Torstar Corporation Reports Second Quarter Results


TORONTO, ON--(Marketwired - August 02, 2017) - Torstar Corporation (TSX: TS.B) today reported financial results for the second quarter ended June 30, 2017.

Highlights for the second quarter:

  • Ended the second quarter of 2017 with $48.4 million of cash and cash equivalents and $9.1 million of restricted cash; Torstar has no bank indebtedness.
  • Our net loss attributable to equity shareholders was $7.0 million ($0.09 per share) in the second quarter of 2017. This compares to a net loss of $23.9 million ($0.30 per share) in the second quarter of 2016.
  • Adjusted loss per share was $0.03 in the second quarter of 2017, an improvement of $0.10 from adjusted loss per share of $0.13 in the second quarter of 2016. Adjusted loss per share in 2017 and 2016 included $0.24 and $0.50 per share effects of amortization and depreciation.
  • Our segmented operating loss was $8.1 million in the second quarter of 2017 which included $19.2 million of non-cash amortization and depreciation expense as well as $6.2 million of restructuring and other charges.
  • Our segmented adjusted EBITDA was $18.0 million in the second quarter of 2017, up $1.8 million from the prior year. Segmented adjusted EBITDA in the Digital Ventures segment was $6.9 million in the quarter which benefitted from 32% growth in adjusted EBITDA at VerticalScope (27% growth in USD). In the newspaper operations, the segmented adjusted EBITDA at the Star Media Group was $0.8 million, an improvement of $1.5 million, while segmented adjusted EBITDA at the Metroland Media Group was $12.7 million, down $1.2 million in the quarter.
  • Segmented revenue was $180.8 million in the second quarter of 2017, down $15.7 million (8%) from $196.5 million in the second quarter of 2016 which included revenue growth of $2.0 million or 22% (17% growth in USD) from VerticalScope.

"Segmented adjusted EBITDA was up $1.8 million to $18.0 million in the second quarter and included $6.9 million from our Digital Ventures segment which continues to benefit from very strong year over year growth in revenue and adjusted EBITDA at VerticalScope. At Metroland and the Star Media Group, we benefitted from continuing efforts on costs which offset the impact of the continuing challenges in the print advertising environment with earnings up $0.3 million across the two operations," said John Boynton, President and CEO of Torstar Corporation. "Looking forward, we expect earnings in the balance of the year to continue to benefit from growth at VerticalScope, helping to offset continued pressures on print advertising revenues in the newspaper operations. In addition, efforts to reduce cash outflow, along with recent regulatory developments related to minimum funding requirements for registered defined benefit pension plans are expected to provide Torstar with additional flexibility in the balance of 2017 and in 2018 as we progress through our transformation."

The following chart provides a continuity of earnings per share from the second quarter and first six months of 2016 to the second quarter and first six months of 2017:

        
  Three months ended June 30  Six months ended June 30  
 
Earnings (Loss)
Per Share
 Adjusted
Earnings (Loss)
Per Share**
 
Earnings (Loss)
Per Share
 Adjusted
Earnings (Loss)
Per Share**
 
Loss per share from continuing operations attributable to equity shareholders in 2016 ($0.30
)($0.13
)($0.96
)($0.53
)
Changes             
• Adjusted EBITDA* 0.02  0.02  0.06  0.06  
• Amortization and depreciation* 0.27  0.27  0.57  0.57  
• Operating earnings (loss)* (0.01 )0.16  (0.33 )0.10  
• Restructuring and other charges* 0.01     0.34     
• Impairment of assets*       (0.04 )   
• Operating profit (loss)* 0.00  0.16  (0.03 )0.10  
• Non-cash foreign exchange 0.01     (0.02 )   
• Income from associated businesses (excluding VerticalScope) (0.01 )(0.01 )(0.02 )(0.02 )
• Other income       (0.02 )   
• Change in current and future taxes (including associated businesses) (0.10 )(0.18 )(0.31 )(0.32 )
Loss per share from continuing operations attributable to equity shareholders in 2017 ($0.10
)($0.03
)($0.40
)($0.24
)
Earnings per share from discontinued operations attributable to equity shareholders in 2017 $0.01
    $0.01
    
Loss per share attributable to equity shareholders in 2017 ($0.09 )($0.03 )($0.39 )($0.24 )
* Includes proportionately consolidated share of joint venture and VerticalScope's operations. These include Non-IFRS or additional IFRS measures.
** Refer to discussion of "Non-IFRS measures" including definition of adjusted earnings (loss) per share.
 
