For the fiscal year ended December 31, 2009
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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)
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| New York
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13-1026995 |
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State or other jurisdiction of
incorporation or organization
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(I.R.S. Employer
Identification No.) |
Registrant’s telephone number, including area code (212) 512-2000
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class
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Name of each exchange on which registered |
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| Common Stock — $1 par value
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New York Stock Exchange |
Securities registered pursuant to section 12(g) of the Act:
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. þ Yes o No
Indicate by check mark if the Registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. o Yes þ No
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. þ Yes o No
Indicate by check mark whether the Registrant has submitted electronically and posted on its
corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the Registrant was required to submit and post such files). þ Yes o No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K (§ 229.405 of this chapter) 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. o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated
filer” in Rule 12-b-2 of the Exchange Act. (Check one):
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| þ Large accelerated filer
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o Accelerated filer
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o Non-accelerated filer
(Do not check if a smaller reporting company)
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o Smaller reporting company |
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12-b-2 of
the Act). o Yes þ No
The aggregate market value of voting stock held by non-affiliates of the Registrant as of the
last business day of the second fiscal quarter ended June 30, 2009, was $9,476,022,642, based on
the closing price of the common stock as reported on the New York Stock Exchange of $30.11 per
common share. For purposes of this calculation, it is assumed that directors, executive officers
and beneficial owners of more than 10% of the registrant outstanding stock are affiliates.
The number of shares of common stock of the Registrant outstanding as of February 12, 2010 was
315,689,313 shares.
Part I, Part II and Part III incorporate information by reference from the Annual Report to
Shareholders for the year ended December 31, 2009. Part III incorporates information by reference
from the definitive proxy statement mailed to shareholders March 19, 2010 for the annual meeting of
shareholders to be held on April 28, 2010.
TABLE OF CONTENTS
PART I
PART I
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The McGraw-Hill Companies, Inc. (the Registrant or the Company) is a leading global
information services provider serving the education, financial services, and business
information markets with a wide range of information products and services. Business
information markets include energy, automotive, construction, aerospace and defense.
We serve our 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. |
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Our McGraw-Hill Education segment is one of the premier global educational publishers.
This segment operates in the elementary and high school (“el-hi”), college and
university, professional, international and adult education markets. |
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In the el-hi market, we sell textbooks (print and digital versions),
supplemental materials and provide assessment and reporting services. The market
for textbooks consists of adoption states, which are states that provide
educational funding to school districts for specific programs based on adoption
calendars, and open territory states, which are states that do not follow
adoption calendars. |
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This market is influenced strongly by the size and
timing of state adoption opportunities and the availability of funds in
adoption states and in the open territory. |
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The total state new adoption market is expected to increase from
approximately $500 million in 2009 to between $925 million and $975
million in 2010. According to the Association of American
Publishers (“AAP”) statistics through December 2009, basal and
supplemental sales in the adoption states and open territory
declined 13.8% versus the prior year. |
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In the college and university market, and the international market, we sell
textbooks and other resources to higher education institutions. This market is
affected by enrollments, higher education funding and the number of courses
available to students. |
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Enrollments in degree-granting higher education
institutions are projected to rise 13% to 20.6 million by 2018, according
to the National Center for Educational Statistics. |
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Online enrollments have continued to grow at rates in
excess of the total higher education school population. |
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Foreign student enrollments at American higher
education institutions, for the second year in a row, increased to record
numbers per the Institute of International Education. |
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The economic recession and related weak job market is
leading more individuals to seek additional education and training. In
2009, this trend was strengthened by provisions in the American Recovery
and Reinvestment Act that raised the maximum Pell Grant award available to
eligible students and increased the tax credit allowable to students or
their families for college tuition and other defined expenses. |
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Internationally, postsecondary enrollments are also
