BAE Systems, EADS in merger talks

Britain's BAE Systems PLC and Airbus-owner EADS NV are in advanced merger talks to create a combined group worth $48-billion (U.S.), overtaking Boeing Co. as the world's biggest aerospace and defence company in sales.

Under the detailed plans announced by the two firms on Wednesday BAE shareholders would own 40 per cent of the combined group and EADS shareholders the remaining 60 pct with the firm structured as a dual-listed company.

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The news sent shares in BAE up 10.6 per cent to 353 pence ($5.68), giving it a market value of $19-billion, while EADS closed 5.6 per cent lower in Paris to give it a market value of $29-billion.

However analysts said they saw plenty of pitfalls in a deal that would face regulatory, security and cultural hurdles.

"On the face of it this will create one of the largest aerospace and defence organizations on the planet, depending on how much they have to spin out to get this past regulators," said Guy Anderson, senior principal analyst, IHS Jane's Defence Industry.

"It could change the European defence market beyond recognition."

Paris-based Oddo Securities analyst Yan Derocles said he was surprised by the scope and timing of the deal, given the fact that defence budgets were shrinking while increasing emerging-market competition has added to uncertainties on BAE's outlook.

In a sign of the pressures on the industry, the news brought a breath of life to what has otherwise been a quiet Berlin air show, with no new airline orders being announced for either Airbus SAS or arch rival Boeing.

A source close to EADS told Reuters that the two companies had been talking on and off for almost a year. The source said the talks were the brainchild of Marwan Lahoud who is in charge of strategy and marketing at EADS.

The merged company would supply a range of products from the Airbus commercial jets such as the A380 superjumbo and its A400M military transporters to the BAE-made Tornado fighter jets and its Astute-class nuclear-powered submarines.

The two companies have a long history of collaboration and are partners in a number of projects, including the Eurofighter and the European MBDA missile joint venture. A deal would also bring BAE back into having a direct interest in Airbus and the France-based planemaker's British plants, having sold its 20 per cent stake in 2006.

It would also give defence-focused BAE more access to commercial aerospace markets, which are booming with EADS's main unit Airbus currently swamped with a backlog of order for passenger jets, while EADS will gain more defence expertise.

The merger would also mark a turning point for BAE 13 years after it was accused of turning its back on Europe in choosing to concentrate on building its U.S. defence business with the takeover of GEC Marconi in preference to merging with Germany's main aerospace and defence group, Daimler Aerospace (DASA).

Spurned by BAE, DASA decided in the same year, 1999, to instead go ahead and create EADS through a merger with French group Aerospatiale and Spain's Construcciones Aeronautica (CASA).

A tie-up could also allow EADS to break free from the shackles of its shareholder agreement which dictates a Franco-German balance of power at the group.

Tensions between the two sides have been simmering this year, notably over plans to refocus more of the group's activities near the Airbus headquarters in Toulouse.

And a move by the German carmaker Daimler AG to sell its stake in EADS has exacerbated the issue. Plans by the German government to buy the stake, for a lack of other investors, have reportedly drawn ire from the French side and from EADS management, which wanted less state involvement.

If the tie-up goes ahead, the shareholder pact as it stands would likely become obsolete.

Combined, BAE and EADS would have sales of about €72-billion ($93-billion), based on 2011 numbers, and would have 220,000 employees worldwide. In comparison Boeing has sales last year of $68.7-billion, while Lockheed Martin Corp. has sales of $46.5-billion, according to Thomson Reuters data.

EADS and BAE said that due to the sensitive nature of the companies' defence business in countries stretching from the United States to Saudi Arabia and Australia, they were talking to governments around the world about the proposed deal.

They said certain defence activities would be ring-fenced with governance arrangements appropriate to their strategic and national security importance, particularly in the United States, given the importance of that market to the enlarged group.

A merger of the two European companies are not expected to raise antitrust concerns in the United States given the modest amount of U.S. military revenues generated by EADS, according to two sources close to the deal.

U.S.-based defence consultant Loren Thompson said a merger of the two would create a larger enterprise that was equally strong in commercial and military products, similar to the strategy already pursued for many years by Boeing.

