Annual Report (Form 10-K), fiscal year 1994

Item 1. Business - ------- -------- The Registrant, incorporated in December 1925, serves business, professional and educational markets around the world with information products and services. Key markets include finance, business, education, law, construction, medical and health, computers and communications, aerospace and defense. As a multimedia publishing and information company, the Registrant employs a broad range of media, including books, magazines, newsletters, software, on-line data services, CD-ROMs, facsimile and television broadcasting. Most of the Registrant's products and services face substantial competition from a variety of sources.
The Registrant's 15,339 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, trade, and other agreements, which are essential to such a business, the Registrant is able to collect, compile, and disseminate this information. Substantially all book manufacturing and magazine printing is handled through a number of independent contractors. The Registrant's principal raw material is paper, and the Registrant has assured sources of supply, at competitive prices, adequate for its business needs.
Descriptions of the company's principal products, broad services and markets, and significant achievements are hereby incorporated by reference from Exhibit (13), pages 8 through 11, 16 through 19 and 24 through 26 (textual material) of the Registrant's 1994 Annual Report to Shareholders.
Information as to Industry Segments - ----------------------------------- The relative contribution of the industry segments of the Registrant and its subsidiaries to operating revenue and operating profit and geographic information for the three years ended December 31, 1994 and the identifiable assets of each segment at the end of each year, are included in Exhibit (13), on page 43 and page 44 in the Registrant's 1994 Annual Report to Shareholders and is hereby incorporated by reference.
Item 2.



Item 2. Properties - ------- ----------
The Registrant leases office facilities at 370 locations, 290 are in the United States. In addition, the Registrant owns real property at 26 locations; 22 are in the United States. The principal facilities of the Registrant are as follows:
The Registrant's major lease covers space in its headquarters building in New York City. The building is owned by Rock-McGraw, Inc., a corporation in which the Registrant and Rockefeller Group, Inc. are the sole shareholders. The Registrant occupies approximately 941,000 square feet of the rentable space under a 30-year lease which includes renewal options for two additional 15-year periods. In addition, the Registrant subleases for its own account approximately 694,000 square feet of space for periods up to 25 years.
The largest complex owned by the Registrant is located in Hightstown, NJ which houses the offices for accounting operations, data processing services, order fulfillment, other service departments and a warehouse. The Registrant is in the process of consolidating its domestic book distribution operations by consolidating the distribution operations in Blue Ridge Summit, PA and Hightstown, NJ to Westerville and Blacklick, OH.
Item 3.

Item 3. Legal Proceedings - ------- ----------------- While the Registrant and its subsidiaries are defendants in numerous legal proceedings in the United States and abroad, neither the Registrant nor its subsidiaries are a party to, nor are any of their properties subject to, any known material pending legal proceedings which Registrant believes will result in a material adverse effect on Registrant's financial statements or business operations.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- No matters were submitted to a vote of Registrant's security holders during the last quarter of the period covered by this Report.
Executive Officers of Registrant --------------------------------
All of the above executive officers of the Registrant have been full-time employees of the Registrant for more than five years except for Thomas J. Kilkenny.
Mr. Kilkenny, prior to his becoming an officer of the Registrant on December 1, 1993, was director of the Registrant's Corporate Audit Department since October 1, 1991. Previously he was with Ernst & Young LLP from 1980 through 1991.
PART II
Item 5.

Item 5. Market for the Registrant's Common Stock and Related Stockholder - ------- ---------------------------------------------------------------- Matters -------
The approximate number of holders of the Company's common stock as of February 28, 1995 was 5,606.
Information concerning other matters is incorporated herein by reference from Exhibit (13), from page 50 of the 1994 Annual Report to Shareholders.
Item 6.

Item 6. Selected Financial Data - ------- ----------------------- Incorporated herein by reference from Exhibit (13), from the 1994 Annual Report to Shareholders, page 34 and page 35.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and - ------- --------------------------------------------------------------- Results of Operations ---------------------
Incorporated herein by reference from Exhibit (13), from the 1994 Annual Report to Shareholders, pages 28 to 33 and page 36.
Item 8.


