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OCI Orecap Invest Corp

0.06
0.00 (0.00%)
14 Jun 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type
Orecap Invest Corp TSXV:OCI TSX Venture Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 0.06 0.055 0.06 0.06 0.06 0.06 119,000 17:36:43

Toromont Announces 2013 Results and 15% Increase in Quarterly Dividend

10/02/2014 9:33pm

Marketwired Canada


Toromont Industries Ltd. (TSX:TIH) today reported financial results for the
three and twelve-month periods ended December 31, 2013.




------------------------------------------------- --------------------------
                             Three months ended      Twelve months ended    
                                December 31              December 31        
                          ----------------------- --------------------------
millions, except per share                    %                           % 
 amounts                     2013   2012 change        2013     2012 change 
------------------------------------------------- --------------------------
Revenues                   $407.3 $431.1     (6%)  $1,593.4 $1,507.2      6%
Operating income           $ 47.8 $ 61.4    (22%)  $  174.0 $  168.8      3%
Net earnings               $ 34.4 $ 44.7    (23%)  $  123.0 $  119.5      3%
Earnings per share - basic $ 0.45 $ 0.58    (22%)  $   1.61 $   1.56      3%
------------------------------------------------- --------------------------



Toromont reported increased revenues and earnings for the year ended December
31, 2013. The Equipment Group continued to increase its revenues and earnings
through strength in product support, introduction of broader product lines and
capitalizing on large project opportunities. CIMCO business operations achieved
best-ever project and product support revenues for 2013.


Revenues and earnings for the fourth quarter of 2013 were lower than the
comparable period in 2012. This is substantially due to the completion of
significant deliveries in 2012 setting up tough comparators, combined with the
challenging market conditions outlined in the Company's third quarter outlook
statement.


"We are pleased with our overall performance for the year, with increased
revenue and operating income in both groups. Toromont is well-positioned with
the people, resources and capabilities to serve the significant projects that
have arisen in our markets. These projects have contributed to our growth,
although they add a degree of quarter-to-quarter variability," said Scott J.
Medhurst, President and Chief Executive Officer of Toromont Industries Ltd.
"Construction unit sales improved and our installed base of equipment continued
to increase in 2013. Our focus on product support together with improved project
execution in our power systems division, also contributed to growth in earnings
of 3% over excellent results in 2012."


Considering the Company's solid financial position, cash flows and balances, and
positive long- term outlook, the Board of Directors today increased the
quarterly dividend to 15 cents per share. This represents a 15% increase in
Toromont's regular quarterly cash dividend. The next dividend is payable April
1, 2014 to shareholders of record at the close of business on March 13, 2014.
The Company has paid dividends every year since going public in 1968 and this
represents the 25th consecutive year of increases.


Highlights:



--  Net earnings were $123 million ($1.61 per share basic), 3% higher than
    2012. Higher revenues and an improved expense ratio were partly offset
    by lower gross margins.
      
--  Net earnings for the quarter were $34.4 million ($0.45 per share basic),
    down 23% from $44.7 million reported in the same quarter last year. The
    decrease was due to lower revenues, lower gross margins and a higher
    expense ratio, in comparison with the remarkable profitability seen in
    the fourth quarter of 2012.
      
--  Cash flow was substantially improved in 2013 with free cash flows(1) of
    $128.5 million versus a negative free cash flow of $53.9 million in
    2012. This improvement resulted in cash balances increasing to $70.8
    million at December 31, 2013 versus a net usage of credit facilities of
    $24.2 million at the end of 2012.
      
--  Equipment Group revenues were $1.4 billion for 2013, 4% higher than last
    year with record levels across new and used equipment sales, product
    support and rental, demonstrating the diverse market opportunities.
    Operating income again exceeded 10% of revenues and increased 2% year-
    over-year on higher revenues and a lower expense ratio, offset by lower
    gross margins.
      
--  Equipment Group revenues of $352 million were down 4% in the fourth
    quarter versus the similar period of 2012 on lower used equipment sales,
    rentals, RPO activity and parts sales. Operating income was $45 million,
    down 22% from a year ago on the lower revenues and decreased gross
    margins.
      
--  Equipment Group backlogs were $97 million at the end of 2013 compared to
    $128 million at this time last year. Substantially all backlog is
    expected to be delivered in 2014. Bookings of $173 million in the fourth
    quarter were 11% higher than the fourth quarter of 2012. This is a good
    level of activity for this time of the year and represented the second
    highest level in the last five years. Bookings in 2013 set a new annual
    record at $714 million, up 16% from $614 million in the prior year.
      
--  CIMCO revenues for the year were $231 million, setting a new record for
    the fourth consecutive year, up 17% from 2012. Package sales and product
    support increased in Canada and the US. Operating income increased 13%
    for the year, reaching $16 million or 7% of revenues. Higher revenues
    were partially offset by lower gross margins and higher selling and
    administrative expenses.
      
--  CIMCO revenues were down 13% in the fourth quarter versus the similar
    period of 2012 which included substantial activity on a major industrial
    project. Product support revenues increased 10% with strong activity in
    both Canada and the US. Operating income decreased 27% on the lower
    revenues and higher selling and administrative expenses, partially
    offset by higher gross margins.
      
--  CIMCO bookings were $21 million in the fourth quarter of 2013 compared
    to $23 million for the same period last year. Bookings for the year were
    $108 million, lower than 2012 due to a significant order received from
    Maple Leaf Foods in 2012. Excluding this record order, bookings were
    $112 million in 2012, comparable to 2013. Backlogs were $65 million at
    December 31, 2013, down from 2012 but reflective of historical levels.
      
--  Return on opening shareholders' equity (25.7%) and return on capital
    employed (26.5%) along with dividend increases continued Toromont's
    long-term performance of superior shareholder returns.
      
--  The Company maintained a strong financial position. Total debt, net of
    cash, to total capitalization was 10%, well within stated capital
    targets. 



"Toromont enters 2014 with increased equipment populations, including large
construction and high-intensity mining equipment, expanded rental fleets and a
strong balance sheet," continued Mr. Medhurst. "Even though there are challenges
in certain market segments, we expect construction markets to be active based on
continued investment in large infrastructure projects. While mining markets are
capital-constrained in the current environment, we also believe there are
significant opportunities in our territory over the longer-term." 


(1) 'Free Cash Flows' is a non-IFRS financial measure. The Company defines free
cash flow as cash provided by operating activities (as per the Consolidated
Statement of Cash Flows), less cash used in investing activities, other than
business acquisitions.


Quarterly Conference Call and Webcast

Interested parties are invited to join the quarterly conference call with
investment analysts, in listen-only mode, on Tuesday, February 11, 2014 at 8:00
a.m. (ET). The call may be accessed by telephone at 1-866-223-7781 (toll free)
or 416-340-2216 (Toronto area). A replay of the conference call will be
available until Tuesday, February 25, 2014 by calling 1-800-408-3053 or
416-694-9451 and quoting passcode 7809226.


Both the live webcast and the replay of the quarterly conference call can be
accessed at www.toromont.com.


Advisory

Information in this press release that is not a historical fact is
"forward-looking information". Words such as "plans", "intends", "outlook",
"expects", "anticipates", "estimates", "believes", "likely", "should", "could",
"will", "may" and similar expressions are intended to identify statements
containing forward-looking information. Forward-looking information in this
press release is based on current objectives, strategies, expectations and
assumptions which management considers appropriate and reasonable at the time
including, but not limited to, general economic and industry growth rates,
commodity prices, currency exchange and interest rates, competitive intensity
and shareholder and regulatory approvals.


By its nature, forward-looking information is subject to risks and uncertainties
which may be beyond the ability of Toromont to control or predict. The actual
results, performance or achievements of Toromont could differ materially from
those expressed or implied by forward- looking information. Factors that could
cause actual results, performance, achievements or events to differ from current
expectations include, among others, risks and uncertainties related to: business
cycles, including general economic conditions in the countries in which Toromont
operates; commodity price changes, including changes in the price of precious
and base metals; changes in foreign exchange rates, including the Cdn$/US$
exchange rate; the termination of distribution or original equipment
manufacturer agreements; equipment product acceptance and availability of
supply; increased competition; credit of third parties; additional costs
associated with warranties and maintenance contracts; changes in interest rates;
the availability of financing; and, environmental regulation.


Any of the above mentioned risks and uncertainties could cause or contribute to
actual results that are materially different from those expressed or implied in
the forward-looking information and statements included in this press release.
For a further description of certain risks and uncertainties and other factors
that could cause or contribute to actual results that are materially different,
see the risks and uncertainties set out in the "Risks and Risk Management" and
"Outlook" sections of Toromont's most recent annual or interim Management
Discussion and Analysis, as filed with Canadian securities regulators at
www.sedar.com and may also be found at www.toromont.com. Other factors, risks
and uncertainties not presently known to Toromont or that Toromont currently
believes are not material could also cause actual results or events to differ
materially from those expressed or implied by statements containing
forward-looking information.


Readers are cautioned not to place undue reliance on statements containing
forward-looking information that are included in this press release, which are
made as of the date of this press release, and not to use such information for
anything other than their intended purpose. Toromont disclaims any obligation or
intention to update or revise any forward-looking information, whether as a
result of new information, future events or otherwise, except as required by
applicable securities legislation.


About Toromont

Toromont Industries Ltd. operates through two business segments: The Equipment
Group and CIMCO. The Equipment Group includes one of the larger Caterpillar
dealerships by revenue and geographic territory in addition to industry leading
rental operations. CIMCO is a market leader in the design, engineering,
fabrication and installation of industrial and recreational refrigeration
systems. Both segments offer comprehensive product support capabilities. This
press release and more information about Toromont Industries can be found at
www.toromont.com.


Management's Discussion and Analysis

This Management's Discussion and Analysis ("MD&A") comments on the operations,
performance and financial condition of Toromont Industries Ltd. ("Toromont" or
the "Company") as at and for the three and twelve months ended December 31,
2013, compared to the preceding year. This MD&A should be read in conjunction
with the attached unaudited consolidated financial statements and related notes
for the twelve months ended December 31, 2013, the annual MD&A contained in the
2012 Annual Report and the audited annual consolidated financial statements for
the year ended December 31, 2012.


The consolidated financial statements reported herein have been prepared in
accordance with International Financial Reporting Standards ("IFRS") and are
reported in Canadian dollars. The information in this MD&A is current to
February 10, 2014.


Additional information is contained in the Company's filings with Canadian
securities regulators, including the Company's 2012 Annual Report and 2013
Annual Information Form. These filings are available on SEDAR at www.sedar.com
and on the Company's website at www.toromont.com.


CORPORATE PROFILE AND BUSINESS SEGMENTATION

As at December 31, 2013, Toromont employed over 3,200 people in almost 100
locations across Canada and the United States. Toromont is listed on the Toronto
Stock Exchange under the symbol TIH.


Toromont has two reportable operating segments: the Equipment Group and CIMCO.

The Equipment Group is comprised of Toromont CAT, one of the world's larger
Caterpillar dealerships, and Battlefield - The CAT Rental Store, an
industry-leading rental operation. Performance in the Equipment Group is driven
by activity in several industries: road building and other
infrastructure-related activities; mining; residential and commercial
construction; power generation; aggregates; waste management; steel; forestry;
and agriculture. Significant activities include the sale, rental and service of
mobile equipment for Caterpillar and other manufacturers; sale, rental and
service of engines used in a variety of applications including industrial,
commercial, marine, on-highway trucks and power generation; and sale of
complementary and related products, parts and service. Territories include
Ontario, Manitoba, Newfoundland and most of Labrador and Nunavut.


CIMCO is a market leader in the design, engineering, fabrication, installation
and after-sale support of refrigeration systems in industrial and recreational
markets. Results of CIMCO are influenced by conditions in the primary market
segments served: beverage and food processing; cold storage; food distribution;
mining; and recreational ice surfaces. CIMCO offers systems designed to optimize
energy usage through proprietary products such as ECO CHILL(R). CIMCO has
manufacturing facilities in Canada and the United States and sells its solutions
globally.


PRIMARY OBJECTIVE AND MAJOR STRATEGIES

A primary objective of the Company is to build shareholder value through
sustainable and profitable growth, supported by a strong financial foundation.
To guide its activities in pursuit of this objective, Toromont works toward
specific, long-term financial goals (see section heading "Key Performance
Measures" in this MD&A) and each of its operating groups consistently employs
the following broad strategies:


Expand Markets

Toromont serves diverse markets that offer significant long-term potential for
profitable expansion. Each operating group strives to achieve or maintain
leading positions in markets served. Incremental revenues are derived from
improved coverage, market share gains and geographic expansion. Expansion of the
installed base of equipment provides the foundation for product support growth
and leverages the fixed costs associated with the Company's infrastructure.


Strengthen Product Support

Toromont's parts and service business is a significant contributor to overall
profitability and serves to stabilize results through economic downturns.
Product support activities also represent opportunities to develop closer
relationships with customers and differentiate the Company's product and service
offering. The ability to consistently meet or exceed customers' expectations for
service efficiency and quality is critical, as after-market support is an
integral part of the customer's decision-making process when purchasing
equipment.


Broaden Product Offerings

Toromont delivers specialized capital equipment to a diverse range of customers
and industries. Collectively, hundreds of thousands of different parts are
offered through the Company's distribution channels. The Company expands its
customer base through selectively extending product lines and capabilities. In
support of this strategy, Toromont represents product lines that are considered
leading and generally best-in-class from suppliers and business partners who
continually expand and develop their offerings. Strong relationships with
suppliers and business partners are critical in achieving growth objectives.


Invest in Resources

The combined knowledge and experience of Toromont's people is a key competitive
advantage. Growth is dependent on attracting, retaining and developing employees
with values that are consistent with Toromont's. A highly principled culture,
share ownership and profitability based incentive programs result in a close
alignment of employee and shareholder interests. By investing in employee
training and development, the capabilities and productivity of employees
continually improve to better serve shareholders, customers and business
partners.


Toromont's information technology represents another competitive differentiator
in the marketplace. The Company's selective investments in technology, inclusive
of e-commerce initiatives, strengthen customer service capabilities, generate
new opportunities for growth, drive efficiency and increase returns to
shareholders.


Maintain a Strong Financial Position

A strong, well-capitalized balance sheet creates stability and financial
flexibility, and has contributed to the Company's long-term track record of
profitable growth. It is also fundamental to the Company's future success.




CONSOLIDATED RESULTS OF                                                     
 OPERATIONS                                                                 
                                                                            
                                      Twelve months ended December 31       
                               ------------                                 
($ thousands, except per share                                              
 amounts)                             2013        2012  $ change  % change  
----------------------------------------------------------------------------
                                                                            
REVENUES                        $1,593,431  $1,507,173  $ 86,258         6% 
Cost of goods sold               1,201,913   1,122,765    79,148         7% 
----------------------------------------------------------------------------
Gross profit                       391,518     384,408     7,110         2% 
Selling and administrative                                                  
 expenses                          217,556     215,600     1,956         1% 
----------------------------------------------------------------------------
OPERATING INCOME                   173,962     168,808     5,154         3% 
Interest expense                     8,693       9,714    (1,021)      (11%)
Interest and investment income      (3,793)     (3,974)      181        (5%)
----------------------------------------------------------------------------
Income before income taxes         169,062     163,068     5,994         4% 
Income taxes                        46,031      43,595     2,436         6% 
----------------------------------------------------------------------------
NET EARNINGS                       123,031     119,473     3,558         3% 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
EARNINGS PER SHARE (BASIC)      $     1.61  $     1.56  $   0.05         3% 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
KEY RATIOS:                                                                 
Gross profit as a % of revenues       24.6%       25.5%                     
Selling and administrative                                                  
 expenses as a % of revenues          13.7%       14.3%                     
Operating income as a % of                                                  
 revenues                             10.9%       11.2%                     
Return on capital employed            26.5%       28.5%                     
Income taxes as a % of income                                               
 before income taxes                  27.2%       26.7%                     
----------------------------------------------------------------------------



Revenues increased in both operating groups. Equipment Group revenues were up 4%
and CIMCO revenues were up 17% with increases in most areas.


Gross profit margin was 24.6% in 2013 compared with 25.5% in 2012. Gross profit
margins were lower in both the Equipment Group and CIMCO.


Selling and administrative expenses increased 1% from 2012, in part reflecting
the 6% increase in revenues. Bad debt expense increased $3.1 million on specific
exposures and the general aging of accounts receivable. Mark-to-market expense
on deferred share units increased $1.9 million, due to the increased share
price. Compensation was $3.3 million (2%) lower in 2013 compared to 2012.
Certain expense categories such as occupancy, legal, freight, training and
travel costs were higher ($3.5 million), reflecting increased business levels,
while warranty was lower ($3.2 million).


Operating income increased on higher revenues and contained expense levels,
partially offset by lower gross margins.


Interest expense decreased on the lower average debt balances resulting from
good cash flows.


Interest income decreased reflecting lower levels of interest on conversion of
rental equipment.


The increased effective income tax rate for 2013 largely reflects a change in
the mix of income by tax jurisdiction.


Net earnings in 2013 were $123.0 million and basic earnings per share ("EPS")
were $1.61 per share, as compared to net earnings of $119.5 million and basic
EPS of $1.56 per share. These represented 3% increases over 2012.


Comprehensive income in 2013 was $131.2 million (2012 - $115.7 million),
comprised of net earnings of $123.0 million (2012 - $119.5 million) and other
comprehensive income of $8.2 million (2012 - ($3.8 million) loss). Other
comprehensive income included actuarial gains on employee pension plans of $7.3
million (2012 - $3.1 million loss), net of tax.


BUSINESS SEGMENT OPERATING RESULTS

The accounting policies of the segments are the same as those of the
consolidated entity. Management evaluates overall business segment performance
based on revenue growth and operating income relative to revenues. Corporate
expenses are allocated based on each segment's revenue. Interest expense and
interest and investment income are not allocated.




Equipment Group                                                           
                                                                          
                                    Twelve months ended December 31       
                             ------------                                 
($ thousands)                       2013        2012  $ change  % change  
--------------------------------------------------------------------------
Equipment sales and rentals                                               
  New                         $  590,796  $  564,435  $ 26,361         5% 
  Used                           155,210     144,367    10,843         8% 
  Rental                         193,454     183,777     9,677         5% 
--------------------------------------------------------------------------
Total equipment sales and                                                 
 rentals                         939,460     892,579    46,881         5% 
Power generation                  11,650      11,435       215         2% 
Product support                  411,582     405,880     5,702         1% 
--------------------------------------------------------------------------
Total revenues                $1,362,692  $1,309,894  $ 52,798         4% 
--------------------------------------------------------------------------
--------------------------------------------------------------------------
                                                                          
Operating income              $  157,924  $  154,589  $  3,335         2% 
--------------------------------------------------------------------------
--------------------------------------------------------------------------
                                                                          
Capital expenditures          $   90,784  $   99,871  $ (9,087)       (9%)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
                                                                          
KEY RATIOS:                                                               
Product support revenues as a                                             
 % of total revenues                30.2%       31.0%                     
Group total revenues as a %                                               
 of consolidated revenues           85.5%       86.9%                     
Return on capital employed          24.0%       26.5%                     
Operating income as a % of                                                
 revenues                           11.6%       11.8%                     
--------------------------------------------------------------------------



Despite sector-specific weakness, overall demand for the Company's products and
services remained buoyant as evidenced by the year over year growth.


Equipment sales and rentals exceeded the record set in 2012, continuing the
steady increase over the last four years.


New equipment sales increased 5% mainly on increases from construction (up $56.5
million), agriculture (up $7.9 million) and forestry (up $5.0 million), offset
by decreases from mining (down $43.2 million). Excluding mining, revenues
increased $70.6 million or 18% year over year on strong sales across most
markets, representative of the diverse product lines.


Used equipment sales include used equipment purchased for resale, equipment
received on trade-in, rental returns (demo class which is the key driver of used
sales this past year) and sales of Company owned rental fleet. The increase of
8% was largely due to mining (up $5.8 million) and agriculture (up $2.2
million). Used equipment sales vary on factors such as product availability
(both new and used), customer demands and the general pricing environment.


Rental revenues were higher on an improved utilization and on expanded fleet as
the Company invested $47 million, net of disposals, in 2013. Utilization of
light equipment was exceptional, driving revenues up 10% year over year, while
heavy equipment rental increased 20%. Operating efficiencies with the heavy
rental fleet remains a focus as the high repair costs, freight expense, rental
processes experienced in 2013 diluted the profitability of the larger fleet.
Equipment on rent with a purchase option decreased 20%, reflective of the
general economic uncertainty which led some customers to opt for rent-to-rent
solutions. Rental rates were fairly consistent in both years with continuing
competitive market conditions.


Power generation revenues from Toromont-owned plants increased marginally over
last year on higher electricity sales from the Waterloo Landfill and Sudbury
Hospital plants, together with higher thermal revenue for the Sudbury Downtown
plant.


