<PAGE> 1
EXHIBIT 99.2
ON PAPER ONLINE
1
Interim Report
3 Months Ended March 31,2000
Hollinger Inc.
<PAGE> 2
CONSOLIDATED FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31 2000 1999
--------------------
(millions of dollars)
<S> <C> <C>
Total revenue 811.9 811.7
----- -----
Net earnings 13.0 109.4
----- -----
Cash flow provided by operations (note) 77.6 94.4
----- -----
(dollars)
Net earnings per retractable common share 0.35 3.33
----- -----
Cash flow provided by operations per
retractable common share (note) 2.09 2.87
----- -----
</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> 3
TO THE SHAREHOLDERS
==============================================================================
FIRST QUARTER RESULTS
Earnings before unusual items, income taxes and minority interest were $33.3
million for the three months ended March 31, 2000 as compared to $24.9 million
for 1999. Net earnings for the period ended March 31, 2000 amounted to $13.0
million or $0.35 per share compared with $109.4 million or $3.33 per share in
1999. Excluding the net effect of unusual items, net earnings were $2.0 million,
or $0.05 per share in the first quarter of 2000 compared with a net loss of $0.5
million or a loss of $0.01 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 first quarter 2000 was $11.1 million, a
$6.4 million improvement over the EBITDA loss of $17.5 million in the first
quarter of 1999, reflecting a 44% increase in revenue year-over-year.
Unusual items in 1999 include the gain on sale of community newspapers by
Hollinger International Inc. In 2000, unusual items include gains on the
disposition of the Company's interest in Trip.com and a partial disposition
of its interest in Interactive Investor International (III). The Company
retains a 29% interest in III.
Interest expense for the quarter rose over 1999 as a result of increased
interest rates and increased debt levels.
First quarter revenue from Internet operations grew from $1.8 million in 1999
to $6.4 million in 2000 reflecting the expanding success of these operations.
Internet related EBITDA losses grew from $2.4 million to $5.8 million over
the same time frame as Hollinger continues to build and improve various
Internet sites associated with the newspaper operations.
<PAGE> 4
==============================================================================
CHANGE IN ACCOUNTING POLICY
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 corporate income taxes. Under the asset and liability
method, future tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Future tax assets and liabilities are measured using enacted or
substantively enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled.
The effect on future tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the date of enactment or
substantive enactment.
Pursuant to the deferral method, which was applied prior to January 1, 2000,
deferred income taxes were recognized for income and expense items that were
reported in different years for financial reporting purposes and income tax
purposes. Deferred income tax was determined using the tax rate applicable for
the year of calculation. Under the deferral method, deferred taxes were not
adjusted for subsequent changes in tax rates.
The cumulative effect of adopting this new standard resulted in a net charge to
retained earnings as at January 1, 2000 of approximately $291,000,000.
Substantially all of this adjustment is attributable to future income tax
liabilities established in respect of amounts ascribed to circulation on
business acquisitions which are largely not deductible for income tax purposes.
Prior years' financial statements have not been restated for this change in
accounting policy.
RESTRUCTURING PROCESS
On April 25, 2000, Hollinger International announced that its board of directors
had approved a process whereby most of the company's community newspaper assets
will be made available for sale and some of its metropolitan newspaper assets
will be made available for merger or affiliation on terms consistent with the
full enterprise value of such assets. Morgan Stanley Dean Witter has
<PAGE> 5
==============================================================================
been retained to act as the company's professional adviser and in that role will
coordinate the process. Cash proceeds from such transactions will be utilized to
reduce debt, to purchase and cancel Hollinger International's own shares and, if
deemed advisable, to distribute to its shareholders. As has been stated in
successive annual reports and at shareholders' meetings, management considers
the company's shares undervalued and the most effective means of narrowing the
gap between the enterprise value and imputable market value of these assets is
to sell some of them and apply the proceeds to debt reduction and share
cancellation.
HOLLINGER INTERNATIONAL INC.
