EXHIBIT 2

FIRSTSERVICE CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

Year ended

December 31, 2013

FIRSTSERVICE CORPORATION

MANAGEMENT’S REPORT

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The accompanying consolidated financial statements and management discussion and analysis (“MD&A”) of FirstService Corporation (the “Company”) and all information in this annual report are the responsibility of management and have been approved by the Board of Directors.

The consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America using the best estimates and judgments of management, where appropriate.  The most significant of these accounting principles are set out in Note 2 to the consolidated financial statements. Management has prepared the financial information presented elsewhere in this annual report and has ensured that it is consistent with the consolidated financial statements.

The MD&A has been prepared in accordance with National Instrument 51-102 of the Canadian Securities Administrators, taking into consideration other relevant guidance, including Regulation S-K of the US Securities and Exchange Commission.

The Board of Directors of the Company has an Audit Committee consisting of three independent directors.  The Audit Committee meets regularly to review with management and the independent auditors any significant accounting, internal control, auditing and financial reporting matters.

These consolidated financial statements have been audited by PricewaterhouseCoopers LLP, which have been appointed as the independent registered public accounting firm of the Company by the shareholders.  Their report outlines the scope of their examination and opinion on the consolidated financial statements. As auditors, PricewaterhouseCoopers LLP have full and independent access to the Audit Committee to discuss their findings.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of its effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has excluded eleven individually insignificant entities acquired by the Company during the last fiscal period from its assessment of internal control over financial reporting as at December 31, 2013.   The total assets and total revenues of the eleven majority-owned entities represent 2.5%and 2.1%, respectively, of the related consolidated financial statement amounts as at and for the year ended December 31, 2013.

Management has assessed the effectiveness of the Company’s internal control over financial reporting as at December 31, 2013, based on the criteria set forth in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management has concluded that, as at December 31, 2013, the Company’s internal control over financial reporting was effective.

The effectiveness of the Company's internal control over financial reporting as at December 31, 2013, has been audited by PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firmas stated in their report which appears herein.

/s/ Jay S. Hennick Chief Executive Officer /s/ John B. Friedrichsen Chief Financial Officer

February 24, 2014

Page 2 of 33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of FirstService Corporation

We have audited the accompanying consolidated balance sheets of FirstService Corporation and its subsidiaries as of December 31, 2013 and December 31, 2012 and the related consolidated statements of (loss) earnings, consolidated statements of comprehensive (loss) earnings, consolidated statements of shareholders’ equity and consolidated statements of cash flows for each of the years in the three-year period ended December 31, 2013. We also have audited FirstService Corporation’s and its subsidiaries’ internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and the company’s internal control over financial reporting based on our integrated audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall consolidated financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded eleven entities from its assessment of internal control over financial reporting as of December 31, 2013 because these entities were acquired by the company in purchase business combinations during 2013. We have also excluded these entities acquired from our audit of internal control over financial reporting.  Total assets and total revenues of these majority-owned entities represent 2.5% and 2.1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2013.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of FirstService Corporation and its subsidiaries as of December 31, 2013 and December 31, 2012 and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, FirstService Corporation and its subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control - Integrated Framework (1992) issued by COSO.

/s/ PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Ontario

February 24, 2014

Page 3 of 33

FIRSTSERVICE CORPORATION

CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS

(in thousands of US dollars, except per share amounts)

Years ended December 31	2013			2012			2011
Revenues	$	2,343,634		$	2,110,466		$	1,851,968
Cost of revenues (exclusive of depreciation and amortization shown below)		1,509,882			1,362,980			1,162,770
Selling, general and administrative expenses		661,025			602,657			581,806
Depreciation		34,782			30,694			27,982
Amortization of intangible assets		37,213			17,461			18,544
Acquisition-related items (note 5)		10,498			16,326			4,649
Operating earnings		90,234			80,348			56,217
Interest expense		22,547			20,609			17,965
Interest income		(1,046	)		(1,044	)		(1,167	)
Other (income) expense, net (note 6)		(1,531	)		(2,441	)		6,317
Earnings before income tax		70,264			63,224			33,102
Income tax expense (recovery) (note 16)		22,624			21,007			(43,823	)
Net earnings from continuing operations		47,640			42,217			76,925
Net (loss) earnings from discontinued operations, net of  income tax (note 4)		(5,997	)		(1,328	)		22,878
Net earnings		41,643			40,889			99,803
Non-controlling interest share of earnings		18,252			13,908			12,752
Non-controlling interest redemption increment (note 13)		41,430			21,131			12,941
Net (loss) earnings attributable to Company		(18,039	)		5,850			74,110
Preferred share dividends		3,146			9,603			9,971
Net (loss) earnings attributable to common shareholders	$	(21,185	)	$	(3,753	)	$	64,139
Net earnings (loss) per common share (note 17)
Basic
Continuing operations	$	(0.46	)	$	(0.08	)	$	1.37
Discontinued operations		(0.18	)		(0.04	)		0.76
Basic	$	(0.64	)	$	(0.12	)	$	2.13
Diluted
Continuing operations	$	(0.46	)	$	(0.08	)	$	1.35
Discontinued operations		(0.18	)		(0.04	)		0.75
Diluted	$	(0.64	)	$	(0.12	)	$	2.10

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

Page 4 of 33

FIRSTSERVICE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) EARNINGS

(in thousands of US dollars)

Years ended December 31	2013			2012		2011
Net earnings	$	41,643		$	40,889	$	99,803
Foreign currency translation (loss) gain		(9,725	)		3,423		(4,185	)
Reclassification to earnings of other comprehensive income on investment (note 5)		-			2,553		-
Comprehensive earnings		31,918			46,865		95,618
Less: Comprehensive earnings attributable to non-controlling shareholders		57,795			34,645		25,522
Comprehensive (loss) earnings attributable to Company		(25,877	)		12,220		70,096

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

Page 5 of 33

FIRSTSERVICE CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands of US dollars)

As at December 31	2013			2012
Assets
Current assets
Cash and cash equivalents	$	142,704		$	108,684
Restricted cash		5,613			3,649
Accounts receivable, net of allowance of $25,534 (December 31, 2011 - $22,357)		371,423			328,455
Income tax recoverable		17,489			2,503
Inventories (note 7)		15,804			14,918
Prepaid expenses and other current assets		38,289			34,197
Deferred income tax (note 16)		23,938			18,135
		615,260			510,541
Other receivables		7,455			6,328
Other assets (note 8)		12,256			13,972
Fixed assets (note 9)		101,554			107,011
Deferred income tax (note 16)		102,629			99,464
Intangible assets (note 10)		177,179			177,949
Goodwill (note 11)		427,178			402,645
		828,251			807,369
	$	1,443,511		$	1,317,910
Liabilities and shareholders' equity
Current liabilities
Accounts payable	$	92,937		$	88,593
Accrued liabilities (note 7)		392,499			313,212
Income tax payable		18,317			6,477
Unearned revenues		20,199			19,702
Long-term debt - current (note 12)		44,785			39,038
Deferred income tax (note 16)		1,427			875
		570,164			467,897
Long-term debt - non-current (note 12)		328,009			298,167
Convertible debentures (note 12)		-			77,000
Contingent acquisition consideration (note 19)		8,618			12,649
Other liabilities		34,433			35,610
Deferred income tax (note 16)		31,165			34,683
		402,225			458,109
Redeemable non-controlling interests (note 13)		222,073			147,751
Shareholders' equity
Preferred shares (note 14)		-			130,762
Common shares (note 14)		300,765			118,821
Contributed surplus		37,510			29,781
Deficit		(123,111	)		(74,024	)
Accumulated other comprehensive earnings		26,757			34,595
Total Company shareholders' equity		241,921			239,935
Non-controlling interests		7,128			4,218
Total shareholders' equity		249,049			244,153
	$	1,443,511		$	1,317,910

Commitments and contingencies (notes 14 and 20)

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

On behalf of the Board of Directors,
/s/Bernard I. Ghert	/s/Jay S. Hennick
Director	Director

Page 6 of 33

FIRSTSERVICE CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands of US dollars, except share information)

	Preferred shares						Common shares												Accumulated
	Issued and						Issued and												other			Non-			Total
	outstanding						outstanding						Contributed						comprehensive			controlling			shareholders'
	shares			Amount			shares			Amount			surplus			Deficit			earnings			interests			equity
Balance, December 31, 2010		5,772,274		$	144,307			30,318,274		$	106,473		$	26,782		$	(110,553	)	$	32,239		$	2,083		$	201,331
Net earnings		-			-			-			-			-			99,803			-			-			99,803
Other comprehensive earnings		-			-			-			-			-			-			(4,185	)		-			(4,185	)
Other comprehensive earnings attributable to NCI		-			-			-			-			-			-			171			(20	)		151
NCI share of earnings		-			-			-			-			-			(14,692	)		-			3,242			(11,450	)
NCI share of earnings from discontinued operations		-			-			-			-			-			1,940			-			-			1,940
NCI redemption increment		-			-			-			-			-			(12,941	)		-			-			(12,941	)
Distributions to NCI		-			-			-			-			-			-			-			(2,627	)		(2,627	)
Acquisitions of businesses, net		-			-			-			-			-			-			-			225			225
Subsidiaries’ equity transactions		-			-			-			-			310			-			-			-			310
Subordinate Voting Shares:
Stock option expense		-			-			-			-			2,335			-			-			-			2,335
Stock options exercised		-			-			262,750			7,112			(1,922	)		-			-			-			5,190
Tax benefit on options exercised		-			-			-			-			465			-			-			-			465
Purchased for cancellation		-			-			(639,770	)		(2,764	)		-			(17,544	)		-			-			(20,308	)
Preferred Shares:
Purchased for cancellation		(149,640	)		(3,746	)		-			-			-			-			-			-			(3,746	)
Dividends (note 14)		-			-			-			-			-			(9,971	)		-			-			(9,971	)
Balance, December 31, 2011		5,622,634			140,561			29,941,254			110,821			27,970			(63,958	)		28,225			2,903			246,522
Net earnings		-			-			-			-			-			40,889			-			-			40,889
Other comprehensive earnings		-			-			-			-			-			-			5,976			-			5,976
Other comprehensive earnings attributable to NCI		-			-			-			-			-			-			394			51			445
NCI share of earnings		-			-			-			-			-			(13,952	)		-			2,449			(11,503	)
NCI share of earnings from discontinued operations		-			-			-			-			-			44			-			-			44
NCI redemption increment		-			-			-			-			-			(21,131	)		-			-			(21,131	)
Distributions to NCI		-			-			-			-			-			-			-			(2,333	)		(2,333	)
Acquisitions of businesses, net		-			-			-			-			-			-			-			1,148			1,148
Subsidiaries’ equity transactions		-			-			-			-			607			-			-			-			607
Subordinate Voting Shares:
Stock option expense		-			-			-			-			3,169			-			-			-			3,169
Stock options exercised		-			-			363,850			9,098			(2,165	)		-			-			-			6,933
Tax benefit on options exercised		-			-			-			-			200			-			-			-			200
Purchased for cancellation		-			-			(235,000	)		(1,098	)		-			(6,216	)		-			-			(7,314	)
Preferred Shares:
Purchased for cancellation		(392,000	)		(9,799	)		-			-			-			(97	)		-			-			(9,896	)
Dividends (note 14)		-			-			-			-			-			(9,603	)		-			-			(9,603	)
Balance, December 31, 2012		5,230,634		$	130,762			30,070,104		$	118,821		$	29,781		$	(74,024	)	$	34,595		$	4,218		$	244,153

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

Page 7 of 33

FIRSTSERVICE CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(in thousands of US dollars, except share information)

	Preferred shares						Common shares												Accumulated
	Issued and						Issued and												other			Non-			Total
	outstanding						outstanding						Contributed						comprehensive			controlling			shareholders'
	shares			Amount			shares			Amount			surplus			Deficit			earnings			interests			equity
Balance, December 31, 2012		5,230,634		$	130,762			30,070,104		$	118,821		$	29,781		$	(74,024	)	$	34,595		$	4,218		$	244,153
Net earnings		-			-			-			-			-			41,643			-			-			41,643
Other comprehensive earnings		-			-			-			-			-			-			(9,725	)		-			(9,725	)
Other comprehensive earnings attributable to NCI		-			-			-			-			-			-			1,887			(392	)		1,495
NCI share of earnings		-			-			-			-			-			(18,252	)		-			4,276			(13,976	)
NCI redemption increment		-			-			-			-			-			(41,430	)		-			-			(41,430	)
Distributions to NCI		-			-			-			-			-			-			-			(4,123	)		(4,123	)
Acquisition of businesses, net		-			-			-			-			-			-			-			3,149			3,149
Subsidiaries’ equity transactions		-			-			-			-			3,520			-			-			-			3,520
Subordinate Voting Shares:
Stock option expense		-			-			-			-			4,166			-			-			-			4,166
Stock options exercised		-			-			464,150			9,784			(2,317	)		-			-			-			7,467
Tax benefit on options exercised		-			-			-			-			2,360			-			-			-			2,360
Dividends		-			-			-			-			-			(10,470	)		-			-			(10,470	)
Purchased for cancellation		-			-			(385,600	)		(1,918	)		-			(12,636	)		-			-			(14,554	)
Issued in settlement of convertible debentures		-			-			2,744,886			77,143			-			-			-			-			77,143
Preferred Shares:
Redeemed for cash		(1,569,190	)		(39,232	)		-			-			-			-			-			-			(39,232	)
Converted to Subordinate Voting Shares		(3,661,444	)		(91,530	)		2,889,900			96,326			-			(4,796	)		-			-			-
Dividends (note 14)		-			-			18,292			609			-			(3,146	)		-			-			(2,537	)
Balance, December 31, 2013		-		$	-			35,801,732		$	300,765		$	37,510		$	(123,111	)	$	26,757		$	7,128		$	249,049

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

Page 8 of 33

FIRSTSERVICE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of US dollars)

Years ended December 31	2013			2012			2011
Cash provided by (used in)
Operating activities
Net earnings	$	41,643		$	40,889		$	99,803
NCI share of earnings from discontinued operations		-			44			1,940
Items not affecting cash:
Depreciation and amortization		75,352			53,502			50,926
Deferred income tax		(23,868	)		(18,660	)		(64,512	)
(Earnings) loss from equity method investments		(1,107	)		(1,230	)		3,475
Stock option expense		4,166			3,169			2,335
Other		4,899			3,323			4,278
Incremental tax benefit on stock options exercised		(2,360	)		(200	)		(465	)
Changes in non-cash working capital:
Accounts receivable		(33,613	)		(19,889	)		(22,452	)
Inventories		(1,226	)		(3,046	)		(2,359	)
Prepaid expenses and other current assets		(2,982	)		(3,897	)		(1,796	)
Accounts payable		(2,455	)		(963	)		10,956
Accrued liabilities		44,447			28,979			(7,325	)
Income tax payable		(421	)		11,842			(1,383	)
Unearned revenues		901			48			(2,946	)
Other liabilities		12,901			9,080			9,739
Net cash provided by operating activities		116,277			102,991			80,214
Investing activities
Acquisitions of businesses, net of cash acquired (note 3)		(37,735	)		(19,153	)		(22,975	)
Disposal of business, net of cash disposed (note 4)		49,460			-			-
Purchases of fixed assets		(34,824	)		(44,395	)		(37,400	)
Changes in restricted cash		(1,964	)		844			(156	)
Other investing activities		(2,234	)		850			1,685
Net cash used in investing activities		(27,297	)		(61,854	)		(58,846	)
Financing activities
Increase in long-term debt		551,932			395,584			207,816
Repayment of long-term debt		(516,479	)		(376,349	)		(133,854	)
Financing fees paid		(546	)		(1,808	)		-
Purchases of non-controlling interests		(6,937	)		(8,040	)		(56,621	)
Sale of interests in subsidiaries to non-controlling interests		1,233			1,608			1,014
Contingent acquisition consideration paid		(1,994	)		(7,133	)		(1,623	)
Proceeds received on exercise of stock options		7,467			6,933			5,190
Incremental tax benefit on stock options exercised		2,360			200			465
Dividends paid to preferred shareholders		(2,537	)		(9,603	)		(9,971	)
Dividends paid to common shareholders		(6,890	)		-			-
Distributions paid to non-controlling interests		(22,001	)		(16,321	)		(10,617	)
Repurchases of Subordinate Voting Shares		(14,554	)		(7,314	)		(20,308	)
Repurchases of Preferred Shares		-			(9,896	)		(3,746	)
Redemption of Preferred Shares		(39,232	)		-			-
Net cash used in financing activities		(48,178	)		(32,139	)		(22,255	)
Effect of exchange rate changes on cash		(6,782	)		1,887			(1,673	)
Increase (decrease) in cash and cash equivalents		34,020			10,885			(2,560	)
Cash and cash equivalents, beginning of year		108,684			97,799			100,359
Cash and cash equivalents, end of year	$	142,704		$	108,684		$	97,799

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

Page 9 of 33

FIRSTSERVICE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands of US dollars, except share and per share amounts)

1.  Description of the business

FirstService Corporation (the “Company”) is a provider of real estate-related services to the commercial, institutional and residential markets in North America and various countries around the world.  The Company’s operations are conducted in three segments: Commercial Real Estate Services (“CRE”), Residential Real Estate Services (“RRE”) and Property Services.  The Company operates as Colliers International within CRE; FirstService Residential and American Pool Enterprises within RRE; and Paul Davis, Certa Pro Painters, California Closets and several other franchise brands within Property Services.

2.  Summary of significant accounting policies

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) 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 the determination of fair values of assets acquired and liabilities assumed in business combinations, recoverability of goodwill and intangible assets, estimated fair value of contingent consideration related to acquisitions, recoverability of deferred income tax assets, quantification of uncertain tax positions and the collectability 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, its majority-owned subsidiaries and those variable interest entities where the Company is the primary beneficiary.  Where the Company does not have a controlling interest but has the ability to exert significant influence, the equity method is used.  Inter-company transactions and accounts are eliminated on consolidation.

