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Press release from Marketwire

Torstar Corporation Reports Fourth Quarter Results

Wednesday, February 29, 2012

Torstar Corporation Reports Fourth Quarter Results06:30 EST Wednesday, February 29, 2012TORONTO, ONTARIO--(Marketwire - Feb. 29, 2012) - Torstar Corporation (TSX:TS.B) today reported financial results for the fourth quarter ended December 31, 2011.Highlights for the quarter:Revenue was $425.3 million in the fourth quarter of 2011, up $7.8 million from $417.5 million in the fourth quarter of 2010. Excluding accounting changes, acquisitions and the impact of foreign exchange, revenues were down $13.3 million in the fourth quarter. EBITDA (see "non-IFRS measures") was $81.2 million in the fourth quarter of 2011, up $5.8 million from $75.4 million in the fourth quarter of 2010. Media Segment EBITDA was up $2.5 million including the benefit of acquisitions. Book Publishing Segment EBITDA was up $3.3 million including a decline of $0.7 million from the impact of foreign exchange. Net income attributable to equity shareholders was $64.3 million ($0.81 per share) in the fourth quarter up $28.0 million ($0.35 per share) from $36.3 million ($0.46 per share) last year. This included a remeasurement gain of $19.0 million ($0.24 per share). Adjusted earnings per share (excluding restructuring and other charges and non-cash foreign exchange in both years and the remeasurement gain on step acquisitions in 2011) was $0.70 in the fourth quarter of 2011, up $0.10 from $0.60 in the fourth quarter of 2010. Net debt was $153.3 million at December 31, 2011, up $64.4 million from $88.9 million at September 30, 2011 reflecting the acquisitions made in the fourth quarter. Highlights for the year:Revenue was $1,548.8 million in 2011, up $65.0 million from $1,483.8 million in 2010. Excluding accounting changes, acquisitions and the impact of foreign exchange, revenues were up $29.7 million in 2011. EBITDA was $242.2 million in 2011, down $8.1 million from $250.3 million in 2010. Media Segment EBITDA was down $4.5 million as higher costs more than offset revenue growth. Book Publishing Segment EBITDA was down $2.0 million including a decline of $6.4 million from the impact of foreign exchange and a $0.7 million benefit from acquisitions. Corporate expenses were up $1.6 million in 2011 as lower professional fees were more than offset by higher compensation costs, including the mark-to-market adjustment of a share-based compensation hedging instrument. Net income attributable to equity shareholders was $217.7 million or $2.74 per share in 2011 up $7.8 million or $0.09 per share from $209.9 million or $2.65 per share in 2010. Excluding the impact of CTV Inc. in both years, Torstar would have reported net income attributable to equity shareholders of $143.1 million or $1.80 per share in 2011 up $20.7 million or $0.26 per share from $122.4 million or $1.54 per share in 2010. Net debt was $153.3 million at December 31, 2011, down $215.3 million from $368.6 million at December 31, 2010. "We are very pleased with our fourth quarter operating results" said David Holland, President and CEO of Torstar Corporation. "EBITDA of $81.2 million was up $5.8 million versus prior year as both Harlequin and the media operations contributed to the growth experienced. For the year as a whole, EBITDA of $242.2 million came in $8.1 million short of prior year. We felt it was a solid performance considering the $6.4 million in negative earnings impact from the strong Canadian dollar, the economic environment and the increased level of investment in the Media business, particularly in digital. Digital revenues in the Media Segment were up 22.8% year over year." "In the fourth quarter, Harlequin's earnings were very strong, growing EBITDA by $3.3 million including $0.7 million of negative earnings impact from foreign exchange. Harlequin continues to demonstrate its ability to navigate successfully within the increasingly digital book publishing environment. The media operation grew EBITDA by $2.5 million to $63.6 million. Results in the quarter were aided by the recent acquisitions and ongoing efforts to control costs which helped to overcome the implications of a challenging advertising environment. In the quarter, we also made good progress in strengthening the platform from which we operate with the acquisition of the increased