Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. S&P Global Inc. (64040) 10-Q published on May 03, 2019 at 4:59 pm
Reporting Period: Mar 30, 2019
In March of 2019, we entered into an agreement to sell Standard & Poor's Investment Advisory Services LLC ("SPIAS"), a business within our Market Intelligence segment, to Goldman Sachs Asset Management ("GSAM"). SPIAS provides non-discretionary investment advice across institutional sub-advisory and intermediary distribution channels globally. The transaction is expected to close in mid-2019. The assets of SPIAS of $8 million and $9 million have been classified as held for sale, which is included in prepaid and other current assets in our consolidated balance sheets as of March 31, 2019 and December 31, 2018, respectively.
We determine whether an arrangement meets the criteria for an operating lease or a finance lease at the inception of the arrangement. We have operating leases for office space and equipment. Our leases have remaining lease terms of 1 year to 14 years, some of which include options to extend the leases for up to 12 years, and some of which include options to terminate the leases within 1 year. We consider these options in determining the lease term used to establish our right-of use ("ROU") assets and associated lease liabilities. We sublease certain real estate leases to third parties which mainly consist of operating leases for space within our offices.
Operating lease ROU assets and operating liabilities are recognized based on the present value and future minimum lease payments over the lease term at commencement date. Our future minimum based payments used to determine our lease liabilities include minimum based rent payments and escalations. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
During the first quarter of 2019, the Company purchased a group annuity contract under which an insurance company assumed the Company’s obligation to pay pension benefits to approximately 4,600 retirees and beneficiaries. This purchase eliminates all future investment or mortality risk associated with these retirees. The purchase of this group annuity contract was funded with pension plan assets. As a result, the Company’s outstanding pension benefit obligation was reduced by approximately $370 million, representing approximately 24% of the total obligations of the Company’s qualified pension plans. In connection with this transaction, the Company recorded a pre-tax settlement charge of $113 million, reflecting the accelerated recognition of a portion of unamortized actuarial losses in the plan. Excluding this pension settlement charge, other income, net increased to $10 million in 2019 from $4 million in 2018, primarily due to a loss on investment in 2018 of $4 million that did not recur in 2019.
Revenue at Indices increased 2% and was favorably impacted by the buyout of the balance of intellectual property rights in a family of indices from one of our co-marketing and index development partners in the fourth quarter of 2018. Increased revenues from higher levels of assets under management ("AUM") for mutual funds and a cumulative catch up from volume based billing was offset by lower exchange-traded derivative volumes. Ending AUM for ETFs in the first quarter of 2019 increased 11% to $1.473 trillion and average AUM for ETFs increased 2% to $1.400 trillion compared to the first quarter of 2018. Foreign exchange rates had an unfavorable impact of less than one percentage point.