<PAGE> 1
EXHIBIT 99.2
ON PAPER ONLINE
2
Interim Report
9 Months Ended September 30, 2000
Hollinger Inc.
<PAGE> 2
[GRAPHIC OMITTED]
3
Interim Report
9 Months Ended September 30, 2000
[HOLLINGER INC. LOGO]
<PAGE> 3
CONSOLIDATED FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30 2000 1999
---- ----
(millions of dollars)
<S> <C> <C>
Total revenue ................................... 2,456.6 2,393.2
--------------------------------------------------------------------------
Net earnings .................................... 3.4 152.2
--------------------------------------------------------------------------
Cash flow provided by operations (note) ......... 240.0 191.9
--------------------------------------------------------------------------
(dollars)
--------------------------------------------------------------------------
Net earnings per retractable common share ....... 0.09 4.45
--------------------------------------------------------------------------
Cash flow provided by operations per
retractable common share (note) ............... 6.46 5.61
--------------------------------------------------------------------------
</TABLE>
NOTE
Cash flow provided by operations is before any change in non-cash operating
working capital, the cash used for discontinued operations and other costs.
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", Hollinger Canadian Publishing
Holdings Inc. is referred to as "HCPH", and Hollinger Canadian Newspapers,
Limited Partnership is referred to as "Hollinger L.P." 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> 4
TO THE SHAREHOLDERS
--------------------------------------------------------------------------------
THIRD QUARTER RESULTS
The loss before unusual items, income taxes and minority interest was $1.6
million for the three months ended September 30, 2000 compared to $19.1 million
for 1999. The net loss for the three months ended September 30, 2000 amounted to
$9.3 million or a loss of $0.25 per share compared with a net loss of $3.9
million or a loss of $0.11 per share in 1999. Excluding the net effect of
unusual items, a net loss of $11.1 million or a loss of $0.30 per share was
incurred in the third quarter of 2000 compared with a net loss of $21.1 million
or a loss of $0.57 per share in 1999.
Reported earnings for the quarter compared to last year have been affected by
several major items.
The National Post EBITDA loss for the third quarter of 2000 was $13.7
million, a $7.2 million improvement over the EBITDA loss of $20.9
million in the third quarter of 1999, reflecting a 30.4% increase in
revenue year-over-year.
Unusual items in the third quarter 2000 include gains on sales of
community newspapers by Hollinger International, additional start-up
costs related to the new printing facility in Chicago, and severance
costs in Canada. Unusual items in the third quarter of 1999 consisted
primarily of a gain on sales of community newspapers by Hollinger
International Inc. and an accounting gain on the issue of limited
partnership units.
Interest expense for the quarter rose over 1999 as a result of higher
interest rates and increased debt levels, due in part to the purchase
by Hollinger International of its own shares for cancellation, the pay
out in July, of the HCPH Special Shares, and the impact of expensing
rather than capitalizing interest costs related to the new Chicago
plant.
Third quarter revenue from Internet operations grew from $2.4 million
in 1999 to $5.9 million in 2000 and Internet related EBITDA losses grew
from $4.0 million to $12.6 million over the same time frame, reflecting
the expanding success of these operations.
RESTRUCTURING PROCESS
In April 2000, Hollinger International announced that its board of directors had
approved a process whereby certain of the company's newspaper assets would be
made available for sale, merger or affiliation on terms consistent with the full
enterprise value of such assets. Morgan Stanley Dean Witter was retained to act
as the company's professional adviser and in that role is co-ordinating the
<PAGE> 5
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process. As had been stated, management considered the company's shares
undervalued and the most effective means of narrowing the gap between the
enterprise value and imputable market value of its assets would be to sell some
of them and apply the proceeds to debt reduction and share cancellation.
On November 16, the sale originally announced by Hollinger International on July
31 of certain Canadian newspaper and related assets to CanWest Global
Communications Corp. had been completed. Included in this sale were:
- a 50% interest in the National Post;
- Hollinger's metropolitan and a large number of its community
newspapers in Canada (including the Ottawa Citizen, Vancouver Sun,
the Province, the Calgary Herald, the Edmonton Journal, the Montreal
Gazette, The Windsor Star, The Regina Leader Post, the Star Phoenix
and The Victoria Times-Colonist); and
- Hollinger's operating Canadian Internet properties including
canada.com.
