2008 McGRAW-HILL RYERSON AnnuAl RepoRt

Table of Contents Company ProfileMcGraw-Hill Ryerson Limited has a long and illustrious history. It is built on the solid foundations oftwo respected publishing companies: McGraw-Hill Book Company, now known as The McGraw-HillCompanies, Inc., and The Ryerson Press.In 1944, the McGraw-Hill Book Company, which had begun publishing in the United States in 1909,bought the Embassy Book Company of Toronto, incorporating it as a franchised distributor for McGraw-Hill, Inc. in Canada. It was called the Embassy Book Company Limited until 1947 when it was thenestablished as a wholly-owned subsidiary of the parent company and renamed the McGraw-Hill Companyof Canada Limited.In 1829, the Methodist Church established the Methodist Book and Publishing House, the very firstpublishing company in Canada. Egerton Ryerson, known as the father of Ontario’s public school system,was given the responsibility of founding the press and took it from religious publishing into the area ofsecular books. In 1919, the press took on his name and continued to publish in many areas: religious,educational, and trade. In December 1970, the McGraw-Hill Company of Canada Limited bought TheRyerson Press from the United Church of Canada and in 1971, the company became McGraw-Hill RyersonLimited (sometimes referred to herein as “MHR” or “McGraw-Hill Ryerson” or the “Company”).The Company publishes and distributes educational and professional products in both print and nonprintmedia. These products are designed to fulfill the individual needs of customers by providing effectiveand innovative educational and learning solutions. Product offerings include text and professionalreference books, multimedia tools, and teaching, assessment, support, and monitoring solutions. TheCompany is committed to providing Canadians with material of the highest quality for their education andenjoyment.The Company is structured on a market-focused basis and operates in three primary market areasthrough the following revenue divisions:• Higher Education Division: post-secondary education, including universities, community, and career colleges.• School Division: secondary and elementary schools.• Professional Division: retailers (online and bricks and mortar), wholesalers, libraries, professionals.McGraw-Hill Ryerson is a public company, operated independently, in close cooperation with variousdivisions and international subsidiaries of its majority shareholder, The McGraw-Hill Companies, Inc.Through this cooperation the Company benefits from its access to the significant product, market, andoperational expertise of The McGraw-Hill Companies, Inc.Company Profile:Who and What McGraw-Hill Ryerson Limited Is 1McGraw-Hill Ryerson at a Glance 2• A quick look at McGraw-Hill Ryerson’s three businesssegments, including: key markets, primary programs,key issues and trends, and outlookVision, Mission, Culture, and Values Statements 3Financial Highlights 4• A look at McGraw-Hill Ryerson’s financial performanceMessage to the Shareholders 5• A letter to McGraw-Hill Ryerson’s shareholders fromH. Ian Macdonald, Chairman, reviewing the Company’sperformance and looking to the futureManagement’s Discussion and Analysis ofOperating Results and Financial Position 11Financial Statements 17• McGraw-Hill Ryerson’s 2008 financial statementsand notesDividend Policy 292008 Corporate Social Responsibility 29Corporate Governance and Management Team 30Shareholder and Corporate Information 32International Affiliates 33McGraw-Hill Ryerson Annual Report 20081An Overview of McGraw-Hill Ryerson’s Business Unitsand Markets• Higher Education Division 6• School Division 7• Professional Division 8• Chenelière/McGraw-Hill (“DLC”) 9• Major Support Initiatives 10

Higher Education DivisionMcGraw-Hill Ryerson Annual Report 2008This Division’s Canadian Publishing Program continued its growth in 2008. Examples include titles in areassuch as Introductory Psychology, Business Math, Advanced Accounting, and Ecology. Overall, 42 titles werepublished in 2008. New projects were also signed in subjects such as Introductory Spanish, Principles ofAccounting, and Introduction to Business. In total, first edition signings in 2008 are forecasted to generate$6.5 million in first-year sales, and revisions are forecasted to generate $11.2 million in first-year sales.The Division continued its growth in the digital market space with the launch of iStudy, the next generationonline study tool. Twelve iStudy products were published in 2008, with an additional 19 planned for 2009.6Key Titles for 2008 were as follows:1. Passer, Psychology, 3/e2. Crane, Marketing, 7/e3. Jerome, Business Mathematics in Canada, 6/e4. Libby, Financial Accounting, 3/e5. Beechy, Intermediate Accounting, 4/e6. Hilton, Modern Advanced Accounting, 5/e7. Bodie, Investments, 6/e8. Ross, Corporate Finance, 5/e9. Triad, Simnet10. Santrock, Life-Span Development, 3/eResearch indicates that students continued to find and use substitutions for textbooks. Copyright infringement(photocopying, online piracy, and peer-to-peer sharing) has contributed to slower growth in all markets across thecountry in recent years. In an effort to ensure long-term success, the Higher Education Division has leveraged itsLearning Solutions team, continued student research, and continued to work with faculty to offer flexible, highvaluesolutions to students, using both traditional and online content, as well as leading-edge technology.

School DivisionThe School Division’s 2008 publishing program continued to build on our long-term strategy of targetingGrades 7–12 mathematics, science, and social studies courses for university, college, and workplace-boundstudents. Our mathematics list was comprised of titles written to curricula in Ontario and Western Canada.Upon the 2005 launch of a new sixteen-course mathematics curriculum in Ontario, the School Divisiondeveloped a multi-year publishing plan to support this curriculum. Implementation of this plan began in2005, and in 2008 we published three new titles: two for university-bound students — MHR AdvancedFunctions 12, MHR Calculus & Vectors 12 — and one for college-bound students — MHR Functions& Applications 11. Our publication list for mathematics courses in Western Canada continued with thepublication of MathLinks 8, the second of the three title MathLinks series, as well as the publication ofMathLinks 7 Adapted, a title designed to assist struggling learners while complementing the core resource(MathLinks 7 ). In Science, the School Division published British Columbia Science 10, the final title in ahighly successful series designed to support new Grades 8–10 science curricula in British Columbia. Thepublication of Discovering Science 8 represents the second in a three-title series being developed undercontract to the Province of Newfoundland. Nova Scotia Science 6 was published under contract to theprovince of Nova Scotia and, as in the case of Discovering Science, is an adaptation of our British ColumbiaScience series. In Social Studies, we published Exploring Nationalism and Understanding Nationalism forthe Alberta market, designed for the university- and college-bound students respectively. Our publishing forthe year was rounded out by Food for Life 2/e and our first custom project for the province of Prince EdwardIsland, an adaptation of the McGraw-Hill McMillan Health and Wellness series for Grades 4, 5, and 6. TheSchool Division also continues to engage in market research into the role and value of technology-enabledteaching and learning solutions in Grade 7–12 classrooms.McGraw-Hill Ryerson Annual Report 20087Key titles in the School Division for 2008:1. Sandner et al., BC Science 102. McAskill et al., MathLinks 73. Speijer et al., MHR Advanced Functions 124. McAskill et al., MathLinks 85. Gardner et al., Exploring Nationalism6. Hoogeveen et al., Understanding Nationalism7. Speijer et al., Principles of Math 98. Speijer et al., MHR Calculus & Vectors 129. Bocknek, McGraw-Hill Ryerson Discovering Science 810. Bocknek et al., Nova Scotia Science 6

professional DivisionMcGraw-Hill Ryerson Annual Report 20088The Professional Division is primarily focused on sales, marketing, and distribution of imported product fromThe McGraw-Hill Companies Inc., as well as a number of Canadian and U.S. agencies. In 2008, the Divisionhad a solid year despite ongoing price pressures, retail uncertainty, and customers increasingly sourcing productsfrom U.S.-based wholesalers and retailers. The Division continued to adjust prices where appropriate toensure offerings remained in line with established industry guidelines. The Division saw impressive gains in itsMedical, Business, and Consumer lines, while our Education and Technical categories lagged behind the previousyear. Medical growth was fueled by the release of Harrison’s 17th ed., as well as continued growth online.Business was driven by the release of a number of key titles, including Grown Up Digital and When MarketsCollide, which further strengthened our market position in the business category. The Division also successfullyadvanced its digital transformation in 2008. Over the last several years, Professional has grown its digitalofferings as customers increasingly seek digitally-based solutions. As such, digital sales are representing anincreasingly larger portion of the total Canadian market sales.Key Professional Products in 2008:1. Fauci, et al., Harrisons Principles of Internal Medicine, 17th ed.2. Dipiro et al., Pharmacotherapy, 7th ed.3. Tapscott, Grown Up Digital4. Morgentaler, Testosterone for Life5. Fitzpatrick et al., Color Atlas and Synopsis Clinical Dermatology, 5th ed.6. Harraps French/English Dictionary, Canadian ed.7. Thomas, Michelle Thomas Spanish for Beginners8. Lowndes, How to Talk to Anyone, 2nd Ed.9. Gray and Gray, Complete Canadian Small Business Guide10. El-Erian, When Markets Collide

chenelière/McGraw-hill (“DLC“)By publishing under a joint imprint, McGraw-Hill Ryerson and Chenelière Education (“DLC”) are able to concurrentlypublish French and English editions of secondary and post-secondary titles. Chenelière/McGraw-Hilltitles enjoyed a strong year in 2008 with French translations of successful McGraw-Hill Ryerson titles.Best-selling titles for 2008:1. Libby, Fondements comptabilité financière, 2/e2. Speijer, Mathématiques 8 — Nouvelle-Écosse3. Sandner, Sciences 10 — Colombie-Britannique4. Dearling, Principes de Mathématiques 9 — Ontario5. Bocknek, Sciences 6 Nouvelle-Ecosse6. Bocknek, Sciences 7 Terre-Neuve et Labrador7. Gardner, Explorons le Nationalisme — Alberta8. Stevenson, Gestion des Operations, Produits et Services, 2/e9. Berkowitz et al., Marketing10. Larson, Initiation à la Comptabilité Générale, 8/eMcGraw-Hill Ryerson Annual Report 20089DLC and McGraw-Hill Ryerson are working together to develop English and French proposals simultaneouslyto fit various calls for resources across Canada. In 2009, DLC's Higher Education and School divisions will bepublishing many new translations of McGraw-Hill Ryerson titles.