Product support revenues were up 1% from the record set in 2012, benefiting from
the larger installed base of equipment in our territory together with good
activity levels for the equipment. Parts revenues were down 0.5% due to
substantial parts deliveries to remote mine sites experienced in the fourth
quarter of 2012. Excluding mining, parts sales were up 8% with strong results
from construction. Service revenues were up 7%, principally from strong mining
results (up $6.8 million), reflecting a mining sector that remains focused on
production but with a change in timing of major rebuilds from 2012. Excluding
mining, service revenues were largely in line with last year across all
industries.


Operating income increased 2% versus a year ago. Gross margin as a percentage of
revenues decreased 80 basis points compared to 2012. Equipment gross margins
were relatively flat year-over-year and were more than offset by a decrease in
product support gross margins. Bad debt expenses increased by $3.6 million on
specific exposures and aged accounts receivable balances. Other selling and
administrative expenses were down 2% year-over-year as the Company remained
focused on controlling costs in a competitive environment. Operating income as a
percentage of revenues was 11.6% in 2013 versus 11.8% in 2012.


Capital expenditures in the Equipment Group were $9.1 million (9%) lower
year-over-year, on reduced spending on rental assets and vehicles. Replacement
and expansion of the rental fleet accounted for $69.1 million of total
investment in 2013. Expenditures of $3.3 million related to new and expanded
facilities to meet current and future growth requirements. Other capital
expenditures included $8.2 million for service and delivery vehicles.




                                           ------                           
($ millions)                                 2013  2012 $ change  % change  
----------------------------------------------------------------------------
Bookings - year ended December 31           $ 714 $ 614 $    100        16% 
Backlogs - as at December 31                $  97 $ 128 $    (31)      (24%)
----------------------------------------------------------------------------



Bookings in 2013 totalled $714 million, up 16% from 2012, lifted by substantial
mining orders booked and delivered in the year.


Backlogs were lower in 2013 on improved equipment availability and completed
deliveries. At December 31, the backlog was almost evenly split between mining,
power systems and construction equipment orders. Substantially all backlog is
expected to be delivered in 2014. Shortened delivery windows due to process
improvements and increased capacity at Caterpillar have also contributed to
reduced backlogs.




CIMCO                                                                       
                                                                            
                                         Twelve months ended December 31    
                                     ----------                             
($ thousands)                             2013      2012  $ change % change 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Package sales                         $140,747  $113,586  $ 27,161       24%
Product support                         89,992    83,693     6,299        8%
----------------------------------------------------------------------------
Total revenues                        $230,739  $197,279  $ 33,460       17%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Operating income                      $ 16,038  $ 14,219  $  1,819       13%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Capital expenditures                  $  4,019  $  1,440  $  2,579      179%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
KEY RATIOS:                                                                 
Product support revenues as a % of                                          
 total revenues                           39.0%     42.4%                   
Group total revenues as a % of                                              
 consolidated revenues                    14.5%     13.1%                   
Return on capital employed                65.4%     70.3%                   
Operating income as a % of revenues        7.0%      7.2%                   
----------------------------------------------------------------------------



CIMCO reported record results for the third straight year on growth in
recreational and industrial activity.


Package revenues increased 24% year-over-year. Activity in recreational markets
was strong in both Canada (up 51%) and the US (up 83%). Industrial markets were
also strong, up 12%, with increases in both Canada and the US. Product support
revenues were up with increased activity in both Canada (6%) and in the US
(15%).


Operating income included a gain of $1.0 million from the insurance proceeds
related to a fire at the Mobile facility (2012 - $0.5 million). Excluding this,
operating income increased 9%, reflecting higher revenues, offset partially by
lower margins and higher selling and administrative expenses. Gross margins were
down 160 basis points on lower package margins due to relative technical
complexity impacting value-add and tighter bids. A change in the sales mix, with
a lower proportion of product support revenues to total, also dampened gross
margins. Selling and administrative expenses, excluding the insurance gain,
increased 9%, mainly due to increased compensation expense and increased legal
fees associated with defending various patents, offset by a reduction in bad
debt expense.


Capital expenditures totalled $4 million in 2013 and related mainly to
rebuilding the Mobile facility, together with investments in information
technology and branch renovations.




                                           ------                           
($ millions)                                 2013  2012 $ change  % change  
----------------------------------------------------------------------------
Bookings - year ended December 31           $ 108 $ 162 $    (54)      (33%)
Backlogs - as at December 31                $  65 $  99 $    (34)      (34%)
----------------------------------------------------------------------------



Bookings in 2012 included $49.8 million in orders from Maple Leaf Foods ("MLF")
for their transformation project. Excluding these record orders for CIMCO,
bookings were comparable year-over-year. Recreational bookings were up 29%, with
increases in both Canada and the US. Industrial bookings were down 53% (28%
excluding MLF in 2012), with a 59% decrease in Canada, partially offset by a 28%
increase in the US.


Backlogs were lower on significant completion of the MLF project. Excluding the
MLF order in both years, backlogs were 3% higher in 2013. Recreational backlogs
were comparable to 2012 as an increase in the US (39%) was offset by a decrease
in Canada (15%). Industrial backlogs were 5% higher excluding MLF. Substantially
the entire backlog is expected to revenue in 2014.


CONSOLIDATED FINANCIAL CONDITION

The Company has maintained a strong financial position for many years. At
December 31, 2013, the ratio of total debt net of cash to total capitalization
was 10%.


Working Capital

The Company's investment in non-cash working capital was $281 million at
December 31, 2013. The major components, along with the changes from December
31, 2012, are identified in the following table.




                             -------------                                  
                              December 31  December 31                      
($ thousands)                        2013         2012  $ change  % change  
----------------------------------------------------------------------------
Accounts receivable           $   240,259  $   231,518  $  8,741         4% 
Inventories                       327,439      327,785      (346)        -  
Other current assets                4,585        4,086       499        12% 
Accounts payable, accrued                                                   
 liabilities and provisions      (238,473)    (194,304)  (44,169)       23% 
Income taxes receivable                                                     
 (payable)                          6,135       (3,130)    9,265        nm  
Derivative financial                                                        
 instruments                        1,331         (219)    1,550        nm  
Dividends payable                  (9,988)      (9,164)     (824)        9% 
Deferred revenue                  (48,924)     (54,664)    5,740       (11%)
Current portion of long-term                                                
 debt                              (1,470)      (1,372)      (98)        7% 
----------------------------------------------------------------------------
Total non-cash working                                                      
 capital                      $   280,894  $   300,536  $(19,642)       (7%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Accounts receivable increased on higher days sales outstanding (DSO). CIMCO
accounts receivable decreased $3 million or 7% on the decrease in revenues in
the fourth quarter of 2013. Equipment Group accounts receivable increased $11
million or 6%. DSO was 48 at December 31, 2013 compared to 45 at the same time
last year.


In total, inventories at December 31, 2013 were largely unchanged
year-over-year. Equipment Group inventories were $2.4 million (0.8%) higher than
this time last year; however, total mobile equipment inventory was down 9% on
new inventory reductions of 13% from the previous year. Parts inventories
increased $8.6 million, substantially in support of newer remote mine-sites.
Mining equipment inventories increased $17.8 million, largely offset by
decreases in construction equipment $13.9 million and inventories of rental
equipment with purchase options ($9.8 million). CIMCO inventories were lower by
$2.7 million or 16% versus a year ago on lower work-in-process ($3.3 million).


Accounts payable and accrued liabilities at December 31, 2013 increased $44.2
million or 23% from this time last year. The increase was primarily due to the
timing of order inflow from a key supplier in the fourth quarter of 2013.


Income taxes receivable represents amounts due to the Company as installments
made during the year exceeded current tax expense.


Higher dividends payable year over year reflect the higher dividend rate. In
2013, the quarterly dividend rate was increased from $0.12 per share to $0.13
per share, an 8% increase.


Deferred revenues represent billings to customers in excess of revenue
recognized. In the Equipment Group, deferred revenues arise on sales of
equipment with residual value guarantees, extended warranty contracts and other
long-term customer support agreements as well as on progress billings on
long-term construction contracts. Equipment Group deferred revenues were 10%
lower than this time last year. In CIMCO, deferred revenues arise on progress
billings in advance of revenue recognition. CIMCO deferred revenues decreased
12% from this time last year.


The current portion of long-term debt reflects scheduled principal repayments
due in 2014.


Goodwill and Intangibles

The Company performs impairment tests on its goodwill and intangibles with
indefinite lives on an annual basis or as warranted by events or circumstances.
The assessment entails estimating the fair value of operations to which the
goodwill and intangibles relate, using the present value of expected discounted
future cash flows. This assessment affirmed goodwill and intangibles values as
at December 31, 2013.


Employee Share Ownership

The Company employs a variety of stock-based compensation plans to align
employees' interests with corporate objectives.


The Company maintains an Executive Stock Option Plan for its senior employees.
Effective 2013, non-employee directors no longer receive grants under this plan.
Stock options vest 20% per year on each anniversary date of the grant and are
exercisable at the designated common share price, which is fixed at prevailing
market prices of the common shares at the date the option is granted. Stock
options granted prior to 2013 have a seven year term and those granted in 2013
have a ten year term. At December 31, 2013, 2.6 million options to purchase
common shares were outstanding, of which 1.0 million were exercisable.


The Company offers an Employee Share Ownership Plan whereby employees can
purchase shares by way of payroll deductions. Under the terms of this plan,
eligible employees may purchase common shares of the Company in the open market
at the then current market price. The Company pays a portion of the purchase
price, matching contributions at a rate of $1 for every $3 dollars contributed,
to a maximum of $1,000 per annum per employee. Company contributions vest to the
employee immediately. Company contributions amounting to $0.9 million in 2013
(2012 - $0.9 million) were charged to selling and administrative expense when
paid. Approximately 48% of employees participate in this plan.


The Company also offers a deferred share unit (DSU) plan for certain executives
and non- employee directors, whereby they may elect, on an annual basis, to
receive all or a portion of their performance incentive bonus or fees,
respectively, in DSUs. Non-employee directors also receive DSUs as part of their
compensation, aligning at-risk and cash compensation components. A DSU is a
notional unit that reflects the market value of a single Toromont common share
and generally vests immediately. DSUs will be redeemed on cessation of
employment or directorship. DSUs have dividend equivalent rights, which are
expensed as earned. The Company records the cost of the DSU Plan as compensation
expense in selling and administrative expenses.


As at December 31, 2013, 288,920 DSUs were outstanding with a total value of
$7.7 million (2012 - 211,872 units at a value of $4.3 million). The liability
for DSUs is included in accounts payable, accrued liabilities and provisions on
the consolidated statement of financial position.


Employee Future Benefits

Defined Contribution Plans

The Company sponsors pension arrangements for substantially all of its
employees, primarily through defined contribution plans in Canada and a 401(k)
matched savings plan in the United States. Certain unionized employees do not
participate in Company-sponsored plans, and contributions are made to these
retirement programs in accordance with the respective collective bargaining
agreements. In the case of defined contribution plans, regular contributions are
made to the individual employee accounts, which are administered by a plan
trustee in accordance with the plan documents.


Defined Benefit Plans

The Company sponsors three defined benefit plans (Powell Plan, Executive Plan
and Toromont Plan) for approximately 121 qualifying employees. These defined
benefit plans are administered by a separate Fund that is legally separated from
the Company and are described fully in note 19 to the consolidated financial
statements.


The funded status of these plans changed by $13.7 million (a decrease in the
accrued pension liability) as at December 31, 2013. The improvement resulted
from (i) a good return on the plan assets in 2013 of 15% (2012 - 8%); and (ii) a
net actuarial gain of $10 million (2012 - net actuarial loss of $4.2 million),
largely reflecting the change in the discount rate (4.6% in 2013 versus 3.9% in
2012), partially offset by the impact of adopting new mortality rates in 2013.


The Executive Plan is a supplemental plan, whose members are largely retirees
with only one active member remaining, and is solely the obligation of the
Company. The Company is not obligated to fund the plan but is obligated to pay
benefits under the terms of the plan as they come due. The Company has posted
letters of credit to secure the obligations under this plan, which were $20.2
million as at December 31, 2013. As there are only nominal plan assets, the
impact of volatility in financial markets on pension expense and contributions
for this plan are insignificant.


The Company expects pension expense and cash pension contributions for 2014 to
be similar to 2013 levels.


A key assumption in pension accounting is the discount rate. This rate is set
with regard to the yield on high-quality corporate bonds of similar average
duration to the cash flow liabilities of the Plans. Yields are volatile and can
deviate significantly from period to period.


Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have, or are
reasonably likely to have, a current or future effect on its results of
operations or financial condition.


Legal and Other Contingencies

Due to the size, complexity and nature of the Company's operations, various
legal matters are pending. Exposure to these claims is mitigated through levels
of insurance coverage considered appropriate by management and by active
management of these matters. In the opinion of management, none of these matters
will have a material effect on the Company's consolidated financial position or
results of operations.


Normal Course Issuer Bid

Toromont believes that, from time to time, the purchase of its common shares at
prevailing market prices may be a worthwhile investment and in the best
interests of both Toromont and its shareholders. As such, the normal course
issuer bid with the TSX was renewed in 2013. This issuer bid allows the Company
to purchase up to approximately 6.5 million of its common shares, representing
10% of common shares in the public float, in the year ending August 30, 2014.
The actual number of shares purchased and the timing of any such purchases will
be determined by Toromont. All shares purchased under the bid will be cancelled.


In 2013, no shares were purchased. In 2012, the Company purchased and cancelled
666,039 shares for $14.1 million (average cost of $21.23 per share).


Outstanding Share Data

As at the date of this MD&A, the Company had 76,891,347 common shares and
2,563,824 share options outstanding.


Dividends

Toromont pays a quarterly dividend on its outstanding common shares and has
historically targeted a dividend rate that approximates 30% of trailing earnings
from continuing operations.


During 2013, the Company declared dividends of $0.52 per common share, $0.13 per
quarter. In 2012, the Company declared dividends of $0.48 per common share,
$0.12 per quarter.


Considering the Company's solid financial position, cash flows and balances, and
positive long- term outlook, the Board of Directors announced it is increasing
the quarterly dividend to 15 cents per share effective with the dividend payable
on April 1, 2014. This represents a 15% increase in Toromont's regular quarterly
cash dividend. The Company has paid dividends every year since going public in
1968 and this represents the 25th consecutive year of increases.


LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

Toromont's liquidity requirements can be met through a variety of sources,
including cash generated from operations, long- and short-term borrowings and
the issuance of common shares. Borrowings are obtained through a variety of
senior debentures, notes payable and committed long-term credit facilities.


The Company maintains a $200 million committed credit facility. The facility
matures in September 2017. Debt incurred under the facility is unsecured and
ranks on par with debt outstanding under Toromont's existing debentures.
Interest is based on a floating rate, primarily bankers' acceptances and prime,
plus applicable margins and fees based on the terms of the credit facility.


As at December 31, 2013, no amounts were drawn on the facility. Letters of
credit utilized $26.6 million of the facility.


Cash at December 31, 2013 was $70.8 million, compared to $2.4 million at
December 31, 2012.


The Company expects that continued cash flows from operations in 2014 and
currently available credit facilities will be more than sufficient to fund
requirements for investments in working capital and capital assets.


Principal Components of Cash Flow

Cash from operating, investing and financing activities, as reflected in the
Consolidated Statements of Cash Flows, are summarized in the following table:




                                                       ----------           
($ thousands)                                               2013       2012 
----------------------------------------------------------------------------
Cash, beginning of year                                 $  2,383  $  75,319 
Cash, provided by (used in):                                                
Operating activities                                                        
  Operations                                             178,873    161,830 
  Change in non-cash working capital and other            21,665   (124,475)
----------------------------------------------------------------------------
                                                         200,538     37,355 
                                                                            
Investing activities                                     (72,032)   (91,205)
----------------------------------------------------------------------------
                                                                            
Financing activities                                     (60,285)   (19,033)
----------------------------------------------------------------------------
                                                                            
Effect of foreign exchange on cash balances                  165        (53)
----------------------------------------------------------------------------
                                                                            
Increase (decrease) in cash in the year                   68,386    (72,936)
----------------------------------------------------------------------------
Cash, end of year                                       $ 70,769  $   2,383 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Cash Flows from Operating Activities

Operating activities provided $200.5 million in 2013 compared to $37.4 million
in 2012. Net earnings adjusted for items not requiring cash were 11% higher than
last year on higher revenues. Non-cash working capital and other provided $21.7
million compared to $124.5 million used in 2012.


The components and changes in working capital are discussed in more detail in
this MD&A under the heading "Consolidated Financial Condition."


Cash Flows from Investing Activities

Investing activities used $72 million in 2013 compared to $91.2 million in 2012.

Net rental fleet additions (purchases less proceeds of disposition) totalled $47
million in 2013 compared to $55 million in 2012. Rental fleet additions were
lower in 2013 as compared to 2012 when increased investments were made in light
of stronger demand on improved market conditions, the existing fleet age profile
and the expansion of our heavy rental operations.


Investments in property, plant and equipment in 2013 totalled $25.7 million
compared to $23.7 million in 2012. Additions in 2013 were largely made within
the Equipment Group. Capital additions included $5.7 million for land and
buildings, mainly to rebuild CIMCO's Mobile facility that was damaged by fire,
as well as for new and expanded branches, $8.6 million for service vehicles,
$4.2 million for machinery and equipment and $1.9 million for IT equipment.
Additions in 2012 included $4.1 million for land and buildings acquired for new
and expanded branch locations, $14.3 million for service vehicles and $3.2
million for machinery and equipment.


In 2012, Toromont acquired from Caterpillar the assets associated with the
former coterminous Bucyrus distribution network for US $13.5 million ($13.7
million).


Cash Flows from Financing Activities

Financing activities used $60.3 million in 2013 compared to $19 million in 2012.

Significant sources and uses of cash in 2013 included:



--  Repayments on the credit facility of $26.5 million; 
--  Dividends paid to common shareholders of $39 million or $0.51 cents per
    share; and 
--  Cash received on exercise of share options of $6.7 million. 



Significant sources and uses of cash in 2012 included:



--  Drawings on the credit facility of $26.5 million; 
--  Dividends paid to common shareholders of $36 million or $0.47 cents per
    share; 
--  Normal course purchase and cancellation of common shares of $14.1
    million, 666,039 shares at an average cost of $21.23; and 
--  Cash received on exercise of share options of $6.2 million. 



OUTLOOK

Softening in several market segments has increased the competitive pressure for
equipment sales in the Equipment Group's markets. Overall construction spending
levels have eased somewhat, leading to a decline in total industry unit sales in
2013, although investment in large infrastructure projects continue to provide
opportunity. Toromont has been successful in increasing its market share,
however backlogs and RPO (rent with purchase option) inventories have declined
versus a year ago, reducing near-term opportunities.


The mining segment has seen good activity over the last two years with
significant deliveries to Detour Gold and Baffinland. Market conditions have
tightened, however opportunities for new mine development, mine expansion and
equipment replacement continue to exist. We remain engaged on a variety of
mining projects at various stages of development within our territory; however,
we do not anticipate that 2014 will see a replication of the equipment
deliveries reported in 2013. With the substantially increased base of installed
equipment, product support activity should continue to grow so long as mines
remain active.


The parts and service business has experienced significant growth and provides a
measure of stability, driven by the larger installed base of equipment in the
field. While the sale of parts decreased year-over-year due to significant sales
to remote mine sites in the fourth quarter of 2012, the growth trend for parts
sales is intact and service activity continued to grow. Work-in- process levels
remain healthy. We also expect that our increased investment in the rental
business, construction and power system segments and broader product lines will
continue to contribute to growth.


At CIMCO, Canadian recreational bookings have returned to the more historical
levels seen prior to the federal stimulus program. Canadian industrial bookings
are at healthy levels, and quoting activity continued to be strong. US bookings
were strong in 2013 reflecting improving market conditions. Backlogs are good
for this time of the year. The product support business remains a focus for
growth and we are encouraged by results so far in the United States. CIMCO has
also expanded its product offering to include CO2-based solutions, which are
expected to contribute to its growth. Additionally, a provincial program in
Quebec to replace CFC and HFC refrigerants bodes well for recreational
activities.


The growth in product support, fueled by the increased installed base in the
Equipment Group and broader product lines and services, bodes well for the
Company's continued success.


CONTRACTUAL OBLIGATIONS

Contractual obligations are set out in the following table. Management believes
that these obligations will be met comfortably through cash generated from
operations and existing long- term financing facilities.