Cash and cash equivalents

Cash equivalents consist of short-term interest-bearing securities, which are readily convertible into cash and have original maturities at the date of purchase of three months or less.

Restricted cash

Restricted cash consists of cash over which the Company has legal ownership but is restricted as to its availability or intended use, including funds held on behalf of clients and franchisees.

Inventories

Inventories are carried at the lower of cost and market.  Cost is determined using the weighted average method.  Work-in-progress inventory relates to real estate project management and appraisal projects in process and are accounted for using the percentage of completion method.

Fixed assets

Fixed assets are carried at cost less accumulated depreciation.  The costs of additions and improvements are capitalized, while maintenance and repairs are expensed as incurred.  Fixed assets are reviewed for impairment whenever events or circumstances indicate that the carrying value of an asset group may not be recoverable.  An impairment loss is recorded to the extent the carrying amount exceeds the estimated fair value of an asset group.  Fixed assets are depreciated over their estimated useful lives as follows:

Page 10 of 33

Buildings	20 to 40 years straight-line
Vehicles	3 to 5 years straight-line
Furniture and equipment	3 to 10 years straight-line
Computer equipment and software	3 to 5 years straight-line
Leasehold improvements	term of the lease to a maximum of 10 years

Investments in securities

The Company classifies investments in securities under the caption “other assets”.  Investments in equity securities are accounted for using the equity method or cost method.  The equity method is utilized where the Company has the ability to exercise significant influence on the investee.  Realized gains or losses and equity earnings or losses are recorded in other (income) expense.  Equity securities, including marketable equity securities as well as those accounted for under the equity method and cost method, are regularly reviewed for impairment based on both quantitative and qualitative criteria that include the extent to which cost exceeds fair value and the duration of the market decline, the Company’s intent and ability to hold until forecasted recovery, and the financial health and near term prospects for the issuer.  Other-than-temporary impairment losses on equity securities are recorded in earnings.

Financial instruments and derivatives

Derivative financial instruments are recorded on the consolidated balance sheets as other assets or other liabilities and carried at fair value.  From time to time, the Company may use interest rate swaps to hedge a portion of its interest rate exposure on long term debt.  Hedge accounting has been applied and the swaps are carried at fair value on the consolidated balance sheets, with gains or losses recognized in earnings.  The carrying value of the hedged item is adjusted for changes in fair value attributable to the hedged interest rate risk; the associated gain or loss is recognized currently in earnings.  If swaps are terminated and the underlying item is not, the resulting gain or loss is deferred and recognized over the remaining life of the underlying item using the effective interest method.

Fair value

The Company uses the fair value measurements framework for financial assets and liabilities and for non-financial assets and liabilities that are recognized or disclosed at fair value on a non-recurring basis.  The framework defines fair value, gives guidance for measurement and disclosure, and establishes a three-level hierarchy for observable and unobservable inputs used to measure fair value.  An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.  The three levels are as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 – Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities

Level 3 – Unobservable inputs for which there is little or no market data, which requires the Company to develop its own assumptions

Financing fees

Financing fees related to the revolving credit facility and Senior Notes are deferred and amortized to interest expense using the effective interest method.

Goodwill and intangible assets

Goodwill represents the excess of purchase price over the fair value of assets acquired and liabilities assumed in a business combination and is not subject to amortization.

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Intangible assets are recorded at fair value on the date they are acquired.  Indefinite life intangible assets are not subject to amortization.  Where lives are finite, they are amortized over their estimated useful lives as follows:

Customer lists and relationships	straight-line over 4 to 20 years
Franchise rights	by pattern of use, currently estimated at 2.5% to 15% per year
Trademarks and trade names	straight-line over 5 to 35 years
Management contracts and other	straight-line over life of contract ranging from 2 to 15 years
Brokerage backlog	as underlying brokerage transactions are completed

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

Goodwill and indefinite life intangible assets are tested for impairment annually, on August 1, or more frequently if events or changes in circumstances indicate the asset might be impaired, in which case the carrying amount of the asset is written down to fair value.

Impairment of goodwill is tested at the reporting unit level.  The Company has seven reporting units determined with reference to business segment, customer type, service delivery model and geography.  Impairment is tested by first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.  Where it is determined to be more likely than not that its fair value is greater than its carrying amount, then no further testing is required.  Where the qualitative analysis is not sufficient to support that the fair value exceeds the carrying amount then a two-step goodwill impairment test is performed.  In the first step, the reporting unit’s carrying amount, including goodwill, is compared to the estimated fair value of the reporting unit.  The fair values of the reporting units are estimated using a discounted cash flow approach. The fair value measurement is classified within Level 3 of the fair value hierarchy. 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.  Certain assumptions are used to determine the fair value of the reporting units, the most sensitive of which are estimated future cash flows and the discount rate applied to future cash flows. Changes in these assumptions could result in a materially different fair value.

Impairment of indefinite life intangible assets is tested by comparing the carrying amount to the estimated fair value on an individual intangible asset basis.

Redeemable non-controlling interests

Redeemable non-controlling interests (“RNCI”) are recorded at the greater of (i) the redemption amount or (ii) the amount initially recorded as RNCI at the date of inception of the minority equity position.   This amount is recorded in the “mezzanine” section of the balance sheet, outside of shareholders’ equity.  Changes in the RNCI amount are recognized immediately as they occur.

Revenue recognition and unearned revenues

(a) Real estate brokerage operations

Commission revenues from real estate leasing transactions are recognized once performance obligations under the commission arrangement are satisfied.  Terms and conditions of a commission arrangement include execution of the lease agreement and satisfaction of future contingencies such as tenant occupancy.  In most cases, a portion of the commission is earned upon execution of the lease agreement, with the remaining portion contingent on a future event, typically tenant occupancy; revenue recognition for the remaining portion, contingent on occupancy, is deferred until all contingencies are satisfied.

Commission revenues from sales brokerage transactions are recognized at the time the service has been provided and the commission becomes legally due, except when future contingencies exist.  In most cases, close of escrow or transfer of title is a future contingency, and accordingly, revenue recognition is deferred until this contingency is satisfied.

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(b) Franchisor operations

The Company operates several franchise systems within its Property Services segment.  Initial franchise fees are recognized when all material services or conditions related to the sale of the franchise have been performed or satisfied.  Royalty revenues are recognized based on a contracted percentage of franchisee revenues, as reported by the franchisees.  Revenues from administrative and other support services, as applicable, are recognized as the services are provided.

(c) Service operations other than real estate brokerage and franchisor operations

Revenues are recognized at the time the service is rendered.  Certain services including but not limited to real estate project management and appraisal projects in process, are recognized on the percentage of completion method, in the ratio of actual costs to total estimated contract costs.  In cases where anticipated costs to complete a project exceed the revenue to be recognized, a provision for the additional estimated losses is recorded in the period when the loss becomes apparent.  Amounts received from customers in advance of services being provided are recorded as unearned revenues when received.

Stock-based compensation

For equity classified awards, compensation cost is measured at the grant date based on the estimated fair value of the award.  For liability classified awards, the fair value of the award is measured each period it is outstanding and changes in fair value are recorded as compensation expense.  The related stock option compensation expense is allocated using the graded attribution method.

Notional value appreciation plans

Under these plans, subsidiary employees are compensated if the notional value of the subsidiary increases.  Awards under these plans generally have a term of up to ten years and a vesting period of five years.  The increase in notional value is calculated with reference to growth in earnings relative to a fixed threshold amount plus or minus changes in indebtedness relative to a fixed opening amount.  If an award is subject to a vesting condition, then graded attribution is applied to the intrinsic value.  The related compensation expense is recorded in selling, general and administrative expenses and the liability is recorded in accrued liabilities.

Foreign currency translation

Assets, liabilities and operations of foreign subsidiaries are recorded based on the functional currency of each entity.  For certain foreign operations, the functional currency is the local currency, in which case the assets, liabilities and operations are translated at current exchange rates from the local currency to the reporting currency, the US dollar.  The resulting unrealized gains or losses are reported as a component of accumulated other comprehensive earnings.  Realized and unrealized foreign currency gains or losses related to any foreign dollar denominated monetary assets and liabilities are included in net earnings.

Income tax

Income tax has been provided using the asset and liability method whereby deferred income tax assets and liabilities are recognized for the expected future income tax consequences of events that have been recognized in the consolidated financial statements or income tax returns.  Deferred income tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which temporary differences are expected to reverse, be recovered or settled.  The effect on deferred income tax assets and liabilities of a change in income tax rates is recognized in earnings in the period in which the change occurs.  A valuation allowance is recorded unless it is more likely than not that realization of a deferred income tax asset will occur based on available evidence.

The Company recognizes uncertainty in tax positions taken or expected to be taken in a tax return by recording a liability for unrecognized tax benefits on its balance sheet.  Uncertainties are quantified by applying a prescribed recognition threshold and measurement attribute.

The Company classifies interest and penalties associated with income tax positions in income tax expense.

Business combinations

All business combinations are accounted for using the purchase method of accounting.  Transaction costs are expensed as incurred.

