McGraw-Hill Ryerson Limited
TSX : MHR

McGraw-Hill Ryerson Limited

May 01, 2009 16:00 ET

McGraw-Hill Ryerson Reports First Quarter Results

WHITBY, ONTARIO--(Marketwire - May 1, 2009) - McGraw-Hill Ryerson Limited (TSX:MHR)

Attention: Business/Financial Editors



Three Months to March 31, 2009 ($000) This Year Year Ago
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Sales, net $ 7,849 $ 8,194
Other 310 624
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Total revenue $ 8,159 $ 8,818

Net Loss (2,681) (2,476)
Net Loss per share $ (1.34) $ (1.24)

Note: Financial information commences on page 3 of this press release.


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 2009, the net loss is $2.7 million, compared to a net loss of $2.5 million in the first quarter of 2008.

Revenue

Total revenue for the first quarter decreased by 7.5% to $8.2 million in 2009 compared to $8.8 million in 2008, driven by a decline in sales in both the School Division and the Professional Division as well as reduced interest income.

The Higher Education Division sales were consistent with 2008 at $3.7 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 for this division.

The School Division sales decreased $0.1 million to $2.7 million in the first quarter of 2009, from $2.8 million in the corresponding quarter of 2008. 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 $0.2 million in the first quarter of 2009 to $1.4 million, from $1.6 million in the comparative period of the prior year. This Division saw reduced ordering patterns and increased returns from several customers.

Expenses

Operating expenses in the first quarter of 2009 decreased by 2.7% to $3.4 million compared to the corresponding period of 2008. These expenses consist of cost of product and royalty expenses and therefore decrease as sales decrease. Operating expenses as a percentage of net sales remained fairly consistent at 43.4% of sales in the first quarter of 2009 compared to 42.7% of sales in the first quarter of last year.

Editorial, selling, general and administrative expenses decreased to $7.6 million during the first quarter of 2009 from $7.9 million in the comparative period of the prior year. This 4.3% decrease is the result of expense controls and productivity improvements across many divisions in the Company, as well as the timing of certain expenses that are weighted more to the later quarters in 2009 compared to 2008.

Net Income/Loss

Net Loss was $2.7 million in the first quarter of 2009 compared to $2.5 million last year, driven mainly by lower revenue.

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, 2009 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 2008 was $95 million. Additional information is available at http://www.mcgrawhill.ca.



McGRAW-HILL RYERSON LIMITED

BALANCE SHEETS
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(unaudited)

(In thousands of dollars)
As at March 31, December 31, March 31,
2009 2008 2008
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ASSETS
Current
Cash and cash equivalents $ 23,515 $ 43,856 $ 27,373
Accounts receivable 1,538 14,285 2,625
Due from parent and affiliated
companies 4,325 1,827 5,619
Inventories 10,486 7,082 10,383
Prepaid expenses and other 1,191 296 1,042
Income taxes receivable 3,448 - 2,613
Future tax assets 1,257 2,263 1,569

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Total current assets 45,760 69,609 51,224

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Capital assets, net 15,753 16,048 16,933
Other assets, net 17,634 16,540 15,256
Future tax assets 396 623 443
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Total assets $ 79,543 $ 102,820 $ 83,856

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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued
charges 8,049 10,721 7,020
Dividends payable - 13,976 -
Income taxes payable - 359 -
Due to parent and affiliated
companies 2,535 5,669 2,323

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Total current liabilities 10,584 30,725 9,343

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Employee future benefits 2,051 2,026 2,008

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Total liabilities 12,635 32,751 11,351

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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 64,911 68,072 70,508

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Total shareholders' equity 66,908 70,069 72,505

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Total liabilities and
shareholders' equity $ 79,543 $ 102,820 $ 83,856

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McGRAW-HILL RYERSON LIMITED

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

(In thousands of dollars except per share
data)
For the three months ended March 31, 2009 March 31, 2008
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REVENUE
Sales, less returns $ 7,849 $ 8,194
Other 310 624

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Total revenue 8,159 8,818

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EXPENSES
Operating 3,405 3,499
Editorial, selling, general and
administrative 7,577 7,921
Amortization - prepublication costs 546 584
Amortization - capital assets 328 337
Future employee benefits 25 25
Exchange loss 40 68
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Total operating expenses 11,921 12,434

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Loss before income taxes (3,762) (3,616)

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Provision for (recovery of) income taxes
Current (2,314) (2,100)
Future 1,233 960

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(1,081) (1,140)

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Net loss and comprehensive loss
for the period $ (2,681) $ (2,476)


Retained earnings, beginning of period 68,072 73,433
Dividends declared to shareholders ($0.24
per share; 2008 - $0.225 per share) (480) (449)

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Retained earnings, end of period $ 64,911 $ 70,508

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Loss per common share
Basic - net loss for the period $ (1.34) $ (1.24)

Diluted - net loss for the period $ (1.34) $ (1.24)

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Weighted average number of common shares for basic and diluted loss per
common share for the three months ended March 31, 2009 and 2008 is
1,996,638.



McGRAW-HILL RYERSON LIMITED

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


(In thousands of dollars)
For the three months ended March 31, 2009 March 31, 2008
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OPERATING ACTIVITIES
Net loss for the period $ (2,681) $ (2,476)
Add/deduct non-cash items:
Amortization - prepublication costs 546 584
Amortization - capital assets 328 337
Employee future benefits 25 25
Future taxes 1,233 960
Net change in non-cash working capital
balances related to operations (3,658) (5,749)
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Cash used in operating activities $ (4,207) $ (6,319)

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INVESTING ACTIVITIES
Prepublication costs (1,645) (1,482)
Capital assets (33) (23)

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Cash used in investing activities (1,678) (1,505)

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FINANCING ACTIVITIES
Dividends paid to shareholders (14,456) (449)

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Cash used in financing activities (14,456) (449)

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Net decrease in cash and cash equivalents
during period (20,341) (8,273)
Cash and cash equivalents, beginning of
period 43,856 35,646

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Cash and cash equivalents, end of period $ 23,515 $ 27,373

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Supplemental cash flow information
Income taxes refunded (50) -
Income taxes paid $ 1,586 $ 1,527

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Contact Information

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