TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

     [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2001

OR

     [    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to _____________

Commission File No. 0-24004

HOLLINGER INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 95-3518892
(I.R.S. Employer
Identification No.)

401 North Wabash Avenue, Suite 740, Chicago, Illinois 60611
(Address of Principal executive offices)        (Zip Code)

Registrant’s telephone number, including area code (312) 321-2299

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes          No ____

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at November 9, 2001
Class A Common Stock par value $.01 per share	86,051,368 shares
Class B Common Stock par value $.01 per share	14,990,000 shares

INDEX

HOLLINGER INTERNATIONAL INC.

		PAGE
PART I	FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition	11
Item 3	Quantitative and Qualitative Analysis about Market Risk	18
PART II	OTHER INFORMATION
Item 6.	Exhibits and reports on Form 8-K	20
	Signatures	21

PART I. FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended
September 30, 2001 and September 30, 2000
(Amounts in Thousands, Except Per Share Data)
(Unaudited)

			Three Months Ended September 30						Nine Months Ended September 30
			2001			2000			2001			2000
Operating revenues:
		Advertising	$	179,977		$	373,732		$	630,163		$	1,203,922
		Circulation		68,204			118,444			215,430			356,878
		Job printing		5,478			14,169			19,319			44,354
		Other		9,865			11,129			31,135			35,659
		Total operating revenues		263,524			517,474			896,047			1,640,813
Operating costs and expenses:
		Newsprint		48,447			76,517			161,976			233,571
		Compensation costs		87,490			172,449			285,560			526,561
		Stock-based compensation		(486	)		1,652			(1,364	)		1,652
		Other operating costs		128,460			198,837			415,433			609,843
		Infrequent items		953			1,109			4,808			5,439
		Depreciation		9,440			16,262			28,287			48,967
		Amortization		8,769			15,630			27,506			46,737
		Total operating costs and expenses		283,073			482,456			922,206			1,472,770
Operating income (loss)				(19,549	)		35,018			(26,159	)		168,043
Other income (expense):
	Interest expense			(19,659	)		(40,384	)		(59,505	)		(112,142	)
	Amortization of debt issue costs			(2,511	)		(2,622	)		(7,207	)		(7,781	)
	Interest and dividend income			18,749			3,042			64,293			5,497
	Other income (expense), net			(158,090	)		5,992			(162,952	)		26,852
Total other income (expense)				(161,511	)		(33,972	)		(165,371	)		(87,574	)
Earnings (loss) before income taxes and minority interest				(181,060	)		1,046			(191,530	)		80,469
Provision for (recovery of) income taxes				(39,020	)		2,769			(31,231	)		32,628
Earnings (loss) before minority interest				(142,040	)		(1,723	)		(160,299	)		47,841
Minority interest				(2,425	)		2,198			(6,535	)		18,875
Net earnings (loss)			$	(139,615	)	$	(3,921	)	$	(153,764	)	$	28,966
Basic earnings (loss) per share			$	(1.37	)	$	(0.06	)	$	(1.57	)	$	0.22
Diluted earnings (loss) per share			$	(1.37	)	$	(0.06	)	$	(1.57	)	$	0.22
Weighted average shares outstanding — basic				101,677			98,705			100,861			98,594
Weighted average shares outstanding — diluted				101,677			98,705			100,861			102,943

1

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three and Nine Months Ended September 30, 2001 and September 30, 2000
(Amounts in Thousands)
(Unaudited)

		Three Months Ended September 30						Nine Months Ended September 30
		2001			2000			2001			2000
Net earnings (loss)		$	(139,615	)	$	(3,921	)	$	(153,764	)	$	28,966
Other comprehensive income (loss):
	Unrealized loss on securities available for sale		(84,034	)		(3,906	)		(45,193	)		(1,860	)
	Foreign currency translation adjustment		3,531			(30,322	)		(31,916	)		(86,031	)
Comprehensive income (loss)		$	(220,118	)	$	(38,149	)	$	(230,873	)	$	(58,925	)

2

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
As of September 30, 2001 and December 31, 2000
(Amounts in Thousands)

		September 30,			December 31,
		2001			2000
		(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents	$	273,230		$	137,671
	Accounts receivable, net		225,838			275,826
	Due from affiliates		54,796			39,692
	Inventories		26,075			21,834
	Other current assets		18,275			11,289
Total current assets			598,214			486,312
Investments			503,119			899,078
Property, plant and equipment, net of accumulated depreciation			317,939			360,596
Intangible assets, net of accumulated amortization			715,501			938,314
Deferred financing costs and other assets			36,785			66,697
		$	2,171,558		$	2,750,997
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Current installments of long-term debt	$	3,346		$	4,753
	Accounts payable and accrued expenses		262,569			292,381
	Income taxes payable		322,564			386,678
	Deferred revenue		43,776			60,006
Total current liabilities			632,255			743,818
Long-term debt, less current installments			808,966			807,495
Deferred income taxes			139,720			185,846
Other long-term liabilities			90,592			54,325
Total liabilities			1,671,533			1,791,484
Minority interest			40,162			89,228
Redeemable preferred stock			8,651			13,088
Stockholders’ equity:
	Convertible preferred stock		—			—
	Class A common stock		988			1,060
	Class B common stock		150			150
	Additional paid-in capital		577,599			748,503
	Accumulated other comprehensive income		(240,753	)		(163,644	)
	Retained earnings		336,072			531,156
			674,056			1,117,225
	Class A common stock in treasury, at cost		(179,906	)		(258,604	)
	Class A common stock in escrow		(42,938	)		(1,424	)
Total stockholders’ equity			451,212			857,197
		$	2,171,558		$	2,750,997

3

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 2001 and September 30, 2000
(Amounts in Thousands)
(Unaudited)

			2001			2000
Cash Flows From Operating Activities:
	Net earnings (loss)		$	(153,764	)	$	28,966
	Items not involving cash:
		Depreciation and amortization		55,793			95,704
		Amortization of debt issue costs		7,207			7,781
		Minority interest		(6,535	)		18,875
		Loss on sale of investments		29,157			—
		Gain on sale of assets		(7,311	)		(42,650	)
		Non-cash interest		(45,255	)		—
		Other non-cash items		37,419			14,016
	Changes in working capital, net			(467	)		(47,309	)
		Cash provided by (used in) operating activities		(83,756	)		75,383
Cash Flows From Investing Activities:
	Capital expenditures			(38,018	)		(58,890	)
	Additions to investments			(44,411	)		(57,976	)
	Acquisitions, net			—			(1,963	)
	Proceeds from disposal of investments			310,266			85,987
	Proceeds from disposal of assets			226,989			—
	Other investing activities			—			(1,345	)
		Cash provided by (used in) investing activities		454,826			(34,187	)
Cash Flows From Financing Activities:
	Proceeds from long-term debt			90,245			327,343
	Repayments of long-term debt			(92,545	)		(155,420	)
	Payment of debt issue costs			—			(3,085	)
	Repurchase of common shares and redemption of preferred shares			(145,900	)		—
	Redemption of Special shares of subsidiary			—			(58,164	)
	Changes in amounts due from affiliates			(15,504	)		(37,304	)
	Dividends and distributions to minority interests			(30,950	)		(10,923	)
	Cash dividends paid			(41,320	)		(47,779	)
	Other financing activities			6,026			(4,379	)
		Cash provided by (used in) financing activities		(229,948	)		10,289
Effect of exchange rate changes on cash				(5,563	)		(2,958	)
Net increase in cash and cash equivalents				135,559			48,527
Cash and cash equivalents at beginning of period				137,671			39,903
Cash and cash equivalents at end of period			$	273,230		$	88,430
Cash paid for interest			$	82,918		$	135,491
Cash paid for taxes			$	52,338		$	24,929

4

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1 — Unaudited Financial Statements

     The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. It is presumed that the reader has already read the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.

