Legal & Regulatory Matters
15. Condensed Consolidating Financial Statements
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 due in 2018, $700 million of 3.3% senior notes due in 2020 and $900 million of 4.4% senior notes due in 2026. See Note 5 — Debt for additional information.
The senior notes described above are fully and unconditionally guaranteed by Standard & Poor’s Financial Services LLC, a 100% owned subsidiary of the Company. The following condensed consolidating financial statements present the results of 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.
(in millions) S&P Global Inc.
Standard & Poor’s Financial
Services LLC Non-Guarantor Subsidiaries Eliminations S&P Global Inc. Consolidated
Revenue $717 $1,780 $3,704 $(138) $6,063
Expenses
Operating-related expenses 90 482 1,261 (138) 1,695 Selling and general expenses 196 345 1,064 — 1,605
Depreciation 31 11 40 — 82
Amortization of intangibles — — 98 — 98
Total expenses 317 838 2,463 (138) 3,480
Operating profit 400 942 1,241 — 2,583
Other income, net (16) — (11) — (27)
Interest expense (income), net 163 — (14) — 149 Non-operating intercompany transactions 365 (77) (2,463) 2,175 — (Loss) income before taxes on income (112) 1,019 3,729 (2,175) 2,461 Provision for taxes on income 26 370 427 — 823 Equity in net income of subsidiaries 3,808 — — (3,808) —
Net income 3,670 649 3,302 (5,983) 1,638
Less: net income attributable to
noncontrolling interests — — — (142) (142) Net income attributable to S&P Global Inc. $3,670 $649 $3,302 $(6,125) $1,496 Comprehensive income $3,694 $649 $3,401 $(5,982) $1,762 STATEMENT OF INCOME Year Ended December 31, 2017
(in millions) S&P Global Inc.
Standard & Poor’s Financial
Services LLC Non-Guarantor Subsidiaries Eliminations S&P Global Inc. Consolidated
Revenue $667 $1,513 $3,607 $(126) $5,661
Expenses
Operating-related expenses 114 451 1,334 (126) 1,773 Selling and general expenses 128 243 1,096 — 1,467
Depreciation 38 9 38 — 85
Amortization of intangibles — — 96 — 96
Total expenses 280 703 2,564 (126) 3,421
Gain on disposition (1,072) — (29) — (1,101)
Operating profit 1,459 810 1,072 — 3,341
Other income, net (20) — (8) — (28)
Interest expense (income), net 191 — (10) — 181 Non-operating intercompany transactions 356 (83) (941) 668 — Income before taxes on income 932 893 2,031 (668) 3,188 Provision for taxes on income 275 420 265 — 960 Equity in net income of subsidiaries 2,412 294 — (2,706) —
Net income 3,069 767 1,766 (3,374) 2,228
Less: net income attributable to
noncontrolling interests — — — (122) (122) Net income attributable to S&P Global Inc. $3,069 $767 $1,766 $(3,496) $2,106 Comprehensive income $3,099 $767 $1,563 $(3,374) $2,055 STATEMENT OF INCOME Year Ended December 31, 2016
(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 $694 $— $1,223 $— $1,917
Restricted cash — — 41 — 41
Accounts receivable, net of allowance
for doubtful accounts 163 109 1,177 — 1,449
Intercompany receivable 550 2,138 2,873 (5,561) — Prepaid and other current assets 58 3 136 — 197 Total current assets 1,465 2,250 5,450 (5,561) 3,604 Property and equipment, net of
accumulated depreciation 192 — 78 — 270
Goodwill 261 — 3,265 9 3,535
Other intangible assets, net — — 1,524 — 1,524 Investments in subsidiaries 8,599 6 8,030 (16,635) — Intercompany loans receivable 130 — 1,643 (1,773) —
Other non-current assets 194 45 286 — 525
Total assets $10,841 $2,301 $20,276 $(23,960) $9,458
LIABILITIES AND EQUITY Current liabilities:
Accounts payable $89 $15 $107 $— $211
Intercompany payable 4,453 32 1,076 (5,561) — Accrued compensation and contributions
to retirement plans 125 33 196 — 354
Income taxes currently payable 1 — 71 — 72
Unearned revenue 240 235 1,166 — 1,641
Accrued legal settlements — — 1 — 1
Other current liabilities 180 16 154 — 350
Total current liabilities 5,088 331 2,771 (5,561) 2,629
Long-term debt 3,662 — — — 3,662
Intercompany loans payable 114 — 1,659 (1,773) — Pension and other postretirement benefits 162 — 67 — 229 Other non-current liabilities 166 75 393 — 634 Total liabilities 9,192 406 4,890 (7,334) 7,154 Redeemable noncontrolling interest — — — 1,620 1,620 Equity:
Common stock 294 — 2,279 (2,279) 294
Additional paid-in capital 72 618 9,784 (9,641) 833 Retained income 12,622 1,277 3,824 (6,439) 11,284 Accumulated other comprehensive loss (299) — (489) 46 (742) Less: common stock in treasury (11,040) — (13) 12 (11,041) Total equity - controlling interests 1,649 1,895 15,385 (18,301) 628 Total equity - noncontrolling interests — — 1 55 56 Total equity 1,649 1,895 15,386 (18,246) 684 Total liabilities and equity $10,841 $2,301 $20,276 $(23,960) $9,458
(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 $632 $— $2,145 $— $2,777
Restricted cash — — 2 — 2
Accounts receivable, net of allowance
for doubtful accounts 138 152 1,029 — 1,319
Intercompany receivable 768 1,784 2,527 (5,079) — Prepaid and other current assets 143 (3) 86 — 226 Total current assets 1,681 1,933 5,789 (5,079) 4,324 Property and equipment, net of
accumulated depreciation 158 10 107 — 275
Goodwill 261 — 2,719 9 2,989
Other intangible assets, net — — 1,388 — 1,388 Investments in subsidiaries 8,364 5 8,028 (16,397) — Intercompany loans receivable 116 — 1,699 (1,815) —
Other non-current assets 215 61 174 (1) 449
Total assets $10,795 $2,009 $19,904 $(23,283) $9,425 LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $79 $23 $93 $— $195
Intercompany payable 3,433 492 1,154 (5,079) — Accrued compensation and contributions
to retirement plans 145 86 241 — 472
Short-term debt 399 — — — 399
Income taxes currently payable 2 — 75 — 77
Unearned revenue 293 193 1,127 — 1,613
Accrued legal settlements — 2 105 — 107
Other current liabilities 136 21 194 — 351
Total current liabilities 4,487 817 2,989 (5,079) 3,214
Long-term debt 3,170 — — — 3,170
Intercompany loans payable 101 — 1,715 (1,816) — Pension and other postretirement benefits 180 — 64 — 244 Other non-current liabilities 376 74 229 — 679 Total liabilities 8,314 891 4,997 (6,895) 7,307 Redeemable noncontrolling interest — — — 1,352 1,352 Equity:
Common stock 412 — 2,318 (2,318) 412
Additional paid-in capital (216) 602 9,256 (9,117) 525 Retained income 12,156 516 3,782 (6,431) 10,023 Accumulated other comprehensive loss (269) — (426) 46 (649) Less: common stock in treasury (9,602) — (23) 23 (9,602) Total equity - controlling interests 2,481 1,118 14,907 (17,797) 709 Total equity - noncontrolling interests — — — 57 57 Total equity 2,481 1,118 14,907 (17,740) 766 Total liabilities and equity $10,795 $2,009 $19,904 $(23,283) $9,425
(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 $3,540 $784 $2,956 $(5,159) $2,121 Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 37 7 40 — 84
Amortization of intangibles — — 122 — 122
Provision for losses on accounts receivable 3 4 14 — 21
Deferred income taxes 33 10 38 — 81
Stock-based compensation 28 16 50 — 94
Accrued legal settlements — 1 — — 1
Other 46 5 1 — 52
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable (27) 39 (176) — (164)
Prepaid and other current assets (2) (4) 5 — (1) Accounts payable and accrued expenses (11) (64) (31) — (106)
Unearned revenue (53) 13 110 — 70
Accrued legal settlements — — (108) — (108)
Other current liabilities (22) (11) (34) — (67) Net change in prepaid/accrued income taxes 2 — (9) — (7) Net change in other assets and liabilities (128) 32 (33) — (129) Cash provided by operating activities 3,446 832 2,945 (5,159) 2,064 Investing Activities:
Capital expenditures (81) (16) (16) — (113)
Acquisitions, net of cash acquired — — (401) — (401)
Proceeds from dispositions — — 6 — 6
Changes in short-term investments — — (5) — (5) Cash used for investing activities (81) (16) (416) — (513) Financing Activities:
Proceeds from issuance of senior notes, net 489 — — — 489
Payments on senior notes (403) — — — (403)
Dividends paid to shareholders (503) — — — (503) Distributions to noncontrolling interest holders — — (154) — (154) Repurchase of treasury shares (1,660) — — — (1,660)
Exercise of stock options 26 — 8 — 34
Purchase of additional CRISIL shares — — (25) — (25) Employee withholding tax on share-based payments (66) — — — (66) Intercompany financing activities (1,181) (816) (3,162) 5,159 — Cash used for financing activities (3,298) (816) (3,333) 5,159 (2,288) Effect of exchange rate changes on cash (5) — (79) — (84) Net change in cash, cash equivalents, and
restricted cash 62 — (883) — (821)
Cash, cash equivalents, and restricted cash
at beginning of year 632 — 2,147 — 2,779
Cash, cash equivalents, and restricted cash
at end of year $694 $— $1,264 $— $1,958
(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 $3,670 $649 $3,302 $(5,983) $1,638 Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 31 11 40 — 82
Amortization of intangibles — — 98 — 98
Provision for losses on accounts receivable 2 3 11 — 16
Deferred income taxes 108 (10) (98) — —
Stock-based compensation 35 22 42 — 99
Accrued legal settlements — — 55 — 55
Other 34 19 43 — 96
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable (2) (23) (171) — (196)
Prepaid and other current assets (5) 3 12 — 10 Accounts payable and accrued expenses 22 97 (44) — 75
Unearned revenue 19 2 64 — 85
Accrued legal settlements — (1) (3) — (4)
Other current liabilities (42) (12) (31) — (85) Net change in prepaid/accrued income taxes 41 (18) 9 — 32 Net change in other assets and liabilities 7 (6) 14 — 15 Cash provided by operating activities 3,920 736 3,343 (5,983) 2,016 Investing Activities:
Capital expenditures (55) (32) (36) — (123)
Acquisitions, net of cash acquired — — (83) — (83)
Proceeds from dispositions — — 2 — 2
Changes in short-term investments — — (5) — (5) Cash used for investing activities (55) (32) (122) — (209) Financing Activities:
Dividends paid to shareholders (421) — — — (421) Distributions to noncontrolling interest holders — — (111) — (111) Repurchase of treasury shares (1,001) — — — (1,001)
Exercise of stock options 68 — 7 — 75
Employee withholding tax on share-based payments (49) — — — (49) Intercompany financing activities (2,546) (704) (2,733) 5,983 — Cash used for financing activities (3,949) (704) (2,837) 5,983 (1,507) Effect of exchange rate changes on cash 5 — 82 — 87 Net change in cash, cash equivalents, and
restricted cash (79) — 466 — 387
Cash, cash equivalents, and restricted cash
at beginning of year 711 — 1,681 — 2,392
Cash, cash equivalents, and restricted cash
at end of year $632 $— $2,147 $— $2,779
(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 $3,069 $767 $1,766 $(3,374) $2,228 Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 38 9 38 — 85
Amortization of intangibles — — 96 — 96
Provision for losses on accounts receivable 1 — 8 — 9
Deferred income taxes 16 (9) 72 — 79
Stock-based compensation 22 17 37 — 76
Gain on disposition (1,072) — (29) — (1,101)
Accrued legal settlements 3 1 50 — 54
Other 48 5 (23) — 30
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable (24) 187 (340) — (177)
Prepaid and other current assets (2) 10 (3) — 5 Accounts payable and accrued expenses (8) (39) 66 — 19
Unearned revenue 19 (395) 483 — 107
Accrued legal settlements — (108) (42) — (150) Other current liabilities (27) (27) 35 — (19) Net change in prepaid/accrued income taxes 141 — 33 — 174 Net change in other assets and liabilities (9) 38 16 — 45 Cash provided by operating activities 2,215 456 2,263 (3,374) 1,560 Investing Activities:
Capital expenditures (68) (15) (32) — (115)
Acquisitions, net of cash acquired (144) — (33) — (177) Contingent consideration payment — — (34) — (34) Proceeds from dispositions 1,422 — 76 — 1,498 Changes in short-term investments — — (1) — (1) Cash provided by (used for) investing activities 1,210 (15) (24) — 1,171 Financing Activities:
Additions to short-term debt (143) — — — (143) Proceeds from issuance of senior notes, net 493 — — — 493
Payments on senior notes (421) — — — (421)
Dividends paid to shareholders (380) — — — (380) Distributions to noncontrolling interest holders — — (116) — (116) Repurchase of treasury shares (1,123) — — — (1,123)
Exercise of stock options 86 — 2 — 88
Contingent consideration payment (5) — — — (5) Employee withholding tax on share-based payments (55) — — — (55) Intercompany financing activities (1,333) (441) (1,600) 3,374 — Cash used for financing activities (2,881) (441) (1,714) 3,374 (1,662) Effect of exchange rate changes on cash — — (158) — (158) Net change in cash, cash equivalents, and
restricted cash 544 — 367 — 911
Cash, cash equivalents, and restricted cash
at beginning of year 167 — 1,314 — 1,481
Cash, cash equivalents, and restricted cash
at end of year $711 $— $1,681 $— $2,392
(in millions, except per share data) 2018 2017 2016 2015 2014 INCOME STATEMENT DATA:
Revenue $6,258 $6,063 $5,661 $5,313 $5,051
Operating profit 2,790 2,583 3,341 1,908 88
Income before taxes on income 2,6811 2,4612 3,1883 1,8154 545
Provision for taxes on income 560 8236 960 547 245
Net income (loss) from continuing operations
attributable to S&P Global Inc. 1,958 1,496 2,106 1,156 (293) Earnings (loss) per share from continuing
operations attributable to the S&P Global Inc. common shareholders:
Basic 7.80 5.84 8.02 4.26 (1.08)
Diluted 7.73 5.78 7.94 4.21 (1.08)
Dividends per share 2.00 1.64 1.44 1.32 1.20