TORONTO, ONTARIO--(Marketwired - Nov. 5, 2014) - Torstar Corporation (TSX:TS.B) today reported financial results for the third quarter ended September 30, 2014.
Highlights for the third quarter1:
- The sale of Harlequin closed on August 1, 2014 for net accounting proceeds of $442.2 million, resulting in a pre-tax accounting gain of $224.6 million. Cash taxes payable on the gain are currently expected to be approximately $4.5 million.
- Total segmented revenue was $211.2 million in the third quarter of 2014, down $16.2 million (7.1%) from $227.4 million in the third quarter of 2013.
- Segmented adjusted EBITDA (see "non-IFRS measures") was $16.0 million in the third quarter of 2014, down $4.7 million (22.7%) from $20.7 million in the third quarter of 2013.
- Segmented operating profit (loss) was a loss of $93.1 million in the third quarter of 2014, an increase of $14.0 million from a loss of $79.1 million in the third quarter of 2013. The segmented operating losses for the third quarters of 2014 and 2013 include a non-cash charge for impairment of assets totalling $97.3 million and $85.5 million respectively.
- Net loss from continuing operations was $87.0 million ($1.08 per share) in the third quarter of 2014, an increase of $6.8 million ($0.07 per share) from $80.2 million ($1.01 per share) in the third quarter of 2013.
- Adjusted earnings per share (see "non-IFRS measures") was $0.06 in the third quarter of 2014, down $0.02 from $0.08 in the third quarter of 2013.
- Ended the third quarter with total cash and cash equivalents and restricted cash of $277.3 million after retiring all outstanding debt.
- Net income attributable to equity shareholders was $125.3 million ($1.57 per share) in the third quarter of 2014 up $196.1 million ($2.46 per share) from a loss of $70.8 million ($0.89 per share) in the third quarter of 2013.
"We were pleased to complete the sale of Harlequin in the third quarter and all outstanding debt was retired using a portion of the sale proceeds," said David Holland, President and CEO of Torstar Corporation. "The results in the quarter were lower with segment adjusted EBITDA down $4.7 million to $16.0 million as revenue declines exceeded the effect of continuing efforts on costs. While revenues were affected by continued shifts in spending by advertisers, pressure on revenues eased somewhat in the quarter at Metroland Media, our community media operation. We were also encouraged by the revenue growth in our digital offerings in the quarter."
"Looking forward, for the balance of the year, we expect continued challenges in print advertising revenues combined with relative stability in multi-platform subscriber revenues and flyer distribution revenues. While we remain focused on resizing the cost base, we remain committed to our multi-platform evolution and in keeping with this commitment, the Toronto Star intends to begin the development of an innovative new tablet product later this year which we expect to launch in the fall of 2015. We continue to assess options available to us to employ capital arising from the Harlequin sale."
1 Torstar's investment in Harlequin Enterprises Limited ("Harlequin") was sold on August 1, 2014 and previously represented the Book Publishing Segment. Effective the second quarter of 2014 this has been reclassified as Assets Held for Sale and Discontinued Operations and all results have been restated to reflect this change. Refer to Note 20 of Torstar's 2014 Third Quarter Condensed Consolidated Financial Statements for further information.
The following table provides a continuity of earnings per share and adjusted earnings per share from the third quarter of 2013 to the third quarter of 2014:
| Earnings Per Share |
Adjusted Earnings Per Share |
||||
| Earnings per share from continuing operations attributable to equity shareholders in the third quarter of 2013 | ($1.01 | ) | $0.08 | ||
| Changes | |||||
| Operations | (0.04 | ) | (0.04 | ) | |
| Interest and financing costs | 0.03 | 0.03 | |||
| Associated businesses | (0.01 | ) | (0.01 | ) | |
| Restructuring and other charges* | 0.02 | ||||
| Impairment of assets* | (0.14 | ) | |||
| Non-cash foreign exchange* | (0.07 | ) | |||
| Change in deferred taxes * | 0.14 | ||||
| Earnings from continuing operations per share attributable to equity shareholders in the third quarter of 2014 | ($1.08 | ) | $0.06 | ||
| Earnings per share from discontinued operations attributable to equity shareholders in the third quarter of 2014 | $2.65 | - | |||
| Earnings per share attributable to equity shareholders in the third quarter of 2014 | $1.57 | $0.06 | |||
| * Items are excluded from definition of adjusted earnings per share, "see Non-IFRS measures". |
OPERATING RESULTS - THIRD QUARTER 2014
The following tables sets out, in $000's the segmented results for the three months ended September 30, 2014 and 2013.
| Three months ended September 30, 2014 | ||||||||||||
| (in $000's) | MMG* | SMG* | Corporate | Total Segmented * |
Adjustments & Elimin- ations for Joint Ventures |
Total Per Consoli- dated Statement of Income |
||||||
| Operating revenue | $115,070 | $96,132 | $211,202 | ($11,277 | ) | $199,925 | ||||||
| Salaries and benefits | (53,722 | ) | (35,424 | ) | ($3,537 | ) | (92,683 | ) | 4,547 | (88,136 | ) | |
| Other operating costs | (48,345 | ) | (52,382 | ) | (1,815 | ) | (102,542 | ) | 4,568 | (97,974 | ) | |
| Adjusted EBITDA** | 13,003 | 8,326 | (5,352 | ) | 15,977 | (2,162 | ) | 13,815 | ||||
| Amortization & depreciation | (3,512 | ) | (4,300 | ) | (14 | ) | (7,826 | ) | 677 | (7,149 | ) | |
| Operating earnings** | 9,491 | 4,026 | (5,366 | ) | 8,151 | (1,485 | ) | 6,666 | ||||
| Restructuring and other charges | (1,475 | ) | (2,432 | ) | (3,907 | ) | 1 | (3,906 | ) | |||
| Impairment of assets | (97,348 | ) | (97,348 | ) | 15,000 | (82,348 | ) | |||||
| Operating profit (loss)** | $8,016 | ($95,754 | ) | ($5,366 | ) | ($93,104 | ) | $13,516 | ($79,588 | ) | ||
| Three months ended September 30, 2013 | ||||||||||||
| (in $000's) | MMG* | SMG* | Corporate | Total Segmented* |
Adjustments & Elimin- ations for Joint Ventures |
Total Per Consoli- dated Statement of Income |
||||||
| Operating revenue | $119,601 | $107,782 | $227,383 | ($11,705 | ) | $215,678 | ||||||
| Salaries and benefits | (56,105 | ) | (40,531 | ) | ($2,122 | ) | (98,758 | ) | 5,017 | (93,741 | ) | |
| Other operating costs | (48,943 | ) | (58,327 | ) | (689 | ) | (107,959 | ) | 4,755 | (103,204 | ) | |
| Adjusted EBITDA** | 14,553 | 8,924 | (2,811 | ) | 20,666 | (1,933 | ) | 18,733 | ||||
| Amortization & depreciation | (3,964 | ) | (4,870 | ) | (10 | ) | (8,844 | ) | 681 | (8,163 | ) | |
| Operating earnings** | 10,589 | 4,054 | (2,821 | ) | 11,822 | (1,252 | ) | 10,570 | ||||
| Restructuring and other charges | (2,648 | ) | (2,858 | ) | (5,506 | ) | 237 | (5,269 | ) | |||
| Impairment of assets | (12,458 | ) | (73,000 | ) | (85,458 | ) | 9,000 | (76,458 | ) | |||
| Operating profit (loss)** | ($4,517 | ) | ($71,804 | ) | ($2,821 | ) | ($79,142 | ) | $7,985 | ($71,157 | ) | |
| * | Includes proportionately consolidated share of joint ventures. |
| ** | These are non-IFRS or additional IFRS measures, see "non-IFRS measures". |
Revenue
Segmented revenue was down $16.2 million or 7.1% in the third quarter of 2014, inclusive of an increase in product sales at Metroland Media Group. Segmented revenues, excluding the impact of TMGTV and product sales at Metroland Media Group, were down $16.9 million or 7.4%. This decline was primarily the result of lower print advertising revenues which continued to be under pressure during the third quarter. However, multi-platform subscriber revenues and flyer distribution revenues, which account for approximately 35% of segmented revenue in the third quarter, were relatively stable in the third quarter. At Metroland Media Group, print advertising revenues declined during the third quarter of 2014, in both the community and daily newspapers. However, similar to the second quarter of 2014, the rate of decline slowed relative to earlier in the year with the trend improving as the third quarter progressed until the latter part of September. At the Star Media Group, revenue declines in the third quarter reflected the closure of print operations in three of Metro's smaller markets. Star Media Group revenues were also believed to be negatively impacted by the transition of advertising sales for the Toronto Star to Metro which occurred in the first quarter of 2014.
Digital revenue trends continued to improve in the third quarter with digital revenue 4.4% above the prior year primarily as a result of revenue growth in eyeReturn Marketing, thestar.com, the Metroland community websites and save.ca, partially offset by lower revenues at WagJag and Workopolis. Adjusting for the declines in WagJag and Workopolis revenues, digital revenues would have increased 8.4% in the third quarter. Digital revenues were 13.2% of total segment revenues in the third quarter of 2014 compared to 11.8% in the third quarter of 2013.
Adjusted EBITDA
Segmented adjusted EBITDA was down $4.7 million or 22.7% in the third quarter of 2014 reflecting a combined $2.2 million decrease in adjusted EBITDA from the Metroland Media Group and Star Media Group as well as an increase of $2.5 million in Corporate expenses. During the third quarter, declines in print advertising revenues and general wage increases exceeded the impact of cost reductions. Overall costs at Metroland Media Group and Star Media Group decreased by $14.0 million in the third quarter of 2014 including $7.7 million of savings from restructuring initiatives, as well as lower pension costs and the impact of lower newsprint price and consumption largely due to print advertising revenue declines. Profitability in the digital properties continued to improve in the third quarter of 2014 across Metroland Media Group and Star Media Group.
The increase in Corporate expenses in the third quarter of 2014 was the result of consulting costs, the return to a normal level of short-term incentive accruals relative to a reduction in the third quarter of 2013 as well as unfavourable mark-to-market movements in share-based hedging instruments.
Operating earnings
Segmented operating earnings were down $3.7 million in the third quarter of 2014.
Impairment of assets
During the third quarter of 2014, Torstar incurred charges related to asset impairment of property, plant and equipment, goodwill and investments in joint ventures totalling $97.3 million. During the third quarter of 2013, Torstar incurred charges related to asset impairment totalling $85.5 million related to certain property, plant and equipment, intangible assets, goodwill and investments in joint ventures. These charges have no impact on cash flows.
During the third quarters of 2014 and 2013, Torstar conducted impairment tests on the carrying value of intangible assets with a finite useful life, intangible assets with an indefinite useful life and goodwill. In carrying out this testing during the third quarter of 2014, it was determined that the carrying amount of goodwill in the Star Media Group of CGUs exceeded the value in use and Torstar 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. Torstar also recorded a $15.0 million impairment charge in respect of its joint venture investment in Workopolis during the third quarter of 2014 resulting from lower forecasted revenues attributable to an increase in competition in the online recruitment and job search markets and prevailing economic conditions.
In the third quarter of 2013, it was determined that the carrying amount of certain intangible assets within the Metroland Media Group CGU and goodwill in the Star Media Group of CGUs exceeded the value in use. Accordingly, Torstar recorded impairment of $12.5 million for intangible assets in the Metroland Media Group CGU and $64.0 million for goodwill in the Star Media Group of CGUs. These impairments were also the result of lower forecasted revenues reflecting shifts in spending by advertisers. Certain of the impairment charges related to intangible assets within the Metroland Media Group CGU were also the result of internal reorganization, realignment and integration of certain digital businesses which occurred during the third quarter of 2013. As a result of factors noted above, Torstar also recorded a $9.0 million impairment charge in respect of its Sing Tao Daily joint venture investment in the third quarter of 2013.
Net income (loss) from continuing operations
Torstar reported a net loss from continuing operations of $87.0 million or $1.08 per share in the third quarter of 2014, an increase of $6.8 million or $0.07 per share from a loss of $80.2 million or $1.01 per share in the third quarter of 2013. Adjusted earnings per share was $0.06 in the third quarter of 2014, down $0.02 per share from $0.08 per share in the third quarter of 2013.
Gain on sale and discontinued operations
On August 1, 2014 Torstar 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. Net accounting proceeds were approximately $442.2 million ($22.8 million of which is being held in escrow) and reflect the purchase price plus adjustments for working capital and other related items. The sale of Harlequin resulted in a pre-tax accounting gain of $224.6 million, net of transaction costs. Cash taxes payable on the gain are currently expected to be approximately $4.5 million.
Revenues from discontinued operations were $30.2 million in the third quarter of 2014 and $94.7 million in the third quarter of 2013. Discontinued operations for the third quarter of 2014 include Harlequin's results through to July 31, 2014.
Net Income from discontinued operations and gain on sale was $212.3 million in the third quarter of 2014 and includes a pre-tax gain of $224.6 million related to the sale of Harlequin. Net income from discontinued operations was $9.4 million in the third quarter of 2013.
Net income attributable to equity shareholders
Torstar reported net income attributable to equity shareholders of $125.3 million or $1.57 per share in the third quarter of 2014 up $196.1 million or $2.46 per share from a loss of $70.8 million or $0.89 per share in the third quarter of 2013.
OUTLOOK
Through the third quarter and first nine months of 2014, Metroland Media Group and Star Media Group continued to face challenges as a result of continued shifts in spending by advertisers. Indications are that the revenue trends experienced at Star Media Group and Metroland Media Group in the second and third quarters of 2014 have continued early into the fourth quarter with print advertising revenues likely to continue to be under pressure. However, multi-platform subscriber revenues and flyer distribution revenues are expected to be relatively stable in the balance of the year. Across Torstar, cost reduction has been and is expected to remain an important area of focus. Metroland Media Group and Star Media Group are expected to realize $5.9 million of savings in the balance of 2014 from restructuring initiatives undertaken through the end of the third quarter of 2014. However, at Star Media Group year over year earnings in the fourth quarter are expected to be negatively impacted by the timing of digital investment spending and the lapping of certain revenue and cost initiatives implemented in the second half of 2013. Full year net investment spending associated with growth initiatives in 2014 is currently expected to be somewhat lower than 2013 levels.
From a cash flow perspective, in 2014, Torstar anticipates spending approximately $37 million for the required funding of its registered defined benefit pension plans. Looking forward, based on the most recent actuarial valuations, Torstar anticipates that the funding obligation for its registered defined benefit pension plans for 2015 will be in the order of $25 million. Capital expenditures in 2014 are currently anticipated to be approximately $21 million.
Lastly as part of the Toronto Star's multi-platform evolution, the Star Media Group has reached agreement in principle with La Presse to develop a new tablet product for the Toronto Star. The parties are working toward completion of definitive documents and expect to begin development in the fourth quarter, with an anticipated launch in the fall of 2015. This innovative new tablet product will be based on technology, research, and experience associated with the new La Presse+ product launched in 2013. The project is expected to require additional capital spending of approximately $1 million to $2 million in the fourth quarter of 2014 and an additional $10 million to $12 million in 2015. There are no significant operating expenses anticipated in 2014 and estimates of the potential impact on 2015 operating results are still in development. The Toronto Star will seek to expand its audiences and increase engagement through this and other projects and it anticipates eliminating the paywall in 2015 with some potential impact on circulation revenue.
DIVIDEND
On November 4, 2014, Torstar declared a quarterly dividend of 13.125 cents per share on its Class A shares and Class B non-voting shares, payable on December 31, 2014, to shareholders of record at the close of business on December 12, 2014. Torstar advises that, for the purposes of the Income Tax Act, Canada and for any relevant provincial tax legislation, this dividend is designated as an eligible dividend.
ADDITIONAL INFORMATION
For additional information, please refer to Torstar's condensed consolidated financial statements and interim Management's Discussion and Analysis for the period ended September 30, 2014. 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 November 5, 2014 at 8:15 a.m. to discuss its third quarter results. The dial-in number is (416) 340-2216 or 1-866-223-7781. 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 8079381. 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, Workopolis, wagjag.com, toronto.com, save.ca, Olive Media, and eyeReturn Marketing.
Non-IFRS measures
In addition to operating profit, an additional IFRS measure, as presented in the consolidated statement of income, management uses Adjusted EBITDA ("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 12 of Torstar's 2014 Third Quarter MD&A for a reconciliation of EBITDA and Operating earnings (and Segmented EBITDA/Segmented Operating earnings - as applicable) with Operating profit (Segmented Operating profit - as applicable), and Adjusted earnings per share to earnings per share.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Segmented Adjusted EBITDA)
Management believes that Adjusted EBITDA is an important proxy for the amount of cash generated by Torstar's 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. Torstar calculates 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 and analysts and financial statement readers and 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 prior to the elimination of proportionately consolidated results for joint ventures.
Operating earnings/Segmented operating earnings
Operating earnings is used by management to represent the results of ongoing operations and is not a recognized measure of financial performance under IFRS. Torstar calculates operating earnings as operating revenue less salaries and benefits and other operating costs and amortization and depreciation. Operating earnings excludes restructuring and other charges and impairment of assets. 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. Torstar's 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. Segmented operating earnings is calculated in the same manner described above, except that it is calculated using total segment results prior to the elimination of proportionately consolidated results for joint ventures.
Adjusted earnings per share
Adjusted earnings per share is used by management to represent the per share earnings of results of ongoing operations and is not a recognized measure of financial performance under IFRS. Torstar calculates adjusted earnings per share as earnings per share from continuing operations less the per share effect of impairment of assets, restructuring and other charges, non-cash foreign exchange, other income (expense) and change in deferred taxes. Torstar's method of calculating adjusted earnings per share may differ from other companies and accordingly may not be comparable to measures used by other companies.
Operating profit
Operating profit is an additional IFRS measure used by management to represent the results of operations inclusive of impairments and restructuring and other charges and appears in Torstar's consolidated statement of income.
Forward-looking statements
Certain statements in this press release and in the Company's oral and written public communications may constitute forward-looking statements that reflect management's expectations regarding the Company's future growth, financial performance and business prospects and opportunities as of the date of this press release. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "anticipate", "believe", "plan", "forecast", "expect", "intend", "would", "could", "if", "may" and similar expressions.
This press release includes, among others, forward-looking statements regarding the Company's expected revenues, expected net savings from restructuring initiatives, expected taxes payable on the Harlequin gain, forecasted revenues in connection with impairment tests, the outlook for the balance of 2014, the expected development and launch, including the timing thereof, of the Toronto Star digital tablet edition and the expected capital spending requirements and operating expenses associated therewith. All such statements are made pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. These statements reflect current expectations of management regarding future events and operating performance, and speak only as of the date of this release. In addition, forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.
By their very nature, forward-looking statements require management to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that management's assumptions may not be accurate and that actual results, performance or achievements may differ significantly from such predictions, forecasts, conclusions or projections expressed or implied by such forward-looking statements. We caution readers not to place undue reliance on the forward-looking statements in this press release as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, outlooks, expectations, goals, estimates or intentions expressed in the forward-looking statements.
These factors include, but are not limited to: the Company's ability to operate in highly competitive industries; the Company's ability to compete with other newspapers and other forms of media and media platforms; the Company's ability to attract and retain advertisers; the Company's ability to maintain adequate circulation/subscription levels; the Company's ability to attract and retain readers; the Company's ability to retain and grow its digital audience and profitably develop its digital businesses; the Company's ability to negotiate and agree on definitive documentation and to integrate the technology associated with the Toronto Star digital tablet edition; general economic conditions in the principal markets in which the Company operates; labour disruptions; the Company's ability to reduce costs; loss of reputation; newsprint costs; availability of capital; changes in pension fund obligations; interest rates; reliance on its printing operations; reliance on technology and information systems; availability of insurance; litigation; privacy, anti-spam, communications e-commerce and environmental laws and regulations applicable generally to the Company's businesses; dependence on key personnel; dependence on third party suppliers and service providers; intellectual property rights; results of impairment tests; risks related to business development and acquisition integration; unexpected costs or liabilities related to acquisitions or dispositions; product revenue and product liability; credit risk; foreign exchange fluctuations and foreign operations; control of Torstar by the Voting Trust; and uncertainties associated with critical accounting estimates.
We caution that the foregoing list is not exhaustive of all possible factors, as other factors could adversely affect our results.
In addition, a number of assumptions, including those assumptions specifically identified throughout this press release, were applied in making the forward-looking statements set forth in this press release. Some of the key assumptions include, without limitation, assumptions regarding the performance of the North American 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 of new products, including the successful development and launch of the Toronto Star digital tablet edition. There is a risk that some or all of these assumptions may prove to be incorrect.
When relying on our forward-looking statements to make decisions with respect to the Company and its securities, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company does not intend, and disclaims any obligation to, update any forward-looking statements, whether written or oral, or whether as a result of new information or otherwise, except as may be required by law.
For more information, please see the discussion of risks affecting Torstar and its businesses in Torstar's 2013 Management's Discussion & Analysis which has been filed on www.sedar.com and is available on Torstar's corporate website www.torstar.com.
Torstar's news releases are available on the Internet at www.torstar.com.
| Torstar Corporation Consolidated Statement of Financial Position |
||||
| (Thousands of Canadian Dollars) (Unaudited) |
||||
| As at September 30 2014 |
As at December 31 2013 |
|||
| Assets | ||||
| Current: | ||||
| Cash and cash equivalents | $232,561 | $19,151 | ||
| Restricted cash | 21,970 | |||
| Receivables | 145,658 | 261,485 | ||
| Inventories | 8,790 | 29,368 | ||
| Prepaid expenses and other current assets | 9,401 | 47,872 | ||
| Prepaid and recoverable income taxes | 3,733 | 3,765 | ||
| Total current assets | 422,113 | 361,641 | ||
| Restricted cash | 22,750 | |||
| Investments in joint ventures | 57,275 | 80,901 | ||
| Investments in associated businesses | 39,251 | 40,215 | ||
| Property, plant and equipment | 126,902 | 150,665 | ||
| Intangible assets | 61,160 | 73,942 | ||
| Goodwill | 344,417 | 533,982 | ||
| Other assets | 10,582 | 11,465 | ||
| Employee benefits assets | 18,403 | 44,532 | ||
| Deferred income tax assets | 22,741 | 51,369 | ||
| Total assets | $1,125,594 | $1,348,712 | ||
| Liabilities and Equity | ||||
| Current: | ||||
| Bank overdraft | $1,741 | |||
| Accounts payable and accrued liabilities | $103,958 | 202,888 | ||
| Derivative financial instruments | 911 | |||
| Provisions | 24,772 | 20,807 | ||
| Income tax payable | 10,701 | 9,810 | ||
| Total current liabilities | 139,431 | 236,157 | ||
| Long-term debt | 175,898 | |||
| Derivative financial instruments | 4,125 | |||
| Provisions | 9,512 | 16,251 | ||
| Other liabilities | 9,978 | 12,425 | ||
| Employee benefits | 79,645 | 82,641 | ||
| Deferred income tax liabilities | 9,529 | 24,431 | ||
| Equity: | ||||
| Share capital | 400,398 | 398,605 | ||
| Contributed surplus | 18,424 | 17,383 | ||
| Retained earnings | 455,208 | 385,589 | ||
| Accumulated other comprehensive income (loss) | 611 | (7,603 | ) | |
| Total equity attributable to equity shareholders | 874,641 | 793,974 | ||
| Minority interests | 2,858 | 2,810 | ||
| Total equity | 877,499 | 796,784 | ||
| Total liabilities and equity | $1,125,594 | $1,348,712 | ||
| Torstar Corporation | |||||||||
| Consolidated Statement of Income | |||||||||
| (Thousands of Canadian Dollars except per share amounts) (Unaudited) |
|||||||||
| Three months ended September 30 |
Nine months ended September 30 |
||||||||
| 2014 | 2013 Restated* |
2014 | 2013 Restated* |
||||||
| Operating revenue | $199,925 | $215,678 | $624,700 | $676,358 | |||||
| Salaries and benefits | (88,136 | ) | (93,741 | ) | (269,745 | ) | (292,871 | ) | |
| Other operating costs | (97,974 | ) | (103,204 | ) | (299,339 | ) | (324,543 | ) | |
| Amortization and depreciation | (7,149 | ) | (8,163 | ) | (23,593 | ) | (24,049 | ) | |
| Restructuring and other charges | (3,906 | ) | (5,269 | ) | (11,776 | ) | (17,047 | ) | |
| Impairment of assets | (82,348 | ) | (76,458 | ) | (82,872 | ) | (76,828 | ) | |
| Operating loss | (79,588 | ) | (71,157 | ) | (62,625 | ) | (58,980 | ) | |
| Interest and financing costs | (615 | ) | (4,004 | ) | (4,953 | ) | (12,065 | ) | |
| Foreign exchange | (7,247 | ) | 251 | (7,860 | ) | (614 | ) | ||
| Loss from joint ventures | (13,695 | ) | (7,931 | ) | (10,599 | ) | (5,262 | ) | |
| Income (loss) of associated businesses | (346 | ) | 1,228 | (925 | ) | 2,914 | |||
| Other income (expense) | 93 | (107 | ) | (1,523 | ) | 420 | |||
| (101,398 | ) | (81,720 | ) | (88,485 | ) | (73,587 | ) | ||
| Income and other taxes recovery (expense) | 14,400 | 1,500 | 18,000 | (300 | ) | ||||
| Net loss from continuing operations | (86,998 | ) | (80,220 | ) | (70,485 | ) | (73,887 | ) | |
| Gain on sale and income from discontinued operations | 212,332 | 9,359 | 222,662 | 25,348 | |||||
| Net income (loss) | $125,334 | ($70,861 | ) | $152,177 | ($48,539 | ) | |||
| Attributable to: | |||||||||
| Equity shareholders | $125,343 | ($70,800 | ) | $152,129 | ($48,621 | ) | |||
| Minority interests | ($9 | ) | ($61 | ) | $48 | $82 | |||
| Net income (loss) attributable to equity shareholders per Class A (voting) and Class B (non-voting) share: | |||||||||
| Basic: | |||||||||
| From continuing operations | ($1.08 | ) | ($1.01 | ) | ($0.88 | ) | ($0.93 | ) | |
| From discontinued operations | $2.65 | $0.12 | $2.78 | $0.32 | |||||
| $1.57 | ($0.89 | ) | $1.90 | ($0.61 | ) | ||||
| Diluted: | |||||||||
| From continuing operations | ($1.08 | ) | ($1.01 | ) | ($0.88 | ) | ($0.93 | ) | |
| From discontinued operations | $2.64 | $0.12 | $2.78 | $0.32 | |||||
| $1.56 | ($0.89 | ) | $1.90 | ($0.61 | ) | ||||
| * The 2013 comparative amounts have been restated to reflect the classification of Harlequin into discontinued operations. |
| Torstar Corporation | |||||||||
| Consolidated Statement of Cash Flows | |||||||||
| (Thousands of Canadian Dollars) | |||||||||
| (Unaudited) | |||||||||
| Three months ended September 30 |
Nine months ended September 30 |
||||||||
| 2014 | 2013 Restated* |
2014 | 2013 Restated* |
||||||
| Cash was provided by (used in) | |||||||||
| Operating activities | ($9,636 | ) | $29,384 | $33,621 | $44,774 | ||||
| Investing activities | 410,992 | (8,850 | ) | 391,073 | (22,074 | ) | |||
| Financing activities | (193,924 | ) | (8,388 | ) | (209,946 | ) | (17,713 | ) | |
| Increase in cash | 207,432 | 12,146 | 214,748 | 4,987 | |||||
| Effect of exchange rate changes from discontinued operations | 305 | 529 | 403 | 168 | |||||
| Cash, beginning of period | 24,824 | 7,540 | 17,410 | 15,060 | |||||
| Cash, end of period | $232,561 | $20,215 | $232,561 | $20,215 | |||||
| Operating activities: | |||||||||
| Net loss from continuing operations | ($86,998 | ) | ($80,220 | ) | ($70,485 | ) | ($73,887 | ) | |
| Amortization and depreciation | 7,149 | 8,163 | 23,593 | 24,049 | |||||
| Deferred income taxes | (12,000 | ) | (15,300 | ) | 2,400 | ||||
| Loss from joint ventures | 13,695 | 7,931 | 10,599 | 5,262 | |||||
| Distributions from joint ventures | 750 | 1,735 | 5,060 | 4,735 | |||||
| Loss (income) of associated businesses | 346 | (1,228 | ) | 925 | (2,914 | ) | |||
| Dividend from associated businesses | 725 | 919 | 382 | ||||||
| Impairment of assets | 82,348 | 76,458 | 82,872 | 76,828 | |||||
| Non-cash employee benefit expense | 3,774 | 6,951 | 11,060 | 20,943 | |||||
| Employee benefits funding | (10,778 | ) | (15,094 | ) | (28,559 | ) | (44,203 | ) | |
| Restricted cash | (21,970 | ) | (21,970 | ) | |||||
| Other | 6,037 | (1,130 | ) | 1,885 | (3,447 | ) | |||
| (16,922 | ) | 3,566 | 599 | 10,148 | |||||
| Decrease (increase) in non-cash working capital | 11,231 | 5,002 | 24,387 | (6,587 | ) | ||||
| Cash provided by (used in) operating activities of continuing operations | (5,691 | ) | 8,568 | 24,986 | 3,561 | ||||
| Cash provided by (used in) operating activities of discontinued operations | (3,945 | ) | 20,816 | 8,635 | 41,213 | ||||
| Cash provided by (used in) operating activities | ($9,636 | ) | $29,384 | $33,621 | $44,774 | ||||
| Investing activities: | |||||||||
| Additions to property, plant and equipment and intangible assets | ($8,020 | ) | ($4,880 | ) | ($15,045 | ) | ($12,416 | ) | |
| Investment in associated businesses | (2,500 | ) | (1,417 | ) | (3,000 | ) | |||
| Acquisitions and investments | (28 | ) | (32 | ) | (10,754 | ) | (2,409 | ) | |
| Net proceeds from the sale of Harlequin | 442,207 | 442,207 | |||||||
| Restricted cash | (22,750 | ) | (22,750 | ) | |||||
| Other | (22 | ) | 257 | 441 | 371 | ||||
| Cash provided by (used in) investing activities of continuing operations | 411,387 | (7,155 | ) | 392,682 | (17,454 | ) | |||
| Cash used in investing activities of discontinued operations | (395 | ) | (1,695 | ) | (1,609 | ) | (4,620 | ) | |
| Cash provided by (used in) investing activities | $410,992 | ($8,850 | ) | $391,073 | ($22,074 | ) | |||
| Financing activities: | |||||||||
| Repayment of bankers' acceptances | ($183,893 | ) | ($190,923 | ) | |||||
| Issuance of bankers' acceptances | $1,743 | 11,199 | $13,428 | ||||||
| Dividends paid | (10,370 | ) | (10,381 | ) | (31,051 | ) | (31,123 | ) | |
| Exercise of share options | 131 | 612 | |||||||
| Other | 208 | 250 | 217 | (18 | ) | ||||
| Cash used in financing activities | ($193,924 | ) | ($8,388 | ) | ($209,946 | ) | ($17,713 | ) | |
| Cash represented by: | |||||||||
| Attributed to continuing operations: | |||||||||
| Cash | $10,409 | $28,641 | $10,409 | $28,641 | |||||
| Cash equivalents - short-term deposits | 222,152 | 222,152 | |||||||
| $232,561 | $28,641 | $232,561 | $28,641 | ||||||
| Attributed to discontinued operations: | |||||||||
| Cash equivalents - short-term deposits | $3,567 | $3,567 | |||||||
| Bank overdraft | (11,993 | ) | (11,993 | ) | |||||
| ($8,426 | ) | ($8,426 | ) | ||||||
| Net cash, end of period | $232,561 | $20,215 | $232,561 | $20,215 | |||||
| * The 2013 comparative amounts have been restated to reflect the classification of Harlequin into discontinued operations. |
Contact Information:
Executive Vice-President and Chief Financial Officer
Torstar Corporation
(416) 869-4776
www.torstar.com