UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission File Number 1-1023
THE MCGRAW-HILL companies, INC.
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(Exact name of registrant as specified in its charter)
New York 13-1026995
- --------------------------------- ---------------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1221 Avenue of the Americas, New York, N.Y. 10020
- ---------------------------------------------------------------------
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 512-2000
------------------
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
On April 30, 2000 there were approximately 194.5 million shares of common
stock (par value $1.00 per share) outstanding.
<PAGE>
The McGraw-Hill Companies, Inc.
-------------------------------
TABLE OF CONTENTS
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Page Number
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PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
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Consolidated Statement of Income for
the three months ended March 31, 2000 and 1999 3
Consolidated Balance Sheet at March 31, 2000,
December 31, 1999 and March 31, 1999 4-5
Consolidated Statement of Cash Flows for the three 6
months ended March 31, 2000 and 1999
Notes to Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of Operating
------ Results and Financial Condition 11-13
Part II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 14
------
Item 6. Exhibits and Reports on Form 8-K 15-30
------
<PAGE>
Part I
Financial Information
Item 1. Financial Statements
---------------------
<TABLE>
The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Statement of Income
-------------------------------
Three Months Ended March 31, 2000 and 1999
------------------------------------------
<CAPTION>
2000 1999
----------- -----------
(in thousands, except
per-share data)
<S> <C> <C>
Operating revenue $ 802,534 $ 716,471
Expenses:
Operating 373,845 351,081
Selling and general 291,508 267,590
Depreciation and amortization 59,197 52,867
----------- -----------
Total expenses 724,550 671,538
Other income - net 25,039 4,586
----------- -----------
Income from operations 103,023 49,519
Interest expense - net 9,345 9,441
----------- -----------
Income before taxes on income 93,678 40,078
Provision for taxes on income 36,066 15,630
----------- -----------
Net Income $ 57,612 $ 24,448
=========== ===========
Earnings per common share:
Basic $ 0.30 $ 0.12
=========== ===========
Diluted $ 0.29 $ 0.12
=========== ===========
Average number of common
shares outstanding: (Note 9)
Basic 194,391 196,847
Diluted 196,104 199,330
</TABLE>
<PAGE>
<TABLE>
The McGraw-Hill Companies, Inc.
------------------------------
Consolidated Balance Sheet
--------------------------
<CAPTION>
March 31, Dec. 31, March 31,
2000 1999 1999
---------- ----------- ----------
(In thousands)
<S>
ASSETS
Current assets: <C> <C> <C>
Cash and equivalents $ 6,812 $ 6,489 $ 36,041
Accounts receivable (net of allowance
for doubtful accounts and sales
returns) (Note 4) 786,047 1,048,991 773,667
Receivable from broker-dealers and
dealer banks (Note 5) 12,920 3,615 7,286
Inventories (Note 4) 356,301 295,255 300,318
Deferred income taxes 111,345 113,206 92,820
Prepaid and other current assets 110,197 86,169 107,293
---------- ---------- ----------
Total current assets 1,383,622 1,553,725 1,317,425
---------- ---------- ----------
Prepublication costs (net of accumulated
amortization) (Note 4) 454,833 439,351 365,919
Investments and other assets:
Investment in Rock-McGraw, Inc. - at
equity 88,268 85,997 81,115
Prepaid pension expense 127,870 119,495 110,758
Other 201,091 206,770 192,660
---------- ---------- ----------
Total investments and other assets 417,229 412,262 384,533
---------- ---------- ----------
Property and equipment - at cost 949,210 993,704 962,471
Less - accumulated depreciation 539,034 563,296 568,103
---------- ---------- ----------
Net property and equipment 410,176 430,408 394,368
Goodwill and other intangible assets - at
cost (net of accumulated amortization) 1,201,342 1,253,051 1,238,722
---------- ---------- ----------
$3,867,202 $4,088,797 $3,700,967
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Balance Sheet
--------------------------
<CAPTION>
March 31, Dec. 31, March 31,
2000 1999 1999
---------- ----------- ----------
(In thousands)
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 139,976 $ 86,631 $ 189,113
Current portion of long-term debt 95,043 95,043 -
Accounts payable 218,782 340,220 226,310
Payable to broker-dealers and dealer
banks (Note 5) 12,781 2,725 5,790
Accrued liabilities 224,800 345,339 204,555
Income taxes currently payable 130,118 105,066 62,917
Unearned revenue 253,959 242,494 247,825
Other current liabilities 294,875 307,935 278,859
---------- ---------- ----------
Total current liabilities 1,370,334 1,525,453 1,215,369
---------- ---------- ----------
Other liabilities:
Long-term debt (Note 6) 353,175 354,775 451,825
Deferred income taxes 123,157 135,426 123,224
Accrued postretirement healthcare and
other benefits 186,593 187,485 192,297
Other non-current liabilities 195,132 194,165 159,380
---------- ---------- ----------
Total other liabilities 858,057 871,851 926,726
---------- ---------- ----------
Total liabilities 2,228,391 2,397,304 2,142,095
---------- ---------- ----------
Shareholders' equity (Note 7 & 8):
Capital stock 205,852 205,852 205,852
Additional paid-in capital 36,806 24,305 19,998
Retained income 1,938,780 1,926,816 1,652,249
Accumulated other comprehensive income (87,842) (87,731) (78,975)
---------- ---------- ----------
2,093,596 2,069,242 1,799,124
Less - common stock in treasury-at cost 440,091 363,728 222,505
Unearned compensation on restricted stock 14,694 14,021 17,747
---------- ---------- ----------
Total shareholders' equity 1,638,811 1,691,493 1,558,872
---------- ---------- ----------
$3,867,202 $4,088,797 $3,700,967
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
The McGraw-Hill Companies, Inc.
-------------------------------
Consolidated Statement of Cash Flows
------------------------------------
For The Three Months Ended March 31, 2000 and 1999
--------------------------------------------------
<CAPTION>
2000 1999
<S> ---------- -----------
Cash flows from operating activities (In thousands)
- --------------------------------------------- <C> <C>
Net income $ 57,612 $ 24,448
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 21,180 19,515
Amortization of goodwill and intangibles 13,954 13,227
Amortization of prepublication costs 24,063 20,125
Gain on sale of Tower Group International (16,587) -
Provision for losses on accounts receivable 14,505 10,033
Other (2,443) (1,546)
Changes in assets and liabilities net of effect of
acquisitions and dispositions:
Decrease in accounts receivable 149,312 166,161
Increase in inventories (61,612) (15,957)
Increase in prepaid and other current assets (25,020) (21,525)
Decrease in accounts payable and accrued expenses (205,724) (200,296)
Increase in unearned revenue 11,981 11,857
(Decrease) / increase in other current liabilities (17,290) 3,947
Increase / (decrease) in interest and income taxes
currently payable 28,815 (4,235)
Increase / (decrease) in deferred income taxes 658 (176)
Net change in other assets and liabilities (9,665) (545)
- --------------------------------------------------- --------- ---------
Cash provided by operating activities (16,261) 25,033
- --------------------------------------------------- --------- ---------
Investing activities
- -------------------------
Investment in prepublication costs (35,845) (27,026)
Purchases of property and equipment (16,377) (51,507)
Disposition of property, equipment and businesses 139,150 189
- --------------------------------------------------- --------- ---------
Cash used for investing activities 86,928 (78,344)
- --------------------------------------------------- --------- ---------
Financing activities
- ----------------------------
Additions to / (repayments of) short-term debt - net 53,414 114,122
Dividends paid to shareholders (45,648) (42,300)
Repurchase of treasury shares (78,611) -
Exercise of stock options 2,115 7,563
Other (888) 62
- --------------------------------------------------- --------- ---------
Cash provided by financing activities (69,618) 79,447
- --------------------------------------------------- --------- ---------
Effect of exchange rate fluctuations on cash (726) (546)
--------- ---------
Net change in cash and equivalents 323 25,590
Cash and equivalents at beginning of period 6,489 10,451
- --------------------------------------------------- --------- ---------
Cash and equivalents at end of period $6,812 $ 36,041
========= =========
</TABLE>
<PAGE>
The McGraw-Hill Companies, Inc.
-------------------------------
Notes to Financial Statements
-----------------------------
1. The financial information in this report has not been audited, but
in the opinion of management all adjustments (consisting only of normal
recurring adjustments) considered necessary to present fairly such
information have been included. The operating results for the three
months ended March 31, 2000 and 1999 are not necessarily indicative of
results to be expected for the full year due to the seasonal nature of
some of the company's businesses. The financial statements included
herein should be read in conjunction with the financial statements and
notes included in the company's Annual Report on Form 10-K for the year
ended December 31, 1999.
Certain prior year amounts have been reclassified for comparability
purposes.
2. The following table is a reconciliation of the company's net income
to comprehensive income for the three month period ended March 31, 2000:
<TABLE> 2000 1999
<CAPTION> ----------- -----------
(in thousands, except
per-share data)
<S> <C> <C>
Net income $ 57,612 $ 24,448
Other comprehensive income, net of tax:
Foreign currency translation adjustments (111) (3,013)
----------- -----------
Total other comprehensive income (111) (3,013)
----------- -----------
Comprehensive income $ 57,501 $ 21,435
=========== ===========
</TABLE>
3. The company has three reportable segments: Educational and
Professional Publishing, Financial Services, and Information and Media
Services. The educational and professional publishing segment provides
educational and professional reference materials, training and lifetime
learning for students and professionals. The financial services segment
consists of Standard & Poor's operations, which provide a wide range of
financial information, credit ratings and analysis globally. The
information and media services segment includes business and professional
media offering information, insight and analysis.
<PAGE>
<TABLE>
The McGraw-Hill Companies, Inc.
-------------------------------
Notes to Financial Statements
-----------------------------
Operating profit by segment is the primary basis for the chief operating
decision maker of the company, the CEO Council, to evaluate the
performance of each segment. A summary of operating results by segment
for the three months ended March 31, 2000 and 1999 follows:
<CAPTION>
2000 1999
------------------- --------------------
Operating Operating
Revenue Profit Revenue Profit
-------- --------- --------- ---------
(in thousands)
<S>
Educational and Professional <C> <C> <C> <C>
Publishing $238,682 $(36,770) $208,983 $(43,857)
Financial Services 317,041 101,511 292,846 91,653
Information and Media Services 246,811 57,066 214,642 18,084
-------------------------------- -------- -------- -------- --------
Total operating segments 802,534 121,807 716,471 65,880
General corporate expense - (18,784) - (16,361)
Interest expense - net - (9,345) - (9,441)
-------------------------------- -------- -------- -------- --------
Total company $802,534 $ 93,678* $716,471 $ 40,078*
======== ======== ======== ========
</TABLE>
*Income before taxes on income.
<TABLE>
4. The allowance for doubtful accounts and sales returns, the
components of inventory and the accumulated amortization of prepublication
costs were as follows:
<CAPTION>
March 31, Dec. 31, March 31,
2000 1999 1999
---------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
Allowance for doubtful accounts $ 127,131 $ 125,144 $ 107,377
========== =========== ==========
Allowance for sales returns $ 87,677 $ 107,382 $ 83,220
========== =========== ==========
Inventories:
Finished goods $ 294,047 $ 239,139 $ 241,897
Work-in-process 29,758 25,205 39,191
Paper and other materials 32,496 30,911 19,230
---------- ----------- ----------
Total inventories $ 356,301 $ 295,255 $ 300,318
========== =========== ==========
Accumulated amortization of
prepublication costs $ 540,096 $ 661,207 $ 512,610
========== =========== ==========
</TABLE>
5. A subsidiary of J.J. Kenny Co. acts as an undisclosed agent in the
purchase and sale of municipal securities for broker-dealers and dealer
banks and the company had $182.1 million of matched purchase and sale
commitments at
<PAGE> The McGraw-Hill Companies, Inc.
<TABLE> -------------------------------
Notes to Financial Statements
-----------------------------
March 31, 2000. Only those transactions not closed at the settlement date
are reflected in the balance sheet as receivables and payables.
