Item 1. Financial Statements

187K characters. Original on sec.gov · Markdown

Item 1. Financial Statements

MOODY’S CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(Amounts in millions, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue	$	1,494	$	1,381	$	2,964	$	2,903
Expenses
Operating	426		393		854		810
Selling, general, and administrative	415		368		801		739
Depreciation and amortization	93		81		181		159
Restructuring	10		31		24		31


Total expenses	944		873		1,860		1,739
Operating income	550		508		1,104		1,164
Non-operating (expense) income, net
Interest expense, net	(71)		(55)		(119)		(108)
Other non-operating income (expense), net	13		(10)		13		(4)
Total non-operating (expense) income, net	(58)		(65)		(106)		(112)
Income before provision for income taxes	492		443		998		1,052
Provision for income taxes	115		116		120		227


Net income attributable to Moody's	$	377	$	327	$	878	$	825
Earnings per share attributable to Moody's common shareholders
Basic	$	2.05	$	1.78	$	4.79	$	4.47
Diluted	$	2.05	$	1.77	$	4.77	$	4.45
Weighted average number of shares outstanding
Basic	183.5		184.1		183.4		184.6
Diluted	184.1		184.9		184.1		185.4

The accompanying notes are an integral part of the condensed consolidated financial statements.

MOODY’S CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Amounts in millions)



	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
	Pre-tax amounts		Tax amounts		After-tax amounts		Pre-tax amounts		Tax amounts		After-tax amounts
Net Income					$	377					$	327
Other Comprehensive Income (Loss):
Foreign Currency Adjustments:
Foreign currency translation adjustments, net	$	51	$	—	51		$	(340)	$	3	(337)
Foreign currency translation adjustments - reclassification of losses included in net income	—		—		—		20		—		20
Net (losses) gains on net investment hedges	(37)		9		(28)		241		(60)		181

Cash Flow Hedges:

Reclassification of losses included in net income	—		(1)		(1)		—		—		—
Pension and Other Retirement Benefits:
Amortization of actuarial losses and prior service costs included in net income	(2)		1		(1)		1		—		1
Net actuarial gains and prior service costs	—		—		—		6		(2)		4
Total other comprehensive income (loss)	$	12	$	9	$	21	$	(72)	$	(59)	$	(131)
Comprehensive income					398						196
Less: comprehensive income (loss) attributable to noncontrolling interests					2						(3)
Comprehensive Income Attributable to Moody's					$	396					$	199


	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022

	Pre-tax amounts		Tax amounts		After-tax amounts		Pre-tax amounts		Tax amounts		After-tax amounts
Net Income					$	878					$	825
Other Comprehensive Income (Loss):
Foreign Currency Adjustments:
Foreign currency translation adjustments, net	$	160	$	(2)	158		$	(448)	$	4	(444)
Foreign currency translation adjustments - reclassification of losses included in net income	—		—		—		20		—		20
Net (losses) gains on net investment hedges	(113)		28		(85)		305		(77)		228

Cash Flow Hedges:

Reclassification of losses included in net income	1		(1)		—		1		—		1
Pension and Other Retirement Benefits:
Amortization of actuarial losses and prior service costs included in net income	(2)		1		(1)		1		—		1
Net actuarial gains and prior service costs	—		—		—		3		(1)		2
Total other comprehensive income (loss)	$	46	$	26	$	72	$	(118)	$	(74)	$	(192)
Comprehensive income					950						633
Less: comprehensive loss attributable to noncontrolling interests					(1)						(3)
Comprehensive Income Attributable to Moody's					$	951					$	636

The accompanying notes are an integral part of the condensed consolidated financial statements.

MOODY’S CORPORATION

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in millions, except share and per share data)


	June 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	2,278	$	1,769
Short-term investments	57		90
Accounts receivable, net of allowance for credit losses of $33 in 2023 and $40 in 2022	1,542		1,652
Other current assets	513		583

Total current assets	4,390		4,094
Property and equipment, net of accumulated depreciation of $1,195 in 2023 and $1,123 in 2022	541		502
Operating lease right-of-use assets	330		346
Goodwill	5,926		5,839
Intangible assets, net	2,138		2,210
Deferred tax assets, net	265		266
Other assets	1,101		1,092
Total assets	$	14,691	$	14,349
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	877	$	1,011
Current portion of operating lease liabilities	105		106

Current portion of long-term debt	300		—
Deferred revenue	1,385		1,258

Total current liabilities	2,667		2,375
Non-current portion of deferred revenue	67		75
Long-term debt	6,923		7,389
Deferred tax liabilities, net	485		457
Uncertain tax positions	204		322
Operating lease liabilities	344		368
Other liabilities	689		674
Total liabilities	11,379		11,660
Contingencies (Note 16)
Shareholders' equity:
Preferred stock, par value $0.01 per share; 10,000,000 shares authorized; no shares issued and outstanding	—		—
Series common stock, par value $0.01 per share; 10,000,000 shares authorized; no shares issued and outstanding	—		—
Common stock, par value $0.01 per share; 1,000,000,000 shares authorized; 342,902,272 shares issued at June 30, 2023 and December 31, 2022, respectively	3		3
Capital surplus	1,124		1,054
Retained earnings	14,213		13,618
Treasury stock, at cost; 159,444,702 and 159,702,362 shares of common stock at June 30, 2023 and December 31, 2022, respectively	(11,626)		(11,513)
Accumulated other comprehensive loss	(570)		(643)
Total Moody's shareholders' equity	3,144		2,519
Noncontrolling interests	168		170
Total shareholders' equity	3,312		2,689
Total liabilities, noncontrolling interests, and shareholders' equity	$	14,691	$	14,349

The accompanying notes are an integral part of the condensed consolidated financial statements.

MOODY’S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in millions)


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities
Net income	$	878	$	825
Reconciliation of net income to net cash provided by operating activities:
Depreciation and amortization	181		159
Stock-based compensation	97		84
Deferred income taxes	21		65



FX translation losses reclassified to net income	—		20
Changes in assets and liabilities:
Accounts receivable	121		63
Other current assets	78		(172)

Other assets	(24)		(12)
Lease obligations	(9)		(7)

Accounts payable and accrued liabilities	(86)		(276)
Deferred revenue	97		92
Uncertain tax positions	(120)		(44)
Other liabilities	(22)		(36)
Net cash provided by operating activities	1,212		761
Cash flows from investing activities
Capital additions	(127)		(133)
Purchases of investments	(55)		(182)
Sales and maturities of investments	82		99
Receipts from settlements of net investment hedges	—		136
Cash paid for acquisitions, net of cash acquired	(3)		(92)

Net cash used in investing activities	(103)		(172)
Cash flows from financing activities
Repayment of notes	(200)		—


Proceeds from stock-based compensation plans	31		16
Treasury shares	(108)		(871)

Repurchase of shares related to stock-based compensation	(64)		(83)
Dividends	(283)		(259)
Dividends to noncontrolling interest	—		(1)
Issuance of notes	—		491
Debt issuance costs and related fees	—		(5)

Net cash used in financing activities	(624)		(712)

Effect of exchange rate changes on cash and cash equivalents	24		(71)
Increase (decrease) in cash and cash equivalents	509		(194)
Cash and cash equivalents, beginning of period	1,769		1,811
Cash and cash equivalents, end of period	$	2,278	$	1,617

The accompanying notes are an integral part of the condensed consolidated financial statements.

