UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
For the fiscal year ended December 31, 2002
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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common stock - $1 par value New York Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
----------------
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definite proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the Registrant is an accelerated filer.
[X]
The aggregate market value of voting stock held by nonaffiliates of the
registrant as of February 15, 2003, was $ 10,515,086,000.
The number of shares of common stock of the registrant outstanding as
of February 15, 2003 was 191,693,589 shares.
Part I, Part II and Part III incorporate information by reference from
the Annual Report to Shareholders for the year ended December 31, 2002. Part III
incorporates information by reference from the definitive proxy statement mailed
to shareholders March 24, 2003 for the annual meeting of shareholders to be held
on April 30, 2003.
TABLE OF CONTENTS
Item Page
- ---- ----
PART I
1. Business.......................................................................... 1
2. Properties........................................................................ 2 - 3
3. Legal proceedings................................................................. 4
4. Submission of matters to a vote of security holders .............................. 4
Executive officers of the registrant.............................................. 5
PART II
5. Market for the registrant's common stock and related
stockholder matters............................................................... 6
6. Selected financial data........................................................... 6
7. Management's discussion and analysis of financial
condition and results of operations............................................... 6
7A. Market risk....................................................................... 6
8 Consolidated financial statements and supplementary data.......................... 6
9 Changes in and disagreements with accountants on accounting
and financial disclosure.......................................................... 6
PART III
10. Directors and executive officers of the registrant................................ 7
11. Executive compensation............................................................ 7
12. Security ownership of certain beneficial owners
and management.................................................................... 7 - 8
13. Certain relationships and related transactions.................................... 9
14. Controls and Procedures........................................................... 9
15. Exhibits, financial statement schedules, and
reports on Form 8-K............................................................... 9 - 12
Signatures............................................................................. 13 - 15
Annual Certification Pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002................................................................. 16 - 19
Exhibits.......................................................................... 20 - 48
Consent of Independent Auditors - Ernst & Young LLP............................... 49
Annual Certifications of the Chief Executive Officer and the
Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act................................................................ 50
Supplementary schedule................................................................. 51
PART I
Item 1. Business
The Registrant, incorporated in December 1925, is a leading global information
services provider serving the financial services, education and business
information markets with information products and services. Other markets
include energy, construction, aerospace and defense, and medical and health. It
serves its customers through a broad range of distribution channels, including
printed books, magazines and newsletters, online via Internet websites and
digital platforms, through wireless and traditional on-air broadcasting, and
through a variety of conferences and trade shows.
The Registrant's 16,505 employees are located worldwide. They perform the vital
functions of analyzing the nature of changing demands for information and of
channeling the resources necessary to fill those demands. By virtue of the
numerous copyrights and licensing, trade, and other agreements, which are
essential to such a business, the Registrant is able to collect, compile, and
disseminate this information. Most book manufacturing and magazine printing is
handled through a number of independent contractors. The Registrant's principal
raw material is paper, and the Registrant has assured sources of supply, at
competitive prices, adequate for its business needs.
Descriptions of the company's principal products, broad services and markets,
and significant achievements are hereby incorporated by reference from Exhibit
(13), pages 6 through 24, containing textual material of the Registrant's 2002
Annual Report to Shareholders.
The Registrant has an investor kit available online or in print that includes
the current Annual Report, Proxy Statement, 10-Q, 10-K, current earnings release
and Dividend Reinvestment and Direct Stock Purchase Program. For online access
go to www.mcgraw-hill.com/investor_relations and click on the digital investor
kit. Requests for printed copies can be e-mailed to
investor_relations@mcgraw-hill.com or mailed to Investor Relations, The
McGraw-Hill Companies, 1221 Avenue of the Americas, New York, NY 10020-1095. You
can call Investor Relations at 866-436-8502.
