The McGraw-Hill

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OVERVIEW

The McGraw-Hill Companies Founded in 1888, The McGraw-Hill Companies is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets. The corporation offers an array of trusted, market leading brands that address three enduring global needs the need for capital, the need for knowledge and the need for transparency. The Corporation has more than 280 offices in 40 countries. Sales in 2008 were $6.4 billion.

MCGRAW-HILL EDUCATION

The McGraw-Hill Education segment is one of the premier global educational publishers. This segment consists of two operating groups: the School Education Group serving the elementary and high school markets, and the Higher Education, Professional and International Group, serving the college and university, professional, and international and adult education markets. Mc Graw-Hill Education is a leading global provider of instructional, assessment and reference products and solutions. It has offices in 33 countries and it publishes in more than 60 languages. Its resources are delivered across a wide range of print and digital platforms to benefit students, educators and professionals at all levels of learning. Revenue for this segment in 2008 decreased by 2.5% to $2.6 billion compared to prior year. School education group revenue declined by 5.4% to $1.4 billion in 2008. Higher education and professional and International group's revenue increased by 0.9% in 2008 to $1.3 billion.

MCGRAW-HILL FINANCIAL SERVICES

The 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 consists of two operating groups, Credit Market Services and Investment Services.

Standard & Poor's Credit Market Services provides valuable information and universal standards that help investors and markets assess risk, access capital and foster economic growth. The global leader in credit ratings in 2008, S&P published more than 1 million new and revised ratings and rated approximately $2.8 trillion in new debt. Revenue for Standard & Poor's Credit Market Services, which provides independent global credit ratings and risk evaluations, declined by 22.5% to $1.8 billion in 2008.

Standard & Poor's 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 high trading volumes in the financial markets. Revenue for Standard & Poor's Investment Services, which provides comprehensive value-added financial data, information, investment indices and research, increased by 15.0% to $899.5 million in 2008.

Standard & Poor's investment advisory group was created solely to provide independent, objective analysis and advice to the investment management and advisory marketplace. Clients receive portfolio strategy, fund research and asset allocation services encompassing the wide range of Standard & Poor's analysis and tools, including our ranking methodologies. Finally, Standard & Poor's provides the analysis, research and advice that help make clients feel more confident about their investment decisions.

MCGRAW-HILL INFORMATION & MEDIA

The 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 which includes the following brands: Aviation Week, Business Week, J.D. Power and Associates, McGraw-Hill Construction, and Plats and the Broadcasting Group, which operates nine television stations. McGraw-Hill Construction, part of The McGraw-Hill Companies, connects people, projects and products across the design and construction industry. Backed by the power of Dodge, Sweets, Engineering News Record, Architectural Record, Green Source and Regional Publications, the company provides information, intelligence, tools, applications and resources to help customers grow their business. McGraw-Hill Construction serves more than one million customers within the $4.6 trillion global construction community. 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. Information & Media: Revenue for this segment in 2008 increased 4.1% to $1.1 billion compared to prior year. In 2008, growth in information services and products helped produce a 4.1% increase in revenue to $954.8 million for the Business to Business Group. For the Broadcasting Group, a banner year in political advertising boosted revenue by 4.0% to $107.1 million for 2008.

KEY IDEAS

McGraw-Hill higher education partners with The NewYork times to add timely, Relevant and real world content to textbooks and related web sites to provide more Information, value and service to professors and students. McGraw-Hill collaborates with different kind of companies across the World. They are committed to reaching open markets wherever it may be. They are driving a new digital evolution and, they are dedicated to developing and retaining the right talent to lead this process.

They are recognizing the development and integration of the latest technologies and products into our already content- rich information structure is a way to create and deliver immediate results for our customers throughout the world. New technologies are changing the way the world learns and works, and The McGraw-Hill Companies is leveraging this technology to create new solutions.

Mc Graw-Hill professional talent is their most valuable resource. It enables them to be a market leader and provides highly valued services and information to the world. Therefore, they are invites exceptional individuals to make a difference with a company that sets the standard for excellence and helps the open markets of the world perform to their potential.

PERSPECTIVE

An Annual Report provides a detailed look at the financial results for the prior twelve months of Operations. Reporting requirements vary by country, but Mc Graw-Hill annual report includes: Chairman's Statement, Income Statement, Cash Flow Statement, Balance Sheet, Notes to the Accounts, Auditors Report and comparisons charts for last 10 years financial reports.

Financial report presents an in-depth business, strategic and financial analysis of The McGraw-Hill Companies, Inc. The report provides a comprehensive insight into the company, including business structure and operations, executive biographies and key competitors. The company's strengths and weaknesses and areas of developments are analyzed in financial report. Financial, strategic and operational factors are considered. The opportunities open to the company are considered and its growth potential assessed. Competitive or technological threats are highlighted. The report contains critical company information business structure and operations, the company history, major products and services, key competitors, key employees and executive biographies, different locations and important subsidiaries. It provides detailed financial ratios for the past five years as well as interim ratios for the last four quarters. Financial ratios include profitability, margins and returns, liquidity and leverage, financial position and efficiency ratios.

Mcgraw Hill 2008 annual report was really helpful for the people to know the current status of operations and financial status. While my reading of this report I was impressed about way of presenting financial report and first page of report displays 2008 financial status with photographs. They are clearly explained company operated sales compared with prior year. It has explained the best reasons behind the success.

Financial report is well organized and the report divided into sections, as 10 year summary, stock performance graph, statement of income, statement of cash flow, balance sheet, statement of shareholders. So, it is easy to find the required information. Organization of this report make it is to read everyone.

CEO's letter is appropriately balanced with graphs and photographs which is related to the text. It shows last ten years revenues, cash generated by operations and cash returned to share holders. The body of the CEO letter is clearly written with confident tone. I believe this is appropriate letter to target audience.

In Annual report they didn't balance the text with graphs, photographs. They are balanced with comparison tables. They have to use more graphs and photographs in report. Comparison tables show financial status of last two years. I think comparisons charts average reader can understand easily McGraw Hill financial information.

LEVEL 1 ANALYSIS

McGraw-Hill Education revenue and operating profit declined 17.2% and 70.1%, respectively, primarily due to softness at School Education Group partially offset by an increase in revenue at Higher Education. In 2008, revenue and operating profit decreased due to declines at the Financial Services and the McGraw-Hill Education segments. Financial Services revenue and operating profit declined 12.9% and 22.4%, respectively, largely due to weakness in Credit Market Services. The McGraw-Hill Education segment's revenue and operating profit declined 2.5% and 20.9%, respectively, principally due to softness in the School Education Group.

COMPARISON TABLE OF FINANCIAL REVIEWS

(In thousands, except per share data, operating statistics and number of employees)
2008 2007
Operating Results by Segment and Income
Statistics Revenue
McGraw-Hill Education $2,638,893 $2,705,831
Financial Services 2,654,287 3,046,229
Information & Media 1,061,875 1,020,221
Total Revenue 6,355,055 6,772,281
Operating Profit
McGraw-Hill Education 316,454 399,990
Financial Services 1,055,427 1,359,477
Information & Media 92,051 63,467
Operating Profit 1,463,932 1,822,934
General corporate (expense)/income (109,122) (159,821)
Interest expense – net (75,624) (40,581)
Income from Continuing Operational Before 1,279,186 1,622,532
Taxes on Income
Provision for taxes on income 479,695 608,973
Income From Continuing Operations Before 799,491 1,013,559
Extraordinary Item and Cumulative Adujustment
Discontinued Operations:
Net (loss)/earnings from discontinued operations - -
Income Before Extraordinary Item and Cumulative 799,491 1,013,559
Adjustment
Early extinguishment of debt.net of tax - -
Cumulative effect on prior years of changes in accounting - -
Net Income $ 799,491 $1,013,559
Basic Earnings per Share
Income from continuing operations before extraordinary $ 2.53 $ 3.01
Item and cumulative adjustment
Discontinued operations - -
Income before extraordinary item and cumulative adjustment $ 2.53 $ 3.01
Extraordinary item and cumulative adjustment
Net income - -
Diluted Earnings per Share
Income from continuing operations before extraordinary item $ 2.51 $ 2.94
And cumulative adjustment
Discontinued operations - -
Income before extraordinary item and cumulative adjustment $ 2.51 $ 2.94
Extraordinary item and cumulative adjustment - -
Net income $ 2.51 $ 2.94
Dividends per share of common stock $ 0.88 $ 0.82
Operating Statistics
Return on average shareholders equity 55.3% 47.3%
Income from continuing operations before taxes as a percent 20.1% 24.0%
Of revenue
Income before extraordinary item and cumulative adjustment 12.6% 15.0%
As a percent of revenue
Balance Sheet Data
Working capital $ (227,980) $ (314,558)
Total assets $6,080,142 $6,391,376
Total debt $1,267,633 $1,197,447
Shareholders equity $1,282,336 $1,606,650
Number of Employees 21,649 21,171

McGraw-Hill Education International includes businesses in Asia, Australia, Canada, Europe, India, and Latin America. More than half of McGraw-Hill Education's revenues come from its School Education Group, the remainder comes from its Higher Education, Professional, and International Group. They are decided to make progress in construction. The electronic delivery of their information is a critical part of the transition and is continuing to produce an increasing share of McGraw-Hill Constructions revenue. Finally In my point of view current environment, Mc Graw-hills remain focused on managing costs and Maintaining liquidity and increased efficiency and reduced redundancies in 2008 and it's providing quality of Education for International Students and providing good financial services right time to right company

RESEARCH FINDINGS

McGraw-Hill Construction Research Shows, Schools Are the Hottest Market for Green Building. The study also found a strong need for access to and information on green building products. Of particular interest were those products related to improving health, such as reducing mold and indoor air pollutants. McGraw-Hill Construction doing work on advance research in the area of green schools and will also be investigating green building in healthcare facilities in 2007.The findings are good news for the industry, given that education construction is the largest construction sector, by value, at $53 billion estimated spending for 2008. Fiscal advantages of green building, such as energy cost savings, are a major motivation behind green schools and universities. Improved health and well-being" was also found to be a critical factor for driving education green building a factor that was not as highly rated to the overall construction marketplace from research previously conducted by McGraw-Hill Constructions. Higher first costs are the primary challenge to building green in this Sector. This is consistent with other McGraw-Hill Construction research into the commercial and residential green building markets.

These results are very exciting. With the strong education construction market and the increased awareness and industry adoption of green, this kind of research provides the information needed to pave the way for healthier learning environments for children's.

The corporation is applying for Leadership Energy and Environmental Design certification, a nationally recognized benchmark for high-performance green buildings, for its higher-education offices.

By 2010, the value of the residential green building marketplace is expected to boost its market share from $7.4 billion and 2 percent of housing starts in 2006 to $19 billion to $38 billion and 5 to 10 percent of residential construction activity, according to a National Association of Home Builders survey.

While McGraw-Hill and others say green building is good business, in growing green consciousness of the consumer, marketing experts say promoting green building is even better business.

The major findings in the study included Green healthcare facilities reduce energy use, thus reducing green house gasses and improving air quality. 47% of respondents said that patient recovery time is reduced in green building other benefits include lower operating costs, greater innovation and public relations benefits.
The survey clearly shows that there is an increasing trend toward building green healthcare facilities. Of the survey respondents, 19% said they expect that their organization will be significantly involved with green building in 2008.

LEVEL 2 ANALYSIS

They are focusing on three core values in education field; those are innovation, success and learning, customer focus. They are constantly looking at new ways to improve learning and help people become more productive and efficient in rapidly changing markets. They are focused on helping students of all ages succeed with their proven solutions. They are committed to providing superior customer service and providing solutions to meet every teaching and learning need.

McGraw-Hill Education is an innovative global leader in high-quality teaching and learning solutions. They are helping to improve the world's prospects by providing individuals vital knowledge to enable them to reach their full potential. McGraw-Hill Education is where the world learns to succeed.

Standard & Poor's, the world's foremost provider of financial market intelligence, provides rigorous, independent analysis, and information on stocks, bonds, mutual funds and many other complex investment vehicles. The critical thinking, opinions, news and data offered by Standard & Poor's are an integral part of the global financial infrastructure.

The company's Education segment, while not as profitable as S&P, enjoys the bulk of a moderately lucrative $800 million textbook publishing industry. With high school and college enrollment rates increasing, McGraw-Hill stands to benefit from long-term societal trends toward higher education, though it is subject to short-term changes in state-wide book adoption rates.

The Financial Services segment through Standard & Poor's credit rating service 41% market share and the Education segment through McGraw-Hill's educational publishing of textbooks 35% market share. Education segment McGraw-Hill's most profitable segment, Financial Services, enjoys several tailwinds and competitive advantages through its operations as Standard & Poor's, including increasingly large and complex worldwide capital markets in which market participants demand trusted, reliable, distilled information and ratings on trillions of dollars worth of securities and financial obligation.

CONCLUSION

In the McGraw-Hill Higher Education, Professional and International Group, growth in the U.S. College and university market and a modest gain internationally offset a decline in professional markets during 2008. It shows that McGraw-Hill offering low price publications for students. The management team constantly finds innovative ways to satisfy the customers. The McGraw-Hill Companies Reports 2008 Earnings Per Share of $2.51, Including $0.14 Restructuring Charge McGraw-hill returned over $5.5 billion to the shareholders since 1996, $1.5 billion of it . Dividend increased 2.3% to an annualized rate of $0.90 per share. McGraw-Hill has increased its dividend annually for the last 36 years so far this year. I think that's pretty good. McGraw-hills 52 week low were $17.15 per share and 52 week high was $37.96. Currently, McGraw-Hills share is worth $25.21 which shows that it is closer to its 52 week high. The reasons to buy the McGraw hill shares, it's a one stop shop to understand the company and we can Identify prospective partners and suppliers with key data on their businesses and locations. So I would like to buy shares of McGraw-hills companies and also I am recommending others, who is going to invest money in stock market.

REFERENCES

http://www.annualreports.com/Company/1936

http://seekingalpha.com/article/102409-the-mcgraw-hill-companies-q3-2008-qtr-end-09-30-08-earnings-call-transcript?page=2

http://investor.mcgraw-hill.com/phoenix.zhtml?c=96562&p=irol-newsArticle&id=1248611

http://biz.yahoo.com/e/090729/mhp10-q.html

http://www.wikinvest.com/stock/McGraw-Hill_Companies_(MHP)

http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/investmentadvisoryservices_au/2,7,1,1,0,0,0,0,0,0,0,0,0,0,0,0.html

http://wikipedia.org/wiki/McGraw-Hill

FINANCIAL CHARTS

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