info-20210228
000159801411/302021Q1false00015980142020-12-012021-02-28xbrli:shares00015980142021-02-28iso4217:USD00015980142020-11-30iso4217:USDxbrli:shares00015980142019-12-012020-02-2900015980142019-11-3000015980142020-02-290001598014us-gaap:CommonStockMember2019-11-300001598014us-gaap:AdditionalPaidInCapitalMember2019-11-300001598014us-gaap:TreasuryStockMember2019-11-300001598014us-gaap:RetainedEarningsMember2019-11-300001598014us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-11-300001598014us-gaap:ParentMember2019-11-300001598014us-gaap:NoncontrollingInterestMember2019-11-300001598014us-gaap:CommonStockMember2019-12-012020-02-290001598014us-gaap:TreasuryStockMember2019-12-012020-02-290001598014us-gaap:ParentMember2019-12-012020-02-290001598014us-gaap:AdditionalPaidInCapitalMember2019-12-012020-02-290001598014us-gaap:RetainedEarningsMember2019-12-012020-02-290001598014us-gaap:NoncontrollingInterestMember2019-12-012020-02-290001598014us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-012020-02-290001598014us-gaap:CommonStockMember2020-02-290001598014us-gaap:AdditionalPaidInCapitalMember2020-02-290001598014us-gaap:TreasuryStockMember2020-02-290001598014us-gaap:RetainedEarningsMember2020-02-290001598014us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-02-290001598014us-gaap:ParentMember2020-02-290001598014us-gaap:NoncontrollingInterestMember2020-02-290001598014us-gaap:CommonStockMember2020-11-300001598014us-gaap:AdditionalPaidInCapitalMember2020-11-300001598014us-gaap:TreasuryStockMember2020-11-300001598014us-gaap:RetainedEarningsMember2020-11-300001598014us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-11-300001598014us-gaap:ParentMember2020-11-300001598014us-gaap:NoncontrollingInterestMember2020-11-300001598014us-gaap:CommonStockMember2020-12-012021-02-280001598014us-gaap:AdditionalPaidInCapitalMember2020-12-012021-02-280001598014us-gaap:TreasuryStockMember2020-12-012021-02-280001598014us-gaap:RetainedEarningsMember2020-12-012021-02-280001598014us-gaap:ParentMember2020-12-012021-02-280001598014us-gaap:NoncontrollingInterestMember2020-12-012021-02-280001598014us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-012021-02-280001598014us-gaap:CommonStockMember2021-02-280001598014us-gaap:AdditionalPaidInCapitalMember2021-02-280001598014us-gaap:TreasuryStockMember2021-02-280001598014us-gaap:RetainedEarningsMember2021-02-280001598014us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-02-280001598014us-gaap:ParentMember2021-02-280001598014us-gaap:NoncontrollingInterestMember2021-02-280001598014info:CMEJointVentureMember2021-02-28xbrli:pure0001598014info:GenIIMemberinfo:IHSMarkitMember2020-12-310001598014info:GenIIMember2020-12-012021-02-280001598014info:CappitechMember2020-12-012021-02-280001598014info:CappitechMember2021-02-280001598014info:AerospaceDefenseMember2019-12-020001598014info:AerospaceDefenseMember2019-12-012019-12-020001598014info:AutomotiveMastermindMemberinfo:AutomotiveMastermindMember2017-09-300001598014info:AutomotiveMastermindMember2019-11-300001598014srt:MinimumMemberinfo:AutomotiveMastermindMember2021-02-280001598014srt:MaximumMemberinfo:AutomotiveMastermindMember2021-02-280001598014info:AutomotiveMastermindMember2021-02-280001598014info:RecurringFixedRevenueMember2020-12-012021-02-280001598014info:RecurringFixedRevenueMember2019-12-012020-02-290001598014info:RecurringVariableRevenueMember2020-12-012021-02-280001598014info:RecurringVariableRevenueMember2019-12-012020-02-290001598014info:NonrecurringRevenueMember2020-12-012021-02-280001598014info:NonrecurringRevenueMember2019-12-012020-02-290001598014us-gaap:CustomerRelationshipsMember2021-02-280001598014us-gaap:CustomerRelationshipsMember2020-11-300001598014us-gaap:DevelopedTechnologyRightsMember2021-02-280001598014us-gaap:DevelopedTechnologyRightsMember2020-11-300001598014us-gaap:DatabasesMember2021-02-280001598014us-gaap:DatabasesMember2020-11-300001598014us-gaap:TrademarksAndTradeNamesMember2021-02-280001598014us-gaap:TrademarksAndTradeNamesMember2020-11-300001598014us-gaap:ComputerSoftwareIntangibleAssetMember2021-02-280001598014us-gaap:ComputerSoftwareIntangibleAssetMember2020-11-300001598014us-gaap:OtherIntangibleAssetsMember2021-02-280001598014us-gaap:OtherIntangibleAssetsMember2020-11-300001598014info:A2019revolvingcreditfacilityMember2021-02-280001598014info:A2019revolvingcreditfacilityMember2020-11-300001598014info:A2019CreditAgreementMember2021-02-280001598014info:A2019CreditAgreementMember2020-11-300001598014info:A5.00SeniorNotesdue2022Member2021-02-280001598014info:A5.00SeniorNotesdue2022Member2020-11-300001598014info:A4.125SeniorNotesDue2023Member2021-02-280001598014info:A4.125SeniorNotesDue2023Member2020-11-300001598014info:A3.625SeniorNotesDue2024Member2021-02-280001598014info:A3.625SeniorNotesDue2024Member2020-11-300001598014info:A4.75SeniorNotesDue2025Member2021-02-280001598014info:A4.75SeniorNotesDue2025Member2020-11-300001598014info:A4.00SeniorNotesDue2026Member2021-02-280001598