SOURCE: Torstar Corporation

Torstar Corporation

March 02, 2016 06:30 ET

Torstar Corporation Reports Fourth Quarter Results

TORONTO, ON--(Marketwired - March 02, 2016) - Torstar Corporation (TSX: TS.B) today reported financial results for the fourth quarter ended December 31, 2015.

Highlights for the fourth quarter:

  • In VerticalScope's first full quarter following Torstar's investment on July 28, 2015, VerticalScope grew their U.S. dollar adjusted EBITDA (see "Non-IFRS measures") by 22.4% relative to the comparable period in 2014.
  • Subsequent to the end of 2015, we announced the transition of printing of the Toronto Star to Transcontinental Printing which is expected to commence in July 2016. Also in connection with this decision, we have commenced exploration of the sale of the existing printing facility and land in Vaughan.
  • Ended 2015 with total cash and cash equivalents and restricted cash of $73.1 million. Subsequent to the end of the year, $22.8 million of restricted cash was released on the expiry of the Harlequin escrow.
  • Our net loss from continuing operations was $233.4 million ($2.90 per share) in the fourth quarter of 2015. This compares to net income of $20.9 million ($0.26 per share) in the fourth quarter of 2014. Our loss in the fourth quarter of 2015 included $213.3 million of non-cash impairment charges and $37.2 million of amortization and depreciation.
  • Our net loss attributable to equity shareholders was $234.8 million ($2.91 per share) in the fourth quarter of 2015 compared to net income attributable to equity shareholders of $20.6 million ($0.26 per share) in the fourth quarter of 2014.
  • Adjusted loss per share (see "Non-IFRS measures") was $0.10 in the fourth quarter of 2015, down $0.40 from the fourth quarter of 2014. Adjusted loss per share included a $0.32 per share effect of amortization of intangible assets, primarily associated with the investment in VerticalScope.
  • Fourth quarter 2015 segmented operating profit (see "Non-IFRS measures") decreased $253.1 million from the fourth quarter of 2014. Segmented operating profit in the fourth quarter of 2015 included $213.3 million of non-cash impairment charges and $37.2 million of amortization and depreciation.
  • Segmented adjusted EBITDA (see "Non-IFRS measures") was $24.8 million in the fourth quarter of 2015, down $13.8 million from $38.6 million in the fourth quarter of 2014 and included $9.6 million of net investment spending in Toronto Star Touch, partially offset by the inclusion of VerticalScope.
  • Segmented revenue (see "Non-IFRS measures") was $233.0 million in the fourth quarter of 2015, down $11.9 million (4.9%) from $244.9 million in the fourth quarter of 2014. VerticalScope's revenue increased 22.7% in the fourth quarter of 2015 as compared with the fourth quarter in 2014.

Highlights for the year:

  • On July 28, 2015 we purchased a 56% interest in VerticalScope, a vertically focused digital media company which operates across North America, for a net investment of approximately $180 million, including transaction costs. VerticalScope's U.S. dollar revenue increased 20.9% from July 29, 2015 through December 31, 2015 as compared with the comparable period in 2014.
  • During the period from July 29, 2015 through December 31, 2015 VerticalScope made acquisitions totalling U.S. $25.1 million of which U.S. $10.6 million was financed from VerticalScope's operating cash flow and U.S. $14.5 million was financed through an increase in VerticalScope's debt.
  • On September 15, 2015 the Toronto Star launched Toronto Star Touch, its innovative new tablet app. The app is free to consumers and is available for iOS on the Apple App Store and for Android on the Google Play Store. While audience size has been lower than we initially anticipated, we are making steady progress in building readership. Daily audience engagement metrics are strong and advertiser response has been very positive.
  • Our net loss from continuing operations was $399.8 million ($4.96 per share) in 2015 and $49.6 million ($0.62 per share) in 2014. Our net loss in 2015 included $361.1 million of non-cash impairment charges and $77.5 million of non-cash amortization and depreciation.
  • Our net loss attributable to equity shareholders was $404.0 million ($5.02 per share) in 2015 compared to net income attributable to equity shareholders of $172.7 million ($2.16 per share) in 2014. Our net income in 2014 included a $224.6 million pre-tax gain on the sale of Harlequin.
  • Adjusted loss per share was $0.10 in 2015, down $0.68 from adjusted earnings per share of $0.58 in 2014. Adjusted loss per share included a $0.39 per share effect of amortization of intangible assets, primarily associated with the investment in VerticalScope.
  • In 2015, our segmented operating loss was $403.1 million which included $361.1 million of non-cash impairment charges and $77.5 million of non-cash amortization and depreciation.
  • Our segmented adjusted EBITDA was $66.8 million in 2015, down $34.9 million from $101.7 million in 2014.
  • Segmented revenue was $843.6 million in 2015, down $61.0 million (6.7%) from $904.6 million in 2014. 
  • In 2015, we announced our intention to reduce the dividend to 26 cents per share annually effective the first quarter of 2016.

"This was a significant year of transition at Torstar as we took the steps necessary to position ourselves for a more digital future. Our investment in VerticalScope repositioned our asset base and achieved our objective of allocating capital to a high growth digital asset. Our launch of Toronto Star Touch greatly enhanced our digital capability in the newsroom at the Toronto Star. In the traditional newspaper operations, we continued to feel the effects of a challenging print advertising environment." said David Holland, President and CEO of Torstar. "Results in the quarter were lower with segment adjusted EBITDA down $13.8 million to $24.8 million as print advertising revenue declines and a significant investment in the launch of Toronto Star Touch exceeded contributions from VerticalScope and the effect of continuing efforts on costs. On a positive note, subscriber revenue at the Toronto Star and flyer distribution at Metroland experienced only modest declines in the quarter. In our Digital Ventures segment, adjusted EBITDA increased $5.5 million in the fourth quarter as we benefited from the inclusion of earnings from our investment in VerticalScope, where earnings grew 22% in the quarter, nicely in line with our expectations."

"Looking forward, in 2016 we anticipate that growth resulting from our efforts and investments in digital operations will increasingly help to offset continued pressure on print advertising revenues. We will also remain focused on resizing the cost base including execution of the outsourcing of printing of the Toronto Star." We are very committed to our multi-platform strategy across our traditional newspaper businesses and we are advancing the digital evolution of our asset base through reinvestment in and support of VerticalScope. "

The following chart provides a continuity of earnings per share from the fourth quarter and twelve months ended 2014 to the fourth quarter and twelve months ended 2015:

  Fourth quarter Twelve months ended December 31
 
Earnings Per Share
Adjusted Earnings Per Share
Earnings Per Share
Adjusted Earnings Per Share
Earnings (loss) per share from continuing operations attributable to equity shareholders in 2014 $0.26   $0.30   ($0.62 ) $0.58  
Changes        
  • Adjusted EBITDA* (0.06 ) (0.06 ) (0.31 ) (0.31 )
  • Amortization and Depreciation* (0.32 ) (0.32 ) (0.39 ) (0.39 )
  • Operating earnings* (0.38 ) (0.38 ) (0.70 ) (0.70 )
  • Restructuring and other charges** 0.04     (0.08 )  
  • Impairment of assets** (2.71 )   (3.30 )  
  • Operating profit(loss) (3.05 ) (0.38 ) (4.08 ) (0.70 )
  • Interest and financing costs (0.02 ) (0.02 ) 0.02   0.02  
  • Non-cash foreign exchange** 0.00     0.06    
  • Other income (expense) ** (0.07 )   (0.06 )  
  • Change in deferred taxes** (0.02 )   (0.28 )  
Earnings (loss) per share from continuing operations attributable to equity shareholders in 2015 ($2.90 ) ($0.10 ) ($4.96 ) ($0.10 )
Earnings (loss) per share from discontinued operations attributable to equity shareholders in 2015 ($0.01 )   ($0.06 )  
Earnings (loss) per share attributable to equity shareholders in 2015 ($2.91 ) ($0.10 ) ($5.02 ) ($0.10 )
*Includes our proportionately consolidated share of joint venture operations and our 56% interest in VerticalScope.
** Items are excluded from definition of adjusted earnings per share, see "Non-IFRS measures"
 

OPERATING RESULTS -- FOURTH QUARTER 2015

The following tables sets out, in $000's the segmented results for the three months ended December 31, 2015 and 2014.

Three months ended December 31, 2015
(in $000's) MMG SMG Digital Ventures Corporate Total Segmented* Adjustments & Eliminations 1 Total Per Consolidated Statement of Income
Operating revenue $120,399   $92,890   $19,740     $233,029   ($19,280 ) $213,749  
Salaries and benefits (52,777 ) (33,691 ) (6,230 ) ($1,641 ) (94,339 ) 6,833   (87,506 )
Other operating costs (49,345 ) (56,572 ) (7,551 ) (380 ) (113,848 ) 5,789   (108,059 )
Adjusted EBITDA** 18,277   2,627   5,959   (2,021 ) 24,842   (6,658 ) 18,184  
Amortization & depreciation (3,624 ) (5,333 ) (28,258 ) (5 ) (37,220 ) 27,911   (9,309 )
Operating earnings (loss)** 14,653   (2,706 ) (22,299 ) (2,026 ) (12,378 ) 21,253   8,875  
Restructuring and other charges (3,958 ) (2,730 ) (808 )   (7,496 ) 841   (6,655 )
Impairment of assets (130,569 ) (78,752 ) (4,000 )   (213,321 ) 4,000   (209,321 )
Operating profit (loss)** ($119,874 ) ($84,188 ) ($27,107 ) ($2,026 ) ($233,195 ) $26,094   ($207,101 )
Loss from continuing operations             ($233,413 )
Discontinued operations             ($1,100 )
Net loss             ($234,513 )
Three months ended December 31, 2014
(in $000's) MMG SMG Digital Ventures Corporate Total Segmented* Adjustments & Eliminations 1 Total Per Consolidated Statement of Income
Operating revenue $130,788   $104,116   $9,963     $244,867   ($11,433 ) $233,434  
Salaries and benefits (56,996 ) (32,834 ) (3,929 ) ($2,796 ) (96,555 ) 4,756   (91,799 )
Other operating costs (51,828 ) (50,894 ) (5,504 ) (1,451 ) (109,677 ) 4,496   (105,181 )
Adjusted EBITDA** 21,964   20,388   530   (4,247 ) 38,635   (2,181 ) 36,454  
Amortization & depreciation (3,516 ) (3,337 ) (885 ) (12 ) (7,750 ) 669   (7,081 )
Operating earnings (loss)** 18,448   17,051   (355 ) (4,259 ) 30,885   (1,512 ) 29,373  
Restructuring and other charges (551 ) (10,319 ) (8 )   (10,878 ) 8   (10,870 )
Impairment of assets (63 )       (63 )   (63 )
Operating profit (loss)** $17,834   $6,732   ($363 ) ($4,259 ) $19,944   ($1,504 ) $18,440  
Income from continuing operations             $20,887  
Net income from discontinued operations              
Net income             $20,887  
1Reflects eliminations of our proportionate share of joint ventures and our 56% interest in VerticalScope. * Includes our proportionately consolidated share of joint venture operations and our 56% interest in VerticalScope. ** These are non-IFRS or additional IFRS measures, see "Non-IFRS measures".

Revenue

Segmented revenue was down $11.9 million or 4.9%. The fourth quarter decline primarily reflected lower print advertising revenues combined with more moderate declines in distribution revenues and a modest 2.6% decrease in subscriber revenue. These declines were partially offset by a $9.3 million increase in revenue associated with the investment in VerticalScope. Operating revenue (excluding our proportionate share of revenues from our joint ventures and our 56% interest in VerticalScope) was down $19.7 million or 8.4%.

Digital revenue across all segments increased 27.3% in the fourth quarter 2015, largely resulting from the investment in VerticalScope as well as from revenue growth at eyeReturn, thestar.com and in local digital advertising at Metroland Media Group. These increases were partially offset by lower revenues in 2015 at Workopolis, Save.ca, WagJag and Olive Media. Digital revenues were 17.5% of total segment revenues in the fourth quarter of 2015 compared to 13.1% in the fourth quarter of 2014.

Salaries and benefits

Our segmented salaries and benefits costs decreased $2.3 million or 2.4% in the fourth quarter of 2015 reflecting the benefit of $5.8 million in savings from restructuring initiatives, partially offset by: (i) the inclusion of our proportionate share of salaries and benefit costs of VerticalScope; (ii) increased staffing costs associated with Toronto Star Touch; and (iii) general wage increases.

Other operating costs

Segmented other operating costs primarily consist of circulation/flyer distribution costs, newsprint costs and other production costs which represented 38.4%, 13.4% and 12.1% respectively of segmented other operating costs in the fourth quarter of 2015. Segmented other operating costs were up $4.1 million or 3.7% as a result of lower print volumes, the impact of lower newsprint price, lower corporate costs and other cost reductions offset by increased costs related to Toronto Star Touch as well as our proportionate share of VerticalScope's other operating costs.

Adjusted EBITDA

Our segmented adjusted EBITDA was $24.8 million in the fourth quarter of 2015, down $13.8 million from the fourth quarter of 2014 reflecting the above noted revenue declines and $9.6 million of net investment spending in Toronto Star Touch which were only partially offset by $5.8 million of savings from restructuring initiatives, the impact of our investment in VerticalScope, $2.2 million in lower Corporate costs and other cost reductions.

Amortization and depreciation

Total segmented amortization and depreciation increased $29.4 million in the fourth quarter of 2015 substantially all of which was the result of additional amortization associated with our investment in VerticalScope.

Operating earnings

Segmented operating loss was $12.4 million in the fourth quarter of 2015 down $43.3 million from operating earnings of $30.9 million in the fourth quarter of 2014. The fourth quarter of 2015 included the impact of $26.9 million of additional amortization associated with our investment in VerticalScope. 

Restructuring and other charges

Total segmented restructuring and other charges were $7.5 million in the fourth quarter of 2015 and $10.9 million in the comparable period of 2014. Restructuring provisions in the fourth quarter of 2015 are expected to result in annualized net savings of $6.3 million and a reduction of approximately 90 positions. $0.7 million of the savings associated with these initiatives were realized in the fourth quarter of 2015. 

Impairment of assets

During the fourth quarter of 2015, we incurred non-cash charges related to asset impairment of goodwill and investments in joint ventures totalling $213.3 million (2014 - $0.1 million). $201.4 million of these charges were in respect of goodwill ($130.6 million in the Metroland Media Group of CGUs and $70.8 million in respect of the Star Media Group of CGUs), $8.0 million was in respect of intangible assets in the Star Media Group of CGUs and $4.0 million in respect of our joint venture investment in Workopolis. 

Operating profit (loss)

In the fourth quarter of 2015 our segmented operating loss was $233.2 million compared to operating profit of $19.9 million in the fourth quarter of 2014. Our loss in the fourth quarter included $213.3 million of in non-cash impairment charges and $37.2 million of amortization and depreciation expense.

Our operating loss, excluding our proportionate share of operating profit (loss) from our joint ventures and our investment in VerticalScope increased $225.5 million in the fourth quarter of 2015.

Income (loss) from joint ventures

Loss from joint ventures was $4.4 million in the fourth quarter of 2015 compared to income of $1.4 million in the fourth quarter of 2014. The loss in the fourth quarter of 2015 included a non-cash impairment charge of $4.0 million related to our joint venture investment in Workopolis. 

Income (loss) from associated businesses

Loss from associated businesses was $17.9 million in the fourth quarter of 2015 compared to income of $1.1 million in the fourth quarter of 2014. The 2015 fourth quarter included income of $0.9 million from Black Press offset by a loss of $1.3 million from Blue Ant, a loss of $0.7 million from Shop.ca, and a loss of $16.6 million from VerticalScope. The fourth quarter loss from VerticalScope included $26.9 million of amortization expense. The fourth quarter of 2014 included income of $2.1 million from Black Press and income of $0.2 million from Blue Ant, partially offset by a loss of $1.2 million from Shop.ca.

Investment in VerticalScope

During 2015, we acquired a 56% interest in VerticalScope. The total purchase price including transaction costs was $202.1 million. On October 22, 2015, we received a $22.1 million distribution from VerticalScope, as anticipated at the time of the closing, reducing our original investment to approximately $180 million, including transaction costs. In connection with the investment in VerticalScope, during the fourth quarter of 2015 we recorded $26.9 million of additional amortization and depreciation expense.

Other income (expense)

Other expense was $2.0 million in the fourth quarter of 2015 compared to other income of $5.3 million in the fourth quarter of 2014. Other expense in the fourth quarter of 2015 included a partial write-down totalling $2.3 million on one of our portfolio investments. This was partially offset by a $0.2 million gain on the sale of an asset and $0.1 million of other income. Other income in the fourth quarter of 2014 included a $4.5 million gain on the sale of Tuango and a $0.7 million gain on the sale of an available-for-sale investment. 

Income and other taxes

We recorded a tax recovery of $0.6 million in the fourth quarter of 2015. This compares to an income tax provision of $6.3 million in the fourth quarter of 2014. The income tax recovery recorded in the fourth quarter of 2015 reflects the non-deductibility of non-cash impairment charges and losses from associated businesses for tax purposes.

Net loss from continuing operations

Our net loss from continuing operations was $233.4 million ($2.90 per share) in the fourth quarter of 2015. This compares to net income of $20.9 million ($0.26 per share) in the fourth quarter of 2014. The fourth quarter of 2015 included $213.3 million of non-cash impairment charges and $37.2 million of amortization and depreciation.

Income (loss) from discontinued operations

The loss from discontinued operations of $1.1 million in the fourth quarter of 2015 relates to adjustments made to provisions for indemnities associated with the sale of Harlequin in 2014. These adjustments reflect the appreciation of the U.S. dollar relative to the Canadian dollar, as well as revised estimates of the amounts of these provisions in respect of taxes, and legal and other costs. 

Net income (loss) attributable to equity shareholders

Our net loss attributable to equity shareholders was $234.8 million ($2.91 per share) in the fourth quarter of 2015 compared to net income attributable to equity shareholders of $20.6 million ($0.26 per share) in the fourth quarter of 2014. The fourth quarter of 2015 included $213.3 million of non-cash impairment charges and $37.2 million of amortization and depreciation.

OPERATING RESULTS -- YEAR ENDED DECEMBER 31, 2015

The following tables sets out, in $000's the segmented results for the years ended December 31, 2015 and 2014.

2015
(in $000's) MMG SMG Digital Ventures Corporate Total Segmented* Adjustments & Eliminations 1 Total Per Consolidated Statement of Income
Operating revenue $447,064   $343,555   $53,021     $843,640   ($57,009 ) $786,631  
Salaries and benefits (208,431 ) (127,092 ) (18,867 ) ($9,044 ) (363,434 ) 21,610   (341,824 )
Other operating costs (189,755 ) (198,057 ) (23,160 ) (2,411 ) (413,383 ) 19,988   (393,395 )
Adjusted EBITDA** 48,878   18,406   10,994   (11,455 ) 66,823   (15,411 ) 51,412  
Amortization & depreciation (14,055 ) (14,991 ) (48,428 ) (37 ) (77,511 ) 47,334   (30,177 )
Operating earnings (loss)** 34,823   3,415   (37,434 ) (11,492 ) (10,688 ) 31,923   21,235  
Restructuring and other charges (19,777 ) (10,634 ) (899 )   (31,310 ) 1,087   (30,223 )
Impairment of assets (265,936 ) (79,145 ) (16,000 )   (361,081 ) 16,000   (345,081 )
Operating profit (loss)** ($250,890 ) ($86,364 ) ($54,333 ) ($11,492 ) ($403,079 ) $49,010   ($354,069 )
Loss from continuing operations             ($399,837 )
Loss from discontinued operations             ($5,000 )
Net loss             ($404,837 )
2014
(in $000's) MMG SMG Digital Ventures Corporate Total Segmented* Adjustments & Eliminations 1 Total Per Consolidated Statement of Income
Operating revenue $484,225   $384,873   $35,520     $904,618   ($46,484 ) $858,134  
Salaries and benefits (219,340 ) (134,620 ) (15,075 ) ($11,136 ) (380,171 ) 18,627   (361,544 )
Other operating costs (196,866 ) (204,457 ) (16,692 ) (4,760 ) (422,775 ) 18,255   (404,520 )
Adjusted EBITDA** 68,019   45,796   3,753   (15,896 ) 101,672   (9,602 ) 92,070  
Amortization & depreciation (14,644 ) (15,337 ) (3,363 ) (57 ) (33,401 ) 2,727   (30,674 )
Operating earnings (loss)** 53,375   30,459   390   (15,953 ) 68,271   (6,875 ) 61,396  
Restructuring and other charges (6,937 ) (15,709 ) (60 )   (22,706 ) 60   (22,646 )
Impairment of assets (329 ) (82,606 ) (15,000 )   (97,935 ) 15,000   (82,935 )
Operating profit (loss)** $46,109   ($67,856 ) ($14,670 ) ($15,953 ) ($52,370 ) $8,185   ($44,185 )
Loss from continuing operations             ($49,598 )
Net income from discontinued operations             $222,662  
Net income             $173,064  
1 Reflects eliminations of our proportionate share of joint ventures and our 56% interest in VerticalScope. *Includes our proportionately consolidated share of joint venture operations and VerticalScope. **These are non-IFRS or additional IFRS measures, see "Non-IFRS measures".

Revenue

Segmented revenue was down $61.0 million or 6.7%. This decline was largely the result of declines in print advertising revenues and flyer distribution revenues and a modest 2.5% decline in subscriber revenues. These declines were partially offset by a $15.1 million increase in revenue associated with the investment in VerticalScope on July 28, 2015. Revenue excluding our proportionate share of revenue from joint ventures and our 56% interest in VerticalScope was down $71.5 million or 8.3%.

Digital revenue across all segments increased 13.6% in 2015, largely resulting from the investment in VerticalScope on July 28, 2015 as well as from revenue growth at eyeReturn, thestar.com and in local digital advertising at Metroland Media Group. These increases were partially offset by lower revenues in 2015 at Workopolis, Olive Media, WagJag and Save.ca. Digital revenues were 14.9% of total segment revenues in 2015 compared to 12.2% in 2014.

The following charts provide a breakdown of total segmented operating revenue for 2015 and 2014:

Year ended
 December 31, 2015
MMG SMG Digital Ventures Total
$ % $ % $   % $ %
  Print advertising $200.3   44.8 % $180.8   52.7 %       $381.1   45.2 %
  Digital advertising 37.7   8.4 % 35.2   10.2 % $53.0   100.0 % 125.9   14.9 %
  Distribution 136.5   30.5 % 10.1   2.9 %       146.5   17.4 %
  Subscriber 28.4   6.4 % 100.5   29.2 %       128.9   15.3 %
  Other 44.2   9.9 % 17.0   5.0 %       61.2   7.2 %
  Total $447.1   100.0 % $343.6   100.0 % $53.0   100.0 % $843.6   100.0 %
                                 
Year ended
 December 31, 2014
MMG SMG Digital Ventures Total
$ % $ % $   % $ %
  Print advertising $221.8   45.8 % $213.9   55.6 %       $435.7   48.2 %
  Digital advertising 38.3   7.9 % 36.7   9.5 % $35.5   100.0 % 110.6   12.2 %
  Distribution 147.2   30.4 % 10.3   2.7 %       157.4   17.4 %
  Subscriber 29.5   6.1 % 105.7   27.5 %       135.2   14.9 %
  Other 47.5   9.8 % 18.3   4.7 %       65.8   7.3 %
  Total $484.2   100.0 % $384.9   100.0 % $35.5   100.0 % $904.6   100.0 %
                                 

Salaries and benefits

Our segmented salaries and benefits costs were down $16.8 million or 4.4% in 2015 reflecting the benefit of $21.5 million in savings from restructuring initiatives and a $7.1 million digital media tax credit (as this represents recoveries of previously incurred salary and benefits costs), partially offset by: (i) the inclusion of our proportionate share of salaries and benefit costs of VerticalScope after July 28, 2015; (ii) increased staffing costs associated with Toronto Star Touch; and (iii) general wage increases.

Other operating costs

Segmented other operating costs primarily consist of circulation/flyer distribution costs, newsprint costs and other production costs which represented 39.0%, 13.4% and 11.6% respectively of segmented other operating costs in 2015. Segmented other operating costs were down $9.4 million (2.2%) as a result of lower print volumes, the impact of lower newsprint price, lower corporate costs and other cost reductions and were partially offset by increased costs related to Toronto Star Touch as well as our proportionate share of VerticalScope's other operating costs after July 28, 2015.

Adjusted EBITDA

Our segmented adjusted EBITDA was $66.8 million in 2015, down $34.9 million from 2014 reflecting the above noted revenue declines and $14.0 million of net investment spending in Toronto Star Touch which were only partially offset by $21.5 million of savings from restructuring initiatives, the impact of our investment in VerticalScope, the benefit of $7.1 million in digital media tax credits, $4.4 million in lower Corporate costs and other cost reductions.

Amortization and depreciation

Total segmented amortization and depreciation increased $44.1 million in 2015, all of which was the result of amortization of intangible assets associated with our investment in VerticalScope.

Operating earnings (loss)

Segmented operating loss was $10.7 million in 2015, compared to segmented operating earnings of $68.3 million in 2014. The loss in 2015 included the impact of $44.1 million of additional amortization expense associated with our investment in VerticalScope. 

Restructuring and other charges

Total segmented restructuring and other charges were $31.3 million in 2015 and largely related to ongoing efforts to reduce costs as well as a charge related to Metroland Media Group's decision to phase out product sales. The 2015 restructuring initiatives are expected to result in annualized net labour savings of approximately $30.0 million and a reduction of approximately 395 positions. Of the expected savings, $10.0 million was realized in 2015. Total segmented restructuring and other charges of $22.7 million were recorded in 2014.

Impairment of assets

During 2015, we incurred non-cash charges related to asset impairment of our property, plant and equipment, intangible assets, goodwill and investments in joint ventures totalling $361.1 million. During 2014, we incurred charges related to asset impairment of property, plant and equipment, goodwill and investments in joint ventures totalling $97.9 million. These charges have no impact on cash flows.

During the third quarters of 2015 and 2014, we conducted impairment tests on the carrying value of intangible assets and goodwill. In carrying out this testing in 2015, we determined that the carrying amount of goodwill in the Metroland Media Group of Cash Generating Units ("CGUs") exceeded the value in use ("VIU") and we recorded an impairment charge of $135.0 million for goodwill and a charge of $0.4 million for intangible assets in the Metroland Media Group of CGUs. This impairment was the result of lower revenue projections reflecting current economic conditions coupled with lower forecasted longer term revenues resulting from continued shifts in spending by advertisers. We also recorded a $12.0 million impairment charge in respect of our joint venture investment in Workopolis during the third quarter of 2015 resulting from lower forecasted revenues attributable to continued increases in competition in the online recruitment and job search markets as well as prevailing economic conditions.

The change in the market capitalization of the Company in the fourth quarter of 2015 was, we believe, primarily the result of a significant change in the risk premiums expected by market participants resulting from uncertainties about the traditional newspaper industry. These uncertainties include continued volatility and longer term visibility in print advertising markets, rapidly changing digital advertising markets and evolving general economic uncertainty. As a result of this change, in connection with our impairment test on December 31, 2015, we determined that the carrying amount of goodwill in the Metroland Media Group of CGUs and the Star Media Group of CGUs exceeded their fair value less cost to sell ("FVLCS") and accordingly, we recorded impairment charges of $130.6 million in respect of goodwill in the Metroland Media Group of CGUs and $70.8 million in respect of goodwill and $8.0 million in respect of intangible assets in the Star Media Group of CGUs. In the fourth quarter of 2015 we also recorded a further impairment charge of $4.0 million related to our joint venture investment in Workopolis resulting from a further downward revision in longer term forecasted revenues reflecting the prevailing business environment.

In carrying out our impairment testing during the third quarter of 2014, we determined that the carrying amount of goodwill in the Star Media Group of CGUs exceeded the value in use and we recorded an impairment charge of $82.0 million for goodwill in the Star Media Group of CGUs. This impairment was the result of lower forecasted revenues reflecting continued shifts in spending by advertisers. We also recorded a $15.0 million impairment charge in respect of our joint venture investment in Workopolis during the third quarter of 2014 reflecting the above noted factors.

Operating profit (loss)

In 2015, our segmented operating loss was $403.1 million compared to $52.4 million in 2014. Our 2015 segmented operating loss included $361.1 million of non-cash impairment charges and $77.5 million of non-cash amortization and depreciation.

Our operating loss excluding our proportionate share of operating profit (loss) from VerticalScope and our joint ventures increased $309.9 million in 2015 compared to 2014.

Interest and financing costs

Interest and financing costs decreased $2.3 million in 2015 reflecting a $4.9 million decrease in interest on debt and a $0.5 million increase in interest earned on cash and cash equivalents. This was partially offset by a $2.7 million increase in financing costs related to employee benefit plans. 

Foreign exchange

Non-cash foreign exchange losses were $1.0 million in 2015 compared to losses of $7.7 million in 2014. The loss in 2015 included $1.7 million of foreign exchange losses associated with the ineffective portion (for accounting purposes) of the hedge of the net investment in VerticalScope, partially offset by $0.7 million of foreign exchange gains associated with the Canadian dollar being weaker at the end of the year relative to the beginning of the year with our operations being in a net asset position in U.S. dollars for the year. 

Upon the sale of Harlequin in 2014, we realized $5.8 million of accumulated foreign exchange losses related to extinguishing a hedge of our U.S. dollar denominated net investment hedge in Harlequin. A portion of the foreign exchange losses for 2014 also relate to the weakening of the Canadian dollar relative to the U.S. dollar prior to the closing of the sale of Harlequin and subsequent repayment of U.S. dollar denominated debt.

Income (loss) from joint ventures

Loss from joint ventures was $14.2 million in 2015 and $9.2 million in 2014. These losses primarily reflect non-cash impairment charges of $16.0 million recorded in 2015 and $15.0 million recorded in 2014 related to our joint venture investment in Workopolis, as discussed above. Excluding the impact of these charges, income from joint ventures was $1.8 million in 2015 and $5.8 million in 2014 largely reflecting lower adjusted EBITDA and restructuring charges at Workopolis.

Income (loss) from associated businesses

Loss from associated businesses was $29.0 million in 2015 compared to income of $0.2 million in 2014. The 2015 loss included income of $3.0 million from Black Press offset by a loss of $3.0 million from Shop.ca, a loss of $1.9 million from Blue Ant and a loss of $27.0 million from VerticalScope. The 2015 loss from VerticalScope included $44.2 million of amortization and depreciation expense. The 2014 income from associated businesses included income of $4.0 million from Black Press and income of $0.4 million from Tuango Inc. ("Tuango") partially offset by losses of $3.5 million from Shop.ca and $0.7 million from Blue Ant.

Our share of Black Press' net income was $3.0 million in 2015 ($4.0 million in 2014), representing Black Press' results through November 30, 2015. Black Press has a February fiscal year end and therefore does not have coterminous quarter-ends with us.

Our share of Tuango's net income was $nil in 2015 and $0.4 million in 2014 as we sold our interest in Tuango on October 16, 2014 for proceeds of $7.6 million and recognized a gain of $4.5 million in other income (expense).

Our share of the Shop.ca net loss was $3.0 million in 2015 compared to $3.5 million in 2014.

We did not record any income or loss during 2015 or 2014 in respect of our investment in Canadian Press as the carrying value had previously been reduced to $nil. We will begin to report our share of Canadian Press' results once the unrecognized losses, including Other Comprehensive Income ("OCI") losses ($3.1 million as of December 31, 2015 and $4.0 million as of December 31, 2014) have been offset by net income, OCI or as additional investments are made. In 2015, our share of Canadian Press' net income would have been $0.5 million ($0.3 million loss in 2014).

Investment in VerticalScope

On July 28, 2015, we acquired a 56% interest in VerticalScope. The total purchase price including transaction costs was $202.1 million. On October 22, 2015, we received a $22.1 million distribution from VerticalScope, as anticipated at the time of the closing, reducing our original investment to approximately $180 million, including transaction costs. Pursuant to certain terms in the shareholders agreement, the investment is accounted for as an associated business using the equity method, rather than a subsidiary or joint venture. The results of VerticalScope are reported as part of our Digital Ventures Segment in our segmented reporting. 

In connection with the investment in VerticalScope, and consistent with the general methodology VerticalScope uses when making its acquisitions, we allocated the difference between the fair value of the purchase price paid and the book value of the net assets of VerticalScope to customer relationships, technology, domain names, acquired content and goodwill. The amortization periods for these intangible assets generally range from 5-10 years, with the exception of acquired content which, consistent with VerticalScope's accounting policy, is amortized over one year. Given the relatively large value allocated to acquired content (U.S. $60.6 million) and the one year amortization period associated with it, we expect larger amortization charges related to these intangible assets to continue through the end of July 2016.

Our 56% share of VerticalScope's 2015 net loss included $44.2 million in respect of amortization and depreciation expense. This included amortization of fair value differences of intangible assets identified when we made our investment in VerticalScope as well as the amortization of fair value differences which VerticalScope has identified on acquisitions it has made subsequent to July 29, 2015.

During the period from July 29, 2015 through December 31, 2015 VerticalScope made acquisitions totalling U.S. $25.1 million of which U.S. $10.6 million was financed from VerticalScope's operating cash flow and U.S. $14.5 million was financed through an increase in VerticalScope's debt. VerticalScope's debt, net of cash on hand was U.S. $78.9 million at December 31, 2015.

Other income (expense)

Other expense was $1.8 million in 2015 compared to other income of $3.8 million in 2014. Other expense in 2015 included a partial write-down totalling $2.3 million on one of our portfolio investments. This was partially offset by a $0.3 million gain on the sale of an associated business and $0.2 million of other income.

Other income (expense) for 2014 included a $4.5 million gain on the sale of Tuango, a $1.1 million gain on the early settlement agreement with Metro International S.A. for the remaining 10% of Metro, and a $0.7 million gain on the sale of an available-for-sale investment. These gains were partially offset by a $2.8 million charge related to the de-recognition of interest rate swaps which were previously designated as cash flow hedges and which were extinguished in 2014.

Income and other taxes

We recorded an income tax recovery of $2.3 million in 2015 reflecting the non-deductibility of non-cash impairment charges and losses from associated businesses for tax purposes. 

We recorded an income tax recovery of $11.7 million in 2014. The effective tax rate in 2014 was 19.1% which includes the impact of impairment charges not deductible for tax purposes offset by the recognition of previously unrecognized loss carryforwards, certain tax and accounting base differences in connection with the sale of Harlequin and the donation of the Toronto Star's photo archive to the Toronto Public Library during 2014.

Net loss from continuing operations

Our net loss from continuing operations was $399.8 million ($4.96 per share) in 2015, compared to a loss of $49.6 million ($0.62 per share) in 2014. Our loss in 2015 included $361.1 million of non-cash impairment charges and $77.5 million of amortization and depreciation expense.

Income (loss) from discontinued operations

On August 1, 2014 we sold all of the shares of Harlequin to a division of HarperCollins Publishers L.L.C., a subsidiary of News Corp., for a purchase price of $455.0 million, subject to certain adjustments for working capital and other related items. Effective the second quarter of 2014, Harlequin was reclassified as Assets Held for Sale and Discontinued Operations. Upon the closing of the sale in the third quarter of 2014, the net assets of Harlequin were no longer included in Assets Held for Sale. In connection with the sale of Harlequin, we indemnified the Purchaser for costs and fees related to certain matters including certain tax and pre-existing litigation matters and recorded a contingent liability in respect of these matters based on the estimated exposure. The loss from discontinued operations of $5.0 million for 2015 includes adjustments made related to the appreciation of the U.S. dollar relative to the Canadian dollar in respect of these provisions as well as revised estimates of the amounts of these provisions in respect of taxes, insurance reserves and legal and other costs. Net income from discontinued operations was $222.7 million in 2014, reflecting Harlequin's net income as well as the gain on sale.

Net income (loss) attributable to equity shareholders

Our net loss attributable to equity shareholders was $404.0 million ($5.02 per share) in 2015 compared to net income attributable to equity shareholders of $172.7 million ($2.16 per share) in 2014. Net income attributable to equity shareholders in 2014 included a $224.6 million pre-tax gain on the sale of Harlequin.

OUTLOOK

Metroland Media Group and Star Media Group are expected to continue to face challenges in 2016 as a result of continued shifts in spending by advertisers. While print advertising declines were more moderate at both the Metroland Media Group newspapers and Star Media Group newspapers in 2015, it is difficult to predict if this trend will continue in 2016 given the continued evolution of advertising markets and volatility in the economy. Flyer distribution revenues are expected to continue to be negatively affected by the 2015 closure of a few large retail customers through the end of the first quarter of 2016. Beyond the first quarter, flyer distribution revenue is expected to be relatively stable in the balance of 2016. Subscriber revenues declined moderately in 2015 and this trend is expected to continue in 2016. At Metroland Media Group and Star Media Group, digital revenue is expected to grow in 2016 as a result of revenues from Toronto Star Touch, growth at thestar.com as well as growth in local digital advertising at Metroland Media Group. Within the Digital Ventures segment, the trends in revenue growth from a combination of acquisitions and organic revenue growth at VerticalScope and organic revenue growth which eyeReturn experienced in 2015 have continued early into 2016 and are expected to continue through the balance of 2016.

Cost reduction remains an important area of focus for us in 2016. Savings related to restructuring initiatives undertaken through the end of 2015 are expected to be $22.5 million in 2016 ($10.8 million in Metroland Media Group, $10.2 million in the Star Media Group and $1.5 million in Digital Ventures), as well as an expected $4.0 million of cost savings ($10.0 million on an annual basis) associated with the transition of printing the Toronto Star to Transcontinental Printing which is currently expected to occur in July 2016. We expect that the combined severance provision and various other transition costs associated with this decision, which will be recorded as a restructuring charge in the first quarter of 2016, will be in the range of approximately $22 million. Also, in connection with this decision, we have commenced exploration of the sale of the existing printing facility and land in Vaughan. Expenses related to our registered defined benefit pension plans are currently expected to decrease by approximately $2.5 million in 2016. While newsprint pricing is currently expected to increase in 2016, we expect that any impact of price increases will be more than offset by lower consumption in the year.

The Toronto Star launched Toronto Star Touch in September 2015. The full year net investment spending in Toronto Star Touch was $14.0 million, on a pre-tax basis, including significant marketing costs associated with the launch. 2016 is expected to represent another significant year of investment in establishing Toronto Star Touch with an expected net investment spending of approximately $10 million in 2016. Excluding Toronto Star Touch, net investment spending associated with other growth initiatives in 2016 is currently expected to be very modest, similar to 2015 levels.

We anticipate our 56% share of VerticalScope's non-cash amortization charges, including those related to intangible assets identified at the time of our investment, to be approximately U.S. $20.0 million each quarter for each of the first and second quarters of 2016, U.S. $9.2 million in the third quarter of 2016 and U.S. $4.1 million in the fourth quarter of 2016. This excludes any additional amortization charges related to acquisitions which VerticalScope may make in 2016.

From a cash flow perspective, in 2016, we anticipate required funding of our registered defined benefit pension plans to remain at approximately $18 million, which is approximately $2.5 million in excess of the amount expected to be expensed in the statement of income. Capital expenditures for 2016 are currently anticipated to be in the order of $19 million including accommodating the outsourcing of the printing of the Toronto Star.

In 2015, we announced our intention to reduce the dividend, if, as and when declared, to 26 cents per share annually effective the first quarter of 2016.

2 The paywall at the Toronto Star was eliminated effective April 1, 2015. Revenues associated with the paywall were not material and were excluded from both the current and prior periods for comparison purposes in the discussions of digital and multi-platform subscriber revenues.

DIVIDEND

On March 1, 2016, Torstar declared a quarterly dividend of 6.5 cents per share on its Class A shares and Class B non-voting shares, payable on March 31, 2016, to shareholders of record at the close of business on March 11, 2016. 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, 2015 and the 2015 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 2, 2016 at 8:15 a.m. to discuss its fourth quarter results. The dial-in number is (416) 340-8527 or 1-800-355-4959. 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 1338991. 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 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 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, Toronto Star Touch, Workopolis, wagjag.com, toronto.com, save.ca and eyeReturn Marketing Inc. It also holds a majority interest in VerticalScope, a North American vertically-focused digital media company.

Non-IFRS measures

In addition to operating profit, an additional IFRS measure, as presented in the consolidated statement of income, management uses segmented revenue, adjusted EBITDA (and where applicable segmented adjusted 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. Please refer to Section 15 of Torstar's MD&A for the year ended December 31, 2015 for a reconciliation of adjusted EBITDA and Operating earnings (and Segmented adjusted EBITDA/Segmented Operating earnings - as applicable) with Operating profit (Segmented Operating profit - as applicable) and adjusted earnings per share to earnings per share.

Segmented revenue

Segmented revenue is calculated in the same manner as operating revenue in the Consolidated Financial Statements, except that it is calculated using total segment results which includes our proportionately consolidated share of revenues from joint ventures and our 56% interest in VerticalScope. Management of each segment is accountable for the revenues, including the proportionately consolidated share of revenues from joint venture operations. Management believes that segmented revenue is a useful measure for investors as it is a measure of the revenues for which management of each segment is accountable. The intent of segmented revenue is to provide additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS and accordingly may not be comparable to measures used by other companies.

Adjusted EBITDA(Segmented Adjusted EBITDA)

Management believes that adjusted EBITDA is an important proxy for the amount of cash generated by our ongoing operations (or by a reporting unit or business segment) to generate liquidity to fund future capital needs and management uses this metric for this purpose. Adjusted EBITDA is not the actual cash provided by operating activities and is not a recognized measure of financial performance under IFRS. We calculate adjusted EBITDA as operating revenue, less salaries and benefits and other operating costs, as presented on the consolidated statement of income, and excludes restructuring and other charges and impairment of assets. Restructuring and other charges and impairment of assets are eliminated as these activities are not related to ongoing operations as of the end of the period. The exclusion of impairment of assets also eliminates the non-cash impact. Adjusted EBITDA is also used by investors and analysts for valuation purposes. The intent of adjusted EBITDA is to provide additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS and accordingly may not be comparable to measures used by other companies (including calculating EBITDA on an adjusted basis to exclude restructuring and other charges and impairment of assets). Segmented adjusted EBITDA is calculated in the same manner described above, except that it is calculated using total segment results including our proportionately consolidated results for joint ventures and our 56% interest in VerticalScope for which management is accountable.

VerticalScope's Adjusted EBITDA has been calculated as total revenue, less salaries and benefits and other operating costs, as presented on VerticalScope's consolidated statement of income, and excludes amortization, depreciation, and interest expense. It also excludes transaction related costs associated with Torstar's investment as well as certain tax credits. Adjusted EBITDA is not the actual cash provided by VerticalScope's operating activities and is not a recognized measure of financial performance under IFRS. Adjusted EBITDA does not have any standardized meaning under IFRS and accordingly may not be comparable to measures used by other companies, including how Torstar presents its own Adjusted EBITDA.

Operating earnings/Segmented operating earnings

Operating earnings is used by management to represent the results of ongoing operations inclusive of amortization and depreciation. Management uses operating earnings as a measure of the amount of income generated by our ongoing operations (or by a reporting unit or business segment) after giving effect to amortization and depreciation. Management believes this metric is also useful for investors for this purpose. We calculate 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. Restructuring and other charges and impairment of assets are eliminated as these activities are not related to ongoing operations as of the end of the period. Our method of calculating operating earnings (including calculating operating earnings on an adjusted basis to exclude restructuring and other charges and impairment of assets) may differ from other companies and accordingly may not be comparable to measures used by other companies. The intent of operating earnings is to provide additional useful information to investors, analysts and readers of Torstar's financial statements. The measure does not have any standardized meaning under IFRS, is not a recognized measure of financial performance under IFRS, 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 including proportionately consolidated operating earnings for our joint ventures and our 56% interest in VerticalScope for which management is accountable.

Adjusted earnings per share

Adjusted earnings per share is used by management to represent the per share earnings of results of our ongoing operations (or by a reporting unit or business segment) and is not a recognized measure of financial performance under IFRS. Management believes this metric is also useful for investors for this purpose. We calculate adjusted earnings per share as earnings per share from continuing operations less the per share effect of restructuring and other charges, impairment of assets, non-cash foreign exchange, other income (expense) and change in deferred taxes. Restructuring and other charges and impairment of assets are eliminated as these activities are not related to ongoing operations as of the end of the period. Non-cash foreign exchange, other income (expense) and changes in deferred taxes are eliminated as these are not related to ongoing operating activities. The intent of presenting adjusted earnings per share is to provide additional useful information to investors, analysts and readers of our financial statements. Our method of calculating adjusted earnings per share may differ from other companies and accordingly may not be comparable to measures used by other companies.The measure does not have any standardized meaning under IFRS, is not a recognized measure of financial performance under IFRS, and accordingly may not be comparable to measures used by other companies.

Operating profit/Segmented operating profit

Operating profit is an additional IFRS measure. Management uses operating profit to measure the results of operations inclusive of impairments and restructuring and other charges. Operating profit appears in our consolidated statement of income. Management believes that operating profit provides additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS and accordingly may not be comparable to measures used by other companies. Our method of calculating operating profit may differ from other companies and accordingly may not be comparable to measures used by other companies. Segmented operating profit is calculated in the same manner described above, except that it is calculated using total segment results including proportionately consolidated results for our joint ventures and our 56% interest in VerticalScope for which management is accountable.

Forward-looking statements

Certain statements in this press release and in Torstar's oral and written public communications may constitute forward-looking statements that reflect management's expectations regarding Torstar'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", "estimate", "intend", "would", "could", "if", "may" and similar expressions.

This press release includes, among others, forward-looking statements regarding regarding the date of commencement of outsourced services related to the printing of the Toronto Star newspaper, expectations regarding expected savings including savings from restructuring initiatives, Torstar's outlook for 2016 including anticipated revenue trends and operating costs (including newsprint costs), expected costs related to Toronto Star Touch, amortization and depreciation and pension plan funding obligations and expenses, Torstar's expected capital expenditures and investment spending, and anticipated future dividend payments. 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 press 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: Torstar's ability to operate in highly competitive industries; Torstar's ability to compete with digital media, other newspapers and other forms of media; Torstar's ability to respond to the shift to digital media and the shift by advertisers to other digital platforms; Torstar's ability to attract, grow and retain its digital audience and profitably develop its digital platforms; Torstar's ability to attract and retain advertisers; Torstar's ability to maintain adequate circulation/subscription levels; Torstar's ability to attract and retain readers and traffic; Torstar's ability to integrate the technology associated with new digital platforms; general economic conditions and customer prospects in the principal markets in which Torstar operates; Torstar's ability to reduce costs; loss of reputation; dependence on third party suppliers and service providers; reliance on technology and information systems and risks of security breaches; changes in employee future benefit obligations; Torstar's ability to execute appropriate strategic growth initiatives including acquisitions; unexpected costs or liabilities related to acquisitions and dispositions; investments in other businesses; labour disruptions; newsprint costs; reliance on printing operations; litigation; privacy, anti-spam, communications, e-commerce and environmental laws, health and safety regulations and other laws and regulations applicable generally to Torstar's businesses; foreign exchange fluctuations and foreign operations; availability of insurance; dependence on key personnel; intellectual property rights; credit risk; availability of capital and restrictions imposed by credit facilities; income tax and other taxes; results of impairment tests and uncertainties associated with critical accounting estimates; holding company structure; dividend policy; and control of Torstar by the Voting Trust.

Torstar cautions 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 economies; tax laws; continued availability of printing operations; availability of financing on appropriate terms; exchange rates; market competition; rates of return and discount rates relating to pension expense and pension plan obligations; expected future revenues; expected future liabilities; expected future cash flows and discount rates relating to valuation of goodwill and intangible assets; and successful development and launch of new products. There is a risk that some or all of these assumptions may prove to be incorrect. There is no assurance regarding the amount and timing of future dividends. When relying on our forward-looking statements to make decisions with respect to Torstar and its securities, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Torstar 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.

When relying on our forward-looking statements to make decisions with respect to Torstar and its securities, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Torstar 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 2015 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, 2015
As at
December 31, 2014
Assets    
  Current:    
  Cash and cash equivalents $35,141   $251,339  
  Restricted cash 37,935   16,150  
  Receivables 144,997   162,843  
  Inventories 6,231   9,309  
  Prepaid expenses 5,944   6,645  
  Prepaid and recoverable income taxes 5,780   2,044  
  Total current assets 236,028   448,330  
Restricted cash   22,750  
Investments in joint ventures 32,861   54,531  
Investments in associated businesses 202,203   39,960  
Property, plant and equipment 117,793   125,057  
Intangible assets 67,821   61,610  
Goodwill 8,133   344,417  
Other assets 9,422   9,497  
Employee benefits 6,922   9,243  
Deferred income tax assets 15,233   28,126  
Total assets $696,416   $1,143,521  
Liabilities and Equity    
  Current:    
  Accounts payable and accrued liabilities $122,296   $115,717  
  Derivative financial instruments 6,543    
  Provisions 29,021   22,583  
  Income tax payable 5,943   11,708  
  Total current liabilities 163,803   150,008  
Provisions 13,228   16,774  
Other liabilities 9,872   9,996  
Employee benefits 87,461   85,315  
Deferred income tax liabilities 2,315   11,708  
Equity:    
  Share capital 402,500   400,577  
  Contributed surplus 19,858   18,708  
  Retained earnings (accumulated deficit) (7,560 ) 447,725  
  Accumulated other comprehensive income 3,121   21  
  Total equity attributable to equity shareholders 417,919   867,031  
  Minority interests 1,818   2,689  
Total equity 419,737   869,720  
Total liabilities and equity $696,416   $1,143,521  
         
         
Torstar Corporation
Consolidated Statement of Income (Loss)
(Thousands of Canadian Dollars except per share amounts)
 
  Three Months Ended
 December 31
Year Ended
 December 31
  2015 2014 2015 2014
         
Operating revenue $213,749   $233,434   $786,631   $858,134  
         
Salaries and benefits (87,506 ) (91,799 ) (341,824 ) (361,544 )
Other operating costs (108,059 ) (105,181 ) (393,395 ) (404,520 )
Amortization and depreciation (9,309 ) (7,081 ) (30,177 ) (30,674 )
Restructuring and other charges (6,655 ) (10,870 ) (30,223 ) (22,646 )
Impairment of assets (209,321 ) (63 ) (345,081 ) (82,935 )
Operating profit (loss) (207,101 ) 18,440   (354,069 ) (44,185 )
Interest and financing costs (1,074 ) 700   (2,046 ) (4,253 )
Foreign exchange (1,482 ) 204   (1,022 ) (7,656 )
Income (loss) from joint ventures (4,449 ) 1,447   (14,170 ) (9,152 )
Income (loss) from associated businesses (17,910 ) 1,119   (28,993 ) 194  
Other income (expense) (1,997 ) 5,277   (1,837 ) 3,754  
  (234,013 ) 27,187   (402,137 ) (61,298 )
Income and other taxes recovery (expense) 600   (6,300 ) 2,300   11,700  
Net income (loss) from continuing operations (233,413 ) 20,887   (399,837 ) (49,598 )
Income (loss) from discontinued operations (1,100 )   (5,000 ) 222,662  
Net income (loss) ($234,513 ) $20,887   ($404,837 ) $173,064  
Attributable to:        
  Equity shareholders ($234,817 ) $20,556   ($403,966 ) $172,685  
  Minority interests $304   $331   ($871 ) $379  
         
Net income (loss) attributable to equity shareholders per Class A (voting) and Class B (non-voting) share:        
Basic:        
  From continuing operations ($2.90 ) $0.26   ($4.96 ) ($0.62 )
  From discontinued operations ($0.01 )   ($0.06 ) $2.78  
  ($2.91 ) $0.26   ($5.02 ) $2.16  
Diluted:        
  From continuing operations ($2.90 ) $0.26   ($4.96 ) ($0.62 )
  From discontinued operations ($0.01 ) ($0.01 ) ($0.06 ) $2.77  
  ($2.91 ) $0.25   ($5.02 ) $2.15  
                 
                 
Torstar Corporation
Consolidated Statement of Cash Flows
(Thousands of Canadian Dollars)
 
  Three months ended December 31 Year ended December 31
  2015 2014 2015 2014
Cash was provided by (used in)        
  Operating activities $16,204   $29,737   $38,050   $63,358  
  Investing activities 14,105   (840 ) (213,513 ) 390,233  
  Financing activities (10,304 ) (10,119 ) (40,735 ) (220,065 )
Increase (decrease) in cash 20,005   18,778   (216,198 ) 233,526  
Effect of exchange rate changes from discontinued operations       403  
Cash, beginning of period 15,136   232,561   251,339   17,410  
Cash, end of period $35,141   $251,339   $35,141   $251,339  
Operating activities:        
  Net income (loss) from continuing operations ($233,413 ) $20,887   ($399,837 ) ($49,598 )
  Amortization and depreciation 9,309   7,081   30,177   30,674  
  Deferred income taxes (900 ) 2,900     (12,400 )
  Loss (income) from joint ventures 4,449   (1,447 ) 14,170   9,152  
  Distributions from joint ventures   4,190   7,500   9,250  
  Loss (income) from associated businesses 17,910   (1,119 ) 28,993   (194 )
  Dividend from associated businesses   303   193   1,222  
  Impairment of assets 209,321   63   345,081   82,935  
  Non-cash employee benefit expense 6,126   2,780   21,459   13,840  
  Employee benefits funding (5,875 ) (11,575 ) (20,409 ) (39,853 )
  Other 833   1,998   (2,249 ) 3,602  
  7,760   26,061   25,078   48,630  
  Restricted cash 2,530   5,820   965   (16,150 )
  Decrease (increase) in non-cash working capital 5,914   (2,144 ) 12,007   22,243  
Cash provided by operating activities of continuing operations 16,204   29,737   38,050   54,723  
Cash provided by operating activities of discontinued operations       8,635  
Cash provided by operating activities $16,204   $29,737   $38,050   $63,358  
Investing activities:        
  Additions to property, plant and equipment and intangible assets ($6,613 ) ($5,902 ) ($30,602 ) ($20,947 )
  Investment in associated businesses (1,532 ) (3,489 ) (203,587 ) (4,906 )
  Return of capital from associated business 22,094     22,094    
  Acquisitions and portfolio investments (16 ) (5 ) (2,106 ) (10,759 )
  Net proceeds from the sale of Harlequin       442,207  
  Restricted cash       (22,750 )
  Proceeds from sale of assets   8,375   411   8,375  
  Other 172   181   277   622  
Cash provided by (used in) investing activities of continuing operations 14,105   (840 ) (213,513 ) 391,842  
Cash used in investing activities of discontinued operations       (1,609 )
Cash provided by (used in) investing activities $14,105   ($840 ) ($213,513 ) $390,233  
Financing activities:        
  Repayment of bankers' acceptances       ($190,923 )
  Issuance of bankers' acceptances       11,199  
  Dividends paid ($10,388 ) ($10,349 ) ($41,532 ) (41,400 )
  Exercise of share options     394   612  
  Other 84   230   403   447  
Cash used in financing activities ($10,304 ) ($10,119 ) ($40,735 ) ($220,065 )
Cash represented by:        
Attributed to continuing operations:        
  Cash $35,141   $33,063   $35,141   $33,063  
  Cash equivalents - short-term deposits   218,276     218,276  
  Net cash, end of period $35,141   $251,339   $35,141   $251,339  

Contact Information

  • For more information please contact:
    L. DeMarchi
    Executive Vice-President and Chief Financial Officer
    Torstar Corporation
    (416) 869-4776