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TheMcGrawHillCompaniesReports16.4%EPSGainforThird
QuarterEPSTopsConsensusForecast
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NEWYORK(BUSINESSWIRE)Oct.22,2002TheMcGrawHillCompanies(NYSE:MHP)today
reporteddilutedearningspershareforthethirdquarterof$1.42,a16.4%increaseoverthe$1.22forthe
sameperiodlastyear.ExcludinganaftertaxgainonthesaleofMMSInternationalinSeptember2002,
dilutedearningspersharewere$1.41,a15.6%increaseoverlastyear.
Netincomeforthethirdquartergrew15.3%to$276.2millionascomparedto$239.5millionin2001.
Excludingtheaftertaxgainonthedisposition,netincomewas$274.2million.
Revenueforthethirdquarterincreased2.8%to$1.58billion.
"AnotheroutstandingperformancebyFinancialServices,solidgrowthfromourHigherEducation,
ProfessionalandInternationalGroup,someimprovementinadvertisingandexcellentcostcontrolswere
keystoourthirdquarter,"saidHaroldMcGrawIII,chairman,presidentandchiefexecutiveofficerof
TheMcGrawHillCompanies."Asaresult,ouroperatingprofitmarginexpandedto28.8%inthe
seasonallymostimportantquarteroftheyear.
"Thethirdquarterresultsin2002reflectafivecentpersharebenefitfromthediscontinuationof
goodwillandotherintangibleamortizationinaccordancewiththeStatementofFinancialAccounting
Standards(SFAS)No.142.Thebenefitforninemonthsthisyearwas14cents.Itwillbe18centsforthe
year.
"TheFirstCallconsensusforecastof$1.40forthethirdquarterof2002reflectsthebenefitfromthe
adoptionofSFAS142.
"Forninemonths,dilutedearningspersharewas$2.27,a17.6%increaseoverthecomparableperiodlast
year.Excludingonetimeitems,dilutedearningspersharewas$2.26ascomparedto$1.89in2001.One
timeitemsin2001reflectaonetimegainof13centsfromthedivestitureofDRI,an11centlossonthe
writedownofselectedassets,theshutdownofBlueListandthecontributionofRationalInvestoranda
twocentgainonthesaleofrealestate.
"Netincomefortheninemonthswas$441.9million,a16.3%increaseover$379.9millionintheprior
year.Excludingonetimeitems,netincomefor2002was$439.9millionascomparedto$371.3million
in2001.
"Revenuefortheninemonthsincreased2.4%to$3.62billion.
Education:"Revenueforthesegmentinthethirdquarterof$995.7millionwasoff0.3%,asa9.1%
5/25/2016 NewsReleaseS&PGlobal
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increaseinrevenuebyMcGrawHillHigherEducation,ProfessionalandInternationalGroup(HPI)
offseta5.9%revenuedeclineintheMcGrawHillSchoolEducationGroup(SEG).Revenueforthethird
quarterwas$407.3millionatHPIand$588.4millionatSEG.Operatingprofitslipped0.4%to$303.9
million.
"TheMcGrawHillSchoolEducationGroupgainedshareinanelementaryhighschoolmarketthatisoff
9.9%aftereightmonths,accordingtothemostrecentAssociationofAmericanPublishersstatistics.
"Weexpecttocapturemorethan31%oftheavailableadoptionsalesopportunitiesthisyear,upfrom
29%lastyear.MarketleadingperformancesinK12scienceandK12socialstudieshelpedproducethis
record.InthekeyTexasscienceadoption,wewon40%ofthemarket.Althoughourbasalreading
programdidnotmeetexpectationsinOklahomaandFlorida,astrongperformancebyourresearchbased
readingproductsandliteratureprogramsproducedexcellentresultsinadoptionstatesandtheopen
territories.Ourprogramscapturedmorethan33%oftheK8readingadoptionmarketinCaliforniaand
morethan20%oftheFloridamarket.
"WealsoreceivedamajorneworderinthethirdquarterfromDetroit,Michigan,formorethan$18
million.Webelieveitisthelargestadoptionthisyearintheopenterritories.Detroitusedablendoflocal,
stateandnewfederalfundsfromtheReadingFirstprogramtopurchasethreeofourproductsOpen
Court,ReadingMasteryandCorrectiveReading.Michiganreceivedagrantof$28.5millionthisyear
fromtheU.S.DepartmentofEducationforitsReadingFirstinitiativesandisoneofthefirststatesto
releasefundingin2002.Sofarthisyear,16stateshavereceivedReadingFirstgrantsfromthe
DepartmentofEducation.
"Prospectsinthetestingmarketcontinuetoimprove,buttimingfactorsresultedinthirdquartersoftness.
WerecentlywonnewstatewidetestingcontractsinConnecticut,WestVirginiaandMaryland.Resultsin
thesupplementalmarketweremixed.
"TheHPIGroupcontinuestobenefitfromthemarriageoftextsandtechnology,whichisproviding
superiorproductenhancementsforbothinstructorsandstudents.Astrongnewlistandrecord
enrollmentsalsocontributedtotheimprovedperformance.BestsellersincludeMcConnell,Economics,
15thedition;Larson,FundamentalAccountingPrinciples,16thedition;Garrison,Managerial
Accounting,10thedition;andSchiller,EconomyToday,9thedition.
"MedicaltextsandSpanishlanguagereadingprogramscontributedtoincreasedinternationalsales.But
thecontinuingsoftnessincomputerbooksalesdampenedgrowthinthedomesticprofessionalmarket.
FinancialServices:"Revenueforthissegmentinthethirdquarterincreased14.1%to$399.2millionand
operatingprofitsgrewby19.4%to$131.2million.Operatingprofitsreflecta$14.5millionpretaxloss
onthesaleofMMSInternational.CorporateValueConsulting(CVC),whichwasacquiredinAugust
2001,provided$16.6millioninincrementalrevenuetothesegment.
"Oursuccessfuldiversificationstrategyexpandinggloballyandcreatingratingsandservicesthatare
