Statement Of Income Alternative
Statement Of Income Alternative (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Revenue | 450.7 | 487.6 | 859.6 | 918.3 |
Expenses | ||||
Operating | 128 | 123.3 | 250.4 | 243.2 |
Selling, general and administrative | 116.7 | 114 | 226.9 | 213.7 |
Restructuring | 3.1 | -0.2 | 14.9 | -0.9 |
Depreciation and amortization | 15.7 | 16.8 | 31.3 | 29.3 |
Total expenses | 263.5 | 253.9 | 523.5 | 485.3 |
Operating income | 187.2 | 233.7 | 336.1 | 433 |
Non-operating (expense) income, net | ||||
Interest (expense) income, net | -6.1 | -12.4 | -9.4 | -23.9 |
Other non-operating (expense) income, net | -6.5 | 2.5 | -10.5 | 11.4 |
Total non-operating (expense) income, net | -12.6 | -9.9 | -19.9 | -12.5 |
Income before provision for income taxes | 174.6 | 223.8 | 316.2 | 420.5 |
Provision for income taxes | 63.6 | 86.2 | 114.1 | 161.7 |
Net income | 111 | 137.6 | 202.1 | 258.8 |
Less: Net income attributable to noncontrolling interests | 1.7 | 2.4 | 2.6 | 2.9 |
Net income attributable to Moody's | 109.3 | 135.2 | 199.5 | 255.9 |
Earnings per share attributable to Moody's common shareholders | ||||
Basic | 0.46 | 0.55 | 0.85 | 1.04 |
Diluted | 0.46 | 0.54 | 0.84 | 1.03 |
Weighted average number of shares outstanding | ||||
Basic | 236.1 | 244.6 | 235.8 | 246 |
Diluted | 238.1 | 248.1 | 237.3 | 249.5 |
Dividends declared per share attributable to Moody's common shareholders | 0.1 | 0.1 | 0.1 | 0.1 |
Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Dec. 31, 2008 |
Current assets: | ||
Cash and cash equivalents | 392.8 | 245.9 |
Short-term investments | 4.9 | 7.1 |
Accounts receivable, net of allowances of $28.3 in 2009 and $23.9 in 2008 | 407.6 | 421.8 |
Deferred tax assets, net | 31.2 | 26.5 |
Other current assets | 64.1 | 107.8 |
Total current assets | 900.6 | 809.1 |
Property and equipment, net of accumulated depreciation of $152.7 in 2009 and $130.4 in 2008 | 267.6 | 247.7 |
Goodwill | 344.6 | 338 |
Intangible assets, net | 106.7 | 114 |
Deferred tax assets, net | 206.6 | 220.1 |
Other assets | 47.7 | 44.5 |
Total assets | 1873.8 | 1773.4 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 262 | 240.4 |
Commercial paper | 370.4 | 104.7 |
Revolving credit facility | 210 | 613 |
Deferred revenue | 462.7 | 435 |
Total current liabilities | 1305.1 | 1393.1 |
Non-current portion of deferred revenue | 108.4 | 114.8 |
Long-term debt | 750 | 750 |
Deferred tax liabilities, net | 15.7 | 19 |
Unrecognized tax benefits | 156.9 | 185.1 |
Other liabilities | 287.2 | 297.5 |
Total liabilities | 2623.3 | 2759.5 |
Contingencies (Note 11) | - | - |
Shareholders' deficit: | ||
Preferred stock, par value $.01 per share; 10,000,000 shares authorized; no shares issued and outstanding | 0 | 0 |
Capital surplus | 380.7 | 392.7 |
Retained earnings | 3,199 | 3023.2 |
Treasury stock, at cost; 106,585,040 and 107,757,537 shares of common stock at June 30, 2009 and December 31, 2008, respectively | -4310.3 | -4361.6 |
Accumulated other comprehensive loss | -30.1 | -52.1 |
Total Moody's shareholders' deficit | -757.3 | -994.4 |
Noncontrolling interests | 7.8 | 8.3 |
Total shareholders' deficit | -749.5 | -986.1 |
Total liabilities and shareholders' deficit | 1873.8 | 1773.4 |
Series common stock | ||
Shareholders' deficit: | ||
Common stock | 0 | 0 |
Common Stock [Member] | ||
Shareholders' deficit: | ||
Common stock | 3.4 | 3.4 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
In Millions, except Share data | Jun. 30, 2009
| Dec. 31, 2008
|
Accounts receivable, allowances | 28.3 | 23.9 |
Property and equipment, accumulated depreciation | 152.7 | 130.4 |
Preferred stock, par value | 0.01 | 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Treasury stock, shares | 106,585,040 | 107,757,537 |
Series common stock | ||
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Common Stock [Member] | ||
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 342,902,272 | 342,902,272 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Cash flows from operating activities | ||
Net income | 202.1 | 258.8 |
Reconciliation of net income to net cash provided by operating activities: | ||
Depreciation and amortization | 31.3 | 29.3 |
Stock-based compensation expense | 30.6 | 29.2 |
Excess tax benefits from stock-based compensation plans | -2.9 | -5.5 |
Legacy Tax | 0 | -7.8 |
Changes in assets and liabilities: | ||
Accounts receivable | 15.9 | 32.1 |
Other current assets | 42.6 | 0.6 |
Other assets | -2.7 | 27.9 |
Accounts payable and accrued liabilities | -11.2 | -137.2 |
Restructuring | 9.4 | -17.6 |
Deferred revenue | 15.5 | 7.4 |
Unrecognized tax benefits | 3.8 | 19.3 |
Other liabilities | -9.9 | 12.2 |
Net cash provided by operating activities | 324.5 | 248.7 |
Cash flows from investing activities | ||
Capital additions | -34.8 | (44) |
Purchases of short-term investments | -2.3 | -6.1 |
Sales and maturities of short-term investments | 4.4 | 6.9 |
Cash paid for acquisitions, net of cash acquired | -0.9 | -38.6 |
Insurance recovery | 0 | 0.9 |
Net cash used in investing activities | -33.6 | -80.9 |
Cash flows from financing activities | ||
Borrowings under revolving credit facilities | 2,232 | 425 |
