NEW YORK, April 7 /PRNewswire/ — Standard & Poor's, the world's leading provider of independent investment research, ratings and indices, announced today that S&P 500 company buybacks surged 72% during the fourth quarter of 2004 and grew by 51% for the entire year. Standard & Poor's attributes the record number of buybacks to an increase in exercised employee stock options.

"Employees appear to have participated in some profit taking, using the gains of 2003 and 2004 to cash in on some of their option holdings," says Howard Silverblatt, Equity Market Analyst at Standard & Poor's. "In addition, many employees had seen their option values drastically reduced during the bear market, but now appear to more fully understand the volatility associated with stock options."

Companies take advantage of stock buybacks for several reasons: to reduce their overall share count (thereby increasing current shareholder values), to reissue the shares for mergers and acquisitions, and to satisfy employees looking to exercise their stock options. For 2004, Merger & Acquisition activity within the S&P 500 was relatively low, and actual share reductions were found in less than a quarter of the index's constituents. The majority of announced buybacks were issued to cover existing employee stock options that were tendered.

Standard & Poor's data shows that during the first three quarters of 2004, stock buybacks increased by 41.7%, and in the fourth quarter, surged 72.4% as companies prepared to fulfill an increased level of employee stock options that were either tendered or were expected to be tendered. Full buyback expenses in 2004 reached $197 billion surpassing the $131 billion for 2003 and the $181 billion for cash dividends in 2004.

Buyback activity was concentrated primarily in the Information Technology sector, which represents 15% of the S&P 500's market value, but accounted for 26% of the 2004 buybacks. The Energy sector also experienced a large increase, accounting for 7.7% of the buybacks compared to a historical 4.1%.

"Standard & Poor's attributes the Energy buyback increase to a sharp rise in their stock prices which created a large variance between the option strike price and the market buyback price," adds Silverblatt. "We estimate that over the past 10-years, current S&P 500 members have spent nearly $1.2 trillion on buybacks."

For 2005, Standard & Poor's expects buyback activity to continue. "Given the number of options already outstanding and the unwillingness of companies to dilute their share count, 2005 buybacks are likely to outpace that of 2004, while also setting another record," concludes Silverblatt.

  S&P 500 STOCK BUYBACKS
                                     2004        1995-2004 AVERAGE
  Consumer Discretionary           13.16%                   13.14%
  Consumer Staples                 13.60%                   13.63%
  Energy                            7.67%                    4.49%
  Financials                       12.96%                   13.57%
  Health Care                      14.86%                   13.73%
  Industrials                       8.90%                   10.11%
  Information Technology           26.22%                   21.74%
  Materials                         1.64%                    4.01%
  Telecommunication Services        0.99%                    2.71%
  Utilities                            NA                    2.88%
  S&P 500                         100.00%                  100.00%



  COMPANY                           SECTOR                    TOTAL BUYBACKS
                                                            FISCAL 1995-2004
                                                                    MILLIONS
  INTL BUSINESS MACHINES CORP       Information Technology           $51,426
  INTEL CORP                        Information Technology           $40,662
  MICROSOFT CORP                    Information Technology           $37,337
  EXXON MOBIL CORP                  Energy                           $36,443
  PFIZER INC                        Health Care                      $34,496
  CITIGROUP INC                     Financials                       $27,852
  MERCK & CO                        Health Care                      $26,381
  ALTRIA GROUP INC                  Consumer Staples                 $25,106
  HEWLETT-PACKARD CO                Information Technology           $19,107
  ORACLE CORP                       Information Technology           $18,885

Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP) , is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research, data and valuations. With 6,000 employees located in 21 countries, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com/.

CONTACT:
David R. Guarino
Communications
Standard & Poor's
+1-212-438-1471

Howard Silverblatt
Equity Market Analyst
Standard & Poor's
+1-212-438-3916