McGraw-Hill Ryerson Limited
TSX : MHR

McGraw-Hill Ryerson Limited

February 05, 2010 16:30 ET

McGraw-Hill Ryerson Reports 2009 Annual Results

WHITBY, ONTARIO--(Marketwire - Feb. 5, 2010) - McGraw-Hill Ryerson Limited (TSX:MHR)

Attention: Business/Financial Editors



Three Months to December 31, 2009 ($000) This Year Year Ago
---------------------------------
(unaudited)
Sales, less returns $22,167 $23,769
Other 1,014 1,495
------- -------
Total revenue $23,181 $25,264

Net Income 3,644 3,459
Net Income per share $ 1.83 $ 1.73

Twelve Months to December 31, 2009 ($000)
----------------------------------
(unaudited)
Sales, less returns $85,818 $91,485
Other 2,191 3,065
------- -------
Total revenue $88,009 $94,550

Net Income 9,296 10,502
Net Income per share $ 4.66 $ 5.26


Annual Results

The Company's total revenue decreased 6.9% in 2009, with revenue of $88.0 million, compared to $94.6 million in 2008.

In the Company's Higher Education Division, sales of both imported U.S. titles and locally published titles increased in 2009, leading to an overall sales increase of 3% compared to 2008. The Division continued its growth in the digital marketplace with the launch of McGraw-Hill Connect™, the next-generation online study tool. The School Division's sales decreased by 20% compared to the previous year. This decrease was distributed equally across our Canadian publishing program and our imported products, where imprints include Glencoe/McGraw-Hill, SRA, and TWG. The decline in revenue from the Canadian publishing program is a function of several factors including: non-repeating 2008 sole-source contracts, ramp-down in spending in science in British Columbia compared to prior years (the new curriculum is now implemented) and, industry-wide sales declines, a function of cutbacks in education budgets in many provinces. McGraw-Hill Ryerson's Professional Division sales declined by 7% in 2009, primarily the result of an agency termination in 2008 as well as a reduction in the number of key US publications.

Cost of product and royalties (referred to as "Operating Expenses" in prior years), decreased to $35.0 million in 2009, from $37.6 million in 2008. This 6.8% decrease is consistent with the sales decline.

Editorial, selling, general, and administrative expenses decreased 6.7% to $30.8 million in 2009, from $33.0 million in 2008. This decrease is mainly the result of a $1.0 million reduction in bonuses and sales commissions, a reduction of travel and entertainment expenses of $0.3 million, as well as a reduction in headcount-related costs. These expenses as a percentage of sales decreased slightly to 35.9% from 36.1%.

Amortization of pre-publication costs increased 13.5% to $7.0 million from $6.2 million in the prior year, as a result of the continuing investment in the Canadian publishing program in the Higher Education and School Divisions in recent years. Capital asset amortization decreased to $1.1 million in 2009 compared to $1.3 million in 2008 as a result of the minimal amount of capital investment required in recent years.

Cash and cash equivalents as of December 31, 2009 decreased to $35.9 million from $43.2 million in 2008, mainly driven by the $14.0 million special dividend payment made in early 2009.

Q4 Results

The Company's sales are cyclical during the year, based on the education industry's school terms for the School and Higher Education Divisions. As a result, the Company earns a significant amount of its total sales in the third and fourth quarters of each year.

In the fourth quarter of 2009, total revenue decreased 6.7% compared to the prior year, caused by decreased sales in the Higher Education and School divisions. Higher Education sales decreased to $16.0 million from $16.8 million partially driven by a decline in sales of imported products. School Division sales decreased $0.7 million compared to the fourth quarter of 2008 to $3.5 million. Professional sales remained consistent at $2.6 million. Net income increased by $0.2 million, mainly driven by reduced editorial, general, selling and administrative expenses.

The accompanying financial statements should be read in conjunction with the "Notes to Financial Statements" included in McGraw-Hill Ryerson's Annual Report.

In business since 1944, McGraw-Hill Ryerson Limited is a leading Canadian publisher of educational resources, and information products and services for lifelong learning and enjoyment. Revenue in 2009 was $88 million. Additional information is available at http://www.mcgrawhill.ca.



