Business Context and Reporting Period
This Form 10-K covers the fiscal year ended December 31, 1998, for The McGraw-Hill Companies, Inc. (Note: The input metadata references S&P Global, but the filing text identifies the registrant as The McGraw-Hill Companies, Inc., which owned Standard & Poor's at the time). The company serves business, professional, and educational markets globally with information products including books, magazines, software, and data services. Key markets include finance, construction, medical, and aerospace. The company employed 15,897 people worldwide as of the reporting date.
Key Financial Metrics
The filing text incorporates detailed financial statements (Revenue, Profit, Cash Flow, Margins, Debt, Liquidity) by reference to the 1998 Annual Report to Shareholders (Exhibit 13) and does not provide specific numerical values within the body of this 10-K text. The following data points are explicitly stated:
- Dividends: $0.78 per share for 1998 (post-split) compared to $0.72 for 1997.
- Market Value: Aggregate market value of voting stock held by nonaffiliates was approximately $10.8 billion as of February 26, 1999.
- Shares Outstanding: 98,799,551 shares as of February 26, 1999 (197,599,102 shares after a two-for-one stock split approved in January 1999).
- Stockholders: Approximately 5,231 holders of common stock as of February 26, 1999.
Note: Specific revenue, net income, operating margins, and debt figures are not present in the provided text.
Material Changes and Operational Updates
- Leadership Transition: Joseph L. Dionne retired as Chairman and CEO on July 1, 1998. Harold McGraw III became President and CEO in April 1998.
- Real Estate Consolidation: The company executed a new 18-year lease at its headquarters (1221 Avenue of the Americas) effective July 2002. Significant consolidation of Standard & Poor's divisions into 55 Water Street and other units into 2 Penn Plaza was scheduled for 1999, terminating several older leases.
- Stock Split: A two-for-one stock split was approved by the Board of Directors on January 27, 1999.
Risks, Contingencies, and Legal Proceedings
County of Orange v. McGraw-Hill Companies, Inc.
The company is involved in significant litigation with the County of Orange regarding credit ratings assigned to County debt instruments. The County alleges breach of contract and professional negligence.
- Claims: The County claims compensatory damages of approximately $2.1 billion (subject to offsets) and unspecified punitive damages.
- Status: The trial, previously scheduled for March 1999, was adjourned pending a decision by the California Supreme Court in a related case. The court recently dismissed claims that the company provided financial advice separate from ratings but held that a triable issue of fact exists regarding the company's duty as a rating agency.
- Company Position: The Registrant believes the allegations and damages claims lack merit and is vigorously contesting the action.
Investor Verification Checklist
- Verify the specific revenue, net income, and cash flow figures in the 1998 Annual Report to Shareholders (Exhibit 13), as they are not listed in this 10-K text.
- Review the Standard & Poor's segment performance specifically, given the significant litigation risk involving the County of Orange.
- Confirm the impact of the real estate lease consolidations (55 Water Street and 2 Penn Plaza) on 1999 operating expenses.
- Monitor the California Supreme Court ruling in the City of Atascadero v. Merrill Lynch case, as it may influence the outcome of the County of Orange litigation.
- Check the post-split share count and dividend yield based on the two-for-one stock split effective in early 1999.