SPGI 10-Q Quarterly Report Sept. 30, 2020 | Alphaminr
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SPGI 10-Q Quarter ended Sept. 30, 2020

Balance Sheet
Cash Flow
Income Statement
Debt
S&P GLOBAL INC.
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PROXIES
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DEF 14A
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DEF 14A
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DEF 14A
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DEF 14A
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DEF 14A
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spgi-20200930
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-1023
spgi-20200930_g1.jpg
S&P Global Inc.
(Exact name of registrant as specified in its charter)
New York 13-1026995
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
55 Water Street , New York , New York 10041
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 212 - 438-1000
Securities registered pursuant to Section 12(b) of the Act:
Class Trading Symbol Name of Exchange on which registered
Common stock (par value $1.00 per share) SPGI New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
☑ Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐
Smaller reporting company
☐
E merging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES ☐ NO ☑

As of October 23, 2020 (latest practicable date), 240.6 million shares of the issuer's classes of common stock (par value $1.00 per share) were outstanding.

1

S&P Global Inc.
INDEX
Page Number
Item 6. Exhibits

2

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of S&P Global Inc.

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of S&P Global Inc. and subsidiaries (the “Company”) as of September 30, 2020, the related consolidated statements of income, comprehensive income, and equity for the three- and nine-month periods ended September 30, 2020 and 2019, the related consolidated statements of cash flows for the nine-month periods ended September 30, 2020 and 2019, and the related notes (collectively referred to as the “consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2019, the related consolidated statements of income, comprehensive income, equity and cash flows for the year then ended, and the related notes and schedule (not presented herein); and in our report dated February 10, 2020, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2019, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company's management. 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 SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ ERNST & YOUNG LLP

New York, New York
October 27, 2020



3

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements

S&P Global Inc.
Consolidated Statements of Income
(Unaudited)
(in millions, except per share amounts) Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Revenue $ 1,846 $ 1,689 $ 5,575 $ 4,964
Expenses:
Operating-related expenses 519 480 1,533 1,460
Selling and general expenses 339 318 944 992
Depreciation 20 20 60 61
Amortization of intangibles 32 29 94 92
Total expenses 910 847 2,631 2,605
Gain on dispositions ( 8 ) ( 49 ) ( 16 ) ( 49 )
Operating profit 944 891 2,960 2,408
Other (income) expense, net ( 6 ) 8 ( 16 ) 104
Interest expense, net 35 32 109 105
Loss on extinguishment of debt 279 — 279 —
Income before taxes on income 636 851 2,588 2,199
Provision for taxes on income 138 189 559 482
Net income 498 662 2,029 1,717
Less: net income attributable to noncontrolling interests
( 43 ) ( 45 ) ( 144 ) ( 135 )
Net income attributable to S&P Global Inc. $ 455 $ 617 $ 1,885 $ 1,582
Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic $ 1.89 $ 2.52 $ 7.82 $ 6.43
Diluted $ 1.88 $ 2.50 $ 7.78 $ 6.40
Weighted-average number of common shares outstanding:
Basic 240.6 245.0 241.2 245.9
Diluted 241.6 246.5 242.3 247.4
Actual shares outstanding at period end 240.6 244.4
See accompanying notes to the unaudited consolidated financial statements.
4

S&P Global Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
(in millions) Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Net income $ 498 $ 662 $ 2,029 $ 1,717
Other comprehensive income:
Foreign currency translation adjustments
( 1 ) ( 35 ) ( 54 ) ( 33 )
Income tax effect
15 2 15 6
14 ( 33 ) ( 39 ) ( 27 )
Pension and other postretirement benefit plans
3 2 ( 30 ) 116
Income tax effect
( 1 ) — 8 ( 28 )
2 2 ( 22 ) 88
Unrealized gain (loss) on forward exchange contracts
14 ( 4 ) 10 ( 4 )
Income tax effect
( 3 ) 1 ( 2 ) 1
11 ( 3 ) 8 ( 3 )
Comprehensive income 525 628 1,976 1,775
Less: comprehensive income attributable to nonredeemable noncontrolling interests
( 3 ) ( 1 ) ( 8 ) ( 7 )
Less: comprehensive income attributable to redeemable noncontrolling interests
( 40 ) ( 44 ) ( 136 ) ( 128 )
Comprehensive income attributable to S&P Global Inc.
$ 482 $ 583 $ 1,832 $ 1,640


See accompanying notes to the unaudited consolidated financial statements.
5

S&P Global Inc.
Consolidated Balance Sheets
(in millions) September 30,
2020 		December 31,
2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 3,148 $ 2,866
Restricted cash 20 20
Accounts receivable, net of allowance for doubtful accounts: 2020 - $ 37 ; 2019 - $ 34
1,427 1,577
Prepaid and other current assets 246 249
Total current assets 4,841 4,712
Property and equipment, net of accumulated depreciation: 2020 - $ 651 ; 2019 - $ 622
298 320
Right of use assets 610 676
Goodwill 3,715 3,575
Other intangible assets, net 1,376 1,424
Other non-current assets 612 641
Total assets $ 11,452 $ 11,348
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 186 $ 190
Accrued compensation and contributions to retirement plans
392 446
Income taxes currently payable 79 68
Unearned revenue 1,720 1,928
Other current liabilities 438 461
Total current liabilities 2,815 3,093
Long-term debt 4,110 3,948
Lease liabilities — non-current 563 620
Pension and other postretirement benefits 262 259
Other non-current liabilities 693 624
Total liabilities 8,443 8,544
Redeemable noncontrolling interest (Note 8) 2,511 2,268
Commitments and contingencies (Note 12)
Equity:
Common stock 294 294
Additional paid-in capital 917 903
Retained income 13,368 12,205
Accumulated other comprehensive loss ( 677 ) ( 624 )
Less: common stock in treasury ( 13,460 ) ( 12,299 )
Total equity — controlling interests 442 479
Total equity — noncontrolling interests 56 57
Total equity 498 536
Total liabilities and equity $ 11,452 $ 11,348

See accompanying notes to the unaudited consolidated financial statements.
6

S&P Global Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in millions) Nine Months Ended
September 30,
2020 2019
Operating Activities:
Net income $ 2,029 $ 1,717
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation 60 61
Amortization of intangibles 94 92
Provision for losses on accounts receivable 16 17
Deferred income taxes ( 14 ) 33
Stock-based compensation 60 53
Gain on dispositions ( 16 ) ( 49 )
Pension settlement charges, net of taxes 2 85
Loss on extinguishment of debt 279 —
Other 50 49
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable 172 ( 50 )
Prepaid and other current assets ( 52 ) ( 59 )
Accounts payable and accrued expenses ( 97 ) ( 54 )
Unearned revenue ( 158 ) ( 27 )
Other current liabilities ( 28 ) ( 82 )
Net change in prepaid/accrued income taxes 28 40
Net change in other assets and liabilities 1 ( 54 )
Cash provided by operating activities 2,426 1,772
Investing Activities:
Capital expenditures ( 43 ) ( 77 )
Acquisitions, net of cash acquired ( 189 ) ( 25 )
Proceeds from dispositions 9 85
Changes in short-term investments 19 ( 3 )
Cash used for investing activities ( 204 ) ( 20 )
Financing Activities:
Proceeds from issuance of senior notes, net 1,276 —
Payments on senior notes ( 1,394 ) —
Dividends paid to shareholders ( 484 ) ( 421 )
Distributions to noncontrolling interest holders, net ( 143 ) ( 100 )
Repurchase of treasury shares ( 1,164 ) ( 1,144 )
Exercise of stock options 14 38
Employee withholding tax on share-based payments and other ( 55 ) ( 57 )
Cash used for financing activities ( 1,950 ) ( 1,684 )
Effect of exchange rate changes on cash 10 ( 7 )
Net change in cash, cash equivalents, and restricted cash 282 61
Cash, cash equivalents, and restricted cash at beginning of period 2,886 1,958
Cash, cash equivalents, and restricted cash at end of period $ 3,168 $ 2,019

See accompanying notes to the unaudited consolidated financial statements.
7

S&P Global Inc.
Consolidated Statements of Equity
(Unaudited)

Three Months Ended September 30, 2020
(in millions) Common Stock $1 par Additional Paid-in Capital Retained Income Accumulated Other Comprehensive Loss Less: Treasury Stock Total SPGI Equity Noncontrolling Interests Total Equity
Balance as of June 30, 2020 $ 294 $ 762 $ 13,189 ( 704 ) $ 13,331 $ 210 $ 58 $ 268
Comprehensive income 1
455 27 482 3 485
Dividends (Dividend declared per common share — $ 0.67 per share)
( 161 ) ( 161 ) ( 7 ) ( 168 )
Share repurchases 120 131 ( 11 ) ( 11 )
Employee stock plans 35 ( 2 ) 37 37
Change in redemption value of redeemable noncontrolling interest ( 115 ) ( 115 ) ( 115 )
Other — 2 2
Balance as of September 30, 2020 $ 294 $ 917 $ 13,368 $ ( 677 ) $ 13,460 $ 442 $ 56 $ 498

Three Months Ended September 30, 2019
(in millions) Common Stock $1 par Additional Paid-in Capital Retained Income Accumulated Other Comprehensive Loss Less: Treasury Stock Total SPGI Equity Noncontrolling Interests Total Equity
Balance as of June 30, 2019 $ 294 $ 790 $ 11,710 $ ( 651 ) $ 11,631 $ 512 $ 58 $ 570
Comprehensive income 1
617 ( 34 ) 583 1 584
Dividends (Dividend declared per common share — $ 0.57 per share)
( 139 ) ( 139 ) ( 1 ) ( 140 )
Share repurchases 30 530 ( 500 ) ( 500 )
Employee stock plans
15 ( 8 ) 23 23
Change in redemption value of redeemable noncontrolling interest
( 134 ) ( 134 ) ( 134 )
Other 1 1 ( 2 ) ( 1 )
Balance as of September 30, 2019 $ 294 $ 835 $ 12,054 $ ( 684 ) $ 12,153 $ 346 $ 56 $ 402

8

Nine Months Ended September 30, 2020
(in millions) Common Stock $1 par Additional Paid-in Capital Retained Income Accumulated Other Comprehensive Loss Less: Treasury Stock Total SPGI Equity Noncontrolling Interests Total Equity
Balance as of December 31, 2019 $ 294 $ 903 $ 12,205 ( 624 ) $ 12,299 $ 479 $ 57 $ 536
Comprehensive income 1
1,885 ( 53 ) 1,832 8 1,840
Dividends (Dividend declared per common share — $ 2.01 per share)
( 484 ) ( 484 ) ( 9 ) ( 493 )
Share repurchases 1,164 ( 1,164 ) ( 1,164 )
Employee stock plans
14 ( 3 ) 17 17
Change in redemption value of redeemable noncontrolling interest
( 238 ) ( 238 ) ( 238 )
Balance as of September 30, 2020 $ 294 $ 917 $ 13,368 $ ( 677 ) $ 13,460 $ 442 $ 56 $ 498

Nine Months Ended September 30, 2019
(in millions) Common Stock $1 par Additional Paid-in Capital Retained Income Accumulated Other Comprehensive Loss Less: Treasury Stock Total SPGI Equity Noncontrolling Interests Total Equity
Balance as of December 31, 2018 $ 294 $ 833 $ 11,284 $ ( 742 ) $ 11,041 $ 628 $ 56 $ 684
Comprehensive income 1
1,582 58 1,640 7 1,647
Dividends (Dividend declared per common share — $ 1.71 per share)
( 420 ) ( 420 ) ( 7 ) ( 427 )
Share repurchases 30 1,174 ( 1,144 ) ( 1,144 )
Employee stock plans
( 28 ) ( 62 ) 34 34
Capital contribution from noncontrolling interest
( 36 ) ( 36 ) ( 36 )
Change in redemption value of redeemable noncontrolling interest
( 356 ) ( 356 ) ( 356 )
Balance as of September 30, 2019 $ 294 $ 835 $ 12,054 $ ( 684 ) $ 12,153 $ 346 $ 56 $ 402
1 Excludes comprehensive income of $ 40 million and $ 44 million for the three months ended September 30, 2020 and 2019, respectively, and $ 136 million and $ 128 million for the nine months ended September 30, 2020 and 2019, respectively, attributable to our redeemable noncontrolling interest.

See accompanying notes to the unaudited consolidated financial statements.
9

S&P Global Inc.
Notes to the Consolidated Financial Statements
(Unaudited)
1. Nature of Operations and Basis of Presentation

S&P Global Inc. (together with its consolidated subsidiaries, "S&P Global," the “Company,” “we,” “us” or “our”) is a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

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. There was no impact on the Company's consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows as a result of this change.

The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. Therefore, the financial statements included herein should be read in conjunction with the financial statements and notes included in our Form 10-K for the year ended December 31, 2019 (our “Form 10-K”). Certain prior-year amounts have been reclassified to conform with current presentation.

In the opinion of management, all normal recurring adjustments considered necessary for a fair statement of the results of the interim periods have been included. The operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year.

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. Since the date of our Form 10-K, there have been no material changes to our critical accounting policies and estimates.

Restricted Cash

Restricted cash of $ 20 million included in our consolidated balance sheets as of September 30, 2020 and December 31, 2019 includes amounts held in escrow accounts in connection with our acquisition of Kensho.

10

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 September 30, 2020 and December 31, 2019, contract assets were $ 33 million and $ 28 million, respectively, and are included in accounts receivable in our consolidated balance sheets.

Unearned Revenue

We record unearned revenue when cash payments are received in advance of our performance. The decrease in the unearned revenue balance at September 30, 2020 compared to December 31, 2019 is primarily driven by $ 1.7 billion of revenues recognized that were included in the unearned revenue balance at the beginning of the period, offset by cash payments received in advance of satisfying our performance obligations.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of contracts for work that has not yet been performed. As of September 30, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 2.0 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.

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 the costs associated with certain sales commission programs are incremental to the costs to obtain contracts with customers and therefore meet the criteria to be capitalized. Total capitalized costs to obtain a contract were $ 112 million and $ 115 million as of September 30, 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 capitalized 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 which has been determined to be approximately 5 years. The expense is recorded within selling and general expenses.

We expense sales commissions when incurred if the amortization period is one year or less. These costs are recorded within selling and general expenses.