increasing in many regions, notably in India and China. |
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Our Financial Services segment operates under the Standard & Poor’s brand. This segment
provides services to investors, corporations, governments, financial institutions,
investment managers and advisors globally. The segment and the markets it serves are
impacted by interest rates, the state of global economies, credit quality and investor
confidence. The Financial Services segment consists of two operating groups: Credit
Market Services and Investment Services. |
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Standard & Poor’s provides independent credit ratings, credit risk
evaluations, and credit ratings-related information and products. This operating
group also provides credit ratings-related information through its RatingsXpress
and RatingsDirect products. |
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Credit ratings revenue is influenced by credit
markets and issuance levels which are dependant upon many factors,
including the general condition of the economy, interest rates, credit
quality and spreads, and the level of liquidity in the financial markets. |
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Investment Services provides comprehensive value-added financial data,
information, indices and research. Revenue at Investment Services is influenced
by demand for company data and securities data as well as demand for investable
products and trading volumes in the financial markets. |
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Our Information & Media segment includes business, professional and broadcast media,
offering information, insight and analysis; and consists of two operating groups: the
Business-to-Business Group (including such brands as J.D. Power and Associates,
McGraw-Hill Construction, Platts and Aviation Week) and the Broadcasting Group, which
operates nine television stations, four ABC affiliated and five Azteca America affiliated
stations. |
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The segment’s business is driven by the need for information and transparency
in a variety of industries, and to a lesser extent, by advertising revenue. |
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Our 21,077 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, trademark, and other agreements which are essential to such a business, we
are able to collect, compile, and disseminate this information. Our books and
magazines are printed by third parties. Our principal raw material is paper, and we
have assured sources of supply, at competitive prices, adequate for our business
needs. |
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Descriptions of our principal products, broad services and markets, and significant
achievements are hereby incorporated by reference from Exhibit (13), pages 22 and 23,
containing textual material of our 2009 Annual Report to Shareholders. |
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We have an investor kit available online and in print that includes the current (and
prior years) Annual Report, Proxy Statement, Form 10-Qs, Form 10-K, all filings
through EDGAR with the Securities and Exchange Commission, and the current earnings
release. For online access go to www.mcgraw-hill.com/investor_relations and click on
Digital Investor Kit. Requests for printed copies, free of charge, can be e-mailed
to investor_relations@mcgraw-hill.com or mailed to Investor Relations, The
McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020-1095.
You can call Investor Relations toll free at 866-436-8502. International callers
may dial 212-512-2192. |
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We have adopted a Code of Ethics for our Chief Executive Officer and Senior
Financial Officers that applies to our chief executive officer, chief financial
officer, and chief accounting officer. To access such code, go to the Corporate
Governance section of our Investor Relations Web site at
www.mcgraw-hill.com/investor_relations. Any waivers that may in the future be
granted from such Code will be posted at such Web site address. In addition to our
Code of Ethics for the Chief Executive Officer and Senior Financial Officers noted
above, the following topics may be found on our Web site at the above Web site
address: |
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Code of Business Ethics for all employees; |
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Corporate Governance Guidelines; |
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Audit Committee Charter; |
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Compensation Committee Charter; and |
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Nominating and Corporate Governance Committee Charter. |
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The foregoing documents are also available in print, free of charge, to any
shareholder who requests them. Requests for printed copies may be e-mailed to
corporate_secretary@mcgraw-hill.com or mailed to the Corporate Secretary, The
McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020-1095. |
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You may also read and copy materials that we have filed with the Securities and
Exchange Commission (“SEC”) at the SEC’s public reference room located at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549. Please call the Commission at
1-800-SEC-0330 for further information on the public reference room. In addition, our
filings with the Commission are available to the public on the Commission’s Web site
at www.sec.gov. Several years of SEC filings are also available on our Investor
Relations Web site. Go to www.mcgraw-hill.com/investor_relations and click on the SEC
Filings link. |
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Certifications |
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We have filed the required certifications under Section 302 of the Sarbanes-Oxley Act
of 2002 as Exhibits (31.1) and (31.2) to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2009. In addition we have filed the required
certifications under Section 906 of the Sarbanes-Oxley Act of 2002 as Exhibit (32) to
our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. After the