Hollinger International's operations are composed of the Chicago Group including
the Chicago Sun-Times, the Community Group which includes The Jerusalem Post,
the U.K. Newspaper Group, consisting of the Telegraph Group Limited, and the
Canadian Newspaper Group (held by HCPH) primarily consisting of Southam Inc. and
Hollinger Canadian Newspapers, Limited Partnership.
TELEGRAPH GROUP LIMITED
EBITDA for the three months ended 31 March 2000 was (pound)28.5 million,
compared to (pound)24.3 million during the corresponding period in 1999, an
increase of over 17%.
The ABC net circulation figure for The Daily Telegraph for the period October
1999 to March 2000 was 1,032,745, more than 309,000 ahead of its nearest
competitor The Times. The Daily Telegraph sold an average of 1,038,079 copies
during March 2000. The ABC net circulation figure for The Sunday Telegraph for
the period October 1999 to March 2000 was 819,167. The ABC weekly circulation
figure for The Spectator magazine for the period July to December 1999 was
58,459 compared to 57,247 for the same period in 1998.
<PAGE> 6
Advertising revenue in local currency for the first quarter was up 17.1% year on
year. Classified sections continue to perform well, in particular the
recruitment, travel and property sections where revenue has increased
year-on-year by 12.4%, 11.9% and 23.1% respectively. Display advertising also
performed strongly during the first quarter with an increase of 23.2% over the
same period last year.
In January a new separate travel supplement was added to The Sunday Telegraph
package and in March, The Sunday Telegraph was awarded National Newspaper of the
Year in the British Press Awards.
Hollinger Telegraph New Media Limited (HTNM) was established early in 2000 as a
separate entity, to drive Hollinger's UK and European online and digital
activities. HTNM now incorporates the Electronic Telegraph network which
currently has 18 websites. HTNM also oversees Hollinger's interests in UKMax.com
a UK portal, handbag.com, a joint venture with Boots which has established
itself as the leading woman's portal site in the UK, and Interactive Investor
International (29% interest), a leading website for financial investors.
Electronic Telegraph (ET) is now focusing on the further development of
commercially-driven channels which are separate businesses built around the News
and Features hub of ET. ET remains the pre-eminent online news service in the
UK, currently reaching up to 75,000 individuals per day, and serving 16 million
page impressions per month. The ET sales team which generates banner,
sponsorship and e-commerce revenues has greatly increased revenues by 138% over
the same period last year. Significant investment is currently being made in the
infrastructure delivering ET to exploit the current technology and application
systems now available which are materially better than when ET was launched over
five years ago.
THE CHICAGO GROUP
The Chicago Group revenue in local currency grew 2% for the first quarter from
1999 to 2000 primarily resulting from increased advertising revenue. National
advertising was up year-over-year,
<PAGE> 7
driven by telecom, dot-com and financial advertising. Classified and retail
advertising were basically flat versus last year; however, the Chicago Sun-Times
has recently announced certain organizational changes which should support
future advertising growth.
During the quarter, Classifieds Chicago (a joint venture with Copley Chicago
Newspapers and Paddock Publications, the parent of the Daily Herald), which
includes classified advertising from over 100 titles in the Chicago area, was
launched to support growth in Internet-related classified advertising revenue.
Also during the quarter, development has continued on an enhanced Chicago
Sun-Times site adding new e-commerce opportunities with several partners and
improved features and functionality.
EBITDA in local currency for the quarter increased 1% over 1999. Newsprint
expense has declined year-over-year as first quarter 2000 pricing is still lower
than first quarter 1999 by approximately 14%.
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 in local currency the Community Group first
quarter 2000 operating revenue increased 12% from 1999 and EBITDA increased 11%
from 1999.
CANADIAN NEWSPAPER GROUP
First quarter operating revenue for the Canadian Newspaper Group was $406.6
million compared with $387.2 million in 1999. EBITDA for the first quarter of
2000 was $62.3 million compared to $54.1 million in 1999. This represents a
growth from 1999 in EBITDA of 15.2%. The improvement in EBITDA was in large
part, the result of improved operating results at the National Post partly
offset by increased losses from internet operations. The National Post EBITDA
loss for the first
<PAGE> 8
quarter 2000 was $11.1 million, a $6.4 million improvement over the EBITDA loss
of $17.5 million in the first quarter of 1999, reflecting a 44% increase in
revenue year-over-year. EBITDA losses from internet operations were $4.6 million
in 2000 compared with a loss of $2.2 million in 1999.