     In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the fiscal year. For further information, refer to the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.

Note 2 — Principles of Presentation and Consolidation

     The Company is a subsidiary of Hollinger Inc., a Canadian corporation, which at September 30, 2001 owned approximately 34.4 % of the combined equity and approximately 72.7 % of the combined voting power of the outstanding Common Stock of the Company, without giving effect to the future issuance of Class A Common Stock upon conversion of the Company’s remaining Series E Redeemable Convertible Preferred Stock (“Series E Preferred Stock”).

     The Consolidated Financial Statements include the accounts of the Company and its majority owned subsidiaries and other controlled entities. At September 30, 2001 the Company’s interest in Hollinger Canadian Newspapers, Limited Partnership (“HCNLP”) was 87%.

     All significant intercompany balances and transactions have been eliminated. Certain reclassifications have been made in the 2000 financial statements to conform to the 2001 presentation.

5

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited)

Note 3 — Earnings per share

     The following table reconciles the numerator and denominator for the calculation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2001 and 2000:

		Three Months Ended September 30, 2001
		Income			Shares		Per-Share
		(Numerator)			(Denominator)		Amount
					(in thousands)
Net loss		$	(139,615	)
Add dividends:
	Convertible preferred stock		—
	Series E Preferred Stock		(108	)
Basic EPS
	Net loss available to common stockholders		(139,723	)		101,677	$	(1.37	)
Effect of dilutive securities
	None		—			—
Diluted EPS
	Net loss available to common stockholders and assumed conversions	$	(139,723	)		101,677	$	(1.37	)

		Three Months Ended September 30, 2000
		Income			Shares		Per-Share
		(Numerator)			(Denominator)		Amount
					(in thousands)
Net loss		$	(3,921	)
Deduct dividends:
	Convertible preferred stock		(2,138	)
	Series E Preferred Stock		(128	)
Basic EPS
	Net income available to common stockholders		(6,187	)		98,705	$	(0.06	)
Effect of dilutive securities
	None		—			—
Diluted EPS
	Net income available to common stockholders and assumed conversions	$	(6,187	)		98,705	$	(0.06	)

6

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited)

		Nine Months Ended September 30, 2001
		Income			Shares		Per-Share
		(Numerator)			(Denominator)		Amount
					(in thousands)
Net loss		$	(153,764	)
Add dividends:
	Convertible preferred stock		(4,274	)
	Series E Preferred Stock		(359	)
Basic EPS
	Net loss available to common stockholders		(158,397	)		100,861	$	(1.57	)
Effect of dilutive securities
	None		—			—
Diluted EPS
	Net loss available to common stockholders and assumed conversions	$	(158,397	)		100,861	$	(1.57	)

		Nine Months Ended September 30, 2000
		Income				Shares		Per-Share
		(Numerator)				(Denominator)		Amount
					(in thousands)
Net earnings		$	28,966
Deduct dividends:
	Convertible preferred stock		(6,412	)
	Series E Preferred Stock		(392	)
Basic EPS
	Net income available to common stockholders		22,162				98,594	$	0.22
Effect of dilutive securities
	HCPH Special shares		—				3,291
	Stock options		—				1,058
Diluted EPS
	Net income available to common stockholders and assumed conversions	$	22,162				102,943	$	0.22

7

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited)

Note 4 — Segment Information

     The Company operates principally in the business of publishing, printing and distribution of newspapers and magazines and holds investments principally in companies that operate in the same business as the Company. The Community Group includes the results of the Jerusalem Post. XSTM Holdings (2000) Inc. (formerly Southam Inc.), Hollinger Canadian Newspapers, Limited Partnership and The National Post Company make up the Canadian Newspaper Group. On September 1, 2001 the Company sold its interest in The National Post Company. Effective January 1, 2001 corporate overhead costs, which had previously been allocated, are disclosed separately in the Investment and Corporate Group. Segment information for both the three months and nine months ended September 30, 2000 has been restated to conform to the 2001 disclosure. The following is a summary of the segments of the Company:

	Three months ended September 30, 2001
							U.K.			Canadian			Investment
	Chicago			Community			Newspaper			Newspaper			and Corporate
	Group			Group			Group			Group			Group			Total
	(in thousands)
Revenues	$	109,982		$	4,850		$	111,340		$	37,352		$	—		$	263,524
Depreciation and amortization	$	9,276		$	611		$	5,190		$	2,675		$	457		$	18,209
Operating income (loss), excluding infrequent items and stock-based compensation	$	1,660		$	(436	)	$	(1,215	)	$	(14,972	)	$	(4,119	)	$	(19,082	)
Equity in loss of affiliates	$	(628	)	$	—		$	(2,308	)	$	—		$	—		$	(2,936	)

	Nine months ended September 30, 2001
							U.K.			Canadian			Investment
	Chicago			Community			Newspaper			Newspaper			and Corporate
	Group			Group			Group			Group			Group			Total
	(in thousands)
Revenues	$	333,580		$	15,131		$	371,161		$	176,175		$	—		$	896,047
Depreciation and amortization	$	27,374		$	1,647		$	14,473		$	10,873		$	1,426		$	55,793
Operating income (loss), excluding infrequent items and stock-based compensation	$	6,878		$	(2,480	)	$	24,841		$	(38,065	)	$	(13,889	)	$	(22,715	)
Equity in loss of affiliates	$	(2,893	)	$	—		$	(10,411	)	$	—		$	—		$	(13,304	)
Total assets	$	612,030		$	69,474		$	546,397		$	645,109		$	298,548		$	2,171,558
Capital expenditures	$	9,503		$	11,951		$	13,869		$	2,525		$	170		$	38,018

8

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited)

	Three months ended September 30, 2000
						U.K.			Canadian		Investment
	Chicago			Community		Newspaper			Newspaper		and Corporate
	Group			Group		Group			Group		Group			Total
	(in thousands)
Revenues	$	96,863		$	17,540	$	128,845		$	274,226	$	—		$	517,474
Depreciation and amortization	$	5,743		$	1,580	$	4,087		$	20,045	$	437		$	31,892
Operating income (loss), excluding infrequent items and stock-based compensation	$	8,118		$	209	$	13,740		$	19,501	$	(3,789	)	$	37,779
Equity in earnings (loss) of affiliates	$	(45	)	$	—	$	(899	)	$	161	$	—		$	(783	)