014info:A4.00SeniorNotesDue2026Member2020-11-300001598014info:A4.75SeniorNotesDue2028Member2021-02-280001598014info:A4.75SeniorNotesDue2028Member2020-11-300001598014info:A4.25SeniorNotesDue2029Member2021-02-280001598014info:A4.25SeniorNotesDue2029Member2020-11-300001598014info:A2019revolvingcreditfacilityMember2019-11-290001598014us-gaap:LondonInterbankOfferedRateLIBORMemberinfo:A2019revolvingcreditfacilityMembersrt:MinimumMember2019-11-292019-11-290001598014us-gaap:LondonInterbankOfferedRateLIBORMemberinfo:A2019revolvingcreditfacilityMembersrt:MaximumMember2019-11-292019-11-290001598014info:A2019revolvingcreditfacilityMembersrt:MinimumMember2019-11-292019-11-290001598014info:A2019revolvingcreditfacilityMembersrt:MaximumMember2019-11-292019-11-290001598014info:A2019CreditAgreementMember2019-09-300001598014us-gaap:LondonInterbankOfferedRateLIBORMemberinfo:A2019CreditAgreementMember2020-04-012020-04-300001598014us-gaap:NondesignatedMember2021-02-280001598014us-gaap:NondesignatedMember2020-11-300001598014us-gaap:EmployeeSeveranceMember2020-11-300001598014us-gaap:ContractTerminationMember2020-11-300001598014us-gaap:EmployeeSeveranceMember2020-12-012021-02-280001598014us-gaap:ContractTerminationMember2020-12-012021-02-280001598014us-gaap:EmployeeSeveranceMember2021-02-280001598014us-gaap:ContractTerminationMember2021-02-280001598014info:ResourcesSegmentMember2021-02-280001598014info:TransportationSegmentMember2021-02-280001598014info:SharedServicesSegmentMember2021-02-280001598014info:FinancialServicesSegmentMember2021-02-280001598014info:AcquisitionRelatedContractTerminationMember2020-11-300001598014info:OtherAcquisitionRelatedCostsMember2020-11-300001598014info:TotalAmountMember2020-11-300001598014info:AcquisitionRelatedContractTerminationMember2020-12-012021-02-280001598014info:OtherAcquisitionRelatedCostsMember2020-12-012021-02-280001598014info:TotalAmountMember2020-12-012021-02-280001598014info:AcquisitionRelatedContractTerminationMember2021-02-280001598014info:OtherAcquisitionRelatedCostsMember2021-02-280001598014info:TotalAmountMember2021-02-280001598014info:TotalCostOfRevenueMember2020-12-012021-02-280001598014info:TotalCostOfRevenueMember2019-12-012020-02-290001598014info:SellingGeneralAndAdministrativeMember2020-12-012021-02-280001598014info:SellingGeneralAndAdministrativeMember2019-12-012020-02-290001598014us-gaap:RestrictedStockUnitsRSUMember2020-11-300001598014us-gaap:RestrictedStockUnitsRSUMember2020-12-012021-02-280001598014us-gaap:RestrictedStockUnitsRSUMember2021-02-2800015980142020-03-012020-05-310001598014info:StockrepurchaseprogramOctober2019Member2020-11-300001598014info:StockrepurchaseprogramOctober2019Member2021-02-2800015980142019-12-010001598014us-gaap:AccumulatedTranslationAdjustmentMember2019-11-300001598014us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-11-300001598014us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2019-11-300001598014us-gaap:AccumulatedTranslationAdjustmentMember2019-12-012020-02-290001598014us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2019-12-012020-02-290001598014us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2019-12-012020-02-290001598014us-gaap:AccumulatedTranslationAdjustmentMember2020-02-290001598014us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-02-290001598014us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2020-02-290001598014us-gaap:AccumulatedTranslationAdjustmentMember2020-11-300001598014us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-11-300001598014us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2020-11-300001598014us-gaap:AccumulatedTranslationAdjustmentMember2020-12-012021-02-280001598014us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2020-12-012021-02-280001598014us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2020-12-012021-02-280001598014us-gaap:AccumulatedTranslationAdjustmentMember2021-02-280001598014us-gaap:AccumulatedDefinedBenefitPlansAdjustmentMember2021-02-280001598014us-gaap:AccumulatedNetGainLossFromDesignatedOrQualifyingCashFlowHedgesMember2021-02-280001598014info:FinancialServicesSegmentMember2020-12-012021-02-280001598014info:FinancialServicesSegmentMember2019-12-012020-02-290001598014info:TransportationSegmentMember2020-12-012021-02-280001598014info:TransportationSegmentMember2019-12-012020-02-290001598014info:ResourcesSegmentMember2020-12-012021-02-280001598014info:ResourcesSegmentMember2019-12-012020-02-290001598014info:CMSSegmentMember2020-12-012021-02-280001598014info:CMSSegmentMember2019-12-012020-02-290001598014info:SharedServicesSegmentMember2020-12-012021-02-280001598014info:SharedServicesSegmentMember2019-12-012020-02-290001598014us-gaap:MaterialReconcilingItemsMember2020-12-012021-02-280001598014us-gaap:MaterialReconcilingItemsMember2019-12-012020-02-29
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ___________________________________________________
FORM 10-Q
  ___________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2021