Other (Income) Expense, net

The components of other (income) expense, net for the three and nine months ended September 30 are as follows:
(in millions) Three Months Nine Months
2020 2019 2020 2019
Other components of net periodic benefit cost 1
$ ( 9 ) $ ( 8 ) $ ( 24 ) $ 88
Net loss from investments 3 16 8 16
Other (income) expense, net $ ( 6 ) $ 8 $ ( 16 ) $ 104

1 The net periodic benefit cost for our retirement and post retirement plans for the nine months ended September 30, 2020 includes a non-cash pre-tax settlement charge of $ 3 million. During the first nine months of 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 nine months ended September 30, 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.

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2. Acquisitions and Divestitures

Acquisitions

2020

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. 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. The acquisition of the ESG Ratings Business is not material to our consolidated financial statements.

2019

During the nine months ended September 30, 2019, we did not complete any material acquisitions.

Divestitures

2020

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 three and nine months ended September 30, 2020, we recorded a pre-tax gain of $ 3 million ($ 2 million after-tax) and $ 11 million ($ 10 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 three and nine months ended September 30, 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 three and nine months ended September 30, 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") within our Market Intelligence segment in July of 2019.

2019

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 three and nine months ended September 30, 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, a business within our Market Intelligence segment, 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 three and nine months ended September 30, 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.
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The operating profit of our businesses that were disposed of for the periods ending September 30, 2020 and 2019 is as follows:
(in millions) Three Months Nine Months
2020 2019 2020 2019
Operating profit 1
$ 1 $ 3 $ 2 $ 9
1 The three and nine months ended September 30, 2020 exclude a pre-tax gain on the sale of the IR webhosting business of $ 3 million and $ 11 million, respectively. The three and nine months ended September 30, 2020 exclude a pre-tax gain on the sale of SPIAS of $ 1 million. The three and nine months ended September 30, 2019 exclude a pre-tax gain on the sale of RigData and SPIAS of $ 27 million and $ 22 million, respectively.

3. Income Taxes

The effective income tax rate was 21.7 % and 21.6 % for the three and nine months ended September 30, 2020, respectively, and 22.2 % and 21.9 % for the three and nine months ended September 30, 2019, respectively. The decrease in the three months ended September 30, 2020 was primarily due to taxes on the deductible pre-tax loss on extinguishment of debt related to the redemption and extinguishment 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 decrease in the nine months ended September 30, 2020 was primarily due to a decrease in taxes on foreign operations. At the end of each interim period, we estimate the annual effective tax rate and apply that rate to our ordinary quarterly earnings. The tax expense or benefit related to significant unusual or infrequently occurring items that will be separately reported or reported net of their related tax effect, and are individually computed, is recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates or tax status is recognized in the interim period in which the change occurs.

The Company is continuously subject to tax examinations in various jurisdictions. As of September 30, 2020 and December 31, 2019, the total amount of federal, state and local, and foreign unrecognized tax benefits was $ 131 million and $ 124 million, respectively, exclusive of interest and penalties. We recognize accrued interest and penalties related to unrecognized tax benefits in interest expense and operating-related expense, respectively. As of September 30, 2020 and December 31, 2019, we had $ 23 million and $ 20 million, respectively, of accrued interest and penalties associated with unrecognized tax benefits. Based on the current status of income tax audits, we believe that the total amount of unrecognized tax benefits may decrease by approximately $ 12 million in the next twelve months as a result of the resolution of local tax examinations.

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4. Debt

A summary of long-term debt outstanding is as follows:
(in millions) September 30,
2020 		December 31,
2019
4.0 % Senior Notes, due 2025 1
695 694
4.4 % Senior Notes, due 2026 2
— 893
2.95 % Senior Notes, due 2027 3
495 493
2.5 % Senior Notes, due 2029 4
495 495
1.25 % Senior Notes, due 2030 5
592 —
6.55 % Senior Notes, due 2037 6
290 294
4.5 % Senior Notes, due 2048 7
273 490
3.25 % Senior Notes, due 2049 8
589 589
2.3 % Senior Notes, due 2060 9
681 —
Long-term debt 4,110 3,948

1 Interest payments are due semiannually on June 15 and December 15, and as of September 30, 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 Interest payments are due semiannually on January 22 and July 22, and as of September 30, 2020, the unamortized debt discount and issuance costs total $ 5 million.
4 Interest payments are due semiannually on June 1 and December 1, and as of September 30, 2020, the unamortized debt discount and issuance costs total $ 5 million.
5 Interest payments are due semiannually on February 15 and August 15, beginning on February 15, 2021, and as of September 30, 2020, the unamortized debt discount and issuance costs total $ 8 million.
6 Interest payments are due semiannually on May 15 and November 15, and as of September 30, 2020, the unamortized debt discount and issuance costs total $ 3 million.
7 Interest payments are due semiannually on May 15 and November 15, and as of September 30, 2020, the unamortized debt discount and issuance costs total $ 10 million.
8 Interest payments are due semiannually on June 1 and December 1, and as of September 30, 2020, the unamortized debt discount and issuance costs total $ 11 million.
9 Interest payments are due semiannually on February 15 and August 15, beginning on February 15, 2021, and as of September 30, 2020, the unamortized debt discount and issuance costs total $ 19 million.

The fair value of our total debt borrowings was $ 5.1 billion and $ 4.5 billion as of September 30, 2020 and December 31, 2019, respectively, and was estimated based on quoted market prices.

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 amounts of our 6.55 % senior notes due in 2037 and our 4.5 % senior notes due in 2048.

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 September 30, 2020 and December 31, 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 three and nine months ended September 30, 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
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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.

5. 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 September 30, 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 September 30, 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 nine months ended September 30, 2020 and twelve months ended December 31, 2019, 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 September 30, 2020 and December 31, 2019, the aggregate notional value of these outstanding forward contracts was $ 333 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 as of September 30, 2020 was $ 3 million. The amount recorded in selling and general expense related to these contracts was a net gain of $ 5 million and less than $ 1 million for three and nine months ended September 30, 2020 and a net loss of $ 4 million and net gain of less than $ 1 million for the three and nine months ended September 30, 2019, respectively.

Net Investment Hedges

During the nine months ended September 30, 2020 and twelve months ended December 31, 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 September 30, 2020 and December 31, 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. 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 for the three and nine months ended September 30, 2020 represent net periodic interest settlements and accruals, which are recognized in interest expense, net. We recognized net interest income of $ 3 million and $ 7 million for the three and nine months ended September 30, 2020, respectively.
Cash Flow Hedges

During the nine months ended September 30, 2020 and twelve months ended December 31, 2019, 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 third quarter of 2022 and the fourth quarter of 2020, 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 September 30, 2020, we estimate that $ 10 million of the net gains related to derivatives designated as cash flow hedges recorded in other comprehensive income is expected to be reclassified into earnings within the next twelve months.
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As of September 30, 2020 and December 31, 2019, the aggregate notional value of our outstanding foreign exchange forward contracts designated as cash flow hedges was $ 501 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 September 30, 2020 and December 31, 2019:
(in millions) September 30, December 31,
Balance Sheet Location 2020 2019
Derivatives designated as cash flow hedges:
Prepaid and other current assets Foreign exchange forward contracts $ 12 $ 1
Other current liabilities Foreign exchange forward contracts $ 1 $ —
Derivatives designated as net investment hedges :
Other non-current assets Cross currency swaps $ — $ —
Other non-current liabilities Cross currency swaps $ 48 $ 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 periods ended September 30:
Three Months
(in millions) Gain (Loss) recognized in Accumulated Other Comprehensive Loss (effective portion) 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 2020 2019
Cash flow hedges - designated as hedging instruments
Foreign exchange forward contracts $ 11 $ ( 3 ) Revenue, Selling and general expenses $ 2 $ —
Net investment hedges - designated as hedging instruments
Cross currency swaps $ ( 47 ) $ — $ — $ —
Nine Months
(in millions) Gain (Loss) recognized in Accumulated Other Comprehensive Loss (effective portion) 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 2020 2019
Cash flow hedges - designated as hedging instruments
Foreign exchange forward contracts $ 8 $ ( 3 ) Revenue, Selling and general expenses $ ( 2 ) $ 4
Net investment hedges - designated as hedging instruments
Cross currency swaps $ ( 38 ) $ — $ — $ —
The activity related to the change in unrealized gains (losses) in accumulated other comprehensive loss was as follows for the periods ended September 30:
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(in millions) Three Months Nine Months
2020 2019 2020 2019
Cash Flow Hedges
Net unrealized (losses) gains on cash flow hedges, net of taxes, beginning of period $ ( 1 ) $ 4 $ 2 $ 4
Change in fair value, net of tax 13 ( 3 ) 6 1
Reclassification into earnings, net of tax ( 2 ) — 2 ( 4 )
Net unrealized gains (losses) on cash flow hedges, net of taxes, end of period $ 10 $ 1 $ 10 $ 1
Net Investment Hedges
Net unrealized (losses) gains on net investment hedges, net of taxes, beginning of period $ — $ — $ ( 8 ) $ —
Change in fair value, net of tax ( 36 ) — ( 28 ) —
Reclassification into earnings, net of tax — — — —
Net unrealized (losses) gains on net investment hedges, net of taxes, end of period $ ( 36 ) $ — $ ( 36 ) $ —

6. 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 have supplemental benefit plans providing 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 defined benefit 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 unrecognized actuarial losses and unrecognized prior service costs. These amounts will be subsequently recognized as net periodic benefit 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.

The components of net periodic benefit cost for our retirement plans and postretirement plans for the periods ended September 30 are as follows:

(in millions) Three Months Nine Months
2020 2019 2020 2019
Service cost $ 1 $ 1 $ 3 $ 2
Interest cost 13 16 39 49
Expected return on assets ( 26 ) ( 27 ) ( 76 ) ( 81 )
Amortization of prior service credit / actuarial loss 4 3 10 7
Net periodic benefit cost ( 8 ) ( 7 ) ( 24 ) ( 23 )
Settlement charges 1
— — 3 113
Net benefit cost $ ( 8 ) $ ( 7 ) $ ( 21 ) $ 90
1 During the nine months ended September 30, 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 first nine
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months of 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 pretax settlement charge of $ 113 million reflects the accelerated recognition of a portion of unamortized actuarial losses in the plan.
Net periodic benefit cost related to our postretirement plans reflected in the table above was not material for the three and nine months ended September 30, 2020 and 2019.
As discussed in our Form 10-K, we changed certain discount rate assumptions for our retirement and postretirement plans and our expected return on assets assumption for our retirement plans which became effective on January 1, 2020. The effect of the assumption changes on retirement and postretirement expense for the three and nine months ended September 30, 2020 did not have a material impact to our financial position, results of operations or cash flows.

In the first nine months of 2020, we contributed $ 9 million to our retirement plans and expect to make additional required contributions of approximately $ 3 million to our retirement plans during the remainder of the year. We may elect to make additional non-required contributions depending on investment performance or any potential deterioration of our pension plan status in the fourth quarter of 2020.

Financial information shown above is based on market conditions as of December 31, 2019. Significant changes in interest rates, asset values and economic conditions have occurred since then, which could affect the information shown herein, although as of September 30, 2020, market conditions at that time had minimal effect on the funded status of the pension plans due to the plans’ investment policies (primarily fixed income investments intended to track movements in the bonds used to determine the discount rate). Effects of the 2019 novel coronavirus ("COVID-19") on the financial markets, regulations, and plan experience are uncertain and still evolving. The short-term and long-term effects of COVID-19 may have significant effects on future measurements.

7. Stock-Based Compensation

We issue stock-based incentive awards to our eligible employees under the 2019 Stock Incentive Plan ("2019 Plan") and to our eligible non-employee Directors under a Director Deferred Stock Ownership 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.

For the three and nine months ended September 30, 2020 and 2019, total stock-based compensation expense primarily related to restricted stock and unit awards was $ 38 million and $ 60 million, respectively, and $ 20 million and $ 53 million, respectively. Total unrecognized compensation expense related to unvested restricted stock and unit awards as of September 30, 2020 was $ 100 million, which is expected to be recognized over a weighted average period of 1.9 years.

8. Equity

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 September 30, 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
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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 terms of each ASR agreement entered for the periods ended September 30, 2020 and 2019, 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 Total Cash Utilized
February 11, 2020 1
July 27, 2020 1.3 0.4 1.7 $ 292.13 $ 500
February 11, 2020 2
July 27, 2020 1.4 0.3 1.7 $ 292.13 $ 500
August 5, 2019 3
October 1, 2019 1.7 0.3 2.0 $ 253.36 $ 500
February 11, 2019 4
July 31, 2019 2.2 0.1 2.3 $ 214.65 $ 500

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 million 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.

Additionally, we purchased shares of our common stock in the open market for the periods ended September 30 as follows:

(in millions, except average price)
Total number of shares purchased
Average price paid per share Total cash utilized
Three Months
September 30, 2020 0.0 $ 351.77 $ 11
September 30, 2019 — $ — $ —
Nine Months
September 30, 2020 0.5 $ 295.40 $ 161
September 30, 2019 0.8 $ 184.51 $ 144

During the nine months ended September 30, 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 nine months ended September 30, 2019, we received 5.4 million shares, including 0.4 million shares received in January of 2019 related to our October 29, 2018 ASR agreement, resulting in $ 1,144 million of cash used to repurchase shares.








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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 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 nine months ended September 30, 2020 were as follows:

(in millions)
Balance as of December 31, 2019 $ 2,268
Net income attributable to noncontrolling interest 136
Distributions payable to noncontrolling interest ( 131 )
Redemption value adjustment 238
Balance as of September 30, 2020
$ 2,511



Accumulated Other Comprehensive Loss

The following table summarizes the changes in the components of accumulated other comprehensive loss for the nine months ended September 30, 2020:
(in millions) Foreign Currency Translation Adjustments Pension and Postretirement Benefit Plans Unrealized Gain (Loss) on Foreign Forward Exchange Contracts Accumulated Other Comprehensive Loss
Balance as of December 31, 2019 $ ( 321 ) $ ( 305 ) $ 2 $ ( 624 )
Other comprehensive (loss) income before reclassifications
( 39 ) 1 ( 33 ) 6 ( 66 )
Reclassifications from accumulated other comprehensive income (loss) to net earnings
— 11 2 2 3 13
Net other comprehensive (loss) income ( 39 ) ( 22 ) 8 ( 53 )
Balance as of September 30, 2020
$ ( 360 ) $ ( 327 ) $ 10 $ ( 677 )
1 Includes an unrealized gain related to the cross currency swaps entered into in December 2019. See note 5 – Derivative Instruments for additional detail of items recognized in accumulated other comprehensive loss.
2 Reflects amortization of net actuarial losses and is net of a tax benefit of $ 2 million for the nine months ended September 30, 2020. See Note 6 — Employee Benefits for additional details of items reclassed from accumulated other comprehensive loss to net earnings.
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3 See Note 5 — Derivative Instruments for additional details of items reclassified from accumulated other comprehensive loss to net earnings.

