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Press release from Marketwire

Torstar Corporation Reports Fourth Quarter Results

Wednesday, March 05, 2014

Torstar Corporation Reports Fourth Quarter Results

06:30 EST Wednesday, March 05, 2014

TORONTO, ONTARIO--(Marketwired - March 5, 2014) - Torstar Corporation (TSX:TS.B) today reported financial results for the fourth quarter ended December 31, 2013.

Highlights for the fourth quarter:

  • Segmented revenue was $366.5 million in the fourth quarter of 2013, down $29.2 million (7.4%) from the fourth quarter of 2012.

  • Segmented EBITDA (see "non-IFRS measures") was $63.2 million in the fourth quarter of 2013, up $0.1 million from $63.1 million in the fourth quarter of 2012.

  • Net income attributable to equity shareholders was $20.6 million ($0.26 per share) in the fourth quarter of 2013 down $0.5 million from $21.1 million ($0.26 per share) in the fourth quarter of 2012.

  • Adjusted earnings per share (see "non-IFRS measures") was $0.48 in the fourth quarter of 2013, down $0.01 from $0.49 in the fourth quarter of 2012.

  • Net debt (see "non-IFRS measures") was $158.5 million at December 31, 2013, down $16.0 million from $174.5 million at September 30, 2013.

  • At December 31, 2013, Torstar's net asset related to its defined benefit pension plans was $31.0 million, an increase of $55.7 million from a net obligation of $24.7 million at September 30, 2013 and reflecting a combination of asset returns, increased long-term interest rates and contributions.

Highlights for the year:

  • Segmented Revenue was $1,381.8 million down $104.0 million or 7.0%, from 2012. Excluding the impact of a decrease at TMGTV primarily from lower product sales, revenue was down $86.4 million (5.9%) in 2013.

  • Segmented EBITDA was $173.5 million in 2013, down $28.4 million from $201.9 million in 2012.

  • Net loss attributable to equity shareholders was $28.0 million or $0.35 per share in 2013 down $110.3 million or $1.38 per share from net income attributable to equity shareholders of $82.3 million or $1.03 per share in 2012 and reflects a $94.9 million increase in impairment of assets and restructuring and other charges over 2012.

  • Net debt was $158.5 million at December 31, 2013, down $4.5 million from $163.0 million at December 31, 2012.

  • In 2013, Torstar's net benefit obligation related to its defined benefit pension and post retirement benefit plans decreased by $217.3 million primarily as a result of asset returns, increased long-term interest rates and contributions.

  • At December 31, 2013, Torstar's net asset related to its defined benefit pension plans was $31.0 million, an increase of $212.4 million from a net obligation of $181.4 million at December 31, 2012 and reflecting a combination of asset returns, increased long-term interest rates and contributions.

"The year finished on a positive note as results in the quarter were stable with EBITDA up by $0.1 million to $63.2 million," said David Holland, President and CEO of Torstar Corporation. "A strong finish in the media operations, up $5.4 million, was offset by a decline at Harlequin. The fourth quarter earnings growth in the media operations was attributable to Star Media Group, with contributions from both the Toronto Star and Metro. At the Toronto Star, a combination of improved revenue performance relative to earlier quarters and efforts on costs yielded growth in earnings. Metro also had a strong fourth quarter growing both its revenue and earnings. Lower revenues were the primary challenge at Harlequin as the operation continues to adjust to the more digital environment."

"The pension situation improved significantly in 2013. Funding into the plans will be lower in 2014 and we would anticipate further reduction in funding within the next few years. We continue to enjoy the benefits of modest leverage with our net debt declining to $158.5 million in 2013."

"Looking forward, Harlequin continues to make the adjustments necessary to succeed in the more digital environment. Including the year over year benefit of the depreciation of the Canadian dollar on foreign earnings, we anticipate Harlequin results to be relatively stable year over year. In the media operations, we anticipate continued pressure on print advertising revenues, although we were pleased to experience some relative improvement in the print advertising trend in the fourth quarter. Multi-platform subscriber revenues are expected to be relatively stable and we anticipate modest growth in distribution revenues. Ongoing restructuring efforts will help to mitigate the earnings impact of the anticipated advertising revenue pressure. As we resize the cost base, we remain disciplined and committed to ensuring that we continue to invest in those areas of greatest value to our customers as we adapt to the evolving media environment."

The following table provides a continuity of earnings per share from 2012 to 2013:

Fourth Quarter Full Year
Net income attributable to equity shareholders per share 2012 $0.26 $1.03
Changes
Operations 0.00 (0.28 )
Interest and financing costs 0.00 0.02
Income (loss) of associated businesses (0.01 ) 0.07
Change in adjusted earnings per share 2013* (0.01 ) (0.19 )
Restructuring and other charges (0.09 ) (0.19 )
Impairment of assets 0.14 (0.92 )
Non-cash foreign exchange (0.01 ) (0.02 )
Adjustment to contingent consideration 0.00 0.02
Gain on sale of assets (2012) (0.03 ) (0.07 )
Investment write-down and loss 0.00 (0.01 )
Net income (loss) attributable to equity shareholders per share 2013 $0.26 ($0.35 )
* Adjusted earnings per share is a non-IFRS measure, see "non-IFRS Measures".
OPERATING RESULTS - FOURTH QUARTER 2013
The following tables sets out, in $000's the segmented results for the three months ended December 31, 2013 and 2012.
Fourth Quarter 2013
Adjustments
& Total Per
Eliminations Consolidated
Book Total for Joint Statement of
(in $000's) Media* Publishing* Corporate Segmented* Ventures Income
Operating revenue $271,449 $95,026 $366,475 ($18,100 ) $348,375
Salaries and benefits (98,070 ) (23,616 ) ($2,643 ) (124,329 ) 5,851 (118,478 )
Other operating costs (118,387 ) (59,866 ) (673 ) (178,926 ) 8,897 (170,029 )
EBITDA** 54,992 11,544 (3,316 ) 63,220 (3,352 ) 59,868
Amortization & depreciation (8,862 ) (1,211 ) (10 ) (10,083 ) 767 (9,316 )
Operating earnings** 46,130 10,333 (3,326 ) 53,137 (2,585 ) 50,552
Restructuring and other
charges (16,512 ) (77 ) (16,589 ) 403 (16,186 )
Impairment of assets (266 ) (266 ) (266 )
Operating profit (loss)** $29,352 $10,256 ($3,326 ) $36,282 ($2,182 ) $34,100
Fourth Quarter 2012
Adjustments
& Total Per
Eliminations Consolidated
Book Total for Joint Statement of
(in $000's) Media* Publishing* Corporate Segmented* Ventures Income
Operating revenue $290,757 $104,989 $395,746 ($17,854 ) $377,892
Salaries and benefits (107,816 ) (23,665 ) ($2,498 ) (133,979 ) 6,460 (127,519 )
Other operating costs (133,376 ) (64,490 ) (786 ) (198,652 ) 8,839 (189,813 )
EBITDA** 49,565 16,834 (3,284 ) 63,115 (2,555 ) 60,560
Amortization & depreciation (8,910 ) (1,080 ) (16 ) (10,006 ) 717 (9,289 )
Operating earnings** 40,655 15,754 (3,300 ) 53,109 (1,838 ) 51,271
Restructuring and other
charges (5,706 ) (944 ) (6,650 ) 389 (6,261 )
Impairment of assets (11,734 ) (11,734 ) 11,000 (734 )
Operating profit (loss)** $23,215 $14,810 ($3,300 ) $34,725 $9,551 $44,276
* Includes proportionately consolidated share of joint venture operations
** These are non-IFRS or additional IFRS measures, see "non-IFRS measures".

Revenue

Segmented Revenue was down $29.2 million or 7.4% in the fourth quarter of 2013. Media Segment revenues were down $19.3 million or 6.6% in the fourth quarter. The fourth quarter Media Segment revenues reflect print advertising revenue declines but also include the impact of having five fewer publishing days at the Metroland Media Group daily newspapers and at least one fewer publishing day at the weekly newspapers in the fourth quarter of 2013 compared to the fourth quarter of 2012. This was the result of variations in the calendar and is the reversal of additional publishing days included in the first quarter of 2013. Media Segment revenues also reflect a $2.4 million decrease in revenue at Metroland Media Group's TMGTV primarily resulting from lower product sales. While print advertising revenues declined during the fourth quarter of 2013, the rate of decline slowed compared to the year to date trend experienced to the end of the third quarter largely the result of improved trends in the Star Media Group.

Digital revenues in the Media Segment were down slightly by 0.8% in the fourth quarter of 2013 representing an improvement in the year to date trend experienced to the end of the third quarter. This decline was primarily the result of lower revenues at WagJag and Workopolis largely offset by growth in other digital properties including eyeReturn Marketing, Olive Media and thestar.com. Digital revenues were 12.2% of total Media Segment revenues in the fourth quarter of 2013 up from 11.5% in the fourth quarter of 2012.

Book Publishing Segment revenues were down $10.0 million in the fourth quarter including a $3.2 million increase from the impact of foreign exchange with revenues down in both North America and Overseas. The decrease in North America was the result of revenue declines in all channels with digital revenues in North America believed to be negatively affected by increased discounts being offered on digital sales of other publishers' bestselling titles. Overseas, growth in digital revenue was insufficient to offset print declines and revenues continued to be affected by challenging economic conditions, particularly in Europe.

Salaries and benefits

Total segmented salaries and benefits expense was down $9.7 million or 7.2% in the fourth quarter as savings from restructuring initiatives of $7.9 million in the Media Segment and $0.9 million in the Book Publishing Segment were offset by the impact of regular wage increases and additional pension costs.

Other operating costs

Total segmented other operating costs were down $19.7 million or 9.9% in the fourth quarter of 2013. Media Segment other operating costs were down $15.0 million or 11.2% in the fourth quarter resulting from: (i) variable cost reductions resulting from revenue declines; (ii) the impact of having fewer publishing days at Metroland Media Group (discussed above); (iii) a decrease in costs at TMGTV resulting from lower product sales; and (iv) the impact of cost reduction initiatives. In the Book Publishing Segment, other operating costs were down $4.6 million or 7.2% in the fourth quarter resulting from variable cost reductions due to revenue declines and reduced advertising and promotional spending.

EBITDA

Segmented EBITDA was $63.2 million in the fourth quarter of 2013, up $0.1 million from the fourth quarter of 2012. Media Segment EBITDA was up $5.4 million or 10.9% as cost reductions more than offset revenue declines. Book Publishing Segment EBITDA was down $5.3 million reflecting declines in revenue partially offset by lower advertising and promotional spending and $0.9 million of savings from restructuring initiatives.

Amortization and depreciation

Segmented amortization and depreciation expense was $10.1 million in the fourth quarter of 2013, a $0.1 million increase over the fourth quarter of 2012.

Operating earnings

Segmented operating earnings were $53.1 million in the fourth quarter of 2013, consistent with the fourth quarter of 2012.