Information as to Operating Segments
The relative contribution of the operating segments of the Registrant and its
subsidiaries to operating revenue, operating profit, long-lived assets and
geographic information for the three years ended December 31, 2002 at the end of
each year, are included in Exhibit (13), on pages 56 and 57 in the Registrant's
2002 Annual Report to Shareholders and is hereby incorporated by reference.
1
Item 2. Properties
The Registrant leases office facilities at 331 locations: 233 are in the United
States. In addition, the Registrant owns real property at 14 locations: 10 are
in the United States. The principal facilities of the Registrant are as follows:
OWNED SQUARE
OR FEET
LOCATIONS LEASED (THOUSANDS) BUSINESS UNIT
- --------- ------ ---------- -------------
DOMESTIC
New York, NY leased 444 Various Units: 1221
Avenue of the Americas
New York, NY leased 946 Standard & Poor's
55 Water Street
New York, NY leased 518 Various Units: 2 Penn Plaza
Some space subleased to
non-MH tenants
Hightstown, NJ owned
Office & Data Center 424 Various Units
Warehouse 407 Vacant
Blacklick, OH owned
Book Distr. Ctr 558 Various Units
Office 73
Desoto, TX - 220 leased 382 Distribution
Book Dist. Ctr.
Dallas, TX leased 418 Distribution
Assembly Plant
Dubuque, IA owned
Office 107 Various Units
Warehouse 274 Some space subleased to
Non-MH tenants
Grove City, OH leased 305 Distribution
Warehouse
Columbus, OH owned 170 School Division of
McGraw-Hill Education
Monterey, CA owned 215 CTB Division of
McGraw-Hill Education
Englewood, CO owned 133 Financial Services
Lexington, MA leased 132 Various units
Some space subleased to
non-MH tenants
Burr Ridge IL leased 130 Various units
Some space subleased to
Non-MH tenants
Denver, CO owned 88 Broadcasting
2
Indianapolis, IN owned 54 Broadcasting
Indianapolis, IN leased 127 CTB Division of
McGraw-Hill Education
Washington, DC leased 73 Various units
Chicago, IL leased 152 Various units
Mather, CA leased 56 CTB Division of
McGraw-Hill Education
FOREIGN
Whitby, Canada owned
Office 80 McGraw-Hill Ryerson, Ltd./
Book Distribution Ctr. 80 Non-McGraw-Hill tenant
Maidenhead, Eng. Leased 85 McGraw-Hill International
(U.K.) Ltd.
Jurong, Sing. leased 30 Various Operating Units
Office 91 Various Publishing Units
Canary Wharf, leased 279 Standard & Poor's,
London BusinessWeek, Platts
In July 2002, a new lease for 1221 Avenue of the Americas commenced. The
Registrant no longer has any non-McGraw-Hill subtenants at this location.
In June 2002, a new lease commenced for 7500 Chavenelle Drive, Dubuque, IA for
330,988 square feet. Most of Registrant's staff at the owned location in Dubuque
relocated to this new location. The majority of the former location (2460 Kerper
Blvd) is subleased to Quebecor World at a current square footage of 281,668.
Effective March 2003, CB Richard Ellis will take over the management of 42 U.S.
facilities. CB Richard Ellis will partner with IKON (mail, reprographics) and
EMCOR (facilities maintenance) to fulfill the agreement.
3
Item 3. Legal Proceedings
While the Registrant and its subsidiaries are defendants in numerous
legal proceedings in the United States and abroad, neither the
Registrant nor its subsidiaries are a party to, or any of their
properties subject to, any known material pending legal proceedings
which Registrant believes will result in a material adverse effect on
its financial statements or business operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of Registrant's security holders
during the last quarter of the period covered by this Report.
