McGraw-Hill Ryerson Reports First Quarter Results

WHITBY, ONTARIO--(Marketwire - April 30, 2010) - McGraw-Hill Ryerson Limited (TSX:MHR)

Attention: Business/Financial Editors

Three Months to March 31, 2010 ($000)			This Year				Year Ago
Sales, net		$	8,320			$	7,849
Other			218				310
Total revenue		$	8,538			$	8,159
Net Loss			(2,498	)			(2,681	)
Net Loss per share		$	(1.25	)		$	(1.34	)

Summary

The first quarter is historically the quarter with the lowest sales of the fiscal year, as sales are heavily weighted towards the second half of the year. As expenses are more evenly distributed over the course of the year, the Company generally reports a net loss in the first quarter of each year. For the first quarter in 2010, the net loss is $2.5 million, compared to a net loss of $2.7 million in the first quarter of 2009.

Revenue

Total revenue for the first quarter increased by 4.6% to $8.5 million in 2010 compared to $8.2 million in 2009, driven by an increase in sales in both the School Division and the Higher Education Division.

The Higher Education Division sales increased $0.4 million over 2009 to $4.0 million. In this Division, sales in the first quarter of each year generally represent a very small proportion of the annual total. Digital products continue to be a growth area.

The School Division sales increased $0.2 million to $2.9 million in the first quarter of 2010, from $2.7 million in the corresponding quarter of 2009. Again, sales in the first quarter of each year generally represent a small proportion of the annual total.

In the Professional Division, sales decreased by $0.1 million in the first quarter of 2010 to $1.3 million, from $1.4 million in the comparative period of the prior year. This minor decrease was caused by reduced orders from several retailers.

Expenses

Cost of product and royalties decreased by 4.2% to $3.3 million compared to the corresponding period of 2009. Margins on sales improved as a result of changes in product mix sold as well as the strengthening Canadian dollar compared to last year which helped improve margins on sales of imported products. Cost of product and royalties as a percentage of net sales decreased to 39.2% of sales in the first quarter of 2010 compared to 43.4% of sales in the first quarter of last year.

Editorial, selling, general and administrative expenses increased to $7.8 million during the first quarter of 2010 from $7.6 million in the comparative period of the prior year. This 2.7% increase was mainly the result of an increase in compensation costs.

Net Income/Loss

Net Loss was $2.5 million in the first quarter of 2010 compared to $2.7 million last year. This improvement was driven mainly by increased revenue and improved margins.

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

Notice to Reader

The attached financial statements have been prepared by management of

McGraw-Hill Ryerson Limited. The financial statements for the three month

period ended March 31, 2010 have not been reviewed by the auditors of

McGraw-Hill Ryerson Limited.

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
BALANCE SHEETS
(unaudited)
(In thousands of dollars)
As at		March 31, 2010		December 31, 2009		March 31, 2009
	ASSETS
	Current
Cash and cash equivalents		$	25,551	$	35,878	$	22,837
Marketable securities			816		821		678
Accounts receivable			1,623		11,319		1,538
Due from parent and affiliated companies			4,013		2,564		4,325
Inventories			9,529		6,052		10,486
Prepaid expenses and other			1,218		318		1,191
Income taxes receivable			5,519		2,368		3,448
Future tax assets			956		2,117		1,257
Total current assets			49,225		61,437		45,760
Capital assets, net			15,048		15,182		15,753
Other assets, net			19,846		19,411		17,634
Future tax assets			—		—		396
Total assets		$	84,119	$	96,030	$	79,543
	LIABILITIES AND SHAREHOLDERS' EQUITY
	Current
Accounts payable and accrued charges			9,603		9,862		8,049
Dividends payable			—		—		—
Income taxes payable			—		—		—
Due to parent and affiliated companies			1,965		5,998		2,535
Total current liabilities			11,568		15,860		10,584
Employee future benefits			2,063		2,038		2,051
Future tax liabilities			1,129		774		—
Total liabilities			14,760		18,672		12,635
	Shareholders' equity
	Share capital
Authorized – 5,000,000 common shares
Issued and outstanding – 1,996,638 common shares			1,997		1,997		1,997
Retained earnings			67,362		75,361		64,911
	Total shareholders' equity		69,359		77,358		66,908
	Total liabilities and shareholders' equity	$	84,119	$	96,030	$	79,543

 

McGRAW-HILL RYERSON LIMITED
STATEMENTS OF LOSS, COMPREHENSIVE LOSS, AND RETAINED EARNINGS
(unaudited)
(In thousands of dollars except per share data)
For the three months ended		March 31, 2010			March 31, 2009
	REVENUE
	Sales, less returns	$	8,320		$	7,849
Other			218			310
Total revenue			8,538			8,159
EXPENSES
	Cost of product and royalties		3,260			3,405
	Editorial, selling, general and administrative		7,779			7,577
	Amortization – prepublication costs		775			546
	Amortization – capital assets		235			328
	Employee future benefits		25			25
	Foreign exchange loss		42			40
Total operating expenses			12,116			11,921
Loss before income taxes			(3,578	)		(3,762	)
Provision for (recovery of) income taxes
	Current		(2,595	)		(2,314	)
	Future		1,515			1,233
			(1,080	)		(1,081	)
Net loss and comprehensive loss for the period		$	(2,498	)	$	(2,681	)
Retained earnings, beginning of period			75,361			68,072
Dividends declared to shareholders ($2.755 per share; 2009 - $0.24 per share)			(5,501	)		(480	)
Retained earnings, end of period		$	67,362		$	64,911
Loss per common share
	Basic	$	(1.25	)	$	(1.34	)
	Diluted	$	(1.25	)	$	(1.34	)

Weighted average number of common shares for basic and diluted loss per common share for the three months ended March 31, 2010 and 2009 is 1,996,638.

 

McGRAW-HILL RYERSON LIMITED
STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands of dollars)
For the three months ended		March 31, 2010			March 31, 2009
	OPERATING ACTIVITIES
	Net income for the period	$	(2,498	)	$	(2,681	)
Add/deduct non-cash items:
	Amortization – prepublication costs		775			546
	Amortization – capital assets		235			328
	Employee future benefits		25			25
	Future income taxes		1,516			1,233
Net change in non-cash working capital balances related to operations			(3,542	)		(3,658	)
Cash used in operating activities			(3,489	)	$	(4,207	)
INVESTING ACTIVITIES
Marketable securities (increase) decrease			5			(2	)
Prepublication costs			(1,241	)		(1,645	)
Capital assets			(101	)		(33	)
Cash used in investing activities			(1,337	)		(1,680	)
FINANCING ACTIVITIES
Dividends paid to shareholders			(5,501	)		(14,456	)
Cash used in financing activities			(5,501	)		(14,456	)
Net decrease in cash during period			(10,327	)		(20,343	)
Cash and cash equivalents, beginning of period			35,878			43,180
Cash and cash equivalents, end of period		$	25,551		$	22,837
	Supplemental cash flow information
Income taxes refunded			(781	)		(50	)
Income taxes paid		$	1,351		$	1,586