-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WY9AAsD8d5ck7emgcpP+HbMhWibDGeuttYAMsUZHihl/lBCgJt+BAUf6w8go1tjZ kcbuptk3Lq+6zS0nA3JRQg== 0000064040-96-000002.txt : 19960514 0000064040-96-000002.hdr.sgml : 19960514 ACCESSION NUMBER: 0000064040-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCGRAW-HILL COMPANIES INC CENTRAL INDEX KEY: 0000064040 STANDARD INDUSTRIAL CLASSIFICATION: BOOKS: PUBLISHING OR PUBLISHING AND PRINTING [2731] IRS NUMBER: 131026995 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-01023 FILM NUMBER: 96561331 BUSINESS ADDRESS: STREET 1: 1221 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2125122000 FORMER COMPANY: FORMER CONFORMED NAME: MCGRAW HILL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: HILL PUBLISHING CO DATE OF NAME CHANGE: 19670327 FORMER COMPANY: FORMER CONFORMED NAME: MCGRAW PUBLISHING CO DATE OF NAME CHANGE: 19670327 10-Q 1 MARCH 1996 10Q ELECTRONIC FILE 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 March 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------ ------------ Commission File Number 1-1023 THE McGRAW-HILL COMPANIES, INC. - --------------------------------------------------------------------- (Exact name of registrant as specified in its charter) 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) Registrant's telephone number, including area code (212) 512-2000 -------------- Not Applicable - --------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 April 26, 1996 there were 100,510,250 shares of Common Stock (par value $1.00 per share) outstanding. The McGraw-Hill Companies, Inc. ------------------------------- TABLE OF CONTENTS ----------------- Page Number ----------- PART I. FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements ------- Consolidated Statement of Income for the three months ended March 31, 1996 and 1995 3 Consolidated Balance Sheet at March 31, 1996, December 31, 1995 and March 31, 1995 4-5 Consolidated Statement of Cash Flows for the three months ended March 31, 1996 and 1995 6 Notes to Consolidated Financial Statements 7-9 Item 2. Management's Discussion and Analysis of ------- Operating Results and Financial Condition 10-12 PART II. OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K 13-26 ------- -2- PART I Financial Information Item 1. Financial Statements -------------------- The McGraw-Hill Companies, Inc. ------------------------------- Consolidated Statement of Income -------------------------------- Three Months Ended March 31, 1996 and 1995 ------------------------------------------
1996 1995 ---------- ---------- (In thousands, except per-share data) Operating revenue $583,851 $568,548 Expenses: Operating 293,189 281,300 Selling and general 216,600 215,063 Depreciation and amortization 40,626 41,037 -------- -------- Total expenses 550,415 537,400 Other income - net 5,242 5,369 -------- -------- Income from operations 38,678 36,517 Interest expense - net 11,419 12,790 -------- -------- Income before taxes on income 27,259 23,727 Provision for taxes on income 11,067 9,776 -------- -------- Net income $ 16,192 $ 13,951 ======== ======== Earnings per common share (Note 1) $ 0.16 $ 0.14 ======== ======== Average number of common shares outstanding (Note 1) 100,706 99,358
-3- The McGraw-Hill Companies, Inc. ------------------------------- Consolidated Balance Sheet --------------------------
March 31, Dec. 31, March 31, 1996 1995 1995 ---------- ---------- ---------- (In thousands) ASSETS Current assets: Cash and equivalents $ 14,350 $ 10,250 $ 7,934 Accounts receivable (net of allowance for doubtful accounts) (Note 3) 717,709 855,372 679,406 Receivable from broker-dealers and dealer banks (Note 4) 8,149 9,674 7,217 Inventories (Note 3) 268,008 238,030 239,870 Prepaid income taxes 67,075 67,128 70,195 Prepaid and other current assets 70,578 59,351 71,337 ---------- ---------- ---------- Total current assets 1,145,869 1,239,805 1,075,959 ---------- ---------- ---------- Prepublication costs (net of accumulated amortization) (Note 3) 298,364 268,200 276,802 Investments and other assets: Investment in Rock-McGraw, Inc. - at equity 63,036 61,797 58,727 Prepaid pension expense 100,009 98,177 97,121 Other 148,393 141,861 144,438 ---------- ---------- ---------- Total investments and other assets 311,438 301,835 300,286 ---------- ---------- ---------- Property and equipment - at cost 829,553 827,307 795,473 Less - accumulated depreciation 504,458 491,178 458,455 ---------- ---------- ---------- Net property and equipment 325,095 336,129 337,018 Goodwill and other intangible assets - at cost (net of accumulated amortization) 957,649 958,420 983,085 ---------- ---------- ---------- $3,038,415 $3,104,389 $2,973,150 ========== ========== ==========
-4- The McGraw-Hill Companies, Inc. ------------------------------- Consolidated Balance Sheet --------------------------
March 31, Dec. 31, March 31, 1996 1995 1995 ---------- ---------- ---------- (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable $ 128,680 $ 71,299 $ 204,750 Accounts payable 186,120 215,179 163,422 Payable to broker-dealers and dealer banks (Note 4) 5,985 7,469 6,697 Accrued liabilities 121,229 188,382 117,099 Income taxes currently payable 71,915 70,405 50,506 Unearned revenue 250,408 241,816 235,432 Other current liabilities 221,695 251,909 219,920 ---------- ---------- ---------- Total current liabilities 986,032 1,046,459 997,826 ---------- ---------- ---------- Other liabilities: Long-term debt (Note 5) 556,655 557,365 657,285 Deferred income taxes 136,038 140,531 125,054 Accrued postretirement healthcare and other benefits 202,451 200,100 191,491 Other non-current liabilities 126,297 124,868 109,921 ---------- ---------- ---------- Total other liabilities 1,021,441 1,022,864 1,083,751 ---------- ---------- ---------- Total liabilities 2,007,473 2,069,323 2,081,577 ---------- ---------- ---------- Shareholders' equity (Notes 1 and 6): Capital stock 102,933 102,933 102,933 Additional paid-in capital 36,969 26,740 22,361 Retained income 1,013,607 1,030,526 907,139 Foreign currency translation adjustments (57,051) (56,247) (55,830) ---------- ---------- ---------- 1,096,458 1,103,952 976,603 Less - common stock in treasury-at cost 51,859 60,778 71,583 unearned compensation on restricted stock 13,657 8,108 13,447 ---------- ---------- ---------- Total shareholders' equity 1,030,942 1,035,066 891,573 ---------- ---------- ---------- $3,038,415 $3,104,389 $2,973,150 ========== ========== ==========
-5- The McGraw-Hill Companies, Inc. ------------------------------- Consolidated Statement of Cash Flows ------------------------------------ For The Three Months Ended March 31, 1996 and 1995 --------------------------------------------------
1996 1995 -------- -------- (In thousands) Cash flows from operating activities - ------------------------------------ Net income $ 16,192 $ 13,951 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 17,765 16,557 Amortization of goodwill and intangibles 8,916 9,317 Amortization of prepublication costs 13,945 15,163 Provision for losses on accounts receivable 18,419 14,283 Other (164) (576) Changes in assets and liabilities net of effect of acquisitions and dispositions: Decrease in accounts receivable 116,269 79,948 Increase in inventories (25,964) (29,455) Increase in prepaid & other current assets (13,611) (19,976) Decrease in accounts payable and accrued expenses (96,842) (77,019) Increase/(decrease) in unearned revenue 8,557 (4,549) Decrease in other current liabilities (22,763) (21,496) Decrease in interest and income taxes payable (2,963) (8,717) Net change in other assets and liabilities 3,080 (2,255) - --------------------------------------------------- --------- --------- Cash provided by/(used for) operating activities 40,836 (14,824) - --------------------------------------------------- --------- --------- Investing activities - -------------------- Investment in Prepublication Costs (39,029) (24,403) Purchases of property and equipment (6,746) (7,540) Acquisition of businesses (25,000) (24,264) Disposition of businesses 4,950 354 - --------------------------------------------------- --------- --------- Cash used for investing activities (65,825) (55,853) - --------------------------------------------------- --------- --------- Financing activities - -------------------- Dividends paid to shareholders (33,063) (29,864) Additions to short-term debt - net 57,634 99,639 Repayment of long-term debt - net (664) (87) Exercise of stock options 11,178 3,499 Other (5,996) (2,632) - --------------------------------------------------- --------- --------- Cash provided by financing activities 29,089 70,555 - --------------------------------------------------- --------- --------- Net change in cash and equivalents 4,100 (122) Cash and equivalents at beginning of period 10,250 8,056 - --------------------------------------------------- --------- --------- Cash and equivalents at end of period $ 14,350 $ 7,934 ========= =========
-6- The McGraw-Hill Companies, Inc. ------------------------------- Notes to Financial Statements ----------------------------- 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 months ended March 31, 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 ended March 31, 1996 and 1995 follows:
1996 1995 ----------------------- ----------------------- Operating Operating Revenue Profit/(Loss) Revenue Profit/(Loss) --------- ------------- --------- ------------- (In thousands) Educational and Professional Publishing $ 165,904 $ (31,421) $ 171,296 $ (29,371) Financial Services 213,107 66,177 199,366 59,301 Information and Media Services 204,840 17,005 197,886 19,443 ---------------------------- --------- --------- --------- --------- Total operating segments 583,851 51,761 568,548 49,373 General corporate expense - (13,083) - (12,856) Interest expense - net - (11,419) - (12,790) ---------------------------- --------- --------- --------- --------- Total company $ 583,851 $ 27,259* $ 568,548 $ 23,727* ========= ========= ========= ========= *Income before taxes on income.
-7- The McGraw-Hill Companies, Inc. ------------------------------- Notes to Financial Statements ----------------------------- 3. The allowance for doubtful accounts, the components of inventory and the accumulated amortization of prepublication costs were as follows:
March 31, Dec. 31, March 31, 1996 1995 1995 --------- --------- --------- (In thousands) Allowance for doubtful accounts $ 81,534 $ 79,980 $ 79,432 ========= ========= ========= Inventories: Finished goods $ 205,187 $ 185,608 $ 182,374 Work-in-process 24,003 15,675 24,537 Paper and other materials 38,818 36,747 32,959 --------- --------- --------- Total inventories $ 268,008 $ 238,030 $ 239,870 ========= ========= ========= Accumulated amortization of prepublication costs $ 367,848 $ 391,384 $ 314,450 ========= ========= =========
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 $323 million of matched purchase and sale commitments at March 31, 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:
March 31, Dec. 31, March 31, 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 6,655 7,365 7,285 --------- --------- --------- Total long-term debt $ 556,655 $ 557,365 $ 657,285 ========= ========= =========
-8- The McGraw-Hill Companies, Inc. ------------------------------- Notes to Financial Statements ----------------------------- 6. Common shares reserved for issuance, for conversions and for stock based awards were as follows:
March 31, Dec. 31, March 31, 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 9,378 Stock based awards 6,651,336 7,245,226 7,761,388 --------- --------- --------- 6,660,682 7,254,572 7,770,766 ========= ========= =========
7. Cash dividends per share declared during the three months ended March 31, 1996 and 1995 were as follows:
1996 1995 ---- ---- Common stock $.33 $.30 Preference stock .30 .30
-9- Item 2. Management's Discussion and Analysis of Operating ------------------------------------------------- Results and Financial Condition ------------------------------- Operating Results - Comparing Three Months Ended March 31, 1996 and 1995 - ------------------------------------------------------------------------ Consolidated Review - ------------------- Operating revenues for the first quarter grew $15.3 million, or 2.7%, over the 1995 quarter to $583.9 million. The revenue growth was primarily at Standard & Poor's Ratings Services, Financial Information Services, and Business Week and also reflects the impact of acquisitions in the Information Services Group, partially offset by a revenue decline at Shepard's/McGraw-Hill. Net income increased 16.1% to $16.2 million from the comparable quarter a year ago and earnings per share were 16 cents versus 14 cents a year ago. The first quarter represents the company's smallest quarter due to the seasonality of some of the company's businesses, primarily the book publishing operations. 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 on April 26, 1996. Total expenses in 1996 increased $13.0 million, or 2.4%, primarily due to increased operating expenses associated with the increase in revenue as well as expenses associated with new products and initiatives. Net interest expense declined $1.4 million, or 10.7% reflecting a decline in average commercial paper borrowing rates from 6.1% in 1995 to 5.5% in 1996. 1996 interest expense was also favorably impacted by a decline in average commercial 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. Segment Review - -------------- Educational and Professional Publishing revenues declined $5.4 million, or 3.1%. The year-to-year decline reflects reduced revenues at Shepard's/McGraw-Hill, due to the December 1995 divestiture of Shepard's topical publishing business, as well as a less favorable state citator revision cycle. International revenues improved as growth in Asia, Australia and Europe offset declines in Canada and Mexico. Revenues in educational publishing were comparable to the prior year while the testing business improved. The segment's operating loss, reflecting typical first quarter seasonal losses in educational publishing, increased 7% to $31.4 million, partly due to development costs for the McGraw- Hill Home Interactive division, which will offer multimedia education titles in the consumer market later this year. On March 15, 1996, the company acquired the publishing assets of Open Court Publishing Company, a publisher of skills- based reading and math programs for the elementary school market. -10- Financial Services' revenue increased $13.7 million, or 6.9%, while operating profit increased $6.9 million, or 11.6%. Standard & Poor's Ratings Services revenue and profits improved reflecting increased new issue volume in the U.S. corporate bond market, continued international expansion and development of new ratings products. In addition to the corporate sector, structured finance, both asset-backed and mortgage-backed, were particularly strong. The Financial Information Services Group revenues and profits also improved from the prior year as growth at MMS International and Platt's offset weakness in municipal securities services. Information and Media Services' revenue increased $7.0 million, or 3.5%, and operating profit declined $2.4 million, or 12.5%. The revenue increase reflects the Tower Group International acquisition of UCB Canada as well as the acquisition of Hospital Practice magazine. Broadcasting revenue and operating profit declined, reflecting last year's strong Super Bowl impact where our San Diego station broadcast the Super Bowl and benefited by the appearance of the San Diego Chargers in the contest. Business Week revenue and profit improved over the prior year, due primarily to strong circulation revenues and an advertising rate increase, offsetting a decline in advertising pages. Revenues and profits declined in the computer magazines, primarily BYTE and Lan Times, and profits were further impacted by start-up costs for the launch of tel.com magazine, which debuted in March. Financial Condition - ------------------- The company continues to maintain a strong financial condition. Cash generated by operating activities in the quarter totaled $40.8 million compared to cash used in operations of $14.8 million last year. This year-to-year increase in cash flow from operations primarily reflects collections from strong fourth quarter sales last year. Total debt increased $56.7 million from year-end reflecting the seasonal spending for inventory and sampling costs for 1996 school publishing adoptions, prepublication spending for 1997 school adoption programs, and the acquisition of Open Court. 