This summary is based on the first quarter fiscal 2008 earnings call conducted by The McGraw-Hill Companies, Inc. (MHP: chart) on April 29, 2008.

Management:

Chairman, President, Chief Executive Officer: Terry McGraw
Senior Vice President Investor Relations: Donald Rubin
Executive Vice President, Chief Financial Officer: Robert Bahash
President McGraw-Hill Financial Services, President Standard & Poor’s: Deven Sharma

Key Investors Issues

- Earnings per share were 25 cents per share compared to 40 cents per share for the same period last year.
- Net income was $81.1 million, down from $143.8 million a year ago.
- Revenue declined 6% to $1.22 billion from $1.3 billion last year.

First Quarter Highlights

Earnings per share were 25 cents per share compared to 40 cents per share for the same period last year.

- Included in the first quarter 2007 results is 3 cents per share gain ($10.3 million after tax) on the divestiture of a mutual fund data business.
- Net income was $81.1 million.
- Revenue declined 6.1% to $1.2 billion.
- Double-digit growth at Standard & Poor''s Investment Services, diversification strategy at Standard & Poor''s Credit Market Services and tight cost controls in the segment helped mitigate the steep decline in structured finance.

Education revenue decreased 0.5% to $330.2 million compared to the same period last year.

The operating loss was reduced by 0.5% to $90.3 million. Foreign exchange rates positively impacted revenue by $4.4 million and had no material impact on the reduced operating loss.

- Revenue for the McGraw-Hill School Education Group declined 4.8% to $138.8 million.
- Revenue for the McGraw-Hill Higher Education, Professional and International Group grew by 2.9% to $191.4 million.
- Revenue in the seasonally slow first quarter for the elementary-high school market depends more on purchases of fill-in copies and supplemental materials than on new business. Last year, the McGraw-Hill School Education Group benefited from early ordering by North Carolina, where there were excellent opportunities for its programs in K-5 reading, K-12 art and music, and 6-12 vocational subjects. Despite a good start in this year''s 6-12 social studies and business education adoptions, first-quarter results in North Carolina did not match last year''s success. The School Education Group also experienced a decline in supplemental sales compared to the first quarter of 2007.

- North Carolina was the only adoption state to place substantial orders for newly adopted materials, but early indicators this year in such key adoption states as Texas, California and Florida are encouraging. The company expects the state new adoption market to grow by 10% to 15% in 2008. There are also, at least for the McGraw-Hill School Education Group, some promising opportunities developing in the open territory.
- In testing, revenue increased as sales from Acuity, new formative testing program, and LAS Links, new assessments for English-language learners, helped to offset timing shifts in work on several state contracts that caused revenue on the custom side of the business to decline in comparison to the first quarter of 2007.
- In the U.S. college and university market, second-semester ordering contributed to the revenue increase for the McGraw-Hill Higher Education, Professional and International Group.

In international markets, favorable foreign exchange as well as improved sales of higher education, professional and English-language training products in the Pacific Rim countries and India overcame softness in the Spanish-language markets.

Revenue in the U.S. professional market decreased as a decline in the sales of older backlist titles could not be wholly offset by an increase in subscription revenue for digital products and the introduction in mid-March of the new, seventeenth edition of Harrison''s Principles of Internal Medicine, which is expected to generate domestic and international sales throughout the remainder of 2008.

Financial Services revenue declined 11.6% to $644.3 million compared to the same period last year.

Operating profit decreased 25.3% to $260 million versus $348 million last year, which included a pre-tax gain of $17.3 million on the sale of a mutual fund data business in March 2007. The segment benefited from cost containment including lower incentive compensation. Foreign exchange rates positively impacted revenue by $14.8 million and operating profit by $6.5 million.

Revenue for Standard & Poor''s Credit Market Services, which provides independent global credit ratings, credit risk evaluations, and ratings-related information and products, declined by 21.6% to $427.3 million compared to the same period last year.

Revenue for Standard & Poor''s Investment Services, which provides comprehensive value-added financial data, information, investment indices and research, increased by 18% to $217 million. Included in Investment Services'' revenue in the first quarter of 2007 was $7.8 million related to its mutual fund data business, with no comparable amount in the first quarter of 2008.

At S&P Credit Market Services, growth overseas and in non-transaction businesses that are not tied directly to new bond issuance in public markets helped cushion a steep decline in structured finance and the fall off in corporates.

Public finance improved.