Repayments of borrowings under revolving credit facilities | (2,635) | 0 |
Issuance of commercial paper | 5013.6 | 7655.7 |
Repayments of commercial paper | -4747.9 | -8105.5 |
Proceeds from term loan | 0 | 150 |
Net proceeds from stock-based compensation plans | 12.4 | 16.5 |
Cost of treasury shares repurchased | 0 | -327.9 |
Excess tax benefits from stock-based compensation plans | 2.9 | 5.5 |
Payment of dividends to MCO shareholders | -47.2 | -49.2 |
Payment of dividends to noncontrolling interests | -2.9 | (2) |
Debt issuance costs and related fees | 0 | -0.7 |
Payments under capital lease obligations | -0.8 | -0.9 |
Net cash used in financing activities | -172.9 | -233.5 |
Effect of exchange rate changes on cash and cash equivalents | 28.9 | 19.5 |
Net increase (decrease) in cash and cash equivalents | 146.9 | -46.2 |
Cash and cash equivalents, beginning of the period | 245.9 | 426.3 |
Cash and cash equivalents, end of the period | 392.8 | 380.1 |
Notes to Financial Statements
Notes to Financial Statements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
GLOSSARY OF TERMS AND ABBREVIATIONS | GLOSSARY OF TERMS AND ABBREVIATIONS The following terms, abbreviations and acronyms are used to identify frequently used terms in this report: TERM DEFINITION ACNielsen ACNielsen Corporation a former affiliate of Old DB Analytics Moodys Analytics reportable segment of MCO; consists of three LOBs subscriptions, software and professional services AOCI Accumulated other comprehensive income (loss); a separate component of shareholders equity (deficit) Basel II Capital adequacy framework published in June 2004 by the Basel Committee on Banking Supervision Board The board of directors of the Company Bps Basis points BQuotes BQuotes, Inc.; an acquisition completed in January 2008; part of the MA segment; a global provider of price discovery tools and end-of-day pricing services Canary Wharf Lease Operating lease agreement entered into on February 6, 2008 for office space in London, England, to be occupied by the Company in the second half of 2009. CDO Collateralized debt obligations CESR Committee of European Securities Regulators CFG Corporate finance group; an LOB of MIS CMBS Commercial mortgage-backed securities; part of CREF Cognizant Cognizant Corporation a former affiliate of Old D comprised the IMS Health and NMR businesses Commission European Commission Company Moodys Corporation and its subsidiaries; MCO; Moodys COSO Committee of Sponsoring Organizations of the Treadway Commission CP Commercial paper CP Notes Unsecured commercial paper notes CP Program The Companys commercial paper program entered into on October 3, 2007 CRAs Credit rating agencies CREF Commercial real estate finance which includes REITs, commercial real estate CDOs and MBS; part of SFG DB Business Old DBs Dun Bradstreet operating company DBPP Defined benefit pension plans Debt/EBITDA Ratio of Total Debt to EBITDA Directors Plan The 1998 MCO Non-Employee Directors Stock Incentive Plan Distribution Date September 30, 2000; the date which old DB separated into two publicly traded companies Moodys Corporation and New DB EBITDA Earnings before interest, taxes, depreciation and amortization ECAIs External Credit Assessment Institutions ECB European Central Bank EITF Emerging Issues Task Force; a task force established by the FASB to improve financial reporting through the timely identification, discussion, and resolution of financial accounting issues within the framework of existing authoritative literature. EMEA Represents countries within Europe, the Middle East and Africa Enb Enb Consulting; an acquisition completed in December 2008; part of the MA segment; a provider of credit and capital markets training services; EPS Earnings per share ESPP The 1999 Moodys Corporation Employee Stock Purchase Plan ETR Effective tax rate EU European Union EUR Euros Excess Tax Benefit The difference between the tax benefit realized at exercise of an option or delivery of a restricted share and the |
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION | NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION Moodys is a provider of (i)credit ratings and related research, data and analytical tools, (ii)quantitative credit risk measures, risk scoring software, and credit portfolio management solutions and (iii)securities pricing software and valuation models. Moodys operates in two reportable segments: Moodys Investors Service and Moodys Analytics. The MIS segment publishes credit ratings on a wide range of debt obligations and the entities that issue such obligations in markets worldwide. Revenue is derived from the originators and issuers of such transactions who use MISs ratings to support the distribution of their debt issues to investors. The MA segment develops a wide range of products and services that support the credit risk management activities of institutional participants in global financial markets. These offerings include quantitative credit risk scores, credit processing software, economic research, analytical models, financial data, securities pricing software and valuation models, and