The parties made minor modifications to the original terms of the transaction,
removing from the sale the Southam Magazine and Information Group and two paid
dailies in Ontario (The Sarnia Observer and the Chatham Daily News).
The aggregate sale price of these properties was approximately $3.2 billion,
plus interest and may be subject to adjustments. The sale and a related
transaction resulted in the Hollinger group receiving approximately $1.8 billion
cash, approximately $685 million in shares of CanWest valued for these purposes
at $25.00 per share (representing an approximate 15.1% equity interest and 5.7%
voting interest) and subordinated debentures of a holding company in the CanWest
group having an aggregate principal amount of approximately $770 million bearing
interest initially at 12 1/8% per annum. Hollinger International has applied a
portion of its cash proceeds to repay all of its bank debt and certain other
debt of approximately $1.5 billion.
On closing, Hollinger L.P. received its pro-rata share of the sale proceeds
(being approximately $1.0 billion) in the form of approximately $560 million
cash, approximately $207 million CanWest shares and $235 million principal
amount of CanWest subordinated debentures. From its cash proceeds of this sale
and the recent sale of Novalis, Hollinger L.P. has established a reserve for
sale contingencies and declared a special cash distribution of $3.10 per unit
(or approximately $567 million in aggregate) to unitholders of record on
November 28, 2000 to be paid on December 1, 2000. Of
<PAGE> 6
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this amount, 87% or approximately $493 million of the special cash distribution
will be received by Hollinger International.
Hollinger International's restructuring initiative has led to a number of sales
that have been completed or agreed upon including the asset sale to CanWest,
sales of all of the UniMedia properties and sales of all the U.S. community
group newspapers (excluding the Chicago Group), generating sale proceeds
approaching $4 billion, enabling Hollinger International to eliminate its bank
debt and dramatically strengthen its balance sheet. The underlying enterprise
value of Hollinger International's properties has been successfully
demonstrated.
With respect to the newspaper assets sold to CanWest, Mr. Conrad Black and his
associates have entered into a management services agreement until at least
December 31, 2001 in order to ensure operating continuity. Hollinger
International will continue, for at least five years, as the managing partner of
the jointly-owned National Post.
HOLLINGER INTERNATIONAL INC.
In addition to its interests in CanWest, 50% of the National Post and other
Canadian newspapers, Hollinger International's assets include The Telegraph
Group Limited in Britain, the Chicago Sun- Times, The Jerusalem Post, a large
number of community newspapers in the Chicago area, the Southam Magazine and
Information Group and a substantial portfolio of new media investments.
Hollinger L.P. (in which Hollinger International has an approximate 87% equity
interest) continues to own a number of community newspapers in Ontario and
British Columbia.
TELEGRAPH GROUP LIMITED
Locally reported EBITDA for the nine months ended September 30, 2000 was
(pound)48.2 million compared to (pound)34.0 million during the corresponding
period in 1999, an increase of 41.8%.
The ABC net circulation figure for The Daily Telegraph for the period April 2000
to September 2000 was 1,029,082, more than 300,000 copies ahead of its nearest
competitor. The ABC net circulation figure for The Sunday Telegraph for the
period April to September 2000 was 805,316. The ABC weekly circulation figure
for The Spectator for the period January to June 2000 was 59,747 compared to
57,544 for the same period in 1999.
<PAGE> 7
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Advertising revenue in local currency for the third quarter was up 13.2% over
third quarter 1999. Classified sections continued to perform well with an
increase of 11.4% over third quarter 1999. In particular, revenue from the
Recruitment (Careers) section has increased during the quarter by 14.5%
year-on-year. Display advertising also performed strongly during the third
quarter with an increase of almost 8% over the same period last year. The growth
in display advertising is due primarily to a 19.4% increase in financial
advertising for the third quarter compared with 1999.