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, an off-adoption year, as the company plans for the 1997 strong adoption year. 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 includes the review of major systems and processes, including certain administrative functions and related technology. The program encompasses the elimination of approximately 750 positions. By the end of the first quarter of 1996, approximately 300 positions had been eliminated and the company has undertaken various technology initiatives. Cash expenditures related to the best practices program in the first quarter did not have a significant impact on the company's liquidity. Commercial paper borrowings at March 31, 1996 totaled $427.5 million, an increase of $59 million from December 31, 1995. Commercial paper is 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. -11- 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 $799.2 million decreased $136.1 million from the end of 1995 due primarily to the seasonal nature of some of the company's businesses. Inventories increased $30 million to $268 million from the end of 1995 due primarily to inventory purchases for 1996 international publishing programs, the acquisition of Open Court, and the seasonal buildup for the annual Sweet's Files. Net prepublication costs at March 31 increased $30.2 million from the end of 1995 to $298.4 million due to additional spending for 1997 adoption year programs, new College and Professional Publishing titles, and the acquisition of Open Court. Purchases of property, plant and equipment of $6.7 million approximated the level of the prior year; the purchases were primarily for computer equipment. In April 1996, the company began to repurchase shares under a share repurchase program approved by the company's Board of Directors in January, authorizing the purchase of up to 4 million shares (post-split) of the company's common stock. The repurchased shares will be used for general corporate purposes, including the issuance of shares for the exercise of employee stock options. -12- PART II Other Information Item 6. Exhibits and Reports on Form 8-K Page Number ----------------------------------------- ----------- a) Exhibits -------- (3) By-Laws. 14-24 (12) Computation of ratio of earnings to fixed charges. 25 (27) Financial Data Schedule. 26 SIGNATURES ---------- 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. THE McGRAW-HILL COMPANIES, INC. ------------------------------- Date: 05/13/96 By Robert J. Bahash ------------------ ------------------------------- Robert J. Bahash Executive Vice President and Chief Financial Officer Date: 05/13/96 By Thomas J. Kilkenny ------------------ ------------------------------- Thomas J. Kilkenny Vice President and Controller Date: 05/13/96 By Kenneth M. Vittor ------------------ ------------------------------- Kenneth M. Vittor Senior Vice President and General Counsel -13- Exhibit (3) THE McGRAW-HILL COMPANIES, INC. BY-LAWS ------- (As amended February 28, 1996) ------------------------------ ARTICLE I --------- STOCKHOLDERS ------------ 1. A meeting of the stockholders shall be held annually, whereoever designated by the Board of Directors on the last Wednesday in April of each year or on such other date as a resolution of the Board of Directors may designate, for the purpose of electing directors, hearing the reports of officers and directors, and for the transaction of such other business required or authorized to be transacted by the stockholders. Any previously scheduled annual or special meeting of stockholders may be postponed by resolution of the Board of Directors, upon public notice given prior to the date scheduled for such meeting. 2. Unless waived in writing by all stockholders, notice of the time, place and object of such meeting shall be given by mailing, at least ten days previous to such meeting, postage prepaid, a copy of such notice, addressed to each stockholder at his address as the same appears on the books of the Company. 3. Special meetings of stockholders for whatsoever purpose shall be held at the principal office of the Company or at such other place as may be designated by a resolution of the Board of Directors and may only be called pursuant to a resolution approved by a majority of the Board of Directors. 4. Notice of each special meeting, except where otherwise expressly provided by statute, and unless waived in writing by every stockholder entitled to vote, stating the time, place and in general terms the purpose or purposes thereof, shall be mailed not less than thirty nor more than fifty days prior to the meeting to each stockholder at his address as the same appears on the books of the Company. 5. At a meeting of stockholders the holders of a majority of the shares entitled to vote, being present in person or represented by proxy, shall be a quorum for all purposes, except where otherwise provided by statute or by the certificate of incorporation. 6. If at any meeting a quorum shall fail to attend in person or by proxy, a majority in interest of stockholders entitled to vote present or represented by proxy at such meeting may adjourn the meeting from time to time without further notice until a quorum shall attend and thereupon any business may be transacted which might have been transacted at the meeting as originally called had the same been then held. The Chairman of a meeting of stockholders may adjourn such meeting from time to time, whether or not there is a quorum of stockholders at such meeting. 7. The Chairman of the Board, and in his absence the President, and in his absence a Chairman appointed by the Board of Directors, shall call meetings of the stockholders to order and shall act as Chairman thereof. -14- 8. The Secretary of the Company shall act as Secretary at all meetings of the stockholders and in his absence the Chairman of the meeting may appoint any person to act as Secretary. 9. At each meeting of stockholders every stockholder entitled to vote may vote in person or by proxy, and shall have one vote for each share of stock registered in his name. The Board of Directors may fix a day not more than fifty days prior to the day of holding any meeting of the stockholders as the day as of which stockholders entitled to notice of and to vote at such meeting shall be determined, and all persons who shall be holders of record of voting stock at such time and no other shall be entitled to notice of and to vote at such meeting. 10. At all elections of directors the polls shall be opened and closed, the proxies shall be received and taken in charge and all ballots shall be received and counted by two inspectors who shall be appointed by the Board. If any inspector shall fail to attend or refuse to act, the vacancy may be filled at the meeting by the Chairman of the meeting. No candidate for election as director shall be appointed an inspector. 11. The inspectors shall, before entering upon the discharge of their duties, be sworn to faithfully execute the duties of inspector at such meeting with strict impartiality and according to the best of their ability. ARTICLE I-A ----------- NOMINATION OF DIRECTORS AND PRESENTATION OF BUSINESS AT STOCKHOLDER MEETINGS ----------------------------------- 1. Nominations of persons for election to the Board of Directors of the Company and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Company's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Company who was a stockholder of record at the time of giving of notice provided for in this Article I-A, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Article I-A. 2. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of Section 1 of this Article I-A, the stockholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Such stockholder's notice shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the -15- proxy statement as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (a) the name and address of such stockholder, as they appear on the Company's books, and of such beneficial owner and (b) the class and number of shares of the Company which are owned beneficially and of record by such stockholder and such beneficial owner. Notwithstanding anything in the second sentence of this Section 2 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Company is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Company at least 70 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Company not later than the close of business on the 10th day following the day on which such public announcement is first made by the Company. 3. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Company's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Company's notice of meeting (A) by or at the direction of the Board of Directors or (B) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any stockholder of the Company who is a stockholder of record at the time of giving of notice provided for in this Article I-A, who shall be entitled to vote at the meeting and who complies with the notice procedures set forth in this Article I- A. In the event the Company calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Company's notice of meeting, if the stockholder's notice required by Section 2 of this Article I-A shall be delivered to the Secretary at the principal executive offices of the Company not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. 4. Only such persons who are nominated in accordance with the procedures set forth in this Article I-A shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Article I-A. The Chairman of the meeting of stockholders shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Article I-A and, if any proposed nomination or business is not in compliance with this Article I-A, to declare that such defective nominations or proposal shall be disregarded. -16- 5. For purposes of this Article I-A, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Company with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act. 6. Notwithstanding the foregoing provisions of this Article I-A, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Article I-A. Nothing in this Article I-A shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Company's proxy statement pursuant to Rule 14a-8 under the Exchange Act. ARTICLE II ---------- BOARD OF DIRECTORS ------------------ 1. The business and affairs of the corporation shall be managed under the direction of the Board of Directors. Unless and until changed as provided in this Section 1 of this Article II, the number of directors constituting the Board of Directors shall be fifteen (15). The Board of Directors shall have power from time to time and at any time, by vote of a majority of the total number of directors which the corporation would have if there were no vacancies on the Board, to increase or reduce the number of directors constituting the Board of Directors to such number (subject to any limits contained in the certificate of incorporation) as the Board of Directors shall determine, but in no event to less than twelve (12) or more than twenty-five (25). Subject to the express terms and conditions of the certificate of incorporation and these By- Laws, the directors shall have the usual and customary powers and duties of directors of a corporation; also any and all powers given and permitted by law; and also power to exercise any and all powers of the corporation, and to do any and all acts without any prior action taken or consent given by the stockholders, unless required by law, or the certificate of incorporation, or by these By-Laws; the directors may exercise all powers, and do all acts and things which are not, by statute or by the certificate of incorporation or these By- Laws, expressly directed or required to be exercised or done by the stockholders. 2. Without prejudice to the general powers conferred by the last preceding section, and the other powers conferred by the certificate of incorporation and by these By-Laws, it is hereby expressly declared that the Board of Directors shall have the following powers, that is to say: FIRST: From time to time to make and change rules and regulations, not inconsistent with these By-Laws, for the management of the Company's business and affairs. SECOND: To purchase or otherwise acquire for the Company and property, rights or privileges which the Company is authorized to acquire, at such price and on such terms and conditions, and for such consideration, as they shall, from time to time, see fit. THIRD: At their discretion to pay for any property or rights acquired by the Company, either wholly or partly, in money or in stocks, bonds, debentures or other securities of the Company. -17- FOURTH: To appoint and at their discretion remove or suspend such subordinate officers, agents or servants, permanently or temporarily, as they may, from time to time, think fit, and to determine their duties, and fix, and, from time to time, change their salaries or emoluments, and to require security in such instance and in such amounts as they think fit. FIFTH: To confer by resolution upon any elected or appointed officer of the Company the power to choose, remove or suspend subordinate officers, agents or servants. SIXTH: To appoint any person or persons to accept and hold in trust for the Company any property belonging to the Company, or in which it is interested, or for any other purpose, and to execute and do all such duties and things as may be requisite in relation to any such trust. SEVENTH: To determine who shall be authorized on the Company's behalf, to sign bills, notes, receipts, acceptances, endorsements, checks, releases, contracts and documents. EIGHTH: From time to time to provide for the management of the affairs of the Company, at home or abroad, in such manner as they see fit, and in particular, from time to time, to delegate any of the powers of the Board of Directors in the course of the current business of the Company, to any special or standing committee or to any officer or agent, and to appoint any persons to be the agents of the Company, with such powers (including the power to sub-delegate), and upon such terms, as may be thought fit. NINTH: To appoint an Executive Committee of three or more directors and such other persons as may be added thereto by specific resolution of the Board, who may meet at stated times, or on notice to all by any of their own number; who shall generally perform such duties and exercise such powers as may be directed or delegated by the Board of Directors from time to time. The Board may delegate to such Committee authority to exercise the powers of the Board while the Board is not in session, except as otherwise provided by law. The Executive Committee shall keep regular minutes of its proceedings and report the same to the Board when required. 3. Each director shall serve for the term for which he shall be elected and until his successor shall be chosen and shall accept his election, but any director may resign at any time. 4. The directors may hold their meetings and may have an office and keep the books of the Company at such place or places as the Board from time to time may determine. 5. A regular meeting of the Board of Directors shall be held each year, either immediately following adjournment of the Annual Meeting of Stockholders or at such other time as may be fixed by the Chairman of the Board or the President but on a date no later than 60 days following the adjournment of the Annual Meeting of Stockholders, for the purpose of electing officers, members of the Executive Committee, members of the other committees of the Board, and to organize the Board for the ensuing year. Regular meetings of the Board of Directors shall also be held monthly at such time and place as may be fixed by the Chairman of the Board, or the President. Notice shall be given to each director of the date of each regular meeting by the Secretary in the same manner as provided in Article II, Section 7, of these By-Laws for notice of special meetings of directors. -18- 6. Special meetings of the Board shall be held whenever called by the Chairman, or by the President, or by the Secretary upon receiving the written request of a majority of the directors of the Board then in office. If so specified in the notice thereof, any and all business may be transacted by a special meeting. 7. The Secretary shall give notice to each director of each special meeting by mailing the same, at least two days before the meeting, or by telegraphing or telephoning not later than the day before the meeting. If every director shall be present at any meeting any business may be transacted without previous notice. 8. A majority of the entire Board of Directors shall constitute a quorum for the transaction of business, except where otherwise provided by statute or by the certificate of incorporation or by these By-Laws, and a majority of those present at the time and place of any regular or special meeting may adjourn the same from time to time without notice. 9. Any one or more members of the Board may participate in a meeting of the Board by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. ARTICLE III ----------- COMMITTEES ---------- 1. The Board may appoint such committees, as it may deem advisable. Committees so appointed shall have such powers and duties as may be specified in the resolution of appointment. 2. Each committee shall keep regular minutes of its proceedings and report the same to the Board when required. 3. Any one or more members of any such committee may participate in a meeting of such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. 4. Any action required or permitted to be taken at any meeting of any committee may be taken without a meeting, if all members of the committee consent in writing to the adoption of a resolution authorizing the action and if the resolution and the written consent thereto are filed with the proceedings of the committee. -19- ARTICLE IV ---------- OFFICERS -------- 1. The elective officers of the Corporation other than directors shall be a Chairman of the Board of Directors, a President, one or more Vice-Presidents, a Secretary and a Treasurer. Any two of the aforesaid office may be filled by the same person. For purposes of these By-Laws the office of Vice-President also may include one or more Executive Vice-Presidents and one or more Senior Vice-Presidents. The term of office of each of said officers shall continue until the next annual election of directors and the selection of his successor by the Board of Directors. Any officer may, at any time, with or without cause, be suspended or removed from office by the affirmative vote of a majority of the entire Board at a meeting thereof. The Chairman of the Board and the President shall be chosen from among the directors. 2. The Chairman of the Board when present shall preside at all meetings of the Board of Directors and at all meetings of the stockholders. He shall perform all duties incident to the office of the Chairman of the Board. The Chairman also shall be the Chief Executive Officer of the Corporation and shall be responsible for the general and active supervision and direction of the business, policies and activities of the Corporation, subject to the control of the Board of Directors. He may execute on behalf of the Corporation all authorized deeds, bonds, mortgages, contracts, documents and papers and may affix thereto the corporate seal when required. He shall have power to sign debentures and certificates of stock of the Corporation. 