Transcontinental sees strong improvement in profitability for fourth
consecutive quarter and resumes organic growth in revenues
- Growth of 18% in adjusted operating income before amortization compared
to second quarter 2009 despite 4% decrease in revenues; on a comparable
basis, revenues grew 2%.
- Growth of 14% in adjusted net income applicable to participating
shares; on a per-share basis, increase from $0.37 to $0.42.
- Increase of $211.3 million in net income applicable to participating
shares, from a loss of $144.3 million to a gain of $67 million; on a
per-participating share basis, from a loss of $1.79 to a gain of $0.83.
- Acquisition of LIPSO, a Canadian leader in mobile solutions, enhancing
the Corporation's marketing communications offering and reflecting
growth strategy for new media and digital platforms.
- As part of the strategic development of solutions offered to local
communities in Canada, launched the pre-shopping websites dealstreet.ca
and publisac.ca, an online reputation management tool for businesses on
weblocal.ca, and four community papers in Quebec.
- Continued to implement a hybrid and Canada-wide newspaper and flyer
printing platform that will become fully operational before the end of
2010.
- Concluded the sale of almost all of Transcontinental's direct mail
assets in the United States to IWCO Direct, for net proceeds of
$105.7 million.
- Substantially improved the Corporation's financial position with a
ratio of net indebtedness (including the securitization program) to
adjusted operating income before amortization of 2.08 as at April 30,
2010, versus 2.40 as at January 31, 2010 and 2.59 as at October 31,
2009.
</pre>
<p/>
<p><span class="xn-location">MONTREAL</span>, <span class="xn-chron">June 8</span> /CNW Telbec/ - During the second quarter of fiscal 2010, Transcontinental resumed organic growth in revenues and generated, for the fourth quarter in a row, an increase in adjusted operating income before amortization. The printing of the <span class="xn-location">San Francisco</span> Chronicle daily, the contribution of the Marketing Communications Sector and the stabilization of the market in certain traditional segments all made a specific contribution to organic growth in revenues. The solid advances in operating income stem from the full impact of the rationalization measures implemented in fiscal 2009 and continuous improvement of operational efficiency. Transcontinental also strengthened its financial position, which enabled it to invest in the digital development of its Media Sector and its marketing communication operations, as shown by the acquisition of LIPSO, a Canadian leader in mobile solutions.</p>
<p>"I am very satisfied with our second quarter results and the performance of the past four quarters, which have all been higher than the previous comparable quarters," said François Olivier, President and Chief Executive Officer of Transcontinental. "We are systematically building the new Transcontinental by accompanying our customers with marketing strategies based on advertising personalization and the new communication platforms, while strengthening our traditional core business, which still provides extremely effective marketing tools. This strategy, combined with our employees' efforts to innovate and improve every day, will allow us to take full advantage of the opportunities that are opening up in our niches."</p>
<p>Transcontinental continued to improve its financial position during the quarter, with a ratio of net indebtedness (including the securitization program) to adjusted operating income before amortization of 2.08 at <span class="xn-chron">April 30, 2010</span>, versus 2.40 as at <span class="xn-chron">January 31, 2010</span> and 2.59 as at <span class="xn-chron">October 31, 2009</span>.</p>
<p/>
<p>Financial Highlights</p>
<p/>
<p>In the second quarter of 2010, Transcontinental generated consolidated revenues of <span class="xn-money">$510.0 million</span>, down 4% from <span class="xn-money">$531.1 million</span> in the same quarter in 2009. Excluding divestitures of publications, plant closures, the paper effect and the exchange rate effect, revenues were up 2%.</p>
<p>Adjusted operating income before amortization, which excludes unusual items, rose 18%, from <span class="xn-money">$77 million to $91 million</span>. The increase stems mainly from the full impact of the rationalization measures implemented in fiscal 2009, improved equipment productivity, and the contribution from printing the <span class="xn-location">San Francisco</span> Chronicle.</p>
<p>Net income applicable to participating shares was up <span class="xn-money">$211.3 million</span>, from a loss of <span class="xn-money">$144.3 million</span> in second quarter 2009 to a gain of <span class="xn-money">$67.0 million</span> in 2010. This increase is primarily due to impairment of goodwill and intangible assets and impairment of assets and restructuring costs in second quarter 2009, combined with a gain on the sale of almost all the assets of the Direct Mail Group in the <span class="xn-location">United States</span> on <span class="xn-chron">April 1, 2010</span> and the increase in adjusted operating income in 2010. On a per-participating share basis, net income applicable to participating shares went from a loss of <span class="xn-money">$1.79</span> to a gain of <span class="xn-money">$0.83</span>.</p>
