Cossette Communication Group - 2008 Third Quarter Results - Gross income increases...

Cossette Communication Group - 2008 Third Quarter Results - Gross income
increases to $67.2 million, net earnings at $2.2 million following goodwill
impairment

KOS (TSX)

QUEBEC CITY, Aug. 5 /PRNewswire-FirstCall/ - Cossette Communication Group Inc.
("Cossette" or the "Company") recorded gross income of $67.2 million for the
third quarter of fiscal 2008, ended June 30, 2008, up 16 per cent from
$57.9 million from the corresponding quarter of the previous fiscal year. Net
earnings amounted to $2.2 million ($0.13 per share), or $4.5 million
($0.27 per share) excluding the after-tax effect of the goodwill impairment
($0.14 per share), compared to $4.7 million ($0.28 per share) for the third
quarter of 2007.
During the quarter, the Company recorded a preliminary goodwill impairment
charge of $4.1 million related to a reevaluation of the fair value of its U.S.
reporting unit. The impairment arises from test results that indicate that the
fair value of the U.S. reporting unit is lower than its carrying amount,
including goodwill. The Company will complete the second and final step of its
annual goodwill impairment test during the fourth quarter of 2008.
"Our results for the third quarter are on target with our stated financial
objectives," said Claude Lessard, Chairman, Chief Executive Officer and
President. "In the current context, we are satisfied with our performance in
Canada. Our U.K. companies were successful on the new business front which
translated to very strong organic growth. As for the U.S., we are well engaged
in this market, as demonstrated by the recent acquisition of Rocket XL. The
teams we have in place in our U.S. operations are energetic and dynamic. We
are very confident of the quality of the service we can deliver in this market
and are optimistic about the future success of the operation."
For the quarter, earnings from operations were $4.3 million ($9.8 million
excluding non-recurring charges totalling $5.5 million), compared with
$7.9 million in 2007. Cash flows from operating activities before changes in
non-cash working capital items reached $8.2 million, compared with
$6.6 million in 2007.
First nine-month period review - For the nine-month period ended June 30,
2008, gross income amounted to $186.6 million, an increase of $18.4 million or
10.9 per cent compared to gross income of $168.2 million reported for the
nine-month period of fiscal 2007. Net earnings for the period were
$6.4 million ($0.39 per share) or $8.7 million ($0.53 per share) excluding the
after-tax effect of the goodwill impairment ($0.14 per share), compared to
$11.7 million ($0.69 per share) for the same period in fiscal 2007.
Earnings from operations for the first nine months of fiscal 2008 were $12.1
million ($19.6 million excluding non-recurring charges totalling
$7.5 million), as compared to $20.5 million for the same period in 2007. Cash
flows from operations before changes in non-cash working capital items in the
first nine months of fiscal 2008 were $17.8 million as compared to
$18.5 million in the comparable period of 2007.
Management's Discussion and Analysis, containing a full analysis of financial
results, is available on SEDAR (www.sedar.com).

Changes in the Senior Management team: Jean Royer leaves and
Martin Faucher comes on board

Jean Royer, Cossette's Executive Vice President and Chief Financial Officer,
has announced his decision to leave the Company. His departure will be
effective September 30, 2008.
"After nine years of outstanding and loyal services, Jean has decided to
explore new professional avenues, at an age where all options are still open
for him. I would like to sincerely thank him for his excellent work, his
dedicated participation and his numerous accomplishments over the years. We
wish him great success in his future endeavours", said Claude Lessard.
"My experience at Cossette will always remain as a landmark in my professional
life. I want to thank Claude Lessard and the senior management team for
providing this great opportunity for me at an early stage of my career,"
stated Jean Royer.
In light of this decision, Claude Lessard is pleased to announce the arrival
of Martin Faucher, CA as Cossette's new Chief Financial Officer (CFO) who will
start on August 25, 2008, ensuring a seamless transition in the administrative
team. Mr. Faucher is currently CFO of iPerceptions Inc., Montreal, a
North-American leader in monitoring consumer attitudes and perceptions on the
Web.
A chartered accountant, Mr. Faucher has a Commerce and Public Accountancy
degree from McGill University and started his career at Ernst & Young. In
1996, he became CFO of Kaydara, a leading real-time 3D animation software
company where he spent 8 years before joining Microbridge, a manufacturer of
electronic calibration products, principally for consumer market applications,
as well as the automotive and medical industries. In 2007, he moved to his
current position.
"Martin's financial and management experience in the fields of high tech, 3D
animation, cultural and entertainment software products and web based
monitoring initiatives will bring new insights to Cossette in our current and
ongoing digital thrust" declared Claude Lessard. "We are very happy to have
him on board."
"Cossette is a company with tremendous opportunities and an impressive
management. I am excited to join this executive team promoting entrepreneurial
values and lead the finance/IT team to play a significant role in the
company's future strategic development," commented Martin Faucher.

