S&P Global Inc. 10-Q

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, 2021 2020 2021 2020 Revenue $ 2,087 $ 1,846 $ 6,209 $ 5,575 Expenses: Operating-related expenses 543 517 1,603 1,528 Selling and general expenses 423 341 1,157 949 Depreciation 20 20 63 60 Amortization of intangibles 21 32 74 94 Total expenses 1,007 910 2,897 2,631 Gain on dispositions ( 3 ) ( 8 ) ( 5 ) ( 16 ) Operating profit 1,083 944 3,317 2,960 Other income, net ( 22 ) ( 6 ) ( 51 ) ( 16 ) Interest expense, net 31 35 94 109 Loss on extinguishment of debt — 279 — 279 Income before taxes on income 1,074 636 3,274 2,588 Provision for taxes on income 213 138 747 559 Net income 861 498 2,527 2,029 Less: net income attributable to noncontrolling interests ( 64 ) ( 43 ) ( 178 ) ( 144 ) Net income attributable to S&P Global Inc. $ 797 $ 455 $ 2,349 $ 1,885 Earnings per share attributable to S&P Global Inc. common shareholders: Net income: Basic $ 3.31 $ 1.89 $ 9.76 $ 7.82 Diluted $ 3.30 $ 1.88 $ 9.72 $ 7.78 Weighted-average number of common shares outstanding: Basic 240.9 240.6 240.8 241.2 Diluted 241.7 241.6 241.7 242.3 Actual shares outstanding at period end 241.0 240.6 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, 2021 2020 2021 2020 Net income $ 861 $ 498 $ 2,527 $ 2,029 Other comprehensive income: Foreign currency translation adjustments ( 7 ) ( 1 ) 6 ( 54 ) Income tax effect ( 6 ) 15 ( 4 ) 15 ( 13 ) 14 2 ( 39 ) Pension and other postretirement benefit plans 5 3 25 ( 30 ) Income tax effect ( 1 ) ( 1 ) ( 5 ) 8 4 2 20 ( 22 ) Unrealized gain (loss) on cash flow hedges 31 14 ( 183 ) 10 Income tax effect ( 8 ) ( 3 ) 48 ( 2 ) 23 11 ( 135 ) 8 Comprehensive income 875 525 2,414 1,976 Less: comprehensive income attributable to nonredeemable noncontrolling interests ( 6 ) ( 3 ) ( 17 ) ( 8 ) Less: comprehensive income attributable to redeemable noncontrolling interests ( 58 ) ( 40 ) ( 161 ) ( 136 ) Comprehensive income attributable to S&P Global Inc. $ 811 $ 482 $ 2,236 $ 1,832 See accompanying notes to the unaudited consolidated financial statements. 5 S&P Global Inc. Consolidated Balance Sheets (in millions) September 30, 2021 December 31, 2020 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 5,899 $ 4,108 Restricted cash 8 14 Accounts receivable, net of allowance for doubtful accounts: 2021 - $ 31 ; 2020 - $ 30 1,445 1,593 Prepaid and other current assets 286 273 Total current assets 7,638 5,988 Property and equipment, net of accumulated depreciation: 2021 - $ 624 ; 2020 - $ 587 256 284 Right of use assets 462 494 Goodwill 3,710 3,735 Other intangible assets, net 1,288 1,352 Other non-current assets 757 684 Total assets $ 14,111 $ 12,537 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 244 $ 233 Accrued compensation and contributions to retirement plans 468 551 Income taxes currently payable 157 84 Unearned revenue 2,006 2,168 Other current liabilities 511 551 Total current liabilities 3,386 3,587 Long-term debt 4,113 4,110 Lease liabilities — non-current 508 544 Pension and other postretirement benefits 288 291 Other non-current liabilities 715 653 Total liabilities 9,010 9,185 Redeemable noncontrolling interest (Note 8) 3,186 2,781 Commitments and contingencies (Note 12) Equity: Common stock 294 294 Additional paid-in capital 1,001 946 Retained income 14,772 13,367 Accumulated other comprehensive loss ( 750 ) ( 637 ) Less: common stock in treasury ( 13,472 ) ( 13,461 ) Total equity — controlling interests 1,845 509 Total equity — noncontrolling interests 70 62 Total equity 1,915 571 Total liabilities and equity $ 14,111 $ 12,537 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, 2021 2020 Operating Activities: Net income $ 2,527 $ 2,029 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 63 60 Amortization of intangibles 74 94 Provision for losses on accounts receivable 16 16 Deferred income taxes 1 ( 14 ) Stock-based compensation 90 60 Gain on dispositions ( 5 ) ( 16 ) Loss on extinguishment of debt — 279 Other 32 52 Changes in operating assets and liabilities, net of effect of acquisitions and dispositions: Accounts receivable 122 172 Prepaid and other current assets ( 66 ) ( 52 ) Accounts payable and accrued expenses ( 85 ) ( 97 ) Unearned revenue ( 159 ) ( 158 ) Other current liabilities ( 35 ) ( 28 ) Net change in prepaid/accrued income taxes 67 28 Net change in other assets and liabilities 16 1 Cash provided by operating activities 2,658 2,426 Investing Activities: Capital expenditures ( 33 ) ( 43 ) Acquisitions, net of cash acquired ( 19 ) ( 189 ) Proceeds from dispositions 11 9 Changes in short-term investments ( 1 ) 19 Cash used for investing activities ( 42 ) ( 204 ) Financing Activities: Proceeds from issuance of senior notes, net — 1,276 Payments on senior notes — ( 1,394 ) Dividends paid to shareholders ( 557 ) ( 484 ) Distributions to noncontrolling interest holders, net ( 171 ) ( 143 ) Repurchase of treasury shares — ( 1,164 ) Exercise of stock options 10 14 Employee withholding tax on share-based payments ( 54 ) ( 55 ) Cash used for financing activities ( 772 ) ( 1,950 ) Effect of exchange rate changes on cash ( 59 ) 10 Net change in cash, cash equivalents, and restricted cash 1,785 282 Cash, cash equivalents, and restricted cash at beginning of period 4,122 2,886 Cash, cash equivalents, and restricted cash at end of period $ 5,907 $ 3,168 See accompanying notes to the unaudited consolidated financial statements. 