McGraw-Hill Ryerson Limited
Incorporated under the laws of Ontario


BALANCE SHEETS
(in thousands of dollars)

As at December 31

2009 2008
$ $
(unaudited)
---------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents 35,878 43,180
Marketable securities 821 676
Accounts receivable (net of
allowance for sales returns of
$6,974; 2008 - $6,986) 11,319 14,285
Due from parent and affiliated
companies (note 2) 2,564 1,827
Inventories (note 4) 6,052 7,082
Prepaid expenses and other 318 296
Income taxes receivable 2,368 -
Future tax assets (note 7) 2,117 2,263
---------------------------------------------------------------------------
Total current assets 61,437 69,609
---------------------------------------------------------------------------
Capital assets, net (note 5) 15,182 16,048
Other assets, net (note 6) 19,411 16,540
Future tax assets (note 7) - 623
---------------------------------------------------------------------------
96,030 102,820
---------------------------------------------------------------------------
---------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued charges 9,862 10,721
Dividends payable - 13,976
Income taxes payable - 359
Due to parent and affiliated
companies (note 2) 5,998 5,669
---------------------------------------------------------------------------
Total current liabilities 15,860 30,725
---------------------------------------------------------------------------
Employee future benefits (note 8) 2,038 2,026
Future tax liabilities 774 -
---------------------------------------------------------------------------
Total liabilities 18,672 32,751
---------------------------------------------------------------------------
Commitments (note 9)

Shareholders' equity
Share capital
Authorized 5,000,000 common shares
Issued and outstanding 1,996,638
common shares 1,997 1,997
Retained earnings 75,361 68,072
---------------------------------------------------------------------------
Total shareholders' equity 77,358 70,069
---------------------------------------------------------------------------
96,030 102,820
---------------------------------------------------------------------------
---------------------------------------------------------------------------


McGraw-Hill Ryerson Limited

STATEMENTS OF INCOME, COMPREHENSIVE INCOME AND RETAINED
EARNINGS
(in thousands of dollars except per share data)

Years ended December 31

2009 2008
$ $
(unaudited)
---------------------------------------------------------------------------

REVENUE
Sales, less returns 85,818 91,485
Other 2,191 3,065
---------------------------------------------------------------------------
88,009 94,550
---------------------------------------------------------------------------

EXPENSES
Cost of product and royalties
(notes 2 and 4) 35,062 37,613
Editorial, selling, general and
administrative (note 3) 30,816 33,030
Amortization - prepublication costs 7,045 6,206
Amortization - capital assets 1,129 1,349
Employee future benefits (note 8) 115 99
Foreign exchange loss 239 345
---------------------------------------------------------------------------
74,406 78,642
---------------------------------------------------------------------------
Income before income taxes 13,603 15,908
---------------------------------------------------------------------------
Provision for income taxes (note 7)
Current 2,764 5,320
Future 1,543 86
---------------------------------------------------------------------------
4,307 5,406
---------------------------------------------------------------------------
Net income and comprehensive
income for the year 9,296 10,502

Retained earnings, beginning of year 68,072 73,433
Dividends paid and payable to
shareholders ($1.005 per share;
2008 - $7.945 per share) (2,007) (15,863)
---------------------------------------------------------------------------
Retained earnings, end of year 75,361 68,072
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Earnings per share
Basic $4.66 $5.26
Diluted $4.66 $5.26
---------------------------------------------------------------------------
---------------------------------------------------------------------------


McGraw-Hill Ryerson Limited

STATEMENTS OF CASH FLOWS
(in thousands of dollars)

Years ended December 31

2009 2008
$ $
(unaudited)
---------------------------------------------------------------------------

OPERATING ACTIVITIES
Net income for the year 9,296 10,502
Add (deduct) non-cash items
Amortization - prepublication costs 7,045 6,206
Amortization - capital assets 1,129 1,349
Employee future benefits 12 43
Future income taxes 1,543 86
---------------------------------------------------------------------------
19,025 18,186

Net change in non-cash working
capital balances related to
operations (note 12) (341) 381
---------------------------------------------------------------------------
Cash provided by operating activities 18,684 18,567
---------------------------------------------------------------------------

INVESTING ACTIVITIES
Marketable securities (increase)
decrease (145) 120
Pre-publication costs (9,595) (8,320)
Additions to capital assets (263) (150)
---------------------------------------------------------------------------
Cash used in investing activities (10,003) (8,350)
---------------------------------------------------------------------------

FINANCING ACTIVITIES
Dividends paid to shareholders (15,983) (1,887)
---------------------------------------------------------------------------
Cash used in financing activities (15,983) (1,887)
---------------------------------------------------------------------------

Net increase (decrease) in cash
during the year (7,302) 8,330
Cash and cash equivalents, beginning
of year 43,180 34,850
---------------------------------------------------------------------------
Cash and cash equivalents, end of year 35,878 43,180
---------------------------------------------------------------------------
---------------------------------------------------------------------------


Contact Information

  • McGraw-Hill Ryerson Limited
    Gordon Dyer
    Executive Vice President and Chief Financial Officer
    (905) 430-5032
    www.mcgrawhill.ca