MOODYS CORP /DE/, 10-Q filed on 11/3/2011
Quarterly Report
Document and Entity Information
In Millions
9 Months Ended
Sep. 30, 2011
Document and Entity Information [Abstract]
 
Document Type
10-Q 
Amendment Flag
FALSE 
Document Period End Date
Sep. 30, 2011 
Document Fiscal Year Focus
2011 
Document Fiscal Period Focus
Q3 
Trading Symbol
MCO 
Entity Registrant Name
MOODYS CORP /DE/ 
Entity Central Index Key
0001059556 
Current Fiscal Year End Date
--12-31 
Entity Filer Category
Large Accelerated Filer 
Entity Common Stock, Shares Outstanding
222.0 
Consolidated Statements of Operations (USD $)
In Millions, except Per Share data
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Consolidated Statements of Operations [Abstract]
 
 
 
 
Revenue
$ 531.3 
$ 513.3 
$ 1,713.6 
$ 1,467.7 
Expenses
 
 
 
 
Operating
171.0 
153.7 
502.3 
423.9 
Selling, general and administrative
145.0 
152.2 
436.4 
418.5 
Restructuring
0.2 
0.4 
0.1 
 
Depreciation and amortization
19.0 
18.1 
58.5 
49.1 
Total expenses
335.2 
324.4 
997.3 
891.5 
Operating Income
196.1 
188.9 
716.3 
576.2 
Non-operating (expense) income, net
 
 
 
 
Interest expense, net
(12.9)
(12.8)
(45.2)
(35.1)
Other non-operating income, net
1.6 
5.3 
13.1 
0.7 
Total non-operating (expense) income, net
(11.3)
(7.5)
(32.1)
(34.4)
Income before provisions for income taxes
184.8 
181.4 
684.2 
541.8 
Provision for income taxes
52.7 
44.2 
204.3 
167.3 
Net income
132.1 
137.2 
479.9 
374.5 
Less: Net income attributable to noncontrolling interests
1.4 
1.2 
4.7 
4.1 
Net income attributable to Moody's
$ 130.7 
$ 136.0 
$ 475.2 
$ 370.4 
Earnings per share attributable to Moody's common shareholders
 
 
 
 
Basic
$ 0.58 
$ 0.58 
$ 2.09 
$ 1.57 
Diluted
$ 0.57 
$ 0.58 
$ 2.06 
$ 1.56 
Weighted average number of shares outstanding
 
 
 
 
Basic
226.0 
234.3 
227.7 
235.5 
Diluted
229.0 
235.7 
230.7 
237.1 
Dividends declared per share attributable to Moody's common shareholders
$ 0.14 
$ 0.105 
$ 0.28 
$ 0.21 
Consolidated Balance Sheets (USD $)
In Millions
Sep. 30, 2011
Dec. 31, 2010
Current assets:
 
 
Cash and cash equivalents
$ 854.2 
$ 659.6 
Short-term investments
13.3 
12.7 
Accounts receivable, net of allowances of $29.7 in 2011 and $33.0 in 2010
400.5 
497.5 
Deferred tax assets, net
42.2 
45.3 
Other current assets
49.8 
127.9 
Total current assets
1,360.0 
1,343.0 
Property and equipment, net of accumulated depreciation of $244.4 in 2011 and $200.8 in 2010
323.7 
319.3 
Goodwill
451.1 
465.5 
Intangible assets, net
153.0 
168.8 
Deferred tax assets, net
172.1 
187.9 
Other assets
61.4 
55.8 
Total assets
2,521.3 
2,540.3 
Current liabilities:
 
 
Accounts payable and accrued liabilities
311.2 
414.4 
Current portion of long-term debt
43.1 
11.3 
Deferred revenue
480.6 
508.1 
Total current liabilities
834.9 
933.8 
Non-current portion of deferred revenue
96.4 
96.6 
Long-term debt
1,200.9 
1,228.3 
Deferred tax liabilities, net
31.1 
36.9 
Unrecognized tax benefits
174.6 
180.8 
Other liabilities
357.6 
362.3 
Total liabilities
2,695.5 
2,838.7 
Contingencies (Note 12)
 
 
Shareholders' deficit:
 
 
Preferred stock, par value $.01 per share; 10,000,000 shares authorized; no shares issued and outstanding
 
 
Capital surplus
386.7 
391.5 
Retained earnings
4,147.4 
3,736.2 
Treasury stock, at cost; 120,863,505 and 112,116,581 shares of common stock at September 30, 2011 and December 31, 2010, respectively
(4,651.0)
(4,407.3)
Accumulated other comprehensive loss
(70.5)
(33.4)
Total Moody's shareholders' deficit
(184.0)
(309.6)
Noncontrolling interests
9.8 
11.2 
Total shareholders' deficit
(174.2)
(298.4)
Total liabilities and shareholders' deficit
2,521.3 
2,540.3 
Series Common Stock [Member]
 
 
Shareholders' deficit:
 
 
Common stock
 
 
Common Stock [Member]
 
 
Shareholders' deficit:
 
 
Common stock
$ 3.4 
$ 3.4 
Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data
Sep. 30, 2011
Dec. 31, 2010
Accounts receivable, allowances
$ 29.7 
$ 33.0 
Accumulated depreciation
$ 244.4 
$ 200.8 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
10,000,000 
10,000,000 
Preferred stock, shares issued
Preferred stock, shares outstanding
Treasury stock, shares
120,863,505 
112,116,581 
Series Common Stock [Member]
 
 
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
10,000,000 
10,000,000 
Common stock, shares issued
Common stock, shares outstanding
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 
Condensed Consolidated Statements Of Cash Flows (USD $)
In Millions
9 Months Ended
Sep. 30,
2011
2010
Cash flows from operating activities
 
 
Net income
$ 479.9 
$ 374.5 
Reconciliation of net income to net cash provided by operating activities:
 
 
Depreciation and amortization
58.5 
49.1 
Stock-based compensation expense
43.2 
41.3 
Excess tax benefits from stock-based compensation plans
(6.0)
(6.1)
Legacy Tax Matters
(6.4)
 
Changes in assets and liabilities:
 
 
Accounts receivable
97.5 
31.1 
Other current assets
80.6 
(1.1)
Other assets
24.2 
(46.2)
Accounts payable and accrued liabilities
(70.7)
24.7 
Restructuring
(0.1)
(4.7)
Deferred revenue
(26.3)
(30.7)
Unrecognized tax benefits
(0.1)
21.8 
Other liabilities
(8.0)
21.0 
Net cash provided by operating activities
666.3 
474.7 
Cash flows from investing activities
 
 
Capital additions
(53.6)
(54.6)
Purchases of short-term investments
(28.9)
(24.0)
Sales and maturities of short-term investments
27.3 
23.6 
Cash paid for acquisitions
(10.1)
 
Net cash used in investing activities
(65.3)
(55.0)
Cash flows from financing activities
 
 
Issuance of commercial paper
 
2,232.8 
Repayments of commercial paper
 
(2,661.5)
Issuance of notes
 
496.9 
Repayments of notes
(7.5)
(1.9)
Net proceeds from stock-based compensation plans
37.6 
26.0 
Cost of treasury shares repurchased
(333.8)
(119.6)
Excess tax benefits from stock-based compensation plans
6.0 
6.1 
Payment of dividends
(89.9)
(74.1)
Payment of dividends to noncontrolling interests
(4.8)
(4.4)
Payments under capital lease obligations
 
(1.0)
Debt issuance costs and related fees
 
(4.0)
Net cash used in financing activities
(392.4)
(104.7)
Effect of exchange rate changes on cash and cash equivalents
(14.0)
4.8 
Net increase in cash and cash equivalents
194.6 
319.8 
Cash and cash equivalents, beginning of the period
659.6 
473.9 
Cash and cash equivalents, end of the period
$ 854.2 
$ 793.7 
Glossary Of Terms And Abbreviations
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 D&B

Analytics

   Moody's Analytics – a reportable segment of MCO formed in January 2008, which includes the non-rating commercial activities of MCO

AOCI

   Accumulated other comprehensive income (loss); a separate component of shareholders' equity (deficit)

ASC

   The FASB Accounting Standards Codification; the sole source of authoritative GAAP as of July 1, 2009 except for rules and interpretive releases of the SEC, which are also sources of authoritative GAAP for SEC registrants

ASU

   The FASB Accounting Standards Update to the ASC. It also provides background information for accounting guidance and the bases for conclusions on the changes in the ASC. ASUs are not considered authoritative until codified into the ASC

Basel II

   Capital adequacy framework published in June 2004 by the Basel Committee on Banking Supervision

Basel III

   A new global regulatory standard on bank capital adequacy and liquidity agreed by the members of the Basel Committee on Banking Supervision. Basel III was developed in a response to the deficiencies in financial regulation revealed by the global financial crisis. Basel III strengthens bank capital requirements and introduces new regulatory requirements on bank liquidity and bank leverage.

Board

   The board of directors of the Company

Bps

   Basis points

Canary Wharf Lease

   Operating lease agreement entered into on February 6, 2008 for office space in London, England, occupied by the Company in the second half of 2009

CDOs

   Collateralized debt obligations

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&B; comprised the IMS Health and NMR businesses

Commission

   European Commission

Company

   Moody's Corporation and its subsidiaries; MCO; Moody's

COSO

   Committee of Sponsoring Organizations of the Treadway Commission

CP

   Commercial paper

CP Notes

   Unsecured commercial paper notes

CP Program

   The Company's commercial paper program entered into on October 3, 2007

CRAs

   Credit rating agencies

 

TERM

  

DEFINITION

CREF

   Commercial real estate finance which includes REITs, commercial real estate CDOs and mortgage-backed securities; part of SFG

CSI

   CSI Global Education, Inc.; an acquisition completed in November 2010; part of the MA segment; a provider of financial learning, credentials, and certification in Canada

D&B Business

   Old D&B's Dun & Bradstreet operating company

DBPP

   Defined benefit pension plans

Debt/EBITDA

   Ratio of Total Debt to EBITDA

EBITDA

   Earnings before interest, taxes, depreciation and amortization

ECAIs

   External Credit Assessment Institutions

ECB

   European Central Bank

EMEA

   Represents countries within Europe, the Middle East and Africa

EPS

   Earnings per share

ESMA

   European Securities and Market Authority

ESPP

   The 1999 Moody's Corporation Employee Stock Purchase Plan

ETR

   Effective tax rate

EU

   European Union

EUR

   Euros

Eurosystem

   The monetary authority of the Eurozone, the collective of European Union member states that have adopted the euro as their sole official currency. The Eurosystem consists of the European Central Bank and the central banks of the member states that belong to the Eurozone

Excess Tax Benefits

   The difference between the tax benefit realized at exercise of an option or delivery of a restricted share and the tax benefit recorded at the time the option or restricted share is expensed under GAAP

Exchange Act

   The Securities Exchange Act of 1934, as amended

FASB

   Financial Accounting Standards Board

FCIC

   Financial Crisis Inquiry Commission; commission appointed by the United States government with the goal of investigating the causes of the financial crisis of 2007–2010

FIG

   Financial institutions group; an LOB of MIS

Financial Reform Act

   Dodd-Frank Wall Street Reform and Consumer Protection Act

FX

   Foreign exchange

GAAP

   U.S. Generally Accepted Accounting Principles

GBP

   British pounds

G-8

   The finance minister and central bank governors of the group of eight countries consisting of Canada, France, Germany, Italy, Japan, Russia, U.S. and U.K., that meet annually

 

TERM

  

DEFINITION

G-20

   The G-20 is an informal forum of industrial and emerging-market countries on key issues related to global economic stability. The G-20 is comprised of: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the U.K. and the U.S. and The EU who is represented by the rotating Council presidency and ECB

IMS Health

   A spin-off of Cognizant; provides services to the pharmaceutical and healthcare industries

Indenture

   Indenture and supplemental indenture dated August 19, 2010, relating to the 2010 Senior Notes

Indicative Ratings

   These are ratings which are provided as of a point in time, and not published or monitored. They are primarily provided to potential or current issuers to indicate what a rating may be based on business fundamentals and financial conditions as well as based on proposed financings

IOSCO

   International Organization of Securities Commissions

IOSCO Code

   Code of Conduct Fundamentals for Credit Rating Agencies

IRS

   Internal Revenue Service

KIS

   Korea Investors Service; a leading Korean rating agency and consolidated subsidiary of the Company

KIS Pricing

   Korea Investors Service Pricing, Inc.; a Korean provider of fixed income securities pricing

Legacy Tax Matter(s)

