1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K

(Mark One)

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 1995
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ---------------to-----------------
Commission File Number 1-1023

THE McGRAW-HILL COMPANIES, INC.
----------------------------------------------------------------
(Exact name of registrant as specified in its charter)

NEW YORK 13-1026995
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1221 AVENUE OF THE AMERICAS, NEW YORK, N.Y. 10020
- ------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 512-2000
------------------

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 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 definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
---

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
--- ---

The aggregate market value of voting stock held by nonaffiliates of the
registrant as of February 29, 1996, was $4,366,913,290.

The number of shares of common stock of the registrant outstanding as
of February 29, 1996 was 50,288,399 shares (100,576,798 shares after the
two-for-one stock split approved by the company's Board of Directors on January
31, 1996).

Part I, Part II and Part IV incorporate information by reference from
the Annual Report to Shareholders for the year ended December 31, 1995. Part III
incorporates information by reference from the definitive proxy statement mailed
to shareholders March 21, 1996 for the annual meeting of shareholders to be held
on April 24, 1996.
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TABLE OF CONTENTS
-----------------
PART I
-------

Item Page
- ---- ----

1. Business.................................................................................. 1

2. Properties................................................................................ 2 - 4

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

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

13. Certain relationships and related transactions............................................ 7

PART IV
------------
14. Exhibits, financial statement schedules, and
reports on Form 8-K....................................................................... 8 - 11

Signatures......................................................................................... 12 - 14

Exhibits.................................................................................. 15 - 99

Consent of Independent Auditors - Ernst & Young LLP................................................ 100

Financial Data Schedule............................................................................ 101

Supplementary schedule............................................................................. 102

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PART I

Item 1. Business
- ------- --------

The Registrant, incorporated in December 1925, serves business, professional and
educational markets around the world with information products and services. Key
markets include finance, business, education, law, construction, medical and
health, computers and communications, aerospace and defense. As a multimedia
publishing and information company, the Registrant employs a broad range of
media, including books, magazines, newsletters, software, on-line data services,
CD-ROMs, facsimile and television broadcasting. Most of the Registrant's
products and services face substantial competition from a variety of sources.

The Registrant's 15,004 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. Substantially all 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 4 through 24 (textual material) of the Registrant's 1995 Annual
Report to Shareholders.

Information as to Industry Segments
- -----------------------------------

The relative contribution of the industry segments of the Registrant and its
subsidiaries to operating revenue and operating profit and geographic
information for the three years ended December 31, 1995 and the identifiable
assets of each segment at the end of each year, are included in Exhibit (13), on
page 42 in the Registrant's 1995 Annual Report to Shareholders and is hereby
incorporated by reference.

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Item 2. Properties
- ------- ----------

The Registrant leases office facilities at 393 locations, 294 are in the United
States. In addition, the Registrant owns real property at 25 locations; 22 are
in the United States. The principal facilities of the Registrant are as follows:

Owned Square
or Feet
Domestic Leased (thousands) Business Unit
- -------- ------ ----------- -------------

New York, NY leased 1,635 See Explanation Below

Hightstown, NJ owned See Explanation Below
Office and Data Ctr. 490
Warehouse 412

New York, NY leased 504 Financial Services
owned 346 Financial Services

Delran, NJ leased 106 Datapro

Colorado Springs, CO owned Shepard's/McGraw-Hill
Office 181
Manufacturing Plant 63

Denver, CO owned 88 Broadcasting

Indianapolis, IN leased 58 Broadcasting

Englewood, CO owned
Rocky Mt. Data Ctr. 14 Financial Services
Office 119 Financial Services

Lexington, MA owned 53 Vacant
leased 122 Various Operating Units

Blue Ridge Summit, PA owned TAB Books
Office 67
Book Dist. Ctr. 114 Vacant

Peterborough, NH owned 51 Byte

Chicago, IL leased 68 Various Operating Units

Redondo Beach, CA leased 50 Tower

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Owned Square
or Feet
Domestic Leased (thousands) Business Unit
- -------- ------ ----------- -------------