Payments due by                                                             
 period              2014     2015   2016   2017   2018  Thereafter    Total
----------------------------------------------------------------------------
Long-term debt                                                              
  - principal    $  1,470 $126,577 $1,690 $1,811 $1,941 $     1,022 $134,511
  - interest     $  6,796 $  5,342 $  427 $  306 $  176 $        36 $ 13,083
Accounts payable $248,461 $      - $    - $    - $    - $         - $248,461
Operating leases $  2,473 $  1,942 $1,702 $1,174 $  647 $     1,064 $  9,002
----------------------------------------------------------------------------
                 $259,200 $133,861 $3,819 $3,291 $2,764 $     2,122 $405,057
----------------------------------------------------------------------------
----------------------------------------------------------------------------



KEY PERFORMANCE MEASURES

Management reviews and monitors its activities and the performance indicators it
believes are critical to measuring success. Some of the key financial
performance measures are summarized in the following table. Others include, but
are not limited to, measures such as market share, fleet utilization, customer
and employee satisfaction and employee health and safety.




                                                                            
                                    -------                                 
Years ended December 31,              2013   2012   2011    2010   2009(3)  
----------------------------------------------------------------------------
EXPANDING MARKETS AND BROADENING                                            
 PRODUCT OFFERINGS                                                          
  Revenue growth (1)                   5.7%   9.1%  14.5%   14.8%    (18.7%)
  Revenue per employee (thousands)                                          
   (1)                               $ 491  $ 481  $ 465  $  423  $    364  
                                                                            
STRENGTHENING PRODUCT SUPPORT                                               
  Product support revenue growth (1)   2.5%  13.2%  12.6%    7.4%     (3.0%)
                                                                            
INVESTING IN OUR RESOURCES                                                  
  Investment in information                                                 
   technology (millions) (1)         $10.7  $10.8  $12.1  $ 10.1  $   10.6  
  Return on capital employed (2)      26.5%  28.5%  32.4%   10.8%     21.1% 
                                                                            
STRONG FINANCIAL POSITION                                                   
  Non-cash working capital                                                  
   (millions) (1)                    $ 281  $ 301  $ 176  $  136  $    172  
  Total debt, net of cash to total                                          
   capitalization                       10%    25%    13%     17%       (6%)
  Book value (shareholders' equity)                                         
   per share                         $7.50  $6.24  $5.27  $15.50  $  13.17  
                                                                            
BUILD SHAREHOLDER VALUE                                                     
  Basic earnings per share growth                                           
   (1)                                 2.9%  17.1%  32.5%    9.6%    (18.3%)
  Dividends per share growth (4)       8.3%  17.0%  16.1%    3.3%      7.1% 
  Return on equity (5)                25.7%  29.9%  28.9%    9.1%     15.5% 
----------------------------------------------------------------------------
(1) Metric presents results on a continuing operations basis.               
(2) Return on capital employed is defined in the section titled "Non-IFRS   
Financial Measures". 2011 ROCE was calculated excluding earnings and capital
employed from discontinued operations.                                      
(3) Financial statements for 2009 reflect Canadian GAAP. These were not     
restated to IFRS.                                                           
(4) Dividends per share growth in 2011 reflects the announced increase in   
dividend subsequent to apportionment of dividend to Enerflex subsequent to  
spinoff.                                                                    
(5) Return on equity is defined in the section titled "Non-IFRS Financial   
Measures". 2011 ROE was calculated excluding earnings and equity from       
discontinued operations.                                                    



While the global recession in 2008-2009 interrupted the steady string of growth
across key performance measures, profitability endured and the balance sheet
continued to strengthen.


Measuring Toromont's results against these strategies over the past five years
illustrates that the Company has and continues to make significant progress.


Since 2009, revenues increased at an average annual rate of 5.1%. Product
support revenue growth has averaged 6.5% annually. Revenue growth in continuing
operations has been a result of:




--  Increased customer demand in certain market segments, most notably
    mining; 
--  Additional product offerings over the years from Caterpillar and other
    suppliers; 
--  Organic growth through increased rental fleet size and additional
    branches; 
--  Increased customer demand for formal product support agreements; 
--  Governmental funding programs such as the RinC program which provided
    support for recreational spending; and 
--  Acquisitions, primarily within the Equipment Group's rental operations. 



Over the same five-year period, revenue growth has been constrained at times by
a number of factors including:




--  General economic weakness, which has negatively impacted revenues from
    the latter part of 2008 through to early 2010; 
--  Inability to source equipment from suppliers to meet customer demand or
    delivery schedules; and 
--  Declines in underlying market conditions such as depressed US industrial
    markets. 



Changes in the Canadian/U.S. exchange rate also impacts reported revenues as the
exchange rate impacts on the purchase price of equipment that in turn is
reflected in selling prices. Since 2009 there has been significant fluctuations
in the average yearly exchange rate of Canadian dollar against the US dollar -
2009 $0.88, 2010 - $0.97, 2011 - $1.01, 2012 - on par and 2013 - $0.97.


Toromont has generated significant competitive advantage over the past years by
investing in its resources, in part to increase productivity levels, and we will
continue this into the future as it is a crucial element to our continued
success in the marketplace.


Toromont continues to maintain a strong balance sheet. Leverage, as represented
by the ratio of total debt, net of cash, to total capitalization (net debt plus
shareholders' equity), was 10%, well within targeted levels.


Toromont has a history of progressive earnings per share growth as evidenced by
the results of the past four years, including 2013. This trend was not continued
in 2009 due to the weak economic environment, which reduced revenues. In 2010,
earnings per share growth were dampened by the issuance of shares in the year
for the acquisition of Enerflex Systems Income Fund ("ESIF"). In 2011, on a
continuing operations basis, earnings per share increased 32.5%, in line with
earnings growth and a further 17.1% increase on a continuing operations basis in
2012. In 2013, despite a challenged economy, EPS increased 2.9%.


Toromont has paid dividends consistently since 1968, and has increased the
dividend in each of the last 25 years. In 2013, the regular quarterly dividend
rate was increased 8% from $0.12 to $0.13 per share, evidencing our commitment
to building exceptional shareholder value.




CONSOLIDATED RESULTS OF OPERATIONS FOR THE FOURTH QUARTER 2013              
                                                                            
Three months ended December 31                                              
                                   ----------                               
($ thousands, except per share                                              
 amounts)                               2013      2012  $ change  % change  
----------------------------------------------------------------------------
REVENUES                            $407,264  $431,068  $(23,804)       (6%)
Cost of goods sold                   303,410   312,109    (8,699)       (3%)
----------------------------------------------------------------------------
Gross profit                         103,854   118,959   (15,105)      (13%)
Selling and administrative expenses   56,043    57,517    (1,474)       (3%)
----------------------------------------------------------------------------
OPERATING INCOME                      47,811    61,442   (13,631)      (22%)
Interest expense                       2,174     2,747      (573)      (21%)
Interest and investment income          (934)   (1,887)      953       (51%)
----------------------------------------------------------------------------
Income before income taxes            46,571    60,582   (14,011)      (23%)
Income taxes                          12,157    15,925    (3,768)      (24%)
----------------------------------------------------------------------------
NET EARNINGS                        $ 34,414  $ 44,657  $(10,243)      (23%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
EARNINGS PER SHARE (BASIC)          $   0.45  $   0.58  $  (0.13)      (22%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
KEY RATIOS:                                                                 
Gross profit as a % of revenues         25.5%     27.6%                     
Selling and administrative expenses                                         
 as a % of revenues                     13.8%     13.3%                     
Operating income as a % of revenues     11.7%     14.3%                     
Income taxes as a % of income                                               
 before income taxes                    26.1%     26.3%                     
----------------------------------------------------------------------------



Revenues were 6% lower in the fourth quarter of 2013 compared to the same period
last year on a 4% decrease in the Equipment Group and a 13% decrease in CIMCO.


Gross profit decreased 13% in the fourth quarter over last year on the lower
sales volumes. Gross profit margin was 25.5% in 2013 compared to 27.6% in 2012.
Equipment Group margins decreased mainly due to the competitive pricing
environment, lower utilization and higher repair costs on rentals, lower RPO
conversions and a slightly unfavorable sales mix from product support. Higher
margins were reported at CIMCO due to a favorable sales mix as well as increases
in package and product support margins.


Selling and administrative expenses decreased 3% compared to the prior year
principally due to reduced personnel costs, tracking revenues and earnings
(commissions and profit-sharing). Due to the significant increase in share price
experienced in the fourth quarter, mark-to-market of DSUs increased expenses by
$1.1 million. Selling and administrative expenses as a percentage of revenues
were 13.8% versus 13.3% in the comparable period last year.


Interest expense was $2.2 million in the fourth quarter of 2013, down $0.6
million from the similar period last year on lower debt balances resulting from
good cash flows.


Interest income was $0.9 million in the fourth quarter of 2013, down $1.0
million from last year on lower interest on conversions of rental equipment with
purchase options.


The effective income tax rate in the quarter was 26.1% compared to 26.3% in the
same period last year.


Net earnings in the quarter were $34.4 million, down 23% from 2012. Basic
earnings per share were $0.45, down 22% from 2012. Excluding the effect of the
significant mining deliveries and large industrial refrigeration billings in the
fourth quarter of 2012, net earnings and basic earnings per share were
comparable period-over-period and in line with our expectations.




Fourth Quarter Results of Operations in the Equipment Group                 
                                                                            
Three months ended December 31                                              
                                   ----------                               
($ thousands)                           2013      2012  $ change  % change  
----------------------------------------------------------------------------
Equipment sales and rentals                                                 
  New                               $153,719  $151,436  $  2,283         2% 
  Used                                38,357    41,539    (3,182)       (8%)
  Rental                              54,200    57,234    (3,034)       (5%)
----------------------------------------------------------------------------
Total equipment sales and rentals    246,276   250,209    (3,933)       (2%)
Power generation                       2,842     2,816        26         1% 
Product support                      102,595   114,377   (11,782)      (10%)
----------------------------------------------------------------------------
Total revenues                      $351,713  $367,402  $(15,689)       (4%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Operating income                    $ 44,646  $ 57,093  $(12,447)      (22%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Bookings ($ millions)               $    173  $    156  $     17        11% 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
KEY RATIOS:                                                                 
Product support revenues as a % of                                          
 total revenues                         29.2%     31.1%                     
Group total revenues as a % of                                              
 consolidated revenues                  86.4%     85.2%                     
Operating income as a % of revenues     12.7%     15.5%                     
----------------------------------------------------------------------------



New equipment sales increased in the quarter, as compared to 2012, mainly on
increases in the construction market (up $5.0 million), agriculture (up $1.8
million) and forestry (up $2.7 million), offset by decreases in mining (down
$7.4 million). Excluding mining, new equipment sales increased 10%
quarter-over-quarter.


Used equipment sales decreased mainly on lower mining equipment sales of $3.4
million in this quarter as compared to 2012. Excluding mining, sales decreased
2% with nominal decreases across all segments.


Rental revenues decreased on lower rental fleet utilization. Light equipment
rental revenues increased 3% on higher utilization, while the other rental
categories (equipment on rent with purchase options on a reduced fleet, heavy
equipment on reduced utilization and power systems due to fleet rebalancing)
were lower. Rental rates have been largely consistent with the prior year, with
continuing competitive market conditions.


Product support revenues were reduced from the record levels achieved in 2012,
due to significant parts deliveries to remote mine sites in Q4 of 2012 not
repeated in Q4 of 2013. Parts revenues were down 14%. Excluding mining, parts
increased 7% on strong construction activity. Service revenues were relatively
even with a year ago across all industries.


Operating income decreased mainly as a result of reduced gross margins. Selling
and administrative expenses were 6% lower than the comparable quarter last year,
on lower compensation and profit sharing while other expenses remained constant.
Operating income as a percentage of revenues was 12.7% compared to 15.5% in the
fourth quarter of 2012.


Bookings in the fourth quarter of 2013 were $173 million, up 11% from the
similar period last year. This represents a good level for this time of year.




Fourth Quarter Results of Operations in CIMCO                               
Three months ended December 31                                              
                                     ---------                              
($ thousands)                            2013     2012  $ change  % change  
----------------------------------------------------------------------------
Package sales                         $31,428  $41,786  $(10,358)      (25%)
Product support                        24,123   21,880     2,243        10% 
----------------------------------------------------------------------------
Total revenues                        $55,551  $63,666  $ (8,115)      (13%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Operating income                      $ 3,165  $ 4,349  $ (1,184)      (27%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Bookings ($ millions)                 $    21  $    23  $     (2)       (9%)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
KEY RATIOS:                                                                 
Product support revenues as a % of                                          
 total revenues                          43.4%    34.4%                     
Group total revenues as a % of                                              
 consolidated revenues                   13.6%    14.8%                     
Operating income as a % of revenues       5.7%     6.8%                     
----------------------------------------------------------------------------



Canadian package revenues in 2012 were buoyed by the MLF project, which is now
winding down. Excluding this order in both years, Canadian revenues were up 6.9%
with strong increases in recreational, offset by a minor decline in industrial.
US package activity more than doubled the levels generated in 2012, with
increases in both recreational and industrial.


Product support revenues set a new record for the fourth quarter and continued
to rise steadily on increased activity in both Canada and the US.


Lower operating income reflects lower revenues and an increase in selling and
administrative expenses, offset by an increase in gross margins on sales mix. In
2012, a gain of $0.3 million was recorded for the fire at the Mobile facility.
Excluding the effect of this gain, selling and administrative expenses increased
$1.0 million or 12% as a result of higher compensation $0.5 million, higher
legal fees to defend patents $0.4 million and higher insurance $0.2 million,
offset by lower bad debt expense of $0.4 million.


Bookings in the quarter totalled $21 million, down 9% from the similar quarter
last year with decreases in both Canada and the US.


QUARTERLY RESULTS

The following table summarizes unaudited quarterly consolidated financial data
for the eight most recently completed quarters. This quarterly information is
unaudited but has been prepared on the same basis as the 2013 annual unaudited
consolidated financial statements.




($ thousands, except per share amounts)   Q1 2013  Q2 2013  Q3 2013  Q4 2013
----------------------------------------------------------------------------
REVENUES                                                                    
  Equipment Group                        $266,816 $317,052 $427,111 $351,713
  CIMCO                                    46,316   57,686   71,186   55,551
----------------------------------------------------------------------------
  Total revenues                         $313,132 $374,738 $498,297 $407,264
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
NET EARNINGS                             $ 17,848 $ 27,284 $ 43,485 $ 34,414
----------------------------------------------------------------------------
                                                                            
PER SHARE INFORMATION:                                                      
Earnings per share - basic               $   0.23 $   0.36 $   0.57 $   0.45
Earnings per share - diluted             $   0.23 $   0.35 $   0.56 $   0.44
Dividends paid per share                 $   0.12 $   0.13 $   0.13 $   0.13
Weighted average common shares                                              
 outstanding -                                                              
Basic (in thousands)                       76,495   76,589   76,625   76,737
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
($ thousands, except per share amounts)   Q1 2012  Q2 2012  Q3 2012  Q4 2012
----------------------------------------------------------------------------
REVENUES                                                                    
  Equipment Group                        $245,799 $334,300 $362,393 $367,402
  CIMCO                                    35,660   45,307   52,646   63,666
----------------------------------------------------------------------------
  Total revenues                         $281,459 $379,607 $415,039 $431,068
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
NET EARNINGS                             $ 16,970 $ 25,383 $ 32,463 $ 44,657
----------------------------------------------------------------------------
                                                                            
PER SHARE INFORMATION:                                                      
Earnings per share - basic               $   0.22 $   0.33 $   0.43 $   0.58
Earnings per share - diluted                 0.22     0.33     0.42     0.58
Dividends paid per share                 $   0.11 $   0.12 $   0.12 $   0.12
Weighted average common shares                                              
 outstanding -                                                              
Basic (in thousands)                       76,786   76,761   76,289   76,352
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Interim period revenues and earnings historically reflect significant
variability from quarter to quarter.


The Equipment Group has historically had a distinct seasonal trend in activity
levels. Lower revenues are recorded during the first quarter due to winter
shutdowns in the construction industry. The fourth quarter had typically been
the strongest due in part to the timing of customers' capital investment
decisions, delivery of equipment from suppliers for customer- specific orders
and conversions of equipment on rent with a purchase option. This pattern has
been interrupted by the timing of significant sales to mining customers, which
can be variable due to the timing of mine site development and access. We expect
this historical seasonal trend to continue for non-mining related business given
the nature of the mining industry and the timing of significant deliveries in
any given quarter.


CIMCO has also had a distinct seasonal trend in results historically, due to
timing of construction activity. CIMCO had traditionally posted a loss in the
first quarter on slower construction activity. Profitability increased in
subsequent quarters as activity levels and resultant revenues increased. This
trend can and has been interrupted somewhat by significant governmental funding
initiatives and significant industrial projects.


As a result of the historical seasonal sales trends, inventories increase
through the year in order to meet the expected demand for delivery in the fourth
quarter of the fiscal year, while accounts receivable are highest at year end.




SELECTED ANNUAL INFORMATION                                                 
                                                                            
                                           -------------                    
(in thousands, except per share amounts)          2013       2012       2011
----------------------------------------------------------------------------
Revenues                                    $1,593,431 $1,507,173 $1,381,974
Net earnings - continuing operations        $  123,031 $  119,473 $  102,678
Net earnings                                $  123,031 $  119,473 $  246,459
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Earnings per share - continuing operations                                  
- Basic                                     $     1.61 $     1.56 $     1.33
- Diluted                                   $     1.59 $     1.55 $     1.32
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Earnings per share                                                          
- Basic                                     $     1.61 $     1.56 $     3.20
- Diluted                                   $     1.59 $     1.55 $     3.18
Dividends declared per share                $     0.52 $     0.48 $     0.48
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total assets                                $1,030,555 $  936,170 $  913,331
Total long-term debt                        $  132,418 $  159,767 $  134,095
Weighted average common shares outstanding,                                 
 basic (millions)                                 76.6       76.5       77.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Revenues grew 6% in 2013, despite competitive market conditions and an uncertain
economic environment, through excellent delivery and execution across all lines
of business. In 2012, revenues grew 9% on improved market conditions and
significant mining activity within the Equipment Group.


Net earnings from continuing operations improved 3% in 2013 and 16% in 2012 on
the higher revenues, generally improving margins and relatively slower growth in
selling and administrative expenses.


Net earnings in 2011 include results from discontinued operations. Net earnings
from discontinued operations in 2011 represent five months of results to May 31,
2011. Additionally, a net gain of $133.2 million was recognized on spinoff.


Earnings per share have generally followed earnings.

Dividends have generally increased in proportion to trailing earnings growth. In
2011, in conjunction with the spinoff, the regular quarterly dividend was
apportioned between Toromont and Enerflex. The previous dividend rate of $0.16
per share was allocated $0.10 to Toromont and $0.06 to Enerflex, thereby keeping
shareholders whole. Subsequent to the spinoff, Toromont announced a 10% increase
in its dividend rate to $0.11 per share. The dividend rate was increased again
in 2012 by 9% to $0.12 per share and in 2013 by 8% to $0.13 per share. The
Company has announced dividend increases in each of the past 24 years.


Total assets increased in 2013 by 10% mainly due to the increase in cash
generated from operations.


Long-term debt decreased in 2013 mainly due to the repayment of the term credit
facility. Total debt net of cash to total capitalization was 10% at December 31,
2013, well within target levels.


RISKS AND RISK MANAGEMENT

In the normal course of business, Toromont is exposed to risks that may
potentially impact its financial results in any or all of its business segments.
The Company and each operating segment employ risk management strategies with a
view to mitigating these risks on a cost- effective basis.


Business Cycle

Expenditures on capital goods have historically been cyclical, reflecting a
variety of factors including interest rates, foreign exchange rates, consumer
and business confidence, commodity prices, corporate profits, credit conditions
and the availability of capital to finance purchases. Toromont's customers are
typically affected, to varying degrees, by these factors and trends in the
general business cycle within their respective markets. As a result, Toromont's
financial performance is affected by the impact of such business cycles on the
Company's customer base.


Commodities prices, and, in particular, changes in the view on long-term trends,
affect demand for the Company's products and services in the Equipment Group.
Commodity price movements in base and precious metals sectors in particular can
have an impact on customers' demands for equipment and customer service. With
lower commodity prices, demand is reduced as development of new projects is
often stopped and existing projects can be curtailed, both leading to less
demand for heavy equipment.


The business of the Company is diversified across a wide range of industry
market segments, serving to temper the effects of business cycles on
consolidated results. Continued diversification strategies such as expanding the
Company's customer base, broadening product offerings and geographic
diversification are designed to moderate business cycle impacts. The Company has
focused on the sale of specialized equipment and ongoing support through parts
distribution and skilled service. Product support growth has been, and will
continue to be, fundamental to the mitigation of downturns in the business
cycle. The product support business contributes significantly higher profit
margins and is typically subject to less volatility than equipment supply
activities.


Product and Supply

The Equipment Group purchases most of its equipment inventories and parts from
Caterpillar under a dealership agreement that dates back to 1993. As is
customary in distribution arrangements of this type, the agreement with
Caterpillar can be terminated by either party upon 90 days' notice. In the event
Caterpillar terminates, it must repurchase substantially all inventories of new
equipment and parts at cost. Toromont has maintained an excellent relationship
with Caterpillar for 21 years and management expects this will continue going
forward.