   Exposures to certain potential tax liabilities assumed in connection with the 2000 Distribution

LIBOR

   London Interbank Offered Rate

LOB

   Line of business

MA

   Moody's Analytics – a reportable segment of MCO formed in January 2008, which includes the non-rating commercial activities of MCO

Make Whole Amount

   The prepayment penalty amount relating to the Series 2005-1 Notes, Series 2007-1 Notes, and 2010 Senior Notes which is a premium based on the excess, if any, of the discounted value of the remaining scheduled payments over the prepaid principal

MCO

   Moody's Corporation and its subsidiaries; the Company; Moody's

MD&A

   Management's Discussion and Analysis of Financial Condition and Results of Operations

MIS

   Moody's Investors Service – a reportable segment of MCO; consists of four LOBs – SFG, CFG, FIG and PPIF

MIS Code

   Moody's Investors Service Code of Professional Conduct

Moody's

   Moody's Corporation and its subsidiaries; MCO; the Company

Net Income

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

New D&B

   The New D&B Corporation – which comprises the D&B business

NM

   Percentage change is not meaningful

NMR

   Nielsen Media Research, Inc.; a spin-off of Cognizant; a leading source of television audience measurement services

NRSRO

   Nationally Recognized Statistical Rating Organization

 

TERM

  

DEFINITION

Old D&B

   The former Dun and Bradstreet Company which distributed New D&B shares on September 30, 2000, and was renamed Moody's Corporation

Post-Retirement Plans

   Moody's funded and unfunded pension plans, the post-retirement healthcare plans and post-retirement life insurance plans

PPIF

   Public, project and infrastructure finance; an LOB of MIS

Profit Participation Plan

   Defined contribution profit participation plan that covers substantially all U.S. employees of the Company

PSI

   The U.S. Senate's Permanent Subcommittee on Investigations;

RD&A

   Research, Data and Analytics; an LOB within MA that produces, sells and distributes research, data and related content. Includes products generated by MIS, such as analyses on major debt issuers, industry studies, and commentary on topical credit events, as well as economic research, data, quantitative risk scores, and other analytical tools that are produced within MA

Reform Act

   Credit Rating Agency Reform Act of 2006

REITs

   Real estate investment trusts

RMBS

   Residential mortgage-backed security; part of SFG

RMS

   The Risk Management Software LOB within MA which provides both economic and regulatory capital risk management software and implementation services

S&P

   Standard & Poor's Ratings Services; a division of The McGraw-Hill Companies, Inc.

SEC

   U.S. Securities and Exchange Commission

Securities Act

   Securities Act of 1933

Series 2005-1 Notes

   Principal amount of $300 million, 4.98% senior unsecured notes due in September 2015 pursuant to the 2005 Agreement

Series 2007-1 Notes

   Principal amount of $300 million, 6.06% senior unsecured notes due in September 2017 pursuant to the 2007 Agreement

SFG

   Structured finance group; an LOB of MIS

SG&A

   Selling, general and administrative expenses

T&E

   Travel and entertainment expenses

Total Debt

   All indebtedness of the Company as reflected on the consolidated balance sheets, excluding current accounts payable and deferred revenue incurred in the ordinary course of business

U.K.

   United Kingdom

U.S.

   United States

USD

   U.S. dollar

UTBs

   Unrecognized tax benefits

UTPs

   Uncertain tax positions

 

TERM

  

DEFINITION

2000 Distribution

   The distribution by Old D&B to its shareholders of all the outstanding shares of New D&B common stock on September 30, 2000

2000 Distribution

Agreement

   Agreement governing certain ongoing relationships between the Company and New D&B after the 2000 Distribution including the sharing of any liabilities for the payment of taxes, penalties and interest resulting from unfavorable IRS rulings on certain tax matters and certain other potential tax liabilities

2005 Agreement

   Note purchase agreement dated September 30, 2005, relating to the Series 2005-1 Notes

2007 Agreement

   Note purchase agreement dated September 7, 2007, relating to the Series 2007-1 Notes

2007 Facility

   Revolving credit facility of $1 billion entered into on September 28, 2007, expiring in 2012

2008 Term Loan

   Five-year $150 million senior unsecured term loan entered into by the Company on May 7, 2008

2010 Senior Notes

   Principal amount of $500 million, 5.50% senior unsecured notes due in September 2020 pursuant to the Indenture

7WTC

   The Company's corporate headquarters located at 7 World Trade Center in New York, NY

7WTC Lease

   Operating lease agreement entered into on October 20, 2006
Description Of Business And Basis Of Presentation
Description Of Business And Basis Of Presentation

NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Moody's is a provider of (i) credit ratings, (ii) credit and economic related research, data and analytical tools, (iii) risk management software and (iv) quantitative credit risk measures, credit portfolio management solutions, training, and financial credentialing and certification services. The Company has two reportable segments: MIS and MA. 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 MIS's ratings to support the distribution of their debt issues to investors. The MA segment, which contains all non-rating commercial activities of the Company, 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, specialized advisory and training services and financial credentialing and certification 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 D&B until September 30, 2000, when Old D&B separated into two publicly traded companies – Moody's Corporation and New D&B. At that time, Old D&B distributed to its shareholders shares of New D&B stock. New D&B comprised the business of Old D&B's Dun & Bradstreet operating company. The remaining business of Old D&B consisted solely of the business of providing ratings and related research and credit risk management services and was renamed Moody's Corporation. For purposes of governing certain ongoing relationships between the Company and New D&B after the 2000 Distribution and to provide for an orderly transition, the Company and New D&B 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 Company's consolidated financial statements and related notes in the Company's 2010 annual report on Form 10-K filed with the SEC on February 28, 2011. 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.

Stock-Based Compensation
Stock-Based Compensation
Income Taxes
Income Taxes

NOTE 3. INCOME TAXES

Moody's effective tax rate was 28.5% and 24.4% for the three months ended September 30, 2011 and 2010, respectively, and 29.9% and 30.9% for the nine months ended September 30, 2011 and 2010, respectively. The increase in the ETR compared to the third quarter of 2010 was primarily due to a tax benefit associated with foreign earnings in 2010, partially offset by a tax benefit from the settlement of state tax audits in the current period. The decrease in the ETR compared to the nine months ended September 30, 2010 was primarily due to lower U.S. taxes on foreign earnings and state income taxes in the current period.

 

The Company classifies interest related to UTBs in interest expense, net in its consolidated statements of operations. Penalties, if incurred, would be recognized in other non-operating income, net. The Company had an overall decrease in its UTBs of $12.6 million ($10.4 million net of federal tax benefit) during the third quarter of 2011 and an overall decrease in its UTBs during the first nine months of 2011 of $6.2 million ($8.7 million, net of federal tax benefit).

Prepaid taxes of $12.6 million and $82.3 million at September 30, 2011 and December 31, 2010, respectively, are included in other current assets in the consolidated balance sheets.

Moody's Corporation and subsidiaries are subject to U.S. federal income tax as well as income tax in various state, local and foreign jurisdictions. Moody's U.S. federal tax returns filed for the years 2008 through 2010 remain subject to examination by the IRS. The Company's tax filings in New York State for the years 2004 through 2007 are currently under examination. The income tax returns for 2008 and 2009 remain open to examination for both New York State and New York City. Tax filings in the U.K. for 2007 through 2009 remain open to examination.

For ongoing audits, it is possible the balance of UTBs could decrease in the next twelve months as 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 that new issues might be raised by tax authorities which could necessitate increases to the balance of UTBs. As the Company is unable to predict the timing or outcome of these audits, it is therefore unable to estimate the amount of changes to the balance of UTBs at this time. However, the Company believes that it has adequately provided for its financial exposure relating to all open tax years by tax jurisdiction in accordance with the applicable provisions of Topic 740 of the ASC regarding UTBs.

Weighted Average Shares Outstanding
Weighted Average Shares Outstanding

NOTE 4. WEIGHTED AVERAGE SHARES OUTSTANDING

Below is a reconciliation of basic to diluted shares outstanding:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2011      2010      2011      2010  

Basic

     226.0         234.3         227.7         235.5   

Dilutive effect of shares issuable under stock-based compensation plans

     3.0         1.4         3.0         1.6   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     229.0         235.7         230.7         237.1   
  

 

 

    

 

 

    

 

 

    

 

 

 

Anti-dilutive options to purchase common shares and restricted stock excluded from the table above

     10.7         16.0         10.8         16.3   
  

 

 

    

 

 

    

 

 

    

 

 

 

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 September 30, 2011 and 2010. These assumed proceeds include Excess Tax Benefits and any unrecognized compensation of the awards.

Short-Term Investments
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 ten months and one month to six months as of September 30, 2011 and December 31, 2010, respectively. Interest and dividends are recorded into income when earned.

Derivative Instruments And Hedging Activities
Derivative Instruments And Hedging Activities

NOTE 6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to global market risks, including risks from changes in FX rates and changes in interest rates. Accordingly, the Company uses derivatives in certain instances to manage the aforementioned financial exposures that occur in the normal course of business. The Company does not hold or issue derivatives for speculative purposes.

Interest Rate Swaps

In the fourth quarter of 2010, the Company entered into interest rate swaps with a total notional amount of $300 million to convert the fixed interest rate on the Series 2005-1 Notes to a floating interest rate based on the 3-month LIBOR. The purpose of this hedge was to mitigate the risk associated with changes in the fair value of the Series 2005-1 Notes, thus the Company has designated these swaps as fair value hedges. The fair value of the swaps is reported in other assets at September 30, 2011 and in other liabilities at December 31, 2010 in the Company's consolidated balance sheets with a corresponding adjustment to the carrying value of the Series 2005-1 Notes. The changes in the fair value of the hedges and the underlying hedged item generally offset and the net cash settlements on the swaps are recorded each period within interest expense, net in the Company's consolidated statement of operations. The net interest income recognized in interest income (expense), net within the Company's consolidated statement of operations on these swaps was $1.0 million and $3.1 million in the three months and nine months ended September 30, 2011, respectively.

In May 2008, the Company entered into interest rate swaps with a total notional amount of $150 million to protect against fluctuations in the LIBOR-based variable interest rate on the 2008 Term Loan, further described in Note 11. These interest rate swaps are designated as cash flow hedges. Accordingly, changes in the fair value of these swaps are recorded to other comprehensive income or loss, to the extent that the hedge is effective, and such amounts are reclassified to earnings in the same period during which the hedged transaction affects income. The fair value of the swaps is reported in other liabilities in the Company's consolidated balance sheets at September 30, 2011 and December 31, 2010.

Foreign Exchange Forwards and Options

           The Company engaged 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 were utilized to hedge exposures related to changes in FX rates. As of December 31, 2010, these FX options and forward exchange contracts have matured and as of September 30, 2011 all realized gains and losses have been reclassified from AOCI into earnings. These FX options and forward exchange contracts were designated as cash flow hedges.

 

The Company also enters into foreign exchange forwards to mitigate the change in fair value on certain assets and liabilities denominated in currencies other than the entity's functional currency. These forward contracts are not designated as hedging instruments under the applicable sections of Topic 815 of the ASC. Accordingly, changes in the fair value of these contracts are recognized immediately in other non-operating (expense) income, net in the Company's consolidated statements of operations along with the FX gain or loss recognized on the assets and liabilities denominated in a currency other than the entity's functional currency. These contracts have expiration dates at various times through December 2011. The following table summarizes the notional amounts of the Company's outstanding foreign exchange forwards:

 

     September 30,
2011
     December 31,
2010
 

Notional amount of Currency Pair:

     

Contracts to purchase USD with euros

   $ 12.6       $ 11.7   

Contracts to sell USD for euros

   $ 54.1       $ 55.5   

Contracts to purchase USD with GBP

   $ 4.1       $ —     

Contracts to sell USD for GBP

   $ 19.6       $ 20.7   

Contracts to purchase USD with other foreign currencies

   $ 6.1       $ 5.4   

Contracts to sell USD for other foreign currencies

   $ 7.3       $ 19.5   

Contracts to purchase euros with other foreign currencies

   10.8       10.5   

Contracts to purchase euros with GBP

   5.4       —     

Contracts to sell euros for GBP

   15.5       14.0   

The net gains (losses) on these instruments recognized in other non-operating income (expense), net in the Company's consolidated statements of operations was ($3.1) million and $8.3 million in the three months ended September 30, 2011 and 2010, respectively, and ($0.6) million and ($1.7) million in the nine months ended September 30, 2011 and 2010, respectively.