MOODY’S CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

(Amounts in millions, except per share data)


Shareholders of Moody's Corporation
	Common Stock			Capital Surplus			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss		Total Moody's Shareholders' Equity		Non- Controlling Interests		Total Shareholders' Equity
	Shares	Amount				Shares			Amount
Balance at March 31, 2022	342.9	$	3	$	826		$	13,132		(158.4)	$	(11,096)	$	(471)	$	2,394	$	188	$	2,582
Net income							327								327		—		327
Dividends ($0.70 per share)							(131)								(131)		—		(131)
Stock-based compensation				38											38				38
Shares issued for stock-based compensation plans at average cost, net				6						—	1				7				7


Treasury shares repurchased				95						(1.0)	(308)				(213)				(213)

Currency translation adjustment, net of net investment hedge activity (net of tax of $57 million)													(133)		(133)		(3)		(136)
Net actuarial gains and prior service costs (net of tax of $2 million)													4		4				4
Amortization of prior service costs and actuarial losses													1		1				1

Balance at June 30, 2022	342.9	$	3	$	965		$	13,328		(159.4)	$	(11,403)	$	(599)	$	2,294	$	185	$	2,479

The accompanying notes are an integral part of the condensed consolidated financial statements.

MOODY'S CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

(Amounts in millions, except per share data)


Shareholders of Moody's Corporation
	Common Stock			Capital Surplus			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss		Total Moody's Shareholders' Equity		Non- Controlling Interests		Total Shareholders' Equity
	Shares	Amount				Shares			Amount
Balance at December 31, 2021	342.9	$	3	$	885		$	12,762		(157.3)	$	(10,513)	$	(410)	$	2,727	$	189	$	2,916
Net income							825								825		—		825
Dividends ($1.40 per share)							(259)								(259)		(1)		(260)
Stock-based compensation				84											84				84
Shares issued for stock-based compensation plans at average cost, net				(36)						0.5	(31)				(67)				(67)


Shares issued as consideration to acquire kompany(1)				35						0.1	9				44				44
Treasury shares repurchased				(3)						(2.7)	(868)				(871)				(871)

Currency translation adjustment, net of net investment hedge activity (net of tax of $73 million)													(193)		(193)		(3)		(196)
Net actuarial losses and prior service costs (net of tax of $1 million)													2		2				2
Amortization of prior service costs and actuarial losses													1		1				1
Net realized and unrealized gain on cash flow hedges													1		1				1
Balance at June 30, 2022	342.9	$	3	$	965		$	13,328		(159.4)	$	(11,403)	$	(599)	$	2,294	$	185	$	2,479

The accompanying notes are an integral part of the condensed consolidated financial statements.

(1) Represents a non-cash investing activity relating to the issuance of common stock to fund a portion of the purchase price for kompany.

MOODY'S CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

(Amounts in millions, except per share data)


Shareholders of Moody's Corporation
	Common Stock			Capital Surplus			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss		Total Moody's Shareholders' Equity		Non- Controlling Interests		Total Shareholders' Equity
	Shares	Amount				Shares			Amount
Balance at March 31, 2023	342.9	$	3	$	1,068		$	13,979		(159.4)	$	(11,570)	$	(589)	$	2,891	$	167	$	3,058
Net income							377								377		—		377
Dividends ($0.77 per share)							(143)								(143)		(1)		(144)
Stock-based compensation				50											50				50
Shares issued for stock-based compensation plans at average cost, net				6						0.3	11				17				17


Treasury shares repurchased										(0.3)	(67)				(67)				(67)
Currency translation adjustment, net of net investment hedge activity (net of tax of $9 million)													21		21		2		23

Amortization of prior service costs and actuarial losses													(1)		(1)				(1)
Net realized and unrealized gain on cash flow hedges (net of tax of $1 million)													(1)		(1)				(1)
Balance at June 30, 2023	342.9	$	3	$	1,124		$	14,213		(159.4)	$	(11,626)	$	(570)	$	3,144	$	168	$	3,312

The accompanying notes are an integral part of the condensed consolidated financial statements.

MOODY'S CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

(Amounts in millions, except per share data)


Shareholders of Moody's Corporation
	Common Stock			Capital Surplus			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Loss		Total Moody's Shareholders' Equity		Non- Controlling Interests		Total Shareholders' Equity
	Shares	Amount				Shares			Amount
Balance at December 31, 2022	342.9	$	3	$	1,054		$	13,618		(159.7)	$	(11,513)	$	(643)	$	2,519	$	170	$	2,689
Net income							878								878		—		878
Dividends ($1.54 per share)							(283)								(283)		(1)		(284)

Stock-based compensation				97											97				97
Shares issued for stock-based compensation plans at average cost, net				(27)						0.7	(4)				(31)				(31)



Treasury shares repurchased				—						(0.4)	(109)				(109)				(109)

Currency translation adjustment, net of net investment hedge activity (net of tax of $26 million)													74		74		(1)		73

Amortization of prior service costs and actuarial losses (net of tax of $1 million)													(1)		(1)				(1)

Balance at June 30, 2023	342.9	$	3	$	1,124		$	14,213		(159.4)	$	(11,626)	$	(570)	$	3,144	$	168	$	3,312

The accompanying notes are an integral part of the condensed consolidated financial statements.

MOODY’S CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(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 risk assessment firm 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 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.

These interim financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the Company’s consolidated financial statements and related notes in the Company’s 2022 annual report on Form 10-K filed with the SEC on February 15, 2023. The results of interim periods are not necessarily indicative of results for the full year or any subsequent period. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

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 U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. In December 2022, the FASB issued ASU 2022-06, "Reference Rate Reform—Deferral of the Sunset Date of Topic 848," which deferred the sunset date of Topic 848 to December 31, 2024. These ASU's were effective upon issuance and the 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 8.

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 2.

NOTE 2. REVENUES

Revenue by Category

The following table presents the Company’s revenues disaggregated by LOB:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
MA:
Decision Solutions (DS)
Banking	$	123	$	110	$	254	$	240
Insurance	133		119		266		241
KYC	78		65		148		127
Total DS	334		294		668		608
Research and Insights (R&I)	217		203		432		406
Data and Information (D&I)	196		178		384		356
Total external revenue	747		675		1,484		1,370
Intersegment revenue	4		1		7		3
Total MA	751		676		1,491		1,373
MIS:
Corporate Finance (CFG)
Investment-grade	94		68		209		182
High-yield	46		31		78		70
Bank loans	68		72		127		185
Other accounts (1)	157		151		307		302
Total CFG	365		322		721		739
Structured Finance (SFG)
Asset-backed securities	32		31		59		63
RMBS	25		28		50		63
CMBS	14		27		28		65
Structured credit	31		36		63		75
Other accounts	—		1		1		1
Total SFG	102		123		201		267
Financial Institutions (FIG)
Banking	97		93		197		182
Insurance	35		24		68		58
Managed investments	10		8		16		13
Other accounts	3		3		6		6
Total FIG	145		128		287		259
Public, Project and Infrastructure Finance (PPIF)
Public finance / sovereign	54		55		106		113
Project and infrastructure	73		67		150		132
Total PPIF	127		122		256		245
Total ratings revenue	739		695		1,465		1,510
MIS Other	8		11		15		23
Total external revenue	747		706		1,480		1,533
Intersegment revenue	46		43		91		86
Total MIS	793		749		1,571		1,619
Eliminations	(50)		(44)		(98)		(89)
Total MCO	$	1,494	$	1,381	$	2,964	$	2,903

(1) Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes, and ICRA corporate finance revenue.