Restructuring and other charges

Total segmented restructuring and other charges of $16.6 million and $6.7 million were recorded in the fourth quarter of 2013 and 2012 respectively. Fourth quarter 2013 restructuring provisions primarily related to the Media Segment and are expected to result in annual net savings of $12.6 million and a reduction of approximately 190 positions with $1.2 million of the savings having been realized in the fourth quarter of 2013.

Impairment of assets

On a segmented basis during the fourth quarter of 2013, Torstar incurred charges related to asset impairment totaling $0.3 million in respect of certain equipment and intangible assets associated with restructuring activities in the Media Segment.

On a segmented basis during the fourth quarter of 2012, Torstar incurred charges related to asset impairment totaling $11.7 million related to certain equipment, intangible assets and joint venture investments in the Media Segment. In connection with restructuring activities, in the fourth quarter of 2012 Torstar incurred charges related to asset impairment totaling $0.4 million related to certain equipment in the Metroland Media Group of CGUs and $0.3 million related to certain equipment and finite life intangible assets in the Star Media Group of CGUs. Additionally, during the fourth quarter of 2012, Torstar performed its annual impairment test on the value of intangible assets with a finite useful life, intangible assets with an indefinite useful life and goodwill. An impairment charge of $11.0 million was recorded in respect of the Workopolis joint venture as a result of increased competition in the online recruitment and job search markets and prevailing economic conditions.

Operating profit

Operating profit was $36.3 million in the fourth quarter of 2013, up $1.6 million from $34.7 million in the fourth quarter of 2012.

Interest and financing costs

Interest and financing costs decreased $0.5 million in the fourth quarter of 2013 relative to the fourth quarter of 2012 primarily reflecting lower financing costs related to employee benefit plans in the fourth quarter of 2013. Net debt was $158.5 million at December 31, 2013, down $16.0 million from $174.5 million at September 30, 2013. Torstar's effective interest rate on long-term debt was 4.2% in the fourth quarter of 2013, up slightly from 4.0% in the same period last year.

Foreign exchange

Torstar reported a non-cash foreign exchange loss of $1.0 million in the fourth quarter of 2013 and a loss of $0.1 million in the same period last year. The loss in the fourth quarter of 2013 was the result of the Canadian dollar being weaker at the end of the quarter relative to the beginning of the quarter and with Torstar's Canadian operations being in a net liability position in U.S. dollars for the quarter.

Income (loss) from joint ventures

Income from joint ventures was $1.8 million in the fourth quarter of 2013 compared to a loss of $9.8 million in the fourth quarter of 2012. This reflects a combination of lower revenues included in the discussion of Segmented Revenue as well as impairment charges of $11.0 million recorded in the fourth quarter of 2012 related to Torstar's joint venture investment in Workopolis.

Income (loss) of associated businesses

Loss from associated businesses was $0.6 million in the fourth quarter of 2013 compared to income of $0.2 million in the fourth quarter of 2012. The fourth quarter of 2013 included income of $1.3 million from Black Press and income of $0.4 million from Tuango, offset by a loss of $1.5 million from Shop.ca, a loss of $0.4 million from Canadian Press, a loss of $0.2 million from Blue Ant and a loss of $0.2 million related to other investments.

The income of $0.2 million in the fourth quarter of 2012 included income of $0.6 million from Blue Ant and income of $0.3 million from Tuango, partially offset by Torstar's share of losses of $0.2 million from Shop.ca and a loss of $0.5 million from Canadian Press.

Gain on sale of assets

In the fourth quarter of 2012, Torstar recorded a gain of $2.7 million in connection with the sale of the assets of Insurance Hotline.

Income and other taxes

Torstar's effective tax rate was 29.9% in the fourth quarter of 2013 compared to 25.6% in the fourth quarter of 2012, excluding the impact of impairment charges. The effective tax rate was higher in 2013 as compared to 2012 as Torstar recognized a higher proportion of fourth quarter 2013 earnings in foreign jurisdictions which are subject to higher rates of tax.

Net income attributable to equity shareholders

Torstar reported net income attributable to equity shareholders of $20.6 million ($0.26 per share) in the fourth quarter of 2013, down $0.5 million from $21.1 million ($0.26 per share) in the fourth quarter of 2012.

OPERATING RESULTS - YEAR ENDED DECEMBER 31, 2013
The following tables sets out, in $000's the segmented results for the years ended December 31, 2013 and 2012.
2013
Adjustments
& Total Per
Eliminations Consolidated
Book Total for Joint Statement of
(in $000's) Media* Publishing* Corporate Segmented* Ventures Income
Operating revenue $984,047 $397,719 $1,381,766 ($72,975 ) $1,308,791
Salaries and benefits (398,298 ) (96,570 ) ($10,743 ) (505,611 ) 25,314 (480,297 )
Other operating costs (454,972 ) (244,834 ) (2,860 ) (702,666 ) 36,072 (666,594 )
EBITDA 130,777 56,315 (13,603 ) 173,489 (11,589 ) 161,900
Amortization & depreciation (34,924 ) (4,288 ) (40 ) (39,252 ) 2,986 (36,266 )
Operating earnings 95,853 52,027 (13,643 ) 134,237 (8,603 ) 125,634
Restructuring and other
charges (33,829 ) (4,095 ) (37,924 ) 705 (37,219 )
Impairment of assets (86,094 ) (86,094 ) 9,000 (77,094 )
Operating profit (loss) ($24,070 ) $47,932 ($13,643 ) $10,219 $1,102 $11,321
2012
Adjustments
& Total Per
Eliminations Consolidated
Book Total for Joint Statement of
(in $000's) Media* Publishing* Corporate Segmented* Ventures Income
Operating revenue $1,059,261 $426,483 $1,485,744 ($78,976 ) $1,406,768
Salaries and benefits (420,441 ) (95,674 ) ($10,528 ) (526,643 ) 27,158 (499,485 )
Other operating costs (500,417 ) (253,550 ) (3,210 ) (757,177 ) 35,636 (721,541 )
EBITDA 138,403 77,259 (13,738 ) 201,924 (16,182 ) 185,742
Amortization &
depreciation (34,027 ) (4,107 ) (48 ) (38,182 ) 2,909 (35,273 )
Operating earnings 104,376 73,152 (13,786 ) 163,742 (13,273 ) 150,469
Restructuring and other
charges (16,498 ) (1,280 ) (17,778 ) 389 (17,389 )
Impairment of assets (13,003 ) (13,003 ) 11,000 (2,003 )
Operating profit (loss) $74,875 $71,872 ($13,786 ) $132,961 ($1,884 ) $131,077
* Includes proportionately consolidated share of joint venture operations

