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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ___________________________________________________
FORM 10-Q
  ___________________________________________________
(Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2019

OR
o
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 001-36495
 ___________________________________________________
IHS MARKIT LTD.
(Exact name of registrant as specified in its charter) 
 ___________________________________________________
Bermuda
001-36495
98-1166311
(State or Other Jurisdiction of Incorporation or Organization)
(Commission File Number)
(IRS Employer Identification Number)

4th Floor, Ropemaker Place
25 Ropemaker Street
London, England
EC2Y 9LY
(Address of Principal Executive Offices)

+44 20 7260 2000
(Registrant’s telephone number, including area code)
 ___________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered
Common Shares, $0.01 par value per share
 
INFO
 
NASDAQ Global Select Market
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.    x  Yes    o  No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    o  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 


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Large accelerated filer
 
x
Accelerated filer
 
o
 
 
 
 
Non-accelerated filer
 
o
Smaller reporting company
 
o
 
 
 
 
 
 
 
 
 
Emerging growth company
 
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    o  Yes    x  No
As of May 31, 2019, there were 401,054,361 Common Shares outstanding (excluding 25,219,470 outstanding common shares held by the Markit Group Holdings Limited Employee Benefit Trust).


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TABLE OF CONTENTS
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 business, events, trends, contingencies, financial performance, or financial condition, appear at various places in this report and use words like “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “see,” “seek,” “should,” “strategy,” “strive,” “target,” “will,” and “would” and similar expressions, and variations or negatives of these words. Examples of forward-looking statements include, among others, statements we make regarding: guidance and predictions relating to expected operating results, such as revenue growth and earnings; strategic actions such as acquisitions, joint ventures, and dispositions, the anticipated benefits therefrom, and our success in integrating acquired businesses; anticipated levels of capital expenditures in future periods; anticipated levels of indebtedness, capital allocation, and share repurchases in future periods; our belief that we have sufficient liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities, and governmental and regulatory investigations and proceedings; and our strategy for customer retention, growth, product development, market position, financial results, and reserves. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management’s current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: economic and financial conditions, including volatility in interest and exchange rates; our ability to develop new products and services; our ability to manage system failures or capacity constraints; our ability to manage fraudulent or unpermitted data access or other cyber-security or privacy breaches; our ability to successfully manage risks associated with changes in demand for our products and services; our ability to manage our relationships with third-party service providers; legislative, regulatory, and economic developments, including any new or proposed U.S. Treasury rule changes; the extent to which we are successful in gaining new long-term relationships with customers or retaining existing ones and the level of service failures that could lead customers to use competitors’ services; the anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion, and growth of our operations; our ability to retain and hire key personnel; our ability to satisfy our debt obligations and our other ongoing business obligations; and the occurrence of any catastrophic events, including acts of terrorism or outbreak of war or hostilities. These risks, as well as other risks which would cause actual results to be significantly different from those expressed or implied by these forward-looking statements, are more fully discussed under the caption “Risk Factors” in our Annual Report on Form 10-K, along with our other filings with the U.S. Securities and Exchange Commission (“SEC”). While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to

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the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on our consolidated financial condition, results of operations, credit rating, or liquidity. Therefore, you should not rely on any of these forward-looking statements. Any forward-looking statement made by us in this Quarterly Report on Form 10-Q is based only on information currently available to our management and speaks only as of the date of this report. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.

Website and Social Media Disclosure
 
We use our website (www.ihsmarkit.com) and corporate Twitter account (@IHSMarkit) as routine channels of distribution of company information, including news releases, analyst presentations, and supplemental financial information, as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor our website and our corporate Twitter account in addition to following press releases, SEC filings and public conference calls and webcasts. Additionally, we provide notifications of news or announcements as part of our investor relations website. Investors and others can receive notifications of new information posted on our investor relations website in real time by signing up for email alerts.

None of the information provided on our website, in our press releases, public conference calls, and webcasts, or through social media channels is incorporated into, or deemed to be a part of, this quarterly report on Form 10-Q or in any other report or document we file with the SEC, and any references to our website or our social media channels are intended to be inactive textual references only.

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PART I.   FINANCIAL INFORMATION
Item 1.
Financial Statements
IHS MARKIT LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value)
 
As of
 
As of
 
May 31, 2019
 
November 30, 2018
 
(Unaudited)
 
(Audited)
Assets

 

Current assets:

 

Cash and cash equivalents
$
109.5

 
$
120.0

Accounts receivable, net
854.0

 
792.9

Income tax receivable
14.3

 
20.8

Deferred subscription costs
84.9

 
77.3

Assets held for sale
63.6

 

Other current assets
134.9

 
88.4

Total current assets
1,261.2

 
1,099.4

Non-current assets:

 

Property and equipment, net
615.1

 
579.6

Intangible assets, net
4,267.5

 
4,484.8

Goodwill
9,781.0

 
9,836.0

Deferred income taxes
14.6

 
14.6

Other
93.9

 
47.9

Total non-current assets
14,772.1

 
14,962.9

Total assets
$
16,033.3

 
$
16,062.3

Liabilities and equity


 


Current liabilities:

 

Short-term debt
$
364.3

 
$
789.9

Accounts payable
33.6

 
63.8

Accrued compensation
119.7

 
214.1

Other accrued expenses
415.0

 
357.7

Income tax payable
23.2

 
8.0

Deferred revenue
938.7

 
886.8

Liabilities held for sale
25.2

 

Total current liabilities
1,919.7

 
2,320.3

Long-term debt, net
4,893.5

 
4,889.2

Accrued pension and postretirement liability
17.1

 
17.4

Deferred income taxes
677.3

 
699.9

Other liabilities
122.5

 
109.1

Commitments and contingencies

 

Redeemable noncontrolling interests
16.8

 
5.9

Shareholders' equity:

 

Common shares, $0.01 par value, 3,000.0 authorized, 475.8 and 472.9 issued, and 401.1 and 397.1 outstanding at May 31, 2019 and November 30, 2018, respectively
4.8

 
4.7

Additional paid-in capital
7,745.4

 
7,680.4

Treasury shares, at cost: 74.8 and 75.8 at May 31, 2019 and November 30, 2018, respectively
(2,076.3
)
 
(2,108.8
)
Retained earnings
3,054.8

 
2,743.1

Accumulated other comprehensive loss
(342.3
)
 
(298.9
)
Total shareholders' equity
8,386.4

 
8,020.5

Total liabilities and equity
$
16,033.3

 
$
16,062.3

See accompanying notes.

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IHS MARKIT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except for per-share amounts)
 
 
Three months ended May 31,
 
Six months ended May 31,
 
2019
 
2018
 
2019
 
2018
Revenue
$
1,135.5

 
$
1,008.3

 
$
2,181.9

 
$
1,940.4

Operating expenses:
 
 
 
 
 
 
 
Cost of revenue
428.0

 
368.4

 
827.8

 
711.3

Selling, general and administrative
293.3

 
299.2

 
593.6

 
589.5

Depreciation and amortization
144.0

 
131.0

 
286.3

 
261.6

Restructuring charges
1.7

 

 
9.9

 

Acquisition-related costs
21.4

 
25.8

 
44.2

 
52.8

Other expense, net
8.4

 
3.0

 
6.4

 
4.4

Total operating expenses
896.8

 
827.4

 
1,768.2

 
1,619.6

Operating income
238.7

 
180.9

 
413.7

 
320.8

Interest income
0.6

 
0.9

 
1.0

 
1.6

Interest expense
(65.8
)
 
(55.3
)
 
(132.7
)
 
(101.6
)
Net periodic pension and postretirement expense
(0.2
)
 
(0.3
)
 
(0.5
)
 
(0.5
)
Non-operating expense, net
(65.4
)
 
(54.7
)
 
(132.2
)
 
(100.5
)
Income from continuing operations before income taxes and equity in loss of equity method investee
173.3

 
126.2

 
281.5

 
220.3

(Provision) benefit for income taxes
(24.2
)
 
(12.0
)
 
(23.3
)
 
134.6

Equity in loss of equity method investee
(0.2
)
 

 
(0.3
)
 

Net income
148.9

 
114.2

 
257.9

 
354.9

Net loss attributable to noncontrolling interest
0.9

 
0.5

 
1.6

 
1.1

Net income attributable to IHS Markit Ltd.
$
149.8

 
$
114.7

 
$
259.5

 
$
356.0

 
 
 
 
 
 
 
 
Basic earnings per share attributable to IHS Markit Ltd.
$
0.37

 
$
0.29

 
$
0.65

 
$
0.90

Weighted average shares used in computing basic earnings per share
400.5

 
391.8

 
399.3

 
394.9

 
 
 
 
 
 
 
 
Diluted earnings per share attributable to IHS Markit Ltd.
$
0.37

 
$
0.28

 
$
0.63

 
$
0.87

Weighted average shares used in computing diluted earnings per share
409.3

 
403.6

 
408.7

 
407.9


See accompanying notes.


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IHS MARKIT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In millions)

 
 
Three months ended May 31,
 
Six months ended May 31,
 
 
2019
 
2018
 
2019
 
2018
Net income
 
$
148.9

 
$
114.2

 
$
257.9

 
$
354.9

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
Net hedging activities (1)
 
(1.9
)
 
1.0

 
(3.4
)
 
5.8

Foreign currency translation adjustment
 
(175.7
)
 
(114.9
)
 
(40.0
)
 
(58.5
)
Total other comprehensive income
 
(177.6
)
 
(113.9
)
 
(43.4
)
 
(52.7
)
Comprehensive income (loss)
 
$
(28.7
)
 
$
0.3

 
$
214.5

 
$
302.2

Comprehensive loss attributable to noncontrolling interest
 
0.9

 
0.5

 
1.6

 
1.1

Comprehensive income (loss) attributable to IHS Markit Ltd.
 
$
(27.8
)
 
$
0.8

 
$
216.1

 
$
303.3

(1) Net of tax benefit (expense) of $0.4 million; $(0.2) million; $0.8 million, and $(1.3) million for the three and six months ended May 31, 2019 and 2018, respectively.


See accompanying notes.

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IHS MARKIT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
 
 
Six months ended May 31,
 
2019
 
2018
Operating activities:

 

Net income
$
257.9

 
$
354.9

Reconciliation of net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
286.3

 
261.6

Stock-based compensation expense
113.3

 
119.6

Net periodic pension and postretirement expense
0.5

 
0.5

Undistributed earnings of affiliates, net
0.2

 

Pension and postretirement contributions
(0.9
)
 
(1.3
)
Deferred income taxes
(43.4
)
 
(184.2
)
Change in assets and liabilities:
 
 
 
Accounts receivable, net
(27.6
)
 
(47.7
)
Other current assets
(54.0
)
 
(16.7
)
Accounts payable
(11.1
)
 
(10.5
)
Accrued expenses
(58.3
)
 
(38.8
)
Income tax
32.0

 
18.1

Deferred revenue
88.6

 
91.0

Other liabilities
29.2

 
39.1

Net cash provided by operating activities
612.7

 
585.6

Investing activities:

 

Capital expenditures on property and equipment
(129.9
)
 
(114.7
)
Acquisitions of businesses, net of cash acquired
(32.6
)
 
(8.8
)
Change in other assets
(7.4
)
 
(7.9
)
Settlements of forward contracts
(2.2
)
 
(2.0
)
Net cash used in investing activities
(172.1
)
 
(133.4
)
Financing activities:

 

Proceeds from borrowings
1,339.2

 
1,427.6

Repayment of borrowings
(1,762.9
)
 
(1,159.9
)
Payment of debt issuance costs
(8.9
)
 
(14.6
)
Payments for purchase of noncontrolling interests

 
(7.7
)
Proceeds from noncontrolling interests
12.5

 

Contingent consideration payments
(2.2
)
 

Proceeds from the exercise of employee stock options
57.6

 
111.9

Payments related to tax withholding for stock-based compensation
(62.7
)
 
(79.1
)
Repurchases of common shares

 
(672.5
)
Net cash used in financing activities
(427.4
)
 
(394.3
)
Foreign exchange impact on cash balance
(23.7
)
 
(32.7
)
Net (decrease) increase in cash and cash equivalents
(10.5
)
 
25.2

Cash and cash equivalents at the beginning of the period
120.0

 
133.8

Cash and cash equivalents at the end of the period
$
109.5

 
$
159.0


See accompanying notes.

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IHS MARKIT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(In millions)


 
Common Shares
 
Additional
Paid-In
Capital
 
 
 
 
 
Accumulated Other
Comprehensive
Loss
 
Total Shareholders’ Equity
 
 
Redeemable Noncontrolling Interests
 
Shares Outstanding
 
Amount
 
 
Treasury
Shares
 
Retained
Earnings
 
 
 
 
Balance at November 30, 2017 (Audited)
399.2

 
$
4.7

 
$
7,612.1

 
$
(1,745.0
)
 
$
2,217.6

 
$
(85.0
)
 
$
8,004.4

 
 
$
19.1

Repurchases of common shares
(3.9
)
 
 
 
 
 
(172.5
)
 
 
 
 
 
(172.5
)
 
 
 
Share-based award activity
2.1

 
 
 
(56.8
)
 
28.2

 
 
 
 
 
(28.6
)
 
 
 
Option exercises
2.4

 
 
 
56.5

 
 
 
 
 
 
 
56.5

 
 
 
Net income (loss)
 
 
 
 
 
 
 
 
241.3

 
 
 
241.3

 
 
(0.6
)
Impact of the Tax Cuts and Jobs Act of 2017
 
 
 
 
 
 
 
 
5.9

 
(5.9
)
 

 
 
 
Purchase of noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 

 
 
(10.1
)
Other comprehensive income
 
 
 
 
 
 
 
 
 
 
61.2

 
61.2

 
 
 
Balance at February 28, 2018
399.8


4.7


7,611.8


(1,889.3
)

2,464.8


(29.7
)

8,162.3



8.4

Repurchases of common shares
(10.3
)
 

 

 
(500.0
)
 

 

 
(500.0
)
 
 

Share-based award activity

 

 
(49.1
)
 
100.1

 

 

 
51.0

 
 

Option exercises
2.5

 

 
54.6

 

 

 

 
54.6

 
 

Net income (loss)

 

 

 

 
114.7

 

 
114.7

 
 
(0.5
)
Other comprehensive income

 

 

 

 

 
(113.9
)
 
(113.9
)
 
 

Balance at May 31, 2018
392.0

 
$
4.7

 
$
7,617.3

 
$
(2,289.2
)
 
$
2,579.5

 
$
(143.6
)
 
$
7,768.7

 
 
$
7.9




 
Common Shares
 
Additional
Paid-In
Capital
 
 
 
 
 
Accumulated Other
Comprehensive
Loss
 
Total Shareholders’ Equity
 
 
Redeemable Noncontrolling Interests
 
Shares Outstanding
 
Amount
 
 
Treasury
Shares
 
Retained
Earnings
 
 
 
 
Balance at November 30, 2018 (Audited)
397.1

 
$
4.7

 
$
7,680.4

 
$
(2,108.8
)
 
$
2,743.1

 
$
(298.9
)
 
$
8,020.5

 
 
$
5.9

Adjustment to opening retained earnings related to adoption of ASC Topic 606
 
 
 
 
 
 
 
 
56.0

 
 
 
56.0

 
 
 
Share-based award activity
1.7

 
0.1

 
8.5

 
(18.0
)
 
(2.4
)
 
 
 
(11.8
)
 
 
 
Option exercises
0.9

 
 
 
23.7

 
 
 
 
 
 
 
23.7

 
 
 
Net income (loss)
 
 
 
 
 
 
 
 
109.7

 
 
 
109.7

 
 
(0.7
)
Issuance of noncontrolling interests
 
 
 
 
 
 
 
 
 
 
 
 

 
 
12.5

Other comprehensive income
 
 
 
 
 
 
 
 
 
 
134.2

 
134.2

 
 
 
Balance at February 28, 2019
399.7


4.8


7,712.6


(2,126.8
)

2,906.4


(164.7
)

8,332.3



17.7

Share-based award activity
0.2

 

 
0.5

 
50.5

 
(1.4
)
 

 
49.6

 
 

Option exercises
1.2

 

 
32.3

 

 

 

 
32.3

 
 

Net income (loss)

 

 

 

 
149.8

 

 
149.8

 
 
(0.9
)
Other comprehensive income

 

 

 

 

 
(177.6
)
 
(177.6
)
 
 

Balance at May 31, 2019
401.1

 
$
4.8

 
$
7,745.4

 
$
(2,076.3
)
 
$
3,054.8

 
$
(342.3
)
 
$
8,386.4

 
 
$
16.8


See accompanying notes.


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IHS MARKIT LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.
Basis of Presentation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements of IHS Markit have been prepared on substantially the same basis as our annual consolidated financial statements and should be read in conjunction with our Annual Report on Form 10-K for the year ended November 30, 2018. In our opinion, these condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented, and such adjustments are of a normal, recurring nature.

Our business has seasonal aspects. Our first quarter generally has our lowest quarterly levels of revenue and profit. We also experience event-driven seasonality in our business; for instance, CERAWeek, an annual energy conference, is typically held in the second quarter of each year. Another example is the biennial release of the Boiler Pressure Vessel Code (“BPVC”) engineering standard, which generates revenue for us predominantly in the third quarter of every other year. The most recent BPVC release was in the third quarter of 2017.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, which establishes a comprehensive new revenue recognition model designed to depict the transfer of goods or services to a customer in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. In March, April, and May 2016, the FASB issued ASU 2016-08, ASU 2016-10, and ASU 2016-12, respectively, which provide further revenue recognition guidance related to principal versus agent considerations, performance obligations and licensing, and narrow-scope improvements and practical expedients. These standards have all been codified in the FASB’s Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers.”

On December 1, 2018, we adopted ASC Topic 606 using the modified retrospective transition method applied to our customer revenue contracts as of the adoption date. Revenue results for periods beginning after December 1, 2018 are presented in accordance with ASC Topic 606, while prior year amounts continue to be reported in accordance with ASC Topic 605, “Revenue Recognition.”

The following table shows the cumulative effect of the changes made to the December 1, 2018 consolidated balance sheet for the adoption of ASC Topic 606 related to contracts that were in effect at the time of adoption (in millions):
 
November 30, 2018
 
Adjustments due to adoption of ASC Topic 606
 
December 1, 2018
Accounts receivable, net
$
792.9

 
$
29.8

 
$
822.7

Other current assets
88.4

 
4.2

 
92.6

Other non-current assets
47.9

 
9.5

 
57.4

Deferred revenue
886.8

 
(28.8
)
 
858.0

Deferred income taxes
699.9

 
16.3

 
716.2

Retained earnings
2,743.1

 
56.0

 
2,799.1


The net cumulative effect adjustment to retained earnings was primarily related to (1) the change in accounting for the license rights associated with certain term-based software license arrangements, which were historically recognized over the term of the contract, but are now recognized at contract inception based on estimated stand-alone selling price, and (2) the change in accounting for commission costs incurred to obtain a portion of our contracts, which costs were historically expensed as incurred, but are now deferred at contract inception and recognized over the expected customer life.

For the three and six months ended May 31, 2019, the adoption of ASC Topic 606 did not result in a material difference between what we reported under ASC Topic 606 and what we would have reported under ASC Topic 605.


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We disaggregate our revenue by segment (as described in Note 12) and by transaction type according to the following categories:

Recurring fixed revenue represents revenue generated from contracts specifying a relatively fixed fee for services delivered over the life of the contract. The fixed fee is typically paid annually or more periodically in advance. These contracts typically consist of subscriptions to our various information offerings and software maintenance, which provide continuous access to our platforms and associated data over the contract term. The revenue is usually recognized ratably over the contract term or for term-based software license arrangements, annually on renewal. The initial term of these contracts is typically annual (with some longer-term arrangements) and non-cancellable for the term of the subscription and may contain provisions for minimum monthly payments.

Recurring variable revenue represents revenue from contracts that specify a fee for services, which is typically not fixed. The variable fee is usually paid monthly in arrears. Recurring variable revenue is based on, among other factors, the number of trades processed, assets under management, or the number of positions we value, and revenue is recognized based on the specific factor used (e.g., for usage-based contracts, we recognize revenue in line with usage in the period). Many of these contracts do not have a maturity date, while the remainder have an initial term ranging from one to five years. Recurring variable revenue was derived entirely from the Financial Services segment for all periods presented.

Non-recurring revenue represents consulting (e.g., research and analysis, modeling, and forecasting), services, single-document product sales, perpetual license sales and associated services, conferences and events, and advertising. Revenue for services and other non-recurring revenue is recognized upon completion of the associated performance obligation.

The following table presents our revenue by transaction type (in millions):
 
Three months ended May 31,
 
Six months ended May 31,
 
2019
 
2018
 
2019
 
2018
Recurring fixed revenue
$
785.2

 
$
698.1

 
$
1,552.4

 
$
1,381.4

Recurring variable revenue
145.0

 
125.9

 
281.0

 
243.0

Non-recurring revenue
205.3

 
184.3

 
348.5

 
316.0

Total revenue
$
1,135.5

 
$
1,008.3

 
$
2,181.9

 
$
1,940.4


Our customer contracts may include multiple performance obligations; for example, we typically sell software licenses with maintenance and other associated services. For these transactions, we recognize revenue based on the relative fair value to the customer of each performance obligation as each performance obligation is completed.

We record a receivable when a customer is billed or when revenue is recognized prior to billing a customer. Contract assets include unbilled amounts for multi-year customer contracts where payment is not yet due and where services have been provided up-front but have not yet been billed. Contract assets were approximately $39.2 million as of May 31, 2019 and $29.8 million as of December 1, 2018, and are recorded in accounts receivable, net, in the consolidated balance sheets.

Contract liabilities primarily include our obligations to transfer goods or services for which we have received consideration (or an amount of consideration is due) from the customer. As of May 31, 2019 and December 1, 2018, we had contract liabilities of $938.7 million and $858.0 million, respectively, which are recorded as deferred revenue in the consolidated balance sheets. The increase in contract liabilities from December 1, 2018 to May 31, 2019 was primarily due to billings of $1,797.5 million that were paid in advance or due from customers, partially offset by $1,694.8 million of revenue recognized for the six months ended May 31, 2019 and the reclassification of $22.0 million of deferred revenue to liabilities held for sale.

We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to exceed one year. Certain sales commission programs are designed to promote the sale of products and services to new customers, and we therefore defer the incremental costs related to these programs over the expected customer life related to those products underlying the contracts. We record these expenses as selling, general and administrative expense within the consolidated statements of operations.


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Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, which requires that lease assets and lease liabilities be recognized on the balance sheet, and that key information about leasing arrangements be disclosed. In July 2018, the FASB issued ASU 2018-11, which provides targeted improvements to ASU 2016-02 by providing an additional optional transition method and a lessor practical expedient for lease and nonlease components. The standard will be effective for us in the first quarter of our fiscal year 2020, although early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements, but believe that the most significant impact of adoption will be the recognition of right-of-use assets and lease liabilities associated with our operating leases.

In June 2016, the FASB issued ASU No. 2016-13, which replaces the existing incurred loss impairment model with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The standard will be effective for us in the first quarter of our fiscal year 2021. We do not expect that the adoption of this ASU will have a significant impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, which removes Step 2 from the goodwill impairment test. The standard will be effective for us in the first quarter of our fiscal 2021, although early adoption is permitted. We do not expect that the adoption of this ASU will have a significant impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, which addresses the accounting for implementation costs associated with a hosted service. The standard provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. The standard will be effective for us in the first quarter of our fiscal 2021, although early adoption is permitted. The amendments will be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We do not expect that the adoption of this ASU will have a significant impact on our consolidated financial statements.

2.
Business Combinations and Divestitures

In May 2019, we announced transactions that will result in the exchange of the majority of our Technology, Media, and Telecom (“TMT”) market intelligence assets within our CMS segment for Informa’s Agribusiness Intelligence group. The agreements value the two businesses at equivalent EBITDA multiples, with Informa contributing an additional $30 million cash to IHS Markit to reflect the larger EBITDA contribution from the TMT market intelligence assets. Both transactions are expected to close in the third quarter of 2019, subject to customary closing conditions. We expect that the Agribusiness Intelligence group will strengthen our Resources core end-market by building on our existing data, pricing, insights, forecasting, and news services within our chemical and downstream product offerings, and will expand our capability into fertilizers and chemical crop protection while expanding our capabilities in biofuels.

As a result of the anticipated transactions, we have classified the relevant TMT intelligence assets and liabilities as held for sale as of May 31, 2019, as further quantified in the table below (in millions):
Accounts receivable
$
12.4

Intangible assets
14.2

Goodwill
37.0

Assets held for sale
$
63.6

Current liabilities
$
0.6

Deferred revenue
22.0

Deferred income taxes
2.6

Liabilities held for sale
$
25.2


3.
Intangible Assets

The following table presents details of our intangible assets, other than goodwill, as of May 31, 2019 and November 30, 2018 (in millions): 

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As of May 31, 2019
 
As of November 30, 2018
 
Gross
 
Accumulated
Amortization
 
Net
 
Gross
 
Accumulated
Amortization
 
Net
Intangible assets subject to amortization:
 
 
 
 
 
 
 
 
 
 
 
Information databases
$
625.4

 
$
(317.8
)
 
$
307.6

 
$
671.0

 
$
(329.6
)
 
$
341.4

Customer relationships
3,427.4

 
(553.0
)
 
2,874.4

 
3,458.8

 
(473.3
)
 
2,985.5

Developed technology
925.8

 
(169.5
)
 
756.3

 
928.8

 
(133.1
)
 
795.7

Developed computer software
84.8

 
(67.3
)
 
17.5

 
85.0

 
(63.0
)
 
22.0

Trademarks
492.3

 
(180.6
)
 
311.7

 
493.8

 
(153.6
)
 
340.2

Other
1.1

 
(1.1
)
 

 
1.1

 
(1.1
)
 

Total intangible assets
$
5,556.8

 
$
(1,289.3
)
 
$
4,267.5

 
$
5,638.5

 
$
(1,153.7
)
 
$
4,484.8


Intangible assets amortization expense was $94.6 million and $190.3 million for the three and six months ended May 31, 2019, respectively, compared to $88.6 million and $177.6 million for the three and six months ended May 31, 2018, respectively. The following table presents the estimated future amortization expense related to intangible assets held as of May 31, 2019 (in millions):
Year
 
Amount
Remainder of 2019
 
$
184.0

2020
 
$
364.5

2021
 
$
359.7

2022
 
$
341.6

2023
 
$
331.1

Thereafter
 
$
2,686.6

Goodwill, gross intangible assets, and net intangible assets are all subject to foreign currency translation effects. The change in net intangible assets from November 30, 2018 to May 31, 2019 was due to current year amortization and the reclassification of the TMT market intelligence intangible assets to assets held for sale.


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4.
Debt

The following table summarizes total indebtedness, including unamortized premiums, as of May 31, 2019 and November 30, 2018 (in millions):
 
 
May 31, 2019
 
November 30, 2018
2018 revolving facility
 
$
995.0

 
$
1,108.0

2018 term loan:
 
 
 
 
Tranche A-1
 

 
574.0

Tranche A-2
 

 
481.3

364-day credit agreement
 

 
250.0

5.00% senior notes due 2022
 
750.0

 
750.0

4.125% senior notes due 2023
 
498.8

 
498.6

3.625% senior notes due 2024
 
398.8

 

4.75% senior notes due 2025
 
812.8

 
813.8

4.00% senior notes due 2026
 
500.0

 
500.0

4.75% senior notes due 2028
 
747.4

 
747.3

4.25% senior notes due 2029
 
596.6

 

Debt issuance costs
 
(49.0
)
 
(51.2
)
Capital leases
 
7.4

 
7.3

Total debt
 
$
5,257.8

 
$
5,679.1

Current portion
 
(364.3
)
 
(789.9
)
Total long-term debt
 
$
4,893.5

 
$
4,889.2


2018 revolving facility. On June 25, 2018, we entered into a $2.0 billion senior unsecured revolving credit agreement (“2018 revolving facility”). Borrowings under the 2018 revolving facility mature in June 2023. The interest rates for borrowings under the 2018 revolving facility are the applicable LIBOR plus a spread of 1.00 percent to 1.75 percent, depending upon our credit rating. A commitment fee on any unused balance is payable periodically and ranges from 0.125 percent to 0.30 percent based upon our credit rating. The obligations under the 2018 revolving facility are not guaranteed by any of our subsidiaries. We had approximately $1.3 million of outstanding letters of credit under the 2018 revolving facility as of May 31, 2019, which reduced the available borrowing under the facility by an equivalent amount.

Subject to certain conditions, the 2018 revolving facility may be expanded by up to an aggregate of $1.0 billion in additional commitments. The 2018 revolving facility has certain financial and other covenants, including a maximum Leverage Ratio and a minimum Interest Coverage Ratio, which is defined as the ratio of Consolidated EBITDA to Consolidated Interest Expense, as such terms are defined in the agreement.

2018 term loan. Coincident with entering into the 2018 revolving facility, we entered into a senior unsecured amortizing term loan agreement (“2018 term loan”). The 2018 term loan had a final maturity date of July 2021, but we repaid both tranches of the 2018 term loan in April 2019 using proceeds from our April 2019 debt offering and borrowings under the 2018 revolving facility. The obligations under the 2018 term loan were not guaranteed by any of our subsidiaries. The interest rates for borrowings under the 2018 term loan were the same as those under the 2018 revolving facility.

364-Day Credit Agreement. On June 25, 2018, we entered into a 364-day Credit Agreement (the “364-Day Credit Agreement”) for a term loan credit facility in an aggregate principal amount of $1.855 billion, which became available to be borrowed upon the satisfaction of certain conditions precedent, including the concurrent completion of our acquisition of Ipreo. On August 2, 2018, concurrent with the completion of our acquisition of Ipreo, we borrowed $250.0 million under the 364-Day Credit Agreement. The unutilized balance of the commitment terminated upon completion of the acquisition. The interest rates for borrowings under the 364-Day Credit Agreement were the applicable LIBOR plus a spread of 1.00 percent to 1.75 percent, depending upon our credit rating. The spread over LIBOR was subject to a 0.25 percent step-up on the 180th day following the closing date of the agreement and a 0.50 percent step-up on the 270th day following the closing date. The obligations under the 364-Day Credit Agreement were not guaranteed by any of our subsidiaries. The 364-Day Credit Agreement had certain financial and other covenants that were consistent with the covenants contained in the 2018 revolving facility and the 2018 term loan, including a maximum Leverage Ratio and a minimum Interest Coverage Ratio, which was defined as the ratio of

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Consolidated EBITDA to Consolidated Interest Expense, as such terms were defined in the 364-Day Credit Agreement. On January 7, 2019, we repaid the 364-Day Credit Agreement using cash on hand and borrowings under the revolving credit facility.

As of May 31, 2019, we had approximately $995 million of outstanding borrowings under the 2018 revolving facility at a current weighted average annual interest rate of 3.91 percent, including the effect of the interest rate swaps described in Note 5.

5.00% senior notes due 2022 (“5% Notes due 2022”). In October 2014, IHS Inc. issued $750 million aggregate principal amount of senior unsecured notes due 2022 in an offering not subject to the registration requirements of the Securities Act of 1933, as amended (the Securities Act). In August 2015, we completed a registered exchange offer for the 5% Notes due 2022. In July 2016, in connection with the merger between IHS and Markit, we completed an exchange offer for $742.8 million of the outstanding 5% Notes due 2022 for an equal principal amount of new 5% senior unsecured notes issued by IHS Markit with the same maturity. Approximately $7.2 million of the 5% Notes due 2022 did not participate in the exchange offer. The new 5% Notes due 2022 are not, and will not be, registered under the Securities Act or the securities laws of any other jurisdiction. The new 5% Notes due 2022 have been admitted to the official list of The International Stock Exchange in the Channel Islands.

The 5% Notes due 2022 bear interest at a fixed rate of 5.00 percent and mature on November 1, 2022. Interest on the 5% Notes due 2022 is due semiannually on May 1 and November 1 of each year. We may redeem the 5% Notes due 2022 in whole or in part at a redemption price equal to 100 percent of the principal amount of the notes plus the Applicable Premium, as defined in the indenture governing the 5% Notes due 2022. Additionally, at the option of the holders of the notes, we may be required to purchase all or a portion of the notes upon occurrence of a Change of Control Triggering Event as defined in the indenture, at a price equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. The indenture contains covenants that limit our ability to, among other things, incur or create liens and enter into sale and leaseback transactions. In addition, the indenture contains a covenant that limits our ability to consolidate or merge with another entity or to sell all or substantially all of our assets to another entity. The indenture contains customary default provisions. In connection with the entry into the 2018 revolving facility and 2018 term loan, each guarantor of the 5% Notes due 2022 was released from its guarantees pursuant to the terms of the indenture under which such notes were issued. The fair value of the 5% Notes due 2022 as of May 31, 2019 was approximately $788.3 million.

4.125% senior notes due 2023 (“4.125% Notes due 2023”). In July 2018, we issued $500 million aggregate principal amount of senior unsecured notes due 2023 in a registered offering under the Securities Act. The 4.125% Notes due 2023 have been admitted for trading to the official list of The International Stock Exchange in the Channel Islands. The 4.125% Notes due 2023 bear interest at a fixed rate of 4.125 percent and mature on August 1, 2023. Interest on the 4.125% Notes due 2023 is due semiannually on February 1 and August 1 of each year. The notes were issued at a discount which represented a price to the public of 99.707 percent of the principal amount. We may redeem the 4.125% Notes due 2023 in whole or in part at a redemption price equal to 100 percent of the principal amount of the notes plus the applicable premium, as defined in the indenture governing the 4.125% Notes due 2023. Additionally, at the option of the holders of the notes, we may be required to purchase all or a portion of the notes upon occurrence of a change of control triggering event as defined in the indenture, at a price equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. The indenture contains covenants that limit our ability to, among other things, incur or create liens and enter into sale and leaseback transactions. In addition, the indenture contains a covenant that limits our ability to consolidate or merge with another entity or to sell all or substantially all of our assets to another entity. The indenture contains customary default provisions. The fair value of the 4.125% Notes due 2023 as of May 31, 2019 was approximately $518.9 million.

3.625% senior notes due 2024 (“3.625% Notes due 2024”). In April 2019, we issued $400 million aggregate principal amount of senior unsecured notes due 2023 in a registered offering under the Securities Act. The 3.625% Notes due 2024 have been admitted for trading to the official list of The International Stock Exchange in the Channel Islands. The 3.625% Notes due 2024 bear interest at a fixed rate of 3.625 percent and mature on May 1, 2024. Interest on the 3.625% Notes due 2024 is due semiannually on May 1 and November 1 of each year. The notes were issued at a discount which represented a price to the public of 99.686 percent of the principal amount. We may redeem the 3.625% Notes due 2024 in whole or in part at a redemption price equal to 100 percent of the principal amount of the notes plus the applicable premium, as defined in the indenture governing the 3.625% Notes due 2024. Additionally, at the option of the holders of the notes, we may be required to purchase all or a portion of the notes upon occurrence of a change of control triggering event as defined in the indenture, at a price equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. The indenture contains covenants that limit our ability to, among other things, incur or create liens and enter into sale and leaseback transactions. In addition, the indenture contains a covenant that limits our ability to consolidate or merge with another entity or to sell all or substantially all of our assets to another entity. The indenture contains customary default provisions. The fair value of the 3.625% Notes due 2024 as of May 31, 2019 was approximately $407.0 million.


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4.75% senior notes due 2025 (“4.75% Notes due 2025”). In February 2017, we issued $500 million aggregate principal amount of senior unsecured notes due 2025 in an offering not subject to the registration requirements of the Securities Act. In July 2017, we issued an additional $300 million aggregate principal amount of the 4.75% Notes due 2025 at a $16.5 million premium, resulting in an effective interest rate of 3.88 percent. The 4.75% Notes due 2025 have been admitted for trading to the official list of The International Stock Exchange in the Channel Islands. The 4.75% Notes due 2025 bear interest at a fixed rate of 4.75 percent and mature on February 15, 2025. Interest on the 4.75% Notes due 2025 is due semiannually on February 15 and August 15 of each year. We may redeem the 4.75% Notes due 2025 in whole or in part at a redemption price equal to 100 percent of the principal amount of the notes plus the Applicable Premium, as defined in the indenture governing the 4.75% Notes due 2025. Additionally, at the option of the holders of the notes, we may be required to purchase all or a portion of the notes upon occurrence of a Change of Control Triggering Event as defined in the indenture, at a price equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. The indenture contains covenants that limit our ability to, among other things, incur or create liens and enter into sale and leaseback transactions. In addition, the indenture contains a covenant that limits our ability to consolidate or merge with another entity or to sell all or substantially all of our assets to another entity. The indenture contains customary default provisions. In connection with the entry into the 2018 revolving facility and 2018 term loan, each guarantor of the 4.75% Notes due 2025 was released from its guarantees pursuant to the terms of the indenture under which such notes were issued. The fair value of the 4.75% Notes due 2025 as of May 31, 2019 was approximately $848.3 million.

4.00% senior notes due 2026 (“4% Notes due 2026”). In December 2017, we issued $500 million aggregate principal amount of senior unsecured notes due 2026 in an offering not subject to the registration requirements of the Securities Act. The 4% Notes due 2026 have been admitted for trading to the official list of The International Stock Exchange in the Channel Islands. The 4% Notes due 2026 bear interest at a fixed rate of 4.00 percent and mature on March 1, 2026. Interest on the 4% Notes due 2026 is due semiannually on March 1 and September 1 of each year. We may redeem the 4% Notes due 2026 in whole or in part at a redemption price equal to 100 percent of the principal amount of the notes plus the applicable premium, as defined in the indenture governing the 4% Notes due 2026. Additionally, at the option of the holders of the notes, we may be required to purchase all or a portion of the notes upon occurrence of a change of control triggering event as defined in the indenture, at a price equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. The indenture contains covenants that limit our ability to, among other things, incur or create liens and enter into sale and leaseback transactions. In addition, the indenture contains a covenant that limits our ability to consolidate or merge with another entity or to sell all or substantially all of our assets to another entity. The indenture contains customary default provisions. In connection with the entry into the 2018 revolving facility and 2018 term loan, each guarantor of the 4% Notes due 2026 was released from its guarantees pursuant to the terms of the indenture under which such notes were issued. The fair value of the 4% Notes due 2026 as of May 31, 2019 was approximately $504.0 million.

4.75% senior notes due 2028 (“4.75% Notes due 2028”). In July 2018, we issued $750 million aggregate principal amount of senior unsecured notes due 2028 in a registered offering under the Securities Act. The 4.75% Notes due 2028 have been admitted for trading to the official list of The International Stock Exchange in the Channel Islands. The 4.75% Notes due 2028 bear interest at a fixed rate of 4.75 percent and mature on August 1, 2028. Interest on the 4.75% Notes due 2028 is due semiannually on February 1 and August 1 of each year. The 4.75% Notes due 2028 were issued at a discount, which represented a price to the public of 99.628% of the principal amount. We may redeem the 4.75% Notes due 2028 in whole or in part at a redemption price equal to 100 percent of the principal amount of the notes plus the applicable premium, as defined in the indenture governing the 4.75% Notes due 2028. Additionally, at the option of the holders of the notes, we may be required to purchase all or a portion of the notes upon occurrence of a change of control triggering event as defined in the indenture, at a price equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. The indenture contains covenants that limit our ability to, among other things, incur or create liens and enter into sale and leaseback transactions. In addition, the indenture contains a covenant that limits our ability to consolidate or merge with another entity or to sell all or substantially all of our assets to another entity. The indenture contains customary default provisions. The fair value of the 4.75% Notes due 2028 as of May 31, 2019 was approximately $797.6 million.

4.25% senior notes due 2029 (“4.25% Notes due 2029”). In April 2019, we issued $600 million aggregate principal amount of senior unsecured notes due 2028 in a registered offering under the Securities Act. The 4.25% Notes due 2029 have been admitted for trading to the official list of The International Stock Exchange in the Channel Islands. The 4.25% Notes due 2029 bear interest at a fixed rate of 4.25 percent and mature on May 1, 2029. Interest on the 4.25% Notes due 2029 is due semiannually on May 1 and November 1 of each year. The 4.25% Notes due 2029 were issued at a discount, which represented a price to the public of 99.422 percent of the principal amount. We may redeem the 4.25% Notes due 2029 in whole or in part at a redemption price equal to 100 percent of the principal amount of the notes plus the applicable premium, as defined in the indenture governing the 4.25% Notes due 2029. Additionally, at the option of the holders of the notes, we may be required to purchase all or a portion of the notes upon occurrence of a change of control triggering event as defined in the indenture, at a price equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. The

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indenture contains covenants that limit our ability to, among other things, incur or create liens and enter into sale and leaseback transactions. In addition, the indenture contains a covenant that limits our ability to consolidate or merge with another entity or to sell all or substantially all of our assets to another entity. The indenture contains customary default provisions. The fair value of the 4.25% Notes due 2029 as of May 31, 2019 was approximately $612.5 million.

As of May 31, 2019, we were in compliance with all of our debt covenants. We have classified short-term debt based on scheduled loan payments and intended repayments on our revolving facility based on expected cash availability over the next 12 months.

The carrying values of our variable rate debt instruments approximate their fair value because of the variable interest rates associated with those instruments. The fair values of the senior notes were measured using observable inputs in markets that are not active; consequently, we have classified those notes within Level 2 of the fair value hierarchy.

5.
Derivatives

Our business is exposed to various market risks, including interest rate and foreign currency risks. We utilize derivative instruments to help us manage these risks. We do not hold or issue derivatives for speculative purposes.

Interest Rate Swaps

To mitigate interest rate exposure on our outstanding revolving facility debt, we utilize interest rate derivative contracts that effectively swap $400 million of floating rate debt at a 2.86 percent weighted-average fixed interest rate, plus the applicable spread on our floating rate debt. We entered into these swap contracts in November 2013 and January 2014, and the contracts expire between May and November 2020.

Because the terms of these swaps and the variable rate debt (as amended or extended over time) effectively coincide, we do not expect any ineffectiveness. We have designated and accounted for these instruments as cash flow hedges, with changes in fair value being deferred in AOCI in our consolidated balance sheets.

Foreign Currency Forwards

To mitigate foreign currency exposure, we utilize short-term foreign currency forward contracts that manage market risks associated with fluctuations in balances that are denominated in currencies other than the local functional currency. We account for these forward contracts at fair value and recognize the associated realized and unrealized gains and losses in other expense, net, since we have not designated these contracts as hedges for accounting purposes. The notional amount of these outstanding foreign currency forward contracts was $516.6 million and $500.1 million as of May 31, 2019 and November 30, 2018, respectively.

Fair Value of Derivatives

Since our derivative instruments are not listed on an exchange, we have evaluated fair value by reference to similar transactions in active markets; consequently, we have classified all of our derivative instruments within Level 2 of the fair value measurement hierarchy. As of May 31, 2019 and November 30, 2018, we had assets of $0.3 million and $0.2 million, respectively, which were classified within other current assets, and we had liabilities of $14.0 million and $1.6 million, respectively, which were classified within other accrued expenses and other liabilities.
 
6.
Acquisition-related Costs

During the six months ended May 31, 2019, we incurred approximately $44.2 million in costs associated with acquisitions and divestitures, of which $30.7 million was performance compensation expense related to the automotiveMastermind (“aM”) acquisition described below, and the remainder was associated with employee severance charges and retention costs, contract termination costs for facility consolidations, and legal and professional fees. Approximately $3.3 million of the total charge was allocated to shared services, with $30.7 million of the charge recorded in the Transportation segment, $9.1 million in the Financial Services segment, and the remainder in the Resources and CMS segments.

In September 2017, we acquired aM, a leading provider of predictive analytics and marketing automation software for the automotive industry. We purchased approximately 78 percent of aM at that time. In exchange for the remaining 22 percent of aM, we issued equity interests in aM’s immediate parent holding company to aM’s founders and certain employees. We will

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pay cash to acquire these interests over the next five years based on put/call provisions that tie the valuation to underlying adjusted EBITDA performance of aM. Since the purchase of the remaining 22 percent of the business requires continued service of the founders and employees, we are accounting for the arrangement as compensation expense that will be remeasured based on changes in the fair value of the equity interests; we have classified this expense as acquisition-related costs within the consolidated statements of operations and we have classified the associated accrued liability as other accrued expenses and other liabilities within the consolidated balance sheets. We currently estimate a compensation expense range of approximately $150 million to $175 million, to be recognized over a weighted-average recognition period of approximately 3.5 years.

The following table provides a reconciliation of the acquisition-related costs accrued liability, recorded in other accrued expenses and other liabilities, as of May 31, 2019 (in millions):
 
Employee
Severance and
Other
Termination
Benefits
 
Contract
Termination
Costs
 
Other
 
Total
Balance at November 30, 2018
$
2.5

 
$
16.8

 
$
68.7

 
$
88.0

Add: Costs incurred
3.5

 

 
41.2

 
44.7

Revision to prior estimates

 
(0.1
)
 
(0.4
)
 
(0.5
)
Less: Amount paid
(5.6
)
 
(6.6
)
 
(8.6
)
 
(20.8
)
Balance at May 31, 2019
$
0.4

 
$
10.1

 
$
100.9

 
$
111.4


As of May 31, 2019, the $111.4 million remaining liability was primarily in the Transportation segment, with the remainder in the Financial Services segment and in shared services. Approximately $94.7 million of the remaining liability is associated with the aM acquisition-related performance compensation liability. We expect that the significant majority of the remaining liability will be paid within the next 12 months.

7.
Stock-based Compensation

Stock-based compensation expense for the three and six months ended May 31, 2019 and May 31, 2018 was as follows (in millions):
 
Three months ended May 31,
 
Six months ended May 31,
 
2019
 
2018
 
2019
 
2018
Cost of revenue
$
15.6

 
$
16.7

 
$
32.9

 
$
34.7

Selling, general and administrative
38.0

 
41.0

 
80.4

 
84.9

Total stock-based compensation expense
$
53.6

 
$
57.7

 
$
113.3

 
$
119.6

No stock-based compensation cost was capitalized during the three and six months ended May 31, 2019 and May 31, 2018.
As of May 31, 2019, there was $277.7 million of unrecognized stock-based compensation cost, adjusted for estimated forfeitures, related to unvested stock-based awards that will be recognized over a weighted-average period of approximately 1.9 years. Total unrecognized stock-based compensation cost will be adjusted for future changes in estimated forfeitures and expected performance achievement.
Restricted Stock Units (RSUs) and Restricted Stock Awards (RSAs). The following table summarizes RSU/RSA activity, including awards with performance and market conditions, during the six months ended May 31, 2019:
 
Shares
 
Weighted-
Average Grant
Date Fair Value
 
(in millions)
 
 
Balance at November 30, 2018
8.8

 
$
41.77

Granted
3.0

 
$
52.74

Vested
(3.4
)
 
$
38.36

Forfeited
(0.3
)
 
$
47.08

Balance at May 31, 2019
8.1

 
$
47.13


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The total fair value of RSUs and RSAs that vested during the six months ended May 31, 2019 was $174.5 million.
Stock Options. The following table summarizes stock option award activity during the six months ended May 31, 2019, as well as stock options that are vested and expected to vest and stock options exercisable as of May 31, 2019:
 
Shares
 
Weighted-Average Exercise Price
 
Weighted-Average Remaining Contractual Term
 
Aggregate Intrinsic Value
 
(in millions)
 
 
 
(in years)
 
(in millions)
Balance at November 30, 2018
15.7

 
$
26.61

 
 
 
 
Exercised
(2.2
)
 
$
26.18

 
 
 
 
Forfeited

 
$

 
 
 
 
Balance at May 31, 2019
13.5

 
$
26.68

 
1.3
 
415.4

Vested and expected to vest at May 31, 2019
13.5

 
$
26.68

 
1.3
 
415.0

Exercisable at May 31, 2019
8.2

 
$
26.51

 
1.3
 
253.5

 
The aggregate intrinsic value amounts in the table above represent the difference between the closing price of our common shares on May 31, 2019 and the exercise price, multiplied by the number of in-the-money stock options as of that date. This represents the value that would have been received by stock option holders if they had all exercised their stock options on May 31, 2019. In future periods, this amount will change depending on fluctuations in our share price. The total intrinsic value of stock options exercised during the six months ended May 31, 2019 was approximately $59.7 million.

8.
Income Taxes

Our effective tax rate is estimated based upon the effective tax rate expected to be applicable for the full year.

Our effective tax rate for the three and six months ended May 31, 2019 was 14 percent and 8 percent, respectively, compared to 10 percent and negative 61 percent, respectively, for the three and six months ended May 31, 2018. The low 2019 tax rates are primarily due to tax benefits associated with excess tax benefits on stock-based compensation of approximately $6 million and $18 million, respectively, for the three and six months ended May 31, 2019, as well as a change in partnership basis related to intangible assets of approximately $7 million. The low or negative 2018 tax rates were primarily due to tax benefits associated with U.S. tax reform of approximately $136 million in the first quarter of 2018, and excess tax benefits on stock-based compensation of approximately $7 million and $31 million, respectively, for the three and six months ended May 31, 2018.

On June 14, 2019, the U.S. Treasury Department (“U.S. Treasury”) and the Internal Revenue Service (the “IRS”) released final temporary regulations related to the Tax Cuts and Jobs Act (the “Temporary Tax Regulations”). The Temporary Tax Regulations are effective retroactively to our 2018 tax year. We are evaluating the impact of the Temporary Tax Regulations and quantifying the amount of any additional one-time U.S. net tax liability related to the 2018 tax year.

9.
Commitments and Contingencies

From time to time, in the ordinary course of our business, we are involved in various legal, regulatory or administrative proceedings, lawsuits, government investigations, and other claims, including employment, commercial, intellectual property, and environmental, safety, and health matters. In addition, we may receive routine requests for information from governmental agencies in connection with their regulatory or investigatory authority or from private third parties pursuant to valid court orders or subpoenas. We review such proceedings, lawsuits, investigations, claims, and requests for information and take appropriate action as necessary. At the present time, we can give no assurance as to the outcome of any such pending proceedings, lawsuits, investigations, claims, or requests for information and we are unable to determine the ultimate resolution of or provide a reasonable estimate of the range of possible loss attributable to these matters or the effect they may have on us. However, we do not expect the outcome of such proceedings, lawsuits, claims, or requests for information to have a material adverse effect on our results of operations or financial condition. We have defended and will continue to vigorously defend ourselves in all matters.


18


10.
Common Shares and Earnings per Share
Weighted-average shares outstanding for the three and six months ended May 31, 2019 and May 31, 2018 were calculated as follows (in millions):
 
Three months ended May 31,
 
Six months ended May 31,
 
2019
 
2018
 
2019
 
2018
Weighted-average shares outstanding:
 
 
 
 
 
 
 
Shares used in basic EPS calculation
400.5

 
391.8

 
399.3

 
394.9

Effect of dilutive securities:
 
 
 
 
 
 
 
RSUs/RSAs
1.6

 
2.4

 
2.3

 
3.5

Stock options
7.2

 
9.4

 
7.1

 
9.5

Shares used in diluted EPS calculation
409.3

 
403.6

 
408.7

 
407.9


Share Repurchase Programs

Our Board of Directors has authorized a share repurchase program of up to $3.25 billion of IHS Markit common shares through November 30, 2019, to be funded using our existing cash, cash equivalents, marketable securities and future cash flows, or through the incurrence of short- or long-term indebtedness, at management’s discretion. This repurchase program does not obligate us to repurchase any set dollar amount or number of shares and may be modified, suspended, or terminated at any time without prior notice. Under this program, we are authorized to repurchase our common shares on the open market from time to time, in privately negotiated transactions, or through accelerated share repurchase (ASR) agreements, subject to availability of common shares, price, market conditions, alternative uses of capital, and applicable regulatory requirements, at management’s discretion. As of May 31, 2019, we had $1.007 billion remaining available to repurchase under the program.

In August 2016, our Board of Directors separately and additionally authorized, subject to applicable regulatory requirements, the repurchase of our common shares surrendered by employees in an amount equal to the exercise price, if applicable, and statutory tax liability associated with the vesting of their equity awards, for which we pay the statutory tax on behalf of the employee and forgo receipt of the exercise price of the award from the employee, if applicable.

Employee Benefit Trust (EBT) Shares

We have approximately 25.2 million outstanding common shares that are held by the Markit Group Holdings Limited Employee Benefit Trust. The trust is under our control using the variable interest entity model criteria; consequently, we have consolidated and classified the trust shares as treasury shares within our consolidated balance sheets.


19

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11.
Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in AOCI by component (net of tax) for the three and six months ended May 31, 2018 (in millions):

 
 
Foreign currency translation
 
Net pension and OPEB liability
 
Unrealized losses on hedging activities
 
Total
Balance at November 30, 2017
 
$
(68.1
)
 
$
(13.0
)
 
$
(3.9
)
 
$
(85.0
)
Other comprehensive income before reclassifications
 
56.4

 

 
3.6

 
60.0

Reclassifications from AOCI to income
 

 

 
1.2

 
1.2

Reclassifications from AOCI to retained earnings
 

 
(1.7
)
 
(4.2
)
 
(5.9
)
Balance at February 28, 2018
 
$
(11.7
)

$
(14.7
)

$
(3.3
)

$
(29.7
)
Other comprehensive (loss) income before reclassifications
 
(114.9
)
 

 
0.2

 
(114.7
)
Reclassifications from AOCI to income
 

 

 
0.8

 
0.8

Balance at May 31, 2018
 
$
(126.6
)

$
(14.7
)

$
(2.3
)

$
(143.6
)

The following table summarizes the changes in AOCI by component (net of tax) for the three and six months ended May 31, 2019 (in millions):

 
 
Foreign currency translation
 
Net pension and OPEB liability
 
Unrealized losses on hedging activities
 
Total
Balance at November 30, 2018
 
$
(288.5
)
 
$
(9.9
)
 
$
(0.5
)
 
$
(298.9
)
Other comprehensive income (loss) before reclassifications
 
135.7

 

 
(1.7
)
 
134.0

Reclassifications from AOCI to income
 

 

 
0.2

 
0.2

Balance at February 28, 2019
 
$
(152.8
)

$
(9.9
)

$
(2.0
)

$
(164.7
)
Other comprehensive loss
 
(175.7
)
 

 
(1.9
)
 
(177.6
)
Balance at May 31, 2019
 
$
(328.5
)

$
(9.9
)

$
(3.9
)

$
(342.3
)

12.
Segment Information

We prepare our financial reports and analyze our business results within our four operating segments: Resources, Transportation, CMS, and Financial Services. We evaluate revenue performance at the segment level and by transaction type. No single customer accounted for 10 percent or more of our total revenue for the three and six months ended May 31, 2019 and May 31, 2018. There are no material inter-segment revenues for any period presented. Our shared services function includes corporate transactions that are not allocated to the reportable segments, including net periodic pension and postretirement expense, as well as certain corporate functions such as investor relations, procurement, corporate development, and portions of finance, legal, and marketing.

We evaluate segment operating performance at the Adjusted EBITDA level for each of our four segments. We define Adjusted EBITDA as net income before net interest, provision for income taxes, depreciation and amortization, stock-based compensation expense, restructuring charges, acquisition-related costs and performance compensation, exceptional litigation, net other gains and losses, pension mark-to-market and settlement expense, the impact of joint ventures and noncontrolling interests, and discontinued operations. Information about the operations of our four segments is set forth below (in millions).

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Three months ended May 31,
 
Six months ended May 31,
 
2019
 
2018
 
2019
 
2018
Revenue
 
 
 
 
 
 
 
Resources
$
249.4

 
$
237.0

 
$
466.2

 
$
442.3

Transportation
318.6

 
296.3

 
606.7

 
565.9

CMS
134.6

 
138.9

 
266.9

 
276.5

Financial Services
432.9

 
336.1

 
842.1

 
655.7

Total revenue
$
1,135.5

 
$
1,008.3

 
$
2,181.9

 
$
1,940.4

 
 
 
 
 
 
 
 
Adjusted EBITDA
 
 
 
 
 
 
 
Resources
$
109.2

 
$
100.5

 
$
202.4

 
$
185.4

Transportation
136.6

 
124.7

 
250.9

 
234.4

CMS
29.3

 
29.9

 
58.7

 
61.7

Financial Services
205.6

 
155.8

 
388.8

 
301.2

Shared services
(15.7
)
 
(12.8
)
 
(27.7
)
 
(25.3
)
Total Adjusted EBITDA
$
465.0

 
$
398.1

 
$
873.1

 
$
757.4

 
 
 
 
 
 
 
 
Reconciliation to the consolidated statements of operations:
 
 
 
 
 
 
 
Interest income
0.6

 
0.9

 
1.0

 
1.6

Interest expense
(65.8
)
 
(55.3
)
 
(132.7
)
 
(101.6
)
(Provision) benefit for income taxes
(24.2
)
 
(12.0
)
 
(23.3
)
 
134.6

Depreciation
(49.4
)
 
(42.4
)
 
(96.0
)
 
(84.0
)
Amortization related to acquired intangible assets
(94.6
)
 
(88.6
)
 
(190.3
)
 
(177.6
)
Stock-based compensation expense
(53.6
)
 
(57.7
)
 
(113.3
)
 
(119.6
)
Restructuring charges
(1.7
)
 

 
(9.9
)
 

Acquisition-related costs
(6.0
)
 
(15.1
)
 
(13.5
)
 
(27.2
)
Acquisition-related performance compensation
(15.4
)
 
(10.7
)
 
(30.7
)
 
(25.6
)
Loss on debt extinguishment
(5.8
)
 
(3.0
)
 
(6.0
)
 
(3.0
)
Share of joint venture results not attributable to Adjusted EBITDA
(0.2
)
 

 
(0.3
)
 

Adjusted EBITDA attributable to noncontrolling interest
0.9

 
0.5

 
1.4

 
1.0

Net income attributable to IHS Markit Ltd.
$
149.8

 
$
114.7

 
$
259.5

 
$
356.0


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

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the financial condition and results of operations of IHS Markit Ltd. (“IHS Markit,” “we,” “us,” or “our”) as of and for the periods presented. The following discussion should be read in conjunction with our 2018 Annual Report on Form 10-K and the Condensed Consolidated Financial Statements and accompanying notes included in this Quarterly Report on Form 10-Q. References to 2019 are to our fiscal year 2019, which began on December 1, 2018 and ends on November 30, 2019.

Executive Summary

Business Overview

We are a world leader in critical information, analytics, and solutions for the major industries and markets that drive economies worldwide. We deliver next-generation information, analytics, and solutions to customers in business, finance, and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident

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decisions. We have more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, we are committed to sustainable, profitable growth.

To best serve our customers, we are organized into the following four industry-focused segments:

Resources, which includes our Energy and Chemicals product offerings;
Transportation, which includes our Automotive; Maritime & Trade; and Aerospace, Defense & Security product offerings;
Consolidated Markets & Solutions, which includes our Product Design; Technology, Media & Telecom (“TMT”); and Economics & Country Risk (“ECR”) product offerings; and
Financial Services, which includes our financial Information, Processing, and Solutions product offerings, as well as our product offerings from Ipreo, our recent acquisition.

We believe that this sales and operating model helps our customers do business with us by providing a cohesive, consistent, and effective product, sales, and marketing approach by segment.

Our recurring fixed revenue and recurring variable revenue represented approximately 84 percent of our total revenue for the six months ended May 31, 2019. Our recurring revenue is generally stable and predictable, and we have long-term relationships with many of our customers.

For 2019, we are focusing our efforts on the following actions:

Increase in geographic, product, and customer penetration. We believe that there are continued opportunities to add new customers and to increase the use of our products and services by existing customers. We plan to add new customers and build our relationships with existing customers by leveraging our existing sales channels, broad product portfolio, global footprint, and industry expertise to anticipate and respond to the changing demands of our end markets.

Introduce innovative offerings and enhancements. In recent years, we have launched several new product offerings addressing a wide array of customer needs, and we expect to continue to innovate using our existing data sets and industry expertise, converting core information to higher value advanced analytics. Our investment priorities are primarily in energy, automotive, and financial services, and we intend to continue to invest across our business to increase our customer value proposition.

Balance capital allocation. As part of our capital allocation focus for the majority of 2019, we continue to de-lever to our capital policy target leverage ratio of 2.0-3.0x. Over the long term, we expect to balance capital allocation between returning capital to shareholders (through consistent share repurchases) and completing mergers and acquisitions, focused primarily on targeted transactions in our core end markets that will allow us to continue to build out our strategic position. In May 2019, we announced transactions that will result in the exchange of the majority of our Technology, Media, and Telecom (“TMT”) market intelligence assets for Informa’s Agribusiness Intelligence group. The agreements value the two businesses at equivalent EBITDA multiples, with Informa contributing an additional $30 million cash to IHS Markit to reflect the larger EBITDA contribution from the TMT market intelligence assets. Both transactions are expected to close in the third quarter of 2019, subject to customary closing conditions. We expect that the Agribusiness Intelligence group will strengthen our Resources core end-market by building on our existing data, pricing, insights, forecasting, and news services within our chemical and downstream product offerings, and will expand our capability into fertilizers and chemical crop protection while expanding our capabilities in biofuels.

On June 19, 2019, we provided written notice to the Nasdaq Global Select Market (“Nasdaq”) that we intended to transfer the principal listing of our common shares from Nasdaq to the New York Stock Exchange (“NYSE”), where they have been authorized for listing. We expect to voluntarily withdraw the listing and trading of the common shares from Nasdaq effective as of the close of trading on July 1, 2019 and to commence trading on the NYSE the following business day, July 2, 2019. The common shares will continue to trade on the NYSE under our current ticker symbol “INFO.”

Key Performance Indicators

We believe that revenue growth, Adjusted EBITDA (both in dollars and margin), and free cash flow are key financial measures of our success. Adjusted EBITDA and free cash flow are financial measures that are not prepared in accordance with U.S. generally accepted accounting principles (“non-GAAP”).

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Table of Contents


Revenue growth. We review year-over-year revenue growth in our segments as a key measure of our success in addressing customer needs. We measure revenue growth in terms of organic, acquisitive, and foreign currency impacts. We define these components as follows:

Organic – We define organic revenue growth as total revenue growth from continuing operations for all factors other than acquisitions and foreign currency movements. We drive this type of revenue growth through value realization (pricing), expanding wallet share of existing customers through up-selling and cross-selling efforts, securing new customer business, and through the sale of new or enhanced product offerings.

Acquisitive – We define acquisitive revenue as the revenue generated from acquired products and services from the date of acquisition to the first anniversary date of that acquisition. This type of growth comes as a result of our strategy to purchase, integrate, and leverage the value of assets we acquire. We also include the impact of divestitures in this metric.

Foreign currency – We define the foreign currency impact on revenue as the difference between current revenue at current exchange rates and current revenue at the corresponding prior period exchange rates. Due to the significance of revenue transacted in foreign currencies, we believe that it is important to measure the impact of foreign currency movements on revenue.

In addition to measuring and reporting revenue by segment, we also measure and report revenue by transaction type. Understanding revenue by transaction type helps us identify and address broad changes in product mix. We summarize our transaction type revenue into the following three categories:

Recurring fixed revenue represents revenue generated from contracts specifying a relatively fixed fee for services delivered over the life of the contract. The fixed fee is typically paid annually or more periodically in advance. These contracts typically consist of subscriptions to our various information offerings and software maintenance, which provide continuous access to our platforms and associated data over the contract term. The revenue is usually recognized ratably over the contract term or for term-based software license arrangements, annually on renewal. The initial term of these contracts is typically annual and non-cancellable for the term of the subscription and may contain provisions for minimum monthly payments.

Recurring variable revenue represents revenue from contracts that specify a fee for services, which is typically not fixed. The variable fee is usually paid monthly in arrears. Recurring variable revenue is based on, among other factors, the number of trades processed, assets under management, or the number of positions we value. Many of these contracts do not have a maturity date, while the remainder have an initial term ranging from one to five years. Recurring variable revenue was derived entirely from the Financial Services segment for all periods presented.

Non-recurring revenue represents consulting (e.g., research and analysis, modeling, and forecasting), services, single-document product sales, perpetual license sales and associated services, conferences and events, and advertising. Our non-recurring products and services are an important part of our business because they complement our recurring business in creating strong and comprehensive customer relationships.

Non-GAAP measures. We use non-GAAP financial measures such as EBITDA, Adjusted EBITDA, and free cash flow in our operational and financial decision-making. We believe that such measures allow us to focus on what we deem to be more reliable indicators of ongoing operating performance (Adjusted EBITDA) and our ability to generate cash flow from operations (free cash flow). We also believe that investors may find these non-GAAP financial measures useful for the same reasons, although we caution readers that non-GAAP financial measures are not a substitute for U.S. GAAP financial measures or disclosures. None of these non-GAAP financial measures are recognized terms under U.S. GAAP and do not purport to be an alternative to net income or operating cash flow as an indicator of operating performance or any other U.S. GAAP measure. Throughout this MD&A, we provide reconciliations of these non-GAAP financial measures to the most directly comparable U.S. GAAP measures.

EBITDA and Adjusted EBITDA. EBITDA and Adjusted EBITDA are used by many of our investors, research analysts, investment bankers, and lenders to assess our operating performance. For example, a measure similar to Adjusted EBITDA is required by the lenders under our revolving credit agreement. We define EBITDA as net income plus or minus net interest, plus provision for income taxes, depreciation, and amortization. Our definition of Adjusted EBITDA further excludes primarily non-cash items and other items that we do not consider to be useful in assessing our operating performance (e.g., stock-based compensation expense, restructuring charges,

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acquisition-related costs and performance compensation, exceptional litigation, net other gains and losses, pension mark-to-market and other adjustments, the impact of joint ventures and noncontrolling interests, and discontinued operations).

Free Cash Flow. We define free cash flow as net cash provided by operating activities less capital expenditures.

Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe that the measures provide users with valuable insight into key components of U.S. GAAP financial disclosures. For example, a company with higher U.S. GAAP net income may not be as appealing to investors if its net income is more heavily comprised of gains on asset sales. Likewise, excluding the effects of interest income and expense moderates the impact of a company’s capital structure on its performance. However, non-GAAP measures have limitations as an analytical tool. Because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. They are not presentations made in accordance with U.S. GAAP, are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with U.S. GAAP or operating cash flows determined in accordance with U.S. GAAP. As a result, these performance measures should not be considered in isolation from, or as a substitute analysis for, results of operations as determined in accordance with U.S. GAAP.

Global Operations

Approximately 40 percent of our revenue is transacted outside of the United States; however, only about 20 percent of our revenue is transacted in currencies other than the U.S. dollar. As a result, a strengthening U.S. dollar relative to certain currencies has historically resulted in a negative impact on our revenue; conversely, a weakening U.S. dollar has historically resulted in a positive impact on our revenue. However, the impact on operating income is diminished due to certain operating expenses denominated in currencies other than the U.S. dollar. Our largest foreign currency exposures are the British Pound, Euro, Canadian Dollar, Singapore Dollar, and Indian Rupee.

Results of Operations

Total Revenue

Revenue for the three and six months ended May 31, 2019, increased 13 percent and 12 percent, respectively, compared to the three and six months ended May 31, 2018. The table below displays the percentage change in revenue due to organic, acquisitive, and foreign currency factors when comparing the three and six months ended May 31, 2019 to the three and six months ended May 31, 2018.
 
Change in Total Revenue
 
Organic
 
Acquisitive
 
Foreign
Currency
Second quarter 2019 vs. second quarter 2018
5
%
 
8
%
 
(1
)%
Year-to-date 2019 vs. year-to-date 2018
5
%
 
8
%
 
(1
)%

We saw solid organic revenue growth in our Transportation, Resources, and Financial Services segments for the three and six months ended May 31, 2019, compared to the three and six months ended May 31, 2018.

Acquisitive revenue growth for the three and six months ended May 31, 2019, compared to the three and six months ended May 31, 2018, was primarily due to the Ipreo acquisition in the third quarter of 2018.

Foreign currency had a negative effect on revenue growth for the three and six months ended May 31, 2019, compared to the three and six months ended May 31, 2018. Due to the extent of our global operations, foreign currency movements could continue to positively or negatively affect our results in the future.


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Table of Contents

Revenue by Segment
 
Three months ended May 31,
 
Percentage
Change
 
Six months ended May 31,
 
Percentage
Change
(In millions, except percentages)
2019
 
2018
 
 
2019
 
2018
 
Revenue:
 
 
 
 
 
 
 
 
 
 
 
Resources
$
249.4

 
$
237.0

 
5
 %
 
$
466.2

 
$
442.3

 
5
 %
Transportation
318.6

 
296.3

 
8
 %
 
606.7

 
565.9

 
7
 %
CMS
134.6

 
138.9

 
(3
)%
 
266.9

 
276.5

 
(3
)%
Financial Services
432.9

 
336.1

 
29
 %
 
842.1

 
655.7

 
28
 %
Total revenue
$
1,135.5

 
$
1,008.3

 
13
 %
 
$
2,181.9

 
$
1,940.4

 
12
 %

The percentage change in revenue for each segment was due to the factors described in the following table.
 
Increase in revenue
 
Second quarter 2019 vs. second quarter 2018
 
Year-to-date 2019 vs. year-to-date 2018
 
Organic
 
Acquisitive
 
Foreign
Currency
 
Organic
 
Acquisitive
 
Foreign
Currency
Resources
6
 %
 
%
 
(1
)%
 
6
 %
 
%
 
(1
)%
Transportation
9
 %
 
%
 
(1
)%
 
8
 %
 
%
 
(1
)%
CMS
(2
)%
 
%
 
(1
)%
 
(2
)%
 
%
 
(1
)%
Financial Services
5
 %
 
25
%
 
(1
)%
 
5
 %
 
25
%
 
(1
)%

Resources revenue for the three and six months ended May 31, 2019, compared to the three and six months ended May 31, 2018, experienced positive organic revenue growth, with 4 percent and 5 percent recurring revenue growth, respectively, for the three and six months ended May 31, 2019, and 11 percent and 13 percent non-recurring revenue growth, respectively. Our Resources annual contract value (“ACV”), which represents the annualized value of recurring revenue contracts, grew at a 4 percent rate on a trailing annual basis, reflecting a stabilization of energy industry trends. Our nonrecurring revenue growth was led by another successful CERAWeek conference event in the second quarter of 2019.

Transportation revenue for the three and six months ended May 31, 2019, compared to the three and six months ended May 31, 2018, continued to experience strong organic growth, with 10 percent recurring revenue growth for both the three and six months ended May 31, 2019, and 6 percent and 5 percent non-recurring revenue growth, respectively, for the three and six months ended May 31, 2019. Our automotive product offerings continue to provide the largest contribution to the growth, as our diversification in used and new car product offerings continues to provide balanced opportunities for growth.

CMS revenue for the three and six months ended May 31, 2019, compared to the three and six months ended May 31, 2018, decreased 2 percent organically, primarily driven by the non-renewal of a contract in our TMT benchmarking product offerings.

Financial Services revenue for the three months ended May 31, 2019, compared to the three months ended May 31, 2018, increased primarily from strength across our Solutions product offerings, while Financial Services revenue for the six months ended May 31, 2019, compared to the six months ended May 31, 2018, increased due to strength in both Information and Solutions product offerings. Within our Information product offerings, revenue growth was led by our pricing and valuation services offerings, and within our Solutions product offerings, revenue growth was led by our managed loan services and analytics software offerings. Within our Processing product offerings, organic revenue growth declined due to market softness in loans primary issuance, partially offset by improvements in derivatives processing. Organic revenue growth in the second quarter benefited by approximately 2 percentage points as a result of the favorable in-quarter impact on our managed loan services software offerings as a result of the adoption of ASC Topic 606. The Ipreo acquisition in the third quarter of 2018 provided the acquisitive growth, with a rebound in second-quarter 2019 global capital markets activity providing sequentially stronger revenue compared to the first quarter of 2019. Ipreo’s Private Capital Markets product offerings continued their strong double-digit growth performance.


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Table of Contents

Revenue by Transaction Type
 
Three months ended May 31,
 
Percentage change
 
Six months ended May 31,
 
Percentage change
(in millions, except percentages)
2019
 
2018
 
Total
 
Organic
 
2019
 
2018
 
Total
 
Organic
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recurring fixed
$
785.2

 
$
698.1

 
12
%
 
5
%
 
$
1,552.4

 
$
1,381.4

 
12
%
 
5
%
Recurring variable
145.0

 
125.9

 
15
%
 
%
 
281.0

 
243.0

 
16
%
 
2
%
Non-recurring
205.3

 
184.3

 
11
%
 
9
%
 
348.5

 
316.0

 
10
%
 
8
%
Total revenue
$
1,135.5

 
$
1,008.3

 
13
%
 
5
%
 
$
2,181.9

 
$
1,940.4

 
12
%
 
5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As a percent of total revenue: