McGraw-Hill ( MHP) said its first-quarter earnings fell 21% from a year ago, due to the absence of some profitable discontinued operations in the 2004 period. Excluding those, earnings nearly doubled as brisk fixed-income and derivatives issuance fed the company's bond-rating agency.

McGraw-Hill earned $75.7 million, or 39 cents a share, in the latest quarter, compared with $95.4 million, or 50 cents a share, last year. The year-ago quarter had discontinued operations of $55.5 million, excluding which the company earned $40.0 million, or 21 cents a share. Revenue jumped 9.7% to $911.5 million.

The latest quarter included a tax benefit that increased earnings by 10 cents a share. Excluding that, analysts surveyed by Thomson First Call had been forecasting earnings of 25 cents a share on revenue of $891.6 million in the 2004 quarter.

McGraw-Hill's biggest division is financial services, which primarily comprises Standard & Poor's. Financial services saw revenue rise 15.6% to $456.6 million and operating income jump 19.9% to $173.8 million.

"Strong structured finance and high-yield corporate markets here and abroad, as well as solid growth in counterparty credit ratings and rating evaluation services, all contributed to Standard & Poor's outstanding results," the company said. International ratings accounted for nearly 35% of ratings revenue, it said.

"Demand for retail and brokerage information is recovering slowly, but sales of products and services to institutional clients picked up as conditions in financial markets continued to improve," the company said. McGraw-Hill said assets under management for exchange-traded funds based on S&P indexes climbed 34.6% to $81.3 billion at the end of March.

In its education segment, revenue rose 6.4% to $278.2 million and the operating loss narrowed 20% to $68.8 million. In information and media services, revenue rose 1.3% to $176.7 million and operating profit rose 9.4% to $13.7 million. In the business-to-business segment, which includes BusinessWeek, construction, energy, aviation and health care products and services, revenue was up 0.6% to $152.0 million.

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