ANNUAL REPORT
2022
Raymond W. McDaniel, Jr.
Letter from the Chairman of the Board of Directors
efforts to make Moody’s a place where people want to come
and stay.
As I continue to reflect on the year, I will take this opportunity
to acknowledge my fellow board members for their many
contributions in 2022, and to welcome Jose Minaya to the
Moody’s Corporation board. Jose brings extensive experience
with strategic investing across a variety of asset classes and
will provide a valuable new perspective to the company. I also
recognize and pay tribute to Clifford L. Alexander, our former
Moody’s Chairman who passed away in 2022. Cliff was a
person of great character, and we remain incredibly grateful for
his contributions to Moody’s legacy.
On a personal note, I will be stepping down as Chairman of the
Board in April. Leaving this great company and the colleagues
who have been such a big part of my life won’t be easy, but the
time is right. In more than 35 years with Moody’s, I have grown
with the company and am proud of its evolution into a leading
global provider of integrated perspectives on risk. It has been a
privilege to be Chairman of the Board since January 2021 and
again from 2005 to 2012.
I extend my fullest appreciation to Rob Fauber, who succeeded
me as Moody’s President and Chief Executive Officer in
2021, for his decisive and empathetic leadership throughout
2022, a time of heightened global risk and uncertainty. I look
ahead with confidence that Rob and Moody’s leadership
team will continue to provide lasting value for our customers,
stockholders and other stakeholders.
Raymond W. McDaniel, Jr.
Chairman of the Board
As I look back over 2022, I am proud of the resilience and
dedication that Moody’s employees showed as they worked
together to help our customers and stakeholders navigate such
a period of heightened uncertainty.
Even as parts of the world started to emerge from the
pandemic, we faced significant new challenges: Russia’s
invasion of Ukraine, a sudden rise in inflation, higher interest
rates and a global economic slowdown. These headwinds
caused significant disruption in the debt capital markets and a
decline in global debt issuance.
In this challenging operating environment, our employees
remained focused on delivering unrivaled perspectives on risk
for our customers. Moody’s ability to innovate and adapt is
a testament to the character and values that have guided us
for more than a century. It also speaks to the strength of our
strategy and pursuit to be the leading organization in helping
customers decode risk and unlock opportunity.
As risks evolve, so do expectations, policies and
accountabilities for managing risk. In response, Moody’s has
been expanding its assessment capabilities in areas such as
sustainability and climate change, cyber, insurance, local
market credit ratings and Know Your Customer (KYC) services.
Moody’s customers increasingly want a 360-degree view
of risk, including greater insight into with whom they are
doing business. Our capabilities around KYC combined with
our targeted investments in RMS, a global leader in climate
and natural disaster risk modeling and analytics, further our
ability to help parties identify, measure and manage risk
across industry segments and sectors. And these are just a few
examples of the new innovations Moody’s brought to market
in 2022.
Our people and forward-leaning culture were also recognized
this year through multiple external channels. Moody’s was
included on the Dow Jones Sustainability Indices for our strong
corporate sustainability practices, as well as CDP’s Climate
Change ‘A’ List for our leadership in reducing our own carbon
emissions and mitigating climate risks. Our commitment to
our employees and communities was also reflected in Moody’s
receipt of “Pinnacle” status in the Seramount Inclusion Index
for building and maintaining a diverse and inclusive workplace.
These acknowledgments both recognize and advance our
1
MOODY’S 2022 ANNUAL REPORT
Robert Fauber
Letter from the President & Chief Executive Officer
LOOKING BACK
The past year was a time of important evolution for our
company. In many ways, it was both a challenging year and a
productive year, but throughout it all, we remained focused
on expanding and enhancing the ways that we deliver for
our customers.
A series of events unfolded last year that impacted global
debt markets and generated more demand to better identify,
measure and manage risk. Russia’s invasion of Ukraine shook
market confidence early in the year, triggering economic
and geopolitical consequences that continue to unfold.
Coming out of a period of unprecedented monetary and fiscal
stimulus, central banks began one of the steepest and quickest
tightening cycles in recent history. And the stubborn pace of
inflation created uncertainty about future rate hikes which led
to further market volatility.
Together, this created turbulence in global debt and equity
markets, leading to a sharp decline in revenues for our rating
agency. At the same time, we continued to unlock the growing
potential of Moody’s Analytics, which provided an important
counter-cyclical recurring revenue growth engine for us.
Moody’s Analytics delivered its 60th consecutive quarter of
growth to close out the year, with annualized recurring revenue
growth of 10%.
EXECUTING OUR STRATEGY
Throughout the year, we accelerated our work to bring our
capabilities together, prioritizing innovation as we integrated
our solutions across our largest businesses: ratings, research,
banking, insurance, and Know Your Customer (KYC).
We remained firmly committed to ratings quality, timely and
insightful research, and engagement with issuers and investors
– all to ensure we are well-positioned to capture opportunities
as issuance activity improves. Additionally, we enhanced our
international ratings footprint, making important investments
that included the acquisition of a majority stake in the leading
domestic rating agency in Africa, GCR, and the continued
expansion of our successful Moody’s Local domestic ratings
business in Latin America. Both are generational investments
that will strengthen our presence in markets of the future.
We also enhanced our analytics and research in key credit-
relevant areas, including ESG and cybersecurity, providing the
kind of thought leadership that the market expects from us.
We enriched our online research platform as well by
implementing a dynamic, new portal that enables our
customers to access more of our insights and analytics. This
expanded access included ESGView, which features a growing
range of ESG, climate and carbon transition content that helps
investors better understand the credit and financial impacts
of these factors on their investments and portfolios. Looking
ahead, we also expect to accelerate our delivery of climate
and weather analytics via a range of products, including our
Climate on Demand platform for financial institutions.
Across our banking and insurance franchises, we continued
to expand our suite of solutions. In banking, we extended our
CreditLens loan origination solution into commercial real
estate, one of the largest asset classes on bank balance sheets.
This product integrates our proprietary property data, market
forecasts and credit analytics to meet the specific needs of
commercial real estate lenders. We are excited to partner on
this product with one of the largest real estate lenders in the
U.S., and we are encouraged by the positive customer feedback
and sales progress we have seen to date.
Similarly, in insurance, we achieved an important milestone
as we transitioned our 100th customer onto our Intelligent
Risk SaaS platform. Our RiskIntegrity suite – supported by
our AXIS actuarial modeling tools – enjoyed strong growth
as our customers used our solutions to comply with the new
accounting standard, IFRS 17. We also expanded our insurance
capabilities by bringing together our broad ESG and company
datasets to enhance underwriting and portfolio management
workflows with a sustainability focus.
Over the course of 2022, driven especially by geopolitical
issues, many of our customers sought to understand more
about who they were doing business with, and the risks
involved in doing business with them – rapidly and at scale.
We worked with our customers to implement more rigorous
screening of their customers and suppliers to comply with a
variety of swiftly evolving restrictions. We launched our KYC
Lifecycle solution, an easy-to-use, configurable portal and
3
MOODY’S 2022 ANNUAL REPORT
Throughout more than 35 years with the company, Ray met
both successes and challenges with his customary humility and
wisdom, and the Moody’s family will forever be indebted to
Ray for his legacy.
On behalf of my colleagues and our stockholders, I thank
Ray for his enormous contribution to our firm as both CEO
and Chairman.
LOOKING FORWARD
Thanks to the deliberate investments we made and decisive
actions we took in 2022, Moody’s enters 2023 in a strong
position, ready to capitalize on new growth opportunities
and serve global debt issuance markets. We believe a sharp
focus on our customers, purposeful innovation and investing
for growth – while making Moody’s a place where people
want to come and stay – is a formula that delivers sustainable
shareholder value.
I offer my sincere thanks to our stockholders and our
customers for their support. I also thank all of my colleagues
at Moody’s for their unwavering commitment through
challenging and uncertain times. We are well prepared to seize
the opportunities that will drive the next phase of our journey
to be the leading provider of integrated perspectives on risk.
Robert Fauber
President & Chief Executive Officer
risk engine, enabling reliable data checks powered by our
vast company, people and news datasets. This launch was an
important milestone as Lifecycle combines capabilities we’ve
acquired and developed over the past five years to deliver a
more holistic KYC workflow solution.
All of this work is the result of a collective effort across the
company and has garnered considerable external recognition,
something of which I am particularly proud. For the first
time, Moody’s earned the #1 overall ranking in the 2023
Chartis RiskTech100, which includes the leading players in risk
technology markets. We also achieved the top position in 15
separate award categories. This recognition is a testament to
our global integrated risk assessment strategy, our focus on
the needs of our customers, and our ongoing investments in
building and delivering industry-leading risk solutions.
In addition, we earned recognition from Institutional Investor
as the Best Credit Rating Agency for the 11th consecutive
year, underscoring our position as the agency of choice with
issuers and investors. This award reflects our thoughtful and
transparent approach to ratings amidst a series of significant
challenges, including the pandemic, the Russia-Ukraine conflict
and macroeconomic headwinds.
Our achievements in 2022 were driven by the resilience and
commitment of our incredibly talented colleagues across the
globe, underpinned by our company’s inclusive and equitable
culture. We believe that having a diverse and inclusive
workforce leads to better outcomes for our customers: it allows
us to attract and retain the best talent, it improves our insights,
and it gives us better perspectives on the incredibly diverse
customer base that we serve. I am pleased that our efforts have
been recognized externally. For the third consecutive year, we
were named to Diversity Inc.’s Top 50 Companies for Diversity.
Seramount highlighted us as a Pinnacle Inclusion Index
Company for superior achievement in diversity, equity and
inclusion, and we achieved Great Place to Work certifications
in the U.S. and India.
CHAIRMAN
After a long and distinguished career at Moody’s, including 15
years as CEO and two periods as Chairman of the Board, Ray
McDaniel will be leaving our company when he concludes his
tenure on our Board in April 2023.
Ray led a period of tremendous growth for our ratings and
research franchise, significantly expanded our international
presence, and built our vibrant data and analytics business.
MOODY’S 2022 ANNUAL REPORT
4
Moody’s Corporation
DIRECTORS
Raymond W. McDaniel, Jr.(4*)
Chairman of the Board of Directors
Moody’s Corporation
Jorge A. Bermudez(1*,2,3,4)
Retired Chief Risk Officer
Citigroup, Inc.
Thérèse Esperdy(1,2,3)
Retired Global Chairman of Financial
Institutions Group
JPMorgan Chase & Co.
Robert Fauber(4)
President & Chief Executive Officer
Moody’s Corporation
Vincent A. Forlenza(1,2,3,4)
Lead Independent Director
Moody’s Corporation
Retired Chief Executive Officer
Becton Dickinson and Company
Kathryn M. Hill(1,2,3)
Retired Senior Vice President
Cisco Systems Inc.
Lloyd W. Howell Jr.(1,2,3*,4)
Executive Vice President
Booz Allen Hamilton
Jose M. Minaya(1,2,3)
Chief Executive Officer
Nuveen
Leslie F. Seidman(1,2*,3,4)
Former Chairman
Financial Accounting Standards Board
Zig Serafin(1,2,3)
Chief Executive Officer
Qualtrics International Inc.
Bruce Van Saun(1,2,3)
Chairman & Chief Executive Officer
Citizens Financial Group, Inc.
5
MOODY’S 2022 ANNUAL REPORT
SENIOR MANAGEMENT
Robert Fauber
President, Chief Executive Officer
Mark Kaye
Chief Financial Officer
Stephen Tulenko
President, Moody’s Analytics
David Platt
Senior Vice President,
Chief Strategy Officer
Caroline Sullivan
Senior Vice President,
Chief Accounting Officer &
Corporate Controller
Michael West
President, Moody’s Investors Service
Christine Elliott
Chief Corporate Affairs Officer
Joshua Carroll
Chief Technology Officer
Daniel Keane
Chief Tax Officer
Shivani Kak
Head of Investor Relations
Andrew Weinberg
Chief Compliance Officer
John J. Goggins
Executive Vice President,
General Counsel
Tameka Alsop
Senior Vice President,
Chief Administrative Officer
Maral Kazanjian
Senior Vice President,
Chief People Officer
Scott Kenney
Senior Vice President,
Risk Management &
Chief Audit Executive
BOARD COMMITTEES
1 Audit
2 Governance & Nominating
3 Compensation & Human Resources
4 Executive
* Committee Chairman
Corporate Secretary
Elizabeth M. McCarroll
Stockholders and other stakeholders may communicate
with the Board, or with a specific director or directors,
by writing to:
c/o Corporate Secretary
Moody’s Corporation
7 World Trade Center
250 Greenwich Street
New York, NY 10007
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-K
FOR THE FISCAL YEAR ENDED December 31, 2022
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 1-14037
MOODY’S CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware
(STATE OF INCORPORATION)
13-3998945
(I.R.S. EMPLOYER IDENTIFICATION NO.)
7 World Trade Center at 250 Greenwich Street, New York, New York 10007
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 553-0300.
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS
TRADING SYMBOL(S)
NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Stock, par value $0.01 per share
1.75% Senior Notes Due 2027
0.950% Senior Notes Due 2030
MCO
MCO 27
MCO 30
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
Large Accelerated Filer
☑ Accelerated Filer ☐ Non-accelerated Filer ☐
Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued
its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of Moody’s Corporation Common Stock held by nonaffiliates* on June 30, 2022 (based upon its closing transaction price on the
New York Stock Exchange on such date) was approximately $50 billion.
As of January 31, 2023, 183.2 million shares of Common Stock of Moody’s Corporation were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive proxy statement for use in connection with its annual meeting of stockholders scheduled to be held on April 18, 2023,
are incorporated by reference into Part III of this Form 10-K.
The Index to Exhibits is included as Part IV, Item 15(3) of this Form 10-K.
* Calculated by excluding all shares held by executive officers and directors of the Registrant without conceding that all such persons are “affiliates” of the
Registrant for purposes of federal securities laws.
* Auditor Name: KPMG LLP
Auditor Location: New York, NY
Auditor Firm ID:
185
MOODY'S 2022 10-K
1
MOODY’S CORPORATION
INDEX TO FORM 10-K
Glossary of Terms and Abbreviations
PART I.
Item 1.
BUSINESS
Background
The Company
Human Capital
Climate
Moody’s Strategy
Prospects for Growth
Competition
Regulation
Intellectual Property
Available Information
Executive Officers of the Registrant
Item 1A.
RISK FACTORS
Item 1B.
UNRESOLVED STAFF COMMENTS
Item 2.
Item 3.
Item 4.
Item 5.
PROPERTIES
LEGAL PROCEEDINGS
MINE SAFETY DISCLOSURES
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
PART II.
Moody’s Purchases of Equity Securities
Common Stock Information
Equity Compensation Plan Information
Performance Graph
Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Company
Current Matters Impacting Moody's Business
Critical Accounting Estimates
Reportable Segments
Results of Operations
Market Risk
Liquidity and Capital Resources
Recently Issued Accounting Pronouncements
Contingencies
Forward-Looking Statements
Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 8.
FINANCIAL STATEMENTS
Page(s)
4-9
10
10
10-13
14-16
16
17
18-19
19
19-20
20-21
21
21-22
23-32
32
32
32
32
32
32
33
33
34
35
35
35
35-39
39
40-53
53-54
55-61
61
61
61-62
63
63-120
2 MOODY'S 2022 10-K
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Item 9A.
CONTROLS AND PROCEDURES
Item 9B.
OTHER INFORMATION
Item 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
PART III.
Item 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 11.
EXECUTIVE COMPENSATION
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Item 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV.
INDEX TO EXHIBITS
Item 16.
FORM 10-K SUMMARY
SIGNATURES
Page(s)
121
121
121
121
121
121
121
121
122
122
122-125
125
126
MOODY'S 2022 10-K
3
The following terms, abbreviations and acronyms are used to identify frequently used terms in this report:
TERM
DEFINITION
GLOSSARY OF TERMS AND ABBREVIATIONS
Acquire Media (AM)
An aggregator and distributor of curated real-time news, multimedia, data, and alerts; acquired by the
Company in October 2020
Acquisition-Related
Intangible Amortization
Expense
Adjusted Diluted EPS
Amortization expense relating to definite-lived intangible assets acquired by the Company from all
business combination transactions
Diluted EPS excluding the impact of certain items as detailed in the section entitled “Non-GAAP
Financial Measures”
Adjusted Net Income
Net Income excluding the impact of certain items as detailed in the section entitled “Non-GAAP
Financial Measures”
Adjusted Operating
Income
Operating income excluding the impact of certain items as detailed in the section entitled "Non-GAAP
Financial Measures"
Adjusted Operating
Margin
Americas
AML
AOCI(L)
Adjusted Operating Income divided by revenue
Represents countries within North and South America, excluding the U.S.
Anti-money laundering
Accumulated other comprehensive income (loss); a separate component of shareholders’ equity
Annualized Recurring
Revenue (ARR)
A supplemental performance metric to provide additional insight on the estimated value of MA's
recurring revenue contracts at a given point in time, excluding the impact of FX and contracts related to
acquisitions
ASC
The FASB Accounting Standards Codification; the sole source of authoritative GAAP as of July 1, 2009
except for rules and interpretive releases of the SEC, which are also sources of authoritative GAAP for
SEC registrants
Asia-Pacific
Represents Australia and countries in Asia including but not limited to: China, India, Indonesia, Japan,
Republic of South Korea, Malaysia, Singapore, Sri Lanka and Thailand
ASR
ASU
BitSight
Board
BPS
Brexit
Accelerated Share Repurchase
The FASB Accounting Standards Update to the ASC. Provides background information for accounting
guidance and the bases for conclusions on the changes in the ASC. ASUs are not considered
authoritative until codified into the ASC
A provider that helps global market participants understand cyber risk through ratings, analytics, and
performance management tools; the Company acquired a minority investment in BitSight in 2021
The board of directors of the Company
Basis points
The withdrawal of the United Kingdom from the European Union
Bureau van Dijk (BvD)
Bureau van Dijk Electronic Publishing, B.V.; a global provider of business intelligence and company
information; acquired by the Company in August 2017 via the acquisition of Yellow Maple I B.V., an
indirect parent of Bureau van Dijk.
Catylist
CCXI
CDP
CFG
CLO
4 MOODY'S 2022 10-K
A provider of commercial real estate (CRE) solutions for brokers; acquired by the Company in
December 2020
China Cheng Xin International Credit Rating Co. Ltd.; China’s first and largest domestic credit rating
agency approved by the People’s Bank of China; the Company acquired a 49% interest in 2006;
currently Moody’s owns 30% of CCXI
An international nonprofit organization that helps companies, cities, states and regions to manage their
environmental impact through a global disclosure system
Corporate finance group; an LOB of MIS
Collateralized loan obligation
TERM
CMBS
COLI
DEFINITION
Commercial mortgage-backed securities; an asset class within SFG
Corporate-Owned Life Insurance
Commission
European Commission
Common Stock
The Company’s common stock
Company
Cortera
COVID-19
CP
CP Notes
CP Program
Moody’s Corporation and its subsidiaries; MCO; Moody’s
A provider of North American credit data and workflow solutions; acquired by the Company in March
2021
An outbreak of a novel strain of coronavirus resulting in an international public health crisis and a global
pandemic
Commercial Paper
Unsecured commercial paper issued under the CP Program
A program entered into on August 3, 2016 allowing the Company to privately place CP up to a
maximum of $1 billion for which the maturity may not exceed 397 days from the date of issue, and
which is backstopped by the 2021 Facility
CRAs
CRE
Credit rating agencies
Commercial Real Estate
Data and Information
(D&I)
LOB within MA which provides vast data sets on companies and securities via data feeds and data
applications products
DBPPs
Defined benefit pension plans
Decision Solutions
(DS)
LOB within MA that provides software and workflow tools for specific use cases (banking, insurance,
KYC/KYS, CRE and structured finance solutions). This LOB utilizes components from the Data &
Information and Research & Insights LOBs to provide integrated risk solutions
DE&I
Diversity, Equity & Inclusion
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
EBITDA
Earnings before interest, taxes, depreciation and amortization
EMEA
EPS
ERS
ESG
ESMA
ESTR
ESPP
ETR
EU
EUR
EURIBOR
Eurozone
Represents countries within Europe, the Middle East and Africa
Earnings per share
Enterprise Risk Solutions; former LOB within MA, which offered risk management software solutions as
well as related risk management advisory engagements services. As of January 1, 2022, the MA LOBs
have been realigned from RD&A and ERS to Decision Solutions, Research and Insights, and Data and
Information
Environmental, Social and Governance
European Securities and Markets Authority
Euro Short-Term Rate
Employee stock purchase plan
Effective tax rate
European Union
Euros
The Euro Interbank Offered Rate
Monetary union of the EU member states which have adopted the euro as their common currency
Excess Tax Benefits
The difference between the tax benefit realized at exercise of an option or delivery of a restricted share
and the tax benefit recorded at the time the option or restricted share is expensed under GAAP
MOODY'S 2022 10-K
5
TERM
DEFINITION
Exchange Act
The Securities Exchange Act of 1934, as amended
External Revenue
Revenue excluding any intersegment amounts
FASB
FIG
Financial Accounting Standards Board
Financial institutions group; an LOB of MIS
Free Cash Flow
Net cash provided by operating activities less cash paid for capital additions
FTSE
FX
GAAP
GBP
GDP
GRI
GDPR
Financial Times Stock Exchange
Foreign exchange
U.S. Generally Accepted Accounting Principles
British pounds
Gross domestic product
Global Reporting Initiative, an international independent standards organization that helps organizations
understand and disclose their impact on climate change, human rights and corruption
European Union’s General Data Protection Regulation
HM Treasury
His Majesty's Treasury; the department of the Government of the United Kingdom responsible for
developing and executing the government's public finance policy and economic policy
ICRA
IASB
IFRS
IRS
kompany
KYC
LIBOR
LOB
MA
ICRA Limited; a provider of credit ratings and research in India.
International Accounting Standards Board
International Financial Reporting Standards
Internal Revenue Service
360kompany AG (kompany); a Vienna, Austria-based platform for business verification and Know Your
Customer (KYC) technology solutions; acquired by the Company in February 2022
Know-your-customer
London Interbank Offered Rate
Line of business
Moody’s Analytics - a reportable segment of MCO; consists of three LOBs - Decision Solutions;
Research and Insights; and Data and Information
Make Whole
The prepayment penalty amount relating to certain Senior Notes, which is a premium based on the
excess, if any, of the discounted value of the remaining scheduled payments over the prepaid principal
MAKS
MCO
MD&A
MIS
MIS Other
Moody’s Analytics Knowledge Services; formerly known as Copal Amba; provided offshore research
and analytic services to the global financial and corporate sectors; business was divested in the fourth
quarter of 2019 and a reporting unit within the MA reportable segment.
Moody’s Corporation and its subsidiaries; the Company; Moody’s
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Moody’s Investors Service - a reportable segment of MCO; consists of five LOBs - SFG; CFG; FIG;
PPIF; and MIS Other
Consists of financial instruments pricing services in the Asia-Pacific region, ICRA non-ratings revenue
and revenue from providing ESG research, data and assessments. These businesses are components
of MIS; MIS Other is an LOB of MIS
Moody’s
Moody’s Corporation and its subsidiaries; MCO; the Company
Moody's Local
A ratings platform focused on providing credit rating services in Latin American capital markets
MSS
Moody's Shared Services; primarily consists of information technology and support staff such as
finance, human resources and legal that support both MIS and MA.
6 MOODY'S 2022 10-K
TERM
NAV
Net Income
DEFINITION
Net asset value
Net income attributable to Moody’s Corporation, which excludes net income from consolidated
noncontrolling interests belonging to the minority interest holder
Credit Losses
Accounting Standard
Updates to the ASC pursuant to ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments”. This accounting guidance requires the use of
an “expected credit loss” impairment model for most financial assets reported at amortized cost, which
requires entities to estimate expected credit losses over the lifetime of the instrument.
NM
Non-GAAP
NRSRO
OCI
Operating segment
Percentage change is not meaningful
A financial measure not in accordance with GAAP; these measures, when read in conjunction with the
Company’s reported results, can provide useful supplemental information for investors analyzing period-
to-period comparisons of the Company’s performance, facilitate comparisons to competitors’ operating
results and to provide greater transparency to investors of supplemental information used by
management in its financial and operational decision making
Nationally Recognized Statistical Rating Organization, which is a credit rating agency registered with
the SEC.
Other comprehensive income (loss); includes gains and losses on cash flow and net investment
hedges, certain gains and losses relating to pension and other retirement benefit obligations and foreign
currency translation adjustments
Term defined in the ASC relating to segment reporting; the ASC defines an operating segment as a
component of a business entity that has each of the three following characteristics: i) the component
engages in business activities from which it may recognize revenue and incur expenses; ii) the
operating results of the component are regularly reviewed by the entity’s chief operating decision
maker; and iii) discrete financial information about the component is available.
Other Retirement Plans The U.S. retirement healthcare and U.S. retirement life insurance plans
PassFort
PCS
POC
PPIF
A U.K. SaaS-based workflow platform for identity verification, customer onboarding, and risk analysis;
acquired by the Company in November 2021
Post-Contract Customer Support
People of color; includes those who identify as Asian, Hispanic, Black, American Indian/Alaskan Native,
Hawaiian/Other Pacific Island or two or more races
Public, project and infrastructure finance; an LOB of MIS
Profit Participation Plan Defined contribution profit participation plan that covers substantially all U.S. employees of the
Company
RD&A
Research, Data and Analytics; former LOB within MA that offered subscription-based research, data
and analytical products, including: credit ratings produced by MIS; credit research; quantitative credit
scores and other analytical tools; economic research and forecasts; business intelligence and company
information products; commercial real estate data and analytical tools; and learning solutions. As of
January 1, 2022, the MA LOBs have been realigned from RD&A and ERS to Decision Solutions,
Research and Insights, and Data and Information
RealXData
A provider of CRE lease-level portfolio management with benchmarking and rent forecasting
capabilities; acquired by the Company in September 2021
Recurring Revenue
For MIS, represents recurring monitoring fees of a rated debt obligation and/or entities that issue such
obligations, as well as revenue from programs such as commercial paper, medium-term notes and shelf
registrations. For MIS Other represents subscription-based revenue. For MA, represents subscription-
based revenue and software maintenance revenue
Reform Act
Credit Rating Agency Reform Act of 2006
Regulatory Data
Corporation (RDC)
A provider of anti-money laundering (AML) and know-your-customer (KYC) data and due diligence
services; acquired by the Company in February 2020
Reis, Inc. (Reis)
A provider of U.S. commercial real estate (CRE) data; acquired by the Company in October 2018
MOODY'S 2022 10-K
7
TERM
DEFINITION
Reporting unit
The level at which Moody’s evaluates its goodwill for impairment under U.S. GAAP; defined as an
operating segment or one level below an operating segment
Research and Insights
(R&I)
LOB within MA that provides models, scores, expert insights and commentary. This LOB includes credit
research; credit models and analytics; and economics data and models
Retirement Plans
Moody’s funded and unfunded pension plans, the healthcare plans and life insurance plans
Revenue Accounting
Standard
Updates to the ASC pursuant to ASU No. 2014-09, “Revenue from Contracts with Customers (ASC
Topic 606).” This accounting guidance significantly changed the accounting framework under U.S.
GAAP relating to revenue recognition and to the accounting for the deferral of incremental costs of
obtaining or fulfilling a contract with a customer
RMBS
RMS
Residential mortgage-backed securities; an asset class within SFG
A global provider of climate and natural disaster risk modeling and analytics; acquired by the Company
in September 2021
ROU Asset
Assets which represent the Company’s right to use an underlying asset for the term of a lease
SaaS
SASB
SBTi
Software-as-a-Service
Sustainability Accounting Standards Board
Science Based Targets initiative; a partnership between CDP, the United Nations Global Compact,
World Resources Institute and the World Wide Fund for Nature created to encourage the private sector
to take the lead on urgent climate action
SEC
U.S. Securities and Exchange Commission
Securities Act
Securities Act of 1933, as amended
SFG
SG&A
SOFR
SSP
T&M
Tax Act
TCFD
Total Debt
Structured finance group; an LOB of MIS
Selling, general and administrative expenses
Secured Overnight Financing Rate
Standalone selling price
Time-and-Material
The “Tax Cuts and Jobs Act” enacted into U.S. law on December 22, 2017, which significantly amends
the tax code in the U.S.
Task Force on Climate-Related Financial Disclosures
All indebtedness of the Company as reflected on the consolidated balance sheets
Transaction Revenue
For MIS, represents the initial rating of a new debt issuance as well as other one-time fees. For MIS
Other, represents revenue from professional services as well as data services, research and analytical
engagements. For MA, represents perpetual software license fees and revenue from software
implementation services, risk management advisory projects, and training and certification services
U.K.
U.S.
USD
UTPs
WEF
YTD
United Kingdom
United States
U.S. dollar
Uncertain tax positions
World Economic Forum
Year-to-date
VisibleRisk
A cyber risk ratings joint venture created by Moody’s and Team8, a global venture group
WACC
Weighted Average Cost of Capital
ZM Financial Systems
(ZMFS)
A provider of risk and financial management software for the U.S. banking sector; acquired by the
Company in December 2020
8 MOODY'S 2022 10-K
TERM
DEFINITION
2018 Restructuring
Program
2020 MA Strategic
Reorganization
Restructuring Program
Restructuring program approved by the chief executive officer of Moody’s on October 26, 2018. This
program included relocation of certain functions from high-cost to lower-cost jurisdictions, a reduction of
staff, including from acquisitions and pursuant to a review of the business criticality of certain positions,
and the rationalization and exit of certain real estate leases due to consolidation of various business
activities.
Restructuring program approved by the chief executive officer of Moody’s on December 22, 2020,
relating to a strategic reorganization in the MA reportable segment
2020 Real Estate
Rationalization
Restructuring Program
Restructuring program approved by the chief executive officer of Moody’s on July 29, 2020, primarily in
response to the COVID-19 pandemic which revolves around the rationalization and exit of certain real
estate leases.
2022 - 2023
Geolocation
Restructuring Program
Restructuring program approved by the chief executive officer of Moody’s on June 30, 2022 and
expanded on October 24, 2022, relating to the Company's post-COVID-19 geolocation strategy and
includes the rationalization and exit of certain real estate leases and a reduction in staff, including the
relocation of certain job functions from their current locations
2013 Senior Notes Due
2024
2014 Senior Notes Due
2044
2015 Senior Notes Due
2027
Principal amount of $500 million, 4.875% senior unsecured notes due in February 2024
Principal amount of $600 million, 5.25% senior unsecured notes due in July 2044
Principal amount of €500 million, 1.75% senior unsecured notes due in March 2027
2017 Senior Notes Due
2023
Principal amount of $500 million, 2.625% senior unsecured notes due January 15, 2023, but early
repaid by the Company in 2022
2017 Senior Notes Due
2028
2018 Senior Notes Due
2029
2018 Senior Notes Due
2048
2019 Senior Notes Due
2030
2020 Senior Notes Due
2025
2020 Senior Notes Due
2050
Principal amount of $500 million, 3.25% senior unsecured notes due January 15, 2028
Principal amount of $400 million, 4.25% senior unsecured notes due February 1, 2029
Principal amount of $400 million, 4.875% senior unsecured notes due December 17, 2048
Principal amount of €750 million, 0.950% senior unsecured notes due February 25, 2030
Principal amount of $700 million, 3.75% senior unsecured notes due March 24, 2025
Principal amount of $300 million, 3.25% senior unsecured notes due May 20, 2050
2020 Senior Notes Due
2060
Principal amount of $500 million, 2.55% senior unsecured notes due August 18, 2060; the Company
early redeemed $200 million of these notes in the fourth quarter of 2022
2021 Facility
Five-year unsecured revolving credit facility, with capacity to borrow up to $1.25 billion; backstops CP
issued under the CP Program
2021 Senior Notes Due
2031
2021 Senior Notes Due
2041
2021 Senior Notes Due
2061
2022 Senior Notes Due
2052
2022 Senior Notes Due
2032
Principal amount of $600 million, 2.00% senior unsecured notes due August 19, 2031
Principal amount of $600 million, 2.75% senior unsecured notes due August 19, 2041
Principal amount of $500 million, 3.10% senior unsecured notes due November 15, 2061
Principal amount of $500 million, 3.75% senior unsecured notes due February 25, 2052
Principal amount of $500 million, 4.25% senior unsecured notes due January 15, 2032
MOODY'S 2022 10-K
9
PART I
ITEM 1. BUSINESS
Background
As used in this report, except where the context indicates otherwise, the terms “Moody’s” or the “Company” refer to Moody’s
Corporation, a Delaware corporation, and its subsidiaries. The Company’s executive offices are located at 7 World Trade Center at
250 Greenwich Street, New York, NY 10007 and its telephone number is (212) 553-0300.
THE COMPANY
Company Overview
Moody’s is a global integrated risk assessment firm that empowers organizations and investors to make better decisions. Moody’s
reports activities in two segments: MIS and MA. Financial information and operating results of these segments, including revenue,
expenses and Adjusted Operating Income, are included in Part II, Item 8. Financial Statements of this annual report and are herein
incorporated by reference.
Independent provider of credit
rating opinions and related
information for over 100 years
Global integrated risk
assessment firm providing
credit rating opinions, analytical
solutions and insights that
empower organizations to make
better, faster decisions
Provider of financial intelligence
and analytical tools supporting
customers’ growth, efficiency
and risk management
objectives
Moody's has evolved over the last 15+ years, expanding its suite of capabilities in line with customer needs
2007 - 2016
Expanded beyond ratings agency
•
•
•
Established Moody’s Analytics, risk assessment franchise serving primarily banks and insurance
companies
Expanded economic data and modeling capabilities
Expanded ratings to China (i.e., CCXI)
2017 - 2022
Built out substantial data and analytics capabilities
•
•
•
Complemented risk management software business with private company information (i.e., BvD)
Accelerated capability expansion (e.g., company database, CRE data, ESG data, KYC suite)
Invested in insurance data and analytics capabilities, including weather and disaster modeling (i.e.,
RMS)
2023 and beyond
Positioned to serve a wide range of risk assessment markets
•
•
Competitive differentiator: integration of data and analytics combined with expertise and technology
enablement
Further investment in data and analytics capabilities such as CRE, ESG, Climate and Cyber to serve high
growth risk assessment use cases
10 MOODY'S 2022 10-K
Moody's Investors Service Overview
Moody's Investors Service (MIS) publishes credit ratings and provides assessment services on a wide range of debt obligations,
programs and facilities, and the entities that issue such obligations in markets worldwide, including various corporate, financial
institution and governmental obligations, and structured finance securities. A rating from MIS enables issuers to create timely, go-
to-market debt strategies in order to capture wider investor focus and deeper liquidity options.
The Benefits of a Moody's Rating
Investors seek Moody's opinions and particularly value the knowledge of its analysts and the depth of Moody's research
Access to capital
Transparency, credit
comparison and market
stability
• Moody’s opinions on credit
are used by institutional
investors throughout the
world, making an issuer’s
debt potentially more
attractive to a wide range of
buyers.
• Signals a willingness by
issuers to be transparent
and provides issuers with
an independent
assessment against which
to compare
creditworthiness.
• A Moody’s rating may
• Moody’s ratings and
facilitate access to both
domestic and international
debt capital.
research reports may help
maintain investor
confidence, especially
during periods of market
stress.
Planning and budgeting
Analytical capabilities
• May help issuers when
formulating internal capital
plans and funding
strategies.
• Among ratings advisors,
Moody’s has a strong
position and is well-
recognized for the depth
and breadth of its analytical
capabilities.
Ratings revenue is derived from the originators and issuers of such transactions who use MIS ratings to support the distribution of
their debt issues to investors. Ratings are disseminated via press releases to the public primarily through a variety of electronic
media, including the internet and real-time information systems widely used by securities traders and investors.
MIS by the Numbers
33,900 +
Rated Organizations
and Structured Deals
~$73 trillion
Total Rated Debt
Outstanding
190+
Rating Methodologies
5,100+
Non-Financial
Corporates
15,100+
U.S. Public Finance
Issuers
1,000+
Infrastructure & Project
Finance Issuers
144
Sovereigns
3,400+
Financial Institutions
8,600+
Structured Finance
Deals
340+
Sub-Sovereigns
46
Supranational
Institutions
MIS also generates revenue from certain non-ratings-related operations, which primarily consist of financial instruments pricing
services in the Asia-Pacific region, revenue from ESG research, data and assessments and revenue from ICRA's non-ratings
operations. The revenue from these operations is included in the MIS Other LOB and is not material to the results of the MIS
segment.
MOODY'S 2022 10-K
11
Moody's Analytics Overview
Moody's Analytics (MA) is a global provider of: i) data and information; ii) research and insights; and iii) decision solutions, which
help customers navigate increasingly complex risks. MA leverages its industry expertise across multiple risks such as credit,
market, financial crime, supply chain, catastrophe and climate to deliver integrated risk assessment solutions that enable business
leaders to identify, measure and manage the implications of interrelated risks and opportunities. MA’s proprietary data, research
and analytics combined with cloud-based software tools deliver solutions to meet customer needs as they arise. MA’s subscription
businesses provide a significant base of recurring revenue to mitigate cyclical changes in debt issuance volumes that may result in
volatility in MIS’s revenues.
Helping Customers Navigate Increasing Global Risks
GLOBAL RISKS
MA PROVIDES AN INTEGRATED VIEW OF RISK
1 Proprietary data with models, software and expertise that
empower customers to better measure, monitor and
manage various types of risk
2 Unparalleled ability to integrate risk capabilities for unique
insights
3 Tech-enabled solutions deeply embedded in customers’
workflows
Heightened operational and reputational
risks
Evolving regulatory environment
Climate change
Fintech disruption & digitization
Complex credit and financial markets
MA by the Numbers
15,200 +
MA Customers
4,400+
Corporates
900+
Insurance Companies
165+
Countries where MA
customers operate
2,600+
Commercial Banks
900+
Real Estate Entities
2,300+
Professional Services
600+
Educational Institutions
1,900+
Asset Managers
200+
Securities Dealers and
Investment Banks
900+
Government Entities
500+
Others
12 MOODY'S 2022 10-K
Sustainability
Moody’s manages its business with the goal of delivering value to all of its stakeholders, including but not limited to, its customers,
employees, business partners, local communities and stockholders. As part of this effort, Moody’s advances sustainability by
considering environmental, social, and governance (“ESG”) factors in its operations, products and services. The Company uses its
expertise and assets to make a positive difference through technology tools, research and analytical services that help other
organizations and the investor community better understand the links between sustainability considerations and the global markets.
Moody’s efforts to promote sustainability-related thought leadership, assessments and data to market participants include adhering
to the policies of recognized sustainability organizations that develop standards or frameworks and/or evaluate and assess
performance, including: the Global Reporting Initiative (GRI); Sustainability Accounting Standards Board (SASB); and the World
Economic Forum (WEF)’s Stakeholder Capitalism metrics. Moody's also issues an annual report on Stakeholder Sustainability and
its implementation of the Task Force on Climate-related Financial Disclosures (“TCFD”) recommendations. Moody’s sustainability-
related achievements in 2022 included the following:
–
Validated Moody’s long-term net-zero targets with SBTi;
– Rolled out an all-employee training on Sustainability and ESG;
– Received the following awards/recognition: i) featured on the 2022 CDP ‘A List’ for Climate Action for third consecutive year; ii)
included in FTSE4Good Index Series for the fourth consecutive year; iii) received ‘Net Zero Transition’ award from Reuters
Responsible Business; iv) named ‘Climate Leader’ by the Finance of the Future Awards; v) awarded 'Best ESG Reporting
(large-cap)' from IR Magazine U.S. 2022; vi) received ‘Sustainability reporting of the year – Americas’ from Environmental
Finance Company Awards 2022; and vii) included in the Dow Jones Sustainability World Index for the first time;
–
–
Published Moody’s 2021 Stakeholder Sustainability report and 2021 TCFD report; and
Issued a global tax policy.
The Board oversees sustainability matters, with assistance from the Audit, Governance & Nominating and Compensation & Human
Resources Committees, as part of its oversight of management and the Company’s overall strategy. The Audit Committee oversees
financial, risk and other disclosures made in the Company’s annual and quarterly reports related to sustainability and has overseen
the expanded voluntary disclosures the Company has made in its periodic filings. The Governance & Nominating Committee
oversees sustainability matters, including significant issues of corporate social and environmental responsibility, as they pertain to
the Company’s business and to long-term value creation for the Company and its stockholders, and makes recommendations to
the Board regarding these issues. This has helped to develop the Company’s robust ESG strategy. Finally, the Compensation &
Human Resources Committee oversees inclusion of sustainability-related performance goals for determining compensation of all
senior executives. This oversight has resulted in the Company more fully integrating sustainability-related performance metrics into
the strategic & operational compensation metric of all senior executives. The Board also oversees Moody’s policies for assessing
and managing the Company's exposure to risk, including climate-related risks such as business continuity disruption and
reputational or credibility concerns stemming from incorporation of climate-related risks into the credit methodologies and credit
ratings of MIS.
Three Pillars of Moody's Sustainability Strategy
Better Business
Better Lives
Better Solutions
For Moody's operations and value
chain
For Moody's people and communities
For market transformation
Strive to embed responsible, sustainable
decision-making into our operations and
value chain.
Aim to foster a nurturing and inclusive
culture across Moody's people and
communities.
Deliver trusted perspectives on financial
materiality and sustainability
performance that help our customers
decode risk and unlock opportunity.
MOODY'S 2022 10-K
13
HUMAN CAPITAL
Moody's believes that a workforce representing an array of backgrounds and experiences helps create an environment that
maximizes every employee’s contribution, widens the leadership pipeline and enhances our work, including the quality of our
opinions, products and services.
As of December 31, 2022 and 2021, the number of Moody’s employees was as follows:
December 31,
2022
2021
Change
%
MIS
U.S.
MA
MSS
Non-U.S.
Total
U.S.
Non-U.S.
Total
U.S.
Non-U.S.
Total
Total MCO U.S.
Non-U.S.
Total
1,538
3,981
5,519
2,789
4,333
7,122
741
1,044
1,785
5,068
9,358
1,459
3,836
5,295
2,647
3,882
6,529
728
908
1,636
4,834
8,626
14,426
13,460
5 %
4 %
4 %
5 %
12 %
9 %
2 %
15 %
9 %
5 %
8 %
7 %
–
The MIS employee population primarily consists of credit analysts, data and operations analysts, credit strategy and
methodology professionals, software engineers, sales and sales operations, and international strategy teams.
– MA’s employee population primarily consists of software engineers, data and operation analysts, advisory and implementation
teams and economists, as well as sales and sales support professionals.
–
The MSS employee population primarily consists of information technology professionals and other professional staff such as
finance, human resources and legal that support both MIS and MA.
As a global integrated risk assessment firm, attracting, supporting and retaining skilled talent is essential to the Company’s
success. Moody’s addresses these goals by:
–
–
–
championing DE&I among employees;
providing market-competitive compensation, benefits and wellness programs; and
advancing employee engagement, including supporting employee learning, development and skills enhancement.
Diversity, Equity and Inclusion (DE&I)
Moody's believes it is imperative to be visible champions of DE&I because differing thoughts and perspectives help to enrich the
Company’s offerings to its many stakeholders and improve performance and retention. The key objectives for which the Company
focuses with respect to these items include:
–
–
incorporating DE&I into Moody’s business strategy;
establishing leadership accountability with respect to diversity, including through executive compensation programs;
– working to increase diverse representation (e.g., women and underrepresented groups);
–
–
–
–
–
continuing to advance women and underrepresented employees in leadership roles;
enhancing employee training in DE&I matters;
promoting equal employment opportunities in all aspects of employment;
designing the Company’s compensation practices to provide equal pay for equal work; and
incorporating market standards, role, experience and performance into compensation decisions.
The executive leadership team’s focus on these items is vital to attract, support and retain its skilled talent. Additionally, an
Executive Diversity Council is tasked with overseeing the implementation and progression of the DE&I strategy and goals across
our business. Chaired by our CEO and composed of senior leaders who are committed to DE&I best practices, the members of the
council meet quarterly so that DE&I policies are an ongoing focus throughout the company.
