The McGraw-Hill Cos., a global information services provider, announced that it is restructuring a limited number of business operations in its financial services and education segments to more efficiently serve its markets and strengthen its long-term growth prospects.
Harold McGraw III, chairman, president and CEO of McGraw-Hill, said the actions are being taken to further streamline operations and lower costs in the areas most affected by current market challenges.
"The decision to reduce staff is always difficult," McGraw added, "but we believe these actions will help improve efficiency while enabling us to focus our resources on those parts of our business that are experiencing the strongest growth."
In connection with these actions, McGraw-Hill will incur a restructuring charge in the second quarter of 2008 of $23.7 million, pre-tax, consisting mostly of employee severance costs related to a workforce reduction of 395 positions in its financial services and education segments. The reduction represents approximately 2% of the company's global workforce. Total restructuring charge after tax is $14.8 million.
"With the seasonality of our business concentrating earnings in the second half of the year and despite continued uncertainty about the pace of recovery in the capital markets, we are not changing our previous 2008 earnings per share guidance of $2.65 to $2.75, which excludes the restructuring charge and associated benefits," explained McGraw.
The impact of restructuring within the financial services segment was $15.2 million, pre-tax, and was driven by the current credit market environment as well as the consolidation of several support functions.
McGraw-Hill Education accounts for $8.5 million, pre-tax, of the restructuring charge. The majority of restructuring actions in this segment are in the assessment business, where the company is taking steps to consolidate resources, better leverage partnerships with key strategic suppliers and facilitate a strategic shift toward increased investments in its digital and custom offerings.
Across other parts of the segment, McGraw-Hill is also taking steps to enable greater efficiencies, better address new and existing revenue streams and shift investments toward digital products.