OR
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) 
 ___________________________________________________
Bermuda001-3649598-1166311
(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 classTrading SymbolName of each exchange on which registered
Common Shares, $0.01 par value per shareINFONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No
Indicate by check mark whether the registrant has submitted electronically 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).     Yes      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.
 



Table of Contents

Large accelerated filer    ☒    Accelerated filer    
Non-accelerated filer    ☐    Smaller reporting company    
        Emerging growth company    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes    No
As of February 28, 2021, there were 398,524,763 Common Shares outstanding (excluding 25,219,470 outstanding common shares held by the Markit Group Holdings Limited Employee Benefit Trust).


Table of Contents
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: the completion of the merger with S&P Global Inc. (“S&P Global”) on anticipated terms and timing, including 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 the combined company’s operations and other conditions to the completion of the merger; the ability of S&P Global and IHS Markit to integrate the business successfully and to achieve anticipated synergies; potential litigation relating to the proposed transaction that could be instituted against S&P Global, IHS Markit or their respective directors; the risk that disruptions from the proposed transaction will harm S&P Global’s and IHS Markit’s business, including current plans and operations; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the merger; rating agency actions; potential business uncertainty, including changes to existing business relationships, during the pendency of the merger that could affect IHS Markit’s financial performance; certain restrictions during the pendency of the merger that may impact IHS Markit’s ability to pursue certain business opportunities or strategic transactions; 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, dividends, 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: operating in competitive markets, 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
2

Table of Contents
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 qualified personnel; our ability to satisfy our debt obligations and our other ongoing business obligations; the occurrence of any catastrophic events, including acts of terrorism or outbreak of war or hostilities; and risks related to public health and safety issues, including the COVID-19 pandemic, on our operations and the operations of our customers and suppliers. 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 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.
3

Table of Contents
PART I.   FINANCIAL INFORMATION
Item 1.Financial Statements
IHS MARKIT LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except par value)
As ofAs of
 February 28, 2021November 30, 2020
 (Unaudited)(Audited)
Assets
Current assets:
Cash and cash equivalents$172.0 $125.6 
Accounts receivable, net981.9 891.7 
Deferred subscription costs99.8 84.3 
Assets held for sale857.0  
Other current assets139.6 131.7 
Total current assets2,250.3 1,233.3 
Non-current assets:
Property and equipment, net673.8 724.8 
Operating lease right-of-use assets, net293.1 296.8 
Intangible assets, net3,456.9 3,846.1 
Goodwill9,715.0 9,908.7 
Deferred income taxes27.1 27.1 
Other253.4 98.4 
Total non-current assets14,419.3 14,901.9 
Total assets$16,669.6 $16,135.2 
Liabilities and equity
Current liabilities:
Short-term debt$478.1 $268.1 
Accounts payable31.0 48.2 
Accrued compensation95.9 206.1 
Other accrued expenses505.5 477.6 
Income tax payable39.0 29.1 
Deferred revenue1,049.8 886.2 
Operating lease liabilities62.0 63.5 
Liabilities held for sale99.8  
Total current liabilities2,361.1 1,978.8 
Long-term debt, net4,642.7 4,641.7 
Deferred income taxes492.6 543.4 
Operating lease liabilities293.0 297.7 
Other liabilities175.6 130.4 
Commitments and contingencies
Redeemable noncontrolling interests13.2 13.8 
Shareholders' equity:
Common shares, $0.01 par value, 3,000.0 authorized, 483.5 and 480.4 issued, and 398.5 and 396.5 outstanding at February 28, 2021 and November 30, 2020, respectively
4.8 4.8 
Additional paid-in capital7,870.8 7,830.2 
Treasury shares, at cost: 85.0 and 83.9 at February 28, 2021 and November 30, 2020, respectively
(3,140.6)(3,039.8)
Retained earnings3,910.6 3,842.1 
Accumulated other comprehensive income (loss)45.8 (107.9)
Total shareholders' equity8,691.4 8,529.4 
Total liabilities and equity$16,669.6 $16,135.2 
See accompanying notes.

4

Table of Contents
IHS MARKIT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except for per-share amounts)
 
 Three months ended February 28/29,
 20212020
Revenue$1,119.9 $1,080.8 
Operating expenses:
Cost of revenue415.2 415.8 
Selling, general and administrative302.2 316.2 
Depreciation and amortization151.6 145.3 
Restructuring and impairment charges1.0 4.5 
Acquisition-related costs13.1 0.9 
Other expense (income), net3.4 (372.8)
Total operating expenses886.5 509.9 
Operating income233.4 570.9 
Interest income0.1 0.4 
Interest expense(55.5)(61.2)
Net periodic pension and postretirement expense (21.5)
Non-operating expense, net(55.4)(82.3)
Income from continuing operations before income taxes and equity in loss of equity method investees178.0 488.6 
Provision for income taxes(30.3)(4.3)
Equity in income (loss) of equity method investees1.0 (0.3)
Net income148.7 484.0 
Net loss attributable to noncontrolling interest0.6 1.0 
Net income attributable to IHS Markit Ltd.$149.3 $485.0 
Basic earnings per share attributable to IHS Markit Ltd.$0.38 $1.23 
Weighted average shares used in computing basic earnings per share397.4 395.7 
Diluted earnings per share attributable to IHS Markit Ltd.$0.37 $1.20 
Weighted average shares used in computing diluted earnings per share400.8 404.1 

See accompanying notes.

5

Table of Contents


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

 Three months ended February 28/29,
 20212020
Net income$148.7 $484.0 
Other comprehensive income (loss), net of tax:
Net hedging activities 0.1 
Net pension liability adjustment (1)
 4.9 
Foreign currency translation adjustment153.7 (35.6)
Total other comprehensive income (loss)153.7 (30.6)
Comprehensive income$302.4 $453.4 
Comprehensive loss attributable to noncontrolling interest0.6 1.0 
Comprehensive income attributable to IHS Markit Ltd.$303.0 $454.4 
(1) Net of tax expense of $2.1 million for the three months ended February 29, 2020.


