MONTREAL, Dec. 6 /CNW Telbec/ - Transcontinental Inc. announced today
that it will be restating its financial statements for prior years. In the
context of the preparation of its year-end financial statements, management
identified two non-cash accounting errors. First, income tax liabilities at
the end of fiscal 2006 were understated by approximately $10 million. This was
mainly related to accounting provisions for income taxes on inter-company
transactions and to future income tax assets on operating losses considered
twice. Second, property, plant and equipment of Mexican subsidiaries were
overstated by approximately $10 million at the end of fiscal 2006, due to
amortization calculated incorrectly. The impact of these restatements on net
income will total approximately $20 million, of which approximately
$10 million relates to 2006 and approximately $10 million relates to prior
years. This is not expected to have any impact on cash flow or cash balances.
Prior to these restatements, 2006 net income was $137.9 million and 2006 total
property, plant and equipment was $713.6 million.
Transcontinental's Board of Directors, on the recommendation of
management, has concluded that it is necessary to restate the Corporation's
audited consolidated financial statements for each of the prior years
affected. As a result, Transcontinental's financial statements as previously
published and filed in respect of each prior period should no longer be relied
upon. Transcontinental is currently working to finalize and file its restated
financial statements for fiscal 2006 and they will be available when it
releases its 2007 financial statements later in December 2007.
"We take our obligation to provide accurate financial information very
seriously and our internal controls remain very strong overall," said Benoît
Huard, Vice President and Chief Financial Officer. "In fact, recent
improvements in controls and procedures led to the discovery of these two
errors and reduce the risk of similar errors occurring again. The restatement
will not impact Transcontinental's business, its current earnings or its
ability to generate cash flow."
For his part, Rémi Marcoux, Executive Chairman of the Board, stated,
"Though this situation is regrettable, it is limited only to two specific
items which we are correcting. My full confidence remains in our Management
team and the future of Transcontinental."
The results set forth in this document, including expected restatement
impacts, are preliminary and unaudited and reflect known restatement
adjustments all as of the time of the issuance of this press release. These
results are subject to change as a result of any adjustments arising from the
restatement process, subsequent events and the completion of the audit of the
financial statements by the Corporation's independent auditors.
The largest printer in Canada and sixth-largest in North America,
Transcontinental also ranks as the country's leading publisher of consumer
magazines and French-language educational resources, and its second-largest
community newspaper publisher. Transcontinental distinguishes itself by
creating strategic partnerships that integrate the company into its customers'
value chain, notably through its unique newspaper printing outsourcing model
and its value-added services. From mass to highly personalized marketing, the
company offers its clients integrated solutions which include a
continent-leading direct marketing offering, a diverse digital platform and a
door-to-door advertising material distribution network. Transcontinental is a
company whose values, including respect, innovation and integrity, are central
to its operation.
Transcontinental (TSX: TCL.A, TCL.B) has more than 14,500 employees in
Canada, the United States and Mexico, and reported revenues of
C$2.3 billion in 2006.
For further information:
For further information: Media: Nessa Prendergast, Director, Media
Relations, Transcontinental Inc., (514) 954-2809,
firstname.lastname@example.org; Financial Community: Jennifer F.
McCaughey, Director, Investor Relations, Transcontinental Inc., (514)
954-2821, email@example.com; www.transcontinental.com