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## MANAGEMENT’S DISCUSSION & ANALYSIS DISCUSSION AND ANALYSIS 

## ANNUAL INFORMATION – 3 YEAR SUMMARY 

(In thousands of dollars or shares except for per share amounts) 

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Total revenues have increased over the past three years. The growth has come from higher Newspaper revenues as Book Publishing revenues have declined from a combination of the strengthening Canadian dollar and lower sales volumes. 

Several factors have caused net income to decline over the past three years: 

• Newspaper profits have increased during the three -year period both from acquisitions and expansion. 

• Book Publishing profits increased in 2003, but then declined significantly in 2004 as all of Harlequin ’s markets faced challenges. 

• Corporate costs have increased by $2.8 million over the three-year period, primarily from higher payroll costs. In 2003, Torstar began expensing stock -based compensation costs and replaced part of the executive option grants with a medium-term incentive plan. 

• Non-cash foreign $1.7 million in 2004 and $4.0 million in 2003 were recognized on the translation of Torstar’s net U .S. dollar asset position. This was as a result of the strengthening Canadian dollar. 

•I n 2004, unusual losses of $12.3 million were realized compared with an unusual loss of $0.7 million in 2003. In 2003, restructuring provisions were offset by gains from the disposition of community newspapers and an investment in Miles Kimball Company. 

• In 2003, an increase in provincial income tax rates resulted in a charge of $4.7 million as future income tax liabilities were restated to the new rate. 

Earnings per share have been impacted both by the lower net income each year but also by an increase in the average number of shares outstanding each year. On average, 2.8 million more shares were outstanding during 2004 than during 2002. 

Cash dividends per share have increased in each of the three years as Torstar continued to distribute free cash flow to shareholders. During 2004, Torstar repurchased just over 1.4 million shares for a total price of $35.0 million through a normal course issuer bid. 

Long-term debt has decreased by $130.7 million over the past two years due to the strengthening of the Canadian dollar and $97.5 million of debt repayments. 

