55 Water Street
New York, NY 10041
spglobal.com
S
&
P
G
l
o
b
a
l
2
0
1
7
A
n
n
u
a
l
R
e
p
o
r
t
Essential
intelligence
shapes a world
of opportunity
Annual Report 2017
Financial Highlights
Years ended December 31
(in millions, except per share data)
2017
2016
%
Change
Revenue
$ 6,063
$ 5,661
Adjusted net income (attributable to the Company’s
common shareholders)*
1,784(a)
1,420(b)
Adjusted diluted earnings per common share*
$ 6.89(a)
$ 5.35(b)
Dividends per common share(c)
$ 1.64
$ 1.44
Total assets
$ 9,425
$ 8,669
Capital expenditures(d)
123
115
Total debt
3,569
3,564
7
26
29
14
9
7
0
Equity (including redeemable noncontrolling interest)
2,118
1,781
19
* Refer to “Reconciliation of Non-GAAP Financial Information” on page 13 of this report for a discussion of the Company’s non-GAAP
financial measures.
(a) Excludes the impact of the following items: legal settlement expenses of $55 million, employee severance charges of $44 million, a charge
to exit leased facilities of $25 million, non-cash acquisition and disposition-related adjustments of $15 million, a pension related charge of
$8 million, an asset write-off of $2 million and amortization of intangibles from acquisitions of $98 million.
(b) Excludes the impact of the following items: a gain from our dispositions of $1.1 billion, a benefit related to net legal settlement insurance
recoveries of $10 million, disposition-related costs of $48 million, a technology-related impairment charge of $24 million, employee
severance charges of $6 million, a disposition-related reserve release of $3 million, acquisition-related costs of $1 million, and amortization
of intangibles from acquisitions of $96 million.
(c) Dividends paid were $0.41 per quarter in 2017 and $0.36 per quarter in 2016.
(d) Includes purchases of property and equipment and additions to technology projects.
Directors and Principal Executives
Board of Directors
Charles E. “Ed” Haldeman, Jr. (E, F, N)
Non-Executive Chairman of the Board
S&P Global Inc.
Rebecca Jacoby (F)
Former Senior Vice President, Operations
Cisco Systems, Inc.
Marco Alverà (F, N)
Chief Executive Officer
Snam S.p.A.
William D. Green (C, E, N)
Former CEO and Chairman
Accenture
Stephanie C. Hill (A, C)
Senior Vice President
Corporate Strategy and
Business Development
Lockheed Martin
Operating Committee
Monique F. Leroux (A, C)
Chair
Investissement Québec
Quebec Economic and Innovation Council
Maria R. Morris (A, F)
Former Executive Vice President
Global Employee Benefits
MetLife, Inc.
Douglas L. Peterson (E)
President and Chief Executive Officer
S&P Global Inc.
Sir Michael Rake (A, E, F)
Chairman
Worldpay Group plc
Phoenix Global Resources plc
Edward B. Rust, Jr. (C, E, N)
Chairman Emeritus
State Farm Mutual Automobile
Insurance Company
Kurt L. Schmoke (C, N)
President
University of Baltimore
Richard E. Thornburgh (A, E, F)
Non-Executive Director and Chairman
Credit Suisse Holdings (USA), Inc.
Vice Chairman
Credit Suisse Group A.G.
Douglas L. Peterson
President and Chief
Executive Officer
Ewout Steenbergen
Executive Vice
President, Chief
Financial Officer
John L. Berisford
President, S&P Global
Ratings
Mike Chinn
President, S&P Global
Market Intelligence
& Executive Vice
President, Data and
Technology Innovation,
S&P Global
Martin Fraenkel
President, S&P Global
Platts
Alexander J.
Matturri
Chief Executive
Officer, S&P Dow
Jones Indices
Nick Cafferillo
Chief Technology
Officer
Martina L. Cheung
Head of Global Risk
Services
Courtney Geduldig
Executive Vice
President, Public
Affairs
Steven J. Kemps
Executive Vice
President, General
Counsel
Swamy
Kocherlakota
Chief Information
Officer
Nancy Luquette
Senior Vice President,
Chief Risk & Audit
Executive
Ashu Suyash
Managing Director
and Chief Executive
Officer, CRISIL
A – Audit Committee
C – Compensation & Leadership
Development Committee
E – Executive Committee
F – Financial Policy Committee
N – Nominating & Corporate Governance Committee
IFC
IBC
Year-End Share Price
Dividends per Share
Revenue (in millions)
$169.40
$107.54
$98.58
$88.98
$78.20
$1.64
$1.44
$1.32
$1.20
$1.12
$6,063
$5,661
$5,313
$5,051
$4,702
’13
’14
’15
’16
’17
’13
’14
’15
’16
’17
’13
’14
’15
’16
’17
Cumulative Total Shareholder Return(e)
400
300
200
100
0
SPGI
Peer Group(f)
S&P 500
$333
$266
$208
’12
’13
’14
’15
’16
’17
(e) Assumes $100 invested on December 31, 2012 and total return includes reinvestment of dividends through December 31, 2017.
(f) The peer group consists of the following companies: Thomson Reuters Corporation, Moody’s Corporation, CME Group Inc., MSCI Inc.,
FactSet Research Systems Inc. and IHS Markit Ltd.
To experience an enriched
version of this Annual
Report, with expanded
content, visit spglobal.com/
annual-report-2017.
02
Chairman’s Letter
Charles E. “Ed” Haldeman, Jr.
Chairman of the Board
Dear Fellow Shareholder:
We are pleased that S&P Global
generated strong growth in 2017.
Our employees excelled at increasing
revenue and operating profit.
This very solid financial performance demonstrates the demand for the essential research, data,
analytics and benchmarks S&P Global provides, and underscores the positive influence of
productivity initiatives.
The earnings power — and the potential — of S&P Global have created significant value for you,
our shareholders.
In 2017, total return to shareholders was 59%, surpassing the S&P 500’s return of 22% and our peer
group’s 29% return.
Last year, the Company returned $1.4 billion to shareholders in the form of dividend payments and
share repurchases. In February of this year, your Board of Directors once again approved an increase
in the regular cash dividend on the Company’s common stock. The increase of 22% to an annual
rate of $2.00 affirms S&P Global’s commitment to shareholders. For 45 consecutive years, through
a wide variety of business cycles and market conditions, the Board has increased the regular cash
dividend. Fewer than 25 companies in the S&P 500 can claim such a record.
To maintain our commitment to shareholders, the Board and management team continually assess
the Company’s strategy and operating performance. Late last year we discussed the biggest trends in
technology and themes influencing global capital and commodity markets. This conversation was
informed by the leadership team’s outreach to customers and users to understand their needs today
and well into the future.
03
59%
Total
return to
shareholders
in 2017
$1.4B
Cash
returned to
shareholders
in 2017
The result of this strategic project both affirmed S&P Global’s purpose
of providing essential intelligence to customers so they can make
confident business decisions, as well as crystallized a vision to power
the markets of the future. In Doug’s letter, he lays out the steps the
Company is taking to realize this vision.
Thriving in an evolving environment based on a foundation of integrity
and a capacity to anticipate and absorb change are key characteristics
of successful organizations. The Board of Directors has oversight
responsibility of the Company’s risk management framework, including
working with the senior leadership team to foster a culture instilled with
honesty, transparency, accountability and risk awareness.
We have a terrific set of directors who bring a diverse and valuable set
of experiences, skills and perspectives into the boardroom. They also
offer a fresh point of view. With the addition of four new Board members
over the last two years, we’ve significantly reduced the average tenure
of directors to about six years. That is well below the average 8.2-year
tenure of directors of S&P 500 companies. I am grateful to all our
directors for their counsel, contributions and commitment to the
highest standards of good corporate governance.
The earnings power — and the potential — of
S&P Global have created significant value for
you, our shareholders.
By returning cash to shareowners while investing in the most promising growth initiatives,
S&P Global has proven to be a responsible steward of shareholder capital. The actions the
management team took in 2017 and continues to take today are designed to enable S&P Global
to continue delivering superior results for all of its stakeholders.
Thank you for your support.
Sincerely,
Charles E. “Ed” Haldeman, Jr.
Chairman of the Board
04
CEO’s Letter
Douglas L. Peterson
President and Chief Executive Officer
Dear Fellow Shareholder:
The shifting conditions that were the
backdrop to so many world events in 2017
are still front and center in many places.
Geopolitical risks and social movements are ongoing. New technologies are emerging. Public policies
and the regulatory landscape are changing. Customer expectations are evolving.
All of these factors have the potential to be disruptive. Amidst this period of uncertainty, S&P Global
must be agile and adaptable and possess the ingenuity and farsightedness to successfully navigate
a dynamic, complex and rapidly moving business environment.
In business, disruption can create opportunities for companies to be formed while it causes others
to disappear. Research indicates, for the first time, that new American companies are failing at a
faster rate than they are being started.
To capitalize on today’s greatest changes and to identify emerging trends, innovation is more
essential than ever. Improving operations and products are important but so is the way we develop
and execute our long-term strategy. Last year we began a future-defining project to ask our
customers and market participants about the geopolitical, regulatory, technological and economic
developments they face doing business. The powerful insights we gleaned from these conversations
have allowed us to develop a strategy and vision for what lies ahead — a belief that S&P Global will
power the markets of the future with its essential intelligence by delivering an exceptional,
differentiated customer experience across the globe.
05
This ambition is built on a rich heritage. For generations this Company has endured because of its
ability to adapt to shifting markets while remaining relevant to our customers. From our founding
during the first Industrial Revolution to the Big Data Analytics Revolution of today, businesses have
turned to us to help them make informed decisions.
Today the tradition of innovation, the spirit of
continuous improvement and the commitment
to operational excellence go on as we find
new ways to enhance our proprietary data, to
make better use of technology and to work
more closely together.
Today the tradition of innovation, the spirit of continuous improvement
and the commitment to operational excellence go on as we find new
ways to enhance our proprietary data, to make better use of technology
and to work more closely together.
In short, we envision a world of opportunities.
This approach coupled with favorable market conditions served us well
in 2017. I am very pleased that every business division generated organic
revenue growth and improved productivity.
13%
Organic
revenue
increased
in 2017
– Organic revenue increased 13%.
– Adjusted operating profit margins expanded 420 basis points to 47%.
– Adjusted diluted earnings per share grew 29%.
The underlying strength of each of our businesses was evident.
– Attractive credit conditions supported strong bond issuance and an increasing number of bank
loan ratings, which drove S&P Global Ratings’ positive results.
– The shift from actively managed funds to passive investments continued as S&P Dow Jones
Indices benefited from record funds flowing into exchange-traded funds associated with
our indices.
– The need for actionable insights based on unique and proprietary content from a wide range of
customers, beyond banks and investors, propelled S&P Global Market Intelligence.
– And the critical nature of our benchmark pricing data and analytics, together with a successful
push to diversify offerings into areas such as liquefied natural gas (LNG) and agriculture, helped
S&P Global Platts deliver another year of growth.
An exceptional performance in 2017 provides a strong foundation for growth in 2018. There is still
much work to be done, and we are excited about the initiatives underway across our Company to
deliver value to our customers and to further improve our own productivity during this time of change.
06
Detailed Capital Management Philosophy
Introduced in 2017
We are continuously analyzing a wide range of
internal investments and acquisitions, allocating
capital to the highest-returning projects and
holding our management team accountable.
We are focused on:
Responsible
stewardship
of shareholder
capital
Rigorous
framework
for capital
allocation
Business line
accountability
Capital light,
cash flow
generative
business
model
Businesses
competing
for capital
to optimize
portfolio
Being
disciplined
acquirers
Capital Returns to Shareholders
75%
of annual Free Cash Flow*
*excluding certain items
Annual Capital Expenditures
~$125M
Prudent Financial Profile
Remain investment-grade rated
$200M
Target average minimum U.S. cash
balance of $200 million
1.75 – 2.25
Target an adjusted gross leverage to
adjusted EBITDA ratio of 1.75 to 2.25
Acquisitions
Opportunities that
– Augment our benchmark, proprietary
data, and tools & analytics
capabilities
– Provide geographic diversification
– Bolster recurring revenues
– Create synergies
We are seizing opportunities to work together and with new
partners to leverage advanced technology that enables
future growth.
Technology is always a topic that comes up when I talk with other CEOs because of its potential
to change businesses and industries.
Artificial Intelligence (AI) and machine learning present both risks and opportunities. We are
responding with new solutions. As an example, S&P Global Market Intelligence has applied natural
language processing (NLP) to corporate earnings call transcripts to dissect the tone, complexity
and overall level of engagement with analysts as indicators of earnings sentiment to help investors
uncover new insights.
07
To succeed in the future, we will need to develop entire ecosystems of companies with these new
capabilities. In 2017, we made a number of investments in early-stage financial technology, or
fintech, firms that give us access to AI and predictive analytics. This presents opportunities to work
with innovative small businesses to test new solutions for customers.
To kick off 2018, we have reorganized our technology functions by establishing three operational
services teams specifically focused on Technology Innovations and Software Engineering, Data
Operations and Digital Infrastructure. These three teams are working closely together to ensure we
achieve the full potential of our data and the latest technologies.
In 2018, other ongoing technology priorities include protecting our Company, as we remain vigilant
about cybersecurity, and updating the technology and workflow tools that are essential to
our employees.
We see opportunities to build a stronger workforce.
We continue to thrive thanks to our diverse, global team and by promoting a work environment
focused on leadership development, career advancement and open feedback linked with
performance management.
Positioning the Company for growth in an age of technology disruption also means new investments
in our people. Over the last two years we’ve increased our hiring of software engineers and
developers, data and content managers, information security specialists and other technology roles.
Technology and people are our two largest investments. But it’s not just about hiring. We also need
to give our technology teams, and all our employees, more advanced training. In 2017, we launched
a project called EssentialTech to enhance the technology acumen of our entire employee base and
provide the networks and tools necessary to help them compete and succeed.
How We Manage Our Company
We are driven by our vision to power the markets of the future. To achieve success in 2018,
we are focused on four critical areas.
Financial
We remain committed to strong financial performance
and to creating long-term value for our shareholders.
Customer
We will be a customer-oriented firm. New innovative
solutions and an enriched, modern user experience
are keys.
Operations
We strive for operational excellence in all we do.
Technology, data, risk and compliance are focal points.
People
We are creating a performance culture, and we are
committed to leadership development programs,
diversity and inclusion, and enhancing technology skills.
08
Expanding Diversity and Inclusion
Opportunities for Employees
The diverse characteristics, perspectives, ideas and backgrounds that our employees bring to
S&P Global give us a vital competitive edge. We embrace and support our employees’ diversity
in a variety of ways.
For example, our nine Employee Resource Groups support, engage and inspire our employees
by connecting people with shared interests, experiences and perspectives. The mission of
the ERGs is to attract and retain diverse talent, promote professional development, support
communities where we operate, spark innovation and expand business opportunities.
Our Employee Resource Groups
Adelante Hispanic and Latino Professionals
APEX Asian Professionals for Excellence
BOLD Black Organization for Leadership
and Development
LEAD Learning, Empowering and
Accelerating Digital
ParentsNet Working Parents and
Caregivers Network
REACH Recognize Employees of all Abilities,
Celebrate and Harness
Spectrum LGBTQ & Friends
VALOR Veterans and Allies Leading for
Organizational Results
WINS Women’s Initiative for Networking and Success
Employee Resource Group
Membership Is Growing Fast
Number of Employee Resource Group
Chapters Is Increasing
47.1%
53.9%
28
39
3,191
’15
4,910
’16
7,222
’17
’15
’16
56
’17
09
I visit customers around the world to listen and
learn about their aspirations, strategies and needs.
It’s one of the most interesting aspects of my role.
Becoming a more customer-oriented organization
is essential to our long-term success.
We are capitalizing on opportunities to optimize data, create new
platforms and deliver new insights.
The launch of the S&P Global Market Intelligence platform has been a massive data and technology
project that clearly demonstrates the value of our businesses increasingly working side by side.
One of the most visible ways we have been integrating the SNL Financial and S&P Capital IQ
businesses was the creation of a single platform for delivering essential intelligence to the markets.
Powerful visual displays of data and deep analytics reveal insights delivered in an intuitive design
that provide customers with the essential information they need, whenever they need it. One of the
important benefits of this project is that it was built as an S&P Global platform so that our other
businesses can build their own solutions on it for their own clients. In fact, S&P Global Platts and
the S&P Global Ratings teams are already taking advantage of this architecture and utilizing this
technology platform.
We recognize the opportunity to anticipate and fulfill evolving
customer needs.
I visit customers around the world to listen and learn about their aspirations, strategies and needs.
It’s one of the most interesting aspects of my role. Becoming a more customer-oriented organization
is essential to our long-term success.
To accomplish that we need to continually improve the client experience. One example is last year’s
introduction of Ratings360™ to corporate issuers. Ratings360™ is a new digital delivery system
that provides a comprehensive, 360-degree view of a company’s critical credit risk factors, along
with new tools, services and support, all in one easy-to-use and interactive platform. Ratings360™
is helping deepen customer relationships and it is one more way we are working together to
demonstrate our essential intelligence.
Another evolving customer need is the growing interest among companies and investors in
environmental, social and governance (ESG) issues. In this case we are increasingly collaborating
across our businesses to support market demand. Last year S&P Global Ratings launched
Green Evaluations, an asset-level environmental credential for investors interested in a more
10
comprehensive picture of the green impact and climate risk attributes of their portfolio. This is
an ongoing collaborative effort that has benefited from the environmental data and risk analysis
of Trucost, which S&P Dow Jones Indices acquired in 2016. Trucost has helped the Ratings team
develop the analytical framework, source the data and refine their overall approach to Green
Evaluations. We are encouraged by the enthusiasm for this new offering in the market.
The long-term growth potential of global capital markets offers exciting prospects to serve new
customers. We are interested in opportunities that augment our benchmark, proprietary data and
tools and analytics capabilities; provide geographic diversification, including in developing markets;
bolster recurring revenues; and/or provide synergies.
S&P Global Platts further demonstrates the work we’re doing to meet the evolving needs of
customers. We’ve heard from many customers who believe that our products and services can bring
added value, especially if they come together in a new way that allows them to connect the dots of a
commodity’s trade flow. The combination of rig information at the wellhead, pipeline flow data that
goes all the way to a shipping terminal and satellite tracking of cargo around the globe can be quite
powerful. By putting all those assets together to see the flow of commodity data gives a completely
new dynamic to an oil company, an airline or other customer developing business plans or trying to
improve a forecast. Bringing together this comprehensive set of data and forecasting tools is one of
the biggest growth engines for S&P Global Platts.
We are securing opportunities to address changes in the regulatory
and public policy environment.
New legislation and regulatory requirements that affect our business are emerging. We’re operating
under the assumption that in markets across the globe there will be increasing levels of regulation
and oversight for all of our businesses; however, compliance, risk
management and control functions are already part of our operations,
and integrity is a core value embedded in our culture.
In the U.S., tax reform legislation became law last year. As a result, we
estimate our effective corporate tax rate in 2018 will decline to a range
of 21% to 22.5% from an adjusted rate of 28.9% in 2017. The reduction
in our effective tax rate will generate approximately $200 million of
additional cash flow in 2018. Tax reform also resulted in a 22% increase
in our regular quarterly cash dividend, a $20 million contribution to
the S&P Global Foundation and improves our 2018 earnings per share
outlook by more than $1.00 per share.
$200M
The reduction in
our effective tax
rate will generate
approximately
$200 million of
additional cash
flow in 2018
We are always evaluating new rules in different countries to determine
their impact on our business. For example in Europe, recent regulatory
changes to the Markets in Financial Instruments Directive, or MiFID II, took effect and are likely to
disrupt the research industry but may also provide an opportunity for us to meet the evolving data
and research needs of customers.
11
$20M
2018
contribution
to S&P Global
Foundation
New Opportunities to Support
Communities and Economies
In 2018, to underscore our commitment to powering more
inclusive and sustainable economies and thriving global
communities, S&P Global has increased its investments in a
range of philanthropic and public engagement programs. In
February, we announced that as a result of U.S. tax reform we
are contributing $20 million to the S&P Global Foundation that
will support non-profit organizations that are aligned with our
Corporate Responsibility (CR) strategy.
Our CR strategy leverages the essential connections between
our capabilities and the needs of society. We focus our efforts
where our skills can make a real difference by:
– providing tools for sustainable investment while minimizing
our own environmental footprint;
– accelerating and promoting science, technology,
engineering, and math (STEM) skill development; and
– breaking down barriers to capital for women entrepreneurs.
This focused strategy has resulted in:
– thousands of our employees volunteering as part of our
Community Impact Month initiative to support hundreds of
community projects worldwide;
– an expanded Disaster Relief Matching Gift program after
natural disasters struck around the world and employees
volunteered to support the hardest hit neighborhoods;
– a wide variety of programs to support women entrepreneurs
and business leaders, including promoting the flow of
resources and capital to enterprises owned and managed by
women; and
– CarbonNeutral® Business Travel Certification through
investments in renewable energy projects globally.
12
On behalf of my 20,000 colleagues, I want to thank
our customers, our shareholders and our partners
for putting their trust in S&P Global and our ability
to deliver essential intelligence to power the
markets of the future.
We see a world of opportunity to power the markets of
the future.
I am really proud of the way our employees are responding to change. I am grateful for their
enthusiasm, dedication and teamwork. Our collective ability to collaborate in new ways, to thrive
in evolving markets and to leverage new technologies creates exciting new global opportunities.
One thing that does not change is our commitment to our core values of relevance, excellence and
integrity. Providing relevant solutions, embracing teamwork and acting with transparency are the
principles that guide everything we do.
On behalf of my 20,000 colleagues, I want to thank our customers, our shareholders and our partners
for putting their trust in S&P Global and our ability to deliver essential intelligence to power the
markets of the future.
Sincerely,
Douglas L. Peterson
President and Chief Executive Officer
Reconciliation of Non-GAAP Financial Information
The Company reports its financial results in accordance with accounting principles generally accepted in the United States
(“GAAP”). The following is provided to supplement certain non-GAAP financial measures discussed in the letter to shareholders
and the financial highlights section of this report (IFC–page 12) both as reported (on a GAAP basis) and as adjusted by excluding
certain items (Non-GAAP) as explained below. The Company’s non-GAAP measures include adjustments that reflect how man-
agement views our businesses. The Company believes these non-GAAP financial measures provide useful supplemental infor-
mation that, in the case of non-GAAP financial measures other than free cash flow and free cash flow excluding certain items,
enables investors to better compare the Company’s performance across periods, and management also uses these measures
internally to assess the operating performance of its business, to assess performance for employee compensation purposes and
to decide how to allocate resources. The Company believes that the presentation of free cash flow and free cash flow excluding
certain items allows investors to evaluate the cash generated from our underlying operations in a manner similar to the method
used by management and that such measures are useful in evaluating the cash available to us to prepay debt, make strategic
acquisitions and investments, and repurchase stock. However, investors should not consider any of these non-GAAP measures
in isolation from, or as a substitute for, the financial information that the Company reports.
S&P Global 2017 Annual Report 13
OPERATING RESULTS BY SEGMENT — REPORTED VS. PERFORMANCE
Non-GAAP Financial Information
Periods ended December 31, 2017 and 2016 (dollars in millions, except per share amounts)
Adjusted Operating Profit
(unaudited)
Ratings
Operating Profit
Non-GAAP Adjustments (a)
Deal- Related Amortization
Adjusted Operating Profit
Market and Commodities Intelligence
Operating Profit
Non-GAAP Adjustments (b)
Deal- Related Amortization
Adjusted Operating Profit
S&P Dow Jones Indices
Operating Profit
Deal- Related Amortization
Adjusted Operating Profit
Total Segments
Operating Profit
Non-GAAP Adjustments (a) (b)
Deal- Related Amortization
Adjusted Segment Operating Profit
Unallocated Expense
Unallocated Expense
Non-GAAP Adjustments (c)
Adjusted Unallocated Expense
Total SPGI
Operating Profit
Non-GAAP Adjustments (a) (b) (c)
Deal- Related Amortization
Adjusted Operating Profit
Adjusted Interest Expense
(unaudited)
Interest Expense
Non-GAAP Adjustments (d)
Adjusted Interest Expense
Adjusted Provision for Income Taxes
(unaudited)
Provision for Income Taxes
Non-GAAP Adjustments (a) (b) (c) (d) (e)
Deal- Related Amortization
Adjusted Provision for Income Taxes
14 S&P Global 2017 Annual Report
Twelve Months
2017
2016
% Change
$ 1,524
80
4
$ 1,608
$ 793
33
87
$ 913
$ 471
7
$ 478
$ 2,788
112
98
$ 2,998
$ (178)
37
$ (141)
$ 2,610
149
98
$ 2,857
$ 1,262
(4)
5
$ 1,263
$ 1,822
(1,027)
85
$ 881
$ 412
6
$ 417
$ 3,496
(1,031)
96
$ 2,561
$
(127)
(3)
$
(130)
$ 3,369
(1,034)
96
$ 2,431
21%
27%
(56)%
4%
14%
14%
(20)%
17%
40%
9%
(23)%
18%
2017
$ 149
—
$ 149
Twelve Months
2016
$ 181
(21)
$ 160
2017
$ 823
(75)
34
$ 782
Twelve Months
2016
$ 960
(265)
34
$ 729
% Change
(18)%
(7)%
% Change
(14)%
7%
Adjusted Effective Tax Rate
(unaudited)
Adjusted Operating Profit
Adjusted Interest Expense
Adjusted Income Before Taxes on Income (1)
Adjusted Provision for Income Taxes (2)
Adjusted Effective Tax Rate (2)/(1)
2017
$ 2,857
(149)
2,708
782
Twelve Months
2016
% Change
$ 2,431
(160)
2,271
729
18%
19%
28.9%
32.1%
Adjusted Net Income Attributable to SPGI and Adjusted Diluted EPS
(unaudited)
2017
Net Income
Attributable
to SPGI
Diluted
EPS
2016
Net Income
Attributable
to SPGI
Twelve Months
As Reported
Non-GAAP Adjustments (a) (b) (c)
Deal- Related Amortization
Adjusted
$ 1,496
224
64
$ 1,784
$ 5.78
0.87
0.25
$ 6.89
Note — Totals presented may not sum due to rounding.
$ 2,106
(748)
62
% Change
Net Income
Attributable
to SPGI
Diluted
EPS
(29)%
(27)%
Diluted
EPS
$ 7.94
(2.82)
0.23
$ 1,420
$ 5.35
26%
29%
Note — Total SPGI adjusted operating profit for the twelve months ended December 31, 2017 include revenue of $6,063 million and adjusted total expense of
$3,206 million. Total SPGI adjusted operating profit for the twelve months ended December 31, 2016 include revenue of $5,661 million and adjusted total expense
of $3,230 million.
Note — Adjusted operating margin for Ratings, Market and Commodities Intelligence and S&P Dow Jones Indices was 54%, 37% and 65% for the twelve months
ended December 31, 2017. Adjusted operating margin for the Company was 47% for the twelve months ended December 31, 2017.
(a) 2017 includes legal settlement expenses $55 million ($34 million after-tax) and employee severance charges of $25 million ($17 million after-tax). 2016 includes
a benefit related to net legal settlement insurance recoveries of $10 million ($4 million after-tax) and employee severance charges of $6 million ($3 million
after-tax).
(b) 2017 includes non-cash acquisition and disposition- related adjustments of $15 million ($7 million after-tax), employee severance charges of $9 million ($7 mil-
lion after-tax), a charge to exit a leased facility of $6 million ($3 million after-tax), and an asset-write off of $2 million ($1 million after-tax). 2016 includes a gain
on dispositions of $1.1 billion ($818 million after-tax), disposition- related costs of $48 million ($42 million after-tax), a technology- related impairment charge of
$24 million ($16 million after-tax) and an acquisition- related cost of $1 million ($1 million after-tax).
(c) 2017 includes a charge to exit leased facilities of $19 million ($16 million after-tax), a pension related charge of $8 million ($7 million after-tax), and employee
severance charges of $10 million ($6 million after-tax). 2016 includes $3 million ($2 million after-tax) from a disposition- related reserve release.
(d) 2016 includes a redemption fee of $21 million ($13 million after-tax) related to the early payment of our senior notes.
(e) 2017 includes $149 million of tax expense due to U.S. tax reform, primarily associated with the deemed repatriation of foreign earnings, which was partially offset
by a $21 million tax benefit related to prior year divestitures.
S&P GLOBAL ORGANIC REVENUE
(unaudited)
Total revenue
Market and Commodities Intelligence acquisitions, divestitures and
product closures
S&P Dow Jones Indices acquisition
Total adjusted revenue
2017
$ 6,063
(30)
(3)
$ 6,030
Twelve Months
2016
$ 5,661
(333)
—
$ 5,328
% Change
7%
13%
S&P Global 2017 Annual Report 15
18 Management’s Discussion and Analysis
46 Consolidated Statements of Income
47 Consolidated Statements of Comprehensive Income
48 Consolidated Balance Sheets
49 Consolidated Statements of Cash Flows
50 Consolidated Statements of Equity
51 Notes to the Consolidated Financial Statements
88 Five Year Financial Review
89 Report of Management
90 Report of Independent Registered Public Accounting Firm
92 Shareholder Information
IBC Directors and Principal Executives
16 S&P Global 2017 Annual Report
2017
Financial
Performance
Management’s Discussion and Analysis of
Financial Condition and Results of Operations
The following Management’s Discussion and Analysis (“MD&A”)
Market and Commodities Intelligence is a global provider of
provides a narrative of the results of operations and financial
multi-asset-class data, research and analytical capabilities,
condition of S&P Global Inc. (together with its consolidated
which integrate cross-asset analytics and desktop services
subsidiaries, the “Company,” “we,” “us” or “our”) for the years
and deliver their customers in the commodity and energy
ended December 31, 2017 and 2016, respectively. The MD&A
markets access to high-value information, data, analytic
should be read in conjunction with the consolidated financial
services and pricing and quality benchmarks. We completed
statements and accompanying notes included in this Annual
the sale of J.D. Power on September 7, 2016, with the results
Report on Form 10-K for the year ended December 31, 2017,
included in Market and Commodities Intelligence results
which have been prepared in accordance with accounting prin-
through that date.
ciples generally accepted in the U.S. (“U.S. GAAP”).
Indices is a global index provider maintaining a wide variety
The MD&A includes the following sections:
Overview
Results of Operations
of valuation and index benchmarks for investment advisors,
wealth managers and institutional investors.
In December of 2017, we announced that S&P Global Platts,
Liquidity and Capital Resources
a business line within Market and Commodities Intelligence,
Reconciliation of Non-GAAP Financial Information
will be managed as a separate business and comprise a sep-
Critical Accounting Estimates
Recent Accounting Standards
Certain of the statements below are forward- looking state-
ments within the meaning of the Private Securities Litigation
Reform Act of 1995. In addition, any projections of future
results of operations and cash flows are subject to substantial
uncertainty. See Forward- Looking Statements on page 44
of this report.
Overview
We are a leading provider of transparent and independent rat-
ings, benchmarks, analytics and data to the capital and com-
modity markets worldwide. The capital markets include asset
managers, investment banks, commercial banks, insurance
companies, exchanges, trading firms and issuers; and the com-
modity markets include producers, traders and intermediaries
within energy, metals, petrochemicals and agriculture.
Our operations consist of three reportable segments: Ratings,
Market and Commodities Intelligence and S&P Dow Jones
Indices (“Indices”).
Ratings is an independent provider of credit ratings, research
and analytics, offering investors and other market partici-
pants information, ratings and benchmarks.
arate reportable segment effective January 1, 2018. We will
begin reporting the financial results of S&P Global Market
Intelligence and S&P Global Platts as separate reportable seg-
ments beginning with the first quarter of 2018.
MAJOR PORTFOLIO CHANGES
The following significant changes by segment were made to
our portfolio during the three years ended December 31, 2017:
2016
Market and Commodities Intelligence
In October of 2016, we completed the sale of Standard &
Poor’s Securities Evaluations, Inc. (“SPSE”) and Credit Market
Analysis (“CMA”) for $425 million in cash to Intercontinental
Exchange, an operator of global exchanges, clearing houses
and data services. During year ended December 31, 2016, we
recorded a pre-tax gain of $364 million ($297 million after-
tax) in gain on dispositions in the consolidated statement of
income related to the sale of SPSE and CMA.
In September of 2016, we completed the sale of J.D. Power
for $1.1 billion to XIO Group, a global alternative invest-
ments firm headquartered in London. During the year ended
December 31, 2016, we recorded a pre-tax gain of $728 mil-
lion ($516 million after-tax) in gain on dispositions in the
consolidated statement of income related to the sale of
J.D. Power.
18 S&P Global 2017 Annual Report
In September of 2016, we acquired PIRA Energy Group
investors, corporations, and regulators make decisions,
(“PIRA”), a global provider of energy research and forecasting
improve efficiency, and manage risk.
products and services. The purchase enhances Market and
In July of 2015, we acquired the entire issued share capital of
Commodities Intelligence’s energy analytical capabilities by
Petromedia Ltd and its operating subsidiaries (“Petromedia”),
expanding its oil offering and strengthening its position in the
an independent provider of data, intelligence, news and
natural gas and power markets.
tools to the global fuels market that offers a suite of prod-
In June of 2016, we acquired RigData, a provider of daily
ucts providing clients with actionable data and intelligence
information on rig activity for the natural gas and oil markets
that enable informed decisions, minimize risk and increase
across North America. The purchase enhances Market and
efficiency.
Commodities Intelligence’s energy analytical capabilities by
strengthening its position in natural gas and enhancing its
oil offering.
2015
Market and Commodities Intelligence
In 2015, we further reduced our real estate footprint by com-
pleting the consolidation of our corporate headquarters with
our operations in New York City.
Increased Shareholder Return
During the three years ended December 31, 2017, we have
In September of 2015, we acquired SNL Financial LC (“SNL”)
returned approximately $4.3 billion to our shareholders
for $2.2 billion. SNL is a global provider of news, data, and
through a combination of share repurchases and our quarterly
analytical tools to five sectors in the global economy: finan-
dividends: we completed share repurchases of approximately
cial services, real estate, energy, media & communications,
$3.1 billion and distributed regular quarterly dividends totaling
and metals & mining. SNL delivers information through its
approximately $1.2 billion. Also, on February 2, 2018, the Board
suite of web, mobile and direct data feed platforms that
of Directors approved an increase in the quarterly common
helps clients, including investment and commercial banks,
stock dividend from $0.41 per share to $0.50 per share.
