SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May, 1999
HOLLINGER INC.
(Translation of registrant's name into English)
10 Toronto Street
Toronto, Ontario M5C 2B7
CANADA
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F Form 40-F x
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.)
Yes No x
<PAGE>
EXHIBIT LIST
Sequential
Exhibit Description Page Number
99.1 Interim Report of Hollinger Inc. 4
for the three months ended
March 31, 1999
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HOLLINGER INC.
Date: June 1, 1999 by /s/ Charles G. Cowan, Q.C.
--------------------------------
Name: Charles G. Cowan, Q.C.
Title: Vice President and
Secretary
[GRAPHIC OMITTED]
1 Interim Report
3 Months Ended March 31, 1999
Hollinger Inc.
[GRAPHIC OMITTED]
<PAGE>
Consolidated Financial Highlights
Three months ended March 31 1999 1998
(millions of dollars)
Total revenue 811.7 787.8
Net earnings 109.4 74.0
Cash flow provided by operations (note) 94.4 96.0
(dollars)
Net earnings per retractable common share 3.33 2.22
Cash flow provided by operations per
retractable common share (note) 2.87 2.88
Note
Cash flow provided by operations is before any increase or decrease in
non-cash operating working capital, the cash used for discontinued operations,
other costs and foreign currency translation adjustment.
Throughout this report, Hollinger Inc. is referred to as "Hollinger" or the
"Company", Hollinger International Inc. is referred to as "Hollinger
International Inc." or "Hollinger International" and Hollinger Canadian
Publishing Holdings Inc. is referred to as "HCPH". The word "company" refers
to one or other of Hollinger Inc.'s subsidiary companies, depending on the
context.
Reference to "dollars " and "$" are to Canadian dollars, "U.S. $" are to
United States dollars and "pounds sterling" and "(pound)" are to lawful
currency of the United Kingdom.
"EBITDA" means earnings before interest, taxes, depreciation and amortization.
<PAGE>
T O T H E S H A R E H O L D E R S
First Quarter Earnings
Net earnings for the first quarter of 1999 were $109.4 million or $3.33 per
share compared with $74.0 million or $2.22 per share in 1998. Excluding the
net effect of unusual items, a net loss of $0.5 million or a loss of $0.01 per
share was incurred in the first quarter of 1999 compared with net earnings of
$0.4 million or $0.01 per share for 1998.
Reported earnings for the quarter compared to last year have been affected by
several major items.
The start-up in October 1998 of the National Post has resulted in an EBITDA
loss from the National Post for the quarter of $17.5 million. This loss is
greater than initially expected because circulation has been higher than
expected without, yet, delivering the inevitable advertising revenues. The
sale of four newspapers as part of the purchase of the Financial Post has
also reduced EBITDA quarter over quarter by $5.0 million.
With the acquisition of the remainder of Southam Inc. completed in early
1999, all of the earnings of Southam Inc. are now attributable to the
Company compared with the first quarter of 1998, when a substantial
minority still existed. The increased ownership has resulted in higher
depreciation and amortization in this quarter compared to the first quarter
of 1998. In addition, the minority interest in Hollinger International has
increased, offsetting some of the Southam impact on minority interest.
Unusual items in 1999 and 1998 include the gain on sale of community
newspapers by Hollinger International Inc. In 1998 this gain was offset in
part by a make-whole premium paid on retiring of Hollinger International
Senior Secured Notes, and redundancy costs.
Acquisition of 100% of Southam Inc.
In December 1998 the Hollinger Group announced a take-over bid to acquire all
the common shares of Southam not then controlled by the Hollinger Group for
$25.25 cash per share after a $7 per share special dividend paid by Southam on
January 4, 1999. As a result of this bid, the Hollinger Group increased its
shareholding in Southam to approximately 97%, and thereafter acquired,
pursuant to the compulsory acquisition provisions of the Canada Business
AcquisitionsAct, the remaining approximately 3% to hold 100% of the
outstanding shares of Southam.
