Key questions from the first quarter earnings call conducted by The McGraw-Hill Companies, Inc. on April 29, 2008.

Peter Appert (Goldman Sachs): The investment services unit with 18% revenue gain was impressive in the context of the market backdrop. What is driving that and how important pricing is to that gain?

Terry McGraw: We have been increasingly building on that. The index services side has been strong. The overall portfolio services and the equity research side have also showed significant gains. The third part is Capital IQ, not only are we gaining on customer penetration, you are also starting to see because of all of the product enhancements and things like the charting functionality and things like that, that we think that that is going to lead to even more revenue enhancement there.

Peter Appert (Goldman Sachs): You made an indication of potentially more staffing cuts. Is that an indication that the second quarter in particular is off to a relatively soft start or pace of business has gotten worse?

Terry McGraw: When you have a significant revenue shortfall as we do in the structured finance area, until we start seeing any meaningful pickup in activity, we are going to be strict on those expenses. As we have said from the beginning, we are going to do it in staged phases. We did the first phase when we first started getting faced with some of these issues in the fourth quarter of last year. We did another phase in the beginning of this year and what we are examining and what we are looking at now is another phase of activity. I do believe that in the structured finance area we are seeing low volumes in the first quarter. If we start to see increased activity on this one, the second half is going to be a different picture, much more positive picture to us and position us better for 2009. At this point we will continue to be strict on cost and you will be seeing more activity associated with that.

Peter Appert (Goldman Sachs): How about on the education side, specifically you indicated some more cuts there?

Terry McGraw: There for the most part is the emphasis on the digital transformation. We are shifting from some of the legacy products to some of the educational services and some of the digital product enhancements. We are starting to see more market demand and therefore we are responding to that. Part of it, where we are in terms of some of the pre-pub costs, we have been able to cut back on some of those pre-pub costs at the same time we are increasing investment on the digital side and we are pleased by that. We want to see more progress in terms of that transformation.

Craig Huber (Lehman Brothers): Your recurring fees for the rest of the year were up about 50% in the first quarter. Do you expect that to be up the remainder of the year?

Robert Bahash: The unearned revenue was 11% after currency it was about 9.5%. With the slower revenue growth during the course of the year, you will see a corresponding slower growth in revenue from unearned revenue during the course of the year. Those numbers will start to slowly decline. We are expecting growth, just not at the same pace that we have been experiencing over the past several years.

Craig Huber (Lehman Brothers): Even if you take your conservative case if market conditions continue as they are for the rest of the year, do you still expect your recurring fees, surveillance annual contracts, subscriptions to be up year over year for the remainder of the year?

Robert Bahash: We do because a fair amount of that recurring revenue is coming from the corporate and government side. Investment grade issuance was strong in the month of April, good GE credit went out, you got Bristol-Meyers, and you got Monsanto. A number of big issuers are hitting the marketplace and that is where we are seeing some of those recurring fees. At a slower growth rate, but nevertheless we are going to be experiencing growth during the course of the year.

Craig Huber (Lehman Brothers): Can you give a sense out of that $200 million of recurring fees, what percentage would be surveillance fees?

Robert Bahash: No, we can not break it down that finely. You are talking about program fees, annual fees, we are talking about general relationship fees, frequent issuer fees, there are a number of different categories that we have within there. We can not break it down that finely, but there is a number of ways that we categorize it to cover all the various markets.

Terry McGraw: The other aspect of that is that it is still a significant factor for us. Even though the growth rate will decline, it will still be at a healthy rate. As things start to improve we will start to see that number go back up as well.

Craig Huber (Lehman Brothers): What is the average length in terms of number of years of the stuff that you rate?

Deven Sharma: In the structured areas, shorter timeframes and in the corporate instruments it is somewhere between five to eight or ten years.

Craig Huber (Lehman Brothers): As you look out over the next year, what asset class of fixed income would you advise investors to focus on that you think would come back first?

Terry McGraw: At this point, the attention is to investment grade at this point. When you start talking about the high yield markets and you start talking about some parts of the structured finance market, it will be slower in coming and there will be a bias towards quality. You will see more plain vanilla issuance from that standpoint. There is a bias to quality at this point. In terms of activity we are seeing still a healthy asset backed market. Both in terms of credit card receivables and in terms of some of the auto loans area. I would look to the commercial mortgage backed market to come back quicker. Right now what you are seeing is some of those deals being done through leveraged loans but you will see more activity from that standpoint.

Robert Bahash: April is a busy month for investment grade. GE did a three tranche deal, $8.5 billion, Oracle a $5 billion three tranche deal, $4 billion three tranche transaction from Verizon, Bristol-Meyers just this week a $600 million transaction, same with Monsanto. We are seeing a fair amount of key activity as rates are where they are from significant investment grade properties as the spreads to treasuries are starting to come in. Hopefully that will bode well for the balance of the year.

Barton Crockett (J.P. Morgan): On the trend in the financial services top line you are saying 7-9% decline for the year. Can you give a sense of whether the second quarter is pacing within that range or outside of it, either on the upside or the downside in terms of the aggregate top line?