All of the major units performed well and the Calgary Herald was unaffected,
both in circulation and profitability, by the strike of certain journalists and
mailroom employees that continued throughout the quarter.
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
RETRACTION PRICE OF RETRACTABLE COMMON SHARES
The retraction price of the outstanding retractable common shares of the Company
as of April 3, 2000 was $10.00 per share.
SHARE CAPITAL INFORMATION
As at May 17, 2000, the issued shares and options to purchase retractable common
shares of the Company were as follows:
Preference shares Retractable common shares Options
12,508,198 Series II 37,132,105 928,000
10,147,225 Series III
<PAGE> 9
GENERAL
At March 31, 2000, Hollinger's publishing interests included 77 daily newspapers
and 302 non-daily newspapers. Total paid daily circulation, including The Daily
Telegraph and the Chicago Sun-Times, was approximately $4.0 million. The total
circulation of the non-dailies was approximately $7.5 million. Web sites are
operated at all of the major newspapers. Through its Hollinger Digital
subsidiary, it operates the Canada.com national portal site and a variety of
other specialized sites.
DIVIDENDS
A regular quarterly dividend of 15 (cent) per retractable common share has been
declared payable on June 10, 2000 to shareholders of record on May 26, 2000.
May 17, 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>
March 31 December 31
2000 1999
----------- -----------
(not audited)
<S> <C> <C>
ASSETS
Investment in Hollinger International................. $ 748,439 $ 903,753
Other investments..................................... 12,285 12,004
Other assets.......................................... 38,342 26,775
----------- -----------
$ 799,066 $ 942,532
----------- -----------
LIABILITIES
Exchangeable shares................................... $ 253,433 $ 285,211
Other liabilities..................................... 309,865 310,583
----------- -----------
563,298 595,794
----------- -----------
NET ASSETS REPRESENTING SHAREHOLDERS' EQUITY
Capital stock......................................... 315,229 315,229
Net unrealized appreciation of investments............ 44,365 181,798
Net unrealized increase in liabilities................ 32,340 15,429
Retained earnings..................................... (156,166) (165,718)
----------- -----------
235,768 346,738
----------- -----------
$ 799,066 $ 942,532
----------- -----------
RETRACTABLE COMMON SHARES OUTSTANDING................. 37,196,415 37,196,415
----------- -----------
NET ASSET VALUE PER RETRACTABLE COMMON SHARE.......... $ 6.34 $ 9.32
=========== ===========
</TABLE>
STATEMENT OF INCOME AND EXPENSES
(not audited)
(in thousands of dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
------------------------
2000 1999
-------- --------
<S> <C> <C>
INCOME
Dividends ...................................... $ 11,340 $ 12,774
Interest and other ............................. 1,105 3,412
Net management fees ............................ 5,519 4,593
-------- --------
17,964 20,779
-------- --------
EXPENSES
Administrative and other expenses .............. 2,955 5,338
Interest expense ............................... 7,643 13,996
-------- --------
10,598 19,334
-------- --------
Income before the undernoted ................... 7,366 1,445
Unusual items .................................. 70 21,050
Income tax expense ............................. (583) (665)
-------- --------
Net income for the period ...................... $ 6,853 $ 21,830
-------- --------
EARNINGS PER RETRACTABLE COMMON SHARE .......... $ 0.18 $ 0.66
-------- --------
</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 MARCH 31, 2000
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales revenue .......... $ 135,385 $ 28,923 $ 238,570 $ 406,628 $ -- $ 809,506
Cost of sales and
expenses ............. 115,577 24,144 172,152 344,336 1,650 657,859
---------- ---------- ---------- ---------- ---------- ----------
Income before interest,
taxes, depreciation
and amortization...... 19,808 4,779 66,418 62,292 (1,650) 151,647
Depreciation and
amortization ......... 7,249 2,301 15,149 29,479 1,625 55,803
---------- ---------- ---------- ---------- ---------- ----------
Operating income........ $ 12,559 $ 2,478 $ 51,269 $ 32,813 $ (3,275) $ 95,844
---------- ---------- ---------- ---------- ---------- ----------
Total assets ........... $ 757,337 $ 246,970 $1,203,143 $3,105,231 $ 316,799 $5,629,480
---------- ---------- ---------- ---------- ---------- ----------
Expenditures on capital
assets................ $ 13,581 $ 1,439 $ 8,110 $ 13,694 $ 157 $ 36,981
---------- ---------- ---------- ---------- ---------- ----------
THREE MONTHS ENDED MARCH 31, 1999
-----------------------------------------------------------------------------