<PAGE>
Offer to Convert Series II Preference Shares into Series III Preference Shares
In mid-March 1999, Hollinger announced that it would make a pro rata offer to
convert up to 25 million (or $250 million) of its Series II Preference Shares
(approximately 50% of the series) into Series III Preference Shares on a
share-for-share basis. The Series II Preference Shares were valued by
Hollinger at $10 per share when issued. The terms of the new Series III
Preference Shares provide for a mandatory redemption on the fifth anniversary
of issue for $10 cash per share (plus unpaid dividends) and an annual
cumulative dividend, payable quarterly, of $0.70 per share per annum (or 7%)
during the five year term. Hollinger has the right at its option to redeem all
or any part of the Series III Preference Shares at any time after three years
for $10 cash per share (plus unpaid dividends). Holders have the right at any
time to retract Series III Preference Shares for a retraction price payable in
cash which, during the first four years will be calculated at the simple
average of the end-of-day price for each of the 20 business days preceding the
date of two series of Government of Canada bonds (being the 7 1/2% series due
on December 1, 2003 and the 6 1/2% series due June 1, 2004) divided by
108.6975 multiplied by 92.5% of the $10 per share issue price, and during the
fifth year will be $9.50 per share (plus unpaid dividends in each case). On
April 23, 1999, Hollinger announced that at the expiry of its offer,
approximately 10,500,000 Series II Preference Shares had been deposited under
the offer and not withdrawn. Hollinger converted these Series II Preference
Shares into approximately 10,500,000 Series III Preference Shares on April 30,
1999. Approximately 38,000,000 Series II Preference Shares remain outstanding.
The retraction price of the Series III Preference Shares as at April 30, 1999
was $9.25.
Series II Preference Shares - Initial Period Expiry Date Selected and
Redemption Right Exercised
On May 6, 1999, Hollinger announced that it had selected May 12, 1999 as the
Initial Period Expiry Date for its Series II Preference Shares and that it was
exercising its right to redeem for cash 13,083,526 of the outstanding Series
II Preference Shares on June 11, 1999. At the expiry of their Initial Period
the Series II Preference Shares changed in nature to "mirror shares" each of
which now tracks 0.46 of a Class A Common Share of Hollinger International.
This means that after May 12, 1999 each Series II Preference Share entitles
the holder to a dividend equal to the amount of any dividend on 0.46 of a
Class A Common Share of Hollinger International (less any U.S. withholding tax
thereon payable by Hollinger or any subsidiary thereof), and will be
exchangeable for 0.46 of a Class A Common Share of Hollinger International
(subject to a cash redemption option available to Hollinger). Hollinger has
exercised its right to purchase 13,083,526 of the Series II Preference Shares
on June 11, 1999 for a cash redemption price per share of Cdn. $10 together
<PAGE>
with the 7% dividend accrued and unpaid thereon up to such date. Such Series
II Preference Shares will be redeemed as nearly as practicable on the same pro
rata basis from each holder.
Upon completion of this redemption, Hollinger will have issued and outstanding
approximately 33 million retractable common shares, approximately 25 million
Series II Preference Shares (exchangeable for an aggregate of approximately
11.5 million Class A Common Shares of Hollinger International) and
approximately 10.5 million Series III Preference Shares.
Establishment of Hollinger Canadian Newspapers, Limited Partnership
On April 30, 1999, HCPH and its affiliates, Hollinger and Hollinger
International announced the formation of Hollinger Canadian Newspapers,
Limited Partnership (the "Hollinger L.P."). The Hollinger L.P. has been
created in order to establish an investment vehicle for investors interested
in participating directly in the cash flow to be generated from the ownership
of community newspaper assets. To that end, the Hollinger L.P. has acquired
Canadian community newspapers formerly owned and operated by HCPH and its
affiliates (principally Southam Inc., UniMedia Inc. and Sterling Newspapers
Company). The newspapers acquired include 49 daily newspapers, 146 non-daily
newspapers and shopping guides and 140 specialty publications located across
Canada.
A $200 million private placement has been completed and private placement
investors have received $200 million of special warrants to acquire
partnership units of the Hollinger L.P. The Hollinger L.P. has filed a
preliminary prospectus to qualify 20 million limited partnership units
issuable upon exercise of the special warrants. Upon issue of such limited
partnership units, HCPH will continue to hold approximately 89% of the equity
of the Hollinger L.P. and private placement investors will hold the balance. A
public offering of partnership units of the Hollinger L.P. is planned for
later this year which, if successful, will result in HCPH's unit holding being
reduced to not less than 75%.
The net proceeds of the special warrant issue have been applied to reduce bank
debt of the Hollinger International group of companies.
