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Shortfalls could total $90B

The National Bank says the country's fading economic prospects could put the federal government on track to run $90 billion in deficits over the Liberals' four-year mandate.

In a report, the bank predicts the public books will sink deeper into the red due to the combination of a weakened economy and Liberal promises of billions in fiscal stimulus.

Report author Warren Lovely says if the bank's downgraded growth profile comes to pass then Ottawa could lose $50 billion in revenue over the next four years.

The Liberals have pledged to run deficits in the coming years in order to spend $17.4 billion over its first mandate on infrastructure projects — which they predict will create jobs and generate economic growth.

Since coming to power, however, the Liberals have shied away from their election vow to keep annual deficits under $10 billion as the economy continues to falter amid falling commodity prices.

The Liberals have also promised to balance the budget in the fourth year of their mandate — a goal Lovely says will be difficult to accomplish without tax hikes or spending cuts.

In November, Finance Minister Bill Morneau said the Liberal government had "inherited" a gloomier fiscal situation from its Conservative predecessors, including a $3-billion deficit forecast for the current fiscal year.

"Repeated downgrades to the national growth outlook have nonetheless dealt a heavy blow to the federal budget balance," Lovely wrote in his report, published Wednesday.

Manufacturing faces hurdles

Amid hopes that Canadian manufacturing will drive economic growth in a country reeling from low oil prices, internal federal documents warn the sector's rebirth is staring at "significant" structural obstacles.

In a recent memo addressed to Economic Development Minister Navdeep Bains, advisers point to industry hurdles that include low productivity, poor innovation, a failure to scale up and weak participation in global value chains.

The fate of Canadian manufacturing will have consequences that reach beyond the industry, the briefing note says.

"The manufacturing sector is a cornerstone of the economy and a catalyst for broader economic activity," it notes, identifying several "hot issues" for the new minister.

"It is expected to help spur export-led growth in the second half of 2015 and into 2016; however, it also faces significant structural challenges."

Manufacturing accounts for nearly 11 per cent of Canada's growth — as measured by gross domestic product — and employs 1.7 million people, the memo says.

The document, labelled "secret," was prepared for Bains as he took over the cabinet post in November. It was obtained by The Canadian Press under the Access to Information Act.

The memo could help guide Bains's decisions and also influence the federal budget, expected late next month.

The Liberal government has been exploring ways to respond to the economic shock of sliding commodity prices, which have hit the economy hard — particularly in the oil sector.

The slump forced the economy to contract over the first half of 2015 — in large part because non-energy sectors were very slow in picking up the slack.

Many experts had been expecting the exchange rate, which has dropped along with oil prices, to help revive exports and the manufacturing industry.

The authors of the briefing note place some of the blame for the lack of a bounce-back on inadequate reinvestment. Canada, like other developed economies, lost a large number of jobs, companies and investment during the global recession, they note.

Moving forward, the document says, the sector must deal with a global manufacturing environment that's rapidly changing due to technological advances "poised to disrupt many of the sectors that anchor Canada's economy."

"This represents both a threat to incumbent business models and an opportunity for those that are able to be on the leading edge of new technology."

Small- and medium-sized manufacturers have struggled to reach the scale of their international competitors, preventing them from competing on the global stage, it adds.

The news isn't all bad, however. The advisers say Canada packs the potential necessary to keep up with the changing industry, thanks to a solid science base and highly educated workforce.

"Canada's rich manufacturing heritage and established presence across the country is a strong foundation for future success."

Getting there will require new streams of sustained investment will be necessary for innovation, productivity-boosting technology and research and development, the memo notes — adding that Canadian firms have been "chronically under-investing" in those areas.

Canadian firms have had to adjust to the big shift toward "value-added" manufacturing and their shrinking share of the ever-important United States market, said Craig Alexander of the C.D. Howe Institute think tank.

Alexander said that while the lower loonie helps increase the competitive edge for Canadian companies, the falling exchange rate also discourages investment because it hikes the cost of imported equipment.

The shadow of uncertainty over the economic outlook acts as another deterrent to investment, added Alexander, C.D. Howe's vice-president of economic analysis.

"This is actually one of the things I'm deeply worried about, because Canada's competitiveness is extremely weak, particularly when you look at Canada's productivity performance."

Asked about the challenges faced by the manufacturing sector, Alexander exclaimed, "Oh heavens, where to start?"

