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Torstar Corporation Reports Third Quarter Results

(November 02, 2011)

TORONTO, ONTARIO -- (Marketwire) -- 11/02/11 -- Torstar Corporation (TSX:TS.B) today reported financial results for the third quarter ended September 30, 2011.

Highlights for the quarter:

-- Revenue was $378.7 million in the quarter, up $25.0 million from the third quarter of 2010. Excluding accounting changes and the impact of foreign exchange, total revenue was up $22.9 million or 6.5% in the quarter. -- EBITDA (see "non-IFRS measures") was $53.7 million in the quarter, down $1.4 million from $55.1 million in the third quarter of 2010. This decline included a $1.6 million decline from the impact of foreign exchange and $1.9 million of lower Media Segment results partially offset by $2.2 million of higher Harlequin results. -- Net income was $25.2 million ($0.32 per share) in the third quarter, up $10.7 million ($0.14 per share) from $14.5 million ($0.18 per share) last year. -- Adjusted earnings per share (excluding restructuring and other charges and non-cash foreign exchange in both years and the CTV loss of associated businesses in 2010) was $0.38 in the third quarter of 2011, up $0.01 from $0.37 in the third quarter of 2010. -- Net debt was $88.9 million at September 30, 2011, down $19.2 million from $108.1 million at June 30, 2011.

"Results continue to be mixed in 2011," said David Holland, President and Chief Executive Officer of Torstar Corporation. "EBITDA was down slightly, by $1.4 million to $53.7 million in the quarter, with improved Harlequin results offset by a modest decline in Media. We view the third quarter results to be solid given the economic environment in which we are operating. The diversification of our asset base is serving us well in a challenging environment."


"Within the Media operation, EBITDA was down $1.9 million due to the soft advertising environment and our continued commitment to investment spending. We continue to make progress in growing digital revenues which were up 27% in the quarter. At Harlequin, EBITDA was up $2.2 million excluding the impact of foreign exchange. This third quarter result was a nice recovery from the weaker results experienced in the second quarter and brings the year-to-date up slightly over prior year. Harlequin continues to adjust successfully to the more digital book publishing environment."

"Looking forward, advertising revenue visibility is limited given the uncertain outlook for the economy. Advertising trends weakened during the quarter and this trend has continued into October. At Harlequin, we anticipate that results for the full year will be up slightly excluding the impact of foreign exchange."

"In October, we announced the acquisition of Performance Printing and the increase of our interest in the Metro commuter papers to 90%. Both investments will further strengthen Torstar's position within the Canadian media landscape."

