Cossette Communication Group - 2008 Third Quarter Results - Gross income increases to $67.2 million, net earnings at $2.2 million following goodwill impairment

    KOS (TSX)

    QUEBEC CITY, Aug. 5 /CNW Telbec/ - Cossette Communication Group Inc.
("Cossette" or the "Company") recorded gross income of $67.2 million for the
third quarter of fiscal 2008, ended June 30, 2008, up 16 per cent from
$57.9 million from the corresponding quarter of the previous fiscal year. Net
earnings amounted to $2.2 million ($0.13 per share), or $4.5 million
($0.27 per share) excluding the after-tax effect of the goodwill impairment
($0.14 per share), compared to $4.7 million ($0.28 per share) for the third
quarter of 2007.
    During the quarter, the Company recorded a preliminary goodwill
impairment charge of $4.1 million related to a reevaluation of the fair value
of its U.S. reporting unit. The impairment arises from test results that
indicate that the fair value of the U.S. reporting unit is lower than its
carrying amount, including goodwill. The Company will complete the second and
final step of its annual goodwill impairment test during the fourth quarter of
    "Our results for the third quarter are on target with our stated
financial objectives," said Claude Lessard, Chairman, Chief Executive Officer
and President. "In the current context, we are satisfied with our performance
in Canada. Our U.K. companies were successful on the new business front which
translated to very strong organic growth. As for the U.S., we are well engaged
in this market, as demonstrated by the recent acquisition of Rocket XL. The
teams we have in place in our U.S. operations are energetic and dynamic. We
are very confident of the quality of the service we can deliver in this market
and are optimistic about the future success of the operation."
    For the quarter, earnings from operations were $4.3 million ($9.8 million
excluding non-recurring charges totalling $5.5 million), compared with
$7.9 million in 2007. Cash flows from operating activities before changes in
non-cash working capital items reached $8.2 million, compared with
$6.6 million in 2007.
    First nine-month period review - For the nine-month period ended June 30,
2008, gross income amounted to $186.6 million, an increase of $18.4 million or
10.9 per cent compared to gross income of $168.2 million reported for the
nine-month period of fiscal 2007. Net earnings for the period were
$6.4 million ($0.39 per share) or $8.7 million ($0.53 per share) excluding the
after-tax effect of the goodwill impairment ($0.14 per share), compared to
$11.7 million ($0.69 per share) for the same period in fiscal 2007.
    Earnings from operations for the first nine months of fiscal 2008 were
$12.1 million ($19.6 million excluding non-recurring charges totalling
$7.5 million), as compared to $20.5 million for the same period in 2007. Cash
flows from operations before changes in non-cash working capital items in the
first nine months of fiscal 2008 were $17.8 million as compared to
$18.5 million in the comparable period of 2007.
    Management's Discussion and Analysis, containing a full analysis of
financial results, is available on SEDAR (

    Changes in the Senior Management team: Jean Royer leaves and
    Martin Faucher comes on board

    Jean Royer, Cossette's Executive Vice President and Chief Financial
Officer, has announced his decision to leave the Company. His departure will
be effective September 30, 2008.
    "After nine years of outstanding and loyal services, Jean has decided to
explore new professional avenues, at an age where all options are still open
for him. I would like to sincerely thank him for his excellent work, his
dedicated participation and his numerous accomplishments over the years. We
wish him great success in his future endeavours", said Claude Lessard.
    "My experience at Cossette will always remain as a landmark in my
professional life. I want to thank Claude Lessard and the senior management
team for providing this great opportunity for me at an early stage of my
career," stated Jean Royer.
    In light of this decision, Claude Lessard is pleased to announce the
arrival of Martin Faucher, CA as Cossette's new Chief Financial Officer (CFO)
who will start on August 25, 2008, ensuring a seamless transition in the
administrative team. Mr. Faucher is currently CFO of iPerceptions Inc.,
Montreal, a North-American leader in monitoring consumer attitudes and
perceptions on the Web.
    A chartered accountant, Mr. Faucher has a Commerce and Public Accountancy
degree from McGill University and started his career at Ernst & Young. In
1996, he became CFO of Kaydara, a leading real-time 3D animation software
company where he spent 8 years before joining Microbridge, a manufacturer of
electronic calibration products, principally for consumer market applications,
as well as the automotive and medical industries. In 2007, he moved to his
current position.
    "Martin's financial and management experience in the fields of high tech,
3D animation, cultural and entertainment software products and web based
monitoring initiatives will bring new insights to Cossette in our current and
ongoing digital thrust" declared Claude Lessard. "We are very happy to have
him on board."
    "Cossette is a company with tremendous opportunities and an impressive
management. I am excited to join this executive team promoting entrepreneurial
values and lead the finance/IT team to play a significant role in the
company's future strategic development," commented Martin Faucher.

    Cossette Communication Group Inc. offers a full range of leading-edge
communication services to clients of all sizes, including some of the most
prestigious brands in the world. A customer-driven organization built around
highly specialized business units, Cossette also offers Convergent
Communications(TM), a unique working method that brings added value to the
client by integrating various services offered by the Group, including
strategic planning and research, advertising, media planning and buying, sales
promotion, CRM, database and direct marketing, interactive marketing and
technology solutions, public relations and alliance marketing, branding and
design, ethnic marketing, sports marketing, branded content and product
placement and business-to-business communications (B2B practices). Cossette
has approximately 1,650 employees and offices in Quebec City, Montreal,
Toronto, Vancouver, Halifax, New York, Irvine, Los Angeles, London, Moscow and

    Forward-looking statements - This press release is not an offer of
securities for sale. It may contain forward-looking statements concerning the
Company's business, operations and strategies, including forward-looking
statements within the meaning of section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 in the United States.The
Company cautions that, by their nature, forward-looking statements involve
risks and uncertainties and the Company's actual results may differ materially
from those expressed or implied in such statements, due to a variety of
factors including downturns in general economic conditions and resulting
changes in client business and marketing strategies, consolidation and
globalisation of client brand strategies, the highly competitive nature of the
communications industry, the greater resources available to much larger global
agencies, low entry barriers for new competitors, dependence upon a limited
number of clients contributing a significant percentage of income, inability
to acquire new clients or new assignments from existing clients due to client
policies prohibiting performance of similar services for competing products or
companies, our ability to successfully integrate our acquired and
to-be-acquired businesses and the retention of key management, creative and
technical personnel. Reference should be made to the most recent annual
Management's Discussion and Analysis for an in-depth description of major risk
factors. The Company assumes no obligation to update or revise any
forward-looking statement, whether as a result of new information, future
events or any other reason, unless required by applicable laws. In the event
the Company does update any forward-looking statements, no inference should be
made that the Company will make additional updates with respect to that
statement, related matters, or any other forward-looking statement.
    Financial analysts are invited to participate in a conference call with
management tomorrow August 6, 2008, at 9:30 a.m. The media and any
stakeholders may attend the call in listening mode only. Please dial
514-861-1531 or 877-667-7766 (Canada & U.S.) or 00-800-6578-9898 (Global Toll
Free). A replay will be available at 514-861-2272 or 800-408-3053, passcode
3265933# until August 27, 2008 and in the Investor Relations section of our
website at

    Appendix: Selected Financial Information

                      Cossette Communication Group Inc.
                       Selected Financial Information
       (in thousands of Canadian dollars, except for amounts per share)

    Results for the 3-month period ended June 30, (unaudited)

                                                            2008        2007

    Gross income                                          67,220      57,945
    Operating expenses before goodwill impairment         58,850      50,042
    Goodwill impairment                                    4,067           -
    Earnings from operations                               4,303       7,903
    Earnings before income taxes and non controlling
     interest                                              4,115       7,755
    Earnings after income taxes                            2,997       5,125
    Non-controlling interest                                (818)       (389)
    Net earnings                                           2,179       4,736
    Cash flows from operations (before changes in
     non-cash working capital items)                       8,202       6,568
    Net earnings per share
      Basic                                                 0.13        0.28
      Diluted                                               0.13        0.28
    Weighted average number of shares outstanding ('000)
      Basic                                               16,319      16,729
      Diluted                                             16,370      16,856

    Results for the 9-month period ended June 30, (unaudited)

                                                            2008        2007

    Gross income                                         186,562     168,227
    Operating expenses before goodwill impairment        170,414     147,763
    Goodwill impairment                                    4,067           -
    Earnings from operations                              12,081      20,464
    Earnings before income taxes and non controlling
     interest                                             12,225      20,992
    Earnings after income taxes                            8,355      13,708
    Non-controlling interest                              (1,953)     (1,990)
    Net earnings                                           6,402      11,718
    Cash flows from operations (before changes in
     non-cash working capital items)                      17,840      18,465
    Net earnings per share
      Basic                                                 0.39        0.69
      Diluted                                               0.39        0.69
    Weighted average number of shares outstanding ('000)
      Basic                                               16,507      16,866
      Diluted                                             16,577      16,936

    Balance sheet

                                                           As at       As at
                                                         June 30,   Sept. 30,
                                                            2008        2007
                                                      (unaudited)   (audited)

    Cash and cash equivalents                             12,024       3,484
    Current assets                                       217,281     188,788
    Intangible assets and deferred charges                 5,573       6,384
    Goodwill                                              82,024      84,244
    Total assets                                         328,454     299,100
    Short-term borrowings, including bank overdraft       41,825           -
    Current portion of long-term debt                         31         411
    Current portion of balances of purchase price of
     subsidiaries                                            331      16,009
    Long-term debt                                           382         108
    Balances of purchase price of subsidiaries                30         529
    Shareholders' equity                                 137,151     132,123
    %SEDAR: 00012070EF

For further information:

For further information: Jean Royer, Executive Vice-President and Chief
Financial Officer, (418) 521-3784; Source: Cossette Communication Group Inc.,

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