6. A summary of long-term debt follows:
<CAPTION>
March 31, Dec. 31, March 31,
2000 1999 1999
---------- ---------- ----------
(In thousands)
<S> <C> <C> <C>
9.43% Notes due 2000 $ 95,043 $ 95,043 $ 95,043
Commercial paper supported by
bank revolving credit agreement 350,000 350,000 350,000
Other 3,175 4,775 6,782
---------- ---------- ----------
Total long-term debt 448,218 449,818 451,825
Less: Current portion of long-term debt (95,043) (95,043) -
---------- ---------- ----------
$ 353,175 $ 354,775 $ 451,825
========== ========== ==========
</TABLE>
<TABLE>
7. Common shares reserved for issuance for conversions and stock based awards
were as follows:
<CAPTION>
March 31, Dec. 31, March 31,
2000 1999 1999
<S> ---------- ---------- ----------
$1.20 convertible preference stock
at the rate of 13.2 shares for each <C> <C> <C>
share of preference stock 17,846 17,846 17,978
Stock based awards 15,554,930 15,941,131 17,081,129
--------- --------- ---------
15,572,776 15,958,977 17,099,107
========== ========== ==========
</TABLE>
<TABLE>
8. Cash dividends per share declared during the three months ended March 31,
2000 and 1999 were as follows:
<CAPTION>
<S> <C> <C>
2000 1999
---- ----
Common stock $.235 $.215
Preference stock .300 .300
</TABLE>
<TABLE>
9. A reconciliation of the number of shares used for calculating basic
earnings per common share and diluted earnings per common share for the
three months ended March 31, 2000 and 1999 follows:
<CAPTION>
2000 1999
---------- ----------
(In thousands)
<S> <C> <C>
Average number of common shares outstanding 194,391 196,847
Effect of stock options and other dilutive securities 1,713 2,483
---------- ----------
Average number of common shares outstanding including
effect of dilutive securities 196,104 199,330
========== ==========
</TABLE>
Restricted performance shares outstanding at March 31, 2000 of 580,000
were not included in the computation of diluted earnings per common shares
because the necessary vesting conditions have not yet been made.
10.In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. The new standard is effective
January 1, 2001. SFAS No. 133 establishes accounting and reporting standards
for derivative instruments and for hedging activities, requiring
companies to recognize all derivatives as either assets or liabilities on
their balance sheet and measuring them at fair value. The adoption of
SFAS No. 133 will not have a material impact on the company's financial
statements.
<PAGE>
Management's Discussion and Analysis of Operating Results and Financial
-----------------------------------------------------------------------
Condition
---------
Operating Results - Comparing Three Months Ended March 31, 2000 and 1999
- ------------------------------------------------------------------------
Consolidated Review
- -------------------
Operating revenue for the first quarter grew 12.0% over prior year's first
quarter to $802.5 million. The revenue increase reflects the solid
performance of Standard & Poor's Ratings, a strong start on education and
outstanding results at Business Week. Net income, including the gain on
the sale of Tower Group International on February 29, 2000 was $57.6
million, an increase of $33.2 million, or 135.7%, over prior year's first
quarter.
Excluding the gain on the sale, net income was $47.4 million an increase
of $23.0 million, or 93.9%, over prior year's first quarter. Diluted
earnings per share including the gain increased to 29 cents and excluding
the gain increased to 24 cents from 12 cents in the prior year's first
quarter. The first quarter represents the Company's smallest quarter due
to the seasonal aspect of the Company's educational publishing operations.
Total expenses in 2000 increased 7.9% due to investments in new products
and services in addition to increases in normal recurring expenses.
Net interest expense decreased 1.0% to $9.3 million from $9.4 million over
the first quarter of 1999. The primary reason for decrease is lower debt
levels due to cash proceeds from the sale of Tower Group International.
The average interest rate on commercial paper borrowings increased from
5.1% in 1999 to 5.9% in 2000.
The provision for taxes as a percent of income before taxes is 38.5%,
compared to 39% in 1999.
Segment Review
- --------------
Educational and Professional Publishing revenue increased 14.2% over the
prior year's first quarter to $238.7 million.
SRA/McGraw-Hill performed well on its basic reading skills program. The
School division did well in California with its social studies program.
Glencoe/McGraw-Hill showed solid gains in open territories.
Glencoe/McGraw-Hill also experienced good sales on its literature program
in Texas. CTB/McGraw-Hill had an outstanding quarter with its TerraNova
program. The Higher Education Group had growth in virtually all of its
titles. The combination of texts with digital solutions is adding sales
in the college and university market. The Professional Book and
International operations had increased revenue for the quarter. Appleton
& Lange, the medical publisher acquired in June 1999, contributed to this
growth. International Publishing benefited from improvements in
Australia, Asia/Pacific and Canadian markets. The gains came primarily
from volume increases.
<PAGE>
The operating loss for the Education and Professional Publishing segment
decreased $7.1 million to $36.8 million over prior year's first quarter,
reflecting the impact of the strong first quarter performance on the
segment's seasonal operating loss for spending in preparation of the
segment's selling period.
Financial Services' revenue increased 8.3% to $317.0 million and operating
profits increased 10.8% to $101.5 million. Standard & Poor's Ratings
Services revenue and operating profit increased double digit even though
new issue dollar volume in the first quarter was down 6.9% in the U.S.
bond market and off 12.8% in Europe. The areas that contributed most to
the growth were Corporate Finance, Financial Institutions, and Insurance.
Growth came from the European, Asian and Latin American markets and such
products as bank loan ratings and ratings evaluation services. Standard &
Poor's Information Services showed revenue increase from index and
portfolio services as expansion continued. Internet redistribution
services benefited from the strong sales of quote feeds and analytical
commentary to financial Websites and Internet redistributors. Continued
softness in the secondary municipal bond market negatively affected the
Capital Markets group.
Information and Media Services' revenue increased $32.2 million, 15.0%, to
$246.8 million during the quarter. Operating profit for the segment
including the gain on the sale of Tower Group International increased to
$57.1 million, a $39.0 million increase over the prior year's first
quarter. Excluding the gain on the sale of Tower Group International,
operating profit for the segment increased to $40.5 million, a $22.4
million increase over the prior year's first quarter.