4
Executive Officers of Registrant
Name Age Position
---- --- --------
Harold McGraw III 54 Chairman of the Board, President and Chief Executive
Officer
Robert J. Bahash 57 Executive Vice President and Chief Financial Officer
David L. Murphy 57 Executive Vice President, Human Resources
Deven Sharma 47 Executive Vice President, Global Strategy
Kenneth M. Vittor 53 Executive Vice President and General Counsel
Scott L. Bennett 53 Senior Vice President, Associate General Counsel and
Secretary
Glenn S. Goldberg 44 Senior Vice President, Corporate Affairs and
Assistant to the Chairman, President and Chief
Executive Officer
Talia M. Griep 40 Senior Vice President, Corporate Controller
Frank J. Kaufman 58 Senior Vice President, Taxes
Frank D. Penglase 62 Senior Vice President, Treasury Operations
All of the above executive officers of the Registrant have been full-time
employees of the Registrant for more than five years except for Deven Sharma and
David Murphy.
Mr. Sharma, prior to becoming an officer of the Registrant on January 15, 2002
was a partner at Booz Allen & Hamilton. During his fourteen years with that
firm, he led its U.S. Marketing Board and Customer Manager Initiatives.
Mr. Murphy, prior to becoming an officer of the Registrant on July 22, 2002,
spent most of his professional career with the Ford Motor Company where, most
recently, he was Vice President, Human Resources.
5
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The approximate number of record holders of the Company's common stock as of
February 15, 2003 was 5,115.
2002 2001
---- ----
Dividends per share of common stock:
$.255 per quarter in 2002 $1.02
$.245 per quarter in 2001 $0.98
Information concerning other matters is incorporated herein by reference from
Exhibit (13), from page 69 of the 2002 Annual Report to Shareholders.
Item 6. Selected Financial Data
Incorporated herein by reference from Exhibit (13), from the 2002
Annual Report to Shareholders, page 70 and page 71.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Incorporated herein by reference from Exhibit (13), from the 2002
Annual Report to Shareholders, pages 27 to 46.
Item 7A. Market Risk
Incorporated herein by reference from Exhibit (13), from the 2002
Annual Report to Shareholders, pages 45 to 46.
Item 8. Consolidated Financial Statements and Supplementary Data
Incorporated herein by reference from Exhibit (13), from the 2002
Annual Report to Shareholders, pages 47 to 66 and page 69.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
6
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors is incorporated herein by reference from the
Registrant's definitive proxy statement dated March 24, 2003 for the annual
meeting of shareholders to be held on April 30, 2003.
Item 11. Executive Compensation
Incorporated herein by reference from the Registrant's definitive proxy
statement dated March 24, 2003 for the annual meeting of shareholders to be held
on April 30, 2003.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Incorporated herein by reference from the Registrant's definitive proxy
statement dated March 24, 2003 for the annual meeting of shareholders to be held
April 30, 2003.
7
The following table details the Registrant's equity compensation plans approved
by its security holders:
2003 Proxy
Equity Compensation Plan Information
(a) (b) (c)
Number of securities to Weighted- Number of securities
be issued upon exercise average remaining available for
of outstanding options, exercise price of future issuance under equity
warrants and outstanding options, compensation plans(excluding
Plan Category rights warrants and rights securities reflected in column (a))
Equity
compensation
plans approved 17,520,823 $55.1316 11,126,240
by security
holders
Equity
compensation
plans not
approved 0 0 0
by security
holders
Total 17,520,823 $55.1316 11,126,240 (1)(2)
(1) Included in this amount are 298,812 shares reserved for issuance under
the Director Deferred Stock Ownership Plan. The remaining 10,827,428
shares are reserved for issuance under the 1993 Employee Stock
Incentive Plan and the 2002 Stock Incentive Plan for Performance Stock,
Restricted Stock, Other Stock-Based Awards, Stock Options and Stock
Appreciation Rights.
(2) The shares reserved under the 1993 Employee Stock Incentive Plan were
calculated as the aggregate of (i) 18,990,978 shares (previously
approved by the shareholders of the Company on April 28, 1993 and April
30, 1997) and (ii) 4.9% of the number of issued and outstanding shares
as of the shareholder record date for the Annual Meeting of
Shareholders held on April 26, 2000. The shares reserved under the 2002
Stock Incentive Plan were calculated as 4.9% of the number of issued
and outstanding shares as of the shareholder record date for the Annual
Meeting of Shareholders held on April 24, 2002.