specialized professional services. MA also distributes investor-oriented research and data developed by MIS as part of its rating process, including in-depth research on major debt issuers, industry studies, and commentary on topical events. The Company operated as part of Old DB until September30, 2000, when Old DB separated into two publicly traded companies Moodys Corporation and New DB. At that time, Old DB distributed to its shareholders shares of New DB stock. New DB comprised the business of Old DBs Dun Bradstreet operating company. The remaining business of Old DB consisted solely of the business of providing ratings and related research and credit risk management services and was renamed Moodys Corporation. For purposes of governing certain ongoing relationships between the Company and New DB after the 2000 Distribution and to provide for an orderly transition, the Company and New DB entered into various agreements including a distribution agreement, tax allocation agreement and employee benefits agreement. These interim financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the Companys consolidated financial statements and related notes in the Companys 2008 annual report on Form 10-K filed with the SEC on March2, 2009. 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 (consisting of 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 prior year amounts have been reclassified to conform to the current year presentation. |
NOTE 2. STOCK-BASED COMPENSATION | NOTE 2. 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: ThreeMonthsEnded June30, SixMonthsEnded June30, 2009 2008 2009 2008 Stock compensation cost $ 16.1 $ 18.0 $ 30.6 $ 29.2 Tax benefit $ 5.9 $ 6.7 $ 11.3 $ 10.8 During the first half of 2009, the Company granted 2.6million employee stock options, which had a weighted average grant date fair value of $8.52 per share based on the Black-Scholes option-pricing model. The Company also granted 0.6million shares of restricted stock in the first six months of 2009, which had a weighted average grant date fair value of $25.18 per share. Unrecognized compensation expense at June30, 2009 was $57.8 million and $42.1 million for stock options and nonvested restricted stock, respectively, which is expected to be recognized over a weighted average period of 1.6years and 1.5 years, respectively. The following tables summarize information relating to stock option exercises and restricted stock vesting: Stock option exercises: SixMonthsEnded June30, 2009 2008 Proceeds from stock option exercises $ 12.1 $ 16.5 Aggregate intrinsic value $ 8.0 $ 15.6 Tax benefit realized upon exercise $ 3.2 $ 6.2 Restricted stock vesting: SixMonthsEnded June30, 2009 2008 Fair value of shares vested $ 7.9 $ 22.7 Tax benefit realized upon vesting $ 2.9 $ 8.6 |
NOTE 3. INCOME TAXES | NOTE 3. INCOME TAXES Moodys effective tax rate was 36.4% and 38.5% for the three month periods ended June30, 2009 and 2008, respectively and 36.1% and 38.5% for the six month periods ended June30, 2009 and 2008, respectively. The decrease in the effective tax rate was primarily due to a larger portion of consolidated taxable income being generated from international sources, which is taxed at a lower rate than the U.S. statutory rate, net reductions to tax and tax-related liabilities in the first quarter of 2009 and a $4.3 million tax benefit related to the settlement of a Legacy Tax Matter in the second quarter of 2009. Additionally, in the second quarter of 2008 there was a $6.4 million non-taxable Legacy Tax benefit recorded in other non-operating income. The Company classifies interest related to FIN 48 tax liabilities in interest expense in its consolidated statements of operations. Penalties, if incurred, would be recognized in other non-operating expenses. During the second quarter and first six months of 2009, the Company had a net decrease in its UTBs of $9.8 million ($4.5 million, net of tax) and a net increase of $3.9 million ($4.4 million, net of tax), respectively, primarily relating to U.S. tax issues. As of June 30, 2009 approximately $32 million of UTBs are included in accounts payable and accrued liabilities. Prepaid taxes of $29.5 million and $62.7 million at June30, 2009 and December31, 2008, respectively, are included in other current assets in the consolidated balance sheets. Moodys Corporation and subsidiaries are subject to U.S. federal income tax as well as income tax in various state, local and foreign jurisdictions. The Companys tax filings in New York State for the years 2004 through 2006 are currently under examination; tax filings in the U.K. for 2001 through 2006 are currently under examination by the U.K. taxing authorities; and income tax and value-added-tax filings in Italy for 2003 through 2007 are currently under examination by the Italian taxing authorities. During the second quarter of 2009, New York City concluded its tax audits for Moodys 2001 through 2007 tax years with no material impact to the statement of operations. Forongoingaudits related to open tax years,the Companyestimatesthatitispossiblethe balance of UTBs could decreasein the next twelve monthsas a result of the settlement of these 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 thatnew issuesmight be raised by tax authoritieswhich could necessitateincreasesto the balance of UTBs. As the Company is unable to predict the timing or outcomeof these audits,it is therefore unable to estimate theamount of changesto the balance of UTBsat this time.However, the Company believes that it has adequately provided for its financial exposure for all open tax years by tax jurisdiction in accordance with the provisions of FIN 48.Additionally, the Company is seeking tax rulings on certain tax positions which, if granted, could change the balance of UTBs over the next twelve months. However, due to the uncertainty involved with t |