Revenue

Segmented revenue was $1,381.8 million down $104.0 million or 7.0% in 2013 inclusive of a $17.6 million decrease in revenue at Metroland Media Group's TMGTV primarily resulting from lower product sales. The decline in product sale revenues in TMGTV operations is consistent with expected product life cycles in this business.

Media Segment revenues were down $75.2 million or 7.1% in 2013, inclusive of the $17.6 million decrease in revenue at Metroland Media Group's TMGTV. This decrease was largely due to print advertising declines at the newspapers partially offset by growth in distribution revenue. The 2013 Media Segment revenues were generated as follows: $628.8 million (64.0%) from print and digital advertising, $149.0 million (15.1%) from flyer distribution, $138.2 million (14.0%) from subscribers and $68.0 million (6.9%) from other activities including printing.

The 2012 Media Segment revenues were generated as follows: $694.8 million (65.6%) from print and digital advertising, $143.8 million (13.6%) from flyer distribution, $139.7 million (13.2%) from subscribers and $81.0 million (7.6%) from other activities including printing.

While digital profitability increased during 2013, digital revenues in the Media Segment were down 5.6% in 2013. This decline was primarily the result of lower revenues at WagJag and Workopolis partially offset by growth in other digital properties including eyeReturn Marketing, Olive Media and local digital revenue at thestar.com. Digital revenues were 11.7% of total Media Segment revenues in 2013 up slightly from 11.5% in 2012.

Book Publishing Segment revenues were down $28.8 million in 2013 including a $4.1 million increase from the impact of foreign exchange. In North America, this decrease was the result of revenue declines in the retail print and direct-to-consumer channels. Overseas, growth in digital was insufficient to offset print declines and revenues continued to be affected by challenging economic conditions, particularly in Europe.

Salaries and benefits

Total segmented salaries and benefits expense decreased $21.0 million or 4.0% in 2013 as savings of $27.3 million from restructuring initiatives in the Media Segment and $3.1 million in the Book Publishing Segment, reduced the impact of regular wage increases and additional pension costs.

Other operating costs

Total segmented other operating costs were down $54.5 million or 7.2% in 2013. Media Segment other operating costs were down $45.4 million or 9.1% attributable to: (i) variable cost reductions resulting from revenue declines; (ii) a decrease in costs at TMGTV from lower product sales; and (iii) the impact of cost reduction initiatives. In the Book Publishing Segment other operating costs were down $8.7 million or 3.4% resulting from variable cost reductions due to revenue declines and reduced advertising and promotional spending in 2013.

EBITDA

Segmented EBITDA was $173.5 million in 2013, down $28.4 million or 14.1% from $201.9 million in 2012. Media Segment EBITDA was down $7.6 million or 5.5% primarily due to print advertising revenue declines, general wage increases as well as higher pension costs partially offset by cost reduction initiatives. Book Publishing Segment EBITDA was down $20.9 million primarily due to lower sales of print books, higher author royalties for digital sales and lower favourable adjustments to prior year returns provisions. This was partially offset by higher digital sales, lower advertising and promotional spending and savings from restructuring initiatives.

Amortization and depreciation

Total segmented amortization and depreciation increased $1.1 million or 2.8% in 2013.

Operating earnings

Segmented operating earnings were $134.2 million in 2013, down $29.5 million or 18.0% from $163.7 million in 2012.

Restructuring and other charges

Total segmented restructuring and other charges of $37.9 million were recorded in 2013. This included $33.2 million for restructuring initiatives and $0.6 million for other charges in the Media Segment and $3.1 million for restructuring initiatives and $1.0 million for other charges in the Book Publishing Segment. The 2013 restructuring initiatives in the Media Segment are expected to result in annualized net labour savings of approximately $36.6 million and a reduction of approximately 510 positions. The 2013 restructuring initiatives in the Book Publishing Segment are expected to result in annualized savings of approximately $3.3 million and a reduction of 31 positions. $15.8 million of the savings were realized in 2013.

Total segmented restructuring and other charges of $17.8 million were recorded in 2012. This included $16.5 million for restructuring initiatives in the Media Segment and $0.9 million for restructuring initiatives and $0.4 million for other charges in the Book Publishing Segment.

Impairment of assets

During 2013, Torstar incurred charges related to asset impairment on a segmented basis totaling $86.1 million related to certain intangible assets and goodwill in the Media Segment. These charges did not impact cash flows.