	Nine months ended September 30, 2000
						U.K.			Canadian		Investment
	Chicago			Community		Newspaper			Newspaper		and Corporate
	Group			Group		Group			Group		Group			Total
	(in thousands)
Revenues	$	291,124		$	59,155	$	429,692		$	860,842	$	—		$	1,640,813
Depreciation and amortization	$	15,907		$	5,437	$	12,924		$	60,123	$	1,313		$	95,704
Operating income (loss), excluding infrequent items and stock-based compensation	$	29,842		$	4,196	$	71,641		$	79,864	$	(10,409	)	$	175,134
Equity in earnings (loss) of affiliates	$	(135	)	$	—	$	(4,289	)	$	515	$	—		$	(3,909	)
Total assets	$	481,300		$	147,831	$	529,354		$	2,060,936	$	225,144		$	3,444,565
Capital expenditures	$	20,626		$	2,782	$	9,928		$	25,149	$	405		$	58,890

Note 5 — Capital Stock

On May 31, 2001 the Company redeemed all 829,409 shares of Series C Preferred Stock for 7,052,464 shares of Class A Common Stock. The Series C Preferred Stock was held by Hollinger Inc. On September 6, 2001 the Company purchased for cancellation, from Hollinger Inc., the 7,052,464 shares of Class A Common Stock for a total cost of $92.2 million.

9

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements - Continued
(Unaudited)

Note 6 — Investments

In August 2001, the Company sold a participation interest in Cdn. $540 million ($350 million) principal amount of 12 1/8% Fixed Rate Subordinated Debentures due 2010 (debentures) issued by a subsidiary of CanWest Global Communication Corp. (CanWest) to a special purpose trust (the “Participation Trust”). This transaction resulted in proceeds to the Company of $297.5 million and has been accounted for as a sale in accordance with SFAS 140. The net loss on the transaction, including the realized holding losses on the underlying debentures, amounted to $43.9 million and has been included in Other expenses. The net cash proceeds were used to repay amounts borrowed under the Company’s bank credit facility and for general corporate purposes.

Under the terms of the Participation Trust, the interest payments received by the Company in respect of the underlying CanWest debentures will be paid to the Participation Trust. However, after May 15, 2003 the Company may be required to deliver, to the Participation Trust, CanWest debentures with a face value equivalent to $350 million. Given that the CanWest debentures are denominated in Canadian dollars, the Company has entered into a forward foreign exchange contract to mitigate its currency exposure. The mark to market gain on the forward contract and the foreign exchange loss on the residual obligation have been charged to earnings for the period.

In addition, in accordance with the Participation Agreement, the Company cannot transfer to an unaffiliated third party, until at least May 15, 2003, the equivalent of $50 million principal amount of CanWest debentures. The Participation Trust and its investors have no recourse to the Company’s other assets in the event that CanWest defaults on its debentures.

Note 7 — The National Post Company

In August 2001, the Company entered into an agreement to sell to CanWest its 50% interest in The National Post Company (National Post). In accordance with the agreement, the Company’s representatives resigned from their executive positions at the National Post effective September 1, 2001.

Accordingly, since with effect from September 1, 2001, the Company has no influence over the operations of the National Post, the Company no longer consolidates or records on an equity basis its share of earnings or losses. The results of operations of the National Post are included in the consolidated results to August 31, 2001.

Note 8 — Sale of Canadian Properties

Effective August 31, 2001 the Company completed the sale of most of its remaining Canadian newspapers for sale proceeds of approximately Cdn.$220 million, subject to adjustment. Included in this sale were community newspapers in Ontario such as The Kingston Whig-Standard, The Sault Star and the Peterborough Examiner. The consideration for this sale was paid in cash.

10

HOLLINGER INTERNATIONAL INC. AND SUBSIDIARIES

ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

OVERVIEW

     The Company’s business is concentrated in the publishing, printing and distribution of newspapers and includes the Chicago Group, the Community Group, the U.K. Newspaper Group and the Canadian Newspaper Group. The Chicago Group includes the Chicago Sun-Times, Post Tribune and city and suburban newspapers in the Chicago metropolitan area. The Community Group includes one U.S. community newspaper, which was sold during the third quarter, and The Jerusalem Post. The U.K. Newspaper Group includes the operating results of the Telegraph. The Canadian Newspaper Group includes results of XSTM Holdings (2000) Inc. (“Southam”), Hollinger Canadian Newspapers, Limited Partnership (“Hollinger L.P.”) and The National Post Company (“National Post”), which was sold September 1, 2001.

CONSOLIDATED RESULTS OF OPERATIONS

A net loss in the third quarter of 2001 amounted to $139.6 million or a loss of $1.37 per share compared with a net loss of $3.9 million or a loss of $0.06 per share, in 2000. A net loss in the nine months ended September 30, 2001 amounted to $153.8 million or a loss of $1.57 per share compared to net earnings of $29.0 million or earnings of $0.22 per share in 2000.

There were a number of infrequent and non-recurring items affecting the results of both years. In the third quarter of 2001 infrequent and non-recurring items amounted to a net loss of $127.0 million after income tax and minority interest and primarily consisted of gains and losses on sales of certain Canadian properties, an accounting loss in respect of the total return equity swap, gains and losses on sales of investments, duplicative start-up costs related to the new printing facility in Chicago and the write-off of investments. In the third quarter of 2000, infrequent and non-recurring items amounted to a net loss of $0.7 million after income tax and minority interest and primarily included duplicative start-up costs related to the new printing facility in Chicago, severance costs in Canada, gains on assets sales, equity losses at Interactive Investor International plc (III) and stock-based compensation cost.

In the nine months ended September 30, 2001, infrequent and non-recurring items amounted to a net loss of $144.7 million after income tax and minority interest and primarily consisted of gains and losses on sales of Canadian properties, an accounting loss in respect of the total return equity swap, gains and losses on sales of investments, duplicative start-up costs related to the new printing facility in Chicago, equity losses at Internet related investments and the write-off of investments. In the nine months ended September 30, 2000, infrequent and non-recurring items amounted to a net loss of $1.8 million after income tax and minority interest and primarily consisted of duplicative start-up costs related to the new printing facility in Chicago, severance costs in Canada, gains on assets sales, including Trip.com and the partial interest in III, the amount paid on mandatory retirement of HCPH Special shares in excess of the recorded book amount and stock-based compensation cost.

Net earnings from comparable operations, which excludes infrequent and non-recurring items amounted to a net loss of $12.6 million or a loss of $0.13 per diluted share in the third quarter of 2001 compared with a net loss of $3.2 million or a loss of $0.03 per diluted share in 2000. Net earnings from comparable operations amounted to a loss of $9.0 million or a loss of $0.09 per diluted share in the nine months ended September 30, 2001 compared with net earnings of $30.7 million or earnings of $0.27 per diluted share in 2000. In determining diluted earnings per share from comparable operations in 2001 the weighted average common shares issuable prior to actual conversion of the Company’s Series C preferred stock were included. This instrument was anti-dilutive in 2001. In 2000 common shares issuable on exercise of stock options and on conversion of convertible instruments were included whether or not dilutive.