Major SupportInitiativesCustomer Satisfaction DivisionThe Customer Satisfaction Division provides customer service and logistical support to ensure a high level ofservice to our customers. Building on the success of improvements implemented in 2007, additional processand quality initiatives were undertaken in 2008. Efforts were focused on increasing operating efficiencies andexpanded operating capacities. The success of these programs significantly improved performance standardsacross the Company.McGraw-Hill Ryerson Annual Report 2003 200810IS & TThe IS&T Department is committed to supporting the Company’s business strategy and goals by ensuring thestability and effectiveness of business systems, tools, and platforms. In 2008, efforts were focused on meetingthe needs of the business through various upgrade initiatives, which optimized and streamlined informationsystems, and facilitated enhanced access to data.Editorial, Design, and Production DepartmentMcGraw-Hill Ryerson’s Editorial, Design, and Production (EDP) Department provides project management,technical production, and manufacturing services for a wide variety of product offerings. In 2008, EDP oversawthe production of more than 150 new titles, revisions, and supplements and 275 reprints. Increasingly,some printing and Editorial/Design tasks are performed overseas. Our network of business alliances with keyvendors in Canada, the U.S., and overseas allows for competitive pricing and ensure the highest quality ofmaterials for McGraw-Hill Ryerson’s products. These alliances help to facilitate the timely delivery of productsto the Company’s warehouse for distribution to customers. In addition, our close working relationship with ourmajority shareholder, The McGraw-Hill Companies, Inc., provides McGraw-Hill Ryerson with the opportunity toleverage the buying power and established best practices of a multi-billion dollar corporation.Human ResourcesThere was extensive support of productivity improvements across the Company in 2008 through ourBusiness Process Improvement Program and Process Mapping. This resulted in improved internal workflowsand increased employee engagement. There continues to be a great emphasis on succession plansfor key positions within the organization and on development of high-potential employees for promotionand retention. Our progressive Human Resource policies, programs, and benefit plans have helped usattract and retain a very strong and loyal workforce.

Management’s Discussion and Analysis ofOperating Results and Financial PositionThis management's discussion and analysis (“MD&A”) provides adetailed analysis of McGraw-Hill Ryerson's business and comparesits 2008 financial results with those of the previous year. In order tobetter understand the MD&A, it should be read in conjunction withthe financial statements for the year ended December 31, 2008and its related notes. The Company prepares and files its financialstatements and MD&A in Canadian dollars and in accordance withCanadian generally accepted accounting principles (“GAAP”). Thefinancial statements and MD&A, as well as additional informationregarding McGraw-Hill Ryerson, including the Annual InformationForm, are available at www.sedar.com. This MD&A is made as ofJanuary 27, 2009.PROFILEMcGraw-Hill Ryerson Limited [the “Company”] was incorporatedin 1944 and has been listed on the Toronto Stock Exchange since1971. The Company is operated independently, in close cooperationwith various divisions and international subsidiaries of itsmajority shareholder, The McGraw-Hill Companies, Inc.The Company’s strategy is to be a Canadian leader in developingand marketing quality information products and services toselect educational, professional, and consumer markets throughinnovation and teamwork.The Company publishes and distributes educational andprofessional products in both print and non-print media. Theseproducts are designed to fulfill the individual needs of customersby providing effective and innovative educational and learningsolutions. Product offerings include text and professional referencebooks, multimedia tools, and teaching, assessment, support,and monitoring solutions.The Company is structured on a market-focused basis andoperates in three primary market areas. The largest division isthe Higher Education Division, which serves post-secondary educationinstitutions, including universities, community colleges,and career colleges. The second largest division is the SchoolDivision, which services secondary and elementary schools. Thethird division is the Professional Division, which services retailers(online and bricks-and-mortar), wholesalers, libraries, andprofessionals.DISCLOSURE CONTROLS AND INTERNALCONTROLS FOR FINANCIAL REPORTINGThe Company’s management is responsible for establishing andmaintaining the Company’s disclosure controls and procedures toensure that information used internally and disclosed externally isaccurate and reliable. Management has evaluated the effective-McGraw-Hill Ryerson Annual Report 2008Selected Annual Financial Results (In Thousands of Dollars). Comparative numbers are restated.2008 2007 2006 2005 2004Net Sales 91,485 89,778 90,014 85,352 86,967% increase/(decrease) 1.9% (0.3%) 5.5% (1.9%) (0.5%)11% of Net SalesHigher Education sales 58.3% 59.9% 60.2% 62.0% 59.9%School sales 30.6% 28.7% 26.2% 25.5% 28.1%Professional sales 9.5% 9.6% 11.7% 11.4% 10.9%Other sales 1.6% 1.8% 2.0% 1.1% 1.2%% of Net SalesImported product sales 41.6% 43.6% 49.7% 51.1% 50.7%Canadian and adaptations sales 56.9% 54.6% 48.3% 47.0% 46.8%Agency sales 0.5% 0.9% 1.0% 0.8% 1.3%Other 1.0% 1.0% 1.0% 1.1% 1.2%Total revenue 94,550 92,532 92,549 87,502 88,970% increase/(decrease) 2.2% 0.0% 5.8% (1.6%) (0.4%)Total expenses 78,642 76,702 82,849 79,375 79,150% of Total revenue 83.2% 82.9% 89.5% 90.7% 89.0%Net income 10,502 9,960 5,925 5,125 6,410Net income/Total Revenue 11.1% 10.8% 6.4% 5.9% 7.2%Net income per share $5.26 $4.99 $2.97 $2.57 $3.21Total assets 102,820 94,660 96,547 88,485 87,372Net income/average assets 10.6% 10.4% 6.4% 5.8% 7.4%Cash dividends declared 15,863 7,757 1,647 4,523 1,408

McGraw-Hill Ryerson Annual Report 200812ness of the Company’s disclosure controls and procedures, andbased on such evaluation has concluded that their design andoperation are adequate and effective as of the end of the fiscalyear ended December 31, 2008.The Company’s management is responsible for establishingand maintaining internal control over financial reporting.Management has evaluated the effectiveness of the internal controlsover financial reporting and has concluded that the designand operation are effective as of the end of the fiscal year endedDecember 31, 2008.During the fourth quarter ended December 31, 2008, therewere no changes in the Company’s internal control over financialreporting that have materially affected, or are reasonably likelyto materially affect, the Company’s internal control over financialreporting.REVENUEThe Company’s net sales increased 1.9% in 2008, with sales of$91.5 million, compared to $89.8 million in 2007.Sales of imported U.S. titles declined in 2008, leading toa slight overall decline in total sales for the Higher EducationDivision compared to 2007. Market share (based on industrysales information provided by the Canadian Publishers Council)fell from 18.1% to 16.7%. The strength of the Canadian publishingprogram in the Higher Education Division continued in 2008,with success across many disciplines, especially in Accounting,Marketing, and Psychology. Digital sales grew significantly in2008. This increase is a reflection of both the need for customizedand student-focused digital solutions and the ability ofMcGraw-Hill Ryerson to meet customer demands. The Divisioncontinued its growth in the digital market space with the launchof iStudy version 2.0, the next generation online study tool andthe continued evolution of eView, a tool that allows educators toevaluate our titles electronically, thereby reducing our environmentalfootprint. McGraw-Hill Ryerson held another successfulEducational Conference series in 2008, reaching approximately600 educational leaders from 83 post-secondary institutions,with a focus on student success within the educational community.With product offerings in homework management, onlinestudy tools, and online course content, faculty are now able tointegrate new technologies into their teaching strategies andoffer students a dynamic learning environment in combinationwith our leading textbooks.The School Division’s sales increased by 8.4% over the previousyear. The largest increase was in our Canadian publishingprogram where many of our 2008 publications were very successful.This growth is a reflection of the implementation of selected newcore Grades 7–12 science, mathematics, and social studies curriculain several provinces. Sales of imported product in the SchoolDivision (Glencoe/McGraw-Hill, SRA, and TWG) showed a declineover the prior year, reflecting a focus on resource purchasing forcore high school courses. Industry performance was flat relative to2007 (based on Canadian Education Resource Council information)reflecting a gradual and sequential implementation of core curriculain the absence of targeted resource funding in the key provinces ofOntario, British Columbia, and Alberta. The strength of the SchoolDivision’s Canadian front list resulted in over-performance relativeto the industry, and market share improved from 14.1% last yearto 15.1% in 2008 (based on industry sales results provided byCanadian Education Resource Council).McGraw-Hill Ryerson’s Professional Division sales grew0.8% in 2008. Revenue growth was impacted by price reductions,which occurred in late 2007 and early 2008. By comparison,unit sales increased 14%, consistent with industry results.Online sales continued to grow as consumers shifted orderingpatterns to online sources. Revenue growth through traditionalbricks-and-mortar retailers was stable in 2008, as key customersposted modest increases vs. prior year. Non-retail revenueshowed impressive growth as the Division continued to diversifyits portfolio and customer base. A number of product categories,including Business, Consumer, and Medical lists, showed impressivegains in 2008. The Medical book sales increase was primarilydriven by the release of Harrison’s 17th ed. as well as othercore title releases. Both the Technical and Education lines weredown significantly in 2008 since key title releases in 2007 werenot replicated in 2008. Sales of digital products and servicesgrew significantly in 2008, with the majority of the growth comingfrom Medical database subscription sales. Sales were fueledby both a high rate of renewal business, as well as the continuedexpansion of new products into Canada.Canadian publications increased from 54.6% of total salesin 2007 to 56.9% of total sales in 2008 as a result of the growth inthe Higher Education and School Divisions’ publishing programs.On average, the Company earns higher margins on Canadianpublications than on imported product or agency product. Salesof product imported from The McGraw-Hill Companies, Inc.decreased to 41.6% of total sales compared to 43.6% in 2007.Other revenue, consisting of rental revenue from the tenantat the Company’s headquarters facility in Whitby, Ontario, intereston investments, and copyright/licensing/translation fees,increased to $3.1 million in 2008 [2007 - $2.8 million].Total revenue increased to $94.6 million in 2008 from $92.5million in 2007.EXPENSESIn 2008, total expenses increased to $78.6 million over the prioryear’s $76.7 million.Operating expenses, comprised of cost of product and royalties,increased to $37.6 million in 2008, from $37.3 million in2007. This 0.8% increase is consistent with the sales increase.Margins on sales of imported products decreased slightly as aresult of the weakening Canadian dollar while margins on salesof locally-produced products have improved as a result of largerprint runs for several key titles. Operating expenses as a percentageof net sales improved slightly to 41.1% of sales in 2008,compared to 41.6% in 2007.Editorial, selling, general, and administrative expensesdecreased 3.9% to $33.0 million in 2008, from $34.4 million in2007. This decrease is partially the result of process improvementsimplemented in 2007 and 2008 as well as the resultingreduction in headcount. These expenses as a percentage of salesdecreased to 36.1% from 38.3%.Employee future benefit expense was $0.1 million in 2008compared to a gain of $2.8 million in 2007. During 2007, theCompany amended its post-retirement benefit plan and reported acurtailment gain of approximately $3.6 million.

