UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-1023
New York 13-1026995
- ---------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1221 Avenue of the Americas, New York, N.Y. 10020
- ---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO[ ]
On July 26, 1996 there were approximately 99.4 million shares of Common Stock (par value $1.00 per share) outstanding.
TABLE OF CONTENTS
-----------------
Page Number
-----------
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
-------
Consolidated Statement of Income for
the three and six month periods ended
June 30, 1996 and 1995 3
Consolidated Balance Sheet at June 30, 1996,
December 31, 1995 and June 30, 1995 4-5
Consolidated Statement of Cash Flows for the six
months ended June 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Operating
------- Results and Financial Condition 10-14
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 15
-------
Item 4. Submission of Matters to a Vote of Security Holders 15-16
-------
Item 5. Other Information 16
-------
Item 6. Exhibits and Reports on Form 8-K 17-19
-------
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PART I
Financial Information
The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Statement of Income
--------------------------------
Periods Ended June 30, 1996 and 1995
------------------------------------
Three Months Six Months
-------------------- ----------------------
1996 1995 1996 1995
--------- --------- ---------- ----------
(In thousands, except per-share data)
Operating revenue $ 710,934 $ 712,782 $1,294,785 $1,281,330
Expenses:
Operating 327,076 324,339 620,265 605,639
Selling and general 226,302 230,000 442,902 445,063
Depreciation and amortization 53,632 57,686 94,258 98,723
--------- --------- ---------- ----------
Total expenses 607,010 612,025 1,157,425 1,149,425
Other income - net 4,728 5,396 9,970 10,765
--------- --------- ---------- ----------
Income from operations 108,652 106,153 147,330 142,670
Interest expense - net 12,412 16,289 23,831 29,079
--------- --------- ---------- ----------
Income before taxes on income 96,240 89,864 123,499 113,591
Provision for taxes on income 39,074 37,023 50,141 46,799
--------- --------- ---------- ----------
Net income $ 57,166 $ 52,841 $ 73,358 $ 66,792
========= ========= ========== ==========
Earnings per common share (Note 1) $ 0.57 $ 0.53 $ 0.73 $ 0.67
========= ========= ========== ==========
Average number of common
shares outstanding (Note 1) 100,311 99,660 100,447 99,538
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The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Balance Sheet
--------------------------
June 30, Dec. 31, June 30,
1996 1995 1995
---------- ---------- ----------
(In thousands)
ASSETS
Current assets:
Cash and equivalents $ 4,828 $ 10,250 $ 19,031
Accounts receivable (net of allowance
for doubtful accounts) (Note 3) 785,912 855,372 781,359
Receivable from broker-dealers and
dealer banks (Note 4) 7,388 9,674 17,461
Inventories (Note 3) 294,239 238,030 295,727
Prepaid income taxes 71,775 67,128 70,171
Prepaid and other current assets 75,865 59,351 62,602
---------- ---------- ----------
Total current assets 1,240,007 1,239,805 1,246,351
---------- ---------- ----------
Prepublication costs (net of accumulated
amortization) (Note 3) 315,257 268,200 277,994
Investments and other assets:
Investment in Rock-McGraw, Inc. - at
equity 64,275 61,797 59,875
Prepaid pension expense 101,414 98,177 91,515
Other 156,452 141,861 151,239
---------- ---------- ----------
Total investments and other assets 322,141 301,835 302,629
---------- ---------- ----------
Property and equipment - at cost 839,370 827,307 808,978
Less - accumulated depreciation 518,829 491,178 474,346
---------- ---------- ----------
Net property and equipment 320,541 336,129 334,632
Goodwill and other intangible assets - at
cost (net of accumulated amortization) 948,945 958,420 973,051
---------- ---------- ----------
$3,146,891 $3,104,389 $3,134,657
========== ========== ==========
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The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Balance Sheet
--------------------------
June 30, Dec. 31, June 30,
1996 1995 1995
---------- ---------- ----------
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 238,860 $ 71,299 $ 286,493
Accounts payable 185,443 215,179 172,611
Payable to broker-dealers and dealer
banks (Note 4) 6,834 7,469 16,846
Accrued liabilities 145,304 188,382 137,146
Income taxes currently payable 103,474 70,405 79,412