The following chart provides a continuity of net income attributable to equity shareholders per share from 2010 to 2011: ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Third Quarter Year to Date ---------------------------------------------------------------------------- Net income attributable to equity shareholders per share 2010 $0.18 $0.69 - Loss from CTV (2010) 0.21 0.35 ---------------------------------------------------------------------------- Adjusted net income attributable to equity shareholders per share 2010 0.39 1.04 Changes - Operations 0.03 (0.05) - Restructuring and other charges 0.01 0.09 - Settlement of interest rate swap contracts (0.03) - Non-cash foreign exchange (0.09) (0.04) - Adjustment to contingent consideration 0.01 0.01 - Gain on sale of assets (2010) (0.03) (0.03) ---------------------------------------------------------------------------- Pre CTV gain net income attributable to equity shareholders per share $0.32 $0.99 - Gain on sale of CTV 2.40 ---------------------------------------------------------------------------- Net income attributable to equity shareholders per share 2011 $0.32 $3.39 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- OPERATING RESULTS - Third quarter and year to date 2011 Overall performance The following tables set out, in $000's, the segmented results for the three and nine months ended September 30, 2011 and 2010. ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Third Quarter 2011 ----------------------------------------------------- Book Media Publishing Corporate Total ---------------------------------------------------------------------------- Operating revenue $262,980 $115,697 $378,677 Other operating costs (130,414) (66,156) $(803) (197,373) Salaries and benefits (99,817) (24,760) (3,036) (127,613) ---------------------------------------------------------------------------- EBITDA 32,749 24,781 (3,839) 53,691 Amortization & depreciation (7,461) (1,024) (15) (8,500) ---------------------------------------------------------------------------- Operating earnings 25,288 23,757 (3,854) 45,191 ---------------------------------------------------------------------------- Restructuring and other charges (1,523) (438) (1,961) ---------------------------------------------------------------------------- Operating profit $23,765 $23,319 $(3,854) $43,230 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Third Quarter 2010 ---------------------------------------------------- Book Media Publishing Corporate Total --------------------------------------------------------------------------- Operating revenue $236,226 $117,484 $353,710 Other operating costs (105,438) (69,206) $(954) (175,598) Salaries and benefits (96,181) (24,083) (2,709) (122,973) --------------------------------------------------------------------------- EBITDA 34,607 24,195 (3,663) 55,139 Amortization & depreciation (6,648) (888) (19) (7,555) --------------------------------------------------------------------------- Operating earnings 27,959 23,307 (3,682) 47,584 --------------------------------------------------------------------------- Restructuring and other charges (2,525) (2,525) --------------------------------------------------------------------------- Operating profit $25,434 $23,307 $(3,682) $45,059 --------------------------------------------------------------------------- --------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Year to Date 2011 ----------------------------------------------------- Book Media Publishing Corporate Total ---------------------------------------------------------------------------- Operating revenue $782,049 $341,372 $1,123,421 Other operating costs (379,511) (201,877) $(2,574) (583,962) Salaries and benefits (294,428) (74,632) (9,338) (378,398) ---------------------------------------------------------------------------- EBITDA 108,110 64,863 (11,912) 161,061 Amortization & depreciation (21,110) (2,811) (45) (23,966) ---------------------------------------------------------------------------- Operating earnings 87,000 62,052 (11,957) 137,095 ---------------------------------------------------------------------------- Restructuring and other charges (5,310) (438) (5,748) ---------------------------------------------------------------------------- Operating profit $81,690 $61,614 $(11,957) $131,347 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Year to Date 2010 ---------------------------------------------------- Book Media Publishing Corporate Total --------------------------------------------------------------------------- Operating revenue $718,136 $348,102 $1,066,238 Other operating costs (315,127) (205,816) $(3,029) (523,972) Salaries and benefits (287,902) (72,081) (7,373) (367,356) --------------------------------------------------------------------------- EBITDA 115,107 70,205 (10,402) 174,910 Amortization & depreciation (20,777) (3,003) (48) (23,828) --------------------------------------------------------------------------- Operating earnings 94,330 67,202 (10,450) 151,082 --------------------------------------------------------------------------- Restructuring and other charges (11,992) (357) (2,779) (15,128) --------------------------------------------------------------------------- Operating profit $82,338 $66,845 $(13,229) $135,954 --------------------------------------------------------------------------- ---------------------------------------------------------------------------

Revenue

Total revenue was $378.7 million in the third quarter of 2011, up $25.0 million from $353.7 million in the third quarter of 2010. Excluding the $4.5 million increase from a change in reporting for Torstar's share of Metro's revenues and the $2.4 million decrease from the stronger Canadian dollar, total revenue would have been up $22.9 million or 6.5% in the quarter. Excluding these items, Media Segment revenues were up $22.3 million or 9.4% in the quarter with growth in product sales, digital and distribution revenues more than offsetting declines in print advertising revenue. Book Publishing revenues were up $0.6 million in the quarter with digital revenue growth more than offsetting declines in print retail and direct-to-consumer revenues.

Year to date, total revenue was $1,123.4 million, up $57.2 million from $1,066.2 million in 2010. Excluding the $12.6 million increase from a change in reporting for Torstar's share of Metro's revenue and the $8.0 million decrease from the stronger Canadian dollar, total revenue would have been up $52.6 million or 4.9% in the first nine months of 2011. Excluding these items, Media Segment revenues were up $51.3 million year to date with growth in product sales, digital and distribution revenues more than offsetting declines in print advertising revenue. Book Publishing revenues were up $1.3 million year to date including the benefit of the acquisition of the other half of the German business at the beginning of the second quarter of 2010. Excluding that benefit, Book Publishing revenues were down $2.8 million year to date.

EBITDA

EBITDA was $53.7 million in the third quarter of 2011, down $1.4 million from $55.1 million in the third quarter of 2010. Year to date, EBITDA was $161.1 million, down $13.8 million from $174.9 million in 2010.

Operating earnings

Operating earnings were $45.2 million in the third quarter of 2011, down $2.4 million from $47.6 million in the third quarter of 2010. Media Segment operating earnings were $25.3 million in the third quarter of 2011, down $2.7 million from $28.0 million in the third quarter last year. Revenue growth for the Media Segment was offset by related cost increases and net investment spending, primarily in the digital properties. Book Publishing operating earnings were $23.8 million in the third quarter of 2011, up $0.5 million from $23.3 million in the third quarter of 2010. Excluding a decline of $1.6 million from the impact of foreign exchange, Book Publishing operating earnings were up $2.0 million in the quarter. Higher North American results more than offset softness across many overseas markets. Corporate costs were $3.9 million in the third quarter of 2011, up $0.2 million from $3.7 million in the third quarter of 2010.

