Torstar Announces Favourable First Quarter Results

Torstar Corporation (TSX: TS.B) today announced its results for the first quarter ended March 31, 2007.

Operating revenue of $377.4 million was up $20.3 million or 5.7% in the first quarter with growth in both the Newspapers and Digital and Book Publishing segments. Operating profit of $34.4 million was up $13.7 million or 66%.

Net income was $15.7 million or $0.20 per share in the first quarter, an increase of $5.9 million or $0.07 per share from the first quarter of 2006. The average number of shares outstanding in the first quarter of 2007 was 78.4 million. The following chart provides a continuity of earnings per share from 2006 to 2007:

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Net income per share 2006                                $0.13
Changes
-  Operations                                   0.06
-  Restructuring provisions in 2006             0.03
-  Income from associated businesses            0.01
-  Interest on CTVgm investment                (0.04)
-  Effective tax rate                           0.01
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Net income per share 2007                                $0.20
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"This was a very good quarter for Torstar. Revenue, EBITDA, operating profit and earnings per share all grew," said Robert Prichard, Torstar's President and Chief Executive Officer. "We made numerous changes in the second half of 2006 to strengthen the performance of our businesses and we are now seeing the results as EBITDA grew by 26% and earnings per share by 54%. Metroland Media Group and Harlequin both delivered strong profit growth and exceeded our expectations in the quarter while the Star Media Group had stable profits in challenging conditions. For our newspapers, results for the quarter were boosted by an extra Saturday at the Toronto Star and some additional publishing days at Metroland Media Group. We expect positive overall profit performance for Torstar to continue as the year unfolds but at a more moderate rate than in the first quarter."

Highlights

Total revenue was $377.4 million in the first quarter of 2007, up $20.3 million from $357.1 million in the first quarter of 2006. Newspapers and Digital revenue grew $14.2 million to $253.0 million split equally between growth in underlying operations and differences in the publishing days in the first quarter of 2007. Reported Book Publishing revenue was $124.5 million in the first quarter, up $6.2 million from $118.3 million in the same period last year including $5.1 million from the favourable impact of foreign exchange rates.

Operating profit was $34.4 million in the first quarter of 2007, up $13.7 million from $20.7 million in 2006. Newspapers and Digital Segment operating profit was $19.9 million in the first quarter, up $5.7 million from $14.2 million in 2006 led by strong growth at Metroland Media Group. In the first quarter of 2006, Weekly Scoop (which ceased publication in June 2006) had an operating loss of $1.4 million. Book Publishing operating profit was $19.1 million in the first quarter of 2007, up $4.0 million from $15.1 million in 2006 with growth in the North America Retail division. Corporate costs were $4.7 million in the first quarter of 2007, down $0.2 million from the first quarter of 2006. In addition, in the first quarter of 2006, a restructuring provision of $3.7 million was recorded related to a voluntary severance program at the Toronto Star's Vaughan Press Centre.

EBITDA, excluding restructuring provisions, was $48.3 million in the first quarter of 2007, up $9.8 million from $38.5 million in 2006.

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                                                          2007        2006
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Newspapers and Digital                                 $32,689     $26,558
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Book Publishing                                         20,329      16,826
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Corporate                                               (4,672)     (4,875)
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EBITDA, excluding restructuring provisions             $48,346     $38,509
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Interest expense was $8.7 million in the first quarter of 2007, up $5.9 million from $2.8 million in the first quarter of 2006. This significant increase was due to the higher level of debt outstanding from the investment in CTVglobemedia ("CTVgm") made late in the third quarter of 2006, and higher interest rates.