KEY RESULTS
(in millions)
Revenue
Operating profit 2
% Operating margin
Diluted earnings per share from net income
Year ended December 31,
% Change 1
2017
$ 6,063
$ 2,610
2016
$ 5,661
$ 3,369
2015
$ 5,313
$ 1,917
43%
60%
36%
’17 vs ’16
’16 vs ’15
7%
(23)%
7%
76%
89%
$ 5.78
$ 7.94
$ 4.21
(27)%
1 % changes in the tables throughout the MD&A are calculated off of the actual number, not the rounded number presented.
2 2017 includes legal settlement expenses of $55 million, employee severance charges of $44 million, a charge to exit leased facilities of $25 million, non-
cash acquisition and disposition- related adjustments of $15 million, a pension related charge of $8 million and an asset write-off of $2 million. 2016 includes
a $1.1 billion gain from our dispositions, a benefit related to net legal settlement insurance recoveries of $10 million, disposition- related costs of $48 mil-
lion, a technology- related impairment charge of $24 million, employee severance charges of $6 million, a $3 million disposition- related reserve release and
acquisition- related costs of $1 million. 2015 includes costs related to identified operating efficiencies primarily related to employee severance charges of
$56 million, net legal settlement expenses of $54 million, acquisition- related costs of $37 million and a gain of $11 million on the sale of our interest in a
legacy McGraw Hill Construction investment. 2017, 2016 and 2015 also includes amortization of intangibles from acquisitions of $98 million, $96 million, and
$67 million, respectively.
S&P Global 2017 Annual Report 19
2017
Revenue increased 7% driven by increases at Ratings
Operating profit increased 76%. Excluding the favorable impact
of the gain from our dispositions of 59 percentage points,
and Indices, partially offset by a decrease at Market and
higher net legal settlement insurance recoveries in 2016 of
Commodities Intelligence. The increase at Ratings was primar-
3 percentage points, higher employee severance charges in
ily due to growth in bank loan ratings revenue and corporate
2015 of 3 percentage points and higher acquisition- related
bond ratings revenue. Revenue growth at Indices was primarily
costs in 2015 of 2 percentage points, partially offset by the
due to higher levels of assets under management for exchange
unfavorable impact of higher disposition- related costs of
traded funds (“ETFs”) and mutual funds. The decrease at
3 percentage points, higher amortization of intangibles from
Market and Commodities Intelligence was primarily due to the
acquisitions of 2 percentage points and a technology- related
disposition of non-core businesses in 2016, partially offset by
impairment charge of 1 percentage point, operating profit
annualized contract value growth in the S&P Global Market
increased 15%. This increase was primarily driven by revenue
Intelligence Desktop and Global Risk Services products and
growth as discussed above. Decreased costs at Ratings and
continued demand for Platts’ proprietary content at S&P
our legacy Capital IQ business due to reduced headcount fol-
Global Platts.
lowing our 2015 restructuring actions also contributed to oper-
Operating profit decreased 23%. Excluding the unfavorable
impact of the gain on dispositions in 2016 of 37 percentage
points, higher net legal settlement expenses in 2017 of 2 per-
centage points, higher employee severance charges in 2017 of
1 percentage point, a charge to exit leased facilities of 1 per-
centage point and non-cash acquisition and disposition- related
adjustments in 2017 of 1 percentage point, partially offset by
the favorable impact of higher disposition- related costs in 2016
of 1 percentage point, operating profit increased 18%. This
increase was primarily due to revenue growth at Ratings and
ating profit growth.
OUR STRATEGY
We are a leading provider of transparent and independent
ratings, benchmarks, analytics and data to the capital and
commodity markets worldwide. Our purpose is to provide the
intelligence that is essential for companies, governments
and individuals to make decisions with conviction. We seek to
deliver on this purpose within the framework of our core values
of integrity, excellence and relevance.
Indices as discussed above, partially offset by higher compen-
We seek to deliver an exceptional, differentiated customer expe-
sation costs due to increased incentive costs and additional
rience across the globe. We strive for operational excellence,
headcount.
2016
Revenue increased 7% driven by increases at all of our report-
continuous innovation, and a high performance culture driven
by our best-in-class talent. In 2018, we will strive to deliver on
our strategic priorities in the following four categories by:
able segments. Revenue growth at Market and Commodities
Finance
Intelligence was favorably impacted by the acquisition of
Achieving financial targets and creating shareholder value
SNL in September of 2015 and annualized contract value
by focusing on organic revenue growth and continuing to
growth primarily driven by the S&P Capital IQ Desktop, Global
deliver margin expansion with a focus on operating leverage
Risk Services and certain data feed products within Data
and efficiency opportunities; and
Management Solutions. Continued demand for S&P Global
Outperforming traditional and nontraditional competitors.
Platts’ proprietary content also contributed to revenue growth.
These increases were partially offset by the unfavorable impact
Customer
from our dispositions in 2016. Revenue growth at Ratings was
Delivering greater customer value through deeper client
driven by an increase in U.S. bank loan ratings revenue, cor-
and market insights, innovative solutions, stronger internal
porate bond ratings revenue and surveillance fees. Revenue
teamwork and reliable, nimble Go-to- Market processes;
growth at Indices was due to higher average levels of assets
Enriching and modernizing the user experience to improve
under management for ETFs and mutual funds, an increase
customer loyalty;
in data revenue and higher volumes for exchange- traded
Identifying and executing transformative growth opportu-
derivatives.
nities; and
Accelerating investments and coordination in building new
products and in developing new markets.
20 S&P Global 2017 Annual Report
Operations
Committing to leadership development programs and skills
Enhancing planning and software engineering processes to
training;
speed up the delivery of content and products;
Embracing and expanding diversity and inclusion in our
Applying lean management, robotics, automation and
workforce; and
machine learning to streamline internal workflow and deliver
Enhancing and augmenting technology talent and skills
productivity;
across the company.
Strengthening our Digital Infrastructure capabilities, with
emphasis on workplace services and cybersecurity; and
Upholding our commitment to a disciplined and practical
risk, control and compliance environment.
People
Creating a performance culture to drive innovation, flexibility
There can be no assurance that we will achieve success in
implementing any one or more of these strategies as a variety
of factors could unfavorably impact operating results, including
prolonged difficulties in the global credit markets and a change
in the regulatory environment affecting our businesses. See
Item 1a, Risk Factors, in this Annual Report on Form 10-K.
and agility to address customer needs;
Further projections and discussion on our 2018 outlook for our
segments can be found within “Results of Operations”.
Results of Operations
CONSOLIDATED REVIEW
(in millions)
Revenue
Expenses:
Operating- related expenses
Selling and general expenses
Depreciation and amortization
Total expenses
Gain on dispositions
Operating profit
Interest expense, net
Provision for taxes on income
Net income
Year ended December 31,
% Change
2017
2016
2015
’17 vs ’16
’16 vs ’15
$ 6,063
$ 5,661
$ 5,313
7%
7%
1,713
1,560
180
3,453
1,773
1,439
181
3,393
1,718
1,532
157
3,407
(3)%
8%
(1)%
2%
—
(1,101)
(11)
N/M
2,610
149
823
1,638
3,369
181
960
2,228
1,917
102
547
1,268
(23)%
(18)%
(14)%
(27)%
16%
(29)%
3%
(6)%
15%
—%
N/M
76%
77%
76%
76%
9%
82%
Less: net income attributable to noncontrolling interests
(142)
(122)
(112)
Net income attributable to S&P Global Inc.
$ 1,496
$ 2,106
$ 1,156
N/M — not meaningful
S&P Global 2017 Annual Report 21
REVENUE
(in millions)
Subscription / Non- transaction revenue
Asset- linked fees
Non- subscription / Transaction revenue
% of total revenue:
Subscription / Non- transaction revenue
Asset- linked fees
Non- subscription / Transaction revenue
U.S. revenue
International revenue:
European region
Asia
Rest of the world
Total international revenue
% of total revenue:
U.S. revenue
International revenue
Year ended December 31,
% Change
2017
2016
2015
’17 vs ’16
’16 vs ’15
$ 3,796
$ 461
$ 1,806
$ 3,623
$ 381
$ 1,657
$ 3,260
$ 369
$ 1,684
5%
21%
9%
11%
3%
(2)%
63%
7%
30%
64%
7%
29%
61%
7%
32%
$ 3,658
$ 3,461
$ 3,202
6%
1,473
594
338
1,330
575
295
1,265
566
280
$ 2,405
$ 2,200
$ 2,111
11%
3%
14%
9%
8%
5%
2%
6%
4%
60%
40%
61%
39%
60%
40%
2017 Revenue by Type
2017 Revenue by Geographic Area
Non-subscription/
Transaction
30%
Subscription/
Non-transaction
63%
Rest of the World
6%
Asia
10%
U.S.
60%
Asset-linked fees
7%
European
Region
24%
22 S&P Global 2017 Annual Report
2017
Revenue increased 7% as compared to 2016. Subscription /
2016
Revenue increased 7% as compared to 2015. Subscription /
non- transaction revenue increased primarily from growth in
non- transaction revenue increased primarily from the favor-
S&P Global Market Intelligence’s average contract values, con-
able impact of the acquisition of SNL in September 2015,
tinued demand for Platts’ proprietary content and an increase
growth in average contract values for our legacy Capital IQ
in surveillance fees at Ratings, partially offset by the unfavor-
products driven by an expansion in new and existing accounts,
able impact of the disposition of non-core businesses in 2016.
continued demand for S&P Global Platts’ proprietary content
Asset- linked fees increased due to the impact of higher levels
and an increase in surveillance fees at Ratings. Asset- linked
of assets under management for ETFs and mutual funds. Non-
fees increased due to higher levels of assets under manage-
subscription / transaction revenue increased primarily due to
ment for ETFs and mutual funds. Non- subscription / transac-
bank loan ratings revenue and corporate bond ratings reve-
tion revenue decreased primarily due to the unfavorable impact
nue at Ratings, partially offset by the unfavorable impact of
of the sale of J.D. Power on September 7, 2016, partially offset
the disposition of non-core businesses in 2016. See “Segment
by an increase in U.S. bank loan ratings revenue and corpo-
Review” below for further information.
rate bond ratings revenue at Ratings and higher volumes for
Foreign exchange rates had a negligible impact on revenue. This
impact refers to constant currency comparisons estimated by
exchange traded derivatives at Indices. See “Segment Review”
below for further information.
recalculating current year results of foreign operations using
Foreign exchange rates had a negligible impact on revenue. This
the average exchange rate from the prior year.
impact refers to constant currency comparisons estimated by
recalculating current year results of foreign operations using
the average exchange rate from the prior year.
TOTAL EXPENSES
The following tables provide an analysis by segment of our operating- related expenses and selling and general expenses for the
years ended December 31, 2017 and 2016:
(in millions)
Ratings 1
Market and Commodities Intelligence 2
Indices
Intersegment eliminations 3
Total segments
Corporate 4
N/M — not meaningful
2017
2016
% Change
Operating-
related
expenses
Selling and
general
expenses
Operating-
related
expenses
Selling and
general
expenses
Operating-
related
expenses
Selling and
general
expenses
$ 850
833
139
(109)
1,713
—
$ 581
699
111
—
1,391
169
$ 797
958
116
(98)
1,773
—
$ 442
774
104
—
1,320
119
$ 1,713
$ 1,560
$ 1,773
$ 1,439
7%
(13)%
21%
(12)%
(3)%
N/M
(3)%
32%
(10)%
7%
N/M
5%
42%
8%
1 In 2017, selling and general expenses include legal settlement expenses of $55 million and employee severance charges of $25 million. In 2016, selling and general
expenses include a benefit related to net legal settlement insurance recoveries of $10 million and employee severance charges of $6 million.
2 In 2017, selling and general expenses include non-cash acquisition and disposition- related adjustments of $15 million, employee severance charges of $9 mil-
lion, a charge to exit a leased facility of $6 million, and an asset write-off of $2 million. In 2016, selling and general expenses include disposition- related costs of
$48 million, a technology- related impairment charge of $24 million and acquisition- related costs of $1 million.
3 Intersegment eliminations relate to a royalty charged to Market and Commodities Intelligence for the rights to use and distribute content and data developed
by Ratings.
4 In 2017, selling and general expenses include a charge to exit leased facilities of $19 million, employee severance charges of $10 million and a pension related
charge of $8 million. In 2016, selling and general expenses include $3 million from a disposition- related reserve release.
S&P Global 2017 Annual Report 23
Operating- Related Expenses
Operating- related expenses decreased $60 million or 3% as
in 2017 of 2 percentage points and non-cash acquisition and
disposition related costs in 2017 of 1 percentage point, partially
compared to 2016. The decrease at Market and Commodities
offset by the favorable impact of higher disposition- related
Intelligence was due to the disposition of non-core businesses
costs in 2016 of 3 percentage points and a technology- related
in 2016. This decrease was partially offset by increases at
impairment charge in 2016 of 2 percentage points, selling and
Ratings and Indices due to higher compensation costs related
general expenses increased 3 percentage points. The increase
to increased incentive costs and additional headcount.
is due to higher compensation costs related to incentives and
Selling and General Expenses
Selling and general expenses increased 8%. Excluding the unfa-
at Corporate primarily due to performance related incentive
compensation and Company-wide technology projects. This
vorable impact of higher net legal settlement expenses in 2017
increase was partially offset by a decrease at Market and
of 4 percentage points, higher employee severance charges in
Commodities Intelligence as a result of business divestitures
additional headcount at Ratings and Indices and an increase
2017 of 3 percentage points, a charge to exit leased facilities
in 2016.
Depreciation and Amortization
Depreciation and amortization remained relatively unchanged as compared to 2016, decreasing $1 million or 1%.
The following tables provide an analysis by segment of our operating- related expenses and selling and general expenses for the
years ended December 31, 2016 and 2015:
(in millions)
Ratings 1
Market and Commodities Intelligence 2
Indices
Intersegment eliminations 3
Total segments
Corporate 4
N/M — not meaningful
2016
2015
% Change
Operating-
related
expenses
Selling and
general
expenses
Operating-
related
expenses
Selling and
general
expenses
Operating-
related
expenses
Selling and
general
expenses
$ 797
958
116
(98)
1,773
—
$ 442
774
104
—
1,320
119
$ 767
925
114
(88)
1,718
—
$ 541
769
82
—
1,392
140
$ 1,773
$ 1,439
$ 1,718
$ 1,532
4%
4%
1%
(10)%
3%
N/M
3%
(18)%
1%
26%
N/M
(5)%
(15)%
(6)%
1 In 2016, selling and general expenses include a benefit related to net legal settlement insurance recoveries of $10 million and employee severance charges of
$6 million. In 2015, selling and general expenses include net legal settlement expenses of $54 million and employee severance charges $13 million.
2 In 2016, selling and general expenses include disposition- related costs of $48 million, a technology- related impairment charge of $24 million and
acquisition- related costs of $1 million. In 2015, selling and general expenses include acquisition- related costs related to the acquisition of SNL of $37 million
and costs related to identified operating efficiencies primarily related to employee severance charges of $33 million.
3 Intersegment eliminations relate to a royalty charged to Market and Commodities Intelligence for the rights to use and distribute content and data developed
by Ratings.
4 In 2016, selling and general expenses include $3 million from a disposition- related reserve release and 2015 includes costs related to identified operating
efficiencies primarily related to employee severance charges of $10 million.
Operating- Related Expenses
Operating- related expenses increased $55 million or 3% as
Selling and General Expenses
Selling and general expenses decreased 6%. Excluding the
compared to 2015. The increase at Market and Commodities
favorable impact of higher net legal settlement insurance
Intelligence was primarily driven by the acquisition of SNL in
recoveries in 2016 of 4 percentage points, higher employee
September of 2015, partially offset by decreases from our dis-
severance charges in 2015 of 3 percentage points, higher
positions in 2016. The increase at Ratings and Indices were due
acquisition- related costs in 2015 of 2 percentage points, par-
to higher compensation costs related to additional headcount
tially offset by the unfavorable impact of disposition- related
and increased incentive costs.
costs of 3 percentage points and a technology- related
impairment charge of 1 percentage point, selling and general
expenses decreased 1%. Decreases at Ratings were driven
by reduced professional fees following the completion of the
24 S&P Global 2017 Annual Report
Company’s program for the 2015 implementation of the Dodd-
operator of global exchanges, clearing houses and data ser-
Frank Wall Street Reform and Consumer Protection Act and
vices. We recorded a pre-tax gain of $364 million in gain on
reduced legal fees following the resolution of a number of sig-
dispositions in the consolidated statement of income related
nificant legal matters. This decrease was partially offset by
to the sale of SPSE and CMA. Additionally, in October of 2016,
an increase at Market and Commodities Intelligence driven by
we completed the sale of Equity and Fund Research (“Equity
the acquisition of SNL in September of 2015, partially offset by
Research”) to CFRA, a leading independent provider of foren-
decreases from our dispositions in 2016.
sic accounting research, analytics and advisory services.
Depreciation and Amortization
Depreciation and amortization increased $24 million or 15%
During the year ended December 31, 2016, we recorded a
pre-tax gain of $9 million in gain on dispositions in the con-
solidated statement of income related to the sale of Equity
as compared to 2015, primarily due to higher intangible asset
Research.
amortization in 2016 from the acquisition of SNL in September
In September of 2016, we completed the sale of J.D. Power
of 2015.
GAIN ON DISPOSITIONS
During 2016, we completed the following transactions that
resulted in a pre-tax gain of $1.1 billion in gain on dispositions
in the consolidated statement of income:
In October of 2016, we completed the sale of SPSE and CMA
for $425 million in cash to Intercontinental Exchange, an
for $1.1 billion to XIO Group, a global alternative investments
firm headquartered in London. We recorded a pre-tax gain of
$728 million in gain on dispositions in the consolidated state-
ment of income related to the sale of J.D. Power.
During 2015, we completed the sale of our interest in a legacy
McGraw Hill Construction investment that resulted in a pre-tax
gain of $11 million in gain on dispositions in the consolidated
statement of income.
OPERATING PROFIT
We consider operating profit to be an important measure for evaluating our operating performance and we evaluate operating
profit for each of the reportable business segments in which we operate.
We internally manage our operations by reference to operating profit with economic resources allocated primarily based on each
segments contribution to operating profit. Segment operating profit is defined as operating profit before unallocated expense.
Segment operating profit is not, however, a measure of financial performance under U.S. GAAP, and may not be defined and cal-
culated by other companies in the same manner.
The table below reconciles segment operating profit to total operating profit:
Year ended December 31,
% Change
(in millions)
Ratings 1
Market and Commodities Intelligence 2
Indices 3
Total segment operating profit
Unallocated expense 4
Total operating profit
N/M — not meaningful
2015
’17 vs ’16
’16 vs ’15
2017
$ 1,524
793
471
2,788
(178)
2016
$ 1,262
1,822
412
3,496
(127)
$ 1,078
585
392
2,055
(138)
$ 2,610
$ 3,369
$ 1,917
21%
(56)%
14%
(20)%
40%
(23)%
17%
N/M
5%
70%
(8)%
76%
1 2017 includes legal settlement expenses of $55 million and employee severance charges of $25 million. 2016 includes a benefit related to net legal settlement
insurance recoveries of $10 million and employee severance charges of $6 million. 2015 includes net legal settlement expenses of $54 million and employee sev-
erance charges of $13 million. 2017, 2016 and 2015 also includes amortization of intangibles from acquisitions of $4 million, $5 million and $5 million, respectively.
2 2017 includes non-cash acquisition and disposition- related adjustments of $15 million, employee severance charges of $9 million, a charge to exit a leased
facility of $6 million, and an asset write-off of $2 million. 2016 includes a $1.1 billion gain from our dispositions, disposition- related costs of $48 million, a
technology- related impairment charge of $24 million and an acquisition- related cost of $1 million. 2015 includes acquisition- related costs related to the acquisi-
tion of SNL of $37 million and costs identified operating efficiencies primarily related to employee severance charges of $33 million. 2017, 2016 and 2015 includes
amortization of intangibles from acquisitions of $87 million, $85 million and $57 million, respectively.
3 2017, 2016 and 2015 includes amortization of intangibles from acquisitions of $7 million, $6 million and $5 million, respectively.
4 2017 includes a charge to exit leased facilities of $19 million, employee severance charges of $10 million and a pension related charge of $8 million. 2016 includes
$3 million from a disposition- related reserve release. 2015 includes a gain of $11 million related to the sale of our interest in a legacy McGraw Hill Construction
investment and costs related to identified operating efficiencies primarily related to employee severance charges of $10 million.
S&P Global 2017 Annual Report 25
2017
SEGMENT OPERATING PROFIT — Decreased $0.7 billion, or
2 percentage points, partially offset by the unfavorable impact
of a technology- related impairment charge of 1 percentage
20% as compared to 2016. Excluding the unfavorable impact of
point, higher amortization of intangibles from acquisitions of
the gain on dispositions in 2016 of 36 percentage points, higher
2 percentage points and higher disposition- related costs of
net legal settlement expenses in 2017 of 2 percentage points,
2 percentage points, segment operating profit increased 13%.
higher employee severance charges in 2017 of 1 percentage
Revenue growth at Market and Commodities Intelligence,
point and non-cash acquisition and disposition- related adjust-
Ratings and Indices were the primary drivers for the increase.
ments in 2017 of 1 percentage point, partially offset by the
Decreased costs at Ratings and our legacy Capital IQ business
favorable impact of higher disposition- related costs in 2016
due to reduced headcount following our 2015 restructuring
of 2 percentage points and a technology- related impairment
actions also contributed to segment operating profit growth.
charge in 2016 of 1 percentage point, segment operating profit
See “Segment Review” below for further information.
increased 17%. This increase was primarily due to revenue
growth at Ratings and Indices as discussed above, partially off-
set by higher compensation costs due to additional increased
incentive costs and additional headcount. See “Segment
Review” below for further information.
UNALLOCATED EXPENSE — Decreased by $11 million or 8%
as compared to 2015. These expenses, included in selling and
general expenses, mainly include costs for corporate cen-
ter functions, select initiatives and unoccupied office space.
Excluding the unfavorable impact of a gain on the sale of our
UNALLOCATED EXPENSE — Increased by $51 million or 40%
interest in a legacy McGraw Hill Construction investment in
as compared to 2016. These expenses, included in selling and
2015 of 8 percentage points, partially offset by the favorable
general expenses, mainly include costs for corporate cen-
impact of a disposition- related reserve release of 2 percent-
ter functions, select initiatives and unoccupied office space.
age points and higher employee severance charges in 2015 of
Excluding the unfavorable impact of a charge to exit leased facil-
7 percentage points, unallocated expense decreased 7% due
ities in 2017 of 14 percentage points, a pension related charge
to higher 2016 pension income as well as a reduction in profes-
in 2017 of 7 percentage points, employee severance charges in
sional service fees.
2017 of 8 percentage points and a disposition- related reserve
release in 2016 of 2 percentage points, unallocated expense
increased 9%. This increase was primarily due to performance
related incentive compensation and Company-wide technol-
ogy projects.
Foreign exchange rates had a favorable impact on operating
profit of 2 percentage points. The foreign exchange rate impact
refers to constant currency comparisons and the remeasure-
ment of monetary assets and liabilities. Constant currency
impacts are estimated by recalculating current year results of
Foreign exchange rates had a favorable impact on operating
foreign operations using the average exchange rate from the
profit of 1 percentage point. The foreign exchange rate impact
prior year. Remeasurement impacts are based on the variance
refers to constant currency comparisons and the remeasure-
between current-year and prior-year foreign exchange rate
ment of monetary assets and liabilities. Constant currency
fluctuations on monetary assets and liabilities denominated
impacts are estimated by recalculating current year results of
in currencies other than the individual business’ functional
foreign operations using the average exchange rate from the
currency.
prior year. Remeasurement impacts are based on the variance
between current-year and prior-year foreign exchange rate
fluctuations on monetary assets and liabilities denominated
INTEREST EXPENSE, NET
Net interest expense for 2017 decreased $32 million or 18% as
in currencies other than the individual business’ functional
compared to 2016, primarily as a result of the favorable impact
currency.
2016
SEGMENT OPERATING PROFIT — Increased $1.4 billion, or
70% as compared to 2015. Excluding the favorable impact of
the gain from our dispositions of 55 percentage points, higher
net legal settlement insurance recoveries in 2016 of 3 percent-
age points, higher acquisition- related costs in 2015 of 2 per-
centage points, higher employee severance charges in 2015 of
of lower interest rates on the $500 million of senior notes
issued in 2016 compared to the $400 million senior notes that
were repaid in the third quarter of 2016.
Net interest expense for 2016 increased $79 million or 77%
as compared to 2015, primarily as a result of the $700 mil-
lion of senior notes issued in the second quarter of 2015, the
$2.0 billion of senior notes issued in the third quarter of 2015
and the $500 million of senior notes issued in the third quarter
of 2016. Additionally, net interest expense in 2016 includes a
26 S&P Global 2017 Annual Report
redemption fee on the early payment of our 5.9% senior notes
Our effective tax rate was 33.4% for 2017, and 30.1% for 2016
due in 2017. These increases were partially offset by the favor-
and 2015. The increase in 2017 was primarily due to the one-
able impact of lower interest rates on the $500 million of senior
time tax charge for the deemed repatriation of foreign earnings,
notes issued in the third quarter of 2016.
net of the recognition of excess tax benefits associated with
share-based payments in the statement of income and the
re- valuation of net U.S. deferred tax liabilities at the reduced
corporate income tax rate.
The Company is continuously subject to tax examinations in
various jurisdictions. In May 2017, the IRS issued a 30-Day
Letter proposing to increase the Company’s federal income
tax for the 2015 tax year by approximately $242 million. The
proposed increase relates primarily to the IRS’s proposed dis-
allowance of claimed tax deductions for certain amounts paid
in 2015 to settle lawsuits by nineteen states and the District of
Columbia. We vigorously disagree with the proposed adjust-
ment and have filed a formal protest with the IRS to contest the
matter before the IRS Appeals Office. This development does
not materially change our initial assessment of the deductibil-
ity of our settlement payments.
PROVISION FOR INCOME TAXES
Comprehensive tax legislation, enacted through the Tax Cuts
and Jobs Act (“TCJA”) on December 22, 2017, significantly
modified U.S. corporate income tax law. Provisional amounts
have been recorded in our financial statements based on the
Company’s initial analysis of the TCJA. The Company may
adjust these amounts in future periods if our interpretation
of the TCJA changes or as additional guidance from the U.S.
Treasury becomes available. As a result of the TCJA, a pro-
visional amount of $149 million has been recorded which
reflects a one-time tax charge of approximately $173 million
on the deemed repatriation of foreign earnings and a one-
time tax benefit of approximately $24 million in respect of the
re- valuation of net U.S. deferred tax liabilities at the reduced
corporate income tax rate. While the TCJA reduced net income
in 2017, the Company is anticipating an ongoing future benefit
from the lower corporate income tax rate.
Segment Review
RATINGS
Ratings is an independent provider of credit ratings, research
bank loan ratings; and
corporate credit estimates, which are intended, based on an
and analytics to investors, issuers and other market partici-
abbreviated analysis, to provide an indication of our opin-
pants. Credit ratings are one of several tools investors can use
ion regarding creditworthiness of a company which does not
when making decisions about purchasing bonds and other
currently have a Ratings credit rating.
fixed income investments. They are opinions about credit risk
and our ratings express our opinion about the ability and will-
ingness of an issuer, such as a corporation or state or city gov-
ernment, to meet its financial obligations in full and on time.
Our credit ratings can also relate to the credit quality of an indi-
vidual debt issue, such as a corporate or municipal bond, and
the relative likelihood that the issue may default.
Non- transaction revenue primarily includes fees for sur-
veillance of a credit rating, annual fees for customer
relationship-based pricing programs, fees for entity credit rat-
ings and global research and analytics. Non- transaction reve-
nue also includes an intersegment royalty charged to Market
and Commodities Intelligence for the rights to use and distrib-
ute content and data developed by Ratings. Royalty revenue
Ratings differentiates its revenue between transaction and
from Market and Commodities Intelligence for 2017, 2016 and
non- transaction. Transaction revenue primarily includes fees
2015 was $100 million, $92 million and $83 million, respectively.
associated with:
ratings related to new issuance of corporate and government
debt instruments, and structured finance debt instruments;
S&P Global 2017 Annual Report 27
(in millions)
Revenue
Transaction revenue
Non- transaction revenue
% of total revenue:
Transaction revenue
Non- transaction revenue
U.S. revenue
International revenue
% of total revenue:
U.S. revenue
International revenue
Operating profit 1
% Operating margin
Year ended December 31,
% Change
2015
’17 vs ’16
’16 vs ’15
2017
$ 2,988
$ 1,540
$ 1,448
2016
$ 2,535
$ 1,178
$ 1,357
$ 2,428
$ 1,107
$ 1,321
52%
48%
46%
54%
46%
54%
$ 1,716
$ 1,272
$ 1,462
$ 1,073
$ 1,390
$ 1,038
57%
43%
58%
42%
57%
43%
18%
31%
7%
17%
19%
4%
6%
3%
5%
3%
$ 1,524
$ 1,262
$ 1,078
21%
17%
51%
50%
44%
1 2017 includes legal settlement expenses of $55 million and employee severance charges of $25 million. 2016 includes a benefit related to net legal settlement
insurance recoveries of $10 million and employee severance charges of $6 million. 2015 includes net legal settlement expenses of $54 million and employee sev-
erance charges of $13 million. 2017, 2016 and 2015 also includes amortization of intangibles from acquisitions of $4 million, $5 million and $5 million, respectively.
2017
Revenue increased 18%. Transaction revenue grew primar-
2016
Revenue increased 4%, which includes the unfavorable impact
ily due to growth in bank loan ratings revenue in the U.S. and
of foreign exchange rates that reduced revenue by 1 percent-
Europe and an increase in corporate bond ratings revenue
age point. Transaction revenue increased due to growth in U.S.
driven by an increase in corporate bond issuance. The increase
bank loan ratings revenue and an increase in corporate bond
in bank loan ratings revenue was driven by refinancing activ-
ratings revenue largely driven by refinancing activity from the
ity from the low interest rate environment. The increase in
low interest rate environment, partially offset by a decrease in
structured finance revenue driven by increased U.S. collater-
structured finance revenue. Revenue growth benefited from
alized loan obligations and U.S. commercial mortgage- backed
increased contract realization. Non- transaction revenue grew
securities issuance also contributed to revenue growth. These
primarily due to an increase in surveillance fees, partially offset
increases were partially offset by a decline in public finance
by a decline in Ratings Evaluation Service activity.
revenue driven by lower state and municipal bond issuance.
Non- transaction revenue grew primarily due to an increase in
surveillance fees and higher entity credit ratings revenue.
Operating profit increased 17%. Excluding the favorable impact
of higher net legal settlement insurance recoveries in 2016 of
6 percentage points and lower employee severance charges in
Operating profit increased 21%. Excluding the unfavorable
2016 of 1 percentage point, operating profit increased 10%. The
impact of higher net legal settlement expenses in 2017 of
increase is due to both revenue growth and expense reduction.
5 percentage points and higher employee severance charges
Reduced expenses were primarily driven by reduced profes-
in 2017 of 1 percentage point, operating profit increased 27%.
sional fees following the completion of the Company’s program
This increase is primarily due to revenue growth, partially offset
for the 2015 implementation of the Dodd-Frank Wall Street
by higher compensation costs related to increased incentive
Reform and Consumer Protection Act and reduced legal fees
costs and additional headcount. A reduction in legal fees and
following the resolution of a number of significant legal mat-
professional service fees also had a favorable impact on oper-
ters. These decreases were partially offset by higher compen-
ating profit growth.
sation costs related to increased incentive costs and additional
headcount. Foreign exchange rates had a favorable impact on
operating profit of 1 percentage point.
28 S&P Global 2017 Annual Report
Market Issuance Volumes
We monitor market issuance volumes regularly within Ratings.
RMBS volume in the U.S. was up driven primarily by favorable
reaction to the new risk retention rules and favorable market
Market issuance volumes noted within the discussion that fol-
conditions leading to increased activity in single family rent-
lows are based on the domicile of the issuer. Issuance volumes
als, credit risk transfers, and non- qualified mortgage deals.
can be reported in two ways: by “domicile” which is based on
EMEA issuance declined as central bank liquidity schemes
where an issuer is located or where the assets associated with
provided other opportunities for funding sources.
an issue are located, or based on “marketplace” which is where
Covered bond (debt securities backed by mortgages or other
the bonds are sold. The following tables depict changes in mar-
high- quality assets that remain on the issuer’s balance
ket issuance levels as compared to the prior year, based on a
sheet) issuance in Europe was up partially due to the impact
composite of Thomson Financial, Harrison Scott Publications,
from the European Central Bank’s covered bond asset pur-
Dealogic and Ratings’ internal estimates.
chase program.
2017 Compared to 2016
Corporate Bond Issuance
U.S.
Europe
Global
High-yield issuance
Investment grade
Total new issue dollars —
Corporate issuance
24%
8%
10%
63%
(2)%
53%
1%
5%
6%
Corporate issuance in the U.S. and Europe was up as a result
of more favorable market conditions primarily due to tighten-
ing credit spreads and some issuers that went to market in
advance of expected interest rate increases. Both high-yield
Industry Highlights and Outlook
Revenue increased in 2017 primarily due to an increase in
bank loan ratings and corporate bond ratings revenue driven
by refinancing activity from the low interest rate environment.
High-yield and investment grade corporate issuance volumes
increased as a result of more favorable market conditions pri-
marily due to tightening credit spreads and some issuers that
went to market in advance of expected interest rate increases.
Legal and Regulatory Environment
and investment grade issuance comparisons also benefited
from weakness in 2016 due to market volatility and political
General
and economic uncertainty in the European markets.
Ratings and many of the securities that it rates are subject to
extensive regulation in both the U.S. and in other countries,
Structured Finance
U.S.
