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2	Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies
3	“Safe Harbor” Statement Under The Private Securities Litigation Reform Act of 1995 This presentation includes certain forward-looking statements about the Company’s businesses, new products, sales, expenses, tax rates, cash flows, prepublication investments and operating and capital requirements. Such forward-looking statements include, but are not limited to: the strength and sustainability of the U.S. and global economy; Educational Publishing’s level of success in 2008 adoptions and in open territories and enrollment and demographic trends; the level of educational funding; the strength of School Education including the testing market, Higher Education, Professional and International publishing markets and the impact of technology on them; the level of interest rates and the strength of the economy, profit levels and the capital markets in the U.S. and abroad; the level of success of new product development and global expansion and strength of domestic and international markets; the demand and market for debt ratings, including collateralized debt obligations (“CDO”), residential mortgage and asset-backed securities and related asset classes; the regulatory environment affecting Standard & Poor’s; the level of merger and acquisition activity in the U.S. and abroad; the strength of the domestic and international advertising markets; the volatility of the energy marketplace; the contract value of public works, manufacturing and single-family unit construction; the level of political advertising; and the level of future cash flow, debt levels, manufacturing expenses, distribution expenses, prepublication, amortization and depreciation expense, income tax rates, capital, technology, restructuring charges and other expenditures and prepublication cost investment. Actual results may differ materially from those in any forward-looking statements because any such statements involve risks and uncertainties and are subject to change based upon various important factors, including, but not limited to, worldwide economic, financial, political and regulatory conditions; currency and foreign exchange volatility; the health of debt and equity markets, including interest rates, credit quality and spreads, the level of liquidity, future debt issuances including residential mortgage backed securities and CDOs backed by residential mortgages and related asset classes; the implementation of an expanded regulatory scheme affecting Standard & Poor’s ratings and services; the level of funding in the education market (both domestically and internationally); the pace of recovery in advertising; continued investment by the construction, computer and aviation industries; the successful marketing of new products, and the effect of competitive products and pricing
4	Committed to advancing total shareholder value Increased cash dividend by 7.3% for 2008 Dividend has increased for 35 consecutive years 10.3% average compound annual growth rate in dividend since 1974 Extended share buyback program into 2008 Board approved initial repurchase target of 20.0 million shares for 2008, subject to market conditions Capacity: A total of 28.0 million shares are authorized
5	Committed to creating total shareholder value
6	MHP has produced a solid long-term record
7	Outlook for U.S. economy U.S. economy probably heading into recession in first half of 2008 Could slow core inflation, but housing remains problem area for economy Sales for new and existing homes continue to decline; high inventory puts pressure on prices S&P’s chief economist expects housing sales to bottom out at mid-year with prices leveling off in early 2009
8	Outlook for U.S. economy State budgets under pressure although problem not as severe as in 2001-02 period More rate cuts by Federal Reserve virtually certain Another 50 basis point cut expected when Fed meets on March 18 Could be further reduction at April meeting
9	Outlook for U.S. economy New fiscal stimulus package could: Boost consumer spending by mid-2008 Help produce growth in U.S. GDP 3.2% in third quarter 2.4% in fourth quarter
10	Positive outlook for world economy World economy remains strong: Expected to grow 4.1% in 2008 Asia leading the way MHP expects another solid performance this year in international markets from all three operating segments International revenue in 2007: 26% of total revenue 15% growth rate
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12	Guidance for Financial Services segment Unlikely we will achieve expected revenue grow of 2% to 4% No updated guidance until we have greater clarity First half: Tough comparisons and greater margin pressure Second half: Less challenging comparisons and some improvement
13	Turbulence in credit markets has carried into first quarter of 2008
14	Turbulence in credit markets has carried into first quarter of 2008
15	Managing costs: A measured approach Full impact of 4Q ’07 restructuring savings will be realized in 2Q ’08 Hiring freeze remains in place Discretionary costs scrutinized very carefully Continue to invest in key initiatives to strengthen ratings franchise Will take more steps to reduce costs if environment does not improve at pace we now expect
16	Outlook for credit crunch Timing of recovery can’t be predicted with certainty Conditions favoring a recovery are well understood and being monitored Must see an end to greater transparency and an end to forced liquidations As banks and other financial institutions reserve for losses related to structured finance, exposures will become transparent to the market and write-downs will end