Business Week continued its outstanding performance with a 32% increase in
advertising pages, according to the Publishers Information Bureau. This
was the best first quarter in Business Week's 71-year history.
Broadcasting also had an outstanding quarter due to political advertising,
the Super Bowl and increases in its base business. The
Business-to-Business Group, comprised of the Aviation Week Group, the
Energy Group, the Healthcare Group and the Construction Information Group,
displayed increased revenue with a decline in operating profits.
Investments in the launching of vertical hubs for Construction, Aviation
and Energy negatively impacted profits.
Financial Condition
- -------------------
The company continues to maintain a strong financial position. Cash used
by operating activities in the first quarter totaled $16.3 million
compared to $25.0 million provided in the prior year. Total debt
increased $52.0 million since year-end, reflecting seasonal spending by
the company for inventory and prepublication costs, dividend payments and
costs related to the share repurchase program, offset somewhat by the
proceeds from the divestiture of Tower Group International. The company's
strong presence in school and higher education significantly impacts the
seasonality of its earnings and borrowing patterns during the year, with
the company borrowing during the first half of the year and generating
cash in the second half of the year, primarily in the fourth quarter.
<PAGE>
Commercial paper borrowings at March 31, 2000 totaled $465.4 million, an
increase of $54.4 million from December 31, 1999. Commercial paper is
supported by a $800 million revolving credit agreement with a group of
banks terminating in February 2002, and $350 million has been classified
as long term. There are no amounts outstanding under this agreement.
$95 million of 9.43% Notes, due in September of the current year, remain
outstanding. Under a shelf registration that became effective with the
Securities and Exchange Commission in 1990, the company can issue an
additional $300 million of debt securities. The new debt could be used to
replace a portion of the commercial paper borrowings with longer-term
securities when management has determined that interest rates are
attractive and markets are favorable.
Gross accounts receivable of $1,000.9 million decreased $280.7 million
from the end of 1999 primarily from the impact of the seasonality of the
educational publishing business and the sale of Tower Group
International. Inventories increased $61.0 million from the end of 1999
to $356.3 million as the company prepares itself for school publishing
adoptions later this year.
Net prepublication costs increased $15.5 million from the end of 1999 to
$454.8 million due to spending for school publishing programs, higher
education and professional publishing titles. Prepublication cost
spending in the first quarter totaled $35.8 million, an increase of $8.8
million over last year's first quarter spending. Spending is expected to
increase over the remainder of the year. Purchases of property and
equipment were $16.4 million, $35.1 million lower than the prior year.
Spending has decreased from the prior year as the consolidation of office
space in New York winds down.
The Board of Directors approved a 9.3% increase in the regular quarterly
dividend on the company's common stock from $.215 to $.235 per common
share. The Board of Directors also authorized in 1999 a stock repurchase
program of up to 15 million shares of outstanding shares. The repurchased
shares will be used for general corporate purposes, including the issuance
of shares for the exercise of employee stock options. Purchases under
this program may be made from time to time on the open market and in
private transactions dependent on market conditions. Approximately 4.8
million shares have been repurchased under this program as of the filing
date of this document.
<PAGE>
Year 2000 Issue
- ---------------
The Company completed substantially all of its Year 2000 readiness work
and experienced no significant problems or disruption to its normal
business activities related to this issue as of April 30, 2000. The cost
to assess, remediate and test systems that were not replaced approximated
$19 million from 1998 to the present.
No material expenditures were made in the first quarter or are expected to
be incurred in the future related to the Year 2000 issue.
<PAGE>
Part II
-------
Other Information
-----------------
Item 1. 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 its financial statements or
business operations.
Item 6. Exhibits and Reports on Form 8-K Page Number
-------------------------------- -----------
(a) Exhibits
(3) By-laws (as amended to date) 16-28
(12) Computation of ratio of earnings to fixed charges 29
(27) Financial data schedule 30
(b) Reports on Form 8-K
No reports were filed during the period covered
by this report
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
The McGraw-Hill Companies, Inc.
-------------------------------
Date: By
-------------------- ------------------------------
Robert J. Bahash
Executive Vice President
and Chief Financial Officer
Date: By
-------------------- ------------------------------
Kenneth M. Vittor
Executive Vice President
and General Counsel
Date: By
-------------------- ------------------------------
Talia M. Griep
Corporate Controller
<PAGE>
THE McGRAW-HILL COMPANIES, INC.
-----------------------------
BY-LAWS
-------
(As amended as of January 1, 2000)
--------------------------------
ARTICLE I
---------
STOCKHOLDERS
------------
1. A meeting of the stockholders shall be held annually, wheresoever
designated by the Board of Directors on the last Wednesday in April of
each year or on such other date as a resolution of the Board of Directors
may designate, for the purpose of electing directors, hearing the reports
of officers and directors, and for the transaction of such other business
required or authorized to be transacted by the stockholders. Any
previously scheduled annual or special meeting of stockholders may be
postponed by resolution of the Board of Directors, upon public notice
given prior to the date scheduled for such meeting.
2. Unless waived in writing by all stockholders, notice of the time,
place and object of such meeting shall be given by mailing, at least ten
days previous to such meeting, postage prepaid, a copy of such notice,
addressed to each stockholder at his address as the same appears on the
books of the Company.
3. Special meetings of stockholders for whatsoever purpose shall be held
at the principal office of the Company or at such other place as may be
designated by a resolution of the Board of Directors and may only be
called pursuant to a resolution approved by a majority of the Board of
Directors.
4. Notice of each special meeting, except where otherwise expressly
provided by statute, and unless waived in writing by every stockholder
entitled to vote, stating the time, place and in general terms the purpose
or purposes thereof, shall be mailed not less than thirty nor more than
fifty days prior to the meeting to each stockholder at his address as the
same appears on the books of the Company.
5. At a meeting of stockholders the holders of a majority of the shares
entitled to vote, being present in person or represented by proxy, shall
be a quorum for all purposes, except where otherwise provided by statute
or by the certificate of incorporation.