Item 8. Consolidated Financial Statements and Supplementary Data - ------- --------------------------------------------------------
Incorporated herein by reference from Exhibit (13), from the 1994 Annual Report to Shareholders, pages 37 to 48 and page 50.
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and - ------- --------------------------------------------------------------- Financial Disclosure --------------------
None
PART III
Item 10.



Item 10. Directors and Executive Officers of the Registrant - -------- --------------------------------------------------
Information concerning directors is incorporated herein by reference from the Registrant's definitive proxy statement dated March 20, 1995 for the annual meeting of shareholders to be held on April 26, 1995.
Item 11.

Item 11. Executive Compensation - -------- ----------------------
Incorporated herein by reference from the Registrant's definitive proxy statement dated March 20, 1995 for the annual meeting of shareholders to be held on April 26, 1995.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management - -------- --------------------------------------------------------------
Incorporated herein by reference from the Registrant's definitive proxy statement dated March 20, 1995 for the annual meeting of shareholders to be held April 26, 1995.
Item 13.

Item 13. Certain Relationships and Related Transactions - -------- ----------------------------------------------
Incorporated herein by reference from the Registrant's definitive proxy statement dated March 20, 1995 for the annual meeting of shareholders to be held April 26, 1995.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. - -------- -----------------------------------------------------------------
(a) 1. Financial Statements. ---------------------
2. Financial Statement Schedules. ------------------------------ McGraw-Hill, Inc. And Financial Statement Schedules
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, 1994 are hereby incorporated by reference in Exhibit (13). With the exception of the pages listed in the above index, the 1994 Annual Report to Shareholders is not to be deemed filed as part of Item 14 (a)(1).
(a) (3) Exhibits.
(3) Articles of Incorporation of Registrant, incorporated by reference from Registrant's Form SE filed March 29, 1989 in connection with Registrant's Form 10-K for the year ended December 31, 1988.
(3) By-laws of Registrant.
(4) Indenture dated as of June 15, 1990 between the Registrant, as issuer, and the Bank of New York, as trustee, incorporated by reference from Registrant's Form SE filed August 3, 1990 in connection with Registrant's Form 10-Q for the quarter ended June 30, 1990.
(4) Instrument defining the rights of security holders, certificate setting forth the terms of the Registrant's 9.43% Notes due 2000, incorporated by reference from Registrant's Form SE filed August 3, 1990 in connection with Registrant's Form 10-Q for the quarter ended June 30, 1990.
(4) Instrument defining the rights of security holders, certificate setting forth the terms of the Registrant's Medium-Term Notes, Series A, incorporated by reference from Registrant's Form SE filed November 15, 1990 in connection with Registrant's Form 10-Q for the quarter ended September 30, 1990.
(10) Rights Agreement dated as of October 25, 1989 between Registrant and Manufacturers Hanover Trust Company, incorporated by reference from Registrant's Form SE dated October 26, 1989 in connection with Registrant's Form 8-A.
(10)* Restricted Stock Award Agreement dated December 4, 1987 incorporated by reference from Registrant's Form SE filed March 30, 1988 in connection with Registrant's Form 10-K for the year ended December 31, 1987.
(10) Indemnification Agreements between Registrant and each of its directors and certain of its executive officers relating to said directors' and executive officers' services to the Registrant, incorporated by reference from Registrant's Form SE filed March 27, 1987 in connection with Registrant's Form 10-K for the year ended December 31, 1986.
(10)* Registrant's 1983 Stock Option Plan for Officers and Key Employees, incorporated by reference from Registrant's Form SE filed March 29, 1990 in connection with Registrant's Form 10-K for the year ended December 31, 1989.
(10)* Registrant's 1987 Key Employee Stock Incentive Plan, incorporated by reference from Registrant's Form 10-K for the year ended December 31, 1993.
(10)* Registrant's 1993 Key Employee Stock Incentive Plan, incorporated by reference from Registrant's Form 10-K for the year ended December 31, 1993.
(10)* Registrant's 1995 Key Executive Short Term Incentive Compensation Plan.
(10)* Registrant's 1990 Key Executive Short-Term Incentive Compensation Plan, incorporated by reference from Registrant's Form SE filed March 28, 1991 in connection with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Key Executive Short-Term Incentive Deferred Compensation Plan, incorporated by reference from Registrant's Form 10-K for the year ended December 31, 1993.
(10)* Registrant's Executive Deferred Compensation Plan, incorporated by reference from Registrant's Form SE filed March 28, 1991 in connection with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Senior Executive Severance Plan, incorporated by reference from Registrant's Form SE filed March 29, 1989 in connection with Registrant's Form 10-K for the year ended December 31, 1988.
(10) Credit Agreement dated as of November 12, 1991 among the Registrant, the Banks' signatory thereto, and Bankers Trust Company, as Agent incorporated by reference from Registrant's Form SE filed November 18, 1991 in connection with Registrant's Form 8-K dated November 19, 1991.
(10) First Amendment to Credit Agreement dated as of November 8, 1993 among the Registrant, the Banks' signatory thereto, and Bankers Trust Company, as agent, incorporated by reference from Registrant's Form 8-K dated November 15, 1993.
(10) Second Amendment to Credit Agreement dated as of November 7, 1994 among the Registrant, the Banks' signatory thereto and Bankers Trust Company, as agent, incorporated by reference from Registrant's Form 8-K dated November 15, 1994.
(10) Partnership Interest Purchase Agreement, dated as of October 4, 1993, with respect to the partnership interest of Macmillan School Publishing, Inc. in Macmillan/McGraw-Hill School Publishing Company incorporated by reference from Registrant's Form 8-K dated October 18, 1993.
(10) Trademark Purchase and Sale Agreement (Macmillan), dated as of October 4, 1993, incorporated by reference from Registrant's Form 8-K dated October 18, 1993.
(10) Trademark Purchase and Sale Agreement (Merrill), dated as of October 4, 1993, incorporated by reference from Registrant's Form 8-K dated October 18, 1993.
(10)* Registrant's Employee Retirement Account Plan Supplement, incorporated by reference from Registrant's Form SE filed March 28, 1991 in connection with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Employee Retirement Plan Supplement, incorporated by reference from Registrant's Form SE filed March 28, 1991 in connection with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Savings Incentive Plan Supplement, incorporated by reference from Registrant's Form SE filed March 28, 1991 in connection with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Senior Executive Supplemental Death, Disability & Retirement Benefits Plan, incorporated by reference from Registrant's Form SE filed March 26, 1992 in connection with Registrant's Form 10-K for the year ended December 31, 1991.
(10)* Registrant's 1993 Stock Payment Plan for Directors, incorporated by reference from Registrant's Proxy Statement dated March 21, 1993.
(10)* Registrant's Director Retirement Plan, incorporated by reference from Registrant's Form SE filed March 29, 1990 in connection with Registrant's Form 10-K for the year ended December 31, 1989.
(10)* Registrant's Director Deferred Compensation Plan, incorporated by reference from Registrant's Form 10-K for the year ended December 31, 1993.
(12) Computation of ratio of earnings to fixed charges.
(13) Registrant's 1994 Annual Report to Shareholders. Such Report, except for those portions thereof which are expressly incorporated by reference in this Form 10-K, is furnished for the information of the Commission and is not deemed "filed" as part of this Form 10-K.
(21) Subsidiaries of the Registrant.
(23) Consent of Ernst & Young LLP, Independent Auditors.
(27) Financial Data Schedule.
(99) Supplemental Schedule.
(b) Reports on Form 8-K.
A report on Form 8-K was filed on November 15, 1994. Item 5 and Item 7 (Exhibit 10) were reported in said report on Form 8-K.
- ---------------- * These exhibits relate to management contracts or compensatory plan arrangements.
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.
McGraw-Hill, Inc. - ----------------- Registrant
By: /s/ Robert N. Landes ------------------------------------------ Robert N. Landes Executive Vice President, Secretary and General Counsel March 24, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on March 24, 1995 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 fourteen members and the signatures set forth below of individual board members, constitute at least a majority of such board.
/s/ Joseph L. Dionne ------------------------------------------ Joseph L. Dionne Chairman and Chief Executive Officer Director
/s/ Harold McGraw III ------------------------------------------ Harold McGraw III President and Chief Operating Officer Director
/s/ Robert J. Bahash ------------------------------------------ Robert J. Bahash Executive Vice President and Chief Financial Officer
/s/ Thomas J. Kilkenny ------------------------------------------ Thomas J. Kilkenny Vice President and Controller
/s/ Vartan Gregorian ------------------------------------------- Vartan Gregorian Director
/s/ John T. Hartley ------------------------------------------- John T. Hartley Director
/s/ George B. Harvey ------------------------------------------- George B. Harvey Director
/s/ Richard H. Jenrette ------------------------------------------- Richard H. Jenrette Director
/s/ Don Johnston ------------------------------------------- Don Johnston Director
/s/ Peter O. Lawson-Johnston ------------------------------------------- Peter 0. Lawson-Johnston Director
/s/ Linda Koch Lorimer ------------------------------------------- Linda Koch Lorimer Director
/s/ John L. McGraw -------------------------------------------- John L. McGraw Director
/s/ Lois D. Rice -------------------------------------------- Lois D. Rice Director
/s/ Paul J. Rizzo -------------------------------------------- Paul J. Rizzo Director
/s/ James H. Ross -------------------------------------------- James H. Ross Director
/s/ Alva O. Way --------------------------------------------- Alva 0. Way Director
EXHIBIT INDEX
(3) Articles of Incorporation of Registrant, incorporated by reference from Registrant's Form SE filed March 29, 1989 in connection with Registrant's Form 10-K for the year ended December 31, 1988.
(3) By-laws of Registrant.
(4) Indenture dated as of June 15, 1990 between the Registrant, as issuer, and the Bank of New York, as trustee, incorporated by reference from Registrant's Form SE filed August 3, 1990 in connection with Registrant's Form 10-Q for the quarter ended June 30, 1990.
(4) Instrument defining the rights of security holders, certificate setting forth the terms of the Registrant's 9.43% Notes due 2000, incorporated by reference from Registrant's Form SE filed August 3, 1990 in connection with Registrant's Form 10-Q for the quarter ended June 30, 1990.
(4) Instrument defining the rights of security holders, certificate setting forth the terms of the Registrant's Medium-Term Notes, Series A, incorporated by reference from Registrant's Form SE filed November 15, 1990 in connection with Registrant's Form 10-Q for the quarter ended September 30, 1990.
(10) Rights Agreement dated as of October 25, 1989 between Registrant and Manufacturers Hanover Trust Company, incorporated by reference from Registrant's Form SE dated October 26, 1989 in connection with Registrant's Form 8-A.
(10)* Restricted Stock Award Agreement dated December 4, 1987 incorporated by reference from Registrant's Form SE filed March 30, 1988 in connection with Registrant's Form 10-K for the year ended December 31, 1987.
(10) Indemnification Agreements between Registrant and each of its directors and certain of its executive officers relating to said directors' and executive officers' services to the Registrant, incorporated by reference from Registrant's Form SE filed March 27, 1987 in connection with Registrant's Form 10-K for the year ended December 31, 1986.
(10)* Registrant's 1983 Stock Option Plan for Officers and Key Employees, incorporated by reference from Registrant's Form SE filed March 29, 1990 in connection with Registrant's Form 10-K for the year ended December 31, 1989.
(10)* Registrant's 1987 Key Employee Stock Incentive Plan, incorporated by reference from Registrant's Form 10-K for the year ended December 31, 1993.
(10)* Registrant's 1993 Key Employee Stock Incentive Plan, incorporated by reference from Registrant's Form 10-K for the year ended December 31, 1993.
(10)* Registrant's 1995 Key Executive Short Term Incentive Compensation Plan.
(10)* Registrant's 1990 Key Executive Short-Term Incentive Compensation Plan, incorporated by reference from Registrant's Form SE filed March 28, 1991 in connection with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Key Executive Short-Term Incentive Deferred Compensation Plan, incorporated by reference from Registrant's Form 10-K for the year ended December 31, 1993.
(10)* Registrant's Executive Deferred Compensation Plan, incorporated by reference from Registrant's Form SE filed March 28, 1991 in connection with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Senior Executive Severance Plan, incorporated by reference from Registrant's Form SE filed March 29, 1989 in connection with Registrant's Form 10-K for the year ended December 31, 1988.
(10) Credit Agreement dated as of November 12, 1991 among the Registrant, the Banks' signatory thereto, and Bankers Trust Company, as Agent incorporated by reference from Registrant's Form SE filed November 18, 1991 in connection with Registrant's Form 8-K dated November 19, 1991.
(10) First Amendment to Credit Agreement dated as of November 8, 1993 among the Registrant, the Banks' signatory thereto, and Bankers Trust Company, as agent, incorporated by reference from Registrant's Form 8-K dated November 15, 1993.
(10) Second Amendment to Credit Agreement dated as of November 7, 1994 among the Registrant, the Banks' signatory thereto and Bankers Trust Company, as agent, incorporated by reference from Registrant's Form 8-K dated November 15, 1994.
(10) Partnership Interest Purchase Agreement, dated as of October 4, 1993, with respect to the partnership interest of Macmillan School Publishing, Inc. in Macmillan/McGraw-Hill School Publishing Company incorporated by reference from Registrant's Form 8-K dated October 18, 1993.
(10) Trademark Purchase and Sale Agreement (Macmillan), dated as of October 4, 1993, incorporated by reference from Registrant's Form 8-K dated October 18, 1993.
(10) Trademark Purchase and Sale Agreement (Merrill), dated as of October 4, 1993, incorporated by reference from Registrant's Form 8-K dated October 18, 1993.
(10)* Registrant's Employee Retirement Account Plan Supplement, incorporated by reference from Registrant's Form SE filed March 28, 1991 in connection with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Employee Retirement Plan Supplement, incorporated by reference from Registrant's Form SE filed March 28, 1991 in connection with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Savings Incentive Plan Supplement, incorporated by reference from Registrant's Form SE filed March 28, 1991 in connection with Registrant's Form 10-K for the year ended December 31, 1990.
(10)* Registrant's Senior Executive Supplemental Death, Disability & Retirement Benefits Plan, incorporated by reference from Registrant's Form SE filed March 26, 1992 in connection with Registrant's Form 10-K for the year ended December 31, 1991.
(10)* Registrant's 1993 Stock Payment Plan for Directors, incorporated by reference from Registrant's Proxy Statement dated March 21, 1993.
(10)* Registrant's Director Retirement Plan, incorporated by reference from Registrant's Form SE filed March 29, 1990 in connection with Registrant's Form 10-K for the year ended December 31, 1989.
(10)* Registrant's Director Deferred Compensation Plan, incorporated by reference from Registrant's Form 10-K for the year ended December 31, 1993.
(12) Computation of ratio of earnings to fixed charges.
(13) Registrant's 1994 Annual Report to Shareholders. Such Report, except for those portions thereof which are expressly incorporated by reference in this Form 10-K, is furnished for the information of the Commission and is not deemed "filed" as part of this Form 10-K.
(21) Subsidiaries of the Registrant.
(23) Consent of Ernst & Young LLP, Independent Auditors.
(27) Financial Data Schedule.
(99) Supplemental Schedule.
- ---------------- * These exhibits relate to management contracts or compensatory plan arrangements.