The Daily Telegraph underwent a major redesign in September which was well
received. The Saturday edition of The Daily Telegraph published its first ever
fashion supplement on September 30. It is intended to publish several of these
in 2001. On September 19, Telegraph Group started printing in Spain in order to
provide same day delivery in Spain and Portugal with a view to increasing sales
in that region.
The readership of telegraph.co.uk (formerly named Electronic Telegraph)
continued to grow ahead of its competitors, reaching 22 million page impressions
in September, with revenues in the third quarter up by 51% on 1999. The current
focus is on the roll-out of the new channels from the newly developed technical
platform. The first of the new generation of sites, sport.telegraph.co.uk and
travel.telegraph.co.uk, will be launched in the fourth quarter of 2000.
handbag.com has strengthened its leadership of the women's interest sector
growing in the third quarter to 4.5 million page impressions per month, with
350,000 unique users. The handbag online auction, with Lady Thatcher's handbag
raising over (pound)100,000 for a breast cancer charity, generated a huge amount
of publicity for handbag.com.
THE CHICAGO GROUP
Revenue for the Chicago Group was U.S. $96.9 million for the third quarter of
2000 compared with U.S. $96.5 million in 1999. Advertising revenue for the third
quarter increased marginally to U.S. $73.3 million in 2000 from U.S. $72.5
million in 1999. Retail advertising was down 6% versus the same quarter last
year as a result of the loss of local and territory advertising, as well as a
decline in preprint business reflecting advertisers' tightened distribution
networks. Classified advertising was up slightly, primarily driven by growth in
automotive. Circulation revenue in the third quarter of 2000 was U.S. $19.5
million, down U.S. $0.6 million or 3% from 1999 due to discounting needed to
competitively build market share. Although circulation revenue for the third
quarter declined versus 1999, average ABC circulation for the Chicago Sun-Times
reflects an increase in circulation of almost 1% for the six months ended
September 30, 2000, compared with the same period in 1999 as detailed in the
September Publisher's Statement.
<PAGE> 8
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Reported EBITDA for the third quarter of 2000 was U.S. $14.2 million compared
with U.S. $15.2 million in 1999, a decrease of U.S. $1.0 million or 6.9%. EBITDA
for the third quarter included a loss from Internet operations of U.S. $0.9
million in 2000 and U.S. $0.1 million in 1999. The decrease in EBITDA in the
third quarter 2000 compared with 1999 primarily results from virtually flat
operating revenue and increased losses from Internet operations.
The Ashland production facility is now operational with five of the six presses
being used in daily production. Press six is planned to be in operation by the
end of the year. The anticipated operating efficiencies that these presses will
bring will be realized in 2001.
On October 20, Hollinger International announced the acquisition of Fox Valley
Press, Inc. from The Copley Press, Inc., one of the largest privately-owned
newspaper publishers in the US. Fox Valley Press, Inc., Copley's wholly-owned
subsidiary in suburban Chicago, publishes four paid daily newspapers (The Herald
News, The Beacon News, The Courier News, and The News Sun), one paid
thrice-weekly, eleven free community weekly newspapers and one shopper. Fox
Valley Press, Inc. is the leading publisher of newspapers serving seven
attractive, fast-growing suburban counties surrounding Chicago and Cook County.
Built around four daily newspapers, whose origins date back more than 100 years,
Fox Valley Press has expanded aggressively since 1996 to capitalize on its
fast-growing markets. The counties that Fox Valley serves are projected to
experience double- digit growth in population and households and are popular
choices for Chicago's middle and upper-class residents seeking top schools and
prosperous communities. These assets are highly additive to our existing Chicago
Group of newspapers and we are delighted to add them to our portfolio.
NATIONAL POST COMPANY
National Post revenue grew to $30.0 million in the third quarter of 2000 from
$23.0 million in 1999, a 30.4% improvement. This growth was primarily driven by
increased advertising revenue, but circulation revenues also improved over 1999.
National Post EBITDA loss for third quarter 2000 was $13.7 million, a $7.2
million improvement over the $20.9 million EBITDA loss in 1999.
INTERNET INVESTMENTS
Since the beginning of the year, Hollinger has added to its portfolio of
minority positions in Internet companies, including investments in
FreeSamples.com, Mediant Technology Partners, DealTime.com, SUMmedia.com and
Offroad Capital. Also, Hollinger has increased its investment in Bidhit.com.