6. If at any meeting a quorum shall fail to attend in person or by proxy,
a majority in interest of stockholders entitled to vote present or
represented by proxy at such meeting may adjourn the meeting from time to
time without further notice until a quorum shall attend and thereupon any
business may be transacted which might have been transacted at the meeting
as originally called had the same been then held. The Chairman of a
meeting of stockholders may adjourn such meeting from time to time,
whether or not there is a quorum of stockholders at such meeting.
7. The Chairman of the Board, and in his absence the President, and in
his absence a Chairman appointed by the Board of Directors, shall call
meetings of the stockholders to order and shall act as Chairman thereof.
8. The Secretary of the Company shall act as Secretary at all meetings of
the stockholders and in his absence the Chairman of the meeting may
appoint any person to act as Secretary.
<PAGE>
9. At each meeting of stockholders every stockholder entitled to vote may
vote in person or by proxy, and shall have one vote for each share of
stock registered in his name. The Board of Directors may fix a day not
more than fifty days prior to the day of holding any meeting of the
stockholders as the day as of which stockholders entitled to notice of and
to vote at such meeting shall be determined, and all persons who shall be
holders of record of voting stock at such time and no other shall be
entitled to notice of and to vote at such meeting.
10. At all elections of directors the polls shall be opened and closed,
the proxies shall be received and taken in charge and all ballots shall be
received and counted by two inspectors who shall be appointed by the
Board. If any inspector shall fail to attend or refuse to act, the
vacancy may be filled at the meeting by the Chairman of the meeting. No
candidate for election as director shall be appointed an inspector.
11. The inspectors shall, before entering upon the discharge of their
duties, be sworn to faithfully execute the duties of inspector at such
meeting with strict impartiality and according to the best of their
ability.
<PAGE>
ARTICLE I-A
-----------
Nomination of Directors and Presentation
----------------------------------------
of Business at Stockholder Meetings
-----------------------------------
1. Nominations of persons for election to the Board of Directors of the
Company and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders (i) pursuant to the
Company's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by any stockholder of the Company who was a stockholder
of record at the time of giving of notice provided for in this Article
I-A, who is entitled to vote at the meeting and who complied with the
notice procedures set forth in this Article I-A.
2. For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (iii) of Section 1 of
this Article I-A, the stockholder must have given timely notice thereof in
writing to the Secretary of the Company. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive
offices of the Company not less than 90 days nor more than 120 days prior
to the first anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is advanced
by more than 30 days or delayed by more than 60 days from such anniversary
date, notice by the stockholder to be timely must be so delivered not
earlier than the 120th day prior to such annual meeting and not later than
the close of business on the later of the 90th day prior to such annual
meeting or the 10th day following the day on which public announcement of
the date of such meeting is first made. In no event shall the public
announcement of an adjournment of an annual meeting commence a new time
period for the giving of a stockholder's notice as provided above. Such
stockholder's notice shall set forth (i) as to each person whom the
stockholder proposes to nominate for election or reelection as a director
all information relating to such person that is required to be disclosed
in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (including such
person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected); (ii) as to any other
business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made; (iii) as to the
stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (a) the name and address of such
stockholder, as they appear on the Company's books, and of such beneficial
owner and (b) the class and number of shares of the Company which are
owned beneficially and of record by such stockholder and such beneficial
owner.
Notwithstanding anything in the second sentence of this Section 2 to
the contrary, in the event that the number of directors to be elected to
the Board of Directors of the Company is increased and there is no public
announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the Company at least 100
days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice shall also be considered timely, but only
with respect to nominees for any new positions created by such increase,
if it shall be delivered to the Secretary at the principal executive
offices of the Company not later than the close of business on the 10th
day following the day on which such public announcement is first made by
the Company.
<PAGE>
3. Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Company's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at
which directors are to be elected pursuant to the Company's notice of
meeting (A) by or at the direction of the Board of Directors or (B)
provided that the Board of Directors has determined that directors shall
be elected at such special meeting, by any stockholder of the Company who
is a stockholder of record at the time of giving of notice provided for in
this Article I-A, who shall be entitled to vote at the meeting and who
complies with the notice procedures set forth in this Article I-A. In the
event the Company calls a special meeting of stockholders for the purpose
of electing one or more directors to the Board, any such stockholder may
nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Company's notice of meeting, if the
stockholder's notice required by Section 2 of this Article I-A shall be
delivered to the Secretary at the principal executive offices of the
Company not earlier than the 120th day prior to such special meeting and
not later than the close of business on the later of the 90th day prior to
such special meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such
meeting. In no event shall the public announcement of an adjournment of
an annual meeting commence a new time period for the giving of a
stockholder's notice as provided above.
4. Only such persons who are nominated in accordance with the procedures
set forth in this Article I-A shall be eligible to serve as directors and
only such business shall be conducted at a meeting of stockholders as
shall have been brought before the meeting in accordance with the
procedures set forth in this Article I-A. The Chairman of the meeting of
stockholders shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was
made in accordance with the procedures set forth in this Article I-A and,
if any proposed nomination or business is not in compliance with this
Article I-A, to declare that such defective nominations or proposal shall
be disregarded.
5. For purposes of this Article I-A, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Company with the Securities and Exchange Commission
pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
6. Notwithstanding the foregoing provisions of this Article I-A, a
stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Article I-A. Nothing in this Article I-A shall
be deemed to affect any rights of stockholders to request inclusion of
proposals in the Company's proxy statement pursuant to Rule 14a-8 under
the Exchange Act.
<PAGE>
ARTICLE II
----------
Board of Directors
------------------
1. The business and affairs of the corporation shall be managed under the
direction of the Board of Directors. Unless and until changed as provided
in this Section 1 of this Article II, the number of directors constituting
the Board of Directors shall be twelve (12). The Board of Directors shall
have power from time to time and at any time, by vote of a majority of the
total number of directors which the corporation would have if there were
no vacancies on the Board, to increase or reduce the number of directors
constituting the Board of Directors to such number (subject to any limits
contained in the certificate of incorporation) as the Board of Directors
shall determine, but in no event to less than twelve (12) or more than
twenty-five (25). Subject to the express terms and conditions of the
certificate of incorporation and these By-Laws, the directors shall have
the usual and customary powers and duties of directors of a corporation;
also any and all powers given and permitted by law; and also power to
exercise any and all powers of the corporation, and to do any and all acts
without any prior action taken or consent given by the stockholders,
unless required by law, or the certificate of incorporation, or by these
By-Laws; the directors may exercise all powers, and do all acts and things
which are not, by statute or by the certificate of incorporation or these
By-Laws, expressly directed or required to be exercised or done by the
stockholders.
