Dear guests,

It is always a great pleasure for me to address the partners and friends of Transcontinental at this forum. I would also like to welcome the Internet users who have just joined us.

It is an interesting coincidence that our first shareholders’ meeting was also held on February 20th, in 1985. Our stock had been trading for just a few months, because we’d completed our first share issue only the previous November. At that time we had slightly more than 5,000 shareholders. Many of you have been with us since the early years, a great mark of your trust in Transcontinental. I can assure you that we will continue to meet your expectations.

This brief look back brings me to an aspect of the “Transcontinental” difference of which I’m particularly proud: its longevity. The real test of a company is to be successful over a long period of time, including the periods when times are tough. To be able to say: “We’ve been there and we met the challenge.”

In the years since it was founded, Transcontinental has dealt with two recessions, rapid technological change and a number of industry consolidations. At the same time we have faced the challenge of meeting the continually evolving needs of our customers and responding to new consumer behaviours.

So we have demonstrated our ability to improve “in and through” change: thanks to our people all across the company who are committed to doing more and doing it better; thanks to our values, our business plan built on proximity to our customers and our targeted growth strategy. And lastly, I would add, thanks to our sense of social and environmental responsibility. 

My friends, that’s what Transcontinental is all about!

Our past tells you where we’re going now and in the future. Transcontinental remains a growth-oriented company. It’s our raison d’être. External conditions can slow us down over the short term, but never over the long term. Our business philosophy has always been the same: to build each day on a solid foundation so that we can create medium and long-term value, but without sacrificing short-term value.

The past fiscal year is a good example of this.

--  --  --

In 2007, the unprecedented rise in the Canadian dollar versus the U.S. dollar and the sudden mortgage crisis in the United States particularly affected our overall results. Even so, we improved our operating performance by becoming more efficient, reducing our costs, growing sales and anticipating the new needs of our customers, whether companies or consumers.

Above all, we continued to invest in the future. In the past three fiscal years we have spent an average of $250 million dollars a year on fixed assets and acquisitions. In terms of capital improvements alone, our Evolution 2010 business project will require an average of $120 million a year, well beyond the average of our competitors as a percentage of revenue. And that does not include special projects like printing the San Francisco Chronicle or our non-capitalized investments in the digital development of our Media sector.

I’d like to also mention that we have taken advantage of the higher Canadian dollar to increase our investments in the United States, particularly in our newspaper printing activities, and to promote internal innovation and efficiency improvements more than ever before. We are coming out of this trial stronger.

--  --  --

I’d now like to address the state of the printing industry in North America. We are hearing increasing scepticism about its future, especially with the extensive media coverage of the difficulties of a competitor. Is this industry, from which we derive two thirds of our revenue, really in decline?

Let me share with you two of my convictions.

First, the printing and media industries are undergoing profound and rapid change, like most industries, but it still offers excellent opportunities for growth. Not only is print still alive and well after many transitions and a long history, it is the cornerstone of any successful communications, sales and marketing strategy. Used in conjunction with other media, print ensures that all target constituencies are reached in a global approach.

Second, Transcontinental has the strategy, solid finances and leadership to keep growing and keep being a winner in these industries.

That is so because, for one thing, we have a niche-based strategy. We are not trying to be the biggest, but rather the best in each of our niches. That’s true for us as a publisher and as a printer. We invest systematically in the niches that have strong growth potential; in the others, we specialize based on our competitive edge and market trends. We have identified three priority niches: digital media development, direct marketing and newspaper printing outsourcing. We also have a targeted strategy on the international front: the United States and Mexico are our priority markets.

Another thing that makes Transcontinental different is that we have always had disciplined financial management. Our solid financial situation combined with our ability to generate cash flow from operations gives us the flexibility needed to invest in our growth, particularly through acquisitions. I expect to see intensified consolidation in the printing industry in North America and we have the financial depth to play a very active role in that process. Two recent developments illustrate this very well: the fact, as announced last week, that we won the contract to print Rogers’ magazines, and today’s announcement that we are investing $60 million to make Transcontinental Transmag, our Montreal newspaper printing plant, one of the most modern operations in the world.

