April 26 – May 2, 2010 Edition McGraw-Hill Reports Income Growth in First Quarter

NEW YORK/AUTHORLINK NEWS/April 27, 2010–The McGraw-Hill Companies today reported an increase of 63.9% in net income to $103.3 million for the first quarter of 2010, compared to $63.0 million for the first quarter of 2009. Revenue grew by 3.7% in the first quarter to $1.2 billion. The company saw double-digit growth in digital sales in its professional division, while the international market slowed.

"Recovery in global bond markets, solid results in U.S. higher education, which is benefiting from double-digit growth in digital products and services, and an outstanding performance in global energy information markets were major factors in our first quarter," said Harold McGraw III, chairman, president and chief executive officer of The McGraw-Hill Companies. "The operating margin expanded in all three segments."

Education: Revenue for this segment increased by 1.5% to $317.2 million in the first quarter compared to the same period last year. The operating loss for the period was cut by 19.3% to $61.8 million. Foreign exchange rates increased revenue by $5.8 million, and had an unfavorable impact on the operating loss of $2.4 million.

The McGraw-Hill School Education Group’s revenue declined by 9.0% to $111.6 million in the first quarter as a modest gain in the instructional materials market was offset by a decline in the testing market.

The McGraw-Hill Higher Education, Professional and International Group’s revenue increased by 8.3% to $205.7 million in the first quarter.

In the elementary-high school market, the McGraw-Hill School Education Group increased sales. Because most school districts do not make significant new purchases in this period, supplemental, residual and intervention orders accounted for most of the activity in the adoption states. North Carolina, usually the only adoption state to purchase new materials in the first quarter, was not in the market this year. In the open territory, the McGraw-Hill School Education Group benefited from large orders for world languages in Ohio, reading in Maryland and music in South Dakota, as well as supplemental and residual orders.

Growth in the expanding formative testing market was offset by the planned phase out of statewide custom contracts in California, Florida and Arizona. McGraw-Hill Education’s Acuity, a leader in the formative assessment market, continued to add new customers.

For McGraw-Hill Higher Education, Professional and International Group, surging sales of digital products contributed to a strong first quarter performance in the U.S. college and university market and improved results in professional markets.

Increased demand fueled by higher enrollments carried through from the fourth quarter of 2009 into the first quarter of 2010 in higher education. Double-digit revenue increases were produced by e-books, online courses and online homework management assessment products for students, including McGraw-Hill Connect(TM), the industry’s most advanced interactive platform.

McGraw-Hill Higher Education’s best sellers in the first quarter included:

Sanderson, Computers in the Medical Office, 6th Edition
Shier, Hole’s Human Anatomy and Physiology, 12th Edition
Garrison, Managerial Accounting, 13th Edition
Judson, Law and Ethics for Medical Careers, 5th Edition
Feldman, Essentials of Understanding Psychology, 8th Edition

In professional markets, digital revenue increased at a double-digit rate and traditional book sales in retail channels got off to a positive start in the first quarter. AccessPhysiotherapy, the sixth vertical site in the AccessMedicine(TM) suite of online subscription platforms for medical students, educators and physicians, was launched in the first quarter. AccessPhysiotherapy includes content from across McGraw-Hill Education, including Anatomy and Physiology Revealed, a virtual dissection tool from McGraw-Hill Higher Education, and Clinical Sports Medicine videos from McGraw-Hill Australia.

Revenue, excluding the impact of foreign exchange, declined slightly in international markets.