Hollinger International Inc.
Hollinger International's operations are comprised of the U.S. Newspapers
Group consisting of the Chicago Group (including the Chicago Sun-Times) and
the Community Group (American Publishing Company and The Jerusalem Post), the
U.K. Newspaper Group, consisting of the Telegraph Group
<PAGE>
Limited, and the Canadian Newspaper Group (held by HCPH) consisting of Southam
Inc., Sterling Newspapers Company and UniMedia Inc.
During the first quarter of 1999, Hollinger International continued to
repurchase shares of its Class A Common Stock with 3,684,400 shares being
repurchased by the end of the quarter.
In March 1999, Hollinger International obtained consents to amend the
indentures governing the Subordinated Notes, Senior Notes and Senior
Subordinated Notes.
In April 1999, Hollinger International Publishing, HCPH, the Telegraph Group
Limited, Southam and a group of financial institutions entered into Fourth
Amended and Restated Credit Facility for a total of U.S. $725 million
consisting of a U.S. $475 million revolving credit line maturing on September
30, 2004 and a U.S. $250 million term loan maturing on December 31, 2004. This
facility replaces the existing Bank Credit Facility.
Information regarding Hollinger International's first quarter 1999 operations
is contained in Form 10-Q which has been filed by that company with the Unites
States Securities and Exchange Commission.
Telegraph Group Limited
The company's reported EBITDA for the three months ended March 31 1999 was
(pound)14.9 million compared to (pound)13.6 million during the corresponding
period in 1998, an increase of 9.6%.
Advertising revenue for the first quarter was up year on year, despite a
slowdown in recruitment advertising year on year. A separate property section
was added to the Saturday edition of The Daily Telegraphon March 27, and
property advertising has increased year on year in the first quarter by 27.4%.
Other classified sections (including travel and education which have increased
year on year by 23.2% and 11.7% respectively) continue to perform well and
display advertising performed strongly during the first quarter.
Newsprint costs have decreased year on year although further developments to
the editorial package have resulted in increases in pagination.
Telegraph Enterprises, the third revenue division of Telegraph Group Limited
which uses the Telegraph brand to facilitate sales of goods and services to
readers, increased its contribution to net income in the first quarter by more
than one third year on year.
<PAGE>
The ABC net circulation figure for The Daily Telegraph for the period October
1998 to March 1999 was 1,043,330, approximately 300,000 ahead of its nearest
competitor The Times. The Daily Telegraph sold an average of 1,045,336 copies
during March 1999.
The ABC net circulation figure for The Sunday Telegraph for the period October
1998 to March 1999 was 814,986 and The Sunday Telegraph sold an average of
808,826 copies during March 1999.
Electronic Telegraph continues to enjoy the largest readership of any online
UK newspaper and for the third year running has been voted "Best Daily
Newspaper on the World Wide Web". The readership fluctuates between 55,000 and
70,000 people per day who collectively read up to 500,000 pages per day (the
key measure of websites). Total monthly page traffic is 12 to 15 million page
impressions.
At the end of the first quarter, there was a series of launches to enhance The
Telegraph's Internet newsstand. These included Feedback (daily opinion polls
and letters columns) as well as enhancements to the classified services
including the addition of two property services. Besides the websites, the New
Media Centre continues to explore other mechanisms for delivering content
digitally to audiences, developing new markets and protecting existing
franchises for the company.
The Chicago Group
The Chicago Group first quarter 1999 operating revenue increased 2% over the
first quarter of 1998, due to continued growth in advertising revenue.
Classified advertising showed the largest increases, followed by retail
advertising. First quarter 1999 EBITDA increased 29% due to increased revenue
and lower operating costs as a result of lower promotional advertising and
miscellaneous operating efficiencies.
The Community Group
In February 1999, the Community Group sold approximately 45 newspapers with a
total paid daily circulation of approximately 296,000. This resulted in an
overall decrease in Community Group operating revenue, EBITDA and operating
income. On a "same store" basis the Community Group first quarter 1999
operating revenue increased 2% from 1998 and first quarter 1999 EBITDA
decreased 6% from 1998.
<PAGE>
Southam Inc.
