Feb. 28, 2002 -- Despite the persistent economic slowdown in North America, Transcontinental Group posted a strong first quarter and has revised its earnings per common share guidance upward by $0.10 for fiscal 2002. In accordance with new rules established by the Canadian Institute of Chartered Accountants (see section "New Accounting Rules''), beginning this quarter, goodwill will no longer be amortized. Given these new rules, the earnings per share guidance for fiscal 2002 that Transcontinental announced at the beginning of the quarter was in the $2.60 to $2.70 range. The upward revision announced today raises this range to $2.70 to $2.80. On a comparable basis, this revised earnings guidance represents an 8% to 12% increase over the earnings per share of $2.50 posted in 2001. For the first quarter ended January 31, 2002, consolidated revenues declined slightly, by 3%, from $448.6 million to $433.2 million, mainly due to the economic slowdown. Income from continuing operations increased from $15.7 million in 2001 to $27.6 million in 2002; on a per share basis, it rose from $0.42 to $0.67. Of this $0.25 increase, $0.15 stems from the adoption of the new accounting rules, while the remaining $0.10 stems from increased profitability. On a comparable basis, income from continuing operations grew 30%, from $21.2 million in 2001 to $27.6 million in 2002; on a per share basis, it rose 18%, from $0.57 to $0.67. Cash flow from continuing operations rose from $42.9 million (or $1.15 per share) in 2001 to $51.4 million (or $1.25 per share) in 2002, an increase of 20%. "We are very proud of this excellent performance, which shows that we can keep our momentum even during an economic slowdown,'' said Daniel Denault, Vice-President and Chief Financial Officer of Transcontinental Group. "We are continuing to reap the benefits of our efforts to reduce costs and enhance productivity, and our niche-based strategy makes us less sensitive to fluctuations in advertising expenditures. Based on the higher-than-expected growth in our first quarter, ongoing programs to reduce costs, a significant reduction of financial expenses, and recent acquisitions, management decided to raise its earnings per common share guidance for fiscal 2002 by $0.10 over the guidance announced on December 4, 2001.'' The Corporation continues to maintain a solid balance sheet with a net funded debt/total capitalization ratio of 31%, considerably lower than management's long-term target of 45%. Transcontinental is thus in an excellent position to pursue its growth. General Comments on Operating Results Luc Desjardins, President and Chief Operating Officer, reviewed the first quarter highlights: Revenues in the Printing sector fell slightly, by 6%, but operating income before depreciation and amortization (EBITDA) wasup 10% over the first quarter of 2001. The decrease in revenues stems from lower paper prices, as well as from a decrease in sales volume of commercial products such as magazines resulting from the economic slowdown. Nevertheless, all three groups (retail, commercial and book) improved their EBITDA margin during the quarter. As for business development, worthnoting is the signing of seven- and eight-year contracts totalling over $100 million with the drug store chains Uniprix and Essaim respectively. About 60% of Printing sector revenues are now generated by long-term contracts. Media sector revenues were up a slight 2% and EBITDA increased 11%. The increase stems mainly from strict cost controls,another excellent performance by our women's magazines, and lower paper costs. Because we are a leader in targeted publications that are very strong in their markets, the Corporation is less vulnerable to cuts in advertising expenditures. As promised by the Corporation, the Interactive Marketing sector continued the recovery initiated in the preceding quarter with an 8% increase in revenues and a substantial 18% increase in EBITDA. The strong performance by our Yorkville Printing plant in Toronto and the repositioning of our direct marketing activities in the U.S. explain the increase in both revenues and EBITDA. "We have become a North American leader in profitability, efficiency and productivity, and we intend to remain one,'' concluded Mr. Desjardins. "It is in this context that we launched our Horizon 2005 project, a major initiative to mobilize the entire company to rethink its processes, its attitudes and its way of doing things in order to continue creating value for its customers, its employees and its shareholders. We will keep shareholders informed of the progress of this ambitious and stimulating project for Transcontinental and its employees.'' Subsequent Events Two acquisitions and the signing of a major printing contract occurred after the end of the first quarter. On February 1, 2002, Transcontinental announced the acquisition of Coronet/Fahlke Printers Ltd., a Winnipeg company that specializes in high-quality sheetfed printing, particularly of commercial products such as brochures, folders, calendars and annual reports. It also offers prepress services. Founded in 1959, Coronet employs about 40 people and posts annual revenues of about $7 million. On February 8, Transcontinental announced the acquisition of the O'Keefe Group's Montreal and Toronto printing plants, a company that also specializes in sheetfed commercial products. Established in 1968, the O'Keefe Group has about 200 employees and posted revenues of $33 million in 2001. The Montreal and Toronto plants serve a diversified and high-end clientele of financial institutions, pharmaceutical companies and a large number of well-known graphic design and advertising agencies. -With these acquisitions, Transcontinental now possesses the largest network of sheetfed printing plants in Canada, with facilities in Quebec City, Montreal, Toronto and Winnipeg, and can offer sheetfed products to its customers from coast to coast. Finally, the contract to print the daily newspaper La Presse and its related products, announced in January 2001 and conditional upon an agreement between La Presse and its employees, became official on February 25, 2002. This contract, one of the most important in the Corporation's history, will make Transcontinental the designated printer of La Presse by September 2003. The 15-year contract, which includes provisions for renewal, is valued at about $60 million per year. Transcontinental will soon begin construction of an ultramodern plant equipped with state-of-the-art technology that will mainly be used to print La Presse and its related products. This contract strengthens Transcontinental's position as the leading independent newspaper printer in Canada, with a network of five printing plants that stretches from Halifax to Vancouver.