Betting the farm on tech

The family farm is going high-tech.

From robotic milking machines to data-gathering drones, industry watchers say technology is making agriculture more precise and efficient as farmers push for increased profits and yields.

"There's a whole confluence of technologies that are adding a lot of value on the farm quickly," said Aki Georgacacos, co-founder of Calgary-based Avrio Capital.

The venture capital firm focuses on agriculture and food innovations, and Georgacacos says changes like fine-detailed mapping and sensors for everything from soil moisture to fuel use are just beginning.

"We're not even scratching the surface," he said, adding an older generation of farmers have been slow to adopt new techniques.

But that's changing.

"Right now we're at a bit of an inflection point, where we've moved beyond early adopters and we're moving now into fast followers, and so we're getting to a point where the rate at which some of this technology is accepted is accelerating."

On Monday, Avrio Capital finished raising $110 million in late-stage venture capital that it plans to invest in the next wave of farm-tech companies.

One of them is Fredericton, N.B.-based Resson Aerospace, which has developed drone-based crop monitoring to know when fields need to be sprayed or watered.

Another is Winnipeg-based Farmers Edge, which 10 years ago was based out of Wade Barnes's basement in rural Manitoba, where he and co-founder Curtis MacKinnon were pushing to make local farms more efficient.

Barnes started introducing farmers to technology that allowed them to apply varying amounts of fertilizer on their fields depending on where it was most needed.

"That was quite revolutionary back in 2005," Barnes said in an interview.

Today, the company has evolved into what Barnes says is one of the biggest in the world working in farm data management, using cloud computing to crunch numbers from soil sensors, satellite imagery, weather stations and other inputs to make farms more efficient.

in January, Farmers Edge secured a $58 million investment from investors including Japanese conglomerate Mitsui & Co. and Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers.

"The next big revolution in agriculture is big data," said Barnes from southern Russia, where he was setting up another satellite office for the company now operating on four continents.

Already, he said, farmers are seeing 30 per cent increases in productivity by using the data available, and the technology is only getting more accessible. A system that five years ago would have cost $15 to $25 an acre now costs under $5, said Barnes.

Cheaper technology and advancements in productivity are more important than ever as pressure mounts on the world's food systems, says Viacheslav Adamchuk, an associate professor in McGill University's bioresource engineering department.

"We are not going to see more arable land; land is all allocated. The population is growing, the climate is changing," he said.

Adamchuk's research has focused on sensor technology in farming, which he says has come down dramatically in price in recent years while at the same time growing in precision.

He estimates that farmers can shave off at least 10 per cent — and upwards of 40 per cent — of their input costs on things like fertilizer, seeds and water thanks to global positioning systems and sensors that allow them to use those resources only where needed.

"You can maintain the same yield with less inputs," said Adamchuk.

Stan Blade, dean of the University of Alberta's faculty of agricultural, life and environmental sciences, says innovation is key for the future of farming.

"The farmers who succeed are the ones who are going to incorporate new technologies," he said.

"Auto-steered tractors, yield monitors on combines — I mean we're all using those things now because it just makes us that much more efficient. They decrease labour, they make things more efficient, they make things safer, so it just presents a whole array of new opportunities for producers that are involved in generating these yields."


The redefinition of "driver"

Computers that control cars of the future can be considered drivers just like humans, the federal government's highway safety agency has found.

The redefinition of "driver" by the National Highway Traffic Safety Administration is an important break for Google, taking it a step closer to its goal of self-driving cars without steering wheels, pedals or human drivers.

But the company still has a long journey ahead before its cars get on the road in great numbers. While the safety agency agreed with Google's "driver" reinterpretation in a recent letter, it didn't allow other concessions and said numerous federal rules would have to be changed to permit the cars.

"NHTSA will interpret 'driver' in the context of Google's described motor vehicle design as referring to the SDS (self-driving system) and not to any of the vehicle occupants," Paul Hemmersbaugh, NHTSA's chief counsel, wrote in the letter.

But the agency rejected many of Google's claims that its cars met federal auto safety standards, including a requirement for foot and hand brakes. Google said the requirement wasn't necessary because the electronic driver can stop the cars. Yet the government said regulations are clear and would have to be changed to allow that.

"In a number of instances, it may be possible for Google to show that certain (federal) standards are unnecessary for a particular vehicle design," Hemmersbaugh wrote. "To date, however, Google has not made such a showing."

