UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
______________
FORM 8-K
CURRENT
REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported): May
1, 2015
MOODY’S
CORPORATION
(Exact
Name of Registrant as Specified in Charter)
Delaware
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1-14037
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13-3998945
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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7 World Trade Center at 250 Greenwich Street New York, New
York 10007
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(Address
of Principal Executive Offices) (Zip Code)
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Registrant’s
telephone number, including area code:
(212) 553-0300
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02, "Results of Operations and Financial Condition"
On May 1, 2015, Moody's Corporation (the "Registrant") announced its
financial results for the quarter ended March 31, 2015, as well as its
outlook for 2015. A copy of the press release containing the
announcement is included as Exhibit 99.1.
The information contained in this Current Report, including the exhibit
hereto, is being furnished and shall not be deemed "filed" for the
purpose of Section 18 of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) or otherwise subject to the liabilities of that
Section. The information in this Current Report shall not be
incorporated by reference into future filings under the Securities Act
of 1933, as amended, or the Exchange Act, unless it is specifically
incorporated by reference therein.
Item 7.01, "Regulation FD Disclosure"
The information set forth under Item 2.02, "Results of Operations and
Financial Condition" is incorporated herein by reference.
Item 9.01, "Financial Statements and Exhibits"
(d) Exhibits
99.1 Press release of Moody's Corporation dated May 1,
2015, announcing results for the quarter ended March 31, 2015.
SIGNATURE
Pursuant to
the requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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MOODY'S
CORPORATION
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By:
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/s/ John J. Goggins
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John J. Goggins
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Executive Vice President and General Counsel
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Date:
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May 1, 2015
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INDEX TO EXHIBITS
Exhibit No.
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Description
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99.1
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Press release of Moody's Corporation dated May 1, 2015, announcing
results for the quarter ended March 31, 2015.
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Exhibit 99.1
Moody's
Corporation Reports Results for First-Quarter 2015
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1Q15
revenue up 13% from 1Q14 to $865.6 million; up 18% on a constant
currency basis
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1Q15
operating income up 12% from 1Q14 to $371.3 million; up 18% on a
constant currency basis
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1Q15
GAAP EPS up 11% from 1Q14 to $1.11
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Reaffirming
FY 2015 guidance of GAAP EPS in the range of $4.55 to $4.65
NEW YORK--(BUSINESS WIRE)--May 1, 2015--Moody’s Corporation (NYSE:MCO)
today announced results for the first-quarter 2015.
FIRST-QUARTER 2015 HIGHLIGHTS
Moody’s Corporation reported revenue of $865.6 million for the three
months ended March 31, 2015, up 13% from $767.2 million for same period
of 2014.
Operating expense in first-quarter 2015 totaled $494.3 million, a 14%
increase from $434.2 million. Operating income was $371.3 million, up
12% from $333.0 million. Adjusted operating income (operating income
before depreciation and amortization) was $399.9 million, up 12% from
$356.1 million. Operating margin for first-quarter 2015 was 42.9%, and
adjusted operating margin was 46.2%. GAAP EPS of $1.11 was up 11% from
first-quarter 2014 GAAP EPS of $1.00.
"Moody’s first-quarter 2015 revenue increased 13% year over year,
reflecting double-digit growth from both Moody’s Investors Service and
Moody’s Analytics,” said Raymond McDaniel, President and Chief Executive
Officer of Moody’s. “We are reaffirming our full-year 2015 earnings per
share guidance of $4.55 to $4.65 despite our expectations for uneven
global growth as well as the strength of the U.S. dollar at current
exchange rates.”
MCO FIRST-QUARTER 2015 REVENUE UP 13%
Moody’s Corporation reported global revenue of $865.6 million for
first-quarter 2015, up 13% from first-quarter 2014. Foreign currency
translation unfavorably impacted revenue by 5%. U.S. revenue was $499.8
million, up 17% from $425.6 million, while non-U.S. revenue was $365.8
million, up 7% from $341.6 million. Revenue generated outside the U.S.
constituted 42% of total revenue, versus 45% in the year-ago period.
MIS First-Quarter Revenue Up 14%
Global revenue for Moody’s Investors Service (MIS) for first-quarter
2015 was $602.3 million, up 14% from the prior-year period. Foreign
currency translation unfavorably impacted MIS revenue by 5%. U.S.
revenue was $371.5 million, up 18%, while non-U.S. revenue was $230.8
million, up 8%. Excluding the 2014 consolidation of ICRA Ltd., MIS
revenue grew 12% year-over-year.
Global corporate finance revenue was $298.7 million in first-quarter
2015, up 13% from the prior-year period, reflecting increased
investment-grade issuance from heightened M&A activity, as well as
strong investor demand for high-yield bonds. Partially offsetting these
gains was a contraction in bank loan issuance. Corporate finance U.S.
revenue increased 13%, while non-U.S. revenue increased 14%.
