McGraw Hill Financial Reports 2nd Quarter Results

Revenue Increased 17% (13% Organic)

Diluted EPS from Continuing Operations Increased 46% to $0.90

Adjusted Diluted EPS from Continuing Operations Increased 31% to $0.92

Adjusted Diluted EPS Guidance Increased to a Range of $3.15 to $3.25

CEO Transition Underway

Sale of Aviation Week Announced

25 Jul, 2013, 07:10 ET from McGraw Hill Financial

NEW YORK, July 25, 2013 /PRNewswire-FirstCall/ -- McGraw Hill Financial, Inc. (NYSE: MHFI) today reported second quarter 2013 results with revenue of $1.25 billion, an increase of 17% compared to the same period last year.  Net income and diluted earnings per share from continuing operations were $250 million and $0.90, respectively. 

Excluding the impact of one-time costs related to the Growth and Value Plan, adjusted net income from continuing operations increased 28% to $257 million, and adjusted diluted earnings per share from continuing operations increased 31% to $0.92

"Our second quarter results topped strong first quarter performance, contributing to a great first half for this new Company," said Harold McGraw III, Chairman, President, and Chief Executive Officer of McGraw Hill Financial.  "The exceptional growth that the Company reported is a testament to the strength of our benchmark brands, our focus on cost control, and the benefit of returning cash to shareholders through meaningful share repurchases."  He continued, "Over the years I have worked to upgrade our portfolio of assets and drive meaningful shareholder return to our investors.  With the Board of Directors' selection of Doug Peterson as my successor to be the Company's next President and CEO, I am confident that Doug will continue to build this great Company while rewarding our shareholders.  Doug is a talented leader with deep industry knowledge, regulatory experience, and most importantly, unquestionable integrity."

The Outlook:  2013 adjusted earnings per share guidance is increased to a range of $3.15 to $3.25 from $3.10 to $3.20.  While the Company expects global issuance to remain generally robust, markets may demonstrate volatility due in part to evolving expectations for interest rates.  In addition, investors should note that comparisons to prior year results become more difficult in the second half of the year.

Standard & Poor's Ratings Services:  Quarterly revenue increased 24% to $599 million compared to 2Q 2012, driven by strength in corporate issuance and bank loan ratings as well as continued recovery in U.S. structured finance issuance.  Operating profit increased 34% to $277 million, driving a 300-plus basis point improvement in operating profit margin to 46%.  

Transaction revenue grew 41% to $287 million compared to the same period last year.  This was driven by a 31% increase in worldwide corporate issuance, an 85% increase in high-yield issuance, and strong bank loan ratings.  In addition, U.S. structured finance continued to show improvement with a 12% increase in issuance driven by substantial growth in commercial mortgage-backed securities (CMBS) and collateralized debt obligations (primarily collateralized loan obligations).  Weakness in European structured finance continued due to lower-cost alternative solutions, such as the Bank of England's Funding for Lending Scheme.

During the quarter, non-transaction revenue increased 12% and represented 52% of Standard & Poor's Ratings' total revenue compared to 58% for the same period last year.  Excluding the acquisition of Coalition, non-transaction revenue grew 9.9%.  Non-transaction growth was driven primarily by entity credit ratings and ratings evaluation services, a telling sign that corporations that have either not issued debt or are contemplating capital structure changes could enter the bond market.  In addition, a change in the structure of the billing of surveillance fees had a positive contribution to year-over-year growth.

Domestic revenue increased 23%, consistent with a 25% increase in international revenue. Foreign exchange rates had a negligible impact on revenue. International revenue represented 46% of Standard & Poor's Ratings' total second quarter revenue.

Tender for CRISIL Shares:  On July 24, the Company initiated a voluntary tender offer for up to 15.7 million shares of CRISIL Limited, a publicly traded company in India.  The tender will close on August 6.  If the tender is fully subscribed, the Company's ownership in CRISIL will increase from approximately 53% to 75%.

S&P Capital IQ:  Revenue increased 3% to $287 million in the second quarter of 2013.  The revenue benefit from recent acquisitions was offset by the wind down of several small products.  Adjusted operating profit decreased 7% to $55 million due to continued investment in the expansion of products, content, and technology.

Among the benefits resulting from this investment was the creation of a new Portfolio Risk Solution, which was launched in June.  This product delivers the only real-time, multi-asset portfolio risk system that enables internal and external collaboration, click-through transparency, and seamless access to the broad range of reference data and functionality offered within the Capital IQ Desktop.