9. 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 of basic and diluted EPS for the periods ended September 30 is as follows:
(in millions, except per share amounts) Three Months Nine Months
2020 2019 2020 2019
Amounts attributable to S&P Global Inc. common shareholders:
Net income $ 455 $ 617 $ 1,885 $ 1,582
Basic weighted-average number of common shares outstanding
240.6 245.0 241.2 245.9
Effect of stock options and other dilutive securities 1.0 1.5 1.1 1.5
Diluted weighted-average number of common shares outstanding
241.6 246.5 242.3 247.4
Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic $ 1.89 $ 2.52 $ 7.82 $ 6.43
Diluted $ 1.88 $ 2.50 $ 7.78 $ 6.40

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. For the three and nine months ended September 30, 2020 and 2019, there were no stock options excluded. Restricted performance shares outstanding of 0.6 million and 0.4 million as of September 30, 2020 and 2019, respectively, were excluded.

10. Restructuring

We continuously evaluate our cost structure to identify cost savings associated with streamlining our management structure. Our 2020 and 2019 restructuring plans consisted of a company-wide workforce reduction of approximately 90 and 300 positions, respectively, and are further detailed below. The charges for the restructuring plans 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.

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The initial restructuring charge recorded and the ending reserve balance as of September 30, 2020 by segment is as follows:
2020 Restructuring Plan 2019 Restructuring Plan
(in millions) Initial Charge Recorded Ending Reserve Balance Initial Charge Recorded Ending Reserve Balance
Ratings $ — $ — $ 11 $ 1
Market Intelligence 2 1 6 2
Platts — — 1 —
Corporate 10 6 7 2
Total $ 12 $ 7 $ 25 $ 5

We recorded a pre-tax restructuring charge of $ 12 million primarily related to employee severance charges for the 2020 restructuring plan during the nine months ended September 30, 2020 and have reduced the reserve by $ 5 million. The ending reserve balance for the 2019 restructuring plan was $ 18 million as of December 31, 2019. For the nine months ended September 30, 2020, we have reduced the reserve for the 2019 restructuring plan by $ 13 million. The reductions primarily related to cash payments for employee severance charges.

11. Segment and Related Information
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 expense, net, or interest expense, net, as these are amounts that do not affect the operating results of our reportable segments.
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.
A summary of operating results for the periods ended September 30 is as follows:

Revenue Three Months Nine Months
(in millions) 2020 2019 2020 2019
Ratings $ 894 $ 789 $ 2,725 $ 2,286
Market Intelligence 530 488 1,565 1,457
Platts 222 212 654 632
Indices 234 232 733 684
Intersegment elimination 1
( 34 ) ( 32 ) ( 102 ) ( 95 )
Total revenue $ 1,846 $ 1,689 $ 5,575 $ 4,964
Operating Profit Three Months Nine Months
(in millions) 2020 2019 2020 2019
Ratings 2
$ 544 $ 477 $ 1,758 $ 1,305
Market Intelligence 3
164 161 469 431
Platts 4
121 136 357 348
Indices 5
151 162 504 474
Total reportable segments 980 936 3,088 2,558
Corporate Unallocated expense 6
( 36 ) ( 45 ) ( 128 ) ( 150 )
Total operating profit $ 944 $ 891 $ 2,960 $ 2,408
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 three and nine months ended September 30, 2020 include a technology-related impairment charge of $ 5 million. Operating profit for the nine months ended September 30, 2019 includes employee severance charges of $ 11 million. Operating profit also
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includes amortization of intangibles from acquisitions of $ 3 million and $ 5 million for the three and nine months ended September 30, 2020, respectively, and $ 2 million for the nine months ended September 30,2019.
3 Operating profit for the three and nine months ended September 30, 2020 includes a gain on dispositions of $ 4 million and $ 12 million, respectively, and employee severance charges of $ 2 million and $ 1 million for the nine months ended September 30, 2020 and 2019, respectively. 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 includes a gain on the sale of SPIAS of $ 22 million for the three and nine months ended September 30, 2019. Operating profit also includes amortization of intangibles from acquisitions of $ 19 million for the three months ended September 30, 2020 and 2019, respectively, and $ 58 million and $ 56 million for the nine months ended September 30, 2020 and 2019.
4 As of July 31, 2019, we completed the sale of RigData and the results are included in Platts results through that date. Operating profit includes a gain on the sale of RigData of $ 27 million for the three and nine months ended September 30, 2019. Operating profit for the nine months ended September 30, 2019 includes employee severance charges of $ 1 million. Operating profit includes amortization of intangibles from acquisitions of $ 2 million for the three months ended September 30, 2020 and 2019 and $ 7 million and $ 9 million for the nine months ended September 30, 2020 and 2019, respectively.
5 Operating profit includes amortization of intangibles from acquisitions of $ 1 million for the three months ended September 30, 2020 and 2019 and $ 4 million for the nine months ended September 30, 2020 and 2019.
6 Corporate Unallocated expense for the three and nine months ended September 30, 2020 includes a gain on disposition of $ 4 million, Kensho retention related expense of $ 2 million and $ 10 million, respectively, and employee severance charges of $ 10 million for the nine months ended September 30, 2020. Corporate Unallocated Expense for the three and nine months ended September 30, 2019 includes Kensho related expenses $ 6 million and $ 17 million, respectively. Corporate unallocated expense for the nine months ended September 30, 2019 includes employee severance charges of $ 7 million and a lease impairment of $ 5 million. Corporate Unallocated expense also includes amortization of intangibles from acquisitions of $ 7 million and $ 20 million for the three and nine months ended September 30, 2020, respectively, and $ 7 million and $ 21 million for the three and nine months ended September 30, 2019, respectively.

The following table presents our revenue disaggregated by revenue type for the periods ended September 30:
(in millions) Ratings Market Intelligence Platts Indices
Intersegment Elimination 1
Total
Three Months Ended September 30, 2020
Subscription $ — $ 517 $ 205 $ 43 $ — $ 765
Non-subscription / Transaction 490 13 2 — — 505
Non-transaction 404 — — — ( 34 ) 370
Asset-linked fees — — — 156 — 156
Sales usage-based royalties — — 15 35 — 50
Total revenue $ 894 $ 530 $ 222 $ 234 $ ( 34 ) $ 1,846
Timing of revenue recognition
Services transferred at a point in time
$ 490 $ 13 $ 2 $ — $ — $ 505
Services transferred over time
404 517 220 234 ( 34 ) 1,341
Total revenue $ 894 $ 530 $ 222 $ 234 $ ( 34 ) $ 1,846
Nine Months Ended September 30, 2020
Subscription $ — $ 1,525 $ 603 $ 132 $ — $ 2,260
Non-subscription / Transaction 1,546 39 4 — — 1,589
Non-transaction 1,179 — — — ( 102 ) 1,077
Asset-linked fees — 1 — 468 — 469
Sales usage-based royalties — — 47 133 — 180
Total revenue $ 2,725 $ 1,565 $ 654 $ 733 $ ( 102 ) $ 5,575
Timing of revenue recognition
Services transferred at a point in time
$ 1,546 $ 39 $ 4 $ — $ — $ 1,589
Services transferred over time
1,179 1,526 650 733 ( 102 ) 3,986
Total revenue $ 2,725 $ 1,565 $ 654 $ 733 $ ( 102 ) $ 5,575

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(in millions) Ratings Market Intelligence Platts Indices
Intersegment Elimination 1
Total
Three Months Ended September 30, 2019
Subscription $ — $ 477 $ 194 $ 42 $ — $ 713
Non-subscription / Transaction 402 10 2 — — 414
Non-transaction 387 — — — ( 32 ) 355
Asset-linked fees — 1 — 152 — 153
Sales usage-based royalties — — 16 38 — 54
Total revenue $ 789 $ 488 $ 212 $ 232 $ ( 32 ) $ 1,689
Timing of revenue recognition
Services transferred at a point in time $ 402 $ 10 $ 2 $ — $ — $ 414
Services transferred over time 387 478 210 232 ( 32 ) 1,275
Total revenue $ 789 $ 488 $ 212 $ 232 $ ( 32 ) $ 1,689
Nine Months Ended September 30, 2019
Subscription $ — $ 1,416 $ 579 $ 122 $ — $ 2,117
Non-subscription / Transaction 1,148 31 8 — — 1,187
Non-transaction 1,138 — — — ( 95 ) 1,043
Asset-linked fees — 10 — 454 — 464
Sales usage-based royalties — — 45 108 — 153
Total revenue $ 2,286 $ 1,457 $ 632 $ 684 $ ( 95 ) $ 4,964
Timing of revenue recognition
Services transferred at a point in time
$ 1,148 $ 31 $ 8 $ — $ — $ 1,187
Services transferred over time 1,138 1,426 624 684 ( 95 ) 3,777
Total revenue $ 2,286 $ 1,457 $ 632 $ 684 $ ( 95 ) $ 4,964
1 Intersegment eliminations primarily consists of a royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.

The following provides revenue by geographic region for the periods ended September 30:
(in millions) Three Months Nine Months
2020 2019 2020 2019
U.S. $ 1,076 $ 1,021 $ 3,384 $ 2,978
European region 455 411 1,310 1,205
Asia 214 174 585 522
Rest of the world 101 83 296 259
Total $ 1,846 $ 1,689 $ 5,575 $ 4,964

See Note 2 — Acquisitions and Divestitures and Note 10 — Restructuring for additional actions that impacted the segment operating results.

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12. Commitments and Contingencies

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 13 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.
The following table provides information on the location and amounts of our leases on our consolidated balance sheets as of September 30, 2020 and December 31, 2019:
(in millions) September 30, December 31,
Balance Sheet Location 2020 2019
Assets
Right of use assets Lease right of use assets $ 610 $ 676
Liabilities
Other current liabilities Current lease liabilities 102 112
Lease liabilities — non-current Non-current lease liabilities 563 620

The components of lease expense for the periods ended September 30 are as follows:
(in millions) Three Months Nine Months
2020 2019 2020 2019
Operating lease cost $ 35 $ 39 $ 110 $ 116
Sublease income — ( 4 ) ( 5 ) ( 13 )
Total lease cost $ 35 $ 35 $ 105 $ 103

Supplemental information related to leases for the periods ended September 30 are as follows:
(in millions) Three Months Nine Months
2020 2019 2020 2019
Cash paid for amounts included in the measurement for operating lease liabilities
Operating cash flows from operating leases $ 32 $ 39 105 110
Right of use assets obtained in exchange for lease obligations
Operating leases — 34 6 772
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Weighted-average remaining lease term and discount rate for our operating leases are as follows:
September 30, December 31,
2020 2019
Weighted-average remaining lease term (years) 8.5 9.0
Weighted-average discount rate 3.86 % 3.93 %

Maturities of lease liabilities for our operating leases are as follows:
(in millions)
2020 (Excluding the nine months ended September 30, 2020)
$ 31
2021 114
2022 97
2023 79
2024 67
2025 and beyond 360
Total undiscounted lease payments $ 748
Less: Imputed interest 83
Present value of lease liabilities $ 665

Related Party Agreements

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, replacing 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 three and nine months ended September 30, 2020, S&P Dow Jones Indices LLC earned $ 32 million and $ 119 million, respectively, of revenue under the terms of the License Agreement. During the three and nine months ended September 30, 2019, S&P Dow Jones Indices LLC earned $ 28 million and $ 87 million, respectively, of revenue under the terms of the License Agreement. 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 and 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
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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.

In addition, various government and self-regulatory agencies frequently make inquiries and conduct investigations into our compliance with applicable laws and regulations, including those related to ratings activities and antitrust matters. For example, as a nationally recognized statistical rating organization registered with the SEC under Section 15E of the Securities Exchange Act of 1934, S&P Global Ratings is in ongoing 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.


13. Recently Issued or Adopted Accounting Standards

In August of 2020, the Financial Accounting Standards Board ("FASB") issued guidance that amends the accounting for convertible instruments and the derivatives scopes 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
27

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 nine months ended September 30, 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.
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14. Condensed Consolidating Financial Statements

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. 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 2020 and a portion of the $ 400 million outstanding principal amount of our 6.55 % senior notes due in 2037. On May 17, 2018, we issued $ 500 million of 4.5 % notes due in 2048. On September 22, 2016, we issued $ 500 million of 2.95 % senior notes due in 2027. On May 26, 2015, we issued $ 700 million of 4.0 % senior notes due in 2025. On August 18, 2015, we issued $ 2.0 billion of senior notes, consisting of $ 400 million of 2.5 % senior notes that were repaid in 2018, $ 700 million of 3.3 % senior notes due in 2020 and $ 900 million of 4.4 % senior notes due in 2026. 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. 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 amounts of our 6.55 % senior notes due in 2037 and our 4.5 % senior notes due in 2048. See Note 4 — Debt for additional information.

The senior notes described above are fully and unconditionally guaranteed by Standard & Poor's Financial Services LLC, a 100 % owned subsidiary of the Company. The following condensed consolidating financial statements present the results of operations, financial position and cash flows of S&P Global Inc., Standard & Poor's Financial Services LLC, and the Non-Guarantor Subsidiaries of S&P Global Inc. and Standard & Poor's Financial Services LLC, and the eliminations necessary to arrive at the information for the Company on a consolidated basis.



