FOR IMMEDIATE RELEASE 34WM-101696
THE McGRAW-HILL COMPANIES REPORTS
8.2% INCREASE IN THIRD QUARTER EARNINGS
COMPLETES EXCHANGE OF SHEPARD'S FOR
TIMES MIRROR HIGHER EDUCATION GROUP
ACQUISITION ESTABLISHES THE MCGRAW-HILL COMPANIES
AS WORLD'S LARGEST EDUCATIONAL PUBLISHER
NEW YORK, N.Y., OCTOBER 16, 1996 -- The McGraw-Hill Companies
(NYSE: MHP) today reported that net income for the third quar-
ter increased by 8.2% to $114.5 million while revenue grew 4.9%
to $949 million. Earnings per share were $1.15 compared to
$1.06 for the same period last year.
For the first nine months, net income grew 8.8% to
$187.9 million. Revenue for the period was $2.2 billion, an
increase of 2.7%. Earnings per share for the first nine months
were $1.88 versus $1.73 for the comparable period a year ago.
The McGraw-Hill Companies also announced the comple-
tion of the exchange of its Shepard's/McGraw-Hill legal pub-
lishing unit for the Times Mirror Higher Education Group and
other consideration, including an undisclosed amount of cash.
THIRD QUARTER RESULTS: "Keys to our third quarter
were the strong performance of Financial Services and good re-
sults in the school market despite an off-adoption year," said
Joseph L. Dionne, chairman and chief executive officer of The
McGraw-Hill Companies.
EDUCATION AND PROFESSIONAL PUBLISHING: "Operating
profit increased 4.9% on a revenue gain of 5.4% in this segment
for the third quarter.
"Although comparisons were difficult after an out-
standing 1995 adoption year in the school market, our
elementary-high school operations still produced gains this
year. We had outstanding results in the secondary school and
supplemental markets, showing strength in both the open ter-
ritories and in adoption states. We were also encouraged by
the early sales of our new basal reading program, Spotlight on
Literacy, in the open territories. Spotlight on Literacy is
currently up for adoption in California, which may spend as
much as $300 million on new reading programs starting in 1997.
"We also benefited from continuing improvement in our
college division, which had strength in the front and back
lists and in Primis Custom Publishing sales.
"In international markets, we had excellent results
in Spain with a major new program for secondary schools, but
improvement there and in Asia could not offset the slow pace of
recovery in Mexico. As a result, total international sales
were flat for the third quarter and profits declined. Without
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the shortfall in Mexico, total international sales and profits
would have been ahead of last year for the third quarter.
There was also softness in professional book operations.
FINANCIAL SERVICES: "Global growth, new products and
a strong market for asset-backed securities contributed to the
10.9% increase in operating profits on a 8.2% gain in revenue
for this segment in the third quarter.
"Standard & Poor's Ratings Services showed strength
across its entire product lineup. International and structured
finance businesses were particularly strong. Other factors
were the increased issuance of high yield corporate debt, im-
proved share in the public finance market and gains in the in-
surance ratings business both here and abroad.
"Our around-the-clock global information businesses
continued to produce growth at Standard & Poor's Financial In-
formation Services. Platt's, our commodities information ser-
vice in the energy market, and MMS International, which pro-
vides analysis and information for global debt and currency
markets, both grew over third-party networks. But there was
softness in the secondary municipal market and at DRI.
INFORMATION AND MEDIA SERVICES: "Revenue advanced by
less than 1% and operating profits declined by 17.3% in this
segment for the third quarter.
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"Improved results at Business Week, Aviation Week and
our healthcare publications could not overcome the shortfalls
at BYTE and LAN Times, our computer and communications publica-
tions, Broadcasting and in the Construction Information Group.
"Revenue improved for the Construction Information
Group, but development and marketing costs for launching the
windows version of Dodge DataLine and weakness in the construc-
tion publications contributed to a drop in operating profits.
"Despite stronger than expected political advertising, the
Broadcasting Company's revenue and operating profits declined,
reflecting competition from the Summer Olympics on a rival net-
work.
"Business Week's revenue and profits both grew, pri-
marily driven by improvements in circulation revenue.
THE OUTLOOK: "There are signs of improvement in our
construction information group and some of our key advertising-
based businesses for the fourth quarter. Political advertising
is strengthening at our television stations and momentum is
starting to build at Business Week. Financial Services contin-
ues to show strength. Excluding the impact of the swap for the
Times Mirror properties, we believe we will achieve our growth
objectives for the year.
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"The exchange of the Shepard's/McGraw-Hill legal pub-
lishing unit for the Times Mirror Higher Education Group will
be a factor in the fourth quarter. We expect a pre-tax gain,
net of one-time charges, of more than $300 million. Dilution
in fourth quarter earnings is estimated to be five-to-seven
cents per share, excluding one-time charges, due to the typical
seasonal decline in higher education business' earnings and the
timing of integration savings.
"The acquisition of the Times Mirror Higher Education
Group makes The McGraw-Hill Companies the world's largest edu-
cational publisher and the leader in 12 higher education disci-
plines, including accounting, economics, finance, biology and
psychology. The new product lineup significantly increases our
sales opportunities overseas where The McGraw-Hill Companies
already has a significant presence."
"The new acquisition represents another step in our
strategy of building on our strength in global publishing,"
said Harold McGraw III, president and chief operating officer
of The McGraw-Hill Companies. "There is very little product
overlap, and we will gain some significant operating efficien-
cies by integrating the Times Mirror Higher Education Group
with our own operations."
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The acquisition involves approximately 1,000 employ-
ees mainly located in Dubuque, Iowa, Madison, Wis., Burr Ridge,
Ill., St. Louis, Mo., and Guilford, Conn.
The five Times Mirror Higher Education business units
that have been acquired --Richard D. Irwin, William C. Brown,
Brown & Benchmark, Irwin Professional Publishing and Mosby Col-
lege -- will become part of The McGraw-Hill CompaniesO new
Higher Education and Consumer Group, headed by Robert E. Evan-
son. The William C. Brown printing operation was sold to Que-
becor Printing (USA) Corp.
The McGraw-Hill Companies is a leading information
services provider, meeting worldwide needs in education, busi-
ness, finance, the professions and government. Founded in 1888,
the Corporation today provides information and analysis in mul-
tiple media through its rich portfolio of valuable brands.
Sales in 1995 exceeded $2.9 billion.
# # #
Contact:
Steven H. Weiss Michelle Marin
Senior Director, The McGraw-Hill Companies
Corporate Communications 212/512-3498 (office)
The McGraw-Hill Companies 212/534-6384 (home)
212/512-2247 (office)
212/580-2565 (home)
weissh@mcgraw-hill.com (e-mail)
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