Sales revenue .......... $ 137,457 $ 50,086 $ 228,006 $ 387,158 $ 1,300 $ 804,007
Cost of sales and
expenses.............. 115,911 41,009 168,184 333,077 6,152 664,333
---------- ---------- ---------- ---------- ---------- ----------
Income before interest,
taxes, depreciation
and amortization...... 21,546 9,077 59,822 54,081 (4,852) 139,674
Depreciation and
amortization.......... 8,645 4,375 15,696 28,129 1,814 58,659
---------- ---------- ---------- ---------- ---------- ----------
Operating income ....... $ 12,901 $ 4,702 $ 44,126 $ 25,952 $ (6,666) $ 81,015
---------- ---------- ---------- ---------- ---------- ----------
Total assets ........... $ 672,374 $ 415,674 $1,360,313 $3,069,469 $ 341,423 $5,859,253
---------- ---------- ---------- ---------- ---------- ----------
Expenditures on capital
assets................ $ 22,567 $ 3,588 $ 13,480 $ 17,352 $ 1,088 $ 58,075
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
NOTE
1. Corporate and Other revenue includes revenues of miscellaneous newspaper
operations.
<PAGE> 12
CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
<TABLE>
<CAPTION>
March 31 December 31
2000 1999
---------- ----------
(not audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash .............................................. $ 62,579 $ 74,441
---------- ----------
Accounts receivable ............................... 526,733 528,072
Inventory ......................................... 64,429 50,089
653,741 652,602
INVESTMENTS ....................................... 183,378 159,744
CAPITAL ASSETS .................................... 3,898,395 3,915,168
GOODWILL AND OTHER ASSETS ......................... 893,966 922,920
---------- ----------
$5,629,480 $5,650,434
---------- ----------
LIABILITIES
CURRENT LIABILITIES
Bank indebtedness ................................. $ 311,227 $ 307,961
Accounts payable and accrued expenses ............. 540,670 603,441
Income taxes payable .............................. 55,260 73,863
Current portion of long-term debt ................. 69,891 71,437
Exchangeable shares ............................... 52,647 51,421
---------- ----------
1,029,695 1,108,123
LONG-TERM DEBT .................................... 2,470,581 2,393,979
EXCHANGEABLE SHARES ............................... 200,786 233,790
Deferred unrealized gain .......................... 37,992 21,139
Future income taxes ............................... 925,766 401,294
---------- ----------
4,664,820 4,158,325
---------- ----------
MINORITY INTEREST AND DEFERRED CREDITS ............ 1,122,890 1,353,221
---------- ----------
SHAREHOLDERS' EQUITY
Capital stock ..................................... 315,229 315,229
Deficit (note 1) .................................. (464,351) (180,732)
---------- ----------
(149,122) 134,497
Equity adjustment from foreign currency translation (9,108) 4,391
---------- ----------
(158,230) 138,888
---------- ----------
$5,629,480 $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> 13
CONSOLIDATED STATEMENT OF EARNINGS
(not audited)
(in thousands of dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------
2000 1999
--------- ---------
<S> <C> <C>
REVENUE
Sales ............................................ $ 809,506 $ 804,007
Investment and other income ...................... 2,385 7,714
--------- ---------
811,891 811,721
--------- ---------
EXPENSES
Cost of sales and expenses ....................... 657,859 664,333
Depreciation and amortization .................... 55,803 58,659
Interest expense ................................. 66,101 62,319
--------- ---------
779,763 785,311
--------- ---------
NET EARNINGS (LOSS) IN EQUITY ACCOUNTED
COMPANIES ........................................ 639 (223)
--------- ---------
NET FOREIGN CURRENCY GAINS(LOSSES) ............... 490 (1,239)
--------- ---------
EARNINGS BEFORE THE UNDERNOTED ................... 33,257 24,948
Unusual items .................................... 37,194 323,162
Income taxes ..................................... (28,121) (135,769)
Minority interest ................................ (29,366) (102,932)
--------- ---------
NET EARNINGS ..................................... $ 12,964 $ 109,409
========= =========
(dollars)
NET EARNINGS PER RETRACTABLE COMMON SHARE
Basic ............................................ $ 0.35 $ 3.33
--------- ---------
Fully diluted .................................... $ 0.29 $ 2.87
--------- ---------
CASH FLOW PROVIDED BY OPERATIONS PER
RETRACTABLE COMMON SHARE
Basic ............................................ $ 2.09 $ 2.87
--------- ---------
Fully diluted .................................... $ 2.04 $ 2.70
--------- ---------
</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
and other costs and foreign currency translation adjustment.