7 S&P Global Inc. Consolidated Statements of Equity (Unaudited) Three Months Ended September 30, 2021 (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, 2021 $ 294 $ 963 $ 14,237 $ ( 764 ) $ 13,465 $ 1,265 $ 66 $ 1,331 Comprehensive income 1 797 14 811 6 817 Dividends (Dividend declared per common share — $ 0.77 per share) ( 186 ) ( 186 ) ( 3 ) ( 189 ) Employee stock plans 38 7 31 31 Change in redemption value of redeemable noncontrolling interest ( 76 ) ( 76 ) ( 76 ) Other — 1 1 Balance as of September 30, 2021 $ 294 $ 1,001 $ 14,772 $ ( 750 ) $ 13,472 $ 1,845 $ 70 $ 1,915 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 8 Nine Months Ended September 30, 2021 (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, 2020 $ 294 $ 946 $ 13,367 $ ( 637 ) $ 13,461 $ 509 $ 62 $ 571 Comprehensive income 1 2,349 ( 113 ) 2,236 17 2,253 Dividends (Dividend declared per common share — $ 2.31 per share) ( 557 ) ( 557 ) ( 10 ) ( 567 ) Employee stock plans 55 11 44 44 Change in redemption value of redeemable noncontrolling interest ( 387 ) ( 387 ) ( 387 ) Other — 1 1 Balance as of September 30, 2021 $ 294 $ 1,001 $ 14,772 $ ( 750 ) $ 13,472 $ 1,845 $ 70 $ 1,915 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 1 Excludes comprehensive income of $ 58 million and $ 40 million for the three months ended September 30, 2021 and 2020, respectively, and $ 161 million and $ 136 million for the nine months ended September 30, 2021 and 2020, 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. 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, 2020 (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, 2021 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 included in our consolidated balance sheets was $ 8 million and $ 14 million as of September 30, 2021 and December 31, 2020, respectively. Restricted cash primarily consisted of cash required to be on deposit under contractual agreements in connection with certain acquisitions and dispositions. 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, 2021 and December 31, 2020, contract assets were $ 17 million and $ 7 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, 2021 compared to December 31, 2020 is primarily driven by $ 1.9 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. 10 Remaining Performance Obligations Remaining performance obligations represent the transaction price of contracts for work that has not yet been performed. As of September 30, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 2.5 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 $ 127 million and $ 129 million as of September 30, 2021 and December 31, 2020, 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, net The components of other income, net for the periods ended September 30 are as follows: (in millions) Three Months Nine Months 2021 2020 2021 2020 Other components of net periodic benefit cost 1 $ ( 11 ) $ ( 9 ) $ ( 34 ) $ ( 24 ) Net (gain) loss from investments ( 11 ) 3 ( 17 ) 8 Other income, net $ ( 22 ) $ ( 6 ) $ ( 51 ) $ ( 16 ) 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. 11 2. Acquisitions and Divestitures Acquisitions Merger Agreement In November of 2020, S&P Global and IHS Markit Ltd ("IHS Markit") entered into a merger agreement, pursuant to which, among other things, a subsidiary of S&P Global will merge with and into IHS Markit, with IHS Markit surviving the merger as a wholly owned subsidiary of S&P Global. Under the terms of the merger agreement, each share of IHS Markit issued and outstanding (other than excluded shares and dissenting shares) will be converted into the right to receive 0.2838 fully paid and nonassessable shares of S&P Global common stock (and, if applicable, cash in lieu of fractional shares, without interest), less any applicable withholding taxes. On March 11, 2021, S&P Global and IHS Markit shareholders voted to approve the merger agreement. As of August 31, 2021, IHS Markit had approximately 398.8 million shares outstanding. Subject to certain closing conditions, the merger is expected to be completed in the first quarter of 2022. 2021 During the nine months ended September 30, 2021, we did not complete any material 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. Divestitures 2021 During the three and nine months ended September 30, 2021, we recorded a pre-tax gain of $ 3 million ($ 2 million after-tax) in Gain on dispositions in the consolidated statements of income related to the sale of an office facility in India in September of 2021. During the nine months ended September 30, 2021, we recorded a pre-tax gain of $ 2 million ($ 2 million after-tax) in Gain on dispositions in the consolidated statements of income related to the sale of Standard & Poor's Investment Advisory Services LLC ("SPIAS"), a business within our Market Intelligence segment, that occurred in July of 2019. 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 integrated 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 received 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. 12 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 that occurred in July of 2019. The operating profit of our businesses that were disposed of for the periods ended September 30 is as follows: (in millions) Three Months Nine Months 2021 2020 2021 2020 Operating profit 1 $ — $ 1 $ 1 $ 2 1 Operating profit excludes a pre-tax gain related to the sale of SPIAS of $ 2 million for nine months ended September 30, 2021, and $ 1 million for the three and nine months ended September 30, 2020. 