A Pentagon spokesman had no immediate comment on a possible merger. The French government declined to comment while the British government said it was working with the two companies to ensure any deal would serve the public interest.

A top Pentagon official told Reuters last week that further big budget cuts could make the U.S. Defense Department rethink its current wariness about additional mergers among top-tier companies in the weapons industry.

Lazard, Evercore and Perella are advising EADS while Morgan Stanley and Goldman Sachs are with BAE.

Among BAE's biggest shareholders is U.K.-based Invesco Asset Management, which owns 13.02 per cent and which increased its stake last month. Its head of U.K. equities, Neil Woodford, is widely regarded as one of the U.K.'s most powerful and best-performing fund managers.

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McDonald’s adding calorie counts on U.S. menu boards

McDonald's Corp.'s restaurants across the United States will soon get a new menu addition: The number of calories in the chain's burgers and fries.

The world's biggest hamburger chain said Wednesday that it will post calorie information on restaurant and drive-thru menus in the U.S. starting Monday.

In a statement to The Canadian Press, McDonald's Canada spokesman Louis Payette wrote that with regard to nutrition information in restaurants, "the conversation has progressed differently in Canada than it has in the U.S."

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"McDonald's Canada is actively working with all levels of government, NGOs and industry stakeholders to develop an appropriate `Made-in-Canada' solution to displaying comprehensive nutrition information that is easily accessible to customers prior to purchase," Mr. Payette wrote.

He also noted that McDonald's Canada is a "longtime industry leader" in providing nutrition information, introducing its first Food Facts brochure more than 30 years ago. Mr. Payette says nutrition information is also available on posters, tray liners and selected packaging, as well as through an online nutrition calculator and mobile app.

McDonald's Restaurants of Canada Limited and its Canadian franchisees own and operate more than 1,400 restaurants across the country.

South of the border, the move to add in calorie counts on U.S. menus comes ahead of a regulation that could require major chains to post the information as early as next year.

"We want to voluntarily do this," said Jan Fields, president of McDonald's USA. "We believe it will help educate customers."

In U.S. cities such as New York and Philadelphia where posting calorie information is already required, however, Ms. Fields notes that the information has not changed what customers choose to order.

"When it's all said and done, the menu mix doesn't change," she said. "But I do think people feel better knowing this information."

The Oak Brook, Ill.,-based company is also testing healthier options for next year, such as an Egg McMuffin made with egg whites and a whole grain muffin. The sandwich has Canadian bacon and white cheddar cheese and clocks in at 260 calories. It will be called the Egg White Delight.

The chain is also testing versions of the McWrap, which is a bigger version of its chicken Snack Wrap that is already sold in Europe. The wraps have sliced cucumbers and range from 350 calories to 580 calories.

The posting of calorie information isn't a magic bullet in fighting obesity but could have a big effect over time, says Margo Wootan, director of nutrition at the Center for Science in the Public Interest, which advocates on nutrition and food safety issues.

"Obesity isn't the kind of thing where one day you wake up and you're fat. We gradually and slowly gain weight over time," she said.

So even if only some people are swayed to make slightly better choices, Ms. Wootan thinks there's a big benefit to providing calorie information.

Another upside is that companies tend to work harder to provide healthier options when they are forced to display calorie information.

"It can be embarrassing, or shocking, so they end up changing the way the product is made," Ms. Wootan said.

The moves also reflect the pressures McDonald's and other fast-food chains are facing amid growing concerns about obesity. McDonald's is also facing competition from chains such as Subway, which positions itself as a healthy alternative to traditional hamburger chains.

McDonald's notes that it has already made strides in improving the nutrition of its food, such as the automatic inclusion of apple slices in its Happy Meals.

And this summer, McDonald's rolled out a "Favourites Under 400" campaign that highlighted the menu items that had fewer than 400 calories. The company noted that about 80 per cent of its menu items fit the bill.

Of course, not everyone orders just one item. And the chain has been blamed by critics for fueling obesity rates with its big soft drinks and other items.

A meal consisting of a Big Mac and medium fries, for example, has 920 calories. Add a 16-ounce Coca-Cola, and the count rises to 1,140 calories.

The decision to post calorie information follows the Supreme Court's decision this summer to uphold President Barack Obama's health care overhaul, which includes a regulation that would require restaurant chains with more than 20 locations to post calorie information. The timing of carrying out that requirement has yet to be worked out.