 
OPERATING RESULTS -- SECOND QUARTER 2017
The following tables sets out, in $000's the segmented results for the three months ended June 30, 2017 and 2016
 
Three months ended June 30, 2017  



(in $000's)
 


MMG
  


SMG
  

Digital
Ventures
  


Corporate
  

Total
Segmented*
  
Adjustments
&
Eliminations1
  Total Per
Consolidated
Statement of
Loss
 
Operating revenue  $100,793   $61,621   $18,358       $180,772   ($19,015 ) $161,757  
Salaries and benefits  (43,821 ) (21,352 ) (5,649 ) ($1,562 ) (72,384 ) 5,928   (66,456 )
Other operating costs  (44,227 ) (39,480 ) (5,763 ) (919 ) (90,389 ) 5,562   (84,827 )
Adjusted EBITDA**  12,745   789   6,946   (2,481 ) 17,999   (7,525 ) 10,474  
Amortization & depreciation  (3,793 ) (8,086 ) (7,317 )     (19,196 ) 6,779   (12,417 )
Share based compensation  (206 ) (22 ) (491 ) 75   (644 ) 644   -  
Operating earnings (loss)**  8,746   (7,319 ) (862 ) (2,406 ) (1,841 ) (102 ) (1,943 )
Restructuring and other charges  (3,265 ) (2,604 ) (142 ) (200 ) (6,211 ) 141   (6,070 )
Operating profit (loss)**  $5,481   ($9,923 ) ($1,004 ) ($2,606 ) ($8,052 ) $39   ($8,013 )
Loss from continuing operations                          ($7,499 )
Income from discontinued operations                          $500  
Net loss                          ($6,999 )
                      
   
Three months ended June 30, 2016  



(in $000's)
 


MMG
  


SMG
  

Digital
Ventures
  


Corporate
  

Total
Segmented*
  
Adjustments
&
Eliminations1
  Total Per
Consolidated
Statement of
Loss
 
Operating revenue  $108,175   $71,155   $17,209       $196,539   ($18,627 ) $177,912  
Salaries and benefits  (47,995 ) (29,412 ) (5,706 ) ($1,770 ) (84,883 ) 6,104   (78,779 )
Other operating costs  (46,223 ) (42,445 ) (6,126 ) (651 ) (95,445 ) 6,226   (89,219 )
Adjusted EBITDA**  13,957   (702 ) 5,377   (2,421 ) 16,211   (6,297 ) 9,914  
Amortization & depreciation  (3,293 ) (9,500 ) (27,887 ) (6 ) (40,686 ) 27,499   (13,187 )
Share based compensation  (147 ) 82   (408 ) (178 ) (651 ) 651   -  
Operating earnings (loss)**  10,517   (10,120 ) (22,918 ) (2,605 ) (25,126 ) 21,853   (3,273 )
Restructuring and other charges  (4,282 ) (2,605 )     (55 ) (6,942 ) 50   (6,892 )
Operating profit (loss)**  $6,235   ($12,725 ) ($22,918 ) ($2,660 ) ($32,068 ) $21,903   ($10,165 )
Loss from continuing operations                          ($24,268 )
Income from discontinued operations                          $400  
Net loss                          ($23,868 )
1Reflects eliminations of proportionate share of joint ventures and VerticalScope.
* Includes proportionately consolidated share of joint venture operations and VerticalScope.
** These are non-IFRS or additional IFRS measures, see "Non-IFRS measures".
 

Revenue

Segmented revenue was down $15.7 million or 8% in the second quarter and included revenue growth of $2.0 million (22%) from VerticalScope. Segmented revenue in the second quarter of 2017 reflected declines of 15% in print advertising revenues, with particular softness in national advertising revenues, a 3.6% decrease in subscriber revenue and a 4.6% decrease in distribution revenues.

Operating revenue (excluding our proportionate share of revenues from our joint ventures and our 56% interest in VerticalScope) was down $16.1 million or 9% in the second quarter of 2017.

Digital revenue in the second quarter of 2017 was comparable to the second quarter of 2016 reflecting lower revenues at Workopolis, Toronto Star Touch and WagJag offset by continued strong growth at VerticalScope as well as in local digital advertising within the community websites at Metroland Media Group. Digital revenues were 18% of total revenue in the second quarter of 2017 compared to 17% in the second quarter of 2016.

Salaries and benefits

Segmented salaries and benefits costs were down $12.5 million (15%) in the second quarter of 2017 reflecting the benefit of savings from restructuring initiatives, including the closure of the Vaughan Printing Facility as well as lower staffing costs associated with Toronto Star Touch.

Other operating costs

Segmented other operating costs primarily include newspaper circulation and flyer distribution costs, production costs and newsprint costs which represented 41%, 13% and 12% respectively of segmented other operating costs for the second quarter of 2017.

Segmented other operating costs were down $5.0 million or 5.3% in the second quarter of 2017 as a result of lower print volumes and the impact of other cost reductions partially offset by outsourcing costs related to printing of the Toronto Star effective the third quarter of 2016.

Adjusted EBITDA

Our segmented adjusted EBITDA was $18.0 million in the second quarter of 2017 up $1.8 million from the prior year. Segmented adjusted EBITDA in the Digital Ventures segment was $6.9 million in the quarter which benefited from 32% growth in adjusted EBITDA at VerticalScope (27% growth in USD). In the newspaper operations, the segmented adjusted EBITDA at the Star Media Group was $0.8 million, an improvement of $1.5 million, while segmented adjusted EBITDA at the Metroland Media Group was $12.7 million, down $1.2 million in the quarter. Segmented adjusted EBITDA for the second quarter of 2017 included Corporate expenses of $2.5 million.

Amortization and depreciation

Total segmented amortization and depreciation of $19.2 million in the second quarter of 2017 decreased $21.5 million from the second quarter of 2016, primarily the result of lower amortization associated with our investment in VerticalScope as well as the absence of accelerated amortization of equipment related to the transition of printing of the Toronto Star to Transcontinental Printing in the second quarter of 2016.

Operating earnings (loss)

Segmented operating loss was $1.8 million in the second quarter of 2017 compared to segmented operating losses of $25.1 million in the second quarter of 2016. These improvements were the result of increases in adjusted EBITDA combined with lower amortization and depreciation expense.

Restructuring and other charges

Total segmented restructuring and other charges were $6.2 million in the second quarter of 2017 compared to $6.9 million in the second quarter of 2016.

Restructuring charges taken through the end of the second quarter of 2017 are expected to result in annualized net savings of $17.5 million and have resulted in the reduction of approximately 195 positions with $11.5 million of the savings expected to be realized in 2017 (including $2.7 million in the first six months) and $6.0 million in 2018.

Operating profit (loss)

Segmented operating loss decreased $24.0 million in the second quarter of 2017. Operating loss for the second quarter of 2017 included $19.2 million of non-cash amortization and depreciation expense as well as $6.2 million of restructuring and other charges. Our loss in the second quarter of 2016 included $40.7 million of amortization and depreciation expense and $6.9 million of restructuring and other charges.

Our operating loss excluding our proportionate share of operating profit (loss) from VerticalScope and our joint ventures decreased $2.2 million in the second quarter of 2017 relative to the comparable period in 2016.

Interest and financing costs

Interest and financing costs were $0.6 million in the second quarter of 2017, down $0.2 million from the second quarter of 2016 primarily reflecting lower net financing expense relating to employee benefit plans and higher interest earned on cash and cash equivalents.

Foreign exchange

Non-cash foreign exchange gains were $1.0 million in the second quarter of 2017 compared to gains of $nil in the second quarter of 2016. The gains in the second quarter primarily reflected an increase in the fair value of the hedge of the original net investment in VerticalScope.

Income (loss) from joint ventures

Our income from joint ventures was $0.4 million in the second quarter of 2017 compared to income of less than $0.1 million in the second quarter of 2016. The results of our joint ventures are included in our discussions of segmented revenue and segmented adjusted EBITDA below.

Loss from associated businesses

Our loss from associated businesses was $0.3 million in the second quarter of 2017 compared to a loss of $16.0 million in the second quarter of 2016.

The loss in the second quarter of 2017 included income of $1.9 million from Blue Ant and income of $1.1 million from our investment in Nest Wealth offset by a loss of $2.0 million from Black Press and a loss of $1.2 million from VerticalScope. The loss from VerticalScope included $6.3 million of amortization expense. The loss in the second quarter of 2016 included income of $1.7 million from Black Press and income of $0.3 million from Blue Ant, offset by a loss of $17.9 million from VerticalScope which included $26.6 million of amortization expense.