Amortization of pre-publication costs increased 7.2% to$6.2 million, from $5.8 million in the prior year, as a result of thecontinuing investment in the Canadian publishing program in theHigher Education and School Divisions in recent years. Capitalasset amortization decreased to $1.3 million in 2008 comparedto $1.4 million in 2007.The Company incurs foreign exchange gains and lossesthroughout the year as a result of the significant volume ofrelated party transactions, most of which are denominated inU.S. dollars. The 2008 foreign exchange loss of $0.3 millionis lower than the $0.6 million exchange loss in 2007. In 2007,the foreign exchange loss was impacted by loss on productsreturned to The McGraw-Hill Companies, Inc. The Companycontinues to employ policies to minimize the impact of currencyfluctuations.The effective tax rate in 2008 changed to 34.2% [2007 –37.1%]. This rate decrease is a result of legislative changes tostatutory tax rates.LIQUIDITY AND FINANCIAL RESOURCESCash and cash equivalents as of December 31, 2008 increased to$43.9 million from $35.6 million in 2007 because of strong collectionresults, ongoing inventory management, and the controlledincrease in pre-publication investment.In December 2008, the Company declared a $7.00 per sharespecial dividend ($14.0 million in total) to be paid in early 2009which will impact cash balances in 2009.The accounts receivable balance decreased slightly to $14.3million, from $14.5 million in the prior year, as a result of strongercollections in late 2008 compared to 2007. The Company's collectionperformance is closely monitored in accordance with creditterms and industry standards.Inventory levels decreased compared with the prior year at$7.1 million versus $7.7 million in 2007. The Company’s effortsto improve distribution processes led to improved inventoryturnover results. This is the second consecutive year that theCompany has been able to reduce inventory levels while improvingservice levels.Pre-publication investment of $8.4 million is greater thanthe prior year’s level of investment of $7.2 million as a result ofincreases in the School Division publishing program in responseto provincial curriculum changes.Capital asset purchases of $0.2 million in 2008 are lower thanthe $0.3 million in 2007. These purchases were mainly for computerequipment, warehouse equipment, and facility improvements.The Company has entered into operating leases, primarilyfor automobiles, for which the estimated future minimum annuallease payments are $0.2 million in 2009, $0.1 million in 2010, and$0.1 million in 2011.The Company has future purchase commitments with avendor for printing/copying costs. The minimum annual commitmentsare $0.8 million in 2009 and $0.3 million in 2010.The Company's cash flow is cyclical during the year, reflectingour sales cycle, with high cash balances in the first and fourthquarters. During the low-cash phase of the cycle, in the secondand third quarters, the Company has a line of credit available tomeet forecasted needs. The line of credit was not used in 2008 or2007. The Company generated significant cash from operationsin both 2008 and 2007.TRANSACTIONS WITH RELATEDPARTIESThe Company is a subsidiary of The McGraw-Hill Companies, Inc.,which owns 70.1% of the outstanding common shares. Underlong-standing arrangements, the Company purchases books andeducational materials from the parent company and variousinternational subsidiaries of The McGraw-Hill Companies, Inc.Inventory purchases from the parent company in 2008 were $26.0million, down from $28.3 million in 2007. In addition, the Companypays royalties to the parent company for any titles that have beenadapted to the Canadian market. Royalty payments in 2008 were$1.7 million compared to $1.8 million in the previous year.The Company also sells books and educational materials tovarious international subsidiaries of The McGraw Hill Companies,Inc. These purchases and sales are recorded at the exchangerates in effect at the time of the transaction. In the normal courseof business, the Company reimburses (and is reimbursed) forcommon expenses shared with other McGraw-Hill entities. Allsuch reimbursements are done at cost, using exchange rates ineffect at the time of the transactions.The Company owed related parties $5.7 million at the endof 2008, compared with $5.5 million at December 31, 2007, andwas owed $1.8 million by the related parties at the end of 2008,consistent with the $1.9 million owed at the end of 2007.McGraw-Hill Ryerson Annual Report 200813Liquidity and Financial Resources (in Thousands of Dollars — except Per Share Data)2008 2007 2006 2005 2004As at December 31,Cash and cash equivalents 43,856 35,646 33,511 27,206 21,496Total assets 102,820 94,660 96,547 88,485 87,372Working capital 38,884 45,219 45,658 42,338 39,188Accounts receivable 14,285 14,489 17,948 17,503 17,231Inventory 7,082 7,717 8,066 8,006 11,543For the 12 Months Ended December 31,Cash flow from operations 18,567 17,571 15,888 15,454 7,190Prepublication investment 8,320 7,423 6,925 4,844 5,079Capital asset additions 150 256 1,011 377 659Dividends declared per share 7.945 3.885 0.825 2.265 0.705

Quarterly Income Statement ($000 — except Per Share Data)31-Mar 30-Jun 30-Sep 31-Dec Full Year2008 2007 2008 2007 2008 2007 2008 2007 2008 2007Total Revenue 8,818 9,965 19,391 19,025 41,077 40,995 25,264 22,547 94,550 92,532Net Income (Loss) (2,476) (2,977) 1,028 627 8,491 9,819 3,459 2,491 10,502 9,960Net Income (Loss) per share $(1.24) $(1.49) $0.51 $0.31 $4.25 $4.92 $1.73 $1.25 $5.26 $4.99McGraw-Hill Ryerson Annual Report 200814DIVIDENDSFor the seventh year in a row, the Company increased its quarterlydividend payment. The quarterly dividend payment is $0.24 pershare at the end of 2008 ($0.225 at the end of 2007).Total dividends declared were $15.9 million in 2008, comparedto $7.8 million in 2007. In the fourth quarter of 2008, theCompany declared a special dividend of $14.0 million ($7.00 pershare) to be paid on January 16, 2009.QUARTERLY RESULTSMost of the Company's sales are cyclical, based on the educationindustry's school terms for the School and Higher EducationDivisions. As a result, the Company earns a significant amount ofits total sales in the third and fourth quarters of each year.In the fourth quarter of 2008, total revenue increased 12.1%compared to the prior year, driven by increased sales in eachof the Company’s business segments. Higher Education salesincreased from $15.6 million to $16.8 million driven by increasedsales of Canadian product. Professional sales improved from$1.5 million to $2.6 million, mainly the result of reduced productreturns. School Division sales showed a minor increase comparedto the fourth quarter of 2007. Net income increased by$1.0 million, driven mainly by the increase in sales and decreasedforeign exchange losses.NEW RESPONSIBILITIES FOR CEOAt the end of the third quarter of 2008, the Company announcedthat President and CEO David Swail had taken on broader responsibilitieswithin majority shareholder The McGraw-Hill Companies,Inc. Both the McGraw-Hill Education publishing operations in LatinAmerica and McGraw-Hill Ryerson’s operations in Canada nowreport to Mr. Swail.CRITICAL ACCOUNTING ESTIMATESThe preparation of financial statements in accordance with Canadiangenerally accepted accounting principles requires management tomake estimates and assumptions that affect the reported amountsof assets and liabilities, and the disclosure of contingent assetsand liabilities at the date of the financial statements, and thereported amounts of revenue and expenses during the reportingperiod. Actual results may differ from those estimates.The critical accounting estimates included in the financialstatements are as follows:■■■■■■■■The inventory obsolescence reserve is based upon management'sassessment of the marketplace of products in demandas compared to the number of units currently on hand. Thiscalculation is completed for each title. Should the estimate forinventory obsolescence vary by one percentage point, it wouldhave an approximate $0.1 million impact on income beforeincome tax.The allowance for doubtful accounts is calculated by reviewingany specifically identified aged accounts, plus a generalprovision for the balance of the accounts. The impact on incomebefore income tax for a one percentage point change in theallowance for doubtful accounts rate is $0.2 million.The estimate for sales return reserve is calculated using theforecasted rate of returns in future periods. This forecast iscalculated separately for each segment and is based on theaverage rate of returns over the past three years. Should theestimate for sales returns vary by one percentage point, itwould have an approximate $0.6 million impact on incomebefore income tax.The employee future benefit is calculated using forecastedhealth care costs in future periods. This forecast is based onhistorical trends. Should the estimate for health care costs varyby one percentage point, it would have an approximate $0.2million impact on income before income tax.RECENT ACCOUNTINGPRONOUNCEMENTSOn January 1, 2008, the Company adopted the new recommendationsof the Canadian Institute of Chartered Accountants (“CICA”)under CICA Handbook Section 3031 “Inventories” (“Section 3031”),Section 3862 “Financial Instruments—Disclosure” (“Section3862”), and Section 3863 “Financial Instruments—Presentation”(“Section 3863”).■■■■Section 3031 prescribes the measurement of inventories at thelower of cost and net realizable value, with guidance on thedetermination of cost, including allocation of overheads andother costs to inventory. Reversals of previous write-downs tonet realizable value are permitted when there is a subsequentincrease in the value of inventories. The Company has compliedwith the measurement standards as required with no resultingimpact on reported inventory balances.Section 1535 requires that a company disclose information thatenables users of its financial statements to evaluate its objectives,policies, and procedures for managing capital includingdisclosures of any externally imposed capital requirements andthe consequences for non-compliance. The Company had early