McDonald's, which has 14,000 locations in the U.S., doesn't plan to advertise the posting of the calorie information. Ms. Fields said it's something the chain is doing as a "customer convenience."

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What’s new inside the iPhone 5

Apple has learned not to mess with a good thing.

The iPhone-maker finally revealed the latest iteration of its blockbuster smartphone on Wednesday, treating customers to a device that featured dozens of minor refinements, but no major departures from the formula that made the iPhone the most profitable gadget on Earth.

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Perhaps the biggest changes to the new iPhone – dubbed the iPhone 5 – are external. The phone is taller, lighter and thinner that its predecessor, addressing a criticism Apple faced last year when it introduced the iPhone 4S – a phone that looked exactly the same as the previous iteration. However, hoping to avoid complaints from other smartphone users who found larger devices too cumbersome to operate with one hand, Apple has made no changes to the width of the phone.

Apple claims the new iPhone is the thinnest smartphone in the world, at 7.6 millimetres thick. The phone is also about 20 per cent lighter than its predecessor, at 112 grams.

The phone is slightly taller than the iPhone 4S – tall enough to make room for a fifth row of icons on the home screen.

Apple has already updated most of its first-party apps, such as the iWork suite of tools, to take advantage of the taller screen, which also features the ultra-crisp, high-resolution "retina" screen. Apps made for older versions of the iPhone will run letterboxed on the new device.

As expected, the new iPhone will handle LTE, the next-generation wireless network that's many times faster than existing networks, and in some cases faster than wireless and wired Internet connections. The move could have some downside for Apple, given that Samsung is reportedly planning to sue the company over LTE-related patents, but few observers expected the iPhone 5 to miss out on the wireless technology, regardless of the potential courtroom implications.

The new wireless technology works across several LTE standards, and will be available on most Canadian carriers including Rogers, Bell, Telus and the sub-brands Koodo, Virgin, Fido. Wind Mobile and Videotron wireless signals appear to be incompatible according to early reports.

In virtually every respect, the iPhone 5 is an improvement over its predecessor – but not in any revolutionary way. The battery lasts longer, the processor is more powerful and the on-board cameras come with various enhancements, including a "panorama" mode that takes massive, sweeping pictures.

But besides changing the size of the screen, Apple has largely left the traditional iPhone formula intact. In fact, even the presentation itself stuck to the same script used by the company's late founder, Steve Jobs, with current CEO Tim Cook kicking things off with a slew of statistics touting Apple's dominance in the mobile marketplace, before unveiling the new phone.

Some features that were expected to be announced on Wednesday never materialized. The iPhone will not come with NFC, a wireless technology that allows for uses such as phone-based payment systems. Apple is also ditching its well-known connector cable, which it had used for nine years dating back to the iPod. Instead, the iPhone 5 will need a new, slimmer connector. While that will likely prove to be a headache for those who have the old cable and docking devices using the old standard, the company said it is building an adapter.

The iPhone 5 will be available in two colours, black and white. Pre-orders for the phone in Canada and the U.S. start on September 14, with shipping set for a week later. The new phone will be priced the same as the current iPhone, starting at about $200 with a contract. Canadian pricing without a contract is starkly different $699 for the 16GB model and $799 for the 32GB model and $899 for the 64GB model.

Perhaps more importantly for Apple's attempts to capture the low-end of the smartphone market, both the iPhone 4S and the older iPhone 4 will both see a price drop, with the latter device essentially priced at $0 with a contract.

According to Apple, the companion iOS 6 software will be available on Wednesday, September 19 as a free update.

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Toys R Us prepares for holiday season with ‘hot toy’ reservation program

It's still summer for a few more days, but the holidays are already heating up at Toys "R" Us Inc.

The largest specialty toy retailer in the United States outlined its plan for its busiest season Wednesday, including adding a "hot toy" reservation system, beefing up services like layaway and ship-to-store, and offering more exclusive toys like its $149.99 (U.S.) Tabeo tablet.