<PAGE> 9
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RETRACTION PRICE OF RETRACTABLE COMMON SHARES
The retraction price of the outstanding retractable common shares of the Company
as of November 21, 2000 was $14.00 per share.
SHARE CAPITAL INFORMATION
As at November 21, 2000, the issued shares and options to purchase retractable
common shares of the Company were as follows:
<TABLE>
<CAPTION>
Preference shares Retractable common shares Options
<S> <C> <C>
8,901,442 Series II 36,389,757 928,000
10,147,225, Series III
</TABLE>
DIVIDENDS
A regular quarterly dividend
of 15(cent) per retractable common share has been declared payable on December
10, 2000 to shareholders of record on November 24, 2000.
/s/ CONRAD BLACK
November 21, 2000 Conrad M. Black (signed)
Chairman of the Board and
Chief Executive Officer
<PAGE> 10
MARKET VALUE INFORMATION
BALANCE SHEET
--------------------------------------------------------------------------------
(in thousands of dollars except where noted)
<TABLE>
<CAPTION>
SEPTEMBER 30 December 31
2000 1999
------------- -----------
(not audited)
<S> <C> <C>
ASSETS
Investment in Hollinger International ........... $ 1,167,773 $ 903,753
Other investments ............................... 13,727 12,004
Other assets .................................... 37,165 26,775
------------ ------------
$ 1,218,665 $ 942,532
------------ ------------
LIABILITIES
Exchangeable shares ............................. $ 224,415 $ 285,211
Other liabilities ............................... 365,602 310,583
------------ ------------
590,017 595,794
------------ ------------
NET ASSETS REPRESENTING SHAREHOLDERS' EQUITY
Capital stock ................................... 314,683 315,229
Net unrealized appreciation of investments ...... 473,793 181,798
Net unrealized (increase) decrease in liabilities (22,861) 15,429
Deficit ......................................... (136,967) (165,718)
------------ ------------
628,648 346,738
------------ ------------
$ 1,218,665 $ 942,532
------------ ------------
RETRACTABLE COMMON SHARES OUTSTANDING ........... 37,132,105 37,196,415
------------ ------------
NET ASSET VALUE PER RETRACTABLE COMMON SHARE .... $ 16.93 $ 9.32
------------ ------------
</TABLE>
STATEMENT OF INCOME AND EXPENSES
(not audited)
--------------------------------------------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
2000 1999
---- ----
<S> <C> <C>
INCOME
Dividends ........................... $ 34,067 $ 82,120
Interest and other .................. 7,362 5,030
Net management fees ................. 16,208 8,790
-------- --------
57,637 95,940
-------- --------
EXPENSES
Administrative and other expenses ... 9,843 7,895
Interest expense .................... 24,496 34,446
-------- --------
34,339 42,341
-------- --------
Income before the undernoted ........ 23,298 53,599
Unusual items ....................... 282 22,256
Income tax expense .................. (1,669) (3,730)
-------- --------
Net income for the period ........... $ 21,911 $ 72,125
-------- --------
EARNINGS PER RETRACTABLE COMMON SHARE $ 0.59 $ 2.11
-------- --------
</TABLE>
<PAGE> 11
SCHEDULE OF SEGMENTED EARNINGS
(not audited)
--------------------------------------------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
U.K. CANADIAN CORPORATE
CHICAGO COMMUNITY NEWSPAPER NEWSPAPER AND CONSOLIDATED
GROUP GROUP GROUP GROUP OTHER TOTAL
------------------------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 2000
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales revenue ...... $143,552 $ 26,026 $201,739 $406,551 $ -- $777,868
Cost of sales
and expenses ....... 122,916 23,303 155,014 346,900 3,245 651,378
-------- -------- -------- -------- -------- --------
Income before
interest, taxes,
depreciation and
amortization ....... 20,636 2,723 46,725 59,651 (3,245) 126,490
Depreciation and
amortization ....... 7,917 2,616 13,990 30,041 162 54,726
-------- -------- -------- -------- -------- --------
Operating
income (loss) ...... $ 12,719 $ 107 $ 32,735 $ 29,610 $ (3,407) $ 71,764
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1999
<S> <C> <C> <C> <C> <C> <C>
Sales revenue ........ $143,459 $ 30,159 $201,734 $378,966 $ 125 $754,443
Cost of sales
and expenses ......... 122,343 22,690 164,851 342,020 7,561 659,465
-------- -------- -------- -------- -------- --------
Income before
interest, taxes,
depreciation and
amortization ......... 21,116 7,469 36,883 36,946 (7,436) 94,978
Depreciation and
amortization ......... 8,401 2,389 15,047 29,130 1,791 56,758
-------- -------- -------- -------- -------- --------
Operating
income (loss) ........ $ 12,715 $ 5,080 $ 21,836 $ 7,816 $ (9,227) $ 38,220
======== ======== ======== ======== ======== ========
</TABLE>
NOTE
1. Corporate and Other revenue includes revenues of miscellaneous newspaper
operations.
