Good morning and welcome to the McGraw Hill Company's 2013 Annual Shareholders Meeting. The meeting is being conducted at McGraw Hill's International Headquarters in New York City. At this time, I would like to inform you that the call is being This call is also being webcast from the McGraw Hill Companies website and will be available for replay about 2 hours after this meeting ends both by phone and on the web. To do that, go to the company's homepage at www.mcgrawhill.com and click on the link for the Annual Shareholders Meeting. I'll repeat the website address.
It is www dotmcgrawhill.com. I will now turn the meeting over to Mr. Harold McGraw III, Chairman, President and Chief Executive Officer of McGraw Hill Companies. Thank you again for participating. We will now proceed.
Okay. If I can have your attention. Good morning, everybody. I'm Terry McGraw. I'm President, Chairman and CEO of the McGraw Hill Companies and it's my pleasure to welcome you to our 2013 Annual Shareholders Meeting.
It is now 11 o'clock And I call the meeting to order. As the annual meeting is getting underway, we were just getting everybody on board On the telephone and on the webcast, we have about 500 people from around the world that are And we welcome all of them. We thank you for your interest in the McGraw Hill Companies and we welcome you to our shareholders meeting as well. I'd like to begin by introducing the gentleman at the desk next to me. That is Ken Vitter, Executive Vice President and General Counsel of the corporation.
And I might add, he's been serving this corporation, I'm a little biased, With such outstanding distinction, and so it's welcome, Kent, for all that you've been doing. And I don't mean to keep making him busier, but he's doing a good job with it. Now it's my pleasure to introduce to you our Board of Directors. And to say the least, we have a world class whose dedication, expertise, leadership are a tremendous source of pride to the corporation. I would ask that each of our directors stand as I say their names and remain standing and please hold your applause until we've introduced 1st, Pedro Aspie, he's Co Chairman, Evercore Partners, Chairman of Protego and the former Finance Minister of Mexico.
Sir, Wynn Bishop, Chairman of the Lloyds Banking Group William D. Green, Retired Executive Chairman, Accenture Charles Ed Haldeman, former CEO of Freddie Mac, former CEO of Putnam Investments and also a part of the starting team of United Asset Management Linda Cots Lorimer, Vice President, Yale University Robert P. McGraw, Chairman and Chief Executive Officer, Averdale Holdings LLC Hilda Ochoa Brilenburg, President and Chief Executive Officer of the Strategic Investment Group Sir Michael Rake, Chairman of the BT Group And if you take a look at the proxy a number of others as well, he doesn't know how to say no. He's also the new Head of the CBI, the Confederation of British Industry, that's like in the United States, the Business Roundtable and we welcome his new leadership there as Edward B. Russ Jr, Chairman, President and Chief Executive Officer of State Farm Insurance Companies and he is our Lead Director Curt Schmoke, Vice President and General Counsel, Howard University, who just celebrated his 10th anniversary last night with us on the And Sidney Terrell, Chairman, Emeritus Eli Lilly and Company and Richard E.
Thornburg, Vice Chairman, Corsair Capital LLC and formerly with Credit For the fun, it is always nice that we have retired directors that come back and Visit us as well as some executives. And I think it would be fun to just introduce them. And I would ask them to stand and remain standing. We have my predecessor Joe Dion and his wife Catherine, Joe, Lois Rice, John Reedy and his wife Joan, Tom Sullivan and his wife Salzi, our fabulous Editor in Chief. I can't call him a business leader because You walk out on me.
Our fabulous Editor in Chief, Steve Shepherd Vern Alden Peter Lawson Johnson Devin Sharma, Bob Evenson and one that I've also got to add to the list is Bob Sherman, Who is the Head of the Young Artist Showcase 96.3 WQXR, who we've done so much work with. Bob Schulman right over here. Great to see you Bob as well. Now I've already introduced Ken Vitter. I'd now like to introduce you to the other members of the senior management team And I'd ask them to stand and remain standing as well.
And by the way, I'm just a little bit biased This is a world class management team and I take a lot of credit for a lot of things because of a lot of the work that they do. Let's forget That part. No, on that one. First is Jack Callahan. He's our Executive Vice President and Chief Financial Officer John Beresford, our Executive Vice President, Global Human Resources Ted Smith, Executive Vice Corporate Affairs and Executive Assistant to the Chairman, President and CEO Charles Teshner, the Executive Vice President of Global Chip Merritt, Vice President, Investor Relations and on the operating side, Lew Eccleston, President of S&P Capital IQ also Chairman of the S&P Dow Jones Indices Glenn Goldberg, President of Commodities and Commercial Markets and Doug Peterson, the President of Standard Poor's Rating Okay.