Operating revenue and operating income for the third quarter of 2001 was $263.5 million and a loss of $19.5 million compared with $517.5 million and operating income of $35.0 million in 2000. Operating revenue and operating income for the nine months ended September 30, 2001 was $896.0 million and a loss of $26.2 million compared with $1,640.8 million and operating income of $168.0 million in 2000. The significant decrease in both operating revenue and operating income in the third quarter and nine months ended September 30 was largely the result of the sales of Canadian properties in both 2000 and 2001 and the sale of US Community properties in 2000 but also is due to lower operating results at Chicago Group (excluding the impact of the acquisition of Copley Group), the U.K. Newspaper Group and the remaining Canadian properties.

EBITDA for the third quarter of 2001 was a loss of $1.3 million compared with EBITDA of $66.9 million in 2000, a decrease of $68.2 million. EBITDA for the nine months ended September 30, 2001 was $29.6 million compared with $263.7 million in 2000, a decrease of $234.1 million. Approximately $52.5 million of the third quarter decrease in EBITDA and $175.9 million of the decrease in EBITDA in the nine months ended September 30 were due to assets sold. The balance of the reduction in EBITDA in both the third quarter and the nine months was mainly due to lower operating results at Chicago Group (excluding the impact of the acquisition of Copley Group), the U.K. Newspaper Group and the remaining Canadian properties.

Lower EBITDA in both the third quarter and nine months ended September 30, 2001, was offset in part, by lower interest costs and increased interest and dividend income. Lower interest expense results from significantly lower debt levels in 2001 compared with 2000 as the Company’s Bank Credit Facility, which totaled $972.0 million, was repaid in November 2000 with part of the cash proceeds from the sale of properties to CanWest. Additional reductions in borrowings and increased positive cash resulted from the third quarter sale of participation interests in the CanWest debentures. The increased interest and dividend income primarily results from interest on the CanWest debentures, prior to the sale of participation interests, and a dividend on CanWest shares. Both the CanWest shares and debentures were received as part of the proceeds from the sale of properties to CanWest in November 2000.

Interest expense for the third quarter and nine months ended September 30, 2001, was $19.7 million and $59.5 million versus $40.4 million and $112.1 million in 2000, reductions of $20.7 million and $52.6 million, respectively. Interest and dividend income was $18.7 million and $64.3 million, respectively, for the third quarter and nine months ended September 30, 2001, compared to $3.0 million and $5.5 million in 2000, increases of $15.7 million and $58.8 million respectively. The proceeds from both the sales of operations and the participation interests in the CanWest debentures allowed for the combined $36.4 million and $111.4 million of increased interest and dividend income and interest expense reduction in the third quarter and nine months ended September 30, 2001, respectively.

Net other expense in the third quarter of 2001 amounted to $158.1 million and primarily included gains and losses on sales of certain Canadian properties, an accounting loss in respect of the total return equity swap, gains and losses on sales of investments and the write-off of investments. Net other income in the third quarter of 2000 amounted to $6.0 million and primarily included gains on asset sales, losses from equity accounted companies and foreign currency losses. Net other expense in the nine months ended September 30, 2001 amounted to $163.0 million and primarily included gains and losses on sales of certain Canadian properties, an accounting loss in respect of the total return equity swap, equity losses at Internet related investments, gains and losses on sales of investments and the write-off of investments. Net other income in the nine months ended September 30, 2000 amounted to $26.9 million and primarily included gains on asset sales, losses from equity accounted companies and foreign currency losses.

Minority interest for the nine months ended September 30, 2001 amounted to earnings of $6.5 million and primarily included the minority’s share of the National Post losses from operations to August 31, 2001, offset in part by the minority share of net earnings of Hollinger L.P., including the minority’s share of the gains on sales of Canadian properties by Hollinger L.P.. In 2000 minority interest amounted to an expense of $18.9 million and primarily included the minority’s share of net earnings of Hollinger L.P. and $10.9 million related to the amount paid on mandatory retirement of HCPH Special shares in excess of the recorded book amount.

11

		Three Months Ended September 30,						Nine Months Ended September 30,
		2001			2000			2001			2000
		(dollar amounts in thousands)						(dollar amounts in thousands)
Operating revenues:
	Chicago Group	$	109,982		$	96,863		$	333,580		$	291,124
	Community Group		4,850			17,540			15,131			59,155
	U.K. Newspaper Group		111,340			128,845			371,161			429,692
	Canadian Newspaper Group		37,352			274,226			176,175			860,842
	Investment and Corporate Group		—			—			—			—
Total operating revenue		$	263,524		$	517,474		$	896,047		$	1,640,813
Operating income (loss), excluding infrequent items and stock-based compensation:
	Chicago Group	$	1,660		$	8,118		$	6,878		$	29,842
	Community Group		(436	)		209			(2,480	)		4,196
	U.K. Newspaper Group		(1,215	)		13,740			24,841			71,641
	Canadian Newspaper Group		(14,972	)		19,501			(38,065	)		79,864
	Investment and Corporate Group		(4,119	)		(3,789	)		(13,889	)		(10,409	)
Total operating income (loss), excluding infrequent items and stock-based compensation		$	(19,082	)	$	37,779		$	(22,715	)	$	175,134
EBITDA:
	Chicago Group	$	10,936		$	13,861		$	34,252		$	45,749
	Community Group		175			1,789			(833	)		9,633
	U.K. Newspaper Group		3,975			17,827			39,314			84,565
	Canadian Newspaper Group		(12,297	)		39,546			(27,192	)		139,987
	Investment and Corporate Group		(3,662	)		(3,352	)		(12,463	)		(9,096	)
Total EBITDA		$	(873	)	$	69,671		$	33,078		$	270,838
	Operating revenues:
	Chicago Group		41.7	%		18.7	%		37.2	%		17.7	%
	Community Group		1.8	%		3.4	%		1.7	%		3.6	%
	U.K. Newspaper Group		42.3	%		24.9	%		41.4	%		26.2	%
	Canadian Newspaper Group		14.2	%		53.0	%		19.7	%		52.5	%
	Investment and Corporate Group		0.0	%		0.0	%		0.0	%		0.0	%
Total operating revenue			100.0	%		100.0	%		100.0	%		100.0	%
Operating income (loss), excluding infrequent items and stock-based compensation:
	Chicago Group		-8.7	%		21.5	%		-30.3	%		17.0	%
	Community Group		2.3	%		0.5	%		10.9	%		2.4	%
	U.K. Newspaper Group		6.4	%		36.4	%		-109.3	%		40.9	%
	Canadian Newspaper Group		78.5	%		51.6	%		167.6	%		45.6	%
	Investment and Corporate Group		21.5	%		-10.0	%		61.1	%		-5.9	%
Total operating income (loss), excluding infrequent items and stock-based compensation			100.0	%		100.0	%		100.0	%		100.0	%
EBITDA:
	Chicago Group		-1252.7	%		19.9	%		103.5	%		16.9	%
	Community Group		-20.1	%		2.6	%		-2.5	%		3.6	%
	U.K. Newspaper Group		-455.3	%		25.6	%		118.9	%		31.2	%
	Canadian Newspaper Group		1408.6	%		56.7	%		-82.2	%		51.7	%
	Investment and Corporate Group		419.5	%		-4.8	%		-37.7	%		-3.4	%
Total EBITDA			100.0	%		100.0	%		100.0	%		100.0	%
EBITDA Margin:
	Chicago Group		9.9	%		14.3	%		10.3	%		15.7	%
	Community Group		3.6	%		10.2	%		n/a			16.3	%
	U.K. Newspaper Group		3.6	%		13.8	%		10.6	%		19.7	%
	Canadian Newspaper Group		n/a			14.4	%		n/a			16.3	%
	Investment and Corporate Group		n/a			n/a			n/a			n/a
Total EBITDA Margin			n/a			13.5	%		3.7	%		16.5	%

