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Transcontinental Revises 2005 Earnings Downward

Press release from the issuing company

MONTREAL, Aug. 24 -- Transcontinental Inc. announced today that it is revising its objective for earnings per share before unusual items downward for the fiscal year ended October 31, 2005. Given results in recent months, management expects that 2005 earnings per share will be 5% to 10% lower than the bottom of the range announced on December 15, 2004, which was $1.74. "A number of current factors, in particular greater production disruption than initially anticipated due to major investments in future growth as well as more difficult market conditions than expected in some niches, lead us to believe that we will not achieve our earnings-per-share objective for fiscal 2005," said Luc Desjardins, president and chief executive officer of Transcontinental. "We firmly believe that these investments, despite their effect on short-term results, will create long-term value for our shareholders." The main factors identified by management are as follows (in decreasing order of importance): greater production disruption than expected, starting in the third quarter, related to the consolidation, reorganization and installation of new equipment, particularly in direct marketing activities in the United States as well as book, magazine and catalogue printing in Canada; persistent pricing pressures in commercial printing in Canada and in book printing; and lastly, slower than anticipated growth in advertising spending in community newspapers in the Atlantic provinces. Note, however, that the performance of Transcontinental's other operating sectors is in line with expectations. The third quarter 2005 results are scheduled to be released on September 14, 2005.