Torstar Corporation Reports Fourth Quarter Results

TORONTO, ONTARIO -- (Marketwire) -- 03/06/13 -- Torstar Corporation (TSX:TS.B) today reported financial results for the fourth quarter ended December 31, 2012.

Highlights for the quarter:


--  Revenue was $395.7 million in the fourth quarter of 2012, down $29.6
    million from $425.3 million in the fourth quarter of 2011. Excluding the
    impact of acquisitions and a decrease at TMGTV resulting from lower
    product sales, revenue was down $23.0 million (5.4%) in the fourth
    quarter. 
    
--  EBITDA (see "non-IFRS measures") was $64.6 million in the fourth quarter
    of 2012, down $16.6 million from $81.2 million in the fourth quarter of
    2011. Media Segment EBITDA was down $12.5 million including the benefit
    of acquisitions. Book Publishing Segment EBITDA was down $4.4 million
    including a decline of $1.1 million from the impact of foreign exchange.
    Corporate expenses were $3.3 million, down $0.3 million from $3.6
    million in 2011.  
    
--  Net income attributable to equity shareholders was $24.1 million ($0.30
    per share) in the fourth quarter, down $40.2 million ($0.51 per share)
    from $64.3 million ($0.81 per share) last year.  
    
--  Adjusted earnings per share for the fourth quarter of 2012 (excluding
    restructuring and other charges, impairment of assets, non-cash foreign
    exchange, other income and gain on sale of assets) was $0.49 in the
    fourth quarter of 2012, down $0.21 from $0.70 in the fourth quarter of
    2011. 
    
--  Net debt was $149.0 million at December 31, 2012, down $10.5 million
    from $159.5 million at September 30, 2012. 
    

Highlights for the year:                                                    

--  Revenue was $1,485.7 million in 2012, down $63.1 million from $1,548.8
    million in 2011. Excluding the impact of acquisitions and a decrease at
    TMGTV resulting from lower product sales, revenue was down $64.9 million
    (4.2%) in 2012. 
    
--  EBITDA was $207.7 million in 2012, down $34.5 million from $242.2
    million in 2011. Media Segment EBITDA was down $27.0 million primarily
    as a result of lower print advertising revenues. Book Publishing Segment
    EBITDA was down $9.2 million including a decline of $1.7 million from
    the impact of foreign exchange. Corporate expenses were down $1.6
    million in 2012 as a result of lower compensation costs and a mark-to-
    market adjustment of a share-based compensation hedging instrument. 
    
--  Net income attributable to equity shareholders was $103.2 million or
    $1.30 per share in 2012 down $114.5 million or $1.44 per share from
    $217.7 million or $2.74 per share in 2011. Excluding the impact of CTV
    Inc. in 2011, Torstar would have reported net income attributable to
    equity shareholders of $143.1 million or $1.80 per share in 2011.  
    
--  Net debt was $149.0 million at December 31, 2012, down $4.3 million from
    $153.3 million at December 31, 2011. 

"Results in the quarter continue to be affected by industry challenges in our media operations and the current economic environment," said David Holland, President and CEO of Torstar Corporation. "EBITDA was down $16.6 million to $64.6 million with the Media and Book Publishing Segments both down in the quarter."

"In the Media operations, the softening of the print advertising environment which emerged in September continued through the fourth quarter and had a more significant impact on Star Media Group results. Revenue and earnings declines experienced in the quarter were more moderate at Metroland Media's community operations. A combination of weaker revenues, higher digital royalty rates and negative foreign exchange impact contributed to the decline in Harlequin results. An encouraging sign is that the quarter-to-quarter stability in the print and digital book publishing markets continued through the fourth quarter."

"Looking forward, visibility remains limited for the Media operation. The print advertising environment remained soft in the early part of 2013. We intend to continue to be diligent in seeking out revenue opportunity across our media platform including the introduction of a paywall at the Star. We also expect to adjust the cost structure in the Media operation as we continue to adapt. Restructuring initiatives undertaken to date in 2013 across the Media operation are expected to yield annualized savings of $6.6 million. At Harlequin, our 2012 result was up against a record 2011 underlying performance. Our objective going into 2013 is to deliver relatively stable full-year book publishing results assuming global economic conditions do not deteriorate. Across Torstar's operations, we continue to benefit from our modest leverage as we take the necessary steps to successfully evolve."