<p>Adjusted net income applicable to participating shares was up 14%, from <span class="xn-money">$30.0 million</span> in 2009 to <span class="xn-money">$34.3 million</span> in 2010. On a per-participating share basis, adjusted net income applicable to participating shares also increased 14%, from <span class="xn-money">$0.37 to $0.42</span>.</p>
<p>Lastly, adjusted operating income margin before amortization was up appreciably, from 14.5% in 2009 to 17.8% in 2010. The increase is mainly due to the full impact of the rationalization measures implemented in 2009 and continuous improvement in operational efficiency.</p>
<p>In the first six months of fiscal 2010, consolidated revenues were down 7%, from <span class="xn-money">$1.10 billion to $1.02 billion</span>, while adjusted operating income before amortization grew 26%, from <span class="xn-money">$136.2 million to $172.1 million</span>. Net income applicable to participating shares went from a loss of <span class="xn-money">$150.7 million</span> in the first half of 2009 to a gain of <span class="xn-money">$93.2 million</span> in the same period in 2010; on a per-participating share basis, net income applicable to participating shares went from a loss of <span class="xn-money">$1.87</span> to a gain of <span class="xn-money">$1.16</span>. Adjusted net income applicable to participating shares rose 24%, from <span class="xn-money">$49.3 million to $61.2 million</span>; on a per-participating share basis, adjusted net income applicable to participating shares also rose 25%, from <span class="xn-money">$0.61 to $0.76</span>.</p>
<p>For more detailed financial information, please see Management's Discussion and Analysis for the Second Quarter ended <span class="xn-chron">April 30, 2010</span> at <a href="http://www.transcontinental.com">www.transcontinental.com</a>, under "Investors."</p>
<p/>
<p>Operating Highlights</p>
<p/>
<p>Below are the main operating highlights to date.</p>
<p/>
<pre>
- In response to growing demand from its customers, Transcontinental
enhanced its marketing communications solutions that use new media and
digital platforms by acquiring LIPSO Systems on April 30, 2010. LIPSO
is a Canadian leader in aggregated mobile solutions encompassing
connectivity, transaction management and applications development. This
acquisition allows Transcontinental to add several new key services to
its marketing communications offering, including cell phone bar-code
reading, electronic couponing for retail sales and electronic ticketing
for transportation and entertainment.
- In the second quarter, the Media Sector furthered the strategic
development of its solutions for local communities in Canada by
officially launching the pre-shopping websites dealstreet.ca and
publisac.ca, which distribute thousands of geographically specific
retail discounts to consumers every day. The business search site,
weblocal.ca, also launched the first online reputation management tool
for advertisers who subscribe to its services.
- Providing solutions for local communities is an important area of
growth for Transcontinental. Thus, four new community papers and their
websites were launched in Quebec: Rive-Sud Express.ca, which serves
Longueuil, Brossard and Saint-Lambert on Montreal's South Shore; Point
de vue Sainte-Agathe and Point de vue Mont-Tremblant, in the
Laurentians; and Abitibi Express in Val-d'Or and Amos in Abitibi. These
launches fulfill consumer demand for Transcontinental to introduce a
local and regional paper that would include, among other things, input
from "citizen contributors." These new papers, combined with new
digital services, will also bring the benefits of enhanced media tools
to local businesses and their respective markets.
- In print media, Transcontinental launched the first business-oriented
French-language bookzine in Canada: PREMIUM - l'intelligence en
affaires. This high-end bi-monthly publication is aimed at business
executives and combines the best of book and magazine. It rounds out
Transcontinental's portfolio of business publications.
- With its innovations and state-of-the-art equipment, Transcontinental
is increasing its market share in newspaper and flyer printing. In
recent months several new customers have been added to its Canada-wide
flyer printing and distribution network. In the United States, the new
plant in Fremont, California, where printing of the San Francisco
Chronicle is running smoothly, has won a new customer, a publisher of
community newspapers in the San Jose area; the plant started printing
one of these newspapers in April. It is also business growth that is
driving the development of a hybrid platform to print newspapers and
flyers being set up under a $1.7 billion, 18-year contract with The
Globe and Mail, a first in Canada. The platform will be operational
before the end of 2010.