The following table presents the Company’s revenues disaggregated by LOB and geographic area:


	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
	U.S.		Non-U.S		Total		U.S.		Non-U.S		Total
MA:
Decision Solutions	$	140	$	194	$	334	$	120	$	174	$	294
Research and Insights	119		98		217		115		88		203
Data and Information	68		128		196		62		116		178
Total MA	327		420		747		297		378		675
MIS:
Corporate Finance	239		126		365		210		112		322
Structured Finance	60		42		102		83		40		123
Financial Institutions	73		72		145		53		75		128
Public, Project and Infrastructure Finance	83		44		127		78		44		122
Total ratings revenue	455		284		739		424		271		695
MIS Other	—		8		8		2		9		11
Total MIS	455		292		747		426		280		706
Total MCO	$	782	$	712	$	1,494	$	723	$	658	$	1,381


	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
	U.S.		Non-U.S		Total		U.S.		Non-U.S		Total
MA:
Decision Solutions	$	279	$	389	$	668	$	253	$	355	$	608
Research and Insights	237		195		432		232		174		406
Data and Information	135		249		384		122		234		356
Total MA	651		833		1,484		607		763		1,370
MIS:
Corporate Finance	485		236		721		485		254		739
Structured Finance	121		80		201		180		87		267
Financial Institutions	136		151		287		118		141		259
Public, Project and Infrastructure Finance	159		97		256		153		92		245
Total ratings revenue	901		564		1,465		936		574		1,510
MIS Other	—		15		15		3		20		23
Total MIS	901		579		1,480		939		594		1,533
Total MCO	$	1,552	$	1,412	$	2,964	$	1,546	$	1,357	$	2,903

The following table presents the Company’s reportable segment revenues disaggregated by segment and geographic region:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
MA:
U.S.	$	327	$	297	$	651	$	607
Non-U.S.:
EMEA	289		257		567		520
Asia-Pacific	71		71		151		139
Americas	60		50		115		104
Total Non-U.S.	420		378		833		763
Total MA	747		675		1,484		1,370
MIS:
U.S.	455		426		901		939
Non-U.S.:
EMEA	181		165		354		358
Asia-Pacific	75		80		146		154
Americas	36		35		79		82
Total Non-U.S.	292		280		579		594
Total MIS	747		706		1,480		1,533
Total MCO	$	1,494	$	1,381	$	2,964	$	2,903

The following tables summarize the split between Transaction Revenue and Recurring Revenue.


	Three Months Ended June 30,
	2023										2022
	Transaction				Recurring			Total			Transaction			Recurring			Total
Decision Solutions	$	43			$	291		$	334		$	38		$	256		$	294
	13		%		87		%	100		%	13		%	87		%	100		%
Research and Insights	$	3			$	214		$	217		$	4		$	199		$	203
	1		%		99		%	100		%	2		%	98		%	100		%
Data and Information	$	1			$	195		$	196		$	—		$	178		$	178
	1		%		99		%	100		%	—		%	100		%	100		%
Total MA	$	47		(1)	$	700		$	747		$	42		$	633		$	675
	6		%		94		%	100		%	6		%	94		%	100		%
Corporate Finance	$	236			$	129		$	365		$	199		$	123		$	322
	65		%		35		%	100		%	62		%	38		%	100		%
Structured Finance	$	48			$	54		$	102		$	73		$	50		$	123
	47		%		53		%	100		%	59		%	41		%	100		%
Financial Institutions	$	73			$	72		$	145		$	57		$	71		$	128
	50		%		50		%	100		%	45		%	55		%	100		%
Public, Project and Infrastructure Finance	$	84			$	43		$	127		$	82		$	40		$	122
	66		%		34		%	100		%	67		%	33		%	100		%
MIS Other	$	2			$	6		$	8		$	1		$	10		$	11
	25		%		75		%	100		%	9		%	91		%	100		%
Total MIS	$	443			$	304		$	747		$	412		$	294		$	706
	59		%		41		%	100		%	58		%	42		%	100		%
Total Moody's Corporation	$	490			$	1,004		$	1,494		$	454		$	927		$	1,381
	33		%		67		%	100		%	33		%	67		%	100		%



	Six Months Ended June 30,
	2023										2022
	Transaction				Recurring			Total			Transaction			Recurring			Total
Decision Solutions	$	83			$	585		$	668		$	78		$	530		$	608
	12		%		88		%	100		%	13		%	87		%	100		%
Research and Insights	$	8			$	424		$	432		$	8		$	398		$	406
	2		%		98		%	100		%	2		%	98		%	100		%
Data and Information	$	1			$	383		$	384		$	—		$	356		$	356
	—		%		100		%	100		%	—		%	100		%	100		%
Total MA	$	92		(1)	$	1,392		$	1,484		$	86		$	1,284		$	1,370
	6		%		94		%	100		%	6		%	94		%	100		%
Corporate Finance	$	466			$	255		$	721		$	492		$	247		$	739
	65		%		35		%	100		%	67		%	33		%	100		%
Structured Finance	$	94			$	107		$	201		$	166		$	101		$	267
	47		%		53		%	100		%	62		%	38		%	100		%
Financial Institutions	$	143			$	144		$	287		$	118		$	141		$	259
	50		%		50		%	100		%	46		%	54		%	100		%
Public, Project and Infrastructure Finance	$	169			$	87		$	256		$	161		$	84		$	245
	66		%		34		%	100		%	66		%	34		%	100		%
MIS Other	$	3			$	12		$	15		$	2		$	21		$	23
	20		%		80		%	100		%	9		%	91		%	100		%
Total MIS	$	875			$	605		$	1,480		$	939		$	594		$	1,533
	59		%		41		%	100		%	61		%	39		%	100		%
Total Moody's Corporation	$	967			$	1,997		$	2,964		$	1,025		$	1,878		$	2,903
	33		%		67		%	100		%	35		%	65		%	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:


	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
	MA		MIS		Total		MA		MIS		Total
Revenue recognized at a point in time	$	22	$	443	$	465	$	49	$	875	$	924
Revenue recognized over time	725		304		1,029		1,435		605		2,040
Total	$	747	$	747	$	1,494	$	1,484	$	1,480	$	2,964



	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
	MA		MIS		Total		MA		MIS		Total
Revenue recognized at a point in time	$	16	$	412	$	428	$	57	$	939	$	996
Revenue recognized over time	659		294		953		1,313		594		1,907
Total	$	675	$	706	$	1,381	$	1,370	$	1,533	$	2,903

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 June 30, 2023 and December 31, 2022:


	As of June 30, 2023				As of December 31, 2022
	MA		MIS		MA		MIS
Unbilled Receivables	$	119	$	428	$	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 three and six months ended June 30, 2023 and 2022 are as follows:



	Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
	MA		MIS		Total		MA		MIS		Total
Balance at March 31,	$	1,288	$	360	$	1,648	$	1,234	$	377	$	1,611
Changes in deferred revenue
Revenue recognized that was included in the deferred revenue balance at the beginning of the period	(592)		(116)		(708)		(391)		(117)		(508)
Increases due to amounts billable excluding amounts recognized as revenue during the period	417		91		508		213		94		307

Effect of exchange rate changes	3		1		4		(37)		(7)		(44)
Total changes in deferred revenue	(172)		(24)		(196)		(215)		(30)		(245)
Balance at June 30,	$	1,116	$	336	$	1,452	$	1,019	$	347	$	1,366



	Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
	MA		MIS		Total		MA		MIS		Total
Balance at December 31,	$	1,055	$	278	$	1,333	$	1,039	$	296	$	1,335
Changes in deferred revenue
Revenue recognized that was included in the deferred revenue balance at the beginning of the period	(788)		(160)		(948)		(654)		(155)		(809)
Increases due to amounts billable excluding amounts recognized as revenue during the period	830		216		1,046		680		215		895
Increases due to acquisitions during the period	—		—		—		1		—		1
Effect of exchange rate changes	19		2		21		(47)		(9)		(56)
Total changes in deferred revenue	61		58		119		(20)		51		31
Balance at June 30,	$	1,116	$	336	$	1,452	$	1,019	$	347	$	1,366
Deferred revenue - current	$	1,115	$	270	$	1,385	$	1,017	$	268	$	1,285
Deferred revenue - non-current	$	1	$	66	$	67	$	2	$	79	$	81

For the MA segment, the decrease in deferred revenue for the three months ended June 30, 2023 was primarily due to the recognition of annual subscription and maintenance billings from December 2022 and January 2023. For the six months ended June 30, 2023, the increase in deferred revenue is primarily attributable to the high concentration of billings in the first quarter.