Year to date, operating earnings were $137.1 million, down $14.0 million from $151.1 million in 2010. Media Segment operating earnings were $87.0 million in the first nine months of 2011, down $7.3 million from $94.3 million in the same period last year. Book Publishing operating earnings were $62.1 million in the first nine months of 2011, down $5.1 million from $67.2 million in the same period in 2010. Excluding a decline of $5.7 million from the impact of foreign exchange, Book Publishing operating earnings were up $0.5 million year to date including $0.7 million of benefit from the 2010 German acquisition. Year to date, corporate costs were $12.0 million, up $1.5 million from $10.5 million in 2010 primarily due to year over year differences in the mark-to-market of a share-based compensation hedging instrument partially offset by lower professional fees.

Restructuring and other charges

Restructuring and other charges of $2.0 million were recorded in the third quarter of 2011 and $5.7 million year to date. The third quarter charge included restructuring initiatives of $1.6 million in the Media Segment and $0.4 million in the Book Publishing Segment. Year to date restructuring and other charges included $2.9 million for restructuring initiatives in the Media Segment and a $2.4 million provision for rented space that the Media Segment will be vacating as reduced staff counts allow for space consolidation. The charge represents the discounted shortfall between the remaining obligation under the existing lease and the amounts to be received through a sublease arrangement. The annual cost savings from the space consolidation are approximately $1.3 million a year with $0.3 million expected to be realized in the fourth quarter of 2011.

The 2011 restructuring initiatives in the Media Segment are expected to result in annualized savings of approximately $4.1 million (rent and salaries) and a reduction of approximately 39 positions. $1.6 million of the savings is expected to be realized in 2011 (with $0.7 million realized in the first nine months). The 2011 restructuring initiatives in the Book Publishing Segment are expected to result in annualized savings of approximately $0.5 million and a reduction of 5 positions. $0.2 million of the savings is expected to be realized in the fourth quarter of 2011.

In 2010, restructuring and other charges of $2.5 million and $15.1 million were recorded in the third quarter and year to date respectively. The third quarter charge included $1.3 million related to restructuring provisions and a $1.2 million adjustment to a provision for litigation, both in the Media Segment. Restructuring and other charges in the first nine months of 2010 included $10.7 million for restructuring in the Media Segment, the $1.2 million litigation provision adjustment in the Media Segment, $2.8 million of costs related to Torstar's bid to purchase the newspaper and digital business of Canwest Limited Partnership and $0.4 million related to transaction costs from Harlequin's acquisition of the other half of the German publishing business.

Operating profit

Operating profit was $43.2 million in the third quarter of 2011, down $1.9 million from $45.1 million in 2010. Year to date, operating profit was $131.3 million, down $4.7 million from $136.0 million in 2010.

Interest and financing costs

Interest and financing costs were $1.8 million in the third quarter of 2011, down $5.1 million from $6.9 million in the third quarter of 2010. Year to date, interest and financing costs were $14.6 million, down $3.2 million from $17.8 million in 2010.

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Third Quarter Year to Date --------------------------------------- (in $000's) 2011 2010 2011 2010 ---------------------------------------------------------------------------- Interest expense $1,195 $6,547 $8,789 $17,318 Interest accretion costs 619 315 1,985 489 Swap settlement charge 3,794 ---------------------------------------------------------------------------- Interest and financing costs $1,814 $6,862 $14,568 $17,807 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

Interest expense was $1.2 million in the third quarter of 2011, down $5.3 million from $6.5 million in the third quarter of 2010. The lower expense reflects the significantly lower level of average net debt outstanding in the third quarter of 2011 and a lower effective interest rate. The average net debt (long-term debt and bank overdraft net of cash and cash equivalents) was $98.5 million in the third quarter of 2011, down $366.0 million from $464.5 million in the same period last year. Torstar's effective interest rate on long-term debt was 3.4% in the third quarter of 2011 and 5.2% in the third quarter of 2010.

Year to date, interest expense was $8.8 million, down $8.5 million from $17.3 million in 2010. The lower expense reflects the significantly lower level of average net debt outstanding in the second and third quarters of 2011, partially offset by a slightly higher effective interest rate. The average net debt (long-term debt and bank overdraft net of cash and cash equivalents) was $188.3 million in the first nine months of 2011, down $295.4 million from $483.7 million in 2010. Torstar's effective interest rate on long-term debt was 4.7% in the first nine months of 2011 and 4.5% in the same period last year.