8
Item 13. Certain Relationships and Related Transactions
Incorporated herein by reference from the Registrant's definitive proxy
statement dated March 24, 2003 for the annual meeting of shareholders to be held
April 30, 2003.
Item 14. Controls and Procedures
As of December 31, 2002, an evaluation was performed under the supervision and
with the participation of the Company's management, including the CEO and CFO,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based on that evaluation, the Company's management,
including the CEO and CFO, concluded that the Company's disclosure controls and
procedures were effective as of December 31, 2002. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect internal controls subsequent to December 31, 2002.
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) 1. Financial Statements.
2. Financial Statement Schedules.
The McGraw-Hill Companies
Index to Financial Statements
And Financial Statement Schedules
Reference
-------------------------
Annual Report
Form to Share-
10-K holders (page)
---- --------------
Data incorporated by reference from Annual
Report to Shareholders:
Report of Independent Auditors............... 68
Consolidated balance sheet at
December 31, 2002 and 2001.............. 48-49
Consolidated statement of income
for each of the three years in
the period ended December 31, 2002...... 47
Consolidated statement of cash flows
for each of the three years in the
period ended December 31, 2002.......... 50
Consolidated statement of shareholders'
equity for each of the three years in
the period ended December 31, 2002...... 51
Notes to consolidated financial
statements.............................. 52-66
Quarterly financial information.............. 69
Consent of Independent Auditors.............. 49
Consolidated schedule for each of the three
years in the period ended December 31, 2002
II - Reserves for doubtful accounts
and sales returns............. 51
9
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or the notes thereto.
The financial statements listed in the above index which are included in the
Annual Report to Shareholders for the year ended December 31, 2002 are hereby
incorporated by reference in Exhibit (13). With the exception of the pages
listed in the above index, the 2002 Annual Report to Shareholders is not to be
deemed filed as part of Item 15 (a)(1).
(a) (3) Exhibits.
(2) Stock Purchase Agreement, dated as of June 22, 2000, among Tribune
Company and Registrant, incorporated by reference from the Registrant's
Form 8-K dated June 30, 2000.
(3) Articles of Incorporation of Registrant incorporated by reference from
Registrant's Form 10-K for the year ended December 31, 1995 and Form
10-Q for the quarter ended June 30, 1998.
(3) By-laws of Registrant incorporated by reference from Registrant's Form
10-Q for the quarter ended March 31, 2000.
(10) Indenture dated as of June 15, 1990 between the Registrant, as issuer,
and the Bank of New York, as trustee, incorporated by reference from
Registrant's Form SE filed August 3, 1990 in connection with
Registrant's Form 10-Q for the quarter ended June 30, 1990.
(10) Instrument defining the rights of security holders, certificate setting
forth the terms of the Registrant's Medium-Term Notes, Series A,
incorporated by reference from Registrant's Form SE filed November 15,
1990 in connection with Registrant's Form 10-Q for the quarter ended
September 30, 1990.
(10) Rights Agreement dated as of July 29, 1998 between Registrant and
Mellon Investor Services, incorporated by reference from Registrant's
Form 8A filed August 3, 1998.
(10)* Restricted Performance Share Award dated January 2, 1997, incorporated
by reference from Registrant's Form 10-K for the year ended December
31, 1996.
(10) Indemnification Agreements between Registrant and each of its directors
and certain of its executive officers relating to said directors' and
executive officers' services to the Registrant, incorporated by
reference from Registrant's Form SE filed March 27, 1987 in connection
with Registrant's Form 10-K for the year ended December 31, 1986.
(10)* Registrant's 1983 Stock Option Plan for Officers and Key Employees,
incorporated by reference from Registrant's Form SE filed March 29,
1990 in connection with Registrant's Form 10-K for the year ended
December 31, 1989.
