Will S&P Missteps Cost McGraw-Hill $5 billion?

The U.S. government is planning to take McGraw-Hill (NYSE:MHP) to court over bond ratings that the company’s Standard & Poor’s unit issued before the financial crisis. Despite the potential for a disastrous result, the company doesn’t seem too concerned, believing the government won’t be able to prove intentional misconduct.

Current standings

McGraw-Hill shares may have slumped since the government issued the civil suit against it, but a number of other figures have been rising. Both profit and income from continuing operations rose in the last quarter, with income nearly doubling from the fourth quarter a year earlier — income rose to $190 million from $113 million, or $0.67 a share from $0.37 a share.

Revenue for the quarter reached $1.23 billion and adjusted earnings per share for the company’s continuing operations reached $0.72. Despite all this positive movement, the company had to post a new loss of $216 million for the quarter. The loss is due in part to a non-cash impairment charge between $450 million and $550 million taken to mark down the value of its education unit, which it sold to Apollo Global Management (NASDAQ:APO).

McGraw-Hill doesn’t expect to be held back by much this year, with its predicted adjusted earnings per share this year to reach between $3.10 and $3.20 for McGraw-Hill Financial. That unit’s growth is expected to be in the high single-digit percentage range for the year, though a successful lawsuit for the government could change that…