Transcontinental's second quarter: Rationalization measures limit impact of recession



    
    - Decreases of 5% in consolidated revenue and 10% in adjusted operating
      income before amortization compared to second quarter 2008.
    - Before negative impact of reduced direct mail activities in the United
      States, consolidated revenue down 2% and adjusted operating income
      before amortization down 5%.
    - Adjusted net income before unusual items of $30.2 million, versus
      $34.1 million in the second quarter 2008; on a per-share basis,
      adjusted net income of $0.37, versus $0.42 for the same period in 2008.
    - Impairment of intangible assets and write-off of goodwill, principally
      related to commercial printing activities, totalled $169 million during
      the quarter; non-cash items having no effect on cash and cash flow from
      operations.
    - Rationalization plan announced on February 18, 2009 carried out. As
      expected, measures generated a total of $27.5 million in restructuring
      costs and asset impairment.
    - Net income: loss of $144.3 million in 2009 compared to earnings of
      $36.9 million in 2008. Decrease mainly due to unusual items mentioned
      above.
    - Signed a total of $625 million in financing agreements since the end of
      first quarter 2009.
    - Commencement of two new printing and marketing communications contracts
      with Rogers Communications; full impact of flyer-printing contract with
      Shoppers Drug Mart-Pharmaprix; began final preparations to start
      printing the San Francisco Chronicle in summer 2009.
    - Appointment of Christian Trudeau as President of the new Marketing
      Communications Sector and signing of several promising contracts.
    - Dividend kept at $0.08 per share.
    - Standard & Poor's lowers Transcontinental's credit rating from BBB to
      BBB (-) with a stable outlook. DBRS leaves unchanged its BBB (H) with a
      stable outlook rating for Transcontinental.
    - Net funded debt to total capitalization ratio of 49%, in the high end
      of the target range of 35% - 50% set by management.
    

    MONTREAL, June 11 /CNW Telbec/ - Before asset impairment, goodwill
write-off and restructuring costs, Transcontinental's results for the second
quarter ended April 30, 2009 were better than the previous quarter. Adjusted
operating income before amortization for the second quarter 2009 was down 10%
compared to a decline of 29% in the first quarter 2009. The Corporation
continued to carry out its major rationalization plan implemented in the
United States in November 2008 and extended to all its other operations in
February 2009. These measures, which included the elimination of 1,500 jobs,
limited the negative impact of the recession. The full effect of the measures,
combined with beginning two new contracts for Rogers Communications, printing
the San Francisco Chronicle in summer 2009, and promising developments in
marketing communications activities will put Transcontinental in a better
position for the second half of its fiscal year. With financing arrangements
totalling $625 million in place since February, management has the resources
required to pursue its business plan and projects.
    "In the current context, excluding unusual items, these are encouraging
results that show an improvement over the first quarter," said François
Olivier, President and CEO of Transcontinental. "We reacted quickly and
adjusted our production capacity and costs to the demand in each of our
markets. I'd like to thank our employees for their exceptional support of our
rationalization efforts and for the new and innovative ways they have found to
do their work. After three quarters of adjustment and refocusing, and assuming
no further deterioration in the present economic situation and the execution
of our rationalization plan, we are confident that our profitability will
continue to improve in coming quarters.
    "In a more general way," noted Mr. Olivier, "we will continue to benefit
from our niche strategy, our diversified and balanced customer base, the start
of new contracts and our financial resources. The year 2009 will be one of
transition for Transcontinental and we will come out of it stronger and better
positioned in each of our markets to take advantage of the economic recovery."