<PAGE> 12
SCHEDULE OF SEGMENTED EARNINGS
(not audited)
--------------------------------------------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
U.K. CANADIAN CORPORATE
CHICAGO COMMUNITY NEWSPAPER NEWSPAPER AND CONSOLIDATED
GROUP GROUP GROUP GROUP OTHER TOTAL
-----------------------------------------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 2000
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales revenue ......... $ 428,853 $ 87,141 $ 664,564 $1,267,645 $ -- $2,448,203
Cost of sales
and expenses .......... 361,902 74,487 497,101 1,060,717 6,055 2,000,262
---------- ---------- ---------- ---------- ---------- ----------
Income before
interest, taxes,
depreciation and
amortization .......... 66,951 12,654 167,463 206,928 (6,055) 447,941
Depreciation and
amortization .......... 22,627 7,213 43,773 89,103 4,089 166,805
---------- ---------- ---------- ---------- ---------- ----------
Operating
income (loss) ......... $ 44,324 $ 5,441 $ 123,690 $ 117,825 $ (10,144) $ 281,136
---------- ---------- ---------- ---------- ---------- ----------
Total assets .......... $ 801,182 $ 215,557 $1,201,079 $3,133,838 $ 396,784 $5,748,440
---------- ---------- ---------- ---------- ---------- ----------
Expenditures on capital
assets ................ $ 39,300 $ 4,167 $ 52,235 $ 37,021 $ 660 $ 133,383
========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1999
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales revenue ......... $ 430,837 $ 112,460 $ 642,662 $1,189,408 $ 2,068 $2,377,435
Cost of sales
and expenses .......... 357,433 88,187 496,601 1,018,381 22,464 1,983,066
---------- ---------- ---------- ---------- ---------- ----------
Income before
interest, taxes,
depreciation and
amortization .......... 73,404 24,273 146,061 171,027 (20,396) 394,369
Depreciation and
amortization .......... 25,353 9,281 45,846 85,943 5,583 172,006
---------- ---------- ---------- ---------- ---------- ----------
Operating
income (loss) ......... $ 48,051 $ 14,992 $ 100,215 $ 85,084 $ (25,979) $ 222,363
========== ========== ========== ========== ========== ==========
Total assets .......... $ 695,560 $ 281,983 $1,320,275 $3,054,709 $ 338,953 $5,691,480
---------- ---------- ---------- ---------- ---------- ----------
Expenditures on capital
assets ................ $ 59,762 $ 6,469 $ 38,518 $ 80,201 $ 3,091 $ 188,041
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
NOTE
1. Corporate and Other revenue includes revenues of miscellaneous newspaper
operations.