(10)* Registrant's 1987 Key Employee Stock Incentive Plan, incorporated by
reference from Registrant's Form 10-K for the year ended December 31,
1993.
(10)* Registrant's Amended and Restated 1993 Employee Stock Incentive Plan,
incorporated by reference from Registrant's Proxy Statement dated March
23, 2000.
10
(10)* Registrant's 2002 Stock Incentive Plan, incorporated by reference from
Registrant's Form 10-Q for the quarter ended June 30, 2002.
(10)* Registrant's Amended and Restated 1996 Key Executive Short Term
Incentive Compensation Plan, incorporated by reference from
Registrant's Proxy Statement dated March 23, 2000.
(10)* Registrant's Key Executive Short-Term Incentive Deferred Compensation
Plan.
(10)* Registrant's Executive Deferred Compensation Plan, incorporated by
reference from Registrant's Form SE filed March 28, 1991 in connection
with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Senior Executive Severance Plan.
(10) 364-Day Credit Agreement dated as of July 23, 2002 among the
Registrant, the lenders listed therein, and JP Morgan Chase Bank, as
administrative agent, incorporated by reference from the Registrant's
Form 8-K/A dated August 1, 2002.
(10) Five-Year Credit Agreement dated as of August 15, 2000 among the
Registrant, the lenders listed therein, and The Chase Manhattan Bank,
as a administrative agent, incorporated by reference from the
Registrant's Form 8-K dated August 21, 2000.
(10)* Registrant's Employee Retirement Account Plan Supplement, incorporated
by reference from Registrant's Form SE filed March 28, 1991 in
connection with Registrant's Form 10-K for the year ended December 31,
1990.
(10)* Registrant's Employee Retirement Plan Supplement, incorporated by
reference from Registrant's Form SE filed March 28, 1991 in connection
with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Savings Incentive Plan Supplement, incorporated by
reference from Registrant's Form SE filed March 28, 1991 in connection
with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Senior Executive Supplemental Death, Disability &
Retirement Benefits Plan, incorporated by reference from Registrant's
Form SE filed March 26, 1992 in connection with Registrant's Form 10-K
for the year ended December 31, 1991.
(10)* Registrant's 1993 Stock Payment Plan for Directors, incorporated by
reference from Registrant's Proxy Statement dated March 21, 1993.
(10)* Resolutions Terminating Registrant's 1993 Stock Payment Plan for
Directors, as adopted on January 31, 1996, incorporated by reference
from Registrant's Form 10-K for the year ended December 31, 1996.
(10)* Resolutions amending certain of Registrant's equity and compensation
plans, as adopted on February 23, 2000, with respect to definitions of
"Cause" and "Change of Control" contained therein, incorporated by
reference from Registrant's Form 10-K for the year ended December 31,
2000.
(10)* Registrant's Director Retirement Plan, incorporated by reference from
Registrant's Form SE filed March 29, 1990 in connection with
Registrant's Form 10-K for the year ended December 31, 1989.
(10)* Resolutions Freezing Existing Benefits and Terminating Additional
Benefits under Registrant's Directors Retirement Plan, as adopted on
January 31, 1996, incorporated by reference from Registrant's Form 10-K
for the year ended December 31, 1996.
(10)* Registrant's Director Deferred Compensation Plan, incorporated by
reference from Registrant's Form 10-K for the year ended December 31,
1993.
11
(10)* Director Deferred Stock Ownership Plan, incorporated by reference from
Registrant's Proxy Statement dated March 21, 1996.
(12) Computation of ratio of earnings to fixed charges.
(13) Registrant's 2002 Annual Report to Shareholders. Such Report, except
for those portions thereof which are expressly incorporated by
reference in this Form 10-K, is furnished for the information of the
Commission and is not deemed "filed" as part of this Form 10-K.
(21) Subsidiaries of the Registrant.
(23) Consent of Ernst & Young LLP, Independent Auditors.
