Torstar Corporation Reports Fourth Quarter Results

TORONTO, ON--(Marketwired - March 01, 2017) - Torstar Corporation (TSX: TS.B) today reported financial results for the fourth quarter ended December 31, 2016.

Highlights for the fourth quarter:

• Ended 2016 with $75.4 million of cash and cash equivalents as well as $11.8 million of restricted cash; Torstar has no bank indebtedness.
  
• Our net income from continuing operations was $0.7 million ($0.01 per share) in the fourth quarter of 2016. This compares to a net loss of $233.4 million ($2.90 per share) in the fourth quarter of 2015. Our income in the fourth quarter of 2016 included $15.6 million of amortization and depreciation and $7.5 million of non- cash impairment charges. Our net loss in the fourth quarter of 2015 included $213.3 million of non-cash impairment charges and $37.2 million of amortization and depreciation.
  
• Adjusted earnings per share (see "Non-IFRS measures") was $0.16 in the fourth quarter of 2016, up $0.26 from the fourth quarter of 2015. Adjusted earnings per share included a $0.27 per share effect of amortization of intangible assets, primarily associated with the investment in VerticalScope.
  
• Fourth quarter 2016 operating profit was $10.3 million, an improvement of $217.4 million from the fourth quarter of 2015.
  
• Segmented adjusted EBITDA (see "Non-IFRS measures") was $31.9 million in the fourth quarter of 2016, up $6.5 million from the fourth quarter of 2015 benefiting from $2.4 million of higher contribution from our Digital Ventures segment which included 34% growth in adjusted EBITDA at VerticalScope. In the newspaper operations segmented adjusted EBITDA at Star Media Group was up $5.5 million in the fourth quarter of 2016 while Metroland Media Group was down $1.5 million in the quarter. Our proportionate share of VerticalScope's adjusted EBITDA was $7.5 million in the fourth quarter of 2016 reflecting growth of 34% relative to the fourth quarter of 2015.
  
• Segmented revenue (see "Non-IFRS measures") was $208.7 million in the fourth quarter of 2016, down $24.3 million (10%) from $233.0 million in the fourth quarter of 2015 with revenues negatively impacted by several factors including the absence of $5.0 million of net revenue associated with the closure of Olive Media at the end of 2015 and the absence of $2.3 million of commercial printing revenue at the Vaughan Printing Facility. Adjusting for these factors, segmented revenue was down $17.0 million or 7% in the fourth quarter of 2016 which included revenue growth of 25% or $2.3 million from VerticalScope.
• David Holland, President and CEO of Torstar and acting Publisher of the Toronto Star, will be retiring effective March 3, 2017 following his previously announced intention to retire. An announcement regarding his successor is expected very soon.

Highlights for the year:

• In July 2016, printing of The Toronto Star was successfully transitioned to Transcontinental Printing ("Transcontinental") and in September 2016, we sold the Vaughan Printing Facility and surrounding lands for net proceeds of $53.6 million recognizing a gain of $21.8 million on the sale.
  
• During 2016, $22.8 million of restricted cash was released from the Harlequin escrow.
  
• Our net loss from continuing operations was $76.0 million ($0.94 per share) in 2016 and $399.8 million ($4.96 per share) in 2015. Our net loss in 2016 included $122.0 million of non-cash amortization and depreciation, $74.8 million of which related to our investment in VerticalScope, and $7.5 million of non-cash impairment charges. 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 $74.8 million ($0.93 per share) in 2016 compared to net loss attributable to equity shareholders of $404.0 million ($5.02 per share) in 2015.
  
• Adjusted loss per share was $0.46 in 2016, up $0.36 from adjusted loss per share of $0.10 in 2015. Adjusted loss per share included a $0.55 per share effect of amortization and depreciation in 2016.
  
• Our segmented adjusted EBITDA was $60.5 million in 2016, down $8.8 million from $69.3 million in 2015 including the negative impact of the loss of $7.6 million in contribution from commercial printing and the closure of Olive Media, the absence of $7.1 million of digital media tax credits recorded in 2015 and the impact of revenue declines. These negative factors were partially offset by $34.5 million of net savings from restructuring initiatives, other cost reductions, $3.6 million of lower net investment in Toronto Star Touch (including $1.2 million of savings from restructuring) and $14.4 million of additional adjusted EBITDA from our investment in VerticalScope. Digital ventures adjusted EBITDA represented 45% of total segmented adjusted EBITDA in 2016, up from 17% in 2015 and due entirely to our investment in VerticalScope in July of 2015.
  