Torstar's effective interest rate in both periods has been impacted by the applicable interest rate spread and the mix of debt outstanding. A higher interest rate spread was applicable to Torstar's debt starting in the first quarter of 2010 through the second quarter of 2011. Debt repayments over the past two years have been against the lower floating-rate debt leaving a larger proportion of outstanding debt at the higher fixed-rates.

Net debt was $88.9 million at September 30, 2011, down $279.7 million from $368.6 million at December 31, 2010.

Interest and financing costs included interest accretion on long-term restructuring provisions, deferred purchase price and contingent consideration obligations of $0.6 million in the third quarter of 2011 and $2.0 million year to date. Interest accretion of $0.3 million and $0.5 million was recorded in the third quarter and first nine months of 2010 respectively.

Year to date, interest and financing costs also included the $3.8 million first quarter charge related to the settlement of Canadian dollar debt interest rate swaps. In 2006, in connection with the investment in CTV, Torstar had entered into interest rate swap agreements to fix the rate of interest on $250 million of Canadian dollar borrowings at 4.3% (plus the applicable interest rate spread based on Torstar's long-term credit rating) through September 2011. The five-year swap arrangements required a resetting of pricing and debt instruments every ninety days with a reset date occurring in March 2011. In anticipation of the receipt of the funds from the completion of the CTV sale, the swap arrangements were not reset in March and Torstar settled the swaps.

Adjustment to contingent consideration

During the third quarter of 2011, Torstar revised the estimate of contingent consideration related to a 2010 acquisition in the Media Segment. The revision resulted in a $0.7 million income inclusion and the reduction of the provision for contingent consideration.

Foreign exchange

The non-cash foreign exchange gain or loss reported in the consolidated statement of income primarily relates to the translation of U.S. dollar denominated assets and liabilities held by Torstar's Canadian operations into Canadian dollars. It does not include the translation of foreign currency (including U.S. dollars) denominated assets and liabilities of Torstar's foreign operations or the translation of U.S. dollar debt that has been designated as a hedge against those net U.S. dollar denominated assets. The foreign exchange on the translation of those foreign-currency denominated assets and liabilities and the related hedge-designated debt into Canadian dollars is reported through other comprehensive income. The amount of the non-cash foreign exchange gain or loss in any year will vary depending on the movement in the relative value of the Canadian dollar and on whether Torstar's Canadian operations have a net asset or net liability position in U.S. dollars.

Torstar reported a non-cash foreign exchange loss of $4.6 million in the third quarter of 2011 compared with a gain of $3.4 million in the third quarter of 2010. Year to date, Torstar reported a non-cash foreign exchange loss of $3.0 million compared with a gain of $0.4 million in 2010. Torstar's Canadian operations were in a net liability position in U.S. dollars in both years however, the Canadian dollar weakened as at the end of the third quarter and first nine months of 2011 (relative to the beginning of each period) and strengthened as at the end of the third quarter and first nine months of 2010.

Torstar's net liability position in U.S. dollars was larger in 2010 as Torstar had not designated any of its U.S. dollar debt as a hedge against its net investment in U.S. dollar denominated operations thereby increasing the net liability position in U.S. dollars. Effective January 1, 2011, Torstar has designated $80.0 million of its U.S. dollar denominated debt as a hedge against its net investment in the Book Publishing businesses that have the U.S. dollar as their functional currency. This reduces Torstar's net liability position in U.S. dollars.

Loss of associated businesses

The loss of associated businesses was $0.6 million in the third quarter of 2011 compared with a loss of $16.2 million in the third quarter of 2010. Year to date, the loss of associated businesses was $1.8 million compared with a loss of $27.9 million in 2010. The 2011 losses included Torstar's share of Canadian Press losses. Torstar acquired a one-third interest in Canadian Press in the fourth quarter of 2010.

Torstar ceased to equity account for its investment in CTV on September 10, 2010 and subsequently sold its investment on April 1, 2011. Torstar has not recorded any amounts related to CTV in the loss of associated businesses in 2011. Torstar's share of CTV's net loss was $16.3 million in the third quarter and $28.0 million for the first nine months of 2010.

Torstar is also not currently recording its share of Black Press's results due to a notional accounting negative carrying value. Torstar's share of Black Press's net income would have been a loss of $0.3 million in the third quarter of 2011 compared with a loss of $0.7 million in the third quarter of 2010. Year to date, Torstar's share of Black Press's net income would have been $1.2 million compared with a loss of $2.3 million in 2010. The 2010 loss included a $3.1 million impairment loss related to a customer-related intangible asset and goodwill related to a printing operation. Excluding the impairment loss in 2010, results were up slightly year over year.