See accompanying notes.
6

Table of Contents

IHS MARKIT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
 Three months ended February 28/29,
 20212020
Operating activities:
Net income$148.7 $484.0 
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization151.6 145.3 
Stock-based compensation expense65.8 82.6 
Gain on sale of assets, net(0.1)(372.3)
Impairment of assets1.3  
Payments for acquisition-related performance compensation (75.9)
Net periodic pension and postretirement expense 21.5 
Undistributed earnings of affiliates, net(1.0)0.2 
Pension and postretirement contributions (8.2)
Deferred income taxes7.3 15.1 
Change in assets and liabilities:
Accounts receivable, net(118.6)(89.8)
Other current assets(27.2)(41.0)
Accounts payable(11.8)(21.5)
Accrued expenses(139.1)(142.0)
Income tax11.7 (40.0)
Deferred revenue163.2 151.8 
Other assets and liabilities(7.3)9.7 
Net cash provided by operating activities244.5 119.5 
Investing activities:
Capital expenditures on property and equipment(72.6)(78.0)
Acquisitions of businesses, net of cash acquired(46.9) 
Payments to acquire equity investments(152.3)(3.6)
Proceeds from sale of assets 466.2 
Change in other assets(2.8)(0.1)
Settlements of forward contracts10.8 2.5 
Net cash (used in) provided by investing activities(263.8)387.0 
Financing activities:
Proceeds from borrowings260.0 293.8 
Repayment of borrowings(50.0)(209.1)
Contingent consideration payments(1.0) 
Dividends paid(79.3)(67.7)
Repurchases of common shares (500.0)
Proceeds from the exercise of employee stock options0.6 130.9 
Payments related to tax withholding for stock-based compensation(73.6)(110.0)
Net cash provided by (used in) financing activities56.7 (462.1)
Foreign exchange impact on cash balance9.0 (12.0)
Net increase in cash and cash equivalents46.4 32.4 
Cash and cash equivalents at the beginning of the period125.6 111.5 
Cash and cash equivalents at the end of the period$172.0 $143.9 

See accompanying notes.
7

Table of Contents
IHS MARKIT LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited, in millions)


Common SharesAdditional
Paid-In
Capital
Accumulated Other
Comprehensive
Loss
Total Shareholders’ EquityRedeemable Noncontrolling Interests
 Shares OutstandingAmountTreasury
Shares
Retained
Earnings
Balance at November 30, 2019 (Audited)398.3 $4.8 $7,769.4 $(2,391.8)$3,295.0 $(261.6)$8,415.8 $15.1 
Repurchases of common shares(6.5)— — (500.0)— — (500.0)— 
Share-based award activity2.2 — (175.8)134.3 $(21.6)— (63.1)— 
Option exercises4.9 — 130.9 — — — 130.9 — 
Dividends and dividend equivalents— — — — (69.0)— (69.0)— 
Net income (loss)— — — — 485.0 — 485.0 (1.0)
Other comprehensive loss— — — — — (30.6)(30.6)— 
Balance at February 29, 2020398.9 $4.8 $7,724.5 $(2,757.5)$3,689.4 $(292.2)$8,369.0 $14.1 


Common SharesAdditional
Paid-In
Capital
Accumulated Other
Comprehensive
Income (Loss)
Total Shareholders’ EquityRedeemable Noncontrolling Interests
 Shares OutstandingAmountTreasury
Shares
Retained
Earnings
Balance at November 30, 2020 (Audited)396.5 $4.8 $7,830.2 $(3,039.8)$3,842.1 $(107.9)$8,529.4 $13.8 
Share-based award activity2.0 — 40.0 (100.8)(0.1)— (60.9)— 
Option exercises — 0.6 — — — 0.6 — 
Dividends and dividend equivalents(80.7)(80.7)
Net income (loss)— — — — 149.3 — 149.3 (0.6)
Other comprehensive income— — — — — 153.7 153.7 — 
Balance at February 28, 2021398.5 $4.8 $7,870.8 $(3,140.6)$3,910.6 $45.8 $8,691.4 $13.2 

See accompanying notes.
8

Table of Contents
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, 2020. 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; however, this event was cancelled in 2020 due to the COVID-19 pandemic, and we held this conference virtually in March 2021. 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 2019.

The preparation of financial statements in conformity with U.S. GAAP requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well the reported amounts of revenue and expense during the reporting period. We have considered the impact of the COVID-19 pandemic in determining our estimates. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 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 adoption of this standard in the first quarter of 2021 did not 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 adoption of this standard in the first quarter of 2021 did not 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 adoption of this standard in the first quarter of 2021 did not have a significant impact on our consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, which enhances and simplifies various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. The standard will be effective for us in the first quarter of our fiscal year 2022, 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.

9

Table of Contents
2.Business Combinations and Divestitures

S&P Global Inc. On November 29, 2020, we, S&P Global Inc., a New York corporation (“S&P Global”), and Sapphire Subsidiary, Ltd., a Bermuda exempted company limited by shares and a wholly-owned subsidiary of S&P Global (“Merger Sub”), entered into an agreement and plan of merger, which was subsequently amended on January 20, 2021, pursuant to which Merger Sub will merge with and into IHS Markit, with IHS Markit surviving such merger as a wholly-owned, direct subsidiary of S&P Global (the “merger”). The merger intends to bring together a unique portfolio of highly complementary assets, as well as innovation and technology capability to accelerate growth and enhance value creation. At the completion of the merger, each IHS Markit share that is issued and outstanding (other than dissenting shares and shares held by IHS Markit in treasury) will be converted into the right to receive 0.2838 fully paid and nonassessable shares of S&P Global common stock, and, if applicable, cash in lieu of fractional shares, without interest, and less any applicable withholding taxes. If the merger is completed, IHS Markit shares will cease to be listed on the New York Stock Exchange and IHS Markit shares will be deregistered under the Securities Exchange Act. The merger was approved by IHS Markit and S&P Global shareholders on March 11, 2021, but is still subject to antitrust and regulatory approval requirements, as well as other customary closing conditions.

CME joint venture. In January 2021, we signed an agreement to enter into a 50/50 joint venture arrangement with shared control with CME Group to combine our post-trade services into a new joint venture. The new company will include trade processing and risk mitigation operations and will incorporate CME’s optimization businesses (Traiana, TriOptima, and Reset) and our MarkitSERV business. Through the combination, we intend to increase operating efficiencies and be better able to service clients with enhanced platforms and services for OTC markets across interest rate, FX, equity, and credit asset classes. We expect the deal to close in the summer of 2021, subject to customary antitrust and regulatory approvals and other customary closing conditions. The following table provides the components of MarkitSERV assets and liabilities (previously included in our Financial Services segment) treated as held for sale as of February 28, 2021 (in millions):

Current assets$34.8 
Property and equipment62.0 
Intangible assets397.6 
Goodwill362.6 
Assets held for sale$857.0 
Deferred revenue$(7.3)
Other current liabilities(14.4)
Deferred income taxes(78.1)
Liabilities held for sale$(99.8)

Gen II. In December 2020, we acquired a 13 percent interest in Gen II Fund Services for $150 million as part of a joint venture with General Atlantic and Hg Capital. We expect that this investment will drive revenue synergies between the joint venture and our Private Markets solutions across private credit, private equity, and data and analytics businesses. We are accounting for this investment using the equity method of accounting.

Cappitech. In December 2020, we acquired Cappitech Regulation Ltd., a Tel-Aviv based technology company providing regulatory reporting solutions on behalf of its clients to regulators, trade repositories, and affiliates, allowing customers to efficiently monitor the transaction reporting taking place across multiple jurisdictions. Cappitech’s advanced technology provides a scalable platform that we expect to combine with our other offerings in the Financial Services segment. We acquired Cappitech for upfront consideration of $47 million, net of cash acquired, with an additional earnout based on a three-year performance period, which we currently estimate at $57 million. The earnout liability is recorded within other accrued expenses and other liabilities in the condensed consolidated balance sheets. The purchase price allocation for this acquisition is still preliminary and may change upon completion of the determination of fair value of assets acquired and liabilities assumed.

Aerospace & Defense divestiture. In December 2019, we completed the sale of our Aerospace & Defense (“A&D”) business line to Montagu Private Equity for approximately $466 million. The A&D assets were previously included in our Transportation segment. We recognized a gain of approximately $372 million on the sale. The gain is included in other expense (income), net, in the condensed consolidated statements of operations.

10

Table of Contents
automotiveMastermind equity interests acquisition. In September 2017, we acquired automotiveMastermind (“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 agreed to pay cash to acquire the 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 is remeasured based on changes in the fair value of the equity interests. We have classified this expense as acquisition-related costs within the condensed consolidated statements of operations and we have classified the associated accrued liability within other liabilities in the condensed consolidated balance sheets. In November 2019, the option holders exercised the put provision on 62.5 percent of their remaining 22 percent interest in the business for $75.9 million in cash, which we paid in December 2019. We estimate the compensation expense associated with the remaining equity interests to be approximately $60 to $65 million, of which approximately $40.7 million has been recognized as of February 28, 2021, with the remaining amount to be recognized through September 2022.

3.Revenue

We disaggregate our revenue by segment (as described in Note 16) 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 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. 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. Subscription revenue is usually recognized ratably over the contract term or, for term-based software license arrangements, annually on renewal.

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). Most of these contracts have an initial term ranging from one to five years, with auto-renewal periods thereafter. Recurring variable revenue was derived entirely from the Financial Services segment for all periods presented.

Non-recurring revenue represents consulting, 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 February 28/29,
 20212020
Recurring fixed revenue$825.6 $804.1 
Recurring variable revenue172.9 146.8 
Non-recurring revenue121.4 129.9 
Total revenue$1,119.9 $1,080.8 

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 $11.4 million as of February 28, 2021 and $19.3 million as of November 30, 2020, and are recorded in accounts receivable, net, in the condensed consolidated balance sheets.
11

Table of Contents

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. Billings represent amounts that were paid in advance or due from customers. We record our contract liabilities as deferred revenue in the condensed consolidated balance sheets.

The following table provides a reconciliation of our contract liabilities as of February 28, 2021 (in millions):
Balance at November 30, 2020$886.2 
Billings1,016.6 
Revenue recognized(845.7)
Divestiture activity(7.3)
Balance at February 28, 2021$1,049.8 

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 condensed consolidated statements of operations.

4.Leases

We utilize operating leases for our various workplaces worldwide, and we also utilize operating leases for our data centers. These leases have remaining terms ranging from one to 12 years, many of which include renewal and early termination options. As of February 28, 2021, we have not considered extension and early termination options in our calculation of the right-of-use (“ROU”) assets and lease liabilities because we do not believe that it is reasonably certain that we will exercise those options. We do not have any significant finance leases.

We determine if an arrangement is a lease at inception. We consider any contract where there is an identified asset that we have the right to control in determining whether the contract contains a lease. ROU assets represent our right to use the underlying assets for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As our operating leases do not provide an implicit rate, we use an incremental borrowing rate based on the information available on the commencement date in determining the present value of lease payments. We calculate our incremental borrowing rates by extrapolating our current unsecured bond portfolio across the maturity ladder and adjusting the resultant corporate rate for the estimated spread for a secured borrowing and for foreign currencies, as appropriate. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Operating lease transactions are included in operating lease right-of-use assets, net, and current and non-current operating lease liabilities in the condensed consolidated balance sheets.

The following table presents lease cost, cash paid for amounts included in the measurement of lease liabilities, the weighted-average remaining lease term, and the weighted-average discount rate for our operating leases for the three months ended February 28, 2021 and February 29, 2020 (in millions):
Three months ended February 28/29,
20212020
Lease cost:
Operating lease cost$14.9 $18.9 
Variable lease cost$2.0 $1.7 
Other information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases$17.8 $15.8 
As of February 28, 2021:
Weighted-average remaining lease term7.8 years
Weighted-average discount rate1.9 %
12

Table of Contents

As of February 28, 2021, maturities of operating lease liabilities under non-cancellable arrangements were as follows (in millions):
YearAmount
Remainder of 2021$53.5 
202259.9 
202350.3 
202444.9 
202538.3 
Thereafter135.4 
Total future minimum operating lease payments382.3 
Imputed interest(27.3)
Total operating lease liability$355.0 

5.Intangible Assets

The following table presents details of our intangible assets, other than goodwill, as of February 28, 2021 and November 30, 2020 (in millions): 
 As of February 28, 2021As of November 30, 2020
 GrossAccumulated
Amortization
NetGrossAccumulated
Amortization
Net
Intangible assets subject to amortization:
Customer relationships$3,226.8 $(799.9)$2,426.9 $3,507.0 $(805.1)$2,701.9 
Developed technology849.8 (262.5)587.3 965.9 (290.1)675.8 
Information databases600.4 (383.9)216.5 597.1 (368.2)228.9 
Trademarks491.9 (273.1)218.8 490.2 (258.6)231.6 
Developed computer software69.3 (65.0)4.3 68.9 (62.9)6.0 
Other6.9 (3.8)3.1 4.1 (2.2)1.9 
Total intangible assets$5,245.1 $(1,788.2)$3,456.9 $5,633.2 $(1,787.1)$3,846.1 

Intangible assets amortization expense was $95.5 million for the three months ended February 28, 2021, compared to $94.2 million for the three months ended February 29, 2020. The following table presents the estimated future amortization expense related to intangible assets held as of February 28, 2021 (in millions):
YearAmount
Remainder of 2021$270.7 
2022$345.7 
2023$333.0 
2024$313.4 
2025$283.6 
Thereafter$1,910.5 
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, 2020 to February 28, 2021 was primarily due to current year amortization and the reclassification of MarkitSERV intangible assets to held-for-sale, as well as foreign currency translation effects.

13

Table of Contents
6.Debt

The following table summarizes total indebtedness, including unamortized premiums, as of February 28, 2021 and November 30, 2020 (in millions):
February 28, 2021November 30, 2020
Maturity DateCarrying AmountFair ValueCarrying AmountFair Value
Credit Facilities:
2019 revolving facilityNovember 2024$227.0 227.0 $17.0 $17.0 
2019 credit agreementApril 2021250.0 250.0 250.0 250.0 
Senior Unsecured Notes:
5.00% senior notes due 2022
November 1, 2022748.2 794.1 748.2 802.6 
4.125% senior notes due 2023
August 1, 2023499.3 541.2 499.2 545.2 
3.625% senior notes due 2024
May 1, 2024399.2 433.6 399.3 436.8 
4.75% senior notes due 2025
February 15, 2025809.2 903.0 809.7 916.2 
4.00% senior notes due 2026
March 1, 2026500.0 557.4 500.0 573.9 
4.75% senior notes due 2028
August 1, 2028747.9 889.2 747.9 906.8 
4.25% senior notes due 2029
May 1, 2029970.9 1,100.6 971.4 1,135.5 
Debt issuance costs(36.2)(38.5)
Finance leases5.3 5.6 
Total debt$5,120.8 $4,909.8 
Current portion(478.1)(268.1)
Total long-term debt$4,642.7 $4,641.7 

2019 revolving facility. On November 29, 2019, we entered into a $1.25 billion senior unsecured revolving credit agreement (“2019 revolving facility”). Subject to certain conditions, the 2019 revolving facility may be expanded by up to an aggregate of $750 million in additional commitments. Borrowings under the 2019 revolving facility mature in November 2024. The interest rates for borrowings under the 2019 revolving facility are the applicable LIBOR plus a spread of 1.00 percent to 1.625 percent, depending upon our corporate credit rating. A commitment fee on any unused balance is payable periodically and ranges from 0.10 percent to 0.25 percent based upon our corporate credit rating. We had approximately $1.3 million of outstanding letters of credit under the 2019 revolving facility as of February 28, 2021, which reduced the available borrowing under the facility by an equivalent amount.

2019 credit agreement. In September 2019, we entered into a 364-day credit agreement (the “2019 credit agreement”) for a term loan credit facility in an aggregate principal amount of $250.0 million. In April 2020, we amended the 2019 credit agreement to extend the term through April 2021. The interest rate for borrowing under the 2019 credit agreement is the applicable LIBOR plus a spread of 1.00 percent.

The 2019 revolving facility and the 2019 credit agreement are subject to 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 agreements.

As of February 28, 2021, we had approximately $227.0 million of outstanding borrowings under the 2019 revolving facility at a current annual interest rate of 1.36 percent and $250.0 million of outstanding borrowings under the 2019 credit agreement at a current weighted average annual interest rate of 1.14 percent.

Senior Unsecured Notes. All of our senior unsecured notes (“Senior Notes”) are unsecured and bear interest at a fixed rate payable semiannually. The Senior Notes were issued in registered offerings under the Securities Act or in offerings not subject to the registration requirements of the Securities Act, and all the Senior Notes have been admitted for trading to the official list of The International Stock Exchange in the Channel Islands. The indentures governing the Senior Notes all provide that, at the option of the respective holders of the Senior Notes, we may be required to purchase all or a portion of such Senior Notes upon occurrence of a change of control triggering event as defined in the respective indentures, at a price equal to 101 percent of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. All the indentures also contain (i) covenants that limit our ability to, among other things, incur or create liens and enter into sale and leaseback transactions, (ii) covenants that limit our ability to consolidate or merge with another entity or to sell all or substantially all of our assets to another entity, and (iii) customary default provisions.

14

Table of Contents
As of February 28, 2021, 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 value 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.

7.Derivatives

Our business is exposed to various market risks, primarily foreign currency risk. We utilize derivative instruments to help us manage this risk. We do not hold or issue derivatives for speculative purposes.

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 (income), net, since we have not designated these contracts as hedges for accounting purposes. The notional amount of these outstanding foreign currency forward contracts was $418.7 million and $342.3 million as of February 28, 2021 and November 30, 2020, respectively.

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 February 28, 2021, and November 30, 2020, we had assets of $2.1 million and $2.5 million, respectively, which were classified within other current assets, and we had liabilities of $0.6 million and $0.4 million, respectively, which were classified within other accrued expenses and other liabilities.