■■adopted this pronouncement in 2007 and the disclosures are inNote 10 of the financial statements.Sections 3862 and 3863 require that a company discloseadditional details of its financial asset and liability categoriesand the risks associated with its financial instruments. Theseaccounting policy changes are for disclosure purposes, and asa result, other than the additional disclosures noted in Note10, the adoption of these standards had no impact on theCompany’s financial statements.The following accounting pronouncements are applicable to annualand interim periods beginning on or after January 1, 2009:Section 3064, “Goodwill and Intangible Assets”, prescribes themeasurement of intangibles, with guidance on the determination ofcosts to capitalize for internally-generated intangibles. The Companyis currently evaluating the effects of adopting this standard.International Financial ReportingStandards (“IFRS”)In February 2008, the Accounting Standards Board of Canada confirmedJanuary 1, 2011 as the changeover date for Canadian publiclyaccountable enterprises to start using International FinancialReporting Standards as issued by the International AccountingStandards Board. IFRS uses a conceptual framework similar toCanadian GAAP, but there are significant differences in recognition,measurement, and disclosures.As a result, the Company commenced our IFRS conversionproject in 2008 and has developed a plan to convert its financialstatements to IFRS. The Company has assessed the differencesbetween IFRS and the Company’s current accounting policies,as well as the alternatives available on adoption. The assessmentwas reviewed with external advisors and the majorityshareholder. Many of the differences identified are not expectedto have a material impact on reported results and financial position.However, there may be significant changes emanating fromthe IFRS accounting principles and provisions for the first timeadoption of IFRS on certain areas. The Company has not yetdetermined the full effects of adopting IFRS.Set out below are the key areas where changes in accountingpolicies may impact the Company’s financial statements. Thelisting should not be regarded as a complete list of changes thatwill result from transition to IFRS. It is intended only to highlightthose areas we believe to be most significant; however, analysisof potential changes is still in process, and not all decisions havebeen made where choices of accounting policies are available.■■■■■■■■■■Asset impairmentProvisionsDeferred taxesStock-based compensationEmployee BenefitsThe Company is still evaluating the impact of the conversion on ouraccounting systems. However, based on the differences identifiedto date, we believe our present systems can accommodate therequired changes. We believe our internal and disclosure controlprocesses, as currently designed, will not need significant modificationsas a result of our conversion to IFRS. We are consideringthe impact that the transition will have on our compensationarrangements.The IFRS implementation has necessitated additional trainingfor the Company’s accounting staff and management. Thisadditional training will continue in 2009–2010.OTHERThe number of common shares outstanding as of December 31,2008 is 1,996,638.RISKS AND UNCERTAINTIESEducational Funding Constraints and CurriculumRevisions in the School MarketEducational funding varies from year to year depending on thecurrent government’s budget and mandate in each jurisdiction. Theannual provincial government mandates affect both the fundinglevels and curriculum revision cycles. The funding levels and curriculumrevision cycles have an immediate and ongoing impact onthe performance of the Company’s School Division.Format and Delivery of Future Learning ResourcesChanging media technology continues to affect the publishingindustry in several ways: sales of non-print materials have begunto increase as a percentage of total sales; there has been anincrease in electronic piracy over the internet; and, most importantly,the format of future learning resources continues to evolve.While the Company is working on leveraging the opportunitiesarising from these developments, there can be no assurances thatone or more of these developments will not have a permanent andlong-term impact on markets for the Company’s products.Competition from Foreign-Based Sources(Wholesalers and Online Bookstores)The advent of online bookstores in the U.S. and other countrieshas created an avenue for Canadian consumers and students topurchase published products directly from foreign retailers, thusbypassing the Canadian marketers and distributors of the product.In particular, students are able to access a very large source of second-handproducts. Sustained increases in market penetration byforeign-based virtual bookstores and wholesalers could adverselyimpact the Company’s market share and financial performance.The impact of this issue varies in relation to the volatility in theCanadian dollar/U.S. dollar exchange rates.CopyrightCourt rulings in Canada have reinforced user rights. As media technologycontinues to evolve, publishers may find it more difficultto protect their content effectively. These factors may impact thefuture sales and royalties within the School and Higher Educationindustries from copyright collectives. Royalties are also impactedMcGraw-Hill Ryerson Annual Report 200815

McGraw-Hill Ryerson Annual Report 200816from the value of license agreements. The Federal Copyright Board isexpected to finalize their evaluation of the School industry copyrighttariff in 2009.Dependency on Retail National AccountsWhile national accounts comprise a small portion of the Company’stotal business, their significant influence in the marketplace canincrease the volatility of sales and returns and lead to less favourablecommercial terms as a result of their negotiating power. Inaddition, some national accounts have introduced in-house publishingprograms that may potentially compete with the Company’spublishing program.Labour Disruptions in the Education SectorA labour disruption in the School or Higher Education markets canhave a significant impact on the purchasing behaviour within thesemarkets, depending on timing and duration of the disruption.Uncertainty in Employee Future Benefits CostsChanges in medical or dental costs or life insurance premiums forcertain employees eligible for the employee retirement benefits mayhave an impact on the Company’s results.Foreign ExchangeThe following table sets forth, for each period indicated, the exchangerate for Canadian dollars expressed in U.S. dollars at the end of thatperiod.ExchangeRate2006 2007 2008Dec. 31 Dec. 31 Mar. 31 Jun. 30 Sept. 30 Dec. 310.858 1.002 0.976 0.986 0.961 0.830A significant portion of the Company’s purchases is incurred inU.S. dollars, while all of its revenues are incurred in Canadian dollarsand its financial results are reported in Canadian dollars. As aresult, major exchange-rate fluctuations between the Canadian andU.S. dollars will either positively or negatively affect net income.The Company is employing policies to minimize the impact of thesecurrency fluctuations, including purchasing U.S. dollars when U.S.dollar-denominated liabilities are identified.Cautionary Note Regarding Forward-LookingStatementsCertain statements contained in this Annual Report and MD&A,including statements which may contain the words "may", "will","likely", "project", "intend", "plan", "forecast", "expects", "believes","anticipates", "could", and similar expressions and statements relatedto matters that are not historical facts, constitute forward-lookinginformation within the meaning of securities laws.Such forward-looking information, particularly with respectto the Company’s future plans, costs, objectives, or economic performance,reflects what we believe in good faith to be reasonableassumptions, expectations, and intentions, based on informationthat is currently available. Although we believe these underlyingassumptions, expectations, and intentions to be reasonable, forward-lookinginformation is not a guarantee of future performance,and involves risks and uncertainties, many of which are beyond ourcontrol and which may cause actual results, events, or actions todiffer materially from those expressed or implied in such forwardlookinginformation. These risks and uncertainties include, but arenot limited to, changes in customer markets, changes in demandfor the Company’s products, changes in technology, changes in educationalfunding by governments, curriculum changes in the Schoolmarket, other government policy changes, changes to the formatand delivery of future learning resources, competition from foreignbasedvirtual bookstores, changes to copyright law, and the abilityto protect the Company’s content under copyright law, and generaleconomic conditions.The factors and assumptions that were applied in reaching theforward-looking information included herein include, but are notlimited to, the assumptions:■■■■■■■■■■that curriculum revisions in several provinces will take place asanticipated and that our newly published products will meet therequirements of those curriculum revisions;that enrolment at elementary schools, secondary schools, and colleges/universitiesis consistent with our expectations. Nationally,we expect a minor decline in enrolment at the elementary andsecondary levels and an increase at the college/university level;that demand for the Higher Education Division’s technology-basedproducts and service will continue to grow;that provincial funding for educational resources will proceed asanticipated; andthat Retail and Medical national accounts will maintain their stablepurchasing and returns patterns.OUTLOOKFiscal 2009 is expected to be a year of modest sales growth for theCompany, with each Division forecasting minor sales increases. TheCompany is also forecasting an expense increase, driven by increasesacross many expense categories, as well as increased informationtechnology costs driven by new Customer Relation Management andEditorial Planning system implementations.Although we have attempted to identify and describe aboveunder the heading “Risks and Uncertainties”, important risks andfactors which may cause actual results to differ materially fromthose described in any forward-looking information, there maybe other risks and factors that cause results, events or actions todiffer materially from those anticipated, estimated, or intended.Accordingly, readers should not place undue reliance on forwardlookinginformation contained in this report. Any forward-lookinginformation contained herein is expressed as of the date of thisreport and, except as required by law, the Company does not undertakeany obligation to update or revise such forward-looking informationto reflect subsequent information, events, or circumstances.

