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Press release from Marketwire

Torstar Corporation Reports Higher Second Quarter Revenue and Earnings

Wednesday, July 28, 2010

Torstar Corporation Reports Higher Second Quarter Revenue and Earnings06:30 EDT Wednesday, July 28, 2010TORONTO, ONTARIO--(Marketwire - July 28, 2010) - Torstar Corporation (TSX:TS.B) today reported financial results for the second quarter ended June 30, 2010.Highlights for the quarter: -- Revenue was $376.5 million in the quarter, up $2.8 million from $373.7 million in the second quarter of last year. Excluding the $12.4 million decrease from the stronger Canadian dollar, revenue was up $15.2 million or 4.2% in the quarter. -- EBITDA (operating profit, as presented on the consolidated statements of income which is before charges for interest and taxes, adjusted for depreciation and amortization of intangible assets, and restructuring and other charges - see "non-GAAP measures") was $66.6 million in the quarter, up $12.0 million or 22% from $54.6 million in the second quarter of 2009. -- Net income was $22.7 million ($0.29 per share) in the second quarter of 2010 up $27.1 million ($0.35 per share) from a loss of $4.4 million ($0.06 per share) in the second quarter last year. -- Net debt was $480.1 million at June 30, 2010, down $13.1 million from $493.2 million at March 31, 2010. "We continue to be pleased with results in 2010," said David Holland, President and Chief Executive Officer of Torstar Corporation. "EBITDA was up in the quarter with continued recovery in the Newspapers and Digital division and another strong performance at Harlequin. In the Newspapers and Digital division, similar to the first quarter, a modest recovery in revenues coupled with lower costs to yield the earnings improvement. At Harlequin, growth in earnings from operations was more than sufficient to offset the foreign exchange headwinds we are confronting. In both of our divisions we are pleased with the progress we are making in adapting to the increasingly digital environment.""Free cash flow generation remains a focus throughout the business. In the quarter, net borrowings declined by $13 million to $480 million. Year to date, net borrowings have declined by $36 million.""Looking forward, we continue to be cautious on the Newspapers and Digital revenue outlook given our revenue experience in the first half of the year and the nature of the economic recovery we are experiencing. At Harlequin, we anticipate another good year operationally but the anticipated improvement in earnings is likely to be offset by the negative impact of the strong Canadian dollar on results."The following chart provides a continuity of earnings per share from 2009 to 2010: ----------------------------------------------------------------------- Second Quarter Year to Date ----------------------------------------------------------------------- Net loss per share 2009 ($0.06) ($0.33) Changes - Operations 0.11 0.29 - Restructuring and other charges (0.01) 0.14 - Loss from associated businesses - Impairments (0.15) (0.08) - Tax valuation allowance (2009) 0.38 0.38 - Other 0.03 0.00 - Non-cash foreign exchange (0.01) (0.02) ----------------------------------------------------------------------- Net income per share 2010 $0.29 $0.38 ----------------------------------------------------------------------- OPERATING RESULTS - Second quarter and year to date June 30, 2010 Overall PerformanceTotal revenue was $376.5 million in the second quarter of 2010, up $2.8 million from $373.7 million in the second quarter of 2009. Excluding the $12.4 million decrease from the stronger Canadian dollar, total revenue would have been up $15.2 million in the quarter. Newspapers and Digital revenue was $258.7 million in the quarter, up $9.1 million or 3.6% from $249.6 million in 2009 reflecting strong national advertising in both print and digital media. Retail and employment advertising remained soft during the quarter. Book Publishing revenue was $117.9 million in the second quarter of 2010, down $6.2 million from $124.1 million in the second quarter of 2009. Excluding the impact of the strong Canadian dollar, Book Publishing revenues were up $6.2 million in the quarter. The North America Direct-To-Consumer and Overseas divisions had revenue growth in the second quarter that was partially offset by lower North America Retail revenues.Year to date total revenue was $710.7 million, down $2.0 million from $712.7 million in the first six months of 2009. Newspapers and Digital revenue was $480.1 million year to date, up $15.9 million or 3.4% from $464.2 million in the same period last year. Book Publishing revenue was $230.6 million year to date, down $18.0 million from $248.6 million in the same period last year. Excluding the impact of the stronger Canadian dollar, Book Publishing revenues were up $4.5 million year to date.Operating profit before restructuring and other charges was $54.9 million in the second quarter of 2010, up $13.4 million from $41.5 million in the second quarter of 2009. Including the $4.8 million of restructuring and other charges, operating profit was $50.1 million in the second quarter of 2010, up $12.4 million from $37.7 million in 2009 (which included $3.8 million of restructuring and other charges). Year to date, operating profit before restructuring and other charges was $87.5 