Global structured finance revenue totaled $101.3 million for
first-quarter 2015, up 6% from a year earlier, primarily the result of
strong U.S. commercial real estate issuance. Structured finance U.S.
revenue was up 13%, while non-U.S. revenue was down 6%.
Global financial institutions revenue was $93.8 million, up 10% compared
to the prior-year period, primarily due to increased revenue from U.S.
finance companies and insurers. Partially offsetting the increase was a
decrease in revenue from global managed investment issuers, which
experienced elevated activity in the prior year. Financial institutions
U.S. and non-U.S. revenue was up 19% and 4%, respectively.
Global public, project and infrastructure finance revenue was $100.7
million, up 25% resulting from increases in U.S. municipal financing
activity and global municipal infrastructure issuance. Public, project
and infrastructure finance U.S. revenue was up 37%, while non-U.S.
revenue was up 7%.
MA First-Quarter Revenue Up 11%
Global revenue for Moody’s Analytics (MA) for first-quarter 2015 was
$263.3 million, up 11% from first-quarter 2014. Foreign currency
translation unfavorably impacted MA revenue by 5%. MA’s U.S. revenue was
$128.3 million, up 17%, and its non-U.S. revenue was $135.0 million, up
5%. Excluding the 2014 acquisitions of Lewtan Technologies and WebEquity
Solutions, MA revenue grew 7% year-over-year.
Global revenue from research, data and analytics (RD&A) was $149.6
million, up 9% from the prior-year period. Growth was driven by strong
sales of credit research and licensing of ratings data, higher customer
retention rates, and the acquisition of Lewtan Technologies in October
2014. RD&A U.S. revenue was up 13%, while non-U.S. revenue was up 3%.
Global enterprise risk solutions (ERS) revenue of $77.1 million was up
29% from first-quarter 2014, resulting from strong project delivery
across all product offerings, as well as the acquisition of WebEquity in
July 2014. ERS U.S. revenue was up 41%, while non-U.S. revenue was up
22%.
Global revenue from professional services of $36.6 million was down 10%
from the prior-year period, primarily due to the year-over-year effect
of exiting certain Copal Amba product lines in late 2014. Professional
services U.S. revenue was down 4%, while non-U.S. revenue was down 13%.
FIRST-QUARTER 2015 EXPENSE UP 14%
First-quarter 2015 expense for Moody’s Corporation was $494.3 million,
up 14% from the prior-year period, primarily due to increased headcount
and added operating expense from 2014 acquisitions. Foreign currency
translation favorably impacted expense by 4%.
Operating income was $371.3 million, up 12% from $333.0 million.
Adjusted operating income of $399.9 million also increased 12% from the
prior-year period. Foreign currency translation unfavorably impacted
operating income by 7%. The operating margin was 42.9%, down from 43.4%.
The adjusted operating margin was 46.2%, down from 46.4%.
Moody’s effective tax rate was 32.9% for first-quarter 2015, compared
with 28.9% for the prior-year period, which included a benefit from the
resolution of a foreign tax audit.
2015 CAPITAL ALLOCATION AND LIQUIDITY
3.8 Million Shares Repurchased in First Quarter
During first-quarter 2015, Moody’s repurchased 3.8 million shares at a
total cost of $365.8 million, or an average cost of $95.20 per share,
and issued 2.3 million shares as part of its annual employee stock-based
compensation plans. Outstanding shares as of March 31, 2015 totaled
202.2 million, down 5% from the prior year. As of March 31, 2015,
Moody’s had $1.2 billion of share repurchase authority remaining.
€500 Million Issued on March 9, 2015
On March 9, 2015, Moody’s issued €500 million of 12-year senior
unsecured notes at 1.75%, hedging the Company’s euro net assets. At
quarter-end, Moody’s had $3.1 billion of outstanding debt and $1.0
billion of additional debt capacity available under its revolving credit
facility. Total cash, cash equivalents and short-term investments at
quarter-end were $2.0 billion, down $49.5 million from a year earlier.
Free cash flow in first-quarter 2015 was $242.8 million, up 54% from
first-quarter 2014 due to the increase in net income and changes in
working capital.
ASSUMPTIONS AND OUTLOOK FOR FULL-YEAR 2015
Moody’s outlook for 2015 is based on assumptions about many
macroeconomic and capital market factors, including interest rates,
foreign currency exchange rates, corporate profitability and business
investment spending, mergers and acquisitions, consumer borrowing and
securitization, and the amount of debt issued. These assumptions are
subject to some degree of uncertainty, and results for the year could
differ materially from our current outlook. Guidance assumes foreign
currency translation at end-of-quarter exchange rates.
Moody’s full-year 2015 GAAP EPS guidance remains in the range of $4.55
to $4.65, although certain components of Moody’s 2015 revenue guidance
have been modified to reflect the Company’s current view of business
conditions.