2. Without prejudice to the general powers conferred by the last
preceding section, and the other powers conferred by the certificate of
incorporation and by these By-Laws, it is hereby expressly declared that
the Board of Directors shall have the following powers, that is to say:
FIRST: From time to time to make and change rules and
regulations, not inconsistent with these By-Laws, for the
management of the Company's business and affairs.
SECOND: To purchase or otherwise acquire for the Company any
property, rights or privileges which the Company is authorized
to acquire, at such price and on such terms and conditions,
and for such consideration, as they shall, from time to time,
see fit.
THIRD: At their discretion to pay for any property or rights
acquired by the Company, either wholly or partly, in money or
in stocks, bonds, debentures or other securities of the
Company.
FOURTH: To appoint and at their discretion remove or suspend
such subordinate officers, agents or servants, permanently or
temporarily, as they may, from time to time, think fit, and to
determine their duties, and fix, and, from time to time,
change their salaries or emoluments, and to require security
in such instance and in such amounts as they think fit.
FIFTH: To confer by resolution upon any elected or appointed
officer of the Company the power to choose, remove or suspend
subordinate officers, agents or servants.
<PAGE>
SIXTH: To appoint any person or persons to accept and hold in
trust for the Company any property belonging to the Company,
or in which it is interested, or for any other purpose, and to
execute and do all such duties and things as may be requisite
in relation to any such trust.
SEVENTH: To determine who shall be authorized on the
Company's behalf, to sign bills, notes, receipts, acceptances,
endorsements, checks, releases, contracts and documents.
EIGHTH: From time to time to provide for the management of
the affairs of the Company, at home or abroad, in such manner
as they see fit, and in particular, from time to time, to
delegate any of the powers of the Board of Directors in the
course of the current business of the Company, to any special
or standing committee or to any officer or agent, and to
appoint any persons to be the agents of the Company, with such
powers (including the power to sub-delegate), and upon such
terms, as may be thought fit.
NINTH: To appoint an Executive Committee of three or more
directors and such other persons as may be added thereto by
specific resolution of the Board, who may meet at stated
times, or on notice to all by any of their own number; who
shall generally perform such duties and exercise such powers
as may be directed or delegated by the Board of Directors from
time to time. The Board may delegate to such Committee
authority to exercise the powers of the Board while the Board
is not in session, except as otherwise provided by law. The
Executive Committee shall keep regular minutes of its
proceedings and report the same to the Board when required.
3. Each director shall serve for the term for which he shall be elected
and until his successor shall be chosen and shall accept his election, but
any director may resign at any time.
4. The directors may hold their meetings and may have an office and keep
the books of the Company at such place or places as the Board from time to
time may determine.
5. A regular meeting of the Board of Directors shall be held each year,
either immediately following adjournment of the Annual Meeting of
Stockholders or at such other time as may be fixed by the Chairman of the
Board or the President but on a date no later than 60 days following the
adjournment of the Annual Meeting of Stockholders, for the purpose of
electing officers, a Chairman of the Board, members of the Executive
Committee, members of the other committees of the Board, and to organize
the Board for the ensuing year. Regular meetings of the Board of
Directors shall also be held monthly at such time and place as may be
fixed by the Chairman of the Board, or the President. Notice shall be
given to each director of the date of each regular meeting by the
Secretary in the same manner as provided in Article II, Section 7, of
these By-Laws for notice of special meetings of directors.
<PAGE>
6. Special meetings of the Board shall be held whenever called by the
Chairman, or by the President, or by the Secretary upon receiving the
written request of a majority of the directors of the Board then in
office. If so specified in the notice thereof, any and all business may
be transacted by a special meeting.
7. The Secretary shall give notice to each director of each special
meeting by mailing the same, at least two days before the meeting, or by
telegraphing or telephoning not later than the day before the meeting. If
every director shall be present at any meeting any business may be
transacted without previous notice.
8. The Chairman of the Board when present shall preside at all meetings
of the Board of Directors and at all meetings of the stockholders. He
shall perform all duties incident to the office of the Chairman of the
Board.
9. A majority of the entire Board of Directors shall constitute a quorum
for the transaction of business, except where otherwise provided by
statute or by the certificate of incorporation or by these By-Laws, and a
majority of those present at the time and place of any regular or special
meeting may adjourn the same from time to time without notice.
10. Any one or more members of the Board may participate in a meeting of
the Board by means of a conference telephone or similar communications
equipment allowing all persons participating in the meeting to hear each
other at the same time. Participation by such means shall constitute
presence in person at a meeting.
<PAGE>
ARTICLE III
-----------
Committees
----------
1. The Board may appoint such committees, as it may deem advisable.
Committees so appointed shall have such powers and duties as may be
specified in the resolution of appointment.
2. Each committee shall keep regular minutes of its proceedings and
report the same to the Board when required.
3. Any one or more members of any such committee may participate in a
meeting of such committee by means of a conference telephone or similar
communications equipment allowing all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at a meeting.
4. Any action required or permitted to be taken at any meeting of any
committee may be taken without a meeting, if all members of the committee
consent in writing to the adoption of a resolution authorizing the action
and if the resolution and the written consent thereto are filed with the
proceedings of the committee.
ARTICLE IV
----------
Officers
--------
1. The elective officers of the Corporation other than directors shall be
a Chairman of the Board, a President, one or more Vice-Presidents, a
Secretary and a Treasurer. Any two of the aforesaid offices may be filled
by the same person, except the offices of President and Secretary. For
purposes of these By-Laws the office of Vice-President also may include
one or more Executive Vice-Presidents and one or more Senior
Vice-Presidents. The term of office of each of said officers shall
continue until the next annual election of directors and the selection of
his successor by the Board of Directors. Any officer may, at any time,
with or without cause, be suspended or removed from office by the
affirmative vote of a majority of the entire Board at a meeting thereof.