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Danish toymaker Lego credits its new range, LEGO Friends, which is aimed at girls for helping them post a 24 per cent rise in interim operating profits in the first half of 2012 Reuters

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Video: Lego builds on bricks for girls

The holidays are crucial for retailers, particularly toy stores. The season can account for up to 40 per cent of annual sales.

CEO Jerry Storch told reporters during an event at its Time Square flagship that the company is entering the season with lean inventories and strong profit margins. He added the same thing he says every year: that Christmas will come and parents will buy their children toys, no matter the economy.

"I can't predict the economy, but the last thing parents cut back on is toys," he said.

In the biggest change, Toys R Us, based in Wayne, N.J., will offer a "hot toy" reservation system starting over the next few days – when the company announces its 50 products on its annual 'hot toy' list. The reservation system will run through the end of October.

Toys must be reserved in stores – in order to avoid online scammers, Mr. Storch said – and customers have to put down 20 per cent to reserve the toy.

Once reserved, customers will receive an e-mail notification when the order is available and have until Dec. 16 to pick it up in store. The idea is to help customers avoid a frantic last-minute search for hot toys – such as 2009's Zhu Zhu Pets stuffed hamsters and last year's Leapfrog LeapPad tablet – which often run out of stock later on in the season.

Services like the reservation program, and Toys R Us' layaway program and new ship-to-store program are important to draw customers into stores as Toys R U facing increasing competition from discounters and online retailers.

But at the event Wednesday Mr. Storch said the media overplays the danger of so-called "showrooming," where customers go into brick-and-mortar stores to browse wares but buy things cheaper online, and said that the best retailers will utilize both stores and e-commerce to reach consumers wherever there are.

"There's a narrative out there that facts don't support," he said, citing data from research firm NPD that showed Toys R Us gained more toy market share than mass merchants like Target Corp. and Wal-Mart Stores Inc. and online retailers such as Amazon.com Inc. combined during the January to July 2012 period.

While the privately held company did report a decline in revenue in stores open at least a year in its most recent quarter, that's solely due to weak video game sales – an industry-wide problem – rather than any "showrooming" effect, he said.

Mr. Storch said preorders for the Tabeo tablet, which was announced on Monday and comes out Oct. 21, have been strong but did not give specific figures.

The company is also increasing the products it sells under its Babies R Us brand. And it is adding more exclusive lines that can only be found at Toys R Us, including a line of clothing and baby products under Heidi Klum's name, debuting Saturday, and a line of Legos for 11– to 16 year olds called Technic, out in the fall.

Mr. Storch said Toys R Us plans to open 150 to 200 temporary stores, similar to the number it opened last year. Mr. Storch declined to comment on the level of seasonal hiring the company plans to make this year.

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Streetwise: MacDonald Dettwiler’s euphoric bubble pops

Since MacDonald Dettwiler struck its $875-million (U.S.) acquisition in late June, investors have treated the company like it was destined for greatness. In the two month span from the announcement date to late August, the stock popped 40 per cent, a rarity for the acquirer in a takeover.

But now it seems that investors have realized they may have been a bit overzealous – acquiring the satellite manufacturing subsidiary of Loral Space & Communications can only help so much. Or maybe those who rode the rise are taking some profits off the table. Either way, the stock is down about 10 per cent since peaking on August 24.

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This doesn't mean investors are turning their backs on Canada's treasured space company; the shares are still up big since the acquisition. But the drop is a reminder that future success isn't guaranteed.

First there is the issue of the subsidiary's latest results. Analyst Steven Li at Raymond James notes that for the six months just reported, earnings before interest taxes depreciation and amortization came in at $54-million, versus $75-million last year, as well as management's expectation of $150-million for the full year.

Mr. Li also notes that there is the chance of a cyclical downturn in satellite orders, which would obviously hurt a division that needs 4- to 5- orders a year to be profitable.

Plus, the acquisition still hasn't been blessed with the necessary regulatory approvals. Not that these should be a huge problem, but you just never know.

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U.S. incomes still shrinking

If American consumers still seem tapped out years after the recession's official end, new census figures help explain why.

Incomes are shrinking among middle earners in the world's largest economy. Real median household income fell 1.5 per cent last year from a year earlier to $50,054, the second straight annual drop.

It's not just a statistical blip. As of last year, Americans' real median household income was a full 8.1 per cent lower than in 2007, the year before the recent recession, the census numbers show.

The gap between the rich and the poor is growing too. Income inequality grew 1.6 per cent between last year and a year earlier – the first time its Gini index measure has shown an annual increase since 1993.

Poverty rates remained near record highs. Some 46.2 million people were living in poverty last year, little changed after three years of increases and at the highest level in more than half a century. That equates to 15 per cent of the population, or one in six Americans.

Politicians will no doubt seize on the latest numbers – in Mitt Romney's case, to show how weak the U.S. economy still is, and in Barack Obama's to show the American middle class needs targeted support.

The findings have clear implications for Canada, which relies on U.S. demand for the bulk of its exports. Today's figures show any real revival could be a long time coming.

Here are some other key census figures:

* Real median earnings of both men and women who worked full time, year-round fell 2.5 per cent between 2010 and 2011.

* The poverty rate last year for children under the age of 18 was 21.9 per cent.

* The weighted average poverty threshold for a family of four last year was $23,021.

* The portion of people without health insurance coverage fell to 15.7 per cent last year from 16.3 per cent. That amounts to 48.6 million without coverage in 2011.

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Bank profits are up, no thanks to lending

Canadian banks reported record profits in the most recent quarter despite an interest rate environment that is crippling the core business of lending across the globe.

Traditionally, banks have made the majority of their profits by "borrowing short and lending long." In 1995, for example, the major banks would borrow money in the market at levels close to the three month T-Bill rate of seven per cent and then lend it to clients at the ten year rate of 9.1 per cent. The accounting term for these profits is Net Interest Income.

In 1995, the 2.1 per cent difference (9.1 minus 7.0) between the short and long term rates resulted in significant returns. Currently, the spread has fallen to below 90 basis points and Net Interest Income has declined markedly as a component of total profits.

The chart above shows the relationship between interest rates and Net Interest Income for the domestic banking sector. Periods where the spread between short and long rates is larger correspond with high Net Income for the Banking sector.

It is no surprise that Canadian banks are increasingly diversifying away from the core lending business into underwriting, brokerage, real estate, insurance and other sources of revenue – the returns from basic lending are falling quickly. The longer interest rates and economic growth continue at current low levels, the more likely this trend will continue.

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SouthGobi lets go CEO after Chalco drops bid

SouthGobi Resources Ltd. dismissed chief executive officer Alexander Molyneux just more than a week after Aluminium Corp. of China Ltd. (Chalco) dropped a $926-million (U.S.) bid for the company that strained its relationship with the Mongolian government.

The coal miner named Ross Tromans, who was general manager marketing at Rio Tinto Coal Australia, as its new CEO.

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Miners march against Andrew Saffy Memorial Hospital discharging injured colleagues into police custody in Lonmin Platinum Mine near Rustenburg, South Africa, Tuesday, Sept. 11, 2012. Union rivalry is at the root of violent illegal strikes that have been troubling the mining industry that is the engine driving Africa's largest economy AP Photo

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Video: South Africa's mining crisis spreads

Mr. Tromans' appointment strengthens the company's links with global miner Rio Tinto Ltd.

SouthGobi's majority shareholder, Turquoise Hill Resources Ltd., formerly Ivanhoe Mines Ltd., is majority-owned by Rio Tinto and five directors with links to Rio joined the board in a shakeup a day after the Chalco deal collapsed.

SouthGobi, which is listed in Toronto and Hong Kong, did not give any reason for the termination of Mr. Molyneux, who had been at the helm since October, 2009. The company could not be immediately reached for comment.

"We are committed to operating SouthGobi and realizing Ovoot Tolgoi's production potential," said chairman Kay Priestly, referring to SouthGobi's flagship coal mine in Mongolia.

Mongolia, close to China and home to some of the world's biggest unexploited mineral deposits, is one of the hottest destinations for mining investment.

But the government is wary of the growing Chinese presence in the sector and suspended SouthGobi's mining licences following the bid by state-controlled Chalco.

SouthGobi said last month that operations at the Ovoot Tolgoi mine had been halted since June 30 and were not expected to resume in the third quarter.

Chalco dropped its bid for a majority stake in SouthGobi after meeting stiff political opposition in Mongolia, citing difficulty in gaining regulatory approvals.