We will now proceed to the business of our annual meeting, the purpose of which is a number of items. Number 1, to review our 2012 And to look at our prospects for 2013 and beyond. Number 2 is to elect 13 directors. 3, to vote on a proposal to change the name of the company to McGraw Hill Financial Inc. 4, to vote on a proposal to appointment of Ernst and Young LLP as our independent registered public accounting firm for 2013 And 6, to vote on a shareholder proposal requesting shareholder action by written consent and to take up any other matter that may To get started, Mr.
Vitter will establish that the meeting is duly called, that we have a quorum Present and that other formalities have been complied with. After Mr. Vitter advises us that a quorum is present, we will proceed with the matters listed And item number 2 on the agenda, which was distributed to everybody as you came in. Ken?
Thanks, Terry. Before we begin, let me provide certain cautionary remarks about forward looking statements that may be made during this annual meeting. Except for historical information, The matters discussed during the meeting may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act, including projections, estimates and description Any such statements are based on current expectations and current economic conditions and are subject to risks and uncertainties that may cause actual results to differ materially from the results anticipated in these forward looking statements. We direct listeners and the audience to the cautionary statements contained in our Form 10ks, 10 Qs and other periodic reports filed with the United States Securities and Exchange Commission. The Corporation's Secretary, Mr.
Scott Bennett has advised me that we have certified list of shareholders of record as of the close of business on March 11, 2013 who are entitled to vote at this Annual Shareholders Meeting. Such lists have been opened for inspection by shareholders. We also have copies of the notice of meeting, proxy materials, annual report And affidavits of mailing relating to this annual meeting. The affidavits will be filed with the records of the annual meeting. The Board of Directors has designated 2 representatives of Computershare Trust Company to act as inspectors of election for the annual meeting.
Representatives of Computershare Trust Company are present and have been duly sworn Their oaths will be duly filed. In addition, I'm advised by Mr. Bennett that shares of common stock representing approximately 89% Of the outstanding shares of the McGraw Hill Companies and representing more than a majority of the votes entitled to be cast at this annual meeting are represented either in person or by proxy. Mr. Chairman, the annual meeting has been duly convened, a quorum is present and the business of the annual meeting should proceed.
Thanks Ken. We will now proceed with the election of directors and the other formal business items. Ballots will be distributed to those who want to vote in person on Further time will be provided following the annual report on operations for questions on other matters and I would request that all remarks Statements concerning the formal business items be directed to the Chair. In order that remarks from the floor be Clearly by everyone, we have microphones on both sides of the auditorium. I would ask that each shareholder wishes to ask Question or make a statement, use one of those.
And if that's not convenient, we'll have a handheld microphone available. If you have a question or remark, please state your name and whether you Are a shareholder or you're representing a shareholder. And as a matter of courtesy, please limit yourself to one statement or question until everyone who wishes to do so has made one. The first item to be voted upon is the election of 13 directors. We present as nominees For election as directors, the 13 persons named in the proxy statement dated March 19, 2013.
The names of the 13 directors nominated for election are Pedro Asbee, Sir Wynn Bischoff, Bill Green, Ed Haldeman, Linda Toch Lorimer, Harold McGraw 3rd, Robert P. McGraw, Hilda Ochoa Berl Nord, Sir Michael Rake, Edward Rust, Kirk Schmoke, Sydney Terrell and Richard Thornburg. The floor is now open for Okay. Seeing none. And again, I would ask that if you need a proxy just raise your hand.
Again, if you've already done it by telephone or webcast Sorry, anything you don't have to do that here on that one. Since there's no further discussion on this item, I declare the voting closed on this The second item to be voted upon is a proposal to amend the corporation's restated certificate of incorporation To change the name of the company to McGraw Hill Financial Inc. From the McGraw Hill Companies. Are there any comments or questions on this? Okay.
Since there's no further discussion on this proposal, I declare the voting closed on this side. The 3rd item to be voted upon is the proposal to approve on an advisory basis the executive compensation program for the company's named executive officers. The floor is open for questions or comments here. Okay. Seeing none, I say the voting on this item is closed.
The 4th item to be voted upon is the ratification of the selection of Ernst and Young LLP as the company's independent Registered public accounting firm for 2013, Ms. Denise Pelle, partner of Ernst and Young responsible for the McGraw Hill Company's account Is present today at our meeting. She is available now if you wish to ask any questions about the selection of her firm or any questions about the financial statements of the McGraw Hill Floor is open for any comments here. Seeing none, I thank you and I declare the voting on this item closed. The 5th item to be voted upon Is a shareholder proposal requesting shareholder action by written consent.
Posed by Mr. Kenneth Steiner. And today we have Ms. Stephanie Samaha Who has been designated to make this proposal? Stephanie, are you there?
Yes. Go ahead, Stephanie. It's all yours.
