WINNIPEG, MANITOBA--(Marketwired - May 14, 2015) - FP Newspapers Inc. ("FPI") (TSX:FP) announces financial results for the quarter ended March 31, 2015. FPI is the successor to the business of the FP Newspapers Income Fund and owns securities entitling it to 49% of the distributable cash of FP Canadian Newspapers Limited Partnership ("FPLP").

First quarter operating results of FPI

FPI had net earnings of $0.4 million, or $0.058 per share, during the three months ended March 31, 2015, compared to net earnings of $0.5 million, or $0.079 per share in the same quarter last year.

First quarter operating results of FPLP

FPLP's revenue for the three months ended March 31, 2015 was $21.3 million, a decrease of $2.2 million or 9.3% from the same three months in the prior year. FPLP's print advertising revenues for the three months ended March 31, 2015 were $12.9 million, a $2.3 million or 14.9% decrease compared to the same period last year. FPLP's largest advertising revenue category, display advertising including colour, was $7.8 million, a decrease of $1.7 million or 18.3% from the same period in the prior year, primarily due to decreased spending in the national automotive, telecommunications and retail categories. Classified advertising revenues for the first quarter decreased by $0.1 million or 6.0% compared to the same period last year, primarily due to decreased spending in real estate and employment categories, partly offset by increased obituary category revenues. Flyer distribution revenues decreased by $0.4 million or 11.4% compared to the first quarter in 2014, primarily due to a decrease in flyer volumes. The lost flyer distribution revenue from the closure of Target Canada is included in the first quarter volume decrease.

Print circulation revenues for the three months ended March 31, 2015 were unchanged from the first quarter of 2014, with lower unit sales offsetting increased revenue from higher subscription and single copy rates. Digital revenues for the first quarter increased by $0.1 million or 18.3%, primarily due to an increase in on-line web ads together with mobile product ad revenues.

Operating expenses for the three months ended March 31, 2015 were $19.7 million, a decrease of $1.8 million or 8.2% compared to the same quarter last year. Employee compensation costs for the first quarter decreased by $0.7 million or 6.7% from the same period in the prior year, primarily due to a reduction in the number of employees. Newsprint expense for FPLP's own publications for the first quarter decreased by $0.3 million or 17.9% compared to the same period in the prior year, primarily due to lower volumes resulting from fewer circulation copies and a lower average cost per metric tonne. Newsprint expense for commercial printing for the three months ended March 31, 2015 remained at relatively the same level compared to last year. Other expenses decreased by $0.4 million or 9.2% compared to the same quarter last year, primarily due to lower outside costs from reduced magazine volumes and declining use of production supplies. Delivery costs decreased by $0.4 million or 9.4%, primarily resulting from lower volumes and more efficient distribution methods.

EBITDA⁽¹⁾ for the three months ended March 31, 2015 was $2.7 million compared to $3.1 million for the same period last year, a decrease of 12.7%. EBITDA⁽¹⁾ margin for the three months ended March 31, 2015 was 12.6%, compared to 13.1% in the same period last year.

FPLP's net earnings were $1.2 million for the three months ended March 31, 2015, compared to $1.7 million for the same period last year.

Distributable cash attributable to FPI⁽²⁾ for the three months ended March 31, 2015 was ($3.0) million or ($0.441) per share, compared to $0.4 million or $0.062 per share for the same period last year. Distributable cash for the first quarter was lowered as a result of the $6.3 million long-term debt repaid from previously undistributed cash and the $0.6 million reserve for future cash sweep debt repayment.

Dividends

FPI declared dividends to Shareholders of $0.08 per share for the quarter, compared to $0.15 per share for the same quarter last year.

Second quarter 2015 Dividend

FPI today announced a cash dividend for the second quarter of 2015 of $0.08 per share, payable on July 31, 2015 to shareholders of record at the close of business on June 30, 2015.

Outlook

The declining print advertising revenues experienced in the first quarter are continuing at similar levels early into the second quarter. National advertising is the largest contributing factor to this decline. While every effort is being made to seek new local advertisers to make up for these national advertising losses, to date we have not been able to hold revenue levels flat.

In the second quarter the Winnipeg Free Press digital team launched a new website and mobile platforms. Readers across all our digital products were asked to complete a registration process which will allow our editors to better understand how our audience accesses the wide-ranging digital content we produce. Within a few weeks of implementing the registration requirement we had in excess of one hundred thousand registrations. The new products will personalize the reading experience by showing each reader more of the stories they enjoy. All of our digital products are available for no additional charge to our current print subscribers and a new digital only monthly subscription as well as a pay-per-article model were rolled out during the second quarter. The new monthly subscription rate is $16.99 and includes unlimited digital access to all Winnipeg Free Press content and an optional Saturday print edition delivery. The pay-per-article service charges readers $0.27 per article.

Additional Information

Additional information including financial statements and management's discussion and analysis can be found on the Company's website at www.fpnewspapers.com or on SEDAR at www.sedar.com.

Caution Regarding Forward-looking Statements

Certain statements in this news release may constitute forward-looking statements within the meaning of applicable securities laws. All statements other than statements of historical fact are forward-looking statements. These statements include but are not limited to statements regarding management's intent, belief or current expectations with respect to market and general economic conditions, future costs and operating performance. Generally, but not always, forward-looking statements will be indicated by words such as "may", "will", "intend", "anticipate", "expect", "believe", "plan", "is budgeting for" or similar terminology.

Forward-looking statements are subject to known and unknown risks and uncertainties that may cause the actual results, performance or achievements of FPI or FPLP, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the current general economic uncertainty, FPLP's ability to effectively manage growth and maintain its profitability, FPLP's ability to operate in a highly competitive industry, FPLP's ability to compete with other forms of media, FPLP's ability to attract advertisers, FPLP's reliance upon key personnel, FPLP's relatively high fixed costs, FPLP's dependence upon particular advertising customer segments, indebtedness incurred in making acquisitions, the availability of financing for capital improvements, the availability of an extension on refinancing of FPLP's term loan facilities, costs related to capital expenditures, cyclical and seasonal variations in FPLP's revenues, the risk of acts of terrorism, the cost of newsprint, the potential for labour disruptions, the risk of equipment failure, and the effect of Canadian tax laws. Additional information about these and other factors is discussed under "Risk Factors" in FPI's Annual Information Form dated March 11, 2015, which is available at www.sedar.com.

In addition, although the forward-looking statements contained in this news release are based upon assumptions that management of FPI and FPLP believe to be reasonable, such assumptions may prove to be incorrect.

Forward-looking statements speak only as of the date hereof and, except as required by law, FPI and FPLP assume no obligation to update or revise them to reflect new events or circumstances. Because forward-looking statements are inherently uncertain, readers should not place undue reliance on them.

About FPI

FPI owns securities entitling it to 49% of the distributable cash of FP Canadian Newspapers Limited Partnership ("FPLP"). FPLP owns the Winnipeg Free Press, the Brandon Sun, and their related businesses, as well as the Canstar Community News division, the publisher of six community newspapers in the Winnipeg region, The Carillon in Steinbach with its related commercial printing operations and the Carberry News Express weekly publication. The Winnipeg Free Press publishes six days a week for delivery to subscribers and single copy sales, serving Winnipeg and Manitoba with an average Monday through Saturday circulation of approximately 109,700 copies. On Sundays the Winnipeg Free Press publishes a newspaper sold through single-copy retail outlets and vending boxes. The Brandon Sun publishes six days a week, serving the region with an average circulation of approximately 11,900 copies. Canstar Community News publishes weekly with an average circulation of approximately 200,000 copies. The businesses employ approximately 510 full-time equivalent people in Winnipeg, Brandon, Steinbach and Carberry, Manitoba.

Conference Call

FPI invites you to participate in a conference call on Thursday, May 14, 2015 at 1:30 p.m. Eastern (12:30 p.m. Central) to discuss the first quarter results.

The dial-in number is 416-340-8527, or dial toll free at 800-355-4959. To ensure your participation, please dial in five minutes before the start of the conference call. Management's presentation will be followed by a question and answer period.

For those unable to participate, the call will be available to listeners upon completion of the call until June 4, 2015. To hear the replay, dial 905-694-9451 or dial toll free at 800-408-3053. The replay code is 8008189.

Non-IFRS financial measures

(1) EBITDA

FPLP believes that in addition to net earnings as reported on FPLP's interim condensed consolidated statements of earnings, EBITDA is a useful supplemental measure as it is a measure used by many of FPLP's unitholders, creditors and analysts as a proxy for the amount of cash generated by FPLP's operating activities and is not a recognized measure of financial performance under IFRS. Investors are cautioned that EBITDA should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of FPLP`s performance. FPLP's method of calculating EBITDA may differ from other issuers and, accordingly, EBITDA may not be comparable to measures used by other issuers. FPLP's method of calculating EBITDA is detailed in the Management's Discussion and Analysis for the quarter ended March 31, 2015 on FPI's website www.fpnewspapers.com or on SEDAR at www.sedar.com.

(2) Distributable Cash Attributable to FPI

FPI believes that in addition to the disclosure of cash flow from operations, distributable cash attributable to FPI is an important supplemental measure of cash flow because it provides investors with an indication of the amount of cash available for distribution to Shareholders and because such calculations are required by the terms of the partnership agreement governing FPLP. Distributable cash attributable to FPI is not a defined term under IFRS, and it should not be construed as an alternative to using net earnings or the statements of cash flows as measures of profitability and cash flow. Readers are cautioned that distributable cash as calculated by FPI may not be comparable to similar measures presented by other issuers. FPI uses this measure as a factor to determine whether to adjust its monthly dividends to Shareholders. FPLP's method of calculating distributable cash attributable to FPI is detailed in the Management's Discussion and Analysis for the quarter ended March 31, 2015 on FPI's website www.fpnewspapers.com or on SEDAR at www.sedar.com.

FP Newspapers Inc.

Condensed Statements of Earnings and Comprehensive Income

(unaudited, in thousands of Canadian dollars except per share amounts)

		Three Months Ended March 31,
			2015			2014
Equity interest from FP Canadian Newspapers Limited Partnership Class A limited partner units		$	606		$	809
Administration expenses			(57	)		(60	)
Net earnings before income taxes			549			749
Current income tax (expense)			(175	)		(382	)
Deferred income tax recovery			25			178
Net earnings for the period		$	399		$	545
Items that will not be reclassified to net earnings:
	Equity interest of other comprehensive (loss) from FP Canadian Newspapers Limited Partnership		(379	)		(500	)
	Deferred income tax recovery		102			134
Comprehensive income for the period		$	122		$	179
Weighted average number of Common Shares outstanding			6,902,592			6,902,592
Net earnings per share - basic and diluted		$	0.058		$	0.079

FP Canadian Newspapers Limited Partnership

Condensed Consolidated Income Statements and Statements of Comprehensive Income

(unaudited, in thousands of Canadian dollars)

		Three Months Ended March 31,
			2015			2014
Revenue
	Print advertising	$	12,926		$	15,185
	Print circulation		6,048			6,049
	Commercial Printing		1,142			1,240
	Digital		927			784
	Promotion and services		257			235
TOTAL REVENUE			21,300			23,493
Operating expenses
	Employee compensation		9,653			10,344
	Newsprint and other paper		1,729			2,102
	Delivery of newspapers		3,496			3,858
	Other		3,692			4,066
	Depreciation and amortization		1,081			1,044
	Restructuring charge		46			49
OPERATING INCOME			1,603			2,030
Other income			25			31
Finance costs			(392	)		(409	)
NET EARNINGS FOR THE PERIOD		$	1,236		$	1,652
Items that will not be reclassified to net earnings:
	Remeasurements for defined benefit pension plan		(773	)		(1,020	)
COMPREHENSIVE INCOME FOR THE PERIOD		$	463		$	632