McGraw-Hill Reports 4th Quarter And Full-year 2012 Results

          McGraw-Hill Reports 4th Quarter And Full-year 2012 Results

McGraw-Hill Education Reclassified to Discontinued Operations in Anticipation
of the Sale Closing in the 1st Quarter

McGraw Hill Financial Revenue Increased 22% in the 4th Quarter and 13% for the
Full Year

Diluted EPS from Continuing Operations Increased 80% to $0.67 in the 4th
Quarter and 19% to $2.37 for the Full Year

Adjusted Diluted EPS from Continuing Operations Increased 56% to $0.72 in the
4th Quarter and 32% to $2.75 for the Full Year, Creating a Baseline for Future
Comparisons

Introduces 2013 Adjusted Diluted EPS Guidance for McGraw Hill Financial of
$3.10 to $3.20, an Increase of Approximately 15% Versus Comparable 2012 EPS of
$2.75

PR Newswire

NEW YORK, Feb. 12, 2013

NEW YORK, Feb. 12, 2013 /PRNewswire-FirstCall/ --The McGraw-Hill Companies
(NYSE: MHP) today reported fourth quarter and full-year 2012 results. Because
of the pending sale of McGraw-Hill Education, this business has been
reclassified as a discontinued operation and its results are excluded from
continuing operations. In addition, in anticipation of the formation of
McGraw Hill Financial and the first full year of operation of the S&P Dow
Jones Indices joint venture, the Company is reporting S&P Capital IQ and S&P
Dow Jones Indices as distinct business segments beginning this quarter.

McGraw Hill Financial:
The Company reported fourth quarter 2012 revenue of $1,226 million, an
increase of 22% compared to the same period last year. Net income and diluted
earnings per share from continuing operations were $190 million and $0.67,
respectively. For the full year, revenue increased 13% to $4,450 million and
net income and diluted earnings per share from continuing operations were $676
million and $2.37, respectively.

Excluding the impact of one-time costs related to the Growth and Value Plan,
and a gain from modifications to the vacation policy, adjusted net income from
continuing operations increased 52% to $205 million, and adjusted diluted
earnings per share from continuing operations increased 56% to $0.72. For the
full year, adjusted net income from continuing operations increased 24% to
$783 million and adjusted diluted earnings per share from continuing
operations increased 32% to $2.75.

"As we approach the successful completion of the Growth and Value Plan, I
could not be more pleased with the execution of the Plan and the value it has
unlocked for shareholders," said Harold McGraw III, chairman, president, and
chief executive officer of The McGraw-Hill Companies. He continued, "The sale
of McGraw-Hill Education is anticipated in the first quarter. Now we reflect
on the tremendous opportunity both McGraw Hill Financial and McGraw-Hill
Education have before them. In 2012, McGraw Hill Financial delivered 13%
revenue growth and 32% diluted adjusted EPS from continuing operations
growth. This performance demonstrates the growth potential of McGraw Hill
Financial, with its market-leading positions providing essential intelligence
to its customers."

The Outlook: The Company reported full-year 2012 revenue of $4,450 million
and adjusted diluted EPS from continuing operations of $2.75. "This creates a
baseline at McGraw Hill Financial for future comparisons," said Mr. McGraw.
He added, "We are introducing 2013 revenue guidance of high single-digit
growth and adjusted diluted EPS guidance of $3.10 to $3.20, approximately a
15% increase. This new company has the capability to deliver more pronounced
growth for our shareholders and employees."

The Growth and Value Plan has delivered:

  oSeparation: The sale of McGraw-Hill Education to Apollo Global Management
    was the cornerstone of the Growth and Value Plan. Its sale will be the
    culmination of this transformative initiative.
  oGrowth Investments: Focusing on innovative products and technologies, the
    Company executed several investments in 2012. The most visible has been
    the formation of the S&P Dow Jones Indices joint venture which combines
    some of the most widely followed and trusted brands in the index space.
    In addition, the Company completed acquisitions of QuantHouse, R^2
    Financial Technologies, Credit Market Analysis Limited, Coalition
    Development Ltd., and Kingsman SA.
  oCost Reductions: The Company approached $175 million in run-rate cost
    reductions exceeding its commitment of at least $100 million by the end of
    2012. The principal elements of the cost reduction programs included
    select headcount reductions; the migration of numerous accounting work
    streams, human resource processes, and selected information technology
    support services to world-class partners that specialize in these
    operations; and redesigning the employee benefits plans, including a
    freeze of the U.S. pension plans. Approximately two-thirds of the savings
    benefited McGraw-Hill Education. The McGraw Hill Financial savings were
    partially offset by the impact of certain stranded costs driven by
    separation.
  oReturn of Capital: During 2011 and 2012, the Company returned $3.1 billion
    to shareholders. Aggregate share repurchases totaled approximately $1.8
    billion. In addition, the Company distributed approximately $600 million
    in regular dividends and approximately $700 million through a special
    dividend of $2.50 per share paid in December 2012.

Standard & Poor's Ratings Services: Driven by the continued low interest rate
environment and elevated levels of refinancing activity, fourth quarter 2012
revenue increased 34% to $584 million and operating profit increased 67% to
$246 million. Adjusted operating profit increased 63% to $254 million in the
fourth quarter compared to a relatively weak fourth quarter in 2011. The
adjusted operating profit margin increased to 43.6% in the quarter.

2012 revenue increased 15% to $2,034 million. Operating profit increased 18%
to $849 million. Adjusted operating profit increased 19% to $865 million
compared to 2011. For 2012, the adjusted operating profit margin
increased130 basis points to 42.5%.

Transaction revenue increased 97% to $292 million during the quarter, compared
to what was a relatively weak period last year, and was driven by a doubling
of U.S. corporate issuance and a 74% increase in European corporate issuance.
Worldwide structured issuance decreased 4%. U.S. structured finance issuance
increased 104% off a small base and was driven by strength in commercial
mortgage-backed securities, asset-backed securities, and collateralized loan
obligations. The growth was offset by a 45% decline in European structured
finance issuance due to a decrease in residential mortgage-backed securities
and covered bond activity.