Cossette Communication Group Inc. offers a full range of leading-edge
communication services to clients of all sizes, including some of the most
prestigious brands in the world. A customer-driven organization built around
highly specialized business units, Cossette also offers Convergent
Communications(TM), a unique working method that brings added value to the
client by integrating various services offered by the Group, including
strategic planning and research, advertising, media planning and buying, sales
promotion, CRM, database and direct marketing, interactive marketing and
technology solutions, public relations and alliance marketing, branding and
design, ethnic marketing, sports marketing, branded content and product
placement and business-to-business communications (B2B practices). Cossette
has approximately 1,650 employees and offices in Quebec City, Montreal,
Toronto, Vancouver, Halifax, New York, Irvine, Los Angeles, London, Moscow and
Shanghai.

Forward-looking statements - This press release is not an offer of securities
for sale. It may contain forward-looking statements concerning the Company's
business, operations and strategies, including forward-looking statements
within the meaning of section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 in the United States.The Company
cautions that, by their nature, forward-looking statements involve risks and
uncertainties and the Company's actual results may differ materially from
those expressed or implied in such statements, due to a variety of factors
including downturns in general economic conditions and resulting changes in
client business and marketing strategies, consolidation and globalisation of
client brand strategies, the highly competitive nature of the communications
industry, the greater resources available to much larger global agencies, low
entry barriers for new competitors, dependence upon a limited number of
clients contributing a significant percentage of income, inability to acquire
new clients or new assignments from existing clients due to client policies
prohibiting performance of similar services for competing products or
companies, our ability to successfully integrate our acquired and
to-be-acquired businesses and the retention of key management, creative and
technical personnel. Reference should be made to the most recent annual
Management's Discussion and Analysis for an in-depth description of major risk
factors. The Company assumes no obligation to update or revise any
forward-looking statement, whether as a result of new information, future
events or any other reason, unless required by applicable laws. In the event
the Company does update any forward-looking statements, no inference should be
made that the Company will make additional updates with respect to that
statement, related matters, or any other forward-looking statement.
Financial analysts are invited to participate in a conference call with
management tomorrow August 6, 2008, at 9:30 a.m. The media and any
stakeholders may attend the call in listening mode only. Please dial
514-861-1531 or 877-667-7766 (Canada & U.S.) or 00-800-6578-9898 (Global Toll
Free). A replay will be available at 514-861-2272 or 800-408-3053, passcode
3265933# until August 27, 2008 and in the Investor Relations section of our
website at www.cossette.com.

Appendix: Selected Financial Information

Cossette Communication Group Inc.
Selected Financial Information
(in thousands of Canadian dollars, except for amounts per share)

Results for the 3-month period ended June 30, (unaudited)

2008 2007

Gross income 67,220 57,945
Operating expenses before goodwill impairment 58,850 50,042
Goodwill impairment 4,067 -
Earnings from operations 4,303 7,903
Earnings before income taxes and non controlling
interest 4,115 7,755
Earnings after income taxes 2,997 5,125
Non-controlling interest (818) (389)
Net earnings 2,179 4,736
Cash flows from operations (before changes in
non-cash working capital items) 8,202 6,568
Net earnings per share
Basic 0.13 0.28
Diluted 0.13 0.28
Weighted average number of shares outstanding ('000)
Basic 16,319 16,729
Diluted 16,370 16,856

Results for the 9-month period ended June 30, (unaudited)

2008 2007

Gross income 186,562 168,227
Operating expenses before goodwill impairment 170,414 147,763
Goodwill impairment 4,067 -
Earnings from operations 12,081 20,464
Earnings before income taxes and non controlling
interest 12,225 20,992
Earnings after income taxes 8,355 13,708
Non-controlling interest (1,953) (1,990)
Net earnings 6,402 11,718
Cash flows from operations (before changes in
non-cash working capital items) 17,840 18,465
Net earnings per share
Basic 0.39 0.69
Diluted 0.39 0.69
Weighted average number of shares outstanding ('000)
Basic 16,507 16,866
Diluted 16,577 16,936

Balance sheet

As at As at
June 30, Sept. 30,
2008 2007
(unaudited) (audited)

Cash and cash equivalents 12,024 3,484
Current assets 217,281 188,788
Intangible assets and deferred charges 5,573 6,384
Goodwill 82,024 84,244
Total assets 328,454 299,100
Short-term borrowings, including bank overdraft 41,825 -
Current portion of long-term debt 31 411
Current portion of balances of purchase price of
subsidiaries 331 16,009
Long-term debt 382 108
Balances of purchase price of subsidiaries 30 529
Shareholders' equity 137,151 132,123

SOURCE COSSETTE COMMUNICATION GROUP INC.

Jean Royer, Executive Vice-President and Chief Financial Officer, (418)
521-3784; Source: Cossette Communication Group Inc., www.cossette.com