Despite difficult economy, Transcontinental improves profitability



    
    - Increase of 5% in adjusted operating income before amortization despite
      a 9% decrease in consolidated revenue compared to third quarter of
      2008.
    - Before the negative impact of reduced direct mail activities in the
      United States, adjusted operating income before amortization would have
      increased 10% and consolidated revenue would have decreased 5%.
    - Increase of 4% in adjusted net income, which excludes unusual items
      such as restructuring costs; on a per-share basis, adjusted net income
      increased from $0.37 to $0.39.
    - Decrease of 15% in net income, primarily due to unusual items; on a
      per-share basis, net income decreased from $0.37 to $0.31.
    - Adoption of a new capital structure indicator, the ratio of net
      indebtedness (including the securitization program) to adjusted
      operating income before amortization. The objective is to maintain this
      ratio within a range of 2.00 to 2.50 and we expect to achieve this by
      the end of fiscal 2011. As at July 31, 2009, the ratio was 3.18.
    - Concluded financing agreements totalling $135 million and obtained
      increase of $25 million in Corporation's credit facilities.
    - Started printing the San Francisco Chronicle on July 6 as scheduled and
      gained new newspaper printing customers in Quebec.
    - Launched mobile versions of three business and financial publications.
    - Corporate Knights magazine includes Transcontinental in its annual
      ranking of the Best 50 Corporate Citizens for its environmental
      efforts.
    

    MONTREAL, Sept. 10 /CNW Telbec/ - Before unusual items and despite the
difficult economic situation, Transcontinental's profitability in the third
quarter increased due to its rationalization program and the daily efforts by
employees across the organization to improve efficiency and reduce costs.
Furthermore, the full impact of the new contracts announced previously,
including contracts to print the Rogers Communications' magazines and direct
marketing products, the startup of printing of the San Francisco Chronicle
daily paper, the customers gained in flyer and newspaper printing, the
excellent performance in educational book publishing, and the success of its
integrated service offering which combines new digital platforms with print,
partially offset the decrease in revenues stemming from the recession.
    "What is especially satisfying in our third-quarter results is the
improved profitability over the two previous quarters and compared to the
solid third quarter of 2008," said François Olivier, President and Chief
Executive Officer of Transcontinental. "For the first time this year, our
financial results were better than last year's. We're beginning to see the
full impact of the tough decisions the recession obliged us to make from the
start of the fiscal year. I'd like to thank our employees for their commitment
to their company, which has had them working on many efficiency improvement
and cost-savings initiatives. Thanks to everyone's efforts, Transcontinental
is now a more flexible organization and in a position to keep developing its
integrated service offering, which is unique in Canada. Our enviable financial
position, strengthened by two new loans and an increase in our credit
facilities in the third quarter, means that we can continue to invest wisely
and prudently in our future."
    "The market is still fragile," noted Mr. Olivier, "but we are headed in
the right direction. I am certain that we will come out of the recession
stronger and in a good position to take advantage of the economic recovery."
    The Corporation has decided to now use the ratio of net indebtedness
(including the securitization program) to adjusted operating income before
amortization as its primary indicator of financial leverage. In addition,
Transcontinental has set the objective of maintaining this ratio within a
target range of 2.00 to 2.50 and expects to achieve that by the end of fiscal
2011. As at July 31, 2009, the ratio was 3.18. Furthermore, as at July 31,
2009, the Corporation's net indebtedness to total capitalization ratio was
49%, within the 35% - 50% range set by management.