NOTE 4. WEIGHTED AVERAGE SHARES OUTSTANDING | NOTE 4. WEIGHTED AVERAGE SHARES OUTSTANDING Below is a reconciliation of basic to diluted shares outstanding: ThreeMonthsEnded June30, SixMonthsEnded June30, 2009 2008 2009 2008 Basic 236.1 244.6 235.8 246.0 Dilutive effect of shares issuable under stock-based compensation plans 2.0 3.5 1.5 3.5 Diluted 238.1 248.1 237.3 249.5 Anti-dilutive options to purchase common shares and restricted stock excluded from the table above 15.1 11.0 16.7 11.1 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 June30, 2009 and 2008. These assumed proceeds include Excess Tax Benefits and any unrecognized compensation as calculated under SFAS No.123R. |
NOTE 5. SHORT-TERM INVESTMENTS | NOTE 5. SHORT-TERM INVESTMENTS Short-term investments are securities with maturities greater than 90 days at the time of purchase that are available for operations in the next twelve months. The short-term investments, primarily consisting of certificates of deposit, are classified as held-to-maturity and therefore are carried at cost. The remaining contractual maturities of the short-term investments were one month to four months and one month to ten months as of June30, 2009 and December31, 2008, respectively. Interest and dividends are recorded into income when earned. |
NOTE 6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | NOTE 6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company engages in hedging activities to protect against FX risks from forecasted billings and related revenue denominated in the euro and the GBP. FX options and forward exchange contracts are utilized to hedge exposures related to changes in FX rates. As of June30, 2009 all FX options and forward exchange contracts had maturities between one and 14months. The hedging program mainly utilizes FX options. The forward exchange contracts are immaterial. The following table summarizes the notional amounts of the Companys outstanding FX options: June30, 2009 December31, 2008 Notional amount of Currency Pair: GBP/USD 6.7 7.4 EUR/USD 12.0 12.9 EUR/GBP 18.0 24.3 In May 2008, the Company entered into interest rate swaps with a total notional amount of $150.0 million to protect against fluctuations in the LIBOR-based variable interest rate on the 2008 Term Loan, further described in Note 10. These interest rate swaps are designated as cash flow hedges. The tables below reflect the expanded disclosure requirements of SFASNo. 161, Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No.133, which the Company implemented in the first quarter of 2009. Fair Value of Derivative Instruments Asset Liability June30, 2009 December31, 2008 June30, 2009 December31, 2008 Derivatives designated as hedging instruments under SFAS No. 133 FX options $ 2.7 $ 4.9 $ $ Interest rate swaps 7.3 10.7 Total $ 2.7 $ 4.9 $ 7.3 $ 10.7 The fair value of FX options and interest rate swaps are included in other current assets and other liabilities, respectively, in the consolidated balance sheets at June30, 2009 and December31, 2008. Derivatives in SFAS No. 133 Cash Flow Hedging Relationships Amount of Gain/(Loss) Recognized in AOCI on Derivative (Effective Portion) Location of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion) Amount of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion) Location of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) Gain / (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing) Three Months Ended June30, Three Months Ended June30, Three Months Ended June30, 2009 2008 2009 2008 2009 2008 FX options $ (0.2 ) $ (0.3 ) Revenue $ 0.6 $ (0.4 ) Revenue $ $ Interest rate swaps 1.8 1.1 Interest expense N/A Total $ 1.6 $ 0.8 $ 0.6 $ (0.4 ) $ $ SixMonthsEnded June 30, Six |
