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, 1995
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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 512-2000
------------------
Not Applicable
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(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 July 28, 1995 there were 49,930,876 shares of Common Stock
(par value $1.00 per share) outstanding.
The McGraw-Hill Companies, Inc.
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TABLE OF CONTENTS
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Page Number
-----------
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
-------
Consolidated Statement of Income for
the three and six month periods ended
June 30, 1995 and 1994 3
Consolidated Balance Sheet at June 30, 1995,
December 31, 1994 and June 30, 1994 4-5
Consolidated Statement of Cash Flows for the Six
months ended June 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of Operating
------- Results and Financial Condition 11-14
PART II. OTHER INFORMATION
- ---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
------- at Annual Meeting of Shareholders 15
Item 6. Exhibits and Reports on Form 8-K 16-32
-------
-2-
PART I
Financial Information
Item 1. Financial Statements
--------------------
The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Statement of Income
--------------------------------
Periods Ended June 30, 1995 and 1994
------------------------------------
Three Months Six Months
-------------------- ----------------------
1995 1994 1995 1994
--------- --------- ---------- ----------
(In thousands, except per-share data)
Operating revenue $ 712,782 $ 648,279 $1,281,330 $1,208,053
Expenses:
Operating 324,339 290,272 605,639 566,843
Selling and general 230,000 216,229 445,063 425,376
Depreciation and amortization 57,686 52,789 98,723 93,266
--------- --------- ---------- ----------
Total expenses 612,025 559,290 1,149,425 1,085,485
Other income - net 5,396 5,411 10,765 8,634
--------- --------- ---------- ----------
Income from operations 106,153 94,400 142,670 131,202
Interest expense - net 16,289 12,698 29,079 24,046
--------- --------- ---------- ----------
Income before taxes on income 89,864 81,702 113,591 107,156
Provision for taxes on income 37,023 33,661 46,799 44,148
--------- --------- ---------- ----------
Net income $ 52,841 $ 48,041 $ 66,792 $ 63,008
========= ========= ========== ==========
Earnings per common share $ 1.06 $ 0.97 $ 1.34 $ 1.27
========= ========= ========== ==========
Average number of common
shares outstanding 49,830 49,442 49,769 49,441
-3-
The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Balance Sheet
--------------------------
June 30, Dec. 31, June 30,
1995 1994 1994
---------- ---------- ----------
(In thousands)
ASSETS
Current assets:
Cash and equivalents $ 19,031 $ 8,056 $ 12,995
Accounts receivable (net of allowance
for doubtful accounts) (Note 3) 781,359 757,949 694,536
Receivable from broker-dealers and
dealer banks (Note 4) 17,461 23,047 52,770
Inventories (Note 3) 295,727 213,253 266,387
Prepaid income taxes 70,171 70,556 92,585
Prepaid and other current assets 62,602 51,226 40,841
---------- ---------- ----------
Total current assets 1,246,351 1,124,087 1,160,114
---------- ---------- ----------
Prepublication costs (net of accumulated
amortization) (Note 3) 277,994 270,506 297,923
Investments and other assets:
Investment in Rock-McGraw, Inc. - at
equity 59,875 57,652 55,210
Prepaid pension expense 101,843 95,110 93,175
Other 145,081 142,502 152,880
---------- ---------- ----------
Total investments and other assets 306,799 295,264 301,265
---------- ---------- ----------
Property and equipment - at cost 808,978 788,671 748,369
Less - accumulated depreciation 474,346 442,889 418,204
---------- ---------- ----------
Net property and equipment 334,632 345,782 330,165
Goodwill and other intangible assets - at
cost (net of accumulated amortization) 973,051 972,894 999,606
---------- ---------- ----------
$3,138,827 $3,008,533 $3,089,073
========== ========== ==========
-4-
The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Balance Sheet
--------------------------
June 30, Dec. 31, June 30,
1995 1994 1994
---------- ---------- ----------