interest in the Metro commuter papers and Performance Printing, a printer and publisher of community papers in Eastern Ontario." "We close 2011 in a strong financial position with net borrowings of $153.3 million. Looking forward, visibility remains limited on advertising revenue. After a slow start to the year, we experienced some improvement in February. At Harlequin, operating earnings excluding the exchange impact were exceptionally strong in 2011, growing by 6.0%, the fifth consecutive year of underlying earnings growth. We expect it will be challenging to achieve a similar level of earnings in 2012 given the economic situation in Europe and an increase in the royalty rates on digital sales." The following chart provides a continuity of earnings per share from 2010 to 2011:Fourth QuarterFull YearNet income attributable to equity shareholders per share 2010$0.46$2.65•CTV - loss from associated businesses (2010)0.35• CTV - remeasurement gain (2010)(1.46)Adjusted net income attributable to equity shareholders 20100.461.54Changes•Operations0.120.06•Restructuring and other charges0.030.12•Settlement of interest rate swap contracts(0.03)•Non-cash foreign exchange(0.03)(0.06)•Adjustment to contingent consideration0.01•Other income (remeasurement gains on step acquisitions)0.240.20•Gain on sale of assets (2010)(0.01)(0.04)Pre CTV gain net income attributable to equity shareholders0.811.80•CTV - gain on sale (2011)0.94Net income attributable to equity shareholders per share 2011$0.81$2.74Revised resultsDuring the process of completing the annual 2011 consolidated financial statements, Torstar determined that two adjustments were required to be made to the previously disclosed financial information for 2010 results prepared in accordance with IFRS 1 and IAS 34. The most significant one related to Torstar's investment in CTV which also caused an adjustment to the previously disclosed 2011 quarterly financial results. There was no operating profit, income tax or cash impact related to either of these adjustments and the total gain recorded on the sale of CTV remains at $190.1 million. There was no impact on the 2010 audited financial statements issued under Canadian generally accepted accounting principles. More details on the changes can be found in Torstar's 2011 Management's Discussion and Analysis filed today on SEDAR and available on Torstar's corporate website www.torstar.com. OPERATING RESULTS - THREE MONTHS ENDED DECEMBER 31, 2011Overall PerformanceThe following table sets out, in $000's, the segmented results for the three months ended December 31, 2011 and 2010.20112010MediaBook PublishingCorporateTotalMediaBook PublishingCorporateTotalOperating revenue$307,281$118,055$425,336$297,560$119,970$417,530Salaries and benefits(104,414)(25,382)($2,889)(132,685)(105,047)(26,125)($3,201)(134,373)Other operating costs(139,307)(71,443)(713)(211,463)(131,445)(75,954)(335)(207,734)EBITDA63,56021,230(3,602)81,18861,06817,891(3,536)75,423Amortization & depreciation(8,305)(884)(10)(9,199)(6,692)(962)(10)(7,664)Operating earnings55,25520,346(3,612)71,98954,37616,929(3,546)67,759Restructuring and other charges(13,550)(113)(13,663)(17,544)24(17,520)Operating profit$41,705$20,233($3,612)$58,326$36,832$16,929($3,522)$50,239 Revenue Total revenue was $425.3 million in the fourth quarter of 2011, up $7.8 million from $417.5 million in the fourth quarter of 2010. The increase included an increase of $5.7 million from a change in reporting for Torstar's share of Metro's revenues, $15.1 million from acquisitions and a $0.3 million increase from the impact of foreign exchange. Excluding these items, total revenue was down $13.3 million in the fourth quarter of 2011. Media Segment revenues, excluding the above items, were down $11.1 million in the fourth quarter. Print advertising declines more than offset $5.7 million of higher product sales in Metroland Media Group's TMGTV operations and $0.3 million of growth in digital revenues. Book Publishing Segment revenues, excluding the impact of foreign exchange, were down $2.3 million in the fourth quarter of 2011 with digital revenue growth not offsetting declines in the print businesses, particularly in the Overseas markets. Salaries and benefits Total salaries and benefits expense was down $1.7 million or 1.3% in the fourth quarter as savings in the newspaper businesses in the Media Segment from restructuring initiatives