Unearned revenue 238,978 241,816 229,389
Other current liabilities 202,615 251,909 191,274
---------- ---------- ----------
Total current liabilities 1,121,508 1,046,459 1,113,171
---------- ---------- ----------
Other liabilities:
Long-term debt (Note 5) 556,734 557,365 657,705
Deferred income taxes 138,965 140,531 125,115
Accrued postretirement healthcare and
other benefits 204,722 200,100 201,324
Other non-current liabilities 128,668 124,868 110,559
---------- ---------- ----------
Total other liabilities 1,029,089 1,022,864 1,094,703
---------- ---------- ----------
Total liabilities 2,150,597 2,069,323 2,207,874
---------- ---------- ----------
Shareholders' equity (Notes 1 and 6):
Capital stock 102,933 102,933 102,933
Additional paid-in capital 37,411 26,740 23,653
Retained income 1,037,916 1,030,526 930,064
Foreign currency translation adjustments (58,355) (56,247) (49,964)
---------- ---------- ----------
1,119,905 1,103,952 1,006,686
Less - common stock in treasury-at cost 111,256 60,778 68,285
unearned compensation on
restricted stock 12,355 8,108 11,618
---------- ---------- ----------
Total shareholders' equity 996,294 1,035,066 926,783
---------- ---------- ----------
$3,146,891 $3,104,389 $3,134,657
========== ========== ==========
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The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Statement of Cash Flows
------------------------------------
For The Six Months Ended June 30, 1996 And 1995
-----------------------------------------------
1996 1995
--------- ---------
(In thousands)
Cash flows from operating activities
- ------------------------------------
Net income $ 73,358 $ 66,792
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 35,175 32,847
Amortization of goodwill and intangibles 18,054 18,891
Amortization of prepublication costs 41,029 46,985
Provision for losses on accounts receivable 35,287 32,896
Other 603 354
Changes in assets and liabilities net of effect of
acquisitions and dispositions:
Decrease/(increase) in accounts receivable 30,930 (38,062)
Increase in inventories (51,680) (84,103)
Increase in prepaid and other current assets (19,052) (11,210)
Decrease in accounts payable and accrued expenses (74,521) (45,051)
Decrease in unearned revenue (2,820) (10,598)
Decrease in other current liabilities (48,903) (45,530)
Increase in interest and income taxes currently payable 34,074 24,968
(Decrease)/increase in prepaid/deferred income taxes (1,505) 456
Net change in other assets and liabilities (4,179) (5,433)
- --------------------------------------------------- --------- ---------
Cash provided by/(used for) operating activities 65,850 (15,798)
- --------------------------------------------------- --------- ---------
Investing activities
- --------------------
Investment in prepublication costs (83,801) (57,261)
Purchases of property and equipment (19,990) (21,525)
Acquisition of businesses (25,809) (24,264)
Disposition of businesses 6,335 429
Other 861 880
- --------------------------------------------------- --------- ---------
Cash used for investing activities (122,404) (101,741)
- --------------------------------------------------- --------- ---------
Financing activities
- --------------------
Dividends paid to shareholders (65,968) (59,780)
Additions to short-term debt - net 167,821 181,230
Repurchase of treasury shares (62,117) -
Exercise of stock options 14,846 8,522
Other (3,450) (1,458)
- --------------------------------------------------- --------- ---------
Cash provided by financing activities 51,132 128,514
- --------------------------------------------------- --------- ---------
Net change in cash and equivalents (5,422) 10,975
Cash and equivalents at beginning of period 10,250 8,056
- --------------------------------------------------- --------- ---------
Cash and equivalents at end of period $ 4,828 $ 19,031
========= =========
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1. The financial information in this report has not been audited, but in the opinion of management all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly such information have been included. The operating results for the three and six month periods ended June 30, 1996 and 1995 are not necessarily indicative of results to be expected for the full year due to the seasonal nature of some of the company's businesses. The financial statements included herein should be read in conjunction with the financial statements and notes included in the company's Annual Report on Form 10-K for the year ended December 31, 1995.