See Notes on page 14

12

			Three Months Ended September 30,						Nine Months Ended September 30,
			2001			2000			2001			2000
			(dollar amounts in thousands)						(dollar amounts in thousands)
Chicago Group
	Operating revenue
		Advertising	$	84,092		$	73,270		$	254,407		$	219,970
		Circulation		22,950			19,528			69,626			59,386
		Job printing and other		2,940			4,065			9,547			11,768
	Total operating revenue			109,982			96,863			333,580			291,124
	Operating costs
		Newsprint		19,321			16,460			57,747			47,899
		Compensation costs		44,940			35,573			136,122			110,121
		Other operating costs		34,785			30,969			105,459			87,355
		Depreciation		4,303			2,151			12,491			6,469
		Amortization		4,973			3,592			14,883			9,438
	Total operating costs			108,322			88,745			326,702			261,282
	Operating income, excluding infrequent items and stock-based compensation		$	1,660		$	8,118		$	6,878		$	29,842
Community Group
	Operating revenue
		Advertising	$	1,276		$	10,275		$	4,604		$	34,556
		Circulation		1,966			4,929			5,953			16,612
		Job printing and other		1,608			2,336			4,574			7,987
	Total operating revenue			4,850			17,540			15,131			59,155
	Operating costs
		Newsprint		619			1,657			1,661			5,321
		Compensation costs		1,694			6,588			6,450			21,880
		Other operating costs		2,362			7,506			7,853			22,321
		Depreciation		392			837			957			2,519
		Amortization		219			743			690			2,918
	Total operating costs			5,286			17,331			17,611			54,959
Operating income (loss), excluding infrequent items and stock-based compensation			$	(436	)	$	209		$	(2,480	)	$	4,196
U.K. Newspaper Group
	Operating revenue
		Advertising	$	71,280		$	84,821		$	254,921		$	296,819
		Circulation		34,835			37,430			101,431			112,248
		Job printing and other		5,225			6,594			14,809			20,625
	Total operating revenue			111,340			128,845			371,161			429,692
	Operating costs
		Newsprint		22,341			21,867			71,781			70,238
		Compensation costs		23,212			22,881			70,237			71,478
		Other operating costs		61,812			66,270			189,829			203,411
		Depreciation		2,916			1,752			7,647			5,625
		Amortization		2,274			2,335			6,826			7,299
	Total operating costs			112,555			115,105			346,320			358,051
	Operating income, excluding infrequent items and stock-based compensation		$	(1,215	)	$	13,740		$	24,841		$	71,641
Canadian Newspaper Group
	Operating revenue
		Advertising	$	23,329		$	205,366		$	116,231		$	652,577
		Circulation		8,453			56,557			38,420			168,632
		Job printing and other		5,570			12,303			21,524			39,633
	Total operating revenue			37,352			274,226			176,175			860,842
	Operating costs
		Newsprint		6,166			36,533			30,787			110,113
		Compensation costs		16,584			106,486			69,776			320,179
		Other operating costs		26,899			91,661			102,804			290,563
		Depreciation		1,543			11,281			6,277			33,632
		Amortization		1,132			8,764			4,596			26,491
	Total operating costs			52,324			254,725			214,240			780,978
	Operating income (loss), excluding infrequent items and stock-based compensation		$	(14,972	)	$	19,501		$	(38,065	)	$	79,864
Investment and Corporate Group
	Operating revenue
		Advertising	$	—		$	—		$	—		$	—
		Circulation		—			—			—			—
		Job printing and other		—			—			—			—
	Total operating revenue			—			—			—			—
	Operating costs
		Newsprint		—			—			—			—
		Compensation costs		1,060			921			2,975			2,903
		Other operating costs		2,602			2,431			9,488			6,193
		Depreciation		286			241			915			722
		Amortization		171			196			511			591
	Total operating costs			4,119			3,789			13,889			10,409
	Operating loss, excluding infrequent items and stock-based compensation		$	(4,119	)	$	(3,789	)	$	(13,889	)	$	(10,409	)