Investment in VerticalScope

During 2015, we acquired a 56% interest in VerticalScope. During the second quarter of 2017, VerticalScope generated U.S. $4.4 million of cash from operations and made acquisitions totalling U.S. $16.3 million. VerticalScope's debt, net of cash, was up U.S. $6.9 million from U.S. $74.4 million at December 31, 2016 to U.S. $81.3 million at June 30, 2017.

In connection with the investment in VerticalScope, during the second quarter of 2017 we recorded $6.3 million of amortization and depreciation expense (2016 - $26.6 million in the second quarter of 2016). Further details of our accounting for this investment are included in Section 3 of our annual MD&A.

Income and other taxes

We recorded a tax recovery of $nil in the second quarter of 2017 compared to $2.6 million in the second quarter of 2016. Excluding the impact of deferred income tax assets not recognized, our effective tax rate was 25.3% in the second quarter of 2017.

Net loss from continuing operations

Our net loss was $7.5 million ($0.10 per share) in the second quarter of 2017. This compares to a net loss of $24.3 million ($0.30 per share) in the second quarter of 2016. The second quarter of 2017 included $6.3 million of non-cash amortization and depreciation expense associated with our investment in VerticalScope and $6.1 million of restructuring charges. The second quarter of 2016 included $26.6 million of non-cash amortization and depreciation expense associated with our investment in VerticalScope as well as $6.9 million of restructuring charges and $4.5 million of additional non-cash amortization and depreciation expense related to the transition of printing of the Toronto Star to Transcontinental Printing.

Net loss attributable to equity shareholders

Our net loss was $7.0 million ($0.09 per share) in the second quarter of 2017. This compares to a net loss of $23.9 million ($0.30 per share) in the second quarter of 2016.

OUTLOOK

Metroland Media Group and Star Media Group continued to face a challenging print advertising market in the quarter resulting from ongoing shifts in spending by advertisers, particularly in the national advertising category while declines were more moderate in the local advertising categories. It is difficult to predict if these trends will continue in the balance of 2017 although trends improved somewhat towards the end of the quarter. We currently expect that flyer distribution revenues will experience moderate declines in the balance of 2017. Subscriber revenues declined moderately in the first six months of 2017 and this trend is expected to continue in the balance of the year. Overall digital revenue at Metroland Media Group and Star Media Group in the balance of the year is expected to benefit from continued growth at thestar.com and in local digital advertising at the Metroland community sites partially offset by expected continued declines in other areas.

Within the Digital Ventures segment, the quarter to quarter trend in revenue growth from a combination of acquisitions and organic revenue growth at VerticalScope experienced in the first six months of 2017 is expected to continue in the balance of the year. In addition, the revenue trends experienced at Workopolis and eyeReturn in the first six months of 2017 are expected to continue through the balance of the year.

Cost reduction will remain an important area of focus for us in the balance of 2017. Net savings related to restructuring initiatives undertaken through the end of the second quarter of 2017 were $18.0 million in the first six months of 2017 and included savings associated with the outsourcing of printing the Toronto Star as well as lower investment in Toronto Star Touch. The pace of year over year cost savings is expected to moderate in the second half of 2017 with net savings related to restructuring initiatives already undertaken expected to be $12.5 million in the balance of the year ($5.1 million in Metroland Media Group and $7.4 million in the Star Media Group). These savings include the benefit of our planned migration from Toronto Star Touch to the new universal app effective August 1, 2017 where development and operating costs are expected to be very modest.

In addition, from a cash flow perspective, we expect full year contributions to our registered defined benefit pension plans in 2017 to be reduced to $10 million down from our previous estimate of $18 million. Furthermore, we currently expect full year 2018 funding into these plans will remain at approximately $10 million. This expected lower level of funding is associated with the draft results of new pension plan valuations completed as at December 31, 2016 and the impact of new interim solvency relief measures concerning funding requirements announced by the Ontario Government on June 29, 2017.

DIVIDEND

On August 1, 2017, Torstar declared a quarterly dividend of 2.5 cents per share on its Class A shares and Class B non-voting shares, payable on September 29, 2017, to shareholders of record at the close of business on September 8, 2017. Torstar advises that, for the purposes of the Income Tax Act, Canada and for any relevant provincial tax legislation, this dividend is designated as an eligible dividend.

ADDITIONAL INFORMATION

For additional information, please refer to Torstar's condensed consolidated financial statements for the period ended June 30, 2017 (the "Condensed Consolidated Financial Statements") and the Interim Management's Discussion and Analysis ("MD&A"). Both documents will be filed today on SEDAR and are available on Torstar's corporate website www.torstar.com.

