S&p Global Inc. · NYSE:SPGI
S&p Global — The McGraw-Hill Companies — Goldman Sachs Communacopia XVIII Conference 2009
24 slides from S&p Global's conference presentation, Sep 15, 2009
Slide 1: Goldman Sachs Communacopia XVIII Conference
Goldman Sachs Communacopia XVIII Conference September 15, 2009 1 Harold McGraw III Chairman, President and CEO The McGraw-Hill Companies Presented at Goldman Sachs Communacopia XVIII Conference September 15, 2009 2
Slide 2: Safe Harbor Statement Under The Private Securities Litigation Reform Act of 1995
“Safe Harbor” Statement Under The Private Securities Litigation Reform Act of 1995 This presentation includes certain forward-looking statements about the Company’s businesses and our prospects, new products, sales, expenses, tax rates, cash flows, prepublication investments and operating and capita
Slide 3: The regulatory outlook
The regulatory outlook • U.S. administration, Congress, and SEC are looking for new ways to bring regulation, oversight, and greater transparency to financial markets • S&P has worked hard to be part of the solution – Taken many steps to strengthen S&P’s governance and analytics 5 Pace of recovery i
Slide 4: Outlook for education market
Outlook for education market • New generation of digital products creates new growth opportunities 7 Financial Services 8
Slide 5: The legal situation: Setting the record straight
The legal situation: Setting the record straight • Court’s ruling broke no new legal ground – District Court expressly reaffirmed that rating agencies are generally afforded legal protection under the First Amendment – First Amendment provides no protection from potential liability for opinions not
Slide 6: Evaluating Judge Scheindlin's decision
Evaluating Judge Scheindlin’s decision • Critical but little noted fact: In ruling on a motion to dismiss, Court is legally required to accept as true all facts alleged by plaintiffs – “All facts are drawn from the First Amended Complaint and are presumed to be true for the purpose of these motions.
Slide 7: The legal calendar: Can't predict when courts will make decisions
The legal calendar: Can’t predict when courts will make decisions • Prepared for a marathon and not a sprint • Rulings will require a knowledgeable and thoughtful assessment in order to avoid misunderstanding we have seen recently 13 Lawsuits fall into three broad categories 1. Underwriter claims ba
Slide 8: The regulatory outlook now
The regulatory outlook now • We continue to work for globally consistent oversight – Preserving analytical independence – Maintaining a level playing field • Coordinating with CESR, the European Commission, IOSCO, and others to prepare for regulation by mid-2010 15 The regulatory outlook now • U.S.:
Slide 9: The regulatory outlook now
The regulatory outlook now • Open meeting with SEC on September 17 will discuss: – New rules on disclosure and conflict of interest requirements for NRSROs – Elimination of references to NRSROs in some rules and forms – Proposals to address credit rating shopping – Future of SEC rule 436(g) • Permit
Slide 10: Tracking the pace of recovery in the bond market
Tracking the pace of recovery in the bond market • Signs of thaw in credit markets • Still expect a double-digit increase in transaction revenue at S&P Credit Market Services in second half 19 Tracking the pace of recovery in the bond market U.S. Corporate U.S. Public Finance 360 $325.2 180 $160.1 $
Slide 11: Tracking the pace of recovery in the bond market
Tracking the pace of recovery in the bond market 24 $22.3 12 U.S. RMBS $10.3 U.S. CMBS (in billions of US$) (in billions of US$) 18 9 $12.5 $5.7 12 $9.8 6 $8.3 $8.1 6 3 $2.5 $1.3 $1.4 $1.1 $1.4 $1.6 $0.9 $0.1 $0.0 $0.0 $0.0 $0.0 $0.0 0 0 1Q 2Q Jul Aug Sep 4Q 1Q 2Q Jul Aug Sep 4Q 96 $87.6 16 U.S. ABS
Slide 12: Prospects for education in 2009
McGraw-Hill Education 23 Prospects for education in 2009 • Bright spots: – Growth in college and university market – Growing demand for digital products and services • Elementary-high school market probably won’t show improvement until 2010 • College market to grow 5% to 7% this year 24
Slide 13: Why we like our long-term prospects in education market
Why we like our long-term prospects in education market • Confluence of content, technology and distribution improves our ability to develop new sources of revenue • El-hi market: We offer multimedia packages, not just a textbook – Mix of components vary by grade and subject – Interactive, online st
Slide 14: The college students' workflow
The college students’ workflow Lecture Text, Study, Performance Reading Other Work (Test/Exam) 27 New ways to “connect" college students and instructors • Research-based interactive assignment and assessment platform • Incorporates cognitive science Accounting Psychology to customize Economics Chemi
Slide 15: New ways to connect college students and instructors
New ways to “connect" college students and instructors • Online assignments with immediate, automatic feedback Online Assignments 29 New ways to “connect" college students and instructors • Recorded class lectures are searchable Lecture – Students can Capture replay specific portions of any lecture
Slide 16: The advantages of McGraw-Hill Connect
New ways to “connect" college students and instructors • Smart software diagnoses what a student has, or has not mastered, for success in the course Question #2 of 30: “Complete the following learning activity to test your mastery of the 31 endocrine system” The advantages of McGraw-Hill Connect • M
Slide 17: Experimenting with textbook rentals in the college market
Experimenting with textbook rentals in the college market • New pilot program with Chegg, an online college textbook rental service – McGraw-Hill supplies approximately 25 titles – In return, we receive a portion of the rental revenue • Exploring relationships with other college textbook suppliers •
Slide 18: Technology creates new ways to reclaim market lost to used books
Technology creates new ways to reclaim market lost to used books • Used books are one-third of college market 35 The goal for new McGraw-Hill Center for Digital Innovation • Bringing same digital environment to the classroom that today’s students have embraced outside school Planet Turtle Cinch A K-
Slide 19: Why we're optimistic about the education market
Why we’re optimistic about the education market • Enrollments will continue to grow • U.S. administration announced multibillion dollar program to boost enrollment in community colleges – Get more students in school and improve graduation rates • Federal stimulus funds will make a difference in educ
Slide 20: Challenging comparisons loom in 2009 vs. 2008
Challenging comparisons loom in 2009 vs. 2008 Total Basal and Supplemental K-12 Net Sales $1,000 $800 (in millions) $600 $400 $200 $0 Jan Feb M ar Apr M ay Jun Jul Aug Se p Oct Nov De c 2008 $74.9 $84.3 $159.0 $202.2 $326.2 $763.6 $977.5 $741.5 $325.1 $143.2 $94.1 $127.2 2009 $57.8 $76.0 $139.9 $154
Slide 21: Impact of federal stimulus money on education market
Impact of federal stimulus money on education market • Department of Education accelerated stimulus spending by one month – Nearly $11.4 billion in funding was made available on September 1 for Title I, IDEA and Vocational Rehabilitation programs – Could lead to some ordering of classroom materials
Slide 22: Outlook for The McGraw-Hill Companies
Outlook for The McGraw-Hill Companies • Free cash flow after dividends is estimated at $430 million to $450 million, although probably at low end of range • Continued working capital improvements, cost containment and prudent investments will enable us to produce free cash flow about equal to 2008,
Slide 23: 2009 outlook for Financial Services
2009 outlook for Financial Services • Revenue to decline slightly • Operating margin at approximately 39%, excluding 2008 and 2009 restructuring charges and loss on sale of Vista Research 45 2009 outlook for Information & Media • Revenue to decline 8% to 9% in view of continued weakness in advertisi
Slide 24: 2009 outlook for The McGraw-Hill Companies
2009 outlook for The McGraw-Hill Companies • Revenue to decline 5.5% to 6.5% • With continued tight expense controls, we expect earnings per share in the $2.20 to $2.25 range, excluding second quarter restructuring charge and divestiture of Vista Research, although it appears we will come in at low
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