On January 31, 1996, the Board of Directors declared a two-for-one stock split of the company's common stock which was distributed on April 26, 1996 to all shareholders of record on March 28, 1996. Accordingly, all references to common share data in the financial statements and notes have been restated to reflect the split.
Certain prior year amounts have been reclassified for comparability purposes.
2. Operating profit by segment is total operating revenue less expenses which
are deemed to be related to the unit's operating revenue. A summary of
operating results by segment for the three months and six months ended
June 30, 1996 and 1995 follows:
1996 1995
-------------------- ---------------------
Operating Operating
Revenue Profit Revenue Profit
--------- --------- --------- ---------
(In thousands)
Three Months
------------
Educational and Professional
Publishing $277,580 $ 26,443 $301,610 $ 31,220
Financial Services 207,088 63,603 192,075 55,975
Information and Media Services 226,266 31,984 219,097 32,497
-------------------------------- -------- -------- -------- --------
Total operating segments 710,934 122,030 712,782 119,692
General corporate expense - (13,378) - (13,539)
Interest expense - net - (12,412) - (16,289)
-------------------------------- -------- -------- -------- --------
Total company $710,934 $ 96,240* $712,782 $ 89,864*
======== ======== ======== ========
*Income before taxes on income.
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The McGraw-Hill Companies, Inc.
-------------------------------
Notes to Financial Statements
-----------------------------
1996 1995
-------------------- ---------------------
Operating Operating
Revenue Profit Revenue Profit
---------- --------- ---------- ---------
Six Months (In thousands)
----------
Educational and Professional
Publishing $ 443,484 $ (4,978) $ 472,906 $ 1,849
Financial Services 420,195 129,780 391,441 115,276
Information and Media Services 431,106 48,989 416,983 51,940
----------------------------- ---------- -------- ---------- --------
Total operating segments 1,294,785 173,791 1,281,330 169,065
General corporate expense - (26,461) - (26,395)
Interest expense - net - (23,831) - (29,079)
----------------------------- ---------- -------- ---------- --------
Total company $1,294,785 $123,499* $1,281,330 $113,591*
========== ======== ========== ========
*Income before taxes on income.
|
3. The allowance for doubtful accounts, the components of inventory and the
accumulated amortization of prepublication costs were as follows:
June 30, Dec. 31, June 30,
1996 1995 1995
--------- --------- ---------
(In thousands)
Allowance for doubtful accounts $ 81,432 $ 79,980 $ 79,958
========= ========= =========
Inventories:
Finished goods $ 228,008 $ 185,608 $ 222,321
Work-in-process 34,628 15,675 36,423
Paper and other materials 31,603 36,747 36,983
--------- --------- ---------
Total inventories $ 294,239 $ 238,030 $ 295,727
========= ========= =========
Accumulated amortization of
prepublication costs $ 398,426 $ 391,384 $ 354,248
========= ========= =========
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4. A subsidiary of J.J. Kenny Co. acts as an undisclosed agent in the purchase and sale of municipal securities for broker-dealers and dealer banks and the company had $409 million of matched purchase and sale commitments at June 30, 1996. Only those transactions not closed at the settlement date are reflected in the balance sheet as receivables and payables.