17	Outlook for credit crunch (cont’d) Efforts to inject liquidity into market and lower interest rates will begin to take hold With tighter credit standards and improving liquidity, banks will be able to attract more funds, allowing them to increase lending As investors reach consensus on fair values, credit spreads will realign Deals hung up in pipeline will get priced and current backlog will be cleared
18	Outlook for credit crunch (cont’d) As pricing is reset in marketplace, investor demand will start to return As market mechanisms are reaffirmed, new debt issuance will increase, reflecting more conservative approach to financing and reduced appetite for complexity Renewed confidence in fundamental credit analysis and value of new actions
19	S&P actions strengthen independence, quality and transparency Four key areas: Governance: Ensure integrity of ratings process Analytics: Enhance quality of ratings analysis and opinions Information: Provide greater transparency and insight to market participants Investor education: More effectively inform marketplace about credit ratings and rated securities
20	S&P actions strengthen independence, quality and transparency 27 steps in comprehensive program include: Creating office of ombudsman to address concerns over potential conflicts of interest Engagement of outside firm to conduct independent reviews of S&P’s compliance and governance Addition of new surveillance capabilities Response from policymakers has been positive
21	Working with the SEC We welcome SEC examination SEC Commissioner Paul Atkins: “A rating is an expression of an opinion—one that barring self-dealing or lack of integrity enjoys the protection of the First Amendment.” “We must remember that even the highest rating by a credit agency is not an insurance policy. We should not create a regulatory regime that appears to provide insurance when there is no such certainty in the capital markets.”
22	S&P will be part of solution to current credit market issues Standard & Poor’s is working closely with SEC and other regulators We believe S&P is making progress on the regulatory and legislative fronts
23	The current legal outlook Two law suits have been filed Nothing material has occurred at this point We don’t believe any pending legal, governmental or self-regulatory proceeding will result in a material adverse effect on our financial condition or our operations
24	Diversity remains a key to S&P’s progress S&P has reduced its dependence on any single market, asset class or business Financial Services starts the year with $793 million dollars in deferred revenue We expect this durable revenue stream to continue growing this year and next
25	Diversity remains a key to S&P’s progress 26% of Financial Services’ 2007 revenue came from S&P Investment Services This non-ratings business grew by 16.3% last year 2008: Expect another year of double-digit growth for S&P Investment Services Moving ahead in data and information Capital IQ continues to grow and expand
26	Expanding S&P’s Index Services 11 new indices launched in January We already have clients for many of them S&P facilitating over-the-counter market for derivatives based on indices Bear Stearns licensed to trade over-the-counter contracts based on the S&P/Case-Shiller Home Price Indices
27	Expanding S&P’s global ratings network In the first quarter: Completed acquisition of a rating agency in Israel — S&P Maalot Opened new offices in Dubai and Johannesburg
28	How S&P is growing overseas revenue International ratings revenue will be a bigger contributor in 2008 Represented 40% of ratings revenue in 2007 Asia, fastest growing overseas region this year CRISIL leading the way Top line at CRISIL has grown nearly 400% since 2004
29	Building a diverse, resilient revenue stream for Financial Services S&P ratings’ non-transaction revenue will make bigger contribution in 2008 54% of mix in 2007 Led by: Strong demand for S&P’s research products Rising annual fees Expanding surveillance services
30	Building a diverse, resilient revenue stream for Financial Services S&P’s non-traditional services provide tools and models These ratings and services are not directly linked to new public debt issuance Accounted for 25.5% of ratings revenue in 2007 Should continue to contribute in 2008
31	Outlook for structured finance market Adverse market conditions continue to impact growth Impact will be most pronounced in first half of the year
32	Summing up for Financial Services January and February new issue volume softer than anticipated Uncertainty remains high Diversity more important than ever in Financial Services More cost cutting likely if market recovers more slowly than expected
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34	Why the value of education is increasing Growing enrollments here and abroad fuel growth Recognition that an educated population is essential for U.S. and global competitiveness
35	Why MHP likes prospects in education Market consolidation across K-16 spectrum Three major competitors instead of four Two new competitors heavily encumbered by debt New investments required to retain competitive edge Key factors: Convergence of technology and content Robust state new adoption markets for rest of decade
36	Thinking outside the book Increasing investment in technology to: Manage costs in the future Develop both print and digital products more efficiently Create new incremental revenue by delivering content in variety of digital formats Support digital products with customer-facing technology infrastructure Improve our marketing with targeted e-mail campaigns and microsites