    Financial Highlights

    In the third quarter ended July 31, 2009, Transcontinental recorded
consolidated revenue of $533.1 million, down 9% from the $584.9 million
recorded in the same quarter in 2008. Adjusted operating income before
amortization increased 5%, from $81.8 million in 2008 to $86.2 million in
2009. The decrease in revenue is mainly due to the recession, which led to a
decline in the volume of direct mail activities in the United States and in
marketing product printing activities, as well as advertising revenues in
magazines and newspapers.
    Net income decreased 15%, from $29.9 million to $25.3 million, due to the
unusual item of restructuring costs; on a per-share basis, net income
decreased from $0.37 to $0.31. Adjusted net income, which excludes unusual
items, rose 4%, from $29.9 million to $31.2 million; on a per-share basis,
adjusted net income increased from $0.37 to $0.39.
    A pre-tax amount of $7.5 million ($5.9 million after tax) was charged to
the third quarter with respect to the consolidation of direct mail operations
in the United States and the rationalization program announced in February
2009. In the first three quarters of fiscal 2009, these measures generated
cost savings of about $50 million. The goal for fiscal 2009 is to save more
than $75 million and, on an annualized basis, more than $100 million.
    In the first nine months of fiscal 2009, consolidated revenue amounted to
$1.701 billion, down 4% from $1.776 billion in 2008. Adjusted operating income
before amortization decreased 11%, from $253.2 million to $225 million. Net
income went from $100.9 million in 2008 to a loss of $125.4 million in 2009,
largely due to impairment of intangible assets and the write-off of goodwill
related primarily to marketing product printing activities, and to the
restructuring costs related to the rationalization program. On a per-share
basis, net income went from $1.23 to a loss of $1.55.
    Adjusted net income, which excludes impairment of assets, restructuring
costs and unusual adjustments to income taxes, decreased 17%, from $92.4
million to $76.5 million; on a per-share basis, it was down 16%, from $1.13 to
$0.95.
    It is important to note that adjusted earnings per share grew steadily
during fiscal 2009, from $0.19 in the first quarter to $0.37 in the second and
$0.39 in the third. This measurement is a good indicator of operating
performance in the first nine months of fiscal 2009.
    For more detailed financial information, please see Management's
Discussion and Analysis for the Third Quarter Ended July 31, 2009, at
www.transcontinental.com, under "Investors."

    Operating Highlights

    The main operating highlights for the third quarter of 2009 illustrate
Transcontinental's strategy to build the new and strengthen its promising
traditional operations.

    
    - Despite the impact of the decrease in advertising revenues on its
      magazines and newspapers, results in the Media sector were stable
      compared to the third quarter of 2008. Door-to-door distribution
      activities and educational book publishing contributed to this
      stability by generating higher revenues than in 2008. While its brands
      continue to reap awards and recognition for both their print and
      Internet versions, Media continued to implement its digital strategy.
      This included the launch of a new interactive and user-friendly website
      for magazine Coup de pouce, as well as introducing mobile applications
      for the financial and business news of Les Affaires, Finances et
      Investissement, and Investment Executive. Since the start of fiscal
      2009, the Corporation has invested about six million dollars on
      developing the Media sector, mainly its digital platforms. The sector's
      network of more than 120 sites receives more than six million unique
      visitors per month.

    - The new Marketing Communications Sector has allowed Transcontinental
      increase its offer to existing customers by providing products and
      services that are ideally suited to their new needs and to new consumer
      behaviours. The finest achievements in this area include additional
      business with major names such as Shoppers Drug Mart-Pharmaprix,
      Zellers and Purolator. Recent strategic acquisitions have greatly
      contributed to the increase in sales, namely Conversys (e-flyer),
      ThinData (permission-based email marketing), Redwood Custom
      Communications (custom communications) and Rastar (data-driven direct
      marketing solutions and variable-data digital printing).

    - Excluding the effects of the rationalization of direct mail operations
      in the United States, revenues in the Printing sector were down
      slightly and profitability was basically stable. The third quarter was
      marked by the startup of printing of the San Francisco Chronicle, which
      took place as scheduled. The new printing plant in Fremont, California
      where the daily paper is being printed is one of the first in North
      America to be built to the standards of Leadership in Energy and
      Environmental Design (LEED). We also gained customers in the flyer and
      newspaper printing operations, including two leading groups of weekly
      papers in the Quebec City area: Le Canada français and L'Avantage.
    

    Reconciliation of Non-GAAP Financial Measures

    Financial data have been prepared in conformity with Canadian Generally
Accepted Accounting Principles (GAAP). However, certain measures used in this
press release do not have any standardized meaning under GAAP and could be
calculated differently by other companies. The Corporation believes that
certain non-GAAP financial measures, when presented in conjunction with
comparable GAAP financial measures, are useful to investors and other readers
because that information is an appropriate measure for evaluating the
Corporation's operating performance. Internally, the Corporation uses this
non-GAAP financial information as an indicator of business performance, and
evaluates management's effectiveness with specific reference to these
indicators. These measures should be considered in addition to, not as a
substitute for or superior to, measures of financial performance prepared in
accordance with GAAP.
    The following table reconciles GAAP financial measures to non-GAAP
financial measures.