The operating results reported for the first quarter of 1998 and 1999 are not
readily comparable as a result of acquisitions and dispositions in 1998. The
first quarter of 1998 included the results of operations in Hamilton,
Kitchener, Medicine Hat and at American Truckerwhich were subsequently
disposed of. In addition, the first quarter of 1999 includes the results of
the Victoria newspaper acquired in 1998 and the National Post which commenced
operating in October 1998.
On a same newspaper basis, Southam's operating revenue and EBITDA were $265.5
million and $65.1 million in 1999 compared with $259.2 million and $52.5
million in 1998.
The significant increase in the first quarter of 1999 in same newspaper EBITDA
is the result of increased advertising revenue, lower newsprint costs and
lower operating costs primarily as a result of reduced promotional costs and
the continued application of normal Hollinger operational expenditure
controls.
Sterling Newspapers Company
Sterling's first quarter 1998 results included the results of operations at
Guelph and Cambridge which were disposed of later in 1998. On a same newspaper
basis, Sterling improved its EBITDA by 2.4% in the first quarter. January
revenues were disappointing in Ontario, due to the record snowfall conditions.
On April 1, Sterling announced the acquisition of Ad Ventures Ltd., a
commercial printer in Saskatoon. This facility will complement Sterling's
prairie commercial print operations.
On April 13, Sterling announced the purchase of the Pembroke Daily News and
the Nepean This Weekfrom Runge Publishing. As part of this transaction,
Sterling sold the Renfrew Newsand Arnprior Newsto Runge Publishing.
UniMedia Inc.
At UniMedia Inc., total revenue for the first quarter was $33.1 million, an
increase of $1.1 million, or 3.4% over the corresponding period of 1998
primarily as a result of increased revenues at the company's community
newspapers and increased printing revenues. Total operating costs of $28.7
million were $1.3 million higher than those of the comparable period of last
year. As a result, EBITDA decreased by $244,600 to $4.3 million.
<PAGE>
Year 2000 Computer Concerns
The Company is on schedule for its review of potential year 2000 computer
problems. All important applications have been identified, reviewed and found
to be compliant or have been replaced or corrected or remediation plans are in
process. The project was completed by the end of 1998 with a few exceptions.
For those exceptions remediation work will be completed in 1999. As stated in
the 1998 Management Discussion and Analysis there will be no special charges
and the program will have no material effect on the Company's financial
condition or reported results.
Retraction Price of Retractable Common Shares
The retraction price of the outstanding retractable common shares of the
Company as of April 15, 1999 was $13.50 per share. As at March 31, 1999 there
were 32,891,072 retractable common shares outstanding.
General
At March 31, 1999, Hollinger's publishing interests included 87 daily
newspapers and 273 non- daily newspapers. Total paid daily circulation,
including The Daily Telegraph and the Chicago Sun- Times, was approximately
4.1 million. The total circulation of the non-dailies was approximately 6.4
million.
Dividends
A regular quarterly dividend of 15(cent) per retractable common share has been
declared payable on June 10, 1999 to shareholders of record on May 26, 1999.
/s/ Conrad M. Black
-------------------------
May 17, 1999 Conrad M. Black
Chairman of the Board and
Chief Executive Officer
<PAGE>
MARKET VALUE INFORMATION
BALANCE SHEET
(in thousands of dollars except where noted)
March 31 December 31
1999 1998
(not audited)
ASSETS
Investment in Hollinger International $ 1,073,800 $ 1,152,124
Other investments 13,762 19,311
Other assets 36,965 83,517
$ 1,124,527 $ 1,254,952
LIABILITIES
Exchangeable shares $ 547,568 $ 547,804
Other liabilities 243,304 343,491
790,872 891,295
NET ASSETS REPRESENTING SHAREHOLDERS' EQUITY
Capital stock 240,070 240,434
Net unrealized appreciation of investments 372,648 419,667
Net unrealized increase in liabilities (15,026) (16,175)
Retained earnings (264,037) (280,269)
333,655 363,657
$ 1,124,527 $ 1,254,952
Retractable common shares outstanding 32,891,072 32,941,072
Net asset value per retractable common share $ 10.14 $ 11.04
