Good morning, and welcome to McGraw Hill Financial's second quarter 2015 earnings conference call. I'd like to inform you that this call is being recorded for broadcast. All participants are in a listen-only mode. We will open the conference to questions and answers after the presentation, and instructions will follow at that time. To access the webcast and slides, go to www.mhfi.com. That's M-H-F-I, for McGraw Hill Financial, Inc., .com, and click on the link for the quarterly earnings webcast. If you are listening by telephone, please note that there is a live phone option available to synchronize the timing of the webcast slides to the audio from your telephone. To do so, log in to the webcast. After completing the guest book screen, you will see two windows in the webcast viewer.
Along the bottom of the left-hand window, click the gear icon and select Live Phone from the list. A line will appear in the sound icon, and the slides will synchronize to the audio from your telephone. If you need any technical assistance, please press star zero, and I will assist you momentarily. I would now like to introduce Mr. Chip Merritt, Vice President of Investor Relations for McGraw Hill Financial. Sir, you may begin.
Good morning, and thanks for joining the call. Presenting this morning's call are Doug Peterson, President and CEO, and Jack Callahan, Chief Financial Officer. This morning, we issued a news release announcing our acquisition of SNL Financial, and a separate release regarding second quarter results. If you need a copy of the releases and financial schedules, they can be downloaded at www.mhfi.com. In today's earnings release and during the conference call, we're providing adjusted financial information. This information is provided to enable investors to make meaningful comparisons of the corporation's operating performance between periods and to view the corporation's business from the same perspective as management's. The earnings release contains exhibits that reconcile the difference between non-GAAP measures and the comparable financial measures calculated in accordance with U.S. GAAP. Before we begin, I need to provide certain cautionary remarks about forward-looking statements.
Except for historical information, the matters discussed in the teleconference may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including projections, estimates, and descriptions of future events. 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 results anticipated in these forward-looking statements. In this regard, we direct listeners to the cautionary statements contained in our Forms 10-Ks, 10-Qs, and other periodic reports filed with the U.S. Securities and Exchange Commission. I would also like to call your attention to a European regulation. Any investor who has or expects to obtain ownership of 5% or more of McGraw Hill Financial should give me a call to better understand the impact of this legislation on the investor and potentially the company.
In addition, we recently published the company's new 2015 investor fact book, which can be downloaded from our website. If you'd like a hard copy, let us know. We're aware that we do have some media representatives with us on the call. However, this call is intended for investors, and we'd ask that questions from the media be directed to Jason Feer in our N.Y. office at 212-512-3151. At this time, I would like to turn the call over to Doug Peterson. Doug?
Thank you, Chip. Good morning, everyone, and welcome to the call. We have two topics to cover with you on this call, the SNL Financial transaction announced this morning and our second quarter earnings. We're creating a compelling combination with the addition of SNL , so let's start with the transaction. Before I go into more detail, let me first give you some history. Shortly after I became CEO, we conducted a rigorous analysis of the markets we serve to define investment priorities and an acquisition wish list. For potential acquisitions, we analyzed quantitative factors such as financial performance and market size, as well as qualitative factors such as strategic fit, strength of management team, and cultural alignment. Our assessment identified SNL as a leading potential partner for MHFI, and we began to explore the possibility of purchasing the company.
Once we started interacting with SNL , we were quickly impressed with the people at SNL , in particular, its talented and dynamic senior leadership team led by Mike Chinn. We became even more convinced that a combination of the two companies offered a very attractive opportunity to create long-term shareholder value. With S&P Capital IQ and Platts, we're in a unique position to add SNL to our portfolio in a very complementary way. As many of you know, SNL is a leading provider of sector-specific market data, news, and analytics for the financial institutions, real estate, insurance, media, energy, and metals and mining sectors. The company has increased organic revenue in the low to mid-teens each year over the past decade. Its subscription business model, coupled with the strong renewal rates, is a great fit for McGraw Hill.
We see exceptional opportunities as a combined company to further penetrate core customer segments, expand into new geographies, and strengthen common core capabilities in data, technology, and market approach. This is a compelling acquisition for 5 key reasons. There's unique fit with clear synergies with S&P Capital IQ and Platts. There's a common industry footprint, especially in areas like banking and insurance, where we can deepen our expertise. There's a proven growth engine, having delivered organic revenue growth in the low to mid-teens. There are clear revenue and cost synergies, and there are sound transaction fundamentals. Jack and I will cover all 5 in more depth today. SNL has a well-diversified customer base, including investment banks, commercial banks, insurance companies, asset managers, corporations, and government entities. Through this acquisition, we add two newer information businesses in adjacent sectors, real estate and media.
SNL's products are commonly cited as best in class and must-have by its customers due to the combination of differentiated content, proprietary analysis, and deep sector coverage. Their products are embedded in the workflow of their user base with tools that have been customized to users' needs over time. For example, over the past 28 years, SNL has built strong relationships with over 75,000 users at its 5,000 customers. You'll note in the pie chart on the top right of this slide that 91% of SNL's revenue is in the Americas. We believe that expanding SNL's global reach is one of the most attractive immediate opportunities. SNL has sector-specific expertise in five different industries: financial institutions, energy, metals and mining, real estate, and media and communications. Currently, financial institutions and energy are the two largest sectors. SNL's well-diversified customer base gives MHFI a stronger presence in banking and insurance.
The company has expanded usage outside of its traditional investment banking customer base in recent years. Users leverage SNL for traditional M&A analysis. For example, the company has a widely used bank merger model. Their capabilities run far deeper. Additional popular use cases for the FIG product include branch mapping and competitive benchmarking. In the energy space, SNL monitors over 9,000 power plants, 100 gas utilities, 120 interstate pipelines, and 2,500 renewable energy plants. SNL tracks ownership and production data in over 80,000 mines across 60 countries in the metals and mining group. In real estate, SNL has data on 140,000 commercial and residential properties globally. With each new market that SNL has entered, they deploy the same model of combining differentiated analytics with unique content and deep sector coverage. This timeline depicts SNL investments over the last decade.
From its roots in providing sector-specific information and data on financial institutions, it has expanded into new sectors. In 2004, SNL entered the energy information market through an acquisition and has built an incredible franchise in power, coal, and natural gas. Between 2012 and 2014, they launched their metals and mining platform with two acquisitions and are beginning to get traction on those investments. They added especially valuable mine-level production data to its metals and mining practice with the acquisition of Intierra RMG in 2014. SNL started developing its European financials product in 2009. The product was launched in 2011 and is showing strong growth rates. This, in addition to similar FIG products for Asia and Latin America, represent an attractive opportunity for future value creation, given the large and growing market.
