Resilience
Annual Report 2020
Financial Highlights
Years ended December 31
(in millions, except per share data)
Revenue
2020
2019
% Change
$7,442
$6,699
Adjusted net income (attributable to the Company’s common shareholders)*
2,830 (a)
2,352 (b)
Adjusted diluted earnings per common share*
$11.69 (a)
$9.53 (b)
Dividends per common share (c)
Total assets
Capital expenditures (d)
Total debt
Equity (including redeemable noncontrolling interest)
$2.68
$2.28
$12,537
$11,348
76
4,110
3,352
115
3,948
2,804
11
20
23
18
10
(34)
4
20
*Refer to “Reconciliation of Non-GAAP Financial Information” on page 15 of this report for a discussion of the Company’s non-GAAP fi nancial measures.
(a)
Includes impact of the following items: loss on the extinguishment of debt of $279 million, lease impairments of $120 million, employee severance charges of $66
million, IHS Markit merger costs of $24 million, a $16 million gain on dispositions, a technology-related impairment charge of $12 million, lease-related costs of $11
million, Kensho retention related expense of $11 million, a pension related charge of $3 million and amortization of intangibles from acquisitions of $123 million.
(b) Includes the impact of the following items: a pension related charge of $113 million, costs associated with early repayment of our Senior Notes of $56 million, a
$49 million gain on dispositions, employee severance charges of $25 million, Kensho retention related expense of $21 million, lease impairments of $11 million,
acquisition-related costs of $4 million and amortization of intangibles from acquisitions of $122 million.
(c) Dividends paid were $0.67 per quarter in 2020 and $0.57 per quarter in 2019.
(d) Includes purchases of property and equipment and additions to technology projects.
Year-End Share Price
Dividends Per Share
Revenue (in millions)
$328.73
$273.05
$169.94
$169.40
$107.54
$2.68
$2.28
$2.00
$1.64
$1.44
$7,442
$6,699
$6,258
$6,063
$5,661
’16
’17
’18
’19
’20
’16
’17
’18
’19
’20
’16
’17
’18
’19
’20
Cumulative Total Shareholder Return(e)
375
350
325
300
275
250
225
200
175
150
125
100
SPGI
Peer Group (f)
S&P 500
$352
$315
$184
’15
’16
’17
’18
’19
’20
(e) Assumes $100 invested on December 31, 2015 and total return includes reinvestment of dividends through December 31, 2020.
(f) The peer group consists of the following companies: Moody’s Corporation, CME Group Inc., MSCI Inc., FactSet Research Systems
Inc., IHS Markit Ltd., Verisk Analytics, Inc., Intercontinental Exchange, Inc.
To experience an
To experience an
enriched version of this
Annual Report, with
Annual Report, with
expanded content, visit
spglobal.com/annualreport.
S&P Global 2020 Annual Report 1
Chairman’s Letter
The Board of Directors congratulates
The Board of Directors congratulates
the leadership team and everyone
the leadership team and everyone
involved for achieving great
involved for achieving great
fi nancial results in 2020 and
fi nancial results in 2020 and
for entering into the merger
for entering into the merger
agreement with IHS Markit.
agreement with IHS Markit.
Richard E. Thornburgh
Chairman of the Board
Delivering Shareholder Value in 2020
21.4%
Total Annual
Shareholder Return
$1.8B
Cash Returned
to Shareholders
17.5%
Increase in
Dividend
2 S&P Global 2020 Annual Report
Dear Fellow Shareholder:
This year’s Annual Report and Doug’s letter to shareholders explain how S&P Global is confronting
the convergence of immense corporate challenges—the biggest business issues of this century.
The people of our company, spread all over the globe, are dealing with a worldwide pandemic, working
toward broader workplace diversity and managing through geopolitical events.
Despite these challenges, our workforce never wavered from our corporate mission and values.
A deeply talented group of professionals has done an excellent job of growing a sustainable business
by serving customers, supporting their communities and establishing an admired and unique culture.
The Board of Directors congratulates the leadership team and everyone involved for achieving great
financial results in 2020 and for entering into the merger agreement with IHS Markit.
The Board takes its responsibilities for strategy, risk, and financial and human capital matters
seriously. The Board approaches its responsibility for environmental, social and governance (ESG)
matters with the same level of diligence as the company does in its production of ESG indices, ratings,
benchmarks and analytics. We fulfill these responsibilities, in part, by encouraging discussions
with management that are open and direct, challenging and fulsome. These conversations concern
the material risks, opportunities and obligations facing our company. Over the years, this culture
of openness has helped make S&P Global resilient, flexible and adaptable to change in the
broadest context.
In accordance with our governance guidelines, Charles E. “Ed” Haldeman, Jr. will retire from the
Board at our Annual Shareholders Meeting in May 2021. On behalf of the Board and management,
I extend our heartfelt appreciation to Ed for his steady leadership during an extraordinary period of
transformation and growth for the company. Ed became non-executive Chair in 2015 and he was the
first to serve in this role when we launched S&P Global in 2016. As the saying goes, he was the right
person at the right time, and he served all stakeholders extremely well.
We also welcome our newest Director, Lord Ian Livingston, who was appointed at our September 2020
Board meeting, and we thank Director Marco Alverà for assuming the Chair of the Board’s Finance
Committee upon my appointment to Board Chair.
During my 10 years of service on the Board, I have met many of our company’s employees across the
globe. They are dedicated and exceptional, and they have our gratitude for producing the “essential
intelligence” on which our varied customers depend during this extraordinary time.
Sincerely,
Richard E. Thornburgh
Chairman of the Board
S&P Global 2020 Annual Report 3
CEO’s Letter
In 2020, our people showed tremendous
resilience, responsibility and resolve
to support one another, our customers,
our communities, our suppliers, and in
doing so, have served our shareholders.
Douglas L. Peterson
President and CEO
Dear Fellow Shareholder:
The last year tested everyone. Families struggled with the COVID-19 pandemic
and personal loss. People and businesses grappled with a steep decline in global
economic activity as lockdowns depressed sales and employment. The killing
of George Floyd and rising inequality renewed diffi cult conversations in the U.S.
and around the world about race, diversity and inclusion. A deadly mob attacked
the U.S. Capitol. And the physical assets of many large corporations are at risk
because of severe weather and climate change.
All these events have increased uncertainty about the future, and they raise
important questions about the role of business in society. How does the
business community demonstrate responsible leadership? How can large
multinational companies like ours deliver on our commitments to provide value
to all stakeholders? What are the opportunities to rebuild trust in market-based
systems with a purpose to serve everyone with whom we do business?
To be sure, the story of how companies are responding to this moment is still
being written. But insights are emerging that tell us something about the most
resilient companies. They’re the ones that focus on the environment and on
societal issues, and that have good governance practices. They’re the ones with
crisis response plans and that engage with all their stakeholders.
In 2020, our people showed tremendous resilience, responsibility and resolve to
support one another, our customers, our communities, our suppliers, and in doing
so, have served our shareholders. I’m incredibly proud of them.
4 S&P Global 2020 Annual Report
Connecting the Past with the Present
Eighty years ago, Paul Babson, the president of Poor’s Publishing, and Clayton
Penhale of Standard Statistics decided to merge their two companies.
The principles on which Standard & Poor’s was formed—integrity, independence
and insights—are just as relevant to investors and corporate leaders now as
they were then. And it is those qualities that are bringing another two great
companies together.
Last year, we announced our agreement to merge with IHS Markit (NYSE: INFO).
We have enormous respect for IHS Markit and everything its Chairman and CEO
Lance Uggla and his team have built. As we look to the future, the combination of
our companies will enable us to leverage data and technology so our customers
can make even better decisions.
We have a proud tradition of evolution, innovation and resilience that gives me
a lot of confidence about the way we will deal with future events. For more than
160 years, we’ve navigated challenges in a wide range of economic cycles, market
conditions and global dynamics.
When Henry Varnum Poor was just getting started with Poor’s Publishing in 1860
by writing journals about the emerging railroad industry, America was on the
cusp of a secession crisis and the Civil War. When our predecessors who were
leading McGraw-Hill Cos. decided to take our company public by listing shares on
the New York Stock Exchange in 1929, the country was on the verge of the Great
Depression. And when Paul and Clayton merged their companies in 1941, the U.S.
was just nine months from entering World War II.
Through it all, our people have displayed integrity, determination and the
spirit of innovation.
This year marks our fifth anniversary as S&P Global. This milestone offers a vivid
reminder that for generations, the S&P brand has represented trusted financial
information. As we go forward, we’ll never stop working to earn the trust of markets
and all our stakeholders.
We have a proud tradition of evolution,
innovation and resilience that gives me
a lot of confidence about the way we will
deal with future events.
S&P Global 2020 Annual Report 5
2020 Financial Review
We delivered exceptional financial performance in 2020. While the pandemic has
crippled many industries and companies, our unique collection of businesses has
continued to thrive by providing the essential intelligence needed by our clients to
navigate this period of heightened uncertainty.
Last year, revenue increased 11% to $7.44 billion and our adjusted diluted
earnings per share rose 23% to $11.69, which compares with the top end of
our guidance of $11.45.
These results are testimony to our resilient business model. We generate about
70% of revenue from subscriptions, non-transaction and asset-linked fees.
Upon closing our merger with IHS Markit, the portion of our new company’s
recurring revenue is projected to increase to 76%.
Another strength of S&P Global is the wide range of sectors that we serve.
In addition to financial institutions, we serve numerous industries, including
utilities, technology, integrated oil and gas as well as governments. And because of
this diversity of revenue, no one industry and certainly no one customer represents
a majority of our business. In fact, nonfinancial corporates in industrial categories
represent almost 60% of our revenue.
We continue to maintain our strong balance sheet and healthy credit profile for
future capital deployment, including steady returns to shareholders.
Powering the Markets of the Future
Having a strategy is one thing. Being able to execute it, especially in times of
great unpredictability, is something else. I’m pleased that our long-term strategy,
what we call Powering the Markets of the Future, continues to be an effective
framework to hold ourselves accountable, allocate capital and chart our path
forward. In 2020, we produced meaningful progress in each of the six components
of our strategy.
While the pandemic has crippled
many industries and companies, our
unique collection of businesses has
continued to thrive.
6 S&P Global 2020 Annual Report
1. Global Reach and Relevance
To expand globally, we took another big step last year. S&P Global (China) Ratings
completed its registration filing with the China Securities Regulatory Commission.
This marks the first time that a wholly foreign-owned credit rating agency (CRA)
can produce credit ratings in China’s exchange bond market, and it gives us
the broadest remit of any wholly foreign-owned CRA in China. As you may
recall, in 2019, we received the first approval to publish ratings in the interbank
bond market.
We also released the China Credit Analytics Platform. This is an integrated desktop
solution that generates credit insights on more than 20 million Chinese private
companies using differentiated content and localized analytics aligned with the
S&P Global standard.
2. Customer Orientation
To strengthen our customers’ experiences with our products, we took a number of
important actions across the company.
For example, we stepped up the frequency and availability of our research and
insights related to the impact of COVID-19 on markets, business sectors and
economies. Our customers have expressed overwhelmingly positive feedback and
we reached record levels of website visitors and overall interest in our content.
In another example, last summer we began customer trials of S&P Global Platts’
faster, more efficient Market on Close (MOC) process. S&P Global Platts editors
have been collaborating with Kensho’s data scientists to shorten the average
two-hour timespan between the market’s close and the publication of a range
of commodity price assessments by an average of 80%. This enables Platts to
publish price assessments faster, so that clients—whether they are in trading,
risk or operations—can take actions sooner and with greater understanding. We
concluded initial trials with customers earlier this year and we will be rolling the
process out across the full range of price assessments in scope in 2021.
And for a richer customer experience, we have added major features to the Market
Intelligence desktop. These improvements allow users to more easily customize,
navigate and discover our great content, including improvements to our market
monitoring dashboard like persona-driven views. High-quality, differentiated
content on the desktop—everything from private company data to ESG insights—
is core to our strategy.
In the future, I’m excited about the opportunities to unleash new combinations
of data, products and technology for our customers. Together with IHS Markit,
we’ll be better positioned to serve diverse customer segments, including financial
services, corporates and the public sector. We’ll have leading capabilities across
benchmarking, data and analytics, risk management, market insight and research,
asset valuations and ratings.
S&P Global 2020 Annual Report 7
3. Operational Excellence
To realize operational excellence, we completed our 2018 productivity program,
achieving $120 million in annual savings. Some of the key areas of improvement
were in standardizing and centralizing processes, consolidating data centers and
utilizing robotics, or RPA, to automate routine activities.
Last year, we introduced a new $120 million productivity program. This initiative
to reduce future expenses will take place over the next two to three years and is
focused on real estate, procurement, travel and entertainment, and technology
infrastructure.
We also demonstrated operational excellence as we moved to a work-from-home
model, accelerating conversations we’d been having about the future of work.
We continue to focus on incorporating technology solutions to transform how we
serve our customers, where we work, and how we work.
4. Technology
To enhance the value we offer to customers, we continue our record of deploying
technology. In 2020, we signed an agreement with Snowflake, a cloud data
platform. Cloud-based delivery enables customers to simplify their data
management and work with multiple large datasets more efficiently. Since
Snowflake is cloud agnostic, our data are ready to query and easily accessible.
Across S&P Global we’ve been deploying more and more sophisticated data
science capabilities. Kensho, which we acquired in 2018, continues to prove an
effective hub of innovation and product improvements. Kensho’s core capabilities
in machine learning, alternative-data analysis, search technology, and natural-
language processing give us a competitive advantage, and in 2020, enabled
customers to move faster and uncover new insights.
And following the merger with IHS Markit, the combination of both companies’
artificial intelligence capabilities with the IHS Markit Data Lake—a centralized
place to store structured and unstructured data where anybody can use it—will
allow our customers to discover completely new insights. It’s one of the most
compelling aspects of putting our businesses together.
8 S&P Global 2020 Annual Report
5. Innovation
We had an incredible year of innovation and product launches. Our innovative new
offerings span the entire company.
To start with, we created a suite of new environmental, social and governance,
or ESG, products. In the last year alone, we launched the S&P 500 ESG Index and
ESG Scores and the first European price assessment for sustainable jet fuel, just
to name a few.
To underscore the demand for ESG-focused data, benchmarks and analytics,
by the end of 2020 assets under management in ESG ETFs based on our indices
were $20.2 billion, up over 200% since the end of 2019. And to meet the growing
market’s demand for ESG insights, we recently established a new organizational
structure to guide our ESG product strategy and growth plans.
I’m also very pleased with last year’s introduction of S&P Global Marketplace—
a data platform that offers the opportunity to explore, discover and evaluate new
datasets in a seamless and intuitive way. There are more than 100 content and
solution options available to clients.
Textual data—research documents, regulatory filings, earnings call transcripts
and similar unstructured data sets—have become one of the most sought-after
pieces of content in Marketplace. Ordinarily, it would take customers an enormous
amount of time trying to consume this kind of information, usually one document
at a time. Here, we’re helping them by applying data science and machine learning.
These techniques allow us to source new content, structure it, apply tags that
describe the content and link relevant data, and add new search capabilities to
help clients find new insights.
6. People First
To put our people first, we expanded our benefits, including extended care leave,
new wellness offerings and a new student loan reimbursement program. In
response to COVID, we have been taking steps to care for our people. We introduced
new and easily accessible wellness programs that promote emotional and mental
health, alongside more traditional benefits to support physical well-being.
S&P Global 2020 Annual Report 9
Attracting and retaining top talent is a priority. In 2020, we welcomed a new
member to our senior leadership team. Dan Draper, who was previously with
the investment management firm Invesco, is the CEO of S&P Dow Jones Indices,
succeeding Alex Matturri who retired last year. Dan has hit the ground running
and is proving that there are a lot of opportunities to continue developing
innovative indices.
We look forward to welcoming a whole new group of talented people later this year
when we expect to close the IHS Markit transaction.
Resilience in 2020 and Beyond:
A Focus on ESG
Despite our resilience, we are not immune from risks.
Early last year, there were concerns the pandemic
could cause a drop in bond issuance, weakness in
new sales or subscription renewals, and reduce assets
under management connected with our indices. The
financial markets finished 2020 strong and we had
an excellent year.
But that doesn’t mean we stop evaluating emerging
risks, as well as opportunities. If anything, the events
of the past year have only sharpened our focus on
evolving events that could impact our company. This
is where putting a priority on ESG factors is critical to
maintaining the sustainability of our business.
We need to keep our own house in order if we are to be a true leader in providing
the markets with ESG data, benchmarks and analytics. Here’s what we’re doing.
Environment
As part of our effort to consider climate change in making decisions, last year
we were one of the first U.S.-based companies to disclose a carbon-adjusted
earnings per share metric. We believe that this measure provides transparency
into the previously hidden cost of carbon emissions from our operations. We’ve
also enhanced our environmental disclosures by setting science-based targets
for the reduction of our greenhouse gas emissions and publishing our second Task
Force on Climate-Related Financial Disclosures report.
Social
In 2020, we moved to address diversity, racial equity and inclusion in our company,
with our customers and in our communities. We began educating our workforce
about racial justice with a series of guest speakers and courageous conversations.
Regardless of your race, sexual orientation, gender, ethnicity—no matter who
10 S&P Global 2020 Annual Report
you are and no matter where you are—we are committed to creating a more
welcoming, inclusive culture.
Our efforts extend to our supply chain and business partners, where we strive to
work with minority-, women-, veteran- and LGBTQ-owned businesses globally.
We are deepening our relationships with our community partners too. Over 80%
of the grants our foundation awards are directed to organizations whose mission
is to promote some form of diversity and inclusion. In 2020, we increased our
charitable contributions to $11 million and we have been very targeted to giving to
the communities most in need, whether it’s because of COVID or racial injustice.
We’ve also continued to conduct special research about the value more women
in the workforce brings to economies, markets and communities. Under the
banner of our #ChangePays campaign, last year we published new research in
partnership with AARP about the importance of employers expanding family-
friendly benefits and promoting work-life balance.
Of course, the racial and social issues in our communities are not new and they
won’t be solved in the short term. Yet, I believe we’ll make progress both in the
business community and across society because asset owners and responsible
business leaders are pushing for change.
Governance
Good corporate governance starts at the top and cuts across every part of our
company. And it’s the culmination of many different factors. Our independent
Board of Directors views ESG issues as essential to its oversight of our business
strategy. Our largest shareholders who vote their proxies want to talk with us
about what we’re doing to attract and develop talent, they want to know how we’re
prepared to respond to cyber incidents and what we’re doing to take advantage of
technology innovation.
One of the lessons coming out of the pandemic is that remote work requires
a new way of thinking to enhance risk management and compliance,
especially cybersecurity.
We’ve gone from several dozen offices to over 20,000 home offices. So, we’ve
enhanced our cyber training and email surveillance.
Effective risk management and governance are only as good as the willingness of
people to follow the rules and behave responsibly. That’s why we have programs in
place to make sure all our people understand and abide by our code of conduct,
and that we have a culture of good governance across the organization.
I believe measuring corporate performance and the transparency companies
provide about it are important elements of governance. As the market moves
toward greater adoption of ESG investing practices, public and private companies
should consider how they can increase their ESG disclosures.
S&P Global 2020 Annual Report 11
2020 Recognition Highlights
Forbes
Newsweek
Most JUST Companies:
The JUST 100 Capital
Most Responsible
Companies
Fortune
Barron’s
Most Admired Companies
100 Most Sustainable
Companies
Working
Mother
Drucker
Institute
100 Best Companies
#26 Company Ranking
The Civic 50
Points of Light
Human Rights
Campaign
Foundation
Most Community-Minded
Companies
Best Places to Work
for LGBTQ Equality
12 S&P Global 2020 Annual Report
Our Way Forward Together
The past year has been diffi cult as each of us has had to wrestle with big changes
in our world. I thank the people on the frontlines for all they’ve done—from the
doctors, nurses and scientists, to the police offi cers and fi refi ghters who keep us
safe, to the truck drivers, factory and grocery store workers who do their best to
keep supply lines connected, to the community members and nongovernmental
organizations pushing for greater equity in society. As business leaders, we need
to do our part to create positive change.
As challenging as last year was, it also offered glimpses of inspiration—how
we can come together to do great things. In our company, we proved that our
long-term strategy, our business portfolio and our people are resilient and act
responsibly in everything they do.
As COVID vaccines get administered to more and more people around the globe,
we’ll gradually see businesses in sectors hit hardest by the pandemic pick up. It
may take a year or more to get back to pre-COVID levels for those businesses. With
a rebound in the global economy expected this year, normalization across sectors
and with a great team, S&P Global is in an excellent position to Power the Markets
of the Future.
Thanks for reading and for your interest in our company.
Sincerely,
Douglas L. Peterson
President and CEO
S&P Global 2020 Annual Report 13
Disclaimers
Offer or Solicitation
This document is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or
a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as amended.
Important Information About the Transaction and Where to Find It
In connection with the proposed transaction, S&P Global and IHS Markit will file relevant materials with the SEC, including a registration statement on Form S-4 filed
by S&P Global to register the shares of S&P Global common stock to be issued in connection with the proposed transaction. The registration statement will include a
joint proxy statement/prospectus which will be sent to the shareholders of S&P Global and IHS Markit seeking their approval of their respective transaction-related
proposals. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4 AND THE RELATED JOINT PROXY STATEMENT/
PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR TO BE FILED
WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT
INFORMATION ABOUT S&P GLOBAL, IHS MARKIT AND THE PROPOSED TRANSACTION.
Investors and security holders may obtain copies of these documents free of charge through the website maintained by the SEC at www.sec.gov or from S&P Global at its
website, or from IHS Markit at its website. Documents filed with the SEC by S&P Global will be available free of charge by accessing S&P Global’s website at www.spglobal.
com under the heading Investor Relations, or, alternatively, by directing a request by telephone to 866-436-8502 (domestic callers) or 212-438-2192 (international callers)
or by mail to S&P Global at Investor Relations, S&P Global Inc., 55 Water Street, New York, NY 10041, and documents filed with the SEC by IHS Markit will be available free
of charge by accessing IHS Markit’s website at www.ihsmarkit.com under the heading Investor Relations or, alternatively, by directing a request by telephone to
303-790-0600 or by mail to IHS Markit at IHS Markit Investor Relations and Corporate Communications, 15 Inverness Way East, Englewood, CO 80112.
Participants in the Solicitation
S&P Global, IHS Markit and certain of their respective directors and executive officers and other members of management and employees may be deemed to be
participants in the solicitation of proxies from the shareholders of S&P Global and IHS Markit in respect of the proposed transaction under the rules of the SEC.
Information about IHS Markit’s directors and executive officers is available in IHS Markit’s Form 10-K for the year ended November 30, 2019, proxy statement dated
February 28, 2020 for its 2020 Annual General Meeting of Shareholders, and certain of its Current Reports on Form 8-K. Information about S&P Global’s directors and
executive officers is available in S&P Global’s Form 10-K for the year ended December 31, 2019, proxy statement dated March 30, 2020 for its 2020 Annual Meeting of
Shareholders, and certain of its Current Reports on Form 8-K. Additional information regarding the participants in the proxy solicitation and a description of their direct
and indirect interests, by security holdings or otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials to be filed with the SEC
regarding the transaction when they become available. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making
any voting or investment decisions. You may obtain free copies of these documents from S&P Global or IHS Markit using the sources indicated above.
14 S&P Global 2020 Annual Report
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 13) 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 management views our
businesses. The Company believes these non-GAAP financial measures provide useful supplemental information 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.
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 2020 Annual Report 15
Operating Results - Reported vs. Performance
Non-GAAP Financial Information
Periods ended December 31, 2020 and 2019
(dollars in millions, except per share amounts)
Adjusted Operating Profit
(unaudited)
Total SPGI
Operating profit
Non-GAAP adjustments (a) (b) (c) (d) (e)
Deal-related amortization
Adjusted operating profit
2020
2019 % Change
$3,617
228
123
$3,226
12
122
12%
$3,967
$3,360
18%
Adjusted Other (Income) Expense, net
(unaudited)
Other (income) expense, net
Non-GAAP adjustments (f)
Adjusted other income, net
Adjusted Provision for Income Taxes
(unaudited)
Provision for income taxes
Non-GAAP adjustments (a) (b) (c) (d) (e) (f) (g)
Deal-related amortization
Adjusted provision for income taxes
Adjusted Effective Tax Rate
(unaudited)
Adjusted operating profit
Adjusted other income, net
Interest expense, net
Adjusted income before taxes on income
Adjusted provision for income taxes
Adjusted effective tax rate 1
2020
$(31)
(3)
$(34)
2020
$694
109
29
$831
2019 % Change
$98
(113)
$(14)
N/M
N/M
2019 % Change
$627
45
29
$702
11%
18%
2020
$3,967
(34)
141
3,861
2019 % Change
$3,360
(14)
141
3,233
18%
19%
831
702
21.5%
21.7%
1 The adjusted effective tax rate is calculated by dividing the adjusted provision for income taxes by the adjusted income before taxes on income.
16 S&P Global 2020 Annual Report
Periods ended December 31, 2020 and 2019
(dollars in millions, except per share amounts)
Adjusted Net Income attributable to SPGI and Adjusted Diluted EPS
(unaudited)
2020
2019
% Change
Net Income
attributable
to SPGI
Diluted
EPS
Net Income
attributable
to SPGI
Diluted
EPS
Net Income
attributable to
SPGI
Diluted
EPS
As reported
$2,339
$9.66
$2,123
$8.60
10%
12%
Non-GAAP adjustments (a) (b) (c) (d) (e) (f) (g)
Deal-related amortization
397
94
1.64
0.39
136
92
0.55
0.37
Adjusted
N/M - not meaningful
Note - Totals presented may not sum due to rounding.
$2,830
$11.69
$2,352
$9.53
20%
23%
(a) 2020 includes a technology-related impairment charge of $11 million ($8 million after-tax). 2020 also includes lease-related costs of $5 million ($4 million after-
tax) and employee severance charges of $4 million ($3 million after-tax). 2019 includes employee severance charges of $11 million ($9 million after-tax).
(b) 2020 includes employee severance charges of $27 million ($21 million after-tax), and lease-related costs of $3 million ($2 million after-tax). 2020 also includes a
gain on disposition of $12 million ($6 million after-tax). 2019 includes employee severance charges of $6 million ($4 million after-tax) and acquisition-related costs
of $4 million ($3 million after-tax). As of July 1, 2019, we completed the sale of SPIAS and the results are included in Market Intelligence results through that date.
2019 also includes a gain on the sale of SPIAS of $22 million ($12 million after-tax).
(c) 2020 includes employee severance charges of $11 million ($9 million after-tax) and lease-related costs of $2 million ($1 million after-tax). As of July 31, 2019,
we completed the sale of RigData and the results are included in Platts results through that date. 2019 includes a gain on the sale of RigData of $27 million ($26
million after-tax) and employee severance charges of $1 million ($1 million after-tax).
(d) 2020 includes employee severance charges of $5 million ($4 million after-tax), a lease impairment charge of $4 million ($3 million after-tax), a technology-related
impairment of $2 million ($1 million after-tax), and lease-related costs of $1 million ($1 million after-tax).
(e) 2020 includes Kensho retention related expense of $12 million ($9 million after-tax) and employee severance charges of $19 million ($15 million after-tax).
2020 includes lease impairments of $116 million ($89 million after-tax), a gain on disposition of $4 million ($3 million after-tax) and IHS Markit merger costs of
$24 million ($21 million after-tax). 2019 includes Kensho retention related expense of $21 million ($16 million after-tax). 2019 includes lease impairments of
$11 million ($8 million after-tax) and employee severance charges of $7 million ($6 million after-tax).
(f) 2020 includes a pension related charge of $3 million ($2 million after-tax). 2019 includes a pension related charge of $113 million ($85 million after-tax).
(g) 2020 includes $4 million of tax benefit related to prior year divestitures. 2020 includes a loss on the extinguishment of debt of $279 million ($223 million after-tax).
2019 includes costs associated with early repayment of our Senior Notes of $57 million ($43 million after-tax).
S&P Global 2020 Annual Report 17
20
50
51
52
53
54
55
93
94
95
98
99
100
18 S&P Global 2020 Annual Report
2020
Financial
Performance
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following Management’s Discussion and Analysis (“MD&A”)
provides a narrative of the results of operations and financial
condition of S&P Global Inc. (together with its consolidated
subsidiaries, the “Company,” “we,” “us” or “our”) for the years
ended December 31, 2020 and 2019, respectively. The MD&A
should be read in conjunction with the consolidated financial
statements and accompanying notes included in our Annual
Report on Form 10-K for the year ended December 31, 2020,
which have been prepared in accordance with accounting
principles generally accepted in the U.S. (“U.S. GAAP”).
The MD&A includes the following sections:
• Overview
• Results of Operations
• Liquidity and Capital Resources
• Reconciliation of Non-GAAP Financial Information
• Critical Accounting Estimates
• Recent Accounting Standards
Certain of the statements below are forward-looking statements
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 pages 48-49 of this report.
Overview
We are a leading provider of transparent and independent
ratings, benchmarks, analytics and data to the capital and
commodity markets worldwide. The capital markets include
asset managers, investment banks, commercial banks,
insurance companies, exchanges, trading firms and issuers;
and the commodity markets include producers, traders
and intermediaries within energy, petrochemicals, metals
and agriculture.
Our operations consist of four reportable segments: S&P Global
Ratings (“Ratings”), S&P Global Market Intelligence (“Market
Intelligence”), S&P Global Platts (“Platts”) and S&P Dow Jones
Indices (“Indices”).
• Ratings is an independent provider of credit ratings, research
and analytics, offering investors and other market participants
information, ratings and benchmarks.
• Market Intelligence is a global provider of multi-asset-class
data, research and analytical capabilities, which integrate
cross-asset analytics and desktop services.
• Platts is the leading independent provider of information and
benchmark prices for the commodity and energy markets.
• Indices is a global index provider maintaining a wide variety
of valuation and index benchmarks for investment advisors,
wealth managers and institutional investors.
Major Portfolio Changes
The following significant changes were made to our portfolio
during the three years ended December 31, 2020:
• In January of 2020, we completed the acquisition of the ESG
Ratings Business from RobecoSAM, which includes the widely
followed SAM* Corporate Sustainability Assessment, an
annual evaluation of companies’ sustainability practices. The
acquisition will bolster our position as the premier resource
for essential environmental, social, and governance (“ESG”)
insights and product solutions for our customers. Through this
acquisition, we will be able to offer our customers even more
transparent, robust and comprehensive ESG solutions.
