þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New York
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13-1026995
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1221 Avenue of the Americas, New York, New York
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10020
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of exchange on which registered
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Common Stock — $1 par value
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New York Stock Exchange
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þ
Large accelerated filer
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o
Accelerated filer
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o
Non-accelerated filer
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o
Smaller reporting company
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(Do not check if a smaller reporting company)
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PART I
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Item
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Page
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1
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1a.
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1b.
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2
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3
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4
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PART II
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5
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6
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7
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7a.
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8.
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9.
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9a.
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9b.
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PART III
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10
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11
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12
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13
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14
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PART IV
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15
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•
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worldwide economic, financial, political and regulatory conditions;
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currency and foreign exchange volatility;
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the effect of competitive products and pricing;
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the level of success of new product development and global expansion;
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the level of future cash flows;
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the levels of capital investments;
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income tax rates;
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restructuring charges;
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the health of debt and equity markets, including credit quality and spreads, the level of liquidity and future debt issuances;
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the level of interest rates and the strength of the capital markets in the U.S. and abroad;
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the demand and market for debt ratings, including collateralized debt obligations, residential and commercial mortgage and asset-backed securities and related asset classes;
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the state of the credit markets and their impact on Standard & Poor’s Ratings and the economy in general;
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the regulatory environment affecting Standard & Poor’s Ratings and our other businesses;
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the likely outcome and impact of litigation and investigations on our operations and financial condition;
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the level of merger and acquisition activity in the U.S. and abroad;
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continued investment by the construction, automotive and computer industries;
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the strength and performance of the domestic and international automotive markets;
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the volatility of the energy marketplace;
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and the contract value of public works, manufacturing and single-family unit construction.
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Commodities & Commercial
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we completed the sale of Aviation Week to Penton, a privately held business information company;
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S&P Capital IQ
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we completed the sale of Financial Communications as well as the closure of several non-core businesses.
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S&P Dow Jones Indices
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our transaction with CME Group, Inc. and CME Group Index Services LLC to form a new company, S&P Dow Jones Indices LLC;
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S&P Capital IQ
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Credit Market Analysis Limited, a provider of independent data concerning the over-the-counter markets; QuantHouse, an independent global provider of end-to-end systematic low-latency market data solutions; and R² Technologies, a provider of advanced risk and scenario-based analytics;
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Commodities & Commercial
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Kingsman SA, a privately-held, Switzerland-based provider of price information and analytics for the global sugar and biofuels markets;
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Standard & Poor's Ratings
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Coalition Development Ltd., a privately-held U.K. analytics company.
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ratings related to new issuance of corporate and government debt instruments, and structured finance debt instruments;
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bank loan ratings; and
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corporate credit estimates, which are intended, based on an abbreviated analysis, to provide an indication of our opinion regarding creditworthiness of a company which does not currently have an S&P Ratings credit rating.
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Desktop Solutions
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a product suite that provides data, analytics and third-party research for global finance professionals, which include Capital IQ and MarketScope Advisor;
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Enterprise Solutions
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integrated bulk data feeds that can be customized, which include QuantHouse, S&P Securities Evaluations, CUSIP and Compustat;
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Ratings Intellectual Property ("IP")
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commercial arm that sells Standard & Poor's Ratings' IP, which includes RatingsDirect® and RatingsXpress®; and
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Proprietary Research
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comprehensive source of market research for financial professionals, which includes Leveraged Commentary & Data, Global Market Intelligence and multi-asset-class research.
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Investment vehicles
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such as, exchange traded funds (“ETFs”), which are based on the S&P and Dow Jones Indices and generate revenue through fees based on assets and underlying funds;
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Listed derivatives
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which generate royalties based on trading volumes of derivatives contracts listed on various exchanges;
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Index-related licensing fees
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which are either fixed or variable annual and per-issue fees for over-the-counter derivatives and retail-structured products; and
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Data subscription
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which support index fund management, portfolio analytics and research.
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Platts
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provides essential price data, analytics, and industry insight that enable commodities markets to perform with greater transparency and efficiency;
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J.D. Power
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provides essential consumer intelligence to help businesses measure, understand, and improve the key performance metrics that drive growth and profitability; and
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McGraw Hill Construction
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provides essential data, news, insights, and intelligence to better inform construction professionals' decisions and strengthen their market position.
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Subscription revenue
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subscriptions to our real-time news, market data and price assessments, along with other print and digital information products, primarily serving the energy and construction markets and the automotive industry; and
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Non-subscription revenue
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primarily from licensing of our proprietary market price data and price assessments to commodity exchanges, syndicated and proprietary research studies, conference sponsorship, consulting engagements and events.
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Serving our customers with innovative, must-have solutions;
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Leveraging our unique portfolio of powerful brands and distinctive opportunities in the financial and commodity markets; and
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Winning as a dynamic, global company.
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Ensuring quality and excellence in everything we do;
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Attracting and developing top-performing people; and
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Delivering together as one connected company.
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We operate in highly competitive markets that continue to change to adapt to customer needs. In order to maintain a competitive position, we must continue to invest in new offerings and new ways to deliver our products and services.
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These investments may not be profitable or may be less profitable than what we have experienced historically.
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We could experience threats to our existing businesses from the rise of new competitors due to the rapidly changing environment within which we operate.
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We rely on our information technology environment and certain critical databases, systems and applications to support key product and service offerings. We believe we have appropriate policies, processes and internal controls to ensure the stability of our information technology, provide security from unauthorized access to our systems and maintain business continuity, but our business could be subject to significant disruption and our operating results may be adversely impacted by unanticipated system failures, data corruption or unauthorized access to our systems.
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We are involved in legal actions and claims arising from our business practices, as discussed under Item 7,
Management's Discussion and Analysis of Financial Condition and Results of Operations
, in this Form 10-K and in Note 12 –
Commitments and Contingencies
to the consolidated financial statements under Item 8,
Consolidated Financial Statements and Supplementary Data
, in this Form 10-K, and face the risk that additional actions and claims will be filed in the future. Due to the inherent uncertainty of the litigation process, the resolution of any actions or claims that may be brought in the future, or the change in applicable legal standards could have a material effect on our financial position and results of operations.
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Unfavorable financial or economic conditions that either reduce investor demand for debt securities or reduce issuers' willingness or ability to issue such securities could reduce the number and dollar volume of debt issuance for which S&P Ratings provides credit ratings.
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Unfavorable financial or economic conditions could also adversely impact S&P DJ Indices, which receives a portion of its revenue from fees based on derivatives trading volumes and index-based ETF assets under management.
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Increases in interest rates or credit spreads, volatility in financial markets or the interest rate environment, significant political or economic events, defaults of significant issuers and other market and economic factors may negatively impact the general level of debt issuance, the debt issuance plans of certain categories of borrowers, the level of derivatives trading and/or the types of credit-sensitive products being offered.
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Any weakness in the macroeconomic environment could constrain customer budgets across the markets we serve, potentially leading to a reduction in their employee headcount and a decrease in demand for our subscription-based products.
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Our results could be adversely affected because of public statements or actions by market participants, government officials and others who may be advocates of increased regulation or regulatory scrutiny.
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The financial services industry is subject to the potential for increasing regulation in the United States and abroad. The businesses conducted by S&P Ratings are in certain cases regulated under the U.S. Credit Rating Agency Reform Act of
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In the past several years, the U.S. Congress, the SEC and the European Commission, through regulators including the International Organization of Securities Commissions and the European Securities and Markets Authority, as well as regulators in other countries in which S&P Ratings operates have been reviewing the role of rating agencies and their processes and the need for greater oversight or regulations concerning the issuance of credit ratings or the activities of credit rating agencies.
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▪
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We do not believe that the laws, regulations and rules that have been adopted as part of this process will have a material adverse effect on our financial condition or results of operations.
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Other laws, regulations and rules relating to credit rating agencies are being considered by local, national, foreign and multinational bodies and are likely to continue to be considered in the future, including provisions seeking to reduce regulatory and investor reliance on credit ratings, rotation of credit rating agencies and liability standards applicable to credit rating agencies. The impact on us of the adoption of any such laws, regulations or rules remains uncertain, but could increase the costs and legal risks relating to S&P Rating's rating activities.
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Additional information regarding rating agencies is provided under Item 7,
Management's Discussion and Analysis of Financial Condition and Results of Operations
, in this Form 10-K.
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Our commodities business is subject to the potential for increasing regulatory review in the United States and abroad.
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In the fall of 2011, the G20 Cannes Final Summit Declaration called upon the International Organization of Securities Commissions ("IOSCO"), International Energy Forum, International Energy Agency and the Organization of Petroleum Exporting Countries to prepare recommendations to improve the functioning and oversight of price reporting companies by mid-2012.
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In a meeting with representatives of IOSCO in January 2012, principals at IOSCO advised Platts management that among the recommendations the regulatory group is considering is establishment of formal oversight of price reporting organizations and their processes, or a self-regulatory oversight regime.
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In addition, new rules adopted by the U.S. Commodity Futures Trading Commission in 2013 affecting transactions in oil derivatives may hinder Platts in relation to its administration of the Platts electronic window (eWindow) as a means of determining price assessments in oil. Similar new rules and regulations in Europe are currently under consideration, albeit on a slower time frame.
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On October 5, 2012, IOSCO issued its final report to the G-20, including Principles for Oil Price Reporting Agencies, which sets out principles IOSCO states are intended to enhance the reliability of oil price assessments that are referenced in derivative contracts subject to regulation by IOSCO members. Platts undertook steps to align its operations with the Principles including an assurance review by an external auditor and after doing so believes that the Principles will not have a significant negative impact on its ongoing business operations.
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We do not believe that any new regulatory or self-regulatory oversight regime would have a material adverse effect on our financial condition or results of operations.
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The S&P DJ Indices business is subject to the potential for increasing regulatory review in the United States and abroad.
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In July 2013, IOSCO issued its Principles for Financial Benchmarks, which is a set of principles intended to promote the reliability of Benchmark determinations, and address governance, Benchmark quality and accountability mechanisms, including with regard to the indices published by S&P DJ Indices.
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S&P DJ Indices is currently undertaking steps to ensure that its operations are aligned with the IOSCO Financial Benchmark Principles.
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We do not believe that any new regulatory or self-regulatory oversight regime would have a material adverse effect on our financial condition or results of operations.
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Our major expenses include employee compensation and capital investments.
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We offer competitive salary and benefit packages in order to attract and retain the quality employees required to grow and expand our businesses. Compensation costs are influenced by general economic factors, including
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We make significant investments in information technology data centers and other technology initiatives. Although we believe we are prudent in our investment strategies and execution of our implementation plans, there is no assurance as to the ultimate recoverability of these investments.
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Our products contain intellectual property delivered through a variety of media, including print and digital. Our ability to achieve anticipated results depends in part on our ability to defend our intellectual property against infringement. Our operating results may be adversely affected by inadequate or changing legal and technological protections for intellectual property and proprietary rights in some jurisdictions and markets.
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As we continue to expand our operations overseas, we face the increased risks of doing business abroad, including inflation, fluctuation in interest rates and currency exchange rates, changes in applicable laws and regulatory requirements, export and import restrictions, tariffs, nationalization, expropriation, limits on repatriation of funds, civil unrest, terrorism, unstable governments and legal systems, and other factors. Adverse developments in any of these areas could cause actual results to differ materially from historical and/or expected operating results.
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The markets for credit ratings, financial research, investment and advisory services, and index-based products are competitive. S&P Ratings, S&P Capital IQ and S&P DJ Indices compete domestically and internationally on the basis of a number of factors, including the quality of its ratings, research and advisory services, client service, reputation, price, geographic scope, range of products and technological innovation.
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While our businesses face competition from traditional content and analytics providers, we also face competition from non-traditional providers such as exchanges, asset managers, investment banks and technology-led companies that are adding content and analytics capabilities to their core businesses.
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In addition, in some of the countries in which S&P Ratings competes, governments may provide financial or other support to locally-based rating agencies and may from time to time establish official credit rating agencies, credit ratings criteria or procedures for evaluating local issuers.
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Our businesses within S&P Capital IQ and S&P DJ Indices have a customer base which is largely comprised of members from the financial services industry. The current challenging business environment and the consolidation of customers resulting from mergers and acquisitions in the financial services industry can result in reductions in the number of firms and workforce which can impact the size of our customer base.
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We are in the process of changing certain of our financial processing systems to an enterprise-wide systems solution. There can be no certainty that these initiatives will deliver the expected benefits. The failure to implement these changes successfully may impact our ability to process transactions accurately and efficiently and could lead to business disruption.
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In addition, we have outsourced certain support functions to third-party service providers to achieve cost savings and efficiencies. If the service providers to which we have outsourced these functions to do not perform effectively, we may not be able to achieve the expected cost savings and, depending on the function involved, we may experience business disruption, processing inefficiencies, or harm employee morale.
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Name
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Age
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Position
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Douglas L. Peterson
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55
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President and Chief Executive Officer
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Jack F. Callahan, Jr.
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55
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Executive Vice President and Chief Financial Officer
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John L. Berisford
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50
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Executive Vice President, Human Resources
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D. Edward Smyth
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64
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Executive Vice President, Corporate Affairs and Executive Assistant
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to the President and Chief Executive Officer
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Kenneth M. Vittor
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64
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Executive Vice President and General Counsel
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2013
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2012
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First Quarter
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$58.62 - $42.07
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$48.60 - $44.67
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Second Quarter
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56.55 - 50.51
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50.00 - 42.02
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Third Quarter
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66.96 - 53.45
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55.19 - 44.19
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Fourth Quarter
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78.81 - 65.34
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57.44 - 49.56
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Year
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78.81 - 42.07
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57.44 - 42.02
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2013
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2012
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$0.280 per quarter in 2013
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$
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1.12
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$0.255 per quarter in 2012
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$
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1.02
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In the U.S. and Canada:
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888-201-5538
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Outside the U.S. and Canada:
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201-680-6578
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TDD for the hearing impaired:
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800-231-5469
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TDD outside the U.S. and Canada:
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201-680-6610
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E-mail address:
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shareholder@computershare.com
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Shareholder online inquiries
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https://www-us.computershare.com/investor/Contact
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Period
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(a) Total Number of Shares Purchased
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(b) Average Price Paid per Share
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(c) Total Number of Shares Purchased as
Part of Publicly Announced Programs
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(d) Maximum Number of Shares that may yet be Purchased Under the Programs
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Oct. 1 — Oct. 31, 2013
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0.3
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$
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70.58
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0.3
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1.6
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Nov. 1 — Nov. 30, 2013
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0.7
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71.63
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0.7
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0.9
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Dec. 1 — Dec. 31, 2013
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1.0
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74.73
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0.9
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50.0
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Total — Qtr
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2.0
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$
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73.07
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1.9
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50.0
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(in millions, except per share data)
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2013
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2012
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2011
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2010
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2009
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Income statement data:
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Revenue
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$
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4,875
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$
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4,450
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$
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3,954
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$
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3,639
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$
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3,483
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Operating profit
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1,405
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1,211
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1,077
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1,026
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953
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Income from continuing operations before taxes on income
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1,346
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1
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1,130
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2
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1,000
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3
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943
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4
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876
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5
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Provision for taxes on income
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443
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404
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374
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344
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315
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Net income from continuing operations attributable to McGraw Hill Financial, Inc.
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812
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676
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607
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582
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546
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Earnings per share from continuing operations attributable to the McGraw Hill Financial, Inc. common shareholders:
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Basic
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2.96
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2.43
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2.03
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1.88
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1.75
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Diluted
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2.90
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2.37
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2.00
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1.86
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1.74
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Dividends per share
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1.12
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1.02
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1.00
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0.94
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0.90
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Special dividend declared per common share
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2.50
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Operating statistics:
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||||||||||
Return on average equity
6
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134.2
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%
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40.5
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%
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48.2
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%
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40.4
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%
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45.7
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%
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|||||
Income from continuing operations before taxes on income as a percent of revenue from continuing operations
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27.6
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%
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25.4
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%
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25.3
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%
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25.9
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%
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25.1
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%
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|||||
Net Income from continuing operations as a percent of revenue from continuing operations
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18.5
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%
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16.3
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%
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15.8
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%
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16.5
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%
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16.1
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%
|
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|||||
Balance sheet data:
7
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||||||||||
Working capital
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$
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564
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|
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$
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(1,044
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)
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$
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(845
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)
|
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$
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262
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$
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2
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|
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Total assets
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6,061
|
|
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5,122
|
|
|
4,112
|
|
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4,664
|
|
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4,010
|
|
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|||||
Total debt
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799
|
|
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1,256
|
|
|
1,198
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|
|
1,198
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|
|
1,198
|
|
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|||||
Redeemable noncontrolling interest
|
810
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|
|
810
|
|
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—
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|
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—
|
|
|
—
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|
|
|||||
Equity
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1,344
|
|
|
840
|
|
|
1,584
|
|
|
2,292
|
|
|
1,929
|
|
|
|||||
Number of employees
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17,000
|
|
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16,600
|
|
|
16,300
|
|
|
14,400
|
|
|
14,700
|
|
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1
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Includes the impact of the following items: $77 million pre-tax legal settlements, $64 million charge for Growth and Value Plan costs, a $36 million non-cash impairment charge related to the facilities and associated infrastructure of one of our data centers that we are in the process of selling, a $28 million restructuring charge in the fourth quarter primarily related to severance, $13 million related to terminating various leases as we reduce our real estate portfolio and a $24 million net gain from our dispositions.