Google, a subsidiary of Alphabet Inc., has suggested the cars could be ready for the public in a few years. After several years of caution, last month federal regulators said they wanted to help speed the technology's widespread adoption if it proves to be safe.

In letters over the past three months, Google asked NHTSA to interpret safety standards in ways that would ease the path for self-driving car prototypes to get into public hands.

In order to put their cars on the road, automakers must self-certify that they meet federal safety standards and get NHTSA's approval. While Hemmersbaugh's letter agrees about the computer as the driver, it says the company will have to apply for exemptions to the standards, and the agency will have to go through the cumbersome federal rule-making process in some cases to get the cars approved.

In January at the Detroit auto show, Transportation Secretary Anthony Foxx said the government wants to get autonomous cars on the road quickly and will fast-track policies and possibly even waive regulations to do it.

Foxx said NHTSA, which is part of his department, will spend the next six months developing guidance for automakers on what's expected of self-driving prototype cars and what sort of tests should be used to make sure they are safe.

The agency also will develop a model policy for states to follow if they decide to allow autonomous cars on public roads. That policy could eventually lead to consistent national regulations for autonomous cars. Right now, individual states like California, Florida and Nevada have their own regulations.

Seven states and Washington, D.C., allow autonomous vehicle testing on their roads, according to the National Conference of State Legislatures. The federal government isn't predicting when autonomous cars will be on public roads in big numbers, but some automakers have said they could be in use in limited areas by 2020 — and Google has been more bullish than that.

Foxx said the government believes self-driving vehicles could eventually cut traffic deaths, decrease highway congestion and improve the environment. He encouraged automakers to come to the government with ideas about how to speed their development.

Safety advocates worry the agency is getting too cozy with the auto industry when it comes to technology regulations.

Google spokesman Johnny Luu said the company had no comment beyond that it was reviewing the agency's response.

Tweaking health plans

During his three-year tenure as a financial analyst at one of Canada's biggest banks, Devon Wright never once used his company health plan.

"There was just nothing there that was of any interest to me," says Wright, 28.

So when Wright quit his job in 2012 to launch technology company Turnstyle Solutions, he decided to create a benefits package tailored to his needs.

Turnstyle is one example of how Canadian companies are tweaking their health plans in order to appeal to a new generation of employees in the coming years. PwC predicts that millennials — who it defined as people born between 1980 and 2000 — will comprise 50 per cent of the global workforce by 2020.

In addition to the standard drug and dental benefits, Turnstyle covers naturopathic medicine, mental health counselling and provides employees with a fitness subsidy that they can spend on anything from a gym membership to yoga classes to participation in a Frisbee league.

The Toronto-based startup also offers free, healthy meals several times a week — a major perk for 23-year-old Sam Hillman.

"Some mornings we have soup, or avocados and eggs," says Hillman, an account director with the company's sales team.

"This emphasis on living a healthy lifestyle really shows the company's commitment to me as a holistic individual, and not just a Turnstyle employee."

Life insurance companies such as Sun Life Financial and Manulife Financial say a growing number of employers have been looking to implement corporate wellness programs in recent years, partly in response to the desires of millennial workers.

Wellness programs include services such as smoking cessation, on-site flu shots and biometric screening, which measures characteristics including blood pressure, body mass index and cholesterol to track employee health.

Preventative health care has become increasingly popular as employers have come to realize how it can benefit not only the individual but the company. Healthy workers are more productive, miss fewer days of work due to illness and are less likely to request costly drugs later down the road.

"We're trying to respond to what millennials are looking for, but there are also benefits to the organization for doing these things," says Joy Sloane, a partner in the Toronto health and benefits consulting practice at human resources firm Morneau Shepell.

Insurers have also started using wearable fitness trackers and incentive programs that reward customers for practising healthy behaviours, such as undergoing annual checkups or regularly hitting the gym.

Manulife, which launched an incentive program south of the border last year, announced on Tuesday it will bring it to Canada this year.

Flexible plans, such as health spending accounts, are also on the rise as employers look to recruit and retain young workers.

"The millennial generation is looking for different things than their parents had in terms of benefits plans," says Lori Casselman, assistant vice-president of integrated health solutions at Sun Life Financial.

Millennials place a much greater priority on mental health services, such as counselling and support groups, than their predecessors did, according to insurers.

