McGraw-Hill Ryerson Limited
TSX : MHR

McGraw-Hill Ryerson Limited

August 01, 2008 16:00 ET

McGraw-Hill Ryerson Reports Second Quarter Results

WHITBY, ONTARIO--(Marketwire - Aug. 1, 2008) - McGraw-Hill Ryerson Limited (TSX:MHR) -

Attention: Business/Financial Editors



Three Months to June 30, 2008 ($000) 2008 2007
-----------------------------

Sales, less returns $ 18,922 $ 18,522
Other 469 503
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Total revenue $ 19,391 $ 19,025

Net Income (Loss) $ 1,028 $ 627
Net Income (Loss) per share $ 0.51 $ 0.31

Six Months to June 30, 2008 ($000)
----------------------------

Sales, less returns $ 27,116 $ 27,786
Other 1,093 1,204
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Total revenue $ 28,209 $ 28,990

Net Loss $ (1,448) $ (2,350)
Net Loss per share $ (0.73) $ (1.18)


Summary

The Company generally reports a modest net income result for the second quarter as sales are more heavily weighted to the second half of the year. For the second quarter in 2008, net income is $1.0 million, compared to $0.6 million in the second quarter last year.

Three Months Ended June 30, 2008

Sales of $18.9 million increased 2.2% compared to prior year, as a result of an increase in the Higher Education division's sales for the quarter, partially offset by a decrease in the Professional division's sales.

The Higher Education Division reported sales of $8.4 million which is an increase of 7.3% over the prior year's $7.8 million.

The School Division reported sales of $8.2 million which is consistent with the prior year's second quarter.

Pricing decreases as well as a large order received in early third quarter this year (compared to late second quarter last year) caused the Professional division's sales to decrease by $0.3 million to $2.0 million.

Total revenue was $19.4 million compared to $19.0 million in second quarter of 2008.

Operating expenses, comprised of cost of product and royalties, increased to $7.2 million from $7.0 million in the prior year, in line with the sales increase.

Six Months Ended June 30, 2008

Total revenue of $28.2 million decreased by 2.7% compared to the prior year of $29.0 million, driven by a decline in sales in the Professional division over the prior year.

The Higher Education Division sales of $12.1 million are an increase of 1.6% over the $11.9 million in 2007.

School Division sales remained consistent at $11.0 million compared to 2007.

Professional Division sales decreased by $0.9 million to $3.6 million. This shortfall is a result of the timing of orders received from several large customers as well as price reductions implemented in late 2007. The impact of price reductions on year over year comparisons should stabilize in the third and fourth quarters of 2008.

Operating expenses, comprised of cost of product and royalties, decreased by 5.8% to $10.7 million. This decrease is partly the result of the lower sales, but also from improved margins the Company is seeing from the offshore production of some Canadian titles.

Year to date loss before tax is $2.0 million, compared to a loss of $3.4 million last year. The decreased loss is caused by the decrease in all expense lines compared to the prior year.

Notice to Reader

The attached financial statements have been prepared by management of
McGraw-Hill Ryerson Limited. The financial statements for the three and six month periods ended June 30, 2008 and 2007 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 2007 was $93 million. Additional information is available at http://www.mcgrawhill.ca.

McGRAW-HILL RYERSON LIMITED



BALANCE SHEETS
--------------
(unaudited)

(In thousands of dollars)

As of June 30, December 31, June 30,
2008 2007 2007
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ASSETS
Current
Cash and cash equivalents $21,078 $35,646 $10,982
Accounts receivable 10,786 14,489 13,530
Due from parent and
affiliated companies 6,555 1,870 5,414
Inventories 10,559 7,717 13,334
Prepaid expenses and other assets 1,163 354 1,318
Income taxes recoverable 4,144 - 4,291
Future tax assets 1,214 2,390 1,011

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Total current assets 55,499 62,466 49,880

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Capital assets, net 16,634 17,247 17,836
Other assets, net 15,812 14,365 13,640
Future tax assets 464 582 1,440
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Total assets $88,409 $94,660 $82,796

