McGraw-Hill Ryerson Limited: McGraw-Hill Ryerson Reports Second Quarter Results



Three Months to June 30, 2009 ($000) 2009 2008
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Sales, less returns $18,027 $18,922
Other 422 469
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Total revenue $18,449 $19,391

Net Income $ 1,037 $ 1,028
Net Income per share $ 0.52 $ 0.51


Six Months to June 30, 2009 ($000)
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Sales, less returns $25,876 $27,116
Other 732 1,093
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Total revenue $26,608 $28,209

Net Loss $ (1,644) $(1,448)
Net Loss per share $ (0.82) $ (0.73)

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 2009, net income is $1.0 million, consistent with $1.0 million in the second quarter last year.

Three Months Ended June 30, 2009

Total Company sales of $18.4 million decreased 4.9% compared to prior year, as a result of a decrease in sales in the School and Professional Divisions.

The Higher Education Division reported sales of $8.7 million which is an increase of 2.0% over the prior year's $8.5 million. This Division reported increased sales in its Science/Engineering imprint.

The School Division sales of $7.5 million was a 9.6% decrease compared to the prior year's second quarter. Many school boards are submitting their orders later in 2009 than they did in 2008.

The Professional Division produced sales of $1.8 million, down $0.2 million from last year.

Cost of Product and Royalties (referred to in prior filings as "Operating Expenses") decreased to $6.8 million from $7.2 million in the prior year, in line with the sales decrease.

Income before tax was $1.3 million ($1.6 million last year). The decrease is mostly a function of the lower sales results.

Six Months Ended June 30, 2009

Total revenue of $26.6 million decreased by 5.7% compared to the prior year's result of $28.2 million, driven by a decline in sales in the School and Professional Divisions.

Higher Education Division sales increased 1.3% to $12.3 million. The increase was a result of strong sales of imported products, especially Science/Engineering titles.

School Division sales decreased 8.3% to $10.1 million compared to $11.0 million in 2008. The decrease is partially the result of delayed orders from several school boards in Ontario and British Columbia driven by funding uncertainty.

Professional division sales decreased by $0.4 million (or 12.3%) to $3.1 million in 2009. This is mainly the result of the termination of an agency contract in mid-2008. Excluding the impact of this contract termination, sales are down 2.4% compared to 2008.

Cost of Product and Royalties (referred to in prior filings as "Operating Expenses") decreased by 4.2% to $10.2 million. This decrease is consistent with the lower sales levels. Cost of Product and Royalties as a percentage of sales remained consistent (39.4% last year, 39.5% this year).

Year to date loss before tax was $2.4 million, compared to a loss of $2.0 million last year. The increased loss was caused by the decrease in sales, partially offset by expense savings 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, 2009 and 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 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)
 June 30, December 31, June 30,
As of 2009 2008 2008
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ASSETS
Current
 Cash and cash equivalents $13,912 $43,856 $21,078
 Accounts receivable 11,427 14,285 10,786
 Due from parent and affiliated companies 3,387 1,827 6,555
 Inventories 10,496 7,082 10,559
 Prepaid expenses and other assets 1,283 296 1,163
 Income taxes recoverable 5,572 - 4,144
 Future tax assets 1,098 2,263 1,214

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 Total current assets 47,175 69,609 55,499

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 Capital assets, net 15,462 16,048 16,634
 Other assets, net 17,932 16,540 15,812
 Future tax assets - 623 464
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 Total assets $80,569 $102,820 $88,409

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LIABILITIES & SHAREHOLDERS' EQUITY
Current
 Accounts payable and accrued charges $7,202 $10,721 $ 9,276
 Dividends Payable - 13,976 -
 Income taxes payable - 359 -
 Due to parent and affiliated companies 3,324 5,669 4,046

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 Total current liabilities 10,526 30,725 13,322

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 Employee future benefits 2,076 2,026 2,033
 Future tax liabilities 531 - -