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. 3. Income Taxes The effective income tax rate was 19.9 % and 22.8 % for the three and nine months ended September 30, 2021, respectively, and 21.7 % and 21.6 % for the three and nine months ended September 30, 2020, respectively. The decrease in the three months ended September 30, 2021 was primarily due to a refinement in tax accruals on foreign operations related to both a prior and current period, partially offset by the deductible pre-tax loss on extinguishment of debt in the prior year. The increase in the nine months ended September 30, 2021 was primarily due to the decrease in the recognition of excess tax benefits associated with share-based payments in the statement of income, certain non-deductible IHS Markit merger costs and the deductible pre-tax loss on extinguishment of debt in the prior year. 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, 2021 and December 31, 2020, the total amount of federal, state and local, and foreign unrecognized tax benefits was $ 143 million and $ 121 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, 2021 and December 31, 2020, we had $ 27 million and $ 24 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 $ 18 million in the next twelve months as a result of the resolution of local tax examinations. 13 4. Debt A summary of long-term debt outstanding is as follows: (in millions) September 30, 2021 December 31, 2020 4.0 % Senior Notes, due 2025 1 $ 696 $ 695 2.95 % Senior Notes, due 2027 2 495 495 2.5 % Senior Notes, due 2029 3 496 495 1.25 % Senior Notes, due 2030 4 593 592 6.55 % Senior Notes, due 2037 5 290 290 4.5 % Senior Notes, due 2048 6 273 273 3.25 % Senior Notes, due 2049 7 589 589 2.3 % Senior Notes, due 2060 8 681 681 Long-term debt $ 4,113 $ 4,110 1 Interest payments are due semiannually on June 15 and December 15, and as of September 30, 2021, the unamortized debt discount and issuance costs total $ 4 million. 2 Interest payments are due semiannually on January 22 and July 22, and as of September 30, 2021, the unamortized debt discount and issuance costs total $ 5 million. 3 Interest payments are due semiannually on June 1 and December 1, and as of September 30, 2021, the unamortized debt discount and issuance costs total $ 4 million. 4 Interest payments are due semiannually on February 15 and August 15, beginning on February 15, 2021, and as of September 30, 2021, the unamortized debt discount and issuance costs total $ 7 million. 5 Interest payments are due semiannually on May 15 and November 15, and as of September 30, 2021, the unamortized debt discount and issuance costs total $ 3 million. 6 Interest payments are due semiannually on May 15 and November 15, and as of September 30, 2021, the unamortized debt discount and issuance costs total $ 10 million. 7 Interest payments are due semiannually on June 1 and December 1, and as of September 30, 2021, the unamortized debt discount and issuance costs total $ 11 million. 8 Interest payments are due semiannually on February 15 and August 15, beginning on February 15, 2021, and as of September 30, 2021, the unamortized debt discount and issuance costs total $ 19 million. The fair value of our total debt borrowings was $ 4.4 billion and $ 4.6 billion as of September 30, 2021 and December 31, 2020, respectively, and was estimated based on quoted market prices. On April 26, 2021, we entered into a revolving $ 1.5 billion five-year credit agreement (our "credit facility") that will terminate on April 26, 2026. This credit facility replaced our revolving $ 1.2 billion five-year credit facility (our "previous credit facility") that was scheduled to terminate on June 30, 2022. The previous credit facility was canceled immediately after the new credit facility became effective. There were no outstanding borrowings under the previous credit facility when it was replaced. On August 13, 2020, we issued $ 600 million of 1.25 % senior notes due in 2030 and $ 700 million of 2.3 % senior notes due in 2060. The notes are fully and unconditionally guaranteed by our wholly-owned subsidiary, Standard & Poor's Financial Services LLC. In the third quarter of 2020, we used the net proceeds to fund the redemption and extinguishment of the $ 900 million outstanding principal amount of our 4.4 % senior notes due in 2026 and a portion of the outstanding principal amount of our 6.55 % senior notes due in 2037 and our 4.5 % senior notes due in 2048. We have the ability to borrow a total of $ 1.5 billion through our commercial paper program, which is supported by our credit facility. As of September 30, 2021 and December 31, 2020, there was no commercial paper issued or outstanding, and we similarly did not draw or have any borrowings outstanding from the credit facility or previous credit facility during the three and nine months ended September 30, 2021 and 2020. Commitment fees for the unutilized commitments under the credit facility and applicable margins for borrowings thereunder are linked to the Company achieving three environmental sustainability performance indicators related to emissions, tested 14 annually. We currently pay a commitment fee of 9 basis points. The credit facility also includes an accordion feature which allows the Company to increase the total commitments thereunder by up to an additional $ 500 million, subject to certain customary terms and conditions. The credit facility contains customary affirmative and negative covenants and customary events of default. The occurrence of an event of default could result in an acceleration of the obligations under the credit facility. The only financial covenant required is that our indebtedness to cash flow ratio, as defined in our credit facility, was 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 and interest 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, 2021 and December 31, 2020, we have entered into foreign exchange forward contracts to mitigate or hedge the effect of adverse fluctuations in foreign exchange rates and cross currency swap contracts to hedge a portion of our net investment in a foreign subsidiary against volatility in foreign exchange rates. During the nine months ended September 30, 2021, we entered into a series of interest rate swaps to mitigate or hedge the adverse fluctuations in interest rates on our future debt refinancing. These contracts are recorded at fair value that is based on foreign currency exchange rates and interest 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, 2021 and twelve months ended December 31, 2020, 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, 2021 and December 31, 2020, the aggregate notional value of these outstanding forward contracts was $ 336 million and $ 460 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, 2021 and December 31, 2020 was $ 6 million and $ 2 million, respectively. The amount recorded in selling and general expense related to these contracts was a net loss of $ 6 million and $ 10 million for three and nine months ended September 30, 2021, respectively, and a net gain of $ 5 million and less than $ 1 million for the three and nine months ended September 30, 2020, respectively. Net Investment Hedges During the nine months ended September 30, 2021 and twelve months ended December 31, 2020, we entered into cross currency swaps to hedge a portion of our net investment in one of our European subsidiaries 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, 2029, 2030. As of September 30, 2021 and December 31, 2020, the notional value of our outstanding cross currency swaps designated as a net investment hedge was $ 1 billion. 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, 2021 represent net periodic interest settlements and accruals, which are recognized in interest expense, net. We recognized net interest income of $ 5 million and $ 14 million for the three and nine months ended September 30, 2021, respectively, and $ 3 million and $ 7 million for the three and nine months ended September 30, 2020, respectively. Cash Flow Hedges Foreign Exchange Forward Contracts During the nine months ended September 30, 2021 and twelve months ended December 31, 2020, 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 2023 and the fourth quarter of 2022, 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 15 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, 2021, we estimate that $ 8 million of pre-tax gain related to foreign exchange forward contracts designated as cash flow hedges recorded in other comprehensive income is expected to be reclassified into earnings within the next twelve months. As of September 30, 2021 and December 31, 2020, the aggregate notional value of our outstanding foreign exchange forward contracts designated as cash flow hedges was $ 520 million and $ 489 million, respectively. Interest Rate Swaps During the nine months ended September 30, 2021, we entered into a series of interest rate swaps. These contracts are intended to mitigate or hedge the adverse fluctuations in interest rates on our future debt refinancing and are scheduled to mature beginning in the first quarter of 2027. These interest rate swaps are designated as cash flow hedges. The changes in the fair value of these contracts are initially reported in accumulated other comprehensive loss in our consolidated balance sheet and will be subsequently reclassified into interest expense, net in the same period that the hedged transaction affects earnings. As of September 30, 2021, the aggregate notional value of our outstanding interest rate swaps designated as cash flow hedges was $ 2.3 billion. 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, 2021 and December 31, 2020: (in millions) September 30, December 31, Balance Sheet Location 2021 2020 Derivatives designated as cash flow hedges: Prepaid and other current assets Foreign exchange forward contracts $ 8 $ 23 Other current liabilities Foreign exchange forward contracts $ — $ 2 Other non-current liabilities Interest rate swap contracts $ 169 $ — Derivatives designated as net investment hedges: Other non-current liabilities Cross currency swaps $ 43 $ 107 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) 2021 2020 2021 2020 Cash flow hedges - designated as hedging instruments Foreign exchange forward contracts $ ( 4 ) $ 11 Revenue, Selling and general expenses $ 5 $ 2 Interest rate swap contracts $ 36 $ — Interest expense, net $ — $ — Net investment hedges - designated as hedging instruments Cross currency swaps $ 33 $ ( 47 ) Interest expense, net $ ( 1 ) $ — 16 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) 2021 2020 2021 2020 Cash flow hedges - designated as hedging instruments Foreign exchange forward contracts $ ( 10 ) $ 8 Revenue, Selling and general expenses $ 15 $ ( 2 ) Interest rate swap contracts $ ( 169 ) $ — Interest expense, net $ — $ — Net investment hedges - designated as hedging instruments Cross currency swaps $ 59 $ ( 38 ) Interest expense, net $ ( 4 ) $ — The activity related to the change in unrealized gains (losses) in accumulated other comprehensive loss was as follows for the periods ended September 30: (in millions) Three Months Nine Months 2021 2020 2021 2020 Cash Flow Hedges Foreign exchange forward contracts Net unrealized gains (losses) on cash flow hedges, net of taxes, beginning of period $ 12 $ ( 1 ) $ 14 $ 2 Change in fair value, net of tax — 13 8 6 Reclassification into earnings, net of tax ( 5 ) ( 2 ) ( 15 ) 2 Net unrealized gains on cash flow hedges, net of taxes, end of period $ 7 $ 10 $ 7 $ 10 Interest rate swap contracts Net unrealized gains (losses) on cash flow hedges, net of taxes, beginning of period $ ( 155 ) $ — $ — $ — Change in fair value, net of tax 27 — ( 128 ) — Reclassification into earnings, net of tax — — — — Net unrealized losses on cash flow hedges, net of taxes, end of period $ ( 128 ) $ — $ ( 128 ) $ — Net Investment Hedges Net unrealized gains (losses) on net investment hedges, net of taxes, beginning of period $ ( 59 ) $ — $ ( 81 ) $ ( 8 ) Change in fair value, net of tax 22 ( 36 ) 40 ( 28 ) Reclassification into earnings, net of tax 1 — 5 — Net unrealized gains (losses) on net investment hedges, net of taxes, end of period $ ( 36 ) $ ( 36 ) $ ( 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. 17 We also 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 retirement and postretirement plans in the consolidated balance sheets, with a corresponding adjustment to accumulated other comprehensive loss, net of taxes. The amounts in accumulated other comprehensive loss represent net unrecognized actuarial losses and unrecognized prior service costs. These amounts will be subsequently recognized as net periodic pension cost pursuant to our accounting policy for amortizing such amounts. Net periodic benefit cost for our retirement and postretirement plans other than the service cost component are included in other income, 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 2021 2020 2021 2020 Service cost $ 1 $ 1 $ 3 $ 3 Interest cost 10 13 31 39 Expected return on assets ( 26 ) ( 26 ) ( 78 ) ( 76 ) Amortization of prior service credit / actuarial loss 5 4 13 10 Net periodic benefit cost $ ( 10 ) $ ( 8 ) $ ( 31 ) $ ( 24 ) Settlement charge 1 — — — 3 Net benefit cost $ ( 10 ) $ ( 8 ) $ ( 31 ) $ ( 21 ) 1 During the nine months ended September 30, 2020, lump sum withdrawals exceeded the combined total anticipated annual service and interest cost of our UK pension plan, triggering the recognition of a non-cash pre-tax settlement charge of $ 3 million. 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, 2021 and 2020. 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, 2021. The effect of the assumption changes on retirement and postretirement expense for the three and nine months ended September 30, 2021 did not have a material impact to our financial position, results of operations or cash flows. In the first nine months of 2021, we contributed $ 7 million to our retirement plans and expect to make additional required contributions of approximately $ 4 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 2021. 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. Total stock-based compensation expense primarily related to restricted stock and unit awards was $ 40 million and $ 90 million for the three and nine months ended September 30, 2021, respectively, and $ 38 million and $ 60 million, for the three and nine 18 months ended September 30, 2020, respectively. Total unrecognized compensation expense related to unvested restricted stock and unit awards as of September 30, 2021 was $ 122 million, which is expected to be recognized over a weighted average period of 1.8 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, 2021, 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 entered into accelerated share repurchase (“ASR”) agreements with financial institutions to initiate share repurchases of our common stock. Under an ASR agreement, we pay a specified amount to the financial institution and receive an initial delivery of shares. This initial delivery of shares represents the minimum number of shares that we may receive under the agreement. Upon settlement of the ASR agreement, the financial institution delivers additional shares. The total number of shares ultimately delivered, and therefore the average price paid per share, is determined at the end of the applicable purchase period of each ASR agreement based on the volume weighted-average share price, less a discount. We account for our ASR agreements as two transactions: a stock purchase transaction and a forward stock purchase contract. The shares delivered under the ASR agreements resulted in a reduction of outstanding shares used to determine our weighted average common shares outstanding for purposes of calculating basic and diluted earnings per share. The repurchased shares are held in Treasury. The forward stock purchase contracts were classified as equity instruments. The ASR agreements were executed under our 2013 Repurchase Program, approved on December 4, 2013. The terms of each ASR agreement entered for the period ended September 30, 2021, 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 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. 19 Additionally, we purchased shares of our common stock in the open market for the periods ended September 30, 2020 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 — $ 351.77 $ 11 Nine Months September 30, 2020 0.5 $ 295.40 $ 161 During the nine months ended September 30, 2021, we did not use cash to repurchase shares. 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. 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, 2021 were as follows: (in millions) Balance as of December 31, 2020 $ 2,781 Net income attributable to redeemable noncontrolling interest 161 Distributions payable to redeemable noncontrolling interest ( 143 ) Redemption value adjustment 387 Balance as of September 30, 2021 $ 3,186 20 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, 2021: (in millions) Foreign Currency Translation Adjustments Pension and Postretirement Benefit Plans Unrealized Gain (Loss) on Cash Flow Hedges Accumulated Other Comprehensive Loss Balance as of December 31, 2020 $ ( 323 ) $ ( 328 ) $ 14 $ ( 637 ) Other comprehensive (loss) income before reclassifications 2 1 9 ( 120 ) ( 109 ) Reclassifications from accumulated other comprehensive income (loss) to net earnings — 11 2 ( 15 ) 3 ( 4 ) Net other comprehensive (loss) income 2 20 ( 135 ) ( 113 ) Balance as of September 30, 2021 $ ( 321 ) $ ( 308 ) $ ( 121 ) $ ( 750 ) 1 Includes an unrealized gain related to our cross currency swaps. 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 $ 3 million for the nine months ended September 30, 2021. See Note 6 — Employee Benefits for additional details of items reclassed from accumulated other comprehensive loss to net earnings. 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 2021 2020 2021 2020 Amounts attributable to S&P Global Inc. common shareholders: Net income $ 797 $ 455 $ 2,349 $ 1,885 Basic weighted-average number of common shares outstanding 240.9 240.6 240.8 241.2 Effect of stock options and other dilutive securities 0.8 1.0 0.9 1.1 Diluted weighted-average number of common shares outstanding 241.7 241.6 241.7 242.3 Earnings per share attributable to S&P Global Inc. common shareholders: Net income: Basic $ 3.31 $ 1.89 $ 9.76 $ 7.82 Diluted $ 3.30 $ 1.88 $ 9.72 $ 7.78 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, 2021 and 2020, there were no stock options excluded. Restricted performance shares outstanding of 0.5 million and 0.6 million as of September 30, 2021 and 2020, respectively, were excluded. 21 10. Restructuring We continuously evaluate our cost structure to identify cost savings associated with streamlining our management structure. Our 2020 restructuring plan consisted of a company-wide workforce reduction of approximately 830 positions, and is 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 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. The initial restructuring charge recorded and the ending reserve balance as of September 30, 2021 by segment is as follows: 2020 Restructuring Plan (in millions) Initial Charge Recorded Ending Reserve Balance Ratings $ 4 $ 1 Market Intelligence 27 6 Platts 10 4 Indices 5 1 Corporate 19 5 Total $ 65 $ 17 The ending reserve balance for the 2020 restructuring plan was $ 58 million as of December 31, 2020. For the nine months ended September 30, 2021, we have reduced the reserve for the 2020 restructuring plan by $ 41 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 expense, other income, net, interest expense, net, or loss on extinguishment of debt as these are amounts that do not affect the operating results of our reportable segments. 22 A summary of operating results for the periods ended September 30 is as follows: Revenue Three Months Nine Months (in millions) 2021 2020 2021 2020 Ratings $ 1,017 $ 894 $ 3,107 $ 2,725 Market Intelligence 570 530 1,664 1,565 Platts 239 222 700 654 Indices 298 234 846 733 Intersegment elimination 1 ( 37 ) ( 34 ) ( 108 ) ( 102 ) Total revenue $ 2,087 $ 1,846 $ 6,209 $ 5,575 Operating Profit Three Months Nine Months (in millions) 2021 2020 2021 2020 Ratings 2 $ 644 $ 544 $ 2,054 $ 1,758 Market Intelligence 3 187 164 533 469 Platts 4 128 121 392 357 Indices 5 213 151 600 504 Total reportable segments 1,172 980 3,579 3,088 Corporate Unallocated expense 6 ( 89 ) ( 36 ) ( 262 ) ( 128 ) Total operating profit $ 1,083 $ 944 $ 3,317 $ 2,960 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 three and nine months ended September 30, 2021 includes amortization of intangibles from acquisitions of $ 2 million and $ 8 million, respectively, and $ 3 million and $ 5 million for the three and nine months ended September 30, 2020, respectively. 3 Operating profit for nine months ended September 30, 2021 includes a gain on disposition of $ 2 million, and 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 nine months ended September 30, 2020 includes employee severance charges of $ 2 million. Additionally, operating profit includes amortization of intangibles from acquisitions of $ 16 million and $ 49 million for three and nine months ended September 30, 2021, respectively, and $ 19 million and $ 58 million for three and nine months ended September 30, 2020, respectively. 4 Operating profit includes amortization of intangibles from acquisitions of $ 2 million for the three months ended September 30, 2021 and 2020, and $ 6 million and $ 7 million for the nine months ended September 30, 2021 and 2020, respectively. 5 Operating profit includes amortization of intangibles from acquisitions of $ 1 million for the three months ended September 30, 2021 and 2020, and $ 4 million for the nine months ended September 30, 2021 and 2020. 6 Corporate Unallocated expense for the three and nine months ended September 30, 2021 includes IHS Markit merger costs of $ 54 million and $ 153 million, respectively, and a gain on disposition of $ 3 million, and for nine months ended September 30, 2021 includes a lease impairment of $ 3 million and Kensho retention related expense of $ 2 million. 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 also includes amortization of intangibles from acquisitions of $ 7 million for the nine months ended September 30, 2021, and $ 7 million and $ 20 million for the three and nine months ended September 30, 2020, respectively. The following table presents our revenue disaggregated by revenue type for the periods ended September 30: 23 (in millions) Ratings Market Intelligence Platts Indices Intersegment Elimination 1 Total Three Months Ended September 30, 2021 Subscription $ — $ 557 $ 220 $ 47 $ — $ 824 Non-subscription / Transaction 551 13 2 — — 566 Non-transaction 466 — — — ( 37 ) 429 Asset-linked fees — — — 211 — 211 Sales usage-based royalties — — 17 40 — 57 Total revenue $ 1,017 $ 570 $ 239 $ 298 $ ( 37 ) $ 2,087 Timing of revenue recognition Services transferred at a point in time $ 551 $ 13 $ 2 $ — $ — $ 566 Services transferred over time 466 557 237 298 ( 37 ) 1,521 Total revenue $ 1,017 $ 570 $ 239 $ 298 $ ( 37 ) $ 2,087 Nine Months Ended September 30, 2021 Subscription $ — $ 1,624 $ 645 $ 140 $ — $ 2,409 Non-subscription / Transaction 1,748 40 6 — — 1,794 Non-transaction 1,359 — — — ( 108 ) 1,251 Asset-linked fees — — — 589 — 589 Sales usage-based royalties — — 49 117 — 166 Other revenue — — — — — — Total revenue $ 3,107 $ 1,664 $ 700 $ 846 $ ( 108 ) $ 6,209 Timing of revenue recognition Services transferred at a point in time $ 1,748 $ 40 $ 6 $ — $ — $ 1,794 Services transferred over time 1,359 1,624 694 846 ( 108 ) 4,415 Total revenue $ 3,107 $ 1,664 $ 700 $ 846 $ ( 108 ) $ 6,209 24 (in millions) Ratings Market Intelligence Platts Indices Intersegment Elimination 1 Total Three Months Ended September 30, 2020 2 Subscription $ — $ 517 $ 205 $ 43 $ — $ 765 Non-subscription / Transaction 488 13 2 — — 503 Non-transaction 406 — — — ( 34 ) 372 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 $ 488 $ 13 $ 2 $ — $ — $ 503 Services transferred over time 406 517 220 234 ( 34 ) 1,343 Total revenue $ 894 $ 530 $ 222 $ 234 $ ( 34 ) $ 1,846 Nine Months Ended September 30, 2020 2 Subscription $ — $ 1,525 $ 603 $ 132 $ — $ 2,260 Non-subscription / Transaction 1,540 39 4 — — 1,583 Non-transaction 1,185 — — — ( 102 ) 1,083 Asset-linked fees — 1 — 468 — 469 Sales usage-based royalties — — 47 133 — 180 Other revenue — — — — — — Total revenue $ 2,725 $ 1,565 $ 654 $ 733 $ ( 102 ) $ 5,575 Timing of revenue recognition Services transferred at a point in time $ 1,540 $ 39 $ 4 $ — $ — $ 1,583 Services transferred over time 1,185 1,526 650 733 ( 102 ) 3,992 Total revenue $ 2,725 $ 1,565 $ 654 $ 733 $ ( 102 ) $ 5,575 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. 2 In the first quarter of 2021, we reevaluated our transaction and non-transaction presentation for Ratings which resulted in a reclassification from transaction revenue to non-transaction revenue of $ 2 million and $ 6 million for the three and nine months ended September 30, 2020, respectively. The following provides revenue by geographic region for the periods ended September 30: (in millions) Three Months Nine Months 2021 2020 2021 2020 U.S. $ 1,260 $ 1,076 $ 3,761 $ 3,384 European region 498 455 1,497 1,310 Asia 227 214 648 585 Rest of the world 102 101 303 296 Total $ 2,087 $ 1,846 $ 6,209 $ 5,575 See Note 2 — Acquisitions and Divestitures and Note 10 — Restructuring for additional actions that impacted the segment operating results. 25 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 12 years, some of which include options to extend the leases for up to 12 years, and some of which include options to terminate the leases within 1 year. We consider these options in determining the lease term used to establish our right of use ("ROU") assets and associated lease liabilities. We sublease certain real estate leases to third parties which mainly consist of operating leases for space within our offices. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expenses for these leases on a straight line-basis over the lease term in operating-related expenses and selling and general expenses. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. Our future minimum based payments used to determine our lease liabilities include minimum based rent payments and escalations. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. During the nine months ending September 30, 2021, we recorded a pre-tax impairment charge of $ 3 million related to the impairment and abandonment of operating lease related ROU assets. The impairment charges are included in selling and general expenses within the consolidated statements of income. The following table provides information on the location and amounts of our leases on our consolidated balance sheets as of September 30, 2021 and December 31, 2020: (in millions) September 30, December 31, Balance Sheet Location 2021 2020 Assets Right of use assets Lease right of use assets $ 462 $ 494 Liabilities Other current liabilities Current lease liabilities 96 100 Lease liabilities — non-current Non-current lease liabilities 508 544 The components of lease expense for the periods ended September 30 are as follows: (in millions) Three Months