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LIABILITIES &
SHAREHOLDERS' EQUITY
Current
Accounts payable and
accrued charges $ 9,276 $10,821 $ 7,735
Income taxes payable - 972 -
Due to parent and
affiliated companies 4,046 5,454 5,519
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Total current liabilities 13,322 17,247 13,254

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Employee future benefits 2,033 1,983 5,524

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Total liabilities 15,355 19,230 18,778

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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 71,057 73,433 62,021

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Total shareholders' equity 73,054 75,430 64,018

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Total liabilities and
shareholders' equity $88,409 $94,660 $82,796

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McGRAW-HILL RYERSON LIMITED

STATEMENTS OF INCOME (LOSS), COMPREHENSIVE INCOME (LOSS)
--------------------------------------------------------
AND RETAINED EARNINGS
---------------------
(unaudited)

(In thousands of dollars
except per share data)
Three months ended Six months ended
June 30 June 30
2008 2007 2008 2007
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Revenue
Sales, less returns $ 18,922 $ 18,522 $ 27,116 $ 27,786
Other 469 503 1,093 1,204
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Total revenue 19,391 19,025 28,209 28,990

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Expenses
Operating 7,173 6,963 10,672 11,325
Editorial, selling,
general and administrative 8,704 8,571 16,625 17,163
Amortization -
prepublication costs 1,426 1,541 2,010 2,227
Amortization -
capital assets 338 339 675 680
Employee future benefits 25 367 50 734
Foreign exchange loss 146 147 214 216

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Total expenses 17,812 17,928 30,246 32,345

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Income (loss) before
income taxes 1,579 1,097 (2,037) (3,355)

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Provision for (recovery of)
income taxes
Current 217 186 (1,883) (2,375)
Future 334 284 1,294 1,370

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551 470 (589) (1,005)

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Net income (loss)
and comprehensive
income (loss) for the period 1,028 627 (1,448) (2,350)

Retained earnings,
beginning of period 70,508 67,834 73,433 71,230
Dividends paid
to shareholders($0.465
per share; 2007 -
$3.435 per share) (479) (6,440) (928) (6,859)

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Retained earnings,
end of period $71,057 $ 62,021 $ 71,057 $ 62,021

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Earnings (loss) per share

Basic - net earnings
(loss) for the period $ 0.51 $ 0.31 $ (0.73) $ (1.18)

Diluted - net earnings
(loss) for the period $ 0.51 $ 0.31 $ (0.73) $ (1.18)

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McGRAW-HILL RYERSON LIMITED

STATEMENTS OF CASH FLOW
-----------------------
(unaudited)

(In thousands of dollars)
Three months ended Six months ended
June 30 June 30
2008 2007 2008 2007
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OPERATING ACTIVITIES
Net income (loss)
for the period $ 1,028 $ 627 $ (1,448) $ (2,350)
Add/(deduct)
charges to income not
affecting cash:
Amortization -
prepublication costs 1,426 1,541 2,010 2,227
Amortization -
capital assets 338 339 675 680
Employee future benefits 25 352 50 703
Future income taxes 334 284 1,294 1,370
Net change in non-cash
working capital
balances related
to operations (6,939) (7,971) (12,688) (14,971)

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Cash used in
operating activities (3,788) (4,828) (10,107) (12,341)

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INVESTING ACTIVITIES
Prepublication costs (1,989) (1,923) (3,471) (3,172)
Additions to capital assets (39) (64) (62) (157)

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Cash used in
investing activities (2,028) (1,987) (3,533) (3,329)

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FINANCING ACTIVITIES
Dividends paid to shareholders (479) (6,440) (928) (6,859)

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Cash used in
financing activities (479) (6,440) (928) (6,859)

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Net decrease in cash
and cash equivalents
during the period (6,295) (13,255) (14,568) (22,529)
Cash and cash equivalents,
beginning of period 27,373 24,237 35,646 33,511

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Cash and cash equivalents,
end of period $ 21,078 $ 10,982 $ 21,078 $10,982

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Supplemental cash flow
information
Income taxes paid $ 1,759 $ 1,088 $ 3,286 $2,428

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Contact Information

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