5. A summary of long-term debt follows:
June 30, Dec. 31, June 30,
1996 1995 1995
--------- --------- ---------
(In thousands)
9.43% senior notes due 2000 $ 250,000 $ 250,000 $ 250,000
Commercial paper supported by
bank revolving credit agreement 300,000 300,000 400,000
Other 6,734 7,365 7,705
--------- --------- ---------
Total long-term debt $ 556,734 $ 557,365 $ 657,705
========= ========= =========
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6. Common shares approved for issuance for conversions and stock based awards
were as follows:
June 30, Dec. 31, June 30,
1996 1995 1995
--------- --------- ---------
$1.20 convertible preference stock
at the rate of 6.6 shares for each
share of preference stock 9,346 9,346 9,346
Stock based awards 6,541,202 7,245,226 7,609,148
--------- --------- ---------
6,550,548 7,254,572 7,618,494
========= ========= =========
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7. Cash dividends per share declared during the periods were as follows:
Three Months Six Months
------------- -----------
1996 1995 1996 1995
---- ---- ---- ----
Common stock $.33 $.30 $.66 $.60
Preference stock .30 .30 .60 .60
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Net income for the quarter increased $4.3 million, or 8.2%, over the 1995 second quarter. Revenues declined $1.8 million, or 0.3%, reflecting volume declines due to an off-adoption year in school publishing following 1995's strong adoption year. Revenues in the Financial Services segment improved due to strong new issuance volume and expanded global operations and in Information and Media Services, primarily due to Business Week. Net income improved over the prior year due to cost controls in school publishing, expanded profit margins in Financial Services and lower interest expense. Earnings per share were 57 cents compared to 53 cents for the second quarter in 1995.
All references to common share data, including earnings per share, reflect the two-for-one stock split of the company's common stock that was distributed to shareholders on April 26, 1996.
Total expenses declined $5.0 million, or 0.8%, reflecting cost controls in Educational and Professional Publishing due to the off-adoption year which offset volume-related expense increases in Financial Services and Information and Media Services.
Net interest expense declined $3.9 million, or 23.8%, resulting from a decline in average commercial paper interest rates from 6.2% in 1995 to 5.3% in 1996 and reduced average commercial paper borrowing levels from the prior year, due to paydowns from the company's operating cash flow.
The provision for taxes as a percentage of income before taxes was 40.6% in 1996 compared to 41.2% in 1995. The reduction in the effective tax rate reflects the declining impact of non-deductible goodwill amortization on higher pre-tax earnings as well as favorable settlement of state tax audits.
On July 3, The McGraw-Hill Companies signed an agreement to exchange its Shepard's/McGraw-Hill legal publishing unit for the Times Mirror Higher Education Group and other consideration, including cash. This transaction is expected to be completed in the third quarter after obtaining necessary government approvals required under the Hart-Scott-Rodino Act. The final valuation of the properties being exchanged will be based on independent appraisals; the company estimates that this transaction will result in a pre-tax gain, net of one-time charges, of more than $300 million.
Educational and Professional Publishing revenue declined $24.0 million, or 8.0%, to $277.6 million. The decline reflects the 1996 off-adoption year for the school publishing industry. In 1995, there were strong sales in the key adoption states of California and Texas where early ordering benefited the second quarter. Second quarter sales in Texas declined from $44 million in 1995 to $8 million in 1996. The revenue variance was also affected by reduced revenues at Shepard's/McGraw-Hill, due to the December divestiture of Shepard's topical publishing business. Partially offsetting the expected decline in school publishing were improved revenues in College publishing and international operations, including Mexico, while business at The Continuing Education Center was soft. The segment also benefited from the 1996 first quarter acquisition of Open Court Publishing. Despite the decline in revenue, operating profit for the segment declined only $4.8 million, or 15.3%, to $26.4 million, due to strong cost controls partially offset by development costs for the McGraw-Hill Home Interactive division, which will offer multimedia education titles in the consumer market later this year.
Financial Services' revenue grew $15.0 million, or 7.8%, to $207.1 million while operating profit improved $7.6 million, or 13.6%, to $63.6 million. Standard & Poor's Ratings Services' revenue and profits improved reflecting expanded global operations, increased new issuance volume in the U.S. bond market and non- traditional ratings products, net of continuing investments. Second quarter new issuance volume was particularly strong in Eurobonds, high-yield corporates and asset-backed securities. Revenue and profit for the Financial Information Services Group also improved from the prior year reflecting good results at Compustat and greater distribution of global products over third-party networks, particularly MMS International and Platt's. These results offset weakness in municipal securities services and consulting revenues at DRI/McGraw-Hill.