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The fair value of the contingent consideration is classified as a financial liability and is recorded on the balance sheet at the acquisition date and is re-measured at fair value at the end of each period until the end of the contingency period, with fair value adjustments recognized in earnings.  However, if the contingent consideration includes an element of compensation to the vendors (i.e. it is tied to continuing employment or it is not linked to the business valuation), then the portion of contingent consideration related to such element is treated as compensation expense over the expected employment period.

3.  Acquisitions

2013 acquisitions:

The Company completed eleven individually insignificant acquisitions, eight in the CRE segment and three in the RRE segment.  In the CRE segment, the Company acquired controlling interest in Colliers Schauer & Scholl GmbH, Colliers Brautigam & Kramer GmbH, Colliers Schon and Lopez Schmitt GmbH, and Trombello Kölbel Immobilienconsulting GmbH (collectively, “Colliers Germany”) as well as four regional firms in the Netherlands, Australia, Canada and Brazil. These acquisitions expanded the CRE segment’s geographic presence to new markets, including Munich, Stuttgart, Frankfurt, Dusseldorf and Berlin. In the RRE segment, the Company acquired firms operating in Missouri, Florida and Alberta, expanding FirstService’s geographic presence in these markets.

Details of these acquisitions are as follows:

	Aggregate Acquisitions
Current assets	$	25,723
Long term assets		2,733
Current liabilities		(35,308)
Long-term liabilities		(18,155)
Redeemable non-controlling interest		(43,531)
Non-controlling interests		(3,629)
	$	(72,167)
Note consideration	$	(776)
Cash consideration, net of cash acquired of $22,984		(37,735)
Acquisition date fair value of contingent consideration		(9,556)
Total purchase consideration	$	(48,067)
Gain on revaluation of previously held equity investment	$	(820)
Acquired intangible assets	$	52,244
Goodwill	$	68,810

During the year, the company recorded a gain upon obtaining control of a business previously accounted for as an equity investment totaling $820 (See note 5).  The gain relates to the revaluation of the previously held equity investment to fair value.

2012 acquisitions:

The Company completed five individually insignificant acquisitions, two in the CRE segment, two in the RRE segment and one in the Property Services segment.  In the CRE segment, the Company acquired assets and select liabilities of Colliers International UK plc (in administration) (“CI UK”) and a regional firm operating in Victoria, Australia. These acquisitions expanded the CRE segment’s geographic presence to new markets, including the United Kingdom, Ireland, Spain and Victoria, Australia.  In the RRE segment, the acquired firms operate in California and Arizona and expand the Company’s service offering in existing markets.  In Property Services, the acquired firm operates in Florida and expands the Company’s geographic presence in an existing market.

Page 14 of 33

Details of these acquisitions are as follows:

	Aggregate Acquisitions
Current assets	$	30,427
Long term assets		3,164
Current liabilities		(21,169)
Long-term liabilities		(1,080)
Redeemable non-controlling interests		(753)
Non-controlling interests		(1,153)
	$	9,436
Note consideration	$	(655)
Cash consideration, net of cash acquired of $419		(19,153)
Acquisition date fair value of contingent consideration		(1,944)
Total purchase consideration	$	(21,752)
Acquired intangible assets	$	7,420
Goodwill	$	4,896

2011 acquisitions:

The Company completed six individually insignificant acquisitions, five in the RRE segment and one in the CRE segment.  In the RRE segment, the acquired firms operate in North and South Carolina, Vancouver, Las Vegas, Toronto and Minneapolis.  The CRE business operates in California.  The acquisitions expand the Company’s geographic presence to new and existing markets.

Details of these acquisitions are as follows:

	Aggregate Acquisitions
Current assets	$	1,819
Long term assets		1,277
Current liabilities		(4,235)
Long-term liabilities		(1,779)
Redeemable non-controlling interests		(7,238)
	$	(10,156)
Cash consideration, net of cash acquired of $531	$	(22,975)
Acquisition date fair value of contingent consideration		(3,482)
Total purchase consideration	$	(26,457)
Acquired intangible assets	$	16,586
Goodwill	$	20,027

Acquisition-related transaction costs for the year ended December 31, 2013 totaled $3,336 (2012 - $5,032; 2011 - $861) and were recorded as expense under the caption “acquisition-related items”.

In all years presented, the fair values of non-controlling interests were determined using an income approach with reference to a discounted free cash flow model using the same assumptions implied in determining the purchase consideration.

The purchase price allocations of acquisitions resulted in the recognition of goodwill.  The primary factors contributing to goodwill are assembled workforces, synergies with existing operations and future growth prospects.  For acquisitions completed during the year ended December 31, 2013, goodwill in the amount of $2,823 is deductible for income tax purposes (2012 - $2,214; 2011 - $11,441).

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The Company typically structures its business acquisitions to include contingent consideration.  Vendors, at the time of acquisition, are entitled to receive a contingent consideration payment if the acquired businesses achieve specified earnings levels during the one- to four-year periods following the dates of acquisition.  The ultimate amount of payment is determined based on a formula, the key inputs to which are (i) a contractually agreed maximum payment; (ii) a contractually specified earnings level and (iii) the actual earnings for the contingency period.  If the acquired business does not achieve the specified earnings level, the maximum payment is reduced for any shortfall, potentially to nil.

Unless it contains an element of compensation, contingent consideration is recorded at fair value each reporting period.  The fair value recorded on the consolidated balance sheet as at December 31, 2013 was $8,740 (see note 19).  The estimated range of outcomes (undiscounted) for these contingent consideration arrangements is determined based on the formula price and the likelihood of achieving specified earnings levels over the contingency period, and ranges from $10,500 to a maximum of $12,600.  These contingencies will expire during the period extending to May 2017.  During the year ended December 31, 2013, $1,994 was paid with reference to such contingent consideration (2012 - $5,492; 2011 - $1,806).

In addition, as at December 31, 2013, the Company had recorded in “Accrued liabilities” $13,727 of consideration payable related to acquisitions where all contingencies had been resolved (2012 - $658).  During the year ended December 31, 2013, $658 was paid with reference to previously resolved contingencies (2012 - $2,451; 2011 - nil).

The compensation element is recorded on a straight line basis over the contingency period and, as at December 31, 2013 totaled $12,009 (2012 - $7,475), which was recorded in “Accrued liabilities” on the balance sheet.  The contingencies related to the compensation element were resolved as of December 31, 2013.

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 their respective closing dates.  The consideration for the acquisitions during the year ended December 31, 2013 was financed from borrowings on the Company’s revolving credit facility and cash on hand.

The amounts of revenues and earnings contributed from the date of acquisition and included in the Company’s consolidated results for the year ended December 31, 2013, and the supplemental pro forma revenues and earnings of the combined entity had the acquisition date been January 1, 2011, are as follows:

	Revenues		Net earnings from continuing operations
Actual from acquired entities for 2013	$	59,564	$	7,231
Supplemental pro forma for 2013 (unaudited)		2,396,038		50,012
Supplemental pro forma for 2012 (unaudited)		2,239,847		47,141
Supplemental pro forma for 2011 (unaudited)		2,090,509		82,292

Supplemental pro forma results were adjusted for non-recurring items.

4.  Discontinued operations

On September 30, 2013, the Company completed the sale of its Field Asset Services operation for cash consideration of $49,460 (net of cash disposed of $5,177).  In addition, the sale agreement provides for contingent consideration which will be recognized if and when realized.  The pre-tax loss on disposal was $7,158, before an income tax recovery of $3,100, resulting in a net loss of $4,058.  Field Asset Services is recorded as a discontinued operation and was previously reported within the Property Services segment.

As at December 31, 2013, the Company decided to sell its residential rental operations (“Rental”).  These operations manage rental units on behalf of institutional owners and other investors.  Rental is recorded as a discontinued operation for all periods presented and was previously reported within the RRE segment.

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	2013			2012			2011
Revenues
Field Asset Services	$	58,063		$	163,413		$	339,416
Rental		24,733			31,658			32,787
		82,796			195,071			372,203
Operating earnings (loss) before income taxes
Field Asset Services	$	(3,623	)	$	(5,072	)	$	36,387
Rental		(2,315	)		3,085			5,447
		(5,938	)		(1,987	)		41,834
(Recovery of) provision for income taxes		(3,999	)		(703	)		17,016
Net operating earnings (loss) from discontinued operations		(1,939	)		(1,284	)		24,818
Net loss on disposal		(4,058	)		-			-
Non controlling interest share of earnings		-			(44	)		(1,940	)
Net earnings (loss) attributable to common shareholders from discontinued operations	$	(5,997	)	$	(1,328	)	$	22,878
Net earnings (loss) per share from discontinued operations
Basic	$	(0.18	)	$	(0.04	)	$	0.76
Diluted		(0.18	)		(0.04	)		0.75

The assets and liabilities of Field Asset Services and Rental as at December 31, 2013 and 2012 are as follows:

	2013		2012
Current assets
Field Asset Services	$	-	$	15,358
Rental		12,531		14,323
		12,531		29,681
Non-current assets
Field Asset Services		-		76,079
Rental		1,259		1,098
		1,259		77,177
Total assets	$	13,790	$	106,858
Current liabilities
Field Asset Services	$	-	$	14,982
Rental		4,206		4,999
		4,206		19,981
Non-current liabilities
Field Asset Services		-		19,482
Rental		290		-
		290		19,482
Total liabilities	$	4,496	$	39,463

Included in non-current assets above for Field Asset Services is $37,195 of goodwill and $17,064 of intangible assets disposed on the date of sale.

