Torstar Corporation: Newspaper Revenues Up 4% In The Second Quarter.TORONTO Toronto (tərŏn`tō), city (1998 est pop. 2,400,000), provincial capital, S Ont., Canada, on Lake Ontario. Toronto is the largest city in Canada and since the 1970s has been one of the fastest-changing cities in North America, experiencing -- Torstar Corporation (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :TS.NV.B) today announced its results for the second quarter ended June June: see month. 30, 2005. Net income was $36.1 million or $0.46 per share in the second quarter of 2005, up $0.3 million or $0.01 per share from $35.8 million or $0.45 per share in the second quarter of 2004. The increase of $0.01 per share in the quarter reflected the lower number of shares outstanding. Year to date net income was $57.3 million or $0.73 per share in 2005, down $1.5 million or $0.01 per share from $58.8 million or $0.74 per share in the same period in 2004. Total revenues were $405.4 million in the quarter, up $6.4 million from $399.0 million in 2004. Newspaper revenues were $272.7 million in the second quarter of 2005, up $9.8 million or 3.7% from $262.9 million in the second quarter of 2004. Book Publishing book publishing. The term publishing means, in the broadest sense, making something publicly known. Usually it refers to the issuing of printed materials, such as books, magazines, periodicals, and the like. revenues were $132.8 million in the second quarter, down $3.3 million from the same period last year as $2.9 million of underlying revenue growth was more than offset by the impact of foreign exchange rates. Total revenues were $766.5 million year to date, up $5.7 million from $760.8 million in the same period last year. "Profits in both Newspapers and Book Publishing increased in the quarter led by strong performances by Metroland Metroland can refer to:
Born in London, England, Prichard attended prep school at Upper Canada College before studying economics at Swarthmore College, business at the University , Torstar's President and Chief Executive Officer. "However, some of the current underlying trends in linage lin·age also line·age n. 1. The number of lines of printed or written material. 2. Payment for written work at a specified amount per line. linage Noun 1. at the Toronto Star The Toronto Star is Canada's highest-circulation newspaper, though its print edition is distributed almost entirely within Ontario. It is owned by Toronto Star Newspapers Ltd., a division of Star Media Group, a subsidiary of Torstar Corporation. and unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. at Harlequin Harlequin (här`ləkwĭn, –kĭn): see commedia dell'arte. Harlequin Principal stock character of the Italian commedia dell'arte. remain challenging, leading to constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. expectations for the remainder of the year in these businesses. At the same time, we are continuing to invest in future growth for both our book publishing and newspaper businesses. Harlequin launched its new book business in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. during the second quarter and has introduced several new products in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market during July July: see month. . In addition, we are expanding our community newspapers into Niagara Niagara, river, United States and Canada Niagara (nīăg`rə), river, 34 mi (55 km) long, issuing from Lake Erie between Buffalo, N.Y., and Fort Erie, Ont., Canada. , extending our Metro The code name for Microsoft's XPS document format. See XML Paper Specification. franchise to Vancouver Vancouver, city, Canada Vancouver, city (1991 pop. 471,844), SW British Columbia, Canada, on Burrard Inlet of the Strait of Georgia, opposite Vancouver Island and just N of the Wash. border. and Ottawa Ottawa, city, Canada Ottawa (ŏt`əwə), city (1991 pop. 313,987), capital of Canada, SE Ont., at the confluence of the Ottawa and Rideau rivers. Hull, Que. , building the Transit Television Network, strengthening our presence on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the with Torstar Digital and, most recently, announcing the launch of Weekly Scoop - a new weekly glossy gloss·y adj. gloss·i·er, gloss·i·est 1. Having a smooth, shiny, lustrous surface: glossy satin. See Synonyms at sleek. 2. celebrity magazine." Newspaper operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. was $42.1 million in the second quarter up $0.7 million from $41.4 million in the second quarter of 2004 with higher profits at CityMedia and Metroland more than offsetting the increased investment in TTN's business. Book Publishing operating profits were $23.4 million in the second quarter of 2005 up $0.5 million from $22.9 million in the same period last year including the positive impact of the foreign exchange hedge contracts. Newspapers Newspaper segment revenues were $272.7 million in the second quarter, up $9.8 million from $262.9 million in 2004 with higher revenues at Metroland, CityMedia and Torstar Digital more than offsetting declines at the Toronto Star. Newspaper segment EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (operating profit before interest, taxes, depreciation and amortization) was $84.3 million in the second quarter of 2005 consistent with the second quarter last year. TTN's EBITDA losses were $2.4 million in 2005 up from $1.6 million in 2004. During the second quarter Torstar completed the purchase of several community newspapers and the Toronto Wine & Cheese Show. The newspapers acquired include The Bracebridge Examiner, The Gravenhurst Gravenhurst (grā`vənhûrst), town (1991 pop. 9,988), S Ont., Canada, N of Toronto. It is the gateway to the Muskoka Lakes area and has some light industry. Banner Same as banner ad. 1. banner - The title page added to printouts by most print spoolers. Typically includes user or account ID information in very large character-graphics capitals. , The Muskokan, the Meaford Meaford may refer to:
Australia
The Toronto Star's revenues were down $7.1 million in the second quarter of 2005 and $8.9 million year to date as linage declines of 8.6% continued to negatively impact advertising revenues. Toronto Star circulation revenues were up $0.4 million in the quarter, reflecting the increases in home delivery and single copy prices. Metroland's revenues were up $14.8 million in the second quarter and $23.0 million year to date with growth from advertising, distributions and new products. Advertising linage at the community newspapers was up 9.4% and distribution volumes grew 11.3% in the second quarter. CityMedia's revenues were up $1.8 million in the quarter from improved advertising revenues at both the daily and community newspapers. Newsprint newsprint low grade paper used for newspapers. Old newspapers are fed to cattle as an alternative roughage and may occasionally be ingested by dogs. Significant amounts of lead are accumulated in tissues; no cases of poisoning have been recorded in cattle, though it has been expenses were down $1.2 million in the quarter in the Newspaper segment from reduced consumption and lower average prices. Payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. costs were up $3.3 million in the quarter with expansion at Metroland, TTN TTN Technology Transfer Network TTN Titin TTN Transient Tachypnea of the Newborn TTN Technology Transfer Node TTN Trenton, NJ, USA - Mercer County (Airport Code) TTN Total Traffic Network , and Torstar Digital more than offsetting lower payroll costs at the Toronto Star and The Hamilton Hamilton, city, Bermuda Hamilton, city (1990 est. pop. 3,100), capital of Bermuda, on Bermuda Island. It is a port at the head of Great Sound, a huge lagoon and deepwater harbor protected by coral reefs. Spectator Spectator, English daily periodical published jointly by Joseph Addison and Richard Steele with occasional contributions from other writers. It succeeded the Tatler, a periodical begun by Steele on Apr. 12, 1709, under the pseudonym Isaac Bickerstaff. from the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). programs that occurred in the third quarter of 2004. Book Publishing Harlequin's revenues were up $2.9 million in the second quarter excluding the impact of foreign exchange. North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. Retail was up $2.7 million, North America Direct-To-Consumer was down $1.9 million and Overseas was up $2.1 