Gain on sale of CTV

During the second quarter of 2011, Torstar recorded a gain of $190.1 million on its sale of its 20% interest in CTV. The transaction closed on April 1, 2011 and Torstar received cash proceeds of $291.6 million.

Income and other taxes

The reporting of the gain on the sale of CTV in 2011 and the loss of associated businesses from CTV in 2010 had an impact on Torstar's effective tax rate in both years. There was no tax expense recorded against the gain on the sale as the gain was a reversal of prior year losses of associated businesses and impairment losses which had not been tax-affected.

Excluding the impact of CTV in both years, Torstar's effective tax rate was 31.6% in the third quarter of 2011 and 30.4% in the third quarter of 2010. Year to date, Torstar's effective tax rate was 30.0% in 2011 and 31.8% in 2010. In both periods Torstar benefitted from the lower Canadian statutory tax rate. The Canadian statutory rate is lower in 2011, although Torstar only realizes a portion of the benefit as a large proportion of its income is taxed in foreign jurisdictions where tax rates remain unchanged. In the quarter, this benefit was offset by the impact of the non-deductible portion of capital losses in 2011 compared with the non-taxable portion of capital gains in 2010. Year to date the effective tax rate also benefited from the recognition of previously unrecognized losses.

Net income attributable to equity shareholders

Torstar reported net income attributable to equity shareholders of $25.2 million or $0.32 per share in the third quarter of 2011 up $10.7 million or $0.14 per share from $14.5 million or $0.18 per share in the third quarter of 2010. Year to date, Torstar reported net income attributable to equity shareholders of $269.0 million or $3.39 per share up $214.6 million or $2.70 per share from $54.4 million or $0.69 per share in 2010.

The second quarter 2011 gain on the sale of CTV was $190.1 million or $2.40 per share. In 2010, Torstar recorded $16.3 million ($0.21 per share) in the third quarter and $28.0 million ($0.35 per share) year to date from CTV as part of the loss of associated businesses. Excluding the impact of CTV in both years, Torstar would have reported net income attributable to equity shareholders of $25.2 million or $0.32 per share in the third quarter of 2011 down $5.6 million or $0.07 per share from $30.8 million or $0.39 per share in the third quarter of 2010. Year to date, Torstar would have reported net income attributable to equity shareholders of $78.9 million or $0.99 per share down $3.5 million or $0.05 per share from $82.4 million or $1.04 per share in 2010.

The average number of Class A and Class B non-voting shares outstanding was 79.5 million in the third quarter and 79.4 million in the first nine months of 2011 up slightly from 79.1 million in both periods last year.

OUTLOOK

In the Media Segment, advertising trends weakened during the third quarter and this trend has continued into October. Visibility on advertising revenue remains limited given the uncertain outlook for the economy. Offsetting this trend are digital revenues that have grown 30.6% year to date and the positive impact of acquisitions and market expansion. The Metro and Performance Printing acquisitions are anticipated to contribute approximately $3.0 million of EBITDA in the fourth quarter. Net investment spending was increased in the Media Segment in the first nine months to support future growth in digital and other areas. Torstar expects to invest between $5 million and $10 million on such initiatives over the course of the year. For the balance of the year, pension expense is expected to be $0.3 million higher for the segment, while newsprint pricing is expected to remain flat. Cost savings from restructuring initiatives are expected to be $5.5 million in the fourth quarter.

Year to date, Harlequin's operating earnings are up $0.5 million compared to 2010 excluding the impact of foreign exchange. The transition from printed books to digital continued at a rapid pace through the third quarter. Harlequin has been adjusting the volume of printed books distributed into the market and expects to see lower book returns relative to books distributed which should contribute to improved operating results. For the full year, Harlequin's earnings are anticipated to be up slightly excluding the impact of foreign exchange. If the Canadian dollar remains at its current levels relative to the U.S. dollar and overseas currencies, Harlequin anticipates a year over year negative foreign exchange impact of approximately $6.4 million (including the $5.7 million realized in the first nine months), including the impact of the U.S. dollar hedges currently in place.

SUBSEQUENT EVENTS

On October 14, 2011, Torstar announced that it had increased its interest in the English-language Metro newspaper operations ("Free Daily News Group") jointly owned in Canada with Metro International S.A. to 90%. The aggregate consideration was $51.5 million and included the purchase of shares from Metro International S.A. and the negotiation of a new franchise agreement. Metro International S.A. will continue to hold a 10% interest in Free Daily News Group.