• In the first full year of our investment, VerticalScope contributed $23.7 million of segmented adjusted EBITDA as VerticalScope's U.S. dollar revenues and adjusted EBITDA increased 21% and 20% respectively, relative to the full year in 2015.
  
• Segmented revenue was $761.7 million in 2016, down $81.9 million (10%) from $843.6 million in 2015.

"We were pleased with results in the quarter with segmented adjusted EBITDA up $6.5 million versus prior year. Importantly, Digital Ventures adjusted EBITDA was up $2.4 million attributable to 34% earnings growth at VerticalScope. Segmented adjusted EBITDA at Star Media Group was up $5.5 million as cost reductions and lower year over year investment in Star Touch more than offset continued pressure on print advertising revenues. At Metroland, with EBITDA down just $1.5 million, results in the quarter reflected a slight improvement in the revenue trend contributing to a solid finish to the year." said David Holland, President and CEO of Torstar "This has been a significant year of transition at Torstar with our earnings base shifting meaningfully towards our digital assets led by VerticalScope which contributed $23.7 million of segmented adjusted EBITDA in the year. We were also very pleased with the execution of the transition of the outsourcing of printing of the Toronto Star as well as the sale of the former printing facility for proceeds of $53.6 million.

"Looking forward, we expect to continue to benefit from a solid financial position, having finished 2016 with $75 million in unrestricted cash and no bank debt. In 2017 we expect the digital evolution of our asset base to continue through reinvestment in and support of VerticalScope and through our continued efforts to advance our multi-platform strategy across our newspaper operations. Finally, it has been a great privilege to serve as Torstar's President and CEO for the past eight years. I wish my successor the very best in leading the continued evolution of the Company."

The following chart provides a continuity of earnings per share from the fourth quarter and twelve months ended 2015 to the fourth quarter and twelve months ended 2016:

OPERATING RESULTS - FOURTH QUARTER 2016

The following tables sets out, in $000's the segmented results for the three months ended December 31, 2016 and 2015.

Revenue
Segmented revenue was down $24.3 million or 10% with revenues negatively impacted by several factors including the absence of $5.0 million of net revenue associated with the closure of Olive Media at the end of 2015 and the absence of $2.3 million of commercial printing revenue at the Vaughan Printing Facility. Adjusting for these factors, segmented revenue was down $17.1 million or 7.3% in the fourth quarter of 2016 which included revenue growth of $2.3 million (25%) from VerticalScope.

Segmented revenue in the fourth quarter reflected declines of 13% in print advertising revenues, with particular softness in national advertising revenues, a 7.1% decrease in subscriber revenue, which included the impact of the closure of the Guelph Mercury, and a 3.0% decrease in distribution revenues.

Operating revenue (excluding our proportionate share of revenues from our joint ventures and our 56% interest in VerticalScope) was down $25.3 million or 12%.

Excluding the impact of Olive Media, digital revenue across all segments increased 2.1% in the fourth quarter of 2016, largely resulting from growth at VerticalScope and in local digital advertising at Metroland Media Group partially offset by lower revenues at Save.ca, Workopolis and WagJag. Digital revenues were 18% of total segment revenues in the fourth quarter of 2016 comparable with the fourth quarter of 2015.

Salaries and benefits
Our segmented salaries and benefits costs decreased $16.2 million or 17% in the fourth quarter of 2016 including the benefit of savings from restructuring initiatives, including the closure of the Vaughan Printing Facility, lower commission costs, and lower staffing costs associated with Toronto Star Touch.

Other operating costs
Segmented other operating costs primarily consist of circulation/flyer distribution costs, newsprint costs and other production costs which represented 41%, 12% and 13% respectively of segmented other operating costs in the fourth quarter of 2016. Segmented other operating costs were down $14.7 million or 13% as a result of lower print volumes and the impact of other cost reductions partially offset by fees associated with outsourcing the printing of the Toronto Star effective the third quarter of 2016.