Global MIS revenue for full-year 2015 is still expected to increase in
the mid-single-digit percent range. However, U.S. revenue is now
expected to increase in the high-single-digit percent range and non-U.S.
revenue is now expected to increase in the low-single-digit percent
range. Within MIS, structured finance revenue and financial institutions
revenue are now each expected to increase in the low-single-digit
percent range.
Global MA revenue for full-year 2015 is still expected to increase in
the mid-single-digit percent range. However, U.S. revenue is now
expected to increase in the low-double-digit percent range and non-U.S.
revenue is now expected to increase in the low-single-digit percent
range. Within MA, professional services revenue is now expected to
decrease in the low-single-digit percent range.
A full summary of Moody’s guidance as of May 1, 2015 is included in the
2015 Outlook table at the end of this press release.
CONFERENCE CALL
Moody’s will hold a conference call to discuss its first-quarter 2015
results, as well as its 2015 outlook, on May 1, 2015, at 11:30 a.m. EST.
Individuals within the U.S. and Canada can access the call by dialing
1-877-400-0505. Other callers should dial +1-719-234-7477. Please dial
into the call by 11:20 a.m. EST. The passcode for the call is “Moody’s
Corporation.”
The teleconference will be webcast with a slide presentation and can be
accessed on Moody's Investor Relations website, http://ir.moodys.com,
until 3:30 p.m. EST, May 30, 2015.
A replay of the teleconference will be available from 3:30 p.m. EST on
May 1, 2015 until 3:30 p.m. EST on May 30, 2015. The replay can be
accessed from within the U.S. and Canada by dialing 888-203-1112. Other
callers can access the replay at +1-719-457-0820. The replay
confirmation code is 6383368.
ABOUT MOODY'S CORPORATION
Moody's is an essential component of the global capital markets,
providing credit ratings, research, tools and analysis that contribute
to transparent and integrated financial markets. Moody’s Corporation
(NYSE: MCO) is the parent company of Moody's Investors Service, which
provides credit ratings and research covering debt instruments and
securities, and Moody's Analytics, which offers leading-edge software,
advisory services and research for credit and economic analysis and
financial risk management. The corporation, which reported revenue of
$3.3 billion in 2014, employs approximately 10,000 people worldwide and
maintains a presence in 33 countries. Further information is available
at www.moodys.com.
“Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995
Certain statements contained in this release are forward-looking
statements and are based on future expectations, plans and prospects for
Moody’s business and operations that involve a number of risks and
uncertainties. Moody’s outlook for 2015 and other forward-looking
statements in this release are made as of May 1, 2015, and the Company
disclaims any duty to supplement, update or revise such statements on a
going-forward basis, whether as a result of subsequent developments,
changed expectations or otherwise. In connection with the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995, the
Company is identifying certain factors that could cause actual results
to differ, perhaps materially, from those indicated by these
forward-looking statements. Those factors, risks and uncertainties
include, but are not limited to, the current world-wide credit market
disruptions and economic slowdown, which is affecting and could continue
to affect the volume of debt and other securities issued in domestic
and/or global capital markets; other matters that could affect the
volume of debt and other securities issued in domestic and/or global
capital markets, including credit quality concerns, changes in interest
rates and other volatility in the financial markets; the level of merger
and acquisition activity in the U.S. and abroad; the uncertain
effectiveness and possible collateral consequences of U.S. and foreign
government initiatives to respond to the current world-wide credit
market disruptions and economic slowdown; concerns in the marketplace
affecting Moody’s credibility or otherwise affecting market perceptions
of the integrity or utility of independent credit agency ratings; the
introduction of competing products or technologies by other companies;
pricing pressure from competitors and/or customers; the level of success
of new product development and global expansion; the impact of
regulation as an NRSRO, the potential for new U.S., state and local
legislation and regulations, including provisions in the Financial
Reform Act and regulations resulting from that Act; the potential for
increased competition and regulation in the EU and other foreign
jurisdictions; exposure to litigation related to Moody’s rating
opinions, as well as any other litigation, government and regulatory
proceedings, investigations and inquiries to which the Company may be
subject from time to time; provisions in the Financial Reform Act
legislation modifying the pleading standards, and EU regulations
modifying the liability standards, applicable to credit rating agencies
in a manner adverse to credit rating agencies; provisions of EU
regulations imposing additional procedural and substantive requirements
on the pricing of services; the possible loss of key employees; failures
or malfunctions of Moody’s operations and infrastructure; any
vulnerabilities to cyber threats or other cybersecurity concerns; the
outcome of any review by controlling tax authorities of the Company’s
global tax planning initiatives; the outcome of those Legacy Tax Matters
and legal contingencies that relate to the Company, its predecessors and
their affiliated companies for which Moody’s has assumed portions of the
financial responsibility; exposure to potential criminal sanctions or
civil remedies if the Company fails to comply with foreign and US laws
and regulations that are applicable in the jurisdictions in which the
Company operates, including sanctions laws, anti-corruption laws and
local laws prohibiting corrupt payments to government officials; the
impact of mergers, acquisitions or other business combinations and the
ability of the Company to successfully integrate acquired businesses;
currency and foreign exchange volatility; the level of future cash
flows; the levels of capital investments; and a decline in the demand
for credit risk management tools by financial institutions; and other
risk factors as discussed in the Company’s annual report on Form 10-K
for the year ended December 31, 2014 and in other filings made by the
Company from time to time with the Securities and Exchange Commission.
