10-KPeriod: FY2011

S&P Global Inc. Annual Report, Year Ended Dec 31, 2011

Filed February 7, 2012For Securities:SPGI

Summary

The McGraw-Hill Companies, Inc. (now S&P Global Inc.) filed its 2011 10-K on February 6, 2012, detailing its performance and strategic initiatives. A significant development was the "Growth and Value Plan" announced in September 2011, which outlined the separation of the company into two distinct public entities: McGraw-Hill Financial (focused on financial markets) and McGraw-Hill Education. This separation was expected to be completed by the end of 2012 through a tax-free spin-off. The company reported revenue of $6.25 billion for 2011, an increase from the previous year, with growth driven primarily by its S&P Ratings and S&P Capital IQ/Indices segments. While S&P Ratings saw increased non-transaction revenue, its operating income declined due to rising expenses. S&P Capital IQ/Indices demonstrated strong performance with significant increases in both revenue and operating income. The Commodities & Commercial segment also experienced revenue and operating income growth. Conversely, the McGraw-Hill Education segment saw a decline in both revenue and operating income, attributed to reduced sales in adoption states and open territories. The company also completed the divestiture of its Broadcasting Group in December 2011.

Financial Highlights

54 data points
Beta

Revenue

$3.95B

64.9% Gross Margin

Net Income

$911.00M

23.0% Net Margin

EPS (Diluted)

$3.00

Total Assets

$6.62B

Cash & Equivalents

$835.00M

Free Cash Flow

$924.00M

Financial Statements
Beta
Revenue$3.95B
Cost of Revenue$1.39B
Gross Profit$2.57B
SG&A Expenses$1.38B
Operating Expenses$2.89B
Operating Income$1.08B
Interest Expense$77.00M
Net Income$911.00M
EPS (Basic)$3.05
EPS (Diluted)$3.00
Shares Outstanding (Basic)298.10M
Shares Outstanding (Diluted)303.60M

Key Highlights

  • 1Announced 'Growth and Value Plan' to split into two independent companies: McGraw-Hill Financial and McGraw-Hill Education.
  • 2Divested the Broadcasting Group on December 30, 2011, for approximately $216 million.
  • 3S&P Ratings revenue increased 4% driven by non-transaction revenue, though operating income saw a 6% decrease.
  • 4S&P Capital IQ / S&P Indices revenue and operating income increased by 14% and 28%, respectively, indicating strong performance in financial data and analytics.
  • 5Commodities & Commercial segment revenue and operating income grew by 10% and 18%, respectively, boosted by Platts and automotive data.
  • 6McGraw-Hill Education segment revenue and operating income declined by 6% and 12%, respectively, due to challenges in the K-12 market.
  • 7Initiated significant cost-reduction and restructuring efforts across the company, including workforce reductions.

Frequently Asked Questions

The most significant strategic change is the 'Growth and Value Plan' to separate into two distinct public companies: McGraw-Hill Financial and McGraw-Hill Education. This separation was targeted for completion by the end of 2012.

S&P Ratings revenue grew by 4% primarily due to an increase in non-transaction revenue. However, operating income decreased by 6% due to higher expenses, including staff increases and regulatory compliance costs, as well as a decline in transaction revenue.

The Broadcasting Group was sold on December 30, 2011, for approximately $216 million. Its results have been reclassified as discontinued operations for all periods presented. The sale generated a pre-tax gain of $123 million.

McGraw-Hill Education's revenue and operating income declined by 6% and 12%, respectively. This was primarily due to lower sales in the elementary and high school (el-hi) market, particularly in adoption states like Texas and Florida, and also impacted by reduced open territory sales. Increased costs related to technology and digital product development also affected profitability.