Two key products, Capital IQ Desktop and RatingsXpress® led the organic revenue growth.  With the successful integration of TheMarkets.com, the new combined number of Capital IQ Desktop users increased 16% over the past year to more than 54,000.  When large enterprise accounts with broad-tiered pricing are excluded, the user growth was mid-single digit.

S&P Capital IQ's international revenue increased by 2% to $97 million in the second quarter and represented 34% of the segment's total revenue.

S&P Dow Jones Indices:  Revenue increased 39% to $123 million in the second quarter of 2013.  Excluding the revenue associated with the Dow Jones Indexes, revenue increased 6% to $94 million.  Quarterly operating profit increased 43% to $80 million. McGraw Hill Financial's share of the operating profit increased 6% to $60 million.

Assets under management in exchange-traded funds based on the S&P Dow Jones Indices reached $546 billion at the end of the quarter.  Excluding the Dow Jones Indexes, quarter-ending assets under management increased 34% to $469 billion.  Trading volume of exchange-traded derivatives, excluding the Dow Jones Indexes, increased 11%.   

Revenue growth was partially mitigated by declines in revenue from mutual funds and modest growth in the data subscription business. 

Commodities & Commercial Markets:  Revenue increased 8% to $259 million. Operating profit increased by 16% to $83 million in the second quarter, compared to the same period last year.

Platts continued to deliver steady revenue growth, delivering a 14% increase to $137 million for the period.  Petroleum, petrochemicals, metals, and agriculture all delivered double-digit growth.  Within petroleum, licensing revenue from global trading services grew more than 50%.

Commercial Markets' revenue increased 2%. J.D. Power delivered mid single-digit growth primarily from its strong Asian auto business. Aviation Week delivered high single-digit growth, primarily from the MRO Americas Show and the biennial Paris Air Show that took place in 2Q 2013.

Sale of Aviation Week: Yesterday, the Company announced a definitive agreement to sell Aviation Week to Penton. The sale continues the execution of the Company's strategy of exiting non-core assets while investing in high-growth, high-margin benchmark businesses. We expect the transaction to close shortly.

DOJ Lawsuit:  On July 16, the Federal District Court in California issued a decision denying our motion to dismiss the Complaint.  The Court's decision was not on the merits of the case as the Court was required at this preliminary stage to accept as true all the factual allegations from the Complaint.  As the case proceeds, the Company will have the opportunity to demonstrate the independence of our ratings and the lack of merit to the Department of Justice's Complaint. 

State Attorneys General Actions:  In June, the Judicial Panel on Multidistrict Litigation (JPML) transferred most of the pending State AG actions to a single Federal Judge in Manhattan.  The Court will decide whether the State AG actions were properly removed to Federal Court.  Oral argument on this issue is scheduled to be held on October 4.

Unallocated Expense:  Unallocated expense includes corporate functions and centrally managed costs.  Adjusted unallocated expense increased by 4% to $49 million in the second quarter.

Non-GAAP Adjustments to Continuing Operations:  During the second quarter, approximately $10 million of pre-tax items were excluded from the adjusted results.  These were Growth and Value Plan costs related to professional fees and outsourcing.  These costs decreased from $24 million in the second quarter of 2012.

Share Repurchase:  The Company initiated a $500 million accelerated share repurchase transaction on March 25.  This plan will be completed this week and we will receive 0.7 million shares, bringing the total shares repurchased under the Accelerated Share Repurchase program to 9.3 million shares.  The Company now has approximately 7.6 million shares remaining under the existing authorization from the Board of Directors and expects to continue share repurchases under this authorization.

Balance Sheet and Cash Flow:  Cash and equivalents at the end of the second quarter were $1.9 billion, up from $760 million at the end of 2012.  In the first half of the year, free cash flow from continuing operations was $145 million, a decrease of $32 million from the same period in 2012. The decline was impacted by legal settlements and the timing of tax payments.

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 and 8.

Conference Call/Webcast Details:  The Company's senior management will review the second quarter earnings results on a conference call scheduled for this morning, July 25, 2013, 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://investor.mhfi.com.

The Webcast will be available live and in replay at http://investor.mhfi.com/phoenix.zhtml?c=96562&p=irol-EventDetails&EventId=4985594.  (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 "McGraw Hill" 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 August 25, 2013.  Domestic participants may call (800) 925-0608; international participants may call +1 (402) 220-3037 (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.