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Table 1 - Consolidated Statements of Operations (Unaudited)
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Three Months Ended
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March 31,
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2015
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2014
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Amounts in millions, except per share amounts
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Revenue
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$
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865.6
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$
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767.2
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Expenses:
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Operating
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244.4
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216.0
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Selling, general and administrative
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221.3
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195.1
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Depreciation and amortization
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28.6
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23.1
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Total expenses
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494.3
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434.2
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Operating income
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371.3
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333.0
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Non-operating (expense) income, net
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Interest (expense) income, net
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(29.3)
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(23.8)
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Other non-operating (expense) income, net
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2.5
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2.4
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Total non-operating (expense) income, net
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(26.8)
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(21.4)
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Income before provision for income taxes
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344.5
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311.6
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Provision for income taxes
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113.2
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89.9
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Net income
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231.3
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221.7
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Less: net income attributable to non-controlling interests
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1.2
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3.7
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Net income attributable to Moody's Corporation
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$
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230.1
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$
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218.0
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Earnings per share attributable to Moody's common shareholders
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Basic
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$
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1.14
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$
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1.02
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Diluted
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$
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1.11
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$
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1.00
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Weighted average number of shares outstanding
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Basic
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202.7
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214.0
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Diluted
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206.5
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218.5
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Table 2 - Supplemental Revenue Information (Unaudited)
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Three Months Ended
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March 31,
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Amounts in millions
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2015
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2014
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Moody's Investors Service
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Corporate Finance
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$
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298.7
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$
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264.4
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Structured Finance
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101.3
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95.3
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Financial Institutions
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93.8
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85.4
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Public, Project and Infrastructure Finance
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100.7
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80.7
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MIS Other*
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7.8
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3.3
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Intersegment royalty
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22.3
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21.5
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Sub-total MIS
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624.6
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550.6
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Eliminations
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(22.3)
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(21.5)
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Total MIS revenue
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602.3
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529.1
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Moody's Analytics
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Research, Data and Analytics
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149.6
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137.6
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Enterprise Risk Solutions
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77.1
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59.8
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Professional Services
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36.6
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40.7
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Intersegment revenue
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3.3
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3.3
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Sub-total MA
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266.6
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241.4
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Eliminations
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(3.3)
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(3.3)
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Total MA revenue
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263.3
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238.1
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Total Moody's Corporation revenue
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$
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865.6
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$
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767.2
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Moody's Corporation revenue by geographic area
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United States
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$
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499.8
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$
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425.6
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International
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365.8
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341.6
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$
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865.6
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$
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767.2
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*Pursuant to the acquisition of ICRA Ltd. (ICRA) in 2014, the
Company realigned certain components of its presentation of revenue
by LOB. Beginning in the fourth quarter of 2014, ICRA’s non-ratings
revenue was combined with non-ratings revenue associated with
Moody’s majority ownership of Korea Investors Service (KIS) to form
the “MIS Other” LOB. Non-ratings revenue from KIS was previously
reported in MA’s RD&A LOB. Expenses relating to ICRA’s and KIS’s
non-ratings revenue are now reported in the MIS segment. The prior
year comparative results have been reclassified to reflect this
realignment.
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Table 3 - Supplemental Revenue Reclassification (Unaudited)
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The following table summarizes the 2014 impact of the
reclassification of non-ratings revenue associated with Moody's
majority ownership of KIS, which was formerly reported in MA's RD&A
LOB, to the MIS Other LOB.
