To Our Shareholders:

The year 2008 will long be remembered as one of the most difficult years that our nation, our economy—and our company—has ever faced. A recession took hold, resulting in economic dislocation and rapid rises in unemployment. Global financial and credit markets remained largely frozen and global equity markets declined precipitously—virtually in unison.

At times like this, when economic and market conditions remain so volatile, questions abound: questions about the causes of the crisis…about its potential impact on our customers, markets and shareholders…about its future course…and perhaps most importantly, about when economic growth will resume. In this year’s annual report we will attempt to answer these critical questions. In the current economic environment, the question I’m asked most often is:

HOW IS THE MCGRAW-HILL COMPANIES POSITIONED TO WEATHER THE CURRENT STORM?
No one can be certain about the outcome of actions being taken to strengthen the economy, but there are two key factors that make me confi dent in our ability to weather the current storm and emerge strong and well-positioned— our financial strength and our business strategy’s alignment with enduring global needs.

Financially, our careful and conservative fiscal management has produced a strong balance sheet, a manageable level of debt and significant cash flow, which we are using to fund operations, make investments, pay down debt and return cash to shareholders.

This is not to say that our revenues and earnings won’t be affected by the downturn; they certainly have been:

• 2008 revenue was $6.4 billion, down 6.2%;
• Net income decreased 21.1% to $799.5 million;
• Diluted earnings per share were $2.51, including $0.14 per share related to restructuring.

While these results don’t match the previous year, they demonstrate our ability to remain profi table in the midst of a recession, and also reflect the effectiveness of our costreduction actions and the strategic value of our diversified portfolio of knowledge-based products and services.

In the current environment, we remain focused on managing costs and maintaining liquidity. Toward that end, we increased efficiency and reduced redundancies in 2008, and since the fourth quarter of 2007, we have eliminated approximately 1,650 positions across our global operations. This is always a difficult step, but it is our responsibility to ensure that our cost level refl ects the revenue opportunities we anticipate.

Our three segments—Education, Financial Services and Information & Media—are leaders in their fields, serving the enduring global needs for knowledge, capital and information transparency that provide the foundations necessary to foster economic growth. ...

Download The McGraw-Hill Companies 2008 Annual Report

PDF format, 1.8MB, 88Pages.

The McGraw-Hill Companies is a leading global information services provider meeting worldwide needs in the financial services, education and business information markets. 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.

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