million. Harlequin's operating profits in the second quarter rose by $0.5 million to $23.4 million from $22.9 million in the same period a year ago. However, excluding the impact of foreign exchange, profits were flat. North America Retail operating profits were down $2.2 million in the quarter from lower volumes, higher production costs and promotional spending. The second quarter 2005 North America Retail series volumes were below the second quarter of 2004 but were in line with the fourth quarter of 2004 and the first quarter of 2005. North America Direct-To-Consumer operating profits were up $0.9 million in the quarter as reduced promotional spending and a mid-year 2004 price increase more than offset the impact of lower volumes. Overseas operating profits were up $1.3 million as actual returns for retail sales were lower than previously provided for. Recent Developments Subsequent to the end of the quarter, Metroland completed the purchase of Paton Pa·ton , Alan Stewart 1903-1988. South African writer noted for his novels Cry, the Beloved Country (1948) and Too Late the Phalarope (1953). He was a founder and leader (1953-1968) of the Liberal Party of South Africa. Publishing. Paton Publishing, located in Mississauga Mississauga (mĭsĭsaw`gə), city (1991 pop. 463,388), S Ont., Canada, 12 mi (20 km) W of Toronto on Lake Ontario. A residential suburb of Toronto and a growing transportation and industrial center, it is one of Canada's fastest-growing , does contract publishing and focused marketing campaigns aimed principally at youth audiences. On July 18, 2005, the Toronto Star announced a voluntary severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when program for production management staff at the Vaughan Vaughan , Henry Known as "the Silurist." 1622-1695. Welsh metaphysical poet whose works include Silex Scintillans (1650-1655). Noun 1. printing facility as part of the Star's ongoing focus on reducing costs and improving margins. Earlier today, Torstar announced the October October: see month. 2005 launch of a new weekly glossy celebrity magazine, called Weekly Scoop, to be sold on newsstands across Canada Across Canada was an afternoon program that formerly aired on The Weather Network. The segment ran from early 1999 until mid 2002. The show ran from 3:00PM ET until 7:00 PM ET. . Other On July 27, 2005, Torstar declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a quarterly dividend of 18.5 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. on its Class A shares and Class B non-voting non-voting adj non-voting shares → azioni fpl senza diritto di voto shares, payable on September September: see month. 30, 2005, to shareholders of record at the close of business on September 9, 2005. For further details on Torstar's second quarter results please see the Interim Management Discussion and Analysis and Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge dated July 27, 2005. Certain statements in this report may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that reflect management's expectations regarding the Company's future growth, results of operations, performance and business prospects and opportunities. Wherever possible, words such as "anticipate", "believe", "expect", "intend" and similar expressions have been used to identify these forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such forward-looking statements. References in this discussion to "Torstar" are to Torstar Corporation and its subsidiaries. Torstar Corporation is a broadly based media company listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. (TS.nv.b). Its businesses include newspapers led by the Toronto Star, Canada's largest daily newspaper; CityMedia Group, publishers of daily and community newspapers in Southwestern Ontario Southwestern Ontario is a region of the Canadian province of Ontario, centred on the city of London. It extends north to south from the Bruce Peninsula on Lake Huron to the Lake Erie shoreline, and east to south-west roughly from Kitchener to Windsor. ; Metroland Printing, Publishing & Distributing, publishers of more than 75 community newspapers in Southern Ontario Ontario, city, United States Ontario, city (1990 pop. 133,179), San Bernardino co., S Calif., near Los Angeles, in a region of vineyards; inc. 1891. ; and Harlequin Enterprises Harlequin Enterprises Limited is a Toronto, Ontario-based company that is the world's leading publisher of series romance and women's fiction. Owned by the Torstar Corporation, the largest newspaper publisher in Canada, the company publishes approximately 120 new titles each month , a leading global publisher of women's fiction Women's fiction is an umbrella term for a wide-ranging collection of literary sub-genres that are marketed to female readers, including many mainstream novels, romantic fiction, "chick lit," and other sub genres. . For more information please contact: D. P. Holland Executive Vice-President and Chief Financial Officer Torstar Corporation 416-869-4031 INTERIM MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial For the three and six months ended June 30, 2005 and 2004 The following review and analysis of Torstar Corporation's (the "Company" or "Torstar") operations and financial position for the three and six months ended June 30, 2005 and 2004 should be read in conjunction with the audited consolidated financial statements and Management's Discussion and Analysis of Torstar Corporation for the year ended December December: see month. 31, 2004 set forth in the Company's Annual Report for such fiscal year and incorporated by reference in the Company's renewal Annual Information Form dated March 21, 2005. Certain statements in this report may constitute forward-looking statements that reflect management's expectations regarding the Company's future growth, results of operations, performance and business prospects and opportunities. Wherever possible, words such as "anticipate", "believe", "expect", "intend" and similar expressions have been used to identify these forward-looking statements. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. References in this discussion to "Torstar" are to Torstar Corporation and its subsidiaries. Torstar reports its financial results under Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "). However, management believes that many of the company's shareholders, creditors, other stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. and analysts prefer to assess the company's performance using earnings before interest, unusual items, taxes, depreciation and amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ("EBITDA") as an estimate of the cash generated by the business, in addition to the GAAP measures. Torstar calculates segment EBITDA as operating profit before depreciation and amortization of intangible assets. Torstar's method of calculating EBITDA may differ from other companies and accordingly, may not be comparable to measures used by other companies. Torstar Corporation is a broadly based media company listed on the Toronto Stock Exchange (TS.nv.b). Its businesses include newspapers led by the Toronto Star, Canada's largest daily newspaper; CityMedia Group, publishers of daily and community newspapers in Southwestern Ontario; Metroland Printing, Publishing & Distributing, publishers of more than 75 community newspapers in Southern Ontario; and Harlequin Enterprises, a leading global publisher of women's fiction. Torstar reports its operations in two segments: Newspapers and Book Publishing. RESULTS OF OPERATIONS - Second quarter and year to date 2005 Overall Performance Newspaper revenues were $272.7 million in the second quarter of 2005, up $9.8 million or 3.7% from $262.9 million in the second quarter of 2004. Book Publishing revenues were $132.8 million in the second quarter, down $3.3 million from the same period last year as $2.9 million of underlying revenue growth was more than offset by the impact of foreign exchange rates. Total revenues were $405.4 million in the quarter up $6.4 million from $399.0 million in 2004. Year to date Newspaper revenues were $504.6 million up $17.0 million, or 3.5% from $487.6 million in the same period in 2004. Book publishing revenues were $262.0 million in the first six months of 2005 down $11.2 million from 2004 primarily due to the impact of foreign exchange rates. Total revenues were $766.5 million year to date up $5.7 