14 MOODY'S 2022 10-K
Moody’s has numerous diversity programs and eleven active business resource groups (“BRGs”) that contribute to a more effective
and inclusive work environment by fostering the recruitment, development and retention of diverse and talented individuals. The
BRGs represent 53 chapters and more than 3,600 employees participating globally as of December 31, 2022. The Company’s
diversity programs are designed to expand Moody’s talent pipeline and include the TIDE program (Talent Aspirations & Alignment,
Insights, Development & Career Planning and Exposure & Expansion), which is a high potential employee diversity initiative aimed
at elevating women and ethnically diverse employees at the Senior Vice President/Senior Director level and above; and RISE, a
global program for women at the Vice President/Director level focused on addressing the unique challenges of women in the
workplace.
The Company provides and periodically updates information on its BRGs and other diversity, inclusion and equity programs in its
various sustainability and stakeholder reports and on its DE&I microsite. See moodys.com/sustainability and moodys.com/diversity
for these items. The content of those websites is not incorporated by reference herein.
The charts below present additional information regarding the diversity of the Company's workforce as of December 31, 2022. The
percentage for people of color ("POC") includes those who identified as Asian, Hispanic, Black, American Indian/Alaskan Native,
Hawaiian/Other Pacific Island or two or more races. Officers and Managers are calculated using the job categories: executives,
senior managers, mid-level managers, and first-level managers. The following data is based on Company records and may involve
estimates or assumptions.
Total Workforce: Gender
U.S. Workforce: Ethnicity
41%
59%
6%
48%
46%
Male
Female
White
POC
Not Disclosed
Total Officers and Managers: Gender (1)
U.S. Officers and Managers: Ethnicity
36%
64%
5%
44%
51%
Male
Female
White
POC
Not Disclosed
(1) Total officers and managers by gender represents approximately 90% of employees (excludes certain non-wholly-owned
subsidiaries and newly acquired companies for which this data was not available).
Additionally, approximately 27% of our Board of Directors identified as female and 27% as POC.
Compensation, Health and Wellness
Moody’s compensation programs are designed to foster and maintain a strong, capable, experienced and motivated global
workforce. An important element of the Company’s compensation philosophy is aligning compensation to local market standards so
that Moody's can attract and retain the highly-skilled talent needed to thrive. The Company’s compensation packages include
market-competitive salaries, annual bonuses and equity grants for certain employees.
With respect to benefits, the Company views investments in benefits as an investment in its people. Moody’s is committed to
providing competitive benefits programs designed to care for all employees and their families. The Company’s comprehensive
programs offer resources for physical and mental health that promote preventive care, awareness and support for a healthy
MOODY'S 2022 10-K
15
lifestyle. Beyond delivering health, welfare, retirement benefits, and paid vacation and sick days, Moody’s extends other benefits to
support its employees and their families, such as parental leave and educational support.
The Company also promotes flexible work arrangements, which support the Company’s efforts to create a work atmosphere in
which people feel valued and inspired to give their best. To balance the needs of Moody's employees and business, the Company
has implemented a "PurposeFirst" framework, which fosters purpose-driven decisions relating to how and where Moody's teams
work.
Talent Management, Employee Engagement and Retention
Moody’s talent management framework includes learning and development, talent acquisition, performance management, total
rewards, succession planning and leadership development. Each of these areas supports the Company’s business strategy and
Moody’s culture as a diverse, equitable and inclusive place to work. Moody's views learning and development as an investment in
its people that aligns their professional goals and interests with the success of the Company and helps to retain talent over the
longer-term. A number of training programs are available, including leadership development, professional skills development, and
technical skills.
The Company measures employee engagement via multiple channels, including a Business Engagement Survey (BES) for
employees to provide anonymous and candid feedback to management. This periodic survey helps Moody's management
understand our employees’ level of engagement in critical areas, which include, but are not limited to: company strategy;
opportunities for employee development; and work/life balance. Managers are accountable for identifying opportunity areas and
taking targeted actions based on survey results. The feedback received through the BES is used as a vital input into making
decisions to improve employee experience and retention.
Management monitors employee turnover rates as presented in the chart below:
Voluntary Turnover
Involuntary Turnover
17%
16%
14%
10%
15%
14%
15%
13%
4%
3%
3%
2%
4%
4%
3%
7%
MIS
MA
MSS
Total MCO
MIS
MA
MSS
Total MCO
2022
2021
2022
2021
The increase in the Company's voluntary turnover rates in 2022 compared to 2021 is likely due to the overall strength of the global
labor market for much of 2022, especially for technology-related jobs. The increase in the Company's involuntary turnover rates in
2022 compared to 2021 is primarily due to the 2022-2023 Geolocation Restructuring Program, which resulted in a reduction in
staff, including the relocation of certain job functions.
CLIMATE CHANGE
Climate change is a defining issue of our time, and while Moody’s has a limited direct environmental impact, we do nonetheless
have an important role to play in demonstrating proactive corporate responsibility and best practices when it comes to climate
change mitigation. As such, the Company is taking steps to achieve its commitment to net-zero emissions across its operations and
value chain by 2040 by publishing its TCFD report on an annual basis, issuing its decarbonization plan and taking actions to
achieve its near and long-term net-zero targets.
Moody’s Decarbonization Plan outlines tangible strategies for realizing its climate ambitions, including the procurement of 100% of
renewable electricity in the Company’s office spaces and optimizing efficiencies in its operations through its hybrid work program.
The costs associated with the implementation of the Decarbonization Plan are not expected to be material.
Furthermore, Moody’s has invested in acquisitions, including RMS, that expand its climate data and analytics capabilities further. To
integrate these capabilities into existing offerings, Moody’s is enhancing its technology infrastructure to provide its analysts and
researchers with streamlined access to consistent and high-quality climate insights. These enhancements will allow Moody’s to
seamlessly integrate climate considerations into its solutions to enable sustainable decision-making.
16 MOODY'S 2022 10-K
MOODY’S STRATEGY
Moody's is a global integrated risk assessment firm that empowers organizations to make better decisions. Our data, analytical
solutions and insights help decision-makers identify opportunities and manage the risks of doing business with others.
Mission
Provide trusted insights and standards that help decision-makers act with confidence
Growth Strategy
Invest with intent to grow and scale
Invest with intent to grow and
strengthen our core business
with a foundation of credibility,
transparency, technology, data
and analytics
Invest in integrated solutions
to allow customers to manage
multiple risks, bringing the
best of Moody's capabilities
Invest to successfully scale in
priority growth markets with
highly differentiated products and
services
Execution Priorities
Investment in high growth markets
How we will get it done
Customer first
Develop our people and
culture
Collaborate, modernize and
innovate
Moody’s invests in initiatives to implement the Company’s strategy, including internally-led organic development and targeted
acquisitions. Illustrative examples include:
Enhancements to
ratings quality and
product extensions
Investments that
extend ownership and
participation in joint
ventures and strategic
alliances
Expansion in emerging
markets
New products,
services, content and
technology capabilities
to meet customer
demands
Selective bolt-on
acquisitions that
accelerate the ability to
scale and grow
Moody’s businesses
MOODY'S 2022 10-K
17
PROSPECTS FOR GROWTH
Moody’s believes that the overall long-term outlook remains favorable for continued growth of the global fixed-income market and
related financial information market, which includes information such as credit opinions, research, data, analytics, risk management
tools and related services.
Moody’s growth is influenced by a number of trends that impact financial information markets including:
Health of the
world’s major
economies
Debt capital
markets activity
Disintermediation
of credit markets
Fiscal and
monetary policy of
governments
Expansion of
market for
integrated data
and analytics
solutions
Business
investment
spending,
including mergers
and acquisitions
In an environment of increasing financial complexity and heightened attention to credit analysis and risk management, Moody’s is
well positioned to benefit from continued growth in global fixed-income market activity and more widespread use of credit ratings,
research and related analytical products. Moody’s expects that these developments will support continued long-term demand for
high quality, independent credit opinions, research, data, analytics, risk management tools and related services. Moreover, pricing
opportunities aligned with customer value creation and advances in information technology present growth opportunities for
Moody’s.
Moody’s operations are subject to various risks, as more fully described in Part I, Item 1A “Risk Factors,” inherent in conducting
business on a global basis. Such risks include currency fluctuations and possible nationalization, expropriation, exchange and price
controls, changes in the availability of data from public sector sources, limits on providing information across borders and other
restrictive governmental actions.
MIS Prospects for Growth
Strong secular trends should continue to provide long-term growth opportunities in MIS. Key growth drivers include:
EXPANDING GLOBAL GDP
Debt issuance driven by global GDP
growth
ONGOING INCREASE
IN REFUNDING WALLS
Refunding needs support MIS growth
AGENCY OF CHOICE
Trusted brand recognized for in-depth
insights and research
GEOGRAPHIC EXPANSION
ENHANCING CAPABILITIES
BANK DISINTERMEDIATION
Serving domestic markets via Moody’s
Local and affiliates in key markets
Meeting customers’ evolving risk
assessment demands, including ESG &
Climate and Cyber
Disintermediation of credit is an
ongoing trend in the global capital
markets
18 MOODY'S 2022 10-K
In addition to the factors noted above, growth in global fixed income markets in a given year is dependent on many macroeconomic
and capital market factors including:
Interest
rates
Business
investment
spending
Corporate
refinancing
needs
Merger and
acquisition
activity
Issuer
financial
health
Consumer
borrowing
levels
Securitization
activity
Expansion
of ratings
coverage
Expansion
into
emerging
markets
Rating fees paid by debt issuers account for most of the revenue of MIS. Therefore, a substantial portion of MIS’s revenue is
dependent upon the dollar-equivalent volume and number of ratable debt securities issued in the global capital markets. However,
annual fee arrangements with frequent debt issuers, annual debt monitoring fees and annual fees from commercial paper and
medium-term note programs, bank deposit ratings, insurance company financial strength ratings, mutual fund ratings, and other
areas partially mitigate MIS’s dependence on the volume or number of new debt securities issued in the global fixed-income
markets.
MA Prospects for Growth
As an integrated risk assessment business, MA helps customers build resilience by providing tools to measure the financial
implications of risk and capitalize on related opportunities. Growth in MA is likely to be driven by expansion across customer
sectors fostered by a broadening of MA's data, analytics and software solutions to meet an expanded set of customer use cases.
MA’s business growth is driven by a number of factors, including:
STRONG
CUSTOMER
RETENTION RATES
CROSS-SELLING,
UPGRADES &
PRICING
CONTINUED SAAS
TRANSITION
INCREASED
DISTRIBUTION
CAPACITY
NEW PRODUCT
DEVELOPMENT
Moody’s expects that MA products and services that measure and manage risk, provide business insights, and enable compliance
with financial regulation, including AML, KYC, and accounting standards, will continue to be in demand from institutions worldwide.
To respond to other sources of demand and drive growth, MA is actively investing in new product innovation, enhanced data sets
and improved delivery services (e.g., software-as-a-service). These efforts should support broader distribution of MA’s capabilities,
deepen relationships with existing customers and drive new customer acquisition.
Competition
MIS competes with other CRAs and with investment banks and brokerage firms that offer credit opinions and research. Many users
of MIS’s ratings also have in-house credit research capabilities. There are also some rating markets, based on industry, geography
and/or instrument type, in which Moody’s has made investments and obtained market positions superior to its competitors, while in
other markets, the reverse is true.
MA competes broadly in the financial information and enterprise risk software industries against various diversified competitors.
MA’s main competitors within Decision Solutions are providers of software and analytic solutions. In Research & Insights, MA faces
competition from providers of economic data, financial research and analysis. MA's main competitors within Data & Information are
providers of commercial and financial data.
Regulation
MIS, certain of the Company's credit rating affiliates and many of the issuers and/or securities that MIS and the affiliates rate, are
subject to extensive regulation in the U.S., EU and in other countries (including by state and local authorities). In addition, some of
the services offered by MA and its affiliates are subject to regulation in a number of countries. MA also derives a significant amount
of its sales from banks and other financial services providers who are subject to regulatory oversight and who are required to pass
through certain regulatory requirements to key suppliers such as MA. Existing and proposed laws and regulations can impact the
Company’s operations, products and the markets in which the Company operates. Additional laws and regulations have been
proposed or are being considered. Each of the existing, adopted, proposed and potential laws and regulations can increase the
costs and legal risk associated with the Company’s operations, including the issuance of credit ratings, and may negatively impact
the Company’s profitability and ability to compete, or result in changes in the demand for the Company's products and services, in
the manner in which the Company's products and services are utilized and in the manner in which the Company operates.
MOODY'S 2022 10-K
19
In the U.S., CRAs are subject to extensive regulation primarily pursuant to the Reform Act and the Dodd-Frank Act. The Reform Act
added Section 15E to the Exchange Act and provided the SEC with the authority to establish a registration and oversight program
for CRAs registered as NRSROs. The Dodd-Frank Act added additional provisions to Section 15E.
In the EU, the CRA industry is registered and supervised through a pan-EU regulatory framework. ESMA has direct supervisory
responsibility for registered CRAs throughout the EU. MIS’s EU CRA subsidiaries are registered and are subject to CRA regulation
in the EU and periodic inspection by ESMA. From time to time, ESMA publishes interpretive guidance, or thematic reports
regarding various aspects of the CRA regulation and, annually, sets out its work program for the forthcoming year. The Commission
is moving forward with their sustainable finance strategy which was released in July 2021. This includes further assessments in
respect of both CRAs and sustainability ratings and research, which might lead to legislative action.
On December 31, 2020, the MIS U.K. registered CRA ceased to be registered with and regulated by ESMA and became subject to
regulation by the U.K. Financial Conduct Authority (FCA). Regulatory arrangements also came into effect in both the U.K. and the
EU to allow credit ratings to be available for regulatory use in both the EU and the U.K. MIS has put arrangements in place to
endorse its U.K. credit ratings into the EU and its EU credit ratings into the U.K. The FCA has recently stated that it intends to
launch a review of competition in the market for credit rating data feeds during the first quarter of 2023. The U.K. Government is
also considering bringing ESG data and ratings firms within the scope of FCA authorization and regulation.
Intellectual Property
Moody’s and its affiliates own and control a variety of intellectual property, including but not limited to:
Proprietary information
Publications
Databases
Trademarks
Research
Software tools and
applications
Domain names
Models and
methodologies
Other proprietary materials
that, in the aggregate, are
of material importance to
Moody’s business
Management of Moody’s believes that each of the trademarks and related corporate names, marks and logos relating to its
businesses, including those containing the term “Moody’s”, are of material importance to the Company.
The Company, primarily through MA and its subsidiaries, licenses certain of its databases, software applications, credit risk models,
research and other publications and services that contain intellectual property to its customers. In addition, the Company licenses
certain databases, software applications, assessments, research and other publications and services relating to ESG and climate
risks that contain intellectual property to its customers. These licenses are provided pursuant to standard agreements containing
customary restrictions and intellectual property protections.
In addition, Moody’s licenses from third parties certain technology, data and other intellectual property rights. Specifically, Moody’s
obtains licenses from third parties to use financial information (such as market and index data, financial statement data, research
data, default data, and security identifiers) as well as software development tools and libraries. In addition, certain of the
Company’s subsidiaries obtain from third party information providers certain financial, credit risk, compliance, management,
ownership, news and/or other data worldwide, which are distributed through certain of Moody's information products. The Company
obtains such technology and intellectual property rights from generally available commercial sources. The Company also utilizes
generally available open source software and libraries for internal use and subject to appropriately permissive open source
licenses, to carry out routine functions in certain of the Company’s software products. Most of such technology and intellectual
property is available from a variety of sources. Although certain financial information (particularly security identifiers, certain pricing
or index data, and certain company financial data in selected geographic markets) is available from a limited number of sources,
Moody’s does not believe it is dependent on any one data source for a material aspect of its business.
The names of Moody’s products and services referred to herein are trademarks, service marks or registered trademarks or service
marks owned by or licensed to Moody’s or one or more of its affiliates. The Company owns patents (including granted, allowed and
pending patents). None of the Company's intellectual property is subject to a specific expiration date, except to the extent that the
patents and the copyright in items that the Company creates (such as credit reports, research, software, and other written opinions)
expire pursuant to relevant law.
20 MOODY'S 2022 10-K
The Company considers its intellectual property to be proprietary, and Moody’s relies on a combination of copyright, trademark,
trade secret, patent, non-disclosure and other contractual and technological safeguards for protection. Moody’s also pursues
instances of third-party infringement of its intellectual property in order to protect the Company’s rights.
Available Information
Moody’s investor relations internet website is https://ir.moodys.com/. Under the “SEC Filings” tab at this website, the Company
makes available free of charge its annual reports on Form 10-K, proxy and other information statements, quarterly reports on Form
10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after they are filed with, or
furnished to, the SEC.
The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and other information statements that
the Company files electronically with the SEC. The SEC’s internet site is https://www.sec.gov/.
Information About Our Executive Officers
Name, Age, Position and Biographical Data
Robert Fauber, 52
President and Chief Executive Officer
Mr. Fauber has served as the Company’s President and Chief Executive Officer since January
2021. Mr. Fauber joined the Board of Directors in October 2020 and he currently serves on the
Executive Committee of the Board of Directors. Prior to serving as CEO, Mr. Fauber served as
Chief Operating Officer from November 2019 to December 2020, as President of MIS from
June 2016 to October 2019, as Senior Vice President—Corporate & Commercial Development
of Moody’s Corporation from April 2014 to May 2016, and was Head of the MIS Commercial
Group from January 2013 to May 2016. From April 2009 through April 2014, he served as
Senior Vice President—Corporate Development of Moody’s Corporation. Mr. Fauber served as
Vice President—Corporate Development from September 2005 to April 2009. Prior to joining
Moody’s, Mr. Fauber served in several roles at Citigroup and its investment banking subsidiary.
John J. Goggins, 62
Executive Vice President and General Counsel
Mr. Goggins has served as the Company’s Executive Vice President and General Counsel
since April 2011 and the Company’s Senior Vice President and General Counsel from October
2000 until April 2011. Mr. Goggins joined Moody’s Investors Service, Inc. in February 1999 as
Vice President and Associate General Counsel.
Mark Kaye, 43
Executive Vice President and Chief Financial Officer
Mr. Kaye has served as the Company’s Executive Vice President—Chief Financial Officer
since April 2021 and as Senior Vice President—Chief Financial Officer from August 2018 to
April 2021. Prior to joining the Company, Mr. Kaye was Senior Vice President and Head of
Financial Planning and Analysis at Massachusetts Mutual Life Insurance Company
(MassMutual) since February 2016, and Chief Financial Officer of MassMutual U.S. since July
2015. Prior to that, Mr. Kaye served as Chief Financial Officer and Senior Vice President,
Retirement Solutions, at Voya Financial from 2011 to 2015. Mr. Kaye previously held various
senior financial and risk reporting positions at ING U.S. and ING Group, and was in the
investment banking division of Credit Suisse First Boston.
MOODY'S 2022 10-K
21
Name, Age, Position and Biographical Data
Caroline Sullivan, 54
Chief Accounting Officer and Corporate Controller
Ms. Sullivan has served as the Company’s Chief Accounting Officer and Corporate Controller
since December 2018. Prior to joining the Company, Ms. Sullivan served in several roles at
Bank of America from 2011 to 2018, where her last position held was Managing Director and
Global Banking Controller. Prior to that role, Ms. Sullivan supported the Global Wealth &
Investment Management business from 2015 to 2017 in a variety of positions including
Controller. Ms. Sullivan, a CPA, previously held various senior positions at several banks and a
major accounting firm, and is a member of the Board of Directors of Financial Executives
International.
Stephen Tulenko, 55
President, Moody’s Analytics
Mr. Tulenko has served as President of Moody’s Analytics since November 2019. Mr. Tulenko
served as Executive Director of ERS from 2013 to October 2019 and as Executive Director of
Global Sales, Customer Service and Marketing from 2008 to 2013. Prior to the formation of
Moody’s Analytics, he held various sales, product development and product strategy roles at
Moody’s Investors Service, Inc. Mr. Tulenko joined Moody’s in 1990.
Michael West, 54
President, Moody’s Investors Service
Mr. West has served as President of Moody’s Investors Service, Inc. since November 2019.
Mr. West served as Managing Director—Head of MIS Ratings and Research from June 2016
to October 2019. Previously, Mr. West served as Managing Director—Head of Global
Structured Finance from February 2014 to May 2016 and Managing Director—Head of Global
Corporate Finance from January 2010 to January 2014. Earlier in his career, he was also
responsible for the research strategy for the ratings businesses and before that led Corporate
Finance for the EMEA Region, European Corporates and the EMEA leveraged finance
business. Prior to joining Moody’s in 1998, Mr. West worked at Bank of America and HSBC in
various credit roles.
22 MOODY'S 2022 10-K
ITEM 1A.
RISK FACTORS
Please carefully consider the following discussion of significant factors, events and uncertainties that make an investment in the
Company’s securities risky and provide important information for the understanding of the “forward-looking” statements discussed
in Item 7 of this Form 10-K and elsewhere. These risk factors should be read in conjunction with the other information in this annual
report on Form 10-K.
The events and consequences discussed in these risk factors could, in circumstances the Company may not be able to accurately
predict, recognize, or control, have a material adverse effect on Moody’s business, financial condition, operating results (including
components of the Company’s financial results such as sales and profits), cash flows and stock price. These risk factors do not
identify all risks that Moody’s faces. The Company could also be affected by factors, events, or uncertainties that are not presently
known to the Company or that the Company currently does not consider to present significant risks. In addition to the effects of
general economic conditions, including inflation and related monetary policy actions in response to inflation, and resulting global
disruptions on our business and operations discussed in Item 7 of this Form 10-K and in the risk factors below, additional or
unforeseen effects from the global economic climate may give rise to or amplify many of these risks discussed below.
A. Legal and Regulatory Risks
Moody’s Faces Risks Related to U.S. Laws and Regulations Affecting the Credit Rating Industry and Moody’s Customers.
Moody’s operates in a highly regulated industry and is subject to extensive regulation by federal, state and local authorities in the
U.S., including the Reform Act and the Dodd-Frank Act. These regulations are complex, continually evolving and have tended to
become more stringent over time. Additionally, changes in Congress may increase the uncertainty with regard to potential changes
in these laws and regulations and the enforcement of any new or existing legislation or directives by government authorities. See
“Regulation” in Part I, Item 1 of this annual report on Form 10-K for more information. The current laws and regulations:
–
seek to encourage, and may result in, increased competition among CRAs and in the credit rating business;
– may result in alternatives to credit ratings or changes in the pricing of credit ratings;
–
–
–
–
restrict the use of information in the development or maintenance of credit ratings;
increase regulatory oversight of the credit markets and CRA operations;
provide the SEC with direct jurisdiction over CRAs that seek NRSRO status, and grant authority to the SEC to inspect the
operations of CRAs; and
provide for enhanced oversight standards and specialized pleading standards, which may result in increases in the number of
legal proceedings claiming liability for losses suffered by investors on rated securities and aggregate legal defense costs.
If these laws and regulations, and any future rulemaking or court rulings, reduce demand for credit ratings or increase costs,
Moody’s may be unable to pass such costs through to customers. In addition, there may be uncertainty over the scope,
interpretation and administration of such laws and regulations. The Company’s compliance and efforts to mitigate the risk of fines,
penalties or other sanctions can result in significant expenses. Legal proceedings that are increasingly lengthy can result in
uncertainty over and exposure to liability.
It is difficult to accurately assess the future impact of legislative and regulatory requirements on Moody’s business and its
customers’ businesses. For example, new laws and regulations may affect MIS’s communications with issuers as part of the rating
assignment process, alter the manner in which MIS’s credit ratings are developed, assigned and communicated, affect the manner
in which MIS or its customers or users of credit ratings operate, impact the demand for MIS’s credit ratings and alter the economics
of the credit ratings business, including by restricting or mandating business models for CRAs. Further, speculation concerning the
impact of legislative and regulatory initiatives and the increased uncertainty over potential liability and adverse legal or judicial
determinations may negatively affect Moody’s stock price. Although these legislative and regulatory initiatives apply to CRAs and
credit markets generally, they may affect Moody’s in a disproportionate manner. Each of these developments increase the costs
and legal risk associated with the issuance of credit ratings and can have a material adverse effect on Moody’s operations,
profitability and competitiveness, the demand for credit ratings and the manner in which such ratings are utilized.
In addition, MA derives a significant amount of its sales from banks and other financial services providers who are subject to
regulatory oversight. U.S. banking regulators, including the Office of the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau, as well as
many state agencies, have issued guidance to insured depository institutions and other providers of financial services on assessing
and managing risks associated with third-party relationships, which include all business arrangements between a financial services
provider and another entity, by contract or otherwise, and generally requires banks and financial services providers to exercise
comprehensive oversight throughout each phase of a bank or financial service provider’s business arrangement with third-party
service providers, and instructs banks and financial service providers to adopt risk management processes commensurate with the
level of risk and complexity of their third-party relationships. In light of this, MA’s existing or potential bank and financial services
customers subject to this guidance have sought to and may further revise their third-party risk management policies and processes
and the terms on which they do business with MA. This can result in delayed or reduced sales to such customers, adversely affect
MA’s relationship with such customers, increase the costs of doing business with such customers and/or result in MA assuming
greater financial and legal risk under service agreements with such customers.
MOODY'S 2022 10-K
23
Moody’s Faces Risks Related to Financial Reforms Outside the U.S. Affecting the Credit Rating Industry and Moody’s
Customers.
In addition to the extensive and evolving U.S. laws and regulations governing the industry, foreign jurisdictions have taken
measures to regulate CRAs and the markets for credit ratings. In particular, the EU has adopted a common regulatory framework
for CRAs operating in the EU and continues to monitor the credit rating industry and analyze approaches that may strengthen
existing regulation. Credit ratings emanating from outside the EU are subject to ESMA’s oversight if they are endorsed into the EU.
Additionally, other foreign jurisdictions have taken measures to increase regulation of CRAs and markets for credit ratings. See
“Regulation” in Part 1, Item 1 of this annual report on Form 10-K for more information.
The EU and other jurisdictions, as discussed further below, adopt legislation and engage in rulemaking on an ongoing basis that
significantly impacts operations and the markets for the Company's products and services. Future laws and regulations could
extend to products and services not currently regulated. These regulations could: (i) affect the need for debt securities to be rated,
(ii) expand supervisory remits to include credit ratings issued outside the home jurisdiction and used for regulatory purposes, (iii)
increase the level of competition in the market for credit ratings, (iv) establish criteria for credit ratings or limit the entities authorized
to provide credit ratings, (v) restrict the collection, use, accuracy, correction and sharing of personal information by CRAs, or (vi)
regulate pricing (for example to require fees that are based on costs and are non-discriminatory) on products and services
provided by MA such as those products that incorporate credit ratings and research originated by MIS. Future regulations could
also affect products and services the Company offers in the ESG sector.
Following the Brexit implementation period that ended December 31, 2020 the MIS U.K. registered CRA ceased to be registered
with and regulated by ESMA and became subject to regulation by the U.K. Financial Conduct Authority ("FCA"). MIS put
arrangements in place to endorse its U.K. credit ratings into the EU and its EU credit ratings into the U.K. On December 31, 2020,
the U.K. also onshored the EU CRA Regulation, with certain necessary modifications, into U.K. domestic law (the “U.K. CRA
Regulation”). The U.K. CRA Regulation contains requirements for the registration, regulation and supervision of CRAs based in the
U.K. It also sets out the circumstances in which U.K. financial institutions can use credit ratings for regulatory purposes, as well as
specific obligations for issuers, originators and sponsors relating to structured finance instruments. It is unclear if the regulation of
CRAs in the EU and the U.K. will differ over time, and divergent regulation between the EU and the U.K. over time or differing
interpretations by the FCA and ESMA of CRA regulation could adversely affect MIS’s business through additional operating
obligations and resulting increased cost.
In February 2022, the FCA published a portfolio letter on its CRA supervision strategy. Among other things, the FCA explained that
it takes a holistic approach to supervising CRAs. This means that if a CRA or the group to which it belongs also carries on
unregulated activities (for example, ESG ratings), the FCA may assess these unregulated activities as part of its supervision of
regulated activities. CRAs need to be able to demonstrate that they have considered, and are actively managing, potential risks
from any unregulated activities. The FCA also identified its supervisory priorities for CRAs, which consist of: ratings process and
methodologies; governance and oversight; market and perimeter risks; and operational resilience and resourcing. The FCA also
identified some other priority areas where it will be carrying out work relevant to CRAs, including a market study on accessing and
using wholesale data and ongoing work on ESG ratings.
Both of Moody’s segments face risks related to financial reforms outside the U.S. affecting the credit rating industry and Moody’s
customers. MIS is a registered entity and is therefore subject to formal regulation and periodic or other inspections in the EU and
other foreign jurisdictions, such as, but not limited to, Hong Kong and China, where it operates through registered subsidiaries. For
example:
–
–
–
In the EU and the U.K., applicable rules include procedural requirements with respect to credit ratings of sovereign issuers,
liability for intentional or grossly negligent failure to abide by applicable regulations, mandatory rotation requirements of CRAs
hired by issuers of securities for credit ratings of resecuritizations, and restrictions on CRAs or their shareholders if certain
ownership thresholds are crossed. Additional procedural and substantive requirements include conditions for the issuance of
credit ratings, rules regarding the organization of CRAs, restrictions on activities deemed to create a conflict of interest,
including requirements that fees be based on costs and non-discriminatory, and special requirements for credit ratings of
structured finance instruments.
In Hong Kong, applicable rules include liability for the intentional or negligent dissemination of false and misleading information
and procedural requirements for the notification of certain matters to regulators. In addition, MIS Hong Kong is subject to a
code of conduct applicable to CRAs that imposes procedural and substantive requirements on the preparation and issuance of
credit ratings, restrictions on activities deemed to create a conflict of interest including the disclosure of its compensation
arrangements with rated entities and special requirements for credit ratings of structured finance instruments. A failure to
comply with these procedural and substantive requirements also exposes MIS Hong Kong to the risk of regulatory
enforcement action which could result in financial penalties or, in serious cases, affect its ability to conduct credit rating
activities in Hong Kong.
In China, while MIS is not a licensed CRA, it does issue global credit ratings on Chinese issuers from offices outside of China.
In addition, the Company holds a 30% investment in CCXI, a domestic CRA licensed in China. China has laws applicable to
domestic CRAs as well as foreign investment in such entities and entities in general (including national security review). Such
laws are broadly crafted and the implementation and interpretation of such laws are subject to the broad discretion of Chinese
regulators, which could affect the Company's ability to conduct business in China.
24 MOODY'S 2022 10-K
–
In addition, U.S. economic sanctions have increasingly targeted Chinese persons. In response, China issued a blocking
statute that establishes a framework for limiting the effect of foreign sanctions on Chinese persons. Blocking statutes typically
create conflicts of law. An entity that is subject to conflicting laws in multiple jurisdictions may need to determine a means to
comply with such laws. Such conflicts could eventually affect the ability of entities to adhere to applicable laws.
With respect to MA, regulators in Europe and other foreign markets in which MA is active have issued guidance similar to that
issued in the U.S. relating to financial institutions’ assessment and management of risks associated with third-party relationships. In
light of this, MA’s existing or potential bank and financial services customers subject to this guidance have sought and may further
revise their third-party risk management policies and processes and the terms on which they do business with MA. This can result
in delayed or reduced sales to such customers, adversely affect MA’s relationship with such customers, increase the costs of doing
business with such customers and/or result in MA assuming greater financial and legal risk under service agreements with such
customers.
Although Moody’s will monitor developments related to financial reforms outside the U.S. affecting the credit rating industry and
Moody’s customers, Moody’s cannot predict the extent of such future laws and regulations, and the effect that they will have on
Moody’s business or the potential for increased exposure to liability could be significant. For example, compliance with the EU,
U.K. and other foreign regulations may increase costs of operations and could have a significant negative effect on Moody’s
operations, profitability or ability to compete, or the markets for its products and services, including in ways that Moody’s presently
is unable to predict. In addition, exposure to increased liability under the EU, U.K. regulations and regulations of other foreign
jurisdictions may further increase costs and legal risks associated with the issuance of credit ratings and materially and adversely
impact Moody’s results of operations. Financial reforms in the EU, U.K. and other foreign jurisdictions may have a material adverse
effect on Moody’s business, operating results and financial condition.
The Company Faces Exposure to Litigation and Government Regulatory Proceedings, Investigations and Inquiries
Related to Rating Opinions and Other Business Practices.
Moody’s faces exposure to litigation and government and regulatory proceedings, investigations and inquiries related to MIS’s
ratings actions, as well as other business practices and products within both MIS and MA. When the market value of credit-
dependent instruments has declined or defaults have occurred, whether as a result of difficult economic times, turbulent markets or
otherwise, the number of investigations and legal proceedings that Moody’s has faced has increased significantly. Parties who
invest in securities rated by MIS have pursued claims against MIS or Moody’s for losses they faced in their portfolios. For instance,
Moody’s faced numerous class action lawsuits and other litigation, government investigations and inquiries concerning events
linked to the U.S. subprime residential mortgage sector and broader deterioration in the credit markets during the financial crisis of
2007-2008. Evolving expectations on ESG disclosures and reporting could also result in new regulatory actions at a corporate and
business unit level. Legal proceedings impose additional expenses on the Company and require the attention of senior
management to an extent that may significantly reduce their ability to devote time to addressing other business issues, and any of
these proceedings, investigations or inquiries could ultimately result in adverse judgments, damages, fines, penalties or activity
restrictions. Risks relating to legal proceedings are heightened in foreign jurisdictions that lack the legal protections or liability
standards comparable to those that exist in the U.S. In addition, new laws and regulations have been and may continue to be
enacted that establish lower liability standards, shift the burden of proof or relax pleading requirements, thereby increasing the risk
of successful litigations in the U.S. and in foreign jurisdictions. These litigation risks are often difficult to assess or quantify. Moody’s
may not have adequate insurance or reserves to cover these risks, and the existence and magnitude of these risks often remains
unknown for substantial periods of time. Furthermore, when Moody’s is unable to achieve dismissals at an early stage and litigation
matters proceed to trial, the aggregate legal defense costs incurred by Moody’s increase substantially, as does the risk of an
adverse outcome.
Additionally, as litigation or the process to resolve pending matters progresses, Moody’s will continue to review the latest
information available and may change its accounting estimates, which could require Moody’s to record or increase liabilities in the
consolidated financial statements in future periods. See Note 21 to the consolidated financial statements for more information
regarding ongoing investigations and civil litigation that the Company currently faces. Due to the number of these proceedings and
the significant amount of damages sought, there is a risk that Moody’s will be subject to judgments, settlements, fines, penalties or
other adverse results that have a material adverse effect on its business, operating results and financial condition.
The Company Is Exposed to Risks Related to Its Compliance and Risk Management Programs.
Moody’s operates in a number of countries, and as a result the Company is required to comply with and quickly adapt to numerous
international and U.S. federal, state and local laws and regulations. The Company’s ability to comply with applicable laws and
regulations, including anti-corruption, antitrust and securities trading laws, is largely dependent on its establishment and
maintenance of compliance, review and reporting systems, as well as its ability to attract and retain qualified compliance and risk
management personnel. Moody’s policies and procedures to identify, evaluate and manage the Company’s risks, including risks
resulting from acquisitions, may not be fully effective, and Moody’s employees or agents may engage in misconduct, fraud or other
errors. It is not always possible to deter such errors, and the precautions the Company takes to prevent and detect this activity may
not be effective in all cases. If Moody’s employees violate its policies or if the Company’s risk management methods are not
effective, the Company may be subject to criminal and civil liability, the suspension of the Company’s employees, fines, penalties,
regulatory sanctions, injunctive relief, exclusion from certain markets or other penalties, and may suffer harm to its reputation,
financial condition and operating results.
MOODY'S 2022 10-K
25
Moody’s Faces Risks Related to Protecting Its Intellectual Property Rights.
Moody’s considers many aspects of its products and services to be proprietary. Failure to protect the Company’s intellectual
property adequately could harm its reputation and affect the Company’s ability to compete effectively. Businesses the Company
acquires also involve intellectual property portfolios, which increase the challenges the Company faces in protecting its strategic
advantage. In addition, the Company’s operating results can be adversely affected by inadequate or changing legal and
technological protections for intellectual property and proprietary rights in some jurisdictions and markets. The lack of strong legal
and technological intellectual property protections in foreign jurisdictions in which we operate may increase our vulnerability and
may pose risks to our business. From time to time, laws are passed that require publication of certain information, in some cases at
no cost, that the Company considers to be its intellectual property and that it currently sells or licenses for a fee, which could result
in lost revenue.
Unauthorized third parties may also try to obtain and use technology or other information that the Company regards as proprietary.
It is also possible that Moody’s competitors or other entities could obtain patents related to the types of products and services that
Moody’s offers, and attempt to require Moody’s to stop developing or marketing the products or services, to modify or redesign the
products or services to avoid infringing, or to obtain licenses from the holders of the patents in order to continue developing and
marketing the products and services. Even if Moody’s attempts to assert or protect its intellectual property rights through litigation, it
may require considerable cost, time and resources to do so, and there is no guarantee that the Company will be successful. The
Company’s ability to establish, maintain and protect its intellectual property and proprietary rights against theft, misappropriation or
infringement could be materially and adversely affected by insufficient and/or changing proprietary rights and intellectual property
legal protections in some jurisdictions and markets. These risks, and the cost, time and resources needed to address them, may
increase as the Company’s business grows and its profile rises in countries with intellectual property regimes that are less
protective than the rules and regulations applied in the United States.
Moody’s Faces Risks Related to Tax Matters, Including Changes in Tax Rates or Tax Rules.
As a global company, Moody’s is subject to taxation in the United States and various other countries and jurisdictions. As a result,
our effective tax rate is determined based on the taxable income and applicable tax rates in the various jurisdictions in which the
Company operates. Moody’s future tax rates could be affected by changes in the composition of earnings in countries or states with
differing tax rates or other factors, including by increased earnings in jurisdictions where Moody’s faces higher tax rates, losses
incurred in jurisdictions for which Moody’s is not able to realize the related tax benefit, or changes in foreign currency exchange
rates. Changes in the tax, accounting and other laws, treaties, regulations, policies and administrative practices, or changes to their
interpretation or enforcement, including changes applicable to multinational corporations such as the Base Erosion Profit Shifting
and the global minimum tax rate initiatives being led by the Organization for Economic Co-operation and Development, which
requires companies to disclose more information to tax authorities on operations around the world, and the European Union’s state
aid rulings, could have a material adverse effect on the Company’s effective tax rate, results of operations and financial condition
and may lead to greater audit scrutiny of profits earned in various countries.
In addition, Moody’s is subject to regular examination of its income tax returns by the Internal Revenue Service and other tax
authorities around the world. Moody’s regularly assesses the likelihood of favorable or unfavorable outcomes resulting from these
examinations to determine the adequacy of its provision for income taxes, including unrecognized tax benefits; however,
developments in an audit or litigation could materially and adversely affect the Company. Although the Company believes its tax
estimates and accruals are reasonable, there can be no assurance that any final determination will not be materially different than
the treatment reflected in its income tax provisions, accruals and unrecognized tax benefits, which could materially and adversely
affect the Company’s business, operating results, cash flows and financial condition.
B. Risks Related to our Business
The Company is Exposed to Legal, Economic, Operational and Regulatory Risks of Operating in Multiple Jurisdictions.
Moody’s conducts operations in various countries outside the U.S. and derives a significant portion of its revenue from foreign
sources. Changes in the economic condition of the various foreign economies in which the Company operates have an impact on
the Company’s business. For example, economic uncertainty in the Eurozone or elsewhere, including, but not limited to, in Latin
America or China, affects the number of securities offerings undertaken within those particular areas. In addition to the risks
addressed elsewhere in this section, operations abroad expose Moody’s to a number of legal, economic and regulatory risks such
as:
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economic and geopolitical market conditions, including the effect of these conditions on customers and customer retention;
exposure to exchange rate movements between foreign currencies and USD;
restrictions on the ability to convert local currency into USD and the costs, including the tax impact, of repatriating cash held by
entities outside the U.S.;
– U.S. laws affecting overseas operations, including domestic and foreign export and import restrictions, tariffs and other trade
barriers and restrictions, such as those related to the U.S.’s relationship with China and embargoes and sanctions laws with
respect to Russia, including the ongoing conflict between Ukraine and Russia, and Venezuela;
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differing and potentially conflicting legal or civil liability, compliance and regulatory standards;
26 MOODY'S 2022 10-K
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current and future regulations relating to the imposition of mandatory rotation requirements on CRAs hired by issuers of
securities;
uncertain and evolving laws and regulations, including those applicable to the financial services industries, such as the
European Union’s implementation of the Markets in Financial Instruments Directive II, MiFID II, in January 2018, and to the
protection of intellectual property;
uncertainty regarding the future relationship between the U.S. and China, which may result in further restrictions or actions by
the U.S. government with respect to doing business in China and/or by the Chinese government with respect to business
conducted by foreign entities in China;
the possibility of nationalization, expropriation, price controls and other restrictive governmental actions;
competition with CRAs that have greater familiarity, longer operating histories and/or support from local governments or other
institutions;
uncertainties in obtaining data and creating products and services relevant to particular geographic markets;
reduced protection for intellectual property rights;
longer payment cycles and possible problems in collecting receivables;
differing accounting principles and standards;
difficulties in staffing and managing foreign operations;
difficulties and delays in translating documentation into foreign languages;
potentially adverse tax consequences; and
complexities of compliance with employment laws and new data and cybersecurity rules in numerous jurisdictions.
Additionally, Moody’s is subject to complex U.S., foreign and other local laws and regulations that are applicable to its operations
abroad, such as laws and regulations governing economic and trade sanctions, tariffs, embargoes, and anticorruption including the
Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act of 2010 and other similar local laws. The internal controls, policies and
procedures and employee training and compliance programs to deter prohibited practices the Company has implemented may not
be effective in preventing employees, contractors or agents from violating or circumventing such internal policies or from material
violations of applicable laws and regulations. Any determination or allegations, even if unfounded, that the Company has violated
sanctions, anti-bribery or anti-corruption laws could have a material adverse effect on Moody’s business, operating results and
financial condition. Compliance with international and U.S. laws and regulations that apply to the Company’s international
operations increases the cost of doing business in foreign jurisdictions. Violations of such laws and regulations may result in severe
fines and penalties, criminal sanctions, administrative remedies, and restrictions on business conduct and could have a material
adverse effect on Moody’s reputation, its ability to attract and retain employees, its business, operating results and financial
condition.
Moody’s Operations are Exposed to Risks from Infrastructure Malfunctions or Failures.
Moody’s ability to conduct business may be materially and adversely impacted by a disruption in the infrastructure that supports its
businesses and the communities in which Moody’s is located, including: (i) New York City, the location of Moody’s headquarters, (ii)
major cities worldwide in which Moody’s has offices, (iii) locations in Europe that may be affected by the conflict in Russia/Ukraine;
and (iv) locations in China used for certain Moody’s work. This may include a disruption involving physical or technological
infrastructure (whether or not controlled by the Company), including the Company’s electronic delivery systems, the Company's
data center facilities, or the Internet, used by the Company or third parties with or through whom Moody’s conducts business. Many
of the Company’s products and services are delivered electronically and the Company’s customers depend on the Company’s
ability to receive, store, process, transmit and otherwise rapidly handle very substantial quantities of data and transactions on
computer-based networks. Some of Moody’s operations require complex processes and the Company’s extensive controls to
reduce the risk of error inherent in our operations cannot eliminate such risk completely. To the extent the Company grows through
acquisitions, newly acquired businesses may not have invested in technological infrastructure and disaster recovery to the same
extent as Moody's has. As their systems are integrated into Moody's, a vulnerability could be introduced, which could impact
platforms across the Company. The Company’s customers also depend on the continued capacity, reliability and security of the
Company’s telecommunications, data centers, networks and other electronic delivery systems, including its websites and
connections to the Internet. The Company’s employees also depend on these systems for internal use. Any significant failure,
compromise, cyber-breach, interruption or a significant slowdown of operations of the Company’s infrastructure, whether due to
human error, capacity constraints, hardware failure or defect, weather (including climate change), natural disasters, fire, power
loss, telecommunication failures, break-ins, sabotage, intentional acts of vandalism, acts of terrorism, political unrest, pandemic
(including the COVID-19 pandemic), war or otherwise, may impair the Company’s ability to deliver its products and services.
