McGraw-Hill Ryerson Limited
TSX : MHR

McGraw-Hill Ryerson Limited

May 02, 2008 16:00 ET

McGraw-Hill Ryerson Reports First Quarter Results

WHITBY, ONTARIO--(Marketwire - May 2, 2008) - McGraw-Hill Ryerson Limited (TSX:MHR) -

Attention: Business/Financial Editors



Three Months to March 31, 2008 ($000) This Year Year Ago
------------------------------
------------------------------


Sales, net $ 8,194 $ 9,264
Other 624 701
-------- ---------
--------
Total revenue $ 8,818 $ 9,965

Net Loss (2,476) (2,977)
Net Loss per share $ (1.24) $ (1.49)


Summary

The first quarter is historically the lowest sales quarter 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 2008, the net loss is $2.5 million, compared to a net loss of $3.0 million in the first quarter last year.

Revenue

Total revenue for the first quarter decreased by 11.5% to $8.8 million in 2008 compared to $10.0 million in 2007, driven by a decline in sales in both the Higher Education Division and the Professional Division.

The Higher Education Division sales decreased 9.6% to $3.7 million in 2008 compared to $4.0 million in the first quarter of 2007. This $0.3 million decrease is expected to be recouped in the second quarter.

The School Division sales are consistent at $2.8 million in both 2008 and 2007.

In the Professional Division, sales decreased by 28.9% in 2008 to $1.6 million, from $2.2 million in the prior year. The Division expects to make up some of this shortfall during the second and third quarter of 2008. A portion of this shortfall is driven by price reductions implemented in late 2007.

Expenses

Operating expenses have decreased 19.8% to $3.5 million compared to 2007. These expenses consist of cost of product and royalty expenses and therefore decrease as sales decrease. Operating expenses as a percentage of net sales improved to 42.7% of sales in the first quarter of 2008 compared to 47.1% of sales in the first quarter last year. This improvement is partially a result of changing product mix (increase in sales of Canadian-produced titles which have higher margins than imported titles).

Editorial, selling, general and administrative expenses have decreased to $7.9 million from $8.6 million. This 7.8% decrease is the result of expense controls and productivity improvements across many divisions in the Company, as well as the timing of certain promotional expenses (which are less heavily weighted in the first quarter this year than in years past).

Net Income/Loss

The Company reported a net loss of $2.5 million, compared to a net loss of $3.0 million in the first quarter of 2007. This improvement was mainly a result of decreased expenses.

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, 2008 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) March 31, December 31, March 31,
As of 2008 2007 2007
---------------------------------------------------------------------------
---------------------------------------------------------------------------

ASSETS
Current
Cash and cash equivalents $ 27,373 $ 35,646 $ 24,237
Accounts receivable 2,625 14,489 4,219
Due from affiliated companies 5,619 1,870 6,225
Inventories 10,383 7,717 11,335
Prepaid expenses and other assets 1,042 354 1,230
Income taxes receivable 2,613 - 3,390
Future tax assets 1,569 2,390 1,481

---------------------------------------------------------------------------

Total current assets 51,224 62,466 52,117

---------------------------------------------------------------------------

Capital assets, net 16,933 17,247 18,111
Other assets, net 15,256 14,365 13,258
Future tax assets 443 582 1,255
---------------------------------------------------------------------------

Total assets $ 83,856 $ 94,660 $ 84,741

---------------------------------------------------------------------------
---------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued charges 7,020 10,821 6,423
Income taxes payable - 972 -
Due to affiliated companies 2,323 5,454 3,314

---------------------------------------------------------------------------

Total current liabilities 9,343 17,247 9,737

---------------------------------------------------------------------------

Employee future benefits 2,008 1,983 5,172

---------------------------------------------------------------------------

Total liabilities 11,351 19,230 14,909

---------------------------------------------------------------------------

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 70,508 73,433 67,835

---------------------------------------------------------------------------

Total shareholders' equity 72,505 75,430 69,832

---------------------------------------------------------------------------

Total liabilities and
shareholders' equity $ 83,856 $ 94,660 $ 84,741

---------------------------------------------------------------------------
---------------------------------------------------------------------------


McGRAW-HILL RYERSON LIMITED

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


(In Thousands of Dollars except per share data) March 31, March 31,
For the three months ended 2008 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------

REVENUE
Sales, less returns $ 8,194 $ 9,264
Other 624 701

----------------------------------------------------------------------------

Total revenue 8,818 9,965

----------------------------------------------------------------------------

EXPENSES
Operating 3,499 4,362
Editorial, selling, general and administrative 7,921 8,593
Amortization - prepublication costs 584 686
Amortization - capital assets 337 341
Future employee benefits 25 367
Exchange loss 68 69
----------------------------------------------------------------------------

Total operating expenses 12,434 14,418

----------------------------------------------------------------------------

Loss before income taxes (3,616) (4,453)

----------------------------------------------------------------------------

Recovery of income taxes
Current (2,100) (2,561)
Future 960 1,085

----------------------------------------------------------------------------

(1,140) (1,476)

----------------------------------------------------------------------------

Net loss and comprehensive loss
for the period $ (2,476) $ (2,977)

Retained earnings, beginning of period 73,433 71,230
Dividends paid to shareholders ($0.225 per
share; 2007 - $0.21 per share) (449) (419)

----------------------------------------------------------------------------

Retained earnings, end of period $ 70,508 $ 67,834

----------------------------------------------------------------------------
----------------------------------------------------------------------------

Earnings per share
Basic - net loss for the period $ (1.24) $ (1.49)

Diluted - net loss for the period $ (1.24) $ (1.49)

----------------------------------------------------------------------------
----------------------------------------------------------------------------

Weighted average number of shares for basic and diluted earnings per share
for 2008 and 2007 is 1,996,638.


McGRAW-HILL RYERSON LIMITED

STATEMENTS OF CASH FLOWS
------------------------
------------------------
(unaudited)


(In Thousands of Dollars)
For the three months ended March 31, 2008 March 31, 2007
----------------------------------------------------------------------------
----------------------------------------------------------------------------

OPERATING ACTIVITIES
Net loss for the period $ (2,476) $ (2,976)
Add/deduct charges to income
not affecting cash:
Amortization - prepublication costs 584 686
Amortization - capital assets 337 341
Employee future benefits 25 351
Future taxes 960 1,085
Net change in non-cash working capital
balances related to operations (5,749) (7,000)
----------------------------------------------------------------------------

Cash used in operating activities $ (6,319) $ (7,513)

----------------------------------------------------------------------------

INVESTING ACTIVITIES
Prepublication costs (1,482) (1,249)
Investment in capital assets (23) (93)

----------------------------------------------------------------------------

Cash used in investing activities (1,505) (1,342)

----------------------------------------------------------------------------

FINANCING ACTIVITIES
Dividends paid to shareholders (449) (419)

----------------------------------------------------------------------------

Cash used in financing activities (449) (419)

----------------------------------------------------------------------------

Net decrease in cash during period (8,273) (9,274)
Cash, beginning of period 35,646 33,511

----------------------------------------------------------------------------

Cash, end of period $ 27,373 $ 24,237

----------------------------------------------------------------------------
----------------------------------------------------------------------------

Supplemental cash flow information

Income taxes paid $ 1,527 $ 1,340

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash position consists of: cash and term deposits


Contact Information

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