Management ReportTo the Shareholders of McGraw-Hill Ryerson LimitedThe financial statements and all the information in this Annual Report were prepared by the management ofMcGraw-Hill Ryerson Limited, which is responsible for their integrity and objectivity.These financial statements—prepared in conformity with appropriately chosen Canadian generallyaccepted accounting principles, and including amounts based on management’s best estimates andjudgments—present fairly McGraw-Hill Ryerson’s financial condition and the results of the Company’soperations. Other financial information given in this report is consistent with these financial statements.McGraw-Hill Ryerson’s management maintains a system of internal accounting controls designed toprovide reasonable assurance that the financial records accurately reflect the Company’s operations andthat the Company’s assets are protected against loss. Consistent with the concept of reasonable assurance,the Company recognizes that the relative cost of these controls should not exceed the expectedbenefits in maintaining these controls. These controls further assure the quality of the financial records inseveral ways: the careful selection and training of management personnel; maintaining an organizationalstructure that provides an appropriate division of financial responsibilities; and communicating financialand other relevant policies through the Company.The financial statements in this report have been audited by Ernst & Young LLP, Chartered Accountants,in accordance with Canadian generally accepted auditing standards. The independent auditors wereretained to express an opinion on the financial statements.McGraw-Hill Ryerson’s Board of Directors is responsible for ensuring that management fulfills itsresponsibilities for financial reporting and is ultimately responsible for reviewing and approving the financialstatements. The Board carries out this responsibility principally through its Audit Committee, whichmeets periodically with management and the independent auditors to ensure that each group is carryingout its respective responsibilities. In addition, the independent auditors meet with, and have full and freeaccess to, the Audit Committee without any representatives from management present.McGraw-Hill Ryerson Annual Report 2008David L. SwailPresident and Chief Executive OfficerGordon DyerExecutive Vice Presidentand Chief Financial Officer17Auditors’ ReportTo the Shareholders of McGraw-Hill Ryerson LimitedWe have audited the balance sheets of McGraw-Hill Ryerson Limited as at December 31, 2008 and 2007and the statements of income, comprehensive income and retained earnings and cash flows for the years thenended. These financial statements are the responsibility of the Company's management. Our responsibility isto express an opinion on these financial statements based on our audits.We conducted our audits in accordance with Canadian generally accepted auditing standards. Thosestandards require that we plan and perform an audit to obtain reasonable assurance whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating theoverall financial statement presentation.In our opinion, these financial statements present fairly, in all material respects, the financial positionof the Company as at December 31, 2008 and 2007 and the results of its operations and its cash flows forthe years then ended in accordance with Canadian generally accepted accounting principles.Toronto, Canada,January 27, 2009Chartered AccountantsLicensed Public Accountants

Balance SheetsMcGraw-Hill Ryerson Limited. Incorporated under the laws of Ontario(In Thousands of Dollars)McGraw-Hill Ryerson Annual Report 200818As at December 31 2008 2007AssetsCurrentCash and cash equivalents 43,856 35,646Accounts receivable [net of allowance for sales returns of $6,986; 2007 - $7,206] [note 10] 14,285 14,489Due from parent and affiliated companies [note 2] 1,827 1,870Inventories [note 4] 7,082 7,717Prepaid expenses and other 296 354Future tax assets [note 7] 2,263 2,390Total current assets 69,609 62,466Capital assets, net [note 5] 16,048 17,247Other assets, net [note 6] 16,540 14,365Future tax assets [note 7] 623 582102,820 94,660Liabilities and Shareholders’ EquityCurrentAccounts payable and accrued charges 10,721 10,821Dividends payable 13,976 —Income taxes payable 359 972Due to parent and affiliated companies [note 2] 5,669 5,454Total current liabilities 30,725 17,247Employee future benefits [note 8] 2,026 1,983Total liabilities 32,751 19,230Commitments [note 9]Shareholders' equityShare capitalAuthorized 5,000,000 common sharesIssued and outstanding 1,996,638 common shares 1,997 1,997Retained earnings 68,072 73,433Total shareholders' equity 70,069 75,430102,820 94,660(See accompanying Notes.)On behalf of the BoardH. Ian Macdonald, O.C., LL.D., Director David L. Swail, Director

Statements of Income, ComprehensiveIncome, and Retained Earnings(In Thousands of Dollars—except Per Share Data)Years ended December 31 2008 2007RevenueSales, less returns 91,485 89,778Other 3,065 2,75494,550 92,532ExpensesOperating [notes 2 and 4] 37,613 37,324Editorial, selling, general and administrative [notes 3 and 13] 33,030 34,355Amortization – prepublication costs 6,206 5,788Amortization – capital assets 1,349 1,368Employee future benefits [note 8] 99 (2,777)Foreign exchange loss 345 64478,642 76,702Income before income taxes 15,908 15,830Provision for income taxes [note 7]Current 5,320 5,021Future 86 8495,406 5,870Net income and comprehensive income for the year 10,502 9,960McGraw-Hill Ryerson Annual Report 200819Retained earnings, beginning of year 73,433 71,230Dividends paid and payable to shareholders [$7.945 per share; 2007 - $3.885 per share] (15,863) (7,757)Retained earnings, end of year 68,072 73,433Earnings per shareBasic $5.26 $4.99Diluted $5.26 $4.99(See accompanying Notes.)

Statements of Cash Flows(In Thousands of Dollars)McGraw-Hill Ryerson Annual Report 200820Years ended December 31 2008 2007Operating ActivitiesNet income for the year 10,502 9,960Add (deduct) non-cash itemsAmortization – prepublication costs 6,206 5,788Amortization – capital assets 1,349 1,368Employee future benefits 43 (2,838)Future income taxes 86 84918,186 15,127Net change in non-cash working capital balances related to operations [note 12] 381 2,444Cash provided by operating activities 18,567 17,571Investing ActivitiesPre-publication costs (8,320) (7,423)Additions to capital assets (150) (256)Cash used in investing activities (8,470) (7,679)Financing ActivitiesDividends paid to shareholders (1,887) (7,757)Cash used in financing activities (1,887) (7,757)Net increase in cash during the year 8,210 2,135Cash and cash equivalents, beginning of year 35,646 33,511Cash and cash equivalents, end of year 43,856 35,646(See accompanying Notes.)

Notes to Financial Statements1 Summary of SignificantAccounting PoliciesThe accompanying financial statements of McGraw-Hill RyersonLimited [the "Company"] have been prepared in accordance withCanadian generally accepted accounting principles. The significantaccounting policies are summarized as follows:Cash and cash equivalentsThe Company considers all highly liquid instruments with amaturity date of ninety days or less at the date of acquisition tobe cash equivalents.Allowance for doubtful accounts and sales returnsThe accounts receivable reserve methodology is based on historicalanalysis and a review of outstanding balances. A significantestimate for the Company is the allowance for sales returns,which is based on the historical rate of return and current marketconditions.InventoriesInventories are stated at the lower of cost, on a first-in, first-outbasis, and net realizable value. The Canadian product inventorycost consists of paper, print and binding costs. The inventorycost of imported and agency product is the purchase price of theproduct. Net realizable value is the estimated selling price inthe ordinary course of business, less estimated costs necessaryto make the sale. A significant estimate for the Company is thereserve for inventory obsolescence. The reserve is based uponmanagement’s assessment of the demand for its products in themarket as compared to the number of units currently on hand.Capital assetsCapital assets are recorded at cost less accumulated amortization.Amortization is provided on a straight-line basis at the followingannual rates:BuildingComputer equipmentFurniture, fixtures, and equipment40 years3 to 7 years5 to 10 yearsPre-publication costsPre-publication costs include third party services, preparationand plate costs, which are amortized from the year of publicationover the lesser of five years and the expected sales life of therelated publication using either an accelerated or straight-linemethod. The Company periodically evaluates the remaining livesand recoverability of such costs, which is sometimes dependentupon program acceptance by provincial authorities, based onexpected undiscounted cash flows.GoodwillGoodwill is not amortized but is subject to an annual review forimpairment, which consists of a comparison of the fair value ofthe assets to their carrying value. Based on the annual impairmentreview for 2008, the Company determined that no provisionfor impairment was required.Foreign exchange translationForeign cash balances and amounts receivable from or payable toforeign affiliates are translated into Canadian dollars at the ratesof exchange prevailing at year end. Transactions denominatedin foreign currencies are translated into Canadian dollars atthe exchange rates at the date of the transactions. Any resultinggains or losses are included in the Statements of Income,Comprehensive Income and Retained Earnings for the year.Revenue recognitionThe Company recognizes revenue for product sales, net of estimatedreturns, when the products are shipped to customers,which is also when title passes to the customer.Other revenue is comprised mainly of rental income, interest,copyright/translation fees and other miscellaneous income, andis recognized as earned on a monthly basis.Employee future benefitsThe Company has a post-retirement benefit plan for certain retireescovering extended health and dental costs as well as basiclife insurance. The premiums for this plan are paid for by theCompany. The Company recognizes an annual cost and benefitobligation related to estimated future benefit payments to bemade to its current and retired employees.Financial instrumentsThe Company has classified its cash and certain cash equivalents,receivables, accounts payable and accrued charges anddue from/to parent and affiliated companies as held for trading.The Company has some cash equivalents that are classifiedas held to maturity. The fair values of the Company’s financialinstruments are not materially different from their carrying value.The Company’s cash equivalents are valued using quoted marketprices in active markets. The Company does not currently engagein any hedging activities. The Company has not pledged anyfinancial assets as collateral.Pension costsThe Company has a defined contribution pension plan for allemployees for which the Company's contributions are expensedas incurred. Total pension expense for this plan during the yearis $775 [2007-$772].McGraw-Hill Ryerson Annual Report 200821

McGraw-Hill Ryerson Annual Report 200822The Company also has a supplemental employee retirementplan [“SERP”] for certain executives. They are entitled toadditional pension payments upon retirement or end of servicesto the Company determined primarily based on the executives’salaries and years of service. Total SERP expense during theyear is $169 [2007 - $275] and the SERP liability as at December31, 2008 is $719 [2007 - $864]. The SERP obligation is unfundedand is included in accounts payable and accrued charges on theCompany’s balance sheets.Income taxesThe Company uses the liability method of accounting for incometaxes. Under the liability method, future tax assets and liabilitiesare determined based on differences between the financialreporting and tax bases of assets and liabilities and are measuredusing the substantively enacted tax rates and laws thatwill be in effect when the differences are expected to reverse.Earnings per shareThe weighted average number of common shares used in thecomputation of both basic and diluted earnings per share for2008 is 1,996,638 [2007 - 1,996,638].Use of estimatesThe preparation of financial statements in accordance withCanadian generally accepted accounting principles requiresmanagement to make estimates and assumptions that affectthe reported amounts of assets and liabilities and disclosureof contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenue and expensesduring the reporting period. Actual results may differ from thoseestimates.Recent accounting pronouncementsOn January 1, 2008, the Company adopted the new recommendationsof the Canadian Institute of Chartered Accountants (“CICA”)under CICA Handbook Section 3031 “Inventories” (“Section 3031”),Section 3862 “Financial Instruments – Disclosure” (“Section3862”) and Section 3863 “Financial Instruments – Presentation”(“Section 3863”).■■Section 3031 prescribes the measurement of inventories at thelower of cost and net realizable value, with guidance on the■■■■determination of cost including allocation of overheads andother costs to inventory. Reversals of previous write-downs tonet realizable value are permitted when there is a subsequentincrease in the value of inventories. The Company has compliedwith the measurement standards as required. The adoption ofthis standard resulted in no impact on inventory.Section 1535 requires that a company disclose information thatenables users of its financial statements to evaluate its objectives,policies and procedures for managing capital includingdisclosures of any externally imposed capital requirements andthe consequences for non-compliance. The Company had earlyadopted this pronouncement in 2007 and the disclosures are inNote 10.Sections 3862 and 3863 require that a Company discloseadditional details of its financial asset and liability categoriesand the risks associated with its financial instruments. Theseaccounting policy changes are for disclosure purposes, and asa result, other than the additional disclosures noted in note10, the adoption of these standards had no impact on theCompany’s financial statements.The following accounting pronouncements are applicable to annualand interim periods beginning on or after January 1, 2009:■■■■Section 3064, ”Goodwill and Intangible Assets“, prescribes themeasurement of intangibles, with guidance on the determinationof costs to capitalize for internally generated intangibles.The Company is currently evaluating the effects of adoptingthis standard.In February 2008, the Canadian Accounting Standards Board(“ACSB”) confirmed that International Financial ReportingStandards (“IFRS”) will replace current Canadian GAAP forpublicly accountable companies. The official change over dateis for interim and annual financial statements for fiscal yearsbeginning on or after January 1, 2011. IFRS will be requiredfor the Company’s interim and annual financial statements forthe fiscal year beginning on January 1, 2011. The Company hasdeveloped a plan to convert its financial statements to IFRS andhas identified the differences between IFRS and the Company’scurrent accounting policies, as well as the alternatives availableupon adoption. There may be significant changes followingfrom the IFRS accounting principles and provisions for the firsttime adoption of IFRS on certain areas. The Company has notyet determined the full effects of adopting IFRS.2 Related Party TransactionsThe Company is a subsidiary of The McGraw-Hill Companies, Inc.[“parent”] which owns 70.1% of the outstanding common shares.Transactions with related parties are as follows:Under long-standing arrangements, the Company, in thenormal course of business, purchases books and educationalmaterials from the parent company and various internationalsubsidiaries of The McGraw-Hill Companies, Inc.The Company pays royalties to the parent company for anyU.S. titles that have been adapted to the Canadian market.The Company also, in the normal course of business, sellsbooks and educational materials to various international subsidiariesof The McGraw-Hill Companies, Inc.The Company reimburses [and is reimbursed] for commonexpenses shared with other affiliated companies [note 3].Terms of payment vary from 45 to 90 days net from thetransaction date and all amounts are non-interest bearing. Therelated party receivables are received within established tradingterms.

Amounts due from parent and affiliated companies consist ofthe following:2008 2007Parent 587 858Affiliated companies 1,240 1,0121,827 1,870Amounts due to parent and affiliated companies consist of thefollowing:2008 2007Parent 5,627 5,427Affiliated companies 42 275,669 5,454Related party transactions with parent and affiliated companies are recorded at the exchange amount and consist of the following:Inventory sold to2008 2007Parent — 34Affiliated companies 295 255Inventory purchases fromParent 26,032 28,265Affiliated companies 230 173Royalties paid to parentParent 1,652 1,703Affiliated companies 19 56Common expenses paid to parent 1,664 1,723Common expenses reimbursed from parent 72 —During the year ended December 31, 2008, the Company incurred and paid legal fees of $90 [2007 – $15] provided by a firm where a partner isa director of the Company. This amount was expensed as legal expense incurred in the ordinary course of business and was measured at theexchange amount, which was the amount of consideration established and agreed to by the firm and the Company.McGraw-Hill Ryerson Annual Report 2008233 STOCK-BASED COMPENSATIONThe parent company has granted certain employees of theCompany stock options to purchase common stock of the parentand/or restricted stock of the parent, collectively referred to asawards [note 2]. The fair values of these awards are charged tothe Company by the parent and are recorded as compensation4 INVENTORIESThe cost of inventory recognized as an expense and included inthe Statements of Income, Comprehensive Income and RetainedEarnings in operating expenses for year ended December 31, 2008amounted to $28,687 [2007 - $29,219]. During the year endedDecember 31, 2008, $839 [2007- $756] of inventory provision wasexpense by the Company over their respective vesting periodswith a corresponding increase in due to parent and affiliatedcompanies. For the year ended December 31, 2008, editorial,selling, general and administrative expenses include stock-basedcompensation of ($92) [2007 – $286].charged to the Statements of Income, Comprehensive Income andRetained Earnings. As of December 31, 2008, none of the inventorywas pledged as security, and there was $298 of reversals duringthe year-ended December 31, 2008 of any write-downs in inventorythat were recognized as an expense in prior periods.5 CAPITAL ASSETSCapital assets consist of the following:Cost2008 2007NetCostbook valueAccumulatedamortizationAccumulatedamortizationNetbook valueLand 3,598 — 3,598 3,598 — 3,598Building 18,028 7,726 10,302 18,017 7,272 10,745Computer equipment 4,191 3,885 306 4,419 3,684 735Furniture, fixtures, and equipment 4,956 3,114 1,842 4,883 2,714 2,16930,773 14,725 16,048 30,917 13,670 17,247

6 OTHER ASSETSOther assets consist of the following:2008 2007Pre-publication costs, net book value 15,932 13,729Goodwill 363 363Deferred leasing cost 245 27316,540 14,365Pre-publication costs consist of the following:McGraw-Hill Ryerson Annual Report 200824Pre-publication costs Accumulated amortization Net book valueBeginning balance 49,082 35,353 13,729Additions 8,409 — 8,409Amortization — 6,206 (6,206)Write off of titles (369) (369) —Ending balance 57,122 41,190 15,932There is $3,943 of pre-publication costs for unpublished titles not being amortized as of December 31, 2008 [2007 - $3,643].7 INCOME TAXESUnder the liability method, future tax assets and liabilities are determined based on differences between the financial reporting and taxbases of assets and liabilities. Significant components of the Company's future tax assets and liabilities are as follows:Current future tax assets2008 2007Allowance for sales returns and other items 2,241 2,356Other 22 342,263 2,390Non-current future tax assets (liabilities)Capital assets (2,022) (2,144)Pre-publication costs 1,914 1,951Employee future benefits 568 558Other 163 217623 582The reconciliation of the provision for income taxes computed at the statutory tax rates is as follows:2008 2007Tax at combined federal and provincial rates 5,330 5,718Manufacturing and processing profits deduction (151) (116)Decrease in future income taxes assets resulting from statutory tax rate change 134 276Other 93 (8)5,406 5,870

8 EMPLOYEE FUTURE BENEFITSThe actuarial determination of the accrued benefit obligationfor this benefit plan uses the projected benefit method [whichincorporates management’s best estimate of cost escalations,retirement ages and other actuarial factors]. Actuarial gains(losses) can arise from changes in actuarial assumptions used todetermine the accrued benefit obligation. When the unamortizednet actuarial gain (loss) exceeds 10% of the accrued benefit, theexcess amount is amortized over the expected average remaininglifetime of the retired members. In 2007, past service costs wereamortized over the expected remaining service life of employeesuntil retirement eligibility (12.7 years). During the third quarterof 2007, the Company amended this plan and reported a pre-taxcurtailment gain of approximately $3.6 million. In 2008, past servicecosts are amortized over the expected remaining lifetime ofretired members (18 years). The most recent actuarial valuationwas completed as of December 31, 2008.The significant assumptions used to calculate the accrued benefit obligation are as follows:2008 2007% %Discount rate 7.0 5.7Dental cost increase 5.0 5.0The weighted average health care cost rates for 2008 were 7.8% [2007 – 7.6%]. The health care cost trend rate is assumed to decreaseratably from 8.5% in 2008 to 4.5% over the next ten years.Changes to the accrued benefit obligation during the year are shown in the table below:2008 2007Accrued benefit obligation, beginning of year 1,779 8,169Current service cost — 385Interest cost 100 284Benefits paid (55) (62)Actuarial gain (69) (583)Decrease in accrued benefit obligation due to curtailment — (6,414)Accrued benefit obligation, end of year 1,755 1,779McGraw-Hill Ryerson Annual Report 200825The reconciliation of accrued benefit obligation to the liability recognized on the balance sheets is as follows:2008 2007Accrued benefit obligation, end of year (1,755) (1,779)Unamortized net actuarial gain (271) (204)Accrued benefit liability (2,026) (1,983)Expenses (gains) resulting from this plan are summarized below:2008 2007Current service cost — 385Interest cost 100 284Amortization of past service costs — 87Amortization of net actuarial loss (gain) (1) 32Curtailment gain — (3,565)99 (2,777)Assumed health care cost trend rates have a significant effect on the amounts reported for this plan. A one-percentage-point change inassumed health care cost trend rates would have the following effects for 2008:IncreaseDecreaseTotal annual service cost and interest cost 14 (12)Accrued benefit obligation 202 (172)

9 COMMITMENTSThe Company has entered into operating leases, primarily forautomobiles, for which the estimated future minimum annuallease payments are as follows:The Company has future purchase commitments with vendorsfor printing/copying costs and for gas purchases. The futureminimum annual commitments are as follows:2009 $1942010 $1382011 $65$3972009 $7972010 $295$1,092The Company has a $22 [2007 - $22] contingent letter of creditto secure the release of goods from customs prior to payment ofduties at the Canadian border.McGraw-Hill Ryerson Annual Report 20082610 FINANCIAL INSTRUMENTSThe Company’s activities expose it to certain financial risks, ofwhich foreign exchange is the most significant. Foreign exchangerisk arises primarily from the Company’s purchases of books andeducational materials from its parent company and other internationalsubsidiaries that are mainly made in U.S. dollars. Asa result, the Company may experience major foreign exchangeexposures between the Canadian and U.S. dollar affecting netincome (as of December 31, 2008, net U.S. dollar account balancesare (1.2)% of total assets (2007 – (2.2%)). As of December31, 2008, fluctuations of +/-5% in the exchange rates betweenthe Canadian and U.S. dollar, would on the translation of U.S.dollar denominated account balances , everything else beingequal, have an effect on income before income taxes for the yearended December 31, 2008 of approximately +/- $50 (2007 - $103).The U.S. dollar exposure is partially offset by U.S. dollar denominatedcash held by the Company.The Company’s credit risk primarily arises from receivables.The Company’s maximum exposure to credit risk is equal to thecarrying value of the accounts receivable balance. With respectto receivables, the Company’s credit risk is limited due to thesignificant proportion of accounts that are government funded.The Company assesses the credit quality of the counter parties,taking into account their financial position, past experience andother factors. Management also monitors the utilization of creditlimits regularly. In cases where the credit quality of a client doesnot meet the Company’s requirements, prepayment is requiredbefore any products are provided. The carrying amount ofaccounts receivable is reduced through the use of an allowancefor doubtful accounts, where the amount of the expense is recognizedin the Statements of Income, Comprehensive Income andRetained Earnings within editorial, selling, general and administrativeexpenses, and an allowance for estimated returns, wherethe amount of the expense is recognized in the Statements ofIncome, Comprehensive Income and Retained Earnings withinsales, less returns and operating expenses. When a receivablebalance is considered uncollectible, it is written off against theallowance for doubtful accounts.As at December 31, 2008 2007Accounts receivable 21,677 22,081Less: Allowance for doubtful accounts (406) (386)Less: Allowance for estimated returns (6,986) (7,207)Accounts receivable as reported 14,285 14,4892008 2007Allowance for doubtful accounts, beginning of year 386 390Add: Provision booked to expense 24 104Less: Write-offs (4) (108)Allowance for doubtful accounts, end of year 406 3862008 2007Allowance for estimated returns, beginning of year 7,207 7,013Less: Returns received from customers (6,621) (7,013)Add: Provision for current year sales 6,400 7,207Allowance for estimated returns, end of year 6,986 7,207

The following table sets forth the age of trade receivables that are not overdue as well as an analysis of overdue amounts:As at December 31, 2008 2007Not overdue 84% 88%Past due for more than one day but not more than three months 14% 11%Past due for more than three months 2% 1%The Company's five largest customers make up approximately29% [2007 - 33%] of the accounts receivable balance andapproximately 14% [2007 - 14%] of net sales.Liquidity risk arises through the excess of financial obligationsover available financial assets due at any point in time.The Company’s objective in managing liquidity risk is to maintainsufficient readily available reserves in order to meet its liquidityrequirements at any point in time. The Company achieves thisby maintaining sufficient cash and cash equivalents and throughthe availability of funding from committed credit facilities. As atDecember 31, 2008, the Company was holding cash and cashequivalents of $43,856 and had undrawn lines of credit availableto it of $6,500. As the majority of the Company’s cash and cashequivalents are held by one bank in Canada there is a concentrationof credit risk. This risk is managed by performing a periodicreview of the credit status of our financial institution.Interest rate risk primarily arises from certain cash equivalentsheld at the bank. These financial assets held to maturity asat the end of the year are $35,000 [2007 - $26,000] and interestincome earned on these investments in the year ended is $698[2007 - $607]. The income earned on these cash equivalents is11 SEGMENTED DISCLOSUREThe Company is structured on a market-focus basis and operatesin three primary market areas: post-secondary education,including universities and community colleges, and proprietarycolleges ["Higher Education"]; secondary and elementary schools["School"] and trade, professional and medical, including retailers,distributors, libraries, non-traditional booksellers, directsubject to the movements in interest rates. The terms of theinvestments are between 30 and 60 days. A +/-1% change ininterest rates would, everything else being equal, have an effecton the income before income taxes for the year ended December31, 2008 of approximately +/- $220.Capital risk managementThe Company manages its capital to safeguard the entity's abilityto continue as a going concern, so that it can continue to providereturns for shareholders and benefits for other stakeholders. TheCompany’s strategy remains unchanged from 2007.The capital structure of the Company consists of shareholders’equity comprising issued capital and retained earnings. TheCompany manages the capital structure and makes adjustmentsto it in the light of changes in economic conditions and the riskcharacteristics of the underlying assets. In order to maintain oradjust the capital structure, the Company may adjust the amountof dividends paid to shareholders or return capital to shareholders.Such decisions are currently influenced by the amount ofcash and cash equivalents held by the Company as well as forecastedfuture cash requirements.marketing and the medical sector ["Professional"]. Included inWarehouse, Support & Other’s Sales, less returns are freightcharged to customers and sales to French institutions mostly inQuebec. The accounting policies of these operating segmentsare the same as those described in the summary of significantaccounting policies.McGraw-Hill Ryerson Annual Report 2008272008HigherEducation School ProfessionalWarehouse,Support & OtherSales, less returns 53,347 27,973 8,727 1,438 91,485Amortization –pre-publication costsAmortization –capital assetsIncome (loss) beforeincome taxesTotal2,874 3,332 — — 6,20669 37 11 1,232 1,34916,950 9,697 1,421 (12,160) 15,908Provision for income taxes — — — 5,406 5,406Total expenditures foradditions to capital asset— 22 11 117 150Segment assets 19,397 15,183 3,411 15,891 53,882

2007Higher Education School ProfessionalWarehouse,Support & OtherSales, less returns 53,746 25,804 8,655 1,573 89,778Amortization –pre-publication costsTotal2,806 2,982 — — 5,788Amortization – capital assets 76 38 12 1,242 1,368Income (loss) beforeincome taxes16,215 8,326 1,539 (10,250) 15,830Provision for income taxes — — — 5,870 5,870Total expenditures foradditions to capital assets111 21 6 118 256Segment assets 19,391 13,541 3,822 16,978 53,732McGraw-Hill Ryerson Annual Report 200828Reconciliations2008 2007Segment assets 53,882 53,732Unallocated assetsCash and cash equivalents 43,856 35,646Due from parent and affiliated companies 1,827 1,870Prepaid expenses and other 124 167Future tax assets 2,263 2,390Non-current future tax assets 623 582Non-current other assets 245 273Total assets 102,820 94,660Segment sales, less returns 91,485 89,778Other revenue 3,065 2,754Total revenue 94,550 92,53212 STATEMENTS OF CASH FLOWSThe net change in non-cash working capital balances related to operations consists of the following:2008 2007Accounts receivable 204 3,459Due from parent and affiliated companies 43 (78)Inventories 635 349Prepaid expenses and other 58 1Income taxes payable (613) 461Accounts payable and accrued charges (100) 124Due to parent and affiliated companies 215 (1,837)Deferred leasing cost 28 (273)Accrual of pre-publication costs (89) 238381 2,444Supplemental cash flow informationIncome taxes refunded (46) (49)Income taxes paid 5,882 4,617

13 EDITORIAL, SELLING, GENERAL, AND ADMINISTRATIVE EXPENSESIn 2007, the Company restructured some business operations toenhance the Company’s long-term growth prospects. The realignmentcost of $290 (pre-tax) consisted of employee termination and14 SUBSEQUENT EVENTOn January 16, 2009, the Company paid a special dividend of $13,976 to its shareholders.Dividend Policyseverance costs and is included in the editorial, selling, general, andadministrative expenses. No further costs related to the realignmentare anticipated. There was no restructuring charge in 2008.At their meeting held on May 1, 2008 the Board of Directorsapproved an increase in the quarterly dividend from 22.5¢ pershare to 24.0¢ per share to shareholders of record as at May 17,2008. This dividend increase took effect with the payment of thesecond-quarter dividend on June 5, 2008. In addition to quarterlydividends, the Company declared a special dividend of $7.00 pershare to shareholders during the fourth quarter of 2008 (to be paidin the first quarter of 2009). Previous special dividends include adividend of $3.00 per share during the second quarter of 2007 anda dividend of $1.50 per share during the fourth quarter of 2005.The determination to declare or pay dividends is entirely atthe discretion of the Board of Directors of the Company, basedupon recommendations from the Finance Committee of the Boardof Directors, and depends upon the Company’s financial condition,results of operations, capital requirements, and other factors thatthe Board of Directors and Finance Committee consider relevant.McGraw-Hill Ryerson’sCorporate Social ResponsibilityMcGraw-Hill Ryerson Annual Report 2008McGraw-Hill Ryerson Limited believes Canadians will flourish incommunities that are healthy, well educated, culturally rich, andsocially secure. The Company supports programs that increasethe abilities of people in our communities to learn, grow intellectually,master new skills, and maximize their individual talentsat school, work, and in the community. McGraw-Hill Ryerson’ssocial responsibility is illustrated through its commitment tothe following activities: Matching Gift Program, United WayProgram, Employee Volunteer Support Program, Scholarships,Global Volunteer Day, and Green Earth Committee.Matching Gift ProgramThe Company will match any employee`s financial gift to any nonprofitCanadian organization that supports education, learning, andliteracy, up to a maximum of $1,000 per institution per year.United Way ProgramMcGraw-Hill Ryerson will match any employee`s United Waycontribution. When an employee contributes a day’s pay tothe United Way, he or she may take a paid day off work to performvolunteer work to support the activities of any non-profitorganization or a worthy project in the community. In 2008, theCompany matched employee contributions of $7,927.Employee Volunteer Support ProgramWhen an employee participates, on a regular basis for a year ormore, in a qualified program of volunteer support through schoolsand non-profit organizations (education, health or fitness, andsocial services) and has an ongoing commitment of at least fiftyhours a year, McGraw-Hill Ryerson will support the program witha $300 contribution.ScholarshipsThe Company supports a variety of scholarship programs corporatelyand within the Higher Education Division.Global Volunteer DayThe McGraw-Hill Companies Inc., the majority shareholder ofMcGraw-Hill Ryerson, has established a Global Volunteer Dayinitiative, held each year in May. In 2008, McGraw-Hill Ryerson’svolunteer employees participated in this program by partneringwith Habitat for Humanity on a project in Toronto. Over twentyMcGraw-Hill Ryerson employees helped build affordable housingin partnership with people in need.Green Earth CommitteeIn 2008, McGraw-Hill Ryerson launched Green Earth Committee,staffed entirely by volunteers with a mandate to make soundenvironmental decisions in our products, processes, and physicalinfrastructure wherever possible. In an attempt to minimizeour environmental footprint, the Company is making significantimprovements in the areas of energy efficiency, waste reduction,and increasing the use of recycled paper in our products. Someof the highlights in 2008 include eliminating the use of Styrofoamin our food services, improved energy consumption/conservationthroughout the facility, and the ongoing expansion of digital contentand services that replace traditional print-based resources.29

McGraw-Hill Ryerson Annual Report 200830DirectorsCorporate GovernanceA primary concern of the Company’s Board of Directors has been, and will continue to be, the effective governance of McGraw-Hill Ryerson Limited onbehalf of all shareholders. The Company’s Corporate Governance Committee meets regularly to review corporate governance matters.1. Robert J. BahashExecutive Vice President and Chief FinancialOfficer, The McGraw-Hill Companies, Inc.since 1988Joined McGraw-Hill in 1974Became a Director in 1988Member of the Finance CommitteePrevious posts at The McGraw-HillCompanies, Inc. include:Senior Vice President, Finance and ManufacturingSenior Vice President, Corporate FinancialOperations2. Susan M. Armstrong, C.A., ICD.DCorporate DirectorBecame a Director in 2005Chairman of the Audit CommitteeMember of the Corporate Governance and AuditCommitteesCurrent Posts include:Chair of the Board of Directors of TheGeorge Hull Centre for Children and Families;Member of the Audit Committee and ResourcesCommittee of the Board of Directors of TrilliumHealth CentreMember of the Board of Directors of TorontoRehabilitation Institute, Chair of theGovernance Committee andMember of the Audit and Fiscal and HumanResources CommitteesPrevious Posts include:Senior Vice President, Swiss ReinsuranceCompany CanadaSenior Vice President and Chief FinancialOfficer, CIBC InsuranceVice President and Chief Financial Officer,The Dominion of Canada General InsuranceCompany3. J. Mark DesLauriersPartnerOsler, Hoskin & Harcourt LLPJoined Osler in 1983Became a Director in 2001Chairman of the Human Resources CommitteeMember of the Executive Committee4. David L. SwailPresident and Chief Executive OfficerMcGraw-Hill Ryerson LimitedJoined McGraw-Hill Ryerson in 2006Became a Director in 2006Member of the Executive Committee and theFinance CommitteePrevious positions include:Vice-President, Operations – Sun MediaVice President, Operations and Planning –CanWest5. Kevin KanePresident, McGraw-Hill Higher Education’s Businessand Economics Group, since 2004Joined The McGraw-Hill Companies, Inc., in 1981Became a Director in 2007Member of the Corporate Governance andNominating CommitteePrevious positions include:McGraw-Hill Higher Education, President of theScience, Engineering and Mathematics Group(SEM)Editor-in-Chief for McGraw-Hill’s Science andMathematics Group6. Hendrik KranenburgGroup President, McGraw-Hill Higher Education,Professional and International Publishing, TheMcGraw-Hill Companies, Inc., since August 2005Joined The McGraw-Hill Companies, Inc. in 1980Became a Director in 2005Member of the Executive Committee and theCompensation CommitteePrevious positions at Standard & Poor’s, a Divisionof The McGraw-Hill Companies Inc., include:Executive Vice President, Investment ServicesExecutive Vice President, Global RatingsDevelopmentExecutive Vice President/Managing Director,Ratings Services (International)7. H. Ian Macdonald, O.C., LL.D.,D.UNIV.D.LITT, FCOLChairman of the Board of Directors ofMcGraw-Hill Ryerson Limited since 1996Became a Director in 1985Chairman of the Finance CommitteeMember of the Executive Committee, the CorporateGovernance and Nominating Committee, the AuditCommittee, and the Human Resources CommitteePresident Emeritus and Professor of Economicsand Public Policy at York UniversityOfficer of the Order of CanadaPast Chairman of the Board of Governors ofThe Commonwealth of Learning8. Manon R. Vennat, CMPrincipal of Manon Vennat & AssociatesMember of the Bar of QuebecMember of the Order of CanadaBecame a Director in 1988Chairman of the Corporate Governance andNominating CommitteeMember of the Audit Committee, and theHuman Resources CommitteePrevious positions include:Chairman, SpencerStuart in MontrealVice President Administration and General Counsel,Corporate Secretary of AES Data

Management TeamDavid L. SwailPresident and Chief Executive OfficerJoined the management team in 2006See Biography in DirectorsMarshall I. MorrisExecutive Vice PresidentCustomer SatisfactionJoined the management team in 1996Prior Employment: various managementpositions at Canadian Tire CorporationGordon K. DyerExecutive Vice President, Chief FinancialOfficer and Secretary-TreasurerJoined the management team in 2003Prior Employment: Vice President, Financeat Teletech Canada Inc.Patrick FerrierPresidentHigher Education DivisionJoined the management team in 2005Prior Employment: Vice President andPublisher, McGraw-Hill Ryerson,Higher Education DivisionClaudio PascucciPresidentProfessional DivisionJoined the management team in 2006Prior Employment: Director of Sales,McGraw-Hill Ryerson, Professional DivisionClive PowellExecutive Vice PresidentEditorial, Design, and ProductionJoined the management team in 1997Prior Employment: Director of Production,McGraw-Hill RyersonMcGraw-Hill Ryerson Annual Report 200831Nancy L. GerrishPresidentSchool DivisionJoined the management team in 1999Prior Employment: Director of Sales andMarketing, McGraw-Hill Ryerson,School Division

Shareholder and Corporate InformationMcGraw-Hill Ryerson Annual Report 200832Executive OfficesMcGraw-Hill Ryerson Limited300 Water StreetWhitby, Ontario L1N 9B6Telephone: (905) 430-5000Facsimile: (905) 430-5020http://www.mcgrawhill.caCorporate and Shareholder InformationGordon DyerSecretary-TreasurerTelephone: (905) 430-5032Annual Meeting of ShareholdersMcGraw-Hill Ryerson Limited300 Water StreetWhitby, OntarioTuesday, June 9, 2009at 11:00 a.m.Exchange ListingsThe Toronto Stock ExchangeStock Symbol: MHRRegistrar and Transfer AgentInvestors are encouraged to contact our Transfer Agent andRegistrar, CIBC Mellon Trust Company, for information regardingtheir security holdings. They can be reached at:CIBC Mellon Trust CompanyP.O. Box 7010Adelaide Street Postal StationToronto, OntarioM5C 2W9AnswerLine (416) 643-5500 or 1-800-387-0825(Toll Free throughout North America)Facsimile: (416) 643-5501Web site: www.cibcmellon.caE-mail: inquiries@cibcmellon.caRecyclingThis report has been printed on recyclable acid-free papers.Outside Legal CounselOsler, Hoskin & Harcourt LLPBarristers & SolicitorsTorontoAuditorsErnst & Young LLPChartered AccountantsTorontoBankersCitibank Canada

International AffiliatesThe McGraw-Hill Companies, Inc.New York, New YorkMcGraw-Hill Australia Pty. LimitedSydney, N.S.W., AustraliaMcGraw-Hill Education (India) Ltd (formerly knownas Tata McGraw-Hill Publishing Company PrivateLimited)New Delhi, IndiaMcGraw-Hill Book Company New Zealand, Pty.LimitedAuckland, New ZealandThe McGraw-Hill Companies, Inc.Singapore BranchMcGraw-Hill International (U.K.) LimitedMaidenhead, EnglandOpen International Publishing LimitedMaidenhead, EnglandThe McGraw-Hill Companies, SRLMilan, ItalyEditora McGraw-Hill de Portugal, Ltda.Lisbon, PortugalEditorial Interamericana, S.A.Bogota, D.E., ColombiaMcGraw-Hill/Interamericana Editores, S.A. de C.V.Mexico, D.F., MexicoMcGraw-Hill/Interamericana de Espana, S.A.Madrid, SpainMcGraw-Hill/Interamericana de Venezuela, S.A.Caracas, VenezuelaMcGraw-Hill/Interamericana de Chile LimitadaSantiago, ChileMcGraw-Hill/Interamericana, Inc.Rio Piedras, Puerto RicoMcGraw-Hill Korea, Inc.Seoul, KoreaMcGraw-Hill International Enterprises, Inc.Athens, GreeceMcGraw-Hill International Enterprises, Inc.Metro Manila, PhilippinesMcGraw-Hill International Enterprises, Inc.Johannesburg, South AfricaMcGraw-Hill International Enterprises, Inc.Kowloon, Hong KongMcGraw-Hill International Enterprises, Inc.Taipei, TaiwanMcGraw-Hill International Enterprises, Inc.Bangkok, ThailandMcGraw-Hill International Enterprises, Inc.ChinaMcGraw-Hill Interamericana do Brasil Ltda.Sao Paulo, BrazilThe McGraw-Hill Companies, GmbHFrankfurt, GermanyThe McGraw-Hill Companies, S.A.Paris, FranceMcGraw-Hill Publications Overseas Corporation,Tokyo, JapanMcGraw-Hill (Malaysia) Sdn. BhdSelangor, Malaysia

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