See Notes on page 14

13

		Three Months Ended September 30,						Nine Months Ended September 30,
		2001			2000			2001			2000
		Percentage			Percentage			Percentage			Percentage
Chicago Group
Operating revenue
	Advertising		76.4	%		75.6	%		76.3	%		75.6	%
	Circulation		20.9	%		20.2	%		20.9	%		20.4	%
	Job printing and other		2.7	%		4.2	%		2.8	%		4.0	%
Total operating revenue			100.0	%		100.0	%		100.0	%		100.0	%
Operating costs
	Newsprint		17.6	%		17.0	%		17.3	%		16.5	%
	Compensation costs		40.9	%		36.7	%		40.8	%		37.8	%
	Other operating costs		31.6	%		32.0	%		31.6	%		30.0	%
	Depreciation		3.9	%		2.2	%		3.7	%		2.2	%
	Amortization		4.5	%		3.7	%		4.5	%		3.2	%
Total operating costs			98.5	%		91.6	%		97.9	%		89.7	%
Operating income, excluding infrequent items and stock-based compensation			1.5	%		8.4	%		2.1	%		10.3	%
Community Group
Operating revenue
	Advertising		26.3	%		58.6	%		30.4	%		58.4	%
	Circulation		40.5	%		28.1	%		39.4	%		28.1	%
	Job printing and other		33.2	%		13.3	%		30.2	%		13.5	%
Total operating revenue			100.0	%		100.0	%		100.0	%		100.0	%
Operating costs
	Newsprint		12.8	%		9.4	%		11.0	%		9.0	%
	Compensation costs		34.9	%		37.6	%		42.6	%		37.0	%
	Other operating costs		48.7	%		42.8	%		51.9	%		37.7	%
	Depreciation		8.1	%		4.8	%		6.3	%		4.3	%
	Amortization		4.5	%		4.2	%		4.6	%		4.9	%
Total operating costs			109.0	%		98.8	%		116.4	%		92.9	%
Operating income (loss), excluding infrequent items and stock-based compensation			-9.0	%		1.2	%		-16.4	%		7.1	%
U.K. Newspaper Group
Operating revenue
	Advertising		64.0	%		65.8	%		68.7	%		69.1	%
	Circulation		31.3	%		29.1	%		27.3	%		26.1	%
	Job printing and other		4.7	%		5.1	%		4.0	%		4.8	%
Total operating revenue			100.0	%		100.0	%		100.0	%		100.0	%
Operating costs
	Newsprint		20.1	%		17.0	%		19.3	%		16.4	%
	Compensation costs		20.9	%		17.8	%		18.9	%		16.6	%
	Other operating costs		55.5	%		51.4	%		51.2	%		47.3	%
	Depreciation		2.6	%		1.3	%		2.1	%		1.3	%
	Amortization		2.0	%		1.8	%		1.8	%		1.7	%
Total operating costs			101.1	%		89.3	%		93.3	%		83.3	%
Operating income, excluding infrequent items and stock-based compensation			-1.1	%		10.7	%		6.7	%		16.7	%
Canadian Newspaper Group
Operating revenue
	Advertising		62.5	%		74.9	%		66.0	%		75.8	%
	Circulation		22.6	%		20.6	%		21.8	%		19.6	%
	Job printing and other		14.9	%		4.5	%		12.2	%		4.6	%
Total operating revenue			100.0	%		100.0	%		100.0	%		100.0	%
Operating costs
	Newsprint		16.5	%		13.3	%		17.5	%		12.8	%
	Compensation costs		44.4	%		38.9	%		39.6	%		37.2	%
	Other operating costs		72.0	%		33.4	%		58.3	%		33.7	%
	Depreciation		4.2	%		4.1	%		3.6	%		3.9	%
	Amortization		3.0	%		3.2	%		2.6	%		3.1	%
Total operating costs			140.1	%		92.9	%		121.6	%		90.7	%
Operating income (loss), excluding infrequent items and stock-based compensation			-40.1	%		7.1	%		-21.6	%		9.3	%

Notes:	1)	EBITDA and operating income excludes infrequent items and stock-based compensation.
	2)	Results for three and nine months ended September 30, 2000 have been restated to reflect the 2001 disclosure of Investment and Corporate Group. Corporate overhead costs which had previously been allocated are now disclosed as Investment and Corporate Group.

14

GROUP OPERATING RESULTS

Chicago Group

Operating revenues for the Chicago Group were $110.0 million in the third quarter of 2001 and $333.6 million in the nine months ended September 30, 2001 compared with $96.9 million and $291.1 million in 2000, increases of $13.1 million and $42.5 million respectively. The Copley Group, which was acquired in December 2000 added $19.7 million to operating revenue in the third quarter of 2001 and $60.0 million in the first nine months of 2001. Operating revenue for operations owned in both years (“same store”) was $90.2 million in the third quarter of 2001 compared with $96.8 million in 2000, a decrease of $6.6 million. For the nine months ended September 30, 2001 same store operating revenue was $273.6 million compared with $291.1 million in 2000, a decrease of $17.5 million. Advertising revenue on a same store basis was $69.0 million in the third quarter of 2001 compared with $73.3 million in 2000 a decrease of $4.3 million. Retail advertising was 2.1% lower and accounted for $0.7 million of the decrease. Classified advertising revenues were down $2.3 million or 7.5% during the quarter, almost entirely the result of lower recruitment advertising. National advertising revenues during the third quarter were flat compared with 2000. Advertising revenue on a same store basis was $208.5 million for the nine months ended September 30, 2001 compared with $220.0 million in 2000 a decrease of $11.5 million.

Circulation revenue, on a same store basis, was $18.7 million in the third quarter of 2001 and $56.8 million in the nine months ended September 30, 2001 compared with $19.5 million and $59.4 million in 2000, decreases of $0.8 million and $2.6 million respectively. The decreases are primarily at the Chicago Sun-Times where circulation revenue from both the daily and Sunday newspapers was lower. Circulation volume in the Sunday paper increased compared with the third quarter of 2000 primarily as a result of the events of September 11. However, Sunday circulation revenue was down as a result of price discounting. Daily average circulation volume at the Chicago Sun-Times increased 3.4% compared with the third quarter of 2000, but as a result of discounting and elimination of the Chicago Sun-Times unprofitable “Midwest Edition” which was distributed to outlying communities, daily circulation revenue was also lower.

Total operating costs, excluding infrequent items, in the third quarter of 2001 were $108.3 million and in the nine months ended September 30, 2001 were $326.7 million compared with $88.7 million and $261.3 million respectively in 2000. On a same store basis, total operating costs, excluding infrequent items, were $87.1 million in the third quarter and $263.6 million in the nine months ended September 30, 2001 compared with $88.7 million and $261.3 million in 2000, a decrease of $1.6 million in the third quarter and an increase of $2.3 million in the nine months.

Newsprint expense, on a same store basis, was up $0.6 million in the quarter and $3.0 million in the nine months. Actual third quarter consumption was down by approximately 10.0%, but the average cost-per-ton of newsprint increased 14% from the third quarter of 2000. Compensation costs, on a same store basis, were basically flat in the quarter and $2.0 million lower in the nine months. Other operating costs , on a same store basis, were $3.5 million lower in the quarter and $3.2 million lower in the nine months. Depreciation charges in 2001 were higher than in 2000, primarily as a result of the new printing facility.

On a same store basis, operating income in the third quarter of 2001 was $3.1 million compared to $8.1 million in 2000, a decrease of $5.0 million and in the first nine months of 2001 was $10.0 million compared to $29.8 million in 2000 , a decrease of $19.8 million. These decreases result primarily from lower operating revenue, higher newsprint costs and the higher depreciation charge, offset in part by lower other operating costs.

The Copley Group, which was acquired in December 2000, added $60.0 million to revenue and $3.9 million to EBITDA in 2001. It is expected that Copley’s operating results will improve as cost saving strategies and efficiencies are implemented.

U.K. Newspaper Group

Third quarter operating revenue for the U.K. Newspaper Group was $111.3 million in 2001 compared with $128.8 million in 2000. Operating revenue for the nine months ended September 30, 2001 was $371.2 million compared with $429.7 million in 2000. In pounds sterling operating revenue for the third quarter of 2001 decreased 11.6% and for the nine months ended September 30, 2001 decreased 7.7%.

The decrease in operating revenue primarily resulted from lower advertising revenue. Advertising revenue for the third quarter of 2001, in local currency, was £49.5 million compared to £57.6 million in 2000, a decrease of £8.1 million or 14.1% year on year. For the nine months advertising revenue, in local currency, was £176.8 million compared to £192.6 million in 2000, a decrease of £15.8 million or 8.2% year on year. Display advertising was down 18.0% and classified advertising in total was down 15.8%, compared with the third quarter of 2000. Recruitment advertising in the third quarter was down 30.8% but property advertising revenue increased year-on-year by 10.3%. Within the Display sector, financial advertising decreased 34.5% year on year.

