July 9, 2015 Last Updated 3:13 pm

Q3 loss for Canadian publisher Postmedia Network after taking $151 million impairment charge

Revenue for Q3 was $205.1 million, compared to $171.0 in the prior year, an increase of $34.1 million, or nearly 20 percent

TORONTO, Ontario – July 9, 2015 — Postmedia Network Canada Corp. today released financial information for the three and nine months ended May 31, 2015. The results for the three and nine months ended May 31, 2015 include the results of the English language newspapers and specialty publications, as well as digital properties acquired, from Quebecor Media Inc. on April 13, 2015.

Third Quarter Operating Results

Net loss in the quarter ended May 31, 2015 was $140.8 million, as compared to $20.6 million in the same period in the prior year. The increase in net loss was primarily the result of a $151.2 million non-cash impairment charge partially offset by net income from the properties acquired in the Sun Acquisition.

Operating loss in the quarter was $149.8 million, as compared to $5.6 million for the same period in the prior year, primarily the result of a $151.2 million non-cash impairment charge, partially offset by operating income from the properties acquired in the Sun Acquisition.

Operating income before depreciation, amortization, impairment and restructuring of $30.6 million in the quarter represents an increase of $5.0 million (19.4%), relative to the same period in the prior year. Excluding the impact of the Sun Acquisition, operating income before depreciation, amortization, impairment and restructuring decreased $3.3 million (13.0%) for the quarter. This decrease relates to decreases in revenue of $23.1 million, partially offset by decreases in operating expenses of $19.8 million for the quarter including a compensation expense recovery totalling $3.5 million related to the Company’s Ontario Interactive Digital Media Tax Credit claim.

NP-200Revenue for the quarter was $205.1 million as compared to $171.0 in the prior year, an increase of $34.1 million (19.9%). Excluding the impact of the Sun Acquisition, revenue for the quarter was $147.9 million, a decrease of $23.1 million (13.5%) relative to the same period in the prior year. This decline was due to decreases in print advertising revenue of $19.1 million (20.2%), print circulation revenue of $3.2 million (6.5%) and digital revenue of $0.9 million (4.0%).

Total operating expenses excluding depreciation, amortization, impairment and restructuring increased $29.1 million (20.0%) for the quarter, relative to the same period in the prior year. Excluding the impact of the Sun Acquisition and the recovery of $3.5 million relating to the Ontario Interactive Digital Media Tax Credit, total operating expenses excluding depreciation, amortization, impairment and restructuring decreased $16.3 million (11.2%). These expense decreases occurred in most operating expense categories including compensation, newsprint and distribution expenses. Production expenses increased as a result of outsourcing of the production of the Montreal Gazette in August 2014 and both The Vancouver Sun and The Province in February 2015.

During the three months ended May 31, 2015, the Company recorded impairments totaling $151.2 million. This total includes $150.7 million related to goodwill and intangible assets and $0.5 million related to assets held-for-sale.

Year-to-Date Operating Results

Net loss in the nine months ended May 31, 2015 was $209.3 million, as compared to $57.7 million in the same period in the prior year. The increase in net loss was primarily the result of a $153.0 million non-cash impairment charge, an increase in non-cash foreign currency exchange losses related to the carrying value of the Company’s US dollar denominated debt, partially offset by net income from the properties acquired in the Sun Acquisition.

The operating loss was $142.7 million for the nine months ended May 31, 2015, as compared to $7.4 million for the same period in the prior year. The increase in operating loss was primarily the result of a $153.0 million non-cash impairment charge partially offset by operating income from the properties acquired in the Sun Acquisition.

Operating income before depreciation, amortization, impairment and restructuring was $89.1 million, a decrease of $4.7 million (5.0%) relative to the same period in the prior year. Excluding the impact of the Sun Acquisition, operating income before depreciation, amortization, impairment and restructuring decreased $13.0 million (13.9%) for the nine months ended May 31, 2015. This decrease relates to decreases in revenue of $64.6 million, partially offset by decreases in operating expenses of $51.6 million including a compensation expense recovery totalling $17.3 million related to the Company’s Ontario Interactive Digital Media Tax Credit claim.

Revenue for the nine months ended May 31, 2015 was $520.1 million as compared to $527.5 million in the prior year, a decrease of $7.4 million (1.4%). Excluding the impact of the Sun Acquisition, revenue decreased $64.6 million (12.2%) for the nine months ended May 31, 2015, relative to the same period in the prior year. This decline was due to decreases in print advertising revenue of $57.0 million (18.9%), print circulation revenue of $7.4 million (5.1%) and digital revenue of $0.8 million (1.2%).

Total operating expenses excluding depreciation, amortization, impairment and restructuring decreased $2.7 million (0.6%) for the nine months ended May 31, 2015, as compared to the same period in the prior year. Excluding the impact of the Sun Acquisition and the recovery of $17.3 million relating to the Ontario Interactive Digital Media Tax Credit, total operating expenses excluding depreciation, amortization, impairment and restructuring decreased $34.3 million (7.9%). These expense decreases occurred in most operating expense categories including compensation, newsprint and distribution expenses. Production expenses increased as a result of outsourcing of the production of the Calgary Herald in November 2013, the Montreal Gazette in August 2014 and both The Vancouver Sun and The Province in February 2015.

During the nine months ended May 31, 2015, the Company recorded impairments totaling $153.0 million. This total includes $150.7 million related to goodwill and intangible assets and $2.3 million related to assets held-for-sale.

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