NOTE 7. GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS | NOTE 7. GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS The following table summarizes the activity in goodwill for the periods indicated: Six Months Ended June30, 2009 Year Ended December31, 2008 MIS MA Consolidated MIS MA Consolidated Beginning balance $ 10.6 $ 327.4 $ 338.0 $ 11.4 $ 168.5 $ 179.9 Additions 3.8 3.8 1.4 158.7 160.1 FX translation 0.1 2.7 2.8 (2.2 ) 0.2 (2.0 ) Ending balance $ 10.7 $ 333.9 $ 344.6 $ 10.6 $ 327.4 $ 338.0 The purchase price allocation for acquisitions made in the fourth quarter of 2008 is subject to adjustment as more detailed analyses are completed and additional information about fair value of assets and liabilities become available. Changes in the fair value of the net assets acquired could impact the amount of the purchase price allocable to goodwill. Acquired intangible assets and related amortization consisted of: June30, 2009 December31, 2008 Customer lists $ 81.0 $ 80.5 Accumulated amortization (40.6 ) (37.7 ) Net customer lists 40.4 42.8 Trade secret 25.5 25.5 Accumulated amortization (7.6 ) (6.6 ) Net trade secret 17.9 18.9 Software 55.7 55.2 Accumulated amortization (13.9 ) (11.0 ) Net software 41.8 44.2 Other 28.6 28.2 Accumulated amortization (22.0 ) (20.1 ) Net other 6.6 8.1 Total acquired intangible assets, net $ 106.7 $ 114.0 Other intangible assets primarily consist of databases, trade names and covenants not to compete. Amortization expense is as follows: ThreeMonthsEnded June30, SixMonthsEnded June30, 2009 2008 2009 2008 Amortization expense $ 4.2 $ 2.7 $ 8.2 $ 5.4 Estimated future amortization expense for acquired intangible assets subject to amortization is as follows: Year Ending December31, 2009 (after June 30) $ 8.4 2010 15.5 2011 14.4 2012 13.7 2013 13.5 Thereafter 41.2 Intangible assets are reviewed for impairment whenever circumstances indicate that the carrying amount may not be recoverable. If the estimated undiscounted future cash flows are lower than the carrying amount of the related asset, a loss is recognized for the difference between the carrying amount and the estimated fair value of the asset. Goodwill is tested for impairment annually as of November30th, or more frequently if circumstances indicate the assets may be impaired. For the three and six months ended June30, 2009 there were no impairments to goodwill; however $0.2 million of intangible assets written off in the first quarter o |
NOTE 8. RESTRUCTURING | NOTE 8. RESTRUCTURING The Companys restructuring accounting comes under the scope of the following GAAP: SFAS No.112 for severance relating to employee terminations, SFAS No.88 for pension settlements and curtailments, SFAS No.144 for asset impairments and SFAS No.146 for contract termination costs and other exit activities. On March27, 2009 the Company approved the 2009 Restructuring Plan to reduce costs in response to a strategic review of its business in certain jurisdictions and weak global economic and market conditions. This will result in a total estimated restructuring charge between $14 million to $16 million. The 2009 Restructuring Plan consists of headcount reductions of approximately $11 million to $12 million as well as contract termination costs and the potential divestiture of non-strategic assets totaling $3 million to $4 million. The Companys plan includes closing offices in South Bend, Indiana; Jakarta, Indonesia and Taipei, Taiwan. There was $0.2 million in accelerated amortization for intangible assets recognized in the first quarter of 2009 relating to the closure of the Jakarta, Indonesia office. The 2009 Restructuring Plan will result in a global headcount reduction between 120 and 170 positions, representing 3% to 4% of the Companys workforce as of December31, 2008. The entire charge, except for $0.2 million of intangible assets written off relating to the Indonesia office closure, will result in cash outlays that will be substantially paid out over the next twelve months. The 2009 Restructuring Plan is expected to be substantially complete by December31, 2009. On December31, 2007, the Company approved the 2007 Restructuring Plan that reduced global head count by approximately 275 positions, or approximately 7.5% of the workforce, in response to the Companys reorganization announced in August 2007 and a decline in the then current and anticipated issuance of rated debt securities in some market sectors. Included in the 2007 Restructuring Plan was a reduction of staff as a result of: (i)consolidation of certain corporate staff functions, (ii)the integration of businesses comprising MA and (iii)an anticipated decline in new securities issuance in some market sectors. The 2007 Restructuring Plan also called for the termination of technology contracts as well as the outsourcing of certain technology functions. The cumulative amount of expense incurred from inception through June30, 2009 for the 2007 Restructuring Plan was $48.4 million. The 2007 Restructuring Plan was substantially complete as of December31, 2008. Total expenses included in the accompanying consolidated statements of operations are as follows: ThreeMonthsEnded June30, SixMonthsEnded June30, (in millions) 2009 2008 2009 2008 2007 Restructuring Plan $ 0.3 $ (0.2 ) $ 0.9 $ (0.9 ) 2009 Restructuring Plan 2.8 14.0 Total $ 3.1 $ (0.2 ) $ 14.9 $ (0.9 ) The expense related to the 2007 Restructuring Plan primarily reflects adjustments to previous estimates. Cha |
NOTE 9. PENSION AND OTHER POST-RETIREMENT BENEFITS | NOTE 9. PENSION AND OTHER POST-RETIREMENT BENEFITS Moodys maintains funded and unfunded noncontributory Defined Benefit Pension Plans. The DBPPs provide defined benefits using a cash balance formula based on years of service and career average salary or final average pay for selected executives. The Company also provides certain healthcare and life insurance benefits for retired U.S. employees. The post-retirement healthcare plans are contributory with participants contributions adjusted annually; the life insurance plans are noncontributory. Moodys funded and unfunded pension plans, the post-retirement healthcare plans and the post-retirement life insurance plans are collectively referred to herein as the Post-Retirement Plans. Effective at the Distribution Date, Moodys assumed responsibility for the Post-Retirement Plans relating to its active employees. New DB has assumed responsibility for the Companys retirees and vested terminated employees as of the Distribution Date. Effective January1, 2008, the Company no longer offers DBPPs to employees hired or rehired on or after January1, 2008 and new hires instead receive a retirement contribution of similar benefit value under the Companys Profit Participation Plan. Current participants of the Companys DBPPs continue to accrue benefits based on existing plan benefit formulas. The components of net periodic benefit expense related to the Post-Retirement Plans are as follows: Three Months Ended June30, Pension Plans Other Post-Retirement Plans 2009 2008 2009 2008 Components of net periodic expense Service cost $ 3.0 $ 3.2 $ 0.2 $ 0.2 Interest cost 2.4 2.5 0.2 0.2 Expected return on plan assets (2.5 ) (2.5 ) Amortization of net actuarial loss from earlier periods 0.1 0.1 Amortization of net prior service costs from earlier periods 0.1 0.1 Curtailment loss 1.0 Cost of special termination benefits 2.8 Net periodic expense $ 3.1 $ 7.2 $ 0.4 $ 0.4 Six Months Ended June 30, Pension Plans Other Post-Retirement Plans 2009 2008 2009 2008 Components of net periodic expense Service cost $ 6.1 $ 6.2 $ 0.4 $ 0.4 Interest cost 4.9 4.9 0.4 0.3 Expected return on plan assets (5.0 ) (5.0 ) Amortization of net actuarial loss from earlier periods 0.3 0.1 Amortization of net prior service costs from earlier periods 0.2 0.2 Curtailment loss 1.0 Cost of special termination benefits 2.8 Net periodic expense $ 6.5 $ 10.2 $ 0.8 $ 0.7 The curtailment loss and the cost of special termination benefits in 2008 relates to the accelerated recognition of prior service costs for a participant in the Companys Supplemen |
NOTE 10. INDEBTEDNESS | NOTE 10. INDEBTEDNESS The following table summarizes total indebtedness: June30, 2009 December31, 2008 2007 Facility $ 210.0 $ 613.0 Commercial paper, net of unamortized discount of $0.1 at 2009 and $0.3 at 2008 370.4 104.7 Notes payable: Series 2005-1 Notes 300.0 300.0 Series 2007-1 Notes 300.0 300.0 2008 Term Loan 150.0 150.0 Total Debt 1,330.4 1,467.7 Current portion (580.4 ) (717.7 ) Total long-term debt $ 750.0 $ 750.0 2007 Facility On September28, 2007, the Company entered into a $1.0 billion five-year senior, unsecured revolving credit facility, expiring in September 2012. The 2007 Facility will serve, in part, to support the Companys CP Program described below. Interest on borrowings is payable at rates that are based on LIBOR plus a premium that can range from 16.0 to 40.0 basis points of the outstanding borrowing amount depending on the Debt/EBITDA ratio. The Company also pays quarterly facility fees, regardless of borrowing activity under the 2007 Facility. The quarterly fees for the 2007 Facility can range from 4.0 to10.0 basis points of the facility amount, depending on the Companys Debt/EBITDA ratio. The Company also pays a utilization fee of 5.0basis points on borrowings outstanding when the aggregate amount outstanding exceeds 50% of the total facility. The weighted average interest rate on borrowings outstanding as of June30, 2009 and December31, 2008 was 0.6% and 1.47%. The 2007 Facility contains certain covenants that, among other things, restrict the ability of the Company and certain of its subsidiaries, without the approval of the lenders, to engage in mergers, consolidations, asset sales, transactions with affiliates and sale-leaseback transactions or to incur liens, as defined in the related agreement. The 2007 Facility also contains financial covenants that, among other things, require the Company to maintain a Debt/EBITDA ratio of not more than 4.0 to 1.0 at the end of any fiscal quarter. Commercial Paper On October3, 2007, the Company entered into a private placement commercial paper program under which the Company may issue CP notes up to a maximum amount of $1.0 billion. Amounts available under the CP Program may be re-borrowed. The CP Program is supported by the Companys 2007 Facility. The maturities of the CP Notes will vary, but may not exceed 397 days from the date of issue. The CP Notes are sold at a discount from par or, alternatively, sold at par and bear interest at rates that will vary based upon market conditions at the time of issuance. The rates of interest will depend on whether the CP Notes will be a fixed or floating rate. The interest on a floating rate may be based on the following: (a)certificate of deposit rate; (b)commercial paper rate; (c)the federal funds rate; (d)the LIBOR; (e)prime rate; (f)treasury rate; or (g)such other base rate as may be specified in a supplement to the private placement agreement. The weighted average interest rate on CP borrowings outstanding was 0 |