3. The President shall be the Chief Operating Officer of the Corporation and shall have general responsibility for directing, administering and coordinating the operational phases of the Corporation's business, subject to the control of the Chairman and Chief Executive Officer. He shall have such duties as the Board may from time to time determine or as may be prescribed by these By-Laws. He shall be responsible for seeing that the orders and resolutions of the Board are carried into effect. He may execute on behalf of the Corporation all authorized deeds, bonds, mortgages, contracts, documents and papers and may affix thereto the corporate seal when required. He shall have power to sign debentures and certificates of stock of the Corporation. If the office of the Chairman of the Board shall be vacant, or if the person holding that office shall be absent, the President shall preside at meetings of stockholders and of the Board of Directors. 4. In the absence or inability to act of both the Chairman and the President, the Board may designate any senior corporate officer to perform the duties of temporary Chairman which shall include presiding at meetings of stockholders and of the Board of Directors. 5. The Board may elect or appoint one or more Vice-Presidents. Each Vice-President shall have such powers and shall perform such duties as may be assigned to him by the Board or by the President. In case of the absence or disability of the President the duties of that office shall be performed by whomever the Board shall determine by resolution. -20- 6. The Secretary shall be sworn to the faithful discharge of his duties; he shall attend all meetings of the directors and stockholders, and shall record all the proceedings of such meetings in a book to be kept for that purpose, and shall perform like duties for standing committees when required. He shall have charge of the giving of notice of meetings of stockholders and directors, and perform all the duties assigned to him by the Board of Directors, or usual for the Secretary of a Corporation to perform. He, or the Treasurer shall, with the Chairman or President sign all debentures and stock certificates of the Company. 7. The Treasurer shall keep or cause to be kept full and true books of account and records of all receipts and disbursements, property, assets and liabilities of the Corporation, in books belonging to the Company, and shall deposit all moneys, securities, and valuables of the Corporation in the name of and to the credit of the Corporation, in such depositories as shall be designated by the Board of Directors. He shall disburse funds of the Company as ordered by the Board, taking proper vouchers therefor and shall render to the President and the Board of Directors, at regular meetings or whenever required, an account of all financial transactions of the Company. He shall also have power to sign debentures and certificates of stock of the Company, checks, notes, bills of exchange or other negotiable instruments for and in the name of the Company. He shall perform all other duties incident to the position of Treasurer, subject to the control of the Board. 8. The Board of Directors shall have power to appoint one or more Assistant Treasurers, Assistant Secretaries, Controller or Assistant Controllers who shall have such powers and perform such duties as may be designated by the Board. 9. The amount of salaries, wages, or other compensation to be paid to the officers, employees and agents of the Company shall be determined from time to time by the Board or by an Executive Officer or Committee to whom this work shall be delegated. No officer shall be incapacitated to receive a regular salary or fixed compensation by reason of being a director of the Corporation. ARTICLE IV-A ------------ 1. Bank Accounts, Deposits, Checks, Drafts and Orders Issued in the Company's Name. Any two of the following officers: the Chairman, President, any Vice-President, and the Treasurer, Secretary or Controller may from time to time (1) open and keep in the name and on behalf of the Company, with such banks, trust companies or other depositories as they may designate, general and special bank accounts for the funds of the Company, and (2) terminate any such bank accounts. Any such action by two of the officers as specified above shall be made by an instrument in writing signed by such two officers and filed with the Secretary. A copy of such instrument, certified by the Secretary or an Assistant Secretary, shall be evidence to all concerned that the designations or terminations therein contained are duly authorized on behalf of the Company at the time of the certification. All funds and securities of the Company shall be deposited in such banks, trust companies or other depositories as are designated by the Board of Directors or by the aforesaid officers in the manner hereinabove provided, and for the purpose of such deposits, the Chairman, President, any Vice-President, the Secretary, the Controller, the Treasurer or an Assistant Treasurer, and each of them, or any other person or persons authorized by the Board of Directors, may endorse, assign and deliver checks, notes, drafts, and other orders for the payment of money which are payable to the Company. -21- All checks, drafts, or orders for the payment of money, drawn in the name of the Company, may be signed by the Chairman, President, any Vice- President, the Secretary, the Treasurer or any Assistant Treasurer, or by any other officer or any employee of the Company who shall from time to time be designated to sign checks, drafts, or orders on all accounts or on any specific account of the Company by an "instrument of designation" signed by any two of the following officers: The Chairman, President, any Vice-President, and the Treasurer, and filed with the Secretary. The Secretary or any Assistant Secretary shall make certified copies of such instruments of designation and such certified copies shall be evidence to all concerned of the authority of the persons designated therein at the time of the certification. An instrument of designation may provide for (1) the facsimile signature of any person authorized to sign by such instrument or by this Section, or (2) the revocation of authority of any person (other than an officer named in this Section) to sign checks, drafts or orders drawn in the name of the Company. ARTICLE IV-B ------------ INDEMNIFICATION --------------- 1. Any person made or threatened to be made a party to any