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2
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Includes the impact of the following items: $135 million charge for Growth and Value Plan costs, a $68 million restructuring charge, transaction costs of $15 million for our S&P Dow Jones Indices LLC joint venture, an $8 million charge related to a reduction in our lease commitments, partially offset by a vacation accrual reversal of $52 million.
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3
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Includes the impact of a $32 million restructuring charge and a $10 million charge for Growth and Value Plan costs.
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4
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Includes the impact of the following items: a $16 million charge for subleasing excess space in our New York facilities, an $11 million restructuring charge and a $7 million gain on the sale of certain equity interests at S&P Ratings.
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5
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Includes the impact of the following items: a $14 million loss on the sale of Vista Research, Inc., an $11 million gain on the sale of
BusinessWeek
and
a $4 million net restructuring charge.
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6
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Includes the impact of the gain on sale of McGraw-Hill Eduction in 2013 and the gain on sale of the Broadcasting Group in 2011.
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7
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Excludes discontinued operations.
|
•
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Overview
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•
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Results of Operations
|
•
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Liquidity and Capital Resources
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•
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Reconciliation of Non-GAAP Financial Information
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•
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Critical Accounting Estimates
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•
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Recently Issued or Adopted Accounting Standards
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•
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S&P Ratings is an independent provider of credit ratings, research and analytics, offering investors and market participants information, ratings and benchmarks.
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•
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S&P Capital IQ is a global provider of multi-asset-class data, research and analytical capabilities, which integrate cross-asset analytics and desktop services.
|
•
|
S&P DJ Indices is a global index provider that maintains a wide variety of valuation and index benchmarks for investment advisors, wealth managers and institutional investors.
|
•
|
C&C consists of business-to-business companies specializing in commercial and commodities markets that deliver their customers access to high-value information, data, analytic services and pricing benchmarks.
|
•
|
C&C
—
we completed the sale of Aviation Week to Penton, a privately held business information company;
|
•
|
S&P Capital IQ
—
we completed the sale of Financial Communications as well as the closure of several non-core businesses.
|
•
|
S&P DJ Indices
—
our transaction with CME Group, Inc. and CME Group Index Services LLC to form a new company, S&P Dow Jones Indices LLC;
|
•
|
S&P Capital IQ
—
Credit Market Analysis Limited, a provider of independent data concerning the over-the-counter markets; QuantHouse, an independent global provider of end-to-end systematic low-latency market data solutions; and R² Technologies, a provider of advanced risk and scenario-based analytics;
|
•
|
C&C
—
Kingsman SA, a privately-held, Switzerland-based provider of price information and analytics for the global sugar and biofuels markets;
|
•
|
S&P Ratings
—
Coalition Development Ltd., a privately-held U.K. analytics company.
|
(in millions)
|
Years ended December 31,
|
|
% Change
1
|
||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
’13 vs ’12
|
|
’12 vs ’11
|
||||||
Revenue
|
$
|
4,875
|
|
|
$
|
4,450
|
|
|
$
|
3,954
|
|
|
10%
|
|
13%
|
Operating profit
|
$
|
1,405
|
|
|
$
|
1,211
|
|
|
$
|
1,077
|
|
|
16%
|
|
12%
|
% Operating margin
|
29
|
%
|
|
27
|
%
|
|
27
|
%
|
|
|
|
|
|||
Diluted EPS from continuing operations
|
$
|
2.90
|
|
|
$
|
2.37
|
|
|
$
|
2.00
|
|
|
22%
|
|
19%
|
1
|
% changes in the tables throughout the MD&A are calculated off of the actual number, not the rounded number presented.
|
•
|
Serving our customers with innovative, must-have solutions;
|
•
|
Leveraging our unique portfolio of powerful brands and distinctive opportunities in the financial and commodity markets; and
|
•
|
Winning as a dynamic, global company.
|
•
|
Ensuring quality and excellence in everything we do;
|
•
|
Attracting and developing top-performing people; and
|
•
|
Delivering together as one connected company.
|
(in millions)
|
Years ended December 31,
|
|
% Change
|
||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
'13 vs '12
|
|
'12 vs '11
|
||||||
Revenue
|
$
|
4,875
|
|
|
$
|
4,450
|
|
|
$
|
3,954
|
|
|
10%
|
|
13%
|
Expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Operating-related expenses
|
1,584
|
|
|
1,486
|
|
|
1,387
|
|
|
7%
|
|
7%
|
|||
Selling and general expenses
|
1,737
|
|
|
1,664
|
|
|
1,377
|
|
|
4%
|
|
21%
|
|||
Depreciation and amortization
|
137
|
|
|
141
|
|
|
126
|
|
|
(3)%
|
|
12%
|
|||
Total expenses
|
3,458
|
|
|
3,291
|
|
|
2,890
|
|
|
5%
|
|
14%
|
|||
Other loss (income)
|
12
|
|
|
(52
|
)
|
|
(13
|
)
|
|
N/M
|
|
N/M
|
|||
Operating profit
|
1,405
|
|
|
1,211
|
|
|
1,077
|
|
|
16%
|
|
12%
|
|||
Interest expense, net
|
59
|
|
|
81
|
|
|
77
|
|
|
(26)%
|
|
4%
|
|||
Provision for taxes on income
|
443
|
|
|
404
|
|
|
374
|
|
|
9%
|
|
8%
|
|||
Income from continuing operations
|
903
|
|
|
726
|
|
|
626
|
|
|
24%
|
|
16%
|
|||
Discontinued operations, net
|
563
|
|
|
(234
|
)
|
|
308
|
|
|
N/M
|
|
N/M
|
|||
Less: net income from continuing operations attributable to noncontrolling interests
|
(91
|
)
|
|
(50
|
)
|
|
(19
|
)
|
|
81%
|
|
N/M
|
|||
Less: net loss (income) from discontinuing operations attributable to noncontrolling interests
|
1
|
|
|
(5
|
)
|
|
(4
|
)
|
|
N/M
|
|
6%
|
|||
Net income attributable to McGraw Hill Financial, Inc.
|
$
|
1,376
|
|
|
$
|
437
|
|
|
$
|
911
|
|
|
N/M
|
|
(52)%
|
(in millions)
|
Years ended December 31,
|
|
% Change
|
||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
’13 vs ’12
|
|
’12 vs ’11
|
||||||
Subscription / Non-transaction revenue
|
$
|
2,978
|
|
|
$
|
2,777
|
|
|
$
|
2,608
|
|
|
7%
|
|
6%
|
Non-subscription / Transaction revenue
|
$
|
1,897
|
|
|
$
|
1,673
|
|
|
$
|
1,346
|
|
|
13%
|
|
24%
|
|
|
|
|
|
|
|
|
|
|
||||||
Domestic revenue
|
$
|
2,892
|
|
|
$
|
2,684
|
|
|
$
|
2,373
|
|
|
8%
|
|
13%
|
International revenue
|
$
|
1,983
|
|
|
$
|
1,766
|
|
|
$
|
1,581
|
|
|
12%
|
|
12%
|
(in millions)
|
2013
|
|
2012
|
|
% Change
|
||||||||||||||
|
Operating-
related expenses
|
|
Selling and
general expenses
|
|
Operating-
related expenses
|
|
Selling and
general expenses
|
|
Operating-
related expenses
|
|
Selling and
general expenses
|
||||||||
S&P Ratings
|
$
|
770
|
|
|
$
|
477
|
|
|
$
|
692
|
|
|
$
|
450
|
|
|
11%
|
|
6%
|
S&P Capital IQ
|
490
|
|
|
416
|
|
|
455
|
|
|
410
|
|
|
8%
|
|
1%
|
||||
S&P DJ Indices
1
|
79
|
|
|
127
|
|
|
72
|
|
|
96
|
|
|
10%
|
|
32%
|
||||
C&C
|
323
|
|
|
368
|
|
|
337
|
|
|
365
|
|
|
(4)%
|
|
1%
|
||||
Intersegment eliminations
|
(76
|
)
|
|
—
|
|
|
(69
|
)
|
|
—
|
|
|
(11)%
|
|
—%
|
||||
Total segments
|
1,586
|
|
|
1,388
|
|
|
1,487
|
|
|
1,321
|
|
|
7%
|
|
5%
|
||||
Corporate
2
|
(2
|
)
|
|
349
|
|
|
(1
|
)
|
|
343
|
|
|
N/M
|
|
2%
|
||||
|
$
|
1,584
|
|
|
$
|
1,737
|
|
|
$
|
1,486
|
|
|
$
|
1,664
|
|
|
7%
|
|
4%
|
1
|
In 2013, selling and general expenses includes a $26 million non-cash impairment charge associated with an intangible asset acquired through the formation of our S&P Dow Jones Indices LLC joint venture. In 2012, selling and general expenses includes transaction costs of $15 million for our S&P Dow Jones Indices LLC joint venture.
|
2
|
In 2013, selling and general expenses primarily include pre-tax legal settlements of approximately $77 million, $64 million for our Growth and Value Plan, restructuring charges and charges related to our reduction in our real estate portfolio. In 2012, selling and general expenses includes expenses of $156 million for our Growth and Value Plan partially offset by a vacation accrual reversal of $52 million. These Growth and Value Plan costs primarily include professional fees and charges associated with our outsourcing initiatives and 2012 also includes severance charges, a charge related to a reduction in our lease commitments and transaction costs for our S&P Dow Jones Indices LLC joint venture.
|
(in millions)
|
2012
|
|
2011
|
|
% Change
|
||||||||||||||
|
Operating-
related expenses
|
|
Selling and
general expenses
|
|
Operating-
related expenses
|
|
Selling and
general expenses
|
|
Operating-
related expenses
|
|
Selling and
general expenses
|
||||||||
S&P Ratings
|
$
|
692
|
|
|
$
|
450
|
|
|
$
|
646
|
|
|
$
|
361
|
|
|
7%
|
|
25%
|
S&P Capital IQ
|
455
|
|
|
410
|
|
|
382
|
|
|
392
|
|
|
19%
|
|
5%
|
||||
S&P DJ Indices
1
|
72
|
|
|
96
|
|
|
75
|
|
|
56
|
|
|
(4)%
|
|
71%
|
||||
C&C
|
337
|
|
|
365
|
|
|
351
|
|
|
356
|
|
|
(4)%
|
|
3%
|
||||
Intersegment eliminations
|
(69
|
)
|
|
—
|
|
|
(63
|
)
|
|
—
|
|
|
(10)%
|
|
—%
|
||||
Total segments
|
1,487
|
|
|
1,321
|
|
|
1,391
|
|
|
1,165
|
|
|
7%
|
|
13%
|
||||
Corporate
2
|
(1
|
)
|
|
343
|
|
|
(4
|
)
|
|
212
|
|
|
(75)%
|
|
62%
|
||||
|
$
|
1,486
|
|
|
$
|
1,664
|
|
|
$
|
1,387
|
|
|
$
|
1,377
|
|
|
7%
|
|
21%
|
1
|
In 2012,
selling and general expenses includes transaction costs of $15 million for our S&P Dow Jones Indices LLC joint venture.
|
2
|
In 2012, selling and general expenses includes expenses of $156 million for our Growth and Value Plan, including costs related to the separation of MHE, restructuring costs and other related non-recurring costs, partially offset by a vacation accrual reversal of $52 million.
|
•
|
During the fourth quarter of 2013, we recognized a non-cash impairment charge of $36 million related to the facilities and associated infrastructure of one of our data centers that we are in the process of selling.
|
•
|
On September 30, 2013, we completed the sale of Financial Communications, which was part of our S&P Capital IQ segment.
|
•
|
On August 27, 2013, CRISIL sold its 49% equity interest in India Index Services & Products Ltd. This investment was held within our S&P Ratings segment.
|
•
|
On August 1, 2013, we completed the sale of Aviation Week within our C&C segment to Penton, a privately held business information company.
|
(in millions)
|
Years ended December 31,
|
% Change
|
|||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
'13 vs '12
|
|
'12 vs '11
|
||||||
S&P Ratings
|
$
|
1,000
|
|
|
$
|
849
|
|
|
$
|
720
|
|
|
18%
|
|
18%
|
S&P Capital IQ
|
211
|
|
|
208
|
|
|
214
|
|
|
1%
|
|
(3)%
|
|||
S&P DJ Indices
|
278
|
|
|
212
|
|
|
189
|
|
|
31%
|
|
12%
|
|||
C&C
|
311
|
|
|
248
|
|
|
180
|
|
|
25%
|
|
38%
|
|||
Total segment operating profit
|
1,800
|
|
|
1,517
|
|
|
1,303
|
|
|
19%
|
|
16%
|
|||
Unallocated expense
1
|
(395
|
)
|
|
(306
|
)
|
|
(226
|
)
|
|
29%
|
|
36%
|
|||
Total operating profit
|
$
|
1,405
|
|
|
$
|
1,211
|
|
|
$
|
1,077
|
|
|
16%
|
|
12%
|
1
|
Includes depreciation expense and expenses for our Growth and Value Plan, including restructuring costs and other related non-recurring costs. 2013 also includes a charge related to pre-tax legal settlements, a non-cash impairment charge related to the facilities and associated infrastructure of one of our data centers that we are in the process of selling and charges related to a reduction in our real estate portfolio. 2012 includes a benefit related to a vacation accrual reversal.
|
•
|
Intangible asset impairments of
$497
million that consisted of goodwill, prepublication and inventory assets at MHE's School Education Group ("SEG").
|
◦
|
As a result of the offer we received from Apollo Global Management, LLC in the fourth quarter of 2012, we performed a goodwill impairment review at MHE, which resulted in a full impairment of goodwill of
$478
million at SEG.
|
◦
|
An impairment charge of
$19
million was recorded on certain prepublication and inventory assets as targeted school programs were shut down.
|
•
|
Restructuring charges of
$39
million consisting primarily of employee severance costs related to a workforce reduction of approximately 530 positions.
|
•
|
Direct transaction costs of $17 million for legal and professional fees related to the sale of MHE.
|
•
|
A charge related to a lease commitment of
$3
million.
|
•
|
These charges were partially offset by a vacation accrual reversal of
$17
million
related to a change in our vacation policy
.
|
•
|
ratings related to new issuance of corporate and government debt instruments, and structured finance debt instruments;
|
•
|
bank loan ratings; and
|
•
|
corporate credit estimates, which are intended, based on an abbreviated analysis, to provide an indication of our opinion regarding creditworthiness of a company which does not currently have an S&P Ratings credit rating.
|
(in millions)
|
|
Years ended December 31,
|
|
% Change
|
||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
’13 vs ’12
|
|
’12 vs ’11
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Transaction
|
|
$
|
1,035
|
|
|
$
|
903
|
|
|
$
|
651
|
|
|
15
|
%
|
|
39
|
%
|
Non-transaction
|
|
1,239
|
|
|
1,131
|
|
|
1,116
|
|
|
10
|
%
|
|
1
|
%
|
|||
Total revenue
|
|
$
|
2,274
|
|
|
$
|
2,034
|
|
|
$
|
1,767
|
|
|
12
|
%
|
|
15
|
%
|
% of total revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Transaction
|
|
46
|
%
|
|
44
|
%
|
|
37
|
%
|
|
|
|
|
|||||
Non-transaction
|
|
54
|
%
|
|
56
|
%
|
|
63
|
%
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Domestic revenue
|
|
$
|
1,214
|
|
|
$
|
1,102
|
|
|
$
|
910
|
|
|
10
|
%
|
|
21
|
%
|
International revenue
|
|
$
|
1,060
|
|
|
$
|
932
|
|
|
$
|
857
|
|
|
14
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating profit
|
|
$
|
1,000
|
|
|
$
|
849
|
|
|
$
|
720
|
|
|
18
|
%
|
|
18
|
%
|
% Operating margin
|
|
44
|
%
|
|
42
|
%
|
|
41
|
%
|
|
|
|
|
•
|
Corporate issuance in the U.S. was up as an increase in investment grade debt issuance driven by a number of large issuance deals was offset by a decrease in high-yield debt issuance driven by interest rate volatility that occurred in the early part of the third quarter of 2013. High-yield debt issuance and investment-grade debt issuance comparisons reflect high volumes experienced in the second half of 2012 as issuers refinanced in advance of the uncertainty surrounding the U.S. fiscal cliff and Presidential election.
|
•
|
Corporate issuance in Europe was down driven by weakness in investment grade issuance reflecting difficult comparisons to 2012 and the fact that many companies had already met their refinancing needs. The decreases were partially offset by strong high-yield debt issuance reflecting issuers taking advantage of improving economic conditions.
|
|
|
2013 Compared to 2012
|
||||
Structured Finance
|
|
U.S.
|
|
Europe
|
||
Asset-Backed Securities (“ABS”)
|
|
(2
|
)%
|
|
—
|
%
|
Collateralized Debt Obligations (“CDO”)
|
|
63
|
%
|
|
**
|
|
Commercial Mortgage-Backed Securities (“CMBS”)
|
|
76
|
%
|
|
**
|
|
Residential Mortgage-Backed Securities (“RMBS”)
|
|
31
|
%
|
|
(56
|
)%
|
Covered Bonds
|
|
*
|
|
|
(19
|
)%
|
Total New Issue Dollars—Structured Finance
|
|
24
|
%
|
|
(18
|
)%
|
*
|
Represents no activity in 2013 and low issuance levels in 2012.
|
**
|
Represents low issuance levels in 2012.
|
•
|
ABS issuance in the U.S. was down slightly due to a decline in student loans and auto activity, partially offset by an increase in credit card activity. Student loan activity was down due to a lower level of Federal Family Education Loan Program ("FFELP") refinancing and a smaller volume of private market deals. Despite solid auto sales and growth in sub-prime lending, auto volumes declined as prime issuers shifted more funding to unsecured markets. The increase in credit card activity was partially driven by banks being more active in an effort to diversify and take advantage of favorable spreads. ABS issuance in Europe was flat as increased activity in the second half of the year reflecting improving economic conditions was offset by declines in the first half of 2013.
|
•
|
Issuance was up in the U.S. CDO market driven by corporate loan activity which benefited from strong credit performance and lower default rates, as new collateral managers entered the market and market participants issued ahead of regulatory changes. European issuance in the CDO market was minimal, however, issuance levels improved in 2013.
|
•
|
CMBS issuance was up in the U.S. due to improving sector fundamentals resulting in more attractive spreads. European CMBS issuance was also up, although off of a low 2012 base.
|
•
|
RMBS volume is up in the U.S. due to a slow revival of the non-agency private-label market driven by a small number of repetitive issuers and new entrants coming into the market. Despite relatively strong market fundamentals in Europe, issuance was down reflecting issuers taking advantage of the Bank of England's Funding for Lending Scheme.
|
•
|
Covered bond issuance (which are debt securities backed by mortgages or other high-quality assets that remain on the issuer's balance sheet) in Europe was down due to the European Central Bank's Long Term Refinancing Offering, the drive for banks to increase deposit funding and the impact of lower mortgage production in many jurisdictions - all collectively reducing funding needs.
|
•
|
Desktop Solutions
—
a product suite that provides data, analytics and third-party research for global finance professionals, which include Capital IQ and MarketScope Advisor;
|
•
|
Enterprise Solutions
—
integrated bulk data feeds that can be customized, which include QuantHouse, S&P Securities Evaluations, CUSIP and Compustat;
|
•
|
Ratings Intellectual Property ("IP")
—
commercial arm that sells Standard & Poor's Ratings' IP, which includes RatingsDirect® and RatingsXpress®; and
|
•
|
Proprietary Research
—
comprehensive source of market research for financial professionals, which includes Leveraged Commentary & Data, Global Market Intelligence and multi-asset-class research.
|
(in millions)
|
|
Years ended December 31,
|
|
% Change
|
||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
’13 vs ’12
|
|
’12 vs ’11
|
||||||||
Revenue
|
|
$
|
1,170
|
|
|
$
|
1,124
|
|
|
$
|
1,031
|
|
|
4
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Subscription revenue
|
|
$
|
1,056
|
|
|
$
|
1,014
|
|
|
$
|
922
|
|
|
4
|
%
|
|
10
|
%
|
Non-subscription revenue
|
|
$
|
114
|
|
|
$
|
110
|
|
|
$
|
109
|
|
|
4
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Domestic revenue
|
|
$
|
767
|
|
|
$
|
749
|
|
|
$
|
693
|
|
|
2
|
%
|
|
8
|
%
|
International revenue
|
|
$
|
403
|
|
|
$
|
375
|
|
|
$
|
338
|
|
|
7
|
%
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating profit
|
|
$
|
211
|
|
|
$
|
208
|
|
|
$
|
214
|
|
|
1
|
%
|
|
(3
|
)%
|
% Operating margin
|
|
18
|
%
|
|
19
|
%
|
|
21
|
%
|
|
|
|
|
•
|
Investment vehicles
—
such as, exchange traded funds (“ETFs”), which are based on the S&P and Dow Jones Indices and generate revenue through fees based on assets and underlying funds;
|
•
|
Listed derivatives
—
which generate royalties based on trading volumes of derivatives contracts listed on various exchanges;
|
•
|
Index-related licensing fees
—
which are either fixed or variable annual and per-issue fees for over-the-counter derivatives and retail-structured products; and
|
•
|
Data subscription
—
which support index fund management, portfolio analytics and research.
|
(in millions)
|
|
Years ended December 31,
|
|
% Change
|
||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
’13 vs ’12
|
|
’12 vs ’11
|
||||||
Revenue
|
|
$
|
493
|
|
|
$
|
388
|
|
|
$
|
323
|
|
|
27%
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Subscription revenue
|
|
$
|
103
|
|
|
$
|
87
|
|
|
$
|
71
|
|
|
19%
|
|
22%
|
Non-subscription revenue
|
|
$
|
390
|
|
|
$
|
301
|
|
|
$
|
252
|
|
|
30%
|
|
19%
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Domestic revenue
|
|
$
|
385
|
|
|
$
|
301
|
|
|
$
|
248
|
|
|
28%
|
|
21%
|
International revenue
|
|
$
|
108
|
|
|
$
|
87
|
|
|
$
|
75
|
|
|
24%
|
|
16%
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating profit
|
|
$
|
278
|
|
|
$
|
212
|
|
|
$
|
189
|
|
|
31%
|
|
12%
|
Less: net income attributable to noncontrolling interests
|
|
73
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
N/M
|
|
N/M
|
|
Net operating profit
|
|
$
|
205
|
|
|
$
|
178
|
|
|
$
|
189
|
|
|
15%
|
|
(6)%
|
% Operating margin
|
|
56
|
%
|
|
55
|
%
|
|
59
|
%
|
|
|
|
|
|||
% Net operating margin
|
|
42
|
%
|
|
46
|
%
|
|
59
|
%
|
|
|
|
|
•
|
Platts
—
provides essential price data, analytics, and industry insight that enable commodities markets to perform with greater transparency and efficiency;
|
•
|
J.D. Power
—
provides essential consumer intelligence to help businesses measure, understand, and improve the key performance metrics that drive growth and profitability; and
|
•
|
McGraw Hill Construction
—
provides essential data, news, insights, and intelligence to better inform construction professionals' decisions and strengthen their market position.
|
•
|
Subscription revenue
—
subscriptions to our real-time news, market data and price assessments, along with other print and digital information products, primarily serving the energy and construction markets and the automotive industry; and
|
•
|
Non-subscription revenue
—
primarily from licensing of our proprietary market price data and price assessments to commodity exchanges, syndicated and proprietary research studies, conference sponsorship, consulting engagements, and events.
|
(in millions)
|
|
Years ended December 31,
|
|
% Change
|
||||||||||||||
|
|
2013
|
|
2012
|
|
2011
|
|
’13 vs ’12
|
|
’12 vs ’11
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodities
|
|
$
|
550
|
|
|
$
|
489
|
|
|
$
|
419
|
|
|
13
|
%
|
|
17
|
%
|
Commercial
|
|
464
|
|
|
484
|
|
|
477
|
|
|
(4
|
)%
|
|
1
|
%
|
|||
Total revenue
|
|
$
|
1,014
|
|
|
$
|
973
|
|
|
$
|
896
|
|
|
4
|
%
|
|
9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Subscription revenue
|
|
$
|
656
|
|
|
$
|
614
|
|
|
$
|
564
|
|
|
7
|
%
|
|
9
|
%
|
Non-subscription revenue
|
|
$
|
358
|
|
|
$
|
359
|
|
|
$
|
332
|
|
|
—
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Domestic revenue
|
|
$
|
563
|
|
|
$
|
563
|
|
|
$
|
551
|
|
|
—
|
%
|
|
2
|
%
|
International revenue
|
|
$
|
451
|
|
|
$
|
410
|
|
|
$
|
345
|
|
|
10
|
%
|
|
19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating profit
|
|
$
|
311
|
|
|
$
|
248
|
|
|
$
|
180
|
|
|
25
|
%
|
|
38
|
%
|
% Operating margin
|
|
31
|
%
|
|
26
|
%
|
|
20
|
%
|
|
|
|
|
(in millions)
|
|
Years ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Net cash provided by (used for):
|
|
|
|
|
|
|
||||||
Operating activities from continuing operations
|
|
$
|
816
|
|
|
$
|
747
|
|
|
$
|
924
|
|
Investing activities from continuing operations
|
|
(130
|
)
|
|
(247
|
)
|
|
(271
|
)
|
|||
Financing activities from continuing operations
|
|
(1,743
|
)
|
|
(905
|
)
|
|
(1,660
|
)
|
(in millions)
|
Less than 1
Year
|
|
1-3 Years
|
|
4-5 Years
|
|
After 5
Years
|
|
Total
|
||||||||||
Debt:
1
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Principal payments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400
|
|
|
$
|
399
|
|
|
$
|
799
|
|
Interest payments
|
50
|
|
|
99
|
|
|
76
|
|
|
498
|
|
|
723
|
|
|||||
Operating leases
2
|
161
|
|
|
278
|
|
|
189
|
|
|
238
|
|
|
866
|
|
|||||
Purchase obligations and other
3
|
100
|
|
|
146
|
|
|
65
|
|
|
—
|
|
|
311
|
|
|||||
Total contractual cash obligations
|
$
|
311
|
|
|
$
|
523
|
|
|
$
|
730
|
|
|
$
|
1,135
|
|
|
$
|
2,699
|
|
1
|
Our debt obligations are described in Note 5 –
Debt
to our consolidated financial statements.
|
2
|
Amounts shown include taxes and escalation payments, see Note 12 –
Commitments and Contingencies
to our consolidated financial statements for further discussion on our operating lease obligations
.
|
3
|
Other consists primarily of commitments for unconditional purchase obligations in contracts for information-technology outsourcing and certain enterprise-wide information-technology software licensing and maintenance.
|
(in millions)
|
|
Years ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
Cash provided by operating activities
|
|
$
|
816
|
|
|
$
|
747
|
|
|
$
|
924
|
|
Capital expenditures
|
|
(117
|
)
|
|
(97
|
)
|
|
(92
|
)
|
|||
Dividends and other payments paid to noncontrolling interests
|
|
(75
|
)
|
|
(24
|
)
|
|
(23
|
)
|
|||
Free cash flow
|
|
$
|
624
|
|
|
$
|
626
|
|
|
$
|
809
|
|
•
|
Discount rate assumptions are based on current yields on high-grade corporate long-term bonds.
|
•
|
Healthcare cost trend assumptions are based on historical market data, the near-term outlook and an assessment of likely long-term trends.
|
•
|
The expected return on assets assumption is calculated based on the plan’s asset allocation strategy and projected market returns over the long-term.
|
|
|
Retirement Plans
|
|
Postretirement Plans
|
||||||||||||||
January 1
|
|
2014
|
|
2013
|
|
2012
|
|
2014
|
|
2013
|
|
2012
|
||||||
Discount rate
1
|
|
5.0
|
%
|
|
4.1
|
%
|
|
5.1
|
%
|
|
4.20
|
%
|
|
3.45
|
%
|
|
4.45
|
%
|
Return on assets
|
|
7.125
|
%
|
|
7.25
|
%
|
|
7.75
|
%
|
|
|
|
|
|
|
|||
Weighted-average healthcare cost rate
|
|
|
|
|
|
|
|
7.0
|
%
|
|
7.5
|
%
|
|
8.0
|
%
|
1
|
The discount rate assumption used to determine the net periodic pension and postretirement benefit cost on our U.S. retirement plans on January 1 is based on the discount rate assumption used to determine the benefit obligation as of December 31 of the previous year.
|
|
|
Years ended December 31,
|
||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||
Risk-free average interest rate
|
|
0.1 - 2.9%
|
|
|
N/A
|
|
0.2 - 3.5%
|
|
||
Dividend yield
|
|
2.09 - 2.07%
|
|
|
N/A
|
|
2.5 - 3.0%
|
|
||
Volatility
|
|
29 - 45%
|
|
|
N/A
|
|
21 - 51%
|
|
||
Expected life (years)
|
|
6.1 - 6.2
|
|
|
N/A
|
|
6.1 - 6.2
|
|
||
Weighted-average grant-date fair value per option
|
|
$
|
14.46
|
|
|
N/A
|
|
$
|
10.61
|
|
|
Page
|
5
Debt
|
|
(in millions, except per share data)
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Revenue
|
$
|
4,875
|
|
|
$
|
4,450
|
|
|
$
|
3,954
|
|
Expenses:
|
|
|
|
|
|
||||||
Operating-related expenses
|
1,584
|
|
|
1,486
|
|
|
1,387
|
|
|||
Selling and general expenses
|
1,737
|
|
|
1,664
|
|
|
1,377
|
|
|||
Depreciation
|
86
|
|
|
93
|
|
|
93
|
|
|||
Amortization of intangibles
|
51
|
|
|
48
|
|
|
33
|
|
|||
Total expenses
|
3,458
|
|
|
3,291
|
|
|
2,890
|
|
|||
Other loss (income)
|
12
|
|
|
(52
|
)
|
|
(13
|
)
|
|||
Operating profit
|
1,405
|
|
|
1,211
|
|
|
1,077
|
|
|||
Interest expense, net
|
59
|
|
|
81
|
|
|
77
|
|
|||
Income from continuing operations before taxes on income
|
1,346
|
|
|
1,130
|
|
|
1,000
|
|
|||
Provision for taxes on income
|
443
|
|
|
404
|
|
|
374
|
|
|||
Income from continuing operations
|
903
|
|
|
726
|
|
|
626
|
|
|||
Discontinued operations, net of tax:
|
|
|
|
|
|
||||||
(Loss) income from discontinued operations
|
(26
|
)
|
|
(234
|
)
|
|
234
|
|
|||
Gain on sale of discontinued operations (includes $(75) accumulated other comprehensive income reclassifications in 2013 for foreign currency translation adjustment)
|
589
|
|
|
—
|
|
|
74
|
|
|||
Discontinued operations, net
|
563
|
|
|
(234
|
)
|
|
308
|
|
|||
Net income
|
1,466
|
|
|
492
|
|
|
934
|
|
|||
Less: net income from continuing operations attributable to noncontrolling interests
|
(91
|
)
|
|
(50
|
)
|
|
(19
|
)
|
|||
Less: net income from discontinued operations attributable to noncontrolling interests
|
1
|
|
|
(5
|
)
|
|
(4
|
)
|
|||
Net income attributable to McGraw Hill Financial, Inc.
|
$
|
1,376
|
|
|
$
|
437
|
|
|
$
|
911
|
|
|
|
|
|
|
|
||||||
Amounts attributable to McGraw Hill Financial, Inc. common shareholders:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
812
|
|
|
$
|
676
|
|
|
$
|
607
|
|
Income (loss) from discontinued operations
|
564
|
|
|
(239
|
)
|
|
304
|
|
|||
Net income
|
$
|
1,376
|
|
|
$
|
437
|
|
|
$
|
911
|
|
|
|
|
|
|
|
||||||
Earnings per share attributable to McGraw Hill Financial, Inc. common shareholders:
|
|
|
|
|
|
||||||
Basic:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
2.96
|
|
|
$
|
2.43
|
|
|
$
|
2.03
|
|
Income (loss) from discontinued operations
|
2.05
|
|
|
(0.86
|
)
|
|
1.02
|
|
|||
Net income
|
$
|
5.01
|
|
|
$
|
1.57
|
|
|
$
|
3.05
|
|
Diluted:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
2.90
|
|
|
$
|
2.37
|
|
|
$
|
2.00
|
|
Income (loss) from discontinued operations
|
2.01
|
|
|
(0.84
|
)
|
|
1.00
|
|
|||
Net income
|
$
|
4.91
|
|
|
$
|
1.53
|
|
|
$
|
3.00
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
274.5
|
|
|
278.6
|
|
|
298.1
|
|
|||
Diluted
|
279.8
|
|
|
284.6
|
|
|
303.6
|
|
|||
|
|
|
|
|
|
||||||
Dividend declared per common share
|
$
|
1.12
|
|
|
$
|
1.02
|
|
|
$
|
1.00
|
|
Special dividend declared per common share
|
$
|
—
|
|
|
$
|
2.50
|
|
|
$
|
—
|
|
(in millions)
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net income
|
$
|
1,466
|
|
|
$
|
492
|
|
|
$
|
934
|
|
Other comprehensive income:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
93
|
|
|
29
|
|
|
(35
|
)
|
|||
Income tax effect
|
(2
|
)
|
|
(19
|
)
|
|
11
|
|
|||
|
91
|
|
|
10
|
|
|
(24
|
)
|
|||
|
|
|
|
|
|
||||||
Pension and other postretirement benefit plans
|
385
|
|
|
(164
|
)
|
|
(45
|
)
|
|||
Income tax effect
|
(154
|
)
|
|
63
|
|
|
9
|
|
|||
|
231
|
|
|
(101
|
)
|
|
(36
|
)
|
|||
|
|
|
|
|
|
||||||
Unrealized gain (loss) on investment and forward exchange contract
|
2
|
|
|
(4
|
)
|
|
(12
|
)
|
|||
Income tax effect
|
(2
|
)
|
|
2
|
|
|
4
|
|
|||
|
—
|
|
|
(2
|
)
|
|
(8
|
)
|
|||
|
|
|
|
|
|
||||||
Comprehensive income
|
1,788
|
|
|
399
|
|
|
866
|
|
|||
Less: comprehensive income attributable to nonredeemable noncontrolling interests
|
(18
|
)
|
|
(20
|
)
|
|
(13
|
)
|
|||
Less: comprehensive income attributable to redeemable noncontrolling interests
|
(73
|
)
|
|
(34
|
)
|
|
—
|
|
|||
Comprehensive income attributable to McGraw Hill Financial, Inc.
|
$
|
1,697
|
|
|
$
|
345
|
|
|
$
|
853
|
|
(in millions)
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and equivalents
|
$
|
1,542
|
|
|
$
|
760
|
|
Short-term investments
|
18
|
|
|
1
|
|
||
Accounts receivable, net of allowance for doubtful accounts: 2013 - $52; 2012 - $54
|
979
|
|
|
954
|
|
||
Deferred income taxes
|
108
|
|
|
117
|
|
||
Prepaid and other current assets
|
228
|
|
|
127
|
|
||
Assets held for sale
|
61
|
|
|
1,940
|
|
||
Total current assets
|
2,936
|
|
|
3,899
|
|
||
Property and equipment:
|
|
|
|
||||
Buildings and leasehold improvements
|
436
|
|
|
439
|
|
||
Equipment and furniture
|
430
|
|
|
701
|
|
||
Total property and equipment
|
866
|
|
|
1,140
|
|
||
Less: accumulated depreciation
|
(617
|
)
|
|
(772
|
)
|
||
Property and equipment, net
|
249
|
|
|
368
|
|
||
Goodwill
|
1,412
|
|
|
1,438
|
|
||
Other intangible assets, net
|
1,033
|
|
|
1,081
|
|
||
Asset for pension benefits
|
261
|
|
|
98
|
|
||
Other non-current assets
|
170
|
|
|
168
|
|
||
Total assets
|
$
|
6,061
|
|
|
$
|
7,052
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
219
|
|
|
$
|
249
|
|
Accrued compensation and contributions to retirement plans
|
427
|
|
|
453
|
|
||
Short-term debt
|
—
|
|
|
457
|
|
||
Income taxes currently payable
|
15
|
|
|
158
|
|
||
Unearned revenue
|
1,309
|
|
|
1,229
|
|
||
Other current liabilities
|
402
|
|
|
457
|
|
||
Liabilities held for sale
|
—
|
|
|
664
|
|
||
Total current liabilities
|
2,372
|
|
|
3,667
|
|
||
Long-term debt
|
799
|
|
|
799
|
|
||
Pension and other postretirement benefits
|
264
|
|
|
529
|
|
||
Deferred income taxes
|
205
|
|
|
56
|
|
||
Other non-current liabilities
|
267
|
|
|
351
|
|
||
Total liabilities
|
3,907
|
|
|
5,402
|
|
||
Redeemable noncontrolling interest
|
810
|
|
|
810
|
|
||
Commitments and contingencies (Note 12)
|
|
|
|
||||
Equity:
|
|
|
|
||||
Common stock, $1 par value: authorized - 600 million shares; issued - 412 million shares in 2013 and 2012
|
412
|
|
|
412
|
|
||
Additional paid-in capital
|
447
|
|
|
492
|
|
||
Retained income
|
7,384
|
|
|
6,525
|
|
||
Accumulated other comprehensive loss
|
(196
|
)
|
|
(517
|
)
|
||
Less: common stock in treasury - at cost: 2013 - 141 million shares; 2012 - 133 million shares
|
(6,746
|
)
|
|
(6,145
|
)
|
||
Total equity – controlling interests
|
1,301
|
|
|
767
|
|
||
Total equity – noncontrolling interests (including 2013 - $25 and 2012 - $25 attributable to discontinued operations)
|
43
|
|
|
73
|
|
||
Total equity
|
1,344
|
|
|
840
|
|
||
Total liabilities and equity
|
$
|
6,061
|
|
|
$
|
7,052
|
|
(in millions)
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
1,466
|
|
|
$
|
492
|
|
|
$
|
934
|
|
Less: income (loss) from discontinued operations
|
563
|
|
|
(234
|
)
|
|
308
|
|
|||
Net income from continuing operations
|
903
|
|
|
726
|
|
|
626
|
|
|||
Adjustments to reconcile income from continuing operations to cash provided by operating activities from continuing operations:
|
|
|
|
|
|
||||||
Depreciation
|
86
|
|
|
93
|
|
|
93
|
|
|||
Amortization of intangibles
|
51
|
|
|
48
|
|
|
33
|
|
|||
Provision for losses on accounts receivable
|
22
|
|
|
32
|
|
|
6
|
|
|||
Deferred income taxes
|
43
|
|
|
53
|
|
|
17
|
|
|||
Stock-based compensation
|
99
|
|
|
93
|
|
|
77
|
|
|||
Gain on dispositions, net
|
(24
|
)
|
|
—
|
|
|
(13
|
)
|
|||
Other
|
136
|
|
|
16
|
|
|
63
|
|
|||
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
|
|
|
|
|
|
||||||
Accounts receivable
|
(35
|
)
|
|
(239
|
)
|
|
14
|
|
|||
Prepaid and other current assets
|
(29
|
)
|
|
3
|
|
|
(16
|
)
|
|||
Accounts payable and accrued expenses
|
(93
|
)
|
|
60
|
|
|
(29
|
)
|
|||
Unearned revenue
|
108
|
|
|
17
|
|
|
44
|
|
|||
Other current liabilities
|
(89
|
)
|
|
(70
|
)
|
|
(52
|
)
|
|||
Net change in prepaid / accrued income taxes
|
(238
|
)
|
|
119
|
|
|
55
|
|
|||
Net change in other assets and liabilities
|
(124
|
)
|
|
(204
|
)
|
|
6
|
|
|||
Cash provided by operating activities from continuing operations
|
816
|
|
|
747
|
|
|
924
|
|
|||
Investing Activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(117
|
)
|
|
(97
|
)
|
|
(92
|
)
|
|||
Acquisitions, including contingent payments, net of cash acquired
|
(47
|
)
|
|
(177
|
)
|
|
(194
|
)
|
|||
Proceeds from dispositions
|
51
|
|
|
—
|
|
|
21
|
|
|||
Changes in short-term investments
|
(17
|
)
|
|
27
|
|
|
(6
|
)
|
|||
Cash used for investing activities from continuing operations
|
(130
|
)
|
|
(247
|
)
|
|
(271
|
)
|
|||
Financing Activities:
|
|
|
|
|
|
||||||
(Payments on) / additions to short-term debt
|
(457
|
)
|
|
457
|
|
|
—
|
|
|||
Payments on senior notes
|
—
|
|
|
(400
|
)
|
|
—
|
|
|||
Dividends paid to shareholders
|
(308
|
)
|
|
(984
|
)
|
|
(296
|
)
|
|||
Dividends and other payments paid to noncontrolling interests
|
(75
|
)
|
|
(24
|
)
|
|
(23
|
)
|
|||
Repurchase of treasury shares
|
(978
|
)
|
|
(295
|
)
|
|
(1,500
|
)
|
|||
Exercise of stock options
|
258
|
|
|
299
|
|
|
139
|
|
|||
Contingent payments
|
(12
|
)
|
|
—
|
|
|
—
|
|
|||
Purchase of additional CRISIL shares
|
(214
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefits from share-based payments
|
43
|
|
|
42
|
|
|
20
|
|
|||
Cash used for financing activities from continuing operations
|
(1,743
|
)
|
|
(905
|
)
|
|
(1,660
|
)
|
|||
Effect of exchange rate changes on cash from continuing operations
|
(1
|
)
|
|
5
|
|
|
(10
|
)
|
|||
Cash used for continuing operations
|
(1,058
|
)
|
|
(400
|
)
|
|
(1,017
|
)
|
|||
Discontinued Operations:
|
|
|
|
|
|
||||||
Cash (used for) provided by operating activities
|
(265
|
)
|
|
520
|
|
|
420
|
|
|||
Cash provided by (used for) investing activities
|
2,129
|
|
|
(198
|
)
|
|
25
|
|
|||
Cash used for financing activities
|
(25
|
)
|
|
(12
|
)
|
|
(4
|
)
|
|||
Effect of exchange rate changes on cash
|
1
|
|
|
3
|
|
|
(5
|
)
|
|||
Effect of change in cash and equivalents
|
—
|
|
|
12
|
|
|
—
|
|
|||
Cash provided by discontinued operations
|
1,840
|
|
|
325
|
|
|
436
|
|
|||
Net change in cash and equivalents
|
782
|
|
|
(75
|
)
|
|
(581
|
)
|
|||
Cash and equivalents at beginning of year
|
760
|
|
|
835
|
|
|
1,416
|
|
|||
Cash and equivalents at end of year
|
$
|
1,542
|
|
|
$
|
760
|
|
|
$
|
835
|
|
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest (including discontinued operations)
|
$
|
50
|
|
|
$
|
77
|
|
|
$
|
71
|
|
Income taxes (including discontinued operations)
|
$
|
787
|
|
|
$
|
243
|
|
|
$
|
452
|
|
(in millions)
|
Common Stock $1 par
|
|
Additional Paid-in Capital
|
|
Retained Income
|
|
Accumulated
Other Comprehensive Loss |
|
Less: Treasury Stock
|
|
Total MHFI Equity
|
|
Noncontrolling Interests
|
|
Total Equity
|
||||||||||||||||
Balance as of December 31, 2010
|
$
|
412
|
|
|
$
|
67
|
|
|
$
|
7,057
|
|
|
$
|
(367
|
)
|
|
$
|
4,958
|
|
|
$
|
2,211
|
|
|
$
|
81
|
|
|
$
|
2,292
|
|
Comprehensive income
|
|
|
|
|
911
|
|
|
(58
|
)
|
|
|
|
853
|
|
|
13
|
|
|
866
|
|
|||||||||||
Dividends
|
|
|
|
|
(301
|
)
|
|
|
|
|
|
(301
|
)
|
|
(12
|
)
|
|
(313
|
)
|
||||||||||||
Noncontrolling interest transactions
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
(3
|
)
|
|
(4
|
)
|
|
(7
|
)
|
||||||||||||
Share repurchases
|
|
|
(73
|
)
|
|
|
|
|
|
1,427
|
|
|
(1,500
|
)
|
|
|
|
(1,500
|
)
|
||||||||||||
Employee stock plans, net of tax benefit
|
|
|
103
|
|
|
|
|
|
|
(145
|
)
|
|
248
|
|
|
|
|
248
|
|
||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
$
|
(2
|
)
|
|
(2
|
)
|
||||||||||||
Balance as of December 31, 2011
|
$
|
412
|
|
|
$
|
94
|
|
|
$
|
7,667
|
|
|
$
|
(425
|
)
|
|
$
|
6,240
|
|
|
$
|
1,508
|
|
|
$
|
76
|
|
|
$
|
1,584
|
|
Comprehensive income
1
|
|
|
|
|
437
|
|
|
(92
|
)
|
|
|
|
345
|
|
|
20
|
|
|
365
|
|
|||||||||||
Dividends
|
|
|
|
|
(989
|
)
|
|
|
|
|
|
(989
|
)
|
|
(22
|
)
|
|
(1,011
|
)
|
||||||||||||
Noncontrolling interest transactions
|
|
|
350
|
|
|
(573
|
)
|
|
|
|
|
|
(223
|
)
|
|
|
|
|
(223
|
)
|
|||||||||||
Share repurchases
|
|
|
50
|
|
|
|
|
|
|
345
|
|
|
(295
|
)
|
|
(3
|
)
|
|
(298
|
)
|
|||||||||||
Employee stock plans, net of tax benefit
|
|
|
(2
|
)
|
|
|
|
|
|
(440
|
)
|
|
438
|
|
|
|
|
438
|
|
||||||||||||
Change in redemption value of redeemable noncontrolling interest
|
|
|
|
|
(17
|
)
|
|
|
|
|
|
(17
|
)
|
|
|
|
(17
|
)
|
|||||||||||||
Other
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|||||||||||||
Balance as of December 31, 2012
|
$
|
412
|
|
|
$
|
492
|
|
|
$
|
6,525
|
|
|
$
|
(517
|
)
|
|
$
|
6,145
|
|
|
$
|
767
|
|
|
$
|
73
|
|
|
$
|
840
|
|
Comprehensive income
1
|
|
|
|
|
1,376
|
|
|
321
|
|
|
|
|
1,697
|
|
|
18
|
|
|
1,715
|
|
|||||||||||
Dividends
|
|
|
|
|
(315
|
)
|
|
|
|
|
|
(315
|
)
|
|
(10
|
)
|
|
(325
|
)
|
||||||||||||
Noncontrolling interest adjustments related to discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(22
|
)
|
|
(22
|
)
|
||||||||||||
Share repurchases
|
|
|
|
|
|
|
|
|
|
989
|
|
|
(989
|
)
|
|
|
|
(989
|
)
|
||||||||||||
Employee stock plans, net of tax benefit
|
|
|
(45
|
)
|
|
|
|
|
|
(388
|
)
|
|
343
|
|
|
|
|
343
|
|
||||||||||||
Change in redemption value of redeemable noncontrolling interest
|
|
|
|
|
11
|
|
|
|
|
|
|
11
|
|
|
|
|
11
|
|
|||||||||||||
Increase in CRISIL ownership
|
|
|
|
|
(216
|
)
|
|
|
|
|
|
(216
|
)
|
|
(17
|
)
|
|
(233
|
)
|
||||||||||||
Other
|
|
|
|
|
3
|
|
|
|
|
|
|
3
|
|
|
1
|
|
|
4
|
|
||||||||||||
Balance as of December 31, 2013
|
$
|
412
|
|
|
$
|
447
|
|
|
$
|
7,384
|
|
|
$
|
(196
|
)
|
|
$
|
6,746
|
|
|
$
|
1,301
|
|
|
$
|
43
|
|
|
$
|
1,344
|
|
1
|
Excludes
$73
million and
$34
million in 2013 and 2012, respectively, attributable to redeemable noncontrolling interest.
|
•
|
S&P Ratings is an independent provider of credit ratings, research and analytics, offering investors and market participants information, ratings and benchmarks.
|
•
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S&P DJ Indices is a global leading index provider that maintains a wide variety of valuation and index benchmarks for investment advisors, wealth managers and institutional investors.
|
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|
C&C consists of business-to-business companies specializing in commercial and commodities markets that deliver their customers access to high-value information, data, analytic services and pricing benchmarks.
|
•
|
In December 2013 we purchased the intellectual property rights to a range of commodities indices developed by Goldman Sachs as well as a limited-use license to promote the commodities indices using the Goldman Sachs Commodity Index trade marks. The commodities indices provide us with a leading benchmark that measures general price movements and inflation in the world economy. We accounted for the acquisition of the intellectual property on a cost basis.
|
•
|
In June of 2013 we made a voluntary open offer to purchase up to an additional
22.23%
of the total equity shares outstanding in CRISIL Limited ("CRISIL"), our majority owned Indian credit rating agency within our S&P Ratings segment. In August of 2013, at the conclusion of the tender offer period, we acquired approximately
11 million
equity shares representing
15.07%
of CRISIL's total outstanding equity shares for
$214 million
, increasing our ownership percentage in CRISIL to
67.84%
from
52.77%
.
|
•
|
On June 29, 2012, we closed our transaction with CME Group, Inc. (“CME Group”) and CME Group Index Services LLC (“CGIS”), a joint venture between CME Group and Dow Jones & Company, Inc., to form a new company, S&P Dow Jones Indices LLC. See below for further detail related to this transaction.
|
•
|
On June 29, 2012, we acquired Credit Market Analysis Limited (“CMA”) from the CME Group. CMA provides independent data concerning the over-the-counter markets. CMA's data and technology will enhance our capability to provide pricing and related over-the-counter information.
|
•
|
On April 3, 2012, we completed the acquisition of QuantHouse, an independent global provider of end-to-end systematic low-latency market data solutions. The acquisition allows us to offer real-time monitors, derived data sets and analytics as well as the ability to package and resell this data as part of a core solution.
|
•
|
On February 8, 2012, we completed the acquisition of R² Technologies (“R²”). R² provides advanced risk and scenario-based analytics to traders, portfolio and risk managers for pricing, hedging and capital management across asset classes.
|
•
|
On November 1, 2012, we completed the acquisition of Kingsman SA (“Kingsman”), a privately-held, Switzerland-based provider of price information and analytics for the global sugar and biofuels markets. The acquisition of Kingsman will expand our presence in sugar and biofuels information markets and has the potential to provide growth in the global agricultural information markets.
|
•
|
On July 4, 2012, CRISIL, our majority owned Indian credit rating agency, completed the acquisition of Coalition Development Ltd. (“Coalition”), a privately-held U.K. analytics company, and its subsidiaries. Coalition provides high-end analytics to leading global investment banks and other financial services firms. Coalition has been integrated into CRISIL's Global Research & Analytics business.
|
(in millions)
|
|
||
Fair value of 27% of S&P Index
|
$
|
571
|
|
Fair value of redeemable noncontrolling interest associated with net assets acquired
|
221
|
|
|
Total
|
$
|
792
|
|
(in millions)
|
|
||
Current assets
|
$
|
79
|
|
Intangible assets:
|
|
||
Indefinite-lived intangibles
|
470
|
|
|
Customer relationships
|
110
|
|
|
Other intangibles
|
33
|
|
|
Goodwill
|
111
|
|
|
Current liabilities
|
(11
|
)
|
|
Total net assets
|
$
|
792
|
|
•
|
On July 1, 2011, we acquired the issued and outstanding shares of Steel Business Briefing Group (the “SBB Group”), a privately held U.K. company and leading provider of news, pricing and analytics to the global steel market. The SBB Group provides subscription-based, electronic products to the steel industry and its participants through two principal businesses, Steel Business Briefing and The Steel Index. The SBB Group is included within Platts, part of our C&C segment. In connection with the preliminary purchase price allocation, estimates of the fair values of long-lived and intangible assets have been determined utilizing currently available information and are subject to finalization.
|
•
|
On January 3, 2011, we acquired all of the issued and outstanding membership interest units of Bentek Energy LLC (“Bentek”), which is included as part of our C&C segment. Bentek offers its customers a comprehensive portfolio of data, information and analytics products in the natural gas and liquids sector. The primary purpose of the acquisition was to acquire Bentek’s knowledge, skill and expertise in gathering high-quality detailed data and their ability to identify key relationships within the data critical to industry participants.
|
(in millions)
|
Years ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Fair value of assets acquired
|
$
|
—
|
|
|
$
|
1,071
|
|
|
$
|
214
|
|
Fair value of consideration transferred for DJI business
|
—
|
|
|
792
|
|
|
—
|
|
|||
Cash paid (net of cash acquired)
|
—
|
|
|
177
|
|
|
194
|
|
|||
Liabilities assumed
1
|
$
|
—
|
|
|
$
|
102
|
|
|
$
|
20
|
|
1
|
2013 acquisitions did not result in any liabilities assumed.
|
•
|
On September 30, 2013, we completed the sale of Financial Communications, which was part of our S&P Capital IQ segment.
|
•
|
On August 27, 2013, CRISIL sold its
49%
equity interest in India Index Services & Products Ltd. This investment was held within our S&P Ratings segment.
|
•
|
On August 1, 2013, we completed the sale Aviation Week within our C&C segment to Penton, a privately held business information company.
|
(in millions)
|
Years ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Revenue
|
$
|
268
|
|
|
$
|
2,062
|
|
|
$
|
2,382
|
|
Expenses
|
310
|
|
|
2,287
|
|
|
2,035
|
|
|||
Operating (loss) income
|
(42
|
)
|
|
(225
|
)
|
|
347
|
|
|||
Interest expense (income), net
|
2
|
|
|
(2
|
)
|
|
(3
|
)
|
|||
(Loss) income before taxes on (loss) income
|
(44
|
)
|
|
(223
|
)
|
|
350
|
|
|||
(Benefit) provision for taxes on (loss) income
|
(18
|
)
|
|
11
|
|
|
116
|
|
|||
(Loss) income from discontinued operations, net of tax
|
(26
|
)
|
|
(234
|
)
|
|
234
|
|
|||
Pre-tax gain on sale from discontinued operations
|
888
|
|
|
—
|
|
|
122
|
|
|||
Provision for taxes on gain on sale
|
299
|
|
|
—
|
|
|
48
|
|
|||
Gain on sale of discontinued operations, net of tax
|
589
|
|
|
—
|
|
|
74
|
|
|||
Discontinued operations, net
|
563
|
|
|
(234
|
)
|
|
308
|
|
|||
Less: net (loss) income attributable to noncontrolling interests
|
(1
|
)
|
|
5
|
|
|
4
|
|
|||
Income (loss) from discontinued operations attributable to McGraw Hill Financial, Inc. common shareholders
|
$
|
564
|
|
|
$
|
(239
|
)
|
|
$
|
304
|
|
•
|
Intangible asset impairments of
$497 million
that consisted of goodwill, prepublication and inventory assets at MHE's School Education Group ("SEG").
|
◦
|
As a result of the offer we received from Apollo Global Management, LLC in the fourth quarter of 2012, we performed a goodwill impairment review at MHE, which resulted in a full impairment of goodwill of
$478 million
|
◦
|
An impairment charge of
$19 million
was recorded on certain prepublication and inventory assets as targeted school programs were shut down.
|
•
|
Restructuring charges of
$39 million
consisting primarily of employee severance costs related to a workforce reduction of approximately
530
positions.
|
•
|
Direct transaction costs of
$17 million
for legal and professional fees related to the sale of MHE.
|
•
|
A charge related to a lease commitment of
$3 million
.
|
•
|
These charges were partially offset by a vacation accrual reversal of
$17 million
related to a change in our vacation policy.
|
(in millions)
|
December 31, 2012
|
||
Accounts receivable, net
|
$
|
333
|
|
Property and equipment, net
|
122
|
|
|
Goodwill
|
469
|
|
|
Other intangible assets, net
|
156
|
|
|
Inventories, net
|
235
|
|
|
Prepublication costs
|
304
|
|
|
Other assets
|
321
|
|
|
Assets held for sale
|
$
|
1,940
|
|
|
|
||
Accounts payable and accrued expenses
|
$
|
123
|
|
Unearned revenue
|
192
|
|
|
Other liabilities
|
349
|
|
|
Liabilities held for sale
|
$
|
664
|
|
(in millions)
|
S&P Ratings
|
|
S&P Capital IQ
|
|
S&P DJ Indices
|
|
C&C
|
|
Total
|
||||||||||
Balance as of December 31, 2011
|
$
|
197
|
|
|
$
|
238
|
|
|
$
|
223
|
|
|
$
|
446
|
|
|
$
|
1,104
|
|
Acquisitions
|
29
|
|
|
164
|
|
|
111
|
|
|
21
|
|
|
325
|
|
|||||
Transfers/reorganizations
|
(95
|
)
|
|
53
|
|
|
45
|
|
|
—
|
|
|
3
|
|
|||||
Other (primarily Fx)
|
(1
|
)
|
|
2
|
|
|
1
|
|
|
4
|
|
|
6
|
|
|||||
Balance as of December 31, 2012
|
130
|
|
|
457
|
|
|
380
|
|
|
471
|
|
|
1,438
|
|
|||||
Dispositions
|
—
|
|
|
(3
|
)
|
|
(4
|
)
|
|
(29
|
)
|
|
(36
|
)
|
|||||
Other (primarily Fx)
|
(5
|
)
|
|
15
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||
Balance as of December 31, 2013
|
$
|
125
|
|
|
$
|
469
|
|
|
$
|
376
|
|
|
$
|
442
|
|
|
$
|
1,412
|
|
•
|
$380 million
and
$90 million
, for Dow Jones Indices intellectual property and the Dow Jones tradename, respectively, that we recorded as part of the transaction to form S&P Dow Jones Indices LLC in 2012 further described in Note 2 –
Acquisitions and Divestitures,
and
|
•
|
$164 million
within our C&C segment for the J.D. Power and Associates tradename.
|
1
|
We incurred a
$26 million
non-cash impairment charge associated with an intangible asset acquired through the formation of our S&P Dow Jones Indices LLC joint venture.
|
(in millions)
|
Amortization
expense
|
|
Expected
amortization
expense
|
||||
2011
|
$
|
33
|
|
|
|
||
2012
|
48
|
|
|
|
|||
2013
|
51
|
|
|
|
|||
2014
|
|
|
$
|
47
|
|
||
2015
|
|
|
45
|
|
|||
2016
|
|
|
45
|
|
|||
2017
|
|
|
42
|
|
|||
2018
|
|
|
36
|
|
(in millions)
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Domestic operations
|
$
|
868
|
|
|
$
|
841
|
|
|
$
|
700
|
|
Foreign operations
|
478
|
|
|
289
|
|
|
300
|
|
|||
Total continuing income before taxes
|
$
|
1,346
|
|
|
$
|
1,130
|
|
|
$
|
1,000
|
|
(in millions)
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Federal:
|
|
|
|
|
|
||||||
Current
|
$
|
209
|
|
|
$
|
194
|
|
|
$
|
238
|
|
Deferred
|
51
|
|
|
74
|
|
|
(6
|
)
|
|||
Total federal
|
260
|
|
|
268
|
|
|
232
|
|
|||
Foreign:
|
|
|
|
|
|
||||||
Current
|
152
|
|
|
91
|
|
|
93
|
|
|||
Deferred
|
(19
|
)
|
|
(9
|
)
|
|
13
|
|
|||
Total foreign
|
133
|
|
|
82
|
|
|
106
|
|
|||
State and local:
|
|
|
|
|
|
||||||
Current
|
40
|
|
|
40
|
|
|
36
|
|
|||
Deferred
|
10
|
|
|
14
|
|
|
—
|
|
|||
Total state and local
|
50
|
|
|
54
|
|
|
36
|
|
|||
Total provision for taxes for continuing operations
|
443
|
|
|
404
|
|
|
374
|
|
|||
Provision for discontinued operations
|
281
|
|
|
11
|
|
|
164
|
|
|||
Total provision for taxes
|
$
|
724
|
|
|
$
|
415
|
|
|
$
|
538
|
|
|
Year Ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
U.S. federal statutory income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State and local income taxes
|
2.8
|
|
|
3.6
|
|
|
2.4
|
|
Foreign operations
|
(3.7
|
)
|
|
(2.6
|
)
|
|
(3.0
|
)
|
S&P Dow Jones Indices LLC joint venture
|
(1.9
|
)
|
|
(1.1
|
)
|
|
—
|
|
Other, net
|
0.7
|
|
|
0.9
|
|
|
3.0
|
|
Effective income tax rate for continuing operations
|
32.9
|
%
|
|
35.8
|
%
|
|
37.4
|
%
|
(in millions)
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Deferred tax assets:
|
|
|
|
||||
Postretirement benefits
|
$
|
32
|
|
|
$
|
201
|
|
Employee compensation
|
72
|
|
|
123
|
|
||
Accrued expenses
|
142
|
|
|
105
|
|
||
Unearned revenue
|
55
|
|
|
60
|
|
||
Allowance for doubtful accounts
|
15
|
|
|
17
|
|
||
Loss carryforwards
|
28
|
|
|
25
|
|
||
Other
|
10
|
|
|
—
|
|
||
Total deferred tax assets
|
354
|
|
|
531
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Goodwill and intangible assets
1
|
(379
|
)
|
|
(379
|
)
|
||
Fixed assets
|
(55
|
)
|
|
(54
|
)
|
||
Other
|
—
|
|
|
(1
|
)
|
||
Total deferred tax liabilities
|
(434
|
)
|
|
(434
|
)
|
||
Net deferred income tax (liability) asset before valuation allowance
|
(80
|
)
|
|
97
|
|
||
Valuation allowance
|
(5
|
)
|
|
(7
|
)
|
||
Net deferred income tax (liability) asset
|
$
|
(85
|
)
|
|
$
|
90
|
|
Reported as:
|
|
|
|
||||
Current deferred tax assets
|
$
|
108
|
|
|
$
|
117
|
|
Current deferred tax liabilities
|
(10
|
)
|
|
(7
|
)
|
||
Non-current deferred tax assets
|
22
|
|
|
36
|
|
||
Non-current deferred tax liabilities
|
(205
|
)
|
|
(56
|
)
|
||
Net deferred income tax (liability) asset
|
$
|
(85
|
)
|
|
$
|
90
|
|
1
|
See Note 2 –
Acquisitions and
Divestitures
for further discussion regarding the impact related to the S&P Dow Jones Indices LLC.
|
(in millions)
|
Years ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Balance at beginning of year
|
$
|
74
|
|
|
$
|
58
|
|
|
$
|
53
|
|
Additions based on tax positions related to the current year
|
27
|
|
|
14
|
|
|
12
|
|
|||
Additions for tax positions of prior years
|
10
|
|
|
3
|
|
|
3
|
|
|||
Reduction for tax positions of prior years
|
(9
|
)
|
|
(1
|
)
|
|
(10
|
)
|
|||
Reduction for settlements
|
(20
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at end of year
|
$
|
82
|
|
|
$
|
74
|
|
|
$
|
58
|
|
(in millions)
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
5.9% Senior Notes, due 2017
1
|
$
|
400
|
|
|
$
|
400
|
|
6.55% Senior Notes, due 2037
2
|
399
|
|
|
399
|
|
||
Commercial paper
|
—
|
|
|
457
|
|
||
Total debt
|
799
|
|
|
1,256
|
|
||
Less: short-term debt including current maturities
|
—
|
|
|
457
|
|
||
Long-term debt
|
$
|
799
|
|
|
$
|
799
|
|
1
|
Interest payments are due semiannually on April 15 and October 15, and as of December 31, 2013, the unamortized debt discount is less than
$1 million
.
|
2
|
Interest payments are due semiannually on May 15 and November 15, and as of December 31, 2013, the unamortized debt discount is approximately
$1 million
.
|
(in millions)
|
Retirement Plans
|
|
Postretirement Plans
|
||||||||||||
|
2013
|
|
2012
|
|
2013
|
|
2012
|
||||||||
Net benefit obligation at beginning of year
|
$
|
2,171
|
|
|
$
|
1,834
|
|
|
$
|
129
|
|
|
$
|
129
|
|
Service cost
|
10
|
|
|
24
|
|
|
2
|
|
|
3
|
|
||||
Interest cost
|
91
|
|
|
93
|
|
|
5
|
|
|
5
|
|
||||
Plan participants’ contributions
|
—
|
|
|
1
|
|
|
4
|
|
|
5
|
|
||||
Actuarial (gain) loss
|
(178
|
)
|
|
287
|
|
|
(13
|
)
|
|
3
|
|
||||
Gross benefits paid
|
(77
|
)
|
|
(71
|
)
|
|
(13
|
)
|
|
(17
|
)
|
||||
Foreign currency effect
|
8
|
|
|
11
|
|
|
—
|
|
|
—
|
|
||||
Curtailment
1
|
(26
|
)
|
|
—
|
|
|
(11
|
)
|
|
—
|
|
||||
Other adjustments
|
5
|
|
|
(8
|
)
|
|
—
|
|
|
1
|
|
||||
Net benefit obligation at end of year
|
2,004
|
|
|
2,171
|
|
|
103
|
|
|
129
|
|
||||
Fair value of plan assets at beginning of year
|
1,851
|
|
|
1,505
|
|
|
—
|
|
|
—
|
|
||||
Actual return on plan assets
|
281
|
|
|
212
|
|
|
—
|
|
|
—
|
|
||||
Employer contributions
|
27
|
|
|
193
|
|
|
9
|
|
|
12
|
|
||||
Plan participants’ contributions
|
—
|
|
|
1
|
|
|
4
|
|
|
5
|
|
||||
Gross benefits paid
|
(77
|
)
|
|
(71
|
)
|
|
(13
|
)
|
|
(17
|
)
|
||||
Foreign currency effect
|
6
|
|
|
11
|
|
|
—
|
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
2,088
|
|
|
1,851
|
|
|
—
|
|
|
—
|
|
||||
Funded status
|
$
|
84
|
|
|
$
|
(320
|
)
|
|
$
|
(103
|
)
|
|
$
|
(129
|
)
|
Amounts recognized in consolidated balance sheets:
|
|
|
|
|
|
|
|
||||||||
Non-current assets
|
$
|
261
|
|
|
$
|
98
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current liabilities
|
(7
|
)
|
|
(7
|
)
|
|
(9
|
)
|
|
(11
|
)
|
||||
Non-current liabilities
|
(170
|
)
|
|
(411
|
)
|
|
(94
|
)
|
|
(118
|
)
|
||||
|
$
|
84
|
|
|
$
|
(320
|
)
|
|
$
|
(103
|
)
|
|
$
|
(129
|
)
|
Accumulated benefit obligation
|
$
|
2,004
|
|
|
$
|
2,093
|
|
|
|
|
|
||||
Plans with accumulated benefit obligation in excess of the fair value of plan assets:
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation
|
$
|
176
|
|
|
$
|
1,773
|
|
|
|
|
|
||||
Accumulated benefit obligation
|
$
|
158
|
|
|
$
|
1,756
|
|
|
|
|
|
||||
Fair value of plan assets
|
$
|
—
|
|
|
$
|
1,356
|
|
|
|
|
|
||||
Amounts recognized in accumulated other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
||||||||
Net actuarial loss (gain)
|
$
|
227
|
|
|
$
|
455
|
|
|
$
|
(11
|
)
|
|
$
|
(3
|
)
|
Prior service credit
|
1
|
|
|
(4
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||
Total recognized
|
$
|
228
|
|
|
$
|
451
|
|
|
$
|
(12
|
)
|
|
$
|
(4
|
)
|
1
|
The curtailment gain for our retirement plans relates to a freeze of pension accruals for MHE employees as well as all remaining active employees in the United Kingdom ("U.K."). The curtailment gain for our postretirement plans relates to the sale of MHE on March 22, 2013.
|
(in millions)
|
Retirement Plans
|
|
Postretirement Plans
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Service cost
|
$
|
10
|
|
|
$
|
24
|
|
|
$
|
67
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
3
|
|
Interest cost
|
91
|
|
|
93
|
|
|
99
|
|
|
5
|
|
|
5
|
|
|
6
|
|
||||||
Expected return on assets
|
(129
|
)
|
|
(124
|
)
|
|
(127
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Actuarial loss
|
26
|
|
|
32
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Prior service credit
|
5
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||||
Curtailment
1
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
$
|
(5
|
)
|
|
$
|
24
|
|
|
$
|
70
|
|
|
$
|
(6
|
)
|
|
$
|
7
|
|
|
$
|
8
|
|
1
|
The curtailment gain for our retirement plans relates to a freeze of pension accruals for MHE employees as well as all remaining active employees in the United Kingdom ("U.K."). The curtailment gain for our postretirement plans relates to the sale of MHE on March 22, 2013.
|
(in millions)
|
Retirement Plans
|
|
Postretirement Plans
|
||||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||||||||
Net actuarial (gain) loss
|
$
|
(213
|
)
|
|
$
|
116
|
|
|
$
|
65
|
|
|
$
|
(8
|
)
|
|
$
|
2
|
|
|
$
|
(12
|
)
|
Recognized actuarial gain
|
(15
|
)
|
|
(20
|
)
|
|
(18
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Prior service credit
|
5
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||||
Total recognized
|
$
|
(223
|
)
|
|
$
|
98
|
|
|
$
|
47
|
|
|
$
|
(8
|
)
|
|
$
|
3
|
|
|
$
|
(11
|
)
|
|
Retirement Plans
|
|
Postretirement Plans
|
||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|
2011
|
||||||
Benefit obligation:
1
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate
|
5.0
|
%
|
|
4.1
|
%
|
|
5.1
|
%
|
|
4.20
|
%
|
|
3.45
|
%
|
|
4.45
|
%
|
Compensation increase factor
|
N/A
|
|
|
N/A
|
|
|
4.5
|
%
|
|
|
|
|
|
|
|||
Net periodic cost:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Weighted-average healthcare cost rate
2
|
|
|
|
|
|
|
7.0
|
%
|
|
7.5
|
%
|
|
8.0
|
%
|
|||
Discount rate - U.S. plan
3
|
4.1
|
%
|
|
5.1
|
%
|
|
5.4
|
%
|
|
3.45
|
%
|
|
4.45
|
%
|
|
4.65
|
%
|
Discount rate - U.K. plan
3
|
4.8
|
%
|
|
5.1
|
%
|
|
5.5
|
%
|
|
|
|
|
|
|
|||
Compensation increase factor - U.S. plan
|
N/A
|
|
|
4.5
|
%
|
|
4.5
|
%
|
|
|
|
|
|
|
|||
Compensation increase factor - U.K. plan
|
5.75
|
%
|
|
5.85
|
%
|
|
6.25
|
%
|
|
|
|
|
|
|
|||
Return on assets
4
|
7.25
|
%
|
|
7.75
|
%
|
|
8.0
|
%
|
|
|
|
|
|
|
1
|
These assumptions for the retirement plans relate to our U.S. ERP and a compensation increase factor is no longer applicable because there are no further salary increases as the U.S. ERP was frozen in April 2012.
|
2
|
The assumed weighted-average healthcare cost trend rate will decrease ratably from
7%
in 2013 to
5%
in 2020 and remain at that level thereafter. Assumed healthcare cost trends have an effect on the amounts reported for the healthcare plans. A one percentage point change in assumed healthcare cost trend creates the following effects:
|
(in millions)
|
1% point
increase
|
|
1% point
decrease
|
||||
Effect on postretirement obligation
|
$
|
4
|
|
|
$
|
(4
|
)
|
3
|
Effective January 1, 2014, we changed our discount rate assumption on our U.S. retirement plans to
5.0%
from
4.1%
in 2013 and changed our discount rate assumption on our U.K. plan to
4.5%
from
4.8%
in 2013.
|
4
|
The expected return on assets assumption is calculated based on the plan’s asset allocation strategy and projected market returns over the long-term. Effective January 1, 2014, we changed our return on assets assumption to
7.125%
from
7.25%
for the U.S. plan in 2013 and to
6.75%
from
7.25%
for the U.K. plan in 2013.
|
(in millions)
|
|
|
Postretirement Plans
2
|
||||||||||||||||
|
Retirement
1
Plans
|
|
Gross
payments
|
|
Retiree
contributions
|
|
Medicare
subsidy
|
|
Net
payments
|
||||||||||
2014
|
$
|
76
|
|
|
$
|
14
|
|
|
$
|
(5
|
)
|
|
$
|
(1
|
)
|
|
$
|
8
|
|
2015
|
79
|
|
|
14
|
|
|
(5
|
)
|
|
(1
|
)
|
|
8
|
|
|||||
2016
|
84
|
|
|
15
|
|
|
(6
|
)
|
|
(1
|
)
|
|
8
|
|
|||||
2017
|
88
|
|
|
15
|
|
|
(6
|
)
|
|
(1
|
)
|
|
8
|
|
|||||
2018
|
92
|
|
|
15
|
|
|
(7
|
)
|
|
(1
|
)
|
|
7
|
|
|||||
2019-2023
|
512
|
|
|
79
|
|
|
(44
|
)
|
|
(3
|
)
|
|
32
|
|
1
|
Reflects the total benefits expected to be paid from the plans or from our assets including both our share of the benefit cost and the participants’ share of the cost.
|
2
|
Reflects the total benefits expected to be paid from our assets.
|
•
|
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
•
|
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
(in millions)
|
December 31, 2013
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Cash and short-term investments, and other
|
$
|
68
|
|
|
$
|
20
|
|
|
$
|
48
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
||||||||
U.S. indexes
1
|
514
|
|
|
145
|
|
|
369
|
|
|
—
|
|
||||
U.S. growth and value
|
373
|
|
|
325
|
|
|
48
|
|
|
—
|
|
||||
U.K.
|
183
|
|
|
101
|
|
|
82
|
|
|
—
|
|
||||
International, excluding U.K.
|
227
|
|
|
131
|
|
|
96
|
|
|
—
|
|
||||
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
Long duration strategy
2
|
517
|
|
|
—
|
|
|
517
|
|
|
—
|
|
||||
Intermediate duration securities
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
||||
Agency mortgage backed securities
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
Asset backed securities
|
16
|
|
|
—
|
|
|
16
|
|
|
—
|
|
||||
Non-agency mortgage backed securities
3
|
45
|
|
|
—
|
|
|
45
|
|
|
—
|
|
||||
U.K.
4
|
66
|
|
|
—
|
|
|
66
|
|
|
—
|
|
||||
International, excluding U.K.
|
61
|
|
|
—
|
|
|
61
|
|
|
—
|
|
||||
Total
|
$
|
2,088
|
|
|
$
|
722
|
|
|
$
|
1,366
|
|
|
$
|
—
|
|
(in millions)
|
December 31, 2012
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Cash and short-term investments, and other
|
$
|
180
|
|
|
$
|
2
|
|
|
$
|
178
|
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
||||||||
U.S. indexes
1
|
399
|
|
|
119
|
|
|
280
|
|
|
—
|
|
||||
U.S. growth and value
|
344
|
|
|
307
|
|
|
37
|
|
|
—
|
|
||||
U.K.
|
154
|
|
|
85
|
|
|
69
|
|
|
—
|
|
||||
International, excluding U.K.
|
225
|
|
|
137
|
|
|
87
|
|
|
1
|
|
||||
Fixed income securities:
|
|
|
|
|
|
|
|
||||||||
Long duration strategy
2
|
370
|
|
|
—
|
|
|
370
|
|
|
—
|
|
||||
Intermediate duration securities
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Agency mortgage backed securities
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
Asset backed securities
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
||||
Non-agency mortgage backed securities
3
|
52
|
|
|
—
|
|
|
52
|
|
|
—
|
|
||||
U.K.
4
|
41
|
|
|
—
|
|
|
41
|
|
|
—
|
|
||||
International, excluding U.K.
|
43
|
|
|
—
|
|
|
43
|
|
|
—
|
|
||||
Real estate:
|
|
|
|
|
|
|
|
||||||||
U.K.
5
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Total
|
$
|
1,851
|
|
|
$
|
650
|
|
|
$
|
1,183
|
|
|
$
|
18
|
|
1
|
Includes securities that are tracked in the following indexes: S&P 500, S&P MidCap 400, S&P MidCap 400 Growth and S&P Smallcap 600.
|
2
|
Includes securities that are investment grade obligations of issuers in the U.S.
|
3
|
Includes U.S. mortgage-backed securities that are not backed by the U.S. government.
|
4
|
Includes securities originated by the government of and other issuers from the U.K.
|
5
|
Includes a fund which holds real estate properties in the U.K.
|
•
|
The U.S. pension trust had assets of
$1.7 billion
and
$1.5 billion
as of December 31, 2013 and 2012, respectively, and the target allocations in 2014 include
48%
domestic equities,
12%
international equities, and
40%
debt securities and short-term investments.
|
•
|
The U.K. pension trust had assets of
$399 million
and
$318 million
as of December 31, 2013 and 2012, respectively, and the target allocations in 2014 include
30%
equities,
40%
diversified growth funds, and
30%
fixed income.
|
•
|
2002 Employee Stock Incentive Plan (the “2002 Plan”)
– The 2002 Plan permits the granting of nonqualified stock options, stock appreciation rights, performance stock, restricted stock and other stock-based awards.
|
•
|
Director Deferred Stock Ownership Plan
– Under this plan, common stock reserved may be credited to deferred stock accounts for eligible Directors. In general, the plan requires that
50%
of eligible Directors’ annual compensation plus dividend equivalents be credited to deferred stock accounts. Each Director may also elect to defer all or a portion of the remaining compensation and have an equivalent number of shares credited to the deferred stock account. Recipients under this plan are not required to provide consideration to us other than rendering service. Shares will be delivered as of the date a recipient ceases to be a member of the Board of Directors or within
five years
thereafter, if so elected. The plan will remain in effect until terminated by the Board of Directors or until no shares of stock remain available under the plan.
|
(in millions)
|
December 31,
|
||
|
2013
|
|
2012
|
Shares available for granting under the 2002 Plan
|
30.3
|
|
26.8
|
Options outstanding
|
12.2
|
|
18.6
|
Total shares reserved for issuance
1
|
42.5
|
|
45.4
|
1
|
Shares reserved for issuance under the Director Deferred Stock Ownership Plan are not included in the total, but are less than
0.2 million
.
|
(in millions)
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Stock option expense
|
$
|
13
|
|
|
$
|
10
|
|
|
$
|
19
|
|
Restricted stock and unit awards expense
|
86
|
|
|
83
|
|
|
58
|
|
|||
Total stock-based compensation expense
|
$
|
99
|
|
|
$
|
93
|
|
|
$
|
77
|
|
|
|
|
|
|
|
||||||
Tax benefit
|
$
|
38
|
|
|
$
|
36
|
|
|
$
|
29
|
|
|
Year Ended December 31,
|
||||||||
|
2013
|
|
2012
|
|
2011
|
||||
Risk-free average interest rate
|
0.1 - 2.9%
|
|
|
N/A
|
|
0.2 - 3.5%
|
|
||
Dividend yield
|
2.09 - 2.07%
|
|
|
N/A
|
|
2.5 - 3.0%
|
|
||
Volatility
|
29 - 45%
|
|
|
N/A
|
|
21 - 51%
|
|
||
Expected life (years)
|
6.1 - 6.2
|
|
|
N/A
|
|
6.1 - 6.2
|
|
||
Weighted-average grant-date fair value per option
|
$
|
14.46
|
|
|
N/A
|
|
$
|
10.61
|
|
(in millions, except per award amounts)
|
Shares
|
|
Weighted average exercise price
|
|
Weighted-average remaining years of contractual term
|
|
Aggregate intrinsic value
|
||||||
Options outstanding as of December 31, 2012
|
18.6
|
|
|
$
|
39.58
|
|
|
|
|
|
|||
Granted
|
1.4
|
|
1
|
|
$
|
51.69
|
|
|
|
|
|
||
Exercised
|
(7.4
|
)
|
|
$
|
37.78
|
|
|
|
|
|
|||
Canceled, forfeited and expired
|
(0.4
|
)
|
|
$
|
50.33
|
|
|
|
|
|
|||
Options outstanding as of December 31, 2013
|
12.2
|
|
|
$
|
41.78
|
|
|
4.3
|
|
$
|
445
|
|
|
Options exercisable as of December 31, 2013
|
10.9
|
|
|
$
|
40.55
|
|
|
3.7
|
|
$
|
409
|
|
(in millions, except per award amounts)
|
Shares
|
|
Weighted-average grant-date fair value
|
||||
Nonvested options outstanding as of December 31, 2012
|
1.1
|
|
|
$
|
10.61
|
|
|
Granted
|
1.4
|
|
|
$
|
14.46
|
|
|
Vested
|
(1.2
|
)
|
|
$
|
10.61
|
|
|
Nonvested options outstanding as of December 31, 2013
|
1.3
|
|
|
$
|
14.46
|
|
|
Total unrecognized compensation expense related to nonvested options
|
$
|
9
|
|
|
|
||
Weighted-average years to be recognized over
|
2.3
|
|
|
|
(in millions)
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net cash proceeds from the exercise of stock options
|
$
|
258
|
|
|
$
|
299
|
|
|
$
|
139
|
|
Total intrinsic value of stock option exercises
|
$
|
158
|
|
|
$
|
120
|
|
|
$
|
41
|
|
Income tax benefit realized from stock option exercises
|
$
|
61
|
|
|
$
|
47
|
|
|
$
|
16
|
|
(in millions, except per award amounts)
|
Shares
|
|
Weighted-average grant-date fair value
|
||||
Nonvested shares as of December 31, 2012
|
3.4
|
|
|
$
|
40.49
|
|
|
Granted
|
3.0
|
|
|
$
|
44.22
|
|
|
Vested
|
(3.1
|
)
|
|
$
|
38.93
|
|
|
Forfeited
|
(0.2
|
)
|
|
$
|
46.28
|
|
|
Nonvested shares as of December 31, 2013
|
3.1
|
|
|
$
|
47.89
|
|
|
Total unrecognized compensation expense related to nonvested awards
|
$
|
84
|
|
|
|
||
Weighted-average years to be recognized over
|
1.6
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Weighted-average grant-date fair value per award
|
$
|
44.22
|
|
|
$
|
44.38
|
|
|
$
|
37.80
|
|
Total fair value of restricted stock and unit awards vested
|
$
|
119
|
|
|
$
|
90
|
|
|
$
|
1
|
|
Tax benefit relating to restricted stock activity
|
$
|
33
|
|
|
$
|
32
|
|
|
$
|
22
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Quarterly dividend rate
|
$
|
0.28
|
|
|
$
|
0.255
|
|
|
$
|
0.25
|
|
Annualized dividend rate
|
$
|
1.12
|
|
|
$
|
1.02
|
|
|
$
|
1.00
|
|
Special dividend
|
$
|
—
|
|
|
$
|
2.50
|
|
|
$
|
—
|
|
Dividends paid (in millions)
|
$
|
308
|
|
|
$
|
984
|
|
|
$
|
296
|
|
(in millions, except average price)
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Total number of shares purchased - 2011 Repurchase Program
1, 2
|
16.9
|
|
|
6.8
|
|
|
26.3
|
|
|||
Total number of shares purchased - 2007 Repurchase Program
|
—
|
|
|
—
|
|
|
8.4
|
|
|||
Average price paid per share
2, 3
|
$
|
58.52
|
|
|
$
|
50.35
|
|
|
$
|
40.48
|
|
Total cash utilized
|
$
|
989
|
|
|
$
|
295
|
|
|
$
|
1,500
|
|
1
|
2013 and 2012 includes shares received as part of our accelerated share repurchase agreements as described in more detail below.
|
2
|
In any period, cash used in financing activities related to common stock repurchased may differ from the comparable change in equity, reflecting timing differences between the recognition of share repurchase transactions and their settlement for cash. As such, in fourth quarter of 2013,
0.1 million
shares were repurchased for approximately
$10 million
, which settled in January 2014. Excluding these
0.1 million
shares, the average price paid per share was
$58.36
.
|
3
|
Average price paid per share information for 2013 includes the accelerated share repurchase transaction, while 2012 and 2011 does not include the accelerated share repurchase transactions entered in December 2011 as discussed in more detail below.
|
(in millions, except per share data)
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Amount attributable to McGraw Hill Financial, Inc. common shareholders:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
812
|
|
|
$
|
676
|
|
|
$
|
607
|
|
Income (loss) from discontinued operations
|
564
|
|
|
(239
|
)
|
|
304
|
|
|||
Net income attributable to the Company
|
$
|
1,376
|
|
|
$
|
437
|
|
|
$
|
911
|
|
|
|
|
|
|
|
||||||
Basic weighted-average number of common shares outstanding
|
274.5
|
|
|
278.6
|
|
|
298.1
|
|
|||
Effect of stock options and other dilutive securities
|
5.3
|
|
|
6.0
|
|
|
5.5
|
|
|||
Diluted weighted-average number of common shares outstanding
|
279.8
|
|
|
284.6
|
|
|
303.6
|
|
|||
|
|
|
|
|
|
||||||
Basic EPS:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
2.96
|
|
|
$
|
2.43
|
|
|
$
|
2.03
|
|
Income (loss) from discontinued operations
|
2.05
|
|
|
(0.86
|
)
|
|
1.02
|
|
|||
Net income
|
$
|
5.01
|
|
|
$
|
1.57
|
|
|
$
|
3.05
|
|
Diluted EPS:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
2.90
|
|
|
$
|
2.37
|
|
|
$
|
2.00
|
|
Income (loss) from discontinued operations
|
2.01
|
|
|
(0.84
|
)
|
|
1.00
|
|
|||
Net income
|
$
|
4.91
|
|
|
$
|
1.53
|
|
|
$
|
3.00
|
|
(in millions)
|
Year Ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Stock options excluded from diluted EPS computation
|
1.2
|
|
|
3.4
|
|
|
10.1
|
|
(in millions)
|
Depreciation & Amortization
|
|
Capital Expenditures
|
||||||||||||||||||||
|
2013
|
2012
|
2011
|
|
2013
|
2012
|
2011
|
||||||||||||||||
S&P Ratings
|
$
|
45
|
|
|
$
|
43
|
|
|
$
|
40
|
|
|
$
|
40
|
|
|
$
|
43
|
|
|
$
|
40
|
|
S&P Capital IQ
|
49
|
|
|
50
|
|
|
43
|
|
|
39
|
|
|
22
|
|
|
21
|
|
||||||
S&P DJ Indices
|
10
|
|
|
8
|
|
|
3
|
|
|
4
|
|
|
2
|
|
|
2
|
|
||||||
C&C
|
22
|
|
|
23
|
|
|
23
|
|
|
17
|
|
|
17
|
|
|
14
|
|
||||||
Total operating segments
|
126
|
|
|
124
|
|
|
109
|
|
|
100
|
|
|
84
|
|
|
77
|
|
||||||
Corporate
|
11
|
|
|
17
|
|
|
17
|
|
|
17
|
|
|
13
|
|
|
15
|
|
||||||
Total
|
$
|
137
|
|
|
$
|
141
|
|
|
$
|
126
|
|
|
$
|
117
|
|
|
$
|
97
|
|
|
$
|
92
|
|
(in millions)
|
Total Assets
|
||||||
|
2013
|
|
2012
|
||||
S&P Ratings
|
$
|
630
|
|
|
$
|
726
|
|
S&P Capital IQ
|
1,054
|
|
|
1,123
|
|
||
S&P DJ Indices
|
1,160
|
|
|
1,133
|
|
||
C&C
|
943
|
|
|
1,000
|
|
||
Total operating segments
|
3,787
|
|
|
3,982
|
|
||
Corporate
1
|
2,213
|
|
|
1,130
|
|
||
Assets held for sale
|
61
|
|
|
1,940
|
|
||
Total
|
$
|
6,061
|
|
|
$
|
7,052
|
|
1
|
Corporate assets consist principally of cash and equivalents, assets for pension benefits, deferred income taxes and leasehold improvements related to subleased areas.
|
(in millions)
|
Revenue
|
|
Long-lived Assets
|
||||||||||||||||
|
Years ended December 31,
|
|
December 31,
|
||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
||||||||||
United States
|
$
|
2,892
|
|
|
$
|
2,684
|
|
|
$
|
2,373
|
|
|
$
|
2,209
|
|
|
$
|
2,376
|
|
European region
|
1,227
|
|
|
1,067
|
|
|
951
|
|
|
432
|
|
|
441
|
|
|||||
Asia
|
483
|
|
|
454
|
|
|
423
|
|
|
59
|
|
|
70
|
|
|||||
Rest of the world
|
273
|
|
|
245
|
|
|
207
|
|
|
54
|
|
|
57
|
|
|||||
Total
|
$
|
4,875
|
|
|
$
|
4,450
|
|
|
$
|
3,954
|
|
|
$
|
2,754
|
|
|
$
|
2,944
|
|
|
Revenue
|
|
Long-lived Assets
|
|||||||||||
|
Years ended December 31,
|
|
December 31,
|
|||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2013
|
|
2012
|
|||||
United States
|
59
|
%
|
|
60
|
%
|
|
60
|
%
|
|
80
|
%
|
|
81
|
%
|
European region
|
25
|
|
|
24
|
|
|
24
|
|
|
16
|
|
|
15
|
|
Asia
|
10
|
|
|
10
|
|
|
11
|
|
|
2
|
|
|
2
|
|
Rest of the world
|
6
|
|
|
6
|
|
|
5
|
|
|
2
|
|
|
2
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
(in millions)
|
Years ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Gross rental expense
|
$
|
207
|
|
|
$
|
164
|
|
|
$
|
158
|
|
Less: sublease revenue
|
(29
|
)
|
|
(4
|
)
|
|
(2
|
)
|
|||
Less: Rock-McGraw rent credit
|
(20
|
)
|
|
(19
|
)
|
|
(18
|
)
|
|||
Net rental expense
|
$
|
158
|
|
|
$
|
141
|
|
|
$
|
138
|
|
(in millions)
|
Rent
commitment
|
|
Sublease
income
|
|
Net rent
|
||||||
2014
|
$
|
161
|
|
|
$
|
(14
|
)
|
|
$
|
147
|
|
2015
|
155
|
|
|
(14
|
)
|
|
141
|
|
|||
2016
|
123
|
|
|
(13
|
)
|
|
110
|
|
|||
2017
|
99
|
|
|
(13
|
)
|
|
86
|
|
|||
2018
|
90
|
|
|
(13
|
)
|
|
77
|
|
|||
2019 and beyond
|
238
|
|
|
(16
|
)
|
|
222
|
|
|||
Total
|
$
|
866
|
|
|
$
|
(83
|
)
|
|
$
|
783
|
|
(in millions, except per share data)
|
First
quarter
|
|
Second
quarter
|
|
Third
quarter
|
|
Fourth
quarter
|
|
Total
year
|
||||||||||
2013
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
1,181
|
|
|
$
|
1,250
|
|
|
$
|
1,194
|
|
|
$
|
1,250
|
|
|
$
|
4,875
|
|
Operating profit
|
$
|
278
|
|
|
$
|
436
|
|
|
$
|
407
|
|
|
$
|
284
|
|
|
$
|
1,405
|
|
Income from continuing operations
|
$
|
174
|
|
|
$
|
273
|
|
|
$
|
265
|
|
|
$
|
190
|
|
|
$
|
903
|
|
Income (loss) from discontinued operations
|
$
|
581
|
|
|
$
|
4
|
|
|
$
|
(20
|
)
|
|
$
|
(2
|
)
|
|
$
|
563
|
|
Net income
|
$
|
755
|
|
|
$
|
277
|
|
|
$
|
245
|
|
|
$
|
188
|
|
|
$
|
1,466
|
|
Net income attributable to McGraw Hill Financial common shareholders:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
153
|
|
|
$
|
250
|
|
|
$
|
235
|
|
|
$
|
173
|
|
|
$
|
812
|
|
Income (loss) from discontinued operations
|
582
|
|
|
4
|
|
|
(20
|
)
|
|
(2
|
)
|
|
564
|
|
|||||
Net income
|
$
|
735
|
|
|
$
|
254
|
|
|
$
|
215
|
|
|
$
|
171
|
|
|
$
|
1,376
|
|
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
0.55
|
|
|
$
|
0.91
|
|
|
$
|
0.86
|
|
|
$
|
0.64
|
|
|
$
|
2.96
|
|
Discontinued operations
|
2.07
|
|
|
0.01
|
|
|
(0.07
|
)
|
|
(0.01
|
)
|
|
2.05
|
|
|||||
Net income
|
$
|
2.62
|
|
|
$
|
0.93
|
|
|
$
|
0.79
|
|
|
$
|
0.63
|
|
|
$
|
5.01
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
0.54
|
|
|
$
|
0.90
|
|
|
$
|
0.84
|
|
|
$
|
0.62
|
|
|
$
|
2.90
|
|
Discontinued operations
|
2.05
|
|
|
0.01
|
|
|
(0.07
|
)
|
|
(0.01
|
)
|
|
2.01
|
|
|||||
Net income
|
$
|
2.59
|
|
|
$
|
0.91
|
|
|
$
|
0.77
|
|
|
$
|
0.62
|
|
|
$
|
4.91
|
|
2012
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
1,035
|
|
|
$
|
1,072
|
|
|
$
|
1,116
|
|
|
$
|
1,226
|
|
|
$
|
4,450
|
|
Operating profit
|
$
|
282
|
|
|
$
|
308
|
|
|
$
|
275
|
|
|
$
|
347
|
|
|
$
|
1,211
|
|
Income from continuing operations
|
$
|
163
|
|
|
$
|
180
|
|
|
$
|
172
|
|
|
$
|
211
|
|
|
$
|
726
|
|
(Loss) income from discontinued operations
|
$
|
(36
|
)
|
|
$
|
40
|
|
|
$
|
165
|
|
|
$
|
(404
|
)
|
|
$
|
(234
|
)
|
Net income (loss)
|
$
|
127
|
|
|
$
|
220
|
|
|
$
|
337
|
|
|
$
|
(193
|
)
|
|
$
|
492
|
|
Net income attributable to McGraw Hill Financial common shareholders:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations
|
$
|
158
|
|
|
$
|
176
|
|
|
$
|
151
|
|
|
$
|
190
|
|
|
$
|
676
|
|
(Loss) income from discontinued operations
|
(35
|
)
|
|
39
|
|
|
162
|
|
|
(406
|
)
|
|
(239
|
)
|
|||||
Net income (loss)
|
$
|
123
|
|
|
$
|
216
|
|
|
$
|
314
|
|
|
$
|
(216
|
)
|
|
$
|
437
|
|
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
0.57
|
|
|
$
|
0.63
|
|
|
$
|
0.54
|
|
|
$
|
0.68
|
|
|
$
|
2.43
|
|
Discontinued operations
|
(0.13
|
)
|
|
0.14
|
|
|
0.58
|
|
|
(1.46
|
)
|
|
(0.86
|
)
|
|||||
Net income (loss)
|
$
|
0.44
|
|
|
$
|
0.77
|
|
|
$
|
1.13
|
|
|
$
|
(0.78
|
)
|
|
$
|
1.57
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Continuing operations
|
$
|
0.56
|
|
|
$
|
0.62
|
|
|
$
|
0.53
|
|
|
$
|
0.67
|
|
|
$
|
2.37
|
|
Discontinued operations
|
(0.13
|
)
|
|
0.14
|
|
|
0.57
|
|
|
(1.43
|
)
|
|
(0.84
|
)
|
|||||
Net income (loss)
|
$
|
0.43
|
|
|
$
|
0.76
|
|
|
$
|
1.10
|
|
|
$
|
(0.76
|
)
|
|
$
|
1.53
|
|
1.
|
Management is responsible for establishing and maintaining adequate internal control over financial reporting.
|
2.
|
Management has evaluated the system of internal control using the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) framework. Management has selected the COSO framework for its evaluation as it is a control framework recognized by the SEC and the Public Company Accounting Oversight Board that is free from bias, permits reasonably consistent qualitative and quantitative measurement of our internal controls, is sufficiently complete so that relevant controls are not omitted and is relevant to an evaluation of internal controls over financial reporting.
|
3.
|
Based on management’s evaluation under this framework, management has concluded that our internal controls over financial reporting were effective as of
December 31, 2013
. There are no material weaknesses in our internal control over financial reporting that have been identified by management.
|
4.
|
Our independent registered public accounting firm, Ernst & Young LLP, has audited our consolidated financial statements for the year ended
December 31, 2013
, and has issued their reports on the financial statements and the effectiveness of our internal control over financial reporting. These reports are located on pages 47 and 48 of this Form 10-K.
|
•
|
Code of Business Ethics for all employees;
|
•
|
Code of Business Conduct and Ethics for Directors;
|
•
|
Employee Complaint Procedures;
|
•
|
Certificate of Incorporation;
|
•
|
By-Laws;
|
•
|
Corporate Governance Guidelines;
|
•
|
Audit Committee Charter;
|
•
|
Compensation and Leadership Development Committee Charter;
|
•
|
Nominating and Corporate Governance Committee Charter;
|
•
|
Financial Policy Committee Charter; and
|
•
|
Executive Committee Charter.
|
|
Equity Compensation Plans’ Information
|
|
||||||||
|
(a)
|
|
(b)
|
|
(c)
|
|
||||
Plan category
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
|
|
||||
Equity compensation plans approved by security holders
|
12,209,122
|
|
|
$
|
41.78
|
|
|
30,472,537
|
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
12,209,122
|
|
1
|
$
|
41.78
|
|
|
30,472,537
|
|
2,3
|
1
|
Shares to be issued upon exercise of outstanding options under our Stock Incentive Plans.
|
2
|
Included in this number are 138,482 shares reserved for issuance under the Director Deferred Stock Ownership Plan. The remaining 30,334,055 shares are reserved for issuance under the 2002 Stock Incentive Plan (the “2002 Plan”) for Performance Stock, Restricted Stock, Other Stock-Based Awards, Stock Options and Stock Appreciation Rights.
|
3
|
Under the terms of the 2002 Plan, shares subject to an award or shares paid in settlement of a dividend equivalent reduce the number of shares available under the 2002 Plan by one share for each such share granted or paid.
|
•
|
forfeited, cancelled, settled in cash or property other than stock, or otherwise not distributable under the 2002 Plan;
|
•
|
tendered or withheld to pay the exercise or purchase price of an award under the 2002 Plan or to satisfy applicable wage or other required tax withholding in connection with the exercise, vesting or payment of, or other event related to, an award under the 2002 Plan; or
|
•
|
repurchased by us with the option proceeds in respect of the exercise of a stock option under the 2002 Plan.
|
1.
|
Financial Statements
|
•
|
Reports of Independent Registered Public Accounting Firm
|
•
|
Consolidated Statements of Income for the three years ended December 31, 2013
|
•
|
Consolidated Statements of Comprehensive Income for the three years ended December 31, 2013
|
•
|
Consolidated Balance Sheets as of December 31, 2013 and 2012
|
•
|
Consolidated Statements of Cash Flows for the three years ended December 31, 2013
|
•
|
Consolidated Statements of Equity for the three years ended December 31, 2013
|
•
|
Notes to the Consolidated Financial Statements
|
2.
|
Financial Schedule
|
•
|
Schedule II—Valuation and Qualifying Accounts
|
3.
|
Exhibits – The exhibits filed as part of this Form 10-K are listed in the Exhibit Index immediately preceding such Exhibits, and such Exhibit Index is incorporated herein by reference.
|
Additions/(deductions)
|
Balance at
beginning of
year
|
|
Net charges
to income
|
|
Deductions and other
1
|
|
Balance at end
of year
|
||||||||
Year ended December 31, 2013
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
$
|
54
|
|
|
$
|
20
|
|
|
$
|
(22
|
)
|
|
$
|
52
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2012
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
$
|
29
|
|
|
$
|
32
|
|
|
$
|
(7
|
)
|
|
$
|
54
|
|
|
|
|
|
|
|
|
|
||||||||
Year ended December 31, 2011
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
$
|
38
|
|
|
$
|
26
|
|
|
$
|
(35
|
)
|
|
$
|
29
|
|
1
|
Primarily includes uncollectible accounts written off, net of recoveries, impact of acquisitions and divestitures and adjustments for foreign currency translation.
|
|
McGraw Hill Financial, Inc.
|
Registrant
|
|
By:
|
|
/s/ Kenneth M. Vittor
|
Kenneth M. Vittor
|
Executive Vice President and General Counsel
|
|
/s/ Douglas L. Peterson
|
Douglas L. Peterson
|
President and Chief Executive Officer and Director
|
|
/s/ Jack F. Callahan, Jr.
|
Jack F. Callahan, Jr.
|
Executive Vice President and Chief Financial Officer
|
|
/s/ Emmanuel N. Korakis
|
Emmanuel N. Korakis
|
Senior Vice President and Corporate Controller
|
|
/s/ Harold W. McGraw III
|
Harold W. McGraw III
|
Chairman of the Board and Director
|
|
/s/
Sir Winfried F.W. Bischoff
|
Sir Winfried F.W. Bischoff
|
Director
|
|
|
/s/ William D. Green
|
William D. Green
|
Director
|
|
/s/ Charles E. Haldeman, Jr.
|
Charles E. Haldeman, Jr.
|
Director
|
|
/s/
Linda Koch Lorimer
|
Linda Koch Lorimer
|
Director
|
|
/s/
Robert P. McGraw
|
Robert P. McGraw
|
Director
|
|
/s/
Hilda Ochoa-Brillembourg
|
Hilda Ochoa-Brillembourg
|
Director
|
|
/s/ Sir Michael Rake
|
Sir Michael Rake
|
Director
|
|
/s/
Edward B. Rust, Jr.
|
Edward B. Rust, Jr.
|
Director
|
|
/s/
Kurt L. Schmoke
|
Kurt L. Schmoke
|
Director
|
|
/s/ Sidney Taurel
|
Sidney Taurel
|
Director
|
|
/s/
Richard E. Thornburgh
|
Richard E. Thornburgh
|
Director
|
Exhibit
Number |
Exhibit Index
|
|
|
|
|
(10.12)*
|
|
Registrant’s Senior Executive Severance Plan, as amended and restated as of January 1, 2012, incorporated by reference from the Registrant's Form 10-K for the fiscal year ended December 31, 2011.
|
|
|
|
(10.13)
|
$1,000,000,000 Four-Year Credit Agreement dated as of June 19, 2013 among the Registrant, Standard & Poor’s Financial Services LLC, as guarantor, the lenders listed therein, JP Morgan Chase Bank, N.A., as administrative agent, and Bank of America, N.A., as syndication agent, incorporated by reference from the Registrant’s Form 8-K filed June 20, 2013.
|
|
|
|
|
(10.14)*
|
|
Registrant’s Employee Retirement Plan Supplement, as amended and restated as of January 1, 2008, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2007.
|
|
|
|
(10.15)*
|
|
First Amendment to Registrant’s Employee Retirement Plan Supplement, effective as of January 1, 2009, incorporated by reference from the Registrant’s Form 10-K for the fiscal year ended December 31, 2009.
|
|
|
|
(10.16)*
|
|
Second Amendment to Registrant’s Employee Retirement Plan Supplement, effective generally as of January 1, 2010, incorporated by reference from the Registrant’s Form 10-K for the fiscal year ended December 31, 2009.
|
|
|
|
(10.17)*
|
|
Third Amendment to Registrant’s Employee Retirement Plan Supplement, effective generally as of January 1, 2012, incorporated from the Registrant's Form 10-K for the fiscal year ended December 31, 2011.
|
|
|
|
(10.18)*
|
|
Fourth Amendment to Registrant’s Employee Retirement Plan Supplement, effective generally as of May 1, 2013.
|
|
|
|
(10.19)*
|
|
Standard & Poor’s Employee Retirement Plan Supplement, as amended and restated as of January 1, 2008, incorporated by reference from the Registrant’s Form 10-K for the fiscal year ended December 31, 2009.
|
|
|
|
(10.20)*
|
|
First Amendment to Standard & Poor’s Employee Retirement Plan Supplement, effective as of December 2, 2009, incorporated by reference from the Registrant’s Form 10-K for the fiscal year ended December 31, 2009.
|
|
|
|
(10.21)*
|
|
Second Amendment to Standard & Poor’s Employee Retirement Plan Supplement, effective as of January 1, 2010, incorporated by reference from the Registrant’s Form 10-K for the fiscal year ended December 31, 2009.
|
|
|
|
(10.22)*
|
|
Third Amendment to Standard & Poor’s Employee Retirement Plan Supplement, effective as of January 1, 2012, incorporated from the Registrant's Form 10-K for the fiscal year ended December 31, 2011.
|
|
|
|
(10.23)*
|
|
Fourth Amendment to Standard & Poor’s Employee Retirement Plan Supplement, effective generally as of January 1, 2014.
|
|
|
|
(10.24)*
|
|
Registrant’s 401(k) Savings and Profit Sharing Supplement, as amended and restated as of January 1, 2008, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2007.
|
|
|
|
(10.25)*
|
|
Amendment to Registrant’s 401(k) Savings and Profit Sharing Supplement, effective as of December 2, 2009, incorporated by reference from the Registrant’s Form 10-K for the fiscal year ended December 31, 2009.
|
|
|
|
(10.26)*
|
|
Amendment to Registrant's 401(k) Savings and Profit Sharing Plan Supplement, effective as of January 1, 2013, incorporated from Registrant’s Form 10-K for the fiscal year ended December 31, 2012.
|
|
|
|
(10.27)*
|
|
Amendment to Registrant’s 401(k) Savings and Profit Sharing Plan Supplement, effective generally as of January 1, 2014.
|
|
|
|
(10.28)*
|
|
Registrant’s Management Supplemental Death and Disability Benefits Plan, as amended January 24, 2006, incorporated by reference from Registrant’s Form 10-K for the fiscal year ended December 31, 2005.
|
|
|
|
(10.29)*
|
|
Amendment to Registrant’s Management Supplemental and Disability Benefits Plan, effective as of January 1, 2010, incorporated by reference from the Registrant’s Form 10-K for the fiscal year ended December 31, 2009.
|
|
|
|
|
|
Exhibit
Number |
Exhibit Index
|
|
|
|
|
(101.LAB)
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
(101.PRE)
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
(101.DEF)
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
(101.LAB)
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
(101.PRE)
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
(101.DEF)
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
Years ended December 31,
|
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income from continuing operations before taxes on income
|
$
|
1,346
|
|
1
|
$
|
1,130
|
|
2
|
$
|
1,000
|
|
3
|
$
|
943
|
|
4
|
$
|
876
|
|
5
|
Fixed charges
6
|
125
|
|
|
130
|
|
|
134
|
|
|
137
|
|
|
132
|
|
|
|||||
Total earnings
|
$
|
1,471
|
|
|
$
|
1,260
|
|
|
$
|
1,134
|
|
|
$
|
1,080
|
|
|
$
|
1,008
|
|
|
Fixed charges:
6
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
$
|
62
|
|
|
$
|
81
|
|
|
$
|
86
|
|
|
$
|
89
|
|
|
$
|
89
|
|
|
Portion of rental payments deemed to be interest
|
62
|
|
|
48
|
|
|
47
|
|
|
47
|
|
|
42
|
|
|
|||||
Amortization of debt issuance costs and discount
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
|||||
Total fixed charges
|
$
|
125
|
|
|
$
|
130
|
|
|
$
|
134
|
|
|
$
|
137
|
|
|
$
|
132
|
|
|
Ratio of earnings to fixed charges:
|
11.8
|
|
x
|
9.7
|
|
x
|
8.5
|
|
x
|
7.9
|
|
x
|
7.6
|
|
x
|
2
|
Includes the impact of the following items: $135 million charge for Growth and Value Plan costs, a $68 million restructuring charge, transaction costs of $15 million for our S&P Dow Jones Indices LLC joint venture, an $8 million charge related to a reduction in our lease commitments, partially offset by a vacation accrual reversal of $52 million.
|
3
|
Includes the impact of the following items: a $32 million restructuring charge and a $10 million charge for Growth and Value Plan costs.
|
4
|
Includes the impact of the following items: a $16 million charge for subleasing excess space in our New York facilities, an $11 million restructuring charge and a $7 million gain on the sale of certain equity interests at Standard & Poor's Ratings.
|
5
|
Includes the impact of the following items: a $14 million loss on the sale of Vista Research, Inc., an $11 million gain on the sale of
BusinessWeek
and a $4 million net restructuring charge.
|
Subsidiaries
|
State or Jurisdiction
of Incorporation
|
Percentage of
Voting Securities
Owned
|
Asia Index Private Limited
|
India
|
50
|
Bentek Energy, LLC
|
Colorado, United States
|
100
|
Capital IQ, Inc.
|
Delaware, United States
|
100
|
Capital IQ Information Systems (India) Pvt. Ltd.
|
India
|
100
|
Capital IQ S.R.L.
|
Argentina
|
100
|
ClariFI, Inc.
|
Delaware, United States
|
100
|
Coalition Development Ltd.
|
England & Wales
|
100
|
Coalition Development Systems (India) Private Limited
|
India
|
100
|
Coalition Singapore Pte. Ltd.
|
Singapore
|
100
|
Credit Market Analysis Limited
|
England & Wales
|
100
|
Credit Market Analysis USA Inc.
|
Delaware, United States
|
100
|
CRISIL Irevna Argentina S.A.
|
Argentina
|
100
|
CRISIL Limited
|
India
|
67.8
|
CRISIL Risk and Infrastructure Solutions, Ltd.
|
India
|
100
|
CRISIL Irevna Poland Sp. Z.o.o.
|
Poland
|
100
|
DJI Opco LLC
|
Delaware, United States
|
100
|
Financial Data Exchange Limited
|
England & Wales
|
100
|
Funds Research USA, LLC
|
Delaware, United States
|
100
|
Grupo McGraw-Hill Companies, S. de R.L. de C.V.
|
Mexico
|
100
|
Grupo Standard & Poor’s, S.A. de C.V.
|
Mexico
|
100
|
International Advertising/McGraw‑Hill LLC
|
Delaware, United States
|
100
|
Irevna Limited
|
England & Wales
|
100
|
Irevna, LLC
|
Delaware, United States
|
100
|
J.D. Power and Associates
|
Delaware, United States
|
100
|
J.D. Power and Associates, GmbH
|
Germany
|
100
|
J.D. Power Asia Pacific K.K.
|
Japan
|
100
|
J.D. Power Commercial Consulting (Shanghai) Co., Ltd.
|
China
|
100
|
J. Kingsman Limited
|
England & Wales
|
100
|
Kingsman SA
|
Switzerland
|
100
|
McGraw-Hill Asian Holdings (Singapore) Pte. Ltd.
|
Singapore
|
100
|
McGraw-Hill Australia Pty Limited
|
Australia
|
100
|
McGraw-Hill Cayman Co. Limited
|
Cayman Islands
|
100
|
McGraw-Hill Finance Europe Limited
|
England & Wales
|
100
|
McGraw-Hill Finance (UK) Ltd.
|
England & Wales
|
100
|
McGraw-Hill Financial Asia Pacific LLC
|
Delaware, United States
|
100
|
McGraw Hill Financial Commodities UK Limited
|
England & Wales
|
100
|
McGraw Hill Financial European Holdings (Luxembourg) S.à.r.l.
|
Luxembourg
|
100
|
McGraw Hill Financial Global Holdings (Luxembourg) S.à.r.l.
|
Luxembourg
|
100
|
McGraw Hill Financial Informacoes do Brasil Limitada
|
Brazil
|
100
|
McGraw-Hill Financial International LLC
|
Delaware, United States
|
100
|
Subsidiaries
|
State or Jurisdiction
of Incorporation
|
Percentage of
Voting Securities
Owned
|
McGraw Hill Financial (Ireland) Limited
|
Ireland
|
100
|
McGraw-Hill Financial Japan K.K.
|
Japan
|
100
|
McGraw Hill Financial (Luxembourg) S.à.r.l.
|
Luxembourg
|
100
|
McGraw-Hill Financial Research Europe Limited
|
England & Wales
|
100
|
McGraw-Hill Financial Singapore Pte. Limited
|
Singapore
|
100
|
McGraw-Hill (France) SAS
|
France
|
100
|
McGraw-Hill (Germany) GmbH
|
Germany
|
100
|
McGraw-Hill Holdings Europe Limited
|
England & Wales
|
100
|
McGraw-Hill Holdings (UK) Limited
|
England & Wales
|
100
|
McGraw-Hill Indices Guarantee Co. (UK) Ltd
|
England & Wales
|
100
|
McGraw-Hill Indices U.K. Limited
|
England & Wales
|
100
|
McGraw-Hill International (U.K.) Limited
|
England & Wales
|
100
|
McGraw-Hill International Holdings LLC
|
Delaware, United States
|
100
|
McGraw-Hill Korea, Inc.
|
Korea
|
100
|
McGraw-Hill (Malaysia) Sdn. Bhd
|
Malaysia
|
100
|
McGraw-Hill News Bureaus, Inc.
|
New York, United States
|
100
|
McGraw-Hill New York, Inc.
|
New York, United States
|
100
|
McGraw-Hill Real Estate, Inc.
|
New York, United States
|
100
|
McGraw-Hill S&P Iberia, S.L.
|
Spain
|
100
|
McGraw-Hill (Sweden) AB
|
Sweden
|
100
|
McGraw-Hill Ventures, Inc.
|
Delaware, United States
|
100
|
Mercator Info Services India Private Limited
|
India
|
100
|
Money Market Directories, Inc.
|
New York, United States
|
100
|
Nippon Standard & Poor’s K.K.
|
Japan
|
100
|
Pipal Research Analytics and Information Services India Limited
|
India
|
100
|
Platts Finance (Luxembourg) Sarl
|
Luxembourg
|
100
|
Platts (U.K.) Limited
|
England & Wales
|
100
|
QuantHouse, Inc.
|
Delaware, United States
|
100
|
Quant House SAS
|
France
|
100
|
Quant House UK Limited
|
England & Wales
|
100
|
Quotevision Limited
|
England & Wales
|
100
|
R² Financial Technologies Inc.
|
Ontario, Canada
|
100
|
S&P/CITIC Index Information Services (Beijing) Co., Ltd.
|
China
|
50
|
S&P DJ Indices UK Ltd
|
England & Wales
|
100
|
S&P Dow Jones Indices LLC
|
Delaware, United States
|
73
|
S&P India LLC
|
Delaware, United States
|
100
|
S&P Opco LLC
|
Delaware, United States
|
100
|
SBB China Ltd
|
China
|
100
|
SBB Danismanlik Ltd
|
Turkey
|
100
|
SBB Singapore Pte Ltd
|
Singapore
|
100
|
SPDJ Singapore Pte Ltd.
|
Singapore
|
100
|
Standard & Poor's (Australia) Pty Ltd.
|
Australia
|
100
|
Standard & Poor’s Credit Market Services France SAS
|
France
|
100
|
Standard & Poor’s Credit Market Services Europe Limited
|
England & Wales
|
100
|
Standard & Poor’s Credit Market Services Italy S.r.l.
|
Italy
|
100
|
Standard & Poor’s (Dubai) Limited
|
United Arab Emirates
|
100
|
Standard & Poor’s Europe LLC
|
Delaware, United States
|
100
|
Subsidiaries
|
State or Jurisdiction
of Incorporation
|
Percentage of
Voting Securities
Owned
|
Standard & Poor’s Financial Services LLC
|
Delaware, United States
|
100
|
Standard & Poor’s Hong Kong Limited
|
Hong Kong
|
100
|
Standard & Poor’s Information Services (Australia) Pty Ltd.
|
Australia
|
100
|
Standard & Poor’s Information Services (Beijing) Co., Ltd.
|
China
|
100
|
Standard & Poor's International, LLC
|
Delaware, United States
|
100
|
Standard & Poor’s International Services LLC
|
Delaware, United States
|
100
|
Standard & Poor’s Investment Advisory Services (HK) Limited
|
Hong Kong
|
100
|
Standard & Poor’s Investment Advisory Services LLC
|
Delaware, United States
|
100
|
Standard & Poor's, LLC
|
Delaware, United States
|
100
|
Standard & Poor’s Maalot Ltd.
|
Israel
|
100
|
Standard & Poor’s Malaysia Sdn. Bhd.
|
Malaysia
|
100
|
Standard & Poor’s Philippines Inc.
|
Philippines
|
100
|
Standard & Poor’s Ratings Argentina S.R.L.
|
Argentina
|
100
|
Standard & Poor’s Ratings do Brasil, Ltda.
|
Brazil
|
100
|
Standard & Poor’s Ratings Japan K.K.
|
Japan
|
100
|
Standard & Poor’s Ratings Management Service (Shanghai) Co., Ltd.
|
China
|
100
|
Standard & Poor’s Rus Ratings Limited
|
Russia
|
100
|
Standard & Poor’s, S.A. de C.V.
|
Mexico
|
100
|
Standard & Poor’s Securities Evaluations, Inc.
|
New York, United States
|
100
|
Standard & Poor’s Singapore Pte. Ltd.
|
Singapore
|
100
|
Standard & Poor’s South Asia Services (Private) Limited
|
India
|
100
|
Steel Business Briefing North America, Inc.
|
Pennsylvania, United States
|
100
|
Taiwan Ratings Corporation
|
Taiwan
|
51
|
The McGraw-Hill Companies (Canada) Corp.
|
Nova Scotia, Canada
|
100
|
The McGraw-Hill Companies Limited
|
England & Wales
|
100
|
The McGraw-Hill Companies S.r.l.
|
Italy
|
100
|
The Steel Index Limited
|
England & Wales
|
100
|
WaterRock Insurance, LLC
|
Vermont, United States
|
100
|
1.
|
Registration Statement (Form S-3 No. 333-146981) pertaining to the Debt Securities of The McGraw-Hill Companies, Inc.,
|
2.
|
Registration Statements (Form S-8 No. 33-49743, No. 333-30043 and No. 333-40502) pertaining to the 1993 Employee Stock Incentive Plan,
|
3.
|
Registration Statements (Form S-8 No. 333-92224 and No. 333-116993) pertaining to the 2002 Stock Incentive Plan,
|
4.
|
Registration Statement (Form S-8 No. 333-06871) pertaining to the Director Deferred Stock Ownership Plan,
|
5.
|
Registration Statement (Form S-8 No. 33-50856) pertaining to The Savings Incentive Plan of McGraw-Hill, Inc. and its Subsidiaries, The Employee Retirement Account Plan of McGraw-Hill, Inc. and its Subsidiaries, The Standard & Poor's Savings Incentive Plan for Represented Employees, The Standard & Poor's Employee Retirement Account Plan for Represented Employees, The Employees' Investment Plan of McGraw-Hill Broadcasting Company, Inc. and its Subsidiaries,
|
6.
|
Registration Statement (Form S-8 No. 333-126465) pertaining to The Savings Incentive Plan of The McGraw-Hill Companies, Inc. and its Subsidiaries, The Employee Retirement Account Plan of The McGraw-Hill Companies, Inc. and its Subsidiaries, The Standard & Poor's Savings Incentive Plan for Represented Employees, and The Standard & Poor's Employee Retirement Account Plan for Represented Employees,
|
7.
|
Registration Statement (Form S-8 No. 333-157570) pertaining to The 401(k) Savings and Profit Sharing Plan of The McGraw-Hill Companies, Inc. and its Subsidiaries, and The Standard & Poor's 401(k) Savings and Profit Sharing Plan for Represented Employees,
|
8.
|
Registration Statement (Form S-8 No. 333-167885) pertaining to The Amended and Restated 2002 Stock Incentive Plan, and
|
9.
|
Registration Statement (Form S-8 No. 333-170902) pertaining to The 401(k) Savings and Profit Sharing Plan of The McGraw-Hill Companies, Inc. and its Subsidiaries, and The Standard & Poor's 401(k) Savings and Profit Sharing Plan for Represented Employees
|
1.
|
I have reviewed this Form 10-K of McGraw Hill Financial, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|
Date: February 7, 2014
|
/s/
Douglas L. Peterson
|
|
Douglas L. Peterson
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Form 10-K of McGraw Hill Financial, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.
|
Date: February 7, 2014
|
/s/ Jack F. Callahan, Jr.
|
|
Jack F. Callahan, Jr.
|
|
Executive Vice President and Chief Financial Officer
|
Date: February 7, 2014
|
/s/
Douglas L. Peterson
|
|
Douglas L. Peterson
|
|
President and Chief Executive Officer
|
|
|
Date: February 7, 2014
|
/s/
Jack F. Callahan, Jr.
|
|
Jack F. Callahan, Jr.
|
|
Executive Vice President and
Chief Financial Officer
|