Thank you. Good morning. I'm Stephanie Samaha and I'm here to move proposal number 5 on shareholder action by written consent. I've been asked to read the following Statement on behalf of Kenneth Steiner. Shareholders request that our Board of Directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon where present in voting.
This written consent includes all issues that shareholders may propose. This written consent is to be consistent with applicable law and consistent with giving shareholders the fullest power to act by written consent consistent with applicable law. This proposal topic won majority shareholder support at 13 major companies in a single year. This included 67% support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent.
The shareholders of Wet Seal successfully used written consent to elect Better Qualified Directors in October 2012. This proposal topic received 47% support in 2012 Embain have received a majority vote had our directors taken a neutral stance on the topic or been willing to make it as easy to vote for this proposal Last year, it took only one click to vote against this proposal, but 15 clicks to vote in favor due to our 2012 Internet voting system. This proposal should also be evaluated in the context of our company's overall corporate governance as reported in 2012. GMI Ratings, an independent investment research firm, downgraded our company to D with high governance risk. They also noted high
And the Board of Directors recommends a vote against this proposal. And there's detailed reasons that are Laid out in the proxy statement that you have received. But the Board believes that this proposal is not necessary because As important an issue as it is, the company amended its certificate of incorporation in 2011 To provide that special meetings of shareholders of the company may be called at the request of holders of 25% of the outstanding Any comments, questions on this proposal? Okay. Since there's no further discussion on this proposal, I The voting closed on those items and that concludes the voting on our formal business items.
Those balance will be collected or And those votes will be described to you in a little bit. Let me move on. And while those votes are being counted, let me once again welcome you all to our 2013 Annual Meeting of Shareholders. This is a very special time for our company. And as we like to say here, it is all about growth.
It is all about a Higher sense of purpose and it's all about being passionate in everything that we do and we try to live up to that every day. So if you're an employee, a shareholder or a customer and you like opportunities produced by Growth, global expansion, technology, transformation and outstanding people, I think you're going to be excited about our story. In March of this year, we completed the 20 month long growth and value plan, which resulted in the creation of 2 powerful new companies, McGraw Hill Education and McGraw Hill Financial, allowing both companies to pursue their specific growth The action that we have taken has accelerated the pace of our growth and created superior value for our shareholders. And for McGraw Hill Financial, it is a name that more closely identifies the essential intelligence that we to both the global financial and the capital and commodity markets. With your vote today, we'll officially rebrand our company, McGraw Hill Financial.
We're also celebrating something that is a little bit unbelievable and is an amazing achievement in its own right. We're Breakthroughs in energy, science, technology, coupled with globalization, the energy behind urbanization and the growth of international trade have raised living standards throughout the world. Today, As we mentioned last night, today, the developed world, which is the United States Europe and Japan represents about 50% of world GDP. The good news World GDP is generated outside of the developed world. What a change in just a decade plus on that.
By 2,030, short 17 years, the latest McKinsey study has that that 50% World GDP generated by the developed world will be 30% on that part. And What exactly does that mean? It means growth, lots and lots of growth. It means hope. It means opportunity.
It means improved standards of living. And it means that others In our world are going to start to benefit from all the things that we have been benefiting from. And for our company, We sit right in the very heart of all of this change. These changes plus the ingenuity of our own people has spurred business innovations, Open new ways of learning contributed to widespread economic progress. And this is not alienous to us At the McGraw Hill Companies.
Think for a moment of McGraw Hill's pioneers. When entrepreneurs and others wanted to know more about the emerging technologies of their time, Our founders offered powerful insights with branded and trusted journals, books, conferences, Whatever. UC McGraw Hill has always been in the business of helping professionals and educators do their jobs more effectively and obviously more efficiently. When the oil industry was still in its early days in America, a young journalist named Warren Platt saw a need for oil market news and set out to promote From a large number of stocks in a matter of seconds, Louis Kjellback and George Olson revolutionized the stock market, Launching the S and P 500 way back in 1957. And while McGraw Hill Education is now a separate company, We recognize their trailblazing work because it is an essential part of our legacy.
For instance, when MIT professor Paul Samuelson questioned why there was this huge gap between the theory laden material that he had been taught in college And the economic problems of the real world, he began writing the seminal textbook Economics in 1945. It's now in its 19th edition and it is as relevant as ever. We are so proud of the And at the conclusion of this meeting, you can see so many more stories of all of these pioneers in the gallery next And I think you'll find it fun, exciting and for all of us very, very rewarding. Okay. With that history as a quick backdrop, I would like to spend the remaining time that we have together this morning focusing on the present and the exciting way forward.
And there are 3 Topics that I would like to cover. First, it's important to acknowledge the character, quality and commitment of our employees. They are the ones who have always made and will continue to make this company exceptional. 2nd, we'll review our recent strong performance and discuss how we are building on this for the days and the years ahead. And 3rd, you'll hear about the powerful secular trends driving long term demand for our information, Ratings, benchmarks, analytics and other capabilities.
So let's start with talking about our people. And we're using 3 words that I began with in the beginning to describe our near 20,000 men and women of our company, growth, purpose and passion. To us growth is a mindset. It's an attitude. It's about being a constant learner and making impacts In markets, it is never ever about us.
It is always about the things that we can do to influence others and to make impacts in markets. Purpose means having a positive impact both at work and in the communities in which we live and work. Above all, our employees display great integrity and here to the highest standards of fairness, impartiality and transparency. Our Board of Directors, senior management team, customers and many market participants recognize their ethical conduct and their value And they're valued too, the essential insights that they provide. Well and passion gives our people the energy To drive the growth and stay committed to the highest measure of our values is what we are all about.
Now Recently, the U. S. Government made claims that are contradicted by our very values of honesty and fairness. Claims that S and P ratings analysts deliberately kept ratings high when they knew they should have been lower Are simply not true. The bottom line is this.
The facts do not support the government's theory. S and P analysts acted in good faith, relied on the same data as the rest of the market, including the Federal Reserve and the U. S. Treasury and came to the same conclusions. As a result, we fully expect to prevail.
Last week, we moved to have the government's complaint dismissed. We filed a motion for dismissal of the complaint in its entirety. As our legal team said in our filing, SMB's inability along with the Federal Reserve and U. S. Treasury and other market participants to predict the extent of the housing crisis As it related to securities in the financial downturn reveals a lack of foresight, Not and certainly not any wrongdoing.
We expect the federal and state suits to take from probably 2 to 3 years to resolve, If not sooner, meaning you can expect some headlines about the government's claims to continue. But rest assured, We will prevail and we will stay keenly focused on what we're supposed to be doing, which is our customers and serving the growing needs of our markets. In other legal news, on April 26, we said that we have settled the Abu Dhabi and King County cases without any munition of liability Or wrongdoing. While we had strong factual and legal defenses to these two cases, we made a practical business decision to settle these actions. The settlements will have no bearing on our positions in any other cases.
We have a successful record dealing with financial Crisis related cases, 42 cases, 42 have been dismissed or withdrawn And by the way, just so one knows, we do everything in the federal courts. And today, because It's such a litigious society. It takes 2, 2.5 years just to get into the queue to get For a federal judge. And so they sit there. And the majority of these 42 cases that have been settled Or withdrawn.
We've done in the same day that the judge saw them. We have learned plenty of valuable lessons Approximately $400,000,000 to reinforce the integrity, independence and performance of our S and P ratings. We continue to Strengthen our leadership team, we've instituted new governance and enhanced risk management functions. These actions exemplify Culture of continual improvement and a recognition that integrity is at the very heart of everything we do. The principles by which our employees conduct themselves every day can be seen in their research, their analytics, their editorial judgments and throughout the For a window into the character of our employees, look no further than the service to communities, especially when the need for support is greatest.
It cannot be overstated what an impact Hurricane Sandy had on New York Metropolitan area, incidentally, we used to have just about everyone Housed here at twelvetwenty one. Jody on and I discussed that. And we thought That given some of the new situations and the like that we should diversify. So we did. We diversified the 2 Penn Plaza and eventually the See the 55 water so that no one area could be hit at 1.
Hurricane Sandy did not treat us There are people like Dave Williams of S&P Capital IQ, who spent days in New Jersey and Staten Island cleaning out basements of homes that Sustained water damage. There are people like Teresa Wills, who works in our tax department, who is part of a whole huge team of Employees who packed 7,300 meals for hungry families affected by the storm. No one asked them to do this. They like so many of our employees just did it, I just did it. Both in the office and in their communities, our people do the right thing.
Now Teresa couldn't be with us today, but Dave is here. And so I'd I'd like to ask Dave to stand and he represents as one individual all of our employees and what we're trying to do. Dave? And as many of you know, last year we lost one of our absolute best employees and one of our best friends in Don Rubin. Don was our Senior Vice President of Investor Relations and a close personal friend to all of us.
He represented The heart and soul of who we are and of our house. During a distinguished 52 year career with the company, Don displayed great wisdom, which was matched by the impeccable quality of his character. At this meeting a year ago, we told you we were going to establish a scholarship in his memory And to pay tribute to Don's early career as a reporter, I am pleased to report the City University of New York Graduate School of Journalism awarded the inaugural Donald S. Rubin McGraw Hill Memorial Scholarship To a very deserving student in September. Her name is Laura Lorenzetti.
Laura graduated cum laude from with a BA from in Economics from New York University and is studying at the CUNY School Because she says that she knows that as she graduates, I'll be equipped to enter a newsroom, Ready to break news on deadline and of the highest quality. Laura is with us today. She's joined by former BusinessWeek Editor in Chief and CUNY Founding Dean, Steve Shepherd and Dean Diana Robertson of CUNY. Laura, would you, Steve and Diana, please stand? Laura, this is as good as it gets.
Okay. It gets harder from here. So congratulations to you and we wish you obviously very well and we're going to follow your success on this And to Nancy Rubin and Lauren Alex Rubin, thank you for joining us today as well. We so enjoy to continue to celebrate Your husband and your dad. Okay.
The second topic I wanted to cover is our Talk about our performance of 2012. We have to move on and all of that. So with that in mind, I want to talk about it in terms of growth and value. We achieved strong growth in our financial results and we unlocked value for shareholders and that's the combination We want to keep before us always. Yesterday, we announced 1st quarter earnings for 2013.
Revenue grew by 14% to 1,200,000,000 Excluding one time costs, net income from continuing operations increased 29% and EPS from continuing operations rose 29 Percent to $0.80 per share. Looking ahead for all of 2013, our guidance calls for revenue to grow at High single digits. Adjusted earnings per share to grow somewhere between $3.10 $3.20 which equates at the midpoint to 15% growth. And we're going to be working very hard to do even better than that. Our first quarter growth trends carried over from 2012.
Last year, revenue grew 13% and adjusted earnings per share from Continuing operations grew at 32%. 2012 was an extraordinary year for us. After careful consideration, We came to an agreement to sell McGraw Hill Education. McGraw Hill Education is just a phenomenal franchise and obviously plays a key role in Education will always be vital to us and as I said earlier, a proud legacy of this company. On our behalf, I wish to wish CEO, Buzz Waterhouse and all the employees of McGraw Hill Education every success in fulfilling their critical The sale of McGraw Hill Education generated $2,500,000,000 It generated net proceeds of 1.9 We used a portion of that to pay down some short term debt and to resume our share repurchase program.
The remainder is available Our business produces very solid free cash flow, and we have a very low level of debt. Our strong balance confidence in the future have allowed us to consistently deliver on our commitment to generate superior shareholder value. Underscoring that commitment, we have returned $1,300,000,000 in cash to shareholders last year in the form of dividends and share repurchase. We declared a special $2.50 per share dividend in December that was 700,000,000 That was on top of the regular $1.02 regular annual cash dividend. In January, the Board of Directors voted increased the regular quarterly cash dividend by 9.8%.
And here's the fun part. We have paid a dividend Every year since 1937 and we've increased it every year since 1973. That is Every year for 40 years, fewer than 25 companies in the S and P 500 can claim Record. We're obviously very proud of our S and P Dow Jones Index Business. And I don't know if Alex Maturi is here, but he's very proud of what we have accomplished since 1957 with the landmark S and P 500 and the performance of the S and P 500, but here's some more exciting news.
And this is over both the short and the long term. McGraw Hill Company's total shareholder return has Form the S and P 500 over the last 10 years, over the last 5 years, over the last 3 years and over the last year. We're very proud of that record. Okay. With that review complete, let's take a look at the steps that we've been taking to position us for greater growth and value creation in the days and the years ahead.
We continue to add Technologies and Credit Market Analysis Limited and these were all in our Capital IQ platform. Coalition Development Limited to Add high end analytics to CRISIL, that's our analysis, research and credit rating company in India, And Kingsman to give Platts even more of a capability in the commodity platform by adding more in the agriculture area, in particular Sugar. And we launched a superb joint venture with the CME Group, S&P, Dow Jones Indices. Earlier, I mentioned that this is an exciting time for our customers. So how are they benefiting?
At S and P Capital IQ, the team is adding portfolio risk analytics, While others can offer portfolio analysis, attribution or risk scenarios separately, S and P Capital IQ is bringing all of these together in one offering and across multiple asset classes. This will help traders, Portfolio and risk managers price, hedge and manage their investments. We also expect our businesses to become more integrated over time to the benefits of our International expansion, as we mentioned earlier, is another huge priority for us. The case for global growth is clear. When the U.
S. Is expected to grow at 2.7% this year, I hope, emerging markets will expand at a much faster pace. China is forecast to grow their GDP at 8.1 percent India 6% Asia Pacific region excluding Japan at 6.2%. 40% of our revenue now comes from outside the United States and it's growing at a faster rate and that number is only 5 years ago, it was only about a third. We expect more growth on the global side ahead.
That's why earlier this year, S and P Rating Services moved to a larger liaison office in Istanbul. This office will support the growth of our business in Turkey as well as S and P's international President for ratings alone. They're now in 23 countries and that's only going to go up. And of course, with your vote today, we are launching the new brand. McGraw Hill Financial is focused on providing clients with essential intelligence that they need to make better informed decisions.
Our employees are excited about the brand. When we ask them to describe the future of our company, they use words like this. This diagram is a word cloud. And every time somebody uses one of the words, it keeps So the bigger words means that that's what keeps coming up. And then it kind of fun that the words that keep coming Are exciting, bright, growth, innovative and the leader on that part.
And by the way, that's the handy work of Ted Smith, and he's very proud of his word cloud and he takes it everywhere he goes. So beware in the gallery We produced a short video to show you the role that employees play in creating this essential intelligence. Take a look.
For more than 125 years, Our employees have been the key to our success, to the markets that we shape, in the communities where we give back and to the growth of our business. Each of you is essential. I am essential.
I am essential for turning information into knowledge, into growth, into reputation, into success.
I am essential to the world's leading brands in ratings,
And over $1,000,000,000,000 of benchmark indices into the world's leading real time data streams and the most followed stock market indices on the planet.
I'm essential to giving a voice to 20,000,000 customers.
And for the financial coverage of 92,000 companies and raising over 3.5
I am essential for inspiring sustainable growth and bringing transparency and insight To capital and commodity markets around the globe.
We are the essential intelligence that turns information into knowledge. We have 7 iconic brands, thousands of brilliant minds focused on essential intelligence.
What a terrific message and what terrific employees. We're very, very Okay. With our new brand identity, we're also changing the ticker symbol under which our shares trade on the New York Stock On May 14, shares of McGraw Hill Financial will begin trading under the MHFI, ticker symbol, And we will be at the New York Stock Exchange to ring the closing bell on 14th. If any of you want to come, I would love to have you. There's hardly anybody on the floor at the New York Stock Exchange anymore.
Everything's electronic. For those of you in the New York City area this Friday evening, We accomplished a lot in 2012 and the Q1 of 2013, but that just sets the stage for the rest of the year and beyond. We believe secular trends in the global capital and commodity markets will bend us for many years to come and this is the 3rd topic that I wanted to address We sit, as I said, right in the middle of some of the biggest developments shaping our global economy. According to a recent report by McKinsey and Company, global financial assets, that's debt and equity, grew to a record 2.25 $1,000,000,000,000 last year, albeit the growth rate has slowed somewhat since the financial crisis. But to give you some perspective of All of that.
The value of financial assets in the year 2000 stood at $119,000,000,000,000 So just in that $119,000,000,000,000 to $225,000,000,000,000 And according to a report last year by S and P, Non financial corporates in the Eurozone, U. K, U. S, China, Japan, just those, will need as much as 40 $6,000,000,000,000 over the next 4 years. That's both in terms of refinancing as well as new monies to spur growth. In addition, European banks continue to deleverage, shifting finance to capital markets financing to capital markets.
We're seeing the introduction of bond markets All over the world, so quickly as markets are turning to the capital markets and in particular the fixed income market in order to raise the kind capital for their growth and expansion, their infrastructure financing. Right now, we are looking at over this timeframe by 2,030 some $70,000,000,000,000 I don't know what a $1,000,000,000,000 it looks like, but some $70,000,000,000,000 in infrastructure Financing on a worldwide basis. India alone in the next 5 years is going to be spending about $1,000,000,000,000 We're talking about roads. We're talking about bridges. We're talking about hospitals.
We're talking about institutions that are going to be to the benefit In the iron ore spot market, Platts is helping to facilitate transparency and efficiency by clearly showing the iron ore market bids, Offers and other information. The information collected from Platts' editorial window, which we call eWindow, has further enhanced the Speed and efficiency of the Platts pricing assessment process helping to transform the iron ore market from a long term annual pricing System to a flexible spot market. Now just so that we're clear on this, the transformation at Platts is huge. From a pure information and editorial process, what it produces today It's about 12,000 price assessments and benchmarks that trade on spot markets all around the world. If I'm a manufacturer and I need raw materials, I used to enter into these long term contracts.
And then these manufacturers turned around and said, I want long term contracts and have to inventory all these raw materials. I just want when I want, when I want it. And there are one spot That existed at that time. Today, they're all over the world and it's flat that provides all the pricing assessment that make those spot markets work. Another positive trend, assets continue to shift to index investment.
Inflows to exchange traded funds or ETFs reached a record $191,000,000,000 last year. Overall, Exchange traded fund assets have more than doubled since 2008. Assets under management and exchange traded funds based on S and P and Dow Jones Indices hit $466,000,000,000 in 2012. That's a 27% increase versus 20 11. And since the end of This year, exchange traded fund assets based on our indices have increased to a record of more than $500,000,000,000 That's your assets and you're right in the center of it.