Adjusted EBITDA
Our segmented adjusted EBITDA was $31.9 million in the fourth quarter of 2016, up $6.5 million from the fourth quarter of 2015 benefiting from $2.4 million of higher contribution from our Digital Ventures segment which included 34% growth in adjusted EBITDA at VerticalScope. In the newspaper operations segmented adjusted EBITDA at Star Media Group was up $5.5 million in the fourth quarter of 2016 while Metroland Media Group was down $1.5 million in the quarter.

Amortization and depreciation
Total segmented amortization and depreciation decreased $21.6 million in the fourth quarter of 2016 which was primarily the result of lower amortization associated with our investment in VerticalScope.

Operating earnings (loss)
Segmented operating earnings was $15.4 million in the fourth quarter of 2016, an improvement of $27.8 million from an operating loss of $12.4 million in the fourth quarter of 2015. This improvement was the result of an increase in adjusted EBITDA combined with lower amortization and depreciation expense.

Restructuring and other charges
Total segmented restructuring and other charges were $4.4 million in the fourth quarter of 2016 and $7.5 million in the comparable period of 2015. Restructuring provisions in the fourth quarter of 2016 are expected to result in annualized net savings of $1.8 million and a reduction of approximately 20 positions. $0.2 million of the savings associated with these initiatives were realized in the fourth quarter of 2016.

Impairment of assets
During the fourth quarter of 2016, we incurred non-cash charges related to asset impairment of investments in joint ventures and intangible assets totalling $7.5 million (2015 - goodwill and investments in joint ventures $213.3 million). Of the impairment charges in the fourth quarter, $6.7 million was in respect of our joint venture investment in Workopolis and the balance of which related to intangible assets at Metroland Media Group. These charges had no impact on cash flows and are discussed further in the discussion of annual operating results.

Operating profit (loss)
In the fourth quarter of 2016 our segmented operating profit was $3.5 million compared to an operating loss of $233.2 million in the fourth quarter of 2015. Our profit in the fourth quarter of 2016 included $15.6 million of amortization and depreciation expense and $7.5 million of non-cash impairment charges. Our loss in the fourth quarter of 2015 included $213.3 million of in non-cash impairment charges and $37.2 million of amortization and depreciation expense.

Our operating profit, excluding our proportionate share of operating profit (loss) from our joint ventures and our investment in VerticalScope increased $217.4 million in the fourth quarter of 2016 to $10.3 million.

Loss from joint ventures
Loss from joint ventures was $6.5 million in the fourth quarter of 2016 compared to a loss of $4.4 million in the fourth quarter of 2015. The loss in the fourth quarter of 2016 included a non-cash impairment charge of $6.7 million related to our joint venture investment in Workopolis (2015 - $4.0 million), as discussed further in the discussion of annual operating results.

Income (loss) from associated businesses
Income from associated businesses was $2.3 million in the fourth quarter of 2016 compared to a loss of $17.9 million in the fourth quarter of 2015. The 2016 fourth quarter included income of $2.2 million from Black Press, income of $1.7 million from Blue Ant, partially offset by a loss of $1.5 million from VerticalScope. The fourth quarter loss from VerticalScope included $7.7 million of amortization expense. The loss in the fourth quarter of 2015 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 2015 fourth quarter loss from VerticalScope included $26.9 million of amortization expense.

Investment in VerticalScope
During 2015, we acquired a 56% interest in VerticalScope. In connection with the investment in VerticalScope, during the fourth quarters of 2016 and 2015 we recorded $7.7 million and $26.9 million of additional amortization and depreciation expense. Further details of our accounting for this investment is included in the discussion of annual operating results and further details of the operating results for this investment during the fourth quarter of 2016 are outlined in our discussion of the operating results for the Digital Ventures segment below.

Other income (expense)
Other income was nil in the fourth quarter of 2016 compared to other expenses of $2.0 million in the fourth quarter of 2015. Other expense in the fourth quarter of 2015 included a partial write-down of $2.3 million in respect of one of our portfolio investments partially offset by a $0.2 million gain on the sale of an asset and $0.1 million of other income.

Income and other taxes
We recorded a tax expense of $4.2 million in the fourth quarter of 2016. This compares to an income tax recovery of $0.6 million in the fourth quarter of 2015. The income tax expense in the fourth quarter of 2016 reflects deferred income tax assets not recognized and losses from associated businesses which are not deductible for tax purposes.The income tax recovery recorded in the fourth quarter of 2015 reflected the non-deductibility of non-cash impairment charges and losses from associated businesses for tax purposes.

Net income (loss) from continuing operations
Our net income from continuing operations was $0.7 million ($0.01 per share) in the fourth quarter of 2016. This compares to net loss of $233.4 million ($2.90 per share) in the fourth quarter of 2015.

OPERATING RESULTS - YEAR ENDED DECEMBER 31, 2016

The following tables sets out, in $000's the segmented results for the years ended December 31, 2016 and 2015.

Revenue
Segmented revenue was down $81.9 million or 9.7% with revenues negatively impacted by several factors including the absence of $14.6 million of net revenue associated with the closure of Olive Media at the end of 2015 and the absence of $8.9 million of commercial printing revenue at the Vaughan Printing Facility. These negative factors were partially offset by increased revenue of $24.9 million from VerticalScope, $20.0 million of which was the result of including a full year of revenue in 2016, relative to a partial year in 2015 and $4.9 million or 29% of year over year comparable period revenue growth at VerticalScope. Adjusting for the non-recurring factors, segmented revenue was down $78.8 million or 9.3% in 2016.

Revenue excluding our proportionate share of revenue from joint ventures and our 56% interest in VerticalScope ("operating revenue") was down $101.5 million or 13%. Adjusting for the above noted factors, operating revenue was down $78.4 million or 10.0%.

Segmented revenue in 2016 reflected declines of 15% in print advertising revenues, with particular softness in national advertising revenues, a 6.8% decrease in subscriber revenue, approximately 1% of which was due to the closure of the Guelph Mercury, and a 5.1% decrease in distribution revenues.

Excluding the impact of Olive Media, digital revenue across all segments increased 18% in 2016, largely resulting from our investment in VerticalScope as well as revenues from Toronto Star Touch and continued growth in local digital advertising within the community websites at Metroland Media Group. These revenue increases were partially offset by lower revenues at Workopolis and WagJag. Digital revenues were 18% of total segment revenues in 2016 compared to 15% in 2015.

The following charts provide a breakdown of total segmented operating revenue for 2016 and 2015 ($ in millions):

Salaries and benefits
Our segmented salaries and benefits costs were down $39.2 million or 11% in 2016 including the absence of $7.1 million of digital media tax credits recorded in 2015. Segmented salaries and benefit costs in 2016 reflected the benefit of savings from restructuring initiatives, including the closure of the Vaughan Printing Facility and lower commission costs partially offset by the inclusion of our proportionate share of salaries and benefit costs of VerticalScope and higher staffing costs associated with Toronto Star Touch.

Other operating costs
Segmented other operating costs primarily consist of circulation/flyer distribution costs, newsprint costs and other production costs which represented 40%, 12% and 12% respectively of segmented other operating costs in 2016. Segmented other operating costs were down $34.0 million (8.2%) as a result of lower print volumes and the impact of other cost reductions partially offset by fees associated with outsourcing the printing of the Toronto Star effective July 2016, as well as increased costs related to our proportionate share of VerticalScope's other operating costs.

Adjusted EBITDA
Our segmented adjusted EBITDA was $60.5 million in 2016, down $8.8 million from 2015 including the negative impact of the loss of $7.6 million in contribution from commercial printing and the closure of Olive Media, the absence of $7.1 million of digital media tax credits recorded in 2015 and the impact of revenue declines. These negative factors were partially offset by $34.5 million of net savings from restructuring initiatives, other cost reductions, $3.6 million of lower net investment in Toronto Star Touch (including $1.2 million of savings from restructuring) and $14.4 million of additional adjusted EBITDA from our investment in VerticalScope.

Amortization and depreciation
Total segmented amortization and depreciation increased $44.5 million in 2016, which included an increase of $30.5 million associated with our investment in VerticalScope on July 28, 2015 as well as $9.3 million of accelerated amortization of equipment related to the transition of printing of the Toronto Star effective July 3, 2016.

Operating earnings (loss)
Segmented operating loss was $64.1 million in 2016, compared to a segmented operating loss of $10.7 million in 2015. The loss in 2016 included the impact of $74.8 million of amortization expense associated with our investment in VerticalScope (2015 - $44.3 million) as well as the above mentioned accelerated amortization of equipment related to the transition of printing of the Toronto Star.

Restructuring and other charges
Total segmented restructuring and other charges were $46.9 million in 2016 and largely related to ongoing efforts to reduce costs including a charge of $20.0 million for severance and facility related expenses in respect of our decision to outsource printing of the Toronto Star. The 2016 restructuring initiatives are expected to result in annualized net savings of approximately $36.5 million and a reduction of approximately 590 positions. Of the expected savings, $19.9 million was realized in 2016. Total segmented restructuring and other charges of $31.3 million were recorded in 2015.

Over the last few years we have undertaken several restructuring initiatives in order to reduce our ongoing operating costs. At December 31, 2016, our liability for payments in respect of these restructuring initiatives was $37.1 million. The following chart provides a year-over-year summary of the realized and expected net savings by year:

Impairment of assets
During 2016, we incurred non-cash charges related to asset impairment of our intangible assets and investments in joint ventures totalling $7.5 million. During 2015, we incurred charges related to asset impairment of property, plant and equipment, goodwill and investments in joint ventures totalling $361.1 million. These charges have no impact on cash flows.

In carrying out our impairment testing during the fourth quarter of 2016, we determined that the carrying amount of our joint venture investment in Workopolis exceeded the value in use ("VIU") and we recorded an impairment charge of $6.7 million in respect of this investment as a result of a further downward revision in longer term forecasted revenues reflecting continued increased competition in the online recruitment and job search markets as well as prevailing economic conditions. We also recorded a $16.0 million impairment charge in respect of our joint venture investment in Workopolis during 2015 reflecting the above noted factors. Also, during the fourth quarter of 2016, following lower than forecasted performance in one of our digital Cash Generating Units ("CGUs") at Metroland Media Group in the quarter, we recorded an impairment charge of $0.8 million in respect of intangible assets within this CGU.

During the third quarters of 2016 and 2015, we conducted impairment tests on the carrying value of intangible assets and goodwill. While no impairments of these assets were identified during our 2016 testing, in carrying out this testing in 2015, we determined that the carrying amount of goodwill in the Metroland Media Group of CGUs exceeded the 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.

In addition, 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.

Operating loss
In 2016, our segmented operating loss was $118.5 million compared to $403.1 million in 2015. Our 2016 segmented operating loss included $122.0 million of non-cash amortization and depreciation and $7.5 million of non-cash impairment charges. 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 operating profit (loss) decreased $293.0 million in 2016 compared to 2015.

Interest and financing costs
Interest and financing costs increased $1.1 million in 2016 primarily reflecting lower interest earned on cash and cash equivalents.

Loss from joint ventures
Loss from joint ventures was $5.5 million in 2016 and $14.2 million in 2015. These losses primarily reflect non-cash impairment charges of $6.7 million recorded in 2016 and $16.0 million recorded in 2015 related to our joint venture investment in Workopolis, as discussed above. Excluding the impact of these charges, income from joint ventures was $1.2 million in 2016 and $1.8 million in 2015 largely reflecting lower adjusted EBITDA at both Workopolis and Sing Tao as well as restructuring charges at Sing Tao.

Loss from associated businesses
Loss from associated businesses was $34.9 million in 2016 compared to a loss of $29.0 million in 2015. The 2016 loss included income of $5.6 million from Black Press and $2.4 million from Blue Ant offset by a loss of $0.6 million from Shop.ca and a loss of $42.2 million from VerticalScope. The 2016 loss from VerticalScope included $74.8 million of amortization and depreciation expense. 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.

Our share of Black Press' net income was $5.6 million in 2016 ($3.0 million in 2015), 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 Blue Ant's net income was $2.4 million in 2016 ($1.9 million loss in 2015) representing Blue Ant's results through November 30, 2016. Our equity interest in Blue Ant was 18% at the end of 2016 relative to 23% at the end of 2015. Blue Ant has raised additional capital during calendar 2016 at a value approximately 40% higher than our weighted average cost per share. Blue Ant has an August fiscal year end and therefore does not have coterminous quarter-ends with us.

Our share of the Shop.ca net loss was $0.6 million in 2016 which reduced the carrying value of our investment to nil. Our share of Shop.ca's net loss was $3.0 million in 2015. Shop.ca declared bankruptcy in 2016.

We did not record any income or loss during 2016 or 2015 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 ($4.6 million as of December 31, 2016) have been offset by net income, OCI or additional investments are made. For the year ended December 31, 2016, the Company would have reported income of $0.3 million and other comprehensive loss of $1.8 million from Canadian Press (2015 - income of $0.5 million and OCI of $0.4 million).

Investment in VerticalScope
In 2015, we acquired a 56% interest in VerticalScope. 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 have incurred large amortization charges related to these intangible assets through the end of July 2016.

Our 56% share of VerticalScope's 2016 net loss included $74.8 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 28, 2015. Amortization and depreciation has been very significant and has been the primary contributor to the decrease in the carrying value of our investment from approximately $180 million at the time of our investment (net of a distribution we received in the third quarter of 2015 and anticipated at the time of the investment) to $114.8 million at December 31, 2016. Further details of the operating results for this investment during 2016 are outlined in our discussion of the operating results for the Digital Ventures segment below.

During 2016 VerticalScope generated U.S. $22.4 million of cash from operations and made acquisitions and investments totalling U.S. $15.7 million. VerticalScope's debt, net of cash on hand, was U.S. $74.4 million at December 31, 2016 down U.S. $6.4 million from U.S. $80.8 million at December 31, 2015.

Other income (expense)
Other income was $24.3 million in 2016 compared to other expenses of $1.8 million in 2015. Other income in 2016 included a gain of $21.8 million on the sale of the Vaughan Printing Facility and surrounding lands, a gain of $1.3 million on the sale of a real estate property in Guelph and an additional $1.3 million gain recognized on the sale of one of Metroland Media Group's real estate properties in Mississauga.

Income and other taxes
We recorded an income tax recovery of $3.9 million in 2016 and an income tax recovery of $2.3 million in 2015. The tax recovery in 2016 reflects deferred income tax assets not recognized, adjustment to deferred tax assets related to prior years and losses from associated businesses which are not deductible for tax purposes. The tax recovery in 2015 reflected 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 $76.0 million ($0.94 per share) in 2016, compared to a loss of $399.8 million ($4.96 per share) in 2015. Our loss in 2016 included $122.0 million of amortization and depreciation expense and $7.5 million of non-cash impairment charges. Our 2015 net loss included $361.1 million of non-cash impairment charges and $77.5 million of non-cash amortization and depreciation.

Income (loss) from discontinued operations
On August 1, 2014 Torstar sold all of the shares of Harlequin Enterprises Limited ("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. In connection with the sale of Harlequin, Torstar indemnified the Purchaser for costs and fees related to certain matters including certain tax and pre-existing litigation matters and estimated the exposure under these indemnities and recorded a contingent liability in respect of these matters. The gain of $1.2 million in 2016 primarily reflects recoveries related to insurance reserves as well as revised estimates of provisions related to legal costs and taxes. The loss from discontinued operations of $5.0 million in 2015 also reflected revised estimates of provisions related to taxes and legal costs.

Net income (loss) attributable to equity shareholders
Our net loss attributable to equity shareholders was $74.8 million ($0.93 per share) in 2016 compared to net loss attributable to equity shareholders of $404.0 million ($5.02 per share) in 2015.

OUTLOOK
In 2016, Metroland Media Group and Star Media Group continued to face a challenging print advertising market resulting from ongoing shifts in spending by advertisers and indications are that the revenue challenges experienced at Star Media Group and Metroland Media Group in 2016 have continued early into 2017. However, it is difficult to predict if the trends experienced in 2016 will continue through 2017. Flyer distribution revenues and revenues from subscribers declined moderately in 2016 and this trend is expected to continue in 2017. In 2017, Metroland Media Group and Star Media Group overall digital revenue is expected to be stable with expected growth in certain business lines offsetting expected declines in other areas.

Within the Digital Ventures segment, the trend in revenue and adjusted EBITDA growth from a combination of organic growth and acquisitions at VerticalScope experienced in 2016 has continued early into 2017 and is expected to remain strong through the balance of 2017.