In local currency, circulation revenue in the third quarter decreased £1.1 million or 4.5%, from £25.3 million in 2000 to £24.2 in 2001. On September 5, 2001 the price of The Daily Telegraph on Monday to Friday increased from 45p to 50p and on September 8, 2001, the price of The Daily Telegraph on Saturday increased from 75p to 85p. These increases will likely result in improved circulation revenue for the balance of the year.

In local currency, the UK Group’s newsprint expenses have increased year-on-year in the quarter by 4.7% and in the nine months by 9.3%. A year on year newsprint price increase of 12.0% in the third quarter has been partly offset by reduced consumption due to lower paginations as a result of the lower advertising revenue. Management anticipates that these newsprint price increases should be partially rolled back during the first half of the coming year.

EBITDA in the third quarter of 2001, in local currency, was £2.8 million versus £12.1 million in 2000, a decrease of £9.3 million, primarily the result of lower revenue and newsprint cost increases. After currency conversion, EBITDA for the third quarter of 2001 was $4.0 million versus $17.8 million in 2000, a decrease of $13.8 million. For the nine months ended September 30, 2001 EBITDA was £27.2 million versus £54.5 million in 2000, a decrease of £27.3 million, primarily the result of lower revenue and newsprint cost increases. After currency conversion, EBITDA for the nine months was $39.3 million in 2001 versus $84.5 million in 2000, a decrease of $45.2 million.

Canadian Newspaper Group

Operating revenue and operating income in the Canadian Newspaper Group were $37.4 million and a loss of $15.0 million in the third quarter of 2001, compared with $274.2 million and operating income of $19.5 million in 2000. In the nine months ended September 30, 2001 operating revenue and operating income were $176.2 million and a loss of $38.1 million, compared with $860.8 million and operating income of $79.9 million in 2000. The significant decrease in both operating revenue and operating income results primarily from the sale of operations in 2000 to CanWest, the sale of UniMedia Company completed in January 2001, the August sale of operations to Osprey Media Holdings Inc. and the September 1, 2001 sale of the National Post. The National Post represents a substantial portion of the reported Canadian Newspaper Group operating loss in 2001. The National Post operating loss for the third quarter was $9.1 million in 2001 (July and August) and $13.4 million in 2000 and for the nine months ended September 30, was $37.0 million in 2001 (January to August) and $33.9 million in 2000.

On a same store basis, operating revenue and operating income of the remaining operations were Cdn. $28.7 million and a loss of Cdn. $9.7 million in the third quarter of 2001, compared with Cdn. $30.2 million and a loss of Cdn. $7.8 million in 2000. For the nine months ended September 30, 2001 same store operating revenue and operating income were Cdn. $93.8 million and a loss of Cdn. $14.8 million, compared with Cdn. $96.6 million and a loss of Cdn. $13.3 million in 2000.

Community Group

Revenue and operating income in the third quarter of 2001 were $4.9 million and a loss of $0.4 million, compared to $17.5 million and operating income of $0.2 million in 2000. For the first nine months of 2001, revenue and operating income were $15.1 million and a loss of $2.5 million, compared to $59.2 million and operating income of $4.2 million in 2000. The significant decrease in both revenue and operating income results almost entirely from the sales of Community Group properties that occurred primarily during 2000. During the third quarter 2001 the last remaining U.S. Community Group property was sold. At September 30, 2001 only The Jerusalem Post was still owned by the Company.

Investment and Corporate Group

Operating costs, excluding infrequent items and stock-based compensation, of the Investment and Corporate Group were $4.1 million in the third quarter of 2001, compared with $3.8 million in 2000, an increase of $0.3 million. For the nine months ended September 30, 2001, operating costs, excluding infrequent items and stock-based compensation, were $13.9 million, compared with $10.4 million in 2000, an increase of $3.5 million.

15

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

Working capital consists of current assets less current liabilities. At September 30, 2001, working capital, excluding debt obligations, was a deficiency of $30.7 million compared to a deficiency of $252.8 million at December 31, 2000. Current assets were $598.2 million at September 30, 2001 and $486.3 million at December 31, 2000. Current liabilities, excluding debt obligations, were $628.9 million at September 30, 2001, compared with $739.1 million at December 31, 2000. The $222.1 million reduction in working capital deficiency from December 31, 2000 to September 30, 2001 results primarily from an increase in cash and cash equivalents due to the 2001 sales of Canadian newspaper properties and sale of participation interests in CanWest debentures and from a reclassification from current income taxes payable to deferred taxes payable.

Debt

Long-term debt, including the current portion, was $812.3 million at September 30, 2001 compared with $812.2 million at December 31, 2000.

EBITDA

EBITDA, which is the Company’s earnings before interest expense, amortization of debt issue costs, interest and dividend income, income taxes, depreciation and amortization, minority interest and other income (expense), net, was a loss of $1.3 million for the third quarter of 2001 compared with $66.9 million for the third quarter of 2000 and $29.6 million for the nine months ended September 30, 2001 compared to $263.7 million in 2000. The significant reduction in EBITDA results from both the sale of Canadian Newspaper Group properties and Community Group properties in 2000 and 2001 and from lower operating results at the Chicago Group, the U.K. Newspaper Group and the remaining Canadian properties. Approximately $52.5 million in the third quarter and $175.9 million in the nine months, of the reduced EBITDA, was due to the assets sold. EBITDA is not intended to represent an alternative to operating income (as determined in accordance with generally accepted accounting principles) as an indicator of the Company’s operating performance, or to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) as a measure of liquidity.

Because of all the changes during the past year, EBITDA is no longer as important in measuring the performance and value of the Company as it once was. For example, EBITDA includes all the National Post losses (to August 31, 2001 when it was sold) while only half of them were the responsibility of the Company, and EBITDA ignores the interest and investment income on the CanWest debentures and shares and the substantial reduction in debt and related interest expense reductions.

Cash Flows

Cash flows used in operating activities were $83.8 million in the nine months ended September 30, 2001, compared with cash flows provided by operating activities of $75.4 million in 2000. Excluding changes in working capital (other than cash), cash flows used in operating activities were $83.3 million in 2001 and cash flows provided by operating activities were $122.7 million in 2000. The reduction in cash flows provided by operating activities compared with 2000 primarily results from the sales of Canadian Newspaper Group properties and Community Group properties and lower operating results at the Company’s remaining operations.

Cash flows provided by investing activities were $454.8 million in 2001, and cash flows used in investing activities were $34.2 million in 2000. The cash flows provided by investing activities in 2001 resulted primarily from the sales of Canadian newspaper properties, the sale of participation interests in CanWest debentures offset, in part, by capital expenditures and additions to investments.