More growth in this market is expected. One outside study projected assets in exchange traded products that includes ETF, Exchange traded commodities and exchange traded notes to grow as much as $4,700,000,000,000 by 2015 and $1,500,000,000,000 in in 2010. Our commitment is to provide an index for every single kind of investment. All of these trends are very powerful the long lasting, which should excite our employees, clients and I hope excites our shareholders. Now I began this morning by talking about our people.
They obviously do just a fabulous job day in, day out. Let me wrap up by sharing 2 brief stories that Our philanthropic initiatives and community focused programs are aimed at expanding important personal finance topics to students as well as to adults. We call these financial essential. Earlier this year, I was in India where I had the great pleasure to help launch The Crystal Foundation, they're focused hugely on this idea. And by the way, their success has been so rapid and that to get to a point Where they have established this CRISIL foundation just talks about a smart head and a kind heart.
Strategic partnership with Cristal in 1996 and we took a majority stake in 2,005. Cristal's growth has been phenomenal. Over the last 5 years, revenues have increased at a compounded annual growth rate of nearly 20%. And they're doing so well that Doug Peterson is not taking credit Which is what I do too. But that's not the whole story.
It's not all about the bottom line. It's about helping them. So in March, CRISIL established its foundation. In its 1st year, it's expected to reach over 50,000 girls and women in To raise the level of understanding of personal finance issues such as saving insurance and so forth. So female inclusion Is the first part.
The other story to what they're doing is financial literacy and all the components on We're very proud. The other story that I'd share with you is closer to home. Next door in the Hell's Kitchen neighborhood, There is a wonderful organization that we've had the privilege of partnering with for more than 50 years. It's called Hartley House. It's a community development center That offers hope and opportunity to thousands of residents every year through after school services, adult education programs and so forth.
Our employees are there continually helping however they can. They set up computers, paint, provide Nicole Siconia is the Executive Director of Hartley House. We're glad that Nicole could be with us. Nicole, I For 125 years, the common thread of our company has been the integrity and ingenuity of our employees. From the Industrial Revolution to today, they have delivered essential intelligence that customers and markets can trust.
As we look ahead, our long term growth prospects are excellent because of the people, the culture, the values and the capabilities of for their indispensable leadership and counsel and thanks to all of our shareholders for your investment in the New McGraw Hill Financial, a terrific 125 year anniversary, and we look forward to continue to Hopefully, please you with all the things that we're trying to do. There we go. Okay. Now the moment that you've all been waiting for. The meeting is now open for questions or comments concerning any subject generally relating to the McGraw Hill Company, hopefully McGraw Hill Company.
I would request that all questions and As before, in order for remarks to be heard, please use the microphone on either side or we'll get you a handheld If you so need one, please state your name and whether you're a shareholder yourself or you represent 1. Let's go to questions and comments. Floor is open. And senior management, you cannot ask a question.
Hello. My name is Nora Maloney and I am a shareholder. I would like to know the status of the Australian litigation and if that has any impact on the current U. S. Litigation that you're working on?
No. Again, when we start talking about litigation, we take everything as a standalone And the issues associated with that. We have worked through the Australian issues on that case. We are in on that one and we'll just see as time goes on. In all of these, there's Big questions of motives and thoughts of impropriety and all of those things.
Those things don't live here. One of the things that everybody here that works at the company knows and understands is that the value structure At the heart of who we are and what we do. And so we fully understand that when things go wrong, People can use a litigation system, but we will defend vigorously every attempt that's against us. And no one suit has a bearing On another suit. So the U.
S. Situation is different from that.
Thank you.
You bet. Yes.
Philip Berman, Portfolio Manager and Shareholders, some comments and questions together. For the last few years, Terry McGraw and the Board have had to make very difficult corporate business decisions to transform a company with an traditional story history into a leaner company concentrating on managing the divisions where the outlook is far stronger and more certain for more certain growth. The newly minted McGraw Hill Financial Companies Shall in the future be able to be more intensely concentrated on making more strategic synergistic acquisitions that may present themselves in the future as we move through the various phases of the Internet In the future as we move through the various phases of the Internet digital age. In the last year, it's noteworthy that when large multinational corporations have reconfigured their core The aggregate sum value of the remainder stronger division have led to a higher stock price on both the short term and long term basis. Now some questions.
As we are all aware in recent years newspapers, magazines and books have all had to modify their business model business sale based on the company having to deal with the old business model of new textbooks versus the Used textbook market and textbook renting and the trend of custom publishing against the uncertain backdrop of Ebooks and the Internet.
Thank you very much. And thank you for your opening comments on that one. I want you to know that again and I appreciate your specific But again, we have a world class Board of Directors and I think the world class senior management team here and management teams underneath them. These decisions don't come easy. We think through them very hard.
And one of the comments that I was making about growth in Value growth in the future and unlocking value for shareholders is what we've got to always be about and focused on. And so together, we make those kind of decisions. The second point On the education front and whatever, one of the things that led us in terms of the growth and value plan to Into the 2 powerful companies, McGraw Hill Financial and McGraw Hill Education, was that in the McGraw Hill Education space, unfortunately, and especially We're failing our young people today. We have a flawed funding model. We're using local property And local municipalities to fund our operations.
The federal government does nothing on that part. And because of that, We are not making the progress in terms of educational reform giving more opportunities to more people. So what we have done with McGraw Hill That we believe in. We believe that in terms of the textbook of today that there's so much more that we can do In terms of the digital capabilities. And I would like to urge anyone To look at the relationship we have, for example, with Apple and all the programs we put together with Apple in terms of the iPad That brings to life these kind of materials.
Now we've got to do it on a scale basis. For McGraw Hill Education, They're going to have to do it in a private setting, not in a public setting, so that they can move very, very quickly in being able to do it. But I I mean to say education is essential to any society is sort of silly. It's obvious We just have to find newer, better and more constructive ways to do it. And I think in a private setting, Such robust conditions around the world in terms of again, the capital demand used to be that big and banks supplied the majority of those funds.
Today, the capital demand for growth is up here and banks are still only providing this much. So where does all of that capital come from? That's coming from capital markets and in large part fixed income markets around the world. And that's why you're seeing such Expansion of exchanges, expansion of capabilities. And again, one of the very nice things from McGraw Hill Financial is you're sitting Right in the heart of this huge opportunity.
It's up to us to take advantage of it and all that. But that's what this team is all about.
The outstanding highlights of the Q1 beyond the already booked education sale was that bond sales heavily boosted MHP's earning. In essence, without the usually steady income of the former Education Division At the former Education Division provided, the stock may be more volatile now depending on economic conditions. For example, in the event Congress ever funds Infrastructure development for our crumbling highways, bridges and roads.
I wish they would.
That would help us enormously. How do you feel about the new change in the structure of the company whereby it's no longer going to be buffered by the Education Division and we're going to have volatile stock move possibly.
Well, I think your comment is exactly correct. Again, there are 2 very different kinds of businesses. McGraw Hill Education is a very capital intensive, Set intensive business and it's a long cycle business. When we talk about reading programs or social study programs, you're talking 4 or 5 years In terms of getting paybacks on those things. So in a firm like that, you're going to have to ask investors to be very patient.
And therefore, you're going I have higher dividend yields and so forth to accommodate that. With McGraw Hill Financial without that capital intensive capability You're right. You're going to be much more or you're going to trade much more as a market related entity. And therefore, if markets are doing well, you should be doing very well. And if markets are not doing as well, we're going to feel that impact.
And so to your point, You will see a little bit more volatility. We will do everything that we can to smooth that out Over time, but you're exactly right. Being a more pure financial related, Commodity related, capital markets related market, you're going to be more influenced by market factors.
And would the Board ever consider as we're changing of the company, would the Board ever consider changing the dividend policy to a stock dividend which would be tax free versus
By the very question, Sir, Wynn Bischoff as Head of our Financial Policy Committee, I'm sure we'll be thinking That part through. Right now in terms of everything that we do in terms of our relationship with our holders, The cash dividend is one that is highly regarded as well as our share repurchase program in all of that. But also the other two Uses of capital are transactions and organic growth. And again, having a clean balance sheet and having the ability To have access to funds, all four components in terms of use of capital are in the boat, but we'll take a look at that. Thanks.
Thank you very much.
Terrific. Any other comments, questions? Okay. If there are no other questions, we will now proceed to the next order of business. And I understand that the inspectors of election, Ken, have now submitted their To the Secretary and will you read that report?
Thanks, Terry. The preliminary tally of votes by the inspectors of elections shows that The 13 persons nominated as directors of the McGraw Hill Company have been elected. The proposal to approve changing the company's name to McGraw Financial, Inc. Has been approved. The proposal to approve on an advisory basis the executive compensation program for the company's named executive officers has been The ratification of the appointment of Ernst and Young LLP as the company's independent registered public accounting firm for 2013 has been approved.
The shareholder proposal requesting shareholder action by written consent has not been approved. The certificate of the inspectors of election will be filed with the records of Meeting and the final results will be available on or before May 7 in our SEC Form 8 ks filing.
Well, there you have it. Welcome to the 1st day of McGraw Hill Financial. No, I'm not. And once again, I thank all of our shareholders on The phones, webcast, wherever you are here for all of your support and our appreciation with that. The vote for the directors is also very much appreciated.
With that, There being no other further business reports, I will now entertain a motion for adjournment. I didn't ask for the second. I don't want you to think this was scripted. All in favor? Thank you all very much.