1	1Q 2008 Earnings Call April 29, 2008 Presenters: Harold McGraw III Chairman, President and CEO Robert J. Bahash Executive Vice President and CFO Deven Sharma President, McGraw-Hill Financial Services Donald S. Rubin Senior Vice President, Investor Relations
2	Donald S. Rubin Senior Vice President, Investor Relations 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	Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies
5	MHP 1Q 2008 results EPS 1Q 2008: $0.25 Compares to $0.40 in 1Q 2007 (included $0.03 gain on divestiture of a mutual fund business in March) Revenue 1Q 2008: Declined 6.1% to $1.2 billion
6	Outlook for U.S. economy Continued financial sector problems Expect Federal Reserve to cut interest rates by 25 to 50 basis points Fed funds rate currently 2.25% David Wyss, S&P’s chief economist, thinks first half of 2008 will be toughest period for economy Expects tax rebate to produce 2.5% GDP growth in 3Q 2008 Business tax credits will provide boost in 4Q
7	McGraw-Hill Education Financial Services Information & Media
8	1Q results at McGraw-Hill Education 1Q 2008 segment results Revenue - 0.5% decline to $330.2 million Operating loss Reduced by 0.5% to $90.3 million
9	1Q results at McGraw-Hill Education School Education Group Revenue - 4.8% to $138.8 million Higher Education, Professional and International Group Revenue + 2.9% to $191.4 million
10	How to assess 1Q results for McGraw-Hill Education El-hi: 1Q revenue depends more on fill-in copies and supplemental materials Higher education: 1Q revenue driven by ordering for start of new term, an echo of previous term
11	Positive indicators for 2008 at School Education Group Expect new state adoption market to grow 10% to 15% North Carolina only adoption state to place substantial basal materials order in 1Q Strength in state new adoption market starting to materialize
12	Outlook for education: Market growth in 2008 State new adoption market estimated at $900 to $950 million vs. $820 million in 2007 Open territory: Expecting 1% to 2% year-over-year revenue growth El-hi: 4% to 5% anticipated growth for whole market
13	Good start for School Education Group in key adoption states
14	Positive early feedback
15	Encouraging signs in open territory Open territory decisions typically made through end of second quarter Expect to benefit from: Math Connects, a new K-5 national program TimeLinks, a new K-5 social studies program Anticipate gains in market share for Treasures, our elementary reading program
16	New intervention opportunities in supplemental market Diminishing demand for traditional, stand-alone products No longer purchased separately since similar materials provided in ancillary packages accompanying today’s basal programs Sales growth in new print and digital intervention products Constructed around state standards and validated through research
17	Establishing a leadership position in formative testing Strengthening new revenue stream as formative assessment gains importance Measuring the success of Acuity, our new formative program since 2007 introduction: Selected for New York City Periodic Assessment Program Largest formative contract ever awarded at $80 million over 5 years Expanding customer base in New York and other states Adopted state-wide in Indiana and West Virginia
18	Support for education funding remains strong
19	Support for education funding remains strong
20	Weakening economy could benefit college and university market
21	Outlook for growing enrollments in Higher Education
22	Outlook for McGraw-Hill Education Gaining confidence in forecasts for growth in el-hi and higher education Segment revenue growth of 6% to 8% in 2008 Expect operating margin decline of 50 to 100 basis points due to stepped-up investments in technology to accelerate digital transformation
23	McGraw-Hill Education Financial Services Information & Media
24	Financial Services 1Q 2008 segment results Revenue -11.6% decline to $644.3 million Operating profit -25.3% to $260.0 million Operating margin 40.4%, down from 47.7% in 1Q 2007 Improved compared to 4Q 2007 (35.8% plus 2.5% 4Q restructuring charge)
25	Cost containment a top priority Starting to benefit from the restructuring in 4Q 2007 Will see full impact starting in 2Q 2008 Strictly limited hiring Cut back on discretionary expenses Reduced 2008 incentive compensation Costs declined year-over-year
26	Cost containment a top priority Considering additional staff reductions Need to do more to lower costs and improve efficiency Will say more in next several weeks about further reductions at: Financial Services McGraw-Hill Education
27	The benefits of a diversified and resilient portfolio Growth of Investment Services is a key in efforts to diversify Investment Services grew by 18% to $217 million in 1Q 2008 Represented 34% of segment’s revenue Expect double-digit revenue growth for balance of year
28	Diversifying at S&P Credit Market Services
29	Growth in unearned revenue at Financial Services Unearned revenue increased 13.6% to $812 million Represents 74% of corporation’s total unearned revenue for 1Q 2008 Expect deferred revenue to continue growing Produced increases at S&P Credit Market Services in: Subscription services Annual fees Surveillance revenue
30	Non-transaction and international revenue
31	Diversification strategy cushioned segment in first quarter
32	Revenue vs. new issuance in 1Q 2008
33	Turbulence in credit markets has carried into first quarter of 2008
34	Turbulence in credit markets has carried into first quarter of 2008
35	European credit markets
36	Outlook for Financial Services
37	Outlook for Financial Services
38	Outlook for Financial Services
39	Data and information benefiting Investment Services Capital IQ continues to add customers Now serving more than 2,300 clients 24% increase vs. 1Q 2007 Continues to upgrade product line Latest release includes 3,500 non-traditional media sources, improved download capabilities, and improved charting functionality
40	Continuing to expand index products and services $209.7 billion in assets under management in ETFs based on S&P indices at end of 1Q 2008 23.1% increase compared to 1Q 2007 Data and custom index businesses grew in 1Q 13 new ETFs in 1Q based on S&P indices Now 157 ETFs based on S&P indices More indices in the pipeline One of fastest growing and most profitable businesses in segment
41	Regulatory and legal outlook
42	SEC’s ongoing examination of rating agencies SEC report expected this summer May propose some new oversight rules We’re committed to bringing stability and transparency to capital markets We do not believe any pending legal, governmental, or self-regulatory proceedings will have adverse effect on our financial conditions or operations
43	Outlook for Financial Services Summary Expect double-digit growth for S&P Investment Services Credit ratings markets face continued uncertainty If steep drop experienced in 1Q in structured finance continues for rest of year, segment revenue would decline 7% to 9% Would also expect a 500 to 600 basis point drop in operating margin
44	McGraw-Hill Education Financial Services Information & Media
45	Information & Media 1Q 2008 segment results Revenue + 3.2% to $243.4 million Operating profit +18.6% to $11.7 million Operating margin 4.8%, up from 4.2% in 1Q 2007
46	Growth at Business-to-Business Group Revenue grew 3.5% in 1Q to $219.7 million Key contributors Value-added information for global markets
47	Growth in volatile global energy markets Increasing demand for Platts’ news and pricing services Platts growing faster overseas than in North America Attracting new customers in emerging markets like former Soviet Republic and the Middle East
48	Growth in international markets for J.D. Power and Associates
49	Advertising mixed in 1Q BusinessWeek Ad pages for global edition down 19.4% in 1Q 2008, according to Publishers Information Bureau Broadcasting revenue of $23.7 million flat vs. 1Q 2007 Increases in political advertising offset by declines in national time sales Outlook for political advertising is promising Upcoming primaries and state and local elections in Indiana, California, Colorado
50	Outlook for Information & Media Summary More global growth for information products Promising outlook for political advertising later in year Segment revenue growth of 6% to 8% Improvement in operating margins
51	Summing up for The McGraw-Hill Companies
52	Outlook for The McGraw-Hill Companies Summary Year-over-year comparisons easier in second half in Financial Services Possibility of finishing 2008 on upswing If current trends in financial markets continue, expect EPS in $2.65 to $2.75 range in 2008
53	Robert J. Bahash Executive Vice President and Chief Financial Officer The McGraw-Hill Companies
54	Updating guidance for 2008 McGraw-Hill Education unchanged Expect revenue growth of 6% to 8% and a 50 to 100 basis point decline in operating margin Transfer of our Advanced Placement “AP” courses from Higher Education to School Education Group Not material to Group’s 1Q results but will be later in the year, as well as to their full-year results Information & Media unchanged Expect 6% to 8% revenue growth and improved margins
55	Updating guidance for 2008 Financial Services’ Investment Services Maintaining forecast of double-digit growth Financial Services segment If little or no improvement in financial markets this year, we would expect revenue to decline 7% to 9% and operating margin to be reduced 500 to 600 basis points If that’s the case, EPS in 2008 could range between $2.65 and $2.75
56	Revised outlook for free cash flow New estimate: Approximately $600 million before acquisitions or share repurchases Started year with $850-$900 million range Forecast driven by: Reduced profits at Financial Services and impact on working capital Reduction will be partially mitigated by careful review of new investments
57	$34 million for acquisitions in 2008 1Q 2008 S&P Maalot, an Israeli securities rating company Licensing rights to S&P Case-Shiller Home Price Indices 2Q 2008 Umbria, a marketing intelligence company social media and consumer-generated media research
