McGraw-Hill Ryerson Limited
TSX : MHR

McGraw-Hill Ryerson Limited

April 30, 2010 16:00 ET

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  
             

Contact Information

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