Document and Entity Information

In Millions, unless otherwise specified

9 Months Ended

Sep. 30, 2013

Oct. 18, 2013

Document and Entity Information [Abstract]

Entity Registrant Name

MCGRAW HILL FINANCIAL INC

Entity Central Index Key

0000064040

Document Type

10-Q

Document Period End Date

Sep. 30, 2013

Amendment Flag

false

Document Fiscal Year Focus

2013

Document Fiscal Period Focus

Q3

Current Fiscal Year End Date

--12-31

Entity Filer Category

Large Accelerated Filer

Entity Common Stock, Shares Outstanding

270.8

Consolidated Statements of Income (Unaudited) (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Income Statement [Abstract]

Revenue

$ 1,194

$ 1,116

$ 3,625

$ 3,224

Expenses:

Operating-related expenses

393

367

1,164

1,080

Selling and general expenses

385

435

1,261

1,175

Depreciation

20

24

65

69

Amortization of intangibles

13

15

38

35

Total expenses

811

841

2,528

2,359

Other income

24

0

24

0

Operating profit

407

275

1,121

865

Interest expense, net

14

21

45

63

Income from continuing operations before taxes on income

393

254

1,076

802

Provision for taxes on income

128

82

364

287

Income from continuing operations

265

172

712

515

Discontinued operations, net of tax:

Income (loss) from discontinued operations

0

165

(27)

169

(Loss) gain on sale of discontinued operations (includes $(75) accumulated other comprehensive income reclassifications for foreign currency translation adjustment in the nine month period)

(20)

0

592

0

Discontinued operations, net

(20)

165

565

169

Net income

245

337

1,277

684

Less: net income from continuing operations attributable to noncontrolling interests

(30)

(21)

(74)

(29)

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

0

(2)

1

(2)

Net income

215

314

1,204

653

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

Income from continuing operations

235

151

638

486

(Loss) income from discontinued operations

(20)

163

566

167

Net income

$ 215

$ 314

$ 1,204

$ 653

Income from continuing operations:

Basic (in dollars per share)

$ 0.86

$ 0.54

$ 2.31

$ 1.74

Diluted (in dollars per share)

$ 0.84

$ 0.53

$ 2.27

$ 1.71

Income from discontinued operations:

Basic (in dollars per share)

$ (0.07)

$ 0.58

$ 2.05

$ 0.60

Diluted (in dollars per share)

$ (0.07)

$ 0.57

$ 2.02

$ 0.59

Net income:

Basic (in dollars per share)

$ 0.79

$ 1.13

$ 4.36

$ 2.34

Diluted (in dollars per share)

$ 0.77

$ 1.10

$ 4.29

$ 2.29

Weighted-average number of common shares outstanding:

Basic (in shares)

272.8

278.7

275.8

278.8

Diluted (in shares)

278.8

284.6

280.4

284.6

Dividend declared per common share (in usd per share)

$ 0.28

$ 0.255

$ 0.84

$ 0.765

Consolidated Statements of Income (Unaudited) (Parenthetical) (USD $)

In Millions, unless otherwise specified

9 Months Ended

Sep. 30, 2013

Income Statement [Abstract]

Accumulated other comprehensive income reclassifications for foreign currency translation adjustment

$ (75)

Consolidated Statements of Comprehensive Income (Unaudited) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Statement of Comprehensive Income [Abstract]

Net income

$ 245

$ 337

$ 1,277

$ 684

Other comprehensive income:

Foreign currency translation adjustment

40

35

84

22

Income tax effect

(2)

(5)

(4)

(11)

Foreign currency translation adjustment, net of income tax effect

38

30

80

11

Pension and other postretirement benefit plans

6

8

(28)

36

Income tax effect

(3)

3

(13)

Pension and other post-retirement benefit plans, net of income tax effect

3

5

(25)

23

Unrealized (loss) gain on investments and forward exchange contracts

(9)

2

(2)

2

Income tax effect

5

(1)

1

(2)

Unrealized loss on investments and forward exchange contracts, net of income tax effect

(4)

1

(1)

0

Comprehensive income

282

373

1,331

718

Less: comprehensive income attributable to nonredeemable noncontrolling interests

(9)

(10)

(15)

Less: comprehensive income attributable to redeemable noncontrolling interests

(22)

(18)

(60)

(18)

Comprehensive income attributable to McGraw Hill Financial, Inc.

$ 251

$ 345

$ 1,256

$ 685

Consolidated Balance Sheets (USD $)

In Millions, unless otherwise specified

Sep. 30, 2013

Dec. 31, 2012

Current assets:

Cash and equivalents

$ 1,577

$ 760

Accounts receivable, net of allowance for doubtful accounts: 2013 - $49; 2012 - $54

957

954

Deferred income taxes

130

117

Prepaid and other current assets

164

128

Assets held for sale

0

1,940

Total current assets

2,828

3,899

Property and equipment, net of accumulated depreciation: 2013 - $646; 2012 - $772

336

368

Goodwill

1,406

1,438

Other intangible assets, net

1,023

1,081

Other non-current assets

255

266

Total assets

5,848

7,052

Current liabilities:

Accounts payable

227

249

Accrued compensation and contributions to retirement plans

349

453

Short-term debt

0

457

Income taxes currently payable

113

158

Unearned revenue

1,240

1,229

Other current liabilities

430

457

Liabilities held for sale

0

664

Total current liabilities

2,359

3,667

Long-term debt

799

Pension and other post-retirement benefits

506

529

Other non-current liabilities

359

407

Total liabilities

4,023

5,402

Commitments and contingencies (Note 11)

Redeemable noncontrolling interest (Note 7)

810

Equity:

Common stock

412

Additional paid-in capital

427

492

Retained income

7,289

6,525

Accumulated other comprehensive loss

(465)

(517)

Less: common stock in treasury

(6,686)

(6,145)

Total equity — controlling interests

977

767

Total equity — noncontrolling interests

38

73

Total equity

1,015

840

Total liabilities and equity

$ 5,848

$ 7,052

Consolidated Balance Sheets (Parenthetical) (USD $)

In Millions, unless otherwise specified

Sep. 30, 2013

Dec. 31, 2012

Statement of Financial Position [Abstract]

Accounts receivable, allowance for doubtful accounts

$ 49

$ 54

Property and equipment, accumulated depreciation

$ 646

$ 772

Consolidated Statements of Cash Flows (Unaudited) (USD $)

In Millions, unless otherwise specified

9 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Operating Activities:

Net income

$ 1,277

$ 684

Less: discontinued operations, net

565

169

Income from continuing operations

712

515

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

Depreciation (including amortization of technology projects)

65

69

Amortization of intangibles

38

35

Provision for losses on accounts receivable

18

20

Deferred income taxes

3

5

Stock-based compensation

73

63

Gain on dispositions

(24)

0

Other

10

46

Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:

Accounts receivable

(8)

(122)

Prepaid and other current assets

(43)

(28)

Accounts payable and accrued expenses

(167)

(17)

Unearned revenue

39

(29)

Other current liabilities

(44)

(32)

Net change in prepaid/accrued income taxes

(121)

115

Net change in other assets and liabilities

(52)

(42)

Cash provided by operating activities from continuing operations

499

598

Investing Activities:

Capital expenditures

(55)

(70)

Acquisitions, net of cash acquired

0

(156)

Proceeds from dispositions

52

0

Changes in short-term investments

(15)

27

Cash used for investing activities from continuing operations

(18)

(199)

Financing Activities:

Repayments of short-term debt, net

(457)

0

Dividends paid to shareholders

(232)

(216)

Dividends and other payments paid to noncontrolling interests

(56)

(8)

Contingent consideration payment

(12)

0

Purchase of CRISIL shares

(214)

0

Repurchase of treasury shares

(850)

(269)

Exercise of stock options

195

253

Excess tax benefits from share-based payments

26

18

Cash used for financing activities from continuing operations

(1,600)