The following chart provides a continuity of earnings per share from 2011 to 2012:


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                                  Fourth Quarter           Full Year 
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Net income attributable to                                           
 equity shareholders per                                             
 share 2011                                $0.81               $2.74 
- CTV - gain on sale (2011)                                    (0.94)
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Adjusted net income                                                  
 attributable to equity                                              
 shareholders 2011                          0.81                1.80 
Changes                                                              
- Operations                    (0.15)              (0.37)           
- Restructuring and other                                            
 charges                         0.06                0.01            
- Impairment of assets          (0.15)              (0.16)           
- Interest and financing                                             
 costs                                               0.07            
- Non-cash foreign exchange                          0.03            
- Adjustment to contingent                                           
 consideration                                      (0.02)           
- Loss of associated                                                 
 businesses                                         (0.02)           
- Other income                                                       
 (remeasurement gains)          (0.24)              (0.14)           
- Gain on sale of assets         0.03                0.10            
- Deferred taxes                (0.06)                               
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Net income attributable to                                           
 equity shareholders per                                             
 share 2012                                $0.30               $1.30 
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OPERATING RESULTS - THREE MONTHS ENDED DECEMBER 31, 2012                    
Overall Performance                                                         
The following table sets out, in $000's, the segmented results for the three
months ended December 31, 2012 and 2011.                                    
                                                                            
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                                            2012                            
                ------------------------------------------------------------
                                         Book                               
                         Media     Publishing      Corporate          Total 
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Operating                                                                   
 revenue              $290,757       $104,989                      $395,746 
                                                                            
Salaries and                                                                
 benefits             (106,251)       (23,747)       $(2,541)      (132,539)
Other operating                                                             
 costs                (133,376)       (64,490)          (786)      (198,652)
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EBITDA                  51,130         16,752         (3,327)        64,555 
Amortization &                                                              
 depreciation           (8,910)        (1,080)           (16)       (10,006)
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Operating                                                                   
 earnings               42,220         15,672         (3,343)        54,549 
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Restructuring                                                               
 and other                                                                  
 charges                (5,706)          (944)                       (6,650)
Impairment of                                                               
 assets                (11,734)                                     (11,734)
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Operating profit       $24,780        $14,728        $(3,343)       $36,165 
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                                            2011                            
                ------------------------------------------------------------
                                         Book                               
                         Media     Publishing      Corporate          Total 
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Operating                                                                   
 revenue              $307,281       $118,055                      $425,336 
                                                                            
Salaries and                                                                
 benefits             (104,414)       (25,382)       $(2,889)      (132,685)
Other operating                                                             
 costs                (139,307)       (71,443)          (713)      (211,463)
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EBITDA                  63,560         21,230         (3,602)        81,188 
Amortization &                                                              
 depreciation           (8,305)          (884)           (10)        (9,199)
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Operating                                                                   
 earnings               55,255         20,346         (3,612)        71,989 
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Restructuring                                                               
 and other                                                                  
 charges               (13,550)          (113)                      (13,663)
Impairment of                                                               
 assets                                                                     
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Operating profit       $41,705        $20,233        $(3,612)       $58,326 
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Revenue

Total revenue was $395.7 million in the fourth quarter of 2012, down $29.6 million from $425.3 million in the fourth quarter of 2011. Excluding the impact of $4.6 million from acquisitions and an $11.2 million decrease in Metroland Media Group's TMGTV resulting from lower product sales, revenue was down $23.0 million or 5.4% in the fourth quarter of 2012. Media Segment revenues, excluding the above items, were down $9.9 million or 3.2% in the fourth quarter, largely due to print advertising revenue declines. Book Publishing Segment revenues, excluding the $4.3 million impact of foreign exchange, were down $8.8 million in the fourth quarter with revenues down in both North America and Overseas. Declines in print revenues were only partially offset by increases in digital revenues.

Salaries and benefits

Salaries and benefits expense was consistent with the prior year in the fourth quarter as savings in the Book Publishing Segment as well as $5.4 million of savings from restructuring initiatives in the newspaper businesses in the Media Segment were offset by the impact of acquisitions, increased pension costs and regular wage increases.