The tables below show the classification between assets and liabilities on the Company's consolidated balance sheets of the fair value of derivative instruments as well as information on the gains/(losses) on those instruments:

 

     Fair Value of Derivative Instruments  
     Asset      Liability  
     September 30,
2011
     December 31,
2010
     September 30,
2011
     December 31,
2010
 

Derivatives designated as accounting hedges:

           

Interest rate swaps

   $ 8.0       $ —         $ 5.8       $ 12.2   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total derivatives designated as accounting hedges

     8.0         —           5.8         12.2   

Derivatives not designated as accounting hedges:

           

FX forwards on certain assets and liabilities

     0.7         2.0         5.3         0.7   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 8.7       $ 2.0       $ 11.1       $ 12.9   
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair value for the interest rate swaps is included in other assets and other liabilities in the consolidated balance sheets at September 30, 2011 and in other liabilities at December 31, 2010. The fair value of the FX forwards is included in other current assets and account payable and accrued liabilities as of September 30, 2011 and December 31, 2010. All of the above derivative instruments are valued using Level 2 inputs as defined in Topic 820 of the ASC. A Level 2 input is an input other than a quoted market price that is observable for the asset or liability, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. In determining the fair value of the derivative contracts in the table above, the Company utilizes industry standard valuation models when active market quotes are not available. Where applicable, these models project future cash flows and discount the future amounts to a present value using spot rates, forward points, currency volatilities, interest rates as well as the risk of non-performance of the Company and the counterparties with whom it has derivative contracts. The Company has established strict counterparty credit guidelines and only enters into transactions with financial institutions that adhere to these guidelines. Accordingly, the risk of counterparty default is deemed to be minimal.

 

All gains and losses on derivatives designated as cash flow hedges are initially recognized through AOCI. Realized gains and losses reported in AOCI are reclassified into earnings (into revenue for FX options and into interest (expense) income, net for the interest rate swaps) as the underlying transaction is recognized.

The cumulative amount of unrecognized hedge losses recorded in AOCI is as follows:

 

     Unrecognized Losses, net of tax  
     September 30,
2011
    December 31,
2010
 

FX options

   $ —        $ (0.2

Interest rate swaps

     (3.7     (5.4
  

 

 

   

 

 

 

Total

   $ (3.7   $ (5.6
  

 

 

   

 

 

 
Acquisitions
Acquisitions

NOTE 7. ACQUISITIONS

CSI Global Education, Inc.

On November 18, 2010, a subsidiary of the Company acquired CSI Global Education, Inc., a provider of financial learning, credentials, and certification in Canada. CSI operates within MA, strengthening the Company's capabilities for delivering credit and other financial training programs to financial institutions worldwide and bolsters Moody's efforts to serve as an essential resource to financial market participants.

This acquisition was accounted for using the purchase method of accounting whereby the purchase price is allocated first to the net assets of the acquired entity based on the fair value of its net assets. Any excess of the purchase price over the fair value of the net assets acquired is recorded to goodwill.

The aggregate purchase price was $151.4 million in net cash payments to the sellers. There is a 2.5 million Canadian dollar contingent cash payment which is dependent upon the achievement of a certain contractual milestone by January 2016. The Company has recognized the fair value of the contingent payment of $2.0 million as a long-term liability at the acquisition date using a discounted cash flow methodology which assumes that the entire 2.5 million Canadian dollar payment will be made by January 2016. This methodology is based on significant inputs that are not observable in the market, which ASC 820 refers to as Level 3 inputs. Subsequent fair value changes, which will be measured quarterly, up to the ultimate amount paid, will be recognized in earnings. The change in fair value of the contingent payment in the first nine months of 2011 was de minimis. The purchase price was funded with cash on hand.

The near term impact to operations and cash flow from this acquisition is not expected to be material to the Company's consolidated financial statements.

KIS Pricing, Inc.

On May 6, 2011, a subsidiary of the Company acquired a 16% additional direct equity investment in KIS Pricing from a shareholder with a non-controlling interest in the entity. The acquisition adds to the Company's existing indirect ownership of KIS Pricing through its controlling equity stake in Korea Investors Service (KIS). The aggregate purchase price was not material and the near term impact to operations and cash flow is not expected to be material. KIS Pricing is part of the MA segment.

Goodwill And Other Acquired Intangible Assets
Goodwill And Other Acquired Intangible Assets

NOTE 8. GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS

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

 

     Nine Months Ended
September 30, 2011
    Year ended
December 31,  2010
 
     MIS     MA     Consolidated     MIS      MA      Consolidated  

Beginning Balance

   $ 11.4     $ 454.1     $ 465.5     $ 11.1      $ 338.1      $ 349.2  

Additions/adjustments

     —          2.7       2.7       —           104.6        104.6  

FX translation

     (0.4     (16.7     (17.1     0.3        11.4        11.7  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Ending balance

   $ 11.0     $ 440.1     $ 451.1     $ 11.4      $ 454.1      $ 465.5  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

The 2011 additions/adjustments for the MA segment in the table above relate to an immaterial acquisition by a subsidiary of the Company. The 2010 additions/adjustments for the MA segment in the table above relate to the acquisition of CSI in November 2010, more fully discussed in Note 7, above.

 

Acquired intangible assets and related amortization consisted of:

     September 30,
2011
    December 31,
2010
 

Customer relationships

   $ 142.7      $ 145.1   

Accumulated amortization

     (55.6     (49.2
  

 

 

   

 

 

 

Net customer relationships

     87.1        95.9   
  

 

 

   

 

 

 

Trade secrets

     31.2        31.4   

Accumulated amortization

     (12.8     (10.9
  

 

 

   

 

 

 

Net trade secrets

     18.4        20.5   
  

 

 

   

 

 

 

Software

     54.8        54.8   

Accumulated amortization

     (23.9     (20.3
  

 

 

   

 

 

 

Net software

     30.9        34.5   
  

 

 

   

 

 

 

Other

     37.8        37.5   

Accumulated amortization

     (21.2     (19.6
  

 

 

   

 

 

 

Net other

     16.6        17.9   
  

 

 

   

 

 

 

Total acquired intangible assets, net

   $ 153.0      $ 168.8   
  

 

 

   

 

 

 

Other intangible assets primarily consist of databases, trade names and covenants not to compete.

Amortization expense relating to acquired intangible assets is as follows:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2011      2010      2011      2010  

Amortization Expense

   $ 5.0       $ 4.2       $ 14.6       $ 12.1   

Estimated future amortization expense for acquired intangible assets subject to amortization is as follows:

 

Year Ending December 31,

      

2011 (after September 30,)

   $ 4.6   

2012

     18.2   

2013

     18.0   

2014

     14.5   

2015

     13.4   

Thereafter

     84.3   

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 November 30th, or more frequently if circumstances indicate the assets may be impaired. For the three and nine months ended September 30, 2011 and 2010, there were no impairments to goodwill or intangible assets.

Detail Of Certain Balance Sheet Captions
Detail Of Certain Balance Sheet Captions

NOTE 9. DETAIL OF CERTAIN BALANCE SHEET CAPTIONS

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

 

Pension And Other Post-Retirement Benefits
Pension And Other Post-Retirement Benefits

NOTE 10. PENSION AND OTHER POST-RETIRMENT BENEFITS

Moody's maintains funded and unfunded noncontributory Defined Benefit Pension Plans. The U.S. DBPPs provide defined benefits using a cash balance formula based on years of service and career average salary for its employees 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. Moody's funded and unfunded U.S. pension plans, the U.S. post-retirement healthcare plans and the U.S. post-retirement life insurance plans are collectively referred to herein as the Post-Retirement Plans.

Effective January 1, 2008, the Company no longer offers DBPPs to U.S. employees hired or rehired on or after January 1, 2008. New U.S. employees will instead receive a retirement contribution of similar benefit value under the Company's Profit Participation Plan. Current participants of the Company's DBPPs continue to accrue benefits based on existing plan formulas.

 

The components of net periodic benefit expense related to the Post-Retirement Plans are as follows:

 

The settlement loss in 2011 relates to a lump sum pension benefit payment of $6.9 million made from the Company's unfunded pension plan.

In March 2010, the Patient Protection and Affordable Care Act (the "Act") and the related reconciliation measure, which modifies certain provisions of the Act, were signed into law. The Act repeals the current rule permitting deduction of the portion of the drug coverage expense that is offset by the Medicare Part D subsidy. This provision of the Act is effective for taxable years beginning after December 31, 2010 and the reconciliation measure delays the aforementioned repeal of the drug coverage expense reduction by two years to December 31, 2012. The Company has accounted for the enactment of the two laws in the first quarter of 2010, for which the impact to the Company's income tax expense and net income was immaterial.

The Company contributed $13.6 million to its U.S. funded pension plan during the nine months ended September 30, 2011 and has no plan to make any additional contribution for the remainder of 2011. For unfunded plans, the Company made payments of $11.1 million, which includes a lump sum payment of $6.9 million as stated above, to its unfunded U.S. DBPP and $0.3 million to its U.S. other post-retirement plans during the nine months ended September 30, 2011. The Company presently anticipates making additional payments of $0.8 million related to its unfunded U.S. DBPPs and $0.3 million to its U.S. other post-retirement plans during the remainder of 2011.

Indebtedness
Indebtedness

NOTE 11. INDEBTEDNESS

The following table summarizes total indebtedness:

 

     September 30,
2011
    December 31,
2010
 

2007 Facility

   $ —        $ —     

Commercial paper

     —          —     

Notes Payable:

    

Series 2005-1 Notes, due 2015, including fair value of interest rate swap of $8.0 million at 2011 and $(3.7) million at 2010

     308.0        296.3   

Series 2007-1 Notes due 2017

     300.0        300.0   

2010 Senior Notes, due 2020, net of unamortized discount of $2.8 million and $3.0 million in 2011 and 2010, respectively

     497.2        497.0   

2008 Term Loan, various payments through 2013

     138.8        146.3   
  

 

 

   

 

 

 

Total debt

     1,244.0        1,239.6   

Current portion

     (43.1     (11.3
  

 

 

   

 

 

 

Total long-term debt

   $ 1,200.9      $ 1,228.3   
  

 

 

   

 

 

 

2007 Facility

On September 28, 2007, the Company entered into a $1.0 billion five-year senior, unsecured revolving credit facility, expiring in September 2012. The 2007 Facility serves, in part, to support the Company's 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 to 10.0 basis points per annum of the facility amount, depending on the Company's Debt/EBITDA ratio. The Company also pays a utilization fee of 5.0 basis points on borrowings outstanding when the aggregate amount outstanding exceeds 50% of the total facility. 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 October 3, 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 Company's 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) federal funds rate; (d) 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 CP Program contains certain events of default including, among other things: non-payment of principal, interest or fees; entrance into any form of moratorium; and bankruptcy and insolvency events, subject in certain instances to cure periods.

 

Notes Payable

On August 19, 2010, the Company issued $500 million aggregate principal amount of unsecured notes in a public offering. The 2010 Senior Notes bear interest at a fixed rate of 5.50% and mature on September 1, 2020. Interest on the 2010 Senior Notes will be due semi-annually on September 1 and March 1 of each year, commencing March 1, 2011. The Company may prepay the 2010 Senior Notes, in whole or in part, at any time at a price equal to 100% of the principal amount being prepaid, plus accrued and unpaid interest and a Make-Whole Amount. Additionally, at the option of the holders of the notes, the Company may be required to purchase all or a portion of the notes upon occurrence of a "Change of Control Triggering Event," as defined in the Indenture, at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase. The Indenture contains covenants that limit the ability of the Company and certain of its subsidiaries to, among other things, incur or create liens and enter into sale and leaseback transactions. In addition, the Indenture contains a covenant that limits the ability of the Company to consolidate or merge with another entity or to sell all or substantially all of its assets to another entity. The Indenture contains customary default provisions. In addition, an event of default will occur if the Company or certain of its subsidiaries fail to pay the principal of any indebtedness (as defined in the Indenture) when due at maturity in an aggregate amount of $50 million or more, or a default occurs that results in the acceleration of the maturity of the Company's or certain of its subsidiaries' indebtedness in an aggregate amount of $50 million or more. Upon the occurrence and during the continuation of an event of default under the Indenture, the notes may become immediately due and payable either automatically or by the vote of the holders of more than 25% of the aggregate principal amount of all of the notes then outstanding.

