The main objective of this paper is 2008 annual report analysis of Mc Graw-Hill companies. Education segment, information Media and financial services are operated by Mc Graw-Hill companies. Annual report cover page photo describes their three business segments with motivation quote that is "Managing for today // Preparing for tomorrow". CEO letter describes their business segments mission, vision past performance, future prospects, products and customers and causes to decline profits, strategies for generating effective results and what changes they are going to achieving goals. Annual report well organized with some photographs, these photographs says importance of their business segments and how these segments helpful to people. Balance sheet shows financial health and operating performance of company. It's includes amount of profits and cash flows, these are related to stockholder's equity, resources and revenue. In balance sheet they are clearly mentioned their profits, liabilities, assets. Stockholders creditor's debtor's stakeholder's employee's customers everybody can understand balance sheet very easily. Shareholders earned $2.51 per share in year 2008. Company returned over $5.5 billion to share holders since 1996. Management team discussed company issues, strategies and medical dental and life insurance benefits for retired employees. Management discussions also included considerable amount of information about company future and each segment achievements. Company internal accounting staff produced all financial statements in a good manner. These financial statements audited by their internal auditors. Finally annual report briefly says financial condition, performance, and strategies.
The McGraw-Hill Companies Founded by James H. Mc Graw and John A. Hill. James H. Mc Graw began working in publishing in 1884. At the same time co-founder John A. Hill was working as an editor at locomotive engineer. These two persons started their own publications under the headings of "Mc Graw publishing company"and"Hill Publication Company" in 1902. The two men crossed the path over the years and their mutual interest in science and technology. These two book departments of two publishing companies merged to form the Mc Graw-Hill Company in year 1909. Mc Graw-Hill Companies operates three leading business segments across the 40 countries. Those are financial services, education and information and media. The corporation offers an array of trusted, market leading brands that address three enduring global needs the need for capital, the need for knowledge and the need for transparency. Mc Graw-Hill Corporation has more than 280 offices across the world. Sales in 2008 were $6.4 billion. From traditional learning materials to online learning solutions, Mc Graw Hill education is a leader across the education market. The company and its educational publishing segment continued to expand their branches across the world since 20th century. It has offices in 33 countries and it publishes in more than 60 different languages throughout the world. Poor's publication company established in 1860. In 1906 standard statistics bureau was formed to provide past unavailable financial data on United states companies. In 1941 poor publishing &standard statistics companies merged to form standard & poor's corporation. Mc Graw-hill companies Inc. acquired standard & poor's in year 1966.. The Financial Services consists of two operating groups, Credit Market Services and Investment Services.
McGraw-Hill higher education partners with The NewYork times to add timely, Relevant and real world content to textbooks and related web sites to provide more Information, value and service to professors and students. In 1950's education segment started to provide modern information technology at the K-12 levels in United States of America and Canada. McGraw-Hill collaborates with different kind of companies across the World. They are committed to reaching open markets wherever it may be. They are driving a new digital evolution and, they are dedicated to developing and retaining the right talent to lead this process. They are recognizing the development and integration of the latest technologies and products into our already content- rich information structure is a way to create and deliver immediate results for our customers throughout the world. The most success key factor of McGraw-Hill Companies is, they are leveraging new technologies to create new solutions. Mc Graw-Hill professional talent is their most valuable resource. It enables them to be a market leader and provides highly valued services and information to the world. Therefore, they are invites exceptional individuals to make a difference with a company that sets the standard for excellence and helps the open markets of the world perform to their potential. Standard & Poor's investment advisory group was created solely to provide independent, objective analysis and advice to the investment management and advisory marketplace. Clients receive portfolio strategy, fund research and asset allocation services encompassing the wide range of Standard & Poor's analysis and tools, including our ranking methodologies. Finally, Standard & Poor's provides the analysis research and advice that help make clients feel more confident about their investment decisions.