For the MIS segment, the changes in the deferred revenue balance during the three and six months ended June 30, 2023 were primarily related to the significant portion of contract renewals that occurred during the first quarter of 2023 and are generally recognized over a one year period.

Remaining performance obligations

Remaining performance obligations in the MA segment include both amounts recorded as deferred revenue on the balance sheet as of June 30, 2023 as well as amounts not yet invoiced to customers as of June 30, 2023, largely reflecting future revenue related to signed multi-year arrangements for hosted and installed subscription-based products. As of June 30, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $3.2 billion. The Company expects to recognize into revenue approximately 65% 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 June 30, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $96 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 from the amounts stated above relating to unsatisfied performance obligations for contracts with an original expected length of one year or less.

NOTE 3. STOCK-BASED COMPENSATION

Presented below is a summary of the stock-based compensation cost and associated tax benefit included in the accompanying consolidated statements of operations:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Stock-based compensation cost	$	50	$	38	$	97	$	84
Tax benefit	$	12	$	9	$	22	$	20

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 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. During the first half of 2023, the Company granted 0.1 million employee stock options, which had a weighted average grant date fair value of $94.67 per share. The Company also granted 0.6 million shares of restricted stock in the first six months of 2023, which had a weighted average grant date fair value of $295.59 per share. Both the employee stock options and restricted stock generally vest ratably over four years. Additionally, the Company granted 0.1 million shares of performance-based awards whereby the number of shares that ultimately vest are based on the achievement of certain non-market-based performance metrics of the Company over three years. The weighted average grant date fair value of these awards was $286.04 per share.

The following weighted average assumptions were used in determining the fair value using the Black-Scholes option-pricing model for options granted in 2023:


Expected dividend yield	1.04	%
Expected stock volatility	29	%
Risk-free interest rate	4.18	%
Expected holding period	5.8 years

Unrecognized stock-based compensation expense at June 30, 2023 was $17 million and $309 million for stock options and unvested restricted stock, respectively, which is expected to be recognized over a weighted average period of 2.1 years and 2.7 years, respectively. Additionally, there was $39 million of unrecognized stock-based compensation expense relating to the aforementioned non-market-based performance-based awards, which is expected to be recognized over a weighted average period of 2.2 years.

The following table summarizes information relating to stock option exercises and restricted stock vesting:


	Six Months Ended June 30,
	2023		2022
Exercise of stock options:
Proceeds from stock option exercises	$	21	$	4
Aggregate intrinsic value	$	44	$	5
Tax benefit realized upon exercise	$	10	$	1
Number of shares exercised (1)	0.2		—
Vesting of restricted stock:
Fair value of shares vested	$	147	$	170
Tax benefit realized upon vesting	$	34	$	40
Number of shares vested	0.5		0.5
Vesting of performance-based restricted stock:
Fair value of shares vested	$	24	$	50
Tax benefit realized upon vesting	$	3	$	7
Number of shares vested	0.1		0.2

(1) The number of options exercised in 2022 was approximately 27 thousand.

NOTE 4. INCOME TAXES

Moody’s effective tax rate (ETR) was 23.4% and 26.2% for the three months ended June 30, 2023 and 2022, respectively. The 2.8% decrease was primarily due to higher excess tax benefits realized from stock-based compensation, along with a non-deductible foreign currency translation loss in 2022 resulting from the Company no longer conducting commercial operations in Russia. Furthermore, Moody’s ETR for the six months ended June 30, 2023 and 2022 was 12.0% and 21.6%, respectively. The 9.6% decrease in the ETR for the six months ended June 30, 2023 compared to the same period in the prior year was primarily due to tax benefits recognized in the first quarter of 2023, which reflect the resolutions of uncertain tax positions in various U.S. and non-U.S. tax jurisdictions. The Company’s year-to-date provision for income taxes differs from the tax computed by applying its estimated annual effective tax rate to the pre-tax earnings primarily due to the following items recognized in 2023: i) net reductions in UTPs of $117 million related to the resolutions of UTPs; and ii) excess tax benefits from stock-based compensation of $13 million.

The Company classifies interest related to UTPs in interest expense, net in its consolidated statements of operations. Penalties, if incurred, would be recognized in other non-operating income (expense), net.

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 remains open to examination. The Company’s New York City tax returns for 2015 through 2019 are currently under examination. The Company’s U.K. tax returns for 2017 through 2021 remain open to examination.

For ongoing audits, it is possible the balance of UTPs could decrease in the next twelve months as a result of the settlement of such audits, which might involve the payment of additional taxes, the adjustment of certain deferred taxes and/or the recognition of tax benefits. It is also possible that new issues will be raised by tax authorities which could necessitate increases to the balance of UTPs. As the Company is unable to predict the timing or outcome of these audits, it 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 the applicable provisions of ASC Topic 740 regarding UTPs.

The following table shows the amount the Company paid for income taxes:


	Six Months Ended June 30,
	2023		2022
Income taxes paid	$	122	$	326

In August 2022, the U.S. Congress passed the Inflation Reduction Act, which included a corporate minimum tax on book earnings of 15%, an excise tax on corporate share repurchases of 1%, and certain climate change and energy tax credit incentives. The adoption of a corporate minimum tax of 15% is not expected to impact Moody’s ETR. The excise tax of 1% on corporate share buybacks will not have an impact on the Company’s ETR for 2023.

NOTE 5. RECONCILIATION OF WEIGHTED AVERAGE SHARES OUTSTANDING

Below is a reconciliation of basic to diluted shares outstanding:


	Three Months Ended June 30,		Six Months Ended June 30,

	2023	2022	2023	2022
Basic	183.5	184.1	183.4	184.6
Dilutive effect of shares issuable under stock-based compensation plans	0.6	0.8	0.7	0.8
Diluted	184.1	184.9	184.1	185.4
Anti-dilutive options to purchase common shares and restricted stock as well as contingently issuable restricted stock which are excluded from the table above	0.4	0.8	0.5	0.4

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 June 30, 2023 and 2022.

NOTE 6. 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 per share over the duration of the program. The initial share repurchase and final share settlement were recorded as a reduction to shareholders’ equity.

NOTE 7. CASH EQUIVALENTS AND INVESTMENTS

The table below provides additional information on the Company’s cash equivalents and investments:


	As of June 30, 2023
							Balance sheet location
	Cost		Gains/(Losses)		Fair Value		Cash and cash equivalents		Short-term investments		Other assets
Certificates of deposit and money market deposit accounts/funds (1)	$	1,221	$	—	$	1,221	$	1,159	$	57	$	5
Mutual funds	$	87	$	4	$	91	$	—	$	—	$	91


	As of December 31, 2022
							Balance sheet location
	Cost		Gains/(Losses)		Fair Value		Cash and cash equivalents		Short-term investments		Other assets

Certificates of deposit and money market deposit accounts (1)	$	914	$	—	$	914	$	808	$	90	$	16
Mutual funds	$	71	$	—	$	71	$	—	$	—	$	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 June 30, 2023 and December 31, 2022. The remaining contractual maturities for the certificates of deposits classified in other assets are 13 months to 18 months at June 30, 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 invested in Corporate-Owned Life Insurance (COLI). As of June 30, 2023 and December 31, 2022, the contract value of the COLI was $47 million and $40 million, respectively.