million up $34.4 million from $53.1 million in the first six months of 2009. Including the $13.1 million of restructuring and other charges, operating profit was $74.4 million year to date, up $51.0 million from $23.4 million in the same period last year (which included $29.7 million of restructuring and other charges).Newspapers and Digital Segment operating profit was $38.3 million in the second quarter of 2010, up $13.1 million from $25.2 million in the same quarter last year. Year to date, Newspapers and Digital Segment operating profit was $51.5 million, up $31.2 million from $20.3 million in 2009. In both the quarter and the year to date, results benefited from revenue improvement and lower newsprint pricing, lower pension costs and labour cost savings from restructuring initiatives.Book Publishing operating profit was $20.4 million in the second quarter of 2010, up $0.7 million from $19.7 million in the second quarter of 2009, as $3.1 million of underlying growth more than offset a negative $2.3 million from the impact of foreign exchange. Year to date, Book Publishing operating profit was $43.1 million, up $2.8 million from $40.3 million last year as $4.7 million of underlying growth more than offset a negative $1.9 million from the impact of foreign exchange. In both the quarter and the year to date, operating results were up in the North America Direct-To-Consumer and Overseas divisions and down in the North America Retail division.Corporate costs were $3.8 million in the second quarter, up $0.5 million from $3.3 million in the same period last year. Year to date, corporate costs were $7.1 million, down $0.4 million from $7.5 million in 2009.EBITDA, excluding restructuring and other charges, was $66.6 million in the second quarter of 2010, up $12.0 million from $54.6 million in the same period last year. Year to date, EBITDA, excluding restructuring and other charges, was $111.3 million, up $31.9 million from $79.4 million in 2009. ---------------------------------------------------------------------------- Second Quarter Year to Date ---------------------------------------------------------------------------- (in $000's) 2010 2009 2010 2009 ---------------------------------------------------------------------------- Newspapers and Digital $48,774 $37,083 $73,039 $44,240 Book Publishing 21,617 20,774 45,345 42,562 Corporate (3,794) (3,292) (7,106) (7,429) ---------------------------------------------------------------------------- EBITDA, excluding restructuring and other charges $66,597 $54,565 $111,278 $79,373 ---------------------------------------------------------------------------- Restructuring and other chargesRestructuring and other charges of $4.8 million were recorded in the second quarter of 2010 compared with $3.8 million in the second quarter of 2009. The 2010 amount included $2.0 million related to restructuring provisions in the Newspapers and Digital Segment and $2.8 million of costs related to Torstar's bid to purchase the newspaper and digital businesses of Canwest Limited Partnership and its related entities. In 2009, the restructuring and other charges were related to restructuring provisions in the Newspapers and Digital Segment.Year to date, restructuring and other charges of $13.1 million were recorded compared with $29.7 million in 2009. The 2010 amount included $10.3 million related to restructuring provisions in the Newspapers and Digital Segment and $2.8 million of costs related to Torstar's bid to purchase the newspaper and digital businesses of Canwest Limited Partnership and its related entities. In 2009, the restructuring and other charges included $12.8 million related to the transition in leadership at Torstar Corporate, $15.5 million for restructuring provisions in the Newspapers and Digital Segment and $1.4 million related to the closure of a distribution centre in Harlequin's U.K. operation.The restructuring charges in the Newspapers and Digital Segment reflect the ongoing focus on reducing operating costs in both Metroland Media Group and Star Media Group. Total annualized net savings from the second quarter 2010 restructuring activities are expected to be approximately $2.5 million (with approximately $1.0 million to be realized during the last six months of 2010) and a reduction of approximately 43 positions.InterestInterest expense was $6.6 million in the second quarter of 2010, up $1.3 million from $5.3 million in the second quarter of 2009. The higher expense reflects higher effective interest rates partially offset by the lower level of average net debt outstanding in 2010. Torstar's effective interest rate was 5.4% in the second quarter of 2010 and 3.4% in the second quarter of 2009. This higher rate reflects the impact of the higher interest rate spread that was effective starting in 2010 for borrowings under Torstar's long-term credit facility. The average net debt (long-term debt and bank overdraft net of cash and cash equivalents) was $486.7 million in the second quarter of 2010, down $134.6 million from $621.3 million in the same period last year.Year to date interest expense was $10.9 million, up $0.1 million from $10.8 million in 2009. The flat year over year expense reflects higher effective interest rates offset by the lower level of average net debt outstanding in 2010. Year to date, Torstar's effective interest rate was 4.4% compared with 3.5% in