STATEMENT OF INCOME AND EXPENSES
(not audited)
(in thousands of dollars)
Three months ended
March 31
1999 1998
Income
Dividends $ 12,774 $ 10,853
Interest and other 3,412 129
Net management fees 4,593 4,139
20,779 15,121
Expenses
Administrative and other expenses 5,338 2,620
Interest expense 13,996 15,803
19,334 18,423
Income (loss) before the undernoted 1,445 (3,302)
Unusual items 21,050 --
Income tax expense (665) (546)
Net income (loss) for the period $ 21,830 $ (3,848)
Earnings (loss) per retractable common share $ 0.66 $ (0.12)
<PAGE>
<TABLE>
SCHEDULE OF SEGMENTED EARNINGS
(not audited)
<CAPTION>
(in thousands of dollars) U.K. Corporate
Chicago Community Newspaper Canadian and Consolidated
Group Group Group Southam Newspapers Other Total
<S> <C> <C> <C> <C> <C> <C> <C>
Three months ended March 31, 1999
Sales revenue $ 137,457 $ 50,086 $ 228,006 $ 313,338 $ 73,820 $ 1,300 $ 804,007
Cost of sales
and expenses 115,911 41,009 168,184 271,890 61,187 6,152 664,333
Income before
interest, taxes,
depreciation and
amortization 21,546 9,077 59,822 41,448 12,633 (4,852) 139,674
Depreciation and
amortization 8,645 4,375 15,696 24,695 3,434 1,814 58,659
Operating
income $ 12,901 $ 4,702 $ 44,126 $ 16,753 $ 9,199 $ (6,666) $ 81,015
Total assets $ 672,374 $ 415,674 $1,360,313 $2,722,893 $ 346,576 $ 341,423 $5,859,253
Expenditures
on capital
assets $ 22,567 $ 3,588 $ 13,480 $ 14,848 $ 2,504 $ 1,088 $ 58,075
Three months ended March 31, 1998
Sales revenue $ 128,095 $ 67,554 $ 211,893 $ 297,544 $ 75,805 $ 2,174 $ 783,065
Cost of sales
and expenses 113,620 52,702 154,734 239,306 62,293 6,412 629,067
Income before
interest, taxes,
depreciation and
amortization 14,475 14,852 57,159 58,238 13,512 (4,238) 153,998
Depreciation and
amortization 7,546 7,884 14,349 17,676 3,515 1,263 52,233
Operating
income $ 6,929 $ 6,968 $ 42,810 $ 40,562 $ 9,997 $ (5,501) $ 101,765
Total assets $ 565,473 $ 606,462 $1,305,180 $1,759,291 $ 349,714 $ 332,558 $4,918,678
Expenditures
on capital
assets $ 32,822 $ 1,250 $ 18,226 $ 15,131 $ 2,764 $ 1,388 $ 71,581
</TABLE>
Note
1. Corporate and Other revenue includes revenues of miscellaneous newspaper
operations.
<PAGE>
CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
March 31 December 31
1999 1998
(not audited)
ASSETS
Current assets
Cash $ 148,745 $ 128,061
Accounts receivable 597,125 584,503
Inventory 50,483 56,294
796,353 768,858
Investments 67,857 75,242
Capital assets 4,061,883 4,129,445
Goodwill and other assets 933,160 730,956
$ 5,859,253 $ 5,704,501
LIABILITIES
Current liabilities
Bank indebtedness $ 248,630 $ 232,128
Accounts payable and accrued expenses 585,949 792,669
Income taxes payable 129,592 2,465
Current portion of long-term debt 711,582 183,150
Exchangeable shares 496,558 496,766
2,172,311 1,707,178
Long-term debt 1,936,052 2,229,599
Exchangeable shares 51,010 51,038
4,159,373 3,987,815
MINORITY INTEREST AND DEFERRED CREDITS 1,679,697 1,783,854
SHAREHOLDERS' EQUITY
Capital stock 240,070 240,434
Retained earnings (202,286) (306,181)
37,784 (65,747)
Equity adjustment from foreign currency
translation (17,601) (1,421)
20,183 (67,168)
$ 5,859,253 $ 5,704,501
<PAGE>
CONSOLIDATED STATEMENT OF EARNINGS
(not audited)
(in thousands of dollars)
Three months ended
March 31
1999 1998
Revenue
Sales $ 804,007 $ 783,065
Investment and other income 7,714 4,742
811,721 787,807
Expenses
Cost of sales and expenses 664,333 629,067
Depreciation and amortization 58,659 52,233
Interest expense 62,319 55,909
785,311 737,209
Net loss in equity accounted
companies (223) (312)
Net foreign currency(losses) gains (1,239) 1,384
Earnings before the undernoted 24,948 51,670
Unusual items 323,162 231,649
Income taxes (135,769) (120,061)
Minority interest (102,932) (89,259)
Net earnings $ 109,409 $ 73,999
(dollars)
Net earnings per retractable common share
Basic $3.33 $2.22
Fully diluted $2.87 $1.16
Cash flow provided by operations per
retractable common share
Basic $2.87 $2.88
Fully diluted $2.70 $1.58
Notes to the Consolidated Statement of Earnings
1. Cash flow provided by operations per retractable common share is based on
cash flow provided by operations which is before any increase or decrease
in non-cash operating working capital, the cash used by discontinued
operations and other costs and foreign currency translation adjustment.
