Commitments and Contingencies

9 Months Ended

Sep. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

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 14 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 sheet as of September 30, 2019:



(in millions)		September 30,
Balance Sheet Location		2019
Assets
Right of use assets	Lease right-of-use assets	$	660
Liabilities
Other current liabilities	Current lease liabilities	112
Lease liabilities — non-current	Noncurrent lease liabilities	615

The components of lease expense for the periods ended September 30 are as follows:



(in millions)	Three Months			Nine Months
	2019			2019
Operating lease cost	$	39		$	116
Sublease income	(4		)	(13		)
Total lease cost	$	35		$	103

Supplemental information related to leases for the periods ended September 30 are as follows:



(in millions)	Three Months		Nine Months
	2019		2019
Cash paid for amounts included in the measurement for operating lease liabilities
Operating cash flows from operating leases	$	39	$	110

Right-of-use assets obtained in exchange for lease obligations
Operating leases	34		772

Weighted-average remaining lease term and discount rate for our operating leases as of September 30 are as follows:



	2019
Weighted-average remaining lease term (years)	9.3
Weighted-average discount rate	4.00	%

Maturities of lease liabilities for our operating leases are as follows:



(in millions)
2019 (Excluding the nine months ended September 30, 2019)	$	38
2020	128
2021	109
2022	92
2023	77
2024 and beyond	417
Total undiscounted lease payments	$	861
Less: Imputed interest	134
Present value of lease liabilities	$	727

Related Party Agreements

In March of 2018, the Company made a $20 million contribution to the S&P Global Foundation included in selling and general expenses.

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, 2019, S&P Dow Jones Indices LLC earned $28 million and $87 million, respectively, of revenue under the terms of the License Agreement. During the three and nine months ended September 30, 2018, S&P Dow Jones Indices LLC earned $28 million and $82 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 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.