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Press release from Marketwire

Torstar Corporation Reports Fourth Quarter Revenue and EBITDA Growth

Wednesday, March 02, 2011

Torstar Corporation Reports Fourth Quarter Revenue and EBITDA Growth06:30 EST Wednesday, March 02, 2011TORONTO, ONTARIO--(Marketwire - March 2, 2011) - Torstar Corporation (TSX:TS.B) today reported financial results for the fourth quarter ended December 31, 2010.Highlights for the quarter:-- Revenue was $416.1 million in the quarter, up $21.3 million or 5.4% from the fourth quarter of 2009.-- 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 $71.5 million in the quarter, up $1.9 million from $69.6 million in the fourth quarter of 2009.-- Net income was $26.7 million or $0.34 per share in the fourth quarter of 2010. This was down $0.4 million from the fourth quarter of 2009, excluding the income from CTVgm that was reported in the fourth quarter last year.-- Net debt was $368.8 million at December 31, 2010, down $81.6 million from $450.4 million at September 30, 2010. The reduction included the benefit of the $40 million received from CTVgm on December 31, 2010.Highlights for the year:-- Revenue was $1,479.6 million, up $28.3 million or 1.9% from $1,451.3 million in 2009. Excluding the $33.2 million negative impact of foreign exchange and the $12.9 million benefit from the acquisition at the beginning of the second quarter of the half of the German book publishing business that Harlequin had not previously owned, revenue was up $48.6 million or 3.3% in the year.-- EBITDA was $233.6 million, up $41.8 million from $191.8 million in 2009.-- Net income was $60.9 million or $0.77 per share in 2010. Excluding the loss from CTVgm in both years, net income would have been $90.0 million or $1.14 per share in 2010, up $36.5 million or $0.46 per share from $53.5 million or $0.68 per share in 2009.-- Net debt was $368.8 million at December 31, 2010, down $147.0 million from $515.8 million at December 31, 2009 including the benefit of the $40 million received from CTVgm on December 31, 2010."We are pleased with our fourth quarter operating results, finishing off a very successful 2010 for Torstar," said David Holland, President and Chief Executive Officer of Torstar Corporation. "In the quarter, EBITDA was up versus prior year as the increase in earnings from the media operations more than offset the anticipated decline in quarterly earnings at Harlequin. For the full year, EBITDA was up substantially to $233.6 million from $191.8 million. The media operations were responsible for the earnings growth, benefiting from modest revenue recovery and ongoing efforts to control costs. Harlequin's results for the year were stable, an accomplishment considering the $3.9 million of negative foreign exchange impact on earnings year over year. Adjusting for foreign exchange impact, 2010 is the fourth consecutive year of earnings growth at Harlequin.""We are particularly pleased with the progress we achieved in reducing net borrowings in 2010. Net borrowings declined by $147 million from $516 million to close the year at $369 million. This decline includes $40 million from the initial proceeds in respect of the CTVglobemedia transaction. Looking forward, we continue to be cautious about the nature of the economic recovery and its impact on the media revenue base. At Harlequin, we are expecting stable underlying operating results in an increasingly digital book publishing environment but will feel the negative effects of a strong Canadian dollar."The following chart provides a continuity of earnings per share from 2009 to 2010:---------------------------------------------------------------------------- Fourth Quarter Year to Date----------------------------------------------------------------------------Net income per share 2009 $0.73 $0.45Changes- Operations 0.07 0.41- Restructuring and other charges (0.05) 0.07- Loss from CTVgm (0.14)- Income from CTVgm (Q4 2009) (0.38)- Income (loss) of associated businesses (0.01)- Investment write-down 0.02 0.02- Gain on sale of assets 0.01 0.04- Change in statutory tax rates (2009) (0.06) (0.06)- Non-cash foreign exchange 0.01 (0.02)----------------------------------------------------------------------------Net income per share 2010 $0.34 $0.77----------------------------------------------------------------------------OPERATING RESULTS - THREE MONTHS ENDED DECEMBER 31, 2010Overall PerformanceTotal revenue was $416.1 million in the fourth quarter of 2010, up $21.3 million or 5.4% from $394.8 million in the fourth quarter of 2009. Media Segment revenue was $296.1 million, up $23.5 million or 8.6% from $272.6 million in the same period last year. The Media Segment revenue growth came from digital, distribution revenues and print advertising along with $8.7 million of product sales in Metroland Media Group's TMGTV operations. Excluding the TMGTV product sales, the Media Segment revenue was up $14.8 million or 5.4% in the fourth quarter of 2010. Book Publishing revenues were $120.0 million in the fourth quarter of 2010, down $2.2 million from $122.2 million in the same period last year. The $4.3 million decrease from the strengthening of the Canadian dollar was offset by the $4.3 million benefit from the acquisition of the other half of the German business. North America digital revenues were up in the quarter, but were more than offset by lower North America retail and direct-to-consumer and Overseas revenues.Operating profit before restructuring and other charges was $60.2 million in the fourth quarter of 2010, up $4.4 million from $55.8 million in the fourth quarter of 2009. Including the $17.9 million of restructuring and other charges, operating profit was $42.3 million in the fourth quarter of 2010, down $0.5 million from $42.8 million in the fourth quarter of 2009 (which included $13.0 million of restructuring and other charges). Media Segment operating profit was $46.6 million in the fourth quarter of 2010, up $7.4 million from $39.2 million in the same period last year. Book Publishing operating profits were $17.3 million in the fourth quarter, down $3.4 million from $20.7 million in the same period last year. The decline included $0.7 million from the negative impact of foreign exchange. Corporate costs were $3.7 million in the fourth quarter of 2010, down $0.4 million from $4.1 million in the fourth quarter of 2009 benefiting from lower professional fees.EBITDA, excluding restructuring and other charges, was $71.5 million in the fourth quarter, up $1.9 million from $69.6 million in the same period last year.