Toromont is dependent on the continued market acceptance of Caterpillar's
products. It is believed that Caterpillar has a solid reputation as a
high-quality manufacturer, with excellent brand recognition and customer support
as well as leading market shares in many of the markets it serves. However,
there can be no assurance that Caterpillar will be able to maintain its
reputation and market position in the future. Any resulting decrease in the
demand for Caterpillar products could have a material adverse impact on the
Company's business, results of operations and future prospects.


Toromont is also dependent on Caterpillar for timely supply of equipment and
parts. From time to time during periods of intense demand, Caterpillar may find
it necessary to allocate its supply of particular products among its dealers.
Such allocations of supply have not, in the past, proven to be a significant
impediment in the conduct of business. However, there can be no assurance that
Caterpillar will continue to supply its products in the quantities and
timeframes required by customers.


Competition

The Company competes with a large number of international, national, regional
and local suppliers in each of its markets. Although price competition can be
strong, there are a number of factors that have enhanced the Company's ability
to compete throughout its market areas including: the range and quality of
products and services; ability to meet sophisticated customer requirements;
distribution capabilities including number and proximity of locations; financing
offered by Caterpillar Finance; e-commerce solutions; reputation and financial
strength.


Increased competitive pressures or the inability of the Company to maintain the
factors that have enhanced its competitive position to date could adversely
affect the Company's business, results of operations or financial condition.


The Company relies on the skills and availability of trained and experienced
tradesmen and technicians in order to provide efficient and appropriate services
to customers. Hiring and retaining such individuals is critical to the success
of these businesses. Demographic trends are reducing the number of individuals
entering the trades, making access to skilled individuals more difficult. The
Company has several remote locations which make attracting and retaining skilled
individuals more difficult.


Credit Risk

Financial instruments that potentially subject the Company to concentrations of
credit risk consist of cash equivalents, accounts receivable and derivative
financial instruments. The carrying amount of assets included on the balance
sheet represents the maximum credit exposure.


When the Company has cash on hand it may be invested in short-term instruments,
such as money market deposits. The Company manages its credit exposure
associated with cash equivalents by ensuring there is no significant
concentration of credit risk with a single counterparty, and by dealing only
with highly rated financial institutions as counterparties.


The Company has accounts receivable from a large diversified customer base, and
is not dependent on any single customer or industry. The Company has accounts
receivable from customers engaged in various industries including construction,
mining, food and beverage, and governmental agencies. Management does not
believe that any single industry represents significant credit risk. These
customers are based predominately in Canada.


The credit risk associated with derivative financial instruments arises from the
possibility that the counterparties may default on their obligations. In order
to minimize this risk, the Company enters into derivative transactions only with
highly rated financial institutions.


Warranties and Maintenance Contracts

Toromont provides warranties for most of the equipment it sells, typically for a
one-year period following sale. The warranty claim risk is generally shared
jointly with the equipment manufacturer. Accordingly, liability is generally
limited to the service component of the warranty claim, while the manufacturer
is responsible for providing the required parts.


The Company also enters into long-term maintenance and repair contracts, whereby
it is obligated to maintain equipment for its customers. The length of these
contracts varies generally from two to five years. The contracts are typically
fixed price on either machine hours or cost per hour, with provisions for
inflationary and exchange adjustments. Due to the long-term nature of these
contracts, there is a risk that maintenance costs may exceed the estimate,
thereby resulting in a loss on the contract. These contracts are closely
monitored for early warning signs of cost overruns. In addition, the
manufacturer may, in certain circumstances, share in the cost overruns if
profitability falls below a certain threshold.


Foreign Exchange

The Company transacts business in multiple currencies, the most significant of
which are the Canadian dollar and the U.S. dollar. As a result, the Company has
foreign currency exposure with respect to items denominated in foreign
currencies.


The rate of exchange between the Canadian and U.S. dollar has an impact on
revenue trends. The Canadian dollar averaged US$0.97 in 2013 compared to being
on par in 2012, a 3% decrease. As substantially all of the equipment and parts
sold in the Equipment Group are sourced in U.S. dollars, and Canadian dollar
sales prices generally reflect changes in the rate of exchange, a stronger
Canadian dollar can adversely affect revenues. The impact is not readily
estimable as it is largely dependent on when customers order the equipment
versus when it was sold. Bookings in a given period would more closely follow
period-over-period changes in exchange rates. Sales of parts come from
inventories maintained to service customer requirements. As a result, constant
parts replenishment means that there is a lagging impact of changes in exchange
rates. In CIMCO, sales are largely affected by the same factors. In addition,
revenues from CIMCO's US subsidiary reflect changes in exchange rates on the
translation of results, although this is not significant.


In addition, pricing to customers is customarily adjusted to reflect changes in
the Canadian dollar landed cost of imported goods. Foreign exchange contracts
reduce volatility by fixing landed costs related to specific customer orders and
establishing a level of price stability for high-volume goods such as spare
parts.


The Company does not enter into foreign exchange forward contracts for
speculative purposes. The gains and losses on the foreign exchange forward
contracts designated as cash flow hedges are intended to offset the translation
losses and gains on the hedged foreign currency transactions when they occur.


As a result, the foreign exchange impact on earnings with respect to
transactional activity is not significant.


Interest Rate

The Company minimizes its interest rate risk by managing its portfolio of
floating and fixed rate debt, as well as managing the term to maturity.


At December 31, 2013, 100% of the Company's debt portfolio was comprised of
fixed rate debt (2012 - 84%). Fixed rate debt exposes the Company to future
interest rate movements upon refinancing the debt at maturity.


Floating rate debt exposes the Company to fluctuations in short-term interest
rates by causing related interest payments and finance expense to vary.


The Company's fixed rate debt matures between 2015 and 2019.

Further, the fair value of the Company's fixed rate debt obligations may be
negatively affected by declines in interest rates, thereby exposing the Company
to potential losses on early settlements or refinancing. The Company does not
intend to settle or refinance any existing debt before maturity.


Financing Arrangements

The Company requires capital to finance its growth and to refinance its
outstanding debt obligations as they come due for repayment. If the cash
generated from the Company's business, together with the credit available under
existing bank facilities, is not sufficient to fund future capital requirements,
the Company will require additional debt or equity financing in the capital
markets. The Company's ability to access capital markets, on terms that are
acceptable, will be dependent upon prevailing market conditions, as well as the
Company's future financial condition. Further, the Company's ability to increase
its debt financing may be limited by its financial covenants or its credit
rating objectives. The Company maintains a conservative leverage structure and
although it does not anticipate difficulties, there can be no assurance that
capital will be available on suitable terms and conditions, or that borrowing
costs and credit ratings will not be adversely affected.


Environmental Regulation

Toromont's customers are subject to significant and ever-increasing
environmental legislation and regulation. This legislation can impact Toromont
in two ways. First, it may increase the technical difficulty in meeting
environmental requirements in product design, which could increase the cost of
these businesses' products. Second, it may result in a reduction in activity by
Toromont's customers in environmentally sensitive areas, in turn reducing the
sales opportunities available to Toromont.


Toromont is also subject to a broad range of environmental laws and regulations.
These may, in certain circumstances, impose strict liability for environmental
contamination, which may render Toromont liable for remediation costs, natural
resource damages and other damages as a result of conduct that was lawful at the
time it occurred or the conduct of, or conditions caused by, prior owners,
operators or other third parties. In addition, where contamination may be
present, it is not uncommon for neighbouring land owners and other third parties
to file claims for personal injury, property damage and recovery of response
costs. Remediation costs and other damages arising as a result of environmental
laws and regulations, and costs associated with new information, changes in
existing environmental laws and regulations or the adoption of new environmental
laws and regulations could be substantial and could negatively impact Toromont's
business, results of operations or financial condition.


Spinoff Transaction Risk

Although the spinoff of Enerflex in 2011, as a separate, publicly traded company
is complete, the transaction exposes Toromont to certain ongoing risks. The
spinoff was structured to comply with all the requirements of the public company
"butterfly rules" in the Income Tax Act. However, there are certain requirements
of these rules that depend on events occurring after completion of the spinoff
or that may not be within the control of Toromont and/or Enerflex. If these
requirements are not met, Toromont could be exposed to significant tax
liabilities which could have a material effect on the financial position of
Toromont. In addition, Toromont has agreed to indemnify Enerflex for certain
liabilities and obligations related to its business at the time of the spinoff.
These indemnification obligations could be significant. These risks are more
fully described in the Management Information Circular relating to the Plan of
Arrangement dated April 11, 2011 which is available at www.sedar.com.


CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's significant accounting policies are described in Note 1 to the
unaudited consolidated financial statements.


The preparation of the Company's consolidated financial statements in conformity
with IFRS requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities, and
the disclosure of contingent liabilities, at the end of the reporting period.
However, uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of the asset
or liability affected in future periods.


In making estimates and judgments, management relies on external information and
observable conditions where possible, supplemented by internal analysis as
required. Management reviews its estimates and judgements on an ongoing basis.


In the process of applying the Company's accounting policies, management has
made the following judgments, estimates and assumptions which have the most
significant effect on the amounts recognized in the consolidated financial
statements. The critical accounting policies and estimates described below
affect the operating segments similarly, and therefore are not discussed on a
segmented basis.


Property, Plant and Equipment

Fixed assets are stated at cost less accumulated depreciation, including asset
impairment losses. Depreciation is calculated using the straight-line method
over the estimated useful lives of the assets. The estimated useful lives of
fixed assets are reviewed on an annual basis. Assessing the reasonableness of
the estimated useful lives of fixed assets requires judgment and is based on
currently available information.


Fixed assets are also reviewed for potential impairment on a regular basis or
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. In cases where the undiscounted expected future cash
flows are less than the carrying amount, an impairment loss is recognized.
Impairment losses on long-lived assets are measured as the amount by which the
carrying value of an asset or asset group exceeds its fair value, as determined
by the discounted future cash flows of the asset or asset group. In estimating
future cash flows, the Company uses its best estimates based on internal plans
that incorporate management's judgments as to the remaining service potential of
the fixed assets. Changes in circumstances, such as technological advances and
changes to business strategy can result in actual useful lives and future cash
flows differing significantly from estimates. The assumptions used, including
rates and methodologies, are reviewed on an ongoing basis to ensure they
continue to be appropriate. Revisions to the estimated useful lives of fixed
assets or future cash flows constitute a change in accounting estimate and are
applied prospectively.


Income Taxes

Income tax rules and regulations in the countries in which the Company operates
and income tax treaties between these countries are subject to interpretation
and require estimates and assumptions in determining the Company's consolidated
income tax provision that may be challenged by the taxation authorities.


Estimates and judgments are made for uncertainties which exist with respect to
the interpretation of complex tax regulations, changes in tax laws and the
amount and timing of future taxable income. Changes or differences in these
estimates or assumptions may result in changes to the current or deferred tax
balances on the consolidated statement of financial position, a charge or credit
to income tax expense in the income statement and may result in cash payments or
receipts.


Impairment of Non-financial Assets

Impairment exists when the carrying value of an asset or cash generating unit
exceeds its recoverable amount, which is the higher of its fair value less costs
to sell and its value in use. The fair value less costs to sell calculation is
based on available data from binding sales transactions in an arm's length
transaction of similar assets or observable market prices less incremental costs
for disposing of the asset. The value in use calculation is based on a
discounted cash flow model. The cash flows are derived from the budget for the
next three years and do not include restructuring activities that the Company is
not yet committed to or significant future investments that will enhance the
asset's performance of the cash generating unit being tested. The recoverable
amount is most sensitive to the discount rate used for the discounted cash flow
model as well as the expected future cash inflows and the growth rate used for
extrapolation purposes.


Revenue Recognition

The Company generates revenue from the assembly and manufacture of equipment
using the percentage-of-completion method. This method requires management to
make a number of estimates and assumptions surrounding: the expected
profitability of the contract; the estimated degree of completion based on cost
progression; and other detailed factors. Although these factors are routinely
reviewed as part of the project management process, changes in these estimates
or assumptions could lead to changes in the revenues recognized in a given
period.


The Company also generates revenue from long-term maintenance and repair
contracts whereby it is obligated to maintain equipment for its customers. The
contracts are typically fixed price on either machine hours or cost per hour,
with provisions for inflationary and exchange adjustments. Revenue is recognized
using the percentage-of-completion method based on work completed. This method
requires management to make a number of estimates and assumptions surrounding:
machine usage; machine performance; future parts and labour pricing;
manufacturers' warranty coverage; and other detailed factors. These factors are
routinely reviewed as part of the contract management process; however changes
in these estimates or assumptions could lead to changes in the revenues and cost
of goods sold recognized in a given period.


Inventories

Management is required to make an assessment of the net realizable value of
inventory at each reporting period. Management incorporates estimates and
judgments that take into account current market prices, current economic trends
and past experiences in the measurement of net realizable value.


Employee Future Benefits Expense

The net obligations associated with the defined benefit pension plans are
actuarially valued using: the projected unit credit method; the current market
discount rate, salary escalation, life expectancy and future pension increases.
All assumptions are reviewed at each reporting date.


Share-based Compensation

Estimating the fair value for share-based payment transactions requires
determining the most appropriate inputs to the valuation model including: the
expected life of the share option; expected sock price volatility; and expected
dividend yield.


FUTURE ACCOUNTING STANDARDS

A number of amendments to standards and a new interpretation have been issued
but are not yet effective for the financial year ending December 31, 2013, and
accordingly, have not been applied in preparing these consolidated financial
statements.


Levies - In May 2013, the IFRS Interpretations Committee ("IFRIC"), with the
approval by the IASB, issued IFRIC 21 - Levies. IFRIC 21 provides guidance on
when to recognize a liability to pay a levy imposed by government that is
accounted for in accordance with IAS 37 - Provisions, Contingent Liabilities and
Contingent Assets. IFRIC 21 is effective for annual periods beginning on or
after January 1, 2014, and is to be applied retrospectively.


Impairment of Assets - In May 2013, the IASB issued amendments to IAS 36 -
Impairment of Assets, to reverse the unintended requirement in IFRS 13 - Fair
Value Measurement, to disclose the recoverable amount of every cash-generating
unit to which significant goodwill or indefinite-lived intangible assets have
been allocated. Under the amendments, recoverable amount is required to be
disclosed only when an impairment loss has been recognized or reversed. These
amendments, which would only impact certain disclosure requirements, are
effective for annual periods beginning on or after January 1, 2014.


The Company is currently assessing the impact of these amendments and
interpretation on its financial statements and does not expect any significant
impact.


RESPONSIBILITY OF MANAGEMENT AND THE BOARD OF DIRECTORS

Management is responsible for the information disclosed in this MD&A and the
accompanying consolidated financial statements, and has in place appropriate
information systems, procedures and controls to ensure that information used
internally by management and disclosed externally is materially complete and
reliable. In addition, the Company's Audit Committee, on behalf of the Board of
Directors, provides an oversight role with respect to all public financial
disclosures made by the Company, and has reviewed and approved this MD&A and the
accompanying consolidated financial statements. The Audit Committee is also
responsible for determining that management fulfills its responsibilities in the
financial control of operations, including disclosure controls and procedures
and internal control over financial reporting.


DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING

The Chief Executive Officer and the Chief Financial Officer, together with other
members of management, have evaluated the effectiveness of the Company's
disclosure controls and procedures and internal controls over financial
reporting as at December 31, 2013, using the internal control integrated
framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COS)") in 1992. Based on that evaluation, they have concluded that
the design and operation of the Company's disclosure controls and procedures
were adequate and effective as at December 31, 2013, to provide reasonable
assurance that a) material information relating to the Company and its
consolidated subsidiaries would have been known to them and by others within
those entities, and b) information required to be disclosed is recorded,
processed, summarized and reported within required time periods. They have also
concluded that the design and operation of internal controls over financial
reporting were adequate and effective as at December 31, 2013, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial reporting in accordance with IFRS.


There have been no changes in the design of the Company's internal controls over
financial reporting during 2013 that would materially affect, or is reasonably
likely to materially affect, the Company's internal controls over financial
reporting.


While the Officers of the Company have evaluated the effectiveness of disclosure
controls and procedures and internal control over financial reporting as at
December 31, 2013 and have concluded that these controls and procedures are
being maintained as designed, they expect that the disclosure controls and
procedures and internal controls over financial reporting may not prevent all
errors and fraud. A control system, no matter how well conceived or operated,
can only provide reasonable, not absolute, assurance that the objectives of the
control system are met.


In May 2013, COSO released an updated version of the 1992 internal control
integrated framework. The original framework will be available through December
15, 2014, at which time the 1992 framework will be superseded. The Company is in
the process of reviewing the changes to the framework and developing a
transition plan to adopt the new framework for the fiscal year ending December
31, 2014.


NON-IFRS FINANCIAL MEASURES

The success of the Company and business unit strategies is measured using a
number of key performance indicators, which are outlined below. These measures
are also used by management in its assessment of relative investments in
operations. These key performance indicators are not measurements in accordance
with IFRS. It is possible that these measures will not be comparable to similar
measures prescribed by other companies. They should not be considered as an
alternative to net income or any other measure of performance under IFRS.


Operating Income and Operating Margin

Each business segment assumes responsibility for its operating results as
measured by, amongst other factors, operating income, which is defined as income
before income taxes, interest income and interest expense. Financing and related
interest charges cannot be attributed to business segments on a meaningful basis
that is comparable to other companies. Business segments and income tax
jurisdictions are not synonymous, and it is believed that the allocation of
income taxes distorts the historical comparability of the performance of the
business segments. Consolidated and segmented operating income is reconciled to
net earnings in tables where used in this MD&A.


Operating income margin is calculated by dividing operating income by total revenue.

Return on Equity and Return on Capital Employed

Return on equity ("ROE") is monitored to assess the profitability of the
consolidated Company. ROE is calculated by dividing net earnings by opening
shareholders' equity (adjusted for shares issued and redeemed during the year).


Return on capital employed ("ROCE") is a key performance indicator that is
utilized to assess both current operating performance and prospective
investments. The numerator used for the calculation is income before income
taxes, interest expense and interest income (excluding interest on rental
conversions). The denominator in the calculation is the monthly average capital
employed, which is defined as net debt plus shareholders' equity.


Working Capital and Non-Cash Working Capital

Working capital is defined as current assets less current liabilities. Non-cash
working capital is defined as working capital less cash and equivalents.


Net Debt to Total Capitalization

Net debt is defined as total long-term debt less cash and cash equivalents.
Total capitalization is defined as net debt plus shareholders' equity. The ratio
of net debt to total capitalization is determined by dividing net debt by total
capitalization.


Free Cash Flow

Free cash flow is defined as cash provided by operating activities (as per the
Consolidated Statement of Cash Flows), less cash used in investing activities,
other than business acquisitions.