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 286,493 $ 105,288 $ 174,931
Accounts payable 172,611 176,314 176,324
Payable to broker-dealers and dealer
banks (Note 4) 16,846 21,909 51,719
Accrued liabilities 141,316 177,172 131,927
Income taxes currently payable 79,412 54,300 73,851
Unearned revenue 229,389 239,715 235,975
Other current liabilities 201,274 233,287 221,859
---------- ---------- ----------
Total current liabilities 1,127,341 1,007,985 1,066,586
---------- ---------- ----------
Other liabilities:
Long-term debt (Note 5) 657,705 657,517 757,932
Deferred income taxes 125,115 129,750 114,812
Accrued postretirement healthcare and
other benefits 191,324 191,650 192,365
Other non-current liabilities 110,559 108,579 118,594
---------- ---------- ----------
Total other liabilities 1,084,703 1,087,496 1,183,703
---------- ---------- ----------
Total liabilities 2,212,044 2,095,481 2,250,289
---------- ---------- ----------
Shareholders' equity (Note 6):
Capital stock 51,474 51,474 51,474
Additional paid-in capital 75,112 69,314 67,016
Retained income 930,064 923,052 840,022
Foreign currency translation adjustments (49,964) (45,224) (26,390)
---------- ---------- ----------
1,006,686 998,616 932,122
Less - common stock in treasury-at cost 68,285 76,987 82,570
unearned compensation on
restricted stock 11,618 8,577 10,768
---------- ---------- ----------
Total shareholders' equity 926,783 913,052 838,784
---------- ---------- ----------
$3,138,827 $3,008,533 $3,089,073
========== ========== ==========
-5-
The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Statement of Cash Flows
------------------------------------
For The Six Months Ended June 30, 1995 and 1994
-----------------------------------------------
1995 1994
--------- ---------
(In thousands)
Cash flows from operating activities
- ------------------------------------
Net income $ 66,792 $ 63,008
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 32,847 31,161
Amortization of goodwill and intangibles 18,891 19,072
Amortization of prepublication costs 46,985 42,553
Provision for losses on accounts receivable 32,896 34,014
Other 354 (753)
Changes in assets and liabilities net of effect of
acquisitions and dispositions:
Increase in accounts receivable (38,062) (18,562)
Increase in inventories (84,103) (51,011)
Decrease in accounts payable and accrued expenses (45,051) (52,687)
Decrease in other current liabilities (45,530) (4,430)
Increase in interest and income taxes payable 25,424 31,361
Net change in other assets and liabilities (26,541) (10,055)
- --------------------------------------------------- --------- ---------
Cash (used for)/provided by operating activities (15,098) 83,671
- --------------------------------------------------- --------- ---------
Investing activities
- --------------------
Purchases of property and equipment (21,525) (21,788)
Investment in prepublication costs (57,261) (55,821)
Disposition of property and equipment 180 4,680
Acquisition of businesses and equity interests (24,964) (309)
Other 1,129 2,655
- --------------------------------------------------- --------- ---------
Cash used for investing activities (102,441) (70,583)
- --------------------------------------------------- --------- ---------
Financing activities
- --------------------
Dividends paid to shareholders (59,780) (57,236)
Additions to short-term debt - net 181,230 3,864
Exercise of stock options 8,473 5,155
Other (1,409) 171
- --------------------------------------------------- --------- ---------
Cash provided by/(used for) financing activities 128,514 (48,046)
- --------------------------------------------------- --------- ---------
Net change in cash and equivalents 10,975 (34,958)
Cash and equivalents at beginning of period 8,056 47,953
- --------------------------------------------------- --------- ---------
Cash and equivalents at end of period $ 19,031 $ 12,995
========= =========
-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 is based on estimates which include all adjustments
(consisting only of normal recurring adjustments) considered necessary to
present fairly such information. The operating results for the three and
six month periods ended June 30, 1995 and 1994 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, 1994.