the first six months of 2009. Year to date, the average net debt (long-term debt and bank overdraft net of cash and cash equivalents) was $496.4 million, down $126.9 million from $623.3 million in the same period last year.Net debt was $480.1 million at June 30, 2010, down $35.7 million from $515.8 million at December 31, 2009.Foreign exchangeTorstar reported a non-cash foreign exchange loss of $0.9 million in the second quarter of 2010 and $1.7 million year to date. These losses arose from the translation of foreign-currency (primarily U.S. dollars) denominated assets and liabilities into Canadian dollars. The amount of the gain or loss in any year will vary depending on the movement in relative value of the Canadian dollar and on whether Torstar has a net asset or net liability position in the foreign currency. A non-cash foreign exchange loss of $0.3 million was reported in the first six months of 2009.Loss from associated businessesThe loss from associated businesses was $6.9 million in the second quarter of 2010 compared with a loss of $27.7 million in the second quarter of 2009. Year to date, the loss from associated businesses was $11.2 million compared with a loss of $34.7 million in 2009.Torstar's share of CTVgm's net loss was $6.8 million in the second quarter of 2010 compared with a loss of $27.6 million in the second quarter of 2009. The second quarter of 2010 included an $11.6 million impairment loss on a broadcast licence and the second quarter of 2009 included a $29.9 million valuation allowance that was provided against certain of CTVgm's future income tax assets. Excluding these two items, Torstar would have reported income of $4.8 million in the second quarter of 2010 compared with $2.4 million in the same period last year. The improved results reflect higher revenues and EBITDA, partially offset by higher amortization and interest expense.Year to date, Torstar's share of CTVgm's net loss was $11.2 million in 2010 compared with a loss of $34.5 million in 2009. In addition to the second quarter items noted above, the 2009 year to date results included an after tax $5.3 million write-down of the carrying value of certain conventional television licences that CTVgm had decided not to renew offset by a gain on the sale of one-half of CTVgm's interest in Maple Leaf Sports and Entertainment Ltd. Excluding all these items, Torstar would have reported income of $0.4 million year to date in 2010 compared with a loss of $4.5 million in 2009.Torstar is not currently recording its share of Black Press's results. Torstar's carrying value in Black Press was reduced to nil in the fourth quarter of 2008. Under Canadian GAAP a negative carrying value is not recorded, but any deficit must be recovered prior to the reporting of any further results. Torstar's share of Black Press's net income would have been $2.0 million in the second quarter of 2010 compared with a loss of $0.4 million in the same period last year. Year to date, Torstar's share of Black Press's net income would have been a loss of $1.6 million, including a $3.1 million impairment loss related to a customer-related intangible asset and goodwill related to a printing operation. Excluding the impairment charge, Torstar's share of Black Press's net income would have been $1.5 million year to date compared with $0.6 million in the same period last year. Black Press's operating results have improved in 2010 as revenue declines have slowed and cost savings have been realized.Income and other taxesTorstar's effective tax rate was 36.6% in the second quarter of 2010. In the second quarter of 2009, Torstar recorded a tax provision of $9.1 million on income before taxes of $4.7 million. In both years the loss from associated businesses was not tax affected. Excluding the impact from not tax-affecting the losses, the effective tax rate would have been 30.7% in the second quarter of 2010 and 28.0% in 2009. The higher effective tax rate in 2010 reflects the impact of permanent differences, including a larger amount of expenses that are only partially deductible for income tax purposes, in the quarter compared to the prior year.Year to date Torstar's effective tax rate was 40.5%. In the first six months of 2009, Torstar recorded a tax provision of $3.4 million on a loss before taxes of $22.3 million. In both years the loss from associated businesses was not tax affected. Excluding the impact from not tax-affecting the losses, the effective tax rate for the first six months would have been 33.2% in 2010 and 27.5% in 2009. The higher effective tax rate in 2010 reflects the impact of permanent differences compared to the prior year.Net income (loss)Torstar reported net income of $22.7 million or $0.29 per share in the second quarter of 2010. In the second quarter of 2009 Torstar reported a net loss of $4.4 million or $0.06 per share. Year to date Torstar reported net income of $30.1 million or $0.38 per share compared with a net loss of $25.7 million or $0.33 per share in 2009.The average number of Class A and Class B non-voting shares outstanding was 79.1 million in the second quarter of 2010 and 79.0 million year to date. In 2009, 79.0 million were outstanding in the second quarter and 78.9 million year to date.OUTLOOKThe Newspapers and Digital Segment had revenue growth of 3.6% in the second quarter of 2010 and 3.4% year to date. This modest growth was achieved