EX-12 14 y05956exv12.htm EX-12 COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EX-12
 

Exhibit (12)

THE McGRAW-HILL COMPANIES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

                                         
    Years Ended December 31,  
    2004     2003     2002     2001     2000  
    (In thousands of dollars)  
Earnings
                                       
Earnings from continuing operations before income tax expense, and cumulative change in accounting (net of taxes) (a)(b)(c)(d)
   $ 1,168,905     $ 1,113,676     $ 883,492     $ 606,444     $ 749,532  
Fixed charges (e)
     75,856       72,411       76,094       99,472       92,098  
Capitalized interest
     —       —       —       —       —  
 
                              
Total Earnings
   $ 1,244,761     $ 1,186,087     $ 959,586     $ 705,916     $ 841,630  
 
                              
 
                                        
Fixed Charges (e)
Interest expense
     15,641     $ 12,275     $ 25,004     $ 57,976     $ 56,434  
Portion of rental payments deemed to be interest
     60,215       60,136       51,090       41,496       35,664  
 
                              
Total Fixed Charges
   $ 75,856     $ 72,411     $ 76,094     $ 99,472     $ 92,098  
 
                              
Ratio of Earnings to Fixed Charges:
     16.4 x     16.4 x     12.6 x     7.1 x     9.1 x

(a)   2003 includes a $131.3 million pre-tax gain on the sale of 45% interest of Rock-McGraw, Inc.

(b)   2002 includes a $14.5 million pre-tax loss on the sale of MMS International.

(c)   2001 includes a $159.0 million provision for restructuring and asset write-down, a $6.9 million pre-tax gain on the sale of real estate, a $8.8 million pre-tax gain on the sale of DRI, and a $22.8 million pre-tax charge for the write-down of certain assets, the shutdown of Blue List and the contribution of Rational Investors.

(d)   2000 includes a $16.6 million pre-tax gain on the sale of the Company’s Tower Group International Division.

(e)   For purposes of computing the ratio of earnings to fixed charges, “earnings from continuing operations before income tax expense” excludes undistributed equity in income of less than 50%-owned companies, primarily the Company’s earnings in its 45% interest in Rock-McGraw, Inc. The Rock-McGraw earnings over the past five years are as follows: 2004 $00.0 million; 2003 $16.6 million; 2002 $13.9 million; 2001 $9.7 million; and 2000 $9.9 million. “Fixed charges” consist of (1) interest on debt and interest related to the sale leaseback of Rock-McGraw, Inc.(see note 13 to the Company’s Consolidated Financial Statements for the year ended December 31, 2004), and (2) the portion of the Company’s rental expense deemed representative of the interest factor in rental expense. As noted in footnote (a) the company did not have earnings from Rock-McGraw in 2004.

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