Cost reduction will remain an ongoing important area of focus for us in 2017. Net savings related to restructuring initiatives undertaken through the end of 2016 are expected to be $17.0 million in 2017 ($6.1 million in Metroland Media Group, $10.9 million in the Star Media Group). In addition, we expect the net investment in Toronto Star Touch to be between $2 million and $4 million for the full year in 2017, (including the benefit of an additional $2.2 million of savings from restructuring initiatives undertaken to date and not included above) down from approximately $11 million in 2016.

Expenses related to our registered defined benefit pension plans are currently expected to decrease by approximately $3 million to approximately $11 million in 2017. However, from a cash flow perspective, in 2017, similar to 2016, we anticipate that the required funding of our registered defined benefit pension plans to remain at approximately $18 million. We are required to file updated actuarial valuation reports in respect of our largest registered defined benefit pension plans as of December 31, 2016. These valuations will determine the minimum future funding requirements in respect of these plans beyond 2017.

Capital expenditures in 2017 are currently anticipated to be reduced to between $12 million and $13 million.

In addition, in 2017, 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 (refer to discussion of Investment in VerticalScope in the discussion of annual operating results), to drop to approximately $7 - $8 million per quarter excluding any potential impact of acquisitions completed in 2017.

DIVIDEND
On February 28, 2017, Torstar declared a quarterly dividend of 2.5 cents per share on its Class A shares and Class B non-voting shares, payable on March 31, 2017, to shareholders of record at the close of business on March 10, 2017. 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, 2016 and the 2016 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 1, 2017 at 8:15 a.m. to discuss its fourth quarter results. The dial-in number is 1-844-891-8288. 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 1-855-859-2056 reservation number 67158487. 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, 2016 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
As a result of the increasing significance of segmented financial results from our investment in VerticalScope relative to our total segmented financial results, effective 2016 we have revised our definition of adjusted EBITDA to exclude share based compensation. We made this change because of the relative significance and variability of this non-cash expense in our proportionate share of VerticalScope's financial results and we believe that the exclusion of this non-cash expense from adjusted EBITDA provides greater insight for investors, analysts and readers, in regards to our segmented earnings excluding non-cash expenses. We have accordingly restated prior period comparative figures.

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(loss), and exclude share based compensation, restructuring and other charges, and impairment of assets. Share based compensation is eliminated as it is a non-cash expense that fluctuates significantly from period to period, in particular for VerticalScope as a result of industry compensation practices. 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, share based compensation 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.

Operating earnings (loss)/Segmented operating earnings (loss)
Operating earnings (loss) is used by management to represent the results of ongoing operations inclusive of amortization and depreciation.

Management uses operating earnings (loss) 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 (loss) as operating revenue less salaries and benefits, other operating costs, share based compensation and amortization and depreciation. Operating earnings (loss) 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(loss) (including calculating operating earnings (loss) 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 (loss) 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 (loss) is calculated in the same manner described above, except that it is calculated using total segment results including proportionately consolidated operating earnings (loss) for our joint ventures and our 56% interest in VerticalScope for which management is accountable.

Adjusted earnings (loss) per share
Adjusted earnings (loss) per share is used by management to represent the per share earnings (loss) 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 (loss) per share as earnings (loss) 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 (loss) per share is to provide additional useful information to investors, analysts and readers of our financial statements. Our method of calculating adjusted earnings (loss) 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 (loss)/Segmented operating profit (loss)
Operating profit (loss) is an additional IFRS measure. Management uses operating profit (loss) to measure the results of operations inclusive of impairments and restructuring and other charges. Operating profit (loss) appears in our consolidated statement of income (loss). Management believes that operating profit (loss) 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 (loss) may differ from other companies and accordingly may not be comparable to measures used by other companies. Segmented operating profit (loss) 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 expectations regarding our financial positions and asset base, expectations regarding expected savings including savings from restructuring initiatives, impairment of assets, estimates relating to contingent liabilities, Torstar's outlook for 2017 including anticipated revenue trends and adjusted EBITDA, expected costs related to Toronto Star Touch, pension plan funding obligations and expenses, Torstar's expected capital expenditures and investment spending, and anticipated non-cash amortization charges. 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; reliance on printing operations, newsprint costs; 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; dividend policy; results of impairment tests and uncertainties associated with critical accounting estimates; holding company structure; 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.

For more information, please see the discussion of risks affecting Torstar and its businesses in Torstar's 2016 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.