8.Restructuring and Impairment Charges

The following table provides a reconciliation of our restructuring liability, recorded in other accrued expenses, as of February 28, 2021 (in millions):
 Employee Severance and
Other Termination
Benefits
Contract
Termination and Other
Costs
Total
Balance at November 30, 2020$54.3 $10.8 $65.1 
Add: Restructuring costs incurred1.3 (0.2)1.1 
Revision to prior estimates(1.2)(0.2)(1.4)
Less: Amount paid(22.2)(1.1)(23.3)
Balance at February 28, 2021$32.2 $9.3 $41.5 

As of February 28, 2021, approximately $12.0 million of the remaining restructuring liability was in Resources, $5.8 million in Transportation, $15.6 million in Shared Services, $4.8 million in Financial Services, and the remainder in CMS.

As part of our effort to moderate the impact of the COVID-19 pandemic, we continue to evaluate our office facilities to determine where we can exit, consolidate, or otherwise optimize our use of office space throughout the company. For the three months ended February 28, 2021, we recorded approximately $1.3 million of impairment charges.

15

Table of Contents
9.Acquisition-Related Costs

During the three months ended February 28, 2021, we incurred approximately $13.1 million in costs associated with acquisitions and divestitures, primarily related to legal, consulting, and other professional services associated with recently announced merger and divestiture activities, as well as aM acquisition-related performance compensation.

The following table provides a reconciliation of the acquisition-related costs accrued liability, recorded in other accrued expenses and other liabilities, as of February 28, 2021 (in millions):
 Contract
Termination
Costs
OtherTotal
Balance at November 30, 2020$1.3 $67.0 $68.3 
Add: Costs incurred 13.1 13.1 
Less: Amount paid(0.1)(17.7)(17.8)
Balance at February 28, 2021$1.2 $62.4 $63.6 

As of February 28, 2021, approximately $40.7 million of the remaining liability is associated with the aM acquisition-related performance compensation liability described in Note 2, with the remainder primarily related to the merger and to acquisition and divestiture activity within the Financial Services segment.

10.Stock-Based Compensation

Stock-based compensation expense for the three months ended February 28, 2021 and February 29, 2020 was as follows (in millions):
 Three months ended February 28/29,
 20212020
Cost of revenue$20.4 $24.0 
Selling, general and administrative45.4 58.6 
Total stock-based compensation expense$65.8 $82.6 
No stock-based compensation cost was capitalized during the three months ended February 28, 2021 and February 29, 2020.
As of February 28, 2021, there was $333.3 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 2.1 years. Total unrecognized stock-based compensation cost will be adjusted for future changes in estimated forfeitures and expected performance achievement.
Restricted Stock Units (RSUs). The following table summarizes RSU activity, including awards with performance and market conditions, during the three months ended February 28, 2021:
 SharesWeighted-
Average Grant
Date Fair Value
 (in millions)
Balance at November 30, 20206.8 $61.57 
Granted2.2 $89.71 
Vested(3.2)$54.15 
Balance at February 28, 20215.8 $76.35 
The total fair value of RSUs that vested during the three months ended February 28, 2021 was $285.2 million.

11.Income Taxes

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

16

Table of Contents
Our effective tax rate for the three months ended February 28, 2021 was 17 percent, compared to 1 percent for the three months ended February 29, 2020. The low 2020 tax rate is primarily due to excess tax benefits on stock-based compensation of approximately $64 million and the tax-efficient divestiture of the A&D business line (U.K. share sales are exempt from tax) of approximately $29 million. The 2021 tax rate includes excess tax benefits on stock-based compensation of approximately $23 million, partially offset by U.S. minimum tax of approximately $19 million.

12.Pensions and Postretirement Benefits

During the first quarter of 2020, we incurred settlement expense of approximately $11.6 million related to lump-sum distributions to participants in our U.S. Retirement Income Plan (“U.S. RIP”), Supplemental Income Plan, and U.K. Retirement Income Plan (“U.K. RIP”) plans. We also converted to termination accounting for our U.K. RIP at the end of the first quarter, which resulted in an expense recognition of actuarial loss in excess of corridor of approximately $9.6 million.

During the second quarter of 2020, we transferred our U.S. RIP annuity liability and our U.K. RIP liability to third-party insurers, which resulted in additional settlement expense of approximately $8.9 million.

13.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.

As of March 22, 2021, nine complaints had been filed by purported shareholders of IHS Markit or S&P Global relating to our proposed merger with S&P Global. Eight of these actions have been voluntarily dismissed. The pending action is captioned Adam Snitkoff v. Marco Alvera, et al., Case No. 650576/2021 (N.Y. Sup. Ct.), filed in the Supreme Court of the State of New York, County of New York (the “Snitkoff Action”). The complaint in the Snitkoff Action names S&P Global and the members of the S&P board as well as IHS Markit as defendants, and it generally asserts state common law claims for breaches of fiduciary duty against the members of the S&P Global board, failure to disclose certain information in the version of the joint proxy statement/prospectus filed by S&P Global with the SEC on January 22, 2021 against all defendants, and aiding and abetting breaches of fiduciary duty against IHS Markit. The Snitkoff Action complaint seeks, among other relief, declaratory relief, an order requiring corrective disclosures, compensatory or rescissory damages, and attorneys’ and experts’ fees. The plaintiff in the Snitkoff Action has filed a stipulation of discontinuance with prejudice following the issuance of certain additional disclosures issued by S&P Global, which is pending court approval. IHS Markit believes the claims asserted in the complaint are without merit.

14.Common Shares and Earnings per Share
Weighted-average shares outstanding for the three months ended February 28, 2021 and February 29, 2020 were calculated as follows (in millions):
 Three months ended February 28/29,
 20212020
Weighted-average shares outstanding:
Shares used in basic EPS calculation397.4 395.7 
Effect of dilutive securities:
RSUs/RSAs3.1 3.8 
Stock options0.3 4.6 
Shares used in diluted EPS calculation400.8 404.1 

17


Share Repurchase Programs

In October 2019, our Board of Directors authorized a share repurchase program of up to $2.5 billion of IHS Markit common shares from October 17, 2019 through November 30, 2021, 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 October 2019 share 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 the repurchase 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 agreements, subject to availability of common shares, price, market conditions, alternative uses of capital, and applicable regulatory requirements, at management’s discretion. As of February 28, 2021, we had $1.6 billion remaining available to repurchase under the program. The merger agreement with S&P Global restricts our ability to purchase our shares and therefore our share repurchase program is currently suspended through November 2021, other than for the repurchase of shares associated with tax withholding requirements for share-based compensation.

In August 2016, our Board of Directors separately 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.

In December 2019, we funded a $500 million accelerated share repurchase (“ASR”) agreement, which terminated in February 2020. We received a total of 6.491 million shares in connection with the ASR.

Dividends

Our Board of Directors approved a quarterly cash dividend of $0.20 per share during the first quarter of 2021, compared to a quarterly cash dividend of $0.17 per share during the first quarter of 2020.

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 condensed consolidated balance sheets.

15.Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in AOCI by component (net of tax) for the three months ended February 29, 2020 (in millions):
Foreign currency translationNet pension and OPEB liabilityUnrealized losses on hedging activitiesTotal
Balance at November 30, 2019$(242.3)$(15.6)$(3.7)$(261.6)
Other comprehensive loss before reclassifications(35.6) (0.7)(36.3)
Reclassifications from AOCI to income 4.9 0.8 5.7 
Balance at February 29, 2020$(277.9)$(10.7)$(3.6)$(292.2)

The following table summarizes the changes in AOCI by component (net of tax) for the three months ended February 28, 2021 (in millions):
Foreign currency translationNet pension and OPEB liabilityUnrealized losses on hedging activitiesTotal
Balance at November 30, 2020$(107.9)$ $ $(107.9)
Other comprehensive income153.7   153.7 
Balance at February 28, 2021$45.8 $ $ $45.8 

18

Table of Contents
16.Segment Information

We prepare our financial reports and analyze our business results within our four operating segments: Financial Services, Transportation, Resources, and CMS. 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 months ended February 28, 2021 and February 29, 2020. 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).
 Three months ended February 28/29,
 20212020
Revenue
Financial Services$484.5 $436.0 
Transportation311.7 297.2 
Resources202.7 225.6 
CMS121.0 122.0 
Total revenue$1,119.9 $1,080.8 
Adjusted EBITDA
Financial Services$232.9 $205.4 
Transportation146.7 118.0 
Resources74.2 90.2 
CMS26.1 29.4 
Shared services(13.1)(11.4)
Total Adjusted EBITDA$466.8 $431.6 
Reconciliation to the condensed consolidated statements of operations:
Interest income0.1 0.4 
Interest expense(55.5)(61.2)
Provision for income taxes(30.3)(4.3)
Depreciation(56.1)(51.1)
Amortization related to acquired intangible assets(95.5)(94.2)
Stock-based compensation expense(65.8)(82.6)
Restructuring and impairment charges(1.0)(4.5)
Acquisition-related costs(9.2)(0.7)
Acquisition-related performance compensation(3.9)(0.2)
Gain on sale of assets0.1 372.3 
Pension mark-to-market and settlement expense (21.2)
Share of joint venture results not attributable to Adjusted EBITDA(0.7)(0.3)
Adjusted EBITDA attributable to noncontrolling interest0.3 1.0 
Net income attributable to IHS Markit Ltd.$149.3 $485.0 
19

Table of Contents


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 2020 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 2021 are to our fiscal year 2021, which began on December 1, 2020 and ends on November 30, 2021.

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 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:

Financial Services, which includes our financial Information, Solutions, and Processing product offerings;
Transportation, which includes our Automotive and Maritime & Trade product offerings;
Resources, which includes our Upstream and Downstream product offerings; and
Consolidated Markets & Solutions, which includes our Product Design, Economics & Country Risk, and TMT benchmarking product offerings.

Our recurring revenue streams represented approximately 89 percent of our total revenue for the three months ended February 28, 2021. Our recurring revenue is generally stable and predictable, and we have long-term relationships with many of our customers.

For the three months ended February 28, 2021, we focused our efforts on the following actions:

Increase in geographic, product, and customer penetration. We believe 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 innovating using our existing data sets and industry expertise, converting core information to higher value advanced analytics. We also intend to continue to invest across our business to increase our customer value proposition.

Improve efficiency, productivity, and financial strength. We are striving to strengthen our operational excellence by consistently improving productivity and efficiency, particularly as we work through the effects of the COVID-19 pandemic. We also continue to build on our strong financial foundation, balancing capital allocation between returning capital to shareholders (targeting an annual capital return of 50 to 75 percent of our annual capital capacity through share repurchases and cash dividends) 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. We intend to continue to operate at the high end of our capital policy target leverage ratio of 2.0-3.0x.

20

Table of Contents
On November 29, 2020, we, S&P Global Inc., and Merger Sub entered into an agreement and plan of merger, which was subsequently amended on January 20, 2021, pursuant to which Merger Sub will merge with and into IHS Markit, with IHS Markit surviving such merger as a wholly-owned, direct subsidiary of S&P Global. The merger intends to bring together a unique portfolio of highly complementary assets, as well as innovation and technology capability to accelerate growth and enhance value creation. At the completion of the merger, each IHS Markit share that is issued and outstanding (other than dissenting shares and shares held by IHS Markit in treasury) will be converted into the right to receive 0.2838 fully paid and nonassessable shares of S&P Global common stock, and, if applicable, cash in lieu of fractional shares, without interest, and less any applicable withholding taxes. If the merger is completed, IHS Markit shares will cease to be listed on the New York Stock Exchange and IHS Markit shares will be deregistered under the Securities Exchange Act. The merger was approved by IHS Markit and S&P Global shareholders on March 11, 2021, but is still subject to antitrust and regulatory approval requirements, as well as other customary closing conditions.

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”).

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 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 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. 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. Subscription revenue is usually recognized ratably over the contract term or, for term-based software license arrangements, annually on renewal.

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. Most of these contracts have an initial term ranging from one to five years, with auto-renewal periods thereafter. Recurring variable revenue was derived entirely from the Financial Services segment for all periods presented.

Non-recurring revenue represents consulting, 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.
21