• In April of 2018, we acquired Kensho Technologies Inc.
(“Kensho”) for approximately $550 million, net of cash acquired,
in a mix of cash and stock. Kensho is a leading-edge provider
of next-generation analytics, artificial intelligence, machine
learning, and data visualization systems to Wall Street’s
premier global banks and investment institutions, as well as
the National Security community. Beginning in the first quarter
of 2019, the contract obligations for revenue from Kensho’s
major customers were transferred to Market Intelligence
for fulfillment. As a result of this transfer, from January 1,
2019 revenue from contracts with Kensho’s customers is
reflected in Market Intelligence’s results. In 2018, the revenue
from contracts with Kensho’s customers was reported in
Corporate revenue.
Shareholder Return
During the three years ended December 31, 2020, we have
returned approximately $5.8 billion to our shareholders
through a combination of share repurchases and our quarterly
dividends: we completed share repurchases of approximately
$4.1 billion and distributed regular quarterly dividends totaling
approximately $1.7 billion. Also, on January 27, 2021 the Board
of Directors approved an increase in the quarterly common stock
dividend from $0.67 per share to $0.77 per share.
20 S&P Global 2020 Annual Report
Key Results
(in millions)
Revenue
Operating profit 2
% Operating margin
Diluted earnings per share from net income
Year ended December 31,
% Change 1
2020
$7,442
$3,617
49%
$9.66
2019
$6,699
$3,226
48%
$8.60
2018
’20 vs ’19
’19 vs ’18
$6,258
$2,790
45%
$7.73
11%
12%
12%
7%
16%
11%
1 % changes in the tables throughout the MD&A are calculated off of the actual number, not the rounded number presented.
2
2020 includes lease impairments of $120 million, employee severance charges of $66 million, IHS Markit merger costs of $24 million, a gain on dispositions of
$16 million, a technology-related impairment charge of $12 million, lease-related costs of $11 million and Kensho retention related expense of $11 million. 2019
includes a gain on the sale of RigData and SPIAS of $27 million and $22 million, respectively, employee severance charges of $25 million, Kensho retention related
expense of $21 million, lease impairments of $11 million and acquisition-related costs of $4 million. 2018 includes legal settlement expenses of $74 million,
Kensho retention related expense of $31 million, restructuring charges related to a business disposition and employee severance charges of $25 million and lease
impairments of $11 million. 2020 also includes amortization of intangibles from acquisitions of $123 million and 2019 and 2018 includes amortization of intangibles
from acquisitions of $122 million.
2020
Revenue increased 11%, with a favorable benefit of 1 percentage
point from the net impact of recent acquisitions and dispositions,
driven by increases at all of our reportable segments. Revenue
growth at Ratings was mainly driven by higher corporate bond
ratings revenue, partially offset by a decrease in bank loan
ratings revenue and structured finance transaction revenues.
Revenue growth at Market Intelligence was driven by annualized
contract value growth in Market Intelligence Desktop products,
Credit Risk Solutions and Data Management Solutions. Revenue
growth at Indices was due to higher assets under management
for exchange traded funds (“ETFs”) and mutual funds, an
increase in exchange-traded derivatives revenue and higher
data subscription revenue. The revenue increase at Platts
was primarily due to continued demand for market data, price
assessment and analytics products. Foreign exchange rates had
a favorable impact of less than 1 percentage point.
Operating profit increased 12%, with a favorable impact from
foreign exchange rates of 1 percentage point. Excluding the
impact of a higher lease impairment charges in 2020 of 3
percentage points, higher employee severance charges in 2020
of 1 percentage point, a higher gain on dispositions in 2019 of
1 percentage point primarily related to the sale of RigData and
Standard & Poor’s Investment Advisory Services LLC (“SPIAS”)
and IHS Markit merger costs in 2020 of 1 percentage point,
operating profit increased 18%. The increase was primarily due
to revenue growth at all of our reportable segments combined
with a decrease in travel and entertainment expenses from
non-essential travel restrictions in response to COVID-19,
partially offset by an increase in incentive costs and higher
compensation costs driven by annual merit increases and
additional headcount.
2019
Revenue increased 7%, with an unfavorable impact of 1
percentage point from foreign exchange rates. The increase
was driven by revenue growth at all of our reportable segments.
Revenue growth at Ratings was driven by an increase in
corporate bond ratings revenue and public finance revenue,
partially offset by lower bank loan ratings revenue. The increase
at Market Intelligence was driven by annualized contract
value growth in the Market Intelligence Desktop, Credit Risk
Solutions and Data Management Solutions products. The
increase at Indices was due to higher levels of assets under
management for ETFs and mutual funds. Revenue growth
at Indices was also favorably impacted by the buyout of the
balance of intellectual property rights in a family of indices
from one of our co-marketing and index development partners
in the fourth quarter of 2018, retrospective fees for previously
unlicensed and unreported index usage and benefits related
to recent contract renegotiation. The increase at Platts was
primarily due to continued demand for market data and price
assessment products.
Operating profit increased 16%, with a favorable impact from
foreign exchange rates of less than 1 percentage point. Excluding
the impact of higher legal settlement expenses in 2018 of 3
percentage points, a gain on our dispositions of 2 percentage
points and higher Kensho retention related expense in 2018 of 1
percentage point, operating profit increased 10%. The increase
was primarily due to revenue growth at all of our reportable
segments, lower professional fees and decreased expenses
at Corporate Unallocated driven by a $20 million reduction in
contributions made to the S&P Global Foundation in 2018. These
increases to operating profit were partially offset by higher
technology costs, an increase in incentive costs and higher
S&P Global 2020 Annual Report 21
compensation costs driven by annual merit increases
and additional headcount.
We are closely monitoring the impact of the outbreak of
COVID-19 on all aspects of our business. While COVID-19 did
not have a material adverse effect on our reported results for
the year ended December 31, 2020, we are unable to predict the
ultimate impact that it may have on our business, future results
of operations, financial position or cash flows.
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 in line with our core values of integrity,
excellence and relevance.
In 2018, we announced the launch of Powering the Markets
of the Future to provide a framework for our forward-looking
business strategy. Through this framework, we seek to
deliver an exceptional, differentiated customer experience by
enhancing our foundational capabilities, evolving and growing
our core businesses, and pursuing growth via adjacencies. In
2021, we will strive to deliver on our strategic priorities in the
following key areas:
• Prioritizing customer preferences, while enhancing and
adjusting the delivery of our products across multiple
channels such as feeds and APIs; and delivering on
S&P Global Platform initiatives;
• Incorporating a customer perspective in all divisions and
functions, including the reimagining of our customer’s
work environments and how best to serve them; pursuing
partnerships to meet customers where they are; and
• Nurturing and protecting the core franchise, while growing
brand equity with the appropriate investments.
Operations
• Improving end-user productivity and experience by providing
our employees with the tools and processes to better
serve our customers;
• Reimagining our work environment by continuing to
standardize our technology and encouraging employee
participation in the reshaping of where we work, how we
work and how we serve;
• Advancing our risk culture by maturing risk management &
compliance processes and our cyber security posture; and
• Utilizing our innovation teams and latest technology to
maintain our commitment to advancing our shared data
processes and technical capabilities.
Finance
People
• Meeting or exceeding revenue growth and EBITA margin targets
with particular focus on accelerating growth in the greater Asia
Pacific region;
• Funding organic opportunities and pursuing disciplined
acquisitions, investments and partnerships to support our
key growth areas;
• Taking a lead role in the market regarding ESG disclosures and
achieving our stated environmental sustainability targets; and
• Executing against Integration Management Office (“IMO”)
and regulatory milestones; building trust and team cohesion
with INFO colleagues; laying groundwork to set proforma
organization up for successful realization of our synergy and
strategic goals.
Customer
• Continuing to deliver our key initiatives to the market and
building them through a customer-first lens;
• Continuing to foster a people first environment, while
maintaining existing levels of engagement;
• Encouraging career mobility through career coaching,
while attracting and retaining the best people; and
• Improving diverse representation through talent acquisition,
advancement and retention, while continuing to raise
awareness of racial education.
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 our Annual Report on Form 10-K.
Further projections and discussion on our 2021 outlook for our
segments can be found within “ – Results of Operations”.
22 S&P Global 2020 Annual Report
Results of Operations
CONSOLIDATED REVIEW
Year ended December 31,
% Change
(in millions)
Revenue
Expenses:
Operating-related expenses
Selling and general expenses
Depreciation and amortization
Total expenses
Gain on dispositions
Operating profit
Other (income) expense, net
Interest expense, net
Loss on extinguishment of debt
Provision for taxes on income
Net income
Less: net income attributable to
noncontrolling interests
2020
$7,442
2019
$6,699
2018
$6,258
2,092
1,543
206
3,841
(16)
3,617
(31)
141
279
694
2,534
(195)
1,976
1,342
204
3,522
(49)
3,226
98
141
57
627
2,303
(180)
1,838
1,424
206
3,468
—
2,790
(25)
134
—
560
2,121
(163)
Net income attributable to S&P Global Inc.
$2,339
$2,123
$1,958
’20 vs ’19
’19 vs ’18
11%
6%
15%
1%
9%
(67)%
12%
N/M
—%
N/M
11%
10%
(9)%
10%
7%
7%
(6)%
(1)%
2%
N/M
16%
N/M
5%
N/M
12%
9%
(10)%
8%
N/M - not meaningful
Revenue
(in millions)
Subscription revenue
Non-subscription / transaction revenue
Non-transaction revenue
Asset-linked fees
Sales usage-based royalties
% of total revenue:
Subscription revenue
Non-subscription / transaction revenue
Non-transaction revenue
Asset-linked fees
Sales usage-based royalties
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
2018
’20 vs ’19
’19 vs ’18
2020
$3,036
2,039
1,492
648
227
41%
27%
20%
9%
3%
2019
$2,843
1,632
1,401
623
200
43%
24%
21%
9%
3%
$2,682
1,401
1,408
542
225
43%
22%
23%
9%
3%
$4,504
$3,976
$3,750
1,769
782
387
$2,938
61%
39%
1,659
710
354
$2,723
59%
41%
1,543
647
318
$2,508
60%
40%
7%
25%
6%
4%
14%
13%
7%
10%
9%
8%
6%
17%
(1)%
15%
(11)%
6%
8%
10%
11%
9%
S&P Global 2020 Annual Report 23
2020 Revenue by Type
2020 Revenue by Geographic Area
Asset-linked fees
9%
Sales usage-based royalties
3%
Rest of the World
5%
Asia
10%
Non-transaction
20%
Non-subscription /
Transaction
27%
Subscription
41%
European
Region
24%
U.S.
61%
2020
Revenue increased 11% as compared to 2019. Subscription
revenue increased primarily from growth in Market Intelligence’s
average contract values and continued demand for Platts
proprietary content. Higher data subscription revenue at
Indices also contributed to subscription revenue growth.
Non-subscription / transaction revenue increased due to an
increase in corporate bond ratings revenue, partially offset by
a decrease in bank loan ratings revenue and structured finance
transaction revenues at Ratings. Non-transaction revenue
increased primarily due to an increase in surveillance revenue,
royalty revenue, and higher Ratings Evaluation Service activity.
Asset-linked fees increased due to the impact of higher average
levels of assets under management for ETFs and mutual funds
at Indices. The increase in sales-usage based royalties was
primarily driven by higher exchange-traded derivative volumes
at Indices. See “Segment Review” below for further information.
The favorable impact of foreign exchange rates increased
revenue by less than 1 percentage point. This impact refers to
constant currency comparisons estimated by recalculating
current year results of foreign operations using the average
exchange rate from the prior year.
2019
Revenue increased 7% as compared to 2018. Subscription
revenue increased primarily from growth in Market Intelligence’s
average contract values and continued demand for Platt’s
proprietary content. Higher data subscription revenue at
Indices also contributed to subscription revenue growth.
Non-subscription / transaction revenue increased driven by an
increase in corporate bond ratings revenue and public finance
revenue, partially offset by a decline in bank loan ratings
revenue at Ratings. Non-transaction revenue decreased 1%
primarily due to the unfavorable impact from foreign exchange
rates. Non-transaction revenue was unfavorably impacted by
a decline in Ratings Evaluation Service activity, a decrease at
CRISIL, primarily within the risk and analytics sector, and lower
entity credit ratings revenue, and benefited from an increase in
surveillance revenue and higher royalty revenue. Asset-linked
fees increased due to the impact of higher levels of assets under
management for ETFs and mutual funds at Indices. Additionally,
asset-linked fees was favorably impacted by the buyout of the
balance of intellectual property rights in a family of indices
from one of our co-marketing and index development partners
in the fourth quarter of 2018, retrospective fees for previously
unlicensed and unreported index usage and benefits related
to recent contract renegotiations. The decline in sales-usage
based royalties was primarily driven by lower exchange-traded
derivative volumes at Indices in 2019. See “Segment Review”
below for further information.
The unfavorable impact of foreign exchange rates reduced
revenue by 1 percentage point. This impact refers to constant
currency comparisons estimated by recalculating current year
results of foreign operations using the average exchange rate
from the prior year.
24 S&P Global 2020 Annual Report
Total Expenses
In the first quarter of 2020, we changed our allocation methodology for allocating our centrally managed technology-related expenses
to our reportable segments to more accurately reflect each segment’s respective usage. Prior-year amounts have been reclassified to
conform with current presentation.
The following table provides an analysis by segment of our operating-related expenses and selling and general expenses for the years
ended December 31, 2020 and 2019:
(in millions)
2020
2019
% Change
Operating-
related
expenses
Selling and
general
expenses
Operating-
related
expenses
Selling and
general
expenses
Operating-
related
expenses
Selling and
general
expenses
$948
903
195
149
(137)
2,058
34
$395
524
208
166
—
1,293
250
$897
836
197
138
(128)
1,940
36
$392
480
196
139
—
1,207
135
$2,092
$1,543
$1,976
$1,342
6%
8%
(1)%
8%
(7)%
6%
(6)%
6%
1%
9%
6%
18%
N/M
7%
86%
15%
Ratings 1
Market Intelligence 2
Platts 3
Indices 4
Intersegment eliminations 5
Total segments
Corporate Unallocated expense 6
N/M - not meaningful
1 In 2020, selling and general expenses include a technology-related impairment charge of $11 million, lease-related costs of $5 million and employee severance
charges of $4 million. In 2019, selling and general expenses include employee severance charges of $11 million.
2 In 2020, selling and general expenses include employee severance charges of $27 million and lease-related costs of $3 million. In 2019, selling and general expenses
include employee severance charges of $6 million and acquisition-related costs of $4 million.
3 In 2020, selling and general expenses include employee severance charges of $11 million and lease-related costs of $2 million. In 2019, selling and general expenses
include employee severance charges of $1 million.
4 In 2020, selling and general expenses include employee severance charges of $5 million, a lease impairment charge of $4 million, a technology-related impairment
charge of $2 million and lease-related costs of $1 million.
5 Intersegment eliminations primarily relate to a royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.
6 In 2020, selling and general expenses include lease impairments of $116 million, IHS Markit merger costs of $24 million, employee severance charges of $19 million,
Kensho retention related expense of $12 million and a gain related to an acquisition of $1 million. In 2019, selling and general expenses include Kensho retention
related expense of $21 million, lease impairments of $11 million and employee severance charges of $7 million.
Operating-Related Expenses
Operating-related expenses increased as compared to 2019
driven by increases at Market Intelligence and Ratings. The
increase at Market Intelligence was primarily due to higher
compensation costs driven by investments in growth initiatives
and the acquisition of 451 Research, LLC, and higher incentive
costs. The increase at Ratings was primarily driven by higher
incentive costs. These increases were partially offset by a
decrease in travel and entertainment expenses from non-
essential travel restrictions in response to COVID-19.
Intersegment eliminations primarily relate to a royalty
charged to Market Intelligence for the rights to use and
distribute content and data developed by Ratings.
Selling and General Expenses
Selling and general expenses increased 15%. Excluding the
impact of higher lease impairment charges in 2020 of 9
percentage points, higher employee severance charges in 2020 of
3 percentage costs, lease-related costs in 2020 of 1 percentage
point, IHS Markit merger costs in 2020 of 1 percentage point
and a technology-related impairment charge of 1 percentage
point, partially offset by higher Kensho related retention expense
in 2019 of 1 percentage point, selling and general expenses
increased 1%. This increase was primarily driven by an increase
at Market Intelligence due to higher compensation costs driven
by investments in growth initiatives and the acquisition of 451
Research, LLC, and higher incentive costs, and an increase
at Indices driven by an increase in legal related costs. These
increases were partially offset by a decrease in travel and
entertainment expenses from non-essential travel restrictions in
response to COVID-19 and lower rental expense from a reduction
in the Company’s real estate footprint.
Depreciation and Amortization
Depreciation and amortization increased $2 million, or 1%,
compared to 2019 due to an increase in depreciation expense
related to assets that began being depreciated in the second half
of 2019 and an increase in amortization expense driven by the
acquisitions of RobecoSAM, Greenwich Associates LLC and 451
Research, LLC in January 2020, February 2020 and December
2019, respectively.
S&P Global 2020 Annual Report 25
The following table provides an analysis by segment of our operating-related expenses and selling and general expenses for the years
ended December 31, 2019 and 2018:
(in millions)
2019
2018
% Change
Ratings 1
Market Intelligence 2
Platts 3
Indices
Intersegment eliminations 4
Total segments
Corporate Unallocated expense 5
Operating-
related
expenses
Selling and
general
expenses
Operating-
related
expenses
Selling and
general
expenses
Operating-
related
expenses
Selling and
general
expenses
$897
836
197
138
(128)
1,940
36
$392
480
196
139
—
1,207
135
$844
754
212
129
(125)
1,814
24
$453
480
177
130
—
1,240
184
$1,976
$1,342
$1,838
$1,424
6%
11%
(7)%
7%
(2)%
7%
53%
7%
(14)%
—%
11%
7%
N/M
(3)%
(27)%
(6)%
N/M - not meaningful
1
2
In 2019, selling and general expenses include employee severance charges of $11 million. In 2018, selling and general expenses include legal settlement expenses of
$74 million and employee severance charges of $8 million.
In 2019, selling and general expenses include employee severance charges of $6 million and acquisition-related costs of $4 million. In 2018, selling and general
expenses include restructuring charges related to a business disposition and employee severance charges of $7 million.
3 In 2019, selling and general expenses include employee severance charges of $1 million.
4
5
Intersegment eliminations primarily relate to a royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.
In 2019, selling and general expenses include Kensho retention related expense of $21 million, lease impairments of $11 million and employee severance charges of
$7 million. In 2018, selling and general expenses include Kensho retention related expense of $31 million, lease impairments of $11 million and employee severance
charges of $10 million.
Operating-Related Expenses
Operating-related expenses increased as compared to 2018
driven by the acquisition of Kensho in April of 2018 and increases
at Ratings, Market Intelligence and Indices. Ratings increased
primarily due to an increase in incentive costs, partially offset by
lower professional fees. The increase at Market Intelligence was
due to higher technology costs, higher compensation costs and
an increase in intersegment royalties tied to annualized contract
value growth. The increase at Indices was primarily related to
increased royalties due to increased traction of royalty-based
products and higher compensation costs.
of 1 percentage point, selling and general expenses remained
unchanged. Increases at Platts, Indices and Ratings, were
offset by a decrease in expenses at Corporate Unallocated.
The increase at Platts was primarily driven by higher technology
costs. The increase at Ratings was primarily driven by an
increase in incentive costs. Indices increased primarily due to
higher legal expenses and compensation costs. These increases
were offset by a decrease in expenses at Corporate Unallocated
primarily driven by a $20 million contribution made by the
Company to the S&P Global Foundation in 2018 and a decrease
in expenses at Kensho.
Intersegment eliminations primarily relate to a royalty charged
to Market Intelligence for the rights to use and distribute content
and data developed by Ratings.
Selling and General Expenses
Selling and general expenses decreased 6%. Excluding the
impact of legal settlement expenses in 2018 of 5 percentage
points and higher Kensho retention related expense in 2018
Depreciation and Amortization
Depreciation and amortization decreased $2 million, or 1%,
compared to 2018 due to decreases at Market Intelligence
and Platts related to assets becoming fully depreciated and
assets becoming fully amortized at Platts, partially offset by
an increase in amortization expense from the acquisition of
Kensho in April of 2018.
26 S&P Global 2020 Annual Report
(in millions)
Market Intelligence 2
Ratings 1
Platts 3
Indices
Intersegment eliminations 4
Total segments
Corporate Unallocated expense 5
Operating-
Selling and
Operating-
Selling and
Operating-
Selling and
related
expenses
general
expenses
related
expenses
general
expenses
related
expenses
general
expenses
$897
836
197
138
(128)
1,940
36
$392
480
196
139
—
1,207
135
$844
754
212
129
(125)
1,814
24
$453
480
177
130
—
1,240
184
$1,976
$1,342
$1,838
$1,424
6%
11%
(7)%
7%
(2)%
7%
53%
7%
(14)%
—%
11%
7%
N/M
(3)%
(27)%
(6)%
Gain on Dispositions
During the year ended December 31, 2020, we completed the
following dispositions that resulted in a pre-tax gain of $16
million, which was included in Gain on dispositions in the
consolidated statements of income:
• In January of 2020, Market Intelligence entered into a strategic
alliance to transition S&P Global Market Intelligence’s Investor
Relations (“IR”) webhosting business to Q4 Inc. (“Q4”), a third
party provider of investor relations related services. This
alliance will integrate Market Intelligence’s proprietary data
into Q4’s portfolio of solutions, enabling further opportunities
for commercial collaboration. In connection with transitioning
its IR webhosting business to Q4, Market Intelligence made a
minority investment in Q4. During the year ended December
31, 2020, we recorded a pre-tax gain of $11 million ($6
million after-tax), respectively, in Gain on dispositions in the
consolidated statement of income related to the sale of IR.
• In September of 2020, we sold our facility at East Windsor, New
Jersey. During the year ended December 31, 2020, we recorded
a pre-tax gain of $4 million ($3 million after-tax) in Gain on
dispositions in the consolidated statements of income related
to the sale of East Windsor.
• During the year ended December 31, 2020, we recorded a
pre-tax gain of $1 million ($1 million after-tax) in Gain on
dispositions in the consolidated statements of income related
to the sale of SPIAS, a business within our Market Intelligence
segment, in July of 2019.
During the year ended December 31, 2019, we completed the
following dispositions that resulted in a pre-tax gain of $49
million, which was included in Gain on dispositions in the
consolidated statement of income:
• In July of 2019, we completed the sale of RigData, a business
within our Platts segment, to Drilling Info, Inc. RigData is a
provider of daily information on rig activity for the natural
gas and oil markets across North America. During the year
ended December 31, 2019, we recorded a pre-tax gain of
$27 million ($26 million after-tax) in Gain on dispositions
in the consolidated statement of income related to the
sale of RigData.
• In March of 2019, we entered into an agreement to sell SPIAS to
Goldman Sachs Asset Management (“GSAM”). SPIAS provides
non-discretionary investment advice across institutional
sub-advisory and intermediary distribution channels globally.
On July 1, 2019, we completed the sale of SPIAS to GSAM.
During the year ended December 31, 2019, we recorded a
pre-tax gain of $22 million ($12 million after-tax) in Gain on
dispositions in the consolidated statement of income related
to the sale of SPIAS.
S&P Global 2020 Annual Report 27
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
segment’s contribution to operating profit. Segment operating profit is defined as operating profit before Corporate Unallocated.
Segment operating profit is not, however, a measure of financial performance under U.S. GAAP, and may not be defined and calculated
by other companies in the same manner.
In the first quarter of 2020, we changed our allocation methodology for allocating our centrally managed technology-related expenses
to our reportable segments to more accurately reflect each segment’s respective usage. Prior-year amounts have been reclassified to
conform with current presentation.
The table below reconciles segment operating profit to total operating profit:
(in millions)
Ratings 1
Market Intelligence 2
Platts 3
Indices 4
Total segment operating profit
Corporate Unallocated 5
Total operating profit
Year ended December 31,
% Change
2020
$2,223
589
458
666
3,936
(319)
$3,617
2019
$1,783
566
457
632
3,438
(212)
$3,226
2018
$1,554
500
401
566
3,021
(231)
$2,790
’20 vs ’19
’19 vs ’18
25%
4%
—%
5%
14%
(50)%
12%
15%
13%
14%
12%
14%
8%
16%
1 2020 includes a technology-related impairment charge of $11 million, lease-related costs of $5 million and employee severance charges of $4 million. 2019 includes
employee severance charges of $11 million. 2018 includes legal settlement expenses of $74 million and employee severance charges of $8 million. 2020 includes
amortization of intangibles from acquisitions of $7 million and 2019 and 2018 includes amortization of intangibles from acquisitions of $2 million.
2 2020 includes employee severance charges of $27 million, a gain on dispositions of $12 million and lease-related costs of $3 million. 2019 includes a gain on the
sale of SPIAS of $22 million, employee severance charges of $6 million and acquisition-related costs of $4 million. 2018 includes restructuring charges related to a
business disposition and employee severance charges of $7 million. 2020, 2019 and 2018 includes amortization of intangibles from acquisitions of $76 million, $75
million and $73 million, respectively.
3 2020 includes employee severance charges of $11 million and lease-related costs of $2 million. 2019 includes a gain on the sale of RigData of $27 million and
employee severance charges of $1 million. 2020, 2019 and 2018 includes amortization of intangibles from acquisitions of $9 million, $12 million, and $18 million.
4 2020 includes employee severance charges of $5 million, a lease impairment charge of $4 million, a technology-related impairment charge of $2 million and lease-
related costs of $1 million. 2020, 2019 and 2018 includes amortization of intangibles from acquisitions of $6 million.
5 2020 includes lease impairments of $116 million, IHS Markit merger costs of $24 million, employee severance charges of $19 million, Kensho retention related
expense of $12 million and a gain related to an acquisition of $1 million. 2019 includes Kensho retention related expense of $21 million, lease impairments of $11
million and employee severance charges of $7 million. 2018 includes Kensho retention related expense of $31 million, lease impairments of $11 million and
employee severance charges of $10 million. 2020, 2019 and 2018 includes amortization of intangibles from acquisitions of $26 million, $28 million, and 23 million.
2020
Segment Operating Profit
Increased $498 million, or 14% as compared to 2019. Excluding
the impact of higher employee severance charges in 2020 of
1 percentage point, a higher gain on dispositions in 2019 of 1
percentage point primarily related to the sale of RigData and
SPIAS, a technology-related impairment charge in 2020 of less
than 1 percentage point and lease-related costs in 2020 of less
than 1 percentage point, operating profit increased 17%. The
increase was primarily due to an increase in revenue at all of our
reportable segments combined with a decrease in travel and
entertainment expenses from non-essential travel restrictions in
response to COVID-19, partially offset by an increase in incentive
costs and higher compensation costs driven by annual merit
increases and additional headcount.
28 S&P Global 2020 Annual Report
Corporate Unallocated Expense
Corporate Unallocated expense includes costs for corporate
center functions, select initiatives and unoccupied office
space and Kensho, included in selling and general expenses.
Corporate Unallocated expense increased by $107 million
or 50% as compared to 2019. Excluding the impact of higher
lease impairment charges in 2020 of 53 percentage points, IHS
Markit merger costs in 2020 of 12 percentage points and higher
employee severance charges in 2020 of 6 percentage points,
partially offset by lower Kensho retention related expense
in 2020 of 6 percentage points and a gain on disposition in
2020 of 2 percentage points, Corporate Unallocated expense
decreased 12% primarily driven by lower rental expense from
a reduction in the Company’s real estate footprint, a decrease
in travel and entertainment expenses and lower professional
fees, partially offset by contributions to the S&P Global
Foundation made in 2020.
Foreign exchange rates had a favorable impact on operating
profit of 1 percentage point. The foreign exchange rate impact
refers to constant currency comparisons and the remeasurement
of monetary assets and liabilities. Constant currency impacts
are estimated by recalculating current year results of foreign
operations using the average exchange rate from the 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 in currencies
other than the individual business’ functional currency.
2019
Segment Operating Profit
Increased $417 million, or 14% as compared to 2018.
Excluding the impact of higher legal settlement expenses in
2018 of 3 percentage points and a gain on our dispositions in
2019 of 2 percentage points, segment operating profit increased
9%. This increase was primarily driven by an increase in revenue
at all of our reportable segments and lower professional fees,
partially offset by higher technology costs, an increase in
incentive costs and higher compensation costs driven by
annual merit increases and additional headcount. See
“ – Segment Review” below for further information.
Corporate Unallocated
Corporate Unallocated includes costs for corporate center
functions, select initiatives and unoccupied office space and
Kensho, included in selling and general expenses, and Kensho
revenue in 2018. Corporate Unallocated improved by $19 million
or 8% as compared to 2018. Excluding the favorable impact of
lower Kensho retention related expense in 2019 of 2 percentage
points, partially offset by the unfavorable impact of higher deal-
related amortization in 2019 of 1 percentage point, Corporate
Unallocated improved 7% primarily driven by a $20 million
contribution made by the Company to the S&P Global Foundation
in 2018 and a reduction in professional fees.
Foreign exchange rates had a favorable impact on operating
profit of less than 1 percentage point. The foreign exchange
rate impact refers to constant currency comparisons and the
remeasurement of monetary assets and liabilities. Constant
currency impacts are estimated by recalculating current year
results of foreign operations using the average exchange
rate from the 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 in currencies other than the individual business’
functional currency.
Other (Income) Expense, net
Other (income) expense, net primarily includes the net periodic
benefit cost for our retirement and post retirement plans. Other
income, net for 2020 was $31 million, other expense, net for
2019 was $98 million and other income, net for 2018 was $25
million. During the year ended December 31, 2020, lump sum
withdrawals exceeded the combined total anticipated annual
service and interest cost of our U.K. pension plan, triggering
the recognition of a non-cash pre-tax settlement charge of $3
million. During the year ended December 31, 2019, the Company
purchased a group annuity contract under which an insurance
company assumed the Company’s obligation to pay pension
benefits to approximately 4,600 retirees and beneficiaries.
This purchase eliminates all future investment or mortality
risk associated with these retirees. The purchase of this group
annuity contract was funded with pension plan assets. As a
result, the Company’s outstanding pension benefit obligation
was reduced by approximately $370 million, representing
approximately 24% of the total obligations of the Company’s
qualified pension plans. In connection with this transaction,
the Company recorded a pre-tax settlement charge of $113
million, reflecting the accelerated recognition of a portion of
unamortized actuarial losses in the plan. The Company also
recorded pension settlement charges of $5 million in 2018.
Excluding these charges, other income, net was $34 million,
$14 million and $29 for 2020, 2019 and 2018, respectively.
The increase in other income, net in 2020 compared to 2019
and the decrease in other income, net in 2019 compared to
2018 was primarily due to a higher loss on investments in 2019.
Interest Expense, net
Net interest expense for 2020 remained relatively unchanged
compared to 2019, increasing less than 1%.
Net interest expense for 2019 increased $7 million or 5% as
compared to 2018, driven by the release of reserves for accrued
interest related to the resolution of various tax audits in 2018.
Loss on Extinguishment of Debt
The year ended December 31, 2020 includes $279 million related
to the redemption fee on the early retirement of our 4.4% senior
notes due in 2026 and a portion of the 6.55% senior notes due
in 2037 and 4.5% senior notes due in 2048 in the third quarter
of 2020. The year ended December 31, 2019 includes $57 million
of costs associated with the early repayment of our 3.3% Senior
Notes and a portion of our 6.55% Senior Notes.
Provision for Income Taxes
Our effective tax rate was 21.5%, 21.4% and 20.9% for 2020,
2019 and 2018, respectively. The increase in 2020 was primarily
due to a decrease in the recognition of excess tax benefits
associated with share-based payments in the statement of
income. The increase in 2019 was primarily due to an increase
in accruals for potential tax liabilities for prior years in
various jurisdictions.
S&P Global 2020 Annual Report 29
Segment Review
RATINGS
Ratings is an independent provider of credit ratings, research,
and analytics to investors, issuers and other market participants.
Credit ratings are one of several tools investors can use when
making decisions about purchasing bonds and other fixed
income investments. They are opinions about credit risk, and
our ratings express our opinion about the ability and willingness
of an issuer, such as a corporation or state or city government,
to meet its financial obligations in full and on time. Our credit
ratings can also relate to the credit quality of an individual debt
issue, such as a corporate or municipal bond, and the relative
likelihood that the issue may default.
Ratings disaggregates its revenue between transaction and
non-transaction. Transaction revenue primarily includes fees
associated with:
• ratings related to new issuance of corporate and
government debt instruments, as well as structured finance
debt instruments;
• bank loan ratings; and
• corporate credit estimates, which are intended, based on an
abbreviated analysis, to provide an indication of our opinion
regarding creditworthiness of a company which does not
currently have a Ratings credit rating.
Non-transaction revenue primarily includes fees for surveillance
of a credit rating, annual fees for customer relationship-based
pricing programs, fees for entity credit ratings and global
research and analytics at CRISIL. Non-transaction revenue also
includes an intersegment royalty charged to Market Intelligence
for the rights to use and distribute content and data developed
by Ratings. Royalty revenue for 2020, 2019 and 2018 was $128
million, $118 million and $109 million, respectively.
The following table provides revenue and segment operating
profit information for the years ended December 31:
(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
2020
$3,606
$1,977
$1,629
55%
45%
$2,110
$1,496
59%
41%
$2,223
62%
2019
$3,106
$1,577
$1,529
51%
49%
$1,745
$1,361
56%
44%
$1,783
57%
2018
$2,883
$1,350
$1,533
47%
53%
$1,619
$1,264
56%
44%
$1,554
54%
’20 vs ’19
’19 vs ’18
16%
25%
7%
21%
10%
8%
17%
—%
8%
8%
25%
15%
1 2020 includes a technology-related impairment charge of $11 million, lease-related costs of $5 million and employee severance charges of $4 million. 2019 includes
employee severance charges of $11 million. 2018 includes legal settlement expenses of $74 million and employee severance charges of $8 million. 2020 includes
amortization of intangibles from acquisitions of $7 million and 2019 and 2018 includes amortization of intangibles from acquisitions of $2 million.
2020
Revenue increased 16% including a favorable benefit of 1
percentage point from the impact of recent acquisitions.
Transaction revenue grew due to an increase in corporate bond
ratings revenue primarily driven by higher corporate bond
issuance in the U.S. mainly resulting from borrowers’ need for
increased liquidity in light of the pandemic-related economic
downturn, historically low borrowing costs, and central bank
lending actions initially announced at the end of the first quarter
of 2020, partially offset by a decrease in bank loan ratings
revenue and structured finance revenues. Non-transaction
revenue increased primarily due to an increase in surveillance
30 S&P Global 2020 Annual Report
revenue, royalty revenue, and higher Ratings Evaluation Service
(“RES”) activity driven by increased M&A activity in the fourth
quarter of 2020. Transaction and non-transaction revenue
also benefited from improved contract terms across product
categories. Foreign exchange rates had a favorable impact of less
than 1 percentage point. Revenue was favorably impacted by
the acquisitions of the ESG Ratings Business from RobecoSAM
and Greenwich Associates LLC in January of 2020 and February
of 2020, respectively. See Note 2 - Acquisitions and Divestitures
to the consolidated financial statements of this Form 10-K for
further discussion.
Operating profit increased 25%, with a 2 percentage point
favorable impact from foreign exchange rates. Excluding the
impact of a technology-related impairment charge in 2020 of less
than 1 percentage point, lease-related costs in 2020 of less than
1 percentage point and higher amortization of intangible assets
in 2020 of less than 1 percentage point, partially offset by higher
employee severance charges in 2019 of less than 1 percentage
point, operating profit increased 25%. The impact of revenue
growth was partially offset by an increase in incentive costs and
higher compensation costs due to annual merit increases and
additional headcount, partially offset by a decrease in travel and
entertainment expenses from non-essential travel restrictions in
response to COVID-19.
2019
Revenue increased 8%, with a 1 percentage point unfavorable
impact from foreign exchange rates, due to an increase in
transaction revenue. Transaction revenue increased due to an
increase in corporate bond ratings revenue primarily driven by
higher corporate bond issuance in the U.S. and Europe mainly
resulting from historically low borrowing costs, partially offset
by lower bank loan ratings revenue driven by reduced U.S.
issuance volumes. An increase in public finance revenue due
to increased issuance also contributed to transaction revenue
growth. Non-transaction revenue decreased less than 1%
primarily due to the unfavorable impact from foreign exchange
rates. Non-transaction revenue was unfavorably impacted by
a decline in RES activity, a decrease at CRISIL, primarily within
the risk and analytics sector, and lower entity credit ratings
revenue, and benefited from an increase in surveillance revenue
and higher royalty revenue. Transaction and non-transaction
revenue also benefited from improved contract terms across
product categories.
Operating profit increased 15%, with a 1 percentage point
unfavorable impact from foreign exchange rates. Excluding
the impact of higher legal settlement expenses in 2018 of 5
percentage points, operating profit increased 10%. This increase
was primarily due to the increase in revenue discussed above
combined with a reduction in legal expenses, lower professional
fees from increased leverage on the Global Technology Center
and internal resources, partially offset by an increase in incentive
costs and AWS cloud infrastructure spend.
Market Issuance Volumes
We monitor market issuance volumes regularly within Ratings.
Market issuance volumes noted within the discussion that
follows are based on where an issuer is located or where the
assets associated with an issue are located. Structured Finance
issuance includes amounts when a transaction closes, not
when initially priced and excludes domestically-rated Chinese
issuance. The following tables depict changes in issuance
levels as compared to the prior year based on data from SDC
Platinum for Corporate bond issuance and based on a composite
of external data feeds and Ratings’ internal estimates for
Structured Finance issuance.
Corporate Bond Issuance *
High-yield issuance
Investment-grade issuance
Total issuance
* Includes Industrials and Financial Services.
2020 Compared to 2019
U.S.
66%
53%
56%
Europe
Global
10%
14%
13%
27%
26%
26%
• Corporate issuance was up in 2020 driven by increases in
both high-yield and investment grade issuance in the U.S. and
Europe. U.S high-yield issuance was particularly strong as
issuers were taking advantage of historically low borrowing
costs. Issuance was also aided by central bank lending
actions intended to provide market stabilization. A number
of large financing transactions contributed to the increase in
investment-grade issuance in the U.S. and Europe in 2020.
2020 Compared to 2019
Structured Finance
U.S.
Europe
Global
Asset-backed securities (“ABS”)
(18)%
24%
(13)%
Structured credit (primarily
CLOs)
Commercial mortgage-backed
securities (“CMBS”)
Residential mortgage-backed
securities (“RMBS”)
Covered bonds
Total issuance
** Represents no activity in 2020 and 2019.
(22)%
(38)%
(26)%
(41)%
(60)%
(42)%
(17)%
(20)%
(15)%
**
(22)%
(42)%
(31)%
(35)%
(23)%
• ABS issuance in the U.S. decreased in 2020 driven by lower
market activity due to the impact of COVID-19. ABS issuance
in Europe increased in 2020 reflecting low prior year activity as
issuers were trying to comply with the new EU framework for
STS Securitization (Simple, Transparent, and Standardized).
• Issuance was down in the U.S. and European structured credit
markets driven by a decline in CLO transactions as demand for
leveraged loans decreased as borrowers turned to the high-
yield bond market.
• CMBS issuance was down in the U.S. and Europe reflecting
decreased market volume due to the poor market environment
and the impact of COVID-19 limiting third party site inspections
and appraisal reports.
• RMBS issuance was down in the U.S. and Europe reflecting
decreased market volume in Non-Performing Loans (NPL)
due to the impact of COVID-19 and the uncertainty on
collateral performance.
• Covered bond (debt securities backed by mortgages or other
high-quality assets that remain on the issuer’s balance sheet)
issuance in Europe decreased due to inexpensive central bank
funding with TLTRO III.
S&P Global 2020 Annual Report 31
Industry Highlights and Outlook
Revenue increased in 2020 primarily driven by higher corporate
bond issuance in the U.S. and Europe. In 2020, Ratings continued
to focus on ESG initiatives and international expansion in China.
In 2021, Ratings will continue to focus on accelerating growth
in key markets globally and expanding Ratings capabilities in
Asia. Additionally, Ratings will continue to focus on developing
key product offerings in ESG and developing new product and
product features leveraging technology investments.
Legal and Regulatory Environment
General
Ratings and many of the securities that it rates are subject to
extensive regulation in both the U.S. and in other countries, and
therefore existing and proposed laws and regulations can impact
the Company’s operations and the markets in which it operates.
Additional laws and regulations have been adopted but not yet
implemented or have been proposed or are being 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 as required. We do not believe
that such new laws, regulations or rules will have a material
adverse effect on our financial condition or results of operations.
Other laws, regulations and rules relating to credit rating
agencies are being considered by local, national, foreign and
multinational bodies and are likely to continue to be considered
in the future, including provisions seeking to reduce regulatory
and investor reliance on credit ratings, remuneration and
rotation of credit rating agencies, and liability standards
applicable to credit rating agencies. The impact on us of
the adoption of any such laws, regulations or rules remains
uncertain, but could increase the costs and legal risks relating
to Ratings’ rating activities, or adversely affect our ability to
compete and/or our remuneration, or result in changes in the
demand for credit ratings.
In the normal course of business both in the U.S. and abroad,
Ratings (or the legal entities comprising Ratings) are defendants
in numerous legal proceedings and are often the subject of
government and regulatory proceedings, investigations and
inquiries. Many of these proceedings, investigations and
inquiries 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, which could adversely impact our consolidated
financial condition, cash flows, business or competitive position.
U.S.
The businesses conducted by our Ratings segment are, in certain
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
designating NRSROs in 1975 for use of their credit ratings in
the determination 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
authority and oversight of NRSROs and can censure NRSROs,
revoke their registration or limit or suspend their registration
in certain cases. The rules implemented by the SEC pursuant
to the Reform Act, the Dodd Frank Act and the Exchange Act
address, among other things, prevention or misuse of material
non-public information, conflicts of interest, documentation and
assessment of internal controls, and improving transparency
of ratings performance and methodologies. The public portions
of the current version of S&P Global Ratings’ Form NRSRO are
available on S&P Global Ratings’ website.
European Union
In the European Union (“EU”), the credit rating industry is
registered 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 industry in the EU, which became effective in 2010.
CRA1 requires the registration, formal regulation and periodic
inspection of credit rating agencies operating in the EU.
Ratings was granted registration in October of 2011. In January
of 2011, the EU established the European Securities and
Markets Authority (“ESMA”), which, among other things, has
direct supervisory responsibility for the registered credit rating
industry throughout the EU.
Additional rules augmenting the supervisory framework for
credit rating agencies went into effect in 2013. Commonly
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
resecuritizations, which may limit the number of years a
32 S&P Global 2020 Annual Report
credit rating agency can issue ratings for such securities of a
particular issuer;
• impose restrictions on credit rating agencies or their
shareholders if certain ownership thresholds are crossed; and
• impose additional procedural and substantive requirements on
the pricing of services.
SPIAS to GSAM. During 2019, we recorded a pre-tax gain of
$22 million ($12 million after-tax) in Gain on dispositions in the
consolidated statement of income related to the sale of SPIAS.
During the year ended December 31, 2020, we recorded a pre-tax
gain of $1 million ($1 million after-tax) in Gain on dispositions
in the consolidated statement of income related to the sale of
SPIAS in July of 2019.
The financial services industry is subject to the potential for
increased regulation in the EU.
Other Jurisdictions
Outside of the U.S. and the EU, regulators and government
officials have also been implementing formal oversight of credit
rating agencies. Ratings is subject to regulations in most of
the foreign jurisdictions in which it operates and continues
to work closely with regulators globally to promote the global
consistency of regulatory requirements. This includes the UK,
which has established a credit rating agencies oversight regime
similar to that in place in the EU, and where Ratings was granted
registration with the Financial Conduct Authority on January
1, 2021. Regulators in additional countries may introduce new
regulations in the future.
Market 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 the S&P Capital IQ and SNL Desktop products);
• Data Management Solutions — integrated bulk data
feeds and application programming interfaces that can be
customized, which includes Compustat, GICS, Point In Time
Financials and CUSIP; and
• Credit Risk Solutions — commercial arm that sells Ratings’
credit ratings and related data, analytics and research, which
includes subscription-based offerings, RatingsDirect® and
RatingsXpress®, and Credit Analytics.
For a further discussion of competitive and other risks inherent
in our Ratings business, see Item 1A, Risk Factors, in our Annual
Report on Form 10-K. For a further discussion of the legal and
regulatory environment in our Ratings business, see Note 13 -
Commitments and Contingencies to the consolidated financial
statements under Item 8, Consolidated Financial Statements
and Supplementary Data, in our Annual Report on Form 10-K.
Subscription revenue at Market Intelligence is primarily derived
from distribution of data, analytics, third-party research, and
credit ratings-related information primarily through web-based
channels, including Market Intelligence Desktop, RatingsDirect®,
RatingsXpress®, and Credit Analytics. Non-subscription revenue
at Market Intelligence is primarily related to certain advisory,
pricing and analytical services.
MARKET INTELLIGENCE
Market Intelligence’s portfolio of capabilities is designed to help
investment professionals, government agencies, corporations
and universities track performance, generate alpha, identify
investment ideas, understand competitive and industry
dynamics, perform valuations and assess credit risk.
In January of 2020, Market Intelligence entered into a strategic
alliance to transition S&P Global Market Intelligence’s IR
webhosting business to Q4, a third party provider of investor
relations related services. This alliance will integrate Market
Intelligence’s proprietary data into Q4’s portfolio of solutions,
enabling further opportunities for commercial collaboration.
In connection with transitioning its IR webhosting business
to Q4, Market Intelligence made a minority investment in Q4.
During the year ended December 31, 2020, we recorded a pre-tax
gain of $11 million ($6 million after-tax), respectively, in Gain on
dispositions in the consolidated statement of income related
to the sale of IR.
In March of 2019, we entered into an agreement to sell SPIAS,
a business within our Market Intelligence segment, to GSAM.
SPIAS provides non-discretionary investment advice across
institutional sub-advisory and intermediary distribution
channels globally. On July 1, 2019, we completed the sale of
S&P Global 2020 Annual Report 33
The following table provides revenue and segment operating profit information for the years ended December 31:
(in millions)
Revenue
Subscription revenue
Non-subscription revenue
Asset-linked fees
% of total revenue:
Subscription revenue
Non-subscription revenue
Asset-linked fees
U.S. revenue
International revenue
% of total revenue:
U.S. revenue
International revenue
Operating profit 1
% Operating margin
Year ended December 31,
% Change
2020
$2,106
$2,050
$55
$1
97%
3%
—%
$1,355
$751
64%
36%
$589
28%
2019
$1,959
$1,904
$45
$10
97%
2%
1%
$1,240
$719
63%
37%
$566
29%
2018
$1,833
$1,773
$40
$20
97%
2%
1%
$1,180
$653
64%
36%
$500
27%
’20 vs ’19
’19 vs ’18
8%
8%
21%
(92)%
7%
7%
12%
(50)%
9%
5%
5%
10%
4%
13%
1 2020 includes employee severance charges of $27 million, a gain on dispositions of $12 million and lease-related costs of $3 million. 2019 includes a gain on the
disposition of SPIAS of $22 million, employee severance charges of $6 million and acquisition-related costs of $4 million. 2018 includes restructuring charges related
to a business disposition and employee severance charges of $7 million. 2020, 2019 and 2018 includes amortization of intangibles from acquisitions of $76 million,
$75 million and $73 million, respectively.
2020
Revenue increased 8% and was favorably impacted by 1
percentage point from the net effect of the recent acquisition
of 451 Research, LLC, offset by the disposition of SPIAS and the
IR webhosting business. The increase in revenue was driven
by growth in annualized contract values for RatingsXpress®,
RatingsDirect®, CUSIP, our data feed products within Data
Management Solutions and our Market Intelligence Desktop
products. Excluding the impact of the acquisition and
dispositions favorably impacting Desktop revenue growth by
3 percentage points, revenue growth at Credit Risk Solutions,
Data Management Solutions and Desktop was 9%, 9% and
4%, respectively. Both U.S. revenue and international revenue
increased compared to 2019. Foreign exchange rates had a
favorable impact of 1 percentage point.
Operating profit increased 4%, with a 3 percentage point
favorable impact from foreign exchange rates. Excluding the
impact of higher employee severance charges in 2020 of 3
percentage points and a higher gain on dispositions in 2019 of
2 percentage points, operating profit increased 9%. The impact
of revenue growth was partially offset by higher compensation
costs primarily due to annual merit increases, an increase in
incentive costs and higher technology costs, partially offset by
a decrease in travel and entertainment expenses from non-
essential travel restrictions in response to COVID-19.
2019
Revenue increased 7% and was favorably impacted by less than
1 percentage point from the net impact of recent acquisitions
and a disposition. Excluding the impact of the acquisitions
and disposition, increased revenue was driven by growth in
annualized contract values in the Market Intelligence Desktop
products, RatingsXpress®, RatingsDirect®, CUSIP and our data
feed products within Data Management Solutions. Excluding the
impact of the acquisitions and disposition favorably impacting
Desktop revenue growth by 1 percentage point, revenue growth
at Data Management Solutions, Credit Risk Solutions and
Desktop was 11%, 9% and 4%, respectively. Both domestic and
international revenue increased compared to 2018. In 2019,
international revenue represented 37% of Market Intelligence’s
total revenue compared to 36% in 2018. Foreign exchange
rates had an unfavorable impact of less than one percentage
point. Revenue was favorably impacted by the acquisitions of
451 Research, LLC, Panjiva Inc. (“Panjiva”) and the Rate Watch
business (“RateWatch”) in December of 2019, February of 2018
and June of 2018, respectively, and the transfer of Kensho
revenue from Corporate in January of 2019, and unfavorably
impacted by the disposition of SPIAS in July of 2019. See Note
1 - Nature of Operations and Basis of Presentation and Note
2 - Acquisitions and Divestitures to the Consolidated Financial
Statements and Supplementary Data, in our Annual Report on
Form 10-K for further discussion.
34 S&P Global 2020 Annual Report
PLATTS
Platts is the leading independent provider of information and
benchmark prices for the commodity and energy markets.
Platts provides essential price data, analytics, and industry
insight enabling the commodity and energy markets to perform
with greater transparency and efficiency.
On July 31, 2019, we completed the sale of RigData, a business
within our Platts segment, to Drilling Info, Inc. RigData is a
provider of daily information on rig activity for the natural gas
and oil markets across North America. During the year ended
December 31, 2019, we recorded a pre-tax gain of $27 million
($26 million after-tax) in Gain on dispositions in the consolidated
statement of income related to the sale of RigData.
Platts’ revenue is generated primarily through the
following sources:
• Subscription revenue — primarily from subscriptions to our
real-time news, market data and price assessments, along
with other information products;
• Sales usage-based royalties — primarily from licensing of
our proprietary market price data and price assessments to
commodity exchanges; and
• Non-subscription revenue — conference sponsorship,
consulting engagements, and events.
Operating profit increased 13%, with a 2 percentage point
favorable impact from foreign exchange rates. Excluding
the favorable impact of the gain on disposition of SPIAS of 6
percentage points, partially offset by the unfavorable impact
of acquisition-related costs in 2019 of 1 percentage point,
operating profit increased 8%. The increase was primarily due
to revenue growth, partially offset by higher technology costs,
higher compensation costs primarily driven by additional
headcount and an increase in intersegment royalties tied to
annualized contract value growth.
Industry Highlights and Outlook
In 2020, Market Intelligence continued to focus on leveraging
its strong content heritage to expand the core business,
streamlining and enriching the customer experience across
all delivery platforms, and harnessing new data sources and
technology to extend into new geographies and growth areas
such as ESG. In 2021, Market Intelligence will continue to focus
on developing key product offerings in growth areas such as
ESG and growing new products and product features leveraging
technology investments.
Legal and Regulatory Environment
The market for research services is very competitive. Market
Intelligence competes domestically and internationally on
the basis of a number of factors, including the quality of its
research and advisory services, client service, reputation,
price, geographic scope, range of products and services, and
technological innovation. For a further discussion of competitive
and other risks inherent in our Market Intelligence business, see
Item 1A, Risk Factors, in our Annual Report on Form 10-K.
European Union
The EU enacted a package of legislative measures known as
MiFID II (“MiFID II”), which revises and updates the existing EU
Markets in Financial Instruments Directive framework, and the
substantive provisions became applicable in all EU Member
States as of January 3, 2018. MiFID II includes provisions that,
among other things, 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. Although the MiFID II package is “framework” legislation
(meaning that much of the detail of the rules will be set out in
subordinate measures, including some technical standards yet
to be adopted by the European Commission), the introduction
of the MiFID II package may result in changes to the manner in
which Market Intelligence licenses its price certain products.
MiFID II may impose regulatory burdens on Market Intelligence
activities in the EU, although the exact impact and costs
are not yet known.
S&P Global 2020 Annual Report 35
The following table provides revenue and segment operating profit information for the years ended December 31:
Year ended December 31,
% Change
(in millions)
Revenue
Subscription revenue
Sales usage-based royalties
Non-subscription revenue
% of total revenue:
Subscription revenue
Sales usage-based royalties
Non-subscription revenue
U.S. revenue
International revenue
% of total revenue:
U.S. revenue
International revenue
Operating profit 1
% Operating margin
2020
$878
$809
$62
$7
92%
7%
1%
$283
$595
32%
68%
$458
52%
2019
$844
$774
$60
$10
92%
7%
1%
$281
$563
33%
67%
$457
54%
2018
$815
$750
$54
$11
92%
7%
1%
$283
$532
35%
65%
$401
49%
’20 vs ’19
’19 vs ’18
4%
5%
3%
(39)%
–%
6%
4%
3%
11%
(5)%
–%
6%
–%
14%
1 2020 includes employee severance charges of $11 million and lease-related costs of $2 million. 2019 includes a gain on the disposition of RigData of $27 million and
employee severance charges of $1 million. 2020, 2019, and 2018 includes amortization of intangibles from acquisitions of $9 million, $12 million, and $18 million.
2020
Revenue increased 4% and was unfavorably impacted by less
than 1 percentage point from the net effect of recent acquisitions
of Enerdata and Live Rice Index and the disposition of RigData.
Revenue increased primarily due to continued demand for
market data, price assessment and analytics products driven
by both expanded product offerings to our existing customers
combined with enhanced contract terms. Additionally, an
increase in sales usage-based royalties from the licensing of
our proprietary market price data and price assessments to
commodity exchanges due to increased trading volumes in the
first half of 2020 contributed to revenue growth. These increases
were partially offset by a decrease in conference revenue as
a result of cancellation and postponement of events due to
COVID-19. International revenue grew and U.S. revenue remained
relatively unchanged compared to 2019 with the U.S. revenue
growth rate being unfavorably impacted by the disposition of
RigData in July of 2019. Petroleum continues to be the most
significant revenue driver, followed by power & gas, metals &
agriculture and petrochemicals also contributing to revenue
growth. Foreign exchange rates had a favorable impact of less
than 1 percentage point.
Operating profit remained relatively unchanged with a
favorable impact from foreign exchange rates of less than 1
percentage point. Excluding the unfavorable impact of the gain
on disposition of RigData in 2019 of 6 percentage points and
higher employee severance charges in 2020 of 2 percentage
points, operating profit increased 8%. The increase was primarily
due to revenue growth combined with a reduction in expenses.
Expenses decreased primarily due to a decrease in travel and
entertainment expenses from non-essential travel restrictions
in response to COVID-19, lower costs as a result of cancellation
and postponement of events due to COVID-19 and the favorable
impact of a benefit resulting from one-time costs related to
the discontinuation of a product line at Platts in 2019. These
decreases were partially offset by an increase in operating
costs to support business initiatives at Platts and higher
incentive costs.
2019
Revenue increased 4% and was unfavorably impacted by
less than 1 percentage point from the net impact of recent
acquisitions and a disposition. Excluding the acquisitions and
disposition, revenue increased due to continued demand for
market data and price assessment products driven by both
expanded product offerings to our existing customers combined
with enhanced contract terms. Additionally, revenue growth
was driven by an increase in sales usage-based royalties from
the licensing of our proprietary market price data and price
assessments to commodity exchanges mainly due to increased
trading volumes in Iron Ore, LNG and Gasoil. Demand for market
data and price assessment products was driven by international
customers. International revenue increased and domestic
revenue, which was unfavorably impacted by the disposition
of RigData in July of 2019, remained relatively unchanged
compared to 2018. In 2019, international revenue represented
67% of Platts total revenue compared to 65% in 2018. Petroleum
continues to be the most significant revenue driver, followed
by power & gas, metals and petrochemicals also contributing
to revenue growth. Foreign exchange rates had an unfavorable
36 S&P Global 2020 Annual Report
(in millions)
Revenue
Subscription revenue
Sales usage-based royalties
Non-subscription revenue
% of total revenue:
Subscription revenue
Sales usage-based royalties
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
’20 vs ’19
’19 vs ’18
2020
$878
$809
$62
$7
92%
7%
1%
$283
$595
32%
68%
$458
52%
2019
$844
$774
$60
$10
92%
7%
1%
$281
$563
33%
67%
$457
54%
2018
$815
$750
$54
$11
92%
7%
1%
$283
$532
35%
65%
$401
49%
4%
5%
3%
(39)%
–%
6%
4%
3%
11%
(5)%
–%
6%
–%
14%
impact of less than 1 percentage point. Revenue was unfavorably
impacted by the disposition of RigData in July of 2019 and
favorably impacted by the acquisitions of Live Rice Index and
Enerdata in August of 2019 and September of 2019, respectively.
See Note 2 - Acquisitions and Divestitures to the Consolidated
Financial Statements and Supplementary Data, in our Annual
Report on Form 10-K for further discussion.
Operating profit increased 14% with a 2 percentage point
favorable impact from foreign exchange rates. Excluding the
favorable impact of the gain on the disposition of RigData of
7 percentage points and lower amortization of intangibles
in 2019 of 2 percentage points, operating profit increased 6%.
The increase was primarily due to revenue growth, partially offset
by an increase in operating costs to support revenue growth and
business initiatives at Platts, including Asia expansion initiatives,
an increase in compensation costs due to annual merit increases
and increased headcount, higher technology costs, an increase
in the bad debt provision in the current year and one-time costs
related to the discontinuation of a product line at Platts.
Industry Highlights and Outlook
In 2020, sustained demand for market data and price
assessment products, led by petroleum, continued to drive
revenue growth. In 2020, Platts continued to focus on extending
the core business through innovation, simplifying its product
and platform strategy, and driving commercial transformation.
In 2021, Platts will continue to focus on accelerating growth in
key markets globally and expanding Platts capabilities in Asia.
Additionally, Platts will continue to focus on developing new
product and product features leveraging technology investments
and developing key product offerings in ESG.
Legal and Regulatory Environment
Platts’ commodities price assessment and information business
is subject to increasing regulatory scrutiny in the U.S. and
abroad. As discussed below under the heading “Indices-Legal
and Regulatory Environment”, the financial benchmarks industry
is subject to the new benchmark regulation in the EU (the “EU
Benchmark Regulation”) as well as potential increased regulation
in other jurisdictions. Platts has obtained authorization and is
now supervised by the Dutch Authority for the Financial Markets
in the Netherlands under the EU Benchmark Regulation, and
may need to take similar steps in other jurisdictions including
the United Kingdom post-Brexit and jurisdictions outside of
Europe if they pass similar legislation. For a further discussion
of competitive and other risks inherent in our Platts business,
see Item 1A, Risk Factors, in our Annual Report on Form 10-K.
European Union
The EU has enacted MiFID II, which revise and update the
existing EU Markets in Financial Instruments Directive and the
substantive provisions became applicable in all EU Member
States as of January 3, 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
requirements in the E.U. Market Infrastructure Regulation of
2011). Although the MiFID II package is “framework” legislation
(meaning that much of the detail of the rules will be set out in
subordinate measures, including some technical standards yet
to be adopted by the European Commission), the introduction
of the MiFID II package may result in changes to the manner
in which Platts licenses its price assessments. MiFID II and
the Market Abuse Regulation (“MAR”) may impose additional
regulatory burdens on Platts activities in the EU over time,
but they have not yet resulted in increased substantive
impact or costs.
In October of 2012, IOSCO issued its Principles for Oil Price
Reporting Agencies (“PRA Principles”), which are intended to
enhance the reliability of oil price assessments referenced in
derivative contracts subject to regulation by IOSCO members.
Platts has aligned 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 commodities for
which it publishes benchmarks.
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 derives revenue from asset-linked fees when investors
direct funds into its proprietary designed or owned indexes,
sales-usage royalties of its indices, and to a lesser extent data
subscription arrangements. 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’
benchmarks that generate revenue through fees based on
assets and underlying funds;
• Exchange traded derivatives — generate sales usage-based
royalties based on trading volumes of derivatives contracts
listed on various exchanges;
• Index-related licensing fees — fixed or variable annual and
per-issue asset-linked 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.
S&P Global 2020 Annual Report 37
The following table provides revenue and segment operating profit information for the years ended December 31:
Year ended December 31,
% Change
(in millions)
Revenue
Asset-linked fees
Subscription revenue
Sales usage-based royalties
% of total revenue:
Asset-linked fees
Subscription revenue
Sales usage-based royalties
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
2020
$989
$647
$177
$165
65%
18%
17%
$826
$163
84%
16%
$666
$181
$485
67%
49%
2019
$918
$613
$165
$140
67%
18%
15%
$772
$146
84%
16%
$632
$170
$462
69%
50%
’20 vs ’19
’19 vs ’18
8%
5%
8%
18%
7%
12%
5%
7%
5%
10%
18%
14%
(18)%
7%
24%
12%
12%
11%
2018
$837
$522
$144
$171
62%
17%
21%
$719
$118
86%
14%
$566
$151
$415
68%
50%
1 2020 includes employee severance charges of $5 million, a lease impairment charge of $4 million, a technology-related impairment charge of $2 million and lease-
related costs of $1 million. 2020, 2019 and 2018 includes amortization of intangibles from acquisitions of $6 million.
2020
Revenue increased 8% primarily due to higher average levels
of assets under management (“AUM”) for ETFs and mutual
funds, an increase in exchange-traded derivatives revenue
and higher data subscription revenue, partially offset by lower
over-the-counter derivative revenue. Average levels of AUM for
ETFs increased 12% to $1.681 trillion and ending AUM for ETFs
increased 18% to $1.998 trillion compared to 2019.
Operating profit grew 5%. Excluding the impact of employee
severance charges in 2020 of 1 percentage point and a lease
impairment charge in 2020 of 1 percentage point, operating
profit increased 7%. The impact of revenue growth was partially
offset by an increase in compensation costs due to annual merit
increases and additional headcount as well as professional
costs, higher incentive costs and an increase in legal related
costs, partially offset by a decrease in travel and entertainment
expenses from non-essential travel restrictions in response to
COVID-19 and lower cost of sales. Foreign exchange rates had a
favorable impact of less than 1 percentage point.
2019
Revenue increased 10% due to higher levels of AUM for
ETFs and mutual funds. Additionally, revenue was favorably
impacted by the buyout of the balance of intellectual property
rights in a family of indices from one of our co-marketing and
index development partners in the fourth quarter of 2018,
retrospective fees for previously unlicensed and unreported
index usage and benefits related to contract renegotiations.
These increases were partially offset by a decrease in exchange-
traded derivatives revenue primarily driven by lower volumes in
2019. Ending AUM for ETFs increased 30% to $1.696 trillion in
2019 and average AUM for ETFs increased 8% to $1.503 trillion
compared to 2018. Foreign exchange rates had an unfavorable
impact of less than 1 percentage point.
Operating profit grew 12%. The impact of revenue growth was
partially offset by higher operating costs from increased royalties
due to increased traction of royalty-based products, higher legal
expenses and increased compensation costs primarily driven by
additional headcount, partially offset by lower incentive
costs. Foreign exchange rates had a favorable impact of
1 percentage point.
Industry Highlights and Outlook
Indices continues to be the leading index provider for the ETF
market space. In 2020, higher average levels of AUM for ETFs
contributed to revenue growth. In 2020, Indices continued
to focus on growing the core business, expanding innovative
offerings with focus on differentiated solutions such as factor,
multi-asset-class, and ESG indices, and growing globally through
collaborative client relationships. In 2021, Indices will continue
38 S&P Global 2020 Annual Report
(in millions)
Revenue
Asset-linked fees
Subscription revenue
Sales usage-based royalties
% of total revenue:
Asset-linked fees
Subscription revenue
Sales usage-based royalties
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
Year ended December 31,
% Change
’20 vs ’19
’19 vs ’18
2020
$989
$647
$177
$165
65%
18%
17%
$826
$163
84%
16%
$666
$181
$485
67%
49%
2019
$918
$613
$165
$140
67%
18%
15%
$772
$146
84%
16%
$632
$170
$462
69%
50%
2018
$837
$522
$144
$171
62%
17%
21%
$719
$118
86%
14%
$566
$151
$415
68%
50%
8%
5%
8%
18%
7%
12%
5%
7%
5%
10%
18%
14%
(18)%
7%
24%
12%
12%
11%
to focus on developing key product offerings in ESG, multi-asset-
class and factor indices and developing new product and product
features leveraging technology investments.
our Indices business, see Item 1A, Risk Factors, in our Annual
Report on Form 10-K.
Legal and Regulatory Environment
Liquidity and Capital Resources
Over the past four years the financial benchmarks industry has
been subject to specific benchmark regulation in the European
Union (the “EU Benchmark Regulation”) and Australia (the
“Australia Benchmark Regulation”). Other jurisdictions are also
considering new regulation for financial benchmarks.
The EU Benchmark Regulation was published June 30, 2016 and
included provisions applicable to Indices and Platts. Both Indices
and Platts have established separate benchmark administrators
in connection with their benchmark activities in Europe. The
Indices and Platts entities are both based in Amsterdam and are
authorized by the Dutch Authority for Financial Markets (AFM).
This legislation will likely cause additional operating obligations
but they are not expected to be material at this time, although
the exact impact remains unclear.
The Australian Benchmark Regulation was enacted in June of
2018 and included provisions applicable to Indices, designating
the S&P ASX 200 a significant financial benchmark and therefore
requiring Indices, as the administrator of the S&P ASX 200, to
obtain a license from the Australian Securities and Investment
Commission (“ASIC”). Indices has obtained the relevant license.
Although narrower in scope, the requirements of the Australian
Benchmark Regulation are similar to those of the EU Benchmark
Regulation. This legislation will likely cause additional operating
obligations but they are not expected to be material at this time,
although the exact impact remains unclear.
In July of 2013, the IOSCO issued Financial Benchmark Principles
(IOSCO Principles), intended to promote the reliability of financial
benchmark determinations. The IOSCO Principles address
governance, benchmark quality and accountability mechanisms,
including with regard to the indices published by Indices.
Even though the IOSCO Principles are not binding law, Indices
has taken steps to align its governance regime and operations
with the IOSCO Principles and engaged an independent auditor
to perform an annual 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 technological innovation.
Our Indices business is impacted by market volatility, asset levels
of investment products tracking indices, and trading volumes
of certain exchange traded derivatives. Volatile capital markets,
as well as changing investment styles, among other factors,
may influence an investor’s decision to invest in and maintain
an investment in an index-linked investment product. For a
further discussion of competitive and other risks inherent in
We continue to maintain a strong financial position. Our primary
source of funds for operations is cash from our businesses
and our core businesses have been strong cash generators. In
2021, 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
businesses, strategic acquisitions, share repurchases, dividends,
repayment of debt, capital expenditures and investment in our
infrastructure.
Cash Flow Overview
Cash, cash equivalents, and restricted cash were $4.1 billion as
of December 31, 2020, an increase of $1.2 billion as compared to
December 31, 2019.
Year ended December 31,
(in millions)
2020
2019
2018
Net cash provided by (used for):
Operating activities
Investing activities
Financing activities
$3,567
$2,776
$2,064
(240)
(2,166)
(131)
(1,751)
(513)
(2,288)
In 2020, free cash flow increased to $3.3 billion compared to $2.5
billion in 2019. Free cash flow is a non-GAAP financial measure
and reflects our cash flow provided by operating activities less
capital expenditures and distributions to noncontrolling interest
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.
Operating activities
Cash provided by operating activities increased to $3.6 billion in
2020 as compared to $2.8 billion in 2019. The increase is mainly
due to higher results from operations in 2020 and improved cash
collections on accounts receivable in 2020.
Cash provided by operating activities increased to $2.8 billion
in 2019 as compared to $2.1 billion in 2018. The increase
is mainly due to higher results from operations, lower
incentive compensation payments and low legal settlement
payments in 2019.
S&P Global 2020 Annual Report 39
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 increased to $0.2 billion for
2020 as compared to $0.1 billion in 2019, primarily due to cash
used for the acquisitions of the ESG Ratings Business from
RobecoSAM and Greenwich Associates LLC in 2020.
Cash used for investing activities decreased to $0.1 billion
for 2019 as compared to $0.5 billion in 2018, primarily due to
cash used for the acquisition of Kensho and the purchase of
intellectual property in 2018.
Refer to Note 2 – Acquisitions and Divestitures to the
Consolidated Financial Statements and Supplementary Data,
in our Annual Report on Form 10-K for further information.
Financing Activities
Our cash outflows from financing activities consist primarily of
share repurchases, dividends and repayment of short-term and
long-term debt, while cash inflows are primarily inflows from
long-term and short-term debt borrowings and proceeds from
the exercise of stock options.
Cash used for financing activities increased to $2.2 billion
in 2020 from $1.8 billion in 2019. The increase is primarily
attributable to cash used for the redemption and extinguishment
of the $900 million outstanding principal amount of our 4.4%
senior notes due in 2026 and a portion of the outstanding
principal amounts of our 6.55% senior notes due in 2037 and
our 4.5% senior notes due in 2048 in 2020, partially offset
by proceeds from the issuance of senior notes in 2020. See
Note 5 – Debt to the Consolidated Financial Statements and
Supplementary Data, in our Annual Report on Form 10-K for
further discussion.
Cash used for financing activities decreased to $1.8 billion
in 2019 from $2.3 billion in 2018. The decrease is primarily
attributable to higher cash paid for share repurchases in 2018
and proceeds from the issuance of senior notes in 2019.
During 2020, we used cash to repurchase 4.0 million shares
for $1,164 million. We entered into two accelerated share
repurchase (“ASR”) agreements with a financial institution on
February 11, 2020 to initiate share repurchases aggregating
$500 million each. We repurchased a total of 1.7 million shares
under each ASR agreement for an average purchase price of
$292.13 per share.
During 2019, we received 5.9 million shares, including 0.4 million
shares received in January of 2019 related to our October 29,
2018 ASR agreement, resulting in $1,240 million of cash used
to repurchase shares. We entered into an ASR agreement
with a financial institution on August 5, 2019 to initiate share
repurchases aggregating $500 million. We repurchased a
40 S&P Global 2020 Annual Report
total of 2.0 million shares under the ASR agreement for an
average purchase price of $253.36 per share. We entered into
an ASR agreement with a financial institution on February 11,
2019 to initiate share repurchases aggregating $500 million.
We repurchased a total of 2.3 million shares under the ASR
agreement for an average purchase price of $214.65 per share.
During 2018, we used cash to repurchase 8.4 million shares for
$1.7 billion. We entered into an ASR agreement with a financial
institution on October 29, 2018 to initiate share repurchases
aggregating $500 million. We repurchased a total of 2.9 million
shares under the ASR agreement for an average purchase
price of $173.80 per share. We entered into an ASR agreement
with a financial institution on March 6, 2018 to initiate share
repurchases aggregating $1 billion. We repurchased a total of
5.1 million shares under that ASR agreement for an average
purchase price of $197.49 per share.
On January 29, 2020, the Board of Directors approved a
share repurchase program authorizing the purchase of 30
million shares (the “2020 Repurchase Program”), which was
approximately 12% of the total shares of our outstanding
common stock at that time. On December 4, 2013, the Board of
Directors approved a share repurchase program authorizing the
purchase of 50 million shares (the “2013 Repurchase Program”),
which was approximately 18% of the total shares of our
outstanding common stock at that time. Our purchased shares
may be used for general corporate purposes, including the
issuance of shares for stock compensation plans and to offset
the dilutive effect of the exercise of employee stock options. As of
December 31, 2020, 30 million shares remained available under
the 2020 Repurchase Program and 0.8 million shares remained
available under the 2013 repurchase program.
See Note 9 – Equity to the Consolidated Financial Statements
and Supplementary Data, in our Annual Report on Form 10-K for
further discussion related to our ASR agreements.
Additional Financing
We have the ability to borrow a total of $1.2 billion through our
commercial paper program, which is supported by our revolving
$1.2 billion five-year credit agreement (our “credit facility”)
that we entered into on June 30, 2017. This credit facility will
terminate on June 30, 2022. As of December 31, 2020 and 2019,
there was no commercial paper issued or outstanding, and
we similarly did not draw or have any borrowings outstanding
from the credit facility during the year ended December
31, 2020 and 2019.
Depending on our corporate credit rating, we pay a commitment
fee of 8 to 17.5 basis points for our credit facility, whether or not
amounts have been borrowed. We currently pay a commitment
fee of 10 basis points. The interest rate on borrowings under
our credit facility is, at our option, calculated using rates that
are primarily based on either the prevailing London Inter-Bank
Offer Rate, the prime rate determined by the administrative
agent or the Federal Funds Rate. For certain borrowings
under this credit facility, there is also a spread based on our
corporate credit rating.
Our credit facility contains certain covenants. The only financial
covenant requires that our indebtedness to cash flow ratio, as
defined in our credit facility, is not greater than 4 to 1, and this
covenant level has never been exceeded.
Dividends
On January 27, 2021, the Board of Directors approved an
increase in the quarterly common stock dividend from $0.67
per share to $0.77 per share.
Supplemental Guarantor Financial Information
The senior notes described below were issued by S&P Global
Inc. and are fully and unconditionally guaranteed by Standard &
Poor’s Financial Services LLC, a 100% owned subsidiary of the
Company. All senior notes have been registered with the SEC in
connection with exchange offers.
• On August 13, 2020, we issued $600 million of 1.25%
senior notes due in 2030 and $700 million of 2.3% senior
notes due in 2060.
• On November 26, 2019, we issued $500 million of 2.5%
senior notes due in 2029 and $600 million of 3.25% senior
notes due in 2049.
• On May 17, 2018, we issued $500 million of 4.5% senior
notes due in 2048.
Company, other than any such Credit Facility of the Company the
guarantee of which by the subsidiary guarantor will be released
concurrently with the release of the subsidiary guarantor’s
guarantees of the notes.
Other subsidiaries of the Company do not guarantee the
registered debt securities of either S&P Global Inc. or Standard
& Poor’s Financial Services LLC (the “Obligor Group”) which are
referred to as the “Non-Obligor Group”.
The following tables set forth the summarized financial
information of the Obligor Group on a combined basis. This
summarized financial information excludes the Non-Obligor
Group. Intercompany balances and transactions between
members of the Obligor Group have been eliminated. This
information is not intended to present the financial position
or results of operations of the Obligor Group in accordance
with U.S. GAAP.
Summarized results of operations year ended
December 31 is as follows:
(in millions)
Revenue
Operating Profit
Net Income
Net income attributable to S&P Global Inc.
2020
$3,082
1,923
712
712
• On September 22, 2016, we issued $500 million of 2.95%
senior notes due in 2027.
Summarized balance sheet information as of December
31 is as follows:
(in millions)
Current assets (excluding intercompany
from Non-Obligor Group)
Noncurrent assets
Current liabilities (excluding intercompany
to Non-Obligor Group)
Noncurrent liabilities
Intercompany payables to
Non-Obligor Group
2020
2019
$3,093
$1,611
1,055
1,225
1,179
1,052
4,936
4,762
3,893
2,785
• On May 26, 2015, we issued $700 million of 4.0% senior
notes due in 2025.
• On November 2, 2007 we issued $400 million of 6.55%
Senior Notes due 2037.
The notes above are unsecured and unsubordinated and rank
equally and ratably with all of our existing and future unsecured
and unsubordinated debt. The guarantees are the subsidiary
guarantor’s unsecured and unsubordinated debt and rank
equally and ratably with all of the subsidiary guarantor’s
existing and future unsecured and unsubordinated debt.
The guarantees of the subsidiary guarantor may be released
and discharged upon (i) a sale or other disposition (including by
way of consolidation or merger) of the subsidiary guarantor or
the sale or disposition of all or substantially all the assets of the
subsidiary guarantor (in each case other than to the Company
or a person who, prior to such sale or other disposition, is an
affiliate of the Company); (ii) upon defeasance or discharge of
any applicable series of the notes, as described above; or (iii)
at such time as the subsidiary guarantor ceases to guarantee
indebtedness for borrowed money, other than a discharge
through payment thereon, under any Credit Facility of the
S&P Global 2020 Annual Report 41
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 disclosed herein.
For example, we are contractually committed to contracts for information-technology outsourcing, certain enterprise-wide
information-technology software licensing and maintenance.
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 service for 2021.
The following table summarizes our significant contractual obligations and commercial commitments as of December 31, 2020,
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
Total
$—
$130
$120
$142
$392
$—
$261
$188
$171
$620
$695
$243
$128
$66
$1,132
$3,415
$1,867
$302
$33
$5,617
$4,110
$2,501
$738
$412
$7,761
1 Our debt obligations are described in Note 5 – Debt to our consolidated financial statement.
2 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.
42 S&P Global 2020 Annual Report
(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
More than
Total
Years
5 Years
$—
$130
$120
$142
$392
$—
$261
$188
$171
$620
$695
$243
$128
$66
$3,415
$1,867
$302
$33
$4,110
$2,501
$738
$412
$1,132
$5,617
$7,761
As of December 31, 2020, we had $121 million of liabilities for
unrecognized tax benefits. We have excluded the liabilities for
unrecognized tax benefits from our contractual obligations
table because, until formal resolutions are reached, reasonable
estimates of the timing of cash settlements with the respective
taxing authorities are not practicable.
As of December 31, 2020, we have recorded $2,781 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 operating
agreement of S&P Dow Jones Indices LLC, whereby, after
December 31, 2017, CME Group and CME Group Index Services
LLC (“CGIS”) has 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 contractual obligations
table because we are uncertain as to the timing and the ultimate
amount of the potential payment we may be required to make.
We make contributions to our pension and postretirement plans
in order to satisfy minimum funding requirements as well as
additional contributions that we consider appropriate to improve
the funded status of our plans. During 2020, we contributed $12
million to our retirement plans. Expected employer contributions
in 2021 are $11 million and $4 million for our retirement and
postretirement plans, respectively. In 2021, 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, 2020 and 2019, we did not have any material
relationships 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
purposes. As such we are not exposed to any financial liquidity,
market or credit risk that could arise if we had engaged in
such relationships.
S&P Global 2020 Annual Report 43
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 expenditures
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
conduct 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 available 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:
Year ended December 31,
% Change
(in millions)
Cash provided by operating activities
Capital expenditures
Distributions to noncontrolling
interest holders, net 1
Free cash flow
Settlement of prior-year tax audits
Tax on gain from sale of SPIAS and RigData
Payment of legal settlements
Tax benefit from legal settlements
2020
$3,567
(76)
(194)
$3,297
—
—
—
—
2019
$2,776
(115)
(143)
$2,518
51
13
1
—
2018
$2,064
(113)
(154)
$1,797
73
—
180
(44)
’20 vs ’19
’19 vs ’18
28%
34%
31%
40%
Free cash flow excluding above items
$3,297
$2,583
$2,006
28%
29%
1 Distributions to noncontrolling interest holders is net of amounts owed to the S&P Dow Jones Indices LLC joint venture by the noncontrolling interest holders.
(in millions)
Cash used for investing activities
Cash used for financing activities
2020
(240)
(2,166)
2019
(131)
(1,751)
2018
(513)
(2,288)
’20 vs ’19
’19 vs ’18
84%
24%
(75)%
(23)%
44 S&P Global 2020 Annual Report
Year ended December 31,
% Change
(in millions)
Cash provided by operating activities
Capital expenditures
Distributions to noncontrolling
interest holders, net 1
Free cash flow
Settlement of prior-year tax audits
Tax on gain from sale of SPIAS and RigData
Payment of legal settlements
Tax benefit from legal settlements
2020
$3,567
(76)
(194)
$3,297
—
—
—
—
2019
$2,776
(115)
(143)
$2,518
51
13
1
—
2018
$2,064
(113)
(154)
$1,797
73
—
180
(44)
’20 vs ’19
’19 vs ’18
28%
34%
31%
40%
Free cash flow excluding above items
$3,297
$2,583
$2,006
28%
29%
(in millions)
Cash used for investing activities
Cash used for financing activities
2020
(240)
(2,166)
2019
(131)
(1,751)
2018
(513)
(2,288)
’20 vs ’19
’19 vs ’18
84%
24%
(75)%
(23)%
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.
On an ongoing basis, we evaluate our estimates and
assumptions, including those related to revenue recognition,
allowance for doubtful accounts, valuation of long-lived assets,
goodwill and other intangible assets, pension plans, incentive
compensation and stock-based compensation, income taxes,
contingencies 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 liabilities 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
different 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 preparation of
our consolidated financial statements:
Revenue Recognition
We adopted Financial Accounting Standards Board Accounting
Standards Codification (“ASC”) 606 “Revenue from Contracts with
Customers” using the modified retrospective transition method
applied to our revenue contracts with customers as of January
1, 2018. Results for reporting periods beginning after January
1, 2018 are presented under ASC 606, while prior year amounts
are not adjusted and continue to be reported in accordance with
our historic accounting under ASC 605 “Revenue Recognition”.
We recorded a net increase to opening retained earnings of
$35 million as of January 1, 2018 due to the cumulative effect
of adopting ASC 606, with the impact primarily related to our
treatment of costs to obtain a contract and to a lesser extent,
changes to the timing of the recognition of our subscription and
non-transaction revenues.
Under ASC 606, revenue is recognized when a customer obtains
control of promised goods or services in an amount that reflects
the consideration the entity expects to receive in exchange for
those goods or services. Under ASC 605, revenue was recognized
as it was earned and when services were rendered. See Note 1 -
Accounting Policies to our consolidated financial statements for
further information.
Allowance for Doubtful Accounts
The allowance for doubtful accounts reserve methodology
is based on historical analysis, a review of outstanding
balances and current conditions, and by incorporating data
points that provide indicators of future economic conditions
including forecasted industry default rates and industry index
benchmarks. 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 indicators. The impact
on operating profit for a one percentage point change in the
allowance for doubtful accounts is approximately $16 million.
During the year ended December 31, 2020, we incorporated
the forecasted impact of future economic conditions into our
allowance for doubtful accounts measurement process including
the expected adverse impact of COVID-19 on the global economy.
Based on our current outlook these assumptions are not
expected to significantly change in 2021.
Accounting for the Impairment of Long-Lived Assets
(including other intangible assets)
We evaluate long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Upon such an occurrence,
recoverability of assets to be held and used is measured by
comparing the carrying amount of an asset to current forecasts
of undiscounted future net cash flows expected to be generated
by the asset. If the carrying amount of the asset exceeds its
estimated future cash flows, an impairment charge is recognized
equal to the amount by which the carrying amount of the asset
exceeds the fair value of the asset. For long-lived assets held
for sale, assets are written down to fair value, less cost to sell.
Fair value is determined based on market evidence, discounted
cash flows, appraised values or management’s estimates,
depending upon the nature of the assets.
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 identifiable
intangible assets of businesses acquired. As of December
31, 2020 and 2019, the carrying value of goodwill and other
indefinite-lived intangible assets was $4.6 billion and $4.4
billion, respectively. Goodwill and other intangible assets with
indefinite lives are not amortized, but instead are tested for
impairment 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 2020 Annual Report 45
Retirement Plans and Postretirement Healthcare
and Other Benefits
Our employee pension and other postretirement benefit costs
and obligations are dependent on assumptions concerning
the outcome of future events and circumstances, including
compensation increases, long-term return on pension plan
assets, healthcare cost trends, discount rates and other factors.
In determining such assumptions, we consult with outside
actuaries and other advisors where deemed appropriate. In
accordance with relevant accounting standards, if actual
results differ from our assumptions, such differences are
deferred and amortized over the estimated remaining lifetime
of the plan participants. While we believe that the assumptions
used in these calculations are reasonable, differences in
actual experience or changes in assumptions could affect
the expense and liabilities related to our pension and other
postretirement benefits.
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 based
on the plan’s asset allocation strategy and projected market
returns over the long-term.
Goodwill
As part of our annual impairment test of our four reporting units,
we initially perform a qualitative analysis evaluating whether
any events and circumstances occurred 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. Reporting
units are generally an operating segment or one level below an
operating segment. Our qualitative assessment included, but
was not limited to, consideration of macroeconomic conditions,
industry and market conditions, cost factors, cash flows,
changes in key Company personnel and our share price. If, based
on our evaluation of the events and circumstances that occurred
during the year 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 performed.
Conversely, if the results of our qualitative assessment
determine that it is more likely than not that the fair value of any
of our reporting units is less than its respective carrying amount
we perform a quantitative impairment test. If the fair value of
the reporting unit is less than the carrying value, the difference
is recognized as an impairment charge. For 2020, based on our
qualitative assessments, we determined that it is more likely
than not that our reporting units’ fair values were greater than
their respective carrying amounts.
Indefinite-Lived Intangible Assets
We evaluate the recoverability of indefinite-lived intangible
assets by first performing a qualitative analysis evaluating
whether any events and circumstances occurred that provide
evidence that it is more likely than not that the indefinite-lived
asset is impaired. If, based on our evaluation of the events and
circumstances that occurred during the year we do not believe
that it is more likely than not that the indefinite-lived asset
is impaired, no quantitative impairment test is performed.
Conversely, if the results of our qualitative assessment
determine 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. The fair value of loss is recognized in an amount equal
to that excess. Significant judgments inherent 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.
We performed our impairment assessment of goodwill and
indefinite-lived intangible assets and concluded that no
impairment existed for the years ended December 31, 2020,
2019, and 2018.
46 S&P Global 2020 Annual Report
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
Retirement Plans
Postretirement Plans
2021
2020
2019
2021
2020
2019
2.75%
5.00%
3.45%
5.50%
4.40%
6.00%
2.20%
3.08%
4.15%
Weighted-average healthcare cost rate
6.00%
6.50%
6.50%
Stock-Based Compensation
Stock-based compensation expense is measured at the grant
date based on the fair value of the award and is recognized over
the requisite service period, which typically is the vesting period.
Stock-based compensation is classified as both operating-
related expense and selling and general expense in our
consolidated statements of income.
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:
Year ended December 31, 2018
Income Taxes
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between financial
statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to be applied to
taxable income in the years 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.
Risk-free average interest rate
Dividend yield
Volatility
Expected life (years)
Weighted-average grant-date fair
value per option
2.6 - 2.7%
1.1%
21.8 - 22.0%
5.67 - 6.07
$112.98
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
with any other pertinent information.
Because lattice-based option-pricing models incorporate ranges
of assumptions, those ranges are disclosed. These assumptions
are based on multiple factors, including historical 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.
In 2018, we made a one-time issuance of incentive stock
options under the 2002 Plan to replace Kensho employees’ stock
options that were assumed in connection with our acquisition of
Kensho in April of 2018. There were no stock options granted in
2020 and 2019.
We file income tax returns in the U.S. federal jurisdiction,
various 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 assessment
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, 2021.
If any of these tax audit settlements do occur within that
period we would make any necessary adjustments to the
accrual for unrecognized tax benefits.
As of December 31, 2020, we have approximately $3.1 billion of
undistributed earnings of our foreign subsidiaries, of which $0.8
billion is reinvested indefinitely in our foreign operations.
S&P Global 2020 Annual Report 47
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 probable
that a liability had been incurred at the date of the financial
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 potential
amounts or ranges of probable losses, and recognize a liability, 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 assumptions 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 loss when it is at least
reasonably possible that a loss may have 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
market valuation approaches may incorporate Level 3 fair
value measures for instances when observable inputs are
not available. The more significant judgmental assumptions
used to estimate the value of the S&P Dow Jones Indices LLC
joint venture include an estimated discount rate, a range of
assumptions that form the basis of the expected future net cash
flows (e.g., the revenue growth rates and operating margins),
and a company specific beta. The significant judgmental
assumptions used that incorporate market data, including the
relative weighting of market observable information and the
comparability of that information in our valuation models, are
forward-looking and could be affected by future economic and
market conditions.
Recent Accounting Standards
See Note 1 – Accounting Policies to our consolidated financial
statements for a detailed description of recent accounting
standards. We do not expect these recent accounting standards
to have a material impact on our results of operations, financial
condition, or liquidity in future periods.
Forward-Looking Statements
This report contains “forward-looking statements,” as defined
in the Private Securities Litigation Reform Act of 1995. These
statements, including statements about COVID-19 and the
merger (the “Merger”) between a subsidiary of the Company
and IHS Markit Ltd. (“IHS Markit”), which express management’s
current views concerning future events, trends, contingencies 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 regulators; changes in the Company’s business
strategies and methods of generating revenue; the development
and performance of the Company’s services and products; the
expected impact of acquisitions and dispositions; the Company’s
effective tax rates; and the Company’s cost structure, dividend
policy, cash flows or liquidity.