An Annual Report provides a detailed look at the financial results for the prior twelve months of operations. Reporting requirements vary by country, but Mc Graw-Hill annual report includes: Chairman's Statement, Income Statement, Cash Flow Statement, Balance Sheet, Notes to the Accounts, Auditors Report and comparisons charts for last 10 years financial reports. My initial impression about this annual report is they are explained honestly about their financial statements. In CEO letter he said very clearly about profits and losses. He covers in letter reasons to decline profits compared to prior year and future strategies to overcome these bad days. I Mcgraw Hill 2008 annual report was really helpful for the people to know the current status of operations and financial status. While my reading of this report I was impressed about way of presenting financial report and first page of report displays 2008 financial status with photographs. They are clearly explained company operated sales compared with prior year. It has explained the best reasons behind the success. Financial report is well organized and the report divided into sections, as 10 year summary, stock performance graph, statement of income, statement of cash flow, balance sheet, statement of shareholders. So, it is easy to find the required information. Organization of this report make it is to read everyone. CEO's letter is appropriately balanced with graphs and photographs which is related to the text. It shows last ten years revenues, cash generated by operations and cash returned to share holders. The body of the CEO letter is clearly written with confident tone. I believe this is appropriate letter to target audience. In Annual report they didn't balance the text with graphs, photographs. But they are used so many tables for explaining financial conditions with balance sheet, share holder's equity and cash flow etc. They have to use more graphs and photographs in report. Comparison tables show financial status of last two years. I think comparisons charts average reader can understand easily McGraw Hill financial information. In my point of view annual report they are organized very well. It contains very important information about the company. Data useful for everybody like customers, shareholders, stakeholders, employees. Students also can learn so many things from this by studying annual report. I learned some important things about company's annual reports from this project. Main thing I knew how to prepare balance sheet for the company. In annual report the main portion is management discussions; it shows company's future plans to get effective results. Average reader also can understand the Mc Graw-hill 2008 annual report.
LEVEL 1 ANALYSYS
McGraw-Hill Education revenue and operating profit declined 17.2% and 70.1%, respectively, primarily due to softness at School Education Group partially offset by an increase in revenue at Higher Education. In 2008, revenue and operating profit decreased due to declines at the Financial Services and the McGraw-Hill Education segments.
COMPARISON TABLE OF FINANCIAL REVIEWS
Operating Results by Segment and Income
McGraw-Hill Education $2,638,893 $2,705,831 Financial Services 2,654,287 3,046,229 Information & Media 1,061,875 1,020,221 Total Revenue 6,355,055 6,772,281
McGraw-Hill Education 316,454 399,990 Financial Services 1,055,427 1,359,477 Information & Media 92,051 63,467 Operating Profit 1,463,932 1,822,934 General corporate (expense)/income (109,122) (159,821) Interest expense - net (75,624) (40,581) Income from Continuing Operational Before 1,279,186 1,622,532 Income Tax Provision for taxes on income 479,695 608,973 Income from Continuing Operations Before 799,491 1,013,559 Extraordinary Item and Cumulative Adjustment
Net (loss)/earnings from discontinued operations - - Income before Extraordinary Item and Cumulative 799,491 1,013,559
Early extinguishment of debt.net of tax - - Cumulative effect on prior years of changes in accounting - - Net Income $ 799,491 $1,013,559
Basic Earnings per Share
Income from continuing operations before extraordinary $ 2.53 $ 3.01 Item and cumulative adjustment Discontinued operations - - Income before extraordinary item and cumulative adjustment $ 2.53 $ 3.01 Extraordinary item and cumulative adjustment Net income - -
Diluted Earnings per Share
Income from continuing operations before extraordinary item $ 2.51 $ 2.94 And cumulative adjustment Discontinued operations - - Income before extraordinary item and cumulative adjustment $ 2.51 $ 2.94 Extraordinary item and cumulative adjustment - - Net income $ 2.51 $ 2.94 Dividends per share of common stock $ 0.88 $ 0.82
Return on average shareholders' equity 55.3% 47.3% Income from continuing operations before taxes as a percent 20.1% 24.0% Of revenue Income before extraordinary item and cumulative adjustment 12.6% 15.0% As a percent of revenue
Balance Sheet Data
Working capital $ (227,980) $ (314,558) Total assets $6,080,142 $6,391,376 Total debt $1,267,633 $1,197,447 Shareholders' equity $1,282,336 $1,606,650 Number of Employees 21,649 21,171 I observed financial reviews of last two years in above table. It shows everything about Mc Graw-hills financial department. In 2008 everything slightly declined compared to prior year, because everybody knows last year will long be remembered as one of the most difficult year that every company has faced problems due to financial recession effect. Financial reviews representing the company financial health and operating performance. Mc Graw-hill company Balance sheet dated as of 31st December 2008. I noticed that it's providing comparable figures of 31st December 2007. This comparisons was helped me a lot to analyzing the information about company financial status. I think previous year's results also essential for understanding and analyzing the information. Revenue for Education segment in 2008 decreased by 2.5% to $2.6 billion compared to prior year. School Education group revenue declined by 5.4% to $1.4 billion in 2008. Higher education group revenue increased by 0.9% to $1.3 billion Basic earnings per share 48 cents decreased in 2008 compared to the 2007. Standard & Poor's Credit Market Services providing important data and global standards about company that help investors to access capital and foster economic growth. S&P is the global leader in credit ratings in 2008. S&P was published more than 1 million new and revised ratings and rated approximately $2.8 trillion in new debt. 22.5% of total revenue declined in 2008 compared to the last year. Assets of Mc Graw-hills decreased in year 2008 at the same time liabilities increased, operating profit and revenue as well. These things are not a problem for this company. I think it can easily recover as soon as possible. McGraw-Hill Education International includes businesses in Asia, Australia, Canada, Europe, India, and Latin America. More than half of McGraw-Hill Education's revenues come from its School Education Group, the remainder comes from its Higher Education, Professional, and International Group. They are decided to make progress in construction. The electronic delivery of their information is a critical part of the transition and is continuing to produce an increasing share of McGraw-Hill Constructions revenue. Finally In my point of view current environment, Mc Graw-hills remain focused on managing costs and Maintaining liquidity and increased efficiency and reduced redundancies in 2008 and it's providing quality of Education for International Students and providing good financial services right time to right company.
