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Transcontinental Again Generates Organic Revenue and Profit Growth

June 8, 2011
MONTREAL—June 8, 2011—Transcontinental’s revenues increased 1 percent in the second quarter of 2011, from $510.0 million to $514.7 million. This increase was primarily due to a number of new contracts, most notably from the expanded relationship with The Globe and Mail. Excluding acquisitions, divestitures and closures, the impact of the exchange rates and the paper component variance, organic revenue growth was 3 percent, with all three sectors contributing.

Similarly, adjusted operating income increased 5 percent, from $58.3 million to $61.3 million, representing the eighth consecutive quarter of year-over-year growth, while the adjusted operating income margin increased from 11.4 percent to 11.9 percent. This increase was mainly due to the contribution from new contracts coupled with the synergies associated with the use of our most productive assets and continued efficiency improvement initiatives in the printing sector. It was partially compensated by continued strategic investments in the media and interactive sectors and more intense competitive pressures in some of our niches.

Net income applicable to participating shares went from $67.0 million to $33.0 million. This decrease is mainly due to a gain related to the discontinuance of direct mail operations in the United States in the second quarter of 2010. Excluding unusual items, adjusted net income applicable to participating shares increased 18 percent, from $34.1 million to $40.1 million.

“I am pleased with our second quarter results, especially with the fact that we have generated organic revenue and profit growth for the fifth consecutive quarter in an industry in profound transformation. This demonstrates our ability to manage our operations efficiently, grow market share and transform our business to better respond to our customers’ evolving needs,” said François Olivier, president and CEO.

“I strongly believe that our service offering including print, media and interactive solutions is unmatched in the marketplace and represents a unique multiplatform offering. Furthermore, our solid financial position provides us with the flexibility to pursue our transformation,” added Olivier.

Highlights for the Six-month Period

In the first six months of fiscal 2011, Transcontinental’s revenues increased 2 percent, from $1,021.6 million to $1,044.8 million. Excluding acquisitions, divestitures and closures, the impact of the exchange rates and the paper component variance, organic revenue growth was 3 percent, with all three sectors contributing.

Similarly, adjusted operating income increased 5 percent, from $105.6 million to $111.1 million, while the adjusted operating income margin increased from 10.3 percent to 10.6 percent.

Net income applicable to participating shares went from $93.2 million to $59.2 million. Excluding unusual items, adjusted net income applicable to participating shares increased 14 percent, from $61.2 million to $70.0 million.
 

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