During the third quarter of 2013, Torstar conducted an impairment test on the carrying value of intangible assets with a finite useful life, intangible assets with an indefinite useful life and goodwill. In carrying out this testing, it was determined that the carrying amount of certain intangible assets within the Metroland Media Group of CGUs and the carrying value of the Star Media Group of CGUs exceeded the value in use. Accordingly, Torstar recorded impairment of $12.5 million for intangible assets in the Metroland Media Group and $64.0 million for goodwill in the Star Media Group of CGUs. These impairments were the result of lower forecasted revenues reflecting shifts in spending by advertisers. Certain of the impairment charges related to intangible assets within the Metroland Media Group of CGUs were also the result of internal reorganization, realignment and integration of certain digital businesses within the Media Segment which occurred during the third quarter of 2013. As a result of this and factors noted above, Torstar also recorded a $9.0 million impairment charge in respect of its Sing Tao Daily joint venture investment.

Other impairment charges totalling $0.6 million were also recorded in 2013 in respect of certain equipment and intangible assets associated with restructuring activities in the Media Segment.

In 2012, Torstar incurred charges related to asset impairment on a segmented basis totalling $13.0 million related to certain equipment, intangible assets and joint venture investments in the Media Segment. As a result of restructuring initiatives, which included the consolidation of some facilities, during the year ended December 31, 2012, Torstar recorded impairment losses of $0.4 million with respect to equipment in the Metroland Media Group of CGUs and $0.2 million with respect to equipment and $1.4 million of finite-life intangible assets in the Star Media Group of CGUs. During the fourth quarter of 2012, Torstar performed its annual impairment test on the value of intangible assets with a finite useful life, intangible assets with an indefinite useful life and goodwill. An impairment charge of $11.0 million was recorded in the Workopolis joint venture as a result of increased competition in the online recruitment and job search markets and prevailing economic conditions.

Operating profit

Segmented operating profit was $10.2 million in 2013, down $122.8 million from $133.0 million in 2012 and reflects a $93.2 million increase in impairment of assets and restructuring and other charges.

Interest and financing costs

Interest and financing costs were down $2.4 million in 2013. The lower costs primarily reflect lower financing costs related to employee benefit plans. Net debt was $158.5 million at December 31, 2013, down $4.5 million from $163.0 million at December 31, 2012. Torstar's effective interest rate on long-term debt was 4.2% in 2013, up slightly from 4.1% in 2012.

Foreign exchange

The non-cash foreign exchange gain or loss reported in the consolidated statement of income primarily relates to the translation of U.S. dollar denominated assets and liabilities held by Torstar's Canadian operations into Canadian dollars. It does not include the translation of foreign currency (including U.S. dollars) denominated assets and liabilities of Torstar's foreign operations or the translation of U.S. dollar debt that has been designated as a hedge against those net U.S. dollar denominated assets. The foreign exchange on the translation of those foreign currency denominated assets and liabilities and the related hedge-designated debt into Canadian dollars is reported through other comprehensive income ("OCI"). The amount of the non-cash foreign exchange gain or loss in any year will vary depending on the movement in the relative value of the Canadian dollar and on whether Torstar's Canadian operations have a net asset or net liability position in U.S. dollars.

In 2013, Torstar reported a non-cash foreign exchange loss of $1.5 million 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 2012, Torstar reported a non-cash foreign exchange loss of $0.2 million.

Adjustment to contingent consideration

Adjustments to contingent consideration estimates resulted in income of $1.0 million in 2013 and additional costs of $0.3 million in 2012. Estimates of the fair value of contingent consideration are recorded on the date of the related acquisition and are revised in future periods as changes in the estimated payments occur.

Income (loss) from joint ventures

Loss from joint ventures was $2.6 million in 2013 compared to income of $2.2 million in 2012. This reflects a combination of lower revenues included in the discussion of Segmented Revenue as well as impairment charges of $9.0 million recorded in 2013 related to Torstar's joint venture investment in Sing Tao Daily and $11.0 million recorded in 2012 related to Torstar's joint venture investment in Workopolis.

Income (loss) of associated businesses

Income of associated businesses was $2.3 million in 2013 compared to a loss of $2.8 million in 2012.

2013 included income of $5.5 million from Black Press and income of $0.7 million from Tuango, partially offset by a loss of $3.1 million from Shop.ca, a loss of $0.4 million related to Canadian Press, a loss of $0.2 million from Blue Ant and a loss of $0.2 million from other investments.

Torstar's share of Black Press's net income was $5.5 million in 2013, representing Black Press's results through November 30, 2013. Black Press has a February fiscal year end and therefore does not have coterminous quarter-ends with Torstar. Torstar did not record its share of Black Press's results in 2012 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 $3.9 million in 2012. Torstar began to report its share of Black Press's results in 2013 when the unrecognized losses ($0.7 million as of December 31, 2012) had been offset by net income or OCI.

Torstar's share of Tuango's net income was $0.7 million in 2013 compared to income of $0.9 million for the period from February 29, 2012 to December 31, 2012.

Torstar's share of the Shop.ca net loss was $3.1 million in 2013 compared to $0.7 million in 2012. Torstar made its initial investment in Shop.ca on June 15, 2012 and the Shop.ca website was launched late in the second quarter of 2012.

Torstar recorded a loss of $0.4 million in 2013 ($0.8 million in 2012) in Canadian Press in respect of its additional investment commitment as the carrying value had previously been reduced to nil. Torstar will begin to report its share of Canadian Press's results once the unrecognized losses (nil as of December 31, 2013 and $6.4 million as of December 31, 2012) have been offset by net income, OCI or as additional investments are made. In 2013, Torstar's share of Canadian Press's net income would have been $0.5 million ($0.3 million loss in 2012).

During 2013, Torstar made investments in other associated businesses totaling $0.5 million for which a loss of $0.2 million was recorded in the year.