Statement of Income
Three Months Ended September 30, 2020
(Unaudited)
(in millions) S&P Global Inc. Standard & Poor's Financial Services LLC Non-Guarantor Subsidiaries Eliminations S&P Global Inc. Consolidated
Revenue $ 219 $ 541 $ 1,128 $ ( 42 ) $ 1,846
Expenses:
Operating-related expenses
28 120 415 ( 44 ) 519
Selling and general expenses
26 84 227 2 339
Depreciation
9 2 9 — 20
Amortization of intangibles
— — 32 — 32
Total expenses
63 206 683 ( 42 ) 910
Gain on dispositions ( 5 ) — ( 3 ) — ( 8 )
Operating profit 161 335 448 — 944
Other income, net ( 4 ) — ( 2 ) — ( 6 )
Interest expense (income), net
35 1 ( 1 ) — 35
Loss on extinguishment of debt 279 — — — 279
Non-operating intercompany transactions
103 ( 6 ) ( 172 ) 75 —
Income before taxes on income
( 252 ) 340 623 ( 75 ) 636
(Benefit) provision for taxes on income
( 71 ) 83 126 — 138
Equity in net income of subsidiaries
711 — — ( 711 ) —
Net income $ 530 $ 257 $ 497 $ ( 786 ) $ 498
Less: net income attributable to noncontrolling interests
— — — ( 43 ) ( 43 )
Net income attributable to S&P Global Inc.
$ 530 $ 257 $ 497 $ ( 829 ) $ 455
Comprehensive income
$ 503 $ 257 $ 554 $ ( 789 ) $ 525


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Statement of Income
Nine Months Ended September 30, 2020
(Unaudited)
(in millions) S&P Global Inc. Standard & Poor's Financial Services LLC Non-Guarantor Subsidiaries Eliminations S&P Global Inc. Consolidated
Revenue $ 645 $ 1,717 $ 3,337 $ ( 124 ) $ 5,575
Expenses:
Operating-related expenses
85 345 1,227 ( 124 ) 1,533
Selling and general expenses
109 177 658 — 944
Depreciation
30 8 22 — 60
Amortization of intangibles
— — 94 — 94
Total expenses
224 530 2,001 ( 124 ) 2,631
Gain on dispositions ( 5 ) — ( 11 ) — ( 16 )
Operating profit 426 1,187 1,347 — 2,960
Other income, net
( 12 ) — ( 4 ) — ( 16 )
Interest expense (income), net
112 1 ( 4 ) — 109
Loss on extinguishment of debt 279 — — — 279
Non-operating intercompany transactions
300 ( 26 ) ( 1,505 ) 1,231 —
Income before taxes on income
( 253 ) 1,212 2,860 ( 1,231 ) 2,588
(Benefit) provision for taxes on income
( 80 ) 296 343 — 559
Equity in net income of subsidiaries
3,289 — — ( 3,289 ) —
Net income $ 3,116 $ 916 $ 2,517 $ ( 4,520 ) $ 2,029
Less: net income attributable to noncontrolling interests
— — — ( 144 ) ( 144 )
Net income attributable to S&P Global Inc.
$ 3,116 $ 916 $ 2,517 $ ( 4,664 ) $ 1,885
Comprehensive income
$ 3,067 $ 916 $ 2,515 $ ( 4,522 ) $ 1,976



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Statement of Income
Three Months Ended September 30, 2019
(Unaudited)
(in millions) S&P Global Inc. Standard & Poor's Financial Services LLC Non-Guarantor Subsidiaries Eliminations S&P Global Inc. Consolidated
Revenue $ 207 $ 491 $ 1,030 $ ( 39 ) $ 1,689
Expenses:
Operating-related expenses
64 103 352 ( 39 ) 480
Selling and general expenses
26 58 234 — 318
Depreciation 11 3 6 — 20
Amortization of intangibles — — 29 — 29
Total expenses 101 164 621 ( 39 ) 847
Gain on dispositions ( 49 ) — — — ( 49 )
Operating profit 155 327 409 — 891
Other (income) expense, net ( 5 ) — 13 — 8
Interest expense (income), net
37 — ( 5 ) — 32
Non-operating intercompany transactions
100 ( 6 ) ( 107 ) 13 —
Income before taxes on income
23 333 508 ( 13 ) 851
Provision for taxes on income 16 80 93 — 189
Equity in net income of subsidiaries
622 — — ( 622 ) —
Net income $ 629 $ 253 $ 415 $ ( 635 ) $ 662
Less: net income attributable to noncontrolling interests
— — — ( 45 ) ( 45 )
Net income attributable to S&P Global Inc.
$ 629 $ 253 $ 415 $ ( 680 ) $ 617
Comprehensive income
$ 632 $ 253 $ 376 $ ( 633 ) $ 628

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Statement of Income
Nine Months Ended September 30, 2019
(Unaudited)
(in millions) S&P Global Inc. Standard & Poor's Financial Services LLC Non-Guarantor Subsidiaries Eliminations S&P Global Inc. Consolidated
Revenue $ 617 $ 1,416 $ 3,047 $ ( 116 ) $ 4,964
Expenses:
Operating-related expenses
195 330 1,051 ( 116 ) 1,460
Selling and general expenses
55 222 715 — 992
Depreciation
33 9 19 — 61
Amortization of intangibles — — 92 — 92
Total expenses 283 561 1,877 ( 116 ) 2,605
Gain on dispositions ( 49 ) — — — ( 49 )
Operating profit 383 855 1,170 — 2,408
Other expense, net 96 — 8 — 104
Interest expense (income), net
115 — ( 10 ) — 105
Non-operating intercompany transactions
291 ( 42 ) ( 1,444 ) 1,195 —
Income before taxes on income
( 119 ) 897 2,616 ( 1,195 ) 2,199
(Benefit) provision for taxes on income
( 28 ) 239 271 — 482
Equity in net income of subsidiaries
2,868 — — ( 2,868 ) —
Net income $ 2,777 $ 658 $ 2,345 $ ( 4,063 ) $ 1,717
Less: net income attributable to noncontrolling interests
— — — ( 135 ) ( 135 )
Net income attributable to S&P Global Inc.
$ 2,777 $ 658 $ 2,345 $ ( 4,198 ) $ 1,582
Comprehensive income
$ 2,869 $ 658 $ 2,310 $ ( 4,062 ) $ 1,775













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Balance Sheet
September 30, 2020
(Unaudited)
(in millions) S&P Global Inc. Standard & Poor's Financial Services LLC Non-Guarantor Subsidiaries Eliminations S&P Global Inc. Consolidated
ASSETS
Current assets:
Cash and cash equivalents
$ 1,818 $ — $ 1,330 $ — $ 3,148
Restricted cash
— — 20 — 20
Accounts receivable, net of allowance for doubtful accounts
216 209 1,002 — 1,427
Intercompany receivable
652 3,485 4,702 ( 8,839 ) —
Prepaid and other current assets
104 ( 1 ) 143 — 246
Total current assets
2,790 3,693 7,197 ( 8,839 ) 4,841
Property and equipment, net of accumulated depreciation
188 — 110 — 298
Right of use assets
364 1 245 — 610
Goodwill
283 — 3,425 7 3,715
Other intangible assets, net
— — 1,376 — 1,376
Investments in subsidiaries
12,739 6 8,228 ( 20,973 ) —
Intercompany loans receivable
17 — 1,107 ( 1,124 ) —
Other non-current assets
238 33 342 ( 1 ) 612
Total assets
$ 16,619 $ 3,733 $ 22,030 $ ( 30,930 ) $ 11,452
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$ 77 $ 10 $ 99 $ — $ 186
Intercompany payable
7,633 53 1,153 ( 8,839 ) —
Accrued compensation and contributions to retirement plans
138 50 204 — 392
Income taxes currently payable
16 — 63 — 79
Unearned revenue
308 245 1,167 — 1,720
Other current liabilities
171 13 254 — 438
Total current liabilities
8,343 371 2,940 ( 8,839 ) 2,815
Long-term debt 4,110 — — — 4,110
Lease liabilities — non-current 351 1 211 — 563
Intercompany loans payable — — 1,124 ( 1,124 ) —
Pension and other postretirement benefits 174 — 88 — 262
Other non-current liabilities 204 76 413 — 693
Total liabilities
13,182 448 4,776 ( 9,963 ) 8,443
Redeemable noncontrolling interest
— — — 2,511 2,511
Equity:
Common stock
294 — 2,375 ( 2,375 ) 294
Additional paid-in capital
103 642 9,533 ( 9,361 ) 917
Retained income
16,722 2,643 5,845 ( 11,842 ) 13,368
Accumulated other comprehensive loss
( 224 ) — ( 499 ) 46 ( 677 )
Less: common stock in treasury
( 13,458 ) — ( 2 ) — ( 13,460 )
Total equity - controlling interests
3,437 3,285 17,252 ( 23,532 ) 442
Total equity - noncontrolling interests
— — 2 54 56
Total equity
3,437 3,285 17,254 ( 23,478 ) 498
Total liabilities and equity $ 16,619 $ 3,733 $ 22,030 $ ( 30,930 ) $ 11,452

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Balance Sheet
December 31, 2019
(in millions) S&P Global Inc. Standard & Poor's Financial Services LLC Non-Guarantor Subsidiaries Eliminations S&P Global Inc. Consolidated
ASSETS
Current assets:
Cash and cash equivalents
$ 1,130 $ — $ 1,736 $ — $ 2,866
Restricted cash
— — 20 — 20
Accounts receivable, net of allowance for doubtful accounts
229 148 1,200 — 1,577
Intercompany receivable
675 2,855 3,983 ( 7,513 ) —
Prepaid and other current assets
102 2 145 — 249
Total current assets
2,136 3,005 7,084 ( 7,513 ) 4,712
Property and equipment, net of accumulated depreciation
204 — 116 — 320
Right of use assets
402 1 273 — 676
Goodwill
283 — 3,283 9 3,575
Other intangible assets, net
— — 1,424 — 1,424
Investments in subsidiaries
12,134 6 8,088 ( 20,228 ) —
Intercompany loans receivable
17 — 1,229 ( 1,246 ) —
Other non-current assets
281 37 324 ( 1 ) 641
Total assets
$ 15,457 $ 3,049 $ 21,821 $ ( 28,979 ) $ 11,348
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$ 80 $ 11 $ 99 $ — $ 190
Intercompany payable
6,288 27 1,198 ( 7,513 ) —
Accrued compensation and contributions to retirement plans
148 61 237 — 446
Income taxes currently payable
7 — 61 — 68
Unearned revenue
297 243 1,388 — 1,928
Other current liabilities
187 18 256 — 461
Total current liabilities
7,007 360 3,239 ( 7,513 ) 3,093
Long-term debt 3,948 — — — 3,948
Lease liabilities — non-current 383 1 236 — 620
Intercompany loans payable — — 1,246 ( 1,246 ) —
Pension and other postretirement benefits 178 — 81 — 259
Other non-current liabilities 171 81 373 ( 1 ) 624
Total liabilities
11,687 442 5,175 ( 8,760 ) 8,544
Redeemable noncontrolling interest
— — — 2,268 2,268
Equity:
Common stock
294 — 2,377 ( 2,377 ) 294
Additional paid-in capital
112 632 9,362 ( 9,203 ) 903
Retained income
15,836 1,975 5,404 ( 11,010 ) 12,205
Accumulated other comprehensive loss
( 175 ) — ( 497 ) 48 ( 624 )
Less: common stock in treasury
( 12,297 ) — ( 2 ) — ( 12,299 )
Total equity - controlling interests
3,770 2,607 16,644 ( 22,542 ) 479
Total equity - noncontrolling interests
— — 2 55 57
Total equity
3,770 2,607 16,646 ( 22,487 ) 536
Total liabilities and equity
$ 15,457 $ 3,049 $ 21,821 $ ( 28,979 ) $ 11,348

34

Statement of Cash Flows
Nine Months Ended September 30, 2020
(Unaudited)
(in millions) S&P Global Inc. Standard & Poor's Financial Services LLC Non-Guarantor Subsidiaries Eliminations S&P Global Inc. Consolidated
Operating Activities:
Net income $ 3,116 $ 916 $ 2,517 $ ( 4,520 ) $ 2,029
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation 30 8 22 — 60
Amortization of intangibles — — 94 — 94
Provision for losses on accounts receivable 4 4 8 — 16
Deferred income taxes ( 12 ) — ( 2 ) — ( 14 )
Stock-based compensation 24 10 26 — 60
Gain on dispositions ( 5 ) — ( 11 ) — ( 16 )
Pension settlement charge, net of taxes — — 2 — 2
Loss on extinguishment of debt 279 — — — 279
Other 22 — 28 — 50
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable 9 ( 46 ) 209 — 172
Prepaid and other current assets ( 46 ) 21 ( 27 ) — ( 52 )
Accounts payable and accrued expenses ( 19 ) ( 16 ) ( 62 ) — ( 97 )
Unearned revenue 12 4 ( 174 ) — ( 158 )
Other current liabilities ( 18 ) ( 5 ) ( 5 ) — ( 28 )
Net change in prepaid/accrued income taxes 57 ( 28 ) ( 1 ) — 28
Net change in other assets and liabilities 20 ( 13 ) ( 6 ) — 1
Cash provided by operating activities 3,473 855 2,618 ( 4,520 ) 2,426
Investing Activities:
Capital expenditures ( 10 ) ( 5 ) ( 28 ) — ( 43 )
Acquisitions, net of cash acquired — — ( 189 ) — ( 189 )
Proceeds from dispositions — — 9 — 9
Changes in short-term investments — — 19 — 19
Cash used for investing activities ( 10 ) ( 5 ) ( 189 ) — ( 204 )
Financing Activities:
Proceeds from issuance of senior notes, net 1,276 — — — 1,276
Payments on senior notes
( 1,394 ) — — — ( 1,394 )
Dividends paid to shareholders ( 484 ) — — — ( 484 )
Distributions to noncontrolling interest holders, net
— — ( 143 ) — ( 143 )
Repurchase of treasury shares ( 1,164 ) — — — ( 1,164 )
Exercise of stock options 11 — 3 — 14
Employee withholding tax on share-based payments
( 55 ) — — — ( 55 )
Intercompany financing activities ( 965 ) ( 850 ) ( 2,705 ) 4,520 —
Cash used for financing activities ( 2,775 ) ( 850 ) ( 2,845 ) 4,520 ( 1,950 )
Effect of exchange rate changes on cash — — 10 — 10
Net change in cash, cash equivalents, and restricted cash 688 — ( 406 ) — 282
Cash, cash equivalents, and restricted cash at beginning of period 1,130 — 1,756 — 2,886
Cash, cash equivalents, and restricted cash at end of period $ 1,818 $ — $ 1,350 $ — $ 3,168