"With the Chalco transaction, you had a deterioration of the relationship between the company and the Mongolian government," said Meredith Bandy, an analyst at BMO Capital Markets.

"Not that any one person is responsible for that, but if you shake up the management team, it may help," she said, referring to Mr. Molyneux's termination.

"You are seeing them switch out a lot of ... the management team with what used to be Ivanhoe people and now they are being replaced with Rio Tinto [people]," Ms. Bandy added.

"Rio Tinto is probably trying to clean up and sell the company. They are not the long-term holder."

SouthGobi said deputy chairman Sean Hinton would lead the company until Mr. Tromans's appointment is confirmed by the board.

SouthGobi's shares, which have fallen 19 per cent since Chalco dropped the bid last week, rose more than 7 per cent to $2.34 (Canadian) on the Toronto Stock Exchange on Wednesday.

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Pupils in GCSE grade 'border war'

11 September 2012 Last updated at 12:53 ET By Sean Coughlan BBC News education correspondent

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Welsh Education Minister Leighton Andrews: Pupils "need to know where they stand"

Pupils in England who took the disputed GCSE English exam could end up with a lower grade for exactly the same work as their counterparts in Wales.

This follows an order from the Welsh government to regrade GCSEs in Wales.

The WJEC exam board says it is being told to raise GCSE grades in Wales while keeping them down in England.

The exam board says it wants conflicting regulators, Ofqual and the Welsh government, to find a more "coherent and rational way forward".

Head teachers earlier told the education select committee that many schools had been angered by what they thought had been unfair GCSE English results.

But Glenys Stacey, head of Ofqual, told the education select committee that she rejected claims of any unfair manipulation of results or suggestion of political interference.

'Difficult and unexpected'

"We played our proper part," she told the investigation into this summer's controversial GCSE exam grades - and ruled out any further change in grades in England.

But the Welsh exam board, WJEC, has been ordered by the education minister in Wales to regrade the results in the disputed English exam - a requirement that would only apply to pupils in exam centres in Wales.

Continue reading the main story

• Issues with GCSE English grading emerged as results reached schools last month
• Heads suggested the exams had been marked over-harshly after Ofqual told exam boards to keep an eye on grade inflation
• Exam boards told reporters grade boundaries had changed significantly mid-way through the year
• Alterations were as much as 10 marks
• Heads complained pupils who sat GCSE English in the winter might have got a lower mark had they sat it in the summer
• Their unions called for an investigation and some mentioned legal action
• Ofqual held a short inquiry but refused to order regrading

Welsh Education Minister Leighton Andrews said on Tuesday that pupils should not have to "live with the consequences of having been awarded what, in all likelihood, is the wrong GCSE grade" - and promised "swift resolution of injustice".

This places the exam board - which has more candidates in England than Wales - in what it calls a "difficult and unexpected position".

"We now find one regulator confirming that the decision made was correct, and another asking us to re-grade, reversing the previous joint decision," says a spokesman for the WJEC exam board - which is believed to be the second biggest provider in the UK for this exam.

This would mean that within the common currency of the GCSE, there could be different levels of awards for the same piece of work from the same exam board, depending on whether the exam was taken in Wales or England.

The select committee had also been told by Ofqual that there had been concerns that pupils in Wales were performing at a lower level than in England - and that this had caused difficulties in setting grades with the WJEC exam board.

This confusion over the value of GCSEs comes against a background in which Education Secretary Michael Gove is preparing to overhaul the GCSE system for pupils in England.

'Major flaws'

On Tuesday morning, MPs on the education select committee had heard accusations from head teachers' leader Brian Lightman that there had been "major flaws" in this year's GCSE English grades.

Mike Griffiths, head of Northampton School for Boys, told the select committee that the unreliability of the results in his school showed that "Ofqual failed to maintain standards".

Pupils who were given a D grade rather than the expected C grade could mean that difference between staying on at school or dropping out and becoming a Neet, said Kenny Fredericks, head of George Green's School in east London.

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Brian Lightman: "Implementation of new examination was deeply flawed"

Mr Lightman, leader of the Association of School and College Leaders, told MPs that he believed that the exam grades for pupils taking the English GCSE in the summer had been been forced downwards in an attempt to balance an "over-generous" marking in January - in a way that was unfair for individual students.

But Ms Stacey defended Ofqual's role in ensuring that the grades awarded for exams accurately reflected the level of achievement.

She said there had been many "significant unknowns" in changes to modules of the GCSE English exam, which had to be resolved in the final awarding of grades.

Ofqual says that the June grade boundaries were set at the right level, but has acknowledged there was a problem with the January boundaries - and it has continued to refuse to order exam boards to regrade this year's exams.

Before the committee took evidence, the Times Educational Supplement published letters revealing the pressure put on one of England's largest exam boards, Edexcel to change its grade boundaries - in a way that prevented a rise in grades.

Ms Stacey told the select committee that if the exam board had not complied, she would have used her powers to force them to change the grades.

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US win means the world - Murray

Andy Murray says his US Open win "means the world" and that he is relieved to have ended Britain's long search for another male Grand Slam champion.

The Scot, 25, beat Novak Djokovic in five sets to claim his first major.

"It is what I have been working towards for the last 10 years of my life," Murray told BBC Sport in New York. "It means the world to me."

Analysis

"Andy Murray's nerve-mangling, history-making US Open triumph over Novak Djokovic was many things: one of the great finals of the modern era, a late-night thriller from the city that never sleeps, a breath-taking demonstration of physical strength and mental fortitude. It was also the perfect bookend to a few months that British sport can scarcely believe and will never forget."

The last British man to win a Grand Slam title was Fred Perry, who won the US Open in 1936, 76 years ago.

Murray has long been tipped to emulate Perry, who won eight majors, but had lost in his four previous Grand Slam finals.

He finally ended his barren run at the fifth attempt, beating defending champion and world number two Djokovic 7-6 (12-10) 7-5 2-6 3-6 6-2 in a contest at Flushing Meadows that lasted almost five hours.

"I think everyone is in a little bit of shock that it has happened," said Murray, speaking to the media after his win. "I've seen my mum after I've lost Slam finals and she has been really upset. Everyone's really happy.

"It is hard to explain. It has been a long, long journey to this point, so I don't know if it is disbelief or whatever, but I am very, very happy on the inside. I'm sorry if I'm not showing it as you would like."

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Asked what it felt like to end Britain's lengthy wait for a male Grand Slam winner, Murray replied: "I've been reminded of that most days of my life for the last few years. It's great to have finally done it and I don't need to get asked that anymore."

Murray said the disappointment of losing to Roger Federer in the Wimbledon final in July was tough to take but added he was proud of the way he had reacted, beating Federer to win Olympic gold last month and now Djokovic to win his first major.

"To come back in the next Grand Slam and to win it in a five-set match against Djokovic on a hard court - he hasn't lost for a couple of years on a hard court in a Grand Slam - is unbelievable," said Murray.

Sir Alex Ferguson on Andy Murray's US Open win

"I'm really proud for the boy. That was a real test of a champion for me. I love watching tennis. It was more nerve-wracking than a Premier League match. I'm usually in control of my own situation but I wasn't in control tonight."

He said it would have been hard to recover had he lost a fifth major final.

"I'm very, very happy to come through," he said. "If I had lost this one from two sets up, it would have been tough to take."

Asked what had been the key to success at Flushing Meadows, Murray said: "I have kept improving.

"I have worked hard all the time, even after the tough losses. I have had a fairly solid team around me as well for a long time."

He also credited coach Ivan Lendl after teaming up with the former world number one and eight-time Grand Slam winner in January.

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Murray can win more slams - Henman

"Having Ivan Lendl around has definitely helped, not just me but the rest of the team as well, having someone of his experience, especially in these situations," said Murray.

"He's got his name on that trophy three times and made the final eight times in a row. It really helps having him around."

Murray said he also hoped his win "inspires some kids to play tennis" and "takes away the notion that British tennis players choke or don't win".

He also insisted British tennis was "in a good place right now" and praised the achievements of Laura Robson, with whom he won Olympic silver in the mixed doubles, and junior Liam Broady.

"Laura's done very well, the Olympics was great for us and Liam Broady was in the final here in the juniors," said Murray. "I hope it stays that way."

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