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 April of 2018, we acquired Kensho Technologies Inc. ("Kensho") for approximately $550 million, net of cash acquired, in a mix of cash and stock. The results of Kensho, an operating segment of the Company, are included in Corporate revenue and Corporate Unallocated for financial reporting purposes. Restricted cash of $37 million included in our consolidated balance sheet as of September 30, 2018 includes amounts held in escrow accounts in connection with our acquisition of Kensho. See Note 2 — Acquisitions and Divestitures and Note 11 — Segment and Related Information for additional information.

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, 2017 (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, 2018 are not necessarily indicative of the results that may be expected for the full year.

Our critical accounting estimates are disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K. 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, we adopted Financial Accounting Standards Board Accounting Standards Codification ("ASC") 606 as discussed below. There have been no other material changes to our critical accounting policies and estimates.

Adoption of ASC 606, “Revenue from Contracts with Customers”

On January 1, 2018, we adopted ASC 606 "Revenue from Contracts with Customers" using the modified retrospective transition method applied to our revenue contracts with customers as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior year amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. We recorded a net increase to opening retained earnings of $35 million as of January 1, 2018 due to the cumulative effect of adopting ASC 606, with the impact primarily related to our treatment of costs to obtain a contract and to a lesser extent, changes to the timing of the recognition of our subscription and non-transaction revenues. We recognized incremental revenue of $5 million for nine months ended September 30, 2018 as a result of the adoption of this standard.

Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services.

The following table presents our revenue disaggregated by revenue type:



(in millions)	Ratings		Market Intelligence		Platts		Indices		Corporate		Intersegment Elimination ¹			Total

	Three Months Ended September 30, 2018
Subscription	$	—	$	451	$	188	$	41	$	5	$	—		$	685
Non-transaction	372		—		—		—		—		(32		)	340
Non-subscription / Transaction	328		8		2		—		—		—			338
Asset-linked fees	—		5		—		131		—		—			136
Sales usage-based royalties	—		—		14		33		—		—			47
Total revenue	$	700	$	464	$	204	$	205	$	5	$	(32	)	$	1,546

Timing of revenue recognition
Services transferred at a point in time	$	328	$	8	$	2	$	—	$	—	$	—		$	338
Services transferred over time	372		456		202		205		5		(32		)	1,208
Total revenue	$	700	$	464	$	204	$	205	$	5	$	(32	)	$	1,546

	Nine Months Ended September 30, 2018
Subscription	$	—	$	1,306	$	556	$	109	$	10	$	—		$	1,981
Non-transaction	1,129		—		—		—		—		(92		)	1,037
Non-subscription / Transaction	1,094		28		8		—		—		—			1,130
Asset-linked fees	—		15		—		396		—		—			411
Sales usage-based royalties	—		—		40		122		—		—			162
Total revenue	$	2,223	$	1,349	$	604	$	627	$	10	$	(92	)	$	4,721

Timing of revenue recognition
Services transferred at a point in time	$	1,094	$	28	$	8	$	—	$	—	$	—		$	1,130
Services transferred over time	1,129		1,321		596		627		10		(92		)	3,591
Total revenue	$	2,223	$	1,349	$	604	$	627	$	10	$	(92	)	$	4,721



(in millions)	Ratings		Market Intelligence		Platts		Indices		Corporate		Intersegment Elimination ¹			Total

	Three Months Ended September 30, 2017 ²
Subscription	$	—	$	406	$	177	$	36	$	—	$	—		$	619
Non-transaction	367		—		—		—		—		(28		)	339
Non-subscription / Transaction	372		10		2		—		—		—			384
Asset-linked fees	—		6		—		118		—		—			124
Sales usage-based royalties	—		—		14		33		—		—			47
Total revenue	$	739	$	422	$	193	$	187	$	—	$	(28	)	$	1,513

Timing of revenue recognition
Services transferred at a point in time	$	372	$	10	$	2	$	—	$	—	$	—		$	384
Services transferred over time	367		412		191		187		—		(28		)	1,129
Total revenue	$	739	$	422	$	193	$	187	$	—	$	(28	)	$	1,513

	Nine Months Ended September 30, 2017 ²
Subscription	$	—	$	1,189	$	523	$	104	$	—	$	—		$	1,816
Non-transaction	1,061		—		—		—		—		(81		)	980
Non-subscription / Transaction	1,138		32		9		—		—		—			1,179
Asset-linked fees	—		17		—		340		—		—			357
Sales usage-based royalties	—		—		45		98		—		—			143
Total revenue	$	2,199	$	1,238	$	577	$	542	$	—	$	(81	)	$	4,475

Timing of revenue recognition
Services transferred at a point in time	$	1,138	$	32	$	9	$	—	$	—	$	—		$	1,179
Services transferred over time	1,061		1,206		568		542		—		(81		)	3,296
Total revenue	$	2,199	$	1,238	$	577	$	542	$	—	$	(81	)	$	4,475


¹	Intersegment eliminations mainly consists of a royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.


²	As noted above, amounts for the three and nine months ended September 30, 2017 were not adjusted under the modified retrospective transition method applied to our revenue contracts with customers as of January 1, 2018.

Subscription revenue

Subscription revenue at Market Intelligence is primarily derived from distribution of data, analytics, third party research, and credit ratings-related information primarily through web-based channels including Market Intelligence Desktop, RatingsDirect®, RatingsXpress®, and Credit Analytics. Subscription revenue at Platts is generated by providing customers access to commodity and energy-related price assessments, market data, and real-time news, along with other information services. Subscription revenue at Indices is derived from the contracts for underlying data of our indexes to support our customers' management of index funds, portfolio analytics, and research.

For subscription products and services, we generally provide continuous access to dynamic data sets and analytics for a defined period, with revenue recognized ratably as our performance obligation to provide access to our data and analytics is progressively fulfilled over the stated term of the contract.

Non-transaction revenue

Non-transaction revenue at Ratings is primarily related to surveillance of a credit rating, annual fees for customer relationship-based pricing programs, fees for entity credit ratings and global research and analytics. Non-transaction revenue also includes an intersegment revenue elimination of $32 million and $92 million for the three and nine months ended September 30, 2018, respectively, and $28 million and $81 million for the three and nine months ended September 30, 2017, respectively, mainly consisting of the royalty charged to Market Intelligence for the rights to use and distribute content and data developed by Ratings.

For non-transaction revenue related to Rating’s surveillance services, we continuously monitor factors that impact the creditworthiness of an issuer over the contractual term with revenue recognized to the extent that our performance obligation is progressively fulfilled over the term contract. Because surveillance services are continuously provided throughout the term of the contract, our measure of progress towards fulfillment of our obligation to monitor a rating is a time-based output measure with revenue recognized ratably over the term of the contract.

Non-subscription / Transaction revenue

Transaction revenue at our Ratings segment primarily includes fees associated with:


•	ratings related to new issuance of corporate and government debt instruments; and structured finance instruments;


•	bank loan ratings; and


•	corporate credit estimates, which are intended, based on an abbreviated analysis, to provide an indication of our opinion regarding creditworthiness of a company which does not currently have a Ratings credit rating.

Transaction revenue is recognized at the point in time when our performance obligation is satisfied by issuing a rating on our customer's instruments, our customer's creditworthiness, or a counter-party's creditworthiness and when we have a right to payment and the customer can benefit from the significant risks and rewards of ownership.

Non-subscription revenue at Market Intelligence is primarily related to certain advisory, pricing and analytical services. Non-subscription revenue at Platts is primarily related to conference sponsorship, consulting engagements and events.

Asset-linked fees

Asset-linked fees at Indices and Market Intelligence are primarily related to royalties payments based on the value of assets under management in our customers exchange-traded funds and mutual funds.

For asset-linked products and services, we provide licenses conveying continuous access to our index and benchmark-related intellectual property during a specified contract term. Revenue is recognized when the extent that our customers have used our licensed intellectual property can be quantified. Recognition of revenue for our asset-linked fee arrangements is subject to the "recognition constraint" for usage-based royalty payments because we cannot reasonably predict the value of the assets that will be invested in index funds structured using our intellectual property until it is either publicly available or when we are notified by our customers. Revenue derived from an asset-linked fee arrangement is measured and recognized when the certainty of the extent of its utilization of our index products by our customers is known.

Sales usage-based royalties

Sales usage-based royalty revenue at our Indices segment is primarily related to trading based fees from exchange-traded derivatives. Sales and usage-based royalty revenue at our Platts segment is primarily related to licensing of its proprietary market price data and price assessments to commodity exchanges.

For sales usage-based royalty products and services, we provide licenses conveying the right to continuous access to our intellectual property over the contract term, with revenue recognized when the extent of our license’s utilization can be quantified, or more specifically, when trading volumes are known and publicly available to us or when we are notified by our customers. Recognition of revenue of fees tied to trading volumes is subject to the recognition constraint for a usage-based royalty promised by our customers in exchange for the license of our intellectual property, with revenue recognized when trading volumes are known.

Arrangements with Multiple Performance Obligations

Our contracts with customers may include multiple performance obligations. Revenue relating to agreements that provide for more than one performance obligation is recognized based upon the relative fair value to the customer of each service component as each component is earned. The fair value of the service components are determined using an analysis that considers cash consideration that would be received for instances when the service components are sold separately. If the fair value to the customer for each service is not objectively determinable, we make our best estimate of the services’ stand-alone selling price and record revenue as it is earned over the service period.

Receivables

We record a receivable when a customer is billed or when revenue is recognized prior to billing a customer. For multi-year agreements, we generally invoice customers annually at the beginning of each annual period. The opening balance of accounts receivable, net of allowance for doubtful accounts, was $1,319 million as of January 1, 2018.

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, 2018 and December 31, 2017, contract assets were $43 million and $17 million, respectively, and are included in accounts receivable in our consolidated balance sheets.

Unearned Revenue

We record unearned revenue when cash payments are received or due in advance of our performance. The decrease in the deferred revenue balance for the three and nine months ended September 30, 2018 is primarily driven by $1.4 billion of revenues recognized that were included in the unearned revenue balance at the beginning of the period, offset by cash payments received or due 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, 2018, the aggregate amount of the transaction price allocated to remaining performance obligations was $1.2 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 certain sales commission programs meet the requirements to be capitalized. Total capitalized costs to obtain a contract were $82 million as of September 30, 2018, and is included in prepaid and other current assets and other non-current assets on our consolidated balance sheets. The asset will be amortized over a period consistent with the transfer to the customer of the goods or services to which the asset relates, calculated based on the customer term and the average life of the products and services underlying the contracts. The expense is recorded within selling and general expenses.

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

Presentation of net periodic pension cost and net periodic postretirement benefit cost

During the first quarter of 2018, we adopted new accounting guidance requiring that net periodic benefit cost for our retirement and postretirement plans other than the service cost component be included outside of operating profit; these costs are included in other income, net in our consolidated statements of income.

The components of other income, net for the three and nine months ended September 30 are as follows:



(in millions)	Three Months						Nine Months
	2018			2017			2018			2017
Other components of net periodic benefit cost	$	(8	)	$	(9	)	$	(24	)	$	(26	)
Net loss from investments ¹	2			—			2			—
Other income, net	$	(6	)	$	(9	)	$	(22	)	$	(26	)


¹	Primarily relates to the change in fair value of CRISIL's investment in Care Ratings Limited ("CARE"). The investment balance of CARE as of September 30, 2018 and December 31, 2017 is $43 million and $54 million, respectively, and is included in non-current assets in our consolidated balance sheets.