The Chairman of the Board and the President shall be chosen from among the
directors.
2. The Chairman of the Board when present shall preside at all meetings
of the Board of Directors and at all meetings of the stockholders. He
shall perform all duties incident to the office of the Chairman of the
Board. He may execute on behalf of the Corporation all authorized deeds,
bonds, mortgages, contracts, documents and papers and may affix thereto
the corporate seal when required. He shall have power to sign debentures
and certificates of stock of the Corporation.
<PAGE>
3. The President shall be the chief executive officer of the
Corporation and shall be responsible for the general and active
supervision and direction of the business, policies and activities of the
Corporation, subject to the control of the Board of Directors. He may
execute on behalf of the Corporation all authorized deeds, bonds,
mortgages, contracts, documents and papers and may affix thereto the
corporate seal when required. He shall have power to sign debentures and
certificates of stock of the Corporation. He shall also have such duties
as the Board may from time to time determine or as may be prescribed by these
By-Laws. He shall be responsible for seeing that the orders and resolutions
of the Board are carried into effect.
4. If the office of the Chairman of the Board shall be vacant, or if the
person holding that office shall be absent, the President shall preside at
meetings of stockholders and of the Board of Directors. In the absence or
inability to act of both the Chairman and the President, the Board may
designate any director or senior corporate officer to perform the duties
of temporary Chairman which shall include presiding at meetings of
stockholders and of the Board of Directors.
5. The Board may elect or appoint one or more Vice-Presidents.
Each Vice-President shall have such powers and shall perform such duties
as may be assigned to him by the Board or by the President. In case of
the absence or disability of the President the duties of that office shall
be performed by whomever the Board shall determine by resolution.
6. The Secretary shall be sworn to the faithful discharge of his duties;
he shall attend all meetings of the directors and stockholders, and shall
record all the proceedings of such meetings in a book to be kept for that
purpose, and shall perform like duties for standing committees when
required. He shall have charge of the giving of notice of meetings of
stockholders and directors, and perform all the duties assigned to him by
the Board of Directors, or usual for the Secretary of a Corporation to
perform. He, or the Treasurer shall, with the Chairman or President sign
all debentures and stock certificates of the Company.
7. The Treasurer shall keep or cause to be kept full and true books of
account and records of all receipts and disbursements, property, assets
and liabilities of the Corporation, in books belonging to the Company, and
shall deposit all moneys, securities, and valuables of the Corporation in
the name of and to the credit of the Corporation, in such depositories as
shall be designated by the Board of Directors. He shall disburse funds of
the Company as ordered by the Board, taking proper vouchers therefor and
shall render to the President and the Board of Directors, at regular
meetings or whenever required, an account of all financial transactions of
the Company. He shall also have power to sign debentures and certificates
of stock of the Company, checks, notes, bills of exchange or other
negotiable instruments for and in the name of the Company. He shall
perform all other duties incident to the position of Treasurer, subject to
the control of the Board.
8. The Board of Directors shall have power to appoint one or more
Assistant Treasurers, Assistant Secretaries, Controller or Assistant
Controllers who shall have such powers and perform such duties as may be
designated by the Board.
9. The amount of salaries, wages, or other compensation to be paid to the
officers, employees and agents of the Company shall be determined from
time to time by the Board or by an Executive Officer or Committee to whom
this work shall be delegated. No officer shall be incapacitated to
receive a regular salary or fixed compensation by reason of being a
director of the Corporation.
<PAGE>
ARTICLE IV-A
------------
1. Bank Accounts, Deposits, Checks, Drafts and Orders Issued in the
Company's Name. Any two of the following officers: the President, any
Vice-President, and the Treasurer, Secretary or Controller may from time
to time (1) open and keep in the name and on behalf of the Company, with
such banks, trust companies or other depositories as they may designate,
general and special bank accounts for the funds of the Company, and (2)
terminate any such bank accounts. Any such action by two of the officers
as specified above shall be made by an instrument in writing signed by
such two officers and filed with the Secretary. A copy of such
instrument, certified by the Secretary or an Assistant Secretary, shall be
evidence to all concerned that the designations or terminations therein
contained are duly authorized on behalf of the Company at the time of the
certification.
All funds and securities of the Company shall be deposited in such
banks, trust companies or other depositories as are designated by the
Board of Directors or by the aforesaid officers in the manner hereinabove
provided, and for the purpose of such deposits, the President, any
Vice-President, the Secretary, the Controller, the Treasurer or an
Assistant Treasurer, and each of them, or any other person or persons
authorized by the Board of Directors, may endorse, assign and deliver
checks, notes, drafts, and other orders for the payment of money which are
payable to the Company.
All checks, drafts, or orders for the payment of money, drawn in the
name of the Company, may be signed by the President, any Vice-President,
the Secretary, the Treasurer or any Assistant Treasurer, or by any other
officer or any employee of the Company who shall from time to time be
designated to sign checks, drafts, or orders on all accounts or on any
specific account of the Company by an "instrument of designation" signed
by any two of the following officers: the President, any Vice-President,
and the Treasurer, and filed with the Secretary. The Secretary or any
Assistant Secretary shall make certified copies of such instruments of
designation and such certified copies shall be evidence to all concerned
of the authority of the persons designated therein at the time of the
certification. An instrument of designation may provide for (1) the
facsimile signature of any person authorized to sign by such instrument or
by this Section, or (2) the revocation of authority of any person (other
than an officer named in this Section) to sign checks, drafts or orders
drawn in the name of the Company.
<PAGE>
ARTICLE IV-B
------------
Indemnification
---------------
1. Any person made or threatened to be made a party to any action or
proceeding, whether civil or criminal, by reason of the fact that such
person or such person's testator or intestate is or was a director,
officer or employee of the Corporation or serves or served any other
corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise in any capacity at the request of the Corporation shall
be indemnified by the Corporation, and the Corporation may advance such
person's related expenses, to the full extent permitted by law.
For purposes of this section, references to "the Corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees, so that any person who is or was a director, officer or
employee of such constituent corporation, or is or was serving at the
request of such constituent corporation any other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity at the request of the Corporation, shall stand
in the same position under the provisions of this section with respect to
the resulting or surviving corporation as such person would have with
respect to such constituent corporation if its separate existence had
continued.
