a 9% decrease in consolidated revenue compared to third quarter of

2008.

- Before the negative impact of reduced direct mail activities in the

United States, adjusted operating income before amortization would have

increased 10% and consolidated revenue would have decreased 5%.

- Increase of 4% in adjusted net income, which excludes unusual items

such as restructuring costs; on a per-share basis, adjusted net income

increased from $0.37 to $0.39.

- Decrease of 15% in net income, primarily due to unusual items; on a

per-share basis, net income decreased from $0.37 to $0.31.

- Adoption of a new capital structure indicator, the ratio of net

indebtedness (including the securitization program) to adjusted

operating income before amortization. The objective is to maintain this

ratio within a range of 2.00 to 2.50 and we expect to achieve this by

the end of fiscal 2011. As at July 31, 2009, the ratio was 3.18.

- Concluded financing agreements totalling $135 million and obtained

increase of $25 million in Corporation's credit facilities.

- Started printing the San Francisco Chronicle on July 6 as scheduled and

gained new newspaper printing customers in Quebec.

- Launched mobile versions of three business and financial publications.

- Corporate Knights magazine includes Transcontinental in its annual

ranking of the Best 50 Corporate Citizens for its environmental

efforts.

MONTREAL, Sept. 10 /CNW Telbec/ - Before unusual items and despite the difficult economic situation, Transcontinental's profitability in the third quarter increased due to its rationalization program and the daily efforts by employees across the organization to improve efficiency and reduce costs. Furthermore, the full impact of the new contracts announced previously, including contracts to print the Rogers Communications' magazines and direct marketing products, the startup of printing of the San Francisco Chronicle daily paper, the customers gained in flyer and newspaper printing, the excellent performance in educational book publishing, and the success of its integrated service offering which combines new digital platforms with print, partially offset the decrease in revenues stemming from the recession.

"What is especially satisfying in our third-quarter results is the improved profitability over the two previous quarters and compared to the solid third quarter of 2008," said Francois Olivier, President and Chief Executive Officer of Transcontinental. "For the first time this year, our financial results were better than last year's. We're beginning to see the full impact of the tough decisions the recession obliged us to make from the start of the fiscal year. I'd like to thank our employees for their commitment to their company, which has had them working on many efficiency improvement and cost-savings initiatives. Thanks to everyone's efforts, Transcontinental is now a more flexible organization and in a position to keep developing its integrated service offering, which is unique in Canada. Our enviable financial position, strengthened by two new loans and an increase in our credit facilities in the third quarter, means that we can continue to invest wisely and prudently in our future."

"The market is still fragile," noted Mr. Olivier, "but we are headed in the right direction. I am certain that we will come out of the recession stronger and in a good position to take advantage of the economic recovery."

The Corporation has decided to now use the ratio of net indebtedness (including the securitization program) to adjusted operating income before amortization as its primary indicator of financial leverage. In addition, Transcontinental has set the objective of maintaining this ratio within a target range of 2.00 to 2.50 and expects to achieve that by the end of fiscal 2011. As at July 31, 2009, the ratio was 3.18. Furthermore, as at July 31, 2009, the Corporation's net indebtedness to total capitalization ratio was 49%, within the 35% - 50% range set by management.

Financial Highlights

In the third quarter ended July 31, 2009, Transcontinental recorded consolidated revenue of $533.1 million, down 9% from the $584.9 million recorded in the same quarter in 2008. Adjusted operating income before amortization increased 5%, from $81.8 million in 2008 to $86.2 million in 2009. The decrease in revenue is mainly due to the recession, which led to a decline in the volume of direct mail activities in the United States and in marketing product printing activities, as well as advertising revenues in magazines and newspapers.

Net income decreased 15%, from $29.9 million to $25.3 million, due to the unusual item of restructuring costs; on a per-share basis, net income decreased from $0.37 to $0.31. Adjusted net income, which excludes unusual items, rose 4%, from $29.9 million to $31.2 million; on a per-share basis, adjusted net income increased from $0.37 to $0.39.

A pre-tax amount of $7.5 million ($5.9 million after tax) was charged to the third quarter with respect to the consolidation of direct mail operations in the United States and the rationalization program announced in February 2009. In the first three quarters of fiscal 2009, these measures generated cost savings of about $50 million. The goal for fiscal 2009 is to save more than $75 million and, on an annualized basis, more than $100 million.

In the first nine months of fiscal 2009, consolidated revenue amounted to $1.701 billion, down 4% from $1.776 billion in 2008. Adjusted operating income before amortization decreased 11%, from $253.2 million to $225 million. Net income went from $100.9 million in 2008 to a loss of $125.4 million in 2009, largely due to impairment of intangible assets and the write-off of goodwill related primarily to marketing product printing activities, and to the restructuring costs related to the rationalization program. On a per-share basis, net income went from $1.23 to a loss of $1.55.

Adjusted net income, which excludes impairment of assets, restructuring costs and unusual adjustments to income taxes, decreased 17%, from $92.4 million to $76.5 million; on a per-share basis, it was down 16%, from $1.13 to $0.95.

It is important to note that adjusted earnings per share grew steadily during fiscal 2009, from $0.19 in the first quarter to $0.37 in the second and $0.39 in the third. This measurement is a good indicator of operating performance in the first nine months of fiscal 2009.

For more detailed financial information, please see Management's Discussion and Analysis for the Third Quarter Ended July 31, 2009, at www.transcontinental.com, under "Investors."

Operating Highlights

The main operating highlights for the third quarter of 2009 illustrate Transcontinental's strategy to build the new and strengthen its promising traditional operations.

- Despite the impact of the decrease in advertising revenues on its

magazines and newspapers, results in the Media sector were stable

compared to the third quarter of 2008. Door-to-door distribution

activities and educational book publishing contributed to this

stability by generating higher revenues than in 2008. While its brands

continue to reap awards and recognition for both their print and

Internet versions, Media continued to implement its digital strategy.

This included the launch of a new interactive and user-friendly website

for magazine Coup de pouce, as well as introducing mobile applications

for the financial and business news of Les Affaires, Finances et

Investissement, and Investment Executive. Since the start of fiscal

2009, the Corporation has invested about six million dollars on

developing the Media sector, mainly its digital platforms. The sector's

network of more than 120 sites receives more than six million unique

visitors per month.

- The new Marketing Communications Sector has allowed Transcontinental

increase its offer to existing customers by providing products and

services that are ideally suited to their new needs and to new consumer

behaviours. The finest achievements in this area include additional

business with major names such as Shoppers Drug Mart-Pharmaprix,

Zellers and Purolator. Recent strategic acquisitions have greatly

contributed to the increase in sales, namely Conversys (e- flyer),

ThinData (permission-based email marketing), Redwood Custom

Communications (custom communications) and Rastar (data-driven direct

marketing solutions and variable-data digital printing).

- Excluding the effects of the rationalization of direct mail operations

in the United States, revenues in the Printing sector were down

slightly and profitability was basically stable. The third quarter was

marked by the startup of printing of the San Francisco Chronicle, which

took place as scheduled. The new printing plant in Fremont, California

where the daily paper is being printed is one of the first in North

America to be built to the standards of Leadership in Energy and

Environmental Design (LEED). We also gained customers in the flyer and

newspaper printing operations, including two leading groups of weekly

papers in the Quebec City area: Le Canada francais and L'Avantage.

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.