relative to a weak performance in the first six months of 2009. The continued softness of the retail and employment advertising categories suggests that the strength of the economic recovery is still in question. Revenue trends in July are consistent with the year to date experience. The businesses will continue to benefit from the lower cost base achieved from restructuring efforts over the past few years. In the second half of 2010, the Segment will benefit from $6.1 million of net cost savings from restructuring activities undertaken in 2009 and 2010 and $4.2 million in lower pension expense. The impact of newsprint pricing is expected to be slightly negative in the second half of 2010. Torstar has arrangements in place with its suppliers that will fix the price for the majority of Torstar's newsprint requirements in 2010. As newsprint pricing decreased during 2009, the year over year pricing comparative for the second half of 2010 will be slightly negative.Harlequin's 2010 outlook continues to be for relatively stable year over year results, including the negative earnings impact of foreign exchange. The growth in the North America digital sales and the acquisition of the other half of the German joint venture in April 2010 will offset the expected decline from the Softbank contribution, lower North America Retail volumes and the negative impact of foreign exchange. Year to date, Harlequin realized a net negative impact of $1.9 million from foreign exchange (including the impact of the U.S. dollar hedges). If the Canadian dollar remains at its current levels relative to the U.S. dollar and overseas currencies, Harlequin anticipates a negative foreign exchange impact of approximately $2.1 million (including the impact of the U.S. dollar hedges) for the balance of the year.Torstar's effective interest rate will increase in the second half of 2010 due to the higher interest rate spread that is applicable to borrowings under its long-term credit facility.SUBSEQUENT EVENTSIn July the Toronto Star reached an agreement with the Communications, Energy and Paperworkers Union to extend the current collective agreement that covers approximately 550 employees at One Yonge Street. This collective agreement was scheduled to expire in December 2010 but will now be extended to December 2012.OTHEROn July 27, 2010, Torstar declared a quarterly dividend of 9.25 cents per share on its Class A shares and Class B non-voting shares, payable on September 30, 2010, to shareholders of record at the close of business on September 10, 2010. Torstar advises that, for the purposes of the Income Tax Act, Canada and for any relevant provincial tax legislation, this dividend is designated as an eligible dividend.ADDITIONAL INFORMATIONFor additional information, please refer to Torstar's consolidated financial statements and interim Management's Discussion and Analysis ("MD&A") for the period ended June 30, 2010. Both documents will be filed today with SEDAR and are available on Torstar's corporate website www.torstar.com.CONFERENCE CALLTorstar has scheduled a conference call for July 28, 2010 at 8:15 a.m. to discuss its second quarter results. The dial-in number is 416-695-6616 or 1-800-766-6630. A live broadcast of the conference call will be available over the Internet on the Investor Relations (Conference Calls) page on Torstar's website www.torstar.com. A recording of the conference call will be available for 9 days by calling 416-695-5800 or 1-800-408-3053 and entering reservation number 4424401. An online archive of the broadcast will be available shortly after the completion of the call and will be accessible by visiting the Investor Relations (Conference Calls) page on Torstar's website www.torstar.com.About Torstar CorporationTorstar Corporation is a broadly based media company listed on the Toronto Stock Exchange (TS.B). Its businesses include the Star Media Group led by the Toronto Star, Canada's largest daily newspaper and digital properties including thestar.com, toronto.com, Workopolis, Olive Media, and eyeReturn Marketing; Metroland Media Group, publishers of community and daily newspapers in Ontario; and Harlequin Enterprises, a leading global publisher of books for women.Non-GAAP MeasuresManagement uses both operating profit, as presented in the consolidated statements of income, and EBITDA as measures to assess the performance of the reporting units and business segments. EBITDA is a measure that is also used by many of Torstar's shareholders, creditors, other stakeholders and analysts as a proxy for the amount of cash generated by Torstar's operations or by a reporting unit or segment. EBITDA is not the actual cash provided by operating activities and is not a recognized measure of financial performance under GAAP. Torstar calculates EBITDA as the consolidated, segment or reporting unit operating profit as presented on the consolidated statements of income which is before charges for interest and taxes, adjusted for depreciation and amortization of intangible assets. Torstar also excludes restructuring and other charges from its calculation of EBITDA. Torstar's method of calculating EBITDA may differ from other companies and accordingly may not be comparable to measures used by other companies.Forward-looking statementsCertain statements in this press release and in the Company's oral and written public communications may constitute forward-looking statements that reflect management's expectations regarding the Company's future growth, results of operations, performance and business prospects and opportunities as of the date of this report. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "anticipate", "believe", "plan", "forecast", "expect", "intend", "would", "could", "if", "may" and similar expressions. All such statements are made pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. These statements reflect current expectations of management regarding future events and operating performance, and speak only as of the date of this report. The Company does not intend, and disclaims any obligation to, update any forward-looking statements, whether written or oral, or whether as a result of new information or otherwise, except as may be required by law.By their very nature, forward-looking statements require management to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that management's assumptions may not be accurate and that actual results, performance or achievements may differ significantly from such predictions, forecasts, conclusions or projections expressed or implied by such forward-looking statements. We caution readers to not place undue reliance on the forward-looking statements in this press release as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, outlooks, expectations, goals, estimates or intentions expressed in the forward-looking statements. In addition, forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.These factors include, but are not limited to: general economic conditions in the principal markets in which the Company operates, the Company's ability to operate in highly competitive industries, the Company's ability to compete with other forms of media, the Company's ability to attract advertisers, cyclical and seasonal variations in the Company's revenues, labour disruptions, newsprint costs, foreign exchange fluctuations, investments, restrictions imposed by existing credit facilities and availability of capital, pension fund obligations, reliance on its printing operations, reliance on technology and information systems, interest rates, availability of insurance, litigation, environmental regulations, dependence on key personnel, control of Torstar by the voting trust, loss of reputation, intellectual property rights and uncertainties associated with critical accounting estimates.We caution that the foregoing list is not exhaustive of all possible factors, as other factors could adversely affect our results. For more information, please see the discussion of risks affecting Torstar and its businesses in Torstar's 2009 Management's Discussion & Analysis which is available at www.sedar.com and on Torstar's corporate website www.torstar.com.In addition, a number of assumptions, including those assumptions specifically identified throughout this press release, were applied in making the forward-looking statements set forth in this press release. Some of the key assumptions include, without limitation, assumptions regarding the performance of the North American economy; tax laws in the countries in which we operate; continued availability of printing operations; continued availability of financing on appropriate terms; exchange rates; market competition; and successful development of new products. There is a risk that some or all of these assumptions may prove to be incorrect.Torstar's new releases are available on the Internet at www.torstar.com. Torstar Corporation Consolidated Balance Sheets (Thousands of Dollars) (Unaudited) June 30 December 31 2010 2009 --------------------------------------------------------------------------- Assets Current: Cash and cash equivalents $41,394 $39,238 Receivables 234,446 253,306 Inventories 32,302 33,953 Prepaid expenses and other current assets 53,488 51,501 Prepaid and recoverable income taxes 2,775 2,997 Future income tax assets 20,323 19,540 ---------------------------------------------------------------------------- Total current assets 384,728 400,535 ---------------------------------------------------------------------------- Property, plant and equipment (net) 239,010 251,817 ---------------------------------------------------------------------------- Investment in associated businesses 170,101 178,828 ---------------------------------------------------------------------------- Intangible assets 53,107 51,619 ---------------------------------------------------------------------------- Goodwill (net) 588,256 581,842 ---------------------------------------------------------------------------- Other assets 138,622 140,108 ---------------------------------------------------------------------------- Future income tax assets 32,178 33,693 ---------------------------------------------------------------------------- Total assets $1,606,002 $1,638,442 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current: Bank overdraft $2,293 $2,052 Accounts payable and accrued liabilities 194,720 218,971 Income taxes payable 24,131 19,158 ---------------------------------------------------------------------------- Total current liabilities 221,144 240,181 ---------------------------------------------------------------------------- Long-term debt 519,208 552,976 ---------------------------------------------------------------------------- Other liabilities 