NOTE 11. CONTINGENCIES | NOTE 11. CONTINGENCIES From time to time, Moodys is involved in legal and tax proceedings, governmental investigations, claims and litigation that are incidental to the Companys business, including claims based on ratings assigned by MIS. Moodys is also subject to ongoing tax audits in the normal course of business. Management periodically assesses the Companys liabilities and contingencies in connection with these matters based upon the latest information available. Moodys discloses material pending legal proceedings pursuant to SEC rules and other pending matters as it may determine to be appropriate. As a result of events in the U.S. subprime residential mortgage sector and the credit markets more broadly over the last two years, various legislative, regulatory and enforcement entities around the world are investigating or evaluating the role of rating agencies in the U.S. subprime mortgage-backed securitization market and structured finance markets more generally. Moodys has received subpoenas and inquiries from states attorneys general and other governmental authorities and is cooperating with such investigations and inquiries. Moodys is also cooperating with a review by the SEC relating to errors in the model used by MIS to rate certain constant-proportion debt obligations. In addition, the Company is facing market participant litigation relating to the performance of MIS rated securities. Although Moodys in the normal course experiences such litigation, the volume and cost of defending such litigation has significantly increased in the current economic environment. On June27, 2008, the Brockton Contributory Retirement System, a purported shareholder of the Companys securities, filed a purported shareholder derivative complaint on behalf of the Company against its directors and certain senior officers, and the Company as nominal defendant, in the Supreme Court of the State of New York, County of New York. The plaintiff asserts various causes of action relating to the named defendants oversight of MISs ratings of RMBS and constant-proportion debt obligations, and their participation in the alleged public dissemination of false and misleading information about MISs ratings practices and/or a failure to implement internal procedures and controls to prevent the alleged wrongdoing. The plaintiff seeks compensatory damages, restitution, disgorgement of profits and other equitable relief. On July2, 2008, Thomas R. Flynn, a purported shareholder of the Companys securities, filed a similar purported shareholder derivative complaint on behalf of the Company against its directors and certain senior officers, and the Company as nominal defendant, in the Supreme Court of the State of New York, County of New York, asserting similar claims and seeking the same relief. The cases have been consolidated and plaintiffs filed an amended consolidated complaint in November 2008. The Company removed the consolidated action to the United States District Court for the Southern District of New York in December 2008. In January 2009, the plaintiffs moved to remand the case to the Supreme Court of the State of New York. The Company has opposed the reman |
NOTE 12. COMPREHENSIVE INCOME AND NONCONTROLLING INTERESTS | NOTE 12. COMPREHENSIVE INCOME AND NONCONTROLLING INTERESTS The components of total comprehensive income, net of tax, are as follows: Three months ended June30, 2009 2008 Shareholders ofMoodys Corporation Noncontrolling Interests Total Shareholders ofMoodys Corporation Noncontrolling Interests Total Net income $ 109.3 $ 1.7 $ 111.0 $ 135.2 $ 2.4 $ 137.6 Net realized and unrealized gain/(loss) on cash flow hedges (net of tax of $0.3 million in both 2009 and 2008) 1.0 1.0 1.2 1.2 FX translation (net of tax of $2.1 million and $3.1 million in 2009 and 2008, respectively) 49.2 (0.9 ) 48.3 (1.4 ) (1.4 ) (2.8 ) Net actuarial gains recognized (net of tax of $2.1 million and $0.5 million in 2009 and 2008, respectively) 3.1 3.1 0.8 0.8 Amortization of actuarial losses and prior service costs (net of tax of $0.1 million in both 2009 and 2008) 0.1 0.1 0.1 0.1 Total comprehensive income $ 162.7 $ 0.8 $ 163.5 $ 135.9 $ 1.0 $ 136.9 Six months ended June30, 2009 2008 Shareholders of Moodys Corporation Noncontrolling Interests Total Shareholders of Moodys Corporation Noncontrolling Interests Total Net income $ 199.5 $ 2.6 $ 202.1 $ 255.9 $ 2.9 $ 258.8 Net realized and unrealized gain/ (loss) on cash flow hedges, net of tax of $0.3 million in both 2009 and 2008. 1.5 1.5 (0.5 ) (0.5 ) FX translation, net of tax of $11.7 million and $2.8 million in 2009 and 2008, respectively. 17.3 (0.2 ) 17.1 10.1 1.1 11.2 Net actuarial gains recognized (net of tax of $2.1 million and $0.8 million in 2009 and 2008, respectively) 3.1 3.1 0.6 0.6 Amortization of actuarial losses and prior service costs (net of tax of $0.2 million and $0.1 million in 2009 and 2008, respectively) 0.3 0.3 0.2 0.2 Total comprehensive income $ 221.7 $ 2.4 $ 224.1 $ 266.3 $ 4.0 $ 270.3 The following table summarizes the activity in the Companys noncontrolling interests: Balance at December31, 2008 $ 8.3 Net income attributable to noncontrolling interests 2.6 Dividends declared attributable to noncontrolling interests (2.9 ) FX translation (0.2 ) Balance at June30, 2009 $ 7.8 |