ARTICLE V
---------
Capital Stock
-------------
1. The instruments of debentures, certificate of shares of the preferred,
preference and common capital stock of the Company shall be in such form
as shall be approved by the Board of Directors. The certificates shall be
signed by the Chairman of the Board or the President and also by the
Secretary or the Treasurer. The seal of the Corporation shall be affixed
to all certificates. The signatures of the officers upon a certificate
may be facsimiles if the certificate is countersigned by a transfer agent
or registered by a registrar other than the Corporation itself or its
employee. Notwithstanding the foregoing provisions regarding share
certificates or any other provisions of this Article V, officers of the
Corporation may provide that some or all of any or all classes or series
of the Corporation's capital stock may be uncertificated shares.
2. All certificates shall be consecutively numbered, and the names of the
owners, the number of shares and the date of issue, shall be entered in
the Company's books.
3. The Company or its duly authorized stock transfer agent shall keep a
book to be known as the stock book, containing the names, alphabetically
arranged, of all persons who are stockholders of the Corporation, showing
their places of residence, the number of shares of preferred, preference
and common stock held by each respectively, and the time when each became
the owner thereof, also entries showing from and to whom such shares shall
be transferred, and the number and denomination of all revenue stamps used
to evidence the payment of the stock transfer tax as required by the laws
of the State of New York, which books shall be open daily, during usual
business hours, for inspection by any person who shall have been a
stockholder of record in such Corporation for a least six months
immediately preceding his demand; or by any person holding or thereunto in
writing authorized by the holders of at least five per centum of any class
of its outstanding shares, upon at least five days written demand.
Persons so entitled to inspect stock books may make extracts therefrom.
4. Shares shall be transferred only on the books of the Corporation by
the holder thereof in person or by his attorney upon the surrender and
cancellation of certificates for a like number of shares, and upon tender
of stock transfer stamps or the equivalent in money sufficient to satisfy
all legal requirements.
5. The Board may make such rules and regulations as it may deem
expedient concerning the issue, transfer and registration of certificates
of stock of the Company.
6. Certificates for shares of stock or for debentures in the Corporation
may be issued in lieu of certificates alleged to have been lost, stolen,
destroyed, mutilated, or abandoned, upon the receipt of (1) such evidence
of loss, theft, destruction or mutilation and a bond of indemnity in such
amount, upon such terms and with such surety, if any, as the Board of
Directors may require in each specific case, or (2) a request by an
appropriate governmental agency or representative for the reissuance of a
stock certificate claimed to be abandoned or escheated in accordance with
the abandoned property or similar law of the state, or (3) in accordance
with general resolutions.
ARTICLE VI
----------
Seal
----
1. The Board shall provide a suitable seal, containing the name of the
Corporation, the year of its creation, and the words "Corporate Seal,
N.Y." or other appropriate words, which seal shall be in charge of the
Secretary, to be used as directed by the Board.
ARTICLE VII
-----------
Fiscal Year
-----------
1. The fiscal year of the Corporation shall begin the first business day
in January.
ARTICLE VIII
------------
Notice and Waiver of Notice
---------------------------
1. Any notice required to be given by these By-Laws may be given by
mailing the same addressed to the person entitled thereto at his address
as shown on the Company's books, and such notice shall be deemed to be
given at the time of such mailing.
2. Any stockholder, director or officer may waive any notice required to
be given by these By-Laws.
ARTICLE IX
----------
Amendments
----------
1. Subject to the terms and conditions of the certificate of
incorporation, the Board of Directors shall have power to make, amend, and
repeal the By-Laws of the corporation, by a vote of the majority of all
the directors present at any regular or special meeting of the Board,
provided a quorum is in attendance and provided further that notice of
intention to make, amend or repeal the By-Laws in whole or in part at such
meeting shall have been previously given to each member of the Board.
<PAGE>
<TABLE>
Exhibit (12)
The McGraw-Hill Companies, Inc.
-------------------------------
Computation of Ratio of Earnings to Fixed Charges
-------------------------------------------------
Periods Ended March 31, 2000
----------------------------
Three Twelve
Months Months
--------- ---------
(In thousands)
<S> <C> <C>
Earnings
Earnings from continuing operations
Before income tax expense and
extraordinary item (Note) $ 91,407 $ 744,421
Fixed charges $ 19,008 $ 77,001
--------- ---------
Total Earnings $ 110,415 $ 821,422
========= =========
Fixed Charges (Note)
Interest expense $ 10,121 $ 44,911
Portion of rental payments deemed to be
interest 8,887 32,090
--------- ---------
Total Fixed Charges $ 19,008 $ 77,001
========= =========
Ratio of Earnings to Fixed Charges 5.8x 10.7x
<FN>
(Note) For purposes of computing the ratio of earnings to fixed charges,
"earnings from continuing operations before income taxes" excludes
undistributed equity in income of less than 50%-owned companies.
"Fixed charges" consist of (1) interest on debt, and (2) the
portion of the company's rental expense deemed representative of
the interest factor in rental expense.
Earnings from continuing operations before income taxes for the
three month and twelve month period ended March 31, 2000 includes
a $16.6 million gain on the sale of Tower Group International.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 6,812
<SECURITIES> 0
<RECEIVABLES> 1,000,855
<ALLOWANCES> 214,808
<INVENTORY> 356,301
<CURRENT-ASSETS> 1,383,622
<PP&E> 949,210
<DEPRECIATION> 539,034
<TOTAL-ASSETS> 3,867,202
<CURRENT-LIABILITIES> 1,370,334
<BONDS> 0
14
0
<COMMON> 205,838
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,867,202
<SALES> 802,534
<TOTAL-REVENUES> 802,534
<CGS> 724,550
<TOTAL-COSTS> 724,550
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 14,505
<INTEREST-EXPENSE> 9,345
<INCOME-PRETAX> 93,678
<INCOME-TAX> 36,066
<INCOME-CONTINUING> 57,612
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,612
<EPS-BASIC> 0.30<F1>
<EPS-DILUTED> 0.29<F2>
</TABLE>