- After releasing its first Sustainability Report based on Global
Reporting Initiative (GRI) standards in February 2010, Transcontinental
continued to affirm its leadership in sustainable development. In the
second quarter 2010, its Constructo business unit launched voirvert.ca,
the first French-language website dedicated entirely to sustainable and
environmental building practices in Quebec. This site is specifically
designed to meet the needs of professionals and managers working in
construction. Transcontinental's commitment to sustainable development
also earned it the annual Best of Show award for the most
environmentally progressive printing company overall. It received this
honour, along with the Gold for "Most Environmentally Progressive
Printer in Canada," 500+ employees, at the fifth annual Environmental
Printing Awards organized by PrintAction magazine. Lastly, in the wake
of the recent historic agreement to conserve the boreal forest,
Transcontinental's paper purchasing policy was recognized for its major
contribution to preservation efforts. The boreal forest agreement,
signed by 21 major forest companies and nine environmental groups,
seeks to preserve a large area of the boreal forest, to protect the
endangered woodland caribou, and to apply the highest environmental
standards to forest management.
</pre>
<p/>
<p>Reconciliation of Non-GAAP Financial Measures</p>
<p/>
<p>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.</p>
<p>The following table reconciles GAAP financial measures to non-GAAP financial measures.</p>
<p/>
<pre>
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) 2010 2009 2010 2009
-------------------------------------------------------------------------
Net income (loss)
applicable to
participating shares $ 67.0 $ (144.3) $ 93.2 $ (150.7)
Dividends on preferred
shares 1.7 - 3.4 -
Net loss (income)
related to discontinued
operations (after tax) (34.7) 2.3 (32.9) 16.2
Non-controlling interest - (0.1) 0.3 0.2
Income taxes 10.7 (13.6) 15.5 (16.1)
Discount on sale of
accounts receivable 0.3 1.4 0.9 3.1
Financial expenses 10.5 8.7 20.5 16.1
Impairment of goodwill
and intangible assets - 169.3 - 169.3
Impairment of assets and
restructuring costs 2.8 23.9 4.7 40.4
-------------------------------------------------------------------------
Adjusted operating
income 58.3 47.6 105.6 78.5
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Amortization 32.7 29.4 66.5 57.7
-------------------------------------------------------------------------
Adjusted operating
income before
amortization $ 91.0 $ 77.0 $ 172.1 $ 136.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income (loss)
applicable to
participating shares $ 67.0 $ (144.3) $ 93.2 $ (150.7)
Net loss (income)
related to discontinued
operations (after tax) (34.7) 2.3 (32.9) 16.2
Impairment of assets and
restructuring costs
(after tax) 2.0 17.3 3.3 29.1
Impairment of goodwill
and intangible assets
(after tax) - 154.7 - 154.7
Unusual adjustments to
income taxes - - (2.4) -
-------------------------------------------------------------------------
Adjusted net income
applicable to
participating shares 34.3 30.0 61.2 49.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Average number of
participating shares
outstanding 80.8 80.8 80.8 80.8
-------------------------------------------------------------------------
Adjusted net income
applicable to
participating shares
per share $ 0.42 $ 0.37 $ 0.76 $ 0.61
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash flow related to
continuing operations $ (57.4) $ (23.6) $ (0.8) $ 9.2
Changes in non-cash
operating items (128.1) (74.2) (134.0) (91.0)
-------------------------------------------------------------------------
Cash flow from
continuing opereations
before changes in
non-cash operating
items $ 70.7 $ 50.6 $ 133.2 $ 100.2
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Long-term debt $ 786.7 $ 746.8
Current portion of
long-term debt 5.9 175.3
Cash and cash
equivalents (14.6) (6.8)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net indebtedness $ 778.0 $ 915.3
-------------------------------------------------------------------------
</pre>
<p/>
<p>Corporate Affairs</p>
<p/>
<p>On <span class="xn-chron">April 1, 2010</span>, having met U.S. regulatory requirements, Transcontinental announced that it had concluded the sale of almost all of its direct mail operations in the <span class="xn-location">United States</span> to IWCO Direct, a U.S. company headquartered in Minnesota. The agreement to sell the assets was announced on <span class="xn-chron">February 10, 2010</span>, subject to regulators' approval. The facilities are in Warminster and <span class="xn-location">Hamburg</span> in Pennsylvania, in <span class="xn-location">Fort Worth</span>, Texas, and in Downey, California. The transaction resulted in net proceeds of <span class="xn-money">$105.7 million</span>. The sale reflects Management's decision to focus on the Corporation's most promising core business operations and on the development of digital products and services. Transcontinental is still the leader in direct marketing in <span class="xn-location">Canada</span>.</p>