2. Earnings per retractable common share is based on earnings applicable to
retractable common shares reduced by the amortization of the equity
component of equity-linked convertible securities.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT
OF CASH FLOW
(not audited)
(in thousands of dollars)
<CAPTION>
Three months ended Three months ended
Marcxh 31 March 31
1999 1998 1999 1998
<S> <C> <C> <C> <C> <C>
CASH PROVIDED BY (USED FOR):
Operations Investment
Net earnings $ 109,409 $ 73,999 Proceeds on disposal of
Unusual items (323,162) (231,649) fixed assets 370 4,932
Current income taxes related Additions to fixed assets
to unusual items 144,383 107,841 and assets under capital leases (43,637) (51,653)
Items not involving cash: Additions to investments (956) (9,230)
Depreciation and amortization 58,659 52,233 Proceeds on disposal
Deferred income taxes 1,633 (2,991) of investments 2,659 35
Net earnings in equity accounted Additions to circulation (14,438) (19,928)
companies, net of dividends (Increase) decrease in goodwill and
received 223 312 other assets (41,009) 3,104
Minority interest 102,932 89,259 Investment in
Other 302 6,999 newspaper operations (600,240) (62,812)
Proceeds on disposal
Cash flow provided by operations .. 94,379 96,003 of newspaper operations 557,887 441,713
(139,364) 306,161
Change in non-cash Effect of exchange rate
operating working capital 427,530 (90,011) changes on cash (5,282) 436
Cash used for
discontinued operations (520) (1,666) Increase in cash position 20,684 33,118
Other costs (1,911) (768) Cash at beginning of period 128,061 158,868
Foreign currency translation Cash at end of period $ 148,745 $ 191,986
adjustment 3,867 3,881
523,345 7,439
Financing
Redemption and cancellation of
capital stock (821) -
Issue of common shares
of subsidiaries 56 1,677
Capital stock of subsidiaries
purchased for cancellation by
subsidiaries (68,162) -
Decrease in long-term debt
and deferred liabilities (270,199) (259,496)
(Decrease) increase in capital lease
obligations (363) 1,979
Retirement of liquid yield
option notes (122) (6,586)
Dividends (4,935) (4,987)
Dividend paid by subsidiaries to
minority interests (13,469) (13,505)
(358,015) (280,918)
Note
1. 1998 comparative amounts have been restated retroactively as required by
the Canadian Institute of Chartered Accounts with respect to new standards
issued regarding disclosure in the cash flow statement.
<PAGE>
RECONCILIATION TO UNITED STATES GENERALLY
ACCEPTED
ACCOUNTING PRINCIPLES (GAAP)
(not audited)
(in thousands of Canadian dollars)
Three months ended
March 31
1999 1998
Net earnings
Net earnings for the period
based on Canadian GAAP $ 109,409 $ 73,999
Capitalization of betterments,
net of related amortization (3,234) (5,122)
Acquired tax losses 173 124
Start-up costs, net of amortization
and write-offs 38 560
Foreign exchange (note 2) -- 56
Compensation to employees (103) (260)
Business combinations (note 4) 233 233
Adjustment to tax provision (4,000) 2,600
Financial instruments (note 3) 908 1,065
Net earnings for the
period based on U.S. GAAP $ 103,424 $ 73,255
Basic earnings per retractable common share: (dollars)
Earnings before extraordinary items $3.14 42.42
Net earnings $3.14 $2.20
Diluted earnings per retractable common share:
Earnings before extraordinary items $2.86 $1.45
Net earnings $2.86 $1.38
</TABLE>
Notes to the Reconciliation to United States GAAP.