"Mental health is now recognized as being one of the key factors in absenteeism and lost productivity, as well as drug claims and long-term disability," says Lisa Callaghan, assistant vice-president of products for Manulife's group benefits division.

"Mental health not only impacts the individuals, but also impacts the team, the environment and the culture, and for those reasons it is becoming more culturally accepted to have those conversations."

While much of the change to corporate health plans is being fuelled by millennials entering the workforce, Sloane says it isn't just young workers who reap the rewards of such changes.

"Although it's being targeted at the millennials, I think it's really beneficial for the whole working population," she says.

NAFTA on the outs?

The North American Free Trade Agreement doesn't have a champion among either of the winners of the New Hampshire primary, who both say they want to scupper the deal should they win the presidency.

That stated objective faces monumental political and legal obstacles, starting with the fact that Donald Trump and Bernie Sanders are still far from winning their respective party nominations, let alone the White House.

But they've served notice that they want to end the 1994 agreement that had wide-ranging consequences on trade between Canada, the U.S., and Mexico.

"We will either renegotiate it or we will break it," Trump told CBS last fall, panning the deal as a disaster. "Every agreement has an end."

He says he likes free trade in theory — but the current deals are no good. Much like Trump's proposal to ban Muslim travel to the U.S., and kicking out illegal migrants, he's rather stingy with the specifics.

Sanders has been consistent. He's been a staunch opponent of the trade deal since it was first signed, and once staged a memorable protest against NAFTA early in his congressional career.

He introduced a bill that would have severely cut the salary of American politicians — to harmonize them with Mexico, so that lawmakers could feel the impact they were imposing on workers.

"The essence of NAFTA is that American workers will be forced to compete against the desperate and impoverished people of Mexico who earn a minimum wage of 58 cents an hour," Sanders told the House of Representatives, which he sat in before entering the Senate.

"It is only appropriate that we, the Congress, lead by example... (Mexican politicians) earn the equivalent of $35,000 a year... If we're going to ask American automobile workers, and dairy farmers, and truck drivers to be competitive with counterparts in Mexico, then the salaries of the U.S. Congress should be competitive with the Mexican Congress."

Unsurprisingly, his 1993 bill failed. NAFTA, on the other hand, passed.

Now Sanders' presidential election platform promises to "reverse" trade policies like NAFTA. One trade lawyer says his legally trained ears detect a little wiggle room there — he says reversing trade policies could mean any number of things.

Mark Warner says he's skeptical either candidate would cancel the deal.

It would be mind-bogglingly complex, he said. Even if a president provided six months' notice that the U.S. was pulling out, elements of NAFTA have since been embedded in the World Trade Organization agreement.

Another problem that other trade experts have identified is that tariffs couldn't just snap back into place. The U.S. Congress would have to re-impose them. It would be no easy task getting tariffs through both chambers — including the Senate where they'd need 60 per cent of the vote.

"It strikes me as very unlikely that you'd do it," the Toronto lawyer said in an interview.

Then there's the final hurdle: modern economic reality. Warner said businesses have become increasingly international and now build a product with different bits shipped in from different countries.

"You would see businesses going nuts," Warner said.

"How do you reverse those supply chains now?... Reversing NAFTA would be like closing the barn door after everybody's gone. The changes that have been made have been made."

As for the effect of NAFTA, a 2015 report by the U.S. Congressional Research Service said it's difficult to measure it precisely because it didn't occur in isolation — other technological and economic factors were already increasing trade.

It cited previous studies that suggested NAFTA had a small, positive overall effect on economic growth — while helping some Americans and hurting others.

Trump's most ardent supporters include people struggling in the modern economy. A New York Times exit poll from New Hampshire found Trump's biggest victory margins were by far with those making less than $30,000, and with those claiming they're falling behind financially.

In an interview with three Trump supporters, neither complained about or even seemed aware of the earlier 1987 Canada-U.S. free-trade agreement. But they did complain about jobs going to Mexico later.

"NAFTA — that changed our country. Everyone's moving out," said Bridget Trepsas.

"Everything went out."

Warner suspects a future president who promises to fix NAFTA would probably follow Barack Obama's example: In his first presidential campaign, Obama promised to reopen NAFTA to add labour and environmental provisions.

Obama says he's kept that promise by negotiating these issues in the new, as-yet-unratified Trans-Pacific Partnership. Labour unions say the new deal doesn't go nearly far enough.