<p/>
<p>Dividend</p>
<p/>
<p>At its <span class="xn-chron">June 8, 2010</span> meeting, the Corporation's Board of Directors declared a quarterly dividend of <span class="xn-money">$0.09</span> per participating share on Class A Subordinate Voting Shares and Class B shares. These dividends are payable on <span class="xn-chron">July 22, 2010</span> to participating shareholders of record at the close of business on <span class="xn-chron">July 2, 2010</span>. On an annual basis, this represents a dividend of <span class="xn-money">$0.36</span> per participating share.</p>
<p>Furthermore, at the same meeting, the Board also declared a quarterly dividend of $0.4207 per share on cumulative 5-year rate reset first preferred shares, series D. These dividends are payable on <span class="xn-chron">July 15, 2010</span>. On an annual basis, this represents a dividend of $1.6875 per preferred share.</p>
<p/>
<p>Additional Information</p>
<p/>
<p>Upon releasing its quarterly results, Transcontinental will hold a conference call for the financial community today at <span class="xn-chron">4:15 p.m. (ET</span>). Media may hear the call in listen-only mode or tune in to the simultaneous audio broadcast on the Corporation's Web site, which will then be archived for 30 days. For media requests for information or interviews, please contact Nessa Prendergast, Director, Media Relations, at 514-954-2809.</p>
<p/>
<p>Profile</p>
<p/>
<p>Transcontinental creates marketing products and services that allow businesses to attract, reach and retain their target customers. The Corporation is the largest printer in <span class="xn-location">Canada</span> and <span class="xn-location">Mexico</span>, and fourth-largest in <span class="xn-location">North America</span>. As the leading publisher of consumer magazines and French-language educational resources, the second-largest community newspaper publisher, and with its digital platforms that deliver unique content through more than 120 websites, it is also one of Canada's leading media groups. In addition, Transcontinental offers marketing products and services that use new communications platforms supported by database analytics, premedia, e-flyers, email marketing, custom communications and mobile solutions.</p>
<p>Transcontinental (TSX: TCL.A, TCL.B, TCL.PR.D) has 11,000 employees in <span class="xn-location">Canada</span>, the <span class="xn-location">United States</span> and <span class="xn-location">Mexico</span>, and reported revenues of C$2.4 billion in 2009. For more information about the Corporation, please visit <a href="http://www.transcontinental.com">www.transcontinental.com</a>.</p>
<p/>
<p>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 forward-looking 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, structural changes in its industries, exchange rate, availability of capital, energy costs, increased competition, as well as the Corporation's capacity to implement its strategic plan and rationalization plan, engage in strategic transactions 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.</p>
<p>The forward-looking information in this release is based on current expectations and information available as of <span class="xn-chron">June 8, 2010</span>. The Corporation's management disclaims any intention or obligation to update or revise any forward-looking statements unless otherwise required by the Securities Authorities.</p>
<p/>
<pre>
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
unaudited
Three months ended Six months ended
(in millions of dollars,
except per share data) April 30 April 30
-------------------------------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Revenues $ 510.0 $ 531.1 $ 1,021.6 $ 1,095.9
Operating costs 354.1 394.2 728.4 831.0
Selling, general and
administrative expenses 64.9 59.9 121.1 128.7
-------------------------------------------------------------------------
Operating income before
amortization,
impairment of assets,
restructuring costs and
impairment of goodwill
and intangible assets 91.0 77.0 172.1 136.2
Amortization 32.7 29.4 66.5 57.7
Impairment of assets and
restructuring costs 2.8 23.9 4.7 40.4
Impairment of goodwill
and intangible assets - 169.3 - 169.3
-------------------------------------------------------------------------
Operating income (loss) 55.5 (145.6) 100.9 (131.2)
Financial expenses 10.5 8.7 20.5 16.1
Discount on sale of
accounts receivable 0.3 1.4 0.9 3.1
-------------------------------------------------------------------------
Income (loss) before
income taxes and non-
controlling interest 44.7 (155.7) 79.5 (150.4)