Washington, DC leased 73 Various Operating Units

Kent, WA leased C.J. Tower
Warehouse/Dist. Ctr 79
Office 6

Monterey, CA owned 270 CTB/McGraw-Hill School
Systems

Blacklick (Gahanna), OH owned
Book Dist. Ctr. 558 Various Operating Units
Office 73

Westerville, OH owned 59 Glencoe

New York, NY leased 64 Professional Publishing

Grove City, OH
Warehouse leased 160 School

Dallas, TX leased
Assembly Plant 148 School
Warehouse 72

Desoto, TX leased
Book Dist. Ctr. 382 School

Foreign
- -------
Whitby, Canada owned McGraw-Hill Ryerson Ltd.
Office 80
Book Dist. Ctr. 80

Maidenhead, England leased 85 McGraw-Hill International
(U.K.) Ltd.

The Registrant's major lease covers space in its headquarters building in New
York City. The building is owned by Rock-McGraw, Inc., a corporation in which
the Registrant and Rockefeller Group, Inc. are the sole shareholders. The
Registrant occupies approximately 941,000 square feet of the rentable space
under a 30-year lease which includes renewal options for two additional 15-year
periods. In addition, the Registrant subleases for its own account approximately
694,000 square feet of space for periods up to 25 years.

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The largest complex owned by the Registrant is located in Hightstown, NJ which
houses the offices for accounting operations, data processing services, other
service departments and a warehouse. The Registrant has consolidated its
domestic book distribution operations by consolidating the distribution
operations in Blue Ridge Summit, PA and Hightstown, NJ to Westerville and
Blacklick, OH. The warehouse in Hightstown, NJ is leased to a tenant. The
warehouse in Blue Ridge Summit, PA is vacant.

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, nor are any of their properties subject to, any
known material pending legal proceedings which Registrant believes will result
in a material adverse effect on Registrant's 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.

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Executive Officers of Registrant
--------------------------------

Name Age Position
---- --- --------

Joseph L. Dionne 62 Chairman and Chief Executive Officer

Harold McGraw III 47 President and Chief Operating Officer

Robert J. Bahash 50 Executive Vice President and
Chief Financial Officer

Robert E. Evanson 59 Executive Vice President,
Corporate Development

Robert N. Landes 65 Senior Executive
Vice President and Secretary

Thomas J. Sullivan 60 Executive Vice President, Administration

Frank J. Kaufman 51 Senior Vice President, Taxes

Barbara B. Maddock 45 Senior Vice President, Human Resources

Barbara A. Munder 50 Senior Vice President, Corporate Affairs

Frank D. Penglase 55 Senior Vice President, Treasury Operations

Kenneth M. Vittor 46 Senior Vice President and General Counsel

Thomas J. Kilkenny 37 Vice President and Controller

All of the above executive officers of the Registrant have been full-time
employees of the Registrant for more than five years except for Robert E.
Evanson, Thomas J. Kilkenny and Barbara B. Maddock.

Mr. Evanson, prior to his becoming an officer of the Registrant on February 22,
1995, was executive vice president, finance and operations for the Registrant's
Educational and Professional Publishing Group since October 1993. Previously, he
was executive vice president and chief financial officer of the
Macmillan/McGraw- Hill School Publishing Company from July 1992 to October 1993,
and held various executive positions at Harcourt Brace Jovanovich, Inc. from
1985 to 1992.

Mr. Kilkenny, prior to his becoming an officer of the Registrant on December 1,
1993, was director of the Registrant's Corporate Audit Department since October
1, 1991. Previously he was with Ernst & Young LLP from 1980 through 1991.

Ms. Maddock, prior to her becoming an officer of the Registrant on August 1,
1994, was Senior Vice President, Human Resources for Cigna Healthcare from July
1993 through July 1994. Previously, she was with Philip Morris Companies, Inc.
where she held a number of Human Resources positions from 1980 through 1993.

Mr. Landes retired as an officer of the Registrant on December 31, 1995.

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PART II

Item 5. Market for the Registrant's Common Stock and Related Stockholder
- ------- ----------------------------------------------------------------
Matters
-------

The approximate number of holders of the Company's common stock as of February
29, 1996 was 5,717.

1995 1994
---- ----

Dividends per share of common stock:
$.30 per quarter in 1995 $1.20
$.29 per quarter in 1994 $1.16

Note: The dividends per share of common stock reflect a 2-for-1 stock split
approved by the Board of Directors on January 31, 1996. All prior periods have
been restated to reflect the split.

Information concerning other matters is incorporated herein by reference from
Exhibit (13), from page 48 of the 1995 Annual Report to Shareholders.

Item 6. Selected Financial Data
- ------- -----------------------

Incorporated herein by reference from Exhibit (13), from the 1995 Annual Report
to Shareholders, page 32 and page 33.

Item 7. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations
---------------------

Incorporated herein by reference from Exhibit (13), from the 1995 Annual Report
to Shareholders, pages 26 to 31 and page 34.

Item 8. Consolidated Financial Statements and Supplementary Data
- ------- --------------------------------------------------------

Incorporated herein by reference from Exhibit (13), from the 1995 Annual Report
to Shareholders, pages 35 to 46 and page 48.

Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosure
--------------------

None

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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 21, 1996 for the annual
meeting of shareholders to be held on April 24, 1996.

Item 11. Executive Compensation
- -------- ----------------------

Incorporated herein by reference from the Registrant's definitive proxy
statement dated March 21, 1996 for the annual meeting of shareholders to be held
on April 24, 1996.

Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------

Incorporated herein by reference from the Registrant's definitive proxy
statement dated March 21, 1996 for the annual meeting of shareholders to be held
April 24, 1996.

Item 13. Certain Relationships and Related Transactions
- -------- ----------------------------------------------

Incorporated herein by reference from the Registrant's definitive proxy
statement dated March 21, 1996 for the annual meeting of shareholders to be held
April 24, 1996.

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PART IV

Item 14. 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......................................... 47
Consolidated balance sheet at
December 31, 1995 and 1994........................................ 36-37
Consolidated statement of income
for each of the three years in
the period ended December 31, 1995................................ 35
Consolidated statement of cash flows
for each of the three years in the
period ended December 31, 1995.................................... 38
Consolidated statement of shareholders'
equity for each of the three years in
the period ended December 31, 1995................................ 39
Notes to consolidated financial
statements........................................................ 40-46
Quarterly financial information........................................ 48

Consent of Independent Auditors............................................ 100

Consolidated schedule for each of the three years in the period ended
December 31, 1995:

II - Reserve for doubtful accounts..................................... 102

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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, 1995 are hereby
incorporated by reference in Exhibit (13). With the exception of the pages
listed in the above index, the 1995 Annual Report to Shareholders is not to be
deemed filed as part of Item 14 (a)(1).

(a) (3) Exhibits.

(3) Articles of Incorporation of Registrant.

(3) By-laws of Registrant.

(4) 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.

(4) Instrument defining the rights of security holders, certificate setting
forth the terms of the Registrant's 9.43% Notes due 2000, 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.

(4) 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 October 25, 1989 between Registrant and
Manufacturers Hanover Trust Company, incorporated by reference from
Registrant's Form SE dated October 26, 1989 in connection with
Registrant's Form 8-A.

(10)* Restricted Stock Award Agreement dated December 4, 1987 incorporated by
reference from Registrant's Form SE filed March 30, 1988 in connection
with Registrant's Form 10-K for the year ended December 31, 1987.

(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 1993 Key Employee Stock Incentive Plan, incorporated by
reference from Registrant's Form 10-K for the year ended December 31,
1993.

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(10)* Registrant's 1995 Key Executive Short Term Incentive Compensation Plan,
incorporated by reference from Registrant's Form 10-K for the year
ended December 31, l994.

(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, incorporated by reference
from Registrant's Form SE filed March 29, 1989 in connection with
Registrant's Form 10-K for the year ended December 31, 1988.