nottiedtothenewissuemarkethelpedproducedoubledigitrevenueandprofitgrowthdespite
softnessintheU.S.corporatemarket.RevenuegrewatadoubledigitrateintheU.S.andabroad.More
than31%ofrevenuefromratingsproductscamefromforeignsourcesinthethirdquarter.
"StructuredfinancemarketswererobustintheU.S.andoverseas.EuropeandAsiawereourfastest
growingstructuredmarketsabroad.Lowinterestratesandrefinancingkeptthecollateralizedand
residentialmortgagebackedsecuritiesmarketsgrowingstrongly.Publicfinancealsocontinuedtoshow
solidgrowthasstateandmunicipalgovernmentsincreasedborrowingbecauseoflowertaxrevenues.
5/25/2016 NewsReleaseS&PGlobal
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Nontraditionalservices,includingfinancialstrengthandderivativeproductratingsandratingevaluation
services,alsogrewrapidly.
"NewissuedollarvolumeintheU.S.marketgrewbyonly0.6%inthethirdquarterascorporateissuance
declined40.1%,accordingtoSecuritiesDataCorp.Forthesameperiod,municipalissuancegrewby
42.9%,assetbackedissuancewasup13.2%andmortgagebackedissuanceincreasedby43.5%.
"NewissueunitvolumeintheU.S.marketdeclinedby2.5%inthethirdquarter.Corporateissuancefell
47.9%,accordingtoSecuritiesData.Municipalunitvolumegrewby3.2%fortheperiod.Assetbacked
issuancewasup4.3%andmortgagebackedunitvolumegrewby10.0%.
"InEurope,thedollarvolumeofbondissuanceincreased3.0%whilethenumberofissuesgrewby1.0%
forthethirdquarter,accordingtoBondware.
"CutbacksbyfinancialfirmsandreducedInternetredistributionservicesledtoreducedrevenuein
investmentproductsandservices,buttightcostcontrolsandgrowthinhighermarginproducts,including
indexes,producedasubstantialgaininprofitability.Despitedeclinesinthestockmarketinthethird
quarter,assetsundermanagementinexchangetradedfundsusingStandard&Poor'sindexesgrewby
27.5%to$49.1billion.
InformationandMediaServices:"Revenueforthissegmentdeclined2.1%to$182.5million,but
operatingprofitsclimbedby138.7%to$19.8million.TheacquisitionofFinancialTimesEnergyin
September2001contributedanincremental$8.4milliontothesegmentrevenueinthethirdquarter.
"Stringentcostcontrolsandsomeimprovementinadvertisingcombinedtoproducethebestresultssofar
thisyearinthesegment.Withimprovingnationaltimesalesandaboostfrompoliticaladvertising,
revenuefortheBroadcastingGroupincreasedby10.5%.
"Revenuedeclinedby4.0%attheBusinesstoBusinessGroup,whichincludesBusinessWeekandour
verticaloperationsinconstruction,energy,aviationandhealthcare.Withonemoreissueinthethird
quarterthisyear,BusinessWeekadpagesnudgedintopositiveterritoryforthefirsttimein2002witha
modestincreaseof0.3%forthelatestperiod,accordingtothePublishersInformationBureau(PIB).
BusinessWeek'sadpagesdropped33.4%inthefirstquarterand20.4%inthesecondquarter.
Theoutlook:"Withcontinuedstrengthinkeymarkets,effectivecostcontrolsandfavorableinterest
expensecomparisons,weconfidentlyexpecttoachieveourdoubledigitearningsgoalfortheyear."
Conferencecallscheduled:TheCorporation'sseniormanagementwillreviewthethirdquarter2002
earningsresultsonaconferencecallscheduledforthismorning,October22nd,at9:00AMEastern
Time.Thiscallisopentoallinterestedparties.Discussionsmayincludeforwardlookinginformation.To
participatebytelephone,pleasedialinby8:45AMEasternTimetoregisterforthecall.Domestic
participantsmaycall888/5665772;internationalparticipantsmaycall+1712/2710857(longdistance
chargeswillapply).ThepasscodeisMcGrawHillandtheconferenceleaderisHaroldMcGrawIII.The
conferencecallwillalsobeWebcastandcanbeaccessedthroughTheMcGrawHillCompanies'Investor
RelationsWebsite.Goto:www.mcgrawhill.com/investor_relationsandclickonthe|WEBCASTLIVE|
button.Atthenextscreen,selecttheWebcastlinkunderListeningOptions.YouwillneedWindows
MediaPlayer.TheWebcastreplaywillbeavailableuntilOctober29,2002.
Toviewthepresenters'slidesonline,gotohttp://www.mymeetings.com/nc/join.TheNetConference
meetingnumberisPH8648870,thepasscodeisMCGRAWHILL(casesensitive),andtheeventtypeis
"Conference."ClickontheProceedbutton.YouwillneedWindowsMediaPlayer.
5/25/2016 NewsReleaseS&PGlobal
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Theforwardlookingstatementsinthisnewsreleaseinvolverisksanduncertaintiesandaresubjectto
changebasedonvariousimportantfactors,includingworldwideeconomicandpoliticalconditions,the
healthofcapitalandequitymarkets,includingfutureinterestratechanges,thepaceofrecoveryin
advertising,thelevelofexpendituresintheeducationmarket,thesuccessfulmarketingofproductsand
theeffectofcompetitiveproductsandpricing.
Foundedin1888,TheMcGrawHillCompaniesisaglobalinformationservicesprovidermeeting
worldwideneedsinthefinancialservices,educationandbusinessinformationmarketsthroughleading
brandssuchasStandard&Poor's,BusinessWeekandMcGrawHillEducation.TheCorporationhas
morethan350officesin33countries.Salesin2001were$4.6billion.Additionalinformationis
availableathttp://www.mcgrawhill.com.
TheMcGrawHillCompanies
StatementsofIncome
PeriodsendedSeptember30,2002and2001
(inthousands,exceptpersharedata)
(unaudited)ThreeMonths