Page 17 of 33

5.  Acquisition-related items

Acquisition-related expense (income) is comprised of the following:

	2013			2012		2011
Contingent consideration compensation expense	$	6,181		$	5,096	$	2,819
Contingent consideration fair value adjustments		1,801			3,645		969
Transaction costs		3,336			5,032		861
Reclassification from accumulated other comprehensive loss		-			2,553		-
Gain on revaluation of previously held equity investment (note 3)		(820	)		-		-
	$	10,498		$	16,326	$	4,649

Contingent consideration compensation expense and contingent consideration fair value adjustments relate to acquisitions made in the current year as well as acquisitions made in the preceding four years.

On March 28, 2012, CI UK entered into an administration process, and as a result the Company’s 29.5% equity investment, held since October 2009, ceased.  As such, the company released $2,553 of accumulated other comprehensive loss related to this investment into earnings.

6.  Other (income) expense

	2013			2012			2011
(Earnings) loss from equity method investments	$	(1,107	)	$	(1,230	)	$	3,475
Other-than-temporary impairment of investment		-			-			3,092
Other		(424	)		(1,211	)		(250	)
	$	(1,531	)	$	(2,441	)	$	6,317

During the year ended December 31 2011, as a result of a sustained decline in the market price of the shares of the Company’s investment in Colliers International UK plc, an other-than-temporary impairment charge of $3,092 was recorded in the statement of earnings.

7.  Components of working capital accounts

	December 31, 2013		December 31, 2012
Inventories
Work-in-progress	$	8,748	$	8,223
Finished goods		2,973		2,358
Supplies and other		4,083		4,337
	$	15,804	$	14,918
Accrued liabilities
Accrued payroll, commission and benefits	$	278,641	$	222,671
Accrued interest		3,584		1,540
Customer advances		5,505		4,769
Acquisition consideration payable		25,736		658
Contingent acquisition consideration payable		122		351
Other		78,911		83,223
	$	392,499	$	313,212

Page 18 of 33

8.  Other assets

	December 31, 2013		December 31, 2012
Equity method investments	$	4,946	$	5,455
Financing fees, net of accumulated amortization of $3,329 (December 31, 2012 - $5,359)		1,731		3,199
Other		5,579		5,318
	$	12,256	$	13,972

9.  Fixed assets

December 31, 2013	Cost		Accumulated depreciation		Net
Land	$	2,527	$	-	$	2,527
Buildings		11,803		4,213		7,590
Vehicles		30,516		22,901		7,615
Furniture and equipment		66,289		47,971		18,318
Computer equipment and software		123,637		87,121		36,516
Leasehold improvements		62,079		33,091		28,988
	$	296,851	$	195,297	$	101,554

		Cost		Accumulated depreciation		Net
Land	$	3,093	$	-	$	3,093
Buildings		14,507		4,953		9,554
Vehicles		28,123		21,494		6,629
Furniture and equipment		71,906		51,047		20,859
Computer equipment and software		118,934		81,316		37,618
Leasehold improvements		59,549		30,291		29,258
	$	296,112	$	189,101	$	107,011

Included in fixed assets are vehicles, office and computer equipment under capital lease at a cost of $8,140 (2012 - $8,077) and net book value of $4,028 (2012 - $4,409).

10.  Intangible assets

December 31, 2013	Gross carrying amount		Accumulated amortization		Net
Customer lists and relationships	$	168,966	$	58,054	$	110,912
Franchise rights		36,754		15,762		20,992
Trademarks and trade names:
Indefinite life		24,720		-		24,720
Finite life		32,753		18,540		14,213
Management contracts and other		22,853		16,520		6,333
Brokerage backlog		2,452		2,443		9
	$	288,498	$	111,319	$	177,179

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December 31, 2012	Gross carrying amount		Accumulated amortization		Net
Customer lists and relationships	$	159,242	$	60,375	$	98,867
Franchise rights		38,255		14,148		24,107
Trademarks and trade names:
Indefinite life		20,995		-		20,995
Finite life		40,335		11,193		29,142
Management contracts and other		19,936		15,111		4,825
Brokerage backlog		2,389		2,376		13
	$	281,152	$	103,203	$	177,949

During the year ended December 31, 2013, the Company acquired the following intangible assets:

	Amount		Estimated weighted average amortization period (years)
Customer lists and relationships	$	42,627		11.0
Trademarks and trade names - indefinite life		3,755		-
Trademarks and trade names - finite life		960		5.0
Brokerage backlog		4,151		0.5
Other		751		5.0
	$	52,244		9.2

The following is the estimated annual amortization expense for recorded intangible assets for each of the next five years ending December 31:

2014	$	18,907
2015		16,517
2016		16,152
2017		15,123
2018		13,716

11.  Goodwill

	Commercial Real Estate Services			Residential Real Estate Services			Property Services			Consolidated
Balance, December 31, 2011	$	150,715		$	158,942		$	85,830		$	395,487
Goodwill acquired during the period		2,667			2,074			155			4,896
Other items		(243	)		(227	)		-			(470	)
Foreign exchange		2,169			462			101			2,732
Balance, December 31, 2012		155,308			161,251			86,086			402,645
Goodwill acquired during the period		65,517			3,293			-			68,810
Goodwill disposed during the period		-			-			(37,195	)		(37,195	)
Other items		-			(217	)		-			(217	)
Foreign exchange		(5,116	)		(1,449	)		(300	)		(6,865	)
Balance, December 31, 2013		215,709			162,878			48,591			427,178
Goodwill		245,292			162,878			48,591			456,761
Accumulated impairment loss		(29,583	)		-			-			(29,583	)
	$	215,709		$	162,878		$	48,591		$	427,178

Page 20 of 33

A test for goodwill impairment is required to be completed annually, in the Company’s case as of August 1, or more frequently if events or changes in circumstances indicate the asset might be impaired.  No goodwill impairments were identified in 2013, 2012 or 2011.

12.  Long-term debt and convertible debentures

	December 31, 2013			December 31, 2012
Revolving credit facility	$	148,647		$	230,740
3.84% Notes		150,000			-
6.40% Notes		25,000			37,500
5.44% Notes		40,000			60,000
Unamortized gain on settlement of interest rate swaps		107			229
Adjustments to long term debt resulting from interest rate swaps		(5,196	)		358
Capital leases maturing at various dates through 2017		2,555			2,815
Other long-term debt maturing at various dates up to 2017		11,681			5,563
		372,794			337,205
Less: current portion		44,785			39,038
Long-term debt - non-current	$	328,009		$	298,167
Convertible Debentures		-			77,000
	$	328,009		$	375,167

On March 1, 2012, the Company entered into an amended and restated credit agreement with a syndicate of banks to provide a $350,000 committed revolving credit facility including an uncommitted accordion provision allowing for an additional $100,000 of borrowing capacity under the same terms.  The revolving credit facility has a five-year term ending March 1, 2017 and bears interest at 1.25% to 3.00% over floating reference rates, depending on certain leverage ratios determined quarterly.  The weighted average interest rate for 2013 was 2.0% (2012 - 2.2%).  The revolving credit facility had $166,349 of available un-drawn credit as at December 31, 2013 ($81,247 was un-drawn at December 31, 2012).  As of December 31, 2013, letters of credit in the amount of $7,770 were outstanding ($10,513 as at December 31, 2012).  The revolving credit facility requires a commitment fee of 0.25% to 0.60% of the unused portion, depending on certain leverage ratios.

On January 16, 2013, the Company completed a private placement for $150,000 of senior secured notes with a fixed interest rate of 3.84% (the “3.84% Notes”).  The 3.84% Notes were placed directly with two US based institutional investors.  The 3.84% Notes have a twelve year term extending to January 16, 2025 with five annual principal repayments beginning on January 16, 2021.

The Company has outstanding $25,000 of 6.40% fixed-rate senior secured notes (the “6.40% Notes”).  The 6.40% Notes have a final maturity of September 30, 2015 with four equal annual principal repayments which began on September 30, 2012.  The Company also has outstanding $40,000 of 5.44% fixed-rate senior secured notes (the “5.44% Notes”).  The 5.44% Notes have a final maturity of April 1, 2015 with five equal annual principal repayments which began on April 1, 2011.

The Company has indemnified the holders of the 3.84% Notes, the 6.40% Notes and the 5.44% Notes (collectively, the “Notes”) from all withholding tax that is or may become applicable to any payments made by the Company on the Notes.  The Company believes this exposure is not material as of December 31, 2013.

The revolving 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 Company’s shares of its subsidiaries; an assignment of material contracts; and an assignment of the Company’s “call” rights with respect to shares of the subsidiaries held by non-controlling interests.

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The covenants of the revolving credit facility and the Notes agreements require the Company to maintain certain ratios including leverage, interest coverage and net worth.  The Company is prohibited from undertaking certain mergers, acquisitions and dispositions without prior approval.