2010 Annual Meeting of Shareholders, we intend to file with the New York Stock
Exchange (“NYSE”) the CEO certification regarding our compliance with the NYSE’s
corporate governance listing standards as required by NYSE rule 303A.12. Last year,
we filed this CEO certification with the NYSE on April 30, 2009. |
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Information as to Operating Segments |
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The relative contribution of our operating segments and our subsidiaries to operating
revenue, operating profit, long-lived assets and geographic information for the three
years ended December 31, 2009, are included in Exhibit (13), on pages 65 to 67 in
our 2009 Annual Report to Shareholders and is hereby incorporated by reference. |
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We are providing the following cautionary statements which identify all known
material risks, uncertainties and other factors that could cause our actual results
to differ materially from historical and expected results. |
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We operate in the educational publishing, financial services and information & media
markets. Certain risk factors are applicable to individual markets while other risk
factors are applicable company-wide. |
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Company-wide Risk Factors |
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Our ability to grow is dependent on a number of factors including the following: |
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Introduction of new products, services or technologies could impact our profitability |
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We operate in highly competitive markets that continue to change to adapt
to customer needs. In order to maintain a competitive position, we must
continue to invest in new offerings and new ways to deliver our products and
services. |
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These investments may not be profitable or may be
less profitable than what we have experienced historically. |
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We could experience threats to our existing businesses from the rise of
new competitors due to the rapidly changing environment within which we
operate. |
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We rely on our information technology environment and certain critical
databases, systems and applications to support key product and service
offerings. We believe we have appropriate policies, processes and internal
controls to ensure the stability of our information technology, provide
security from unauthorized access to our systems and maintain business
continuity, but our operating results may be adversely impacted by
unanticipated system failures or data corruption. |
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A significant increase in operating costs and expenses could have a material adverse
effect on our profitability |
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Our major expenses include employee compensation and printing, paper, and
distribution costs for product-related manufacturing. |
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We offer competitive salary and benefit packages
in order to attract and retain the quality employees required to grow
and expand our businesses. Compensation costs are influenced by
general economic factors, including those affecting the cost of health
insurance and postretirement benefits, and any trends specific to the
employee skill sets we require. |
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We could experience changes in pension costs and
funding requirements due to poor investment returns and/or changes in
pension. |
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Paper prices fluctuate based on the worldwide
demand and supply for paper in general and for the specific types of
paper used by us. Our overall paper price increase is currently
limited due to negotiated price reductions, long-term agreements, and
short-term price caps for a portion of paper purchases that are not
protected by long-term agreements. |
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Our books and magazines are printed by third
parties and we typically have multi-year contracts for the production
of books and magazines in order to reduce price fluctuations over the
contract term. |
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We make significant investments in information
technology data centers and other technology initiatives as well as
significant investments in the development of programs for the el-hi
market place. Although we believe we are prudent in our investment
strategies and execution of our implementation plans, there is no
assurance as to the ultimate recoverability of these investments. |
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Our ability to protect our intellectual property rights could impact our competitive
position |
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Our products contain intellectual property delivered through a variety of
media, including print, broadcast and digital. Our ability to achieve
anticipated results depends in part on our ability to defend our intellectual
property against infringement. Our operating results may be adversely
affected by inadequate legal and technological protections for intellectual
property and proprietary rights in some jurisdictions and markets. |
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Exposure to litigation could have a material effect on our financial position and
results of operations |
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We are involved in legal actions and claims arising from our business
practices, as discussed in the Management’s Discussion and Analysis section
of our Annual Report to Shareholders, and face the risk that additional
actions and claims will be filed in the future. Due to the inherent
uncertainty of the litigation process, the resolution of any particular legal
proceeding or change in applicable legal standards could have a material
effect on our financial position and results of operations. |
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Risk of doing business abroad |