(10) Credit Agreement dated as of November 12, 1991 among the Registrant,
the Banks' signatory thereto, and Bankers Trust Company, as Agent
incorporated by reference from Registrant's Form SE filed November 18,
1991 in connection with Registrant's Form 8-K dated November 19, 1991.

(10) First Amendment to Credit Agreement dated as of November 8, 1993 among
the Registrant, the Banks' signatory thereto, and Bankers Trust
Company, as agent, incorporated by reference from Registrant's Form 8-K
dated November 15, 1993.

(10) Second Amendment to Credit Agreement dated as of November 7, 1994 among
the Registrant, the Banks' signatory thereto and Bankers Trust Company,
as agent, incorporated by reference from Registrant's Form 8-K dated
November 15, 1994.

(10) Partnership Interest Purchase Agreement, dated as of October 4, 1993,
with respect to the partnership interest of Macmillan School
Publishing, Inc. in Macmillan/McGraw-Hill School Publishing Company
incorporated by reference from Registrant's Form 8-K dated October 18,
1993.

(10) Trademark Purchase and Sale Agreement (Macmillan), dated as of October
4, 1993, incorporated by reference from Registrant's Form 8-K dated
October 18, 1993.

(10) Trademark Purchase and Sale Agreement (Merrill), dated as of October 4,
1993, incorporated by reference from Registrant's Form 8-K dated
October 18, 1993.

(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.

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(10)* Registrant's 1993 Stock Payment Plan for Directors, incorporated by
reference from Registrant's Proxy Statement dated March 21, 1993.

(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)* Registrant's Director Deferred Compensation Plan, incorporated by
reference from Registrant's Form 10-K for the year ended December 31,
1993.

(12) Computation of ratio of earnings to fixed charges.

(13) Registrant's 1995 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.

(27) Financial Data Schedule.

(b) Reports on Form 8-K.

No reports on Form 8-K were filed by the Registrant during the last
quarter of 1995.

----------------
* These exhibits relate to management contracts or compensatory
plan arrangements.

-11-
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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
Senior Vice President and General Counsel
March 26, 1996

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed on March 26, 1996 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 fifteen members and the
signatures set forth below of individual board members, constitute at least a
majority of such board.

/s/ Joseph L. Dionne
------------------------------------------
Joseph L. Dionne
Chairman and Chief Executive Officer
Director

/s/ Harold McGraw III
------------------------------------------
Harold McGraw III
President and Chief Operating Officer
Director

/s/ Robert J. Bahash
------------------------------------------
Robert J. Bahash
Executive Vice President and
Chief Financial Officer

-12-
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/s/ Thomas J. Kilkenny
------------------------------------------
Thomas J. Kilkenny
Vice President and Controller

/s/ Pedro Aspe
------------------------------------------
Pedro Aspe
Director

/s/ Vartan Gregorian
-------------------------------------------
Vartan Gregorian
Director

/s/ John T. Hartley
-------------------------------------------
John T. Hartley
Director

/s/ George B. Harvey
-------------------------------------------
George B. Harvey
Director

/s/ Richard H. Jenrette
-------------------------------------------
Richard H. Jenrette
Director

/s/ Don Johnston
-------------------------------------------
Don Johnston
Director

/s/ Peter 0. Lawson-Johnston
-------------------------------------------
Peter 0. Lawson-Johnston
Director

/s/ Linda Koch Lorimer
-------------------------------------------
Linda Koch Lorimer
Director

-13-
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/s/ Robert P. McGraw
--------------------------------------------
Robert P. McGraw
Director

/s/ Lois D. Rice
--------------------------------------------
Lois D. Rice
Director

/s/ Paul J. Rizzo
--------------------------------------------
Paul J. Rizzo
Director

/s/ James H. Ross
--------------------------------------------
James H. Ross
Director

/s/ Alva 0. Way
---------------------------------------------
Alva 0. Way
Director

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EXHIBIT INDEX

Exhibit No. Description
- ----------- -----------