On September 24, 2013, the Company completed the redemption of its then outstanding $76,992 in principal amount of 6.50% Convertible Unsecured Subordinate Debentures (“Convertible Debentures”) in accordance with the redemption rights attached to the Convertible Debentures.  Prior to the redemption date, the Company received conversion requests that resulted in the issuance of 2,744,886 Subordinate Voting Shares based on a conversion price of $28.00 per share or 35.7143 shares for every $1 of principal amount of Convertible Debentures.  The balance of the Convertible Debentures were redeemed for cash of $143.

The effective interest rate on the Company’s long-term debt and Convertible Debentures for the year ended December 31, 2013 was 4.5% (2012 - 5.1%).  The estimated aggregate amount of principal repayments on long-term debt required in each of the next five years ending December 31 and thereafter to meet the retirement provisions are as follows:

2014	$	44,785
2015		34,230
2016		346
2017		148,736
2018 and thereafter		144,697

13.  Redeemable non-controlling interests

The minority equity positions in the Company’s subsidiaries are referred to as redeemable non-controlling interests (“RNCI”).  The RNCI are considered to be redeemable securities.  Accordingly, the RNCI is recorded at the greater of (i) the redemption amount or (ii) the amount initially recorded as RNCI at the date of inception of the minority equity position.  This amount is recorded in the “mezzanine” section of the balance sheet, outside of shareholders’ equity.  Changes in the RNCI amount are recognized immediately as they occur.  The following table provides a reconciliation of the beginning and ending RNCI amounts:

	2013			2012
Balance, January 1	$	147,751		$	138,502
RNCI share of earnings		13,976			11,503
RNCI share of other comprehensive earnings		(1,495	)		(445	)
RNCI redemption increment		41,430			21,131
Distributions paid to RNCI		(17,878	)		(13,988	)
Purchases of interests from RNCI, net		(5,242	)		(9,705	)
RNCI recognized on business acquisitions		43,531			753
Balance, December 31	$	222,073		$	147,751

The Company has shareholders’ agreements in place at each of its non-wholly owned subsidiaries.  These agreements allow the Company to “call” the non-controlling interest at a price determined with the use of a formula price, which is usually equal to a fixed multiple of average annual net earnings before extraordinary items, income taxes, interest, depreciation, and amortization.  The agreements also have redemption features which allow the owners of the RNCI to “put” their equity to the Company at the same price subject to certain limitations.  The formula price is referred to as the redemption amount and may be paid in cash or in Subordinate Voting Shares.  The redemption amount as of December 31, 2013 was $215,747 (2012 - $139,728).  The redemption amount is lower than that recorded on the balance sheet as the formula price of certain RNCI are lower than the amount initially recorded at the inception of the minority equity position.  If all put or call options were settled with Subordinate Voting Shares as at December 31, 2013, approximately 5,100,000 (2012 - 4,800,000) such shares would be issued.

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14.  Capital stock

The authorized capital stock of the Company is as follows:

An unlimited number of Preferred Shares, issuable in series;

An unlimited number of Subordinate Voting Shares having one vote per share; and

An unlimited number of Multiple Voting Shares having 20 votes per share, convertible at any time into Subordinate Voting Shares at a rate of one Subordinate Voting Share for each Multiple Voting Share outstanding.

The following table provides a summary of total capital stock issued and outstanding:

	Preferred Shares				Subordinate Voting Shares				Multiple Voting Shares				Total Common Shares
	Number		Amount		Number		Amount		Number		Amount		Number		Amount
Balance, December 31, 2012		5,230,634	$	130,762		28,744,410	$	118,448		1,325,694	$	373		30,070,104	$	118,821
Balance, December 31, 2013		-		-		34,476,038		300,392		1,325,694		373		35,801,732		300,765

On May 3, 2013, the Company eliminated all of its outstanding Preferred Shares, redeeming 30% for cash consideration of $39,232 and converting all remaining Preferred Shares into Subordinate Voting Shares.   The Preferred Shares were converted to Subordinate Voting Shares based on 95% of the weighted average trading price of the Subordinate Voting Shares on the NASDAQ stock market for the 20 trading days ended April 29, 2013 (such weighted average trading price being $33.34).  As a result, 2,889,900 new Subordinate Voting Shares were issued from treasury.

On September 24, 2013, the Company redeemed its outstanding Convertible Debentures, issuing 2,744,886 of Subordinate Voting Shares.  See note 12.

Pursuant to an agreement approved in February 2004, the Company agreed that it will make payments to its Chief Executive Officer (“CEO”) that are contingent upon the arm’s length sale of control of the Company or upon a distribution of the Company’s assets to shareholders.  The payment amounts will be determined with reference to the price per Subordinate Voting Share received by shareholders upon an arm’s length sale or upon a distribution of assets.  The right to receive the payments may be transferred among members of the CEO’s family, their holding companies and trusts.  The agreement provides for the CEO to receive each of the following two payments.  The first payment is an amount equal to 5% of the product of: (i) the total number of Subordinate and Multiple Voting Shares outstanding on a fully diluted basis at the time of the sale and (ii) the per share consideration received by holders of Subordinate and Multiple Voting Shares minus a base price of C$5.675.  The second payment is an amount equal to 5% of the product of (i) the total number of shares outstanding on a fully diluted basis at the time of the sale and (ii) the per share consideration received by holders of Subordinate Voting Shares minus a base price of C$11.05.  Assuming an arm’s length sale of control of the Company took place on December 31, 2013, the amount required to be paid to the CEO would be $131,780.

15.  Stock-based compensation

Company stock option plan

The Company has a stock option plan for certain officers and key full-time employees of the Company and its subsidiaries, other than its CEO.  Options are granted at the market price for the underlying shares on the date of grant.  Each option vests over a four-year term, expires five years from the date granted and allows for the purchase of one Subordinate Voting Share.  All Subordinate Voting Shares issued are new shares.  As at December 31, 2013, there were 298,250 options available for future grants.

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Grants under the Company’s stock option plan are equity-classified awards.  Stock option activity for the years ended December 31, 2013, 2012 and 2011 was as follows:

	Number of options			Weighted average exercise price		Weighted average remaining contractual life (years)		Aggregate intrinsic value
Shares issuable under options - December 31, 2010		1,850,300		$	19.03
Granted		308,000			30.78
Exercised		(262,750	)		19.87
Shares issuable under options - December 31, 2011		1,895,550		$	20.83
Granted		367,000			31.48
Exercised		(363,850	)		19.15
Forfeited		(169,500	)		32.38
Shares issuable under options - December 31, 2012		1,729,200		$	22.31
Granted		422,000			31.35
Exercised		(464,150	)		16.20
Shares issuable under options - December 31, 2013		1,687,050		$	26.25		2.5	$	28,345
Options exercisable - End of period		709,350		$	21.97		1.6	$	14,950

The Company incurred stock-based compensation expense related to these awards of $4,166 during the year ended December 31, 2013 (2012 - $3,169; 2011 - $2,335).

As at December 31, 2013, the range of option exercise prices was $11.74 to $40.66 per share.  Also as at December 31, 2013, the aggregate intrinsic value and weighted average remaining contractual life for in-the-money options vested and expected to vest were $28,345 and 2.5 years, respectively.

The following table summarizes information about option exercises during years ended December 31, 2013, 2012 and 2011:

	2013		2012		2011
Number of options exercised		464,150		363,850		262,750
Aggregate fair value	$	16,780	$	11,198	$	8,510
Intrinsic value		9,313		4,265		3,320
Amount of cash received		7,467		6,933		5,190
Tax benefit recognized	$	3,148	$	1,438	$	1,119

As at December 31, 2013, there was $4,351 of unrecognized compensation cost related to non-vested awards which is expected to be recognized over the next 4 years.  During the year ended December 31, 2013, the fair value of options vested was $3,956 (2012 - $3,485; 2011 - $2,606).

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, utilizing the following weighted average assumptions:

	2013			2012			2011
Risk free rate		0.4	%		0.4	%		1.0	%
Expected life in years		4.75			4.75			4.75
Expected volatility		37.5	%		40.3	%		39.4	%
Dividend yield		0.0	%		0.0	%		0.0	%
Weighted average fair value per option granted	$	10.13		$	10.87		$	10.73

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The risk-free interest rate is based on the implied yield of a zero-coupon US Treasury bond with a term equal to the option’s expected term.  The expected life in years represents the estimated period of time until exercise and is based on historical experience.  The expected volatility is based on the historical prices of the Company’s shares over the previous four years.  The dividend yield assumption for 2013 option grants was nil as the grants preceded the Company’s new dividend policy.

Subsidiary stock option plans

The Company has stock option plans at its Commercial Real Estate subsidiary entitling the holders to acquire up to a 1.0% interest in the subsidiary as at December 31, 2013.  Since the inception of the plan, stock options representing a 7.2% interest in the subsidiary were exercised.  Options, as well as shares acquired upon option exercise under the subsidiary stock option plan, are liability classified awards because the underlying stock is also classified as a liability.  The fair value of the liability relating to these awards is calculated each period using the Black-Scholes option pricing model.  The fair value of the liability related to these awards as at December 31, 2013 was $12,834 (2012 - $4,266) and compensation expense recognized related to the awards for the year ended December 31, 2013 was $8,568 (2012 - $4,266; 2011 - nil).