Lastly, we have a unique business project that shows, in very concrete ways, that it is our people who make the difference. People who are motivated, trained in our values and continuous improvement, guided by leaders and working as a team. Indeed, the highlight of 2007 was the launch of The Race Towards Excellence, an innovative way to get all of our employees mobilized behind the four issues of Evolution 2010: talent, sales growth, efficiency and digital.

I would add one more item of our difference. Transcontinental Inc. earns more than a quarter of its revenues, and slightly more than 40% of its profits, from its Media sector. Our strong brands in both magazines and newspapers have earned us exceptional awareness in the communities we serve and are an excellent lever for the development of our digital offering. This is one of the Corporation’s priority area for growth in the coming years.

--  --  --

This year there is a special aspect to our annual shareholders’ meeting. Luc Desjardins is leaving us today after eight years of loyal and productive service: first as president and chief operating officer starting in 2000, then as chief executive officer as of March 2004. Luc effectively mobilized our troops around stimulating business projects like Horizon 2005 and Evolution 2010 and led them to continually strive to excel. He was a respected leader, team player and disciplined manager.

Conditions in the past few years have not been easy. But Transcontinental has continued to rank among the most productive players in its industry in its operating results, which means, in what we can actually control.

Luc, you have taken Transcontinental through an important stage of its growth, while continually protecting the common interests of our employees, customers and shareholders. On behalf of the Board of Directors, our 15,000 employees and myself, I thank you for everything you have done. I am certain that you will continue to have a highly successful career.

One of Luc’s great strengths was that he was able to surround himself with strong and competent people. The Board of Directors was thus able to select an internal candidate to succeed him, François Olivier, who officially becomes president and chief executive officer today. For a number of months, Luc and François have worked together very closely to ensure a smooth transition in top management.

François’ track record with Transcontinental is impressive. Since 1993, he has worked his way up through the ranks, exceeding expectations at every step of the way. He has become known for developing our model for newspaper printing outsourcing in North America. From 2005, he was president of the Printing Products and Services sector. François is an entrepreneur and innovator who puts growth front and centre and has excellent credibility throughout the organization.

François was appointed after a rigorous process by the independent members of the Board of Directors under the director of the senior director, J.V. Raymond Cyr, and the help of a firm of outside consultants. I am particularly pleased that they chose an internal candidate, and one who is also a member of my family. A common trait of companies that are successful over the long haul is that a majority of top managers are recruited internally.

François, you are inheriting a business that is in an excellent position to pursue its growth. Good luck to you and your team.

--  --  --

In closing, I’d like to thank the members of the Board of Directors for their invaluable contribution to Transcontinental’s development. They do an outstanding job of representing the interests of all of our shareholders.

I’d also like to thank Hubert T. Lacroix and Robert Chevrier for their contributions. They are leaving the Board after a number of years of loyal service. Mr. Lacroix withdrew on January 1 to become the president and chief executive officer of Société Radio-Canada–CBC. Mr. Chevrier decided not to renew his term. As the chairs of two Board committees, they guided Transcontinental through the process of instituting new regulatory requirements. I thank them sincerely on behalf of all our shareholders.

I would also like to welcome our new director, Lino A. Saputo, Jr., president and chief executive officer of Saputo inc. Lino will bring to Transcontinental the benefit of his experience in one of the most respected companies in the North American business community.

Finally, I would also like to thank our customers and shareholders for their loyalty and our some 15,000 employees for their dedication and commitment to the values of our company.

I view Transcontinental’s future with great confidence and optimism. We will continue to show that we can meet the expectations of our employees, customers and shareholders, the three pillars of the organization. Your company is in good hands.

Thank you for your attention. Please give a warm welcome to Luc Desjardins.