58	Revised stock buyback target Capacity: Began year with 28 million shares remaining in 2007 buyback program Initial 2008 target: 20 million shares 1Q 2008: 3.4 million shares repurchased for $134 million; average price of $39.42 New target: 15 million shares Reflects reduction in free cash flow Focus on maintaining debt levels comparable with year-end 2007
59	Net debt 1Q 2008: $1.2 billion in net debt $400 million increase versus year-end 2007 Commercial paper borrowing in 1Q to fund primarily seasonal cash requirements along with share repurchases As of March 31: Gross debt of $1.2 billion of unsecured senior notes and $396.2 million in commercial paper outstanding Offset by $396.7 million in cash, primarily foreign holdings
60	Outlook for net interest expense 2008: Now expect $75-85 million for year Lower than previous estimate due to new share repurchase target 1Q 2008: $17.8 million net interest expense Compared to $1.2 million in 1Q 2007
61	Reduced fully-diluted weighted average shares outstanding (WASO) 1Q 2008: 323.4 million shares 38.1 million share decrease compared to 1Q 2007 7.4 million share decrease compared to 4Q 2007
62	Outlook for lower corporate expenses 1Q 2008: Decreased $1.2 million to $33.9 million, compared to a year ago Primarily driven by lower incentive compensation accruals 2008: Now expect mid single-digit decrease Compares to previous guidance of low single-digit increase Change primarily driven by reduced incentive compensation and stringent expense controls
63	Measuring impact of incentive compensation in 2008 1Q benefited from decreased incentive compensation, including stock-based compensation $40 million decrease year-over-year at S&P Decline in incentive compensation expense not as pronounced for rest of year Accruals less significant in second half of 2007 due to slow down of business
64	Monitoring costs at Financial Services We are investing in businesses that are growing while maintaining stringent expenses controls at Credit Market Services On an adjusted basis, expenses decreased 1Q ‘08 vs. 1Q ‘07: Reported expense: 0.9%, or $3.4 million increase Adjusted expense: 4.0%, or $16 million decrease Adjusted for: Net gain in 2007 (1Q 2007 gain from divestiture of mutual fund business, partially offset by operating expenses prior to divestiture) Acquisition operating costs for 2008
65	Monitoring costs at Financial Services 1Q ’08 vs. 4Q ’07: Expense decreased $70 million, or 15.4% Excludes restructuring charge taken in 4Q ’07 We are benefiting from expense management, hiring delays and curtailments, and 4Q restructuring actions Lower incentive compensation a key factor, but not as significant as Q1 ’08 to Q1 ’07 comparison since we reduced incentive compensation in 4Q ‘07
66	Outlook for unearned revenue 1Q 2008: $1.1 billion Reflects 11.5% year over year increase Excluding foreign currency gains, increase is 9.7% 2008: Expect growth to moderate given forecast for slower revenue growth
67	Outlook for tax rate 2008: Expect effective tax rate of 37.5% Approximately same as 2007 on full-year basis
68	Reduced projection for prepublication investments 1Q 2008: $66.6 million, compared to $57.4 million in same period last year 2007: Now expect $290 million Down from previous $300-$310 million estimate Reflects prudent investments and continued off-shoring efficiencies
69	Lower capital expenditures for property and equipment 1Q 2008: $23.6 million, compared to $22.7 million in same period last year 2008: Now expect $160 million Normal replacement expenditures Additional purchases of software and technology equipment for new data center in first half of 2008 Continued investments in technology
70	Outlook for non-cash items Amortization of pre-publication costs 1Q 2008: $28.2 million, compared to $28.1 million in same period last year 2008: Still expect prepublication amortization to increase $45 million to $285 million
71	Outlook for non-cash items Depreciation 1Q 2008: $27.5 million, compared to $28.9 million in same period last year 2008: Still expect approximately $125 million Completion of data center Purchases of new technology equipment for data center Other increases in capital expenditures
72	Outlook for non-cash items Amortization of intangibles 1Q 2008: $14.2 million, compared to $11.6 million in same period last year 2008: Expect approximately $52 million
73	1Q 2008 Earnings Call April 29, 2008 Presenters: Harold McGraw III Chairman, President and CEO Robert J. Bahash Executive Vice President and CFO Deven Sharma President, McGraw-Hill Financial Services Donald S. Rubin Senior Vice President, Investor Relations
74	1Q 2008 Earnings Call April 29, 2008 Replay Options Internet Go to www.mcgraw-hill.com/investor_relations Click on the Earnings Announcement link under Investor Presentation Webcasts Telephone (Available through May 29) Domestic: 888-662-6641 International: +1-402-220-6412 No password required