Non-transaction revenue increased 2% in the fourth quarter and represented 50%
of Standard & Poor's Ratings' total revenue compared to 66% for the same
period last year.

Domestic revenue increased 46% in the fourth quarter, outpacing a 23% increase
in international revenue. Foreign exchange rates negatively impacted
international revenue by $4 million. International revenue represented 46% of
Standard & Poor's Ratings' total fourth quarter revenue.

S&P Capital IQ: Revenue increased 8% to $290 million in the fourth quarter of
2012. Organic growth accounted for 5% and new revenue from the acquisitions
of QuantHouse, R^2 Financial Technologies, and Credit Market Analysis Limited
accounted for the balance. Quarterly operating profit decreased 10% to $48
million. Adjusted operating profit decreased 1% to $53 million.

Full-year 2012 revenue increased 9% to $1,124 million. Organic growth
accounted for 7% and new revenue from the acquisitions of QuantHouse, R^2
Financial Technologies, and Credit Market Analysis Limited accounted for the
balance. Operating profit decreased 3% to $208 million. Adjusted operating
profit increased 6% to $228 million.

The business enjoyed high single-digit adjusted operating profit in the first
half of the year. In the second half of the year, profits declined modestly
as the acquisitions were supplemented with additional investments to further
develop the newly acquired technologies into innovative products and services.

Two key offerings, S&P Capital IQ (within Desktop Solutions) and Global Data
Solutions (within Enterprise Solutions), both delivered solid growth despite
continued layoffs within the financial industry. TheMarkets.com is being
successfully integrated into S&P Capital IQ's platform and users are migrating
to S&P Capital IQ service. Collectively, the number of S&P Capital IQ users
increased 7% over the past year to more than 71,000.

S&P Dow Jones Indices: Revenue increased 38% to $110 million in the fourth
quarter of 2012. Excluding the revenue associated with theDow Jones Indexes,
revenue increased 5% to $84 million. Quarterly operating profit increased 48%
to $64 million.Adjusted operating profit attributable to the Company
increased 16% to $50 million.

2012 revenue increased 20% to $388 million.Excluding the revenue associated
with the Dow Jones Indexes, full-year revenue increased 3% to $332 million.
Operating profit increased 12% to $212 million. Adjusted operating profit
attributable to the Company increased 5% to $198 million.

Because the S&P Dow Jones Indices joint venture is a majority-owned entity,
100% of its revenue and expenses are consolidated into the Company's financial
statements. In accordance with U.S. GAAP, 27% of the net income that is not
owned by the Company is removed from the Company's income statement in the
"net income attributable to noncontrolling interests" line.

Assets under management in exchange-traded funds based on S&P's indices
increased 28% to $402 billion at the end of the fourth quarter. Including the
Dow Jones Indexes, assets under management increased 27% to $466 billion.
This was driven by record industry inflow of $191 billion into ETFs in the
quarter.

The revenue benefit of increased assets under management was partially offset
by a 12% decline in the average daily volume of exchange-traded derivative
contracts based on S&P's indices, as well as a 27% decline in over-the-counter
derivative revenue due to concerns among European banks with credit risk and
the general economic slowdown.

Commodities & Commercial Markets: Revenue increased 9% to $260 million and
operating profit increased 31% to $54 million in the fourth quarter of 2012.
Adjusted operating profit increased by 27% to $59 million in the fourth
quarter, compared to the same period last year.

For 2012, revenue increased 9% to $973 million. Operating profit increased
38% to $248 million. Adjusted operating profit increased by 40% to $260
million.

Platts topped off an already strong year with 15% revenue growth at
Commodities to $129 million for the fourth quarter. Petroleum product
subscriptions, licensing of its price assessments to derivative exchanges, and
metals products and services all contributed to their double-digit growth.

Commercial Markets' revenue increased 4% for the quarter as a record year at
J.D. Power and Associates was offset by a modest decline at Construction.

DOJ Lawsuit: The Company believes the Department of Justice civil lawsuit
filed last week is entirely without factual or legal merit and that the
Company has very strong defenses against this and all pending litigation. S&P
has a record of successfully defending these types of cases, with 41 cases
dismissed outright or voluntarily withdrawn.

The DOJ lawsuit disregards the central fact that S&P'sCDO ratings were made
in good faith through its committee-based system and were fully consistent
with the views of many other institutions at the time, including U.S.
Government officials who in 2007 publicly stated that problems in the subprime
market appeared to be contained.

The cherry-picked emails, selectively chosen from 20 million emails and
documents, do not disprove this central fact. They display a culture of
vigorous debate but not of wrongdoing. Claims that S&P deliberately kept
ratings high when it knew they should be lower are simply not true as an
objective assessment of all of the evidence will prove.

The DOJ also cites the fact that S&P personnel discussed proposed rating
criteria with market participants although, under certain recent regulations,
S&P is required to do just that.

The fact is, before 2007, and increasingly during 2007, S&P downgraded a
record number of U.S. residential mortgage-backed securities (RMBS) and
repeatedly warned of deteriorating conditions in the housing market and
potential downgrades to come. (See list of published documents from this time
on website listed below.) Between February and July of 2007 alone, S&P took
637 negative actions on ratings on 2006 vintage subprime RMBS. S&P downgraded
more underlying U.S. RMBS than any other rating agency and did so sooner — a
year and a half before the Lehman bankruptcy. These negative rating actions
had a direct and automatic impact on S&P's CDO ratings. If the RMBS that was
put on CreditWatch, or downgraded, was in a CDO, or was being considered for a
new CDO, S&P's CDO rating took that negative status into account and required
additional protection for the CDO.