SNL added depth and diversification to its financial institutions platform when it acquired the insurance specialty company Highline Data in 2011. The company has a number of investments underway, and it's best to think about their businesses falling into two buckets, established businesses and developing businesses. On the left of this slide are a set of businesses with low to mid-teens organic growth rates and margins in the 30s. On the right are developing businesses, which are in investment phases and expected to turn a profit by 2017. This results in an aggregate margin in the 20s. We believe SNL has the ability to continue to grow revenue and expand margins on its own. Together, we think that the opportunity for growth are more substantial. The combination of SNL and McGraw Hill Financial will slightly modify our revenue mix.
Adding SNL to our portfolio will increase the analytic data and research revenue of McGraw Hill Financial from 33%-36% and increase our recurring revenue from 60%-62%. It wasn't that long ago that SNL's customer base was concentrated in the investment bank sector. They've systematically built products and verticals to provide attractive and compelling data solutions. In the pie chart in the upper left-hand side of this slide, you can see SNL's customer diversification. SNL now serves all leading bulge bracket regional boutique investment banks in the U.S., over 600 investment managers around the world, all of the largest 75 U.S. commercial banks, all 25 of the largest P&C and life insurance companies in the U.S. An array of the largest and most prestigious consulting companies, media companies, power utilities, and mining companies.
Thanks, Doug, and good morning to everyone on the call. As Doug mentioned, SNL is a proven growth engine that will be additive to McGraw Hill Financial's future performance. The company has delivered mid-teens revenue growth for over a decade, driven by organic growth in the low to mid-teens, complemented by selective acquisitions. The revenue model is highly stable, as it is a subscription-based business with high renewal rates and clear future revenue visibility, much like our S&P Capital IQ and Platts businesses. Furthermore, the upfront receipt of cash before the subscription period begins results in minimal working capital requirements. In 2015, we expect revenues of around $255 million and margins over 20%, which includes 5-6 points of investment in the developing businesses that Doug just reviewed. Given the unique fit of SNL into McGraw Hill Financial, we have identified significant synergies, both cost and revenue-based.
Thanks, Doug, and good morning to everyone on the call. As Doug mentioned, SNL is a proven growth engine that will be additive to McGraw Hill Financial's future performance. The company has delivered mid-teens revenue growth for over a decade, driven by organic growth in the low to mid-teens, complemented by selective acquisitions. The revenue model is highly stable, as it is a subscription-based business with high renewal rates and clear future revenue visibility, much like our S&P Capital IQ and Platts businesses. Furthermore, the upfront receipt of cash before the subscription period begins results in minimal working capital requirements. In 2015, we expect revenues of around $255 million and margins over 20%, which includes 5-6 points of investment in the developing businesses that Doug just reviewed. Given the unique fit of SNL into McGraw Hill Financial, we have identified significant synergies, both cost and revenue-based.
We have built $70 million of EBITDA benefits in the financial plan that should be realized over the next four years by 2019. I will provide more detail on these synergies in just a moment. There's also a tax benefit associated with the basis step-up that has an NPV of approximately $550 million, which has an economic impact on the valuation. Relative to the earnings per share for the first full year of operation in 2016, we anticipate accretion on a cash basis, excluding transaction-specific amortization. On a GAAP basis, we expect the transaction to be accretive in 2018. As I just mentioned, SNL is a proven growth engine, delivering mid-teens growth over the last few years. Their established businesses are growing approximately 10% with margins over 30%.
Their developing businesses, global expansion of their leading financial institutions product line, the build-out of the metals and mining product line, and selective software for U.S. banks and insurance companies, are all expected to be profitable in 2017. As these developing businesses become profitable, overall margins in the business should strongly improve. This attractive margin profile will be further strengthened by synergies. The combination of SNL and McGraw Hill Financial provides significant revenue and cost synergies for SNL and both our S&P Capital IQ and Platts businesses. With S&P Capital IQ, we see opportunities to deepen penetration in commercial banking, insurance, and corporates. This includes a terrific opportunity to accelerate international growth for SNL's leading financial institutions products, leveraging the commercial reach of McGraw Hill Financial. In addition, we see incremental opportunity by developing new products that leverage capabilities in core sectors, including risk management products for banking and insurance.
With Platts, the opportunity exists to build out the combined energy and commodity platforms. The SNL products of energy focus largely on utilities and natural gas, and metals and mining match up well with Platts' capabilities in these areas. In energy, there is an opportunity to expand internationally, leveraging the recent Platts acquisition of Eclipse. Furthermore, there are clear opportunities to introduce new products, especially in oil, leveraging the deep expertise of Platts. There are also greater opportunities to build out joint capability vertically in these commodity sectors by providing end-to-end information offerings covering price assessments, fundamental research, and supply-demand analytics. Finally, SNL adds scale and leverage to our data and technology operations, which will enable us to drive efficiencies and add new opportunities to enrich existing product offerings. Let me provide a bit more color on the data-related opportunity.
SNL adds considerable capabilities in data collection, analysis, and research with the addition of 2,000 employees in key offshore locations. The combined capabilities of both companies will have approximately 7,200 employees, primarily in locations that can attract well-trained analytical associates at a reasonable cost. This is a terrific asset to power future growth. The total synergies built into the $70 million of EBITDA by 2019 are roughly half cost-related and the balance revenue-related. The revenue synergies assumed over the medium term are fairly straightforward, as McGraw Hill Financial will work with SNL to extend their global reach. Quite simply, no other billion-dollar-plus acquisition that we have reviewed since the formation of McGraw Hill Financial has offered such a clear synergy opportunity, both over the medium term and longer term in new product development and customer relevance.
The clear synergy is a significant consideration into the overall valuation of the business that supported the purchase price. As Doug and I have both discussed, the current profitability of the business is impacted by investments in the developing businesses, which are growing rapidly but are not yet profitable. We evaluated these investments in great detail and are comfortable with the ramp rate to profitability by 2017. The valuation needed to provide a return on these investments, which included multiple acquisitions over the last four to five years. There is also considerable value from the tax basis step-up, which on a net present value basis is worth approximately $550 million. Lastly, with the upfront cash receipts exceeding revenue, the cash basis on which a valuation is based is roughly a year ahead of GAAP EBITDA.
If you take into consideration the economic impact of a tax step-up, the value of this transaction is approximately $1.7 billion. As we move past the investment cycle that is nearing an end and consider that cash flow is roughly a year ahead of EBITDA, we view the price of this transaction as having a mid-teens multiple on 2017 cash flow before the impact of synergies. Longer term, the synergies across SNL, S&P Cap IQ, and Platts provide a terrific opportunity for significant shareholder value creation. Financing of the transaction should be relatively straightforward given our strong balance sheet and the success of our recent bond offering, which reintroduced McGraw Hill Financial to the fixed income investor. This acquisition will be funded by a combination of approximately $525 million of cash on the balance sheet and $1.7 billion of new debt.
A committed bridge financing of $1 billion, combined with our existing credit facility of $1.2 billion, will provide additional flexibility through closing. Post-deal, we anticipate 1.6 times pro forma leverage, which provides ongoing flexibility in returning capital to shareholders through share repurchase and dividends and pursuing future growth opportunities while maintaining an investment-grade rating. Our approach to integration will be to have SNL CEO Mike Chinn report directly to Doug. Mike and his executive team are based in Charlottesville, Virginia, and we are committed to that location over the long term. Initially, for financial reporting purposes, we will report SNL as part of S&P Cap IQ, but that may evolve over time. We expect immediate areas of focus to include pragmatic integration of corporate data and technology capability, as well as sales force training on this enhanced product line.
Let me summarize by saying that SNL has a unique fit with McGraw Hill Financial, adding sector-specific depth and overall scale. It is a proven growth engine with compelling revenue and cost synergy opportunities across both S&P Cap IQ and Platts. We believe that McGraw Hill Financial is the right owner for SNL. Let me hand the call back over to Doug to discuss our second quarter results.
Thank you, Jack. As I've said in the past, we're aligned around four very important themes that drive growth and performance and create value. Strengthening our customer and stakeholder engagement, accelerating our international growth, sustaining our margin expansion and maintaining discipline in capital allocation, and fostering a robust risk and compliance culture to manage and mitigate risk throughout the company. As you just heard, the acquisition of SNL today fits very well with these themes. Let's turn to the second quarter, and I'm pleased to report solid results. The company delivered increased revenue despite unfavorable foreign exchange rates and decreased issuance outside of the United States, continued margin expansion with a 450 basis point improvement in adjusted operating profit margin, a 17% increase in adjusted diluted EPS to $1.21, strong year-to-date free cash flow of $621 million, excluding the payments of legal settlements.
Issuance of $700 million of new 10-year notes as we reentered the capital markets for the first time in eight years, increased capital return with the repurchase of 2.6 million shares year-to-date, new additions to the portfolio with the purchases of NADA Used Car Guide, J.D. Power, Petromedia, and Platts, continued productivity efforts across the company, which Jack will review later in the call. Let's take a closer look at the second quarter results. Revenue increased 3%, excluding the impact of foreign exchange, revenue increased 6%. Adjusted operating profit increased 16%. While geopolitical concerns negatively impacted issuance in our Ratings business, adjusted operating profit increased across the entire portfolio. Progress on productivity initiatives resulted in a year-over-year decline in adjusted expenses. These initiatives have been focused on delayering the organization, driving process efficiencies, and improving productivity.
Of note, on Friday, we will close the door on our former Midtown headquarters as the last wave of employees relocates to our downtown Manhattan operating center at 55 Water Street. Productivity actions led to an adjusted operating margin increase of 450 basis points, adjusted diluted EPS increased 17%. Standard & Poor's Rating Services reported its second highest revenue ever, due to unfavorable changes in FX and weak issuance outside the United States did not exceed the second quarter of last year. Every other business segment delivered year-on-year revenue growth. Let me turn to individual businesses, I'll start with Standard & Poor's Rating Services. In the quarter, revenue decreased 1%, excluding the negative impact of foreign exchange, revenue increased 3%. Adjusted operating profit grew 7%, the adjusted operating margin increased 370 basis points to 50%.
While revenue was negatively impacted by FX, it had less of an impact on operating profit. S&P Rating Services continues to make progress in improving margin. Reduced headcount from recent restructurings and lower incentive costs were the primary contributors to this quarter's margin improvement. In addition, Ratings continues to implement a process reengineering program called The Way We Work. Legal expenses were significantly lower. This was offset by costs associated with Dodd-Frank implementation as we continue to invest in people and technology. Transaction revenue increased from 49% to 50% of total revenue. Non-transaction revenue decreased due to the effects of a strong dollar. Excluding the impact of FX, non-transaction revenue increased 3%, due primarily to annual fee growth. Transaction revenue grew 4%, excluding the impact of foreign exchange.
This is a result of the record U.S. public finance issuance and strong U.S. investment-grade issuance, paced by a number of large M&A transactions. When we look at second quarter issuance in the U.S., it was driven by a 20% increase in public finance as call options on strong 2005 issuance are being refinanced, a 30% increase in investment-grade issuance. U.S. structured finance issuance in total was unchanged, with a 53% increase in CMBS, an 18% decrease in structured credit, which is predominantly CLOs. In Europe, issuance decreased in almost every category. RMBS was a notable exception. Concerns about Greek debt, slowing growth in China, dramatic volatility in German sovereign debt, along with very low-cost bank liquidity all combined to dampen bond market activity outside the United States during the quarter. In Europe, investment-grade debt issuance decreased actually 33%, high-yield debt declined 54%.
Structured issuance decreased 7%, with RMBS being the primary area of strength. Not depicted on this chart is issuance from other parts of the world, which collectively, excluding sovereigns, declined over 50%. Let me turn to S&P Capital IQ. Revenue grew 6% with consistent growth globally. Adjusted segment operating profit grew 37%, and adjusted operating margin increased 520 basis points to 22.9%. Capitalizing on past investments, the margin improvement is a result of product enhancements that deliver revenue growth coupled with tight cost control. In fact, headcount increased less than 1% year-over-year. Excluding the impact of FX, revenue increased 7% and expenses only 3%. Let me add a bit more color on growth in the three business lines of S&P Capital IQ.
S&P Capital IQ Desktop and Enterprise Solutions revenue increased 7%, primarily as a result of low teens increase in desktop revenue, driven by a similar increase in users. S&P Credit Solutions revenue increased 6%, due primarily to growth in RatingsXpress and RatingsDirect. In the smallest category, S&P Capital IQ Markets Intelligence, revenue decreased 4% overall. Strong growth in global market intelligence and Leveraged Commentary and Data, however, was offset by declines in equity research services. Turning to S&P Dow Jones Indices, this business delivered an 11% increase in revenue due to ETF, mutual fund, data license, and derivative revenue, which all increased. Operating profit increased 16%, and the operating profit margin increased 250 basis points to 64.6%. During the quarter, we introduced 64 new indices, many in the fixed income space, and a net of 18 new ETFs based upon our indices were launched.
ETFs asset under management associated with our indices increased 10% to $792 billion, versus the end of the second quarter in 2014. Please note that while our year-over-year growth was meaningful, this AUM decreased from the record $832 billion at the end of 2014 as ETF flows moved to products offering European and non-U.S. exposure. One of our fastest-growing categories has been the products based on our smart beta indices. AUM in these products increased 55% year-over-year to $133.6 billion. This next slide depicts two charts that should help you understand year-to-year ETF industry flows. In the chart on the left, you see that the AUM linked to ETFs based on our indices has declined recently. While the year-over-year comparisons are still positive, AUM has declined since the end of 2014. The chart on the right shows that inflows into passively managed ETFs continue to be robust.
In fact, while down sequentially, the industry experienced record first half flows of $146 billion. Unfortunately, compared to recent quarters, the percentage of flows directed to products based on our indices has declined. We view this as temporary as investors move into global products. During the quarter, we launched the flagship of our fixed income indices, the S&P 500 Bond Index. This is the first index that tracks the debt of the S&P 500 companies and the first to be priced in real time throughout the day. Weighted by the market value of the bonds and with a maturity requirement of greater than one month, we anticipate that the S&P 500 Bond Index will be liquid enough to also serve as the basis for potential ETF and structured products. The S&P 500 Bond Index currently tracks the debt of 430 S&P 500 companies, reflecting over $3 trillion in debt outstanding.
At the launch, we published more than 20 years of daily historical data on the S&P 500 Bond Index. We'll round out this offering with multiple S&P 500 index variations based on duration, rating, and sector. Examples include the S&P 500 AA Investment Grade Corporate Bond Index , the S&P 500 5-7 Year Investment Grade Corporate Bond Index, and the S&P 500 Utilities Corporate Bond Index. Finally, as you know, we have formed a number of unique and dynamic alliances with exchanges in various markets since 1998. This quarter, we signed an agreement with the BM&FBOVESPA designed to create and launch new co-branded Brazilian equity indices. In addition, we have signed an agreement with the BMV, the Mexican Stock Exchange, incorporating all of BMV's indices, including their flagship index, IPC, the broadest indicator of the BMV's overall performance.
In the commodities and commercial market segment, revenue grew 7% with organic growth of 6%, excluding the Eclipse Energy Group acquisition. This was led by high single-digit revenue growth at Platts. Adjusted segment operating profit grew 15%. Adding together the solid revenue growth and tight cost control, the adjusted operating margin increased 270 basis points to 37.8%. J.D. Power delivered low single-digit revenue growth by double-digit revenue growth from the PIN information network, the Power Information Network, and modest growth in the U.S. auto sector. Revenues in Asia were negative as growth in the China market moderated and Japan revenue declined. Platts continued to deliver strong results while building for the future. Platts demonstrated resiliency, delivering high single-digit revenue growth despite continued low commodity prices.
Platts results, while quite strong, would have been even stronger, except that several major banks have withdrawn from the commodities space and upselling new products has been difficult in this low oil price environment. Metals, agriculture, and petrochemicals continue to deliver the highest revenue growth rates, and global trading services increased primarily due to license revenue from The Steel Index derivative activity and record eWindow trading volumes. Petromedia is a small but interesting tuck-in acquisition for Platts. Through a product named Bunkerworld, Petromedia provides pricing, news, and analytics for the global marine fuel market. Bunker makes up 70% of the cost of chartering a ship, and is therefore a critical price component for the industry. The other main product is Ocean Intelligence, which provides credit reports for the bunker industry and adds to Platts risk management offerings. The highlights of the quarter for J.D. Power.
J.D. Power was the acquisition of the NADA Used Car Guide. This is the premier source of used car value benchmarks. This acquisition fits well with J.D. Power's PIN business as both generate essential pricing benchmarks and analytics. This subscription-based business with more than 30,000 business customers expands J.D. Power's offerings in the U.S. automotive, OEM, retailer, financial services, and insurance markets. This final slide shows examples of how different sectors utilize this reliable used car benchmark data in their businesses. With that, I want to thank you for joining the call this morning. Now I'm going to hand it over to Jack Callahan, our Chief Financial Officer.
Thanks, Doug. I know this has been a longer call this morning than our norm, so I just want to briefly add some color on several items related to second quarter financial performance, the balance sheet, and the impact of the SNL acquisition on our 2015 guidance, and then we'll open it up to your questions. First, I will recap key financial results and review certain adjustments to earnings that were recorded in the quarter. Let's start with the second quarter income statement. Overall, these were very good results, especially the continuing progress in margin improvement. Revenue grew 3%, despite the continued headwinds from foreign exchanges, which reduced our growth rate by about three points. Adjusted consolidated operating profit grew 16%, with all four business units contributing to this growth. Operating margins were over 41%, up 450 basis points from a year ago.
This is the highest quarterly margin achieved since the formation of McGraw Hill Financial. Revenue growth, combined with progress on our productivity initiatives, contributed to this significant step up. While foreign exchange had a negative impact on revenue, it had almost no impact on adjusted operating profit for the company as a whole due to the offsetting impact to expenses. Adjusted unallocated expenses decreased 22% as the prior period had costs associated with the sale of certain assets. The tax rate on an adjusted basis was 32.3%. For the balance of the year, we continue to guide below a 33% rate. Adjusted net income increased 17%, and adjusted diluted earnings per share increased 17% to $1.21, versus the toughest comparison from 2014.
The average diluted shares outstanding decreased by almost one-half million shares versus a year ago, as share repurchase activity offset the dilutive impact of shares granted for equity-related compensation. Now let me turn to adjustments to earnings to help you better assess the underlying performance of the business. In total, pre-tax adjustments to earnings from continuing operations resulted in a $30 million gain during the quarter. This consisted of $41 million in net settlement-related insurance recoveries, a gain of $11 million related to the sale of a legacy construction business asset, and $22 million of restructuring charges as the company continues to delayer and streamline operations. Now I'll turn to cash flow and the return of capital. Our year-to-date free cash flow was a negative $988 million.
However, once the payments associated with legal settlements are excluded, to get a better sense of our underlying cash generation from operations, year-to-date free cash flow was a positive $621 million. That puts us well on our way to full year 2015 guidance of greater than $1.1 billion. During the quarter, the company stepped up its share repurchase program and bought 1.6 million shares, bringing the year-to-date total to 2.6 million shares. The share repurchase program remains an important component of our overall capital allocation, and we anticipate continuing to selectively repurchase shares under our remaining share repurchase authorization of 42.9 million shares. Now let's turn to the balance sheet. As of the end of the second quarter, we had $1.7 billion of cash and cash equivalents, of which approximately 70% was held outside the United States.
Our cash position was augmented with the issuance of $700 million of 10-year notes in May. This was the first bond offering by the company since 2007, and we were delighted with the strong interest from investors and the attractive 4% coupon. We used some of the proceeds from these notes to pay down the short-term debt that we incurred during the first quarter, and during the quarter, we completed the refinancing of our $1.2 billion credit facility. At the end of the quarter, we had approximately $1.5 billion term debt. As a result of the SNL acquisition, as we discussed earlier, we currently anticipate issuing $1.7 billion of long-term debt to fund the transaction, and we anticipate completing the financing ahead of projected closing. Once completed, this would bring our total debt to approximately $3.2 billion or 1.6 times EBITDA.
The unique fit of SNL, combined with the smaller acquisitions of NADA Used Car Guide by J.D. Power and Petromedia by Platts, all strengthen the McGraw Hill Financial portfolio and will contribute to sustained growth. In the context of 2015 guidance, and assuming that the SNL transaction closes towards the end of the third quarter, we anticipate that the deals to collectively add approximately $80 million-$90 million of revenue over the balance of this year in the second half, and SNL specifically have a dilutive impact to adjusted EPS of approximately $0.05-$0.07. However, based on the strength of the quarter and our outlook for the remainder of the year, we will leave adjusted EPS guidance unchanged at $4.35-$4.45. At this point, we would expect performance toward the higher end of this range.
In closing, we continue to focus on creating growth and driving performance, building out the portfolio, improving margins, and returning cash to shareholders. Today is truly a special day as we look forward to welcoming over 3,000 associates of SNL Financial to McGraw Hill Financial. With that, we will now open the call to your questions.
Just a couple instructions for our phone participants. Please press star one to indicate that you wish to enter the queue to ask a question. To cancel or withdraw your question, simply press star two. I would kindly ask you to limit yourself to two questions. That's two questions in order to allow time for other callers during today's Q&A session. If you've been listening through a speakerphone but would like to now ask a question, we ask that you lift your handset prior to pressing star one and remain on the handset until your question has been answered. This will ensure better sound quality. Operator, we will now take our first question.
The first question comes from Alex Kramm, UBS. Your line is open.
Yeah. Hey, good morning, everyone. Hopefully you can hear me okay. I'm remote. Anyway, Doug, I guess for you often describe McGraw Hill Financial as a collection of benchmark businesses. Obviously those are hard to purchase or hard to expand. Maybe you can just summarize to us how you think SNL can be one of those benchmark businesses or not. Then maybe specifically, you said part of this business will be part of Platts or could become part of Platts over time. When I look at the customer base, it's really just financial companies and not really the core user base of Platts. Can you maybe talk about this a little bit? Because a benchmark company, I would assume some corporate users as well.
Well, thank you for the question. First of all, let me just mention that as we've been looking at our overall strategy, we focus on a combination of benchmarks of data analytics and research. All of these are different sorts of products which get embedded into the workflow of the users that we work with. First of all, SNL really is a benchmarking business at heart. If you look at how they produce the information, the proprietary data, and the focus and attention to detail that they provide, it's very similar to what you would look at for a benchmarking business. They're not a traditional price or index or credit benchmark, but they serve as financial performance and operating performance benchmarks for companies and assets in our space.
We do look at them, in addition to the second part of your question about how they would enhance our business related to Platts. They've been building verticals in the mining space, in the energy market analysis. As an example, they've got industry forecast curves and proprietary daily spot market prices in the energy market. They have operational statistics on over 5,000 electrical utilities. They've got power plant unit level data. On the mining world, they've got profiles and statistics on all mining projects globally. They've got customized maps. They've got location data, company primary, commodity information, ownership information, et cetera. All of that is very similar to what Bentek does and very complementary to Bentek and Eclipse in the natural gas space. We see a lot of excellent fits and ways that we'll be able to leverage their database and their relationship.
I think that we want to make sure that you get more and more data about who they are and who their customers are. You'll see over time, as you get a chance to learn more about them, that they've diversified incredibly well beyond their traditional investment banking portfolio.
Okay, thank you. That's helpful. Maybe just secondly, for Jack, maybe you can talk a little bit more about the accretion as we think about 2016, and to some degree, also from a mechanical and technical perspective. If you're saying it's accretive on a cash basis, are you actually going to adjust your earnings next year to exclude amortization? Or will we still find this look dilutive on a reported basis? If so, how much dilution do you think you could expect next year from an EPS perspective? Thanks.
Alex, at this point in time, I don't anticipate that we would exclude the amortization specifically relative to transactional. However, we will point you towards to let you know what it is, such that you can judge the cash accretion that we're forecasting for next year. We will connect the dots there. I think we have some work to do to close this deal. We have to finalize some purchase accounting. I would say on a GAAP basis, next year, the dilution for 2016, please, this is a first pass view of it, is somewhere between $0.15-$0.20, and we'll tighten up that range as we integrate this into our 2016 financial planning and future guidance.
Right. Very helpful. Thanks again.
William Bird, FBR Capital Markets, your line is open.
Yeah, good morning. The synergy numbers are quite large relative to EBITDA. I was wondering if you could just give us a sense of what's included in the synergies. Also, what's not included, and then how do you expect synergies to phase in between now and 2018? Thank you.
Let me start, Bill. This is Doug. Well, first of all, one of the things we've been impressed with at SNL as we've gotten to know them is their ability to run a very tight operational shop and how they've got ways that we can work together, as Jack showed on that map, in their operating centers around the globe. Second, as you saw from the chart, they've got 91% of their sales today are in the U.S., We have a sales force and penetration globally that we think that we can get a lot of synergies from there. Let me hand it over to Jack for some more details.
Yeah, two points. Maybe let me address maybe cost synergies first, come back on revenue, because again, the case is built roughly 50/50. First on cost, we came at the analysis not just looking at the costs of SNL. We looked at the cost across SNL, S&P Capital IQ, and Platts. I think when you look across that cost base, the cost synergies that we assumed here are actually quite modest, and there's a lot of overlapping capability as it relates to technology, in some cases, data, et cetera. I think you need to take from a cost point of view, and take a more holistic view of it. Secondly, in terms of revenue, there's both near term, let's call them medium term and longer term revenue synergies.
Some of the more medium term are taking their great products they've already developed, like their global FIG product, we just have a much greater sales force coverage than what SNL has today. In collective, we just have more feet on the street to expand that to accelerate their global build-out. Longer term, there's a lot of new product development opportunity that's quite exciting, both maybe in more traditional S&P Capital IQ space, but also, as Doug was just mentioning, with Platts in terms of the mutual areas of capability that we've built out there.
The question on the phasing in, how it may phase in between now and 2018?
Traditionally, as you'd expect, the cost synergies are a little bit more forward weighting between now. We had pointed to $70 million by 2019. We may get a little bit more benefit on the revenue side a little earlier because of the opportunity to take their existing product line through our sales force. In terms of the specifics for 2016, we'll give you more guidance on that when we do it in the context of our full outlook for next year towards the end of this year or early next.
Thank you.
Thank you.
Thanks, Bill.
Andre Benjamin, Goldman Sachs, your line is open.
Thank you. Good morning. First question. I know you're just getting your hands around this large deal, but I was thinking, what does this mean for incremental M&A, which you mentioned you may continue to do? How we should think about areas of focus? Should we expect you to do some other things, like continue to build the index business more organically like you've been doing? Then if you were to do a deal, how high a leverage you would be temporarily willing to go for that deal?
Andre, good morning. Thank you for the question. We continue to believe we have flexibility to pursue what we've always described before as our asset allocation between investing in organic growth, smaller tuck-in acquisitions, continuing to pay our dividend, and also repurchase shares. As I mentioned earlier, we're focused on benchmark businesses, in particular, how we can also enhance those with high-quality data and research businesses. We'd hope that we can continue to do small transactions like the other ones that we announced this quarter with Petromedia and NADA Used Car Guide. It's our goal to continue to add to the portfolio high-quality properties over time. In the sense, we also want to keep a level of leverage, so we're also able to always pay our dividend and repurchase shares.
On the core business, I know you mentioned that you are having some challenge in the Platts business from some banks pulling back. Any color on exactly how much of a headwind that was this quarter? Apologize if I missed it. More importantly, do you have any visibility into how many more may follow that trend going forward?
Yeah, I wouldn't refer to it as a challenge. Platts had a great quarter. I would not put it in that context at all. We probably lost a point or two of growth off of what we otherwise would have had because of some of the banks pulling out of commodity space and a couple of small frackers going out of business. Great quarter and with oil prices the way they've gone so dramatically south, it's kind of amazing how little Platts has been impacted.
Thanks.
Joseph Foresi, Janney Montgomery Scott, your line is open.
Hi. I was wondering if you could talk about the pricing structure of the SNL acquisition and how you feel pricing power there relates to what you're seeing in Capital IQ.
I think we've been very impressed with the must-have capability of what SNL offers its customer set and the very sector-specific data and analytics that they provide. I think over time, they have realized reasonable pricing improvements over time, and I suspect that will continue. I think that I wouldn't point to anything unusual about pricing. I think it's more what we work on across both our S&P Cap IQ business and Platts. I think it's very similar.
Okay. If I could just get some comments on Europe and the issuance market there and your thoughts sort of as we head towards the back half of the year. Thanks.
Yeah. Europe has continued to be incredibly weak. There's a combination of factors that I mentioned earlier, the volatility that we saw early in the year with the German yields. We also saw some of the negative interest rate issuance, et cetera. We haven't seen too much of a rebound in Europe in this July, although there have been a few reverse Yankee bonds which have gone to the market and a few financial institutions. Overall, Europe investment grade was down 33% investment-grade corporates were down 33% in the second quarter. Financial institutions were down 40%. Total Europe was down over 40%, and the rest of the world was down 54%. We saw very strong issuance in the U.S. in investment grade. It was up almost 30%, although non-investment grade in the U.S. was down 8.9%.
As I've always said every quarter when we have these calls and when I meet with investors is that we don't know what each quarter is going to bring, and we have a longer-term forecast that with a combination of refinancing, with global growth, with a belief that we have that Europe will continue to move from a banking market to a capital market overall, that in the long run, we will see growth in issuance. We do see quarter by quarter a lot of volatility.
Thank you.
Douglas Arthur, Huber Research, your line is open.
Thanks. Jack, I think you mentioned, or Doug, that the organic growth
trend at SNL has been low to mid-teens. Can you break that down between how much of that growth is a function of the new verticals they've gotten into? Another way of asking the question is, what's the organic growth of the very established products? Are they slowing, or are they also growing at a mid-teens level? Thanks.
There's a chart in the deck that I think lays it out over the last few years, I think back to 2012. On a compounded basis, including a forecast for 2015, the established businesses have been growing around 10%. The developing businesses have been growing, I think it's 70%-
70, yeah
CAGR over the last few years, for all in CAGR of around 16%. On the established side, it's really a combination of both organic investment combined with selective acquisitions. You should view the developing business as a combination of both internal investment that they've made, combined with some of these acquisitions. As you look at the timeline, you can see they've been pretty active the last few years, adding to the mix.
So the-
Slide 16.
Okay. Just to clarify, the organic growth has included the impact of the small tuck-ins.
No, let's break it apart. I think if you go within the established businesses, the developing businesses, some of that's been internal investment, some of that's been acquisition. Depending on the year, that's why we've classified over a longer term timeframe there, the growth of either low teens to mid-teens, depending on the year.
Okay. Thank you. I'll go back and take a look at it. Thanks.
Denny Galindo, Morgan Stanley, your line is now open.
Hi there. Good morning. I had a quick one just on the quarter on Capital IQ margins were very strong. It looks like the best since 2012 or so. I wanted to get a feeling for whether there was any kind of one-timish benefit from here, whether it was mix-driven. I know that some of your lower profit pieces of that segment have been declining, whereas some of the other ones are growing, or any other kind of one-time issues that might have driven that margin expansion. Can we expect it to continue?
Yeah. First of all, in terms of, we have been doing some selective restructuring in that business. Also the team there has done a nice job of re-sequencing on some of the investments that were underway in the business, I think that's starting to have some real benefits. I would say, though, there is a little bit of an impact in their margins in Cap IQ from Forex. Just about all of their revenue is dollar denominated based. From an expense point of view, we are benefiting a bit from Forex, particularly in the pound and the euro. A little less than half is Forex, the rest is just good performance in terms of expense management.
Okay. Lastly, this SNL is really more of a sector specific data platform. Actually, some of the more general platforms have also been going to providing more sector specific information. Is this a trend in the industry that everyone's going to have their own sector specific platform instead of the more general one-size-fits-all platforms? Do you think it's just additive? Maybe you could just talk about that trend.
Well, from the point of view of the trend, I think that what we find what our users and customers are looking for is depth, and depth of knowledge, depth of data, time series, being able to go back for a long time to be able to understand the kind of data need. As an example, not related to SNL, but when we launched the S&P 500 Bond Index, we put in 20 years of back data on this kind of transaction. What I would look at is the type of data and the analytics that are required more and more in the market is sophistication. To have that kind of sophistication, you need to have depth and data and industry specific information that somebody like SNL has.
I think SNL has been a leader in this area, as well as some of the other McGraw Hill Financial businesses, you should expect to see this kind of activity from a lot of different companies.
Operator?
Our next question comes from Peter Appert, Piper Jaffray. Your line is open.
Thanks. Doug, it looks like S&P's revenue growth maybe is lagging a little bit relative to some of the peers or relative to the overall industry. Do you have any bridge in terms of why that differential may exist?
When I've looked at this in a couple of different ways, the main driver of differential and growth is in the U.S., and it's in the structured finance market, specifically. If you look at the issuance during the second quarter, as I went through them, the largest growth in the U.S. was in the investment grade corporates and in public finance, which we continue to perform very well in. The only sector where there was growth in the U.S. in structured finance was in CMBS. As you know, we're temporarily not involved in conduit/fusion and CMBS, and that's the main differentiating factor that we've seen when we look at our competitors.
Got it. Thank you. On the margin side, the progress at S&P has obviously been very impressive. Can you talk about how far along we are in the margin improvement story? Are most of the gains baked in at this point, or is there more to come?
We are going to continue to work as much as possible on that, although we continue to invest in people and technology. We think that it's important that we automate and update our systems, such as our processing systems. I mentioned The Way We Work, Dodd-Frank. We're also ensuring that we have a high-quality publication and publishing systems so that we think that we're very pleased with the performance and with the improvement in the margins. We will continue to attack those margins through every different lever we have. On the other hand, we want to continue to invest to have the highest quality and very high-quality risk management when we look at the way we manage a company. We're pleased. We think that there should continue to be more progress, we don't want to overpromise either.
Peter, one thing, just as a reminder, this was a good revenue quarter. There is the importance of revenue leverage in the margin. I think while 50% margins are quite attractive, I'm not sure I'd straight line that, particularly the third quarter, which traditionally is a little bit lower in revenues. We're overall extraordinarily pleased with the solid progress we've made there.
Thank you.
Ken McAtamney, William Blair, your line is now open.
I guess just another question on SNL. The differentiation, I guess, can you help us just for those less familiar with the product, I guess. How's the data different than what people can get through other kind of data providers? Or is it more the research and kind of analysis layered on top of the data that's really, I guess the differentiating point as SNL goes to market here?
Jack, I'll take a start, then maybe Doug can add on. I think what's different is if you compare it with S&P Capital IQ, which has sort of broad coverage. S&P has really grown up very sector specific with deep expertise in financial institutions. That's where they really have perfected their model. Then what they have $5 billion off that debt that they then have kind of taken that model, then expanded it to other significant industry types that have provided them the growth. They're still in the middle of this expansion and investment phase. That's why we're very excited to work with them now to leverage the great progress they've made in taking their financial institutions product globally.
We want to work with them, with the Platts and the investments they've made in energy and metals and mining, to kind of collectively continue to build out that very sector-specific, deep insight. They provide some tools, back to Doug's earlier point about getting all the way down to workflow, that actually simplify some of the regulatory requirements for some of the commercial banks. They're very deep and very much linked into the workflow of their clients.
Let me just add as an example in the bank area where they started and the kind of discipline that they're now moving into their other verticals. If you were to look at the U.S. banking market, they have detailed information about every branch of every bank in the U.S. They can look at the proximity of the different branches and overlap analysis. They can have an analysis of the bird's eye views and satellite. They can map it. They can look at the markets and the market demographics of every branch. They can look at deposit concentration and deposit growth. They can then add into that deposit rates, auto rates, mortgage rates, asset quality, demographics, et cetera. That's the kind of information which is unparalleled that they've built up in that kind of a market.
They've taken that expertise and that approach to managing and gathering data, then distributing that, which is a combination of proprietary data mapped with some third-party data so that they really provide something that is quite unique. They've moved that into other markets, and it's very complementary to both S&P Capital IQ and Platts, as we've said.
Okay. Thank you. As we think about, I guess, the core part of SNL, the growth, 10% growth, I guess, over the last few years, do you have any sense that you can give us for how much of that is price versus customer growth versus kind of selling additional products to the established customer base?
I think it'd be premature to get into that level of detail on this call, it's been a combination of both extending their reach, and some fair realization on pricing.
Okay. Thank you.
Thanks. Thanks, Tim.
William Warmington, Wells Fargo, your line is open.
Thank you, and congratulations on the SNL acquisition. Their accuracy guarantee is famous. One question I wanted to ask you was just to make sure that I had the bridge correctly in terms of how you're looking at the acquisition cost before and after the adjustments. If we just start out unadjusted at the $2.225 billion versus the EBITDA, looks like about $51 million unadjusted, and then we can adjust. You can back out the $550 million on the tax and add the $70 million back to the EBITDA. That would get you to something closer to a 14 multiple. Is that the way you're thinking about it?
I think you got to look forward. Their current margins are so impacted by the investments that they're making in the developing businesses, combined with the fact that they've made a number of acquisitions in these areas to build them out.
Yeah.
I would look forward to 2017, as these investments work, which we have spent a lot of time looking at, that we're quite excited about. Once as they start to basically contribute to the profit pool before any real application of synergies, you start to be getting to a GAAP EBITDA in 2017 of around $100 million.
Yeah.
Also too, remember, the valuation here is based on cash, not GAAP EBITDA. They tend to have like 98% of their customers pay ahead. If you think about it from a rough cash EBITDA, you could add at least on a current run rate around $20 million to that number. I think that's more the right range to think about comparing it to what the valuation of the business is. Then we start to layer in the synergies as we start to move forward into 2017, 2018, beyond.
Got it. Then a question on the overall business. It's such a high % of renewals. Is there a seasonality to the renewals? Are most of them taking place at the end of December, beginning of January, or is it just spread out throughout the year?
A good number of their deals are multi-year in nature. It's a little bit of a mix. There's a little bit of maybe the end of the year. There's nothing overly pronounced in it.
Got it. Thank you.
We've been quite impressed with their overall success and their renewals, really on a consistent year-on-year fashion. It's really quite remarkable, particularly when you consider how they've expanded out from their core strength in financial institutions into new sectors over the last few years.
Okay. Well, thank you very much.
Thank you.
James Friedman, Susquehanna, your line is now open.
Hi, thank you. It's Jamie at Susquehanna Financial Group. I was wondering, with regard to the $140 million cost takeout plan for the McGraw Hill Financial side, if you can update us as to where you are there. I guess I'll ask my SNL Financial upfront. In terms of the five to six points of investment, could you articulate in a little bit more detail where that investment's going?
Sure. We're well on track in terms of our cost savings. I think that's pretty obvious by looking at our margins-
Yes
the progress that we've made there. As Douglas L. Peterson mentioned, one part of that program was the exit of our old headquarters building, which is being completed over the last few weeks. We're well on our way to delivering on that target. We may actually given the very strong margin performance we've had so far, we may be a little ahead of that previous target that we had set to have full realization of the $140 million by the end of 2016. I think we're a bit ahead. We'll give a more complete update on that as we approach the back half of the year. As it relates back to your investment on the five to six points of investment, that has all to do with the investments they're making in the build-out of the developing businesses. That's taking the FIG products global.
It's building out metals and mining, which is really interesting to us, and its synergy with Platts. They also have some selected software businesses capabilities that they offer U.S. commercial banks and insurance companies. Those businesses are growing very nicely at a compounded basis of around 70% over the last few years. They'll start contributing to profitability in 2017.
Thank you.
Thank you.
Our next question comes from Manav Patnaik, Barclays. Your line is open.
Thank you. Just one question for Jack and then one for Doug as well. Firstly, on the margins, the SNL Financial, I just want to make sure I got that clear. You said steady state, their margins should be 30%. I think you said there was five to six points of investments going on. I guess margin should be 25, but I think you said this year it was only 20. I just wanted to know what that gap was and if that 30% includes your synergies by 2018.
Well, look, I think the way to think about it is their established businesses right now are on the 30% range. They're investing in developing businesses. Once the developing businesses start to contribute to profitability, frankly, they're a drag right now, overall company margins will start to approach that 30% number over time. There's also just some general margin improvement in the established businesses. That's just the sequence of the build-out of these developing businesses should improve the overall margins of the business over the next two years. We would layer in specific synergies.
Okay. Just big picture, Doug, it seems like obviously you guys are looking at 2017 cash EBITDA. There seems like some work left in terms of synergies and tax benefits and so forth, and you get to your mid-teens multiple. Woodmac seemed like it was sort of a cleaner, like you get to the similar multiples in 2017. What was the difference between walking out of that deal and valuation versus pursuing this one?
I don't have any comments on Woodmac. What I would say is that we're very, very pleased with SNL. It's a fantastic business. As I said earlier, Mike Chinn and the management team have built a very high-quality set of businesses and operating procedures. We think that they bring a high-quality operating platform. They've got product innovation, and that they can benefit tremendously from our global reach, as well as the operating centers we already have. This is really about SNL today, and we're very pleased that we're able to announce this transaction.
Okay. All right. Fair enough. Thanks, guys.
Vincent Hung, Autonomous Research . Your line is now open.
Hi, good morning.
Morning. Good morning.
Just the first question. Could you just talk about the existing management team and how they're going to be incentivized and how long they're going to be locked in for?
Locked in?
Do we have contracts with Mike Chinn and the folks, that sort of thing?
Are you talking about the SNL people or the McGraw Hill Financial people?
Yes, SNL.
Yes. Well, I think in our approach, Look, Mike is now a direct report to Doug. One of the reasons why we were excited about this deal was the quality of that leadership team. We're looking forward to working with them, and we're quite comfortable that we're going to have that opportunity over the coming years.
Okay. Last question. On slide 12, you break out the revenues by customer type. Can you just give us a sense for revenue growth by those customer types?
All we would say is that I think, you're asking in the context of SNL?
Yeah.
Yeah. The only thing I think we would say today is that they've done a very nice job of kind of broadening it out from investment banks, and to kind of appeal more to the buy side, commercial banks, insurance, and corporate. I think they've done a nice job building a very broad reach in their customers that they serve, and they have no significant dependence on any one customer, or customer type, which I think kind of gives more to the stability and future predictability of the business.
Okay, thanks.
Thank you.
Our last question comes from Patrick O'Shaughnessy, Raymond James. Your line is now open.
Hey. A question on the tax benefit that you guys are going to be getting. Can you talk a little bit about the nature of that benefit, and then how are you going to realize it? Is your GAAP tax rate going to be lower going forward, or how do you actually benefit from that?
It's basically just a step up in the basis. It will provide us some tax benefits within the U.S., in large part, which is our highest tax jurisdiction. It'll collectively give us a couple tenths of improvement in our overall effective tax rate, which is helpful. That's how it'll come in over the next few years.
That it plays out over a number of years.
It's a number of years, That's why you really need to think about it on an NPV basis. This benefit will be with us for about 15 years.
All right. Got it. Thank you. That makes sense. As far as the cash component of the deal, are you able to use any non-U.S. cash for that, or is that basically going to kind of more or less tap out the U.S. cash that you have on hand right now?
It will be mostly a U.S.-based deal in terms of cash. That's one reason why we do need to go to raise some new debt to fund the transaction.
All right, great. Thank you.
Great. Thank you everyone. I know this has been a very long call, and you might have some more questions you can get to Chip later. We've covered a lot this morning on our acquisition announcement on SNL Financial. We also were able to go through the quarter, which we think was a very strong quarter from the point of view of margin improvement and continued for us to deliver what we've been talking about in the past. Thank you again, everybody, and good morning.
That concludes this morning's call. A PDF version of the presenter slides is available now for downloading from www.mhfi.com. A replay of this call, including the Q&A session, will be available in about two hours. The replay will be maintained on McGraw Hill Financial's website for 12 months from today and for one month from today by telephone. On behalf of McGraw Hill Financial, we thank you for participating and wish you a good day.