On October 17, 2011, Torstar announced that it had acquired Performance Printing Limited of Smiths Falls, Ontario for $22.5 million. Performance Printing is a commercial printer with operations in Smiths Falls, as well as a newspaper publisher and flyer distributor in several Eastern Ontario communities including Kingston, Belleville, Brockville, Smiths Falls and Ottawa.

DIVIDEND

On November 1, 2011, Torstar declared a quarterly dividend of 12.5 cents per share on its Class A shares and Class B non-voting shares, payable on December 31, 2011, to shareholders of record at the close of business on December 9, 2011. 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 ("MD&A") for the period ended September 30, 2011. Both documents will be filed today with SEDAR and are available on Torstar's corporate website www.torstar.com.

CONFERENCE CALL

Torstar has scheduled a conference call for November 2, 2011 at 8:15 a.m. to discuss its third quarter results. The dial-in number is 416-340-2216 or 1-866-226-1792. A live broadcast of the conference call will be available over the Internet on the Investor Relations (Conference Calls) page on Torstar's website www.torstar.com. A recording of the conference call will be available for 9 days by calling 905-694-9451 or 1-800-408-3053 and entering reservation number 3672277. An online archive of the broadcast will be available shortly after the completion of the call and will be accessible by visiting the Investor Relations (Conference Calls) page on Torstar's website www.torstar.com.

About Torstar Corporation

Torstar Corporation is a broadly based media and book publishing company listed on the Toronto Stock Exchange (TS.B). Its businesses include the Star Media Group led by the Toronto Star, Canada's largest daily newspaper and digital properties including thestar.com, toronto.com, Workopolis, Olive Media, and eyeReturn Marketing; Metroland Media Group, publishers of community and daily newspapers in Ontario; and Harlequin, a leading global publisher of books for women.

Non-IFRS measures

In addition to operating profit, as presented in the consolidated statement of income, management uses EBITDA and operating earnings as measures to assess the consolidated performance and the performance of the reporting units and business segments.

EBITDA (earnings before interest, taxes, depreciation and amortization) is a measure that is also used by many of Torstar's shareholders, creditors, other stakeholders and analysts as a proxy for the amount of cash generated by Torstar's operations or by a reporting unit or business segment. EBITDA is not the actual cash provided by operating activities and is not a recognized measure of financial performance under IFRS. Torstar calculates EBITDA as operating revenue less other operating costs and salaries and benefits as presented on the consolidated statement of income. EBITDA excludes restructuring and other charges. Torstar's method of calculating EBITDA may differ from other companies and accordingly may not be comparable to measures used by other companies.

Operating earnings is used by management to represent the results of ongoing operations and is not a recognized measure of financial performance under IFRS. Torstar calculates operating earnings as operating revenue less other operating costs, salaries and benefits and amortization and depreciation. Operating earnings excludes restructuring and other charges. Torstar's method of calculating operating earnings may differ from other companies and accordingly may not be comparable to measures used by other companies.

Forward-looking statements

Certain statements in this press release and in the Company's oral and written public communications may constitute forward-looking statements that reflect management's expectations regarding the Company's future growth, results of operations, performance and business prospects and opportunities as of the date of this report. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "anticipate", "believe", "plan", "forecast", "expect", "intend", "would", "could", "if", "may" and similar expressions. All such statements are made pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. These statements reflect current expectations of management regarding future events and operating performance, and speak only as of the date of this release. In addition, forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.

By their very nature, forward-looking statements require management to make assumptions and are subject to inherent risks and uncertainties. There is a significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that management's assumptions may not be accurate and that actual results, performance or achievements may differ significantly from such predictions, forecasts, conclusions or projections expressed or implied by such forward-looking statements. We caution readers not to place undue reliance on the forward-looking statements in this press release as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, outlooks, expectations, goals, estimates or intentions expressed in the forward-looking statements.

These factors include, but are not limited to: general economic conditions in the principal markets in which the Company operates; the Company's ability to operate in highly competitive industries; the Company's ability to compete with other forms of media and media platforms; the Company's ability to attract and retain advertisers; the Company's ability to retain and grow its digital audience and further develop its digital businesses; cyclical and seasonal variations in the Company's revenues; labour disruptions; newsprint costs; the Company's ability to reduce costs; foreign exchange fluctuations; credit risk; restrictions imposed by existing credit facilities, debt financing and availability of capital; pension fund obligations; results of impairment tests; reliance on its printing operations; reliance on technology and information systems; risks related to business development; interest rates; availability of insurance; litigation; environmental regulations; dependence on key personnel; loss of reputation; privacy and confidential information; product liability; intellectual property rights; control of Torstar by the Voting Trust; and uncertainties associated with critical accounting estimates.

We caution that the foregoing list is not exhaustive of all possible factors, as other factors could adversely affect our results.

In addition, a number of assumptions, including those assumptions specifically identified throughout this press release, were applied in making the forward-looking statements set forth in this press release. Some of the key assumptions include, without limitation, assumptions regarding the performance of the North American economy; tax laws in the countries in which we operate; continued availability of printing operations; continued availability of financing on appropriate terms; exchange rates; market competition; rates of return and discount rates relating to pension expense and pension plan obligations; royalty rates, expected future revenues, expected future cash flows and discount rates relating to valuation of goodwill and intangible assets; and successful development of new products. There is a risk that some or all of these assumptions may prove to be incorrect.

When relying on our forward-looking statements to make decisions with respect to the Company and its securities, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company does not intend, and disclaims any obligation to, update any forward-looking statements, whether written or oral, or whether as a result of new information or otherwise, except as may be required by law.

For more information, please see the discussion of risks affecting Torstar and its businesses in Torstar's 2010 Management's Discussion & Analysis which is available at www.sedar.com and on Torstar's corporate website www.torstar.com.

Torstar's new releases are available on the Internet at www.torstar.com.

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Torstar Corporation Consolidated Statement of Financial Position (Thousands of Canadian Dollars) (Unaudited) September 30 December 31 January 01 2011 2010 2010 ---------------------------------------------------------------------------- Assets Current: Cash and cash equivalents $56,649 $42,991 $39,158 Receivables 248,008 266,436 250,289 Inventories 33,500 34,294 33,953 Derivative financial instruments 3,354 6,067 Prepaid expenses and other current assets 52,120 49,439 48,913 Prepaid and recoverable income taxes 4,060 3,013 2,997 ---------------------------------------------------------------------------- Total current assets 394,337 399,527 381,377 ---------------------------------------------------------------------------- Property, plant and equipment 170,544 171,543 177,493 ---------------------------------------------------------------------------- Investment in associated businesses 932 2,201 170,783 ---------------------------------------------------------------------------- Derivative financial instruments 1,471 ---------------------------------------------------------------------------- Intangible assets 76,175 61,522 54,094 ---------------------------------------------------------------------------- Goodwill 605,183 594,303 580,302 ---------------------------------------------------------------------------- Other assets 3,651 1,118 2,089 ---------------------------------------------------------------------------- Deferred income tax assets 109,377 84,804 84,950 ---------------------------------------------------------------------------- Investment in CTV Inc. - classified as held for sale 98,945 ---------------------------------------------------------------------------- Total assets $1,360,199 $1,413,963 $1,452,559 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Liabilities and Equity Current: Bank overdraft $9,534 $6,958 $2,052 Current portion of long-term debt 136,017 Accounts payable and accrued liabilities 209,260 212,293 194,348 Derivative financial instruments 1,390 4,947 Provisions 19,318 21,170 27,966 Income tax payable 15,249 33,239 19,172 ---------------------------------------------------------------------------- Total current liabilities 390,768 278,607 243,538 ---------------------------------------------------------------------------- Long-term debt 404,586 551,240 ---------------------------------------------------------------------------- Derivative financial instruments 9,578 7,647 16,633 ---------------------------------------------------------------------------- Provisions 10,760 20,923 2,095 ---------------------------------------------------------------------------- Other liabilities 15,573 21,967 17,548 ---------------------------------------------------------------------------- Employee benefits 319,836 207,768 186,952 ---------------------------------------------------------------------------- Deferred income tax liabilities 3,770 9,621 8,267 ---------------------------------------------------------------------------- Equity: Share capital 395,254 392,816 391,626 Contributed surplus 14,423 13,235 12,182 Retained earnings 206,027 70,392 33,702 Accumulated other comprehensive loss (8,046) (15,724) (12,530) ---------------------------------------------------------------------------- Total equity attributable to equity shareholders 607,658 460,719 424,980 Minority interests 2,256 2,125 1,306 ---------------------------------------------------------------------------- Total equity 609,914 462,844 426,286 ---------------------------------------------------------------------------- Total liabilities and equity $1,360,199 $1,413,963 $1,452,559 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Torstar Corporation Consolidated Statement of Income (Thousands of Canadian Dollars except per share amounts) (Unaudited) Three months ended Nine months ended September 30 September 30 2011 2010 2011 2010 ---------------------------------------------------------------------------- Operating revenue $378,677 $353,710 $1,123,421 $1,066,238 Other operating costs (197,373) (175,598) (583,962) (523,972) Salaries and benefits (127,613) (122,973) (378,398) (367,356) Amortization and depreciation (8,500) (7,555) (23,966) (23,828) Restructuring and other charges (1,961) (2,525) (5,748) (15,128) ---------------------------------------------------------------------------- Operating profit 43,230 45,059 131,347 135,954 Interest and financing costs (1,814) (6,862) (14,568) (17,807) Adjustment to contingent consideration 701 701 Foreign exchange (4,585) 3,402 (2,961) 424 Loss of associated businesses (582) (16,242) (1,769) (27,898) Other income 29 29 Gain on sale of assets 2,829 2,829 Gain on sale of CTV Inc. 190,123 ---------------------------------------------------------------------------- Income before taxes 36,979 28,186 302,902 93,502 Income and other taxes (11,700) (13,500) (33,800) (38,600) ---------------------------------------------------------------------------- Net income $25,279 $14,686 $269,102 $54,902 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Attributable to: Equity shareholders $25,239 $14,548 $268,971 $54,417 Minority interests $40 $138 $131 $485 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net income attributable to equity shareholders per Class A (voting) and Class B (non- voting) share: Basic $0.32 $0.18 $3.39 $0.69 Diluted $0.32 $0.18 $3.36 $0.68 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Torstar Corporation Consolidated Statement of Cash Flows (Thousands of Canadian Dollars) (Unaudited) Three months ended Nine months ended September 30 September 30 2011 2010 2011 2010 ---------------------------------------------------------------------------- Cash was provided by (used in) Operating activities $44,615 $39,208 $68,644 $99,224 Investing activities (10,295) (6,959) 239,139 (15,452) Financing activities (17,660) (42,123) (298,559) (90,221) ---------------------------------------------------------------------------- Increase (decrease) in cash 16,660 (9,874) 9,224 (6,449) Effect of foreign exchange 1,263 1,240 1,858 (228) Cash, beginning of period 29,192 39,063 36,033 37,106 ---------------------------------------------------------------------------- Cash, end of period $47,115 $30,429 $47,115 $30,429 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Operating activities: Net income $25,279 $14,686 $269,102 $54,902 Depreciation and amortization 8,500 7,555 23,966 23,828 Deferred income taxes 3,900 1,900 8,000 7,300 Loss of associated businesses 582 16,242 1,769 27,898 Gain on sale of CTV Inc. (190,123) Non-cash employee benefit expense 3,610 3,083 10,954 9,544 Employee benefits funding (13,991) (4,892) (41,299) (14,669) Other 2,853 (3,765) (3,152) 3,188 ---------------------------------------------------------------------------- 30,733 34,809 79,217 111,991 Decrease (increase) in non-cash working capital 13,882 4,399 (10,573) (12,767) ---------------------------------------------------------------------------- Cash provided by operating activities $44,615 $39,208 $68,644 $99,224 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Investing activities: Additions to property, plant and equipment and intangible assets $(9,290) $(6,210) $(26,326) $(15,214) Proceeds from sale of CTV Inc. 291,590 Acquisitions and investments (1,150) (4,079) (26,067) (9,783) Proceeds from mortgage receivable 6,215 Proceeds from sale of assets 3,000 3,000 Other 145 330 (58) 330 ---------------------------------------------------------------------------- Cash provided by (used in) investing activities $(10,295) $(6,959) $239,139 $(15,452) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Financing activities: Issuance of bankers' acceptances $39,620 $8,521 $39,620 Repayment of bankers' acceptances $(8,265) (281,430) (33,890) Repayment of medium term notes (75,000) (75,000) Dividends paid (9,880) (7,233) (26,986) (21,744) Exercise of share options 311 Other 485 490 1,025 793 ---------------------------------------------------------------------------- Cash used in financing activities $(17,660)$(42,123) $(298,559) $(90,221) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Cash represented by: Cash $48,921 $29,274 $48,921 $29,274 Cash equivalents - short-term deposits 7,728 7,886 7,728 7,886 ---------------------------------------------------------------------------- Cash and cash equivalents 56,649 37,160 56,649 37,160 Bank overdraft (9,534) (6,731) (9,534) (6,731) ---------------------------------------------------------------------------- $47,115 $30,429 $47,115 $30,429 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

Contacts:
Torstar Corporation
L. DeMarchi
Executive Vice-President and Chief Financial Officer
(416) 869-4776
www.torstar.com


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