<PAGE> 14
CONSOLIDATED STATEMENT OF CASH FLOW
(not audited)
(in thousands of dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-------------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH PROVIDED BY (USED FOR):
OPERATIONS
Net earnings ................................... $ 12,964 $ 109,409
Unusual items .................................. (37,194) (323,162)
Current income taxes related to unusual items... 7,325 144,383
Items not involving cash:
Depreciation and amortization .................. 55,803 58,659
Future income taxes ............................ 10,207 1,633
Net earnings in equity accounted companies,
net of dividends received..................... (519) 223
Minority interest .............................. 29,366 102,932
Other .......................................... (352) 302
--------- ---------
CASH FLOW PROVIDED BY OPERATIONS ............... 77,600 94,379
Change in non-cash operating working capital.... (166,941) 427,530
Cash used for discontinued operations........... (473) (520)
Other costs .................................... (3,005) (1,911)
--------- ---------
(92,819) 519,478
--------- ---------
FINANCING
Redemption and cancellation of capital stock.... -- (821)
Redemption and cancellation of exchangeable
shares ....................................... (962) --
Issue of common shares of subsidiaries.......... -- 56
Capital stock of subsidiaries purchased for
cancellation by subsidiaries ................. -- (68,162)
Increase (decrease) in long-term debt and
deferred liabilities.......................... 129,767 (270,199)
Decrease in capital lease obligations........... (700) (363)
Retirement of liquid yield option notes......... -- (122)
Dividends ...................................... (5,580) (4,935)
Dividends and distributions paid to minority
interests..................................... (16,745) (13,469)
--------- ---------
105,780 (358,015)
--------- ---------
INVESTMENT
Proceeds on disposal of fixed assets............ 1,775 370
Additions to fixed assets and assets under
capital leases................................ (27,529) (43,637)
Additions to investments ....................... (21,504) (956)
Proceeds on disposal of investments............. 35,826 2,659
Additions to circulation ....................... (9,452) (14,438)
Increase in goodwill and other assets........... (1,376) (41,009)
Investment in newspaper operations ............. (2,471) (600,240)
Proceeds on disposal of newspaper operations ... -- 557,887
--------- ---------
(24,731) (139,364)
--------- ---------
Effect of exchange rate
changes on cash............................... (92) (1,415)
--------- ---------
(DECREASE) INCREASE IN CASH POSITION ........... (11,862) 20,684
CASH AT BEGINNING OF PERIOD .................... 74,441 128,061
--------- ---------
CASH AT END OF PERIOD .......................... $ 62,579 $ 148,745
========= =========
</TABLE>
<PAGE> 15
RECONCILIATION TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
(not audited)
(in thousands of Canadian dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-----------------------
2000 1999
--------- ---------
(note 5)
<S> <C> <C>
NET EARNINGS
NET EARNINGS FOR THE PERIOD
BASED ON CANADIAN GAAP ............................. $ 12,964 $ 109,409
Capitalization of betterments,
net of related amortization ...................... (1,228) (3,234)
Acquired tax losses (note 6) ....................... -- 173
Foreign exchange (note 2) .......................... (1,003) --
Compensation to employees .......................... -- (103)
Business combinations (note 4) ..................... 233 233
Adjustment to tax provision (note 6) ............... -- (4,000)
Financial instruments (note 3) ..................... 3,687 9,402
Other .............................................. 19 38
--------- ---------
NET EARNINGS FOR THE
PERIOD BASED ON U.S. GAAP .......................... $ 14,672 $ 111,918
--------- ---------