20022001%Change

Operatingrevenue$1,577,334$1,535,1002.8
Expensesnet1,147,1691,132,1301.3

Incomefromoperations430,165402,9706.7
Interestexpense5,96513,558(56.0)

Incomebeforetaxesonincome424,200389,4128.9
Provisionfortaxesonincome147,981149,924(1.3)

Netincome$276,219$239,48815.3
=============================
Earningspercommonshare:
Basic

Netincome$1.43$1.2415.3
============================
Diluted

Netincome$1.42$1.2216.4
============================
Dividendpercommonshare$0.255$0.2454.1
============================
5/25/2016 NewsReleaseS&PGlobal
http://investor.spglobal.com/phoenix.zhtml?c=96562&p=irolnewsArticle_pf&ID=347351 5/9
Averagenumberofcommonsharesoutstanding:
Basic193,030193,892
Diluted194,461195,680
TheMcGrawHillCompanies
StatementsofIncome
PeriodsendedSeptember30,2002and2001
(inthousands,exceptpersharedata)
(unaudited)NineMonths

20022001%Change

Operatingrevenue$3,615,387$3,530,9672.4
Expensesnet2,906,5742,887,9110.6

Incomefromoperations708,813643,05610.2
Interestexpense19,53846,459(57.9)

Incomebeforetaxesonincome689,275596,59715.5
Provisionfortaxesonincome247,384216,72114.1

Netincome$441,891$379,87616.3
=============================
Earningspercommonshare:
Basic