On September 7, 2007, the Company issued and sold through a private placement transaction, $300.0 million aggregate principal amount of its 6.06% Series 2007-1 Senior Unsecured Notes due 2017 pursuant to the 2007 Agreement. The Series 2007-1 Notes have a ten-year term and bear interest at an annual rate of 6.06%, payable semi-annually on March 7 and September 7. Under the terms of the 2007 Agreement, the Company may, from time to time within five years, in its sole discretion, issue additional series of senior notes in an aggregate principal amount of up to $500.0 million pursuant to one or more supplements to the 2007 Agreement. The Company may prepay the Series 2007-1 Notes, in whole or in part, at any time at a price equal to 100% of the principal amount being prepaid, plus accrued and unpaid interest and a Make Whole Amount. The 2007 Agreement contains covenants that limit the ability of the Company, and certain of its subsidiaries to, among other things: enter into transactions with affiliates, dispose of assets, incur or create liens, enter into any sale-leaseback transactions, or merge with any other corporation or convey, transfer or lease substantially all of its assets. The Company must also not permit its Debt/EBITDA ratio to exceed 4.0 to 1.0 at the end of any fiscal quarter.

On September 30, 2005, the Company issued and sold through a private placement transaction, $300.0 million aggregate principal amount of its Series 2005-1 Senior Unsecured Notes due 2015 pursuant to the 2005 Agreement. The Series 2005-1 Notes have a ten-year term and bear interest at an annual rate of 4.98%, payable semi-annually on March 30 and September 30. Proceeds from the sale of the Series 2005-1 Notes were used to refinance $300.0 million aggregate principal amount of the Company's outstanding 7.61% senior notes which matured on September 30, 2005. In the event that Moody's pays all, or part, of the Series 2005-1 Notes in advance of their maturity, such prepayment will be subject to a Make Whole Amount. The Series 2005-1 Notes are subject to 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 agreements.

 

2008 Term Loan

On May 7, 2008, Moody's entered into a five-year, $150.0 million senior unsecured term loan with several lenders. Proceeds from the loan were used to pay off a portion of the CP outstanding. Interest on borrowings under the 2008 Term Loan is payable quarterly at rates that are based on LIBOR plus a margin that can range from 125 basis points to 175 basis points depending on the Company's Debt/EBITDA ratio. The outstanding borrowings shall amortize in accordance with the schedule of payments set forth in the 2008 Term Loan outlined in the table below.

The 2008 Term Loan contains restrictive covenants that, among other things, restrict the ability of the Company to engage or to permit its subsidiaries to engage in mergers, consolidations, asset sales, transactions with affiliates and sale-leaseback transactions or to incur, or permit its subsidiaries to incur, liens, in each case, subject to certain exceptions and limitations. The 2008 Term Loan also limits the amount of debt that subsidiaries of the Company may incur. In addition, the 2008 Term Loan contains a financial covenant that requires the Company to maintain a Debt/EBITDA ratio of not more than 4.0 to 1.0 at the end of any fiscal quarter.

The principal payments due on the Company's long-term borrowings for each of the next five years are presented in the table below:

 

Year Ended December 31,

   2008 Term Loan      Series 2005-1 Notes      Total  

2011 (after September 30,)

   $ 3.8       $ —         $ 3.8   

2012

     71.2         —           71.2   

2013

     63.8         —           63.8   

2014

     —           —           —     

2015

     —           300.0         300.0   
  

 

 

    

 

 

    

 

 

 

Total

   $ 138.8       $ 300.0       $ 438.8   
  

 

 

    

 

 

    

 

 

 

In the fourth quarter of 2010, the Company entered into interest rate swaps with a total notional amount of $300 million which converted the fixed rate of interest on the Series 2005-1 Notes to a floating LIBOR-based interest rate. Also, on May 7, 2008, the Company entered into interest rate swaps with a total notional amount of $150 million to protect against fluctuations in the LIBOR-based variable interest rate on the 2008 Term Loan. Both of these interest rate swaps are more fully discussed in Note 6 above.

At September 30, 2011, the Company was in compliance with all covenants contained within all of the debt agreements. In addition to the covenants described above, the 2007 Facility, the 2005 Agreement, the 2007 Agreement, the 2010 Senior Notes and the 2008 Term Loan contain cross default provisions. These provisions state that default under one of the aforementioned debt instruments could in turn permit lenders under other debt instruments to declare borrowings outstanding under those instruments to be immediately due and payable. As of September 30, 2011, there were no such cross defaults.

 

Interest (expense) income, net

The following table summarizes the components of interest as presented in the consolidated statements of operations:

 

The Company's long-term debt, including the current portion, is recorded at cost except for the Series 2005-1 Notes which are carried at cost adjusted for the fair value of an interest rate swap used to hedge the fair value of the note. The fair value and carrying value of the Company's long-term debt as of September 30, 2011 and December 31, 2010 is as follows:

 

     September 30, 2011      December 31, 2010  
     Carrying
Amount
     Estimated Fair
Value
     Carrying
Amount
     Estimated Fair
Value
 

Series 2005-1 Notes

   $ 308.0       $ 312.2       $ 296.3       $ 310.6   

Series 2007-1 Notes

     300.0         327.7         300.0         321.3   

2010 Senior Notes

     497.2         524.6         497.0         492.1   

2008 Term Loan

     138.8         138.8         146.3         146.3   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,244.0       $ 1,303.3       $ 1,239.6       $ 1,270.3   
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair value of the Company's 2010 Senior Notes is based on quoted market prices. The fair value of the remaining long-term debt, which is not publicly traded, is estimated using discounted cash flows with inputs based on prevailing interest rates available to the Company for borrowings with similar maturities.

Contingencies
Contingencies

NOTE 12 CONTINGENCIES

From time to time, Moody's is involved in legal and tax proceedings, governmental investigations, claims and litigation that are incidental to the Company's business, including claims based on ratings assigned by MIS. Moody's is also subject to ongoing tax audits in the normal course of business. Management periodically assesses the Company's liabilities and contingencies in connection with these matters based upon the latest information available. Moody's discloses material pending legal proceedings pursuant to SEC rules and other pending matters as it may determine to be appropriate.

Following the events in the U.S. subprime residential mortgage sector and the credit markets more broadly over the last several years, MIS and other credit rating agencies are the subject of intense scrutiny, increased regulation, ongoing investigation, and civil litigation. Legislative, regulatory and enforcement entities around the world are considering additional legislation, regulation and enforcement actions, including with respect to MIS's compliance with newly imposed regulatory standards. Moody's has received subpoenas and inquiries from states attorneys general and other governmental authorities and is responding to such investigations and inquiries.

In addition, the Company is facing litigation from market participants relating to the performance of MIS rated securities. Although Moody's in the normal course experiences such litigation, the volume and cost of defending such litigation has significantly increased following the events in the U.S. subprime residential mortgage sector and the credit markets more broadly over the last several years.

On June 27, 2008, the Brockton Contributory Retirement System, a purported shareholder of the Company's 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 MIS's ratings of RMBS and constant-proportion debt obligations, and their participation in the alleged public dissemination of false and misleading information about MIS's 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 July 2, 2008, Thomas R. Flynn, a purported shareholder of the Company's 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, which the Company opposed. On February 23, 2010, the court issued an opinion remanding the case to the Supreme Court of New York. On October 30, 2008, the Louisiana Municipal Police Employees Retirement System, a purported shareholder of the Company's securities, also filed a shareholder derivative complaint on behalf of the Company against its directors and certain officers, and the Company as a nominal defendant, in the U.S. District Court for the Southern District of New York. This complaint also asserts various causes of action relating to the Company's ratings of RMBS, CDO and constant-proportion debt obligations, and named defendants' participation in the alleged public dissemination of false and misleading information about MIS's ratings practices and/or a failure to implement internal procedures and controls to prevent the alleged wrongdoing. On December 9, 2008, Rena Nadoff, a purported shareholder of the Company, filed a shareholder derivative complaint on behalf of the Company against its directors and its CEO, and the Company as a nominal defendant, in the Supreme Court of the State of New York. The complaint asserts a claim for breach of fiduciary duty in connection with alleged overrating of asset-backed securities and underrating of municipal securities. On October 20, 2009, the Company moved to dismiss or stay the action in favor of related federal litigation. On January 26, 2010, the court entered a stipulation and order, submitted jointly by the parties, staying the Nadoff litigation pending coordination and prosecution of similar claims in the above and below described federal derivative actions. On July 6, 2009, W. A. Sokolowski, a purported shareholder of the Company, filed a purported shareholder derivative complaint on behalf of the Company against its directors and current and former officers, and the Company as a nominal defendant, in the United States District Court for the Southern District of New York. The complaint asserts claims relating to alleged mismanagement of the Company's processes for rating structured finance transactions, alleged insider trading and causing the Company to buy back its own stock at artificially inflated prices.

Two purported class action complaints have been filed by purported purchasers of the Company's securities against the Company and certain of its senior officers, asserting claims under the federal securities laws. The first was filed by Raphael Nach in the U.S. District Court for the Northern District of Illinois on July 19, 2007. The second was filed by Teamsters Local 282 Pension Trust Fund in the U.S. District Court for the Southern District of New York on September 26, 2007. Both actions have been consolidated into a single proceeding entitled In re Moody's Corporation Securities Litigation in the U.S. District Court for the Southern District of New York. On June 27, 2008, a consolidated amended complaint was filed, purportedly on behalf of all purchasers of the Company's securities during the period February 3, 2006 through October 24, 2007. Plaintiffs allege that the defendants issued false and/or misleading statements concerning the Company's business conduct, business prospects, business conditions and financial results relating primarily to MIS's ratings of structured finance products including RMBS, CDO and constant-proportion debt obligations. The plaintiffs seek an unspecified amount of compensatory damages and their reasonable costs and expenses incurred in connection with the case. The Company moved for dismissal of the consolidated amended complaint in September 2008. On February 23, 2009, the court issued an opinion dismissing certain claims and sustaining others. On January 22, 2010, plaintiffs moved to certify a class of individuals who purchased Moody's Corporation common stock between February 3, 2006 and October 24, 2007, which the Company opposed. On March 31, 2011, the court issued an opinion denying plaintiffs' motion to certify the proposed class. On April 14, 2011, plaintiffs filed a petition in the United States Court of Appeals for the Second Circuit seeking discretionary permission to appeal the decision. The Company filed its response to the petition on April 25, 2011. On July 20, 2011, the Second Circuit issued an order denying plaintiffs' petition for leave to appeal.

For claims, litigation and proceedings not related to income taxes, where it is both probable that a liability is expected to be incurred and the amount of loss can be reasonably estimated, the Company records liabilities in the consolidated financial statements and periodically adjusts these as appropriate. In other instances, because of uncertainties related to the probable outcome and/or the amount or range of loss, management does not record a liability but discloses the contingency if significant. As additional information becomes available, the Company adjusts its assessments and estimates of such matters accordingly. In view of the inherent difficulty of predicting the outcome of litigation, regulatory, enforcement and similar matters and contingencies, particularly where the claimants seek large or indeterminate damages or where the parties assert novel legal theories or the matters involve a large number of parties, the Company cannot predict what the eventual outcome of the pending matters will be or the timing of any resolution of such matters. The Company also cannot predict the impact (if any) that any such matters may have on how its business is conducted, on its competitive position or on its financial position, results of operations or cash flows. As the process to resolve the pending matters referred to above progresses, management will continue to review the latest information available and assess its ability to predict the outcome of such matters and the effects, if any, on its operations and financial condition. However, in light of the inherent uncertainties involved in these matters, the large or indeterminate damages sought in some of them and the novel theories of law asserted, an estimate of the range of possible losses cannot be made at this time. For income tax matters, the Company employs the prescribed methodology of Topic 740 of the ASC which requires a company to first determine whether it is more-likely-than-not (defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more-likely-than-not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority.

Legacy Tax Matters

Moody's continues to have exposure to potential liabilities arising from Legacy Tax Matters. As of September 30, 2011, Moody's has recorded liabilities for Legacy Tax Matters totaling $53.6 million. This includes liabilities and accrued interest due to New D&B arising from the 2000 Distribution Agreement. It is possible that the ultimate liability for Legacy Tax Matters could be greater than the liabilities recorded by the Company, which could result in additional charges that may be material to Moody's future reported results, financial position and cash flows.

The following summary of the relationships among Moody's, New D&B and their predecessor entities is important in understanding the Company's exposure to the Legacy Tax Matters.

In November 1996, The Dun & Bradstreet Corporation separated into three separate public companies: The Dun & Bradstreet Corporation, ACNielsen Corporation and Cognizant Corporation. In June 1998, The Dun & Bradstreet Corporation separated into two separate public companies: Old D&B and R.H. Donnelley Corporation. During 1998, Cognizant separated into two separate public companies: IMS Health Incorporated and Nielsen Media Research, Inc. In September 2000, Old D&B separated into two separate public companies: New D&B and Moody's.