16.  Income tax

Income tax differs from the amounts that would be obtained by applying the statutory rate to the respective year’s earnings before tax. Differences result from the following items:

	2013			2012			2011
Income tax expense using combined statutory rate of 26.5% (2012 - 26.5%, 2011 - 28.3%)	$	18,622		$	16,754		$	9,351
Permanent differences		4,125			3,327			4,434
Tax effect of flow through entities		(2,156	)		(3,663	)		(3,462	)
Goodwill or other investment impairment charge		-			676			874
Impact of changes in foreign exchange rates		(518	)		1,546			(679	)
Adjustments to tax liabilities for prior periods		925			721			762
Effects of changes in enacted tax rates		250			(14	)		52
Changes in liability for unrecognized tax benefits		181			352			(342	)
Stock-based compensation		2,791			128			(386	)
Foreign, state and provincial tax rate differential		(4,285	)		(946	)		(6,728	)
Tax on preferred shares		880			-			-
Other taxes		1,906			93			2,046
Change in valuation allowances		(97	)		2,033			(49,745	)
Provision for (recovery of) income taxes as reported	$	22,624		$	21,007		$	(43,823	)

Earnings before income tax by jurisdiction comprise the following:

	2013		2012		2011
Canada	$	1,977	$	22,438	$	33,331
United States		4,613		9,811		(20,662	)
Australia		33,061		25,800		21,791
Foreign		30,613		5,175		(1,358	)
Total	$	70,264	$	63,224	$	33,102

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Income tax expense (recovery) comprises the following:

	2013			2012			2011
Current
Canada	$	11,137		$	5,771		$	4,630
United States		3,008			18,139			8,839
Australia		11,088			8,526			7,206
Foreign		11,860			4,729			3,708
		37,093			37,165			24,383
Deferred
Canada		(7,627	)		364			(275	)
United States		(2,435	)		(14,500	)		(67,279	)
Australia		(1,079	)		(743	)		(729	)
Foreign		(3,328	)		(1,279	)		77
		(14,469	)		(16,158	)		(68,206	)
Total	$	22,624		$	21,007		$	(43,823	)

The significant components of deferred income tax are as follows:

	2013			2012
Deferred income tax assets
Loss carry-forwards	$	91,957		$	88,318
Expenses not currently deductible		23,467			17,255
Stock-based compensation		3,956			3,317
Basis differences of partnerships and other entities		14,173			15,685
Allowance for doubtful accounts		4,580			3,324
Inventory and other reserves		2,554			1,611
		140,687			129,510
Less: valuation allowance		(14,120	)		(11,911	)
		126,567			117,599
Deferred income tax liabilities
Depreciation and amortization		31,165			33,751
Unrealized foreign exchange gains		-			932
Prepaid and other expenses deducted for tax purposes		1,427			875
		32,592			35,558
Net deferred income tax asset	$	93,975		$	82,041

From 2008 to 2011, the Company recognized valuation allowances with respect to deferred income tax assets in its CRE operations, primarily in the United States, due to a history of operating losses.  During the fourth quarter of 2011, the Company completed a reorganization of certain operations in the United States. As a result, a valuation allowance in the amount of $48,351 related to the United States CRE operations was reversed as of December 31, 2011.  The recoverability of deferred income tax assets is dependent on generating sufficient taxable income before the 20 year loss carry-forward limitation. Although realization is not assured, the Company believes it is more likely than not that the deferred tax asset will be realized. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry-forward period are reduced.

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The Company has gross operating loss carry-forwards as follows:

	Loss carry forward				Gross losses not recognized				Net
	2013		2012		2013		2012		2013		2012
Canada	$	72,526	$	53,866	$	2,438	$	4,228	$	70,088	$	49,638
United States		164,414		172,155		4,099		4,098		160,315		168,057
Australia		304		889		-		-		304		889
Foreign		46,901		43,578		41,412		40,413		5,489		3,165

The Company has gross capital loss carry-forwards as follows:

	Loss carry forward				Gross losses not recognized				Net
	2013		2012		2013		2012		2013		2012
Canada	$	939	$	1,224	$	939	$	1,224	$	-	$	-
United States		4,197		1,068		4,197		1,068		-		-
Australia		8,123		9,455		8,123		9,455		-		-

These amounts above are available to reduce future federal and provincial income taxes in their respective jurisdictions.  Net operating loss carry-forward balances attributable to the United States and Canada expire over the next 14 to 20 years.  Net operating loss carry-forward balances attributable to Australia are carried forward indefinitely subject to certain continuity of ownership conditions.

Cumulative unremitted earnings of US and foreign subsidiaries approximated $186,121 as at December 31, 2013 (2012 - $149,249).  Income tax is not provided on the unremitted earnings of US and foreign subsidiaries because it has been the practice and is the intention of the Company to reinvest these earnings indefinitely in these subsidiaries.

A reconciliation of the beginning and ending amounts of the liability for unrecognized tax benefits is as follows:

Balance, December 31, 2011	$	7,602
Increases based on tax positions related to 2012		1,093
Reduction for lapses in applicable statutes of limitations		(781)
Balance, December 31, 2012		7,914
Increases based on tax positions related to 2013		384
Increases for tax positions of prior periods		562
Reduction for lapses in applicable statutes of limitations		(840)
Balance, December 31, 2013	$	8,020

Of the $8,020 (2012 - $7,914) in gross unrecognized tax benefits, $8,226, (2012 - $7,914) would affect the Company’s effective tax rate if recognized.  For the year ended December 31, 2013, an expense of $29 in interest and penalties related to provisions for income tax was recorded in income tax expense (2012 - recovery of $38; 2011 - recovery of $238).  As at December 31, 2013, the Company had accrued $151 (2012 - $122) for potential income tax related interest and penalties.

Within the next twelve months, the Company believes it is reasonably possible that $1,500 of unrecognized tax benefits associated with uncertain tax positions may be reduced due to lapses in statutes of limitations.

The Company’s significant tax jurisdictions include the United States, Canada and Australia.  The number of years with open tax audits varies depending on the tax jurisdictions.  Generally, income tax returns filed with the Canada Revenue Agency and related provinces are open for three to four years and income tax returns filed with the U.S. Internal Revenue Service and related states are open for three to five years.  Tax returns in Australia are generally open for four years.

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The Canada Revenue Agency commenced an examination of the Company’s Canadian income tax return for the years 2010 and 2011 that is anticipated to be completed by the end of 2014.  There have not been any proposed adjustments.

The Company does not currently expect any other material impact on earnings to result from the resolution of matters related to open taxation years, other than noted above.  Actual settlements may differ from the amounts accrued.  The Company has, as part of its analysis, made its current estimates based on facts and circumstances known to date and cannot predict changes in facts and circumstances that may affect its current estimates.

17.  Net (loss) earnings per common share

Earnings per share calculations cannot be anti-dilutive, therefore diluted shares are not used in the denominator when the numerator is in a loss position.  The following table reconciles the denominator used to calculate earnings per common share:

	2013			2012			2011
Shares issued and outstanding at beginning of period		30,070,104			29,941,254			30,318,274
Weighted average number of shares:
Issued during the period		2,968,064			250,868			218,418
Repurchased during the period		(110,455	)		(165,703	)		(443,081	)
Weighted average number of shares used in computing basic earnings per share		32,927,713			30,026,419			30,093,611
Assumed exercise of stock options, net of shares assumed acquired under the Treasury Stock Method		334,586			349,531			457,404
Number of shares used in computing diluted earnings per share		33,262,299			30,375,950			30,551,015

18.  Other supplemental information

	2013		2012		2011
Franchisor operations
Revenues	$	80,450	$	75,025	$	74,429
Operating earnings		19,435		16,801		16,110
Initial franchise fee revenues		5,817		5,950		5,857
Cash payments made during the period
Income taxes	$	46,159	$	25,673	$	43,897
Interest		17,314		18,860		16,240
Non-cash financing activities
Increases in capital lease obligations	$	2,215	$	2,948	$	1,540
Other expenses
Rent expense	$	69,489	$	68,580	$	65,992

19.  Financial instruments

Concentration of credit risk

The Company is subject to credit risk with respect to its cash and cash equivalents, accounts receivable and other receivables.  Concentrations of credit risk with respect to cash and cash equivalents are limited by the use of multiple large and reputable banks.  Concentrations of credit risk with respect to the 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 various countries.

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Interest rate risk

The Company maintains an interest rate risk management strategy that uses interest rate hedging contracts from time to time.  The Company’s specific goals are to: (i) manage interest rate sensitivity by modifying the characteristics of its debt and (ii) lower the long-term cost of its borrowed funds.  Fluctuations in interest rates affect the fair value of the hedging contracts as their value depends on the prevailing market interest rate.  Hedging contracts are monitored on a monthly basis.

As of December 31, 2013, the Company was party to two interest rate swap agreements to exchange the fixed rate on a portion of its debt to a floating rate.  On the 3.84% Notes, an interest rate swap exchanges the fixed rate on $150,000 of principal for LIBOR (3 months in arrears) +1.35%.  The terms of the swap match the term of the 3.84% Senior Notes with a maturity of January 16, 2025.  On the 5.44% Senior Notes, an interest rate swap exchanges the fixed rate on $20,000 of principal for LIBOR (6 month in arrears) + 3.87%.  The terms of the swap match the term of the 5.44% Senior Notes with a maturity of April 1, 2015.