NOTE 8. 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 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 June 30, 2023			As of December 31, 2022
Hedged Item	Nature of Swap	Notional Amount		Floating Interest Rate (1)	Notional Amount		Floating Interest Rate
2017 Senior Notes due 2028	Pay Floating/Receive Fixed	$	500	SOFR	$	500	3-month LIBOR
2020 Senior Notes due 2025	Pay Floating/Receive Fixed	300		SOFR	300		6-month LIBOR
2014 Senior Notes due 2044	Pay Floating/Receive Fixed	300		SOFR	300		3-month LIBOR
2018 Senior Notes due 2048	Pay Floating/Receive Fixed	300		SOFR	300		3-month LIBOR
2018 Senior Notes due 2029	Pay Floating/Receive Fixed	400		SOFR	400		SOFR
2022 Senior Notes due 2052	Pay Floating/Receive Fixed	500		SOFR	500		SOFR
2022 Senior Notes due 2032	Pay Floating/Receive Fixed	250		SOFR	250		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.

Refer to Note 14 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				Amount of income/(loss) recognized in the consolidated statements of operations
	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022			2023			2022
Interest expense, net				$	(71)		$	(55)		$	(119)	$	(108)

Descriptions		Location on Consolidated Statements of Operations
Net interest settlements and accruals on interest rate swaps		Interest expense, net		$	(21)		$	3		$	(39)	$	9
Fair value changes on interest rate swaps		Interest expense, net		$	(46)		$	(47)		$	—	$	(132)
Fair value changes on hedged debt		Interest expense, net		$	46		$	47		$	—	$	132

Net investment hedges

Debt designated as net investment hedges

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:


June 30, 2023
	Pay			Receive
Nature of Swap	Notional Amount		Weighted Average Interest Rate	Notional Amount		Weighted Average Interest Rate
Pay Fixed/Receive Fixed	€	765	3.67%	$	800	5.25%
Pay Floating/Receive Floating	2,138		Based on ESTR	2,250		Based on SOFR
Total	€	2,903		$	3,050


December 31, 2022
	Pay			Receive
Nature of Swap	Notional Amount		Weighted Average Interest Rate	Notional Amount		Weighted Average Interest Rate
Pay Fixed/Receive Fixed	€	765	3.67%	$	800	5.25%
Pay Floating/Receive Floating	450		Based on 3-month EURIBOR	500		Based on 3-month USD LIBOR
Pay Floating/Receive Floating	1,688		Based on ESTR	1,750		Based on SOFR
Total	€	2,903		$	3,050

As of June 30, 2023 these hedges will expire and the notional amounts will be settled as follows unless terminated early at the discretion of the Company:


Years Ending December 31,

2026	€	450
2027	€	531
2028	€	588
2029	€	373
2031	€	481
2032	€	480
Total	€	2,903

The following tables provide information on the gains/(losses) on the Company’s net investment and cash flow hedges:


Derivative and Non-Derivative Instruments in Net Investment Hedging Relationships		Amount of Gain/(Loss) Recognized in AOCL on Derivative, net of Tax					Amount of Loss Reclassified from AOCL into Income, net of Tax					Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
	Three Months Ended June 30,					Three Months Ended June 30,					Three Months Ended June 30,
		2023		2022			2023		2022			2023		2022

Cross currency swaps		$	(24)	$	118		$	—	$	—		$	14	$	11
Long-term debt		(4)		63			—		—			—		—
Total net investment hedges		$	(28)	$	181		$	—	$	—		$	14	$	11
Derivatives in Cash Flow Hedging Relationships
Cross currency swap		$	—	$	—		$	1	$	—		$	—	$	—
Interest rate contracts		—		—			—		(1)			—		—
Total cash flow hedges		$	—	$	—		$	1	$	(1)		$	—	$	—
Total		$	(28)	$	181		$	1	$	(1)		$	14	$	11


Derivative and Non-Derivative Instruments in Net Investment Hedging Relationships		Amount of Gain/(Loss) Recognized in AOCL on Derivative, net of Tax					Amount of Loss Reclassified from AOCL into Income, net of Tax					Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
	Six Months Ended June 30,					Six Months Ended June 30,					Six Months Ended June 30,
		2023		2022			2023		2022			2023		2022

Cross currency swaps		$	(63)	$	142		$	—	$	—		$	30	$	21
Long-term debt		(22)		86			—		—			—		—
Total net investment hedges		$	(85)	$	228		$	—	$	—		$	30	$	21
Derivatives in Cash Flow Hedging Relationships
Cross currency swap		$	—	$	—		$	1	$	—		$	—	$	—
Interest rate contracts		—		—			(1)		(1)			—		—
Total cash flow hedges		$	—	$	—		$	—	$	(1)		$	—	$	—
Total		$	(85)	$	228		$	—	$	(1)		$	30	$	21

The cumulative amount of net investment hedge and cash flow hedge gains (losses) remaining in AOCL is as follows:


	Cumulative Gains/(Losses), net of tax
	June 30, 2023		December 31, 2022
Net investment hedges
Cross currency swaps	$	55	$	118
FX forwards	29		29
Long-term debt	16		38
Total net investment hedges	$	100	$	185
Cash flow hedges
Interest rate contracts	$	(46)	$	(47)
Cross currency swaps	1		2
Total cash flow hedges	(45)		(45)
Total net gain in AOCL	$	55	$	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 (expense), 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 October 2023.

The following table summarizes the notional amounts of the Company’s outstanding foreign exchange forwards:


	June 30, 2023				December 31, 2022
Notional amount of currency pair:	Sell		Buy		Sell		Buy
Contracts to sell USD for GBP	$	683	£	548	$	170	£	146
Contracts to sell USD for Japanese yen	$	15	¥	2,000	$	24	¥	3,500
Contracts to sell USD for Canadian dollars	$	116	C$	155	$	87	C$	120
Contracts to sell USD for Singapore dollars	$	81	S$	109	$	50	S$	70
Contracts to sell USD for euros	$	272	€	250	$	116	€	115

Contracts to sell USD for Indian rupee	$	23	₹	1,900	$	19	₹	1,600
Contracts to sell GBP for USD	£	90	$	115	£	—	$	—
Contracts to sell euros for USD	€	125	$	135	€	85	$	89

NOTE: € = euro, £ = British pound, $ = U.S. dollar, ¥ = Japanese yen, C$ = Canadian dollar, S$= Singapore dollars, ₹= Indian rupee

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 fair value of these swaps at June 30, 2023 and related gains in the three and six months ended June 30, 2023 were not material. The notional amount of the total return swaps as of June 30, 2023 was $59 million.

The following table summarizes the impact to the consolidated statements of operations relating to the net losses on the Company’s derivatives which are not designated as hedging instruments:


Derivatives not designated as accounting hedges	Location on Consolidated Statements of Operations		Three Months Ended June 30,				Six Months Ended June 30,
		2023	2022		2023		2022
FX forwards	Other non-operating income, net		$	10	$	(38)	$	15	$	(57)

The table below shows the classification between assets and liabilities on the Company’s consolidated balance sheets for the fair value of the derivative instrument as well as the carrying value of its non-derivative debt instruments designated and qualifying as net investment hedges:


	Derivative and Non-Derivative Instruments
	Balance Sheet Location	June 30, 2023		December 31, 2022
Assets:
Derivatives designated as accounting hedges:

Cross-currency swaps designated as net investment hedges	Other assets	$	7	$	27



Derivatives not designated as accounting hedges:
FX forwards on certain assets and liabilities	Other current assets	10		19

Total assets		$	17	$	46
Liabilities:
Derivatives designated as accounting hedges:


Cross-currency swaps designated as net investment hedges	Other liabilities	$	142	$	78
Interest rate swaps designated as fair value hedges	Other liabilities	239		239
Total derivatives designated as accounting hedges		381		317
Non-derivatives designated as accounting hedges:
Long-term debt designated as net investment hedge	Long-term debt	1,364		1,334
Derivatives not designated as accounting hedges:
FX forwards on certain assets and liabilities	Accounts payable and accrued liabilities	3		2
Total liabilities		$	1,748	$	1,653

NOTE 9. GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS

The following table summarizes the activity in goodwill for the periods indicated:


	Six Months Ended June 30, 2023
	MA						MIS						Consolidated
	Gross goodwill		Accumulated impairment charge		Net goodwill		Gross goodwill		Accumulated impairment charge		Net goodwill		Gross goodwill		Accumulated impairment charge		Net goodwill
Balance at beginning of year	$	5,474	$	(12)	$	5,462	$	377	$	—	$	377	$	5,851	$	(12)	$	5,839
Additions/ adjustments (1)	90		—		90		(87)		—		(87)		3		—		3
Foreign currency translation adjustments	85		—		85		(1)		—		(1)		84		—		84

Ending balance	$	5,649	$	(12)	$	5,637	$	289	$	—	$	289	$	5,938	$	(12)	$	5,926


	Year Ended December 31, 2022
	MA						MIS						Consolidated
	Gross goodwill		Accumulated impairment charge		Net goodwill		Gross goodwill		Accumulated impairment charge		Net goodwill		Gross goodwill		Accumulated impairment charge		Net goodwill
Balance at beginning of year	$	5,615	$	(12)	$	5,603	$	396	$	—	$	396	$	6,011	$	(12)	$	5,999
Additions/ adjustments (2)	88		—		88		4		—		4		92		—		92
Foreign currency translation adjustments	(229)		—		(229)		(23)		—		(23)		(252)		—		(252)

Ending balance	$	5,474	$	(12)	$	5,462	$	377	$	—	$	377	$	5,851	$	(12)	$	5,839

(1) 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.

(2) 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.

Acquired intangible assets and related amortization consisted of:


	June 30, 2023		December 31, 2022
Customer relationships	$	2,055	$	2,024
Accumulated amortization	(507)		(453)
Net customer relationships	1,548		1,571
Software/product technology	670		661
Accumulated amortization	(326)		(283)
Net software/product technology	344		378
Database	178		178
Accumulated amortization	(73)		(64)
Net database	105		114
Trade names	199		197
Accumulated amortization	(65)		(58)
Net trade names	134		139
Other (1)	52		52
Accumulated amortization	(45)		(44)
Net other	7		8
Total acquired intangible assets, net	$	2,138	$	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:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Amortization expense	$	50	$	51	$	101	$	102

NOTE 10. RESTRUCTURING

On June 30, 2022, the chief executive officer of Moody’s approved a restructuring program (the “2022 - 2023 Geolocation Restructuring Program”). The Company estimates that the program will result in annualized savings of $120 million to $140 million per year. This program relates to the Company's post-COVID-19 geolocation strategy and includes the rationalization and exit of certain leased office spaces and a reduction in staff, including the relocation of certain job functions. The exit from certain leased office spaces began in the fourth quarter of 2022 and is expected to result in $50 million to $70 million of pre-tax charges from vacating the affected office spaces, a large portion of which Moody's intends to sublease. The program is also expected to include $110 million to $120 million of pre-tax personnel-related restructuring charges, an amount that includes severance costs, expense related to the modification of equity awards, and related costs primarily determined under the Company’s existing severance plans. The savings generated from the 2022 - 2023 Geolocation Restructuring Program are expected to strengthen the Company's operating margin, with a portion being deployed to support strategic investments, including the Company's workplace of the future program and employee retention initiatives. The 2022 - 2023 Geolocation Restructuring Program is expected to be substantially complete by the end of 2023. Cash outlays associated with this program, which primarily relate to personnel-related costs, are expected to be $110 million to $120 million, which are expected to be paid through 2024.

Total expense included in the accompanying consolidated statements of operations relating to the aforementioned restructuring program is below:

Substantially all of the restructuring charges recognized during the three and six months ended June 30, 2023 and June 30, 2022 relate to employee termination costs.



	Three months ended June 30,				Six months ended June 30,
	2023		2022		2023		2022


2020 MA Strategic Reorganization Restructuring Program	$	—	$	(1)	$	—	$	(1)
2022 - 2023 Geolocation Restructuring Program	10		32		24		32
Total Restructuring	$	10	$	31	$	24	$	31

Changes to the restructuring liability for the aforementioned restructuring programs during the first half of 2023 were as follows:



Balance as of December 31, 2022	$	65









2022 - 2023 Geolocation Restructuring Program:
Cost incurred and adjustments	22
Cash payments and adjustments	(57)
Balance as of June 30, 2023	$	30


Cumulative expense incurred through June 30, 2023	Employee Termination Costs		Real Estate Related Costs		Other Costs		Total



2022 - 2023 Geolocation Restructuring Program	$	107	$	29	$	1	$	137

NOTE 11. FAIR VALUE

The table below presents information about items that are carried at fair value at June 30, 2023 and December 31, 2022:


	Fair Value Measurement as of June 30, 2023
Description	Balance		Level 1		Level 2
Assets:
Derivatives (1)	$	17	$	—	$	17
Money market funds/mutual funds	231		231		—
Total	$	248	$	231	$	17
Liabilities:
Derivatives (1)	$	384	$	—	$	384
Total	$	384	$	—	$	384


	Fair Value Measurement as of December 31, 2022
Description	Balance		Level 1		Level 2
Assets:
Derivatives (1)	$	46	$	—	$	46

Mutual funds	71		71		—
Total	$	117	$	71	$	46
Liabilities:
Derivatives (1)	$	319	$	—	$	319
Total	$	319	$	—	$	319

(1) Represents fair value of certain derivative contracts as more fully described in Note 8 to the condensed consolidated financial statements.

The following are descriptions of the methodologies utilized by the Company to estimate the fair value of its derivative contracts, mutual funds and money market 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 the fair value recognized through net income under ASC Topic 321. The fair value of these instruments is determined using Level 1 inputs as defined in the ASC Topic 820.

NOTE 12. OTHER BALANCE SHEET AND STATEMENTS OF OPERATIONS INFORMATION

The following tables contain additional detail related to certain balance sheet captions:


	June 30, 2023		December 31, 2022
Other current assets:
Prepaid taxes	$	169	$	235
Prepaid expenses	112		119
Capitalized costs to obtain and fulfill sales contracts	112		106
Foreign exchange forwards on certain assets and liabilities	10		19

Interest receivable on interest rate and cross currency swaps	78		74
Other	32		30
Total other current assets	$	513	$	583

Other assets:
Investments in non-consolidated affiliates	$	526	$	517
Deposits for real-estate leases	15		15
Indemnification assets related to acquisitions	107		110
Mutual funds and fixed deposits	96		87
Company owned life insurance (at contract value)	47		40
Costs to obtain sales contracts	176		171
Derivative instruments designated as accounting hedges	7		27
Pension and other retirement employee benefits	39		40
Other	88		85
Total other assets	$	1,101	$	1,092

Accounts payable and accrued liabilities:
Salaries and benefits	$	113	$	104
Incentive compensation	166		276
Customer credits, advanced payments and advanced billings	99		102

Dividends	5		6
Professional service fees	47		49
Accrued interest	79		93
Accounts payable	37		52
Income taxes	112		86
Pension and other retirement employee benefits	7		7
Accrued royalties	26		23
Foreign exchange forwards on certain assets and liabilities	3		2
Restructuring liability	28		65


Interest payable on interest rate and cross currency swaps	62		51
Other	93		95
Total accounts payable and accrued liabilities	$	877	$	1,011






































	June 30, 2023		December 31, 2022
Other liabilities:
Pension and other retirement employee benefits	$	195	$	189

Interest accrued on UTPs	30		47
MAKS indemnification provisions	19		23
Income tax liability - non-current portion	15		48
Derivative instruments designated as accounting hedges	381		317
Restructuring liability - non-current portion	2		—
Other	47		50
Total other liabilities	$	689	$	674

Investments in non-consolidated affiliates:

The following table provides additional detail regarding Moody's investments in non-consolidated affiliates, as included in other assets in the consolidated balance sheets:


	June 30, 2023		December 31, 2022
Equity method investments (1)	$	194	$	187
Investments measured using the measurement alternative (2)	325		325
Other	7		5
Total investments in non-consolidated affiliates	$	526	$	517
(1) 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.
(2) Equity securities without readily determinable fair value for which the Company has elected to apply the measurement alternative in accordance with ASC Topic 321.

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.

Earnings from non-consolidated affiliates, which are included within other non-operating income (expense), net, are disclosed within the table below.

Other non-operating income (expense), net:

The following table summarizes the components of other non-operating income (expense), net:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
FX loss (1)	$	(5)	$	(22)	$	(31)	$	(22)
Net periodic pension costs - other components	9		6		18		12
Income from investments in non-consolidated affiliates	1		2		3		4
Gains / losses on investments	5		(9)		11		(14)
Other (2)	3		13		12		16
Total	$	13	$	(10)	$	13	$	(4)

(1) The amount for the six months ended June 30, 2023 includes a $23 million loss recorded pursuant to an immaterial out-of-period adjustment relating to the 2022 fiscal year. The amounts for the three and six months ended June 30, 2022 include FX translation losses of $20 million reclassified to earnings resulting from the Company no longer conducting commercial operations in Russia.

(2) The amount for the six months ended June 30, 2023 reflects a benefit of $9 million related to the favorable resolutions of various tax matters. The amounts for the three and six months ended June 30, 2022 reflect an $11 million benefit from a statute of limitations lapse relating to reserves established pursuant to the divestiture of MAKS.

NOTE 13. COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table provides details about the reclassifications out of AOCL:


	Three Months Ended June 30,				Location in the consolidated statements of operations
Losses on currency translation adjustments	2023		2022
Foreign currency translation adjustments - reclassification of losses included in net income	$	—	$	(20)	Other non-operating income, net
Total losses on currency translation adjustments	—		(20)
Gains (losses) on cash flow hedges

Interest rate contract	—		—		Other non-operating income, net
Income tax effect of item above	1		—		Provision for income taxes
Total net gains (losses) on cash flow hedges	1		—




Pension and other retirement benefits
Amortization of actuarial losses and prior service costs included in net income	2		(1)		Other non-operating income, net


Income tax effect of item above	(1)		—		Provision for income taxes
Total pension and other retirement benefits	1		(1)
Total net gains (losses) included in Net Income attributable to reclassifications out of AOCL	$	2	$	(21)



	Six Months Ended June 30,				Location in the consolidated statements of operations
Losses on currency translation adjustments	2023		2022
Foreign currency translation adjustments - reclassification of losses included in net income	$	—	$	(20)	Other non-operating income, net
Total losses on currency translation adjustments	—		(20)
Losses on cash flow hedges

Interest rate contract	(1)		(1)		Other non-operating income, net
Income tax effect of item above	1		—		Provision for income taxes
Total net losses on cash flow hedges	—		(1)




Pension and other retirement benefits
Amortization of actuarial losses and prior service costs included in net income	2		(1)		Other non-operating income, net

Income tax effect of item above	(1)		—		Provision for income taxes
Total pension and other retirement benefits	1		(1)
Total net gains (losses) included in Net Income attributable to reclassifications out of AOCL	$	1	$	(22)

The following tables show changes in AOCL by component (net of tax):



	Three Months Ended June 30,
	2023										2022
Gains/(Losses)	Pension and Other Retirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustments		Net Investment Hedges		Total		Pension and Other Retirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustments		Net Investment Hedges		Total
Balance at March 31,	$	(47)	$	(44)	$	(626)	$	128	$	(589)	$	(51)	$	(46)	$	(442)	$	68	$	(471)
Other comprehensive income/(loss) before reclassifications	—		—		49		(28)		21		4		—		(334)		181		(149)
Amounts reclassified from AOCL	(1)		(1)		—		—		(2)		1		—		20		—		21
Other comprehensive income/(loss)	(1)		(1)		49		(28)		19		5		—		(314)		181		(128)
Balance at June 30,	$	(48)	$	(45)	$	(577)	$	100	$	(570)	$	(46)	$	(46)	$	(756)	$	249	$	(599)


	Six Months Ended June 30,
	2023										2022
Gains/(Losses)	Pension and Other Retirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustments		Net Investment Hedges		Total		Pension and Other Retirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustments		Net Investment Hedges		Total
Balance at December 31,	$	(47)	$	(45)	$	(736)	$	185	$	(643)	$	(49)	$	(47)	$	(335)	$	21	$	(410)
Other comprehensive income/(loss) before reclassifications	—		—		159		(85)		74		2		—		(441)		228		(211)
Amounts reclassified from AOCL	(1)		—		—		—		(1)		1		1		20		—		22

Other comprehensive income/(loss)	(1)		—		159		(85)		73		3		1		(421)		228		(189)
Balance at June 30,	$	(48)	$	(45)	$	(577)	$	100	$	(570)	$	(46)	$	(46)	$	(756)	$	249	$	(599)

NOTE 14. 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:


June 30, 2023
Notes Payable:	Principal Amount		Fair Value of Interest Rate Swaps (1)		Unamortized (Discount) Premium		Unamortized Debt Issuance Costs		Carrying Value
4.875% 2013 Senior Notes, due 2024	$	300	$	—	$	—	$	—	$	300
5.25% 2014 Senior Notes, due 2044	600		(42)		3		(4)		557
1.75% 2015 Senior Notes, due 2027	546		—		—		(2)		544

3.25% 2017 Senior Notes, due 2028	500		(37)		(3)		(2)		458
4.25% 2018 Senior Notes, due 2029	400		(42)		(2)		(2)		354
4.875% 2018 Senior Notes, due 2048	400		(44)		(6)		(4)		346
0.950% 2019 Senior Notes, due 2030	818		—		(2)		(4)		812
3.75% 2020 Senior Notes, due 2025	700		(24)		—		(2)		674
3.25% 2020 Senior Notes, due 2050	300		—		(4)		(3)		293
2.55% 2020 Senior Notes, due 2060	300		—		(2)		(3)		295
2.00% 2021 Senior Notes, due 2031	600		—		(7)		(4)		589
2.75% 2021 Senior Notes, due 2041	600		—		(13)		(5)		582
3.10% 2021 Senior Notes, due 2061	500		—		(7)		(5)		488
3.75% 2022 Senior Notes, due 2052	500		(36)		(8)		(5)		451
4.25% 2022 Senior Notes, due 2032	500		(14)		(2)		(4)		480
Total debt	$	7,564	$	(239)	$	(53)	$	(49)	$	7,223
Current portion									(300)
Total long-term debt									$	6,923