million from $760.8 million in the same period last year. Newspaper operating profit was $42.1 million in the second quarter up $0.7 million from $41.4 million in the second quarter of 2004 with higher profits at CityMedia and Metroland more than offsetting the increased investment in the Transit Television Network's (TTN) business and the slight decrease in profits at the Toronto Star. Year to date, Newspaper operating profit was $58.7 million down $1.4 million from $60.1 million in the same period in 2004 as the higher TTN operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. more than offset improved newspaper results. Book Publishing operating profits were $23.4 million in the second quarter of 2005 up $0.5 million from $22.9 million in the same period last year including the positive impact of the foreign exchange hedge contracts. Year to date Book Publishing operating profits were $48.0 million down $1.0 million from $49.0 million in 2004 as lower North America Retail results more than offset improvements in the North America Direct-To-Consumer and Overseas results. Corporate costs were $4.5 million in the second quarter of 2005 and $9.4 million year to date. These costs were up $0.7 million in the quarter and $1.3 million year to date. The increase in costs includes higher accounting expense for stock options, mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. adjustments on deferred share units and higher pension costs. Interest expense was $2.6 million in the second quarter of 2005, consistent with the second quarter of 2004. Year to date, interest expense was $4.9 million down $0.5 million from $5.4 million in 2004. Interest rates were flat year over year while debt levels were lower in the first quarter of 2005 and flat in the second quarter compared with the same periods in 2004. There were no unusual items in the second quarter of 2005 or 2004. In the first quarter of 2005, the unusual gain of $1.4 million was from the sale of the land and building in Kitchener Kitchener, city (1991 pop. 168,282), Regional Municipality of Waterloo, S Ont., Canada, in the Grand River valley. Settled largely by Mennonites from Pennsylvania in 1806, it was known as Berlin until 1916, when it was renamed in memory of Lord Kitchener. that had previously been occupied oc·cu·py tr.v. oc·cu·pied, oc·cu·py·ing, oc·cu·pies 1. To fill up (time or space): a lecture that occupied three hours. 2. To dwell or reside in. 3. by The Record. The effective tax rate was 38.8% in the second quarter of 2005 and 38.9% year to date. These rates were slightly higher than the effective rate of 38.5% in the second quarter and year to date in 2004. Higher TTN startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. losses that were not tax-effected in either year added 0.6% and 0.8% to the 2005 second quarter and year to date effective tax rates respectively. Net income was $36.1 million or $0.46 per share in the second quarter of 2005, up $0.3 million or $0.01 per share from $35.8 million or $0.45 per share in the second quarter of 2004. The increase of $0.01 per share in the quarter reflected the lower number of shares outstanding. The weighted average number of shares outstanding during the second quarter was 78.1 million down 1.6 million from 79.7 million in the second quarter of 2004. The decrease was the result of the normal course issuer bid for 2 million shares that Torstar completed between May 2004 and April 2005 offset in part by shares issued on the exercise of stock options. Year to date net income was $57.3 million or $0.73 per share in 2005, down $1.5 million or $0.01 per share from $58.8 million or $0.74 per share in the same period in 2004. On a year to date per share basis operating profits net of tax were down $0.03, while the unusual gain and fewer shares outstanding contributed $0.01 each. The weighted average number of shares outstanding year to date in 2005 was 78.1 million down 1.2 million from 79.3 million in the same period of 2004. Newspapers The Newspaper segment includes the newspaper and commercial printing results of the Toronto Star, CityMedia Group and Metroland Printing, Publishing and Distributing; Torstar Digital; Torstar Media Group Television Torstar Media Group Television is a subsidy of Toronto Star Newspapers Ltd.., a division of Torstar Corporation. TMGTV operates ShopTV Canada, a a 24-hour direct-response television business operating as well as TMGTV Productions, a direct-response production house, and DRTV ("TMG TMG - TransMoGrifier. An early language for writing recursive descent compilers. It was macroed from the IBM 1604 to the IBM 709 to the IBM 7094 to the GE-635, where it was used by McIlroy and Morris to write the EPL compiler for Multics. TV") and Transit Television Network ("TTN"). CityMedia Group publishes three daily newspapers - The Hamilton Spectator, The Spectator, The Daily periodical published in London by Richard Steele and Joseph Addison from March 1, 1711, to Dec. 6, 1712, and revived by Addison in 1714 (for 80 issues). It succeeded The Tatler, launched by Steele in 1709. Record (Kitchener, Cambridge Cambridge, city, Canada Cambridge (kām`brĭj), city (1991 pop. 92,772), S Ont., Canada, on the Grand River, NW of Hamilton. It was formed in 1973 with the amalgamation of Galt, Hespeler, and Preston, all founded in the early 19th cent. and Waterloo Waterloo, town, Belgium Waterloo (vä`tərlō), commune (1991 pop. 27,860), Walloon Brabant prov., central Belgium, near Brussels. The battle of Waterloo (see Waterloo campaign) was fought just south of there on June 18, 1815. ) and the Guelph Mercury The Guelph Mercury is an English language newspaper published in Guelph, Ontario, Canada. It publishes a mix of community, national and international news and is owned by the Torstar Corporation. - along with 10 community newspapers and a number of specialty publications Specialty Publications is an American publisher of gay erotic material. Their 'Men' Magazine has been the #1-selling gay male erotic magazine for over 25 years.[1] Magazines
Workopolis is a partnership of two Canadian media companies, the Toronto Star and Gesca Ltée, the newspaper publishing subsidiary of Power Corporation of Canada. , Toronto.com and the Torstar Digital corporate group. Each newspaper reports the results for its own website within the newspaper results. Selected financial information for the Newspaper segment (in $000's): For the three months ended June 30:
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Toronto Metro- City- Torstar Other
Star land Media Digital(1) (2) Total
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2005
Revenue $111,544 $110,902 $42,643 $4,194 $3,374 $272,657
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Operating profit 12,818 23,365 7,902 703 (2,639) 42,149
Depreciation 8,536 2,108 1,424 130 745 12,943
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Segment EBITDA $21,354 $25,473 $9,326 $833 ($1,894) $55,092
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Margins:
- Operating
profit 11.5% 21.1% 18.5% 16.8% n/a 15.5%
- EBITDA 19.1% 23.0% 21.9% 19.9% n/a 20.2%
2004(3)
Revenue(4) $118,690 $96,056 $40,875 $3,614 $3,694 $262,929
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Operating profit 13,198 22,006 6,881 838 (1,483) 41,440
Depreciation 8,541 1,416 1,460 174 468 12,059
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Segment EBITDA $21,739 $23,422 $8,341 $1,012 ($1,015) $53,499
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Margins:
- Operating
profit 11.1% 22.9% 16.8% 23.2% n/a 15.8%
- EBITDA 18.3% 24.4% 20.4% 28.0% n/a 20.3%
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(1) Torstar Digital was established in 2005 as a reporting unit for the Newspaper segment's independent Internet operations including workopolis and Toronto.com and the Torstar Digital corporate group. Each newspaper reports the results for its own website within the newspaper results. (2) Consists of TMGTV and TTN. (3) The 2004 results have been restated to include the workopolis and Toronto.com results in Torstar Digital. (4) 2004 quarterly revenue and margins for the Toronto Star and CityMedia have been restated from those previously presented to reflect the change in accounting for circulation revenues gross of certain distribution costs distribution costs distribute npl → Vertriebskosten pl . This change was implemented in the fourth quarter of 2004.
For the six months(5) ended June 30:
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Toronto Metro- City- Torstar
Star land Media Digital Other Total
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2005
Revenue $212,670 $199,168 $78,210 $8,329 $6,187 $504,564
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Operating profit 14,787 37,005 10,424 1,758 (5,318) 58,656
Depreciation 17,003 4,059 2,847 254 1,457 25,620
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Segment EBITDA $31,790 $41,064 $13,271 $2,012 ($3,861) $84,276
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Margins:
- Operating
profit 7.0% 18.6% 13.3% 21.1% n/a 11.6%
- EBITDA 14.9% 20.6% 17.0% 24.2% n/a 16.7%
2004
Revenue $221,542 $176,175 $76,332 $6,936 $6,607 $487,592
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Operating profit 14,254 37,138 9,849 1,672 (2,863) 60,050
Depreciation 17,123 2,853 2,921 349 891 24,137
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Segment EBITDA $31,377 $39,991 $12,770 $2,021 ($1,972) $84,187
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Margins:
- Operating
profit 6.4% 21.1% 12.9% 24.1% n/a 12.3%
- EBITDA 14.2% 22.7% 16.7% 29.1% n/a 17.3%
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(5) Torstar Digital results have been restated from the first quarter presentation to include only workopolis, Toronto.com and the Torstar Digital corporate group.The financial results from the websites directly related to the newspapers are now included with the newspaper results. Newspaper segment revenues were up $9.8 million in the second quarter and $17.0 million year to date with higher revenues at Metroland, CityMedia and Torstar Digital more than offsetting declines at the Toronto Star. During the second quarter Torstar completed the purchase of several community newspapers and the Toronto Wine & Cheese Show. The newspapers acquired include The Bracebridge Examiner, The Gravenhurst Banner, The Muskokan, the Meaford Express, the Thornbury Courier-Herald, the Parry Sound North Star and the Parry Sound Beacon Star. These businesses will all be reported with Metroland. The Toronto Star's revenues were down $7.1 million in the second quarter of 2005 and $8.9 million year to date as linage declines of 8.6% continued to negatively impact advertising revenues. Careers linage was up 9.2% in the quarter while national, retail and travel were down 10.7%, 4.9% and 7.5% respectively. National linage was negatively impacted in the second quarter by lower automotive advertising. Year to date, careers linage was up 5.2% while national, retail and travel were down 3.1%, 7.6% and 10.3%. The Star's effective average line rate was negatively impacted during the second quarter by the mix of business but was up 2.7% year to date. Toronto Star circulation revenues were up $0.4 million in the quarter and $1.0 million year to date, reflecting the increases in home delivery and single copy prices. Metroland's revenues were up $14.8 million in the second quarter and $23.0 million year to date with growth from advertising, distributions and new products. Advertising linage at the community newspapers was up 9.4% in the second quarter and 8.3% year to date. Distribution volumes were up 11.3% in the quarter and 10.3% year to date. Revenue growth from new products included directories magazines, and Metro's expansion into Vancouver and Ottawa. CityMedia's revenues were up $1.8 million in the quarter and $1.9 million year to date from improved advertising revenues at both the daily and community newspapers. Linage was up 5.8% in the quarter at The Hamilton Spectator with a strong performance from local advertising. Newsprint expenses were down $1.2 million in the quarter and $1.6 million year to date in the Newspaper segment. About two-thirds of the cost savings were due to lower average newsprint prices in 2005. Lower consumption at the Toronto Star due to planned paging decreases and lower linage was partially offset by higher consumption at Metroland for new products including the Metro expansion. Payroll costs were up $3.3 million in the quarter and $5.0 million year to date. Metroland, TTN, and Torstar Digital all had higher payroll costs reflecting the investments in growth by these operations. The Toronto Star and The Hamilton Spectator had lower payroll costs from the restructuring programs that occurred in the third quarter of 2004. Other expenses were higher in the quarter and year to date for Metroland, TTN and Torstar Digital from the growth in the businesses. CityMedia continued to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. strike costs during the second quarter from the strike by The Hamilton Web mailroom mail·room n. A room in which ingoing and outgoing mail is handled for a company or other organization. and production staff. Depreciation expense was higher at Metroland and TTN from the expanded operations and Metroland's new printing press that became operational in the second quarter of 2004. TTN's Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. installation began, as scheduled, late in the second quarter of 2005. In May 2005 Gerry Ger·ry , Elbridge 1744-1814. American politician. A signer of the Declaration of Independence (1776) and a delegate to the Continental Congress (1787), he served as governor of Massachusetts (1810-1811) and as Vice President of the United States Noble was appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. and has relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. to TTN's head office in Orlando, Florida The city of Orlando is a major city in central Florida and is the county seat of Orange County, Florida. According to the 2000 census, the city population was 185,951. A 2006 U.S. . TTN had EBITDA losses of $2.4 million in the second quarter and $4.6 million year to date up as expected from $1.6 million and $3.1 million in the same periods in 2004. Operating losses were $3.1 million in the quarter and $5.9 million year to date up from $2.0 million and $3.8 million in the same periods last year as TTN continues to build out the business. Book Publishing The Book Publishing segment reports the results of Harlequin Enterprises Limited, a leading global publisher of women's fiction. Harlequin publishes women's fiction around the world, selling books through the retail channel and directly to the consumer by mail and the Internet. Harlequin's women's fiction publishing operations are comprised of three divisions: North America Retail, North America Direct-To-Consumer and Overseas. As an international publisher, Harlequin's results are affected by changes in foreign exchange rates relative to the Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents . The most significant is the change in the U.S.$/Cdn.$ exchange rate. To offset some of this risk, Torstar has entered into forward foreign exchange and option contracts for U.S. dollars and Euros. The following charts identify the impact of foreign currency movements, foreign currency hedges Currency hedge Applies mainly to international equities. Hedging technique to guard against foreign exchange fluctuations (i.e., short Euro l00 mm when holding a long position of Euro l00 mm in stocks). and underlying operations on reported revenue and operating profit for the three and six months ended June 30 (in $000's):
---------------------------------------------------------------------
Three Months Six Months
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
Reported revenue, prior year $136,109 $145,173 $273,194 $295,064
Impact of currency movements (8,357) (22) (14,965) (11,000)
Impact of U.S. dollar hedges(6) 2,117 4,433 4,069 9,508
Change in operating revenue 2,911 (13,475) (326) (20,378)
---------------------------------------------------------------------
Reported revenue,
current year $132,780 $136,109 $261,972 $273,194
---------------------------------------------------------------------
(6) The U.S. dollar hedges were reported in revenue effective January January: see month. 1, 2004. The impact of the U.S. dollar hedges in 2004 is the full gain on the hedges while the 2005 impact is the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. gain year over year. Torstar has hedged $76 million of its 2005 U.S. dollar revenue at $1.59 ($75 million at $1.58 in 2004). There are no hedges in place for 2006.
---------------------------------------------------------------------
Three Months Six Months
---------------------------------------------------------------------
2005 2004 2005 2004
Reported operating profit,
prior year $22,871 $29,159 $48,992 $59,056
Impact of currency movements (2,269) (163) (4,210) (4,146)
Impact of U.S. dollar hedges 2,117 1,003 4,069 4,693
Impact of other currency hedges 665 (659) 139 59
Change in operating profit (13) (6,469) (1,026) (10,670)
---------------------------------------------------------------------
Reported operating
profit, current year $23,371 $22,871 $47,964 $48,992
---------------------------------------------------------------------
Depreciation and amortization 1,970 2,152 3,942 4,103
---------------------------------------------------------------------
Segment EBITDA $25,341 $25,023 $51,906 $53,095
---------------------------------------------------------------------
Harlequin's revenues were up $2.9 million in the second quarter excluding the impact of foreign exchange. North America Retail was up $2.7 million, North America Direct-To-Consumer was down $1.9 million and Overseas was up $2.1 million. Year to date revenues were down $0.3 million excluding the impact of foreign exchange. North America Retail was up $0.6 million, North America Direct-To-Consumer was down $3.2 million and Overseas was up $2.3 million. Harlequin's operating profits were flat in the second quarter excluding the impact of foreign exchange. North America Retail was down $2.2 million, North America Direct-To-Consumer was up $0.9 million and Overseas was up $1.3 million. Year to date operating profits were down $1.0 million excluding the impact of foreign exchange. North America Retail was down $5.7 million, North America Direct-To-Consumer was up $2.0 million and Overseas was up $2.7 million. The reported increase in North America Retail second quarter revenues resulted from the favourable effect of a mid-year 2004 series price increase and a very difficult second quarter in 2004. The second quarter 2005 North America Retail series volumes were below the second quarter of 2004 but were in line with the fourth quarter of 2004 and the first quarter of 2005. Higher product costs and promotional spending contributed to the lower operating profits both in the second quarter and year to date. The lower North America Direct-To-Consumer revenues were from lower volumes that are consistent with the longer-term trend of a declining number of books sold. Operating profits were up in the quarter and year to date as reduced promotional spending and a mid-year 2004 price increase more than offset the impact of lower volumes. The reported increases in Overseas revenues and operating profits for the second quarter and year to date arose primarily as actual returns for retail sales were lower than previously provided for. The U.K. continued to face retail volume declines for both series and single titles. In Japan a decline in series volumes was partially offset by improved single title performance. Harlequin's reported operating profit margin Operating profit margin The ratio of operating profit to net sales. was 17.6% in the second quarter and 18.3% year to date up from 16.8% and 17.9% in the same periods in 2004. Harlequin's margins are impacted by the gains realized on foreign exchange hedges that were in place for 2004 and 2005. Excluding the impact of the foreign exchange hedge gains from revenue and operating profit as calculated below, the operating profit margin was 13.1% in the second quarter and 13.6% year to date down from 14.3% and 14.8% in the same periods in 2004. There are no hedges in place for 2006.
---------------------------------------------------------------------
Three Months Six Months
---------------------------------------------------------------------
2005 2004 2005 2004
Reported revenue $132,780 $136,109 $261,972 $273,194
Hedge gains 6,550 4,433 13,577 9,508
---------------------------------------------------------------------
Revenue before hedges $126,230 $131,676 $248,395 $263,686
---------------------------------------------------------------------
Reported operating profit $23,371 $22,871 $47,964 $48,992
Hedge gains 6,834 4,052 14,097 9,889
---------------------------------------------------------------------
Operating profit before
hedges $16,537 $18,819 $33,867 $39,103
---------------------------------------------------------------------
Reported margins 17.6% 16.8% 18.3% 17.9%
Margins excluding hedges 13.1% 14.3% 13.6% 14.8%
---------------------------------------------------------------------
Associated Businesses Torstar has a 19.35% equity investment in Black Press Ltd. and a 30% equity interest in Q-ponz Inc. Black Press Ltd. is a privately held company privately held company A firm whose shares are held within a relatively small circle of owners and are not traded publicly. that publishes 95 newspapers (both dailies and weeklies) and has 17 printing plants in Western Canada
Western Canada, commonly referred to as the West , Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. State and Hawaii Hawaii, island, United States Hawaii, island (1990 pop. 120,217), 4,037 sq mi (10,456 sq km), largest and southernmost island of the state of Hawaii and coextensive with Hawaii co.; known as the Big Island. . Q-ponz Inc. is a coupon A certificate evidencing the obligation to pay an installment of interest or a dividend that must be cut and presented to its issuer for payment when it is due. Coupons are usually attached to a document, such as a promissory note, bond, share of stock, or a bearer envelope business based in Toronto. Black Press has performed strongly showing growth, benefiting from robust economic conditions in British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography and Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. . Torstar's income from associated businesses was $0.6 million in the second quarter of 2005 and $0.5 million year to date. LIQUIDITY AND CAPITAL RESOURCES Overview Funds are generally used for capital expenditures, debt repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan and distributions to shareholders. Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. is used to supplement funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. and as required for acquisitions. It is expected that future cash flows from operating activities, combined with the credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities available will be adequate to cover forecasted financing requirements. In the second quarter of 2005, $17.1 million of cash was generated by operations, $31.9 million was used for investing activities and $19.4 million was generated by financing activities. Cash and cash equivalents, net of bank overdraft A check that is drawn on an account containing less money than the amount stated on the check. The term overdraft is also used in reference to the condition that exists when vouchers , increased by $4.1 million in the quarter and $6.0 million year to date to $46.8 million at June 30, 2005. Operating activities Operating activities provided cash of $17.1 million in the second quarter down $11.2 million from $28.3 million in the second quarter of 2004. The decline was related to the level of pension funding during the second quarter of 2005 and a $10.0 million larger increase in non-cash working capital. Non-cash working capital increased $32.4 million in the second quarter of 2005 from higher newspaper receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed (second quarter revenues are higher than first quarter) and lower payables Payables Related: Accounts payable due to the timing of payments including payments to authors, distributors and payments related to the 2004 restructuring provisions. The increase in non-cash working capital was higher than the increase of $22.4 million in the second quarter of 2004 due to the timing of payments including income tax installments, distributor incentives and customer refunds. Year to date non-cash working capital increased by $49.8 million compared with an increase of $17.3 million in the same period last year. Investing activities During the second quarter, $31.9 million was used for investing activities up $17.9 million from $14.0 million in the same period last year. The Metroland acquisitions of several community newspapers and the Toronto Wine and Cheese Show used $23.6 million of cash in the second quarter of 2005 and additions to capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) used $8.2 million. Year to date capital additions were $18.0 million, down $5.7 million from $23.7 million in the first six months of 2004. In 2004 press additions were underway at both Metroland and CityMedia. During the first quarter of 2005, net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $5.7 million were received from the sale of property in Kitchener that had previously been occupied by The Record. Financing activities Financing activities provided $19.4 million of cash during the second quarter of 2005 compared with an $11.5 million use of cash in 2004. During the second quarter of 2005, Torstar increased its long-term debt by $33.4 million. Average debt outstanding during the second quarter was $303 million in 2005 and $308 million in 2004. At June 30, 2005, Torstar had $57 million of available credit facilities after providing for outstanding letters of credit, commercial paper and the medium term notes that will mature in September 2005. Cash dividends of $14.1 million were paid in the second quarter of 2005, up $0.4 million from $13.7 million in 2004. The increase reflected the higher dividend rate partially offset by a lower number of shares outstanding. During the second quarter of 2005, Torstar purchased 70,100 shares for a total price of $1.7 million under the normal course issuer bid that opened on May 7, 2004. In the second quarter of 2004, 377,600 shares were purchased for a total price of $10.2 million. Torstar commenced a normal course issuer bid on May 6, 2005, effective for one year, to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. for cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. up to 2 million Class B shares. No shares were purchased under this bid during the second quarter of 2005. Torstar intends to purchase approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 2 million shares over the next three quarters absent any significant acquisitions. Contractual Obligations There were no changes in Torstar's significant contractual obligations during the first six months of 2005. OUTLOOK Torstar's newspapers continue to face multiple competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. both in print and other media for advertising in Southern Ontario. However, the growth that was realized in advertising revenues by Torstar's smaller city dailies and community newspapers during the second quarter is encouraging. Harlequin continues to focus on its strategic plan for 2005, which includes a significant increase in the level of North American retail advertising and promotional investment spending, primarily in the second half of the year. The 2005 publishing schedule also anticipates lower volumes in the fourth quarter of 2005 compared to the fourth quarter of 2004. SUMMARY OF QUARTERLY RESULTS (In thousands of dollars except for per share amounts) --------------------------------------------------------------------- --------------------------------------------------------------------- Quarter June 30, March 31, Dec. 31, Sept. 30, ended 2005 2005 2004 2004 --------------------------------------------------------------------- Revenue $405,437 $361,099 $414,523 $366,540 Net Income $36,112 $21,139 $42,592 $11,309 Net income per Class A voting and Class non-voting share Basic $0.46 $0.27 $0.54 $0.14 Diluted $0.46 $0.27 $0.54 $0.14 --------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------------------- Quarter June 30, March 31, Dec. 31, Sept. 30, ended 2004 2004 2003 2003 --------------------------------------------------------------------- Revenue $399,038 $361,748 $387,840 $368,040 Net Income $35,764 $23,038 $30,355 $29,715 Net income per Class A voting and Class non-voting share Basic $0.45 $0.29 $0.39 $0.38 Diluted $0.44 $0.29 $0.38 $0.38 --------------------------------------------------------------------- The summary of quarterly results illustrates the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of revenues and operating profits in the Newspaper Segment. The fourth quarter (ended December 31) tends to be the strongest for the daily newspapers. The weekly and community newspapers have a more even performance during the year. The fourth quarter of 2003 (ended December 31) and the third quarter of 2004 (ended September 30) included unusual losses of $7.8 million and $12.3 million that negatively impacted net income and net income per share in those quarters. RECENT DEVELOPMENTS Subsequent to the end of the quarter, Metroland completed the purchase of Paton Publishing. Paton Publishing, located in Mississauga, does contract publishing and focused marketing campaigns aimed principally at youth audiences. On July 18, 2005, the Toronto Star announced a voluntary severance program for management staff at the Vaughan printing facility as part of the Star's ongoing focus on reducing costs and improving margins. On July 27, 2005 Torstar announced the October 2005 launch of a new weekly glossy celebrity magazine, called Weekly Scoop, to be sold on newsstands across Canada. OTHER At June 30, 2005, Torstar had 9,916,522 Class A voting shares Voting Shares Shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors. Notes: Different classes of shares, such as preferred stock, sometimes don't allow for voting rights. and 68,227,589 Class B non-voting shares outstanding and 5,475,168 options to purchase Class B non-voting shares outstanding to executives and non-executive directors A non-executive director (NED, also NXD) or outside director is a member of the board of directors of a company who does not form part of the executive management team. He or she is not an employee of the company or affiliated with it in any other way. . More information on Torstar's share capital and stock option plan is provided in Notes 3 and 4 of the consolidated financial statements. Additional information relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Torstar is available on SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review at www.sedar.com. Dated: July 27, 2005
Torstar Corporation
Consolidated Statements
of Income
(unaudited)
Three months ended Six months ended
June 30 June 30
---------------------------------------------------------------------
(thousands of dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Operating revenue
Newspapers $272,657 $262,929 $504,564 $487,592
Book publishing 132,780 136,109 261,972 273,194
---------------------------------------------------------------------
$405,437 $399,038 $766,536 $760,786
---------------------------------------------------------------------
---------------------------------------------------------------------
Operating profit
Newspapers $42,149 $41,440 $58,656 $60,050
Book publishing 23,371 22,871 47,964 48,992
Corporate (4,537) (3,814) (9,442) (8,146)
---------------------------------------------------------------------
60,983 60,497 97,178 100,896
Interest (2,595) (2,626) (4,892) (5,408)
Foreign exchange (407) (405) (655) (195)
Unusual items (note 8) 1,350
---------------------------------------------------------------------
Income before taxes 57,981 57,466 92,981 95,293
Income and other taxes (22,500) (22,100) (36,200) (36,700)
---------------------------------------------------------------------
Income before income of
associated businesses 35,481 35,366 56,781 58,593
Income of associated
businesses 631 398 470 209
---------------------------------------------------------------------
Net income $36,112 $35,764 $57,251 $58,802
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings per Class A and
Class B share (note 3(C)):
Net income - Basic $0.46 $0.45 $0.73 $0.74
Net income - Diluted $0.46 $0.44 $0.73 $0.73
---------------------------------------------------------------------
---------------------------------------------------------------------
(See accompanying notes)
Torstar Corporation
Consolidated Balance Sheets
(unaudited)
June 30 December 31
---------------------------------------------------------------------
(thousands of dollars) 2005 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Assets
Current:
Cash and cash equivalents $48,813 $47,229
Receivables 249,970 247,942
Inventories 34,297 35,236
Prepaid expenses 79,756 68,250
Future income tax assets 23,299 23,851
------------- ------------
Total current assets 436,135 422,508
------------- ------------
Property, plant and equipment (net) 377,732 392,141
Investment in associated businesses 23,517 22,954
Goodwill (net) 499,624 499,637
Other assets (note 7) 141,102 114,731
Future income tax assets 58,015 58,056
------------- ------------
Total assets $1,536,125 $1,510,027
------------- ------------
------------- ------------
Liabilities and Shareholders' Equity
Current:
Bank overdraft $1,984 $6,414
Accounts payable and accrued liabilities 186,254 214,352
Income taxes payable 14,641 23,917
------------- ------------
Total current liabilities 202,879 244,683
------------- ------------
Long-term debt (note 2) 365,070 317,829
------------- ------------
Other liabilities 84,206 83,177
------------- ------------
Future income tax liabilities 70,577 70,677
------------- ------------
Shareholders' equity:
Share capital (note 3) 371,755 369,140
Contributed surplus 3,660 2,442
Retained earnings 444,046 425,787
Foreign currency translation adjustment (6,068) (3,708)
------------- ------------
Total shareholders' equity 813,393 793,661
------------- ------------
Total liabilities and shareholders'
equity $1,536,125 $1,510,027
------------- ------------
------------- ------------
(See accompanying notes)
Torstar Corporation
Consolidated Statements Of
Cash Flows
(unaudited)
Three months ended Six months ended
June 30 June 30
---------------------------------------------------------------------
(thousands of dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Cash was provided by (used in)
Operating activities $17,079 $28,311 $36,318 $70,723
Investing activities (31,875) (13,967) (35,814) (28,208)
Financing activities 19,366 (11,487) 6,567 (52,857)
---------------------------------------------------------------------
Increase (decrease) in cash 4,570 2,857 7,071 (10,342)
Effect of exchange rate
changes (467) 87 (1,057) 567
Cash, beginning of period 42,726 37,698 40,815 50,417
---------------------------------------------------------------------
Cash, end of period $46,829 $40,642 $46,829 $40,642
---------------------------------------------------------------------
---------------------------------------------------------------------
Operating activities:
Net income $36,112 $35,764 $57,251 $58,802
Depreciation 14,289 13,600 28,314 27,017
Amortization 641 644 1,280 1,285
Future income taxes 500 (4) 700 337
Income of associated
businesses (631) (398) (470) (209)
Other (1,463) 1,143 (965) 755
---------------------------------------------------------------------
49,448 50,749 86,110 87,987
Increase in non-cash
working capital (32,369) (22,438) (49,792) (17,264)
---------------------------------------------------------------------
Cash provided by operating
activities $17,079 $28,311 $36,318 $70,723
---------------------------------------------------------------------
---------------------------------------------------------------------
Investing activities:
Additions to property,
plant and equipment ($8,219) ($11,117) ($17,968) ($23,702)
Acquisitions (note 7) (23,604) (1,635) (23,604) (3,340)
Investment in associated
business (note 7) (1,413) (1,413)
Other (note 8) (52) 198 5,758 247
---------------------------------------------------------------------
Cash used in investing
activities ($31,875) ($13,967) ($35,814) ($28,208)
---------------------------------------------------------------------
---------------------------------------------------------------------
Financing activities:
Issuance of commercial
paper (net) $33,409 $10,663 $45,212 $35,938
Repayment of mid-term notes (75,000)
Dividends paid (14,147) (13,676) (28,299) (27,300)
Exercise of stock options
(note 3(a)) 1,164 723 1,743 21,735
Purchase of shares for
cancellation (note 3(b)) (1,740) (10,212) (13,068) (10,212)
Other 680 1,015 979 1,982
---------------------------------------------------------------------
Cash provided by (used in)
financing activities $19,366 ($11,487) $6,567 ($52,857)
---------------------------------------------------------------------
---------------------------------------------------------------------
Cash represented by:
Cash and cash equivalents $48,813 $43,421 $48,813 $43,421
Bank overdraft (1,984) (2,779) (1,984) (2,779)
---------------------------------------------------------------------
$46,829 $40,642 $46,829 $40,642
---------------------------------------------------------------------
---------------------------------------------------------------------
(See accompanying notes)
Torstar Corporation
Consolidated Statements Of
Retained Earnings
(unaudited)
Six months ended
June 30
-------------------------------------------------------------------
(thousands of dollars) 2005 2004
-------------------------------------------------------------------
-------------------------------------------------------------------
Retained earnings, beginning of period $425,787 $395,758
Net income 57,251 58,802
Dividends (28,914) (27,770)
Premium paid on repurchase of shares
for cancellation (note 3(b)) (10,078) (8,200)
-------------------------------------------------------------------
Retained earnings, end of period $444,046 $418,590
-------------------------------------------------------------------
-------------------------------------------------------------------
(See accompanying notes)
TORSTAR CORPORATION Notes to the Interim Consolidated Financial Statements (Dollar amounts in thousands unless otherwise stated) 1. Accounting policies The accounting policies used in the preparation of these unaudited interim consolidated financial statements conform with those in Torstar Corporation's December 31, 2004 audited annual consolidated financial statements. These interim financial statements do not include all of the disclosures included in the annual financial statements and accordingly should be read in conjunction with the annual consolidated financial statements.
2. Long-term debt
---------------------------------------------------------------------
As at As at
June 30, 2005 December 31, 2004
---------------------------------------------------------------------
Commercial paper:
Cdn. Dollar denominated $190,589 $156,792
U.S. Dollar denominated 129,481 116,037
------------- ---------------
320,070 272,829
------------- ---------------
Medium Term Notes:
Cdn. Dollar denominated 45,000 45,000
------------- ---------------
$365,070 $317,829
------------- ---------------
------------- ---------------
All commercial paper and medium term notes with a term of less than one year have been classified as long-term debt as the company has the ability and intention to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. these amounts under its existing credit facilities. The carrying values Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the various long-term debt instruments approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. their fair value at June 30, 2005. The company entered into an interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. agreement that will fix the interest rate on U.S. $80 million of borrowings at approximately 3.5% for four years beginning December 2003. The fair value of the U.S. interest rate swap arrangement was $1.2 million favourable at June 30, 2005.
3. Share Capital
a) A summary of changes to the company's share capital is as follows:
Class A shares (voting)
At June 30, 2005 there were 9,916,522 Class A shares outstanding
with a stated value of $2,694. The only changes in the Class A
shares since December 31, 2004 were the conversion to Class B
shares of 1,953 shares with a stated value of $1.
Class B shares (non-voting)
Shares Amount
------------ ----------
December 31, 2004 68,533,752 $366,445
Converted from Class A 1,953 1
Issued under Employee Share
Purchase Plan 128,959 3,225
Stock options exercised 95,900 1,743
Purchased for cancellation (559,200) (2,990)
Dividend reinvestment plan 25,306 615
Other 919 22
------------ ----------
June 30, 2005 68,227,589 $369,061
------------ ----------
------------ ----------
Total Class A and Class B shares 78,144,111 $371,755
------------ ----------
------------ ----------
b) The company commenced a normal course issuer bid on May 6, 2005, effective for one year, to repurchase for cancellation up to 2 million Class B shares, representing approximately 2.9% of the company's outstanding Class B shares. As at June 30, 2005 no shares were repurchased under this bid. A similar issuer bid, which commenced May 7, 2004, was completed in the second quarter. 2,000,000 Class B shares were repurchased and cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. since the beginning of this issuer bid at an average repurchase price of $24.02 per share for a total consideration of $48,044. During 2005, 559,200 Class B shares were repurchased at an average price of $23.37 per share for a total consideration of $13,068. Retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. were reduced by $10,078 representing the excess of the cost of the shares repurchased over their stated value Stated Value A value that, instead of being par value, is assigned to a corporation's stock for accounting purposes. Stated value has no relation to market price. Notes: . c) Earnings per share Basic per share amounts have been determined by dividing net income by the weighted average number of shares outstanding during the period. Diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. per share amounts have taken into consideration the dilutive effect Dilutive effect Result of a transaction that decreases earnings per common share (EPS). of stock options and the employee share purchase plan. The weighted average number of Class A and Class B shares outstanding (in thousands) were:
Three months ended Six months ended
June 30 June 30
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2005 2004 2005 2004
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Basic 78,098 79,669 78,132 79,310
Diluted 78,707 80,935 78,560 80,357
d) During the six months ended June 30, 2005, controlling shareholders sold 10,000 Class B shares. 4. Stock-based compensation The company has four stock-based compensation plans: an executive share option plan, an employee share purchase plan, a deferred share unit plan for employees and a deferred share unit plan for non-employee directors.
a) A summary of changes in the executive share option plan is as
follows:
Share options Weighted average
exercise price
--------------- -------------------
December 31, 2004 4,936,962 $22.63
Granted 643,531 22.00
Exercised (95,900) (18.18)
Cancelled (9,425) (25.53)
--------------- -------------------
June 30, 2005 5,475,168 $22.63
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--------------- -------------------
Options exercisable at June 30, 2005 are as follows:
Range of Share options Weighted average
exercise price Exercisable exercise price
-------------- ------------- ----------------
$15.75-18.05 488,100 $17.11
$18.50-22.20 2,144,614 $20.96
$25.00-29.01 1,028,160 $25.78
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$15.75-29.01 3,660,874 $21.80
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b) The company has recognized in 2005 compensation expense totalling $1.1 million (2004 - $0.8 million) for the stock options granted in 2003 to 2005 and the employee share purchase plans originating in 2004 and 2005. The fair value of the executive stock options granted in 2005 was estimated to be $3.48 (2004 - $5.52) per option at the date of grant using the Black-Scholes option pricing model option pricing model A mathematical formula for determining the price at which an option should trade. The model expresses the value of an option as a function of the value of the underlying asset, length of time until maturity, exercise price, yields on with the assumptions of a risk-free interest rate Risk-Free Interest Rate Describes return available to an investor in a security somehow guaranteed to produce that return. The risk-free interest rate compensataes the investor for the temporary sacrifice of consumption. of 3.7% (2004 - 4.1%), expected dividend yield Expected dividend yield Total amount of dividends received during the life of a futures contract or total dividends received for holding a particular stock one year. See: Current yield. of 3.4% (2004 - 2.4%), expected volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of 20.7% (2004 - 20.6%) and an expected time until exercise of 5 years. c) No compensation expense has been recognized for the company's stock-based compensation plans granted in 2002. Had compensation cost for the company's stock-based compensation plans been determined based on the fair value method of accounting for stock-based compensation, the company's net income and earnings per share would have been reduced to the pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma amounts indicated below:
Three months Six months
ended June 30 ended June 30
---------------------------------------------------------------------
2005 2004 2005 2004
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Net income - As reported $36,112 $35,764 $57,251 $58,802
- Pro forma $35,685 $35,118 $56,397 $57,532
Earnings per
share - Basic - As reported $0.46 $0.45 $0.73 $0.74
- Pro forma $0.46 $0.44 $0.72 $0.73
Earnings per
share - Diluted - As reported $0.46 $0.44 $0.73 $0.73
- Pro forma $0.45 $0.43 $0.72 $0.72
d) The company has a Deferred Share Unit Plan for executives and non-employee directors. As at June 30, 2005, 149,880 units were outstanding at a value of $3.7 million. During the second quarter, the company entered into a derivative instrument Noun 1. derivative instrument - a financial instrument whose value is based on another security derivative legal document, legal instrument, official document, instrument - (law) a document that states some contractual relationship or grants some right in order to offset its exposure to 139,868 units. Changes in the fair value of this instrument will be recorded as compensation expense and will offset the impact of changes in the value of the outstanding deferred share units. 5. Employee Future Benefits The company maintains a number of defined benefit plans Defined benefit plan A pension plan obliging the sponsor to make specified dollar payments to qualifying employees at retirement. The pension obligations are effectively the debt obligation of the plan sponsor. Related: Defined contribution plan , which provide pension benefits to its employees in Canada and the United States The United States and Canada share a unique legal relationship. U.S. law looks northward with a mixture of optimism and cooperation, viewing Canada as an integral part of U.S. economic and environmental policy. . Post employment benefits other than pensions are also available to employees, primarily in the Canadian newspapers operations, which provide for various health and life insurance benefits. The company has expensed net pension benefit costs of $8.1 million for the six months ended June 30, 2005 (2004 - $7.7 million) and $3.9 million for the quarter ended June 30, 2005 (2004 - $3.9 million). With respect to post-employment benefits other than pensions, for the six months and quarter ended June 30, 2005 the net benefit cost was $2.2 million and $1.2 million respectively (2004 - $1.9 million and $1.0 million respectively). 6. Forward Foreign Exchange Contracts and Options As described in Note 13 of the company's December 31, 2004 annual financial statements, the company has entered into various forward foreign exchange contracts and option contracts. During the first half of 2005 the company entered into an offsetting position for 2.0 million of its 4.0 million 2006 Euro forward foreign exchange contracts. The company has marked to market its outstanding Euro forward foreign exchange contracts at June 30, 2005. As a result, an unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. of $0.4 million was included in the operating profit of the book publishing segment for the six months ended June 30, 2005. 7. Acquisitions The company completed a number of community newspaper acquisitions during 2005 and 2004. In 2005, the total purchase price of $23.6 million has been included in Other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. pending the completion of the final allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of the purchase prices. In 2004, the total purchase price was $3.3 million of which $2.8 million was allocated to goodwill. The company also acquired on June 17, 2004 a 30% equity interest in an associated business. 8. Unusual items During the first quarter of 2005, the company recognized a $1.4 million gain from the completion of the sale of the land and building previously occupied by The Record in Kitchener. Net proceeds were $5.7 million. Torstar Corporation (TSX:TS.NV.B) |
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