SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 29, 1998
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The McGraw-Hill Companies, Inc.
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(Exact name of registrant as specified in its charter)
New York 1-1023 13-1026995
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
1221 Avenue of the Americas, New York, New York 10020
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 512-2000
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(Former Name)
Item 5. Other Events.
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On July 29, 1998, the Board of Directors of The McGraw-Hill Companies, Inc.
(the "Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $1.00 per share
(the "Common Shares"), of the Company. The dividend is payable on August 14,
1998 (the "Record Date") to the shareholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one two-hundredth of
a share of Series A Preferred Stock, par value $1.00 per share (the "Preferred
Shares"), of the Company at a price of $300 per one two-hundredth of a Preferred
Share (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (the "Rights Agent").
In connection with the declaration of the dividend of Rights, the Board of
Directors of the Company authorized the redemption of the Company's existing
preferred share purchase rights, which were established in October 1989. The
rights will be redeemed effective as of the close of business on August 14, 1998
pursuant to the Rights Agreement, dated as of October 25, 1989, between the
Company and Manufacturers Hanover Trust Company. This redemption will result in
a one time payment of $.005 per right for each Common Share outstanding as of
August 14, 1998.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of 20% or more of the outstanding
Common Shares or (ii) 10 business days (or such later date as may be determined
by action of the Board of Directors of the Company prior to such time as any
person or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Common Shares. Until the Distribution Date (or earlier redemption
or expiration of the Rights), new Common Share certificates issued after the
Record Date upon transfer or new issuance of Common Shares will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Common Shares outstanding as of the Record
Date, even without such notation or a copy of this Summary of Rights being
attached thereto, will also constitute the transfer of the Rights associated
with the Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
("Right Certificates") will be mailed to holders of
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record of the Common Shares as of the close of business on the Distribution Date
and such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on August 14, 2008 (the "Final Expiration Date"), unless the Rights are
earlier redeemed or exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one two-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $25 per share but will be entitled to an aggregate
dividend of 200 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 200 times the payment made per Common Share. Each Preferred
Share will have 200 votes, voting together with the Common Shares. Finally, in
the event of any merger, consolidation or other transaction in which Common
Shares are exchanged, each Preferred Share will be entitled to receive 200 times
the amount received per Common Share. These rights are protected by customary
antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one two-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two
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times the exercise price of the Right. In the event that any person or group of
affiliated or associated persons becomes an Acquiring Person, proper provision
shall be made so that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be void), will thereafter
have the right to receive upon exercise that number of Common Shares having a
market value of two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and prior
to the acquisition by such person or group of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which will have become void),
in whole or in part, at an exchange ratio of one Common Share, or one
two-hundredth of a Preferred Share (or of a share of a class or series of the
Company's preferred stock having equivalent rights, preferences and privileges),
per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one two-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
Common Shares, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.005 per Right (the "Redemption Price").
The redemption of the Rights may be made effective at such time on such basis
with such conditions as the Board of Directors of the Company in its sole
discretion may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after such time as any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely affect the interests
of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to
any offer conditioned on a substantial number of Rights being acquired. The
Rights should not interfere with any merger or other business combination
approved by the Board of Directors since the Rights may be redeemed by the
Company at the Redemption Price prior to the time that a
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person or group has acquired beneficial ownership of 20% or more of the Common
Shares.
The Rights Agreement, dated as of July 29, 1998, between the Company and
the Rights Agent specifying the terms of the Rights and the form of press
release announcing the declaration of the Rights are attached hereto as Exhibits
4.1 and 99.1, respectively and are incorporated herein by reference. The
foregoing description of the Rights is qualified in its entirety by reference to
such exhibits.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial statements of business acquired.
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Not applicable.
(b) Pro forma financial information.
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Not applicable.
(c) Exhibits. The following exhibits are filed with this
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Report:
Exhibit
No. Description
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4.1 Rights Agreement, dated as of July 29, 1998,
between The McGraw-Hill Companies, Inc. and
ChaseMellon Shareholder Services, L.L.C.
which includes the form of Right Certificate
as Exhibit A and the Summary of Rights to
Purchase Preferred Shares as Exhibit B.
(Incorporated by reference to Exhibit 4.1 to
the Company's Registration Statement on
Form 8-A filed on August 3, 1998).
99.1 Press release, dated July 29, 1998, issued
by the Company. (Incorporated by reference
to Exhibit 99.1 to the Company's Registration
Statement on Form 8-A filed on August 3,
1998).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned,
thereunto duly authorized.
THE McGRAW-HILL COMPANIES, INC.
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(Registrant)
By /s/ Kenneth M. Vittor
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Kenneth M. Vittor
Senior Vice President and
General Counsel
Dated: August 3, 1998
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THE McGRAW-HILL COMPANINES, INC.
Current Report on Form 8-K
Exhibit Index
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Exhibit Description
No.
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4.1 Rights Agreement, dated as of July 29, 1998,
between The McGraw-Hill Companies, Inc. and
ChaseMellon Shareholder Services, L.L.C.
which includes the form of Right Certificate
as Exhibit A and the Summary of Rights to
Purchase Preferred Shares as Exhibit B.
(Incorporated by reference to Exhibit 4.1 to
the Company's Registration Statement on
Form 8-A filed on August 3, 1998).
99.1 Press release, dated July 29, 1998, issued
by the Company. (Incorporated by reference
to Exhibit 99.1 to the Company's Registration
Statement on Form 8-A filed on August 3,
1998).
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