Information and Media Services' revenue increased $7.2 million, or 3.3%, to $226.3 million and operating profit declined $0.5 million, or 1.6%, to $32.0 million. Business Week advertising pages increased 1% over last year's second quarter, a significant improvement from the first quarter comparison. Business Week revenues grew at a greater rate than the page gain as revenue per advertising page increased. Revenues also improved for the Construction Information Group due to new electronic products and some improvement in advertising. Revenues at the computer magazines declined, partly offset by increases at the healthcare publications, while Broadcasting revenues were flat. The decline in segment operating profit reflects the impact of the revenue declines at the computer magazines, the costs of launching tele.com magazine and reduced profits in Broadcasting due to soft market conditions in San Diego.
For the first half of the year, net income increased $6.6 million, or 9.8%, to $73.4 million. Operating revenue increased $13.5 million, or 1.1%, to $1,295 million. The relatively flat revenues reflect an off-adoption year in school publishing, offset by strong growth in financial services. Total expenses increased $8.0 million, or 0.7%, reflecting the revenue growth and development expenses for new businesses net of cost controls in school publishing. Earnings per share were 73 cents versus 67 cents last year.
Net interest expense decreased $5.2 million, or 18.0%, reflecting a decline in average commercial paper interest rates from 6.2% in 1995 to 5.4% in 1996 and reduced average commercial paper borrowing levels from the prior year, due to paydowns from the company's operating cash flow.
The provision for taxes as a percentage of income before taxes was 40.6% in 1996 compared to 41.2% in 1995. The reduction in the effective tax rate reflects the declining impact of non-deductible goodwill amortization on higher pre-tax earnings as well as favorable settlement of state tax audits.
Educational and Professional revenue declined $29.4 million, or 6.2%, to $443.5 million. The decline reflects the off-adoption year for the school publishing industry. The revenue decline also reflects reduced revenues at Shepard's/McGraw-Hill, due to the December 1995 divestiture of Shepard's topical publishing business. Partially offsetting the expected decline in school publishing, revenues increased in international publishing and the segment benefited from the first quarter acquisition of Open Court Publishing. The segment had an operating loss of $5.0 million, compared to operating profit of $1.8 million last year. This decline in profits reflects the revenue decline, partially offset by cost controls. Operating profit compared to last year was also impacted by development costs for the McGraw-Hill Home Interactive division.
Financial Services' revenue increased $28.8 million, or 7.3%, to $420.2 million. Operating profit improved $14.5 million, or 12.6%, to $129.8 million. Standard & Poor's Ratings Services' revenue and profits increased reflecting expanded global operations, increased new issuance volume in the U.S. bond market and non-traditional ratings products, net of continuing investments. Revenue and profit for the Financial Information Services Group also improved from the prior year reflecting good results from greater distribution of global products over third-party networks, particularly MMS International and Platt's. These results offset weakness in municipal securities services.
Information and Media Services' revenue increased $14.1 million, or 3.4%, to $431.1 million. Operating profit declined $3.0 million, or 5.7%, to $49.0 million. The revenue increase reflects improved advertising revenues at Business Week as an advertising rate increase offset a decline in advertising pages. The Tower Group International acquisition of UCB Canada and the acquisition of Hospital Practice magazine also contributed to the revenue increase. Revenues for the Construction Information Group improved while revenue at the computer magazines declined and Broadcasting was flat. The decline in segment operating profit reflects the impact of the revenue declines at the computer magazines, the costs of launching tele.com magazine, which debuted in March, and Broadcasting's softer market conditions in San Diego and last year's higher margin Super Bowl broadcast.
The company continues to maintain a strong financial position. Cash generated by operating activities totaled $65.8 million compared to cash used in operations last year of $15.8 million. This year-to-year improvement in cash flow from operations largely reflects reduced working capital requirements due to the 1996 off-adoption year in school publishing. Total debt was $795.6 million, an increase of $166.9 million from year-end. The increase in debt reflects the seasonal spending for inventory and sampling costs for 1996 school publishing adoptions, prepublication spending for 1997 school adoption programs, the acquisition of Open Court and borrowings to finance the repurchase by the company of 1.3 million common shares in the second quarter. The company's strong presence in school publishing significantly impacts the seasonality of its earnings and borrowing patterns during the year, with the company borrowing during the first half of the fiscal year and generating cash in the second half of the year. Borrowing patterns will be further impacted in 1996 from the company's spending for the 1997 strong adoption year. The company's borrowings will also be impacted by the transaction exchanging Shepard's/McGraw-Hill for the Times Mirror Higher Education Group later this year, entailing a tax payment in December on a pre-tax gain, net of one-time charges, estimated to exceed $300 million.