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As we continue to expand our operations overseas, we face the increased
risks of doing business abroad, including inflation, fluctuation in interest
rates and currency exchange rates, changes in applicable laws and regulatory
requirements, export and import restrictions, tariffs, nationalization,
expropriation, limits on repatriation of funds, civil unrest, terrorism,
unstable governments and legal systems, and other factors. Adverse
developments in any of these areas could cause actual results to differ
materially from historical and/or expected operating results. |
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Risk Factors Specific to our Financial Services Segment |
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Changes in the volume of debt securities issued in domestic and/or global capital
markets and changes in interest rates and other volatility in the financial markets
could have a material impact on our results of operations |
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Unfavorable financial or economic conditions that either reduce investor
demand for debt securities or reduce issuers’ willingness or ability to issue
such securities could reduce the number and dollar volume of debt issuance
for which Standard & Poor’s provides ratings services. |
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Increases in interest rates or credit spreads, volatility in financial
markets or the interest rate environment, significant political or economic
events, defaults of significant issuers and other market and economic factors
may negatively impact the general level of debt issuance, the debt issuance
plans of certain categories of borrowers, and/or the types of
credit-sensitive products being offered. |
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A sustained period of market decline or weakness could have a material
adverse effect on us. |
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Our results could be adversely affected because of public statements or
actions by market participants, government officials and others who may be
advocates of increased regulation, regulatory scrutiny or litigation. |
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Increased competition or regulation could result in a loss of market share or revenue |
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The markets for credit ratings as well as research, investment and
advisory services are very competitive. Our Financial Services segment
competes domestically and internationally on the basis of a number of
factors, including quality of ratings, research and investment advice, client
service, reputation, price, geographic scope, range of products and services,
and technological innovation. |
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In addition, in some of the countries in which Standard & Poor’s competes,
governments may provide financial or other support to locally-based rating
agencies and may from time to time establish official credit rating agencies,
credit ratings criteria or procedures for evaluating local issuers. |
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The financial services industry is subject to the potential for increasing
regulation in the United States and abroad. The businesses conducted by our
Financial Services segment are in certain cases regulated under the U.S.
Credit Rating Agency Reform Act of 2006, Investment Advisers Act of 1940, the
U.S. Securities Exchange Act of 1934, the National Association of Securities
Dealers and/or the laws of the states or other jurisdictions in which they
conduct business. |
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In the past several years the U.S. Congress, the
Securities and Exchange Commission (“SEC”), the European Commission,
through the Committee of European Securities Regulators (“CESR”) and
the International Organization of Securities Commissions (“IOSCO”), a
global group of securities commissioners, have been reviewing the role
of rating agencies and their processes and the need for greater
oversight or regulations concerning the issuance of credit ratings or
the activities of credit rating agencies. |
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Local, national and multinational bodies have
considered and adopted other legislation and regulations relating to
credit rating agencies from time to time. |
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We do not believe that any such laws, regulations or rules
will have a material adverse effect on our financial condition
or results of operations. |
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Other laws, regulations and rules relating to
credit rating agencies are being considered by local, national,
foreign and multinational bodies and are likely to continue to be
considered in the future. The impact on us of the adoption of any
such laws, regulations or rules remains uncertain. |
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Additional information regarding rating agencies
is provided in the Management’s Discussion and Analysis section of our
2009 Annual Report to Shareholders. |
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Consolidation of customers could impact our available markets and revenue growth |
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Our investment services businesses have a customer base which is largely
comprised of members from the financial services industry. The current
challenging business environment and the consolidation of customers resulting
from mergers and acquisitions in the financial services industry can result
in reductions in the number of firms and workforce which can impact the size
of our customer base. |
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Risk Factors Specific to our McGraw-Hill Education Segment |
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Changes in educational funding could materially affect our education businesses |
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Our U.S. educational textbook and testing businesses may be adversely
affected by changes in state educational funding as a result of changes in
legislation, both at the federal and state level, changes in the state
procurement process and changes in the condition of the local, state or U.S.
economy. |
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While in the past few years the availability of state and federal funding
for elementary and high school education had improved due to legislative
mandates such as No Child Left Behind (“NCLB”) and Reading First, future
changes in federal funding and the state and local tax base could create an
unfavorable environment, leading to budget issues resulting in a decrease in
educational funding. |
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Our education businesses operate in a cyclical environment |
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A significant portion of our sales are to customers in educational
markets. Our School Education Group and the industry it serves are
influenced strongly by the magnitude and timing of state adoption
opportunities. Approximately 20 states currently use an adoption process to
purchase textbooks. In the remaining states, known as “open territories”,
textbooks are purchased independently by local districts or individual
schools. |
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Our internal estimate indicates that the 2010 el-hi market overall is
expected to increase 6% to 7%. In addition, despite the size of the market,
there is no guarantee that we will be successful in the state new adoption
market or in open territories. |
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Risk Factors Specific to our Information & Media Segment |
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Changes in the global advertising markets could materially impact our results |
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Although advertising is less than 5% of our revenue, advertising is still
a significant source of revenue in our Information & Media segment. In
general, demand for advertising tends to correlate with changes in the level
of economic activity in the United States and in the markets we serve. In
addition, world, national and local events may affect advertising demand. |
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Competition from other forms of media such as other magazines,
broadcasters and Web sites, affects our ability to attract and retain
advertisers. |
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Our broadcasting operations are subject to regulatory development that could affect
their profitability |
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All television stations are subject to Federal Communications Commission
(“FCC”) regulation. Television stations broadcast under licenses that are
generally granted and renewed for a period of eight years. The FCC regulates
television station operations in several ways, including, but not limited to,
employment practices, political advertising, indecency and obscenity,
sponsorship identification, children’s programming, issue-responsive
programming, signal carriage, ownership, and engineering, transmissions,
antenna and other technical matters. |
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Changes in the global automotive markets |
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Declines in the global automotive industry impacts our ability to sustain
or grow our revenue streams associated with business intelligence to that
market. |
| Item 1b. |
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Unresolved Staff Comments |
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None. |
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We lease office facilities at 241 locations: 122 are in the United States. In
addition, we own real property at 21 locations, of which 11 are in the United States.
Our principal facilities are as follows: |
Domestic
New York, NY
55 Water Street
2 Penn Plaza
1221 Avenue of the Americas
Blacklick, OH
Book Distr. Ctr.
Office
Ashland, OH
Groveport, OH
Columbus, OH
Orion Place
Easton Commons
East Windsor, NJ
Data Center
Warehouse
Delran, NJ
DeSoto, TX
Assembly Plant
Monterey, CA
Westlake Village, CA
San Francisco, CA
San Diego, CA
Dubuque, IA
Chavenelle Drive
Bell Street
Chicago, IL
Burr Ridge, IL
Centennial, CO
Denver, CO
Indianapolis, IN
North Michigan Road
81st Street
North Meridian Street
Washington, DC
Norcross, GA
Lake Mary, FL
Troy, MI
Boston, MA
Foreign
Canary Wharf, England
Maidenhead, England
Wooburn, England
Mexico City, Mexico
Whitby, Canada
Madrid, Spain
Jurong, Singapore
Singapore, Singapore
Mumbai, India
New Delhi, India
Frankfurt, Germany
| Item 3. |
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Legal Proceedings |
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Incorporated herein by reference from Exhibit (13) from Footnote 15 from Notes to our
Consolidated Financial Statements for the year ended December 31, 2009, included in our 2009
Annual Report to Shareholders. |
| Item 4. |
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Submission of Matters to a Vote of Security Holders |
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No matters were submitted to a vote of our security holders during the last quarter
of the period covered by this Report. |
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Executive Officers of the Registrant |
Harold McGraw III
Robert J. Bahash
Bruce D. Marcus
David L. Murphy
D. Edward Smyth
Charles L. Teschner, Jr.
Kenneth M. Vittor
| All of the above executive officers have been full-time employees and officers for
more than five years except for Mr. Marcus, Mr. Smyth and Mr. Teschner. |
| Mr. Marcus, prior to becoming an officer on January 19, 2005, was Senior Vice
President, Enterprise Systems, with responsibility for systems development across the
Company. Prior to that, he was Vice President, Business Operations and Technology
for Platts. |
| Mr. Smyth, prior to becoming an officer on February 17, 2009, served as Chief
Administrative Officer and Senior Vice President of Corporate and Government Affairs
for H.J. Heinz Company. Prior to joining Heinz, Mr. Smyth spent fifteen years as a
senior Irish diplomat. |
| Mr. Teschner, prior to becoming an officer on March 23, 2009, served as Lead Partner