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 Total liabilities 13,133 32,751 15,355

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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 65,439 68,072 71,057

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 Total shareholders' equity 67,436 70,069 73,054

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 Total liabilities and shareholders'
 equity $80,569 $102,820 $88,409

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MCGRAW-HILL RYERSON LIMITED

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

(In thousands of dollars
 except per share data)
 Three months ended Six months ended
 June 30 June 30
 2009 2008 2009 2008
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Revenue
 Sales, less returns $ 18,027 $ 18,922 $ 25,876 $ 27,116
 Other 422 469 732 1,093

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Total revenue 18,449 19,391 26,608 28,209

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Expenses
 Cost of Product and Royalties 6,817 7,173 10,222 10,672
 Editorial, selling, general and
 administrative 8,177 8,704 15,754 16,625
 Amortization - prepublication costs 1,770 1,426 2,316 2,010
 Amortization - capital assets 327 338 655 675
 Employee future benefits 25 25 50 50
 Foreign exchange loss 10 146 50 214

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Total expenses 17,126 17,812 29,047 30,246

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Income (loss) before income taxes 1,323 1,579 (2,439) (2,037)

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Provision for (recovery of) income
 taxes
 Current (800) 217 (3,114) (1,883)
 Future 1,086 334 2,319 1,294

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 286 551 (795) (589)

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Net income (loss) and comprehensive
 income (loss) for the period 1,037 1,028 (1,644) (1,448)


Retained earnings, beginning
 of period 64,911 70,508 68,072 73,433
Dividends paid to shareholders
 ($0.495 per share; 2008 - $0.465
 per share) (509) (479) (989) (928)

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Retained earnings, end of period $65,439 $ 71,057 $ 65,439 $ 71,057

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Earnings (loss) per share

 Basic - net earnings (loss)
 for the period $ 0.52 $ 0.51 $ (0.82) $ (0.73)

 Diluted - net earnings (loss)
 for the period $ 0.52 $ 0.51 $ (0.82) $ (0.73)

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Weighted average number of common shares for basic and diluted earnings
(loss) per share for 2009 and 2008 is 1,996,638.


MCGRAW-HILL RYERSON LIMITED

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

(In thousands of dollars)
 Three months ended Six months ended
 June 30 June 30
 2009 2008 2009 2008
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OPERATING ACTIVITIES
 Net income (loss) for the period $ 1,037 $ 1,028 $ (1,644) $ (1,448)
 Add/(deduct) charges to income
 not affecting cash:
 Amortization - prepublication
 costs 1,770 1,426 2,316 2,010
 Amortization - capital assets 327 338 655 675
 Employee future benefits 25 25 50 50
 Future income taxes 1,086 334 2,319 1,294
 Net change in non-cash working
 capital balances related to
 operations (11,233) (6,939) (14,891) (12,688)

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Cash used in operating activities (6,988) (3,788) (11,195) (10,107)

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INVESTING ACTIVITIES
 Prepublication costs (2,070) (1,989) (3,715) (3,471)
 Additions to capital assets (36) (39) (69) (62)

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Cash used in investing activities (2,106) (2,028) (3,784) (3,533)

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FINANCING ACTIVITIES
 Dividends paid to shareholders (509) (479) (14,965) (928)

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Cash used in financing activities (509) (479) (14,965) (928)

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Net decrease in cash and cash
 equivalents during the period (9,603) (6,295) (29,944) (14,568)
Cash and cash equivalents,
 beginning of period 23,515 27,373 43,856 35,646

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Cash and cash equivalents,
 end of period $ 13,912 $21,078 $ 13,912 $21,078

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Supplemental cash flow information
 Income taxes refunded - - $50 -
 Income taxes paid $ 1,363 $ 1,759 $ 2,949 $3,286
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Contributing Sources

Market Wire

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McGraw-Hill Ryerson Limited: McGraw-Hill Ryerson Reports Second Quarter Results