Europe
Global
impact the Company’s operations and the markets in which it
2017 Compared to 2016
and therefore existing and proposed laws and regulations can
Asset- backed securities (“ABS”)
Structured credit
Commercial mortgage- backed
12%
87%
(12)%
74%
7%
85%
operates. Additional laws and regulations have been adopted
but not yet implemented or have been proposed or are being
securities (“CMBS”)
20%
(5)%
19%
Residential mortgage- backed
securities (“RMBS”)
Covered bonds
Total new issue dollars —
Structured finance
*Represents no activity in 2017 and 2016.
46%
*
(34)%
9%
3%
—%
36%
2%
18%
considered. In addition, in certain countries, governments
may provide financial or other support to locally-based rating
agencies. For example, governments may from time to time
establish official rating agencies or credit ratings criteria or
procedures for evaluating local issuers. We have reviewed the
new laws, regulations and rules which have been adopted and
we have implemented, or are planning to implement, changes
ABS issuance was up in the U.S. driven by an increase in
as required. We do not believe that such new laws, regulations
auto transactions, commercial real estate loans and student
or rules will have a material adverse effect on our financial
loans. European ABS declined due to key auto issuers com-
condition or results of operations. Other laws, regulations and
pleting financing in the unsecured debt market.
rules relating to credit rating agencies are being considered by
Issuance was up in the U.S. and European structured credit
local, national, foreign and multinational bodies and are likely
markets driven by increased collateralized loan obligations
to continue to be considered in the future, including provisions
(“CLO”) refinancing engagements primarily due to overall
seeking to reduce regulatory and investor reliance on credit
market conditions.
ratings, rotation of credit rating agencies and liability stan-
CMBS issuance was up in the U.S. reflecting increased mar-
dards applicable to credit rating agencies. The impact on us
ket volume due to a low interest rate environment and favor-
of the adoption of any such laws, regulations or rules remains
able reaction to the new risk retention rules. European CMBS
uncertain, but could increase the costs and legal risks relating
issuance was down, although from a low 2016 base.
S&P Global 2017 Annual Report 29
to Ratings’ rating activities, or adversely affect our ability to
European Union
compete, or result in changes in the demand for credit ratings.
In the European Union, the credit rating industry is registered
In the normal course of business both in the U.S. and abroad,
Ratings (or the legal entities comprising Ratings) are defen-
dants in numerous legal proceedings and are often the subject
of government and regulatory proceedings, investigations and
inquiries. Many of these proceedings, investigations and inqui-
ries relate to the ratings activity of Ratings and are or have been
brought by purchasers of rated securities. In addition, various
government and self- regulatory agencies frequently make
inquiries and conduct investigations into Ratings’ compliance
with applicable laws and regulations. Any of these proceedings,
investigations or inquiries could ultimately result in adverse
judgments, damages, fines, penalties or activity restrictions,
and supervised through a pan- European regulatory framework
which is a compilation of three sets of legislative actions. In
2009, the European Parliament passed a regulation (“CRA1”)
that established an oversight regime for the credit rating indus-
try in the European Union, which became effective in 2010.
CRA1 requires the registration, formal regulation and periodic
inspection of credit rating agencies operating in the European
Union. Ratings was granted registration in October of 2011. In
January of 2011, the European Union established the European
Securities and Markets Authority (“ESMA”), which, among other
things, has direct supervisory responsibility for the registered
credit rating industry throughout the European Union.
which could adversely impact our consolidated financial con-
Additional rules augmenting the supervisory framework for
dition, cash flows, business or competitive position.
credit rating agencies went into effect in 2013. Commonly
U.S.
The businesses conducted by our Ratings segment are, in cer-
tain cases, regulated under the Credit Rating Agency Reform
Act of 2006 (the “Reform Act”), the Dodd-Frank Wall Street
Reform and Consumer Protection Act (the “Dodd Frank Act”),
the Securities Exchange Act of 1934 (the “Exchange Act”) and/
or the laws of the states or other jurisdictions in which they
conduct business. The financial services industry is subject to
the potential for increased regulation in the U.S.
S&P Global Ratings is a credit rating agency that is registered
with the SEC as a Nationally Recognized Statistical Rating
Organization (“NRSRO”). The SEC first began informally desig-
nating NRSROs in 1975 for use of their credit ratings in the deter-
mination of capital charges for registered brokers and dealers
under the SEC’s Net Capital Rule. The Reform Act created a
new SEC registration system for rating agencies that choose
to register as NRSROs. Under the Reform Act, the SEC is given
referred to as CRA3, these rules, among other things:
impose various additional procedural requirements with
respect to ratings of sovereign issuers;
require member states to adopt laws imposing liability on
credit rating agencies for an intentional or grossly negligent
failure to abide by the applicable regulations;
impose mandatory rotation requirements on credit rating
agencies hired by issuers of securities for ratings of rese-
curitizations, which may limit the number of years a credit
rating agency can issue ratings for such securities of a par-
ticular issuer;
impose restrictions on credit rating agencies or their share-
holders if certain ownership thresholds are crossed; and
impose additional procedural and substantive requirements
on the pricing of services.
The financial services industry is subject to the potential for
increased regulation in the European Union.
authority and oversight of NRSROs and can censure NRSROs,
Other Jurisdictions
revoke their registration or limit or suspend their registration
Outside of the U.S. and the European Union, regulators and
in certain cases. The rules implemented by the SEC pursuant
government officials have also been implementing formal
to the Reform Act, the Dodd Frank Act and the Exchange Act
oversight of credit rating agencies. Ratings is subject to reg-
address, among other things, prevention or misuse of material
ulations in most of the foreign jurisdictions in which it oper-
non- public information, conflicts of interest, documentation
ates and continues to work closely with regulators globally to
and assessment of internal controls, and improving transpar-
promote the global consistency of regulatory requirements.
ency of ratings performance and methodologies. The public
Regulators in additional countries may introduce new regula-
portions of the current version of S&P Global Ratings’ Form
tions in the future.
NRSRO are available on S&P Global Ratings’ website.
30 S&P Global 2017 Annual Report
For a further discussion of competitive and other risks inherent
of global exchanges, clearing houses and data services. During
in our Ratings business, see Item 1a, Risk Factors, in this Annual
the year ended December 31, 2016, we recorded a pre-tax gain
Report on Form 10-K. For a further discussion of the legal and
of $364 million ($297 million after-tax) in gain on dispositions
regulatory environment in our Ratings business, see Note 13 —
in the consolidated statement of income related to the sale of
Commitments and Contingencies to the consolidated financial
SPSE and CMA. Additionally, in October of 2016, we completed
statements under Item 8, Consolidated Financial Statements
the sale of Equity Research, a business within our Market and
and Supplementary Data, in this Annual Report on Form 10-K.
Commodities Intelligence segment to CFRA, a leading indepen-
MARKET AND COMMODITIES INTELLIGENCE
Market and Commodities Intelligence’s portfolio of capabilities
dent provider of forensic accounting research, analytics and
advisory services. During the year ended December 31, 2016,
we recorded a pre-tax gain of $9 million ($5 million after-tax) in
are designed to help the financial community, corporations and
gain on dispositions in the consolidated statement of income
professional service firms track performance, generate bet-
related to the sale of Equity Research.
ter investment returns, identify new trading and investment
ideas, perform risk analysis, develop mitigation strategies and
provide high-value information to the commodity and energy
markets that enable its customers to make better informed
trading and business decisions.
In September of 2016, we completed the sale of J.D. Power for
$1.1 billion to XIO Group, a global alternative investments firm
headquartered in London. During the year ended December 31,
2016, we recorded a pre-tax gain of $728 million ($516 million
after-tax) in gain on dispositions in the consolidated statement
In December of 2017, we announced that S&P Global Platts,
of income related to the sale of J.D. Power.
a business line within Market and Commodities Intelligence,
will be managed as a separate business and comprise a sep-
arate reportable segment effective January 1, 2018. We will
begin reporting the financial results of S&P Global Market
Intelligence and S&P Global Platts as separate reportable seg-
ments beginning with the first quarter of 2018.
Market and Commodities Intelligence includes the following
business lines:
Desktop — a product suite that provides data, analytics and
third-party research for global finance professionals, which
includes the Market Intelligence Desktop (which are inclusive
of S&P Capital IQ and SNL Desktop products);
In January of 2017, we completed the sale of Quant House
Data Management Solutions — integrated data feeds and
SAS (“QuantHouse”), included in our Market and Commodities
application programming interfaces that can be customized,
Intelligence segment, to QH Holdco, an independent third party.
which includes Computstat, GICS, Point In Time Financials
In November of 2016, we entered into a put option agreement
and CUSIP;
that gave the Company the right, but not the obligation, to put
Risk Services — commercial arm that sells Ratings’ credit
the entire share capital of QuantHouse to QH Holdco. As a result,
ratings and related data, analytics and research, which
we classified the assets and liabilities of QuantHouse, net of
includes subscription-based offerings, RatingsDirect® and
our costs to sell, as held for sale, which is included in prepaid
RatingsXpress®; and
and other current assets and other current liabilities, respec-
tively, in our consolidated balance sheet as of December 31,
2016 resulting in an aggregate loss of $31 million. On January 4,
2017, we exercised the put option, thereby entering into a defin-
itive agreement to sell QuantHouse to QH Holdco. On January 9,
2017, we completed the sale of QuantHouse to QH Holdco.
In October of 2016, we completed the sale of SPSE and CMA for
$425 million in cash to Intercontinental Exchange, an operator
S&P Global Platts — the leading independent provider
of information and benchmark prices for the commodity
and energy markets. S&P Global Platts provides essential
price data, analytics, and industry insight that enable the
commodities and energy markets to perform with greater
transparency and efficiency. Additionally, S&P Global Platts
generates revenue from licensing of our proprietary market
price data and price assessments to commodity exchanges.
S&P Global 2017 Annual Report 31
We completed the sale of J.D. Power on September 7, 2016, with the results included in Market and Commodities Intelligence
results through that date.
(in millions)
Revenue
Subscription revenue
Non- subscription revenue
% of total revenue:
Subscription revenue
Non- subscription revenue
U.S. revenue
International revenue
% of total revenue:
U.S. revenue
International revenue
Operating profit 1
% Operating margin
Year ended December 31,
% Change
2017
$ 2,452
$ 2,317
$ 135
2016
$ 2,585
$ 2,231
$ 354
2015
’17 vs ’16
’16 vs ’15
$ 2,376
$ 1,911
$ 465
(5)%
4%
(62)%
9%
17%
(24)%
95%
5%
86%
14%
80%
20%
$ 1,396
$ 1,056
$ 1,523
$ 1,062
$ 1,368
$ 1,008
57%
43%
59%
41%
58%
42%
(8)%
(1)%
11%
6%
$ 793
$ 1,822
$ 585
(56)%
212%
32%
70%
25%
1 2017 includes non-cash acquisition and disposition- related adjustments of $15 million, employee severance charges of $9 million, a charge to exit a leased
facility of $6 million, and an asset write-off of $2 million. 2016 includes a $1.1 billion gain from our dispositions, disposition- related costs of $48 million, a
technology- related impairment charge of $24 million and an acquisition- related cost of $1 million. 2015 includes acquisition- related costs related to the acquisi-
tion of SNL of $37 million and costs identified operating efficiencies primarily related to employee severance charges of $33 million. 2017, 2016 and 2015 includes
amortization of intangibles from acquisitions of $87 million, $85 million and $57 million, respectively.
2017
Revenue decreased 5% and was unfavorably impacted by
Operating profit decreased 56%. Excluding the unfavorable
impact of the gain on dispositions in 2016 of 62 percentage
13 percentage points from the net impact of acquisitions and
points, non-cash acquisition and disposition- related adjust-
dispositions. Excluding these acquisitions and dispositions,
ments in 2017 of 1 percentage point, partially offset by the
revenue increased primarily driven by growth in annualized
favorable impact of disposition- related costs in 2016 of 2 per-
contract values in the Market Intelligence Desktop products,
centage points and a technology- related impairment charge
RatingsXpress® and RatingsDirect® from new and existing
in 2016 of 1 percentage point, operating profit increased 4%.
customers. The number of users and customers continued to
The increase is due to margin improvement from existing busi-
grow for each of these products in 2017. Increases in annual-
nesses, partially offset by the unfavorable impact of the dispo-
ized contract value for certain of our data feed products within
sitions discussed above.
Data Management Solutions also contributed to revenue
growth. Additionally, strength in S&P Global Platts’ propri-
etary content due to continued demand for market data and
price assessment products across all commodity sectors, led
by petroleum, contributed to revenue growth. Both domestic
and international revenue decreased due to the unfavorable
impact of the dispositions discussed below. In 2017, interna-
tional revenue represented 43% of Market and Commodities
Intelligence’s total revenue compared to 41% in 2016. Revenue
was favorably impacted by the acquisitions of RigData and PIRA
in June of 2016 and September of 2016, respectively. Revenue
was unfavorably impacted by the dispositions of J.D. Power in
September of 2016, SPSE and CMA in October of 2016, Equity
Fund Research in October of 2016 and QuantHouse in January
of 2017. See Note 2 — Acquisitions and Divestitures for further
discussion.
2016
Revenue increased 9% and was favorably impacted by 1 per-
centage point of growth from the net impact of acquisitions and
dispositions discussed below. Revenue growth was also driven
by increases in annualized contract values in the S&P Capital
IQ Desktop, RatingsXpress® and RatingsDirect® from new and
existing customers. The number of users on the S&P Capital IQ
Desktop and the number of customers at RatingsXpress® con-
tinued to grow in 2016. Increases in annualized contract value
for certain of our data feed products within Data Management
Solutions also contributed to revenue growth. Additionally,
strength in S&P Global Platts’ proprietary content due to con-
tinued demand for S&P Global Platts’ market data and price
assessment products across all commodity sectors, led by
petroleum, and continued licensing of our proprietary mar-
ket price data and price assessments to various commodity
exchanges contributed to revenue growth. Both domestic and
32 S&P Global 2017 Annual Report
international revenue increased, with international revenue
into other European Economic Area (“EEA”) States, and is to
representing 41% of Market and Commodities Intelligence’s
the conditions under the E.U. Markets in Financial Instruments
total revenue. Revenue was favorably impacted by the acqui-
Directive (“MiFID”).
sitions of SNL, PIRA, RigData and Petromedia Ltd, partially off-
set by the unfavorable impact of the dispositions of J.D. Power,
SPSE and CMA and Equity Research. See Note 2 — Acquisitions
and Divestitures for further discussion.
The markets for research and investment advisory services are
very competitive. Market Intelligence competes domestically
and internationally on the basis of a number of factors, includ-
ing the quality of its research and advisory services, client ser-
Operating profit increased 212%. Excluding the favorable
vice, reputation, price, geographic scope, range of products
impact from the gain on dispositions of 194 percentage points,
and services, and technological innovation. For a further dis-
the favorable impact of higher acquisition- related costs in 2015
cussion of competitive and other risks inherent in our Market
of 6 percentage points and higher employee severance charges
Intelligence business, see Item 1a, Risk Factors, in this Annual
in 2015 of 6 percentage points, partially offset by the unfavor-
Report on Form 10-K.
able impact of higher disposition- related costs of 9 percent-
age points, higher amortization of intangibles from acquisitions
S&P Global Platts
of 5 percentage points and a technology- related impairment
charge of 4 percentage points, operating profit increased
24%. This increase is due to revenue growth and the favorable
impact of foreign exchange rates of 5 percentage points, par-
tially offset by higher compensation costs and increased tech-
nology costs primarily as a result of the acquisition of SNL in
September of 2015.
Industry Highlights and Outlook
In 2017, Market and Commodities Intelligence continued to
S&P Global Platts’ commodities price assessment and infor-
mation business is subject to increasing regulatory scrutiny
in the U.S. and abroad. As discussed below under the head-
ing “ Indices-Legal and Regulatory Environment”, the financial
benchmarks industry is subject to the new pending bench-
mark regulation in the European Union (the “E.U. Benchmark
Regulation”) as well as potential increased regulation in
other jurisdictions. As a result of these measures, as well as
measures that could be taken in other jurisdictions outside
of Europe, S&P Global Platts will be required in due course
benefit from organic revenue growth and SNL integration syn-
to obtain registration or authorization in connection with its
ergies. The segment also launched a beta version of the new
benchmark and price assessment activities in Europe and
Market Intelligence platform in 2017. Additionally, the segment
potentially elsewhere.
integrated and leveraged recent acquisitions to develop and
expand its analytical capabilities and offerings.
The European Union has finalized a package of legislative mea-
sures known as MiFID II (“MiFID II”), which revise and update
In 2018, both Market Intelligence and S&P Global Platts will
the existing E.U. Markets in Financial Instruments Directive
continue to enhance its product offerings, pursue growth in
framework entered into force on July 2, 2014, and the substan-
new markets and geographies, and develop its analytical
tive provisions apply in all E.U. Member States as of January 3,
capabilities.
Legal and Regulatory Environment
Market Intelligence
The financial services industry is subject to the potential for
increased regulation in the U.S. and abroad. Market Intelligence
operates investment advisory businesses that are regulated in
the U.S. under the U.S. Investment Advisers Act of 1940 (the
“Investment Advisers Act”) and/or the laws of the states or
other jurisdictions in which they conduct business.
Market Intelligence operates a business that is authorized
and regulated in the United Kingdom by the Financial Conduct
Authority (the “FCA”). As such, this business is authorized to
arrange and advise on investments, and is also entitled to exer-
cise a passport right to provide specified cross border services
2018. MiFID II includes provisions that, among other things:
(i) impose new conditions and requirements on the licensing
of benchmarks and provide for non- discriminatory access to
exchanges and clearing houses; (ii) modify the categorization
and treatment of certain classes of derivatives; (iii) expand
the categories of trading venue that are subject to regulation;
(iv) require the unbundling of investment research and direct
how asset managers pay for research either out of a research
payment account or from a firm’s profits; and (v) provide for
the mandatory trading of certain derivatives on exchanges
(complementing the mandatory derivative clearing require-
ments in the E.U. Market Infrastructure Regulation of 2011). The
MiFID II package is “framework” legislation (meaning that much
of the detail of the rules will be set out in subordinate mea-
sures, including some technical standards yet to be adopted
S&P Global 2017 Annual Report 33
by the European Commission). The introduction of the MiFID II
The markets for commodities price assessments and informa-
package may result in changes to the manner in which Platts
tion are very competitive. S&P Global Platts competes domes-
licenses its price assessments. MiFID II and the Market Abuse
tically and internationally on the basis of a number of factors,
Regulation (“MAR”) may impose additional regulatory burdens
including the quality of its assessments and other informa-
on Platts’s activities in the European Union, although the exact
tion it provides to the commodities and related markets, cli-
impact and costs are not yet known.
ent service, reputation, price, range of products and services
In October of 2012, IOSCO issued its PRA Principles which set
out principles, which are intended to enhance the reliability
of oil price assessments referenced in derivative contracts
subject to regulation by IOSCO members. S&P Global Platts
has taken steps to align its operations with the PRA Principles
and as recommended by IOSCO in its final report on the PRA
Principles, has aligned to the PRA Principles for other commod-
ities for which it publishes benchmarks.
(including geographic coverage) and technological innovation.
Furthermore, sustained downward pressure on oil and other
commodities prices and trading activity in those markets could
have a material adverse impact on the rate of growth of S&P
Global Platts’ revenue. For a further discussion of competitive
and other risks inherent in our Platts business, see Item 1a,
Risk Factors, in this Annual Report on Form 10-K.
INDICES
Indices is a global index provider maintaining a wide variety of indices to meet an array of investor needs. Indices’ mission is to
provide transparent benchmarks to help with decision making, collaborate with the financial community to create innovative
products and provide investors with tools to monitor world markets.
Indices primarily derives revenue from asset- linked fees based on the S&P and Dow Jones indices and to a lesser extent generates
subscription revenue and transaction revenue. Specifically, Indices generates revenue from the following sources:
Investment vehicles — asset- linked fees such as ETFs and mutual funds, that are based on the S&P Dow Jones Indices’ bench-
marks and generate revenue through fees based on assets and underlying funds;
Exchange traded derivatives — generate royalties based on trading volumes of derivatives contracts listed on various exchanges;
Index- related licensing fees — fixed or variable annual and per-issue fees for over-the- counter derivatives and retail- structured
products; and
Data and customized index subscription fees — fees from supporting index fund management, portfolio analytics and research.
Year ended December 31,
% Change
(in millions)
Revenue
Asset- linked fees
Subscription revenue
Transaction revenue
% of total revenue:
Asset- linked fees
Subscription revenue
Transaction revenue
U.S. revenue
International revenue
% of total revenue:
U.S. revenue
International revenue
Operating profit 1
Less: net income attributable to noncontrolling interests
Net operating profit
% Operating margin
% Net operating margin
2017
$ 733
$ 461
$ 141
$ 131
2016
$ 639
$ 381
$ 133
$ 125
63%
19%
18%
$ 603
$ 130
60%
21%
19%
$ 525
$ 114
82%
18%
82%
18%
$ 471
$ 127
$ 344
$ 412
$ 109
$ 303
64%
47%
64%
47%
2015
$ 597
$ 369
$ 116
$ 112
62%
19%
19%
$ 488
$ 109
82%
18%
$ 392
$ 101
$ 291
66%
49%
’17 vs ’16
’16 vs ’15
15%
21%
6%
5%
7%
3%
14%
11%
15%
14%
14%
16%
14%
8%
5%
5%
8%
4%
1 2017, 2016 and 2015 includes amortization of intangibles from acquisitions of $7 million, $6 million and $5 million, respectively.
34 S&P Global 2017 Annual Report
2017
Revenue at Indices increased 15%, primarily driven by higher
Legal and Regulatory Environment
The financial benchmarks industry is subject to the new pend-
average levels of assets under management (“AUM”) for ETFs
ing benchmark regulation in the European Union (the “E.U.
and mutual funds. Revenue growth was favorably impacted
Benchmark Regulation”) as well as potential increased regula-
by 1 percentage point from the acquisition of Trucost plc
tion in other jurisdictions.
(“Trucost”) in October of 2016. See Note 2 — Acquisitions
and Divestitures for further discussion. Ending AUM for ETFs
increased 31% to $1.343 trillion and average AUM for ETFs
increased 34% to $1.167 trillion compared to 2016.
The E.U. Benchmark Regulation was published June 30, 2016
and included provisions applicable to Indices and Platts, which
will become effective January 1, 2018. The E.U. Benchmark
Regulation requires Indices and Platts in due course to obtain
Operating profit grew 14%. The impact of revenue growth was
registration or authorization in connection with their respec-
partially offset by higher compensation costs and increased
tive benchmark activities in Europe. This legislation will
operating costs to support revenue growth and business ini-
likely cause additional operating obligations but they are not
tiatives at Indices. Higher compensation costs related to
expected to be material at this time, although the exact impact
increased incentive costs and additional headcount partially
remains unclear.
related to the acquisition of Trucost.
2016
Revenue at Indices increased 7%, primarily driven by higher
average levels of AUM for ETFs and mutual funds, an increase
in data revenue and higher volumes for exchange- traded deriv-
atives. Revenue growth was favorably impacted by less than
one percentage point from the acquisition of Trucost. Ending
AUM for ETFs increased 25% to $1.023 trillion and average
AUM for ETFs increased 8% to $869 billion compared to 2015.
As discussed above under the heading “S&P Global Platts
Legal and Regulatory Environment”, the European Union has
finalized a package of legislative measures known as MiFID II.
The introduction of the MiFID II package may result in changes
to the manner in which S&P Dow Jones Indices licenses its
indices. MiFID II and the Market Abuse Regulation (“MAR”)
may impose additional regulatory burdens on S&P Dow Jones
Indices activities in the European Union, although the exact
impact and costs are not yet known.
Higher average levels of AUM for ETFs contributed to revenue
In July of 2013, the International Organization of Securities
growth primarily driven by the flow of investment funds to the
Commissions
(“IOSCO”)
issued Financial Benchmark
U.S. equity markets in the second half of the year.
Operating profit grew 5%. Revenue growth was partially offset
by higher compensation costs primarily driven by additional
headcount related to the acquisition of Trucost, increased
incentive costs and increased operating costs to support reve-
nue growth and business initiatives at Indices.
Industry Highlights and Outlook
Indices continues to be the leading index provider for the ETF
market space. In 2017, higher average levels of AUM for ETFs
contributed to revenue growth. In 2017, Indices focused on
continued Index innovation and growing international partner-
ships. In 2018, Indices will continue to pursue opportunities for
innovation and seek to grow international partnerships.
Principles, intended to promote the reliability of benchmark
determinations, and address governance, benchmark qual-
ity and accountability mechanisms, including with regard to
the indices published by Indices. Even though the Financial
Benchmark Principles are not binding law, Indices has taken
steps to align its governance regime and operations with the
Financial Benchmark Principles and engaged an independent
auditor to perform a reasonable assurance review of such
alignment.
The markets for index providers are very competitive. Indices
competes domestically and internationally on the basis of a
number of factors, including the quality of its benchmark
indices, client service, reputation, price, range of products
and services (including geographic coverage) and technolog-
ical innovation. For a further discussion of competitive and
other risks inherent in our Indices business, see Item 1a, Risk
Factors, in this Annual Report on Form 10-K.
S&P Global 2017 Annual Report 35
Liquidity and Capital Resources
We continue to maintain a strong financial position. Our primary
source of funds for operations is cash from our businesses
Operating activities
Cash provided by operating activities increased to $2.0 billion
in 2017 compared to $1.6 billion in 2016. The increase is mainly
due to higher results from operations, partially offset by the
and our core businesses have been strong cash generators. In
timing of estimated tax payments.
2018, cash on hand, cash flows from operations and availability
under our existing credit facility are expected to be sufficient
to meet any additional operating and recurring cash needs into
the foreseeable future. We use our cash for a variety of needs,
including but not limited to: ongoing investments in our busi-
nesses, strategic acquisitions, share repurchases, dividends,
repayment of debt, capital expenditures and investment in our
infrastructure.
CASH FLOW OVERVIEW
Cash and cash equivalents were $2.8 billion as of December 31,
Cash provided by operating activities increased $1.2 billion
to $1.6 billion in 2016 compared to $356 million in 2015. The
increase is mainly due to the payment of legal and regulatory
settlements in 2015 of $1.6 billion.
Investing activities
Our cash outflows from investing activities are primarily for
acquisitions and capital expenditures, while cash inflows are
primarily proceeds from dispositions.
Cash used for investing activities decreased to $209 million for
2017, an increase of $0.4 billion as compared to December 31,
2017 as compared to cash provided by investing activities of
2016, and consisted of approximately 20% of domestic cash
$1.2 billion in 2016. The decrease is primarily due to proceeds
and 80% of cash held abroad.
from the sale of J.D. Power of $1.1 billion in 2016.
(in millions)
Net cash provided by (used for):
Operating activities from
continuing operations
Investing activities from
continuing operations
Financing activities from
continuing operations
Year ended December 31,
2017
2016
2015
$ 2,016 $ 1,560 $ 356
(209)
1,205
(2,525)
Cash provided by investing activities increased to $1.2 billion
for 2016 as compared to cash used for investing activities of
$2.5 billion in 2015. The increase is primarily due to proceeds
from the sale of J.D. Power of $1.1 billion in 2016 compared to
cash used for the acquisition of SNL of $2.2 billion in 2015.
Refer to Note 2 — Acquisitions and Divestitures to our consoli-
(1,507)
(1,696)
1,349
dated financial statements for further information.
In 2017, free cash flow increased to $1.8 billion compared to
$1.3 billion in 2016. The increase is primarily due to the increase
Financing activities
Our cash outflows from financing activities consist primar-
in cash provided from operating activities as discussed below.
ily of share repurchases, dividends and repayment of debt,
Free cash flow is a non-GAAP financial measure and reflects
while cash inflows are primarily inflows from long-term and
our cash flow provided by operating activities less capital
short-term debt borrowings and proceeds from the exercise
expenditures and distributions to noncontrolling interest
of stock options.
holders. Capital expenditures include purchases of property
and equipment and additions to technology projects. See
“Reconciliation of Non-GAAP Financial Information” below for
a reconciliation of cash flow provided by operating activities,
the most directly comparable U.S. GAAP financial measure, to
free cash flow and free cash flow excluding certain items.
Cash used for financing activities decreased to $1.5 billion in
2017 from $1.7 billion in 2016. The decrease is primarily attrib-
utable to higher repayments of debt and higher cash paid for
share repurchases in 2016, partially offset by the issuance of
senior notes in 2016.
Cash used for financing activities was $1.7 billion in 2016 com-
pared to cash provided by financing activities of $1.3 billion in
2015. The decrease is primarily attributable to higher proceeds
received from the issuance of senior notes in 2015.
36 S&P Global 2017 Annual Report
During 2017, we used cash to repurchase 6.8 million shares for
We have the ability to borrow a total of $1.2 billion through our
$1.0 billion. We entered into an accelerated share repurchase
commercial paper program, which is supported by our credit
(“ASR”) agreement with a financial institution on August 1, 2017
facility. There were no commercial paper borrowings outstand-
to initiate share repurchases aggregating $500 million. We
ing as of December 31, 2017 and 2016.
repurchased a total of 3.2 million shares under the ASR agree-
ment for an average purchase price of $154.46 per share. See
Note 9 — Equity for further discussion.
Depending on our corporate credit rating, we pay a commit-
ment fee of 8 to 17.5 basis points for our credit facility, whether
or not amounts have been borrowed. We currently pay a com-
During 2016, we used cash to repurchase 10 million shares
mitment fee of 12.5 basis points. The interest rate on borrow-
for $1.1 billion, which included 0.3 million shares for approxi-
ings under our credit facility is, at our option, calculated using
mately $26 million that settled in January of 2016. Using a por-
rates that are primarily based on either the prevailing London
tion of the proceeds received from the sale of J.D. Power, we
Inter-Bank Offer Rate, the prime rate determined by the admin-
entered into an ASR agreement with a financial institution on
istrative agent or the Federal Funds Rate. For certain borrow-
September 7, 2016 to initiate share repurchases aggregating
ings under this credit facility, there is also a spread based on
$750 million. We repurchased a total of 6.1 million shares under
our corporate credit rating.
the ASR agreement for an average purchase price of $122.18
per share. See Note 9 — Equity for further discussion.
Our credit facility contains certain covenants. The only finan-
cial covenant requires that our indebtedness to cash flow ratio,
During 2015, we used cash to repurchase 9.8 million shares for
as defined in our credit facility, is not greater than 4 to 1, and
$974 million. An additional 0.3 million shares were repurchased
this covenant level has never been exceeded.
in the fourth quarter of 2015 for approximately $26 million,
which settled in January of 2016.
On December 4, 2013, the Board of Directors approved a share
repurchase program authorizing the purchase of up to 50 mil-
lion shares, which was approximately 18% of the total shares
of our outstanding common stock at that time. Our current
repurchase program has no expiration date and purchases
under this program may be made from time to time on the open
market and in private transactions, depending on market con-
ditions. As of December 31, 2017, 19 million shares remained
available under our current repurchase program.
Discontinued Operations
Cash flows from discontinued operations reflects the classi-
DIVIDENDS
On February 2, 2018, the Board of Directors approved an
increase in the quarterly common stock dividend from $0.41
per share to $0.50 per share.
CONTRACTUAL OBLIGATIONS
We typically have various contractual obligations, which are
recorded as liabilities in our consolidated balance sheets,
while other items, such as certain purchase commitments
and other executory contracts, are not recognized, but are dis-
closed herein. For example, we are contractually committed
to contracts for information- technology outsourcing, certain
enterprise-wide information- technology software licensing
fication of McGraw Hill Construction as a discontinued oper-
and maintenance and make certain minimum lease payments
ation. Cash used for operating activities from discontinued
for the use of property under operating lease agreements.
operations of $129 million in 2015 relates to the tax payment
on the gain on sale of McGraw Hill Construction.
ADDITIONAL FINANCING
On June 30, 2017, we entered into a $1.2 billion five year- credit
agreement (our “credit facility”) that will terminate on June 30,
2022. This credit facility replaced our $1.2 billion five year credit
facility that was scheduled to terminate on June 30, 2020. The
previous credit facility was canceled immediately after the
new credit facility became effective. There were no outstand-
ing borrowings under the previous credit facility when it was
replaced.
We believe that the amount of cash and cash equivalents on
hand, cash flow expected from operations and availability
under our credit facility will be adequate for us to execute our
business strategy and meet anticipated requirements for lease
obligations, capital expenditures, working capital and debt ser-
vice for 2018.
S&P Global 2017 Annual Report 37
The following table summarizes our significant contractual obligations and commercial commitments as of December 31, 2017,
over the next several years. Additional details regarding these obligations are provided in the notes to our consolidated financial
statements, as referenced in the footnotes to the table:
(in millions)
Debt: 1
Principal payments
Interest payments
Operating leases 2
Purchase obligations and other 3
Total contractual cash obligations
Less than
1 Year
1–3 Years
3–5 Years
More than
5 Years
$ 399
138
122
110
$ 769
$ 697
254
192
100
$ 1,243
$ —
217
140
31
$ 388
$ 2,473
657
516
78
$ 3,724
Total
$ 3,569
1,266
970
319
$ 6,124
1 Our debt obligations are described in Note 5 — Debt to our consolidated financial statements.
2 Amounts shown include taxes and escalation payments, see Note 13 — Commitments and Contingencies to our consolidated financial statements for further
discussion on our operating lease obligations.
3 Other consists primarily of commitments for unconditional purchase obligations in contracts for information- technology outsourcing and certain enterprise-wide
information- technology software licensing and maintenance.
As of December 31, 2017, we had $212 million of liabilities for
well as additional contributions that we consider appropriate
unrecognized tax benefits. We have excluded the liabilities for
to improve the funded status of our plans. During 2017, we
unrecognized tax benefits from our contractual obligations
contributed $8 million and $25 million to our domestic and
table because, until formal resolutions are reached, reasonable
international retirement and postretirement plans, respec-
estimates of the timing of cash settlements with the respective
tively. Expected employer contributions in 2018 are $9 million
taxing authorities are not practicable.
and $7 million for our domestic and international retirement
As of December 31, 2017, we have recorded $1,350 million
for our redeemable noncontrolling interest in our S&P Dow
Jones Indices LLC partnership discussed in Note 9 — Equity
to our consolidated financial statements. Specifically, this
amount relates to the put option under the terms of the oper-
ating agreement of S&P Dow Jones Indices LLC, whereby, after
December 31, 2017, CME Group and CME Group Index Services
LLC (“CGIS”) will have the right at any time to sell, and we are
obligated to buy, at least 20% of their share in S&P Dow Jones
Indices LLC. We have excluded this amount from our contrac-
tual obligations table because we are uncertain as to the timing
and the ultimate amount of the potential payment we may be
required to make.
and postretirement plans, respectively. In 2018, we may elect
to make additional non- required contributions depending on
investment performance and the pension plan status. See
Note 7 — Employee Benefits to our consolidated financial
statements for further discussion.
OFF- BALANCE SHEET ARRANGEMENTS
As of December 31, 2017 and 2016, we did not have any rela-
tionships with unconsolidated entities, such as entities often
referred to as specific purpose or variable interest entities
where we are the primary beneficiary, which would have been
established for the purpose of facilitating off- balance sheet
arrangements or other contractually narrow or limited pur-
poses. As such we are not exposed to any financial liquidity,
We make contributions to our pension and postretirement
market or credit risk that could arise if we had engaged in such
plans in order to satisfy minimum funding requirements as
relationships.
38 S&P Global 2017 Annual Report
Reconciliation of Non-GAAP Financial Information
Free cash flow is a non-GAAP financial measure and reflects our cash flow provided by operating activities less capital expen-
ditures and distributions to noncontrolling interest holders. Capital expenditures include purchases of property and equipment
and additions to technology projects. Our cash flow provided by operating activities is the most directly comparable U.S. GAAP
financial measure to free cash flow. Additionally, we have considered certain items in evaluating free cash flow, which are included
in the table below.
We believe the presentation of free cash flow and free cash flow excluding certain items allows our investors to evaluate the cash
generated from our underlying operations in a manner similar to the method used by management. We use free cash flow to con-
duct and evaluate our business because we believe it typically presents a more conservative measure of cash flows since capital
expenditures and distributions to noncontrolling interest holders are considered a necessary component of ongoing operations.
Free cash flow is useful for management and investors because it allows management and investors to evaluate the cash avail-
able to us to prepay debt, make strategic acquisitions and investments and repurchase stock.
The presentation of free cash flow and free cash flow excluding certain items are not intended to be considered in isolation or as
a substitute for the financial information prepared and presented in accordance with U.S. GAAP. Free cash flow, as we calculate
it, may not be comparable to similarly titled measures employed by other companies. The following table presents a reconciliation
of our cash flow provided by operating activities to free cash flow excluding the impact of the items below:
(in millions)
2017
2016
2015
’17 vs ’16
’16 vs ’15
Year ended December 31,
% Change
Cash provided by operating activities
Capital expenditures
Distributions to noncontrolling interest holders
Free cash flow
Tax on gain from sale of J.D. Power
Tax on gain from sale of SPSE and CMA
Payment of legal and regulatory settlements
Legal settlement insurance recoveries
Tax benefit from legal settlements
$ 2,016
(123)
(111)
$ 1,782
—
67
4
—
(2)
$ 1,560
(115)
(116)
$ 1,329
200
—
150
(77)
(24)
Free cash flow excluding above items
$ 1,851
$ 1,578
N/M — not meaningful
$ 356
(139)
(104)
$ 113
—
—
1,624
(101)
(250)
$ 1,386
29%
N/M
34%
N/M
17%
14%
S&P Global 2017 Annual Report 39
Critical Accounting Estimates
Our discussion and analysis of our financial condition and
results of operations is based upon our consolidated financial
statements, which have been prepared in accordance with U.S.
GAAP. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses and
related disclosure of contingent assets and liabilities. Unless
otherwise indicated, all discussion and analysis of our finan-
cial condition and results of operations relate to our continuing
operations.
On an ongoing basis, we evaluate our estimates and assump-
tions, including those related to revenue recognition, allowance
for doubtful accounts, valuation of long-lived assets, goodwill
and other intangible assets, pension plans, incentive compen-
sation and stock-based compensation, income taxes, contin-
gencies and redeemable noncontrolling interests. We base our
estimates on historical experience, current developments and
on various other assumptions that we believe to be reasonable
under these circumstances, the results of which form the basis
for making judgments about carrying values of assets and lia-
bilities that cannot readily be determined from other sources.
There can be no assurance that actual results will not differ
from those estimates.
Management considers an accounting estimate to be critical if
it required assumptions to be made that were uncertain at the
time the estimate was made and changes in the estimate or dif-
ferent estimates could have a material effect on our results of
operations. Management has discussed the development and
selection of our critical accounting estimates with the Audit
Committee of our Board of Directors. The Audit Committee has
reviewed our disclosure relating to them in this MD&A.
We believe the following critical accounting policies require us
to make significant judgments and estimates in the prepara-
tion of our consolidated financial statements:
REVENUE RECOGNITION
Revenue is recognized as it is earned when services are ren-
dered. We consider amounts to be earned once evidence of
an arrangement has been obtained, services are performed,
fees are fixed or determinable and collectability is reasonably
assured. Revenue relating to products that provide for more
than one deliverable is recognized based upon the relative fair
value to the customer of each deliverable as each deliverable is
provided. Revenue relating to agreements that provide for more
than one service is recognized based upon the relative fair
value to the customer of each service component as each com-
ponent is earned. If the fair value to the customer for each ser-
vice is not objectively determinable, we make our best estimate
of the services’ standalone selling price and recognize revenue
as earned as the services are delivered. The allocation of con-
sideration received from multiple element arrangements that
involve initial assignment of ratings and the future surveillance
of ratings is determined through an analysis that considers
cash consideration that would be received for instances when
the service components are sold separately. In such cases, we
defer portions of rating fees that we estimate will be attributed
to future surveillance and recognize the deferred revenue rat-
ably over the estimated surveillance periods. Advertising reve-
nue is recognized when the page is run. Subscription income is
recognized over the related subscription period.
For the years ended December 31, 2017, 2016 and 2015, no sig-
nificant changes have been made to the underlying assump-
tions related to estimates of revenue or the methodologies
applied. In 2018, we will be adopting a new accounting standard
for the recognition of revenue. See Note 1 — Accounting Policies
to our consolidated financial statements for further informa-
tion related to the impact of the new revenue standard in 2018.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful accounts reserve methodology is
based on historical analysis, a review of outstanding balances
and current conditions. In determining these reserves, we
consider, amongst other factors, the financial condition and
risk profile of our customers, areas of specific or concentrated
risk as well as applicable industry trends or market indica-
tors. The impact on operating profit for a one percentage point
change in the allowance for doubtful accounts is approximately
$14 million.
40 S&P Global 2017 Annual Report
For the years ended December 31, 2017, 2016 and 2015, there
were no material changes in our assumptions regarding the
Goodwill
As part of our annual impairment test of our four reporting
determination of the allowance for doubtful accounts. Based
units, we initially perform a qualitative analysis evaluating
on our current outlook these assumptions are not expected to
whether any events and circumstances occurred that pro-
significantly change in 2018.
vide evidence that it is more likely than not that the fair value
of any of our reporting units is less than its carrying amount.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
Reporting units are generally an operating segment or one
ASSETS (INCLUDING OTHER INTANGIBLE ASSETS)
We evaluate long-lived assets for impairment whenever events
level below an operating segment. Our qualitative assessment
included, but was not limited to, consideration of macroeco-
or changes in circumstances indicate that the carrying amount
nomic conditions, industry and market conditions, cost fac-
of an asset may not be recoverable. Upon such an occurrence,
tors, cash flows, changes in key Company personnel and our
recoverability of assets to be held and used is measured by
share price. If, based on our evaluation of the events and cir-
comparing the carrying amount of an asset to current forecasts
cumstances that occurred during the year we do not believe
of undiscounted future net cash flows expected to be gener-
that it is more likely than not that the fair value of any of our
ated by the asset. If the carrying amount of the asset exceeds
reporting units is less than its carrying amount, no quantitative
its estimated future cash flows, an impairment charge is recog-
impairment test is performed. Conversely, if the results of our
nized equal to the amount by which the carrying amount of the
qualitative assessment determine that it is more likely than
asset exceeds the fair value of the asset. For long-lived assets
not that the fair value of any of our reporting units is less than
held for sale, assets are written down to fair value, less cost to
its respective carrying amount we perform a two-step quan-
sell. Fair value is determined based on market evidence, dis-
titative impairment test. For 2017, based on our qualitative
counted cash flows, appraised values or management’s esti-
assessments, we determined that it is more likely than not that
mates, depending upon the nature of the assets.
our reporting units’ fair value was greater than their respective
For the year ended December 31, 2016, we recorded a non-
carrying amounts.
cash impairment charge of $24 million related to a technology
If the fair value of the reporting unit is less than the carrying
project at our Market and Commodities segment in selling and
value, a second step is performed which compares the implied
fair value of the reporting unit’s goodwill to the carrying value
of the goodwill. The implied fair value of the goodwill is deter-
mined based on the difference between the fair value of the
reporting unit and the net fair value of the identifiable assets
and liabilities of the reporting unit. If the implied fair value of
the goodwill is less than the carrying value, the difference is
recognized as an impairment charge.
general expenses in our consolidated statement of income.
GOODWILL AND INDEFINITE-LIVED
INTANGIBLE ASSETS
Goodwill represents the excess of purchase price and related
costs over the value assigned to the net tangible and iden-
tifiable intangible assets of businesses acquired. As of
December 31, 2017 and 2016, the carrying value of goodwill
and other indefinite-lived intangible assets was $3.7 billion,
respectively. Goodwill and other intangible assets with indef-
inite lives are not amortized, but instead are tested for impair-
ment annually during the fourth quarter each year or more
frequently if events or changes in circumstances indicate that
the asset might be impaired.
S&P Global 2017 Annual Report 41
Indefinite-Lived Intangible Assets
We evaluate the recoverability of indefinite-lived intangible
assets by first performing a qualitative analysis evaluating
RETIREMENT PLANS AND POSTRETIREMENT
HEALTHCARE AND OTHER BENEFITS
Our employee pension and other postretirement benefit costs
whether any events and circumstances occurred that provide
and obligations are dependent on assumptions concerning the
evidence that it is more likely than not that the indefinite-lived
outcome of future events and circumstances, including com-
asset is impaired. If, based on our evaluation of the events and
pensation increases, long-term return on pension plan assets,
circumstances that occurred during the year we do not believe
healthcare cost trends, discount rates and other factors. In
that it is more likely than not that the indefinite-lived asset
determining such assumptions, we consult with outside actu-
is impaired, no quantitative impairment test is performed.
aries and other advisors where deemed appropriate. In accor-
Conversely, if the results of our qualitative assessment deter-
dance with relevant accounting standards, if actual results
mine that it is more likely than not that the indefinite-lived
differ from our assumptions, such differences are deferred and
asset is impaired, a quantitative impairment test is performed.
amortized over the estimated remaining lifetime of the plan
If necessary, the impairment test is performed by comparing
participants. While we believe that the assumptions used in
the estimated fair value of the intangible asset to its carrying
these calculations are reasonable, differences in actual expe-
value. If the indefinite-lived intangible asset carrying value
rience or changes in assumptions could affect the expense
exceeds its fair value, an impairment analysis is performed
and liabilities related to our pension and other postretirement
using the income approach. The fair value of loss is recognized
benefits.
in an amount equal to that excess. Significant judgments inher-
ent in these analyses include estimating the amount and timing
of future cash flows and the selection of appropriate discount
rates, royalty rates and long-term growth rate assumptions.
Changes in these estimates and assumptions could materially
affect the determination of fair value for this indefinite-lived
intangible asset and could result in an impairment charge,
which could be material to our financial position and results
of operations.
The following is a discussion of some significant assumptions
that we make in determining costs and obligations for pension
and other postretirement benefits:
Discount rate assumptions are based on current yields on
high-grade corporate long-term bonds.
Healthcare cost trend assumptions are based on historical
market data, the near-term outlook and an assessment of
likely long-term trends.
The expected return on assets assumption is calculated
We performed our impairment assessment of goodwill and
based on the plan’s asset allocation strategy and projected
indefinite-lived intangible assets and concluded that no
market returns over the long-term.
impairment existed for the years ended December 31, 2017,
2016, and 2015.
Our discount rate and return on asset assumptions used to determine the net periodic pension and postretirement benefit cost
on our U.S. retirement plans are as follows:
January 1
Discount rate
Return on assets
Weighted- average healthcare cost rate
Retirement Plans
Postretirement Plans
2018
3.68%
6.00%
2017
4.14%
6.25%
2016
4.47%
6.25%
2018
3.40%
2017
3.69%
2016
3.90%
6.50%
7.00%
7.00%
42 S&P Global 2017 Annual Report
STOCK-BASED COMPENSATION
Stock-based compensation expense is measured at the grant
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future
date based on the fair value of the award and is recognized
tax consequences attributable to differences between finan-
over the requisite service period, which typically is the vest-
cial statement carrying amounts of existing assets and liabil-
ing period. Stock-based compensation is classified as both
ities and their respective tax bases. Deferred tax assets and
operating- related expense and selling and general expense in
liabilities are measured using enacted tax rates expected to be
our consolidated statements of income.
applied to taxable income in the years in which those temporary
We use a lattice-based option- pricing model to estimate the
fair value of options granted. The following assumptions were
used in valuing the options granted:
differences are expected to be recovered or settled. We recog-
nize liabilities for uncertain tax positions taken or expected to
be taken in income tax returns. Accrued interest and penalties
related to unrecognized tax benefits are recognized in interest
Year Ended
December 31, 2015
expense and operating expense, respectively.
Risk-free average interest rate
Dividend yield
Volatility
Expected life (years)
Weighted- average grant-date fair value
per option
0.2–1.9%
1.4%
21–39%
6.3
$27.57
Judgment is required in determining our provision for income
taxes, deferred tax assets and liabilities and unrecognized tax
benefits. In determining the need for a valuation allowance, the
historical and projected financial performance of the operation
that is recording a net deferred tax asset is considered along
Because lattice-based option- pricing models incorporate
with any other pertinent information.
ranges of assumptions, those ranges are disclosed. These
We file income tax returns in the U.S. federal jurisdiction, var-
assumptions are based on multiple factors, including histori-
ious states, and foreign jurisdictions, and we are routinely
cal exercise patterns, post- vesting termination rates, expected
under audit by many different tax authorities. We believe that
future exercise patterns and the expected volatility of our stock
our accrual for tax liabilities is adequate for all open audit
price. The risk-free interest rate is the imputed forward rate
years based on our assessment of many factors including
based on the U.S. Treasury yield at the date of grant. We use the
past experience and interpretations of tax law. This assess-
historical volatility of our stock price over the expected term of
ment relies on estimates and assumptions and may involve a
the options to estimate the expected volatility. The expected
series of complex judgments about future events. It is possible
term of options granted is derived from the output of the lattice
that examinations will be settled prior to December 31, 2018. If
model and represents the period of time that options granted
any of these tax audit settlements do occur within that period
are expected to be outstanding.
we would make any necessary adjustments to the accrual for
During 2015, we stopped granting stock options as part of our
unrecognized tax benefits.
employees’ total stock-based incentive awards. There were no
For the years ended December 31, 2016 and 2015, we had
stock options granted in 2017 and 2016 and a minimal amount
determined that the undistributed earnings of our foreign
of stock options granted in 2015.
subsidiaries were permanently reinvested within those for-
eign operations. Accordingly, we had not recorded deferred
income taxes on these indefinitely reinvested earnings. As
of December 31, 2017, we have approximately $2.6 billion of
undistributed earnings of our foreign subsidiaries. As a result
of the TCJA, more than 70% of these $2.6 billion earnings will
no longer be permanently reinvested. We will continue to per-
manently reinvest approximately $780 million of these undis-
tributed earnings.
S&P Global 2017 Annual Report 43
CONTINGENCIES
We are subject to a number of lawsuits and claims that arise
in the ordinary course of business. We recognize a liability for
such contingencies when both (a) information available prior to
issuance of the financial statements indicates that it is prob-
able that a liability had been incurred at the date of the finan-
cial statements and (b) the amount of loss can reasonably be
estimated. We continually assess the likelihood of any adverse
judgments or outcomes to our contingencies, as well as poten-
tial amounts or ranges of probable losses, and recognize a lia-
bility, if any, for these contingencies based on an analysis of
each matter with the assistance of outside legal counsel and,
if applicable, other experts. Because many of these matters
are resolved over long periods of time, our estimate of liabilities
may change due to new developments, changes in assump-
tions or changes in our strategy related to the matter. When
we accrue for loss contingencies and the reasonable estimate
of the loss is within a range, we record its best estimate within
the range. We disclose an estimated possible loss or a range of
Forward- Looking Statements
This Annual Report on Form 10-K contains “ forward- looking
statements,” as defined in the Private Securities Litigation
Reform Act of 1995. These statements, which express man-
agement’s current views concerning future events, trends, con-
tingencies or results, appear at various places in this report
and use words like “anticipate,” “assume,” “believe,” “continue,”
“estimate,” “expect,” “forecast,” “future,” “intend,” “plan,”
“potential,” “predict,” “project,” “strategy,” “target” and similar
terms, and future or conditional tense verbs like “could,” “may,”
“might,” “should,” “will” and “would.” For example, management
may use forward- looking statements when addressing topics
such as: the outcome of contingencies; future actions by reg-
ulators; changes in the Company’s business strategies and
methods of generating revenue; the development and perfor-
mance of the Company’s services and products; the expected
impact of acquisitions and dispositions; the Company’s effec-
tive tax rates; and the Company’s cost structure, dividend pol-
loss when it is at least reasonably possible that a loss may have
icy, cash flows or liquidity.
been incurred.
REDEEMABLE NONCONTROLLING INTEREST
The fair value component of the redeemable noncontrolling
interest in Indices business is based on a combination of an
income and market valuation approach. Our income and mar-
ket valuation approaches may incorporate Level 3 measures for
instances when observable inputs are not available, including
Forward- looking statements are subject to inherent risks and
uncertainties. Factors that could cause actual results to differ
materially from those expressed or implied in forward- looking
statements include, among other things:
worldwide economic, political and regulatory conditions,
including conditions that may result from legislative, regu-
latory and policy changes associated with the current U.S.
administration or the United Kingdom’s withdrawal from the
assumptions related to expected future net cash flows, long-
European Union;
term growth rates, the timing and nature of tax attributes, and
the redemption features.
RECENT ACCOUNTING STANDARDS
See Note 1 — Accounting Policies to our consolidated financial
the rapidly evolving regulatory environment, in Europe, the
United States and elsewhere, affecting Ratings, Market
and Commodities Intelligence and Indices, including new
and amended regulations and the Company’s compliance
therewith;
statements for a detailed description of recent accounting
the Company’s ability to maintain adequate physical, tech-
standards. We do not expect these recent accounting stan-
nical and administrative safeguards to protect the security
dards to have a material impact on our results of operations,
of confidential information and data, and the potential for
financial condition, or liquidity in future periods.
unauthorized access to our systems or a system or network
disruption that results in improper disclosure of confidential
information or data, regulatory penalties and remedial costs;
our ability to make acquisitions and dispositions and suc-
cessfully integrate the businesses we acquire;
the outcome of litigation, government and regulatory pro-
ceedings, investigations and inquiries;
44 S&P Global 2017 Annual Report
the health of debt and equity markets, including credit
The factors noted above are not exhaustive. The Company
quality and spreads, the level of liquidity and future debt
and its subsidiaries operate in a dynamic business environ-
issuances;
ment in which new risks emerge frequently. Accordingly, the
the demand and market for credit ratings in and across the
Company cautions readers not to place undue reliance on any
sectors and geographies where the Company operates;
forward- looking statements, which speak only as of the dates
concerns in the marketplace affecting the Company’s credi-
on which they are made. The Company undertakes no obli-
bility or otherwise affecting market perceptions of the integ-
gation to update or revise any forward- looking statement to
rity or utility of independent credit ratings;
reflect events or circumstances arising after the date on which
the effect of competitive products and pricing, including the
it is made, except as required by applicable law. Further infor-
level of success of new product developments and global
mation about the Company’s businesses, including information
expansion;
about factors that could materially affect its results of opera-
consolidation in the Company’s end- customer markets;
tions and financial condition, is contained in the Company’s fil-
the impact of customer cost- cutting pressures, including in
ings with the SEC, including Item 1a, Risk Factors, in this Annual
the financial services industry and commodities markets;
Report on Form 10-K.
a decline in the demand for credit risk management tools by
financial institutions;
the level of merger and acquisition activity in the United
States and abroad;
the volatility of the energy marketplace and the health of the
commodities markets;
our ability to attract, incentivize and retain key employees;
our ability to adjust to changes in European and United
Kingdom markets as the United Kingdom leaves the
European Union, and the impact of the United Kingdom’s
departure on our credit rating activities and other European
and United Kingdom offerings;
the Company’s ability to successfully recover should it expe-
rience a disaster or other business continuity problem from
a hurricane, flood, earthquake, terrorist attack, pandemic,
security breach, cyber- attack, power loss, telecommunica-
tions failure or other natural or man-made event;
changes in applicable tax or accounting requirements,
including the impact of recent tax reform in the U.S.;
the level of the Company’s future cash flows and capital
investments;
the impact on the Company’s revenue and net income caused
by fluctuations in foreign currency exchange rates; and
the Company’s exposure to potential criminal sanctions or
civil penalties if it fails to comply with foreign and U.S. laws
and regulations that are applicable in the domestic and inter-
national jurisdictions in which it operates, including sanc-
tions laws relating to countries such as Iran, Russia, Sudan
and Syria, anti- corruption laws such as the U.S. Foreign
Corrupt Practices Act and the U.K. Bribery Act of 2010, and
local laws prohibiting corrupt payments to government offi-
cials, as well as import and export restrictions.
S&P Global 2017 Annual Report 45
Consolidated Statements of Income
(in millions, except per share data)
Revenue
Expenses:
Operating- related expenses
Selling and general expenses
Depreciation
Amortization of intangibles
Total expenses
Gain on dispositions
Operating profit
Interest expense, net
Income before taxes on income
Provision for taxes on income
Net income
Less: net income attributable to noncontrolling interests
Year Ended December 31,
2017
2016
2015
$ 6,063
$ 5,661
$ 5,313
1,713
1,560
82
98
3,453
—
2,610
149
2,461
823
1,638
(142)
1,773
1,439
85
96
3,393
(1,101)
3,369
181
3,188
960
2,228
(122)
1,718
1,532
90
67
3,407
(11)
1,917
102
1,815
547
1,268
(112)
Net income attributable to S&P Global Inc.
$ 1,496
$ 2,106
$ 1,156
Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic
Diluted
Weighted- average number of common shares outstanding:
Basic
Diluted
Actual shares outstanding at year end
Dividend declared per common share
See accompanying notes to the consolidated financial statements.
$ 5.84
$ 5.78
256.3
258.9
253.7
$ 1.64
$ 8.02
$ 7.94
262.8
265.2
258.3
$ 1.44
$ 4.26
$ 4.21
271.6
274.6
265.2
$ 1.32
46 S&P Global 2017 Annual Report
Consolidated Statements of Comprehensive Income
(in millions)
Net income
Other comprehensive income:
Foreign currency translation adjustment
Income tax effect
Pension and other postretirement benefit plans
Income tax effect
Unrealized loss on investment
Income tax effect
Unrealized gain (loss) on forward exchange contracts
Income tax effect
Comprehensive income
Less: comprehensive income attributable to nonredeemable noncontrolling interests
Less: comprehensive income attributable to redeemable noncontrolling interests
Year Ended December 31,
2017
2016
2015
$ 1,638
$ 2,228
$ 1,268
93
—
93
52
(11)
41
(10)
—
(10)
—
—
—
1,762
(15)
(127)
(132)
(7)
(139)
(27)
(10)
(37)
—
—
—
4
(1)
3
2,055
(13)
(109)
(111)
1
(110)
34
(9)
25
—
—
—
(1)
—
(1)
1,182
(11)
(101)
Comprehensive income attributable to S&P Global Inc.
$ 1,620
$ 1,933
$ 1,070
See accompanying notes to the consolidated financial statements.
S&P Global 2017 Annual Report 47
Consolidated Balance Sheets
(in millions)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net of allowance for doubtful accounts: 2017 — $33; 2016 — $28
Prepaid and other current assets
Total current assets
Property and equipment:
Buildings and leasehold improvements
Equipment and furniture
Total property and equipment
Less: accumulated depreciation
Property and equipment, net
Goodwill
Other intangible assets, net
Other non- current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Accrued compensation and contributions to retirement plans
Short-term debt
Income taxes currently payable
Unearned revenue
Accrued legal and regulatory settlements
Other current liabilities
Total current liabilities
Long-term debt
Pension and other postretirement benefits
Other non- current liabilities
Total liabilities
Redeemable noncontrolling interest
Commitments and contingencies (Note 13)
Equity:
Common stock, $1 par value: authorized — 600 million shares; issued — 412 million shares in 2017 and 2016
Additional paid-in capital
Retained income
Accumulated other comprehensive loss
Less: common stock in treasury — at cost: 2017 — 158 million shares; 2016 — 153 million shares
412
525
10,025
(649)
(9,602)
Total equity — controlling interests
Total equity — noncontrolling interests
Total equity
Total liabilities and equity
See accompanying notes to the consolidated financial statements.
48 S&P Global 2017 Annual Report
December 31,
2017
2016
$ 2,779
12
1,319
214
4,324
354
475
829
(554)
275
2,989
1,388
449
$ 2,392
8
1,122
149
3,671
356
452
808
(537)
271
2,949
1,506
272
$ 9,425
$ 8,669
$
195
472
399
77
1,613
107
351
3,214
3,170
244
679
7,307
1,350
$ 183
409
—
95
1,509
56
359
2,611
3,564
274
439
6,888
1,080
412
502
9,210
(773)
(8,701)
650
51
701
711
57
768
$ 9,425
$ 8,669
Consolidated Statements of Cash Flows
(in millions)
Operating Activities:
Net income
Adjustments to reconcile net income to cash provided by operating activities from
continuing operations:
Depreciation
Amortization of intangibles
Provision for losses on accounts receivable
Deferred income taxes
Stock-based compensation
Gain on dispositions
Accrued legal and regulatory settlements
Other
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable
Prepaid and other current assets
Accounts payable and accrued expenses
Unearned revenue
Accrued legal and regulatory settlements
Other current liabilities
Net change in prepaid/accrued income taxes
Net change in other assets and liabilities
Cash provided by operating activities from continuing operations
Investing Activities:
Capital expenditures
Acquisitions, net of cash acquired
Proceeds from dispositions
Changes in short-term investments
Cash (used for) provided by investing activities from continuing operations
Financing Activities:
(Payments on)/additions to short-term debt, net
Proceeds from issuance of senior notes, net
Payments on senior notes
Dividends paid to shareholders
Distributions to noncontrolling interest holders
Repurchase of treasury shares
Exercise of stock options
Contingent consideration payments
Purchase of additional CRISIL shares
Employee withholding tax on share-based payments
Cash (used for) provided by financing activities from continuing operations
Effect of exchange rate changes on cash
Cash provided by continuing operations
Discontinued Operations:
Cash used for operating activities
Cash used for discontinued operations
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Cash paid during the year for:
Interest (including discontinued operations)
Income taxes (including discontinued operations)
See accompanying notes to the consolidated financial statements.
Year Ended December 31,
2017
2016
2015
$ 1,638
$ 2,228
$ 1,268
82
98
16
—
99
—
55
96
(196)
10
75
85
(4)
(85)
32
15
2,016
(123)
(83)
2
(5)
(209)
—
—
—
(421)
(111)
(1,001)
75
—
—
(49)
(1,507)
87
387
85
96
9
79
76
(1,101)
54
30
(177)
5
19
107
(150)
(19)
174
45
1,560
(115)
(177)
1,498
(1)
1,205
(143)
493
(421)
(380)
(116)
(1,123)
88
(39)
—
(55)
(1,696)
(158)
911
—
—
—
—
90
67
8
280
78
(11)
119
57
(118)
5
(9)
129
(1,624)
(77)
129
(35)
356
(139)
(2,396)
14
(4)
(2,525)
143
2,674
—
(363)
(104)
(974)
86
(5)
(16)
(92)
1,349
(67)
(887)
(129)
(129)
387
2,392
911
1,481
(1,016)
2,497
$ 2,779
$ 2,392
$ 1,481
$ 139
$ 709
$ 150
$ 683
$
65
$ 260
S&P Global 2017 Annual Report 49
Consolidated Statements of Equity
(in millions)
Common
Stock
$1 par
Additional
Paid-in
Capital
Retained
Income
Accumulated
Other
Comprehensive
Loss
Less:
Treasury
Stock
Total
SPGI
Equity
Noncontrolling
Interests
Total
Equity
Balance as of December 31, 2014
$ 412
Comprehensive income 1
Dividends
Share repurchases
Employee stock plans, net of tax
benefit
Change in redemption value of
redeemable noncontrolling interest
Other
$ 493 $ 6,946
1,156
(359)
(86)
$ (514) $ 6,849 $ 488
1,070
(359)
(1,000)
1,000
$ 51 $ 539
1,081
(368)
(1,002)
11
(9)
(2)
(18)
(120)
102
102
(107)
(107)
—
(2)
(107)
(2)
Balance as of December 31, 2015
$ 412
$ 475 $ 7,636
$ (600) $ 7,729 $ 194
$ 49 $ 243
Comprehensive income 1
Dividends
Share repurchases
Employee stock plans, net of tax
benefit
Change in redemption value of
redeemable noncontrolling interest
Other
2,106
(380)
(173)
1,933
(380)
13
(10)
1,097
(1,097)
(125)
152
1,946
(390)
(1,097)
152
(153)
1
(153)
—
(1)
27
(153)
1
Balance as of December 31, 2016
$ 412
$ 502 $ 9,210
$ (773) $ 8,701 $ 650
$ 51 $ 701
Comprehensive income 1
Dividends
Share repurchases
Employee stock plans
Change in redemption value of
1,496
(421)
124
23
redeemable noncontrolling interest
(260)
Other
1,001
(100)
1,620
(421)
(1,001)
123
(260)
—
15
(10)
(5)
8
1,635
(431)
(1,006)
131
(2)
(260)
(2)
Balance as of December 31, 2017
$ 412
$ 525 $ 10,025
$ (649) $ 9,602 $ 711
$ 57 $ 768
1 Excludes $127 million, $109 million and $101 million in 2017, 2016 and 2015, respectively, attributable to redeemable noncontrolling interest.
See accompanying notes to the consolidated financial statements.
50 S&P Global 2017 Annual Report
Notes to the Consolidated Financial Statements
1. Accounting Policies
sale in its present condition subject only to terms that are usual
and customary for sales of such disposal group; an active pro-
NATURE OF OPERATIONS S&P Global Inc. (together with its
gram to locate a buyer and other actions required to complete
consolidated subsidiaries, the “Company,” the “Registrant,”
the plan to sell the disposal group have been initiated; the sale
“we,” “us” or “our”) is a leading provider of transparent and
of the disposal group is probable, and transfer of the disposal
independent ratings, benchmarks, analytics and data to the
group is expected to qualify for recognition as a completed sale
capital and commodity markets worldwide. The capital mar-
within one year, except if events or circumstances beyond our
kets include asset managers, investment banks, commercial
control extend the period of time required to sell the disposal
banks, insurance companies, exchanges, trading firms and
group beyond one year; the disposal group is being actively
issuers; and the commodity markets include producers, trad-
marketed for sale at a price that is reasonable in relation to its
ers and intermediaries within energy, metals, petrochemicals
current fair value; and actions required to complete the plan
and agriculture.
Our operations consist of three reportable segments: Ratings,
indicate that it is unlikely that significant changes to the plan
will be made or that the plan will be withdrawn.
Market and Commodities Intelligence and S&P Dow Jones
A disposal group that is classified as held for sale is initially
Indices (“Indices”).
measured at the lower of its carrying value or fair value less any
Ratings is an independent provider of credit ratings, research
costs to sell. Any loss resulting from this measurement is rec-
and analytics, offering investors and other market partici-
ognized in the period in which the held for sale criteria are met.
pants information, ratings and benchmarks.
Conversely, gains are not recognized on the sale of a disposal
Market and Commodities Intelligence is a global provider of
group until the date of sale.
multi-asset-class data, research and analytical capabilities,
which integrate cross-asset analytics and desktop services
and deliver their customers in the commodity and energy
markets access to high-value information, data, analytic
services and pricing and quality benchmarks. We completed
the sale of J.D. Power on September 7, 2016, with the results
included in Market and Commodities Intelligence results
through that date.
Indices is a global index provider that maintains a wide vari-
ety of valuation and index benchmarks for investment advi-
sors, wealth managers and institutional investors.
See Note 12 — Segment and Geographic Information for fur-
ther discussion on our operating segments, which are also our
reportable segments.
Assets and Liabilities Held for Sale and
Discontinued Operations
ASSETS AND LIABILITIES HELD FOR SALE We classify a dis-
posal group to be sold as held for sale in the period in which
all of the following criteria are met: management, having the
authority to approve the action, commits to a plan to sell the
disposal group; the disposal group is available for immediate
The fair value of a disposal group less any costs to sell is
assessed each reporting period it remains classified as held for
sale and any subsequent changes are reported as an adjust-
ment to the carrying value of the disposal group, as long as the
new carrying value does not exceed the carrying value of the
disposal group at the time it was initially classified as held for
sale. Upon determining that a disposal group meets the crite-
ria to be classified as held for sale, the Company reports the
assets and liabilities of the disposal group as held for sale in the
current period in our consolidated balance sheets.
DISCONTINUED OPERATIONS Beginning on January 1, 2015,
we adopted revised guidance for discontinued operations that
raises the threshold for a disposal to qualify as a discontinued
operation. In determining whether a disposal of a component
of an entity or a group of components of an entity is required to
be presented as a discontinued operation, we make a determi-
nation whether the disposal represents a strategic shift that
had, or will have, a major effect on our operations and financial
results. A component of an entity comprises operations and
cash flows that can be clearly distinguished both operation-
ally and for financial reporting purposes. If we conclude that
the disposal represents a strategic shift, then the results of
S&P Global 2017 Annual Report 51
operations of the group of assets being disposed of (as well as
customers, areas of specific or concentrated risk as well as
any gain or loss on the disposal transaction) are aggregated
applicable industry trends or market indicators.
for separate presentation apart from our continuing operating
results in the consolidated financial statements. Unless oth-
erwise indicated, all disclosures and amounts in the notes to
our consolidated financial statements relate to our continuing
operations.
CAPITALIZED TECHNOLOGY COSTS We capitalize certain
software development and website implementation costs.
Capitalized costs only include incremental, direct costs of
materials and services incurred to develop the software after
the preliminary project stage is completed, funding has been
PRINCIPLES OF CONSOLIDATION The consolidated finan-
committed and it is probable that the project will be com-
cial statements include the accounts of all subsidiaries and
pleted and used to perform the function intended. Incremental
our share of earnings or losses of joint ventures and affiliated
costs are expenditures that are out-of- pocket to us and are
companies under the equity method of accounting. All sig-
not part of an allocation or existing expense base. Software
nificant intercompany accounts and transactions have been
development and website implementation costs are expensed
eliminated.
USE OF ESTIMATES The preparation of financial statements
in conformity with generally accepted accounting principles in
the United States of America requires management to make
estimates and assumptions that affect the amounts reported
in the financial statements and accompanying notes. Actual
results could differ from those estimates.
as incurred during the preliminary project stage. Capitalized
costs are amortized from the year the software is ready for
its intended use over its estimated useful life, three to seven
years, using the straight-line method. Periodically, we evaluate
the amortization methods, remaining lives and recoverability
of such costs. Capitalized software development and website
implementation costs are included in other non- current assets
and are presented net of accumulated amortization. Gross
CASH AND CASH EQUIVALENTS Cash and cash equivalents
deferred technology costs were $186 million and $145 million
include ordinary bank deposits and highly liquid investments
as of December 31, 2017 and 2016, respectively. Accumulated
with original maturities of three months or less that consist
amortization of deferred technology costs was $104 million and
primarily of money market funds with unrestricted daily liquid-
$91 million as of December 31, 2017 and 2016, respectively.
ity and fixed term time deposits. Such investments and bank
deposits are stated at cost, which approximates market value,
and were $2.8 billion and $2.4 billion as of December 31, 2017
and 2016, respectively. These investments are not subject to
significant market risk.
SHORT-TERM INVESTMENTS Short-term investments are
securities with original maturities greater than 90 days that
are available for use in our operations in the next twelve
months. The short-term investments, primarily consisting of
certificates of deposit and mutual funds, are classified as held-
to- maturity and therefore are carried at cost. Interest and div-
idends are recorded in income when earned.
ACCOUNTS RECEIVABLE Credit is extended to customers
based upon an evaluation of the customer’s financial condi-
tion. Accounts receivable, which include billings consistent
with terms of contractual arrangements, are recorded at net
realizable value.
FAIR VALUE Certain assets and liabilities are required to be
recorded at fair value and classified within a fair value hierar-
chy based on inputs used when measuring fair value. We have
an immaterial amount of forward exchange contracts that are
adjusted to fair value on a recurring basis.
Other financial instruments, including cash and cash equiva-
lents and short-term investments, are recorded at cost, which
approximates fair value because of the short-term maturity
and highly liquid nature of these instruments. The fair value of
our total debt borrowings were $3.8 billion and $3.7 billion as of
December 31, 2017 and 2016, respectively, and was estimated
based on quoted market prices.
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
(INCLUDING OTHER INTANGIBLE ASSETS) We evaluate long-
lived assets for impairment whenever events or changes in cir-
cumstances indicate that the carrying amount of an asset may
not be recoverable. Upon such an occurrence, recoverability of
ALLOWANCE FOR DOUBTFUL ACCOUNTS The allowance for
assets to be held and used is measured by comparing the car-
doubtful accounts reserve methodology is based on historical
rying amount of an asset to current forecasts of undiscounted
analysis, a review of outstanding balances and current con-
future net cash flows expected to be generated by the asset. If
ditions. In determining these reserves, we consider, amongst
the carrying amount of the asset exceeds its estimated future
other factors, the financial condition and risk profile of our
cash flows, an impairment charge is recognized equal to the
52 S&P Global 2017 Annual Report
amount by which the carrying amount of the asset exceeds
difference between the sum of the fair values of the reporting
the fair value of the asset. For long-lived assets held for sale,
units and our total market capitalization for reasonableness,
assets are written down to fair value, less cost to sell. Fair value
taking into account certain factors including control premiums.
is determined based on market evidence, discounted cash
flows, appraised values or management’s estimates, depend-
ing upon the nature of the assets.
If the fair value of the reporting unit is less than the carrying
value, a second step is performed which compares the implied
fair value of the reporting unit’s goodwill to the carrying value of
For the year ended December 31, 2016, we recorded a non-
the goodwill. The fair value of the goodwill is determined based
cash impairment charge of $24 million related to a technology
on the difference between the fair value of the reporting unit
project at our Market and Commodities Intelligence segment
and the net fair value of the identifiable assets and liabilities
in selling and general expenses in our consolidated statement
of the reporting unit. If the implied fair value of the goodwill is
of income.
less than the carrying value, the difference is recognized as an
GOODWILL AND OTHER INDEFINITE-LIVED INTANGIBLE
impairment charge.
ASSETS Goodwill represents the excess of purchase price and
We evaluate the recoverability of indefinite-lived intangible
related costs over the value assigned to the net tangible and
assets by first performing a qualitative analysis evaluating
identifiable intangible assets of businesses acquired. Goodwill
whether any events and circumstances occurred that provide
and other intangible assets with indefinite lives are not amor-
evidence that it is more likely than not that the indefinite-lived
tized, but instead are tested for impairment annually during
asset is impaired. If, based on our evaluation of the events and
the fourth quarter each year, or more frequently if events or
circumstances that occurred during the year we do not believe
changes in circumstances indicate that the asset might be
that it is more likely than not that the indefinite-lived asset
impaired. We have four reporting units with goodwill that are
is impaired, no quantitative impairment test is performed.
evaluated for impairment.
We initially perform a qualitative analysis evaluating whether
any events and circumstances occurred or exist that provide
evidence that it is more likely than not that the fair value of any
of our reporting units is less than its carrying amount. If, based
on our evaluation we do not believe that it is more likely than
not that the fair value of any of our reporting units is less than
its carrying amount, no quantitative impairment test is per-
formed. Conversely, if the results of our qualitative assessment
Conversely, if the results of our qualitative assessment deter-
mine that it is more likely than not that the indefinite-lived
asset is impaired, a quantitative impairment test is performed.
If necessary, the impairment test is performed by comparing
the estimated fair value of the intangible asset to its carrying
value. If the indefinite-lived intangible asset carrying value
exceeds its fair value, an impairment analysis is performed
using the income approach. An impairment charge is recog-
nized in an amount equal to that excess.
determine that it is more likely than not that the fair value of
Significant judgments inherent in these analyses include esti-
any of our reporting units is less than their respective carrying
mating the amount and timing of future cash flows and the
amounts we perform a two-step quantitative impairment test.
selection of appropriate discount rates, royalty rates and long-
When conducting the first step of our two step impairment test
to evaluate the recoverability of goodwill at the reporting unit
level, the estimated fair value of the reporting unit is compared
to its carrying value including goodwill. Fair value of the report-
ing units are estimated using the income approach, which
term growth rate assumptions. Changes in these estimates
and assumptions could materially affect the determination of
fair value for each reporting unit and indefinite-lived intangible
asset and could result in an impairment charge, which could
be material to our financial position and results of operations.
incorporates the use of the discounted free cash flow (“DCF”)
We performed our impairment assessment of goodwill and
analyses and are corroborated using the market approach,
indefinite-lived intangible assets and concluded that no
which incorporates the use of revenue and earnings multiples
impairment existed for the years ended December 31, 2017,
based on market data. The DCF analyses are based on the
2016 and 2015.
current operating budgets and estimated long-term growth
projections for each reporting unit. Future cash flows are dis-
counted based on a market comparable weighted average
cost of capital rate for each reporting unit, adjusted for market
and other risks where appropriate. In addition, we analyze any
FOREIGN CURRENCY TRANSLATION We have operations
in many foreign countries. For most international operations,
the local currency is the functional currency. For international
operations that are determined to be extensions of the parent
S&P Global 2017 Annual Report 53
company, the United States (“U.S.”) dollar is the functional
INCOME TAXES Deferred tax assets and liabilities are rec-
currency. For local currency operations, assets and liabilities
ognized for the future tax consequences attributable to dif-
are translated into U.S. dollars using end of period exchange
ferences between financial statement carrying amounts of
rates, and revenue and expenses are translated into U.S. dol-
existing assets and liabilities and their respective tax bases.
lars using weighted- average exchange rates. Foreign currency
Deferred tax assets and liabilities are measured using enacted
translation adjustments are accumulated in a separate com-
tax rates expected to be applied to taxable income in the years
ponent of equity.
REVENUE RECOGNITION Revenue is recognized as it is
earned when services are rendered. We consider amounts to be
earned once evidence of an arrangement has been obtained,
services are performed, fees are fixed or determinable and
collectability is reasonably assured. Revenue relating to prod-
in which those temporary differences are expected to be
recovered or settled. We recognize liabilities for uncertain tax
positions taken or expected to be taken in income tax returns.
Accrued interest and penalties related to unrecognized tax
benefits are recognized in interest expense and operating
expense, respectively.
ucts that provide for more than one deliverable is recognized
Judgment is required in determining our provision for income
based upon the relative fair value to the customer of each
taxes, deferred tax assets and liabilities and unrecognized tax
deliverable as each deliverable is provided. Revenue relating
benefits. In determining the need for a valuation allowance, the
to agreements that provide for more than one service is recog-
historical and projected financial performance of the operation
nized based upon the relative fair value to the customer of each
that is recording a net deferred tax asset is considered along
service component as each component is earned. If the fair
with any other pertinent information.
value to the customer for each service is not objectively deter-
minable, management makes its best estimate of the services’
stand-alone selling price and records revenue as it is earned
over the service period. For arrangements that include multiple
services, fair value of the service components are determined
using an analysis that considers cash consideration that would
be received for instances when the service components are
sold separately. Advertising revenue is recognized when the
page is run. Subscription income is recognized over the related
subscription period.
We file income tax returns in the U.S. federal jurisdiction, var-
ious states, and foreign jurisdictions, and we are routinely
under audit by many different tax authorities. We believe that
our accrual for tax liabilities is adequate for all open audit
years based on our assessment of many factors including
past experience and interpretations of tax law. This assess-
ment relies on estimates and assumptions and may involve a
series of complex judgments about future events. It is possible
that examinations will be settled prior to December 31, 2018. If
any of these tax audit settlements do occur within that period
DEPRECIATION The costs of property and equipment are
we would make any necessary adjustments to the accrual for
depreciated using the straight-line method based upon the
unrecognized tax benefits.
following estimated useful lives: buildings and improvements
from 15 to 40 years and equipment and furniture from 2 to 10
years. The costs of leasehold improvements are amortized
over the lesser of the useful lives or the terms of the respec-
tive leases.
For the years ended December 31, 2016 and 2015, we had
determined that the undistributed earnings of our foreign
subsidiaries were permanently reinvested within those for-
eign operations. Accordingly, we had not recorded deferred
income taxes on these indefinitely reinvested earnings. As
ADVERTISING EXPENSE The cost of advertising is expensed
of December 31, 2017, we have approximately $2.6 billion of
as incurred. We incurred $33 million, $35 million and $33 mil-
undistributed earnings of our foreign subsidiaries. As a result
lion in advertising costs for the years ended December 31, 2017,
of the TCJA, more than 70% of these $2.6 billion earnings
2016 and 2015, respectively.
STOCK-BASED COMPENSATION Stock-based compensation
expense is measured at the grant date based on the fair value
will no longer be permanently reinvested. We will continue
to permanently reinvest approximately $780 million of these
undistributed earnings.
of the award and is recognized over the requisite service period,
REDEEMABLE NONCONTROLLING INTEREST The agree-
which typically is the vesting period. Stock-based compensa-
ment with the minority partners of our S&P Dow Jones Indices
tion is classified as both operating- related expense and selling
LLC joint venture established in June of 2012 contains redemp-
and general expense in the consolidated statements of income.
tion features whereby interests held by our minority partners
are redeemable either (i) at the option of the holder or (ii) upon
54 S&P Global 2017 Annual Report
the occurrence of an event that is not solely within our control.
award. This guidance does not change the accounting for mod-
Since redemption of the noncontrolling interest is outside of our
ifications but clarifies when modification accounting guidance
control, this interest is presented on our consolidated balance
should be applied. Under the new guidance, an entity should
sheets under the caption “Redeemable noncontrolling inter-
apply modification accounting in response to a change in the
est.” If the interest were to be redeemed, we would be required
terms and conditions of an entity’s share-based payment
to purchase all of such interest at fair value on the date of
awards unless three newly specified criteria are met. The
redemption. We adjust the redeemable noncontrolling interest
guidance is effective for reporting periods beginning after
each reporting period to its estimated redemption value, but
December 15, 2017; however, early adoption is permitted. We
never less than its initial fair value, using a combination of an
do not expect this guidance to have a significant impact on our
income and market valuation approach. Our income and mar-
consolidated financial statements.
ket valuation approaches may incorporate Level 3 measures for
instances when observable inputs are not available, including
assumptions related to expected future net cash flows, long-
term growth rates, the timing and nature of tax attributes, and
the redemption features. Any adjustments to the redemption
value will impact retained income. See Note 9 — Equity for fur-
ther detail.
In March of 2017, the FASB issued guidance to enhance the
presentation of net periodic pension cost and net periodic
postretirement benefit cost. The guidance requires employ-
ers to report the service cost component in the same line item
or items as other compensation costs arising from services
rendered by the pertinent employees during the period, and
requires the other components of net periodic pension cost and
CONTINGENCIES We accrue for loss contingencies when
net periodic postretirement benefit cost to be presented in the
both (a) information available prior to issuance of the consol-
income statement separately from the service cost component
idated financial statements indicates that it is probable that
outside a subtotal of income from operations. Additionally,
a liability had been incurred at the date of the financial state-
only the service cost component is eligible for capitalization.
ments and (b) the amount of loss can reasonably be estimated.
The guidance is effective for reporting periods beginning after
We continually assess the likelihood of any adverse judgments
December 15, 2017; however, early adoption is permitted. The
or outcomes to our contingencies, as well as potential amounts
guidance is required to be adopted retrospectively with respect
or ranges of probable losses, and recognize a liability, if any, for
to the income statement presentation requirement and pro-
these contingencies based on an analysis of each matter with
spectively for the capitalization requirement. The change in
the assistance of outside legal counsel and, if applicable, other
capitalization requirement will not have a material impact on
experts. Because many of these matters are resolved over long
our consolidated financial statements. We recorded a bene-
periods of time, our estimate of liabilities may change due to
fit of $25 million, $24 million and $3 million in 2017, 2016 and
new developments, changes in assumptions or changes in our
2015, respectively, related to our net periodic benefit costs for
strategy related to the matter. When we accrue for loss con-
our retirement and postretirement plans. These amounts are
tingencies and the reasonable estimate of the loss is within a
not necessarily indicative of future amounts that may arise in
range, we record our best estimate within the range. We dis-
years following the implementation of this new guidance. See
close an estimated possible loss or a range of loss when it is at
Note 7 — Employee Benefits for additional information related
least reasonably possible that a loss may be incurred.
to our retirement and postretirement plans.
RECENT ACCOUNTING STANDARDS In August of 2017, the
In January of 2017, the FASB issued guidance that simplifies
Financial Accounting Standards Board (“FASB”) issued guid-
the subsequent measurement of goodwill and eliminates
ance to enhance the hedge accounting model for both non-
Step 2 from the goodwill impairment test. Under the new guid-
financial and financial risk components, which includes
ance, an entity should perform its annual, or interim, goodwill
amendments to address certain aspects of recognition and
impairment test by comparing the fair value of a reporting
presentation disclosure. The guidance is effective for reporting
unit with its carrying amount. An entity should recognize
periods beginning after December 15, 2018. We do not expect
an impairment charge for the amount by which the carrying
this guidance to have a significant impact on our consolidated
amount exceeds the reporting unit’s fair value; however, the
financial statements.
In May of 2017, the FASB issued guidance that provides clari-
fication on when modification accounting should be used for
changes to the terms or conditions of a share-based payment
loss recognized should not exceed the total amount of goodwill
allocated to that reporting unit. Additionally, an entity should
consider income tax effects from any tax deductible goodwill
on the carrying amount of the reporting unit when measuring
S&P Global 2017 Annual Report 55
the goodwill impairment loss, if applicable. The guidance is
financing activity in our consolidated statements of cash flows
effective for reporting periods beginning after December 15,
for the years ended December 31, 2016 and 2015, respectively.
2019; however, early adoption is permitted. We do not expect
this guidance to have a significant impact on our consolidated
financial statements.
In February of 2016, the FASB issued guidance that amends
accounting for leases. Under the new guidance, a lessee will
recognize assets and liabilities but will recognize expenses
In January of 2017, the FASB issued guidance that clarifies the
similar to current lease accounting. The guidance is effec-
definition of a business with the objective of adding guidance
tive for reporting periods beginning after December 15, 2018;
to assist entities with evaluating whether transactions should
however, early adoption is permitted. The new guidance must
be accounted for as acquisitions (or disposals) of assets or
be adopted using a modified retrospective approach to each
businesses. The guidance is effective for reporting periods
prior reporting period presented with various optional practical
beginning after December 15, 2017. We do not expect this guid-
expedients. We are currently evaluating the impact of the adop-
ance to have a significant impact on our consolidated financial
tion of this guidance on our consolidated financial statements.
statements.
In January of 2016, the FASB issued guidance to enhance the
In August of 2016, the FASB issued guidance providing amend-
reporting model for financial instruments, which includes
ments to eight specific statement of cash flows classification
amendments to address certain aspects of recognition, mea-
issues. The guidance is effective for reporting periods begin-
surement, presentation and disclosure. The guidance is effec-
ning after December 15, 2017; however, early adoption is per-
tive for reporting periods beginning after December 15, 2017.
mitted. We do not expect this guidance to have a significant
We do not expect this guidance to have a significant impact on
impact on our consolidated financial statements.
our consolidated financial statements.
In March of 2016, the FASB issued guidance to modify several
In May of 2014, the FASB and the International Accounting
aspects of accounting for share-based payment transactions,
Standards Board (“IASB”) issued jointly a converged standard
including the accounting for income taxes, forfeitures, statu-
on the recognition of revenue from contracts with customers,
tory tax withholding requirements, as well as classification in
which is intended to improve the financial reporting of reve-
the statement of cash flows. This guidance requires recogniz-
nue and comparability of the top line in financial statements
ing excess tax benefits and deficiencies as income tax expense
globally. The core principle of the new standard is for the rec-
or benefit in the statement of income, instead of in equity. The
ognition of revenue to depict the transfer of goods or services
guidance was effective on January 1, 2017 and was adopted as
to customers in amounts that reflect the payment to which the
follows: 1) prospectively for the recognition of excess tax ben-
company expects to be entitled in exchange for those goods or
efits and deficiencies in the tax provision, 2) retrospectively for
services. The new standard will also result in enhanced reve-
the classification of excess tax benefits and deficiencies in the
nue disclosures, provide guidance for transactions that were
statement of cash flows, and 3) retrospectively for the classi-
not previously addressed comprehensively and improve guid-
fication of cash paid for shares withheld to satisfy employee
ance for multiple- element arrangements. In August of 2015, the
taxes in the statement of cash flows. For the year ended
FASB issued guidance deferring the effective date of the new
December 31, 2017, excess tax benefits from share-based pay-
revenue standard by one year. Subsequently, the FASB issued
ments of $72 million were recognized as an income tax benefit
implementation guidance related to the new revenue standard,
in our consolidated statements of income and classified as an
including the following: In March of 2016, the FASB issued guid-
operating activity in our consolidated statements of cash flows.
ance to clarify the implementation guidance on principal ver-
For the years ended December 31, 2016 and 2015, we reclas-
sus agent considerations; in April of 2016, the FASB clarified
sified $41 million and $69 million, respectively, of excess tax
guidance on performance obligations and the licensing imple-
benefits from share-based payments from a financing activity
mentation guidance; in May of 2016, the FASB issued a practi-
to an operating activity in our consolidated statements of cash
cal expedient in response to identified implementation issues.
flows. In addition, cash paid for shares withheld on the employ-
The new guidance will be effective for annual reporting periods
ees’ behalf of $49 million was classified as a financing activity
beginning after December 15, 2017, including interim reporting
in our consolidated statements of cash flows for the year ended
periods within that reporting period. We have completed our
December 31, 2017. Cash paid for employee taxes of $55 million
evaluation of changes to our accounting policies, business pro-
and $92 million were reclassified from an operating activity to a
cesses, systems and internal controls to support the recogni-
tion and disclosure requirements under the new standard. We
56 S&P Global 2017 Annual Report
will adopt the new revenue standard effective January 1, 2018
The investment with Algomi is not material to our consoli-
using the modified retrospective transition method. Based on
dated financial statements.
our analysis, adoption of the new standard will impact: 1) the
In June of 2017, CRISIL, included within our Ratings segment,
capitalization of costs to obtain contracts with our custom-
acquired 8.9% of the outstanding shares of CARE Ratings
ers and the related amortization period of those costs; 2) the
Limited (“CARE”) from Canara Bank. CARE is a Securities
timing of when fees for certain Ratings products that are rec-
and Exchange Board of India registered credit rating agency
ognized to match when the customer obtains control of the
providing various rating and grading services in India whose
product; 3) the accounting for long-term deferred revenue in
shares are publicly traded on both the Bombay Stock
our Ratings segment which contain a financing component;
Exchange and the National Stock Exchange of India. We
and 4) the presentation of sales of certain of our jointly-owned
accounted for the investment in CARE as available-for-sale
products in our Market and Commodities Intelligence segment,
using the fair value method of accounting. The investment
where revenue will be recognized on a gross rather than net
balance as of December 31, 2017 of $54 million is included in
basis. The aggregate impact of these adjustments on our open-
other non- current assets in our consolidated balance sheet.
ing balance sheet will be an increase to retained earnings of
The change in the fair value of this investment is reported in
approximately $40 million, with the increase driven primarily by
accumulated other comprehensive loss in our consolidated
the capitalization of costs to obtain contracts with our custom-
balance sheet. The investment in CARE is not material to our
ers of approximately $79 million previously expensed, offset by
consolidated financial statements.
the deferral of income associated with our Ratings products of
approximately $14 million previously recognized in revenue, the
net impact of recording expense associated with the significant
2016
For the year ended December 31, 2016, we paid cash for
financing component of Ratings’ long term deferred revenue of
acquisitions, net of cash acquired, totaling $177 million. None
approximately $12 million, and a net increase to the associated
of our acquisitions were material either individually or in the
deferred tax assets and deferred tax liabilities associated with
aggregate, including the pro forma impact on earnings. All
these adjustments of approximately $13 million.
RECLASSIFICATION
Certain prior year amounts have been reclassified for compa-
rability purposes.
2. Acquisitions and Divestitures
ACQUISITIONS
2017
For the year ended December 31, 2017, we paid cash for
acquisitions, net of cash acquired, totaling $83 million. None
of our acquisitions were material either individually or in the
aggregate, including the pro forma impact on earnings. All
acquisitions were funded with cash flows from operations.
Acquisitions completed during the year ended December 31,
2017 included:
In August of 2017, we acquired a 6.02% investment in Algomi
Limited (“Algomi”), an innovative fintech company focused on
providing software- enabled liquidity solutions to both buy-
side and sell-side firms within the credit markets. Our invest-
ment in Algomi will help facilitate product collaboration and
enable future business expansion. We accounted for the
investment in Algomi using the cost method of accounting.
acquisitions were funded with cash flows from operations.
Acquisitions completed during the year ended December 31,
2016 by segment included:
Market and Commodities Intelligence
In December of 2016, Market and Commodities Intelligence
acquired a 2.54% equity investment in Kensho Technologies,
Inc. (“Kensho”), a financial technology startup in market data
analytics. We accounted for the acquisition of Kensho on a
cost basis. Our investment in Kensho is not material to our
consolidated financial statements.
In September of 2016, Market and Commodities Intelligence
acquired PIRA Energy Group (“PIRA”), a global provider of
energy research and forecasting products and services. The
purchase enhances Market and Commodities Intelligence’s
energy analytical capabilities by expanding its oil offering
and strengthening its position in the natural gas and power
markets. We accounted for the acquisition of PIRA using the
purchase method of accounting. The acquisition of PIRA is
not material to our consolidated financial statements.
In June of 2016, Market and Commodities Intelligence
acquired RigData, a provider of daily information on rig
activity for the natural gas and oil markets across North
America. The purchase enhances Market and Commodities
Intelligence’s energy analytical capabilities by strengthening
S&P Global 2017 Annual Report 57
its position in natural gas and enhancing its oil offering. We
growth opportunities as a result of the acquisition. The intangi-
accounted for the acquisition of RigData using the purchase
ble assets, excluding goodwill and indefinite-lived intangibles,
method of accounting. The acquisition of RigData is not
will be amortized over their anticipated useful lives between
material to our consolidated financial statements.
3 and 10 years which will be determined when we finalize our
In March of 2016, Market and Commodities Intelligence
purchase price allocations. The goodwill for PIRA and RigData
acquired Commodity Flow, a specialist technology and busi-
is expected to be deductible for tax purposes.
ness intelligence service for the global waterborne com-
modity and energy markets. The purchase helps extend
Market and Commodities Intelligence’s trade flow analyti-
2015
For the year ended December 31, 2015, we paid cash for acqui-
cal capabilities and complements its existing shipping ser-
sitions, net of cash acquired, totaling $2.4 billion. We used
vices. We accounted for the acquisition of Commodity Flow
the net proceeds of our $2.0 billion of senior notes issued in
using the purchase method of accounting. The acquisition of
August of 2015 and cash on hand to finance the acquisition of
Commodity Flow is not material to our consolidated financial
SNL. All other acquisitions were funded with cash flows from
statements.
Following our acquisition of PIRA, we made a contingent pur-
chase price payment in 2016 for $34 million that has been
reflected in the consolidated statement of cash flows as a
financing activity.
Following our acquisition of National Automobile Dealers
Association’s Used Car Guide (“UCG”) at J.D. Power in July of
2015, we made a contingent purchase price payment in 2016
for $5 million that has been reflected in the consolidated state-
ment of cash flows as a financing activity.
Indices
operations. Acquisitions completed during the year ended
December 31, 2015 by segment included:
Market and Commodities Intelligence
In September of 2015, we acquired SNL Financial LC (“SNL”)
for $2.2 billion. SNL is a global provider of news, data, and
analytical tools to five sectors in the global economy: finan-
cial services, real estate, energy, media & communications,
and metals & mining. SNL delivers information through its
suite of web, mobile and direct data feed platforms that
helps clients, including investment and commercial banks,
investors, corporations, and regulators make decisions,
improve efficiency, and manage risk. See below for further
In October of 2016, Indices acquired Trucost plc, a leader in
detail related to this transaction.
carbon and environmental data and risk analysis through its
In July of 2015, we acquired the entire issued share capital of
subsidiary S&P Global Indices UK Limited. The purchase will
Petromedia Ltd and its operating subsidiaries (“Petromedia”),
build on Indices’ current portfolio of Environmental, Social
an independent provider of data, intelligence, news and tools
and Governance solutions. The acquisition of Trucost plc is
to the global fuels market that offers a suite of products
not material to our consolidated financial statements.
Ratings
that provides clients with actionable data and intelligence
that enable informed decisions, minimize risk and increase
efficiency. We accounted for the acquisition of Petromedia
In June of 2016, Ratings acquired a 49% equity investment
using the purchase method of accounting. The acquisition
in Thailand’s TRIS Rating Company Limited from its parent
of Petromedia is not material to our consolidated financial
company, TRIS Corporation Limited. The transaction extends
statements.
an existing association between Ratings and TRIS Rating and
deepens their commitment to capital markets in Thailand.
We accounted for the acquisition of TRIS Rating Company
using the equity method of accounting. The equity invest-
ment in TRIS Rating is not material to our consolidated finan-
cial statements.
For acquisitions during 2016 that were accounted for using the
purchase method, the excess of the purchase price over the
fair value of the net assets acquired is allocated to goodwill and
other intangibles. The goodwill recognized on our acquisitions
is largely attributable to anticipated operational synergies and
Following our acquisition of UCG at J.D. Power in July of 2015,
we made a contingent purchase price payment in 2015 for
$5 million that has been reflected in the consolidated state-
ment of cash flows as a financing activity.
For acquisitions during 2015 that were accounted for using the
purchase method, the excess of the purchase price over the
fair value of the net assets acquired is allocated to goodwill and
other intangibles. Intangible assets recorded for all transac-
tions are amortized using the straight-line method for periods
not exceeding 18 years.
58 S&P Global 2017 Annual Report
Acquisition of SNL
ACQUISITION- RELATED EXPENSES During the year ended
the results that actually would have been realized had this
acquisition been completed at the beginning of 2015. The unau-
December 31, 2015, the Company incurred approximately
dited pro forma information includes intangible asset charges
$37 million of acquisition- related costs related to the acquisi-
and incremental borrowing costs as a result of the acquisition,
tion of SNL. These expenses are included in selling and general
net of related tax, estimated using the Company’s effective tax
expenses in our consolidated statements of income.
rate for continuing operations for the periods presented.
ALLOCATION OF PURCHASE PRICE Our acquisition of SNL
was accounted for using the purchase method. Under the pur-
chase method, the excess of the purchase price over the fair
value of the net assets acquired is allocated to goodwill and
other intangibles. The goodwill recognized is largely attribut-
able to anticipated operational synergies and growth oppor-
tunities as a result of the acquisition. The intangible assets,
excluding goodwill and indefinite-lived intangibles, will be
amortized over their anticipated useful lives between 10 and
18 years. The goodwill is expected to be deductible for tax
purposes.
(in millions)
Pro forma revenue
Pro forma net income
Year Ended
December 31, 2015
$5,477
$1,258
Non-cash investing activities
Liabilities assumed in conjunction with our acquisitions are
as follows:
(in millions)
Fair value of assets acquired
Cash paid (net of cash acquired)
Year ended December 31,
2017
2016
2015
$ 83 $ 253 $ 2,576
2,401
211
83
The following table presents the final allocation of purchase
Liabilities assumed
$ — $ 42 $ 175
price to the assets and liabilities of SNL as a result of the
acquisition.
(in millions)
Current assets
Property, plant and equipment
Goodwill
Other intangible assets, net:
Databases and software
Customer relationships
Tradenames
Other intangibles
Other intangible assets, net
Other non- current assets
Total assets acquired
Current liabilities
Unearned revenue
Other non- current liabilities
Total liabilities acquired
Net assets acquired
$
29
19
1,574
421
162
185
4
772
1
2,395
(43)
(117)
(1)
(161)
$ 2,234
SUPPLEMENTAL PRO FORMA INFORMATION Supplemental
information on an unaudited pro forma basis is presented below
for the year ended December 31, 2015 as if the acquisition of
SNL occurred on January 1, 2015. The pro forma financial infor-
mation is presented for comparative purposes only, based on
estimates and assumptions, which the Company believes to be
DIVESTITURES — CONTINUING OPERATIONS
2017
In April of 2017, we signed a letter of intent to sell our facility
at East Windsor, New Jersey. The fixed assets of the facility
of $5 million have been classified as held for sale, which is
included in prepaid and other current assets in our consoli-
dated balance sheet as of December 31, 2017.
In January of 2017, we completed the sale of Quant House
SAS (“QuantHouse”), included in our Market and Commodities
Intelligence segment, to QH Holdco, an independent third
party. In November of 2016, we entered into a put option
agreement that gave the Company the right, but not the obli-
gation, to put the entire share capital of QuantHouse to QH
Holdco. As a result, we classified the assets and liabilities of
QuantHouse, net of our costs to sell, as held for sale, which
were included in prepaid and other current assets and other
current liabilities, respectively, in our consolidated balance
sheet as of December 31, 2016 resulting in an aggregate loss
of $31 million. On January 4, 2017, we exercised the put option,
thereby entering into a definitive agreement to sell QuantHouse
to QH Holdco. On January 9, 2017, we completed the sale of
QuantHouse to QH Holdco.
reasonable but not necessarily indicative of the consolidated
The components of assets and liabilities held for sale related to
financial position or results of operations in future periods or
QuantHouse, which were included in prepaid and other current
S&P Global 2017 Annual Report 59
assets and other current liabilities in the consolidated balance
Research”) to CFRA, a leading independent provider of foren-
sheet, consist of the following:
sic accounting research, analytics and advisory services.
December 31, 2016
During the year ended December 31, 2016, we recorded a
(in millions)
Accounts receivable, net
Other assets
Assets of a business held for sale
Accounts payable and accrued expenses
Unearned revenue
Other liabilities
Liabilities of a business held for sale
$ 4
3
$ 7
$ 3
7
35
$ 45
pre-tax gain of $9 million ($5 million after-tax) in gain on dis-
positions in the consolidated statement of income related to
the sale of Equity Research.
In September of 2016, we completed the sale of J.D. Power,
included within our Market and Commodities Intelligence
segment, for $1.1 billion to XIO Group, a global alternative
investments firm headquartered in London. During the year
ended December 31, 2016, we recorded a pre-tax gain of
$728 million ($516 million after-tax) in gain on dispositions
in the consolidated statement of income related to the sale
2016
During the year ended December 31, 2016, we completed the
following dispositions that resulted in a net pre-tax gain of
of J.D. Power.
$1.1 billion, which was included in gain on dispositions in the
consolidated statement of income:
In October of 2016, we completed the sale of Standard
& Poor’s Securities Evaluations, Inc. (“SPSE”) and Credit
Market Analysis (“CMA”), two businesses within our Market
2015
During the year ended December 31, 2015, we recorded a pre-
tax gain of $11 million in gain on dispositions in the consoli-
dated statement of income related to the sale of our interest in
and Commodities Intelligence segment, for $425 million in
a legacy McGraw Hill Construction investment.
cash to Intercontinental Exchange, an operator of global
exchanges, clearing houses and data services. During the
year ended December 31, 2016, we recorded a pre-tax gain
of $364 million ($297 million after-tax) in gain on disposi-
The operating profit of our businesses that were disposed of or
held for sale for the years ending December 31, 2017, 2016, and
2015 is as follows:
tions in the consolidated statement of income related to the
sale of SPSE and CMA. Additionally, in October of 2016, we
(in millions)
Operating profit 1
Year ended December 31,
2017
$—
2016
$62
2015
$85
completed the sale of Equity and Fund Research (“Equity
1 The year ended December 31, 2016 excludes a pre-tax gain of $1.1 billion on
our dispositions.
3. Goodwill and Other Intangible Assets
GOODWILL
Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable
intangible assets of businesses acquired.
The change in the carrying amount of goodwill by segment is shown below:
(in millions)
Balance as of December 31, 2015
Acquisitions
Dispositions
Other 1
Balance as of December 31, 2016
Other 1
Balance as of December 31, 2017
Market and
Commodities
Intelligence
$ 2,392
106
(35 )
(6 )
2,457
27
$ 2,484
Ratings
$ 114
—
—
(5)
109
5
$ 114
Indices
$ 376
7
—
—
383
8
$ 391
Total
$ 2,882
113
(35)
(11)
2,949
40
$ 2,989
1 Primarily relates to the impact of foreign exchange and valuation adjustments for prior period acquisitions. 2016 includes adjustments related to SNL and
Petromedia. 2017 includes adjustments related to PIRA, Trucost, RigData and Commodity Flow.
Goodwill additions and dispositions in the table above relate to transactions discussed in Note 2 — Acquisitions and Divestitures.
60 S&P Global 2017 Annual Report
OTHER INTANGIBLE ASSETS
Other intangible assets include both indefinite-lived assets not subject to amortization and definite-lived assets subject to
amortization. We have indefinite-lived assets with a carrying value of $714 million as of December 31, 2017 and 2016 that consist
of the following:
$380 million and $90 million for Dow Jones Indices intellectual property and the Dow Jones tradename, respectively, that we
recorded as part of the transaction to form S&P Dow Jones Indices LLC in 2012.
$185 million within our Market and Commodities Intelligence segment for the SNL tradename.
$59 million within our Indices segment for the Goldman Sachs Commodity Index intellectual property and the Broad Market
Indices intellectual property.
The following table summarizes our definite-lived intangible assets:
Databases
and
software
Content
Customer
relationships
Tradenames
Other
intangibles
Total
$ 510
$ 139
$ 168
$ 47
$ 269
$ 1,133
(in millions)
Cost
Balance as of December 31, 2015
Acquisitions
Dispositions
Impairment 1
Reclassifications
Other (primarily Fx)
Balance as of December 31, 2016
Dispositions
Other 2
Balance as of December 31, 2017
Accumulated amortization
Balance as of December 31, 2015
Current year amortization
Dispositions
Impairment 1
Reclassifications
Other (primarily Fx)
Balance as of December 31, 2016
Current year amortization
Dispositions
Reclassifications
Other (primarily Fx)
—
—
(2)
—
(2)
506
(4)
52
—
—
—
—
—
139
—
—
—
—
—
165
(3)
330
(2)
19
$ 554
$ 139
$ 347
$ 88
$ 73
$ 60
47
—
(2)
2
(3)
132
52
(3)
2
4
14
—
—
—
—
87
14
—
—
—
21
—
—
5
(2)
84
22
(2)
1
1
—
(2)
—
1
(1)
45
—
5
$ 50
$ 36
2
(1)
—
—
(1)
36
4
—
1
1
$ 42
$ 9
$ 8
98
(8)
(22)
(166)
(8)
163
—
(86)
98
(10)
(24)
—
(14)
1,183
(6)
(10)
$ 77
$ 1,167
$ 67
$ 324
12
(6)
(10)
(7)
(4)
52
6
(1)
(4)
4
96
(7)
(12)
—
(10)
391
98
(6)
—
10
$ 57
$ 493
$ 111
$ 20
$ 792
$ 674
Balance as of December 31, 2017
$ 187
$ 101
$ 106
Net definite-lived intangibles:
December 31, 2016
December 31, 2017
$ 374
$ 367
$ 52
$ 38
$ 246
$ 241
1 Relates to a technology- related impairment charge at Market and Commodities Intelligence and recorded in selling and general expenses in the consolidated
statement of income.
2 Primarily relates to the impact of foreign exchange and valuation adjustments for prior period acquisitions. 2017 includes adjustments related to PIRA, Trucost,
RigData and Commodity Flow.
Definite-lived intangible assets are being amortized on a straight-line basis over periods of up to 20 years. The weighted- average
life of the intangible assets as of December 31, 2017 is approximately 12 years.
Amortization expense for the years ended December 31, 2017, 2016 and 2015 was $98 million, $96 million, and $67 million, respec-
tively. Expected amortization expense for intangible assets over the next five years for the years ended December 31, assuming
no further acquisitions or dispositions, is as follows:
(in millions)
Amortization expense
2018
$95
2019
$88
2020
$82
2021
$70
2022
$68
S&P Global 2017 Annual Report 61
4. Taxes on Income
A reconciliation of the U.S. federal statutory income tax rate to
our effective income tax rate for financial reporting purposes
Comprehensive tax legislation enacted through the Tax Cuts
is as follows:
and Jobs Act (“TCJA”) on December 22, 2017, significantly
modified U.S. corporate income tax law. Provisional amounts
have been recorded in our financial statements based on the
U.S. federal statutory income
Company’s initial analysis of the TCJA. The Company may
tax rate
Year Ended December 31,
2017
2016
2015
35.0% 35.0% 35.0%
2.5
2.7
2.6
—
(4.3)
—
(3.9)
(3.2)
(2.0)
6.0 — —
(2.7)
— —
(1.8)
(2.1)
0.4
(1.2)
(1.6)
1.5
(2.0)
(2.9)
0.6
State and local income taxes
Divestitures
Foreign operations
Impact of TCJA
Stock-based compensation
S&P Dow Jones Indices LLC
joint venture
Tax credits and incentives
Other, net
Effective income tax rate
33.4% 30.1% 30.1%
The principal temporary differences between the accounting
for income and expenses for financial reporting and income tax
purposes are as follows:
(in millions)
Deferred tax assets:
Legal and regulatory settlements
Employee compensation
Accrued expenses
Postretirement benefits
Unearned revenue
Allowance for doubtful accounts
Loss carryforwards
Other
Total deferred tax assets
Deferred tax liabilities:
Goodwill and intangible assets
Fixed assets
Other
Total deferred tax liabilities
Net deferred income tax asset before
valuation allowance
Valuation allowance
December 31,
2017
2016
$ 27 $ 23
78
87
105
33
11
112
3
50
47
34
26
8
135
45
372
452
(249)
(4)
—
(253)
(320)
(3)
—
(323)
119
(127)
129
(116)
Net deferred income tax (liability) asset
$
(8)
$ 13
Reported as:
Non- current deferred tax assets
Non- current deferred tax liabilities
$ 59 $ 61
(48)
(67)
Net deferred income tax (liability) asset
$
(8)
$ 13
We record valuation allowances against deferred income tax
assets when we determine that it is more likely than not that
such deferred income tax assets will not be realized based
upon all the available evidence. The valuation allowance is pri-
marily related to operating losses.
adjust these amounts in future periods if our interpretation
of the TCJA changes or as additional guidance from the U.S.
Treasury becomes available. As a result of the TCJA, a pro-
visional amount of $149 million has been recorded which
reflects a one-time tax charge of approximately $173 million
on the deemed repatriation of foreign earnings and a one-time
tax benefit of approximately $24 million in respect of the re-
valuation of net U.S. deferred tax liabilities at the reduced cor-
porate income tax rate.
Income before taxes on income resulting from domestic and
foreign operations is as follows:
(in millions)
Domestic operations
Foreign operations
Year Ended December 31,
2017
2016
2015
$ 1,723 $ 2,585 $ 1,266
549
738
603
Total income before taxes
$ 2,461 $ 3,188 $ 1,815
The provision for taxes on income consists of the following:
(in millions)
Federal:
Current
Deferred
Year Ended December 31,
2017
2016
2015
$ 489 $ 641 $ 90
276
63
79
Total federal
552
720
366
Foreign:
Current
Deferred
Total foreign
State and local:
Current
Deferred
Total state and local
194
(3)
133
(4)
111
(1)
191
129
110
73
7
99
12
80
111
34
37
71
Total provision for taxes
$ 823 $ 960 $ 547
62 S&P Global 2017 Annual Report
We have not recorded deferred income taxes applicable to
The U.S. federal income tax audits for 2016 and 2015 are in pro-
undistributed earnings of foreign subsidiaries that are indefi-
cess. During 2017, we completed various state and foreign tax
nitely reinvested in foreign operations. Undistributed earnings
audits and, with few exceptions, we are no longer subject to
that are indefinitely reinvested in foreign operations amounted
federal, state and local, or non-U.S. income tax examinations
to $780 million at December 31, 2017. Quantification of the
by tax authorities for the years before 2010. The impact to tax
deferred tax liability, if any, associated with indefinitely rein-
expense in 2017, 2016 and 2015 was not material.
vested earnings is not practicable.
We file income tax returns in the U.S. federal jurisdiction, var-
We made net income tax payments for continuing and discon-
ious states, and foreign jurisdictions, and we are routinely
tinued operations totaling $709 million in 2017, $683 million in
under audit by many different tax authorities. We believe that
2016, and $260 million in 2015. As of December 31, 2017, we
our accrual for tax liabilities is adequate for all open audit
had net operating loss carryforwards of $564 million, of which
years based on an assessment of many factors including past
a major portion has an unlimited carryover period under cur-
experience and interpretations of tax law. This assessment
rent law.
A reconciliation of the beginning and ending amount of unrec-
ognized tax benefits is as follows:
Year ended
December 31,
relies on estimates and assumptions and may involve a series
of complex judgments about future events. It is possible that
tax examinations will be settled prior to December 31, 2018. If
any of these tax audit settlements do occur within that period,
we would make any necessary adjustments to the accrual for
(in millions)
2017
2016
2015
unrecognized tax benefits.
Balance at beginning of year
$ 221 $ 162 $ 155
Additions based on tax positions related
to the current year
Additions for tax positions of prior years
Reduction for tax positions of prior years
Reduction for settlements
Expiration of applicable statutes of
23
17
(32)
(5)
48
20
(3)
(6)
24
16
(15)
(18)
limitations
Balance at end of year
(12)
—
—
$ 212 $ 221 $ 162
The total amount of federal, state and local, and foreign unrec-
ognized tax benefits as of December 31, 2017, 2016 and 2015
was $212 million, $221 million and $162 million, respectively,
exclusive of interest and penalties. During the period ending
December 31, 2017, the change in unrecognized tax benefits
resulted in a net reduction of tax expense of $4 million.
We recognize accrued interest and penalties related to unrec-
ognized tax benefits in interest expense and operating- related
expense, respectively. In addition to the unrecognized tax ben-
efits, as of December 31, 2017 and 2016, we had $59 million
and $44 million, respectively, of accrued interest and penal-
ties associated with unrecognized tax benefits. Based on the
current status of income tax audits, we believe that the total
amount of unrecognized tax benefits on the balance sheet may
be reduced by up to approximately $60 million in the next twelve
months as a result of the resolution of local tax examinations.
5. Debt
A summary of short-term and long-term debt outstanding is
as follows:
(in millions)
2.5% Senior Notes, due 2018 1
3.3% Senior Notes, due 2020 2
4.0% Senior Notes, due 2025 3
4.4% Senior Notes, due 2026 4
2.95% Senior Notes, due 2027 5
6.55% Senior Notes, due 2037 6
Total debt
Less: short-term debt including current
maturities
Long-term debt
December 31,
2017
2016
$ 399
697
692
892
493
396
$ 398
696
691
891
492
396
3,569
3,564
399
—
$ 3,170
$ 3,564
1 Interest payments are due semiannually on February 15 and August 15, and
as of December 31, 2017, the unamortized debt discount and issuance costs
total $1 million.
2 Interest payments are due semiannually on February 14 and August 14, and
as of December 31, 2017, the unamortized debt discount and issuance costs
total $3 million.
3 Interest payments are due semiannually on June 15 and December 15, and
as of December 31, 2017, the unamortized debt discount and issuance costs
total $8 million.
4 Interest payments are due semiannually on February 15 and August 15, and
as of December 31, 2017, the unamortized debt discount and issuance costs
total $8 million.
5 Interest payments are due semiannually on January 22 and July 22, and as of
December 31, 2017, the unamortized debt discount and issuance costs total
$7 million.
6 Interest payments are due semiannually on May 15 and November 15, and
as of December 31, 2017, the unamortized debt discount and issuance costs
total $4 million.
S&P Global 2017 Annual Report 63
Annual debt maturities are scheduled as follows based on book
rates that are primarily based on either the prevailing London
values as of December 31, 2017: $399 million due in 2018, no
Inter-Bank Offer Rate, the prime rate determined by the admin-
amounts due in 2019, $697 million due in 2020, no amounts due
istrative agent or the Federal Funds Rate. For certain borrow-
in 2021, and $2.5 billion due thereafter.
ings under this credit facility, there is also a spread based on
On September 22, 2016, we issued $500 million of 2.95% senior
our corporate credit rating.
notes due in 2027. The notes are fully and unconditionally guar-
Our credit facility contains certain covenants. The only finan-
anteed by our wholly-owned subsidiary, Standard & Poor’s
cial covenant requires that our indebtedness to cash flow ratio,
Financial Services LLC. We used the net proceeds to fund the
as defined in our credit facility, is not greater than 4 to 1, and
$400 million early repayment of our 5.9% senior notes due in
this covenant level has never been exceeded.
2017 on October 20, 2016, and intend to use the balance for
general corporate purposes.
On August 18, 2015, we issued $2.0 billion of senior notes
consisting of $400 million of 2.5% senior notes due in 2018,
$700 million of 3.3% senior notes due in 2020 and $900 mil-
lion of 4.4% senior notes due in 2026. The notes are fully and
unconditionally guaranteed by our wholly-owned subsidiary,
Standard & Poor’s Financial Services LLC. We used the net pro-
ceeds to finance the acquisition of SNL.
On May 26, 2015, we issued $700 million of 4.0% senior notes
due in 2025 and used a portion of the net proceeds for the
repayment of short-term debt, including commercial paper.
The 4.0% senior notes will mature on June 15, 2025 and are
fully and unconditionally guaranteed by our wholly-owned sub-
sidiary, Standard & Poor’s Financial Services LLC.
On June 30, 2017, we entered into a revolving $1.2 billion five-
year credit agreement (our “credit facility”) that will terminate
on June 30, 2022. This credit facility replaced our $1.2 billion
five-year credit facility that was scheduled to terminate on
June 30, 2020. The previous credit facility was canceled imme-
diately after the new credit facility became effective. There
6. Derivative Instruments
Our exposure to market risk includes changes in foreign
exchange rates. We have operations in foreign countries where
the functional currency is primarily the local currency. For inter-
national operations that are determined to be extensions of
the parent company, the U.S. dollar is the functional currency.
We typically have naturally hedged positions in most countries
from a local currency perspective with offsetting assets and
liabilities. As of December 31, 2017 and December 31, 2016,
we have entered into foreign exchange forward contracts to
mitigate or hedge the effect of adverse fluctuations in foreign
currency exchange rates. Foreign currency forward contracts
are recorded at fair value that is based on foreign currency
exchange rates in active markets; therefore, we classify these
derivative contracts within Level 2 of the fair value hierarchy.
We do not enter into any derivative financial instruments for
speculative purposes.
UNDESIGNATED DERIVATIVE INSTRUMENTS
During the three months ended December 31, 2017, we entered
were no outstanding borrowings under the previous credit
into foreign exchange forward contracts in order to mitigate
facility when it was replaced.
We have the ability to borrow a total of $1.2 billion through our
commercial paper program, which is supported by our credit
facility. There were no commercial paper borrowings outstand-
ing as of December 31, 2017 and 2016.
the change in fair value of specific assets and liabilities in the
consolidated balance sheet. These forward contracts do not
qualify for hedge accounting. As of December 31, 2017, the
aggregate notional value of these outstanding forward con-
tracts was $130 million. The changes in fair value of these for-
ward contracts are recorded in prepaid and other assets in the
Depending on our corporate credit rating, we pay a commit-
consolidated balance sheet with their corresponding change
ment fee of 8 to 17.5 basis points for our credit facility, whether
in fair value recognized into selling and general expenses in the
or not amounts have been borrowed. We currently pay a com-
consolidated statement of income. The net gain recorded in
mitment fee of 12.5 basis points. The interest rate on borrow-
selling and general expense for the year ended December 31,
ings under our credit facility is, at our option, calculated using
2017 related to these contracts was $3 million.
64 S&P Global 2017 Annual Report
CASH FLOW HEDGES
During the three months ended March 31, 2017 and
December 31, 2017, we entered into a series of foreign exchange
forward contracts to hedge a portion of our Indian rupee, British
pound, and Euro exposures through the fourth quarter of 2017
and 2018, respectively. These contracts are intended to offset
the impact of the movement of exchange rates on future rev-
enue and operating costs and are scheduled to mature within
twelve months. The changes in the fair value of these contracts
selling and general expenses in the same period that the hedge
contract matures.
As of December 31, 2017, we estimate that $2 million of the net
gains related to derivatives designated as cash flow hedges
recorded in other comprehensive income is expected to be
reclassified into earnings within the next twelve months. There
was no material hedge ineffectiveness for the year ended
December 31, 2017.
are initially reported in accumulated other comprehensive
As of December 31, 2017 and December 31, 2016, the aggregate
loss in our consolidated balance sheet and are subsequently
notional value of our outstanding foreign currency forward con-
reclassified into revenue and selling and general expenses in
tracts designated as cash flow hedges was $307 million and
the same period that the hedged transaction affects earnings.
$65 million, respectively.
During the three months ended March 31, 2016, we entered
The following table provides information on the location and
into a series of foreign exchange forward contracts to hedge
fair value amounts of our cash flow hedges as of December 31,
a portion of our Indian Rupee exposure through the fourth
2017 and December 31, 2016:
quarter of 2016. These contracts were intended to offset the
impact of the movement of exchange rates on future operat-
(in millions)
December 31,
2017
2016
ing costs and matured at the end of each quarter during 2016.
The changes in the fair value of these contracts were initially
reported in accumulated other comprehensive loss in our con-
solidated balance sheet and subsequently reclassified into
Balance Sheet Location
Derivatives designated as cash flow hedges:
Foreign exchange
Prepaid and other
current assets
forward contracts
$3
$3
S&P Global 2017 Annual Report 65
The following table provides information on the location and amounts of pre-tax gains (losses) on our cash flow hedges for the
years ended December 31:
Gain (Loss) Recognized
in Accumulated Other
Comprehensive Loss
(effective portion)
Location of Gain
Reclassified from
Accumulated Other
Comprehensive Loss into
Income (effective portion)
Gain (Loss) Reclassified
from Accumulated Other
Comprehensive Loss into
Income (effective portion)
(in millions)
Cash flow hedges — designated as hedging instruments
Foreign exchange forward contracts
2017
$ —
2016
2015
$3
$ —
Selling and general
expenses
2017
2016
2015
$9
$4
$ —
The activity related to the change in unrealized gains (losses) in accumulated other comprehensive loss was as follows for the
years ended December 31:
(in millions)
Net unrealized gains (losses) on cash flow hedges, net of taxes, beginning of year
Change in fair value, net of tax
Reclassification into earnings, net of tax
Net unrealized gains (losses) on cash flow hedges, net of taxes, end of year
Year ended December 31,
2017
$ 2
9
(9)
$ 2
2016
$ (1)
7
(4)
$ 2
2015
$ (1)
—
—
$ (1)
7. Employee Benefits
We maintain a number of active defined contribution retire-
We also provide certain medical, dental and life insurance ben-
ment plans for our employees. The majority of our defined
efits for active and retired employees and eligible dependents.
benefit plans are frozen. As a result, no new employees will be
The medical and dental plans and supplemental life insurance
permitted to enter these plans and no additional benefits for
plan are contributory, while the basic life insurance plan is non-
current participants in the frozen plans will be accrued.
contributory. We currently do not prefund any of these plans.
We also have supplemental benefit plans that provide senior
We recognize the funded status of our retirement and postre-
management with supplemental retirement, disability and
tirement plans in the consolidated balance sheets, with a cor-
death benefits. Certain supplemental retirement benefits
responding adjustment to accumulated other comprehensive
are based on final monthly earnings. In addition, we sponsor
loss, net of taxes. The amounts in accumulated other compre-
voluntary 401(k) plans under which we may match employee
hensive loss represent net unrecognized actuarial losses and
contributions up to certain levels of compensation as well as
unrecognized prior service costs. These amounts will be sub-
profit- sharing plans under which we contribute a percentage of
sequently recognized as net periodic pension cost pursuant to
eligible employees’ compensation to the employees’ accounts.
our accounting policy for amortizing such amounts.
66 S&P Global 2017 Annual Report
BENEFIT OBLIGATION
A summary of the benefit obligation and the fair value of plan assets, as well as the funded status for the retirement and post-
retirement plans as of December 31, 2017 and 2016, is as follows (benefits paid in the table below include only those amounts
contributed directly to or paid directly from plan assets):
Retirement Plans
Postretirement Plans
(in millions)
Net benefit obligation at beginning of year
Service cost
Interest cost
Plan participants’ contributions
Actuarial loss (gain)
Gross benefits paid
Foreign currency effect
Other adjustments 1
Net benefit obligation at end of year
Fair value of plan assets at beginning of year
Actual return on plan assets
Employer contributions
Plan participants’ contributions
Gross benefits paid
Foreign currency effect
Other adjustments
Fair value of plan assets at end of year
Funded status
Amounts recognized in consolidated balance sheets:
Non- current assets
Current liabilities
Non- current liabilities
2017
2016
2017
3
74
—
107
(110)
$ 2,260 $ 2,199
3
78
—
196
(121)
(75)
(20)
38
(43)
$ 57
—
2
3
(5)
(8)
—
—
2,329
2,260
49
2,073
263
8
—
(110)
31
(46)
2,023
259
8
—
(121)
(74)
(22)
—
—
25
3
(8)
—
—
2,219
2,073
20
2016
$ 80
—
2
4
(6)
(10)
—
(13)
57
—
—
6
4
(10)
—
—
—
$ (110)
$ (187)
$ (29)
$ (57)
$ 114 $
(9)
(215)
46
(8)
(225)
$ —
—
(29)
$ (110)
$ (187)
$ (29)
$ —
(8)
(49)
$ (57)
Accumulated benefit obligation
Plans with accumulated benefit obligation in excess of the fair value of plan assets:
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Amounts recognized in accumulated other comprehensive loss, net of tax:
$ 2,319 $ 2,251
$ 224 $ 674
$ 214 $ 665
$ — $ 441
Net actuarial loss (gain)
Prior service credit
Total recognized
1 Relates to the impact of retiree annuity purchases.
$ 451 $ 483
1
1
$ (37)
(12)
$ 452 $ 484
$ (49)
$ (35)
(13)
$ (48)
The actuarial loss included in accumulated other comprehensive loss for our retirement plans and expected to be recognized
in net periodic pension cost during the year ending December 31, 2018 is $19 million. There is no prior service credit included in
accumulated other comprehensive loss for our retirement plans expected to be recognized in net periodic benefit cost during the
year ending December 31, 2018.
There is an immaterial amount of actuarial loss and prior service credit included in accumulated other comprehensive loss for our
postretirement plans expected to be recognized in net periodic benefit cost during the year ending December 31, 2018.
S&P Global 2017 Annual Report 67
NET PERIODIC BENEFIT COST
For purposes of determining annual pension cost, prior service costs are being amortized straight-line over the average expected
remaining lifetime of plan participants expected to receive benefits.
A summary of net periodic benefit cost for our retirement and postretirement plans for the years ended December 31, is as follows:
(in millions)
Service cost
Interest cost
Expected return on assets
Amortization of:
Actuarial loss (gain)
Prior service (credit) cost
Other 1
Net periodic benefit cost
Retirement Plans
Postretirement Plans
2017
2016
2015
2017
2016
$
3 $
3 $
74
(126)
78
(122)
6
96
(127)
$ —
2
—
$ —
2
—
18
—
8
16
—
—
20
—
—
(2)
(2)
—
(1)
—
—
2015
$ —
3
—
—
(1)
—
$ (23)
$ (25)
$
(5)
$ (2)
$ 1
$ 2
1 Represents a charge related to our U.K. retirement plan.
Our U.K. retirement plan accounted for a benefit of $6 million in 2017, $10 million in 2016, and $10 million in 2015 of the net periodic
benefit cost attributable to the funded plans.
Other changes in plan assets and benefit obligations recognized in other comprehensive income, net of tax for the years ended
December 31, are as follows:
(in millions)
Net actuarial (gain) loss
Recognized actuarial (gain) loss
Prior service (credit) cost
Other 1
Total recognized
1 Represents a charge related to our U.K. retirement plan.
Retirement Plans
Postretirement Plans
2017
2016
2015
$ (20)
(12)
—
(7)
$ 60
(10)
—
$ (6)
(13)
—
2017
$ (3)
2016
$ (12)
1
1
1
(8)
2015
$ (17)
—
1
$ (39)
$ 50
$ (19)
$ (1)
$ (19)
$ (16)
The total cost for our retirement plans was $70 million for 2017, $69 million for 2016 and $91 million for 2015. Included in the total
retirement plans cost are defined contribution plans cost of $70 million for 2017, $65 million for 2016 and $67 million for 2015.
68 S&P Global 2017 Annual Report
ASSUMPTIONS
Benefit obligation:
Discount rate 2
Net periodic cost:
Weighted- average healthcare cost rate 1
Discount rate — U.S. plan 2
Discount rate — U.K. plan 2
Return on assets 3
Retirement Plans
Postretirement Plans
2017
2016
2015
2017
2016
2015
3.68%
4.14%
4.47% 3.40%
3.69%
3.90%
4.13%
2.58%
6.25%
4.47%
3.84%
6.25%
7.00%
4.15% 3.69%
3.80%
6.25%
7.00%
3.94%
7.00%
3.60%
1 The assumed weighted- average healthcare cost trend rate will decrease ratably from 7% in 2017 to 5% in 2024 and remain at that level thereafter. Assumed
healthcare cost trends have an effect on the amounts reported for the healthcare plans. A one percentage point change in assumed healthcare cost trend creates
the following effects:
(in millions)
Effect on postretirement obligation
1% point increase
1% point decrease
$ —
$ —
2 Effective January 1, 2017, we changed our discount rate assumption on our U.S. retirement plans to 4.13% from 4.47% in 2016 and changed our discount rate
assumption on our U.K. plan to 2.58% from 3.84% in 2016. At the end of 2015, we changed our approach used to measure service and interest costs on all of our
retirement plans. For 2015 and prior periods presented, we measured service and interest costs utilizing a single weighted- average discount rate derived from the
yield curve used to measure the benefit obligation. For 2016 and 2017, we elected to measure service and interest costs by applying the specific spot rates along
that yield curve to the plans’ liability cash flows. We believe this new approach provides a more precise measurement of service and interest costs by aligning the
timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. This change does not affect the measurement of our benefit obligation.
We have accounted for this change as a change in accounting estimate that is inseparable from a change in accounting principle and, accordingly, have accounted
for it on a prospective basis. Pension and postretirement medical costs decreased by approximately $10 million in 2017 and $14 million in 2016 as a result of
this change.
3 The expected return on assets assumption is calculated based on the plan’s asset allocation strategy and projected market returns over the long-term. Effective
January 1, 2018, our return on assets assumption for the U.S. plan and U.K. plan decreased to 6.00% from 6.25%.
CASH FLOWS
In December of 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) was enacted. The
Act established a prescription drug benefit under Medicare, known as “Medicare Part D”, and a federal subsidy to sponsors of
retiree healthcare benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. Our benefits pro-
vided to certain participants are at least actuarially equivalent to Medicare Part D, and, accordingly, we are entitled to a subsidy.
Expected employer contributions in 2018 are $9 million and $7 million for our retirement and postretirement plans respectively.
In 2018, we may elect to make additional non- required contributions depending on investment performance and the pension plan
status. Information about the expected cash flows for our retirement and postretirement plans and the impact of the Medicare
subsidy is as follows:
(in millions)
2018
2019
2020
2021
2022
2023–2027
Postretirement Plans 2
Retirement
Plans 1
Gross
payments
Retiree
contributions
$ 88
90
93
96
99
527
$ 9
8
8
7
6
24
$ (3)
(3)
(2)
(2)
(2)
(9)
Medicare
subsidy 3
$ —
—
—
—
—
—
Net
payments
$ 6
5
6
5
4
15
1 Reflects the total benefits expected to be paid from the plans or from our assets including both our share of the benefit cost and the participants’ share of the cost.
2 Reflects the total benefits expected to be paid from our assets.
3 Expected medicare subsidy amounts, for the years presented, are less than $1 million.
FAIR VALUE OF PLAN ASSETS
In accordance with authoritative guidance for fair value measurements certain assets and liabilities are required to be recorded
at fair value. Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an
orderly transaction between market participants. A fair value hierarchy has been established which requires us to maximize the
S&P Global 2017 Annual Report 69
use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used
to measure fair value are as follows:
Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substan-
tially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities.
The fair value of our defined benefit plans assets as of December 31, 2017 and 2016, by asset class is as follows:
(in millions)
Cash and short-term investments
Equities:
U.S. indexes 1
U.S. growth and value
U.K.
International, excluding U.K.
Fixed income:
Long duration strategy 2
Intermediate duration securities
Agency mortgage backed securities
Asset backed securities
Non- agency mortgage backed securities 3
International, excluding U.K.
Real Estate
U.K. 4
Total
Collective investment funds
Total
(in millions)
Cash, short-term investments, and other
Equities:
U.S. indexes 1
U.S. growth and value
U.K.
International, excluding U.K.
Fixed income:
Long duration strategy 2
Intermediate duration securities
Agency mortgage backed securities
Asset backed securities
Non- agency mortgage backed securities 3
International
Real Estate
U.K. 4
Total
Collective investment funds
Total
December 31, 2017
Level 1
$ 10
50
109
5
45
—
—
—
—
—
—
Level 2
$ —
—
—
—
—
1,076
35
5
19
15
18
—
—
Level 3
$ —
—
—
—
—
—
—
—
—
—
—
39
$ 219
$ 1,168
$ 39
December 31, 2016
Level 1
$ 38
69
103
3
38
—
—
—
—
—
—
Level 2
$ —
—
—
—
—
970
32
5
19
20
16
—
—
Level 3
$ —
—
—
—
—
—
—
—
—
—
—
11
$ 251
$ 1,062
$ 11
Total
$
10
50
109
5
45
1,076
35
5
19
15
18
39
$ 1,426
$ 793
$ 2,219
Total
$
38
69
103
3
38
970
32
5
19
20
16
11
$ 1,324
$ 749
$ 2,073
1 Includes securities that are tracked in the S&P Smallcap 600 index.
2 Includes securities that are mainly investment grade obligations of issuers in the U.S.
3 Includes U.S. mortgage- backed securities that are not backed by the U.S. government.
4 Includes a fund which holds real estate properties in the U.K.
70 S&P Global 2017 Annual Report
For securities that are quoted in active markets, the trustee/
instruments. The short-term portfolio, whose primary goal is
custodian determines fair value by applying securities’ prices
capital preservation for liquidity purposes, is composed of gov-
obtained from its pricing vendors. For commingled funds that
ernment and government- agency securities, uninvested cash,
are not actively traded, the trustee applies pricing information
receivables and payables. The portfolios do not employ any
provided by investment management firms to the unit quanti-
financial leverage.
ties of such funds. Investment management firms employ their
own pricing vendors to value the securities underlying each
commingled fund. Underlying securities that are not actively
U.S. DEFINED CONTRIBUTION PLANS
Assets of the defined contribution plans in the U.S. consist pri-
traded derive their prices from investment managers, which in
marily of investment options which include actively managed
turn, employ vendors that use pricing models (e.g., discounted
equity, indexed equity, actively managed equity/bond funds,
cash flow, comparables). The domestic defined benefit plans
target date funds, S&P Global Inc. common stock, stable value
have no investment in our stock, except through the S&P 500
and money market strategies. There is also a self- directed
commingled trust index fund.
The trustee obtains estimated prices from vendors for secu-
rities that are not easily quotable and they are categorized
accordingly as Level 3. The following table details further
information on our plan assets where we have used significant
unobservable inputs (Level 3):
(in millions)
Balance as of December 31, 2016
Purchases
Distributions
Gain (loss)
Balance as of December 31, 2017
Level 3
$11
28
(1)
1
$39
PENSION TRUSTS’ ASSET ALLOCATIONS
There are two pension trusts, one in the U.S. and one in the U.K.
The U.S. pension trust had assets of $1,739 million and
$1,632 million as of December 31, 2017 and 2016 respectively,
and the target allocations in 2017 include 68% fixed income,
27% domestic equities and 5% international equities.
The U.K. pension trust had assets of $480 million and
$441 million as of December 31, 2017 and 2016, respec-
tively, and the target allocations in 2017 include 40% fixed
income, 30% diversified growth funds, 20% equities and
10% real estate.
The pension assets are invested with the goal of producing a
combination of capital growth, income and a liability hedge.
The mix of assets is established after consideration of the long-
term performance and risk characteristics of asset classes.
Investments are selected based on their potential to enhance
returns, preserve capital and reduce overall volatility. Holdings
are diversified within each asset class. The portfolios employ a
mix of index and actively managed equity strategies by market
capitalization, style, geographic regions and economic sec-
tors. The fixed income strategies include U.S. long duration
mutual fund investment option. The plans purchased 228,248
shares and sold 297,750 shares of S&P Global Inc. common
stock in 2017 and purchased 216,035 shares and sold 437,283
shares of S&P Global Inc. common stock in 2016. The plans
held approximately 1.5 million shares of S&P Global Inc. com-
mon stock as of December 31, 2017 and 1.6 million shares as
of December 31, 2016, with market values of $255 million and
$171 million, respectively. The plans received dividends on S&P
Global Inc. common stock of $3 million and $2 million during
the years ended December 31, 2017 and December 31, 2016
respectively.
8. Stock-Based Compensation
We issue stock-based incentive awards to our eligible employ-
ees and Directors under the 2002 Employee Stock Incentive
Plan and a Director Deferred Stock Ownership Plan.
2002 EMPLOYEE STOCK INCENTIVE PLAN (THE “2002
PLAN”) — The 2002 Plan permits the granting of nonquali-
fied stock options, stock appreciation rights, performance
stock, restricted stock and other stock-based awards.
DIRECTOR DEFERRED STOCK OWNERSHIP PLAN —
Under this plan, common stock reserved may be credited
to deferred stock accounts for eligible Directors. In general,
the plan requires that 50% of eligible Directors’ annual com-
pensation plus dividend equivalents be credited to deferred
stock accounts. Each Director may also elect to defer all or a
portion of the remaining compensation and have an equiva-
lent number of shares credited to the deferred stock account.
Recipients under this plan are not required to provide con-
sideration to us other than rendering service. Shares will be
delivered as of the date a recipient ceases to be a member
of the Board of Directors or within five years thereafter, if so
elected. The plan will remain in effect until terminated by the
Board of Directors or until no shares of stock remain avail-
securities, opportunistic fixed income securities and U.K. debt
able under the plan.
S&P Global 2017 Annual Report 71
The number of common shares reserved for issuance are as
follows:
(in millions)
Shares available for granting under the 2002 Plan
Options outstanding
Total shares reserved for issuance 1
2017
33.8
2.1
35.9
2016
33.5
3.8
37.3
1 Shares reserved for issuance under the Director Deferred Stock Ownership
Plan are not included in the total, but are less than 0.1 million.
We issue treasury shares upon exercise of stock options and
the issuance of restricted stock and unit awards. To offset the
dilutive effect of the exercise of employee stock options, we
periodically repurchase shares. See Note 9 — Equity for further
discussion.
STOCK OPTIONS
Stock options may not be granted at a price less than the fair
December 31,
market value of our common stock on the date of grant. Stock
options granted vest over a three year service period in equal
annual installments and have a maximum term of 10 years.
Stock option compensation costs are recognized from the date
of grant, utilizing a three-year graded vesting method. Under
this method, one-third of the costs are ratably recognized
over the first twelve months, one-third of the costs are ratably
recognized over a twenty-four month period starting from the
date of grant with the remaining costs ratably recognized over a
thirty-six month period starting from the date of grant.
We use a lattice-based option- pricing model to estimate the
fair value of options granted. The following assumptions were
Stock-based compensation expense and the corresponding
used in valuing the options granted:
tax benefit are as follows:
(in millions)
Stock option expense
Restricted stock and unit awards
Year Ended December 31,
2017
2016
2015
$ 3
$ 7
$ 14
expense
96
69
64
Year Ended
December 31, 2015
Risk-free average interest rate
Dividend yield
Volatility
Expected life (years)
Weighted- average grant-date fair value per option
0.2–1.9%
1.4%
21–39%
6.3
$27.57
Total stock-based compensation
expense
Tax benefit
$ 99
$ 76
$ 78
Because lattice-based option- pricing models incorporate
$ 38
$ 29
$ 29
ranges of assumptions, those ranges are disclosed. These
assumptions are based on multiple factors, including histori-
cal exercise patterns, post- vesting termination rates, expected
future exercise patterns and the expected volatility of our stock
price. The risk-free interest rate is the imputed forward rate
based on the U.S. Treasury yield at the date of grant. We use the
historical volatility of our stock price over the expected term of
the options to estimate the expected volatility. The expected
term of options granted is derived from the output of the lattice
model and represents the period of time that options granted
are expected to be outstanding.
During 2015, we stopped granting stock options as part of our
employees’ total stock-based incentive awards. There were no
stock options granted in 2017 and 2016 and a minimal amount
of stock options granted in 2015.
72 S&P Global 2017 Annual Report
Stock option activity is as follows:
(in millions, except per award amounts)
Options outstanding as of December 31, 2016
Exercised
Forfeited and expired 1
Options outstanding as of December 31, 2017
Options exercisable as of December 31, 2017
1 There are less 0.1 million shares forfeited and expired.
Shares
Weighted average
exercise price
Weighted- average
remaining years of
contractual term
Aggregate
intrinsic value
3.8
(1.7)
—
2.1
2.1
$ 43.36
$ 113.04
$ 72.35
$ 44.09
$ 44.08
3.5
3.5
$270
$270
(in millions, except per award amounts)
Nonvested options outstanding as of December 31, 2016
Vested
Forfeited 1
Nonvested options outstanding as of December 31, 2017
Total unrecognized compensation expense related to
nonvested options 2
Weighted- average years to be recognized over
1 There are less than 0.1 million shares forfeited.
Shares
0.2
(0.2)
—
—
$ —
0.1
Weighted- average
grant-date fair
value
$23.42
$23.40
$24.22
$27.52
2 There is less than $1 million of unrecognized compensation expense related to nonvested options.
The total fair value of our stock options that vested during the
of awards that are anticipated to fully vest. For performance
years ended December 31, 2017, 2016 and 2015 was $4 million,
unit awards, adjustments are made to expense dependent
$7 million and $11 million, respectively.
upon financial goals achieved.
Information regarding our stock option exercises is as follows:
Restricted stock and unit activity for performance and non-
(in millions)
Net cash proceeds from the exercise
Year Ended December 31,
2017
2016
2015
performance awards is as follows:
of stock options
$ 75
$ 88
$ 86
(in millions, except per award amounts)
Shares
Weighted-
average
grant-date
fair value
Total intrinsic value of stock option
exercises
$ 118
$ 95
$ 94
Income tax benefit realized from
stock option exercises
$ 64
$ 41
$ 49
Nonvested shares as of December 31, 2016
Granted
Vested
Forfeited 1
1.0 $ 106.31
0.8 $ 147.12
(1.0)
$ 156.16
— $ 107.96
Nonvested shares as of December 31, 2017
0.8 $ 124.91
RESTRICTED STOCK AND UNIT AWARDS
Restricted stock and unit awards (performance and non-
Total unrecognized compensation expense
related to nonvested awards
performance) have been granted under the 2002 Plan.
Weighted- average years to be recognized over
$ 66
1.6
Performance unit awards will vest only if we achieve certain
1 There are less than 0.1 million shares forfeited.
financial goals over the performance period. Restricted stock
non- performance awards have various vesting periods (gener-
ally three years), with vesting beginning on the first anniversary
of the awards. Recipients of restricted stock and unit awards
Year Ended December 31,
2017
2016
2015
Weighted- average grant-date
fair value per award
$ 147.12 $ 93.01 $ 77.06
are not required to provide consideration to us other than ren-
Total fair value of restricted
dering service.
stock and unit awards vested
$
147 $
99 $ 155
Tax benefit relating to
The stock-based compensation expense for restricted stock
restricted stock activity
$
36 $
26 $
24
and unit awards is determined based on the market price of our
stock at the grant date of the award applied to the total number
S&P Global 2017 Annual Report 73
9. Equity
CAPITAL STOCK
Two million shares of preferred stock, par value $1 per share,
are authorized; none have been issued.
agreement was structured as an uncapped ASR agreement
in which we paid $500 million and received an initial delivery
of approximately 2.8 million shares, representing 85% of the
$500 million at a price equal to the then market price of the
Company. We completed the ASR agreement on October 31,
2017 and received an additional 0.5 million shares. We repur-
On February 2, 2018, the Board of Directors approved an
chased a total of 3.2 million shares under the ASR agreement
increase in the dividends for 2018 to a quarterly rate of $0.50
for an average purchase price of $154.46 per share. The total
per common share.
Quarterly dividend rate
Annualized dividend rate
Dividends paid (in millions)
Year Ended December 31,
2017
2016
2015
$ 0.41 $ 0.36 $ 0.33
$ 1.64 $ 1.44 $ 1.32
$ 421 $ 380 $ 363
STOCK REPURCHASES
On December 4, 2013, the Board of Directors approved a share
repurchase program authorizing the purchase of 50 million
shares, which was approximately 18% of the total shares of
our outstanding common stock at that time.
Share repurchases were as follows:
(in millions, except average price)
2017
2016
2015
Year Ended December 31,
Total number of shares
purchased 1
Average price paid per share 2
Total cash utilized 2
9.7
6.8
10.1
$ 147.74 $ 113.36 $ 99.00
$ 1,001 $ 1,097 $ 1,000
number of shares repurchased under the ASR agreement is
equal to $500 million divided by the volume weighted- average
share price, less a discount. The repurchased shares are held in
Treasury. The ASR agreement was executed under the current
share repurchase program, approved on December 4, 2013.
Using a portion of the proceeds received from the sale of J.D.
Power, we entered into an ASR agreement with a financial
institution on September 7, 2016 to initiate share repurchases
aggregating $750 million. The ASR agreement was structured
as a capped ASR agreement in which we paid $750 million and
received an initial delivery of approximately 4.4 million shares
and an additional amount of 0.9 million shares during the
month of September 2016, representing the minimum number
of shares of our common stock to be repurchased based on a
calculation using a specified capped price per share. We com-
pleted the ASR agreement on December 7, 2016 and received
an additional 0.9 million shares, which settled on December 12,
2016. We repurchased a total of 6.1 million shares under the
ASR agreement for an average purchase price of $122.18 per
1 2017 and 2016 includes shares received as part of our accelerated share
share. The total number of shares repurchased under the ASR
repurchase agreements as described in more detail below.
2 In December of 2015, 0.3 million shares were repurchased for approximately
$26 million, which settled in January of 2016. Excluding these 0.3 million
shares, the average price paid per share was $98.98. Cash used for financ-
ing activities only reflects those shares which settled during the year ended
December 31, 2017, 2016 and 2015 resulting in $1,001 million, $1,123 million
and $974 million of cash used to repurchase shares, respectively.
Our purchased shares may be used for general corporate pur-
poses, including the issuance of shares for stock compensa-
tion plans and to offset the dilutive effect of the exercise of
employee stock options. As of December 31, 2017, 19 million
shares remained available under our current share repurchase
program. Our current share repurchase program has no expira-
tion date and purchases under this program may be made from
time to time on the open market and in private transactions,
depending on market conditions.
agreement was based on the volume weighted- average share
price, minus a discount, of our common stock over the term
of the ASR agreement. The repurchased shares are held in
Treasury. The ASR agreement was executed under the current
share repurchase program, approved on December 4, 2013.
The ASR agreements were accounted for as two transactions: a
stock purchase transaction and a forward stock purchase con-
tract. The shares delivered under the ASR agreement resulted
in a reduction of our outstanding shares used to determine
our weighted average common shares outstanding for pur-
poses of calculating basic and diluted earnings per share. The
forward stock purchase contract was classified as an equity
instrument.
ACCELERATED SHARE REPURCHASE AGREEMENTS
We entered into an accelerated share repurchase (“ASR”)
agreement with a financial institution on August 1, 2017 to
initiate share repurchases aggregating $500 million. The ASR
REDEEMABLE NONCONTROLLING INTERESTS
The agreement with the minority partners that own 27% of our
S&P Dow Jones Indices LLC joint venture contains redemp-
tion features whereby interests held by minority partners are
redeemable either (i) at the option of the holder or (ii) upon
74 S&P Global 2017 Annual Report
the occurrence of an event that is not solely within our con-
its estimated redemption value, but never less than its initial
trol. Specifically, under the terms of the operating agreement
fair value, considering a combination of an income and mar-
of S&P Dow Jones Indices LLC, after December 31, 2017, CME
ket valuation approach. Our income and market valuation
Group and CME Group Index Services LLC (“CGIS”) will have the
approaches may incorporate Level 3 fair value measures for
right at any time to sell, and we are obligated to buy, at least
instances when observable inputs are not available, including
20% of their share in S&P Dow Jones Indices LLC. In addition,
assumptions related to expected future net cash flows, long-
in the event there is a change of control of the Company, for the
term growth rates, the timing and nature of tax attributes, and
15 days following a change in control, CME Group and CGIS will
the redemption features. Any adjustments to the redemption
have the right to put their interest to us at the then fair value of
value will impact retained income.
CME Group’s and CGIS’ minority interest.
Noncontrolling interests that do not contain such redemption
If interests were to be redeemed under this agreement, we
features are presented in equity.
would generally be required to purchase the interest at fair
value on the date of redemption. This interest is presented on
the consolidated balance sheets outside of equity under the
caption “Redeemable noncontrolling interest” with an initial
value based on fair value for the portion attributable to the net
assets we acquired, and based on our historical cost for the
portion attributable to our S&P Index business. We adjust the
Changes to redeemable noncontrolling interest during the year
ended December 31, 2017 were as follows:
(in millions)
Balance as of December 31, 2016
Net income attributable to noncontrolling interest
Distributions to noncontrolling interest
Redemption value adjustment
$ 1,080
127
(117)
260
$ 1,350
redeemable noncontrolling interest each reporting period to
Balance as of December 31, 2017
ACCUMULATED OTHER COMPREHENSIVE LOSS
The following table summarizes the changes in the components of accumulated other comprehensive loss for the year ended
December 31, 2017:
Foreign
Currency
Translation
Adjustment
Pension and
Postretirement
Benefit Plans 1
Unrealized
Gain (Loss)
on Forward
Exchange
Contracts 2
Unrealized
Loss on
Investment
Accumulated
Other
Comprehensive
Loss
(in millions)
Balance as of December 31, 2016
Other comprehensive income before reclassifications
Reclassifications from accumulated other
comprehensive loss to net earnings
Net other comprehensive income
$ (332)
93
—
93
$ (443)
30
11
41
Balance as of December 31, 2017
$ (239)
$ (402)
$ 2
9
(9)
—
$ 2
—
(10)
—
(10)
$ (10)
$ (773)
122
2
124
$ (649)
1 See Note 7 — Employee Benefits for additional details of items reclassed from accumulated other comprehensive loss to net earnings.
2 See Note 6 — Derivative Instruments for additional details of items reclassed from accumulated other comprehensive loss to net earnings.
The net actuarial loss and prior service cost related to pension and other postretirement benefit plans included in other compre-
hensive income is net of a tax provision of $5 million for the year ended December 31, 2017.
10. Earnings per Share
Basic earnings per common share (“EPS”) is computed by divid-
additional common shares that would have been outstanding
ing net income attributable to the common shareholders of the
if potential common shares with a dilutive effect had been
Company by the weighted- average number of common shares
issued. Potential common shares consist primarily of stock
outstanding. Diluted EPS is computed in the same manner as
options and restricted performance shares calculated using
basic EPS, except the number of shares is increased to include
the treasury stock method.
S&P Global 2017 Annual Report 75
The calculation for basic and diluted EPS is as follows:
due to circumstances not foreseen when the original plans
(in millions, except per share data)
2017
2016
2015
consolidated statements of income during the period when it
Year Ended December 31,
were initiated. In these cases, we reverse reserves through the
Amount attributable to S&P Global Inc.
common shareholders:
Net income
Basic weighted- average number of
common shares outstanding
Effect of stock options and other
dilutive securities
$ 1,496 $ 2,106 $ 1,156
256.3 262.8 271.6
is determined they are no longer needed. There was approxi-
mately $7 million of reserves from the 2016 restructuring plan
that we have reversed in 2017, which offset the initial charge
of $30 million recorded for the 2016 restructuring plan. Also,
there was approximately $7 million of reserves from the 2015
2.6 2.4 3.0
restructuring plan that we have reversed in 2016, which offset
Diluted weighted- average number of
the initial charge of $63 million recorded for the 2015 restruc-
common shares outstanding
258.9 265.2 274.6
turing plan.
Earnings per share attributable to S&P
Global Inc. common shareholders:
Net income:
Basic
Diluted
$ 5.84 $ 8.02 $ 4.26
$ 5.78 $ 7.94 $ 4.21
Each period we have certain stock options and restricted per-
formance shares that are potentially excluded from the com-
putation of diluted EPS. The effect of the potential exercise of
stock options is excluded when the average market price of our
common stock is lower than the exercise price of the related
option during the period or when a net loss exists because the
effect would have been antidilutive. Additionally, restricted
performance shares are excluded because the necessary
vesting conditions had not been met or when a net loss exists.
As of December 31, 2017, 2016 and 2015, there were no stock
options excluded. Restricted performance shares outstand-
ing of 0.6 million, 0.7 million and 0.9 million as of December 31,
2017, 2016 and 2015, respectively, were excluded.
11. Restructuring
The initial restructuring charge recorded and the ending reserve
balance as of December 31, 2017 by segment is as follows:
2017
Restructuring Plan
2016
Restructuring Plan
Initial
Charge
Recorded
Ending
Reserve
Balance
Initial
Charge
Recorded
Ending
Reserve
Balance
$ 25
$ 24
$ 14
4
9
—
10
5
—
10
10
1
5
3
—
1
$ 44
$ 39
$ 30
$ 8
(in millions)
Ratings
Market and
Commodities
Intelligence
Indices
Corporate
Total
For the year ended December 31, 2017, we have reduced the
reserve for the 2017 restructuring plan by $5 million and for
the years ended December 31, 2017 and 2016, we have reduced
the reserve for the 2016 restructuring plan by $15 million and
$7 million, respectively. The reductions primarily related to
cash payments for employee severance costs.
During 2017 and 2016, we continued to evaluate our cost
structure and further identified cost savings associated with
streamlining our management structure and our decision to
12. Segment and Geographic
Information
exit non- strategic businesses. Our 2017 and 2016 restructur-
As discussed in Note 1 — Accounting Policies, we have three
ing plans consisted of a company-wide workforce reduction
reportable segments: Ratings, Market and Commodities
of approximately 520 and 230 positions, respectively, and are
Intelligence and Indices.
further detailed below. The charges for each restructuring plan
are classified as selling and general expenses within the con-
solidated statements of income and the reserves are included
in other current liabilities in the consolidated balance sheets.
Our Chief Executive Officer is our chief operating decision-
maker and evaluates performance of our segments and allo-
cates resources based primarily on operating profit. Segment
operating profit does not include unallocated expense or inter-
In certain circumstances, reserves are no longer needed
est expense, as these are costs that do not affect the operating
because of efficiencies in carrying out the plans or because
results of our segments. We use the same accounting policies
employees previously identified for separation resigned from
for our segments as those described in Note 1 — Accounting
the Company and did not receive severance or were reassigned
Policies.
76 S&P Global 2017 Annual Report
Segment information for the years ended December 31 is as follows:
(in millions)
Ratings 1
Market and Commodities Intelligence 2
Indices 3
Intersegment elimination 4
Total operating segments
2017
$ 2,988
2,452
733
(110)
6,063
Revenue
2016
$ 2,535
2,585
639
(98)
5,661
2015
$ 2,428
2,376
597
(88)
5,313
Unallocated expense 5
—
—
—
Operating Profit
2017
2016
$ 1,524
793
471
—
2,788
(178)
$ 1,262
1,822
412
—
3,496
(127)
2015
$ 1,078
585
392
—
2,055
(138)
Total
$ 6,063
$ 5,661
$ 5,313
$ 2,610
$ 3,369
$ 1,917
1 Operating profit for the year ended December 31, 2017 includes legal settlement expenses of $55 million and employee severance charges of $25 million.
Operating profit for the year ended December 31, 2016 primarily includes a benefit related to net legal settlement insurance recoveries of $10 million and
employee severance charges of $6 million. Operating profit for the year ended December 31, 2015 includes net legal settlement expenses of $54 million and
employee severance charges of $13 million. Additionally, operating profit includes amortization of intangibles from acquisitions of $4 million for the year ended
December 31, 2017 and $5 million for the years ended December 31, 2016 and 2015.
2 Operating profit for the year ended December 31, 2017 includes non-cash acquisition and disposition- related adjustments of $15 million, employee sever-
ance charges of $9 million, a charge to exit a leased facility of $6 million, and an asset-write off of $2 million. Operating profit for the year ended December 31,
2016 includes a $1.1 billion gain from our dispositions, disposition- related costs of $48 million, a technology- related impairment charge of $24 million and an
acquisition- related cost of $1 million. Operating profit for the year ended December 31, 2015 includes acquisition- related costs related to the acquisition of
SNL of $37 million and costs related to identified operating efficiencies primarily related to employee severance charges of $33 million. Additionally, operating
profit includes amortization of intangibles from acquisitions of $87 million, $85 million and $57 million for the years ended December 31, 2017, 2016 and 2015,
respectively.
3 Operating profit includes amortization of intangibles from acquisitions of $7 million, $6 million and $5 million for the years ended December 31, 2017, 2016 and
2015, respectively.
4 Revenue for Ratings and expenses for Market and Commodities Intelligence include an intersegment royalty charged to Market and Commodities Intelligence for
the rights to use and distribute content and data developed by Ratings.
5 The year ended December 31, 2017 includes a charge to exit leased facilities of $19 million, employee severance charges of $10 million and a pension related
charge of $8 million. The year ended December 31, 2016 includes $3 million from a disposition- related reserve release. The year ended December 31, 2015 includes
a gain of $11 million related to the sale of our interest in a legacy McGraw Hill Construction investment and costs related to identified operating efficiencies pri-
marily related to employee severance charges of $10 million.
(in millions)
Ratings
Market and Commodities Intelligence
Indices
Total operating segments
Corporate
Total
Depreciation & Amortization
Capital Expenditures
2017
$ 34
128
9
171
9
$ 180
2016
$ 34
131
8
173
8
$ 181
2015
$ 43
99
8
150
7
$ 157
2017
$ 45
52
3
100
23
$ 123
2016
$ 42
57
3
102
13
$ 115
Segment information as of December 31 is as follows:
2015
$ 48
78
4
130
9
$ 139
2016
$ 612
4,104
1,247
5,963
2,699
7
Total Assets
2017
$ 788
4,172
1,270
6,230
3,190
5
$ 9,425
$ 8,669
(in millions)
Ratings
Market and Commodities Intelligence
Indices
Total operating segments
Corporate 1
Assets held for sale 2
Total
1 Corporate assets consist principally of cash and cash equivalents, assets for pension benefits, deferred income taxes and leasehold improvements related to
subleased areas.
2 Includes East Windsor, New Jersey facility and QuantHouse as of December 31, 2017 and 2016, respectively.
S&P Global 2017 Annual Report 77
We do not have operations in any foreign country that represent more than 7% of our consolidated revenue. Transfers between
geographic areas are recorded at agreed upon prices and intercompany revenue and profit are eliminated. No single customer
accounted for more than 10% of our consolidated revenue.
The following provides revenue and long-lived assets by geographic region:
(in millions)
U.S.
European region
Asia
Rest of the world
Total
U.S.
European region
Asia
Rest of the world
Total
Revenue
Year ended December 31,
Long-lived Assets
December 31,
2017
$ 3,658
1,473
594
338
$ 6,063
2016
$ 3,461
1,330
575
295
$ 5,661
Revenue
Year ended December 31,
2015
$ 3,202
1,265
566
280
$ 5,313
2017
$ 4,285
346
54
49
$ 4,734
2016
$ 4,335
341
58
46
$ 4,780
Long-lived Assets
December 31,
2017
2016
2015
2017
2016
60%
24
10
6
61%
24
10
5
60%
24
11
5
91%
7
1
1
91%
7
1
1
100%
100%
100%
100%
100%
See Note 2 — Acquisitions and Divestitures and Note 11 — Restructuring, for actions that impacted the segment operating results.
13. Commitments and Contingencies
RELATED PARTY AGREEMENT
In June of 2012, we entered into a license agreement (the
RENTAL EXPENSE AND LEASE OBLIGATIONS
We are committed under lease arrangements covering prop-
“License Agreement”) with the holder of S&P Dow Jones Indices
erty, computer systems and office equipment. Leasehold
LLC noncontrolling interest, CME Group, which replaced the
improvements are amortized on a straight-line basis over the
2005 license agreement between Indices and CME Group.
shorter of their economic lives or their lease term. Certain lease
Under the terms of the License Agreement, S&P Dow Jones
arrangements contain escalation clauses covering increased
Indices LLC receives a share of the profits from the trading and
costs for various defined real estate taxes and operating ser-
clearing of CME Group’s equity index products. During the years
vices and the associated fees are recognized on a straight-line
ended December 31, 2017, 2016 and 2015, S&P Dow Jones
basis over the minimum lease period.
Rental expense for property and equipment under all operating
lease agreements is as follows:
(in millions)
Gross rental expense
Less: sublease revenue
Less: rent credit
Year ended December 31,
2017
2016
2015
$ 177 $ 179 $ 182
(14)
(4)
(17)
—
(16)
—
Net rental expense
$ 160 $ 163 $ 164
Indices LLC earned $74 million, $76 million and $63 million of
revenue under the terms of the License Agreement, respec-
tively. The entire amount of this revenue is included in our con-
solidated statement of income and the portion related to the
27% noncontrolling interest is removed in net income attribut-
able to noncontrolling interests.
78 S&P Global 2017 Annual Report
Cash amounts for future minimum rental commitments under
the outcome of such matters and the effects, if any, on our con-
existing non- cancelable leases with a remaining term of more
solidated financial condition, cash flows, business and com-
than one year, along with minimum sublease rental income to
petitive position, which may require that we record liabilities in
be received under non- cancelable subleases are shown in the
the consolidated financial statements in future periods.
following table.
(in millions)
2018
2019
2020
2021
2022
2023 and beyond
Total
Rent
commitment
Sublease
income
Net rent
$ 122
109
83
71
69
516
$ 970
$ (17)
(17)
(3)
—
—
—
$ (37)
$ 105
92
80
71
69
516
$ 933
LEGAL & REGULATORY MATTERS
In the normal course of business both in the United States and
abroad, the Company and its subsidiaries are defendants in a
number of legal proceedings and are often the subject of gov-
ernment and regulatory proceedings, investigations and inqui-
ries. Many of these proceedings, investigations and inquiries
relate to the ratings activity of S&P Global Ratings brought by
issuers and alleged purchasers of rated securities. In addition,
various government and self- regulatory agencies frequently
make inquiries and conduct investigations into our compliance
with applicable laws and regulations, including those related
to ratings activities and antitrust matters. Any of these pro-
ceedings, investigations or inquiries could ultimately result
in adverse judgments, damages, fines, penalties or activity
restrictions, which could adversely impact our consolidated
financial condition, cash flows, business or competitive
position.
With respect to the matters identified below, we have recog-
nized a liability when both (a) information available indicates
that it is probable that a liability has been incurred as of the
date of these financial statements and (b) the amount of loss
can reasonably be estimated.
S&P GLOBAL RATINGS
Financial Crisis Litigation
The Company and its subsidiaries continue to defend civil
cases brought by private and public plaintiffs arising out of
ratings activities prior to and during the global financial crisis
of 2008–2009. Included in these civil cases are several law-
suits in Australia against the Company and Standard & Poor’s
International, LLC relating to alleged investment losses in
collateralized debt obligations (“CDOs”) rated by S&P Global
Ratings. We can provide no assurance that we will not be obli-
gated to pay significant amounts in order to resolve these mat-
ters on terms deemed acceptable.
U.S. Securities and Exchange Commission
As a nationally recognized statistical rating organization
registered with the SEC under Section 15E of the Securities
Exchange Act of 1934, S&P Global Ratings is in ongoing com-
munication with the staff of the SEC regarding compliance
with its extensive obligations under the federal securities laws.
Although S&P Global Ratings seeks to promptly address any
compliance issues that it detects or that the staff of the SEC
The Company believes that it has meritorious defenses to the
raises, there can be no assurance that the SEC will not seek
pending claims and potential claims in the matters described
remedies against S&P Global Ratings for one or more compli-
below and is diligently pursuing these defenses, and in some
ance deficiencies.
cases working to reach an acceptable negotiated resolution.
However, in view of the uncertainty inherent in litigation and
government and regulatory enforcement matters, we cannot
predict the eventual outcome of these matters or the timing
of their resolution, or in most cases reasonably estimate what
the eventual judgments, damages, fines, penalties or impact
of activity restrictions may be. As a result, we cannot provide
assurance that the outcome of the matters described below
will not have a material adverse effect on our consolidated
financial condition, cash flows, business or competitive posi-
tion. As litigation or the process to resolve pending matters
progresses, as the case may be, we will continue to review the
latest information available and assess our ability to predict
Trani Prosecutorial Proceeding
In 2014, the prosecutor in the Italian city of Trani obtained
criminal indictments against several current and former S&P
Global Ratings managers and ratings analysts for alleged
market manipulation, and against Standard & Poor’s Credit
Market Services Europe under Italy’s vicarious liability stat-
ute, for having allegedly failed to properly supervise the ratings
analysts and prevent them from committing market manipula-
tion. The prosecutor’s theories were based on various actions
by S&P Global Ratings taken with respect to Italian sovereign
debt between May of 2011 and January of 2012. On March 30,
2017, following trial, the court in Trani issued an oral verdict
S&P Global 2017 Annual Report 79
acquitting each of the individual defendants and Standard &
Company. In January of 2016, a different purported share-
Poor’s Credit Market Services Europe of all charges, and on
holder commenced a separate putative derivative action on
September 27, 2017, the court filed a written opinion support-
behalf of the Company in New York State Supreme Court titled
ing the verdict. The prosecutor did not appeal, and the verdict
L.A. Grika v. Harold McGraw III, et al. The allegations in the
is now final.
Shareholder Derivative Actions
In August of 2015, two purported shareholders commenced
a putative derivative action on behalf of the Company in New
York State Supreme Court titled Retirement Plan for General
Employees of the City of North Miami Beach and Robin Stein
v. Harold McGraw III, et al. The complaint asserts claims for,
among other things, breach of fiduciary duty, waste of cor-
porate assets, and mismanagement against the board of
directors and certain former directors and employees of the
Company. Plaintiffs seek recovery from the defendants based
primarily on allegations that S&P Global Ratings’ credit ratings
practices for certain residential mortgage- backed securities
and collateralized debt obligations misrepresented the credit
complaint are substantially similar to those in the North Miami
Beach matter. The complaint asserts claims for, among other
things, breach of fiduciary duty, aiding and abetting breaches
of fiduciary duty, unjust enrichment, contribution and indem-
nification against Harold McGraw III, Douglas L. Peterson, and
nine former employees of the Company. The Grika matter was
transferred to the judge presiding over the North Miami Beach
matter. In December of 2016, the court issued orders granting
the Company’s motions to dismiss both the North Miami Beach
and Grika matters. In January of 2017, the plaintiffs in both
matters filed notices of appeal. Briefing on the North Miami
Beach appeal is now complete, and oral argument was held on
January 23, 2018. The plaintiff in the Grika matter filed a brief
in support of his appeal on January 2, 2018, and the Company
and the individual defendants filed briefs in opposition to the
risks of those securities, allegedly resulting in losses to the
appeal on January 31, 2018.
14. Quarterly Financial Information (Unaudited)
(in millions, except per share data)
2017
Revenue
Operating profit
Net income
First
quarter
Second
quarter
Third
quarter
Fourth
quarter
Total year
$ 1,453 $ 1,509 $ 1,513 $ 1,589 $ 6,063
$ 648 $ 677 $ 658 $ 628 $ 2,610
$ 430 $ 457 $ 452 $ 299 $ 1,638
Net income attributable to S&P Global common shareholders
$ 399 $ 421 $ 414 $ 263 $ 1,496
Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic
Diluted
2016 1
Revenue
Operating profit
Net income
Net income attributable to S&P Global common shareholders
Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic
Diluted
Note — Totals presented may not sum due to rounding.
$ 1.54 $ 1.63 $ 1.62 $ 1.03 $ 5.84
$ 1.53 $ 1.62 $ 1.61 $ 1.02 $ 5.78
$ 1,341 $ 1,482 $ 1,439 $ 1,399 $ 5,661
$ 512 $ 651 $ 1,348 $ 857 $ 3,369
$ 323 $ 412 $ 923 $ 569 $ 2,228
$ 294 $ 383 $ 892 $ 537 $ 2,106
$ 1.11 $ 1.45 $ 3.39
$ 1.10 $ 1.44 $ 3.36
2.07
2.05
8.02
7.94
1 The third quarter of 2016 and the fourth of 2016 include a pre-tax gain on our dispositions of $722 million ($521 million after-tax) and $379 million ($297 million
after-tax), respectively. See Note 2 — Acquisitions and Divestitures for further information.
80 S&P Global 2017 Annual Report
15. Condensed Consolidating Financial Statements
On September 22, 2016, we issued $500 million of 2.95% senior notes due in 2027. On May 26, 2015, we issued $700 million of 4.0%
senior notes due in 2025. On August 18, 2015, we issued $2.0 billion of senior notes, consisting of $400 million of 2.5% senior notes
due in 2018, $700 million of 3.3% senior notes due in 2020 and $900 million of 4.4% senior notes due in 2026. See Note 5 — Debt
for additional information.
The senior notes described above are fully and unconditionally guaranteed by Standard & Poor’s Financial Services LLC, a 100%
owned subsidiary of the Company. The following condensed consolidating financial statements present the results of opera-
tions, financial position and cash flows of S&P Global Inc., Standard & Poor’s Financial Services LLC, and the Non- Guarantor
Subsidiaries of S&P Global Inc. and Standard & Poor’s Financial Services LLC, and the eliminations necessary to arrive at the
information for the Company on a consolidated basis.
(in millions)
Revenue
Expenses:
Operating- related expenses
Selling and general expenses
Depreciation
Amortization of intangibles
Total expenses
Operating profit
Interest expense (income), net
Non- operating intercompany transactions
(Loss) income before taxes on income
Provision for taxes on income
Equity in net income of subsidiaries
Net income
Less: net income attributable to
noncontrolling interests
Net income attributable to S&P Global Inc.
Comprehensive income
Statement of Income
Year Ended December 31, 2017
S&P Global Inc.
Standard &
Poor’s Financial
Services LLC
Non- Guarantor
Subsidiaries
Eliminations
S&P Global Inc.
Consolidated
$ 717
$ 1,780
$ 3,704
$
(138)
$ 6,063
108
162
31
—
301
416
163
365
(112)
26
3,808
3,670
—
$ 3,670
$ 3,694
482
345
11
—
838
942
—
(77)
1,019
370
—
649
—
$ 649
$ 649
1,261
1,053
40
98
2,452
1,252
(14)
(2,463)
3,729
427
—
3,302
(138)
—
—
—
(138)
—
—
2,175
(2,175)
—
(3,808)
(5,983)
1,713
1,560
82
98
3,453
2,610
149
—
2,461
823
—
1,638
—
(142)
$ 3,302
$ (6,125)
$ 3,401
$ (5,982)
(142)
$ 1,496
$ 1,762
S&P Global 2017 Annual Report 81
(in millions)
Revenue
Expenses:
Operating- related expenses
Selling and general expenses
Depreciation
Amortization of intangibles
Total expenses
Gain on dispositions
Operating profit
Interest expense (income), net
Non- operating intercompany transactions
Income before taxes on income
Provision for taxes on income
Equity in net income of subsidiaries
Net income
Less: net income attributable to
noncontrolling interests
Net income attributable to S&P Global Inc.
Comprehensive income
(in millions)
Revenue
Expenses:
Operating- related expenses
Selling and general expenses
Depreciation
Amortization of intangibles
Total expenses
Gain on disposition
Operating profit
Interest expense (income), net
Non- operating intercompany transactions
(Loss) income before taxes on income
(Benefit) provision for taxes on income
Equity in net income of subsidiaries
Net income
Less: net income attributable to
noncontrolling interests
Net income attributable to S&P Global Inc.
Comprehensive income
Statement of Income
Year Ended December 31, 2016
S&P Global Inc.
Standard &
Poor’s Financial
Services LLC
Non- Guarantor
Subsidiaries
Eliminations
S&P Global Inc.
Consolidated
$ 667
$ 1,513
$ 3,607
$
(126)
$ 5,661
113
109
38
—
260
(1,072)
1,479
191
356
932
275
2,412
3,069
—
$ 3,069
$ 3,099
451
243
9
—
703
—
810
—
(83)
893
420
294
767
—
$ 767
$ 767
1,335
1,087
38
96
2,556
(29)
1,080
(10)
(941)
2,031
265
—
1,766
(126)
—
—
—
(126)
—
—
—
668
(668)
—
(2,706)
(3,374)
—
$ 1,766
$ 1,563
(122)
$ (3,496)
$ (3,374)
1,773
1,439
85
96
3,393
(1,101)
3,369
181
—
3,188
960
—
2,228
(122)
$ 2,106
$ 2,055
Statement of Income
Year Ended December 31, 2015
S&P Global Inc.
Standard &
Poor’s Financial
Services LLC
Non- Guarantor
Subsidiaries
Eliminations
S&P Global Inc.
Consolidated
$ 624
$ 2,141
$ 2,663
$
(115)
$ 5,313
137
184
40
—
361
—
263
112
282
(131)
(107)
1,473
1,449
—
$ 1,449
$ 1,446
737
254
18
—
1,009
—
1,132
—
222
910
358
272
824
—
$ 824
$ 822
959
1,094
32
67
2,152
(11)
522
(10)
(504)
1,036
296
—
740
(115)
—
—
—
(115)
—
—
—
—
—
—
(1,745)
(1,745)
—
$ 740
$ 655
(112)
$ (1,857)
$ (1,741)
1,718
1,532
90
67
3,407
(11)
1,917
102
—
1,815
547
—
1,268
(112)
$ 1,156
$ 1,182
82 S&P Global 2017 Annual Report
Balance Sheet
December 31, 2017
S&P Global Inc.
Standard &
Poor’s Financial
Services LLC
Non- Guarantor
Subsidiaries
Eliminations
S&P Global Inc.
Consolidated
(in millions)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance for
$
632
$ —
$ 2,147
$ —
$ 2,779
doubtful accounts
Intercompany receivable
Prepaid and other current assets
Total current assets
Property and equipment, net of
accumulated depreciation
Goodwill
Other intangible assets, net
Investments in subsidiaries
Intercompany loans receivable
Other non- current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Intercompany payable
Accrued compensation and contributions
to retirement plans
Short-term debt
Income taxes currently payable
Unearned revenue
Accrued legal settlements
Other current liabilities
Total current liabilities
Long-term debt
Intercompany loans payable
Pension and other postretirement benefits
Other non- current liabilities
Total liabilities
Redeemable noncontrolling interest
Equity:
Common stock
Additional paid-in capital
Retained income
Accumulated other comprehensive loss
Less: common stock in treasury
Total equity — controlling interests
Total equity — noncontrolling interests
Total equity
138
768
143
1,681
158
261
—
8,364
116
215
152
1,784
(3)
1,933
10
—
—
5
—
61
1,029
2,527
86
5,789
107
2,719
1,388
8,028
1,699
174
—
(5,079)
—
(5,079)
—
9
—
(16,397)
(1,815)
(1)
1,319
—
226
4,324
275
2,989
1,388
—
—
449
$ 10,795
$ 2,009
$ 19,904
$ (23,283)
$ 9,425
$
79
3,433
$
23
492
$
93
1,154
$ —
(5,079)
$
195
—
145
399
2
293
—
136
4,487
3,170
101
180
376
8,314
—
412
(216)
12,156
(269)
(9,602)
2,481
—
2,481
86
—
—
193
2
21
817
—
—
—
74
891
—
—
602
516
—
—
1,118
—
1,118
241
—
75
1,127
105
194
2,989
—
1,715
64
229
4,997
—
2,318
9,256
3,782
(426)
(23)
14,907
—
14,907
—
—
—
—
—
—
(5,079)
—
(1,816)
—
—
(6,895)
1,350
(2,318)
(9,117)
(6,429)
46
23
(17,795)
57
(17,738)
472
399
77
1,613
107
351
3,214
3,170
—
244
679
7,307
1,350
412
525
10,025
(649)
(9,602)
711
57
768
Total liabilities and equity
$ 10,795
$ 2,009
$ 19,904
$ (23,283)
$ 9,425
S&P Global 2017 Annual Report 83
Balance Sheet
December 31, 2016
S&P Global Inc.
Standard &
Poor’s Financial
Services LLC
Non- Guarantor
Subsidiaries
Eliminations
S&P Global Inc.
Consolidated
(in millions)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance for
$ 711
$ —
$ 1,681
$ —
$ 2,392
doubtful accounts
Intercompany receivable
Prepaid and other current assets
Total current assets
Property and equipment, net of
accumulated depreciation
Goodwill
Other intangible assets, net
Investments in subsidiaries
Intercompany loans receivable
Other non- current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
Intercompany payable
Accrued compensation and contributions
to retirement plans
Income taxes currently payable
Unearned revenue
Accrued legal and regulatory settlements
Other current liabilities
Total current liabilities
Long-term debt
Intercompany loans payable
Pension and other postretirement benefits
Other non- current liabilities
Total liabilities
Redeemable noncontrolling interest
Equity:
Common stock
Additional paid-in capital
Retained income
Accumulated other comprehensive loss
Less: common stock in treasury
Total equity — controlling interests
Total equity — noncontrolling interests
Total equity
138
(165)
77
761
159
261
—
5,464
17
134
131
837
2
970
1
—
—
680
—
24
853
870
79
—
(1,542)
(1)
3,483
(1,543)
111
2,679
1,506
7,826
1,354
114
—
9
—
(13,970)
(1,371)
—
1,122
—
157
3,671
271
2,949
1,506
—
—
272
$ 6,796
$ 1,675
$ 17,073
$ (16,875)
$ 8,669
$
73
1,324
$
22
40
$
88
177
$ —
(1,541)
$ 183
—
129
43
273
2
163
2,007
3,564
11
196
52
5,830
—
412
(174)
9,721
(292)
(8,701)
966
—
966
69
—
191
3
(54)
271
—
—
—
74
345
—
—
1,154
176
—
—
1,330
—
1,330
211
52
1,045
51
250
1,874
—
1,360
78
314
3,626
—
2,460
10,485
1,034
(525)
(7)
13,447
—
13,447
—
—
—
—
(1,541)
—
(1,371)
—
(1)
(2,913)
1,080
(2,460)
(10,963)
(1,721)
44
7
(15,093)
51
(15,042)
409
95
1,509
56
359
2,611
3,564
—
274
439
6,888
1,080
412
502
9,210
(773)
(8,701)
650
51
701
$ 8,669
Total liabilities and equity
$ 6,796
$ 1,675
$ 17,073
$ (16,875)
84 S&P Global 2017 Annual Report
(in millions)
S&P Global Inc.
Statement of Cash Flows
Year Ended December 31, 2017
Standard &
Poor’s Financial
Services LLC
Non- Guarantor
Subsidiaries
Eliminations
S&P Global Inc.
Consolidated
Operating Activities:
Net income
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation
Amortization of intangibles
Provision for losses on accounts receivable
Deferred income taxes
Stock-based compensation
Accrued legal settlements
Other
Changes in operating assets and liabilities, net
of effect of acquisitions and dispositions:
Accounts receivable
Prepaid and current assets
Accounts payable and accrued expenses
Unearned revenue
Accrued legal settlements
Other current liabilities
Net change in prepaid/accrued income
taxes
Net change in other assets and liabilities
Cash provided by operating activities
Investing Activities:
Capital expenditures
Acquisitions, net of cash acquired
Proceeds from dispositions
Changes in short-term investments
Cash used for investing activities
Financing Activities:
Dividends paid to shareholders
Distributions to noncontrolling interest
holders
Repurchase of treasury shares
Exercise of stock options
Employee withholding tax on share-based
payments
Intercompany financing activities
Cash used for financing activities
Effect of exchange rate changes on cash from
continuing operations
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
$ 3,670
$ 649
$ 3,302
$ (5,983)
$ 1,638
31
—
2
108
35
—
34
(2)
(5)
22
19
—
(42)
41
7
3,920
(55)
—
—
—
(55)
11
—
3
(10)
22
—
19
(23)
3
97
2
(1)
(12)
(18)
(6)
736
(32)
—
—
—
(32)
40
98
11
(98)
42
55
43
(171)
12
(44)
64
(3)
(31)
9
14
3,343
(36)
(83)
2
(5)
(122)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(5,983)
—
—
—
—
—
(421)
—
—
—
—
(1,001)
68
(49)
(2,546)
(3,949)
5
(79)
711
—
—
—
—
(704)
(704)
—
—
—
(111)
—
7
—
(2,733)
(2,837)
82
466
1,681
—
—
—
—
5,983
5,983
—
—
—
82
98
16
—
99
55
96
(196)
10
75
85
(4)
(85)
32
15
2,016
(123)
(83)
2
(5)
(209)
(421)
(111)
(1,001)
75
(49)
—
(1,507)
87
387
2,392
Cash and cash equivalents at end of year
$ 632
$ —
$ 2,147
$ —
$ 2,779
S&P Global 2017 Annual Report 85
(in millions)
S&P Global Inc.
Statement of Cash Flows
Year Ended December 31, 2016
Standard &
Poor’s Financial
Services LLC
Non- Guarantor
Subsidiaries
Eliminations
S&P Global Inc.
Consolidated
Operating Activities:
Net income
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation
Amortization of intangibles
Provision for losses on accounts receivable
Deferred income taxes
Stock-based compensation
Gain on dispositions
Accrued legal and regulatory settlements
Other
Changes in operating assets and liabilities, net
of effect of acquisitions and dispositions:
Accounts receivable
Prepaid and current assets
Accounts payable and accrued expenses
Unearned revenue
Accrued legal and regulatory settlements
Other current liabilities
Net change in prepaid/accrued income
taxes
Net change in other assets and liabilities
Cash provided by operating activities
Investing Activities:
Capital expenditures
Acquisitions, net of cash acquired
Proceeds from dispositions
Changes in short-term investments
Cash provided by (used for) investing activities
Financing Activities:
Payments on short-term debt, net
Proceeds from issuance of senior notes, net
Payments on senior notes
Dividends paid to shareholders
Distributions to noncontrolling interest
holders
Repurchase of treasury shares
Exercise of stock options
Contingent consideration payments
Employee withholding tax on share-based
payments
Intercompany financing activities
Cash used for financing activities
Effect of exchange rate changes on cash from
continuing operations
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
$ 3,069
$ 767
$ 1,766
$ (3,374)
$ 2,228
38
—
1
16
22
(1,072)
3
48
(24)
(2)
(8)
19
—
(27)
141
(9)
2,215
(68)
(144)
1,422
—
1,210
(143)
493
(421)
(380)
—
(1,123)
86
(5)
(55)
(1,333)
(2,881)
—
544
167
9
—
—
(9)
17
—
1
5
187
10
(39)
(395)
(108)
(27)
—
38
456
(15)
—
—
—
(15)
—
—
—
—
—
—
—
—
—
(441)
(441)
—
—
—
38
96
8
72
37
(29)
50
(23)
(340)
(3)
66
483
(42)
35
33
16
2,263
(32)
(33)
76
(1)
10
—
—
—
—
(116)
—
2
(34)
—
(1,600)
(1,748)
(158)
367
1,314
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(3,374)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,374
3,374
—
—
—
85
96
9
79
76
(1,101)
54
30
(177)
5
19
107
(150)
(19)
174
45
1,560
(115)
(177)
1,498
(1)
1,205
(143)
493
(421)
(380)
(116)
(1,123)
88
(39)
(55)
—
(1,696)
(158)
911
1,481
Cash and cash equivalents at end of year
$ 711
$ —
$ 1,681
$ —
$ 2,392
86 S&P Global 2017 Annual Report
(in millions)
S&P Global Inc.
Statement of Cash Flows
Year Ended December 31, 2015
Standard &
Poor’s Financial
Services LLC
Non- Guarantor
Subsidiaries
Eliminations
S&P Global Inc.
Consolidated
Operating Activities:
Net income
Adjustments to reconcile net income to cash
provided by (used for) operating activities
from continuing operations:
Depreciation
Amortization of intangibles
Provision for losses on accounts receivable
Deferred income taxes
Stock-based compensation
Gain on disposition
Accrued legal and regulatory settlements
Other
Changes in operating assets and liabilities, net
of effect of acquisitions and dispositions:
Accounts receivable
Prepaid and current assets
Accounts payable and accrued expenses
Unearned revenue
Accrued legal and regulatory settlements
Other current liabilities
Net change in prepaid/accrued income
taxes
Net change in other assets and liabilities
Cash provided by (used for) operating activities
$ 1,449
$ 824
$ 740
$ (1,745)
$ 1,268
40
—
1
33
23
—
—
23
3
(4)
8
(5)
—
(31)
14
78
18
—
1
290
24
—
110
16
(27)
14
(34)
66
(1,624)
(35)
—
8
32
67
6
(43)
31
(11)
9
18
(94)
(5)
17
68
—
(11)
115
(121)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
90
67
8
280
78
(11)
119
57
(118)
5
(9)
129
(1,624)
(77)
129
(35)
from continuing operations
1,632
(349)
818
(1,745)
356
Investing Activities:
Capital expenditures
Acquisitions, net of cash acquired
Proceeds from dispositions
Changes in short-term investments
Cash used for investing activities from
continuing operations
Financing Activities:
Additions to short-term debt
Proceeds from issuance of senior notes, net
Dividends paid to shareholders
Distributions to noncontrolling interest
holders
Repurchase of treasury shares
Exercise of stock options
Contingent consideration payments
Purchase of additional CRISIL shares
Employee withholding tax on share-based
payments
Intercompany financing activities
Cash (used for) provided by financing activities
from continuing operations
Effect of exchange rate changes on cash from
continuing operations
Cash provided by continuing operations
Discontinued Operations:
Cash used for operating activities
Cash used for discontinued operations
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of year
(67)
(2,243)
—
—
(10)
—
—
—
(62)
(153)
14
(4)
—
—
—
—
(139)
(2,396)
14
(4)
(2,310)
(10)
(205)
—
(2,525)
143
2,674
(363)
—
(974)
80
(5)
—
(92)
(2,020)
—
—
—
—
—
—
—
—
—
359
—
—
—
(104)
—
6
—
(16)
—
(84)
—
—
—
—
—
—
—
—
—
1,745
143
2,674
(363)
(104)
(974)
86
(5)
(16)
(92)
—
(557)
359
(198)
1,745
1,349
—
(1,235)
—
—
(1,235)
1,402
—
—
—
—
—
—
(67)
348
(129)
(129)
219
1,095
—
—
—
—
—
—
(67)
(887)
(129)
(129)
(1,016)
2,497
Cash and cash equivalents at end of year
$ 167
$ —
$ 1,314
$ —
$ 1,481
S&P Global 2017 Annual Report 87
Five Year Financial Review
(in millions, except per share data)
Income statement data:
Revenue
Operating profit
Income before taxes on income
Provision for taxes on income
Net income (loss) from continuing operations attributable to
2017
2016
2015
2014
2013
$ 6,063
2,610
2,4611
8236
$ 5,661
3,369
3,1882
960
$ 5,313
1,917
1,815 3
547
$ 5,051
113
544
245
$ 4,702
1,358
1,2995
425
S&P Global Inc.
1,496
2,106
1,156
(293)
783
Earnings (loss) per share from continuing operations
attributable to the S&P Global Inc. common shareholders:
Basic
Diluted
Dividends per share
Operating statistics:
5.84
5.78
1.64
8.02
7.94
1.44
4.26
4.21
1.32
(1.08)
(1.08)
1.20
2.85
2.80
1.12
Return on average equity 7
Income from continuing operations before taxes on income as a
223.0%
472.0%
324.3%
(1.4)%
134.2%
percent of revenue from continuing operations
40.6%
56.3%
34.2%
1.1%
27.6%
Net income (loss) from continuing operations as a percent of
revenue from continuing operations
27.0%
39.4%
23.9%
(3.8)%
18.6%
Balance sheet data: 7
Working capital
Total assets
Total debt
Redeemable noncontrolling interest
Equity
Number of employees 8
$ 1,110
9,425
3,569
1,350
768
20,400
$ 1,060
8,669
3,564
1,080
701
20,000
$
388
8,183
3,611
920
243
20,400
$
42
6,773
795
810
539
17,000
$
612
6,060
794
810
1,344
16,400
1 Includes the impact of the following items: legal settlement expenses of $55 million, employee severance charges of $44 million, a charge to exit leased facilities
of $25 million, non-cash acquisition and disposition- related adjustments of $15 million, a pension related charge of $8 million, an asset write-off of $2 million
and amortization of intangibles from acquisitions of $98 million.
2 Includes the impact of the following items: a $1.1 billion gain from our dispositions, a benefit related to net legal settlement insurance recoveries of $10 mil-
lion, disposition- related costs of $48 million, a technology- related impairment charge of $24 million, employee severance charges of $6 million, a $3 million
disposition- related reserve release, an acquisition- related cost of $1 million and amortization of intangibles from acquisitions of $96 million.
3 Includes the impact of the following items: costs related to identified operating efficiencies primarily related to employee severance charges of $56 million, net
legal settlement expenses of $54 million, acquisition- related costs of $37 million, an $11 million gain on dispositions and amortization of intangibles from acqui-
sitions of $67 million.
4 Includes the impact of the following items: $1.6 billion of legal and regulatory settlements, employee severance charges of $86 million, $4 million of professional
fees largely related to corporate development activities and amortization of intangibles from acquisitions of $48 million.
5 Includes the impact of the following items: $77 million of legal settlements, $64 million charge for costs necessary to enable the separation of McGraw-Hill
Education and reduce our cost structure, a $36 million non-cash impairment charge related to the sale of our data center, employee severance charges of $28 mil-
lion, a charge to exit leased facilities of $13 million, a $24 million net gain from our dispositions and amortization of intangibles from acquisitions of $51 million.
6 Includes $149 million of tax expense due to U.S. tax reform, primarily associated with the deemed repatriation of foreign earnings, which was partially offset by
a $21 million tax benefit related to prior year divestitures.
7 Includes the impact of the $1.1 billion gain on dispositions in 2016, the gain on sale of McGraw Hill Construction in 2014 and the gain on sale of McGraw-Hill
Education in 2013.
8 Excludes discontinued operations.
88 S&P Global 2017 Annual Report
Report of Management
To the Shareholders of S&P Global Inc.
MANAGEMENT’S REPORT ON INTERNAL CONTROL
MANAGEMENT’S ANNUAL REPORT ON ITS
OVER FINANCIAL REPORTING
As stated above, the Company’s management is responsible
RESPONSIBILITY FOR THE COMPANY’S FINANCIAL
for establishing and maintaining adequate internal control
STATEMENTS AND INTERNAL CONTROL OVER
FINANCIAL REPORTING
The financial statements in this report were prepared by the
management of S&P Global Inc., which is responsible for their
integrity and objectivity.
These statements, prepared in conformity with accounting
principles generally accepted in the United States and includ-
ing amounts based on management’s best estimates and judg-
ments, present fairly S&P Global Inc.’s financial condition and
the results of the Company’s operations. Other financial infor-
mation given in this report is consistent with these statements.
The Company’s management is responsible for establish-
ing and maintaining adequate internal control over financial
reporting for the Company as defined under the U.S. Securities
Exchange Act of 1934. It further assures the quality of the finan-
cial records in several ways: a program of internal audits, the
careful selection and training of management personnel, main-
taining an organizational structure that provides an appropri-
ate division of financial responsibilities, and communicating
financial and other relevant policies throughout the Company.
S&P Global Inc.’s Board of Directors, through its Audit
Committee, composed entirely of outside directors, is respon-
sible for reviewing and monitoring the Company’s financial
reporting and accounting practices. The Audit Committee
meets periodically with management, the Company’s internal
auditors and the independent registered public accounting
firm to ensure that each group is carrying out its respective
responsibilities. In addition, the independent registered
public accounting firm has full and free access to the Audit
Committee and meet with it with no representatives from man-
agement present.
over financial reporting. The Company’s management has
evaluated the system of internal control using the Committee
of Sponsoring Organizations of the Treadway Commission
2013 framework (“COSO 2013 framework”). Management has
selected the COSO 2013 framework for its evaluation as it is a
control framework recognized by the Securities and Exchange
Commission and the Public Company Accounting Oversight
Board that is free from bias, permits reasonably consistent
qualitative and quantitative measurement of the Company’s
internal controls, is sufficiently complete so that relevant con-
trols are not omitted and is relevant to an evaluation of internal
controls over financial reporting.
Based on management’s evaluation under this framework, we
have concluded that the Company’s internal controls over finan-
cial reporting were effective as of December 31, 2017. There are
no material weaknesses in the Company’s internal control over
financial reporting that have been identified by management.
The Company’s independent registered public accounting firm,
Ernst & Young LLP, has audited the consolidated financial state-
ments of the Company for the year ended December 31, 2017,
and has issued their reports on the financial statements and
the effectiveness of internal controls over financial reporting.
OTHER MATTERS
There have been no changes in the Company’s internal controls
over financial reporting during the most recent quarter that
have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
Douglas L. Peterson
President and Chief Executive Officer
Ewout L. Steenbergen
Executive Vice President and Chief Financial Officer
S&P Global 2017 Annual Report 89
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
S&P Global Inc.
OPINION ON THE FINANCIAL STATEMENTS
We have audited the accompanying consolidated balance
BASIS FOR OPINION
These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the
sheets of S&P Global Inc. (the Company) as of December 31,
PCAOB and are required to be independent with respect to the
2017 and 2016, and the related consolidated statements of
Company in accordance with the U.S. federal securities laws
income, comprehensive income, equity and cash flows for
and the applicable rules and regulations of the Securities and
each of the three years in the period ended December 31, 2017,
Exchange Commission and the PCAOB.
and the related notes (collectively referred to as the “con-
solidated financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the consoli-
dated financial position of the Company at December 31, 2017
and 2016, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended
December 31, 2017, in conformity with U.S. generally accepted
accounting principles.
We conducted our audits in accordance with the standards
of the PCAOB. Those standards require that we plan and per-
form the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included perform-
ing procedures to assess the risks of material misstatement
of the financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such pro-
We also have audited, in accordance with the standards of
cedures included examining, on a test basis, evidence regard-
the Public Company Accounting Oversight Board (United
ing the amounts and disclosures in the financial statements.
States) (PCAOB), the Company’s internal control over finan-
Our audits also included evaluating the accounting principles
cial reporting as of December 31, 2017, based on crite-
used and significant estimates made by management, as well
ria established in Internal Control- Integrated Framework
as evaluating the overall presentation of the financial state-
issued by the Committee of Sponsoring Organizations of the
ments. We believe that our audits provide a reasonable basis
Treadway Commission (2013 framework), and our report dated
for our opinion.
February 9, 2018 expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 1969.
New York, New York
February 9, 2018
90 S&P Global 2017 Annual Report
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Our audit included obtaining an understanding of internal con-
S&P Global Inc.
OPINION ON INTERNAL CONTROL OVER
FINANCIAL REPORTING
We have audited S&P Global Inc.’s internal control over finan-
cial reporting as of December 31, 2017, based on criteria estab-
lished in Internal Control- Integrated Framework issued by
trol over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and oper-
ating effectiveness of internal control based on the assessed
risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit pro-
vides a reasonable basis for our opinion.
the Committee of Sponsoring Organizations of the Treadway
DEFINITION AND LIMITATIONS OF INTERNAL
Commission (2013 framework) (the COSO criteria). In our opin-
ion, S&P Global Inc. (the Company) maintained, in all material
CONTROL OVER FINANCIAL REPORTING
A company’s internal control over financial reporting is a pro-
respects, effective internal control over financial reporting as
cess designed to provide reasonable assurance regarding the
of December 31, 2017, based on the COSO criteria.
reliability of financial reporting and the preparation of financial
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of S&P Global Inc.
as of December 31, 2017 and 2016, and the related consoli-
dated statements of income, comprehensive income, equity
and cash flows for each of the three years in the period ended
December 31, 2017, and the related notes and financial state-
ment schedule listed in Item 15(a)(2) and our report dated
February 9, 2018 expressed an unqualified opinion thereon.
BASIS FOR OPINION
The Company’s management is responsible for maintaining
effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over finan-
cial reporting included in the accompanying Management’s
statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reason-
able detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reason-
able assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accor-
dance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding pre-
vention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material
effect on the financial statements.
Annual Report on Internal Control Over Financial Reporting.
Because of its inherent limitations, internal control over finan-
Our responsibility is to express an opinion on the Company’s
cial reporting may not prevent or detect misstatements. Also,
internal control over financial reporting based on our audit. We
projections of any evaluation of effectiveness to future periods
are a public accounting firm registered with the PCAOB and
are subject to the risk that controls may become inadequate
are required to be independent with respect to the Company in
because of changes in conditions, or that the degree of compli-
accordance with the U.S. federal securities laws and the appli-
ance with the policies or procedures may deteriorate.
cable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of
the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effec-
tive internal control over financial reporting was maintained in
all material respects.
/s/ ERNST & YOUNG LLP
New York, New York
February 9, 2018
S&P Global 2017 Annual Report 91
Shareholder Information
Annual Meeting
The 2018 annual meeting will be held at 11 a.m. EDT on
Tuesday, May 1st at 55 Water Street, New York,
New York, 10041.
The annual meeting will also be Webcast at:
http://investor.spglobal.com
Stock Exchange Listing
Shares of our common stock are traded primarily on the
New York Stock Exchange. SPGI is the ticker symbol for our
common stock.
Investor Relations Web Site
Go to http://investor.spglobal.com to find:
– Management presentations
– Financial news releases
– Financial reports, including the annual report, proxy
statement and SEC filings
– Investor Fact Book
– Operating Committee
– Corporate governance documents
– Dividend and stock split history
– Stock quotes and charts
– Investor e-mail alerts
– RSS news feeds
Investor Kit
The Company’s investor kit includes the most recent Annual
Report, Proxy Statement, Form 10-Qs, Form 10-K, and
earnings release. These documents can be downloaded from
the SEC Filings & Reports section of the Company’s Investor
Relations Website at http://investor.spglobal.com
Requests for printed copies, free of charge, can be e-mailed
to investor.relations@spglobal.com or mailed to Investor
Relations, S&P Global Inc., 55 Water Street, New York,
NY 10041. Interested parties can also call Investor Relations
toll-free at 866-436-8502 (domestic callers) or 212-438-2192
(international callers).
Transfer Agent and Registrar for Common Stock
Computershare is the transfer agent for S&P Global Inc.
Computershare maintains the records for the Company’s
registered shareholders and can assist with a variety of
shareholder related services.
92 S&P Global 2017 Annual Report
Shareholder correspondence should be mailed to:
Computershare
P.O. Box 505000
Louisville, KY 40233
Overnight correspondence should be mailed to:
Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202
Investor Center™ website to view and manage shareholder
account online: www.computershare.com/investor
For shareholder assistance:
In the U.S. and Canada: 888-201-5538
Outside the U.S. and Canada: 201-680-6578
TDD for the hearing impaired: 800-231-5469
TDD outside the U.S. and Canada: 201-680-6610
E-mail address:
web.queries@computershare.com
Shareholder online inquiries:
https://www-us.computershare.com/investor/Contact
Direct Stock Purchase and Dividend
Reinvestment Plan
This program offers a convenient, low-cost way to invest in
S&P Global’s common stock. Participants can purchase and
sell shares directly through the program, make optional cash
investments weekly, reinvest dividends, and send certificates
to the transfer agent for safekeeping.
Interested investors can view the prospectus and enroll
online at www.computershare.com/investor. To receive the
materials by mail, contact Computershare as noted above.
News Media Inquiries
Go to www.spglobal.com/press to view the latest Company
news and information or to submit an e-mail inquiry. You may
also call Corporate Affairs at 212-438-1247.
Certifications and S&P Global Inc.
Form 10-K
We have filed the required certifications under Sections 302
and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1, 31.2
and 32 to our Form 10-K for the year ended December 31, 2017.
The financial information included in this report was
excerpted from the Company’s Form 10-K for the year ended
December 31, 2017, filed with the Securities and Exchange
Commission on February 9, 2018. Shareholders may access
a complete copy of the 10-K from the SEC Filings & Reports
section of the Company’s Investor Relations Website at
http://investor.spglobal.com.
m
o
c
.
i
n
o
s
d
d
a
.
w
w
w
i
n
o
s
d
d
A
y
b
n
g
s
e
D
i
Financial Highlights
Years ended December 31
(in millions, except per share data)
2017
2016
%
Change
Revenue
$ 6,063
$ 5,661
Adjusted net income (attributable to the Company’s
common shareholders)*
1,784(a)
1,420(b)
Adjusted diluted earnings per common share*
$ 6.89(a)
$ 5.35(b)
Dividends per common share(c)
$ 1.64
$ 1.44
Total assets
$ 9,425
$ 8,669
Capital expenditures(d)
123
115
Total debt
3,569
3,564
7
26
29
14
9
7
0
Equity (including redeemable noncontrolling interest)
2,118
1,781
19
* Refer to “Reconciliation of Non-GAAP Financial Information” on page 13 of this report for a discussion of the Company’s non-GAAP
financial measures.
(a) Excludes the impact of the following items: legal settlement expenses of $55 million, employee severance charges of $44 million, a charge
to exit leased facilities of $25 million, non-cash acquisition and disposition-related adjustments of $15 million, a pension related charge of
$8 million, an asset write-off of $2 million and amortization of intangibles from acquisitions of $98 million.
(b) Excludes the impact of the following items: a gain from our dispositions of $1.1 billion, a benefit related to net legal settlement insurance
recoveries of $10 million, disposition-related costs of $48 million, a technology-related impairment charge of $24 million, employee
severance charges of $6 million, a disposition-related reserve release of $3 million, acquisition-related costs of $1 million, and amortization
of intangibles from acquisitions of $96 million.
(c) Dividends paid were $0.41 per quarter in 2017 and $0.36 per quarter in 2016.
(d) Includes purchases of property and equipment and additions to technology projects.
Directors and Principal Executives
Board of Directors
Charles E. “Ed” Haldeman, Jr. (E, F, N)
Non-Executive Chairman of the Board
S&P Global Inc.
Rebecca Jacoby (F)
Former Senior Vice President, Operations
Cisco Systems, Inc.
Marco Alverà (F, N)
Chief Executive Officer
Snam S.p.A.
William D. Green (C, E, N)
Former CEO and Chairman
Accenture
Stephanie C. Hill (A, C)
Senior Vice President
Corporate Strategy and
Business Development
Lockheed Martin
Operating Committee
Monique F. Leroux (A, C)
Chair
Investissement Québec
Quebec Economic and Innovation Council
Maria R. Morris (A, F)
Former Executive Vice President
Global Employee Benefits
MetLife, Inc.
Douglas L. Peterson (E)
President and Chief Executive Officer
S&P Global Inc.
Sir Michael Rake (A, E, F)
Chairman
Worldpay Group plc
Phoenix Global Resources plc
Edward B. Rust, Jr. (C, E, N)
Chairman Emeritus
State Farm Mutual Automobile
Insurance Company
Kurt L. Schmoke (C, N)
President
University of Baltimore
Richard E. Thornburgh (A, E, F)
Non-Executive Director and Chairman
Credit Suisse Holdings (USA), Inc.
Vice Chairman
Credit Suisse Group A.G.
Douglas L. Peterson
President and Chief
Executive Officer
Ewout Steenbergen
Executive Vice
President, Chief
Financial Officer
John L. Berisford
President, S&P Global
Ratings
Mike Chinn
President, S&P Global
Market Intelligence
& Executive Vice
President, Data and
Technology Innovation,
S&P Global
Martin Fraenkel
President, S&P Global
Platts
Alexander J.
Matturri
Chief Executive
Officer, S&P Dow
Jones Indices
Nick Cafferillo
Chief Technology
Officer
Martina L. Cheung
Head of Global Risk
Services
Courtney Geduldig
Executive Vice
President, Public
Affairs
Steven J. Kemps
Executive Vice
President, General
Counsel
Swamy
Kocherlakota
Chief Information
Officer
Nancy Luquette
Senior Vice President,
Chief Risk & Audit
Executive
Ashu Suyash
Managing Director
and Chief Executive
Officer, CRISIL
A – Audit Committee
C – Compensation & Leadership
Development Committee
E – Executive Committee
F – Financial Policy Committee
N – Nominating & Corporate Governance Committee
IFC
IBC
55 Water Street
New York, NY 10041
spglobal.com
S
&
P
G
l
o
b
a
l
2
0
1
7
A
n
n
u
a
l
R
e
p
o
r
t
Essential
intelligence
shapes a world
of opportunity
Annual Report 2017