Gain on sale of assets

During 2013, the Book Publishing Segment sold its 50% joint venture interest in its book publishing business in Greece for nominal consideration incurring a loss of $0.2 million. This was partially offset by a gain of $0.1 million from the sale of an available-for-sale equity investment for which Torstar received proceeds of $0.3 million.

During 2012, Torstar recognized a gain on sale of assets of $6.1 million. In the first quarter of 2012, Torstar sold a portion of its 50% joint venture interest in Tuango for proceeds of $3.9 million and recorded a gain on sale of assets of $3.4 million. Torstar retained a 38.2% interest in Tuango. In the fourth quarter of 2012, Torstar recorded a gain of $2.7 million in connection with the sale of the assets of Insurance Hotline. Net proceeds were $7.0 million comprised of $2.0 million in cash and a 12.6% interest in Kanetix Ltd. (an online Canadian insurance marketplace) valued at $5.0 million.

Investment write-down and loss

Investment write-down and loss was $0.6 million in 2013 and $0.1 million in 2012. During 2013, Torstar management determined that there had been an other than temporary decline in the value of two portfolio investments. Accordingly a $0.6 million write-down was recorded during the third quarter reducing the carrying value to nil.

Income and other taxes

With the exception of impairment charges in respect of certain intangible assets, impairment charges incurred during 2013 and 2012 were not deductible for tax purposes. Excluding the impact of the impairment charges in both 2013 and 2012, Torstar's effective tax rate was 27.8% in 2013 compared to 26.0% in 2012. The effective tax rate was higher in 2013 as compared to 2012 as there were several items in 2012 income which were capital in nature and taxed at a lower rate. In addition, Torstar recorded $0.8 million in 2012 as a tax benefit from the recognition of tax losses that had previously not been recognized.

Torstar's effective tax rate is higher than the Canadian statutory tax rates due to the large portion of its income that is taxed in foreign jurisdictions with higher tax rates as well as the impact of expenses that are not deductible for income tax purposes.

Net income (loss) attributable to equity shareholders

Torstar reported net loss attributable to equity shareholders of $28.0 million or $0.35 per share in 2013 down $110.3 million or $1.38 per share from net income attributable to equity shareholders of $82.3 million or $1.03 per share in 2012 and reflects a $94.9 million increase in impairment of assets and restructuring and other charges over 2012.

OUTLOOK

In 2013, the Media Segment continued to face challenges as a result of shifts in spending by advertisers combined with economic uncertainty. The rate of decline of print advertising revenues slowed in the fourth quarter of 2013, relative to earlier in the year. While indications are that the revenue trends experienced in early 2014 are showing an improvement relative to full year 2013, print advertising revenues are likely to continue to be under pressure. However, digital revenue and distribution revenue are expected to grow. Across Torstar, restructuring and operating cost reduction has been and is expected to remain an important area of focus. The Media Segment is anticipated to realize $21.1 million of savings in 2014 from restructuring initiatives undertaken through the end of 2013. The Media Segment will also benefit from lower defined benefit pension expense, which is expected to be approximately $14 million lower in 2014, with $6 million reflected in salaries and benefit expenses and $8 million in interest and financing costs. In addition, pricing arrangements with the suppliers of a majority of Torstar's newsprint requirements are expected to result in lower newsprint costs in 2014. Net investment spending associated with growth initiatives in 2014 is currently expected to be consistent with 2013 levels.

Harlequin finished 2013 with operating earnings down compared to the prior year reflecting lower revenues, higher author royalties for digital sales and lower favourable adjustments to prior year returns provisions. With revenues weaker than anticipated in 2013 and some Overseas markets continuing to face economic challenges, Harlequin's 2014 results are expected to be relatively stable compared to 2013, including the benefit of foreign exchange. However, earnings are expected to be lower in the first quarter as a result of stronger results posted in the first quarter of 2013 relative to the balance of the year. If the Canadian dollar remains at its current levels relative to the U.S. dollar and overseas currencies, Harlequin anticipates a year over year positive foreign currency impact of approximately $5.0 million including the impact of U.S. dollar hedges currently in place.

From a cash flow perspective, in 2014, Torstar anticipates spending approximately $40.0 million for the funding of registered defined benefit pension plans based on September 1, 2013 actuarial valuations. Torstar also anticipates spending approximately $27.0 million for additions to property, plant, equipment and intangible assets; inclusive of Torstar's proportionate share of additions to property, plant, equipment and intangible assets of its joint ventures. The 2014 capital expenditures are anticipated to include continued investment in technology and software in the Media Segment in addition to general capital maintenance spending.

DIVIDEND

On March 4, 2014, Torstar declared a quarterly dividend of 13.125 cents per share on its Class A shares and Class B non-voting shares, payable on March 31, 2014, to shareholders of record at the close of business on March 14, 2014. 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 INFORMATION

For additional information, please refer to Torstar's audited consolidated financial statements for the year ended December 31, 2013 and the 2013 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 CALL

Torstar has scheduled a conference call for March 5, 2014 at 8:15 a.m. to discuss its fourth quarter results. The dial-in number is (416) 340-8527 or 1-800-766-6630. 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 at (905) 694-9451 or 1-800-408- 3053 reservation number 5628301. 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 (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, Free Daily News Group Inc., which publishes the English-language Metro newspapers in several Canadian cities, Metroland Media Group, publisher of community and daily newspapers in Ontario; and also include digital properties including thestar.com, Workopolis, wagjag.com, toronto.com, save.ca, Olive Media, and eyeReturn Marketing; and Harlequin, a leading global publisher of books for women.

Non-IFRS measures

In addition to operating profit, an additional IFRS measure, as presented in the consolidated statement of income, management uses EBITDA (and where applicable Segmented EBITDA) operating earnings (and where applicable Segmented operating earnings) and Adjusted earnings per share as measures to assess the consolidated performance and the performance of the reporting units and business segments. Torstar also reports net debt, which is also a non-IFRS measure. Please refer to Section 13 of Torstar's 2013 MD&A for a reconciliation of EBITDA and Operating earnings (and Segmented EBITDA/Segmented Operating earnings - as applicable) with Operating profit (Segmented Operating profit - as applicable), Adjusted earnings per share to earnings per share and Net debt to Long-term debt.

Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA")/Segmented EBITDA

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 and impairment of assets. Torstar's method of calculating EBITDA may differ from other companies and accordingly may not be comparable to measures used by other companies. Segmented EBITDA is calculated in the same manner described above, except that it is calculated using total segment results prior to the elimination of proportionately consolidated results for joint ventures.

Operating earnings/Segmented operating earnings

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 salaries and benefits and other operating costs and amortization and depreciation. Operating earnings excludes restructuring and other charges and impairment of assets. Torstar's method of calculating operating earnings may differ from other companies and accordingly may not be comparable to measures used by other companies. Segmented operating earnings is calculated in the same manner described above, except that it is calculated using total segment results prior to the elimination of proportionately consolidated results for joint ventures.

Adjusted earnings per share

Adjusted earnings per share is used by management to represent the per share earnings of results of ongoing operations and is not a recognized measure of financial performance under IFRS. Torstar calculates adjusted earnings per share as earnings per share less the per share effect of impairment of assets, restructuring and other charges, non-cash foreign exchange, adjustments to contingent consideration, gain (loss) on sale of assets and investment write-down and loss. Torstar's method of calculating adjusted earnings per share may differ from other companies and accordingly may not be comparable to measures used by other companies.

Net debt

Net debt is used by management to represent the amount of borrowings outstanding and is calculated as the sum of Long-term debt, Current portion of long-term debt and Bank overdraft less Cash and cash equivalents.

Operating profit

Operating profit is an additional IFRS measure used by management to represent the results of operations inclusive of impairments and restructuring and other charges and appears in Torstar's consolidated statement of income.

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 press release. 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.

This press release includes, among others, forward-looking statements regarding the Company's expected net savings from restructuring initiatives, anticipated pension funding requirements and the outlook for 2014. 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 newspapers and other forms of media and media platforms; the Company's ability to attract and retain advertisers; the Company's ability to maintain adequate circulation/subscription levels; 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; general economic conditions in the principal markets in which the Company operates; the Company's ability to compete with book publishers, self-publishing and other providers of entertainment; the trend towards digital books and the Company's ability to distribute its books through the changing distribution landscape; the popularity of its authors and its ability to retain popular authors; the contraction and concentration of the wholesale and retail print channels; the Company's ability to accurately estimate the rate of book returns through the wholesale and retail channels; the decline of the Company's direct-to-consumer book publishing operations; labour disruptions; the Company's ability to reduce costs; loss of reputation; newsprint costs; foreign operations and foreign exchange fluctuations; credit risk; restrictions imposed by existing credit facilities, debt financing and availability of capital; changes in pension fund obligations; reliance on its printing operations; reliance on technology and information systems; interest rates; availability of insurance; litigation; environmental, privacy, anti-spam, communications and e-commerce laws and regulations applicable generally to the Company's businesses; dependence on key personnel; dependence on third party suppliers and service providers; intellectual property rights; results of impairment tests; risks related to business development and acquisition integration; product revenue and product liability; 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 and global economies; 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 2013 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 news releases are available on the Internet at www.torstar.com.

Torstar Corporation
Consolidated Statement of Financial Position
(Thousands of Canadian Dollars)
As at
December 31 2013
As at
December 31 2012 Restated*
As at
January 1 2012
Restated*
Assets
Current:
Cash and cash equivalents $19,151 $24,827 $36,450
Receivables 261,485 263,606 265,655
Inventories 29,368 31,637 34,600
Derivative financial instruments 1,272 367
Prepaid expenses and other current assets 47,872 43,254 46,269
Prepaid and recoverable income taxes 3,765 10,775 1,929
Total current assets 361,641 375,371 385,270
Investments in joint ventures 80,901 91,258 107,512
Investments in associated businesses 40,215 32,921 16,935
Property, plant and equipment 150,665 161,872 170,454
Intangible assets 73,942 87,475 85,865
Goodwill 533,982 596,703 598,603
Other assets 11,465 8,323 1,798
Employee benefits assets 44,532
Deferred income tax assets 51,369 89,965 100,246
Total assets $1,348,712 $1,443,888 $1,466,683
Liabilities and Equity
Current:
Bank overdraft $1,741 $9,767 $7,413
Current portion of long-term debt 196,191
Accounts payable and accrued liabilities 202,888 195,822 194,237
Derivative financial instruments 911
Provisions 20,807 15,649 22,057
Income taxes payable 9,810 11,016 17,118
Total current liabilities 236,157 232,254 437,016
Long-term debt 175,898 178,027
Derivative financial instruments 4,125 7,018 8,761
Provisions 16,251 14,520 16,906
Other liabilities 12,425 25,362 26,290
Employee benefits 82,641 255,434 264,027
Deferred income tax liabilities 24,431 7,593 7,419
Equity:
Share capital 398,605 397,425 395,334
Contributed surplus 17,383 16,057 14,828
Retained earnings 385,589 317,033 301,863
Accumulated other comprehensive loss (7,603 ) (9,699 ) (8,286 )
Total equity attributable to equity shareholders 793,974 720,816 703,739
Minority interests 2,810 2,864 2,525
Total equity 796,784 723,680 706,264
Total liabilities and equity $1,348,712 $1,443,888 $1,466,683
* Certain amounts shown here do not correspond to the annual consolidated financial statements as at December 31, 2012 and reflect adjustments made.
Torstar Corporation
Consolidated Statement of Income
(Thousands of Canadian Dollars except per share amounts)
Three months ended Year ended
December 31 December 31
2012 2012
2013 Restated* 2013 Restated*
Operating revenue $348,375 $377,892 $1,308,791 $1,406,768
Salaries and benefits (118,478 ) (127,519 ) (480,297 ) (499,485 )
Other operating costs (170,029 ) (189,813 ) (666,594 ) (721,541 )
Amortization and depreciation (9,316 ) (9,289 ) (36,266 ) (35,273 )
Restructuring and other charges (16,186 ) (6,261 ) (37,219 ) (17,389 )
Impairment of assets (266 ) (734 ) (77,094 ) (2,003 )
Operating profit (loss) 34,100 44,276 11,321 131,077
Interest and financing costs (4,306 ) (4,782 ) (17,460 ) (19,906 )
Foreign exchange (955 ) (103 ) (1,506 ) (248 )
Adjustment to contingent consideration 71 (19 ) 979 (258 )
Income from joint ventures 1,785 (9,833 ) (2,578 ) 2,183
Income (loss) of associated businesses (569 ) 222 2,345 (2,802 )
Gain (loss) on sale of assets 2,663 (152 ) 6,080
Investment write-down and loss (562 ) (93 )
30,126 32,424 (7,613 ) 116,033
Income and other taxes (9,000 ) (11,100 ) (19,800 ) (33,100 )
Net income (loss) $21,126 $21,324 ($27,413 ) $82,933
Attributable to:
Equity shareholders $20,637 $21,079 ($27,984 ) $82,344
Minority interests $489 $245 $571 $589
Net income (loss) attributable to equity
shareholders per Class A (voting) and Class
B (non-voting) share:
Basic and Diluted $0.26 $0.26 ($0.35 ) $1.03
* Certain amounts shown here do not correspond to the annual consolidated financial statements as at December 31, 2012 and reflect adjustments made.
Torstar Corporation
Consolidated Statement of Cash Flows
(Thousands of Canadian Dollars)
Three months ended Year ended
December 31 December 31
2012 2012
2013 Restated* 2013 Restated*
Cash was provided by (used in)
Operating activities $35,958 $28,998 $80,732 $89,835
Investing activities (6,646 ) (7,075 ) (28,720 ) (47,140 )
Financing activities (32,517 ) (32,407 ) (50,230 ) (56,112 )
Increase (decrease) in cash (3,205 ) (10,484 ) 1,782 (13,417 )
Effect of exchange rate changes 400 98 568 (560 )
Cash, beginning of period 20,215 25,446 15,060 29,037
Cash, end of period $17,410 $15,060 $17,410 $15,060
Operating activities:
Net income (loss) $21,126 $21,324 ($27,413 ) $82,933
Amortization and depreciation 9,316 9,288 36,266 35,273
Deferred income taxes 5,100 6,400 9,400 17,700
Loss (income) from joint ventures 7,215 9,833 2,578 (2,183 )
Distributions from joint ventures 1,000 3,360 7,934 14,408
Loss (income) of associated businesses 569 (222 ) (2,345 ) 2,802
Dividend from associated businesses 572 954
Impairment of assets (8,734 ) 734 77,094 2,003
Non-cash employee benefit expense 8,461 8,729 33,379 33,173
Employee benefits funding (18,142 ) (20,825 ) (67,232 ) (76,540 )
Other 4,198 (2,667 ) (617 ) (10,747 )
30,681 35,954 69,998 98,822
Decrease (increase) in non-cash working capital 5,277 (6,956 ) 10,734 (8,987 )
Cash provided by operating activities $35,958 $28,998 $80,732 $89,835
Investing activities:
Additions to property, plant and equipment and
intangible assets ($6,142 ) ($7,623 ) ($23,128 ) ($30,174 )
Investment in joint ventures (30 )
Investment in associated businesses (485 ) (3,485 ) (11,265 )
Acquisitions and investments (26 ) (1,410 ) (2,485 ) (11,883 )
Proceeds from sale of assets 1,957 253 6,207
Other 7 1 125 5
Cash used in investing activities ($6,646 ) ($7,075 ) ($28,720 ) ($47,140 )
Financing activities:
Issuance of bankers' acceptances $13,428 $5,991
Repayment of bankers' acceptances ($22,416 ) ($22,100 ) (22,416 ) (22,211 )
Dividends paid (10,338 ) (10,386 ) (41,461 ) (41,054 )
Exercise of share options 413
Other 237 79 219 749
Cash used in financing activities ($32,517 ) ($32,407 ) ($50,230 ) ($56,112 )
Cash represented by:
Cash $16,211 $20,253 $16,211 $20,253
Cash equivalents - short-term deposits 2,940 4,574 2,940 4,574
Cash and cash equivalents 19,151 24,827 19,151 24,827
Bank overdraft (1,741 ) (9,767 ) (1,741 ) (9,767 )
$17,410 $15,060 $17,410 $15,060
* Certain amounts shown here do not correspond to the annual consolidated financial statements as at December 31, 2012 and reflect adjustments made.

FOR FURTHER INFORMATION PLEASE CONTACT:

Contact Information:
L. DeMarchi
Executive Vice-President and Chief Financial Officer
Torstar Corporation
(416) 869-4776
www.torstar.com

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