CONFERENCE CALL

Torstar has scheduled a conference call for August 2, 2017 at 8:15 a.m. to discuss its second quarter results. The dial-in number is 844-891-8288. A live broadcast of the conference call will be available over the internet on the Presentations, Events and Conference Calls page (Investor Relations) on Torstar's website www.torstar.com. A recording of the conference call will be available for 9 days at 855-859-2056 reservation number 33441200. An online archive of the broadcast will be available shortly after the completion of the call and will be accessible by visiting the Presentations, Events and Conference Calls (Investor Relations) page on Torstar's website www.torstar.com.

About Torstar Corporation

Torstar Corporation is a broadly based media company listed on the Toronto Stock Exchange (TS.B). Its businesses include the Star Media Group led by the Toronto Star, Canada's largest daily newspaper and Free Daily News Group Inc., which publishes the English-language Metro newspapers in several Canadian cities; Metroland Media Group, publisher of community and daily newspapers in Ontario; and also include digital properties including thestar.com, Workopolis, wagjag.com, toronto.com, save.ca and eyeReturn Marketing Inc. It also holds a majority interest in VerticalScope, a North American vertically-focused digital media company.

Non-IFRS measures

In addition to operating profit (loss), an additional IFRS measure, as presented in the consolidated statement of income (loss), management uses segmented revenue, adjusted EBITDA (and where applicable segmented adjusted EBITDA), operating earnings (loss) (and where applicable segmented operating earnings (loss)), and adjusted earnings (loss) per share as measures to assess the consolidated performance and the performance of the reporting units and business segments. Please refer to Section 11 of Torstar's MD&A for the three and six months ended June 30, 2017 for a reconciliation of adjusted EBITDA and operating earnings (loss) (and segmented adjusted EBITDA/segmented operating earnings (loss) -- as applicable) with operating profit (loss) (segmented operating profit (loss) -- as applicable) and adjusted earnings (loss) per share to earnings (loss) per share.

Segmented revenue

Segmented revenue is calculated in the same manner as operating revenue in the Condensed Consolidated Financial Statements, except that it is calculated using total segment results which includes our proportionately consolidated share of revenues from joint ventures and our 56% interest in VerticalScope. Management of each segment is accountable for the revenues, including the proportionately consolidated share of revenues from joint venture operations. We believe that segmented revenue is a useful measure for investors as it is a measure of the revenues for which management of each segment is accountable. The intent of segmented revenue is to provide additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS and accordingly may not be comparable to measures used by other companies.

Adjusted EBITDA (Segmented Adjusted EBITDA)

As a result of the increasing significance of segmented financial results from our investment in VerticalScope relative to our total segmented financial results, effective the third quarter of 2016 we have revised our definition of adjusted EBITDA to exclude share based compensation. We made this change because of the relative significance and variability of this non-cash expense in our proportionate share of VerticalScope's financial results. We believe that the exclusion of this non-cash expense from adjusted EBITDA provides greater insight for investors, analysts and readers, in regards to our segmented earnings excluding non-cash expenses. We have accordingly restated prior period comparative figures.

Management believes that adjusted EBITDA is an important proxy for the amount of cash generated by our ongoing operations (or by a reporting unit or business segment) to generate liquidity to fund future capital needs and we use this metric for this purpose. Adjusted EBITDA is not the actual cash provided by operating activities and is not a recognized measure of financial performance under IFRS. We calculate adjusted EBITDA as operating revenue, less salaries and benefits and other operating costs, as presented on the consolidated statement of income, and exclude restructuring and other charges, share based compensation and impairment of assets. Share based compensation is eliminated as it is a non-cash expense that fluctuates significantly from period to period, in particular for VerticalScope as a result of industry compensation practices. Restructuring and other charges and impairment of assets are eliminated as these activities are not related to ongoing operations as of the end of the period. The exclusion of impairment of assets also eliminates the non-cash impact. Adjusted EBITDA is also used by investors and analysts for valuation purposes. The intent of adjusted EBITDA is to provide additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS and accordingly may not be comparable to measures used by other companies (including calculating EBITDA on an adjusted basis to exclude restructuring and other charges, share based compensation and impairment of assets). Segmented adjusted EBITDA is calculated in the same manner described above, except that it is calculated using total segment results including our proportionately consolidated results for joint ventures and our 56% interest in VerticalScope for which management is accountable.

Operating earnings (loss)/Segmented operating earnings (loss)

Operating earnings (loss) is used by management to represent the results of ongoing operations inclusive of amortization and depreciation. We use operating earnings (loss) as a measure of the amount of income generated by our ongoing operations (or by a reporting unit or business segment) after giving effect to amortization and depreciation. We believe this metric is also useful for investors for this purpose. We calculate operating earnings (loss) as operating revenue less salaries and benefits, other operating costs, share based compensation and amortization and depreciation. Operating earnings (loss) excludes restructuring and other charges and impairment of assets. Restructuring and other charges and impairment of assets are eliminated as these activities are not related to ongoing operations as of the end of the period. Our method of calculating operating earnings (including calculating operating earnings (loss) on an adjusted basis to exclude restructuring and other charges and impairment of assets) may differ from other companies and accordingly may not be comparable to measures used by other companies. The intent of operating earnings (loss) is to provide additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS, is not a recognized measure of financial performance under IFRS, and accordingly may not be comparable to measures used by other companies. Segmented operating earnings (loss) is calculated in the same manner described above, except that it is calculated using total segment results including proportionately consolidated operating earnings (loss) for our joint ventures and our 56% interest in VerticalScope for which management is accountable.

Adjusted earnings (loss) per share

Adjusted earnings (loss) per share is used by management to represent the per share earnings (loss) of results of our ongoing operations (or by a reporting unit or business segment) and is not a recognized measure of financial performance under IFRS. We believe this metric is also useful for investors for this purpose. We calculate adjusted earnings (loss) per share as earnings (loss) per share from continuing operations less the per share effect of restructuring and other charges, impairment of assets, non-cash foreign exchange, other income (expense) and change in deferred taxes. Restructuring and other charges and impairment of assets are eliminated as these activities are not related to ongoing operations as of the end of the period. Non-cash foreign exchange, other income (expense) and changes in deferred taxes are eliminated as these are not related to routine operating activities. The intent of presenting adjusted earnings (loss) per share is to provide additional useful information to investors, analysts and readers of our financial statements. Our method of calculating adjusted earnings (loss) per share may differ from other companies and accordingly may not be comparable to measures used by other companies. The measure does not have any standardized meaning under IFRS, is not a recognized measure of financial performance under IFRS, and accordingly may not be comparable to measures used by other companies.

Operating profit (loss)/Segmented operating profit (loss)

Operating profit (loss) is an additional IFRS measure. Management uses operating profit (loss) to measure the results of operations inclusive of impairments and restructuring and other charges. Operating profit (loss) appears in our consolidated statement of income (loss). We believe that operating profit (loss) provides additional useful information to investors, analysts and readers of our financial statements. The measure does not have any standardized meaning under IFRS and accordingly may not be comparable to measures used by other companies. Our method of calculating operating profit (loss) may differ from other companies and accordingly may not be comparable to measures used by other companies. Segmented operating profit (loss) is calculated in the same manner described above, except that it is calculated using total segment results including proportionately consolidated results for our joint ventures and our 56% interest in VerticalScope for which management is accountable.

Forward-looking statements

Certain statements in this press release and in Torstar's oral and written public communications may constitute forward-looking statements that reflect management's expectations regarding Torstar's future growth, financial performance and business prospects and opportunities as of the date of this press release. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "anticipate", "believe", "plan", "forecast", "expect", "estimate", "intend", "would", "could", "if", "may" and similar expressions.

This press release includes, among others, forward-looking statements regarding Torstar's expectations in relation to earnings, growth including growth at VerticalScope, anticipated revenue trends, expected savings including savings from restructuring initiatives and expected liquidity and Torstar's outlook for the balance of 2017, including anticipated revenue trends, expected costs relating to the Toronto Star's new universal app and anticipated funding requirements in respect of our defined benefit pension plans. All such statements are made pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. These statements reflect current expectations of management regarding future events and operating performance, and speak only as of the date of this press release. In addition, forward-looking statements are provided for the purpose of providing information about management's current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes.

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

These factors include, but are not limited to: Torstar's ability to operate in highly competitive industries; Torstar's ability to compete with digital media, other newspapers and other forms of media; Torstar's ability to respond to the shift to digital media and the shift by advertisers to other digital platforms; Torstar's ability to attract, grow and retain its digital audience and profitably develop its digital platforms; Torstar's ability to attract and retain advertisers; Torstar's ability to maintain adequate circulation/subscription levels; Torstar's ability to attract and retain readers and traffic; Torstar's ability to integrate the technology associated with new digital platforms; general economic conditions and customer prospects in the principal markets in which Torstar operates; Torstar's ability to reduce costs; loss of reputation; dependence on third party suppliers and service providers; reliance on technology and information systems and risks of security breaches; changes in employee future benefit obligations; Torstar's ability to execute appropriate strategic growth initiatives including acquisitions; unexpected costs or liabilities related to acquisitions and dispositions; investments in other businesses; labour disruptions; reliance on printing operations, newsprint costs; litigation; privacy, anti-spam, communications, e-commerce and environmental laws, health and safety regulations and other laws and regulations applicable generally to Torstar's businesses; foreign exchange fluctuations and foreign operations; availability of insurance; dependence on key personnel; intellectual property rights; credit risk; availability of capital and restrictions imposed by credit facilities; income tax and other taxes; dividend policy; results of impairment tests and uncertainties associated with critical accounting estimates; holding company structure; and control of Torstar by the Voting Trust.

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

In addition, a number of assumptions, including those assumptions specifically identified throughout this press release, were applied in making the forward-looking statements set forth in this press release. Some of the key assumptions include, without limitation, assumptions regarding the performance of the North American economies; tax laws; continued availability of printing operations; availability of financing on appropriate terms; exchange rates; market competition; rates of return and discount rates relating to pension expense and pension plan obligations; expected future revenues; expected future liabilities; expected future cash flows and discount rates relating to valuation of goodwill and intangible assets; and successful development and launch of new products. There is a risk that some or all of these assumptions may prove to be incorrect. There is no assurance regarding the amount and timing of future dividends. When relying on our forward-looking statements to make decisions with respect to Torstar and its securities, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Torstar does not intend, and disclaims any obligation, to update any forward-looking statements, whether written or oral, or whether as a result of new information or otherwise, except as may be required by law.

For more information, please see the discussion of risks affecting Torstar and its businesses in Torstar's 2016 Management's Discussion & Analysis which has been filed on www.sedar.com and is available on Torstar's corporate website www.torstar.com.

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

   
Torstar Corporation  
Consolidated Statement of Financial Position  
(Thousands of Canadian Dollars)  
(Unaudited)  
  As at  As at  
  June 30, 2017  December 31, 2016  
Assets       
 Current:       
 Cash and cash equivalents $48,379  $75,374  
 Restricted cash 9,056  11,847  
 Receivables 95,792  116,487  
 Inventories 4,086  4,829  
 Prepaid expenses 7,338  4,467  
 Prepaid and recoverable income taxes 10,460  9,271  
 Total current assets 175,111  222,275  
Investments in joint ventures 23,200  27,463  
Investments in associated businesses 151,385  157,897  
Property, plant and equipment 58,071  61,969  
Intangible assets 41,303  55,945  
Goodwill 8,133  8,133  
Other assets 12,529  12,414  
Employee benefits    7,073  
Deferred income tax assets 11,432  11,322  
Total assets $481,164  $564,491  
Liabilities and Equity       
 Current:       
 Accounts payable and accrued liabilities $79,834  $101,133  
 Derivative financial instruments 136  472  
 Provisions 21,726  28,473  
 Income tax payable 7,252  7,212  
 Total current liabilities 108,948  137,290  
Provisions 7,440  11,104  
Other liabilities 6,319  7,616  
Employee benefits 120,116  77,407  
Deferred income tax liabilities 5,114  4,904  
Equity:       
 Share capital 402,976  402,814  
 Contributed surplus 21,076  20,797  
 Accumulated deficit (191,913 )(102,599 )
 Accumulated other comprehensive income 1,236  5,176  
 Total equity attributable to equity shareholders 233,375  326,188  
 Minority interests (148 )(18 )
Total equity 233,227  326,170  
Total liabilities and equity $481,164  $564,491  
     
   
Torstar Corporation  
Consolidated Statement of Loss  
(Thousands of Canadian Dollars except per share amounts)  
(Unaudited)  
  Three months ended  Six months ended  
  June 30  June 30  
  2017  2016  2017  2016  
          
Operating revenue $161,757  $177,912  $300,433  $334,593  
          
Salaries and benefits (66,456 )(78,779 )(131,199 )(156,002 )
Other operating costs (84,827 )(89,219 )(163,317 )(175,498 )
Amortization and depreciation (12,417 )(13,187 )(22,482 )(26,452 )
Restructuring and other charges (6,070 )(6,892 )(10,553 )(38,692 )
Operating loss (8,013 )(10,165 )(27,118 )(62,051 )
Interest and financing costs (575 )(773 )(1,137 )(1,547 )
Foreign exchange 1,003  3  158  1,537  
Income (loss) from joint ventures 367  28  (2,449 )581  
Loss from associated businesses (302 )(15,961 )(2,497 )(33,193 )
Other income 21     47  1,273  
  (7,499 )(26,868 )(32,996 )(93,400 )
Income and other taxes recovery    2,600  1,100  15,600  
Net loss from continuing operations (7,499 )(24,268 )(31,896 )(77,800 )
Income loss from discontinued operations 500  400  500  400  
Net loss ($6,999 )($23,868 )($31,396 )($77,400 )
Attributable to:             
 Equity shareholders ($6,988 )($23,923 )($31,266 )($77,446 )
 Minority interests ($11 )$55  ($130 )$46  
          
          
Net loss attributable to equity shareholders per Class A            
(voting) and Class B (non-voting) share:             
Basic and Diluted:             
 From continuing operations ($0.10 )($0.30 )($0.40 )($0.96 )
 From discontinued operations $0.01     $0.01     
  ($0.09 )($0.30 )($0.39 )($0.96 )
         
   
Torstar Corporation  
Consolidated Statement of Cash Flows  
(Thousands of Canadian Dollars)  
(Unaudited)  
  Three months ended  Six months ended  
  June 30  June 30  
  2017  2016  2017  2016  
Cash was provided by (used in)             
 Operating activities ($6,160 )$423  ($17,834 )($19,894 )
 Investing activities (2,757 )(3,475 )(5,114 )19,276  
 Financing activities (2,085 )(5,279 )(4,047 )(10,378 )
Decrease in cash (11,002 )(8,331 )(26,995 )(10,996 )
Cash, beginning of period 59,381  32,476  75,374  35,141  
Cash, end of period $48,379  $24,145  $48,379  $24,145  
Operating activities:             
 Net loss from continuing operations ($7,499 )($24,268 )($31,896 )($77,800 )
 Amortization and depreciation 12,417  13,187  22,482  26,452  
 Deferred income taxes    (2,000 )   (11,500 )
 Loss (income) from joint ventures (367 )(28 )2,449  (581 )
 Distributions from joint ventures 1,814     1,814     
 Loss from associated businesses 302  15,961  2,497  33,193  
 Dividend from associated businesses       194  194  
 Non-cash employee benefit expense 3,816  4,509  7,782  9,721  
 Employee benefits funding (7,888 )(5,118 )(12,029 )(9,422 )
 Gain on sale of assets          (1,263 )
 Other (2,217 )(4,835 )(3,965 )937  
   378  (2,592 )(10,672 )(30,069 )
 Decrease (increase) in restricted cash       2,791  (3,540 )
 Decrease (increase) in non-cash working capital (6,538 )3,015  (9,953 )13,715  
Cash provided by (used in) operating activities ($6,160 )$423  ($17,834 )($19,894 )
Investing activities:             
 Additions to property, plant and equipment and intangible assets ($2,820 )($3,182 )($5,052 )($8,186 )
 Received from (investment in) associated businesses 63     63  (500 )
 Investment in joint ventures    (293 )   (293 )
 Acquisitions and portfolio investments       (125 )(5 )
 Receipt of escrowed cash from sale of Harlequin          22,750  
 Proceeds from sale of assets          5,509  
 Other          1  
Cash provided by (used in) investing activities ($2,757 )($3,475 )($5,114 )$19,276  
Financing activities:             
 Dividends paid ($1,983 )($5,199 )($3,969 )($10,344 )
 Other (102 )(80 )(78 )(34 )
Cash used in financing activities ($2,085 )($5,279 )($4,047 )($10,378 )
Cash represented by:             
Attributed to continuing operations:             
 Cash $15,342  $24,145  $15,342  $24,145  
 Cash equivalents -- short-term deposits 33,037     33,037     
 Net cash, end of period $48,379  $24,145  $48,379  $24,145  
          

Contact Information:

For more information please contact:
L. DeMarchi
Executive Vice-President and Chief Financial Officer
Torstar Corporation
(416) 869-4776