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Statement of Cash Flows
Nine Months Ended September 30, 2019
(Unaudited)
(in millions) S&P Global Inc. Standard & Poor's Financial Services LLC Non-Guarantor Subsidiaries Eliminations S&P Global Inc. Consolidated
Operating Activities:
Net income $ 2,777 $ 658 $ 2,345 $ ( 4,063 ) $ 1,717
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation 33 9 19 — 61
Amortization of intangibles — — 92 — 92
Provision for losses on accounts receivable 5 1 11 — 17
Deferred income taxes 22 1 10 — 33
Stock-based compensation 17 9 27 — 53
Gain on dispositions ( 49 ) — — — ( 49 )
Pension settlement charge, net of taxes 85 — — — 85
Other 12 6 31 — 49
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable ( 90 ) ( 86 ) 126 — ( 50 )
Prepaid and other current assets ( 20 ) 2 ( 41 ) — ( 59 )
Accounts payable and accrued expenses ( 17 ) ( 1 ) ( 36 ) — ( 54 )
Unearned revenue 35 21 ( 83 ) — ( 27 )
Other current liabilities ( 62 ) ( 6 ) ( 14 ) — ( 82 )
Net change in prepaid/accrued income taxes 31 1 8 — 40
Net change in other assets and liabilities ( 56 ) ( 3 ) 5 — ( 54 )
Cash provided by operating activities 2,723 612 2,500 ( 4,063 ) 1,772
Investing Activities:
Capital expenditures ( 32 ) ( 3 ) ( 42 ) — ( 77 )
Acquisitions, net of cash acquired — — ( 25 ) — ( 25 )
Proceeds from dispositions 85 — — — 85
Changes in short-term investments — — ( 3 ) — ( 3 )
Cash used for investing activities 53 ( 3 ) ( 70 ) — ( 20 )
Financing Activities:
Dividends paid to shareholders
( 421 ) — — — ( 421 )
Distributions to noncontrolling interest holders, net
— — ( 100 ) — ( 100 )
Repurchase of treasury shares ( 1,144 ) — — — ( 1,144 )
Exercise of stock options 36 — 2 — 38
Employee withholding tax on share-based payments, and other
( 55 ) — ( 2 ) — ( 57 )
Intercompany financing activities ( 1,377 ) ( 609 ) ( 2,077 ) 4,063 —
Cash used for financing activities ( 2,961 ) ( 609 ) ( 2,177 ) 4,063 ( 1,684 )
Effect of exchange rate changes on cash — — ( 7 ) — ( 7 )
Net change in cash, cash equivalents, and restricted cash ( 185 ) — 246 — 61
Cash, cash equivalents, and restricted cash at beginning of period 694 — 1,264 — 1,958
Cash, cash equivalents, and restricted cash at end of period $ 509 $ — $ 1,510 $ — $ 2,019

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)

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, "S&P Global," the “Company,” “we,” “us” or “our”) for the three and nine months ended September 30, 2020. The MD&A should be read in conjunction with the consolidated financial statements, accompanying notes and MD&A included in our Form 10-K for the year ended December 31, 2019 (our “Form 10-K”), which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The MD&A includes the following sections:
• Overview
• Results of Operations — Comparing the Three and Nine Months Ended September 30, 2020 and 2019
• Liquidity and Capital Resources
• Reconciliation of Non-GAAP Financial Information
• Critical Accounting Estimates
• Recently Issued or Adopted Accounting Standards
• Forward-Looking Statements

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.
Key results for the periods ended September 30 are as follows:
(in millions, except per share amounts) Three Months Nine Months
2020 2019
% Change 1
2020 2019
% Change 1
Revenue $ 1,846 $ 1,689 9% $ 5,575 $ 4,964 12%
Operating profit 2
$ 944 $ 891 6% $ 2,960 $ 2,408 23%
Operating margin % 51 % 53 % 53 % 49 %
Diluted earnings per share from net income $ 1.88 $ 2.50 (25)% $ 7.78 $ 6.40 22%
1 % changes in the tables throughout the MD&A are calculated off of the actual number, not the rounded number presented.
2 Operating profit for the three months ended September 30, 2020 includes a gain on dispositions of $8 million, a technology-related impairment charge of $5 million and Kensho retention related expense of $2 million. Operating profit for the nine months ended September 30, 2020 includes a gain on dispositions of $16 million, employee severance charges of $12 million, a technology-related impairment charge of $5 million and Kensho retention related expense of $10 million. Operating profit for the three and nine months ended September 30, 2019 includes a gain on dispositions related to the sale of RigData and Standard & Poor's Investment Advisory Services LLC ("SPIAS") of $27 million and $22 million, respectively. The nine months ended September 30, 2019 includes employee severance charges of $20 million and a lease impairment charge of $5 million. Additionally, operating profit for the three and nine months ended September 30, 2019 includes Kensho retention related expense of $6 million and $17 million, respectively. Operating profit also includes amortization of intangibles from acquisitions of $32 million and $29 million for the three months ended September 30, 2020 and 2019, respectively, and $94 million and $92 million for the nine months ended September 30, 2020 and 2019, respectively.

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Three Months

Revenue increased 9% driven by increases at all of our reportable segments. Revenue growth at Ratings was mainly driven by an increase in transaction revenue due to higher corporate bond ratings revenue, partially offset by a decrease in bank loan ratings revenue. 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 average levels of assets under management ("AUM") for ETFs and mutual funds, and an increase in data subscription revenue, partially offset by lower over-the-counter derivative revenue and exchange-traded derivative revenue. The revenue increase at Platts was primarily due to continued demand for market data and price assessment products. Foreign exchange rates had a favorable impact of less than 1 percentage point.

Operating profit increased 6%, with a favorable impact from foreign exchange rates of 2 percentage points. Excluding the unfavorable impact of a higher gain on dispositions in 2019 of 5 percentage points primarily related to the sale of RigData and SPIAS, operating profit increased 11%. 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 the 2019 novel coronavirus ("COVID-19"), partially offset by an increase in incentive costs and higher compensation costs driven by annual merit increases and additional headcount.

Nine Months

Revenue increased 12% driven by increases at all of our reportable segments. Revenue growth at Ratings was mainly driven by an increase in transaction revenue due to higher corporate bond ratings revenue, partially offset by a decrease in bank loan ratings revenue. 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 exchange-traded derivatives trading volumes, higher AUM for ETFs and an increase in data subscription revenue. The revenue increase at Platts was primarily due to continued demand for market data and price assessment products. Foreign exchange rates had an unfavorable impact of less than 1 percentage point.

Operating profit increased 23%, with a favorable impact from foreign exchange rates of 2 percentage points. Excluding the unfavorable impact of a higher gain on dispositions in 2019 of less than 1 percentage point primarily related to the sale of RigData and SPIAS and a technology-related impairment charge of less than 1 percentage point, partially offset by higher employee severance charges in 2019 of less than 1 percentage point, a lease impairment charge in 2019 of less than 1 percentage point and higher Kensho retention related expense in 2019 of less than 1 percentage point, operating profit increased 23%. 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.

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 three and nine months ended September 30, 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. While we have modeled and updated the financial implications of a three month recovery scenario, factoring in data points from both internal and external economists and a range of observable market sources and incorporated the impact into our 2020 guidance expectations, the extent to which our results of operations may be impacted by the COVID-19 pandemic will depend largely on future developments, which are uncertain and cannot be accurately predicted.

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 2020, we will strive to deliver on our strategic priorities in the following key areas:



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Finance

• Meeting or exceeding revenue growth and EBITA margin targets and delivering on commitments to return capital to shareholders;

• Funding organic opportunities with continued productivity gains;

• Pursuing a disciplined acquisition, investment and partnership strategy to support our strategic initiatives; and

• Better serving our customers, employees, and the communities in which we operate through our commitment to corporate responsibility and sustainability.

Customer

• Continuing to drive excellence through our core business offerings;

• Delivering ESG, Small and Medium-sized Enterprise data and Marketplace solutions to market on schedule and with strong commercial traction;

• Modernizing and enhancing the delivery of our products across multiple channels (e.g., S&P Global Platform, MI Smart move, feeds, application programming interfaces);

• Providing a superior customer experience through the collective efforts of our divisions and functions; and

• Accelerating growth in non-U.S. markets with a particular focus on progressing our businesses in China.

Operations

• Modernizing our workplace to improve end-user productivity and experience, enabling our employees to innovate and better serve our customers;

• Standardizing and simplifying our technology to best support and enable our divisions;

• Reducing our Cyber Security risk while augmenting process maturity and producing outcomes commensurate with our risk appetite;

• Maintaining our strong commitment to quality, utilizing shared data processes and capabilities; and

• Continuing to advance a strong Risk, Internal Control, and Compliance environment.

People

• Creating an inclusive performance-driven culture that drives employee engagement and aligns with our purpose of accelerating progress in the world;

• Promoting career mobility and attracting and retaining the best people; and

• Improving diversity in overall representation through talent acquisition, advancement and retention.

There can be no assurance that we will achieve success in implementing any one or more of these strategies as a variety of factors could unfavorably impact operating results, including prolonged difficulties in the global credit markets and a change in the regulatory environment affecting our businesses. See Item 1A, Risk Factors in this Form 10-Q and our most recently filed Annual Report on Form 10-K.
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RESULTS OF OPERATIONS — COMPARING THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019
Consolidated Review
(in millions) Three Months Nine Months
2020 2019 % Change 2020 2019 % Change
Revenue $ 1,846 $ 1,689 9% $ 5,575 $ 4,964 12%
Total Expenses:
Operating-related expenses 519 480 8% 1,533 1,460 5%
Selling and general expenses 339 318 6% 944 992 (5)%
Depreciation and amortization 52 49 6% 154 153 1%
Total expenses 910 847 7% 2,631 2,605 1%
Gain on dispositions (8) (49) (84)% (16) (49) (67)%
Operating profit 944 891 6% 2,960 2,408 23%
Other expense, net (6) 8 N/M (16) 104 N/M
Interest expense, net 35 32 11% 109 105 4%
Loss on extinguishment of debt 279 — N/M 279 — N/M
Provision for taxes on income 138 189 (27)% 559 482 16%
Net income 498 662 (25)% 2,029 1,717 18%
Less: net income attributable to noncontrolling interests (43) (45) 3% (144) (135) (6)%
Net income attributable to S&P Global Inc. $ 455 $ 617 (26)% $ 1,885 $ 1,582 19%
Revenue
The following table provides consolidated revenue information for the periods ended September 30:
(in millions) Three Months Nine Months
2020 2019 % Change 2020 2019 % Change
Revenue $ 1,846 $ 1,689 9% $ 5,575 $ 4,964 12%
Subscription revenue $ 765 $ 713 7% $ 2,260 $ 2,117 7%
Non-subscription / transaction revenue 505 414 22% 1,589 1,187 34%
Non-transaction revenue 370 355 4% 1,077 1,043 3%
Asset-linked fees 156 153 2% 469 464 1%
Sales usage-based royalties 50 54 (6)% 180 153 18%
% of total revenue:
Subscription revenue 41 % 42 % 41 % 43 %
Non-subscription / transaction revenue 27 % 25 % 29 % 24 %
Non-transaction revenue 20 % 21 % 19 % 21 %
Asset-linked fees 9 % 9 % 8 % 10 %
Sales usage-based royalties 3 % 3 % 3 % 2 %
U.S. revenue $ 1,076 $ 1,021 5% $ 3,384 $ 2,978 14%
International revenue:
European region 455 411 10% 1,310 1,205 9%
Asia 214 174 23% 585 522 12%
Rest of the world 101 83 22% 296 259 14%
Total international revenue $ 770 $ 668 15% $ 2,191 $ 1,986 10%
% of total revenue:
U.S. revenue 58 % 60 % 61 % 60 %
International revenue 42 % 40 % 39 % 40 %
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spgi-20200930_g2.jpg spgi-20200930_g3.jpg
Three Months

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-transaction revenue increased primarily due to an increase in Ratings Evaluation Service ("RES") activity, partially offset by lower entity credit ratings revenue. Non-subscription / transaction revenue increased due to an increase in corporate bond ratings revenue, partially offset by lower bank loan ratings revenue. Asset linked fees increased reflecting higher average levels of assets under management for ETFs and mutual funds at Indices. The decrease in sales-usage based royalties was primarily driven by lower exchange-traded derivative revenue 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.

Nine Months

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-transaction revenue increased primarily due to an increase in surveillance and royalty revenue, partially offset by lower entity credit ratings revenue. Non-subscription / transaction revenue increased due to an increase in corporate bond ratings revenue, partially offset by a decrease in bank loan ratings revenue at Ratings. Asset linked fees increased due to the impact of higher average levels of assets under management for ETFs 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 unfavorable impact of foreign exchange rates reduced 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.


41

Total Expenses

The following tables provide an analysis by segment of our operating-related expenses and selling and general expenses for the periods ended September 30:

Three Months

(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
Ratings 1
$ 243 $ 96 $ 219 $ 85 11% 12%
Market Intelligence
221 124 203 122 9% 2%
Platts 48 47 48 49 1% (4)%
Indices 34 47 33 35 1% 34%
Intersegment eliminations 2
(35) 2 (32) — (11)% -
Total segments
511 316 471 291 8% 8%
Corporate Unallocated expense 3
8 23 9 27 (7)% (16)%
Total
$ 519 $ 339 $ 480 $ 318 8% 6%

1 In 2020, selling and general expenses include a technology-related impairment charge of $5 million.
2 Intersegment eliminations primarily relate to a royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.
3 In 2020 and 2019 , selling and general expenses include Kensho retention related expense of $2 million and $6 million, respectively.

Operating-Related Expenses

Operating-related expenses increased 8% driven by an increase at Ratings and Market Intelligence. The increase at Ratings was primarily driven by higher incentive costs. The increase at Market Intelligence was due to an increase in compensation costs associated with investments in growth initiatives and the acquisition of 451 Research, LLC, higher incentive costs and an increase in intersegment royalties tied to annualized contract value growth. 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 6%. Excluding the impact of 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 6%. This increase was primarily driven by an increase at Indices and Ratings. The increase at Indices was primarily driven by an increase in legal related costs and Ratings increased primarily due to higher incentive costs.

Depreciation and Amortization

Depreciation and amortization increased 1% due to an increase in amortization expense driven by the acquisitions of RobecoSAM and 451 Research, LLC in January 2020 and December 2019, respectively.






42

Nine Months

(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
Ratings 1
$ 681 $ 257 $ 665 $ 290 2% (11)%
Market Intelligence 2
669 363 606 368 10% (1)%
Platts 3
144 140 146 149 (2)% (6)%
Indices 115 108 109 95 5% 14%
Intersegment eliminations 4
(102) — (95) — (7)% -
Total segments
1,507 868 1,431 902 5% (4)%
Corporate Unallocated expense 5
26 76 29 90 (6)% (16)%
Total
$ 1,533 $ 944 $ 1,460 $ 992 5% (5)%

1 In 2020, selling and general expenses include a technology-related impairment charge of $5 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 $2 million. In 2019, selling and general expenses include employee severance charges of $1 million.
3 In 2019, selling and general expenses include employee severance charges of $1 million.
4 Intersegment eliminations primarily relate to a royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.
5 In 2020 and 2019, selling and general expenses include employee severance charges of $10 million and $7 million, respectively. In 2019, selling and general expenses include a lease impairment charge of $5 million. In 2020 and 2019 , selling and general expenses include Kensho retention related expense of $10 million and $17 million, respectively.

Operating-Related Expenses

Operating-related expenses increased 5% primarily driven by an increase at Market Intelligence and Ratings. The increase at Market Intelligence was due to higher compensation costs driven by investments in growth initiatives and the acquisition of 451 Research, LLC, higher incentive costs and an increase in intersegment royalties tied to annualized contract value growth. 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 decreased 5%. Excluding the impact of higher Kensho related retention expense in 2019 of 1 percentage point and higher employee severance charges in 2019 of 1 percentage point, selling and general expenses decreased 3%. This decrease was primarily driven by decreases at Ratings, Platts and Market Intelligence due to a decrease in travel and entertainment expenses from non-essential travel restrictions in response to COVID-19, partially offset by an increase at Indices driven by an increase in legal related costs.

Depreciation and Amortization

Depreciation and amortization increased 1% due to an increase in amortization expense driven by the acquisitions of RobecoSAM and 451 Research, LLC in January 2020 and December 2019, respectively, partially offset by a decrease in depreciation expense due to assets being fully depreciated.


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Gain on Dispositions
During the three and nine months ended September 30, 2020, we completed the following disposition that resulted in a pre-tax gain of $3 million and $11 million, respectively, which was included in Gain on disposition 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 three months and nine months ended September 30, 2020, we recorded a pre-tax gain of $3 million ($2 million after-tax) and $11 million ($10 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 three and nine months ended September 30, 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 three and nine months ended September 30, 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 within our Market Intelligence segment in July of 2019.
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 tables below reconcile segment operating profit to total operating profit for the periods ended September 30:
Three Months
(in millions) 2020 2019 % Change
Ratings 1
$ 544 $ 477 14%
Market Intelligence 2
164 161 2%
Platts 3
121 136 (11)%
Indices 4
151 162 (7)%
Total segment operating profit 980 936 5%
Corporate Unallocated expense 5
(36) (45) 20%
Total operating profit $ 944 $ 891 6%
1 2020 includes a technology-related impairment charge of $5 million. 2019 includes employee severance charges of $11 million. 2020 includes amortization of intangibles from acquisitions of $3 million.
2 2020 includes a gain on dispositions related to the sale of Investor Relations and SPIAS of $4 million and 2019 includes a gain on the sale of SPIAS of $22 million. 2020 and 2019 includes amortization of intangibles from acquisitions of $19 million.
3 2019 includes a gain on the sale of RigData of $27 million. 2020 and 2019 include amortization of intangibles from acquisitions of $2 million.
4 2020 and 2019 include amortization of intangibles from acquisitions of $1 million.
5 2020 includes a gain on disposition of $4 million. 2020 and 2019 include Kensho retention related expense of $2 million and $6 million, respectively. 2020 and 2019 include amortization of intangibles from acquisitions of $7 million.
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Segment Operating Profit — Increased 5% as compared to 2019. Excluding the unfavorable impact of a higher gain on dispositions in 2019 of 5 percentage points primarily related to the sale of RigData and SPIAS and a technology-related impairment charge in 2020 of 1 percentage point, operating profit increased 11%. 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. See “Segment Review” below for further information.
Corporate Unallocated Expense— Corporate Unallocated expense includes costs for corporate functions, select initiatives, unoccupied office space and Kensho, included in selling and general expenses. Corporate Unallocated expense decreased 20% compared to 2019. Excluding the favorable impact of a gain on disposition in 2020 of 8 percentage points and higher Kensho retention related expense in 2019 of 7 percentage points, Corporate Unallocated expense decreased 5% driven by lower rental expense from a reduction in the Company's real estate footprint, a decrease in travel and entertainment expenses and proceeds from a company owned life insurance policy, partially offset by a contribution to the S&P Global Foundation made in 2020.

Foreign exchange rates had a favorable impact on operating profit of 2 percentage points. This impact refers to constant currency comparisons and the remeasurement of monetary assets and liabilities. Constant currency impacts are estimated by re-calculating 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 assets and liabilities denominated in currencies other than the individual businesses functional currency.

Nine Months

(in millions) 2020 2019 % Change
Ratings 1
$ 1,758 $ 1,305 35%
Market Intelligence 2
469 431 9%
Platts 3
357 348 3%
Indices 4
504 474 6%
Total segment operating profit 3,088 2,558 21%
Corporate Unallocated expense 5
(128) (150) 15%
Total operating profit $ 2,960 $ 2,408 23%
1 2020 includes a technology-related impairment charge of $5 million. 2019 includes employee severance charges of $11 million. 2020 and 2019 include amortization of intangibles from acquisitions of $5 million and $2 million, respectively.
2 2020 includes a gain on dispositions related to the sale of Investor Relations and SPIAS of $12 million and employee severance charges of $2 million. 2019 includes a gain on the sale of SPIAS of $22 million and employee severance charges of $1 million. 2020 and 2019 includes amortization of intangibles from acquisitions of $58 million and $56 million, respectively.
3 2019 includes a gain on the sale of RigData of $27 milllion and employee severance charges of $1 million. 2020 and 2019 include amortization of intangibles from acquisitions of $7 million and $9 million, respectively.
4 2020 and 2019 include amortization of intangibles from acquisitions of $4 million.
5 2020 and 2019 include employee severance charges of $10 million and $7 million, respectively, and Kensho retention related expense of $10 million and $17 million, respectively. 2020 includes and gain on disposition of $4 million and 2019 includes a lease impairment charge of $5 million. 2020 and 2019 include amortization of intangibles from acquisitions of $20 million and $21 million, respectively.
Segment Operating Profit — Increased 21% as compared to 2019. Excluding the unfavorable impact of a higher gain on dispositions in 2019 of 1 percentage point primarily related to the sale of RigData and SPIAS, operating profit increased 22%. 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. See “Segment Review” below for further information.
Corporate Unallocated Expense— Corporate Unallocated expense includes costs for corporate functions, select initiatives, unoccupied office space and Kensho, included in selling and general expenses. Corporate Unallocated expense decreased 15% compared to 2019. Excluding the favorable impact of higher Kensho retention related expense in 2019 of 3 percentage points, a gain on disposition in 2020 of 2 percentage points, a lease impairment charge in 2019 of 2 percentage points, higher amortization of intangibles in 2019 of 1 percentage point, partially offset by higher employee severance charges in 2020 of 2
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percentage points, Corporate Unallocated expense decreased 8%. This decrease was 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 2 percentage points. This impact refers to constant currency comparisons and the remeasurement of monetary assets and liabilities. Constant currency impacts are estimated by re-calculating 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 assets and liabilities denominated in currencies other than the individual businesses 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 increased to $6 million for the three months ended September 30, 2020 compared to other expense, net of $8 million for the three months ended September 30, 2019 primarily due to a higher loss on investments for the three months ended September 30, 2019. During the nine months ended September 30, 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 first nine months of 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. Excluding these pension settlement charges, other income, net was $19 million for the nine months ended September 30, 2020 compared to $8 million for the nine months ended September 30, 2019 due to a higher loss on investments for the nine months ended September 30, 2019.

Interest Expense, net

Net interest expense increased 11% and 4% compared to the three and nine months ended September 30, 2019, respectively, primarily due to a decrease in interest income in 2020 as a result of a decrease in interest rates and lower cash balances in international locations.

Loss on Extinguishment of Debt

The three and nine months ended September 30, 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.

Provision for Income Taxes

The effective income tax rate was 21.7% and 21.6% for the three and nine months ended September 30, 2020, respectively, and 22.2% and 21.9% for the three and nine months ended September 30, 2019, respectively. The decrease in the three months ended September 30,2020 was primarily due to taxes on the deductible pre-tax loss on extinguishment of debt related to the redemption and extinguishment 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 decrease in the nine months ended September 30, 2020 was primarily due to a decrease in taxes on foreign operations.

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.

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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 was $32 million and $95 million for the three and nine months ended September 30, 2020, respectively, and $30 million and $87 million for the three and nine months ended September 30, 2019, respectively.

The following table provides revenue and segment operating profit information for the periods ended September 30:
(in millions) Three Months Nine Months
2020 2019 % Change 2020 2019 % Change
Revenue $ 894 $ 789 13% $ 2,725 $ 2,286 19%
Transaction revenue $ 490 $ 402 22% $ 1,546 $ 1,148 35%
Non-transaction revenue $ 404 $ 387 4% $ 1,179 $ 1,138 4%
% of total revenue:
Transaction revenue
55 % 51 % 57 % 50 %
Non-transaction revenue 45 % 49 % 43 % 50 %
U.S. revenue $ 489 $ 457 7% $ 1,601 $ 1,309 22%
International revenue $ 405 $ 332 22% $ 1,124 $ 977 15%
% of total revenue:
U.S. revenue 55 % 58 % 59 % 57 %
International revenue 45 % 42 % 41 % 43 %
Operating profit 1
$ 544 $ 477 14% $ 1,758 $ 1,305 35%
Operating margin % 61 % 60 % 65 % 57 %
1 Operating profit for the three and nine months ended September 30, 2020 include a technology-related impairment charge of $5 million. Operating profit for the nine months ended September 30, 2019 includes employee severance charges of $11 million. Operating profit also includes amortization of intangibles from acquisitions of $3 million and $5 million for the three and nine months ended September 30, 2020 and $2 million for the nine months ended September 30, 2019.
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Three Months
Revenue increased 13% and benefited by 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 U.S. high-yield corporate bond issuance volumes mainly resulting from historically low borrowing costs and central bank lending programs. The increase in transaction revenue was partially offset by a decrease in bank loan ratings revenue. Non-transaction revenue increased primarily due to an increase in Ratings Evaluation Service ("RES"), partially offset by lower entity credit ratings revenue. 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-Q for further discussion.
Operating profit increased 14%, with a 2 percentage point favorable impact from foreign exchange rates. Excluding the impact of a technology-related impairment charge in 2020 of 1 percentage point and higher amortization of intangibles in 2020 of 1 percentage point, operating profit increased 16%. The increase was primarily due to revenue growth and a decrease in travel and entertainment expenses from non-essential travel restrictions in response to COVID-19. These increases were partially offset by an increase in incentive costs and higher compensation costs due to annual merit increases and additional headcount.

Nine Months

Revenue increased 19% and with a favorably benefit of less than 1 percentage point from the impact of recent acquisitions. The increase in revenue was primarily driven by an increase in transaction revenue. 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 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. Non-transaction revenue increased primarily due to an increase in surveillance and royalty revenue, partially offset by lower entity credit ratings revenue. Transaction and non-transaction revenue also benefited from improved contract terms across product categories. Foreign exchange rates had an unfavorable impact of 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-Q for further discussion.

Operating profit increased 35%, with a 2 percentage point favorable impact from foreign exchange rates. Excluding the impact of employee severance charges in 2019 of 2 percentage points, partially offset by the impact of a technology-related impairment charge in 2020 of 1 percentage point, operating profit increased 34%. The operating profit increase was primarily due to the increase in revenue discussed above combined with a reduction in expenses. Expenses decreased primarily due to the favorable impact of foreign exchange rates, 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 due to annual merit increases and additional headcount.

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.
Third Quarter
Compared to Prior Year 		Year-to-Date
Compared to Prior Year
Corporate Bond Issuance * U.S. Europe Global U.S. Europe Global
High-yield issuance 94% 3% 41% 79% 13% 32%
Investment-grade issuance (5)% (7)% 6% 64% 16% 30%
Total issuance 11% (5)% 9% 67% 15% 30%
* Includes Industrials and Financial Services.

• Corporate issuance was up in the U.S. in the quarter and the first nine months driven by a strong increase in high-yield issuance as issuers were taking advantage of historically low borrowing costs. Issuance was also aided by central bank
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lending actions intended to provide market stabilization. Corporate issuance in Europe was down in the quarter driven by weakness in investment-grade issuance. A number of large financing transactions contributed to the increase in investment-grade issuance in the U.S. and Europe for the first nine months.

Third Quarter Compared to Prior Year Year-to-Date Compared to Prior Year
Structured Finance Issuance U.S. Europe Global U.S. Europe Global
Asset-backed securities (“ABS”) 10% (27)% 1% (16)% 81% (7)%
Structured credit (primarily CLOs) (47)% (17)% (40)% (32)% (31)% (31)%
Commercial mortgage-backed securities (“CMBS”) (30)% (70)% (35)% (25)% (41)% (24)%
Residential mortgage-backed securities (“RMBS”) (1)% 58% 17% (13)% 33% —%
Covered bonds * (43)% (43)% * (41)% (33)%
Total issuance (12)% (17)% (14)% (21)% (17)% (18)%
* Represents no activity in 2020 and 2019.


• ABS issuance increased in the U.S. in the quarter driven by an increase in certain asset lease deals and decreased in the first nine months primarily from a low Q2 issuance after the market shutdown at the outset of COVID-19. ABS issuance in Europe decreased, primarily in Autos, as the ECB introduced more attractive targeted longer-term refinancing operation (TLTRO III) liquidity and increased in the first nine months 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 poor market environment and the impact of the COVID-19 crisis limiting third party site inspections and appraisal reports.

• RMBS issuance was down in the U.S. reflecting decreased market volume in Non-Performing Loans (NPL) due to the impact of the COVID-19 crisis and the uncertainty on collateral performance. RMBS issuance increased in Europe reflecting a number of large jumbo deals in the quarter.

• 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.

For a further discussion of competitive and other risks inherent in our Ratings business, see Item 1A, Risk Factors in this Form 10-Q and our most recently filed Annual Report on Form 10-K. For a further discussion of the legal and regulatory environment see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.

Market Intelligence

Market Intelligence's portfolio of capabilities are 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.

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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 three months and nine months ended September 30, 2020, we recorded a pre-tax gain of $3 million ($2 million after-tax) and $11 million ($10 million after-tax), respectively, in Gain on dispositions in the consolidated statement of income related to the sale of IR.

During the three and nine months ended September 30, 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 Standard & Poor's Investment Advisory Services LLC ("SPIAS") in July of 2019.

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.
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.
The following table provides revenue and segment operating profit information for the periods ended September 30:
(in millions) Three Months Nine Months
2020 2019 % Change 2020 2019 % Change
Revenue $ 530 $ 488 9% $ 1,565 $ 1,457 7%
Subscription revenue $ 517 $ 477 8% $ 1,525 $ 1,416 8%
Non-subscription revenue $ 13 $ 10 30% $ 39 $ 31 27%
Asset-linked fees $ — $ 1 (83)% $ 1 $ 10 (92)%
% of total revenue:
Subscription revenue 98 % 98 % 97 % 97 %
Non-subscription revenue 2 % 2 % 3 % 2 %
Asset-linked fees — % — % — % 1 %
U.S. revenue $ 337 $ 312 8% $ 1,007 $ 923 9%
International revenue $ 193 $ 176 10% $ 558 $ 534 5%
% of total revenue:
U.S. revenue 64 % 64 % 64 % 63 %
International revenue 36 % 36 % 36 % 37 %
Operating profit 1
$ 164 $ 161 2% $ 469 $ 431 9%
Operating margin % 31 % 33 % 30 % 30 %
1 Operating profit for the three and nine months ended September 30, 2020 includes a gain on dispositions of $4 million and $12 million, respectively. Operating profit for the nine months ended September 30, 2020 also includes employee severance charges of $2 million. Operating profit for the three and nine months ended September 30, 2019 includes a gain on the disposition of SPIAS of $22 million and employee severance charges of $1 million for the nine months ended September 30, 2019. Operating profit also includes amortization of intangibles from acquisitions of $19 million for the three months ended September 30, 2020 and 2019, and $58 million and $56 million for the nine months ended September 30, 2020 and 2019, respectively.

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Three Months

Revenue increased 9% and was favorably impacted by 2 percentage points from the net effect of the recent acquisition of 451 Research, LLC, offset by the disposition of Standard & Poor's Investment Advisory Services LLC and the IR webhosting business. The increase in revenue was driven by growth in annualized contract values for our data feed products within Data Management Solutions, CUSIP, RatingsXpress®, RatingsDirect®, and Market Intelligence Desktop products. Excluding the impact of the acquisition and dispositions favorably impacting Desktop revenue growth by 4 percentage points, revenue growth at Data Management Solutions, Credit Risk Solutions, and Desktop was 12%, 11% and 3%, respectively. Both U.S. revenue and international revenue increased compared to the three months ended September 30, 2019. Foreign exchange rates had a favorable impact of less than one percentage point.

Operating profit increased 2%, with a 3 percentage point favorable impact from foreign exchange rates. Excluding the unfavorable impact of a gain on the disposition of SPIAS in 2019 of 13 percentage points, partially offset by the favorable impact of the gain on disposition of the IR webhosting business in 2020 of 1 percentage point, operating profit increased 14%. The increase was primarily due to revenue growth and a decrease in travel and entertainment expenses from non-essential travel restrictions in response to COVID-19, partially offset by an increase in compensation costs primarily driven by additional headcount, higher incentive costs and an increase in intersegment royalties tied to annualized contract value growth.

Nine Months

Revenue increased 7% and was favorably impacted by less than 1 percentage point from the net effect of the recent acquisition of 451 Research, LLC, offset by the disposition of Standard & Poor's Investment Advisory Services LLC 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 10%, 9% and 4%, respectively. Both U.S. revenue and international revenue increased compared to the nine months ended September 30, 2019. Foreign exchange rates had an unfavorable impact of less than one percentage point.

Operating profit increased 9%, with a 3 percentage point favorable impact from foreign exchange rates. Excluding the unfavorable impact of a gain on the disposition of SPIAS in 2019 of 4 percentage points, partially offset by the favorable impact of the gain on disposition of the IR webhosting business in 2020 of 2 percentage point, operating profit increased 11%. The increase was primarily due to revenue growth and a decrease in travel and entertainment expenses from non-essential travel restrictions in response to COVID-19, partially offset by an increase in compensation costs primarily driven by additional headcount, higher incentive costs and an increase in intersegment royalties tied to annualized contract value growth.
For a further discussion of competitive and other risks inherent in our Market Intelligence business, see Item 1A, Risk Factors in this Form 10-Q and our most recently filed Annual Report on Form 10-K. For a further discussion of the legal and regulatory environment see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.

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.

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.
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The following table provides revenue and segment operating profit information for the periods ended September 30:
(in millions) Three Months Nine Months
2020 2019 % Change 2020 2019 % Change
Revenue $ 222 $ 212 5% $ 654 $ 632 4%
Subscription revenue $ 205 $ 194 6% $ 603 $ 579 4%
Sales usage-based royalties $ 15 $ 16 (6)% $ 47 $ 45 5%
Non-subscription revenue $ 2 $ 2 (45)% $ 4 $ 8 (41)%
% of total revenue:
Subscription revenue 92 % 91 % 92 % 92 %
Sales usage-based royalties 7 % 8 % 7 % 7 %
Non-subscription revenue 1 % 1 % 1 % 1 %
U.S. revenue $ 70 $ 72 (3)% $ 211 $ 212 —%
International revenue $ 152 $ 140 8% $ 443 $ 420 6%
% of total revenue:
U.S. revenue 32 % 34 % 32 % 34 %
International revenue 68 % 66 % 68 % 66 %
Operating profit 1
$ 121 $ 136 (11)% $ 357 $ 348 3%
Operating margin % 55 % 65 % 55 % 55 %
1 Operating profit for the three and nine months ended September 30, 2019 includes a gain on the sale of RigData of $27 million and employee severance charges of $1 million for the nine months ended September 30, 2019. Operating profit includes amortization of intangibles from acquisitions of $2 million for the three months ended September 30, 2020 and 2019 and $7 million and $9 million for the nine months ended September 30, 2020 and 2019, respectively.

Three Months

Revenue increased 5% 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 and price assessment products driven by both expanded product offerings to our existing customers combined with enhanced contract terms. This increase was partially offset by a decrease in sales usage-based royalties from the licensing of our proprietary market price data and price assessments to commodity exchanges mainly due to decreased trading volumes in Petroleum and Gas and a decrease in conference revenue as a result of cancellation and postponement of events due to COVID-19. Demand for market data and price assessment products was driven by international customers. International revenue grew and U.S. revenue decreased compared to the three months ended September 30, 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 metals & agriculture, petrochemicals and power & gas, also contributing to revenue growth. Foreign exchange rates had an unfavorable impact of less than 1 percentage point.

Operating profit decreased 11% 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 of 21 percentage points, operating profit increased 10%. 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 and lower costs as a result of cancellation and postponement of events due to COVID-19. These decreases were partially offset by an increase in incentive costs and higher compensation costs due to annual merit increases and additional headcount.

Nine Months

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 and price assessment products driven by both expanded product offerings to our existing customers combined with
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enhanced contract terms, 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 decreased slightly compared to the nine months ended September 30, 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 an unfavorable impact of less than 1 percentage point.

Operating profit increased 3% 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 of 7 percentage points, operating profit increased 10%. 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 incentive costs and higher compensation costs due to annual merit increases and additional headcount.

For a further discussion of competitive and other risks inherent in our Platts business, see Item 1A, Risk Factors in this Form 10-Q and our most recently filed Annual Report on Form 10-K. For a further discussion of the legal and regulatory environment see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.
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 based 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.

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The following table provides revenue and segment operating profit information for the periods ended September 30:
(in millions) Three Months Nine Months
2020 2019 % Change 2020 2019 % Change
Revenue $ 234 $ 232 1% $ 733 $ 684 7%
Asset-linked fees $ 156 $ 152 2% $ 468 $ 454 3%
Subscription revenue $ 43 $ 42 3% $ 132 $ 122 8%
Sales usage-based royalties $ 35 $ 38 (7)% $ 133 $ 108 23%
% of total revenue:
Asset-linked fees 67 % 66 % 64 % 66 %
Subscription revenue 18 % 18 % 18 % 18 %
Sales usage-based royalties 15 % 16 % 18 % 16 %
U.S. revenue $ 197 $ 196 —% $ 619 $ 582 7%
International revenue $ 37 $ 36 2% $ 114 $ 102 10%
% of total revenue:
U.S. revenue 84 % 85 % 84 % 85 %
International revenue 16 % 15 % 16 % 15 %
Operating profit 1
$ 151 $ 162 (7)% $ 504 $ 474 6%
Less: net operating profit attributable to noncontrolling interests 41 43 136 128
Net operating profit $ 110 $ 119 (7)% $ 368 $ 346 6%
Operating margin % 65 % 70 % 69 % 69 %
Net operating margin % 47 % 51 % 50 % 51 %
1 Operating profit includes amortization of intangibles from acquisitions of $1 million for the three months ended September 30, 2020 and 2019 and $4 million for the nine months ended September 30, 2020 and 2019.

Three Months

Revenue at Indices increased 1% primarily due to higher average levels of assets under management ("AUM") for ETFs and mutual funds, and an increase in data subscription revenue. These increases were partially offset by lower over-the-counter derivative revenue and exchange-traded derivative revenue. Average levels of AUM for ETFs increased 12% to $1.714 trillion and ending AUM for ETFs increased 11% to $1.727 trillion compared to the third quarter of 2019. Foreign exchange rates had an unfavorable impact of less than 1 percentage point.

Operating profit decreased 7% due to an increase in legal related costs, higher incentive costs and an increase in compensation costs due to annual merit increases and additional headcount as well as professional costs, partially offset by lower cost of sales and the increase in revenue discussed above. Foreign exchange rates had a favorable impact of less than 1 percentage point.

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Nine Months

Revenue at Indices increased 7% primarily due to higher exchange-traded derivative trading volumes from market volatility, higher average levels of AUM for ETFs and an increase in data subscription revenue. These increases were partially offset by the unfavorable impact of benefits related to a 2019 contract renegotiation and a retrospective fee for previously unlicensed and unreported index usage that were recognized in the first nine months of 2019. Average AUM for ETFs increased 10% to $1.620 trillion compared to the first nine months of 2019. Ending AUM for ETFs increased 11% to $1.727 trillion compared to the first nine months of 2019. Foreign exchange rates had an unfavorable impact of 1 percentage point.

Operating profit increased 6%. The impact of revenue growth and lower travel and entertainment expenses from non-essential travel restrictions in response to COVID-19 was partially offset by an increase in legal related costs, higher compensation costs due to annual merit increases, an increase in incentive costs as well as professional costs. Foreign exchange rates had a favorable impact of less than 1 percentage point.

For a further discussion of competitive and other risks inherent in our Indices business, see Item 1A, Risk Factors in this Form 10-Q and our most recently filed Annual Report on Form 10-K. For a further discussion of the legal and regulatory environment see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.

LIQUIDITY AND CAPITAL RESOURCES

We continue to maintain a strong financial position. Our primary source of funds for operations is cash from our businesses. 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 $3,168 million as of September 30, 2020, an increase of $282 million from December 31, 2019.

The following table provides cash flow information for the nine months ended September 30:
(in millions) 2020 2019 % Change
Net cash provided by (used for):
Operating activities $ 2,426 $ 1,772 37%
Investing activities $ (204) $ (20) N/M
Financing activities $ (1,950) $ (1,684) 16%

In the first nine months of 2020, free cash flow increased to $2,240 million compared to $1,595 million in the first nine months of 2019. The increase is primarily due to an increase in cash provided by operating activities as discussed below. 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 $654 million to $2,426 million for the first nine months of 2020. The increase is mainly due to higher operating results in 2020 and improved cash collections on accounts receivable in 2020.

Investing activities

Our cash outflows from investing activities are primarily for acquisitions and capital expenditures, while cash inflows are primarily proceeds from dispositions.

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Cash used for investing activities increased to $204 million for the first nine months of 2020 compared to $20 million in the first nine months of 2019, primarily due to cash used for the acquisitions of the ESG Ratings Business from RobecoSAM and Greenwich Associates LLC in 2020. See Note 2 — Acquisitions and Divestitures to the consolidated financial statements of this Form 10-Q for further discussion.

Financing activities

Our cash outflows from financing activities consist primarily of share repurchases, dividends to shareholders and repayments of short-term and long-term debt, while cash inflows are primarily attributable to the borrowing of short-term and long-term debt and proceeds from the exercise of stock options.

Cash used for financing activities increased $266 million to $1,950 million for the first nine months of 2020. 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 4 — Debt to the consolidated financial statements of this Form 10-Q for further discussion.

During the nine months ended September 30, 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 nine months ended September 30, 2019, we received 5.4 million shares, including 0.4 million shares received in January of 2019 related to our October 29, 2018 ASR agreement, resulting in $1,144 million of cash used to repurchase shares. See Note 8 — Equity to the consolidated financial statements of this Form 10-Q for further discussion.

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 September 30, 2020 and December 31, 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 three and nine months ended September 30, 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 29, 2020, the Board of Directors approved an increase in the quarterly common stock dividend from $0.57 per share to $0.67 per share.

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, net. 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
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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 item below for the nine months ended September 30:

(in millions) 2020 2019 % Change
Cash provided by operating activities $ 2,426 $ 1,772 37 %
Capital expenditures (43) (77)
Distributions to noncontrolling interest holders, net 1
(143) (100)
Free cash flow 2,240 1,595 40 %
Settlement of prior-year tax audits — 51
Payment of legal settlements — 1
Free cash flow excluding certain items $ 2,240 $ 1,647 36 %
1 Distributions to noncontrolling interest holders is net of amounts owed to the S&P Dow Jones Indices joint venture by the noncontrolling interest holders .

(in millions) 2020 2019 % Change
Cash used for investing activities (204) (20) N/M
Cash used for financing activities (1,950) (1,684) 16 %
N/M - not meaningful

CRITICAL ACCOUNTING ESTIMATES

Our accounting policies are described in Note 1 — Accounting Policies to the consolidated financial statements in our most recent Form 10-K. As discussed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , in our most recent Form 10-K, we consider 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. These critical estimates include 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 non-controlling 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. Since the date of our Form 10-K, there have been no material changes to our critical accounting estimates.

RECENTLY ISSUED OR ADOPTED ACCOUNTING STANDARDS

See Note 13 – Recently Issued or Adopted Accounting Standards to the consolidated financial statements of this Form 10-Q for further information.

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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, 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 including the upcoming U.S. presidential election, 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 associated with the current U.S. administration;
• the Company’s ability to successfully recover should it 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 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 proceedings, investigations and inquiries;
• 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 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 introduction of competing products or technologies by 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;
• the level of the Company’s future cash flows and capital investments;
• the impact on the Company’s revenue and net income caused by fluctuations in foreign currency exchange rates;
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• 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, including the Tax Cuts and Jobs Act 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 most recently filed Annual Report on Form 10-K and Item 1A, Risk Factors in this Form 10-Q.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
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 September 30, 2020 and December 31, 2019, 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 are not designated as hedges and do not qualify for hedge accounting. As of September 30, 2020 and December 31, 2019, we entered into foreign exchange forward contracts to hedge the effect of adverse fluctuations in foreign exchange rates and a cross-currency swap contracts to hedge a portion of our net investment in a foreign subsidiary against volatility in foreign exchange rates. We have not entered into any derivative financial instruments for speculative purposes. See Note 5 - Derivative Instruments to the consolidated financial statements of this Form 10-Q for further discussion.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed so that information required to be disclosed in our reports filed with the U.S. Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

As of September 30, 2020, an evaluation was performed under the supervision and with the participation of management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of September 30, 2020.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As a result of the COVID-19 pandemic, the majority of our workforce began working remotely in March 2020. These changes to the working environment did not have a material effect on our internal controls over financial reporting during the most recent quarter.


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PART II – OTHER INFORMATION
Item 1. Legal Proceedings

See Note 12 – Commitments and Contingencies - Legal & Regulatory Matters to the consolidated financial statements of this Form 10-Q for information on our legal proceedings.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in our most recently filed Annual Report on Form 10-K which could materially affect our business, financial condition or future results. The COVID-19 pandemic has heightened, and in some cases manifested, certain of the risks we normally face in operating our business, including those disclosed in our most recently filed Annual Report on Form 10-K, and the risk factor disclosure in the Form 10-K is qualified by the information relating to COVID-19 that is described in this Quarterly Report on Form 10-Q, including the new risk factor set forth below. There have been no material changes to the risk factors we have previously disclosed in Item 1A, Risk Factors, in our most recent Form 10-K, except as follows:

The COVID-19 pandemic and its effects have affected, and may have a material adverse effect on, our results of operations.

Following the outbreak of an infectious respiratory illness caused by the 2019 novel coronavirus (“COVID-19”), the World Health Organization declared a global emergency on January 30, 2020 and subsequently declared COVID-19 as a pandemic on March 11, 2020.

COVID-19 has spread globally, including in the United States, the United Kingdom, the European Union and other jurisdictions in which we operate. As its impacts have become more severe, governments across the world have taken steps to contain the virus by restricting human movement through numerous measures including travel bans and restrictions, social distancing, quarantines, shelter in place orders, enhanced health screenings at ports of entry and elsewhere, and business shutdowns. These measures have resulted in an unprecedented near halt of the global economy. Such measures may remain in place to varying degrees for a significant period of time and they are likely to continue to adversely affect the global economy.

While the initial economic disruption was triggered by non-economic factors, continuation of the shutdown of businesses and entire industries, increases in unemployment, implementation of furloughs, lost wages across populations and a significant drop in consumer and business spending, are expected to result in a recession, the duration and gravity of which is unknown and cannot be known at this time. In particular, the United States entered into a recession in February 2020. A return to more ordinary course economic activity is dependent on the duration and severity of the COVID-19 pandemic, which are in turn dependent on a series of evolving factors, including the severity and transmission rate of the virus, the extent and effectiveness of containment efforts, the potential resurgence of the virus, and policy decisions made by governments across the globe as they react to evolving local and global conditions. There are no comparable recent events that can provide guidance as to the effect of the COVID-19 global pandemic, and, as a result, the ultimate impact of the coronavirus outbreak or a similar health epidemic is highly uncertain. The effects of COVID-19 have impacted our operations and may ultimately have a material adverse impact on our results of operations in the future, particularly in the event of a severe recession. The extent to which the pandemic will continue to affect our businesses, financial condition and results of operations will depend on future developments, which are highly uncertain and cannot be predicted.

Increased volatility and uncertainty in the global economy, and the financial and commodities markets
The global economy has been disrupted as a result of the ongoing health crisis and the financial and commodities markets have reacted with unprecedented volatility. Governmental authorities worldwide have taken increased measures to stabilize the markets and support economic growth. The success of these measures is unknown, and they may not be sufficient to address the market dislocations or avert severe and prolonged reductions in economic activity. Even after the pandemic subsides, the U.S. economy and other major economies may continue to experience a recession, and we anticipate our businesses would be materially and adversely affected by a prolonged recession in the U.S. and other major markets. Because there are no comparable recent events that can provide guidance on the impact to the global economy, we cannot predict the extent to which our business may be impacted. In addition, the increase in revenue of Ratings was primarily driven by higher corporate bond issuance in the U.S. mainly resulting from historically low borrowing costs, increased borrowing demand from companies to increase their liquidity in light of uncertainties associated with COVID-19, and central bank lending actions. There can be no guarantee that such favorable conditions would continue in the future, and our businesses, financial condition and results of operations could be negatively affected absent such favorable conditions. Moreover, the unprecedented volatility observed in the markets since the outset of COVID-19 may result in sudden unexpected changes in market structures that were not previously anticipated by laws, rules, regulations or general market practices. Risks posed to our businesses, financial condition and results of operations from volatility in the financial and commodities markets are described in our risk factor
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entitled, “Changes in the volume of securities issued and traded in domestic and/or global capital markets, asset levels and flows into investment products, changes in interest rates and volatility in the financial markets, and volatility in the commodities markets impact our business, financial condition or results of operations”, in our most recently filed Annual Report on Form 10-K.

Decreased demand for our subscription services
Our clients are being impacted to varying degrees. Some may no longer be in business by the time the COVID-19 crisis comes to an end, others will face significant spending constraints in order to continue to operate, and others may reduce their workforces permanently. As a result of the impact on our clients, our subscription services may face pricing pressure on renewals, delayed renewals, and challenges to new sales which would in turn reduce revenue, ultimately impacting our results of operations. Limited human mobility has, among other things, significantly reduced demand for energy for transportation and the decrease in demand has been exacerbated by political tensions between large oil producing countries.

This could put additional pressure on Platts clients and translate into slower demand for our subscription and related products and services. Moreover, while our business continuity program has been effective to date, the current restrictions on human mobility limit our ability to interact with subscribers and effectively demonstrate new products and may have a negative effect on our ability to secure new subscriptions and renewals.

Our businesses assess and analyze the impact of economic events
Our divisions are all actively engaged in analyzing and providing views on the quickly evolving economic conditions. We are publishing articles and research pieces that attempt to assess the impact of the COVID-19 pandemic on the world economy and its components, both geographic and sectoral. In addition, we are taking actions (including, but not limited to, rating actions, revising the composition of our indices, etc.), consistent with our business procedures, in response to the evolving conditions. Notwithstanding the care we take in carrying out our work, the views and assumptions we express, the conclusions we draw, the actions we take, and the work our divisions are producing today are likely to be heavily scrutinized with the benefit of hindsight. We have faced significant regulatory and media scrutiny following prior periods of volatility and economic uncertainty. Such scrutiny has in the past and may in the future impact our reputation, brand and credibility and result in government and regulatory proceedings, investigations, inquiries and litigation. See our risk factors entitled “Exposure to litigation and government and regulatory proceedings, investigations and inquiries could have a material adverse effect on our business, financial condition or results of operations” and “Our reputation, credibility, and brand are key assets and competitive advantages of our Company and our business may be affected by how we are perceived in the marketplace” in our most recently filed Annual Report on Form 10-K.

Business continuity
Our business continuity program has been effective to date. Some portion of our employee population has been working remotely since January, and by mid-March nearly our entire employee population was working remotely. While we have been able to continue our operations during this time, maintaining a remote work environment for an extended period of time may have a material adverse effect on our productivity and our ability to meet the needs of our clients and exposes us to operational risks. See our risk factor entitled “Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability” in our most recently filed Annual Report on Form 10-K. In addition, a portion of our information technology resources have been diverted to establishing and maintaining an infrastructure that supports a sustained remote working environment. Such efforts limit the resources available for improvement and innovation projects. Moreover, given the extent to which we are utilizing a remote working environment, we face increased vulnerability. Although there has not been a cyber attack that has had a material adverse effect on the Company to date, we have noted an increase in cyber threats targeted at our remote work environment and there can be no assurance that there will not be a material adverse effect in the future. See our risk factor entitled “We are exposed to risks related to cybersecurity and protection of confidential information” in our most recently filed Annual Report on Form 10-K. In addition, while our employee base currently has adequate resources to pursue new clients or expand existing relationships, we have no control over the business continuity resources available to our clients. As a result, our ability to maintain, expand, or establish new client relationships may be limited.

Return of capital
While our capital position has not been materially affected by the COVID-19 pandemic, there can be no assurance that a recession triggered by the pandemic will not have a material negative impact on our capital position. Our Board of Directors has determined that, in these unprecedented times, it is prudent that the Company not initiate any new share repurchase plan at this time. The Board has made no changes to the dividend guidance. There can be no assurance that our dividend or share repurchases will remain unchanged.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On January 29, 2020, the Board of Directors approved a share repurchase program authorizing the purchase of 30 million
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shares (the "2020 Repurchase Program"), which was approximately 12% of the total shares of our outstanding common stock at that time. During the third quarter of 2020, we did not repurchase any shares under the 2020 Repurchase Program and, as of September 30, 2020, 30 million shares remained under the 2020 Repurchase Program.

On December 4, 2013, the Board of Directors approved a share repurchase program authorizing the purchase of up to 50 million shares (the "2013 Repurchase Program"), which was approximately 18% of the Company's outstanding shares at that time. During the third quarter of 2020, we completed the ASR agreements that we entered into on February 11, 2020 and received an additional 0.5 million shares. As of September 30, 2020, 0.8 million shares remained under the 2013 Repurchase Program.

Repurchased 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. Our 2013 and 2020 Repurchase Programs have no expiration date and purchases under this program may be made from time to time on the open market and in private transactions, depending on market conditions.

The following table provides information on our purchases of our outstanding common stock during the third quarter of 2020 pursuant to our 2013 and 2020 Repurchase Programs (column c). In addition to these purchases, the number of shares in column (a) include shares of common stock that are tendered to us to satisfy our employees’ tax withholding obligations in connection with the vesting of awards of restricted shares (we repurchase such shares based on their fair market value on the vesting date).

There were no other share repurchases during the quarter outside the repurchases noted below.

Period (a) Total Number of Shares Purchased (b) Average Price Paid per Share (c) Total Number of Shares Purchased as
Part of Publicly Announced Programs 		(d) Maximum Number of Shares that may yet be Purchased Under the Programs
July 1 — July 31, 2020 1
514,429 $ 295.91 512,522 30.8 million
Aug 1 — Aug 31, 2020 2,254 351.37 — 30.8 million
September 1 — September 30, 2020 1,572 351.75 — 30.8 million
Total — Quarter 518,255 $ 296.32 512,522 30.8 million
1 Includes 0.5 million shares received from the conclusion of our ASR agreement that we entered into on February 11, 2020.
Item 5. Other Information

IRAN THREAT REDUCTION AND SYRIA HUMAN RIGHTS ACT DISCLOSURE

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which amended the Securities Exchange Act of 1934, an issuer is required to disclose in its annual or quarterly reports, as applicable, whether, during the reporting period, it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant to certain Executive Orders. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable laws and regulations.

During the third quarter of 2020, the Company recorded no revenue or net profit attributable to the transactions or dealings described below. The amount recorded in connection with the foregoing reflects the uncertainty of collection.

During the third quarter of 2020, Platts, a division of the Company that provides energy-related information in over 150 countries, sold information and informational materials, which are generally exempt from U.S. economic sanctions, to subscribers that are owned or controlled, or appear to be owned or controlled, by the Government of Iran or are otherwise subject to disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012. Platts provided such subscribers access to proprietary data, analytics, and industry information that enable commodities markets to perform with greater transparency and efficiency. The Company will continue to monitor its provision of products and services to such subscribers.
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Item 6. Exhibits

(4.1)
(4.2)
(4.3)
(15)
(31.1)
(31.2)
(32)
(101.INS) Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
(101.SCH) Inline XBRL Taxonomy Extension Schema
(101.CAL) Inline XBRL Taxonomy Extension Calculation Linkbase
(101.LAB) Inline XBRL Taxonomy Extension Label Linkbase
(101.PRE) Inline XBRL Taxonomy Extension Presentation Linkbase
(101.DEF) Inline XBRL Taxonomy Extension Definition Linkbase
(104) Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibit 101)



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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
S&P Global Inc.
Registrant
Date: October 27, 2020 By:
/s/ Ewout L. Steenbergen
Ewout L. Steenbergen
Executive Vice President and Chief Financial Officer
Date: October 27, 2020 By:
/s/ Christopher F. Craig
Christopher F. Craig
Senior Vice President, Controller and Chief Accounting Officer

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TABLE OF CONTENTS
Part I Financial InformationprintItem 1. Financial StatementsprintItem 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operations (unaudited)printItem 3. Quantitative and Qualitative Disclosures About Market RiskprintItem 4. Controls and ProceduresprintPart II Other InformationprintItem 1. Legal ProceedingsprintItem 1A. Risk FactorsprintItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsprintItem 5. Other InformationprintItem 6. Exhibitsprint

Exhibits

(4.1) Sixth Supplemental Indenture dated as of August 13, 2020, among S&P Global Inc., Standard & Poors Financial Services LLC and U.S. Bank National Association, as trustee, incorporated by reference from the Registrant's Form 8-K filed August 13, 2020 (4.2) Form of 1.250% Senior Note due 2030 (included in Exhibit 4.2 of the referenced Form 8-K), incorporated by reference from the Registrant's Form 8-K filed August 13, 2020 (4.3) Form of 2.300% Senior Note due 2060 (included in Exhibit 4.2 of the referenced Form 8-K), incorporated by reference from the Registrant's Form 8-K filed August 13, 2020 (15) Letter on Unaudited Interim Financials (31.1) Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (31.2) Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (32) Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2002