---------------------------------------------------------------------------- Fourth Quarter Fourth Quarter(in $000's) 2010 2009----------------------------------------------------------------------------Media $56,852 $51,985Book Publishing 18,330 21,701Corporate (3,709) (4,081)----------------------------------------------------------------------------EBITDA, excluding restructuring and other charges $71,473 $69,605----------------------------------------------------------------------------Restructuring and other chargesRestructuring and other charges of $17.9 million were recorded in the fourth quarter of 2010 including restructuring provisions of $17.4 million and a $0.5 million impairment loss on intangible assets, both in the Media Segment.The restructuring provision in the fourth quarter of 2010 included $14.6 million related to a voluntary separation program at the Toronto Star's Vaughan Press Centre. This program was offered as part of the collective agreement covering approximately 275 employees at the Press Centre that was reached during the third quarter of 2010. The collective agreement provided for a substantial restructuring of job categories with wage reductions over time for a number of junior classifications. Existing employees were given the option of accepting a severance package or transitioning to the new wage rates. The financial benefits from the program are from the lower pay rates as the total staff complement is expected to be stable. The staff departures will take place over the next four years which will result in the benefits also being realized over a number of years. The charge of $14.6 million reflects the discounted value of the future severance obligations.In 2009, the restructuring and other charges of $13.0 million included restructuring provisions of $12.3 million and a $0.7 million impairment loss on intangible assets, both in the Media Segment.Total annualized net savings from the fourth quarter 2010 restructuring initiatives are expected to be approximately $10.8 million with a reduction of approximately 30 positions.InterestInterest expense was $6.2 million in the fourth quarter of 2010, up $1.1 million from $5.1 million in the fourth quarter of 2009. The higher expense reflects higher effective interest rates partially offset by a lower level of average net debt outstanding in the fourth quarter of 2010. The average net debt (long-term debt and bank overdraft net of cash and cash equivalents) was $409.6 million in the fourth quarter of 2010, down $124.9 million from $534.5 million in 2009. Torstar's effective interest rate was 6.0% in the fourth quarter of 2010 and 3.8% in the fourth quarter of 2009. The higher rate reflected the impact of the higher interest rate spread that was effective starting at the beginning of 2010 for borrowings under Torstar's long-term credit facility. It also reflected the mix of debt outstanding with a larger proportion being the higher fixed-rate debt in the fourth quarter of 2010.Foreign exchangeTorstar reported a non-cash foreign exchange gain of $0.2 million in the fourth quarter of 2010. This gain 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. In 2009, a non-cash foreign exchange loss of $0.5 million was reported.Income (loss) of associated businessesIncome (loss) of associated businesses was a loss of $0.4 million in the fourth quarter of 2010 compared with income of $30.4 million in the fourth quarter of 2009.Torstar ceased to equity account for its investment in CTVgm on September 10, 2010 and as a result did not include any amounts related to CTVgm in the income (loss) of associated businesses in the fourth quarter of 2010.Torstar's share of CTVgm's net income was $30.3 million in the fourth quarter of 2009. The net income included the benefit of a gain on the change in the fair value of financial liabilities, a partial recovery of the valuation allowance against certain of CTVgm's future income tax assets, a gain on the sale of CTVgm's interest in Maple Leaf Sports and Entertainment Ltd., and a $4.2 million positive earnings impact as future income tax liabilities related to intangible assets were reduced to reflect the reduction in future provincial income tax rates, partially offset by a $2.3 million impairment loss on intangible assets. Excluding the impact of the above items, Torstar would have reported income from CTVgm of $10.5 million in the fourth quarter of 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 accounting rules 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 income would have been $2.5 million in the fourth quarter of 2010 up from $0.9 million in the fourth quarter of 2009. The higher income in 2010 reflects the improvement in Black Press's revenues and EBITDA.Gain on sale of assetsTorstar recognized a gain on sale of assets of $1.3 million in the fourth quarter of 2010 on the sale of a small piece of excess land in Vaughan.Investment write-downIn the fourth quarter of 2010, Torstar recognized an investment write-down of $0.8 million related to two small portfolio investments. In 2009 Torstar recognized an investment write-down of $2.4 million, reducing the carrying value of its portfolio investment in Vocel Inc. to nil.Income and other taxesTorstar's effective tax rate was 26.1% in the fourth quarter of 2010 excluding the impact of not tax affecting the $0.4 million loss of associated businesses.In the fourth quarter of 2009, Torstar's effective tax rate was 37.1% excluding the impact of not tax affecting the $30.4 million income of associated businesses and excluding the $5.1 million benefit from changes in statutory tax rates. During 2009, the Ontario provincial government enacted corporate tax decreases for future years. Under Canadian generally accepted accounting principles the impact of these changes on Torstar's future income tax assets and liabilities is to be recorded during the period the tax changes are substantially enacted.The lower effective tax rate in 2010 reflected the lower Canadian statutory income tax rates, a $2.6 million benefit from the reduction of the valuation allowance that is recorded against Torstar's future income tax assets and the impact of permanent differences in calculating income taxes in one period versus another.Net incomeTorstar reported net income of $26.7 million or $0.34 per share in the fourth quarter of 2010, down $30.7 million or $0.39 per share from $57.4 million or $0.73 per share in the fourth quarter of 2009. Excluding the income from CTVgm in the fourth quarter of 2009, Torstar's fourth quarter of 2010 would have been down $0.4 million compared with the fourth quarter of 2009.The average number of Class A and Class B non-voting shares outstanding was 79.1 million in the fourth quarter of 2010 up slightly from 79.0 million in the fourth quarter of 2009.Segment Results - MediaThe following tables set out, in $000's, the results for the reporting units within the Media Segment for the three months ended December 31, 2010 and 2009.