    
                Reconciliation of non-GAAP financial measures
                     For the third quarter ended July 31,
                                 (unaudited)

    -------------------------------------------------------------------------
                                      Three months ended   Nine months ended
    (in millions of dollars,                  July 31             July 31
     except per share amounts)         2009       2008       2009       2008
    -------------------------------------------------------------------------
    Net income (loss)              $   25.3   $   29.9   $ (125.4)  $  100.9
    Non-controlling interest            0.1       (0.7)       0.3       (0.4)
    Income taxes                        9.0       12.1      (15.4)      23.1
    Discount on sale of accounts
     receivable                         0.8        1.9        3.9        7.1
    Financial expenses                 10.7        7.0       26.8       22.6
    Impairment of goodwill and
     intangible assets                    -          -      169.3          -
    Impairment of assets and
     restructuring costs                7.5        0.1       66.3        4.4
    -------------------------------------------------------------------------
    Adjusted operating income      $   53.4   $   50.3   $  125.8   $  157.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Amortization                       32.8       31.5       99.2       95.5
    -------------------------------------------------------------------------
    Adjusted operating income
     before amortization           $   86.2   $   81.8   $  225.0   $  253.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income (loss)              $   25.3   $   29.9   $ (125.4)  $  100.9
    Impairment of assets and
     restructuring costs
     (after tax)                        5.9          -       47.1        3.0
    Impairment of goodwill and
     intangible assets (after tax)        -          -      154.8          -
    Unusual adjustments to income
     taxes                                -          -          -      (11.5)
    -------------------------------------------------------------------------
    Adjusted net income                31.2       29.9       76.5       92.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average number of shares
     outstanding                       80.8       80.8       80.8       82.0
    -------------------------------------------------------------------------
    Adjusted earnings per share    $   0.39   $   0.37   $   0.95   $   1.13
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cash flow related to operating
     activities                    $    8.4   $   77.1   $   (4.0)  $  131.6
    Changes in non-cash operating
     items                            (45.6)       2.0     (152.7)     (87.7)
    -------------------------------------------------------------------------
    Cash flow from operating
     activities before changes in
     non-cash operating items      $   54.0   $   75.1   $  148.7   $  219.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Long-term debt                                       $  768.7   $  589.7
    Current portion of long-term debt                       157.4      109.4
    Cash and cash equivalents                                 3.1      (57.3)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net indebtedness                                     $  929.2   $  641.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Sustainable Development

    Transcontinental has set up a task force whose mandate is to produce an
initial report on sustainable development within Transcontinental. Sustainable
development includes social development, economic development and
environmental protection. The report will be written to meet the standards of
the Global Reporting Initiative, a respected reference which sets out the
methodology for this type of report.
    In addition, Transcontinental was again listed in the select group of the
Best 50 Corporate Citizens in 2009, chosen by the magazine Corporate Knights.
The magazine defines corporate citizens as ones who "do the best job of
keeping their end of the social contract, while innovating solutions for the
problems that will determine whether our civilizations succeeds or fails."

    Corporate Affairs

    On July 28, 2009, Transcontinental announced that it had concluded two
new financing arrangements for a total of $135 million. This included a
five-year loan of $50 million from the Société générale de financement du
Québec, and a six-year loan of (euro)55.6 million ($85.7 million) with
HypoVereinsbank, a major European bank, to be used to purchase production
equipment over the next two years.
    Transcontinental also announced that it had added $25 million to the $125
million one-year credit facilities arranged with its bank syndicate on May 5,
2009. Transcontinental has thus obtained additional flexibility in managing
its working capital and capital expenditures, or to meet any other specific
need.

    Dividend

    At its September 10, 2009 meeting, the Corporation's Board of Directors
maintained the quarterly dividend of $0.08 per share on Class A Subordinate
Voting Shares and Class B Shares. These dividends are payable on October 23,
2009 to shareholders of record at the close of business on October 5, 2009. On
an annual basis, this represents a dividend of $0.32 per share.