Netincome$2.29$1.9616.8
=============================
Diluted

Netincome$2.27$1.9317.6
=============================
Dividendpercommonshare$0.765$0.7354.1
=============================
Averagenumberofcommonsharesoutstanding:
Basic192,993194,281
Diluted194,758196,343
TheMcGrawHillCompanies
5/25/2016 NewsReleaseS&PGlobal
http://investor.spglobal.com/phoenix.zhtml?c=96562&p=irolnewsArticle_pf&ID=347351 6/9
OperatingResultsbySegment
PeriodsendedSeptember30,2002and2001
(unaudited)(dollarsinthousands)
Revenue

ThreeMonths20022001%Change

McGrawHillEducation$995,655$998,776(0.3)
FinancialServices(1)(2)399,218349,99214.1
InformationandMediaServices182,461186,332(2.1)

Totaloperatingsegments1,577,3341,535,1002.8
Generalcorporateexpense
Interestexpense

Totalcompany$1,577,334$1,535,1002.8
=============================
TheMcGrawHillCompanies
OperatingResultsbySegment
PeriodsendedSeptember30,2002and2001
(unaudited)(dollarsinthousands)
OperatingProfit

ThreeMonths20022001%Change

McGrawHillEducation$303,861$305,124(0.4)
FinancialServices(1)(2)131,164109,89619.4
InformationandMediaServices19,7918,292138.7

Totaloperatingsegments454,816423,3127.4
5/25/2016 NewsReleaseS&PGlobal
http://investor.spglobal.com/phoenix.zhtml?c=96562&p=irolnewsArticle_pf&ID=347351 7/9
Generalcorporateexpense(24,651)(20,342)21.2
Interestexpense(5,965)(13,558)(56.0)

Totalcompany$424,200*$389,412*8.9
=============================
*Incomebeforetaxesonincome
(1)Quarterandyeartodateresultsincludea$14.5million
pretaxloss($2.0millionaftertaxbenefit,or1centper
dilutedshare)onthedispositionofMMSInternational.
(2)Yeartodate2001resultsforFinancialServicesincludean
$8.8millionpretaxgain(13centsperdilutedshare)onthe
saleofDRIanda$22.8millionpretaxcharge(11centsper
dilutedshare)forrestructuringinitiatives.
TheMcGrawHillCompanies
OperatingResultsbySegment
PeriodsendedSeptember30,2002and2001
(unaudited)(dollarsinthousands)
Revenue

NineMonths20022001%Change

McGrawHillEducation$1,854,239$1,872,684(1.0)
FinancialServices(1)(2)1,196,8111,060,95412.8
InformationandMediaServices564,337597,329(5.5)

Totaloperatingsegments3,615,3873,530,9672.4
Generalcorporateexpense(3)
Interestexpense

Totalcompany$3,615,387$3,530,9672.4
=============================
5/25/2016 NewsReleaseS&PGlobal
http://investor.spglobal.com/phoenix.zhtml?c=96562&p=irolnewsArticle_pf&ID=347351 8/9
TheMcGrawHillCompanies
OperatingResultsbySegment
PeriodsendedSeptember30,2002and2001
(unaudited)(dollarsinthousands)
OperatingProfit

NineMonths20022001%Change

McGrawHillEducation$296,093$315,284(6.1)
FinancialServices(1)(2)418,863326,55528.3
InformationandMediaServices58,30955,0365.9

Totaloperatingsegments773,265696,87511.0
Generalcorporateexpense(3)(64,452)(53,819)19.8
Interestexpense(19,538)(46,459)(57.9)

Totalcompany$689,275*$596,597*15.5
=============================
*Incomebeforetaxesonincome
(1)Quarterandyeartodateresultsincludea$14.5million
pretaxloss($2.0millionaftertaxbenefit,or1centper
dilutedshare)onthedispositionofMMSInternational.
(2)Yeartodate2001resultsforFinancialServicesincludean
$8.8millionpretaxgain(13centsperdilutedshare)onthe
saleofDRIanda$22.8millionpretaxcharge(11centsper
dilutedshare)forrestructuringinitiatives.
(3)Yeartodatecorporateexpensein2001includesa$6.9million
pretaxgain(2centsperdilutedshare)onthesaleofreal
estate.
CONTACT:
TheMcGrawHillCompanies
5/25/2016 NewsReleaseS&PGlobal
http://investor.spglobal.com/phoenix.zhtml?c=96562&p=irolnewsArticle_pf&ID=347351 9/9
MediaRelations
StevenH.Weiss,212/5122247(office)
917/3742024(cell)
weissh@mcgrawhill.com
or
InvestorRelations
DonaldS.Rubin,212/5124321(office)
donald_rubin@mcgrawhill.com