In early periods (starting stage) Mc Graw-Hill Company focused on developing of different specialties business, management and social sciences, adding to its core strengths in engineering and medical. McGraw-Hill publications built on more than 100 years ago. Innovation, trust and leadership were helped them to their extraordinary success in publication industry. The McGraw-Hill Education segment is one of the premier educational publishers. This segment operates two groups, that is School Education Group and Higher education group. Elementary and high school market comes under school education group and college and university, professional and educational market comes under higher education group. Its resources are delivered across a wide range of print and digital platforms to benefit students, educators and professionals at all levels of learning. in 2008. Financial Services segment operates under the Standard &Poor's brand. Financial segment provides services to different kind of corporations, such as governments, financial institutions, investment managers and advisors globally. It serves based on interest rates, credit quality and investor confidence The corporation is applying for Leadership Energy and Environmental Design certification, a nationally recognized benchmark for high-performance green buildings, for its higher-education offices. By 2010, the value of the residential green building marketplace is expected to boost its market share from $7.4 billion and 2 percent of housing starts in 2006 to $19 billion to $38 billion and 5 to 10 percent of residential construction activity, according to a National Association of Home Builders survey. While McGraw-Hill and others say green building is good business, in growing green consciousness of the consumer, marketing experts say promoting green building is even better business. The major findings in the study included Green healthcare facilities reduce energy use, thus reducing green house gasses and improving air quality. 47% of respondents said that patient recovery time is reduced in green building other benefits include lower operating costs, greater innovation and public relations benefits. The survey clearly shows that there is an increasing trend toward building green healthcare facilities. Of the survey respondents, 19% said they expect that their organization will be significantly involved with green building in 2008.
LEVEL 2 ANALYSIS
They are focusing on three core values in education field; those are innovation, success and learning, customer focus. They are constantly looking at new ways to improve learning and help people become more productive and efficient in rapidly changing markets. They are focused on helping students of all ages succeed with their proven solutions. They are committed to providing superior customer service and providing solutions to meet every teaching and learning need. McGraw-Hill Education is an innovative global leader in high-quality teaching and learning solutions.A A They are helping to improve the world's prospects by providing individuals vital knowledge to enable them to reach their full potential.A McGraw-Hill Education is where the world learns to succeed. Standard & Poor's, the world's foremost provider of financial market intelligence, provides rigorous, independent analysis, and information on stocks, bonds, mutual funds and many other complex investment vehicles. The critical thinking, opinions, news and data offered by Standard & Poor's are an integral part of the global financial infrastructure. The company's Education segment, while not as profitable as S&P, enjoys the bulk of a moderately lucrative $800 million textbook publishing industry. With high school and college enrollment rates increasing, McGraw-Hill stands to benefit from long-term societal trends toward higher education, though it is subject to short-term changes in state-wide book adoption rates. The Financial Services segment through Standard & Poor's credit rating service 41% market share and the Education segment through McGraw-Hill's educational publishing of textbooks 35% market share. Education segment McGraw-Hill's most profitable segment, Financial Services, enjoys several tailwinds and competitive advantages through its operations as Standard & Poor's, including increasingly large and complex worldwide capital markets in which market participants demand trusted, reliable, distilled information and ratings on trillions of dollars worth of securities and financial obligation.
The management team constantly finds innovative ways to satisfy the customers. The McGraw-Hill Companies Reports 2008 Earnings Per Share of $2.51, Including $0.14 Restructuring Charge McGraw-hill returned over $5.5 billion to the shareholders since 1996, I think that's pretty good. McGraw-hills 52 week low were $17.15 per share and 52 week high was $37.96. Currently, McGraw-Hills share is worth $25.21 which shows that it is closer to its 52 week high. The reasons to buy the McGraw hill shares, it's a one stop shop to understand the company and we can Identify prospective partners and suppliers with key data on their businesses and locations. So I would like to buy shares of McGraw-hills companies and also I am recommending others, who is going to invest money in stock market.
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