    Additional Information

    Upon releasing its quarterly results, Transcontinental will hold a
conference call for the financial community today at 4:15 p.m. (ET). Media may
hear the call in listen-only mode or tune in to the simultaneous audio
broadcast on Transcontinental's Web site, which will be archived for 30 days.
For Media requests for information or interviews, please contact Maxim Labrie,
Media Relations, at 514-954-4176.

    Profile

    Transcontinental provides printing, publishing and marketing services
that deliver exceptional value to its clients and provide a unique, integrated
platform for them to reach and retain their target audiences. Transcontinental
is the largest printer in Canada and in Mexico, and sixth-largest in North
America. It is also the country's leading publisher of consumer magazines and
French-language educational resources, the second-largest community newspaper
publisher, and its digital platform delivers unique content through more than
120 Web sites. Its Marketing Communications Sector provides advertising
services and marketing products using new communications platforms supported
by database analytics, premedia, email marketing, and custom communications.
Transcontinental is a growing company with a culture of continuous improvement
and financial discipline, whose values, including respect, innovation and
integrity, are central to its operation.
    Transcontinental (TSX: TCL.A, TCL.B) has approximately 13,000 employees
in Canada, the United States and Mexico, and reported revenue of C$2.4 billion
in 2008. For more information about the Corporation, please visit
www.transcontinental.com.

    Note: This press release contains certain forward-looking statements
concerning the future performance of the Corporation. Such statements, based
on the current expectations of management, inherently involve numerous risks
and uncertainties, known and unknown. We caution that all forwardlooking
information is inherently uncertain and actual results may differ materially
from the assumptions, estimates or expectations reflected or contained in the
forward-looking information, and that actual future performance will be
affected by a number of factors, many of which are beyond the Corporation's
control, including, but not limited to, the economic situation, exchange rate,
availability of Capital, energy costs, increased competition, the
Corporation's capacity to implement its strategic plan and rationalization
plan, and make and integrate acquisitions into its activities. The risks,
uncertainties and other factors that could influence actual results are
described in the Management's Discussion and Analysis and Annual Information
Form.
    The forward-looking information in this release is based on current
expectations and information available as of September 10, 2009. The
Corporation's management disclaims any intention or obligation to update or
revise any forward-looking statements unless otherwise required by the
Securities Authorities.

    
                                     CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                                                   unaudited

    (in millions of dollars,       Three months ended   Nine months ended
     except per share data)               July 31             July 31
    -------------------------------------------------------------------------
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------

    Revenues                      $   533.1  $   584.9  $ 1,700.6  $ 1,776.0
    Operating costs                   390.9      432.4    1,280.8    1,309.9
    Selling, general and
     administrative expenses           56.0       70.7      194.8      212.9
    -------------------------------------------------------------------------

    Operating income before
     amortization, impairment
     of assets, restructuring
     costs and impairment of
     goodwill and intangible
     assets                            86.2       81.8      225.0      253.2
    Amortization                       32.8       31.5       99.2       95.5
    Impairment of assets and
     restructuring costs                7.5        0.1       66.3        4.4
    Impairment of goodwill and
     intangible assets                    -          -      169.3          -
    -------------------------------------------------------------------------

    Operating income (loss)            45.9       50.2     (109.8)     153.3
    Financial expenses                 10.7        7.0       26.8       22.6
    Discount on sale of accounts
     receivable                         0.8        1.9        3.9        7.1
    -------------------------------------------------------------------------

    Income (loss) before income
     taxes and non-controlling
     interest                          34.4       41.3     (140.5)     123.6
    Income taxes (recovered)            9.0       12.1      (15.4)      23.1
    Non-controlling interest            0.1       (0.7)       0.3       (0.4)
    -------------------------------------------------------------------------
    Net income (loss)             $    25.3  $    29.9  $  (125.4) $   100.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Per share (basic)
    Net income (loss)             $    0.31  $    0.37  $   (1.55)  $   1.23
    -------------------------------------------------------------------------
    Per share (diluted)
    Net income (loss)             $    0.31  $    0.37  $   (1.55)  $   1.23
    -------------------------------------------------------------------------

    Average number of shares
     outstanding (in millions)         80.8       80.8       80.8       82.0
    -------------------------------------------------------------------------

    The notes are an integral part of the consolidated financial statements.



                       CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                                                                   unaudited

    (in millions of dollars)       Three months ended   Nine months ended
                                          July 31             July 31
    -------------------------------------------------------------------------
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------

    Net income (loss)             $    25.3  $    29.9  $  (125.4) $   100.9
    Other comprehensive income
     (loss):
    Unrealized net change in
     fair value of derivatives
     designated as cash flow
     hedges, net of income taxes
     of $5.9 million and
     $5.6 million for the
     three-month and nine-month
     periods ended July 31, 2009
     ($(0.6) million and
     $(1.4) million for the
     same periods in 2008)             15.3       (1.5)      13.0       (2.5)
    Reclassification adjustments
     for net change in fair value
     of derivatives designated as
     cash flow hedges in prior
     periods, transferred to net
     income in the current period,
     net of income taxes of a
     negligible amount and
     $2.1 million for the
     three-month and nine-month
     periods ended July 31, 2009
     ($(0.6) million and $
     (2.5) million for the
     same periods in 2008)             (0.1)      (1.3)       5.1       (5.5)
    -------------------------------------------------------------------------
    Net change in fair value of
     derivatives designated as
     cash flow hedges                  15.2       (2.8)      18.1       (8.0)
    Unrealized net gains on
     translation of financial
     statements of self-sustaining
     foreign operations                 6.5        3.0        4.7       10.5
    -------------------------------------------------------------------------
    Other comprehensive income         21.7        0.2       22.8        2.5
    -------------------------------------------------------------------------
    Comprehensive income (loss)   $    47.0  $    30.1  $  (102.6)  $  103.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                                                   unaudited

                                                           Nine months ended
    (in millions of dollars)                                    July 31
    -------------------------------------------------------------------------
                                                             2009       2008
    -------------------------------------------------------------------------

    Balance, beginning of period, as previously
     reported                                           $   756.5  $   806.4
    Change in accounting policies - Goodwill and
     intangible assets                                       (3.0)      (1.7)
    -------------------------------------------------------------------------
    Restated balance, beginning of period                   753.5      804.7
    Net income (loss)                                      (125.4)     100.9
    -------------------------------------------------------------------------
                                                            628.1      905.6
    Premium on redemption of shares                             -      (32.5)
    Dividends on shares                                     (19.3)     (18.8)
    -------------------------------------------------------------------------
    Balance, end of period                              $   608.8  $   854.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The notes are an integral part of the consolidated financial statements.



                                                 CONSOLIDATED BALANCE SHEETS
                                                                   unaudited

    -------------------------------------------------------------------------
                                                            As at      As at
                                                          July 31,   October
    (in millions of dollars)                                 2009   31, 2008
    -------------------------------------------------------------------------

    Current assets
      Cash and cash equivalents                         $       -  $    90.7
      Accounts receivable                                   257.9      207.1
      Income taxes receivable                                 2.3        4.5
      Inventories                                            83.1       99.3
      Prepaid expenses and other current assets              24.5       16.1
      Future income taxes                                    16.7       28.1
    -------------------------------------------------------------------------
                                                            384.5      445.8

    Property, plant and equipment                           981.9      936.7
    Goodwill                                                681.3      842.6
    Intangible assets                                       153.8      166.2
    Future income taxes                                     185.1      141.0
    Other assets                                             92.7       82.7
    -------------------------------------------------------------------------
                                                        $ 2,479.3  $ 2,615.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Current liabilities
      Bank overdraft                                    $     3.1  $       -
      Accounts payable and accrued liabilities              293.0      442.9
      Income taxes payable                                   51.8       48.3
      Deferred subscription revenues and deposits            46.0       49.6
      Future income taxes                                     3.9        9.9
      Current portion of long-term debt                     157.4      194.3
    -------------------------------------------------------------------------
                                                            555.2      745.0

    Long-term debt                                          768.7      602.1
    Future income taxes                                     120.7       99.3
    Other liabilities                                        51.6       65.5
    -------------------------------------------------------------------------
                                                          1,496.2    1,511.9
    -------------------------------------------------------------------------

    Non-controlling interest                                  0.1        0.1
    -------------------------------------------------------------------------

    Commitments

    Shareholders' equity
      Share capital                                         379.5      379.5
      Contributed surplus                                    12.6       11.3

      Retained earnings                                     608.8      753.5
      Accumulated other comprehensive loss                  (17.9)     (41.3)
    -------------------------------------------------------------------------
                                                            590.9      712.2
    -------------------------------------------------------------------------
                                                            983.0    1,103.0
    -------------------------------------------------------------------------
                                                        $ 2,479.3  $ 2,615.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The notes are an integral part of the consolidated financial statements.



                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                   unaudited

                                    Three months ended     Nine months ended
    (in millions of dollars)              July 31               July 31
    -------------------------------------------------------------------------
                                       2009       2008       2009       2008
    -------------------------------------------------------------------------

    Operating activities
      Net income (loss)           $    25.3  $    29.9  $  (125.4) $   100.9
      Items not affecting cash
       and cash equivalents
        Amortization                   37.2       37.3      114.3      111.7
        Impairment of assets           (0.8)         -       26.4        1.9
        Impairment of goodwill
         and intangible assets            -          -      169.3          -
        Loss (gain) on disposal
         of assets                        -        0.3       (1.3)       0.7
        Future income taxes            (2.8)      12.9      (39.8)       3.5
        Non-controlling interest        0.1       (0.7)       0.3       (0.4)
        Net change in accrued
         pension benefit asset
         and liability                 (1.8)      (3.8)      (5.9)       1.9
        Stock-based compensation        0.8        0.6        1.6        2.4
        Other                          (4.0)      (1.4)       9.2       (3.3)
    -------------------------------------------------------------------------
      Cash flow from operating
       activities before changes
       in non-cash operating items     54.0       75.1      148.7      219.3
      Changes in non-cash operating
       items                          (45.6)       2.0     (152.7)     (87.7)
    -------------------------------------------------------------------------
      Cash flow related to operating
       activities                       8.4       77.1       (4.0)     131.6
    -------------------------------------------------------------------------

    Investing activities
      Business acquisitions            (0.7)      (5.4)     (13.7)     (22.3)
      Acquisitions of property,
       plant and equipment            (61.4)     (62.0)    (224.3)    (153.5)
      Disposals of property, plant
       and equipment                    1.2        0.4        7.2        0.9
      Increase in other assets         (8.7)     (15.3)     (20.2)     (26.5)
    -------------------------------------------------------------------------
      Cash flow related to
       investing activities           (69.6)     (82.3)    (251.0)    (201.4)
    -------------------------------------------------------------------------

    Financing activities
      Increase in long-term debt       50.2          -      150.8          -
      Reimbursement of long-term
       debt                          (102.5)      (7.7)    (106.4)     (10.9)
      Increase in revolving term
       credit facility                112.5       47.9      140.6      152.9
      Dividends on shares              (6.4)      (6.4)     (19.3)     (18.8)
      Redemption of shares                -       (3.8)         -      (48.7)
      Issuance of shares                  -        0.2          -        0.6
      Other                             0.2       (1.1)      (1.1)      (0.2)
    -------------------------------------------------------------------------
      Cash flow related to
       financing activities            54.0       29.1      164.6       74.9
    -------------------------------------------------------------------------

    Effect of exchange rate
     changes on cash and cash
     equivalents denominated in
     foreign currencies                (2.7)       1.4       (3.4)       3.7
    -------------------------------------------------------------------------

    (Decrease) increase in cash
     and cash equivalents              (9.9)      25.3      (93.8)       8.8
    Cash and cash equivalents at
     beginning of period                6.8       32.0       90.7       48.5
    -------------------------------------------------------------------------
    (Bank overdraft) cash and
     cash equivalents at end of
     period                       $    (3.1) $    57.3  $    (3.1) $    57.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additional information
      Interest paid               $     9.8  $    10.8  $    24.4  $    27.6
      Income taxes (recovered)
       paid                            (1.0)      (9.4)      17.7       18.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The notes are an integral part of the consolidated financial statements.
    




For further information:

For further information: Media: Maxim Labrie, Media Relations,
Transcontinental Inc., (514) 954-4176, maxim.labrie@transcontinental.ca,
www.transcontinental.com; Financial Community: Jennifer F. McCaughey,
Director, Investor Relations, Transcontinental Inc., (514) 954-2821,
jennifer.mccaughey@transcontinental.ca

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