Annual Report
2023
Vincent A. Forlenza
Letter from the Chairman of the Board of Directors
Looking back on 2023, global trends continued to converge
and shape what proved to be another year of swift and seismic
change. Our collective global experience was defined by
several factors, including the continued rapid advancement
of technology, particularly artificial intelligence, central bank
actions to manage inflation, the ongoing impacts from climate
change as well as evolving geopolitical conflicts – to name
a few.
It was my honor to be appointed as Moody’s Chairman of the
Board in April, after having served on the Board for the past five
years. This new role has afforded me a unique vantage point for
reflection on the impressive achievements of Moody’s teams
amidst this backdrop.
Over the course of more than four decades in healthcare,
I have witnessed the transformative power of technology.
I can appreciate how innovation can revolutionize industries,
and I am pleased that Moody’s has been an early mover in
harnessing the power of generative artificial intelligence
(GenAI). Moody’s is building on a powerful foundation of
proprietary datasets and insights to bring a step change in
efficiency and effectiveness to its customers and its people.
This work includes the development of Moody’s Research
Assistant, a first-of-its-kind GenAI-powered search and
analysis tool, which launched at the end of 2023 and enabled
customers to unlock insights with unprecedented speed. This
milestone provides a glimpse of what the future holds for
risk analysis.
EXPONENTIAL OPPORTUNITY
MAKING A MEASURABLE IMPACT
Fueled by visionary leadership and an unwavering belief that
greater transparency, more informed decisions, and fair access
to information opens the door to shared progress, the firm has
steadily evolved to meet the moment – one Moody’s defined
in 2023 as an era of exponential risk. A more interconnected
world has led risks to compound. Consider the interrelated
impacts from extreme weather events, cyberattacks and
supply chain failures – collectively, these forces have elevated
global uncertainty.
Throughout this dynamic environment, Moody’s remained
focused on sustainable value creation for its stakeholders
by further defining this moment as one also marked by
exponential opportunity. The momentum behind Moody’s
achievements is influenced by a clear mindset focused on
growth by helping stakeholders anticipate, adapt, and thrive
in our new global paradigm.
INNOVATING FOR OUR STAKEHOLDERS
As part of its evolution, Moody’s has remained focused on
providing innovative solutions and insights across its business –
from ratings and research to data and analytics. Over the past
year, Moody’s launched new cloud-based software solutions
to serve banking, insurance, and Know Your Customer
workflows. Importantly, Moody’s has also continued to invest
in technology to provide a better experience for its customers
by further integrating its vast array of content and datasets.
During my tenure on the Board, I have been inspired by
the dedication of Moody’s people which is evident in their
contributions in the communities where they live and work.
The most recent year was no exception where more than
3,300 employees participated in 150+ global projects through
the company’s annual teambuilding and volunteering program,
Moody’s TeamUp®.
Concurrently in 2023, Moody’s employee-led Business
Resource Groups played a crucial role in advancing the
company’s focus on inclusion, helping to create a culture where
everyone feels a sense of belonging. This work speaks to the
strength of character of Moody’s employees, which is evident
in the values they share.
I want to say a special thanks to Ray McDaniel, the outgoing
Chairman of Moody’s Board of Directors, who retired in
April 2023 after a long and distinguished career. The Board
shares the deep appreciation held by Moody’s employees for
his steady leadership and his tremendous contributions
to the firm.
Finally, I express my appreciation to Moody’s stockholders
for their continued support, and I thank the company’s
executive leadership team and all employees for their
tremendous efforts.
1
MOODY’S 2023 ANNUAL REPORT
Vincent A. Forlenza
Chairman of the Board of Directors
Robert Fauber
Letter from the President & Chief Executive Officer
REFLECTING ON OUR PROGRESS
As I think about 2023 and the milestones our company
achieved, I am reminded how incredibly proud I am of my
colleagues. Working together, they enabled progress through
the launch of innovative products and solutions. They also
expanded our customer relationships and integrated risk
analysis capabilities. Collectively, our accomplishments
generated 8% revenue growth for our company and delivered
value for our stakeholders, empowering them to act with
confidence in a world where risks are more complex and
interconnected than ever before.
The past year was defining for our company, filled with
positive change and momentum that excites me for the road
ahead. Fueling our progress is our steadfast commitment to
our values, which anchors our decisions and our actions. Our
people embody our values – and thanks to their agility and
dedication, we kept our focus on providing clarity, knowledge
and fairness through our opinions, enabling individuals and
organizations to make better decisions.
AN ERA OF EXPONENTIAL RISK
The events of the past year highlighted the changing
nature and convergence of global risks. Also evident from
conversations with our stakeholders was a growing demand
for relevant insights and solutions to help them navigate
these challenges.
From geopolitical conflicts to banking system stress and
cyclical trends in inflation and interest rates, multiple risks
generated volatility in the global debt and equity markets. This
heightened uncertainty contributed to a trend of increasing
volatility that we have been seeing now for a number of years.
Our world is linked by technology and trade, and by culture
and commerce – risks no longer exist in isolation. Last year, I
was honored to be invited to speak on this topic at the United
States Military Academy at West Point. I described our global
reality as an “era of exponential risk,” where our interconnected
world creates new, compounding risks. At Moody’s, we believe
this era also presents opportunities – not just to understand
exponential risk, but to get ahead of it, to adapt and thrive.
To navigate this era, we believe our stakeholders need to
break down risk silos, while embracing technology, data, and
analytics to build resiliency. Over the past year, our
company continued to evolve rapidly to help our customers
anticipate the effects of emerging threats, identify
vulnerabilities, spot and seize opportunities, and support
lasting competitive advantage.
HARNESSING GENERATIVE AI
One of the most exciting developments of 2023 was the
phenomenal growth of generative artificial intelligence – or
GenAI. Our swift embrace of this technology was a natural
step for Moody’s because, for more than 100 years, innovation
has been core to how we operate. It also builds on our
longstanding experience with traditional artificial intelligence.
It was remarkable to see how much creativity was unleashed
this past year when we gave every employee secure and
responsible access to new GenAI tools. We also accelerated our
ability to innovate through new partnerships with Microsoft
and Google.
All of this work culminated in the public launch of Moody’s
Research Assistant, a first-of-its-kind research offering powered
by GenAI. The unveiling of this powerful tool marked a
milestone in our ongoing journey to enable our customers to
more rapidly unlock deeper and richer integrated risk insights.
I am pleased to share that the early feedback we have received
from our stakeholders has encouraged us. We will continue to
develop similar products in the months and years ahead.
NEW AND EXPANDED SOLUTIONS
Our accomplishments are a testament to our unique offering –
one that sets us apart. This offering is underpinned by our focus
on purposeful innovation, delivering for our customers, and
investing for growth – a formula that has created sustainable
value for our shareholders.
This approach fueled our impressive financial performance
and continued strong returns for our stockholders. Moody’s
achieved revenue growth of 8% and adjusted diluted EPS
growth of 16% in 2023.
3
MOODY’S 2023 ANNUAL REPORT
To help illuminate how our business, solutions and insights
are evolving, we hosted our first Innovation Open House with
investors, analysts and other stakeholders this past September.
Our colleagues demonstrated how we are using Moody’s
proprietary data, models and software to offer our customers a
comprehensive view of risk.
Over the past year, our product roadmap has been as rich as
I can remember. Highlights included: enhancements we have
made to one of our flagship customer solutions, CreditView,
which integrates credit ratings, research, data and content
from our entire company; and investments we have made to
expand several of our solutions, such as EDF-X, a platform
which provides risk insights and early warning signals on more
than 400 million public and private companies, and Moody’s
Climate on Demand, which offers forward-looking risk scoring
on assets and locations.
From climate risk to compliance risk, our enhanced offerings
introduced in 2023 focused on generating deeper insights
to yield new advantages and greater possibilities for our
customers. As another example, we addressed the growing
demand for analysis of decarbonization plans through
the launch of Net Zero Assessments. And as geopolitical
events generated increasingly complex risks, we introduced
Know Your Customer (KYC) solutions like Sanctions360 to
help organizations be even more effective and efficient in
uncovering sanctions-related risk within their customer base,
counterparties and supply chain.
Investing for growth, combined with constant innovation,
helped Moody’s Analytics (MA) to deliver its 64th consecutive
quarter of revenue growth, with 10% annual recurring
revenue growth. At the same time, we continued to balance
our disciplined approach to expenses with ongoing investment
in the business.
RECOGNITION FOR OUR PEOPLE
As I have acknowledged, our company’s growth and innovation
in 2023 was made possible by our people’s unwavering
commitment to excellence. And I was pleased to see their
efforts recognized externally. I will proudly share a few
highlights: for the second consecutive year, we achieved
the number one ranking in the Chartis RiskTech100. Then in
December, Institutional Investor named us as the Best Credit
Rating Agency for the 12th year in a row.
Throughout the past year, we also continued to prioritize
inclusion. In recognition, we were listed in Bloomberg’s Gender
Equality Index for the fourth year in a row and named one of
America’s 100 Most JUST Companies. Furthermore, we were
recognized as a Stonewall Top 100 employer, and we received
a score of 100% on the Human Rights Campaign Foundation’s
2023 Corporate Equality Index, marking 12 consecutive years
that we have earned a top ranking.
Collectively, these examples of recognition are a testament
to our people, who through their actions connect the value
of what we have always done throughout our history as an
integrated risk assessment firm to the greater benefit it creates
in today’s environment of exponential risk.
ACCELERATING OUR MOMENTUM
I am energized by the possibilities ahead. In the coming year,
we will continue to advance the values that our company is
built on by uniting the brightest minds – our people – to turn
today’s risks into tomorrow’s opportunities. Fueled by curiosity,
ambition, and inspiration, we are well-positioned to continue
investing for growth and creating value for our stakeholders.
On a personal note, I am delighted to welcome our new
Chairman of the Board, Vince Forlenza, who brings a wealth
of experience in steering and evolving global businesses. I also
salute our former CEO and Chairman, Ray McDaniel, who
concluded his tenure on our Board of Directors after several
decades of exceptional leadership, most recently as our
Board Chair.
Thank you to our customers, stockholders, partners, and
employees for being an integral part of our ongoing journey.
Robert Fauber
President & Chief Executive Officer
MOODY’S 2023 ANNUAL REPORT
4
Moody’s Corporation
DIRECTORS
Vincent A. Forlenza(2,3,4*)
Chairman of the Board
Moody’s Corporation
Retired Chief Executive Officer
Becton Dickinson and Company
Jorge A. Bermudez(1*,2,4)
Retired Chief Risk Officer
Citigroup, Inc.
Thérèse Esperdy(1,2)
Retired Global Chairman of Financial
Institutions Group
JPMorgan Chase & Co.
Robert Fauber(4)
President & Chief Executive Officer
Moody’s Corporation
Kathryn M. Hill(2,3)
Retired Senior Vice President
Cisco Systems, Inc.
Lloyd W. Howell Jr.(2,3*,4)
Executive Director
NFL Players Association
Jose M. Minaya(1,2)
Chief Executive Officer
Nuveen
Leslie F. Seidman(1,2*,4)
Former Chairman
Financial Accounting Standards Board
Zig Serafin(2,3)
Chief Executive Officer
Qualtrics International Inc.
Bruce Van Saun(2,3)
Chairman & Chief Executive Officer
Citizens Financial Group, Inc.
5
MOODY’S 2023 ANNUAL REPORT
SENIOR MANAGEMENT
Robert Fauber
President, Chief Executive Officer
Caroline Sullivan
Interim Chief Financial Officer,
Chief Accounting Officer &
Corporate Controller
Stephen Tulenko
President, Moody’s Analytics
Michael West
President, Moody’s Investors Service
Tameka Alsop
Senior Vice President,
Chief Administrative Officer
Maral Kazanjian
Senior Vice President,
Chief People Officer
David Platt
Senior Vice President,
Chief Strategy Officer
Richard Steele
Senior Vice President,
General Counsel
Christine Elliott
Chief Corporate Affairs Officer
Andrew Weinberg
Chief Compliance Officer
Alastair Wilson
Chief Credit Officer
Deepali Chawla
Chief Treasury Officer
Shivani Kak
Head of Investor Relations
Daniel Keane
Chief Tax Officer
Chelsey Remme
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
FORM 10-K
(MARK ONE)
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED December 31, 2023
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. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the
correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of
the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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, 2023 (based upon its closing transaction price on the New York
Stock Exchange on such date) was approximately $64 billion.
As of January 31, 2024, 182.5 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 16, 2024, 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 2023 10-K
1
MOODY’S CORPORATION
INDEX TO FORM 10-K
Glossary of Terms and Abbreviations
PART I.
Item 1.
BUSINESS
Background
The Company
Sustainability
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 1C.
CYBERSECURITY AND RISK MANAGEMENT
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
2 MOODY'S 2023 10-K
Page
4
10
10
10
14
15
18
19
20
21
22
22
23
23
25
35
35
37
37
37
37
37
38
38
39
40
40
40
40
44
45
59
60
65
65
65
Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 8.
Item 9.
FINANCIAL STATEMENTS
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
67
67
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123
123
123
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124
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128
MOODY'S 2023 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
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
AI
Americas
AOCI(L)
Adjusted Operating Income divided by revenue
Artificial Intelligence
Represents countries within North and South America, excluding the U.S.
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
BES
BitSight
Board
BPS
Brexit
BRG
CAO
CCXI
CCPA
CDP
CFG
4 MOODY'S 2023 10-K
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
Business Engagement Survey; A Moody's employee survey that focuses on purpose, leadership,
manager effectiveness, wellbeing, connection, and empowerment
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
Business Resource Group
Chief Administrative Officer
China Cheng Xin International Credit Rating Co. Ltd.; the first and largest domestic credit rating agency
approved by the People’s Bank of China; the Company acquired a 49% interest in 2006 and currently
Moody’s owns 30% of CCXI
California Consumer Privacy Act; a privacy law enacted in 2018 by the state of California to regulate the
way businesses all over the world can collect, use and share the personal information of California
residents
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
TERM
CISO
CLO
CMBS
CODM
COLI
DEFINITION
Chief Information Security Officer
Collateralized loan obligation
Commercial mortgage-backed securities; an asset class within SFG
Chief Operating Decision Maker
Corporate-Owned Life Insurance
Commission
European Commission
Common Stock
The Company’s common stock
Company
COVID-19
CP
CP Notes
CP Program
CPRA
CRAs
CRE
CreditView
Moody’s Corporation and its subsidiaries; MCO; Moody’s
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
California Privacy Rights Act of 2020; an amendment to the CCPA, which adds additional consumer
privacy rights and obligations for businesses
Credit rating agencies
Commercial Real Estate
A product offering from MA that incorporates credit ratings, research and data from Moody’s Investors
Service plus research, data and content from Moody’s Analytics.
CTSO
Chief Technology Services Officer
Cyber Committee
The Cyber Risk Enterprise Risk Management Committee
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 SaaS solutions supporting banking, insurance, and KYC workflows. This
LOB utilizes components from the Data & Information and Research & Insights LOBs to provide risk
assessment solutions
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
DORA
EBITDA
EMEA
EPS
ERS
ESG
ESMA
ESTR
ESPP
ETR
The European Union Digital Operational Resilience Act
Earnings before interest, taxes, depreciation and amortization
Represents countries within Europe, the Middle East and Africa
Earnings per share
Enterprise Risk Solutions; a former LOB within MA, which offered risk management software solutions
as well as related risk management advisory engagements services
Environmental, Social and Governance
European Securities and Markets Authority
Euro Short-Term Rate
Employee stock purchase plan
Effective tax rate
MOODY'S 2023 10-K
5
TERM
EU
EU AI Act
EUR
EURIBOR
Eurozone
DEFINITION
European Union
A proposed regulation in the EU, which would introduce a common regulatory and legal framework for
artificial intelligence
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
Exchange Act
The Securities Exchange Act of 1934, as amended
ELT
Executive Leadership Team
External Revenue
Revenue excluding any intersegment amounts
FASB
FCA
FIG
Financial Accounting Standards Board
Financial Conduct Authority; supervises Credit Rating Agencies in the U.K. in order to ensure credit
ratings are independent, objective and of adequate quality
Financial institutions group; an LOB of MIS
Free Cash Flow
Net cash provided by operating activities less cash paid for capital additions
FTC
FTSE
FX
GAAP
GBP
GDP
GDPR
Gen AI
GRI
GLoBE
Federal Trade Commission
Financial Times Stock Exchange
Foreign exchange
U.S. Generally Accepted Accounting Principles
British pounds
Gross domestic product
General Data Protection Regulation; a European regulation implemented in 2018 to enhance EU
citizens' control over the personal data that companies can legally hold. GDPR was simultaneously
implemented in the U.K., with slight modification to the EU's regulation in 2021 following Brexit
Generative Artificial Intelligence
Global Reporting Initiative, an international independent standards organization that helps organizations
understand and disclose their impact on climate change, human rights and corruption
Global Anti-Base Erosion, also known as "Pillar Two"; tax model issued by the OECD in 2023
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 Limited; a provider of credit ratings and research in India.
International Accounting Standards Board
International Financial Reporting Standards
The Company's Information Security Incident Response Plan
International Organization of Securities Commissions
Internal Revenue Service
An international standard to manage information security
360kompany AG; a platform for business verification and Know Your Customer (KYC) technology
solutions acquired by the Company in February 2022
ICRA
IASB
IFRS
Incident Response
Plan
IOSCO
IRS
ISO 27001
kompany
6 MOODY'S 2023 10-K
TERM
KMV
KYC
LIBOR
LLM
LOB
MA
ML
DEFINITION
KMV LLC and KMV Corporation (“KMV”); a provider of market-based quantitative services for banks
and investors in credit-sensitive assets acquired by Moody's in April 2002
Know-your-customer
London Interbank Offered Rate
Large language model used in the context of Gen AI
Line of business
Moody’s Analytics - a reportable segment of MCO; consists of three LOBs - Decision Solutions;
Research and Insights; and Data and Information
Machine Learning
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
MNPI
Moody’s
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 - CFG; SFG; FIG;
PPIF; and MIS Other
Consists of financial instruments pricing services in the Asia-Pacific region, ICRA non-ratings revenue,
and revenue from professional services. These businesses are components of MIS; MIS Other is an
LOB of MIS
Material non-public information
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
NAV
Net Income
Moody's Shared Services; primarily consists of information technology and support staff such as
finance, human resources and legal that support both MA and MIS
Net asset value
Net income attributable to Moody’s Corporation, which excludes net income from consolidated
noncontrolling interests belonging to the minority interest holder
Net Zero Assessments
An independent assessment of an entity’s carbon transition plan relative to a global net zero pathway,
consistent with the goals of the 2015 Paris Agreement on climate change
NIST Framework
NIST Cybersecurity Framework; a set of cybersecurity best practices and recommendations from the
National Institute of Standards and Technology (NIST)
NM
Non-GAAP
NRSRO
OCI(L)
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
OECD
Organization for Economic Co-operation and Development
MOODY'S 2023 10-K
7
TERM
DEFINITION
Operating segment
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 Moody's Postretirement Medical and Life Insurance Plan
PCS
PPIF
Post-Contract Customer Support
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
Recurring Revenue
For MA, represents subscription-based revenue and software maintenance 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 financial instrument pricing services.