The interest rate swaps are being accounted for as fair value hedges.  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 gains or losses are recognized concurrently in earnings.  So long as the hedges are considered highly effective, the net impact on earnings is nil.

The following tables provide fair value information of the hedging instruments and the effect of the hedging instruments during the period:

	2013
Derivative designated as hedging instrument	Balance sheet location	Fair Value
	Other assets
Interest rate swap asset	(non-current)	$	148
	Other liabilities
Interest rate swap liability	(non-current)	$	5,344

Fair values of financial instruments

The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2013:

	Carrying value at		Fair value measurements
	December 31, 2013		Level 1		Level 2		Level 3
Interest rate swap asset	$	148	$	-	$	148	$	-
Interest rate swap liability		5,344		-		5,344		-
Contingent consideration liability		8,740		-		-		8,740

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The fair values of the interest rate swap asset and liability was determined using widely accepted valuation techniques.  The inputs to the measurement of the fair value of contingent consideration related to acquisitions are Level 3 inputs.  The fair value measurements were made using a discounted cash flows approach; significant model inputs were expected future operating cash flows (determined with reference to each specific acquired business) and discount rates (which range from 9.0% to 12.5%).  Changes in the fair value of the contingent consideration liability are comprised of the following:

Balance, December 31, 2012	$	13,000
Amounts recognized on acquisitions		9,556
Fair value adjustments (note 5)		1,801
Resolved and settled in cash		(1,994)
Resolved and recorded in "Accrued liabilities"		(13,727)
Other		104
Balance, December 31, 2013	$	8,740
Less: current portion	$	122
Non-current portion	$	8,618

The carrying amounts for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair values due to the short maturity of these instruments, unless otherwise indicated.  The inputs to the measurement of the fair value of long term debt are Level 3 inputs.  The fair value measurements were made using a net present value approach; significant model inputs were expected future cash outflows and discount rates (which range from 0.1% to 3.0%).  The following are estimates of the fair values for other financial instruments:

	2013				2012
	Carrying amount		Fair value		Carrying amount		Fair value
Other receivables	$	7,455	$	7,455	$	6,328	$	6,328
Long-term debt		372,794		386,952		337,205		347,319
Convertible debentures		-		-		77,000		86,048

Other receivables include notes receivable from non-controlling shareholders and other non-current receivables.

20.  Commitments and contingencies

(a) Lease commitments

Minimum operating lease payments are as follows:

Year ended December 31
2014	$	65,095
2015		55,342
2016		43,743
2017		32,445
2018		26,669
Thereafter		83,424

(b)  Contingencies

In the normal course of operations, the Company is subject to routine claims and litigation incidental to its business.  Litigation currently pending or threatened against the Company includes disputes with former employees and commercial liability claims related to services provided by the Company.  The Company believes resolution of such proceedings, combined with amounts set aside, will not have a material impact on the Company’s financial condition or the results of operations.

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21.  Related party transactions

The Company has entered into office space rental arrangements and property management contracts with senior managers of certain subsidiaries. These senior managers are usually also minority shareholders of the subsidiaries. The business purpose of the transactions is to rent office space for the Company and to generate property management revenues for the Company. The recorded amount of the rent expense for the year ended December 31, 2013 was $950 (2012 - $1,573; 2011 - $3,363). The recorded amount of the property management revenues for year ended December 31, 2013 was $12,988 (2012 - $16,198; 2011 - $15,821). These amounts are settled monthly in cash, and are priced at market rates. The rental arrangements have fixed terms of up to 10 years. The property management contracts have terms of 1 to 3 years.

As at December 31, 2013, the Company had $4,696 of loans receivable from non-controlling shareholders (2012 - $3,487) and $5,081 of loans payable to minority shareholders (2012 - $2,180). The business purpose of the loans receivable is to finance the sale of non-controlling interests in subsidiaries to senior managers. The business purpose of the loans payable is to finance purchases of non-controlling interests. The loan amounts are measured based on the formula price of the underlying non-controlling interests, and interest rates are determined based on the Company’s cost of borrowing plus a spread. The loans have terms of 1 to 10 years, but are open for repayment without penalty at any time.

22.  Segmented information

Operating segments

The Company has three reportable operating segments. The segments are grouped with reference to the nature of services provided and the types of clients that use those services.  The Company assesses each segment’s performance based on operating earnings or operating earnings before depreciation and amortization.  CRE provides commercial property brokerage and other advisory services to clients in North America and in various other countries around the world.  RRE provides property management and related property services to residential communities in North America.  Property Services provides franchised and Company-owned property services to customers in North America. Corporate includes the costs of operating the Company’s corporate head office.

Included in total assets of the CRE segment at December 31, 2013 is $4,744 (2012 - $5,226) of investments in subsidiaries accounted for under the equity method.  The reportable segment information excludes intersegment transactions.

2013	Commercial Real Estate Services		Residential Real Estate Services		Property Services		Corporate			Consolidated
Revenues	$	1,318,779	$	884,334	$	140,317	$	204		$	2,343,634
Depreciation and amortization		32,539		30,655		8,557		244			71,995
Operating earnings (loss)		60,663		30,509		20,305		(21,243	)		90,234
Other income, net											1,531
Interest expense, net											(21,501	)
Income taxes											(22,624	)
Net earnings from continuing operations										$	47,640
Net loss from discontinued operations										$	(5,997	)
Net earnings										$	41,643
Total assets	$	797,520	$	467,480	$	171,028	$	7,483		$	1,443,511
Total additions to long lived assets		129,904		21,854		823		(76	)		152,505

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2012	Commercial Real Estate Services		Residential Real Estate Services		Property Services		Corporate			Consolidated
Revenues	$	1,170,427	$	814,617	$	125,204	$	218		$	2,110,466
Depreciation and amortization		24,106		18,530		5,155		364			48,155
Operating earnings (loss)		33,796		42,574		18,991		(15,013	)		80,348
Other expense, net											2,441
Interest expense, net											(19,565	)
Income taxes											(21,007	)
Net earnings from continuing operations										$	42,217
Net earnings from discontinued operations										$	(1,328	)
Net earnings										$	40,889
Total assets	$	633,439	$	444,037	$	232,757	$	7,677		$	1,317,910
Total additions to long lived assets		35,031		19,689		7,767		73			62,560

2011		Commercial Real Estate Services		Residential Real Estate Services		Property Services		Corporate			Consolidated
Revenues	$	994,579	$	736,029	$	121,172	$	188		$	1,851,968
Depreciation and amortization		22,073		17,887		6,427		139			46,526
Operating earnings (loss)		22,379		42,736		8,043		(16,941	)		56,217
Other expense, net											(6,317	)
Interest expense, net											(16,798	)
Income taxes											43,823
Net earnings from continuing operations										$	76,925
Net earnings from discontinued operations										$	22,878
Net earnings										$	99,803
Total assets	$	576,268	$	423,328	$	210,898	$	23,224		$	1,233,718
Total additions to long lived assets		14,997		49,071		6,441		68			70,577

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Geographic information

Revenues in each geographic region are reported by customer locations.  Amounts reported in geographic regions other than the United States, Canada and Australia are primarily denominated in US dollars, UK pounds and Euros.

	2013		2012		2011
United States
Revenues	$	1,391,450	$	1,295,692	$	1,151,709
Total long-lived assets		395,069		468,602		476,530
Canada
Revenues	$	341,491	$	330,622	$	310,912
Total long-lived assets		88,660		99,529		91,821
Australia
Revenues	$	199,221	$	177,677	$	171,873
Total long-lived assets		44,811		49,269		54,701
Other
Revenues	$	411,472	$	306,475	$	217,474
Total long-lived assets		177,371		70,205		55,494
Consolidated
Revenues	$	2,343,634	$	2,110,466	$	1,851,968
Total long-lived assets		705,911		687,605		678,546

23.  Impact of recently issued accounting standards

On January 1, 2013, the Company adopted updated guidance issued by the Financial Accounting Standards Board (“FASB”) on comprehensive income (ASU 2013-02). This update requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts. The guidance did not have a material impact on the Company’s results of operations, financial position or disclosure.

In July 2013, the FASB issued updated guidance on the presentation of unrecognized tax benefits (ASU 2013-11).  This update provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward exists. The updated guidance is expected to reduce diversity in practice by providing guidance on the presentation of unrecognized tax benefits and will better reflect the manner in which an entity would settle at the reporting date any additional income taxes that would result from the disallowance of a tax position when net operating loss carry-forwards, similar tax losses, or tax credit carry-forwards exist. The amendments in this update should be applied prospectively to all unrecognized tax benefits that existed at the effective date, which for the Company is January 1, 2014. The Company is currently evaluating the impact, if any, of this guidance on its results of operations, financial position and disclosure.

24.  Reclassifications

Certain balances on the consolidated balance sheets have been reclassified to conform to the current year’s presentation.

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