Business context and reporting period
The McGraw-Hill Companies, Inc. filed this Form 10-K for the fiscal year ended December 31, 2009. The requested “2009 Q4” period is not reported here as a standalone quarter; this is an annual filing. The company operated in education, financial services under the Standard & Poor’s brand, and information and media, including business-to-business media and television broadcasting.
Financial performance and position
The supplied filing text refers readers to the 2009 Annual Report for the consolidated income statement, balance sheet, cash flow statement, segment results, and management’s discussion, but does not include their values. Revenue, profit, cash flow, margins, debt balances, liquidity measures, and segment financial results therefore do not have clear values in the supplied text.
- Advertising contributed less than 5% of company revenue, though it remained significant to Information & Media.
- The company paid dividends of $0.90 per share in 2009, up from $0.88 in 2008.
- No shares were repurchased under the 2007 program in 2009; 10.9 million shares were repurchased in 2008. At year-end 2009, 17.1 million shares remained authorized for repurchase.
- The exhibit index lists credit agreements, including a $433.3 million 364-day facility entered into in August 2009. The supplied text does not state amounts drawn, total debt, or available liquidity.
Material changes versus the prior comparable period
- Association of American Publishers data through December 2009 showed basal and supplemental education sales in adoption states and open territory fell 13.8% from the prior year.
- State new-adoption opportunities were expected to rise from approximately $500 million in 2009 to $925 million–$975 million in 2010. The company estimated the overall 2010 elementary and high school market would increase 6%–7%.
- Annual dividends increased by $0.02 per share; share repurchases paused in 2009 following 10.9 million shares bought back in 2008.
Outlook, risks, and unusual items
Management’s market outlook cited expected growth in 2010 school-textbook adoptions. The company also noted rising higher-education enrollment, online learning growth, and increased demand for education and training amid the recession. These are market observations, not company earnings guidance; no clear company-level revenue or earnings forecast appears in the supplied text.
- Education results are exposed to adoption-cycle timing and state, local, and federal funding. The filing noted recession-related pressure on education sales and funding.
- Standard & Poor’s ratings revenues are sensitive to debt issuance, credit-market conditions, interest rates, spreads, liquidity, and investor confidence. The company identified potential regulatory scrutiny, litigation, and competition as risks.
- Other risks include competition and technology change, the profitability of new-product investment, IT-system failures or data corruption, rising compensation and paper costs, intellectual-property protection, litigation, foreign-market exposures, advertising conditions, FCC regulation, and weakness in automotive markets.
- The filing stated that management considered disclosure controls and internal control over financial reporting effective as of December 31, 2009, with no identified material weaknesses.
- No unresolved SEC staff comments, disagreements with accountants, or matters submitted to shareholders for a vote in the last quarter were reported.
Important facts for investors to verify
- Consult the incorporated 2009 Annual Report for actual annual and quarterly revenue, earnings, cash flow, margins, segment performance, debt, liquidity, and management’s full discussion of results.
- Check the Annual Report notes for legal proceedings, contingencies, and any unusual or nonrecurring charges, which are not described in detail in the supplied text.
- Verify actual 2010 education-market adoption outcomes and whether the stated market estimates translated into company growth.
- Review credit-agreement terms, borrowings, maturities, and covenant headroom; the supplied text lists facilities but not utilization or total debt.