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, 1995 and 1994 follows:
1995 1994
-------------------- ---------------------
Operating Operating
Revenue Profit Revenue Profit
--------- ---------- --------- ----------
Three Months (In thousands)
------------
Educational and Professional
Publishing $ 301,610 $ 31,220 $ 258,818 $ 20,906
Financial Services 192,075 55,975 183,094 53,257
Information and Media Services 219,097 32,497 206,367 33,288
-------------------------------- -------- --------- --------- ---------
Total operating segments 712,782 119,692 648,279 107,451
General corporate expense - (13,539) - (13,051)
Interest expense - net - (16,289) - (12,698)
-------------------------------- -------- --------- --------- ---------
Total company $712,782 $ 89,864* $ 648,279 $ 81,702*
======== ========= ========= =========
<FN>
*Income before taxes on income.
</FN>
-7-
The McGraw-Hill Companies, Inc.
-------------------------------
Notes to Financial Statements
-----------------------------
1995 1994
---------------------- -----------------------
Operating Operating
Revenue Profit Revenue Profit/(Loss)
---------- ---------- ---------- ------------
Six Months (In thousands)
----------
Educational and Professional
Publishing $ 472,906 $ 1,849 $ 435,133 $ (4,027)
Financial Services 391,441 115,276 377,540 112,039
Information and Media Services 416,983 51,940 395,380 47,760
------------------------------ ---------- --------- ---------- ---------
Total operating segments 1,281,330 169,065 1,208,053 155,772
General corporate expense - (26,395) - (24,570)
Interest expense - net - (29,079) - (24,046)
------------------------------ ---------- --------- ---------- ---------
Total company $1,281,330 $113,591* $1,208,053 $ 107,156*
========== ========= ========== =========
<FN>
*Income before taxes on income.
</FN>
-8-
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:
June 30, Dec. 31, June 30,
1995 1994 1994
--------- --------- ---------
(In thousands)
Allowance for doubtful accounts $ 79,958 $ 78,732 $ 79,201
========= ========= =========
Inventories:
Finished goods $ 189,993 $ 140,168 $ 187,936
Work-in-process 68,751 47,795 57,541
Paper and other materials 36,983 25,290 20,910
--------- --------- ---------
Total inventories $ 295,727 $ 213,253 $ 266,387
========= ========= =========
Accumulated amortization of
prepublication costs $ 354,248 $ 346,172 $ 279,555
========= ========= =========
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 $252 million of matched purchase and sale commitments at
June 30, 1995. 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,
1995 1994 1994
--------- --------- ---------
(In thousands)
9.43% senior notes due 2000 $ 250,000 $ 250,000 $ 250,000
Commercial paper supported by
bank revolving credit agreement 400,000 400,000 500,000
Other 7,705 7,517 7,932
--------- --------- ---------
Total long-term debt $ 657,705 $ 657,517 $ 757,932
========= ========= =========
-9-
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:
June 30, Dec. 31, June 30,
1995 1994 1994
--------- --------- ---------
$1.20 convertible preference stock
at the rate of 3.3 shares for each
share of preference stock 4,673 4,996 5,046
Stock based awards 3,804,574 4,055,114 4,230,568
--------- --------- ---------
3,809,247 4,060,110 4,235,614
========= ========= =========
Common shares reserved for issuance at June 30 and December 31, 1994 were
restated to include 2.3 million shares under the 1993 Key Employee Stock
Incentive Plan. No stock options under the 1993 Plan were issued prior to
1995.
7. Cash dividends per share declared during the periods were as follows:
CAPTION>
Three Months Six Months
------------- -------------
1995 1994 1995 1994
---- ---- ----- -----
Common stock $.60 $.58 $1.20 $1.16
Preference stock .30 .30 .60 .60
-10-
Item 2. Management's Discussion and Analysis of Operating
-------------------------------------------------
Results and Financial Condition
-------------------------------
Operating Results - Comparing Periods Ended June 30, 1995 and 1994
- ------------------------------------------------------------------
Three Months
- ------------
Consolidated Review
- -------------------
Operating revenue for the quarter grew $64.5 million, or 10%, over the 1994
quarter to $712.8 million primarily due to volume increases in Educational and
Professional Publishing, reflecting strong school publishing business. Revenues
also improved in the Financial Services segment, in both Financial Information
Services and S&P Ratings, and in the Information and Media Services segment,
primarily at Business Week. Net income increased 10% to $52.8 million primarily
due to school publishing. Earnings per share were $1.06 versus 97 cents last
year.
Total expenses in 1995 increased $52.7 million, or 9.4%, reflecting primarily
costs associated with the increased revenues, continued investments at S&P
Ratings and costs related to new electronic products for the construction
information market.
Net interest expense increased $3.6 million, or 28.3%, reflecting an increase in
average commercial paper interest rates from 3.8% in 1994 to 6.2% in 1995. The
impact of the higher rates was partially offset by reduced average commercial
paper borrowing levels from the prior year.
The provision for taxes as a percent of income before taxes was 41.2% in both
1994 and 1995.
Segment Review
- --------------
Educational and Professional Publishing revenue increased $42.8 million, or
16.5%, to $301.6 million. The increase is due to strong sales by the McGraw-
Hill School Publishing Company, primarily in the key 1995 adoption states of
Texas and California. Revenues in the quarter were enhanced by some early
ordering activity. Glencoe, the secondary and vocational publisher, performed
particularly well. Excluding school publishing, the revenues of the company's
other publishing operations declined slightly from last year. International
publishing revenues were flat, with improvement in all major regions offsetting
depressed market conditions in Mexico. Revenues in legal publishing declined
due to the timing of the publishing program. Operating profit for the segment
improved $10.3 million, or 49.3%, to $31.2 million due to the strong school
publishing performance. The company has announced that Shepard's/McGraw-Hill,
its legal information service unit, plans to divest its topical publishing
business to concentrate on its core business, legal citations.
-11-
Financial Services' revenue grew $9.0 million, or 4.9%, and operating profit
increased $2.7 million, or 5.1%. Financial Information Services'revenues and
profits gained in the quarter, led by Platt's and MMS International, reflecting
continued broader distribution of products over third-party networks. Operating
profits were favorable to last year due to the higher revenues, cost containment
and the continued turnaround at DRI/McGraw-Hill. S&P Ratings' revenues
increased from last year as new bond issuance began to improve, particularly in
June. S&P Ratings' global expansion also yielded higher revenues. Operating
profits were flat with last year due to continuing investments for expansion.
Information and Media Services revenue increased $12.7 million, or 6.2%, while
operating profit declined $0.8 million, or 2.4%. Business Week revenue gained
significantly in the quarter, despite one less issue than a year ago, while
revenues for Tower Group International also increased, partly due to the
acquisition of UCB Canada, Ltd. Broadcasting was flat with last year. The
drop in segment operating profit is largely due to the Construction Information
Group, where there was a decline in revenues and profits for the construction
magazines and increased costs in Dodge related to the introduction of new
electronic products. The change in network affiliation for the company's Denver
broadcast station from CBS to ABC announced last year has been delayed but is
expected to be completed in the third quarter.
Six Months
- ----------
Consolidated Review
- -------------------
For the first half of the year, operating revenue of $1.3 billion was $73.3
million, or 6.1%, ahead of 1994. School publishing was the major contributor to
the revenue growth, with Financial Information Services and Business Week also
recording increases. Total expenses in 1995 increased $63.9 million, or 5.9%,
reflecting primarily the increased revenues and continued investments in S&P
Ratings. Net income increased 6.0% to $66.8 million from $63 million. Earnings
per share were $1.34 versus $1.27 last year.
Net interest expense increased $5.0 million, or 20.9%, reflecting an increase in
average commercial paper interest rates from 3.6% in 1994 to 6.2% in 1995. The
impact of the higher rates was partially offset by reduced average commercial
paper borrowing levels from the prior year.
The provision for taxes as a percent of income before taxes was 41.2% in both
1994 and 1995.
Segment Review
- --------------
Educational and Professional Publishing revenue increased $37.8 million, or
8.7%, to $472.9 million. School publishing accounts for most of the revenue
rise, with small increases also in domestic professional publishing and at the
Continuing Education Center. Internationally, revenues improved slightly with
strong results in Europe and Asia offset by a significant decline in Mexico,
reflecting depressed market conditions. Medical publishing revenues declined
-12-
reflecting the prior year publication of "Harrison's Principles of Internal
Medicine," which is published every four years. Operating profit improved to
$1.8 million compared to an operating loss of $4.0 million in 1994 due to the
improved revenues in school publishing and professional publishing, partially
offset by declines in medical publishing and Shepard's, reflecting publication
timing within each fiscal year.
Financial Services' revenue increased $13.9 million, or 3.7%, to $391.4 million.
Operating profit improved $3.2 million, or 2.9%. Financial Information
Services' revenues and profits increased reflecting continued growth in
financial information products, particularly in Financial Data Services,
comprised of S&P Comstock, Platt's and MMS International. Profits were also
enhanced by the continued turnaround at DRI/McGraw-Hill. Despite significant
declines in new issuance volume in the U.S. corporate bond market, revenues
improved at S&P Ratings due to growth in new ratings services and continued
global expansion. S&P Ratings' profits declined from last year due to
continuing investment to expand the business.
Information and Media Services revenue increased $21.6 million, or 5.5%, to
$417.0 million while operating profit improved $4.2 million, or 8.8%. Business
Week and Tower Group International had revenue gains with Business Week
accounting for most of the profit increase; Tower profits declined due to higher
costs for new products. Broadcasting results improved over the prior year.
Profits in the Construction Information Group declined reflecting new product
costs and reduced revenues for the group's magazines.
Financial Condition - June 30, 1995 versus December 31, 1994
- ------------------------------------------------------------
The company continues to maintain a strong financial position. Cash used in
operating activities totaled $15.1 million compared to cash flow generated from
operations last year of $83.7 million. This year-to-year decline in the cash
flow from operations largely reflects seasonal factors related to 1995 school
publishing adoptions, such as inventory purchases and sampling costs. Total
debt was $944.2 million, an increase of $170.4 million from year-end, net of the
increase in cash balance of $11 million. The increase in debt reflects the
seasonal factors noted above, as well as the acquisition of UCB Canada, Ltd.
The increased seasonality of the company's businesses caused by the 1993
acquisition of the Macmillan/McGraw-Hill School Publishing Company has impacted
the company's borrowing patterns during the year. The company now borrows
during the first half of the fiscal year and generates cash in the second half
of the year, primarily from fourth quarter collections from customers in the
education markets. This pattern is magnified in years where there is
significant state adoption activity, such as in 1995. Cash expenditures related
to the consolidation of book publishing operations, primarily for severance
costs and lease terminations, had a minimal impact on the company's liquidity.
Commercial paper borrowings at June 30, 1995 totaled $675.5 million, an
increase of $177 million from December 31, 1994. Commercial paper debt is
supported by a $800 million revolving credit agreement with a group of banks
-13-
terminating in November 1999, and $400 million has been 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 $861.3 million increased $24.6 million
from the end of 1994, due primarily to second quarter school publishing sales.
Receivables were $87.6 million higher than at June 30, 1994, due primarily to
the more favorable 1995 school publishing adoption cycle as well as revenue
growth in the company's other businesses. Number of days sales outstanding, a
key indicator of collection efficiency, improved two days from June 1994.
Inventories increased $82.5 million to $295.7 million from the end of 1994 due
primarily to the seasonal requirements for school publishing and the seasonal
buildup for the annual Sweet's Files. Inventories were $29.3 million higher
than at June 30, 1994 due to the 1995 school publishing adoptions.
Net prepublication costs at June 30 increased $7.5 million from the end of 1994
to $278.0 million due to additional investment in new titles and school programs
net of year to date amortization expense. 1995 year to date prepublication cost
investment totaled $57.3 million, an increase of $1.4 million compared to the
comparable six month period in 1994. Net prepublication costs were $19.9
million lower than at June 30, 1994 as amortization has exceeded spending in the
twelve months ended June 30, 1995.
Purchases of property and equipment during the first six months totaled $21.5
million, primarily for computer equipment for the market focus groups. This
spending approximated 1994's spending level.
-14-
PART II
Other Information
Item 4. Submission of Matters to a Vote of Security Holders at Annual
-------------------------------------------------------------
Meeting of Shareholders.
-----------------------
The 1995 annual meeting of shareholders of the Registrant was held on April 26,
1995. The matters voted on and the results of the vote are as follows:
(a) The following nominees, having received the FOR votes set forth
opposite their respective names, were duly elected directors of the
Registrant for three-year terms:
DIRECTOR FOR WITHHOLD AUTHORITY
- --------------------- ------------ ------------------
George B. Harvey 44,015,430 150,355
Richard H. Jenrette 43,963,129 202,667
Lois Dickson Rice 43,955,413 210,383
The terms of office of the following directors continued after the meeting:
Joseph L. Dionne, Don Johnston, Harold W. McGraw III, Alva O. Way, Linda Koch
Lorimer, Vartan Gregorian, John T. Hartley, Peter O. Lawson-Johnston, Paul J.
Rizzo and James H. Ross.
(b) Shareholders approved an amendment to the Registrant's restated
certificate of incorporation to change the corporate name of the Registrant
from "McGraw-Hill, Inc." to "The McGraw-Hill Companies, Inc." The vote was
42,926,978 shares FOR and 1,107,375 shares AGAINST, with 131,442 shares
abstaining and no broker nonvotes.
(c) Shareholders ratified the appointment of Ernst & Young LLP as
independent auditors for the Registrant and its subsidiaries for 1995. The
vote was 44,065,009 shares FOR and 44,589 shares AGAINST, with 56,198
shares abstaining and no broker nonvotes.
(d) A shareholder proposal requesting the elimination of the election
of directors by three separate classes was not approved. The vote was
19,013,038 shares FOR and 22,053,920 shares AGAINST, with 193,195 shares
abstaining and 2,905,643 broker nonvotes.
(e) A shareholder proposal requesting the elimination of pension plans
for non-employee directors was not approved. The vote was 10,729,130
shares FOR and 30,005,960 shares AGAINST, with 525,554 shares abstaining
and 2,905,143 broker nonvotes.
-15-
Item 6. Exhibits and Reports on Form 8-K Page Number
-------------------------------- -----------
a) Exhibits
3(i) Amendment to Registrant's Restated Certificate
of Incorporation. 17-18
3(ii) Amendment to Registrant's By-Laws. 19-30
12 Computation of ratio of earnings to fixed charges. 31
27 Financial Data Schedule. 32
b) Reports on Form 8-K.
A Report on Form 8-K was filed by the Registrant on May 2, 1995.
Item 5 (Other Events) was reported on in said Form 8-K which
disclosed the change in the Registrant's name from McGraw-Hill,
Inc. to The McGraw-Hill Companies, Inc.
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: 8/10/95 By Robert J. Bahash
------------------ ------------------------------
Robert J. Bahash
Executive Vice President
and Chief Financial Officer
Date: 8/10/95 By Thomas J. Kilkenny
------------------ ------------------------------
Thomas J. Kilkenny
Vice President and Controller
Date: 8/10/95 By Kenneth M. Vittor
------------------ ------------------------------
Kenneth M. Vittor
Senior Vice President
and General Counsel
-16-
Exhibit 3(i)
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF McGRAW-HILL, INC.
UNDER SECTION 805 OF THE BUSINESS CORPORATION LAW
-------------------------------------------------
It is hereby certified that:
(1) The name of the Corporation is McGRAW-HILL, INC. The name under which
the Corporation was formed was McGraw-Hill Publishing Company, Inc. which name
was changed to McGraw-Hill, Inc. on January 2, 1964.
(2) The Certificate of Incorporation of the Corporation was filed by the
Department of State on December 29, 1925.
(3) Article I of the Certificate of Incorporation of the Corporation is
hereby amended to effect a change in the Corporation's name from "McGraw-Hill,
Inc." to "The McGraw-Hill Companies, Inc." Article I of the Certificate of
Incorporation of the Corporation is hereby amended to read as follows:
"ARTICLE I. The Corporate name shall be:
The McGraw-Hill Companies, Inc."
(4) This Amendment to the Certificate of Incorporation of the Corporation
was properly authorized by vote at a meeting of the board of directors, duly
held on January 25, 1995, followed by the vote of the holders of at least a
majority of all outstanding shares of Common Stock and $1.20 Convertible
Preference Stock, voting together as a single class, entitled to vote thereon at
the Annual Meeting of Shareholders of the Corporation duly held on April 26,
1995.
IN WITNESS WHEREOF, this Certificate has been signed this 26th day of
April, 1995.
/s/ Robert N. Landes
------------------------------------
Robert N. Landes
Executive Vice President
/s/ Scott L. Bennett
------------------------------------
Scott L. Bennett
Assistant Secretary
-17-
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
ROBERT N. LANDES, being duly sworn deposes and says that he is the person
who signed the foregoing Certificate of Amendment; that he signed said
Certificate in the capacity set forth beneath his signature thereon; that he has
read said Certificate and knows the contents thereof; and that the statements
contained therein are true to his own knowledge.
/s/ Robert N. Landes
-------------------------------
Robert N. Landes
Executive Vice President
Subscribed and sworn to
before me on April 26, 1995
/s/ Peter J. O'Conor
- ----------------------------------------
Notary Public, State of New York
No. 41-4816506, Qual. in Queens County
Certificate Filed in New York County
Commission Expires May 31, 1996
-18-
Exhibit 3(ii)
THE McGRAW-HILL COMPANIES, INC.
BY-LAWS
-------
(As amended July 26, 1995)
--------------------------
ARTICLE I
---------
STOCKHOLDERS
------------
1. A meeting of the stockholders shall be held annually, wheresoever
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.
-19-
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.
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
-20-
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
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.
-21-
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.
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.
-22-
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 fourteen (14). 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.
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.
-23-
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.
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.
-24-
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.
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 offices 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
-25-
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.
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.
-26-
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.
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
-27-
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.
-28-
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 at 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.
-29-
ARTICLE VII
-----------
FISCAL YEAR
-----------
1. The fiscal year of the Corporation shall begin the first business day
in January.
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.
-30-
Exhibit 12
The McGraw-Hill Companies, Inc.
-------------------------------
Computation of Ratio of Earnings to Fixed Charges
-------------------------------------------------
Periods Ended June 30, 1995
---------------------------
Six Twelve
Months Months
--------- ---------
(In thousands)
Earnings
Earnings from continuing operations
before income tax expense (Note)...... $ 111,369 $ 348,538
Fixed charges........................... 46,285 90,343
Capitalized interest.................... (233) (399)
--------- ---------
Total Earnings....................... $ 157,421 $ 438,482
========= =========
Fixed Charges (Note)
Interest expense........................ $ 31,409 $ 61,270
Portion of rental payments deemed to be
interest.............................. 14,876 29,073
--------- ---------
Total Fixed Charges.................. $ 46,285 $ 90,343
========= =========
Ratio of Earnings to Fixed Charges 3.4x 4.9x
<FN>
(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.
</FN>
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