December 31, 2022
Notes Payable:	Principal Amount		Fair Value of Interest Rate Swaps (1)		Unamortized (Discount) Premium		Unamortized Debt Issuance Costs		Carrying Value
4.875% 2013 Senior Notes, due 2024	$	500	$	—	$	(1)	$	(1)	$	498
5.25% 2014 Senior Notes, due 2044	600		(42)		3		(4)		557
1.75% 2015 Senior Notes, due 2027	534		—		—		(2)		532

3.25% 2017 Senior Notes, due 2028	500		(37)		(3)		(2)		458
4.25% 2018 Senior Notes, due 2029	400		(42)		(2)		(2)		354
4.875% 2018 Senior Notes, due 2048	400		(44)		(6)		(4)		346
0.950% 2019 Senior Notes, due 2030	800		—		(2)		(4)		794
3.75% 2020 Senior Notes, due 2025	700		(27)		(1)		(3)		669
3.25% 2020 Senior Notes, due 2050	300		—		(4)		(3)		293
2.55% 2020 Senior Notes, due 2060	300		—		(2)		(3)		295
2.00% 2021 Senior Notes, due 2031	600		—		(7)		(4)		589
2.75% 2021 Senior Notes, due 2041	600		—		(13)		(5)		582
3.10% 2021 Senior Notes, due 2061	500		—		(7)		(5)		488
3.75% 2022 Senior Notes, due 2052	500		(35)		(8)		(5)		452
4.25% 2022 Senior Notes, due 2032	500		(12)		(2)		(4)		482
Total long-term debt	$	7,734	$	(239)	$	(55)	$	(51)	$	7,389

(1) The fair value of interest rate swaps in the table above represents the cumulative amount of fair value hedging adjustments included in the carrying amount of the hedged debt.

Notes Payable

In the second quarter of 2023, the Company repaid $200 million of its $500 million 2013 Senior Notes due 2024.

At June 30, 2023, the Company was in compliance with all covenants contained within all of the debt agreements. All the debt agreements contain cross default provisions which state that default under one of the aforementioned debt instruments could in turn permit lenders under other debt instruments to declare borrowings outstanding under those instruments to be immediately due and payable. As of June 30, 2023, there were no such cross defaults.

The repayment schedule for the Company’s borrowings is as follows:


Year Ending December 31,	Year Ending Total
2023 (After June 30,)	$	—
2024	300
2025	700
2026	—
2027	546
Thereafter	6,018
Total	$	7,564

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:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Income	$	15	$	2	$	25	$	4
Expense on borrowings	(75)		(50)		(145)		(98)
Income (expense) on UTPs and other tax related liabilities(1)	(4)		(3)		14		(6)
Net periodic pension costs - interest component	(7)		(4)		(13)		(8)
Interest expense, net	$	(71)	$	(55)	$	(119)	$	(108)
Interest paid(2)	$	47	$	12	$	143	$	90

(1) The amount for the six months ended June 30, 2023 reflects a $22 million reduction of tax-related interest expense primarily related to the resolutions of outstanding tax matters.

(2) Interest paid includes net settlements on interest rate swaps more fully discussed in Note 8.

The fair value and carrying value of the Company’s debt as of June 30, 2023 and December 31, 2022 are as follows:


	June 30, 2023				December 31, 2022
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
















Total debt	$	7,223	$	6,369	$	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 15. 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 term from one year to 20 years at the Company’s discretion.

The following table presents the components of the Company’s lease cost:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	23	$	25	$	47	$	52
Sublease income	(2)		(2)		(4)		(4)
Variable lease cost	5		5		10		10
Total lease cost	$	26	$	28	$	53	$	58

The following tables present other information related to the Company’s operating leases:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Cash paid for amounts included in the measurement of operating lease liabilities	$	30	$	29	$	60	$	60
Right-of-use assets obtained in exchange for new operating lease liabilities	$	19	$	15	$	24	$	30


	June 30, 2023		June 30, 2022
Weighted-average remaining lease term	4.8 years		5.3 years
Weighted-average discount rate applied to operating leases	3.2	%	3.1	%

The following table presents a maturity analysis of the future minimum lease payments included within the Company’s operating lease liabilities at June 30, 2023:


Year Ending December 31,	Operating Leases
2023 (After June 30,)	$	60
2024	115
2025	103
2026	84
2027	68
After 2027	54
Total lease payments (undiscounted)	484
Less: Interest	35
Present value of lease liabilities:	$	449
Lease liabilities - current	$	105
Lease liabilities - noncurrent	$	344

NOTE 16. CONTINGENCIES

Given the nature of the Company's activities, Moody’s and its subsidiaries are subject to legal and tax proceedings, governmental, regulatory and legislative investigations, subpoenas and other inquiries, and claims and litigation by governmental and private parties that are based on ratings assigned by MIS or that are otherwise incidental to the Company’s business. Moody’s and MIS also are subject to periodic reviews, inspections, examinations and investigations by regulators in the U.S. and other jurisdictions, any of which may result in claims, legal proceedings, assessments, fines, penalties or restrictions on business activities. Moody’s also is subject to ongoing tax audits as addressed in Note 4 to the condensed 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 17. 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 - Decision Solutions, Research and Insights, and Data and Information.

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.

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 2 for further details on the components of the Company’s revenue.


	Three Months Ended June 30,
	2023								2022
	MA		MIS		Eliminations		Consolidated		MA		MIS		Eliminations		Consolidated
Total external revenue	$	747	$	747	$	—	$	1,494	$	675	$	706	$	—	$	1,381
Intersegment revenue	4		46		(50)		—		1		43		(44)		—
Revenue	751		793		(50)		1,494		676		749		(44)		1,381
Operating, SG&A	541		350		(50)		841		471		334		(44)		761
Adjusted Operating Income	$	210	$	443	$	—	$	653	$	205	$	415	$	—	$	620
Add:
Depreciation and amortization	74		19		—		93		60		21		—		81

Restructuring	8		2		—		10		16		15		—		31


Operating Income							$	550							$	508



	Six Months Ended June 30,
	2023								2022
	MA		MIS		Eliminations		Consolidated		MA		MIS		Eliminations		Consolidated
Total external revenue	$	1,484	$	1,480	$	—	$	2,964	$	1,370	$	1,533	$	—	$	2,903
Intersegment revenue	7		91		(98)		—		3		86		(89)		—
Revenue	1,491		1,571		(98)		2,964		1,373		1,619		(89)		2,903
Operating, SG&A	1,067		686		(98)		1,655		944		694		(89)		1,549
Adjusted Operating Income	$	424	$	885	$	—	$	1,309	$	429	$	925	$	—	$	1,354
Add:
Depreciation and amortization	144		37		—		181		120		39		—		159
Restructuring	16		8		—		24		16		15		—		31



Operating Income							$	1,104							$	1,164

The table below shows cumulative restructuring expense incurred through June 30, 2023 by reportable segment.


	MA		MIS		Total



2022 - 2023 Geolocation Restructuring Program	$	65	$	72	$	137

The costs expected to be incurred related to the 2022 - 2023 Geolocation Restructuring Program are $80 million - $100 million for the MA segment and $80 million - $90 million for the MIS segment.

The restructuring program is more fully discussed in Note 10.

Consolidated Revenue Information by Geographic Area


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
United States	$	782	$	723	$	1,552	$	1,546
Non-U.S.:
EMEA	470		422		921		878
Asia-Pacific	146		151		297		293
Americas	96		85		194		186
Total Non-U.S.	712		658		1,412		1,357
Total	$	1,494	$	1,381	$	2,964	$	2,903

NOTE 18. SUBSEQUENT EVENT

On July 24, 2023, the Board approved the declaration of a quarterly dividend of $0.77 per share of Moody’s common stock, payable on September 8, 2023 to shareholders of record at the close of business on August 18, 2023.

Previous: Cover and table of contents · Next: Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations