MAIN NEWS HEADLINES
October 26 – November 2, 2006 Edition
More Year-end Job
Cuts to Boost Profits
NEW YORK, NY/10/19/06The McGraw-Hill Companies (NYSE: MHP), as part of an effort to return to double-digit earnings in 2007, is expected to lay off another 100 people in its education divisions by the end of the year. The layoffs will bring to 700 the total number of job cuts in the restructuring.
Net income for the third quarter was $382.3 million. Revenue was up 0.8% to $2.0 billion versus the same period last year. "Record results at Financial Services and stringent cost management in the face of a softer education market this year were key factors in our third quarter," said Harold McGraw III, chairman, president and chief executive officer of The McGraw-Hill Companies.
"The $15.4 million pre-tax restructuring charge ($9.7 million after tax) was primarily for employee severance costs for the previously announced integration of our elementary and secondary basal publishing operations and the outsourcing of some information technology functions. Approximately 600 positions were eliminated in the third quarter, said McGraw.
"We will complete the restructuring this year in the fourth quarter, resulting in an additional pre-tax charge of $16 million, or approximately $0.03 per diluted share. The charge cannot be recognized until the fourth quarter due to timing of actions that relate primarily to the vacating of some facilities by the end of the year and the elimination of another 100 positions, the CEO said.
"Total restructuring charges for 2006 will be approximately $31.4 million, or $0.06 per diluted share, primarily from the elimination of 700 positions. These actions further streamline the organization and position us for a return to double-digit earnings growth in 2007, McGraw added.
In the Education segment, revenue decreased by 6.3% to $1.1 billion in the third quarter compared to the same period last year. The segment’s operating profit declined 7.0% to $354.0 million. The segment also incurred a restructuring charge of $5.6 million in the third quarter principally for the integration of its elementary and secondary basal publishing business. The charge consisted primarily of employee severance costs for the elimination of 400 positions across the single segment.
Revenue for the McGraw-Hill School Education Group declined by 12.0% to $603.0 million in the third quarter. Revenue for McGraw-Hill Higher Education, Professional and International Group increased by 2.2% to $467.2 million in the third quarter compared to the same period last year.
Net income for the first nine months was $677.5 million. Revenue for the period was up 4.4% to $4.7 billion.
The McGraw-Hill Companies is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets through leading brands such as Standard & Poor’s, McGraw-Hill Education, BusinessWeek and J.D. Power and Associates. The Corporation has more than 240 offices in 36 countries. Sales in 2005 were $6.0 billion. Additional information is available at http://www.mcgraw-hill.com.