<PAGE> 13
CONSOLIDATED BALANCE SHEET
--------------------------------------------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
SEPTEMBER 30 December 31
2000 1999
------------ -----------
(not audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash ................................................... $ 147,960 $ 74,441
Accounts receivable .................................... 549,990 528,072
Inventory .............................................. 80,477 50,089
----------- -----------
778,427 652,602
INVESTMENTS ............................................ 233,700 159,744
CAPITAL ASSETS ......................................... 3,852,870 3,915,168
GOODWILL AND OTHER ASSETS .............................. 883,443 922,920
----------- -----------
$ 5,748,440 $ 5,650,434
----------- -----------
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness ...................................... $ 334,093 $ 307,961
Accounts payable and accrued expenses .................. 609,597 603,441
Income taxes payable ................................... 77,561 73,863
Current portion of long-term debt ...................... 13,526 71,437
Exchangeable shares .................................... -- 51,421
----------- -----------
1,034,777 1,108,123
LONG-TERM DEBT ......................................... 2,790,476 2,393,979
EXCHANGEABLE SHARES .................................... 224,415 233,790
Deferred unrealized (loss) gain ........................ (17,057) 21,139
Future income taxes .................................... 928,674 401,294
----------- -----------
4,961,285 4,158,325
----------- -----------
MINORITY INTEREST AND DEFERRED CREDITS ................. 1,034,372 1,353,221
SHAREHOLDERS' EQUITY
Capital stock .......................................... 314,683 315,229
Deficit (note 1) ....................................... (485,091) (180,732)
(170,408) 134,497
Equity adjustment from foreign currency translation .... (76,809) 4,391
----------- -----------
(247,217) 138,888
----------- -----------
$ 5,748,440 $ 5,650,434
----------- -----------
</TABLE>
NOTE
1. The Company has adopted effective January 1, 2000, on a retroactive basis,
the new standard issued by The Canadian Institute of Chartered Accountants
with respect to accounting for income taxes. The cumulative effect of
adopting the new standard was to increase the deficit at the beginning of
the year by approximately $291 million. Prior years' financial statements
have not been restated for this change in accounting policy.
<PAGE> 14
CONSOLIDATED STATEMENT OF EARNINGS
(not audited)
--------------------------------------------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUE
Sales ................................. $ 777,868 $ 754,443 $ 2,448,203 $ 2,377,435
Investment and other income ........... 3,224 2,850 8,390 15,786
----------- ----------- ----------- -----------
781,092 757,293 2,456,593 2,393,221
----------- ----------- ----------- -----------
EXPENSES
Cost of sales and expenses ............ 651,378 659,465 2,000,262 1,983,066
Depreciation and amortization ......... 54,726 56,758 166,805 172,006
Interest expense ...................... 76,406 59,465 212,252 184,350
----------- ----------- ----------- -----------
782,510 775,688 2,379,319 2,339,422
----------- ----------- ----------- -----------
NET EARNINGS IN EQUITY ACCOUNTED
COMPANIES ............................. 593 152 1,814 1,057
NET FOREIGN CURRENCY (LOSSES) GAINS ... (777) (888) 475 2,984
----------- ----------- ----------- -----------
EARNINGS (LOSS) BEFORE THE UNDERNOTED . (1,602) (19,131) 79,563 57,840
Unusual items ......................... 15,014 27,105 55,111 474,601
Income taxes .......................... (12,890) (7,285) (68,526) (214,549)
Minority interest ..................... (9,866) (4,586) (62,770) (165,714)
----------- ----------- ----------- -----------
NET EARNINGS (LOSS) ................... $ (9,344) $ (3,897) $ 3,378 $ 152,178
=========== =========== =========== ===========
(dollars) (dollars)
NET EARNINGS (LOSS) PER RETRACTABLE
COMMON SHARE
Basic ................................. $ (0.25) $ (0.11) $ 0.09 $ 4.45
----------- ----------- ----------- -----------
Fully diluted ......................... $ (0.25) $ (0.11) $ 0.05 $ 3.80
----------- ----------- ----------- -----------
CASH FLOW PROVIDED BY OPERATIONS
PER RETRACTABLE COMMON SHARE (note 1)
Basic ................................. $ 1.82 $ 0.79 $ 6.46 $ 5.61
----------- ----------- ----------- -----------
Fully diluted ......................... $ 1.73 $ 0.79 $ 6.14 $ 5.30
----------- ----------- ----------- -----------
</TABLE>
NOTE 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, other costs and foreign currency translation adjustment.