Warner said it would be difficult for the next president to reopen TPP — but a piece of cake compared to cancelling NAFTA.

More layoffs at Husky

Slumping world oil prices continue to hit Calgary’s energy industry hard as more layoffs have been announced.

Husky Energy issued pink slips to 400 people arriving for work at the downtown Calgary office on Tuesday, but there could be many more when cuts from their other locations are included.

These layoffs are coming just a few months after Husky eliminated 1,400 jobs in October.

At that time, more than 1,000 of those jobs were contractors but nearly 300 were full-time employees in the Calgary office.

Late Tuesday afternoon, Husky Energy’s media manager Mel Duvall issued a statement calling the layoffs a difficult decision.

He says the company is taking the steps necessary to ensure the company’s resilience "through this cycle and beyond."

He declined to provide specific numbers but says the staff reductions were across the company’s operations.

Buybacks lose billions

If you think your stocks are doing poorly, check out the performance of some of the most sophisticated investors, the ones with more knowledge about what's going on inside businesses than anyone else: Companies that buy their own shares.

The companies losing money on these bets are down a collective $126 billion over the past three years, a decline of 15 per cent.

Many corporations would have been better off investing that cash in an index fund instead of their own stock. The overall market rose 39 per cent over the same period. The companies could also have distributed that cash to shareholders, allowing them to spend what is, in the end, their money.

And it's not just a few big corporate losers accounting for all the pain. The group includes 229 companies in the Standard and Poor's 500 index, nearly half of the companies in the study prepared by FactSet for The Associated Press.

When a company shells out money to buy its own shares, Wall Street usually cheers. The move makes the company's profit per share look better, and many think buybacks have played a key role pushing stocks higher in the seven-year bull market.

But buybacks can also sap companies of cash that they could be using to grow for the future, no matter if the price of those shares rises or falls.

And the recent losses highlight another criticism: Companies may be good at finding oil or selling bathroom trinkets, but they aren't always smart stock investors. Some corporations bought ever more of their own shares even as prices tripled from financial-crisis lows and several measures showed the market was overvalued.

"Whenever you see a buyback, the company always says, 'We think our stock is cheap,'" says Nicholas Colas, chief market strategist at brokerage ConvergEx Group.

They are sometimes so confident that they take out enormous loans just to buy more and more shares. That those shares have now plunged in value is something Colas calls a "great irony" of the bull market.

Among the companies with the biggest paper losses are struggling ones that bought after their stock fell, only to watch prices drop even more. Macy's, the beleaguered retailer, is down $1.5 billion on its purchases, a 26 per cent loss. American Express has lost $4.1 billion, or 34 per cent. As the price of oil plunged, driller Chevron racked up $2.8 billion in paper losses, or 28 per cent.

The losses are also piling up in unexpected places, such as at companies that have generated solid earnings through most of the bull market, suggesting that there is danger when stocks of even top performers climb too high. Starwood Hotels & Resorts Worldwide and Ford Motor have each lost hundreds of millions on their buybacks, more than a fifth each of what they spent.

Defenders of buybacks say they are a smart use of cash when there are few other uses for it in a shaky global economy that makes it risky to expand. Unlike dividends, they don't leave shareholders with a tax bill. Critics say they divert funds from research and development, training and hiring, and doing the kinds of things that grow the businesses in the long term.

"The company doing the most buybacks is often not investing enough in its business," says Fortuna Advisor CEO Gregory Milano, a consultant who has written several studies criticizing the purchases. He says most buybacks are "financial engineering" and a waste of money.

The study looked at 476 companies in the S&P 500 index, leaving out the index members that split off parts of their businesses during the period. Among the findings:


Nearly a third of the companies studied, 153 in all, lost $100 million or more on their purchases in three years.


Four of the top 10 biggest dollar losers are energy companies. But big losses are hitting a variety of companies, including insurers and banks, retailers, technology companies, airlines and entertainment giants.


MasterCard has the biggest paper gains from buybacks: $7.9 billion. IBM has the biggest paper losses: $9.8 billion. IBM says it isn't neglecting long-term investments and notes that the money it spent on R&D, big projects and acquisitions last year was triple what it spent buying its stock.


When the companies that have profited from buybacks over the last three years are included with the losers, the paper losses narrow to $11 billion. Total spent on buybacks by all companies: $1.43 trillion, more than the annual economic output of all but 12 of 193 countries in the world, according to the World Bank.