---------------------------------------------------------------------------- 2010 2009---------------------------------------------------------------------------- Metroland Star Metroland Star Media Media Total Media Media Total----------------------------------------------------------------------------Operating revenue $158,467 $137,631 $296,098 $143,594 $128,966 $272,560EBITDA $32,530 $24,322 $56,852 $28,993 $22,992 $51,985Depreciation & amortization 2,866 7,370 10,236 4,194 8,589 12,783 -------------------------------------------------------------Operating profit $29,664 $16,952 $46,616 $24,799 $14,403 $39,202 -------------------------------------------------------------EBITDA margin 20.5% 17.7% 19.2% 20.2% 17.8% 19.1%Operating profit margin 18.7% 12.3% 15.7% 17.3% 11.2% 14.4%----------------------------------------------------------------------------Total revenue of the Media Segment was $296.1 million in the fourth quarter of 2010, up $23.5 million or 8.6% from $272.6 million in 2009. The revenue growth came from digital, distribution revenues and print advertising along with $8.7 million of product sales in Metroland Media Group's TMGTV operations. Excluding the TMGTV product sales, the Media Segment revenue was up $14.8 million or 5.4% in the fourth quarter of 2010. Digital revenues grew $6.4 million (31.0%) compared to the fourth quarter of 2009 contributing 9.2% of the total Media Segment revenue in the fourth quarter of 2010, up from 7.6% in the same period last year.The Media Segment expenses were up $18.7 million in the fourth quarter of 2010. This included higher product sales costs, distribution costs, commissions and incentives all related to the revenue growth. It also included $1.1 million from higher newsprint pricing and the continued investment in the digital businesses. Offsetting a portion of these higher costs was $3.5 million of net savings from restructuring initiatives and $2.9 million of lower pension costs.Metroland Media GroupMetroland Media Group revenues were $158.5 million in the fourth quarter of 2010 up $14.9 million or 10.4% from $143.6 million in the fourth quarter of 2009. The increase included $8.7 million of revenue from product sales in the TMGTV operations. Excluding the TMGTV product sales, revenues were up $6.2 million or 4.3% in the fourth quarter of 2010.Digital and distribution revenues were the contributors of the revenue growth in the quarter. Digital revenue was up $2.1 million in the quarter with several of Metroland Media Group's digital properties, including some new initiatives, providing the revenue growth. Distribution revenues were up $3.7 million in the fourth quarter, primarily from strong volume growth. In-paper advertising revenues were lower in the fourth quarter. Multi-market retail advertising was up in the quarter but was more than offset by continued softness in classified revenue. Local retail advertising was only slightly down in the quarter, which was an improvement over the year to date performance of that category.Metroland Media Group expenses were up $11.4 million in the fourth quarter of 2010. This included increased costs related to the TMGTV product sales costs (which have a lower margin than the newspaper and digital businesses) and from the higher distribution volumes. Realized labour cost savings of $0.8 million and $0.7 million of lower pension costs were more than offset by wage increases and higher commission and incentive expense and increased staffing for the digital operations. Newsprint pricing was about 7% higher in the quarter, increasing costs by $0.6 million.Metroland Media Group's EBITDA was $32.5 million in the fourth quarter of 2010 up $3.5 million from $29.0 million in the fourth quarter of 2009. Metroland Media Group's operating profit was $29.7 million in the fourth quarter of 2010, up $4.9 million from $24.8 million in the same period last year.Star Media GroupStar Media Group revenues were $137.6 million in the fourth quarter of 2010, up $8.6 million or 6.7% from $129.0 million in the fourth quarter of 2009. The revenue growth was evenly split between the print and digital properties.Toronto Star print advertising revenues were up 4.2% in the fourth quarter of 2010. This was the strongest revenue growth quarter in 2010 with strength in both national and retail advertising. The classified revenues continued to be soft during the quarter.The jointly-owned Metro newspapers had revenue growth in the fourth quarter of 2010 from strong national advertising revenues. Sing Tao's fourth quarter revenue growth was evenly split between newspapers and magazine revenues.Star Media Group digital revenues were up $4.3 million in the fourth quarter of 2010 with strong growth from Olive Media, Workopolis and thestar.com. Digital revenues in the fourth quarter also benefited from the acquisitions of travelalerts.ca and wagjag.com.Star Media Group expenses were up $7.3 million in the fourth quarter of 2010 as net savings of $2.7 million from restructuring efforts and $2.2 million of lower defined benefit pension costs were more than offset by $0.5 million from higher newsprint pricing and the continued investment in staff and marketing expenses in the digital businesses.Star Media Group EBITDA was $24.3 million in the fourth quarter of 2010, up $1.3 million from $23.0 million in 2009. Star Media Group operating profit was $17.0 million in the fourth quarter of 2010, up $2.6 million from $14.4 million in the same period last year.Segment Results - Book PublishingThe following tables set out, in $000's, a summary of operating results for the Book Publishing Segment and a continuity of revenue and operating profit, including the impact of foreign currency movements, for the three months ended December 31, 2010 and 2009.---------------------------------------------------------------------------- 2010 2009----------------------------------------------------------------------------Revenue $120,043 $122,225EBITDA $18,330 $21,701Depreciation & amortization 1,056 1,048 --------------------------Operating profit $17,274 $20,653 --------------------------EBITDA margin 15.3% 17.8%Operating profit margin 14.4% 16.9%-------------------------------------------------------------------------------------------------------------------------------------------------------- Fourth Quarter----------------------------------------------------------------------------Reported revenue, prior year $122,225Impact of currency movements and foreign exchange contracts (4,321)Change in underlying revenue 2,139----------------------------------------------------------------------------Reported revenue, current year $120,043 ----------------------------------------------------------------------------Reported operating profit, prior year $20,653Impact of currency movements and foreign exchange contracts (701)Change in underlying operating profit (2,678)----------------------------------------------------------------------------Reported operating profit, current year $17,274----------------------------------------------------------------------------North American division revenues were down $0.3 million and operating profit was down $3.0 million in the fourth quarter of 2010 excluding the impact of foreign exchange. Digital revenues were up $5.5 million in the fourth quarter of 2010 reflecting the strong growth of the e-book market including the positive impact of the growing number of e-book readers. Sales of print books declined in the quarter. Retail revenues were down $3.0 million in the fourth quarter as fewer books were sold through that channel reflecting continued weakness in the U.S. economy (and its effect on consumer spending) as well as a shift in format from physical to digital books. Direct-to-consumer revenues were down $2.8 million in the fourth quarter from lower volumes. Higher costs in the fourth quarter, including advertising and promotional costs, incentives and inventory adjustments contributed to the lower operating profit.Overseas division revenues were up $2.4 million and operating profit was up $0.3 million in the fourth quarter of 2010 excluding the impact of foreign exchange. Excluding the benefit from the acquisition of the other half of the German business earlier in the year, Overseas revenues were down $1.9 million and operating profit was up $0.2 million in the fourth quarter. The Japanese operation accounted for the revenue decline in