NOTE 13. SEGMENT INFORMATION | NOTE 13. SEGMENT INFORMATION The Company operates in two reportable segments in accordance with SFAS No.131, Disclosures about Segments of an Enterprise and Related Information: MIS and MA. Revenue for MIS and expenses for MA include an intersegment royalty charged to MA for the rights to use and distribute content, data and products developed by MIS. Additionally, overhead costs and corporate expenses of the Company are allocated to each segment based on a revenue-split methodology. Overhead expenses include costs such as rent and occupancy, information technology and support staff such as finance, human resource, information technology and legal. Eliminations in the table below represent intersegment royalty revenue/expense. Below is financial information by segment, MIS and MA revenue by line of business and consolidated revenue information by geographic area, each of which is for the three and six-month periods ended June30, 2009 and 2008, and total assets by segment as of June30, 2009 and December31, 2008. Financial Information by Segment Three Months Ended June30, 2009 2008 MIS MA Eliminations Consolidated MIS MA Eliminations Consolidated Revenue $ 324.7 $ 140.4 $ (14.4 ) $ 450.7 $ 371.5 $ 131.8 $ (15.7 ) $ 487.6 Expenses: Operating, SGA 163.2 95.9 (14.4 ) 244.7 170.4 82.6 (15.7 ) 237.3 Restructuring 0.5 2.6 3.1 0.2 (0.4 ) (0.2 ) Depreciation and amortization 7.5 8.2 15.7 10.4 6.4 16.8 Total 171.2 106.7 (14.4 ) 263.5 181.0 88.6 (15.7 ) 253.9 Operating income $ 153.5 $ 33.7 $ $ 187.2 $ 190.5 $ 43.2 $ $ 233.7 Six Months Ended June30, 2009 2008 MIS MA Eliminations Consolidated MIS MA Eliminations Consolidated Revenue $ 609.6 $ 279.1 $ (29.1 ) $ 859.6 $ 685.7 264.3 $ (31.7 ) $ 918.3 Expenses: Operating, SGA 315.8 190.6 (29.1 ) 477.3 323.8 164.8 (31.7 ) 456.9 Restructuring 8.1 6.8 14.9 (0.4 ) (0.5 ) (0.9 ) Depreciation and amortization 15.2 16.1 31.3 17.4 11.9 29.3 Total 339.1 213.5 (29.1 ) 523.5 340.8 176.2 (31.7 ) 485.3 Operating income $ 270.5 $ 65.6 $ $ 336.1 $ 344.9 $ 88.1 $ $ |
NOTE 14. RECENTLY ISSUED ACCOUNTING STANDARDS | NOTE 14. RECENTLY ISSUED ACCOUNTING STANDARDS Adopted: In May 2009, the FASB issued SFAS No.165 Subsequent Events, which sets forth principles and disclosure requirements for events that occur after the balance sheet date. In particular, SFAS No.165 requires disclosure of the date through which management of a company has evaluated subsequent events and whether that date represents the date the financial statements were issued or available to be issued. The Company has implemented the provisions of SFAS No.165 as of June30, 2009. The implementation did not have any impact on the Companys consolidated financial statements. Not Yet Adopted: In June 2009, the FASB issued SFAS No.167 Amendments to FASB Interpretation No.46(R), which sets forth new guidance on the analysis that must be performed to determine if an enterprises variable interest or interests give it a controlling financial interest in a variable interest entity. Additionally, SFAS No.167 requires enhanced disclosures that will provide more transparent information about an enterprises involvement in a variable interest entity. The Company plans to implement the provisions of SFAS No.167 as of January1, 2010 and does not expect the implementation to have a material impact on its consolidated financial statements. In June 2009, the FASB issued SFAS No.168 The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles a replacement of FASB Statement No.162. SFAS No.168 sets forth the FASBs new codification which was first introduced in SFAS No.162, The Hierarchy of Generally Accepted Accounting Principles as the source of authoritative GAAP. The Company will implement the provisions of this statement in its financial statements for the period ending September30, 2009. The implementation of the standard will not have any impact on its consolidated financial statements but will require the Company to reference the new codification beginning in the third quarter of 2009. |
NOTE 15. SUBSEQUENT EVENTS | NOTE 15. SUBSEQUENT EVENTS On July27, 2009, the Board approved the declaration of a quarterly dividend of $0.10 per share of Moodys common stock, payable on September10, 2009 to shareholders of record at the close of business on August20, 2009. Subsequent events were evaluated by the Company through July31, 2009 which is the date the financial statements were issued. |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Amendment Description | N.A. |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | |||
6 Months Ended
Jun. 30, 2009 | Jun. 30, 2009
Common Stock [Member] | Jun. 30, 2008
Common Stock [Member] | |
Entity [Text Block] | |||
Trading Symbol | MCO | ||
Entity Registrant Name | MOODYS CORP /DE/ | ||
Entity Central Index Key | 0001059556 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 236,300,000 | ||
Entity Public Float | $8,300,000,000 |