S&P Global Inc. [SPGI] Filings

10-Q 1 spgi-20230930.htm 10-Q spgi-20230930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-1023

S&P Global Inc.

(Exact name of registrant as specified in its charter)

New York

13-1026995

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

55 Water Street

New York

10041

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: 212-438-1000

Securities registered pursuant to Section 12(b) of the Act:

Class

Trading Symbol

Name of Exchange on which registered

Common stock (par value $1.00 per share)

SPGI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

☑

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☑

As of October 27, 2023 (latest practicable date), 316.8 million shares of the issuer's classes of common stock (par value $1.00 per share) were outstanding excluding 7.2 million outstanding common shares held by the Markit Group Holdings Limited Employee Benefit Trust.

S&P Global Inc.

INDEX


			Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Report of Independent Registered Public Accounting Firm			3
Consolidated Statements of Income for the three and nine months ended Se ptember 30, 2023 and 2022			4
Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022			5
Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022			6
Consolidated Statements of Cash Flows for the nin e months ended September 30, 2023 and 2022			7
Consolidated Statements of Equity for the three and nine months ended September 30, 2023 and 2022			8
Notes to the Consolidated Financial Statements			10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			33
Item 3. Quantitative and Qualitative Disclosures About Market Risk			65
Item 4. Controls and Procedures			65
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			66
Item 1A. Risk Factors			66
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities			66
Item 5. Other Information			67
Item 6. Exhibits			68
Signatures			69

Report of Independent Registered Public Accounting Firm

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

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of S&P Global Inc. and subsidiaries (the Company) as of September 30, 2023, the related consolidated statements of income, comprehensive income, and equity for the three- and nine-month periods ended September 30, 2023 and 2022, the related consolidated statements of cash flows for the nine-month periods ended September 30, 2023 and 2022, and the related notes (collectively referred to as the “consolidated interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2022, the related consolidated statements of income, comprehensive income, equity and cash flows for the year then ended, and the related notes and schedule (not presented herein); and in our report dated February 9, 2023, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2022, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the SEC and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ ERNST & YOUNG LLP

New York, New York

November 2, 2023

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

S&P Global Inc.

Consolidated Statements of Income

(Unaudited)


(in millions, except per share amounts)	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Revenue	$	3,084	$	2,861	$	9,345	$	8,244
Expenses:
Operating-related expenses	995		989		3,109		2,745
Selling and general expenses	741		725		2,217		2,451
Depreciation	22		31		71		93
Amortization of intangibles	260		267		782		645
Total expenses	2,018		2,012		6,179		5,934
Loss (gain) on dispositions	—		2		69		(1,897)
Equity in income on unconsolidated subsidiaries	(8)		(6)		(33)		(21)
Operating profit	1,074		853		3,130		4,228
Other income, net	(5)		(37)		(5)		(86)
Interest expense, net	84		71		258		218
(Gain) loss on extinguishment of debt, net	—		(4)		—		15
Income before taxes on income	995		823		2,877		4,081
Provision for taxes on income	181		145		628		1,053





Net income	814		678		2,249		3,028
Less: net income attributable to noncontrolling interests	(72)		(70)		(202)		(213)

Net income attributable to S&P Global Inc.	$	742	$	608	$	2,047	$	2,815






Earnings per share attributable to S&P Global Inc. common shareholders:






Net income:
Basic	$	2.34	$	1.84	$	6.41	$	8.95
Diluted	$	2.33	$	1.84	$	6.40	$	8.91
Weighted-average number of common shares outstanding:
Basic	317.5		329.6		319.4		314.5
Diluted	318.0		330.9		319.9		315.7

Actual shares outstanding at period end					316.8		325.8

See accompanying notes to the unaudited consolidated financial statements.

S&P Global Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)


(in millions)	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Net income	$	814	$	678	$	2,249	$	3,028

Other comprehensive income:
Foreign currency translation adjustments	(113)		(255)		(40)		(371)
Income tax effect	(6)		(15)		2		(42)
	(119)		(270)		(38)		(413)

Pension and other postretirement benefit plans	—		4		(12)		5
Income tax effect	—		(1)		4		(1)
	—		3		(8)		4

Unrealized gain on cash flow hedges	115		54		115		283
Income tax effect	(29)		(14)		(29)		(71)
	86		40		86		212

Comprehensive income	781		451		2,289		2,831
Less: comprehensive income attributable to nonredeemable noncontrolling interests	(7)		(6)		(19)		(18)
Less: comprehensive income attributable to redeemable noncontrolling interests	(65)		(64)		(183)		(195)
Comprehensive income attributable to S&P Global Inc.	$	709	$	381	$	2,087	$	2,618

See accompanying notes to the unaudited consolidated financial statements.

S&P Global Inc.

Consolidated Balance Sheets


(in millions)	September 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,645	$	1,286
Restricted cash	1		1
Accounts receivable, net of allowance for doubtful accounts: 2023 - $51; 2022 - $48	2,547		2,494

Prepaid and other current assets	611		588
Assets of a business held for sale	—		1,298
Total current assets	4,804		5,667
Property and equipment, net of accumulated depreciation: 2023 - $795; 2022 - $859	254		297
Right of use assets	392		423
Goodwill	34,785		34,545
Other intangible assets, net	17,635		18,306
Equity investments in unconsolidated subsidiaries	1,791		1,752
Other non-current assets	900		794
Total assets	$	60,561	$	61,784
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	458	$	450
Accrued compensation and contributions to retirement plans	655		753
Short-term debt	47		226
Income taxes currently payable	59		116
Unearned revenue	3,022		3,126

Other current liabilities	977		1,094
Liabilities of a business held for sale	—		234
Total current liabilities	5,218		5,999
Long-term debt	11,415		10,730
Lease liabilities — non-current	543		577
Pension and other postretirement benefits	183		180
Deferred tax liability — non-current	3,671		4,065
Other non-current liabilities	507		489
Total liabilities	21,537		22,040
Redeemable noncontrolling interest (Note 8)	3,510		3,267
Commitments and contingencies (Note 12)
Equity:
Common stock, $1 par value: authorized - 600 million shares; issued - 2023 and 2022 415 million shares	415		415
Additional paid-in capital	44,439		44,422
Retained income	18,725		17,784
Accumulated other comprehensive loss	(846)		(886)
Less: common stock in treasury	(27,314)		(25,347)
Total equity — controlling interests	35,419		36,388
Total equity — noncontrolling interests	95		89
Total equity	35,514		36,477
Total liabilities and equity	$	60,561	$	61,784

See accompanying notes to the unaudited consolidated financial statements.

S&P Global Inc.

Consolidated Statements of Cash Flows

(Unaudited)


(in millions)	Nine Months Ended
	September 30,
	2023		2022
Operating Activities:
Net income	$	2,249	$	3,028


Adjustments to reconcile net income to cash provided by operating activities:
Depreciation	71		93
Amortization of intangibles	782		645
Provision for losses on accounts receivable	19		18
Deferred income taxes	(430)		(155)
Stock-based compensation	143		160
Loss (gain) on dispositions	69		(1,897)

Loss on extinguishment of debt, net	—		15
Other	151		249
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable	(64)		291
Prepaid and other current assets	(128)		(66)
Accounts payable and accrued expenses	(120)		(382)
Unearned revenue	(71)		(188)

Other current liabilities	(313)		(85)
Net change in prepaid/accrued income taxes	62		(92)
Net change in other assets and liabilities	(44)		(144)
Cash provided by operating activities	2,376		1,490
Investing Activities:
Capital expenditures	(95)		(61)
Acquisitions, net of cash acquired	(293)		242
Proceeds from dispositions	1,004		3,510
Changes in short-term investments	(9)		(2)
Cash provided by investing activities	607		3,689
Financing Activities:
Payments on short-term debt, net	(188)		(219)
Proceeds from issuance of senior notes, net	744		5,395
Payments on senior notes	—		(3,684)
Dividends paid to shareholders	(864)		(749)
Proceeds from noncontrolling interest holders	—		410
Distributions to noncontrolling interest holders	(211)		(197)
Contingent consideration payments	(8)		—

Repurchase of treasury shares	(2,001)		(11,003)
Exercise of stock options	12		4
Employee withholding tax on share-based payments	(86)		(85)
Cash used for financing activities	(2,602)		(10,128)
Effect of exchange rate changes on cash	(22)		(167)








Net change in cash, cash equivalents, and restricted cash	359		(5,116)
Cash, cash equivalents, and restricted cash at beginning of period	1,287		6,505
Cash, cash equivalents, and restricted cash at end of period	$	1,646	$	1,389

See accompanying notes to the unaudited consolidated financial statements.

S&P Global Inc.

Consolidated Statements of Equity

(Unaudited)


Three Months Ended September 30, 2023
(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, 2023	$	415	$	44,293	$	18,279	$	(813)	$	26,706	$	35,468	$	91	$	35,559
Comprehensive income 1					742		(33)				709		7		716
Dividends (Dividend declared per common share — $0.90 per share)					(286)						(286)		(2)		(288)

Share repurchases			125						625		(500)				(500)
Employee stock plans			21						(17)		38				38

Change in redemption value of redeemable noncontrolling interest					(10)						(10)				(10)
Adjustment to noncontrolling interest											—				—
Other											—		(1)		(1)
Balance as of September 30, 2023	$	415	$	44,439	$	18,725	$	(846)	$	27,314	$	35,419	$	95	$	35,514


Three Months Ended September 30, 2022
(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, 2022	$	415	$	43,242	$	17,298	$	(811)	$	20,711	$	39,433	$	73	$	39,506
Comprehensive income 1					608		(227)				381		6		387
Dividends (Dividend declared per common share — $0.85 per share)					(277)						(277)		(2)		(279)

Share repurchases			962						3,462		(2,500)				(2,500)
Employee stock plans			25						1		24				24
Change in redemption value of redeemable noncontrolling interest					106						106				106
Other											—		(4)		(4)
Balance as of September 30, 2022	$	415	$	44,229	$	17,735	$	(1,038)	$	24,174	$	37,167	$	73	$	37,240

See accompanying notes to the unaudited consolidated financial statements.


Nine Months Ended September 30, 2023
(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, 2022	$	415	$	44,422	$	17,784	$	(886)	$	25,347	$	36,388	$	89	$	36,477
Comprehensive income 1					2,047		40				2,087		19		2,106
Dividends (Dividend declared per common share — $2.70 per share)					(864)						(864)		(11)		(875)

Share repurchases			125						2,126		(2,001)				(2,001)
Employee stock plans			(106)						(159)		53				53
Change in redemption value of redeemable noncontrolling interest					(247)						(247)				(247)
Adjustment to noncontrolling interest			(2)								(2)				(2)
Other					5						5		(2)		3
Balance as of September 30, 2023	$	415	$	44,439	$	18,725	$	(846)	$	27,314	$	35,419	$	95	$	35,514


Nine Months Ended September 30, 2022
(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, 2021	$	294	$	1,031	$	15,017	$	(841)	$	13,469	$	2,032	$	75	$	2,107
Comprehensive income 1					2,815		(197)				2,618		18		2,636
Dividends (Dividend declared per common share — $2.47 per share)					(749)						(749)		(12)		(761)
Acquisition of IHS Markit	121		43,415								43,536				43,536
Share repurchases			(313)						10,690		(11,003)				(11,003)
Employee stock plans			96						15		81				81
Change in redemption value of redeemable noncontrolling interest					653						653				653
Other					(1)						(1)		(8)		(9)
Balance as of September 30, 2022	$	415	$	44,229	$	17,735	$	(1,038)	$	24,174	$	37,167	$	73	$	37,240

1Excludes comprehensive income of $65 million and $64 million for the three months ended September 30, 2023 and 2022, respectively, and $183 million and $195 million for the nine months ended September 30, 2023 and 2022, respectively, attributable to our redeemable noncontrolling interest.

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 provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets.

Our operations consist of six reportable segments: S&P Global Market Intelligence (“Market Intelligence”), S&P Global Ratings (“Ratings”), S&P Global Commodity Insights (“Commodity Insights”), S&P Global Mobility (“Mobility”), S&P Dow Jones Indices (“Indices” ) and S&P Global Engineering Solutions (“Engineering Solutions”).

•Market Intelligence is a global provider of multi-asset-class data and analytics integrated with purpose-built workflow solutions.

•Ratings is an independent provider of credit ratings, research, and analytics, offering investors and other market participants information, ratings and benchmarks.

•Commodity Insights is a leading independent provider of information and benchmark prices for the commodity and energy markets.

•Mobility is a leading provider of solutions serving the full automotive value chain including vehicle manufacturers (OEMs), automotive suppliers, mobility service providers, retailers, consumers, and finance and insurance companies.

•Indices is a global index provider maintaining a wide variety of valuation and index benchmarks for investment advisors, wealth managers and institutional investors.

•As of May 2, 2023, we completed the sale of Engineering Solutions, a leading provider of engineering standards and related technical knowledge, and the results are included through that date.

On May 2, 2023, we completed the sale of Engineering Solutions to Allium Buyer LLC, a Delaware limited liability company controlled by funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (“KKR”). We received the full proceeds from the sale of $975 million in cash, subject to purchase price adjustments, which we expect to result in approximately $750 million in after-tax proceeds. The assets and liabilities of Engineering Solutions were classified as held for sale in our consolidated balance sheet as of December 31, 2022. During the nine months ended September 30, 2023, we recorded a pre-tax loss of $120 million in Loss (gain) on dispositions and disposition-related costs of $16 million in selling and general expenses in the consolidated statement of income ($182 million after-tax, net of a release of a deferred tax liability of $157 million) related to the sale of Engineering Solutions. Following the sale, the assets and liabilities of Engineering Solutions are no longer reported in our consolidated balance sheet as of September 30, 2023. The transaction followed our announced intent in November of 2022 to divest the business. Engineering Solutions became part of the Company following our merger with IHS Markit.

On February 28, 2022, we completed the merger with IHS Markit Ltd (“IHS Markit”), and as a result, IHS Markit and its subsidiaries became wholly owned consolidated subsidiaries of S&P Global, and the financial results include IHS Markit from the date of acquisition.

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, 2022 (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, 2023 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, business combinations, 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 $1 million as of September 30, 2023 and December 31, 2022.

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, 2023 and December 31, 2022, contract assets were $104 million and $60 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, 2023 compared to December 31, 2022 is primarily driven by $2.6 billion of revenues recognized that were included in the unearned revenue balance at the beginning of the period, offset by cash payments received in advance of satisfying our performance obligations.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of contracts for work that has not yet been performed. As of September 30, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $3.7 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 Contracts

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 contracts were $202 million and $175 million as of September 30, 2023 and December 31, 2022, 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.

Equity in Income on Unconsolidated Subsidiaries

The Company holds an investment in a 50/50 joint venture arrangement with shared control with CME Group that combined each company’s post-trade services into a joint venture, OSTTRA. The joint venture provides trade processing and risk mitigation operations and incorporates CME’s optimization businesses (Traiana, TriOptima, and Reset) and the Company’s MarkitSERV business. The combination is intended to increase operating efficiencies of both businesses to more effectively service clients with enhanced platforms and services for OTC markets across interest rate, FX, equity, and credit asset classes.

Other Income, net

The components of other income, net for the periods ended September 30 are as follows:


(in millions)	Three Months				Nine Months
	2023		2022		2023		2022
Other components of net periodic benefit cost	$	(6)	$	(7)	$	(18)	$	(18)
Net loss (gain) from investments	1		(30)		13		(68)
Other income, net	$	(5)	$	(37)	$	(5)	$	(86)

2. Acquisitions and Divestitures

Acquisitions

2023

On February 16, 2023, we completed the acquisition of Market Scan Information Systems, Inc. (“Market Scan”), a leading provider of automotive pricing and incentive intelligence, including Automotive Payments as a ServiceTM and its powerful payment calculation engine. The addition of Market Scan to Mobility will enable the integration of detailed transaction intelligence in areas that are complementary to existing services for dealers, OEMs, lenders, and other market participants. The acquisition of Market Scan is not material to our consolidated financial statements.

On January 3, 2023, we completed the acquisition of ChartIQ, a premier charting provider for the financial services industry. ChartIQ is a professional grade charting solution that allows users to visualize data with a fully interactive web-based library that works seamlessly across web, mobile and desktop. It provides advanced capabilities including trade visualization, options analytics, technical analysis and more. Additionally, ChartIQ allows clients to visualize vendor-supplied data combined with their own proprietary content, alternative datasets or analytics. The acquisition is part of our Market Intelligence segment and further enhances our S&P Capital IQ Pro platform, our digital investment solutions provider Markit Digital and other workflow solutions to provide the industry with leading visualization capabilities. The acquisition of ChartIQ is not material to our consolidated financial statements.

On January 4, 2023, we completed the acquisition of TruSight Solutions LLC (“TruSight”) a provider of third-party vendor risk assessments. The acquisition was integrated into our Market Intelligence segment and further expands the breadth and depth of S&P Global’s third party vendor risk management solutions by offering high-quality validated assessment data to clients designed to reduce further the vendor due diligence burden on service providers to the financial services industry. The acquisition of TruSight is not material to our consolidated financial statements.

2022

Merger with IHS Markit

On February 28, 2022, we completed the merger with IHS Markit. The fair value of the consideration transferred for IHS Markit was approximately $43.5 billion.

Allocation of Purchase Price

The merger with IHS Markit was accounted for as a business combination using the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). The allocation of purchase price recorded for IHS Markit is as follows:


(in millions)	February 28, 2022
Assets acquired
Cash and cash equivalents	$	310
Accounts receivable, net	968
Prepaid and other current assets	224
Assets of a business held for sale	1,519
Property and equipment	118
Right of use assets	240
Goodwill	31,456
Other intangible assets	18,620
Equity investments in unconsolidated subsidiaries	1,644
Other non-current assets	54
Total assets acquired	$	55,153
Liabilities assumed
Account payable	$	174
Accrued compensation	90
Short-term debt	968
Unearned revenue	1,053
Other current liabilities	581
Liabilities of a business held for sale	72
Long-term debt	4,191
Lease liabilities - non-current	231
Deferred tax liability - non-current	4,200
Other non-current liabilities	57
Total liabilities assumed	$	11,617
Total consideration transferred	$	43,536

Acquired Identifiable Intangible Assets

The following table sets forth the fair values of the components of the identifiable intangible assets acquired and their useful lives:


(in millions)	Fair Value		Weighted Average Useful Lives
Customer relationships	$	13,596	25 years
Trade names and trademarks	1,469		14 years
Developed technology	1,043		10 years
Databases	2,512		12 years
Total Identified Intangible Assets	$	18,620	21 years

Divestitures

2023

sheet as of December 31, 2022. During the nine months ended September 30, 2023, we recorded a pre-tax loss of $120 million in Loss (gain) on dispositions and disposition-related costs of $16 million in selling and general expenses in the consolidated statement of income ($182 million after-tax, net of a release of a deferred tax liability of $157 million) related to the sale of Engineering Solutions. Following the sale, the assets and liabilities of Engineering Solutions are no longer reported in our consolidated balance sheet as of September 30, 2023. The transaction followed our announced intent in November of 2022 to divest the business. Engineering Solutions became part of the Company following our merger with IHS Markit.

In the first quarter of 2023, we received a contingent payment following the sale of Leveraged Commentary and Data (“LCD”) along with a related family of leveraged loan indices in June of 2022. The contingent payment was payable six months following the closing upon the achievement of certain conditions related to the transition of LCD customer relationships. During the nine months ended September 30, 2023, the contingent payment resulted in a pre-tax gain of $46 million ($34 million after-tax) related to the sale of LCD in our Market Intelligence segment and $4 million ($3 million after-tax) in Loss (gain) on dispositions related to the sale of a family of leveraged loan indices in our Indices segment.

2022

As a condition of securing regulatory approval for the merger, S&P Global and IHS Markit agreed to divest of certain of their businesses. S&P Global’s divestitures included CUSIP Global Services (“CGS”), its LCD business and a related family of leveraged loan indices while IHS Markit’s divestitures included Oil Price Information Services (“OPIS”); Coal, Metals and Mining; and PetroChem Wire businesses and its Base Chemicals business.

In June of 2022, we completed the previously announced sale of LCD along with a related family of leveraged loan indices, within our Market Intelligence and Indices segments, respectively, to Morningstar for a purchase price of $600 million in cash, subject to customary adjustments, and a contingent payment of up to $50 million which was payable six months following the closing upon the achievement of certain conditions related to the transition of LCD customer relationships. During the three and nine months ended September 30, 2022, we recorded a pre-tax loss of $15 million ($11 million after-tax) and a pre-tax gain of $505 million ($378 million after-tax) for the sale of LCD. During the three and nine months ended September 30, 2022 we recorded a pre-tax gain of $14 million ($12 million after-tax) and $52 million ($43 million after-tax) for the sale of a family of leveraged loan indices in Loss (gain) on dispositions in the consolidated statements of income.

In June of 2022, we completed the previously announced sale of the Base Chemicals business to News Corp for $295 million in cash. We did not recognize a gain on the sale of the Base Chemicals business.

In March of 2022, we completed the previously announced sale of CGS, a business within our Market Intelligence segment, to FactSet Research Systems Inc. for a purchase price of $1.925 billion in cash, subject to customary adjustments. During the three and nine months ended September 30, 2022, we recorded a pre-tax loss of $2 million ($2 million after-tax) and a pre-tax gain of $1.341 billion ($1.005 billion after-tax) in Loss (gain) on dispositions in the consolidated statements of income related to the sale of CGS.

In February of 2022, we completed the previously announced sale of OPIS to News Corp for $1.150 billion in cash. We did not recognize a gain on the sale of OPIS.

Assets and Liabilities Held for Sale

The components of assets and liabilities held for sale in the consolidated balance sheets consist of the following:


(in millions)	September 30,		December 31,
	2023		2022 1
Accounts Receivable, net	$	—	$	88
Goodwill	—		437
Other intangible assets, net	—		697
Other assets	—		76
Assets of a business held for sale	$	—	$	1,298

Accounts payable and accrued expenses	$	—	$	59
Deferred tax liability	—		27
Unearned revenue	—		148
Liabilities of a business held for sale	$	—	$	234

1 Assets and liabilities held for sale as of December 31, 2022 relate to Engineering Solutions.

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
	2023		2022		2023		2022
Operating profit 1	$	—	$	—	$	19	$	59

1 The operating profit presented includes the revenue and recurring direct expenses associated with businesses disposed of or held for sale. The nine months ended September 30, 2023 excludes a pre-tax loss related to the sale of Engineering Solutions of $120 million. The three months ended September 30, 2022 excludes a pre-tax loss of $15 million and a pre-tax gain of $14 million related to the sale LCD and a related family of leveraged loan indices, respectively. The nine months ended September 30, 2022 excludes pre-tax gains related to the sale LCD and a related family of leveraged loan indices of of $505 million and $52 million, respectively. The three and nine months ended September 30, 2022 also excludes a pre-tax loss of $2 million and a pre-tax gain of $1.3 billion related to the sale of CGS, respectively.

3. Income Taxes

The effective income tax rate was 18.2% and 21.8% for the three and nine months ended September 30, 2023, respectively, and 17.6% and 25.8% for the three and nine months ended September 30, 2022, respectively. The lower rate for the three months ended September 30, 2022 was primarily due to a combination of discrete adjustments including transaction costs. The higher rate for the nine months ended September 30, 2022 was primarily due to the tax charge on merger related divestitures and deal related non-deductible costs.

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 subject to tax examinations in various jurisdictions. As of September 30, 2023 and December 31, 2022, the total amount of federal, state and local, and foreign unrecognized tax benefits was $244 million and $223 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, 2023 and December 31, 2022, we had $50 million and $38 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 $20 million in the next twelve months as a result of the resolution of local tax examinations.

For tax years beginning after December 31, 2021, the Tax Cuts and Jobs Act of 2017 (“TCJA”) requires taxpayers to capitalize and amortize research and development costs pursuant to Internal Revenue Code (“IRC”) Section 174. Section 174 requires taxpayers to capitalize research and development costs and amortize them over 5 years for expenditures attributed to domestic research and 15 years for expenditures attributed to foreign research. This provision affects a significant proportion of the Company for the first time in 2023. The actual impact of Section 174 capitalization and amortization on the income tax payable and deferred tax asset will depend on multiple factors, including the amount of research and development expenses we will incur and whether we conduct our research and development activities inside or outside the United States. Although Congress is considering legislation that would defer, repeal or otherwise modify this capitalization and amortization requirement, the possibility that this will happen is uncertain. If legislation is not passed to defer, repeal, or otherwise modify the capitalization and amortization requirement we expect our cash taxes to be greater than in the prior year.

4. Debt

A summary of short-term and long-term debt outstanding is as follows:


(in millions)	September 30, 2023		December 31, 2022
4.125% Senior Notes, due 2023 1	$	—	$	38
3.625% Senior Notes, due 2024 2	47		48
4.75% Senior Notes, due 2025 3	4		4
4.0% Senior Notes, due 2026 4	3		3
2.95% Senior Notes, due 2027 5	497		496
2.45% Senior Notes, due 2027 6	1,239		1,237
4.75% Senior Notes, due 2028 7	814		823
4.25% Senior Notes, due 2029 8	1,019		1,029
2.5% Senior Notes, due 2029 9	497		497
2.70% Sustainability-Linked Senior Notes, due 2029 10	1,235		1,233
1.25% Senior Notes, due 2030 11	594		594
2.90% Senior Notes, due 2032 12	1,474		1,472
5.25% Senior Notes, due 2033 13	743		—
6.55% Senior Notes, due 2037 14	291		290
4.5% Senior Notes, due 2048 15	272		272
3.25% Senior Notes, due 2049 16	590		590
3.70% Senior Notes, due 2052 17	974		974
2.3% Senior Notes, due 2060 18	683		682
3.9% Senior Notes, due 2062 19	486		486


Commercial paper	—		188

Total debt	11,462		10,956
Less: short-term debt including current maturities	47		226
Long-term debt	$	11,415	$	10,730

1 We made a $38 million payment on the retirement of our 4.125% senior notes in the third quarter of 2023.

2 Interest payments are due semiannually on May 1 and November 1.

3 Interest payments are due semiannually on February 15 and August 15.

4 Interest payments are due semiannually on March 1 and September 1.

5 Interest payments are due semiannually on January 22 and July 22, and as of September 30, 2023, the unamortized debt discount and issuance costs total $3 million.

6 Interest payments are due semiannually on March 1 and September 1 and as of September 30, 2023, the unamortized debt discount and issuance costs total $11 million.

7 Interest payments are due semiannually on February 1 and August 1.

8 Interest payments are due semiannually on May 1 and November 1.

9 Interest payments are due semiannually on June 1 and December 1, and as of September 30, 2023, the unamortized debt discount and issuance costs total $3 million.

10 Interest payments are due semiannually on March 1 and September 1 and as of September 30, 2023, the unamortized debt discount and issuance costs total $15 million.

11 Interest payments are due semiannually on February 15 and August 15, and as of September 30, 2023, the unamortized debt discount and issuance costs total $6 million.

12 Interest payments are due semiannually on March 1 and September 1 and as of September 30, 2023, the unamortized debt discount and issuance costs total $26 million.

13 Interest payments are due semiannually on March 15 and September 15, beginning on March 15, 2024, and as of September 30, 2023, the unamortized debt discount and issuance costs total $7 million.

14 Interest payments are due semiannually on May 15 and November 15, and as of September 30, 2023, the unamortized debt discount and issuance costs total $2 million.

15 Interest payments are due semiannually on May 15 and November 15, and as of September 30, 2023, the unamortized debt discount and issuance costs total $11 million.

16 Interest payments are due semiannually on June 1 and December 1, and as of September 30, 2023, the unamortized debt discount and issuance costs total $10 million.

17 Interest payments are due semiannually on March 1 and September 1 and as of September 30, 2023, the unamortized debt discount and issuance costs total $26 million.

18 Interest payments are due semiannually on February 15 and August 15, and as of September 30, 2023, the unamortized debt discount and issuance costs total $17 million.

19 Interest payments are due semiannually on March 1 and September 1 and as of September 30, 2023, the unamortized debt discount and issuance costs total $14 million.

The fair value of our total debt borrowings was $9.6 billion and $9.3 billion as of September 30, 2023 and December 31, 2022, respectively, and was estimated based on quoted market prices.