(222)

Effect of exchange rate changes on cash from continuing operations

(7)

9

Cash (used for) provided by continuing operations

(1,126)

186

Discontinued Operations:

Cash (used for) provided by operating activities

(192)

247

Cash provided by (used for) investing activities

2,159

(133)

Cash used for financing activities

(25)

(5)

Effect of exchange rate changes on cash

1

3

Effect of change in cash and equivalents

0

2

Cash provided by discontinued operations

1,943

114

Net change in cash and equivalents

817

300

Cash and equivalents at beginning of period

760

835

Cash and equivalents at end of period

$ 1,577

$ 1,135

Consolidated Statements of Equity Consolidated Statements of Equity (USD $)

In Millions, unless otherwise specified

Total

Common Stock $1 par

Additional Paid-in Capital

Retained Income

Accumulated Other Comprehensive Loss

Less: Treasury Stock

Total MHFI Equity

Noncontrolling Interests

Beginning balance at Dec. 31, 2012

$ 840

$ 412

$ 492

$ 6,525

$ (517)

$ 6,145

$ 767

$ 73

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Comprehensive Income¹

1,271

1,204

52

1,256

15

Dividends

(247)

(238)

(9)

Noncontrolling interest adjustments related to discontinued operations

(22)

0

(22)

Share repurchases

(850.0)

850.0

(850.0)

Employee stock plans, net of tax benefit

244

(65)

(309)

244

Change in redemption value of redeemable noncontrolling interest

9

Increase in CRISIL ownership

(233)

(216)

(17)

Other

3

5

(2)

Net income attributable to noncontrolling interest

60

Ending balance at Sep. 30, 2013

$ 1,015

$ 412

$ 427

$ 7,289

$ (465)

$ 6,686

$ 977

$ 38

[1] Excludes $60 million attributable to our redeemable noncontrolling interest.

Nature of Operations and Basis of Presentation

McGraw Hill Financial, Inc. (together with its consolidated subsidiaries, "McGraw Hill Financial," the “Company,” “we,” “us” or “our”) is a leading content and analytics provider serving the capital, commodities and commercial markets. The capital markets include asset managers, banks, exchanges, issuers and financial advisors; the commodities markets include producers, traders and intermediaries within energy, metals, and agriculture; and the commercial markets include professionals and corporate executives within automotive, construction and marketing / research information services.

Our operations consist of four reportable segments: Standard & Poor’s Ratings (“S&P Ratings”), S&P Capital IQ, S&P Dow Jones Indices ("S&P DJ Indices") and Commodities & Commercial Markets (“C&C”).


•	S&P Ratings is a provider of credit ratings, research and analytics, offering investors and market participants with information and independent ratings benchmarks.


•	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 commodities and commercial markets that deliver their customers access to high-value information, data, analytic services and pricing benchmarks.

We completed the sale of our McGraw-Hill Education business ("MHE") on March 22, 2013 and, accordingly, the results of operations of MHE have been reclassified to reflect the business as a discontinued operation for the three and nine months ended September 30, 2013 and 2012. The assets and liabilities of MHE have been removed from the consolidated balance sheet as of September 30, 2013 and classified as held for sale as of December 31, 2012. See Note 2 — Acquisitions and Divestitures for further discussion.

The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Therefore, the financial statements included herein should be read in conjunction with the financial statements and notes included in our Form 10-K, as amended, for the year ended December 31, 2012 (our “Form 10-K”).

In the opinion of management all normal recurring adjustments considered necessary for a fair statement of the results of the interim periods have been included. The operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the full year. Certain prior-year amounts have been reclassified to conform to the current presentation.

Our critical accounting estimates are disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, allowance for doubtful accounts, valuation of long-lived assets, goodwill and other intangible assets, pension plans, incentive and stock-based compensation, income taxes, contingencies and redeemable noncontrolling interests. Since the date of our Form 10-K, there have been no material changes to our critical accounting policies and estimates.

Acquisitions and Divestitures

Acquisitions

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%.

Following CRISIL's acquisition of Coalition Development Ltd. ("Coalition") that occurred in July of 2012, we made a contingent purchase price payment in the first nine months of 2013 for $12 million that has been reflected in the consolidated statement of cash flows as a financing activity.

During the nine months ended September 30, 2012, we completed the following acquisitions:


•	On July 4, 2012, CRISIL completed the acquisition of 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.


•	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.


•	On June 29, 2012, we acquired Credit Market Analysis Limited ("CMA") from the CME Group. CMA provides independent data concerning over-the-counter markets. CMA's data and technology will enhance our capability to provide pricing and related over-the-counter information. CMA was integrated into our S&P Capital IQ segment.


•	On April 3, 2012 we completed the acquisition of QuantHouse, an independent global provider of end-to-end systematic low latency market data solutions. QuantHouse was integrated into our S&P Capital IQ segment. The acquisition allows us to offer unique 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. R² was integrated into our S&P Capital IQ segment.

None of these acquisitions was material either individually or in the aggregate, including the pro forma impact on earnings.

Divestitures

During the three months ended September 30, 2013 we completed the following dispositions that resulted in a net pre-tax gain of $24 million, which was included in other income in the consolidated statement of income:


•	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.

On March 22, 2013, we completed the sale of MHE to investment funds affiliated with Apollo Global Management, LLC for a purchase price of $2.4 billion in cash. We recorded an after-tax gain on the sale of $592 million , which is included in discontinued operations, net in the consolidated statement of income for the nine months ended September 30, 2013. During the three months ended September 30, 2013, we adjusted the after tax gain on the sale of MHE, primarily due to post-closing working capital adjustments. We have used a portion of the after-tax proceeds from the sale to pay down short-term debt, in part driven by the special dividend paid in 2012, and to continue share repurchases. We will also continue to use a portion of the after-tax proceeds to make selective acquisitions and investments.

In connection with the sale, we have entered into transition service agreements designed to ensure and facilitate the orderly transfer of MHE's business operations to the buyer. Under the terms of these agreements, we will provide various services to MHE for an expected period of three to twelve months from the date of the sale.

The key components of income from discontinued operations for the periods ended September 30 consist of the following:



(in millions)	Three Months					Nine Months
	2013			2012		2013			2012
Revenue	$	—		$	836	$	268		$	1,606
Expenses	(1		)	582		310			1,357
Operating income (loss)	1			254		(42		)	249
Interest expense (income), net	1			—		2			(2		)
Income (loss) before taxes on income (loss)	—			254		(44		)	251
Provision (benefit) for taxes on income (loss)	—			89		(17		)	82
Income (loss) from discontinued operations, net of tax	—			165		(27		)	169
Pre-tax (loss) gain on sale from discontinued operations	(32		)	—		888			—
(Benefit) provision for taxes on income	(12		)	—		296			—
(Loss) gain on sale of discontinued operations, net of tax	(20		)	—		592			—
Discontinued operations, net	(20		)	165		565			169
Less: net income (loss) attributable to noncontrolling interests	—			2		(1		)	2
(Loss) income from discontinued operations attributable to McGraw Hill Financial, Inc. common shareholders	$	(20	)	$	163	$	566		$	167

The components of assets and liabilities classified as held for sale in the consolidated balance sheet consist of the following:



(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

We did not complete any divestitures during the nine months ended September 30, 2012.

Income Taxes

The effective income tax rate for continuing operations was 32.6% and 32.2%, for the three months ended September 30, 2013 and September 30, 2012, respectively.

The effective income tax rate for continuing operations was 33.8% and 35.8% for nine months ended September 30, 2013 and September 30, 2012. The reduction in the effective income tax rate was primarily due to the partnership structure of the S&P Dow Jones Indices LLC and a tax benefit on the sale of Aviation Week as discussed in Note 2 — Acquisitions and Divestitures.

At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary quarterly earnings. The tax expense or benefit related to significant, unusual or extraordinary items that will be separately reported or reported net of their related tax effect, and are individually computed, are recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates or tax status is recognized in the interim period in which the change occurs.

As of September 30, 2013 and December 31, 2012, the total amount of federal, state and local, and foreign unrecognized tax benefits was $59 million and $74 million, respectively, exclusive of interest and penalties. The reduction in unrecognized tax benefits is due primarily to tax positions related to prior years that were settled during the quarter ended September 30, 2013.

We recognize accrued interest and penalties related to unrecognized tax benefits in interest expense and operating-related expense, respectively. In addition to the unrecognized tax benefits, as of September 30, 2013 and December 31, 2012, we had $16 million and $14 million, respectively, of accrued interest and penalties associated with uncertain tax positions.

Debt



(in millions)	September 30, 2013		December 31, 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 September 30, 2013, the unamortized debt discount is $0.4 million.


²	Interest payments are due semiannually on May 15 and November 15, and, as of September 30, 2013, the unamortized debt discount is $1.3 million.

The fair value of our long-term debt borrowings was $816 million and $916 million as of September 30, 2013 and December 31, 2012, respectively, and was estimated based on Level 1 fair value measures, specifically quoted market prices.

Currently, we have the ability to borrow a total of $1.0 billion through our commercial paper program, which is supported by our credit facility described below. As of September 30, 2013, there were no commercial paper borrowings outstanding. In connection with the special dividend in the amount of $2.50 per share on our common stock we utilized our commercial paper program in December of 2012 and as a result, commercial paper borrowings outstanding as of December 31, 2012 totaled $457 million with an average interest rate and term of 0.48% and 28 days.

On June 19, 2013, we entered into a $1.0 billion four-year credit agreement (our “credit facility”) that will terminate on June 19, 2017. This credit facility replaced our $1.2 billion three-year credit facility that was scheduled to terminate on July 30, 2013. The previous credit facility was canceled after the new credit facility became effective. There were no outstanding borrowings under the previous credit facility when it was replaced.

We pay a commitment fee of 20 to 45 basis points for our credit facility, depending on our indebtedness to cash flow ratio, whether or not amounts have been borrowed and currently pay a commitment fee of 25 basis points. The interest rate on borrowings under our credit facility is, at our option, calculated using rates that are primarily based on either the prevailing London Inter-Bank Offer Rate, the prime rate determined by the administrative agent or the Federal funds rate. For certain borrowings under this credit facility there is also a spread based on our credit rating added to the applicable rate.

Our credit facility contains certain covenants. The only financial covenant requires that our indebtedness to cash flow ratio, as defined in our credit facility, is not greater than 3.25 to 1, and this covenant level has never been exceeded.

Employee Benefits

We maintain a number of active defined contribution retirement plans for our employees. The majority of our defined benefit plans are frozen. As a result, no new employees will be permitted to enter these plans and no additional benefits for current participants in the frozen plans will be accrued.

We also have supplemental benefit plans that provide senior management with supplemental retirement, disability and death benefits. Certain supplemental retirement benefits are based on final monthly earnings. In addition, we sponsor voluntary 401(k) plans under which we may match employee contributions up to certain levels of compensation as well as profit-sharing plans under which we contribute a percentage of eligible employees' compensation to the employees' accounts.

We also provide certain medical, dental and life insurance benefits for active and retired employees and eligible dependents. The medical and dental plans and supplemental life insurance plan are contributory, while the basic life insurance plan is noncontributory. We currently do not prefund any of these plans.

We recognize the funded status of our defined benefit retirement and postretirement plans in the consolidated balance sheets, with a corresponding adjustment to accumulated other comprehensive income, net of taxes. The amounts in accumulated other comprehensive income represent unrecognized actuarial losses and unrecognized prior service costs. These amounts will be subsequently recognized as net periodic pension cost pursuant to our accounting policy for amortizing such amounts.

We recognized $6 million and $19 million of unrecognized actuarial losses and unrecognized prior service costs as net periodic benefit cost during the three and nine months ended September 30, 2013, respectively, and $8 million and $23 million during the three and nine months ended September 30, 2012, respectively.

In the first nine months of 2013, we contributed $19 million to our retirement plans and expect to make additional required contributions of approximately $5 million to our retirement plans during the remainder of the year. We may elect to make additional non-required contributions depending on investment performance and the pension plan status in the fourth quarter of 2013.

Stock-Based Compensation

We issue stock-based incentive awards to our eligible employees and Directors under the 2002 Employee Stock Incentive Plan and a Director Deferred Stock Ownership Plan. No further awards may be granted under the 1993 Employee Stock Incentive Plan and any remaining outstanding options under the 1993 Employee Stock Incentive Plan expired in the first quarter of 2013. The 2002 Employee Stock Incentive Plan permits the granting of nonqualified stock options, stock appreciation rights, performance stock, restricted stock and other stock-based awards.

Stock-based compensation for the periods ended September 30 is as follows:



(in millions)	Three Months				Nine Months
	2013		2012		2013		2012
Stock option expense	$	4	$	2	$	10	$	9
Restricted stock and unit awards expense	22		21		63		54
Total stock-based compensation expense¹	$	26	$	23	$	73	$	63


¹	Included in total stock-based compensation expense are amounts related to employees at the Company's corporate offices who transferred to MHE of $1 million and $3 million for the three and nine months ended September 30, 2012, respectively.

As of September 30, 2013 and December 31, 2012, we issued 5.3 million and 8.4 million common shares, respectively, upon exercise of certain stock options outstanding.

Equity

Stock Repurchases

In 2011, the Board of Directors approved a stock repurchase program authorizing the purchase of up to 50.0 million shares (the “2011 Repurchase Program”), which was approximately 17% of the total shares of our outstanding common stock at that time. Share repurchases for the periods ended September 30 were as follows:



(in millions, except average price)	Three Months				Nine Months
	2013		2012		2013		2012
Total number of shares purchased ^{1, 2}	6.4		5.9		15.0		6.8
Average price paid per share ^{2, 3}	$	61.42	$	50.35	$	61.42	$	50.35
Total cash utilized	$	350	$	295	$	850	$	295


¹	The three and nine month periods ended September 30, 2013 and the nine month ended September 30, 2012 include shares received as part of our accelerated share repurchase agreements 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 the third quarter of 2012, 0.5 million shares were repurchased for $25.6 million, which settled in October 2012. Excluding these 0.5 million shares, the average price paid per share was $49.99.


³	Average price paid per share information does not include the accelerated share repurchase transaction as discussed in more detail below.

Our purchased shares may be used for general corporate purposes, including the issuance of shares for stock compensation plans and to offset the dilutive effect of the exercise of employee stock options. As of September 30, 2013, 1.9 million shares remained available under the 2011 Repurchase Program. The 2011 Repurchase Program has no expiration date and purchases under this program may be made from time to time on the open market and in private transactions, depending on market conditions.

Accelerated Share Repurchase Program

We entered into an accelerated share repurchase (“ASR”) agreement with a financial institution on March 25, 2013 to initiate share repurchases aggregating $500 million. The ASR agreement was structured as a capped ASR agreement in which we paid $500 million and received an initial delivery of approximately 7.2 million shares during the three months ended March 31, 2013, with an additional 1.4 million shares received on April 1, 2013, in the aggregate, representing the minimum number of shares of our common stock to be repurchased based on a calculation using a specific capped price per share. The total number of shares ultimately purchased was determined based on the volume weighted-average share price (“VWAP”), minus a discount, of our common stock from March 25, 2013 through July 22, 2013. On July 25, 2013 we received a final incremental delivery of 0.7 million shares determined using a VWAP of $53.7995 bringing the total amount of shares received to 9.3 million.