and senior client officer at the consulting firm Booz Allen Hamilton, where he lived
or worked in more than 20 countries and served on various management committees. |
PART II
| Item 5. |
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Market for the Registrant’s Common Stock and Related
Stockholder Matters and Issuer Purchases of Equity Securities |
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On February 12, 2010, the closing price of our common stock was $34.17 per share
as reported on the New York Stock Exchange. The approximate number of record holders
of our common stock as of February 12, 2010 was 4,613. |
Dividends per share of common stock:
$0.225 per quarter in 2009
$0.22 per quarter in 2008
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On January 31, 2007 the Board of Directors approved a stock repurchase program
authorizing the purchase of up to 45 million shares, which was approximately 12.7% of
the total shares of our outstanding common stock as of January 31, 2007. As of
December 31, 2007, 28.0 million shares remained available under the 2007 repurchase
program. In 2008, we repurchased 10.9 million shares. In 2009, we did not repurchase
any shares under the 2007 repurchase program. As of December 31, 2009 and 2008, 17.1
million shares remained available under the 2007 repurchase program. The repurchase
program has no expiration date. The repurchased shares may be used for general
corporate purposes, including the issuance of shares in connection with the exercise
of employee stock options. Purchases under this program may be made from time to time
on the open market and in private transactions, depending on market conditions. |
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Information concerning the high and low stock price of our common stock on the New
York Stock Exchange is incorporated herein by reference from Exhibit (13), from page
88 of the 2009 Annual Report to Shareholders. |
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A performance graph that compares our cumulative total shareholder return during the
previous five years with a performance indicator of the overall market (i.e., S&P
500), and our peer group is incorporated herein by reference from Exhibit (13), from
the inside cover of the 2009 Annual Report to Shareholders. |
| Item 6. |
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Selected Financial Data |
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Incorporated herein by reference from Exhibit (13), from the 2009 Annual Report to
Shareholders, pages 86 and 87. |
| Item 7. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Incorporated herein by reference from Exhibit (13), from the 2009 Annual Report to
Shareholders, pages 22 to 54. |
| Item 7a. |
|
Quantitative and Qualitative Disclosure about Market Risk |
| |
|
Incorporated herein by reference from Exhibit (13), from the 2009 Annual Report to
Shareholders, page 52. |
| Item 8. |
|
Consolidated Financial Statements and Supplementary Data |
| |
|
Incorporated herein by reference from Exhibit (13), from the 2009 Annual Report to
Shareholders, pages 55 to 85. |
| Item 9. |
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
| Item 9a. |
|
Controls and Procedures |
| |
| |
|
Disclosure Controls and Procedures |
| |
|
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed with the Securities and
Exchange Commission (“SEC”) is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms, and that such information |
| |
|
is accumulated
and communicated to management, including our Chief Executive Officer (“CEO”) and
Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding
required disclosure. |
| |
|
As of December 31, 2009, an evaluation was performed under the supervision and with
the participation of management, including the CEO and CFO, of the effectiveness of
the design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) under the U.S. Securities Exchange Act of 1934). Based on that
evaluation, management, including the CEO and CFO, concluded that our disclosure
controls and procedures were effective as of December 31, 2009. |
| |
|
Management’s Annual Report on Internal Control Over Financial Reporting |
| |
|
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404) and as
defined in Rules 13a-15(f) under the U.S. Securities Exchange Act of 1934, management
is required to provide the following report on our internal control over financial
reporting: |
|
|
1. Management is responsible for establishing and maintaining adequate internal
control over financial reporting. |
|
|
2. Management has evaluated the system of internal control using the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) framework. Management
has selected the COSO framework for its evaluation as it is a control framework
recognized by the SEC and the Public Company Accounting Oversight Board that is free
from bias, permits reasonably consistent qualitative and quantitative measurement of
our internal controls, is sufficiently complete so that relevant controls are not
omitted and is relevant to an evaluation of internal controls over financial
reporting. |
|
|
3. Based on management’s evaluation under this framework, management has concluded
that our internal controls over financial reporting were effective as of December 31,
2009. There are no material weaknesses in our internal control over financial
reporting that have been identified by management. |
|
|
4. Our independent registered public accounting firm, Ernst & Young LLP, has audited
our consolidated financial statements for the year ended December 31, 2009, and has
issued their reports on the financial statements and the effectiveness of internal
controls over financial reporting. These reports are located on pages 83 and 84 of
the 2009 Annual Report to Shareholders. |
Other Matters
There have been no changes in our internal control over financial reporting during
the most recent quarter that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
|
|
|
| Item 9b. |
|
Other Information |
None.
