Cover and table of contents

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Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form			10-Q

(Mark one)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			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									13-3998945
(State of Incorporation)									(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	MCO	New York Stock Exchange
1.75% Senior Notes Due 2027	MCO 27	New York Stock Exchange
0.950% Senior Notes Due 2030	MCO 30	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 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 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Shares Outstanding at September 30, 2021
185.9 million

Table of Contents


	MOODY’S CORPORATION INDEX TO FORM 10-Q
	Page(s)
Glossary of Terms and Abbreviations	3-6
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2021 and 2020	7
	Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, 2021 and 2020	8
	Consolidated Balance Sheets (Unaudited) at September 30, 2021 and December 31, 2020	9
	Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2021 and 2020	10
	Consolidated Statements of Shareholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2021 and 2020	11-14
	Notes to Condensed Consolidated Financial Statements (Unaudited)	15-49
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations
	The Company	50
	Sustainability	50

	Critical Accounting Estimates	51-52
	Reportable Segments	52
	Results of Operations	53-78
	Liquidity and Capital Resources	78-83
	Recently Issued Accounting Standards	84
	Contingencies	84
	Regulation	84
	Forward-Looking Statements	85-86
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	87
Item 4.	Controls and Procedures	87
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	88
Item 1A.	Risk Factors	88
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	88
Item 5.	Other Information	88
Item 6.	Exhibits	89-90

SIGNATURES

Table of Contents

GLOSSARY OF TERMS AND ABBREVIATIONS

The following terms, abbreviations and acronyms are used to identify frequently used terms in this report:


TERM			DEFINITION

Acquire Media (AM)			Business acquired by the Company in October 2020; an aggregator and distributor of curated adverse real-time news, multimedia, data, and alerts
Acquisition-Related Intangible Amortization Expense			Amortization of definite-lived intangible assets acquired by the Company from all business combination transactions

Adjusted Diluted EPS			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			Adjusted Operating Income divided by revenue
Americas			Represents countries within North and South America, excluding the U.S.
AOCI(L)			Accumulated other comprehensive income/loss; a separate component of shareholders’ equity
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, Korea, Malaysia, Singapore, Sri Lanka and Thailand

ASU			The FASB Accounting Standards Update to the ASC. It also 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
Board			The board of directors of the Company
BPS			Basis points
Bureau van Dijk			Bureau van Dijk Electronic Publishing, B.V., a global provider of business intelligence and company information; acquired by the Company on August 10, 2017 via the acquisition of Yellow Maple I B.V., an indirect parent of Bureau van Dijk
Catylist			A provider of commercial real estate (CRE) solutions for brokers; acquired by the Company on December 30, 2020
CFG			Corporate finance group; an LOB of MIS
CLO			Collateralized loan obligation
CMBS			Commercial mortgage-backed securities; an asset class within SFG
COLI			Corporate-Owned Life Insurance
Common Stock			The Company’s common stock
Company			Moody’s Corporation and its subsidiaries; MCO; Moody’s

Cortera			A provider of North American credit data and workflow solutions; the Company acquired Cortera in March 2021
COVID-19			An outbreak of a novel strain of coronavirus resulting in an international public health crisis and a global pandemic
CP			Commercial Paper
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 2018 Facility
CRAs			Credit rating agencies
Credit Losses Accounting Standard			Updates to the ASC pursuant to ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This new accounting guidance requires the use of an “expected credit loss” impairment model for most financial assets reported at amortized cost, which will require entities to estimate expected credit losses over the lifetime of the instrument.

Table of Contents


TERM			DEFINITION
DBPPs			Defined benefit pension plans
Dodd-Frank Act			Dodd-Frank Wall Street Reform and Consumer Protection Act
EMEA			Represents countries within Europe, the Middle East and Africa
EPS			Earnings per share
ERS			The Enterprise Risk Solutions LOB within MA, which offers risk management software solutions as well as related risk management advisory engagements services
ESG			Environmental, Social, and Governance
ESMA			European Securities and Markets Authority
ETR			Effective tax rate
EU			European Union
EUR			Euros
EURIBOR			The Euro Interbank Offered Rate
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
External Revenue			Revenue excluding any intersegment amounts
FASB			Financial Accounting Standards Board
FIG			Financial institutions group; an LOB of MIS

Free Cash Flow			Net cash provided by operating activities less cash paid for capital additions

FX			Foreign exchange
GAAP			U.S. Generally Accepted Accounting Principles
GBP			British pounds
ICRA			ICRA Limited; a provider of credit ratings and research in India. ICRA is a public company with its shares listed on the Bombay Stock Exchange and the National Stock Exchange of India. The Company previously held 28.5% equity ownership and in June 2014, increased that ownership stake to over 50% through the acquisition of additional shares




KIS Pricing			Korea Investors Service Pricing, Inc; a Korean provider of fixed income securities pricing and consolidated subsidiary of the Company
KIS Research			Korea Investors Service Research; a Korean provider of financial research and consolidated subsidiary of the Company
Korea			Republic of South Korea
LIBOR			London Interbank Offered Rate
LOB			Line of business
MA			Moody’s Analytics - a reportable segment of MCO which provides a wide range of products and services that support financial analysis and risk management activities of institutional participants in global financial markets; consists of two LOBs - RD&A and ERS

MAKS			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 was formerly part of the PS LOB and a reporting unit within the MA reportable segment

MCO			Moody’s Corporation and its subsidiaries; the Company; Moody’s
MD&A			Management’s Discussion and Analysis of Financial Condition and Results of Operations
MIS			Moody’s Investors Service - a reportable segment of MCO; consists of five LOBs - SFG, CFG, FIG, PPIF and MIS Other
MIS Other			Consists of financial instruments pricing services in the Asia-Pacific region, ICRA non-ratings revenue and revenue from providing ESG research, data and assessments. These businesses are components of MIS; MIS Other is an LOB of MIS
Moody’s			Moody’s Corporation and its subsidiaries; MCO; the Company

Table of Contents


TERM			DEFINITION
MSS			Moody's Shared Services; primarily consists of information technology and support staff such as finance, human resources and legal that support both MIS and MA.


Net Income			Net income attributable to Moody’s Corporation, which excludes net income from consolidated noncontrolling interests belonging to the minority interest holder


NM			Percentage change is not meaningful
Non-GAAP			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
NRSRO			Nationally Recognized Statistical Rating Organization, which is a credit rating agency registered with the SEC.
OCI			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

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 Plan			The U.S. retirement healthcare and U.S. retirement life insurance plans

PPIF			Public, project and infrastructure finance; an LOB of MIS
Profit Participation Plan			Defined contribution profit participation plan that covers substantially all U.S. employees of the Company


RD&A			An LOB within MA that offers subscription-based research, data and analytical products, including: credit ratings produced by MIS; credit research; quantitative credit scores and other analytical tools; economic research and forecasts; business intelligence and company information products; commercial real estate data and analytical tools; learning solutions


Recurring Revenue			For MIS, represents recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations, as well as revenue from programs such as commercial paper, medium-term notes and shelf registrations. For MIS Other, represents subscription-based revenue. For MA, represents subscription-based revenue and software maintenance revenue
Reform Act			Credit Rating Agency Reform Act of 2006
Regulatory DataCorp Inc. (RDC)			A global leader in risk and compliance intelligence; the Company acquired RDC in February 2020


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
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 changes 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			Residential mortgage-backed securities; an asset class within SFG

RMS			A global provider of climate and natural disaster risk modeling and analytics; acquired by the Company in September 2021
SEC			U.S. Securities and Exchange Commission
Securities Act			Securities Act of 1933, as amended
SFG			Structured finance group; an LOB of MIS
SG&A			Selling, general and administrative expenses
Tax Act			The “Tax Cuts and Jobs Act” enacted into U.S. law on December 22, 2017 which significantly amends the tax code in the U.S.

Table of Contents


TERM			DEFINITION
Transaction Revenue			For MIS, represents the initial rating of a new debt issuance as well as other one-time fees. For MIS Other, represents revenue from professional services as well as data services, research and analytical engagements. For MA, represents perpetual software license fees and revenue from software implementation services, risk management advisory projects, training and certification services, and research and analytical engagements
U.K.			United Kingdom
U.S.			United States
USD			U.S. dollar
UTPs			Uncertain tax positions

YTD			Year-To-Date
ZM Financial Systems (ZMFS)			A provider of risk and financial management software for the U.S. banking sector; acquired by the Company in December 2020

2020 MA Strategic Reorganization 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
2020 Real Estate Rationalization Restructuring Program			Restructuring program approved by the chief executive officer of Moody’s on July 29, 2020, primarily in response to the COVID-19 pandemic which revolves around the rationalization and exit of certain real estate leases.
2012 Senior Notes due 2022			Principal amount of $500 million, 4.50% senior unsecured notes due in September 2022
2013 Senior Notes due 2024			Principal amount of the $500 million, 4.875% senior unsecured notes due in February 2024
2014 Senior Notes due 2044			Principal amount of $600 million, 5.25% senior unsecured notes due in July 2044
2015 Senior Notes due 2027			Principal amount of €500 million, 1.75% senior unsecured notes due in March 2027
2017 Senior Notes due 2023			Principal amount of $500 million, 2.625% senior unsecured notes due January 15, 2023
2017 Senior Notes due 2028			Principal amount of $500 million, 3.250% senior unsecured notes due January 15, 2028

2018 Facility			Five-year unsecured revolving credit facility, with capacity to borrow up to $1 billion; backstops CP issued under the CP Program

2018 Senior Notes due 2029			Principal amount of $400 million, 4.25% senior unsecured notes due February 1, 2029
2018 Senior Notes due 2048			Principal amount of $400 million, 4.875% senior unsecured notes due December 17, 2048
2019 Senior Notes due 2030			Principal amount of €750 million, 0.950% senior unsecured notes due February 25, 2030
2020 Senior Notes due 2025			Principal amount of $700 million, 3.75% senior unsecured notes due March 24, 2025
2020 Senior Notes due 2050			Principal amount of $300 million, 3.25% senior unsecured notes due May 20, 2050
2020 Senior Notes due 2060			Principal amount of $500 million, 2.55% senior unsecured notes due August 18, 2060
2021 Senior Notes due 2031			Principal amount of $600 million, 2.00% senior unsecured notes due August 19, 2031
2021 Senior Notes due 2041			Principal amount of $600 million, 2.75% senior unsecured notes due August 19, 2041

Table of Contents

PART I. FINANCIAL INFORMATION

Next: Item 1. Financial Statements