Unfortunately, these actions turned out to be insufficient in anticipating
theseverity of the housing crisis that ultimately came to pass.However, the
Company does not believe the Department of Justice can prove that this failure
— common to nearly everyone at the time — was the product of intentional
misconduct by anyone at S&P.

Additional information is available at www.standardandpoors.com/response

Unallocated Expense: Unallocated expense includes corporate functions and
centrally managed costs. Adjusted unallocated expense increased 7% to $62
million in the fourth quarter, largely driven by increased incentives.

Non-GAAP Adjustments to Continuing Operations: During the fourth quarter,
there were $77 million of one-time charges related to the Growth and Value
Plan, which includes restructuring charges. Approximately $44 million was
related to professional fees and approximately $29 million was related to
restructuring actions. Also during the quarter, the vacation policy was
changed resulting in a $52 million gain. These items are excluded from the
adjusted results.

Return of Capital: During 2012, share repurchases totaled approximately $300
million, regular quarterly dividends totaled approximately $300 million, and
the Company paid approximately $700 million for a special dividend of $2.50
per share in December.

In 2013, the Company anticipates continuing its share repurchase program,
subject to market conditions, once the funds from the sale of McGraw-Hill
Education are received. As a reminder, the Company currently has 16.9 million
shares remaining under the existing authorization from the Board of Directors.
The 2013 EPS guidance includes a positive impact from this anticipated share
repurchase activity.

Balance Sheet and Cash Flow: Cash and short-term investments at the end of
the fourth quarter were $761 million, down from $864 million at the end of
2011. During the fourth quarter the Company paid down approximately $400
million of 5.375% Senior Notes and paid the special dividend. To help fund
these transactions, the Company utilized its commercial paper program and had
$457 million outstanding at year end. 2012 free cash flow from continuing
operations (see exhibits 3 and 11) was $626 million, a decrease of $183
million from the same period in 2011. This was due primarily to the one-time
costs associated with the Growth and Value Plan and a $150 million fourth
quarter pension contribution.

The McGraw-Hill Companies:

Discontinued Operations: With the pending sale of the McGraw-Hill Education
business, the results were classified as a discontinued operation. Net loss
from discontinued operations in the fourth quarter and full year were $(406)
million and $(239) million, respectively. These losses include intangible
asset impairments of $497 million that consisted of goodwill, prepublication
investment, and inventory assets at McGraw-Hill Education's School Education
Group. Adjusted net income from discontinued operations for the fourth
quarter and full year were $9 million and $196 million, respectively.

On a consolidated basis, which includes McGraw Hill Financial and McGraw-Hill
Education, adjusted diluted earnings per share for the fourth quarter and the
full year were $0.75 and $3.44, respectively. This exceeded the Company's
most recent 2012 guidance of $3.35 to $3.40 per share.

Comparison of Adjusted Information to U.S. GAAP Information: Adjusted diluted
earnings per share, adjusted diluted earnings per share from continuing
operations, adjusted net income, adjusted operating profit, adjusted
unallocated expense and free cash flow are non-GAAP financial measures
contained in this earnings release that are derived from the Company's
continuing operations. This information is provided in order to allow
investors to make meaningful comparisons of the Company's operating
performance between periods and to view the Company's business from the same
perspective as Company management. These non-GAAP measures may be different
than similar measures used by other companies. Reconciliations for the
differences between non-GAAP measures used in this earnings release and
comparable financial measures calculated in accordance with U.S. GAAP are
attached as Exhibits 5, 11, 12, and 13.

Conference Call/Webcast Details: The Company's senior management will review
the fourth quarter and year-end earnings results on a conference call
scheduled for this morning, February12, at 8:30 a.m. Eastern Time. This call
is open to all interested parties. Discussions may include forward-looking
information. Additional information presented on the conference call may be
made available on the Company's Investor Relations Website at
http://www.mcgraw-hill.com/investor_relations.

The Webcast will be available live and in replay at
http://investor.mcgraw-hill.com/phoenix.zhtml?c=96562&p=irol-EventDetails&EventId=4892269.
(Please copy and paste URL into Web browser.)

Telephone access is available. Domestic participants may call (888) 391-6568;
international participants may call +1 (415) 228-4733 (long distance charges
will apply). The passcode is "3044525" and the conference leader is Harold
McGraw III. A recorded telephone replay will be available approximately two
hours after the meeting concludes and will remain available until March 12,
2013. Domestic participants may call (888) 383-2997; international
participants may call +1 (203) 369-0378 (long distance charges will apply).
No passcode is required.

The forward-looking statements in this news release involve risks and
uncertainties and are subject to change based on various important factors,
including worldwide economic, financial, liquidity, political and regulatory
conditions; the health of debt (including U.S. residential mortgage-backed
securities and collateralized debt obligations) and equity markets, including
possible future interest rate changes; the health of the economy; the
successful marketing of competitive products; and the effect of competitive
products and pricing.

In addition, there are certain risks and uncertainties relating to our
previously announced Growth and Value Plan which contemplates a separation of
our education business, including, but not limited to, the impact and possible
disruption to our operations, the timing and certainty of completing the
transaction, unanticipated developments that may delay or negatively impact
the transaction, and the ability of each business to operate as an independent
entity upon completion of the transaction.