<PAGE> 15
CONSOLIDATED STATEMENT
OF CASH FLOW
(not audited)
--------------------------------------------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
2000 1999
--------- ---------
<S> <C> <C>
CASH PROVIDED BY (USED FOR):
OPERATIONS
Net earnings ........................... $ 3,378 $ 152,178
Unusual items .......................... (55,111) (474,601)
Current income taxes related
to unusual items ..................... 14,984 158,758
Items not involving cash:
Depreciation and amortization .......... 166,805 172,006
Deferred income taxes .................. 39,096 13,991
Net earnings in equity
accounted companies, net of
dividends received ................... (1,305) (689)
Minority interest ...................... 62,770 165,714
Other .................................. 9,392 4,588
--------- ---------
CASH FLOW PROVIDED BY OPERATIONS ....... 240,009 191,945
Change in non-cash
operating working capital ............ (87,789) 36,775
Cash used for
discontinued operations .............. (1,336) (1,558)
Other costs ............................ (5,908) (40,241)
--------- ---------
144,976 186,921
--------- ---------
FINANCING
Issue of capital stock ................. -- 75,160
Redemption of HCPH
special shares ....................... (140,429) --
Redemption and cancellation of
capital stock ........................ (132) (821)
Redemption and cancellation of
exchangeable shares .................. (4,620) (137,307)
Capital stock of subsidiaries
purchased for cancellation
by subsidiaries ...................... -- (166,838)
Issue of partnership units and
common shares of subsidiaries ........ 5,648 231,428
Increase in long-term debt
and deferred liabilities ............. 245,487 81,264
Redemption and retirement of
convertible debt ..................... -- (122)
Decrease in capital lease
obligations .......................... (1,415) (2,135)
Dividends .............................. (16,709) (15,447)
Dividends and distributions paid by
subsidiary operations to
minority interests ................... (53,086) (44,439)
--------- ---------
34,744 20,743
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
2000 1999
--------- ---------
<S> <C> <C>
INVESTMENT
Proceeds on disposal of
fixed assets ......................... 11,771 11,549
Additions to fixed assets
and assets under capital leases ...... (91,901) (148,774)
Additions to investments ............... (82,047) (28,678)
Proceeds on disposal
of investments and marketable
securities ........................... 58,598 2,999
Additions to circulation ............... (41,482) (39,267)
Additions to goodwill and
other assets ......................... (3,533) (62,042)
Investment in newspaper
operations ........................... (2,878) (615,909)
Proceeds on disposal of newspaper
operations ........................... 44,906 652,346
--------- ---------
(106,566) (227,776)
--------- ---------
Effect of exchange rate
changes on cash ...................... 365 (5,610)
--------- ---------
INCREASE (DECREASE) IN CASH POSITION ... 73,519 (25,722)
CASH AT BEGINNING OF PERIOD ............ 74,441 128,061
--------- ---------
CASH AT END OF PERIOD .................. $ 147,960 $ 102,339
--------- ---------
Supplemental disclosure of investing
and financing activities
Interest paid .......................... $ 219,163 $ 184,449
--------- ---------
Income taxes paid ...................... $ 35,569 $ 160,004
--------- ---------
</TABLE>
<PAGE> 16
RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP)
(not audited)
--------------------------------------------------------------------------------
(in thousands of Canadian dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET EARNINGS
NET EARNINGS (LOSS) FOR THE PERIOD
BASED ON CANADIAN GAAP .................. $ (9,344) $ (3,897) $ 3,378 $ 152,178
Capitalization of betterments,
net of related amortization ............. (4,140) (3,260) (8,294) (8,191)
Acquired tax losses ..................... 154 167 476 505
Other ................................... (14) 39 45 120
Business combinations (note 4) .......... 233 233 699 699
Foreign exchange (note 2) ............... (1,780) 2,452 (5,123) 2,452
Compensation to employees ............... -- (285) -- (832)
Financial instruments (note 3) .......... 2,743 4,346 (85) 21,552
Stock compensation (note 5) ............. (1,228) -- (1,228) --
--------- --------- --------- ---------
NET EARNINGS (LOSS) FOR THE
PERIOD BASED ON U.S. GAAP ............... $ (13,376) $ (205) $ (10,132) $ 168,483
========= ========= ========= =========
(dollars) (dollars)
BASIC EARNINGS PER RETRACTABLE COMMON
SHARE:
Earnings (loss) before extraordinary
items ................................... $ (1.08) $ (0.10) $ (1.36) $ 4.60
--------- --------- --------- ---------
Net earnings (loss) ..................... $ (1.08) $ (0.10) $ (1.36) $ 4.37
--------- --------- --------- ---------
DILUTED EARNINGS PER RETRACTABLE
COMMON SHARE:
Earnings (loss) before extraordinary
items ................................... $ (1.10) $ (0.10) $ (1.46) $ 4.14
--------- --------- --------- ---------
Net earnings (loss) ..................... $ (1.10) $ (0.10) $ (1.46) $ 3.91
--------- --------- --------- ---------
</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 nine months ended September 30, 2000 and September 30,
1999 and the three months ended September 30, 2000 and September 30, 1999 in
order to conform to accounting principles generally accepted in the United
States.
2. Under Canadian GAAP, the unrealized foreign exchange gain or loss arising on
the translation of long-term debt denominated in a foreign currency is
deferred and amortized over the life of the related debt. Under U.S. GAAP
this exchange gain or loss is expensed immediately.
3. Canadian GAAP 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 carrying amount is not required. During the
period ended September 30, 2000, the Company announced the cash settlement
of all of the subsidiary special shares. Under U.S. GAAP, the accrued loss
on settlement is higher by $8,633,000 as a result of not accreting the value
of these shares to their cash settlement amount in prior years.
Under Canadian GAAP, the dividends on mandatory redeemable preferred
stock must be recorded as interest expense. Under U.S. GAAP, such dividends
are charged against retained earnings.
Under U.S. GAAP, the movement in the unrealized mark to market
adjustment on the Series II preference shares of $31,948,822 for the period
ended September 30, 2000 (1999, nil) must be treated as an adjustment to
dividends paid for purposes of calculating earnings per share. Such
adjustment is not required under Canadian GAAP.
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. Effective July 1, 2000, under U.S. GAAP, a stock-based compensation expense
must be recorded in relation to the 1999 repricing of stock options
originally issued by Hollinger International Inc. in 1998. Such adjustment
is not required under Canadian GAAP.
<PAGE> 17
TRANSFER AGENTS AND REGISTRARS
Retractable Common Shares and Series II and III
Preference Shares:
Computershare Investor Services, Inc., Toronto
STOCK EXCHANGE LISTINGS
The Retractable Common Shares are listed on The Toronto
Stock Exchange (stock symbol HLG.C)
The Series II and III Preference Shares are listed on The Toronto Stock Exchange
(trading symbols HLG.PR.B and HLG.PR.C, respectively).
INVESTOR INFORMATION
Holders of the Company's securities and other interested parties seeking
information about the Company should communicate with the Executive
Vice-President and Chief Financial Officer, at 10 Toronto Street, Toronto,
Ontario M5C 2B7, Tel (416) 363-8721, Fax (416) 364-0832.
SHARE INFORMATION
For information relating to Retractable Common Shares and
Series II and III Preference Shares holdings, dividends,
lost share certificates, etc., please communicate with:
Computershare Investor Services, Inc.
Tel: (416) 981-9633 or 1-800-663-9097 (toll free in Canada
and U.S.) Fax: (416) 981-9800 e-mail: [email protected]
MAJOR ELECTRONIC WEB SITES
Hollinger International http://www.hollinger.com
Telegraph http://www.telegraph.co.uk
http://www.UKMax.com
http://www.thebestofbritish.com
Chicago Sun-Times http://www.suntimes.com
Chicago Network http://www.chicago-news.com
Jerusalem Post http://jpost.co.il
Southam http://www.canada.com
UniMedia http://www.unimedia.ca
National Post http://www.nationalpost.com
National Post Site http://www.canada.com
[HOLLINGER INC LOGO]
10 Toronto Street, Toronto, Ontario, M5C 2B7
General Enquiries:Telephone (416) 363-8721
Fax: (416) 364-2088