Moody’s efforts to secure and plan for potential disruptions of its major operating systems may not be successful. The Company
relies on third-party providers, including, increasingly, cloud-based service providers, to provide certain essential services. While
the Company believes that such providers are reliable, the Company has limited control over the performance of such providers. To
the extent any of the Company’s third-party providers ceases to provide these services in an efficient, cost-effective manner or fails
to adequately expand its services to meet the Company’s needs and the needs of the Company’s customers, the Company could
MOODY'S 2022 10-K
27
experience lower revenues and higher costs. Additionally, although the Company maintains processes to prevent, detect and
recover from a disruption, the Company also does not have fully redundant systems for most of its smaller office locations and low-
risk systems, and its disaster recovery plan does not include restoration of non-essential services. If a disruption occurs in one of
Moody’s locations or systems and its personnel in those locations or those who rely on such systems are unable to utilize other
systems or communicate with or travel to other locations, such persons’ ability to service and interact with Moody’s customers will
suffer. The Company cannot predict with certainty all of the adverse effects that could result from the Company’s failure, or the
failure of a third party, to efficiently address and resolve these delays and interruptions. A disruption to Moody’s operations or
infrastructure may have a material adverse effect on its reputation, business, operating results and financial condition.
The Economics of the Company’s Business is Dependent on the Volume of Debt Securities Issued in Domestic and/or
Global Capital Markets. Recent Financial Market Conditions, Including Decreased Asset Levels and Flows into Investment
Vehicles, Increases in Interest Rates and Other Volatility Has Had, and May Continue to Have, a Material Adverse Impact
on the Volume of Debt Securities Issued.
Moody’s business is impacted by general economic conditions and volatility in world financial markets. Furthermore, issuers of debt
securities have increasingly elected to issue securities without ratings or securities which are rated or evaluated by non-traditional
parties such as financial advisors, rather than traditional CRAs, such as MIS. A majority of Moody’s credit-rating-based revenue is
transaction-based, and therefore it is especially dependent on the number and dollar volume of debt securities issued in the capital
markets. Conditions that reduce issuers’ ability or willingness to issue debt securities, such as market volatility, declining growth,
currency devaluations, changes in laws (including tax-related laws) or other adverse economic trends, reduce the number and
dollar-equivalent volume of debt issuances for which Moody’s provides ratings services and thereby adversely affect the fees
Moody’s earns in its ratings business.
Current market, economic and government factors are negatively impacting the volume of debt securities issued in global capital
markets and the demand for credit ratings, which is materially and adversely affecting the Company’s business, operating results
and financial condition. These factors include increases in interest rates (as well as the related monetary policy by governments in
the response to inflation), the withdrawal of COVID-19 economic stimulus, inflationary pressures, increases in mortgage rates,
widening credit spreads, regulatory and political developments (including uncertainty in various jurisdictions where Moody's
operates), difficult economic conditions, growth in the use of alternative sources of credit, and defaults by significant issuers.
Further declines or other changes in the markets for debt securities may materially and adversely affect the Company’s business,
operating results, financial condition, cash flows and prospects.
Moody’s initiatives to reduce costs to counteract a decline in its business, including the 2022 - 2023 Geolocation Restructuring
Program, may not be sufficient. Cost reductions, including those associated with this program, may be difficult or impossible to
obtain in the short term, due in part to rent, technology, compliance, compensation and other fixed costs associated with some of
the Company’s operations as well as the need to monitor outstanding ratings. Further, cost-reduction initiatives, including those
under-taken to date, could make it difficult for the Company to rapidly expand operations in order to accommodate any unexpected
increase in the demand for ratings. Further volatility in the financial markets, including continued decreases in the volumes of debt
securities and increases in interest rates, may have a material adverse effect on the business, operating results and financial
condition, which the Company may not be able to successfully offset with cost reductions.
The Company Faces Increased Pricing Pressure from Competitors and/or Customers.
There is price competition in the credit rating, research, and credit risk management markets, as well as in the market for research,
business intelligence and analytical services offered by MA. Moody’s faces competition globally from other CRAs and from
investment banks and brokerage firms that offer credit opinions in research, as well as from in-house research operations.
Competition for customers and market share has spurred more aggressive tactics by some competitors in areas such as pricing
and services, as well as increased competition from non-NRSROs that evaluate debt risk for issuers or investors. At the same time,
a challenging business environment and consolidation among both competitors and customers, particularly those involved in
structured finance products and commercial real estate, and other factors affecting demand may enhance the market power of
competitors and reduce the Company’s customer base. Recent weak economic growth has intensified competitive pricing
pressures, which may result
development of alternative, proprietary systems for assessing credit risk that replace the products currently purchased from
Moody’s. While Moody’s seeks to compete primarily on the basis of the quality of its products and services, it can lose market
share when its pricing is not sufficiently competitive. In addition, the Reform Act was designed to encourage competition among
rating agencies. The formation of additional NRSROs may increase pricing and competitive pressures. Furthermore, in some of the
countries in which Moody’s operates, governments may provide financial or other support to local rating agencies. Any inability of
Moody’s to compete successfully with respect to the pricing of its products and services will have a material adverse impact on its
business, operating results and financial condition.
in customers’ use of free or lower-cost information that is available from alternative sources or their
28 MOODY'S 2022 10-K
The Company Is Exposed to Reputation and Credibility Concerns.
Moody’s reputation and the strength of its brand are key competitive strengths. To the extent that the rating agency business as a
whole or Moody's, relative to its competitors, suffers a loss in credibility, Moody’s business will be significantly impacted. Factors
that may have already affected credibility and could potentially continue to have an impact in this regard include the appearance of
a conflict of interest, the performance of securities relative to the rating assigned to such securities, the timing and nature of
changes in ratings, a major compliance failure, negative perceptions or publicity and increased criticism by users of ratings,
regulators and legislative bodies, including as to the ratings process, including as to the Company’s recent ESG initiatives, and its
implementation with respect to one or more securities and intentional, poor representation of our products and services by our
partners or agents, manipulation of our products and services by third parties, or unintentional misrepresentations of Moody’s
products and services in advertising materials, public relations information, social media or other external communications.
Operational errors, whether by Moody’s or a Moody’s competitor, could also harm the reputation of the Company or the credit rating
industry. Damage to reputation and credibility could have a material adverse impact on Moody’s business, operating results and
financial condition, as well as on the Company’s ability to find suitable candidates for acquisition.
The Introduction of Competing Products, Technologies or Services by Other Companies Can Negatively Impact the
Nature and Economics of the Company’s Business.
The markets for credit ratings, research, credit risk management services, business intelligence and analytical services are highly
competitive and characterized by rapid technological change, changes in customer and investor demands, and evolving regulatory
requirements, industry standards and market preferences. The ability to develop and successfully launch and maintain innovative
products, technologies and services that anticipate customers’ and investors’ changing requirements and utilize emerging
technological trends in a timely and cost-effective manner is a key factor in maintaining market share. Moody’s competitors include
both established companies with significant financial resources, brand recognition, market experience and technological expertise,
and smaller companies which may be better poised to quickly adopt new or emerging technologies or respond to customer
requirements. Competitors may develop quantitative methodologies or related services for assessing credit risk that customers and
market participants may deem preferable, more cost-effective or more valuable than the credit risk assessment methods currently
employed by Moody’s, or may position, price or market their products in manners that differ from those utilized by Moody’s.
Moody’s also competes indirectly against consulting firms and technology and information providers, some of whom are also
suppliers to Moody’s; these indirect competitors could in the future choose to compete directly with Moody’s, cease doing business
with Moody’s or change the terms under which they do business with Moody’s in a way that could negatively impact our business.
In addition, customers or others may develop alternative, proprietary systems for assessing risk, including credit and climate risk.
Such developments could affect demand for Moody’s products and services and its growth prospects. Further, the increased
availability in recent years of free or relatively inexpensive internet information may reduce the demand for Moody’s products and
services. Moody’s growth prospects also could be adversely affected by Moody’s failure to make necessary or optimal capital
infrastructure expenditures and improvements and the inability of its information technologies to provide adequate capacity and
capabilities to meet increased demands of producing quality ratings and research products at levels achieved by competitors. Any
inability of Moody’s to compete successfully may have a material adverse effect on its business, operating results and financial
condition.
Moody’s Is Exposed to Risks Related to Loss of Skilled Employees and Related Compensation Cost Pressures.
Moody’s success depends upon its ability to recruit, retain and motivate highly skilled, experienced professionals, including
financial analysts. Competition for skilled individuals in the financial services industry is intense, and Moody’s ability to attract high
quality employees could be impaired if it is unable to offer competitive compensation and other incentives or if the regulatory
environment mandates restrictions on or disclosures about individual employees that would not be necessary in competing
industries. Rising expenses including wage inflation, and global labor shortages could adversely affect Moody’s ability to attract and
retain high-quality employees. As greater focus has been placed on executive compensation at public companies, in the future,
Moody’s may be required to alter its compensation practices in ways that adversely affect its ability to attract and retain talented
employees. Investment banks, investors and competitors may seek to attract analyst talent by providing more favorable working
conditions or offering significantly more attractive compensation packages than Moody’s. Moody’s also may not be able to identify
and hire the appropriate qualified employees in some markets outside the U.S. with the required experience or skills to perform
sophisticated credit analysis. We could also fail to effectively respond to evolving perceptions and goals of those in our workforce or
whom we might seek to hire, including in response to changes brought on by the COVID-19 pandemic, with respect to flexible
working or other matters. There is a risk that even when the Company invests significant resources in attempting to attract, train
and retain qualified personnel, it will not succeed in its efforts, and its business could be harmed. Further, employee expectations in
areas such as environmental, social matters and corporate governance have been rapidly evolving and increasing. A failure to
adequately meet employee expectations may result in an inability to attract and retain talented employees.
Moody’s is highly dependent on the continued services of Robert Fauber, the President and Chief Executive Officer, and other
senior officers and key employees. The loss of the services of skilled personnel for any reason and Moody’s inability to replace
them with suitable candidates quickly or at all, as well as any negative market perception resulting from such loss, could have a
material adverse effect on Moody’s business, operating results and financial condition.
MOODY'S 2022 10-K
29
Moody’s Acquisitions, Dispositions and Other Strategic Transactions or Investments May Not Produce Anticipated
Results Exposing the Company to Future Significant Impairment Charges Relating to Its Goodwill, Intangible Assets or
Property and Equipment.
Moody’s regularly evaluates and enters into acquisitions, dispositions or other strategic transactions and investments to strengthen
its business and grow the Company. For example, Moody’s acquired Bureau van Dijk in 2017, Reis in 2018, Regulatory DataCorp
(RDC) in 2020, and RMS in 2021. Such transactions and investments present significant challenges and risks. The Company faces
intense competition for acquisition targets, especially in light of industry consolidation, which may affect Moody’s ability to complete
such transactions on favorable terms or at all. Additionally, the Company makes significant investments in technology, including
software for internal use, which can be expensive, time-intensive and complex to develop and implement.
The anticipated growth, synergies and other strategic objectives of completed transactions may not be fully realized, and a variety
of factors may adversely affect any anticipated benefits from such transactions. Any strategic transaction involves a number of
risks, including unanticipated challenges regarding integration of operations, technologies and new employees; the existence of
liabilities or contingencies not disclosed to or otherwise known by the Company prior to closing a transaction; unexpected
regulatory and operating difficulties and expenditures; scrutiny from competition and antitrust authorities; failure to retain key
personnel of the acquired business; future developments that impair the value of purchased goodwill or intangible assets; diversion
of management’s focus from other business operations; failure to implement or remediate controls, procedures and policies
appropriate for a larger public company at acquired companies that prior to the acquisition lacked such controls, procedures and
policies; disputes or litigation arising out of acquisitions or dispositions; challenges retaining the customers of the acquired
business; coordination of product, sales, marketing and program and systems management functions; integration of employees
from the acquired business into Moody’s organization; integration of the acquired business’s accounting, information technology,
human resources, legal and other administrative systems with Moody’s; risks that acquired systems expose us to cybersecurity
risks; and for foreign transactions, additional risks related to the integration of operations across different cultures and languages,
and the economic, political, and regulatory risks associated with specific countries. The anticipated benefits from an acquisition or
other strategic transaction or investment may not be realized fully, or may take longer to realize than expected. As a result, the
failure of acquisitions, dispositions and other strategic transactions and investments to perform as expected may have a material
adverse effect on Moody’s business, operating results and financial condition.
At December 31, 2022, Moody’s had $5,839 million of goodwill and $2,210 million of intangible assets on its balance sheet.
Approximately 94% of the goodwill and intangible assets reside in the MA business, including those related to Bureau van Dijk and
RMS, and are allocated to the two reporting units within MA. The remaining 6% of goodwill and intangible assets reside in MIS and
primarily relate to ICRA. Failure to achieve business objectives and financial projections in any of these reporting units could result
in a significant asset impairment charge, which would result in a non-cash charge to operating expenses. Goodwill and intangible
assets are tested for impairment on an annual basis and also when events or changes in circumstances indicate that impairment
may have occurred. Determining whether an impairment of goodwill exists can be especially difficult in periods of market or
economic uncertainty and turmoil, and requires significant management estimates and judgment. In addition, the potential for
goodwill impairment is increased during periods of economic uncertainty. An asset impairment charge could have a material
adverse effect on Moody’s business, operating results and financial condition.
The Global COVID-19 Pandemic May Have a Material Adverse Impact on the Company’s Operations and Financial
Performance.
The Company’s operations and financial performance could be negatively impacted by future effects of the COVID-19 pandemic.
The future impact of the pandemic on the Company’s operations and financial performance as well as the performance of our
customers, depends on many factors that are not within our control, including, but not limited, to: governmental, business and
individuals’ actions (including restrictions on travel and workforce pressures); actions taken in response to global and regional
economies, travel, and economic activity; the availability of federal, state, local or non-U.S. funding programs; general economic
uncertainty in key global markets and financial market volatility; global economic conditions and levels of economic growth; the
potential emergence of new COVID-19 variants; uncertainty presented by approved vaccines, corresponding rollout and
unanticipated consequences of such vaccines; and the pace of recovery as the pandemic subsides. These future impacts may
have the effect of heightening many of the other risks, such as those surrounding cybersecurity due to increased remote work,
described in our risk factors in this Form 10-K.
Our business could be negatively impacted by climate change.
As a global company, our employees and offices are subject to risks related to the impact of climate change. We have offices in
In addition, continued reliable energy sources
locations that are vulnerable to the effects of climate change and extreme weather.
are critical for business continuity globally and those sources too can be impacted by extreme weather. The frequency and impact
of extreme weather events on critical infrastructure has the potential to disrupt the Company’s ongoing operations, as well as the
operations of our vendors and customers, and may result in losses and additional costs to maintain or resume operations.
C. Technology Risks
The Company Is Exposed to Risks Related to Cybersecurity and Protection of Confidential Information.
The Company’s operations rely on the secure processing, storage and transmission of confidential, sensitive, proprietary and other
types of information relating to its business operations and confidential and sensitive information about its customers and
employees in the Company’s computer systems and networks, and in those of its third party vendors. Unauthorized disclosure of
30 MOODY'S 2022 10-K
this information could cause our customers to lose faith in our ability to protect their confidential information and therefore cause
customers to cease doing business with us. The risks the Company faces range from cyber-attacks common to most industries, to
more advanced threats that target the Company because of its prominence in the global marketplace, or due to its ratings of
sovereign debt. Breaches of Moody’s or Moody’s vendors’ technology and systems, whether from circumvention of security
systems, denial-of-service attacks or other cyber-attacks some of which may be carried out by state-sponsored actors, hacking,
“phishing” attacks, computer viruses, social media impersonation, ransomware, or malware, employee or insider error,
malfeasance, social engineering, physical breaches or other actions, may result in manipulation or corruption of sensitive data,
material interruptions or malfunctions in the Company’s or such vendors’ web sites or systems, applications, data processing, or
disruption of other business operations, or may compromise the confidentiality and integrity of material information held by the
Company (including information about Moody’s business, employees or customers), as well as sensitive personally identifiable
information (PII), the disclosure of which could lead to identity theft. Measures that Moody’s takes to avoid, detect, mitigate or
recover from material incidents can be expensive, and may be insufficient, circumvented, or may become ineffective. Additionally,
the Company may be exposed to additional threats as the Company migrates its data from legacy systems to cloud-based
solutions, and increased dependence on third parties to store cloud-based data subjects the Company to further cyber risks.
Further, many of our employees work remotely, which magnifies the importance of the integrity of our remote access security
measures and may expose the Company to additional cyber risks.
The Company has invested and continues to invest in risk management and information security measures in order to protect its
systems and data, including employee training, disaster plans, and technical defenses. The cost and operational consequences of
implementing, maintaining and enhancing further data or system protection measures could increase significantly to overcome
increasingly intense, complex, and sophisticated global cyber threats. Despite the Company’s best efforts, it is not fully insulated
from, and has in the past experienced, security threats and system disruptions. Although past incidents have not had a material
adverse effect on the Company's operating results, there can be no assurance of a similar result in the future. Because the
methods used for these systems cyberattacks are rapidly changing, the Company, despite significant focus and investment, may
be unable to anticipate/deploy sufficient protections against such incidents. Further, the extent of a particular security incident and
the steps needed to investigate may not be immediately clear, and it may take a significant amount of time before such an
investigation can be completed and full and reliable information about the incident, including the extent of the harm and how best to
remediate it, is known. Recent well-publicized security breaches at other companies have led to enhanced government and
regulatory scrutiny of the measures taken by companies to protect against cyber-attacks, and may in the future result in heightened
cybersecurity compliance requirements, including additional regulatory expectations for oversight of vendors and service providers.
Cybersecurity incidents, including the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary
information or sensitive or confidential data, could cause reputational harm, loss of customers and revenue, fines, regulatory
actions and scrutiny, sanctions or other statutory penalties, litigation, liability for failure to safeguard the Company’s customers’
information, or financial losses that are either not insured against or not fully covered through any insurance maintained by the
Company. In addition, disclosure or media reports of actual or perceived security vulnerabilities to the Company’s systems or those
of the Company’s third parties, even if no breach has been attempted or occurred, could lead to reputational harm, loss of
customers and revenue, or increased regulatory actions oversight and scrutiny.
Any of the foregoing may have a material adverse effect on Moody’s business, operating results and financial condition.
The Company Is Exposed to Risks Related to Protection of Personal
Information
To conduct its operations, the Company regularly moves data across national borders, and consequently is subject to a variety of
continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection and
data security such as the Federal Trade Commission Act in the United States, the General Data Protection Regulation (“GDPR”) in
the European Union, the General Data Protection Regulation in the U.K., the Cyber Security Law, the Data Security Law, and the
Personal Information Protection Law in China and various other international, federal, state and local laws and regulations. The
scope of the laws that may be applicable to Moody’s is often uncertain and may be conflicting, particularly with respect to foreign
laws. For example, GDPR, which became effective in May 2018, greatly increased the jurisdictional reach of European Union
privacy law and added a broad array of requirements for processing personal data, including the public disclosure of significant
data breaches. Failure to comply with GDPR requirements could result in penalties of up to 4% of annual worldwide revenue.
Additionally, other countries have enacted or are enacting data localization laws that require data to stay within their borders.
Further, laws such as the California Consumer Privacy Act of 2018 ("CCPA"), require among other things, covered companies to
provide disclosures to consumers, and affords consumers the ability to opt-out of certain sales of personal information. The
California Privacy Rights Act of 2020 (“CPRA”) became effective on January 1, 2023. The effects of non-compliance with the
CCPA, CPRA and other similar data privacy laws in other jurisdictions are significant, and may require the Company to modify its
data processing practices and policies and to incur additional costs and expenses. All of these evolving compliance and operational
requirements have required changes to certain business practices, thereby increasing costs, requiring significant management time
and attention, and subjecting the Company to negative publicity, as well as remedies that may harm its business, including fines,
modified demands or orders, the cessation of existing business practices, and exposure to litigation, regulatory actions, sanctions
or other statutory penalties.
MOODY'S 2022 10-K
31
The Company Is Dependent on the Use of Third-Party Software, Data, Hosted Solutions, Data Centers, Cloud and Network
Infrastructure (Together, “Third Party Technology”), and Any Reduction in Third-Party Product Quality or Service
Offerings, Could Have a Material Adverse Effect on the Company’s Business, Financial Condition or Results of
Operations.
Moody’s relies on Third Party Technology in connection with its product development and offerings and operations. The Company
depends on the ability of Third Party Technology providers to deliver and support reliable products, enhance their current products,
develop new products on a timely and cost-effective basis, provide data necessary to develop and maintain its products and
respond to emerging industry standards and other technological changes. The Third Party Technology Moody’s uses can become
obsolete or restrictive, incompatible with future versions of the Company’s products, fail to be comprehensive or accurate,
unavailable or fail to operate effectively, and Moody’s business could be adversely affected when the Company is unable to timely
or effectively replace such Third Party Technology.
The Company also monitors its use of Third Party Technology to comply with applicable license and other contractual
requirements. Despite the Company’s efforts, the Company cannot ensure that such third parties will permit Moody’s use in the
future, resulting in increased Third Party Technology acquisition costs and loss of rights. In addition, the Company’s operating costs
could increase if license or other usage fees for Third Party Technology increase or the efforts to incorporate enhancements to
Third Party Technology are substantial. In the ordinary course, our third-parties, including our vendors, are subject to various forms
of cyber attacks. To date, such attacks have not resulted in a material adverse impact to our business operations, but there can be
no guarantee we will not experience such an impact. Some of these third-party suppliers are also Moody’s competitors, increasing
the risks noted above. When any of these risks materialize, they could have a material adverse effect on the Company’s business,
financial condition or results of operations.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
Moody’s corporate headquarters is located at 7 World Trade Center at 250 Greenwich Street, New York, New York 10007. As of
December 31, 2022, Moody’s operations were conducted from 29 U.S. offices and 89 non-U.S. office locations, all of which are
leased. These properties are geographically distributed to meet operating and sales requirements worldwide. These properties are
generally considered to be both suitable and adequate to meet current operating requirements.
ITEM 3.
LEGAL PROCEEDINGS
For information regarding legal proceedings, see Part II, Item 8 –“Financial Statements”, Note 21 “Contingencies” in this Form 10-
K.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.
PART II
ITEM 5.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Information in response to this Item is set forth under the captions below.
MOODY’S PURCHASES OF EQUITY SECURITIES
For the three months ended December 31, 2022:
Period
October 1- 31
November 1- 30
December 1- 31
Total
Total Number of
Shares Purchased (1)
Average Price
Paid per Share
Total Number of Shares
Purchased as Part of Publicly
Announced Program
Approximate Dollar
Value of Shares That May Yet Be
Purchased Under The Program (2)
8,398
529
493
9,420
$
$
$
$
—
—
—
—
—
—
—
—
$848 million
$848 million
$848 million
(1)
(2)
Includes surrender to the Company of 8,398, 529 and 493 shares of common stock in October, November and December, respectively, to
satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees.
Amounts shown are as of the last day of each of the months. On February 9, 2021, the Board authorized $1 billion in share repurchase
authority and on February 7, 2022, the Board of Directors approved an additional $750 million of share repurchase authority. At December 31,
2022, there was approximately $848 million of combined share repurchase authority remaining. There is no established expiration date for the
remaining authorization.
During the fourth quarter of 2022, Moody’s issued a net 38 thousand shares under employee stock-based compensation plans.
32 MOODY'S 2022 10-K
COMMON STOCK INFORMATION
The Company’s common stock trades on the New York Stock Exchange under the symbol “MCO”. The number of registered
shareholders of record at January 31, 2023 was 1,555. A substantially greater number of the Company’s common stock is held by
beneficial holders whose shares of record are held by banks, brokers and other financial institutions.
EQUITY COMPENSATION PLAN INFORMATION
The table below sets forth, as of December 31, 2022, certain information regarding the Company’s equity compensation plans.
Plan Category
Equity compensation plans approved by
security holders
Equity compensation plans not
approved by security holders
Total
Number of Securities to
be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
(a)
3,035,203 (1) $
—
3,035,203
$
$
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights (2)
Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation
Plans (excluding Securities
Reflected in Column (a))
(b)
181.35
—
181.35
(c)
16,415,492 (3)
—
16,415,492
(1)
(2)
(3)
Includes 2,269,406 options and unvested restricted shares outstanding under the Company's 2001 Key Employees' Stock Incentive Plan,
104,033 options and unvested restricted shares outstanding under the Risk Management Solutions, Inc. 2015 Equity Incentive Plan and 6,370
unvested restricted shares outstanding under the 1998 Non-Employee Directors' Stock Incentive Plan. This number also includes a maximum
of 655,394 performance shares outstanding under the Company's 2001 Key Employees' Stock Incentive Plan, which is the maximum number
of shares issuable pursuant to performance share awards assuming the maximum payout of 200% of the target award for performance shares
granted in 2020, 2021 and 2022. Assuming payout at target, the number of shares to be issued upon the vesting of outstanding performance
share awards is 327,697.
Does not reflect unvested restricted shares or performance share awards included in column (a) because these awards have no exercise
price.
Includes 12,577,447 shares available for issuance as under the 2001 Stock Incentive Plan, of which all may be issued as options and
6,718,549 may be issued as restricted stock, performance shares or other stock-based awards under the 2001 Stock Incentive Plan, 442,093
shares available for issuance as options, shares of restricted stock or performance shares under the Risk Management Solutions, Inc. 2015
Equity Incentive Plan, and 873,572 shares available for issuance as options, shares of restricted stock or performance shares under the 1998
Directors Plan, and 2,522,380 shares available for issuance under the Company’s Employee Stock Purchase Plan.
MOODY'S 2022 10-K
33
PERFORMANCE GRAPH
The following graph compares the total cumulative shareholder return of the Company to the performance of Standard & Poor’s
500 Composite Index and the Russell 3000 Financial Services Index.
The comparison assumes that $100.00 was invested in the Company’s common stock and in each of the foregoing indices on
December 31, 2017. The comparison also assumes the reinvestment of dividends, if any. The total return for the Company's
common stock was 98% during the performance period as compared with a total return during the same period of 57% and 48% for
the S&P 500 Composite Index and the Russell 3000 Financial Services Index, respectively.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
Among Moody’s Corporation, the Standard & Poor’s 500 Composite Index, and
the Russell 3000 Financial Services Index
Moody’s Corporation
S&P 500 Composite Index
Russell 3000—Financial Services Index
$300
$250
$200
$150
$100
$50
12/17
12/18
12/19
12/20
12/21
12/22
Moody’s Corporation
S&P 500 Composite Index
Russell 3000—Financial Services Index
Year Ended December 31,
2017
2018
2019
2020
2021
2022
$ 100.00
$ 100.00
$ 100.00
$
$
$
95.90
$ 164.22
$ 202.45
$ 274.46
$ 197.60
95.62
$ 125.72
$ 148.85
$ 191.58
$ 156.89
91.65
$ 121.82
$ 129.87
$ 174.77
$ 147.73
The comparisons in the graph above are provided in response to disclosure requirements of the SEC and are not intended to
forecast or be indicative of future performance of the Company’s common stock.
34 MOODY'S 2022 10-K
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis of financial condition and results of operations should be read in conjunction with the Moody’s
Corporation consolidated financial statements and notes thereto included elsewhere in this annual report on Form 10-K.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains Forward-Looking
Statements. See “Forward-Looking Statements” commencing on page 61 and Item 1A. “Risk Factors” commencing on page 23 for
a discussion of uncertainties, risks and other factors associated with these statements.
The Company
Moody’s is a global integrated risk assessment firm that empowers organizations and investors to make better decisions. Moody’s
reports in two segments: MIS and MA.
MIS publishes credit ratings and provides assessment services on a wide range of debt obligations, programs and facilities, and
the entities that issue such obligations in markets worldwide, including various corporate, financial institution and governmental
obligations, and structured finance securities.
MA is a global provider of: i) data and information; ii) research and insights; and iii) decision solutions, which help companies make
better and faster decisions. MA leverages its industry expertise across multiple risks such as credit, market, financial crime, supply
chain, catastrophe and climate to deliver integrated risk assessment solutions that enable business leaders to identify, measure
and manage the implications of interrelated risks and opportunities.
Current Matters Impacting Moody's Business
Current Macroeconomic Uncertainties/Market Volatility
The Company is monitoring current macroeconomic and geopolitical uncertainties that have contributed to declines in rated
issuance volumes in 2022. A substantial portion of MIS’s revenue is impacted by the level of issuance activity in the fixed income
capital markets, both in the U.S. and internationally. While market volatility in 2022 has resulted in declines in rated issuance
volumes, the Company believes that these declines are predominantly cyclical in nature. However, due to various uncertainties,
Moody's is unable to predict the severity and duration of current macroeconomic and geopolitical uncertainties and their potential
impact on future ratings issuance volumes. Refer to Item 1A. “Risk Factors” for further disclosure relating to these risks.
Russia/Ukraine Conflict
The Company is closely monitoring the impact of the ongoing Russia/Ukraine conflict on all aspects of its business. In response to
the conflict, the Company is no longer conducting commercial operations in Russia for both MIS and MA and is complying with all
applicable regulatory restrictions set forth by the jurisdictions in which Moody's operates. Furthermore, the Company also has
withdrawn MIS credit ratings on Russian entities.
While Moody's Russian operations and net assets are not material, broader global market volatility, which partially relates to
uncertainties surrounding the conflict, has contributed to an adverse impact on rated issuance volumes in 2022. This impact to
rated issuance volumes is more fully discussed in the "Results of Operations" section of this MD&A. The Company is unable to
predict either the near-term or longer-term impact that the conflict may have on its financial position and operating results due to
numerous uncertainties regarding the severity and duration of the conflict and its broader potential macroeconomic impact.
COVID-19
The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. The Company
continues to monitor regional developments relating to the COVID-19 pandemic to inform decisions regarding its offices and its
business travel policies. As of the date of the filing of this annual report on Form 10-K, the Company has reopened all of its offices
for employees to access.
The COVID-19 pandemic has not had a material adverse impact on the Company's reported results to date and is currently not
expected to have a material adverse impact on its financial outlook. Refer to Item 1A. “Risk Factors” for further disclosure relating
to the risks of the COVID-19 pandemic on the Company's business.
Critical Accounting Estimates
Moody’s discussion and analysis of its financial condition and results of operations are based on the Company’s consolidated
financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires Moody’s to make estimates and judgments that affect reported amounts of
assets and liabilities and related disclosures of contingent assets and liabilities at the dates of the financial statements and revenue
and expenses during the reporting periods. These estimates are based on historical experience and on other assumptions that are
believed to be reasonable under the circumstances. On an ongoing basis, Moody’s evaluates its critical accounting estimates.
Actual results may differ from these estimates under different assumptions or conditions. The following accounting estimates are
considered critical because they are particularly dependent on management’s judgment about matters that are uncertain at the
time the accounting estimates are made and changes to those estimates could have a material impact on the Company’s
consolidated results of operations or financial condition.
MOODY'S 2022 10-K
35
Goodwill and Other Acquired Intangible Assets
At July 31st of each year, Moody’s evaluates its goodwill for impairment at the reporting unit level, defined as an operating segment
(i.e., MIS and MA), or one level below an operating segment (i.e., a component of an operating segment).
The Company has four reporting units: two within the Company’s ratings business (one for the ICRA business and one that
encompasses all of Moody’s other ratings operations) and two reporting units within MA consisting of businesses that offer: i) data
and data-driven analytical solutions; and ii) risk-management software, workflow and CRE solutions.
The Company evaluates the recoverability of goodwill using a two-step impairment test approach at the reporting unit level. In the
first step, the Company assesses various qualitative factors to determine whether the fair value of a reporting unit may be less than
its carrying amount. If a determination is made based on the qualitative factors that an impairment does not exist, the Company is
not required to perform further testing. If the aforementioned qualitative assessment results in the Company concluding that it is
more likely than not that the fair value of a reporting unit may be less than its carrying amount, the fair value of the reporting unit
will be quantitatively determined and compared to its carrying value including goodwill. If the fair value of the reporting unit exceeds
the carrying value of the net assets assigned to that unit, goodwill is not impaired, and the Company is not required to perform
further testing. If the fair value of the reporting unit is less than the carrying value, the Company will record a goodwill impairment
charge for the amount by which the carrying value exceeds the reporting unit’s fair value. The Company evaluates its reporting
units on an annual basis, or more frequently if there are changes in the reporting structure of the Company due to acquisitions,
realignments or if there are indicators of potential impairment. For the reporting units where the Company is consistently able to
conclude that no impairment exists using only a qualitative approach, the Company’s accounting policy is to perform the second
step of the aforementioned goodwill impairment assessment at least once every three years.
The Company last performed quantitative assessments on all reporting units at July 31, 2021, pursuant to a change in reporting
unit structure in the MA reportable segment. The quantitative assessments performed at July 31, 2021 resulted in fair values that
significantly exceeded carrying values for all reporting units.
Determining the fair value of a reporting unit involves the use of significant estimates and assumptions, which are more fully
described below. In addition, the Company also makes certain judgments and assumptions in allocating shared assets and
liabilities to determine the carrying values for each of its reporting units.
Other assets and liabilities, including applicable corporate assets, are allocated to the extent they are related to the operation of
respective reporting units.
Annual goodwill impairment assessment performed at July 31, 2022
At July 31, 2022, the Company performed qualitative assessments for each of the four reporting units. These qualitative
assessments resulted in the Company determining that it was not more likely than not that the fair value of any reporting unit was
less than its carrying amount.
Methodologies and significant estimates utilized in determining the fair value of reporting units:
The following is a discussion regarding the Company’s methodology for determining the fair value of its reporting units, excluding
ICRA, at July 31, 2021 (the date of the last quantitative assessment). As ICRA is a publicly traded company in India, the Company
was able to observe its fair value based on its market capitalization.
The fair value of each reporting unit, excluding ICRA, was estimated using a discounted cash flow methodology and comparable
public company and precedent transaction multiples. The discounted cash flow analysis requires significant estimates, including
projections of future operating results and cash flows of each reporting unit that are based on internal budgets and strategic plans,
expected long-term growth rates, terminal values, weighted average cost of capital and the effects of external factors and market
conditions. Changes in these estimates and assumptions could materially affect the estimated fair value of each reporting unit that
could result in an impairment charge to reduce the carrying value of goodwill, which could be material to the Company’s financial
position and results of operations. Moody’s allocates newly acquired goodwill to reporting units based on the reporting unit
expected to benefit from the acquisition.
The sensitivity analyses on the future cash flows and WACC assumptions are described below. These key assumptions utilized in
the discounted cash flow valuation methodology require significant management judgment:
–
Future cash flow assumptions - The projections for future cash flows utilized in the models are derived from historical
experience and assumptions regarding future growth and profitability of each reporting unit. These projections are consistent
with the Company’s operating budget and strategic plan. Cash flows for the five years subsequent to the date of the
quantitative goodwill impairment test were utilized in the determination of the fair value of each reporting unit. The growth rates
assumed a gradual increase in revenue based on new customer acquisition and new products. Beyond five years, a terminal
value was determined using a perpetuity growth rate based on inflation and real GDP growth rates. A sensitivity analysis of the
revenue growth rates was performed on all reporting units. For each reporting unit analyzed, a 10% reduction in the revenue
growth rates used would still result in fair values that significantly exceeded carrying values.
– WACC - The WACC is the rate used to discount each reporting unit’s estimated future cash flows. The WACC is calculated
based on the proportionate weighting of the cost of debt and equity. The cost of equity is based on a risk-free interest rate and
an equity risk factor, which is derived from public companies similar to the reporting unit and which captures the perceived
risks and uncertainties associated with the reporting unit’s cash flows. The cost of debt component is calculated as the
36 MOODY'S 2022 10-K
weighted average cost associated with all of the Company’s outstanding borrowings as of the date of the impairment test and
was immaterial to the computation of the WACC. The cost of debt and equity is weighted based on the debt to market
capitalization ratio of publicly traded companies with similarities to the reporting unit being tested. The WACC for all reporting
units ranged from 8.0% to 8.5% as of July 31, 2021. Differences in the WACC used between reporting units is primarily due to
distinct risks and uncertainties regarding the cash flows of the different reporting units. A sensitivity analysis of the WACC was
performed on all reporting units as of July 31, 2021 for each reporting unit. For all reporting units, an increase in the WACC of
one percentage point would still result in fair values that significantly exceeded carrying values.
Long-lived assets
Long-lived assets, which consist primarily of amortizable intangible assets, operating lease ROU assets and property and
equipment, are reviewed for recoverability whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable.
Under the first step of the recoverability assessment, Moody's compares the estimated undiscounted future cash flows attributable
to the asset or asset group to its carrying value. If the undiscounted future cash flows are greater than the carrying value, no further
assessment is required. If the undiscounted future cash flows are less than the carrying value, Moody's proceeds with step two of
the assessment. Under step two of this assessment, Moody's is required to determine the fair value of the asset or asset group and
recognize an impairment loss if the carrying amount exceeds its fair value. In performing this assessment, Moody's must include
assumptions that market participants would use in their estimates of fair value, including the estimated future cash flows and
discount rate. Moody's must apply judgment in developing estimated future cash flows and in the determination of market
participant assumptions.
Income Taxes
The Company is subject to income taxes in the U.S. and various foreign jurisdictions. The Company’s tax assets and liabilities are
affected by the amounts charged for services provided and expenses incurred as well as other tax matters such as intercompany
transactions. The Company accounts for income taxes under the asset and liability method in accordance with ASC Topic 740.
Therefore, income tax expense is based on reported income before income taxes, and deferred income taxes reflect the effect of
temporary differences between the amounts of assets and liabilities that are recognized for financial reporting purposes and the
amounts that are recognized for income tax purposes.
The Company is subject to tax audits in various jurisdictions. The Company regularly assesses the likely outcomes of such audits
in order to determine the appropriateness of liabilities for UTPs. The Company classifies interest related to income taxes as a
component of interest expense in the Company’s consolidated financial statements and associated penalties, if any, as part of
other non-operating expenses.
For UTPs, ASC Topic 740 requires a company to first determine whether it is more-likely-than-not (defined as a likelihood of more
than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing
authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more-likely-
than-not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be
realized upon effective settlement with a taxing authority. As the determination of liabilities related to UTPs and associated interest
and penalties requires significant estimates to be made by the Company, there can be no assurance that the Company will
accurately predict the outcomes of these audits, and thus the eventual outcomes could have a material impact on the Company’s
operating results or financial condition.
Revenue Recognition and Costs to Obtain a Contract with a Customer
Revenue is recognized when control of promised goods or services is transferred to the customer, in an amount that reflects the
consideration the Company expects to be entitled to in exchange for those goods or services.
The discussion below outlines areas of the Company’s revenue recognition process that require significant management judgment
and estimates. Refer to Note 2 of the consolidated financial statements for a comprehensive discussion regarding the Company’s
accounting policies relating to the recognition of revenue and costs to obtain a contract with a customer.
Allocating consideration to performance obligations:
Management judgment is required in the determination of the SSP, which is utilized to allocate the transaction price to each distinct
performance obligation at contract inception when the contract includes multiple distinct performance obligations.
In the MIS segment, the SSP for both ratings and monitoring services is generally based upon directly observable selling prices
where the rating or monitoring service is sold separately.
In the MA segment, for performance obligations where an observable price exists, such as PCS, the observable price is utilized. If
an observable price does not currently exist, the Company will utilize management’s best estimate of SSP for that good or service
using estimation methods that maximize the use of observable data points.
The SSP in both segments is usually apportioned along the lines of class of customer, nature of product/services, and other
attributes related to those products and services. Once SSP is determined for each performance obligation, the transaction price,
including any discount, is allocated based on the relative SSP of the separate performance obligations.
MOODY'S 2022 10-K
37
Costs to Obtain a Contract with a Customer:
Costs incurred to obtain customer contracts, such as sales commissions, are deferred and recorded within other current assets and
other assets when such costs are determined to be incremental to obtaining a contract, would not have been incurred otherwise
and the Company expects to recover those costs. These costs are amortized to expense on a systematic basis consistent with the
transfer of products or services to the customer for which the asset relates. Depending on the line of business to which the contract
relates, this amortization period may be based upon the average economic life of the products sold or average period for which
services are provided, inclusive of anticipated contract renewals.
Contingencies
Accounting for contingencies, including those matters described in Note 21 to the consolidated financial statements, is highly
subjective and requires the use of judgments and estimates in assessing their magnitude and likely outcome. In many cases, the
outcomes of such matters will be determined by third parties, including governmental or judicial bodies. The provisions made in the
consolidated financial statements, as well as the related disclosures, represent management’s best estimates of the current status
of such matters and their potential outcome based on a review of the facts and in consultation with outside legal counsel where
deemed appropriate. The Company regularly reviews contingencies and as new information becomes available may, in the future,
adjust its associated liabilities.
For claims, litigation and proceedings and governmental investigations and inquiries not related to income taxes, the Company
records liabilities in the consolidated financial statements when it is both probable that a liability has been incurred and the amount
of loss can be reasonably estimated and periodically adjusts these as appropriate. When the reasonable estimate of the loss is
within a range of amounts, the minimum amount of the range is accrued unless some higher amount within the range is a better
estimate than another amount within the range. In instances when a loss is reasonably possible but uncertainties exist related to
the probable outcome and/or the amount or range of loss, management does not record a liability but discloses the contingency if
material. As additional information becomes available, the Company adjusts its assessments and estimates of such matters
accordingly. Moody’s also discloses material pending legal proceedings pursuant to SEC rules and other pending matters as it may
determine to be appropriate.
In view of the inherent difficulty of assessing the potential outcome of legal proceedings, governmental, regulatory and legislative
investigations and inquiries, claims and litigation and similar matters and contingencies, particularly when the claimants seek large
or indeterminate damages or assert novel legal theories or the matters involve a large number of parties, the Company often
cannot predict what the eventual outcome of the pending matters will be or the timing of any resolution of such matters. The
Company also may be unable to predict the impact (if any) that any such matters may have on how its business is conducted, on
its competitive position or on its financial position, results of operations or cash flows. As the process to resolve any pending
matters progresses, management will continue to review the latest information available and assess its ability to predict the
outcome of such matters and the effects, if any, on its operations and financial condition and to accrue for and disclose such
matters as and when required. However, because such matters are inherently unpredictable and unfavorable developments or
resolutions can occur, the ultimate outcome of such matters, including the amount of any loss, may differ from those estimates.
Pension and Other Retirement Benefits
The expenses, assets and liabilities that Moody’s reports for its Retirement Plans are dependent on many assumptions concerning
the outcome of future events and circumstances. These significant assumptions include the following:
–
–
future compensation increases based on the Company’s long-term actual experience and future outlook;
long-term expected return on pension plan assets based on historical portfolio results and the expected future average annual
return for each major asset class within the plan’s portfolio (which is principally comprised of equity and fixed-income
investments); and
–
discount rates based on current yields on high-grade corporate long-term bonds.
The discount rates used to measure the present value of the Company’s benefit obligation for its Retirement Plans as of December
31, 2022 were derived using a cash flow matching method whereby the Company compares each plan’s projected payment
obligations by year with the corresponding yield on the FTSE pension discount curve. The cash flows by plan are then discounted
back to present value to determine the discount rate applicable to each plan.
Moody’s major assumptions vary by plan and assumptions used are set forth in Note 15 to the consolidated financial statements. In
determining these assumptions, the Company consults with third-party actuaries and other advisors as deemed appropriate. While
the Company believes that the assumptions used in its calculations are reasonable, differences in actual experience or changes in
assumptions could have a significant effect on the expenses, assets and liabilities related to the Company’s Retirement Plans.
When actual plan experience differs from the assumptions used, actuarial gains or losses arise. Excluding differences between the
expected long-term rate of return assumption and actual returns on plan assets, the Company amortizes, as a component of
annual pension expense, total outstanding actuarial gains or losses over the estimated average future working lifetime of active
plan participants to the extent that the gain/loss exceeds 10% of the greater of the beginning-of-year projected benefit obligation or
the market-related value of plan assets. For Moody’s Retirement Plans, the total actuarial losses as of December 31, 2022 that
have not been recognized in annual expense are $68 million, and Moody’s expects the net periodic expense related to the
amortization of net actuarial (losses)/gains will be immaterial in 2023.
