S&P Global - 10-Q quarterly report FY2016 Q2

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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

For the quarterly period ended June 30, 2016



¨	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, New York	10041
(Address of principal executive offices)	(Zip Code)

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

McGraw Hill Financial, Inc.

(Former name, former address and former fiscal year, if changed since last report)

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 þ NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted 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 and post such files).

YES þ NO ¨

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



þ Large accelerated filer	o Accelerated filer	o Non-accelerated filer	o Smaller reporting company
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ¨ NO þ

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:



Class	Shares Outstanding	Date
Common stock (par value $1.00 per share)	264.0 million	July 15, 2016

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 six months ended June 30, 2016 and 2015	4
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015	5
Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015	6
Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015	7
Consolidated Statement of Equity for the six months ended June 30, 2016	8
Notes to the Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	51
Item 4. Controls and Procedures	51
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	52
Item 1a. Risk Factors	52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 5. Other Information	53
Item 6. Exhibits	54
Signatures	55

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of S&P Global Inc.

We have reviewed the consolidated balance sheet of S&P Global Inc. (and subsidiaries) (the “Company”) as of June 30, 2016, the related consolidated statements of income and comprehensive income for the three-month and six-month periods ended June 30, 2016 and 2015, the related statements of cash flows for the six-month periods ended June 30, 2016 and 2015, and the related consolidated statement of equity for the six-month period ended June 30, 2016. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information 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 Public Company Accounting Oversight Board (United States), 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.

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above 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), the consolidated balance sheet of S&P Global Inc. (and subsidiaries) as of December 31, 2015, and the related consolidated statements of income, comprehensive income, equity, and cash flows for the year then ended (not presented herein) and we expressed an unqualified audit opinion on those consolidated financial statements in our report dated February 11, 2016.

/s/ ERNST & YOUNG LLP

New York, New York

July 28, 2016

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						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Revenue	$	1,482		$	1,342		$	2,823		$	2,615
Expenses:
Operating-related expenses	469			412			926			823
Selling and general expenses	317			326			647			654
Depreciation	22			22			40			43
Amortization of intangibles	23			11			47			23
Total expenses	831			771			1,660			1,543
Other income	—			(11		)	—			(11		)
Operating profit	651			582			1,163			1,083
Interest expense, net	42			16			83			32
Income before taxes on income	609			566			1,080			1,051
Provision for taxes on income	197			185			345			340
Net income	412			381			735			711
Less: net income attributable to noncontrolling interests	(29		)	(28		)	(58		)	(55		)
Net income attributable to S&P Global Inc.	$	383		$	353		$	677		$	656

Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic	$	1.45		$	1.29		$	2.56		$	2.40
Diluted	$	1.44		$	1.28		$	2.54		$	2.38
Weighted-average number of common shares outstanding:
Basic	264.5			273.1			264.7			273.3
Diluted	266.7			275.7			267.0			276.0

Actual shares outstanding at period end							263.9			272.5

Dividend declared per common share	$	0.36		$	0.33		$	0.72		$	0.66

See accompanying notes to the unaudited consolidated financial statements.

S&P Global Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)



(in millions)	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net income	$	412		$	381		$	735		$	711

Other comprehensive income:
Foreign currency translation adjustment	(54		)	50			(40		)	(32		)
Income tax effect	(1		)	(2		)	(1		)	(2		)
	(55		)	48			(41		)	(34		)

Pension and other postretirement benefit plans	12			51			16			55
Income tax effect	(3		)	(16		)	(4		)	(18		)
	9			35			12			37

Unrealized gain on forward exchange contracts	(1		)	(1		)	3			—
Income tax effect	—			—			(1		)	—
	(1		)	(1		)	2			—

Comprehensive income	365			463			708			714
Less: comprehensive income attributable to nonredeemable noncontrolling interests	(2		)	(4		)	(5		)	(5		)
Less: comprehensive income attributable to redeemable noncontrolling interests	(27		)	(24		)	(53		)	(50		)
Comprehensive income attributable to S&P Global Inc.	$	336		$	435		$	650		$	659

See accompanying notes to the unaudited consolidated financial statements.

S&P Global Inc.

Consolidated Balance Sheets



(in millions)	June 30, 2016			December 31, 2015
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,567		$	1,481
Accounts receivable, net of allowance for doubtful accounts: 2016 - $33; 2015 - $37	1,007			991
Deferred income taxes	110			109
Prepaid and other current assets	201			212
Assets of businesses held for sale	574			503
Total current assets	3,459			3,296
Property and equipment, net of accumulated depreciation: 2016 - $584; 2015 - $585	242			270
Goodwill	2,882			2,882
Other intangible assets, net	1,483			1,522
Other non-current assets	225			213
Total assets	$	8,291		$	8,183
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	178		$	206
Accrued compensation and contributions to retirement plans	265			383
Short-term debt	309			143
Unearned revenue	1,460			1,421
Other current liabilities	426			549
Liabilities of businesses held for sale	207			206
Total current liabilities	2,845			2,908
Long-term debt	3,470			3,468
Pension and other postretirement benefits	260			276
Other non-current liabilities	371			368
Total liabilities	6,946			7,020
Redeemable noncontrolling interest (Note 8)	920			920
Commitments and contingencies (Note 12)
Equity:
Common stock	412			412
Additional paid-in capital	444			475
Retained income	8,123			7,636
Accumulated other comprehensive loss	(627		)	(600		)
Less: common stock in treasury	(7,976		)	(7,729		)
Total equity — controlling interests	376			194
Total equity — noncontrolling interests	49			49
Total equity	425			243
Total liabilities and equity	$	8,291		$	8,183

See accompanying notes to the unaudited consolidated financial statements.

S&P Global Inc.

Consolidated Statements of Cash Flows

(Unaudited)



(in millions)	Six Months Ended
	June 30,
	2016			2015
Operating Activities:
Net income	$	735		$	711
Adjustments to reconcile net income to cash provided by (used for) operating activities from continuing operations:
Depreciation	40			43
Amortization of intangibles	47			23
Provision for losses on accounts receivable	8			4
Deferred income taxes	(4		)	166
Stock-based compensation	34			37
Other	47			51
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable	(39		)	(136		)
Prepaid and other current assets	(21		)	(24		)
Accounts payable and accrued expenses	(212		)	(257		)
Unearned revenue	38			71
Accrued legal and regulatory settlements	(108		)	(1,609		)
Other current liabilities	(23		)	(65		)
Net change in prepaid/accrued income taxes	73			119
Net change in other assets and liabilities	(44		)	(31		)
Cash provided by (used for) operating activities from continuing operations	571			(897		)
Investing Activities:
Capital expenditures	(36		)	(42		)
Acquisitions, net of cash acquired	(52		)	(2		)
Proceeds from dispositions	—			14
Changes in short-term investments	—			(7		)
Cash used for investing activities from continuing operations	(88		)	(37		)
Financing Activities:
Additions to short-term debt, net	166			—
Proceeds from issuance of senior notes, net	—			690
Dividends paid to shareholders	(191		)	(185		)
Dividends and other payments paid to noncontrolling interests	(57		)	(49		)
Repurchase of treasury shares	(373		)	(274		)
Exercise of stock options	65			73
Excess tax benefits from share-based payments	19			38
Cash (used for) provided by financing activities from continuing operations	(371		)	293
Effect of exchange rate changes on cash from continuing operations	(26		)	(7		)
Cash provided by (used for) continuing operations	86			(648		)
Discontinued Operations:
Cash used for operating activities	—			(129		)
Cash used for discontinued operations	—			(129		)
Net change in cash and cash equivalents	86			(777		)
Cash and cash equivalents at beginning of period	1,481			2,497
Cash and cash equivalents at end of period	$	1,567		$	1,720

See accompanying notes to the unaudited consolidated financial statements.

S&P Global Inc.

Consolidated Statement of Equity

(Unaudited)



(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, 2015	$	412	$	475		$	7,636		$	(600	)	$	7,729		$	194		$	49		$	243
Comprehensive income ¹						677			(27		)				650			5			655
Dividends						(191		)							(191		)	(6		)	(197		)
Share repurchases												347			(347		)	1			(346		)
Employee stock plans, net of tax benefit			(31		)							(100		)	69						69
Change in redemption value of redeemable noncontrolling interest						1									1						1
Balance as of June 30, 2016	$	412	$	444		$	8,123		$	(627	)	$	7,976		$	376		$	49		$	425


¹	Excludes $53 million attributable to our redeemable noncontrolling interest.

See accompanying notes to the unaudited consolidated financial statements.

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.

On April 27, 2016, we changed our name to S&P Global Inc. from McGraw Hill Financial, Inc.

Our operations consist of four reportable segments: S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices ("S&P DJ Indices") and S&P Global Platts.


•	S&P Global Ratings is an independent provider of credit ratings, research and analytics to investors, issuers and market participants.


•	S&P Global Market Intelligence is a global provider of multi-asset-class data, research and analytical capabilities, which integrate cross-asset analytics and desktop services.


•	S&P DJ Indices is a global index provider that maintains a wide variety of valuation and index benchmarks for investment advisors, wealth managers and institutional investors.


•	S&P Global Platts consists of business-to-business companies specializing in commercial and commodities markets that deliver their customers access to high-value information, data, analytic services and pricing and quality benchmarks.

The S&P Global Ratings segment includes S&P Global Ratings, which is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization ("NRSRO"), as well as CRISIL, a global analytical company incorporated in India, and certain other ratings-related businesses.

In April of 2016, we entered into a definitive agreement to sell J.D. Power, included within our S&P Global Platts segment, for $1.1 billion to XIO Group, a global alternative investments firm headquartered in London. During the second quarter of 2016, we received regulatory approval to proceed with the sale and expect the transaction to close in the third quarter of 2016. In the fourth quarter of 2015, we began exploring strategic alternatives for J.D. Power and initiated an active program to sell the business. The assets and liabilities of J.D. Power have been classified as held for sale in our consolidated balance sheet as of June 30, 2016 and December 31, 2015.

In February of 2016, we entered into a definitive agreement to sell Standard & Poor’s Securities Evaluations, Inc. ("SPSE") and Credit Market Analysis ("CMA"), two businesses within our S&P Global Market Intelligence segment, to Intercontinental Exchange, an operator of global exchanges, clearing houses and data services. The sale is subject to extended regulatory anti-trust review and is expected to close shortly after completion of this extended review. As a result, we have classified the assets and liabilities of SPSE and CMA as held for sale in our consolidated balance sheet as of June 30, 2016.

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 footnotes 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, 2015 (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 six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the full year.

Our critical accounting estimates are disclosed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, allowance for doubtful accounts, valuation of long-lived assets, goodwill and other intangible assets, pension plans, incentive compensation and stock-based compensation, income taxes, contingencies and redeemable noncontrolling interests. Since the date of our Form 10-K, there have been no material changes to our critical accounting policies and estimates.


2.	Acquisitions and Divestitures

Acquisitions

Acquisitions by segment included:

S&P Global Ratings

•

In June of 2016, S&P Global Ratings acquired a 49% equity investment in Thailand's TRIS Rating Company Limited from its parent company, TRIS Corporation Limited. The transaction extends an existing association between S&P Global Ratings and TRIS Rating and deepens their commitment to capital markets in Thailand. We accounted for the acquisition of TRIS Rating Company using the equity method of accounting. The equity investment in TRIS Rating is not material to our consolidated financial statements.

S&P Global Platts

•

In June of 2016, Platts acquired RigData, a provider of daily information on rig activity for the natural gas and oil markets across North America. The purchase enhances Platts' energy analytical capabilities by strengthening its position in natural gas and enhancing its oil offering. We accounted for the acquisition of RigData using the purchase method of accounting. The acquisition of RigData is not material to our consolidated financial statements.

•

In March of 2016, Platts acquired Commodity Flow, a specialist technology and business intelligence service for the global waterborne commodity and energy markets. The purchase helps extend Platts trade flow analytical capabilities and complements its existing shipping services. We accounted for the acquisition of Commodity Flow using the purchase method of accounting. The acquisition of Commodity Flow is not material to our consolidated financial statements.

During the six months ended June 30, 2015, we did not complete any material acquisitions.

Divestitures

During the six months ended June 30, 2016, we did not complete any dispositions.

During the six months ended June 30, 2015, we recorded a pre-tax gain of $11 million within other income in the consolidated statement of income related to the sale of our interest in a legacy McGraw Hill Construction investment.

Businesses Held for Sale

In February of 2016, we entered into a definitive agreement to sell SPSE and CMA, two businesses within our S&P Global Market Intelligence segment, to Intercontinental Exchange, an operator of global exchanges, clearing houses and data services. The sale is subject to extended regulatory anti-trust review and is expected to close shortly after completion of this extended review. As a result, we have classified the assets and liabilities of SPSE and CMA as held for sale in our consolidated balance sheet as of June 30, 2016.

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



(in millions)	June 30,		December 31,
	2016		2015
Accounts receivable, net	$	72	$	58
Goodwill	133		75
Other intangible assets, net	309		335
Other assets	60		35
Assets of businesses held for sale	$	574	$	503

Accounts payable and accrued expenses	$	35	$	42
Unearned revenue	66		64
Other liabilities	106		100
Liabilities of businesses held for sale	$	207	$	206

The operating profit of our businesses held for sale for the periods ended June 30, 2016 and 2015 is as follows:



(in millions)	Three Months				Six Months
	2016		2015		2016		2015
Operating profit	$	20	$	22	$	44	$	38


3.	Income Taxes

The effective income tax rate was 32.3% and 31.9% for the three and six months ended June 30, 2016, respectively, and 32.6% and 32.4% for three and six months ended June 30, 2015, respectively. The decrease in the effective income tax rate was due to the resolution of tax audits and lower non-U.S. taxes.

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 extraordinary 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.

As of June 30, 2016 and December 31, 2015, the total amount of federal, state and local, and foreign unrecognized tax benefits was $122 million and $120 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. In addition, as of June 30, 2016 and December 31, 2015, we had $37 million and $31 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 significantly decrease in the next twelve months. Although the ultimate resolution of our tax audits is unpredictable, the resulting change in our unrecognized tax benefits could have a material impact on our results of operations and/or cash flows.


4.	Debt



(in millions)	June 30, 2016		December 31, 2015
5.9% Senior Notes, due 2017¹	$	400	399
2.5% Senior Notes, due 2018 ²	398		398
3.3% Senior Notes, due 2020 ³	695		695
4.0% Senior Notes, due 2025 ⁴	690		690
4.4% Senior Notes, due 2026 ⁵	891		890
6.55% Senior Notes, due 2037 ⁶	396		396
Commercial paper	309		143
Total debt	3,779		3,611
Less: short-term debt including current maturities	309		143
Long-term debt	$	3,470	$	3,468


¹	Interest payments are due semiannually on April 15 and October 15, and as of June 30, 2016, the unamortized debt discount and issuance costs are less than $1 million.


²	Interest payments are due semiannually on February 15 and August 15, and as of June 30, 2016, the unamortized debt discount and issuance costs total $2 million.