 

Old D&B and its predecessors entered into global tax planning initiatives in the normal course of business. These initiatives are subject to normal review by tax authorities. Old D&B and its predecessors also entered into a series of agreements covering the sharing of any liabilities for payment of taxes, penalties and interest resulting from unfavorable IRS determinations on certain tax matters, and certain other potential tax liabilities, all as described in such agreements. Further, in connection with the 2000 Distribution and pursuant to the terms of the 2000 Distribution Agreement, New D&B and Moody's have agreed on the financial responsibility for any potential liabilities related to these Legacy Tax Matters.

At the time of the 2000 Distribution, New D&B paid Moody's $55.0 million for 50% of certain anticipated future tax benefits through 2012. In the event that these tax benefits are not claimed or otherwise not realized by New D&B, or there is an IRS audit of New D&B impacting these tax benefits, Moody's would be required to repay to New D&B an amount equal to the discounted value of its share of the related future tax benefits as well as its share of any tax liability incurred by New D&B. In June 2011, the statute of limitations for New D&B relating to the 2004 tax year expired. As a result, in the second quarter of 2011, Moody's recorded a reduction of accrued interest expense of $2.8 million ($1.7 million, net of tax) and an increase in other non-operating income of $6.4 million, relating to amounts due to New D&B. As of September 30, 2011, Moody's liability with respect to this matter totaled $51.5 million.

Additionally, in April 2011, Moody's received a refund of $0.9 million ($0.6 million, net of tax) for interest assessed related to pre-spinoff tax years. Coupled with the $6.4 million noted above (and related interest of $1.7 million), net legacy tax benefits were $8.7 million in the nine months ended September 30, 2011 of which $7 million was deemed to be unusual in nature.

In 2005, settlement agreements were executed with the IRS with respect to certain Legacy Tax Matters related to the years 1989-1990 and 1993-1996. With respect to these settlements, Moody's and New D&B believed that IMS Health and NMR did not pay their full share of the liability to the IRS under the terms of the applicable separation agreements between the parties. Moody's and New D&B subsequently paid these amounts to the IRS and commenced arbitration proceedings against IMS Health and NMR to resolve this dispute. Pursuant to these arbitration proceedings, the Company received $10.8 million ($6.5 million as a reduction of interest expense and $4.3 million as a reduction of tax expense) in 2009. The aforementioned settlement payment resulted in net income benefits of $8.2 million in 2009. The Company continues to carry a $2 million liability for this matter.

In 2006, New D&B and Moody's each deposited $39.8 million with the IRS in order to stop the accrual of statutory interest on potential tax deficiencies with respect to the 1997 through 2002 tax years. In 2007, New D&B and Moody's requested a return of that deposit. The IRS applied a portion of the deposit in satisfaction of an assessed deficiency and returned the balance to the Company. Moody's subsequently pursued a refund for a portion of the outstanding amount. In May 2010, the IRS refunded $5.2 million to the Company for the 1997 tax year, which included interest of approximately $2.5 million resulting in an after-tax benefit of $4.6 million.

Comprehensive Income And Noncontrolling Interests
Comprehensive Income And Noncontrolling Interests

NOTE 13. COMPREHENSIVE INCOME AND NONCONTROLLING INTERESTS

The components of total comprehensive income, net of tax, are as follows:

 

 

The following table summarizes the activity in the Company's noncontrolling interests:

 

     Nine Months Ended
September 30,
 
     2011     2010  

Beginning Balance

   $ 11.2      $ 10.1   

Net income attributable to noncontrolling interests

     4.7        4.1   

Dividends declared to noncontrolling interests

     (4.8     (4.4

Purchase of KIS Pricing shares from noncontrolling interest

     (1.0     —     

FX translation

     (0.3     0.3   
  

 

 

   

 

 

 

Ending Balance

   $ 9.8      $ 10.1   
  

 

 

   

 

 

 
Segment Information
Segment Information

NOTE 14. SEGMENT INFORMATION

The Company operates in two reportable segments: 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. Also, revenue for MA and expenses for MIS include an intersegment license fee charged to MIS from MA for certain MA products and services utilized in MIS's ratings process. Overhead charges and corporate expenses which exclusively benefit only one segment, are fully charged to that segment. Additionally, overhead costs and corporate expenses of the Company which benefit both segments 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. Beginning on January 1, 2011, the Company refined its methodology for allocating the aforementioned overhead and corporate costs to its segments. The refined methodology is reflected in the segment results for the three and nine months ended September 30, 2011 and accordingly, the segment results for the three and nine months ended September 30, 2010 have been reclassified to conform to the new presentation. "Eliminations" in the table below represent intersegment royalty/license 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 nine month periods ended September 30, 2011 and 2010, and total assets by segment as of September 30, 2011 and December 31, 2010.

Financial Information by Segment

 

MIS and MA Revenue by Line of Business

The table below presents revenue by LOB within each reportable segment:

 

 

                                 
     Three Months Ended September 30,     Nine Months Ended September 30,  
     2011     2010     2011     2010  

MIS:

                                

Corporate finance (CFG)

   $ 129.0     $ 144.9     $ 510.9     $ 399.2  

Structured finance (SFG)

     82.0       70.1       257.7       214.7  

Financial institutions (FIG)

     72.1       73.6       228.1       213.0  

Public, project and infrastructure finance (PPIF)

     68.3       69.6       205.3       195.4  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total external revenue

     351.4       358.2       1,202.0       1,022.3  

Intersegment royalty

     16.8       15.5       49.0       46.3  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total

     368.2       373.7       1,251.0       1,068.6  
    

 

 

   

 

 

   

 

 

   

 

 

 

MA:

                                

Research, data and analytics (RD&A)

     115.3       106.0       335.9       315.8  

Risk management software (RMS)

     47.9       42.8       127.5       115.3  

Professional services

     16.7       6.3       48.2       14.3  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total external revenue

     179.9       155.1       511.6       445.4  

Intersegment license fee

     2.6       2.3       7.8       7.0  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total

     182.5       157.4       519.4       452.4  
    

 

 

   

 

 

   

 

 

   

 

 

 

Eliminations

     (19.4     (17.8     (56.8     (53.3
    

 

 

   

 

 

   

 

 

   

 

 

 

Total MCO

   $ 531.3     $ 513.3     $ 1,713.6     $ 1,467.7  

 

Consolidated Revenue Information by Geographic Area:

                                 

 

 

 

     Three Months Ended September 30,        Nine Months Ended September 30,   
       2011       2010       2011       2010  

United States

   $ 274.3     $ 278.3     $ 890.7     $ 794.4  
    

 

 

   

 

 

   

 

 

   

 

 

 

International:

                                

EMEA

     163.1       155.5       532.1       453.9  

Other

     93.9       79.5       290.8       219.4  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total International

     257.0       235.0       822.9       673.3  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 531.3     $ 513.3     $ 1,713.6     $ 1,467.7  
Total Assets by Segment:

 

Recently Issued Accounting Standards
Recently Issued Accounting Standards

NOTE 15. RECENTLY ISSUED ACCOUNTING STANDARDS

In January 2010, the FASB issued ASU No. 2010-06, "Improving Disclosures about Fair Value Measurements". The new standard requires disclosure regarding transfers in and out of Level 1 and Level 2 classifications within the fair value hierarchy as well as requiring further detail of activity within the Level 3 category of the fair value hierarchy. The new standard also requires disclosures regarding the fair value for each class of assets and liabilities, which is a subset of assets or liabilities within a line item in a company's balance sheet. Additionally, the standard will require further disclosures surrounding inputs and valuation techniques used in fair value measurements. The new disclosures and clarifications of existing disclosures set forth in this ASU are effective for interim and annual reporting periods beginning after December 15, 2009, except for the additional disclosures regarding Level 3 fair value measurements, for which the effective date is for fiscal years and interim periods within those years beginning after December 15, 2010. The Company has fully adopted all provisions of this ASU as of January 1, 2011 and the implementation did not have a material impact on the Company's consolidated financial statements.

In December 2010, the FASB issued ASU No. 2010-29, "Disclosure of Supplementary Pro Forma Information for Business Combinations". The objective of this ASU is to address diversity in practice regarding proforma disclosures for revenue and earnings of the acquired entity. The amendments in this ASU specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this ASU also expand the supplemental pro forma disclosures under ASC Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments in this ASU are effective for fiscal years beginning on or after December 15, 2010. The Company will conform to the disclosure requirements set forth in this ASU for any future material business combinations.

In May 2011, the FASB issued ASU No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs". The objective of this ASU is to achieve common fair value measurement and disclosure requirements in U.S. GAAP and IFRS. The amendments in this ASU change the wording used to describe current requirements in U.S. GAAP for measuring fair value and for financial statement disclosure about fair value measurements. Some of the amendments in the ASU clarify the FASB's intent or change a particular principle or requirement pertaining to the application of existing fair value measurement requirements or for disclosing information about fair value measurements. The amendments in this ASU are required to be applied prospectively and are effective for fiscal years beginning after December 15, 2011 and early adoption is not permitted. The Company is currently evaluating the potential impact, if any, of the implementation of this ASU on its consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income". Under the amendments in this ASU, an entity has two options for presenting its total comprehensive income: to show its components along with the components of net income in a single continuous statement, or in two separate but consecutive statements. The amendments in this ASU are required to be applied retrospectively and are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The Company intends to conform to the new presentation required in this ASU beginning with its Form 10Q for the three months ended March 31, 2012.

In September 2011, the FASB issued ASU No. 2011-08, "Intangibles—Goodwill and Other (Topic 350)". The objective of this ASU is to simplify how entities test goodwill for impairment. This ASU permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350 of the ASC. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Prior to the issuance of this ASU, an entity was required to test goodwill for impairment, on at least an annual basis, by comparing the fair value of a reporting unit with its carrying amount, including goodwill (step one). If the fair value of a reporting unit was less than its carrying amount, then the second step of the test would be performed to measure the amount of the impairment loss, if any. Under the amendments in this ASU, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption permitted. The Company intends to early adopt the provisions of this ASU for its assessment of potential goodwill impairment which is performed at least annually as of November 30.

Subsequent Events
Subsequent Events

NOTE 16. SUBSEQUENT EVENTS

On October 25, 2011, the Board approved the declaration of a quarterly dividend of $0.14 per share of Moody's common stock, payable on December 10, 2011 to shareholders of record at the close of business on November 20, 2011.

Stock-Based Compensation (Tables)
     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2011      2010      2011      2010  

Stock compensation cost

   $ 12.9      $ 13.6      $ 43.2      $ 41.3  

Tax benefit

   $ 5.0      $ 5.0      $ 16.2      $ 15.6  

Expected dividend yield

     1.53

Expected stock volatility

     41

Risk-free interest rate

     3.33

Expected holding period

     7.6 yrs   

Grant date fair value

   $ 12.49   
Weighted Average Shares Outstanding (Tables)
Reconciliation Of Basic To Diluted Shares Outstanding
     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2011      2010      2011      2010  

Basic

     226.0         234.3         227.7         235.5   

Dilutive effect of shares issuable under stock-based compensation plans

     3.0         1.4         3.0         1.6   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted

     229.0         235.7         230.7         237.1   
  

 

 

    

 

 

    

 

 

    

 

 

 

Anti-dilutive options to purchase common shares and restricted stock excluded from the table above

     10.7         16.0         10.8         16.3   
  

 

 

    

 

 

    

 

 

    

 

 

 
Derivative Instruments And Hedging Activities (Tables)
     September 30,
2011
     December 31,
2010
 

Notional amount of Currency Pair:

     

Contracts to purchase USD with euros

   $ 12.6       $ 11.7   

Contracts to sell USD for euros

   $ 54.1       $ 55.5   

Contracts to purchase USD with GBP

   $ 4.1       $ —     

Contracts to sell USD for GBP

   $ 19.6       $ 20.7   

Contracts to purchase USD with other foreign currencies

   $ 6.1       $ 5.4   

Contracts to sell USD for other foreign currencies

   $ 7.3       $ 19.5   

Contracts to purchase euros with other foreign currencies

   10.8       10.5   

Contracts to purchase euros with GBP

   5.4       —     

Contracts to sell euros for GBP

   15.5       14.0   
     Fair Value of Derivative Instruments  
     Asset      Liability  
     September 30,
2011
     December 31,
2010
     September 30,
2011
     December 31,
2010
 

Derivatives designated as accounting hedges:

           

Interest rate swaps

   $ 8.0       $ —         $ 5.8       $ 12.2   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total derivatives designated as accounting hedges

     8.0         —           5.8         12.2   

Derivatives not designated as accounting hedges:

           

FX forwards on certain assets and liabilities

     0.7         2.0         5.3         0.7   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 8.7       $ 2.0       $ 11.1       $ 12.9   
  

 

 

    

 

 

    

 

 

    

 

 

 
     Unrecognized Losses, net of tax  
     September 30,
2011
    December 31,
2010
 

FX options

   $ —        $ (0.2

Interest rate swaps

     (3.7     (5.4
  

 

 

   

 

 

 

Total

   $ (3.7   $ (5.6
  

 

 

   

 

 

 
Goodwill And Other Acquired Intangible Assets (Tables)
     Nine Months Ended
September 30, 2011
    Year ended
December 31,  2010
 
     MIS     MA     Consolidated     MIS      MA      Consolidated  

Beginning Balance

   $ 11.4     $ 454.1     $ 465.5     $ 11.1      $ 338.1      $ 349.2  

Additions/adjustments

     —          2.7       2.7       —           104.6        104.6  

FX translation

     (0.4     (16.7     (17.1     0.3        11.4        11.7  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 

Ending balance

   $ 11.0     $ 440.1     $ 451.1     $ 11.4      $ 454.1      $ 465.5  
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

    

 

 

 
     September 30,
2011
    December 31,
2010
 

Customer relationships

   $ 142.7      $ 145.1   

Accumulated amortization

     (55.6     (49.2
  

 

 

   

 

 

 

Net customer relationships

     87.1        95.9   
  

 

 

   

 

 

 

Trade secrets

     31.2        31.4   

Accumulated amortization

     (12.8     (10.9
  

 

 

   

 

 

 

Net trade secrets

     18.4        20.5   
  

 

 

   

 

 

 

Software

     54.8        54.8   

Accumulated amortization

     (23.9     (20.3
  

 

 

   

 

 

 

Net software

     30.9        34.5   
  

 

 

   

 

 

 

Other

     37.8        37.5   

Accumulated amortization

     (21.2     (19.6
  

 

 

   

 

 

 

Net other

     16.6        17.9   
  

 

 

   

 

 

 

Total acquired intangible assets, net

   $ 153.0      $ 168.8   
  

 

 

   

 

 

 
     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2011      2010      2011      2010  

Amortization Expense

   $ 5.0       $ 4.2       $ 14.6       $ 12.1   

Year Ending December 31,

      

2011 (after September 30,)

   $ 4.6   

2012

     18.2   

2013

     18.0   

2014

     14.5   

2015

     13.4   

Thereafter

     84.3   
Detail Of Certain Balance Sheet Captions (Tables)
Additional Detail Related To Certain Balance Sheet Captions
Pension And Other Post-Retirement Benefits (Tables)
Net Periodic Benefit Expense Related To Post-Retirement Plans
Indebtedness (Tables)
     September 30,
2011
    December 31,
2010
 

2007 Facility

   $ —        $ —     

Commercial paper

     —          —     

Notes Payable:

    

Series 2005-1 Notes, due 2015, including fair value of interest rate swap of $8.0 million at 2011 and $(3.7) million at 2010

     308.0        296.3   

Series 2007-1 Notes due 2017

     300.0        300.0   

2010 Senior Notes, due 2020, net of unamortized discount of $2.8 million and $3.0 million in 2011 and 2010, respectively

     497.2        497.0   

2008 Term Loan, various payments through 2013

     138.8        146.3   
  

 

 

   

 

 

 

Total debt

     1,244.0        1,239.6   

Current portion

     (43.1     (11.3
  

 

 

   

 

 

 

Total long-term debt

   $ 1,200.9      $ 1,228.3   
  

 

 

   

 

 

 

Year Ended December 31,

   2008 Term Loan      Series 2005-1 Notes      Total  

2011 (after September 30,)

   $ 3.8       $ —         $ 3.8   

2012

     71.2         —           71.2   

2013

     63.8         —           63.8   

2014

     —           —           —     

2015

     —           300.0         300.0   
  

 

 

    

 

 

    

 

 

 

Total

   $ 138.8       $ 300.0       $ 438.8   
  

 

 

    

 

 

    

 

 

 
     September 30, 2011      December 31, 2010  
     Carrying
Amount
     Estimated Fair
Value
     Carrying
Amount
     Estimated Fair
Value
 

Series 2005-1 Notes

   $ 308.0       $ 312.2       $ 296.3       $ 310.6   

Series 2007-1 Notes

     300.0         327.7         300.0         321.3   

2010 Senior Notes

     497.2         524.6         497.0         492.1   

2008 Term Loan

     138.8         138.8         146.3         146.3   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 1,244.0       $ 1,303.3       $ 1,239.6       $ 1,270.3   
  

 

 

    

 

 

    

 

 

    

 

 

 
Comprehensive Income And Noncontrolling Interests (Tables)
     Nine Months Ended
September 30,
 
     2011     2010  

Beginning Balance

   $ 11.2      $ 10.1   

Net income attributable to noncontrolling interests

     4.7        4.1   

Dividends declared to noncontrolling interests

     (4.8     (4.4

Purchase of KIS Pricing shares from noncontrolling interest

     (1.0     —     

FX translation

     (0.3     0.3   
  

 

 

   

 

 

 

Ending Balance

   $ 9.8      $ 10.1   
  

 

 

   

 

 

 
Segment Information (Tables)
                                 
     Three Months Ended September 30,     Nine Months Ended September 30,  
     2011     2010     2011     2010  

MIS:

                                

Corporate finance (CFG)

   $ 129.0     $ 144.9     $ 510.9     $ 399.2  

Structured finance (SFG)

     82.0       70.1       257.7       214.7  

Financial institutions (FIG)

     72.1       73.6       228.1       213.0  

Public, project and infrastructure finance (PPIF)

     68.3       69.6       205.3       195.4  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total external revenue

     351.4       358.2       1,202.0       1,022.3  

Intersegment royalty

     16.8       15.5       49.0       46.3  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total

     368.2       373.7       1,251.0       1,068.6  
    

 

 

   

 

 

   

 

 

   

 

 

 

MA:

                                

Research, data and analytics (RD&A)

     115.3       106.0       335.9       315.8  

Risk management software (RMS)

     47.9       42.8       127.5       115.3  

Professional services

     16.7       6.3       48.2       14.3  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total external revenue

     179.9       155.1       511.6       445.4  

Intersegment license fee

     2.6       2.3       7.8       7.0  
    

 

 

   

 

 

   

 

 

   

 

 

 

Total

     182.5       157.4       519.4       452.4  
    

 

 

   

 

 

   

 

 

   

 

 

 

Eliminations

     (19.4     (17.8     (56.8     (53.3
    

 

 

   

 

 

   

 

 

   

 

 

 

Total MCO

   $ 531.3     $ 513.3     $ 1,713.6     $ 1,467.7  
Stock-Based Compensation (Narrative) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
9 Months Ended
Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Grant date fair value
$ 12.49 
Options [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Options granted
0.6 
Grant date fair value
$ 12.49 
Unrecognized compensation expense
$ 24.1 
Weighted average period to recognize expense (in years)
1.4 
Restricted Stock [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Options granted
1.5 
Weighted average grant date fair value
$ 30.05 
Award vesting period, years
four 
Unrecognized compensation expense
50.6 
Weighted average period to recognize expense (in years)
1.7 
Restricted Stock [Member] |
Non-Market Performance Based Vesting Condition [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Weighted average grant date fair value
$ 28.76 
Restricted stock awards granted
0.4 
Award vesting period, years
three 
Unrecognized compensation expense
$ 14.1 
Weighted average period to recognize expense (in years)
Stock-Based Compensation (Stock-Based Compensation Cost And Associated Tax Benefit) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Stock-Based Compensation [Abstract]
 
 
 
 
Stock compensation cost
$ 12.9 
$ 13.6 
$ 43.2 
$ 41.3 
Tax benefit
$ 5.0 
$ 5.0 
$ 16.2 
$ 15.6 
Stock-Based Compensation (Weighted Average Assumptions Used In Determining The Fair Value For Options Granted) (Details)
9 Months Ended
Sep. 30, 2011
Stock-Based Compensation [Abstract]
 
Expected dividend yield
1.53% 
Expected stock volatility
41.00% 
Risk-free interest rate
3.33% 
Expected holding period (in years)
7.6 
Grant date fair value
$ 12.49 
Stock-Based Compensation (Stock Option Exercises And Restricted Stock Vesting) (Details) (USD $)
In Millions
9 Months Ended
Sep. 30,
2011
2010
Options [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Proceeds from stock option exercises
$ 41.5 
$ 28.5 
Aggregate intrinsic value
20.4 
16.3 
Tax benefit realized upon exercise
8.0 
6.6 
Restricted Stock [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Fair value of shares vested
18.8 
12.4 
Tax benefit realized upon exercise
$ 7.0 
$ 4.6 
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dec. 31, 2010
Income Tax Contingency [Line Items]
 
 
 
 
 
Effective income tax rate
28.50% 
24.40% 
29.90% 
30.90% 
 
Overall increase/decrease in unrecognized tax benefits (UTBS)
 
 
$ (0.1)
$ 21.8 
 
Prepaid taxes
12.6 
 
12.6 
 
82.3 
Gross [Member]
 
 
 
 
 
Income Tax Contingency [Line Items]
 
 
 
 
 
Overall increase/decrease in unrecognized tax benefits (UTBS)
12.6 
 
6.2 
 
 
Net [Member]
 
 
 
 
 
Income Tax Contingency [Line Items]
 
 
 
 
 
Overall increase/decrease in unrecognized tax benefits (UTBS)
$ 10.4 
 
$ 8.7 
 
 
Weighted Average Shares Outstanding (Reconciliation Of Basic To Diluted Shares Outstanding) (Details)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Weighted Average Shares Outstanding [Abstract]
 
 
 
 
Basic
226.0 
234.3 
227.7 
235.5 
Dilutive effect of shares issuable under stock-based compensation plans
3.0 
1.4 
3.0 
1.6 
Diluted
229.0 
235.7 
230.7 
237.1 
Anti-dilutive options to purchase common shares and restricted stock excluded from the table above
10.7 
16.0 
10.8 
16.3 
Short-Term Investments (Details)
Sep. 30, 2011
Dec. 31, 2010
9 Months Ended
Sep. 30, 2011
Minimum [Member]
Short-term investment securities, maturity date
 
 
Remaining months for contractual maturities of short-term investments, minimum
 
Remaining months for contractual maturities of short-term investments, maximum
10 
 
90 days
Derivative Instruments And Hedging Activities (Narrative) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
May 31, 2008
May 7, 2008
3 Months Ended
Sep. 30, 2011
Interest Expense [Member]
Interest Rate Swaps [Member]
9 Months Ended
Sep. 30, 2011
Interest Expense [Member]
Interest Rate Swaps [Member]
12 Months Ended
Dec. 31, 2010
Series 2005 - 1 Swap [Member]
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
Net interest income (expense) recognized
 
 
 
 
 
 
$ (1.0)
$ 3.1 
 
Floating interest rate base
 
 
 
 
 
 
 
 
3-month LIBOR 
Interest rate swaps notional amount
 
 
 
 
150 
150 
 
 
300 
Gain (loss) on foreign currency derivatives
$ (3.1)
$ 8.3 
$ (0.6)
$ (1.7)
 
 
 
 
 
Derivative Instruments And Hedging Activities (Summary Of Notional Amounts Of Outstanding Foreign Exchange Forwards) (Details) (Forward Contracts [Member])
In Millions
Sep. 30, 2011
Euros [Member]
USD ($)
Dec. 31, 2010
Euros [Member]
USD ($)
Sep. 30, 2011
GBP [Member]
USD ($)
Sep. 30, 2011
GBP [Member]
EUR (€)
Dec. 31, 2010
GBP [Member]
USD ($)
Dec. 31, 2010
GBP [Member]
EUR (€)
Sep. 30, 2011
Other Foreign Currencies [Member]
USD ($)
Sep. 30, 2011
Other Foreign Currencies [Member]
EUR (€)
Dec. 31, 2010
Other Foreign Currencies [Member]
USD ($)
Dec. 31, 2010
Other Foreign Currencies [Member]
EUR (€)
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
Contracts to purchase foreign currencies
$ 12.6 
$ 11.7 
$ 4.1 
€ 5.4 
 
 
$ 6.1 
€ 10.8 
$ 5.4 
€ 10.5 
Contracts to sell foreign currencies
$ 54.1 
$ 55.5 
$ 19.6 
€ 15.5 
$ 20.7 
€ 14.0 
$ 7.3 
 
$ 19.5 
 
Derivative Instruments And Hedging Activities (Fair Value Of Derivative Instruments) (Details) (USD $)
In Millions
Sep. 30, 2011
Dec. 31, 2010
Derivative [Line Items]
 
 
Derivatives assets
$ 8.7 
$ 2.0 
Derivatives liabilities
11.1 
12.9 
Designated As Hedging Instrument [Member]
 
 
Derivative [Line Items]
 
 
Derivatives assets
8.0 
 
Derivatives liabilities
5.8 
12.2 
Designated As Hedging Instrument [Member] |
Interest Rate Swaps [Member]
 
 
Derivative [Line Items]
 
 
Derivatives assets
8.0 
 
Derivatives liabilities
5.8 
12.2 
Not Designated As Hedging Instrument [Member]
 
 
Derivative [Line Items]
 
 
Derivatives assets
0.7 
2.0 
Derivatives liabilities
$ 5.3 
$ 0.7 
Derivative Instruments And Hedging Activities (Gains And Losses On Derivatives Designated As Hedging Instruments) (Details) (Cash Flow Hedging [Member], USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Derivative [Line Items]
 
 
 
 
Amount of Gain/(Loss) Recognized in AOCI on Derivative (Effective Portion)
$ (0.1)
$ (1.5)
$ (0.5)
$ (3.5)
Amount of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)
(0.9)
(0.9)
(2.4)
(3.0)
Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
 
 
(0.2)
Interest Expense [Member] |
Interest Rate Swaps [Member]
 
 
 
 
Derivative [Line Items]
 
 
 
 
Amount of Gain/(Loss) Recognized in AOCI on Derivative (Effective Portion)
(0.1)
(1.1)
(0.5)
(3.6)
Amount of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)
(0.9)
(0.7)
(2.2)
(2.3)
Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
 
 
 
FX Options [Member] |
Revenue [Member]
 
 
 
 
Derivative [Line Items]
 
 
 
 
Amount of Gain/(Loss) Recognized in AOCI on Derivative (Effective Portion)
 
(0.4)
 
0.1 
Amount of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)
 
(0.2)
(0.2)
(0.7)
Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
 
 
 
$ (0.2)
Derivative Instruments And Hedging Activities (Cumulative Amount Of Unrecognized Hedge Losses Recorded In AOCI) (Details) (USD $)
In Millions
Sep. 30, 2011
Dec. 31, 2010
Derivative [Line Items]
 
 
Cumulative amount of unrecognized hedge losses recorded in AOCI
$ (3.7)
$ (5.6)
FX Options [Member]
 
 
Derivative [Line Items]
 
 
Cumulative amount of unrecognized hedge losses recorded in AOCI
 
(0.2)
Interest Rate Swaps [Member]
 
 
Derivative [Line Items]
 
 
Cumulative amount of unrecognized hedge losses recorded in AOCI
$ (3.7)
$ (5.4)
Acquisitions (Details)
In Millions, unless otherwise specified
0 Months Ended
Nov. 18, 2011
Nov. 18, 2011
CSI Global Education [Member]
USD ($)
Nov. 18, 2011
CSI Global Education [Member]
CAD ($)
May 6, 2011
Korea Investors Services Pricing [Member]
Business Acquisition [Line Items]
 
 
 
 
Purchase price
 
$ 151.4 
 
 
Contingent payment
 
 
2.5 
 
Contractual milestone
 
 
 
Contingent consideration at fair value
 
$ 2.0 
 
 
Additional direct equity investment in KIS
 
 
 
16.00% 
There is a 2.5 million Canadian dollar contingent cash payment which is dependent upon the achievement of a certain contractual milestone by January 2016.
Goodwill And Other Acquired Intangible Assets (Narrative) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Goodwill And Other Acquired Intangible Assets [Abstract]
 
 
 
 
Goodwill impairment loss
$ 0 
$ 0 
$ 0 
$ 0 
Goodwill And Other Acquired Intangible Assets (Activity In Goodwill) (Details) (USD $)
In Millions
9 Months Ended
Sep. 30, 2011
12 Months Ended
Dec. 31, 2010
Goodwill [Line Items]
 
 
Beginning balance
$ 465.5 
$ 349.2 
Additions/adjustments
2.7 
104.6 
FX translation
(17.1)
11.7 
Ending balance
451.1 
465.5 
MIS [Member]
 
 
Goodwill [Line Items]
 
 
Beginning balance
11.4 
11.1 
FX translation
(0.4)
0.3 
Ending balance
11.0 
11.4 
MA [Member]
 
 
Goodwill [Line Items]
 
 
Beginning balance
454.1 
338.1 
Additions/adjustments
2.7 
104.6 
FX translation
(16.7)
11.4 
Ending balance
$ 440.1 
$ 454.1 
Goodwill And Other Acquired Intangible Assets (Amortization Expense) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Goodwill And Other Acquired Intangible Assets [Abstract]
 
 
 
 
Amortization Expense
$ 5.0 
$ 4.2 
$ 14.6 
$ 12.1 
Goodwill And Other Acquired Intangible Assets (Estimated Future Amortization Expense) (Details) (USD $)
In Millions
9 Months Ended
Sep. 30, 2011
Goodwill And Other Acquired Intangible Assets [Abstract]
 
2011 (after September 30,)
$ 4.6 
2012
18.2 
2013
18.0 
2014
14.5 
2015
13.4 
Thereafter
$ 84.3 
Pension And Other Post-Retirement Benefits (Net Periodic Benefit Expense Related To Post-Retirement Plans) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Other post-retirement plans
 
 
$ 6.9 
 
Pension Plans [Member]
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Service cost
3.7 
3.3 
11.3 
10.1 
Interest cost
3.3 
3.1 
9.9 
9.1 
Expected return on plan assets
(3.0)
(2.7)
(9.0)
(8.0)
Amortization of net actuarial loss from earlier periods
1.2 
0.7 
3.7 
2.1 
Amortization of net prior service costs from earlier periods
0.2 
0.2 
0.5 
0.5 
Settlement loss
1.6 
 
1.6 
 
Net periodic expense
7.0 
4.6 
18.0 
13.8 
Other Post-Retirement Plans [Member]
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Service cost
0.3 
0.2 
0.9 
0.6 
Interest cost
0.2 
0.2 
0.6 
0.6 
Amortization of net prior service costs from earlier periods
0.1 
0.1 
0.2 
0.1 
Net periodic expense
0.6 
0.5 
1.7 
1.3 
Other post-retirement plans
 
 
0.3 
 
Estimated additional payments in 2011
0.3 
 
0.3 
 
Funded Pension Contributions [Member]
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Company contribution
 
 
13.6 
 
Unfunded Pension Contributions [Member]
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Other post-retirement plans
 
 
11.1 
 
Estimated additional payments in 2011
$ 0.8 
 
$ 0.8 
 
Indebtedness (Narrative) (Details) (USD $)
9 Months Ended
Sep. 30,
9 Months Ended
Sep. 30, 2011
May 31, 2008
May 7, 2008
9 Months Ended
Sep. 30, 2011
Line Of Credit [Member]
Sep. 28, 2007
Line Of Credit [Member]
9 Months Ended
Sep. 30, 2011
Commercial Paper [Member]
Oct. 3, 2007
Commercial Paper [Member]
2011
2010 Senior Notes [Member]
2011
Series 2007-1 Notes [Member]
2011
Series 2005-1 Notes [Member]
Sep. 30, 2011
Senior Notes 7.61 Percent Due September 30th 2005 [Member]
9 Months Ended
Sep. 30, 2011
2008 Term Loan [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Date the credit facility was entered
 
 
 
2007-09-28 
 
 
 
 
 
 
 
 
Date of expiry of credit facility
 
 
 
2012-09-28 
 
 
 
 
 
 
 
 
Financial covenants to be maintained at the end of any fiscal quarter
 
 
 
Debt/EBITDA ratio of not more than 4.0 to 1.0 
 
 
 
 
 
 
 
 
Five-year senior, unsecured revolving credit facility
 
 
 
 
$ 1,000,000,000 
 
$ 1,000,000,000 
 
 
 
 
 
Maturity date of CP Notes
 
 
 
 
 
397 days 
 
 
 
 
 
 
Interest on borrowings under the 2008 Term Loan
 
 
 
LIBOR plus a premium that can range from 16.0 to 40.0 basis points 
 
 
 
 
 
 
 
LIBOR plus a margin that can range from 125 basis points to 175 basis points 
Quarterly facility fees
 
 
 
4.0 to 10.0 basis points per annum 
 
 
 
 
 
 
 
 
Utilization fee
 
 
 
5.0 basis points on borrowings outstanding when the aggregate amount outstanding exceeds 50% of the total facility 
 
 
 
 
 
 
 
 
Debt to EBITDA ratio not to exceed at the end of any fiscal quarter
 
 
 
 
 
 
 
 
 
 
Debt/EBITDA ratio of not more than 4.0 to 1.0 
Date of agreement with the lenders for the five year senior unsecured term loan
 
 
 
 
 
 
 
2010-08-19 
September 7, 2007 
2005-09-30 
 
May 7, 2008 
Entered with several lenders into a five year senior unsecured term loan/Refinance of Senior Notes
 
 
 
 
 
 
 
500,000,000 
300,000,000 
300,000,000 
300,000,000 
150,000,000 
Minimum amount for default on senior notes payable
50,000,000 
 
 
 
 
 
 
 
 
 
 
 
Minimum percentage for default on senior notes payable
 
 
 
 
 
 
 
 
 
 
 
Senior Unsecured Notes, interest
 
 
 
 
 
 
 
5.50% 
6.06% 
4.98% 
7.61% 
 
Maturity date of Senior Unsecured Notes
 
 
 
 
 
 
 
Sep. 01, 2020 
Sep. 07, 2017 
Sep. 30, 2015 
 
 
Prepayment and purchase feature of Senior Unsecured Notes
In the event that Moody's pays all, or part, of the Series 2005-1 Notes in advance of their maturity, such prepayment will be subject to a Make Whole Amount 
 
 
 
 
 
 
The Company may prepay the Series 2007-1 Notes, in whole or in part, at any time at a price equal to 100% of the principal amount being prepaid, plus accrued and unpaid interest and a Make Whole Amount 
 
 
 
Issuance of additional principal amount of Senior Notes within five years from time to time
 
 
 
 
 
 
 
 
500,000,000 
 
 
 
Interest rate swaps total notional amount
 
$ 150,000,000 
$ 150,000,000 
 
 
 
 
 
 
$ 300,000,000 
 
 
Debt instrument, term (years)
 
 
 
 
 
 
 
 
10 
10 
 
 
Debt/EBITDA ratio to exceed 4.0 to 1.0 at the end of any fiscal quarter
Upon the occurrence and during the continuation of an event of default under the Indenture, the notes may become immediately due and payable either automatically or by the vote of the holders of more than 25% of the aggregate principal amount of all of the notes then outstanding
The Company may prepay the 2010 Senior Notes, in whole or in part, at any time at a price equal to 100% of the principal amount being prepaid, plus accrued and unpaid interest and a Make-Whole Amount. Additionally, at the option of the holders of the notes, the Company may be required to purchase all or a portion of the notes upon occurrence of a "Change of Control Triggering Event," as defined in the Indenture, at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of purchase
Indebtedness (Summary Of Total Indebtedness) (Details) (USD $)
In Millions
Sep. 30, 2011
Dec. 31, 2010
Debt Instrument [Line Items]
 
 
Current portion
$ (43.1)
$ (11.3)
Total debt
1,244.0 
1,239.6 
Total long-term debt
1,200.9 
1,228.3 
Derivatives assets
8.7 
2.0 
Series 2005 - 1 Swap [Member] |
Interest Rate Swaps [Member]
 
 
Debt Instrument [Line Items]
 
 
Derivatives assets
8.0 
(3.7)
Series 2005-1 Notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Notes payable
308.0 
296.3 
Series 2007-1 Notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Notes payable
300.0 
300.0 
2008 Term Loan [Member]
 
 
Debt Instrument [Line Items]
 
 
Loan Payable
138.8 
146.3 
2010 Senior Notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Notes payable
497.2 
497.0 
Unamortized discount
$ 2.8 
$ 3.0 
Indebtedness (Principal Payments Due On Company's Long-Term Borrowings) (Details) (USD $)
In Millions
Sep. 30, 2011
Debt Instrument [Line Items]
 
2011 (after September 30,)
$ 3.8 
2012
71.2 
2013
63.8 
2015
300.0 
Total
438.8 
2008 Term Loan [Member]
 