In December of 2011 we entered into two separate ASR agreements with a financial institution to initiate share repurchases aggregating $500 million. The first ASR agreement was structured as an uncollared ASR agreement for the repurchase of $250 million of shares at a per share price equal to the VWAP of our common stock between December 7, 2011 and February 22, 2012. We purchased and received approximately 5 million and 0.8 million shares in December 2011 and February 2012, respectively, under the agreement. The second agreement was structured as a capped agreement for the repurchase of $250 million of shares where we purchased and received 5 million and 0.1 million shares in December 2011 and April 2012, respectively.

Redeemable Noncontrolling Interests

The agreement with the minority partners of our S&P Dow Jones Indices LLC established in June of 2012 contains redemption features whereby interests held by minority partners are redeemable either (i) at the option of the holder or (ii) upon the occurrence of an event that is not solely within our control. Specifically, under the terms of the operating agreement of S&P Dow Jones Indices LLC, after December 31, 2017, CME Group and CGIS will have the right at any time to sell, and we are obligated to buy, at least 20% of their share in S&P Dow Jones Indices LLC. In addition, in the event there is a change of control of the Company, for the 15 days following a change in control, CME Group and CGIS will have the right to put their interest to us at the then fair value of CME Group's and CGIS' minority interest.

If interests were to be redeemed under this agreement, we would generally be required to purchase the interest at fair value on the date of redemption. This interest is presented on the consolidated balance sheets outside of equity under the caption “Redeemable noncontrolling interest” with an initial value based on fair value for the portion attributable to the net assets we acquired, and based on our historical cost for the portion attributable to our S&P Index business. We adjust the redeemable noncontrolling interest each reporting period to its estimated redemption value, but never less than its initial fair value, considering a combination of an income and market valuation approach. Our income and market valuation approaches may incorporate Level 3 fair value measures for instances when observable inputs are not available, including assumptions related to expected future net cash flows, long-term growth rates, the timing and nature of tax attributes, and the redemption features. Any adjustments to the redemption value will impact retained income.

Noncontrolling interests that do not contain such redemption features are presented in equity.

Changes to redeemable noncontrolling interest during the nine months ended September 30, 2013 were as follows:



(in millions)
Balance as of December 31, 2012	$	810
Net income attributable to noncontrolling interest	60
Distributions to noncontrolling interest	(51		)
Redemption value adjustment	(9		)
Balance as of September 30, 2013	$	810

Earnings Per Share

Basic earnings per common share (“EPS”) is computed by dividing net income attributable to the common shareholders of the Company by the weighted-average number of common shares outstanding. Diluted EPS is computed in the same manner as basic EPS, except the number of shares is increased to include additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued. Potential common shares consist primarily of stock options, restricted stock and restricted stock units calculated using the treasury stock method.

The calculation for basic and diluted EPS for the periods ended September 30 is as follows:



(in millions, except per share amounts)	Three Months					Nine Months
	2013			2012		2013		2012
Amounts attributable to McGraw Hill Financial, Inc. common shareholders:
Income from continuing operations	$	235		$	151	$	638	$	486
(Loss) income from discontinued operations	(20		)	163		566		167
Net income	$	215		$	314	$	1,204	$	653

Basic weighted-average number of common shares outstanding	272.8			278.7		275.8		278.8
Effect of stock options and other dilutive securities	6.0			5.9		4.6		5.8
Diluted weighted-average number of common shares outstanding	278.8			284.6		280.4		284.6

Earnings per share attributable to McGraw Hill Financial, Inc. common shareholders:
Income from continuing operations:
Basic	$	0.86		$	0.54	$	2.31	$	1.74
Diluted	$	0.84		$	0.53	$	2.27	$	1.71
Income from discontinued operations:
Basic	$	(0.07	)	$	0.58	$	2.05	$	0.60
Diluted	$	(0.07	)	$	0.57	$	2.02	$	0.59
Net income:
Basic	$	0.79		$	1.13	$	4.36	$	2.34
Diluted	$	0.77		$	1.10	$	4.29	$	2.29

Restricted performance shares outstanding of 0.9 million and 2.7 million as of September 30, 2013 and 2012, respectively, were not included in the computation of diluted EPS because the necessary vesting conditions had not been met.

The effect of the potential exercise of stock options is excluded from the computation of diluted EPS when the average market price of our common stock is lower than the exercise price of the related option during the period because the effect would have been antidilutive. The number of stock options excluded from the diluted EPS computation for the periods ended September 30 is as follows:



(in millions)	Three Months		Nine Months
	2013	2012	2013	2012
Stock options excluded from diluted EPS computation	1.2	3.2	2.7	3.9

Restructuring

As part of our Growth and Value Plan that we began in September of 2011, we have initiated various restructuring plans as we identified opportunities for cost savings through workforce reductions and created a flatter and more agile organization. The plans that are currently active with a remaining liability are further described below. Our 2012 and 2011 plans consisted of a company-wide workforce reduction of approximately 670 positions and 250 positions, respectively. The charges for each restructuring plan are classified as selling and general expenses within the consolidated statements of income and the reserves are included in other current liabilities in the consolidated balance sheets.

In certain circumstances, reserves are no longer needed because of efficiencies in carrying out the plans or because employees previously identified for separation resigned from the Company and did not receive severance or were reassigned due to circumstances not foreseen when the original plans were initiated. In these cases, we reverse reserves through the consolidated statements of income during the period when it is determined they are no longer needed.

As part of the definitive agreement to sell MHE to investment funds affiliated with Apollo Global Management, LLC, described further in Note 2 — Acquisitions and Divestitures, we have retained MHE's restructuring liabilities. Therefore, the remaining reserves described below include MHE's restructuring liability, however, the initial charge associated with the reserve has been bifurcated between continuing and discontinued operations.

The initial restructuring charge recorded and the ending reserve balance as of September 30, 2013 by segment is as follows:



	2012 Restructuring Plan				2011 Restructuring Plan ¹
(in millions)	Initial Charge Recorded		Ending Reserve Balance		Initial Charge Recorded		Ending Reserve Balance
S&P Ratings	$	15	$	8	$	9	$	—
S&P Capital IQ	19		6		—		—
S&P DJ Indices	1		—		—		—
C&C	12		2		6		—
Corporate	21		4		17		4
Total continuing operations	68		20		32		4
MHE	39		9		34		6
Total	$	107	$	29	$	66	$	10


¹	In the second quarter of 2012 we recorded an additional pre-tax restructuring charge of $5 million primarily for employee severance costs as part of the Growth and Value Plan.

For the three and nine months ended September 30, 2013, we have reduced the reserve for the 2012 restructuring plan by $17 million and $64 million, respectively, primarily relating to cash payments for employee severance costs.

For the three months ended September 30, 2013 and 2012, we have reduced the reserve for the 2011 restructuring plan by $3 million and $6 million, respectively, primarily relating to cash payments for employee severance costs. For the nine months ended September 30, 2013 and 2012, we have reduced the reserve by $11 million and $36 million, respectively.

Segment and Related Information

We have four reportable segments: S&P Ratings, S&P Capital IQ, S&P DJ Indices and C&C. The Executive Committee, consisting of our principal corporate executives, is our chief operating decision-maker and evaluates performance of our segments and allocates resources based primarily on operating profit. Segment operating profit does not include unallocated expense or interest expense, which are centrally managed costs.

A summary of operating results by segment for the periods ended September 30 is as follows:



Three Months	2013						2012
(in millions)	Revenue			Operating Profit			Revenue			Operating Profit
S&P Ratings	$	540		$	243		$	502		$	209
S&P Capital IQ	293			54			284			40
S&P DJ Indices	124			80			109			61
C&C	255			91			239			60
Intersegment elimination ¹	(18		)	—			(18		)	—
Total operating segments	1,194			468			1,116			370
Unallocated expense ²	—			(61		)	—			(95		)
Total	$	1,194		$	407		$	1,116		$	275



Nine Months	2013						2012
(in millions)	Revenue			Operating Profit			Revenue			Operating Profit
S&P Ratings	$	1,701		$	779		$	1,451		$	603
S&P Capital IQ	868			165			835			160
S&P DJ Indices	363			227			277			148
C&C	750			236			713			195
Intersegment elimination ¹	(57		)	—			(52		)	—
Total operating segments	3,625			1,407			3,224			1,106
Unallocated expense ²	—			(286		)	—			(241		)
Total	$	3,625		$	1,121		$	3,224		$	865


¹	Revenue for S&P Ratings and expenses for S&P Capital IQ include an intersegment royalty charged to S&P Capital IQ for the rights to use and distribute content and data developed by S&P Ratings.


²	Includes Growth and Value Plan costs of $10 million and $64 million for the three and nine months ended September 30, 2013, respectively and $48 million and $101 million for the three and nine months ended September 30, 2012, respectively. Also includes pre-tax legal settlements of approximately $77 million for the nine months ended September 30, 2013.

See Note 2 — Acquisitions and Divestitures and Note 9 — Restructuring for additional actions that impacted the segment operating results.

Commitments and Contingencies

Rental Expense and Lease Obligations

As of September 30, 2013, the remaining deferred gain related to our sale-leaseback transaction with Rock-McGraw, Inc. was $112 million, as $4 million and $11 million was amortized during the three and nine months ended September 30, 2013. Interest expense associated with this operating lease for the three and nine months ended September 30, 2013 was $1 million and $4 million, respectively.

Related Party Agreements

In June of 2012 we entered into a new license agreement (the "License Agreement") with the holder of S&P Dow Jones Indices LLC noncontrolling interest, CME Group, which replaced the 2005 license agreement between S&P DJ Indices and CME Group. Under the terms of the License Agreement, S&P Dow Jones Indices LLC receives a share of the profits from the trading and clearing of CME Group's equity index products. During the three and nine months ended September 30, 2013, S&P Dow Jones Indices LLC earned $12 million and $36 million, respectively, of revenue under the terms of the License Agreement. The entire amount of this revenue is included in our consolidated statements of income, and the portion related to the 27% noncontrolling interest is removed in net income attributable to noncontrolling interests.

Legal Matters

The following amends the disclosure in Note 13 — Commitments and Contingencies to the consolidated financial statements of our Form 10-K.


•	In connection with the Reese v. Bahash litigation, on September 24, 2013, the Court denied, in their entirety, plaintiff's motions seeking to be relieved from the judgment dismissing the case and for leave to file an amended complaint.


•	In connection with the DOJ lawsuit, the Company and S&P filed a motion to dismiss the complaint on April 22, 2013. The Court issued an order denying the motion to dismiss on July 16, 2013.

•

In connection with the numerous state-court actions that have been brought against the Company and S&P by the attorneys general of various states and the District of Columbia, the Company and S&P have removed most of the actions to federal court and filed a motion before the United States Judicial Panel on Multidistrict Litigation ("JPML") to consolidate and transfer those removed actions to one federal court for all pretrial proceedings. On June 6, 2013, the JPML granted S&P's motion with respect to the state actions then before it and ordered those actions be consolidated before the United States District Court for the Southern District of New York. The Company expects that any similar actions subsequently filed by other state attorneys general will be similarly consolidated in the Southern District of New York upon S&P's request. On October 4, 2013, the Court heard argument on motions by the states to have the cases remanded to state court.

We believe that the claims asserted and/or contemplated in the proceedings described in Note 13 — Commitments and Contingencies to the consolidated financial statements of our Form 10-K, as amended above, have no basis and they will be vigorously defended by the Company and/or the subsidiaries involved.

In view of the inherent difficulty of predicting the outcome of legal matters, particularly where the claimants seek very large or indeterminate damages, or where the cases present novel legal theories, involve a large number of parties or are in early stages of discovery, we cannot state with confidence what the eventual outcome of the pending matters described in Note 13 — Commitments and Contingencies to the consolidated financial statements of our Form 10-K will be, what the timing of the ultimate resolution of these matters will be or what the eventual loss, fines, penalties or impact related to each pending matter may be. We believe, based on our current knowledge, the outcome of the legal actions, proceedings and investigations currently pending should not have a material adverse effect to our financial position, results of operations or cash flows.

Additionally, in April 2013 we settled certain subprime litigation cases. Included in selling and general expenses in our consolidated statement of income for the nine months ended September 30, 2013 is a pre-tax amount of approximately $77 million for these settlements. These cases were dismissed under the terms of the settlements.

Updates to our Legal and Regulatory Environment

•

In connection with the businesses conducted by S&P DJ Indices, on July 17, 2013, International Organization of Securities Commissions ("IOSCO") published its “Principles for Financial Benchmarks.” S&P DJ Indices has begun voluntary implementation of the principles. As a part of that process S&P DJ Indices is taking into consideration the ESMA-EBA Principles for Benchmark-Setting Processes in the EU published in June 2013 and the Index Industry Association’s Best Practices issued in July 2013. S&P DJ Indices does not believe that aligning its operations to these principles and/or practices will have a significant negative impact on its ongoing business operations.

•

Our commodities business is subject to the potential for increased regulation in the U.S. and abroad. On October 5, 2012, the IOSCO issued its final report to the G-20, including Principles for Oil Price Reporting Agencies ("PRA"), 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. On January 9, 2013, IOSCO held a meeting with the Price Reporting Organizations to discuss implementation of the Principles for Oil Price Reporting Agencies. At the meeting, Platts was able to obtain clarification from IOSCO on its expectations for voluntary implementation of the Principles by Platts. Platts has begun voluntary implementation of the IOSCO Oil Price Reporting Principles and does not believe the Principles will have a significant negative impact on its ongoing business operations.

In July of 2013 Platts reaffirmed its commitment to aligning its operations to the IOSCO Principles for Oil Price Reporting Agencies and to applying those principles to its price reporting in the other commodity markets in which it publishes price assessments that underlie financial derivatives contracts. The announcement followed IOSCO's publication on July 17, 2013 of its “Principles for Financial Benchmarks,” which stated that it “expects the oil PRAs to continue to implement and comply with the PRA principles.” Platts is currently finalizing the assurance review called for by the IOSCO Principles for Oil Price Reporting Agencies.

On May 14, 2013, representatives from the European Commission (DG Competition, the EC's antitrust office) commenced an unannounced inspection of Platts' offices at Canary Wharf in London which lasted until May 19, 2013 in conjunction with the potential anticompetitive conduct (in particular, in the crude oil, refined oil products and biofuels markets) relating to Platts' Market On Close price assessment process. No allegations have been made against Platts at this time. There have also been several civil actions filed in the U.S. relating to potential anticompetitive behavior by market participants relating to the Platts price assessment process, none of which have named Platts as a defendant.

Recently Adopted Accounting Standards

Recent Accounting Standards

In July of 2013, the Financial Accounting Standards Board (“FASB”) issued amended guidance that resolves the diversity in practice for the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This new accounting guidance requires the netting of unrecognized tax benefits ("UTBs") against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. Under the new standard, UTBs will be netted against all available same-jurisdiction loss or other tax carryforwards that would be utilized, rather than only against carryforwards that are created by the UTBs. The new standard requires prospective adoption but allows retrospective adoption for all periods presented. We will adopt the FASB’s amended guidance for our annual reporting period beginning January 1, 2014. We do not expect the adoption of the guidance to have a significant impact on our financial position, results of operations or cash flows.

In March of 2013, the FASB issued amended guidance that resolves the diversity in practice for the accounting for the cumulative translation adjustment upon derecognition of certain subsidiaries or groups of assets within a foreign entity. The amended guidance requires that when a parent entity ceases to have a controlling financial interest in a subsidiary or group of assets within a foreign entity, the parent is required to release any related cumulative translation adjustment into net income in instances when a sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. Additionally, the amended guidance clarifies that the sale of an investment in a foreign entity includes both (1) events that result in the loss of a controlling financial interest in a foreign entity and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date. In these instances, an entity is required to release the cumulative translation adjustment into net income. We will adopt the FASB's amended guidance during the three months ended March 31, 2014. We do not expect the adoption of the guidance to have a significant impact on our financial position, results of operations or cash flows.

In February of 2013, the FASB issued amended guidance expanding the disclosure requirements for amounts reclassified out of accumulated other comprehensive income. The amendments require an entity to present, either on the face of the statement where net income is presented or in the notes to its financial statements, details of significant items reclassified in their entirety out of accumulated other comprehensive income and identification of the respective line items effecting net income for instances when reclassification is required under U.S. GAAP. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity will be required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by type. The amendments were effective on January 1, 2013 and have been incorporated into this quarterly report on Form 10-Q. Adoption of this guidance did not have a significant impact on our financial position, results of operations or cash flows.

Acquisitions and Divestitures (Tables)

Schedule of components of income and assets and liabilities from discontinued operations

The key components of income from discontinued operations for the periods ended September 30 consist of the following:



(in millions)	Three Months					Nine Months
	2013			2012		2013			2012
Revenue	$	—		$	836	$	268		$	1,606
Expenses	(1		)	582		310			1,357
Operating income (loss)	1			254		(42		)	249
Interest expense (income), net	1			—		2			(2		)
Income (loss) before taxes on income (loss)	—			254		(44		)	251
Provision (benefit) for taxes on income (loss)	—			89		(17		)	82
Income (loss) from discontinued operations, net of tax	—			165		(27		)	169
Pre-tax (loss) gain on sale from discontinued operations	(32		)	—		888			—
(Benefit) provision for taxes on income	(12		)	—		296			—
(Loss) gain on sale of discontinued operations, net of tax	(20		)	—		592			—
Discontinued operations, net	(20		)	165		565			169
Less: net income (loss) attributable to noncontrolling interests	—			2		(1		)	2
(Loss) income from discontinued operations attributable to McGraw Hill Financial, Inc. common shareholders	$	(20	)	$	163	$	566		$	167

The components of assets and liabilities classified as held for sale in the consolidated balance sheet consist of the following:



(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

Debt (Tables)

Short-term and long-term debt outstanding



(in millions)	September 30, 2013		December 31, 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 September 30, 2013, the unamortized debt discount is $0.4 million.


²	Interest payments are due semiannually on May 15 and November 15, and, as of September 30, 2013, the unamortized debt discount is $1.3 million.

Stock-Based Compensation (Tables)

Stock-Based Compensation

Stock-based compensation for the periods ended September 30 is as follows:



(in millions)	Three Months				Nine Months
	2013		2012		2013		2012
Stock option expense	$	4	$	2	$	10	$	9
Restricted stock and unit awards expense	22		21		63		54
Total stock-based compensation expense¹	$	26	$	23	$	73	$	63

Equity (Tables)

Schedule of stock repurchases

In 2011, the Board of Directors approved a stock repurchase program authorizing the purchase of up to 50.0 million shares (the “2011 Repurchase Program”), which was approximately 17% of the total shares of our outstanding common stock at that time. Share repurchases for the periods ended September 30 were as follows:



(in millions, except average price)	Three Months				Nine Months
	2013		2012		2013		2012
Total number of shares purchased ^{1, 2}	6.4		5.9		15.0		6.8
Average price paid per share ^{2, 3}	$	61.42	$	50.35	$	61.42	$	50.35
Total cash utilized	$	350	$	295	$	850	$	295


¹	The three and nine month periods ended September 30, 2013 and the nine month ended September 30, 2012 include shares received as part of our accelerated share repurchase agreements 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 the third quarter of 2012, 0.5 million shares were repurchased for $25.6 million, which settled in October 2012. Excluding these 0.5 million shares, the average price paid per share was $49.99.


³	Average price paid per share information does not include the accelerated share repurchase transaction as discussed in more detail below.

Schedule of redeemable noncontrolling interest

Changes to redeemable noncontrolling interest during the nine months ended September 30, 2013 were as follows:



(in millions)
Balance as of December 31, 2012	$	810
Net income attributable to noncontrolling interest	60
Distributions to noncontrolling interest	(51		)
Redemption value adjustment	(9		)
Balance as of September 30, 2013	$	810

Earnings Per Share (Tables)

Schedule of calculation for basic and diluted EPS

The calculation for basic and diluted EPS for the periods ended September 30 is as follows:



(in millions, except per share amounts)	Three Months					Nine Months
	2013			2012		2013		2012
Amounts attributable to McGraw Hill Financial, Inc. common shareholders:
Income from continuing operations	$	235		$	151	$	638	$	486
(Loss) income from discontinued operations	(20		)	163		566		167
Net income	$	215		$	314	$	1,204	$	653

Basic weighted-average number of common shares outstanding	272.8			278.7		275.8		278.8
Effect of stock options and other dilutive securities	6.0			5.9		4.6		5.8
Diluted weighted-average number of common shares outstanding	278.8			284.6		280.4		284.6

Earnings per share attributable to McGraw Hill Financial, Inc. common shareholders:
Income from continuing operations:
Basic	$	0.86		$	0.54	$	2.31	$	1.74
Diluted	$	0.84		$	0.53	$	2.27	$	1.71
Income from discontinued operations:
Basic	$	(0.07	)	$	0.58	$	2.05	$	0.60
Diluted	$	(0.07	)	$	0.57	$	2.02	$	0.59
Net income:
Basic	$	0.79		$	1.13	$	4.36	$	2.34
Diluted	$	0.77		$	1.10	$	4.29	$	2.29

Schedule of number of stock options excluded from the diluted EPS computation

The number of stock options excluded from the diluted EPS computation for the periods ended September 30 is as follows:



(in millions)	Three Months		Nine Months
	2013	2012	2013	2012
Stock options excluded from diluted EPS computation	1.2	3.2	2.7	3.9

Restructuring (Tables)

Schedule of initial restructuring charge recorded and the ending reserve balance

The initial restructuring charge recorded and the ending reserve balance as of September 30, 2013 by segment is as follows:



	2012 Restructuring Plan				2011 Restructuring Plan ¹
(in millions)	Initial Charge Recorded		Ending Reserve Balance		Initial Charge Recorded		Ending Reserve Balance
S&P Ratings	$	15	$	8	$	9	$	—
S&P Capital IQ	19		6		—		—
S&P DJ Indices	1		—		—		—
C&C	12		2		6		—
Corporate	21		4		17		4
Total continuing operations	68		20		32		4
MHE	39		9		34		6
Total	$	107	$	29	$	66	$	10


¹	In the second quarter of 2012 we recorded an additional pre-tax restructuring charge of $5 million primarily for employee severance costs as part of the Growth and Value Plan.

Segment and Related Information (Tables)

Schedule of operating results by segment

A summary of operating results by segment for the periods ended September 30 is as follows:



Three Months	2013						2012
(in millions)	Revenue			Operating Profit			Revenue			Operating Profit
S&P Ratings	$	540		$	243		$	502		$	209
S&P Capital IQ	293			54			284			40
S&P DJ Indices	124			80			109			61
C&C	255			91			239			60
Intersegment elimination ¹	(18		)	—			(18		)	—
Total operating segments	1,194			468			1,116			370
Unallocated expense ²	—			(61		)	—			(95		)
Total	$	1,194		$	407		$	1,116		$	275



Nine Months	2013						2012
(in millions)	Revenue			Operating Profit			Revenue			Operating Profit
S&P Ratings	$	1,701		$	779		$	1,451		$	603
S&P Capital IQ	868			165			835			160
S&P DJ Indices	363			227			277			148
C&C	750			236			713			195
Intersegment elimination ¹	(57		)	—			(52		)	—
Total operating segments	3,625			1,407			3,224			1,106
Unallocated expense ²	—			(286		)	—			(241		)
Total	$	3,625		$	1,121		$	3,224		$	865


¹	Revenue for S&P Ratings and expenses for S&P Capital IQ include an intersegment royalty charged to S&P Capital IQ for the rights to use and distribute content and data developed by S&P Ratings.


²	Includes Growth and Value Plan costs of $10 million and $64 million for the three and nine months ended September 30, 2013, respectively and $48 million and $101 million for the three and nine months ended September 30, 2012, respectively. Also includes pre-tax legal settlements of approximately $77 million for the nine months ended September 30, 2013.

Nature of Operations and Basis of Presentation Nature of Operations and Basis of Presentation (Details)

3 Months Ended

9 Months Ended

Sep. 30, 2013

Segment

Sep. 30, 2013

Segment

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Number of reportable segments (in segments)

4

Acquisitions and Divestitures (Narrative) (Details) (USD $)

Share data in Millions, unless otherwise specified

3 Months Ended

9 Months Ended

1 Months Ended

9 Months Ended

0 Months Ended

9 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Aug. 31, 2013

CRISIL Limited

Jun. 30, 2013

CRISIL Limited

Sep. 30, 2013

CRISIL Limited

Mar. 22, 2013

MHE

Sep. 30, 2013

MHE

Aug. 27, 2013

CRISIL Limited

India Index Services & Products Ltd

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Offer to purchase additional equity percent

22.23%

Shares acquired

11

Percent of total shares aquired

15.07%

Consideration for shares

$ 214,000,000

Ownership percentage

52.77%

67.84%

Contingent purchase price payment

12,000,000

0

12,000,000

Pre-tax gain on dispositions

24,000,000

Percent of equity interest sold

49.00%

After-tax gain on sale of business

(20,000,000)

0

592,000,000

0

592,000,000

Cash proceeds from sale of business

$ 2,400,000,000

Acquisitions and Divestitures (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Dec. 31, 2012

Components of income from discontinued operations

Revenue

$ 0

$ 836

$ 268

$ 1,606

Expenses

(1)

582

310

1,357

Operating income (loss)

1

254

(42)

249

Interest expense (income), net

1

0

2

(2)

Income (loss) before taxes on income (loss)

0

254

(44)

251

Provision (benefit) for taxes on income (loss)

0

(89)

17

(82)

Income (loss) from discontinued operations, net of tax

0

165

(27)

169

Pre-tax (loss) gain on sale from discontinued operations

(32)

0

888

0

(Benefit) provision for taxes on income

(12)

0

296

0

(Loss) gain on sale of discontinued operations, net of tax

(20)

0

592

0

Discontinued operations, net

(20)

165

565

169

Less: net income (loss) attributable to noncontrolling interests

0

2

(1)

2

(Loss) income from discontinued operations attributable to McGraw Hill Financial, Inc. common shareholders

(20)

163

566

167

Components of assets and liabilities classified as held for sale

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

Income Taxes (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Effective income tax rate

32.60%

32.20%

33.80%

35.80%

Unrecognized tax benefits

$ 59

$ 74

Accrued interest and penalties associated with uncertain tax positions

$ 16

$ 14

Debt (Details) (USD $)

In Millions, unless otherwise specified

Sep. 30, 2013

Dec. 31, 2012

Debt Instrument [Line Items]

Total debt

$ 799

$ 1,256

Less: short-term debt including current maturities

0

457

Long-term debt

799

5.9% Senior Notes, due 2017

Debt Instrument [Line Items]

Total debt

400 ¹

Interest rate

5.90%

Unamortized debt discount on senior notes

0.4

6.55% Senior Notes, due 2037

Debt Instrument [Line Items]

Total debt

399 ²

Interest rate

6.55%

Unamortized debt discount on senior notes

1.3

Commercial paper

Debt Instrument [Line Items]

Total debt

$ 0

$ 457

[1] Interest payments are due semiannually on April 15 and October 15, and, as of September 30, 2013, the unamortized debt discount is $0.4 million.

[2] Interest payments are due semiannually on May 15 and November 15, and, as of September 30, 2013, the unamortized debt discount is $1.3 million.

(Narrative) (Details) (USD $)

1 Months Ended

3 Months Ended

9 Months Ended

1 Months Ended

9 Months Ended

1 Months Ended

9 Months Ended

Dec. 31, 2012

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Jun. 30, 2013

4 Year Facility

Sep. 30, 2013

4 Year Facility

Jun. 19, 2013

4 Year Facility

Jun. 30, 2013

3 Year Facility

Jun. 18, 2013

3 Year Facility

Sep. 30, 2013

Minimum

4 Year Facility

Sep. 30, 2013

Maximum

Sep. 30, 2013

Maximum

4 Year Facility

Debt Instrument [Line Items]

Long-term debt fair value

$ 916,000,000

$ 816,000,000

Maximum borrowing capacity

1,000,000,000

1,200,000,000

Dividend declared per common share (in usd per share)

$ 2.50

$ 0.28

$ 0.255

$ 0.84

$ 0.765

Line of credit amount outstanding

$ 457,000,000

Line of credit, interest rate

0.48%

Line of credit, term at period end

28 days

Term of facility

4 years

3 years

Commitment fee

0.25%

0.20%

0.45%

Indebtedness to cash flow

3.25

Employee Benefits (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Compensation and Retirement Disclosure [Abstract]

Net periodic benefit cost

$ 6

$ 8

$ 19

$ 23

Contribution towards retirement plans

19

Expected contributions towards of retirement plans

$ 5

Stock-Based Compensation (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Total stock-based compensation expense

$ 26 ¹

$ 23 ¹

$ 73 ¹

$ 63 ¹

Stock option expense

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Total stock-based compensation expense

4

2

10

9

Restricted stock and unit awards expense

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Total stock-based compensation expense

22

21

63

54

MHE

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Total stock-based compensation expense

3 ¹

MHE |
Stock option expense

Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]

Total stock-based compensation expense

$ 1

[1] Included in total stock-based compensation expense are amounts related to employees at the Company's corporate offices who transferred to MHE of $1 million and $3 million for the three and nine months ended September 30, 2012, respectively.

Stock-Based Compensation (Narrative) (Details)

In Millions, unless otherwise specified

9 Months Ended

12 Months Ended

Sep. 30, 2013

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Common shares issued from exercise of stock option outstanding

5.3

8.4

Equity (Schedule of stock repurchases) (Details) (USD $)

In Millions, except Per Share data, unless otherwise specified

1 Months Ended

3 Months Ended

9 Months Ended

Oct. 31, 2012

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Total cash utilized

$ 850.0

2011 repurchase program

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Total number of shares purchased (in shares)

0.5

6.4 ¹ ²

5.9 ¹ ²

15.0 ¹ ²

6.8 ¹ ²

Average price paid per share (in dollars per share)

$ 49.99

$ 61.42 ² ³

$ 50.35 ² ³

$ 61.42 ² ³

$ 50.35 ² ³

Total cash utilized

$ 25.6

$ 350.0

$ 295.0

$ 850.0

$ 295.0

[1] The three and nine month periods ended September 30, 2013 and the nine month ended September 30, 2012 include shares received as part of our accelerated share repurchase agreements 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 the third quarter of 2012, 0.5 million shares were repurchased for $25.6 million, which settled in October 2012. Excluding these 0.5 million shares, the average price paid per share was $49.99.

[3] Average price paid per share information does not include the accelerated share repurchase transaction as discussed in more detail below.

Equity (Narrative) (Details) (USD $)

In Millions, except Per Share data, unless otherwise specified

0 Months Ended

4 Months Ended

9 Months Ended

12 Months Ended

1 Months Ended

3 Months Ended

1 Months Ended

Apr. 2, 2013

Mar. 25, 2013

Jul. 25, 2013

Sep. 30, 2013

Dec. 31, 2011

agreements

Sep. 30, 2013

2011 repurchase program

Sep. 30, 2013

First ASR agreement

Sep. 30, 2013

Second ASR agreement

Feb. 28, 2012

Uncollared ASR agreement

Dec. 31, 2011

Uncollared ASR agreement

Sep. 30, 2013

Uncollared ASR agreement

Apr. 30, 2012

Capped ASR agreement

Dec. 31, 2011

Capped ASR agreement

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Stock repurchase program number of shares authorized to be repurchased (in shares)

50.0

Maximum number of shares authorized for repurchase under stock repurchase plan as percentage of outstanding common stock

17.00%

Remaining shares available under repurchase program (in shares)

1.9

Repurchase of additional shares (in shares)

$ 500

Repurchase of shares at a per share price (in shares)

$ 250

Shares received on initial delivery (in shares)

5.0

7.2

5.0

Additional shares received (in shares)

1.4

0.7

0.8

0.1

Accelerated share repurchases, final price paid (in dollars per share)

$ 53.7995

Accelerated share repurchases, cumulative shares repurchased (in shares)

9.3

Accelerated share repurchase program, number of agreements entered (in agreements)

2

Interest in joint venture minimum percentage

20.00%

Agreement terms, change of control, put option for minority interest ownership, effective period

15 days

Equity (Schedule of redeemable noncontrolling interest) (Details) (USD $)

In Millions, unless otherwise specified

9 Months Ended

Sep. 30, 2013

Equity [Abstract]

Beginning balance

$ 810

Net income attributable to noncontrolling interest

60

Distributions to noncontrolling interest

(51)

Redemption value adjustment

(9)

Ending balance

$ 810

Earnings Per Share (Details) (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2013

Sep. 30, 2012

Sep. 30, 2013

Sep. 30, 2012

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

Income from continuing operations

$ 235

$ 151

$ 638

$ 486

(Loss) income from discontinued operations

(20)

163

566

167

Net income

$ 215

$ 314

$ 1,204

$ 653

Basic weighted-average number of common shares outstanding (in shares)

272.8

278.7

275.8

278.8

Effect of stock options and other dilutive securities (in shares)

6.0

5.9

4.6

5.8

Diluted weighted-average number of common shares outstanding (in shares)

278.8

284.6

280.4

284.6

Income from continuing operations:

Basic (in dollars per share)

$ 0.86

$ 0.54

$ 2.31

$ 1.74

Diluted (in dollars per share)

$ 0.84

$ 0.53

$ 2.27

$ 1.71

Income from discontinued operations:

Basic (in dollars per share)

$ (0.07)

$ 0.58

$ 2.05

$ 0.60

Diluted (in dollars per share)

$ (0.07)

$ 0.57

$ 2.02

$ 0.59

Net income:

Basic (in dollars per share)

$ 0.79

$ 1.13

$ 4.36

$ 2.34

Diluted (in dollars per share)

$ 0.77

$ 1.10

$ 4.29

$ 2.29

Restricted performance shares

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Outstanding shares not included in the computation of diluted earnings per share (in shares)

0.9

2.7

Stock options

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Outstanding shares not included in the computation of diluted earnings per share (in shares)

1.2

3.2

2.7

3.9

Restructuring (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

12 Months Ended

3 Months Ended

12 Months Ended

3 Months Ended

9 Months Ended

Sep. 30, 2013

Restructuring plan 2011

Sep. 30, 2012

Restructuring plan 2011

Dec. 31, 2011

Restructuring plan 2011

Positions

Sep. 30, 2013

Restructuring plan 2011

Sep. 30, 2012

Restructuring plan 2011

Dec. 31, 2012

Restructuring plan 2011

Jun. 30, 2012

Restructuring plan 2011

Employee severance

Dec. 31, 2012

Restructuring plan 2011

S&P Ratings

Dec. 31, 2012

Restructuring plan 2011

S&P Capital IQ

Dec. 31, 2012

Restructuring plan 2011

S&P DJ Indices

Dec. 31, 2012

Restructuring plan 2011

C&C

Dec. 31, 2012

Restructuring plan 2011

Corporate

Dec. 31, 2012

Restructuring plan 2011

Total continuing operations

Dec. 31, 2012

Restructuring plan 2011

MHE

Sep. 30, 2013

Restructuring plan 2012

Sep. 30, 2013

Restructuring plan 2012

Positions

Sep. 30, 2013

Restructuring plan 2012

S&P Ratings

Sep. 30, 2013

Restructuring plan 2012

S&P Capital IQ

Sep. 30, 2013

Restructuring plan 2012

S&P DJ Indices

Sep. 30, 2013

Restructuring plan 2012

C&C

Sep. 30, 2013

Restructuring plan 2012

Corporate

Sep. 30, 2013

Restructuring plan 2012

Total continuing operations

Sep. 30, 2013

Restructuring plan 2012

MHE

Restructuring Cost and Reserve [Line Items]

Workforce reduction (in positions)

250

670

Initial Charge Recorded

$ 66 ¹

$ 5

$ 9

$ 0

$ 6

$ 17

$ 32

$ 34

$ 107

$ 15

$ 19

$ 1

$ 12

$ 21

$ 68

$ 39

Ending Reserve Balance

10 ¹

0

4

6

29

8

6

0

2

4

20

9

Restructuring charges paid

$ 3

$ 6

$ 11

$ 36

$ 17

$ 64

[1] In the second quarter of 2012 we recorded an additional pre-tax restructuring charge of $5 million primarily for employee severance costs as part of the Growth and Value Plan.

Segment and Related Information (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2013

Segment

Sep. 30, 2012

Sep. 30, 2013

Segment

Sep. 30, 2012

Segment Reporting Information [Line Items]

Number of reportable segments (in segments)

4

Revenue

$ 1,194

$ 1,116

$ 3,625

$ 3,224

Operating Profit

407

275

1,121

865

S&P Ratings

Segment Reporting Information [Line Items]

Revenue

540

502

1,701

1,451

Operating Profit

243

209

779

603

S&P Capital IQ

Segment Reporting Information [Line Items]

Revenue

293

284

868

835

Operating Profit

54

40

165

160

S&P DJ Indices

Segment Reporting Information [Line Items]

Revenue

124

109

363

277

Operating Profit

80

61

227

148

C&C

Segment Reporting Information [Line Items]

Revenue

255

239

750

713

Operating Profit

91

60

236

195

Intersegment elimination

Segment Reporting Information [Line Items]

Revenue

(18)¹

(57)¹

(52)¹

Operating Profit

0 ¹

Total continuing operations

Segment Reporting Information [Line Items]

Revenue

1,194

1,116

3,625

3,224

Operating Profit

468

370

1,407

1,106

Unallocated expense

Segment Reporting Information [Line Items]

Revenue

0 ²

Operating Profit

(61)²

(95)²

(286)²

(241)²

Growth and value plan |
Unallocated expense

Segment Reporting Information [Line Items]

Initial Charge Recorded

10

48

64

101

Pre-tax legal settlements |
Unallocated expense

Segment Reporting Information [Line Items]

Initial Charge Recorded

$ 77

[1] Revenue for S&P Ratings and expenses for S&P Capital IQ include an intersegment royalty charged to S&P Capital IQ for the rights to use and distribute content and data developed by S&P Ratings.

[2] Includes Growth and Value Plan costs of $10 million and $64 million for the three and nine months ended September 30, 2013, respectively and $48 million and $101 million for the three and nine months ended September 30, 2012, respectively. Also includes pre-tax legal settlements of approximately $77 million for the nine months ended September 30, 2013.

Commitments and Contingencies (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Deferred gain

$ 112

Amortized Deferred Gain

4

11

Interest expense

1

4

Noncontrolling interest ownership by noncontrolling owners

27.00%

Litigation settlement amount

77

S&P DJ Indices |
CME Group

Related Party Transaction [Line Items]

Revenues earned under license agreement

$ 12

$ 36