Reform Act
Credit Rating Agency Reform Act of 2006
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; economics data and models; and structured finance solutions
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
RMS Plans
ROU Asset
SaaS
SASB
SEC
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
The RMS 2014 Equity Award Plan and the RMS 2015 Equity Incentive Plan
Assets which represent the Company’s right to use an underlying asset for the term of a lease
Software-as-a-Service
Sustainability Accounting Standards Board
U.S. Securities and Exchange Commission
Second Party Opinions An independent assessment of how debt instruments or financing frameworks align to sustainability
principles and the extent to which they are expected to contribute to long-term sustainable development
Securities Act
Securities Act of 1933, as amended
SFG
SG&A
SOC 2
SOFR
SSP
T&M
Tax Act
TCFD
8 MOODY'S 2023 10-K
Structured finance group; an LOB of MIS
Selling, general and administrative expenses
A report on controls at a service organization relevant to security, availability, processing integrity,
confidentiality, or privacy, as defined by the American Institute of Certified Public Accountants
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 amended
the tax code in the U.S.
Task Force on Climate-Related Financial Disclosures
TERM
DEFINITION
Transaction Revenue
For MA, represents perpetual software license fees and revenue from software implementation
services, risk management advisory projects, and training and certification services. For MIS (excluding
MIS Other), represents the initial rating of a new debt issuance as well as other one-time fees. For MIS
Other, represents revenue from professional services
U.K.
United Kingdom
U.K. Competition &
Markets Authority
Government department in the U.K. responsible for strengthening business competition and preventing
and reducing anti-competitive activities
U.S.
USD
UTPs
United States
U.S. dollar
Uncertain tax positions
VisibleRisk
A cyber risk ratings joint venture created by Moody’s and Team8, a global venture group
WACC
Weighted Average Cost of Capital
2020 MA Strategic
Reorganization
Restructuring Program
2022 - 2023
Geolocation
Restructuring Program
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
Restructuring program approved by the chief executive officer of Moody’s on June 30, 2022 relating to
the Company's post-COVID-19 geolocation strategy and other strategic initiatives; 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
MOODY'S 2023 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 to anticipate, adapt and thrive in a new era of
exponential risk. Our data, analytical solutions and insights help decision-makers identify opportunities and manage the risks of
doing business with others.
Moody's is empowering organizations to make better decisions.
Moody's
We provide tools that enable Banks, Insurers, Investors, Corporations and Governments to...
What do
we do?
Issue, Originate, Select,
Underwrite
Identify, Measure,
Monitor & Manage Risk
Verify, Comply, Plan
& Report
Leveraging our set of data, analytics, & domain expertise across...
How do we
do this?
Credit
Properties
People
Companies
Securities
Economies
ESG
Climate
Moody’s has two reportable segments: MA and MIS.
Provider of financial intelligence
and analytical tools supporting
customers’ growth, efficiency
and risk management
objectives
Independent provider of credit
rating opinions and related
information for over 100 years
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.
10 MOODY'S 2023 10-K
Moody's Analytics Overview
MA empowers financial services, corporate and public sector customers to anticipate risks, adapt and thrive in a new era of
exponential risk. MA's combined data, analytics and cloud-based software tools deliver integrated solutions that help customers to
start business relationships, monitor and manage risk, and comply and report based on global laws, rules and regulations.
MA is comprised of: i) a premier fixed income and economic research business (Research & Insights); ii) a data business powered
by the world’s largest database on companies and credit (Data & Information); and iii) three cloud-based SaaS businesses serving
banking, insurance and KYC workflows (Decision Solutions).
MA creates a holistic view on risk provided by our vast set of proprietary data, analytics, and domain expertise across a range of
areas, including credit, companies, properties, securities, people, economies, ESG, climate and more. MA's integrated and
technology-enabled solutions provide unique capabilities and insights that are embedded in customer workflows.
MOODY'S 2023 10-K
11
MA by the Numbers
14,800+
MA Customers
160+
Countries where MA
customers operate
6,600+
Corporates and
Professional Services
2,600+
Commercial Banks
1,900+
Asset Managers
900+
Real Estate Entities
600+
Educational Institutions
100+
Securities Dealers and
Investment Banks
900+
Government Entities
400+
Others
800+
Insurance Companies
12 MOODY'S 2023 10-K
Moody's Investors Service Overview
MIS is a leading global provider of credit ratings, research, and risk analysis. A rating from Moody’s enables issuers to create
timely, go-to-market debt strategies with the ability to capture wider investor focus and provides investors with a comprehensive
view of global debt markets through our credit ratings and research. Moody’s trusted insights can help decision-makers navigate
the safest path through market turmoil and volatility.
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.
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
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.
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.
MIS by the Numbers
~$74 trillion
Total Rated Debt
Outstanding
33,200+
Rated Organizations
and Structured Deals
190+
Rating Methodologies
4,800+
Non-Financial
Corporates
14,700+
U.S. Public Finance
Issuers
1,000+
Infrastructure & Project
Finance Issuers
144
Sovereigns
3,300+
Financial Institutions
8,900+
Structured Finance
Deals
370+
Sub-Sovereigns
47
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 Second Party Opinions and Net Zero 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 2023 10-K
13
Sustainability
Moody’s manages its business with the goal of delivering value to all of its stakeholders, including its customers, employees,
business partners, local communities and stockholders. As part of this effort, Moody’s advances its commitment to sustainability by
considering ESG factors in its operations, value chain, products and services. It 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 involve adhering to globally recognized standards
including the GRI, SASB and TCFD recommendations. Moody's received the following awards and recognition for its sustainability-
related efforts during 2023:
– Named 2022 CDP Supplier Engagement Leader on Climate Action for third consecutive year;
– Recognized among America’s 100 Most JUST Companies by JUST Capital and CNBC for its commitment to serving its
workforce, customers, communities, the environment, and stockholders;
– Named to Bloomberg Gender-Equality Index for fourth consecutive year; and
– Ranked #1 on Forbes' Net Zero Leaders list.
The Board oversees sustainability matters via 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, or analysis of such risks within MA's products and services.
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 that inform
a clear and holistic understanding of
ESG risk.
14 MOODY'S 2023 10-K
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, 2023 and 2022, the number of Moody’s employees was as follows:
December 31,
2023
2022
Change
%
MA
U.S.
MIS
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
2,995
4,858
7,853
1,490
3,855
5,345
744
1,209
1,953
5,229
9,922
2,789
4,333
7,122
1,538
3,981
5,519
741
1,044
1,785
5,068
9,358
15,151
14,426
7 %
12 %
10 %
(3)%
(3)%
(3)%
— %
16 %
9 %
3 %
6 %
5 %
– MA’s employee population primarily consists of software engineers, product managers and strategists, data and operations
analysts, advisory and implementation teams and economists, as well as sales, business development, and sales support
professionals.
–
–
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.
The MSS employee population primarily consists of information technology professionals and other professional staff such as
finance, human resources, compliance, and legal that support both MA and MIS.
As a global provider of integrated perspectives on risk, attracting, supporting and retaining skilled talent is essential to the
Company’s success. Moody’s addresses these goals by:
–
–
–
championing inclusion among employees;
providing market-competitive compensation, benefits and wellness programs; and
advancing employee engagement, including supporting employee learning, development and skills enhancement.
Inclusion
Moody's believes that a diverse workforce, comprised of individuals with varied thoughts, backgrounds, and experiences, fosters an
environment that makes our opinions stronger, our products more innovative, our workplace more welcoming, and improves how
we relate and respond to our customers. We aim to foster a culture of true inclusion and belonging, valuing everyone's unique
perspectives and contributions. We believe diversity and equity are essential to build a workplace where inclusion thrives. That
strategy will guide us as we seek to ensure equal opportunities in all aspects of employment.
Focus Areas
Our current strategy is rooted in the following five focus areas intended to drive meaningful change:
–
A Broader, More Global Perspective on Diversity
We want every one of our employees, everywhere, to be equally involved and supported in all areas of our workplace. Our
goal is to position diversity in a way that works for everyone—to be broader and more holistic. As a global company, we will
seek to understand how different parts of the world view diversity differently.
–
BRGs as Cultural Ambassadors
We recognize the significant contributions of our BRGs to our organization—they are open to all employees and foster a sense
of unity and community, creating an environment where employees feel a strong sense of belonging and are encouraged to be
their most authentic selves at work. BRGs are networks for purposeful engagement and cohesive organization. We want to
continue to empower our BRGs, so they can flourish.
MOODY'S 2023 10-K
15
–
Pay Equity and Inclusive Benefits
We are committed to paying all of our employees equitably and fairly and to providing them with extensive and inclusive
benefits programs. We continue to increase transparency and clarity when it comes to pay and benefits and strive to give
employees insight into how we compensate them because we want our employees to be in-the-know on these topics.
–
Success and Growth of Our Employees
Moody’s is committed to the success and growth of all of our employees, with a particular emphasis on attracting and
developing women in our workforce globally. We’re investing in initiatives that help us better understand what attracts,
engages, and retains employees from many diverse backgrounds across our organization to help us focus on strategies that
will be most effective.
–
Awareness and Education
When we know better, we do better, so it’s important that we remain aware and educated on issues of inclusion. We are
committed to fostering an environment where everyone feels safe and accepted. To achieve this, we will proactively educate
our employees, including on topics like inclusion in decision making and neurodiversity.
Inclusion Operating and Governance Model
Our Inclusion Operating and Governance Model (OGM) is the engine that drives inclusion and belonging at Moody’s. By providing
a functional framework to guide how our inclusion team, councils, sponsors, BRGs and committees work together, the OGM
focuses our collective efforts to advance our strategic priorities. The Global Inclusion Council, chaired by our CEO and composed
of senior leaders who are committed to inclusion and diversity best practices, is charged with the oversight of our global inclusion
strategy and its progress. The members of the council meet quarterly.
Our governance model also include three Regional Inclusion Councils tasked with overseeing the implementation and progression
of the inclusion strategy within their respective regions. Each council is composed by the BRG regional executives sponsors and
also meet on a quarterly basis.
Our operating model includes 11 active BRGs which represent 53 chapters and are open to all Moody's employees, with more than
3,800 employees participating globally as of December 31, 2023.
Data
The charts below present additional information regarding the composition of the Company's workforce as of December 31, 2023.
The percentage for underrepresented groups includes those who identified as Asian, Hispanic or Latino, 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%
47%
6%
47%
Male
Female
White
Underrepresented Groups
Not Disclosed
16 MOODY'S 2023 10-K
Total Officers and Managers: Gender (1)
U.S. Officers and Managers: Ethnicity
36%
64%
5%
44%
51%
Male
Female
White
Underrepresented Groups
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 30% of our Board of Directors identified as female and 30% as members of underrepresented groups.
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
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 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.
MOODY'S 2023 10-K
17
Management monitors employee turnover rates as presented in the chart below:
Voluntary Turnover
Involuntary Turnover
17%
14%
10%
7%
15%
15%
7%
8%
5%
3%
3%
4%
9%
7%
4%
4%
MA
MIS
MSS
Total MCO
MA
MIS
MSS
Total MCO
2023
2022
2023
2022
The decrease in the Company's voluntary turnover rates in 2023 compared to 2022 is likely due to the overall strength of the global
labor market for much of 2022, especially for technology-related jobs, and a decline in that trend for 2023. The Company's
involuntary turnover rates in 2023 remained steady when compared to 2022, with both years including the impacts of the
2022-2023 Geolocation Restructuring Program, which resulted in a reduction in staff, including the relocation of certain job
functions during both years.
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.
Our 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.
Moody’s has made acquisitions, including RMS, which expand its climate data and analytics capabilities. The Company is taking
steps to integrate these capabilities into existing offerings to provide its analysts and researchers with streamlined access to
consistent and high-quality climate insights.
18 MOODY'S 2023 10-K
MOODY’S STRATEGY
Moody’s is a global integrated risk assessment firm that empowers organizations to anticipate, adapt and thrive in a new era of
exponential risk. 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,
including Gen AI, to
meet customer
demands
Selective bolt-on
acquisitions that
accelerate the ability to
scale and grow
Moody’s businesses
In this era of exponential risk, we know that risks are interconnected, and organizations want a complete view of risk. This includes
having a greater breadth and depth of understanding around how risks connect.
Our integrated approach provides stakeholders with a more comprehensive view of risk, helping them to make better decisions and
unlock opportunities. Moody’s brings together multiple data sets and develops risk analysis solutions to assess multiple risk factors
(e.g., supply chain failures; cyberattacks; geopolitical tensions; sanctions and security issues; and extreme weather events).
MOODY'S 2023 10-K
19
PROSPECTS FOR GROWTH
Moody’s believes that the overall long-term outlook remains favorable for continued growth from the offerings of both of our
reportable segments.
Moody’s growth is influenced by a number of trends that impact financial information markets including:
Enablement of
Gen AI
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 exponential risk, Moody’s expects to be well positioned to benefit from
continued growth in global fixed-income market activity and more widespread use of credit ratings and integrated risk solutions.
Moreover, pricing opportunities aligned with customer value creation and advances in technology present growth opportunities for
Moody’s.
Over the last decade, Moody’s has leveraged the power of AI and ML to better serve our customer base. As an early adopter of
Gen AI, Moody's expects to be well positioned to benefit from the capabilities of this groundbreaking technology, which will help our
customers make better decisions by unlocking deeper, more integrated perspectives on risk. Through enablement of Gen AI, both
internally and through certain strategic partnerships, we are in the process of evolving how we deliver insights on exponential risk
to our customers.
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.
MA Prospects for Growth
MA provides insights on the evolving risks of our customers and supports their ability to capitalize on related opportunities. Growth
in MA is likely to be driven by landing new customers and expanding customer relationships across use cases over time. Our
trusted and curated data is key in an environment that is increasingly using Gen AI, and we expect that the integration of our
platforms will enable effective cross-selling of models, data and applications. MA's growth is also likely to be driven by quickly
addressing new use cases and incorporating new risk data and analytics as needed.
Strategic growth drivers:
NEW PRODUCT
DEVELOPMENT
STRONG
CUSTOMER
RETENTION RATES
CROSS-SELLING,
UPGRADES &
PRICING
CONTINUED SAAS
TRANSITION
INCREASED
DISTRIBUTION
CAPACITY AND
PRODUCTIVITY
20 MOODY'S 2023 10-K
Market growth drivers:
Customers need to understand a large range of interconnected and emerging risks. Our comprehensive solutions support the
transformation underway across various industries due to:
Operational and reputational risks
Digitization
Evolving regulatory environment
Fluctuations in credit and financial
markets
Climate change
Geopolitical risks
MIS Prospects for Growth
Strong secular trends should continue to provide long-term growth opportunities in MIS. Key growth drivers include:
Long-term Growth Building Blocks
Economic Expansion
Value Proposition
• GDP growth drives demand for debt
capital to fund business investments
+
• Proven rating accuracy and deeply
experienced analysts
+
• Refinancing needs support future
• Mix of issuers and opportunistic
supply
issuance
Developing Capital
Markets
• Deepening participation in developing
markets
• Meeting customers’ evolving risk
assessment demands, including
Climate, Cybersecurity, and ESG
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.
Within MIS, we remain firmly committed to ratings quality, timely and insightful research, and engagement with issuers and
investors. During the last year, we further expanded our domestic ratings footprint into new domestic markets, with investments in
new affiliates in Costa Rica and Vietnam. Additionally, the prominence of our Moody’s Local domestic rating business has grown
significantly.
Competition
MA competes broadly in the financial information and enterprise risk software industries against various diversified competitors.
MA’s main competitors within DS are providers of software and analytic solutions. In R&I, MA faces competition from providers of
economic data, financial research and analysis. MA's main competitors within D&I are providers of commercial and financial data.
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.
MOODY'S 2023 10-K
21
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. (including by state and local authorities), EU and in other countries. 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
conduct due diligence and pass through certain regulatory requirements to key suppliers such as MA by contract. 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.
In the U.S., CRAs are subject to extensive regulation primarily pursuant to Section 15E of the Exchange Act and rules thereunder.
MIS is registered with the SEC as an NRSRO and is subject to the SEC's oversight and examination authority.
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 with and are subject to CRA
regulation in the EU and periodic inspection by ESMA.
As part of the legislative package on sustainable finance, in June 2023, the European Commission published a proposal on the
transparency and integrity of ESG rating activities, which would subject ESG rating and/or score providers to formal regulation and
supervision by ESMA. Following negotiations between the Council of the European Union and the European Parliament, it is
expected to be adopted in the first half of 2024. Because the regulation has not yet been finalized, its precise scope and impact are
uncertain; however, the Company continues to assess the potential impact on both MA and MIS.
In December 2022, the EU adopted DORA, which will apply from early 2025. As a credit rating agency, MIS is in scope of DORA,
and accordingly, is required to undertake certain steps to ensure that its oversight and risk management of its information
technology, including any functions outsourced to third-parties that provide information communication technologies, is resilient. MA
provides certain products and services to clients that may be regulated financial institutions in the EU and therefore fall in the scope
of DORA. It is therefore expected that MA may receive queries from such clients in relation to those products and services, as well
as requests for contractual commitments, to ensure their compliance with DORA.
In the U.K., MIS U.K. is registered with and regulated by the FCA. In March 2023, the FCA initiated a review of competition in the
markets for certain types of wholesale market data. Credit rating data is included as one element of the FCA’s review. In August
2023, the FCA published an update, determining that its findings did not require a referral to the U.K. Competition & Markets
Authority. However, the FCA also stated that it would continue its analysis and would announce any potential remedies in its final
report due on or before March 1, 2024.
Additionally, HM Treasury published a consultation in March 2023 on whether regulation for providers of ESG ratings should be
introduced, on the potential scope of a regulatory regime. It is unclear if and when the U.K. Government might seek to take forward
such legislation.
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 as a service and
other 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 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.
22 MOODY'S 2023 10-K
The Company, primarily through MA and its affiliates, licenses certain of its databases, SaaS and other software applications, credit
risk models, assessments, research and other publications and services 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
affiliates obtain from third-party information providers certain financial, credit risk, compliance, firmographic, management,
ownership, news and/or other data worldwide, which are distributed through 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
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.
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, 53
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.
Richard Steele, 54
Senior Vice President and General Counsel
Mr. Steele has served as the Company’s Senior Vice President and General Counsel since
September 2023. Mr. Steele joined Moody’s KMV Company in 2006 as its Chief Legal Officer,
and was named General Counsel of Moody’s Analytics in January 2008. Prior to joining the
Company, Mr. Steele was a corporate lawyer at Wilson Sonsini Goodrich & Rosati, and also
held senior legal positions at several firms in financial technology, software and venture capital.
MOODY'S 2023 10-K
23
Name, Age, Position and Biographical Data
Caroline Sullivan, 55
Interim Chief Financial Officer, Chief Accounting Officer and Corporate Controller
Ms. Sullivan has served as the Company’s Chief Accounting Officer and Corporate Controller
since December 2018 and has served as the Interim Chief Financial Offer since September
2023. 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.
Stephen Tulenko, 56
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, 55
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.
24 MOODY'S 2023 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, changes in
international conditions, including the impact of ongoing or new developments in the Russia-Ukraine military conflict and the
military conflict in Israel and surrounding areas, 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 Applicable to the Financial Industry that Affect 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, administration and enforcement 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.
MOODY'S 2023 10-K
25
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 its agreements with such customers.
Moody’s Faces Risks Related to Financial Reforms Outside the U.S. Affecting the Credit Rating Industry, Moody’s
Businesses, and Moody’s Customers.
In addition to the extensive and evolving U.S. laws and regulations governing the credit rating 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, and ratings endorsed into the U.K. are similarly subject to oversight of the FCA. 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:
–
–
–
–
–
–
affect the need for debt securities to be rated;
expand supervisory remits to include credit ratings issued outside the home jurisdiction and used for regulatory purposes;
increase the level of competition in the market for credit ratings, including the distribution of credit ratings;
establish criteria for credit ratings or limit the entities authorized to provide credit ratings;
restrict the collection, use, accuracy, correction and sharing of personal information by CRAs; or
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 that incorporate or are based on artificial intelligence
technologies.
As part of the legislative package on sustainable finance, in June 2023, the European Commission published a proposal on the
transparency and integrity of ESG rating activities. The Council of the European Union, in December 2023, agreed its position on
the draft regulation, which would subject ESG rating and/or score providers to formal regulation and supervision by ESMA. The
draft regulation is now set for negotiations between the European Council and Parliament and is expected to be adopted in 2024.
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.
In March 2023, the FCA initiated a review of competition in the markets for certain types of wholesale market data. Credit rating
data is included as one element of the FCA’s review. In August 2023, the FCA published an update, determining that its findings did
not require a referral to the U.K. Competition & Markets Authority. However, the FCA also stated that it would continue its analysis
and announce any potential remedies in its final report due on or before March 1, 2024.
26 MOODY'S 2023 10-K
Additionally, HM Treasury published a consultation in March 2023 proposing to make firms providing ESG ratings and/or scores to
U.K. users (both from the U.K. and abroad) subject to FCA supervision. The proposals mirror the IOSCO recommendations on
ESG ratings and data products providers. It is unclear if and when the U.K. Government might seek to move forward legislation to
enable the FCA to supervise such firms. The U.K. is also currently developing a voluntary industry-led Code of Conduct for ESG
ratings and data providers.
The precise scope and impact of the regulatory developments related to ESG in Europe remain unclear; however, the Company
continues to assess the potential impact on both MA and MIS.
Both of Moody’s segments face risks related to financial reforms outside the U.S. affecting the credit rating industry, Moody’s
businesses, and Moody’s customers. For example:
– 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.
–
–
–
–
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). MA is
licensed in China to provide subscriptions to credit research and ratings data and other information relevant to the financial
markets. Such laws are broadly crafted and the implementation, interpretation and enforcement of such laws are subject to the
broad discretion of Chinese regulators, which could affect the Company’s ability to conduct business in China.
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 its 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 2023 10-K
27
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 increased regulatory scrutiny and new
regulatory actions at a corporate and business unit level. MA’s offering of products and services relating to sanctions, KYC and
financial crime may result in increased regulatory scrutiny and could expose the Company to increased risk of litigation from data
subjects and other third-parties. Additionally, as Moody’s develops its Gen AI product offerings and/or its uses of Gen AI, the
Company may face increased regulatory scrutiny and exposure to increased litigation. Legal proceedings and regulatory inquiries
and investigations 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, the Reform Act, the Dodd-Frank Act and regulations
thereunder, 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 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, including if and how
rights in these markets evolve to address advances in LLMs and Gen AI. 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
28 MOODY'S 2023 10-K
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 OECD, which requires companies to disclose more information to tax
authorities on operations around the world, and the EU’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 IRS 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.
During 2023, multiple foreign jurisdictions in which the Company operates have enacted legislation to adopt a minimum tax rate
described in the GloBE or Pillar Two, tax model rules issued by the OECD. A minimum ETR of 15% would apply to multinational
companies with consolidated revenue above €750 million with an effective date beginning in 2024. Under the GloBE rules, a
company would be required to determine a combined ETR for all entities located in a jurisdiction. If the jurisdictional tax rate is less
than 15%, an additional tax will be due to bring the jurisdictional effective tax rate up to 15%. While the Pillar Two minimum tax
requirement is not currently anticipated to have a material impact on the Company’s results of operations or financial position,
management is evaluating and will continue to monitor the potential impact of the Pillar Two global minimum tax proposals on our
consolidated financial statements and related disclosures.
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, China or the Middle East, 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 events and market conditions, such as the Russia-Ukraine military conflict and the military conflict in
Israel and surrounding areas, including the effect of these events and conditions on customers, customer retention and
demands for our products and services;
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 Russia-Ukraine military conflict;
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differing and potentially conflicting legal or civil liability, compliance and regulatory standards;
current and future regulations relating to the imposition of mandatory rotation requirements on CRAs hired by issuers of
securities;
uncertain, evolving and new laws and regulations, including those applicable to the financial services industries, such as the
European Union’s upcoming implementation of DORA in January 2025, and to the protection of intellectual property and to the
emergence of LLMs in the context of Gen AI and other technologies, such as the EU AI Act, including the effect of these laws
and regulations on our customers and on the products and services that we offer;
uncertainty regarding the future relationship and increasing tensions 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;
MOODY'S 2023 10-K
29
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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, various proposed and enacted data privacy laws, 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 that may be affected by the Russia-Ukraine military conflict and
the military conflict in Israel and surrounding areas; 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, 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
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.
30 MOODY'S 2023 10-K
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. Companies are also increasingly accessing
alternative sources of financing, such as loans and debt financing from non-bank lenders that do not involve a CRA-issued credit
rating. 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 MIS 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 or uncertainty around interest rates (as well as related monetary policy
by governments in the response to factors such as inflation), the withdrawal of COVID-19 economic stimulus, inflationary
pressures, increases or volatility 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, and the
emergence of LLMs, Gen AI and other technologies may further intensify these pressures. 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 in customers’ use of free or lower-cost information that is increasingly becoming available from alternative sources or their
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.
MOODY'S 2023 10-K
31
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, or the Company’s recent ESG initiatives and our incorporation
of climate- and other ESG- related risks in the Company's rating process, 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, or errors in software or data, whether by
Moody’s or a Moody’s competitor, could also harm the reputation of the Company or the industries in which the Company operates.
Additionally, as Moody's develops its Gen AI product offerings, the Company may incur risks or challenges in its adoption that could
lead to reputational harm. 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.
Our reputation or business could be negatively impacted by ESG matters and our reporting of such matters
Both in the United States and internationally, there is an increasing focus from regulators, certain investors and other stakeholders
concerning ESG matters. We communicate certain ESG-related initiatives, goals and/or commitments (including with respect to
environmental matters, diversity and other matters), in our various public disclosures, Task Force on Climate-related Financial
Disclosures Report, on our website, in our filings with the SEC and elsewhere. These initiatives, goals or commitments could be
challenging to achieve and costly to implement. In addition, MIS incorporates climate and other ESG related risks in its rating
process, which also could cause reputational risk or could lead to litigation. The Company could fail to achieve, or be perceived to
fail to achieve, our net zero 2040 commitment or other ESG-related initiatives, goals or commitments. Furthermore, we could be
criticized for the timing, scope or nature of these initiatives, goals or commitments, or for any changes to them. To the extent that
our required and voluntary disclosures about such ESG matters increase, we could be criticized for the accuracy, sufficiency or
completeness of such disclosures. We could be subject to litigation or regulatory enforcement actions regarding the accuracy,
sufficiency or completeness of our ESG-related disclosures. Our actual or perceived failure to achieve our ESG-related initiatives,
goals or commitments could negatively impact our reputation or otherwise materially harm our business.
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, including change based on our Gen AI offerings, 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, including services based on LLMs and Gen AI, 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 and operating margins 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, data scientists and software engineers. Competition for skilled individuals in the financial services and
technology industries 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
32 MOODY'S 2023 10-K
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 with respect to
flexible working or other matters. Also, the emergence and adoption of LLM and Gen AI technologies will require upskilling and
additional training of Moody's employees, making retention and training increasingly important. 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 ESG 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 Company's 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 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. 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, 2023, Moody’s had $5,956 million of goodwill and $2,049 million of intangible assets on its balance sheet.
Approximately 95% of the goodwill and intangible assets reside in the MA business and are allocated to the two reporting units
within MA. The remaining 5% 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.
Our business could be negatively impacted by climate change.
As a global company, our employees and offices, as well as those of our vendors, are subject to risks related to the impact of
climate change. We have offices in locations that are vulnerable to the effects of climate change and extreme weather. In addition,
continued reliable energy sources 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 third-party 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. Such information relates to its business operations and confidential and sensitive information about its
MOODY'S 2023 10-K
33
customers and employees in the Company’s computer systems and networks, and in those of its third-party vendors. The
Company also often has access to MNPI and other confidential information concerning its customers, including public and private
companies, sovereigns, and other third parties, and their customers, suppliers or transaction counterparties. Unauthorized
disclosure of the foregoing information could cause our customers to lose faith in our ability to protect their confidential information,
affecting the trading of their securities, damage their reputations or competitive positions and therefore cause customers to cease
doing business with us, and potentially expose us to risk of litigation.
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 and corporate issuers. The
Company and its third-party service providers, including our vendors, regularly experience cyber-attacks and data breaches of
varying degrees. Cyber-attacks targeting Moody’s or Moody’s vendors’ technology and systems, whether from circumvention of
security systems, denial-of-service attacks, ransomware, malware, hacking, social engineering or "phishing" attacks, computer
viruses, employee or insider threats, malfeasance, supply chain attacks, physical breaches, payment fraud or other cyber-attacks
some of which may be carried out by state-sponsored actors, may result in unauthorized access, exfiltration, 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. Such events may compromise the confidentiality,
integrity, or availability of material information held by the Company (including information about Moody’s business, employees or
customers), as well as other sensitive data, including personally identifiable information, the disclosure of which could lead to
identity theft. The Company's MNPI concerning customers and clients could be improperly used by authorized or unauthorized
parties, including for insider trading. The Company has implemented administrative, technical, and physical measures to detect and
prevent unauthorized activity, but such precautions may not be successful.
As the Company has grown and acquired businesses, IT guidelines have been developed and applied within business units or
inherited from legacy organizations, which can result in internal differences in the Company's approach to IT standards until
acquired entities are integrated. This creates a risk of developing unintended vulnerabilities and could result in additional costs,
difficulty meeting new regulatory standards, or failing to meet customer expectations. The Company may be exposed to additional
threats as it 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. Although Moody’s devotes significant
resources to maintain and regularly update such systems and processes, 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. Further,
Moody’s relies on third-party technical subject matter experts to assist in managing its cyber security risk management processes.
While Moody’s employs such third parties to assist in strengthening its cybersecurity defenses, there can be no guarantee that any
action taken as advised by such third party will be adequate or sufficient to address the evolving threat landscape. Additionally, any
measures that Moody’s takes in connection with such third parties to avoid, detect, mitigate or recover from material cyber security
threats or incidents can be expensive, and may be insufficient, circumvented, or may become ineffective.
Additionally, 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 or its
third-party vendors, despite significant focus and investment, may be unable to anticipate and/or 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 third-party 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 Confidential and 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 U.S. and abroad regarding privacy, data protection and data
security, such as the Federal Trade Commission Act in the U.S., the GDPR in the EU, the GDPR 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
34 MOODY'S 2023 10-K
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. A number of U.S. states have enacted data privacy laws, including the California Privacy Rights Act of 2020 (“CPRA”),
and laws in Virginia, Colorado, Connecticut and Utah which became effective in 2023. Data privacy laws have also been passed in
numerous U.S. states, including Iowa, Indiana, Tennessee, Montana, Texas, Delaware, New Jersey and Oregon that will go into
effect over the course of 2024, 2025 and 2026. The effects of non-compliance with the CCPA, CPRA and other similar data privacy
laws 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 or could require in the future, 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.
The Company Is Dependent on the Use of Third-Party Software, Data, Hosted Solutions, Data Centers, Cloud and Network
Infrastructure (Together, the “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. In addition, certain aspects of the Company’s business rely on a concentrated
group of vendors, and a cybersecurity breach or event at one or more of such vendors could have a significant impact on the
Company’s operations.
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. Some of these third-party suppliers are also Moody’s competitors, increasing the risks
noted above.
In the ordinary course, third-parties, including the Company’s vendors, are subject to various forms of cyber-attacks. Additionally,
the Company may be exposed to additional threats as the Company migrates its data from legacy systems to cloud-based
solutions, and becomes increasingly dependent on third parties to store cloud-based data subjects. To date, such attacks have not
resulted in a material adverse impact to Moody’s business operations, but there can be no guarantee the Company will not
experience such an impact in the future.
If 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 1C.
CYBERSECURITY AND RISK MANAGEMENT
Governance
Management
The Company maintains a dedicated internal cybersecurity team that interacts with executive management and its business units
to identify, assess, manage, and respond to cybersecurity risks and incidents relating to the Company’s information systems and
operations. In addition, this internal cybersecurity team is responsible for managing detection, mitigation and remediation of
cybersecurity incidents. The internal cybersecurity team is managed by the CISO, who reports to the CAO, who is a member of the
executive leadership team. At December 31, 2023, the Company’s internal cybersecurity team consisted of members located in
various countries and time zones across the world. The team has members with experience in governance, risk management and
compliance, threat monitoring, threat emulation, penetration testing and cyber incident management. Team members have both
individual responsibilities and a team focus, covering areas such as network, endpoint device, and e-mail security engineering as
well as operations and threat management, monitoring, and response.
The Cyber Committee, chaired by the CISO, and whose members include the CTSO and CAO, as well as other members of senior
management and the legal team, is responsible for identifying cybersecurity risks and threats, recommending mitigating actions to
strengthen cybersecurity resilience, and meeting risk tolerance thresholds established by senior management. The Cyber
MOODY'S 2023 10-K
35
Committee also validates that the Company has appropriate people, process and technology capabilities to identify, mitigate and
report on cybersecurity risks to the executive leadership team and the Board of Directors. The Cyber Committee meets regularly to
allow members of the internal cybersecurity team to present concerns and recommendations for decisions on preventing,
identifying, mitigating, and remediating risks and threats. To the extent warranted, the Cyber Committee may additionally be
convened on an ad hoc basis. The Cyber Committee makes decisions regarding the reporting of cybersecurity concerns to the
executive leadership team, who escalate issues to the Board and/or the Audit Committee as necessary. In the case of incidents
that arise, the Cyber Committee, under the direction of the Board and/or executive leadership team when appropriate, works to
involve all appropriate personnel with the aim of resolving the incident, performing any required remediation/reporting, and taking
appropriate steps to comply with applicable laws and regulations. The process that the Cyber Committee follows upon emergence
of incidents is documented in the Company’s Incident Response Plan. Additionally, cybersecurity risks and the adequacy of
associated mitigations are analyzed by senior leadership as part of the enterprise risk assessments that are reported to and
discussed by the Board.
The CISO has extensive cybersecurity knowledge and skills, gained from over 20 years’ experience working in regulated industries.
The CISO holds a number of cybersecurity related certifications, including the Certified Information Systems Security Professional
and Certified Information Security Manager. In addition to the CISO, the CTSO has been a close partner and advocate for
cybersecurity at the Company, and is consulted or informed on all decisions or risks that affect the Company's technology systems
and/or implicate cybersecurity. The CAO is responsible for overseeing the cybersecurity team at the executive leadership level.
Board of Directors and Audit Committee
The Board provides oversight of management’s efforts to assess and manage cybersecurity risks and respond to cybersecurity
incidents and threats. In addition, the Audit Committee of the Board of Directors regularly receives reports from management
regarding the Company’s financial and compliance risks, including, but not limited to, risks relating to internal controls and
cybersecurity risks.
The Board receives regular updates from the CISO, CTSO, and CAO regarding matters related to technology and cybersecurity.
The Company has protocols, as discussed below, by which certain cybersecurity concerns, incidents and threats are escalated
within the Company and, where appropriate, reported in a timely manner to the Board.
Risk Management and Strategy
The objective of the Company's comprehensive cybersecurity program is to assess, identify, and manage risks from cybersecurity
incidents and threats. The Company's cybersecurity program leverages the NIST Framework and it incorporates training and
awareness coupled with ongoing monitoring and assessment. The cybersecurity program is an important part of the Company’s
enterprise risk management (ERM), with the head of the Company’s ERM program sitting on the Cyber Committee, and sets forth
a process for escalating certain incidents to the Company’s ERM group integrated into the Company’s Incident Response Plan.
As part of the cybersecurity program, the Company’s cybersecurity environment is monitored by automated tools on an ongoing
basis and an internal cybersecurity team that reviews threats, alerts, and incidents. The Company’s Incident Response Plan
provides governance and guidance in responding to information security incidents and is tested regularly for calibration against
existing and emerging threats. The Incident Response Plan describes the process to be followed by the Cyber Committee in
connection with the oversight of the cybersecurity environment and specific events that occur from time to time. The cybersecurity
program undergoes periodic internal and external reviews. In addition, the Company's Internal Controls Department performs an
independent assessment of the design and operating effectiveness of the Company’s network of cybersecurity controls in
accordance with the NIST Framework. The results of the assessment are periodically shared with the Cyber Committee and the
Audit Committee.
The Company’s cybersecurity environment is also subject to routine vulnerability assessment processes. Internal and external
teams, including the Cyber Committee, conduct activities such as penetration testing, red teaming, tabletop exercises and phishing
drills. Results are measured and assessed for possible improvements. In addition to these ongoing efforts, the Company has a set
of third-party risk management tools through which it monitors for cybersecurity risks and threats associated with its third-party
service providers. The Incident Response Plan includes processes that define how the Company manages and responds to such
risks or threats associated with its third-party service providers.
The Company contracts with reputable third parties to conduct annual external assessments of its cybersecurity program and its
components. Government agencies and their contracted agents also conduct periodic reviews in certain jurisdictions where the
Company operates. Insurance agents, customers and other market participants routinely assess the Company’s security posture
relative to their own standards.
Security Policy and Requirements
The Company has an Information Security Policy and Information Security Standards, which, taken together, describe the
standards and minimum requirements that are expected of all business and information security personnel to protect the
Company’s information and technology assets. The policy provides a framework guided by security principles designed to address
the confidentiality, integrity and availability of the Company’s information assets in the context of internal, external, deliberate and
accidental threats, while supporting the Company’s information creation and sharing needs.
The Company is subject to various privacy laws in the jurisdictions where it operates including CCPA and GDPR, as well as U.S.
Federal regulation by the FTC, for certain privacy-related aspects of its business, and the Sarbanes-Oxley Act of 2002. The
36 MOODY'S 2023 10-K
Company is audited in connection with requirements set forth in the Sarbanes-Oxley Act of 2002, and Moody’s Analytics obtains
third-party audits in connection with ISO 27001 and SOC 2 certification and attestation reports, respectively, for certain products.
As previously mentioned, the Company also aligns with NIST standards in connection with information security, which it uses to
evaluate its cybersecurity readiness and resilience, and is required to make various filings and comply with requirements in certain
jurisdictions in which it operates.
The Company’s cybersecurity program also includes an information security training and awareness program called InfoSafe for all
employees. The program includes annual certification to having read and understood the Company's IT Use Policy, continuing
education on phishing awareness, regular communications about cybersecurity best practices, and participation in annual events
like Cybersecurity Awareness Month. Employees are expected to complete annual cybersecurity training, and compliance is
monitored. The Company uses general and targeted phishing simulations to help employees better recognize and respond to
potential threats. The training program is further enhanced by cybersecurity experts speaking at educational events. The Company
also offers specialized training modules on emerging cybersecurity threats for its software development teams. The Company’s IT
Use Policy outlines a detailed escalation process under which employees are to immediately report any suspected cybersecurity
incident.
The cybersecurity threat landscape is dynamic and volatile, and requires significant investment on the part of the Company in
terms of talent recruitment and retention, as well as procuring and deploying the correct tools to address threats. Additional
information on cybersecurity risks is discussed in Item 1A of Part I, “Risk Factors,” under the heading “Technology Risks,” which
should be read in conjunction with the foregoing information.
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, 2023, Moody’s operations were conducted from 31 U.S. offices and 81 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, 2023:
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)
154,055
281,831
190,073
625,959
$
$
$
$
315.47
341.59
378.28
346.80
143,847
280,953
189,577
614,377
$527 million
$431 million
$359 million
Period
October 1- 31
November 1- 30
December 1- 31
Total
(1)
(2)
Includes surrender to the Company of 10,208; 878; and 496 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.
As of the last day of each of the months.
On February 7, 2022, the Board of Directors authorized $750 million of share repurchase authority. At December 31, 2023, there
was approximately $359 million of share repurchase authority remaining under this authorization. On February 5, 2024, the Board
of Directors authorized an additional $1 billion in share repurchase authority. There is no established expiration date for the
remaining authorizations.
During the fourth quarter of 2023, Moody’s issued a net 100 thousand shares under employee stock-based compensation plans.
MOODY'S 2023 10-K
37
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, 2024 was 1,461. 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, 2023, certain information regarding the Company’s equity compensation plans.
Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights
Plan Category
(a)
Weighted-
Average Exercise
Price of
Outstanding
Options,
Warrants and
Rights (2)
(b)
Number of Securities
Remaining Available for
Future Issuance Under Equity
Compensation Plans
(excluding Securities
Reflected in Column (a))
(c)
Equity compensation plans approved by
security holders
Equity compensation plans not
approved by security holders
Total
2,732,417 (1) $
—
2,732,417
$
$
212.29
—
212.29
19,736,943 (3)
—
19,736,943
(1)
(2)
(3)
Includes 2,065,581 options and unvested restricted stock units outstanding under the Company's 2001 Key Employees' Stock Incentive Plan,
66,855 options and unvested restricted stock units outstanding under the Risk Management Solutions, Inc. 2015 Equity Incentive Plan and
5,841 unvested restricted stock units outstanding under the 1998 Non-Employee Directors' Stock Incentive Plan. This number also includes a
maximum of 594,140 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 2021, 2022 and 2023. Assuming payout at target, the number of shares to be issued upon the vesting of
outstanding performance share awards is 297,070.
Does not reflect unvested restricted stock units or performance share awards included in column (a) because these awards have no exercise
price.
Includes 15,956,514 shares available for issuance as under the 2001 Stock Incentive Plan, of which all may be issued as options and
10,173,336 may be issued as awards of unrestricted shares, restricted stock, restricted stock units, performance shares or any other stock-
based awards under the 2001 Stock Incentive Plan, 449,049 shares available for issuance as options or restricted stock units under the Risk
Management Solutions, Inc. 2015 Equity Incentive Plan, 866,673 shares available for issuance as options, shares of restricted stock, restricted
stock units or performance shares under the 1998 Directors Plan, and 2,464,707 shares available for issuance under the Company’s
Employee Stock Purchase Plan.
38 MOODY'S 2023 10-K
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, 2018. The comparison also assumes the reinvestment of dividends, if any. The total return for the Company's
common stock was 192% during the performance period as compared with a total return during the same period of 107% and 97%
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
$350
$300
$250
$200
$150
$100
$50
12/18
12/19
12/20
12/21
12/22
12/23
2018
2019
2020
2021
2022
2023
Year Ended December 31,
Moody’s Corporation
$ 100.00
$ 171.25
$ 211.11
$ 286.21
$ 206.05
$ 291.60
S&P 500 Composite Index
$ 100.00
$ 131.49
$ 155.68
$ 200.37
$ 164.08
$ 207.21
Russell 3000—Financial Services Index
$ 100.00
$ 137.65
$ 136.25
$ 187.43
$ 160.35
$ 196.70
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.
MOODY'S 2023 10-K
39
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 65 and Item 1A. “Risk Factors” commencing on page 25 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 to anticipate, adapt and thrive in a new era of
exponential risk. Moody’s reports in two segments: MA and MIS.
MA is a global provider of: i) research and insights; ii) data and information; 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.
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.
Current Matters Impacting Moody's Business
Current Macroeconomic Uncertainties/Market Volatility
The Company continues to monitor current macroeconomic and geopolitical uncertainties that have contributed to volatility in rated
issuance volumes, which began in 2022 and have continued into 2023. These uncertainties include, but are not limited to: i)
inflation levels; ii) higher interest rates; and iii) volatility in the global capital markets partly resulting from the ongoing military
conflicts further discussed below and the failures of certain banking institutions in the first half of 2023. 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 has resulted in suppressed rated issuance volumes in certain sectors, the Company believes that these
suppressed volumes are predominantly transitory 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 rated issuance
volumes. Refer to Item 1A. “Risk Factors” for further disclosure relating to these risks.
Military Conflicts
The Company continues to closely monitor the impact of the ongoing Russia-Ukraine military conflict and the military conflict in
Israel and surrounding areas on all aspects of its business. In response to the Russia-Ukraine military conflict, the Company is no
longer conducting commercial operations in Russia for both MA and MIS and is complying with all applicable regulatory restrictions
set forth by authorities in the jurisdictions in which Moody's operates. Furthermore, the Company also has withdrawn MIS credit
ratings on Russian entities.
While Moody's operations and net assets in Russia and Israel and surrounding areas are not material, broader global market
volatility, which partially relates to uncertainties surrounding these military conflicts, has contributed and may continue to contribute
to volatility in rated issuance volumes. This impact on 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 conflicts may have on
its financial position and operating results due to numerous uncertainties regarding the severity and duration of the conflicts and
their broader potential macroeconomic impact.
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.
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., MA and MIS), or one level below an operating segment (i.e., a component of an operating segment).
40 MOODY'S 2023 10-K
The Company has four reporting units: 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, and two within the Company’s ratings
business (one for the ICRA business and one that encompasses all of Moody’s other ratings operations).
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, 2023
At July 31, 2023, 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
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
MOODY'S 2023 10-K
41
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 the U.S. and various foreign 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 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.
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.
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.
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
42 MOODY'S 2023 10-K
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, 2023 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, 2023 that
have not been recognized in annual expense are $72 million, and Moody’s expects the net periodic expense related to the
amortization of net actuarial (losses)/gains will be immaterial in 2024.
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
MOODY'S 2023 10-K
43
amortization. As of December 31, 2023, the Company has an unrecognized loss of $71 million, of which $10 million will be
recognized in the market-related value of assets that is used to calculate the expected return on assets component of 2024
expense.
The table below shows the estimated effect that a one percentage-point decrease in each of these assumptions will have on
Moody’s 2024 income before provision for income taxes. These effects have been calculated using the Company’s current
projections of 2024 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
2024
Estimated Impact on 2024
Income before Provision
for Income Taxes
(Decrease)/Increase
4.73%/4.75% $
3.60% $
6.10% $
(4)
1
(5)
(1) Weighted average discount rates of 4.73% and 4.75% 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 2024.
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, 2023: MA and MIS, which are more fully described in the
section entitled “The Company” above and in Note 22 to the consolidated financial statements.
44 MOODY'S 2023 10-K
Results of Operations
This section of this Form 10-K generally discusses the year ended December 31, 2023 and 2022 financial results and year-to-year
comparisons between these years. Discussions related to the year ended December 31, 2021 financial results and year-to-year
comparisons between the years ended December 31, 2022 and 2021 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, 2022.
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.
MOODY'S 2023 10-K
45
Year ended December 31, 2023 compared with year ended December 31, 2022
Executive Summary
The following table provides an executive summary of key operating results for the year ended December 31, 2023. 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:
2023
2022
% Change
Favorable /
(Unfavorable)
Insight and Key Drivers of Change Compared to Prior Year
Moody's total revenue
$5,916 $5,468
8 % — reflects growth in both segments
MA external revenue
$3,056 $2,769
10 % — sustained demand for KYC solutions, as well as continued growth
from insurance products and SaaS-based banking offerings;
— ongoing strong retention for ratings data feeds; and
— elevated usage and demand for credit and economic research
MIS external revenue
$2,860 $2,699
6% — increased investment-grade/speculative-grade corporate debt
Total operating and
SG&A expenses
$3,319 $3,140
issuance coupled with higher infrastructure finance issuance relative
to suppressed activity in the prior year; and
— increases in banking-related revenue mainly due to favorable mix of
infrequent issuers, as well as higher issuance volumes; partially
offset by
— declines across most asset classes in SFG reflecting a decrease in
securitization activity amidst capital market volatility
(6 %) — higher incentive compensation accruals and performance-based
equity compensation aligned with actual/expected financial and
operating performance; and
— higher salaries and benefits, primarily reflecting hiring and salary
increases in MA to support business growth
Depreciation and
amortization
$373
$331
(13%) — higher amortization relating to internally developed software,
primarily related to the development of MA SaaS solutions
Restructuring
$ 87
$114
24 % — relates to the Company's 2022 - 2023 Geolocation Restructuring
$(202) $(123)
(64%) — higher realized losses of $81 million on fixed-to-floating interest rate
Program, more fully discussed in Note 11 to the consolidated
financial statements
Total non-operating
(expense) income, net
swaps resulting from higher interest rates (more fully discussed in
Note 7 to the consolidated financial statements);
— a $70 million gain on extinguishment of debt in in the prior year; and
— a $20 million net increase in foreign exchange losses recorded
during the year; partially offset by
— an increase in interest income of $48 million related to higher cash
balances and interest yields;
— higher gains on certain of the Company's investments of $28 million;
and
— a $22 million benefit related to the resolutions of tax matters in the
first quarter of 2023
170BPS — operating margin and Adjusted Operating Margin(1) expansion is
primarily due to revenue growth, partially offset by increases in
130BPS
operating and SG&A costs
500BPS — lower ETR primarily reflects tax benefits recognized in the first
quarter of 2023, which resulted from the resolutions of UTPs in
various U.S. and non-U.S. tax jurisdictions
17 % — increase in Diluted EPS and Adjusted Diluted EPS(1) is mostly
attributable to growth in operating income/Adjusted Operating
Income(1) coupled with a $0.76/share benefit related to the
resolutions of tax matters in the first quarter of 2023, compared to
$0.12/share for similar matters in the first quarter of 2022
16 %
Operating Margin
36.1 % 34.4 %
Adjusted Operating
Margin(1)
ETR
43.9 % 42.6 %
16.9 % 21.9 %
Diluted EPS
$8.73
$7.44
Adjusted Diluted EPS(1) $9.90
$8.57
46 MOODY'S 2023 10-K
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,
2023
2022
% Change
Favorable
(Unfavorable)
$
3,098
$
2,873
8%
10%
4%
10%
9%
8%
(5%)
(7%)
(13%)
24%
(5%)
13%
12%
(9%)
29%
(100%)
(64%)
17%
—%
17%
16%
1,848
577
393
2,818
5,916
1,687
1,632
373
87
3,779
2,137
2,597
(251)
49
—
(202)
1,607
184.0
8.73
9.90
$
$
$
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
36.1 %
43.9 %
16.9 %
34.4 %
42.6 %
21.9 %
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)
ETR
$
$
$
GLOBAL REVENUE
________________________________________________________________________________________________________
2023---------------------------------------------------------------------------------------2022
52%
48%
53%
47%
31%
31%
69%
69%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
Global revenue ⇑ $448 million
U.S. Revenue ⇑ $225 million
Non-U.S. Revenue ⇑ $223 million
Growth in global revenue reflected increases in both MA and MIS, both in the U.S. and internationally. Refer to the section entitled
“Segment Results” of this MD&A for a more fulsome discussion of the Company’s segment revenue.
MOODY'S 2023 10-K
47
Operating Expense ⇑ $74 million
Operating Expense Drivers
$1,613
3%
2%
$1,687
2022 Operating Expenses
Incentive and Stock-Based
Compensation
Salaries and Benefits
2023 Operating Expenses
Compensation expenses of $1,224 million increased $73
million primarily reflecting:
Non-compensation expenses of $463 million increased $1
million:
— an increase in incentive compensation accruals and
— expenses were generally in line with the prior year and
performance-based equity compensation that aligns with
actual/projected financial and operating performance; and
— higher salaries and benefits that reflects hiring and salary
increases, primarily in MA to support continued growth in
the business.
reflective of disciplined cost management
SG&A Expense ⇑ $105 million
SG&A Expense Drivers
$1,527
$1,632
4%
4%
(1)%
2022 SG&A Expenses
Incentive and Stock-
Based Compensation
Salaries and Benefits
All Other
2023 SG&A Expenses
Compensation expenses of $1,016 million increased $111
million reflecting:
Non-compensation expenses of $616 million decreased $6
million:
— an increase in incentive compensation accruals and
— expenses were generally in line with prior year and reflective
performance-based equity compensation that aligns with
actual/projected financial and operating performance; and
— an increase in salaries and benefits that reflects headcount
growth and annual salary increases, primarily to support
business growth in MA
of disciplined cost management
48 MOODY'S 2023 10-K
Depreciation and amortization
The increase in depreciation and amortization expense is driven by amortization of internally developed software, which is primarily
related to the development of MA SaaS solutions.
Restructuring
The restructuring charge in both periods relates to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully
discussed in Note 11 to the consolidated financial statements.
Operating margin 36.1%, up 170 BPS
Adjusted Operating Margin 43.9%, up 130 BPS
Operating Margin and Adjusted Operating Margin(1) expansion primarily reflects revenue growth offset by an increase in operating
and SG&A expenses.
Interest Expense, net ⇑ $20 million
Other non-operating income ⇑ $11 million
Increase in expense is primarily due to:
The most notable drivers of the increase in income are:
— higher realized losses of $81 million on fixed-to-floating
interest rate swaps resulting from higher interest rates
(more fully discussed in Note 7 to the consolidated financial
statements); partially offset by
— higher interest income of $48 million reflecting higher cash
balances and interest yields; and
— a $22 million benefit related to the resolutions of tax matters
in the first quarter of 2023.
— higher gains on certain of the Company's investments of
$28 million; partially offset by
— a $20 million net increase in foreign currency losses mainly
attributable to an immaterial out-of-period adjustment
relating to the 2022 fiscal year, partially offset by foreign
currency translation losses reclassified to earnings in 2022
resulting from the Company no longer conducting
commercial operations in Russia.
Gain on extinguishment of debt
The gain in the prior year relates to the early redemption of a portion of the 2.55% 2020 Senior Notes, Due 2060.
ETR ⇓ 500BPS
The decrease in the ETR primarily reflects the resolutions of UTPs in various U.S. and non-U.S. tax jurisdictions in the first quarter
of 2023, which resulted in a decrease to the provision for income taxes of $113 million.
Diluted EPS ⇑ $1.29
Adjusted Diluted EPS ⇑ $1.33
Both diluted EPS and Adjusted Diluted EPS(1) growth is mostly attributable to higher operating income and Adjusted Operating
Income(1), the components of which are more fully described above. This is coupled with a $0.76/share benefit related to the
resolutions of tax matters in the first quarter of 2023, compared to $0.12/share for similar matters in the first quarter of 2022.
MOODY'S 2023 10-K
49
Segment Results
Moody’s Analytics
The table below provides a summary of revenue and operating results, followed by further insight and commentary:
Year Ended December 31,
2023
2022
% 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
MOODY'S ANALYTICS REVENUE
$
1,383
$
884
789
3,056
13
3,069
1,946
186
2,132
937
$
$
1,245
812
712
2,769
8
2,777
1,763
174
1,937
840
30.5 %
30.2 %
298
59
250
49
11%
9%
11%
10%
63%
11%
(10%)
(7%)
(10%)
12%
(19%)
(20%)
________________________________________________________________________________________________________
2023---------------------------------------------------------------------------------------2022
44%
56%
6%
94%
45%
55%
6%
94%
U.S.
Non-U.S.
Recurring
Transaction
U.S.
Non-U.S.
Recurring
Transaction
MA: Global revenue ⇑ $287 million
U.S. Revenue ⇑ $109 million
Non-U.S. Revenue ⇑ $178 million
The 10% increase in global MA revenue reflects growth both in the U.S. (9%) and internationally (12%) across all LOBs.
–
ARR(2) increased 10% reflecting strong growth across all LOBs.
50 MOODY'S 2023 10-K
DECISION SOLUTIONS REVENUE
________________________________________________________________________________________________________
2023---------------------------------------------------------------------------------------2022
42%
58%
12%
88%
42%
58%
12%
88%
U.S.
Non-U.S.
Recurring
Transaction
U.S.
Non-U.S.
Recurring
Transaction
DS: Global revenue ⇑ $138 million
U.S. Revenue ⇑ $58 million
Non-U.S. Revenue ⇑ $80 million
Global DS revenue for the for the years ended December 31, 2023 and 2022 was comprised as follows:
$1,383
$312
$550
$521
2023
$1,245
$260
$504
$481
2022
KYC
Insurance
Banking
Global DS revenue grew 11% and reflects increases in both the U.S. (11%) and internationally (11%).
The most notable drivers of the growth reflect:
–
–
–
continued demand for KYC solutions reflecting increased counterparty risk data usage, including new sales growth from
corporates, governments, and insurers, which also drove ARR(2) growth of 17%;
growth in subscription-based revenue for actuarial modeling and regulatory reporting tools that support customers' compliance
with certain international accounting standards relating to insurance contracts, which resulted in ARR(2) growth of 11%; and
growth across banking offerings following Moody's investments in SaaS-based solutions, which also resulted in ARR(2) growth
of 9%.
The aforementioned factors contributed to overall ARR(2) growth for DS of 11%.
MOODY'S 2023 10-K
51
RESEARCH AND INSIGHTS REVENUE
________________________________________________________________________________________________________
2023---------------------------------------------------------------------------------------2022
45%
55%
2%
98%
42%
58%
2%
98%
U.S.
Non-U.S.
Recurring
Transaction
U.S.
Non-U.S.
Recurring
Transaction
R&I: Global revenue ⇑ $72 million
U.S. Revenue ⇑ $20 million
Non-U.S. Revenue ⇑ $52 million
Global R&I revenue increased 9% compared to 2022 and reflects growth in both the U.S. (4%) and internationally (15%).
The most notable drivers of growth reflect:
–
–
increased demand for credit default models and economic analytics, partially due to banking stress events in the first quarter;
and
steady sales growth and strong retention from the CreditView product offering.
The aforementioned factors contributed to overall ARR(2) growth for R&I of 7%.
DATA AND INFORMATION REVENUE
________________________________________________________________________________________________________
2023---------------------------------------------------------------------------------------2022
36%
35%
64%
U.S.
Non-U.S.
100%
Recurring
Transaction
65%
U.S.
Non-U.S.
100%
Recurring
Transaction
D&I: Global revenue ⇑ $77 million
U.S. Revenue ⇑ $31 million
Non-U.S. Revenue ⇑ $46 million
Global D&I revenue increased 11% compared to 2022 and reflects growth in both the U.S. (12%) and internationally (10%), mainly
driven by:
–
–
continued strong retention and new sales for ratings feeds coupled with higher price realization; and
increased demand for company data.
The aforementioned factors also contributed to ARR(2) growth of 10% for D&I.
52 MOODY'S 2023 10-K
MA: Operating and SG&A Expense ⇑ $183 million
MA Operating and SG&A Expense Drivers
$1,763
5%
3%
2%
$1,946
2022 MA Operating
and SG&A Expenses
Salaries and Benefits
Operating Growth,
Including Investments
to Support Business
Growth
Incentive and Stock
Based Compensation
2023 MA Operating
and SG&A Expenses
Compensation expenses of $1,238 million increased $122
million:
Non-compensation expenses of $708 million increased
$61 million:
— the growth in salaries and benefits reflects higher
— the increase is mostly attributable to operating growth,
headcount and annual salary increases to support business
growth; and
including investments to support technology, innovation and
product development.
— the increase in incentive and performance-based equity
compensation aligns with actual/expected financial and
operational performance as well as headcount growth.
MA: Adjusted Operating Margin 30.5% ⇑ 30BPS
The modest Adjusted Operating Margin expansion for MA is primarily due to the 10% increase in global MA revenue, offset by a
10% increase in operating and SG&A expenses.
Depreciation and amortization
The increase in depreciation and amortization expense primarily reflects higher amortization of internally developed software
relating to the development of SaaS-based solutions.
Restructuring
The restructuring charges in both periods relate to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully
discussed in Note 11 to the consolidated financial statements.
MOODY'S 2023 10-K
53
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,
2023
2022
% 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
$
1,404
$
1,269
405
545
476
2,830
30
2,860
186
3,046
1,373
13
1,386
1,660
$
462
491
431
2,653
46
2,699
174
2,873
1,377
8
1,385
1,488
54.5 %
51.8 %
75
28
81
65
$
11%
(12%)
11%
10%
7%
(35%)
6%
7%
6%
—%
(63%)
—%
12%
7%
57%
The following chart presents changes in rated issuance volumes compared to 2022. 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
Leveraged Loans
High Yield Bonds
Structured Finance
(27)%
Financial Institutions
Public, Project and
Infrastructure Finance
17%
32%
5%
6%
6%
6%
54 MOODY'S 2023 10-K
MOODY'S INVESTORS SERVICE REVENUE
________________________________________________________________________________________________________
2023---------------------------------------------------------------------------------------2022
39%
43%
39%
61%
57%
61%
44%
56%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
MIS: Global revenue ⇑ $161 million
U.S. Revenue ⇑ $116 million
Non-U.S. Revenue ⇑ $45 million
The increase in global MIS revenue reflects growth in CFG, FIG and PPIF revenue being partly offset by declines in SFG activity
across most asset classes.
CFG REVENUE
________________________________________________________________________________________________________
2023---------------------------------------------------------------------------------------2022
32%
37%
34%
39%
68%
63%
66%
61%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
CFG: Global revenue ⇑ $135 million
U.S. Revenue ⇑ $120 million
Non-U.S. Revenue ⇑ $15 million
Global CFG revenue for the years ended December 31, 2023 and 2022 was comprised as follows:
$1,404
$627
$292
$150
$335
2023
$1,269
$592
$275
$108
$294
2022
Other accounts (CFG)*
Bank loans
High-yield
Investment-grade
* 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 2023 10-K
55
The growth in CFG revenue reflected increases in both the U.S (14%) and internationally (3%).
Transaction revenue increased $115 million compared to the prior year, with the most notable drivers reflecting:
–
higher leveraged finance (speculative-grade bonds and bank loans) and investment-grade rated issuance volumes reflecting
both refinancing activity and issuance to fund M&A transactions compared to suppressed issuance activity in these sectors in
the prior year.
SFG REVENUE
________________________________________________________________________________________________________
2023---------------------------------------------------------------------------------------2022
38%
62%
47%
53%
33%
67%
43%
57%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
SFG: Global revenue ⇓ $57 million
U.S. Revenue ⇓ $56 million
Non-U.S. Revenue ⇓ $1 million
Global SFG revenue for the years ended December 31, 2023 and 2022 was comprised as follows:
$405
$129
$60
$92
$121
2023
$462
$140
$98
$106
$116
2022
Other accounts (SFG)
Structured credit
CMBS
RMBS
Asset-backed securities
The decrease in SFG revenue of 12% reflected declines in both the U.S. (18%) and internationally (1%). Transaction revenue
decreased $72 million compared to 2022.
The decline in SFG revenue reflected lower securitization activity across most asset classes, most notably in CMBS, resulting from
higher credit spreads and market volatility given ongoing geopolitical and macroeconomic uncertainties.
56 MOODY'S 2023 10-K
FIG REVENUE
________________________________________________________________________________________________________
2023---------------------------------------------------------------------------------------2022
46%
54%
47%
53%
45%
43%
55%
57%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
FIG: Global revenue ⇑ $54 million
U.S. Revenue ⇑ $30 million
Non-U.S. Revenue ⇑ $24 million
Global FIG revenue for the years ended December 31, 2023 and 2022 was comprised as follows:
$545
$32
$123
$378
2023
$491
$28
$113
$337
2022
Other accounts (FIG)
Managed investments
Insurance
Banking
The increase in FIG revenue of 11% reflected growth in both the U.S. (13%) and internationally (9%) which resulted in a $43 million
increase in transaction revenue compared to 2022.
The most notable drivers of the increase reflected:
–
–
a favorable mix of infrequent issuers within the banking sector coupled with higher rated issuance volumes; and
higher rated issuance volumes in the insurance sector.
PPIF REVENUE
________________________________________________________________________________________________________
2023---------------------------------------------------------------------------------------2022
39%
37%
38%
39%
61%
63%
62%
61%
U.S.
Non-U.S.
Transaction
Recurring
U.S.
Non-U.S.
Transaction
Recurring
MOODY'S 2023 10-K
57
PPIF: Global revenue ⇑ $45 million
U.S. Revenue ⇑ $26 million
Non-U.S. Revenue ⇑ $19 million
Global PPIF revenue for the years ended December 31, 2023 and 2022 was comprised as follows:
$476
$271
$205
2023
$431
$234
$197
2022
Project and infrastructure
Public finance / sovereign
The 10% increase in PPIF revenue reflected growth in both the U.S. (10%) and internationally (12%), which resulted in an increase
in transaction revenue of $38 million compared to 2022.
The most notable drivers of the growth were:
–
–
increases in investment-grade infrastructure finance activity in the U.S. and internationally; and
higher U.S. and international public finance activity.
MIS: Operating and SG&A Expense ⇓ $4 million
MIS Operating and SG&A Expense Drivers
$1,377
5%
$1,373
(4)%
(1)%
2022 MIS Operating
and SG&A Expenses
Incentive and Stock-
Based Compensation
Cost Control Initiatives
All Other
2023 MIS Operating
and SG&A Expenses
Compensation expenses of $1,003 million increased $63
million:
Non-compensation expenses of $370 million decreased
$67 million:
— the increase in incentive compensation accruals and stock-
— the decrease in non-compensation costs is primarily due to
based compensation is aligned with actual/projected
financial and operating performance.
ongoing disciplined cost management.
Restructuring
The restructuring charges in both periods relate to the Company's 2022 - 2023 Geolocation Restructuring Program as more fully
discussed in Note 11 to the consolidated financial statements.
MIS: Adjusted Operating Margin 54.5% ⇑ 270BPS
The MIS Adjusted Operating Margin expansion primarily reflected the aforementioned 6% increase in revenue coupled with
ongoing disciplined cost management.
58 MOODY'S 2023 10-K
Market Risk
FX risk:
Moody’s maintains a presence in more than 40 countries. In 2023, approximately 41% 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,
2023, approximately 52% 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, net in the Company’s consolidated statements of operations. Accordingly, the Company
enters into foreign exchange forward contracts 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
the forward contracts if currencies being purchased were to weaken by 10%:
Foreign Currency Forwards (1)
Sell
U.S. dollar
U.S. dollar
U.S. dollar
U.S. dollar
U.S. dollar
U.S. dollar
Canadian dollar
Buy
British pound
Canadian dollar
Euro
Singapore dollar
Indian rupee
Japanese yen
U.S. dollar
Impact on fair value of contract
$52 million unfavorable impact
$14 million unfavorable impact
$6 million unfavorable impact
$5 million unfavorable impact
$2 million unfavorable impact
$1 million unfavorable impact
$2 million favorable impact
$78 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, 2023, 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 $321 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, 2023, 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 $138 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.
MOODY'S 2023 10-K
59
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 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
SOFR-based swap rate would result in an approximate $275 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.
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,
2023
2022
$ Change
Favorable/ (unfavorable)
$
$
$
$
2,151
(247)
(1,584)
1,880
$
$
$
$
1,474
(262)
(1,208)
1,191
$
$
$
$
677
15
(376)
689
(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 additions. 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 increased by $677 million compared to the prior year, partly related to an increase in net
income of $234 million (see section entitled “Results of Operations” of this MD&A for further discussion).
Additionally, the increase in operating cash flow reflects:
–
–
higher income tax payments in the prior year of $144 million;
approximately $140 million in higher incentive compensation payments in 2022 (based on full-year 2021 financial and
operating results) compared to payments made in the current year (based on full-year 2022 financial and operating results);
and
–
the remaining increase is primarily due to various changes in working capital.
Net cash used in investing activities
The $15 million decrease in cash flows used in investing activities compared to 2022 primarily reflects:
– higher cash paid of $94 million in the prior year for acquisitions, primarily reflecting the acquisition of kompany in 2022;
–
–
higher net purchases of investments in non-consolidated affiliates in the prior year of $80 million, reflecting the purchase of
Moody's equity interest in GCR in the prior year; and
higher net sales of investments in 2023 of $49 million;
mostly offset by:
60 MOODY'S 2023 10-K
– higher net cash receipts of $220 million in 2022 relating to the settlement of net investment hedges.
Net cash used in financing activities
The $376 million increase in cash used in financing activities was primarily attributed to:
–
debt repayments of $500 million in 2023, compared to net issuance of $362 million in the prior year (refer to the section
"Material Cash Requirements" below for further discussion on the Company's financing arrangements);
partially offset by:
–
higher cash paid for treasury share repurchases in 2022 of $493 million, which includes payment for shares made under an
ASR agreement executed in the first quarter of 2022.
Cash and cash equivalents and short-term investments
The Company’s aggregate cash and cash equivalents and short-term investments of $2.2 billion at December 31, 2023 included
approximately $1.7 billion located outside of the U.S. Approximately 43% of the Company’s aggregate cash and cash equivalents
and short-term investments is denominated in EUR and GBP. 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 continues to repatriate 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, 2023, Moody’s had $7.0 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, 2023 is as follows:
$829
$552
$500
$400
$600
$500
$600
$600
$400
$500
$500
$300
$300
$700
$—
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 $5.0 billion, of which
approximately $300 million is expected to be paid in each of the next five years, and the remaining amount expected to be paid
thereafter. 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 could 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, 2023, these
purchase obligations totaled $788 million, of which approximately 40% is expected to be paid in the next twelve months and
another approximate 45% expected to be paid over the next two subsequent years, with the remainder to be paid thereafter.
MOODY'S 2023 10-K
61
Leases
The Company has remaining payments related to its operating leases of $442 million at December 31, 2023, primarily related to
real estate leases, of which $118 million in payments are expected over the next twelve months. For more information on the
expected cash flows relating to 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, 2023, 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.
Dividends and share repurchases
On February 5, 2024, the Board approved the declaration of a quarterly dividend of $0.85 per share for Moody’s common stock,
payable March 15, 2024 to shareholders of record at the close of business on February 23, 2024. The continued payment of
dividends at this rate, or at all, is subject to the discretion of the Board.
On February 7, 2022, the Board approved $750 million in share repurchase authority. At December 31, 2023, the Company had
approximately $359 million of remaining authority. On February 5, 2024, the Board of Directors authorized an additional $1 billion in
share repurchase 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 has substantially completed the 2022 -
2023 Geolocation Restructuring Program. Future cash outlays associated with this program, which will consist of personnel-related
costs, are expected to be $36 million, substantially all of 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 2024. 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.
62 MOODY'S 2023 10-K
Operating income
Adjustments:
Depreciation and amortization
Restructuring
Adjusted Operating Income
Operating margin
Adjusted Operating Margin
$
$
Year ended December 31,
2023
2022
2,137
$
373
87
2,597
$
36.1 %
43.9 %
1,883
331
114
2,328
34.4 %
42.6 %
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; and iv) FX translation losses reclassified to earnings resulting from the Company no longer conducting
commercial operations in Russia.
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, and FX translation losses reclassified
to earnings resulting from the Company no longer conducting commercial operations in Russia 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,
2023
2022
Net income attributable to Moody’s common shareholders
$
1,607
$
1,374
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
$
$
$
198
(48)
87
(22)
—
—
200
(47)
114
(26)
(70)
17
$
$
$
150
65
—
—
153
88
(53)
20
Adjusted Net Income
$
1,822
$
1,582
MOODY'S 2023 10-K
63
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
Year ended December 31,
2023
2022
$
8.73
$
7.44
$
$
$
1.08
(0.26)
0.47
(0.12)
—
—
$
$
1.08
(0.25)
0.62
(0.14)
$
(0.38)
0.09
0.82
0.35
—
—
0.83
0.48
(0.29)
0.11
8.57
Adjusted Diluted EPS
$
9.90
$
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 cash paid 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,
2023
2022
$
$
$
$
2,151
(271)
1,880
(247)
(1,584)
$
$
$
$
1,474
(283)
1,191
(262)
(1,208)
64 MOODY'S 2023 10-K
Key Performance Metrics:
The Company presents 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 GAAP.
Amounts in millions
MA ARR
Decision Solutions
Banking
Insurance
KYC
Total Decision Solutions
Research and Insights
Data and Information
Total MA ARR
December 31, 2023
December 31, 2022
Change
Growth
$
$
$
418 $
533
326
1,277 $
879
806
385 $
482
279
1,146 $
819
733
2,962 $
2,698 $
33
51
47
131
60
73
264
9%
11%
17%
11%
7%
10%
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 40 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 significant government debt and deficit levels, and inflation and related
monetary policy actions by governments in response to inflation) on worldwide credit markets and on economic activity,
including on the volume of mergers and acquisitions, and their effects on the volume of debt and other securities issued in
domestic and/or global capital markets;
MOODY'S 2023 10-K
65
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
the uncertain effectiveness and possible collateral consequences of U.S. and foreign government initiatives and monetary
policy to respond to the current economic climate, including instability of financial institutions, credit quality concerns, and other
potential impacts of volatility in financial and credit markets;
the global impacts of the Russia-Ukraine military conflict and the military conflict in Israel and the surrounding areas 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;
other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets,
including regulation, increased utilization of technologies that have the potential to intensify competition and accelerate
disruption and disintermediation in the financial services industry, 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 countries or entities within countries and of Moody’s no longer conducting
commercial operations in countries where political instability warrants such actions;
concerns in the marketplace affecting our credibility or otherwise affecting market perceptions of the integrity or utility of
independent credit agency ratings;
the introduction or development of competing and/or emerging technologies and products;
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 jurisdictions in which we operate, including the EU;
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 CRAs in a manner adverse to CRAs;
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 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,
2023, 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
66 MOODY'S 2023 10-K
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.
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 59 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
68
69
71
72
73
74
75
78
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 2023 10-K
67
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, 2023 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, 2023.
The effectiveness of our internal control over financial reporting as of December 31, 2023 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, 2023.
/s/ ROBERT FAUBER
Robert Fauber
President and Chief Executive Officer
/s/ CAROLINE SULLIVAN
Caroline Sullivan
Interim Chief Financial Officer, Chief Accounting Officer and Corporate Controller
February 14, 2024
68 MOODY'S 2023 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
December 31, 2023 and 2022, 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, 2023, 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, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 2023, 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, 2023 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 2023 10-K
69
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 a 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 $196 million as of December 31, 2023. 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 14, 2024
70 MOODY'S 2023 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
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 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,
2023
2022
2021
$
5,916
$
5,468
$
6,218
1,687
1,632
373
87
3,779
2,137
(251)
49
—
(202)
1,935
327
1,608
1
1,607
8.77
8.73
183.2
184.0
$
$
$
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
The accompanying notes are an integral part of the consolidated financial statements.
MOODY'S 2023 10-K
71
MOODY’S CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in millions)
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:
Reclassification of losses
included in net income
Pension and Other
Retirement Benefits:
Amortization of actuarial
gains/losses, prior service
credits/costs, and
settlement gain/charge
included in net income
Net actuarial gains
(losses)
Total Other Comprehensive
Income (Loss)
Comprehensive Income
Less: comprehensive loss
attributable to
noncontrolling interests
Comprehensive Income
Attributable to Moody’s
Year Ended December 31, 2023
Year Ended December 31, 2022
Year Ended December 31, 2021
Pre-tax
amounts
Tax
amounts
After-tax
amounts
Pre-tax
amounts
Tax
amounts
After-tax
amounts
Pre-tax
amounts
Tax
amounts
After-tax
amounts
$ 1,608
$
1,374
$
2,214
$
213
$
(1) $
212
$
(439) $
2
$
(437) $
(303) $
11
$
(292)
—
(177)
—
2
(3)
(8)
—
45
—
(1)
—
2
—
20
—
20
—
—
—
(132)
219
(55)
164
319
(77)
242
—
1
(3)
(6)
—
2
3
(1)
—
—
(1)
1
—
2
2
—
(2)
2
19
73
1
—
(5)
(18)
$
27
$
45
$
72
$
(196) $
(53) $
(249) $
108
$
(88) $
1,680
(4)
1,125
(16)
$ 1,684
$
1,141
$
2,236
(1)
2
14
55
20
2,234
(2)
The accompanying notes are an integral part of the consolidated financial statements.
72 MOODY'S 2023 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 $35 in 2023 and $40 in 2022
Other current assets
Total current assets
Property and equipment, net of accumulated depreciation of $1,272 in 2023 and $1,123 in 2022
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, 2023 and December 31, 2022, respectively.
Capital surplus
Retained earnings
December 31,
2023
2022
$
2,130
$
63
1,659
489
4,341
603
277
5,956
2,049
258
1,138
1,769
90
1,652
583
4,094
502
346
5,839
2,210
266
1,092
$
$
14,622
$
14,349
1,076
$
108
1,316
2,500
65
7,001
402
196
306
676
1,011
106
1,258
2,375
75
7,389
457
322
368
674
11,146
11,660
—
—
3
1,228
14,659
—
—
3
1,054
13,618
Treasury stock, at cost; 160,430,754 and 159,702,362 shares of common stock at December 31, 2023
and December 31, 2022, respectively
(12,005)
(11,513)
Accumulated other comprehensive loss
Total Moody’s shareholders’ equity
Noncontrolling interests
Total shareholders’ equity
(567)
3,318
158
3,476
(643)
2,519
170
2,689
Total liabilities and shareholders’ equity
$
14,622
$
14,349
The accompanying notes are an integral part of the consolidated financial statements.
MOODY'S 2023 10-K
73
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
Provision for credit losses on accounts receivable
ROU Asset impairment & other non-cash restructuring/impairment charges
FX translation losses reclassified to net income
(Gain)/loss on extinguishment of debt
Gain on sale/non-cash exchange of investments in non-consolidated affiliates
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
Purchases of investments in non-consolidated affiliates
Sales of investments in non-consolidated affiliates
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
Proceeds from stock-based compensation plans
Repurchase of shares related to stock-based compensation
Treasury shares
Dividends
Dividends to noncontrolling interests
Debt issuance costs, extinguishment costs and related fees
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Year Ended December 31,
2023
2022
2021
$
1,608
$
1,374
$
2,214
373
193
(38)
22
35
—
—
(4)
(12)
119
(69)
(26)
76
24
(129)
(21)
2,151
(271)
(143)
162
(5)
13
(3)
—
—
(247)
—
(500)
50
(71)
(490)
(564)
(9)
—
331
169
48
25
29
20
(70)
—
9
(223)
(48)
(19)
(161)
20
(33)
3
1,474
(283)
(246)
216
(74)
2
(97)
220
—
(262)
988
(626)
26
(87)
(983)
(515)
(1)
(10)
(1,584)
41
361
1,769
2,130
$
(1,208)
(46)
(42)
1,811
1,769
$
$
257
175
(218)
13
—
—
13
(36)
(270)
(12)
(26)
(11)
80
65
(184)
(55)
2,005
(139)
(171)
145
(266)
2
(2,179)
37
(48)
(2,619)
1,672
(500)
38
(83)
(750)
(463)
(5)
(31)
(122)
(50)
(786)
2,597
1,811
The accompanying notes are an integral part of the consolidated financial statements.
74 MOODY'S 2023 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 provider of integrated perspectives on risk that empowers organizations and investors to make better decisions.
Moody’s reports in two reportable segments: MA and MIS.
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.
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.
Certain reclassifications have been made to prior period amounts to conform to the current presentation.
Adoption of New Accounting Standards in 2023
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 GAAP guidance on contract modifications and hedge accounting to ease the financial
reporting burdens related to the expected market transition from 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
amendments may be applied prospectively through December 31, 2024 as the transition from LIBOR is completed.
During the first quarter of 2023, the Company modified the contractual terms of certain of its interest rate swaps designated as fair
value hedges and cross-currency swaps designated as net investment hedges. These modifications replaced the previous LIBOR/
EURIBOR-based reference rates included in the swap agreements to SOFR/ESTR-based rates. Pursuant to the modification of the
contractual terms of these instruments, the Company utilized the optional expedients set forth in ASC Topic 848 relating to
derivative instruments used in hedging relationships. The aggregate notional amounts of these swaps is disclosed in Note 7.
Reclassification of Previously Reported Revenue by LOB
In the second quarter of 2023, the Company expanded its disaggregation of revenue disclosures for MA's Decision Solutions LOB
to enhance insight and transparency into this business. In conjunction with this new presentation, the Company reclassified certain
immaterial revenue relating to structured finance solutions from the Decision Solutions LOB to the Research & Insights LOB.
Prior year revenue by LOB disclosures have been reclassified to conform to this new presentation, which is disclosed in Note 3.
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 Topic 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 ASC Topic 810 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 ASC Topic 810. 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 and money market funds 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
78 MOODY'S 2023 10-K
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 MA's SaaS-based solutions as well as the Company’s financial, website
and other systems. Such costs generally consist of employee compensation, direct costs for third-party license fees and
professional services provided by third parties, 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 consolidated 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 consolidated
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 consolidated balance sheets
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., MA and MIS), 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.
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.
For purposes of assessing the recoverability of goodwill, the Company has four reporting units: 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 and two within the Company’s ratings business (one for the ICRA business and one that encompasses all of
Moody’s other ratings operations).
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.
MOODY'S 2023 10-K
79
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 consolidated balance sheets 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 ASC Topic 815 are recorded in the
consolidated statements of operations in the period in which they occur. Cash flows from derivatives are recognized in the
consolidated statements of cash flows in a manner consistent with the recognition of the underlying hedged item.
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 geography.
Sales, usage-based, value added and other taxes are excluded from revenues.
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. 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, except for those installed subscriptions where the software
license and PCS performance obligations were determined to be incapable of being distinct from each other in accordance with
ASC 606-10-25-19 and ASC 606-10-25-20. In such instances, revenue is recognized over time.
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.
80 MOODY'S 2023 10-K
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.
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
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.
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.
The Company capitalizes royalty costs within the MA segment 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.
In addition, 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.
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 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 sheets 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
MOODY'S 2023 10-K
81
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
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
82 MOODY'S 2023 10-K
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 AOCI(L) proportionately in accordance with the percentage of ownership interest of the non-controlling shareholder.
Additionally, the Company reclassifies the income tax effects from AOCI(L) at such time as the earnings or loss of the related
activity are recognized in earnings.
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.
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 Topic 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, money market
MOODY'S 2023 10-K
83
funds, and certificates of deposits as of December 31, 2023 and 2022. Short-term investments primarily consist of certificates of
deposit as of December 31, 2023 and 2022. Derivatives primarily consist of foreign exchange forwards or swap contracts (interest
rate swaps and cross-currency swaps) as of December 31, 2023 and 2022. For trade receivables, no customer accounted for 10%
or more of accounts receivable at December 31, 2023 or 2022.
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.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment
Disclosures" ("ASU No. 2023-07"), which expands segment disclosure requirements for public entities. ASU No. 2023-07 will
require entities to disclose significant segment expenses by reportable segment if they are regularly provided to the CODM and
included in each reported measure of segment profit or loss. In addition, this ASU permits entities to disclose more than one
measure of segment profit or loss used by the CODM. Additionally, disclosure of the CODM’s title and position will be required on
an annual basis, as well as an explanation of how the CODM uses the reported measure(s). Furthermore, all existing annual
disclosures about segment profit or loss and assets must be provided on an interim basis in addition to disclosure of significant
segment expenses and other segment items. This ASU is effective for fiscal years beginning after December 15, 2023, and interim
periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented
in the financial statements. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial
statements and disclosures.
In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU
No. 2023-09"), which is intended to enhance the transparency and decision usefulness of income tax disclosures. The
amendments in ASU No. 2023-09 require entities to disclose additional income tax information, primarily related to greater
disaggregation of the entity's ETR reconciliation and income taxes paid by jurisdiction disclosures. This ASU is effective for annual
periods beginning after December 15, 2024, and should be applied on a prospective basis; however, retrospective application is
permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and
disclosures.
84 MOODY'S 2023 10-K
NOTE 3
REVENUES
Revenue by Category
The following table presents the Company’s revenues disaggregated by LOB:
MA:
Decision Solutions (DS)
Banking
Insurance
KYC
Total DS
Research and Insights (R&I)
Data and Information (D&I)
Total external revenue
Intersegment revenue
Total MA
MIS:
Corporate finance (CFG)
Investment-grade
High-yield
Bank loans
Other accounts (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
Eliminations
Total MCO
Year Ended December 31,
2023
2022
2021
$
$
521
550
312
1,383
884
789
3,056
13
3,069
335
150
292
627
$
481
504
260
1,245
812
712
2,769
8
2,777
294
108
275
592
474
245
217
936
772
698
2,406
7
2,413
439
411
606
631
1,404
1,269
2,087
121
92
60
129
3
405
378
123
32
12
545
205
271
476
2,830
30
2,860
186
3,046
(199)
116
106
98
140
2
462
337
113
28
13
491
197
234
431
2,653
46
2,699
174
2,873
(182)
$
5,916
$
5,468
$
118
123
102
215
2
560
411
145
36
10
602
244
277
521
3,770
42
3,812
165
3,977
(172)
6,218
(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 2023 10-K
85
The following table presents the Company’s revenues disaggregated by LOB and geographic area:
Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021
U.S.
Non-U.S.
Total
U.S.
Non-U.S.
Total
U.S.
Non-U.S.
Total
MA:
Decision Solutions
$
577 $
806 $
1,383 $
519 $
726 $
1,245 $
387 $
549 $
Research and Insights
Data and Information
490
281
394
508
884
789
470
250
342
462
812
712
426
226
346
472
936
772
698
Total MA
MIS:
Corporate finance
Structured finance
Financial institutions
Public, project and
infrastructure finance
Total ratings
revenue
MIS Other
Total MIS
Total MCO
1,348
1,708
3,056
1,239
1,530
2,769
1,039
1,367
2,406
952
252
253
292
452
153
292
184
1,404
405
545
476
832
308
223
266
437
154
268
165
1,269
1,384
462
491
431
364
289
304
703
196
313
217
2,087
560
602
521
1,749
1,081
2,830
1,629
1,024
2,653
2,341
1,429
3,770
1
29
30
5
41
46
3
39
42
1,750
1,110
2,860
1,634
1,065
2,699
2,344
1,468
3,812
$
3,098 $
2,818 $
5,916 $
2,873 $
2,595 $
5,468 $
3,383 $
2,835 $ 6,218
The following table presents the Company's reportable segment revenues disaggregated by segment and geographic region:
Year Ended December 31,
2023
2022
2021
$
1,348
$
1,239
$
1,039
1,169
306
233
1,708
3,056
1,750
679
271
160
1,110
2,860
5,916
$
1,034
285
211
1,530
2,769
1,634
648
271
146
1,065
2,699
5,468
$
955
246
166
1,367
2,406
2,344
930
357
181
1,468
3,812
6,218
$
MA:
U.S.
Non-U.S.:
EMEA
Asia-Pacific
Americas
Total Non-U.S.
Total MA
MIS:
U.S.
Non-U.S.:
EMEA
Asia-Pacific
Americas
Total Non-U.S.
Total MIS
Total MCO
86 MOODY'S 2023 10-K
The following table summarizes the split between transaction and recurring revenue:
2023
2022
2021
Year Ended December 31,
Decision Solutions $
169
$ 1,214
$1,383
$
153
$ 1,092
$1,245
$
147
$
789
$ 936
Transaction
Recurring
Total
Transaction
Recurring
Total
Transaction
Recurring
Total
12 %
88 %
100 %
12 %
88 %
100 %
16 %
84 %
100 %
Research and
Insights
Data and
Information
Total MA
$
$
$
2 %
3
— %
16
$
868
$ 884
$
17
$
795
$ 812
$
19
$
753
$ 772
98 %
100 %
2 %
98 %
100 %
2 %
98 %
100 %
$
786
$ 789
$ — $
712
$ 712
100 %
100 %
— %
100 %
100 %
188
(1) $ 2,868
$3,056
6 %
94 %
100 %
170
$ 2,599
$2,769
$
$
4
$
694
$ 698
1 %
99 %
100 %
170
$ 2,236
$2,406
6 %
94 %
100 %
7 %
93 %
100 %
772
$
497
$1,269
$ 1,600
61 %
39 %
100 %
77 %
262
$
200
$ 462
$
362
$
$
487
$2,087
23 %
100 %
198
$ 560
$
$
$
Corporate Finance $
887
Structured Finance $
190
63 %
$
$
517
$1,404
37 %
100 %
215
$ 405
Financial
Institutions
Public, Project and
Infrastructure
Finance
MIS Other
47 %
53 %
100 %
57 %
43 %
100 %
65 %
35 %
100 %
$
254
$
291
$ 545
$
211
$
280
$ 491
$
320
$
282
$ 602
47 %
53 %
100 %
43 %
57 %
100 %
53 %
47 %
100 %
$
$
301
63 %
6
20 %
$
$
175
$ 476
37 %
100 %
24
$
30
$
$
263
$
168
$ 431
61 %
39 %
100 %
4
$
42
$
46
$
$
354
68 %
4
$
$
167
$ 521
32 %
100 %
38
$
42
80 %
100 %
9 %
91 %
100 %
10 %
90 %
100 %
Total MIS
$ 1,638
$ 1,222
$2,860
$ 1,512
$ 1,187
$2,699
$ 2,640
$ 1,172
$3,812
57 %
43 %
100 %
56 %
44 %
100 %
69 %
31 %
100 %
Total Moody’s
Corporation
$ 1,826
$ 4,090
$5,916
$ 1,682
$ 3,786
$5,468
$ 2,810
$ 3,408
$6,218
31 %
69 %
100 %
31 %
69 %
100 %
45 %
55 %
100 %
(1) Revenue from software implementation services and risk management advisory projects, while classified by management as transactional
revenue, is recognized over time under U.S. GAAP (please also refer to the following table).
The following table presents the timing of revenue recognition:
Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021
MA
MIS
Total
MA
MIS
Total
MA
MIS
Total
Revenue
recognized at a
point in time
Revenue
recognized over
time
$
102 $
1,638
$
1,740
$
97 $
1,512
$
1,609 $
101 $
2,640 $
2,741
2,954
1,222
4,176
2,672
1,187
3,859
2,305
1,172
3,477
Total
$
3,056 $
2,860
$
5,916
$
2,769 $
2,699
$
5,468 $
2,406 $
3,812 $
6,218
MOODY'S 2023 10-K
87
Unbilled Receivables, Deferred Revenue and Remaining Performance Obligations
Unbilled receivables
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. In addition, certain MIS arrangements contain contractual terms whereby the
customers are billed in arrears for annual monitoring services, requiring revenue to be accrued as an unbilled receivable as such
services are provided.
The following table presents the Company's unbilled receivables, which are included within accounts receivable, net, at
December 31, 2023 and December 31, 2022:
As of December 31, 2023
As of December 31, 2022
MA
MIS
MA
MIS
Unbilled Receivables
$
119
$
415
$
148
$
385
Deferred revenue
The Company recognizes deferred revenue when a contract requires a customer to pay consideration to the Company in advance
of when revenue related to that contract 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, 2023 are as follows:
Balance at December 31, 2022
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
Effect of exchange rate changes
Total changes in deferred revenue
Balance at December 31, 2023
Deferred revenue - current
Deferred revenue - noncurrent
Year Ended December 31, 2023
MA
MIS
Total
$
1,055 $
278
$
1,333
(980)
(211)
(1,191)
1,015
21
56
1,111 $
1,109 $
2 $
$
$
$
200
3
(8)
270
207
63
$
$
$
1,215
24
48
1,381
1,316
65
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
MA
MIS
Total
$
1,039 $
296
$
1,335
(996)
(210)
(1,206)
1,018
1
(7)
16
1,055 $
1,053 $
2 $
$
$
$
202
—
(10)
(18)
278
205
73
$
$
$
1,220
1
(17)
(2)
1,333
1,258
75
88 MOODY'S 2023 10-K
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
MA
MIS
Total
$
874 $
313
$
1,187
(810)
(220)
(1,030)
884
94
(3)
165
1,039 $
1,035 $
4 $
$
$
$
207
—
(4)
(17)
296
214
82
$
$
$
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 and organic growth.
Remaining performance obligations
Remaining performance obligations in the MA segment include both amounts recorded as deferred revenue on the consolidated
balance sheet as of December 31, 2023 as well as amounts not yet invoiced to customers as of December 31, 2023, largely
reflecting future revenue related to signed multi-year arrangements for hosted and installed subscription-based products. As of
December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was
approximately $3.6 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.
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, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations
was approximately $91 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.
Costs to Obtain or Fulfill a Contract with a Customer
MA Costs to Obtain a Contract with a Customer
As of December 31,
2023
2022
Capitalized costs to obtain sales contracts
$
268 $
232
Amortization of capitalized costs to obtain sales contracts $
102 $
80 $
60
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,
2023
2022
2021
MOODY'S 2023 10-K
89
MA and MIS Costs to Fulfill a Contract with a Customer
Capitalized costs to fulfill sales contracts
$
35 $
9 $
44 $
33 $
12 $
45
As of December 31, 2023
As of December 31, 2022
MA
MIS
Total
MA
MIS
Total
Year Ended
December 31, 2023
Year Ended
December 31, 2022
Year Ended
December 31, 2021
MA
MIS
Total
MA
MIS
Total
MA
MIS
Total
Amortization of
capitalized costs to
fulfill sales
contracts
$
70 $
44 $
114 $
69 $
54 $
123 $
76 $
48 $
124
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,
2023
2022
2021
183.2
0.8
184.0
183.9
0.8
184.7
186.4
1.5
187.9
0.5
0.5
0.2
The calculation of basic shares outstanding is based on the weighted average number of shares of common stock outstanding
during the reporting period. 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, 2023, 2022 and 2021.
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.
90 MOODY'S 2023 10-K
NOTE 6
CASH EQUIVALENTS AND INVESTMENTS
The tables below provide additional information on the Company’s cash equivalents and investments:
As of December 31, 2023
Gross
Unrealized
Gains
Cost
Consolidated Balance Sheet location
Fair Value
Cash and cash
equivalents
Short-term
investments
Other
assets
Certificates of deposit and money
market deposit accounts/funds (1)
Mutual funds
$
$
1,178
91
$
$
— $
1,178
6
$
97
$
$
1,112
$
— $
63
$
— $
3
97
As of December 31, 2022
Gross
Unrealized
Gains
Cost
Fair Value
Consolidated Balance Sheet location
Other
assets
Short-term
investments
Cash and cash
equivalents
Certificates of deposit and money
market deposit accounts (1)
Mutual funds
$
$
914
71
$
$
— $
— $
914
71
$
$
808
$
— $
90
$
— $
16
71
(1)
Consists of time deposits, money market deposit accounts and money market funds. The remaining contractual maturities for the certificates of
deposits classified as short-term investments are one month to 12 months at both December 31, 2023 and December 31, 2022. The remaining
contractual maturities for the certificates of deposits classified in other assets are 14 months at December 31, 2023 and 13 months to 24
months at December 31, 2022. 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 is invested in COLI. As of December 31, 2023 and December 31, 2022, the contract value of the COLI
was $47 million and $40 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 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:
As of December 31, 2023
As of December 31, 2022
Hedged Item
Nature of Swap
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 Pay Floating/Receive Fixed
2018 Senior Notes due 2029 Pay Floating/Receive Fixed
2022 Senior Notes due 2052 Pay Floating/Receive Fixed
2022 Senior Notes due 2032 Pay Floating/Receive Fixed
Notional
Amount
500
300
300
300
400
500
250
Floating
Interest Rate (1)
SOFR
$
SOFR
SOFR
SOFR
SOFR
SOFR
SOFR
Notional
Amount
500
300
300
300
400
500
250
Floating
Interest Rate
3-month LIBOR
6-month LIBOR
3-month LIBOR
3-month LIBOR
SOFR
SOFR
SOFR
Total
$
2,550
$
2,550
(1)
Contractual terms of instruments using the 3-month or 6-month LIBOR at December 31, 2022 were modified to the SOFR reference rate in the
first quarter of 2023.
MOODY'S 2023 10-K
91
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,
2023
2022
2021
(251) $
(231) $
(171)
(89) $
(8) $
23
56
$
(56) $
(228) $
228
$
(60)
60
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
Total
Nature of Swap
Pay Fixed/Receive Fixed
Pay Floating/Receive Floating
Pay Floating/Receive Floating
Total
December 31, 2023
Pay
Receive
Notional
Amount
Weighted Average Interest
Rate
Notional
Amount
Weighted Average Interest
Rate
€
€
€
€
765
2,138
2,903
3.67%
Based on ESTR
$
$
800
2,250
3,050
5.25%
Based on SOFR
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
92 MOODY'S 2023 10-K
As of December 31, 2023, 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,
Notional Amount (Pay)
Notional Amount (Receive)
2026
2027
2028
2029
2031
2032
Total
€
€
450 $
531
588
373
481
480
2,903 $
500
550
600
400
500
500
3,050
The following table provides information on the gains/(losses) on the Company’s net investment and cash flow hedges:
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)
Derivative and Non-Derivative
Instruments in Net
Investment Hedging
Relationships
Year Ended December 31,
Year Ended December 31,
Year Ended December 31,
2023
2022
2021
2023
2022
2021
2023
2022
2021
FX forward contracts
$
— $
— $
Cross currency swaps
Long-term debt
(97)
(35)
99
65
18
143
81
$
— $
— $
—
—
—
—
Total net investment hedges
$ (132) $
164 $
242
$
— $
— $
1
—
—
1
$
— $
— $
54
—
56
—
$
54 $
56 $
Derivatives in Cash Flow
Hedging Relationships
Cross currency swaps
Interest rate contracts
Total cash flow hedges
$
$
Total
$ (132) $
164 $
242
$
— $
— $
— $
1 $
— $
— $
— $
— $
—
—
—
— $
— $
— $
(2)
(1) $
(1) $
(2)
(2) $
(2) $
(2)
(2)
(1)
$
$
—
— $
54 $
—
— $
56 $
—
35
—
35
—
—
—
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 swaps
Total cash flow hedges
Total net gain in AOCL
Cumulative Gains/(Losses), net of tax
December 31, 2023 December 31, 2022
$
$
$
21
29
3
53
(45)
1
(44)
9
$
118
29
38
185
(47)
2
(45)
140
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 ASC Topic 815. 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 August 2024.
MOODY'S 2023 10-K
93
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, 2023
December 31, 2022
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 Indian rupee
Contracts to sell euros for USD
Contracts to sell USD for AUD
Contracts to sell Canadian dollars for USD
$
$
$
$
$
$
€
$
$
513
14
£
¥
147 C$
50 S$
60
€
23
₹
— $
5 A$
25
$
407
2,000
200
67
55
1,900
$
$
$
$
$
$
— €
8
19
$
$
170
24
£
¥
87 C$
50 S$
116
19
85
€
₹
$
— A$
— $
146
3,500
120
70
115
1,600
89
—
—
NOTE: € = euro, £ = British pound, S$ = Singapore dollar, $ = U.S. dollar, ¥ = Japanese yen, C$ = Canadian dollar, ₹= Indian
rupee, A$ = Australian dollar
Total Return Swaps
Beginning in the second quarter of 2023, the Company entered into total return swaps to mitigate market-driven changes in the
value of certain liabilities associated with the Company's deferred compensation plans. The notional amount of the total return
swaps as of December 31, 2023 was $58 million.
The following table summarizes the impact to the consolidated statements of operations relating to the net gains and (losses) on
the Company’s derivatives which are not designated as hedging instruments:
Derivatives Not Designated
as Accounting Hedges
Consolidated Statements of Operations
Location
FX forwards
Other non-operating income, net
Foreign exchange forwards
relating to RMS acquisition (1)
Total return swaps
Total return swaps
Other non-operating income, net
Operating expense
SG&A expense
$
$
$
$
Year Ended December 31,
2023
2022
2021
15
$
(72) $
— $
2
1
$
$
— $
— $
— $
(27)
(13)
—
—
(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.
94 MOODY'S 2023 10-K
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
Consolidated
Balance Sheet
Location
December 31,
2023
December 31,
2022
Assets:
Derivatives designated as accounting hedges:
Cross-currency swaps designated as net investment hedges
Other assets
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:
$
$
$
3
$
$
$
13
16
183
183
366
27
19
46
78
239
317
Long-term debt designated as net investment hedge
Long-term debt
1,381
1,334
Derivatives not designated as accounting hedges:
FX forwards on certain assets and liabilities
Total liabilities
NOTE 8
PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of:
Accounts payable and
accrued liabilities
—
2
$
1,747
$
1,653
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
$
$
December 31,
2023
2022
354
$
57
1,232
232
1,875
(1,272)
603
$
339
54
995
237
1,625
(1,123)
502
The increase in internal-use computer software in the table above primarily relates to capitalized software development costs
pursuant to MA's strategic shift to SaaS-based solutions. Depreciation and amortization expense related to the above assets for
the years ended December 31, 2023, 2022, and 2021 was $175 million, $131 million, and $99 million, respectively, of which
$121 million, $79 million, and $54 million, respectively, related to amortization of internal-use computer software.
On a weighted-average basis, Moody's internal-use computer software has an estimated useful life of approximately 4.5 years.
NOTE 9
ACQUISITION
The material business combination described below is 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.
RMS
MOODY'S 2023 10-K
95
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 expands Moody’s insurance data and analytics business and accelerates 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
Accounts receivable
Other current assets
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
Deferred tax assets, net
Other assets
Liabilities:
Accounts payable and accrued liabilities
Deferred revenue
Operating lease liabilities
Deferred tax liabilities, net
Uncertain tax positions
Other liabilities
Total liabilities
Net assets acquired
Goodwill
55
38
12
13
64
779
1,357
50
99
$
518
212
49
(96)
(89)
(68)
(214)
(71)
(2)
$
$
(540)
1,927
$
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
consolidated statement of operations for the year ended December 31, 2021.
96 MOODY'S 2023 10-K
Supplementary Unaudited Pro Forma Information
Supplemental information on an unaudited pro forma basis is presented below for the twelve months ended December 31, 2021 as
if the acquisition of RMS occurred on January 1, 2021. 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, 2021.
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
$
$
6,463
2,244
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 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 relating to a fair value adjustment to deferred revenue required as part of acquisition accounting for the
year ended December 31, 2021.
NOTE 10
GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS
The following tables summarize the activity in goodwill:
Year Ended December 31, 2023
MA
Accumulated
impairment
charge
Gross
goodwill
Net
goodwill
Gross
goodwill
MIS
Accumulated
impairment
charge
Net
goodwill
Gross
goodwill
Consolidated
Accumulated
impairment
charge
Net
goodwill
$ 5,474 $
(12) $ 5,462 $
377
$
— $
377
$ 5,851
$
(12) $ 5,839
90
117
—
—
90
(87)
117
(3)
—
—
(87)
3
(3)
114
—
—
3
114
Balance at
beginning of year
Additions/
adjustments (1)
Foreign currency
translation
adjustments
Ending Balance
$ 5,681 $
(12) $ 5,669 $
287
$
— $
287
$ 5,968
$
(12) $ 5,956
Year Ended December 31, 2022
MA
Accumulated
impairment
charge
Gross
goodwill
Net
goodwill
Gross
goodwill
MIS
Accumulated
impairment
charge
Consolidated
Net
goodwill
Gross
goodwill
Accumulated
impairment
charge
Net
goodwill
$ 5,615 $
(12) $ 5,603 $
396
$
— $
396
$ 6,011
$
(12) $ 5,999
88
(229)
—
—
88
4
(229)
(23)
—
—
4
92
(23)
(252)
—
—
92
(252)
Balance at
beginning of year
Additions/
adjustments (2)
Foreign currency
translation
adjustments
Ending balance
$ 5,474 $
(12) $ 5,462 $
377
$
— $
377
$ 5,851
$
(12) $ 5,839
(1)
(2)
The 2023 additions/adjustments primarily relate to a reallocation of goodwill pursuant to a realignment of certain components of the
Company's ESG business in the first quarter of 2023.
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.
MOODY'S 2023 10-K
97
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,
2023
2022
$
2,065
$
(556)
1,509
674
(364)
310
179
(82)
97
199
(72)
127
52
(46)
6
2,024
(453)
1,571
661
(283)
378
178
(64)
114
197
(58)
139
52
(44)
8
$
2,049
$
2,210
(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
$
198
$
200
$
158
Estimated future annual amortization expense for intangible assets subject to amortization is as follows:
Year Ending December 31,
Year Ended December 31,
2023
2022
2021
2024
2025
2026
2027
2028
Thereafter
Total estimated future amortization
NOTE 11
RESTRUCTURING
$
$
193
190
186
170
158
1,152
2,049
On June 30, 2022, the chief executive officer of Moody’s approved the 2022 - 2023 Geolocation Restructuring Program. The
Company estimates that the program will result in annualized savings of $145 million to $165 million per year. This program relates
to the Company's post-COVID-19 geolocation strategy and other strategic initiatives and includes the rationalization and exit of
certain leased office spaces and a reduction in staff, including the relocation of certain job functions. Cumulative charges related to
this program are shown in the table below. 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 substantially complete as of December 31, 2023. Cash outlays associated with this program, which primarily relate to
personnel-related costs, are expected to be $130 million to $140 million, substantially all of which are expected to be paid by the
end of 2024.
98 MOODY'S 2023 10-K
Total expenses included in the accompanying consolidated statements of operations relating to the Company's 2022 - 2023
Geolocation Restructuring Program are as follows (table excludes immaterial adjustments relating to the finalization of prior
programs in previous years):
2022 - 2023 Geolocation Restructuring Program
Employee Termination Costs (1)
Real Estate Related Costs (2)
Other Costs (3)
Total Restructuring
$
$
Year ended December 31,
2023
2022
Cumulative expense
incurred
51 $
36
—
87 $
85 $
27
1
113 $
136
63
1
200
(1)
(2)
(3)
Amount in the year ended December 31, 2023 includes severance costs, while amount in the year ended December 31, 2022 includes both
severance costs and expense related to the modification of equity awards.
For the year ended December 31, 2023, primarily includes ROU Asset impairment charges. For the year ended December 31, 2022, primarily
includes ROU Asset and leasehold improvement impairment charges and the non-cash acceleration of amortization of abandoned ROU
Assets and leasehold improvements. The fair value of the impaired assets in both periods 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 for the year ended
December 31, 2023 was $4 million and was categorized as Level 3 within the ASC Topic 820 fair value hierarchy. The fair value of those
assets subsequent to the impairment for the year ended December 31, 2022 was $0.
Primarily includes professional service fees related to execution of the restructuring program.
Changes to the restructuring liability were as follows:
Balance as of January 1
2020 MA Strategic Reorganization Restructuring Program:
Cost incurred and adjustments
Cash payments
2022 - 2023 Geolocation Restructuring Program:
Cost incurred and adjustments
Cash payments and adjustments
Balance as of December 31 (1)
2023
2022
65
$
—
(1)
51
(79)
36
$
4
(1)
(2)
86
(22)
65
$
$
(1)
Restructuring liability is primarily comprised of employee termination costs, with an immaterial amount of real estate-related and other costs.
Amounts related to the year ended December 31, 2021 are not considered material for disclosure.
As of December 31, 2023, substantially all of the remaining $36 million restructuring liability is expected to be paid out in 2024.
NOTE 12
FAIR VALUE
The tables below present information about items that are carried at fair value at December 31, 2023 and 2022:
Description
Assets:
Derivatives (1)
Money market funds/mutual funds
Liabilities:
Total
Derivatives (1)
Total
Fair value Measurement as of December 31, 2023
Level 2
Level 1
Balance
$
$
$
$
16
$
107
123
366
366
$
$
$
— $
107
107
$
— $
— $
16
—
16
366
366
MOODY'S 2023 10-K
99
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
(1)
Represents fair value of certain derivative contracts 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 money market funds 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.
Money market funds and mutual funds:
The money market funds and mutual funds in the table above are deemed to be equity securities with readily determinable fair
values with changes in 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.
100 MOODY'S 2023 10-K
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
Interest receivable on interest rate and cross currency swaps
Other
Total other current assets
Other assets:
Investments in non-consolidated affiliates
Deposits for real-estate leases
Indemnification assets related to acquisitions
Mutual funds, certificates of deposit and money market deposit accounts/funds
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
$
$
$
December 31,
2023
2022
$
115
133
116
13
79
33
489
$
December 31,
2023
2022
521
$
16
111
100
47
196
3
41
103
235
119
106
19
74
30
583
517
15
110
87
40
171
27
40
85
$
1,138
$
1,092
December 31,
2023
2022
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
Interest payable on interest rate and cross currency swaps
Other
$
130
345
105
7
46
83
23
108
15
24
—
35
67
88
104
276
102
6
49
92
52
86
7
23
2
65
52
95
Total accounts payable and accrued liabilities
$
1,076
$
1,011
MOODY'S 2023 10-K
101
Other liabilities:
Pension and other retirement employee benefits
$
190
$
December 31,
2023
2022
Interest accrued on UTPs
MAKS indemnification provisions
Income tax liability – non-current portion
Derivative instruments designated as accounting hedges
Restructuring liability – non-current portion
Other
Total other liabilities
Investments in non-consolidated affiliates:
36
19
15
366
1
49
$
676
$
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,
2023
2022
$
$
$
186
327
8
521
$
189
47
23
48
317
—
50
674
187
325
5
517
(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.
102 MOODY'S 2023 10-K
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
Total losses on currency translation adjustments
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
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 gains (losses), prior
service credits (costs), and settlement gain
(charge) included in net income
Settlement credit (charge)
Total before income taxes
Income tax effect of item above
Total pension and other retirement benefits
Total net gains (losses) included in Net Income
attributable to reclassifications out of AOCL
$
Year Ended December 31,
2023
2022
2021
Location in the Consolidated
Statements of Operations
$
— $
(20) $
— Other non-operating income, net
—
1
(3)
(2)
1
(1)
—
—
—
—
2
1
3
—
3
2
(20)
—
1
(3)
(2)
—
(2)
—
—
—
—
(3)
—
(3)
1
(2)
— Other non-operating income, net
(2) Other non-operating income, net
(2)
— Provision for income taxes
(2)
2 Other non-operating income, net
2
(1) Provision for income taxes
1
(11) Other non-operating income, net
(8) Other non-operating income, net
(19)
5 Provision for income taxes
(14)
$
(24) $
(15)
The following tables show changes in AOCL by component (net of tax):
Year Ended December 31, 2023
Pension and
Other
Retirement
Benefits
Gains/
(Losses) on
Cash Flow
Hedges
Foreign
Currency
Translation
Adjustments
Net
Investment
Hedges
Total
Balance at December 31, 2022
Other comprehensive income/(loss) before
reclassifications
Amounts reclassified from AOCL
Other comprehensive income/(loss)
Balance at December 31, 2023
$
$
(47) $
(45) $
(736) $
185
$
(643)
(6)
(3)
(9)
—
1
1
216
—
216
(132)
—
(132)
78
(2)
76
(56) $
(44) $
(520) $
53
$
(567)
MOODY'S 2023 10-K
103
Year Ended December 31, 2022
Pension and
Other
Retirement
Benefits
Gains/
(Losses) on
Cash Flow
Hedges
Foreign
Currency
Translation
Adjustments
Net
Investment
Hedges
Total
Balance at December 31, 2021
Other comprehensive income/(loss) before
reclassifications
Amounts reclassified from AOCL
Other comprehensive income/(loss)
Balance at December 31, 2022
$
$
(49) $
(47) $
(335) $
21 $
(410)
—
2
2
—
2
2
(421)
20
(401)
164
—
164
(47) $
(45) $
(736) $
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
Balance at December 31, 2020
Other comprehensive income/(loss) before
reclassifications
Amounts reclassified from AOCL
Other comprehensive income/(loss)
Balance at December 31, 2021
$
$
(118) $
(49) $
(45) $
(220) $
(432)
55
14
69
—
2
2
(290)
—
(290)
242
(1)
241
7
15
22
(49) $
(47) $
(335) $
21 $
(410)
NOTE 15
PENSION AND OTHER RETIREMENT BENEFITS
U.S. Plans
Moody’s maintains funded and unfunded noncontributory 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.
104 MOODY'S 2023 10-K
The 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:
Change in benefit obligation:
Benefit obligation, beginning of the period
$
(462) $
(570) $
(39) $
Pension Plans
Other Retirement Plans
2023
2022
2023
2022
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
$
$
$
$
$
$
$
(11)
(22)
—
30
(4)
(15)
(14)
(15)
—
20
1
116
(3)
(2)
(1)
2
2
(1)
(484) $
(462) $
(42) $
420
$
544
$
— $
48
(30)
11
—
449
$
(35) $
(111)
(20)
7
—
420
$
(42) $
40
$
39
$
(13)
(62)
(35) $
(453) $
(5)
(76)
(42) $
(432)
—
(2)
1
1
— $
(42) $
— $
(2)
(40)
(42) $
(48)
(4)
(1)
(1)
2
—
13
(39)
—
—
(2)
1
1
—
(39)
—
(2)
(37)
(39)
The net increase in the pension benefit obligation from assumption changes and actuarial losses in 2023 primarily resulted from
decreases to the discount rates as well as an increase to the annuity conversion rate. 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 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,
2023
2022
$
$
75
67
$
$
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 gains (losses)
Net prior service credits
Total recognized in AOCL – pre-tax
Pension Plans
Other Retirement Plans
2023
2022
2023
2022
$
$
(82) $
1
(81) $
(77) $
2
(75) $
10
—
10
$
$
82
72
9
—
9
MOODY'S 2023 10-K
105
Net periodic pension (income) expenses recognized for the Retirement Plans are as follows for the years ended December 31:
Pension Plans
Other Retirement Plans
2023
2022
2021
2023
2022
2021
Components of net periodic
expense
Service cost
Interest cost
$
Expected return on plan assets
Amortization of net actuarial
(gains) losses and prior service
credits from earlier periods
(Gain) loss on settlement of
pension obligations
$
11
22
(32)
(1)
(2)
Net periodic (income) expense $
(2) $
$
14
15
(26)
3
—
6
$
19
14
(27)
11
8
$
25
$
3
2
—
(1)
—
4
$
$
4
1
—
—
—
5
$
$
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
2023
2022
2021
2023
2022
2021
Amortization of net actuarial (gains)
losses and prior service credit
$
Settlement (gain) loss
Net actuarial (loss)/gain arising
during the period
(1) $
(2)
(3)
Total recognized in OCI – pre-tax
$
(6) $
ADDITIONAL INFORMATION:
Assumptions—Retirement Plans
$
3
—
(19)
(16) $
11
$
(1) $
— $
8
65
84
—
1
$
— $
—
13
13
$
4
1
—
1
—
6
1
—
4
5
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount rate
Rate of compensation increase
Pension Plans
Other Retirement Plans
2023
2022
2023
2022
4.73 %
3.60 %
4.93 %
3.63 %
4.75 %
—
4.90 %
—
Weighted-average assumptions used to determine net periodic benefit expense for years ended December 31:
Pension Plans
Other Retirement Plans
2023
2022
2021
2023
2022
2021
Discount rate
Expected return on plan assets
Rate of compensation increase
Cash balance plan interest
crediting rate
4.93 %
6.55 %
3.63 %
2.60 %
5.05 %
3.63 %
2.24 %
5.45 %
3.62 %
4.50 %
4.50 %
4.50 %
4.90 %
2.65 %
2.30 %
—
—
—
—
—
—
—
—
—
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 2023, the expected rate of return used in calculating the net periodic benefit costs was 6.55%. For
2024, the Company’s expected rate of return assumption is 6.10% to reflect the Company’s current view of long-term capital
market outlook.
106 MOODY'S 2023 10-K
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 35% (range of 23% to 46%) in equity securities, 61% (range of 44% to
77%) 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, 2023 and 2022 are as follows:
Fair Value Measurement as of December 31, 2023
Balance
Level 1
Level 2
$
5
$
— $
5
Measured
using NAV
practical
expedient (1)
—
$
% of total
assets
1 %
Asset Category
Cash and cash equivalents
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)
Private investment fund—high yield securities
Total fixed-income investments
Other investment—private real estate fund
106
21
20
147
29
60
144
25
14
272
25
Total Assets
$
449
$
—
—
—
—
—
—
—
25
—
25
—
25
106
21
20
147
—
60
144
—
—
204
—
$
356
$
—
—
—
—
29
—
—
—
14
43
25
68
24 %
5 %
4 %
33 %
6 %
13 %
32 %
6 %
3 %
60 %
5 %
100 %
MOODY'S 2023 10-K
107
Asset Category
Cash and cash equivalents
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
Fair Value Measurement as of December 31, 2022
Balance
Level 1
Level 2
$
5
$
— $
5
Measured
using NAV
practical
expedient (1)
—
$
% of total
assets
1 %
96
17
19
132
26
54
126
24
14
12
256
27
—
—
—
—
—
—
—
24
14
—
38
—
38
96
17
19
132
—
54
126
—
—
—
180
—
$
317
$
—
—
—
—
26
—
—
—
—
12
38
27
65
23 %
4 %
5 %
31 %
6 %
13 %
30 %
6 %
3 %
3 %
61 %
6 %
100 %
Total Assets
$
420
$
(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, 2023 and 2022. The
Company made payments of $11 million and $7 million related to its U.S. unfunded pension plan obligations during the years
ended December 31, 2023 and 2022, respectively. The Company currently does not anticipate making a contribution to its funded
pension plan in 2024, and anticipates making payments of $13 million related to its unfunded U.S. pension plans and immaterial
payments related to its other Retirement Plans during the year ended December 31, 2024.
108 MOODY'S 2023 10-K
Estimated Future Benefits Payable
Estimated future benefits payments for the Retirement Plans are as follows as of the year ended December 31, 2023:
Year Ending December 31,
2024
2025
2026
2027
2028
2029 - 2033
Defined Contribution Plans
Pension Plans
Other Retirement
Plans
$
$
28
25
28
30
30
167
2
2
2
2
3
18
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 $71 million, $35 million and $54 million in the years
ended December 31, 2023, 2022 and 2021, 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, 2023, 2022, and 2021, 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 315,400 and 329,300 shares of Moody’s common stock at December 31, 2023 and 2022,
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, 2023,
2022, and 2021 were $42 million, $37 million, and $32 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. In April 2023,
stockholders approved an amendment to the 2001 Plan increasing the number of shares of Common Stock authorized for issuance
by 4.0 million. This results in the 2001 Plan, which is shareholder approved, now permitting for the grant of up to 54.6 million
shares, of which not more than 10.7 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 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.
MOODY'S 2023 10-K
109
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,
2023
2022
2021
$
$
193
45
$
$
169
41
$
$
175
42
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,
2023
2022
2021
1.04 %
29 %
4.19 %
5.8
0.86 %
27 %
1.91 %
5.6
0.89 %
28 %
0.82 %
5.6
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,
2023
2022
2021
Weighted average grant date fair value per share
$
94.71
$
84.00
$
121.14
A summary of option activity as of December 31, 2023 and changes during the year then ended is presented below:
Options
Shares
Weighted
Average Exercise
Price Per Share
Weighted
Average
Remaining
Contractual Term
Aggregate
Intrinsic Value
Outstanding, December 31, 2022
Granted
Exercised
Outstanding, December 31, 2023
Vested and expected to vest, December 31, 2023
Exercisable, December 31, 2023
1.0
0.1
$
$
(0.3) $
0.8
0.8
0.6
$
$
$
181.35
295.42
116.05
212.29
212.11
176.07
5.0 years $
5.0 years $
3.8 years $
147
147
123
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, 2023 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, 2023. This amount varies based on the fair value of Moody’s stock. As of December 31, 2023, there was $9 million
of total unrecognized compensation expense related to options. The expense is expected to be recognized over a weighted
average period of 1.9 years.
110 MOODY'S 2023 10-K
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,
2023
2022
2021
$
$
$
32
58
14
$
$
$
8
9
2
$
$
$
24
55
13
A summary of nonvested restricted stock activity for the year ended December 31, 2023 is presented below:
Nonvested Restricted Stock
Shares
Balance, December 31, 2022
Granted
Vested
Forfeited
Balance, December 31, 2023
Weighted Average Grant
Date Fair Value
Per Share
1.3
0.7
$
$
(0.6) $
(0.1) $
1.3
$
288.47
296.05
269.38
290.39
300.39
As of December 31, 2023, there was $219 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,
2023
164
40
$
$
2022
180
42
$
$
2021
194
46
$
$
A summary of performance-based restricted stock activity for the year ended December 31, 2023 is presented below:
Performance-based restricted stock
Balance, December 31, 2022
Granted
Vested
Balance, December 31, 2023
Shares
Weighted Average Grant
Date Fair Value Per Share
0.3
0.1
$
$
(0.1) $
0.3
$
303.80
286.14
273.81
308.12
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,
2023
2022
2021
$
$
24
3
$
$
50
7
$
$
28
7
As of December 31, 2023, there was $24 million of total unrecognized compensation expense related to this plan. The expense is
expected to be recognized over a weighted average period of 2.0 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 2023, 2022, and 2021 resulting in the ESPP qualifying for non-compensatory status under ASC Topic 718. Accordingly, no
compensation expense was recognized for the ESPP in 2023, 2022, and 2021. 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.
MOODY'S 2023 10-K
111
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
Year Ended December 31,
2023
2022
2021
$
76
67
222
365
(14)
(4)
(20)
(38)
$
106
$
17
215
338
57
10
(19)
48
Total provision for income taxes
$
327
$
386
$
A reconciliation of the U.S. federal statutory tax rate to the Company’s ETR on income before provision for income taxes is as
follows:
404
106
249
759
(172)
(45)
(1)
(218)
541
U.S. statutory tax rate
State and local taxes, net of federal tax benefit
Foreign operations
Release of UTP reserves
Other
ETR
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,
2023
2022
2021
21.0 %
2.5 %
0.4 %
(5.7)%
(1.3)%
16.9 %
21.0 %
0.8 %
(0.2)%
— %
0.3 %
21.9 %
21.0 %
1.5 %
(1.5)%
— %
(1.4)%
19.6 %
344
$
488
$
932
Year Ended December 31,
2023
2022
2021
892
$
1,043
$
804
956
1,935
$
1,760
$
1,563
1,192
2,755
$
$
$
112 MOODY'S 2023 10-K
The components of deferred tax assets and liabilities are as follows:
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
Other
Total deferred tax assets
Deferred tax liabilities:
December 31,
2023
2022
$
9
$
19
60
53
25
103
200
38
7
29
6
13
562
9
15
57
51
27
115
206
36
11
68
12
14
621
Accumulated depreciation and amortization of intangible assets and capitalized software
(551)
(593)
ROU Assets
Capital gains
Self-insured related income
Revenue Accounting Standard - ASC Topic 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
(67)
(20)
(6)
(4)
(14)
(5)
(15)
(682)
(120)
(24)
$
(144) $
(82)
(29)
(12)
(5)
(13)
(48)
(9)
(791)
(170)
(21)
(191)
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 $15 million as of December 31, 2023.
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, 2023 includes benefits from the favorable resolution of
certain U.S. and non-U.S. UTPs of $120 million, excess tax benefits from stock compensation of $15 million, and other net
decreases to tax positions of $13 million.
The Company had valuation allowances of $24 million and $21 million at December 31, 2023 and 2022, respectively, related to
foreign net operating losses for which realization is uncertain.
As of December 31, 2023, the Company had $196 million of UTPs of which $93 million represents the amount that, if recognized,
would impact the ETR in future periods. The decrease in 2021 through 2023 resulted primarily from the favorable resolution of
uncertain tax positions in various U.S. and non U.S. jurisdictions.
MOODY'S 2023 10-K
113
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,
2023
2022
2021
$
322
$
388
$
21
3
(17)
(108)
(25)
12
12
(27)
(30)
(33)
$
196
$
322
$
483
102
18
—
(134)
(81)
388
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, 2023, 2022 and 2021 the amount of accrued interest recorded
in the Company’s consolidated balance sheets related to UTPs was $36 million, $47 million and $59 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 2019 through 2020 are currently under examination and
2021 through 2022 remain open to examination. The Company’s New York City tax returns for 2015 through 2020 are currently
under examination and years 2021 and 2022 are open for examination. The Company’s U.K. tax returns from 2017 to 2022 remain
open to examination.
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 2024. 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% did not have a significant impact on Moody’s ETR. The excise tax of 1% on corporate
share buybacks is recorded to shareholders' equity and does not have an impact on the Company’s ETR.
During 2023, multiple foreign jurisdictions in which the Company operates have enacted legislation to adopt a minimum tax rate
described in the Global Anti-Base Erosion tax model rules (referred to as GloBE or Pillar Two) issued by the OECD. A minimum
ETR of 15% would apply to multinational companies with consolidated revenue above €750 million, with an effective date
beginning in 2024. Under the GloBE rules, a company would be required to determine a combined ETR for all entities located in a
jurisdiction. If the jurisdictional tax rate is less than 15%, an additional tax generally will be due to bring the jurisdictional effective
tax rate up to 15%. Through December 31, 2023, the Company continues to assess the impact of the Pillar Two minimum tax
requirements for 2024. The analysis of the impact of the new requirements is currently being finalized, although it is not expected to
have a material impact upon our results of operations or financial position.
114 MOODY'S 2023 10-K
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, 2023
Principal
Amount
Fair Value of
Interest Rate
Swaps(1)
Unamortized
(Discount)
Premium
Unamortized
Debt
Issuance
Costs
Carrying
Value
Notes Payable:
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
600
552
500
400
400
829
700
300
300
600
600
500
500
500
$
(34) $
—
(26)
(34)
(36)
—
(16)
—
—
—
—
—
(29)
(8)
3
—
(2)
(2)
(6)
(2)
(1)
(4)
(2)
(6)
(12)
(7)
(8)
(2)
$
(4) $
(1)
(2)
(2)
(3)
(4)
(1)
(3)
(3)
(4)
(5)
(5)
(5)
(4)
565
551
470
362
355
823
682
293
295
590
583
488
458
486
Total long-term debt
$
7,281
$
(183) $
(51) $
(46) $
7,001
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 Note, due 2052
4.25% 2022 Senior Note, 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
(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.
MOODY'S 2023 10-K
115
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, 2023
December 31, 2022
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 SOFR; (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, 2023, 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.
In 2023, the Company fully repaid $500 million of the 2013 Senior Notes due 2024.
At December 31, 2023, the Company was in compliance with all covenants contained within all of the debt agreements. All of 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, 2023, there were no such cross defaults.
The repayment schedule for the Company’s borrowings is as follows:
Year Ending December 31,
Total
$
$
—
700
—
552
500
5,529
7,281
2024
2025
2026
2027
2028
Thereafter
Total
116 MOODY'S 2023 10-K
Interest expense, net
The following table summarizes the components of interest as presented in the consolidated statements of operations and the cash
paid for interest:
Expense on borrowings(1)
Income (expense) on UTPs and other tax related liabilities(2)
Net periodic pension costs - interest component
Income
Interest expense, net
Interest paid(3)
Year Ended December 31,
2022
2021
2023
(296) $
(216) $
8
(26)
63
(251) $
281
$
(13)
(17)
15
(231) $
198
$
(185)
21
(16)
9
(171)
162
$
$
$
(1) Expense on borrowings includes interest on long-term debt, as well as realized gains/losses related to interest rate swaps and cross currency
swaps, which are more fully discussed in Note 7.
(2) The amount for the year ended December 31, 2023 reflects a $22 million reduction of tax-related interest expense primarily related to the
resolutions of outstanding tax matters. 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.
(3) 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, 2023 and 2022 are as follows:
Long-term debt
December 31, 2023
December 31, 2022
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
$
7,001
$
6,402
$
7,389
$
6,564
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, 2023:
February 7, 2022
$
750
$
359
Date Authorized
Amount Authorized
Remaining Authority
During 2023, Moody’s repurchased 1.5 million shares of its common stock under its share repurchase program and issued a net
0.8 million shares under employee stock-based compensation plans. The net amount includes shares withheld for employee
payroll taxes.
On February 5, 2024, the Board authorized $1 billion of additional share repurchase authority, which will commence after the
utilization of the current remaining authority.
MOODY'S 2023 10-K
117
Dividends
The Company’s cash dividends were:
Dividends Per Share
Year ended December 31,
First quarter
Second quarter
Third quarter
Fourth quarter
Total
2023
2022
2021
Declared
Paid
Declared
Paid
Declared
Paid
$
$
0.77
$
0.77
$
0.70
$
0.70
$
0.62
$
0.77
0.77
0.77
0.77
0.77
0.77
0.70
0.70
0.70
0.70
0.70
0.70
0.62
0.62
0.62
3.08
$
3.08
$
2.80
$
2.80
$
2.48
$
0.62
0.62
0.62
0.62
2.48
On February 5, 2024, the Board approved the declaration of a quarterly dividend of $0.85 per share of Moody’s common stock,
payable on March 15, 2024 to shareholders of record at the close of business on February 23, 2024. The continued payment of
dividends at the rate noted above, or at all, is subject to the discretion of the Board.
NOTE 20
LEASES
The Company has operating leases, substantially all of which 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. 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,
2023
2022
2021
$
$
93
$
(7)
22
108
$
102 $
(7)
20
115 $
98
(6)
19
111
During 2023 and 2022, the Company recorded charges of $32 million and $23 million, respectively, related to the exit of certain real
estate leases that resulted in ROU Asset impairment. The charges in both years were recorded within restructuring expense in the
consolidated statements 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
ROU Assets obtained in exchange for new operating lease liabilities
Year Ended December 31,
2023
2022
2021
$
$
119
40
$
$
118 $
35 $
113
137
Weighted-average remaining lease term (in years)
Weighted-average discount rate applied to operating leases
4.4
3.2 %
4.9
3.1 %
5.6
3.1 %
Year Ended December 31,
2023
2022
2021
118 MOODY'S 2023 10-K
The following table presents a maturity analysis of the future minimum lease payments included within the Company’s operating
lease liabilities at December 31, 2023:
Year Ending December 31,
Operating Leases
2024
2025
2026
2027
2028
Thereafter
Total lease payments (undiscounted)
Less: Interest
Present value of lease liabilities:
Lease liabilities - current
Lease liabilities - noncurrent
NOTE 21
CONTINGENCIES
$
$
$
$
118
108
89
71
20
36
442
28
414
108
306
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. MIS is
responding to SEC requests for documents and information in connection with an investigation of MIS’s compliance with record
preservation requirements relating to certain business communications sent over electronic messaging channels that have not
been approved by MIS. The SEC is conducting similar investigations of the record preservation practices of other NRSROs and
other registrants subject to record preservation requirements. 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: MA and MIS and accordingly, the Company reports in two reportable
segments: MA and MIS.
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 - DS, R&I, and D&I.
The MIS segment consists of five LOBs. The CFG, FIG, PPIF and SFG 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 professional services.
MOODY'S 2023 10-K
119
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. Additionally, 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. These intersegment fees are generally based on the
market value of the products and services being transferred between the segments.
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
$ 3,056
$ 2,860
$
— $
5,916
$ 2,769
$ 2,699
$
— $
5,468
MA
MIS
Eliminations Consolidated
MA
MIS
Eliminations Consolidated
Year Ended December 31,
2023
2022
Intersegment revenue
Revenue
Operating, SG&A
Adjusted Operating Income
13
3,069
2,132
937
186
3,046
1,386
1,660
Add:
Depreciation and
amortization
Restructuring
Operating Income
298
59
75
28
Total external revenue
Intersegment revenue
Revenue
Operating, SG&A
Adjusted Operating Income
Add:
Depreciation and amortization
Restructuring
Operating income
(199)
(199)
(199)
—
—
—
—
5,916
3,319
2,597
8
2,777
1,937
840
174
2,873
1,385
1,488
373
87
250
49
81
65
(182)
(182)
(182)
—
—
—
—
5,468
3,140
2,328
331
114
$
2,137
$
1,883
Year Ended December 31, 2021
MA
MIS
Eliminations
Consolidated
$
2,406
$
3,812
$
— $
7
2,413
1,786
627
185
1
165
3,977
1,503
2,474
72
(1)
(172)
(172)
(172)
—
—
—
$
6,218
—
6,218
3,117
3,101
257
—
2,844
The table below shows cumulative restructuring expense incurred through December 31, 2023 by reportable segment.
2022 - 2023 Geolocation Restructuring Program
$
108
$
92 $
200
MA
MIS
Total
The 2022 - 2023 Geolocation Restructuring program is more fully discussed in Note 11.
120 MOODY'S 2023 10-K
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,
2023
2022
2021
$
3,098
$
2,873
$
3,383
1,848
577
393
2,818
1,682
556
357
2,595
5,916
$
5,468
$
4,323
$
4,408
$
4,562
4,489
8,885
$
8,897
$
1,885
603
347
2,835
6,218
4,449
4,802
9,251
$
$
$
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,
2023
Allowances for credit losses
Deferred tax assets—valuation allowance
2022
Allowances for credit losses
Deferred tax assets—valuation allowance
2021
Allowances for credit losses
Deferred tax assets—valuation allowance
Balance at
Beginning of
the Year
Charged to
costs and
expenses
Deductions (1)
Balance at End
of the Year
$
$
$
$
$
$
(40) $
(21) $
(32) $
(18) $
(34) $
(15) $
(22) $
(2) $
(25) $
(4) $
(13) $
(4) $
27
$
(1) $
17
1
15
1
$
$
$
$
(35)
(24)
(40)
(21)
(32)
(18)
(1)
Reflects write-off of uncollectible accounts receivable or expiration of foreign net operating tax losses.
MOODY'S 2023 10-K
121
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:
Year Ended December 31,
2022
2021
2023
FX loss(1)
Purchase price hedge loss(2)
Net periodic pension income - non-service and non-interest cost components
Income from investments in non-consolidated affiliates(3)
Gain (loss) on investments
Other
Total
$
(30) $
(10) $
—
35
19
14
11
49
$
—
24
17
(14)
21
38
$
$
(1)
(13)
9
60
13
14
82
(1)
(2)
(3)
The amount for the year ended December 31, 2023 includes a $23 million loss recorded pursuant to an immaterial out-of-period adjustment
relating to the 2022 fiscal year. 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.
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.
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.
122 MOODY'S 2023 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 Interim 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 Interim 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 Interim 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,
2023.
Limitations on Controls
The Company's disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives as
specified above. The Company's management does not expect, however, that these disclosure controls and procedures will
prevent or detect all instances of error or fraud. Any control system, regardless of how well designed and operated, is based upon
certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation
of controls can provide absolute assurance that misstatements due to error or fraud will not occur, or that all control issues and
instances of fraud, if any, within the Company have been detected.
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 16, 2024, 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 2024 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 2023,” “Outstanding Equity Awards at Fiscal Year-End Table for
2023,” “Option Exercises and Stock Vested Table for 2023,” “Pension Benefits Table for 2023,” “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 2024 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 2024 Proxy
Statement and is incorporated by reference.
MOODY'S 2023 10-K
123
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 2024 Proxy Statement and is incorporated by reference.
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 2024 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 67, 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
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 of 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)
124 MOODY'S 2023 10-K
S-K EXHIBIT NUMBER
.3.7.1
.3.7.2
.3.8
.3.9
.3.10
.3.11
.3.12
.3.13
.3.14
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)
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†
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 (incorporated by
reference to Exhibit 10.1 to the Report on Form 8-K of the Registrant, file number 1-14037, filed April 21,
2023)
Form of Employee Non-Qualified Stock Option Grant Agreement (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 10.3.3.2 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) for the
Amended and Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan (incorporated by
reference to Exhibit 10.3.2.3 to the Registrant’s Annual Report on Form 10-K, file number 1-14037, filed
February 15, 2023)
Form of Employee Non-Qualified Stock Option Grant Agreement (for awards granted in 2024 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)
MOODY'S 2023 10-K
125
S-K EXHIBIT NUMBER
.3.3.2†
.3.3.3†*
.3.4.1†
Form of Performance Share Award Letter (for awards granted in 2023) 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 15, 2023)
Form of Performance Share Award Letter (for awards granted in 2024 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 2023) 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)
.3.4.2†
Form of Restricted Stock Unit Grant Agreement (for awards granted in 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 15, 2023)
.3.4.3†*
Form of Restricted Stock Unit Grant Agreement (for awards granted in 2024 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
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 to 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)
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)
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, 2023
126 MOODY'S 2023 10-K
S-K EXHIBIT NUMBER
23
31
32
97
101
104
*
†
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
Policy Relating to Recovery of Erroneously Awarded Compensation
.1*
Moody’s Corporation Comprehensive Clawback Policy
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
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 2023 10-K
127
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 14, 2024
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/ CAROLINE SULLIVAN
Caroline Sullivan,
/s/ JOSE MINAYA
Jose Minaya,
Interim Chief Financial Officer, Chief Accounting Officer and
Director
Corporate Controller
(principal financial and accounting officer)
/s/ LESLIE F. SEIDMAN
Leslie F. Seidman,
Director
/s/ ZIG SERAFIN
Zig Serafin,
Director
/s/ BRUCE VAN SAUN
Bruce Van Saun,
Director
Date: February 14, 2024
/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
128 MOODY'S 2023 10-K
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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
Equiniti Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
Phone: +1.800.937.5449
Online Shareholder Account Information
equiniti.com/us/ast-access/individuals/
HelpAST@equiniti.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, 2023 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
+1.212.553.0300
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 CouncilTM (FSC®)
standards. The 10-K of this report is
printed on 100% recycled paper.