Unexpected Loss Affects Shannock's Third Quarter.

VANCOUVER, British Columbia--(BUSINESS WIRE)--April 26, 1996--TSC SHANNOCK CORP.(TSE: TSH ) TSC Shannock Corporation ('Shannock') reported an unexpected loss in its 3rd quarter and has restated amounts previously reported. The loss and restatement arose from irregularities uncovered in the financial reporting of its wholly owned subsidiary, Echo Video Productions Inc. ('Echo') and its 44.5 percent owned affiliate Canavision Inc. ('Canavision'), as announced March 12, 1996.

The losses from Echo and Canavision are approximately $1.23 million. Of this amount, approximately $900,000 relates to the fiscal year ended May 31, 1995, with the balance relating to the first six months of the current fiscal year. The adjustment to the fiscal year ended May 31, 1995 results from an overstatement of inventory at that date of $278,000 and unrecorded liabilities prior to the acquisition of Echo and Canavision of $621,000. Furthermore, the Company has restated its previously issued financial statements for the fiscal year ended May 31, 1995 and will report the revised financial information along with the 3rd quarter report to shareholders.

As a result of the current and prior period adjustments, Shannock's reported income before tax for the nine month period ended February 29, 1996 has been reduced from $934,583, as compared with $1,012,171 in the same period in fiscal 1995, to $579,320, or $0.18 per share, as compared to $112,805 for the same period in fiscal 1995. Revenues rose 6 percent to $71.4 million for the nine months ended February 29, 1996.

For the third quarter, sales revenues remained the same at $22.5 million. The loss reported was $12,142 or - $0.02 per share before tax. This loss does not reflect the negative adjustments of Echo and Canavision which pertain to the first two quarters. Shannock's third quarter results were lower than anticipated during the month of February, primarily due to the lower profit margins realized from the release of Pocohontas, combined with the operating losses for Echo and Canavision. -0-

The following table summarizes the adjusted results:

                                    9 MONTHS ENDED FEB.29
                                     PRIOR TO ADJUSTMENTS
                                ---------------------------
                                     1996           1995
                                ------------   ------------
Sales                           $ 71,432,930   $ 67,336,596
Income before taxes             $    934,583   $  1,012,171
Income per share before tax     $       0.29   $       0.31
Income tax                      $    515,633   $    485,042
Net Income(loss)                $    418,950   $    527,129
Income per share after tax      $       0.13   $       0.16
Number of shares outstanding       3,196,477      3,309,659

                                   9 MONTHS ENDED FEB.29
                                     AFTER ADJUSTMENTS
                                ---------------------------
                                     1996           1995
                                ------------   ------------
Sales                           $ 71,432,930   $ 67,336,596
Income before taxes             $    579,320   $    112,805
Income per share before tax     $       0.18   $       0.03
Income tax                      $    499,243   $    485,042
Net Income(loss)                $     80,077   $  (372,237)
Income/loss per share after tax $       0.02   $     (0.11)
Number of shares outstanding       3,196,477      3,309,659

As a result of the losses of Echo and Canavision, management has taken action to minimize or stem the losses flowing from these entities in the future including changes to management, a review of purchasing and sales practices, and revisions to internal operations and controls. Further, the Company is exploring the potential for utilizing the losses for tax purposes in the future. Shannock has also retained the Forensic Accounting Services of KPMG Peat Marwick Thorne and legal counsel to determine whether the company has recourse to recover the losses against third parties. The board of directors will also be reviewing Shannock's normal course issuer bid initiated in May 1995.

It is important to note that these changes in the financial statements do not affect Shannock's reported cash position and that Shannock's investment in Echo and Canavision represents less than 10 percent of Shannock's assets. Mr. William McCartney, President and CEO, commented that "although these results are disappointing, they have absolutely no effect on the future earnings capabilities of the Company's core business or its current viability".

Shannock's core business, video distribution, continues to capture a larger share of the Canadian video rental and sell- through market. Recently, Shannock was awarded the "Perfect 10" award from MCA Video, for achieving the highest increase in sales of all Canadian video distributors.

SMA Distribution, Shannock's exclusive video distribution subsidiary based in Toronto, is poised for a second consecutive year of strong sales and profit growth. SMA has doubled its sales each year over the last two years, and is confident in achieving close to $3 million in sales for fiscal 1996. This sales growth reflects an increase in excess of 100 percent compared to the same period last year. SMA's most recent distribution acquisition, A&E Home Video, continues to surpass all sales projections. The recent success of popular titles such as 'Cracker' and 'Pride and the Prejudice' pushed sales of the A&E line far beyond forecasts. This combined with the release schedule of upcoming A&E titles for the next two quarters should ensure SMA's continuing success as a profitable, diversified, and integrated addition to Shannock's strategically aligned corporate group.

Shannock subsidiary TSC Film continues to add quality product to its film library. Many films acquired in the recent Hemdale library have already been sold in domestic markets, with foreign market opportunities following close behind. TSC Film is still exploring strategic alliances with some well known production companies, and is confident that negotiations will continue smoothly.

The expected imminent success of some upcoming smash titles such as Braveheart, Jumanji, and The Bridges of Madison County should ensure increased sales revenues in the fourth quarter in both the rental and sell-through sectors of Shannock's business.

Shannock is a publicly traded corporation listed on The Toronto Stock Exchange (symbol - TSH). Founded in 1978, TSC Shannock Corporation is one of the four national leading video wholesalers in Canada, and has the rights to distribute all major releases from North American music and film studio companies. Shannock is also involved in the acquisition of programming for theatrical and television distribution. Its headquarters are located in British Columbia, with eight distribution centres and sales offices across the country. -0-

Note to Editors: The Toronto Stock Exchange has not approved or disapproved of the information contained herein.

CONTACT: TSC Shannock Corporation

Trudy Dalinger, 604/433-3331

800/288-4841

or

TSC Shannock Corporation

Malcolm Earle, 604/433-3331

800/288-4841