Amortization expenses for pre-publication costs decreased to $8.5 million in 2012 compared to $9.0 million in 2011. The decrease is attributable to the delay in government curriculum revisions for the School publishing program. Depreciation expense for capital assets decreased slightly to $0.8 million from $0.9 million in 2011.
Finance income decreased by $0.1 million, driven by lower average cash balances in 2012 compared to 2011. Finance costs in 2012, consisting mainly of banking charges, increased by $0.1 million.
Net income decreased to $8.1 million from $8.8 million last year, mainly driven by the sales decrease.
Cash and cash equivalents decreased to $15.1 million as of December 31, 2012 from $41.9 million in 2011, which is mainly a result of the special dividend payments made during the year. Total dividend payments were $40.3 million in 2012 compared to $12.2 million in 2011. Excluding special dividends, cash and cash equivalents balances increased by $1.2 million in 2012 compared to 2011.
Q4 Results
Most of the Company's sales revenue is seasonal, based on the education industry's school terms for the School and Higher Education divisions. As a result, the Company earns a significant amount of its total sales revenue in the third and fourth quarters of each year.
In the fourth quarter of 2012, total revenue increased 7.2% compared to the prior quarter, caused mainly by one-time retroactive copyright income. Higher Education sales increased to $15.0 million from $14.9 million. School division sales decreased $0.6 million, compared to the fourth quarter of 2011, to $2.6 million. Professional sales decreased $0.7 million from $2.0 million in 2011 as a result of the softening in consumer demand this year. Net income increased by $1.8 million in the fourth quarter compared to the corresponding quarter in 2011, mainly driven by the revenue increase.
The accompanying financial statements should be read in conjunction with the "Notes to Financial Statements" included in McGraw-Hill Ryerson's Annual Report.
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. Total revenue in 2012 was $77 million. Additional information is available at http://www.mcgrawhill.ca.
McGraw-Hill Ryerson Limited STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (in thousands of dollars except per share data) For the years ended December 31 2012 2011 $ $----------------------------------------------------------------------------Sales revenue, less returns 72,258 78,953Other income 4,283 2,496Rental income 541 583----------------------------------------------------------------------------Total revenue 77,082 82,032Cost of goods sold (note 11) 26,754 29,470----------------------------------------------------------------------------Gross profit 50,328 52,562Operating expenses (notes 5, 7 and 8) 30,208 30,224Amortization - pre-publication costs (note 6) 8,477 9,047Depreciation - property, plant and equipment (note 12) 842 949----------------------------------------------------------------------------Operating income 10,801 12,342Finance income (note 14) 323 386Finance costs (178) (141)Foreign exchange gain (loss) 282 (88)----------------------------------------------------------------------------Income before income taxes 11,228 12,499Income tax expense (note 9) 3,083 3,742----------------------------------------------------------------------------Net income and comprehensive income for the yearattributable to equity holders of the Company 8,145 8,757--------------------------------------------------------------------------------------------------------------------------------------------------------Earnings per shareBasic and diluted $ 4.08 $ 4.39--------------------------------------------------------------------------------------------------------------------------------------------------------McGraw-Hill Ryerson Limited STATEMENTS OF FINANCIAL POSITION (in thousands of dollars)As at December 31, December 31, 2012 2011 $ $----------------------------------------------------------------------------ASSETSCurrentCash and cash equivalents (note 14) 15,146 41,926Marketable securities (note 14) 799 716Trade and other receivables, net (note 14) 10,463 11,429Inventories, net (note 11) 4,601 6,123Due from parent and affiliated companies (note 10) 1,783 1,925Prepaid expenses and other assets 333 280----------------------------------------------------------------------------Total current assets 33,125 62,399----------------------------------------------------------------------------Property, plant and equipment, net (note 12) 13,423 14,071Intangible assets (note 6) 13,754 16,439Deferred tax assets, net (note 9) 731 494----------------------------------------------------------------------------Total non-current assets 27,908 31,004---------------------------------------------------------------------------- 61,033 93,403--------------------------------------------------------------------------------------------------------------------------------------------------------LIABILITIES AND EQUITYCurrent liabilitiesTrade and other payables (note 5) 10,691 11,122Income taxes payable 265 713Due to parent and affiliated companies (note 10) 4,693 4,784----------------------------------------------------------------------------Total current liabilities 15,649 16,619----------------------------------------------------------------------------Employee future benefits (note 7) 2,353 2,281Long-term payable (note 5) 350 44----------------------------------------------------------------------------Total liabilities 18,352 18,944----------------------------------------------------------------------------EquityIssued capital Authorized 5,000,000 no par value common shares Issued and outstanding 1,996,638 common shares 1,997 1,997Paid-in capital 1,081 702Retained earnings 39,603 71,760----------------------------------------------------------------------------Total equity 42,681 74,459---------------------------------------------------------------------------- 61,033 93,403--------------------------------------------------------------------------------------------------------------------------------------------------------McGraw-Hill Ryerson Limited STATEMENTS OF CHANGES IN EQUITY (in thousands of dollars) Share Paid in Retained capital capital earnings Total $ $ $ $----------------------------------------------------------------------------Balance, December 31, 2010 1,997 372 75,232 77,601Dividends paid ($6.125 per share) - - (12,229) (12,229)Additional paid-in capital (note 8) - 330 - 330Net income and comprehensive income attributable to equity holders of the Company - - 8,757 8,757----------------------------------------------------------------------------Balance, December 31, 2011 1,997 702 71,760 74,459------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Balance, December 31, 2011 1,997 702 71,760 74,459Dividends paid ($20.185 per share) - - (40,302) (40,302)Additional paid-in capital (note 8) - 379 - 379Net income and comprehensive income attributable to equity holders of the Company - - 8,145 8,145----------------------------------------------------------------------------Balance, December 31, 2012 1,997 1,081 39,603 42,681--------------------------------------------------------------------------------------------------------------------------------------------------------McGraw-Hill Ryerson Limited STATEMENTS OF CASH FLOWS (in thousands of dollars)For the years ended December 31 2012 2011 $ $----------------------------------------------------------------------------Operating activitiesNet income for the year 8,145 8,757Add (deduct) charges not affecting cash: Amortization - pre-publication costs (note 6) 8,477 9,047 Depreciation - property, plant and equipment (note 12) 842 949 (Decrease) increase in employee future benefits 72 (307) Deferred taxes (note 9) (237) 318Net change in non-cash working capital balances related to operations (note 15) 1,941 (1,735)----------------------------------------------------------------------------Cash provided by operating activities 19,240 17,029----------------------------------------------------------------------------Investing activitiesInvestment in pre-publication costs (note 6) (5,820) (7,324)Investment in property, plant and equipment (note 12) (194) (390)Increase (decrease) in marketable securities (83) 116----------------------------------------------------------------------------Cash used in investing activities (6,097) (7,598)----------------------------------------------------------------------------Financing activitiesDividends paid to shareholders (40,302) (12,229)Change in paid-in capital (note 8) 379 330----------------------------------------------------------------------------Cash used in financing activities (39,923) (11,899)----------------------------------------------------------------------------Net (decrease) increase in cash and cash equivalents (26,780) (2,468)Cash and cash equivalents, beginning of year 41,926 44,394----------------------------------------------------------------------------Cash and cash equivalents, end of year 15,146 41,926--------------------------------------------------------------------------------------------------------------------------------------------------------
(1) McGraw-Hill Ryerson does not publish in all segments of this sector.
(2) Ibid.
Contacts:
McGraw-Hill Ryerson Limited
Brenda Arseneault
Vice President and Chief Financial Officer
(905) 430-5223
www.mcgrawhill.ca