    Financial Highlights

    In the second quarter 2009, Transcontinental recorded consolidated
revenues of $563.4 million, down 5% from $595.1 million in the second quarter
of 2008. Adjusted operating income before amortization was down 10%, from
$89.0 million to $80.5 million. The decline is mainly due to a major decrease
in the volume of direct mail activities in the United States and, to a lesser
extent, to the effects of the recession on some printing and publishing
activities. Excluding the negative impact of the lower volume of direct mail
activities in the United States, consolidated revenues would have declined 2%
and adjusted operating income before amortization would have declined 5%. The
decrease was mitigated by the positive contribution of acquisitions, the
positive impact of paper on revenues and the positive fluctuations in the
exchange rate between the Canadian dollar and its U.S. and Mexican
counterparts, combined with growth in door-to-door distribution activities, in
the publishing of educational materials and in digital and one-to-one
marketing communication products
    Adjusted net income, which does not take unusual items into account,
declined 11%, from $34.1 million to $30.2 million; on a per-share basis,
adjusted net income decreased from $0.42 to $0.37.
    Net income went from $36.9 million in the second quarter of 2008 to a
loss of $144.3 million in 2009. The decrease is mainly due to impairment of
intangible assets and goodwill write-off, principally related to commercial
printing activities, totalling $169 million, non-cash items having no effect
on cash and cash flow from operations. Net income was also reduced by
restructuring costs and asset impairment totalling $27.5 million, stemming
from rationalization measures. On a per-share-basis, net income went from
$0.45 to a loss of $1.79.
    In the first six months of fiscal 2009, consolidated revenue decreased
2%, from $1.19 billion to $1.17 billion, while adjusted operating income
before amortization decreased 19%, from $171.4 million to $138.8 million. Net
income went from $71 million in the first half of 2008 to a loss of $150,7
million in 2009; on a per-share basis, net income declined from $0.86 to a
loss of $1.87. Adjusted net income, which does not take into account unusual
items related to asset impairment, restructuring costs and goodwill write-off,
was down 28%, from $62.5 million to $45.3 million; on a per-share basis,
adjusted net income declined from $0.76 to $0.56.
    As at April 30, 2009, the Corporation's net funded debt to total
capitalization ratio was 49%, in the high end of the target range of 35% - 50%
set by management.
    For more detailed financial information, please see Management's
Discussion and Analysis for the Second Quarter Ended April 30, 2009, at
www.transcontinental.com, under "Investors."

    
    Operating Highlights

    Here are the main operating highlights for the second quarter 2009.

    - The Corporation continued to carry out its major rationalization plan
      to keep Transcontinental financially solid, and modified production
      capacity in each of its markets to meet demand. To date, the equivalent
      of 1,400 positions have been cut-more than half of them in the United
      States; in addition, five print titles have ceased publication and four
      printing plants have been merged or consolidated. A set of other
      measures have also been implemented throughout the organization,
      ranging from a hiring freeze to unpaid leave and shorter work weeks.
      The savings from the restructuring should exceed the targets set in the
      first quarter and will amount to about $100 million on an annual basis,
      $75 million of that in the current fiscal year. The full impact of
      these measures will be felt starting in the second half of this fiscal
      year. Lastly, the plant in Fairborn, Ohio, which produces flyers for
      regional retailers, was sold following a review of the Corporation's
      business objectives in this segment in the United States.

    - In early 2009, the two new contracts with Rogers Communications took
      effect: one is an exclusive six-year contract to print all of Rogers'
      magazines; the second, also for six years, is to produce and print its
      marketing communications products. These two major gains add to the
      full impact of the Shoppers Drug Mart-Pharmaprix contract in 2009 and
      the printing of the San Francisco Chronicle daily, which will start in
      the summer of 2009.

    - The mission of the new Marketing Communications sector, created in
      November 2008, is to develop new avenues of growth centred on new
      communications platforms, one-to-one marketing and an integrated
      service offering. In the second quarter, this sector signed several
      contracts with major brands such as Reader's Digest Canada and
      Purolator Courier. It also received seven 2008 Pearl Awards, which
      recognize excellence in the custom communications industry.

    - In the second quarter, the Media sector continued to extend and enrich
      its digital services offering through various initiatives: the launch
      of icimamaison.ca, a real estate selling site; the relaunch of
      publisac.ca; the launch of online versions for the two finance
      magazines Investment Executive and Finance et Investissement, which
      will also soon release daily updates for BlackBerries and the Apple
      iPhone. Also, traffic on weblocal.ca, Transcontinental's Canada-wide
      search site for finding and rating local businesses now exceeds two
      million unique visitors per month. Revenue generated by digital
      services grew more than 30% in the first half compared to the same
      period a year ago. In the second half of fiscal 2009, the Media sector
      will continue to expand its digital services offering while completing
      its rationalization measures.
    

    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
                                 (unaudited)

    -------------------------------------------------------------------------
                                    Three months ended      Six months ended
                                          April 30              April 30
    (in millions of dollars,
     except per share amounts)        2009       2008       2009       2008
    -------------------------------------------------------------------------
    Net income (loss)           $   (144.3) $    36.9  $  (150.7) $    71.0
    Non-controlling interest          (0.1)         -        0.2        0.3
    Income taxes                     (15.4)       8.6      (24.4)      11.0
    Discount on sale of
     accounts receivable               1.4        2.1        3.1        5.2
    Financial expenses                 8.7        7.1       16.1       15.6
    Goodwill and intangibles
     assets impairment               169.3          -      169.3          -
    Impairment of assets and
     restructuring costs              27.5        2.4       58.8        4.3
    -------------------------------------------------------------------------
    Adjusted operating income   $     47.1  $    57.1  $    72.4  $   107.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Amortization                      33.4       31.9       66.4       64.0
    -------------------------------------------------------------------------
    Adjusted operating income
     before amortization        $     80.5  $    89.0  $   138.8  $   171.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income (loss)           $   (144.3) $    36.9  $  (150.7) $    71.0
    Impairment of assets and
     restructuring costs
     (after tax)                      19.7        1.7       41.2        3.0
    Goodwill and intangibles
     assets impairment
     (after tax)                     154.8          -      154.8          -
    Unusual adjustments to
     income taxes                        -       (4.5)         -      (11.5)
    -------------------------------------------------------------------------
    Adjusted net income               30.2       34.1       45.3       62.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average number of shares
     outstanding                      80.8       81.8       80.8       82.7
    -------------------------------------------------------------------------
    Adjusted earnings per
     share                      $     0.37  $    0.42  $    0.56  $    0.76
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash flow related to
     operating activities       $    (21.9) $    21.5  $   (12.4) $    54.5
    Changes in non-cash
     operating items                 (72.1)     (54.2)    (107.1)     (89.7)
    -------------------------------------------------------------------------
    Cash flow from operating
     activities before changes
     in non-cash operating
     items                      $     50.2  $    75.7  $    94.7  $   144.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Long-term debt                                     $   747.4  $   643.7
    Current portion of
     long-term debt                                        176.2       14.4
    Cash and cash equivalents                               (6.8)     (32.0)
    -------------------------------------------------------------------------
    Net indebtedness                                   $   916.8  $   626.1
    -------------------------------------------------------------------------
    

    Financing Activities

    In an environment in which credit is tight and costly, Transcontinental
has successfully completed several refinancing and financing arrangements
since the end of the first quarter. In the second quarter, the Corporation
announced it had completed a long-term private placement offering of $100
million in unsecured debentures underwritten by the Solidarity Fund QFL, a
Quebec-based development capital company. It also announced the extension, to
August 2010, of its $300-million securitization of receivables program set up
in 2001. Since the end of the second quarter, the Corporation has renewed
credit facilities of $125 million for one year with its bank syndicate, and
arranged $100 million in financing through a five-year loan from the Caisse de
dépôt et placement du Québec.
    The commitment of this $625 million in various financings reflects the
financial market's confidence in Transcontinental.

    Corporate Affairs

    On March 12, 2009, Transcontinental announced the appointment of
Christian Trudeau as President of its Marketing Communications sector and as a
member of the Corporation's Executive Committee. The purpose of the new sector
is to deliver integrated marketing solutions to Transcontinental's customers
by focusing on the development of new one-to-one advertising services, new
communication platforms and the production of marketing communications
products. Mr. Trudeau assumed his duties on April 9. From 2004, he was
President and Chief Operating Officer of Centria Commerce, an e-commerce
company. Previously, Mr. Trudeau was President and Chief Operating Officer of
BCE Emergis, a North American leader in e-commerce, and he also held senior
executive positions at Bell Canada and the Montréal Exchange.

    Dividend

    At its June 11, 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 July 24, 2009
to shareholders of record at the close of business on July 6, 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 13,500 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 June 11, 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     Six months ended
     except per share data)                April 30             April 30
    -------------------------------------------------------------------------
                                      2009       2008       2009       2008
    -------------------------------------------------------------------------

    Revenues                    $    563.4  $   595.1  $ 1,167.5  $ 1,191.1
    Operating costs                  418.0      434.6      889.9      877.5
    Selling, general and
     administrative expenses          64.9       71.5      138.8      142.2
    -------------------------------------------------------------------------

    Operating income before
     amortization, impairment
     of assets and
     restructuring costs and
     impairment of goodwill
     and intangible assets            80.5       89.0      138.8      171.4
    Amortization                      33.4       31.9       66.4       64.0
    Impairment of assets and
     restructuring costs              27.5        2.4       58.8        4.3
    Impairment of goodwill
     and intangible assets           169.3          -      169.3          -
    -------------------------------------------------------------------------

    Operating income (loss)         (149.7)      54.7     (155.7)     103.1
    Financial expenses                 8.7        7.1       16.1       15.6
    Discount on sale of accounts
     receivable                        1.4        2.1        3.1        5.2
    -------------------------------------------------------------------------

    Income (loss) before income
     taxes and non-controlling
     interest                       (159.8)      45.5     (174.9)      82.3
    Income taxes (recovered)         (15.4)       8.6      (24.4)      11.0
    Non-controlling interest          (0.1)         -        0.2        0.3
    -------------------------------------------------------------------------
    Net income (loss)           $   (144.3) $    36.9  $  (150.7)  $   71.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Per share (basic)
    Net income (loss)           $    (1.79) $    0.45  $   (1.87)  $   0.86
    -------------------------------------------------------------------------
    Per share (diluted)
    Net income (loss)           $    (1.79) $    0.45  $   (1.87)  $   0.86
    -------------------------------------------------------------------------

    Average number of shares
     outstanding (in millions)        80.8       81.8       80.8       82.7
    -------------------------------------------------------------------------



                       CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                                                                    unaudited


                                    Three months ended     Six months ended
    (in millions of dollars)             April 30              April 30
    -------------------------------------------------------------------------
                                      2009       2008       2009       2008
    -------------------------------------------------------------------------
    Net income (loss)           $   (144.3) $    36.9  $  (150.7)  $   71.0
    Other comprehensive
     income (loss):
    Unrealized net change in
     fair value of derivatives
     designated as cash flow
     hedges, net of income
     taxes of $1.5 million and
     ($0.3) million for the
     three-month and six-month
     periods ended April 30,
     2009 ($0.6 million and
     ($0.8) million for the
     same periods in 2008)             3.5        1.8       (2.3)      (1.0)
    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
     ($0.6) million and
     ($2.1) million for the
     three-month and six-month
     periods ended April 30,
     2009 ($1.1 million and
     $1.9 million for the same
     periods in 2008)                  1.9       (2.8)       5.2       (4.2)
    -------------------------------------------------------------------------
    Net change in fair value of
     derivatives designated as
     cash flow hedges                  5.4       (1.0)       2.9       (5.2)
    Unrealized net gains (losses)
     on translation of financial
     statements of self-sustaining
     foreign operations                3.6        3.5       (1.8)       7.5
    -------------------------------------------------------------------------
    Other comprehensive income         9.0        2.5        1.1        2.3
    -------------------------------------------------------------------------
    Comprehensive income (loss) $   (135.3) $    39.4  $  (149.6)  $   73.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                 CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
                                                                    unaudited


                                                          Six months ended
    (in millions of dollars)                                   April 30
    -------------------------------------------------------------------------
                                                          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)                                   (150.7)        71.0
    -------------------------------------------------------------------------
                                                         602.8        875.7
    Premium on redemption of shares                          -        (29.8)
    Dividends on shares                                  (12.9)       (12.4)
    -------------------------------------------------------------------------
    Balance, end of period                         $     589.9  $     833.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                                  CONSOLIDATED BALANCE SHEETS
                                                                    unaudited


    -------------------------------------------------------------------------
                                                         As at        As at
                                                      April 30,  October 31,
    (in millions of dollars)                              2009         2008
    -------------------------------------------------------------------------

    Current assets
      Cash and cash equivalents                    $       6.8  $      90.7
      Accounts receivable                                249.1        207.1
      Income taxes receivable                              6.0          4.5
      Inventories                                         92.4         99.3
      Prepaid expenses and other current assets           19.7         16.1
      Future income taxes                                 18.4         28.1
    -------------------------------------------------------------------------
                                                         392.4        445.8

    Property, plant and equipment                        981.0        936.7
    Goodwill                                             682.1        842.6
    Intangible assets                                    156.1        166.2
    Future income taxes                                  187.8        141.0
    Other assets                                          79.8         82.7
    -------------------------------------------------------------------------
                                                   $   2,479.2  $   2,615.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Current liabilities
      Accounts payable and accrued
       liabilities                                 $     340.4  $     442.9
      Income taxes payable                                44.7         48.3
      Deferred subscription revenues and
       deposits                                           54.2         49.6
      Future income taxes                                  2.6          9.9
      Current portion of long-term debt                  176.2        194.3
    -------------------------------------------------------------------------
                                                         618.1        745.0

    Long-term debt                                       747.4        602.1
    Future income taxes                                  108.4         99.3
    Other liabilities                                     63.3         65.5
    -------------------------------------------------------------------------
                                                       1,537.2      1,511.9
    -------------------------------------------------------------------------

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

    Commitments

    Shareholders' equity
      Share capital                                      379.5        379.5
      Contributed surplus                                 12.2         11.3
      Retained earnings                                  589.9        753.5
      Accumulated other comprehensive loss               (39.6)       (41.3)
    -------------------------------------------------------------------------
                                                         550.3        712.2
    -------------------------------------------------------------------------
                                                         942.0      1,103.0
    -------------------------------------------------------------------------
                                                   $   2,479.2  $   2,615.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                    unaudited


                                     Three months ended     Six months ended
    (in millions of dollars)              April 30              April 30
    -------------------------------------------------------------------------
                                      2009       2008       2009       2008
    -------------------------------------------------------------------------

    Operating activities
      Net income (loss)         $   (144.3)  $   36.9  $  (150.7)  $   71.0
      Items not affecting cash
       and cash equivalents
        Amortization                  39.2       35.4       77.1       74.4
        Impairment of assets           8.4          -       27.2        1.9
        Impairment of goodwill
         and intangible assets       169.3          -      169.3          -
        (Gain) loss on disposal
         of assets                    (1.2)       0.4       (1.3)       0.4
        Future income taxes          (23.0)      (0.6)     (37.0)      (9.4)
        Non-controlling
         interest                     (0.1)         -        0.2        0.3
        Net change in accrued
         pension benefit asset
         and liability                (1.7)       2.7       (4.1)       5.7
        Stock-based compensation       0.6        0.9        0.8        1.8
        Other                          3.0          -       13.2       (1.9)
    -------------------------------------------------------------------------
      Cash flow from operating
       activities before changes
       in non-cash operating
       items                          50.2       75.7       94.7      144.2
      Changes in non-cash
       operating items               (72.1)     (54.2)    (107.1)     (89.7)
    -------------------------------------------------------------------------
      Cash flow related to
       operating activities          (21.9)      21.5      (12.4)      54.5
    -------------------------------------------------------------------------

    Investing activities
      Business acquisitions           (1.3)     (13.9)     (13.0)     (16.9)
      Acquisitions of property,
       plant and equipment           (64.2)     (60.2)    (162.9)     (91.5)
      Disposals of property,
       plant and equipment             5.9        0.5        6.0        0.5
      Increase in other assets        (9.3)      (5.7)     (11.5)     (11.2)
    -------------------------------------------------------------------------
      Cash flow related to
       investing activities          (68.9)     (79.3)    (181.4)    (119.1)
    -------------------------------------------------------------------------

    Financing activities
      Increase in long-term
       debt                          100.6          -      100.6          -
      Reimbursement of
       long-term debt                 (2.0)      (1.6)      (3.9)      (3.2)
      (Decrease) Increase in
       revolving term credit
       facility                      (18.7)      96.6       28.1      105.0
      Dividends on shares             (6.4)      (6.6)     (12.9)     (12.4)
      Redemption of shares               -      (34.0)         -      (44.9)
      Issuance of shares                 -        0.4          -        0.4
      Other                           (0.8)       1.2       (1.3)       0.9
    -------------------------------------------------------------------------
      Cash flow related to
       financing activities           72.7       56.0       110.6      45.8
    -------------------------------------------------------------------------

    Effect of exchange rate
     changes on cash and cash
     equivalents denominated
     in foreign currencies            (0.3)       0.6        (0.7)      2.3
    -------------------------------------------------------------------------
    Decrease in cash and cash
     equivalents                     (18.4)      (1.2)      (83.9)    (16.5)
    Cash and cash equivalents
     at beginning of period           25.2       33.2        90.7      48.5
    -------------------------------------------------------------------------
    Cash and cash equivalents
     at end of period           $      6.8  $    32.0  $      6.8  $   32.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Additional information
      Interest paid             $      3.1  $     4.8  $     14.6  $   16.8
      Income taxes paid
       (recovered)                    (0.6)      12.9        18.7      28.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

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

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Transcontinental Inc.

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