About McGraw Hill Financial:  McGraw Hill Financial is a leading financial intelligence company providing the global capital and commodity markets with independent benchmarks, credit ratings, portfolio and enterprise risk solutions, and analytics. The Company's iconic brands include:  Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power, and McGraw Hill Construction. The Company has approximately 17,000 employees in 27 countries. Additional information is available at www.mhfi.com

Investor Relations:  http://investor.mhfi.com

Get news direct from McGraw Hill Financial via RSS: http://investor.mhfi.com/phoenix.zhtml?c=96562&p=rssSubscription&t=&id=&

Release issued:  July 25, 2013

***

Contact:

Investor Relations: Chip Merritt Vice President, Investor Relations (212) 512-4321 (office) chip.merritt@mhfi.com  

News Media: Jason Feuchtwanger Director, Corporate Media Relations (212) 512-3151 (office) jason.feuchtwanger@mhfi.com

 

Exhibit 1

 

McGraw Hill Financial Condensed Consolidated Statements of Income Three and six months ended June 30, 2013 and 2012 (dollars in millions, except per share data)

(unaudited)

Three Months

Six Months

2013

2012

% Change

2013

2012

% Change

Revenue

$

1,250

$

1,072

17%

$

2,431

$

2,108

15%

Expenses

814

764

6%

1,717

1,518

13%

Operating profit

436

308

42%

714

590

21%

Interest expense, net

16

21

(24)%

31

42

(26)%

Income from continuing operations before taxes on income

420

287

46%

683

548

25%

Provision for taxes on income

147

107

37%

236

205

15%

Income from continuing operations

273

180

52%

447

343

30%

Income (loss) from discontinued operations

4

40

(91)%

(27)

4

N/M

Gain on sale of discontinued operations

N/M

612

N/M

Discontinued operations, net of tax

4

40

(91)%

585

4

N/M

Net income

277

220

26%

1,032

347

N/M

Less: net income attributable to noncontrolling interests - continuing

(23)

(3)

N/M

(44)

(8)

N/M

Less: net (income) loss attributable to noncontrolling interests - discontinued

(1)

N/M

1

N/M

Net income attributable to McGraw Hill Financial, Inc.

$

254

$

216

18%

$

989

$

339

N/M

Amounts attributable to McGraw Hill Financial, Inc. common shareholders:

Income from continuing operations

$

250

$

177

42%

$

403

$

335

20%

Income from discontinued operations

4

39

(91)%

586

4

N/M

Net income

$

254

$

216

18%

$

989

$

339

N/M

Earnings per share attributable to McGraw Hill Financial, Inc. common shareholders:

Income from continuing operations:

Basic

$

0.91

$

0.63

45%

$

1.45

$

1.20

21%

Diluted

$

0.90

$

0.62

46%

$

1.43

$

1.18

22%

Income from discontinued operations:

Basic

$

0.01

$

0.14

(90)%

$

2.11

$

0.02

N/M

Diluted

$

0.01

$

0.14

(90)%

$

2.08

$

0.01

N/M

Net income:

Basic

$

0.93

$

0.77

20%

$

3.57

$

1.22

N/M

Diluted

$

0.91

$

0.76

21%

$

3.52

$

1.19

N/M

Average number of common shares outstanding:

Basic

274.3

279.7

277.4

278.9

Diluted

278.3

285.3

281.3

284.5

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

 

McGraw Hill Financial Condensed Consolidated Balance Sheets June 30, 2013 and December 31, 2012 (dollars in millions)

(unaudited)

June 30,

December 31,

2013

2012

Assets:

Cash and equivalents

$

1,900

$

760

Other current assets

1,207

1,199

Assets held for sale (a)

1,940

Total current assets

3,107

3,899

Property and equipment, net

340

368

Goodwill and other intangible assets, net

2,469

2,519

Other non-current assets

244

266

Total assets

$

6,160

$

7,052

Liabilities and Equity:

Short-term debt

$

$

457

Unearned revenue

1,284

1,229

Other current liabilities

1,111

1,317

Liabilities held for sale (a)

664

Long-term debt

799

799

Pension, other postretirement benefits and other non-current liabilities

885

936

Total liabilities

4,079

5,402

Redeemable noncontrolling interest

810

810

Total equity

1,271

840

Total liabilities and equity

$

6,160

$

7,052

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

 

 

Exhibit 3

 

McGraw Hill Financial Condensed Consolidated Statements of Cash Flows Six months ended June 30, 2013 and 2012 (dollars in millions)

(unaudited)

2013

2012

Operating Activities:

Net income from continuing operations

$

447

$

343

Adjustments to reconcile income from operations to cash provided by operating activities from continuing operations:

Depreciation (including amortization of technology projects)

45

45

Amortization of intangibles

25

20

Stock-based compensation

47

40

Other

27

30

Net changes in operating assets and liabilities

(365)

(259)

Cash provided by operating activities from continuing operations

226

219

Investing Activities:

Capital expenditures

(43)

(36)

Acquisitions, net of cash acquired

(148)

Changes in short-term investments

26

Cash used for investing activities from continuing operations

(43)

(158)

Financing Activities:

Repayments of short-term debt, net

(457)

Dividends paid to shareholders

(156)

(145)

Dividends and other payments paid to noncontrolling interests

(38)

(6)

Repurchase of treasury shares

(500)

Exercise of stock options and other

107

141

Cash used for financing activities from continuing operations

(1,044)

(10)

Effect of exchange rate changes on cash from continuing operations

(36)

(5)

Cash (used for) provided by continuing operations

(897)

46

Cash provided by (used for) discontinued operations

2,037

(144)

Net change in cash and equivalents

1,140

(98)

Cash and equivalents at beginning of period

760

835

Cash and equivalents at end of period

$

1,900

$

737

 

 

Exhibit 4

 

McGraw Hill Financial Operating Results by Segment Three and six months ended June 30, 2013 and 2012 (dollars in millions)

(unaudited)

Three Months

Six Months

Revenue

Revenue

2013

2012

% Change

2013

2012

% Change

S&P Ratings

$

599

$

483

24%

$

1,161

$

949

22%

S&P Capital IQ

287

277

3%

575

551

4%

S&P Dow Jones Indices

123

89

39%

238

168

42%

Commodities & Commercial Markets

259

240

8%

496

474

5%

Intersegment Elimination

(18)

(17)

(9)%

(39)

(34)

(13)%

Total revenue

$

1,250

$

1,072

17%

$

2,431

$

2,108

15%

Segment Expenses

Segment Expenses

2013

2012

% Change

2013

2012

% Change

S&P Ratings

$

322

$

275

17%

$

625

$

555

13%

S&P Capital IQ

232

219

6%

464

431

8%

S&P Dow Jones Indices

43

47

(8)%

91

81

12%

Commodities & Commercial Markets

176

169

4%

351

339

4%

Intersegment Elimination

(18)

(17)

(9)%

(39)

(34)

(13)%

Total segment expenses

$

755

$

693

9%

$

1,492

$

1,372

9%

Operating Profit

Operating Profit

2013

2012

% Change

2013

2012

% Change

S&P Ratings

$

277

$

208

34%

$

536

$

394

36%

S&P Capital IQ

55

58

(6)%

111

120

(8)%

S&P Dow Jones Indices

80

42

92%

147

87

68%

Commodities & Commercial Markets

83

71

16%

145

135

8%

Total operating segments

495

379

31%

939

736

28%

Unallocated expense

(59)

(71)

(17)%

(225)

(146)

54%

Total operating profit

$

436

$

308

42%

$

714

$

590

21%

 

 

Exhibit 5

 

McGraw Hill Financial Operating Results by Segment - Reported vs. Performance Three and six months ended June 30, 2013 and 2012 (dollars in millions, except per share amounts)

(unaudited)

2013

2012

% Change

Reported

Non-GAAP Adjustments

Performance

Reported

Non-GAAP Adjustments

Performance

Reported

Performance

Three Months

S&P Ratings

$

277

$

$

277

$

208

$

$

208

34%

34%

S&P Capital IQ

55

55

58

1

59

(6)%

(7)%

S&P Dow Jones Indices

80

80

42

14

c

56

92%

43%

Commodities & Commercial Markets

83

83

71

71

16%

16%

Segment operating profit

495

495

379

15

394

31%

26%

Unallocated expense  

(59)

10

a

(49)

(71)

24

b

(47)

(17)%

4%

Operating profit

436

10

446

308

39

347

42%

29%

Interest expense, net  

16

16

21

21

(24)%

(24)%

Income before taxes on income

420

10

430

287

39

326

46%

32%

Provision for taxes on income

147

3

150

107

15

122

37%

22%

Income from continuing operations

273

7

280

180

24

204

52%

37%

Income from discontinued operations

4

(4)

40

(40)

(91)%

N/M

Net income

277

3

280

220

(16)

204

26%

37%

Less: NCI net income - continuing

(23)

(23)

(3)

(3)

N/M

N/M

Less: NCI net income - discontinued

(1)

1

N/M

N/M

Net income - continuing

250

7

257

177

24

201

42%

28%

Net income - discontinued

4

(4)

39

(39)

(91)%

N/M

Net income attributable to MHFI

$

254

$

3

$

257

$

216

$

(16)

$

200

18%

29%

Diluted EPS - continuing

$

0.90

$

0.02

$

0.92

$

0.62

$

0.08

$

0.70

46%

31%

Diluted EPS - total

$

0.91

$

0.01

$

0.92

$

0.76

$

(0.06)

$

0.70

21%

32%

Six Months

S&P Ratings

$

536

$

$

536

$

394

$

$

394

36%

36%

S&P Capital IQ

111

111

120

1

121

(8)%

(8)%

S&P Dow Jones Indices

147

147

87

14

c

101

68%

45%

Commodities & Commercial Markets

145

145

135

135

8%

7%

Segment operating profit

939

939

736

15

751

28%

25%

Unallocated expense  

(225)

131

a

(94)

(146)

53

b

(93)

54%

1%

Operating profit

714

131

845

590

68

658

21%

28%

Interest expense, net  

31

31

42

42

(26)%

(26)%

Income before taxes on income

683

131

814

548

68

616

25%

32%

Provision for taxes on income

236

49

285

205

26

231

15%

22%

Income from continuing operations

447

82

529

343

42

385

30%

37%

Income from discontinued operations

585

(585)

4

(4)

N/M

N/M

Net income

1,032

(503)

529

347

38

385

N/M

37%

Less: NCI net income - continuing

(44)

(44)

(8)

(8)

N/M

N/M

Less: NCI net loss - discontinued

1

(1)

N/M

N/M

Net income - continuing

403

82

485

335

42

377

21%

29%

Net income - discontinued

586

(586)

4

(4)

N/M

N/M

Net income attributable to MHFI

$

989

$

(504)

$

485

$

339

$

38

$

377

N/M

29%

Diluted EPS - continuing

$

1.43

$

0.29

$

1.72

$

1.18

$

0.15

$

1.32

22%

30%

Diluted EPS - total

$

3.52

$

(1.79)

$

1.72

$

1.19

$

0.13

$

1.32

N/M

30%

N/M - not meaningful

Note - Totals presented may not sum due to rounding

(a)    Includes remaining costs from the completion of our Growth and Value Plan necessary to enable the separation of MHE, which primarily includes professional fees and other non-recurring costs. The six months also includes pre-tax legal settlements of approximately $77 million.

(b)   Includes Growth and Value Plan related costs necessary to enable the separation of MHE and reduce our cost structure, which primarily includes professional fees and severance charges, and for the six months also includes a charge related to a reduction in our lease commitments.

(c)    Transaction costs associated with our S&P Dow Jones LLC joint venture.

 

 

Exhibit 6

 

McGraw Hill Financial Subscription / Non-Transaction vs. Non-Subscription / Transaction Revenue Three and six months ended June 30, 2013 and 2012

(dollars in millions)

(unaudited)

Subscription / Non-Transaction

Non-Subscription / Transaction

2013

2012

% Change

2013

2012

% Change

Three Months

S&P Ratings (a)

$

312

$

280

12%

$

287

$

203

41%

S&P Capital IQ (b)

260

251

4%

27

26

2%

S&P Dow Jones Indices (c)

26

19

40%

97

70

38%

Commodities Markets(d)

123

109

12%

14

11

28%

Commercial Markets (e)

38

38

—%

84

82

3%

Intersegment elimination

(18)

(17)

9%

Total

$

741

$

680

9%

$

509

$

392

30%

Six Months

S&P Ratings (a)

$

610

$

552

10%

$

551

$

397

39%

S&P Capital IQ (b)

520

498

4%

55

53

4%

S&P Dow Jones Indices (c)

51

37

38%

187

131

43%

Commodities Markets(d)

242

219

11%

25

20

23%

Commercial Markets (e)

76

76

—%

153

159

(4)%

Intersegment elimination

(39)

(34)

13%

Total

$

1,460

$

1,348

8%

$

971

$

760

28%

(a)    Non-transaction revenue is primarily related to annual fees for frequent issuer programs and surveillance, while transaction revenue is related to ratings of publicly-issued debt, bank loan ratings and corporate credit estimates. Non-transaction revenue also includes an intersegment revenue elimination, which mainly consists of the royalty of $18 million and $35 million for the three and six months ended June 30, 2013, respectively, and $17 million and $34 million for three and six months ended June 30, 2012, respectively, charged to S&P Capital IQ for the rights to use and distribute content and data developed by S&P Ratings.

(b)   Subscription revenue is related to credit ratings-related information products, S&P Capital IQ platform, investment research products and other data subscriptions, while non-subscription revenue is related to certain advisory, pricing and analytical services.

(c)    Subscription revenue is related to data subscriptions, which support index fund management, portfolio analytics and research, while non-subscription revenue is related to fees based on assets underlying exchange-traded funds, as well as certain advisory, pricing and analytical services.

(d)   Subscription revenue is related to Platts real-time news, market data, and price assessments, along with other print and digital information products, while non-subscription revenue is related to consulting engagements, events, and transactional activity related to licensing.

(e)    Subscription revenue is related to print and digital information products primarily serving the automotive, construction, aerospace and defense markets, while non-subscription revenue is related to syndicated and proprietary research studies, advertising, consulting engagements and events.

 

 

Exhibit 7

 

McGraw Hill Financial Domestic vs. International Revenue Three and six months ended June 30, 2013 and 2012

(dollars in millions)

(unaudited)

Domestic

International

2013

2012

% Change

2013

2012

% Change

Three Months

S&P Ratings

$

323

$

263

23%

$

276

$

220

25%

S&P Capital IQ

190

182

4%

97

95

2%

S&P Dow Jones Indices

99

69

42%

24

20

25%

Commodities Markets

55

48

13%

82

72

14%

Commercial Markets

92

96

(4)%

30

24

28%

Intersegment elimination

(9)

(10)

(5)%

(9)

(7)

27%

Total

$

750

$

648

16%

$

500

$

424

18%

Six Months

S&P Ratings

$

637

$

510

25%

$

524

$

439

19%

S&P Capital IQ

380

368

3%

195

183

7%

S&P Dow Jones Indices

187

129

46%

51

39

29%

Commodities Markets

104

95

9%

163

144

13%

Commercial Markets

174

185

(6)%

55

50

9%

Intersegment elimination

(21)

(20)

3%

(18)

(14)

28%

Total

$

1,461

$

1,267

15%

$

970

$

841

15%

 

 

Exhibit 8

 

McGraw Hill Financial Non-GAAP Financial Information Three and six months ended June 30, 2013 and 2012 (dollars in millions)

Computation of Free Cash Flow

(unaudited)

Six Months

2013

2012

Cash provided by operating activities

$

226

$

219

Capital expenditures

(43)

(36)

Dividends and other payments paid to noncontrolling interests

(38)

(6)

Free cash flow

$

145

$

177

 

Adjusted S&P Capital IQ Revenue

(unaudited)

Three Months

Six Months

2013

2012

% Change

2013

2012

% Change

S&P Capital IQ

$

287

$

277

3%

$

575

$

551

4%

Acquisitions (QuantHouse and CMA)

(8)

(4)

(16)

(4)

Product closures

(4)

(2)

(9)

Adjusted S&P Capital IQ

$

279

$

269

3%

$

557

$

538

3%

 

Adjusted S&P Dow Jones Indices Revenue

(unaudited)

Three Months

Six Months

2013

2012

% Change

2013

2012

% Change

S&P Dow Jones Indices

$

123

$

89

39%

$

238

$

168

42%

Dow Jones Indices

(29)

(58)

Adjusted S&P Dow Jones Indices

$

94

$

89

6%

$

180

$

168

7%

 

Adjusted S&P Dow Jones Indices Net Operating Profit

Three Months

Six Months

(unaudited)

2013

2012

% Change

2013

2012

% Change

Operating profit

$

80

$

56

43%

$

147

$

101

45%

Operating profit attributable to NCI

20

38

Net operating profit

$

60

$

56

6%

$

109

$

101

6%

 

SOURCE McGraw Hill Financial



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