37	Digital revenue growing fastest in professional, higher education and testing Harrison’s Principles of Internal Medicine, 17^th Edition Leveraging technology to increase value of new edition
38	Adding pay-per-view feature in medical market AccessMedicine Flagship online service for health professionals Provides enhanced content from more than 50 major medical references in digital format New pay-per-view feature for users who don’t need full subscription
39	Transformation of textbook underway in higher education New introductory-level general text in chemistry Supported by: Downloadable MP3 and podcast files Integrated online homework and study programs
40	Transformation of textbook underway in higher education Created AMGOV for introductory course in American government Looks nothing like traditional college textbook; designed like a magazine Result of in-depth research on undergraduates’ study habits and class prep Will be published annually
41	eBooks for the higher education market Offering 300 eBooks through CourseSmart New online consortium of college and university publishers eBook savings: Student savings: Half the cost of new print titles Marketing savings: Texts online can cut sampling costs to instructors Goal: Have entire front-list available by August for sampling by instructors
42	Application of technology is key to growth in testing Parent Network: New standard for online assessment Helps parents easily review results and stay involved in student’s learning and progress To date, more than 5.7 million visits and 154 million hits for Florida
43	More progress in testing Acuity, a web-based formative assessment program Won $80 million, five-year contract with New York City State-level contracts will produce revenue in 2008 and beyond Indiana West Virginia
44	New digital materials for the el-hi classroom Steady evolution of hybrid instructional programs Key: Determining which teaching and learning tools work best Depends on age of student, subject and individual learning needs
45	New digital materials for the el-hi classroom Prime example: New math program for California includes: Interactive editions Time-saving technology tools for teachers Online tutors and math games for students Growing use of digital materials reflected in increased traffic on math website 2003: 30.6 million page views 2007: 64.9 million page views
46	Outlook for el-hi market Encouraged by early tone of business in adoption states and open territory Too soon to make a call on this year’s performance State funding issues should relatively little impact this year on state new adoption market Speculation on cutback applies to 2008-09 budgets Open territory the wild card in this year’s marketplace We think el-hi market will grow 4% to 5% in 2008 Expect state new adoption market to grow 10% to 15% this year Expect growth of 1% to 2% in open territory
47	Outlook for higher education market Another good year both here and abroad 2008 U.S. college and university market will grow 3% to 4% Boost from growth of digital products and services Expect to outperform the market
48	Summing up for McGraw-Hill Education Revenue will growth 6% to 8% in 2008 Operating profit will grow in low single-digit range because of substantial increases in prepublication costs and investments in technology Operating margin may decline 50 to 100 basis points
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50	Expect another year of progress at Information & Media More improvement in 2008 Revenue to grow 6% to 8% Operating margin expands Internet is reshaping B2B market and driving need for information and analytics New opportunities to deliver premium services B2B group’s revenue increased 6.2% in 2007 despite softness in print advertising at BusinessWeek
51	How J.D. Power turns information into action Expanding in the rapidly growing Asia-Pacific market Online syndicated studies Global automotive business Continuing to expand in new markets Financial services Insurance
52	Platts pricing information: Benchmark for the global energy market Ongoing volatility in oil and natural gas markets is increasing demand for Platts’ news and pricing products Developing new benchmarks in emerging commodities
53	Enhancing value proposition for construction industry Better serving customers in commercial construction markets with digital and Web-based products
54	Outlook for BusinessWeek Print advertising off to slow start in seasonally small quarter Ability to attract readers, subscribers and viewers continues to grow Newsstand sales grew 9.3% in second half of 2007 Average circulation rose 1.3% to 933,566 Print audience is 4.9 million—largest since 1998 Will keep building user engagement at BusinessWeek.com
55	Broadcasting Group Increased political advertising key to solid rebound in 2008
56	Summing up for Information & Media Top-line growth of 6% to 8% Improved operating margin More growth from information products Increase in political advertising at Broadcasting
57	Outlook for 2008 Full year: Given uncertainty, unlikely we will achieve original forecast of 3% to 5% earnings per share growth 1Q 2008: We are projecting significant decline in net income and earnings per share
58	Outlook for 2008 Good start in 2007 will make comparisons very difficult for us in first half of 2008 Looking forward to easier comparisons and better performance in second half of 2008 Finishing year on an upswing hinges on pace of recovery in financial markets
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