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Transcontinental Announces $53 Million Capital Investment, Goss Presses

Press release from the issuing company

MONTREAL--Nov. 16, 20004 -- Transcontinental announced today that it is making a major $53 million capital investment in its printing operations. The outlay will be added to capital investments of about $200 million the Corporation will be making over the next two years and involves the purchase of three Goss presses as well as highly automated finishing equipment. The three presses will replace seven presses currently in use, which will be sold in other markets, transferred to other Transcontinental printing plants or dismantled. Two of the new presses will print magazines, catalogues, directories and other commercial products and will be installed at Transcontinental RBW Graphics in Owen Sound, Ontario and at Transcontinental Boucherville in the Montreal area. The third press will go to the Transcontinental Interglobe book printing plant in Beauceville, Quebec. The purchase of these presses, which employ the most recent technologies developed by Heidelberg Web Systems, a company recently acquired by Goss International Corporation, will significantly improve productivity, flexibility and overall product quality. The investment will have repercussions on the workforce at the three plants concerned and will result in a reduction of about 135 employees, the majority occupying temporary or contract positions. "For Transcontinental, this major capital investment will strengthen our competitive position in our book, magazine and specialized catalogue niches," said Luc Desjardins, President and CEO of Transcontinental. "These are highly competitive markets in which we already have an experienced workforce and good positioning. Buying the best equipment in the industry will make us even more efficient." This capital investment project comes out of the Corporation's revised manufacturing strategy instituted in early 2004. The revised strategy initially focused on ensuring that the existing equipment in Transcontinental's printing plants be used to its full potential, and on equipment transfers within the network. This first stage was completed in 2004. In the second stage, a team of Transcontinental specialists evaluated the new printing and finishing technologies and began to develop a capital investment plan for each of the Corporation's niches. Transcontinental's review of its manufacturing strategy arose naturally out of its Horizon 2005 business project. This review was the logical next step after the implementation of a continuous improvement approach using Kaizen workshops, the optimization of the company's existing assets, and the adoption of a more integrated approach to capital investments. The review will also enable the Corporation to redirect production to the most appropriate units, taking into account services and operating costs. Non-recurring charges in fourth quarter 2004 Manufacturing strategy review During the manufacturing strategy review, the Corporation conducted a complete survey of its equipment. Production equipment that would no longer be needed was identified and will be devalued. These assets include equipment that will be replaced under the capital investment project announced today. The devaluation of these assets and expenses related to the workforce reduction will result in a non-recurring, after-tax charge of $5 million, or $0.06 per share, in the fourth quarter of 2004.