News Column

McGraw-Hill Ryerson Reports First Quarter Results

Apr 26 2013 12:00AM

Marketwire

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WHITBY, ONTARIO -- (Marketwired) -- 04/26/13 -- McGraw-Hill Ryerson (TSX: MHR) -

Attention: Business/Financial Editors

Three Months to March 31 ($000) 2013 2012--------------------------------------------------------(unaudited)Sales revenue, less returns $ 7,387 $ 7, 693Other income 302 217Rental income 182 115 --------- ----------Total Revenue $ 7,871 $ 8,025Net loss $ (1,763) $ (2,666)Net loss per share $ ( 0.88) $ ( 1.33)



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 calendar year leading up to the beginning of the school season. 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 2013, the net loss is $1.8 million, compared to a net loss of $2.7 million in the first quarter of 2012.

Revenue

Total revenue for the first quarter decreased by 1.9% to $7.9 million in 2013 compared to $8.0 million in 2012.

The Higher Education Division sales increased by 6.5% to $4.2 million in the first quarter of 2013 compared to the first quarter of 2012. This increase was mainly the result of increased digital revenue and reduced returns.

The School Division sales decreased by $0.5 million to $2.2 million in the first quarter of 2013 from $2.7 million in the corresponding quarter of 2012 as a result of non-recurring contract business.

In the Professional Division, sales decreased by 3.5% in the first quarter of 2013 to $1.0 million due to a decrease in the wholesaler market.

Rental and other income, representing billed freight, copyright licensing, translation fees and rental income from the tenant at the Company's Whitby, Ontario facility, increased in the first quarter of 2013 by 45.8% to $0.5 million from $0.3 million in the corresponding quarter of 2012. The major contributing factor to the increase is increased digital commission income as well as increased rental income.

Expenses

Cost of goods sold remained consistent for the first quarter at $2.7 million when compared to the same quarter in 2012.

Operating expenses decreased for the first quarter to $6.4 million compared to $7.9 million for the same quarter in 2012. The decrease is a result of reduced sales and compensation expenses.

Amortization expense for pre-publication costs remained consistent at $0.8 million in the first quarter of 2013 compared to the same quarter in 2012. Depreciation expense for capital assets in the first quarter also remained consistent at $0.2 million.

Finance income and costs, consisting mainly of banking charges, in the first quarter of 2013 remained consistent with the same quarter of 2012.

In the first quarter, the Company reported a foreign exchange loss of $0.1 million compared to a $0.1 million gain in the same period of 2012. The Company incurs foreign exchange gains and losses throughout the year as a result of the volume of related-party transactions, most of which are denominated in U.S. dollars. The Company continues to employ policies to minimize the impact of these currency fluctuations.

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, 2013 and March 31, 2012 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 2012 was $72 million. Additional information is available at http://www.mcgrawhill.ca.

McGraw-Hill Ryerson Limited

STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

(in thousands of dollars except per share data)

(unaudited)

Three months ended March 31 2013 2012 $ $----------------------------------------------------------------------------Sales revenue, less returns 7,387 7,693Other income 302 217Rental income 182 115----------------------------------------------------------------------------Total revenue 7,871 8,025Cost of goods sold 2,668 2,748----------------------------------------------------------------------------Gross profit 5,203 5,277Operating expenses 6,400 7,889Amortization - pre-publication costs 806 827Depreciation - property, plant and equipment 201 216----------------------------------------------------------------------------Operating loss (2,204) (3,655)Finance income 37 107Finance costs (40) (36)Foreign exchange (loss) gain (71) 53----------------------------------------------------------------------------Loss before income taxes (2,278) (3,531)Income tax recovery (515) (865)----------------------------------------------------------------------------Net loss for the period attributable to equity holders of the Company (1,763) (2,666)----------------------------------------------------------------------------Other comprehensive gain (loss)Actuarial gain (loss) on employee future benefits, net of tax 191 (69)----------------------------------------------------------------------------Comprehensive loss (1,572) (2,735)--------------------------------------------------------------------------------------------------------------------------------------------------------Loss per shareBasic and diluted ($0.88) ($1.33)--------------------------------------------------------------------------------------------------------------------------------------------------------



McGraw-Hill Ryerson Limited

STATEMENTS OF FINANCIAL POSITION

(in thousands of dollars)

(unaudited)

As at March 31, December 31, March 31, 2013 2012 2012 $ $ $----------------------------------------------------------------------------ASSETSCurrentCash and cash equivalents 10,235 15,146 31,611Marketable securities 859 799 755Trade and other receivables, net 2,798 10,463 2,841Inventories, net 6,913 4,601 8,885Due from parent and affiliated companies 1,088 1,783 6,837Income taxes receivable 2,011 - 2,600Prepaid expenses and other assets 917 333 850----------------------------------------------------------------------------Total current assets 24,821 33,125 54,379----------------------------------------------------------------------------Property, plant and equipment, net 13,266 13,423 13,858Intangible assets 13,683 13,754 16,715Deferred tax assets - 731 -----------------------------------------------------------------------------Total non-current assets 26,949 27,908 30,573---------------------------------------------------------------------------- 51,770 61,033 84,952--------------------------------------------------------------------------------------------------------------------------------------------------------LIABILITIES AND EQUITYCurrent liabilitiesTrade and other payables 7,808 10,691 7,472Income taxes payable - 265 -Due to parent and affiliated companies 645 4,693 3,285----------------------------------------------------------------------------Total current liabilities 8,453 15,649 10,757----------------------------------------------------------------------------Employee future benefits 2,547 2,517 2,210Long-term payable - 350 -Deferred tax liabilities 430 - 581----------------------------------------------------------------------------Total liabilities 11,430 18,516 13,548----------------------------------------------------------------------------EquityIssued capital Authorized 5,000,000 no par value common shares Issued and outstanding 1,996,638 common shares 1,997 1,997 1,997Paid-in capital 1,265 1081 821Retained earnings 37,200 39,561 68,525Accumulated other comprehensive income (loss) (122) (122) 61----------------------------------------------------------------------------Total equity 40,340 42,517 71,404---------------------------------------------------------------------------- 51,770 61,033 84,952--------------------------------------------------------------------------------------------------------------------------------------------------------



McGraw-Hill Ryerson Limited

STATEMENTS OF CHANGES IN EQUITY

(in thousands of dollars)

(unaudited)

Accumulated other Share Paid-in comprehensive Retained capital capital income earnings Total $ $ $ $ $----------------------------------------------------------------------------Balance, December 31, 2011 1,997 702 61 71,760 74,520Dividends paid ($0.285 per share) - - - (569) (569)Additional paid- in capital - 119 - - 119Net loss attributable to equity holders of the Company - - - (2,666) (2,666)----------------------------------------------------------------------------Balance, March 31, 2012 1,997 821 61 68,525 71,404------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Balance, December 31, 2012 1,997 1,081 (122) 39,561 42,517Dividends paid ($0.30 per share) - - - (598) (598)Additional paid- in capital - 184 - - 184Net loss attributable to equity holders of the Company - - - (1,763) (1,763)----------------------------------------------------------------------------Balance, March 31, 2013 1,997 1,265 (122) 37,200 40,340--------------------------------------------------------------------------------------------------------------------------------------------------------



McGraw-Hill Ryerson Limited

STATEMENTS OF CASH FLOWS

(in thousands of dollars)

(unaudited)

Three months ended March 31 2013 2012 $ $----------------------------------------------------------------------------Operating activitiesNet loss for the period (1,763) (2,666)Add (deduct) charges not affecting cash: Amortization - pre-publication costs 806 827 Depreciation - property, plant and equipment 201 216 Decrease in long-term payable (350) (44) Employee future benefits 30 (10) Deferred taxes 1,161 1,075Net change in non-cash working capital balances related to operations (3,737) (8,111)----------------------------------------------------------------------------Cash used in operating activities (3,652) (8,713)----------------------------------------------------------------------------Investing activitiesInvestment in pre-publication costs (741) (1,110)Investment in property, plant and equipment (44) (3)Increase in financial instruments (60) (39)----------------------------------------------------------------------------Cash used in investing activities (845) (1,152)----------------------------------------------------------------------------Financing activitiesDividends paid to shareholders (598) (569)Change in paid-in capital 184 119----------------------------------------------------------------------------Cash used in financing activities (414) (450)----------------------------------------------------------------------------Net decrease in cash and cash equivalents (4,911) (10,315)Cash and cash equivalents, beginning of period 15,146 41,926----------------------------------------------------------------------------Cash and cash equivalents, end of period 10,235 31,611--------------------------------------------------------------------------------------------------------------------------------------------------------





Contacts:
McGraw-Hill Ryerson Limited
Brenda Arseneault
Vice-President and Chief Financial Officer
(905) 430-5223
www.mcgrawhill.ca





Source: Marketwire