• Sold the assets of one- and two-colour book printing plants Transcontinental Gagné in Louiseville and Transcontinental Métrolitho in Sherbrooke, Quebec. Transcontinental Inc. plans to pursue its educational book printing activities in the four-colour web printing niche in the Quebec, Canada and U.S. markets.
• Extension to 2019 of contracts to print Rogers' marketing products and magazines for a value of up to $250 million. These agreements follow in the wake of other contracts renewed since January 2012 with key accounts in various sectors of the retail industry in Canada. These contracts with retailers are valued at more than $1.5 billion and have terms of three to six years.
• Ongoing development of Transcontinental Inc.'s digital and interactive activities with the acquisition of a majority stake in Redux Media, a leading online advertising network that specializes in real-time bidding, and by setting up a digital advertising representation partnership with Glacier Media, publisher of newspapers and business information products. In addition to expanding its digital network, the Corporation is providing new mobile applications, notably On the Table and P$ Mobile Service, an innovative remote parking payment solution for Stationnement de Montréal.
• Purchase of all outstanding shares of the newspaper Métro Montréal. With this transaction the weekday paper will become a provider of local, national and international information across the various TC Transcontinental platforms, including the new morning show, Ça commence bien! produced by the Corporation's television production house.
• The Corporation has been authorized to redeem, for cancellation on the open market, between April 13, 2012 and April 12, 2013, up to 5% of its Class A Subordinate Voting Shares and its Class B Shares. In the three and nine months ended July 31, 2012, the Corporation redeemed 471,500 of its Class A Subordinate Voting Shares at a weighted average price of $9.27 for a total cash consideration of $4.4 million, in accordance with its normal course issuer bid put in place on April 13, 2012.
For more detailed financial information, please see Management's Discussion and Analysis for the third quarter ended July 31, 2012 as well as the financial statements in the "Investors" section of our website at www.tc.tc
Highlights of the First Nine Months
For the first nine months of fiscal 2012, the revenues of Transcontinental Inc. grew 4%, from $1,467.7 million to $1,527.0 million. This increase is mainly due to the acquisition of Quad/Graphics Canada, Inc. and Redux Media, among others, to new contracts, notably with Canadian Tire, and to community-newspaper acquisitions in Quebec. It was mitigated by the lower volume from the non-recurring revenue from the printing contract for the Canadian Census last year, by the erosion of demand in the Educational Book Publishing Group due to the end of the school reform in Quebec, by the soft national advertising market which affected community newspapers outside Quebec and by the incentives granted at the renewal of certain printing contracts.
Adjusted operating income was down 11%, from $166.6 million to $148.8 million, primarily due to the above-noted reasons, and to margin erosion stemming from competitive pressures in the local solutions market. Net income applicable to participating shares decreased, from $89.9 million, or $1.11 per share, to a loss of $131.4 million, or $1.62 per share. This decrease is mainly due to an impairment of assets of $180.8 million, which is non-cash and non-operational. The notices of re-assessment received from the federal and provincial tax authorities last February, totalling $58 million, which the Corporation is currently contesting, and the restructuring, integration and acquisition costs to integrate Quad/Graphics Canada, Inc. also contributed to the decrease. Excluding unusual items and discontinued operations, adjusted net income applicable to participating shares was down 13%, from $100.8 million, or $1.24 per share, to $87.5 million, or $1.08 per share.