38 MOODY'S 2022 10-K
For Moody’s funded U.S. pension plan, the differences between the expected long-term rate of return assumption and actual
returns could also affect the net periodic pension expense. As permitted under ASC Topic 715, the Company amortizes the impact
of asset returns over a five-year period for purposes of calculating the market-related value of assets that is used in determining the
expected return on assets’ component of annual expense and in calculating the total unrecognized gain or loss subject to
amortization. As of December 31, 2022, the Company has an unrecognized loss of $106 million, of which $19 million will be
recognized in the market-related value of assets that is used to calculate the expected return on assets component of 2023
expense.
The table below shows the estimated effect that a one percentage-point decrease in each of these assumptions will have on
Moody’s 2023 income before provision for income taxes. These effects have been calculated using the Company’s current
projections of 2023 expenses, assets and liabilities related to Moody’s Retirement Plans, which could change as updated data
becomes available.
(dollars in millions)
Weighted Average Discount Rates (1)
Weighted Average Assumed Compensation Growth Rate
Assumed Long-Term Rate of Return on Pension Assets
Assumptions Used for
2023
Estimated Impact on 2023
Income before Provision
for Income Taxes
(Decrease)/Increase
4.93%/4.90% $
3.63% $
6.55% $
(1)
1
(5)
(1) Weighted average discount rates of 4.93% and 4.90% for pension plans and Other Retirement Plans, respectively.
Based on current projections, the Company estimates that expenses related to Retirement Plans will be immaterial in 2023.
Investments in Non-consolidated Affiliates
Equity method investments are reviewed for indicators of other-than-temporary impairment on a quarterly basis. These investments
are written down to fair value if there is evidence of a loss in value that is other-than-temporary.
For equity investments without a readily determinable fair value for which the Company does not have significant influence,
Moody's generally elects to measure these investments at cost, less impairment, adjusted for subsequent observable price
changes as of the date that an observable transaction takes place.
The Company performs an assessment on a quarterly basis to determine if there are indicators of impairment for its investments in
non-consolidated affiliates. If there are indicators of impairment, the Company estimates the investment’s fair value and records an
impairment if the carrying value of the investment exceeds its fair value.
In situations where estimation of fair value is required for investments in non-consolidated affiliates, the Company considers
various factors, including: recent observable investee equity transactions, comparable public company/precedent transaction
multiples and discounted cash flow models. The estimation of fair value for these investments may involve significant judgment.
Other Estimates
In addition to the critical accounting estimates described above, there are other accounting estimates within Moody’s consolidated
financial statements. Management believes the current assumptions and other considerations used to estimate amounts reflected
in Moody’s consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other
considerations used in estimating amounts reflected in Moody’s consolidated financial statements, the resulting changes could
have a material adverse effect on Moody’s consolidated results of operations or financial condition.
See Note 2 to the consolidated financial statements for further information on significant accounting policies that impact Moody’s.
Reportable Segments
The Company is organized into two reportable segments at December 31, 2022: MIS and MA, which are more fully described in
the section entitled “The Company” above and in Note 22 to the consolidated financial statements.
MOODY'S 2022 10-K
39
Results of Operations
This section of this Form 10-K generally discusses year ended December 31, 2022 and 2021 financial results and year-to-year
comparisons between these years. Discussions related to the year ended December 31, 2020 financial results and year-to-year
comparisons between the years ended December 31, 2021 and 2020 that are not included in this Form 10-K can be found in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Impact of acquisitions/divestitures on comparative results
Moody’s completed the following acquisitions, which impact the Company's year-over-year comparative results:
– Cortera on March 19, 2021;
– RMS on September 15, 2021;
– RealXData on September 17, 2021;
–
–
PassFort on November 30, 2021; and
kompany on February 28, 2022.
Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for the definitions of how the Company determines
certain organic growth measures used in this MD&A that exclude the impact of acquisition activity.
The following footnotes are applicable throughout the discussion of the Company's results of operations:
(1) Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for the definition and methodology that the
Company utilizes to calculate this metric.
(2) Refer to the section entitled "Key Performance Metrics" of this MD&A for the definition and methodology that the Company
utilizes to calculate this metric.
40 MOODY'S 2022 10-K
Year ended December 31, 2022 compared with year ended December 31, 2021
Executive Summary
The following table provides an executive summary of key operating results for the year ended December 31, 2022. Following this
executive summary is a more detailed discussion of the Company’s operating results as well as a discussion of the operating
results of the Company’s reportable segments.
Year Ended December 31,
Financial measure:
2022
2021
% Change
Favorable /
(Unfavorable)
Insight and Key Drivers of Change Compared to Prior Year
Moody's total revenue
$5,468 $6,218
(12 %) — reflects lower MIS revenue partially offset by growth in MA
MIS external revenue
$2,699 $3,812
(29 %) — credit market activity remained muted across all sectors given
ongoing market volatility, central bank actions, high levels of balance
sheet cash, as well as heightened inflationary and recessionary
concerns
MA external revenue
$2,769 $2,406
15 % — inorganic growth from acquisitions; and
Total operating and
SG&A expenses
Depreciation and
amortization
— strong organic growth across all LOBs, most notably for KYC and
compliance solutions coupled with continued strong retention and
demand for credit research, analytics and models
$3,140 $3,117
(1 %) — operational and integration costs associated with recent
acquisitions; and
— increases in hiring and salary growth;
mostly offset by:
— lower incentive compensation accruals and performance-based
equity compensation; and
— favorable changes in FX translation rates
$331
$257
(29%) — higher amortization of intangible assets reflecting recent M&A
activity (most notably RMS); and
— amortization of internally developed software, primarily related to
the development of MA SaaS solutions
Restructuring
$114
$ —
NM — relates to the Company's 2022 - 2023 Geolocation Restructuring
Total non-operating
(expense) income, net
$(123) $ (89)
(38%) — a $45 million benefit in 2021 related to the reversal of tax-related
Program, more fully discussed in Note 11 to the consolidated
financial statements
interest accruals pursuant to the resolution of uncertain tax
positions;
— a $36 million non-cash gain in 2021 relating to the exchange of the
Company's minority investment in VisibleRisk for shares of BitSight;
— a $31 million increase in interest expense in 2022 primarily due to
debt issued late in 2021 and in 2022; and
— $20 million in FX translation losses reclassified to earnings in 2022
resulting from the Company no longer conducting commercial
operations in Russia;
partially offset by:
— a $70 million gain on extinguishment of debt in 2022, as more fully
discussed in Note 18 to the consolidated financial statements
Operating Margin
34.4 % 45.7 % (1,130BPS) — margin declines are primarily due to the aforementioned decrease in
Adjusted Operating
Margin(1)
ETR
42.6 % 49.9 %
(730BPS)
MIS revenue
21.9 % 19.6 %
(230BPS) — tax benefits realized upon resolution of uncertain tax positions during
2021 that did not recur to the same extent in 2022; and
— a non-deductible loss in 2022 associated with the Company no
longer conducting commercial operations in Russia
$7.44
Diluted EPS
Adjusted Diluted EPS(1) $8.57
$11.78
$12.29
(37) %
(30) %
— primarily due to declines in MIS revenue
MOODY'S 2022 10-K
41
Moody’s Corporation
Revenue:
United States
Non-U.S.:
EMEA
Asia-Pacific
Americas
Total Non-U.S.
Total
Expenses:
Operating
SG&A
Depreciation and amortization
Restructuring
Total
Operating income
Adjusted Operating Income (1)
Interest expense, net
Other non-operating income, net
Gain on extinguishment of debt
Year Ended December 31,
2022
2021
% Change
Favorable
(Unfavorable)
$
2,873
$
3,383
(15%)
(11%)
(8%)
3%
(8%)
(12%)
1%
(3%)
(29%)
NM
(6%)
(34%)
(25%)
(35%)
(54%)
NM
(38%)
(38%)
2%
(37%)
(30%)
1,682
556
357
2,595
5,468
1,613
1,527
331
114
3,585
1,883
2,328
(231)
38
70
(123)
1,374
184.7
7.44
8.57
$
$
$
1,885
603
347
2,835
6,218
1,637
1,480
257
—
3,374
2,844
3,101
(171)
82
—
(89)
2,214
187.9
11.78
12.29
34.4 %
42.6 %
21.9 %
45.7 %
49.9 %
19.6 %
Non-operating (expense) income, net
Net income attributable to Moody’s
Diluted weighted average shares outstanding
Diluted EPS attributable to Moody’s common shareholders
Adjusted Diluted EPS (1)
$
$
$
Operating margin
Adjusted Operating Margin (1)
Effective tax rate
GLOBAL REVENUE
________________________________________________________________________________________________________
2022---------------------------------------------------------------------------------------2021
53%
47%
31%
69%
54%
46%
45%
55%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
Global revenue ⇓ $750 million
U.S. Revenue ⇓ $510 million
Non-U.S. Revenue ⇓ $240 million
The decrease in global revenue reflected declines in MIS in all regions, partially offset by growth in MA in all regions. Refer to the
section entitled “Segment Results” of this MD&A for a more fulsome discussion of the Company’s segment revenue.
42 MOODY'S 2022 10-K
Changes in foreign currency translation rates unfavorably impacted global revenue by three percent.
Organic constant currency revenue(1) for MCO decreased 13%.
Operating Expense ⇓ $24 million
SG&A Expense ⇑ $47 million
$1,613
$1,637
$1,527
$1,480
Compensation
Non-compensation
Compensation
Non-compensation
2022
2021
2022
2021
Compensation expenses decreased $83 million with the
most notable drivers reflecting:
Compensation expenses increased $57 million with the
most notable drivers reflecting:
— lower incentive compensation accruals and performance-
based equity compensation of approximately $120 million,
which aligns with actual/projected financial and operating
performance; and
— higher salaries and benefits of approximately $100 million
primarily reflecting hiring and salary increases in MA's sales
organization to support continued growth in the business as
well as in shared services support functions; and
— approximately $55 million in higher compensation costs
— inorganic growth from acquisitions of approximately $45
capitalized in 2022 reflecting certain product development in
the MA operating segment;
million;
partially offset by:
partially offset by:
— inorganic growth from acquisitions of approximately $100
million.
— lower incentive compensation accruals and performance-
based equity compensation of approximately $70 million,
which aligns with actual/projected financial and operating
performance.
Non-compensation expenses increased $59 million with
the most notable drivers reflecting:
Non-compensation expenses decreased $10 million with
the most notable drivers reflecting:
— inorganic growth from acquisitions of approximately $35
— lower consulting and other professional fees of
million; and
— higher costs of approximately $15 million relating to
strategic initiatives to support business growth coupled with
enhancements to technology infrastructure to enable
automation, innovation and efficiency.
approximately $75 million, which includes deal-related costs
associated with acquisitions that closed in 2021;
partially offset by:
— inorganic growth from acquisitions of approximately $30
million; and
— higher travel costs of approximately $20 million compared to
minimal travel in the prior year in light of COVID-19.
Depreciation and amortization
The increase in depreciation and amortization expense is driven by higher amortization of intangible assets reflecting recent M&A
activity (most notably RMS) coupled with amortization of internally developed software, which is primarily related to the
development of MA SaaS solutions.
Restructuring
The restructuring charge in 2022 relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed
in Note 11 to the consolidated financial statements.
Operating margin 34.4%, down 1,130 BPS
Adjusted Operating Margin 42.6%, down 730 BPS
Overall, margin declines primarily resulted from the aforementioned decrease in MIS revenue.
MOODY'S 2022 10-K
43
Interest Expense, net ⇑ $60 million
Other non-operating income ⇓ $44 million
Increase in expense is primarily due to:
Decrease in income is primarily due to:
— an approximate $45 million benefit in the prior year related
to the reversal of tax-related interest accruals pursuant to
the resolution of UTPs; and
— a $36 million non-cash gain in 2021 relating to the
exchange of the Company's minority investment in
VisibleRisk for shares of BitSight; and
— $31 million higher interest on borrowings resulting from the
issuance of new long-term debt late in 2021 and in 2022
(refer to the "Material Cash Requirements" section of this
MD&A for further information on the Company's
indebtedness).
— $20 million in FX translation losses reclassified to earnings
in 2022 resulting from the Company no longer conducting
commercial operations in Russia (refer to the section above
entitled "Russia/Ukraine Conflict" for further information);
partially offset by
— a $13 million loss in 2021 on a forward contract used to
hedge a portion of the GBP-denominated RMS purchase
price.
Gain on extinguishment of debt
The gain in 2022 relates to the early redemption of a portion of the 2.55% 2020 Senior Notes, Due 2060, as more fully discussed in
Note 18 to the consolidated financial statements.
ETR ⇑ 230BPS
The primary drivers for the increase in the ETR include:
— tax benefits realized upon resolution of uncertain tax positions during 2021 that did not recur to the same extent in 2022; and
— a non-deductible loss in 2022 associated with the Company no longer conducting commercial operations in Russia.
Diluted EPS ⇓ $4.34
Adjusted Diluted EPS ⇓ $3.72
Diluted EPS and Adjusted Diluted EPS declined mainly due to lower operating income and Adjusted Operating Income,
respectively. Refer to the section entitled “Non-GAAP Financial Measures” of this MD&A for items excluded in the derivation of
Adjusted Diluted EPS.
44 MOODY'S 2022 10-K
Segment Results
Moody’s Investors Service
The table below provides a summary of revenue and operating results, followed by further insight and commentary:
Year Ended December 31,
2022
2021
% Change
Favorable
(Unfavorable)
Revenue:
Corporate finance (CFG)
Structured finance (SFG)
Financial institutions (FIG)
Public, project and infrastructure finance (PPIF)
Total ratings revenue
MIS Other
Total external revenue
Intersegment royalty
Total
Expenses:
Operating and SG&A (external)
Operating and SG&A (intersegment)
Total operating and SG&A expense
Adjusted Operating Income
Adjusted Operating Margin
Depreciation and amortization
Restructuring
$
1,269
$
2,087
462
491
431
2,653
46
2,699
174
2,873
1,377
8
1,385
1,488
$
560
602
521
3,770
42
3,812
165
3,977
1,496
7
1,503
2,474
51.8 %
62.2 %
81
65
72
(1)
$
(39%)
(18%)
(18%)
(17%)
(30%)
10%
(29%)
5%
(28%)
8%
(14%)
8%
(40%)
(13%)
NM
The following chart presents changes in rated issuance volumes compared to 2021. To the extent that changes in rated issuance
volumes had a material impact to MIS's revenue compared to the prior year, those impacts are discussed below.
Changes in Rated Issuance Volumes
Total MIS Rated Issuance
Investment Grade
(31)%
(31)%
Leveraged Loans
(51)%
High Yield Bonds
(73)%
Structured Finance
(35)%
Financial Institutions
Public, Project and
Infrastructure Finance
(7)%
(17)%
MOODY'S 2022 10-K
45
MOODY'S INVESTORS SERVICE REVENUE
________________________________________________________________________________________________________
2022---------------------------------------------------------------------------------------2021
39%
44%
39%
61%
56%
61%
31%
69%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
MIS: Global revenue ⇓ $1,113 million
U.S. Revenue ⇓ $710 million
Non-U.S. Revenue ⇓ $403 million
The decrease in global MIS revenue primarily relates to a 31% decrease in rated issuance volumes, which resulted in transaction
revenue declining $1,128 million compared to the same period in the prior year. The decline in rated issuance volumes compared
to 2021 reflected muted credit market activity across all sectors given ongoing market volatility, central bank actions, high levels of
balance sheet cash, as well as heightened inflationary and recessionary concerns.
Changes in foreign currency translation rates unfavorably impacted MIS revenue by two percentage points.
CFG REVENUE
________________________________________________________________________________________________________
2022---------------------------------------------------------------------------------------2021
34%
39%
34%
66%
61%
66%
23%
77%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
CFG: Global revenue ⇓ $818 million
U.S. Revenue ⇓ $552 million
Non-U.S. Revenue ⇓ $266 million
46 MOODY'S 2022 10-K
Global CFG revenue for the years ended December 31, 2022 and 2021 was comprised as follows:
$2,087
$631
$606
$411
$439
2021
$1,269
$592
$275
$108
$294
2022
Other accounts (CFG)⁽¹⁾
Bank loans
High-yield
Investment-grade
(1) Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from
programs such as commercial paper, medium term notes and ICRA corporate finance revenue.
The decrease in CFG revenue of 39% reflected declines both in the U.S. (40%) and internationally (38%), which resulted in an
$828 million decrease in transaction revenue.
The most notable drivers of the decrease compared to 2021 reflected declines in leveraged finance and investment-grade issuance
activity resulting from muted credit market activity given ongoing market volatility, central bank actions, high levels of balance sheet
cash, as well as heightened inflationary and recessionary concerns compared to a strong prior year period.
SFG REVENUE
________________________________________________________________________________________________________
2022---------------------------------------------------------------------------------------2021
33%
67%
43%
57%
35%
35%
65%
65%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
SFG: Global revenue ⇓ $98 million
U.S. Revenue ⇓ $56 million
Non-U.S. Revenue ⇓ $42 million
Global SFG revenue for the years ended December 31, 2022 and 2021 was comprised as follows:
$462
$140
$98
$106
$116
2022
$560
$215
$102
$123
$118
2021
Other accounts (SFG)
Structured credit
CMBS
RMBS
Asset-backed securities
The decrease in SFG revenue of 18% reflected declines both in the U.S. (15%) and internationally (21%). Transaction revenue
decreased $100 million.
MOODY'S 2022 10-K
47
The most notable driver of the decline compared to 2021 was a decrease in CLO refinancing activity in the U.S. and EMEA
resulting from the widening of credit spreads for this asset class.
Changes in foreign currency translation rates unfavorably impacted SFG revenue by three percentage points.
FIG REVENUE
________________________________________________________________________________________________________
2022---------------------------------------------------------------------------------------2021
45%
55%
43%
57%
48%
52%
53%
47%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
FIG: Global revenue ⇓ $111 million
U.S. Revenue ⇓ $66 million
Non-U.S. Revenue ⇓ $45 million
Global FIG revenue for the years ended December 31, 2022 and 2021 was comprised as follows:
$491
$28
$113
$337
2022
$602
$36
$145
$411
2021
Other accounts (FIG)
Managed investments
Insurance
Banking
The decrease in FIG revenue of 18% reflected declines both in the U.S. (23%) and internationally (14%) which resulted in a $109
million decrease in transaction revenue compared to the prior year.
The most notable drivers of the decline reflected lower revenue from banking and insurance issuers primarily due to:
–
–
an unfavorable product mix; and
a decline in opportunistic issuance, as banks, insurers and asset management issuers were well capitalized following financing
activity in the prior year period ahead of anticipated interest rate increases.
Changes in foreign currency translation rates unfavorably impacted FIG revenue by two percentage points.
48 MOODY'S 2022 10-K
PPIF REVENUE
________________________________________________________________________________________________________
2022---------------------------------------------------------------------------------------2021
38%
39%
62%
61%
42%
58%
32%
68%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
PPIF: Global revenue ⇓ $90 million
U.S. Revenue ⇓ $38 million
Non-U.S. Revenue ⇓ $52 million
Global PPIF revenue for the years ended December 31, 2022 and 2021 was comprised as follows:
$431
$234
$197
2022
$521
$277
$244
2021
Project and infrastructure
Public finance / sovereign
Transaction revenue decreased $91 million compared to the same period in the prior year.
The 17% decrease in PPIF revenue reflected declines both in the U.S. (13%) and internationally (24%) The decrease in revenue
was mainly due to:
–
–
declines in U.S. public finance revenue resulting from market volatility, which increased funding costs, coupled with issuers in
this sector being currently well capitalized; and
declines in sovereign, project finance and infrastructure finance rated issuance volumes in EMEA resulting from market
volatility and rising funding costs.
Changes in foreign currency translation rates unfavorably impacted PPIF revenue by two percentage points.
MIS: Operating and SG&A Expense ⇓ $119 million
$1,377
$940
$437
2022
$1,496
$1,090
$406
2021
Compensation
Non-compensation
MOODY'S 2022 10-K
49
The decrease in operating and SG&A expense reflects a $150 million decrease in compensation expense partially offset by a $31
million increase in non-compensation expenses. The most notable drivers of these changes are as follows:
Compensation costs
Non-compensation costs
The decrease is primarily due to:
The increase is primarily due to:
— lower incentive compensation accruals and performance-
based equity compensation of approximately $165 million,
which aligns with actual/projected financial and operating
performance.
— higher bad debt reserves of approximately $20 million
resulting from the impact of the Russia/Ukraine conflict; and
— higher travel costs of approximately $10 million compared
to minimal travel in the prior year in light of COVID-19.
Favorable changes in FX translation rates reduced compensation and non-compensation costs by approximately $40 million and
approximately $10 million, respectively.
MIS: Adjusted Operating Margin 51.8% ⇓ 1,040BPS
The MIS Adjusted Operating Margin decline primarily reflected the aforementioned 29% decrease in revenue.
Restructuring Charge
The restructuring charge in 2022 relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed
in Note 11 to the consolidated financial statements.
Moody’s Analytics
The table below provides a summary of revenue and operating results, followed by further insight and commentary:
Year Ended December 31,
2022
2021
% Change
Favorable
(Unfavorable)
Revenue:
Decision Solutions (DS)
Research and Insights (R&I)
Data and Information (D&I)
Total external revenue
Intersegment revenue
Total MA Revenue
Expenses:
Operating and SG&A (external)
Operating and SG&A (intersegment)
Total operating and SG&A expense
Adjusted Operating Income
Adjusted Operating Margin
Depreciation and amortization
Restructuring
$
1,324
$
733
712
2,769
8
2,777
1,763
174
1,937
840
$
$
1,011
697
698
2,406
7
2,413
1,621
165
1,786
627
30.2 %
26.0 %
250
49
185
1
31%
5%
2%
15%
14%
15%
(9%)
(5%)
(8%)
34%
(35%)
NM
50 MOODY'S 2022 10-K
MOODY'S ANALYTICS REVENUE
________________________________________________________________________________________________________
2022---------------------------------------------------------------------------------------2021
45%
55%
6%
94%
43%
57%
7%
93%
U.S.
Non-U.S.
Recurring
Transaction
U.S.
Non-U.S.
Recurring
Transaction
MA: Global revenue ⇑ $363 million
U.S. Revenue ⇑ $200 million
Non-U.S. Revenue ⇑ $163 million
The 15% increase in global MA revenue reflects strong growth both in the U.S. (19%) and internationally (12%) in all LOBs and
includes revenue from the acquisitions of RMS, PassFort and kompany. Changes in foreign currency translation rates unfavorably
impacted MA revenue by five percentage points.
Organic constant currency revenue(1) growth was 10%.
ARR(2) increased 10% reflecting strong growth across all LOBs.
DECISION SOLUTIONS REVENUE
________________________________________________________________________________________________________
2022---------------------------------------------------------------------------------------2021
44%
56%
12%
88%
43%
57%
16%
84%
U.S.
Non-U.S.
Recurring
Transaction
U.S.
Non-U.S.
Recurring
Transaction
DS: Global revenue ⇑ $313 million
U.S. Revenue ⇑ $148 million
Non-U.S. Revenue ⇑ $165 million
Global DS revenue grew 31% compared to 2021 reflecting growth in the U.S. (34%) and internationally (29%). The most notable
drivers of the growth include:
–
–
–
–
inorganic revenue growth from the acquisitions of RMS, PassFort and kompany;
continued demand for KYC and anti-money laundering compliance solutions;
growth in subscription-based revenue for pension and actuarial modeling tools in support of certain international accounting
standards relating to insurance contracts; and
growth in subscription-based banking solutions driven by continued product development with a strategic emphasis on cloud-
based SaaS solutions.
Changes in foreign currency translation rates unfavorably impacted DS revenue by four percentage points.
Organic constant currency revenue(1) grew 12%.
ARR(2) grew 11% primarily reflecting increased demand for KYC and banking products.
MOODY'S 2022 10-K
51
RESEARCH AND INSIGHTS REVENUE
________________________________________________________________________________________________________
2022---------------------------------------------------------------------------------------2021
45%
55%
1%
99%
54%
46%
1%
99%
U.S.
Non-U.S.
Recurring
Transaction
U.S.
Non-U.S.
Recurring
Transaction
R&I: Global revenue ⇑ $36 million
U.S. Revenue ⇑ $28 million
Non-U.S. Revenue ⇑ $8 million
Global R&I revenue increased 5% compared to 2021, mainly driven by growth in recurring revenue of 6%, primarily due to
continued strong retention and demand for credit research, analytics and models.
Changes in foreign currency translation rates unfavorably impacted R&I revenue by three percentage points.
Constant currency revenue(1) growth for R&I was 8%.
ARR(2) grew 9%, primarily reflecting the aforementioned strong retention and demand for credit research, analytics and models.
DATA AND INFORMATION REVENUE
________________________________________________________________________________________________________
2022---------------------------------------------------------------------------------------2021
35%
32%
65%
U.S.
Non-U.S.
100%
Recurring
Transaction
1%
99%
68%
U.S.
Non-U.S.
Recurring
Transaction
D&I: Global revenue ⇑ $14 million
U.S. Revenue ⇑ $24 million
Non-U.S. Revenue ⇓ $10 million
Global D&I revenue increased 2% compared to 2021, with the main drivers of the growth reflecting:
–
–
continued strong retention and new sales for ratings data feeds coupled with pricing increases; and
increased demand for company data.
Changes in foreign currency translation unfavorably impacted D&I revenue by seven percentage points.
Organic constant currency revenue(1) growth for D&I was 9%.
ARR(2) grew 9% reflecting increasing demand for company data and ratings data feeds products.
52 MOODY'S 2022 10-K
MA: Operating and SG&A Expense ⇑ $142 million
$1,763
$1,116
$647
2022
$1,621
$991
$630
2021
Compensation
Non-compensation
The increase in operating and SG&A expenses compared to 2021 is primarily due to growth in both compensation and non-
compensation costs of $125 million and $17 million, respectively, with the most notable drivers of the increase reflecting:
Compensation costs
Non-compensation costs
— inorganic expense growth from acquisitions of
— operating and integration-related costs associated with
approximately $150 million.
recent acquisitions of approximately $65 million;
partially offset by:
— lower consulting/professional fees of approximately $45
million due in part to a higher proportion of costs capitalized
relating to the development of SaaS-based solutions.
Favorable changes in FX translation rates reduced compensation and non-compensation costs by approximately $45 million and
approximately $20 million, respectively.
MA: Adjusted Operating Margin 30.2% ⇑ 420BPS
The Adjusted Operating Margin increase for MA is primarily due to the 15% increase in global MA revenue partially offset by
operational and integration-related costs associated with recent acquisitions.
Depreciation and amortization
The increase in depreciation and amortization expense is driven by higher amortization of intangible assets reflecting recent M&A
activity (most notably RMS) and amortization of internally developed software relating to the development of SaaS-based solutions.
Restructuring
The restructuring charge in 2022 relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully discussed
in Note 11 to the consolidated financial statements.
Market Risk
Foreign exchange risk:
Moody’s maintains a presence in more than 40 countries. In 2022, approximately 40% of the Company’s revenue and
approximately 38% of the Company's expenses were denominated in functional currencies other than the U.S. dollar, principally in
the British pound and the euro. As such, the Company is exposed to market risk from changes in FX rates. As of December 31,
2022, approximately 51% of Moody’s assets were located outside the U.S., making the Company susceptible to fluctuations in FX
rates. The effects of translating assets and liabilities of non-U.S. operations with non-U.S. functional currencies to the U.S. dollar
are charged or credited to OCI.
The effects of revaluing assets and liabilities that are denominated in currencies other than a subsidiary’s functional currency are
charged to other non-operating income (expense), net in the Company’s consolidated statements of operations. Accordingly, the
Company enters into foreign exchange forwards to partially mitigate the change in fair value on certain assets and liabilities
denominated in currencies other than a subsidiary’s functional currency. The following table shows the impact to the fair value of
MOODY'S 2022 10-K
53
the forward contracts if currencies being purchased were to weaken by 10%:
Foreign Currency Forwards (1)
Sell
U.S. dollar
U.S. dollar
Euro
U.S. dollar
U.S. dollar
U.S. dollar
U.S. dollar
Buy
British pound
Euro
U.S. dollar
Canadian dollar
Singapore dollar
Indian rupee
Japanese yen
Impact on fair value of contract
$18 million unfavorable impact
$12 million unfavorable impact
$9 million unfavorable impact
$8 million unfavorable impact
$5 million unfavorable impact
$2 million unfavorable impact
$2 million unfavorable impact
$56 million unfavorable impact
(1)
Refer to Note 7 to the consolidated financial statements in Item 8 of this Form 10-K for further detail on the forward contracts.
The change in fair value of the foreign exchange forward contracts would be offset by FX revaluation gains or losses on underlying
assets and liabilities denominated in currencies other than a subsidiary’s functional currency.
Derivatives and non-derivatives designated as net investment hedges:
The Company designates derivative instruments and foreign currency-denominated debt as hedges of foreign currency risk of net
investments in certain foreign subsidiaries (net investment hedges) under ASC Topic 815, Derivatives and Hedging.
Cross-currency swaps
As of December 31, 2022, the Company had cross-currency swaps designated as hedges of euro denominated net investments in
subsidiaries, for which the notional values and corresponding interest rates are disclosed in Note 7 to the consolidated financial
statements located in Item 8 of this Form 10-K.
If the euro were to strengthen 10% relative to the U.S. dollar, there would be an approximate $310 million unfavorable impact to the
fair value of the cross-currency swaps recognized in OCI, which would be offset by favorable currency translation gains on the
Company’s euro net investment in foreign subsidiaries.
Euro-denominated debt
As of December 31, 2022, the Company has designated €500 million of the 2015 Senior Notes and €750 million of the 2019 Senior
Notes as a net investment hedge to mitigate FX exposure relating to euro denominated net investments in subsidiaries. If the euro
were to strengthen 10% relative to the U.S. dollar, there would be an approximate $133 million unfavorable adjustment to OCI
related to these net investment hedges. This adjustment would be offset by favorable translation adjustments on the Company’s
euro net investment in subsidiaries.
Interest rate and credit risk:
Interest rate swaps designated as a fair value hedge:
The Company’s interest rate risk management objectives are to reduce the funding cost and volatility to the Company and to alter
the interest rate exposure to a desired risk profile. Moody’s uses interest rate swaps as deemed necessary to assist in
accomplishing these objectives. The Company is exposed to interest rate risk on its various outstanding fixed-rate debt for which
the fair value of the outstanding fixed rate debt fluctuates based on changes in interest rates. The Company has entered into
interest rate swaps to convert the fixed interest rate on certain of its long-term debt to a floating interest rate based on the 3-month
and 6-month LIBOR as well as SOFR. These swaps are adjusted to fair market value based on prevailing interest rates at the end
of each reporting period and fluctuations are recorded as a reduction or addition to the carrying value of the borrowing, while net
interest payments are recorded as interest expense/income in the Company’s consolidated statement of operations. A hypothetical
change of 100 BPS in the LIBOR/SOFR-based swap rate would result in an approximate $110 million change to the fair value of
the swaps, which would be offset by the change in fair value of the hedged item.
Additional information on these interest rate swaps is disclosed in Note 7 to the consolidated financial statements located in Item 8
of this Form 10-K.
Moody’s cash equivalents consist of investments in high-quality investment-grade securities within and outside the U.S. with
maturities of three months or less when purchased. The Company manages its credit risk exposure by allocating its cash
equivalents among various money market deposit accounts and certificates of deposit and by limiting the amount it can invest with
any single issuer. Short-term investments primarily consist of certificates of deposit.
54 MOODY'S 2022 10-K
Liquidity and Capital Resources
Moody's remains committed to using its strong cash flow to create value for shareholders by both investing in the Company's
employees and growing the business through targeted organic initiatives and inorganic acquisitions aligned with strategic priorities.
Additional excess capital is returned to the Company’s shareholders via a combination of dividends and share repurchases.
Cash Flow
The Company is currently financing its operations, capital expenditures, acquisitions and share repurchases from operating and
financing cash flows.
The following is a summary of the changes in the Company’s cash flows followed by a brief discussion of these changes:
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Free Cash Flow (1)
Year Ended December 31,
2022
1,474
(262)
(1,208)
1,191
$
$
$
$
2021
2,005
(2,619)
(122)
1,866
$
$
$
$
$ Change
Favorable/ (unfavorable)
$
$
$
$
(531)
2,357
(1,086)
(675)
(1)
Free Cash Flow is a non-GAAP measure and is defined by the Company as net cash provided by operating activities minus cash paid for
capital expenditures. Refer to the section entitled “Non-GAAP Financial Measures” of this MD&A for further information on this financial
measure.
Net cash provided by operating activities
Net cash flows from operating activities decreased $531 million compared to the prior year primarily reflecting:
–
–
–
a decrease in operating income of $961 million (see section entitled “Results of Operations” of this MD&A for further
discussion);
higher incentive compensation payouts in 2022 of approximately $130 million resulting from the Company's strong
performance during 2021; and
various changes in working capital;
partially offset by:
–
–
favorable impact from changes in accounts receivable of $291 million in 2022 resulting from collections in 2022 relating to
strong performance in the fourth quarter of 2021; and
lower cash paid for income taxes of $444 million (refer to Note 17 to the consolidated financial statements for further analysis
of the Company's income taxes).
Net cash used in investing activities
The $2,357 million decrease in cash flows used in investing activities compared to 2021 primarily reflects:
–
–
–
higher cash paid of $2,082 million in the prior year for acquisitions, primarily reflecting the acquisition of RMS (refer to Note 9
to the consolidated financial statements for further discussion on the Company's M&A activity);
$250 million of cash paid in the prior year for a minority investment in BitSight (refer to Note 13 to the consolidated financial
statements for further discussion on the Company's investments in non-consolidated affiliates); and
higher net cash receipts of $231 million in 2022 relating to the settlement of net investment hedges;
partially offset by:
–
an increase in cash paid for capital additions of $144 million reflecting product development and investments relating to
strategic initiatives to support business growth and to enhance technology infrastructure to enable automation, innovation and
efficiency.
Net cash used in financing activities
The $1,086 million increase in cash used in financing activities was primarily attributed to:
–
–
–
higher net issuance (issuance, less repayment) of $810 million in long-term debt in 2021;
higher cash paid for treasury share repurchases in 2022 of $233 million, which includes payment for shares made under an
ASR agreement executed in the first quarter of 2022; and
higher dividend payments of $52 million in 2022.
MOODY'S 2022 10-K
55
Cash and cash equivalents and short-term investments
The Company’s aggregate cash and cash equivalents and short-term investments of $1.9 billion at December 31, 2022 included
approximately $1.4 billion located outside of the U.S. Approximately 42% of the Company’s aggregate cash and cash equivalents
and short-term investments is denominated in euros and British pounds. The Company manages both its U.S. and non-U.S. cash
flow to maintain sufficient liquidity in all regions to effectively meet its operating needs.
As a result of the Tax Act, all previously net undistributed foreign earnings have now been subject to U.S. tax. The Company
continues to evaluate which entities it will indefinitely reinvest earnings outside the U.S. The Company has provided deferred taxes
for those entities whose earnings are not considered indefinitely reinvested. Accordingly, the Company has commenced
repatriating a portion of its non-U.S. cash in these subsidiaries and will continue to repatriate certain of its offshore cash in a
manner that addresses compliance with local statutory requirements, sufficient offshore working capital and any other factors that
may be relevant in certain jurisdictions. Notwithstanding the Tax Act, which generally eliminated federal income tax on future cash
repatriation to the U.S., cash repatriation may be subject to state and local taxes or withholding or similar taxes.
Material Cash Requirements
The Company's material cash requirements consist of the following contractual and other obligations:
Financing Arrangements
Indebtedness
At December 31, 2022, Moody’s had $7.4 billion of outstanding debt and approximately $1 billion of additional capacity available
under the Company’s CP program, which is backstopped by the $1.25 billion 2021 Facility.
The repayment schedule for the Company’s borrowings outstanding at December 31, 2022 is as follows:
$700
$500
$800
$534
$500
$400
$600
$500
$600
$600
$400
$500
$500
$300
$300
2024 2025
//
2027 2028 2029 2030 2031 2032
//
2041
//
2044
//
2048
//
2050
//
2052
//
2060 2061
USD
EUR
Future interest payments and fees associated with the Company's debt and credit facility are expected to be $4.8 billion, of which
approximately $316 million is expected to be paid over the next twelve months. For additional information on the Company's
outstanding debt, CP program and 2021 Facility, refer to Note 18 to the consolidated financial statements.
Management may consider pursuing additional long-term financing when it is appropriate in light of cash requirements for
operations, share repurchases and other strategic opportunities, which would result in higher financing costs.
Purchase Obligations
Purchase obligations generally include multi-year agreements with vendors to purchase goods or services and mainly include data
center/cloud hosting fees and fees for information technology licensing and maintenance. As of December 31, 2022, these
purchase obligations totaled $218 million, of which $138 million is expected to be paid in the next twelve months.
Leases
The Company has operating lease obligations of $474 million at December 31, 2022, primarily related to real estate leases, of
which approximately $119 million in payments are expected over the next twelve months. For more information on the Company's
operating leases, refer to Note 20 to the consolidated financial statements.
Pension and Other Retirement Plan Obligations
The Company does not anticipate making significant contributions to its funded pension plan in the next twelve months. This plan is
overfunded at December 31, 2022, and accordingly holds sufficient investments to fund future benefit obligations. Payments for the
Company's unfunded plans are not expected to be material
in either the short or long-term. For further information on the
Company's pension and other retirement plan obligations, refer to Note 15 to the consolidated financial statements.
56 MOODY'S 2022 10-K
Dividends and share repurchases
On January 30, 2023, the Board approved the declaration of a quarterly dividend of $0.77 per share for Moody’s common stock,
payable March 17, 2023 to shareholders of record at the close of business on February 24, 2023. The continued payment of
dividends at this rate, or at all, is subject to the discretion of the Board.
On February 9, 2021, the Board approved $1 billion in share repurchase authority, and on February 7, 2022, the Board approved
an additional $750 million of share repurchase authority. At December 31, 2022, the Company had approximately $848 million of
remaining authority. There is no established expiration date for the remaining authorizations.
Restructuring
As more fully discussed in Note 11 to the consolidated financial statements, the Company is currently in the process of executing
the 2022 - 2023 Geolocation Restructuring Program. This program relates to the Company's post-COVID-19 geolocation strategy
and includes the rationalization and exit of certain real estate leases and a reduction in staff, including the relocation of certain job
functions from their current locations. Future cash outlays associated with this program are expected to be approximately $60
million to $80 million, which are expected to be paid through 2024.
Sources of Funding to Satisfy Material Cash Requirements
The Company believes that it has the financial resources needed to meet its cash requirements and expects to have positive
operating cash flow in 2023. Cash requirements for periods beyond the next twelve months will depend, among other things, on the
Company’s profitability and its ability to manage working capital requirements. The Company may also borrow from various
sources as described above.
Non-GAAP Financial Measures:
In addition to its reported results, Moody’s has included in this MD&A certain adjusted results that the SEC defines as “Non-GAAP
financial measures.” Management believes that such adjusted financial measures, when read in conjunction with the Company’s
reported results, can provide useful supplemental information for investors analyzing period-to-period comparisons of the
Company’s performance, facilitate comparisons to competitors’ operating results and can provide greater transparency to investors
of supplemental information used by management in its financial and operational decision-making. These adjusted measures, as
defined by the Company, are not necessarily comparable to similarly defined measures of other companies. Furthermore, these
adjusted measures should not be viewed in isolation or used as a substitute for other GAAP measures in assessing the operating
performance or cash flows of the Company. Below are brief descriptions of the Company’s adjusted financial measures
accompanied by a reconciliation of the adjusted measure to its most directly comparable GAAP measure.
Adjusted Operating Income and Adjusted Operating Margin:
The Company presents Adjusted Operating Income and Adjusted Operating Margin because management deems these metrics to
be useful measures to provide additional perspective on Moody's operating performance. Adjusted Operating Income excludes the
impact of: i) depreciation and amortization; and ii) restructuring charges/adjustments. Depreciation and amortization are excluded
because companies utilize productive assets of different useful lives and use different methods of acquiring and depreciating
productive assets. Restructuring charges/adjustments are excluded as the frequency and magnitude of these charges may vary
widely across periods and companies.
Management believes that the exclusion of the aforementioned items, as detailed in the reconciliation below, allows for an
additional perspective on the Company’s operating results from period to period and across companies. The Company defines
Adjusted Operating Margin as Adjusted Operating Income divided by revenue.
Operating income
Adjustments:
Depreciation and amortization
Restructuring
Adjusted Operating Income
Operating margin
Adjusted Operating Margin
$
$
Year ended December 31,
2022
2021
1,883
$
331
114
2,328
$
34.4 %
42.6 %
2,844
257
—
3,101
45.7 %
49.9 %
MOODY'S 2022 10-K
57
Adjusted Net Income and Adjusted Diluted EPS attributable to Moody’s common shareholders:
The Company presents Adjusted Net Income and Adjusted Diluted EPS because management deems these metrics to be useful
measures to provide additional perspective on Moody's operating performance. Adjusted Net Income and Adjusted Diluted EPS
exclude the impact of: i) amortization of acquired intangible assets; ii) restructuring charges/adjustments; iii) a gain on the
extinguishment of debt; iv) FX translation losses reclassified to earnings resulting from the Company no longer conducting
commercial operations in Russia; and v) a non-cash gain relating to the Company’s minority investment in BitSight.
The Company excludes the impact of amortization of acquired intangible assets as companies utilize intangible assets with
different estimated useful lives and have different methods of acquiring and amortizing intangible assets. These intangible assets
were recorded as part of acquisition accounting and contribute to revenue generation. The amortization of intangible assets related
to acquisitions will recur in future periods until such intangible assets have been fully amortized. Furthermore, the timing and
magnitude of business combination transactions are not predictable and the purchase price allocated to amortizable intangible
assets and the related amortization period are unique to each acquisition and can vary significantly from period to period and
across companies. Restructuring charges/adjustments, the gain on extinguishment of debt, FX translation losses reclassified to
earnings resulting from the Company no longer conducting commercial operations in Russia, and the non-cash gain relating to the
Company's minority interest in BitSight are excluded as the frequency and magnitude of these items may vary widely across
periods and companies.
The Company excludes the aforementioned items to provide additional perspective when comparing net income and diluted EPS
from period to period and across companies as the frequency and magnitude of similar transactions may vary widely across
periods.
Amounts in millions
Year ended December 31,
2022
2021
Net income attributable to Moody’s common shareholders
$
1,374
$
2,214
Pre-tax Acquisition-Related Intangible Amortization Expenses
Tax on Acquisition-Related Intangible Amortization Expenses
Net Acquisition-Related Intangible Amortization Expenses
Pre-tax restructuring
Tax on restructuring
Net restructuring
Pre-tax gain on extinguishment of debt
Tax on gain on extinguishment of debt
Net gain on extinguishment of debt
FX losses resulting from the Company no longer conducting
commercial operations in Russia
Pre-tax gain relating to minority investment in BitSight
Tax on gain relating to minority investment in BitSight
Net gain relating to minority investment in BitSight
Adjusted Net Income
$
$
$
$
200
(47)
114
(26)
(70)
17
—
—
$
$
$
$
153
88
(53)
20
158
(36)
—
—
—
—
(36)
9
122
—
—
—
—
$
1,582
(27)
$
2,309
58 MOODY'S 2022 10-K
Below is a reconciliation of this measure to its most directly comparable U.S. GAAP amount:
Diluted earnings per share attributable to Moody’s common
shareholders
Pre-tax Acquisition-Related Intangible Amortization Expenses
Tax on Acquisition-Related Intangible Amortization Expenses
Net Acquisition-Related Intangible Amortization Expenses
Pre-tax restructuring
Tax on restructuring
Net restructuring
Pre-tax gain on extinguishment of debt
Tax on gain on extinguishment of debt
Net gain on extinguishment of debt
FX losses resulting from the Company no longer conducting
commercial operations in Russia
Pre-tax gain relating to minority investment in BitSight
$
Tax on gain relating to minority investment in BitSight
Net gain relating to minority investment in BitSight
Adjusted Diluted EPS
Year ended December 31,
2022
2021
$
7.44
$
11.78
$
$
1.08
(0.25)
0.62
(0.14)
$
(0.38)
0.09
$
$
$
0.84
(0.19)
—
—
—
—
0.83
0.48
(0.29)
0.11
0.65
—
—
—
—
—
$
(0.19)
0.05
—
8.57
$
(0.14)
$
12.29
Note: the tax impacts in the table above were calculated using tax rates in effect in the jurisdiction for which the item relates.
Free Cash Flow:
The Company defines Free Cash Flow as net cash provided by operating activities minus payments for capital additions.
Management believes that Free Cash Flow is a useful metric in assessing the Company’s cash flows to service debt, pay dividends
and to fund acquisitions and share repurchases. Management deems capital expenditures essential to the Company’s product and
service innovations and maintenance of Moody’s operational capabilities. Accordingly, capital expenditures are deemed to be a
recurring use of Moody’s cash flow. Below is a reconciliation of the Company’s net cash flows from operating activities to Free
Cash Flow:
Net cash provided by operating activities
Capital additions
Free Cash Flow
Net cash used in investing activities
Net cash used in financing activities
Year ended December 31,
2022
2021
1,474
(283)
1,191
(262)
(1,208)
$
$
$
$
2,005
(139)
1,866
(2,619)
(122)
$
$
$
$
MOODY'S 2022 10-K
59
Organic Constant Currency Revenue Growth (Decline)/Constant Currency Revenue Growth (Decline):
Beginning in the second quarter of 2022, the Company began presenting organic constant currency revenue growth (decline) and
constant currency revenue growth (decline) as its non-GAAP measure of revenue growth (decline). Previously, the Company
presented organic revenue growth (decline), which excluded only the impact of certain acquisition activity. Management deems this
revised measure to be useful in providing additional perspective in assessing the Company's revenue growth (decline) excluding
both the inorganic revenue impacts from certain acquisition activity and the impacts of changes in foreign exchange rates. The
Company calculates the dollar impact of foreign exchange as the difference between the translation of its current period non-USD
functional currency results using comparative prior period weighted average foreign exchange translation rates and current year
reported results.
Below is a reconciliation of the Company's reported revenue and growth (decline) rates to its organic constant currency revenue
growth (decline) and constant currency revenue growth (decline) measures:
Year ended December 31,
2022
2021
Change
Amounts in millions
MA revenue
FX impact
Inorganic revenue from acquisitions
Organic constant currency MA revenue
Decision Solutions revenue
FX impact
Inorganic revenue from acquisitions
Organic constant currency Decision Solutions revenue
Research and Insights revenue
FX impact
Constant currency Research and Insights revenue
Data and Information revenue
FX impact
Inorganic revenue from acquisitions
$
$
$
$
$
$
$
2,769 $
2,406 $
113
(236)
—
—
2,646 $
2,406 $
1,324 $
1,011 $
40
(234)
—
—
1,130 $
1,011 $
733 $
21
754 $
697 $
—
697 $
712 $
698 $
52
(2)
—
—
Organic constant currency Data and Information revenue $
762 $
698 $
Growth
15%
10%
31%
12%
5%
8%
2%
9%
363
113
(236)
240
313
40
(234)
119
36
21
57
14
52
(2)
64
MCO revenue
FX impact
Inorganic revenue from acquisitions
Organic constant currency MCO revenue
$
$
5,468 $
6,218 $
193
(236)
—
—
5,425 $
6,218 $
(750)
193
(236)
(793)
(12)%
(13)%
60 MOODY'S 2022 10-K
Key Performance Metrics:
The Company presents Annualized Recurring Revenue (“ARR”) on a constant currency organic basis for its MA business as a
supplemental performance metric to provide additional insight on the estimated value of MA's recurring revenue contracts at a
given point in time. The Company uses ARR to manage and monitor performance of its MA operating segment and believes that
this metric is a key indicator of the trajectory of MA's recurring revenue base.
The Company calculates ARR by taking the total recurring contract value for each active renewable contract as of the reporting
date, divided by the number of days in the contract and multiplied by 365 days to create an annualized value. The Company
defines renewable contracts as subscriptions, term licenses, maintenance and renewable services. ARR excludes transaction sales
including training, one-time services and perpetual licenses. In order to compare period-over-period ARR excluding the effects of
foreign currency translation, the Company bases the calculation on currency rates utilized in its current year operating budget and
holds these FX rates constant for the duration of all current and prior periods being reported. Additionally, ARR excludes contracts
related to acquisitions to provide additional perspective in assessing growth excluding the impacts from certain acquisition activity.
The Company’s definition of ARR may differ from definitions utilized by other companies reporting similarly named measures, and
this metric should be viewed in addition to, and not as a substitute for, financial measures presented in accordance with U.S.
GAAP.
Amounts in millions
MA ARR
Decision Solutions
Research and Insights
Data and Information
Total MA ARR
December 31, 2022
December 31, 2021
Change
Growth
$
$
1,235 $
1,110 $
770
768
707
705
2,773 $
2,522 $
125
63
63
251
11%
9%
9%
10%
Recently Issued Accounting Pronouncements
Refer to Note 2 to the consolidated financial statements located in Part II, Item 8 on this Form 10-K for a discussion on the impact
to the Company relating to recently issued accounting pronouncements.
Contingencies
Legal proceedings in which the Company is involved also may impact Moody’s liquidity or operating results. No assurance can be
provided as to the outcome of such proceedings. In addition, litigation inherently involves significant costs. For information
regarding legal proceedings, see Part II, Item 8 – “Financial Statements”, Note 21 “Contingencies” in this Form 10-K.
Forward-Looking Statements
Certain statements contained in this annual report on Form 10-K are forward-looking statements and are based on future
expectations, plans and prospects for the Company's business and operations that involve a number of risks and uncertainties.
Such statements involve estimates, projections, goals, forecasts, assumptions and uncertainties that could cause actual results or
outcomes to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking
statements. Those statements appear at various places throughout this annual report on Form 10-K, including in the sections
entitled “Contingencies” under Item 7, “MD&A”, commencing on page 35 of this annual report on Form 10-K, under “Legal
Proceedings” in Part I, Item 3, of this Form 10-K, and elsewhere in the context of statements containing the words “believe,”
“expect,” “anticipate,” “intend,” “plan,” “will,” “predict,” “potential,” “continue,” “strategy,” “aspire,” “target,” “forecast,” “project,”
“estimate,” “should,” “could,” “may,” and similar expressions or words and variations thereof relating to the Company’s views on
future events, trends and contingencies or otherwise convey the prospective nature of events or outcomes generally indicative of
forward-looking statements. Stockholders and investors are cautioned not to place undue reliance on these forward-looking
statements. The forward-looking statements and other information in this document are made as of the date of this annual report
on Form 10-K, and the Company undertakes no obligation (nor does it intend) to publicly supplement, update or revise such
statements on a going-forward basis, whether as a result of subsequent developments, changed expectations or otherwise, except
as required by applicable law or regulation. In connection with the “safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, the Company is identifying certain factors that could cause actual results to differ, perhaps materially, from
those indicated by these forward-looking statements.
Those factors, risks and uncertainties include, but are not limited to:
–
–
the impact of general economic conditions, including inflation and related monetary policy actions by governments in response
to inflation, on worldwide credit markets and economic activity and its effect on the volume of debt and other securities issued
in domestic and/or global capital markets;
the global impacts of each of the conflict in Ukraine and the COVID-19 pandemic on volatility in world financial markets, on
general economic conditions and GDP in the U.S. and worldwide, on global relations and on the Company's own operations
and personnel;
MOODY'S 2022 10-K
61
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets,
including regulation, credit quality concerns, changes in interest rates, inflation and other volatility in the financial markets, as
well as the number of issuances of securities without ratings or securities which are rated or evaluated by non-traditional
parties;
the level of merger and acquisition activity in the U.S. and abroad;
the uncertain effectiveness and possible collateral consequences of U.S. and foreign government actions affecting credit
markets, international trade and economic policy, including those related to tariffs, tax agreements and trade barriers;
the impact of MIS’s withdrawal of its credit ratings on Russian entities and of Moody’s no longer conducting commercial
operations in Russia;
concerns in the marketplace affecting our credibility or otherwise affecting market perceptions of the integrity or utility of
independent credit agency ratings;
the introduction of competing products or technologies by other companies;
pricing pressure from competitors and/or customers;
the level of success of new product development and global expansion;
the impact of regulation as an NRSRO, the potential for new U.S., state and local legislation and regulations;
the potential for increased competition and regulation in the EU and other foreign jurisdictions;
exposure to litigation related to our rating opinions, as well as any other litigation, government and regulatory proceedings,
investigations and inquiries to which Moody’s may be subject from time to time;
provisions in U.S. legislation modifying the pleading standards and EU regulations modifying the liability standards applicable
to credit rating agencies in a manner adverse to credit rating agencies;
provisions of EU regulations imposing additional procedural and substantive requirements on the pricing of services and the
expansion of supervisory remit to include non-EU ratings used for regulatory purposes;
uncertainty regarding the future relationship between the U.S. and China;
the possible loss of key employees and the impact of the global labor environment;
failures or malfunctions of our operations and infrastructure;
any vulnerabilities to cyber threats or other cybersecurity concerns;
the timing and effectiveness of our restructuring programs, such as the 2022 - 2023 Geolocation Restructuring Program;
currency and foreign exchange volatility;
the outcome of any review by controlling tax authorities of Moody’s global tax planning initiatives;
exposure to potential criminal sanctions or civil remedies if Moody’s fails to comply with foreign and U.S. laws and regulations
that are applicable in the jurisdictions in which Moody’s operates, including data protection and privacy laws, sanctions laws,
anti-corruption laws, and local laws prohibiting corrupt payments to government officials;
the impact of mergers, acquisitions, such as our acquisition of RMS, or other business combinations and the ability of Moody’s
to successfully integrate acquired businesses;
the level of future cash flows;
the levels of capital investments; and
a decline in the demand for credit risk management tools by financial institutions.
These factors, risks and uncertainties as well as other risks and uncertainties that could cause Moody’s actual results to differ
materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements are described in
greater detail under “Risk Factors” in Part I, Item 1A of Moody’s annual report on Form 10-K for the year ended December 31,
2022, and in other filings made by the Company from time to time with the SEC or in materials incorporated herein or therein.
Stockholders and investors are cautioned that the occurrence of any of these factors, risks and uncertainties may cause the
Company’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-
looking statements, which could have a material and adverse effect on the Company’s business, results of operations and financial
condition. New factors may emerge from time to time, and it is not possible for the Company to predict new factors, nor can the
Company assess the potential effect of any new factors on it. Forward-looking and other statements in this document may also
address our corporate responsibility progress, plans, and goals (including sustainability and environmental matters), and the
inclusion of such statements is not an indication that these contents are necessarily material to investors or required to be
disclosed in the Company’s filings with the Securities and Exchange Commission. In addition, historical, current, and forward-
looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal
controls and processes that continue to evolve, and assumptions that are subject to change in the future.
62 MOODY'S 2022 10-K
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information in response to this item is set forth under the caption “Market Risk” in Part II, Item 7 on page 53 of this annual report on
Form 10-K.
ITEM 8.
FINANCIAL STATEMENTS
Index to Financial Statements
Management’s Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements:
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Consolidated Statements of Shareholders’ Equity
Notes to Consolidated Financial Statements
Page(s)
64
65-66
67
68
69
70
71-73
74-120
Schedules are omitted as not required or inapplicable or because the required information is provided in the consolidated financial
statements, including the notes thereto.
MOODY'S 2022 10-K
63
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Moody’s Corporation is responsible for establishing and maintaining adequate internal control over financial
reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined by the SEC in Rules
13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, internal control over financial reporting is a process designed
by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar
functions, and effected by the Company’s Board, management and other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles.
Moody’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of Moody’s management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management of the Company evaluated and assessed the design and operational effectiveness of the Company’s internal control
over financial reporting as of December 31, 2022 based on criteria established in the Internal Control—Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on the assessment performed, management has concluded that Moody’s maintained effective internal control over financial
reporting as of December 31, 2022.
The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by KPMG LLP, an
independent registered public accounting firm, as stated in their accompanying report which expresses an unqualified opinion on
the effectiveness of Moody's internal control over financial reporting as of December 31, 2022.
/s/ ROBERT FAUBER
Robert Fauber
President and Chief Executive Officer
/s/ MARK KAYE
Mark Kaye
Executive Vice President and Chief Financial Officer
February 15, 2023
64 MOODY'S 2022 10-K
To the Shareholders and Board of Directors
Moody’s Corporation:
Report of Independent Registered Public Accounting Firm
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Moody’s Corporation and subsidiaries (the Company) as of
December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, shareholders’ equity,
and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the
consolidated financial statements). We also have audited the Company’s internal control over financial reporting as of December
31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2022 and 2021 and the results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 2022 in conformity with U.S. generally accepted accounting principles. Also in our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022 based
on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based
on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of
the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
MOODY'S 2022 10-K
65
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Gross uncertain tax positions
As discussed in Note 17 to the consolidated financial statements, the Company has recorded uncertain tax positions
(UTPs), excluding associated interest, of $322 million as of December 31, 2022. The Company determines whether it is
more-likely-than-not that a tax position will be sustained based on its technical merits as of the reporting date. A tax
position that meets this more-likely-than-not threshold is then measured and recognized at the largest amount of benefit
that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.
We identified the assessment of the Company’s gross UTPs as a critical audit matter because complex judgment was
required in evaluating the Company’s interpretation of tax laws and its estimate of the ultimate resolution of the tax
positions.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and
tested the operating effectiveness of internal controls over the Company’s tax process, including those related to the
timely identification of UTPs, the assessment of new information related to previously identified UTPs, and the
measurement of UTPs. We involved valuation professionals with specialized skills and knowledge, who assisted in
assessing transfer pricing studies for compliance with applicable laws and regulations. Additionally, we involved tax
professionals with specialized skills and knowledge, who assisted in:
•
•
•
•
evaluating the Company’s interpretation of tax laws and judgments about the administrative practices of tax
authorities
inspecting settlement documents with applicable taxing authorities
assessing the expiration of statutes of limitations
performing an assessment of the Company’s tax positions and comparing the results to the Company’s
assessment.
In addition, we evaluated the Company’s ability to accurately estimate its gross UTPs by comparing historical gross UTPs
to actual results upon conclusion of tax audits or expiration of the statute of limitations.
/s/ KPMG LLP
We have served as the Company’s auditor since 2008.
New York, New York
February 15, 2023
66 MOODY'S 2022 10-K
MOODY’S CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in millions, except per share data)
Revenue
Expenses
Operating
Selling, general and administrative
Depreciation and amortization
Restructuring
Loss pursuant to the divestiture of MAKS
Total expenses
Operating income
Non-operating (expense) income, net
Interest expense, net
Other non-operating income, net
Gain on extinguishment of debt
Non-operating (expense) income, net
Income before provision for income taxes
Provision for income taxes
Net income
Less: Net (loss) income attributable to noncontrolling interests
Net income attributable to Moody’s
Earnings per share
Basic
Diluted
Weighted average shares outstanding
Basic
Diluted
$
$
$
Year Ended December 31,
2022
2021
$
5,468
$
6,218
$
1,613
1,527
331
114
—
3,585
1,883
(231)
38
70
(123)
1,760
386
1,374
—
1,374
7.47
7.44
183.9
184.7
$
$
$
1,637
1,480
257
—
—
3,374
2,844
(171)
82
—
(89)
2,755
541
2,214
—
2,214
11.88
11.78
186.4
187.9
$
$
$
2020
5,371
1,475
1,229
220
50
9
2,983
2,388
(205)
46
—
(159)
2,229
452
1,777
(1)
1,778
9.48
9.39
187.6
189.3
The accompanying notes are an integral part of the consolidated financial statements.
MOODY'S 2022 10-K
67
MOODY’S CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in millions)
Year Ended December 31, 2022
Pre-tax
amounts
Tax
amounts
After-tax
amounts
Year Ended December 31, 2021
Pre-tax
amounts
Tax
amounts
After-tax
amounts
Year Ended December 31, 2020
Pre-tax
amounts
Tax
amounts
After-tax
amounts
Net Income
Other Comprehensive Income
(Loss):
Foreign Currency
Adjustments:
Foreign currency
translation adjustments,
net
Foreign currency
translation adjustments -
reclassification of losses
included in net income
Net gains (losses) on net
investment hedges
Net investment hedges -
reclassification of gains
included in net income
Cash Flow Hedges:
Net losses on cash flow
hedges
Reclassification of losses
included in net income
Pension and Other
Retirement Benefits:
Amortization of actuarial
losses/prior service costs
and settlement charge
included in net income
Net actuarial gains
(losses) and prior service
costs
Total Other Comprehensive
Income (Loss)
Comprehensive Income
Less: comprehensive loss
attributable to
noncontrolling interests
Comprehensive Income
Attributable to Moody’s
$ 1,374
$
2,214
$
1,777
$
(439) $
2
$
(437) $
(303) $
11
$
(292) $
361
$
(13) $
348
20
219
—
—
2
3
(1)
—
20
—
—
—
—
(55)
164
319
(77)
242
(364)
—
—
—
(1)
1
—
—
2
2
—
(2)
—
2
19
73
1
—
—
(5)
(18)
(1)
(1)
(68)
3
8
—
2
14
55
—
91
—
17
(1)
(2)
—
(273)
(1)
(51)
2
6
(42)
10
(32)
$
(196) $
(53) $
(249) $
108
$
(88) $
20
$
(103) $
102
$
(1)
1,125
(16)
2,234
(2)
1,776
(8)
$ 1,141
$
2,236
$
1,784
The accompanying notes are an integral part of the consolidated financial statements.
68 MOODY'S 2022 10-K
MOODY’S CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in millions, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents
Short-term investments
Accounts receivable, net of allowances for credit losses of $40 in 2022 and $32 in 2021
Other current assets
Total current assets
Property and equipment, net of accumulated depreciation of $1,123 in 2022 and $1,010 in 2021
Operating lease right-of-use assets
Goodwill
Intangible assets, net
Deferred tax assets, net
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities
Current portion of operating lease liabilities
Deferred revenue
Total current liabilities
Non-current portion of deferred revenue
Long-term debt
Deferred tax liabilities, net
Uncertain tax positions
Operating lease liabilities
Other liabilities
Total liabilities
Contingencies (Note 21)
Shareholders’ equity:
Preferred stock, par value $.01 per share; 10,000,000 shares authorized; no shares issued and
outstanding
Series common stock, par value $.01 per share; 10,000,000 shares authorized; no shares issued and
outstanding
Common stock, par value $.01 per share; 1,000,000,000 shares authorized; 342,902,272 shares
issued at December 31, 2022 and December 31, 2021, respectively.
Capital surplus
Retained earnings
December 31,
2022
2021
$
1,769
$
90
1,652
583
4,094
502
346
5,839
2,210
266
1,092
1,811
91
1,720
389
4,011
347
438
5,999
2,467
384
1,034
$
$
14,349
$
14,680
1,011
$
106
1,258
2,375
75
7,389
457
322
368
674
1,142
105
1,249
2,496
86
7,413
488
388
455
438
11,660
11,764
—
—
3
1,054
13,618
—
—
3
885
12,762
Treasury stock, at cost; 159,702,362 and 157,262,484 shares of common stock at December 31, 2022
and December 31, 2021, respectively
(11,513)
(10,513)
Accumulated other comprehensive loss
Total Moody’s shareholders’ equity
Noncontrolling interests
Total shareholders’ equity
(643)
2,519
170
2,689
(410)
2,727
189
2,916
Total liabilities and shareholders’ equity
$
14,349
$
14,680
The accompanying notes are an integral part of the consolidated financial statements.
MOODY'S 2022 10-K
69
MOODY’S CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in millions)
Cash flows from operating activities
Net income
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization
Stock-based compensation
Deferred income taxes
ROU asset impairment & other non-cash restructuring/impairment charges
FX translation losses reclassified to net income
Loss pursuant to the divestiture of MAKS
(Gain)/loss on extinguishment/early redemption of debt
Non-cash gain related to minority interest in BitSight
Settlement of treasury rate lock
Changes in assets and liabilities:
Accounts receivable
Other current assets
Other assets
Lease obligations
Accounts payable and accrued liabilities
Deferred revenue
Unrecognized tax positions and other non-current tax liabilities
Other liabilities
Net cash provided by operating activities
Cash flows from investing activities
Capital additions
Purchases of investments
Sales and maturities of investments
Cash paid for acquisitions, net of cash acquired
Receipts from settlements of net investment hedges
Payments for settlements of net investment hedges
Net cash used in investing activities
Cash flows from financing activities
Issuance of notes
Repayment of notes
Issuance of commercial paper
Repayment of commercial paper
Proceeds from stock-based compensation plans
Repurchase of shares related to stock-based compensation
Treasury shares
Dividends
Dividends to noncontrolling interests
Payment for noncontrolling interest
Debt issuance costs, extinguishment costs and related fees
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Year Ended December 31,
2022
2021
2020
$
1,374
$
2,214
$
1,777
331
169
48
29
20
—
(70)
—
—
34
(223)
(48)
(19)
(161)
20
(33)
3
1,474
(283)
(320)
218
(97)
220
—
(262)
988
(626)
—
—
26
(87)
(983)
(515)
(1)
—
(10)
(1,208)
(46)
(42)
257
175
(218)
—
—
—
13
(36)
—
(257)
(12)
(26)
(11)
80
65
(184)
(55)
2,005
(139)
(437)
147
(2,179)
37
(48)
(2,619)
1,672
(500)
—
—
38
(83)
(750)
(463)
(5)
—
(31)
(122)
(50)
(786)
220
154
(44)
36
—
9
24
—
(68)
31
(38)
(49)
(10)
247
(29)
(12)
(102)
2,146
(103)
(181)
104
(897)
2
(2)
(1,077)
1,491
(800)
789
(792)
51
(104)
(503)
(420)
(1)
(23)
(39)
(351)
47
765
$
1,811
1,769
$
2,597
1,811
$
1,832
2,597
The accompanying notes are an integral part of the consolidated financial statements.
70 MOODY'S 2022 10-K
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MOODY’S CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(tabular dollar and share amounts in millions, except per share data)
NOTE 1
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Moody’s is a global integrated risk assessment firm that empowers organizations and investors to make better decisions. Moody’s
reports in two reportable segments: MIS and MA.
MIS publishes credit ratings and provides assessment services on a wide range of debt obligations, programs and facilities, and
the entities that issue such obligations in markets worldwide, including various corporate, financial institution and governmental
obligations, and structured finance securities.
MA is a global provider of: i) data and information; ii) research and insights; and iii) decision solutions, which help companies make
better and faster decisions. MA leverages its industry expertise across multiple risks such as credit, market, financial crime, supply
chain, catastrophe and climate to deliver integrated risk assessment solutions that enable business leaders to identify, measure
and manage the implications of interrelated risks and opportunities.
Certain reclassifications have been made to prior period amounts to conform to the current presentation.
Adoption of New Accounting Standards in 2022
In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform - Scope,” which clarified the scope and application of
the original guidance, ASU No. 2020-04, "Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU No.
2020-04"), issued in March 2020 (codified into ASC Topic 848 "Reference Rate Reform"). ASU No. 2020-04 provides temporary
optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the
financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other
interbank offered rates to alternative reference rates. In December 2022, the FASB issued ASU 2022-06, "Reference Rate Reform
—Deferral of the Sunset Date of Topic 848," which deferred the sunset date of Topic 848 to December 31, 2024. These ASU's were
effective upon issuance, and the Company may elect to apply the amendments prospectively through December 31, 2024 as the
transition from LIBOR is completed.
As of December 31, 2022, the Company has interest rate swaps designated as fair value hedges and cross currency swaps
designated as net investment hedges referencing three-month or six-month USD LIBOR with aggregate notional amounts as
disclosed in Note 7. For derivative instruments that will be outstanding at the transition date, the Company intends to modify the
contractual terms of the instruments to replace LIBOR with another reference rate, such as SOFR. Pursuant to the modification of
the contractual terms of these instruments, the Company intends to utilize the various optional expedients set forth in ASC Topic
848 relating to derivative instruments used in hedging relationships.
On January 1, 2022, the Company adopted ASU 2021-08, "Business Combinations (Topic 805): Accounting for Contract Assets
and Contract Liabilities from Contracts with Customers" ("ASU No. 2021-08"). This ASU requires companies to apply the definition
of a performance obligation under ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred
revenue) relating to contracts with customers that are acquired in a business combination. The adoption of this ASU will result in
the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree
before the acquisition under ASC Topic 606. Accordingly, upon adoption, the Company will no longer be required to adjust acquired
deferred revenue to fair value in business combination transactions. The amendments in ASU No. 2021-08 are applied
prospectively and have been applied to business combination transactions completed subsequent to January 1, 2022.
Reclassification of Previously Reported Revenue by LOB
In the first quarter of 2022, the Company realigned its revenue by LOB reporting structure for the MA operating segment to
enhance insight and transparency into this business. As of January 1, 2022, the MA LOBs have been realigned from RD&A and
ERS to:
– Decision Solutions (DS) - provides software and workflow tools for specific use cases (banking, insurance, KYC/KYS, CRE
and structured finance solutions). This LOB utilizes components from the Data & Information and Research & Insights LOBs to
provide integrated risk solutions;
– Research & Insights (R&I) - provides models, scores, expert insights and commentary. This LOB includes: credit research;
credit models and analytics; and economics data and models; and
– Data & Information (D&I) - provides vast data sets on companies and securities via data feeds and data applications
products.
Prior year revenue by LOB disclosures have been reclassified to conform to the new LOB reporting structure, which is presented in
Note 3.
74 MOODY'S 2022 10-K
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The consolidated financial statements include those of Moody’s Corporation and its majority- and wholly-owned subsidiaries. The
effects of all intercompany transactions have been eliminated. Investments in companies for which the Company has significant
influence over operating and financial policies but not a controlling interest are accounted for on an equity basis whereby the
Company records its proportional share of the investment’s net income or loss as part of other non-operating income (expense),
net and any dividends received reduce the carrying amount of the investment. Equity investments without a readily determinable
fair value for which the Company does not have significant influence are accounted for under the ASC 321 measurement
alternative; these investments are recorded at initial cost, less impairment, adjusted upward or downward for any observable price
changes in similar investments. The Company applies the guidelines set forth in Topic 810 of the ASC in assessing its interests in
variable interest entities to decide whether to consolidate an entity. The Company has reviewed the potential variable interest
entities and determined that there are no consolidation requirements under Topic 810 of the ASC. The Company consolidates its
ICRA subsidiaries on a three month lag.
Cash and Cash Equivalents
Cash equivalents principally consist of investments in money market deposit accounts as well as certificates of deposit with
maturities of three months or less when purchased.
Short-term Investments
Short-term investments are securities with maturities greater than 90 days at the time of purchase that are available for operations
in the next 12 months. The Company’s short-term investments primarily consist of certificates of deposit and their cost
approximates fair value due to the short-term nature of the instruments. Interest and dividends on these investments are recorded
into income when earned.
Property and Equipment
Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives.
Expenditures for maintenance and repairs that do not extend the economic useful life of the related assets are charged to expense
as incurred.
Computer Software Developed or Obtained for Internal Use
The Company capitalizes costs related to software developed or obtained for internal use. These assets, included in property and
equipment in the consolidated balance sheets, relate to the Company’s financial, website and other systems. Such costs generally
consist of direct costs for third-party license fees, professional services provided by third parties and employee compensation, in
each case incurred either during the application development stage or in connection with upgrades and enhancements that
increase functionality. Such costs are depreciated over their estimated useful lives on a straight-line basis. Costs incurred during
the preliminary project stage of development as well as maintenance costs are expensed as incurred.
The Company also capitalizes implementation costs incurred in cloud computing arrangements (e.g., hosted arrangements) and
depreciates the costs over the non-cancellable term of the cloud computing arrangements plus any option renewal periods that are
reasonably certain to be exercised or for which the exercise is controlled by the service provider. The Company classifies the
amortization of capitalized implementation costs in the same line item in the statement of operations as the fees associated with
the hosting service (i.e., operating and SG&A expense) and classifies the related payments in the statement of cash flows in the
same manner as payments made for fees associated with the hosting service (i.e. cash flows from operating activities). In addition,
the capitalization of implementation costs is reflected in the balance sheet consistent with the location of prepayment of fees for the
hosting element (i.e., within other current assets or other assets).
Goodwill and Other Acquired Intangible Assets
Moody’s evaluates its goodwill for impairment at the reporting unit level, defined as an operating segment (i.e., MIS and MA), or
one level below an operating segment (i.e., a component of an operating segment), annually as of July 31 or more frequently if
impairment indicators arise in accordance with ASC Topic 350.
The Company evaluates the recoverability of goodwill using a two-step impairment test approach at the reporting unit level. In the
first step, the Company assesses various qualitative factors to determine whether the fair value of a reporting unit may be less than
its carrying amount. If a determination is made based on the qualitative factors that an impairment does not exist, the Company is
not required to perform further testing. If the aforementioned qualitative assessment results in the Company concluding that it is
more likely than not that the fair value of a reporting unit may be less than its carrying amount, the fair value of the reporting unit
will be quantitatively determined and compared to its carrying value including goodwill. If the fair value of the reporting unit exceeds
the carrying value of the net assets assigned to that unit, goodwill is not impaired and the Company is not required to perform
further testing. If the fair value of the reporting unit is less than the carrying value, the Company will record a goodwill impairment
charge for the amount by which the carrying value exceeds the reporting unit’s fair value.
MOODY'S 2022 10-K
75
The Company evaluates its reporting units on an annual basis, or more frequently if there are changes in the reporting structure of
the Company due to acquisitions, reporting unit realignments or if there are indicators of potential impairment. For the reporting
units where the Company is consistently able to conclude that no impairment exists using only a qualitative approach, the
Company’s accounting policy is to perform the second step of the aforementioned goodwill impairment assessment at least once
every three years. Goodwill is assigned to a reporting unit at the date when an acquisition is integrated into one of the established
reporting units, and is based on which reporting unit is expected to benefit from the synergies of the acquisition.
For purposes of assessing the recoverability of goodwill, the Company has four reporting units: two within the Company’s ratings
business (one for the ICRA business and one that encompasses all of Moody’s other ratings operations) and two reporting units
within MA consisting of businesses that offer: i) data and data-driven analytical solutions; and ii) risk-management software,
workflow and CRE solutions.
Impairment of long-lived assets and definite-lived intangible assets
Long-lived assets (including ROU Assets) and amortizable intangible assets are reviewed for recoverability whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable.
Under the first step of the recoverability assessment, the Company compares the estimated undiscounted future cash flows
attributable to the asset or asset group to their carrying value. If the undiscounted future cash flows are greater than the carrying
value, no further assessment is required. If the undiscounted future cash flows are less than the carrying value, Moody's proceeds
with step two of the assessment. Under step two of this assessment, Moody's is required to determine the fair value of the asset or
asset group (reduced by the estimated cost to sell the asset for assets or disposal groups classified as held-for-sale) and recognize
an impairment loss if the carrying amount exceeds its fair value.
Stock-Based Compensation
The Company records compensation expense over the requisite service period for all share-based payment award transactions
granted to employees based on the fair value of the equity instrument at the time of grant. This includes shares issued under stock
option and restricted stock plans.
Derivative Instruments and Hedging Activities
Based on the Company’s risk management policy, the Company may use derivative financial instruments to reduce exposure to
changes in foreign exchange rates and interest rates. The Company does not enter into derivative financial instruments for
speculative purposes. All derivative financial instruments are recorded on the balance sheet at their respective fair values on a
gross basis. The changes in the value of derivatives that qualify as fair value hedges are recorded in the same income statement
line item in earnings in which the corresponding adjustment to the carrying value of the hedged item is presented. The entire
change in the fair value of derivatives that qualify as cash flow hedges is recorded to OCI and such amounts are reclassified from
AOCI(L) to the same income statement line in earnings in the same period or periods during which the hedged transaction affects
income. The Company assesses effectiveness for net investment hedges using the spot-method. The entire change in the fair
value of derivatives that qualify as net investment hedges is initially recorded to OCI. Those changes in fair value attributable to
components included in the assessment of hedge effectiveness in a net investment hedge are recorded in the currency translation
adjustment component of OCI and remain in AOCI(L) until the period in which the hedged item affects earnings. Those changes in
fair value attributable to components excluded from the assessment of hedge effectiveness in a net investment hedge are recorded
to OCI and amortized to earnings using a systematic and rational method over the duration of the hedge. Any changes in the fair
value of derivatives that the Company does not designate as hedging instruments under Topic 815 of the ASC are recorded in the
consolidated statements of operations in the period in which they occur.
Revenue Recognition and Costs to Obtain or Fulfill a Contract with a Customer
Revenue recognition:
Revenue is recognized when control of promised goods or services is transferred to the customer, in an amount that reflects the
consideration the Company expects to be entitled to in exchange for those goods or services.
When contracts with customers contain multiple performance obligations, the Company accounts for individual performance
obligations separately if they are distinct. The transaction price is allocated to each distinct performance obligation on a relative
SSP basis. The Company determines the SSP by using the price charged for a deliverable when sold separately or uses
management’s best estimate of SSP for goods or services not sold separately using estimation techniques that maximize
observable data points, including: internal factors relevant to its pricing practices such as costs and margin objectives; standalone
sales prices of similar products; pricing policies; percentage of the fee charged for a primary product or service relative to a related
product or service; and customer segment and geography. Additional consideration is also given to market conditions such as
competitor pricing strategies and market trends.
Sales, usage-based, value added and other taxes are excluded from revenues.
MIS Revenue
In the MIS segment, revenue arrangements with multiple elements are generally comprised of two distinct performance obligations,
a rating and the related monitoring service. Revenue attributed to ratings of issued securities is generally recognized when the
rating is delivered to the issuer. Revenue attributed to monitoring of issuers or issued securities is recognized ratably over the
76 MOODY'S 2022 10-K
period in which the monitoring is performed, generally one year. In the case of certain structured finance products, primarily CMBS,
issuers can elect to pay all of the annual monitoring fees upfront. These fees are deferred and recognized over the future
monitoring periods based on the expected lives of the rated securities.
MIS arrangements generally have standard contractual terms for which the stated payments are due at conclusion of the ratings
process for ratings and either upfront or in arrears for monitoring services; and are signed by customers either on a per issue basis
or at the beginning of the relationship with the customer. In situations when customer fees for an arrangement may be variable, the
Company estimates the variable consideration at inception using the expected value method based on analysis of similar contracts
in the same line of business, which is constrained based on the Company’s assessment of the realization of the adjustment
amount.
The Company allocates the transaction price within arrangements that include multiple performance obligations based upon the
relative SSP of each service. The SSP for both rating and monitoring services is generally based upon observable selling prices
where the rating or monitoring service is sold separately to similar customers.
MA Revenue
In the MA segment, products and services offered by the Company include hosted research and data subscriptions, installed and
hosted software subscriptions, perpetual installed software licenses and related maintenance, or PCS, and professional services.
Subscription and PCS contracts are generally invoiced in advance of the contractual coverage period, which is principally one year,
but can range from 3-5 years. Perpetual software licenses are generally invoiced upon delivery and professional services are
invoiced as those services are provided. Payment terms and conditions vary by contract type, but primarily include a requirement of
payment within 30 to 60 days.
Revenue from research, data and other hosted subscriptions is recognized ratably over the related subscription period as MA's
performance obligation to provide access to these products is progressively fulfilled over the stated term of the contract. A large
portion of these services are invoiced in the months of November, December and January.
Revenue from the sale of a software license, when considered distinct from the related software implementation services, is
generally recognized at the time the product master or first copy is delivered or transferred to the customer. PCS is generally
recognized ratably over the contractual period commencing when the software license is fully delivered. Revenue from installed
software subscriptions, which includes PCS, is bifurcated into a software license performance obligation and a PCS performance
obligation, which follow the patterns of recognition described above.
For implementation services and other service projects for which fees are fixed, the Company determined progress towards
completion is most accurately measured on a percentage-of-completion basis (input method) as this approach utilizes the most
directly observable data points and is therefore used to recognize the related revenue. For implementation services where price
varies based on time expended, a time-based measure of progress towards completion of the performance obligation is utilized.
Revenue from professional services rendered is generally recognized over time as the services are performed.
Products and services offered within the MA segment are sold either stand-alone or together in various combinations. In instances
where an arrangement contains multiple performance obligations, the Company accounts for the individual performance obligations
separately if they are considered distinct. Revenue is generally allocated to all performance obligations based upon the relative
SSP at contract inception. For certain performance obligations, judgment is required to determine the SSP. Revenue is recognized
for each performance obligation based upon the conditions for revenue recognition noted above.
In the MA segment, customers usually pay a fixed fee for the products and services based on signed contracts. However,
accounting for variable consideration is applied mainly for: i) estimates for cancellation rights and price concessions and ii) T&M
based services.
The Company estimates the variable consideration associated with cancellation rights and price concessions based on the
expected amount to be provided to customers and reduces the amount of revenue to be recognized.
Costs to Obtain or Fulfill a Contract with a Customer:
Costs to obtain a contract with a customer
Costs incurred to obtain customer contracts, such as sales commissions, are deferred and recorded within other current assets and
other assets when such costs are determined to be incremental to obtaining a contract, would not have been incurred otherwise
and the Company expects to recover those costs. These costs are amortized to expense on a systematic basis consistent with the
transfer of the products or services to the customer. Depending on the line of business to which the contract relates, this may be
based upon the average economic life of the products sold or average period for which services are provided, inclusive of
anticipated contract renewals. Determining the estimated economic life of the products sold requires judgment with respect to
anticipated future technological changes. Costs to obtain customer contracts are only incurred in the MA segment.
Cost to fulfill a contract with a customer
Costs incurred to fulfill customer contracts, are deferred and recorded within other current assets and other assets when such costs
relate directly to a contract, generate or enhance resources of the Company that will be used in satisfying performance obligations
in the future and the Company expects to recover those costs.
MOODY'S 2022 10-K
77
The Company capitalizes work-in-process costs for in-progress MIS ratings, which is recognized consistent with the rendering of
the related services to the customers, as ratings are issued.
In addition, within the MA segment, the Company capitalizes royalty costs related to third-party information data providers
associated with hosted company information and business intelligence products. These costs are amortized to expense consistent
with the recognition pattern of the related revenue over time.
Accounts Receivable Allowances
In order to determine an estimate of expected credit losses, receivables are segmented based on similar risk characteristics
including historical credit loss patterns and industry or class of customers to calculate reserve rates. The Company uses an aging
method for developing its allowance for credit losses by which receivable balances are stratified based on aging category. A
reserve rate is calculated for each aging category which is generally based on historical information, and is adjusted, when
necessary, for current conditions (e.g., macroeconomic or industry related) and reasonable and supportable forecasts about the
future. The Company also considers customer specific information (e.g., bankruptcy or financial difficulty) when estimating its
expected credit losses, as well as the economic environment of the customers, both from an industry and geographic perspective,
in evaluating the need for allowances. Expected credit losses are reflected as additions to the accounts receivable allowance.
Actual uncollectible account write-offs are recorded against the allowance.
Leases
The Company has operating leases, which substantially all relate to the lease of office space. The Company’s leases which are
classified as finance leases are not material to the consolidated financial statements.
The Company determines if an arrangement meets the definition of a lease at contract inception. The Company recognizes in its
consolidated balance sheet a lease liability and an ROU Asset for all leases with a lease term greater than 12 months. In
determining the length of the lease term, the Company utilizes judgment in assessing the likelihood of whether it is reasonably
certain that it will exercise an option to extend or early-terminate a lease, if such options are provided in the lease agreement.
ROU Assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the
Company’s obligation to make lease payments arising from the lease. ROU Assets and lease liabilities are recognized at the lease
commencement date based on the present value of lease payments over the lease term. As substantially all of the Company’s
leases do not provide an implicit interest rate, the Company uses its estimated secured incremental borrowing rates at the lease
commencement date in determining the present value of lease payments. These secured incremental borrowing rates are
attributable to the currency in which the lease is denominated.
At commencement, the Company’s initial measurement of the ROU Asset is calculated as the present value of the remaining lease
payments (i.e., lease liability), with additive adjustments reflecting: initial direct costs (e.g., broker commissions) and prepaid lease
payments (if any); and reduced by any lease incentives provided by the lessor if: (i) received before lease commencement or (ii)
receipt of the lease incentive is contingent upon future events for which the occurrence is both probable and within the Company’s
control.
Lease expense for minimum operating lease payments is recognized on a straight-line basis over the lease term. This straight-line
lease expense represents a single lease cost which is comprised of both an interest accretion component relating to the lease
liability and amortization of the ROU Assets. The Company records this single lease cost in operating and SG&A expenses.
However, in situations where an operating lease ROU Asset has been impaired, the subsequent amortization of the ROU Asset is
then recorded on a straight-line basis over the remaining lease term and is combined with accretion expense on the lease liability
to result in single operating lease cost (which subsequent to impairment will no longer follow a straight-line recognition pattern).
The Company has lease agreements which include lease and non-lease components. For the Company’s office space leases, the
lease components (e.g., fixed rent payments) and non-lease components (e.g., fixed common-area maintenance costs) are
combined and accounted for as a single lease component.
Variable lease payments (e.g. variable common-area-maintenance costs) are only included in the initial measurement of the lease
liability to the extent those payments depend on an index or a rate. Variable lease payments not included in the lease liability are
recognized in net income in the period in which the obligation for those payments is incurred.
Contingencies
Moody’s is involved in legal and tax proceedings, governmental, regulatory and legislative investigations and inquiries, claims and
litigation that are incidental to the Company’s business, including claims based on ratings assigned by MIS. Moody’s is also subject
to ongoing tax audits in the normal course of business. Management periodically assesses the Company’s liabilities and
contingencies in connection with these matters based upon the latest information available. Moody’s discloses material pending
legal proceedings pursuant to SEC rules and other pending matters as it may determine to be appropriate.
For claims, litigation and proceedings and governmental investigations and inquiries not related to income taxes, the Company
records liabilities in the consolidated financial statements when it is both probable that a liability has been incurred and the amount
of loss can be reasonably estimated and periodically adjusts these as appropriate. When the reasonable estimate of the loss is
within a range of amounts, the minimum amount of the range is accrued unless some higher amount within the range is a better
estimate than another amount within the range. In instances when a loss is reasonably possible but uncertainties exist related to
the probable outcome and/or the amount or range of loss, management does not record a liability but discloses the contingency if
78 MOODY'S 2022 10-K
material. As additional information becomes available, the Company adjusts its assessments and estimates of such matters
accordingly. Moody’s also discloses material pending legal proceedings pursuant to SEC rules and other pending matters as it may
determine to be appropriate.
In view of the inherent difficulty of assessing the potential outcome of legal proceedings, governmental, regulatory and legislative
investigations and inquiries, claims and litigation and similar matters and contingencies, particularly when the claimants seek large
or indeterminate damages or assert novel legal theories or the matters involve a large number of parties, the Company often
cannot predict what the eventual outcome of the pending matters will be or the timing of any resolution of such matters. The
Company also may be unable to predict the impact (if any) that any such matters may have on how its business is conducted, on
its competitive position or on its financial position, results of operations or cash flows. As the process to resolve any pending
matters progresses, management will continue to review the latest information available and assess its ability to predict the
outcome of such matters and the effects, if any, on its operations and financial condition and to accrue for and disclose such
matters as and when required. However, because such matters are inherently unpredictable and unfavorable developments or
resolutions can occur, the ultimate outcome of such matters, including the amount of any loss, may differ from those estimates.
Operating Expenses
Operating expenses include costs associated with the development and production of the Company’s products and services and
their delivery to customers. These expenses principally include employee compensation and benefits and travel costs that are
incurred in connection with these activities. Operating expenses are charged to income as incurred.
Selling, General and Administrative Expenses
SG&A expenses include such items as compensation and benefits for corporate officers and staff and compensation and other
expenses related to sales. They also include items such as office rent, business insurance and professional fees. SG&A expenses
are charged to income as incurred.
Foreign Currency Translation
For all operations outside the U.S. where the Company has designated the local currency as the functional currency, assets and
liabilities are translated into U.S. dollars using end of year exchange rates, and revenue and expenses are translated using
average exchange rates for the year. For these foreign operations, currency translation adjustments are recorded to other
comprehensive income.
Comprehensive Income
Comprehensive income represents the change in net assets of a business enterprise during a period due to transactions and other
events and circumstances from non-owner sources including: foreign currency translation impacts; net actuarial gains and losses
and net prior service costs related to pension and other retirement plans; and gains and losses on derivative instruments
designated as net investment hedges or cash flow hedges. Comprehensive income items, including cumulative translation
adjustments of entities that are less-than-wholly-owned subsidiaries, will be reclassified to noncontrolling interests and thereby,
adjusting accumulated other comprehensive income proportionately in accordance with the percentage of ownership interest of the
non-controlling shareholder.
Income Taxes
The Company accounts for income taxes under the asset and liability method in accordance with ASC Topic 740. Therefore,
income tax expense is based on reported income before income taxes and deferred income taxes reflect the effect of temporary
differences between the amounts of assets and liabilities that are recognized for financial reporting purposes and the amounts that
are recognized for income tax purposes.
The Company classifies interest related to unrecognized tax benefits as a component of interest expense in its consolidated
statements of operations. Penalties are recognized in other non-operating expenses. For UTPs, the Company first determines
whether it is more-likely-than-not (defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its
technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all
relevant information. A tax position that meets this more-likely-than-not threshold is then measured and recognized at the largest
amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.
On December 22, 2017, the Tax Act was signed into law, resulting in all previously undistributed foreign earnings being subject to
U.S. tax. The Company has provided deferred taxes for those entities whose earnings are not considered indefinitely reinvested.
Fair Value of Financial Instruments
The Company’s financial instruments include cash, cash equivalents, trade receivables and payables, and certain short-term
investments consisting primarily of certificates of deposit and money market deposits, all of which are short-term in nature and,
accordingly, approximate fair value.
The Company also invests in mutual funds, which are accounted for as equity securities with readily determinable fair values under
ASC Topic 321. The Company measures these investments at fair value with both realized gains and losses and unrealized holding
gains and losses for these investments included in net income.
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Also, the Company uses derivative instruments to manage certain financial exposures that occur in the normal course of business.
These derivative instruments are carried at fair value in the Company’s consolidated balance sheets.
Fair value is defined by the ASC 820 as the price that would be received from selling an asset or paid to transfer a liability (i.e., an
exit price) in an orderly transaction between market participants at the measurement date. The determination of this fair value is
based on the principal or most advantageous market in which the Company could commence transactions and considers
assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and
risk of nonperformance. Also, determination of fair value assumes that market participants will consider the highest and best use of
the asset.
The ASC establishes a fair value hierarchy whereby the inputs contained in valuation techniques used to measure fair value are
categorized into three broad levels as follows:
Level 1: quoted market prices in active markets that the reporting entity has the ability to access at the date of the fair value
measurement;
Level 2: inputs other than quoted market prices described in Level 1 that are observable for the asset or liability, either directly or
indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or
liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities;
Level 3: unobservable inputs that are supported by little or no market activity and that are significant to the fair value measurement
of the assets or liabilities.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk principally consist of cash and cash
equivalents, short-term investments, trade receivables and derivatives.
For cash and cash equivalents, short-term investments and derivatives, the Company manages its credit exposure by limiting the
amount of counterparty risk with any particular financial institution; limits are assigned to each counterparty based on perceived
quality of credit, and are monitored daily. Cash equivalents are held among various money market deposit accounts and certificates
of deposits as of December 31, 2022 and 2021. Short-term investments primarily consist of certificates of deposit as of December
31, 2022 and 2021. Derivatives primarily consist of foreign exchange forwards or swap contracts (interest rate swaps and cross-
currency swaps) as of December 31, 2022 and 2021. For trade receivables, no customer accounted for 10% or more of accounts
receivable at December 31, 2022 or 2021.
Earnings per Share of Common Stock
Basic shares outstanding is calculated based on the weighted average number of shares of common stock outstanding during the
reporting period. Diluted shares outstanding is calculated giving effect to all potentially dilutive common shares, assuming that such
shares were outstanding and dilutive during the reporting period.
Pension and Other Retirement Benefits
Moody’s maintains various noncontributory DBPPs as well as other contributory and noncontributory retirement plans. The expense
and assets/liabilities that the Company reports for its pension and other retirement benefits are dependent on many assumptions
concerning the outcome of future events and circumstances. These assumptions represent the Company’s best estimates and may
vary by plan. The differences between the assumptions for the expected long-term rate of return on plan assets and actual
experience is spread over a five-year period to the market-related value of plan assets, which is used in determining the expected
return on assets component of annual pension expense. All other actuarial gains and losses are generally deferred and amortized
over the estimated average future working life of active plan participants.
The Company recognizes as an asset or liability in its consolidated balance sheet the funded status of its defined benefit retirement
plans, measured on a plan-by-plan basis. Changes in the funded status due to actuarial gains/losses are recorded as part of other
comprehensive income during the period the changes occur.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.
80 MOODY'S 2022 10-K
NOTE 3
REVENUES
Revenue by Category
The following table presents the Company’s revenues disaggregated by LOB:
MIS:
Corporate finance (CFG)
Investment-grade
High-yield
Bank loans
Other accounts (CFG) (1)
Total CFG
Structured finance (SFG)
Asset-backed securities
RMBS
CMBS
Structured credit
Other accounts (SFG)
Total SFG
Financial institutions (FIG)
Banking
Insurance
Managed investments
Other accounts (FIG)
Total FIG
Public, project and infrastructure finance (PPIF)
Public finance / sovereign
Project and infrastructure
Total PPIF
Total ratings revenue
MIS Other
Total external revenue
Intersegment royalty
Total MIS
MA:
Decision Solutions
Research and Insights
Data and Information
Total external revenue
Intersegment revenue
Total MA
Eliminations
Total MCO
Year Ended December 31,
2022
2021
2020
$
$
294
108
275
592
$
439
411
606
631
636
352
287
582
1,269
2,087
1,857
116
106
98
140
2
462
337
113
28
13
491
197
234
431
2,653
46
2,699
174
2,873
1,324
733
712
2,769
8
2,777
(182)
118
123
102
215
2
560
411
145
36
10
602
244
277
521
3,770
42
3,812
165
3,977
1,011
697
698
2,406
7
2,413
(172)
$
5,468
$
6,218
$
98
96
61
105
2
362
355
137
28
10
530
250
246
496
3,245
47
3,292
148
3,440
835
650
594
2,079
7
2,086
(155)
5,371
(1) Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs
such as commercial paper, medium term notes, and ICRA corporate finance revenue.
MOODY'S 2022 10-K
81
The following table presents the Company’s revenues disaggregated by LOB and geographic area:
Year Ended December 31, 2022
Year Ended December 31, 2021
Year Ended December 31, 2020
U.S.
Non-U.S.
Total
U.S.
Non-U.S.
Total
U.S.
Non-U.S.
Total
MIS:
Corporate finance
$
Structured finance
Financial institutions
Public, project and
infrastructure finance
Total ratings revenue
MIS Other
Total MIS
MA:
Decision Solutions
Research and Insights
Data and Information
Total MA
Total MCO
$
832
308
223
266
437
154
268
165
$ 1,269
$ 1,384
$
462
491
431
364
289
304
703
196
313
217
$ 2,087
$ 1,291
$
560
602
521
214
250
311
566
148
280
185
$ 1,857
362
530
496
1,629
1,024
2,653
2,341
1,429
3,770
2,066
1,179
3,245
5
41
46
3
39
42
2
45
47
1,634
1,065
2,699
2,344
1,468
3,812
2,068
1,224
3,292
584
405
250
740
328
462
1,324
733
712
436
377
226
575
320
472
1,011
697
698
1,239
1,530
2,769
1,039
1,367
2,406
340
363
184
887
495
287
410
835
650
594
1,192
2,079
$ 2,873
$ 2,595
$ 5,468
$ 3,383
$ 2,835
$ 6,218
$ 2,955
$ 2,416
$ 5,371
The following table presents the Company's reportable segment revenues disaggregated by segment and geographic region:
Year Ended December 31,
2022
2021
2020
$
1,634
$
2,344
$
2,068
648
271
146
1,065
2,699
1,239
1,034
285
211
1,530
2,769
5,468
$
930
357
181
1,468
3,812
1,039
955
246
166
1,367
2,406
6,218
$
727
345
152
1,224
3,292
887
818
226
148
1,192
2,079
5,371
$
MIS:
U.S.
Non-U.S.:
EMEA
Asia-Pacific
Americas
Total Non-U.S.
Total MIS
MA:
U.S.
Non-U.S.:
EMEA
Asia-Pacific
Americas
Total Non-U.S.
Total MA
Total MCO
82 MOODY'S 2022 10-K
The following tables summarize the split between transaction and recurring revenue. In the MIS segment, excluding MIS Other,
transaction revenue represents the initial rating of a new debt issuance as well as other one-time fees while recurring revenue
represents the recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations, as well as revenue
from programs such as commercial paper, medium-term notes and shelf registrations. In MIS Other, transaction revenue
represents revenue from professional services and recurring revenue represents subscription-based revenues. In the MA segment,
recurring revenue represents subscription-based revenues and software maintenance revenue. Transaction revenue in MA
represents perpetual software license fees and revenue from software implementation services, risk management advisory
projects, and training and certification services.
Year Ended December 31,
2022
2021
2020
Transaction
Recurring
Total
Transaction
Recurring
Total
Transaction
Recurring
Total
Corporate Finance
Structured Finance
Financial Institutions
$
$
$
772
61 %
262
57 %
211
43 %
Public, Project and
Infrastructure Finance $
263
MIS Other
$
61 %
4
9 %
$
$
$
$
$
497
$1,269
$ 1,600
39 %
100 %
77 %
200
$ 462
43 %
100 %
280
$ 491
57 %
100 %
168
$ 431
39 %
100 %
42
$
46
91 %
100 %
$
$
$
$
362
65 %
320
53 %
354
68 %
4
10 %
$
$
$
$
$
487
$2,087
$ 1,401
23 %
100 %
75 %
198
$ 560
35 %
100 %
282
$ 602
47 %
100 %
167
$ 521
32 %
100 %
38
$
42
90 %
100 %
$
$
$
$
175
48 %
265
50 %
337
68 %
4
9 %
$
$
$
$
$
456
$1,857
25 %
100 %
187
$ 362
52 %
100 %
265
$ 530
50 %
100 %
159
$ 496
32 %
100 %
43
$
47
91 %
100 %
Total MIS
$ 1,512
$ 1,187
$2,699
$ 2,640
$ 1,172
$3,812
$ 2,182
$ 1,110
$3,292
56 %
44 %
100 %
69 %
31 %
100 %
66 %
34 %
100 %
Decision Solutions
$
164
$ 1,160
$1,324
$
158
$
853
$1,011
$
185
$
650
$ 835
12 %
88 %
100 %
16 %
84 %
100 %
22 %
78 %
100 %
Research and
Insights
$
6
$
727
$ 733
1 %
99 %
100 %
Data and Information $ — $
712
$ 712
Total MA
$
170
$ 2,599
$2,769
— %
100 %
100 %
$
$
$
$
$
8
1 %
4
1 %
689
$ 697
99 %
100 %
694
$ 698
99 %
100 %
170
$ 2,236
$2,406
$
$
$
$
$
8
1 %
4
1 %
642
$ 650
99 %
100 %
590
$ 594
99 %
100 %
197
$ 1,882
$2,079
6 %
94 %
100 %
7 %
93 %
100 %
9 %
91 %
100 %
Total Moody’s
Corporation
$ 1,682
$ 3,786
$5,468
$ 2,810
$ 3,408
$6,218
$ 2,379
$ 2,992
$5,371
31 %
69 %
100 %
45 %
55 %
100 %
44 %
56 %
100 %
The following table presents the timing of revenue recognition:
Year Ended December 31, 2022
Year Ended December 31, 2021
Year Ended December 31, 2020
MIS
MA
Total
MIS
MA
Total
MIS
MA
Total
Revenue
recognized at a
point in time
Revenue
recognized over
time
$
1,512
$
97
$
1,609
$
2,640
$
101
$
2,741 $
2,182 $
121 $
2,303
1,187
2,672
3,859
1,172
2,305
3,477
1,110
1,958
3,068
Total
$
2,699
$
2,769
$
5,468
$
3,812
$
2,406
$
6,218 $
3,292 $
2,079 $
5,371
MOODY'S 2022 10-K
83
Unbilled Receivables, Deferred Revenue and Remaining Performance Obligations
Unbilled receivables
At December 31, 2022 and December 31, 2021, accounts receivable included approximately $385 million and $386 million,
respectively, of unbilled receivables related to the MIS segment. Certain MIS arrangements contain contractual terms whereby the
customers are billed in arrears for annual monitoring services and rating fees, requiring revenue to be accrued as an unbilled
receivable as such services are provided.
In addition, for certain MA arrangements, the timing of when the Company has the unconditional right to consideration and
recognizes revenue occurs prior to invoicing the customer. Accordingly, at December 31, 2022 and December 31, 2021, accounts
receivable included approximately $148 million and $152 million, respectively, of unbilled receivables related to the MA segment.
Deferred revenue
The Company recognizes deferred revenue when a contract requires a customer to pay consideration to the Company in advance
of when revenue is recognized. This deferred revenue is relieved when the Company satisfies the related performance obligation
and revenue is recognized.
Significant changes in the deferred revenue balances during the year ended December 31, 2022 are as follows:
Balance at December 31, 2021
Changes in deferred revenue
Revenue recognized that was included in the deferred revenue
balance at the beginning of the period
Increases due to amounts billable excluding amounts recognized as
revenue during the period
Increases due to acquisitions during the period
Effect of exchange rate changes
Total changes in deferred revenue
Balance at December 31, 2022
Deferred revenue - current
Deferred revenue - noncurrent
Year Ended December 31, 2022
MIS
MA
Total
$
296
$
1,039
$
1,335
(210)
(996)
(1,206)
202
—
(10)
(18)
278
205
73
$
$
$
1,018
1,220
1
(7)
16
1,055
1,053
2
$
$
$
1
(17)
(2)
1,333
1,258
75
$
$
$
Significant changes in the deferred revenue balances during the year ended December 31, 2021 are as follows:
Balance at December 31, 2020
Changes in deferred revenue
Revenue recognized that was included in the deferred revenue
balance at the beginning of the period
Increases due to amounts billable excluding amounts recognized as
revenue during the period
Increases due to acquisitions during the period
Effect of exchange rate changes
Total changes in deferred revenue
Balance at December 31, 2021
Deferred revenue—current
Deferred revenue—noncurrent
Year Ended December 31, 2021
MIS
MA
Total
$
313
$
874
$
1,187
(220)
(810)
(1,030)
207
—
(4)
(17)
296
214
82
$
$
$
884
94
(3)
165
1,039
1,035
4
$
$
$
1,091
94
(7)
148
1,335
1,249
86
$
$
$
For the MA segment, for the year ended December 31, 2021, the increase in the deferred revenue balance was primarily due to
acquisitions (Cortera, RMS, and PassFort) and organic growth.
84 MOODY'S 2022 10-K
Significant changes in the deferred revenue balances during the year ended December 31, 2020 are as follows:
Balance at December 31, 2019
Changes in deferred revenue
Revenue recognized that was included in the deferred revenue
balance at the beginning of the period
Increases due to amounts billable excluding amounts recognized as
revenue during the period
Increases due to acquisitions during the period
Effect of exchange rate changes
Total changes in deferred revenue
Balance at December 31, 2020
Deferred revenue—current
Deferred revenue—noncurrent
Year Ended December 31, 2020
MIS
MA
Total
$
322
$
840
$
1,162
(229)
(800)
(1,029)
215
—
5
(9)
313
216
97
$
$
$
792
24
18
34
874
873
1
$
$
$
1,007
24
23
25
1,187
1,089
98
$
$
$
For the MA segment, for the year ended December 31, 2020, the increase in the deferred revenue balance was primarily due to
acquisitions (RDC, Acquire Media, ZMFS, and Catylist) and changes in FX translation rates.
Remaining performance obligations
Remaining performance obligations in the MIS segment largely reflect deferred revenue related to monitoring fees for certain
structured finance products, primarily CMBS, where the issuers can elect to pay the monitoring fees for the life of the security in
advance. As of December 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations
was approximately $99 million. The Company expects to recognize into revenue approximately 25% of this balance within one
year, approximately 50% of this balance between one to five years and the remaining amount thereafter. With respect to the
remaining performance obligations for the MIS segment, the Company has applied a practical expedient set forth in ASC Topic 606
permitting the omission of unsatisfied performance obligations relating to contracts with an original expected length of one year or
less.
Remaining performance obligations in the MA segment include both amounts recorded as deferred revenue on the balance sheet
as of December 31, 2022 as well as amounts not yet invoiced to customers as of December 31, 2022 largely reflecting future
revenue related to signed multi-year arrangements for hosted and installed subscription-based products. As of December 31, 2022,
the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $3.5 billion. The
Company expects to recognize into revenue approximately 60% of this balance within one year, approximately 25% of this balance
between one to two years and the remaining amount thereafter.
Costs to Obtain or Fulfill a Contract with a Customer
MA Costs to Obtain a Contract with a Customer
As of December 31,
2022
2021
Capitalized costs to obtain sales contracts
$
232 $
183
Amortization of capitalized costs to obtain sales contracts $
80 $
60 $
59
Amortization of costs incurred to obtain customer contracts is included within SG&A expenses in the consolidated statements of
operations. Costs incurred to obtain customer contracts are only in the MA segment.
Year ended December 31,
2022
2021
2020
MOODY'S 2022 10-K
85
MIS and MA Costs to Fulfill a Contract with a Customer
Capitalized costs to fulfill sales contracts
$
12 $
33 $
45 $
14 $
44 $
58
As of December 31, 2022
As of December 31, 2021
MIS
MA
Total
MIS
MA
Total
Year Ended
December 31, 2022
Year Ended
December 31, 2021
Year Ended
December 31, 2020
MIS
MA
Total
MIS
MA
Total
MIS
MA
Total
Amortization of
capitalized costs to
fulfill sales
contracts
$
54 $
69 $
123 $
48 $
76 $
124 $
47 $
66 $
113
Amortization of costs to fulfill customer contracts is included within operating expenses in the consolidated statements of
operations.
NOTE 4
RECONCILIATION OF WEIGHTED AVERAGE SHARES OUTSTANDING
Below is a reconciliation of basic to diluted shares outstanding:
Basic
Dilutive effect of shares issuable under stock-based compensation plans
Diluted
Antidilutive options to purchase common shares and restricted stock as well
as contingently issuable restricted stock which are excluded from the table
above
Year Ended December 31,
2022
183.9
0.8
184.7
2021
186.4
1.5
187.9
2020
187.6
1.7
189.3
0.5
0.2
0.2
The calculation of diluted EPS requires certain assumptions regarding the use of both cash proceeds and assumed proceeds that
would be received upon the exercise of stock options and vesting of restricted stock outstanding as of December 31, 2022, 2021
and 2020.
NOTE 5
ACCELERATED SHARE REPURCHASE PROGRAM
On March 1, 2022, the Company entered into an ASR agreement with a financial institution counterparty to repurchase $500 million
of its outstanding common stock. The Company paid $500 million to the counterparty and received an initial delivery of 1.2 million
shares of its common stock. Final settlement of the ASR agreement was completed in April 2022 and the Company received
delivery of an additional 0.3 million shares of the Company’s common stock.
In total, the Company repurchased 1.5 million shares of the Company’s common stock during the term of the ASR Agreement,
based on the volume-weighted average price (net of discount) of $324.20/share over the duration of the program. The initial share
repurchase and final share settlement were recorded as a reduction to shareholders’ equity.
86 MOODY'S 2022 10-K
NOTE 6
CASH EQUIVALENTS AND INVESTMENTS
The table below provides additional information on the Company’s cash equivalents and investments:
Gross
Unrealized
Gains
Cost
As of December 31, 2022
Balance sheet location
Fair Value
Cash and cash
equivalents
Short-term
investments
Other
assets
Certificates of deposit and money
market deposit accounts (1)
Mutual funds
$
$
914
71
$
$
— $
— $
914
71
$
$
808
$
— $
90
$
— $
16
71
Gross
Unrealized
Gains
Cost
As of December 31, 2021
Balance sheet location
Fair Value
Cash and cash
equivalents
Short-term
investments
Other assets
Certificates of deposit and money
market deposit accounts (1)
Mutual funds
$
$
691
65
$
$
— $
8
$
691
73
$
$
584
$
— $
91
$
— $
16
73
(1)
Consists of time deposits and money market deposit accounts. The remaining contractual maturities for the certificates of deposits classified
as short-term investments are one month to 12 months at both December 31, 2022 and at December 31, 2021. The remaining contractual
maturities for the certificates of deposits classified in other assets are 13 months to 24 months at December 31, 2022 and 13 months to 29
months at December 31, 2021. Time deposits with a maturity of less than 90 days at time of purchase are classified as cash and cash
equivalents.
In addition, the Company invests in Corporate-Owned Life Insurance (COLI). As of December 31, 2022 and December 31, 2021,
the contract value of the COLI was $40 million and $37 million, respectively.
NOTE 7
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The Company is exposed to global market risks, including risks from changes in FX rates and changes in interest rates.
Accordingly, the Company uses derivatives in certain instances to manage the aforementioned financial exposures that occur in the
normal course of business. The Company does not hold or issue derivatives for speculative purposes.
Derivatives and non-derivative instruments designated as accounting hedges:
Fair Value Hedges
Interest Rate Swaps
The Company has entered into interest rate swaps to convert the fixed interest rate on certain of its long-term debt to a floating
interest rate based on the 3-month LIBOR, 6-month LIBOR, and SOFR. The purpose of these hedges is to mitigate the risk
associated with changes in the fair value of the long-term debt, thus the Company has designated these swaps as fair value
hedges. The fair value of the swaps is adjusted quarterly with a corresponding adjustment to the carrying value of the debt. The
changes in the fair value of the swaps and the underlying hedged item generally offset and the net cash settlements on the swaps
are recorded each period within interest expense, net in the Company’s consolidated statements of operations.
The following table summarizes the Company’s interest rate swaps designated as fair value hedges:
Notional Amount
As of December 31,
Hedged Item
Nature of Swap
2022
2021
2017 Senior Notes due 2023
Pay Floating/Receive Fixed
2017 Senior Notes due 2028
Pay Floating/Receive Fixed
2020 Senior Notes due 2025
Pay Floating/Receive Fixed
2014 Senior Notes due 2044
Pay Floating/Receive Fixed
2018 Senior Notes due 2048
2018 Senior Notes due 2029 (1)
2022 Senior Notes due 2052 (1)
2022 Senior Notes due 2032 (1)
Pay Floating/Receive Fixed
Pay Floating/Receive Fixed
Pay Floating/Receive Fixed
Pay Floating/Receive Fixed
Total
Total
$
$
$
$
$
$
$
$
$
(1) Executed in 2022.
— $
500
300
300
300
400
500
250
2,550
$
$
$
$
$
$
$
$
Floating Interest
Rate
250
500
300
300
300
3-month LIBOR
3-month LIBOR
6-month LIBOR
3-month LIBOR
3-month LIBOR
— SOFR
— SOFR
— SOFR
1,650
MOODY'S 2022 10-K
87
Refer to Note 18 for information on the cumulative amount of fair value hedging adjustments included in the carrying amount of the
above hedged items.
The following table summarizes the impact to the statements of operations of the Company’s interest rate swaps designated as fair
value hedges:
Total amounts of financial statement line item presented in the statements of
operations in which the effects of fair value hedges are recorded
Interest expense, net
Descriptions
Net interest settlements and accruals on
interest rate swaps
Location on Consolidated
Statements of Operations
Interest expense, net
Fair value changes on interest rate swaps
Interest expense, net
Fair value changes on hedged debt
Interest expense, net
$
$
$
$
Net Investment Hedges
Debt designated as net investment hedges
Amount of Income (Expense)
Recognized in the Consolidated
Statements of Operations
Year Ended December 31,
2022
2021
2020
(231) $
(171) $
(205)
(8) $
23
$
19
(228) $
228
$
(60) $
60
$
47
(47)
The Company has designated €500 million of the 2015 Senior Notes Due 2027 and €750 million of the 2019 Senior Notes due
2030 as net investment hedges to mitigate FX exposure related to a portion of the Company’s euro net investment in certain
foreign subsidiaries against changes in euro/USD exchange rates. These hedges are designated as accounting hedges under the
applicable sections of ASC Topic 815 and will end upon the repayment of the notes in 2027 and 2030, respectively, unless
terminated early at the discretion of the Company.
Cross currency swaps designated as net investment hedges
The Company enters into cross-currency swaps to mitigate FX exposure related to a portion of the Company’s euro net investment
in certain foreign subsidiaries against changes in euro/USD exchange rates. The following table provides information on the cross-
currency swaps designated as net investment hedges under ASC Topic 815:
Nature of Swap
Pay Fixed/Receive Fixed
Pay Floating/Receive Floating
Pay Floating/Receive Floating
Total
Nature of Swap
Pay Fixed/Receive Fixed
Pay Floating/Receive Floating
Total
December 31, 2022
Pay
Receive
Notional
Amount
Weighted Average Interest
Rate
Notional
Amount
Weighted Average Interest
Rate
€
€
€
€
765
450
1,688
2,903
3.67%
Based on 3-month EURIBOR
Based on ESTR
$
$
800
500
1,750
3,050
5.25%
Based on 3-month USD LIBOR
Based on SOFR
December 31, 2021
Pay
Receive
Notional
Amount
Weighted Average Interest
Rate
Notional
Amount
Weighted Average Interest
Rate
909
1,179
2,088
2.16%
Based on 3-month EURIBOR
$
$
1,050
1,350
2,400
4.45%
Based on 3-month USD LIBOR
88 MOODY'S 2022 10-K
As of December 31, 2022, these hedges will expire and the notional amounts will be settled as follows unless terminated early at
the discretion of the Company:
Year Ending December 31,
2026
2027
2028
2029
2031
2032
Total
€
€
€
€
€
€
€
450
531
588
373
481
480
2,903
The following table provides information on the gains/(losses) on the Company’s net investment and cash flow hedges:
—
50
—
50
—
—
50
Amount of Gain/(Loss)
Recognized in AOCL on
Derivative, net of Tax
Amount of Gain/(Loss)
Reclassified from AOCL
into
Income, net of tax
Gain/(Loss) Recognized in
Income on Derivative
(Amount Excluded from
Effectiveness Testing)
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
2022
2021
2020
2022
2021
2020
2022
2021
2020
$
— $
18 $
(14)
$
— $
1 $
— $
— $
— $
99
65
143
81
(165)
(95)
—
—
—
—
—
—
56
—
35
—
Instruments in Net
Investment Hedging
Relationships
FX forward contracts
Cross currency swaps
Long-term debt
Total net investment hedges
$
164 $
242 $ (274)
$
— $
1 $
— $
56 $
35 $
Derivatives in Cash Flow
Hedging Relationships
Interest rate contracts
Total cash flow hedges
—
—
—
—
(51)
(51)
(2)
(2)
(2)
(2)
Total
$
164 $
242 $ (325)
$
(2) $
(1) $
(2)
(2)
(2)
—
—
—
—
$
56 $
35 $
The cumulative amount of net investment hedge and cash flow hedge gains (losses) remaining in AOCL is as follows:
Net investment hedges
Cross currency swaps
FX forwards
Long-term debt
Total net investment hedges
Cash flow hedges
Interest rate contracts
Cross-currency swap
Total cash flow hedges
Total net (loss) gain in AOCL
Cumulative Gains/(Losses), net of tax
December 31, 2022 December 31, 2021
$
$
118
$
29
38
185
(47)
2
(45)
140
$
19
29
(27)
21
(49)
2
(47)
(26)
Derivatives not designated as accounting hedges:
Foreign exchange forwards
The Company also enters into foreign exchange forward contracts to mitigate the change in fair value on certain assets and
liabilities denominated in currencies other than a subsidiary’s functional currency. These forward contracts are not designated as
accounting hedges under the applicable sections of Topic 815 of the ASC. Accordingly, changes in the fair value of these contracts
are recognized immediately in other non-operating income, net in the Company’s consolidated statements of operations along with
the FX gain or loss recognized on the assets and liabilities denominated in a currency other than the subsidiary’s functional
currency. These contracts have expiration dates at various times through April 2023.
MOODY'S 2022 10-K
89
The following table summarizes the notional amounts of the Company’s outstanding foreign exchange forwards:
Notional Amount of Currency Pair:
Sell
Buy
Sell
Buy
December 31, 2022
December 31, 2021
Contracts to sell USD for GBP
Contracts to sell USD for Japanese yen
Contracts to sell USD for Canadian dollars
Contracts to sell USD for Singapore dollars
Contracts to sell USD for euros
Contracts to sell USD for Russian ruble
Contracts to sell USD for Indian rupee
Contracts to sell GBP for USD
Contracts to sell euros for USD
$
$
$
$
$
$
$
£
€
170
24
£
¥
87 C$
50 S$
116
€
— ₽
₹
19
— $
85
$
146
3,500
120
70
115
$
$
$
$
$
— $
1,600
$
— £
89
€
126
22
£
¥
120 C$
67 S$
364
16
7
172
€
₽
₹
$
— $
92
2,500
150
90
315
1,200
500
231
—
NOTE: € = euro, £ = British pound, S$ = Singapore dollar, $ = U.S. dollar, ¥ = Japanese yen, C$ = Canadian dollar, ₽= Russian
ruble, ₹= Indian rupee
The following table summarizes the impact to the consolidated statements of operations relating to the net gain (loss) on the
Company’s derivatives which are not designated as hedging instruments:
Derivatives Not Designated as
Accounting Hedges
Location on Statement of Operations
FX forwards
Other non-operating expense, net
Foreign exchange forwards
relating to RMS acquisition (1)
Other non-operating income, net
$
$
Year Ended December 31,
2022
(72) $
2021
(27) $
— $
(13) $
2020
41
—
(1) The Company entered into forward contracts to sell $1,675 million for £1,200 million to hedge a portion of the GBP denominated
RMS purchase price. The contract was terminated on September 14, 2021 and resulted in a $13 million loss.
The table below shows the classification between assets and liabilities on the Company’s consolidated balance sheets for the fair
value of the derivative instruments as well as the carrying value of its non-derivative debt instruments designated and qualifying as
net investment hedges:
Derivative and Non-derivative Instruments
Balance Sheet
Location
December 31,
2022
December 31,
2021
Assets:
Derivatives designated as accounting hedges:
Cross-currency swaps designated as net investment hedges
Other assets
Interest rate swaps designated as fair value hedges
Other assets
Total derivatives designated as accounting hedges
Derivatives not designated as accounting hedges:
FX forwards on certain assets and liabilities
Other current assets
Total assets
Liabilities:
Derivatives designated as accounting hedges:
Cross-currency swaps designated as net investment hedges
Other liabilities
Interest rate swaps designated as fair value hedges
Other liabilities
Total derivatives designated as accounting hedges
Non-derivative instruments designated as accounting hedge:
$
$
$
$
27
—
27
19
46
78
239
317
53
13
66
1
67
17
23
40
Long-term debt designated as net investment hedge
Long-term debt
1,334
1,421
Derivatives not designated as accounting hedges:
FX forwards on certain assets and liabilities
Total liabilities
90 MOODY'S 2022 10-K
Accounts payable and
accrued liabilities
2
12
$
1,653
$
1,473
NOTE 8
PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of:
December 31,
2022
2021
Office and computer equipment (3 - 10 year estimated useful life)
Office furniture and fixtures (3 - 10 year estimated useful life)
Internal-use computer software (1 - 10 year estimated useful life)
Leasehold improvements and building (1 - 20 year estimated useful life)
Total property and equipment, at cost
Less: accumulated depreciation and amortization
Total property and equipment, net
$
$
339
$
54
995
237
1,625
(1,123)
502
$
300
52
771
234
1,357
(1,010)
347
Depreciation and amortization expense related to the above assets was $131 million, $99 million, and $96 million for the years
ended December 31, 2022, 2021, and 2020, respectively.
NOTE 9
ACQUISITIONS
The following is a discussion of material acquisitions completed by the Company. The business combinations described below are
accounted for using the acquisition method of accounting whereby assets acquired and liabilities assumed were recognized at fair
value on the date of the transaction. Any excess of the purchase price over the fair value of the assets acquired and liabilities
assumed was recorded to goodwill. Goodwill typically results through expected synergies from combining operations of an acquiree
and an acquirer, anticipated new customer acquisition and products, as well as from intangible assets that do not qualify for
separate recognition.
With the exception of RMS, the Company has not presented pro forma combined results for these acquisitions because the impact
on previously reported statements of operations would not have been material.
PassFort
On November 30, 2021, the Company acquired 100% of PassFort, a U.K. SaaS-based workflow platform for identity verification,
customer onboarding, and risk analysis.
The table below details the total consideration relating to the acquisition:
Cash paid at closing
Additional consideration paid to sellers in 2022 (1)
Total consideration
$
$
157
1
158
(1) Represents additional consideration paid to the sellers following finalization of customary post-closing completion adjustments.
Shown below is the purchase price allocation, which summarizes the fair value of the assets and liabilities assumed, at the date of
acquisition:
Cash
Accounts receivable
Intangible assets:
Product technology (5 year useful life)
Customer relationships (16 year useful life)
Trade name (4 year useful life)
Total intangible assets (9 year weighted average useful life)
Goodwill
Liabilities:
Accounts payable and accrued liabilities
Deferred revenue
Deferred tax liabilities
Total liabilities
Net assets acquired
$
$
$
$
14
8
1
(7)
(1)
(6)
10
1
23
138
(14)
158
MOODY'S 2022 10-K
91
Goodwill
The goodwill recognized as a result of this acquisition includes, among other things, value created by combining the
complementary risk assessment products of the Company and PassFort. The integration of PassFort’s platform into Moody’s suite
of KYC and compliance offerings is expected to create a holistic workflow solution to benefit both new and existing Moody's
customers.
Goodwill, which has been assigned to the MA segment, is not deductible for tax purposes.
Transaction costs
Transaction costs directly related to the PassFort acquisition were not material.
RMS
On September 15, 2021, the Company acquired 100% of RMS, a global provider of climate and natural disaster risk modeling and
analytics. The cash payment was funded with new debt financing and a combination of U.S. and offshore cash on hand. The
acquisition will expand Moody’s insurance data and analytics business and accelerate the development of the Company’s global
integrated risk capabilities to address the next generation of risk assessment.
The table below details the total consideration relating to the acquisition:
Cash paid at closing
Replacement equity compensation awards
Total consideration
$
$
1,922
5
1,927
Shown below is the purchase price allocation, which summarizes the fair value of the assets and liabilities assumed, at the date of
acquisition:
Cash (1)
Accounts receivable
Other current assets (1)
Property and equipment
Operating lease right-of-use assets
Intangible assets:
Customer relationships (23 year useful life)
Product technology (7 year useful life)
Trade name (9 year useful life)
Total intangible assets (18 year weighted average useful life)
Goodwill (1)
Deferred tax assets, net
Other assets
Liabilities:
Accounts payable and accrued liabilities (1)
Deferred revenue
Operating lease liabilities
Deferred tax liabilities, net
Uncertain tax positions (1)
Other liabilities
Total liabilities
Net assets acquired
55
38
12
13
64
779
1,357
50
99
$
518
212
49
(96)
(89)
(68)
(214)
(71)
(2)
$
$
(540)
1,927
$
(1) During the third quarter of 2022, the Company adjusted the purchase price allocation pursuant to the receipt of additional
information from the sellers relating to RMS's pre-acquisition income taxes. These adjustments included a decrease to UTPs
of $25 million along with other immaterial adjustments. These adjustments resulted in a corresponding decrease in goodwill of
$19 million.
92 MOODY'S 2022 10-K
Goodwill
The goodwill recognized as a result of this acquisition includes, among other things, the value of combining the complementary
product portfolios of Moody's and RMS, which is expected to extend the Company's reach into new market segments. The goodwill
also includes the combined company's ability to accelerate technology innovations into new product adjacencies (leveraging RMS's
team of data scientists, modelers and software engineers) as well as combining RMS's products with Moody’s core data and
analytics offerings to provide holistic integrated risk solutions.
Goodwill, of which $1,267 million and $90 million has been assigned to the MA and MIS segments, respectively, is not deductible
for tax purposes. The amount of goodwill allocated to the MIS segment relates to the integration of certain of RMS's models/
processes into the Company's ESG solutions offerings.
Other assets in the table above includes an indemnification asset of $95 million related to uncertain tax positions assumed in the
transaction, for which the Company expects to be indemnified by the sellers in the event of an unfavorable outcome.
Transaction costs
Transaction costs directly related to the RMS acquisition were $22 million and were recorded in SG&A expenses in the statement
of operations.
Supplementary Unaudited Pro Forma Information
Supplemental information on an unaudited pro forma basis is presented below for the twelve months ended December 31, 2021
and 2020 as if the acquisition of RMS occurred on January 1, 2020. The pro forma financial information is presented for
comparative purposes only, based on certain estimates and assumptions, which the Company believes to be reasonable but not
necessarily indicative of future results of operations or the results that would have been reported if the acquisition had been
completed at January 1, 2020. The unaudited pro forma information includes amortization of acquired intangible assets, based on
the purchase price allocation and an estimate of useful lives reflected above, and incremental financing costs resulting from the
acquisition, net of income tax, which was estimated using the weighted average statutory tax rates in effect in the jurisdiction for
which the pro forma adjustment relates.
Unaudited
Pro forma Revenue
Pro forma Net Income attributable to Moody's
Year Ended December 31,
2021
2020
$
$
6,463 $
2,244 $
5,667
1,666
The unaudited pro forma results do not include any anticipated cost savings or other effects of the planned integration of RMS.
Accordingly, the pro forma results above are not necessarily indicative of the results that would have been reported if the
acquisition had occurred on the dates indicated, nor are the pro forma results indicative of results which may occur in the future.
The RMS results included in the above have been converted to U.S. GAAP from IFRS as issued by the IASB and have been
translated to USD at rates in effect for the periods presented. The RMS amounts in the pro forma results include an addition to
revenue of approximately $18 million and a reduction to revenue of approximately $22 million relating to a fair value adjustment to
deferred revenue required as part of acquisition accounting for the years ended December 31, 2021 and 2020, respectively.
Cortera
On March 19, 2021, the Company acquired 100% of Cortera, a provider of North American credit data and workflow solutions.
The table below details the total consideration relating to the acquisition:
Cash paid at closing
Additional consideration paid to sellers in 2021 (1)
Total consideration
$
$
138
1
139
(1) Represents additional consideration paid to the sellers following finalization of customary post-closing completion adjustments.
MOODY'S 2022 10-K
93
Shown below is the purchase price allocation, which summarizes the fair value of the assets and liabilities assumed, at the date of
acquisition:
Current assets
Intangible assets:
Database (10 year useful life)
Customer relationships (18 year useful life)
Product technology (8 year useful life)
Trade name (5 year useful life)
Total intangible assets (11 year weighted average useful life)
Goodwill(1)
Deferred tax assets(1)
Other assets
Liabilities:
Accounts payable and accrued liabilities
Deferred revenue
Deferred tax liabilities
Other liabilities
Total liabilities
Net assets acquired
$
$
38
9
9
1
(1)
(4)
(15)
(2)
$
7
57
79
16
2
$
(22)
139
(1) During the third quarter of 2021, the Company received further information, that existed as of the acquisition date, with respect
to Cortera’s deferred taxes. Accordingly, the Company recorded a measurement period adjustment of $16 million to its
estimate for deferred tax assets.
Current assets in the table above include acquired cash of $4 million and accounts receivable of approximately $2 million.
Goodwill
The goodwill recognized as a result of this acquisition includes, among other things, the value of combining the complementary risk
assessment products of the Company and Cortera, which is expected to extend the Company’s reach to new and evolving market
segments as well as cost savings synergies, expected new customer acquisitions and products.
Goodwill, which has been assigned to the MA segment, is not deductible for tax purposes.
Transaction costs
Transaction costs directly related to the Cortera acquisition were not material.
RDC
On February 13, 2020, the Company acquired 100% of RDC, a provider of anti-money laundering and know-your-customer data
and due diligence services.
The table below details the total consideration relating to the acquisition:
Cash paid at closing
Additional consideration paid to sellers in 2020 (1)
Total consideration
$
$
700
2
702
(1) Represents additional consideration paid to the sellers following finalization of customary post-closing completion adjustments.
94 MOODY'S 2022 10-K
Shown below is the purchase price allocation, which summarizes the fair value of the assets and liabilities assumed, at the date of
acquisition:
(Amounts in millions)
Current assets
Intangible assets:
Customer relationships (25 year useful life)
Database (10 year useful life)
Product technology (4 year useful life)
Trade name (3 year useful life)
Total intangible assets (19 year weighted average life)
Goodwill
Other assets
Liabilities:
Accounts payable and accrued liabilities
Deferred revenue
Deferred tax liabilities
Other liabilities
Total liabilities
Net assets acquired
$
$
174
86
17
3
(5)
(20)
(71)
(2)
$
24
280
494
2
$
(98)
702
Current assets in the table above include acquired cash of $6 million. Additionally, current assets include accounts receivable of
approximately $14 million.
Goodwill
The goodwill recognized as a result of this acquisition includes, among other things, the value of combining the complementary
product portfolios of the Company and RDC, which is expected to extend the Company’s reach to new and evolving market
segments as well as cost savings synergies, expected new customer acquisitions and products.
Goodwill, which has been assigned to the MA segment, is not deductible for tax purposes.
Transaction costs
Transaction costs directly related to the RDC acquisition were not material.
Other Acquisitions
During the fourth quarter of 2020, the Company acquired three additional businesses within the MA reportable segment, which
were not individually material, but are material in aggregate, to Moody's consolidated financial statements:
–
–
–
In December 2020, the Company acquired 100% of Catylist, Inc., a provider of commercial real estate solutions for brokers.
In December 2020, the Company acquired 100% of ZM Financial Systems, a provider of financial management software for
the U.S. banking sector.
In October 2020, the Company acquired 100% of Acquire Media, an aggregator and distributor of curated real-time news,
multimedia, data, and alerts.
The aggregate consideration transferred for the aforementioned acquisitions of $205 million was funded by cash on hand.
MOODY'S 2022 10-K
95
The following table summarizes the aggregate fair value of the assets acquired and liabilities assumed as of the respective closing
dates for each acquisition.
(Amounts in millions)
Current assets
Intangible assets:
Customer relationships (18 year useful life)
Product technology (8 year useful life)
Database (10 year useful life)
Trade name (14 year useful life)
Total intangible assets (14 year weighted average life)
Goodwill
Other assets
Liabilities:
Current liabilities
Long-term liabilities
Total liabilities
Net assets acquired
$
5
$
$
47
23
8
4
(8)
(8)
$
82
131
3
(16)
205
NOTE 10
GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS
The following tables summarize the activity in goodwill:
Year Ended December 31, 2022
MIS
Accumulated
impairment
charge
Gross
goodwill
Net
goodwill
Gross
goodwill
MA
Accumulated
impairment
charge
Net
goodwill
Gross
goodwill
Consolidated
Accumulated
impairment
charge
Net
goodwill
Balance at
beginning of
year
Additions/
adjustments (1)
Foreign currency
translation
adjustments
$
396
$
— $
396
$
5,615
$
(12) $
5,603
$
6,011
$
(12) $
5,999
4
(23)
—
—
4
88
(23)
(229)
—
—
88
92
(229)
(252)
—
—
92
(252)
Ending Balance
$
377
$
— $
377
$
5,474
$
(12) $
5,462
$
5,851
$
(12) $
5,839
Year Ended December 31, 2021
MIS
Accumulated
impairment
charge
Gross
goodwill
Net
goodwill
Gross
goodwill
MA
Accumulated
impairment
charge
Net
goodwill
Gross
goodwill
Consolidated
Accumulated
impairment
charge
Net
goodwill
Balance at
beginning of
year
Additions/
adjustments (2)
Foreign
currency
translation
adjustments
$
311
$
— $
311
$
4,257
$
(12) $
4,245
$
4,568
$
(12) $
4,556
90
(5)
—
—
90
1,525
—
1,525
1,615
—
1,615
(5)
(167)
—
(167)
(172)
—
(172)
Ending balance $
396
$
— $
396
$
5,615
$
(12) $
5,603
$
6,011
$
(12) $
5,999
(1) The 2022 additions/adjustments for the MA segment in the table above primarily relate to the acquisition of kompany in the
first quarter of 2022, partially offset by RMS measurement period adjustments in the third quarter of 2022, which are more
fully discussed in Note 9.
(2) The 2021 additions/adjustments for the MA segment in the table above relate to the acquisitions of Cortera, RMS,
RealXData, Bogard, and PassFort. The 2021 additions/adjustments for the MIS segment relate to certain revenue synergies
from the RMS acquisition that are expected to benefit the ESG solutions group within the MIS Other LOB.
96 MOODY'S 2022 10-K
Acquired intangible assets and related accumulated amortization consisted of:
Customer relationships
Accumulated amortization
Net customer relationships
Software/product technology
Accumulated amortization
Net software/product technology
Database
Accumulated amortization
Net database
Trade names
Accumulated amortization
Net trade names
Other (1)
Accumulated amortization
Net other
Total
December 31,
2022
2021
$
2,024
$
(453)
1,571
661
(283)
378
178
(64)
114
197
(58)
139
52
(44)
8
2,101
(381)
1,720
663
(219)
444
179
(46)
133
207
(47)
160
54
(44)
10
$
2,210
$
2,467
(1) Other intangible assets primarily consist of trade secrets, covenants not to compete, and acquired ratings methodologies and
models.
Amortization expense relating to acquired intangible assets is as follows:
Amortization expense
Year Ended December 31,
2021
2020
2022
$
200
$
158
$
124
Estimated future annual amortization expense for intangible assets subject to amortization is as follows:
Year Ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total estimated future amortization
NOTE 11
RESTRUCTURING
$
$
196
187
183
180
171
1,293
2,210
On June 30, 2022, the chief executive officer of Moody’s approved a restructuring program (the “2022 - 2023 Geolocation
Restructuring Program”) for which the scope was expanded in October 2022. The Company estimates that the program will result
in annualized savings of $100 million to $135 million per year. This program relates to the Company's post-COVID-19 geolocation
strategy and includes the rationalization and exit of certain leased office spaces and a reduction in staff, including the relocation of
certain job functions. The exit from certain leased office spaces began late in 2022 and is expected to result in $50 million to
$70 million of pre-tax charges from vacating the affected office spaces, a large portion of which Moody's intends to sublease. The
program also includes $85 million to $100 million of pre-tax personnel-related restructuring charges, an amount that includes
severance costs, expense related to the modification of equity awards and related costs primarily determined under the Company’s
existing severance plans. The savings generated from the 2022 - 2023 Geolocation Restructuring Program are expected to
strengthen the Company's operating margin, with a portion being deployed to support strategic investments, including the
Company's workplace of the future program and employee retention initiatives. The 2022 - 2023 Geolocation Restructuring
Program is expected to be substantially complete by the end of 2023. Cash outlays associated with this program are expected to
be $85 million to $100 million, which are expected to be paid through 2024.
MOODY'S 2022 10-K
97
On December 22, 2020, the chief executive officer of Moody’s approved a restructuring program (the “2020 MA Strategic
Reorganization Restructuring Program”) that the Company estimates will result in annualized savings of $20 million per year. This
program related to a strategic reorganization in the MA reportable segment consisting of severance and related costs primarily
determined under the Company’s existing severance plans. The 2020 MA Strategic Reorganization Restructuring Program resulted
in a total of $19 million in pre-tax charges and was substantially completed in the first half of 2021.
On July 29, 2020, the chief executive officer of Moody’s approved a restructuring program (the “2020 Real Estate Rationalization
Restructuring Program”) primarily in response to the COVID-19 pandemic which revolved around the rationalization and exit of
certain leased office spaces. The exit from certain leased office space began in the third quarter of 2020 and was substantially
completed at December 31, 2021. The 2020 Real Estate Rationalization Restructuring Program primarily reflected non-cash
charges related to the impairment of operating lease right-of-use assets and leasehold improvements. The 2020 Restructuring
Program is expected to result in an estimated annualized savings of approximately $5 million to $6 million a year.
Total expenses included in the accompanying consolidated statements of operations relating to the Company's restructuring
programs are as follows:
Year Ended December 31, 2022
Employee
Termination Costs (1)
Real Estate
Related Costs (2)
Other
Costs (3)
Total
2020 Real Estate Rationalization Restructuring Program $
2020 MA Strategic Reorganization Restructuring Program
2022 - 2023 Geolocation Restructuring Program
Total Restructuring
$
— $
(1)
85
84 $
2 $
— $
—
27
29 $
—
1
1 $
2
(1)
113
114
Year Ended December 31, 2021
Employee
Termination Costs (1)
Real Estate
Related Costs
Other
Costs
Total
2018 Restructuring Program
2020 MA Strategic Reorganization Restructuring Program
Total Restructuring
$
$
(2) $
2
— $
— $
—
— $
— $
—
— $
(2)
2
—
Year Ended December 31, 2020
Employee
Termination Costs (1)
Real Estate
Related Costs (4)
Other
Costs
Total
2018 Restructuring Program
2020 Real Estate Rationalization Restructuring Program
2020 MA Strategic Reorganization Restructuring Program
Total Restructuring
$
$
(4) $
—
18
14 $
— $
— $
36
—
—
—
36 $
— $
(4)
36
18
50
(1)
Includes severance costs and expense related to the modification of equity awards.
(2) Primarily includes ROU Asset and leasehold improvement impairment charges and the non-cash acceleration of amortization
of abandoned ROU assets and leasehold improvements for the year ended December 31, 2022. The fair value of the impaired
assets was determined by utilizing the present value of the estimated future cash flows attributable to the assets. The fair
value of those assets subsequent to the impairment was $0.
(3) Primarily includes professional service fees related to execution of the 2022 - 2023 Geolocation Restructuring Program.
(4)
Includes ROU Asset impairment charges and the non-cash acceleration of amortization of leasehold improvements for the
year ended December 31, 2020. The fair value of the impaired ROU Assets was determined by utilizing the present value of
the estimated future cash flows attributable to the assets. The fair value of those ROU assets subsequent to the impairment
was $10 million and was categorized as Level 3 within the ASC Topic 820 fair value hierarchy.
98 MOODY'S 2022 10-K
Changes to the restructuring liability were as follows:
2022
2021
2020
Balance as of January 1
2018 Restructuring Program:
Cost incurred and adjustments
Cash payments
2020 Real Estate Rationalization Restructuring Program:
Cost incurred and adjustments
2020 MA Strategic Reorganization Restructuring Program:
Cost incurred and adjustments
Cash payments
2022 - 2023 Geolocation Restructuring Program:
Cost incurred and adjustments
Cash payments
Balance as of December 31 (1)
$
4
$
21 $
—
—
—
(1)
(2)
86
(22)
65
$
$
(2)
—
(1)
2
(16)
—
—
4 $
24
(4)
(18)
1
18
—
—
—
21
(1) Restructuring liability is primarily comprised of employee termination costs, with an immaterial amount of real estate-related
and other costs.
As of December 31, 2022, substantially all of the remaining $65 million restructuring liability is expected to be paid out in 2023.
Cumulative expense incurred through
December 31, 2022
2018 Restructuring Program
2020 Real Estate Rationalization Restructuring
Program
2020 MA Strategic Reorganization Restructuring
Program
2022 - 2023 Geolocation Restructuring Program
$
$
$
$
NOTE 12
FAIR VALUE
Employee
Termination
Costs
Real Estate
Related
Costs
Other Costs
Total
55
$
— $
19
85
$
$
48 $
38 $
— $
27 $
— $
— $
— $
1 $
103
38
19
113
The tables below present information about items which are carried at fair value on a recurring basis at December 31, 2022 and
2021:
Assets:
Liabilities:
Description
Derivatives (1)
Mutual funds
Total
Derivatives (1)
Total
Fair value Measurement as of December 31, 2022
Balance
Level 1
Level 2
$
$
$
$
$
46
71
117
$
319
319
$
$
— $
71
71
$
— $
— $
46
—
46
319
319
MOODY'S 2022 10-K
99
Assets:
Liabilities:
Description
Derivatives (1)
Mutual funds
Total
Derivatives (1)
Total
Fair Value Measurement as of December 31, 2021
Balance
Level 1
Level 2
$
$
$
$
$
67
73
140
$
52
52
$
$
— $
73
73
$
— $
— $
67
—
67
52
52
(1) Represents FX forwards on certain assets and liabilities as well as interest rate swaps and cross-currency swaps as more fully
described in Note 7 to the consolidated financial statements.
The following are descriptions of the methodologies utilized by the Company to estimate the fair value of its derivative contracts
and mutual funds:
Derivatives:
In determining the fair value of the derivative contracts in the table above, the Company utilizes industry standard valuation models.
Where applicable, these models project future cash flows and discount the future amounts to a present value using spot rates,
forward points, currency volatilities, interest rates as well as the risk of non-performance of the Company and the counterparties
with whom it has derivative contracts. The Company established strict counterparty credit guidelines and only enters into
transactions with financial institutions that adhere to these guidelines. Accordingly, the risk of counterparty default is deemed to be
minimal.
Mutual funds:
The mutual funds in the table above are deemed to be equity securities with readily determinable fair values with changes in the
fair value recognized through net income under ASC Topic 321. The fair value of these instruments is determined using Level 1
inputs as defined in the ASC Topic 820.
NOTE 13.
OTHER BALANCE SHEET INFORMATION
The following tables contain additional detail related to certain balance sheet captions:
Other current assets:
Prepaid taxes
Prepaid expenses
Capitalized costs to obtain and fulfill sales contracts
Foreign exchange forwards on certain assets and liabilities
Other
Total other current assets
Other assets:
Investments in non-consolidated affiliates
Deposits for real-estate leases
Indemnification assets related to acquisitions
Mutual funds and fixed deposits
Company owned life insurance (at contract value)
Costs to obtain sales contracts
Derivative instruments designated as accounting hedges
Pension and other retirement employee benefits
Other
Total other assets
100 MOODY'S 2022 10-K
$
$
$
December 31,
2022
2021
235
119
106
19
104
583
$
$
112
99
103
1
74
389
December 31,
2022
2021
517
$
15
110
87
40
171
27
40
85
443
14
106
89
37
138
66
77
64
$
1,092
$
1,034
Accounts payable and accrued liabilities:
Salaries and benefits
Incentive compensation
Customer credits, advanced payments and advanced billings
Dividends
Professional service fees
Interest accrued on debt
Accounts payable
Income taxes
Pension and other retirement employee benefits
Accrued royalties
Foreign exchange forwards on certain assets and liabilities
Restructuring liability
Other
Total accounts payable and accrued liabilities
Other liabilities:
Pension and other retirement employee benefits
Interest accrued on UTPs
MAKS indemnification provisions
Income tax liability – non-current portion
Derivative instruments designated as accounting hedges
Other
Total other liabilities
Investments in non-consolidated affiliates:
$
$
$
December 31,
2022
2021
$
104
276
102
6
49
92
52
86
7
23
2
65
145
390
100
6
75
85
47
115
7
36
12
4
147
1,011
$
120
1,142
December 31,
2022
2021
189
$
235
47
23
48
317
50
59
33
23
40
48
$
674
$
438
The following table provides additional detail regarding Moody's investments in non-consolidated affiliates, as included in other
assets in the consolidated balance sheets:
Equity method investments (1)
Investments measured using the measurement alternative (2)
Other
Total investments in non-consolidated affiliates
December 31,
$
2022
187
325
5
517
$
2021
121
318
4
443
$
$
(1)
(2)
Equity securities in which the Company has significant influence over the investee but does not have a controlling financial
interest in accordance with ASC Topic 323.
Equity securities without readily determinable fair value for which the Company has elected to apply the measurement
alternative in accordance with ASC Topic 321, which is more fully discussed in Note 2.
Moody's holds various investments accounted for under the equity method, the most significant of which is the Company's minority
investment in CCXI. Moody's also holds various investments measured using the measurement alternative, the most significant of
which is the Company's minority interest in BitSight.
Refer to Note 24 for disclosure on earnings from non-consolidated affiliates, which are included within other non-operating income,
net.
MOODY'S 2022 10-K
101
NOTE 14
COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME
The following table provides details about the reclassifications out of AOCL:
Losses on currency translation adjustments
Foreign currency translation adjustments -
reclassification of losses included in net income
$
(20) $
— $
— Other non-operating income, net
Year Ended December 31,
2022
2021
2020
Location in the consolidated
statements of operations
Total losses on currency translation adjustments
(20)
—
—
(2)
(2)
—
(2)
—
2
2
(1)
1
(11)
(8)
(19)
5
(14)
1
(3)
(2)
—
(2)
—
—
—
—
—
(3)
—
(3)
1
(2)
—
— Other non-operating income, net
(3) Other non-operating income, net
(3)
1 Provision for income taxes
(2)
1 Other non-operating income, net
— Other non-operating income, net
1
— Provision for income taxes
1
(6) Other non-operating income, net
(2) Other non-operating income, net
(8)
2 Provision for income taxes
(6)
(7)
$
(24) $
(15) $
Losses on cash flow hedges
Cross-currency swap
Interest rate contract
Total before income taxes
Income tax effect of item above
Total net losses on cash flow hedges
Gains on net investment hedges
Cross currency swaps
FX forwards
Total before income taxes
Income tax effect of item above
Total net gains on net investment hedges
Pension and other retirement benefits
Amortization of actuarial losses and prior service
costs included in net income
Settlement charge
Total before income taxes
Income tax effect of item above
Total pension and other retirement benefits
Total net losses included in Net Income
attributable to reclassifications out of AOCL
102 MOODY'S 2022 10-K
The following tables show changes in AOCL by component (net of tax):
Balance at December 31, 2021
Other comprehensive income/(loss) before
reclassifications
Amounts reclassified from AOCL
Other comprehensive income/(loss)
Balance at December 31, 2022
Balance at December 31, 2020
Other comprehensive income/(loss) before
reclassifications
Amounts reclassified from AOCL
Other comprehensive income/(loss)
Balance at December 31, 2021
Balance at December 31, 2019
Other comprehensive income/(loss) before
reclassifications
Amounts reclassified from AOCL
Other comprehensive income/(loss)
Balance at December 31, 2020
Year Ended December 31, 2022
Pension and
Other
Retirement
Benefits
Gains/ (Losses)
on Cash Flow
Hedges
Foreign
Currency
Translation
Adjustments
Net Investment
Hedges
Total
$
$
$
$
$
$
(49) $
(47) $
(335) $
21
$
(410)
—
2
2
—
2
2
(421)
20
(401)
(47) $
(45) $
(736) $
164
—
164
185
$
(257)
24
(233)
(643)
Year Ended December 31, 2021
Pension and
Other
Retirement
Benefits
Gains/ (Losses)
on Cash Flow
Hedges
Foreign
Currency
Translation
Adjustments
Net Investment
Hedges
Total
(118) $
(49) $
(45) $
(220) $
(432)
55
14
69
—
2
2
(290)
—
(290)
242
(1)
241
7
15
22
(49) $
(47) $
(335) $
21 $
(410)
Year Ended December 31, 2020
Pension and
Other
Retirement
Benefits
Gains/ (Losses)
on Cash Flow
Hedges
Foreign
Currency
Translation
Adjustments
Net Investment
Hedges
Total
(92) $
— $
(401) $
54 $
(439)
(32)
6
(26)
(51)
2
(49)
356
—
356
(273)
(1)
(274)
—
7
7
(118) $
(49) $
(45) $
(220) $
(432)
NOTE 15
PENSION AND OTHER RETIREMENT BENEFITS
U.S. Plans
Moody’s maintains funded and unfunded noncontributory Defined Benefit Pension Plans ("DBPPs"). The DBPPs provide defined
benefits using a cash balance formula based on years of service and career average salary or final average pay for selected
executives. The Company also provides certain healthcare and life insurance benefits for retired U.S. employees. The retirement
healthcare plans are contributory; the life insurance plans are noncontributory. Moody’s funded and unfunded U.S. pension plans,
the U.S. retirement healthcare plans and the U.S. retirement life insurance plans are collectively referred to herein as the
“Retirement Plans.” The U.S. retirement healthcare plans and the U.S. retirement life insurance plans are collectively referred to
herein as the “Other Retirement Plans.”
Through 2007, substantially all U.S. employees were eligible to participate in the Company’s DBPPs. Effective January 1, 2008, the
Company no longer offers DBPPs to U.S. employees hired or rehired on or after January 1, 2008 and new hires in the U.S. instead
will receive a retirement contribution in similar benefit value under the Company’s Profit Participation Plan. Current participants of
the Company’s Retirement Plans and Other Retirement Plans continue to accrue benefits based on existing plan benefit formulas.
MOODY'S 2022 10-K
103
Following is a summary of changes in benefit obligations and fair value of plan assets for the Retirement Plans for the years ended
December 31:
Pension Plans
Other Retirement Plans
2022
2021
2022
2021
Change in benefit obligation:
Benefit obligation, beginning of the period
Service cost
Interest cost
Plan participants’ contributions
Benefits paid
Actuarial (loss) gain
Assumption changes
Benefit obligation, end of the period
Change in plan assets:
Fair value of plan assets, beginning of the period
Actual return on plan assets
Benefits paid
Employer contributions
Plan participants’ contributions
Fair value of plan assets, end of the period
Funded status of the plans
Amounts recorded on the consolidated balance sheets:
Pension and retirement benefits asset – non current
Pension and retirement benefits liability – current
Pension and retirement benefits liability – non current
Net amount recognized
Accumulated benefit obligation, end of the period
$
$
$
$
$
$
$
$
(570) $
(14)
(15)
—
20
1
116
(462) $
$
544
(111)
(20)
7
—
420
$
(42) $
$
39
(5)
(76)
(42) $
(432) $
(663) $
(19)
(14)
—
68
(6)
64
(570) $
$
528
34
(68)
50
—
544
$
(26) $
$
74
(5)
(95)
(26) $
(524)
(48) $
(4)
(1)
(1)
2
—
13
(39) $
— $
—
(2)
1
1
— $
(39) $
— $
(2)
(37)
(39) $
(48)
(4)
(1)
(1)
2
(3)
7
(48)
—
—
(2)
1
1
—
(48)
—
(1)
(47)
(48)
The net decrease in the pension benefit obligation from assumption changes and actuarial gains in 2022 primarily resulted from
increases to discount rates, partially offset by an increase to the annuity conversion rate. The net decrease in the pension benefit
obligation from assumption changes and actuarial losses in 2021 primarily resulted from increases to the discount rates and
changes to certain actuarial assumptions, including increased rates of retirement at younger ages.
The following information is for those pension plans with an accumulated benefit obligation in excess of plan assets:
Aggregate projected benefit obligation
Aggregate accumulated benefit obligation
December 31,
2022
82
72
$
$
2021
101
86
$
$
The following table summarizes the pre-tax net actuarial losses and prior service costs recognized in AOCL for the Company’s
Retirement Plans as of December 31:
Net actuarial losses (gains)
Net prior service credits
Total recognized in AOCL – pretax
Pension Plans
Other Retirement Plans
2022
(77) $
2
(75) $
2021
(61) $
3
(58) $
2022
9
—
9
$
$
2021
(4)
—
(4)
$
$
104 MOODY'S 2022 10-K
Net periodic benefit expenses recognized for the Retirement Plans for the years ended December 31:
Pension Plans
Other Retirement Plans
2022
2021
2020
2022
2021
2020
Components of net periodic
expense
Service cost
Interest cost
Expected return on plan assets
Amortization of net actuarial
loss and prior service credits
from earlier periods
Loss on settlement of pension
obligations
Net periodic expense
$
$
$
14
15
(26)
$
19
14
(27)
$
17
17
(20)
3
—
6
11
8
7
2
$
25
$
23
$
4
1
—
—
—
5
$
$
4
1
—
1
—
6
$
$
3
1
—
—
—
4
The following table summarizes the pre-tax amounts recorded in OCI related to the Company’s Retirement Plans for the years
ended December 31:
Pension Plans
Other Retirement Plans
2022
2021
2020
2022
2021
2020
$
3
—
(19)
(16) $
11
$
8
65
84
$
$
7
2
(37)
(28) $
— $
—
13
13
$
1
—
4
5
$
$
—
—
(3)
(3)
Amortization of net actuarial losses
and prior service credit
Settlement loss
$
Net actuarial (loss)/gain arising
during the period
Total recognized in OCI – pre-tax
$
ADDITIONAL INFORMATION:
Assumptions—Retirement Plans
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount rate
Rate of compensation increase
Pension Plans
Other Retirement Plans
2022
4.93 %
3.63 %
2021
2.60 %
3.63 %
2022
4.90 %
—
2021
2.65 %
—
Weighted-average assumptions used to determine net periodic benefit expense for years ended December 31:
Discount rate
Expected return on plan assets
Rate of compensation increase
Cash balance plan interest
crediting rate
Pension Plans
Other Retirement Plans
2022
2.60 %
5.05 %
3.63 %
2021
2.24 %
5.45 %
3.62 %
2020
3.04 %
4.45 %
3.64 %
4.50 %
4.50 %
4.50 %
2022
2.65 %
2021
2.30 %
2020
3.05 %
—
—
—
—
—
—
—
—
—
The expected rate of return on plan assets represents the Company’s best estimate of the long-term return on plan assets and is
determined by using a building block approach, which generally weighs the underlying long-term expected rate of return for each
major asset class based on their respective allocation target within the plan portfolio, net of plan paid expenses. As the assumption
reflects a long-term time horizon, the plan performance in any one particular year does not, by itself, significantly influence the
Company’s evaluation. For 2022, the expected rate of return used in calculating the net periodic benefit costs was 5.05%. For
2023, the Company’s expected rate of return assumption is 6.55% to reflect the Company’s current view of long-term capital
market outlook.
MOODY'S 2022 10-K
105
Plan Assets
Moody’s investment objective for the assets in the funded pension plan is to earn total returns that will minimize future contribution
requirements over the long-term within a prudent level of risk. The Company works with its independent investment consultants to
determine asset allocation targets for its pension plan investment portfolio based on its assessment of business and financial
conditions, demographic and actuarial data, funding characteristics, and related risk factors. Other relevant factors, including
historical and forward looking views of inflation and capital market returns, are also considered. Risk management practices include
monitoring plan asset performance, diversification across asset classes and investment styles and periodic rebalancing toward
asset allocation targets. The Company’s Asset Management Committee is responsible for overseeing the investment activities of
the plan, which includes selecting acceptable asset classes, defining allowable ranges of holdings by asset class and by individual
investment managers, defining acceptable securities within each asset class, and establishing investment performance
expectations. Ongoing monitoring of the plan includes reviews of investment performance and managers on a regular basis, annual
liability measurements, and periodic asset/liability studies.
The Company’s investment policy uses risk-controlled investment strategies by increasing the plan’s asset allocation to fixed
income securities and specifying ranges of acceptable target allocation by asset class based on different levels of the plan’s
accounting funded status. In addition, the investment policy also requires the investment-grade fixed income assets to be
rebalanced between shorter and longer duration bonds as the interest rate environment changes. This investment policy is
designed to help protect the plan’s funded status and to limit volatility of the Company’s contributions. Based on the policy, the
Company’s current target asset allocation is approximately 33% (range of 28% to 38%) in equity securities, 62% (range of 57% to
67%) in fixed income securities and 5% (range of 2% to 8%) in other investments and the plan will use a combination of active and
passive investment strategies and different investment styles for its investment portfolios within each asset class. The plan’s equity
investments are diversified across U.S. and non-U.S. stocks of small, medium and large capitalization. The plan’s fixed income
investments are diversified principally across U.S. and non-U.S. government and corporate bonds, which are expected to help
reduce plan exposure to interest rate variation and to better align assets with obligations. The plan also invests in other fixed
income investments such as debts rated below investment grade, emerging market debt, and convertible securities. The plan’s
other investment, which is made through a private real estate debt fund, is expected to provide additional diversification benefits
and absolute return enhancement to the plan assets.
Fair value of the assets in the Company’s funded pension plan by asset category at December 31, 2022 and 2021 are as follows:
Fair Value Measurement as of December 31, 2022
Balance
Level 1
Level 2
$
5
$
— $
5
$
Asset Category
Cash and cash equivalent
Common/collective trust funds—equity
securities
U.S. large-cap
U.S. small and mid-cap
Emerging markets
Total equity investments
Emerging markets bond fund
Common/collective trust funds and corporate
bonds —fixed income securities
Intermediate-term investment grade U.S.
government/ corporate bonds
Mutual funds
Long duration corporate bonds
U.S. Treasury Inflation-Protected Securities (TIPs)
Convertible securities
Private investment fund—high yield securities
Total fixed-income investments
Other investment—private real estate fund
96
17
19
132
26
54
126
24
14
12
256
27
Total Assets
$
420
$
106 MOODY'S 2022 10-K
Measured
using NAV
practical
expedient (1)
—
—
—
—
—
26
—
—
—
—
12
38
27
65
% of total
assets
1 %
23 %
4 %
5 %
31 %
6 %
13 %
30 %
6 %
3 %
3 %
61 %
6 %
100 %
—
—
—
—
—
—
—
24
14
—
38
—
38
96
17
19
132
—
54
126
—
—
—
180
—
$
317
$
Asset Category
Cash and cash equivalent
Common/collective trust funds—equity
securities
U.S. large-cap
U.S. small and mid-cap
Emerging markets
Total equity investments
Emerging markets bond fund
Common/collective trust funds and corporate
bonds —fixed income securities
Intermediate-term investment grade U.S.
government/ corporate bonds
Mutual funds
Long duration corporate bonds
U.S. Treasury Inflation-Protected Securities
(TIPs)
Convertible securities
Private investment fund—high yield securities
Total fixed-income investments
Other investment—private real estate debt fund
135
23
27
185
30
68
177
24
17
14
330
25
Fair Value Measurement as of December 31, 2021
Balance
Level 1
Level 2
$
4
$
— $
4
$
Measured
using NAV
practical
expedient (1)
—
—
—
—
—
30
—
—
—
14
44
25
69
% of total
assets
1 %
25 %
4 %
5 %
34 %
6 %
13 %
33 %
4 %
3 %
3 %
61 %
4 %
100 %
—
—
—
—
—
—
—
24
17
—
41
—
41
135
23
27
185
—
68
177
—
—
245
—
$
434
$
Total Assets
$
544
$
(1)
Investments are measured using the net asset value per share (or its equivalent) practical expedient and have not been categorized in the fair
value hierarchy. The fair value amounts presented in the table are intended to permit a reconciliation of the fair value hierarchy to the value of
the total plan assets.
Cash and cash equivalents are primarily comprised of investments in money market mutual funds. In determining fair value,
Level 1 investments are valued based on quoted market prices in active markets. Investments in common/collective trust and
private mutual
funds are valued using the NAV per unit in each fund. The NAV is based on the value of the underlying investments
owned by each fund, minus its liabilities, and then divided by the number of shares outstanding. Common/collective trust funds and
the private mutual fund are categorized in Level 2 to the extent that they are considered to have a readily determinable fair value.
Investments for which fair value is estimated by using the NAV per share (or its equivalent) as a practical expedient are not
categorized in the fair value hierarchy.
Except for the Company’s U.S. funded pension plan, all of Moody’s Retirement Plans are unfunded and therefore have no plan
assets.
Cash Flows
The Company did not contribute to its U.S. funded pension plan during the years ended December 31, 2022 and 2021. The
Company made payments of $7 million and $50 million related to its U.S. unfunded pension plan obligations during the years
ended December 31, 2022 and 2021, respectively. The Company currently does not anticipate making a contribution to its funded
pension plan in 2023, and anticipates making payments of $6 million related to its unfunded U.S. pension plans and immaterial
payments related to its other Retirement Plans during the year ended December 31, 2023.
MOODY'S 2022 10-K
107
Estimated Future Benefits Payable
Estimated future benefits payments for the Retirement Plans are as follows as of the year ended December 31, 2022:
Year Ending December 31,
2023
2024
2025
2026
2027
2028 - 2032
Defined Contribution Plans
$
Pension Plans
22
25
31
29
30
160
$
Other Retirement
Plans
2
2
2
2
3
17
Moody’s has a Profit Participation Plan covering substantially all U.S. employees. The Profit Participation Plan provides for an
employee salary deferral and the Company matches employee contributions, equal to 50% of employee contribution up to a
maximum of 3% of the employee’s pay. Effective January 1, 2008, all new hires are automatically enrolled in the Profit Participation
Plan when they meet eligibility requirements unless they decline participation. As the Company’s U.S. DBPPs are closed to new
entrants effective January 1, 2008, all eligible new hires will instead receive a retirement contribution into the Profit Participation
Plan in value similar to the pension benefits. Additionally, effective January 1, 2008, the Company implemented a deferred
compensation plan in the U.S., which is unfunded and provides for employee deferral of compensation and Company matching
contributions related to compensation in excess of the IRS limitations on benefits and contributions under qualified retirement
plans. Total expenses associated with U.S. defined contribution plans were $35 million, $54 million and $44 million in the years
ended December 31, 2022, 2021 and 2020, respectively.
Effective January 1, 2008, Moody’s has designated the Moody’s Stock Fund, an investment option under the Profit Participation
Plan, as an Employee Stock Ownership Plan and, as a result, participants in the Moody’s Stock Fund may receive dividends in
cash or may reinvest such dividends into the Moody’s Stock Fund. Moody’s paid approximately $1 million during each of the years
ended December 31, 2022, 2021, and 2020, respectively, for the Company’s common shares held by the Moody’s Stock Fund. The
Company records the dividends as a reduction of retained earnings in the Consolidated Statements of Shareholders’ Equity. The
Moody’s Stock Fund held approximately 329,300 and 328,500 shares of Moody’s common stock at December 31, 2022 and 2021,
respectively.
Non-U.S. Plans
Certain of the Company’s non-U.S. operations provide pension benefits to their employees. The non-U.S. defined benefit pension
plans are immaterial. For defined contribution plans, company contributions are primarily determined as a percentage of
employees’ eligible compensation. Expenses related to these defined contribution plans for the years ended December 31, 2022,
2021, and 2020 were $37 million, $32 million, and $29 million, respectively.
NOTE 16
STOCK-BASED COMPENSATION PLANS
Under the 1998 Plan, 33.0 million shares of the Company’s common stock have been reserved for issuance. The 2001 Plan, which
is shareholder approved, permits the granting of up to 50.6 million shares, of which not more than 14.0 million shares are available
for grants of awards other than stock options. The stock plans also provide for the granting of restricted stock. The stock plans
provide that options are exercisable not later than ten years from the grant date. The vesting period for awards under the stock
plans is generally determined by the Board at the date of the grant and has been four years except for employees who are at or
near retirement eligibility, as defined, for which vesting is between one and four years. Additionally, the vesting period is three years
for certain performance-based restricted stock that contain a condition whereby the number of shares that ultimately vest are based
on the achievement of certain non-market based performance metrics of the Company. Options may not be granted at less than
the fair market value of the Company’s common stock at the date of grant.
The Company maintains the Directors’ Plan for its Board, which permits the granting of awards in the form of non-qualified stock
options, restricted stock or performance shares. The vesting period is determined by the Board at the date of the grant and is
generally one year for both options and restricted stock. Under the Directors’ Plan, 1.7 million shares of common stock were
reserved for issuance. Any director of the Company who is not an employee of the Company or any of its subsidiaries as of the
date that an award is granted is eligible to participate in the Directors’ Plan.
On September 15, 2021, the Company acquired RMS, which is discussed in more detail in Note 9. As part of the acquisition, the
Company registered the RMS 2014 Equity Award Plan and the RMS 2015 Equity Incentive Plan (collectively, "RMS Plans") as part
of the purchase agreement to acquire RMS. Under the RMS Plans, 1.2 million shares of the Company’s common stock have been
reserved for issuance. The RMS Plans provide that options are exercisable not later than ten years from the grant date. The
vesting period is generally determined by the Board at the date of the grant and is four years for both options and restricted stock
granted during 2021.
108 MOODY'S 2022 10-K
As a result of the acquisition, certain RMS employees' unvested equity awards (employee stock options and restricted stock) with
an acquisition-date fair value of $33 million were converted into equity awards of the Company based on an exchange ratio as
defined in the purchase agreement. The portion of the fair value of the replacement awards related to services provided prior to the
acquisition was $5 million and was accounted for as consideration transferred (See Note 9). The remaining portion of the
replacement awards of $28 million, which is associated with post-acquisition service requirements, will be recognized as
compensation expense over the remaining vesting period.
Presented below is a summary of the stock-based compensation expense and associated tax benefit in the accompanying
consolidated statements of operations:
Stock-based compensation expense
Tax benefit
Year Ended December 31,
2022
169
41
$
$
2021
175
42
$
$
2020
154
30
$
$
The fair value of each employee stock option award is estimated on the date of grant using the Black-Scholes option-pricing model
that uses the assumptions noted below. The expected dividend yield is derived from the annual dividend rate on the date of grant.
The expected stock volatility is based on an assessment of historical weekly stock prices of the Company as well as implied
volatility from Moody’s traded options. The risk-free interest rate is based on U.S. government zero coupon bonds with maturities
similar to the expected holding period. The expected holding period is determined by examining historical and projected post-
vesting exercise behavior activity.
The following weighted average assumptions were used for options granted (excluding the aforementioned RMS replacement
awards for the year ended December 31, 2021):
Expected dividend yield
Expected stock volatility
Risk-free interest rate
Expected holding period (in years)
Year Ended December 31,
2022
0.86 %
27 %
1.91 %
5.6
2021
0.89 %
28 %
0.82 %
5.6
2020
0.80 %
23 %
1.43 %
5.7
Due to the RMS replacement option awards being heavily in-the-money at the acquisition date, the Company utilized a binomial
valuation approach in 2021 to determine the fair value of the options, which approximated the intrinsic value of the replaced awards
at the acquisition date.
The following represents the fair value of the options at grant date (including the RMS replacement option awards for the year
ended December 31, 2021):
Year Ended December 31,
2022
2021
2020
Weighted average grant date fair value per share
$
84.00
$
121.14
$
60.66
A summary of option activity as of December 31, 2022 and changes during the year then ended is presented below:
Options
Outstanding, December 31, 2021
Granted
Exercised
Outstanding, December 31, 2022
Vested and expected to vest, December 31, 2022
Exercisable, December 31, 2022
Weighted Average
Exercise Price Per
Share
Weighted Average
Remaining
Contractual Term
Aggregate Intrinsic
Value
Shares
1.0
0.1
$
$
(0.1) $
1.0
1.0
0.7
$
$
$
166.16
324.64
148.28
181.35
181.01
139.08
5.2 years $
5.2 years $
4.0 years $
107
107
99
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between Moody’s closing
stock price on the last trading day of the year ended December 31, 2022 and the exercise prices, multiplied by the number of in-
the-money options) that would have been received by the option holders had all option holders exercised their options as of
December 31, 2022. This amount varies based on the fair value of Moody’s stock. As of December 31, 2022, there was $14 million
of total unrecognized compensation expense related to options. The expense is expected to be recognized over a weighted
average period of 2.0 years.
MOODY'S 2022 10-K
109
The following table summarizes information relating to stock option exercises:
Proceeds from stock option exercises
Aggregate intrinsic value
Tax benefit realized upon exercise
Year Ended December 31,
2022
2021
8
9
2
$
$
$
24
55
13
$
$
$
2020
39
132
32
$
$
$
A summary of nonvested restricted stock activity for the year ended December 31, 2022 is presented below:
Nonvested Restricted Stock
Balance, December 31, 2021
Granted
Vested
Forfeited
Balance, December 31, 2022
Shares
Weighted Average Grant
Date Fair Value Per Share
1.4
0.6
$
$
(0.6) $
(0.1) $
1.3
$
253.85
318.88
229.86
281.24
288.47
As of December 31, 2022, there was $216 million of total unrecognized compensation expense related to nonvested restricted
stock. The expense is expected to be recognized over a weighted average period of 2.4 years.
The following table summarizes information relating to the vesting of restricted stock awards:
Fair value of shares vested
Tax benefit realized upon vesting
Year Ended December 31,
2022
180
42
$
$
2021
194
46
$
$
2020
202
46
$
$
A summary of performance-based restricted stock activity for the year ended December 31, 2022 is presented below:
Performance-based restricted stock
Balance, December 31, 2021
Granted
Vested
Balance, December 31, 2022
Shares
Weighted Average Grant
Date Fair Value Per Share
0.4
0.1
$
$
(0.2) $
0.3
$
266.89
310.62
169.80
303.80
The following table summarizes information relating to the vesting of the Company’s performance-based restricted stock awards:
Fair value of shares vested
Tax benefit realized upon vesting
Year Ended December 31,
2022
50
7
$
$
2021
28
7
$
$
2020
70
17
$
$
As of December 31, 2022, there was $22 million of total unrecognized compensation expense related to this plan. The expense is
expected to be recognized over a weighted average period of 1.4 years.
The Company has a policy of issuing treasury stock to satisfy shares issued under stock-based compensation plans.
In addition, the Company also sponsors the ESPP. Under the ESPP, 6 million shares of common stock were reserved for issuance.
The ESPP permits eligible employees to purchase common stock of the Company on a monthly basis at a discount to the average
of the high and the low trading prices on the New York Stock Exchange on the last trading day of each month. This discount was
5% in 2022, 2021, and 2020 resulting in the ESPP qualifying for non-compensatory status under Topic 718 of the ASC. Accordingly,
no compensation expense was recognized for the ESPP in 2022, 2021, and 2020. The employee purchases are funded through
after-tax payroll deductions, which plan participants can elect from one percent to ten percent of compensation, subject to the
annual federal limit.
110 MOODY'S 2022 10-K
NOTE 17
INCOME TAXES
Components of the Company’s income tax provision are as follows:
Current:
Federal
State and Local
Non-U.S.
Total current
Deferred:
Federal
State and Local
Non-U.S.
Total deferred
Total provision for income taxes
Year Ended December 31,
2022
2021
2020
$
$
106
17
215
338
57
10
(19)
48
386
$
$
404
106
249
759
(172)
(45)
(1)
(218)
541
$
$
213
68
215
496
6
—
(50)
(44)
452
A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate on income before provision for income
taxes is as follows:
U.S. statutory tax rate
State and local taxes, net of federal tax benefit
Benefit of foreign operations
Other
Effective tax rate
Income tax paid
The source of income before provision for income taxes is as follows:
U.S.
Non-U.S.
Income before provision for income taxes
Year Ended December 31,
2022
21.0 %
0.8 %
(0.2)%
0.3 %
21.9 %
2021
21.0 %
1.5 %
(1.5)%
(1.4)%
19.6 %
$
$
$
488
$
932
$
Year Ended December 31,
2022
804
956
2021
$
1,563
$
1,192
1,760
$
2,755
$
2020
21.0 %
2.3 %
(1.5)%
(1.5)%
20.3 %
514
2020
1,349
880
2,229
MOODY'S 2022 10-K
111
The components of deferred tax assets and liabilities are as follows:
December 31,
2022
2021
Deferred tax assets:
Account receivable allowances
Accumulated depreciation and amortization
Stock-based compensation
Accrued compensation and benefits
Capitalized costs
Operating lease liabilities
Deferred revenue
Net operating loss
Restructuring
Uncertain tax positions
Self-insured related reserves
Loss on net investment hedges - OCI
Other
Total deferred tax assets
Deferred tax liabilities:
Accumulated depreciation and amortization of intangible assets and capitalized software
ROU Assets
Capital gains
Self-insured related income
Revenue Accounting Standard - ASC 606
Deferred tax on unremitted foreign earnings
Gain on net investment hedges - OCI
Other
Total deferred tax liabilities
Net deferred tax liabilities
Valuation allowance
Total net deferred tax liabilities
$
9
$
15
57
51
27
115
206
36
11
68
12
—
14
621
(593)
(82)
(29)
(12)
(5)
(13)
(48)
(9)
(791)
(170)
(21)
$
(191) $
8
10
50
101
33
134
252
33
1
86
10
11
16
745
(659)
(102)
(31)
(10)
(7)
(12)
(4)
(6)
(831)
(86)
(18)
(104)
On December 22, 2017, the Tax Act was signed into law, which resulted in significant changes to U.S. corporate tax laws. The Tax
Act includes a mandatory one-time deemed repatriation tax (“transition tax”) on previously untaxed accumulated earnings of foreign
subsidiaries and beginning in 2018 reduces the statutory federal corporate income tax rate from 35% to 21%. Accordingly, the
Company determined the transition tax to be $236 million, with the remaining balance due of $48 million as of December 31, 2022.
As a result of the Tax Act, all previously net undistributed foreign earnings have now been subject to U.S. tax. The Company
regularly evaluates which entities it will indefinitely reinvest earnings. The Company has provided deferred taxes for those entities
whose earnings are not considered indefinitely reinvested.
The Company’s annual tax expense for the year ended December 31, 2022 includes Excess Tax Benefits from stock compensation
of $19 million, benefits from the resolution of certain UTPs of $30 million and other net increases to tax positions of $12 million.
The Company had valuation allowances of $21 million and $18 million at December 31, 2022 and 2021, respectively, related to
foreign net operating losses for which realization is uncertain.
As of December 31, 2022, the Company had $322 million of UTPs of which $297 million represents the amount that, if recognized,
would impact the effective tax rate in future periods. The decrease in 2022 resulted primarily from lapses in statutes of limitation for
non-U.S. jurisdictions along with state income tax settlement payments. The decrease in 2021 resulted primarily from the
resolutions of uncertain tax positions. The increase in 2020 was primarily due to the additional reserves established for non-U.S.
tax exposures.
112 MOODY'S 2022 10-K
A reconciliation of the beginning and ending amount of UTPs is as follows:
Balance as of January 1
Additions for tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements with taxing authorities
Lapse of statute of limitations
Balance as of December 31
Year Ended December 31,
2022
388
12
12
(27)
(30)
(33)
322
$
$
2021
483
102
18
—
(134)
(81)
388
$
$
2020
477
37
17
(2)
(5)
(41)
483
$
$
The Company classifies interest related to UTPs in interest expense in its consolidated statements of operations. Penalties, if
incurred, are recognized in other non-operating (expense) income, net. Refer to Note 18 for disclosure of interest (expense) income
relating to UTPs and other tax-related liabilities. As of December 31, 2022, 2021 and 2020 the amount of accrued interest recorded
in the Company’s consolidated balance sheets related to UTPs was $47 million, $59 million and $113 million, respectively.
Moody’s Corporation and subsidiaries are subject to U.S. federal income tax as well as income tax in various state, local and
foreign jurisdictions. The Company’s U.S. federal income tax returns for 2017 through 2020 are currently under examination and
2021 remains open to examination. The Company’s New York City tax returns for 2015 through 2017 are currently under
examination. After the resolution of a tax audit for 2012, certain of the Company’s U.K. subsidiaries’ returns from 2012 to 2021
remain open to examination.
For current ongoing matters related to open tax years, the Company estimates that it is reasonably possible that a significant
portion of the balance of UTPs could decrease in the next twelve months as a result of the effective settlement of these audits.
Given the number of years and nature of matters that remain subject to examination in various tax jurisdictions both in the U.S. and
internationally, the Company is unable to estimate a range of possible changes to its UTPs for 2023. It is also possible that new
issues might be raised by tax authorities which might necessitate increases to the balance of UTPs. As the Company is unable to
predict the timing of conclusion of these audits, the Company is unable to estimate the amount of changes to the balance of UTPs
at this time. However, the Company believes that it has adequately provided for its financial exposure relating to all open tax years,
by tax jurisdiction, in accordance with ASC Topic 740.
In August 2022, the U.S. Congress passed the Inflation Reduction Act, which included a corporate minimum tax on book earnings
of 15%, an excise tax on corporate share repurchases of 1%, and certain climate change and energy tax credit incentives. The
adoption of a corporate minimum tax of 15% is not expected to impact Moody’s ETR. The excise tax of 1% on corporate share
buybacks will not have an impact on the Company’s ETR.
MOODY'S 2022 10-K
113
NOTE 18
INDEBTEDNESS
The Company’s debt is recorded at its carrying amount, which represents the issuance amount plus or minus any issuance
premium or discount, except for certain debt as depicted in the table below, which is recorded at the carrying amount adjusted for
the fair value of an interest rate swap used to hedge the fair value of the note.
