Condensed Consolidating Financial Statements

On May 26, 2015, we issued $700 million of 4.0% senior notes due in 2025. On August 18, 2015, we issued $2.0 billion of senior notes, consisting of $400 million of 2.5% senior notes due in 2018, $700 million of 3.3% senior notes due in 2020 and $900 million of 4.4% senior notes due in 2026.

The senior notes described above are fully and unconditionally guaranteed by Standard & Poor's Financial Services LLC, a 100% owned subsidiary of the Company. The following condensed consolidating financial statements present the results of operations, financial position and cash flows of McGraw Hill Financial, Inc., Standard & Poor's Financial Services LLC, and the Non-Guarantor Subsidiaries of McGraw Hill Financial, Inc. and Standard & Poor's Financial Services LLC, and the eliminations necessary to arrive at the information for the Company on a consolidated basis.



	Statement of Income
	Three Months Ended March 31, 2016
	(Unaudited)
(in millions)	McGraw Hill Financial, Inc.		Standard & Poor's Financial Services LLC			Non-Guarantor Subsidiaries			Eliminations			McGraw Hill Financial Inc. Consolidated
Revenue	$	171	$	342		$	859		$	(31	)	$	1,341
Expenses:
Operating-related expenses	26		139			323			(31		)	457
Selling and general expenses	17		35			278			—			330
Depreciation	9		2			7			—			18
Amortization of intangibles	—		—			24			—			24
Total expenses	52		176			632			(31		)	829
Operating profit	119		166			227			—			512
Interest expense (income), net	42		—			(2		)	—			40
Non-operating intercompany transactions	74		(5		)	(497		)	428			—
Income before taxes on income	3		171			726			(428		)	472
Provision for taxes on income	—		57			92			—			149
Equity in net income of subsidiaries	791		71			—			(862		)	—
Net income	$	794	$	185		$	634		$	(1,290	)	$	323
Less: net income attributable to noncontrolling interests	—		—			—			(29		)	(29		)
Net income attributable to McGraw Hill Financial, Inc.	$	794	$	185		$	634		$	(1,319	)	$	294
Comprehensive income	$	802	$	185		$	646		$	(1,290	)	$	343



	Statement of Income
	Three Months Ended March 31, 2015
	(Unaudited)
(in millions)	McGraw Hill Financial, Inc.			Standard & Poor's Financial Services LLC		Non-Guarantor Subsidiaries			Eliminations			McGraw Hill Financial Inc. Consolidated
Revenue	$	156		$	543	$	601		$	(27	)	$	1,273
Expenses:
Operating-related expenses	31			192		214			(27		)	410
Selling and general expenses	66			25		238			—			329
Depreciation	10			5		7			—			22
Amortization of intangibles	1			—		10			—			11
Total expenses	108			222		469			(27		)	772
Operating profit	48			321		132			—			501
Interest expense (income), net	17			—		(1		)	—			16
Non-operating intercompany transactions	58			32		(98		)	8			—
(Loss) income before taxes on income	(27		)	289		231			(8		)	485
Provision for taxes on income	4			87		65			—			156
Equity in net income of subsidiaries	408			67		—			(475		)	—
Net Income	377			269		166			(483		)	329
Less: net income attributable to noncontrolling interests	—			—		—			(26		)	(26		)
Net income attributable to McGraw Hill Financial, Inc.	$	377		$	269	$	166		$	(509	)	$	303
Comprehensive income	$	373		$	269	$	94		$	(486	)	$	250



	Balance Sheet
	March 31, 2016
	(Unaudited)
(in millions)	McGraw Hill Financial, Inc.			Standard & Poor's Financial Services LLC			Non-Guarantor Subsidiaries			Eliminations			McGraw Hill Financial Inc. Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	171		$	—		$	1,429		$	—		$	1,600
Accounts receivable, net of allowance for doubtful accounts	122			166			690			—			978
Intercompany receivable	206			1,782			1,727			(3,715		)	—
Deferred income taxes	74			10			26			—			110
Prepaid and other current assets	69			16			104			—			189
Assets of businesses held for sale	16			—			555			—			571
Total current assets	658			1,974			4,531			(3,715		)	3,448
Property and equipment, net of accumulated depreciation	127			1			123			—			251
Goodwill	17			—			2,843			9			2,869
Other intangible assets, net	—			—			1,487			1			1,488
Investments in subsidiaries	4,990			671			7,265			(12,926		)	—
Intercompany loans receivable	17			371			1,745			(2,133		)	—
Other non-current assets	68			19			118			—			205
Total assets	$	5,877		$	3,036		$	18,112		$	(18,764	)	$	8,261
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	59		$	23		$	86		$	—		$	168
Intercompany payable	2,191			646			878			(3,715		)	—
Accrued compensation and contributions to retirement plans	88			10			95			—			193
Short-term debt	472			—			—			—			472
Unearned revenue	269			212			977			—			1,458
Other current liabilities	202			(40		)	326			—			488
Liabilities of businesses held for sale	82			—			121			—			203
Total current liabilities	3,363			851			2,483			(3,715		)	2,982
Long-term debt	3,469			—			—			—			3,469
Intercompany loans payable	20			—			2,112			(2,132		)	—
Pension and postretirement benefits	218			—			49			—			267
Other non-current liabilities	(25		)	86			292			—			353
Total liabilities	7,045			937			4,936			(5,847		)	7,071
Redeemable noncontrolling interest										920			920
Equity:
Common stock	412			—			2,336			(2,336		)	412
Additional paid-in capital	(240		)	126			11,174			(10,638		)	422
Retained income	6,844			1,973			(12		)	(967		)	7,838
Accumulated other comprehensive loss	(314		)	—			(311		)	45			(580		)
Less: common stock in treasury	(7,870		)	—			(12		)	12			(7,870		)
Total equity - controlling interests	(1,168		)	2,099			13,175			(13,884		)	222
Total equity - noncontrolling interests	—			—			1			47			48
Total equity	(1,168		)	2,099			13,176			(13,837		)	270
Total liabilities and equity	$	5,877		$	3,036		$	18,112		$	(18,764	)	$	8,261



	Balance Sheet
	December 31, 2015
(in millions)	McGraw Hill Financial, Inc.			Standard & Poor's Financial Services LLC		Non-Guarantor Subsidiaries			Eliminations			McGraw Hill Financial Inc. Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	167		$	—	$	1,314		$	—		$	1,481
Accounts receivable, net of allowance for doubtful accounts	116			319		556			—			991
Intercompany receivable	208			1,872		1,273			(3,353		)	—
Deferred income taxes	75			10		24			—			109
Prepaid and other current assets	120			13		80			(1		)	212
Assets of businesses held for sale	4			—		499			—			503
Total current assets	690			2,214		3,746			(3,354		)	3,296
Property and equipment, net of accumulated depreciation	141			3		126			—			270
Goodwill	17			40		2,816			9			2,882
Other intangible assets, net	—			—		1,522			—			1,522
Investments in subsidiaries	4,651			659		7,316			(12,626		)	—
Intercompany loans receivable	16			368		1,733			(2,117		)	—
Other non-current assets	67			19		127			—			213
Total assets	$	5,582		$	3,303	$	17,386		$	(18,088	)	$	8,183
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	71		$	54	$	81		$	—		$	206
Intercompany payable	2,144			675		535			(3,354		)	—
Accrued compensation and contributions to retirement plans	127			89		167			—			383
Short-term debt	143			—		—			—			143
Unearned revenue	254			586		582			(1		)	1,421
Other current liabilities	191			65		293			—			549
Liabilities of businesses held for sale	80			—		126			—			206
Total current liabilities	3,010			1,469		1,784			(3,355		)	2,908
Long-term debt	3,468			—		—			—			3,468
Intercompany loans payable	21			—		2,096			(2,117		)	—
Pension and postretirement benefits	230			—		46			—			276
Other non-current liabilities	(25		)	98		295			—			368
Total liabilities	6,704			1,567		4,221			(5,472		)	7,020
Redeemable noncontrolling interest	—			—		—			920			920
Equity:
Common stock	412			—		2,337			(2,337		)	412
Additional paid-in capital	(184		)	1,179		10,174			(10,694		)	475
Retained income	6,701			557		987			(609		)	7,636
Accumulated other comprehensive loss	(322		)	—		(322		)	44			(600		)
Less: common stock in treasury	(7,729		)	—		(12		)	12			(7,729		)
Total equity - controlling interests	(1,122		)	1,736		13,164			(13,584		)	194
Total equity - noncontrolling interests	—			—		1			48			49
Total equity	(1,122		)	1,736		13,165			(13,536		)	243
Total liabilities and equity	$	5,582		$	3,303	$	17,386		$	(18,088	)	$	8,183



	Statement of Cash Flows
	Three Months Ended March 31, 2016
	(Unaudited)
(in millions)	McGraw Hill Financial, Inc.			Standard & Poor's Financial Services LLC			Non-Guarantor Subsidiaries			Eliminations			McGraw Hill Financial Inc. Consolidated
Operating Activities:
Net income	$	794		$	185		$	634		$	(1,290	)	$	323
Adjustments to reconcile income from continuing operations to cash provided by (used for) operating activities from continuing operations:
Depreciation	9			2			7			—			18
Amortization of intangibles	—			—			24			—			24
Provision for losses on accounts receivable	—			1			2			—			3
Deferred income taxes	(1		)	—			—			—			(1		)
Stock-based compensation	4			3			7			—			14
Other	3			3			25			—			31
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable	(7		)	153			(153		)	—			(7		)
Prepaid and current assets	(2		)	(3		)	(14		)	—			(19		)
Accounts payable and accrued expenses	(89		)	(89		)	(96		)	—			(274		)
Unearned revenue	15			(374		)	398			—			39
Accrued legal and regulatory settlements	—			(108		)	—			—			(108		)
Other current liabilities	(12		)	(19		)	53			—			22
Net change in prepaid/accrued income taxes	98			—			1			—			99
Net change in other assets and liabilities	(17		)	30			(44		)	—			(31		)
Cash provided by (used for) operating activities from continuing operations	795			(216		)	844			(1,290		)	133
Investing Activities:
Capital expenditures	(4		)	(4		)	(8		)	—			(16		)
Acquisitions, net of cash acquired	—			—			(7		)	—			(7		)
Changes in short-term investments	—			—			(1		)	—			(1		)
Cash used for investing activities from continuing operations	(4		)	(4		)	(16		)	—			(24		)
Financing Activities:
Additions to short-term debt, net	329			—			—			—			329
Dividends paid to shareholders	(96		)	—			—			—			(96		)
Dividends and other payments paid to noncontrolling interests	—			—			(33		)	—			(33		)
Repurchase of treasury shares	(226		)	—			—			—			(226		)
Exercise of stock options	31			—			—			—			31
Excess tax benefits from share-based payments	6			—			—			—			6
Intercompany financing activities	(838		)	220			(672		)	1,290			—
Cash (used for) provided by financing activities from continuing operations	(794		)	220			(705		)	1,290			11
Effect of exchange rate changes on cash from continuing operations	7			—			(8		)	—			(1		)
Net change in cash and cash equivalents	4			—			115			—			119
Cash and cash equivalents at beginning of period	167			—			1,314			—			1,481
Cash and cash equivalents at end of period	$	171		$	—		$	1,429		$	—		$	1,600



	Statement of Cash Flows
	Three Months Ended March 31, 2015
	(Unaudited)
(in millions)	McGraw Hill Financial, Inc.			Standard & Poor's Financial Services LLC			Non-Guarantor Subsidiaries			Eliminations			McGraw Hill Financial Inc. Consolidated
Operating Activities:
Net income	$	377		$	269		$	166		$	(483	)	$	329
Adjustments to reconcile income net income to cash provided by (used for) operating activities from continuing operations:
Depreciation	10			5			7			—			22
Amortization of intangibles	1			—			10			—			11
Provision for losses on accounts receivable	—			(3		)	3			—			—
Deferred income taxes	61			—			—			—			61
Stock-based compensation	5			5			8			—			18
Other	3			23			7			—			33
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable	11			(22		)	(58		)	—			(69		)
Prepaid and current assets	2			(6		)	(6		)	—			(10		)
Accounts payable and accrued expenses	(124		)	(68		)	(113		)	—			(305		)
Unearned revenue	3			15			30			—			48
Accrued legal and regulatory settlements	—			(1,559		)	—			—			(1,559		)
Other current liabilities	5			(18		)	(4		)	—			(17		)
Net change in prepaid/accrued income taxes	(23		)	—			111			—			88
Net change in other assets and liabilities	94			10			(103		)	—			1
Cash provided by (used for) operating activities from continuing operations	425			(1,349		)	58			(483		)	(1,349		)
Investing Activities:
Capital expenditures	(7		)	(2		)	(7		)	—			(16		)
Acquisitions, net of cash acquired	—			—			(2		)	—			(2		)
Changes in short-term investments	—			—			(1		)	—			(1		)
Cash used for investing activities from continuing operations	(7		)	(2		)	(10		)	—			(19		)
Financing Activities:
Additions to short-term debt, net	365			—			—			—			365
Dividends paid to shareholders	(94		)	—			—			—			(94		)
Dividends and other payments paid to noncontrolling interests	—			—			(30		)	—			(30		)
Repurchase of treasury shares	(110		)	—			—			—			(110		)
Exercise of stock options	57			—			—			—			57
Excess tax benefits from share-based payments	32			—			—			—			32
Intercompany financing activities	(1,983		)	1,351			149			483			—
Cash (used for) provided by financing activities from continuing operations	(1,733		)	1,351			119			483			220
Effect of exchange rate changes on cash from continuing operations	(7		)	—			(37		)	—			(44		)
Cash (used for) provided by continuing operations	(1,322		)	—			130			—			(1,192		)
Discontinued Operations:
Cash used for operating activities	—			—			(129		)	—			(129		)
Cash used for discontinued operations	—			—			(129		)	—			(129		)
Net change in cash and cash equivalents	(1,322		)	—			1			—			(1,321		)
Cash and cash equivalents at beginning of period	1,402			—			1,095			—			2,497
Cash and cash equivalents at end of period	$	80		$	—		$	1,096		$	—		$	1,176