In January, the company's Board of Directors approved a share repurchase program authorizing the purchase of up to 4 million shares of the company's common stock. In the second quarter, the company bought 1.3 million shares at a cost of $62.1 million. The repurchased shares will be used for general corporate purposes, including the issuance of shares for the exercise of employee stock options. The company continued to repurchase shares in August; future purchases under the program may be made from time to time dependent on market conditions.
In the fourth quarter of 1995, the company implemented a best practices program to improve the efficiency and effectiveness of the company's operations. The program included the review of major systems and processes, including certain administrative functions and related technology. The program encompasses the elimination of approximately 750 positions. At the end of the second quarter of 1996, approximately 450 positions had been eliminated and the company has undertaken various technology initiatives. Cash expenditures related to the best practices program in the first half of 1996 did not have a significant impact on the company's liquidity.
Commercial paper borrowings at June 30, 1996 totaled $531.5 million, an increase of $163.0 million from December 31, 1995. These borrowings are supported by an $800 million revolving credit agreement with a group of banks terminating in November 1999, and $300 million is classified as long-term. There are no amounts outstanding under this agreement.
Under a shelf registration which became effective with the Securities and Exchange Commission in mid-1990, the company can issue an additional $250 million of debt securities. The new debt could be used to replace a portion of the commercial paper borrowings with longer term securities, when and if interest rates are attractive and markets are favorable.
Accounts receivable before reserves of $867.3 million decreased $68.0 million from the end of 1995 due primarily to the seasonal nature of some of the company's businesses. Inventories increased $56.2 million to $294.2 million from the end of 1995 due primarily to the seasonal requirements for school publishing and the seasonal buildup for the annual Sweet's files.
Net prepublication costs at June 30 increased $47.1 million from the end of 1995 to $315.3 million due to additional spending for 1997 adoption year programs and new college and professional publishing titles. Prepublication cost spending in the first half of 1996 totaled $83.8 million compared to $57.3 million in 1995.
Purchases of property and equipment of $20 million were slightly less than the comparable period last year; the purchases were primarily for computer equipment.
PART II
Other Information
(b) The following nominees, having received the FOR votes set forth opposite their respective names, constituting a plurality of the votes cast at the Annual Meeting for the election of Directors, were duly elected a director of the Registrant for two-year terms:
DIRECTOR FOR WITHHOLD AUTHORITY -------- --- ------------------ Pedro Aspe 43,747,126 158,273 Robert P. McGraw 43,750,375 155,024 |
The following nominees having received the FOR votes set forth opposite their respective names, constituting a plurality of the votes cast at the Annual Meeting for the election of Directors, were duly elected Directors of the Registrant for three-year terms:
DIRECTOR FOR WITHHOLD AUTHORITY -------- --- ------------------ Joseph L. Dionne 43,749,454 155,945 Don Johnston 43,746,915 158,484 Linda Koch Lorimer 43,752,652 152,747 Harold W. McGraw III 43,752,604 152,795 Alva O. Way 43,748,516 156,883 |
The terms of office of the following directors continued after the meeting: Vartan Gregorian; John T. Hartley; Peter O. Lawson-Johnston; Paul J. Rizzo; James H. Ross; George B. Harvey; Richard H. Jenrette; and Lois Dickson Rice.
(c) (i) Shareholders approved the 1996 Key Executive Short-Term Incentive Compensation Plan. The vote was 42,522,119 shares FOR and 1,011,253 shares AGAINST, with 372,027 shares abstaining and no broker nonvotes.
(ii) Shareholders approved the Director Deferred Stock Ownership Plan. The vote was 41,813,698 shares FOR and 1,317,242 shares AGAINST, with 353,391 shares abstaining and 421,068 broker nonvotes.