Stocks may bounce back, of course, turning losses into gains. But the history of buybacks isn't encouraging.

Companies often buy at the wrong time, experts say, because it's only after several years into an economic recovery that they have enough cash to feel comfortable spending big on buybacks. That is also when companies have made all the obvious moves to improve their business — slashing costs, using technology to become more efficient, expanding abroad — and are not sure what to do next to keep their stocks rising.

"For the average company, it gets harder to increase earnings per share," says Fortuna's Milano. "It leads them to do buybacks precisely when they should not being doing it."

And, sure enough, buybacks approached record levels recently even as earnings for the S&P 500 dropped and stocks got more expensive. Companies spent $559 billion on their own shares in the 12 months through September, according to the latest report from S&P Dow Jones Indices, just below the peak in 2007 — the year before stocks began their deepest plunge since the Great Depression.

U.S. job market looking up

U.S. companies advertised more available jobs in December and more Americans quit, trends that could lift wages in the coming months.

The number of job openings jumped 4.9 per cent to 5.6 million, the most since July, the Labor Department said Tuesday. And quits increased 6.9 per cent to nearly 3.1 million, the highest in more than nine years.

People typically quit for better-paying positions, so more quits are a sign that overall pay levels could increase. Employers have also struggled to fill many open jobs, which could push them to offer higher pay to attract workers.

The data comes after the government said last week that hiring had slowed sharply in January. Yet wages grew at a solid pace, and the unemployment rate fell to an eight-year low of 4.9 per cent.

Federal Reserve chair Janet Yellen has said that she monitors quits as a potential sign of an improving job market. More Americans quit when they either have new jobs or are confident they can find one.

Some economists were encouraged by the job openings report.

"Despite the turmoil in financial markets and increasing talk of recession, the labour market continues to improve and is moving toward full employment," said Gus Faucher, senior economist at PNC Financial. "The tightening in the job market is pushing up wages, which in turn is supporting consumer spending."

Other analysts worry that signs of an economic slowdown could soon catch up with the job market.

"As fate would have it, the job market may be feeling healthy, just as the rest of the economy is downshifting," said Joe LaVorgna, chief U.S. economist at Deutsche Bank.

U.S. manufacturing is shrinking in the face of slowing overseas growth and the stronger dollar, while measures of the service sector have also declined. The economy grew at just a 0.7 per cent annual rate in the final three months of last year.

Tuesday's figures also heighten the challenges facing Yellen as she considers whether the Fed should continue raising the short-term rate it controls, and when.

A lower unemployment rate, more quits and more job openings suggests employers are having a harder time keeping their employees and attracting new workers. Raising pay is one way to respond to those challenges.

Higher pay, in turn, could lift inflation, as companies raise prices to offset larger labour costs. That adds pressure on the Fed to raise interest rates.

At the same time, U.S. growth is slowing, as goods pile up on warehouse shelves and corporate profits have fallen. That has prompted many economists to forecast as few as one or two rate hikes this year, below the Fed's own forecast of four increases.

The Fed increased its benchmark rate for the first time in nine years in December.

Record profit at Cineplex

The Force was with Cineplex last year as the latest instalment in the "Star Wars" saga helped propel the theatre chain to its best-ever annual and fourth-quarter financial results.

Box office revenue was $196.3 million in the final quarter of 2015, up $23.8 million or 13.8 per cent from a year earlier.

Cineplex's total revenue from all sources including concession sales, advertising and newer business initiatives was $407.4 million, up 22.6 per cent from the fourth quarter of 2014.

Net income more than doubled to $76.8 million or $1.22 per share, up 139.4 per cent from $32.1 million or $0.51 per share.

"Star Wars: The Force Awakens" was in the company's theatres for 14 days of the fourth quarter and was Cineplex's top film for 2015.

In the fourth quarter, Cineplex had record attendance of 20.4 million — 7.1 per cent higher than a year earlier.

Box office revenue per patron was $9.63, up 6.3 per cent in the fourth quarter of 2014, and concession revenue per patron was $5.58, up 8.6 per cent.

Trains slam head on in crash

Two commuter trains crashed head-on Tuesday morning in southern Germany, killing at least nine people and injuring around 150, slamming into each other on a curve without braking after an automatic safety system apparently failed to stop them, the transport minister said.

