states andthe District of Columbia as of March 31, 2007. Certain statements herein, such as any statements about Providence'sconfidence or strategies or its expectations about revenues, results ofoperations, profitability, earnings per share, contracts, collections,award of contracts, acquisitions and related growth, growth resulting frominitiatives in certain states, effective tax rate or market opportunities,constitute "forward-looking statements" within the meaning of the privateSecurities Litigation Reform Act of 1995. Such forward-looking statementsinvolve a number of known and unknown risks, uncertainties and otherfactors which may cause Providence's actual results or achievements to bematerially different from those expressed or implied by suchforward-looking statements. These factors include, but are not limited to,reliance on government-funded contracts, risks associated with governmentcontracting, risks involved in managing government business, legislative orpolicy changes, challenges resulting from growth or acquisitions, adversemedia and legal, economic and other risks detailed in Providence's filingswith the Securities and Exchange Commission. Words such as "believe,""demonstrate," "expect," "estimate," "anticipate," "should" and "likely"and similar expressions identify forward-looking statements. Readers arecautioned not to place undue reliance on those forward-looking statements,which speak only as of the date the statement was made. Providenceundertakes no obligation to update any forward-looking statement containedherein.
