Mr. David Holland reports

TORSTAR CORPORATION REPORTS FIRST QUARTER RESULTS AND INCREASE IN QUARTERLY DIVIDEND

Torstar Corp. has released its financial results for the first quarter ended March 31, 2012.

Highlights for the quarter:

• Revenue was $350.8-million in the first quarter of 2012, down $600,000 from $351.4-million in the first quarter of 2011. Excluding acquisitions and the impact of foreign exchange, revenues were down $11.0-million or 3.1 per cent in the first quarter.
• EBITDA (earnings before interest, taxes, depreciation and amortization) was $40.2-million in the first quarter of 2012, down $1.5-million from $41.7-million in the first quarter of 2011.
• Net income attributable to equity shareholders was $29.3-million (37 cents per share) in the first quarter up $13.8-million (17 cents per share) from $15.5-million (20 cents per share) last year.
• Adjusted earnings per share (excluding restructuring and other charges and non-cash foreign exchange in both years, other income and gain on sale of assets in 2012 and swap settlement charges in 2011) were 24 cents in the first quarter of 2012, up two cents from 22 cents in the first quarter of 2011.
• Net debt was $155.3-million at March 31, 2012, up $2.0-million from $153.3-million at Dec. 31, 2011.
• Torstar's board of directors has approved, effective with the June 30, 2012, dividend a 5-per-cent increase in the quarterly dividend from 12.5 cents to 13.125 cents per share.

David Holland, president and chief executive officer of Torstar, said: "Results were solid in the quarter given the environment, with EBITDA down $1.5-million to $40.2-million. In the media segment, EBITDA was $22.1-million, down $400,000, as continued efforts on cost control mitigated the impact of a challenging print advertising environment. At Harlequin, EBITDA was down $1.5-million on lower revenues as we continue to adjust in the print and digital book publishing markets to the shift to digital reading.

"Looking forward, in the Canadian media operations visibility remains limited on the print advertising market and the digital advertising market continues to evolve rapidly. At Harlequin, after a strong 2011, we are anticipating a modest decline in results in 2012.

"We were pleased this morning to announce a 5-per-cent increase in Torstar's quarterly dividend from 12.5 cents to 13.125 cents. This increase is consistent with the goal stated last year at this time of returning the company back to a pattern of dividend increases on an annual basis."

Operating results -- first quarter 2012

Overall performance

Revenue

Total revenue was $350.8-million in the first quarter of 2012, down $600,000 from $351.4-million in the first quarter of 2011.

Media segment revenues were up $8.1-million in the first quarter of 2012 including $9.7-million from acquisitions made in 2011. Excluding the impact of acquisitions, revenues were down $1.6-million in the quarter. Print advertising revenues were down at the Toronto Star and Metroland Media Group newspapers partially offset by revenue growth at the Metro newspapers. Digital revenues were flat in the quarter with growth in some properties offset by declines in others. The national finance category of advertising continued to be weak in the first quarter and was a significant contributor to the revenue declines in both print and digital media. Digital revenues were 11.2 per cent of total media segment revenues in the first quarter of 2012 down slightly from 11.5 per cent in the same period last year.

Book publishing segment revenues were down $8.7-million in the first quarter of 2012 including a $700,000 improvement from the impact of foreign exchange. Excluding the impact of foreign exchange, revenues were down $9.4-million in the quarter with declines in print revenues more than offsetting digital revenue growth.

EBITDA

Total EBITDA was $40.2-million in the first quarter of 2012, down $1.5-million from $41.7-million in the first quarter of 2011.

Media segment EBITDA was relatively stable, down $400,000 in the first quarter. Prior year acquisitions provided $1.1-million of EBITDA growth in the quarter. Revenue declines, $400,000 of higher pension costs and investments in growth initiatives, were partially offset by $3.0-million of cost savings from restructuring initiatives, lower marketing costs in the digital properties and general cost savings. A portion of the cost savings resulted from timing of expenditures and is anticipated to reverse later in the year.

Book publishing segment EBITDA was down $1.5-million in the first quarter as a result of the lower revenues.

Corporate expenses were $3.3-million in the first quarter of 2012, down $400,000 from $3.7-million in the first quarter of 2011. The decrease was primarily related to year-over-year differences in the mark-to-market of a share-based hedging instrument.

Operating profit

Operating profit was $28.4-million in the first quarter of 2012, down $5.1-million from $33.5-million in the first quarter of 2011.

Other income and gain on sale of assets

During the first quarter of 2012, Torstar sold a portion of its 50-per-cent joint venture interest in Tuango for net proceeds of $3.9-million and recorded a gain on sale of assets of $3.4-million. Torstar retained a 38.2-per-cent interest in Tuango. As a result of the sale transaction and revised shareholder agreement, Torstar lost joint control of Tuango and accordingly moved from proportionately consolidating Tuango to accounting for it as an associated business using the equity method. The investment in associated businesses was recorded at fair value, resulting in a remeasurement gain of $10.4-million which has been included in other income.

Net income attributable to equity shareholders

Torstar reported net income attributable to equity shareholders of $29.3-million or 37 cents per share in the first quarter of 2012 up $13.8-million or 17 cents per share from $15.5-million or 20 cents per share in the first quarter of 2011.

Dividend

On May 8, 2012, Torstar declared a quarterly dividend of 13.125 cents per share on its Class A shares and Class B non-voting shares, payable on June 30, 2012, to shareholders of record at the close of business on June 8, 2012. 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.

Conference call

Torstar has scheduled a conference call for May 9, 2012, at 8:15 a.m. to discuss its first quarter results. The dial-in numbers are 416-340-8527 or 1-877-240-9772. A live broadcast of the conference call will also be available over the Internet on the presentations, events and conference calls page (investor relations) on Torstar's website. A recording of the conference call will be available for nine days by calling 905-694-9451 or 1-800-408-3053 and entering reservation No. 3672277. An on-line 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 page (investor relations) on Torstar's website.

Annual general meeting

Torstar will be holding its annual general meeting at 10 a.m. on May 9, 2012, at Le Meridien King Edward Hotel, 37 King St. East, Toronto, Ont., in the Sovereign room. The annual general meeting will also be webcast live on the presentations, events and conference calls page (investor relations) at the company's website with interactive capabilities. An on-line archive of the webcast will be available shortly after the completion of the meeting and will be accessible by visiting the presentations, events and conference calls page (investor relations) on Torstar's website.

                     CONSOLIDATED STATEMENT OF INCOME                      
            (In thousands of dollars except per share amounts)                                        
                                                                            
                                                    Three months ended March 31, 
                                                             2012           2011

Operating revenue                                        $350,755       $351,422
Salaries and benefits (loss)                             (128,618)      (122,240)
Other operating (costs)                                  (181,905)      (187,503)
Amortization and depreciation (loss)                       (9,253)        (7,780)
Restructuring and other (charges)                          (2,595)          (401)
Operating profit                                           28,384         33,498
Interest and financing (costs)                             (2,271)       (10,715)
Foreign (exchange)                                             (6)           768
(Loss) of associated businesses                              (412)          (563)
Other income                                               10,407
Gain on sale of assets                                      3,417
                                                           39,519         22,988
Income and other taxes (loss)                             (10,250)        (7,600)
Net income                                                $29,269        $15,388
Attributable to
equity shareholders                                       $29,310        $15,472
Minority interests (loss)                                     (41)           (84)
Net income attributable to equity shareholders
per Class A (voting) and Class B (non-voting)
share
Basic                                                       $0.37          $0.20
Diluted                                                     $0.37          $0.19

We seek Safe Harbor.