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, financial, political and regulatory
conditions, and factors that contribute to uncertainty and
volatility, natural and man-made disasters, civil unrest,
pandemics (e.g., COVID-19), geopolitical uncertainty, and
conditions that may result from legislative, regulatory, trade
and policy changes;
• the satisfaction of the conditions precedent to consummation
of the Merger, including the ability to secure regulatory
approvals on the terms expected, the Company’s shareholder
approval and the IHS Markit shareholder approval at all or in
a timely manner;
• the occurrence of events that may give rise to a right of one or
both of the parties to terminate the merger agreement;
• uncertainty relating to the impact of the Merger on the
businesses of the Company and IHS Markit, including
potential adverse reactions or changes to the market price
of the Company’s common stock and IHS Markit shares
resulting from the announcement or completion of the Merger
and changes to existing business relationships during the
pendency of the acquisition that could affect the Company’s
and/or IHS Markit’s financial performance;
• risks relating to the value of the Company’s stock to be
issued in the Merger, significant transaction costs and/or
unknown liabilities;
• the ability of the Company to successfully integrate IHS
Markit’s operations and retain and hire key personnel of
both companies;
• the ability of the Company to retain customers and to
implement its plans, forecasts and other expectations with
respect to IHS Markit’s business after the consummation of
the Merger and realize expected synergies;
48 S&P Global 2020 Annual Report
• business disruption following the Merger;
• the possibility that the Merger may be more expensive to
complete than anticipated, including as a result of unexpected
factors or events;
• the Company’s and IHS Markit’s ability to meet expectations
regarding the accounting and tax treatments of the Merger;
Ratings, S&P Global Platts, S&P Dow Jones Indices, and
S&P Global Market Intelligence, including the Company’s
compliance therewith;
• the Company’s ability to make acquisitions and dispositions
and successfully integrate the businesses we acquire;
• consolidation in the Company’s end-customer markets;
• the Company’s ability to successfully recover should it
• the introduction of competing products or technologies by
experience a disaster or other business continuity problem
from a hurricane, flood, earthquake, terrorist attack, pandemic,
security breach, cyber attack, power loss, telecommunications
failure or other natural or man-made event, including the
ability to function remotely during long-term disruptions such
as the ongoing COVID-19 pandemic;
• the Company’s ability to maintain adequate physical, technical
and administrative safeguards to protect the security of
confidential information and data, and the potential for
a system or network disruption that results in regulatory
penalties and remedial costs or improper disclosure of
confidential information or data;
• the outcome of litigation, government and regulatory
other companies;
• the impact of customer cost-cutting pressures, including in the
financial services industry and the commodities markets;
• 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 and health of the energy and
commodities markets;
• our ability to attract, incentivize and retain key employees;
proceedings, investigations and inquiries;
• the level of the Company’s future cash flows and
• the health of debt and equity markets, including credit
quality and spreads, the level of liquidity and future debt
issuances, demand for investment products that track indices
and assessments and trading volumes of certain exchange
traded derivatives;
• the demand and market for credit ratings in and across the
sectors and geographies where the Company operates;
• concerns in the marketplace affecting the Company’s
credibility or otherwise affecting market perceptions
of the integrity or utility of independent credit ratings,
benchmarks and indices;
• the effect of competitive products and pricing, including
the level of success of new product developments and
global expansion;
• the Company’s exposure to potential criminal sanctions or
civil penalties for noncompliance with foreign and U.S. laws
and regulations that are applicable in the domestic and
international jurisdictions in which it operates, including
sanctions laws relating to countries such as Iran, Russia,
Sudan, Syria and Venezuela, 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 officials, as well as import and export restrictions;
• the continuously evolving regulatory environment, in Europe,
the United States and elsewhere, affecting S&P Global
capital investments;
• the impact on the Company’s revenue and net income caused
by fluctuations in foreign currency exchange rates;
• the Company’s 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 offerings in
the European Union and United Kingdom; and
• the impact of changes in applicable tax or accounting
requirements on the Company.
The factors noted above are not exhaustive. The Company and
its subsidiaries operate in a dynamic business environment in
which new risks emerge frequently. Accordingly, the Company
cautions readers not to place undue reliance on any forward-
looking statements, which speak only as of the dates on
which they are made. The Company undertakes no obligation
to update or revise any forward-looking statement to reflect
events or circumstances arising after the date on which it is
made, except as required by applicable law. Further information
about the Company’s businesses, including information about
factors that could materially affect its results of operations
and financial condition, is contained in the Company’s filings
with the SEC, including Item 1A, Risk Factors, in our Annual
Report on Form 10-K.
S&P Global 2020 Annual Report 49
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
Other (income) expense, net
Interest expense, net
Loss on extinguishment of debt
Income before taxes on income
Provision for taxes on income
Net income
Less: net income attributable to noncontrolling interests
Year Ended December 31,
2020
$7,442
2019
$6,699
2018
$6,258
2,092
1,543
83
123
3,841
(16)
3,617
(31)
141
279
3,228
694
2,534
(195)
1,976
1,342
82
122
3,522
(49)
3,226
98
141
57
2,930
627
2,303
(180)
1,838
1,424
84
122
3,468
—
2,790
(25)
134
—
2,681
560
2,121
(163)
Net income attributable to S&P Global Inc.
$2,339
$2,123
$1,958
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
See accompanying notes to the consolidated financial statements.
$9.71
$9.66
241.0
242.1
240.6
$8.65
$8.60
245.4
246.9
244.0
$7.80
$7.73
250.9
253.2
248.4
50 S&P Global 2020 Annual Report
(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
Other (income) expense, net
Interest expense, net
Loss on extinguishment of debt
Income before taxes on income
Provision for taxes on income
Net income
Year Ended December 31,
2020
$7,442
2019
$6,699
2018
$6,258
2,092
1,543
83
123
3,841
(16)
3,617
(31)
141
279
3,228
694
2,534
(195)
$9.71
$9.66
241.0
242.1
240.6
1,976
1,342
82
122
3,522
(49)
3,226
98
141
57
2,930
627
2,303
(180)
$8.65
$8.60
245.4
246.9
244.0
1,838
1,424
84
122
3,468
—
2,790
(25)
134
—
2,681
560
2,121
(163)
$7.80
$7.73
250.9
253.2
248.4
Less: net income attributable to noncontrolling interests
Net income attributable to S&P Global Inc.
$2,339
$2,123
$1,958
Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic
Diluted
Basic
Diluted
Weighted-average number of common shares outstanding:
Actual shares outstanding at year end
Consolidated Statements of Comprehensive Income
(in millions)
Net income
Other comprehensive income:
Foreign currency translation adjustments
Income tax effect
Pension and other postretirement benefit plans
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,
2020
$2,534
2019
$2,303
2018
$2,121
(24)
22
(2)
(31)
8
(23)
17
(5)
12
10
8
18
141
(39)
102
(2)
—
(2)
2,521
(14)
2,421
(10)
(96)
(4)
(100)
(14)
9
(5)
2
—
2
2,018
(12)
(181)
(170)
(151)
Comprehensive income attributable to S&P Global Inc.
$2,326
$2,241
$1,855
See accompanying notes to the consolidated financial statements.
S&P Global 2020 Annual Report 51
Consolidated Balance Sheets
(in millions)
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Short-term investments
Accounts receivable, net of allowance for doubtful accounts: 2020 - $30; 2019 - $34
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
Right of use assets
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
Income taxes currently payable
Unearned revenue
Other current liabilities
Total current liabilities
Long-term debt
Lease liabilities – non-current
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: 2020 - 294 million shares; 2019 - 294 million shares
Additional paid-in capital
Retained income
Accumulated other comprehensive loss
Less: common stock in treasury - at cost: 2020 - 53 million shares; 2019 - 50 shares
Total equity – controlling interests
Total equity – noncontrolling interests
Total equity
Total liabilities and equity
See accompanying notes to the consolidated financial statements.
52 S&P Global 2020 Annual Report
December 31,
2020
2019
$4,108
$2,866
14
9
1,593
264
5,988
364
507
871
(587)
284
494
3,735
1,352
684
20
28
1,577
221
4,712
420
522
942
(622)
320
676
3,575
1,424
641
$12,537
$11,348
$233
551
84
2,168
551
3,587
4,110
544
291
653
9,185
2,781
294
946
13,367
(637)
(13,461)
509
62
571
$190
446
68
1,928
461
3,093
3,948
620
259
624
8,544
2,268
294
903
12,205
(624)
(12,299)
479
57
536
$12,537
$11,348
Consolidated Statements of Cash Flows
(in millions)
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 settlements
Pension settlement charge, net of taxes
Loss on extinguishment of debt
Lease impairment charges
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 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:
Proceeds from issuance of senior notes, net
Payments on senior notes
Dividends paid to shareholders
Distributions to noncontrolling interest holders, net
Repurchase of treasury shares
Exercise of stock options
Purchase of additional CRISIL shares
Employee withholding tax on share-based payments and other
Cash used for financing activities
Effect of exchange rate changes on cash
Net change in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of year
Cash, cash equivalents, and restricted cash at end of year
Cash paid during the year for:
Interest
Income taxes
See accompanying notes to the consolidated financial statements.
Year Ended December 31,
2020
2019
2018
$2,534
$2,303
$2,121
84
122
21
81
94
—
1
—
—
11
41
(164)
(1)
(106)
70
(108)
(67)
(7)
(129)
2,064
(113)
(401)
6
(5)
(513)
489
(403)
(503)
(154)
83
123
17
(31)
90
(16)
9
2
279
120
110
18
(85)
132
220
—
(15)
(2)
(21)
82
122
18
46
78
(49)
—
85
57
11
25
(135)
(81)
73
256
(1)
(56)
(41)
(17)
3,567
2,776
(76)
(201)
18
19
(240)
1,276
(1,394)
(645)
(194)
(1,164)
16
—
(61)
(2,166)
75
1,236
2,886
$4,122
$159
$683
(115)
(91)
85
(10)
(131)
1,086
(868)
(560)
(143)
(1,240)
(1,660)
40
—
(66)
(1,751)
34
928
1,958
$2,886
$162
$659
34
(25)
(66)
(2,288)
(84)
(821)
2,779
$1,958
$151
$558
S&P Global 2020 Annual Report 53
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
Non-
controlling
Interests
Balance as of December 31, 2017
$412
$525
$10,023
$(649)
$9,602
Comprehensive income ¹
Dividends (Dividend declared per
common share — $2.00 per share)
Share repurchases
Retirement of common stock
(118)
Employee stock plans
Change in redemption value of
redeemable noncontrolling interest
Increase in CRISIL ownership
Stock consideration for Kensho
Other
(103)
1,958
(503)
(228)
(75)
56
(25)
352
342
102
Balance as of December 31, 2018
$294
$833
$11,284
$(742)
$11,041
$628
Comprehensive income ¹
Dividends (Dividend declared per
common share — $2.28 per share)
Share repurchases
Employee stock plans
Capital contribution from
noncontrolling interest
Change in redemption value of
redeemable noncontrolling interest
Other
75
(5)
2,123
(560)
(36)
(608)
2
Balance as of December 31, 2019
$294
$903 $12,205
$(624)
$12,299
Comprehensive income ¹
Dividends (Dividend declared per
common share — $2.68 per share)
Share repurchases
Employee stock plans
Change in redemption value of
redeemable noncontrolling interest
Other
(13)
2,339
(645)
(532)
43
1,164
(1,164)
(2)
45
(532)
—
Balance as of December 31, 2020
$294
$946
$13,367
$(637)
$13,461
$509
$709
1,855
(503)
1,585 (1,660)
(118)
(28)
—
84
(228)
(25)
352
44
118
2,241
(560)
1,315 (1,240)
(57)
52
(36)
(608)
2
$479
2,326
(645)
Total
Equity
$766
1,867
(514)
(1,660)
—
84
(228)
(23)
352
40
$684
2,251
(570)
(1,240)
52
(36)
(608)
3
$536
2,340
(656)
(1,164)
45
(532)
2
$571
$57
12
(11)
2
(4)
$56
10
(10)
1
$57
14
(11)
2
$62
1 Excludes $181 million, $170 million and $151 million in 2020, 2019 and 2018, respectively, attributable to redeemable noncontrolling interest.
2 Includes opening balance sheet adjustments related to the adoption of the new revenue recognition standard and the reclassification of the unrealized loss on
investments from Accumulated other comprehensive loss to Retained income.
See accompanying notes to the consolidated financial statements.
54 S&P Global 2020 Annual Report
Notes to the Consolidated Financial Statements
2019, respectively, includes amounts held in escrow accounts
in connection with our acquisition of Kensho. See Note 2 –
Acquisitions and Divestitures for additional information and Note
12 – Segment and Geographic Information for further discussion
on our reportable segments.
Adoption of ASC 842, “Leases”
On January 1, 2019, we adopted Financial Accounting Standards
Board Accounting Standards Codification (“FASB ASC”) 842
that requires a lessee to recognize “right of use” assets with
offsetting lease liabilities on the balance sheet, with expenses
recognized similar to previously issued guidance. We adopted the
new lease standard effective January 1, 2019 using the modified
retrospective transition method. Under this transition method,
the standard was adopted prospectively without restating prior
period’s financial statements. As part of the adoption, we elected
the practical expedient to not separate lease and non-lease
components. See Note 13 – Commitments and Contingencies for
further details on our leases.
Adoption of ASC 606, “Revenue from
Contracts with Customers”
We adopted FASB ASC 606 “Revenue from Contracts with
Customers” using the modified retrospective transition method
applied to our revenue contracts with customers as of January
1, 2018. Results for reporting periods beginning after January
1, 2018 are presented under ASC 606, while prior year amounts
are not adjusted and continue to be reported in accordance with
our historic accounting under ASC 605 “Revenue Recognition”.
We recorded a net increase to opening retained earnings of
$35 million as of January 1, 2018 due to the cumulative effect
of adopting ASC 606, with the impact primarily related to our
treatment of costs to obtain a contract and to a lesser extent,
changes to the timing of the recognition of our subscription and
non-transaction revenues.
Under ASC 606, revenue is recognized when a customer obtains
control of promised goods or services in an amount that reflects
the consideration the entity expects to receive in exchange for
those goods or services. Under ASC 605, revenue was recognized
as it was earned and when services were rendered.
1. Accounting Policies
Nature of operations
S&P Global Inc. (together with its consolidated subsidiaries,
the “Company,” the “Registrant,” “we,” “us” or “our”) is a leading
provider of transparent and independent ratings, benchmarks,
analytics and data to the capital and commodity markets
worldwide. The capital markets include asset managers,
investment banks, commercial banks, insurance companies,
exchanges, trading firms and issuers; and the commodity
markets include producers, traders and intermediaries within
energy, metals, petrochemicals and agriculture.
Our operations consist of four reportable segments: S&P Global
Ratings (“Ratings”), S&P Global Market Intelligence (“Market
Intelligence”), S&P Global Platts (“Platts”) and S&P Dow Jones
Indices (“Indices”).
• Ratings is an independent provider of credit ratings, research
and analytics, offering investors and other market participants
information, ratings and benchmarks.
• Market Intelligence is a global provider of multi-asset-class
data, research and analytical capabilities, which integrate
cross-asset analytics and desktop services.
• Platts is the leading independent provider of information and
benchmark prices for the commodity and energy markets.
• Indices is a global index provider that maintains a wide variety
of valuation and index benchmarks for investment advisors,
wealth managers and institutional investors.
In the first quarter of 2020, we changed our allocation
methodology for allocating our centrally managed technology-
related expenses to our reportable segments to more accurately
reflect each segment’s respective usage. Prior-year amounts
have been reclassified to conform with current presentation.
In April of 2018, we acquired Kensho Technologies Inc. (“Kensho”)
for approximately $550 million, net of cash acquired, in a mix
of cash and stock. Beginning in the first quarter of 2019, the
contract obligations for revenue from Kensho’s major customers
were transferred to Market Intelligence for fulfillment.
As a result of this transfer, from January 1, 2019, revenue
from contracts with Kensho’s customers is reflected in Market
Intelligence’s results. In 2018, the revenue from contracts
with Kensho’s customers was reported in Corporate revenue.
Restricted cash of $14 million and $20 million included in our
consolidated balance sheets as of December 31, 2020 and
S&P Global 2020 Annual Report 55
Subscription Revenue
Subscription revenue at Market Intelligence is primarily derived
from distribution of data, analytics, third party research, and
credit ratings-related information primarily through web-based
channels including Market Intelligence Desktop, RatingsDirect®,
RatingsXpress®, and Credit Analytics. Subscription revenue at
Platts is generated by providing customers access to commodity
and energy-related price assessments, market data, and real-
time news, along with other information services. Subscription
revenue at Indices is derived from the contracts for underlying
data of our indexes to support our customers’ management of
index funds, portfolio analytics, and research.
For subscription products and services, we generally provide
continuous access to dynamic data sets and analytics for
a defined period, with revenue recognized ratably as our
performance obligation to provide access to our data and
analytics is progressively fulfilled over the stated term
of the contract.
Non-transaction Revenue
Non-transaction revenue at Ratings is primarily related to
surveillance of a credit rating, annual fees for customer
relationship-based pricing programs, fees for entity credit
ratings and global research and analytics at CRISIL. Non-
transaction revenue also includes an intersegment revenue
elimination of $137 million, $128 million and $125 million
for the years ended December 31, 2020, 2019, and 2018
respectively, mainly consisting of the royalty charged to Market
Intelligence for the rights to use and distribute content and
data developed by Ratings.
For non-transaction revenue related to Rating’s surveillance
services, we continuously monitor factors that impact the
creditworthiness of an issuer over the contractual term with
revenue recognized to the extent that our performance obligation
is progressively fulfilled over the term contract. Because
surveillance services are continuously provided throughout
the term of the contract, our measure of progress towards
fulfillment of our obligation to monitor a rating is a time-based
output measure with revenue recognized ratably over the term
of the contract.
Non-subscription / Transaction Revenue
Transaction revenue at our Ratings segment primarily includes
fees associated with:
• ratings related to new issuance of corporate and government
debt instruments; as well as structured finance instruments;
• bank loan ratings; and
• corporate credit estimates, which are intended, based on an
abbreviated analysis, to provide an indication of our opinion
regarding creditworthiness of a company which does not
currently have a Ratings credit rating.
Transaction revenue is recognized at the point in time when our
performance obligation is satisfied by issuing a rating on our
customer’s instruments, our customer’s creditworthiness, or a
counter-party’s creditworthiness and when we have a right to
payment and the customer can benefit from the significant risks
and rewards of ownership.
Non-subscription revenue at Market Intelligence is primarily
related to certain advisory, pricing and analytical services. Non-
subscription revenue at Platts is primarily related to conference
sponsorship, consulting engagements and events.
Asset-Linked Fees
Asset-linked fees at Indices and Market Intelligence are primarily
related to royalties payments based on the value of assets
under management in our customers exchange-traded funds
and mutual funds.
For asset-linked products and services, we provide licenses
conveying continuous access to our index and benchmark-
related intellectual property during a specified contract term.
Revenue is recognized when the extent that our customers
have used our licensed intellectual property can be quantified.
Recognition of revenue for our asset-linked fee arrangements is
subject to the “recognition constraint” for usage-based royalty
payments because we cannot reasonably predict the value of
the assets that will be invested in index funds structured using
our intellectual property until it is either publicly available or
when we are notified by our customers. Revenue derived from an
asset-linked fee arrangement is measured and recognized when
the certainty of the extent of its utilization of our index products
by our customers is known.
56 S&P Global 2020 Annual Report
Sales Usage-Based Royalties
Sales usage-based royalty revenue at our Indices segment is
primarily related to trading based fees from exchange-traded
derivatives. Sales and usage-based royalty revenue at our Platts
segment is primarily related to licensing of its proprietary market
price data and price assessments to commodity exchanges.
For sales usage-based royalty products and services, we
provide licenses conveying the right to continuous access to
our intellectual property over the contract term, with revenue
recognized when the extent of our license’s utilization can be
quantified, or more specifically, when trading volumes are known
and publicly available to us or when we are notified by our
customers. Recognition of revenue of fees tied to trading volumes
is subject to the recognition constraint for a usage-based royalty
promised by our customers in exchange for the license of our
intellectual property, with revenue recognized when trading
volumes are known.
Unearned Revenue
We record unearned revenue when cash payments are received
in advance of our performance. The increase in the unearned
revenue balance for the year ended December 31, 2020 is
primarily driven by cash payments received in advance of
satisfying our performance obligations, offset by $1.9 billion of
revenues recognized that were included in the unearned revenue
balance at the beginning of the period.
Remaining Performance Obligations
Remaining performance obligations represent the transaction
price of contracts for work that has not yet been performed. As
of December 31, 2020, the aggregate amount of the transaction
price allocated to remaining performance obligations was $2.3
billion. We expect to recognize revenue on approximately half
and three-quarters of the remaining performance obligations
over the next 12 and 24 months, respectively, with the remainder
recognized thereafter.
Arrangements with Multiple Performance Obligations
Our contracts with customers may include multiple performance
obligations. Revenue relating to agreements that provide for
more than one performance obligation is recognized based upon
the relative fair value to the customer of each service component
as each component is earned. The 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. If the fair value to
the customer for each service is not objectively determinable, we
make our best estimate of the services’ stand-alone selling price
and record revenue as it is earned over the service period.
Receivables
We record a receivable when a customer is billed or when
revenue is recognized prior to billing a customer. For multi-year
agreements, we generally invoice customers annually at the
beginning of each annual period.
Contract Assets
Contract assets include unbilled amounts from when the
Company transfers service to a customer before a customer
pays consideration or before payment is due. As of December 31,
2020 and 2019, contract assets were $7 million and $28 million,
respectively, and are included in accounts receivable in our
consolidated balance sheets.
We do not disclose the value of unfulfilled performance
obligations for (i) contracts with an original expected length
of one year or less and (ii) contracts where revenue is a
usage-based royalty promised in exchange for a license of
intellectual property.
Costs to Obtain a Contract
We recognize an asset for the incremental costs of obtaining
a contract with a customer if we expect the benefit of those
costs to be longer than one year. We have determined that
certain sales commission programs meet the requirements to
be capitalized. Total capitalized costs to obtain a contract were
$129 million and $115 million as of December 31, 2020 and
December 31, 2019, respectively, and are included in prepaid
and other current assets and other non-current assets on our
consolidated balance sheets. The asset will be amortized over a
period consistent with the transfer to the customer of the goods
or services to which the asset relates, calculated based on the
customer term and the average life of the products and services
underlying the contracts. The expense is recorded within selling
and general expenses.
We expense sales commissions when incurred if the
amortization period would have been one year or less. These
costs are recorded within selling and general expenses.
S&P Global 2020 Annual Report 57
Other (Income) Expense, net
The components of other (income) expense, net for the year
ended December 31 are as follows:
(in millions)
2020
2019
2018
Other components of net
periodic benefit cost1
Net loss from investments
Other (income) expense, net
$(32)
1
$(31)
$79
19
$98
$(30)
5
$(25)
1 The net periodic benefit cost for our retirement and post retirement plans for
the year ended December 31, 2020 includes a non-cash pre-tax settlement
charge of $3 million. During the year ended December 31, 2019, the Company
purchased a group annuity contract under which an insurance company
assumed a portion of the Company’s obligation to pay pension benefits to
the plan’s beneficiaries. The net periodic benefit cost for our retirement
and post retirement plans for the year ended December 31, 2019 includes a
non-cash pre-tax settlement charge of $113 million reflecting the accelerated
recognition of a portion of unamortized actuarial losses in the plan.
Assets and Liabilities Held for Sale and
Discontinued Operations
Assets and Liabilities Held for Sale
We classify a disposal 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 sale in its present condition subject only to terms
that are usual and customary for sales of such disposal group;
an active program to locate a buyer and other actions required
to complete the plan to sell the disposal group have been
initiated; the sale of the disposal group is probable, and transfer
of the disposal group is expected to qualify for recognition as a
completed sale within one year, except if events or circumstances
beyond our control extend the period of time required to sell
the disposal group beyond one year; the disposal group is being
actively marketed for sale at a price that is reasonable in relation
to its current fair value; and actions required to complete the
plan indicate that it is unlikely that significant changes to the
plan will be made or that the plan will be withdrawn.
A disposal group that is classified as held for sale is initially
measured at the lower of its carrying value or fair value less
any costs to sell. Any loss resulting from this measurement
is recognized in the period in which the held for sale criteria
are met. Conversely, gains are not recognized on the sale of a
disposal group until the date of sale.
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 adjustment
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 criteria 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
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 determination 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 operationally and for
financial reporting purposes. If we conclude that the disposal
represents a strategic shift, then the results of operations of
the group of assets being disposed of (as well as any gain or
loss on the disposal transaction) are aggregated for separate
presentation apart from our continuing operating results in the
consolidated financial statements.
Principles of Consolidation
The consolidated financial statements include the accounts
of all subsidiaries and our share of earnings or losses of joint
ventures and affiliated companies under the equity method
of accounting. All significant intercompany accounts and
transactions have been 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.
Cash and Cash Equivalents
Cash and cash equivalents include ordinary bank deposits
and highly liquid investments with original maturities of three
months or less that consist primarily of money market funds
with unrestricted daily liquidity and fixed term time deposits.
Such investments and bank deposits are stated at cost, which
approximates market value, and were $4.1 billion and $2.9
billion as of December 31, 2020 and 2019, respectively.
These investments are not subject to significant market risk.
58 S&P Global 2020 Annual Report
Fair Value
Certain assets and liabilities are required to be recorded at fair
value and classified within a fair value hierarchy based on inputs
used when measuring fair value. We have forward exchange
contracts and cross currency swaps that are adjusted to fair
value on a recurring basis.
Other financial instruments, including cash and cash equivalents
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
long-term debt borrowings were $4.6 billion and $4.4 billion as
of December 31, 2020 and 2019, 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 circumstances indicate that the carrying amount
of an asset may not be recoverable. Upon such an occurrence,
recoverability of assets to be held and used is measured by
comparing the carrying amount of an asset to current forecasts
of undiscounted future net cash flows expected to be generated
by the asset. If the carrying amount of the asset exceeds its
estimated future cash flows, an impairment charge is recognized
equal to the amount by which the carrying amount of the asset
exceeds the fair value of the asset. For long-lived assets held for
sale, assets are written down to fair value, less cost to sell.
Fair value is determined based on market evidence, discounted
cash flows, appraised values or management’s estimates,
depending upon the nature of the assets.
Restricted Cash
Cash that is subject to legal restrictions or is unavailable for
general operating purposes is classified as restricted cash.
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 dividends are recorded in income when earned.
Accounts Receivable
Credit is extended to customers based upon an evaluation
of the customer’s financial condition. Accounts receivable,
which include billings consistent with terms of contractual
arrangements, are recorded at net realizable value.
Allowance for Doubtful Accounts
The allowance for doubtful accounts reserve methodology
is based on historical analysis, a review of outstanding
balances and current conditions, and by incorporating data
points that provide indicators of future economic conditions
including forecasted industry default rates and industry index
benchmarks. 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 indicators.
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 committed and it is probable that
the project will be completed and used to perform the function
intended. Incremental costs are expenditures that are out-of-
pocket to us and are not part of an allocation or existing expense
base. Software development and website implementation costs
are expensed 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 capitalized technology costs were $209
million and $212 million as of December 31, 2020 and 2019,
respectively. Accumulated amortization of capitalized technology
costs was $150 million and $129 million as of December 31, 2020
and 2019, respectively.
S&P Global 2020 Annual Report 59
Goodwill and Other Indefinite-Lived Intangible Assets
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. Goodwill and other
intangible assets with indefinite lives are not amortized, but
instead are tested for impairment annually during the fourth
quarter each year, or more frequently if events or changes
in circumstances indicate that the asset might be impaired.
We have four reporting units with goodwill that are 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 performed.
Conversely, if the results of our qualitative assessment
determine that it is more likely than not that the fair value of
any of our reporting units is less than their respective carrying
amounts we perform a quantitative impairment test.
When conducting our 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 reporting units
are estimated using the income approach, which incorporates
the use of the discounted free cash flow (“DCF”) analyses and are
corroborated using the market approach, which incorporates the
use of revenue and earnings multiples based on market data.
The DCF analyses are based on the current operating budgets
and estimated long-term growth projections for each reporting
unit. Future cash flows are discounted 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 difference between
the sum of the fair values of the reporting units and our total
market capitalization for reasonableness, taking into account
certain factors including control premiums. If the fair value of
the reporting unit is less than the carrying value, the difference
is recognized as an impairment charge.
We evaluate the recoverability of indefinite-lived intangible
assets by first performing a qualitative analysis evaluating
whether any events and circumstances occurred that provide
evidence that it is more likely than not that the indefinite-lived
asset is impaired. If, based on our evaluation of the events and
circumstances that occurred during the year we do not believe
that it is more likely than not that the indefinite-lived asset
is impaired, no quantitative impairment test is performed.
Conversely, if the results of our qualitative assessment
determine 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 recognized in an amount
equal to that excess.
Significant judgments inherent 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 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.
We performed our impairment assessment of goodwill
and indefinite-lived intangible assets and concluded that
no impairment existed for the years ended December 31,
2020, 2019 and 2018.
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 company, the United States (“U.S.”)
dollar is the functional currency. For local currency operations,
assets and liabilities are translated into U.S. dollars using end of
period exchange rates, and revenue and expenses are translated
into U.S. dollars using weighted-average exchange rates. Foreign
currency translation adjustments are accumulated in a separate
component of equity.
Depreciation
The costs of property and equipment are depreciated using
the straight-line method based upon the 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 respective leases.
Advertising Expense
The cost of advertising is expensed as incurred. We incurred $29
million, $34 million and $33 million in advertising costs for the
years ended December 31, 2020, 2019 and 2018, respectively.
Stock-Based Compensation
Stock-based compensation expense is measured at the grant
date based on the fair value of the award and is recognized over
the requisite service period, which typically is the vesting period.
Stock-based compensation is classified as both operating-
related expense and selling and general expense in the
consolidated statements of income.
60 S&P Global 2020 Annual Report
We file income tax returns in the U.S. federal jurisdiction,
various 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 assessment
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, 2021.
If any of these tax audit settlements do occur within that
period we would make any necessary adjustments to the
accrual for unrecognized tax benefits.
As of December 31, 2020, we have approximately $3.1 billion of
undistributed earnings of our foreign subsidiaries, of which $0.8
billion is reinvested indefinitely in our foreign operations.
Redeemable Noncontrolling Interest
The agreement with the minority partners of our S&P Dow Jones
Indices LLC joint venture contains redemption features whereby
interests held by our minority partners are redeemable either (i)
at the option of the holder or (ii) upon the occurrence of an event
that is not solely within our control. Since redemption of the
noncontrolling interest is outside of our control, this interest is
presented on our consolidated balance sheets under the caption
“Redeemable noncontrolling interest.” If the interest were to
be redeemed, we would generally be required to purchase the
interest at fair value on the date of redemption. We adjust the
redeemable noncontrolling interest each reporting period to its
estimated redemption value, but never less than its initial fair
value, using both income and market valuation approaches.
Our income and market valuation approaches incorporate
Level 3 measures for instances when observable inputs are
not available. The more significant judgmental assumptions
used to estimate the value of the S&P Dow Jones Indices LLC
joint venture include an estimated discount rate, a range of
assumptions that form the basis of the expected future net cash
flows (e.g., the revenue growth rates and operating margins),
and a company specific beta. The significant judgmental
assumptions used that incorporate market data, including the
relative weighting of market observable information and the
comparability of that information in our valuation models, are
forward-looking and could be affected by future economic and
market conditions. Any adjustments to the redemption value will
impact retained income. See Note 9 – Equity for further detail.
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:
Year Ended December 31, 2018
Risk-free average interest rate
Dividend yield
Volatility
Expected life (years)
Weighted-average grant-date
fair value per option
2.6 - 2.7%
1.1%
21.8 - 22.0%
5.67 - 6.07
$112.98
Because lattice-based option-pricing models incorporate ranges
of assumptions, those ranges are disclosed. These assumptions
are based on multiple factors, including historical 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.
In 2018, we made a one-time issuance of incentive stock
options under the 2002 Plan to replace Kensho employees’ stock
options that were assumed in connection with our acquisition of
Kensho in April of 2018. There were no stock options granted in
2020 and 2019.
Income Taxes
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between financial
statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to be applied to
taxable income in the years 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.
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
with any other pertinent information.
S&P Global 2020 Annual Report 61
Contingencies
We accrue for loss contingencies when both (a) information
available prior to issuance of the consolidated financial
statements indicates that it is probable that a liability had been
incurred at the date of the financial 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 potential amounts or ranges
of probable losses, and recognize a liability, 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 assumptions 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 our best estimate within the range. We disclose
an estimated possible loss or a range of loss when it is at least
reasonably possible that a loss may be incurred.
Recent Accounting Standards
In August of 2020, the Financial Accounting Standards Board
(“FASB”) issued guidance that amends the accounting for
convertible instruments and the derivatives scope exception
for contracts in an entity’s own equity. The guidance is effective
for reporting periods beginning after December 15, 2020;
however, early adoption is permitted. We do not expect this
guidance to have a significant impact on our consolidated
financial statements.
In January of 2020, the FASB intended to clarify the interaction of
the accounting for equity securities under Accounting Standards
Codification (“ASC”) 321, investments accounted for under the
equity method of accounting under ASC 323, and the accounting
for certain forward contracts and purchased options accounted
for under ASC 815. This guidance could change how the Company
accounts for an equity security under the measurement
alternative. The guidance is effective for reporting periods
beginning after December 15, 2020; however, early adoption is
permitted. We do not expect this guidance to have a significant
impact on our consolidated financial statements.
In December of 2019, the FASB issued guidance to simplify
the accounting for income taxes. The guidance eliminates
certain exceptions to the general principles of Topic 740. The
guidance is effective for reporting periods after December 15,
2020; however, early adoption is permitted. We do not expect
this guidance to have a significant impact on our consolidated
financial statements.
In November of 2018, the FASB issued guidance that provides
clarification on whether certain transactions between
collaborative arrangement participants should be accounted
for as revenue under ASC 606. The guidance was effective on
January 1, 2020, and the adoption of this guidance did not have a
significant impact on our consolidated financial statements.
In August of 2018, the FASB issued guidance to align the
requirements for capitalizing implementation costs incurred
in a hosting arrangement that is a service contract with the
requirements for capitalizing implementation costs incurred
to develop or obtain internal-use software. The guidance
was effective on January 1, 2020, and the adoption of this
guidance did not have a significant impact on our consolidated
financial statements.
In January of 2017, the FASB issued guidance that simplifies
the subsequent measurement of goodwill and eliminates Step 2
from the goodwill impairment test. Under the new guidance, an
entity should perform its annual, or interim, goodwill impairment
test by comparing the fair value of a reporting unit with its
carrying amount. An entity should recognize an impairment
charge for the amount by which the carrying amount exceeds
the reporting unit’s fair value; however, the 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 the goodwill impairment
loss, if applicable. The guidance was effective on January 1, 2020,
and the adoption of this guidance did not have a significant
impact on our consolidated financial statements.
In June of 2016, the FASB issued guidance amending the
measurement of credit losses on certain financial instruments
by requiring the use of an expected loss methodology, which
will result in more timely recognition of credit losses.
We adopted this guidance on January 1, 2020. The adoption of
this guidance impacted our process for assessing the adequacy
of our allowance for doubtful accounts on accounts receivable
and contract assets by incorporating data points that provide
indicators of future economic conditions including forecasted
industry default rates and industry index benchmarks in concert
with our historical process contemplating experienced receivable
write off rates from past events and current economic conditions.
The adoption of this guidance did not have a significant
impact on our consolidated financial statements. During the
twelve months ended December 31, 2020, we incorporated
the forecasted impact of future economic conditions into our
allowance for doubtful accounts measurement process including
the expected adverse impact of the 2019 novel coronavirus
(“COVID-19”) on the global economy.
Reclassification
Certain prior year amounts have been reclassified for
comparability purposes.
62 S&P Global 2020 Annual Report
2. Acquisitions and Divestitures
ACQUISITIONS
Merger Agreement
In November of 2020, S&P Global and IHS Markit Ltd (“IHS
Markit”) entered into a merger agreement, pursuant to which,
among other things, a subsidiary of S&P Global will merge with
and into IHS Markit, with IHS Markit surviving the merger as
a wholly owned subsidiary of S&P Global. Under the terms of
the merger agreement, each share of IHS Markit issued and
outstanding (other than excluded shares and dissenting shares)
will be converted into the right to receive 0.2838 fully paid and
nonassessable shares of S&P Global common stock (and, if
applicable, cash in lieu of fractional shares, without interest),
less any applicable withholding taxes. As of December 31, 2020,
IHS Markit had approximately 396.6 million shares outstanding.
Subject to certain closing conditions, the merger is expected to
be completed in the second half of 2021.
2020
For the year ended December 31, 2020, we paid cash for
acquisitions of $201 million, net of cash acquired, funded with
cash from operations. None of our acquisitions were material
either individually or in the aggregate, including the pro forma
impact on earnings. Acquisitions completed during the year
ended December 31, 2020 included:
• In February of 2020, CRISIL, included within our Ratings
segment, completed the acquisition of Greenwich Associates
LLC (“Greenwich”), a leading provider of proprietary
benchmarking data, analytics and qualitative, actionable
insights that helps financial services firms worldwide measure
and improve business performance. The acquisition will
complement CRISIL’s existing portfolio of products and expand
offerings to new segments across financial services including
commercial banks and asset and wealth managers.
We accounted for this acquisition using the purchase method
of accounting. The acquisition of Greenwich is not material to
our consolidated financial statements.
• In January of 2020, we completed the acquisition of the ESG
Ratings Business from RobecoSAM, which includes the widely
followed SAM* Corporate Sustainability Assessment, an
annual evaluation of companies’ sustainability practices.
The acquisition will bolster our position as the premier resource
for essential environmental, social, and governance (“ESG”)
insights and product solutions for our customers. Through this
acquisition, we will be able to offer our customers even more
transparent, robust and comprehensive ESG solutions.
We accounted for this acquisition using the purchase method
of accounting. The acquisition of the ESG Ratings Business is
not material to our consolidated financial statements.
For acquisitions during 2020 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
growth opportunities as a result of the acquisition. The intangible
assets, excluding goodwill and indefinite-lived intangibles, will
be amortized over their anticipated useful lives between 3 and
10 years which will be determined when we finalize our purchase
price allocations. The goodwill for Greenwich and ESG Ratings
Business is expected to be deductible for tax purposes.
2019
For the year ended December 31, 2019, we paid cash for
acquisitions of $91 million, net of cash acquired, funded with
cash from operations. None of our acquisitions were material
either individually or in aggregate, including the pro forma impact
on earnings. Acquisitions completed during the year ended
December 31, 2019 included:
• In December of 2019, Market Intelligence acquired 451
Research, LLC (“451 Research”), a privately-held research and
advisory firm that provides intelligence, expertise and data
covering high-growth emerging technology segments. This
acquisition will expand and strengthen Market Intelligence’s
research coverage, adding differentiated expertise and
intelligence with comprehensive offerings in technologies.
We accounted for this acquisition using the purchase method
of accounting. The acquisition of 451 Research is not material
to our consolidated financial statements.
• In September of 2019, Platts acquired Canadian Enerdata
Ltd. (“Enerdata”), an independent provider of energy data
and information in Canada, to further enhance Platts’ North
American natural gas offering. We accounted for the
acquisition using the purchase method of accounting.
The acquisition of Enerdata is not material to our consolidated
financial statements.
• In August of 2019, Platts acquired Live Rice Index (“LRI”),
a global provider of information and benchmark price
assessments for the rice industry. The purchase expands Platts
portfolio of agricultural price assessments while extending its
data and news coverage in key export regions for international
grains. We accounted for the acquisition using the purchase
method of accounting. The acquisition of LRI is not material to
our consolidated financial statements.
• In July of 2019, we completed the acquisition of the Orion
technology center from Ness Technologies. Orion was
developed to become our center of excellence for technology
talent to focus on innovation by providing employees with
access to the latest technologies and global communications
infrastructure, as well as physical spaces that enable highly-
collaborative teams. We accounted for the acquisition using
S&P Global 2020 Annual Report 63
the purchase method of accounting. The acquisition of Orion is
not material to our consolidated financial statements.
For acquisitions during 2019 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
growth opportunities as a result of the acquisition. The intangible
assets, excluding goodwill and indefinite-lived intangibles, will
be amortized over their anticipated useful lives between 3 and
10 years which will be determined when we finalize our purchase
price allocations. The goodwill for 451 Research and Orion is
expected to be deductible for tax purposes.
• In April of 2018, we acquired Kensho for approximately $550
million, net of cash acquired, in a mix of cash and stock.
Kensho is a leading-edge provider of next-generation analytics,
artificial intelligence, machine learning, and data visualization
systems to Wall Street’s premier global banks and investment
institutions, as well as the National Security community.
The acquisition will strengthen S&P Global’s emerging
technology capabilities, enhance our ability to deliver essential,
actionable insights that will transform the user experience for
our clients, and accelerate efforts to improve efficiency and
effectiveness of our core internal operations. We accounted
for the acquisition of Kensho using the purchase method of
accounting. The acquisition of Kensho is not material to our
consolidated financial statements.
2018
For the year ended December 31, 2018, we paid for acquisitions
in a mix of cash and stock. We paid cash for acquisitions of
$401 million, net of cash acquired, funded with cash flows from
operations. Additionally, stock consideration was given for our
acquisition of Kensho. 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, 2018 included:
• In February of 2018, Market Intelligence acquired Panjiva,
Inc. (“Panjiva”), a privately-held company that provides deep,
differentiated, sector-relevant insights on global supply chains,
leveraging data science and technology to make sense of large,
unstructured datasets. The acquisition will help strengthen
the insights, products and data that we provide to our clients
throughout the world. We accounted for the acquisition
of Panjiva using the purchase method of accounting.
The acquisition of Panjiva is not material to our consolidated
financial statements.
• In January of 2018, CRISIL, included within our Ratings
segment, acquired a 100% stake in Pragmatix Services Private
Limited (“Pragmatix”), a data analytics company focused on
delivering cutting edge solutions in the “data to intelligence”
life cycle to the Banking, Financial Services and Insurance
vertical. The acquisition will strengthen CRISIL’s position as an
agile, innovative and global analytics company. We accounted
for the acquisition of Pragmatix using the purchase method of
accounting. The acquisition of Pragmatix is not material to our
consolidated financial statements.
For acquisitions during 2018 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
growth opportunities as a result of the acquisition. The intangible
assets, excluding goodwill and indefinite-lived intangibles, will
be amortized over their useful lives not exceeding 10 years.
The goodwill for RateWatch will continue to be deductible
for tax purposes.
• In December of 2018, Indices purchased the balance of
the intellectual property (“IP”) rights in a family of indices
derived from the S&P 500, solidifying its IP in and to the S&P
500 index family. We accounted for the acquisition on a cost
basis. The transaction is not material to our consolidated
financial statements.
• In August of 2018, we acquired a 5.03% investment in
FiscalNote, a technology innovator at the intersection of
global business and government that provides advanced,
data-driven Issues Management solutions. We measured
the investment in FiscalNote at cost, less any impairment,
and changes resulting from observable price changes will
be recorded in the consolidated statements of income. The
investment in FiscalNote is not material to our consolidated
financial statements.
• In June of 2018, Market Intelligence acquired the RateWatch
business (“RateWatch”) from TheStreet, Inc., a B2B data
business that offers subscription and custom reports on
bank deposits, loans, fees and other product data to the
financial services industry. The acquisition will complement
and strengthen Market Intelligence’s core capabilities of
providing differentiated data and analytics solutions for
the banking sector. We accounted for the acquisition of
RateWatch using the purchase method of accounting.
The acquisition of RateWatch is not material to our
consolidated financial statements.
64 S&P Global 2020 Annual Report
Non-cash Investing Activities
Liabilities assumed in conjunction with our acquisitions
are as follows:
(in millions)
Fair value of assets acquired
Cash and stock consideration
(net of cash acquired)
Liabilities assumed
Year ended December 31,
2020
$219
201
$18
2019
$110
91
$19
2018
$857
803
$54
DIVESTITURES
2020
During the year ended December 31, 2020, we completed the
following dispositions that resulted in a pre-tax gain of $16
million, which was included in Gain on dispositions in the
consolidated statement of income:
• In January of 2020, Market Intelligence entered into a strategic
alliance to transition S&P Global Market Intelligence’s Investor
Relations (“IR”) webhosting business to Q4 Inc. (“Q4”), a third
party provider of investor relations related services.
This alliance will integrate Market Intelligence’s proprietary
data into Q4’s portfolio of solutions, enabling further
opportunities for commercial collaboration. In connection
with transitioning its IR webhosting business to Q4, Market
Intelligence made a minority investment in Q4. During the year
ended December 31, 2020, we recorded a pre-tax gain of $11
million ($6 million after-tax) in Gain on dispositions in the
consolidated statements of income related to the sale of IR.
• In September of 2020, we sold our facility at East Windsor, New
Jersey. During the year ended December 31, 2020, we recorded
a pre-tax gain of $4 million ($3 million after-tax) in Gain on
dispositions in the consolidated statements of income related
to the sale of East Windsor.
• During the year ended December 31, 2020, we recorded a
pre-tax gain of $1 million ($1 million after-tax) in Gain on
dispositions in the consolidated statements of income related
to the sale of Standard & Poor’s Investment Advisory Services
LLC (“SPIAS”), a business within our Market Intelligence
segment, in July of 2019.
2019
During the year ended December 31, 2019, we completed the
following dispositions that resulted in a pre-tax gain of $49
million, which was included in Gain on dispositions in the
consolidated statement of income:
• On July 31, 2019, we completed the sale of RigData, a business
within our Platts segment, to Drilling Info, Inc. RigData is a
provider of daily information on rig activity for the natural
gas and oil markets across North America. During the year
ended December 31, 2019, we recorded a pre-tax gain of
$27 million ($26 million after-tax) in Gain on dispositions
in the consolidated statement of income related to the
sale of RigData.
• In March of 2019, we entered into an agreement to sell SPIAS to
Goldman Sachs Asset Management (“GSAM”). SPIAS provides
non-discretionary investment advice across institutional
sub-advisory and intermediary distribution channels globally.
On July 1, 2019, we completed the sale of SPIAS to GSAM.
During the year ended December 31, 2019, we recorded a
pre-tax gain of $22 million ($12 million after-tax) in Gain on
dispositions in the consolidated statement of income related
to the sale of SPIAS.
2018
During the year ended December 31, 2018, we did not complete
any material dispositions.
The operating profit of our businesses that were disposed
of for the years ending December 31, 2020, 2019, and
2018 is as follows:
(in millions)
Operating profit 1
Year ended December 31,
2020
$2
2019
$16
2018
$20
1 The year ended December 31, 2020 excludes a pre-tax gain on the sale of the IR
webhosting business of $11 million. The year ended December 31, 2019
excludes a pre-tax gain on the sale of RigData and SPIAS of $27 million and $22
million, respectively.
S&P Global 2020 Annual Report 65
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, 2018
Acquisitions
Dispositions
Reclassifications
Other ¹
Balance as of December 31, 2019
Acquisitions
Dispositions
Other ¹
Ratings
Market
Intelligence
Platts
Indices
Corporate
Total
$113
—
—
—
2
115
138
—
10
$2,029
44
(12)
3
(2)
2,062
—
(2)
11
$516
6
(3)
—
2
521
—
—
6
$379
—
—
(3)
—
376
—
—
—
$498
—
$3,535
50
—
—
3
501
—
—
(3)
(15)
—
5
3,575
138
(2)
24
Balance as of December 31, 2020
$263
$2,071
$527
$376
$498
$3,735
1 Primarily relates to the impact of foreign exchange and valuation adjustments for prior period acquisitions. 2020 includes adjustments related to Investor Relations.
2019 includes adjustments related to Panjiva, RateWatch and Eclipse.
Goodwill additions and dispositions in the table above relate to transactions discussed in Note 2 – Acquisitions and Divestitures.
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 $846 million as of December 31, 2020 and 2019.
• 2020 and 2019 both include $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.
• 2020 and 2019 both include $185 million within our Market Intelligence segment for the SNL tradename.
• 2020 and 2019 both include $132 million within our Indices segment for the balance of the IP rights in a family of indices derived
from the S&P 500, solidifying Indices IP in and to the S&P 500 index family.
• 2020 and 2019 both include $59 million within our Indices segment for the Goldman Sachs Commodity Index intellectual property
and the Broad Market Indices intellectual property.
66 S&P Global 2020 Annual Report
The following table summarizes our definite-lived intangible assets:
(in millions)
COST
Databases
and software
Content
Customer
relationships
Tradenames
Other
intangibles
Total
Balance as of December 31, 2018
$561
$139
$346
$50
$194
$1,290
Acquisitions
Reclassifications
Other (primarily Fx) 1
Balance as of December 31, 2019
Acquisitions
Other 1
—
78
(10)
629
14
2
—
—
—
139
—
—
—
10
(1)
355
—
1
—
5
(1)
54
—
1
29
(93)
—
130
40
7
29
—
(12)
1,307
54
11
Balance as of December 31, 2020
$645
$139
$356
$55
$177
$1,372
ACCUMULATED AMORTIZATION
Balance as of December 31, 2018
$240
$115
$126
$45
Current year amortization
Reclassifications
Other (primarily Fx) 1
Balance as of December 31, 2019
Current year amortization
Acquisitions
Other 1
73
22
(4)
331
73
—
2
14
—
—
129
10
—
—
23
4
—
153
21
—
1
3
1
(1)
48
2
—
—
$86
9
(27)
—
68
17
10
1
$612
122
—
(5)
729
123
10
4
Balance as of December 31, 2020
$406
$139
$175
$50
$96
$866
NET DEFINITE-LIVED INTANGIBLES:
December 31, 2019
December 31, 2020
$298
$239
$10
—
$202
$181
$6
$5
$62
$81
$578
$506
1 Primarily relates to the impact of foreign exchange and valuation adjustments for prior period acquisitions. 2020 includes adjustments related to 451 Research. 2019
includes adjustments related to RigData.
Definite-lived intangible assets are being amortized on a straight-line basis over periods of up to 21 years. The weighted-average life
of the intangible assets as of December 31, 2020 is approximately 12 years.
Amortization expense was $123 million for the year ended December 31, 2020 and $122 million for the years ended 2019 and
December 31, 2018. 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
2021
$96
2022
$87
2023
$81
2024
$79
2025
$61
S&P Global 2020 Annual Report 67
4. Taxes on Income
Income before taxes on income resulting from domestic and
foreign operations is as follows:
Year ended December 31,
The increase in 2020 was primarily due to a decrease in the
recognition of excess tax benefits associated with share-
based payments in the statement of income. The increase in
the effective income tax rate in 2019 was primarily due to an
increase in accruals for potential tax liabilities for prior years in
various jurisdictions.
(in millions)
2020
2019
2018
Domestic operations
Foreign operations
$2,226
1,002
$2,068
$1,857
862
824
We have elected to recognize the tax on Global Intangible Low
Taxed Income (“GILTI”) as a period expense in the year the tax is
incurred. GILTI expense is included in Other, net above.
Total income before taxes
$3,228
$2,930
$2,681
The principal temporary differences between the accounting
for income and expenses for financial reporting and income tax
purposes are as follows:
The provision for taxes on income consists of the following:
(in millions)
Deferred tax assets:
Employee compensation
Accrued expenses
Postretirement benefits
Unearned revenue
Loss carryforwards
Lease liabilities
Other
Total deferred tax assets
Deferred tax liabilities:
Goodwill and intangible assets
Right of use asset
Fixed assets
Total deferred tax liabilities
Net deferred income tax asset
before valuation allowance
Valuation allowance
Net deferred income tax (liability) asset
Reported as:
Non-current deferred tax assets
Non-current deferred tax liabilities
December 31,
2020
2019
64
41
12
28
217
186
53
601
(347)
(138)
(7)
(492)
109
(219)
$(110)
$67
(177)
58
35
27
28
155
199
25
527
(318)
(194)
—
(512)
15
(163)
$(148)
$52
(200)
Net deferred income tax (liability) asset
$(110)
$(148)
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 primarily
related to operating losses.
(in millions)
Federal:
Current
Deferred
Total federal
Foreign:
Current
Deferred
Total foreign
State and local:
Current
Deferred
Total state and local
Year ended December 31,
2020
2019
2018
$349
$303
$198
1
350
246
(9)
237
111
(4)
107
13
316
201
14
215
93
3
96
53
251
214
(2)
212
84
13
97
Total provision for taxes
$694
$627
$560
A reconciliation of the U.S. federal statutory income tax rate to
our effective income tax rate for financial reporting purposes
is as follows:
Year ended December 31,
2020
2019
2018
U.S. federal statutory income tax rate
21.0% 21.0% 21.0%
State and local income taxes
Foreign operations
TCJA Transition Tax
Stock-based compensation
S&P Dow Jones Indices LLC joint venture
Tax credits and incentives
Other, net
3.0
(0.3)
—
(0.7)
(1.2)
(2.2)
1.9
2.6
(0.3)
—
(1.4)
(1.2)
(1.7)
2.4
2.8
0.2
(0.3)
(1.2)
(1.2)
(1.7)
1.3
Effective income tax rate
21.5% 21.4% 20.9%
68 S&P Global 2020 Annual Report
As of December 31, 2020, we have approximately $3.1 billion
of undistributed earnings of our foreign subsidiaries, of which
$0.8 billion is reinvested indefinitely in our foreign operations.
We have not recorded deferred income taxes applicable
to undistributed earnings of foreign subsidiaries that are
indefinitely reinvested in foreign operations. Quantification
of the deferred tax liability, if any, associated with indefinitely
reinvested earnings is not practicable.
We made net income tax payments totaling $683 million in 2020,
$659 million in 2019, and $558 million in 2018. As of December
31, 2020, we had net operating loss carryforwards of $795
million, of which a significant portion has an unlimited carryover
period under current law.
We file income tax returns in the U.S. federal jurisdiction and
various state 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 an assessment of many factors including past
experience and interpretations of tax law. This assessment
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, 2021.
If any of these tax audit settlements do occur within that period,
we would make any necessary adjustments to the accrual for
unrecognized tax benefits.
A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows:
5. Debt
Year ended December 31,
A summary of long-term debt outstanding is as follows:
(in millions)
Balance at beginning of year
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 limitations
2020
$124
2019
$147
24
1
(13)
(4)
(11)
21
11
(15)
(33)
(7)
2018
$212
19
2
(21)
(65)
—
(in millions)
4.0% Senior Notes, due 2025 1
4.4% Senior Notes, due 2026 2
2.95% Senior Notes, due 2027 3
2.5% Senior Notes, due 2029 4
1.25% Senior Notes, due 2030 5
6.55% Senior Notes, due 2037 6
4.5% Senior Notes, due 2048 7
3.25% Senior Notes, due 2049 8
Balance at end of year
$121
$124
$147
2.3% Senior Notes, due 2060 9
December 31,
2020
2019
695
—
495
495
592
290
273
589
681
694
893
493
495
—
294
490
589
—
Long-term debt
$4,110
$3,948
The total amount of federal, state and local, and foreign
unrecognized tax benefits as of December 31, 2020, 2019
and 2018 was $121 million, $124 million and $147 million,
respectively, exclusive of interest and penalties. During the
period ended December 31, 2020, the change in unrecognized tax
benefits resulted in a net decrease of tax expense of $1 million.
We recognize accrued interest and penalties related to
unrecognized tax benefits in interest expense and operating-
related expense, respectively. 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 $19 million in the next twelve months as
a result of the resolution of local tax examinations. In addition
to the unrecognized tax benefits, as of December 31, 2020 and
2019, we had $24 million and $20 million, respectively, of accrued
interest and penalties associated with unrecognized tax benefits.
The U.S. federal income tax audits for 2017 through 2019 are in
process. During 2020, we completed state and foreign tax audits
and, with few exceptions, we are no longer subject to federal,
state, or foreign income tax examinations by tax authorities for
the years before 2013. The impact to tax expense in 2020, 2019
and 2018 was not material.
1
Interest payments are due semiannually on June 15 and December 15, and
as of December 31, 2020, the unamortized debt discount and issuance costs
total $5 million.
2 We made a $900 million payment on the early retirement of our 4.4% senior
notes in the third quarter of 2020.
3
4
5
6
7
8
9
Interest payments are due semiannually on January 22 and July 22, and as
of December 31, 2020, the unamortized debt discount and issuance costs
total $5 million.
Interest payments are due semiannually on June 1 and December 1, and
as of December 31, 2020, the unamortized debt discount and issuance costs
total $5 million.
Interest payments are due semiannually on February 15 and August 15, and
as of December 31, 2020, the unamortized debt discount and issuance costs
total $8 million.
Interest payments are due semiannually on May 15 and November 15, and
as of December 31, 2020, the unamortized debt discount and issuance costs
total $3 million.
Interest payments are due semiannually on May 15 and November 15, and
as of December 31, 2020, the unamortized debt discount and issuance costs
total $10 million.
Interest payments are due semiannually on June 1 and December 1, and as
of December 31, 2020, the unamortized debt discount and issuance costs
total $11 million.
Interest payments are due semiannually on February 15 and August 15, and
as of December 31, 2020, the unamortized debt discount and issuance costs
total $19 million.
S&P Global 2020 Annual Report 69
Annual debt maturities are scheduled as follows based on
book values as of December 31, 2020: no amounts due in 2021,
2022, 2023, 2024, $695 million due in 2025, and $3.4 billion
due thereafter.
On August 13, 2020, we issued $600 million of 1.25% senior notes
due in 2030 and $700 million of 2.3% senior notes due in 2060.
The notes are fully and unconditionally guaranteed by our wholly-
owned subsidiary, Standard & Poor’s Financial Services LLC.
In the third quarter of 2020, we used the net proceeds to fund the
redemption and extinguishment of the $900 million outstanding
principal amount of our 4.4% senior notes due in 2026 and a
portion of the outstanding principal amount of our 6.55% senior
notes due in 2037 and our 4.5% senior notes due in 2048.
On November 26, 2019, we issued $500 million of 2.5% senior
notes due in 2029 and $600 million of 3.25% senior notes due in
2049. The notes are fully and unconditionally guaranteed by our
wholly-owned subsidiary, Standard & Poor’s Financial Services
LLC. In the fourth quarter of 2019, we used the net proceeds to
fund the redemption of the $700 million outstanding principal
amount of our 3.3% senior notes due in August of 2020 and a
portion of the $400 million outstanding principal amount of our
6.55% senior notes due in October of 2037.
We have the ability to borrow a total of $1.2 billion through our
commercial paper program, which is supported by our revolving
$1.2 billion five-year credit agreement (our “credit facility”)
that we entered into on June 30, 2017. This credit facility will
terminate on June 30, 2022. As of December 31, 2020 and 2019,
there was no commercial paper issued or outstanding, and
we similarly did not draw or have any borrowings outstanding
from the credit facility during the year ended December
31, 2020 and 2019.
Depending on our corporate credit rating, we pay a commitment
fee of 8 to 17.5 basis points for our credit facility, whether or not
amounts have been borrowed. We currently pay a commitment
fee of 10 basis points. The interest rate on borrowings under
our credit facility is, at our option, calculated using rates that
are primarily based on either the prevailing London Inter-Bank
Offer Rate, the prime rate determined by the administrative
agent or the Federal Funds Rate. For certain borrowings
under this credit facility, there is also a spread based on our
corporate credit rating.
Our credit facility contains certain covenants. The only financial
covenant requires that our indebtedness to cash flow ratio, as
defined in our credit facility, is not greater than 4 to 1, and this
covenant level has never been exceeded.
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
international 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, 2020 and December 31, 2019, we
have entered into foreign exchange forward contracts to mitigate
or hedge the effect of adverse fluctuations in foreign exchange
rates. As of December 31, 2020 and December 31, 2019, we have
entered into cross currency swap contracts to hedge a portion
of our net investment in a foreign subsidiary against volatility
in foreign exchange rates. These 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 twelve months ended December 31, 2020, 2019
and 2018 we entered into foreign exchange forward contracts
in order to mitigate 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, 2020 and 2019, the aggregate notional value of these
outstanding forward contracts was $460 million and $116
million, respectively. The changes in fair value of these forward
contracts are recorded in prepaid and other assets or other
current liabilities in the consolidated balance sheet with their
corresponding change in fair value recognized in selling and
general expenses in the consolidated statement of income.
The amount recorded in other current liabilities was $2 million
as of December 31, 2020 and less than $1 million as of December
31, 2019. The amount recorded in selling and general expense
for the twelve months ended December 31, 2020 and 2019
related to these contracts was a net gain of $9 million and $4
million, respectively.
Net Investment Hedges
During the twelve months ended December 31, 2020 and 2019,
we entered into cross currency swaps to hedge a portion of
our net investment in a certain European subsidiary against
volatility in the Euro/U.S. dollar exchange rate. These swaps
are designated and qualify as a hedge of a net investment in a
foreign subsidiary and are scheduled to mature in 2024, 2025
and 2026. As of December 31, 2020 and 2019 the notional value
of our outstanding cross currency swaps designated as a net
investment hedge was $1 billion and $400 million, respectively.
The changes in the fair value of swaps are recognized in foreign
currency translation adjustments, a component of other
comprehensive income (loss), and reported in accumulated other
comprehensive loss in our consolidated balance sheet.
70 S&P Global 2020 Annual Report
The gain or loss will be subsequently reclassified into net
earnings when the hedged net investment is either sold
or substantially liquidated. We have elected to assess the
effectiveness of our net investment hedges based on changes
in spot exchange rates. Accordingly, amounts related to the
cross currency swaps recognized directly in net income during
2020 represent net periodic interest settlements and accruals,
which are recognized in interest expense, net. We recognized net
interest income of $10 million and $1 million during the twelve
months ended December 31, 2020 and 2019, respectively.
Cash Flow Hedges
During the twelve months ended December 31, 2020, 2019
and 2018, we entered into a series of foreign exchange forward
contracts to hedge a portion of the Indian rupee, British pound,
and Euro exposures through the fourth quarter of 2022, 2021,
2020 and 2019, respectively. These contracts are intended to
offset the impact of movement of exchange rates on future
revenue and operating costs and are scheduled to mature
within twenty-four months. The changes in the fair value of
these contracts are initially reported in accumulated other
comprehensive loss in our consolidated balance sheet and are
subsequently reclassified into revenue and selling and general
expenses in the same period that the hedged transaction
affects earnings.
As of December 31, 2020, we estimate that $19 million of the
pre-tax gains related to derivatives designated as cash flow
hedges recorded in other comprehensive income is expected to
be reclassified into earnings within the next twenty-four months.
As of December 31, 2020 and December 31, 2019, the aggregate
notional value of our outstanding foreign exchange forward
contracts designated as cash flow hedges was $489 million and
$249 million, respectively.
The following table provides information on the location and fair value amounts of our cash flow hedges and net investment hedges
as of December 31, 2020 and December 31, 2019:
December 31,
(in millions)
Balance Sheet Location
Derivatives designated as cash flow hedges:
Prepaid and other current assets
Foreign exchange forward contracts
Other current liabilities
Foreign exchange forward contracts
Derivatives designated as net investment hedges:
Other non-current liabilities
Cross currency swaps
2020
2019
$23
$2
$1
—
$107
$10
The following table provides information on the location and amounts of pre-tax gains (losses) on our cash flow hedges and net
investment hedges for the years ended December 31:
Gain (Loss) Recognized
in Accumulated Other
Comprehensive Loss
(effective portion)
2020
2019
2018
Location of Gain (Loss)
Reclassified from
Accumulated Other
Comprehensive Loss into
Income (effective portion)
Gain (Loss) Reclassified
from Accumulated Other
Comprehensive Loss into
Income (effective portion)
2020
2019
2018
$17
$(2)
$2
Revenue, Selling and
general expenses
$2
$5
$(4)
(in millions)
Cash flow hedges - designated as
hedging instruments
Foreign exchange forward contracts
Net investment hedges - designated as
hedging instruments
Cross currency swaps
$(97)
$(10)
$—
$—
$—
$—
S&P Global 2020 Annual Report 71
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)
Cash Flow Hedges
Net unrealized gains (losses) on cash flow hedges, net of taxes, beginning of period
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 period
Net Investment Hedges
Net unrealized (losses) gains on net investment hedges, net of taxes, beginning of period
Change in fair value, net of tax
Reclassification into earnings, net of tax
Net unrealized (losses) gains on net investment hedges, net of taxes, end of period
Year ended December 31,
2020
2019
2018
$2
14
(2)
$14
$(8)
(73)
—
$(81)
$4
3
(5)
$2
$—
(8)
—
$(8)
$2
(2)
4
$4
$—
—
—
$—
7. Employee Benefits
We maintain a number of active defined contribution retirement plans for our employees. The majority of our defined benefit plans
are frozen. As a result, no new employees will be permitted to enter these plans and no additional benefits for current participants in
the frozen plans will be accrued.
We also have supplemental benefit plans that provide senior management with supplemental retirement, disability and death
benefits. Certain supplemental retirement benefits are based on final monthly earnings. In addition, we sponsor a voluntary 401(k)
plan under which we may match employee contributions up to certain levels of compensation as well as profit-sharing plans under
which we contribute a percentage of eligible employees’ compensation to the employees’ accounts.
We also provide certain medical, dental and life insurance benefits for active and retired employees and eligible dependents.
The medical and dental plans and supplemental life insurance plan are contributory, while the basic life insurance plan is
noncontributory. We currently do not prefund any of these plans.
We recognize the funded status of our retirement and postretirement plans in the consolidated balance sheets, with a corresponding
adjustment to accumulated other comprehensive loss, net of taxes. The amounts in accumulated other comprehensive loss represent
net unrecognized actuarial losses and unrecognized prior service costs. These amounts will be subsequently recognized as net
periodic pension cost pursuant to our accounting policy for amortizing such amounts.
Net periodic benefit cost for our retirement and postretirement plans other than the service cost component are included in other
(income) expense, net in our consolidated statements of income.
72 S&P Global 2020 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
postretirement plans as of December 31, 2020 and 2019, 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 1
Gross benefits paid
Foreign currency effect
Other adjustments 2
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 2
Fair value of plan assets at end of year
Funded status
Amounts recognized in consolidated balance sheets:
Non-current asset
Current liabilities
Non-current liabilities
2020
$1,945
2019
$2,076
4
52
—
269
(76)
26
—
2,220
1,960
327
12
—
(76)
20
—
2,243
$23
$297
(10)
(264)
$23
3
64
—
232
(75)
13
(368)
1,945
1,987
354
46
—
(75)
16
(368)
1,960
$15
$259
(10)
(234)
$15
Accumulated benefit obligation
$2,204
$1,932
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:
Net actuarial loss (gain)
Prior service credit
Total recognized
$274
$258
$—
$373
2
$375
$244
$231
$—
$355
2
$357
2020
$38
—
2019
$40
—
1
2
1
(6)
—
—
36
13
—
—
2
(6)
—
—
9
1
2
1
(6)
—
—
38
16
1
—
3
(7)
—
—
13
$(27)
$(25)
$—
—
(27)
$(27)
$—
—
(25)
$(25)
$(37)
(12)
$(49)
$(40)
(13)
$(53)
1 The increase in actuarial loss in 2020 was primarily due to a reduction in the discount rate from 2019.
2 Relates to the impact of a retiree annuity purchase in 2019. The Company purchased a group annuity contract under which an insurance company assumed a portion
of the Company’s obligation to pay pension benefits to the plan’s beneficiaries. The purchase of this group annuity contract was funded by pension plan assets.
S&P Global 2020 Annual Report 73
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
Net periodic benefit cost
Settlement charge
Total net periodic benefit cost
RETIREMENT PLANS
POSTRETIREMENT PLANS
2020
2019
2018
2020
2019
2018
$4
52
$3
64
$3
71
(102)
(108)
(124)
17
—
(29)
31
$(26)
12
—
(29)
1132
$84
20
—
(30)
43
$(26)
$—
1
—
(2)
(1)
(2)
—
$—
1
—
(2)
(1)
(2)
—
$—
1
—
(2)
(1)
(2)
—
$(2)
$(2)
$(2)
1 During the year ended December 31, 2020, lump sum withdrawals exceeded the combined total anticipated annual service and interest cost of our U.K. pension plan,
triggering the recognition of a non-cash pre-tax settlement charge of $3 million.
2 Relates to the impact of a retiree annuity purchase in 2019. The Company purchased a group annuity contract under which an insurance company assumed a portion
of the Company’s obligation to pay pension benefits to the plan’s beneficiaries. The purchase of this group annuity contract was funded by pension plan assets. The
non-cash pre-tax settlement charge reflects the accelerated recognition of a portion of unamortized actuarial losses in the plan.
3 Represents a charge related to our U.K. retirement plan.
Our U.K. retirement plan accounted for a benefit of $17 million in 2020, $14 million in 2019 and $10 million in 2018 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 loss (gain)
Recognized actuarial (gain) loss
Prior service cost
Settlement charge
Total recognized
RETIREMENT PLANS
POSTRETIREMENT PLANS
2020
$28
(9)
—
(2)1
2019
$(10)
(10)
—
(85)2
$17
$(105)
2018
2020
2019
2018
$28
(15)
1
(4)3
$10
$1
2
1
—
$4
$—
1
1
—
$2
$(7)
1
1
—
$(5)
1 During the year ended December 31, 2020, lump sum withdrawals exceeded the combined total anticipated annual service and interest cost of our U.K. pension plan,
triggering the recognition of a non-cash pre-tax settlement charge of $3 million.
2 Relates to the impact of a retiree annuity purchase in 2019. The Company purchased a group annuity contract under which an insurance company assumed a portion of
the Company’s obligation to pay pension benefits to the plan’s beneficiaries. The purchase of this group annuity contract was funded by pension plan assets. The non-
cash after tax settlement charge reflects the accelerated recognition of a portion of unamortized actuarial losses in the plan.
3 Represents a charge related to our U.K. retirement plan.
74 S&P Global 2020 Annual Report
The total cost for our retirement plans was $91 million for 2020, $187 million for 2019 and $80 million for 2018. The total cost for our
retirement plans in 2019 includes the $113 million settlement charge related to the retiree annuity purchase in 2019. Included in the
total retirement plans cost are defined contribution plans cost of $80 million for 2020, $73 million for 2019 and $79 million for 2018.
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
2020
2019
2018
2020
2019
2018
2.75%
3.45%
4.40%
2.20% 3.08%
4.15%
3.45%
1.92%
5.50%
4.40%
2.72%
6.00%
3.68%
2.41%
6.00%
6.00% 6.50% 6.50%
3.08% 4.15% 3.40%
1 The assumed weighted-average healthcare cost trend rate will decrease ratably from 6% in 2020 to 5% in 2024 and remain at that level thereafter.
2 Effective January 1, 2020, we changed our discount rate assumption on our U.S. retirement plans to 3.45% from 4.40% in 2019 and changed our discount rate
assumption on our U.K. plan to 1.92% from 2.72% in 2019.
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, 2021, our return on assets assumption for the U.S. plan was reduced to 5.00% from 5.50% and the U.K. plan was reduced to 5.50% from 6.00%.
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 provided to
certain participants are at least actuarially equivalent to Medicare Part D, and, accordingly, we are entitled to a subsidy.
Expected employer contributions in 2021 are $11 million and $4 million for our retirement and postretirement plans, respectively.
In 2021, we may elect to make 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)
2021
2022
2023
2024
2025
2026-2030
Postretirement Plans 2
Retirement
Plans 1
Gross
payments
Retiree
contributions
Medicare
subsidy 3
Postretirement
Plans 2
$66
69
72
75
78
433
$6
5
5
4
4
16
$(2)
(1)
(1)
(1)
(1)
(6)
$ —
—
—
—
—
—
4
4
4
3
3
10
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.
S&P Global 2020 Annual Report 75
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 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 substantially 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, 2020 and 2019, by asset class is as follows:
76 S&P Global 2020 Annual Report
(in millions)
Cash and short-term investments
Equities:
U.S. indexes 1
U.S. growth and value
Fixed income:
Long duration strategy 2
Intermediate duration securities
Real Estate:
U.K. 3
Infrastructure:
U.K. 4
Total
Common collective trust funds measured at net asset value
as a practical expedient:
Collective investment funds 5
Total
(in millions)
Cash and short-term investments
Equities:
U.S. indexes 1
U.S. growth and value
Fixed income:
Long duration strategy 2
Intermediate duration securities
Agency mortgage backed securities
Asset backed securities
Non-agency mortgage backed securities 6
International, excluding U.K.
Real Estate:
U.K. 4
Total
Common collective trust funds measured at net asset value
as a practical expedient:
Collective investment funds 5
Total
Includes securities that are tracked in the S&P Smallcap 600 index.
Includes securities that are mainly investment grade obligations of issuers in the U.S.
Includes a fund which holds real estate properties in the U.K.
Includes funds that invest in global infrastructure for the U.K. Pension.
December 31, 2020
Level 2
$—
—
—
1,339
57
—
78
$1,474
Total
Level 1
$4
9
41
—
—
—
—
$54
$4
9
41
1,339
57
38
78
$1,566
$677
$2,243
December 31, 2019
Level 2
$—
—
—
1,078
20
3
14
11
15
—
$1,141
Total
Level 1
$3
23
56
—
—
—
—
—
—
—
$82
$3
23
56
1,078
20
3
14
11
15
39
$1,262
$698
$1,960
Level 3
$—
—
—
—
—
38
—
$38
Level 3
$—
—
—
—
—
—
—
—
—
39
$39
Includes the Standard & Poor’s 500 Composite Stock Index, the Standard & Poor’s MidCap 400 Composite Stock Index, a short-term investment fund which is a
common collective trust vehicle, and other various asset classes.
Includes U.S. mortgage-backed securities that are not backed by the U.S. government.
S&P Global 2020 Annual Report 77
1
2
3
4
5
6
For securities that are quoted in active markets, the trustee/
custodian determines fair value by applying securities’ prices
obtained from its pricing vendors. For commingled funds that
are not actively traded, the trustee applies pricing information
provided by investment management firms to the unit quantities
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
traded derive their prices from investment managers, which in
turn, employ vendors that use pricing models (e.g., discounted
cash flow, comparables). The domestic defined benefit plans
have no investment in our stock, except through the S&P 500
commingled trust index fund.
The trustee obtains estimated prices from vendors for securities
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:
(in millions)
Balance as of December 31, 2019
Distributions
Balance as of December 31, 2020
Level 3
$39
(1)
$38
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
sectors. The fixed income strategies include U.S. long duration
securities, opportunistic fixed income securities and U.K. debt
instruments. The short-term portfolio, whose primary goal
is capital preservation for liquidity purposes, is composed of
government and government-agency securities, uninvested
cash, receivables and payables. The portfolios do not employ
any financial leverage.
U.S. Defined Contribution Plan
Assets of the defined contribution plan in the U.S. consist
primarily of investment options, which include actively managed
equity, indexed equity, actively managed equity/bond funds,
target date funds, S&P Global Inc. common stock, stable value
and money market strategies. There is also a self-directed
mutual fund investment option. The plan purchased 296,921
shares and sold 331,088 shares of S&P Global Inc. common
stock in 2020 and purchased 165,286 shares and sold 333,030
shares of S&P Global Inc. common stock in 2019. The plan held
approximately 1.3 million shares of S&P Global Inc. common
stock as of December 31, 2020 and 2019, respectively, with
market values of $414 million and $355 million, respectively.
The plan received dividends on S&P Global Inc. common stock
of $3 million during the years ended December 31, 2020 and
December 31, 2019, respectively.
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 $1,630 million and $1,432
million as of December 31, 2020 and 2019 respectively, and
the target allocations in 2020 include 85% fixed income, 8%
domestic equities, 5% international equities and 2% cash and
cash equivalents.
• The U.K. pension trust had assets of $613 million and $528
million as of December 31, 2020 and 2019, respectively, and
the target allocations in 2020 include 49% fixed income, 15%
diversified growth funds, 15% infrastructure, 14% equities and
7% real estate.
8. Stock-Based Compensation
We issue stock-based incentive awards to our eligible employees
under the 2019 Employee Stock Incentive Plan and to our
eligible non-employee Directors under a Director Deferred Stock
Ownership Plan. No further awards may be granted under the
2002 Employee Stock Incentive Plan (the “2002 Plan”), although
awards granted under the 2002 Plan prior to the adoption of the
new 2019 Plan in June of 2019 remain outstanding in accordance
with their terms. The remaining outstanding options under the
2002 Plan will have fully met their maximum term and expire in
the second quarter of 2028.
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
• 2019 Employee Stock Incentive Plan (the “2019 Plan”)
The 2019 Plan permits the granting of incentive stock
options, nonqualified stock options, stock appreciation
rights, performance stock, restricted stock and other
stock-based awards.
78 S&P Global 2020 Annual Report
• 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
compensation 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
equivalent number of shares credited to the deferred stock
account. Recipients under this plan are not required to provide
consideration 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 available
under the plan.
The number of common shares reserved for issuance
are as follows:
December 31,
Stock Options
Stock options may not be granted at a price less than the fair
market value of our common stock on the date of grant.
Stock options granted vest over a four year service period and
have a maximum term of 10 years. Stock option compensation
costs are recognized from the date of grant, utilizing a four-year
graded vesting method. Under this method, more than half of the
costs are recognized over the first twelve months, approximately
one-quarter of the costs are recognized over a twenty-four
month period starting from the date of grant, approximately
one-tenth of the costs are recognized over a thirty-six month
period starting from the date of grant, and the remaining costs
recognized over a forty-eight 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 used in
valuing the options granted:
(in millions)
Shares available for granting 1
Options outstanding
Total shares reserved for issuance 2
2020
19.7
0.5
20.2
2019
20.0
0.7
20.7
Risk-free average interest rate
Dividend yield
Volatility
Expected life (years)
1 Shares available for granting at December 31, 2020 and 2019 are under the
2019 Plan.
Weighted-average grant-date fair
value per option
Year ended December 31, 2018
2.6 - 2.7%
1.1%
21.8 - 22.0%
5.67 - 6.07
$112.98
2 Shares reserved for issuance under the Director Deferred Stock Ownership
Plan are not included in the total, but are less than 1.0 million at December 31,
2020 and 2019, respectively.
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-based compensation expense and the corresponding tax
benefit are as follows:
(in millions)
Stock option expense
Restricted stock and unit
awards expense
Total stock-based
compensation expense
Tax benefit
Year ended December 31,
2020
$—
90
$90
$15
2019
2018
$1
77
$78
$13
$5
89
$94
$19
Because lattice-based option-pricing models incorporate ranges
of assumptions, those ranges are disclosed. These assumptions
are based on multiple factors, including historical 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.
In 2018, we made a one-time issuance of incentive stock
options under the 2002 Plan to replace Kensho employees’ stock
options that were assumed in connection with our acquisition
of Kensho in April of 2018. There were no stock options granted
in 2020 and 2019.
S&P Global 2020 Annual Report 79
Stock option activity is as follows:
(in millions, except per award amounts)
Options outstanding as of December 31, 2019
Exercised
Forfeited and expired 1
Options outstanding as of December 31, 2020
Options exercisable as of December 31, 2020
1 There are less than 0.1 million shares forfeited and expired.
(in millions, except per award amounts)
Nonvested options outstanding as of December 31, 2019
Vested 1
Forfeited
Nonvested options outstanding as of December 31, 2020 ²
Total unrecognized compensation expense related to nonvested options
Weighted-average years to be recognized over
1 There are less than 0.1 million shares vested.
2 There are less than 0.1 million nonvested options outstanding as of December 31, 2020.
Shares
Weighted average
exercise price
Weighted-average
remaining years of
contractual term
Aggregate
intrinsic value
0.7
(0.2)
—
0.5
0.5
$55.73
$280.79
$58.06
$60.46
$60.34
2.56
2.53
$123
$122
Shares
Weighted-average
grant-date fair value
$112.68
$113.14
$113.40
$111.96
—
—
—
—
$—
0.2
The total fair value of our stock options that vested during the years ended December 31, 2020, 2019 and 2018 was $2 million,
$3 million and $5 million, respectively.
Information regarding our stock option exercises is as follows:
(in millions)
Net cash proceeds from the exercise of stock options
Total intrinsic value of stock option exercises
Income tax benefit realized from stock option exercises
Year ended December 31,
2020
$16
$60
$13
2019
$40
$110
$33
2018
$34
$77
$27
RESTRICTED STOCK AND UNIT AWARDS
Restricted stock and unit awards (performance and non-performance) have been granted under the 2002 Plan and 2019 Plan.
Performance unit awards will vest only if we achieve certain financial goals over the performance period. Restricted stock non-
performance awards have various vesting periods (generally three years), with vesting beginning on the first anniversary of the
awards. Recipients of restricted stock and unit awards are not required to provide consideration to us other than rendering service.
80 S&P Global 2020 Annual Report
Stock Repurchases
On January 29, 2020, the Board of Directors approved a
share repurchase program authorizing the purchase of 30
million shares (the “2020 Repurchase Program”), which was
approximately 12% of the total shares of our outstanding
common stock at that time. On December 4, 2013, the Board of
Directors approved a share repurchase program authorizing the
purchase of 50 million shares (the “2013 Repurchase Program”),
which was approximately 18% of the total shares of our
outstanding common stock at that time.
Our purchased shares may be used for general corporate
purposes, including the issuance of shares for stock
compensation plans and to offset the dilutive effect of the
exercise of employee stock options. As of December 31, 2020, 30
million shares remained available under the 2020 Repurchase
Program and 0.8 million shares remained available under the
2013 repurchase program. Our 2020 Repurchase Program
and 2013 Repurchase Program have no expiration date and
purchases under these programs may be made from time to time
on the open market and in private transactions, depending on
market conditions.
We have entered into accelerated share repurchase (“ASR”)
agreements with financial institutions to initiate share
repurchases of our common stock. Under an ASR agreement, we
pay a specified amount to the financial institution and receive an
initial delivery of shares. This initial delivery of shares represents
the minimum number of shares that we may receive under the
agreement. Upon settlement of the ASR agreement, the financial
institution delivers additional shares. The total number of shares
ultimately delivered, and therefore the average price paid per
share, is determined at the end of the applicable purchase period
of each ASR agreement based on the volume weighted-average
share price, less a discount. We account for our ASR agreements
as two transactions: a stock purchase transaction and a forward
stock purchase contract. The shares delivered under the ASR
agreements resulted in a reduction of outstanding shares used
to determine our weighted average common shares outstanding
for purposes of calculating basic and diluted earnings per share.
The repurchased shares are held in Treasury. The forward stock
purchase contracts were classified as equity instruments.
The ASR agreements were executed under our 2013 Repurchase
Program, approved on December 4, 2013.
The stock-based compensation expense for restricted stock
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
of awards that are anticipated to fully vest. For performance
unit awards, adjustments are made to expense dependent upon
financial goals achieved.
Restricted stock and unit activity for performance and non-
performance awards is as follows:
Shares
Weighted-
average grant-
date fair value
$199.93
$232.92
$192.71
$220.76
$227.67
0.6
0.4
(0.4)
—
0.6
$85
1.8
Year ended December 31,
2020
2019
2018
$232.92
$187.40
$182.75
$134
$153
$154
$26
$29
$29
(in millions, except per award
amounts)
Nonvested shares as of
December 31, 2019
Granted
Vested
Forfeited
Nonvested shares as of
December 31, 2020
Total unrecognized
compensation expense related
to nonvested awards
Weighted-average years
to be recognized over
Weighted-average grant-date
fair value per award
Total fair value of restricted
stock and unit awards vested
Tax benefit relating to
restricted stock activity
9. Equity
Capital Stock
Two million shares of preferred stock, par value $1 per share, are
authorized; none have been issued.
On January 27, 2021, the Board of Directors approved an
increase in the dividends for 2021 to a quarterly rate of $0.77
per common share.
Quarterly dividend rate
Annualized dividend rate
Dividends paid (in millions)
Year ended December 31,
2020
$0.67
$2.68
$645
2019
$0.57
$2.28
$560
2018
$0.50
$2.00
$503
S&P Global 2020 Annual Report 81
The terms of each ASR agreement entered for the years ended December 31, 2020, 2019 and 2018, structured as outlined above,
are as follows:
(in millions, except average price)
ASR Agreement
Initiation
Date
ASR Agreement
Completion
Date
Initial
Shares
Delivered
Additional
Shares
Delivered
Total Number
of Shares
Purchased
Average
Price Paid
Per Share
February 11, 2020 1
February 11, 2020 2
July 27, 2020
July 27, 2020
August 5, 2019 3
October 1, 2019
February 11, 2019 4
July 31, 2019
October 29, 2018 5
January 2, 2019
March 6, 2018 6
September 25, 2018
1.3
1.4
1.7
2.2
2.5
4.5
0.4
0.3
0.3
0.1
0.4
0.6
1.7
1.7
2.0
2.3
2.9
5.1
$292.13
$292.13
$253.36
$214.65
$173.80
$197.49
Total
Cash
Utilized
$500
$500
$500
$500
$500
$1,000
1 The ASR agreement was structured as a capped ASR agreement in which we paid $500 million and received an initial delivery of 1.3 million shares and an additional
amount of 0.2 million during the month of February, representing a minimum number of shares of our common stock to be repurchased based on a calculation using
a specified capped price per share. We completed the ASR agreement on July 27, 2020 and received an additional 0.2 million shares.
2 The ASR agreement was structured as an uncapped ASR agreement in which we paid $500 million and received an initial delivery of 1.4 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 July 27, 2020 and received an additional 0.3
million shares.
3 The ASR agreement was structured as a capped ASR agreement in which we paid $500 million and received an initial delivery of 1.7 million shares and an additional
amount of 0.2 million during the month of August, representing a minimum number of shares of our common stock to be repurchased based on a calculation using a
specified capped price per share. We completed the ASR agreement on October 1, 2019 and received an additional 0.1 million shares.
4 The ASR agreement was structured as an uncapped ASR agreement in which we paid $500 million and received an initial delivery of 2.2 million shares, representing
85% of the $500 at a price equal to the then market price of the Company. We completed the ASR agreement on July 31, 2019 and received an additional 0.1 million
shares.
5 The ASR agreement was structured as an uncapped ASR agreement in which we paid $500 million and received an initial delivery of 2.5 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 January 2, 2019 and received an additional 0.4
million shares.
6 The ASR agreement was structured as an uncapped ASR agreement in which we paid $1 billion and received an initial delivery of 4.5 million shares, representing 85%
of the $1 billion at a price equal to the then market price of the Company. We completed the ASR agreement on September 25, 2018 and received an additional 0.6
million shares.
Additionally, we purchased shares of our common stock in the open market as follows
(in millions, except average price)
Year Ended
December 31, 2020
December 31, 2019
December 31, 2018
Total number of shares purchased
Average price paid per share
Total cash utilized
0.5
1.2
0.9
$295.40
$208.83
$182.93
$161
$240
$160
During the year ended December 31, 2020, we purchased a total of 4.0 million shares for $1,161 million of cash. During the fourth
quarter of 2019, we repurchased shares for $3 million, which settled in the first quarter of 2020, resulting in $1,164 million of cash
used to repurchase shares. During the year ended December 31, 2019 we received 5.9 million shares, including 0.4 million shares
received in January of 2019 related to our October 29, 2018 ASR agreement, resulting in $1,240 million of cash used to repurchase
shares. During the year ended December 31, 2018, we purchased a total of 8.4 million shares for cash of $1,660 million.
82 S&P Global 2020 Annual Report
Redeemable Noncontrolling Interests
The agreement with the minority partners that own 27% of our S&P Dow Jones Indices LLC joint venture contains redemption
features whereby interests held by minority partners are redeemable either (i) at the option of the holder or (ii) upon the occurrence
of an event that is not solely within our control. Specifically, under the terms of the operating agreement of S&P Dow Jones Indices
LLC, CME Group and CME Group Index Services LLC (“CGIS”) has 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. In addition, in the event there is a change of control of the Company, for the 15 days
following a change in control, CME Group and CGIS will have the right to put their interest to us at the then fair value of CME Group’s
and CGIS’ minority interest.
If interests were to be redeemed under this agreement, we 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 redeemable noncontrolling interest
each reporting period to its estimated redemption value, but never less than its initial fair value, using both income and market
valuation approaches. Our income and market valuation approaches may incorporate Level 3 fair value measures for instances when
observable inputs are not available. The more significant judgmental assumptions used to estimate the value of the S&P Dow Jones
Indices LLC joint venture include an estimated discount rate, a range of assumptions that form the basis of the expected future
net cash flows (e.g., the revenue growth rates and operating margins), and a company specific beta. The significant judgmental
assumptions used that incorporate market data, including the relative weighting of market observable information and the
comparability of that information in our valuation models, are forward-looking and could be affected by future economic and market
conditions. Any adjustments to the redemption value will impact retained income.
Noncontrolling interests that do not contain such redemption features are presented in equity.
Changes to redeemable noncontrolling interest during the year ended December 31, 2020 were as follows:
(in millions)
Balance as of December 31, 2019
Net income attributable to redeemable noncontrolling interest
Distributions to noncontrolling interest
Redemption value adjustment
Balance as of December 31, 2020
$2,268
181
(200)
532
$2,781
Accumulated Other Comprehensive Loss
The following table summarizes the changes in the components of accumulated other comprehensive loss for the year ended
December 31, 2020:
(in millions)
Foreign
Currency
Translation
Adjustment 1, 3
Pension and
Postretirement
Benefit
Plans 2
Unrealized
Gain (Loss) on
Forward Exchange
Contracts 3
Accumulated
Other
Comprehensive
Loss
Balance as of December 31, 2019
$(321)
$(305)
Other comprehensive (loss) income before reclassifications
Reclassifications from accumulated other comprehensive
income (loss) to net earnings
Net other comprehensive gain (loss) income
(2)
—
(2)
(37)
14
(23)
Balance as of December 31, 2020
$(323)
$(328)
$2
14
(2)
12
$14
$(624)
(25)
12
(13)
$(637)
1
Includes an unrealized loss related to cross currency swaps.
2 Reflects amortization of net actuarial losses and is net of a tax benefit of $3 million for the year ended December 31, 2020. See Note 7 - Employee Benefits for
additional details of items reclassed from accumulated other comprehensive loss to net earnings.
3 See Note 6 – Derivative Instruments for additional detail of items recognized in accumulated other comprehensive loss.
S&P Global 2020 Annual Report 83
10. Earnings per Share
Basic earnings per common share (“EPS”) is computed by dividing net income attributable to the common shareholders of the
Company by the weighted-average number of common shares outstanding. Diluted EPS is computed in the same manner as basic
EPS, except the number of shares is increased to include additional common shares that would have been outstanding if potential
common shares with a dilutive effect had been issued. Potential common shares consist primarily of stock options and restricted
performance shares calculated using the treasury stock method.
The calculation for basic and diluted EPS is as follows:
Year ended December 31,
(in millions, except per share data)
2020
2019
2018
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
Diluted weighted-average number of common shares outstanding
Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic
Diluted
$2,339
241.0
1.1
242.1
$9.71
$9.66
$2,123
245.4
1.5
246.9
$8.65
$8.60
$1,958
250.9
2.3
253.2
$7.80
$7.73
We have certain stock options and restricted performance shares that are potentially excluded from the computation 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, 2020, 2019 and 2018, there were no stock options excluded. Restricted performance shares
outstanding of 0.4 million as of December 31, 2020 and 2019, respectively and 0.5 million as of 2018 were excluded.
84 S&P Global 2020 Annual Report
11. Restructuring
During 2020 and 2019, we continued to evaluate our cost structure and further identified cost savings associated with streamlining
our management structure and our decision to exit non-strategic businesses. Our 2020 and 2019 restructuring plans consisted of a
company-wide workforce reduction of approximately 830 and 300 positions, respectively, and are further detailed below. The charges
for each restructuring plan are classified as selling and general expenses within the consolidated statements of income and the
reserves are included in other current liabilities in the consolidated balance sheets.
In certain circumstances, reserves are no longer needed because of efficiencies in carrying out the plans or because employees
previously identified for separation resigned from the Company and did not receive severance or were reassigned due to
circumstances not foreseen when the original plans were initiated. In these cases, we reverse reserves through the consolidated
statements of income during the period when it is determined they are no longer needed. There were approximately $7 million of
reserves from the 2019 restructuring plan that we have reversed in 2020, which offset the initial charge of $25 million recorded for
the 2019 restructuring plan. There were approximately $3 million of reserves from the 2018 restructuring plan that we have reversed
in 2019, which offset the initial charge of $25 million recorded for the 2018 restructuring plan.
The initial restructuring charge recorded and the ending reserve balance as of December 31, 2020 by segment is as follows:
(in millions)
Ratings
Market Intelligence
Platts
Indices
Corporate
Total
2020 Restructuring Plan
2019 Restructuring Plan
Initial Charge
Recorded
Ending Reserve
Balance
Initial Charge
Recorded
Ending Reserve
Balance
$4
27
10
5
19
$65
$3
26
10
4
15
$58
$11
6
1
—
7
$25
$1
3
—
—
1
$5
For the year ended December 31, 2020, we have reduced the reserve for the 2020 restructuring plan by $7 million and for the years
ended December 31, 2020 and 2019, we have reduced the reserve for the 2019 restructuring plan by $13 million and $7 million,
respectively. The reductions primarily related to cash payments for employee severance charges.
S&P Global 2020 Annual Report 85
12. Segment and
Geographic Information
As discussed in Note 1 – Accounting Policies, we have
four reportable segments: Ratings, Market Intelligence,
Platts and Indices.
Our Chief Executive Officer is our chief operating decision-maker
and evaluates performance of our segments and allocates
resources based primarily on operating profit. Segment operating
profit does not include Corporate Unallocated, other income, net,
or interest expense, net, as these are costs that do not affect the
operating results of our reportable segments. We use the same
accounting policies for our segments as those described in Note
1 – Accounting Policies.
In the first quarter of 2020, we changed our allocation
methodology for allocating our centrally managed technology-
related expenses to our reportable segments to more accurately
reflect each segment’s respective usage. Prior-year amounts
have been reclassified to conform with current presentation.
Beginning in the first quarter of 2019, the contract obligations
for revenue from Kensho’s major customers were transferred to
Market Intelligence for fulfillment. As a result of this transfer,
from January 1, 2019 revenue from contracts with Kensho’s
customers is reflected in Market Intelligence’s results. In 2018,
the revenue from contracts with Kensho’s customers was
reported in Corporate revenue. See Note 2 – Acquisitions and
Divestitures for additional information.
A summary of operating results for the years ended December
31 is as follows:
Revenue
(in millions)
Ratings
Market Intelligence
Platts
Indices
Corporate
2020
2019
2018
$3,606
$3,106
$2,883
2,106
1,959
1,833
878
989
—
844
918
—
815
837
15
Intersegment elimination 1
(137)
(128)
(125)
Total revenue
$7,442
$6,699
$6,258
Operating Profit
(in millions)
Ratings 2
Market Intelligence 3
Platts 4
Indices 5
2020
2019
2018
$2,223
$1,783
$1,554
589
458
666
566
457
632
500
401
566
Total reportable segments
3,936
3,438
3,021
Corporate Unallocated 6
(319)
(212)
(231)
Total operating profit
$3,617
$3,226
$2,790
1 Revenue for Ratings and expenses for Market Intelligence include an
intersegment royalty charged to Market Intelligence for the rights to use and
distribute content and data developed by Ratings.
2 Operating profit for the year ended December 31, 2020 includes a technology-
related impairment charge of $11 million, lease-related costs of $5 million
and employee severance charges of $4 million. Operating profit or the year
ended December 31, 2019 includes employee severance charges of $11
million. Operating profit for the year ended December 31, 2018 includes legal
settlement expenses of $74 million and employee severance charges of $8
million. Additionally, operating profit includes amortization of intangibles from
acquisitions of $7 million for the year ended December 31, 2020 and $2 million
for the years ended December 31, 2019 and 2018.
3 Operating profit for the year ended December 31, 2020 includes employee
severance charges of $27 million, a gain on dispositions of $12 million and
lease-related costs of $3 million. As of July 1, 2019, we completed the sale
of SPIAS and the results are included in Market Intelligence results through
that date. Operating profit for the year ended December 31, 2019 includes a
gain on the sale of SPIAS of $22 million, employee severance charges of $6
million and acquisition related costs of $4 million. Operating profit for the year
ended December 31, 2018 includes restructuring charges related to a business
disposition and employee severance charges of $7 million. Additionally,
operating profit includes amortization of intangibles from acquisitions of $76
million, $75 million and $73 million for the years ended December 31, 2020,
2019 and 2018, respectively.
4 Operating profit for the year ended December 31, 2020 includes severance
charges of $11 million and lease-related costs of $2 million. As of July 31, 2019,
we completed the sale of RigData and the results are included in Platts results
through that date. Operating profit for the year ended December 31, 2019
includes a gain on the sale of RigData of $27 million and employee severance
charges of $1 million. Additionally, Operating profit includes amortization of
intangibles from acquisitions of $9 million, $12 million and $18 million for the
years ended December 31, 2020, 2019 and 2018, respectively.
5 Operating profit for the year ended December 31, 2020 includes employee
severance charges of $5 million, a lease impairment charge of $4 million,
a technology-related impairment charge of $2 million and lease-related
costs of $1 million. Operating profit includes amortization of intangibles from
acquisitions of $6 million for the years ended December 31, 2020, 2019 and 2018.
6 Corporate Unallocated expense for the year ended December 31, 2020 includes
lease impairments of $116 million, IHS Markit merger costs of $24 million,
employee severance charges of $19 million, Kensho retention related expense
of $12 million and a gain related to an acquisition of $1 million. Corporate
Unallocated expense for the year ended December 31, 2019 includes Kensho
retention related expenses $21 million, lease impairments of $11 million and
employee severance charges of $7 million. Corporate Unallocated operating
loss for the year ended December 31, 2018 includes Kensho retention related
expense of $31 million, lease impairments of $11 million and employee
severance charges of $10 million. Additionally, Corporate Unallocated includes
amortization of intangibles from acquisitions of $26 million, $28 million and $23
million for the years ended December 31, 2020, 2019 and 2018, respectively.
86 S&P Global 2020 Annual Report
The following table presents our revenue disaggregated by revenue type for the years ended December 31:
(in millions)
Ratings
Market
Intelligence
Platts
Indices
Corporate
Intersegment
Elimination 1
Total
Subscription
Non-subscription / Transaction
Non-transaction
Asset-linked fees
Sales usage-based royalties
Total revenue
Timing of revenue recognition
$—
1,977
1,629
—
—
2020
$2,050
$809
$177
55
—
1
—
7
—
—
62
—
—
647
165
$3,606
$2,106
$878
$989
Services transferred at a point in time
Services transferred over time
Total revenue
$1,977
1,629
$3,606
$55
2,051
$2,106
$7
871
$878
$—
989
$989
$—
—
—
—
—
$—
$—
—
$—
$—
—
(137)
—
—
$3,036
2,039
1,492
648
227
$(137)
$7,442
$—
(137)
$2,039
5,403
$(137)
$7,442
(in millions)
Ratings
Market
Intelligence
Platts
Indices
Corporate
Intersegment
Elimination 1
Total
Subscription
Non-subscription / Transaction
Non-transaction
Asset-linked fees
Sales usage-based royalties
Total revenue
Timing of revenue recognition
$—
1,577
1,529
—
—
2019
$1,904
$774
$165
45
—
10
—
10
—
—
60
—
—
613
140
$3,106
$1,959
$844
$918
Services transferred at a point in time
Services transferred over time
Total revenue
$1,577
1,529
$3,106
$45
1,914
$1,959
$10
834
$844
$—
918
$918
$—
—
—
—
—
$—
$—
—
$—
$—
—
(128)
—
—
$2,843
1,632
1,401
623
200
$(128)
$6,699
$—
(128)
$1,632
5,067
$(128)
$6,699
(in millions)
Ratings
Market
Intelligence
Platts
Indices
Corporate
Intersegment
Elimination 1
Total
Subscription
Non-subscription / Transaction
Non-transaction
Asset-linked fees
Sales usage-based royalties
Total revenue
Timing of revenue recognition
$—
1,350
1,533
—
—
2018
$1,773
$750
$144
40
—
20
—
11
—
—
54
—
—
522
171
$2,883
$1,833
$815
$837
Services transferred at a point in time
Services transferred over time
Total revenue
$1,350
1,533
$2,883
$40
1,793
$1,833
$11
804
$815
$—
837
$837
$15
—
—
—
—
$15
$—
15
$15
$—
—
(125)
—
—
$2,682
1,401
1,408
542
225
$(125)
$6,258
$—
(125)
$1,401
4,857
$(125)
$6,258
1
Intersegment eliminations mainly consists of a royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.
S&P Global 2020 Annual Report 87
Segment information for the years ended December 31 is as follows:
(in millions)
Ratings
Market Intelligence
Platts
Indices
Total reportable segments
Corporate
Total
Segment information as of December 31 is as follows:
(in millions)
Ratings
Market Intelligence
Platts
Indices
Total reportable segments
Corporate 1
Assets held for sale 2
Total
Depreciation & Amortization
Capital Expenditures
2020
$40
101
17
9
167
39
2019
$34
99
21
8
162
42
2018
$32
99
27
9
167
39
$206
$204
$206
2020
$33
28
7
4
72
4
$76
2019
$41
44
13
5
103
12
$115
2018
$42
30
9
3
84
29
$113
Total Assets
2020
$1,088
3,762
913
1,443
7,206
5,331
—
2019
$963
3,806
938
1,492
7,199
4,140
9
$12,537
$11,348
1 Corporate assets consist principally of cash and cash equivalents, goodwill and other intangible assets, assets for pension benefits, deferred income taxes and
leasehold improvements related to subleased areas.
2
Includes East Windsor and New Jersey facility as of December 31, 2019.
88 S&P Global 2020 Annual Report
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
LONG-LIVED ASSETS
Year ended December 31,
December 31,
2020
2019
2018
$4,504
$3,976
$3,750
1,769
1,659
1,543
782
387
710
354
647
318
2020
2019
$4,787
$4,946
496
102
44
323
93
44
$7,442
$6,699
$6,258
$5,429
$5,406
REVENUE
LONG-LIVED ASSETS
Year ended December 31,
December 31,
2020
61%
24
10
5
2019
59%
25
11
5
2018
60%
25
10
5
2020
88%
2019
91%
9
2
1
6
2
1
100%
100%
100%
100%
100%
See Note 2 – Acquisitions and Divestitures and Note 11 – Restructuring, for actions that impacted the segment operating results.
S&P Global 2020 Annual Report 89
13. Commitments and Contingencies
The components of lease expense for the years ended December
31 are as follows:
Leases
We determine whether an arrangement meets the criteria for
an operating lease or a finance lease at the inception of the
arrangement. We have operating leases for office space and
equipment. Our leases have remaining lease terms of 1 year to 12
years, some of which include options to extend the leases for up
to 12 years, and some of which include options to terminate the
leases within 1 year. We consider these options in determining
the lease term used to establish our right-of use (“ROU”) assets
and associated lease liabilities. We sublease certain real estate
leases to third parties which mainly consist of operating leases
for space within our offices.
Leases with an initial term of 12 months or less are not recorded
on the balance sheet; we recognize lease expenses for these
leases on a straight line-basis over the lease term in operating-
related expenses and selling and general expenses.
Operating lease ROU assets and operating lease liabilities are
recognized based on the present value of future minimum lease
payments over the lease term at commencement date. Our future
minimum based payments used to determine our lease liabilities
include minimum based rent payments and escalations. As most
of our leases do not provide an implicit rate, we use our estimated
incremental borrowing rate based on the information available
at commencement date in determining the present value of
lease payments.
During the year ended December 31, 2020, we recorded a pre-tax
impairment charge of $120 million related to the impairment
and abandonment of operating lease related ROU assets.
The impairment charges are included in selling and general
expenses within the consolidated statements of income.
The following table provides information on the location and
amounts of our leases on our consolidated balance sheets as
of December 31, 2020 and 2019:
(in millions)
Balance Sheet Location
Assets
2020
2019
Right of use assets
Lease right-of-use assets
$494
$676
Liabilities
Other current liabilities
Current lease liabilities
Lease liabilities —
non-current
Non-current lease
liabilities
100
544
112
620
(in millions)
Operating lease cost
Sublease income
Total lease cost
2020
$144
(6)
$138
2019
$157
(18)
$139
Supplemental information related to leases for the years ended
December 31 are as follows:
(in millions)
Cash paid for amounts included in the measurement
for operating lease liabilities
Twelve Months
2020
2019
Operating cash flows for operating leases
$137
$146
Right of use assets obtained in exchange for
lease obligations
Operating leases
8
777
Weighted-average remaining lease term and discount rate for our
operating leases as of December 31 are as follows:
Weighted-average remaining lease term (years)
8.5
9.0
Weighted-average discount rate
3.78%
3.93%
2020
2019
Maturities of lease liabilities for our operating leases
are as follows:
(in millions)
2021
2022
2023
2024
2025
2026 and beyond
Total undiscounted lease payments
Less: Imputed interest
Present value of lease liabilities
$120
103
85
68
60
302
$738
94
$644
90 S&P Global 2020 Annual Report
Related Party Agreement
In June of 2012, we entered into a license agreement (the
“License Agreement”) with the holder of S&P Dow Jones Indices
LLC noncontrolling interest, CME Group, which replaced the 2005
license agreement between Indices and CME Group. Under the
terms of the License Agreement, S&P Dow Jones Indices LLC
receives a share of the profits from the trading and clearing
of CME Group’s equity index products. During the years ended
December 31, 2020, 2019 and 2018, S&P Dow Jones Indices LLC
earned $149 million, $114 million and $121 million of revenue
under the terms of the License Agreement, respectively. The
entire amount of this revenue is included in our consolidated
statement of income and the portion related to the 27%
noncontrolling interest is removed in net income attributable
to noncontrolling interests.
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 government and regulatory proceedings,
investigations and inquiries.
In the second quarter of 2020, Indices, a joint venture with CME
Group controlled by the Company, received a “Wells Notice”
from the Staff of the SEC stating that the Staff has made a
preliminary determination to recommend that the SEC file
an enforcement action against Indices. The proposed action
would allege violations of federal securities laws with respect
to the absence of disclosure of a quality assurance mechanism
and the impact of that mechanism on certain volatility related
index values published on one business day in 2018. The Staff’s
recommendation may involve a civil injunctive action, a cease
and desist proceeding, disgorgement, pre-judgment interest
and civil money penalties. The Wells Notice is neither a formal
allegation nor a finding of wrongdoing. It allows Indices the
opportunity to provide its perspective and to address the issues
raised by the Staff before any decision is made by the SEC on
whether to authorize the commencement of an enforcement
proceeding. Indices has been cooperating with the SEC in this
matter and intends to continue to do so.
The Company is aware of a potential class action complaint
relating to alleged investment losses in collateralized debt
obligations rated by Ratings prior to the financial crisis, which
was filed in Australia on August 7, 2020 against the Company and
a subsidiary of the Company. The Company and its subsidiary
have not been served.
We can provide no assurance that we will not be obligated to pay
significant amounts in order to resolve these matters on terms
deemed acceptable.
From time to time, the Company receives customer complaints,
particularly, though not exclusively, in its Ratings and Indices
segments. The Company believes it has strong contractual
protections in the terms and conditions included in its
arrangements with customers. Nonetheless, in the interest
of managing customer relationships, the Company from time
to time engages in dialogue with such customers in an effort
to resolve such complaints, and if such complaints cannot be
resolved through dialogue, may face litigation regarding such
complaints. The Company does not expect to incur material
losses as a result of these matters.
Moreover, 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. For example,
as a nationally recognized statistical rating organization
registered with the SEC under Section 15E of the Exchange Act,
S&P Global Ratings is in ongoing communication with the staff
of the SEC regarding compliance with its extensive obligations
under the federal securities laws. Although S&P Global seeks
to promptly address any compliance issues that it detects or
that the staff of the SEC or another regulator raises, there can
be no assurance that the SEC or another regulator will not
seek remedies against S&P Global for one or more compliance
deficiencies. Any of these proceedings, 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.
In view of the uncertainty inherent in litigation and government
and regulatory enforcement matters, we cannot predict
the eventual outcome of such matters or the timing of their
resolution, or in most cases reasonably estimate what the
eventual judgments, damages, fines, penalties or impact of
activity (if any) restrictions may be. As a result, we cannot provide
assurance that such outcomes will not have a material adverse
effect on our consolidated financial condition, cash flows,
business or competitive position. 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 the outcome of such matters and
the effects, if any, on our consolidated financial condition, cash
flows, business or competitive position, which may require that
we record liabilities in the consolidated financial statements in
future periods.
S&P Global 2020 Annual Report 91
14. Quarterly Financial Information (Unaudited)
(in millions, except per share data)
First
quarter
Second
quarter
Third
quarter
Fourth
quarter
2020
Revenue
Operating profit
Net income
Net income attributable to S&P
Global common shareholders
$1,786
$912
$689
$639
Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic
Diluted
2019
Revenue
Operating profit
Net income
Net income attributable to S&P
Global common shareholders
$2.64
$2.62
$1,571
$705
$453
$410
$1,943
$1,105
$842
$792
$3.29
$3.28
$1,704
$813
$602
$555
$1,846
$944
$498
$455
$1.89
$1.88
$1,689
$891
$662
$617
$1,867
$656
$505
$454
$1.89
$1.88
$1,735
$818
$585
$541
Total
year
$7,442
$3,617
$2,534
$2,339
$9.71
$9.66
$6,699
$3,226
$2,303
$2,123
Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic
Diluted
$1.66
$1.65
$2.25
$2.24
$2.52
$2.50
$2.22
$2.20
$8.65
$8.60
Note - Totals presented may not sum due to rounding.
92 S&P Global 2020 Annual Report
Five Year Financial Review
Year Ended December 31,
(in millions, except per share data)
2020
2019
2018
2017
2016
INCOME STATEMENT DATA:
Revenue
Operating profit
Income before taxes on income
Provision for taxes on income 6
Net income attributable to S&P Global Inc.
Earnings per share attributable to the S&P Global
Inc. common shareholders:
Basic
Diluted
Dividends per share
OPERATING STATISTICS:
Return on average equity 7
Income before taxes on income as a percent of
revenue from operations
Net income from operations as a percent of
revenue from operations
BALANCE SHEET DATA (AS OF PERIOD END):
Working capital 8
Total assets
Total debt 9
Redeemable noncontrolling interest
Equity
$7,442
3,617
3,2281
694
2,339
9.71
9.66
2.68
$6,699
3,226
2,9302
627
2,123
8.65
8.60
2.28
$6,258
2,790
2,6813
560
1,958
7.80
7.73
2.00
$6,063
2,583
2,4614
823
1,496
5.84
5.78
1.64
457.8%
43.4%
377.5%
43.7%
292.6%
42.8%
222.3%
40.6%
34.0%
34.4%
33.9%
27.0%
$2,401
12,537
4,110
2,781
571
$1,619
11,348
3,948
2,268
536
$957
9,441
3,662
1,620
684
$1,110
9,425
3,569
1,352
766
$5,661
3,341
3,1885
960
2,106
8.02
7.94
1.44
472.0%
56.3%
39.4%
$1,060
8,669
3,564
1,080
701
NUMBER OF EMPLOYEES
23,000
22,500
21,200
20,400
20,000
1
2
3
4
5
6
7
Includes impact of the following items: loss on the extinguishment of debt of $279 million, lease impairments of $120 million, employee severance charges of $66
million, IHS Markit merger costs of $24 million, a $16 million gain on dispositions, a technology-related impairment charge of $12 million, lease-related costs of $11
million, Kensho retention related expense of $11 million, a pension related charge of $3 million and amortization of intangibles from acquisitions of $123 million.
Includes the impact of the following items: a pension related charge of $113 million, costs associated with early repayment of our Senior Notes of $56 million, a
$49 million gain on dispositions, employee severance charges of $25 million, Kensho retention related expense of $21 million, lease impairments of $11 million,
acquisition-related costs of $4 million and amortization of intangibles from acquisitions of $122 million.
Includes the impact of the following items: legal settlement expenses of $74 million, Kensho retention related expense of $31 million, restructuring charges related
to a business disposition and employee severance charges of $25 million, lease impairments of $11 million, a pension related charge of $5 million and amortization of
intangibles from acquisitions of $122 million.
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.
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 million,
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.
Includes $4 million of tax benefit related to prior year divestitures in 2020 and $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 in 2017.
Includes the impact of the $16 million gain on dispositions in 2020, the $49 million gain on dispositions in 2019 and the $1.1 billion gain on dispositions in 2016.
8 Working capital is calculated as current assets less current liabilities.
9
Includes short-term debt of $399 million as of December 31, 2017.
S&P Global 2020 Annual Report 93
Report of Management
To the Shareholders of S&P Global Inc.
Management’s Annual Report on its Responsibility for the Company’s Financial Statements and Internal Control Over
Financial Reporting
The fi nancial 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 including amounts
based on management’s best estimates and judgments, present fairly S&P Global Inc.’s fi nancial condition and the results of the
Company’s operations. Other fi nancial information given in this report is consistent with these statements.
The Company’s management is responsible for establishing and maintaining adequate internal control over fi nancial reporting for the
Company as defi ned under the U.S. Securities Exchange Act of 1934. It further assures the quality of the fi nancial records in several
ways: a program of internal audits, the careful selection and training of management personnel, maintaining an organizational
structure that provides an appropriate division of fi nancial responsibilities, and communicating fi nancial 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 responsible for
reviewing and monitoring the Company’s fi nancial reporting and accounting practices. The Audit Committee meets periodically with
management, the Company’s internal auditors and the independent registered public accounting fi rm to ensure that each group is
carrying out its respective responsibilities. In addition, the independent registered public accounting fi rm has full and free access to
the Audit Committee and meet with it with no representatives from management present.
Management’s Report on Internal Control Over Financial Reporting
As stated above, the Company’s management is responsible for establishing and maintaining adequate internal control over
fi nancial 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 suffi ciently complete so that relevant controls are not omitted and is relevant to an evaluation
of internal controls over fi nancial reporting.
Based on management’s evaluation under this framework, we have concluded that the Company’s internal controls over fi nancial
reporting were effective as of December 31, 2020. There are no material weaknesses in the Company’s internal control over fi nancial
reporting that have been identifi ed by management.
The Company’s independent registered public accounting fi rm, Ernst & Young LLP, has audited the consolidated fi nancial statements
of the Company for the year ended December 31, 2020, and has issued their reports on the fi nancial statements and the effectiveness
of internal controls over fi nancial reporting.
Other Matters
There have been no changes in the Company’s internal controls over fi nancial reporting during the most recent quarter that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control over fi nancial reporting.
Douglas L. Peterson
Ewout L. Steenbergen
President and Chief Executive Offi cer
Executive Vice President and Chief Financial Offi cer
94 S&P Global 2020 Annual Report
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
sheets of S&P Global Inc. (the Company) as of December 31,
2020 and 2019, the related consolidated statements of income,
comprehensive income, equity and cash flows for each of the
three years in the period ended December 31, 2020, and the
related notes (collectively referred to as the “consolidated
financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial
position of the Company at December 31, 2020 and 2019, and the
results of its operations and its cash flows for each of the three
years in the period ended December 31, 2020, in conformity with
U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting
as of December 31, 2020, based on criteria established in
Internal Control-Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (2013
framework), and our report dated February 9, 2021 expressed an
unqualified opinion thereon.
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
PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of
the PCAOB. Those standards require that we plan and perform
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 performing 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 procedures included
examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising
from the current period audit of the financial statements that
was communicated or required to be communicated to the audit
committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our
especially challenging, subjective or complex judgments.
The communication of the critical audit matter does not alter in
any way our opinion on the consolidated financial statements,
taken as a whole, and we are not, by communicating the critical
audit matter below, providing a separate opinion on the critical
audit matter or on the account or disclosures to which it relates.
S&P Global 2020 Annual Report 95
Valuation of redeemable noncontrolling interest in S&P Dow Jones Indices LLC
DESCRIPTION
OF THE
MATTER
As described in Notes 1 and 9 to the financial statements, the Company has an agreement with the minority
partners of its S&P Dow Jones Indices LLC joint venture that contains redemption features outside of the control
of the Company. This arrangement is reported as a redeemable noncontrolling interest at fair value of $2,781
million at December 31, 2020. The Company adjusts the redeemable noncontrolling interest each reporting
period to its estimated redemption value, but never less than its initial fair value, using both income and market
valuation approaches.
Auditing the Company’s valuation of its redeemable noncontrolling interest was complex due to the estimation
uncertainty in determining the fair value. The estimation uncertainty was primarily due to the sensitivity of
the fair value to underlying assumptions about the future performance of the business. The more significant
judgmental assumptions used to estimate the value of the S&P Dow Jones Indices LLC joint venture include
an estimated discount rate, a range of assumptions that form the basis of the expected future net cash flows
(e.g., revenue growth rates and operating margins), a company specific beta and earnings and transaction
multiples for comparable companies and similar acquisitions, respectively. These significant judgmental
assumptions that incorporate market data are forward-looking and could be affected by future economic and
market conditions.
HOW WE
ADDRESSED
THE MATTER
IN OUR AUDIT
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s
controls over the accounting for its redeemable noncontrolling interest, including controls over management’s
judgments and evaluation of the underlying assumptions with regard to the valuation models applied and the
estimation process supporting the determination of the fair value of S&P Dow Jones Indices LLC joint venture.
To test the valuation of redeemable noncontrolling interest, we evaluated the Company’s selection of the
valuation methodology and the methods and significant assumptions used by inspecting available market data
and performing sensitivity analyses. For example, when evaluating the assumptions related to the revenue
growth rate and operating profit margins, we compared the assumptions to the past performance of S&P Dow
Jones Indices LLC joint venture in addition to current observable industry, market and economic trends. We
involved valuation specialists to assist in our evaluation of the methodology and significant assumptions used
by the Company, including the discount rate, company specific beta and earnings for comparable companies
and transaction multiples for similar acquisitions. We also tested the completeness and accuracy of the
underlying data supporting the significant assumptions and estimates.
/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 1969.
New York, New York
February 9, 2021
96 S&P Global 2020 Annual Report
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
S&P Global Inc.
Opinion on Internal Control over Financial Reporting
We have audited S&P Global Inc.’s internal control over
financial reporting as of December 31, 2020, based on criteria
established in Internal Control—Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion,
S&P Global Inc. (the Company) maintained, in all material
respects, effective internal control over financial reporting
as of December 31, 2020, based on the COSO criteria.
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, 2020 and 2019, the related consolidated
statements of income, comprehensive income, equity and cash
flows for each of the three years in the period ended December
31, 2020, and the related notes and our report dated February
9, 2021 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
financial reporting included in the accompanying Management’s
Annual Report on Internal Control Over Financial Reporting.
Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit.
We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the
applicable 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 effective
internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating
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 provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over
Financial Reporting
A company’s internal control over financial reporting is a process
designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
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 reasonable
detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable
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
accordance with authorizations of management and directors
of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ ERNST & YOUNG LLP
New York, New York
February 9, 2021
S&P Global 2020 Annual Report 97
Shareholder Information
Annual Meeting of Shareholders
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: 800-490-1493
TDD outside the U.S. and Canada: 781-575-4592
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 certifi cates
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.
Certifi cations and S&P Global Inc. Form 10-K
We have fi led the required certifi cations 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, 2020.
The fi nancial information included in this report was
excerpted from the Company’s Form 10-K for the year
ended December 31, 2020, fi led with the Securities and
Exchange Commission on February 9, 2021. 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.
The 2021 annual meeting will be held at 11 a.m. EDT on
Wednesday, May 5th as a virtual-only meeting. Shareholders
and guests may access the meeting online at
www.meetingcenter.io/283714745. Meeting access details
for shareholders and guests, and proxy voting information
are available at www.spglobal.com/proxy.
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 fi nd:
• Management presentations
• Financial news releases
• Financial reports, including the annual report,
proxy statement and SEC fi lings
• 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.
Shareholder correspondence should be mailed to:
Computershare
P.O. Box 505000
Louisville, KY 40233-5000
98
S&P Global 2020 Annual Report
Board of Directors
Richard E. Thornburgh (E, F, N)
Non-Executive Chairman
of the Board
S&P Global Inc.
Marco Alverà (E, F, N)
Chief Executive Offi cer
Snam S.p.A.
William “Bill” J. Amelio (A, F)
Co-Chief Executive Offi cer
and Executive Chairman
DoubleCheck
William D. Green (C, E, N)
Former CEO and Chairman
Accenture Plc
Charles E.
Haldeman, Jr. (E, F, N)
Former Chief Executive Offi cer
Freddie Mac and
Putnam Investments
Stephanie C. Hill (A, C)
Executive Vice President,
Rotary and Mission
Systems
Lockheed Martin Corp.
Rebecca Jacoby (F, N)
Former Senior Vice
President, Operations
Cisco Systems, Inc.
Monique F. Leroux (A, C)
Former Chief Executive
Offi cer and Chair
Desjardins Group
Ian Paul Livingston (A, C)
Non-Executive Director
and Chairman
Dixons Carphone plc
Maria R. Morris (A, E, F)
Former Executive
Vice President,
Global Employee Benefi ts
MetLife, Inc.
Douglas L. Peterson (E)
President and Chief
Executive Offi cer
S&P Global Inc.
Edward B. Rust, Jr. (C, E, N)
Former Chairman and Chief
Executive Offi cer
State Farm Mutual
Automobile Insurance
Company
Kurt L. Schmoke (C, N)
President
University of Baltimore
A – Audit Committee
C – Compensation & Leadership Development Committee
E – Executive Committee
F – Finance Committee
N – Nominating & Corporate Governance Committee
Committee assignments as of March 29, 2021
S&P Global 2020 Annual Report 99
Operating Committee
Douglas L. Peterson
President and Chief
Executive Offi cer
Ewout Steenbergen
Executive Vice President,
Chief Financial Offi cer
John L. Berisford
President,
S&P Global Ratings
Martina L. Cheung
President, S&P Global
Market Intelligence
Saugata Saha
President,
S&P Global Platts
Dan Draper
Chief Executive Offi cer,
S&P Dow Jones Indices
Courtney Geduldig
Chief Public and Government
Affairs Offi cer
Steven J. Kemps
Executive Vice President,
General Counsel
Swamy Kocherlakota
Executive Vice President,
Chief Information Offi cer
Nancy Luquette
Executive Vice President,
Chief Risk Offi cer
Dimitra Manis
Executive Vice President,
Chief People Offi cer
Ashu Suyash
Managing Director and
Chief Executive Offi cer, CRISIL
100 S&P Global 2020 Annual Report
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New York, NY 10041
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