Nine Months 2021 2020 2021 2020 Operating lease cost $ 32 $ 35 $ 97 $ 110 Sublease income — — ( 1 ) ( 5 ) Total lease cost $ 32 $ 35 $ 96 $ 105 26 Supplemental information related to leases for the periods ended September 30 are as follows: (in millions) Three Months Nine Months 2021 2020 2021 2020 Cash paid for amounts included in the measurement for operating lease liabilities Operating cash flows for operating leases $ 32 $ 32 96 105 Right of use assets obtained in exchange for lease obligations Operating leases 16 — 18 6 Weighted-average remaining lease term and discount rate for our operating leases are as follows: September 30, December 31, 2021 2020 Weighted-average remaining lease term (years) 8.4 8.5 Weighted-average discount rate 3.61 % 3.78 % Maturities of lease liabilities for our operating leases are as follows: (in millions) 2021 (Excluding the nine months ended September 30, 2021) $ 30 2022 113 2023 94 2024 75 2025 67 2026 and beyond 332 Total undiscounted lease payments $ 711 Less: Imputed interest 107 Present value of lease liabilities $ 604 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, 2021, S&P Dow Jones Indices LLC earned $ 34 million and $ 102 million, respectively, of revenue under the terms of the License Agreement. 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. 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 subjected to government and regulatory proceedings, investigations and inquiries. A class action lawsuit was filed in Australia on August 7, 2020 against the Company and a subsidiary of the Company. A separate lawsuit was filed against the Company and a subsidiary of the Company in Australia on February 2, 2021 by two entities within the Basis Capital investment group. The lawsuits both relate to alleged investment losses in collateralized debt obligations rated by Ratings prior to the financial crisis. 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. 27 From time to time, the Company receives customer complaints, particularly, though not exclusively, in its Ratings and Indices segments. The Company believes it has strong contractual protections in the terms and conditions included in its arrangements with customers. Nonetheless, in the interest of managing customer relationships, the Company from time to time engages in dialogue with such customers in an effort to resolve such complaints, and if such complaints cannot be resolved through dialogue, may face litigation regarding such complaints. The Company does not expect to incur material losses as a result of these matters. Moreover, various government and self-regulatory agencies frequently make inquiries and conduct investigations into our compliance with applicable laws and regulations, including those related to ratings activities and antitrust matters. For example, as a nationally recognized statistical rating organization registered with the SEC under Section 15E of the Exchange Act, S&P Global Ratings is in ongoing communication with the staff of the SEC regarding compliance with its extensive obligations under the federal securities laws. Although S&P Global seeks to promptly address any compliance issues that it detects or that the staff of the SEC or another regulator raises, there can be no assurance that the SEC or another regulator will not seek remedies against S&P Global for one or more compliance deficiencies. Any of these proceedings, investigations or inquiries could ultimately result in adverse judgments, damages, fines, penalties or activity restrictions, which could adversely impact our consolidated financial condition, cash flows, business or competitive position. In view of the uncertainty inherent in litigation and government and regulatory enforcement matters, we cannot predict the eventual outcome of such matters or the timing of their resolution, or in most cases reasonably estimate what the eventual judgments, damages, fines, penalties or impact of activity (if any) restrictions may be. As a result, we cannot provide assurance that such outcomes will not have a material adverse effect on our consolidated financial condition, cash flows, business or competitive position. As litigation or the process to resolve pending matters progresses, as the case may be, we will continue to review the latest information available and assess our ability to predict the outcome of such matters and the effects, if any, on our consolidated financial condition, cash flows, business or competitive position, which may require that we record liabilities in the consolidated financial statements in future periods. 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 scope exception for contracts in an entity's own equity. The guidance was effective on January 1, 2021, and the adoption of this guidance did not 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. The guidance clarifies how to account for the transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative. The guidance was effective on January 1, 2021, and the adoption of this guidance did not have a significant impact on our consolidated financial statements. In December of 2019, the FASB issued guidance to simplify the accounting for income taxes, which eliminates certain exceptions to the general principles of Topic 740. The guidance is effective for reporting periods after December 15, 2020. Our adoption of this guidance on January 1, 2021 did not have a significant impact on our consolidated financial statements. 28