more than offset the impact of acquisitions, increased staffing in the Media Segment digital operations and regular wage increases. Other operating costs Total other operating costs were up $3.7 million or 1.8% in the fourth quarter of 2011. The increase included the impact of acquisitions, higher product costs for the TMGTV product sales and market expansions. In the Media Segment, newsprint pricing was flat year over year while consumption was down. The Book Publishing Segment had lower promotional spending and overhead costs in the fourth quarter. EBITDA EBITDA was $81.2 million in the fourth quarter of 2011, up $5.8 million from $75.4 million in the fourth quarter of 2010. Media Segment EBITDA was up $2.5 million including the benefit of acquisitions. Book Publishing Segment EBITDA was up $3.3 million including a decline of $0.7 million from the impact of foreign exchange. Restructuring and other charges Restructuring charges of $13.7 million and $17.5 million were recorded in the fourth quarter of 2011 and 2010 respectively. The Media Segment fourth quarter 2011 restructuring provisions of $13.6 million are expected to result in annual net savings of $6.8 million and a reduction of approximately 110 positions. Interest and financing costs Interest and financing costs were $2.1 million in the fourth quarter of 2011, down $4.2 million from $6.3 million in the fourth quarter of 2010. Interest expense was $1.4 million in the fourth quarter of 2011, down $4.6 million from $6.0 million in the fourth quarter of 2010. The lower expense reflects the significantly lower level of average net debt outstanding in 2011 and lower effective interest rates. The average net debt (long-term debt and bank overdraft net of cash and cash equivalents) was $121.1 million in the fourth quarter of 2011, down $288.1 million from $409.2 million in the same period last year. Torstar's effective interest rate on long-term debt was 3.0% in the fourth quarter of 2011 and 5.4% in the fourth quarter of 2010. Other income Under IFRS, when a business combination is achieved in stages, the acquirer is required to remeasure its previously held interest in the acquiree to the acquisition date fair value and recognize the resulting gain or loss, if any, in profit or loss. This remeasurement resulted in other income of $19.0 million in the fourth quarter of 2011 related to Torstar's increased ownership of Metro. Income and other taxes In the fourth quarter of 2011, the remeasurement gain on the Metro transaction was not tax-affected. In addition, Torstar recorded $8.7 million in the fourth quarter of 2011 and $2.8 million in the fourth quarter of 2010 as a tax benefit from the recognition of tax losses that had previously not been recognized. Excluding the impact of these items in both years, Torstar's effective tax rate was 32.7% in the fourth quarter of 2011 and 30.0% in the fourth quarter of 2010. The Canadian statutory rate was lower in 2011, although Torstar only realized a portion of the benefit as a large proportion of its income is taxed in foreign jurisdictions where tax rates remain unchanged. The higher effective rate in 2011 reflected the mix of income and the impact of capital gains in 2010 that were tax-affected at 50% of the statutory rate. Net income attributable to equity shareholders Torstar reported net income attributable to equity shareholders of $64.3 million or $0.81 per share in the fourth quarter of 2011 up $28.0 million or $0.35 per share from $36.3 million or $0.46 per share in the fourth quarter of 2010. OPERATING RESULTS - YEAR ENDED DECEMBER 31, 2011Overall PerformanceThe following table sets out, in $000's, the segmented results for the years ended December 31, 2011 and 2010.20112010MediaBook PublishingCorporateTotalMediaBook PublishingCorporateTotalOperating revenue$1,089,330$459,427$1,548,757$1,015,696$468,072$1,483,768Salaries and benefits(398,842)(100,014)($12,227)(511,083)(392,949)(98,206)($10,574)(501,729)Other operating costs(518,818)(273,320)(3,287)(795,425)(446,572)(281,770)(3,364)(731,706)EBITDA171,67086,093(15,514)242,249176,17588,096(13,938)250,333Amortization & depreciation(29,415)(3,695)(55)(33,165)(27,469)(3,965)(58)(31,492)Operating earnings142,25582,398(15,569)209,084148,70684,131(13,996)218,841Restructuring and other charges(18,860)(551)(19,411)(29,536)(357)(2,755)(32,648)Operating profit$123,395$81,847($15,569)$189,673$119,170$83,774($16,751)$186,193 Revenue Total revenue was $1,548.8 million in 2011, up $65.0 million from $1,483.8 million in 2010. The increase included an increase of $18.3 million from a change in reporting for Torstar's share of Metro's revenues, $24.7 million from acquisitions and a $7.7 million decrease from the impact of foreign exchange. Excluding these items, total revenue was up $29.7 million in 2011. Media Segment revenues, excluding the above items, were up $34.7 million in 2011 including $45.3 million of higher product sales in Metroland Media Group's TMGTV operations and $19.2 million of growth in digital revenues. Print advertising revenues were down in the year with softness in national and retail categories. Digital revenues in the Media Segment were up 22.8% year over year. Book Publishing Segment revenues, excluding the impact of foreign exchange and acquisitions, were down $5.1 million in 2011 with digital revenue growth not offsetting declines in print revenue in the Overseas markets. Salaries and benefits Total salaries and benefits expense was up $9.4 million or 1.9% in 2011 as significant savings from restructuring initiatives in the newspaper businesses in the Media Segment reduced the impact of acquisitions, increased staffing in the Media Segment digital operations, regular wage increases and a $1.3 million expense in Corporate from the mark-to-market adjustments of a share-based compensation hedging instrument. Other operating costs Total other operating costs were up $63.7 million or 8.7% in 2011. The increase included the impact of acquisitions, higher product costs for the TMGTV product sales, market expansions and investment spending in the digital operations. In the Media Segment, newsprint pricing was flat year over year while consumption was down. The Book Publishing Segment had lower promotional spending and overhead costs in 2011. EBITDA EBITDA was $242.2 million in 2011, down $8.1 million from $250.3 million in 2010. Media Segment EBITDA was down $4.5 million as higher costs more than offset revenue growth. Book Publishing Segment EBITDA was down $2.0 million including a decline of $6.4 million from the impact of foreign exchange and a $0.7 million benefit from acquisitions. Corporate expenses were up $1.6 million in 2011 as lower professional fees were more than offset by higher compensation costs, including the mark-to-market adjustment of a share-based compensation hedging instrument. Restructuring and other charges Restructuring and other charges of $19.4 million were recorded in 2011. This included $15.6 million for restructuring initiatives in the Media Segment and $0.6 million in the Book Publishing Segment. It also included a $3.2 million provision for rented space that the Media Segment vacated as reduced staff counts allowed for space consolidation. The provision represents the discounted shortfall between the remaining obligation under the existing leases and the amounts to be received through sublease arrangements. The annual cost savings from the space consolidation are approximately $1.3 million a year with $0.3 million realized in the fourth quarter of 2011. The 2011 restructuring initiatives in the Media Segment are expected to result in annualized net labour savings of approximately $9.4 million and a reduction of approximately 150 positions. $1.5 million of the savings were realized in 2011. The 2011 restructuring initiatives in the Book Publishing Segment are expected to result in annualized savings of approximately $0.5 million and a reduction of 5 positions. $0.2 million of the savings was realized in the fourth quarter of 2011.Restructuring and other charges of $32.6 million were recorded in 2010 including $28.2 million of restructuring provisions in the Media Segment, $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 $1.2 million adjustment to a provision for litigation in the Media Segment and $0.4 million related to transaction costs from Harlequin's acquisition of the other half of the German publishing business. Interest and financing costs Interest and financing costs were $16.6 million in 2011, down $7.5 million from $24.1 million in 2010. 2011 interest expense was $10.2 million, down $13.1 million from $23.3 million in 2010. The lower expense reflects the significantly lower level of average net debt outstanding in the last three quarters of 2011 and lower effective interest rates. The average net debt (long-term debt and bank overdraft net of cash and cash equivalents) was $171.5 million in 2011, down $289.2 million from $460.7 million in 2010. Torstar's effective interest rate on long-term debt was 3.9% in 2011 and 4.9% in 2010. Net debt was $153.3 million at December 31, 2011, down $215.3 million from $368.6 million at December 31, 2010.In 2011, Torstar also incurred a $3.8 million charge related to the settlement of Canadian dollar debt interest rate swaps. In 2006, in connection with the investment in CTV, Torstar had entered into interest rate swap agreements to fix the rate of interest on $250 million of Canadian dollar borrowings at 4.3% (plus the applicable interest rate spread based on Torstar's long-term credit rating) through September 2011. The five-year swap arrangements required a resetting of pricing and debt instruments every ninety days with a reset date occurring in March 2011. In anticipation of the receipt of the funds from the completion of the CTV sale, the swap arrangements were not reset in March and Torstar settled the swaps.Interest accretion costs related to contingent consideration estimates, long-term restructuring provisions and deferred acquisition payments were $2.7 million in 2011 and $0.8 million in 2010. Foreign exchange Torstar reported a non-cash foreign exchange loss of $3.5 million in 2011 as a result of the Canadian dollar being weaker at the end of the year compared with the beginning and with Torstar's Canadian operations being in a net liability position in U.S. dollars for most of the year. In 2010, Torstar's Canadian operations were in a net liability position in U.S. dollars, but the Canadian dollar was stronger at the end of the year compared with the beginning resulting in a non-cash foreign exchange gain of $4.8 million. Loss of associated businesses Loss of associated businesses was $2.2 million in 2011 and $28.3 million in 2010. Torstar recorded a loss of $1.6 million in 2011 as its share of Canadian Press's results through the third quarter of 2011 when Torstar's carrying value was reduced to nil. Torstar recorded a loss of $0.5 million in 2011 and $0.4 million in 2010 as its share of Q-ponz's results. Torstar ceased to equity account for its investment in CTV on September 10, 2010 and subsequently sold its investment on April 1, 2011. Torstar has not recorded any amounts related to CTV in the loss of associated businesses in 2011. Torstar's share of CTV's net loss was $28.0 million in 2010, representing CTV's results through September 10, 2010.Torstar has not recorded its share of Black Press' results in either 2011 or 2010 as Torstar's carrying value in Black Press was previously reduced to nil. Torstar's share of Black Press's net income would have been $3.3 million in 2011 up from $0.1 million in 2010. $2.3 million of the improvement related to impairment losses recorded by Black Press in 2010. Other income Under IFRS, when a business combination is achieved in stages, the acquirer is required to remeasure its previously held interest in the acquiree to the acquisition date fair value and recognize the resulting gain or loss, if any, in profit or loss. This remeasurement resulted in other income of $19.1 million in 2011 related to Torstar's increased ownership of Metro and save.ca and $3.5 million in 2010 from Harlequin's acquisition of the other half of the German publishing business. CTV Inc. - gain on sale/remeasurement In 2011, Torstar recorded a gain of $74.6 million on the sale of its interest in CTV. The transaction closed on April 1, 2011 and Torstar received cash proceeds of $291.6 million. Torstar entered into the agreements to sell its interest in CTV in September 2010, with the sale subject to customary approvals and closing conditions, including approval by the Canadian Radio-television and Telecommunications Commission. Effective with the signing of the agreements, Torstar recorded a $115.5 million remeasurement gain as the investment was reclassified as available-for-sale and remeasured at estimated fair value. Income and other taxes There were several items in Torstar's net income before taxes in 2011 and 2010 that were not tax-affected and therefore had an impact on Torstar's effective tax rate in both years. This included the 2011 gain on the sale of CTV, the 2011 remeasurement gain on the Metro and save.ca transactions, the 2010 loss