TOROMONT INDUSTRIES LTD.                                                    
CONSOLIDATED STATEMENTS OF FINANCIAL                                        
 POSITION                                                                   
(Unaudited)                                                                 
                                                --------------              
                                                   December 31   December 31
($ thousands)                               Note          2013          2012
----------------------------------------------------------------------------
                                                                    Restated
Assets                                                            See Note 1
Current assets                                                              
  Cash                                           $      70,769 $       2,383
  Accounts receivable                          3       240,259       231,518
  Inventories                                  4       327,439       327,785
  Income taxes receivable                                6,135             -
  Derivative financial instruments                       1,331            43
  Other current assets                                   4,585         4,086
----------------------------------------------------------------------------
Total current assets                                   650,518       565,815
                                                                            
Property, plant and equipment                  5       166,440       157,993
Rental equipment                               5       174,712       158,932
Other assets                                   6         8,861        12,614
Deferred tax assets                           15         2,435        13,697
Goodwill and intangible assets                 7        27,589        27,119
----------------------------------------------------------------------------
Total assets                                     $   1,030,555 $     936,170
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Liabilities                                                                 
Current liabilities                                                         
  Accounts payable, accrued liabilities and                                 
   provisions                                  8 $     248,461 $     203,468
  Deferred revenues                                     48,924        54,664
  Current portion of long-term debt            9         1,470         1,372
  Derivative financial instruments                           -           262
  Income taxes payable                                       -         3,130
----------------------------------------------------------------------------
Total current liabilities                              298,855       262,896
                                                                            
Deferred revenues                                       11,060        11,337
Long-term debt                                 9       130,948       158,395
Accrued pension liability                     19        13,135        26,840
Derivative financial instruments                             -           127
                                                                            
Shareholders' equity                                                        
Share capital                                 10       279,149       270,900
Contributed surplus                           11         6,329         5,957
Retained earnings                                      289,979       199,486
Accumulated other comprehensive income                   1,100           232
----------------------------------------------------------------------------
Shareholders' equity                                   576,557       476,575
----------------------------------------------------------------------------
Total liabilities and shareholders' equity       $   1,030,555 $     936,170
----------------------------------------------------------------------------
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See accompanying notes                                                      
                                                                            
TOROMONT INDUSTRIES LTD.                                                    
CONSOLIDATED INCOME STATEMENTS                                              
(Unaudited)                                                                 
                                                                            
Years ended December 31                                                     
                                                  ---------------           
($ thousands, except share amounts)           Note        2013         2012 
----------------------------------------------------------------------------
                                                                   Restated 
                                                                 See Note 1 
Revenues                                        23 $ 1,593,431  $ 1,507,173 
Cost of goods sold                              17   1,201,913    1,122,765 
----------------------------------------------------------------------------
Gross profit                                           391,518      384,408 
Selling and administrative expenses             17     217,556      215,600 
----------------------------------------------------------------------------
Operating income                                       173,962      168,808 
Interest expense                                14       8,693        9,714 
Interest and investment income                  14      (3,793)      (3,974)
----------------------------------------------------------------------------
Income before income taxes                             169,062      163,068 
Income taxes                                    15      46,031       43,595 
----------------------------------------------------------------------------
Net earnings                                       $   123,031  $   119,473 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Earnings per share                                                          
  Basic                                         16 $      1.61  $      1.56 
  Diluted                                       16 $      1.59  $      1.55 
----------------------------------------------------------------------------
Weighted average number of shares outstanding                               
  Basic                                             76,612,204   76,549,792 
  Diluted                                           77,155,151   77,086,929 
----------------------------------------------------------------------------
See accompanying notes                                                      
                                                                            
TOROMONT INDUSTRIES LTD.                                                    
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME                             
(Unaudited)                                                                 
                                                                            
                                                                            
                                                     ----------             
Years ended December 31 ($ thousands)                     2013         2012 
----------------------------------------------------------------------------
                                                                   Restated 
                                                                 See Note 1 
                                                                            
Net earnings                                          $123,031  $   119,473 
Other comprehensive income (loss):                                          
Items that may be reclassified subsequently to net                          
 earnings:                                                                  
  Unrealized gain (loss) on translation of financial                        
   statements of foreign operations                        407         (121)
  Change in fair value of derivatives designated as                         
   cash flow hedges, net of income tax expense                              
   (recovery) (2013 - $1,084; 2012 - ($650))             3,089       (1,619)
  (Gain) loss on derivatives designated as cash flow                        
   hedges transferred to net earnings, net of income                        
   tax expense (recovery) (2013 - $925; 2012 -                              
   ($435))                                              (2,628)       1,080 
                                                                            
Items that will not be reclassified subsequently to                         
 net earnings:                                                              
  Actuarial gains (losses) on pension plans, net of                         
   income tax expense (recovery)                                            
  (2013 - $2,637; 2012 - ($1,115))                       7,316       (3,096)
----------------------------------------------------------------------------
                                                                            
Other comprehensive income (loss)                        8,184       (3,756)
----------------------------------------------------------------------------
                                                                            
Comprehensive income                                  $131,215  $   115,717 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
See accompanying notes                                                      
                                                                            
TOROMONT INDUSTRIES LTD.                                                    
CONSOLIDATED STATEMENTS OF CASH FLOWS                                       
(Unaudited)                                                                 
                                                                            
                                                                            
                                                     ----------             
Years ended December 31 ($ thousands)            Note     2013         2012 
----------------------------------------------------------------------------
                                                                   Restated 
                                                                 See Note 1 
Operating activities                                                        
  Net earnings                                        $123,031  $   119,473 
  Items not requiring cash:                                                 
    Depreciation and amortization                       59,246       52,818 
    Stock-based compensation                       11    1,957        1,659 
    Accrued pension liability                           (3,752)      (3,532)
    Deferred income taxes                                8,462          379 
    Gain on sale of rental equipment and                                    
     property, plant and equipment                     (10,071)      (8,967)
----------------------------------------------------------------------------
                                                       178,873      161,830 
  Net change in non-cash working capital and                                
   other                                           21   21,665     (124,475)
----------------------------------------------------------------------------
Cash provided by operating activities                  200,538       37,355 
----------------------------------------------------------------------------
                                                                            
Investing activities                                                        
  Additions to:                                                             
    Rental equipment                                   (69,123)     (77,611)
    Property, plant and equipment                      (25,680)     (23,700)
  Proceeds on disposal of:                                                  
    Rental equipment                                    22,143       22,562 
    Property, plant and equipment                        1,393        1,504 
  Increase in other assets                                (265)        (291)
  Increase in intangible assets                           (500)     (13,669)
----------------------------------------------------------------------------
Cash used in investing activities                      (72,032)     (91,205)
----------------------------------------------------------------------------
                                                                            
Financing activities                                                        
  (Decrease) increase in term credit facility                               
   debt                                                (26,547)      26,547 
  Repayment of long-term debt                           (1,372)      (1,280)
  Financing costs                                            -         (369)
  Dividends                                        10  (39,026)     (35,996)
  Shares purchased for cancellation                          -      (14,137)
  Cash received on exercise of stock options             6,660        6,202 
----------------------------------------------------------------------------
Cash used in financing activities                      (60,285)     (19,033)
----------------------------------------------------------------------------
                                                                            
Effect of exchange rate changes on cash                                     
 denominated in foreign currency                           165          (53)
----------------------------------------------------------------------------
  Increase (decrease) in cash                           68,386      (72,936)
  Cash at beginning of year                              2,383       75,319 
----------------------------------------------------------------------------
  Cash at end of year                                 $ 70,769  $     2,383 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Supplemental cash flow information (note 21)                                
See accompanying notes                                                      
                                                                            
TOROMONT INDUSTRIES LTD.                              
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY          
(Unaudited)                                           
                                                                       
                                                                       
                                                                       
                                          Share Contributed   Retained 
($ thousands)                  Notes    capital     surplus   earnings 
-----------------------------------------------------------------------
                                                                       
At January 1, 2013                   $  270,900  $    5,957 $  199,486 
Net earnings                                  -           -    123,031 
Other comprehensive income                    -           -      7,316 
Effect of stock compensation                                           
 plans                         10,11      8,271         372          - 
Other adjustments                           (22)          -            
Dividends                                     -           -    (39,854)
-----------------------------------------------------------------------
At December 31, 2013                 $  279,149  $    6,329 $  289,979 
-----------------------------------------------------------------------
-----------------------------------------------------------------------
                                                                       

                                                                            
                                          Accumulated other                 
                                         comprehensive income               
                                    ------------------------------          
                                         Foreign                            
                                        currency     Cash                   
                                     translation     flow                   
($ thousands)                  Notes adjustments   hedges   Total     Total 
----------------------------------------------------------------------------
                                                                            
At January 1, 2013                   $       424  $  (192) $  232  $476,575 
Net earnings                                   -        -       -   123,031 
Other comprehensive income                   407      461     868     8,184 
Effect of stock compensation                                                
 plans                         10,11           -        -       -     8,643 
Other adjustments                              -        -       -       (22)
Dividends                                      -        -       -   (39,854)
----------------------------------------------------------------------------
At December 31, 2013                 $       831  $   269  $1,100  $576,557 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                       
                                                                       
                                                                       
($ thousands) - Restated - See            Share Contributed   Retained 
Note 1                         Notes    capital     surplus   earnings 
-----------------------------------------------------------------------
                                                                       
At January 1, 2012                   $  265,436  $    5,890 $  131,643 
Net earnings                                  -           -    119,473 
Other comprehensive loss                      -           -     (3,096)
Shares purchased for                                                   
 cancellation                     10     (2,330)          -    (11,806)
Effect of stock compensation                                           
 plans                         10,11      7,794          67          - 
Dividends                                     -           -    (36,728)
-----------------------------------------------------------------------
At December 31, 2012                 $  270,900  $    5,957 $  199,486 
-----------------------------------------------------------------------
-----------------------------------------------------------------------
                                                                       
See accompanying notes                                                 

                                                                            
                                          Accumulated other                 
                                         comprehensive income               
                                    ------------------------------          
                                         Foreign                            
                                        currency     Cash                   
($ thousands) - Restated - See       translation     flow                   
Note 1                         Notes adjustments   hedges   Total     Total 
----------------------------------------------------------------------------
                                                                            
At January 1, 2012                   $       545  $   347  $  892  $403,861 
Net earnings                                   -        -       -   119,473 
Other comprehensive loss                    (121)    (539)   (660)   (3,756)
Shares purchased for                                                        
 cancellation                     10           -        -       -   (14,136)
Effect of stock compensation                                                
 plans                         10,11           -        -       -     7,861 
Dividends                                      -        -       -   (36,728)
----------------------------------------------------------------------------
At December 31, 2012                 $       424  $  (192) $  232  $476,575 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
See accompanying notes                                                      
                                                                            
                                                                            
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                              
(Unaudited)                                                                 
December 31, 2013                                                           
($thousands except where otherwise indicated)                               



1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Corporate Information

Toromont Industries Ltd. (the "Company" or "Toromont") is a limited company
incorporated and domiciled in Canada whose shares are publicly traded on the
Toronto Stock Exchange under the symbol TIH. The registered office is located at
3131 Highway 7 West, Concord, Ontario, Canada.


Toromont operates through two business segments: The Equipment Group and CIMCO.
The Equipment Group includes one of the larger Caterpillar dealerships by
revenue and geographic territory in addition to industry-leading rental
operations. CIMCO is a market leader in the design, engineering, fabrication and
installation of industrial and recreational refrigeration systems. Both segments
offer comprehensive product support capabilities. Toromont employs over 3,000
people in almost 100 locations.


Statement of Compliance

These consolidated unaudited financial statements are prepared in accordance
with International Financial Reporting Standards ("IFRS"), as issued by the
International Accounting Standards Board ("IASB").


These consolidated unaudited financial statements were authorized for issue by
the Audit Committee of the Board of the Directors on February 10, 2014.


Basis of Preparation

These consolidated financial statements were prepared on a historical cost
basis, except for derivative instruments that have been measured at fair value.
The consolidated financial statements are presented in Canadian dollars and all
values are rounded to the nearest thousands, except where otherwise indicated.


Basis of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries.


Subsidiaries are fully consolidated from the date of acquisition, being the date
on which the Company obtains control, and continue to be consolidated until the
date that such control ceases. The financial statements of the subsidiaries are
prepared for the same reporting period as the parent company, using consistent
accounting policies. All intra-group balances, income and expenses and
unrealized gains and losses resulting from intra-group transactions are
eliminated in full.


Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method. The cost
of an acquisition is measured as the aggregate of consideration transferred,
measured at acquisition date fair value. Acquisition costs are expensed as
incurred.


Goodwill is initially measured at cost, being the excess of the cost of the
business combination over the Company's share in the net fair value of the
acquiree's identifiable assets, liabilities and contingent liabilities. If the
cost of acquisition is less than the fair value of the net assets of the
subsidiary acquired, the difference is recognized directly in the consolidated
income statements.


After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. For the purpose of impairment testing, goodwill acquired in a
business combination is, from the acquisition date, allocated to each of the
Company's cash-generating units ("CGUs") that are expected to benefit from the
synergies of the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.


Where goodwill forms part of a CGU and part of the operation within that unit is
disposed of, the goodwill associated with the operation disposed of is included
in the carrying amount of the operation when determining the gain or loss on
disposal of the operation. Goodwill disposed of in this circumstance is measured
based on the relative fair values of the operation disposed of and the portion
of the CGU retained.


Cash and Cash Equivalents

Cash consists of petty cash and demand deposits. Cash equivalents, when
applicable, consists of short-term deposits with an original maturity of three
months or less.


Accounts Receivable

Accounts receivable are amounts due from customers for merchandise sold or
services performed in the ordinary course of business. If collection is expected
in one year or less (or in the normal operating cycle of the business, if
longer), they are classified as current assets. If not, they are presented as
non-current assets.


Accounts receivable are recognized initially at fair value and subsequently
measured at amortized cost using the effective interest method, less provision
for impairment.


The Company maintains an allowance for doubtful accounts to provide for
impairment of trade receivables. The expense relating to doubtful accounts is
included within "Selling and administrative expenses" in the consolidated income
statements.


Inventories

Inventories are valued at the lower of cost and net realizable value.

Cost of equipment, repair and distribution parts and direct materials include
purchase cost and costs incurred in bringing each product to its present
location and condition. Serialized inventory is determined on a specific-item
basis. Non-serialized inventory is determined based on a weighted-average actual
cost.


Cost of work-in-process includes cost of direct materials, labour and an
allocation of manufacturing overheads, excluding borrowing costs, based on
normal operating capacity.


Cost of inventories includes the transfer of gains and losses on qualifying cash
flow hedges, recognized in other comprehensive income, in respect of the
purchase of inventory.


Net realizable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and the estimated costs necessary
to make the sale.


Property, Plant and Equipment

Property, plant and equipment are recorded at cost, net of accumulated
depreciation and accumulated impairment losses, if any.


Depreciation is recognized principally on a straight-line basis over the
estimated useful lives of the assets. Estimated useful lives range from 20 to 30
years for buildings, three to 10 years for equipment and 20 years for power
generation assets. Leasehold improvements and lease inducements are amortized on
a straight-line basis over the term of the lease. Land is not depreciated.


The assets' residual values, useful lives and methods of depreciation are
reviewed at each financial year end and adjusted prospectively, if appropriate.


Rental Equipment

Rental equipment is recorded at cost, net of accumulated depreciation and
accumulated impairment losses, if any. Depreciation is recognized principally on
a straight-line basis over the estimated useful lives of the assets, which range
from one to 10 years.


Intangible Assets

Intangible assets acquired separately are measured on initial recognition at
cost. Following initial recognition, intangible assets are carried at cost less
any accumulated amortization and accumulated impairments losses. The useful
lives of intangible assets are assessed as either finite or indefinite. The
assessment of indefinite life is reviewed annually to determine whether the
indefinite life continues to be supportable. Intangible assets with indefinite
useful lives are not amortized, but are tested for impairment annually.
Intangible assets with a definite useful life are amortized over a period of 17
years on a straight line basis.


Provisions

Provisions are recognized when the Company has a present obligation, legal or
constructive, as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.


Provisions for warranty costs are recognized when the product is sold or service
provided. Initial recognition is based on historical experience.


Financial Instruments

The Company determines the classification of its financial assets and
liabilities at initial recognition. Initially, all financial assets and
liabilities are recognized at fair value. Regular-way trades of financial assets
and liabilities are recognized on the trade date. Transaction costs are expensed
as incurred except for loans and receivables and loans and borrowings, in which
case transaction costs are included in initial cost.


Financial Assets

Subsequent measurement of financial assets depends on the classification. The
Company has made the following classifications:




--  Cash and cash equivalents are classified as held for trading and as such
    are measured at fair value, with changes in fair value being included in
    profit or loss. 
--  Accounts receivable are classified as loans and receivables and are
    recorded at amortized cost using the effective interest rate method,
    less provisions for doubtful accounts. 
--  Derivatives are classified as held for trading and are measured at fair
    value with changes in fair value being included in profit or loss,
    unless they are designated as hedging instruments, in which case changes
    in fair value are included in other comprehensive income. 



The Company assesses at each statement of financial position date, whether there
is any objective evidence that a financial asset or a group of financial assets
is impaired.


Financial Liabilities

Subsequent measurement of financial liabilities depends on the classification.
The Company has made the following classifications:




--  Accounts payable and accrued liabilities are classified as financial
    liabilities held for trading and as such are measured at fair value,
    with changes in fair value being included in profit or loss. 
--  Long-term debt is classified as loans and borrowings and as such is
    subsequently measured at amortized cost using the effective interest
    rate method. Discounts, premiums and fees on acquisition are taken into
    account in determining amortized cost. 
--  Derivatives are classified as held for trading and are measured at fair
    value with changes in fair value being included in profit or loss,
    unless they are designated as effective hedging instruments, in which
    case changes in fair value are included in other comprehensive income. 



Fair Value of Financial Instruments

The Company uses the following hierarchy for determining and disclosing the fair
value of financial instruments by valuation technique:




--  Level 1 - unadjusted quoted prices in active markets for identical
    assets or liabilities. 
--  Level 2 - other techniques for which all inputs that have a significant
    effect on the recorded fair value are observable, either directly or
    indirectly. 
--  Level 3 - techniques that use inputs that have a significant effect on
    the recorded fair value that are not based on observable market data. 



Derivative Financial Instruments and Hedge Accounting

Derivative financial arrangements are used to hedge exposure to fluctuations in
exchange rates. Such derivative financial instruments are initially recognized
at fair value on the date on which a derivative contract is entered into and are
subsequently measured at fair value. Derivatives are carried as financial assets
when the fair value is positive and as financial liabilities when the fair value
is negative.


Any gains or losses arising from changes in the fair value of derivatives are
taken directly to the income statement, except for the effective portion of cash
flow hedges, which is recognized in other comprehensive income.


At inception, the Company designates and documents the hedge relationship
including identification of the transaction and the risk management objectives
and strategy for undertaking the hedge. The Company also documents its
assessment, both at hedge inception and on an ongoing basis, of whether the
derivatives that are used in hedging transactions are highly effective in
offsetting changes in fair values or cash flows of hedged items.


The Company has designated certain derivatives as cash flow hedges. These are
hedges of firm commitments and highly probable forecast transactions. The
effective portion of changes in the fair value of derivatives that are
designated as a cash flow hedge is recognized in other comprehensive income. The
gain or loss relating to the ineffective portion is recognized immediately in
the income statement. Additionally:




--  If a hedge of a forecast transaction subsequently results in the
    recognition of a non- financial asset, the associated gains or losses
    that were recognized in other comprehensive income are included in the
    initial cost or other carrying amount of the asset; 
--  For cash flow hedges other than those identified above, amounts
    accumulated in other comprehensive income are recycled to the income
    statement in the period when the hedged item will affect earnings (for
    instance, when the forecast sale that is hedged takes place); 
--  When a hedging instrument expires or is sold, or when a hedge no longer
    meets the criteria for hedge accounting, any cumulative gain or loss in
    other comprehensive income remains in other comprehensive income and is
    recognized when the forecast transaction is ultimately recognized in the
    income statement; and 
--  When a forecast transaction is no longer expected to occur, the
    cumulative gain or loss that was reported in other comprehensive income
    is immediately recognized in the income statement. 



Impairment of Non-financial Assets

The Company assesses at each reporting date whether there is an indication that
an asset may be impaired. If any indication exists, or when annual impairment
testing for an asset is required, the Company estimates the asset's recoverable
amount. The recoverable amount is the higher of an asset's fair value less costs
to sell and its value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable
cash flows (CGUs). In determining fair value less costs to sell, recent market
transactions are taken into account, if available. In assessing value in use,
the estimated further cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. An impairment loss is recognized
for the amount by which the asset's carrying amount exceeds its recoverable
amount. Impairment losses are recognized in the income statement.


The Company bases its impairment calculation on detailed budgets which are
prepared for each of the CGUs and generally cover a period of three years. For
longer periods, a long-term growth rate is calculated and applied to project
future cash flows after the third year.


For assets other than goodwill, an assessment is made at each reporting date
whether there is any indication that previously recognized impairment losses may
no longer exist or may have decreased. If such indication exists, the Company
estimates the asset's recoverable amount. A previously recognized impairment
loss is reversed only if there has been a change in the assumptions used to
determine the asset's recoverable amount since the last impairment loss was
recognized. The reversal is limited so that the carrying amount of the asset
does not exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been
recognized for the asset in prior years. Such reversal is recognized in the
income statement.


Goodwill is tested for impairment annually during the fourth quarter of the year
and when circumstances indicate that the carrying value may be impaired.


Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic
benefits will flow to the Company and the revenue can be reliably measured.
Revenue is measured at the fair value of the consideration received, excluding
discounts, rebates, sales taxes and duty. The following specific recognition
criteria must also be met before revenue is recognized:




--  Revenues from the sale of equipment are recognized when the significant
    risks and rewards of ownership of the goods have passed to the buyer,
    usually on shipment of the goods and/or invoicing. 
--  Revenues from the sale of equipment for which the Company has provided a
    guarantee to repurchase the equipment at predetermined residual values
    and dates are accounted for as operating leases. Revenues are recognized
    over the period extending to the date of the residual value guarantee. 
--  Revenues from the sale of equipment systems involving design,
    manufacture, installation and start-up are recorded using the
    percentage-of-completion method. Percentage-of- completion is normally
    measured by reference to costs incurred to date as a percentage of total
    estimated cost for each contract. Any foreseeable losses on such
    projects are recognized immediately in profit or loss as identified. 
--  Revenues from equipment rentals are recognized in accordance with the
    terms of the relevant agreement with the customer, generally on a
    straight-line basis over the term of the agreement. 
--  Product support services include sales of parts and servicing of
    equipment. For the sale of parts, revenues are recognized when the part
    is shipped to the customer. For servicing of equipment, revenues are
    recognized on completion of the service work. 
--  Revenues from long-term maintenance contracts and separately priced
    extended warranty contracts are recognized on a percentage-of-completion
    basis proportionate to the service work that has been performed based on
    the parts and labour service provided. These contracts are closely
    monitored for performance. Any losses estimated during the term of the
    contract are recognized when identified. At the completion of the
    contract, any remaining profit on the contract is recognized as revenue.
--  Interest income is recognized using the effective interest method. 