About The McGraw-Hill Companies:
The McGraw-Hill Companies (NYSE: MHP), a financial intelligence and education
company, signed an agreement to sell its McGraw-Hill Education business to
investment funds affiliated with Apollo Global Management, LLC in November
2012. Following the sale closing, expected in early 2013, the Company will be
renamed McGraw Hill Financial (subject to shareholder approval) and will be a
powerhouse in benchmarks, content and analytics for the global capital and
commodity markets. The Company's leading brands will include: Standard &
Poor's, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL Ltd., J.D. Power
and Associates, McGraw-Hill Construction and Aviation Week. The Company will
have approximately 17,000 employees in more than 30 countries. Additional
information is available at www.mcgraw-hill.com

Investor Relations: http://www.mcgraw-hill.com/investor_relations 

Get news direct from McGraw-Hill via RSS:
http://investor.mcgraw-hill.com/phoenix.zhtml?c=96562&p=newsRSS

Release issued: February 12, 2013

* * *

Contacts for The McGraw-Hill Companies:

Investor Relations:
Chip Merritt
Vice President, Investor Relations
(212) 512-4321 (office)
chip_merritt@mcgraw-hill.com

News Media:
Jason Feuchtwanger
Director, Corporate Media Relations
(212) 512-3151 (office)
jason_feuchtwanger@mcgraw-hill.com



Exhibit 1

The McGraw-Hill Companies
Condensed Consolidated Statements of Income
Periods ended December31, 2012 and 2011

(dollars in millions, except per share data)

(unaudited)       Three Months                  Twelve Months
                   2012       2011      %        2012        2011      %
                                        Change                         Change
Revenue            $ 1,226    $ 1,004   22%      $ 4,450     $ 3,954   13%
Expenses           931        804       16%      3,291       2,890     14%
Other income       52         —         N/M      52          13        N/M
Operating profit   347        200       74%      1,211       1,077     12%
Interest expense,  18         19        (3)%     81          77        4%
net
Income before      329        181       82%      1,130       1,000     13%
taxes on income
Provision for      118        68        74%      404         374       8%
taxes on income
Income from
continuing         211        113       86%      726         626       16%
operations
(Loss) income
from discontinued  (404)      108       N/M      (234)       308       N/M
operations
Net (loss) income  (193)      221       N/M      492         934       (47)%
Less: net income
attributable to
noncontrolling     (21)       (5)       N/M      (50)        (19)      N/M
interests -
continuing
Less: net income
attributable to
noncontrolling     (2)        (2)       55%      (5)         (4)       6%
interests -
discontinued
Net (loss) income
attributable to    $ (216)    $ 214     N/M      $ 437       $ 911     (52)%
The McGraw-Hill
Companies, Inc.
Amounts
attributable to
The McGraw-Hill
Companies, Inc.
common
shareholders:
Income from
continuing         $ 190      $ 108     76%      $ 676       $ 607     11%
operations
(Loss) income
from discontinued  (406)      106       N/M      (239)       304       N/M
operations
Net (loss) income  $ (216)    $ 214     N/M      $ 437       $ 911     (52)%
Earnings per
share
attributable to
The McGraw-Hill
Companies, Inc.
common
shareholders:
Basic:
Income from
continuing         $ 0.68     $ 0.38    81%      $ 2.43      $ 2.03    19%
operations
(Loss) income
from discontinued    (1.46)   0.37      N/M      (0.86)      1.02      N/M
operations
Net (loss) income  $ (0.78)   $ 0.75    N/M      $ 1.57      $ 3.05    (49)%
Diluted:
Income from
continuing         $ 0.67     $ 0.37    80%      $ 2.37      $ 2.00    19%
operations
(Loss) income
from discontinued    (1.43)   0.36      N/M        (0.84)    1.00      N/M
operations
Net (loss) income  $ (0.76)   $ 0.73    N/M      $ 1.53      $ 3.00    (49)%
Dividend per       $ 0.255    $ 0.25    2%       $ 1.02      $ 1.00    2%
common share
Special dividend   $ 2.50     $ —       N/M      $ 2.50      $ —       N/M
per common share
Average number of
common shares
outstanding:
Basic              277.9      286.2              278.6       298.1
Diluted            284.7      292.4              284.6       303.6

N/M - not meaningful

Note - % change in the tables throughout the exhibits are calculated off of
the actual number, not the rounded number presented.



Exhibit 2

The McGraw-Hill Companies
Condensed Consolidated Balance Sheets
December31, 2012 and 2011

(dollars in millions)

(unaudited)                                               2012       2011
Assets:
Cash and short-term investments                           $ 761      $ 864
Other current assets                                      1,198      940
Assets held for sale (a)                                  1,940      2,508
Total current assets                                      3,899      4,312
Property and equipment, net                               368        373
Goodwill and other intangible assets, net (b)             2,519      1,531
Other non-current assets                                  266        404
Total assets                                              $ 7,052    $ 6,620
Liabilities and Equity:
Short-term debt                                           457        400
Unearned revenue                                          1,229      1,187
Liabilities held for sale (a)                             664        719
Other current liabilities                                 1,317      1,063
Long-term debt                                            799        798
Pension, other postretirement benefits and other          936        869
non-current liabilities
Total liabilities                                         5,402      5,036
Redeemable noncontrolling interest (b)                    810        —
Total equity                                              840        1,584
Total liabilities and equity                              $ 7,052    $ 6,620

(a) Includes McGraw-Hill Education as of December 31, 2012 and 2011.

(b) Includes the impact of the S&P Dow Jones Indices LLC joint venture.



Exhibit 3

The McGraw-Hill Companies
Condensed Consolidated Statements of Cash Flows
Years ended December31, 2012 and 2011

(dollars in millions)

(unaudited)                                                 2012     2011
Operating Activities:
Net income from continuing operations                       $ 726    $  626
Adjustments to reconcile income from continuing operations
to cash provided by operating activities from continuing
operations:
Depreciation (including amortization of technology          93       93
projects)
Amortization of intangibles                                 48       33
Stock-based compensation                                    93       77
Other                                                       101      73
Net changes in operating assets and liabilities             (314)    22
Cash provided by operating activities from continuing       747      924
operations
Investing Activities:
Capital expenditures                                        (97)     (92)
Acquisitions, net of cash acquired                          (177)    (194)
Other                                                       27       15
Cash used for investing activities from continuing          (247)    (271)
operations
Financing Activities:
Additions to short-term debt                                457      —
Payments of senior notes                                    (400)    —
Dividends paid to shareholders                              (984)    (296)
Dividends and other payments paid to noncontrolling         (24)     (23)
interests
Repurchase of treasury shares                               (295)    (1,500)
Exercise of stock options and other                         341      159
Cash used for financing activities from continuing          (905)    (1,660)
operations
Effect of exchange rate changes on cash from continuing     5        (10)
operations
Cash used for continuing operations                         (400)    (1,017)
Cash provided by discontinued operations                    325      436
 Net change in cash and equivalents                     (75)     (581)
 Cash and equivalents at beginning of year              835      1,416
 Cash and equivalents at end of year                    $ 760    $  835



Exhibit 4

The McGraw-Hill Companies
Operating Results by Segment
Periods ended December31, 2012 and 2011

(dollars in millions)

(unaudited)

                 Three Months                   Twelve Months
                  Revenue                        Revenue
                  2012      2011      % Change   2012      2011      % Change
S&P Ratings       $ 584     $ 434     34%        $ 2,034   $ 1,767   15%
S&P Capital IQ    290       268       8%         1,124     1,031     9%
^1
S&P Dow Jones     110       80        38%        388       323       20%
Indices ^1
Commodities &     260       239       9%         973       896       9%
Commercial
Intersegment      (18)      (17)      (6)%       (69)      (63)      (9)%
Elimination
Total revenue     $ 1,226   $ 1,004   22%        $ 4,450   $ 3,954   13%
                  Segment Expenses               Segment Expenses
                  2012      2011      % Change   2012      2011      % Change
S&P Ratings       $ 338     $ 287     18%        $ 1,185   $ 1,047   13%
S&P Capital IQ    242       214       13%        916       817       12%
S&P Dow Jones     46        37        24%        176       134       31%
Indices
Commodities &     206       198       4%         725       716       1%
Commercial
Intersegment      (18)      (17)      (6)%       (69)      (63)      (9)%
Elimination
Total segment     $ 814     $ 719     13%        $ 2,933   $ 2,651   11%
expenses
                  Operating Profit               Operating Profit
                  2012      2011      % Change   2012      2011      % Change
S&P Ratings       $ 246     $ 147     67%        $ 849     $ 720     18%
S&P Capital IQ    48        54        (10)%      208       214       (3)%
S&P Dow Jones     64        43        48%        212       189       12%
Indices
Commodities &     54        41        31%        248       180       38%
Commercial
Total operating   412       285       44%        1,517     1,303     16%
segments
Unallocated       (65)      (85)      (24)%      (306)     (226)     36%
expense ^2
Total operating   $ 347     $ 200     74%        $ 1,211   $ 1,077   12%
profit

^1 ^  As a result of our joint venture between CME Group and Dow Jones &
Company, Inc., to form a new company, S&P Dow Jones Indices, LLC and how we
are managing this company, we have separated our previously reported S&P
Capital IQ / S&P Indices segment into two separate reportable segments.

^2 Includes an increase for costs that were previously allocated to
McGraw-Hill Education, such as costs for centralized departments, that could
not be classified as discontinued operations due to the nature of the expense.
Also includes Growth and Value Plan related costs necessary to enable
separation and reduce our cost structure, which primarily includes
professional fees and restructuring charges; and for 2012, unallocated expense
includes $52 million related to a vacation accrual reversal in the fourth
quarter.



Exhibit 5

The McGraw-Hill Companies
Operating Results by Segment - Reported vs. Performance
Periods ended December31, 2012 and 2011

(dollars in millions)

(unaudited)   2012                                   2011                                   % Change
              Reported   Non-GAAP      Performance   Reported  Non-GAAP      Performance    Reported  Performance
                         Adjustments                           Adjustments
             Three Months
S&P Ratings   $ 246      $   8       a $   254       $  147    $   9       b $   156        67%       63%
S&P Capital   48         5           a 53            54        —             54             (10)%     (1)%
IQ
S&P Dow
Jones         64         3           a 67            43        —             43             48%       56%
Indices
Commodities   54         6           a 59            41        6           b 47             31%       27%
& Commercial
Segment
operating     412        22            433           285       15            300            44%       45%
profit
Unallocated   (65)       3           a (62)          (85)      27          b (58)           (24)%     7%
expense 
Operating     347        25            371           200       42            242            74%       54%
profit
Interest
expense, net  18         —             18            19        —             19             (3)%      (3)%

Income
before taxes  329        25            353           181       42            223            82%       59%
on income
Provision
for taxes on  118        9             126           68        15            83             74%       52%
income
Income from
continuing    211        16            227           113       27            140            86%       62%
operations
Income from
discontinued  (404)      415         c 11            108       22          b 129            N/M       (91)%
operations
Net income    (193)      431           238           221       49            270            N/M       (12)%
Less: NCI
net income -  (21)       (1)           (22)          (5)       —             (5)            N/M       N/M
continuing
Less: NCI
net income -  (2)        —             (2)           (2)       —             (2)            55%       55%
discontinued
Net income -  $ 190      $   15        $   205       $  108    $   27        $   135        76%       52%
continuing
Net income -  $ (406)    $   415       $   9         $  106    $   22        $   127        N/M       (92)%
discontinued
Net income
attributable  $ (216)    $   430       $   214       $  214    $   49        $   263        N/M       (19)%
to MHP
Diluted EPS   $ 0.67     $   0.05      $   0.72      $  0.37   $   0.09      $   0.46       81%       56%
- continuing
Diluted EPS   $ (0.76)   $   1.51      $   0.75      $  0.73   $   0.17      $   0.90       N/M       (16)%
- total
             Twelve Months
S&P Ratings   $ 849      $   16      a $   865       $  720    $   9       b $   728        18%       19%
S&P Capital   208        20          a 228           214       —             214            (3)%      6%
IQ
S&P Dow
Jones         212        22          a 234           189       —             189            12%       24%
Indices
Commodities   248        12          a 260           180       6           b 186            38%       40%
& Commercial
Segment
operating     1,517      70            1,587         1,303     15            1,317          16%       21%
profit
Unallocated   (306)      104         a (202)         (226)     27          b (198)          36%       2%
expense 
Operating     1,211      174           1,385         1,077     42            1,119          12%       24%
profit
Interest
expense, net  81         —             81            77        —             77             4%        4%

Income
before taxes  1,130      174           1,304         1,000     42            1,042          13%       25%
on income
Provision
for taxes on  404        65            469           374       15            389            8%        21%
income
Income from
continuing    726        109           835           626       27            653            16%       28%
operations
Income from
discontinued  (234)      435           201           308       21          b 329            N/M       (39)%
operations
Net income    492        544           1,036         934       48            982            (47)%     5%
Less: NCI
net income -  (50)       (2)           (52)          (19)      —             (19)           N/M       N/M
continuing
Less: NCI
net income -  (5)        —             (5)           (4)       —             (4)            6%        6%
discontinued
Net income -  $ 676      $   107       $   783       $  607    $   27        $   634        11%       24%
continuing
Net income -  $ (239)    $   435     c $   196       $  304    $   21        $   325        N/M       (40)%
discontinued
Net income
attributable  $ 437      $   542       $   979       $  911    $   48        $   959        (52)%     2%
to MHP
Diluted EPS   $ 2.37     $   0.38      $   2.75      $  2.00   $   0.09      $   2.09       19%       32%
- continuing
Diluted EPS   $ 1.53     $   1.91      $   3.44      $  3.00   $   0.16      $   3.16    d  (49)%     9%
- total

N/M - not meaningful

Note - Totals presented may not sum across due to rounding.

a Includes Growth and Value Plan related costs necessary to enable separation
and reduce our cost structure, which primarily includes professional fees and
restructuring charges. Unallocated expense also includes $52 million related
to a vacation accrual reversal. S&P Dow Jones Indices also includes
transaction costs associated with our S&P Dow Jones Indices LLC joint venture.

b Includes restructuring charges and $10 million of Growth and Value Plan
costs within unallocated expense.

c Includes intangible asset impairments, restructuring charges, transaction
costs for legal and professional fees related to the sale of McGraw-Hill
Education, partially offset by a vacation reversal.

d Includes a $0.25 gain for the sale of the Broadcasting Group in December
2011; excluding this gain, diluted EPS was $2.91.



Exhibit 6

The McGraw-Hill Companies
McGraw Hill Financial
Periods ended December31, 2012 and 2011

(dollars in millions)

Subscription / Non-Transaction vs. Non-Subscription / Transaction Revenue

(unaudited)                             2012       2011       % Change
Three Months
Subscription / Non-transaction revenue  $ 741      $ 690      7%
Non-subscription / Transaction revenue  485        314        54%
Total McGraw Hill Financial             $ 1,226    $ 1,004    22%
Twelve Months
Subscription / Non-transaction revenue  $ 2,855    $ 2,672    7%
Non-subscription / Transaction revenue  1,595      1,282      24%
Total McGraw Hill Financial             $ 4,450    $ 3,954    13%

Domestic vs. International Revenue

(unaudited)                  2012       2011       % Change
Three Months
Domestic revenue             $ 736      $ 594      24%
International revenue        490        410        20%
Total McGraw Hill Financial  $ 1,226    $ 1,004    22%
Twelve Months
Domestic revenue             $ 2,684    $ 2,373    13%
International revenue        1,766      1,581      12%
Total McGraw Hill Financial  $ 4,450    $ 3,954    13%



Exhibit 7

The McGraw-Hill Companies
Standard & Poor's Ratings
Periods ended December31, 2012 and 2011

(dollars in millions)

Transaction vs. Non-Transaction Revenue

(unaudited)                      2012       2011       % Change
Three Months
Transaction revenue (a)          $ 292      $ 148      97%
Non-transaction revenue (b) (c)  292        286        2%
Total Standard & Poor's Ratings  $ 584      $ 434      34%
Twelve Months
Transaction revenue              $ 903      $ 651      39%
Non-transaction revenue          1,131      1,116      1%
Total Standard & Poor's Ratings  $ 2,034    $ 1,767    15%

(a) Revenue related to ratings of publicly-issued debt, bank loan ratings
and corporate credit estimates.

(b) Revenue primarily related to annual fees for frequent issuer programs
and surveillance.

(c) Includes intersegment royalty revenue from S&P Capital IQ of $18 million
and $69 million for the three and twelve months ended December31, 2012,
respectively and $17 million and $63 million for the three and twelve months
ended December31, 2011, respectively.



Domestic vs. International Revenue

(unaudited)                      2012       2011       % Change
Three Months
Domestic revenue                 $ 318      $ 218      46%
International revenue            266        216        23%
Total Standard & Poor's Ratings  $ 584      $ 434      34%
Twelve Months
Domestic revenue                 $ 1,102    $ 910      21%
International revenue            932        857        9%
Total Standard & Poor's Ratings  $ 2,034    $ 1,767    15%



Exhibit 8

The McGraw-Hill Companies
S&P Capital IQ
Periods ended December31, 2012 and 2011

(dollars in millions)

Subscription vs. Non-Subscription Revenue

(unaudited)                   2012       2011       % Change
Three Months
Subscription revenue (a)      $ 260      $ 238      9%
Non-subscription revenue (b)  30         30         —%
Total S&P Capital IQ          $ 290      $ 268      8%
Twelve Months
Subscription revenue          $ 1,014    $ 922      10%
Non-subscription revenue      110        109        1%
Total S&P Capital IQ          $ 1,124    $ 1,031    9%

(a) Revenue related to credit ratings-related information products, S&P
Capital IQ platform, investment research products and other data
subscriptions.

(b) Revenue related to certain advisory, pricing and analytical services.



Domestic vs. International Revenue

(unaudited)            2012       2011       % Change
Three Months
Domestic revenue       $ 190      $ 178      7%
International revenue  99         90         11%
Total S&P Capital IQ   $ 290      $ 268      8%
Twelve Months
Domestic revenue       $ 749      $ 693      8%
International revenue  375        338        11%
Total S&P Capital IQ   $ 1,124    $ 1,031    9%



Exhibit 9

The McGraw-Hill Companies
S&P Dow Jones Indices
Periods ended December31, 2012 and 2011

(dollars in millions)

Subscription vs. Non-Subscription Revenue

(unaudited)                   2012     2011     % Change
Three Months
Subscription revenue (a)      $ 26     $ 18     43%
Non-subscription revenue (b)  84       62       36%
Total S&P Dow Jones Indices   $ 110    $ 80     38%
Twelve Months
Subscription revenue          87       71       22%
Non-subscription revenue      301      252      19%
Total S&P Dow Jones Indices   $ 388    $ 323    20%

(a) Revenue related to data subscriptions, which support index fund
management, portfolio analytics and research.

(b) Revenue related to fees based on assets underlying exchange-traded
funds, as well as certain advisory, pricing and analytical services.



Domestic vs. International Revenue

(unaudited)                  2012     2011     % Change
Three Months
Domestic revenue             $ 87     $ 59     47%
International revenue        23       21       12%
Total S&P Dow Jones Indices  $ 110    $ 80     38%
Twelve Months
Domestic revenue             $ 301    $ 248    21%
International revenue        87       75       16%
Total S&P Dow Jones Indices  $ 388    $ 323    20%



Exhibit 10

TheMcGraw-Hill Companies
Commodities & Commercial
Periods ended December31, 2012 and 2011

(dollars in millions)

Commodities & Commercial Revenue

(unaudited)                     2012     2011     % Change
Three Months
Commodities                     $ 129    $ 113    15%
Commercial                      131      126      4%
Total Commodities & Commercial  $ 260    $ 239    9%
Twelve Months
Commodities                     $ 489    $ 419    17%
Commercial                      484      477      1%
Total Commodities & Commercial  $ 973    $ 896    9%



Subscription vs. Non-Subscription Revenue

(unaudited)                     2012     2011     % Change
Three Months
Subscription revenue (a)        $ 163    $ 148    10%
Non-subscription revenue (b)    97       91       7%
Total Commodities & Commercial  $ 260    $ 239    9%
Twelve Months
Subscription revenue            $ 622    $ 562    11%
Non-subscription revenue        351      334      5%
Total Commodities & Commercial  $ 973    $ 896    9%

(a) Revenue related to Platts real-time news, market data and price
assessments, along with other print and digital information products primarily
serving the energy, automotive, construction, aerospace and defense markets.

(b) Revenue related to syndicated and proprietary research studies,
advertising, consulting engagements and events.

Domestic vs. International Revenue

(unaudited)                     2012     2011     % Change
Three Months
Domestic revenue                $ 148    $ 146    1%
International revenue           112      93       21%
Total Commodities & Commercial  $ 260    $ 239    9%
Twelve Months
Domestic revenue                $ 563    $ 551    2%
International revenue           410      345      19%
Total Commodities & Commercial  $ 973    $ 896    9%



Exhibit 11

The McGraw-Hill Companies
Non-GAAP Financial Information
Periods ended December31, 2012 and 2011

(dollars in millions)

Computation of Free Cash Flow

(unaudited)                                                    Twelve Months
                                                               2012    2011
Cash provided by operating activities                          $ 747   $ 924
Capital expenditures                                           (97)    (92)
Dividends and other payments paid to noncontrolling interests  (24)    (23)
Free cash flow from continuing operations                      $ 626   $ 809



Adjusted S&P Capital IQ Revenue for Acquisitions

(unaudited)           Three Months               Twelve Months
                      2012    2011    % Change   2012      2011      % Change
S&P Capital IQ        $ 290   $ 268   8%         $ 1,124   $ 1,031   9%
Acquisitions (R^2,    (9)     —                  (22)      —
QuantHouse, CMA)
Adjusted S&P Capital  $ 281   $ 268   5%         $ 1,102   $ 1,031   7%
IQ



Adjusted S&P Dow Jones Indices Revenue

(unaudited)                Three Months              Twelve Months
                           2012    2011   % Change   2012    2011    % Change
S&P Dow Jones Indices      $ 110   $ 80   38%        $ 388   $ 323   20%
Dow Jones Indices          (26)    —                 (56)    —
Adjusted S&P Dow Jones     $ 84    $ 80   5%         $ 332   $ 323   3%
Indices



Adjusted S&P Dow Jones Indices Net Operating Profit

(unaudited)   2012                                 2011       % Change
              Reported  Non-GAAP     Performance   Reported   Reported  Performance
                        Adjustments
             Three Months
Operating     $  64     $   3        $   67        $  43      48%       56%
profit
Income
attributable  16        1            17            —
to NCI
Net
operating     $  48     $   2        $   50        $  43      12%       16%
profit
             Twelve Months
Operating     $  212    $   22       $   234       $  189     12%       24%
profit
Income
attributable  34        2            36            —
to NCI
Net
operating     $  178    $   20       $   198       $  189     (6)%      5%
profit



Exhibit 12

The McGraw-Hill Companies
Recasted S&P Capital IQ and S&P Dow Jones Indices Operating Profit - Reported
/ Performance
Periods ended December31, 2012 and 2011

(dollars in millions)

 (unaudited)                        2012
Reported (GAAP)                     Operating Profit
                                    Q1      Q2      Q3      Q4      Full Year
S&P Capital IQ                      $ 62    $ 58    $ 40    $ 48    $  208
S&P Dow Jones Indices               45      42      61      64      $  212
 Total S&P Capital IQ / S&P         $ 107   $ 100   $ 101   $ 112   $  420
 Indices
Performance (Adjusted)              Operating Profit
                                    Q1      Q2 ^1   Q3 ^2   Q4 ^2   FY
S&P Capital IQ                      $ 62    $ 59    $ 54    $ 53    $  228
S&P Dow Jones Indices               45      56      65      67      $  234
 Total S&P Capital IQ / S&P         $ 107   $ 115   $ 119   $ 120   $  462
 Indices

^1  Q2 excludes transaction costs associated with our S&P Dow Jones Indices,
LLC joint venture.

^2  Q3 and Q4 exclude restructuring charges.



 (unaudited)                         2011
Reported & Performance               Operating Profit
                                     Q1     Q2     Q3      Q4     Full Year
S&P Capital IQ                       $ 52   $ 50   $ 59    $ 54   $  214
S&P Dow Jones Indices                44     48     54      43     $  189
 Total S&P Capital IQ / S&P Indices  $ 96   $ 98   $ 113   $ 97   $  403

Note - Totals presented may not sum due to rounding.



Exhibit 13

The McGraw-Hill Companies
Recasted Financial Information for Continuing Operations
Periods ended December31, 2012 and 2011

(dollars in millions)

(unaudited)   2012
              Q1                 Q2                 Q3                 Q4                  Full Year
              Reported Adjusted  Reported Adjusted  Reported Adjusted  Reported  Adjusted  Reported Adjusted
Revenue       $ 1,035  $ 1,035   $ 1,072  $ 1,072   $ 1,116  $ 1,116   $ 1,226   $ 1,226   $ 4,450  $ 4,450
Income
(loss) from   $ 163    $ 182     $ 180    $ 204     $ 172    $ 223     $ 211     $ 227     $ 726    $ 835
continuing
operations
Income
(loss) from   $ (36)   $ (33)    $ 40     $ 43      $ 165    $ 180     $ (404)   $ 11      $ (234)  $ 201
discontinued
operations
Net income    $ 128    $ 148     $ 220    $ 247     $ 337    $ 402     $ (193)   $ 238     $ 492    $ 1,036
Net income
attributable
to MHP:
Income
(loss) from   $ 158    $ 176     $ 176    $ 200     $ 151    $ 201     $ 190     $ 205     $ 676    $ 783
continuing
operations
Income
(loss) from   (35)     (32)      39       43        162      177       (406)     9         (239)    196
discontinued
operations
Net income    $ 123    $ 144     $ 216    $ 243     $ 314    $ 378     $ (216)   $ 214     $ 437    $ 979
Basic
earnings per
share:
Continuing    $ 0.57   $ 0.64    $ 0.63   $ 0.72    $ 0.54   $ 0.72    $      $      $ 2.43   $   
operations                                                              0.68     0.74              2.81
Discontinued  (0.13)   (0.12)    0.14     0.15      0.58     0.64      (1.46)    0.03      (0.86)   0.70
operations
Net Income    $ 0.44   $ 0.52    $ 0.77   $ 0.87    $ 1.12   $ 1.36    $ (0.78)  $ 0.77    $ 1.57   $ 3.51
Diluted
earnings per
share:
Continuing    $ 0.56   $ 0.62    $ 0.62   $ 0.70    $ 0.53   $ 0.71    $ 0.67    $ 0.72    $ 2.37   $ 2.75
operations
Discontinued  (0.13)   (0.11)    0.14     0.15      0.57     0.62      (1.43)    0.03      (0.84)   0.69
operations
Net Income    $ 0.43   $ 0.51    $ 0.76   $ 0.85    $ 1.10   $ 1.33    $ (0.76)  $ 0.75    $ 1.53   $ 3.44



(unaudited)   2011
              Q1                 Q2                 Q3                 Q4                 Full Year
              Reported Adjusted  Reported Adjusted  Reported Adjusted  Reported Adjusted  Reported Adjusted
Revenue       $  959   $  959    $ 1,020  $ 1,020   $  971   $  971    $ 1,004  $ 1,004   $ 3,954  $ 3,954
Income
(loss) from   $  165   $  165    $ 181    $ 181     $  167   $  167    $ 113    $ 140     $ 626    $ 653
continuing
operations
Income
(loss) from   $  (41)  $  (41)   $ 34     $ 34      $  207   $  207    $ 108    $ 129     $ 308    $ 329
discontinued
operations
Net income    $  124   $  124    $ 216    $ 216     $  374   $  374    $ 221    $ 270     $ 934    $ 982
Net income
attributable
to MHP:
Income
(loss) from   $  160   $  160    $ 177    $ 177     $  161   $  161    $ 108    $ 135     $ 607    $ 634
continuing
operations
Income
(loss) from   (40)     (40)      34       34        205      205       106      127       304      325
discontinued
operations
Net income    $  120   $  120    $ 211    $ 211     $  366   $  366    $ 214    $ 263     $ 911    $ 959
Basic
earnings per
share:
Continuing    $  0.52  $  0.53   $ 0.59   $ 0.59    $  0.54  $  0.54   $ 0.38   $ 0.47    $ 2.03   $ 2.13
operations
Discontinued  (0.13)   (0.14)    0.11     0.11      0.69     0.69      0.37     0.45      1.02     1.09
operations
Net Income    $  0.39  $  0.39   $ 0.70   $ 0.70    $  1.23  $  1.23   $ 0.75   $ 0.92    $ 3.05   $ 3.22
Diluted
earnings per
share:
Continuing    $  0.52  $  0.52   $ 0.57   $ 0.57    $  0.53  $  0.53   $ 0.37   $ 0.46    $ 2.00   $ 2.09
operations
Discontinued  (0.13)   (0.13)    0.11     0.11      0.67     0.67      0.36     0.44      1.00     1.07
operations
Net Income    $  0.39  $  0.39   $ 0.68   $ 0.68    $  1.20  $  1.20   $ 0.73   $ 0.90    $ 3.00   $ 3.16

Note - Totals presented may not sum due to rounding.



SOURCE The McGraw-Hill Companies

Website: http://www.mcgraw-hill.com
 
Press spacebar to pause and continue. Press esc to stop.