McGraw-Hill Ryerson Reports Second Quarter Results
Stock Symbol: MHR
WHITBY, ON, July 30 /CNW/ -
Three Months to June 30, 2010 ($000) 2010 2009
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Sales, less returns $15,754 $18,027
Other 477 422
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Total revenue $16,231 $18,449
Net Income $ 386 $ 1,037
Net Income per share $ 0.19 $ 0.52
Six Months to June 30, 2010 ($000)
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Sales, less returns $24,074 $25,876
Other 695 732
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Total revenue $24,769 $26,608
Net Loss $(2,112) $(1,644)
Net Loss per share $ (1.06) $ (0.82)
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 2010, net income is $0.4 million, lower than the $1.0 million in the second quarter of last year as a result of lower sales.
Three Months Ended June 30, 2010
Sales of $15.8 million decreased 12.0% 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 $8.8 million, consistent with the prior year's $8.7 million.
The School Division sales of $5.2 million decreased from the prior year's second quarter sales of $7.5 million. This decline was driven mostly by decreased orders from provinces in Western Canada.
The Professional Division produced sales of $1.5 million, down $0.2 million from last year.
Cost of product and royalties decreased to $5.8 million from $6.8 million in the prior year, in line with the sales decrease.
Income before tax was $0.6 million compared to $1.3 million in the second quarter last year, mainly the result of the decrease in sales.
Six Months Ended June 30, 2010
Total revenue of $24.8 million decreased by 6.9% compared to the prior year's result of $26.6 million, again driven by a decline in sales in the School and Professional Divisions.
Higher Education Division sales increased by 4.4% to $12.9 million from $12.3 million in the corresponding period of the prior year. This division has had very positive market feedback to the introduction of its locally-developed Connect teaching and learning platform. Connect is an on-line study guide/assessment tool/homework manager that is sold in conjunction with many of the Division's titles.
School Division sales decreased by 19.7% to $8.1 million compared to $10.1 million in 2009. The decrease is mainly the result of fewer orders from school boards in Alberta and British Columbia. The year-to-date sales decline is consistent with industry-wide sales results, as provided by the Canadian Educational Resources Council (CERC).
Professional Division sales decreased by $0.3 million to $2.8 million in 2010 compared to $3.1 million during the corresponding period of last year. This is mainly the result of reduced orders from several retailers.
Cost of product and royalties decreased by 10.9% to $9.1 million. This decline is consistent with the lower sales results. Cost of product and royalties as a percentage of sales showed a minor improvement (39.5% last period, 37.8% this period), driven mainly by a change in mix of products sold.
Year to date loss before income tax was $2.9 million, compared to a loss of $2.4 million in the corresponding period of last year. This variance was caused by the decrease in sales.
Notice to Reader
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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, 2010 and 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 2009 was $88 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 December June
As at 30, 2010 31, 2009 30, 2009
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ASSETS
Current
Cash $19,677 $35,878 $13,139
Marketable securities 728 821 773
Accounts receivable 7,593 11,319 11,427
Due from parent and affiliated companies 3,611 2,564 3,387
Inventories 9,084 6,052 10,496
Prepaid expenses and other assets 1,107 318 1,283
Income taxes recoverable 6,047 2,368 5,572
Future tax assets 767 2,117 1,098
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Total current assets 48,614 61,437 47,175
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Capital assets, net 14,838 15,182 15,462
Other assets, net 19,352 19,411 17,932
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Total assets $82,804 $96,030 $80,569
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LIABILITIES & SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued charges $8,343 9,862 7,202
Due to parent and affiliated companies 1,885 5,998 3,324
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Total current liabilities 10,228 15,860 10,526
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Employee future benefits 2,088 2,038 2,076
Future tax liabilities 1,282 774 531
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Total liabilities 13,598 18,672 13,133
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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 67,209 75,361 65,439
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Total shareholders' equity 69,206 77,358 67,436
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Total liabilities and shareholders'
equity $82,804 $96,030 $80,569
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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
2010 2009 2010 2009
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Revenue
Sales, less returns $15,754 $18,027 $24,074 $25,876
Other 477 422 695 732
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Total revenue 16,231 18,449 24,769 26,608
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Expenses
Cost of product and
royalties 5,849 6,817 9,109 10,222
Editorial, selling, general
and administrative 7,632 8,177 15,411 15,754
Amortization - prepublication
costs 1,819 1,770 2,594 2,316
Amortization - capital assets 241 327 476 655
Employee future benefits 25 25 50 50
Foreign exchange loss 26 10 68 50
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Total expenses 15,592 17,126 27,708 29,047
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Income (loss) before income
taxes 639 1,323 (2,939) (2,439)
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Provision for (recovery of)
income taxes
Current (89) (800) (2,685) (3,114)
Future 342 1,086 1,858 2,319
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253 286 (827) (795)
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Net income (loss) and
comprehensive income (loss)
for the period 386 1,037 (2,112) (1,644)
Retained earnings, beginning of
period 67,362 64,911 75,361 68,072
Dividends paid to shareholders
($3.025 per share; 2009 -
$0.495 per share) (539) (509) (6,040) (989)
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Retained earnings, end of
period $67,209 $65,439 $67,209 $65,439
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Earnings (loss) per common
share
Basic - net income (loss)
for the period $ 0.19 $ 0.52 $ (1.06) $ (0.82)
Diluted - net income (loss)
for the period $ 0.19 $ 0.52 $ (1.06) $ (0.82)
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Weighted average number of common shares for basic and diluted income
(loss) per common share for 2010 and 2009 is 1,996,638.
STATEMENTS OF CASH FLOW
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(unaudited)
(In thousands of dollars)
Three months ended Six months ended
June 30 June 30
2010 2009 2010 2009
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OPERATING ACTIVITIES
Net income (loss) for the
period $ 386 $ 1,037 $(2,112) $(1,644)
Add/(deduct) items not
affecting cash:
Amortization -
prepublication costs 1,819 1,770 2,594 2,316
Amortization - capital
assets 241 327 476 655
Employee future benefits 25 25 50 50
Future income taxes 342 1,086 1,858 2,319
Net change in non-cash working
capital balances related to
operations (6,873) (11,233) (10,415) (14,891)
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Cash used in operating
activities (4,060) (6,988) (7,549) (11,195)
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INVESTING ACTIVITIES
Prepublication costs (1,332) (2,070) (2,573) (3,715)
Additions to capital assets (31) (36) (132) (69)
Increase (decrease) in
investments 88 2 93 (97)
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Cash used in investing
activities (1,275) (2,104) (2,612) (3,881)
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FINANCING ACTIVITIES
Dividends paid to shareholders (539) (509) (6,040) (14,965)
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Cash used in financing activities (539) (509) (6,040) (14,965)
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Net decrease in cash during the
period (5,874) (9,601) (16,201) (30,041)
Cash, beginning of period 25,551 22,740 35,878 43,180
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Cash, end of period $19,677 $13,139 $19,677 $ 13,139
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Supplemental cash flow
information
Income taxes refunded $ - $ - $ 781 $ 50
Income taxes paid $ 455 $ 1,363 $ 1,806 $ 2,949
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For further information: Gordon Dyer, Executive Vice President and Chief Financial Officer, (905) 430-5032, http://www.mcgrawhill.ca
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