³	Interest payments are due semiannually on February 14 and August 14, and as of June 30, 2016, the unamortized debt discount and issuance costs total $5 million.


⁴	Interest payments are due semiannually on June 15 and December 15, and as of June 30, 2016, the unamortized debt discount and issuance costs total $10 million.


⁵	Interest payments are due semiannually on February 15 and August 15, and as of June 30, 2016, the unamortized debt discount and issuance costs total $9 million.


⁶	Interest payments are due semiannually on May 15 and November 15, and as of June 30, 2016, the unamortized debt discount and issuance costs total $4 million.

The fair value of our long-term debt borrowings was $3.8 billion and $3.6 billion as of June 30, 2016 and December 31, 2015, respectively, and was estimated based on quoted market prices.

We have the ability to borrow a total of $1.2 billion through our commercial paper program, which is supported by our revolving $1.2 billion five-year credit agreement (our “credit facility”) that we entered into on June 30, 2015. This credit facility will terminate on June 30, 2020. Commercial paper borrowings outstanding as of June 30, 2016 and December 31, 2015 totaled $309 million and $143 million, respectively with an average interest rate and term of 0.89% and 14 days and 0.95% and 17 days, respectively. As of June 30, 2016, we can borrow approximately $891 million in additional funds under our credit facility.

Depending on our indebtedness to cash flow ratio, we pay a commitment fee of 10 to 20 basis points for our credit facility, whether or not amounts have been borrowed.We currently pay a commitment fee of 15 basis points. The interest rate on borrowings under our credit facility is, at our option, calculated using rates that are primarily based on either the prevailing London Inter-Bank Offer Rate, the prime rate determined by the administrative agent or the Federal Funds Rate. For certain borrowings under this credit facility, there is also a spread based on our indebtedness to cash flow ratio added to the applicable rate.

Our credit facility contains certain covenants. The only financial covenant requires that our indebtedness to cash flow ratio, as defined in our credit facility, is not greater than 4 to 1, and this covenant level has never been exceeded.


5.	Derivative Instruments

Cash Flow Hedges

Our exposure to market risk includes changes in foreign exchange 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 June 30, 2016 and December 31, 2015, we have entered into foreign exchange forward contracts to hedge the effect of adverse fluctuations in foreign currency exchange rates. We do not enter into any derivative financial instruments for speculative purposes.

During the three months ended March 31, 2016, we entered into a series of foreign exchange forward contracts to hedge a portion of our Indian Rupee exposure through the fourth quarter of 2016. These contracts are intended to offset the impact of movement of exchange rates on future operating costs and are scheduled to mature at the end of each quarter during 2016. The changes in the fair value of these contracts are initially reported in accumulated other comprehensive loss in our consolidated balance sheet and are subsequently reclassified into selling and general expenses in the same period that the hedge contract matures. As of June 30, 2016, we estimate that $1 million of the net gains related to derivatives designated as cash flow hedges recorded in other comprehensive income (loss) is expected to be reclassified into earnings within the next twelve months. There was no hedge ineffectiveness for the three and six months ended June 30, 2016.

As of June 30, 2016 and June 30, 2015, the aggregate notional value of our outstanding foreign currency forward contracts was $96 million and $59 million, respectively.

The following table provides information on the location and fair value amounts of our cash flow hedges as of June 30, 2016 and December 31, 2015:



(in millions) Balance Sheet Location		June 30, 2016		December 31, 2015
Prepaid and other current assets ¹	Foreign exchange forward contracts	$	4	$	1


¹	We use the income approach to measure the fair value of our forward currency forward contracts. The income approach uses pricing models that rely on observable inputs such as forward rates, and therefore are classified as Level 2.

The following table provides information on the location and amounts of pre-tax gains (losses) on our cash flow hedges for the periods ended June 30:

Three Months



(in millions)	Gain (Loss) Recognized in Accumulated Other Comprehensive Loss (effective portion)						Location of Gain Reclassified from Accumulated Other Comprehensive Loss into Income (effective portion)	Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (effective portion)
Cash flow hedges - designated as hedging instruments	2016			2015				2016		2015
Foreign exchange forward contracts	$	(1	)	$	(1	)	Selling and general expenses	$	1	$	—

Six Months



(in millions)	Gain (Loss) Recognized in Accumulated Other Comprehensive Loss (effective portion)				Location of Gain Reclassified from Accumulated Other Comprehensive Loss into Income (effective portion)	Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (effective portion)
Cash flow hedges - designated as hedging instruments	2016		2015			2016		2015
Foreign exchange forward contracts	$	2	$	—	Selling and general expenses	$	2	$	—

The activity related to the change in unrealized gains (losses) in accumulated other comprehensive loss was as follows for the periods ended June 30:



(in millions)	Three Months						Six Months
	2016			2015			2016			2015
Net unrealized gains (losses) on cash flow hedges, net of taxes, beginning of period	$	2		$	—		$	(1	)	$	(1	)
Change in fair value, net of tax	—			(1		)	4			—
Reclassification into earnings, net of tax	(1		)	—			(2		)	—
Net unrealized gains (losses) on cash flow hedges, net of taxes, end of period	$	1		$	(1	)	$	1		$	(1	)


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.

We have supplemental benefit plans that provide senior management with supplemental retirement, disability and death benefits. Certain supplemental retirement benefits are based on final monthly earnings. In addition, we sponsor voluntary 401(k) plans 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 defined benefit 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 unrecognized actuarial losses and unrecognized prior service costs. These amounts will be subsequently recognized as net periodic benefit (credit) cost pursuant to our accounting policy for amortizing such amounts.

The components of net periodic benefit (credit) cost for our retirement plans and postretirement plans for the periods ended June 30 are as follows:

Retirement Plans



(in millions)	Three Months						Six Months
	2016			2015			2016			2015
Service cost	$	1		$	2		$	1		$	3
Interest cost	19			24			39			48
Expected return on plan assets	(31		)	(32		)	(61		)	(63		)
Amortization of actuarial loss	4			5			8			10
Net periodic benefit (credit) cost	$	(7	)	$	(1	)	$	(13	)	$	(2	)

Postretirement Plans



(in millions)	Three Months						Six Months
	2016			2015			2016			2015
Service cost	$	—		$	—		$	—		$	—
Interest cost	1			1			1			2
Amortization of prior service credit / actuarial gain	(1		)	(1		)	(1		)	(1		)
Net periodic benefit (credit) cost	$	—		$	—		$	—		$	1

As discussed in our Form 10-K, we changed certain discount rate assumptions and our expected return on assets assumption for our retirement plans, which became effective on January 1, 2016. In addition, at the end of 2015, we changed our approach used to measure service and interest costs on all of our retirement plans. For 2015, we measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation. For 2016, we elected to measure service and interest costs by applying the specific spot rates along that yield curve to the plans' liability cash flows. We also updated the assumed mortality rates to reflect life expectancy improvements. The effect of the assumption changes for the three and six months ended June 30, 2016 resulted in a decrease in net periodic benefit cost of approximately $5 million and $10 million respectively.

In the first six months of 2016, we contributed $4 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 and the pension plan status in the remaining second half of 2016.


7.	Stock-Based Compensation

We issue stock-based incentive awards to our eligible employees and Directors under the 2002 Employee Stock Incentive Plan and a Director Deferred Stock Ownership Plan. The 2002 Employee Stock Incentive Plan permits the granting of nonqualified stock options, stock appreciation rights, performance stock, restricted stock and other stock-based awards.

Stock-based compensation for the periods ended June 30 is as follows:



(in millions)	Three Months				Six Months
	2016		2015		2016		2015
Stock option expense ¹	$	2	$	3	$	4	$	9
Restricted stock and unit awards expense	18		16		30		28
Total stock-based compensation expense	$	20	$	19	$	34	$	37


¹	There were a minimal amount of stock options granted in 2015. During 2015, the Company stopped granting stock options.

During the six months ended June 30, 2016, the Company granted 0.5 million shares of restricted stock and unit awards, which had a weighted average grant date fair value of $99.43 per share. Total unrecognized compensation expense related to unvested restricted stock and unit awards as of June 30, 2016 was $81 million, which is expected to be recognized over a weighted average period of 1.9 years.


8.	Equity

Stock Repurchases

On December 4, 2013, the Board of Directors approved a share repurchase program authorizing the purchase of 50 million shares, which was approximately 18% of the total shares of our outstanding common stock at that time.

In any period, share repurchase transactions could result in timing differences between the recognition of those repurchases and their settlement for cash. This could result in a difference between the cash used for financing activities related to common stock repurchased and the comparable change in equity.

Share repurchases for the periods ended June 30 were as follows:



(in millions, except average price)	Three Months				Six Months
	2016		2015		2016		2015
Total number of shares purchased	1.4		1.6		3.5		2.6
Average price paid per share ¹	$	107.74	$	104.82	$	98.05	$	104.62
Total cash utilized¹	$	147	$	164	$	347	$	274


¹	In December of 2015, 0.3 million shares were repurchased for approximately $26 million, which settled in January of 2016. Cash used for financing activities only reflects those shares which settled during the six months ended June 30, 2016 resulting in $373 million of cash used to repurchase shares.

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 June 30, 2016, approximately 31.9 million shares remained available under the current share repurchase program which has no expiration date and purchases under this program may be made from time to time on the open market and in private transactions, depending on market conditions.

Redeemable Noncontrolling Interests

The agreement with the minority partners of our S&P Dow Jones Indices LLC 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, after December 31, 2017, CME Group and CME Group Index Services LLC ("CGIS") will have 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, considering a combination of an income and market valuation approach. Our income and market valuation approaches may incorporate Level 3 fair value measures for instances when observable inputs are not available, including assumptions related to expected future net cash flows, long-term growth rates, the timing and nature of tax attributes, and the redemption features. 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 six months ended June 30, 2016 were as follows:



(in millions)
Balance as of December 31, 2015	$	920
Net income attributable to noncontrolling interest	53
Distributions payable to noncontrolling interest	(52		)
Redemption value adjustment	(1		)
Balance as of June 30, 2016	$	920

Accumulated Other Comprehensive Loss

The following table summarizes the changes in the components of accumulated other comprehensive loss for the six months ended June 30, 2016:



(in millions)	Foreign Currency Translation Adjustment			Pension and Postretirement Benefit Plans				Unrealized Gain (Loss) on Forward Exchange Contracts				Accumulated Other Comprehensive Loss
Balance as of December 31, 2015	$	(193	)	$	(406	)		$	(1	)		$	(600	)
Other comprehensive income before reclassifications	(41		)	7				4				(30		)
Reclassifications from accumulated other comprehensive loss to net earnings	—			5			¹	(2		)	²	3
Net other comprehensive income	(41		)	12				2				(27		)
Balance as of June 30, 2016	$	(234	)	$	(394	)		$	1			$	(627	)


¹	See Note 6 — Employee Benefits for additional details of items reclassed from accumulated other comprehensive loss to net earnings.


²	See Note 5 — Derivative Instruments for additional details of items reclassed from accumulated other comprehensive loss to net earnings.

The net actuarial loss and prior service cost related to pension and other postretirement benefit plans included in other comprehensive income is net of a tax provision of $2 million for the six months ended June 30, 2016.


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 for basic and diluted EPS for the periods ended June 30 is as follows:



(in millions, except per share amounts)	Three Months				Six Months
	2016		2015		2016		2015
Amounts attributable to S&P Global Inc. common shareholders:
Net income	$	383	$	353	$	677	$	656

Basic weighted-average number of common shares outstanding	264.5		273.1		264.7		273.3
Effect of stock options and other dilutive securities	2.2		2.6		2.3		2.7
Diluted weighted-average number of common shares outstanding	266.7		275.7		267.0		276.0

Earnings per share attributable to S&P Global Inc. common shareholders:
Net income:
Basic	$	1.45	$	1.29	$	2.56	$	2.40
Diluted	$	1.44	$	1.28	$	2.54	$	2.38

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 six months ended June 30, 2016 and 2015, there were no stock options excluded. Restricted performance shares outstanding of 1.2 million and 1.7 million as of June 30, 2016 and 2015, respectively, were excluded.


10.	Restructuring

During 2016 and 2015, we continued to evaluate our cost structure and further identified cost savings associated with streamlining our management structure and our decision to exit non-strategic businesses. Our 2016 and 2015 restructuring plans consisted of a workforce reduction of approximately 70 and 550 positions, respectively, and are further detailed below. The charges for the restructuring plan 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 of efficiencies in carrying out the plans or 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 June 30, 2016 by segment is as follows:



	2016 Restructuring Plans				2015 Restructuring Plans
(in millions)	Initial Charge Recorded		Ending Reserve Balance		Initial Charge Recorded		Ending Reserve Balance
S&P Global Ratings	$	8	$	7	$	18	$	9
S&P Global Market Intelligence	—		—		31		13
S&P Global Platts	3		3		3		1
Corporate	—		—		11		7
Total	$	11	$	10	$	63	$	30

We recorded a pre-tax restructuring charge of $11 million for the 2016 restructuring plan during the six months ended June 30, 2016 and have reduced the reserve for the 2016 restructuring plan by $1 million. The ending reserve balance for the 2015 restructuring plan was $50 million as of December 31, 2015. For the six months ended June 30, 2016, we have reduced the reserve for the 2015 restructuring plan by $20 million.


11.	Segment and Related Information

We have four reportable segments: S&P Global Ratings, S&P Global Market Intelligence, S&P DJ Indices and S&P Global Platts. 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 unallocated expense or interest expense as these are costs that do not affect the operating results of our segments.

A summary of operating results by segment for the periods ended June 30 is as follows:



Three Months	2016						2015
(in millions)	Revenue			Operating Profit			Revenue			Operating Profit
S&P Global Ratings ¹	$	682		$	396		$	658		$	361
S&P Global Market Intelligence ²	416			93			324			63
S&P DJ Indices ³	153			100			148			96
S&P Global Platts ⁴	255			93			234			87
Intersegment elimination ⁵	(24		)	—			(22		)	—
Total operating segments	1,482			682			1,342			607
Unallocated expense ⁶	—			(31		)	—			(25		)
Total	$	1,482		$	651		$	1,342		$	582



Six Months	2016						2015
(in millions)	Revenue			Operating Profit			Revenue			Operating Profit
S&P Global Ratings ¹	$	1,234		$	658		$	1,264		$	652
S&P Global Market Intelligence ²	824			173			644			125
S&P DJ Indices ³	304			200			291			191
S&P Global Platts ⁴	509			196			459			173
Intersegment elimination ⁵	(48		)	—			(43		)	—
Total operating segments	2,823			1,227			2,615			1,141
Unallocated expense ⁶	—			(64		)	—			(58		)
Total	$	2,823		$	1,163		$	2,615		$	1,083

Operating profit for the three and six months ended June 30, 2016 includes a benefit related to legal settlement insurance recoveries of $37 million and $52 million, respectively, partially offset by legal settlement charges of $3 million and $6 million, respectively. Operating profit for the three and six months ended June 30, 2015 includes a benefit related to legal settlement insurance recoveries of $45 million and $80 million, respectively, partially offset by legal settlement charges of $4 million and $34 million, respectively. Additionally, the three and six months ended June 30, 2016 and 2015 includes restructuring charges of $6 million and $8 million, respectively. Operating profit also includes amortization of intangibles from acquisitions of $1 million for the three months ended June 30, 2016 and 2015 and $3 million and $2 million for the six months ended June 30, 2016 and 2015, respectively.

Operating profit includes disposition-related costs of $8 million for the three and six months ended June 30, 2016 and a technology related impairment charge of $24 million for the six months ended June 30, 2016. Additionally, restructuring charges of $12 million are included for the three and six months ended June 30, 2015. Operating profit also includes amortization of intangibles from acquisitions of $18 million and $36 million for the three and six months ended June 30, 2016, respectively, and $6 million and $12 million for the three and six months ended June 30, 2015, respectively.


³	Operating profit includes amortization of intangibles from acquisitions of $1 million for the three months ended June 30, 2016 and 2015 and $3 million for the six months ended June 30, 2016 and 2015.

⁴

Operating profit for the three and six months ended June 30, 2016 includes disposition-related costs of $2 million and $4 million, respectively. Additionally, restructuring charges of $1 million are included for the three and six months ended June 30, 2015. Operating profit also includes amortization of intangibles from acquisitions of $3 million for the three months ended June 30, 2016 and 2015 and $5 million and $6 million for the six months ended June 30, 2016 and 2015, respectively.


⁵	Revenue for S&P Global Ratings and expenses for S&P Global Market Intelligence include an intersegment royalty charged to S&P Global Market Intelligence for the rights to use and distribute content and data developed by S&P Global Ratings.

⁶

The three and six months ended June 30, 2016 includes $3 million from a disposition-related reserve release. The three and six months ended June 30, 2015 include a gain of $11 million related to the sale of our interest in a legacy McGraw Hill Construction investment. See Note 2 — Acquisitions and Divestitures for additional information. Additionally, restructuring charges of $1 million are included for the three and six months ended June 30, 2015.

The following provides revenue by geographic region for the periods ended June 30:



(in millions)	Three Months				Six Months
	2016		2015		2016		2015
U.S.	$	910	$	810	$	1,750	$	1,575
European region	339		310		636		617
Asia	156		151		293		279
Rest of the world	77		71		144		144
Total	$	1,482	$	1,342	$	2,823	$	2,615

See Note 2 — Acquisitions and Divestitures and Note 10 — Restructuring for additional actions that impacted the segment operating results.


12.	Commitments and Contingencies

Related Party Agreements

In June of 2012, we entered into a new license agreement (the "License Agreement") with the holder of S&P Dow Jones Indices LLC noncontrolling interest, CME Group, which replaced the 2005 license agreement between S&P DJ 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 six months ended June 30, 2016, S&P Dow Jones Indices LLC earned $18 million and $40 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 & Regulatory Matters

In the normal course of business both in the United States and abroad, the Company, its subsidiary Standard & Poor’s Financial Services LLC (“S&P LLC”) and some of its other subsidiaries are defendants in a number of legal proceedings and are often the subject of government and regulatory proceedings, investigations and inquiries. Many of these proceedings, investigations and inquiries relate to the ratings activity of S&P Global Ratings brought by issuers and alleged purchasers of rated securities. In addition, various government and self-regulatory agencies frequently make inquiries and conduct investigations into our compliance with applicable laws and regulations, including those related to ratings activities and antitrust matters. 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.

The Company believes that it has meritorious defenses to the pending claims and potential claims in the matters described below and is diligently pursuing these defenses, and in some cases working to reach an acceptable negotiated resolution. However, in view of the uncertainty inherent in litigation and government and regulatory enforcement matters, we cannot predict the eventual outcome of these matters or the timing of their resolution, or in most cases reasonably estimate what the eventual judgments, damages, fines, penalties or impact of activity restrictions may be. As a result, we cannot provide assurance that the outcome of the matters described below 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 and competitive position, which may require that we record liabilities in the consolidated financial statements in future periods.

S&P Global Ratings

Financial Crisis Litigation

The Company and its subsidiaries continue to defend civil cases brought by private and public plaintiffs arising out of ratings activities prior to and during the global financial crisis of 2008-2009. Discovery in these cases is ongoing. 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. At this time, however, we are unable to reasonably estimate the range of such additional amounts, if any.

U.S. Securities and Exchange Commission

As a nationally recognized statistical rating organization registered with the SEC under Section 15E of the Securities Exchange Act of 1934, S&P Global Ratings is in ongoing communication with the staff of the SEC regarding compliance with its extensive obligations under the federal securities laws. Although S&P Global Ratings seeks to promptly address any compliance issues that it detects or that the staff of the SEC raises, there can be no assurance that the SEC will not seek remedies against S&P Global Ratings for one or more compliance deficiencies.

Trani Prosecutorial Proceeding

The prosecutor in the Italian city of Trani has obtained criminal indictments against several current and former S&P Global Ratings managers and ratings analysts for alleged market manipulation, and against Standard & Poor’s Credit Market Services Europe under Italy’s vicarious liability statute, for having allegedly failed to properly supervise the ratings analysts and prevent them from committing market manipulation. The prosecutor’s theories are based on various actions by S&P Global Ratings taken with respect to Italian sovereign debt between May of 2011 and January of 2012. Trial commenced in February of 2015 and is ongoing. Apart from criminal penalties that might be imposed following a conviction, such conviction could also lead to civil damages claims and other sanctions against Standard & Poor's Credit Market Services Europe or the Company. Such claims and sanctions cannot be quantified at this stage.

Shareholder Derivative Actions

In August of 2015, two purported shareholders commenced a putative derivative action on behalf of the Company in New York State Supreme Court titled Retirement Plan for General Employees of the City of North Miami Beach and Robin Stein v. Harold McGraw III, et al. The complaint asserts claims for, inter alia, breach of fiduciary duty, waste of corporate assets, and mismanagement against the board of directors, certain former directors of the Company, and three former S&P Global Ratings employees. Plaintiffs seek recovery from the defendants based on allegations that S&P Global Ratings’ credit ratings practices for certain residential mortgage-backed securities and collateralized debt obligations misrepresented the credit risks of those securities, allegedly resulting in losses to the Company. The Company and the individual defendants filed motions to dismiss the complaint in October of 2015. Plaintiffs filed an opposition in December of 2015, and the Company and the individual defendants filed their reply on January 8, 2016.

On January 28, 2016, a different purported shareholder commenced a separate putative derivative action on behalf of the Company in New York State Supreme Court titled L.A. Grika v. Harold McGraw III, et al. The allegations in the complaint are substantially similar to those in the North Miami Beach matter described above. The complaint asserts claims for, inter alia, breach of fiduciary duty, aiding and abetting breaches of fiduciary duty, unjust enrichment, contribution and indemnification against Harold McGraw III, Douglas L. Peterson, and nine former S&P Global Ratings employees. The case was transferred to the judge presiding over the North Miami Beach action. The Company and the individual defendants filed motions to dismiss the Grika complaint in May of 2016. Plaintiffs filed an opposition in June of 2016, and the Company and the individual defendants filed their reply on July 22, 2016.

The court has not yet scheduled a date for oral argument on the motions to dismiss in either the North Miami or the Grika actions.

The City of Swan

Australian government municipal councils filed suit against the Company and S&P International LLC in a representative action in April of 2013 in connection with alleged investment losses in eight synthetic collateralized debt obligations (“CDOs”) rated by S&P Global Ratings. These same CDOs were at issue in an earlier lawsuit brought by the plaintiffs against its investment advisor, Lehman Brothers Australia (“LBA”), in which the plaintiffs secured a judgment against LBA, which is now in liquidation. The plaintiffs claim total losses of AUD$327 million from these investments and are seeking recovery from both LBA and the Company. On February 19, 2016, the Company reached a settlement with the plaintiffs to resolve the claims in this action. Under the settlement, the Company agreed to and made a payment of AUD$144 million. The federal court approved the settlement on April 12, 2016.


13.	Recently Issued or Adopted Accounting Standards

In March of 2016, the Financial Accounting Standards Board ("FASB") issued guidance to simplify several aspects of accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for reporting periods beginning after December 15, 2016; however, early adoption is permitted. We are currently evaluating the impact of the adoption of this guidance will have on our consolidated financial statements.

In February of 2016, the FASB issued guidance that amends accounting for leases. Under the new guidance, a lessee will recognize assets and liabilities but will recognize expenses similar to current lease accounting. The guidance is effecting for reporting periods beginning after December 15, 2018; however early adoption is permitted. The new guidance must be adopted using a modified retrospective approach to each prior reporting period presented with various optional practical expedients. We are currently evaluating the impact of the adoption of this guidance will have on our consolidated financial statements.

In January of 2016, the FASB issued guidance to enhance the reporting model for financial instruments, which includes amendments to address certain aspects of recognition, measurement, presentation and disclosure. The guidance is effective for reporting periods beginning after December 15, 2017. We do not expect this guidance to have a significant impact on our consolidated financial statements.

In November of 2015, the FASB issued guidance to simplify the presentation of deferred income taxes. The guidance requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This guidance is effective for reporting periods beginning after December 15, 2016; however, early adoption is permitted. We do not expect the adoption of this guidance to have a significant impact on our consolidated financial statements.

In September of 2015, the FASB issued guidance intended to simplify the accounting for measurement-period adjustments made to provisional amounts recognized in a business combination. The guidance eliminates the requirement to retrospectively account

for those adjustments. The guidance was effective on January 1, 2016, and the adoption of this guidance did not have a significant impact on our consolidated financial statements.

In February of 2015, the FASB issued guidance that requires management to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The guidance was effective on January 1, 2016, and the adoption of this guidance did not have a significant impact on our consolidated financial statements.

In January of 2015, the FASB issued guidance that eliminates the concept of reporting extraordinary items, but retains current presentation and disclosure requirements for an event or transaction that is of an unusual nature or of a type that indicates infrequency of occurrence. Transactions that meet both criteria would now also follow such presentation and disclosure requirements. The guidance was effective on January 1, 2016, and the adoption of this guidance did not have a significant impact on our consolidated financial statements.

In August of 2014, the FASB issued guidance that requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. This guidance is effective for reporting periods beginning after December 15, 2016; however, early adoption is permitted. We do not expect the adoption of this guidance to have a significant impact on our consolidated financial statements.

In May of 2014, the FASB and the International Accounting Standards Board (“IASB”) issued jointly a converged standard on the recognition of revenue from contracts with customers, which is intended to improve the financial reporting of revenue and comparability of the top line in financial statements globally. The core principle of the new standard is for the recognition of revenue to depict the transfer of goods or services to customers in amounts that reflect the payment to which the company expects to be entitled in exchange for those goods or services. The new standard will also result in enhanced revenue disclosures, provide guidance for transactions that were not previously addressed comprehensively and improve guidance for multiple-element arrangements. In August of 2015, the FASB issued guidance deferring the effective date of the new revenue standard by one year. The new guidance will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Subsequently, the FASB issued implementation guidance related to the new revenue standard, including the following: In March of 2016, the FASB issued guidance to clarify the implementation guidance on principal versus agent considerations; in April of 2016, the FASB clarified guidance on performance obligations and the licensing implementation guidance; in May of 2016, the FASB issued a practical expedient in response to identified implementation issues. While we will continue with our evaluation process, initially, we believe this guidance may have an impact on the accounting for certain proprietary consulting arrangements in our S&P Global Platts segment as well as the accounting for certain integrated desktop service revenue arrangements offered in our S&P Global Market Intelligence segment.


14.	Condensed Consolidating Financial Statements

On May 26, 2015, we issued $700 million of 4.0% senior notes due in 2025. On August 18, 2015, we issued $2.0 billion of senior notes, consisting of $400 million of 2.5% senior notes due in 2018, $700 million of 3.3% senior notes due in 2020 and $900 million of 4.4% senior notes due in 2026.

The senior notes described above are fully and unconditionally guaranteed by Standard & Poor's Financial Services LLC, a 100% owned subsidiary of the Company. The following condensed consolidating financial statements present the results of operations, financial position and cash flows of S&P Global Inc., Standard & Poor's Financial Services LLC, and the Non-Guarantor Subsidiaries of S&P Global Inc. and Standard & Poor's Financial Services LLC, and the eliminations necessary to arrive at the information for the Company on a consolidated basis.



	Statement of Income
	Three Months Ended June 30, 2016
	(Unaudited)
(in millions)	S&P Global Inc.			Standard & Poor's Financial Services LLC			Non-Guarantor Subsidiaries			Eliminations			S&P Global Inc. Consolidated
Revenue	$	171		$	413		$	930		$	(32	)	$	1,482
Expenses:
Operating-related expenses	26			93			382			(32		)	469
Selling and general expenses	33			62			222			—			317
Depreciation	10			2			10			—			22
Amortization of intangibles	—			—			23			—			23
Total expenses	69			157			637			(32		)	831
Operating profit	102			256			293			—			651
Interest expense (income), net	44			—			(2		)	—			42
Non-operating intercompany transactions	95			(37		)	(199		)	141			—
Income before taxes on income	(37		)	293			494			(141		)	609
Provision for taxes on income	(17		)	111			103			—			197
Equity in net income of subsidiaries	617			72			—			(689		)	—
Net income	$	597		$	254		$	391		$	(830	)	$	412
Less: net income attributable to noncontrolling interests	—			—			—			(29		)	(29		)
Net income attributable to S&P Global Inc.	$	597		$	254		$	391		$	(859	)	$	383
Comprehensive income	$	545		$	261		$	409		$	(850	)	$	365



	Statement of Income
	Six Months Ended June 30, 2016
	(Unaudited)
(in millions)	S&P Global Inc.			Standard & Poor's Financial Services LLC			Non-Guarantor Subsidiaries			Eliminations			S&P Global Inc. Consolidated
Revenue	$	342		$	754		$	1,789		$	(62	)	$	2,823
Expenses:
Operating-related expenses	52			231			705			(62		)	926
Selling and general expenses	51			97			499			—			647
Depreciation	19			5			16			—			40
Amortization of intangibles	—			—			47			—			47
Total expenses	122			333			1,267			(62		)	1,660
Operating profit	220			421			522			—			1,163
Interest expense (income), net	86			—			(3		)	—			83
Non-operating intercompany transactions	169			(42		)	(697		)	570			—
Income before taxes on income	(35		)	463			1,222			(570		)	1,080
Provision for taxes on income	(18		)	167			196			—			345
Equity in net income of subsidiaries	1,408			144			—			(1,552		)	—
Net income	$	1,391		$	440		$	1,026		$	(2,122	)	$	735
Less: net income attributable to noncontrolling interests	—			—			—			(58		)	(58		)
Net income attributable to S&P Global Inc.	$	1,391		$	440		$	1,026		$	(2,180	)	$	677
Comprehensive income	$	1,347		$	446		$	1,055		$	(2,140	)	$	708



	Statement of Income
	Three Months Ended June 30, 2015
	(Unaudited)
(in millions)	S&P Global Inc.		Standard & Poor's Financial Services LLC		Non-Guarantor Subsidiaries			Eliminations			S&P Global Inc. Consolidated
Revenue	$	161	$	573	$	636		$	(28	)	$	1,342
Expenses:
Operating-related expenses	21		154		265			(28		)	412
Selling and general expenses	1		101		224			—			326
Depreciation	10		5		7			—			22
Amortization of intangibles	1		—		10			—			11
Total expenses	33		260		506			(28		)	771
Other income	—		—		(11		)	—			(11		)
Operating profit	128		313		141			—			582
Interest expense (income), net	20		—		(4		)	—			16
Non-operating intercompany transactions	71		59		(130		)	—			—
Income before taxes on income	37		254		275			—			566
Provision for taxes on income	11		99		75			—			185
Equity in net income of subsidiaries	338		68		—			(406		)	—
Net income	$	364	$	223	$	200		$	(406	)	$	381
Less: net income attributable to noncontrolling interests	—		—		—			(28		)	(28		)
Net income attributable to S&P Global Inc.	$	364	$	223	$	200		$	(434	)	$	353
Comprehensive income	$	384	$	222	$	262		$	(405	)	$	463



	Statement of Income
	Six Months Ended June 30, 2015
	(Unaudited)
(in millions)	S&P Global Inc.		Standard & Poor's Financial Services LLC		Non-Guarantor Subsidiaries			Eliminations			S&P Global Inc. Consolidated
Revenue	$	317	$	1,117	$	1,237		$	(56	)	$	2,615
Expenses:
Operating-related expenses	53		311		515			(56		)	823
Selling and general expenses	67		162		425			—			654
Depreciation	19		10		14			—			43
Amortization of intangibles	2		—		21			—			23
Total expenses	141		483		975			(56		)	1,543
Other income	—		—		(11		)	—			(11		)
Operating profit	176		634		273			—			1,083
Interest expense (income), net	37		—		(5		)	—			32
Non-operating intercompany transactions	129		91		(220		)	—			—
Income before taxes on income	10		543		498			—			1,051
Provision for taxes on income	17		190		133			—			340
Equity in net income of subsidiaries	703		134		—			(837		)	—
Net income	$	696	$	487	$	365		$	(837	)	$	711
Less: net income attributable to noncontrolling interests	—		—		—			(55		)	(55		)
Net income attributable to S&P Global Inc.	$	696	$	487	$	365		$	(892	)	$	656
Comprehensive income	$	710	$	486	$	357		$	(839	)	$	714



	Balance Sheet
	June 30, 2016
	(Unaudited)
(in millions)	S&P Global Inc.			Standard & Poor's Financial Services LLC			Non-Guarantor Subsidiaries			Eliminations			S&P Global Inc. Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	62		$	—		$	1,505		$	—		$	1,567
Accounts receivable, net of allowance for doubtful accounts	117			170			720			—			1,007
Intercompany receivable	41			1,798			1,160			(2,999		)	—
Deferred income taxes	75			10			26			(1		)	110
Prepaid and other current assets	107			—			94			—			201
Assets of businesses held for sale	22			—			552			—			574
Total current assets	424			1,978			4,057			(3,000		)	3,459
Property and equipment, net of accumulated depreciation	123			1			118			—			242
Goodwill	17			—			2,874			(9		)	2,882
Other intangible assets, net	—			—			1,483			—			1,483
Investments in subsidiaries	5,376			662			7,265			(13,303		)	—
Intercompany loans receivable	17			374			1,834			(2,225		)	—
Other non-current assets	71			21			133						225
Total assets	$	6,028		$	3,036		$	17,764		$	(18,537	)	$	8,291
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	70		$	23		$	85		$	—		$	178
Intercompany payable	2,569			282			148			(2,999		)	—
Accrued compensation and contributions to retirement plans	100			23			142			—			265
Short-term debt	309			—			—			—			309
Unearned revenue	272			205			983			—			1,460
Other current liabilities	150			(62		)	338						426
Liabilities of businesses held for sale	83			—			124			—			207
Total current liabilities	3,553			471			1,820			(2,999		)	2,845
Long-term debt	3,470			—			—			—			3,470
Intercompany loans payable	10			—			2,215			(2,225		)	—
Pension and postretirement benefits	209			—			51			—			260
Other non-current liabilities	(12		)	84			300			(1		)	371
Total liabilities	7,230			555			4,386			(5,225		)	6,946
Redeemable noncontrolling interest	—			—			—			920			920
Equity:
Common stock	412			—			2,336			(2,336		)	412
Additional paid-in capital	(233		)	130			11,224			(10,677		)	444
Retained income	6,961			2,345			121			(1,304		)	8,123
Accumulated other comprehensive loss	(366		)	6			(293		)	26			(627		)
Less: common stock in treasury	(7,976		)	—			(10		)	10			(7,976		)
Total equity - controlling interests	(1,202		)	2,481			13,378			(14,281		)	376
Total equity - noncontrolling interests	—			—			—			49			49
Total equity	(1,202		)	2,481			13,378			(14,232		)	425
Total liabilities and equity	$	6,028		$	3,036		$	17,764		$	(18,537	)	$	8,291



	Balance Sheet
	December 31, 2015
(in millions)	S&P Global Inc.			Standard & Poor's Financial Services LLC		Non-Guarantor Subsidiaries			Eliminations			S&P Global Inc. Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	167		$	—	$	1,314		$	—		$	1,481
Accounts receivable, net of allowance for doubtful accounts	116			319		556			—			991
Intercompany receivable	208			1,872		1,273			(3,353		)	—
Deferred income taxes	75			10		24			—			109
Prepaid and other current assets	120			13		80			(1		)	212
Assets of businesses held for sale	4			—		499			—			503
Total current assets	690			2,214		3,746			(3,354		)	3,296
Property and equipment, net of accumulated depreciation	141			3		126			—			270
Goodwill	17			40		2,816			9			2,882
Other intangible assets, net	—			—		1,522			—			1,522
Investments in subsidiaries	4,651			659		7,316			(12,626		)	—
Intercompany loans receivable	16			368		1,733			(2,117		)	—
Other non-current assets	67			19		127			—			213
Total assets	$	5,582		$	3,303	$	17,386		$	(18,088	)	$	8,183
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	71		$	54	$	81		$	—		$	206
Intercompany payable	2,144			675		535			(3,354		)	—
Accrued compensation and contributions to retirement plans	127			89		167			—			383
Short-term debt	143			—		—			—			143
Unearned revenue	254			586		582			(1		)	1,421
Other current liabilities	191			65		293			—			549
Liabilities of businesses held for sale	80			—		126			—			206
Total current liabilities	3,010			1,469		1,784			(3,355		)	2,908
Long-term debt	3,468			—		—			—			3,468
Intercompany loans payable	21			—		2,096			(2,117		)	—
Pension and postretirement benefits	230			—		46			—			276
Other non-current liabilities	(25		)	98		295			—			368
Total liabilities	6,704			1,567		4,221			(5,472		)	7,020
Redeemable noncontrolling interest	—			—		—			920			920
Equity:
Common stock	412			—		2,337			(2,337		)	412
Additional paid-in capital	(184		)	1,179		10,174			(10,694		)	475
Retained income	6,701			557		987			(609		)	7,636
Accumulated other comprehensive loss	(322		)	—		(322		)	44			(600		)
Less: common stock in treasury	(7,729		)	—		(12		)	12			(7,729		)
Total equity - controlling interests	(1,122		)	1,736		13,164			(13,584		)	194
Total equity - noncontrolling interests	—			—		1			48			49
Total equity	(1,122		)	1,736		13,165			(13,536		)	243
Total liabilities and equity	$	5,582		$	3,303	$	17,386		$	(18,088	)	$	8,183



	Statement of Cash Flows
	Six Months Ended June 30, 2016
	(Unaudited)
(in millions)	S&P Global Inc.			Standard & Poor's Financial Services LLC			Non-Guarantor Subsidiaries			Eliminations			S&P Global Inc. Consolidated
Operating Activities:
Net income	$	1,391		$	440		$	1,026		$	(2,122	)	$	735
Adjustments to reconcile net income to cash provided by operating activities from continuing operations:
Depreciation	19			5			16			—			40
Amortization of intangibles	—			—			47			—			47
Provision for losses on accounts receivable	1			1			6			—			8
Deferred income taxes	(4		)	—			—			—			(4		)
Stock-based compensation	10			7			17			—			34
Other	3			8			36			—			47
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable	(7		)	148			(180		)	—			(39		)
Prepaid and other current assets	(28		)	13			(6		)	—			(21		)
Accounts payable and accrued expenses	(67		)	(98		)	(47		)	—			(212		)
Unearned revenue	18			(375		)	395			—			38
Accrued legal and regulatory settlements	—			(108		)	—			—			(108		)
Other current liabilities	(25		)	(25		)	27			—			(23		)
Net change in prepaid/accrued income taxes	64			—			9			—			73
Net change in other assets and liabilities	(31		)	27			(40		)	—			(44		)
Cash provided by operating activities from continuing operations	1,344			43			1,306			(2,122		)	571
Investing Activities:
Capital expenditures	(16		)	(7		)	(13		)	—			(36		)
Acquisitions, net of cash acquired	(40		)	—			(12		)	—			(52		)
Cash used for investing activities from continuing operations	(56		)	(7		)	(25		)	—			(88		)
Financing Activities:
Additions to short-term debt, net	166			—			—			—			166
Dividends paid to shareholders	(191		)	—			—			—			(191		)
Dividends and other payments paid to noncontrolling interests	—			—			(57		)	—			(57		)
Repurchase of treasury shares	(373		)	—			—			—			(373		)
Exercise of stock options	64			—			1			—			65
Excess tax benefits from share-based payments	19			—			—			—			19
Intercompany financing activities	(1,038		)	(36		)	(1,048		)	2,122			—
Cash used for financing activities from continuing operations	(1,353		)	(36		)	(1,104		)	2,122			(371		)
Effect of exchange rate changes on cash from continuing operations	(40		)	—			14			—			(26		)
Net change in cash and cash equivalents	(105		)	—			191			—			86
Cash and cash equivalents at beginning of period	167			—			1,314			—			1,481
Cash and cash equivalents at end of period	$	62		$	—		$	1,505		$	—		$	1,567



	Statement of Cash Flows
	Six Months Ended June 30, 2015
	(Unaudited)
(in millions)	S&P Global Inc.			Standard & Poor's Financial Services LLC			Non-Guarantor Subsidiaries			Eliminations			S&P Global Inc. Consolidated
Operating Activities:
Net income	$	696		$	487		$	365		$	(837	)	$	711
Adjustments to reconcile net income to cash provided by (used for) operating activities from continuing operations:
Depreciation	19			10			14			—			43
Amortization of intangibles	2			—			21			—			23
Provision for losses on accounts receivable	—			(2		)	6			—			4
Deferred income taxes	(138		)	161			143			—			166
Stock-based compensation	11			11			15			—			37
Other	9			29			13			—			51
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions:
Accounts receivable	1			(23		)	(114		)	—			(136		)
Prepaid and other current assets	32			(3		)	(53		)	—			(24		)
Accounts payable and accrued expenses	(99		)	(43		)	(115		)	—			(257		)
Unearned revenue	11			15			45			—			71
Accrued legal and regulatory settlements	—			(1,609		)	—			—			(1,609		)
Other current liabilities	(34		)	(22		)	(9		)	—			(65		)
Net change in prepaid/accrued income taxes	108			—			11			—			119
Net change in other assets and liabilities	62			3			(96		)	—			(31		)
Cash provided by (used for) operating activities from continuing operations	680			(986		)	246			(837		)	(897		)
Investing Activities:
Capital expenditures	(18		)	(4		)	(20		)	—			(42		)
Acquisitions, net of cash acquired	—			—			(2		)	—			(2		)
Proceeds from dispositions	—			—			14			—			14
Changes in short-term investments	—			—			(7		)	—			(7		)
Cash used for investing activities from continuing operations	(18		)	(4		)	(15		)	—			(37		)
Financing Activities:
Proceeds from issuance of senior notes, net	690			—			—			—			690
Dividends paid to shareholders	(185		)	—			—			—			(185		)
Dividends and other payments paid to noncontrolling interests	—			—			(49		)	—			(49		)
Repurchase of treasury shares	(274		)	—			—			—			(274		)
Exercise of stock options	71			—			2			—			73
Excess tax benefits from share-based payments	38			—			—			—			38
Intercompany financing activities	(1,870		)	990			43			837			—
Cash (used for) provided by financing activities from continuing operations	(1,530		)	990			(4		)	837			293
Effect of exchange rate changes on cash from continuing operations	(3		)	—			(4		)	—			(7		)
Cash (used for) provided by continuing operations	(871		)	—			223			—			(648		)
Discontinued Operations:
Cash used for operating activities	—			—			(129		)	—			(129		)
Cash used for discontinued operations	—			—			(129		)	—			(129		)
Net change in cash and cash equivalents	(871		)	—			94			—			(777		)
Cash and cash equivalents at beginning of period	1,402			—			1,095			—			2,497
Cash and cash equivalents at end of period	$	531		$	—		$	1,189		$	—		$	1,720

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)

The following Management's Discussion and Analysis (“MD&A”) provides a narrative of the results of operations and financial condition of S&P Global Inc. (together with its consolidated subsidiaries, "S&P Global," the “Company,” “we,” “us” or “our”) for the three and six months ended June 30, 2016. The MD&A should be read in conjunction with the consolidated financial statements, accompanying notes and MD&A included in our Form 10-K for the year ended December 31, 2015 (our “Form 10-K”), which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The MD&A includes the following sections:


•	Overview


•	Results of Operations — Comparing the Three and Six Months Ended June 30, 2016 and 2015


•	Liquidity and Capital Resources


•	Reconciliation of Non-GAAP Financial Information


•	Critical Accounting Estimates


•	Recently Issued or Adopted Accounting Standards


•	Forward-Looking Statements

OVERVIEW

We are a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

On April 27, 2016, we changed our name to S&P Global Inc. from McGraw Hill Financial, Inc.

Our operations consist of four reportable segments: S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices ("S&P DJ Indices") and S&P Global Platts.


•	S&P Global Ratings is an independent provider of credit ratings, research and analytics, offering investors, issuers and market participants information, ratings and benchmarks.


•	S&P Global Market Intelligence is a global provider of multi-asset-class data, research and analytical capabilities, which integrate cross-asset analytics and desktop services.


•	S&P DJ Indices is a global index provider that maintains a wide variety of valuation and index benchmarks for investment advisors, wealth managers and institutional investors.


•	S&P Global Platts consists of business-to-business companies specializing in commercial and commodities markets that deliver their customers access to high-value information, data, analytic services and pricing and quality benchmarks.

Key results for the periods ended June 30 are as follows:



(in millions, except per share amounts)	Three Months							Six Months
	2016			2015			% Change 1	2016			2015			% Change 1
Revenue	$	1,482		$	1,342		10%	$	2,823		$	2,615		8%
Operating profit ²	$	651		$	582		12%	$	1,163		$	1,083		7%
Operating margin %	44		%	43		%		41		%	41		%
Diluted earnings per share from continuing operations	$	1.44		$	1.28		12%	$	2.54		$	2.38		7%


¹	% changes in the tables throughout the MD&A are calculated off of the actual number, not the rounded number presented.

Operating profit for the three and six months ended June 30, 2016 includes a benefit related to legal settlement insurance recoveries of $37 million and $52 million, respectively, partially offset by legal settlement charges of $3 million and $6 million, respectively, disposition-related costs of $10 million and $12 million, respectively, restructuring charges of $6 million and a $3 million disposition-related reserve release. Operating profit for the six months ended June 30, 2016 includes a technology related impairment charge of $24 million. Operating profit for the three and six months ended June 30, 2015 includes a benefit related to legal settlement insurance recoveries of $45 million and $80 million, respectively, partially offset by legal settlement charges of $4 million and $34 million, respectively, an $11 million gain related to the sale of our interest in a legacy McGraw Hill Construction investment and restructuring charges of $22 million. Operating profit also includes amortization of intangibles of $23 million and $47 million for the three and six months ended June 30, 2016, respectively, and $11 million and $23 million for the three and six months ended June 30, 2015, respectively.

Three Months

Revenue increased 10% driven by increases at all of our reportable segments. Excluding the favorable impact of revenue from acquisitions of 6 percentage points and the unfavorable impact of foreign exchange rates of 1 percentage point, revenue increased 5%. Revenue growth at S&P Global Market Intelligence was favorably impacted by the acquisition of SNL Financial ("SNL") in September of 2015 and annualized contract value growth primarily driven by the S&P Capital IQ Desktop, Global Risk Services and certain data feed products. The increase at S&P Global Ratings was primarily due to growth in bank loan ratings and corporate bond ratings revenue. The revenue increase at S&P Global Platts was primarily driven by continued demand for Platts’ proprietary content as annualized contract values increased, and the acquisition of Used Car Guide ("UCG") at J.D. Power in July of 2015. Revenue growth at S&P DJ Indices was primarily due to an increase in data revenue and higher volumes for exchange-traded derivatives.

Operating profit increased 12% primarily driven by revenue growth. Excluding the unfavorable impact of a gain on the sale of a non-core investment in 2015 of 2 percentage points, higher amortization of intangibles from acquisitions of 2 percentage points, disposition-related costs of 2 percentage points and higher insurance recoveries in 2015 of 1 percentage point, partially offset by the favorable impact of higher restructuring charges in 2015 of 3 percentage points and a disposition-related reserve release of 1 percentage point, operating profit increased 16%.

Six Months

Revenue increased 8% driven by increases at S&P Global Market Intelligence, S&P Global Platts and S&P DJ Indices, partially offset by a decrease at S&P Global Ratings. Excluding the favorable impact of revenue from acquisitions of 6 percentage points and the unfavorable impact of foreign exchange rates of less than 1 percentage point, revenue increased 2%. Revenue growth at S&P Global Market Intelligence was favorably impacted by the acquisition of SNL in September of 2015 and annualized contract value growth primarily driven by the S&P Capital IQ Desktop, Global Risk Services and certain data feed products. The revenue increase at S&P Global Platts was primarily driven by continued demand for Platts’ proprietary content as annualized contract values increased, and the acquisition of UCG at J.D. Power in July of 2015. Revenue growth at S&P DJ Indices was primarily driven by higher volumes for exchange-traded derivatives and an increase in data revenue, partially offset by the unfavorable impact of lower average levels of assets under management ("AUM") for exchange traded funds ("ETFs") in the first quarter of 2016. These increases were partially offset by a decrease at S&P Global Ratings driven by the unfavorable impact of reduced market issuance in the U.S. and European region in the first quarter of 2016 combined with a decrease in structured finance revenue.

Operating profit increased 7% primarily driven by revenue growth at S&P Global Market Intelligence, S&P Global Platts and S&P DJ Indices. S&P Global Ratings also contributed to operating profit growth due to decreased costs, partially offset by the decrease in revenue discussed above. Excluding the unfavorable impact of a technology related impairment charge of 2 percentage points, higher amortization of intangibles from acquisitions of 2 percentage points, disposition-related costs of 1 percentage point

and the impact of a gain on the sale of a non-core investment in 2015 of 1 percentage point, partially offset by the favorable impact of higher restructuring charges in 2015 of 2 percentage points, operating profit increased 12%.

Our Strategy

We are a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. Our purpose is to provide the intelligence that is essential for companies, governments and individuals to make decisions with conviction. We seek to deliver on this purpose within the framework of our core values of integrity, excellence and relevance.

There can be no assurance that we will achieve success in implementing any one or more of these strategies as a variety of factors could unfavorably impact operating results, including prolonged difficulties in the global credit markets and a change in the regulatory environment affecting our businesses.

RESULTS OF OPERATIONS — COMPARING THE THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2015

Consolidated Review



(in millions)	Three Months							Six Months
	2016			2015			% Change	2016			2015			% Change
Revenue	$	1,482		$	1,342		10%	$	2,823		$	2,615		8%
Total Expenses:
Operating-related expenses	469			412			14%	926			823			12%
Selling and general expenses	317			326			(3)%	647			654			(1)%
Depreciation and amortization	45			33			35%	87			66			32%
Total expenses	831			771			8%	1,660			1,543			7%
Other income	—			(11		)	N/M	—			(11		)	N/M
Operating profit	651			582			12%	1,163			1,083			7%
Interest expense, net	42			16			N/M	83			32			N/M
Provision for taxes on income	197			185			7%	345			340			1%
Net income	412			381			8%	735			711			4%
Less: net income attributable to noncontrolling interests	(29		)	(28		)	5%	(58		)	(55		)	7%
Net income attributable to S&P Global Inc.	$	383		$	353		9%	$	677		$	656		3%

N/M - not meaningful

Revenue

The following table provides consolidated revenue information for the periods ended June 30:



(in millions)	Three Months								Six Months
	2016			2015			% Change		2016			2015			% Change
Revenue	$	1,482		$	1,342		10%		$	2,823		$	2,615		8%

Subscription / Non-transaction revenue	$	904		$	782		15	%	$	1,785		$	1,542		16	%
Asset linked fees	$	92		$	92		—	%	$	178		$	184		(3	)%
Non-subscription / Transaction revenue	$	486		$	468		4	%	$	860		$	889		(3	)%
% of total revenue:
Subscription / Non-transaction revenue	61		%	58		%			63		%	59		%
Asset linked fees	6		%	7		%			6		%	7		%
Non-subscription / Transaction revenue	33		%	35		%			31		%	34		%

U.S. revenue	$	910		$	810		12	%	$	1,750		$	1,575		11	%
International revenue:
European region	339			310			9	%	636			617			3	%
Asia	156			151			4	%	293			279			5	%
Rest of the world	77			71			8	%	144			144			—	%
Total international revenue	$	572		$	532		7	%	$	1,073		$	1,040		3	%
% of total revenue:
U.S. revenue	61		%	60		%			62		%	60		%
International revenue	39		%	40		%			38		%	40		%

Three Months

Subscription / non-transaction revenue increased 15% primarily from growth in S&P Global Market Intelligence's average contract values driven by an expansion in new and existing accounts as well as continued demand for Platts’ proprietary content. Non-subscription / transaction revenue increased 4% primarily due to an increase in U.S. bank loan ratings revenue and corporate bond ratings revenue at S&P Global Ratings and higher volumes for exchange traded derivatives at S&P DJ Indices. Subscription / non-transaction revenue growth was also favorably impacted by the acquisitions of SNL and UCG in September of 2015 and July of 2015, respectively. See “Segment Review” below for further information.

The unfavorable impact of foreign exchange rates reduced revenue by 1 percentage point. This impact refers to constant currency comparisons estimated by recalculating current year results of foreign operations using the average exchange rate from the prior year.

Six Months

Subscription / non-transaction revenue increased 16% primarily from growth in S&P Global Market Intelligence's average contract values driven by an expansion in new and existing accounts as well as continued demand for Platts’ proprietary content. Asset linked fees decreased 3% due to the impact of lower average assets under management for ETFs in the first quarter of 2016. Non-subscription / transaction revenue decreased 3% primarily due to reduced market issuance in the U.S. and European region at S&P Global Ratings in the first quarter of 2016 combined with a decrease in structured finance revenue, partially offset by higher volumes for exchange traded derivatives at S&P DJ Indices. Subscription / non-transaction revenue growth was also favorably impacted by the acquisitions of SNL and UCG in September of 2015 and July of 2015, respectively. See “Segment Review” below for further information.

The unfavorable impact of foreign exchange rates reduced revenue by less than 1 percentage point. This impact refers to constant currency comparisons estimated by recalculating current year results of foreign operations using the average exchange rate from the prior year.

Total Expenses

The following tables provide an analysis by segment of our operating-related expenses and selling and general expenses for the periods ended June 30:

Three Months



(in millions)	2016					2015					% Change
	Operating- related expenses			Selling and general expenses		Operating- related expenses			Selling and general expenses		Operating- related expenses	Selling and general expenses
S&P Global Ratings ¹	$	198		$	79	$	184		$	102	7%	(22)%
S&P Global Market Intelligence ²	177			120		144			105		22%	14%
S&P DJ Indices	34			17		32			18		6%	(4)%
S&P Global Platts ³	85			71		74			66		14%	8%
Intersegment eliminations ⁴	(25		)	—		(22		)	—		(14)%	N/M
Total segments	469			288		412			291		14%	(1)%
Unallocated expense ⁵	—			29		—			35		N/M	(17)%
Total	$	469		$	317	$	412		$	326	14%	(3)%

N/M - not meaningful


¹	In 2016 and 2015, selling and general expenses includes a benefit related to legal settlement insurance recoveries of $37 million and $45 million, respectively, partially offset by legal settlement charges of $3 million and $4 million, respectively. Additionally, 2016 and 2015 includes restructuring charges of $6 million and $8 million, respectively.


²	In 2016, selling and general expenses includes disposition-related costs of $8 million. Additionally, 2015 includes restructuring charges of $12 million.


³	In 2016, selling and general expenses includes disposition-related costs of $2 million and 2015 includes restructuring charges of $1 million.


⁴	Intersegment elimination relates to a royalty charged to S&P Global Market Intelligence for the rights to use and distribute content and data developed by S&P Global Ratings.


⁵	In 2016, selling and general expenses includes a $3 million disposition-related reserve release. In 2015, selling and general expenses include a gain of $11 million related to the sale of our interest in a legacy McGraw Hill Construction investment and restructuring charges.

Operating-Related Expenses

Operating-related expenses increased 14%. Increases at S&P Global Market Intelligence and S&P Global Platts were primarily driven by the acquisitions of SNL in September of 2015 and UCG in July of 2015, respectively. Increases at S&P Global Ratings and S&P DJ Indices were due to higher compensation costs related to additional headcount.

Intersegment eliminations primarily relate to a royalty charged to S&P Global Market Intelligence for the rights to use and distribute content and data developed by S&P Global Ratings.

Selling and General Expenses

Selling and general expenses decreased 3%. Excluding the unfavorable impact of a gain on the sale of a non-core investment in 2015 of 3 percentage points, disposition-related costs of 2 percentage points and insurance recoveries of 2 percentage points, partially offset by the favorable impact of higher restructuring charges in 2015 of 4 percentage points and disposition-related reserve release of 1 percentage point, selling and general expenses decreased 5%. Decreases at S&P Global Ratings driven by decreased costs related to the implementation of the Dodd-Frank Wall Street Reform of the Consumer Protection Act were partially offset by increases at S&P Global Market Intelligence and S&P Global Platts driven by the acquisitions of SNL in September of 2015 and UCG in July of 2015, respectively.

Depreciation and Amortization

Depreciation and amortization increased compared to the second quarter of 2015 due to higher intangible asset amortization in 2016 from the acquisitions of SNL in September of 2015 and UCG in July of 2015.

Six Months



(in millions)	2016					2015					% Change
	Operating- related expenses			Selling and general expenses		Operating- related expenses			Selling and general expenses		Operating- related expenses	Selling and general expenses
S&P Global Ratings ¹	$	393		$	166	$	368		$	223	7%	(25)%
S&P Global Market Intelligence ²	348			251		288			209		21%	20%
S&P DJ Indices	69			31		64			32		8%	(5)%
S&P Global Platts ³	164			138		148			125		11%	10%
Intersegment eliminations ⁴	(48		)	—		(43		)	—		(12)%	N/M
Total segments	926			586		824			589		12%	(1)%
Unallocated expense ⁵	—			61		(1		)	65		N/M	(7)%
Total	$	926		$	647	$	823		$	654	12%	(1)%

N/M - not meaningful


¹	In 2016 and 2015, selling and general expenses includes a benefit related to legal settlement insurance recoveries of $52 million and $80 million, respectively, partially offset by legal settlement charges of $6 million and $34 million, respectively. Additionally, 2016 and 2015 includes restructuring charges of $6 million and $8 million, respectively.


²	In 2016, selling and general expenses includes a technology related impairment charge of $24 million and disposition-related costs of $8 million. Operating profit for 2015 includes restructuring charges of $12 million.


³	Operating profit for 2016 includes disposition-related costs of $4 million and 2015 includes restructuring charges of $1 million.


⁴	Intersegment elimination relates to a royalty charged to S&P Global Market Intelligence for the rights to use and distribute content and data developed by S&P Global Ratings.

⁵In 2016, selling and general expenses includes a $3 million disposition-related reserve release. In 2015, selling and general expenses include a gain of $11 million related to the sale of our interest in a legacy McGraw Hill Construction investment and restructuring charges.

Operating-Related Expenses

Operating-related expenses increased 12%. Increases at S&P Global Market Intelligence and S&P Global Platts were primarily driven by the acquisitions of SNL in September of 2015 and UCG in July of 2015, respectively. Increases at S&P Global Ratings and S&P DJ Indices were due to higher compensation costs related to additional headcount.

Intersegment eliminations primarily relate to a royalty charged to S&P Global Market Intelligence for the rights to use and distribute content and data developed by S&P Global Ratings.

Selling and General Expenses

Selling and general expenses decreased 1%. Excluding the unfavorable impact of a technology related impairment charge of 3 percentage points, disposition-related costs of 2 percentage points and a gain on the sale of a non-core investment in 2015 of 2 percentage points, partially offset by the favorable impact of higher restructuring charges in 2015 of 2 percentage points, selling and general expenses decreased 5%. Decreases at S&P Global Ratings driven by lower incentive costs, decreased costs related to the implementation of the Dodd-Frank Wall Street Reform of the Consumer Protection Act and reduced legal fees following the resolution of a number of significant legal matters were partially offset by increases at S&P Global Market Intelligence and S&P Global Platts driven by the acquisitions of SNL in September of 2015 and UCG in July of 2015, respectively.

Depreciation and Amortization

Other Income

During the three months ended June 30, 2015, we completed the sale of our interest in a legacy McGraw Hill Construction investment that resulted in a gain of $11 million.

Operating Profit

We consider operating profit to be an important measure for evaluating our operating performance and we evaluate operating profit for each of the reportable business segments in which we operate.

We internally manage our operations by reference to “segment operating profit” with economic resources allocated primarily based on segment operating profit. Segment operating profit is defined as operating profit before unallocated expense. Segment operating profit is one of the key metrics we use to evaluate operating performance. Segment operating profit is not, however, a measure of financial performance under U.S. GAAP, and may not be defined and calculated by other companies in the same manner.

The tables below reconcile segment operating profit to total operating profit for the periods ended June 30:

Three Months



(in millions)	2016			2015			% Change
S&P Global Ratings ¹	$	396		$	361		10%
S&P Global Market Intelligence ²	93			63			48%
S&P DJ Indices ³	100			96			5%
S&P Global Platts ⁴	93			87			7%
Total segment operating profit	682			607			12%
Unallocated expense ⁵	(31		)	(25		)	23%
Total operating profit	$	651		$	582		12%

Operating profit for 2016 and 2015 includes a benefit related to legal settlement insurance recoveries of $37 million and $45 million, respectively, partially offset by legal settlement charges of $3 million and $4 million, respectively. Additionally, 2016 and 2015 includes restructuring charges of $6 million and $8 million, respectively. Operating profit for 2016 and 2015 also includes amortization of intangibles from acquisitions of $1 million.


²	Operating profit for 2016 includes disposition-related costs of $8 million. Additionally, 2015 includes restructuring charges of $12 million. Operating profit for 2016 and 2015 also includes amortization of intangibles from acquisitions of $18 million and $6 million, respectively.


³	Operating profit for 2016 and 2015 includes amortization of intangibles from acquisitions of $1 million.


⁴	Operating profit for 2016 includes disposition-related costs of $2 million and 2015 includes restructuring charges of $1 million. Operating profit for 2016 and 2015 also includes amortization of intangibles from acquisitions of $3 million.


⁵	In 2016, selling and general expenses includes a $3 million disposition-related reserve release. In 2015, selling and general expenses include a gain of $11 million related to the sale of our interest in a legacy McGraw Hill Construction investment and restructuring charges.

Segment Operating Profit — Increased 12% as compared to the second quarter of 2015. Excluding the unfavorable impact of higher amortization of intangibles related to acquisitions of 2 percentage points, disposition-related costs of 2 percentage points and insurance recoveries of 1 percentage point, partially offset by the favorable impact of higher restructuring charges recorded in 2015 of 3 percentage points, segment operating profit increased 15%. Revenue growth at S&P Global Market Intelligence, S&P Global Ratings, S&P Global Platts and S&P DJ Indices were the primary drivers for the increase. See “Segment Review” below for further information.

Unallocated Expense — These expenses, included in selling and general expenses, mainly include costs for corporate center functions, select initiatives and unoccupied office space. Unallocated expense increased $6 million or 23% as compared to the second quarter of 2015. Excluding the unfavorable impact of a gain on the sale of a non-core investment in 2015 of 43 percentage points, partially offset by the favorable impact of a disposition-related reserve release of 12 percentage points and higher restructuring charges in 2015 of 5 percentage points, unallocated expense decreased $1 million or 4%.

on the variance between current-year and prior-year foreign exchange rate fluctuations on assets and liabilities denominated in currencies other than the individual businesses functional currency.

Six Months



(in millions)	2016			2015			% Change
S&P Global Ratings ¹	$	658		$	652		1%
S&P Global Market Intelligence ²	173			125			39%
S&P DJ Indices ³	200			191			5%
S&P Global Platts ⁴	196			173			13%
Total segment operating profit	1,227			1,141			8%
Unallocated expense ⁵	(64		)	(58		)	11%
Total operating profit	$	1,163		$	1,083		7%

Operating profit for 2016 and 2015 includes a benefit related to legal settlement insurance recoveries of $52 million and $80 million, respectively, partially offset by legal settlement charges of $6 million and $34 million, respectively. Additionally, 2016 and 2015 includes restructuring charges of $6 million and $8 million, respectively. Operating profit for 2016 and 2015 also includes amortization of intangibles from acquisitions of $3 million and $2 million, respectively.


²	Operating profit for 2016 includes a technology related impairment charge of $24 million and disposition-related costs of $8 million. Operating profit for 2015 includes restructuring charges of $12 million. Operating profit for 2016 and 2015 also includes amortization of intangibles from acquisitions of $36 million and $12 million, respectively.


³	Operating profit for 2016 and 2015 includes amortization of intangibles from acquisitions of $3 million.


⁴	Operating profit for 2016 includes disposition-related costs of $4 million and 2015 includes restructuring charges of $1 million. Operating profit for 2016 and 2015 also includes amortization of intangibles from acquisitions of $5 million and $6 million, respectively.

Segment Operating Profit — Increased 8% as compared to the first six months of 2015. Excluding the unfavorable impact of a technology related impairment charge of 2 percentage points, higher amortization of intangibles related to acquisitions of 2 percentage points, disposition-related costs of 1 percentage point, partially offset by the favorable impact of higher restructuring charges recorded in 2015 of 1 percentage point, segment operating profit increased 12%. Revenue growth at S&P Global Market Intelligence, S&P Global Platts and S&P DJ Indices were the primary drivers for the increase. See “Segment Review” below for further information.

Unallocated Expense — These expenses, included in selling and general expenses, mainly include costs for corporate center functions, select initiatives and unoccupied office space. Unallocated expense increased $6 million or 11% as compared to the second quarter of 2015. Excluding the unfavorable impact of a gain on the sale of a non-core investment in 2015 of 19 percentage points, partially offset by the favorable impact of a disposition-related reserve release of 5 percentage points and higher restructuring charges in 2015 of 2 percentage points, unallocated expense decreased $1 million or 1%.

Foreign exchange rates had a favorable impact on operating profit of 3 percentage points. This impact refers to constant currency comparisons and the remeasurement of monetary assets and liabilities. Constant currency impacts are estimated by re-calculating current year results of foreign operations using the average exchange rate from the prior year. Remeasurement impacts are based on the variance between current-year and prior-year foreign exchange rate fluctuations on assets and liabilities denominated in currencies other than the individual businesses functional currency.

Interest Expense, net

Net interest expense increased compared to the second quarter and first six months of 2015 primarily as a result of higher interest expense related to the $700 million of senior notes issued in the second quarter of 2015 and the $2.0 billion of senior notes issued in the third quarter of 2015.

Provision for Income Taxes

The effective income tax rate was 32.3% and 31.9% for the three and six months ended June 30, 2016, respectively, and 32.6% and 32.4% for the three and six months ended June 30, 2015, respectively. The decrease in the effective income tax rate was due to the resolution of tax audits and lower non-U.S. taxes.

Segment Review

S&P Global Ratings

Credit ratings are one of several tools that investors can use when making decisions about purchasing bonds and other fixed income investments. They are opinions about credit risk and our ratings express our opinion about the ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full and on time. Our credit ratings can also relate to the credit quality of an individual debt issue, such as a corporate or municipal bond, and the relative likelihood that the issuer may default.

S&P Global Ratings differentiates its revenue between transaction and non-transaction. Transaction revenue primarily includes fees associated with:


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


•	bank loan ratings; and


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

Non-transaction revenue primarily includes fees for surveillance of a credit rating, annual fees for customer relationship-based pricing programs, fees for entity credit ratings and global research and analytics. Non-transaction revenue also includes an intersegment royalty charged to S&P Global Market Intelligence for the rights to use and distribute content and data by S&P Global Ratings. Royalty revenue was $22 million and $44 million for the three and six months ended June 30, 2016, respectively, and $20 million and $40 million for the three and six months ended June 30, 2015, respectively.

The following table provides revenue and segment operating profit information for the periods ended June 30:



(in millions)	Three Months							Six Months
	2016			2015			% Change	2016			2015			% Change
Revenue	$	682		$	658		4%	$	1,234		$	1,264		(2)%

Non-transaction revenue	$	339		$	330		3%	$	666		$	647		3%
Transaction revenue	$	343		$	328		5%	$	568		$	617		(8)%
% of total revenue:
Non-transaction revenue	50		%	50		%		54		%	51		%
Transaction revenue	50		%	50		%		46		%	49		%

U.S. revenue	$	398		$	386		3%	$	727		$	738		(1)%
International revenue	$	284		$	272		5%	$	507		$	526		(4)%
% of total revenue:
U.S. revenue	58		%	59		%		59		%	58		%
International revenue	42		%	41		%		41		%	42		%

Operating profit ¹	$	396		$	361		10%	$	658		$	652		1%
Operating margin %	58		%	55		%		53		%	52		%

million, respectively, partially offset by legal settlement charges of $4 million and $34 million, respectively. Additionally, the three and six months ended June 30, 2016 and 2015 includes restructuring charges of $6 million and $8 million, respectively. Operating profit also includes amortization of intangibles from acquisitions of $1 million for the three months ended June 30, 2016 and 2015 and $3 million and $2 million for the six months ended June 30, 2016 and 2015, respectively.

Three Months

Revenue increased 4%, which includes the unfavorable impact of foreign exchange rates that reduced revenue by less than 1 percentage point. Transaction revenue grew primarily due to an increase in U.S. bank loan ratings revenue driven largely by refinancing activity resulting from the low interest rate environment and higher corporate bond ratings revenue. Revenue growth benefited from increased contract realization. These increases were partially offset by a decline in structured finance revenue driven by decreased issuance of U.S. collateralized loan obligations ("CLO") and U.S. commercial mortgage backed securities ("CMBS"). Non-transaction revenue grew primarily due to growth in surveillance fees, increases at CRISIL, mainly within the risk and analytics sector, and growth in commercial paper and medium term note programs. These increases were partially offset by a decline in entity credit ratings activity driven by a decline in new issuers.

Operating profit increased 10%. Excluding the unfavorable impact of higher insurance recoveries partially offset by legal settlement related charges in 2015 of 3 percentage points and the favorable impact of higher restructuring charges in 2015 of 1 percentage point, operating profit increased 12%. This increase is primarily due to the increase in revenue and decreased costs related to the implementation of the Dodd-Frank Wall Street Reform of the Consumer Protection Act. These increases were partially offset by higher compensation costs related to additional headcount, primarily in the second half of 2015. Foreign exchange rates had a favorable impact on operating profit of 3 percentage points.

Six Months

Revenue decreased 2%, which includes the unfavorable impact of foreign exchange rates that reduced revenue by less than 1 percentage point. Transaction revenue decreased driven by the unfavorable impact of reduced market issuance in the U.S. and European region in the first quarter of 2016, primarily impacting corporate bond ratings revenue combined with a decrease in structured finance revenue. These decreases were partially offset by growth in U.S. bank loan ratings revenue. Non-transaction revenue grew primarily due to growth in surveillance fees, increases at CRISIL, mainly within the risk and analytics sector, and growth in commercial paper and medium term note programs. These increases were partially offset by a decrease in lower entity credit ratings activity driven by a decline in new issuers.

Operating profit increased 1%. Excluding the unfavorable impact of higher insurance recoveries partially offset by legal settlement related charges in 2015 of less than one percentage point, partially offset by the favorable impact of higher restructuring charges in 2015 of less than one percentage point, operating profit increased 1%. The increase is primarily due to lower incentive costs, decreased costs related to the implementation of the Dodd-Frank Wall Street Reform of the Consumer Protection Act and reduced legal fees following the resolution of a number of significant legal matters, partially offset by the decrease in revenue as discussed above and higher compensation costs related to additional headcount, primarily in the second half of 2015.

Issuance Volumes

We monitor issuance volumes as an indicator of trends in transaction revenue streams within S&P Global Ratings. Issuance volumes noted within the discussion that follows are based on the domicile of the issuer. Issuance volumes can be reported in two ways: by “domicile” which is based on where an issuer is located or where the assets associated with an issue are located, or based on “marketplace” which is where the bonds are sold. The following tables depict changes in issuance levels as compared to the prior year, based on a composite of Thomson Financial, Harrison Scott Publications, Dealogic and S&P Global Ratings' internal estimates.



	Second Quarter Compared to Prior Year			Year-to-Date Compared to Prior Year
Corporate Issuance	U.S.	Europe	Global	U.S.	Europe	Global
High-yield issuance	(9)%	(5)%	(2)%	(36)%	(41)%	(36)%
Investment-grade	(6)%	—%	10%	(9)%	—%	5%
Total new issue dollars — corporate issuance	(6)%	(1)%	8%	(14)%	(7)%	(1)%


•	Although the number of issuances were down, par value of corporate investment-grade issuance was up in the quarter driven by a number of high par value deals. Corporate issuance in the U.S. and Europe was down in the quarter and first half of the year due to market volatility and political and economic uncertainty in the European markets.



	Second Quarter Compared to Prior Year			Year-to-Date Compared to Prior Year
Structured Finance	U.S.	Europe	Global	U.S.	Europe	Global
Asset-backed securities (“ABS”)	(15)%	1%	(5)%	(23)%	2%	(15)%
Structured Credit	(47)%	71%	(32)%	(56)%	20%	(45)%
Commercial mortgage-backed securities (“CMBS”)	(66)%	(91)%	(68)%	(49)%	(81)%	(52)%
Residential mortgage-backed securities (“RMBS”)	(50)%	29%	(1)%	(45)%	20%	(6)%
Covered bonds	*	(8)%	(8)%	*	6%	7%
Total new issue dollars — structured finance	(37)%	4%	(17)%	(38)%	7%	(17)%


*	Represents no activity in 2016 and 2015.


•	ABS issuance in the U.S. was down driven by a decline in auto transactions.


•	Issuance was down in the U.S. Structured Credit markets driven by lower availability of leveraged loans and overall market volatility. Issuance was up in the European Structured Credit markets driven by new CLO engagements in the quarter.


•	CMBS issuance in the U.S. was down with the mix reflecting a combination of fewer single borrower transactions and market volatility. European CMBS issuance was also down, although from a low 2015 base.


•	RMBS volume in the U.S. was down driven by minimal activity in the private label securities market. The increase in European RMBS volume was driven primarily by one large issuance in the quarter.

•

Covered bond issuance (which are debt securities backed by mortgages or other high-quality assets that remain on the issuer's balance sheet) in Europe was down in the quarter due to market volatility. Covered bond issuance was up in the first half of the year reflecting banks and financial institutions taking advantage of attractive lower rates driven by The European Central Bank's purchase program in the first quarter of 2016.

For a further discussion of the legal and regulatory environment see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.

S&P Global Market Intelligence

S&P Global Market Intelligence's portfolio of capabilities are designed to help the financial community track performance, generate better investment returns (alpha), identify new trading and investment ideas, perform risk analysis, and develop mitigation strategies.

S&P Global Market Intelligence includes the following business lines:


•	Financial Data & Analytics — a product suite that provides data, analytics and third-party research for global finance professionals, which includes the S&P Capital IQ Desktop, SNL, Leveraged Commentary & Data and integrated bulk data feeds that can be customized, which include QuantHouse, S&P Securities Evaluations, CUSIP and Compustat;


•	Global Risk Services — commercial arm that sells S&P Global Ratings' credit ratings and related data, analytics and research, which includes subscription-based offerings, RatingsDirect® and RatingsXpress®; and


•	Research & Advisory — a comprehensive source of market research for financial professionals, which includes Global Market Intelligence and Equity Research Services.

The following table provides revenue and segment operating profit information for the periods ended June 30:



(in millions)	Three Months							Six Months
	2016			2015			% Change	2016			2015			% Change
Revenue	$	416		$	324		29%	$	824		$	644		28%

Subscription revenue	$	382		$	292		31%	$	758		$	578		31%
Non-subscription revenue	$	34		$	32		4%	$	66		$	66		—%
% of total revenue:
Subscription revenue	92		%	90		%		92		%	90		%
Non-subscription revenue	8		%	10		%		8		%	10		%

U.S. revenue	$	284		$	212		34%	$	564		$	424		33%
International revenue	$	132		$	112		18%	$	260		$	220		18%
% of total revenue:
U.S. revenue	68		%	65		%		68		%	66		%
International revenue	32		%	35		%		32		%	34		%

Operating profit ¹	$	93		$	63		48%	$	173		$	125		39%
Operating margin %	22		%	19		%		21		%	19		%

Operating profit includes disposition-related costs of $8 million for the three and six months ended June 30, 2016 and a technology related impairment charge of $24 million for the six months ended June 30, 2016. Additionally, the three and six months ended June 30, 2015 includes restructuring charges of $12 million. Operating profit also includes amortization of intangibles from acquisitions of $18 million and $36 million for the three and six months ended June 30, 2016, respectively, and $6 million and $12 million for the three and six months ended June 30, 2015, respectively.

Three Months

Revenue increased 29% and was favorably impacted by 21 percentage points from the acquisition of SNL. Excluding the acquisition of SNL, revenue growth was primarily driven by increases in annualized contract values in the S&P Capital IQ Desktop, RatingsXpress® and RatingsDirect® from new and existing customers. Increases in annualized contract value for certain of our data feed products also contributed to revenue growth. These increases were partially offset by declines in the equity research business. The unfavorable impact of foreign exchange rates reduced revenue by less than 1 percentage point. The number of users on the S&P Capital IQ Desktop and the number of customers at RatingsXpress® continued to grow in the quarter. Both domestic and international revenue across all regions increased, with international revenue representing 32% of S&P Global Market Intelligence's total revenue. International revenue growth across all regions was primarily driven by sales growth of the S&P Capital IQ Desktop and RatingsXpress®in Europe and Asia, and the favorable impact of the acquisition of SNL.

Operating profit increased 48%. Excluding the unfavorable impact of disposition-related costs of less than one percentage point and the amortization of intangibles from acquisitions of less than one percentage point, partially offset by the favorable impact of higher restructuring charges in 2015 of less than one percentage point, operating profit increased 48%. This increase is due to revenue growth and the favorable impact of foreign exchange rates of 5 percentage points, partially offset by higher compensation costs and increased technology costs related to the acquisition of SNL. Excluding the acquisition of SNL, expenses decreased compared to the second quarter of 2015 driven by lower compensation costs primarily due to a reduction in headcount and the favorable impact of foreign exchange rates.

Six Months

Revenue increased 28% and was favorably impacted by 21 percentage points from the acquisition of SNL. Excluding the acquisition of SNL, revenue growth was primarily driven by increases in annualized contract values in the S&P Capital IQ Desktop, RatingsXpress® and RatingsDirect® from new and existing customers. Increases in annualized contract value for certain of our data feed products also contributed to revenue growth. These increases were partially offset by declines in the equity research business. The unfavorable impact of foreign exchange rates reduced revenue by less than 1 percentage point. The number of users on the S&P Capital IQ Desktop and the number of customers at RatingsXpress® continued to grow in the first half of the year.

Both domestic and international revenue across all regions increased, with international revenue representing 32% of S&P Global Market Intelligence's total revenue. International revenue growth across all regions was primarily driven by sales growth of the S&P Capital IQ Desktop and RatingsXpress®in Europe and Asia, and the favorable impact of the acquisition of SNL.

Operating profit increased 39%. Excluding the unfavorable impact of a technology related impairment charge of 13 percentage points, amortization of intangibles from acquisitions of 14 percentage points and disposition-related costs of 4 percentage points partially offset by the favorable impact of of higher restructuring charges in 2015 of 6 percentage points, operating profit increased 63%. This increase is due to revenue growth and the favorable impact of foreign exchange rates of 9 percentage points, partially offset by higher compensation costs and increased technology costs related to the acquisition of SNL. Excluding the acquisition of SNL, expenses decreased compared to the second half of 2015 driven by lower compensation costs primarily due to a reduction in headcount and the favorable impact of foreign exchange rates.

S&P Dow Jones Indices

S&P DJ Indices is a global index provider that maintains a wide variety of indices to meet an array of investor needs. S&P DJ Indices’ mission is to provide transparent benchmarks to help with decision making, collaborate with the financial community to create innovative products and provide investors with tools to monitor world markets.

S&P DJ Indices generates subscription revenue and transaction revenue but primarily derives revenue from asset linked fees based on the S&P and Dow Jones Indices. Specifically, S&P DJ Indices generates revenue from the following sources:


•	Investment vehicles — Asset linked fees such as ETFs and mutual funds, which are based on the S&P Dow Jones Indices' benchmarks and generate revenue through fees based on assets and underlying funds;


•	Exchange traded derivatives — which generate royalties based on trading volumes of derivatives contracts listed on various exchanges;


•	Index-related licensing fees — which are either fixed or variable annual and per-issue fees for over-the-counter derivatives and retail-structured products; and


•	Data and customized index subscription fees — which support index fund management, portfolio analytics and research.

The following table provides revenue and segment operating profit information for the periods ended June 30:



(in millions)	Three Months							Six Months
	2016			2015			% Change	2016			2015			% Change
Revenue	$	153		$	148		4%	$	304		$	291		4%

Asset linked fees	$	92		$	92		—%	$	178		$	184		(3)%
Subscription revenue	$	32		$	28		13%	$	62		$	56		10%
Transaction revenue	$	29		$	28		6%	$	64		$	51		26%
% of total revenue:
Asset linked fees	60		%	62		%		59		%	63		%
Subscription revenue	21		%	19		%		20		%	19		%
Transaction revenue	19		%	19		%		21		%	18		%


U.S. revenue	$	128		$	121		6%	$	253		$	235		8%
International revenue	$	25		$	27		(8)%	51			$	56		(10)%
% of total revenue:
U.S. revenue	84		%	82		%		83		%	81		%
International revenue	16		%	18		%		17		%	19		%

Operating profit ¹	$	100		$	96		5%	$	200		$	191		5%
Less: net operating profit attributable to noncontrolling interests	27			25				53			50
Net operating profit	$	73		$	71		4%	$	147		$	141		4%
Operating margin %	65		%	65		%		66		%	66		%
Net operating margin %	48		%	48		%		48		%	49		%


¹	Operating profit includes amortization of intangibles from acquisitions of $1 million for the three months ended June 30, 2016 and 2015 and $3 million for the six months ended June 30, 2016 and 2015.

Three Months

Revenue at S&P DJ Indices increased 4%, primarily driven by an increase in data revenue and higher volumes for exchange-traded derivatives. The unfavorable impact of foreign exchange rates reduced revenue by less than 1 percentage point.

Ending AUM for ETFs in the second quarter of 2016 increased 8% to $855 billion and average AUM for ETFs increased 3% to $845 billion compared to the second quarter of 2015.

Operating profit grew 5%. Excluding the impact of amortization of intangibles related to acquisitions of less than 1 percentage point, operating profit increased 4%. This increase was primarily due to revenue growth, partially offset by a slight increase in expenses. Increased compensation costs related to additional headcount and increased technology costs were partially offset by expense savings resulting from cost containment measures. Foreign exchange rates had an unfavorable impact on operating profit of less than 1 percentage point.

Six Months

Revenue at S&P DJ Indices increased 4%, primarily driven by higher volumes for exchange-traded derivatives and an increase in data revenue, partially offset by the unfavorable impact of lower average levels of AUM for ETFs in the first quarter of 2016. The unfavorable impact of foreign exchange rates reduced revenue by less than 1 percentage point.

Operating profit grew 5%. Excluding amortization of intangibles related to acquisitions of less than 1 percentage point, operating profit increased 5%. This increase was primarily due to revenue growth, partially offset by increased compensation costs due to additional headcount and increased technology costs. Foreign exchange rates had a favorable impact on operating profit of less than 1 percentage point.

S&P Global Platts

S&P Global Platts consists of business-to-business companies specializing in the commodities and commercial markets that deliver their customers access to high-value information, data, analytic services and pricing and quality benchmarks. S&P Global Platts includes the following brands:


•	Platts — provides essential price data, analytics, and industry insight that enable commodities markets to perform with greater transparency and efficiency; and


•	J.D. Power — provides essential consumer intelligence to help businesses measure, understand, and improve the key performance metrics that drive growth and profitability.

The S&P Global Platts business is driven by the need for high-value information and transparency in a variety of industries. S&P Global Platts seeks to deliver premier content that is deeply embedded in customer workflows and decision making processes.

S&P Global Platts' revenue is generated primarily through the following sources:


•	Subscription revenue — subscriptions to our real-time news, market data and price assessments, along with other information products, primarily serving the energy and the automotive industry; and


•	Non-subscription revenue — primarily from licensing of our proprietary market price data and price assessments to commodity exchanges, syndicated and proprietary research studies, commercial-oriented data and analytics, conference sponsorship, consulting engagements, and events.

The following table provides revenue and segment operating profit information for the periods ended June 30:



(in millions)	Three Months							Six Months
	2016			2015			% Change	2016			2015			% Change
Revenue	$	255		$	234		9%	$	509		$	459		11%

Subscription revenue	$	175		$	154		13%	$	347		$	304		14%
Non-subscription revenue	$	80		$	80		—%	$	162		$	155		5%
% of total revenue:
Subscription revenue	69		%	66		%		68		%	66		%
Non-subscription revenue	31		%	34		%		32		%	34		%

U.S. revenue	$	113		$	102		10%	$	230		$	200		15%
International revenue	$	142		$	132		8%	279			259			8%
% of total revenue:
U.S. revenue	44		%	44		%		45		%	44		%
International revenue	56		%	56		%		55		%	56		%

Operating profit ¹	$	93		$	87		7%	$	196		$	173		13%
Operating margin %	37		%	37		%		38		%	38		%

Three Months

Revenue grew 9% primarily due to continued demand for Platts’ proprietary content. This growth was driven mainly by continued demand for Platts’ market data and price assessment products, led by petroleum. Additionally, growth has been driven by the continued licensing of our proprietary market price data and price assessments to various commodity exchanges. Platts' revenue was also favorably impacted by the acquisitions of RigData and Commodity Flow in June of 2016 and March of 2016, respectively, and Petromedia Ltd and its operating subsidiaries in July of 2015. J.D. Power also contributed to the revenue increase primarily due to the acquisition of UCG in July of 2015, partially offset by a decrease in auto proprietary research and consulting engagements in China. The unfavorable impact of foreign exchange rates reduced revenue by less than 1 percentage point.

Operating profit increased 7%. Excluding the unfavorable impact of disposition costs of 2 percentage points partially offset by the favorable impact of higher restructuring charges in 2015 of 1 percentage point, operating profit increased 7%. This increase is primarily due to the increase in revenue and the favorable impact of foreign exchange rates of 2 percentage points, partially offset by higher compensation costs at Platts and J.D. Power primarily related to additional headcount related to acquisitions.

Six Months

Revenue grew 11% primarily due to continued demand for Platts’ proprietary content. This growth was driven mainly by continued demand for Platts’ market data and price assessment products, led by petroleum. Additionally, growth has been driven by the continued licensing of our proprietary market price data and price assessments to various commodity exchanges. Platts' revenue was also favorably impacted by the acquisitions of RigData and Commodity Flow in June of 2016 and March of 2016, respectively, and Petromedia Ltd and its operating subsidiaries in July of 2015. J.D. Power also contributed to the revenue increase primarily due to the acquisition of UCG in July of 2015 and growth in data and analytics revenue. The unfavorable impact of foreign exchange rates reduced revenue by less than 1 percentage point.

Operating profit increased 13%. Excluding the unfavorable impact of disposition costs of 1 percentage point, operating profit increased 14%. This increase is primarily due to the increase in revenue and the favorable impact of foreign exchange rates of 2 percentage points, partially offset by higher compensation costs at Platts and J.D. Power primarily related to additional headcount related to acquisitions.

In April of 2016, we entered into a definitive agreement to sell J.D. Power for $1.1 billion to XIO Group, a global alternative investments firm headquartered in London. During the second quarter of 2016, we received regulatory approval to proceed with the sale and expect the transaction to close in the third quarter of 2016. In the fourth quarter of 2015, we began exploring strategic alternatives for J.D. Power and initiated an active program to sell the business. The assets and liabilities of J.D. Power have been classified as held for sale in our consolidated balance sheet as of June 30, 2016 and December 31, 2015.

For a further discussion of the legal and regulatory environment see Note 12 – Commitments and Contingencies to the consolidated financial statements of this Form 10-Q.

LIQUIDITY AND CAPITAL RESOURCES

We continue to maintain a strong financial position. Our primary source of funds for operations is cash from our businesses and our core businesses have been strong cash generators. Cash on hand, cash flows from operations and availability under our existing credit facility are expected to be sufficient to meet any additional operating and recurring cash needs into the foreseeable future. We use our cash for a variety of needs, including among others: ongoing investments in our businesses, strategic acquisitions, share repurchases, dividends, repayment of debt, capital expenditures and investment in our infrastructure.

Cash Flow Overview

Cash and cash equivalents were $1,567 million as of June 30, 2016, an increase of $86 million from December 31, 2015, and consisted of approximately 5% of domestic cash and 95% of cash held abroad. Typically, cash held outside the U.S. is anticipated to be utilized to fund international operations or to be reinvested outside of the U.S., as a significant portion of our opportunities for growth in the coming years is expected to be abroad. In the event funds from international operations are needed to fund operations in the U.S., we would be required to accrue for and pay taxes in the U.S. to repatriate these funds.

The following table provides cash flow information for the six months ended June 30:



(in millions)	2016			2015			% Change
Net cash provided by (used for):
Operating activities from continuing operations	$	571		$	(897	)	N/M
Investing activities from continuing operations	$	(88	)	$	(37	)	N/M
Financing activities from continuing operations	$	(371	)	$	293		N/M

N/M - not meaningful

In the first six months of 2016, free cash flow increased to $478 million compared to $(988) million in the first six months of 2015. The increase is primarily due to the increase in cash provided by (used for) operating activities as discussed below. Free cash flow is a non-GAAP financial measure and reflects our cash flow provided by (used for) operating activities less capital expenditures and dividends and other payments paid to noncontrolling interests. Capital expenditures include purchases of property and equipment and additions to technology projects. See “Reconciliation of Non-GAAP Financial Information” below for a reconciliation of cash flow provided by operating activities, the most directly comparable U.S. GAAP financial measure, to free cash flow and free cash flow excluding certain items.

Operating activities

Cash provided by operating activities was $571 million for the first six months of 2016 compared to cash used for operating activities of $897 million for the first six months of 2015. The increase is mainly due to the payment of legal and regulatory settlements in 2015.

Investing activities

Our cash outflows from investing activities are primarily for acquisitions and capital expenditures, while cash inflows are primarily proceeds from dispositions.

Cash used for investing activities increased to $88 million for the first six months of 2016 as compared to $37 million in the first six months of 2015, primarily due to cash paid for acquisitions in 2016. See Note 2 — Acquisitions and Divestitures for further discussion.

Financing activities

Our cash outflows from financing activities consist primarily of share repurchases, dividends to shareholders and repayments of short-term and long-term debt, while cash inflows are primarily attributable to the borrowing of short-term and long-term debt and proceeds from the exercise of stock options.

Cash used for financing activities was $371 million in the first six months of 2016 as compared to cash provided by financing activities of $293 million in the first six months of 2015. The decrease is primarily attributable to proceeds received from the issuance of $700 million of senior notes in the second quarter of 2015 and an increase in cash used for share repurchases in 2016.

During the first six months of 2016, we used cash to repurchase 3.8 million shares for $373 million. In December of 2015, we purchased 0.3 million shares for approximately $26 million, which settled in January of 2016. During the first six months of 2015, we used cash to repurchase 2.6 million shares for $274 million.

Discontinued Operations

Cash used for operating activities from discontinued operations of $129 million in the first six months of 2015 relates to the tax payment on the gain on sale of McGraw Hill Construction which was sold in the fourth quarter of 2014.

Additional Financing

We have the ability to borrow a total of $1.2 billion through our commercial paper program, which is supported by our revolving $1.2 billion five-year credit agreement (our “credit facility”) that we entered into on June 30, 2015. This credit facility will terminate on June 30, 2020. Commercial paper borrowings outstanding as of June 30, 2016 and December 31, 2015 totaled $309 million and $143 million, respectively with an average interest rate and term of 0.91% and 14 days and 0.95% and 17 days, respectively. As of June 30, 2016, we can borrow approximately $891 million in additional funds under our credit facility.

Depending on our indebtedness to cash flow ratio, we pay a commitment fee of 10 to 20 basis points for our credit facility, whether or not amounts have been borrowed. We currently pay a commitment fee of 15 basis points. The interest rate on borrowings under our credit facility is, at our option, calculated using rates that are primarily based on either the prevailing London Inter-Bank Offer Rate, the prime rate determined by the administrative agent or the Federal Funds Rate. For certain borrowings under this credit facility, there is also a spread based on our indebtedness to cash flow ratio added to the applicable rate.

Dividends

On January 27, 2016, the Board of Directors approved an increase in the quarterly common stock dividend from $0.33 per share to $0.36 per share.

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION

Free cash flow is a non-GAAP financial measure and reflects our cash flow provided by (used for) operating activities less capital expenditures and dividends and other payments paid to noncontrolling interests. Capital expenditures include purchases of property and equipment and additions to technology projects. Our cash flow provided by operating activities is the most directly comparable U.S. GAAP financial measure to free cash flow. Additionally, we have considered certain items in evaluating free cash flow, which are included in the table below.

We believe the presentation of free cash flow and free cash flow excluding certain items allows our investors to evaluate the cash generated from our underlying operations in a manner similar to the method used by management. We use free cash flow to conduct and evaluate our business because we believe it typically presents a more conservative measure of cash flows since capital expenditures and dividends and other payments paid to noncontrolling interests are considered a necessary component of ongoing operations. Free cash flow is useful for management and investors because it allows management and investors to evaluate the cash available to us to service debt, make strategic acquisitions and investments, repurchase stock and fund ongoing operational and working capital needs.

The presentation of free cash flow and free cash flow excluding certain items are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. Free cash flow, as we calculate it, may not be comparable to similarly titled measures employed by other companies. The following table presents a reconciliation of our cash flow provided by operating activities to free cash flow excluding the impact of the items below for the six months ended June 30:



(in millions)	2016			2015
Cash provided by (used for) operating activities from continuing operations	$	571		$	(897	)
Capital expenditures	(36		)	(42		)
Dividends and other payments paid to noncontrolling interests	(57		)	(49		)
Free cash flow	478			(988		)
Payment of legal and regulatory settlements	108			1,609
Legal settlement insurance recoveries	(52		)	(65		)
Tax benefit from legal settlements	(21		)	(258		)
Free cash flow excluding above items	$	513		$	298

CRITICAL ACCOUNTING ESTIMATES

Our accounting policies are described in Note 1 — Accounting Policies to the consolidated financial statements in our Form 10-K. As discussed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Form 10-K, we consider an accounting estimate to be critical if it required assumptions to be made that were uncertain at the time the estimate was made and changes in the estimate or different estimates could have a material effect on our results of operations. These critical estimates include 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 non-controlling interests. We base our estimates on historical experience, current developments and on various other assumptions that we believe to be reasonable under these circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that cannot readily be determined from other sources. There can be no assurance that actual results will not differ from those estimates. Since the date of our Form 10-K, there have been no changes to our critical accounting estimates.

RECENTLY ISSUED OR ADOPTED ACCOUNTING STANDARDS

See Note 13 – Recently Issued or Adopted Accounting Standards to the consolidated financial statements of this Form 10-Q for further information.

FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future events, trends, contingencies or results, appear at various places in this report and use words like “anticipate,” “assume,” “believe,” “continue,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “potential,” “predict,” “project,” “strategy,” “target” and similar terms, and future or conditional tense verbs like “could,” “may,” “might,” “should,” “will” and “would.” Factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements include, among other things:


•	the successful completion of the pending sale of J.D. Power to XIO Group;


•	our ability to make acquisitions and dispositions and successfully integrate the businesses we acquire;


•	worldwide economic, financial, political and regulatory conditions, including economic conditions and regulatory changes that may result from the United Kingdom’s likely exit from the European Union;


•	the rapidly evolving regulatory environment, in the United States and abroad, affecting S&P Global Ratings, S&P Global Platts, S&P Dow Jones Indices, and S&P Global Market Intelligence, including new and amended regulations and the Company’s compliance therewith;


•	the outcome of litigation, government and regulatory proceedings, investigations and inquiries;


•	the health of debt and equity markets, including credit quality and spreads, the level of liquidity and future debt issuances;


•	the demand and market for credit ratings in and across the sectors and geographies where the Company operates;


•	concerns in the marketplace affecting the Company’s credibility or otherwise affecting market perceptions of the integrity or utility of independent credit ratings;


•	the effect of competitive products and pricing, including the level of success of new product developments and global expansion;


•	consolidation in the Company’s end-customer markets;


•	the impact of cost-cutting pressures across the financial services industry;


•	a decline in the demand for credit risk management tools by financial institutions;


•	the level of merger and acquisition activity in the United States and abroad;


•	the volatility of the energy marketplace;


•	the health of the commodities markets;


•	the impact of cost-cutting pressures and reduced trading in oil and other commodities markets;


•	our ability to incentivize and retain key employees;


•	the Company’s ability to maintain adequate physical, technical and administrative safeguards to protect the security of confidential information and data, and the potential of a system or network disruption that results in regulatory penalties, remedial costs or improper disclosure of confidential information or data;


•	the Company’s ability to successfully recover should it experience a disaster or other business continuity problem from a hurricane, flood, earthquake, terrorist attack, pandemic, security breach, cyber-attack, power loss, telecommunications failure or other natural or man-made event;


•	changes in applicable tax or accounting requirements;


•	the level of the Company’s future cash flows and capital investments;


•	the impact on the Company’s revenue and net income caused by fluctuations in foreign currency exchange rates; and

•

the Company’s exposure to potential criminal sanctions or civil penalties if it fails to comply with foreign and U.S. laws and regulations that are applicable in the domestic and international jurisdictions in which it operates, including sanctions laws relating to countries such as Iran, Russia, Sudan and Syria, anti-corruption laws such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act of 2010, and local laws prohibiting corrupt payments to government officials, as well as import and export restrictions.

The factors noted above are not exhaustive. The Company and its subsidiaries operate in a dynamic business environment in which new risks emerge frequently. Accordingly, the Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the dates on which they are made. The Company undertakes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date on which it is made, except as required by applicable law. Further information about the Company’s businesses, including information about factors that could materially affect its results of operations and financial condition, is contained in the Company’s filings with the SEC, including the “Risk Factors” section in the Company’s most recently filed Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk includes changes in foreign exchange 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 June 30, 2016 and December 31, 2015, we entered into foreign exchange forward contracts to hedge the effect of adverse fluctuations in foreign currency exchange rates. We have not entered into any derivative financial instruments for speculative purposes. See Note 5 - Derivative Instruments to the consolidated financial statements of this Form 10-Q for further discussion.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed so that information required to be disclosed in our reports filed with the U.S. Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

As of June 30, 2016, an evaluation was performed under the supervision and with the participation of management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of June 30, 2016.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Note 12 – Commitments and Contingencies - Legal & Regulatory Matters to the consolidated financial statements of this Form 10-Q for information on our legal proceedings.

Item 1a. Risk Factors

Our Form 10-K contains detailed cautionary statements which identify all known material risks, uncertainties and other factors that could cause our actual results to differ materially from historical or expected results. The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in our Form 10-K. Except as presented below, there have been no material changes to the risk factors we have previously disclosed in Item 1a, Risk Factors, in our Form 10-K.

Regulatory changes and economic conditions leading up to and following the United Kingdom’s likely exit from the European Union could have a material adverse effect on our business and results of operations.


•	Following a referendum on June 23, 2016 in which voters in the United Kingdom ("U.K.") approved an exit from the European Union ("EU"), it is expected that the U.K. government will initiate a process to leave the EU (often referred to as Brexit) and begin negotiating the terms of the U.K.’s future relationship with the EU.

•

Any impact from Brexit on the Company will depend, in part, on the outcome of tariff, trade and other negotiations. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations between the U.K and the EU as the U.K. determines which EU laws to replace or replicate and the EU determines how to treat regulated activities (e.g., the activities of credit rating agencies) originating in the U.K. Our businesses are subject to increasing regulation of the financial services and commodities industries in Europe. Potential changes in EU regulation and/or additional regulation in the U.K. could cause additional operating obligations and increased costs for our businesses.


•	Any of these effects of Brexit, and others we cannot anticipate, could adversely affect our business, business opportunities, results of operations, financial condition and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On December 4, 2013, the Board of Directors approved a share repurchase program authorizing the purchase of up to 50 million shares, which was approximately 18% of the Company's outstanding shares at that time. During the second quarter of 2016, we repurchased 1.4 million shares and, as of June 30, 2016, 31.9 million shares remained under our current repurchase program.

Repurchased 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. The 2013 repurchase program has no expiration date and purchases under this program may be made from time to time on the open market and in private transactions, depending on market conditions.

The following table provides information on our purchases of our outstanding common stock during the second quarter of 2016 pursuant to our current share repurchase program (column c). In addition to these purchases, the number of shares in column (a) include: 1) shares of common stock that are tendered to us to satisfy our employees’ tax withholding obligations in connection with the vesting of awards of restricted shares (we repurchase such shares based on their fair market value on the vesting date), and 2) our shares deemed surrendered to us to pay the exercise price and to satisfy our employees’ tax withholding obligations in connection with the exercise of employee stock options. There were no other share repurchases during the quarter outside the repurchases noted below.

(amounts in millions, except per share price)



Period	(a) Total Number of Shares Purchased	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Programs	(d) Maximum Number of Shares that may yet be Purchased Under the Programs
Apr. 1 — Apr. 30, 2016	—	$	99.30	—	33.3
May 1 — May 31, 2016	0.4	107.60		0.4	32.9
Jun. 1 — Jun. 30, 2016	1.0	107.79		1.0	31.9
Total — Qtr	1.4	$	107.74	1.4	31.9

Item 5. Other Information

IRAN THREAT REDUCTION AND SYRIA HUMAN RIGHTS ACT DISCLOSURE

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which amended the Securities Exchange Act of 1934, an issuer is required to disclose in its annual or quarterly reports, as applicable, whether, during the reporting period, it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant to certain Executive Orders. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable laws and regulations.

Revenue during the second quarter of 2016 attributable to the transactions or dealings by the Company described below was approximately $211,000, with net profit from such sales being a fraction of the revenues.

During the second quarter of 2016, one of the Company’s divisions, a provider of energy-related information in over 150 countries, sold information and informational materials, which are generally exempt from U.S. economic sanctions, to fourteen subscribers that are owned or controlled, or appear to be owned or controlled, by the Government of Iran (the “GOI”). The Company, among other things, offers customers that subscribe to its publications access to proprietary data, analytics, and industry information that enable commodities markets to perform with greater transparency and efficiency. This division provided such data related to the energy and petrochemicals markets to the subscribers referenced above, generating revenue that was a de minimis portion of both the division's and the Company’s revenue. Eight are designated by the Treasury Department’s Office of Foreign Assets Control as GOI entities and six appear, based on publicly available information, to be owned or controlled by GOI entities. We believe that these transactions were permissible under U.S. sanctions pursuant to certain statutory and regulatory exemptions for the exportation of information and informational materials. The Company will continue to monitor its provision of products and services to these Iranian customers so that such activity continues to be permissible under U.S. sanctions.

Item 6. Exhibits



(2.1)	Stock and Asset Purchase Agreement between McGraw Hill Financial, Inc. and Jefferson Bidco Inc., dated as of April 15, 2016 *

(12)	Computation of Ratio of Earnings to Fixed Charges

(15)	Letter on Unaudited Interim Financials

(31.1)	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

(31.2)	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

(32)	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(101.INS)	XBRL Instance Document

(101.SCH)	XBRL Taxonomy Extension Schema

(101.CAL)	XBRL Taxonomy Extension Calculation Linkbase

(101.LAB)	XBRL Taxonomy Extension Label Linkbase

(101.PRE)	XBRL Taxonomy Extension Presentation Linkbase

(101.DEF)	XBRL Taxonomy Extension Definition Linkbase

* Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.



			S&P Global Inc.
			Registrant

Date:	July 28, 2016	By:	/s/ Jack F. Callahan, Jr.
			Jack F. Callahan, Jr.
			Executive Vice President and Chief Financial Officer

Date:	July 28, 2016	By:	/s/ Robert J. MacKay
			Robert J. MacKay
			Senior Vice President and Corporate Controller

S&P Global - 10-Q quarterly report FY2016 Q2

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