the fourth quarter of 2010 as a result of lower digital revenues. The digital revenue shortfall included the expected decline in 2010 from the agreement between Harlequin's Japanese operation and SoftBank Creative Corp. (a division of Softbank Corp., one of the largest providers of cell phone services in Japan) to distribute digital manga (comic) content on cell phones and Internet distribution sites. Revenues were higher in the same period last year in accordance with the delivery schedule of titles to Softbank. The U.K. and Germany both had higher revenues in the quarter that were offset by small declines in some of the other markets. Operating profit was up in Germany (after excluding the portion from the acquisition) as a result of revenue growth. France and the Nordic group also had operating profit growth in the fourth quarter which was primarily the result of higher non-recurring costs in the fourth quarter of 2009. Partially offsetting these improvements was the lower operating profit in Japan as a result of the lower digital revenues.OPERATING RESULTS - YEAR ENDED DECEMBER 31, 2010Overall PerformanceTotal revenue was $1,479.6 million in 2010 up $28.3 million or 1.9% from $1,451.3 million in 2009. Media Segment revenue was $1,011.4 million in 2010, up $53.4 million or 5.6% from $958.0 million in 2009. The Media Segment revenue growth came from digital, print advertising and distribution revenues along with $12.7 million of product sales in Metroland Media Group's TMGTV operations. Excluding the TMGTV product sales, the Media Segment revenue was up $40.7 million or 4.2% in 2010. Book Publishing revenue was $468.2 million in 2010, down $25.1 million from $493.3 million in 2009 including a $33.2 million decline from the stronger year over year Canadian dollar. Excluding the impact of foreign exchange and the $12.9 million benefit from the acquisition at the beginning of the second quarter of 2010 of the half of the German business that Harlequin had not previously owned, Book Publishing revenue was down $4.8 million or 1.0% in the year. North America digital revenues were up in the year, but were more than offset by lower North America retail and direct-to-consumer and Overseas revenues.Operating profit before restructuring and other charges was $187.3 million in 2010, up $48.3 million from $139.0 million in 2009. Including the $33.5 million of restructuring and other charges, operating profit was $153.9 million in 2010, up $58.6 million from $95.3 million in 2009 (which included $43.7 million of restructuring and other charges). Media Segment operating profit was $118.8 million in 2010, up $48.6 million from $70.2 million in 2009. Book Publishing operating profit was $83.4 million in 2010, down $0.4 million from $83.8 million in 2009 as a $3.9 million decline due to foreign exchange more than offset growth in the underlying operations. Corporate costs were $14.9 million in 2010, down $0.1 million from $15.0 million in 2009.EBITDA, excluding restructuring and other charges, was $233.6 million in 2010, up $41.8 million from $191.8 million in 2009.----------------------------------------------------------------------------(in $000's) 2010 2009----------------------------------------------------------------------------Media $160,754 $118,527Book Publishing 87,652 88,187Corporate (14,828) (14,913)----------------------------------------------------------------------------EBITDA, excluding restructuring and other charges $233,578 $191,801----------------------------------------------------------------------------Restructuring and other chargesRestructuring and other charges of $33.5 million were recorded in 2010 including $29.1 million of restructuring provisions, $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, a $1.1 million adjustment to a provision for litigation in the Media Segment and a $0.5 million impairment loss on intangible assets in the Media Segment.The restructuring provisions in 2010 included $14.6 million related to a voluntary separation program at the Toronto Star's Vaughan Press Centre. This program was offered as part of the collective agreement covering approximately 275 employees at the Press Centre that was reached during the third quarter of 2010. The collective agreement provided for a substantial restructuring of job categories with wage reductions over time for a number of junior classifications. Existing employees were given the option of accepting a severance package or transitioning to the new wage rates. The financial benefits from the program are from the lower pay rates as the total staff complement is expected to be stable. The staff departures will take place over the next four years which will result in the benefits also being realized over a number of years. The charge of $14.6 million reflects the discounted value of the future severance obligations.In 2009, the restructuring and other charges of $43.7 million included $12.8 million related to the transition in leadership at Torstar Corporate, $28.8 million for restructuring provisions in the Media Segment, $1.4 million related to the closure of a distribution centre in Harlequin's U.K. operation and a $0.7 million impairment loss on intangible assets in the Media Segment.Both Star Media Group and Metroland Media Group have undertaken several restructuring initiatives in 2009 and 2010 in order to reduce ongoing operating costs. Total annualized net savings from the 2010 restructuring initiatives are expected to be approximately $20.8 million and a reduction of approximately 180 positions. Total annualized net savings from the 2009 restructuring activities were approximately $23.7 million and a reduction of approximately 450 positions.The following chart provides the realized and expected net savings by year:----------------------------------------------------------------------------(in $000's) 2009 Initiatives 2010 Initiatives Combined----------------------------------------------------------------------------Realized net savings:2009 $12,700 $12,7002010 10,200 $4,700 14,900Expected net savings:2011 800 10,700 11,5002012 2,100 2,1002013 1,400 1,4002014 1,500 1,5002015 400 400----------------------------------------------------------------------------Annualized net savings $23,700 $20,800 $44,500----------------------------------------------------------------------------InterestInterest expense was $23.8 million in 2010, up $2.8 million from $21.0 million in 2009. The higher expense reflects higher effective interest rates partially offset by a lower level of average net debt outstanding in 2010. The average net debt (long-term debt and bank overdraft net of cash and cash equivalents) was $461.7 million in 2010, down $126.1 million from $587.8 million in 2009. Torstar's effective interest rate was 5.2% in 2010 and 3.6% in 2009. The higher rate reflected the impact of the higher interest rate spread that was effective starting at the beginning of 2010 for borrowings under Torstar's long-term credit facility.Net debt was $368.8 million at December 31, 2010, down $147.0 million from $515.8 million at December 31, 2009. The reduction included the benefit of the $40 million received on December 31, 2010 from CTVgm.Foreign exchangeTorstar reported a non-cash foreign exchange loss of $1.9 million in 2010. This loss 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. In 2009, a non-cash foreign exchange loss of $0.5 million was reported.Income (loss) of associated businessesIncome (loss) of associated businesses was a loss of $29.5 million in 2010 and a loss of $18.0 million in 2009.Torstar's share of CTVgm's net loss was $29.1 million in 2010 compared with a loss of $17.8 million in 2009. The results are not directly comparable as the 2010 loss covers only the period through September 10, 2010 while the 2009 loss includes a full year's results. As a result, the 2010 results do not include CTVgm results for Torstar's fourth quarter, which is traditionally the strongest earnings quarter for CTVgm.On September 10, 2010, Torstar announced that it had entered into agreements to sell its 20% interest in CTVgm for aggregate cash proceeds of approximately $345 million. On December 31, 2010, Torstar received $40 million in connection with CTVgm's sale of The Globe and Mail. The sale of Torstar's 20% interest in CTVgm remains subject to customary approvals and closing conditions, including approval by the CRTC, and is expected to close by mid 2011. Effective with the signing of the agreements, Torstar ceased to meet the accounting criteria for significant influence over the operations of CTVgm and as a result ceased to equity account for CTVgm's results as of September 10, 2010.Torstar's share of CTVgm's 2010 loss through September 10, 2010 included an $18.2 million loss related to the impairment of intangible assets. Excluding the impairment loss, Torstar would have reported a net loss of $10.9 million in 2010. The full year 2009 loss included an intangible asset impairment loss of $16.5 million, a $26.3 million valuation allowance (negative earnings impact) that was provided against certain of CTVgm's future income tax assets, a recovery related to CRTC Part II licence fees, a gain on the change in the fair value of financial liabilities and a $4.2 million positive earnings impact as future income tax liabilities related to intangible assets were reduced to reflect the reduction in future provincial income tax rates. Excluding the impact of the above items, Torstar would have reported a net loss of $4.3 million in 2009 for its share of CTVgm's loss.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 $0.1 million in 2010, including a $3.1 million impairment loss related to a customer-related intangible asset and goodwill associated with a printing operation. Excluding the impairment charge, Torstar's share of Black Press's net income would have been $3.2 million in 2010 compared with $2.5 million in 2009. Black Press's EBITDA has improved during 2010, partially offset by higher interest and restructuring costs.Gain on sale of assetsTorstar recognized a gain on sale of assets of $4.1 million in 2010. This included $1.3 million on the sale of a small piece of excess land in Vaughan and $2.8 million realized on the formation of a joint venture with Rogers Media to manage and further develop the Total Online Publishing Solutions ("TOPS") system. The TOPS system is a highly scalable content management system for internet media publishers that had been developed by Torstar and used by its newspapers. In 2009, Torstar recognized a gain of $0.2 million related to the sale of a small property in Cambridge, Ontario.Investment write-downDuring 2010, Torstar recognized an investment write-down of $0.8 million related to two small portfolio investments. In 2009 Torstar recognized an investment write-down of $2.4 million, reducing the carrying value of its portfolio investment in Vocel Inc. to nil.Income and other taxesTorstar's effective tax rate was 31.3% in 2010 excluding the negative impact of not tax affecting the $29.5 million loss of associated businesses.In 2009, Torstar's effective tax rate was 32.3% excluding the impact of not tax affecting the $18.0 million loss of associated businesses and excluding the $5.1 million benefit from changes in statutory tax rates. During 2009, the Ontario provincial government enacted corporate tax decreases for future years. Under Canadian generally accepted accounting principles the impact of these changes on Torstar's future income tax assets and liabilities is to be recorded during the period the tax changes are substantially enacted.The lower effective tax rate in 2010 reflected the lower Canadian statutory income tax rates and a $2.6 million benefit from the reduction of the valuation allowance that is recorded against Torstar's future income tax assets. These benefits were partially offset by foreign income that is now being taxed at rates that are higher than the Canadian statutory rate.Net incomeTorstar reported net income of $60.9 million or $0.77 per share in 2010, up $25.3 million or $0.32 per share from $35.6 million or $0.45 per share in 2009. Excluding the loss from CTVgm in both years, Torstar would have reported net income of $90.0 million or $1.14 per share in 2010, up $36.5 million or $0.46 per share from $53.5 million or $0.68 per share in 2009.The average number of Class A and Class B non-voting shares outstanding was 79.1 million in 2010 up slightly from 79.0 million in 2009.Segment Operating Results - MediaThe following tables set out, in $000's, the results for the reporting units within the Media Segment for the years ended December 31, 2010 and 2009.---------------------------------------------------------------------------- 2010 2009---------------------------------------------------------------------------- Metroland Star Metroland Star Media Media Total Media Media Total----------------------------------------------------------------------------Operating revenue $541,735 $469,698 $1,011,433 $513,298 $444,658 $957,956EBITDA $99,272 $61,482 $160,754 $86,917 $31,610 $118,527Depreciation & amortization 12,614 29,344 41,958 16,501 31,872 48,373 ---------------------------------------------------------------Operating profit $86,658 $32,138 $118,796 $70,416 ($262) $70,154 ---------------------------------------------------------------EBITDA margin 18.3% 13.1% 15.9% 16.9% 7.1% 12.4%Operating profit margin 16.0% 6.8% 11.7% 13.7% n/a 7.3%----------------------------------------------------------------------------Total revenue of the Media Segment was $1,011.4 million in 2010, up $53.4 million or 5.6% from $958.0 million in 2009. The revenue growth came from digital, print advertising and distribution revenues along with $12.7 million of product sales in Metroland Media Group's TMGTV operations. Excluding the TMGTV product sales, the Media Segment revenue was up $40.7 million or 4.2% in 2010. Digital revenues grew $23.1 million (34.7%) in 2010 contributing 8.9% of the total Media Segment revenue in 2010, up from 6.9% in 2009.The Media Segment expenses were up $11.1 million in 2010. This included higher product sales costs, distribution costs, commissions and incentives all related to the revenue growth as well as the continued investment in the digital businesses. Offsetting a portion of these higher costs was $14.9 million of net savings from restructuring initiatives, $11.3 million of lower pension costs and $4.6 million from lower newsprint pricing.Metroland Media GroupMetroland Media Group revenues were $541.7 million in 2010 up $28.4 million from $513.3 million in 2009. The increase included $12.7 million of revenue from product sales in the TMGTV operations. Excluding the TMGTV product sales, revenues were up $15.7 million or 3.1% in 2010.Digital and distribution revenues were the contributors of the revenue growth in the year. Digital revenue was up $10.9 million in the year with revenue growth across most of Metroland Media Group's sites. Distribution revenues were up $8.1 million with volumes growing almost 7% in the year. Print advertising revenue from directories, magazines and supplementary newspaper sections was down in the year while in-paper advertising revenues were relatively flat. National advertising had strong growth in the year which offset most of the continued softness in classified and local retail.Metroland Media Group expenses were up $16.0 million in 2010. This included increased costs related to the TMGTV product sales (which have a lower margin than the newspaper and digital businesses) and from the higher distribution volumes. Realized labour cost savings of $5.4 million from restructuring efforts and $2.6 million of lower defined benefit pension costs were more than offset by wage increases and higher commission and incentive expense and increased staffing for the digital operations. Newsprint pricing was about 8% lower in the year, contributing $2.6 million of cost savings.Metroland Media Group's EBITDA was $99.3 million in 2010 up $12.4 million from $86.9 million in 2009. Metroland Media Group's operating profit was $86.7 million in 2010 up $16.3 million from $70.4 million in 2009.Star Media GroupStar Media Group revenues were $469.7 million in 2010, up $25.0 million or 5.6% from $444.7 million in 2009. The revenue growth was evenly split between the print and digital properties.Toronto Star print advertising revenues were up 2.6% in 2010 with national advertising revenue up throughout the year. The retail and classified categories trended positive as the year progressed but were still down on a full-year basis. Retail advertising was up in the fourth quarter. The classified category continued to be affected by structural pressures.The jointly-owned Metro newspapers had significant revenue growth in the year, benefiting from improved national advertising as well as continued growth in the newer markets. Sing Tao revenues were also up in the year with the growth split evenly between newspapers and magazine revenues.Star Media Group digital revenues were up $12.2 million in 2010 with strong growth for Olive Media, Workopolis and thestar.com. Digital revenues also benefited from the TOPS partnership with Rogers Media and the acquisitions of travelalerts.ca and wagjag.com.Star Media Group expenses were down $4.9 million in 2010 as net savings of $9.5 million from restructuring efforts, $8.7 million of lower pension costs and $2.0 million of lower newsprint pricing more than offset the continued investment in staff and marketing expenses in the digital businesses.Star Media Group EBITDA was $61.5 million in 2010, up $29.9 million from $31.6 million in 2009. Star Media Group operating profit was $32.1 million in 2010 compared with an operating loss of $0.3 million in 2009.Segment Operating Results - Book PublishingThe following tables set out, in $000's, a summary of operating results for the Book Publishing Segment and a continuity of revenue and operating profit, including the impact of foreign currency movements, for the years ended December 31, 2010 and 2009.---------------------------------------------------------------------------- 2010 2009----------------------------------------------------------------------------Revenue $468,155 $493,303EBITDA $87,652 $88,187Depreciation & amortization 4,230 4,390 --------------------------Operating profit $83,422 $83,797 --------------------------EBITDA margin 18.7% 17.9%Operating profit margin 17.8% 17.0%----------------------------------------------------------------------------Reported revenue, prior year $493,303Impact of currency movements and foreign exchange contracts (33,246)Change in underlying revenue 8,098----------------------------------------------------------------------------Reported revenue, current year $468,155----------------------------------------------------------------------------Reported operating profit, prior year $83,797Impact of currency movements and foreign exchange contracts (3,851)Change in underlying operating profit 3,476----------------------------------------------------------------------------Reported operating profit, current year $83,422----------------------------------------------------------------------------North American division revenues were up $1.3 million and operating profit was up $1.0 million in 2010 excluding the impact of foreign exchange. Digital revenues were up $16.1 million in 2010 reflecting the strong growth of the e-book market. Sales of print books declined in the year. Retail revenues were down $10.7 million as fewer books were sold through that channel reflecting continued weakness in the U.S. economy (and its effect on consumer spending) as well as a shift in format from physical to digital books. Direct-to-consumer revenues were down $4.1 million as lower volumes were only partially offset by higher prices. The lower volumes in the direct-to-consumer channel were consistent with the long-term decline in the direct mail industry.Overseas division revenues were up $6.8 million and operating profit was up $2.5 million in 2010 excluding the impact of foreign exchange. Excluding the benefit from the acquisition of the other half of the German business at the beginning of the second quarter, Overseas revenues were down $6.1 million and operating profit was up $1.5 million. The Japanese operation accounted for most of the revenue decline in 2010, the result of a combination of lower digital revenues as well as continued challenges in its print book business. The digital revenue shortfall included the expected decline in 2010 from the agreement between Harlequin's Japanese operation and SoftBank Creative Corp. (a division of Softbank Corp., one of the largest providers of cell phone services in Japan) to distribute digital manga (comic) content on cell phones and Internet distribution sites. Revenues were lower in 2010 in accordance with the agreed upon delivery schedule of titles to Softbank. Modest revenue declines were also experienced in several other Overseas markets in 2010 due to lower volumes. The German operation provided most of the operating profit growth (after excluding the portion from the acquisition) as a result of strong revenues and cost savings. Several other markets including Australia, the U.K. and the Netherlands also reported operating profit growth in 2010.OUTLOOKGiven the uncertainty in the pace of recovery in the Ontario economy, it is difficult to predict the level of revenue growth anticipated in the Media Segment in 2011. During 2010, National advertising improved from 2009 levels, retail advertising continued to be soft and classified advertising continued to feel the impact of structural changes. If overall retail advertising strengthens during the year, Torstar would expect to realize that benefit in its daily and community newspapers. Digital revenue is expected to benefit from the 2010 acquisitions of travelalerts.ca and wagjag.com. Early indications in 2011 are that revenue growth has slowed compared to the growth experienced in the fourth quarter of 2010. Torstar anticipates increasing its investment in the Media Segment's digital operations in 2011 as well as experiencing increased pension costs of $1.6 million. These higher costs are expected to be mitigated by $11.5 million of savings from restructuring initiatives. Newsprint pricing is expected to be stable compared to 2010 due to agreements in place with newsprint suppliers.The book publishing industry, and in particular the U.S. market, is undergoing significant changes from the rapid growth in digital books. As part of this trend, Harlequin anticipates continued growth in its e-book business with some resulting decline in print sales. In February 2011, Borders Group, Inc. (a U.S. book retailer) filed for Chapter 11 bankruptcy protection in the U.S. While Harlequin does not face a direct credit risk in relationship to Borders, the potential disruption to the U.S. retail book distribution network could result in lower sales. These changing trends make it more difficult to predict 2011 performance but on balance, Harlequin expects full-year 2011 operating results to be stable excluding the impact of foreign exchange. If the Canadian dollar remains at its current levels relative to the U.S. dollar and overseas currencies, Harlequin anticipates a year over year negative foreign exchange impact of approximately $7.0 million, including the impact of the U.S. dollar hedges currently in place.In addition to the $40 million received in December 2010, subject to regulatory approval and customary closing conditions, Torstar expects to receive approximately $290 million of proceeds (this is net of an estimate of certain costs associated with closing the transaction) on the sale of its interest in CTVgm by mid 2011. This is expected to result in an estimated accounting gain of $189.6 million or $2.40 per share (the carrying value of CTVgm will be approximately $12.4 million lower under IFRS). Depending on the timing of the receipt and the use of the proceeds, there may also be costs associated with the early termination of some interest rate swap agreements.Torstar's net debt was $368.8 million at December 31, 2010. It is anticipated that net debt levels will increase at least during the first quarter of 2011 due to movements in working capital, including the payment of final 2010 income tax installments and payments related to restructuring provisions. During the full year 2011, $18.1 million ($12.5 million net of tax) of payments are expected to be made related to restructuring provisions. In addition, in 2011 the funding for Torstar's registered defined benefit pension plans will increase to approximately $50.0 million from $16.8 million in 2010.INTERNATIONAL FINANCIAL REPORTING STANDARDSEffective with the first quarter of 2011, Torstar will be reporting its results under IFRS rather than Canadian GAAP. In the 2011 quarterly and full year reporting, the comparative 2010 results and balances will be restated on an IFRS basis so that the change in accounting standards does not distort any changes in year over year results. For more details about the impact of Torstar's transition to IFRS please see Torstar's 2010 Management's Discussion and Analysis.OTHEROn March 1, 2011, Torstar declared a quarterly dividend of 9.25 cents per share on its Class A shares and Class B non-voting shares, payable on March 31, 2011, to shareholders of record at the close of business on March 11, 2011. 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 audited consolidated financial statements for the year ended December 31, 2010 and the 2010 Management's Discussion and Analysis ("MD&A"). 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 March 2, 2011 at 8:15 a.m. to discuss its fourth quarter results. The dial-in number is 416-340-2216 or 1-866-226-1792. 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 4332887. 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 and book publishing 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 release. 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.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 not to 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.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 and media platforms; the Company's ability to attract and retain advertisers; the Company's ability to retain and grow its digital audience and further develop its digital businesses; cyclical and seasonal variations in the Company's revenues; labour disruptions; newsprint costs; the Company's ability to reduce costs; foreign exchange fluctuations; credit risk; closing conditions, termination rights, and other risks and uncertainties related to the timing and completion of the proposed CTVgm transaction; restrictions imposed by existing credit facilities, debt financing and availability of capital; pension fund obligations; results of impairment tests; reliance on its printing operations; reliance on technology and information systems; risks related to business development; interest rates; availability of insurance; litigation; environmental regulations; dependence on key personnel; loss of reputation; privacy and confidential information; product liability; intellectual property rights; control of Torstar by the Voting Trust; 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.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; rates of return and discount rates relating to pension expense and pension plan obligations; royalty rates, expected future revenues, expected future cash flows and discount rates relating to valuation of goodwill and intangible assets; and successful development of new products. There is a risk that some or all of these assumptions may prove to be incorrect.When relying on our forward-looking statements to make decisions with respect to the Company and its securities, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. 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.For more information, please see the discussion of risks affecting Torstar and its businesses in Torstar's 2010 Management's Discussion & Analysis which is available at www.sedar.com and on Torstar's corporate website www.torstar.com.Torstar's new releases are available on the Internet at www.torstar.com.---------------------------------------------------------------------------- Torstar Corporation Consolidated Balance Sheets (Thousands of Dollars) (Audited) December 31 December 31 2010 2009----------------------------------------------------------------------------Assets Current: Cash and cash equivalents $42,899 $39,238 Receivables 265,391 253,306 Inventories 34,294 33,953 Prepaid expenses and other current assets 49,982 51,501 Prepaid and recoverable income taxes 3,013 2,997 Future income tax assets 20,090 19,540---------------------------------------------------------------------------- Total current assets 415,669 400,535---------------------------------------------------------------------------- Property, plant and equipment (net) 231,609 251,817---------------------------------------------------------------------------- Investment in CTVglobemedia Inc. 112,848---------------------------------------------------------------------------- Investment in associated businesses 1,816 178,828---------------------------------------------------------------------------- Intangible assets 58,900 51,619---------------------------------------------------------------------------- Goodwill (net) 590,959 581,842---------------------------------------------------------------------------- Other assets 134,709 140,108---------------------------------------------------------------------------- Future income tax assets 26,689 33,693---------------------------------------------------------------------------- Total assets $1,573,199 $1,638,442--------------------------------------------------------------------------------------------------------------------------------------------------------Liabilities and Shareholders' Equity Current: Bank overdraft $6,958 $2,052 Accounts payable and accrued liabilities 234,854 218,971 Income taxes payable 33,233 19,158---------------------------------------------------------------------------- Total current liabilities 275,045 240,181---------------------------------------------------------------------------- Long-term debt 404,727 552,976---------------------------------------------------------------------------- Other liabilities 117,064 103,408---------------------------------------------------------------------------- Future income tax liabilities 55,404 62,897---------------------------------------------------------------------------- Shareholders' equity: Share capital 392,816 391,626 Contributed surplus 14,462 11,901 Retained earnings 323,953 292,306 Accumulated other comprehensive loss (10,272) (16,853)---------------------------------------------------------------------------- Total shareholders' equity 720,959 678,980---------------------------------------------------------------------------- Total liabilities and shareholders' equity $1,573,199 $1,638,442------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Torstar Corporation Consolidated Statements of Income (Thousands of Dollars) (Unaudited) (Audited) Three months ended Twelve months ended December 31 December 31 2010 2009 2010 2009----------------------------------------------------------------------------Operating revenue Media $296,098 $272,560 $1,011,433 $957,956 Book Publishing 120,043 122,225 468,155 493,303---------------------------------------------------------------------------- $416,141 $394,785 $1,479,588 $1,451,259--------------------------------------------------------------------------------------------------------------------------------------------------------Operating profit Media $46,616 $39,202 $118,796 $70,154 Book Publishing 17,274 20,653 83,422 83,797 Corporate (3,719) (4,089) (14,886) (14,969) Restructuring and other charges (17,920) (12,968) (33,455) (43,729)---------------------------------------------------------------------------- 42,251 42,798 153,877 95,253 Interest (6,161) (5,100) (23,766) (21,036) Foreign exchange 161 (493) (1,942) (458) Income (loss) of associated businesses (445) 30,350 (29,478) (17,953) Gain on sale of assets 1,259 4,088 239 Investment write-down (773) (2,400) (773) (2,400)---------------------------------------------------------------------------- Income before taxes 36,292 65,155 102,006 53,645 Income and other taxes (9,600) (7,800) (41,100) (18,000)----------------------------------------------------------------------------Net income $26,692 $57,355 $60,906 $35,645--------------------------------------------------------------------------------------------------------------------------------------------------------Earnings per Class A and Class B share: Net income - Basic $0.34 $0.73 $0.77 $0.45 Net income - Diluted $0.33 $0.73 $0.76 $0.45------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Torstar Corporation Consolidated Statements Of Cash Flows (Thousands of Dollars) (Unaudited) (Audited) Three months ended Twelve months ended December 31 December 31 2010 2009 2010 2009----------------------------------------------------------------------------Cash was provided by (used in) Operating activities $58,682 $51,028 $157,374 $153,364 Investing activities 27,287 (9,455) 12,164 (29,151) Financing activities (79,808) (36,793) (170,029) (126,078)----------------------------------------------------------------------------Increase (decrease) in cash 6,161 4,780 (491) (1,865)Effect of exchange rate changes (526) (173) (754) (2,311)Cash, beginning of period 30,306 32,579 37,186 41,362----------------------------------------------------------------------------Cash, end of period $35,941 $37,186 $35,941 $37,186--------------------------------------------------------------------------------------------------------------------------------------------------------Operating activities: Net income $26,692 $57,355 $60,906 $35,645 Depreciation and amortization 11,302 13,839 46,246 52,819 Future income taxes (5,245) (2,412) (5,332) (3,206) Loss (income) of associated businesses 445 (30,350) 29,478 17,953 Investment write-down 773 2,400 773 2,400 Other 14,256 2,800 25,315 14,248---------------------------------------------------------------------------- 48,223 43,632 157,386 119,859Decrease (increase) in non-cash working capital 10,459 7,396 (12) 33,505----------------------------------------------------------------------------Cash provided by operating activities $58,682 $51,028 $157,374 $153,364--------------------------------------------------------------------------------------------------------------------------------------------------------Investing activities: Additions to property, plant and equipment and intangible assets ($11,717) ($6,765) ($26,940) ($20,706) Return of capital by CTVglobemedia Inc. 40,000 40,000 Investment in associated businesses (750) (750) Acquisitions and investments (1,929) (2,288) (11,562) (9,464) Proceeds from mortgage receivable 6,215 Proceeds from sale of assets 1,344 4,344 239 Other 339 (402) 857 780----------------------------------------------------------------------------Cash provided by (used in) investing activities $27,287 ($9,455) $12,164 ($29,151)--------------------------------------------------------------------------------------------------------------------------------------------------------Financing activities: Issuance of bankers' acceptances $39,620 $14,370 Repayment of bankers' acceptances ($73,028) ($29,882) (106,918) (86,230) Repayment of medium term notes (75,000) (25,000) Dividends paid (7,238) (7,272) (28,982) (29,076) Other 458 361 1,251 (142)----------------------------------------------------------------------------Cash used in financing activities ($79,808) ($36,793) ($170,029) ($126,078)--------------------------------------------------------------------------------------------------------------------------------------------------------Cash represented by: Cash $32,948 $29,004 $32,948 $29,004 Cash equivalents 9,951 10,234 9,951 10,234---------------------------------------------------------------------------- Cash and cash equivalents 42,899 39,238 42,899 39,238 Bank overdraft (6,958) (2,052) (6,958) (2,052)---------------------------------------------------------------------------- $35,941 $37,186 $35,941 $37,186--------------------------------------------------------------------------------------------------------------------------------------------------------FOR FURTHER INFORMATION PLEASE CONTACT: L. DeMarchiTorstar CorporationExecutive Vice-President and Chief Financial Officer(416) 869-4776