16

Cash flows used in financing activities were $229.9 million in 2001 and cash flows provided by financing activities were $10.3 million in 2000. The cash flows used in financing activities in 2001 included cash dividends paid of $41.3 million, distributions to minority interests in HCNLP of $31.0 million and the repurchase of Class A common shares and the redemption of preferred shares totalling $145.9 million. During 2001 the Company utilized approximately $88.0 million of a new bank credit facility. This bank credit facility was repaid in full in August 2001 with part of the proceeds of the sale of participation interests in CanWest debentures.

Total Return Equity Swap

During the third quarter of 2001 the Company purchased 3.6 million of its own Class A common shares, which had previously been subject to a Total Return Equity Swap, at an average price per share of $13.88 for a total consideration of $50.0 million. These shares are included in treasury at September 30, 2001. During November 2001, a party to the Total Return Equity Swap sold in the open market approximately 3.6 million of the Company’s Class A common shares, which were subject to the Total Return Equity Swap, for an average price of approximately $9.70 per share or an accounting loss to the Company of $15.5 million. Approximately $12.6 million of this loss had been recognized at September 30, 2001.

Capital Expenditures and Acquisition Financing

The Chicago Group, the Community Group, the U.K. Newspaper Group and the Canadian Newspaper Group have funded their capital expenditures and acquisition activities out of cash provided by asset sales, operating activities and borrowings under the Company’s credit facility.

Dividends and Other Commitments

The amount available for the payment of dividends and other obligations by the Company at any time is a function of (i) restrictions in agreements binding the Company limiting its ability to pay dividends, management fees and other payments and (ii) restrictions in agreements binding the Company’s subsidiaries limiting their ability to pay dividends, management fees and other payments to the Company. The Company is party to a debt agreement that permits the payment of dividends at the present rate. However, certain agreements binding Hollinger International Publishing Inc. (Publishing) and other subsidiaries of the Company contain such restrictive provisions. As of September 30, 2001, Publishing and its subsidiary companies were not permitted to pay dividends due to restrictions under its debt instruments.

The amount available for the payment of dividends and other obligations by the Company at any time is limited by a number of binding agreements, but the Company expects its internal cash flow and financing resources to be adequate to meet its foreseeable requirements.

17

Other

Certain of the statements in this Form 10-Q may be deemed to be “forward looking” statements. Refer to the Company’s Annual Report on Form 10-K for a discussion of factors that may affect such statements.

Accounting Pronouncements

On July 20, 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, Business Combinations and No. 142 Goodwill and Other Intangible Assets. SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method. Business combinations accounted for as poolings-of-interests and initiated prior to June 30, 2001 are grandfathered. SFAS 142 replaces the requirement to amortize intangible assets with indefinite lives and goodwill with a requirement for an impairment test. SFAS 142 also requires an evaluation of intangible assets and their useful lives and transitional impairment tests for goodwill and certain intangible assets upon adoption. After transition, the impairment tests will be performed annually. SFAS 142 is effective for fiscal years beginning after December 15, 2001, as of the beginning of the year.

In August 2001, the FASB issued SFAS No. 143, Asset Retirement Obligations and SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS 143 requires that an asset retirement liability be recorded at fair value when an enterprise incurs the legal obligation to retire a long-lived asset. The statement is effective for fiscal years beginning after June 15, 2002. SFAS 144 retains the fundamental recognition and measurement principles of current accounting standards for assets to be held and used and the fundamental measurement principles for assets to be held for sale. The new standard introduces recognition principles for assets held for sale and for those to be disposed of other than by sale. The statement is effective for fiscal years beginning after December 15, 2001.

The Company has not yet determined the impact of the above new accounting standards on its financial reporting.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

     Newsprint Newsprint prices continued to fluctuate and on a consolidated basis newsprint expense amounted to $162.0 million in 2001 and $233.6 million in 2000. Management believes that while newsprint prices could continue to show wide price variations in the future, prices for the balance of 2001 in North America are not expected to increase significantly from current levels. In the United Kingdom, newsprint prices payable by the Company in 2001, which are subject to longer-term contracts, have increased from prices paid in 2000 because the contracts in effect for much of 2000 were booked at prices that were well below North American prices. Management believes that newsprint prices in the United Kingdom for the balance of 2001 will not vary significantly from those currently payable and could be partially rolled back during the first half of 2002. Operating divisions take steps to ensure that they have sufficient supply of newsprint and have mitigated cost increases by adjusting pagination and page sizes and printing and distributing practices. Based on levels of usage during the nine months ended September 30, 2001 and based on ownership levels at September 30, 2001, a change in the price of newsprint of $50 per tonne would increase or decrease year to date net earnings by about $8.2 million.

     Inflation During the past three years, inflation has not had a material effect on the Company’s newspaper business in the United States, United Kingdom and Canada.

     Interest Rates At September 30, 2001 the Company has $150.0 million of debt under the Total Return Equity Swap on which interest is calculated at floating rates. As a result the Company is vulnerable to changes in interest rates. Increases in interest rates will reduce net earnings and declines in interest rates can result in increased earnings. Based on debt at September 30, 2001 which is subject to floating interest rates and September 30, 2001 ownership levels and foreign exchanges rates, a 1% change in the floating interest rates would increase or decrease the Company’s year to date net earnings by approximately $0.7 million.

     Foreign Exchange Rates A substantial portion of the Company’s income is earned outside of the United States in currencies other than the United States dollar. As a result the Company’s income is vulnerable to changes in the value of the United States dollar. Increases in the value of the United States dollar can reduce net earnings and declines can result in increased earnings. Based on year to date 2001 earnings and ownership levels, a $0.05 change in the important foreign currencies would have the following effect on the Company’s reported year to date net earnings:

18

	Actual Average
	2001 Rate		Increase/Decrease
United Kingdom	$	1.44/£	$507,000
Canada	$0.65/Cdn.$		$4,100,000

     Electronic Media Management holds the view that newspapers will continue to be an important business segment. Among educated and affluent people, indications are that strong newspaper readership will continue. In fact, it is possible that readership will increase as the population ages. Alternate forms of information delivery such as the Internet could impact newspapers, but recognition of the Internet’s potential combined with a strong newspaper franchise could be a platform for Internet operations. Newspaper readers can be offered a range of Internet services as varied as the content. Virtually all of the Company’s larger newspapers are now published on the Internet as well as in the traditional newsprint format.

     General Economic Outlook The Company's dependence on advertising sales, which generally have a short lead-time, means that it has only a limited ability to predict results for the fiscal year. Newspaper advertising revenue has been negatively impacted by the softening and uncertain economic environment especially so following the events of September 11. At this time, the Company is unable to predict whether the current advertising slowdown represents a short-term deferral of demand that will be reversed in the next six months, or whether, instead, reduced demand will continue for an extended period. If the current slowdown continues, the Company expects that overall newsprint demand would decline and the Company's usage and costs would also decline.

19

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

     None

(b) Reports on Form 8-K

     None

20

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 INTERNATIONAL INC.
Registrant

Date: November 13, 2001 By: /S/ Jack A. Boultbee
Jack A. Boultbee
Executive Vice President

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