The first rescue units were on the scene within three minutes of receiving emergency calls, but with a river on one side and a forest on the other, it took hours to reach some of the injured in the wreckage. Rescue crews using helicopters and small boats shuttled injured passengers to the other side of the Mangfall river to waiting ambulances.

Authorities said they were taken to hospitals across southern Bavaria.

"This is the biggest accident we have had in years in this region and we have many emergency doctors, ambulances and helicopters on the scene," police spokesman Stefan Sonntag said.

German rail operator Deutsche Bahn said safety systems on the stretch had been checked as recently as last week, but Transport Minister Alexander Dobrindt suggested a system designed to automatically brake trains if they've accidentally ended up on the same track didn't seem to have functioned properly.

Dobrindt, however, said it was too early to draw conclusions.

"The site is on a curve, we have to assume that the train drivers had no visual contact and hit each other without braking," Dobrindt told reporters in Bad Aibling, near the crash scene, adding that speeds of up to 100 kph (60 mph) were possible on the stretch.

Black boxes from both trains had been recovered and are now being analyzed, which should show what went wrong, Dobrindt said.

"We need to determine immediately whether it was a technical problem or a human mistake," he said.

The two regional trains crashed before 7 a.m. on the single line that runs near Bad Aibling, in Bavaria, and several wagons overturned. The two train drivers are thought to be among the dead, and 50 of those hurt were being treated for serious injuries, authorities said.

Each train could hold up to 1,000 passengers and are commonly used by children travelling to school, but because of regional holidays to celebrate Carnival, fewer than 200 were on board in total.

"We're lucky that we're on the Carnival holidays, because usually many more people are on these trains," regional police chief Robert Kopp said.

About 700 emergency personnel from Germany and neighbouring Austria were involved in the rescue efforts and about a dozen helicopters were used.

Train operator Bayerische Oberlandbahn said it had started a hotline for family and friends to check on passengers.

"This is a huge shock. We are doing everything to help the passengers, relatives and employees," Bernd Rosenbusch, the head of the Bayerische Oberlandbahn, said in a statement.

In Munich, the city blood centre put out an urgent call for donors in the wake of the crash.

The Munich Blood Donation Service, which delivers blood products to local hospitals, said on its website that there was "an acute increased need for life-saving blood products" after the accident and called for immediate donations.

Fortis buying US utility

Fortis Inc. has a friendly US$11.3-billion deal to buy U.S. electric transmission company ITC, the latest acquisition south of the border for the Newfoundland-based utility company.

The deal announced Tuesday includes US$6.9 billion in cash and stock and US$4.4 billion in assumed debt. Shareholders in ITC would have a 27 per cent stake in the combined company.

Although Fortis has a low public profile, it has expanded beyond its base as owner of Newfoundland Power and now owns extensive operations across North America. As of Monday, it had a stock market value of about C$11.6 billion.

"Fortis has grown its business through strategic acquisitions that have contributed to strong organic growth over the past decade," Fortis president and CEO Barry Perry said in a joint statement issued by the two companies.

"ITC not only further strengthens and diversifies our business, but it also accelerates our growth."

Fortis is offering US$22.57 in cash and 0.7520 of a Fortis share for each ITC share — totalling about 33 per cent more than what ITC's shares were worth before it announced on Nov. 30 that it was reviewing its strategic alternatives.

"From the very beginning of ITC, we have been focused on creating meaningful value for all stakeholders, including customers, investors and employees, by becoming the leading electric transmission company in the U.S.," said ITC chairman Joseph Welch, who is also the company's president and CEO.

Under the deal, Fortis adds ITC's high-voltage transmission lines in seven states to its holdings in several Canadian provinces, the United States and the Turks and Caicos Islands.

Its Canadian holdings include FortisBC, which provides power including natural gas, electricity, propane and alternative energy to approximately 1.1 million customers in more than 135 communities in British Columbia. FortisAlberta has 530,000 customers, FortisOntario has 64,000.

The St. John's-based company, which can trace its roots to the formation of the St. John's Electronic Company in 1885, also owns Newfoundland Power and Maritime Electric in Atlantic Canada.

In the U.S., Fortis owns Arizona-based UNS Energy with 658,000 electricity and gas customers and the Central Hudson transmission and distribution company in New York state. It also has a 60 per cent interest in a company that provides electricity on Grand Cayman Island in the Caribbean.

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