(b) Reports on Form 8-K.
No report on Form 8-K was filed by the Registrant in the last quarter
covered by this Form 10-K.
(99) Annual certifications of the Chief Executive Officer and the Chief
Financial Officer pursuant to Section 906 of the Sarbanes - Oxley Act
of 2002.
- ----------------
* These exhibits relate to management contracts or compensatory plan
arrangements.
12
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.
The McGraw-Hill Companies, Inc.
- -------------------------------
Registrant
By: /s/ Kenneth M. Vittor
-------------------------------
Kenneth M. Vittor
Executive Vice President and
General Counsel
March 13, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed on March 13, 2003 on behalf of Registrant by the following
persons who signed in the capacities as set forth below under their respective
names. Registrant's board of directors is comprised of twelve members and the
signatures set forth below of individual board members, constitute at least a
majority of such board.
/s/ Harold McGraw III
-------------------------------
Harold McGraw III
Chairman, President and
Chief Executive Officer
/s/ Robert J. Bahash
-------------------------------
Robert J. Bahash
Executive Vice President and
Chief Financial Officer
13
/s/ Talia M. Griep
-------------------------------
Talia M. Griep
Senior Vice President
and Corporate Controller
/s/ Pedro Aspe
-------------------------------
Pedro Aspe
Director
/s/ Sir Winfried F.W. Bischoff
-------------------------------
Sir Winfried F.W. Bischoff
Director
-------------------------------
Douglas N. Daft
Director
/s/ Vartan Gregorian
-------------------------------
Vartan Gregorian
Director
/s/ Linda Koch Lorimer
-------------------------------
Linda Koch Lorimer
Director
/s/ Robert P. McGraw
-------------------------------
Robert P. McGraw
Director
14
/s/ Lois Dickson Rice
-------------------------------
Lois Dickson Rice
Director
/s/ James H. Ross
-------------------------------
James H. Ross
Director
/s/ Edward B. Rust, Jr.
-------------------------------
Edward B. Rust, Jr.
Director
-------------------------------
Kurt L. Schmoke
Director
/s/ Sidney Taurel
-------------------------------
Sidney Taurel
Director
15
ANNUAL CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Harold W. McGraw III, certify that:
1. I have reviewed this annual report on Form 10-K of The
McGraw-Hill Companies, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and
16
ANNUAL CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Date: 3/13/03
/s/ Harold W. McGraw III
-----------------------------
Harold W. McGraw III
Chairman, President and
Chief Executive Officer
17
ANNUAL CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert J. Bahash, certify that:
1. I have reviewed this annual report on Form 10-K of The
McGraw-Hill Companies, Inc.;
2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
annual report;
3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly
present in all material respects the financial condition,
results of operations and cash flows of the registrant as of,
and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;
b. evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c. presented in this annual report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent functions):
a. all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and
18
ANNUAL CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
b. any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6 The registrant's other certifying officers and I have
indicated in this annual report whether there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Date: 3/13/03
/s/ Robert J. Bahash
-----------------------------
Robert J. Bahash
Executive Vice President
and Chief Financial Officer
19
Table of Contents
EXHIBITS AND FINANCIAL STATEMENTS
EXHIBIT PAGE
- ------- ----
(10) The McGraw-Hill Companies, Inc. Key Executive Short-Term
Incentive Deferred Compensation Plan................................... 21-34
(10) The McGraw-Hill Companies, Inc. Senior Executive Severance Plan........ 35-44
(12) Computation of Ratio of Earnings to Fixed Charges...................... 45-46
(13) Registrant's 2002 Annual Report to Shareholders........................ -
(21) Subsidiaries of Registrant............................................. 47-48
(23) Consent of Ernst & Young LLP-Independent Auditors...................... 49
(99) Annual Certifications of the Chief Executive Officer and
the Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act..................................................... 50
Schedule II Reserves for Doubtful Accounts and Sales Returns.................... 51