BASIC EARNINGS PER RETRACTABLE COMMON SHARE: ....... (dollars)
Earnings before extraordinary items (note 3) ....... $ 0.77 $ 3.14
--------- ---------
Net earnings ....................................... $ 0.77 $ 3.14
--------- ---------
DILUTED EARNINGS PER RETRACTABLE COMMON SHARE:
Earnings before extraordinary items ................ $ 0.72 $ 2.86
--------- ---------
Net earnings ....................................... $ 0.72 $ 2.86
--------- ---------
</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, 2000 and
March 31, 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. 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 $16,683,000 as at March 31, 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. U.S GAAP earnings for the three months ended March 31, 1999 have been
increased by $8,494,000 as a result of a restatement to include the effects
of dividends accrued on the Series I, II, and III preference shares which
are treated as interest expense under Canadian GAAP, but as dividends paid
under U.S. GAAP. This adjustment had no impact on U.S. GAAP earnings per
share.
6. Effective January 1, 2000, the Company adopted on a retroactive basis new
Canadian accounting standards for income taxes which are comparable to the
related US accounting standards. As a result of this change, the Company
will not have any significant differences between Canadian and U.S. GAAP in
respect of income taxes for periods subsequent to January 1, 2000. Under
Canadian accounting standards, the Company is not required to restate its
comparative figures for prior years and the cumulative effect of this
change in accounting policy of $291,000,000 (net of related minority
interest) has been charged directly to retained earnings. Substantially all
of this adjustment is attributable to future income tax liabilities
established in respect of amounts ascribed to circulation on business
acquisitions which are largely not deductible for income tax purposes.
Under U.S. GAAP, the establishment of such future tax liabilities on
business acquisitions, would have resulted in additional goodwill being
recorded for an equivalent amount. The new Canadian accounting standard for
income taxes does not require the restatement of prior years' business
acquisitions and permits the adjustment otherwise made to goodwill under
U.S. GAAP, to be made directly to retained earnings (net of the related
minority interest). As a result of not restating comparative figures,
differences between Canadian and U.S. GAAP for income taxes still existed
for the period prior to January 1, 2000.
<PAGE> 16
<TABLE>
<S> <C>
TRANSFER AGENTS AND REGISTRARS MAJOR ELECTRONIC WEB SITES
Retractable Common Shares and Series II and Hollinger International http://www.hollinger.com
III Preference Shares: Telegraph http://www.telegraph.co.uk
Montreal Trust Company of Canada, Toronto http://www.UKMax.com
STOCK EXCHANGE LISTINGS http://www.thebestofbritish.com
The Retractable Common Shares are listed on The Chicago Sun-Times http://www.suntimes.com
Toronto Stock Exchange (stock symbol HLG.C) Chicago Network http://www.chicago-news.com
The Series II and III Preference Shares are listed on Jerusalem Post http://jpost.co.il
The Toronto Stock Exchange (trading symbols
HLG.PR.B and HLG.PR.C, respectively). Southam http://www.canada.com
NVESTOR INFORMATION UniMedia http://www.unimedia.ca
National Post http://www.nationalpost.com
Holders of the Company's securities and other
interested parties seeking information about National Post Site http://www.canada.com
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:
Montreal Trust Company of Canada,
Tel: (416) 981-9633 or 1-800-663-9097 (toll free in
Canada and U.S.) Fax: (416) 981-9800
e-mail: [email protected]
Hollinger Inc.
10 Toronto Street, Toronto, Ontario, M5C 2B7
General Enquiries: Telephone (416) 363-8721
Fax: (416) 364-2088
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