Acquisitions Boost Transcontinental’s Revenues; Agreement with Hearst Renegotiated
“We renewed several multiyear printing and distribution agreements and we launched and acquired titles to expand the scope of our newspaper network. In addition, because of our excellent financial position and our ability to generate significant cash flows, we maintained the necessary flexibility to continue to develop TC Transcontinental. We continued to enhance our new services by entering the television production space, by investing in our flagship brands, by expanding the scope of our digital advertising representation and by continuing to rollout mobile apps for our clients and our own brands. I am certain that our achievements in the past year put us in an excellent position to pursue our transformation.”
Highlights of Fiscal 2012
In 2012, TC Transcontinental’s revenues increased 6.2 percent, from $1.989 billion to $2.112 billion. This increase stems mainly from the acquisitions of Quad/Graphics Canada, Inc. and Redux Media. It was, however, mitigated by the incentives granted at the renewal of certain printing contracts and by non-recurring revenue from the printing contract for the Canadian Census in 2011.
Adjusted operating income remained relatively stable, from $246.6 million to $245.2 million. The slight decrease of 0.6 percent derives primarily from the Media Sector, due to the end of the school reform in Quebec, which impacted educational book publishing revenues, as well as a soft national advertising market. The decrease was mitigated by new printing contracts, the synergies from the integration of Quad/Graphics Canada and the optimization of the operational structure of our digital operations.
Net income applicable to participating shares declined, from $120.7 million to a loss of $183.3 million. The decrease stems mainly from a $232.0 million asset impairment related to the Media Sector, which was non-cash. The decrease also stems from a $58.0 million provision for notices of re-assessment from tax authorities, which the Corporation is currently contesting, a $57.2 million impairment charge of the carrying value of our U.S. deferred tax asset, and $55.0 million in restructuring and other costs mostly related to the integration of Quad/Graphics Canada, Inc. These items were, however, partially offset by a gain on acquisition of $32.1 million.