(iii) Shareholders ratified the appointment of Ernst & Young as independent auditors for the Registrant and its subsidiaries for 1996. The vote was 43,728,492 shares FOR and 115,332 shares AGAINST , with 61,575 shares abstaining and no broker nonvotes.
(iv) Shareholders did not approve the shareholder proposal to eliminate the election of directors by classes. The vote was 13,954,427 shares FOR and 26,810,734 shares AGAINST, with 24,725 shares abstaining and 2,898,514 broker nonvotes.
(a) Exhibits
(10)* Director Deferred Stock Ownership Plan, incorporated by reference from Registrant's Proxy Statement, dated March 21, 1996.
(10)* 1996 Key Executive Short-Term Incentive Compensation Plan, incorporated by reference from Registrant's Proxy Statement, dated March 21, 1996.
(12) Computation of Ratio of Earnings to Fixed Charges. 18
(27) Financial Data Schedule. 19
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: 08/13/96 By Robert J. Bahash
------------------ -------------------------------
Robert J. Bahash
Executive Vice President
and Chief Financial Officer
Date: 08/08/96 By Thomas J. Kilkenny
------------------ -------------------------------
Thomas J. Kilkenny
Vice President and Controller
Date: 08/09/96 By Kenneth M. Vittor
------------------ -------------------------------
Kenneth M. Vittor
Senior Vice President
and General Counsel
|
Exhibit (12)
The McGraw-Hill Companies, Inc.
-------------------------------
Computation of Ratio of Earnings to Fixed Charges
-------------------------------------------------
Periods Ended June 30, 1996
---------------------------
Six Twelve
Months Months
--------- ---------
(In thousands)
Earnings
Earnings from continuing operations
before income tax expense (Note)...... $ 121,021 $ 391,778
Fixed charges........................... 40,395 86,600
Capitalized interest.................... - (188)
--------- ---------
Total Earnings....................... $ 161,416 $ 478,190
========= =========
Fixed Charges (Note)
Interest expense........................ $ 25,515 $ 57,938
Portion of rental payments deemed to be
interest.............................. 14,880 28,662
--------- ---------
Total Fixed Charges.................. $ 40,395 $ 86,600
========= =========
Ratio of Earnings to Fixed Charges 4.0x 5.5x
(Note) For purposes of computing the ratio of earnings to fixed charges,
"earnings from continuing operations before income taxes" excludes
undistributed equity in income of less than 50%-owned companies. "Fixed
charges" consist of (1) interest on debt and capital leases, and (2) the
portion of the company's rental expense deemed representative of the
interest factor in rental expense.
|
| ARTICLE 5 |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 6 MOS |
| FISCAL YEAR END | DEC 31 1996 |
| PERIOD END | JUN 30 1996 |
| CASH | 4,828 |
| SECURITIES | 0 |
| RECEIVABLES | 867,344 |
| ALLOWANCES | 81,432 |
| INVENTORY | 294,239 |
| CURRENT ASSETS | 1,240,007 |
| PP&E | 839,370 |
| DEPRECIATION | 518,829 |
| TOTAL ASSETS | 3,146,891 |
| CURRENT LIABILITIES | 1,121,508 |
| BONDS | 0 |
| COMMON | 102,919 |
| PREFERRED MANDATORY | 14 |
| PREFERRED | 0 |
| OTHER SE | 0 |
| TOTAL LIABILITY AND EQUITY | 3,146,891 |
| SALES | 1,294,785 |
| TOTAL REVENUES | 1,294,785 |
| CGS | 1,157,425 |
| TOTAL COSTS | 1,157,425 |
| OTHER EXPENSES | 0 |
| LOSS PROVISION | 35,287 |
| INTEREST EXPENSE | 23,831 |
| INCOME PRETAX | 123,499 |
| INCOME TAX | 50,141 |
| INCOME CONTINUING | 73,358 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 73,358 |
| EPS PRIMARY | 0.73 |
| EPS DILUTED | 0.73 |