action or proceeding, whether civil or criminal, by reason of the fact that such person or such person's testator or intestate is or was a director, officer or employee of the Corporation or serves or served any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity at the request of the Corporation shall be indemnified by the Corporation, and the Corporation may advance such person's related expenses, to the full extent permitted by law. For purposes of this section, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees, so that any person who is or was a director, officer or employee of such constituent corporation, or is or was serving at the request of such constituent corporation any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity at the request of the Corporation, shall stand in the same position under the provisions of this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. ARTICLE V --------- CAPITAL STOCK ------------- 1. The instruments of debentures, certificate of shares of the preferred, preference and common capital stock of the Company shall be in such form as shall be approved by the Board of Directors. The certificates shall be signed by the Chairman of the Board or the President and also by the Secretary or the Treasurer. The seal of the Corporation shall be affixed to all certificates. The signatures of the officers upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation itself or its employee. -22- 2. All certificates shall be consecutively numbered, and the names of the owners, the number of shares and the date of issue, shall be entered in the Company's books. 3. The Company or its duly authorized stock transfer agent shall keep a book to be known as the stock book, containing the names, alphabetically arranged, of all persons who are stockholders of the Corporation, showing their places of residence, the number of shares of preferred, preference and common stock held by each respectively, and the time when each became the owner thereof, also entries showing from and to whom such shares shall be transferred, and the number and denomination of all revenue stamps used to evidence the payment of the stock transfer tax as required by the laws of the State of New York, which books shall be open daily, during usual business hours, for inspection by any person who shall have been a stockholder of record in such Corporation for a least six months immediately preceding his demand; or by any person holding or thereunto in writing authorized by the holders of at least five per centum of any class of its outstanding shares, upon at least five days written demand. Persons so entitled to inspect stock books may make extracts therefrom. 4. Shares shall be transferred only on the books of the Corporation by the holder thereof in person or by his attorney upon the surrender and cancellation of certificates for a like number of shares, and upon tender of stock transfer stamps or the equivalent in money sufficient to satisfy all legal requirements. 5. The Board may make such rules and regulations as it may deem expedient concerning the issue, transfer and registration of certificates of stock of the Company. 6. Certificates for shares of stock or for debentures in the Corporation may be issued in lieu of certificates alleged to have been lost, stolen, destroyed, mutilated, or abandoned, upon the receipt of (1) such evidence of loss, theft, destruction or mutilation and a bond of indemnity in such amount, upon such terms and with such surety, if any, as the Board of Directors may require in each specific case, or (2) a request by an appropriate governmental agency or representative for the reissuance of a stock certificate claimed to be abandoned or escheated in accordance with the abandoned property or similar law of the state, or (3) in accordance with general resolutions. ARTICLE VI ---------- SEAL ---- 1. The Board shall provide a suitable seal, containing the name of the Corporation, the year of its creation, and the words "Corporate Seal, N.Y." or other appropriate words, which seal shall be in charge of the Secretary, to be used as directed by the Board. ARTICLE VII ----------- FISCAL YEAR ----------- 1. The fiscal year of the Corporation shall begin the first business day in January. -23- ARTICLE VIII ------------ NOTICE AND WAIVER OF NOTICE --------------------------- 1. Any notice required to be given by these By-Laws may be given by mailing the same addressed to the person entitled thereto at his address as shown on the Company's books, and such notice shall be deemed to be given at the time of such mailing. 2. Any stockholder, director or officer may waive any notice required to be given by these By-Laws. ARTICLE IX ---------- AMENDMENTS ---------- 1. Subject to the terms and conditions of the certificate of incorporation, the Board of Directors shall have power to make, amend, and repeal the By-Laws of the corporation, by a vote of the majority of all the directors present at any regular or special meeting of the Board, provided a quorum is in attendance and provided further that notice of intention to make, amend or repeal the By-Laws in whole or in part at such meeting shall have been previously given to each member of the Board. -24- Exhibit (12) The McGraw-Hill Companies, Inc. ------------------------------- Computation of Ratio of Earnings to Fixed Charges ------------------------------------------------- Periods Ended March 31, 1996 ----------------------------
Three Twelve Months Months --------- --------- (In thousands) Earnings Earnings from continuing operations before income tax expense (Note)...... $ 26,020 $ 385,494 Fixed charges........................... 19,792 90,299 Capitalized interest.................... - (310) --------- --------- Total Earnings....................... $ 45,812 $ 475,483 ========= ========= Fixed Charges (Note) Interest expense........................ $ 12,247 $ 61,576 Portion of rental payments deemed to be interest.............................. 7,545 28,723 --------- --------- Total Fixed Charges.................. $ 19,792 $ 90,299 ========= ========= Ratio of Earnings to Fixed Charges 2.3x 5.3x (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.
-25- EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-Q
5 1,000 3-MOS DEC-31-1996 MAR-31-1996 14,350 0 799,243 81,534 268,008 1,145,869 829,553 504,458 3,038,415 986,032 0 102,919 14 0 0 3,038,415 583,851 583,851 550,415 550,415 0 18,419 11,419 27,259 11,067 16,192 0 0 0 16,192 0.16 0.16
-----END PRIVACY-ENHANCED MESSAGE-----