PART III
|
|
|
| Item 10. |
|
Directors and Executive Officers of the Registrant |
Incorporated herein by reference from our definitive proxy statement dated March 19,
2010 for the annual meeting of shareholders to be held on April 28, 2010.
|
|
|
| Item 11. |
|
Executive Compensation |
|
|
|
| Item 12. |
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters |
Incorporated herein by reference from our definitive proxy statement dated March 19,
2010 for the annual meeting of shareholders to be held April 28, 2010.
The following table details our equity compensation plans as of December 31, 2009:
Equity Compensation Plans’ Information
Equity compensation
plans approved by
security holders
Equity compensation
plans not approved
by security holders
Total
|
|
|
| Item 13. |
|
Certain Relationships and Related Transactions |
Incorporated herein by reference from our definitive proxy statement dated March 19,
2010 for the annual meeting of shareholders to be held April 28, 2010.
|
|
|
| Item 14. |
|
Principal Accounting Fees and Services |
During the year ended December 31, 2009, Ernst & Young LLP audited the consolidated
financial statements of the Registrant and its subsidiaries.
PART IV
|
|
|
| Item 15. |
|
Exhibits and Financial Statement Schedules |
| (a) |
1. |
Financial Statements |
| |
| |
|
The Index to Financial Statements and Financial Statement Schedule on page 14 is
incorporated herein by reference as the list of financial statements required as
part of this report. |
| |
| |
2. |
Financial Statement Schedules |
| |
| |
|
The Index to Financial Statements and Financial Statement Schedule on page 14 is
incorporated herein by reference as the list of financial statements required as
part of this report. |
| |
| |
3. |
Exhibits |
| |
| |
|
The exhibits filed as part of this Annual Report on Form 10-K are listed in the
Exhibit Index on pages 19 to 21, immediately preceding such Exhibits, and such
Exhibit Index is incorporated herein by reference. |
The
McGraw-Hill Companies, Inc.
Index to Financial Statements,
Financial Statement Schedules and Exhibits
Data incorporated by reference from Annual Report to Shareholders:
Financial Statement Schedule:
Consolidated schedule for each of the three years in the period ended December 31, 2009
Schedule II — Reserves for doubtful accounts and sales returns
Consent of Independent Registered Public Accounting Firm
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, 2009 are hereby incorporated by reference in
Exhibit (13). With the exception of the pages listed in the above index, the 2009 Annual Report
to Shareholders is not to be deemed filed as part of Item 15 (a)(1).
The McGraw-Hill Companies, Inc.
Schedule Of Valuation and Qualifying Accounts Disclosure
Schedule II — Reserves for Doubtful Accounts and Sales Returns
(In thousands)
Year ended 12/31/09
Allowance for doubtful accounts
Allowance for returns
Year ended 12/31/08
Year ended 12/31/07
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
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed on February 24, 2010 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.
Harold W. McGraw III
Chairman, President,
Chief Executive Officer, and
Director
Robert J. Bahash
Executive Vice President and
Chief Financial Officer
Emmanuel N. Korakis
Senior Vice President and
Corporate Controller
Pedro Aspe
/s/ Sir Winfried F.W. Bischoff
Sir Winfried F.W. Bischoff
Douglas N. Daft
Linda Koch Lorimer
Robert P. McGraw
Hilda Ochoa-Brillembourg
Sir Michael Rake
Edward B. Rust, Jr.
Kurt L. Schmoke
Sidney Taurel
(3)
(4.1)
(4.2)
(10.1)
(10.2)*
(10.3)*
(10.4)*
(10.5)*
(10.6)*
(10.7)*
(10.8)*
(10.9)*
(10.10)*
(10.11)*
(10.12)*
(10.13)*
(10.14)*
(10.15)*
(10.16)*
(10.17)
(10.18)
(10.19)
(10.20)
(10.21)
(10.22)
(10.22A)
(10.23)*
(10.24)*
(10.25)*
(10.26)*
(10.27)*
(10.28)*
(10.29)*
(10.30)*
(10.31)*
(10.32)*
(10.33)*
(10.34)*
(10.35)*
(10.36)*
(10.37)*
(10.38)*
(10.39)*
(12)
(13)
(21)
(23)
(31.1)
(31.2)
(32)
(99)