109,593 103,408 ---------------------------------------------------------------------------- Future income tax liabilities 61,158 62,897 ---------------------------------------------------------------------------- Shareholders' equity: Share capital 392,633 391,626 Contributed surplus 13,177 11,901 Retained earnings 307,779 292,306 Accumulated other comprehensive loss (18,690) (16,853) ---------------------------------------------------------------------------- Total shareholders' equity 694,899 678,980 ---------------------------------------------------------------------------- Total liabilities and shareholders' equity $1,606,002 $1,638,442 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Torstar Corporation Consolidated Statements Of Income (Thousands of Dollars) (Unaudited) ---------------------------------------------------------------------------- Three months ended Six months ended June 30 June 30 2010 2009 2010 2009 ---------------------------------------------------------------------------- Operating revenue Newspapers and digital $258,666 $249,634 $480,110 $464,163 Book publishing 117,854 124,099 230,629 248,577 ---------------------------------------------------------------------------- $376,520 $373,733 $710,739 $712,740 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Operating profit Newspapers and digital $38,271 $25,162 $51,500 $20,326 Book publishing 20,446 19,664 43,123 40,281 Corporate (3,808) (3,308) (7,135) (7,461) Restructuring and other charges (4,778) (3,805) (13,110) (29,705) ---------------------------------------------------------------------------- 50,131 37,713 74,378 23,441 Interest (6,616) (5,256) (10,905) (10,814) Foreign exchange (876) (11) (1,720) (261) Loss of associated businesses (6,856) (27,708) (11,156) (34,713) ---------------------------------------------------------------------------- Income (loss) before taxes 35,783 4,738 50,597 (22,347) Income and other taxes (13,100) (9,100) (20,500) (3,400) --------------------------------------------------------------------------- Net income (loss) $22,683 ($4,362) $30,097 ($25,747) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Earnings (loss) per Class A and Class B share: Net income (loss) - Basic $0.29 ($0.06) $0.38 ($0.33) Net income (loss) - Diluted $0.28 ($0.06) $0.38 ($0.33) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Torstar Corporation Consolidated Statements Of Cash Flows (Thousands of Dollars) (Unaudited) ---------------------------------------------------------------------------- Three months ended Six months ended June 30 June 30 2010 2009 2010 2009 ---------------------------------------------------------------------------- Cash was provided by (used in) Operating activities $28,649 $1,048 $59,748 $24,575 Investing activities (4,973) (7,215) (8,267) (11,727) Financing activities (23,966) 6,102 (48,098) (27,495) ---------------------------------------------------------------------------- Increase (decrease) in cash (290) (65) 3,383 (14,647) Effect of exchange rate changes 117 (316) (1,468) (389) Cash, beginning of period 39,274 26,707 37,186 41,362 ---------------------------------------------------------------------------- Cash, end of period $39,101 $26,326 $39,101 $26,326 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Operating activities: Net income (loss) $22,683 ($4,362) $30,097 ($25,747) Depreciation and amortization 11,688 13,047 23,790 26,227 Future income taxes (407) (656) (117) 926 Loss of associated businesses 6,856 27,708 11,156 34,713 Other 4,467 60 9,398 4,485 ---------------------------------------------------------------------------- 45,287 35,797 74,324 40,604 Increase in non-cash working capital (16,638) (34,749) (14,576) (16,029) ---------------------------------------------------------------------------- Cash provided by operating activities $28,649 $1,048 $59,748 $24,575 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Investing activities: Additions to property, plant and equipment and intangible ($5,806) ($3,327) ($9,006) ($7,965) assets Acquisitions and investments (5,448) (4,344) (5,606) (4,344) Proceeds from mortgage receivable 6,215 6,215 Other 66 456 130 582 ---------------------------------------------------------------------------- Cash used in investing activities ($4,973) ($7,215) ($8,267) ($11,727) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Financing activities: Issuance of bankers' acceptances $14,370 $14,370 Repayment of bankers' acceptances ($16,673) ($33,890) (26,501) Dividends paid (7,236) (7,270) (14,511) (14,533) Other (57) (998) 303 (831) ---------------------------------------------------------------------------- Cash provided by (used in) financing activities ($23,966) $6,102 ($48,098) ($27,495) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Cash represented by: Cash $31,978 $24,044 $31,978 $24,044 Cash equivalents 9,416 11,421 9,416 11,421 ---------------------------------------------------------------------------- Cash and cash equivalents 41,394 35,465 41,394 35,465 Bank overdraft (2,293) (9,139) (2,293) (9,139) ---------------------------------------------------------------------------- $39,101 $26,326 $39,101 $26,326 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- FOR FURTHER INFORMATION PLEASE CONTACT: Torstar Corporation L. DeMarchi Executive Vice-President and Chief Financial Officer (416) 869-4776 www.torstar.com