Other operating costs

Other operating costs were down $12.8 million or 6.1% in the fourth quarter of 2012 resulting from revenue declines, and a $9.7 million decrease in TMGTV costs resulting from lower product sales, partially offset by investment spending related to Metro.

EBITDA

EBITDA was $64.6 million in the fourth quarter of 2012, down $16.6 million from $81.2 million in the fourth quarter of 2011. Media Segment EBITDA was down $12.5 million primarily as a result of lower print advertising revenues. Book Publishing Segment EBITDA was down $4.4 million including a decline of $1.1 million from the impact of foreign exchange. Corporate expenses were $3.3 million, down $0.3 million from $3.6 million in 2011.

Restructuring and other charges

Restructuring and other charges of $6.7 million and $13.7 million were recorded in the fourth quarter of 2012 and 2011 respectively. Fourth quarter 2012 restructuring provisions of $6.3 million are expected to result in annual net savings of $5.9 million and a reduction of approximately 67 positions. $0.4 million of the savings were realized in the fourth quarter of 2012.

Impairment of assets

During the fourth quarter, Torstar incurred charges related to asset impairments totaling $11.7 million related to certain equipment, intangible assets and goodwill in the Media Segment. These charges have no impact on cash flows. During the fourth quarter, in connection with restructuring activities, Torstar incurred charges related to asset impairments totaling $0.4 million related to certain equipment in the Metroland Media Group of cash generating units ("CGUs") and $0.3 million related to certain equipment and finite life intangible assets in the Toronto Star Group CGU. 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. A goodwill impairment charge of $11.0 million was recorded in the Workopolis CGU as a result of increased competition in the online recruitment and job search markets and prevailing economic conditions.

Interest and financing costs

Interest expense increased in the fourth quarter of 2012 reflecting a higher level of average net debt outstanding in the fourth quarter of 2012 and higher effective interest rates. The average net debt (long-term debt and bank overdraft net of cash and cash equivalents) was $154.2 million in the fourth quarter of 2012, up $33.7 million from $121.1 million in the same period last year. Torstar's effective interest rate on long-term debt was 4.0% in the fourth quarter of 2012 and 3.0% in the fourth quarter of 2011.

Income from associated businesses

Income from associated businesses was $0.1 million in the fourth quarter of 2012 inclusive of Torstar's share of Blue Ant's income of $0.6 million and Tuango's income of $0.2 million. This was partially offset by Torstar's share of losses of $0.2 million from Shop.ca and a $0.5 million loss in Canadian Press. Loss of associated businesses was $0.4 million from Q-ponz in the fourth quarter of 2011. Torstar recorded a loss of $0.5 million in the fourth quarter of 2012 to reduce its carrying value in Canadian Press to nil. Torstar did not record its share of Black Press's results in the fourth quarter of 2012 as Torstar's carrying value in Black Press had previously been reduced to nil.

Other income

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.

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 for net proceeds of $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. This investment has been recorded at cost and is included in portfolio investments. At the same time, Torstar received an additional $4.0 million of cash in exchange for Media inventory to be provided to Kanetix Ltd. over the next two years.

Income and other taxes

Torstar's effective tax rate in the fourth quarter of 2012 was 33.7%, which was higher than the Canadian statutory rate of 26.5% primarily due to the impairment of goodwill that was not tax affected.

Net income attributable to equity shareholders

Torstar reported net income attributable to equity shareholders of $24.1 million or $0.30 per share in the fourth quarter of 2012, down $40.2 million or $0.51 per share from $64.3 million or $0.81 per share in the fourth quarter of 2011.


                                                                            
OPERATING RESULTS - YEAR ENDED DECEMBER 31, 2012                            
Overall Performance                                                         
The following table sets out, in $000's, the segmented results for the years
ended December 31, 2012 and 2011.                                           
                                                                            
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                                            2012                            
                ------------------------------------------------------------
                                         Book                               
                         Media     Publishing      Corporate          Total 
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Operating                                                                   
 revenue            $1,059,261       $426,483                    $1,485,744 
                                                                            
Salaries and                                                                
 benefits             (414,135)       (96,002)      $(10,698)      (520,835)
Other operating                                                             
 costs                (500,417)      (253,550)        (3,210)      (757,177)
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EBITDA                 144,709         76,931        (13,908)       207,732 
Amortization &                                                              
 depreciation          (34,027)        (4,107)           (48)       (38,182)
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Operating                                                                   
 earnings              110,682         72,824        (13,956)       169,550 
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Restructuring                                                               
 and other                                                                  
 charges               (16,498)        (1,280)                      (17,778)
Impairment of                                                               
 assets                (13,003)                                     (13,003)
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Operating profit       $81,181        $71,544       $(13,956)      $138,769 
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                                            2011                            
                ------------------------------------------------------------
                                         Book                               
                         Media     Publishing      Corporate          Total 
----------------------------------------------------------------------------
Operating                                                                   
 revenue            $1,089,330       $459,427                    $1,548,757 
                                                                            
Salaries and                                                                
 benefits             (398,842)      (100,014)      $(12,227)      (511,083)
Other operating                                                             
 costs                (518,818)      (273,320)        (3,287)      (795,425)
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EBITDA                 171,670         86,093        (15,514)       242,249 
Amortization &                                                              
 depreciation          (29,415)        (3,695)           (55)       (33,165)
----------------------------------------------------------------------------
Operating                                                                   
 earnings              142,255         82,398        (15,569)       209,084 
----------------------------------------------------------------------------
Restructuring                                                               
 and other                                                                  
 charges               (18,860)          (551)                      (19,411)
Impairment of                                                               
 assets                                                                     
----------------------------------------------------------------------------
Operating profit      $123,395        $81,847       $(15,569)      $189,673 
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Revenue

Total revenue was down $63.1 million or 4.1% in 2012. Excluding the impact of $36.1 million from acquisitions and a $34.3 million decrease in Metroland Media Group's TMGTV resulting from lower product sales, revenue was down $64.9 million or 4.2%. The declines in product sale revenues in TMGTV operations are consistent with expected product life cycles in this business. Media Segment revenues, excluding the above items, were down $31.8 million or 2.9% in 2012. Print advertising revenues were down at the Toronto Star and the Metroland Media Group, partially offset by revenue growth at the Metro newspapers. Digital revenue in the Media Segment was down 4.7% in 2012 due primarily to a decline at WagJag and a change to equity accounting for Torstar's investment in Tuango in the first quarter of 2012. Excluding these two items, digital revenue was up 1.1%. Book Publishing Segment revenues, excluding the impact of foreign exchange, were down $27.4 million or 6.0% in 2012 with declines in print revenue more than offsetting digital revenue growth. Beginning in the second quarter of 2012, digital revenue growth and print revenue declines began to moderate and this trend continued for the balance of the year.

Salaries and benefits

Total salaries and benefits expense increased 1.9% in 2012 as savings of $16.6 million from restructuring initiatives in the newspaper businesses in the Media Segment reduced the impact of acquisitions, additional pension costs and regular wage increases. Book Publishing Segment salaries and benefits reflect lower variable compensation costs. Corporate expenses were down $1.6 million in 2012 as a result of lower variable compensation costs and a favourable mark-to-market adjustment related to a share-based compensation hedging instrument.

Other operating costs

Total other operating costs were down 4.8% in 2012 resulting from revenue declines and a $30.4 million decrease in costs at TMGTV resulting from lower product sales, partially offset by additional expenses related to investment spending at Metro and 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 costs resulting from lower revenues and reduced promotional spending in 2012.

EBITDA

EBITDA was $207.7 million in 2012, down $34.5 million from $242.2 million in 2011. Prior year acquisitions provided $5.8 million of EBITDA growth in 2012. Media Segment EBITDA was down $27.0 million primarily as a result of lower print advertising revenue. Book Publishing Segment EBITDA was down $9.2 million including a decline of $1.7 million from the impact of foreign exchange. Corporate expenses were $13.9 million, down $1.6 million from $15.5 million in 2011.

Restructuring and other charges

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. The 2012 restructuring initiatives in the Media Segment are expected to result in annualized net labour savings of approximately $17.5 million and a reduction of approximately 260 positions. The 2012 restructuring initiatives in the Book Publishing Segment are expected to result in annualized savings of approximately $0.9 million and a reduction of 9 positions. $6.0 million of the savings were realized in 2012.

Restructuring and other charges of $19.4 million were recorded in 2011, including $18.8 million in the Media Segment and $0.6 million in the Book Publishing Segment. The 2011 restructuring charge for the Media Segment included $15.6 million in respect of labour restructuring and a $3.2 million provision for rented space that was vacated as reduced staff counts allowed for space consolidation.

Impairment of assets

In 2012, Torstar incurred charges related to asset impairment totaling $13.0 million related to certain equipment, intangible assets and goodwill in the Media Segment. These charges have no impact on cash flows.

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 Toronto Star Group CGU.

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 CGU as a result of increased competition in the online recruitment and job search markets and prevailing economic conditions.

Interest and financing costs

Interest and financing costs were $8.8 million in 2012, down $7.8 million from $16.6 million in 2011.

2012 interest expense reflects a lower level of average net debt outstanding in 2012 partially offset by higher effective interest rates. The average net debt (long-term debt and bank overdraft net of cash and cash equivalents) was $154.9 million in 2012, down $16.6 million from $171.5 million in 2011. Torstar's effective interest rate on long-term debt was 4.1% in 2012 and 3.9% in 2011. Net debt was $149.0 million at December 31, 2012, down $4.3 million from $153.3 million at December 31, 2011.

Interest accretion costs related to contingent consideration estimates, long-term restructuring provisions and deferred acquisition payments were $1.0 million in 2012 and $2.7 million in 2011.

Loss of associated businesses

Loss of associated businesses was $3.3 million in 2012 and $2.2 million in 2011.

Torstar's share of Blue Ant's net loss was $2.2 million in 2012 ($nil in 2011), representing Blue Ant's results through November 30, 2012. Blue Ant completed its acquisition of High Fidelity HDTV in 2012 and the loss includes expenses for the Canadian Radio-television and Telecommunications Commission benefit obligations and reorganization charges. Blue Ant has an August fiscal year end and therefore does not have coterminous quarter-ends with Torstar.

Torstar's share of the Shop.ca net loss was $0.7 million. 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 $0.8 million in 2012 ($1.6 million in 2011) to reduce its carrying value in Canadian Press to nil. Torstar's unrecognized share of Canadian Press's net loss was $0.3 million in 2012 down from $0.7 million in 2011. Torstar will begin to report its share of Canadian Press's results once the unrecognized losses ($6.4 million as of December 31, 2012) have been offset by net income, other comprehensive income or at such time that additional investments are made.

Torstar has not recorded its share of Black Press' results in either 2012 or 2011 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, up from $3.3 million in 2011. Torstar will begin again to report its share of Black Press's results once the unrecognized losses ($0.7 million as of December 31, 2012) have been offset by net income or other comprehensive income.

On February 29, 2012 Torstar sold a portion of its 50% interest in Tuango. As a result of the sale transaction and revised shareholders' agreement, Torstar lost joint control of Tuango and moved from proportionately consolidating Tuango to accounting for it as an associated business using the equity method. Torstar's share of Tuango's net income for the period from February 29, 2012 to December 31, 2012 was $0.4 million.

Torstar ceased to equity account for Q-ponz when it was sold in early 2012. No amounts were recorded related to the Q-ponz results in 2012 ($0.5 million loss in 2011).

Other income and gain on sale of assets

During 2012, Torstar recognized other income of $10.4 million and a gain on sale of assets of $9.8 million.

Torstar recognized a gain on sale of assets of $3.7 million from the sale of Sing Tao's land and buildings in Toronto. Torstar's share of the proceeds included $2.5 million of cash and $3.5 million for a mortgage receivable which will mature in 18 to 24 months from the date of sale.

Torstar also recorded a gain on sale of assets of $3.4 million on the sale of a portion of its 50% joint venture interest in Tuango as noted above. Net proceeds were $3.9 million and Torstar retained a 38.2% interest in Tuango. As a result of the move from proportionately consolidating Tuango to accounting for it as an associated business using the equity method, the investment was remeasured and the investment in associated businesses was recorded at fair value, resulting in a remeasurement gain of $10.4 million which has been included in other income.

In November 2012, Torstar recorded a gain of $2.7 million in connection with the sale of the assets of Insurance Hotline. Net proceeds of $7.0 million were 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. This investment has been recorded at cost and is included in portfolio investments. At the same time, Torstar received an additional $4.0 million of cash in exchange for Media inventory to be provided to Kanetix Ltd. over the next two years.

In 2011, Torstar recognized other income of $19.1 million. 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.

Gain on sale of CTV Inc.

In 2011, Torstar recorded a gain of $74.6 million on the sale of its remaining interest in CTV. The transaction closed on April 1, 2011 and Torstar received cash proceeds of $291.6 million.

Income and other taxes

There were several items in Torstar's net income before taxes in 2012 and 2011 that were not tax-affected and therefore had an impact on Torstar's effective tax rate in both years. This included the 2012 remeasurement gain on Tuango, the 2011 gain on the sale of CTV, and the 2011 remeasurement gain on the Metro and save.ca transactions. In addition, Torstar recorded $0.8 million in 2012 and $10.0 million in 2011 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 30.5% in 2012 and 31.6% in 2011. The Canadian statutory rate was 26.5% in 2012, which was lower than the 28.25% Canadian statutory rate in 2011. The Canadian statutory rate had previously been planned to be reduced to 26.25% in 2012 and further to 25% by 2014. The Ontario government passed legislation during 2012 to indefinitely postpone this planned tax rate reduction. Torstar recorded a tax benefit of $0.2 million in 2012 in respect of this tax rate change.

Torstar's effective tax rate is higher than the Canadian statutory rate due to the impact of non-deductible expenses and income earned in foreign jurisdictions subject to higher rates of tax.

Net income attributable to equity shareholders

Torstar reported net income attributable to equity shareholders of $103.2 million or $1.30 per share in 2012 down $114.5 million or $1.44 per share from $217.7 million or $2.74 per share in 2011. Excluding the impact of CTV in 2011, Torstar would have reported net income attributable to equity shareholders of $143.1 million or $1.80 per share in 2011.

OUTLOOK

The 2013 revenue outlook for the Media Segment remains uncertain. Print advertising continues to be challenged by shifts in spending by advertisers and economic uncertainty. Early indications in 2013 are that print advertising revenue remains soft. Digital revenue is expected to grow in 2013. Cost reductions remain an important area of focus. The Media Segment is anticipated to realize $15.6 million of savings in 2013 from restructuring initiatives undertaken through the end of 2012. Management anticipates pursuing further cost reductions as the year progresses including recent restructuring initiatives in the Media Segment which are expected to result in annualized net savings of $6.6 million, $5.0 million of which are expected to be realized in 2013. In addition, fixed price arrangements with the suppliers of a majority of Torstar's newsprint requirements are expected to reduce newsprint costs by approximately $3.5 million in 2013. Net investment spending associated with growth initiatives in 2013 is anticipated to be consistent with 2012 levels.

Harlequin finished 2012 with operating earnings down $7.9 million compared to the prior year, excluding the impact of foreign exchange. Digital revenue growth and print declines began to moderate in North America as some stability emerged in print and digital sales during 2012. This trend is expected to continue. Overseas markets are expected to continue to face economic challenges particularly in Europe. After a challenging 2012, which included the impact of a competitor's bestseller and the introduction of higher author royalties on digital sales, Harlequin's earnings are anticipated to be relatively stable in 2013. However, earnings are expected to be lower in the first quarter due to the timing of the increase in author royalties on digital sales part way through 2012 and the strong results posted in the first quarter of 2012. If the Canadian dollar remains at its current levels relative to the U.S. dollar and overseas currencies, Harlequin anticipates the impact of foreign exchange to be relatively neutral in 2013.

Effective January 1, 2013 Torstar will be required to adopt the amended IAS 19 accounting standard surrounding Employee Benefits. After restating 2012 for the adoption of this standard, it is expected that 2013 employee future benefit expense will increase by approximately $2.0 million.

From a cash flow perspective, in 2013, Torstar anticipates spending approximately $65.0 million for the minimum required funding of registered defined benefit pension plans and $33.0 million for additions to property, plant, equipment and intangible assets. The 2013 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 5, 2013, 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, 2013, to shareholders of record at the close of business on March 15, 2013. 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, 2012 and the 2012 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 6, 2013 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 7117631. 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 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.

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 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.

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. 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; 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 maintain adequate circulation 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; 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; changes in pension fund obligations; results of impairment tests; reliance on its printing operations; reliance on technology and information systems; risks related to business development and acquisition integration; interest rates; availability of insurance; litigation; environmental, privacy, anti-spam, communications and e-commerce laws and regulations applicable generally to our businesses; dependence on key personnel; dependence on third party suppliers and service providers; 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 2012 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.


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Torstar Corporation                                                         
Consolidated Statement of Financial Position                                
(Thousands of Canadian Dollars)                                             
                                                                            
                                    As at December 31     As at December 31 
                                                 2012                  2011 
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Assets                                                                      
  Current:                                                                  
  Cash and cash equivalents                   $39,021               $50,588 
  Receivables                                 274,383               278,010 
  Inventories                                  34,001                36,995 
  Derivative financial                                                      
   instruments                                  1,272                   367 
  Prepaid expenses and other                                                
   current assets                              44,236                47,063 
  Prepaid and recoverable income                                            
   taxes                                       11,195                 2,451 
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  Total current assets                        404,108               415,474 
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Property, plant and equipment                 167,104               177,245 
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Investment in associated                                                    
 businesses                                    42,835                16,935 
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Intangible assets                             108,130               107,845 
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Goodwill                                      648,861               665,029 
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Other assets                                   11,823                 1,798 
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Deferred income tax assets                     88,383               100,441 
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Total assets                               $1,471,244            $1,484,767 
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Liabilities and Equity                                                      
  Current:                                                                  
  Bank overdraft                               $9,962                $7,661 
  Current portion of long-term                                              
   debt                                                             196,191 
  Accounts payable and accrued                                              
   liabilities                                212,741               210,567 
  Provisions                                   15,964                22,599 
  Income tax payable                           11,522                17,398 
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  Total current liabilities                   250,189               454,416 
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Long-term debt                                178,027                       
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Derivative financial instruments                7,018                 8,761 
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Provisions                                     14,520                16,906 
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Other liabilities                              25,847                26,749 
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Employee benefits                             255,434               264,027 
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Deferred income tax liabilities                 8,315                 7,644 
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Equity:                                                                     
  Share capital                               397,425               395,334 
  Contributed surplus                          16,057                14,828 
  Retained earnings                           325,247               301,863 
  Accumulated other                                                         
   comprehensive loss                          (9,699)               (8,286)
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  Total equity attributable to                                              
   equity shareholders                        729,030               703,739 
  Minority interests                            2,864                 2,525 
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Total equity                                  731,894               706,264 
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Total liabilities and equity               $1,471,244            $1,484,767 
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Torstar Corporation                                                         
Consolidated Statement of Income                                            
                                                                            
(Thousands of Canadian Dollars except per share amounts)                    
                                                                            
                               Three months ended                Year ended 
                                      December 31               December 31 
                                                                            
                                2012         2011         2012         2011 
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Operating revenue           $395,746     $425,336   $1,485,744   $1,548,757 
                                                                            
Salaries and benefits       (132,539)    (132,685)    (520,835)    (511,083)
Other operating costs       (198,652)    (211,463)    (757,177)    (795,425)
Amortization and                                                            
 depreciation                (10,006)      (9,199)     (38,182)     (33,165)
Restructuring and other                                                     
 charges                      (6,650)     (13,663)     (17,778)     (19,411)
Impairment of assets         (11,734)                  (13,003)             
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Operating profit              36,165       58,326      138,769      189,673 
Interest and financing                                                      
 costs                        (2,001)      (2,061)      (8,759)     (16,629)
Adjustment to contingent                                                    
 consideration                   (19)         (71)        (258)         630 
Foreign exchange                 (97)        (516)        (246)      (3,477)
Income (loss) of                                                            
 associated businesses            74         (388)      (3,295)      (2,157)
Gain on sale of assets         2,663                     9,811              
Other income                               19,026       10,407       19,055 
Gain on sale of CTV Inc.                                             74,590 
Investment write-down                                                       
 and loss                                    (544)         (93)        (544)
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                              36,785       73,772      146,336      261,141 
Income and other taxes       (12,400)      (9,200)     (42,500)     (43,000)
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Net income                   $24,385      $64,572     $103,836     $218,141 
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Attributable to:                                                            
  Equity shareholders        $24,140      $64,283     $103,247     $217,721 
  Minority interests            $245         $289         $589         $420 
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Net income attributable                                                     
 to equity shareholders                                                     
 per Class A (voting)                                                       
 and Class B (non-                                                          
 voting) share:                                                             
Basic                          $0.30        $0.81        $1.30        $2.74 
Diluted                        $0.30        $0.81        $1.29        $2.72 
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Torstar Corporation                                                         
Consolidated Statement of Cash Flows                                        
                                                                            
