34 TORSTAR 2004 CityMedia revenues were up $0.9 million in the fourth quarter excluding the $1.5 million impact of the  accounting change for circulation revenues and $1.3 million from acquisitions. Advertising revenue was flat in the fourth quarter at The Hamilton Spectator as a 4.5% linage decline was offset by a higher effective line rate. However, the fourth quarter linage decrease was the smallest year-over-year decline during 2004. The Record had a small increase in advertising revenue as a strong effective line rate slightly offset a 7.8% decline in linage. CityMedia costs were relatively flat year over year in the fourth quarter. TTN’s revenues were flat in the fourth quarter year over year. Operating losses were $2.7 million in the fourth quarter of 2004, up $1.2 million from $1.5 million in the fourth quarter of 2003. Depreciation expense was $0.3 million higher in the quarter as more systems were installed and operating. Book Publishing revenues were down $9.5 million in the fourth quarter of 2004 excluding the impact of foreign exchange. North America Retail was down $3.3 million, North America Direct-To-Consumer was down $2.2 million and Overseas was down $2.4 million. In the fourth quarter of 2003, the former Creativity division had revenues of $1.6 million. Book Publishing operating profits were down $4.1 million in the fourth quarter of 2004 excluding the impact of  foreign exchange. North America Retail was down  $3.6 million, North America Direct-To-Consumer was up $0.9 million and Overseas was down $1.8 million. In the fourth quarter of 2003, the former Creativity division had operating losses of $0.4 million. North America Retail continued to face challenges in the U.S. mass-market paperback segment. In the North America Direct-To-Consumer division, favourable payment rates and a June 2004 price increase offset the impact of lower volumes and provided an increase in operating profits. In Overseas, Japan and Germany reported lower net sales in the core retail series programs in the fourth quarter. The U.K. had lower net sales for both its series and single title programs. The details of the changes in reported revenues and operating profits for the fourth quarter of 2004 are as  follows (in $000’s): $^{10}$Gains on the U.S. dollar hedges were recorded in operating profit in 2003. Therefore the impact on operating profit in 2004 is the year over year change.  $^{11}$If the 2003 U.S. dollar hedge gain had been reported in revenue, the fourth quarter 2003 operating profit margin would have been 20.3%. $^{9 }$The impact of the U.S. dollar hedges is reported in revenue effective January 1, 2004. The 2003 U.S. dollar hedges were reported directly in operating profit. Torstar has hedged  $75 million of its U.S. dollar revenue at $1.58 in 2004 and $76 million at $1.59 in 2005. There are no hedges in place for 2006. For more details see Note 13 in Torstar’s December 31, 2004 annual financial statements. Reported revenue, 2003 $137,008 Impact of currency movements (5,636) Impact of U.S. dollar hedges 9 7,545 Change in operating revenue (9,526) Reported revenue, 2004 $129,391 Reported operating profit, 2003 $28,819 Impact of currency movements (1,422) Impact of U.S. dollar hedges 10 2,495 Impact of other currency hedges (900) Change in operating profit (4,127) Reported operating profit, 2004 $24,865 Depreciation and amortization 2,235 Segment EBITDA $27,100 2004 2003 Reported: Operating margin 19.2% 21.0% 11 EBITDA margin 20.9% 22.5% Impact of foreign exchange  contracts on margins: Reported operating profit $24,865 $28,819 Hedge gains 6,966 5,372 Adjusted operating profit $17,899 $23,447 Operating profit margin 14.7% 17.1% EBITDA margin 16.5% 18.6% BOOK PUBLISHING MANAGEMENT’S DISCUSSION AND ANALYSIS