of associated businesses related to CTV, the 2010 remeasurement gain on Torstar's investment in CTV and the 2010 remeasurement gain on Harlequin's German transaction. In addition, Torstar recorded $10.0 million in 2011 and $3.0 million in 2010 as a tax benefit from the recognition of tax losses that had previously not been recognized. Excluding the impact of these items in both years, Torstar's effective tax rate was 31.6% in 2011 and 31.2% in 2010. The Canadian statutory rate was lower in 2011, although Torstar only realized a portion of the benefit as a large proportion of its income is taxed in foreign jurisdictions where tax rates remain unchanged. The effective tax rate was lower in 2010 primarily due to capital gains that were tax-affected at 50% of the statutory rate. Net income attributable to equity shareholders Torstar reported net income attributable to equity shareholders of $217.7 million or $2.74 per share in 2011 up $7.8 million or $0.09 per share from $209.9 million or $2.65 per share in 2010. Excluding the impact of CTV in both years, Torstar would have reported net income attributable to equity shareholders of $143.1 million or $1.80 per share in 2011 up $20.7 million or $0.26 per share from $122.4 million or $1.54 per share in 2010. OUTLOOKThe 2012 revenue outlook for the Media Segment remains uncertain. Print advertising continues to be challenged by economic uncertainty and shifts in spending by advertisers. The 2011 acquisitions are expected to contribute revenue growth in 2012 while product sales at TMGTV are anticipated to be lower. Digital revenue growth is expected to continue in 2012. Early indications in 2012 are that advertising revenues remain soft although no clear trend has emerged. On the expense side, in addition to the increased costs from the 2011 acquisitions, the Media Segment is expected to have $1.0 million of higher registered defined benefit pension plan expense along with general cost increases. The Media Segment is anticipated to realize $11.1 million of savings in 2012 from restructuring initiatives undertaken through the end of 2011. Newsprint pricing is expected to be flat year over year. Net investment spending associated with growth initiatives in 2012 is anticipated to be consistent with 2011 levels. In addition, the more significant acquisitions completed in 2011 are expected to contribute approximately $10.0 million in incremental EBITDA in 2012. Harlequin had a very strong 2011 but going into 2012 Harlequin continues to face uncertainty around the relationship between digital revenue growth and retail print revenue declines. Early indications are that the pace of digital revenue growth in North America has moderated in 2012. It is, however, unclear whether this moderated growth will slow the decline in retail print sales. Revenues in Harlequin's Overseas division are also expected to continue to be challenged by the weak European economies in 2012. In addition, in 2012 Harlequin will have higher author royalties related to digital revenue. Given these factors, it is anticipated that, excluding the impact of foreign exchange, it will be difficult for Harlequin to match the very good results experienced in 2011. 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 $1.1 million, including the impact of the U.S. dollar hedges currently in place.From a cash flow perspective, in 2012, Torstar anticipates spending approximately $65.0 - $70.0 million for the required funding of registered defined benefit pension plans, $35.0 million for additions to property, plant, equipment and intangible assets and $14.7 million for payments related to prior year acquisitions and investment commitments.DIVIDENDOn February 28, 2012, Torstar declared a quarterly dividend of 12.5 cents per share on its Class A shares and Class B non-voting shares, payable on March 31, 2012, to shareholders of record at the close of business on March 9, 2012. 