Foreign Currency Translation

The functional and presentation currency of the Company is the Canadian dollar.
Each of the Company's subsidiaries determines its functional currency and items
included in the financial statements of each subsidiary are measured using that
functional currency.


Transactions in foreign currencies are initially recorded at the functional
currency rate prevailing at the date of the transaction or at the average rate
for the period when this is a reasonable approximation. Monetary assets and
liabilities denominated in foreign currencies are retranslated at the functional
currency spot rate of exchange as at the reporting date. All differences are
taken directly to profit or loss. Non-monetary items that are measured in terms
of historical cost in a foreign currency are translated using the exchange rates
as at the dates of the initial transactions.


The assets and liabilities of foreign operations (having a functional currency
other than the Canadian dollar) are translated into Canadian dollars at the rate
of exchange prevailing at the statement of financial position date and the
statements of earnings are translated at the average exchange rate for the
period. The exchange differences arising on translation are recognized in
accumulated other comprehensive income in shareholders' equity. On disposal of a
foreign operation, the deferred cumulative amount recognized in equity is
recognized in the income statement.


Share-based Payment Transactions

The Company operates both equity-settled and cash-settled share-based
compensation plans under which the Company receives services from employees,
including senior executives and directors, as consideration for equity
instruments of the Company.


For equity-settled plans, which are no longer available to non-employee
directors, expense is based on the fair value of the awards granted determined
using the Black-Scholes option pricing model and the best estimate of the number
of equity instruments that will ultimately vest. For awards with graded vesting,
each tranche is considered to be a separate grant based on its respective
vesting period. The fair value of each tranche is determined separately on the
date of grant and is recognized as stock-based compensation expense, net of
forfeiture estimate, over the term of its respective vesting period.


For cash-settled plans, the expense is determined based on the fair value of the
liability incurred at each award date and at each subsequent statement of
financial position date until the award is settled. The fair value of the
liability is measured by applying quoted market prices. Changes in fair value
are recognized in the income statement in selling and administrative expenses.


Employee Future Benefits

For defined contribution plans, the pension expense recorded in the income
statement is the amount of the contributions the Company is required to pay in
accordance with the terms of the plans.


For defined benefit plans, the pension expense is determined separately for each
plan using the following policies:




--  The cost of pensions earned by employees is actuarially determined using
    the projected unit credit method pro-rated on length of service and
    management's best estimate assumptions to value its pensions using a
    measurement date of December 31; 
--  Net interest is calculated by applying the discount rate to the net
    defined benefit liability or asset; 
--  Past service costs from plan amendments are recognized immediately in
    net earnings to the extent that the benefits have vested; otherwise,
    they are amortized on a straight-line basis over the vesting period; 
--  Actuarial gains and losses arising from experience adjustments and
    changes in actuarial assumptions are recognized in retained earnings and
    included in the statement of comprehensive income in the period in which
    they occur. 



Income Taxes

Current income tax assets and liabilities are measured at the amount expected to
be recovered from or paid to the taxation authorities.


Deferred tax is provided using the liability method on temporary differences
between the tax bases of assets and liabilities and their carrying amounts for
financial reporting purposes at the reporting date. Deferred tax assets and
liabilities are measured using enacted or substantively enacted income tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in income tax rates is recognized in the
income statement in the period that includes the date of substantive enactment.
The Company assesses recoverability of deferred tax assets based on the
Company's estimates and assumptions. Deferred tax assets are recorded at an
amount that the Company considers probable to be realized.


Current and deferred income taxes relating to items recognized directly in
shareholders' equity are also recognized directly in shareholders' equity.


Leases

The determination of whether an arrangement is, or contains, a lease is based on
the substance of the arrangement at inception date. Leases which transfer
substantially all of the benefits and risks of ownership of the property to the
lessee are classified as finance leases; all other leases are classified as
operating leases. Classification is re-assessed if the terms of the lease are
changed.


Toromont as Lessee

Operating lease payments are recognized as an operating expense in the income
statement on a straight-line basis over the lease term. Benefits received and
receivable as an incentive to enter into an operating lease are deferred and
amortized on a straight-line basis over the term of the lease.


Toromont as Lessor

Rental income from operating leases is recognized on a straight-line basis over
the term of the relevant lease. Initial direct costs incurred in negotiating and
arranging an operating lease are added to the carrying amount of the leased
asset and recognized on a straight-line basis over the lease term.


Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of time to
get ready for its intended use or sale are capitalized as part of the cost of
the respective asset. All other borrowing costs are expensed in the period they
occur.


Standards Adopted in 2013

Certain new standards and amendments to standards that were adopted on January
1, 2013 are noted below.


a. IAS 19 - Employee Benefits 

The Company adopted revisions to IAS 19 - Employee Benefits ("IAS 19R")
effective January 1, 2013. As a result, expected returns on plan assets of
defined benefit plans are not recognized in net earnings. Instead, interest on
net defined benefit obligation is recognized in net earnings, calculated using
the discount rate used to measure the net pension obligation or asset.


The change in accounting policy has been applied retrospectively. As all
components of other comprehensive income related to employee benefits were
previously recognized in retained earnings, there was no impact on the January
1, 2012 statement of financial position for the adoption of IAS 19R.


The following is a summary of the impact of the adjustments related to the
adoption of IAS 19R on the respective financial statements:


As at and for the year ended December 31, 2012:



--  Increase in pension expense - $1,470 
--  Decrease in income tax expense - $390 
--  Decrease in net earnings - $1,080 ($0.01 per share basic) 
--  Decrease in other comprehensive loss - $1,080 
--  No change to accrued pension liability or deferred tax assets 



b. IFRS 10 - Consolidated Financial Statements, IFRS 11 - Joint Arrangements,
IFRS 12 - Disclosure of Interests in Other Entities and amendments to IAS 27 -
Separate Financial Statements and IAS 28 - Investments in Associates 


The adoption of these standards and amendments had no impact on the financial
statements of the Company.


c. IFRS 13 - Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value
measurements. IFRS 13 does not change when an entity is required to use fair
value, but rather provides guidance on how to measure fair value. IFRS 13 also
requires additional disclosures. Application of IFRS 13 has not materially
impacted the fair value measurements of the Company. Additional disclosures
where required, are provided in the individual notes relating to the assets and
liabilities whose fair values were determined. Fair value hierarchy is provided
in Note 12.


d. IAS 1 - Presentation of Financial Statements

The amendments enhance the presentation of other comprehensive income ("OCI") in
the financial statements, primarily by requiring the components of OCI to be
presented separately for items that may be reclassified to the statement of
earnings from those that remain in equity. The amendment affected presentation
only and had no impact on the Company's financial position or performance.


Standards Issued But Not Yet Effective

A number of amendments to standards and a new interpretation have been issued
but are not yet effective for the financial year ended December 31, 2013, and
accordingly, have not been applied in preparing these consolidated financial
statements.


Levies - In May 2013, the IFRS Interpretations Committee ("IFRIC"), with the
approval by the IASB, issued IFRIC 21 - Levies. IFRIC 21 provides guidance on
when to recognize a liability to pay a levy imposed by government that is
accounted for in accordance with IAS 37 - Provisions, Contingent Liabilities and
Contingent Assets. IFRIC 21 is effective for annual periods beginning on or
after January 1, 2014, and is to be applied retrospectively. The Company is
currently assessing the impact of adopting this interpretation on its
consolidated financial statements and does not expect any significant impact.


Impairment of Assets - In May 2013, the IASB issued amendments to IAS 36 -
Impairment of Assets, to reverse the unintended requirement in IFRS 13 - Fair
Value Measurement, to disclose the recoverable amount of every cash-generating
unit to which significant goodwill or indefinite-lived intangible assets have
been allocated. Under the amendments, recoverable amount is required to be
disclosed only when an impairment loss has been recognized or reversed. These
amendments are effective for annual periods beginning on or after January 1,
2014. As the amendments impact certain disclosure requirements only, the Company
does not expect any significant impact on the financial statements.


2. Significant Accounting Estimates and Assumptions

The preparation of the Company's consolidated financial statements in conformity
with IFRS requires management to make judgments, estimates and assumptions that
affect the reported amounts of revenues, expenses, assets and liabilities, and
the disclosure of contingent liabilities, at the end of the reporting period.
However, uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of the asset
or liability affected in future periods.


In making estimates and judgments, management relies on external information and
observable conditions where possible, supplemented by internal analysis as
required. Management reviews its estimates and judgements on an ongoing basis.


In the process of applying the Company's accounting policies, management has
made the following judgments, estimates and assumptions which have the most
significant effect on the amounts recognized in the consolidated financial
statements.


Property, Plant and Equipment and Rental Equipment - Depreciation is calculated
based on the estimated useful lives of the assets and estimated residual values.


Impairment of non-financial assets - Impairment exists when the carrying value
of an asset or cash generating unit exceeds its recoverable amount, which is the
higher of its fair value less costs of disposal and its value in use. The fair
value less costs of disposal calculation is based on available data from binding
sales transactions, conducted at arm's length, for similar assets or observable
market prices less incremental costs for disposing of the asset. The value in
use calculation is based on a discounted cash flow ("DCF") model. The cash flows
are derived from the budget for the next three years and do not include
restructuring activities that the Company is not yet committed to or significant
future investments that will enhance the asset's performance of the CGU being
tested. The recoverable amount is sensitive to the discount rate used for the
DCF model as well as the expected future cash-inflows and the growth rate used
for extrapolation purposes. The key assumptions used to determine the
recoverable amount for the different CGUs, including a sensitivity analysis, are
disclosed and further explained in Note 7.


Changes in circumstances, such as technological advances and changes to business
strategy, can result in actual useful lives, residual values and future cash
flows differing significantly from estimates. The assumptions used are reviewed
on an ongoing basis to ensure they continue to be appropriate.


Income Taxes - Estimates and judgments are made for uncertainties which exist
with respect to the interpretation of complex tax regulations, changes in tax
laws, and the amount and timing of future taxable income.


Revenue Recognition - The Company generates revenue from the assembly and
manufacture of equipment using the percentage-of-completion method. This method
requires management to make a number of estimates and assumptions surrounding:
the expected profitability of the contract; the estimated degree of completion
based on cost progression; and other detailed factors. Although these factors
are routinely reviewed as part of the project management process, changes in
these estimates or assumptions could lead to changes in the revenues recognized
in a given period.


The Company also generates revenue from long-term maintenance and repair
contracts whereby it is obligated to maintain equipment for its customers. The
contracts are typically fixed price on either machine hours or cost per hour,
with provisions for inflationary and exchange adjustments. Revenue is recognized
using the percentage-of-completion method based on work completed. This method
requires management to make a number of estimates and assumptions surrounding:
machine usage; machine performance; future parts and labour pricing;
manufacturers' warranty coverage; and other detailed factors. These factors are
routinely reviewed as part of the contract management process; however, changes
in these estimates or assumptions could lead to changes in the revenues and cost
of goods sold recognized in a given period.


Inventories - Management is required to make an assessment of the net realizable
value of inventory at each reporting period. Management incorporates estimates
and judgments that take into account current market prices, current economic
trends and past experience in the measurement of net realizable value.


Employee Future Benefits Expense - The net obligations associated with the
defined benefit pension plans are actuarially valued using: the projected unit
credit method; the current market discount rate, salary escalation, life
expectancy and future pension increases. All assumptions are reviewed at each
reporting date.


Share-based Compensation - Estimating the fair value for share-based payment
transactions requires determining the most appropriate inputs to the valuation
model including: the expected life of the share option; volatility; and dividend
yield.


3. ACCOUNTS RECEIVABLE



                                                                            
                                                --------------              
                                                  December 31   December 31 
                                                         2013          2012 
----------------------------------------------------------------------------
Trade receivables                                $    223,672  $    221,999 
Less: allowance for doubtful accounts                  (9,242)       (5,496)
----------------------------------------------------------------------------
Trade receivables - net                               214,430       216,503 
Other receivables                                      25,829        15,015 
----------------------------------------------------------------------------
Trade and other receivables                      $    240,259  $    231,518 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The aging of gross trade receivables at each reporting date was as follows:



                                                  -------------             
                                                    December 31  December 31
                                                           2013         2012
----------------------------------------------------------------------------
Current to 90 days                                 $    210,055 $    211,750
Over 90 days                                             13,617       10,249
----------------------------------------------------------------------------
                                                   $    223,672 $    221,999
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The following table presents the movement in the Company's allowance for
doubtful accounts:




                                                 -------------              
                                                   December 31  December 31 
                                                          2013         2012 
----------------------------------------------------------------------------
Balance, beginning of year                        $      5,496 $      5,574 
Provisions and revisions, net                            3,746          (78)
----------------------------------------------------------------------------
Balance, end of year                              $      9,242 $      5,496 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



4. INVENTORIES



                                                  -------------             
                                                    December 31  December 31
                                                           2013         2012
----------------------------------------------------------------------------
Equipment                                          $    214,646 $    219,549
Repair and distribution parts                            85,002       76,783
Direct materials                                          2,789        2,598
Work-in-process                                          25,002       28,855
----------------------------------------------------------------------------
                                                   $    327,439 $    327,785
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The amount of inventory recognized as an expense and included in cost of goods
sold accounted for other than by the percentage-of-completion method during 2013
was $933 million (2012 - $885 million). The cost of goods sold includes
inventory write-downs pertaining to obsolescence and aging together with
recoveries of past write-downs upon disposition. The amounts charged to the
consolidated income statement and included in cost of goods sold on a net basis
for inventory valuation issues during 2013 was $1.0 million. A net reversal of
write- downs of $0.2 million was recorded in 2012.


5. PROPERTY, PLANT AND EQUIPMENT AND RENTAL EQUIPMENT



                                                        --------------------
                                                  Power              Rental 
                    Land Buildings Equipment Generation     Total Equipment 
----------------------------------------------------------------------------
                                                                            
Cost                                                                        
January 1, 2013  $46,017  $113,200  $118,440    $38,291  $315,948  $299,412 
Additions             55    10,835    15,565        348    26,803    69,494 
Disposals            (12)      (52)   (4,449)         -    (4,513)  (35,516)
Currency                                                                    
 translation                                                                
 effects               9         5        55          -        69         - 
----------------------------------------------------------------------------
December 31,                                                                
 2013            $46,069  $123,988  $129,611    $38,639  $338,307  $333,390 
                                                                            
Accumulated                                                                 
 depreciation                                                               
January 1, 2013  $     -  $ 53,835  $ 82,361    $21,759  $157,955  $140,480 
Depreciation                                                                
 charge                -     4,836    11,838      1,537    18,211    40,436 
Depreciation of                                                             
 disposals             -      (105)   (4,223)         -    (4,328)  (22,238)
Currency                                                                    
 translation                                                                
 effects               -         2        27          -        29         - 
----------------------------------------------------------------------------
December 31,                                                                
 2013            $     -  $ 58,568  $ 90,003    $23,296  $171,867  $158,678 
----------------------------------------------------------------------------
Net book value -                                                            
 December 31,                                                               
 2013            $46,069  $ 65,420  $ 39,608    $15,343  $166,440  $174,712 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                        --------------------
                                                  Power              Rental 
                    Land Buildings Equipment Generation     Total Equipment 
----------------------------------------------------------------------------
                                                                            
Cost                                                                        
January 1, 2012  $45,635  $110,297  $107,380    $37,992  $301,304  $262,468 
Additions            385     3,750    18,823        301    23,259    73,531 
Disposals              -      (835)   (7,755)        (2)   (8,592)  (36,587)
Currency                                                                    
 translation                                                                
 effects              (3)      (12)       (8)         -       (23)        - 
----------------------------------------------------------------------------
December 31,                                                                
 2012            $46,017  $113,200  $118,440    $38,291  $315,948  $299,412 
                                                                            
Accumulated                                                                 
 depreciation                                                               
January 1, 2012  $     -  $ 49,576  $ 79,554    $20,246  $149,376  $127,106 
Depreciation                                                                
 charge                -     4,715    10,375      1,515    16,605    35,440 
Depreciation of                                                             
 disposals             -      (454)   (7,558)        (2)   (8,014)  (22,066)
Currency                                                                    
 translation                                                                
 effects               -        (2)      (10)         -       (12)        - 
----------------------------------------------------------------------------
December 31,                                                                
 2012            $     -  $ 53,835  $ 82,361    $21,759  $157,955  $140,480 
----------------------------------------------------------------------------
Net book value -                                                            
 December 31,                                                               
 2012            $46,017  $ 59,365  $ 36,079    $16,532  $157,993  $158,932 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



During 2013, depreciation expense of $53,864 was charged in cost of goods sold
(2012 - $47,255) and $4,783 was charged to selling and administrative expenses
(2012 - $4,790).


Operating income from rental operations for the year ended December 31, 2013 was
$29.4 million (2012 - $26.8 million).


6. OTHER ASSETS



                                                                            
                                                     December 31 December 31
                                                            2013        2012
----------------------------------------------------------------------------
                                                                            
Equipment sold with guaranteed residual values       $     7,437 $    11,456
Other                                                      1,424       1,158
----------------------------------------------------------------------------
                                                     $     8,861 $    12,614
----------------------------------------------------------------------------
----------------------------------------------------------------------------



7. GOODWILL AND INTANGIBLE ASSETS  



                                                                            
                                                     December 31 December 31
                                                            2013        2012
----------------------------------------------------------------------------
Goodwill                                             $    13,450 $    13,450
Intangible Assets:                                                          
  Distribution Network (indefinite life)                  13,669      13,669
  Patents (definite life):                                                  
  Cost                                          500                        -
  Accumulated amortization                      (30)                       -
                                               -----                        
  Net book value                                             470           -
----------------------------------------------------------------------------
Total Goodwill and Intangible Assets                 $    27,589 $    27,119
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The distribution network is considered to have an indefinite useful life as the
agreement does not have a termination date. Intangible assets with an indefinite
useful life are not amortized but are tested for impairment annually, or when
conditions suggest that there may be an impairment.


Impairment testing of Goodwill and Intangible Assets with indefinite lives

Goodwill and intangible assets with indefinite lives have been allocated to two
CGUs for impairment testing as follows:




--  Toromont CAT, included within the Equipment Group 
--  CIMCO, which is also an operating and reportable segment 



The respective carrying amounts have been allocated to the two CGUs below:



                           Goodwill      Intangible Assets       Total      
----------------------------------------------------------------------------
                           2013     2012     2013     2012     2013     2012
----------------------------------------------------------------------------
Toromont CAT           $ 13,000 $ 13,000 $ 13,669 $ 13,669 $ 26,669 $ 26,669
CIMCO                       450      450        -        -      450      450
----------------------------------------------------------------------------
                                                                            
Total                  $ 13,450 $ 13,450 $ 13,669 $ 13,669 $ 27,119 $ 27,119
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The Company performed the annual impairment test of goodwill and intangible
assets allocated to Toromont CAT as at December 31, 2013. The recoverable amount
of Toromont CAT has been determined based on a value in use calculation using
cash flow projections from financial budgets approved by senior management
covering a three-year period. Cash flow beyond the three-year period was
extrapolated using a 2% growth rate which represents the expected growth in the
Canadian economy. The pre-tax discount rate applied to cash flow projects is
10.8%. As a result of the analysis, management did not identify impairment for
this CGU.


The Company performed the annual impairment test of goodwill allocated to CIMCO
as at December 31, 2013. The recoverable amount of CIMCO has been determined
based on a value in use calculation using cash flow projections from financial
budgets approved by senior management covering a three-year period. Cash flow
beyond the three-year period was extrapolated using a 2% growth rate which
represents the expected growth in the Canadian economy. The pre-tax discount
rate applied to cash flow projects is 13.0%. As a result of the analysis,
management did not identify impairment for this CGU.


Key Assumption Used in Value in Use Calculations

The calculation of value in use for Toromont CAT and CIMCO are most sensitive to
the following assumptions:




--  Discount rates 
--  Growth rate to extrapolate cash flows beyond the budget period 



Discount rates represent the current market assessment of the risks specific to
each CGU, taking into consideration the time value of money and individual risks
of the underlying assets that have not been incorporated in the cash flow
estimates. The discount rate is derived from the CGU's weighted-average cost of
capital, taking into account both debt and equity. The cost of equity is derived
from the expected return on investment by the Company's shareholders.


The cost of debt is based on the interest-bearing borrowings the Company is
obliged to service. Segment-specific risk is incorporated by applying different
debt to equity ratios.


Growth rate estimates are based on published data and were used as a
conservative estimate of future growth.


Sensitivity to Changes in Assumptions

Management believes that no reasonably possible change in any of the above key
assumptions would cause the carrying value of either unit to materially exceed
its recoverable amount.


8. PAYABLES, ACCRUALS AND PROVISIONS 



                                                --------------              
                                                   December 31   December 31
                                                          2013          2012
----------------------------------------------------------------------------
Accounts payable and accrued liabilities         $     224,073 $     183,361
Dividends payable                                        9,987         9,165
Provisions                                              14,401        10,942
----------------------------------------------------------------------------
                                                 $     248,461 $     203,468
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Activities related to provisions were as follows:



                                           ---------------------------------
                                             Warranty      Other      Total 
----------------------------------------------------------------------------
Balance as at December 31, 2012             $   6,577  $   4,365  $  10,942 
New provisions                                  8,279      3,445     11,724 
Charges/credits against provisions             (6,502)    (1,763)    (8,265)
----------------------------------------------------------------------------
Balance as at December 31, 2013             $   8,354  $   6,047  $  14,401 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                             Warranty      Other      Total 
----------------------------------------------------------------------------
Balance as at December 31, 2011             $   5,132  $   3,626  $   8,758 
New provisions                                  6,728      1,036      7,764 
Charges/credits against provisions             (5,283)      (297)    (5,580)
----------------------------------------------------------------------------
Balance as at December 31, 2012             $   6,577  $   4,365  $  10,942 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Warranty

At the time of sale, a provision is recognized for expected warranty claims on
products and services, based on past experience and known issues. It is expected
that most of these costs will be incurred in the next financial year.


Other

Other provisions relate largely to open legal and insurance claims and onerous
contracts. No one claim is significant.


9. LONG-TERM DEBT



                                                                 
                                         ------------            
                                         December 31 December 31 
                                                2013        2012 
-----------------------------------------------------------------
                                                                 
Bank credit facility                     $         - $    26,547 
Senior debentures                            134,511     135,883 
Debt issuance costs, net of amortization     (2,093)     (2,663) 
-----------------------------------------------------------------
Total long-term debt                         132,418     159,767 
Less current portion                           1,470       1,372 
-----------------------------------------------------------------
                                         $   130,948 $   158,395 
-----------------------------------------------------------------
-----------------------------------------------------------------



All debt is unsecured.

The Company maintains a $200 million committed credit facility. The facility
matures in September 2017. Debt incurred under the facility is unsecured and
ranks pari passu with debt outstanding under Toromont's existing debentures.
Interest is based on a floating rate, primarily bankers' acceptances and prime,
plus applicable margins and fees based on the terms of the credit facility.


At December 31, 2013, standby letters of credit issued utilized $26.6 million of
the credit lines (December 31, 2012 - $24.1 million).


Terms of the senior debentures are:



--  $125,000, 4.92% senior debentures due October 13, 2015, interest payable
    semi- annually, principal due on maturity; and 
--  $9,511, 7.06% senior debentures due March 29, 2019, interest payable
    semi-annually through September 29, 2009; thereafter, blended principal
    and interest payments through to maturity. 



These credit arrangements include covenants, restrictions and events of default
usually present in credit facilities of this nature, including requirements to
meet certain financial tests periodically and restrictions on additional
indebtedness and encumbrances.


Scheduled principal repayments and interest payments on long-term debt are as
follows:




                                                     Principal      Interest
----------------------------------------------------------------------------
                                                                            
2014                                             $       1,470 $       6,796
2015                                                   126,577         5,342
2016                                                     1,690           427
2017                                                     1,811           306
2018                                                     1,941           176
2019                                                     1,022            36
----------------------------------------------------------------------------
                                                 $     134,511 $      13,083
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Interest expense includes interest on debt initially incurred for a term greater
than one year of $7,984 (2012 - $8,425).


10. SHARE CAPITAL

Authorized

The Company is authorized to issue an unlimited number of common shares (no par
value) and preferred shares. No preferred shares have been issued.


Issued

The changes in the common shares issued and outstanding during the year were as
follows:




                            ------------------------                        
                                               2013                    2012 
----------------------------------------------------------------------------
                             Number of       Common  Number of       Common 
                                Common        Share     Common        Share 
                                Shares      Capital     Shares      Capital 
----------------------------------------------------------------------------
Balance, beginning of year  76,407,658  $   270,900 76,629,777  $   265,436 
Exercise of stock options      443,371        8,271    443,920        7,794 
Purchase of shares for                                                      
 cancellation                        -            -   (666,039)      (2,330)
Other adjustments               (6,132)         (22)         -            - 
----------------------------------------------------------------------------
Balance, end of year        76,844,897  $   279,149 76,407,658  $   270,900 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Shareholder Rights Plan

The Shareholder Rights Plan is designed to encourage the fair treatment of
shareholders in connection with any takeover offer for the Company. Rights
issued under the plan become exercisable when a person, and any related parties,
acquires or commences a take-over bid to acquire 20% or more of the Company's
outstanding common shares without complying with certain provisions set out in
the plan or without approval of the Company's Board of Directors. Should such an
acquisition occur, each rights holder, other than the acquiring person and
related parties, will have the right to purchase common shares of the Company at
a 50% discount to the market price at that time. The plan expires in April 2015.


Normal Course Issuer Bid ("NCIB")

Toromont renewed its NCIB program in 2013. The current issuer bid allows the
Company to purchase up to approximately 6.5 million of its common shares in the
12-month period ending August 30, 2014, representing 10% of common shares in the
public float, as estimated at the time of renewal. The actual number of shares
purchased and the timing of any such purchases will be determined by Toromont.
All shares purchased under the bid will be cancelled.


The Company did not purchase any shares under the normal course issuer bid
during the year ended December 31, 2013. In the year ended December 31, 2012,
the Company purchased and cancelled 666,039 common shares for $14,137 (average
cost of $21.23 per share) under its NCIB program.


Dividends

The Company paid dividends of $39.0 million ($0.51 per share) for the year ended
December 31, 2013 and $36.0 million ($0.47 per share) for the year ended
December 31, 2012.


For the year ended December 31, 2013, the Board of Directors of the Company
declared dividends of $0.52 per common share or $0.13 per quarter (2012 - $0.48
($0.12 per quarter). The fourth quarter dividend of $0.13 per share was declared
on November 4, 2013, payable on January 2, 2014, to all shareholders on record
at December 11, 2013. As such, at December 31, 2013, the Company accrued $10
million in accounts payable and accrued liabilities on the consolidated
statement of financial position. Subsequent to the year ended December 31, 2013,
this amount was paid.


11. CONTRIBUTED SURPLUS

Contributed surplus consists of accumulated stock option expense less the fair
value of the options at the grant date that have been exercised and reclassified
to share capital. Changes in contributed surplus were as follows:




                                                        ----------          
                                                             2013      2012 
----------------------------------------------------------------------------
Contributed surplus, beginning of year                   $  5,957  $  5,890 
Stock-based compensation, net of forfeitures                1,957     1,659 
Value of compensation cost associated with exercised                        
 options                                                   (1,585)   (1,592)
----------------------------------------------------------------------------
Contributed surplus, end of year                         $  6,329  $  5,957 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



12. FINANCIAL INSTRUMENTS

Financial Assets and Liabilities - Classification and Measurement

Financial assets and financial liabilities are measured on an ongoing basis at
cost, fair value or amortized cost, depending on the classification. The
following table highlights the carrying amounts and classifications of financial
assets and liabilities:


Fair Value of Financial Instruments



                                     ---------------------------------------
                                                         Other              
                                                     financial              
As at December 31, 2013               Derivatives  liabilities        Total 
----------------------------------------------------------------------------
Current portion of long-term debt     $         -  $    (1,470) $    (1,470)
Derivative financial instruments            1,331            -        1,331 
Long term debt                                  -     (130,948)    (130,948)
----------------------------------------------------------------------------
Total                                 $     1,331  $  (132,418) $  (131,087)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                         Other              
                                                     financial              
As at December 31, 2012               Derivatives  liabilities        Total 
----------------------------------------------------------------------------
                                                                            
Current portion of long-term debt     $         -  $    (1,372) $    (1,372)
Derivative financial instruments             (346)           -         (346)
Long term debt                                  -     (158,395)    (158,395)
----------------------------------------------------------------------------
Total                                 $      (346) $  (159,767) $  (160,113)
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The fair value of derivative financial instruments is measured using the
discounted value of the difference between the contract's value at maturity
based on the contracted foreign exchange rate and the contract's value at
maturity based on the comparable foreign exchange rate at period end under the
same conditions. The financial institution's credit risk is also taken into
consideration in determining fair value. The valuation is determined using Level
2 inputs which are observable inputs or inputs which can be corroborated by
observable market data for substantially the full term of the asset or
liability, most significantly foreign exchange spot and forward rates.


The fair value of senior debentures as at December 31, 2013 was $141,800
(carrying value of $134,511) (2012 - $144,078 (carrying value of $135,883)). The
fair value was determined using the discounted cash flow method, a generally
accepted valuation technique. The discounted factor is based on market rates for
debt with similar terms and remaining maturities and based on Toromont's credit
risk. The Company has no plans to prepay these instruments prior to maturity.
The valuation is determined using Level 2 inputs which are observable inputs or
inputs which can be corroborated by observable market data for substantially the
full term of the asset or liability.


During the year ended December 31, 2013, there were no transfers between Level 1
and Level 2 fair value measurements.


Derivative Financial Instruments and Hedge Accounting

Foreign exchange contracts and options are transacted with financial
institutions to hedge foreign currency denominated obligations related to
purchases of inventory and sales of products. As at December 31, 2013, the
Company was committed to USD purchase contracts with a notional amount of $107
million at an average exchange rate of $1.0527, maturing between January 2014
and November 2014.


Management estimates that a gain of $1,331 (2012 - loss of $346) would be
realized if the contracts were terminated on December 31, 2013. Certain of these
forward contracts are designated as cash flow hedges, and accordingly, an
unrealized gain of $360 (2012 - loss of $260) has been included in OCI. These
gains are not expected to affect net earnings as the gains will be reclassified
to net earnings within the next 12 months and will offset losses recorded on the
underlying hedged items, namely foreign denominated accounts payable. Certain of
these forward contracts are not designated as cash flow hedges but are entered
into for periods consistent with foreign currency exposure of the underlying
transactions. A gain of $971 (2012 - loss of $86) on these forward contracts is
included in net earnings, which offsets losses recorded on the
foreign-denominated items, namely accounts payable.


All hedging relationships are formally documented, including the risk management
objective and strategy. On an on-going basis, an assessment is made as to
whether the designated derivative financial instruments continue to be effective
in offsetting changes in cash flows of the hedged transactions.


13. FINANCIAL INSTRUMENTS - RISK MANAGEMENT

In the normal course of business, Toromont is exposed to financial risks that
may potentially impact its operating results in one or all of its operating
segments. The Company employs risk management strategies with a view to
mitigating these risks on a cost-effective basis. Derivative financial
agreements are used to manage exposure to fluctuations in exchange rates. The
Company does not enter into derivative financial agreements for speculative
purposes.


Currency Risk

The Canadian operations of the Company source the majority of its products and
major components from the United States. Consequently, reported costs of
inventory and the transaction prices charged to customers for equipment and
parts are affected by the relative strength of the Canadian dollar. The Company
mitigates exchange rate risk by entering into foreign currency contracts to fix
the cost of imported inventory where appropriate. In addition, pricing to
customers is customarily adjusted to reflect changes in the Canadian dollar
landed cost of imported goods.


The Company maintains a conservative hedging policy whereby all significant
transactional currency risks are identified and hedged.


Sensitivity Analysis

The following sensitivity analysis is intended to illustrate the sensitivity to
changes in foreign exchange rates on the Company's financial instruments and
show the impact on net earnings and comprehensive income. It is provided as a
reasonably possibly change in currency in a volatile environment. Financial
instruments affected by currency risk include cash, accounts receivable,
accounts payable and derivative financial instruments.


As at December 31, 2013, a 5% weakening (strengthening) of the Canadian dollar
against the US dollar would result in a $235 increase (decrease) in OCI for
financial instruments held in foreign operations and a $810 increase (decrease)
in net earnings and $1,851 increase (decrease) in OCI for financial instruments
held in Canadian operations.


The movement in OCI in foreign operations reflects the change in the fair value
of financial instruments. Gains or losses on translation of foreign subsidiaries
are deferred in OCI. Accumulated currency translation adjustments are recognized
in income when there is a reduction in the net investment in the foreign
operation.


The movement in net earnings in Canadian operations is a result of a change in
the fair values of financial instruments. The majority of these financial
instruments are hedged.


The movement in OCI in Canadian operations reflects the change in the fair value
of derivative financial instruments that are designated as cash flow hedges. The
gains or losses on these instruments are not expected to affect net earnings as
the gains or losses will offset losses or gains on the underlying hedged items.


Credit Risk

Financial instruments that potentially subject the Company to credit risk
consist of cash, accounts receivable and derivative financial instruments. The
carrying amount of assets included on the consolidated statement of financial
position represents the maximum credit exposure.


The Company has deposited cash with reputable financial institutions, from which
management believes the risk of loss to be remote.


The Company has accounts receivable from customers engaged in various industries
including mining, construction, food and beverage, and governmental agencies.
These specific industries may be affected by economic factors that may impact
accounts receivable. Management does not believe that any single industry
represents significant credit risk. Credit risk concentration with respect to
trade receivables is mitigated by the Company's large customer base.


The credit risk associated with derivative financial instruments arises from the
possibility that the counterparties may default on their obligations. In order
to minimize this risk, the Company enters into derivative transactions only with
highly rated financial institutions.


Interest Rate Risk

The Company minimizes its interest rate risk by managing its portfolio of
floating and fixed rate debt, as well as managing the term to maturity. The
Company may use derivative instruments such as interest rate swap agreements to
manage its current and anticipated exposure to interest rates. There were no
interest rate swap agreements outstanding as at December 31, 2013 or December
31, 2012.


The Company did not have any floating rate debt at December 31, 2013 (December
31, 2012 - $26.5 million).


Liquidity Risk

Liquidity risk is the risk that the Company may encounter difficulties in
meeting obligations associated with financial liabilities. As at December 31,
2013, the Company had unutilized lines of credit of $173.4 million (December 31,
2012 - $149.4 million).


Accounts payable are primarily due within 90 days and will be satisfied from
current working capital.


The Company expects that continued cash flows from operations in 2014, together
with currently available credit facilities, will be more than sufficient to fund
its requirements for investments in working capital, capital assets and dividend
payments through the next 12 months, and that the Company's credit ratings
provide reasonable access to capital markets to facilitate future debt issuance.


14. INTEREST INCOME AND EXPENSE 

The components of interest expense were as follows:



                                                    ------------            
                                                            2013        2012
----------------------------------------------------------------------------
Term loan facility                                   $     1,894 $     2,807
Senior debentures                                          6,799       6,907
----------------------------------------------------------------------------
                                                     $     8,693 $     9,714
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The components of interest and investment income were as follows:



                                                    ------------            
                                                            2013        2012
----------------------------------------------------------------------------
Interest income on rental conversions                $     3,036 $     3,529
Other                                                        757         445
----------------------------------------------------------------------------
                                                     $     3,793 $     3,974
----------------------------------------------------------------------------
----------------------------------------------------------------------------



15. INCOME TAXES

Significant components of the provision for income tax expense were as follows:



                                                          ---------         
                                                               2013     2012
----------------------------------------------------------------------------
Current income tax expense                                 $ 37,565 $ 43,212
Deferred income tax expense                                   8,466      383
----------------------------------------------------------------------------
Total income tax expense                                   $ 46,031 $ 43,595
----------------------------------------------------------------------------
----------------------------------------------------------------------------



A reconciliation of income taxes at Canadian statutory rates with the reported
income taxes was as follows:




                                                          ---------         
                                                              2013     2012 
----------------------------------------------------------------------------
Statutory Canadian federal and provincial income tax rates   26.50%   26.50%
----------------------------------------------------------------------------
Expected taxes on income                                   $44,801  $43,213 
Increase (decrease) in income taxes resulting from:                         
  Higher effective tax rates in other jurisdictions            291      110 
  Manufacturing and processing rate reduction                 (270)    (218)
  Expenses not deductible for tax purposes                     993      902 
  Non-taxable gains                                           (270)     (83)
  Effect of future income tax rate increases (reductions)      283     (320)
  Other                                                        203       (9)
----------------------------------------------------------------------------
Provision for income taxes                                 $46,031  $43,595 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Effective income tax rate                                     27.2%    26.7%
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The statutory income tax rate represents the combined Canadian federal and
Ontario provincial income tax rates which are the relevant tax jurisdictions for
the Company.


The source of deferred income taxes was as follows:             



                                                  -------------             
                                                          2013         2012 
----------------------------------------------------------------------------
Accrued liabilities                                $    10,315  $     9,681 
Deferred revenue                                         1,988        1,193 
Accounts receivable                                      1,389        1,273 
Inventories                                              2,861        2,866 
Capital assets                                         (18,000)      (9,147)
Pension                                                  3,274        7,144 
Other                                                      700          620 
Cash flow hedges in other comprehensive income             (92)          67 
----------------------------------------------------------------------------
Deferred tax assets                                $     2,435  $    13,697 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The movement in net deferred tax assets was as follows:             



                                                  -------------             
                                                          2013         2012 
----------------------------------------------------------------------------
Balance, January 1                                 $    13,697  $    12,749 
Tax expense recognized in income                        (8,466)        (383)
Tax (expense) recovery recognized in other                                  
 comprehensive income                                   (2,796)       1,331 
----------------------------------------------------------------------------
Balance, December 31                               $     2,435  $    13,697 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The aggregate amount of temporary differences associated with investments in
subsidiaries for which deferred tax assets have not been recognized as at
December 31, 2013 was $50,097 (December 31, 2012 - $39,512).


16. EARNINGS PER SHARE

Basic earnings per share ("EPS") are calculated by dividing net earnings for the
year by the weighted average number of common shares outstanding during the
year.


Diluted EPS is calculated by dividing net earnings by the weighted average
number of common shares outstanding during the year plus the weighted average
number of common shares that would be issued on conversion of all dilutive stock
options to common shares.




                                                    ------------            
                                                            2013        2012
----------------------------------------------------------------------------
Net earnings available to common shareholders        $   123,031 $   119,473
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Weighted average common shares outstanding            76,612,204  76,549,792
Dilutive effect of stock option conversion               542,947     537,137
----------------------------------------------------------------------------
Diluted weighted average common shares outstanding    77,155,151  77,086,929
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Earnings per share                                                          
  Basic                                              $      1.61 $      1.56
  Diluted                                            $      1.59 $      1.55
----------------------------------------------------------------------------



For the calculation of diluted earnings per share for the year ended December
31, 2013, 507,200 outstanding stock options with an exercise price of $23.50
were considered anti-dilutive (exercise price in excess of average market price
during the year ended December 31, 2013) and as such were excluded from the
calculation. There were no anti-dilutive options for the year ended December 31,
2012.


17. EMPLOYEE BENEFITS EXPENSE 



                                                    ------------            
                                                            2013        2012
----------------------------------------------------------------------------
Wages and salaries                                   $   274,601 $   264,360
Other employment benefit expenses                         44,218      43,013
Share options granted to directors and employees           1,957       1,659
Pension costs                                             11,590      11,097
----------------------------------------------------------------------------
                                                     $   332,366 $   320,129
----------------------------------------------------------------------------
----------------------------------------------------------------------------



18. STOCK-BASED COMPENSATION

The Company maintains a stock option program for certain employees. Under the
plan, up to 7,000,000 options may be granted for subsequent exercise in exchange
for common shares. It is the Company's policy that no more than 1% of
outstanding shares or 764,077 share options may be granted in any one year.
Stock options vest 20% per year on each anniversary date of the grant and are
exercisable at the designated common share price, which is fixed at prevailing
market prices of the common shares at the date the option is granted. Stock
options granted prior to 2013 have a seven year term and those granted in 2013
have a ten year term. Toromont accrues compensation cost over the vesting period
based on the grant date fair value.


A reconciliation of the outstanding options for the years ended December 31,
2013 and 2012 was as follows:




                                 ---------------------                      
                                            Year ended            Year ended
                                     December 31, 2013     December 31, 2012
----------------------------------------------------------------------------
                                              Weighted              Weighted
                                               Average               Average
                                 Number of    Exercise Number of    Exercise
                                   Options       Price   Options       Price
----------------------------------------------------------------------------
Options outstanding, beginning of                                           
 year                            2,564,355  $    16.92 2,419,060  $    15.41
Granted                            516,200       23.40   610,100       20.76
Exercised (1)                     (443,371)      15.07  (443,920)      13.97
Forfeited                          (26,910)      19.68   (20,885)      16.61
----------------------------------------------------------------------------
Options outstanding, end of year 2,610,274  $    18.49 2,564,355  $    16.92
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Options exercisable, end of year 1,006,224  $    16.20   972,990  $    15.24
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) For the year ended December 31, 2013, the weighted average share price  
at date of exercise was $23.78 (2012 - $21.95).                             



The following table summarizes stock options outstanding and exercisable as at
December 31, 2013.




                 -----------------------------------------------------------
                         Options Outstanding           Options Exercisable  
----------------------------------------------------------------------------
                                  Weighted   Weighted               Weighted
Range of                           Average    Average                Average
Exercise               Number    Remaining   Exercise      Number   Exercise
Prices            Outstanding Life (years)      Price Outstanding      Price
----------------------------------------------------------------------------
$12.42 - $14.75       344,289          1.7 $    12.93     271,029 $    13.07
$14.76 - $17.10     1,165,770          3.5 $    16.83     618,920 $    16.71
$17.11 - $23.40     1,100,215          7.4 $    21.98     116,275 $    20.76
----------------------------------------------------------------------------
Total               2,610,274          4.9 $    18.49   1,006,224 $    16.20
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The fair value of the stock options granted during 2013 and 2012 were determined
at the time of grant using the Black-Scholes option pricing model with the
following weighted average assumptions:




                                                        ----------          
                                                             2013      2012 
----------------------------------------------------------------------------
Fair value price per option                              $   5.49  $   3.91 
Expected life of options (years)                             8.29      5.81 
Expected stock price volatility                              25.0%     25.0%
Expected dividend yield                                      2.22%     2.31%
Risk-free interest rate                                      2.28%     1.34%
----------------------------------------------------------------------------



Deferred Share Unit Plan

The Company offers a deferred share unit ("DSU") plan for executives and
non-employee directors, whereby they may elect on an annual basis to receive all
or a portion of their performance incentive bonus or fees, respectively, in
DSUs. In addition, the Board may grant discretionary DSUs. Non-employee
directors also receive a portion of their compensation in DSUs.


The following table summarizes information related to DSU activity:



                                       ------------------                   
                                                     2013              2012 
----------------------------------------------------------------------------
                                        Number of         Number of         
                                             DSUs   Value      DSUs   Value 
----------------------------------------------------------------------------
Outstanding, beginning of year            211,872 $ 4,297   193,728  $4,093 
Units granted or taken in lieu of                                           
 performance incentive awards, director                                     
 fees and dividends                        77,048   1,743    33,671     778 
Redemptions                                     -       -   (15,527)   (314)
Fair market value adjustment                    -   1,656         -    (260)
----------------------------------------------------------------------------
Outstanding, end of year                  288,920 $ 7,696   211,872  $4,297 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The liability for DSUs is recorded in accounts payable and accrued liabilities.

Employee Share Ownership Plan

The Company offers an Employee Share Ownership Plan (the "Plan") whereby
employees who meet the eligibility criteria can purchase shares by way of
payroll deductions. There is a Company match of up to $1,000 per employee per
annum based on contributions by the Company of $1 for every $3 contributed by
the employee. Company contributions vest to the employee immediately. Company
contributions amounting to $0.9 million in 2013 (2012 - $0.9 million) were
charged to selling and administrative expenses when paid. The Plan is
administered by a third party.


19. EMPLOYEE FUTURE BENEFITS

Defined Contribution Plans

The Company sponsors pension arrangements for substantially all of its
employees, primarily through defined contribution plans in Canada and a 401(k)
matched savings plan in the United States. Certain unionized employees do not
participate in Company-sponsored plans, and contributions are made to these
retirement programs in accordance with the respective collective bargaining
agreements. In the case of defined contribution plans, regular contributions are
made to the individual employee accounts, which are administered by a plan
trustee in accordance with the plan documents.


Included in the net pension expense for the years ended December 31, were the
following components of the defined contribution plans:




                                                      -----------           
                                                             2013       2012
----------------------------------------------------------------------------
Defined contribution plans                             $    9,075 $    8,648
401(k) matched savings plans                                  128        120
----------------------------------------------------------------------------
Net pension expense                                    $    9,203 $    8,768
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Defined Benefit Plans

The Company sponsors funded defined benefit plans for approximately 121
qualifying employees. The defined benefit plans are administered by a separate
Fund that is legally separated from the Company.


Outlined below is a summary of the plans in effect at December 31, 2013 and 2012:

a) Powell Plan - This is a legacy plan whose members were employees of Powell
Equipment when it was acquired by Toromont in 2001. The plan is a contributory
plan that provides pension benefits based on length of service and career
average earnings. The plan is administered by the Toromont Pension Management
Committee with assets held in a pension fund that is legally separate from the
Company and cannot be used for any purpose other than payment of pension
benefits and related administrative fees. The plan is registered with the
province of Manitoba. Manitoba's minimum funding regulations require special
payments for Toromont to amortize any shortfalls of plan assets relative to the
cost of settling all accrued benefit entitlements through the purchase of
annuities or payments of an equivalent lump sum value (solvency funding basis).
Security in the form of letters of credit is permitted in lieu of some or all of
these solvency special payments. If the fair value of defined benefit assets
were to exceed 105% of this solvency funding target, the excess can be applied
to the cost of the defined benefits and defined contributions in future periods.
The most recent actuarial valuation was completed as at December 31, 2012, with
the next valuation scheduled for December 31, 2013.


b) Executive Plan - This is a non-contributory pension arrangement for certain
senior executives that provides for a supplementary retirement payout in excess
of amounts provided for under the registered plan. The plan is a supplemental
pension plan and is solely the obligation of the Company. The Company is not
obligated to fund the plan but pay benefits under the terms of the plan as they
come due. At December 31, 2013, the Company has posted letters of credit in the
amount of $20.2 million to secure the obligations under this plan. The most
recent actuarial valuation was completed as at December 31, 2013, with the next
valuation scheduled for December 31, 2014. 


c) Other plan assets and obligations - This provides for certain retirees and
terminated vested employees of businesses previously acquired by the Company as
well as for retired participants of the defined contribution plan that, in
accordance with the plan provisions, have elected to receive a pension directly
from the plan. The most recent actuarial valuation was completed on January 1,
2011, with the next valuation scheduled for January 1, 2014. 


Risks

The plans typically expose the Company to actuarial risks such as: investment
risk, interest rate risk, longevity risk and salary risk.




----------------------------------------------------------------------------
Investment risk  The present value of the defined benefit plan liability is 
                 calculated using a discount rate determined by reference to
                 high quality corporate bond yields; if the return on plan  
                 asset is below this rate, it will create a plan deficit.   
                 Currently the plan has a relatively balanced investment in 
                 equity securities, debt instruments and real estates. The  
                 Toromont Pension Management Committee reviews the asset mix
                 and performance of the plan assets on a quarterly basis    
                 with the balanced investment strategy intention.           
----------------------------------------------------------------------------
Interest risk    A decrease in the bond interest rates will increase the    
                 plan liability; however, this will be partially offset by  
                 an increase in the plan's holdings in debt instruments.    
----------------------------------------------------------------------------
Longevity risk   The present value of the defined benefit plan liability is 
                 calculated by reference to the best estimate of the        
                 mortality of plan participants both during and after their 
                 employment. An increase in the life expectancy of the plan 
                 participants will increase the plan's liability.           
----------------------------------------------------------------------------
Salary risk      The present value of the defined benefit plan liability is 
                 calculated by reference to the future salaries of plan     
                 participants. As such, an increase in the salary of the    
                 plan participants will increase the plan's liability.      
----------------------------------------------------------------------------



The principal assumptions used for the purpose of the actuarial valuations were
as follows:




                                                              -------       
                                                                2013   2012 
----------------------------------------------------------------------------
Discount rate(s)                                                4.60%  3.90%
Expected rate(s) of salary increase                             4.00%  4.00%
----------------------------------------------------------------------------



Amounts are recognized in comprehensive income in respect to these defined
benefit plans as follows:




                                                        ----------          
                                                             2013      2012 
                                                        --------------------
Service cost                                             $  1,394  $  1,209 
Net interest expense (income)                                 993     1,120 
----------------------------------------------------------------------------
                                                                            
Components of defined benefit costs recognized in net                       
 earnings                                                   2,387     2,329 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Remeasurement on the net defined benefit liability                          
  Actuarial losses arising from experience adjustments   $    992  $  1,823 
  Actuarial losses arising from changes in demographic                      
   assumptions                                              2,589       961 
  Actuarial (gains)/losses arising from changes in                          
   financial assumptions                                   (7,043)    3,413 
  Return on plan assets (excluding amounts included in                      
   net interest expense)                                   (6,491)   (1,986)
----------------------------------------------------------------------------
                                                                            
Components of defined benefit costs recognized in other                     
 comprehensive income                                    $ (9,953) $  4,211 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The changes in the fair value of assets and the pension obligations of the
defined benefit plans at year end were as follows:




                                                          ---------         
                                                              2013     2012 
----------------------------------------------------------------------------
Accrued defined benefit obligations:                                        
  Balance, beginning of year                               $83,733  $79,373 
  Current service cost                                       1,394    1,209 
  Interest cost                                              3,212    3,392 
  Remeasurement (gains)/losses:                                             
    Actuarial losses arising from experience adjustments       992    1,935 
    Actuarial losses arising from changes in demographic                    
     assumptions                                             2,589      961 
    Actuarial (gains)/losses arising from changes in                        
     financial assumptions                                  (7,043)   3,413 
  Benefits paid                                             (5,496)  (6,983)
  Voluntary contributions by plan participants                 410      433 
----------------------------------------------------------------------------
  Balance, end of year                                      79,791   83,733 
----------------------------------------------------------------------------
                                                                            
Plan assets:                                                                
  Fair value, beginning of year                             56,893   53,212 
  Interest income on plan assets                             2,219    2,272 
  Remeasurement gain:                                                       
    Return on plan assets (excluding amounts included in                    
     net interest expense)                                   6,491    1,986 
  Contributions from the Company                             6,139    5,961 
  Contributions from the plan participants                     410      433 
  Benefits paid                                             (5,496)  (6,983)
  Other adjustments                                              -       12 
----------------------------------------------------------------------------
  Fair value, end of year                                   66,656   56,893 
----------------------------------------------------------------------------
Accrued pension liability                                  $13,135  $26,840 
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The funded status of the of the Company's defined benefit pension plans at year
end was as follows:




                                       -------------------------------------
                                                                       2013 
----------------------------------------------------------------------------
                                            Accrued                 Accrued 
                                            defined                 pension 
                                            benefit        Plan       asset 
                                         obligation      assets (liability) 
----------------------------------------------------------------------------
Powell Plan                             $    51,431 $    55,408 $     3,977 
Executive Plan                               20,965       1,888     (19,077)
Other plan assets and obligations             7,395       9,360       1,965 
----------------------------------------------------------------------------
Accrued pension asset (liability)       $    79,791 $    66,656 $   (13,135)
----------------------------------------------------------------------------
----------------------------------------------------------------------------

                                                                            
                                                                       2012 
----------------------------------------------------------------------------
                                                                            
                                            Accrued                 Accrued 
                                            defined                 pension 
                                            benefit        Plan       asset 
                                         obligation      assets (liability) 
----------------------------------------------------------------------------
Powell Plan                             $    53,844 $    46,634 $    (7,210)
Executive Plan                               21,843       1,527     (20,316)
Other plan assets and obligations             8,046       8,732         686 
----------------------------------------------------------------------------
Accrued pension asset (liability)       $    83,733 $    56,893 $   (26,840)
----------------------------------------------------------------------------
----------------------------------------------------------------------------



The allocation of the fair value of the plan assets at the end of the reporting
period for each category, were as follows:




                                                      -----------           
                                                            2013       2012 
----------------------------------------------------------------------------
Equity securities                                           49.0%      44.6%
Debt securities                                             33.6%      37.8%
Real estate                                                 16.9%      16.8%
Cash and cash equivalents                                    0.5%       0.8%
----------------------------------------------------------------------------



The fair values of the above plan assets are determined based on the following
methods:




--  Equity securities - generally quoted market prices in active markets. 
--  Debt securities - generally quoted market prices in active markets. 
--  Real estate - are valued based on appraisals performed by a qualified
    external real estate appraiser. Real estate assets are located primarily
    in Canada. 
--  Cash and cash equivalents - generally recorded at cost which
    approximately fair value. 



The actual return on plan assets was $8.7 million (2012 - $4.3 million). 

Sensitivity Analysis

Significant actuarial assumptions for the determination of the defined
obligation are the discount rate and the life expectancy. The sensitivity
analyses have been determined based on reasonably possible changes of the
respective assumptions occurring at the end of the reporting period, while
holding all other assumptions constant.


As at December 31, 2013, the following quantitative analysis shows changes to
the significant actuarial assumptions and the corresponding impact to the
defined benefit obligation:




              --------------------------------------------------------------
                      Discount Rate                 Life expectancy         
              --------------------------------------------------------------
                                              Increase by 1   Decrease by 1 
                 1% Increase    1% Decrease            year            year 
----------------------------------------------------------------------------
Powell Plan    $      (6,625) $       7,650 $         1,383 $        (1,383)
Executive Plan $      (1,904) $       2,225 $           552 $          (552)
Other Plan     $        (500) $         538 $           357 $          (357)
----------------------------------------------------------------------------



The sensitivity analysis presented above may not be representative of the actual
change in the defined benefit obligation as it is unlikely that the change in
assumptions would occur in isolation of one another as some of the assumptions
may be correlated.


The Company expects to contribute $5.9 million to the defined benefit plans
during 2014.


The weighted average duration of the defined benefit plan obligation at December
31, 2013 was 13.8 years (2012 - 13.2 years).


20. CAPITAL MANAGEMENT

The Company defines capital as the aggregate of shareholders' equity and
long-term debt less cash.


The Company's capital management framework is designed to maintain a flexible
capital structure that allows for optimization of the cost of capital at
acceptable risk while balancing the interests of both equity and debt holders.


The Company generally targets a net debt to total capitalization ratio of 33%,
although there is a degree of variability associated with the timing of cash
flows. Also, if appropriate opportunities are identified, the Company is
prepared to significantly increase this ratio depending upon the opportunity.


The Company's capital management criteria can be illustrated as follows:



                                                --------------              
                                                  December 31   December 31 
                                                         2013          2012 
----------------------------------------------------------------------------
Shareholders' equity                             $    576,557  $    476,575 
Long-term debt                                        132,418       159,767 
Less cash                                             (70,769)       (2,383)
----------------------------------------------------------------------------
                                                                            
Total capitalization                             $    638,206  $    633,959 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Net debt as a % of total capitalization                    10%           25%
Net debt to equity ratio                               0.11:1        0.33:1 
----------------------------------------------------------------------------



The Company is subject to minimum capital requirements relating to bank credit
facilities and senior debentures. The Company has comfortably met these minimum
requirements during the year.


There were no changes in the Company's approach to capital management during the
year.


21. SUPPLEMENTAL CASH FLOW INFORMATION 



                                                      -----------           
                                                            2013       2012 
----------------------------------------------------------------------------
Net change in non-cash working capital and other                            
  Accounts receivable                                  $  (8,741) $ (22,275)
  Inventories                                                346    (25,848)
  Accounts payable, accrued liabilities and provisions    42,806    (73,486)
  Deferred revenues                                       (6,017)     6,514 
  Other                                                   (6,729)    (9,380)
----------------------------------------------------------------------------
                                                       $  21,665  $(124,475)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Cash paid during the year for:                                              
  Interest                                             $   7,961  $   9,097 
  Income taxes                                         $  47,804  $  47,578 
----------------------------------------------------------------------------
                                                                            
Cash received during the year for:                                          
  Interest                                             $   3,309  $   3,776 
  Income taxes                                         $   2,120  $     308 
----------------------------------------------------------------------------



22. COMMITMENTS

The Company has entered into leases on buildings, vehicles and office equipment.
The vehicle and office equipment leases generally have an average life between
three and five years with no renewal options. The building leases have a maximum
lease term of 20 years including renewal options. Some of the contracts include
a lease escalation clause, which is usually based on the Consumer Price Index.


Future minimum lease payments under non-cancellable operating leases as at
December 31, 2013 were as follows:




2014                                                               $   2,473
2015                                                                   1,942
2016                                                                   1,702
2017                                                                   1,174
2018                                                                     647
2019 and thereafter                                                    1,064
----------------------------------------------------------------------------
                                                                   $   9,002
----------------------------------------------------------------------------
----------------------------------------------------------------------------



23. SEGMENTED INFORMATION

The Company has two reportable operating segments, each supported by the
corporate office. The business segments are strategic business units that offer
different products and services, and each is managed separately. The corporate
office provides finance, treasury, legal, human resources and other
administrative support to the business segments. Corporate overheads are
allocated to the business segments based on revenue.


The accounting policies of the reportable operating segments are the same as
those described in Note 1 - Significant Accounting Policies. Each reportable
operating segment's performance is measured based on operating income. No
reportable operating segment is reliant on any single external customer.




              --------------------------------------------------------------
                     Equipment Group       CIMCO            Consolidated    
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                     2013       2012     2013     2012       2013       2012
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Equipment/                                                                  
package        $  746,006 $  708,802 $140,747 $113,586 $  886,753 $  822,388
sales                                                                       
Rentals           193,454    183,777        -        -    193,454    183,777
Product                                                                     
 support          411,582    405,880   89,992   83,693    501,574    489,573
Power                                                                       
 generation        11,650     11,435        -        -     11,650     11,435
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Total revenues $1,362,692 $1,309,894 $230,739 $197,279 $1,593,431 $1,507,173
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Operating                                                                   
 Income        $  157,924 $  154,589 $ 16,038 $ 14,219 $  173,962 $  168,808
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Interest                                                                    
 expense                                                    8,693      9,714
Interest and                                                                
 investment                                               (3,793)    (3,974)
 income                                                                     
Income taxes                                               46,031     43,595
----------------------------------------------------------------------------
                                                                            
Net earnings                                           $  123,031 $  119,473
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Selected balance sheet information:



                                  ------------------------------------------
                                       Equipment                            
As at December 31, 2013                    Group         CIMCO  Consolidated
----------------------------------------------------------------------------
Identifiable assets                $     868,145 $      62,725 $     930,870
Corporate assets                                                      99,685
----------------------------------------------------------------------------
Total assets                                                   $   1,030,555
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Identifiable liabilities           $     247,990 $      39,081 $     287,071
Corporate liabilities                                                166,927
----------------------------------------------------------------------------
Total liabilities                                              $     453,998
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Capital expenditures               $      90,784 $       4,019 $      94,803
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Depreciation                       $      57,489 $       1,157 $      58,646
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                       Equipment                            
As at December 31, 2012                    Group         CIMCO  Consolidated
----------------------------------------------------------------------------
Identifiable assets                $     835,649 $      65,530 $     901,179
Corporate assets                                                      34,991
----------------------------------------------------------------------------
Total assets                                                   $     936,170
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Identifiable liabilities           $     214,239 $      38,845 $     253,084
Corporate liabilities                                                206,511
----------------------------------------------------------------------------
Total liabilities                                              $     459,595
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Capital expenditures               $      99,871 $       1,440 $     101,311
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Depreciation                       $      51,247 $         798 $      52,045
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Operations are based primarily in Canada and the United States. The following
summarizes the final destination of revenues to customers and the capital assets
held in each geographic segment:




                                                    ------------            
                                                            2013        2012
----------------------------------------------------------------------------
Revenues                                                                    
  Canada                                             $ 1,542,504 $ 1,470,686
  United States                                           43,895      31,375
  International                                            7,032       5,112
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                                                     $ 1,593,431 $ 1,507,173
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
                                                    ------------            
                                                            2013        2012
----------------------------------------------------------------------------
Capital Assets and Goodwill                                                 
  Canada                                             $   351,016 $   329,346
  United States                                            3,586       1,029
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                                                     $   354,602 $   330,375
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24. RELATED PARTY DISCLOSURES

Key management personnel and director compensation comprised:



                                                    ------------            
                                                            2013        2012
----------------------------------------------------------------------------
Salaries                                             $     2,962 $     3,128
Stock options and DSU awards                               1,847       1,337
Annual non-equity incentive based plan compensation        2,785       3,665
Pension                                                      494         451
All other compensation                                       174         195
----------------------------------------------------------------------------
                                                     $     8,262 $     8,776
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----------------------------------------------------------------------------



The remuneration of directors and key management is determined by the Human
Resources Committee having regard to the performance of the individual and
Company and market trends.


25. ECONOMIC RELATIONSHIP

The Company, through its Equipment Group, sells and services heavy equipment and
related parts. Distribution agreements are maintained with several equipment
manufacturers, of which the most significant are with subsidiaries of
Caterpillar Inc. The distribution and servicing of Caterpillar products account
for the major portion of the Equipment Group's operations. Toromont has had a
strong relationship with Caterpillar since inception in 1993.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Paul R. Jewer
Executive Vice President and
Chief Financial Officer
Toromont Industries Ltd.
Tel: (416) 667-5638

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