The following table summarizes total indebtedness:
December 31, 2022
Principal
Amount
Fair Value of
Interest Rate
Swaps(1)
Unamortized
(Discount)
Premium
Unamortized
Debt
Issuance
Costs
Carrying
Value
Notes Payable:
4.875% 2013 Senior Notes, due 2024
$
5.25% 2014 Senior Notes, due 2044
1.75% 2015 Senior Notes, due 2027
3.25% 2017 Senior Notes, due 2028
4.25% 2018 Senior Notes, due 2029
4.875% 2018 Senior Notes, due 2048
0.950% 2019 Senior Notes, due 2030
3.75% 2020 Senior Notes, due 2025
3.25% 2020 Senior Notes, due 2050
2.55% 2020 Senior Notes, due 2060
2.00% 2021 Senior Notes, due 2031
2.75% 2021 Senior Notes, due 2041
3.10% 2021 Senior Notes, due 2061
3.75% 2022 Senior Notes, due 2052
4.25% 2022 Senior Notes, due 2032
500
600
534
500
400
400
800
700
300
300
600
600
500
500
500
$
— $
(1) $
(1) $
(42)
—
(37)
(42)
(44)
—
(27)
—
—
—
—
—
(35)
(12)
3
—
(3)
(2)
(6)
(2)
(1)
(4)
(2)
(7)
(13)
(7)
(8)
(2)
(4)
(2)
(2)
(2)
(4)
(4)
(3)
(3)
(3)
(4)
(5)
(5)
(5)
(4)
498
557
532
458
354
346
794
669
293
295
589
582
488
452
482
Total long-term debt
$
7,734
$
)
(
(239) $
)
(
(55) $
)
(
(51) $
7,389
December 31, 2021
Principal
Amount
Fair Value of
Interest Rate
Swaps (1)
Unamortized
(Discount)
Premium
Unamortized
Debt
Issuance
Costs
Carrying
Value
Notes Payable:
4.875% 2013 Senior Notes, due 2024
$
5.25% 2014 Senior Notes, due 2044
1.75% 2015 Senior Notes due 2027
2.625% 2017 Senior Notes, due 2023
3.25% 2017 Senior Notes, due 2028
4.25% 2018 Senior Notes, due 2029
4.875% 2018 Senior Notes, due 2048
0.950% 2019 Senior Notes, due 2030
3.75% 2020 Senior Notes, due 2025
3.25% 2020 Senior Notes, due 2050
2.55% 2020 Senior Notes, due 2060
2.00% 2021 Senior Notes, due 2031
2.75% 2021 Senior Notes, due 2041
3.10% 2021 Senior Notes, due 2061
500
600
568
500
500
400
400
853
700
300
500
600
600
500
$
— $
(1) $
(1) $
(7)
—
5
8
—
(7)
—
(9)
—
—
—
—
—
3
—
—
(3)
(2)
(6)
(2)
(1)
(4)
(4)
(8)
(13)
(7)
(5)
(2)
(1)
(2)
(2)
(4)
(5)
(4)
(3)
(5)
(5)
(6)
(5)
498
591
566
504
503
396
383
846
686
293
491
587
581
488
Total long-term debt
$
7,521
$
)
(
(10) $
)
(
(48) $
)
(
(50) $
7,413
(1) The fair value of interest rate swaps in the tables above represents the cumulative amount of fair value hedging adjustments
included in the carrying amount of the hedged debt.
114 MOODY'S 2022 10-K
Credit Facility
The following summarizes information relating to the Company's revolving credit facility:
2021 Credit Facility
December 17, 2021
$
1,250 December 17, 2026
$
— $
1,250
$
— $
1,250
Issue Date
Capacity
Maturity
Drawn
Undrawn
Drawn
Undrawn
December 31, 2022
December 31, 2021
Interest on borrowings under the 2021 Credit Facility is payable at rates that are based on an adjusted term SOFR Rate plus a
premium that can range from 80.5 basis points to 122.5 basis points, depending on the Company’s index debt ratings, as set forth
in the 2021 Facility Agreement. The Company also has the option to choose other rates, such as those based on adjusted Daily
Simple SOFR or an alternate base rate as set forth in the 2021 Facility Agreement. The Company also pays quarterly facility fees,
regardless of borrowing activity under the Facility. The quarterly fees for the 2021 Facility can range from 7 basis points of the 2021
Credit Facility amount to 15 basis points, depending on the Company’s index debt ratings. The facility fees for the 2021 Credit
Facility are subject to sustainability-based pricing adjustments based on the Company’s annual performance with respect to certain
spending with vendors who have committed to and publicly announced the setting of science-based targets to reduce greenhouse
gas emissions. The 2021 Facility contains a financial covenant that requires the Company to maintain a total debt to EBITDA Ratio
of (i) not more than 4 to 1 at the end of any fiscal quarter or (ii) not more than 4.5 to 1 as of the end of the first three consecutive
quarters immediately following any acquisition with consideration in excess of $500 million, subject to certain conditions as set forth
in the 2021 Facility.
Commercial Paper
On August 3, 2016, the Company entered into a private placement commercial paper program under which the Company may
issue CP notes up to a maximum amount of $1.0 billion. Borrowings under the CP Program are backstopped by the 2021 Facility.
Amounts under the CP Program may be re-borrowed. The maturity of the CP Notes will vary, but may not exceed 397 days from
the date of issue. The CP Notes are sold at a discount from par, or alternatively, sold at par and bear interest at rates that will vary
based upon market conditions. The rates of interest will depend on whether the CP Notes will be a fixed or floating rate. The
interest on a floating rate may be based on the following: (a) certificate of deposit rate; (b) commercial paper rate; (c) the federal
funds rate; (d) the LIBOR; (e) prime rate; (f) Treasury rate; or (g) such other base rate as may be specified in a supplement to the
private placement agreement. The CP Program contains certain events of default including, among other things: non-payment of
principal, interest or fees; entrance into any form of moratorium; and bankruptcy and insolvency events, subject in certain instances
to cure periods. As of December 31, 2022, the Company has no CP borrowings outstanding.
Notes Payable
The Company may prepay certain of its senior notes, in whole or in part, but may incur a Make Whole amount penalty.
During 2022, the Company issued the 2022 Senior Notes due 2052 and the 2022 Senior Notes due 2032. The key terms of these
debt issuances are set forth in the table above.
In 2022, the Company fully repaid $500 million of the 2017 Senior Notes due 2023 via a tender offer.
Additionally, in December 2022, the Company repaid a portion of its outstanding 2.55% 2020 Senior Notes due 2060 via a partial
tender offer. Pursuant to this tender offer, the Company early redeemed $200 million in principal amount of the notes for
$126 million, resulting in a net $70 million gain on extinguishment. This gain on extinguishment is net of $4 million related to
unamortized discounts and debt issuance costs associated with the principal amount that was repaid.
At December 31, 2022, the Company was in compliance with all covenants contained within all of the debt agreements. All the debt
agreements contain cross default provisions which state that default under one of the aforementioned debt instruments could in
turn permit lenders under other debt instruments to declare borrowings outstanding under those instruments to be immediately due
and payable. As of December 31, 2022, there were no such cross defaults.
The repayment schedule for the Company’s borrowings is as follows:
Year Ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total
$
$
Total
—
500
700
—
534
6,000
7,734
MOODY'S 2022 10-K
115
Interest expense, net
The following table summarizes the components of interest as presented in the consolidated statements of operations:
Expense on borrowings
(Expense) income on UTPs and other tax related liabilities(1)
Net periodic pension costs - interest component
Income
Interest expense, net
Interest paid (2)
Year Ended December 31,
2022
2021
(216) $
(185) $
(13)
(17)
15
)
(
(231) $
198
$
21
(16)
9
)
(
(171) $
162
$
2020
(163)
(34)
(19)
11
)
(
(205)
132
$
$
$
(1) The amount for the year ended December 31, 2021 includes a $45 million benefit relating to the reversal of tax-related interest
accruals pursuant to the resolution of tax matters.
(2)
Interest paid includes net settlements on interest rate swaps more fully discussed in Note 7.
The fair value and carrying value of the Company’s debt as of December 31, 2022 and 2021 are as follows:
Long-term debt
December 31, 2022
December 31, 2021
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
$
7,389
$
6,564
$
7,413
$
7,982
The fair value of the Company’s debt is estimated based on quoted prices in active markets as of the reporting date, which are
considered Level 1 inputs within the fair value hierarchy.
NOTE 19
CAPITAL STOCK
Authorized Capital Stock
The total number of shares of all classes of stock that the Company has authority to issue under its Restated Certificate of
Incorporation is 1.02 billion shares with a par value of $0.01, of which 1.0 billion are shares of common stock, 10.0 million are
shares of preferred stock and 10.0 million are shares of series common stock. The preferred stock and series common stock can
be issued with varying terms, as determined by the Board.
Share Repurchase Program
The Company first implemented a systematic share repurchase program in the third quarter of 2005 through an SEC Rule 10b5-1
program and has maintained its program since. Moody’s may also purchase opportunistically when conditions warrant. As a result,
Moody’s share repurchase activity will continue to vary from quarter to quarter. The table below summarizes the Company’s
remaining authority under its share repurchase program as of December 31, 2022:
Date Authorized
February 7, 2022
February 9, 2021
Total Remaining Authority at December 31, 2022
Amount Authorized
Remaining Authority
$
$
750
1,000
$
$
$
750
98
848
During 2022, Moody’s repurchased 3.1 million shares of its common stock under its share repurchase program and issued a net
0.6 million shares under employee stock-based compensation plans. The net amount includes shares withheld for employee
payroll taxes.
116 MOODY'S 2022 10-K
Dividends
The Company’s cash dividends were:
2022
Dividends Per Share
Year ended December 31,
2021
2020
First quarter
Second quarter
Third quarter
Fourth quarter
Total
Declared
Paid
Declared
Paid
Declared
0.70
$
0.70
$
0.62
$
0.62
$
0.56
$
0.70
0.70
0.70
0.70
0.70
0.70
0.62
0.62
0.62
0.62
0.62
0.62
0.56
0.56
0.56
2.80
$
2.80
$
2.48
$
2.48
$
2.24
$
$
$
Paid
0.56
0.56
0.56
0.56
2.24
On January 30, 2023, the Board approved the declaration of a quarterly dividend of $0.77 per share of Moody’s common stock,
payable on March 17, 2023 to shareholders of record at the close of business on February 24, 2023. The continued payment of
dividends at the rate noted above, or at all, is subject to the discretion of the Board.
NOTE 20
LEASE COMMITMENTS
The Company has operating leases, substantially all of which relate to the lease of office space. The Company's leases classified
as finance leases are not material to the consolidated financial statements. Certain of the Company's leases include options to
renew, with renewal terms that can extend the lease from one to 20 years at the Company's discretion.
The following table presents the components of the Company’s lease cost:
Operating lease cost
Sublease income
Variable lease cost
Total lease cost
Year Ended December 31,
2022
2021
2020
$
$
102
$
(7)
20
115
$
98 $
(6)
19
111 $
96
(5)
19
110
During 2022, the Company recorded $23 million of ROU Asset impairment charges related to the exit of certain real estate leases.
The impairment charges were recorded within Restructuring expense on the consolidated statement of operations. Refer to Note
11 for further details.
The following tables present other information related to the Company’s operating leases:
Cash paid for amounts included in the measurement of operating lease liabilities
Right-of-use assets obtained in exchange for new operating lease liabilities
Year Ended December 31,
2022
2021
2020
$
$
118
35
$
$
113 $
137 $
108
36
Weighted-average remaining lease term (in years)
Weighted-average discount rate applied to operating leases
4.9
3.1 %
5.6
3.1 %
6.0
3.6 %
Year Ended December 31,
2022
2021
2020
MOODY'S 2022 10-K
117
The following table presents a maturity analysis of the future minimum lease payments included within the Company’s operating
lease liabilities at December 31, 2022:
Year Ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total lease payments (undiscounted)
Less: Interest
Present value of lease liabilities:
Lease liabilities - current
Lease liabilities - noncurrent
NOTE 21
CONTINGENCIES
Operating Leases
119
111
98
79
64
40
511
37
474
106
368
$
$
$
$
Given the nature of the Company's activities, Moody’s and its subsidiaries are subject to legal and tax proceedings, governmental,
regulatory and legislative investigations, subpoenas and other inquiries, and claims and litigation by governmental and private
parties that are based on ratings assigned by MIS or that are otherwise incidental to the Company’s business. Moody’s and MIS
also are subject to periodic reviews, inspections, examinations and investigations by regulators in the U.S. and other jurisdictions,
any of which may result in claims, legal proceedings, assessments, fines, penalties or restrictions on business activities. Moody’s
also is subject to ongoing tax audits as addressed in Note 17 to the consolidated financial statements.
Management periodically assesses the Company’s liabilities and contingencies in connection with these matters based upon the
latest information available. For claims, litigation and proceedings and governmental investigations and inquiries not related to
income taxes, the Company records liabilities in the consolidated financial statements when it is both probable that a liability has
been incurred and the amount of loss can be reasonably estimated and periodically adjusts these as appropriate. When the
reasonable estimate of the loss is within a range of amounts, the minimum amount of the range is accrued unless some higher
amount within the range is a better estimate than another amount within the range. In instances when a loss is reasonably possible
but uncertainties exist related to the probable outcome and/or the amount or range of loss, management does not record a liability
but discloses the contingency if material. As additional information becomes available, the Company adjusts its assessments and
estimates of such matters accordingly. Moody’s also discloses material pending legal proceedings pursuant to SEC rules and other
pending matters as it may determine to be appropriate.
In view of the inherent difficulty of assessing the potential outcome of legal proceedings, governmental, regulatory and legislative
investigations and inquiries, claims and litigation and similar matters and contingencies, particularly when the claimants seek large
or indeterminate damages or assert novel legal theories or the matters involve a large number of parties, the Company often
cannot predict what the eventual outcome of the pending matters will be or the timing of any resolution of such matters. The
Company also may be unable to predict the impact (if any) that any such matters may have on how its business is conducted, on
its competitive position or on its financial position, results of operations or cash flows. As the process to resolve any pending
matters progresses, management will continue to review the latest information available and assess its ability to predict the
outcome of such matters and the effects, if any, on its operations and financial condition and to accrue for and disclose such
matters as and when required. However, because such matters are inherently unpredictable and unfavorable developments or
resolutions can occur, the ultimate outcome of such matters, including the amount of any loss, may differ from those estimates.
NOTE 22
SEGMENT INFORMATION
The Company is organized into two operating segments: MIS and MA and accordingly, the Company reports in two reportable
segments: MIS and MA.
The MIS segment consists of five LOBs. The CFG, SFG, FIG and PPIF LOBs generate revenue principally from fees for the
assignment and ongoing monitoring of credit ratings on debt obligations and the entities that issue such obligations in markets
worldwide. The MIS Other LOB primarily consists of financial instruments pricing services in the Asia-Pacific region, ICRA non-
ratings revenue and revenue from providing ESG research, data and assessments.
The MA segment develops a wide range of products and services that support the risk management activities of institutional
participants in global financial markets. The MA segment consists of three LOBs - Decision Solutions, Research and Insights, and
Data and Information.
Revenue for MIS and expenses for MA include intersegment fees charged to MA for the rights to use and distribute content, data
and products developed by MIS. Additionally, revenue for MA and expenses for MIS include an intersegment fee charged to MIS
from MA for certain MA products and services utilized in MIS’s ratings process. These intersegment fees are generally based on
the market value of the products and services being transferred between the segments.
118 MOODY'S 2022 10-K
Overhead expenses include costs such as rent and occupancy, information technology and support staff such as finance, human
resources and legal. Such costs and corporate expenses that exclusively benefit one segment are fully charged to that segment.
For overhead costs and corporate expenses that benefit both segments, costs are allocated to each segment based on the
segment’s share of full-year 2018 actual revenue which comprises a “Baseline Pool” established in 2019, which will remain fixed
over time. In subsequent periods, incremental overhead costs (or reductions thereof) will be allocated to each segment based on
the prevailing shares of total revenue represented by each segment.
“Eliminations” in the following table represent intersegment revenue/expense. Moody’s does not report the Company’s assets by
reportable segment, as this metric is not used by the chief operating decision maker to allocate resources to the segments.
Consequently, it is not practical to show assets by reportable segment.
Financial Information by Segment
The table below shows revenue and Adjusted Operating Income by reportable segment. Adjusted Operating Income is a financial
metric utilized by the Company’s chief operating decision maker to assess the profitability of each reportable segment. Refer to
Note 3 for further details on the components of the Company’s revenue.
Total external revenue
$
2,699
$
2,769
$
— $
5,468
$
3,812
$
2,406
$
— $
6,218
MIS
MA
Eliminations Consolidated
MIS
MA
Eliminations Consolidated
Year Ended December 31,
2022
2021
Intersegment revenue
Revenue
Operating, SG&A
Adjusted Operating Income
174
2,873
1,385
1,488
8
2,777
1,937
840
Add:
Depreciation and
amortization
Restructuring
Operating Income
81
65
250
49
Total external revenue
Intersegment revenue
Revenue
Operating, SG&A
Adjusted Operating Income
Add:
Depreciation and amortization
Restructuring
Loss pursuant to the divestiture of MAKS
Operating income
(182)
(182)
(182)
—
—
—
—
5,468
3,140
2,328
331
114
165
3,977
1,503
2,474
7
2,413
1,786
627
72
(1)
185
1
(172)
(172)
(172)
—
—
—
—
6,218
3,117
3,101
257
—
$
1,883
$
2,844
Year Ended December 31, 2020
MIS
MA
Eliminations
Consolidated
$
3,292
$
2,079
$
— $
148
3,440
1,387
2,053
70
19
—
7
2,086
1,472
614
150
31
9
(155)
(155)
(155)
—
—
—
—
5,371
—
5,371
2,704
2,667
220
50
9
$
2,388
The table below shows cumulative restructuring expense incurred through December 31, 2022 by reportable segment.
2018 Restructuring Program
$
2020 Real Estate Rationalization Restructuring Program
2020 MA Strategic Reorganization Restructuring Program
2022 - 2023 Geolocation Restructuring Program
MIS
MA
Total
60
22
—
64
$
43 $
16
19
49
103
38
19
113
The costs expected to be incurred related to the 2022 - 2023 Geolocation Restructuring Program are $70 million - $90 million for
the MIS segment and $65 million - $80 million for the MA segment.
The restructuring programs are more fully discussed in Note 11.
MOODY'S 2022 10-K
119
CONSOLIDATED REVENUE AND LONG-LIVED ASSETS INFORMATION BY GEOGRAPHIC AREA
Revenue:
U.S.
Non-U.S.:
EMEA
Asia-Pacific
Americas
Total Non-U.S.
Total
Long-lived assets at December 31:
U.S.
Non-U.S.
Total
Year Ended December 31,
2021
2020
2022
$
2,873
$
3,383
$
2,955
1,682
556
357
2,595
1,885
603
347
2,835
5,468
$
6,218
$
4,408
$
4,449
$
4,489
4,802
8,897
$
9,251
$
1,545
571
300
2,416
5,371
2,162
4,889
7,051
$
$
$
NOTE 23
VALUATION AND QUALIFYING ACCOUNTS
Accounts receivable allowances represent estimates for uncollectible accounts. The valuation allowance on deferred tax assets
relates to foreign net operating tax losses for which realization is uncertain. Below is a summary of activity:
Year Ended December 31,
2022
Balance at
Beginning of
the Year
Adoption of Credit
Losses Accounting
Standard
Charged to
costs and
expenses
Deductions (1)
Balance at
End of the
Year
Allowances for credit losses
$
Deferred tax assets—valuation allowance $
2021
Allowances for credit losses
Deferred tax assets—valuation allowance
2020
Allowances for credit losses
Deferred tax assets—valuation allowance
$
$
$
$
(32) $
(18) $
(34) $
(15) $
(20) $
(9) $
— $
— $
— $
— $
(2) $
— $
(25) $
(4) $
(13) $
(4) $
(26) $
(6) $
17
1
15
1
$
$
$
$
14
$
— $
(40)
(21)
(32)
(18)
(34)
(15)
(1)
Reflects write-off of uncollectible accounts receivable or expiration of foreign net operating tax losses.
NOTE 24
OTHER NON-OPERATING INCOME, NET
The following table summarizes the components of other non-operating income, net as presented in the consolidated statements of
operations:
FX (loss) gain(1)
Purchase price hedge loss(2)
Net periodic pension costs—other components
Income from investments in non-consolidated affiliates(3)
Other
Total
Year Ended December 31,
2022
(10) $
—
24
17
7
38
$
2021
(1) $
(13)
9
60
27
82
$
2020
2
—
13
6
25
46
$
$
(1) The amount for the year ended December 31, 2022 includes FX translation losses of $20 million reclassified to earnings
resulting from the Company no longer conducting commercial operations in Russia.
(2) The amount for the year ended December 31, 2021 reflects a loss on a forward contract to hedge a portion of the RMS British
pound-denominated purchase price.
(3) The amount for the year ended December 31, 2021 includes a $36 million non-cash gain relating to the exchange of Moody’s
minority investment in VisibleRisk (accounted for under the equity method) for shares of BitSight, a cybersecurity ratings
company.
120 MOODY'S 2022 10-K
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
ITEM 9.
DISCLOSURE
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company carried out an evaluation, as required by Rule 13a-15(b) under the Exchange Act, under the supervision and with the
participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the
Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”). Based on such evaluation, such officers
have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to provide
reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in the communication to the
Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.
Changes In Internal Control Over Financial Reporting
Information in response to this Item is set forth under the caption “Management’s Report on Internal Control Over Financial
Reporting,” in Part II, Item 8 of this annual report on Form 10-K.
The Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has determined that
there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably
likely to materially affect, these internal controls over financial reporting during the three months ended December 31, 2022.
During the fiscal year ended December 31, 2021, the Company acquired RMS and in the fiscal year ended December 31, 2022,
Moody's integrated the acquired entity into the Company’s financial reporting processes and procedures and internal controls over
financial reporting.
ITEM 9B.
OTHER INFORMATION
Not applicable.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
Except for the information relating to the executive officers of the Company set forth in Part I of this annual report on Form 10-K,
the information called for by Items 10-14 is contained in the Company’s definitive proxy statement for use in connection with its
annual meeting of stockholders scheduled to be held on April 18, 2023, and is incorporated herein by reference.
ITEM 10
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required by this Item 10 is included under the heading “Information about our Executive Officers” in Part I, Item 1 of this
Form 10-K, as well as under the headings “Item 1–Election of Directors,” “Corporate Governance–Codes of Business Conduct and
Ethics,” and “The Audit Committee,” in the 2023 Proxy Statement and is incorporated by reference.
ITEM 11
EXECUTIVE COMPENSATION
Information required by this Item 11 is included under the headings “Compensation Discussion and Analysis,” “Summary
Compensation Table,” “Grants of Plan-Based Awards Table for 2022,” “Outstanding Equity Awards at Fiscal Year-End Table for
2022,” “Option Exercises and Stock Vested Table for 2022,” “Pension Benefits Table for 2022,” “Non-Qualified Deferred
Compensation Table,” “Potential Payments Upon Termination or Change in Control,” “Compensation of Directors,” “Relationship of
Compensation Practices to Risk Management,” "Pay Versus Performance," “CEO Pay Ratio,” and “Report of the Compensation &
Human Resources Committee” in the 2023 Proxy Statement and is incorporated by reference.
ITEM 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Information required by this Item 12 is included under the heading “Equity Compensation Plan Information” in Part II, Item 5 of this
Form 10-K, as well as under the heading “Security Ownership of Certain Beneficial Owners and Management” in the 2023 Proxy
Statement and is incorporated by reference.
ITEM 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by this Item 13 is included under the headings “Corporate Governance –Director Independence” and “Certain
Relationships and Related Transactions” in the 2023 Proxy Statement and is incorporated by reference.
MOODY'S 2022 10-K
121
ITEM 14
PRINCIPAL ACCOUNTING FEES AND SERVICES
Information required by this Item 14 is included under the headings “Item 2–Ratification of Appointment of Independent Registered
Public Accountants–Principal Accounting Fees and Services” and “The Audit Committee” in the 2023 Proxy Statement and is
incorporated by reference.
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
LIST OF DOCUMENTS FILED AS PART OF THIS REPORT.
(1) Financial Statements.
See Index to Financial Statements on page 63, in Part II. Item 8 of this Form 10-K.
(2) Financial Statement Schedules.
None.
(3) Exhibits.
INDEX TO EXHIBITS
S-K EXHIBIT NUMBER
3
4
Articles of Incorporation and By-laws
.1
.2
Restated Certificate of Incorporation of the Registrant, effective April 22, 2020 (incorporated by reference to
Exhibit 3.3 to the Report on Form 8-K of the Registrant, file number 1-14037, filed April 27, 2020)
Amended and Restated By-laws of Moody’s Corporation, effective December 20, 2022 (incorporated by
reference to Exhibit 3.1 to the Report on Form 8-K of the Registrant, file number 1-14037, filed December
21, 2022)
Instruments Defining the Rights of Security Holders, Including Indentures
.1
.2
.3.1
.3.2
.3.3
.3.4.1
.3.4.2
.3.5
.3.6
.3.7.1
Description of the Registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of
1934 (incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K, file number
1-14037, filed February 22, 2021)
Specimen Common Stock certificate (incorporated by reference to Exhibit 4.1 to the Report on Form 8-K of
the Registrant, file number 1-14037, filed October 4, 2000)
Indenture, dated as of August 19, 2010, between Moody’s Corporation and Wells Fargo, National
Association, as trustee (incorporated by reference to Exhibit 4.1 to the Report on Form 8-K of the
Registrant, file number 1-14037, filed August 19, 2010)
Third Supplemental Indenture, dated as of August 12, 2013, between Moody’s Corporation and Wells
Fargo, National Association, as trustee, including the form of the 4.875% Senior Notes due 2024
(incorporated by reference to Exhibit 4.1 to the Report on Form 8-K of the Registrant, file number 1-14037,
filed August 12, 2013)
Fourth Supplemental Indenture, dated July 16, 2014, between the Company and Wells Fargo Bank,
National Association, as trustee, including the form of 5.250% Senior Notes due 2044 (incorporated by
reference to Exhibit 4.1 to the Report on Form 8-K of the Registrant, file number 1-14037, filed July 16,
2014)
Fifth Supplemental Indenture, dated March 9, 2015, between the Company, Wells Fargo Bank, National
Association, as trustee and Elavon Financial Services Limited, UK Branch as paying agent and transfer
agent and Elavon Financial Services Limited as registrar, including the form or 1.75% Senior Notes due
2027 (incorporated by reference to Exhibit 4.1 to the Report on Form 8-K of the Registrant, file number
1-14037, filed March 10, 2015)
Agency Agreement, dated March 9, 2015, between the Company, Wells Fargo Bank, National Association,
as trustee and Elavon Financial Services Limited, UK Branch as paying agent and transfer agent and
Elavon Financial Services Limited as registrar ((incorporated by reference to Exhibit 4.3 to the Report on
Form 8-K of the Registrant, file number 1-14037, filed March 10, 2015)
Seventh Supplemental Indenture, dated as of June 12, 2017, between Moody’s Corporation and Wells
Fargo, National Association, as trustee, including the form of 2.625% Senior Notes due 2023 and the form
of 3.250% Senior Notes due 2028 (incorporated by reference to Exhibit 4.3 to the Report on Form 8-K of the
Registrant, file number 1-14037, filed June 12, 2017)
Ninth Supplemental Indenture, dated as of December 17, 2018, between the Company and Wells Fargo
Bank, National Association, as trustee, including the form of 4.250% Senior Note due 2029 and the form of
4.875% Senior Note due 2048 (incorporated by reference to Exhibit 4.1 to the Report on Form 8-K of the
Registrant, file number 1-14037, filed December 21, 2018)
Tenth Supplemental Indenture, dated as of November 25, 2019, between the Company, Wells Fargo Bank,
National Association, as trustee, Elavon Financial Services Limited, UK Branch as paying agent and U.S.
Bank National Association as registrar and transfer agent, including the form of 0.950% Senior Note due
2030 (incorporated by reference to Exhibit 4.1 to the Report on Form 8-K of the Registrant, file number
1-14037, filed November 25, 2019)
122 MOODY'S 2022 10-K
S-K EXHIBIT NUMBER
.3.7.2
.3.8
.3.9
.3.10
.3.11
.3.12
.3.13
.3.14
Agency Agreement, dated November 25, 2019, between the Company, Wells Fargo Bank, National
Association, as trustee, Elavon Financial Services Limited, UK Branch as paying agent and U.S. Bank
National Association as registrar and transfer agent. (incorporated by reference to Exhibit 4.3 to the Report
on Form 8-K of the Registrant, file number 1-14037, filed November 25, 2019)
Eleventh Supplement Indenture, dated as of March 24, 2020, between the Company and Wells Fargo Bank,
National Association, as trustee, including the form of 3.750% Senior Note due 2025 (incorporated by
reference to Exhibit 4.1 to the Report on Form 8-K of the Registrant, file number 1-14037, filed March 25,
2020)
Twelfth Supplemental Indenture, dated as of May 20, 2020, between the Company and Wells Fargo Bank,
National Association, as trustee, including the form of 3.250% Senior Note due 2050 (incorporated by
reference to Exhibit 4.1 to the Report on Form 8-K of the Registrant, file number 1-14037, filed May 20,
2020)
Thirteenth Supplemental Indenture, dated as of August 18, 2020, between the Company and Wells Fargo
Bank, National Association, as trustee, including the form of 2.550% Senior Note due 2060 (incorporated by
reference to Exhibit 4.1 to the Report on Form 8-K of the Registrant, file number 1-14037, filed August 18,
2020)
Fourteenth Supplemental Indenture, dated as of August 19, 2021, between the Company and Wells Fargo
Bank, National Association, as trustee, including the form of 2.000% Senior Note due 2031 and the form of
2.750% Senior Notes due 2041 (incorporated by reference to Exhibit 4.1 to the Report on Form 8-K of the
Registrant, file number 1-14037, filed August 19, 2021)
Fifteenth Supplemental Indenture, dated as of November 29, 2021, between the Company and
Computershare Trust Company, N.A. as successor to Wells Fargo Bank, National Association, as trustee,
including the form of 3.100% Senior Note due 2061 (incorporated by reference to Exhibit 4.1 to the Report
on Form 8-K of the Registrant, file number 1-14037, filed November 29, 2021
Sixteenth Supplemental Indenture, dated as of February 25, 2022, between the Company and
Computershare Trust Company, N.A. as successor to Wells Fargo Bank, National Association, as Trustee,
including the form of 3.750% Senior Note due 2052 (incorporated by reference to Exhibit 4.1 to the Report
on Form 8-K of the Registrant, file number 1-14037, filed February 28, 2022)
Seventeenth Supplemental Indenture, dated as of August 8, 2022, between the Company and
Computershare Trust Company, N.A. as successor to Wells Fargo Bank, National Association, as Trustee,
including the form of 4.250% Senior Note due 2032 (incorporated by reference to Exhibit 4.1 to the Report
on Form 8-K of the Registrant, file number 1-14037, filed August 8, 2022)
10
Material Contracts
.1.1†
.1.2†
.2†
.3.1†*
.3.2.1†
.3.2.2†
.3.2.3†*
.3.3.1†
.3.3.2†*
.3.4.1†
1998 Moody’s Corporation Non-Employee Directors’ Stock Incentive Plan (Adopted September 8, 2000;
Amended and Restated as of December 11, 2012, October 20, 2015, December 14, 2015 and December
18, 2017) (incorporated by reference to Exhibit 10.2.1 to the Registrant’s Annual Report on Form 10-K, file
number 1-14037, filed February 27, 2018)
Form of Non-Employee Director Restricted Stock Unit Grant Agreement (for awards after 2017) for the 1998
Moody’s Corporation Non-Employee Directors’ Stock Incentive Plan (Adopted September 8, 2000;
Amended and Restated as of December 11, 2012, October 20, 2015, December 14, 2015 and December
18, 2017) (incorporated by reference to Exhibit 10.2.3 to the Registrant’s Annual Report on Form 10-K, file
number 1-14037, filed February 27, 2018)
Moody’s Corporation 1999 Employee Stock Purchase Plan (as amended and restated December 15, 2008)
(formerly, The Dun & Bradstreet Corporation 1999 Employee Stock Purchase Plan) (incorporated by
reference to Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed March
2, 2009)
Amended and Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan (as amended and
restated December 20, 2022)
Form of Employee Non-Qualified Stock Option Grant Agreement (for awards granted between 2017 and
2019) for the Amended and Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan
(incorporated by reference to Exhibit 10.17 to the Registrant’s Annual Report on Form 10-K, file number
1-14037, filed February 24, 2017)
Form of Employee Non-Qualified Stock Option Grant Agreement (for awards granted in 2020 or later) for
the Amended and Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan (incorporated
by reference to Exhibit 10.3.3.2 to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed
February 24, 2020)
Form of Employee Non-Qualified Stock Option Grant Agreement (for awards granted in 2023 or later) for
the Amended and Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan
Form of Performance Share Award Letter (for awards granted prior to 2023) for the Amended and Restated
2001 Moody’s Corporation Key Employees’ Stock Incentive Plan (incorporated by reference to Exhibit
10.3.4.3 to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed February 24, 2020)
Form of Performance Share Award Letter (for awards granted in 2023 or later) for the Amended and
Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan
Form of Restricted Stock Unit Grant Agreement (for awards granted prior to 2020) for the Amended and
Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan (incorporated by reference to
Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed February 24, 2017)
MOODY'S 2022 10-K
123
S-K EXHIBIT NUMBER
.3.4.2†
Form of Restricted Stock Unit Grant Agreement (for awards granted in 2020 or later) for the Amended and
Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan (incorporated by reference to
Exhibit 10.3.5.2 to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed February 24,
2020)
.3.4.3†*
Form of Restricted Stock Unit Grant Agreement (for awards granted in 2023 or later) for the Amended and
Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan
.4†
.5†
.6†
.7†
.8.1†
.8.2†
.8.3†
.9†
.10.1†
.10.2†
.11.1†
.11.2†
.12†
.13†
.14†
.15†
.16†
.17
.18†
.19
.20
2004 Moody’s Corporation Covered Employee Cash Incentive Plan (as amended on February 10, 2015)
(incorporated by reference to Exhibit 10.15 to the Registrant’s Annual Report on Form 10-K, file number
1-14037, filed February 26, 2015)
Moody’s Corporation Deferred Compensation Plan (amended and restated effective as of January 1, 2020)
(incorporated by reference to Exhibit 10.5 the Registrant’s Annual Report on Form 10-K, file number
1-14037, filed February 22, 2021)
Supplemental Executive Benefit Plan of Moody’s Corporation, amended and restated as of January 1, 2008
(incorporated by reference to Exhibit 10.38 to the Registrant’s Annual Report on Form 10-K, file number
1-14037, filed February 29, 2008)
Pension Benefit Equalization Plan of Moody’s Corporation, amended and restated as of January 1, 2008
(incorporated by reference to Exhibit 10.39 to the Registrant’s Annual Report on Form 10-K, file number
1-14037, filed February 29, 2008)
Moody’s Corporation Cafeteria Plan, effective January 1, 2008 (incorporated by reference to Exhibit 10.46
to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed March 2, 2009)
First Amendment to the Moody’s Corporation Cafeteria Plan (incorporated by reference to Exhibit 10.3 to
the Registrant’s Quarterly Report on form 10-Q, file number 1-14037, filed July 31, 2014)
Second Amendment to the Moody’s Corporation Cafeteria Plan (incorporated by reference to Exhibit 10.33
to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed February 26, 2015)
Moody’s Corporation Change in Control Severance Plan (as amended December 18, 2017) (incorporated
by reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed
February 27, 2018)
Moody’s Corporation Retirement Account (amended and restated as of January 1, 2021) (incorporated by
reference to Exhibit 10.10 to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed
February 22, 2021)
First Amendment to the Moody’s Corporation Retirement Account (effective January 1, 2021) (incorporated
by reference to Exhibit 10.10.2 to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed
February 22, 2022)
Profit Participation Plan of Moody’s Corporation (amended and restated as of January 1, 2020)
(incorporated by reference to Exhibit 10.11 to the Registrant’s Annual Report on Form 10-K, file number
1-14037, filed February 22, 2021)
First Amendment to the Profit Participation Plan of Moody’s Corporation (effective January 1, 2020)
(incorporated by reference to Exhibit 10.11.2 to the Registrant’s Annual Report on Form 10-K, file number
1-14037, filed February 22, 2022)
The Moody’s Corporation Nonfunded Deferred Compensation Plan for Non-Employee Directors (as
amended December 16, 2008, October 15, 2015 and December 19, 2016) (incorporated by reference to
Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed February 22, 2022)
Amended and Restated Moody’s Corporation Career Transition Plan (amended and restated as of
November 8, 2021) (incorporated by reference to Exhibit 10.13.1 to the Registrant’s Annual Report on Form
10-K, file number 1-14037, filed February 22, 2022)
Supplemental Executive Disability Benefit Plan of Moody’s Corporation, effective as of January 1, 2019
(incorporated by reference to Exhibit 10.22 to Registrant’s Annual Report on Form 10-K, file number
1-14037, filed February 25, 2019)
Risk Management Solutions, Inc. 2014 Equity Award Plan (incorporated by reference to Exhibit 99.1 to the
Registration Statement on Form S-8 of the Registrant, file number 333-259539, filed September 15, 2021)
Risk Management Solutions, Inc. 2015 Equity Incentive Plan (incorporated by reference to Exhibit 99.2 to
the Registration Statement on Form S-8 of the Registrant, file number 333-259539, filed September 15,
2021)
Form Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Report on Form 8-K of the
Registrant, file number 1-14037, filed December 22, 2017)
Employment Offer Letter between Moody’s Corporation and Mark Kaye, dated July 18, 2018 (incorporated
by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q of the Registrant, file number 1-14037,
filed on October 31, 2018)
Form Commercial Paper Dealer Agreement between Moody’s Corporation, as Issuer, and the Dealer party
thereto (incorporated by reference to Exhibit 10.1 to the Report on Form 8-K of the Registrant, file number
1-14037, filed August 3, 2016)
Credit Agreement, dated as of December 17, 2021, among Moody’s Corporation, the borrowing subsidiaries
party thereto, the lenders and issuing banks party thereto, JPMorgan Chase Bank, N.A., as administrative
agent, and the other agents party thereto (incorporated by reference to Exhibit 4.1 to the Report on Form 8-
K of the Registrant, file number 1-14037, filed December 20, 2021).
21*
Subsidiaries of the Registrant List of Active Subsidiaries as of December 31, 2022
124 MOODY'S 2022 10-K
S-K EXHIBIT NUMBER
23
31
32
Consent of Independent Registered Public Accounting Firm
.1*
Consent of KPMG LLP
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
.1*
.2*
Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
.1*
.2*
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002. (The Company has furnished this certification and does not intend for it to be considered
filed under the Securities Exchange Act of 1934 or incorporated by reference into future filings under the
Securities Act of 1933 or the Securities Exchange Act of 1934
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002. (The Company has furnished this certification and does not intend for it to be considered
filed under the Securities Exchange Act of 1934 or incorporated by reference into future filings under the
Securities Act of 1933 or the Securities Exchange Act of 1934
101
Inline XBRL
.INS*
Inline XBRL Instance Document
.SCH*
Inline XBRL Taxonomy Extension Schema Document
.CAL*
.DEF*
.LAB*
.PRE*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Definitions Linkbase Document
Inline XBRL Taxonomy Extension Labels Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
_____________
The cover page from this Annual Report on Form 10-K (formatted in Inline XBRL and contained in Exhibit
101)
*
†
Filed herewith
Management contract of compensatory plan or arrangement
ITEM 16
None.
FORM 10-K SUMMARY
MOODY'S 2022 10-K
125
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
MOODY’S CORPORATION
(Registrant)
By: /s/ ROBERT FAUBER
Robert Fauber
President and Chief Executive Officer
Date: February 15, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date indicated.
/s/ ROBERT FAUBER
Robert Fauber,
/s/ LLOYD W. HOWELL, JR.
Lloyd W. Howell, Jr.,
President and Chief Executive Officer
Director
(principal executive officer)
/s/ MARK KAYE
Mark Kaye,
/s/ RAYMOND W. MCDANIEL, JR.
Raymond W. McDaniel, Jr.,
Executive Vice President and Chief Financial Officer
Chairman
(principal financial officer)
/s/ CAROLINE SULLIVAN
Caroline Sullivan,
Chief Accounting Officer and Corporate Controller
(principal accounting officer)
/s/ JORGE A. BERMUDEZ
Jorge A. Bermudez,
Director
/s/ THÉRÈSE ESPERDY
Thérèse Esperdy,
Director
/s/ VINCENT A. FORLENZA
Vincent A. Forlenza,
Lead Independent Director
/s/ KATHRYN M. HILL
Kathryn M. Hill,
Director
126 MOODY'S 2022 10-K
/s/ JOSE MINAYA
Jose Minaya,
Director
/s/ LESLIE F. SEIDMAN
Leslie F. Seidman,
Director
/s/ ZIG SERAFIN
Zig Serafin,
Director
/s/ BRUCE VAN SAUN
Bruce Van Saun,
Director
Date: February 15, 2023
Moody’s Corporate Information
CORPORATE OFFICE
7 World Trade Center
250 Greenwich Street
New York, NY 10007
+1.212.553.0300
moodys.com
TRANSFER AGENT, REGISTRAR
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
U.S.: +1.866.714.7299
Outside the U.S.: +1.718.921.8124
Hearing impaired: +1.866.703.9077
Online Shareholder Account Information
amstock.com
info@amstock.com
INDEPENDENT ACCOUNTANTS
KPMG LLP
345 Park Avenue
New York, NY 10154
CORPORATE GOVERNANCE
The Company has filed its annual report on Form 10-K for the year ended
December 31, 2022 with the Securities and Exchange Commission.
The Form 10-K, along with other Moody’s SEC filings and corporate governance
documents, are available, without charge, upon request to the Investor
Relations Department at the Corporate Office or on ir.moodys.com.
The Company has submitted to the New York Stock Exchange the Chief
Executive Officer’s certification that he is unaware of any violation by the
Company of the NYSE’s corporate governance listing standards. The Company
has filed with the SEC the Chief Executive Officer and Chief Financial Officer
certifications as exhibits to the most recently filed Form 10-K, pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
COMMON STOCK INFORMATION
The Company’s common stock trades on the New York Stock Exchange
under the symbol “MCO”.
INVESTOR RELATIONS
+1.212.553.4857
ir@moodys.com
ir.moodys.com
MOODY’S ENVIRONMENTAL POLICY
Moody’s Corporation is committed to doing our part to protect and care for
the environments in which we live and work.
This commitment is demonstrated by the continuous development and
implementation of practical and effective corporate policies and programs that
support the more efficient use of natural resources and reduce the impact of
our businesses on the environment. These programs and policies include, where
feasible, the reduction and elimination of waste through re-use, recovery and
recycling. As part of these efforts, Moody’s is committed to reducing its global
operations’ contribution to climate change. Our environmental programs are
structured to minimize the impact on our greenhouse gas emissions to the
extent possible.
Moody’s Corporation recognizes that our environmental impacts are limited
and include greenhouse gas emissions (from energy used in buildings and for
transport), water use and waste (from office operations). Nonetheless, we are
committed to minimizing the impact of our operations and services on the
environment by:
» Complying with the letter and spirit of all relevant environmental legislation
» Establishing applicable corporate environmental goals and objectives which
will be reviewed and revised as necessary on an ongoing basis
» Minimizing the environmental risks to our employees and the communities
in which we operate
» Using various communications channels to ensure that our employees are
aware of environmental concerns and the impact of their activities on the
environment, and to encourage them to minimize these impacts
» Adopting a purchasing program that takes into consideration the
environmental practices of potential suppliers and contractors
» Seeking to reduce internal and client-facing travel whenever practical
» Where possible, consider “green” building choices or, at a minimum,
those that provide the efficient use of energy and materials when selecting
new office locations
» Reducing, and where possible eliminating, waste through re-use, recovery
and recycling by participating in building-wide conservation efforts for
water and energy conservation
» Tracking and reporting the results of our efforts annually in our Corporate
Social Responsibility Report
» Responding to CDP Climate Change questionnaire annually
» Ensuring that our policy is available for public review and is
communicated to employees to increase their awareness of
environmental concerns and to further encourage them to minimize
the impact they have on the environment
Our commitment is demonstrated by the continuous development and
implementation of practical and effective corporate policies and programs that
support the more efficient use of natural resources and reduce the impact of our
businesses on the environment.
All paper in this report is certified to the
Forest Stewardship Council® (FSC®)
standards. The 10-K of this report is
printed on paper that contains
recycled fiber.