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, 2011 and the 2011 Management's Discussion and Analysis ("MD&A"). Both documents will be filed today on SEDAR and are available on Torstar's corporate website www.torstar.com.CONFERENCE CALLTorstar has scheduled a conference call for February 29, 2012 at 8:15 a.m. to discuss its fourth quarter results. The dial-in number is 416-340-8527 or 1-877-240-9772. A live broadcast of the conference call will be available over the internet on the Presentations, Events and Conference Calls page (Investor Relations) on Torstar's website www.torstar.com. A recording of the conference call will be available for 9 days by calling 905-694-9451 or 1-800-408-3053 and entering reservation number 3672277. An online archive of the broadcast will be available shortly after the completion of the call and will be accessible by visiting the Presentations, Events and Conference Calls page (Investor Relations) page on Torstar's website www.torstar.com. About Torstar Corporation Torstar 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, a leading global publisher of books for women. Non-IFRS measures In addition to operating profit, as presented in the consolidated statement of income, management uses EBITDA and operating earnings as measures to assess the consolidated performance and the performance of the reporting units and business segments. EBITDA (earnings before interest, taxes, depreciation and amortization) 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 business segment. EBITDA is not the actual cash provided by operating activities and is not a recognized measure of financial performance under IFRS. Torstar calculates EBITDA as operating revenue less salaries and benefits and other operating costs as presented on the consolidated statement of income. EBITDA excludes restructuring and other charges. Torstar's method of calculating EBITDA may differ from other companies and accordingly may not be comparable to measures used by other companies.Operating earnings is used by management to represent the results of ongoing operations and is not a recognized measure of financial performance under IFRS. Torstar calculates operating earnings as operating revenue less other operating costs, salaries and benefits and amortization and depreciation. Operating earnings excludes restructuring and other charges. Torstar's method of calculating operating earnings may differ from other companies and accordingly may not be comparable to measures used by other companies. Forward-looking statements Certain 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, financial 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: the Company's ability to operate in highly competitive industries; the Company's ability to compete with other forms of media and media platforms; general economic conditions in the principal markets in which the Company operates; the Company's ability to attract and retain advertisers; the Company's ability to attract and retain readers; the Company's ability to retain and grow its digital audience and profitably develop its digital businesses; the trend towards digital books and the Company's ability to distribute its books through the changing distribution landscape; the Company's ability to accurately estimate the rate of book returns through the wholesale and retail channels; the popularity of its authors and its ability to retain popular authors; labour disruptions; newsprint costs; the Company's ability to reduce costs; foreign exchange fluctuations; credit risk; 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, privacy, communications and e-commerce laws and regulations applicable generally to our businesses; dependence on key personnel; loss of reputation; 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 2011 Management's Discussion & Analysis which has been filed on www.sedar.com and is available on Torstar's corporate website www.torstar.com.Torstar's new releases are available on the Internet at www.torstar.com.Torstar CorporationConsolidated Statement of Financial Position(Thousands of Canadian Dollars)As at December 312011As at December 312010As at January 012010AssetsCurrent:Cash and cash equivalents$50,588$42,991$39,158Receivables278,010266,436250,289Inventories36,99534,29433,953Derivative financial instruments3673,3546,067Prepaid expenses and other current assets47,06349,43948,913Prepaid and recoverable income taxes2,4513,0132,997Total current assets415,474399,527381,377Property, plant and equipment177,245171,543177,493Investment in associated businesses16,9352,201170,783Derivative financial instruments1,471Intangible assets107,84564,29354,094Goodwill665,029595,899580,302Other assets1,7981,1182,089Deferred income tax assets100,44184,80484,950Investment in CTV Inc.217,000Total assets$1,484,767$1,536,385$1,452,559Liabilities and EquityCurrent:Bank overdraft$7,661$6,958$2,052Current portion of long-term debt196,191Accounts payable and accrued liabilities210,567212,293194,348Derivative financial instruments4,947Provisions22,59921,17027,966Income tax payable17,39833,23919,172Total current liabilities454,416278,607243,538Long-term debt404,586551,240Derivative financial instruments8,7617,64716,633Provisions16,90620,9232,095Other liabilities27,90021,96717,548Employee benefits262,876207,768186,952Deferred income tax liabilities7,64410,3278,267Equity:Share capital395,334392,816391,626Contributed surplus14,82813,23512,182Retained earnings301,863189,58633,702Accumulated other comprehensive loss(8,286)(13,202)(12,530)Total equity attributable to equity shareholders703,739582,435424,980Minority interests2,5252,1251,306Total equity706,264584,560426,286Total liabilities and equity$1,484,767 $1,536,385 $1,452,559Torstar CorporationConsolidated Statement of Income(Thousands of Canadian Dollars except per share amounts)Three months ended December 31Year ended December 312011201020112010Operating revenue$425,336$417,530$1,548,757$1,483,768Salaries and benefits(132,685)(134,373)(511,083)(501,729)Other operating costs(211,463)(207,734)(795,425)(731,706)Amortization and depreciation(9,199)(7,664)(33,165)(31,492)Restructuring and other charges(13,663)(17,520)(19,411)(32,648)Operating profit58,32650,239189,673186,193Interest and financing costs(2,061)(6,328)(16,629)(24,135)Adjustment to contingent consideration(71)630Foreign exchange(516)4,381(3,477)4,805Loss of associated businesses(388)(445)(2,157)(28,343)Other income19,02619,0553,461Gain on sale of assets1,2594,088CTV Inc. - gain on sale/remeasurement74,590115,533Investment write-down(544)(773)(544)(773)73,77248,333261,141260,829Income and other taxes(9,200)(11,700)(43,000)(50,100)Net income$64,572$36,633$218,141$210,729Attributable to:Equity shareholders$64,283$36,299$217,721$209,910Minority interests$289$334$420$819Net income attributable to equity shareholders per Class A (voting) and Class B (non-voting) share:Basic$0.81$0.46$2.74$2.65Diluted$0.81$0.45$2.72$2.64Torstar CorporationConsolidated Statement of Cash Flows(Thousands of Canadian Dollars)Three months ended December 31Year ended December 312011201020112010Cash was provided by (used in)Operating activities$46,311$58,430$114,955$157,654Investing activities(101,711)27,508137,42812,056Financing activities52,977(79,808)(245,582)(170,029)Increase (decrease) in cash(2,423)6,1306,801(319)Effect of exchange rate changes(1,765)(526)93(754)Cash, beginning of period47,11530,42936,03337,106Cash, end of period$42,927$36,033$42,927$36,033Operating activities:Net income$64,572$36,633$218,141$210,729Amortization and depreciation9,1997,66433,16531,492Deferred income taxes(3,700)(1,440)4,3005,660Loss of associated businesses3884452,15728,343CTV Inc. - gain on sale/remeasurement(74,590)(115,533)Investment write-down544773544773Non-cash employee benefit expense3,6123,69414,56613,238Employee benefits funding(9,868)(4,866)(51,167)(19,535)Other(10,872)8,459(14,024)8,18653,87551,362133,092163,353Decrease (increase) in non-cash working capital(7,564)7,068(18,137)(5,699)Cash provided by operating activities$46,311$58,430$114,955$157,654Investing activities:Additions to property, plant and equipment and intangible assets($8,720)($11,759)($35,046)($26,973)CTV Inc. - proceeds/return of capital40,000291,59040,000Investment in associated businesses(17,268)(750)(17,268)(750)Acquisitions and investments(75,726)(1,615)(101,793)(11,398)Proceeds from mortgage receivable6,215Proceeds from sale of assets1,3444,344Other3288(55)618Cash provided by (used in) investing activities($101,711)$27,508$137,428$12,056Financing activities:Issuance of bankers' acceptances$63,109$71,630$39,620Repayment of bankers' acceptances($73,028)(281,430)(106,918)Repayment of medium term notes(75,000)Dividends paid(9,876)(7,238)(36,862)(28,982)Exercise of share options13324Other(269)4587561,251Cash provided by (used in) financing activities$52,977($79,808)($245,582)($170,029)Cash represented by:Cash$42,733$33,040$42,733$33,040Cash equivalents - short-term deposits7,8559,9517,8559,951Cash and cash equivalents50,58842,99150,58842,991Bank overdraft(7,661)(6,958)(7,661)(6,958)$42,927$36,033$42,927$36,033FOR FURTHER INFORMATION PLEASE CONTACT: L. DeMarchiTorstar CorporationExecutive Vice-President and Chief Financial Officer(416) 869-4776www.torstar.com