(Thousands of Canadian Dollars)                                             
                                                                            
                               Three months ended               Year ended  
                                      December 31               December 31 
                                                                            
                                2012         2011         2012         2011 
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Cash was provided by                                                        
 (used in)                                                                  
  Operating activities       $30,404      $46,311      $90,605     $114,955 
  Investing activities        (9,004)    (101,711)     (47,733)     137,428 
  Financing activities       (32,407)      52,977      (56,112)    (245,582)
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Increase (decrease) in                                                      
 cash                        (11,007)      (2,423)     (13,240)       6,801 
Effect of exchange rate                                                     
 changes                         222       (1,765)        (628)          93 
Cash, beginning of                                                          
 period                       39,844       47,115       42,927       36,033 
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Cash, end of period          $29,059      $42,927      $29,059      $42,927 
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Operating activities:                                                       
  Net income                 $24,385      $64,572     $103,836     $218,141 
  Amortization and                                                          
   depreciation               10,006        9,199       38,182       33,165 
  Deferred income taxes        7,600       (3,700)      24,200        4,300 
  Loss (income) of                                                          
   associated businesses         (74)         388        3,295        2,157 
  Gain on sale of CTV                                                       
   Inc.                                                             (74,590)
  Impairment of assets        11,734                    13,003              
  Non-cash employee                                                         
   benefit expense             4,520        3,692       16,284       14,646 
  Employee benefits                                                         
   funding                   (20,825)      (9,937)     (76,540)     (51,236)
  Other                       (2,635)     (10,339)     (24,854)     (13,491)
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                              34,711       53,875       97,406      133,092 
  Increase in non-cash                                                      
   working capital            (4,307)      (7,564)      (6,801)     (18,137)
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Cash provided by                                                            
 operating activities        $30,404      $46,311      $90,605     $114,955 
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Investing activities:                                                       
  Additions to property,                                                    
   plant and equipment                                                      
   and intangible assets     $(9,555)     $(8,720)    $(33,012)    $(35,046)
  Proceeds from sale of                                                     
   CTV Inc.                                                         291,590 
  Investment in                                                             
   associated businesses                  (17,268)     (11,265)     (17,268)
  Acquisitions and                                                          
   portfolio investments      (1,410)     (75,726)     (11,883)    (101,793)
  Proceeds from sale of                                                     
   assets                      1,957                     8,407              
  Other                            4            3           20          (55)
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Cash provided by (used                                                      
 in) investing                                                              
 activities                  $(9,004)   $(101,711)    $(47,733)    $137,428 
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Financing activities:                                                       
  Issuance of bankers'                                                      
   acceptances                            $63,109       $5,991      $71,630 
  Repayment of bankers'                                                     
   acceptances              $(22,100)                  (22,211)    (281,430)
  Dividends paid             (10,386)      (9,876)     (41,054)     (36,862)
  Exercise of share                                                         
   options                                     13          413          324 
  Other                           79         (269)         749          756 
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Cash used in financing                                                      
 activities                  (32,407)     $52,977     $(56,112)   $(245,582)
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Cash represented by:                                                        
  Cash                       $29,248      $42,733      $29,248      $42,733 
  Cash equivalents -                                                        
   short-term deposits         9,773        7,855        9,773        7,855 
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  Cash and cash                                                             
   equivalents                39,021       50,588       39,021       50,588 
  Bank overdraft              (9,962)      (7,661)      (9,962)      (7,661)
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                             $29,059      $42,927      $29,059      $42,927 
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Contacts:
Torstar Corporation
L. DeMarchi
Executive Vice-President and Chief Financial Officer
(416) 869-4776
www.torstar.com