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Three Months Ended
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March 31, 2014
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Amounts in millions
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As Reported
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Reclassification
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As Reclassified
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Moody's Investors Service
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Corporate Finance
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$
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264.4
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$
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-
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$
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264.4
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Structured Finance
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95.3
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-
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95.3
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Financial Institutions
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85.4
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-
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85.4
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Public, Project and
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Infrastructure Finance
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80.7
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-
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80.7
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MIS Other
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-
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3.3
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3.3
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Total MIS revenue
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525.8
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3.3
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529.1
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Moody's Analytics
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Research, Data and Analytics
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140.9
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|
|
(3.3)
|
|
|
137.6
|
|
Enterprise Risk Solutions
|
|
|
59.8
|
|
|
-
|
|
|
59.8
|
|
Professional Services
|
|
|
40.7
|
|
|
-
|
|
|
40.7
|
|
Total MA revenue
|
|
|
241.4
|
|
|
(3.3)
|
|
|
238.1
|
|
|
|
|
|
|
|
|
|
|
|
Total Moody's Corporation revenue
|
|
$
|
767.2
|
|
$
|
-
|
|
$
|
767.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4 - Non-operating (expense) income, net
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
Amounts in millions
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net:
|
|
|
|
|
|
|
Expense on borrowings
|
$
|
(28.3)
|
|
$
|
(26.1)
|
|
Income
|
|
1.9
|
|
|
1.6
|
|
UTPs and other tax related liabilities
|
|
(3.2)
|
|
|
0.6
|
|
Interest Capitalized
|
|
0.3
|
|
|
0.1
|
|
|
Total interest expense, net
|
$
|
(29.3)
|
|
$
|
(23.8)
|
Other non-operating (expense) income, net:
|
|
|
|
|
|
|
FX gain/(loss)
|
$
|
-
|
|
$
|
1.0
|
|
Joint venture income (loss)
|
|
1.9
|
|
|
1.8
|
|
Other
|
|
0.6
|
|
|
(0.4)
|
|
|
Other non-operating income (expense), net
|
|
2.5
|
|
|
2.4
|
Total non-operating (expense) income, net
|
$
|
(26.8)
|
|
$
|
(21.4)
|
|
|
|
|
|
|
|
|
|
Table 5 - Selected Consolidated Balance Sheet Data (Unaudited)
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2015
|
|
2014
|
|
Amounts in millions
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,509.9
|
|
$
|
1,219.5
|
|
Short-term investments
|
|
|
485.5
|
|
|
458.1
|
|
Total current assets
|
|
|
3,039.3
|
|
|
2,686.4
|
|
Non-current assets
|
|
|
1,936.7
|
|
|
1,982.6
|
|
Total assets
|
|
|
4,976.0
|
|
|
4,669.0
|
|
Total current liabilities
|
|
|
1,138.2
|
|
|
1,199.7
|
|
Total debt (1)
|
|
|
3,095.1
|
|
|
2,547.3
|
|
Other long-term liabilities
|
|
|
888.9
|
|
|
879.1
|
|
Total shareholders' equity(deficit)*
|
|
|
(146.2)
|
|
|
42.9
|
|
Total liabilities and shareholders' equity
|
4,976.0
|
|
|
4,669.0
|
|
|
|
|
|
|
|
|
|
Actual number of shares outstanding
|
|
|
202.2
|
|
|
204.4
|
|
|
|
|
|
|
|
|
|
* The decrease primarily reflects share repurchases and FX
translation losses partially offset by net income in the first
three months of 2015.
|
|
|
|
March 31,
|
|
December 31,
|
|
(1) Total debt consists of the following:
|
|
2015
|
|
2014
|
|
Series 2007-1 Notes due 2017
|
|
$
|
300.0
|
|
$
|
300.0
|
|
2010 Senior Notes due 2020 (a)
|
|
|
511.1
|
|
|
503.8
|
|
2012 Senior Notes due 2022 (b)
|
|
|
497.0
|
|
|
496.9
|
|
2013 Senior Notes due 2024 (c)
|
|
|
497.5
|
|
|
497.5
|
|
2014 Senior Notes due 2019 (d)
|
|
|
454.1
|
|
|
450.7
|
|
2014 Senior Notes due 2044 (e)
|
|
|
298.4
|
|
|
298.4
|
|
2015 Senior Notes due 2027 (f)
|
|
|
537.0
|
|
|
-
|
|
Total debt
|
|
$
|
3,095.1
|
|
$
|
2,547.3
|
|
|
|
|
|
|
|
|
|
(a) Represents $500 million of 5.5% publicly traded Senior Notes
which mature on September 1, 2020; the notes were offered to the
public at 99.374% of the face amount and include a $13.0 million
and a $5.8 million adjustment relating to the fair value of an
interest rate hedge at March 31,2015 and December 31, 2014,