1. The above represents additional information to the Consolidated Statement
of Earnings of the Company which was prepared in accordance with Canadian
GAAP. Set out above are the material adjustments (net of deferred income
taxes, minority interest and foreign exchange rate adjustments where
applicable) to net earnings for the three months ended March 31, 1999 and
March 31, 1998 in order to conform to accounting principles generally
accepted in the United States.
2. Under Canadian GAAP, the unrealized foreign exchange gain or loss on the
translation of the U.S. dollar Liquid Yield Option Notes (LYONs) into
Canadian dollars which was not considered a hedge against a U.S. dollar
investment was being deferred or amortized over the term of the notes.
Under U.S. GAAP this exchange gain or loss was expensed in the immediately.
3. Under the accounting standards for financial instruments, a portion of
certain of the Company's convertible instruments are classified as equity
rather than debt. Under U.S. GAAP, no portion of the convertible
instruments would be classified as equity and the related interest expense
on the equity component would be classified as an interest expense rather
than as a dividend equivalent. In addition, Canadian GAAP requires the
carrying value of the debt component of an instrument be increased over
time to its settlement amount on maturity, through a charge to interest
expense. Under U.S. GAAP, no portion of the instrument would be classified
as equity and accordingly this adjustment to interest expense is not
required. Canadian GAAP also requires the value ascribed to certain
subsidiary special shares be increased over the life of the shares to the
Company's optional cash settlement amount through a periodic charge to
earnings. Under U.S. GAAP the shares are recorded at their fair value on
the date of issue and such a charge to increase their carried amount is not
required.
4. U.S. GAAP requires that the transfer of the Canadian Newspaper Group be
accounted for at historical values using "as-if pooling of interests"
accounting, resulting in no gain on the sale of properties and no
additional amount being ascribed to circulation.
5. A loss on extinguishment of debt can be classified as an extraordinary item
under U.S. GAAP, but not under Canadian GAAP.
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Transfer Agents and Registrars Share Information
Retractable Common Shares, Series II and III For information relating to Retractable Common
Preference Shares: Shares and Series II and III Preference Shares
holdings, dividends, lost share certificates, etc., please
Montreal Trust Company of Canada, Toronto,
communicate with:
Montreal and Vancouver, Canada
Montreal Trust Company of Canada,
The Bank of Nova Scotia Trust Company of New York
Tel: (416) 981-9500 or 1-800-663-9097 (toll free in
New York, New York, U.S.A.
Canada and U.S.) Fax: (416) 981-9800
Warrants to Purchase Retractable Common Shares of
Hollinger Inc.: Major Electronic Web Sites
Montreal Trust Company of Canada, Toronto Hollinger International http://www.hollinger.com
Stock Exchange Listings Telegraph http://www.telegraph.co.uk
http://www.UKMax.com
The Retractable Common Shares are listed on the
Toronto, Montreal, and Vancouver stock exchanges http://www.thebestofbritish.com
(stock symbol HLG.C), and are also quoted on The
Chicago Sun-Times http://www.suntimes.com
NASDAQ Stock Market (trading symbol HLGCF).
Chicago Network http://www.chicago-news.com
The Series II and III Preference Shares are listed
on the Toronto, Montreal and Vancouver stock Jerusalem Post http://jpost.co.il
exchanges (trading symbols HLG.PR.B and HLG.
PR.C, respectively). Southam http://www.canada.com
UniMedia http://www.lesoleil.com
The Warrants to Purchase Retractable Common http://www.ledroit.com
Shares are not listed on any stock exchange.
Star-Phoenix http://www.saskstar.sk.ca
Investor Information
Leader-Post http://www.leader-post.sk.ca
Holders of the Company's securities and other
Version francaise
interested parties seeking information about
the Company should communicate with the Vice- Pour recevoir ce rapport en francais s'adresser a :
President, Strategic and Corporate Development, Compagnie Montreal Trust du Canada, 151, rue
at 10 Toronto Street, Toronto, Ontario M5C 2B7, Front ouest, 8e etage, Toronto (Ontario) M5J 2N1.
Tel (416) 363-8721, Fax (416) 364-0832.
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HOLLINGER INC.
10 Toronto Street, Toronto, Ontario, M5C 2B7
General Enquiries:Telephone (416) 363-8721
Fax: (416) 364-2088
