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Exhibit (12)
THE McGRAW-HILL COMPANIES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
Years Ended December 31
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1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(In thousands of dollars)
Earnings
Earnings from continuing operations
before income tax expense and
extraordinary item, net of
taxes (a)(e) $ 553,320 $ 465,873 $ 809,705 $ 382,126 $ 341,816
Fixed charges 79,618 83,840 77,563 90,382 83,219
Capitalized interest -- -- -- (421) (353)
--------- --------- --------- --------- ---------
Total Earnings $ 632,938 $ 549,713 $ 887,268 $ 472,087 $ 424,682
========= ========= ========= ========= =========
Earnings from continuing
operations before income
tax expense, extraordinary
and other unusual items
(a)(b)(c)(d)(e) $ 542,633 $ 478,622 $ 415,974 $ 382,126 $ 341,816
Fixed charges 79,618 83,840 77,563 90,382 83,219
Capitalized interest -- -- -- (421) (353)
--------- --------- --------- --------- ---------
Total Earnings $ 622,251 $ 562,462 $ 493,537 $ 472,087 $ 424,682
========= ========= ========= ========= =========
Fixed Charges(d)(e)
Interest expense $ 51,857 $ 56,771 $ 51,347 $ 63,832 $ 55,650
Portion of rental payments
deemed to be interest 27,761 27,069 26,216 26,550 27,569
--------- --------- --------- --------- ---------
Total Fixed Charges $ 79,618 $ 83,840 $ 77,563 $ 90,382 $ 83,219
========= ========= ========= ========= =========
Ratio of Earnings to Fixed charges:
Earnings from continuing
operations before income tax
expense and extraordinary item,
net of taxes (d) 7.9x 6.6x 11.4x 5.2x 5.1x
Earnings from continuing
operations before income tax
expense, extraordinary and other
unusual items (a)(b)(c)(d) 7.8x 6.7x 6.4x 5.2x 5.1x
(a) All earnings amounts exclude the impact from the early extinguishment of
$155 million of the company's 9.43% notes in 1998
(b) Excludes a $26.7 million gain on the sale of a building at 65 Broadway and
a $16.0 million charge for the write-down of assets at the Continuing
Education Center recorded in 1998.
(c) Excludes a $33.2 million pre-tax one-time provision for real estate
write-downs related to the consolidation of office space in New York City
and a $20.4 million pre-tax gain on the sale of Datapro Information
Services recorded in 1997.
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(d) On October 15, 1996, the company completed the exchange of its
Shepard's/McGraw-Hill legal publishing unit for the Times Mirror Higher
Education Group. The 1996 results exclude a pre-tax gain of $418.7 million
and a one-time charge of $25 million for costs of integrating the
company's College division with the acquired higher education business.
(e) 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 (2) the portion of the
company's rental expense deemed representative of the interest factor in
rental expense.
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