respectively
|
|
|
(b) Represents $500 million of 4.5% publicly traded Senior Notes
which mature on September 1, 2022; the notes were offered to the
public at 99.218% of the face amount
|
|
(c) Represents $500 million of 4.9% publicly traded Senior Notes
which mature on February 15, 2024; the notes were offered to the
public at 99.431% of the face amount
|
|
(d) Represents $450 million of 2.75% publicly traded Senior Notes
which mature on July 15, 2019; the notes were offered to the
public at 99.838% of the face amount and include a $4.7 million
and a $1.4 million adjustment relating to the fair value of an
interest rate hedge at March 31, 2015 and December 31, 2014,
respectively
|
|
(e) Represents $300 million of 5.25% publicly traded Senior Notes
which mature on July 15, 2044; the notes were offered to the
public at 99.462% of the face amount
|
|
(f) Represents €500 million of 1.75% publicly traded Senior Notes
which mature on March 9, 2027
|
|
|
|
|
|
Table 6 - Financial Information by Segment:
|
|
|
|
The table below presents revenue, adjusted operating income and
operating income by reportable segment. The Company defines adjusted
operating income as operating income excluding depreciation and
amortization.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
MIS
|
|
MA
|
|
Eliminations
|
|
Consolidated
|
|
MIS
|
|
MA
|
|
Eliminations
|
|
Consolidated
|
Revenue
|
|
$
|
624.6
|
|
$
|
266.6
|
|
$
|
(25.6)
|
|
$
|
865.6
|
|
$
|
550.6
|
|
$
|
241.4
|
|
$
|
(24.8)
|
|
$
|
767.2
|
Operating, selling, general and administrative expense
|
|
|
281.3
|
|
|
210.0
|
|
|
(25.6)
|
|
|
465.7
|
|
|
248.6
|
|
|
187.3
|
|
|
(24.8)
|
|
|
411.1
|
Adjusted operating income
|
|
|
343.3
|
|
|
56.6
|
|
|
-
|
|
|
399.9
|
|
|
302.0
|
|
|
54.1
|
|
|
-
|
|
|
356.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
16.0
|
|
|
12.6
|
|
|
-
|
|
|
28.6
|
|
|
11.4
|
|
|
11.7
|
|
|
-
|
|
|
23.1
|
Operating income
|
|
$
|
327.3
|
|
$
|
44.0
|
|
$
|
-
|
|
$
|
371.3
|
|
$
|
290.6
|
|
$
|
42.4
|
|
$
|
-
|
|
$
|
333.0
|
Adjusted operating margin
|
|
|
55.0%
|
|
|
21.2%
|
|
|
|
|
|
46.2%
|
|
|
54.8%
|
|
|
22.4%
|
|
|
|
|
|
46.4%
|
Operating margin
|
|
|
52.4%
|
|
|
16.5%
|
|
|
|
|
|
42.9%
|
|
|
52.8%
|
|
|
17.6%
|
|
|
|
|
|
43.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7 - Transaction and Relationship Revenue:
|
|
|
|
The tables below summarize the split between transaction and
relationship revenue. In the MIS segment, excluding MIS Other,
transaction revenue represents the initial rating of a new debt
issuance as well as other one-time fees while relationship revenue
represents the recurring monitoring of a rated debt obligation
and/or entities that issue such obligations, as well as revenue from
programs such as commercial paper, medium-term notes, shelf
registrations and other non-rating subscription based revenue. In
MIS Other, transaction revenue represents revenue from professional
services and outsourcing engagements and relationship revenue
represents subscription based revenues. In the MA segment,
relationship revenue represents subscription-based revenues and
software maintenance revenue. Transaction revenue in MA represents
software license fees and revenue from risk management advisory
projects, training and certification services, and outsourced
research and analytical engagements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
Transaction
|
|
Relationship
|
|
Total
|
|
Transaction
|
|
Relationship
|
|
Total
|
|
Corporate Finance
|
|
|
$213.6
|
|
$85.1
|
|
|
$298.7
|
|
|
$187.9
|
|
$76.5
|
|
|
$264.4
|
|
|
|
|
72%
|
|
28%
|
|
|
100%
|
|
|
71%
|
|
29%
|
|
|
100%
|
|
Structured Finance
|
|
|
$61.8
|
|
$39.5
|
|
|
$101.3
|
|
|
$55.7
|
|
$39.6
|
|
|
$95.3
|
|
|
|
|
61%
|
|
39%
|
|
|
100%
|
|
|
58%
|
|
42%
|
|
|
100%
|
|
Financial Institutions
|
|
|
$37.8
|
|
$56.0
|
|
|
$93.8
|
|
|
$29.0
|
|
$56.4
|
|
|
$85.4
|
|
|
|
|
40%
|
|
60%
|
|
|
100%
|
|
|
34%
|
|
66%
|
|
|
100%
|
|
Public, Project and Infrastructure Finance
|
|
|
$64.4
|
|
$36.3
|
|
|
$100.7
|
|
|
$43.0
|
|
$37.7
|
|
|
$80.7
|
|
|
|
|
64%
|
|
36%
|
|
|
100%
|
|
|
53%
|
|
47%
|
|
|
100%
|
|
MIS Other
|
|
|
$3.3
|
|
$4.5
|
|
|
$7.8
|
|
|
-
|
|
$3.3
|
|
|
$3.3
|
|
|
|
|
42%
|
|
58%
|
|
|
100%
|
|
|
-
|
|
100%
|
|
|
100%
|
|
Total MIS
|
|
|
$380.9
|
|
$221.4
|
|
|
$602.3
|
|
|
$315.6
|
|
$213.5
|
|
|
$529.1
|
|
|
|
|
63%
|
|
37%
|
|
|
100%
|
|
|
60%
|
|
40%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Moody's Analytics
|
|
|
$60.6
|
|
$202.7
|
|
|
$263.3
|
|
|
$54.6
|
|
$183.5
|
|
|
$238.1
|
|
|
|
|
23%
|
|
77%
|
|
|
100%
|
|
|
23%
|
|
77%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Moody's Corporation
|
|
|
$441.5
|
|
$424.1
|
|
|
$865.6
|
|
|
$370.2
|
|
$397.0
|
|
|
$767.2
|
|
|
|
|
51%
|
|
49%
|
|
|
100%
|
|
|
48%
|
|
52%
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 8 - 2015 Outlook:
|
|
|
|
Moody’s outlook for 2015 is based on assumptions about many
macroeconomic and capital market factors, including interest rates,
foreign currency exchange rates, corporate profitability and
business investment spending, merger and acquisition activity,
consumer borrowing and securitization, and the amount of debt
issued. These assumptions are subject to some degree of uncertainty,
and results for the year could differ materially from our current
outlook. Moody’s guidance, which is presented in the table below,
assumes foreign currency translation at end-of-quarter exchange
rates.
|
|
|
|
Full-year 2015 Moody's Corporation guidance
|
MOODY'S CORPORATION
|
Current guidance as of May 1, 2015
|
Last publicly disclosed guidance on February 25, 2015
|
Revenue
|
growth in the mid-single-digit percent range
|
NC
|
Operating Expenses
|
growth in the mid-single-digit percent range
|
NC
|
Depreciation & amortization
|
Approximately $120 million
|
NC
|
Operating Margin
|
Approximately 43%
|
NC
|
Adjusted Operating Margin
|
Approximately 46%
|
NC
|
Effective tax rate
|
Approximately 32% - 33%
|
NC
|
GAAP EPS
|
$4.55 to $4.65
|
NC
|
Capital expenditures
|
Approximately $110 - $115 million
|
NC
|
Free cash flow
|
Approximately $1 billion
|
NC
|
Share repurchases
|
Approximately $1 billion (subject to available cash, market
conditions and other ongoing capital allocation decisions)
|
NC
|
|
|
|
|
|
|
|
|
Full-year 2015 revenue guidance
|
MIS
|
Current guidance as of May 1, 2015
|
Last publicly disclosed guidance on February 25, 2015
|
MIS global
|
growth in the mid-single-digit percent range
|
NC
|
MIS U.S.
|
growth in the high-single-digit percent range
|
growth in the mid-single-digit percent range
|
MIS Non-U.S.
|
growth in the low-single-digit percent range
|
growth in the mid-single-digit percent range
|
Corporate finance
|
growth in the mid-single-digit percent range
|
NC
|
Structured finance
|
growth in the low-single-digit percent range
|
growth in the mid-single-digit percent range
|
Financial institutions
|
growth in the low-single-digit percent range
|
growth in the mid-single-digit percent range
|
Public, project and infrastructure finance
|
growth in the high-single-digit percent range
|
NC
|
MA
|
|
|
MA global
|
growth in the mid-single-digit percent range
|
NC
|
MA U.S.
|
growth in the low-double-digit percent range
|
growth of approximately 10%
|
MA Non-U.S.
|
growth in the low-single-digit percent range
|
growth in the mid-single-digit percent range
|
Research, data and analytics
|
growth in the high-single-digit percent range
|
NC
|
Enterprise risk solutions
|
growth in the mid-single-digit percent range
|
NC
|
Professional services
|
decrease in the low-single-digit percent range
|
approximately flat
|
NC- There is no difference between the Company's current
guidance and the last publicly disclosed guidance for this item.
|
|
|
Non-GAAP Financial Measures:
|
|
|
|
The tables below reflect certain adjusted results that the SEC
defines as "non-GAAP financial measures" as well as a reconciliation
of each non-GAAP measure to its most directly comparable GAAP
measure. Management believes that such non-GAAP financial measures,
when read in conjunction with the Company's reported results, can
provide useful supplemental information for investors analyzing
period-to-period comparisons of the Company's performance,
facilitate comparisons to competitors' operating results and provide
greater transparency to investors of supplemental information used
by management in its financial and operational decision-making.
These non-GAAP measures, as defined by the Company, are not
necessarily comparable to similarly defined measures of other
companies. Furthermore, these non-GAAP measures should not be viewed
in isolation or used as a substitute for other GAAP measures in
assessing the operating performance or cash flows of the Company.
|
|
|
|
Table 9 - Adjusted Operating Income and Adjusted Operating Margin:
|
|
|
|
The table below reflects a reconciliation of the Company’s operating
income and operating margin to adjusted operating income and
adjusted operating margin. The Company defines adjusted operating
income as operating income excluding depreciation and amortization.
The Company presents adjusted operating income because management
deems this metric to be a useful measure of assessing the operating
performance of Moody’s, measuring the Company's ability to service
debt, fund capital expenditures, and expand its business. Adjusted
operating income excludes depreciation and amortization because
companies utilize productive assets of different ages and use
different methods of both acquiring and depreciating productive
assets. Management believes that the exclusion of this item,
detailed in the reconciliation below, allows for a more meaningful
comparison of the Company’s results from period to period and across
companies. The Company defines adjusted operating margin as adjusted
operating income divided by revenue.
|
|
|
|
|
|
|
|
|
|
(amounts in millions)
|
|
Three Months Ended
March 31,
|
|
|
|
2015
|
|
2014
|
|
Operating income
|
|
$
|
371.3
|
|
$
|
333.0
|
|
|
Depreciation & amortization
|
|
|
28.6
|
|
|
23.1
|
|
Adjusted operating income
|
|
$
|
399.9
|
|
$
|
356.1
|
|
Operating margin
|
|
|
42.9%
|
|
|
43.4%
|
|
Adjusted operating margin
|
|
|
46.2%
|
|
|
46.4%
|
|
|
|
|
|
|
|
|
|
|
|
Full-Year Ended December 31,
2015
|
|
Operating margin guidance
|
|
Approximately 43%
|
|
Depreciation and amortization
|
|
Approximately 3%
|
|
Adjusted operating margin guidance
|
|
Approximately 46%
|
|
|
|
|
|
|
|
Table 10 - Free Cash Flow:
|
|
|
|
The table below reflects a reconciliation of the Company’s net cash
flows from operating activities to free cash flow. The Company
defines free cash flow as net cash provided by operating activities
minus payments for capital additions. Management believes that free
cash flow is a useful metric in assessing the Company’s cash flows
to service debt, pay dividends and to fund acquisitions and share
repurchases. Management deems capital expenditures essential to the
Company’s product and service innovations and maintenance of Moody’s
operational capabilities. Accordingly, capital expenditures are
deemed to be a recurring use of Moody’s cash flow.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
(amounts in millions)
|
|
|
2015
|
|
|
|
2014
|
|
|
Net cash flows from operating activities
|
$
|
261.8
|
|
|
$
|
177.2
|
|
|
Capital additions
|
|
|
(19.0)
|
|
|
(19.1)
|
|
|
Free cash flow
|
|
$
|
242.8
|
|
|
$
|
158.1
|
|
|
Net cash used in investing activities
|
$
|
(49.3)
|
|
|
$
|
(82.2)
|
|
|
Net cash provided by (used in) financing
activities
|
$
|
123.9
|
|
|
$
|
(222.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 11 - Revenue and Operating Income Growth Excluding
Foreign Exchange Impact:
|
|
|
|
The table below reflects reconciliations of the Company's reported
revenue and operating income growth rates to their growth rates
assuming 2015 results were translated using the same foreign
currency rate as used in 2014. The Company presents the revenue and
operating income growth rates using this approach because management
deems this metric to be a useful measure when evaluating the
Company's revenue and operating income growth from the prior year.
Management believes that the exclusion of the impact of changes in
foreign exchange rates on revenue and operating income growth,
detailed in the reconciliation below, allows for a more meaningful
comparison of the Company's results from period-to-period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March
31, 2015
|
|
|
|
|
|
MCO Revenue
|
|
MCO Operating Income
|
|
MCO reported growth rate
|
|
|
12.8%
|
|
|
11.5%
|
|
Add: Foreign currency impact
|
|
|
|
5.3%
|
|
|
6.5%
|
|
MCO growth rate excluding foreign exchange
|
|
|
18.1%
|
|
|
18.0%
|
|
|
|
|
|
|
|
|
|
|
|
Table 12 - Revenue Growth Excluding 2014 Acquisitions:
|
|
|
|
The table below reflects a reconciliation of the reported revenue
growth rate to the growth rate excluding the impact of revenue from
acquisitions which were completed in 2014. The Company presents the
revenue growth rate excluding acquisitions because management deems
this metric to be a useful measure when evaluating the Company's
revenue growth from the prior year. Management believes that the
exclusion of the impact of acquisitions on revenue growth, detailed
in the reconciliation below, allows for a more meaningful comparison
of the Company's results from period-to-period and across companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2015
|
|
|
|
|
|
MIS
|
MA
|
|
Reported revenue growth rate
|
|
14%
|
11%
|
|
Less: Impact of 2014 acquisitions
|
|
2%
|
4%
|
|
Revenue growth rate excluding acquisitions
|
|
12%
|
7%
|
CONTACT:
Michael Adler, 212-553-4667
Senior Vice President
Corporate
Communications
michael.adler@moodys.com
or
Salli
Schwartz, 212-553-4862
Global Head of Investor Relations
sallilyn.schwartz@moodys.com
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