Income taxes (recovered) 10.7 (13.6) 15.5 (16.1)
Non-controlling interest - (0.1) 0.3 0.2
-------------------------------------------------------------------------
Net income (loss) from
continuing operations 34.0 (142.0) 63.7 (134.5)
Net income (loss) from
discontinued operations 34.7 (2.3) 32.9 (16.2)
-------------------------------------------------------------------------
Net income (loss) 68.7 (144.3) 96.6 (150.7)
Dividends on preferred
shares, net of related
income taxes 1.7 - 3.4 -
-------------------------------------------------------------------------
Net income (loss)
applicable to
participating shares $ 67.0 $ (144.3) $ 93.2 $ (150.7)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net income (loss) per
participating share -
basic and diluted
Continuing operations $ 0.40 $ (1.76) $ 0.75 $ (1.67)
Discontinued operations 0.43 (0.03) 0.41 (0.20)
-------------------------------------------------------------------------
$ 0.83 $ (1.79) $ 1.16 $ (1.87)
-------------------------------------------------------------------------
Average number of
participating shares
outstanding (in
millions) 80.8 80.8 80.8 80.8
-------------------------------------------------------------------------
The notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
unaudited
Three months ended Six months ended
(in millions of dollars) April 30 April 30
-------------------------------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Net income (loss) $ 68.7 $ (144.3) $ 96.6 $ (150.7)
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 ($0.4)
million for the three-
month and six-month
periods ended April 30,
2010 ($1.5 million and
($0.3) million for the
same periods in 2009) (0.3) 3.5 (5.4) (2.3)
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 $0.5 million
and $0.6 million for
the three-month and
six-month periods ended
April 30, 2010
($0.6 million and
$2.1 million for the
same periods in 2009) 5.3 1.9 7.2 5.2
-------------------------------------------------------------------------
Net change in fair value
of derivatives
designated as cash flow
hedges 5.0 5.4 1.8 2.9
Unrealized net gains
(losses) on translation
of financial statements
of self-sustaining
foreign operations (2.0) 3.6 (2.9) (1.8)
-------------------------------------------------------------------------
Other comprehensive
income (loss) 3.0 9.0 (1.1) 1.1
-------------------------------------------------------------------------
Comprehensive income
(loss) $ 71.7 $ (135.3) $ 95.5 $ (149.6)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
unaudited
Six months ended
(in millions of dollars) April 30
-------------------------------------------------------------------------
2010 2009
-------------------------------------------------------------------------
Balance, beginning of period $ 645.9 $ 753.5
Net income (loss) 96.6 (150.7)
-------------------------------------------------------------------------
742.5 602.8
Dividends on participating shares (13.8) (12.9)
Dividends on preferred shares (3.6) -
-------------------------------------------------------------------------
Balance, end of period $ 725.1 $ 589.9
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The notes are an integral part of the consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
unaudited
-------------------------------------------------------------------------
As at As at
April 30, October 31,
(in millions of dollars) 2010 2009
-------------------------------------------------------------------------
Current assets
Cash and cash equivalents $ 14.6 $ 34.7
Accounts receivable 358.8 306.0
Income taxes receivable 17.3 4.1
Inventories 74.7 74.3
Prepaid expenses and other current assets 21.5 20.1
Future income taxes 8.4 11.0
-------------------------------------------------------------------------
495.3 450.2
Property, plant and equipment 932.3 938.8
Goodwill 672.7 673.4
Intangible assets 186.4 184.3
Future income taxes 143.6 141.5
Other assets 57.9 68.3
Assets from discontinued operations - 93.2
-------------------------------------------------------------------------
$ 2,488.2 $ 2,549.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Current liabilities
Accounts payable and accrued liabilities $ 268.3 $ 360.0
Income taxes payable 28.1 27.0
Deferred subscription revenues and deposits 39.0 37.2
Future income taxes 2.0 0.5
Current portion of long-term debt 5.9 7.0
-------------------------------------------------------------------------
343.3 431.7
Long-term debt 786.7 818.8
Future income taxes 107.0 109.0
Other liabilities 57.4 43.8
Liabilities from discontinued operations - 31.1
-------------------------------------------------------------------------
1,294.4 1,434.4
-------------------------------------------------------------------------
Non-controlling interest 0.3 0.1
-------------------------------------------------------------------------
Commitments
Shareholders' equity
Share capital 476.3 476.5
Contributed surplus 13.3 12.9
Retained earnings 725.1 645.9
Accumulated other comprehensive loss (21.2) (20.1)
-------------------------------------------------------------------------
703.9 625.8
-------------------------------------------------------------------------
1,193.5 1,115.2
-------------------------------------------------------------------------
$ 2,488.2 $ 2,549.7
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
unaudited
Three months ended Six months ended
(in millions of dollars) April 30 April 30
-------------------------------------------------------------------------
2010 2009 2010 2009
-------------------------------------------------------------------------
Operating activities
Net income (loss) $ 68.7 $ (144.3) $ 96.6 $ (150.7)
Less : Net income
(loss) from disconti-
nued operations 34.7 (2.3) 32.9 (16.2)
-------------------------------------------------------------------------
Net income (loss) from
continuing operations 34.0 (142.0) 63.7 (134.5)
Items not affecting
cash and cash
equivalents
Amortization 38.7 35.2 78.8 68.4
Impairment of assets 0.2 8.4 0.3 24.9
Impairment of
goodwill and
intangible assets - 169.3 - 169.3
Gain on disposal of
assets (0.2) (1.2) (0.6) (1.3)
Future income taxes (2.6) (21.3) (9.1) (29.1)
Net change in
accrued pension
benefit asset and
liability 1.3 (1.7) (0.7) (4.1)
Stock-based
compensation 1.1 0.6 1.6 0.8
Other (1.8) 3.3 (0.8) 5.8
-------------------------------------------------------------------------
Cash flow from opera-
ting activities
before changes in
non-cash operating
items 70.7 50.6 133.2 100.2
Changes in non-cash
operating items (128.1) (74.2) (134.0) (91.0)
-------------------------------------------------------------------------
Cash flow related to
operating activi-
ties of continuing
operations (57.4) (23.6) (0.8) 9.2
-------------------------------------------------------------------------
Cash flow related
to operating
activities of
discontinued
operations 7.1 1.7 5.8 (21.6)
-------------------------------------------------------------------------
(50.3) (21.9) 5.0 (12.4)
-------------------------------------------------------------------------
Investing activities
Business acquisitions (2.2) (1.3) (2.8) (13.0)
Acquisitions of
property, plant and
equipment (26.3) (62.6) (89.0) (159.8)
Disposals of property,
plant and equipment 0.8 3.0 1.6 3.1
Increase in intangible
assets and other
assets (7.4) (9.3) (10.6) (11.5)
-------------------------------------------------------------------------
Cash flow related to
investing activities
of continuing
operations (35.1) (70.2) (100.8) (181.2)
-------------------------------------------------------------------------
Cash flow related to
investing activities
of discontinued
operations 93.0 1.3 92.2 (0.2)
-------------------------------------------------------------------------
57.9 (68.9) (8.6) (181.4)
-------------------------------------------------------------------------
Financing activities
Increase in long-term
debt 4.8 100.2 37.7 100.2
Reimbursement of long-
term debt (2.7) (1.6) (7.8) (3.2)
Increase (decrease) in
revolving term credit
facility (16.9) (18.7) (29.6) 28.1
Dividends on
participating shares (7.3) (6.4) (13.8) (12.9)
Dividends on preferred
shares (1.7) - (3.6) -
Other 2.0 (0.8) 1.4 (1.3)
-------------------------------------------------------------------------
Cash flow related to
financing activities
of continuing
operations (21.8) 72.7 (15.7) 110.9
-------------------------------------------------------------------------
Cash flow related to
financing activities
of discontinued
operations (0.9) - (0.9) (0.3)
-------------------------------------------------------------------------
(22.7) 72.7 (16.6) 110.6
-------------------------------------------------------------------------
Effect of exchange rate
changes on cash and
cash equivalents
denominated in
foreign currencies - (0.3) 0.1 (0.7)
-------------------------------------------------------------------------
Decrease in cash and
cash equivalents (15.1) (18.4) (20.1) (83.9)
Cash and cash
equivalents at
beginning of period 29.7 25.2 34.7 90.7
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Cash and cash
equivalents at end of
period $ 14.6 $ 6.8 $ 14.6 $ 6.8
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Additional information
Interest paid $ 11.1 $ 3.1 $ 20.4 $ 14.6
Income taxes paid
(recovered) $ 35.0 $ (0.6) $ 34.1 $ 18.7
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The notes are an integral part of the consolidated financial statements.
For further information: Media: Nessa Prendergast, Director, Media Relations, Transcontinental Inc., (514) 954-2809, [email protected]; Financial Community: Jennifer F. McCaughey, Director, Investor Relations, Transcontinental Inc., (514) 954-2821, [email protected]; www.transcontinental.com
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