Debt Instrument [Line Items]
 
2011 (after September 30,)
3.8 
2012
71.2 
2013
63.8 
Total
138.8 
Series 2005-1 Notes [Member]
 
Debt Instrument [Line Items]
 
2015
300.0 
Total
$ 300.0 
Indebtedness (Summary Of Components Of Interest As Presented In Consolidated Statements Of Operations) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Indebtedness [Abstract]
 
 
 
 
Expense on borrowings
$ (16.2)
$ (14.0)
$ (48.9)
$ (35.4)
Income
1.6 
0.8 
3.9 
1.9 
Income/(expense) on UTBs and other tax related liabilities
0.9 
(0.2)
(6.1)
(5.3)
Capitalized
0.8 
0.6 
2.2 
1.2 
Legacy Tax
 1
 1
3.7 1
2.5 1
Total interest expense, net
(12.9)
(12.8)
(45.2)
(35.1)
Reversal of accrued interest expense
2.8 
 
2.8 
 
Interest income
$ 0.9 
 
$ 0.9 
 
Indebtedness (Fair Value And Carrying Value Of Long-Term Debt) (Details) (USD $)
In Millions
Sep. 30, 2011
Dec. 31, 2010
Debt Instrument [Line Items]
 
 
Carrying Amount
$ 1,244.0 
$ 1,239.6 
Estimated Fair Value
1,303.3 
1,270.3 
Series 2005-1 Notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Carrying Amount
308.0 
296.3 
Estimated Fair Value
312.2 
310.6 
Series 2007-1 Notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Carrying Amount
300.0 
300.0 
Estimated Fair Value
327.7 
321.3 
2010 Senior Notes [Member]
 
 
Debt Instrument [Line Items]
 
 
Carrying Amount
497.2 
497.0 
Estimated Fair Value
524.6 
492.1 
2008 Term Loan [Member]
 
 
Debt Instrument [Line Items]
 
 
Carrying Amount
138.8 
146.3 
Estimated Fair Value
$ 138.8 
$ 146.3 
Contingencies (Narrative) (Details) (USD $)
In Millions, unless otherwise specified
1 Months Ended
Apr. 30, 2011
3 Months Ended
Jun. 30, 2011
9 Months Ended
Sep. 30, 2011
12 Months Ended
Dec. 31, 2009
Dec. 31, 2010
9 Months Ended
Sep. 30, 2011
Legacy Tax Matters [Member]
12 Months Ended
Dec. 31, 2009
Legacy Tax Matters IMS Health and NMR 1993 - 1996 [Member]
Sep. 30, 2011
Legacy Tax Matters Amortization Expense Deductions 2000 Distribution Agreement [Member]
1 Months Ended
May 31, 2010
Settlement of Tax Years 1997 - 2002 [Member]
9 Months Ended
Sep. 30, 2011
Settlement of Tax Years 1997 - 2002 [Member]
Dec. 31, 2006
Settlement of Tax Years 1997 - 2002 [Member]
Sep. 30, 2011
Legacy Tax Matters 1989-1990 and 1993-1996 [Member]
Loss Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Minimum likelihood that a tax position will be sustained based on its technical merits as of the reporting date
 
 
50.00% 
 
 
 
 
 
 
 
 
 
Liabilities for 2000 distribution agreement and Liabilities for Legacy Tax Matters, Liability for the remaining potential exposure
 
 
$ 51.5 
 
$ 57.3 
 
 
$ 51.5 
 
 
 
$ 53.6 
Proceeds from IMS Health, NMR arbitration settlements and New D&B for 50% of the anticipated future tax benefits through 2012
 
 
 
 
 
55.0 
10.8 
 
 
 
 
 
Benefit to net income related to the resolution of Legacy Tax Matters
 
 
 
 
 
 
8.2 
 
 
 
 
 
Reduction of interest expense
 
2.8 
 
6.5 
 
 
 
 
 
 
 
 
Reduction in interest expense, net of tax
 
1.7 
 
 
 
 
 
 
 
 
 
 
Reduction of tax expense
 
 
 
4.3 
 
 
 
 
 
 
 
 
Increase in other non-operating income
 
6.4 
 
 
 
 
 
 
 
 
 
 
Liability for legacy tax matters
 
 
 
 
 
 
 
 
 
 
 
Deposit with IRS to stop the accrual of statutory interest on potential tax deficiencies with respect to the 1997 through 2002 tax years, New D&B and Moody's Commenced procedures to recover approximately
 
 
11.3 
 
11.4 
 
 
 
 
 
39.8 
 
Refund from IRS for the 1997 tax year
 
 
 
 
 
 
 
 
5.2 
 
 
 
Refund from IRS for the 1997 tax year, interest
 
 
 
 
 
 
 
 
2.5 
 
 
 
After-tax benefit from tax settlement
 
 
 
 
 
 
 
 
 
4.6 
 
 
Legacy Refund, net
0.6 
 
 
 
 
 
 
 
 
 
 
 
Legacy Refund
0.9 
 
 
 
 
 
 
 
 
 
 
 
Total legacy tax impact unusual in nature
 
 
7.0 
 
 
 
 
 
 
 
 
 
Total legacy tax impact
 
 
$ 8.7 
 
 
 
 
 
 
 
 
 
Comprehensive Income And Noncontrolling Interests (Components Of Total Comprehensive Income, Net Of Tax) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Comprehensive Income And Noncontrolling Interests [Line Items]
 
 
 
 
Net income
$ 132.1 
$ 137.2 
$ 479.9 
$ 374.5 
Net realized and unrealized gain/(loss) on cash flow hedges
0.7 
(0.6)
1.8 
(0.3)
FX translation
(74.4)
59.5 
(38.2)
11.8 
Net actuarial gains and prior service costs
 
 
(3.3)
4.1 
Amortization and recognition of actuarial losses and prior service costs
0.6 
0.5 
2.3 
1.3 
Total comprehensive income
59.0 
196.6 
442.5 
391.4 
Net realized and unrealized gain/(loss) on cash flow hedges, tax
0.5 
0.1 
1.2 
0.1 
FX translation, tax
0.1 
1.7 
0.1 
10.3 
Net actuarial gains and prior service costs, tax
 
 
2.4 
2.9 
Amortization and recognition of actuarial losses and prior service costs, tax
0.5 
0.4 
1.7 
1.4 
Shareholders' Of Moody's Corporation [Member]
 
 
 
 
Comprehensive Income And Noncontrolling Interests [Line Items]
 
 
 
 
Net income
130.7 
136.0 
475.2 
370.4 
Net realized and unrealized gain/(loss) on cash flow hedges
0.7 
(0.6)
1.8 
(0.3)
FX translation
(73.3)
58.8 
(37.9)
11.5 
Net actuarial gains and prior service costs
 
 
(3.3)
4.1 
Amortization and recognition of actuarial losses and prior service costs
0.6 
0.5 
2.3 
1.3 
Total comprehensive income
58.7 
194.7 
438.1 
387.0 
Noncontrolling Interests [Member]
 
 
 
 
Comprehensive Income And Noncontrolling Interests [Line Items]
 
 
 
 
Net income
1.4 
1.2 
4.7 
4.1 
FX translation
(1.1)
0.7 
(0.3)
0.3 
Total comprehensive income
$ 0.3 
$ 1.9 
$ 4.4 
$ 4.4 
Comprehensive Income And Noncontrolling Interests (Activity In The Company's Noncontrolling Interests) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Comprehensive Income And Noncontrolling Interests [Abstract]
 
 
 
 
Beginning Balance
 
 
$ 11.2 
$ 10.1 
Net income attributable to noncontrolling interests
1.4 
1.2 
4.7 
4.1 
Dividends declared to noncontrolling interests
 
 
(4.8)
(4.4)
Purchase of KIS Pricing shares from noncontrolling interest
 
 
(1.0)
 
FX translation
 
 
(0.3)
0.3 
Ending Balance
$ 9.8 
$ 10.1 
$ 9.8 
$ 10.1 
Segment Information (Financial Information By Segment) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
$ 531.3 
$ 513.3 
$ 1,713.6 
$ 1,467.7 
Operating, SG&A
316.0 
305.9 
938.7 
842.4 
Restructuring
0.2 
0.4 
0.1 
 
Depreciation and amortization
19.0 
18.1 
58.5 
49.1 
Total expenses
335.2 
324.4 
997.3 
891.5 
Operating income
196.1 
188.9 
716.3 
576.2 
MIS [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
368.2 
373.7 
1,251.0 
1,068.6 
Operating, SG&A
200.0 
204.3 
604.2 
562.0 
Restructuring
0.1 
0.3 
 
 
Depreciation and amortization
9.8 
10.3 
30.8 
26.3 
Total expenses
209.9 
214.9 
635.0 
588.3 
Operating income
158.3 
158.8 
616.0 
480.3 
MA [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
182.5 
157.4 
519.4 
452.4 
Operating, SG&A
135.4 
119.4 
391.3 
333.7 
Restructuring
0.1 
0.1 
0.1 
 
Depreciation and amortization
9.2 
7.8 
27.7 
22.8 
Total expenses
144.7 
127.3 
419.1 
356.5 
Operating income
37.8 
30.1 
100.3 
95.9 
Eliminations [Member]
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
Revenue
(19.4)
(17.8)
(56.8)
(53.3)
Operating, SG&A
(19.4)
(17.8)
(56.8)
(53.3)
Total expenses
$ (19.4)
$ (17.8)
$ (56.8)
$ (53.3)
Segment Information (MIS and MA Revenue By Line Of Business) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Revenue
$ 531.3 
$ 513.3 
$ 1,713.6 
$ 1,467.7 
MIS [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Revenue
368.2 
373.7 
1,251.0 
1,068.6 
Intersegment royalty
16.8 
15.5 
49.0 
46.3 
External revenue
351.4 
358.2 
1,202.0 
1,022.3 
MIS [Member] |
Corporate Finance (CFG) [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
External revenue
129.0 
144.9 
510.9 
399.2 
MIS [Member] |
Structured Finance (SFG) [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
External revenue
82.0 
70.1 
257.7 
214.7 
MIS [Member] |
Financial Institutions (FIG) [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
External revenue
72.1 
73.6 
228.1 
213.0 
MIS [Member] |
Public, Project And Infrastructure Finance (PPIF) [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
External revenue
68.3 
69.6 
205.3 
195.4 
MA [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Revenue
182.5 
157.4 
519.4 
452.4 
Intersegment royalty
2.6 
2.3 
7.8 
7.0 
External revenue
179.9 
155.1 
511.6 
445.4 
MA [Member] |
Research, Data And Analytics (RD&A) [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
External revenue
115.3 
106.0 
335.9 
315.8 
MA [Member] |
Risk Management Software (RMS) [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
External revenue
47.9 
42.8 
127.5 
115.3 
MA [Member] |
Professional Services [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
External revenue
16.7 
6.3 
48.2 
14.3 
Eliminations [Member]
 
 
 
 
Segment Reporting, Revenue Reconciling Item [Line Items]
 
 
 
 
Revenue
$ (19.4)
$ (17.8)
$ (56.8)
$ (53.3)
Segment Information (Consolidated Revenue Information By Geographic Area) (Details) (USD $)
In Millions
3 Months Ended
Sep. 30,
9 Months Ended
Sep. 30,
2011
2010
2011
2010
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Revenue
$ 531.3 
$ 513.3 
$ 1,713.6 
$ 1,467.7 
United States [Member]
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Revenue
274.3 
278.3 
890.7 
794.4 
International [Member]
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Revenue
257.0 
235.0 
822.9 
673.3 
International [Member] |
EMEA [Member]
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Revenue
163.1 
155.5 
532.1 
453.9 
International [Member] |
Other Regions [Member]
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
Revenue
$ 93.9 
$ 79.5 
$ 290.8 
$ 219.4 
Segment Information (Total Assets By Segment) (Details) (USD $)
In Millions
Sep. 30, 2011
Dec. 31, 2010
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Total Assets
$ 2,521.3 
$ 2,540.3 
MIS [Member]
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Total Assets
591.3 
639.0 
MA [Member]
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Total Assets
821.2 
910.0 
Corporate [Member]
 
 
Segment Reporting, Asset Reconciling Item [Line Items]
 
 
Total Assets
$ 1,108.8 1
$ 991.3 1
Subsequent Events (Details)
9 Months Ended
Sep. 30, 2011
Subsequent Events [Abstract]
 
Dividends declared per share
$ 0.14 
Dividend declared date
Oct. 25, 2011 
Dividend payable date
Dec. 10, 2011 
Dividend record date
Nov. 20, 2011