Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q   

(Mark one)
 
x 	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended March 31, 2016
Or
 
¨ 	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from              to             
Commission file number 1-14037

Moody’s Corporation
(Exact name of registrant as specified in its charter)

 
			
Delaware	 	13-3998945	
(State of Incorporation)	 	(I.R.S. Employer Identification No.)	
		
7 World Trade Center at
250 Greenwich Street, New York, N.Y.	 	10007	
(Address of Principal Executive Offices)	 	(Zip Code)	
Registrant’s telephone number, including area code:
(212) 553-0300   

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months, or for such shorter period that the registrant was required to submit and post such files.    Yes   x     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	 	x	  	Accelerated filer	 	¨	
				
Non-accelerated filer	 	¨   (Do not check if a smaller reporting company)	  	Smaller reporting company	 	¨	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Title of Each Class	 	Shares Outstanding at March 31, 2016	
Common Stock, par value $0.01 per share	 	194.3 million	

Table of Contents
MOODY’S CORPORATION
 INDEX TO FORM 10-Q

 	 	 	  	Page(s)	 	
	 	Glossary of Terms and Abbreviations	  	 	3-7	  	
	
PART I. FINANCIAL INFORMATION	   	
Item 1.	 	Financial Statements	  				
	 	Consolidated Statements of Operations (Unaudited) for the Three Months Ended March  31, 2016 and 2015	  	 	8	  	
	 	Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended March  31, 2016 and 2015	  	 	9	  	
	 	Consolidated Balance Sheets (Unaudited) at March 31, 2016 and December 31, 2015	  	 	10	  	
	 	Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March  31, 2016 and 2015	  	 	11	  	
	 	Notes to Condensed Consolidated Financial Statements (Unaudited)	  	 	12-31	  	
Item 2.	 	Management’s Discussion and Analysis of Financial Condition and Results of Operations	  				
	 	The Company	  	 	32	  	
	 	Critical Accounting Estimates	  	 	32	  	
	 	Reportable Segments	  	 	32-33	  	
	 	Results of Operations	  	 	33-39	  	
	 	Liquidity and Capital Resources	  	 	39-44	  	
	 	Recently Issued Accounting Standards	  	 	45	  	
	 	Contingencies	  	 	45	  	
	 	Regulation	  	 	46	  	
	 	Forward-Looking Statements	  	 	46-47	  	
Item 4.	 	Controls and Procedures	  	 	47-48	  	
	
PART II. OTHER INFORMATION	   	
Item 1.	 	Legal Proceedings	  	 	49	  	
Item 1A.	 	Risk Factors	  	 	49	  	
Item 2.	 	Unregistered Sales of Equity Securities and Use of Proceeds	  	 	49	  	
Item 5.	 	Other Information	  	 	49	  	
Item 6.	 	Exhibits	  	 	50	  	
		
SIGNATURES	  	 	51	  	
Exhibits Filed Herewith	  				
10.1	 	Second Amendment to the Profit Participation Plan of Moody’s Corporation	  				
31.1	 	Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	  				
31.2	 	Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	  				
32.1	 	Chief Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	  				
32.2	 	Chief Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	  				
101.DEF	 	XBRL Definitions Linkbase Document	  				
101.INS	 	XBRL Instance Document	  				
101.SCH	 	XBRL Taxonomy Extension Schema Document	  				
101.CAL	 	XBRL Taxonomy Extension Calculation Linkbase Document	  				
101.LAB	 	XBRL Taxonomy Extension Labels Linkbase Document	  				
101.PRE	 	XBRL Taxonomy Extension Presentation Linkbase Document	  				

Table of Contents
 GLOSSARY OF TERMS AND ABBREVIATIONS
The following terms, abbreviations and acronyms are used to identify frequently used terms in this report:

TERM	  	DEFINITION	
		
Adjusted Operating Income	  	Operating income excluding depreciation and amortization	
		
Adjusted Operating Margin	  	Operating margin excluding depreciation and amortization	
		
Amba	  	Amba Investment Services; a provider of outsourced investment research and quantitative analytics for global financial institutions; a majority owned subsidiary of the Company acquired 100% of Amba in December 2013	
		
Americas	  	Represents countries within North and South America, excluding the U.S.	
		
AOCI	  	Accumulated other comprehensive income (loss); a separate component of shareholders’ equity	
		
ASC	  	The FASB Accounting Standards Codification; the sole source of authoritative GAAP as of July 1, 2009 except for rules and interpretive releases of the SEC, which are also sources of authoritative GAAP for SEC registrants	
		
Asia-Pacific	  	Represents countries in Asia including but not limited to: Australia, China, India, Indonesia, Japan, Korea, Malaysia, Singapore, Sri Lanka and Thailand	
		
ASU	  	The FASB Accounting Standards Update to the ASC. It also provides background information for accounting guidance and the bases for conclusions on the changes in the ASC. ASUs are not considered authoritative until codified into the ASC	
		
BlackBox	  	BlackBox Logic; a leading provider of Residential Mortgage-Backed securities loan level data. The Company acquired the customer base and products of BlackBox Logic in December 2015	
		
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	
		
CFG	  	Corporate finance group; an LOB of MIS	
		
CLO	  	Collateralized loan obligation	
		
CMBS	  	Commercial mortgage-backed securities; part of the CREF asset class within SFG	
		
Commission	  	European Commission	
		
Common Stock	  	The Company’s common stock	
		
Company	  	Moody’s Corporation and its subsidiaries; MCO; Moody’s	
		
Copal	  	Copal Partners; an acquisition completed in November 2011; part of the MA segment; leading provider of outsourced research and analytical services to institutional investors	
		
Copal Amba	  	Operating segment and reporting unit created in January 2014 that consists of all operations from Copal as well as the operations of Amba. The Copal Amba operating segment provides outsourced research and analytical services to the global financial and corporate sectors	
		
Council	  	Council of the European Union	
		
CRAs	  	Credit rating agencies	
		
CRA3	  	Regulation (EU) No 462/2013 of the European Parliament and of the Council, which updated the regulatory regimes imposing additional procedural requirements on CRAs	
		
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 services primarily in Canada	
 
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TERM	  	DEFINITION	
		
D&A	  	Depreciation and amortization	
		
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	
		
ECCA	  	Economics and Consumer Credit Analytics; a business within the RD&A LOB which provides economic and consumer credit trend analytics	
		
EMEA	  	Represents countries within Europe, the Middle East and Africa	
		
EPS	  	Earnings per share	
		
Equilibrium	  	A leading provider of credit rating and research services in Peru and Panama; acquired by Moody’s in May 2015	
		
ERS	  	The enterprise risk solutions LOB within MA, which offers risk management software products as well as software implementation services and related risk management advisory engagements	
		
ESMA	  	European Securities and Markets Authority	
		
ETR	  	Effective tax rate	
		
EU	  	European Union	
		
EUR	  	Euros	
		
European Ratings Platform	  	Central credit ratings website administered by ESMA	
		
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	
		
FIG	  	Financial institutions group; an LOB of MIS	
		
Financial Reform Act	  	Dodd-Frank Wall Street Reform and Consumer Protection Act	
		
Free Cash Flow	  	Net cash provided by operating activities less cash paid for capital additions	
		
FSTC	  	Financial Services Training and Certifications; a reporting unit within the MA segment that includes on-line and classroom-based training services and CSI	
		
FX	  	Foreign exchange	
		
GAAP	  	U.S. Generally Accepted Accounting Principles	
		
GBP	  	British pounds	
		
GGY	  	Gilliland Gold Young; a leading provider of advanced actuarial software for the global insurance industry. The Company acquired GGY on March 1, 2016	
		
ICRA	  	ICRA Limited; a leading provider of credit ratings and research in India. The Company previously held 28.5% equity ownership and in June 2014, increased that ownership stake to just over 50% through the acquisition of additional shares	
		
IRS	  	Internal Revenue Service	
		
IT	  	Information technology	
		
KIS	  	Korea Investors Service, Inc; a leading Korean rating agency and consolidated subsidiary of the Company	
		
KIS Pricing	  	Korea Investors Service Pricing, Inc; a leading Korean provider of fixed income securities pricing and consolidated subsidiary of the Company	
		
Legacy Tax Matter(s)	  	Exposures to certain potential tax liabilities assumed in connection with the 2000 Distribution	
 
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TERM	  	DEFINITION	
		
Lewtan	  	Lewtan Technologies; a leading provider of analytical tools and data for the global structured finance market; part of the RD&A LOB within MA; an acquisition completed in October 2014	
		
LIBOR	  	London Interbank Offered Rate	
		
LOB	  	Line of business	
		
MA	  	Moody’s Analytics – a reportable segment of MCO formed in January 2008 which provides a wide range of products and services that support financial analysis and risk management activities of institutional participants in global financial markets; consists of three LOBs – RD&A, ERS and PS	
		
M&A	  	Mergers and acquisitions	
		
Make Whole Amount	  	The prepayment penalty amount relating to the Series 2007-1 Notes, 2010 Senior Notes, 2012 Senior Notes, 2013 Senior Notes, 2014 Senior Notes (5-year), 2014 Senior Notes (30-year) and 2015 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 five LOBs – SFG, CFG, FIG, PPIF and MIS Other	
		
MIS Other	  	Consists of non-ratings revenue from ICRA, KIS Pricing and KIS Research. These businesses are components of MIS; MIS Other is an LOB of MIS	
		
Moody’s	  	Moody’s Corporation and its subsidiaries; MCO; the Company	
		
MSS	  	Moody’s Shared Services	
		
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 is comprised of the D&B Business	
		
NM	  	Percentage change is not meaningful	
		
Non-GAAP	  	A financial measure not in accordance with GAAP; these measures, when read in conjunction with the Company’s reported results, can provide useful supplemental information for investors analyzing period-to-period comparisons of the Company’s performance, facilitate comparisons to competitors’ operating results and to provide greater transparency to investors of supplemental information used by management in its financial and operational decision making	
		
NRSRO	  	Nationally Recognized Statistical Rating Organization	
		
OCI	  	Other comprehensive income (loss); includes gains and losses on cash flow and net investment hedges, unrealized gains and losses on available for sale securities, certain gains and losses relating to pension and other retirement benefit obligations and foreign currency translation adjustments	
		
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	
		
Other Retirement Plan	  	The U.S. retirement healthcare and U.S. retirement life insurance plans	
		
PPIF	  	Public, project and infrastructure finance; an LOB of MIS	
		
Profit Participation Plan	  	Defined contribution profit participation plan that covers substantially all U.S. employees of the Company	
		
PS	  	Professional Services, an LOB within MA that provides outsourced research and analytical services as well as financial training and certification programs	
		
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	
 
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TERM	  	DEFINITION	
		
Reform Act	  	Credit Rating Agency Reform Act of 2006	
		
REIT	  	Real Estate Investment Trust	
		
Relationship Revenue	  	Represents MIS recurring monitoring of a rated debt obligation and/or entities that issue such obligations, as well as revenue from programs such as commercial paper, medium-term notes and shelf registrations. For MIS Other represents subscription-based revenue. For MA, represents subscription-based and maintenance revenue	
		
Retirement Plans	  	Moody’s funded and unfunded pension plans, the healthcare plans and life insurance plans	
		
SAV	  	Structured Analytics and Valuation; a business within the RD&A LOB which provides data and analytics for securitized assets	
		
SEC	  	U.S. Securities and Exchange Commission	
		
Securities Act	  	Securities Act of 1933	
		
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	
		
Total Debt	  	All indebtedness of the Company as reflected on the consolidated balance sheets	
		
Transaction Revenue	  	For MIS, represents the initial rating of a new debt issuance as well as other one-time fees. For MIS Other, represents revenue from professional services and outsourcing engagements. For MA, represents software license fees and revenue from risk management advisory projects, training and certification services, and outsourced research and analytical engagements	
		
U.K.	  	United Kingdom	
		
U.S.	  	United States	
		
USD	  	U.S. dollar	
		
UTBs	  	Unrecognized tax benefits	
		
UTPs	  	Uncertain tax positions	
		
VSOE	  	Vendor specific objective evidence; as defined in the ASC, evidence of selling price limited to either of the following: the price charged for a deliverable when it is sold separately, or for a deliverable not yet being sold separately, the price established by management having the relevant authority	
		
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	
		
2007 Agreement	  	Note purchase agreement dated September 7, 2007, relating to the Series 2007-1 Notes	
		
2010 Indenture	  	Supplemental indenture and related agreements dated August 19, 2010, relating to the 2010 Senior Notes	
		
2010 Senior Notes	  	Principal amount of $500 million, 5.50% senior unsecured notes due in September 2020 pursuant to the 2010 Indenture	
 
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TERM	  	DEFINITION	
		
2012 Facility	  	Revolving credit facility of $1 billion entered into on April 18, 2012; was replaced with the 2015 Facility	
		
2012 Indenture	  	Supplemental indenture and related agreements dated August 18, 2012, relating to the 2012 Senior Notes	
		
2012 Senior Notes	  	Principal amount of $500 million, 4.50% senior unsecured notes due in September 2022 pursuant to the 2012 Indenture	
		
2013 Indenture	  	Supplemental indenture and related agreements dated August 12, 2013, relating to the 2013 Senior Notes	
		
2013 Senior Notes	  	Principal amount of the $500 million, 4.875% senior unsecured notes due in February 2024 pursuant to the 2013 Indenture	
		
2014 Indenture	  	Supplemental indenture and related agreements dated July 16, 2014, relating to the 2014 Senior Notes	
		
2014 Senior Notes (5-Year)	  	Principal amount of $450 million, 2.75% senior unsecured notes due in July 2019	
		
2014 Senior Notes (30-Year)	  	Principal amount of $600 million, 5.25% senior unsecured notes due in July 2044	
		
2015 Facility	  	Five-year unsecured revolving credit facility, with capacity to borrow up to $1 billion; replaces the 2012 Facility	
		
2015 Indenture	  	Supplemental indenture and related agreements dated March 9, 2015, relating to the 2015 Senior Notes	
		
2015 Senior Notes	  	Principal amount €500 million, 1.75% senior unsecured notes issued March 9, 2015 and due in March 2027	
		
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	
 
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 PART I. FINANCIAL INFORMATION
 Item 1. Financial Statements
MOODY’S CORPORATION
 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in millions, except per share data)

 	  	Three Months Ended
March 31,	 	
 	  	2016	 	 	2015	 	
Revenue	  	$	816.1	  	 	 	865.6	  	

Expenses	  				 				
Operating	  	 	249.2	  	 	 	244.4	  	
Selling, general and administrative	  	 	232.9	  	 	 	221.3	  	
Depreciation and amortization	  	 	29.9	  	 	 	28.6	  	

Total expenses	  	 	512.0	  	 	 	494.3	  	

Operating income	  	 	304.1	  	 	 	371.3	  	

Non-operating (expense) income, net	  				 				
Interest expense, net	  	 	(34.1	) 	 	 	(29.3	) 	
Other non-operating income, net	  	 	5.6	  	 	 	2.5	  	

Total non-operating expense, net	  	 	(28.5	) 	 	 	(26.8	) 	
			
Income before provision for income taxes	  	 	275.6	  	 	 	344.5	  	
Provision for income taxes	  	 	89.0	  	 	 	113.2	  	

Net income	  	 	186.6	  	 	 	231.3	  	
Less: Net income attributable to noncontrolling interests	  	 	2.2	  	 	 	1.2	  	
	  	 	 	 	 	 	 	 	
Net income attributable to Moody’s	  	$	184.4	  	 	 	230.1	  	

Earnings per share attributable to Moody’s common shareholders	  				 				
Basic	  	$	0.95	  	 	$	1.14	  	
	  	 	 	 	 	 	 	 	
Diluted	  	$	0.93	  	 	$	1.11	  	

Weighted average number of shares outstanding	  				 				
Basic	  	 	195.0	  	 	 	202.7	  	
	  	 	 	 	 	 	 	 	
Diluted	  	 	197.9	  	 	 	206.5	  	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the consolidated financial statements.
 
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MOODY’S CORPORATION
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Amounts in millions)

 	  	Three Months Ended March 31,	 	
 	  	2016	 	 	2015	 	
 	  	Pre-tax
amounts	 	 	Tax
amounts	 	 	After-tax
amounts	 	 	Pre-tax
amounts	 	 	Tax
amounts	 	 	After-tax
amounts	 	
Net income	  				 				 	$	186.6	  	 				 				 	$	231.3	  	

Other comprehensive income (loss):	  				 				 				 				 				 				
Foreign currency translation:	  				 				 				 				 				 				
Foreign currency translation adjustments	  	$	48.5	  	 	$	(12.5	) 	 	 	36.0	  	 	$	(77.8	) 	 	$	(12.7	) 	 	 	(90.5	) 	
Foreign currency translation adjustments - reclassification of gains included in net income	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	(0.1	) 	 	 	—  	  	 	 	(0.1	) 	
Cash flow hedges:	  				 				 				 				 				 				
Net unrealized gain on cash flow hedges	  	 	2.0	  	 	 	(0.8	) 	 	 	1.2	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Reclassification of gains included in net income	  	 	(2.2	) 	 	 	0.8	  	 	 	(1.4	) 	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Available for sale securities:	  				 				 				 				 				 				
Net unrealized gains on available for sale securities	  	 	0.6	  	 	 	—  	  	 	 	0.6	  	 	 	1.1	  	 	 	—  	  	 	 	1.1	  	
Pension and Other Retirement Benefits:	  				 				 				 				 				 				
Amortization of actuarial losses and prior service costs included in net income	  	 	2.6	  	 	 	(1.0	) 	 	 	1.6	  	 	 	3.8	  	 	 	(1.5	) 	 	 	2.3	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total other comprehensive income (loss)	  	$	51.5	  	 	$	(13.5	) 	 	 	38.0	  	 	$	(73.0	) 	 	$	(14.2	) 	 	 	(87.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Comprehensive income	  				 				 	 	224.6	  	 				 				 	 	144.1	  	
Less: comprehensive income attributable to noncontrolling interests	  				 				 	 	2.2	  	 				 				 	 	1.2	  	
	  				 				 	 	 	 	 				 				 	 	 	 	
Comprehensive income attributable to Moody’s	  				 				 	$	222.4	  	 				 				 	 	$142.9	  	
	  				 				 	 	 	 	 				 				 	 	 	 	
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
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MOODY’S CORPORATION
 CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in millions, except share and per share data)

 	  	March 31,
2016	 	 	December 31,
2015	 	
ASSETS	  				 				
			
Current assets:	  				 				
Cash and cash equivalents	  	$	1,576.1	  	 	$	1,757.4	  	
Short-term investments	  	 	490.6	  	 	 	474.8	  	
Accounts receivable, net of allowances of $27.6 in 2016 and $27.5 in 2015	  	 	852.1	  	 	 	802.0	  	
Deferred tax assets, net	  	 	—  	  	 	 	29.3	  	
Other current assets	  	 	166.5	  	 	 	179.6	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	3,085.3	  	 	 	3,243.1	  	
Property and equipment, net of accumulated depreciation of $541.6 in 2016 and $518.9 in 2015	  	 	310.5	  	 	 	306.4	  	
Goodwill	  	 	1,050.9	  	 	 	976.3	  	
Intangible assets, net	  	 	329.2	  	 	 	299.1	  	
Deferred tax assets, net	  	 	176.2	  	 	 	137.7	  	
Other assets	  	 	162.8	  	 	 	140.4	  	
	  	 	 	 	 	 	 	 	
Total assets	  	$	5,114.9	  	 	$	5,103.0	  	

LIABILITIES AND SHAREHOLDERS’ DEFICIT	  				 				
			
Current liabilities:	  				 				
Accounts payable and accrued liabilities	  	$	391.5	  	 	$	566.6	  	
Deferred tax liabilities, net	  	 	—  	  	 	 	16.7	  	
Deferred revenue	  	 	760.4	  	 	 	635.2	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	1,151.9	  	 	 	1,218.5	  	
Non-current portion of deferred revenue	  	 	135.1	  	 	 	132.5	  	
Long-term debt	  	 	3,428.6	  	 	 	3,380.6	  	
Deferred tax liabilities, net	  	 	118.6	  	 	 	83.8	  	
Unrecognized tax benefits	  	 	209.9	  	 	 	203.4	  	
Other liabilities	  	 	422.3	  	 	 	417.2	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	5,466.4	  	 	 	5,436.0	  	
Contingencies (Note 14)	  	 	—  	  	 	 	—  	  	
Shareholders’ deficit:	  				 				
Preferred stock, par value $.01 per share; 10,000,000 shares authorized; no shares issued and outstanding	  	 	—  	  	 	 	—  	  	
Series common stock, par value $.01 per share; 10,000,000 shares authorized; no shares issued and outstanding	  	 	—  	  	 	 	—  	  	
Common stock, par value $.01 per share; 1,000,000,000 shares authorized; 342,902,272 shares issued at March 31, 2016 and December 31, 2015, respectively.	  	 	3.4	  	 	 	3.4	  	
Capital surplus	  	 	431.7	  	 	 	451.3	  	
Retained earnings	  	 	6,895.1	  	 	 	6,709.0	  	
Treasury stock, at cost; 148,575,058 and 146,826,744 shares of common stock at March 31, 2016 and December 31, 2015, respectively	  	 	(7,610.3	) 	 	 	(7,389.2	) 	
Accumulated other comprehensive loss	  	 	(301.5	) 	 	 	(339.5	) 	
	  	 	 	 	 	 	 	 	
Total Moody’s shareholders’ deficit	  	 	(581.6	) 	 	 	(565.0	) 	
Noncontrolling interests	  	 	230.1	  	 	 	232.0	  	
	  	 	 	 	 	 	 	 	
Total shareholders’ deficit	  	 	(351.5	) 	 	 	(333.0	) 	
	  	 	 	 	 	 	 	 	
Total liabilities and shareholders’ deficit	  	$	5,114.9	  	 	$	5,103.0	  	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the consolidated financial statements.
 
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MOODY’S CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in millions)

 	  	Three Months Ended
March 31,	 	
 	  	2016	 	 	2015	 	
Cash flows from operating activities	  				 				
Net income	  	$	186.6	  	 	$	231.3	  	
Reconciliation of net income to net cash provided by operating activities:	  				 				
Depreciation and amortization	  	 	29.9	  	 	 	28.6	  	
Stock-based compensation expense	  	 	25.4	  	 	 	22.7	  	
Deferred income taxes	  	 	11.3	  	 	 	7.6	  	
Excess tax benefits from stock-based compensation plans	  	 	(16.3	) 	 	 	(37.4	) 	
Changes in assets and liabilities:	  				 				
Accounts receivable	  	 	(45.5	) 	 	 	(62.7	) 	
Other current assets	  	 	13.6	  	 	 	2.9	  	
Other assets	  	 	1.5	  	 	 	(13.9	) 	
Accounts payable and accrued liabilities	  	 	(99.0	) 	 	 	(72.8	) 	
Deferred revenue	  	 	122.6	  	 	 	127.9	  	
Unrecognized tax benefits and other non-current tax liabilities	  	 	5.3	  	 	 	7.4	  	
Other liabilities	  	 	1.9	  	 	 	20.2	  	

Net cash provided by operating activities	  	 	237.3	  	 	 	261.8	  	

Cash flows from investing activities	  				 				
Capital additions	  	 	(26.3	) 	 	 	(19.0	) 	
Purchases of investments	  	 	(134.6	) 	 	 	(167.9	) 	
Sales and maturities of short-term investments	  	 	126.1	  	 	 	116.8	  	
Acquisitions, net of cash acquired	  	 	(75.9	) 	 	 	—  	  	
Settlement of net investment hedges	  	 	2.3	  	 	 	20.8	  	

Net cash used in investing activities	  	 	(108.4	) 	 	 	(49.3	) 	

Cash flows from financing activities	  				 				
Issuance of notes	  	 	—  	  	 	 	552.8	  	
Proceeds from stock-based compensation plans	  	 	24.3	  	 	 	34.8	  	
Repurchase of shares for payroll tax withholdings related to stock-based compensation	  	 	(42.7	) 	 	 	(58.7	) 	
Cost of treasury shares repurchased	  	 	(262.1	) 	 	 	(365.8	) 	
Excess tax benefits from settlement of stock-based compensation plans	  	 	16.3	  	 	 	37.4	  	
Payment of dividends	  	 	(72.1	) 	 	 	(68.7	) 	
Payment of dividends to noncontrolling interests	  	 	(2.9	) 	 	 	(3.7	) 	
Debt issuance costs and related fees	  	 	—  	  	 	 	(4.2	) 	

Net cash (used in) provided by financing activities	  	 	(339.2	) 	 	 	123.9	  	
Effect of exchange rate changes on cash and cash equivalents	  	 	29.0	  	 	 	(46.0	) 	

Net (decrease) increase in cash and cash equivalents	  	 	(181.3	) 	 	 	290.4	  	
Cash and cash equivalents, beginning of the period	  	 	1,757.4	  	 	 	1,219.5	  	

Cash and cash equivalents, end of the period	  	$	1,576.1	  	 	$	1,509.9	  	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
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MOODY’S CORPORATION
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(tabular dollar and share amounts in millions, except per share data)
NOTE 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Moody’s is a provider of (i) credit ratings, (ii) credit, capital markets and economic research, data and analytical tools, (iii) software solutions and related risk management services, (iv) quantitative credit risk measures, financial services training and certification services and (v) outsourced research and analytical services. Moody’s has two reportable segments: MIS and MA.
MIS, the credit rating agency, publishes credit ratings on a wide range of debt obligations and the entities that issue such obligations in markets worldwide. Revenue is primarily derived from the originators and issuers of such transactions who use MIS ratings in the distribution of their debt issues to investors. Additionally, MIS earns revenue from certain non-ratings-related operations, which consist primarily of the distribution of research and fixed income pricing services in the Asia-Pacific region and outsourced services. The revenue from these operations is included in the MIS Other LOB and is not material to the results of the MIS segment.
The MA segment develops a wide range of products and services that support financial analysis and risk management activities of institutional participants in global financial markets. Within its Research, Data and Analytics business, MA distributes research and data developed by MIS as part of its ratings process, including in-depth research on major debt issuers, industry studies and commentary on topical credit-related events. The RD&A business also produces economic research as well as data and analytical tools such as quantitative credit risk scores. Within its Enterprise Risk Solutions business, MA provides software solutions as well as related risk management services. The Professional Services business provides outsourced research and analytical services along with financial training and certification programs.
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 2015 annual report on Form 10-K filed with the SEC on February 25, 2016. The results of interim periods are not necessarily indicative of results for the full year or any subsequent period. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
Certain reclassifications have been made to prior period amounts to conform to the current presentation.
In the first quarter of 2016, the Company adopted ASU No. 2015-17 “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes” on a prospective basis, and accordingly, prior year comparative periods have not been adjusted. This ASU requires the classification of all deferred income tax assets and liabilities as noncurrent on the balance sheet.
In the first quarter of 2016, the Company adopted ASU No. 2015-03,“Simplifying the Presentation of Debt Issuance Costs” on a retrospective basis. This ASU requires a company to present debt issuance costs in the balance sheet as a reduction of debt rather than as an asset. The impact to the Company’s balance sheet as of December 31, 2015 and March 31, 2016 relating to the adoption of this ASU is set forth in the table below:

 	  	As reported
December 31, 2015	 	  	Reclassification	 	 	December 31, 2015
As adjusted	 	  	As reported
March 31,  2016	 	  	Reclassification	 	  	March 31, 2016
Under previous
accounting guidance	 	
Long-term debt	  	$	3,401.0	  	  	$	(20.4	) 	 	$	3,380.6	  	  	$	3,428.6	  	  	$	19.9	  	  	$	3,448.5	  	
Other assets	  	$	160.8	  	  	$	(20.4	) 	 	$	140.4	  	  	$	162.8	  	  	$	19.9	  	  	$	182.7	  	
 
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NOTE 2. STOCK-BASED COMPENSATION
Presented below is a summary of the stock-based compensation cost and associated tax benefit included in the accompanying consolidated statements of operations:

 	  	Three Months Ended
March 31,	 	
 	  	2016	 	  	2015	 	
Stock-based compensation cost	  	$	25.4	  	  	$	22.7	  	
Tax benefit	  	$	8.4	  	  	$	7.9	  	
During the first three months of 2016, the Company granted 0.5 million employee stock options, which had a weighted average grant date fair value of $22.93 per share based on the Black-Scholes option-pricing model. The Company also granted 1.2 million shares of restricted stock in the first three months of 2016, which had a weighted average grant date fair value of $80.83 per share. Both the employee stock options and restricted stock generally vest ratably over a four-year period. Additionally, the Company granted approximately 0.2 million shares of performance-based awards whereby the number of shares that ultimately vest are based on the achievement of certain non-market based performance metrics of the Company over a three-year period. The weighted average grant date fair value of these awards was $76.45 per share.
The following weighted average assumptions were used in determining the fair value for options granted in 2016:

Expected dividend yield	  	 	1.83	% 	
Expected stock volatility	  	 	32.3	% 	
Risk-free interest rate	  	 	1.60	% 	
Expected holding period	  	 	6.8 years	  	
Grant date fair value	  	$	22.93	  	
Unrecognized compensation expense at March 31, 2016 was $16.0 million and $172.5 million for stock options and unvested restricted stock, respectively, which is expected to be recognized over a weighted average period of 1.5 years and 1.9 years, respectively. Additionally, there was $23.8 million of unrecognized compensation expense relating to the aforementioned non-market based performance-based awards, which is expected to be recognized over a weighted average period of 1.2 years.
The following tables summarize information relating to stock option exercises and restricted stock vesting:

 	  	Three Months Ended
March  31,	 	
Exercise of stock options:	  	2016	 	  	2015	 	
Proceeds from stock option exercises	  	$	22.8	  	  	$	33.5	  	
Aggregate intrinsic value	  	$	11.0	  	  	$	32.1	  	
Tax benefit realized upon exercise	  	$	3.9	  	  	$	11.9	  	
Number of shares exercised	  	 	0.4	  	  	 	0.7	  	
		
 	  	Three Months Ended
March 31,	 	
Vesting of restricted stock:	  	2016	 	  	2015	 	
Fair value of shares vested	  	$	89.3	  	  	$	108.9	  	
Tax benefit realized upon vesting	  	$	29.5	  	  	$	35.9	  	
Number of shares vested	  	 	1.0	  	  	 	1.1	  	
		
 	  	Three Months Ended
March 31,	 	
Vesting of performance-based restricted stock:	  	2016	 	  	2015	 	
Fair value of shares vested	  	$	23.6	  	  	$	43.1	  	
Tax benefit realized upon vesting	  	$	8.4	  	  	$	16.1	  	
Number of shares vested	  	 	0.2	  	  	 	0.5	  	
 
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NOTE 3. INCOME TAXES
Moody’s effective tax rate was 32.3% and 32.9% for the three months ended March 31, 2016 and 2015, respectively. The decrease in the ETR compared to the first quarter of 2015 was primarily due to a reduction in UTBs resulting from a change in New York City tax law relating to income apportionment.
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 (expense) income, net. The Company had an increase in its UTBs of $6.5 million ($6.2 million net of federal tax benefit) during the first quarter of 2016.
Moody’s Corporation and subsidiaries are subject to U.S. federal income tax as well as income tax in various state, local and foreign jurisdictions. The Company’s U.S. federal income tax returns for the years 2011 through 2012 are under examination and its returns for 2013 through 2014 remain open to examination. The Company’s New York State tax returns for 2011 through 2014 are currently under examination and the Company’s New York City tax return for 2013 is currently under examination. The Company’s U.K. tax return for 2012 is currently under examination and its returns for 2013 and 2014 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.
The following table shows the amount the Company paid for income taxes:

 	  	Three Months Ended
March  31,	 	
 	  	2016	 	  	2015	 	
Income taxes paid	  	$	    22.0	  	  	$	    31.4	  	
NOTE 4. WEIGHTED AVERAGE SHARES OUTSTANDING
Below is a reconciliation of basic to diluted shares outstanding:

 	  	Three Months Ended
March  31,	 	
 	  	2016	 	  	2015	 	
Basic	  	 	195.0	  	  	 	202.7	  	
Dilutive effect of shares issuable under stock-based compensation plans	  	 	2.9	  	  	 	3.8	  	
	  	 	 	 	  	 	 	 	
Diluted	  	 	197.9	  	  	 	206.5	  	
	  	 	 	 	  	 	 	 	
Anti-dilutive options to purchase common shares and restricted stock as well as contingently issuable restricted stock excluded from the table above	  	 	1.5	  	  	 	1.0	  	
	  	 	 	 	  	 	 	 	
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 March 31, 2016 and 2015. These assumed proceeds include Excess Tax Benefits and any unrecognized compensation of the awards.
The decrease in the diluted shares outstanding primarily reflects treasury share repurchases under the Company’s Board authorized share repurchase program.
 
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NOTE 5. CASH EQUIVALENTS AND INVESTMENTS
The table below provides additional information on the Company’s cash equivalents and investments:

 	  	As of March 31, 2016	 	
 	  	Cost	 	  	Gross
Unrealized
Gains	 	  	Fair
Value	 	  	Balance sheet location	 	
 	  			  			  			  	Cash and cash
equivalents	 	  	Short-term
investments	 	  	Other
assets	 	
Money market mutual funds	  	$	228.6	  	  	$	—  	  	  	$	228.6	  	  	$	228.6	  	  	$	—  	  	  	$	—  	  	
Certificates of deposit and money market deposit accounts (1)	  	$	1,097.4	  	  	$	—  	  	  	$	1,097.4	  	  	$	583.9	  	  	$	490.6	  	  	$	22.9	  	
Fixed maturity and open ended mutual funds (2)	  	$	28.5	  	  	$	3.7	  	  	$	32.2	  	  	$	—  	  	  	$	—  	  	  	$	32.2	  	

 	  	As of December 31, 2015	 	
 	  	Cost	 	  	Gross
Unrealized
Gains	 	  	Fair
Value	 	  	Balance sheet location	 	
 	  			  			  			  	Cash and cash
equivalents	 	  	Short-term
investments	 	  	Other
assets	 	
Money market mutual funds	  	$	188.3	  	  	$	—  	  	  	$	188.3	  	  	$	188.3	  	  	$	—  	  	  	$	—  	  	
Certificates of deposit and money market deposit accounts (1)	  	$	1,307.3	  	  	$	—  	  	  	$	1,307.3	  	  	$	809.4	  	  	$	474.8	  	  	$	23.1	  	
Fixed maturity and open ended mutual funds (2)	  	$	28.7	  	  	$	3.2	  	  	$	31.9	  	  	$	—  	  	  	$	—  	  	  	$	31.9	  	
 
(1)	Consists of time deposits and money market deposit accounts. The remaining contractual maturities for the certificates of deposits classified as short-term investments were one month to 13 months at March 31, 2016 and one month to 12 months at December 31, 2015. The remaining contractual maturities for the certificates of deposits classified in other assets are one month to 24 months at March 31, 2016 and one month to 27 months at December 31, 2015. Time deposits with a maturity of less than 90 days at time of purchase are classified as cash and cash equivalents.	
(2)  	Consists of investments in fixed maturity mutual funds and open-ended mutual funds. The remaining contractual maturities for the fixed maturity instruments range from eight months to 28 months and 11 months to 31 months at March 31, 2016 and December 31, 2015 respectively.	
The money market mutual funds as well as the fixed maturity and open ended mutual funds in the table above are deemed to be “available for sale” under ASC Topic 320 and the fair value of these instruments is determined using Level 1 inputs as defined in the ASC.
 
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NOTE 6. ACQUISITIONS
The business combination described below is accounted for using the acquisition method of accounting whereby assets acquired and liabilities assumed were recognized at fair value on the date of the transaction. Any excess of the purchase price over the fair value of the assets acquired and liabilities assumed was recorded to goodwill. The Company has not presented proforma combined results because the impact on previously reported statements of operations would not have been material. Additionally, the near term impact to the Company’s operations and cash flows is not material.
Gilliland Gold Young (GGY)
On March 1, 2016, subsidiaries of the Company acquired 100% of GGY, a leading provider of advanced actuarial software for the life insurance industry. The cash payment of $83.4 million made at closing was funded with cash on hand. The acquisition of GGY will allow MA to provide an industry-leading enterprise risk offering for global life insurers and reinsurers.
The table below details the total consideration relating to the acquisition:

Cash paid at closing	  	$	83.4	  	
Additional consideration to be paid to sellers in 2016 (1)	  	 	3.5	  	
	  	 	 	 	
Total consideration	  	$	86.9	  	

(1)	Represents additional consideration due to the sellers for amounts withheld at closing pending the completion of certain administrative matters	
Shown below is the purchase price allocation, which summarizes the fair value of the assets and liabilities assumed, at the date of acquisition:

Current assets	  				  	$	11.9	  	
Property and equipment, net	  				  	 	2.1	  	
Indemnification assets	  				  	 	1.5	  	
Intangible assets:	  				  				
Trade name (19 year weighted average life)	  	$	3.7	  	  				
Client relationships (21 year weighted average life)	  	 	13.8	  	  				
Software (7 year weighted average life)	  	 	16.6	  	  				
	  	 	 	 	  				
Total intangible assets (14 year weighted average life)	  				  	 	34.1	  	
Goodwill	  				  	 	58.8	  	
Liabilities	  				  	 	(21.5	) 	
	  				  	 	 	 	
Net assets acquired	  				  	$	86.9	  	
	  				  	 	 	 	
Current assets in the table above include acquired cash of $7.5 million. Additionally, current assets include accounts receivable of $2.9 million. Goodwill, which has been assigned to the MA segment, is not deductible for tax.
In connection with the acquisition, the Company assumed liabilities relating to UTPs and certain other tax exposures which are included in the liabilities assumed in the table above. The sellers have contractually indemnified the Company against any potential payments that may have to be made regarding these amounts. Accordingly, the Company carries an indemnification asset on its consolidated balance sheet at March 31, 2016.
The Company incurred $0.9 million of costs directly related to the GGY acquisition of which $0.6 million was incurred in 2015 and $0.3 million was incurred in the first quarter of 2016. These costs are recorded within selling, general and administrative expenses in the Company’s consolidated statements of operations.
GGY is part of the ERS reporting unit for purposes of the Company’s annual goodwill impairment assessment.
 
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NOTE 7. 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.
Derivatives and non-derivative instruments designated as accounting hedges:
Interest Rate Swaps
In the second quarter of 2014, the Company entered into interest rate swaps with a total notional amount of $250 million to convert the fixed interest rate on the 2010 Senior Notes to a floating interest rate based on the 3-month LIBOR. In the third quarter of 2014, the Company entered into interest rate swaps with a total notional amount of $250 million to convert the fixed interest rate on the remaining balance of the 2010 Senior Notes to a floating interest rate based on the 3-month LIBOR. The purpose of these hedges is to mitigate the risk associated with changes in the fair value of the 2010 Senior Notes, thus the Company has designated these swaps as fair value hedges. The fair value of the swaps is adjusted quarterly with a corresponding adjustment to the carrying value of the 2010 Senior 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 income (expense), net, in the Company’s consolidated statement of operations.
In the third quarter of 2014, the Company entered into interest rate swaps with a total notional amount of $250 million to convert the fixed interest rate on a portion of the 2014 Senior Notes (5-year) to a floating interest rate based on the 3-month LIBOR. In the first quarter of 2015, the Company entered into interest rate swaps with a total notional amount of $200 million to convert the fixed interest rate on the remaining balance of the 2014 Senior Notes (5-year) to a floating interest rate based on the 3-month LIBOR. The purpose of these hedges is to mitigate the risk associated with changes in the fair value of the 2014 Senior Notes (5-year), thus the Company has designated these swaps as fair value hedges. The fair value of the swaps is adjusted quarterly with a corresponding adjustment to the carrying value of the 2014 Senior Notes (5-year). 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 income (expense), net, in the Company’s consolidated statement of operations.
The following table summarizes the impact to the statement of operations of the Company’s interest rate swaps designated as fair value hedges:

 	 	 	 	Three Months Ended
March  31,	 	
Derivatives designated as fair value accounting hedges	 	Location on Statement of Operations	 	2016	 	 	2015	 	
Interest rate swaps	 	Interest income (expense), net	 	$	3.0	  	 	$	3.5	  	
Cross-currency swaps
In conjunction with the issuance of the 2015 Senior Notes, the Company entered into a cross-currency swap to exchange €100 million for U.S. dollars on the date of the settlement of the notes. The purpose of this cross-currency swap is to mitigate FX risk on the remaining principal balance on the 2015 Senior Notes that was not designated as a net investment hedge as more fully discussed below. Under the terms of the swap, the Company will pay the counterparty interest on the $110.5 million received at 3.945% per annum and the counterparty will pay the Company interest on the €100 million paid at 1.75% per annum. These interest payments will be settled in March of each year, beginning in 2016, until either the maturity of the cross-currency swap in 2027 or upon early termination at the discretion of the Company. The principal payments on this cross currency swap will be settled in 2027, concurrent with the repayment of the 2015 Senior Notes at maturity or upon early termination at the discretion of the Company. In March 2016, the Company designated these cross-currency swaps as cash flow hedges. Accordingly, changes in fair value subsequent to the date the swaps were designated as cash flow hedges will initially be recognized in OCI. Gains and losses on the swaps initially recognized in OCI will be reclassified to the statement of operations in the period in which changes in the underlying hedged item affects net income. Ineffectiveness, if any, will be recognized in other non-operating (expense), income, net in the Company’s consolidated statement of operations.
 
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Net investment hedges
The Company enters into foreign currency forward contracts which are designated as net investment hedges and has designated €400 million of the 2015 Senior Notes as a net investment hedge. These hedges are intended to mitigate FX exposure related to non-U.S. dollar net investments in certain foreign subsidiaries against changes in foreign exchange rates. These net investment hedges are designated as accounting hedges under the applicable sections of Topic 815 of the ASC.
Hedge effectiveness is assessed based on the overall changes in the fair value of the hedge. For hedges that meet the effectiveness requirements, changes in the fair value are recorded in AOCI in the foreign currency translation account. Any change in the fair value of these hedges that is the result of ineffectiveness is recognized immediately in other non-operating (expense) income in the Company’s consolidated statement of operations.
The following table summarizes the notional amounts of the Company’s outstanding net investment hedges:

 	  	March 31,	 	  	December 31,	 	
 	  	2016	 	  	2015	 	
Notional amount of net investment hedges:	  				  				
Long-term debt designated as net investment hedge	  	€	400.0	  	  	€	400.0	  	
Contracts to sell GBP for euros	  	£	21.5	  	  	£	21.2	  	
Contracts to sell Japanese yen for USD	  	¥	19,400	  	  	¥	19,400	  	
The outstanding contracts to sell Japanese yen for USD expire in November 2016. The outstanding contracts to sell GBP for euros expire in June 2016. The hedge relating to the portion of the 2015 Senior Notes that was designated as a net investment hedge will end upon the repayment of the notes in 2027 unless terminated earlier at the discretion of the Company.
The following table provides information on the gains/(losses) on the Company’s net investment and cash flow hedges

Derivatives and non-derivative instruments in
Net Investment Hedging Relationships	  	Amount of
Gain/(Loss)  Recognized
in AOCI on Derivative
(Effective Portion),
net of tax	 	  	Location of Gain/(Loss)
Reclassified from AOCI into
Income (Effective Portion)	  	Amount of  Gain/(Loss)
Reclassified from AOCI into
Income (Effective Portion)	 	
 	  	Three Months Ended
March 31,	 	  	 	  	Three Months Ended
March 31,	 	
 	  	2016	 	 	2015	 	  	 	  	2016	 	  	2015	 	
FX forwards	  	$	(4.6	) 	 	$	11.3	  	  	N/A	  	$	—  	  	  	$	—  	  	
Long-term debt	  	 	(13.1	) 	 	 	7.6	  	  	N/A	  	 	—  	  	  	 	—  	  	
	  	 	 	 	 	 	 	 	  		  	 	 	 	  	 	 	 	
Total net investment hedges	  	$	(17.7	) 	 	$	18.9	  	  	N/A	  	$	—  	  	  	$	—  	  	

Derivatives in cash flow hedging relationships	  	 	 	 	 	 	  	 	  	 	 	  	 	 	
Cross currency swap	  	$	1.2	  	 	$	—  	  	  	Other non-operating income, net	  	$	1.4	  	  	$	—  	  	
	  	 	 	 	 	 	 	 	  		  	 	 	 	  	 	 	 	
Total	  	$	(16.5	) 	 	$	18.9	  	  	Total	  	$	1.4	  	  	$	—  	  	
	  	 	 	 	 	 	 	 	  		  	 	 	 	  	 	 	 	
The cumulative amount of realized and unrecognized net investment hedge and cash flow hedge gains (losses) recorded in AOCI is as follows:

 	  	Gains (Losses), net of tax	 	
 	  	March 31,
2016	 	  	December 31,
2015	 	
Net investment hedges	  				  				
FX forwards	  	$	29.7	  	  	$	34.3	  	
Long-term debt	  	 	(8.4	) 	  	 	4.7	  	
	  	 	 	 	  	 	 	 	
Total gains (losses) on net investment hedges	  	$	21.3	  	  	$	39.0	  	
	  	 	 	 	  	 	 	 	
Cash flow hedges	  				  				
Treasury rate lock	  	$	(1.1	) 	  	$	(1.1	) 	
Cross currency swap	  	 	(0.2	) 	  	 	—  	  	
	  	 	 	 	  	 	 	 	
Total losses on cash flow hedges	  	 	(1.3	) 	  	 	(1.1	) 	
	  	 	 	 	  	 	 	 	
Total net gains in AOCI	  	$	20.0	  	  	$	37.9	  	

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Derivatives not designated as accounting hedges:
Foreign exchange forwards
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 a subsidiary’s functional currency. These forward contracts are not designated as accounting hedges 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 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 subsidiary’s functional currency. These contracts have expiration dates at various times through June 2016.
The following table summarizes the notional amounts of the Company’s outstanding foreign exchange forwards:

 	  	March 31,	 	  	December 31,	 	
 	  	2016	 	  	2015	 	
Notional amount of currency pair:	  				  				
Contracts to purchase USD with euros	  	$	0.5	  	  	$	—  	  	
Contracts to sell USD for euros	  	$	71.2	  	  	$	70.1	  	
Contracts to purchase euros with other foreign currencies	  	€	34.1	  	  	€	35.5	  	
Contracts to sell euros for other foreign currencies	  	€	—  	  	  	€	1.4	  	
Contracts to sell euros for GBP	  	€	38.2	  	  	€	23.1	  	
The following table summarizes the impact to the consolidated statements of operations relating to the net gain (loss) on the Company’s derivatives which are not designated as hedging instruments:

 	  	 	  	Three Months  Ended
March 31,	 	
Derivatives not designated as accounting hedges	  	Location on Statement of Operations	  	2016	 	  	2015	 	
Foreign exchange forwards	  	Other non-operating income (expense), net	  	$	0.5	  	  	$	(4.4	) 	
The table below shows the classification between assets and liabilities on the Company’s consolidated balance sheets for the fair value of the derivative instrument as well as the carrying value of its nonderivative debt instruments designated and qualifying as net investment hedges:

 	  	Derivative and Non-derivative Instruments	 	
 	  	Balance Sheet
Location	  	March 31,
2016	 	  	December 31,
2015	 	
Assets:	  		  				  				
Derivatives not designated as accounting hedges:	  		  				  				
FX forwards on certain assets and liabilities	  	Other current assets	  	$	1.8	  	  	$	0.1	  	
Derivatives designated as accounting hedges:	  		  				  				
FX forwards on net investment in certain foreign subsidiaries	  	Other current assets	  	$	0.3	  	  	$	0.4	  	
Interest rate swaps	  	Other assets	  	 	32.3	  	  	 	12.1	  	
	  		  	 	 	 	  	 	 	 	
Total derivatives designated as accounting hedges	  		  	 	32.6	  	  	 	12.5	  	
	  		  	 	 	 	  	 	 	 	
Total assets	  		  	$	34.4	  	  	$	12.6	  	

Liabilities:	  		  				  				
Derivatives designated as accounting hedges:	  		  				  				
Cross-currency swap	  	Other non-current
liabilities	  	$	0.4	  	  	$	—  	  	
FX forwards on net investment in certain foreign subsidiaries	  	Accounts payable
and accrued
liabilities	  	 	12.1	  	  	 	1.2	  	
Interest rate swaps	  	Other non-current
liabilities	  	 	—  	  	  	 	0.3	  	
	  		  	 	 	 	  	 	 	 	
Total derivatives designated as accounting hedges	  		  	$	12.5	  	  	$	1.5	  	
	  		  	 	 	 	  	 	 	 	
Non-derivative instrument designated as accounting hedge	  		  				  				
Long-term debt designated as net investment hedge	  	Long-term debt	  	$	455.8	  	  	$	434.5	  	
Derivatives not designated as accounting hedges:	  		  				  				
Cross-currency swap	  	Other non-current
liabilities	  	 	—  	  	  	 	9.0	  	
FX forwards on certain assets and liabilities	  	Accounts payable
and accrued
liabilities	  	 	1.0	  	  	 	1.9	  	
	  		  	 	 	 	  	 	 	 	
Total liabilities	  		  	$	469.3	  	  	$	446.9	  	

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NOTE 8. GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS
The following table summarizes the activity in goodwill for the periods indicated:

 	  	Three Months Ended March 31, 2016	 	
 	  	MIS	 	 	MA	 	 	Consolidated	 	
 	  	Gross
goodwill	 	 	Accumulated
impairment
charge	 	  	Net
goodwill	 	 	Gross
goodwill	 	 	Accumulated
impairment
charge	 	 	Net
goodwill	 	 	Gross
goodwill	 	 	Accumulated
impairment
charge	 	 	Net
goodwill	 	
Balance at beginning of year	  	$	284.4	  	 	$	—  	  	  	$	284.4	  	 	$	704.1	  	 	$	(12.2	) 	 	$	691.9	  	 	$	988.5	  	 	$	(12.2	) 	 	$	976.3	  	
Additions/adjustments	  	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	58.8	  	 	 	—  	  	 	 	58.8	  	 	 	58.8	  	 	 	—  	  	 	 	58.8	  	
Foreign currency translation adjustments	  	 	0.1	  	 	 	—  	  	  	 	0.1	  	 	 	15.7	  	 	 	—  	  	 	 	15.7	  	 	 	15.8	  	 	 	—  	  	 	 	15.8	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ending balance	  	$	284.5	  	 	$	—  	  	  	$	284.5	  	 	$	778.6	  	 	$	(12.2	) 	 	$	766.4	  	 	$	1,063.1	  	 	$	(12.2	) 	 	$	1,050.9	  	

 	  	Year ended December 31, 2015	 	
 	  	MIS	 	 	MA	 	 	Consolidated	 	
 	  	Gross
goodwill	 	 	Accumulated
impairment
charge	 	  	Net
goodwill	 	 	Gross
goodwill	 	 	Accumulated
impairment
charge	 	 	Net
goodwill	 	 	Gross
goodwill	 	 	Accumulated
impairment
charge	 	 	Net
goodwill	 	
Balance at beginning of year	  	$	298.7	  	 	$	—  	  	  	$	298.7	  	 	$	734.6	  	 	$	(12.2	) 	 	$	722.4	  	 	$	1,033.3	  	 	$	(12.2	) 	 	$	1,021.1	  	
Additions/adjustments	  	 	3.7	  	 	 	—  	  	  	 	3.7	  	 	 	5.0	  	 	 	—  	  	 	 	5.0	  	 	 	8.7	  	 	 	—  	  	 	 	8.7	  	
Foreign currency translation adjustments	  	 	(18.0	) 	 	 	—  	  	  	 	(18.0	) 	 	 	(35.5	) 	 	 	—  	  	 	 	(35.5	) 	 	 	(53.5	) 	 	 	—  	  	 	 	(53.5	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ending balance	  	$	284.4	  	 	$	—  	  	  	$	284.4	  	 	$	704.1	  	 	$	(12.2	) 	 	$	691.9	  	 	$	988.5	  	 	$	(12.2	) 	 	$	976.3	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The 2016 additions/adjustments for the MA segment in the table above relate to the acquisition of GGY. The 2015 additions/adjustments for the MIS segment in the table above relate to the acquisition of Equilibrium. The 2015 additions/adjustments for the MA segment primarily reflect an adjustment to an indemnification asset recognized as part of the Copal acquisition, goodwill acquired from the acquisition of a business from BlackBox Logic and adjustments to deferred revenue balances and deferred tax assets recognized as part of the Lewtan acquisition.
The accumulated impairment charge in the table above reflects an impairment charge recognized in 2012 relating to the FSTC reporting unit within MA. This impairment charge reflected a contraction in spending for training and certification services for many individuals and global financial institutions in 2012 due to macroeconomic uncertainties at the time. The fair value of the FSTC reporting unit utilized in this impairment assessment was estimated using a discounted cash flow methodology and comparable public company and precedent transaction multiples.
 
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Acquired intangible assets and related amortization consisted of:

 	  	March 31,	 	  	December 31,	 	
 	  	2016	 	  	2015	 	
Customer relationships	  	$	316.2	  	  	$	298.4	  	
Accumulated amortization	  	 	(114.8	) 	  	 	(110.0	) 	
	  	 	 	 	  	 	 	 	
Net customer relationships	  	 	201.4	  	  	 	188.4	  	

Trade secrets	  	 	30.1	  	  	 	29.7	  	
Accumulated amortization	  	 	(23.8	) 	  	 	(23.1	) 	
	  	 	 	 	  	 	 	 	
Net trade secrets	  	 	6.3	  	  	 	6.6	  	

Software	  	 	93.6	  	  	 	74.7	  	
Accumulated amortization	  	 	(51.4	) 	  	 	(47.7	) 	
	  	 	 	 	  	 	 	 	
Net software	  	 	42.2	  	  	 	27.0	  	

Trade names	  	 	76.4	  	  	 	72.4	  	
Accumulated amortization	  	 	(17.1	) 	  	 	(16.2	) 	
	  	 	 	 	  	 	 	 	
Net trade names	  	 	59.3	  	  	 	56.2	  	

Other	  	 	44.2	  	  	 	44.3	  	
Accumulated amortization	  	 	(24.2	) 	  	 	(23.4	) 	
	  	 	 	 	  	 	 	 	
Net other	  	 	20.0	  	  	 	20.9	  	

Total acquired intangible assets, net	  	$	329.2	  	  	$	299.1	  	
	  	 	 	 	  	 	 	 	
Other intangible assets primarily consist of databases, covenants not to compete, and acquired ratings methodologies and models.
Amortization expense relating to acquired intangible assets is as follows:

 	  	Three Months Ended
March  31,	 	
 	  	2016	 	  	2015	 	
Amortization expense	  	$	7.9	  	  	$	8.5	  	
Estimated future amortization expense for acquired intangible assets subject to amortization is as follows:

Year Ending December 31,	  	 	 	
2016 (after March 31)	  	$	25.3	  	
2017	  	 	32.3	  	
2018	  	 	26.3	  	
2019	  	 	23.4	  	
2020	  	 	22.3	  	
Thereafter	  	 	199.6	  	
	  	 	 	 	
Total estimated future amortization	  	$	329.2	  	
	  	 	 	 	
Amortizable intangible assets are reviewed for recoverability whenever events or changes in 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. There were no impairments to intangible assets during the three months ended March 31, 2016 and 2015.
 
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NOTE 9. FAIR VALUE
The table below presents information about items that are carried at fair value at March 31, 2016 and December 31, 2015:

 	 	 	  	Fair Value Measurement as of March 31, 2016    	 	
   	 	Description	  	Balance	 	  	Level 1	 	  	Level 2	 	
Assets:	 		  				  				  				
	 	Derivatives (a)	  	$	34.4	  	  	$	—  	  	  	$	34.4	  	
	 	Money market mutual funds	  	 	228.6	  	  	 	228.6	  	  	 	—  	  	
	 	Fixed maturity and open ended mutual funds (b)	  	 	32.2	  	  	 	32.2	  	  	 	—  	  	
	 		  	 	 	 	  	 	 	 	  	 	 	 	
	 	Total	  	$	295.2	  	  	$	260.8	  	  	$	34.4	  	
	 		  	 	 	 	  	 	 	 	  	 	 	 	
Liabilities:	 		  				  				  				
	 	Derivatives (a)	  	$	13.5	  	  	$	—  	  	  	$	13.5	  	
	 		  	 	 	 	  	 	 	 	  	 	 	 	
	 	Total	  	$	13.5	  	  	$	—  	  	  	$	13.5	  	

															
 	 	 	  	Fair Value Measurement as of December 31, 2015	 	
   	 	Description	  	Balance	 	  	Level 1	 	  	Level 2	 	
Assets:	 		  				  				  				
	 	Derivatives (a)	  	$	12.6	  	  	$	—  	  	  	$	12.6	  	
	 	Money market mutual funds	  	 	188.3	  	  	 	188.3	  	  	 	—  	  	
	 	Fixed maturity and open ended mutual funds (b)	  	 	31.9	  	  	 	31.9	  	  	 	—  	  	
	 		  	 	 	 	  	 	 	 	  	 	 	 	
	 	Total	  	$	232.8	  	  	$	220.2	  	  	$	12.6	  	
	 		  	 	 	 	  	 	 	 	  	 	 	 	
Liabilities:	 		  				  				  				
	 	Derivatives (a)	  	$	12.4	  	  	$	—  	  	  	$	12.4	  	
	 		  	 	 	 	  	 	 	 	  	 	 	 	
	 	Total	  	$	12.4	  	  	$	—  	  	  	$	12.4	  	

(a)	Represents FX forwards, interest rate swaps and cross-currency swaps as more fully described in Note 7 to the financial statements.	
(b)	Consists of investments in fixed maturity mutual funds and open-ended mutual funds.	
The following are descriptions of the methodologies utilized by the Company to estimate the fair value of its derivative contracts, fixed maturity plans, open ended mutual funds and money market mutual funds:
Derivatives:
In determining the fair value of the derivative contracts, the Company utilizes industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using spot rates, forward points, currency volatilities, interest rates as well as the risk of non-performance of the Company and the counterparties with whom it has derivative contracts. The Company established strict counterparty credit guidelines and only enters into transactions with financial institutions that adhere to these guidelines. Accordingly, the risk of counterparty default is deemed to be minimal.
Fixed maturity and open ended mutual funds:
The fixed maturity mutual funds and open ended mutual funds primarily represent exchange traded funds in India and are classified as securities available-for-sale. Accordingly, any unrealized gains and losses are recognized through OCI until the instruments mature or are sold.
Money market mutual funds:
The money market mutual funds represent publicly traded funds with a stable $1 net asset value.
 
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NOTE 10. OTHER BALANCE SHEET AND STATEMENT OF OPERATIONS INFORMATION
The following tables contain additional detail related to certain balance sheet captions:

 	  	March 31,
2016	 	  	December 31,
2015	 	
Other current assets:	  				  				
Prepaid taxes	  	$	74.1	  	  	$	83.3	  	
Prepaid expenses	  	 	69.2	  	  	 	66.9	  	
Other	  	 	23.2	  	  	 	29.4	  	

Total other current assets	  	$	166.5	  	  	$	179.6	  	

 	  	March 31,
2016	 	  	December 31,
2015	 	
Other assets:	  				  				
Investments in joint ventures	  	$	30.3	  	  	$	28.7	  	
Deposits for real-estate leases	  	 	11.8	  	  	 	11.4	  	
Indemnification assets related to acquisitions	  	 	20.7	  	  	 	19.2	  	
Mutual funds and fixed deposits	  	 	55.1	  	  	 	55.0	  	
Other	  	 	44.9	  	  	 	26.1	  	

Total other assets	  	$	162.8	  	  	$	140.4	  	

 	  	March  31,
2016	 	  	December  31,
2015	 	
Accounts payable and accrued liabilities:	  				  				
Salaries and benefits	  	$	91.0	  	  	$	83.0	  	
Incentive compensation	  	 	35.3	  	  	 	137.2	  	
Customer credits, advanced payments and advanced billings	  	 	26.9	  	  	 	24.6	  	
Self-insurance reserves	  	 	18.8	  	  	 	19.7	  	
Dividends	  	 	6.8	  	  	 	78.2	  	
Professional service fees	  	 	59.3	  	  	 	54.5	  	
Interest accrued on debt	  	 	18.2	  	  	 	59.4	  	
Accounts payable	  	 	14.4	  	  	 	22.2	  	
Income taxes	  	 	41.5	  	  	 	11.5	  	
Pension and other retirement employee benefits	  	 	5.8	  	  	 	6.2	  	
Other	  	 	73.5	  	  	 	70.1	  	

Total accounts payable and accrued liabilities	  	$	391.5	  	  	$	566.6	  	

 	  	March  31,
2016	 	  	December  31,
2015	 	
Other liabilities:	  				  				
Pension and other retirement employee benefits	  	$	270.0	  	  	$	261.7	  	
Deferred rent-non-current portion	  	 	98.9	  	  	 	98.4	  	
Interest accrued on UTPs	  	 	30.7	  	  	 	27.9	  	
Legacy and other tax matters	  	 	2.9	  	  	 	1.7	  	
Other	  	 	19.8	  	  	 	27.5	  	

Total other liabilities	  	$	422.3	  	  	$	417.2	  	

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Changes in the Company’s self-insurance reserves for claims insured by the Company’s wholly-owned insurance subsidiary, which primarily relate to legal defense costs for claims from prior years, are as follows:

 	  	Three Months Ended
March 31, 2016	 	  	Year Ended
December 31,
2015	 	
			
Balance January 1,	  	$	19.7	  	  	$	21.5	  	
Accruals (reversals), net	  	 	0.4	  	  	 	22.2	  	
Payments	  	 	(1.3	) 	  	 	(24.0	) 	
	  	 	 	 	  	 	 	 	
Balance	  	$	18.8	  	  	$	19.7	  	
	  	 	 	 	  	 	 	 	
Other Non-Operating (Expense) Income:
The following table summarizes the components of other non-operating (expense) income:

 	  	Three Months Ended
March 31,	 	
 	  	2016	 	  	2015	 	
FX gain	  	$	4.0	  	  	$	—  	  	
Joint venture income	  	 	1.9	  	  	 	1.9	  	
Other	  	 	(0.3	) 	  	 	0.6	  	
	  	 	 	 	  	 	 	 	
Total	  	$	5.6	  	  	$	2.5	  	
	  	 	 	 	  	 	 	 	
NOTE 11. COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME
The following table provides details about the reclassifications out of AOCI:

 	 	Three Months
Ended March 31, 2016	 	 	Three Months
Ended March 31, 2015	 	 	Affected line in  the
consolidated statement of
operations	
Gains (losses) on currency translation adjustments	 				 				 		
Liquidation of foreign subsidiary	 	$	—  	  	 	$	0.1	  	 	Other non-operating
income, net	
	 	 	 	 	 	 	 	 	 		
Total gains on currency translation adjustments	 	 	—  	  	 	 	0.1	  	 		
Gains on cash flow hedges	 				 				 		
Cross-currency derivative contracts	 	 	2.2	  	 	 	—  	  	 	Other non-operating
income, net	
Income tax effect of item above	 	 	(0.8	) 	 	 	—  	  	 	Provision for
income taxes	
	 	 	 	 	 	 	 	 	 		
Total gains on cash flow hedges	 	 	1.4	  	 	 	—  	  	 		
	 	 	 	 	 	 	 	 	 		
Pension and other retirement benefits	 				 				 		
Amortization of actuarial losses and prior service costs included in net income	 	 	(1.6	) 	 	 	(2.3	) 	 	Operating expense	
Amortization of actuarial losses and prior service costs included in net income	 	 	(1.0	) 	 	 	(1.5	) 	 	SG&A expense	
	 	 	 	 	 	 	 	 	 		
Total before income taxes	 	 	(2.6	) 	 	 	(3.8	) 	 		
Income tax effect of item above	 	 	1.0	  	 	 	1.5	  	 	Provision for
income taxes	
	 	 	 	 	 	 	 	 	 		
Total pension and other retirement benefits	 	 	(1.6	) 	 	 	(2.3	) 	 		
	 	 	 	 	 	 	 	 	 		
Total losses included in Net Income attributable to reclassifications out of AOCI	 	$	(0.2	) 	 	$	(2.2	) 	 		

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The following table shows changes in AOCI by component (net of tax):

 	  	Three Months Ended	 	
 	  	March 31, 2016	 	
 	  	Gains/
(Losses) on
Cash  Flow
Hedges	 	 	Pension
and Other
Retirement
Benefits	 	 	Foreign
Currency
Translation
Adjustments	 	 	Gains on
Available
for Sale
Securities	 	  	Total	 	
Balance December 31, 2015	  	$	(1.1	) 	 	$	(85.7	) 	 	$	(256.0	) 	 	$	3.3	  	  	$	(339.5	) 	
Other comprehensive income before reclassifications	  	 	1.2	  	 	 	—  	  	 	 	36.0	  	 	 	0.6	  	  	 	37.8	  	
Amounts reclassified from AOCI	  	 	(1.4	) 	 	 	1.6	  	 	 	—  	  	 	 	—  	  	  	 	0.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Other comprehensive income/(loss)	  	 	(0.2	) 	 	 	1.6	  	 	 	36.0	  	 	 	0.6	  	  	 	38.0	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Balance March 31, 2016	  	$	(1.3	) 	 	$	(84.1	) 	 	$	(220.0	) 	 	$	3.9	  	  	$	(301.5	) 	

 	  	Three Months Ended	 	
 	  	March 31, 2015	 	
 	  	Gains/
(Losses) on
Cash Flow
Hedges	 	 	Pension
and Other
Retirement
Benefits	 	 	Foreign
Currency
Translation
Adjustments	 	 	Gains on
Available
for Sale
Securities	 	  	Total	 	
Balance December 31, 2014	  	$	—  	  	 	$	(105.4	) 	 	$	(130.7	) 	 	$	0.9	  	  	$	(235.2	) 	
Other comprehensive income/(loss) before reclassifications	  	 	—  	  	 	 	—  	  	 	 	(90.5	) 	 	 	1.1	  	  	 	(89.4	) 	
Amounts reclassified from AOCI	  	 	—  	  	 	 	2.3	  	 	 	(0.1	) 	 	 	—  	  	  	 	2.2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Other comprehensive income/(loss)	  	 	—  	  	 	 	2.3	  	 	 	(90.6	) 	 	 	1.1	  	  	 	(87.2	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
Balance March 31, 2015	  	$	—  	  	 	$	(103.1	) 	 	$	(221.3	) 	 	$	2.0	  	  	$	(322.4	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	
NOTE 12. PENSION AND OTHER RETIREMENT BENEFITS
Moody’s maintains funded and unfunded noncontributory Defined Benefit Pension Plans. The U.S. plans 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 retirement healthcare plans are contributory; the life insurance plans are noncontributory. Moody’s funded and unfunded U.S. pension plans, the U.S. retirement healthcare plans and the U.S. retirement life insurance plans are collectively referred to herein as the “Retirement Plans”. The U.S. retirement healthcare plans and the U.S. retirement life insurance plans are collectively referred to herein as the “Other 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 Retirement Plans are as follows:

 	  	Three Months Ended March 31,	 	
 	  	Pension Plans	 	  	Other Retirement Plans	 	
 	  	2016	 	  	2015	 	  	2016	 	  	2015	 	
Components of net periodic expense	  				  				  				  				
Service cost	  	$	5.2	  	  	$	5.8	  	  	$	0.5	  	  	$	0.5	  	
Interest cost	  	 	4.6	  	  	 	4.3	  	  	 	0.3	  	  	 	0.2	  	
Expected return on plan assets	  	 	(4.3	) 	  	 	(3.6	) 	  	 	—  	  	  	 	—  	  	
Amortization of net actuarial loss from earlier periods	  	 	2.6	  	  	 	3.4	  	  	 	—  	  	  	 	0.1	  	
Amortization of net prior service costs from earlier periods	  	 	—  	  	  	 	0.2	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Net periodic expense	  	$	8.1	  	  	$	10.1	  	  	$	0.8	  	  	$	0.8	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The Company made payments of $1.2 million related to its unfunded U.S. DBPPs and $0.1 million to its U.S. other retirement plans during the three months ended March 31, 2016. The Company anticipates making payments of $22 million related to its funded pension plan and making payments of $3.2 million related to its unfunded U.S. DBPPs and $0.9 million to its U.S. other retirement plans, respectively, during the remainder of 2016.
 
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NOTE 13. INDEBTEDNESS
The following table summarizes total indebtedness:

 	  	March 31, 2016	 	
 	  	Principal
Amount	 	  	Fair Value of
Interest Rate
Swap (1)	 	  	Unamortized
(Discount)
Premium	 	 	Unamortized
Debt  Issuance
Costs (2)	 	 	Carrying
Value	 	
Notes payable:	  				  				  				 				 				
6.06% Series 2007-1 Notes due 2017	  	$	300.0	  	  	$	—  	  	  	$	—  	  	 	$	(0.1	) 	 	$	299.9	  	
5.50% 2010 Senior Notes, due 2020	  	 	500.0	  	  	 	22.1	  	  	 	(1.6	) 	 	 	(1.9	) 	 	 	518.6	  	
4.50% 2012 Senior Notes, due 2022	  	 	500.0	  	  	 	—  	  	  	 	(2.7	) 	 	 	(2.4	) 	 	 	494.9	  	
4.875% 2013 Senior Notes, due 2024	  	 	500.0	  	  	 	—  	  	  	 	(2.2	) 	 	 	(3.0	) 	 	 	494.8	  	
2.75% 2014 Senior Notes (5-Year), due 2019	  	 	450.0	  	  	 	10.2	  	  	 	(0.5	) 	 	 	(2.2	) 	 	 	457.5	  	
5.25% 2014 Senior Notes (30-Year), due 2044	  	 	600.0	  	  	 	—  	  	  	 	3.4	  	 	 	(6.1	) 	 	 	597.3	  	
1.75% 2015 Senior Notes, due 2027	  	 	569.8	  	  	 	—  	  	  	 	—  	  	 	 	(4.2	) 	 	 	565.6	  	

Total long-term debt	  	$	3,419.8	  	  	$	32.3	  	  	$	(3.6	) 	 	$	(19.9	) 	 	$	3,428.6	  	

 	  	December 31, 2015	 	
 	  	Principal
Amount	 	  	Fair Value of
Interest Rate
Swap (1)	 	  	Unamortized
(Discount)
Premium	 	 	Unamortized
Debt Issuance
Costs (2)	 	 	Carrying
Value	 	
Notes payable:	  				  				  				 				 				
6.06% Series 2007-1 Notes due 2017	  	$	300.0	  	  	$	—  	  	  	$	—  	  	 	$	(0.2	) 	 	$	299.8	  	
5.50% 2010 Senior Notes, due 2020	  	 	500.0	  	  	 	9.4	  	  	 	(1.6	) 	 	 	(2.0	) 	 	 	505.8	  	
4.50% 2012 Senior Notes, due 2022	  	 	500.0	  	  	 	—  	  	  	 	(2.8	) 	 	 	(2.5	) 	 	 	494.7	  	
4.875% 2013 Senior Notes, due 2024	  	 	500.0	  	  	 	—  	  	  	 	(2.3	) 	 	 	(3.1	) 	 	 	494.6	  	
2.75% 2014 Senior Notes (5-Year), due 2019	  	 	450.0	  	  	 	2.3	  	  	 	(0.5	) 	 	 	(2.4	) 	 	 	449.4	  	
5.25% 2014 Senior Notes (30-Year), due 2044	  	 	600.0	  	  	 	—  	  	  	 	3.4	  	 	 	(6.2	) 	 	 	597.2	  	
1.75% 2015 Senior Notes, due 2027	  	 	543.1	  	  	 	—  	  	  	 	—  	  	 	 	(4.0	) 	 	 	539.1	  	

Total long-term debt	  	$	3,393.1	  	  	$	11.7	  	  	$	(3.8	) 	 	$	(20.4	) 	 	$	3,380.6	  	

(1)  	The Company has entered into interest rate swaps on the 2010 Senior Notes and the 2014 Senior Notes (5-Year) which are more fully discussed in Note 7 above.	
(2)	Pursuant to ASU No. 2015-03, unamortized debt issuance costs are presented as a reduction to the carrying value of the notes payable. See Note 1 for additional discussion.	
At March 31, 2016, the Company was in compliance with all covenants contained within all of the debt agreements. The 2015 Facility, the 2015 Senior Notes, the 2014 Senior Notes (5-year), the 2014 Senior Notes (30-year), the Series 2007-1 Notes, the 2010 Senior Notes, the 2012 Senior Notes and the 2013 Senior Notes all 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 March 31, 2016, there were no such cross defaults.
 
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Interest expense, net
The following table summarizes the components of interest as presented in the consolidated statements of operations:

 	  	Three Months Ended
March  31,	 	
 	  	2016	 	  	2015	 	
Income	  	$	2.9	  	  	$	1.9	  	
Expense on borrowings	  	 	(34.6	) 	  	 	(28.3	) 	
UTPs and other tax related liabilities	  	 	(2.8	) 	  	 	(3.2	) 	
Capitalized	  	 	0.4	  	  	 	0.3	  	
	  	 	 	 	  	 	 	 	
Total	  	$	(34.1	) 	  	$	(29.3	) 	
	  	 	 	 	  	 	 	 	
The following table shows the cash paid for interest:

 	  	Three Months Ended
March 31,	 	
 	  	2016	 	  	2015	 	
Interest paid	  	$	67.1	  	  	$	48.2	  	
The fair value and carrying value of the Company’s long-term debt as of March 31, 2016 and December 31, 2015 are as follows:

 	  	March 31, 2016	 	  	December 31, 2015	 	
 	  	Carrying
Amount	 	  	Estimated
Fair Value	 	  	Carrying
Amount	 	  	Estimated
Fair Value	 	
Series 2007-1 Notes	  	$	299.9	  	  	$	318.9	  	  	$	299.8	  	  	$	320.6	  	
2010 Senior Notes	  	 	518.6	  	  	 	560.6	  	  	 	505.8	  	  	 	551.2	  	
2012 Senior Notes	  	 	494.9	  	  	 	548.1	  	  	 	494.7	  	  	 	530.0	  	
2013 Senior Notes	  	 	494.8	  	  	 	553.9	  	  	 	494.6	  	  	 	533.8	  	
2014 Senior Notes (5-Year)	  	 	457.5	  	  	 	461.5	  	  	 	449.4	  	  	 	454.3	  	
2014 Senior Notes (30-Year)	  	 	597.3	  	  	 	668.3	  	  	 	597.2	  	  	 	617.7	  	
2015 Senior Notes	  	 	565.6	  	  	 	575.8	  	  	 	539.1	  	  	 	520.2	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	3,428.6	  	  	$	3,687.1	  	  	$	3,380.6	  	  	$	3,527.8	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The fair value of the Company’s long-term debt is estimated based on quoted market prices for similar instruments. Accordingly, the inputs used to estimate the fair value of the Company’s long-term debt are classified as Level 2 inputs within the fair value hierarchy.
NOTE 14. CONTINGENCIES
Moody’s is involved in legal and tax proceedings, governmental investigations and inquiries, 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 global credit crisis of 2008, MIS and other credit rating agencies have been the subject of intense scrutiny, increased regulation, ongoing inquiry and governmental investigations, 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 regulatory standards. Moody’s periodically receives and is continuing to address subpoenas and inquiries from various governmental authorities, including the U.S. Department of Justice and states attorneys general, and is responding to such investigations and inquiries.
 
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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 global credit markets more broadly over the last several years.
On August 25, 2008, Abu Dhabi Commercial Bank filed a purported class action in the United States District Court for the Southern District of New York asserting numerous common-law causes of action against two subsidiaries of the Company, another rating agency, and Morgan Stanley & Co. The action related to securities issued by a structured investment vehicle called Cheyne Finance (the “Cheyne SIV”) and sought, among other things, compensatory and punitive damages. The central allegation against the rating agency defendants was that the credit ratings assigned to the securities issued by the Cheyne SIV were false and misleading. In early proceedings, the court dismissed all claims against the rating agency defendants except those for fraud and aiding and abetting fraud. In June 2010, the court denied plaintiff’s motion for class certification, and additional plaintiffs were subsequently added to the complaint. In January 2012, the rating agency defendants moved for summary judgment with respect to the fraud and aiding and abetting fraud claims. Also in January 2012, in light of new New York state case law, the court permitted the plaintiffs to file an amended complaint that reasserted previously dismissed claims against all defendants for breach of fiduciary duty, negligence, negligent misrepresentation, and related aiding and abetting claims. In May 2012, the court, ruling on the rating agency defendants’ motion to dismiss, dismissed all of the reasserted claims except for the negligent misrepresentation claim, and on September 19, 2012, after further proceedings, the court also dismissed the negligent misrepresentation claim. On August 17, 2012, the court ruled on the rating agencies’ motion for summary judgment on the plaintiffs’ remaining claims for fraud and aiding and abetting fraud. The court dismissed, in whole or in part, the fraud claims of four plaintiffs as against Moody’s but allowed the fraud claims to proceed with respect to certain claims of one of those plaintiffs and the claims of the remaining 11 plaintiffs. The court also dismissed all claims against Moody’s for aiding and abetting fraud. Three of the plaintiffs whose claims were dismissed filed motions for reconsideration, and on November 7, 2012, the court granted two of these motions, reinstating the claims of two plaintiffs that were previously dismissed. On February 1, 2013, the court dismissed the claims of one additional plaintiff on jurisdictional grounds. Trial on the remaining fraud claims against the rating agencies, and on claims against Morgan Stanley for aiding and abetting fraud and for negligent misrepresentation, was scheduled for May 2013. On April 24, 2013, pursuant to confidential settlement agreements, the 14 plaintiffs with claims that had been ordered to trial stipulated to the voluntary dismissal, with prejudice, of these claims as against all defendants, and the court so ordered that stipulation on April 26, 2013. The settlement did not cover certain claims of two plaintiffs, Commonwealth of Pennsylvania Public School Employees’ Retirement System (“PSERS”) and Commerzbank AG (“Commerzbank”), that were previously dismissed by the Court. On May 23, 2013, these two plaintiffs filed a Notice of Appeal to the Second Circuit, seeking reversal of the dismissal of their claims and also seeking reversal of the trial court’s denial of class certification. According to pleadings filed by plaintiffs in earlier proceedings, PSERS and Commerzbank AG seek, respectively, $5.75 million and $69.6 million in compensatory damages in connection with the two claims at issue on the appeal. In October 2014, the Second Circuit affirmed the denial of class certification and the dismissal of PSERS’ claim but reversed a ruling of the trial court that had excluded certain evidence relevant to Commerzbank’s principal argument on appeal. The Second Circuit did not reverse the dismissal of Commerzbank’s claim but instead certified a legal question concerning Commerzbank’s argument to the New York Court of Appeals. The New York Court of Appeals subsequently agreed to hear the certified question, and on June 30, 2015, the Court of Appeals ruled in Moody’s favor. The case was then returned to the Second Circuit for final disposition of the appeal. On February 23, 2016, the Second Circuit affirmed the dismissal of Commerzbank’s claim.
On July 9, 2009, the California Public Employees’ Retirement System (“CalPERS”) filed an action in the Superior Court of California in San Francisco (the “Superior Court”) asserting two common-law causes of action, negligent misrepresentation and negligent interference with prospective economic advantage. The complaint named as defendants the Company, MIS, The McGraw-Hill Companies, Fitch, Inc., and various subsidiaries of Fitch, Inc. The action related to the plaintiff’s purchase of securities issued by three structured investment vehicles (“SIVs”) known as Cheyne Finance, Sigma Finance, and Stanfield Victoria Funding. The plaintiff’s complaint sought unspecified compensatory damages arising from alleged losses in connection with investments that purportedly totaled approximately $1.3 billion; in subsequent court filings, the plaintiff claimed to have suffered “unrealized losses” of approximately $779 million. The central allegation against the defendants was that the credit ratings assigned to the securities issued by the SIVs were inaccurate and that the methodologies used by the rating agencies had no reasonable basis. In August 2009, the defendants removed the action to federal court, but the case was remanded to state court in November 2009 based on a finding that CalPERS is an “arm of the State.” In April 2010, in response to a motion by the defendants, the Superior Court dismissed the claim for negligent interference with prospective economic advantage but declined to dismiss the claim for negligent misrepresentation. On December 23, 2015, following the close of fact discovery, the Company and MIS filed a motion for summary judgment. On March 8, 2016, prior to argument or decision on the motion for summary judgment, the Company and CalPERS entered into an agreement to settle this matter, and the case was subsequently dismissed with prejudice. This resolution did not have a negative financial impact on the Company.
 
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For claims, litigation and proceedings and governmental investigations and inquiries not related to income taxes, where it is both probable that a liability has been 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. When the reasonable estimate of the loss is within a range of amounts, the minimum amount of the range is accrued unless some higher amount within the range is a better estimate than another amount within the range. In 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, governmental investigations and inquiries, 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 any pending matters progresses, management will continue to review the latest information available and assess its ability to predict the outcome of such matters and the effects, if any, on its operations and financial condition. However, in light of the large or indeterminate damages sought in some of them, the absence of similar court rulings on the theories of law asserted and uncertainties regarding apportionment of any potential damages, an estimate of the range of possible losses cannot be made at this time.
NOTE 15 SEGMENT INFORMATION
The Company is organized into three operating segments: (i) MIS, (ii) MA and (iii) Copal Amba. The Copal Amba operating segment has been aggregated with the MA operating segment based on the fact that it has similar economic characteristics to MA. Accordingly, the Company reports in two reportable segments: MIS and MA.
The MIS segment consists of five LOBs. The CFG, SFG, FIG and PPIF LOBs generate revenue principally from fees for the assignment and ongoing monitoring of credit ratings on debt obligations and the entities that issue such obligations in markets worldwide. The MIS Other LOB primarily consists of the distribution of research and financial instruments pricing services in the Asia-Pacific region as well as ICRA non-ratings revenue.
The MA segment develops a wide range of products and services that support the risk management activities of institutional participants in global financial markets. The MA segment consists of three LOBs—RD&A, ERS and PS.
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. The royalty rate charged by MIS approximates the fair value of the aforementioned content, data and products and is generally based on comparable market transactions. Also, revenue for MA and expenses for MIS include an intersegment fee charged to MIS from MA for certain MA products and services utilized in MIS’s ratings process. These fees charged by MA are generally equal to the costs incurred by MA to produce these products and services. Additionally, overhead costs and corporate expenses of the Company that exclusively benefit only one segment are fully charged to that segment. Overhead costs and corporate expenses of the Company that benefit both segments are allocated to each segment based on a revenue-split methodology. Accordingly, a reportable segment’s share of these costs will increase as its proportion of revenue relative to Moody’s total revenue increases. Overhead expenses include costs such as rent and occupancy, information technology and support staff such as finance, human resources and information technology. “Eliminations” in the table below represent intersegment revenue/expense. Moody’s does not report the Company’s assets by reportable segment, as this metric is not used by the chief operating decision maker to allocate resources to the segments. Consequently, it is not practical to show assets by reportable segment.
 
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Financial Information by Segment
The table below shows revenue, Adjusted Operating Income and operating income by reportable segment. Adjusted Operating Income is a financial metric utilized by the Company’s chief operating decision maker to assess the profitability of each reportable segment.

 	  	Three Months Ended March 31,	 	
 	  	2016	 	  	2015	 	
 	  	MIS	 	  	MA	 	  	Eliminations	 	 	Consolidated	 	  	MIS	 	  	MA	 	  	Eliminations	 	 	Consolidated	 	
Revenue	  	$	549.1	  	  	$	293.8	  	  	$	(26.8	) 	 	$	816.1	  	  	$	624.6	  	  	$	266.6	  	  	$	(25.6	) 	 	$	865.6	  	
Operating, SG&A	  	 	278.6	  	  	 	230.3	  	  	 	(26.8	) 	 	 	482.1	  	  	 	281.3	  	  	 	210.0	  	  	 	(25.6	) 	 	 	465.7	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Adjusted Operating Income	  	 	270.5	  	  	 	63.5	  	  	 	—  	  	 	 	334.0	  	  	 	343.3	  	  	 	56.6	  	  	 	—  	  	 	 	399.9	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Less:	  				  				  				 				  				  				  				 				
Depreciation and amortization	  	 	17.5	  	  	 	12.4	  	  	 	—  	  	 	 	29.9	  	  	 	16.0	  	  	 	12.6	  	  	 	—  	  	 	 	28.6	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Operating income	  	$	253.0	  	  	$	51.1	  	  	$	—  	  	 	$	304.1	  	  	$	327.3	  	  	$	44.0	  	  	$	—  	  	 	$	371.3	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
MIS and MA Revenue by Line of Business
The table below presents revenue by LOB within each reportable segment:

 	  	Three Months Ended March 31,	 	
 	  	2016	 	  	2015	 	
MIS:	  				  				
Corporate finance (CFG)	  	$	240.3	  	  	$	298.7	  	
Structured finance (SFG)	  	 	90.6	  	  	 	101.3	  	
Financial institutions (FIG)	  	 	94.9	  	  	 	93.8	  	
Public, project and infrastructure finance (PPIF)	  	 	91.5	  	  	 	100.7	  	
	  	 	 	 	  	 	 	 	
Total ratings revenue	  	 	517.3	  	  	 	594.5	  	
MIS Other	  	 	7.8	  	  	 	7.8	  	
	  	 	 	 	  	 	 	 	
Total external revenue	  	 	525.1	  	  	 	602.3	  	
	  	 	 	 	  	 	 	 	
Intersegment royalty	  	 	24.0	  	  	 	22.3	  	
	  	 	 	 	  	 	 	 	
Total	  	 	549.1	  	  	 	624.6	  	
	  	 	 	 	  	 	 	 	
MA:	  				  				
Research, data and analytics (RD&A)	  	 	164.9	  	  	 	149.6	  	
Enterprise risk solutions (ERS)	  	 	89.5	  	  	 	77.1	  	
Professional services (PS)	  	 	36.6	  	  	 	36.6	  	
	  	 	 	 	  	 	 	 	
Total external revenue	  	 	291.0	  	  	 	263.3	  	
	  	 	 	 	  	 	 	 	
Intersegment revenue	  	 	2.8	  	  	 	3.3	  	
	  	 	 	 	  	 	 	 	
Total	  	 	293.8	  	  	 	266.6	  	
	  	 	 	 	  	 	 	 	
Eliminations	  	 	(26.8	) 	  	 	(25.6	) 	
	  	 	 	 	  	 	 	 	
Total MCO	  	$	816.1	  	  	$	865.6	  	
	  	 	 	 	  	 	 	 	
Consolidated Revenue Information by Geographic Area:

 	  	Three Months Ended March 31,	 	
 	  	2016	 	  	2015	 	
Revenue	  				  				
United States	  	$	480.0	  	  	$	499.8	  	
International:	  				  				
EMEA	  	 	210.2	  	  	 	227.6	  	
Asia-Pacific	  	 	82.0	  	  	 	86.1	  	
Americas	  	 	43.9	  	  	 	52.1	  	
	  	 	 	 	  	 	 	 	
Total International	  	 	336.1	  	  	 	365.8	  	
	  	 	 	 	  	 	 	 	
Total	  	$	816.1	  	  	$	865.6	  	

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NOTE 16. RECENTLY ISSUED ACCOUNTING STANDARDS
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”. This ASU outlines a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14 “Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date” which defers the effective date of the ASU for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted up to the original effective date of December 15, 2016. In addition, in March and April 2016, the FASB issued additional updates clarifying the implementation guidance for the new revenue recognition standard.
The Company is currently evaluating its adoption options with regard to the aforementioned ASU’s relating to revenue recognition and the impact that adoption of these update will have on its consolidated financial statements. Currently, the Company believes this ASU will have an impact on: i) the capitalization of certain contract implementation costs for its ERS business which will be expensed as incurred under the new standard; ii) the accounting for certain software subscription revenue in MA whereby the license rights within the arrangement would be recognized at the inception of the contract based on estimated stand-alone selling price with the remainder recognized over the subscription period; iii) the accounting for certain ERS revenue arrangements where VSOE is not available should result in the acceleration of revenue recognition and iv) the accounting for contract acquisition costs which will be expensed as incurred under the new standard.
In January 2016, the FASB issued ASU No. 2016-01 “Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10).” The amendments in this ASU update various aspects of recognition, measurement, presentation and disclosures relating to financial instruments. This ASU is effective for fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact of this ASU on the Company’s financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” requiring lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses and cash flows will depend on classification as either a finance or operating lease. This ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. This standard must be adopted using a modified retrospective approach whereby leases will be presented in accordance with the new standard as of the earliest period presented. The Company is currently evaluating the impact of this ASU on the Company’s financial statements.
In March 2016, the FASB issued ASU No. 2016-07, “Investments – Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting.” This ASU amends the accounting for an investment not previously accounted for under the equity method that subsequently qualifies for the equity method of accounting. It requires a company to add the cost of the additional interest acquired to its current basis and the commencement of the equity method of accounting when the criteria are met. In addition, the unrealized gains or losses in accumulated other comprehensive related to an available for sale equity security should be recognized through earnings if the investment subsequently qualifies for the equity method of accounting. The amendments of this ASU are effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The adoption of this ASU will only impact the Company if an investment not previously accounted for under the equity method qualifies for accounting under the equity method.
In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting”. This ASU changes various aspects related to the accounting for share-based payments including: i) accounting for Excess Tax Benefits and shortfalls; ii) the accounting for forfeitures; iii) restrictions on the value of shares retained by an entity to fund the employee’s portion of payroll taxes; and iv) classification of Excess Tax Benefits in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016 and early adoption is permitted if all amendments are adopted in the same period. The Company is evaluating the impact of this ASU on its financial statements but currently expects that the most significant effect of this ASU will be the impact on its reported Net Income and Diluted EPS as Excess Tax Benefits and shortfalls will be recorded to the provision for income taxes under this ASU as compared to a charge to capital surplus under current GAAP.
NOTE 17. SUBSEQUENT EVENT
On April 11, 2016, the Board approved the declaration of a quarterly dividend of $0.37 per share of Moody’s common stock, payable on June 10, 2016 to shareholders of record at the close of business on May 20, 2016.
 
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 Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	
This discussion and analysis of financial condition and results of operations should be read in conjunction with the Moody’s Corporation condensed consolidated financial statements and notes thereto included elsewhere in this quarterly report on Form 10-Q.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains Forward-Looking Statements. See “Forward-Looking Statements” commencing on page 46 for a discussion of uncertainties, risks and other factors associated with these statements.
 The Company
Moody’s is a provider of (i) credit ratings, (ii) credit and economic related research, data and analytical tools, (iii) software solutions and related risk management services, (iv) quantitative credit risk measures, financial services training and certification services and (v) outsourced research and analytical services. Moody’s has two reportable segments: MIS and MA.
MIS, the credit rating agency, publishes credit ratings on a wide range of debt obligations and the entities that issue such obligations in markets worldwide. Revenue is primarily derived from the originators and issuers of such transactions who use MIS ratings in the distribution of their debt issues to investors. Additionally, MIS earns revenue from certain non-ratings-related operations, which consist primarily of the distribution of research and fixed income pricing services in the Asia-Pacific region, and from ICRA non-ratings services. The revenue from these operations is included in the MIS Other LOB and is not material to the results of the MIS segment.
The MA segment develops a wide range of products and services that primarily support financial analysis and risk management activities of institutional participants in global financial markets. Within its RD&A business, MA distributes research and data developed by MIS as part of its ratings process, including in-depth research on major debt issuers, industry studies and commentary on topical credit-related events. The RD&A business also produces economic research as well as data and analytical tools such as quantitative credit risk scores. Within its ERS business, MA provides software solutions as well as related risk management services. The PS business provides outsourced research and analytical services and financial training and certification programs.
 Critical Accounting Estimates
Moody’s discussion and analysis of its financial condition and results of operations are based on the Company’s consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires Moody’s to make estimates and judgments that affect reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the dates of the financial statements and revenue and expenses during the reporting periods. These estimates are based on historical experience and on other assumptions that are believed to be reasonable under the circumstances. On an ongoing basis, Moody’s evaluates its estimates, including those related to revenue recognition, accounts receivable allowances, contingencies, restructuring, goodwill and acquired intangible assets, pension and other retirement benefits, stock-based compensation, and income taxes. Actual results may differ from these estimates under different assumptions or conditions. Item 7, MD&A, in the Company’s annual report on Form 10-K for the year ended December 31, 2015, includes descriptions of some of the judgments that Moody’s makes in applying its accounting estimates in these areas. Since the date of the annual report on Form 10-K, there have been no material changes to the Company’s critical accounting estimates.
 Reportable Segments
The Company is organized into two reportable segments at March 31, 2016: MIS and MA.
The MIS segment is comprised primarily of all of the Company’s ratings operations. The MIS segment consists of five LOBs – CFG, SFG, FIG, PPIF and MIS Other. The ratings LOBs generate revenue principally from fees for the assignment and ongoing monitoring of credit ratings on debt obligations and the entities that issue such obligations in markets worldwide. The MIS Other LOB consists of certain non-ratings operations managed by MIS which consists of non-rating revenue from ICRA as well as certain research and fixed income pricing service operations in the Asia-Pacific region.
 
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The MA segment develops a wide range of products and services that support financial analysis and risk management activities of institutional participants in global financial markets. The MA segment consists of three lines of business – RD&A, ERS and PS.
The following is a discussion of the results of operations of the Company and its reportable segments. Total MIS revenue and total MA expenses include the intersegment royalty revenue for MIS and expense charged to MA for the rights to use and distribute content, data and products developed by MIS. The royalty rate charged by MIS approximates the fair value of the aforementioned content, data and products developed by MIS. Total MA revenue and total MIS expenses include intersegment fees charged to MIS from MA for the use of certain MA products and services in MIS’s ratings process. These fees charged by MA are generally equal to the costs incurred by MA to provide these products and services. Overhead charges and corporate expenses that exclusively benefit one segment are fully charged to that segment. Additionally, overhead costs and corporate expenses of the Company that benefit both segments are generally 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 resources and information technology.
 RESULTS OF OPERATIONS
Three months ended March 31, 2016 compared with three months ended March 31, 2015
Executive Summary
 
 	•	 	Moody’s revenue in the three months ended March 31, 2016 totaled $816.1 million, a decrease of $49.5 million, or 6%, compared to 2015 and reflected declines in MIS revenue partially offset by good growth in MA. Excluding the unfavorable impact of changes in FX translation rates, revenue decreased 4% from the prior year. The following discussion of MIS and MA revenue exclude intersegment revenue.	
 
 	•	 	MIS revenue decreased 13% compared to the prior year reflecting lower revenue from rating high-yield and investment-grade corporate debt in the U.S. and EMEA primarily due to market volatility in the first quarter of 2016. Additionally, the decrease reflected lower securitization activity in the first quarter of 2016, most notably in the U.S. CMBS and CLO asset classes.	
 
 	•	 	MA revenue was 11% higher than the prior year. Excluding the impact of unfavorable changes in FX translation rates, MA revenue grew 13% reflecting increases in ERS and RD&A across all regions. Revenue grew in all product areas of ERS, with particular strength in the Assets, Liability & Capital, Credit Assessment & Origination and Stress Testing products. The 2016 acquisition of GGY also contributed to the growth in ERS. In RD&A, revenue growth was primarily driven by credit research and licensing of ratings data as well as growth in SAV and ECCA.	
 
 	•	 	Total operating expenses increased $17.7 million, or 4% reflecting higher compensation costs associated with headcount growth (including costs from the acquisition of GGY) and annual compensation increases partially offset by lower incentive compensation costs;	
 
 	•	 	Excluding the favorable impact relating to changes in FX translation rates, total expenses increased 6% compared to the prior year.	
 
 	•	 	Operating income of $304.1 million in the first quarter of 2016 was down $67.2 million compared to 2015 and resulted in an operating margin of 37.3%, compared to 42.9% in the prior year. Adjusted Operating Income of $334.0 million in the first quarter of 2016 decreased $65.9 million compared to 2015, resulting in an Adjusted Operating Margin of 40.9% compared to 46.2% in the prior year.	
 
 	•	 	The ETR in the first quarter of 2016 was 60 BPS lower than the prior year primarily due to lower state income taxes.	
 
 	•	 	The increase in non-operating expense, net, compared to the prior year is primarily due to interest on the 2015 Senior Notes issued in March 2015 as well as interest on the $300 million of additional borrowings under the 2014 Senior Notes (30-Year) in November 2015. These increases in expense were partially offset by higher FX gains in 2016.	
 
 	•	 	Diluted EPS of $0.93 in the first quarter of 2016 decreased $0.18 from 2015 reflecting a decrease in Net Income partially offset by a 4% reduction in diluted weighted average shares outstanding.	
 
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Moody’s Corporation

 	  	 
Three months ended March 31,	 	 	% Change
Favorable
(Unfavorable)	 	
 	  	2016	 	 	2015	 	 			
Revenue:	  				 				 				
United States	  	$	480.0	  	 	$	499.8	  	 	 	(4	%) 	
International:	  				 				 				
EMEA	  	 	210.2	  	 	 	227.6	  	 	 	(8	%) 	
Asia-Pacific	  	 	82.0	  	 	 	86.1	  	 	 	(5	%) 	
Americas	  	 	43.9	  	 	 	52.1	  	 	 	(16	%) 	
	  	 	 	 	 	 	 	 	 				
Total International	  	 	336.1	  	 	 	365.8	  	 	 	(8	%) 	
	  	 	 	 	 	 	 	 	 				
Total	  	 	816.1	  	 	 	865.6	  	 	 	(6	%) 	
	  	 	 	 	 	 	 	 	 				
Expenses:	  				 				 				
Operating	  	 	249.2	  	 	 	244.4	  	 	 	(2	%) 	
SG&A	  	 	232.9	  	 	 	221.3	  	 	 	(5	%) 	
Depreciation and amortization	  	 	29.9	  	 	 	28.6	  	 	 	(5	%) 	
	  	 	 	 	 	 	 	 	 				
Total	  	 	512.0	  	 	 	494.3	  	 	 	(4	%) 	
	  	 	 	 	 	 	 	 	 				
Operating income	  	$	304.1	  	 	$	371.3	  	 	 	(18	%) 	
	  	 	 	 	 	 	 	 	 				
Adjusted Operating Income (1)	  	$	334.0	  	 	$	399.9	  	 	 	(16	%) 	
	  	 	 	 	 	 	 	 	 				
Interest expense, net	  	$	(34.1	) 	 	$	(29.3	) 	 	 	(16	%) 	
Other non-operating income, net	  	$	5.6	  	 	$	2.5	  	 	 	124	% 	
	  	 	 	 	 	 	 	 	 				
Total non-operating expense, net	  	$	(28.5	) 	 	$	(26.8	) 	 	 	(6	%) 	
	  	 	 	 	 	 	 	 	 				
Net income attributable to Moody’s	  	$	184.4	  	 	$	230.1	  	 	 	(20	%) 	
Diluted weighted average shares outstanding	  	 	197.9	  	 	 	206.5	  	 	 	4	% 	
Diluted EPS attributable to Moody’s common shareholders	  	$	0.93	  	 	$	1.11	  	 	 	(16	%) 	
Operating margin	  	 	37.3	% 	 	 	42.9	% 	 				
Adjusted Operating Margin (1)	  	 	40.9	% 	 	 	46.2	% 	 				
 
(1)  	Adjusted Operating Income and Adjusted Operating Margin are non-GAAP financial measures. Refer to the section entitled “Non-GAAP Financial Measures” of this Management Discussion and Analysis for further information regarding these measures.	
The table below shows Moody’s global staffing by geographic area:

 	  	March 31	 	  	% Change	 	
 	  	2016	 	  	2015	 	  	 	 	
United States	  	 	3,441	  	  	 	3,202	  	  	 	7	% 	
International	  	 	7,311	  	  	 	6,768	  	  	 	8	% 	
	  	 	 	 	  	 	 	 	  				
Total	  	 	10,752	  	  	 	9,970	  	  	 	8	% 	
	  	 	 	 	  	 	 	 	  				
Global revenue of $816.1 million in the first quarter of 2016 decreased $49.5 million, or 6%, compared to 2015. Excluding the unfavorable impact of changes in FX translation rates, global revenue decreased 4% from the prior year and reflected lower MIS revenue partially offset by good growth in MA revenue.
The $77.2 million decrease in MIS revenue reflects declines in high-yield and investment-grade corporate debt revenue across all regions reflecting market volatility in the first quarter of 2016. Additionally, the decrease reflected lower securitization activity in the first quarter of 2016, most notably in the U.S. CMBS and CLO asset classes. Unfavorable changes in FX translation rates had a $7 million impact on revenue in the first quarter of 2016.
 
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The $27.7 million growth in MA reflects increases in ERS and RD&A across all regions. Revenue grew in all product areas of ERS, with particular strength in the Assets, Liability & Capital, Credit Assessment & Origination and Stress Testing products. The 2016 acquisition of GGY also contributed to the growth in ERS. In RD&A, revenue growth was primarily driven by credit research and licensing of ratings data as well as growth in SAV and ECCA businesses. These results were partially offset by unfavorable changes in FX translation rates of approximately $6 million. Excluding the impact of changes in FX rates, MA revenue increased 13% compared to 2015.
Transaction revenue accounted for 45% of global MCO revenue in the first quarter of 2016 compared to 51% in the prior year.
U.S. revenue of $480.0 million in the first quarter of 2016 decreased $19.8 million from the prior year, reflecting lower revenue across all MIS LOBs, partially offset by growth in RD&A and ERS revenue within MA.
Non-U.S. revenue of $336.1 million decreased $29.7 million compared to the first quarter of 2015 due to declines in MIS across all regions being partially offset by growth in MA across all regions.
Operating expenses were $249.2 million in the first quarter of 2016, up 2% compared to 2015 and included an increase in compensation costs reflecting higher expenses resulting from the impact of annual compensation increases and increased headcount (including headcount from the acquisition of GGY). These increases were partially offset by lower incentive compensation costs reflecting lower projected achievement against full-year projected results compared to the prior year. The changes above include a favorable impact relating to changes in FX translation rates compared to the prior year.
SG&A expenses of $232.9 million in the first quarter of 2016 increased 5% from the prior year period reflecting higher compensation and non-compensation expenses of approximately $7 million and $5 million, respectively. The growth in compensation costs was primarily due to higher expenses resulting from annual compensation increases, headcount growth in MIS and MA as well as in overhead support areas coupled with higher headcount from the GGY acquisition. These increases were partially offset by lower incentive compensation costs reflecting lower projected achievement against full-year projected results compared to the prior year. The increase in non-compensation expenses primarily reflects higher legal fees as well as higher rent and occupancy costs reflecting various real estate expansion projects. The increases above include a favorable impact relating to changes in FX translation rates compared to the prior year.
Operating income of $304.1 million in the first quarter of 2016 was down $67.2 million compared to 2015 and resulted in an operating margin of 37.3%, compared to 42.9% in the prior year. Adjusted Operating Income of $334.0 million in the first quarter of 2016 decreased $65.9 million compared to 2015, resulting in an Adjusted Operating Margin of 40.9% compared to 46.2% in the prior year period.
Interest expense, net in the first quarter of 2016 was ($34.1) million, a $4.8 million increase in expense compared to 2015. The increase reflects interest on the 2015 Senior Notes which were issued in March 2015 as well as interest on the $300 million of additional borrowings under the 2014 Senior Notes (30-Year) in November 2015.
Other non-operating income, net was $5.6 million in the first quarter of 2016, a $3.1 million increase in income compared to 2015. This increase reflected approximately $4 million in higher FX gains compared to the prior year primarily due to the strengthening of the euro to both the British pound and the U.S. dollar over the previous three months.
The Company’s ETR was 32.3% in the first quarter of 2016, compared with 32.9% in 2015 with the decrease primarily due to lower state income tax.
Net Income in the first quarter of 2016 was $184.4 million, or $0.93 per diluted share. This is a decrease of $45.7 million, or $0.18 per diluted share, compared to 2015. The decrease in diluted EPS reflects lower Net Income partially offset by a 4% reduction in diluted weighted average shares outstanding. This reduction in diluted weighted average shares outstanding reflects share repurchases under the Company’s Board authorized share repurchase program partially offset by shares issued under the employee stock-based compensation programs.
 
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Segment Results
Moody’s Investors Service
The table below provides a summary of revenue and operating results, followed by further insight and commentary:

 	  	 
Three months ended March 31,	 	 	% Change
Favorable
(Unfavorable)	 	
 	  	2016	 	 	2015	 	 			
Revenue:	  				 				 				
Corporate finance (CFG)	  	$	240.3	  	 	$	298.7	  	 	 	(20	%) 	
Structured finance (SFG)	  	 	90.6	  	 	 	101.3	  	 	 	(11	%) 	
Financial institutions (FIG)	  	 	94.9	  	 	 	93.8	  	 	 	1	% 	
Public, project and infrastructure finance (PPIF)	  	 	91.5	  	 	 	100.7	  	 	 	(9	%) 	
	  	 	 	 	 	 	 	 	 				
Total ratings revenue	  	 	517.3	  	 	 	594.5	  	 	 	(13	%) 	
	  	 	 	 	 	 	 	 	 				
MIS Other	  	 	7.8	  	 	 	7.8	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 				
Total external revenue	  	 	525.1	  	 	 	602.3	  	 	 	(13	%) 	
	  	 	 	 	 	 	 	 	 				
Intersegment royalty	  	 	24.0	  	 	 	22.3	  	 	 	8	% 	
	  	 	 	 	 	 	 	 	 				
Total	  	 	549.1	  	 	 	624.6	  	 	 	(12	%) 	
	  	 	 	 	 	 	 	 	 				
Expenses:	  				 				 				
Operating and SG&A (external)	  	 	275.8	  	 	 	278.0	  	 	 	1	% 	
Operating and SG&A (intersegment)	  	 	2.8	  	 	 	3.3	  	 	 	15	% 	
	  	 	 	 	 	 	 	 	 				
Adjusted Operating Income	  	 	270.5	  	 	 	343.3	  	 	 	(21	%) 	
	  	 	 	 	 	 	 	 	 				
Depreciation and amortization	  	 	17.5	  	 	 	16.0	  	 	 	(9	%) 	
	  	 	 	 	 	 	 	 	 				
Operating income	  	$	253.0	  	 	$	327.3	  	 	 	(23	%) 	
	  	 	 	 	 	 	 	 	 				
Adjusted Operating Margin	  	 	49.3	% 	 	 	55.0	% 	 				
Operating margin	  	 	46.1	% 	 	 	52.4	% 	 				
The following is a discussion of external MIS revenue and operating expenses:
Global MIS revenue of $525.1 million in the first quarter of 2016 was down 13% compared to 2015 reflecting lower rated issuance volumes for high-yield corporate debt across all regions as well as declines in CMBS and CLO activity in the U.S. Also, there were declines in rated issuance volumes for investment-grade corporate debt across all non-U.S. regions reflecting market volatility in the first quarter of 2016. Transaction revenue for MIS was 56% of total revenue in the first quarter of 2016 compared to 63% in the first quarter of 2015.
In the U.S., revenue was $336.0 million in the first quarter of 2016, a decrease of $35.5 million compared to 2015 and reflected lower rated issuance volumes for high-yield corporate debt due to credit spread and market volatility in the first quarter of 2016. Additionally, there were declines in securitization activity in the CMBS and CLO asset classes within SFG reflecting market volatility as well as uncertainty relating to the implementation of regulatory requirements. Partially offsetting these decreases were higher monitoring fee revenue reflecting a larger number of outstanding rated instruments as well as higher insurance-related issuance volumes due to M&A activity in the sector.
Non-U.S. revenue was $189.1 million in the first quarter of 2016, a decrease of $41.7 million compared to 2015. The decrease reflects lower rated issuance volumes for high-yield and investment-grade corporate debt across all regions reflecting market volatility in the first quarter of 2016 resulting from global economic growth concerns and weak commodity prices. Partially offsetting these declines was higher monitoring fee revenue reflecting a larger number of outstanding rated instruments.
 
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Global CFG revenue of $240.3 million in the first quarter of 2016 was down 20% compared to 2015. The decline reflects lower rated issuance volumes for speculative-grade corporate debt across all regions as credit spreads were volatile for high-yield instruments reflecting overall market volatility in the first quarter of 2016. Also, there were lower rated issuance volumes for investment-grade corporate debt across all non-U.S. regions reflecting the aforementioned market volatility in the first quarter of 2016. Partially offsetting these decreases were the benefits from changes in the mix of fee type, new fee initiatives and pricing increases. Transaction revenue represented 63% and 72% of total CFG revenue in the first quarter of 2016 and 2015, respectively. In the U.S., revenue was $172.4 million, or $19.7 million lower than the prior year. Internationally, revenue of $67.9 million decreased $38.7 million compared to the prior year.
Global SFG revenue of $90.6 million in the first quarter of 2016 decreased $10.7 million, or 11%, compared to 2015. In the U.S., revenue of $60.0 million decreased $10.7 million compared to the first quarter of 2015. This decrease reflected lower securitization activity in the CMBS asset class due to higher credit spreads resulting from overall market volatility in the first quarter of 2016 as well as uncertainties relating to the implementation of regulatory requirements. Additionally, the decline in the U.S. reflects lower CLO formation also due to wider credit spreads resulting from market volatility as well as declining availability of collateral for these instruments. Non-U.S. revenue in the first quarter of 2016 of $30.6 million was flat compared to the prior year as modest growth in EMEA was offset by declines in other regions. Transaction revenue was 55% of total SFG revenue in the first quarter of 2016 compared to 61% in the prior year.
Global FIG revenue of $94.9 million in the first quarter of 2016 increased $1.1 million, or 1%, compared to 2015. Excluding the unfavorable impact of changes in FX translation rates, FIG revenue grew 4% compared to the prior year. In the U.S., revenue was $40.2 million, or 3% lower than the prior year, primarily reflecting reduced banking-related issuance volumes due to market volatility in the first quarter of 2016. This decrease was partially offset by higher M&A rated issuance volumes in the insurance sector as well as benefits from changes in the mix of fee type, new fee initiatives and pricing increases. Internationally, revenue was $54.7 million in the first quarter of 2016, or $2.3 million higher compared to 2015. This increase primarily reflects higher banking revenue in EMEA and insurance revenue in Asia-Pacific as well as benefits from changes in the mix of fee type, new fee initiatives and pricing increases. Partially offsetting the increase in non-U.S. revenue was an approximate $2 million unfavorable impact from changes in FX rates. Transaction revenue was 39% of total FIG revenue in the first quarter of 2016 compared to 40% in the same period in 2015.
Global PPIF revenue was $91.5 million in the first quarter of 2016 and decreased $9.2 million, or 9%, compared to 2015. In the U.S., revenue in the first quarter of 2016 was $61.1 million, a decrease of $4.2 million compared to 2015 due to lower public and project finance revenue reflecting market volatility in the first quarter of 2016 compared to robust issuance in the prior year. Outside the U.S., PPIF revenue decreased $5.0 million compared to 2015, primarily due to lower rated issuance volumes in infrastructure finance in EMEA reflecting market volatility coupled with lower project finance revenue in Asia-Pacific. These decreases were partially offset by benefits from changes in the mix of fee type, new fee initiatives and pricing increases. Transaction revenue was 59% and 64% of total PPIF revenue in first quarter of 2016 and 2015, respectively.
Operating and SG&A expenses in the first quarter of 2016 decreased $2.2 million compared to 2015 primarily reflecting lower non-compensation expense of approximately $3 million primarily due to overall cost control initiatives. Partially offsetting this decrease was higher compensation expense of approximately $1 million primarily reflecting annual salary increases, headcount growth in the ratings LOBs as well as in the support areas such as IT, finance and human resources for which the costs are allocated to each segment based on a revenue-split methodology. This increase in salary expense was partially offset by reduced incentive compensation costs reflecting lower projected achievement against full-year targeted results compared to the prior year.
Adjusted Operating Income and operating income in the first quarter of 2016, which includes intersegment royalty revenue and intersegment expenses, was $270.5 million and $253.0 million, respectively, and were down 21% and 23%, respectively, compared to 2015. Adjusted Operating Margin and operating margin were 49.3% and 46.1%, respectively, or 570 BPS and 630 BPS lower compared to the first quarter of 2015.
 
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Moody’s Analytics
The table below provides a summary of revenue and operating results, followed by further insight and commentary:

 	  	 	 	 	 	 	 	% Change
Favorable
(Unfavorable)	 	
 	  	Three months ended March 31,	 	 			
 	  	2016	 	 	2015	 	 			
Revenue:	  				 				 				
Research, data and analytics (RD&A)	  	$	164.9	  	 	$	149.6	  	 	 	10	% 	
Enterprise risk solutions (ERS)	  	 	89.5	  	 	 	77.1	  	 	 	16	% 	
Professional services (PS)	  	 	36.6	  	 	 	36.6	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 				
Total external revenue	  	 	291.0	  	 	 	263.3	  	 	 	11	% 	
	  	 	 	 	 	 	 	 	 				
Intersegment revenue	  	 	2.8	  	 	 	3.3	  	 	 	(15	%) 	
	  	 	 	 	 	 	 	 	 				
Total MA Revenue	  	 	293.8	  	 	 	266.6	  	 	 	10	% 	
	  	 	 	 	 	 	 	 	 				
Expenses:	  				 				 				
Operating and SG&A (external)	  	 	206.3	  	 	 	187.7	  	 	 	(10	%) 	
Operating and SG&A (intersegment)	  	 	24.0	  	 	 	22.3	  	 	 	(8	%) 	
	  	 	 	 	 	 	 	 	 				
Adjusted Operating Income	  	 	63.5	  	 	 	56.6	  	 	 	12	% 	
	  	 	 	 	 	 	 	 	 				
Depreciation and amortization	  	 	12.4	  	 	 	12.6	  	 	 	2	% 	
	  	 	 	 	 	 	 	 	 				
Operating income	  	$	51.1	  	 	$	44.0	  	 	 	16	% 	
	  	 	 	 	 	 	 	 	 				
Adjusted Operating Margin	  	 	21.6	% 	 	 	21.2	% 	 				
Operating margin	  	 	17.4	% 	 	 	16.5	% 	 				
The following is a discussion of external MA revenue and operating expenses:
Global MA revenue increased $27.7 million, or 11%, compared to the first quarter of 2015 reflecting growth in RD&A as well as ERS, which included revenue from the acquisition of GGY. Excluding unfavorable changes in FX translation rates, MA revenue grew 13% compared to the prior year. Recurring revenue comprised 76% and 77% of total MA revenue in the first quarter of 2016 and 2015, respectively.
In the U.S., revenue of $144.0 million in the first quarter of 2016 increased $15.7 million, and reflected growth in ERS and RD&A.
Non-U.S. revenue of $147.0 million in the first quarter of 2016 was $12.0 million higher than in 2015 reflecting growth in RD&A and ERS, partially offset by an approximate $6 million unfavorable impact due to changes in FX rates.
Global RD&A revenue of $164.9 million, which comprised 57% of total external MA revenue in both the first quarter of 2016 and 2015, increased $15.3 million, or 10%, over the prior year period. Excluding an approximate $4 million unfavorable impact due to changes in FX translation rates, RD&A revenue grew 13% compared to the prior year reflecting increases across all regions. The growth reflected strong sales of credit research and licensing of ratings data, record customer retention and higher revenue within SAV and ECCA. In the U.S., revenue of $96.2 million increased 14% over the prior year. Non-U.S. revenue of $68.7 million increased 5% and included the unfavorable impact from changes in FX translation rates.
Global ERS revenue in the first quarter of 2016 of $89.5 million increased $12.4 million, or 16%, over 2015. Excluding unfavorable changes in FX translation rates, ERS revenue grew 18%. Revenue growth was primarily due to increases across all product offerings with particular strength in the Assets, Liabilities & Capital, Credit Assessment and Origination and Stress Testing products as well as revenue from the acquisition of GGY in March of 2016. Revenue in ERS is subject to quarterly volatility resulting from the variable nature of project timing and the concentration of software implementation and license revenue in a relatively small number of engagements. In the U.S., revenue of $35.2 million increased 14% compared to the prior year. Non-U.S. revenue of $54.3 million increased 17% and included the aforementioned unfavorable impact from changes in FX translation rates.
 
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Global PS revenue of $36.6 million in the first quarter of 2016 was flat compared to 2015. Excluding unfavorable changes in FX translation rates, revenue was 2% higher than the prior year reflecting good growth in the outsourced research and analytical services business. In the U.S., revenue of $12.6 million decreased 6%. Non-U.S. revenue of $24.0 million decreased 3% compared to the prior year and included an approximate $1 million unfavorable impact due to changes in FX translation rates.
Operating and SG&A expenses in the first quarter of 2016 increased $18.6 million compared to 2015. The expense growth reflects an approximate $16 million increase in compensation costs primarily due to higher headcount to support business growth as well as higher headcount in support areas, for which the costs are allocated based on the Company’s revenue-split methodology. Also contributing to the increase in compensation costs was headcount from the acquisition of GGY, annual merit increases and higher incentive compensation reflecting greater achievement against full-year targeted results compared to the prior year. Additionally, there was an approximate $3 million increase in non-compensation expenses primarily due to higher rent and occupancy and variable costs correlated with business growth.
Adjusted Operating Income was $63.5 million in the first quarter of 2016 and increased $6.9 million compared to 2015. Operating income of $51.1 million in the first quarter of 2016 increased $7.1 million compared to 2015. Adjusted Operating Margin for the first quarter of 2016 was 21.6% compared to 21.2% in 2015. Operating margin was 17.4% in the first quarter of 2016 compared to 16.5% in the prior year. Adjusted operating income and operating income both include intersegment revenue and expense.
 Liquidity and Capital Resources
Cash Flow
The Company is currently financing its operations, capital expenditures and share repurchases from cash flow from operating and financing activities. The following is a summary of the changes in the Company’s cash flows followed by a brief discussion of these changes:

 	  	Three Months Ended
March 31,	 	  	$ Change	 	
 	  	2016	 	  	2015	 	  	 	 	
Net cash provided by operating activities	  	$	237.3	  	  	$	261.8	  	  	$	(24.5	) 	
Net cash used in investing activities.	  	$	(108.4	) 	  	$	(49.3	) 	  	$	(59.1	) 	
Net cash (used in) provided by financing activities	  	$	(339.2	) 	  	$	123.9	  	  	$	(463.1	) 	
Free Cash Flow*	  	$	211.0	  	  	$	242.8	  	  	$	(31.8	) 	
 
*	Free Cash Flow is a non-GAAP financial measure. Refer to the section “Non-GAAP Financial Measures” of this MD&A for further information on this financial measure.	
Net cash provided by operating activities
Net cash flows from operating activities decreased $24.5 million compared to the prior year. The decrease was primarily due to lower net income of $44.7 million. This was partially offset by an approximate $29 million increase primarily relating to higher incentive compensation payouts in 2015 compared to 2016 which reflected lower achievement against full-year targeted results in 2015 compared to achievement in 2014. The remaining decrease in cash flow from operations is due to various other changes in working capital.
 
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Net cash used in investing activities
The $59.1 million increase in cash used in investing activities is primarily due to:
 
 	•	 	cash paid, net of cash acquired, of $75.9 million to acquire GGY;	
 
 	•	 	$18.5 million less cash received upon maturity of FX forward contracts designated as net investment hedges;	
Partially offset by:
 
 	•	 	lower net purchases of investments of $42.6 million.	
Net cash used in financing activities
The $463.1 million increase in cash used in financing activities was attributed to:
 
 	•	 	net proceeds of $552.8 million in 2015 reflecting the issuance of the 2015 Senior Notes;	
Partially offset by:
 
 	•	 	treasury shares repurchased of $262.1 million in the first three months of 2016 compared to $365.8 million in the first three months of 2015;	
Cash and short-term investments held in non-U.S. jurisdictions
The Company’s aggregate cash and cash equivalents and short-term investments of $2.1 billion at March 31, 2016 consisted of approximately $1.5 billion located outside of the U.S. Approximately 32% of the Company’s aggregate cash and cash equivalents and short-term investments is denominated in euros and British pounds. Approximately 95% of the cash and cash equivalents and short-term investments in the Company’s non-U.S. operations are held by entities whose undistributed earnings are indefinitely reinvested in the Company’s foreign operations. Accordingly, the Company has not provided deferred income taxes on these indefinitely reinvested earnings. A future distribution or change in assertion regarding reinvestment by the foreign subsidiaries relating to these earnings could result in additional tax liability to the Company. It is not practicable to determine the amount of the potential additional tax liability due to complexities in the tax laws and in the hypothetical calculations that would have to be made. The Company manages both its U.S. and international cash flow to maintain sufficient liquidity in all regions to effectively meet its operating needs.
Indebtedness
At March 31, 2016, Moody’s had $3.4 billion of outstanding debt and $1.0 billion of additional capacity available under the 2015 Facility. At March 31, 2016, the Company was in compliance with all covenants contained within all of the debt agreements. The 2015 Facility, the 2007 Agreement, the 2010 Indenture, the 2012 Indenture, the 2013 Indenture, the 2014 Indenture and the 2015 Indenture 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 March 31, 2016, there were no such cross defaults.
 
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The repayment schedule for the Company’s borrowings is as follows:

Year Ended
December 31,	  	Series 2007-1
Notes	 	  	2010 Senior
Notes	 	  	2012 Senior
Notes	 	  	2013 Senior
Notes	 	  	2014 Senior
Notes (5-Year)	 	  	2014 Senior
Notes (30-Year)	 	  	2015 Senior
Notes (1)	 	  	Total	 	
2016 (after March 31,)	  	$	—  	  	  	$	—  	  	  	$	—  	  	  	$	—  	  	  	$	—  	  	  	$	—  	  	  	$	—  	  	  	$	—  	  	
2017	  	 	300.0	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	300.0	  	
2018	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
2019	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	450.0	  	  	 	—  	  	  	 	—  	  	  	 	450.0	  	
2020	  	 	—  	  	  	 	500.0	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	  	 	500.0	  	
Thereafter	  	 	—  	  	  	 	—  	  	  	 	500.0	  	  	 	500.0	  	  	 	—  	  	  	 	600.0	  	  	 	569.8	  	  	 	2,169.8	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	300.0	  	  	$	500.0	  	  	$	500.0	  	  	$	500.0	  	  	$	450.0	  	  	$	600.0	  	  	$	569.8	  	  	$	3,419.8	  	

(1)  	Based on end of quarter FX rates	
Management may consider pursuing additional long-term financing when it is appropriate in light of cash requirements for operations, share repurchases and other strategic opportunities, which would result in higher financing costs.
Other Material Future Cash Requirements
The Company believes that it has the financial resources needed to meet its cash requirements and expects to have positive operating cash flow for the next twelve months. Cash requirements for periods beyond the next twelve months will depend, among other things, on the Company’s profitability and its ability to manage working capital requirements. The Company may also borrow from various sources.
The Company remains committed to using its strong cash flow to create value for shareholders by investing in growing areas of the business, reinvesting in ratings quality initiatives, making selective acquisitions, repurchasing stock and paying a dividend, all in a manner consistent with maintaining sufficient liquidity after giving effect to any additional indebtedness that may be incurred. In April 2016, the Board of Directors of the Company declared a quarterly dividend of $0.37 per share of Moody’s common stock, payable on June 10, 2016 to shareholders of record at the close of business on May 20, 2016. The continued payment of dividends at this rate, or at all, is subject to the discretion of the Board. In December 2014, the Board authorized $1.0 billion of share repurchase authority that has a remaining repurchase authority of approximately $204 million at March 31, 2016. In December 2015, the Board authorized an additional $1.0 billion of share repurchase authority which will be utilized following the completion of the program authorized in December 2014. Full-year 2016 total share repurchases are expected to be approximately $1 billion, subject to available cash, market conditions and other ongoing capital allocation decisions.
On February 6, 2008, the Company entered into an operating lease agreement to occupy six floors of an office tower located in the Canary Wharf district of London, England. The Canary Wharf Lease has an initial term of 17.5-years with a total of 15 years of renewal options. The total base rent of the Canary Wharf Lease over its initial 17.5-year term is approximately £134 million, and the Company began making base rent payments in 2011. In addition to the base rent payments, the Company will be obligated to pay certain customary amounts for its share of operating expenses and tax obligations. The total remaining lease payments as of March 31, 2016 are approximately £92 million, of which approximately £9 million will be paid in the next twelve months. Payments under this lease agreement are included in the contractual obligations table below.
 
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On October 20, 2006, the Company entered into an operating lease agreement with 7 World Trade Center, LLC for 589,945 square-feet of an office building located at 7WTC at 250 Greenwich Street, New York, New York, which is serving as Moody’s headquarters. The 7WTC Lease has an initial term of 21 years with a total of 20 years of renewal options. The total base rent of 7WTC Lease over its initial 21-year term is approximately $536 million including rent credits from the World Trade Center Rent Reduction Program promulgated by the Empire State Development Corporation. On March 28, 2007, the 7WTC lease agreement was amended for the Company to lease an additional 78,568 square-feet at 7WTC. The additional base rent is approximately $106 million over a 20-year term. The total remaining lease payments as of March 31, 2016, including the aforementioned rent credits, are approximately $411 million, of which approximately $33 million will be paid during the next twelve months. Payments under this lease agreement are included in the contractual obligations table below.
The Company anticipates making an approximate $22 million contribution to its U.S. defined benefit funded pension plan during the remainder of 2016.
Off-Balance Sheet Arrangements
At March 31, 2016, Moody’s did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as special purpose or variable interest entities where Moody’s is the primary beneficiary, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, Moody’s is not exposed to any financing, liquidity market or credit risk that could arise if it had engaged in such relationships.
Contractual Obligations
The following table presents payments due under the Company’s contractual obligations as of March 31, 2016:

 	  	 	 	  	Payments Due by Period	 	
(in millions)	  	Total	 	  	Less Than 1 Year	 	  	1 -3 Years	 	  	3 - 5 Years	 	  	Over 5 Years	 	
Indebtedness (1)	  	$	4,943.2	  	  	$	137.2	  	  	$	547.0	  	  	$	1,163.0	  	  	$	3,096.0	  	
Operating lease obligations	  	 	811.5	  	  	 	95.8	  	  	 	173.1	  	  	 	141.5	  	  	 	401.1	  	
Capital lease obligations	  	 	1.2	  	  	 	0.6	  	  	 	0.6	  	  	 	—  	  	  	 	—  	  	
Purchase obligations	  	 	167.6	  	  	 	69.1	  	  	 	64.0	  	  	 	34.5	  	  	 	—  	  	
Pension obligations (2)	  	 	161.7	  	  	 	28.9	  	  	 	44.5	  	  	 	17.3	  	  	 	71.0	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total (3)	  	$	6,085.2	  	  	$	331.6	  	  	$	829.2	  	  	$	1,356.3	  	  	$	3,568.1	  	

(1)  	Reflects principal payments, related interest and applicable fees due on the Series 2007-1 Notes, the 2010 Senior Notes, the 2012 Senior Notes, the 2013 Senior Notes, the 2014 Senior Notes (5-year), the 2014 Senior Notes (30-year), the 2015 Senior Notes and the 2015 Facility as described in Note 13 to the condensed consolidated financial statements.	
(2)  	Reflects projected benefit contributions to the Company’s funded U.S. DBPP and payments relating to the Company’s U.S. unfunded DBPPs and Retirement and Other Plans described in Note 12 to the condensed consolidated financial statements	
(3)  	The table above does not include the Company’s net long-term tax liabilities of $211.6 million relating to UTP and Legacy Tax Matters, since the expected cash outflow of such amounts by period cannot be reasonably estimated.	
Dividends
On April 11, 2016, the Board approved the declaration of a quarterly dividend of $0.37 per share of Moody’s common stock, payable on June 10, 2016 to shareholders of record at the close of business on May 20, 2016.
Non-GAAP Financial Measures:
In addition to its reported results, Moody’s has included in this MD&A certain adjusted results that the SEC defines as “non-GAAP financial measures.” Management believes that such non-GAAP financial measures, when read in conjunction with the Company’s reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company’s
 
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performance, facilitate comparisons to competitors’ operating results and can provide greater transparency to investors of supplemental information used by management in its financial and operational decision-making. These non-GAAP measures, as defined by the Company, are not necessarily comparable to similarly defined measures of other companies. Furthermore, these non-GAAP measures should not be viewed in isolation or used as a substitute for other GAAP measures in assessing the operating performance or cash flows of the Company. Below are brief descriptions of the Company’s non-GAAP financial measures accompanied by a reconciliation of the non-GAAP measure to its most directly comparable GAAP measure:
Constant Currency Measures :
The Company presents revenue and operating income growth on a constant currency basis because management deems this metric to be a useful measure of assessing the operations of the Company in times of foreign exchange rate volatility. Constant currency measures exclude the impact of changes in foreign exchange rates on operating results. The Company calculates the dollar impact of foreign exchange as the difference between the translation of its current period non-USD functional currency results using prior comparative period weighted average foreign exchange translation rates and current year as reported results. Growth rates on a constant currency basis are determined based on the difference between current period revenue and operating income translated using prior period comparative weighted average exchange rates and prior period as reported results divided by prior as reported results. Below is a reconciliation of the Company’s as reported revenue and operating income changes to the changes on a constant currency basis:

   	  	Three Months Ended March 31, 2016	 	
 	  	RD&A	 	 	ERS	 	 	PS	 	 	Total MA	 	
 	  	Revenue	 	 	Revenue	 	 	Revenue	 	 	Revenue	 	
 	  	$	 	  	%	 	 	$	 	  	%	 	 	$	 	  	%	 	 	$	 	  	%	 	
Reported change	  	$	 15.3	  	  	 	10	% 	 	$	 12.4	  	  	 	16	% 	 	$	 —  	  	  	 	—  	  	 	$	 27.7	  	  	 	11	% 	
FX impact	  	 	3.7	  	  	 	3	% 	 	 	1.4	  	  	 	2	% 	 	 	0.9	  	  	 	2	% 	 	 	6.0	  	  	 	2	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Constant currency change	  	$	19.0	  	  	 	13	% 	 	$	13.8	  	  	 	18	% 	 	$	0.9	  	  	 	2	% 	 	$	33.7	  	  	 	13	% 	

									
 	  	FIG	 	
 	  	Revenue	 	
 	  	$	 	  	%	 	
Reported change	  	$	 1.1	  	  	 	1	% 	
FX impact	  	 	2.3	  	  	 	3	% 	
	  	 	 	 	  	 	 	 	
Constant currency change	  	$	3.4	  	  	 	4	% 	

																	
 	  	MCO	 	 	MCO	 	
 	  	Revenue	 	 	Expense	 	
 	  	$	 	  	%	 	 	$	 	  	%	 	
Reported change	  	$	 (49.5	) 	  	 	(6	%) 	 	$	 17.7	  	  	 	4	% 	
FX impact	  	 	12.6	  	  	 	2	% 	 	 	11.5	  	  	 	2	% 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
Constant currency change	  	$	(36.9	) 	  	 	(4	%) 	 	$	29.2	  	  	 	6	% 	

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Adjusted Operating Income and Adjusted Operating Margin :
The Company presents adjusted operating income because management deems this metric to be a useful measure of assessing the operating performance of Moody’s, measuring the Company’s ability to service debt, fund capital expenditures, and expand its business. Adjusted operating income excludes depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. Management believes that the exclusion of this item, detailed in the reconciliation below, allows for a more meaningful comparison of the Company’s results from period to period and across companies. The Company defines adjusted operating margin as adjusted operating income divided by revenue:

 	  	Three Months Ended
March  31,	 	
 	  	2016	 	 	2015	 	
Operating income	  	$	304.1	  	 	$	371.3	  	
Adjustments:	  				 				
Depreciation and amortization	  	 	29.9	  	 	 	28.6	  	
	  	 	 	 	 	 	 	 	
Adjusted Operating Income	  	$	334.0	  	 	$	399.9	  	
	  	 	 	 	 	 	 	 	
Operating Margin	  	 	37.3	% 	 	 	42.9	% 	
Adjusted Operating Margin	  	 	40.9	% 	 	 	46.2	% 	
Free Cash Flow:
The Company defines free cash flow as net cash provided by operating activities minus payments for capital additions. Management believes that free cash flow is a useful metric in assessing the Company’s cash flows to service debt, pay dividends and to fund acquisitions and share repurchases. Management deems capital expenditures essential to the Company’s product and service innovations and maintenance of Moody’s operational capabilities. Accordingly, capital expenditures are deemed to be a recurring use of Moody’s cash flow. Below is a reconciliation of the Company’s net cash flows from operating activities to free cash flow:

 	  	Three Months Ended
March 31,	 	
 	  	2016	 	  	2015	 	
Net cash flows provided by operating activities	  	$	237.3	  	  	$	261.8	  	
Capital additions	  	 	(26.3	) 	  	 	(19.0	) 	
	  	 	 	 	  	 	 	 	
Free cash flow	  	$	211.0	  	  	$	242.8	  	
	  	 	 	 	  	 	 	 	
Net cash used in investing activities	  	$	(108.4	) 	  	$	(49.3	) 	
Net cash (used in) provided by financing activities	  	$	(339.2	) 	  	$	123.9	  	
 
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 Recently Issued Accounting Standards
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”. This ASU outlines a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In August 2015, the FASB issued ASU No. 2015-14 “Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date” which defers the effective date of the ASU for annual and interim reporting periods beginning after December 15, 2017, with early adoption permitted up to the original effective date of December 15, 2016. In addition, in March and April 2016, the FASB issued additional updates clarifying the implementation guidance for the new revenue recognition standard.
The Company is currently evaluating its adoption options with regard to the aforementioned ASU’s relating to revenue recognition and the impact that adoption of these update will have on its consolidated financial statements. Currently, the Company believes this ASU will have an impact on: i) the capitalization of certain contract implementation costs for its ERS business which will be expensed as incurred under the new standard; ii) the accounting for certain software subscription revenue in MA whereby the license rights within the arrangement would be recognized at the inception of the contract based on estimated stand-alone selling price with the remainder recognized over the subscription period; iii) the accounting for certain ERS revenue arrangements where VSOE is not available should result in the acceleration of revenue recognition and iv) the accounting for contract acquisition costs which will be expensed as incurred under the new standard.
In January 2016, the FASB issued ASU No. 2016-01 “Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10).” The amendments in this ASU update various aspects of recognition, measurement, presentation and disclosures relating to financial instruments. This ASU is effective for fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact of this ASU on the Company’s financial statements.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” requiring lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses and cash flows will depend on classification as either a finance or operating lease. This ASU is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. This standard must be adopted using a modified retrospective approach whereby leases will be presented in accordance with the new standard as of the earliest period presented. The Company is currently evaluating the impact of this ASU on the Company’s financial statements.
In March 2016, the FASB issued ASU No. 2016-07, “Investments – Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity Method of Accounting.” This ASU amends the accounting for an investment not previously accounted for under the equity method that subsequently qualifies for the equity method of accounting. It requires a company to add the cost of the additional interest acquired to its current basis and the commencement of the equity method of accounting when the criteria are met. In addition, the unrealized gains or losses in accumulated other comprehensive related to an available for sale equity security should be recognized through earnings if the investment subsequently qualifies for the equity method of accounting. The amendments of this ASU are effective for fiscal years beginning after December 15, 2016, with early adoption permitted. The adoption of this ASU will only impact the Company if an investment not previously accounted for under the equity method qualifies for accounting under the equity method.
In March 2016, the FASB issued ASU No. 2016-09, “Improvements to Employee Share-Based Payment Accounting”. This ASU changes various aspects related to the accounting for share-based payments including: i) accounting for Excess Tax Benefits and shortfalls; ii) the accounting for forfeitures; iii) restrictions on the value of shares retained by an entity to fund the employee’s portion of payroll taxes; and iv) classification of Excess Tax Benefits in the statement of cash flows. This ASU is effective for fiscal years beginning after December 15, 2016 and early adoption is permitted if all amendments are adopted in the same period. The Company is evaluating the impact of this ASU on its financial statements but currently expects that the most significant effect of this ASU will be the impact on its reported Net Income and Diluted EPS as Excess Tax Benefits and shortfalls will be recorded to the provision for income taxes under this ASU as compared to a charge to capital surplus under current GAAP.
 Contingencies
Legal proceedings in which the company is involved also may impact Moody’s liquidity or operating results. No assurance can be provided as to the outcome of such proceedings. In addition, litigation inherently involves significant costs. For information regarding legal proceedings, see Item 1—“Financial Statements”, Note 14 “Contingencies.”
 
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 Regulation
MIS and many of the securities that it rates are subject to extensive regulation in both the U.S. and in other countries (including by state and local authorities). Thus, existing and proposed laws and regulations can impact the Company’s operations and the markets for securities that it rates. Additional laws and regulations have been adopted but not yet implemented or have been proposed or are being considered. Each of the existing, adopted, proposed and potential laws and regulations can increase the costs and legal risk associated with the issuance of credit ratings and may negatively impact Moody’s operations or profitability, the Company’s ability to compete, or result in changes in the demand for credit ratings, in the manner in which ratings are utilized and in the manner in which Moody’s operates.
The regulatory landscape has changed rapidly in recent years, and continues to evolve. In the EU, the CRA industry is registered and supervised through a pan-European regulatory framework. The European Securities and Markets Authority has direct supervisory responsibility for the registered CRA industry throughout the EU. MIS is a registered entity and is therefore subject to formal regulation and periodic inspection. Applicable rules include procedural requirements with respect to ratings of sovereign issuers, liability for intentional or grossly negligent failure to abide by applicable regulations, mandatory rotation requirements of CRAs hired by issuers of securities for ratings of resecuritizations, restrictions on CRAs or their shareholders if certain ownership thresholds are crossed, reporting requirements to ESMA regarding fees, and additional procedural and substantive requirements on the pricing of services.
Separately, CRA3 also requires that ESMA and / or the European Commission produce several reports on the industry’s structure and the use of ratings. In October 2015, ESMA published its reports, wherein it acknowledged the impact of regulation on the industry, and stated that it will continue to monitor the industry structure over the next three to five years. The European Commission is expected to publish its reports during the first half of 2016.
In the U.S., CRAs are subject to extensive regulation primarily pursuant to the Reform Act and the Financial Reform Act. The SEC is required by these legislative acts to publish two annual reports to Congress on NRSROs. The Financial Reform Act requires the SEC to examine each NRSRO once a year and issue an annual report summarizing the examination findings, among other requirements. The annual report required by the Reform Act details the SEC’s views on the state of competition, transparency and conflicts of interests among NRSROs, among other requirements. The SEC voted in August 2014 to adopt its final rules for NRSROs as required by the Financial Reform Act. The Company has made and continues to make substantial IT and other investments, and has implemented the relevant compliance obligations.
In light of the regulations that have gone into effect in both the EU and the U.S. (as well as many other countries), from time to time and as a matter of course pursuant to their enabling legislation these regulatory authorities have and will continue to publish reports that describe their oversight activities over the industry. In addition, other legislation and/or interpretation of existing regulation relating to credit rating and research services is being considered by local, national and multinational bodies and this type of activity is likely to continue in the future. Finally, in certain countries, governments may provide financial or other support to locally-based rating agencies. For example, governments may from time to time establish official rating agencies or credit ratings criteria or procedures for evaluating local issuers. If enacted, any such legislation and regulation could change the competitive landscape in which MIS operates. The legal status of rating agencies has been addressed by courts in various decisions and is likely to be considered and addressed in legal proceedings from time to time in the future. Management of the Company cannot predict whether these or any other proposals will be enacted, the outcome of any pending or possible future legal proceedings, or regulatory or legislative actions, or the ultimate impact of any such matters on the competitive position, financial position or results of operations of Moody’s.
 Forward-Looking Statements
Certain statements contained in this quarterly report on Form 10-Q are forward-looking statements and are based on future expectations, plans and prospects for the Company’s business and operations that involve a number of risks and uncertainties. Such statements involve estimates, projections, goals, forecasts, assumptions and uncertainties that could cause actual results or outcomes to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements. Those statements appear at various places throughout this quarterly report on Form 10-Q, including in the section entitled “Contingencies” under Item 2. “MD&A”, commencing on page 32 of this quarterly report on Form 10-Q, under “Legal Proceedings” in Part II, Item 1, of this Form 10-Q, and elsewhere in the context of statements containing the words “believe”, “expect”,
 
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“anticipate”, “intend”, “plan”, “will”, “predict”, “potential”, “continue”, “strategy”, “aspire”, “target”, “forecast”, “project”, “estimate”, “should”, “could”, “may” and similar expressions or words and variations thereof relating to the Company’s views on future events, trends and contingencies. Stockholders and investors are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements and other information are made as of the date of this quarterly report on Form 10-Q, and the Company undertakes no obligation (nor does it intend) to publicly supplement, update or revise such statements on a going-forward basis, whether as a result of subsequent developments, changed expectations or otherwise. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, the Company is identifying examples of factors, risks and uncertainties that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements.
Those factors, risks and uncertainties include, but are not limited to, the current world-wide credit market disruptions and economic slowdown, which is affecting and could continue to affect the volume of debt and other securities issued in domestic and/or global capital markets; other matters that could affect the volume of debt and other securities issued in domestic and/or global capital markets, including credit quality concerns, changes in interest rates and other volatility in the financial markets; the level of merger and acquisition activity in the U.S. and abroad; the uncertain effectiveness and possible collateral consequences of U.S. and foreign government initiatives to respond to the current world-wide credit market disruptions and economic slowdown; concerns in the marketplace affecting our credibility or otherwise affecting market perceptions of the integrity or utility of independent credit agency ratings; the introduction of competing products or technologies by other companies; pricing pressure from competitors and/or customers; the level of success of new product development and global expansion; the impact of regulation as an NRSRO, the potential for new U.S., state and local legislation and regulations, including provisions in the Financial Reform Act and regulations resulting from that Act; the potential for increased competition and regulation in the EU and other foreign jurisdictions; exposure to litigation related to our rating opinions, as well as any other litigation, government and regulatory proceedings, investigations and inquires to which the Company may be subject from time to time; provisions in the Financial Reform Act legislation modifying the pleading standards, and EU regulations modifying the liability standards, applicable to credit rating agencies in a manner adverse to credit rating agencies; provisions of EU regulations imposing additional procedural and substantive requirements on the pricing of services; the possible loss of key employees; failures or malfunctions of our operations and infrastructure; any vulnerabilities to cyber threats or other cybersecurity concerns; the outcome of any review by controlling tax authorities of the Company’s global tax planning initiatives; the outcome of those Legacy Tax Matters and legal contingencies that relate to the Company, its predecessors and their affiliated companies for which Moody’s has assumed portions of the financial responsibility; exposure to potential criminal sanctions or civil remedies if the Company fails to comply with foreign and U.S. laws and regulations that are applicable in the jurisdictions in which the Company operates, including sanctions laws, anti-corruption laws, and local laws prohibiting corrupt payments to government officials; the impact of mergers, acquisitions or other business combinations and the ability of the Company to successfully integrate acquired businesses; currency and foreign exchange volatility; the level of future cash flows; the levels of capital investments; and a decline in the demand for credit risk management tools by financial institutions. These factors, risks and uncertainties as well as other risks and uncertainties that could cause Moody’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements are described in greater detail under “Risk Factors” in Part I, Item 1A of the Company’s annual report on Form 10-K for the year ended December 31, 2015, and in other filings made by the Company from time to time with the SEC or in materials incorporated herein or therein. Stockholders and investors are cautioned that the occurrence of any of these factors, risks and uncertainties may cause the Company’s actual results to differ materially from those contemplated, expressed, projected, anticipated or implied in the forward-looking statements, which could have a material and adverse effect on the Company’s business, results of operations and financial condition. New factors may emerge from time to time, and it is not possible for the Company to predict new factors, nor can the Company assess the potential effect of any new factors on it.
 
 Item 4.	Controls and Procedures	
Evaluation of Disclosure Controls and Procedures: The Company carried out an evaluation, as required by Rule 13a-15(b) under the Exchange Act, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the communication to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
 
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In addition, the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, has determined that there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, these internal controls over financial reporting during the period covered by the report.
 
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 PART II. OTHER INFORMATION
 
 Item 1.	Legal Proceedings	
For information regarding legal proceedings, see Item 1 – “Financial Statements – Notes to Condensed Consolidated Financial Statements (Unaudited),” Note 14 “Contingencies” in this Form 10-Q.
 
 Item 1A.	Risk Factors	
There have been no material changes since December 31, 2015 to the significant risk factors and uncertainties known to the Company that, if they were to occur, could materially adversely affect the Company’s business, financial condition, operating results and/or cash flow. For a discussion of the Company’s risk factors, refer to Item 1A. “Risk Factors”, contained in the Company’s annual report on Form 10-K for the year ended December 31, 2015.
 
 Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	
MOODY’S PURCHASES OF EQUITY SECURITIES
For the Three Months Ended March 31, 2016

Period	  	Total Number of Shares
Purchased (1)	 	  	Average Price
Paid per Share	 	  	Total Number of Shares
Purchased as Part of
Publicly Announced
Program	 	  	Approximate Dollar Value of
Shares That May Yet be
Purchased Under the
Program (2)	 	
January 1 - 31	  	 	1,276,678	  	  	$	 	  	  	 	90.50	  	  	 	1,276,375	  	  	$	 	  	  	 	1,350.1 million	  	
February 1 - 29	  	 	767,617	  	  	$	 	  	  	 	85.06	  	  	 	765,585	  	  	$	 	  	  	 	1,285.0 million	  	
March 1 - 31	  	 	1,340,181	  	  	$	 	  	  	 	93.02	  	  	 	875,499	  	  	$	 	  	  	 	1,203.5 million	  	
	  	 	 	 	  				  				  	 	 	 	  				  				
Total	  	 	3,384,476	  	  	$	 	  	  	 	89.83	  	  	 	2,917,459	  	  				  				
	  	 	 	 	  				  				  	 	 	 	  				  				
(1)  	Includes surrender to the Company of 303, 2,032 and 464,682 shares of common stock in January, February and March, respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees	
(2)  	As of the last day of each of the months. In December 2015, the Board authorized a $1 billion share repurchase program which will commence following the completion of the existing program. There is no established expiration date for the remaining authorization.	
During the first quarter of 2016, Moody’s issued 1.6 million shares under employee stock-based compensation plans.
 
 Item 5.	Other Information	
Not applicable
 
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 Item 6.	Exhibits	

Exhibit
No.	  	Description	
		
    3	  	ARTICLES OF INCORPORATION AND BY-LAWS	
		
      .1	  	Amended and Restated By-laws of Moody’s Corporation, effective April 17, 2013 (incorporated by reference to Exhibit 3.2 to the Report on Form 8-K of the Registrant, file number 1-14037, filed April 22, 2013).	
		
      .2	  	Restated Certificate of Incorporation of Moody’s Corporation, dated April 17, 2013 (incorporated by reference to Exhibit 3.4 to the Report on Form 8-K of the Registrant, file number 1-14037, filed April 22, 2013).	
		
10	  		
		
      .1*	  	Second Amendment to the Profit Participation Plan of Moody’s Corporation.	
		
  31	  	CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002	
		
      .1*	  	Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	
		
      .2*	  	Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	
		
  32	  	CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002	
		
      .1*	  	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. The Company has furnished this certification and does not intend for it to be considered filed under the Securities Exchange Act of 1934 or incorporated by reference into future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934.	
		
      .2*	  	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. The Company has furnished this certification and does not intend for it to be considered filed under the Securities Exchange Act of 1934 or incorporated by reference into future filings under the Securities Act of 1933 or the Securities Exchange Act of 1934.	
		
101.DEF*	  	XBRL Definitions Linkbase Document	
		
101.INS*	  	XBRL Instance Document	
		
101.SCH*	  	XBRL Taxonomy Extension Schema Document	
		
101.CAL*	  	XBRL Taxonomy Extension Calculation Linkbase Document	
		
101.LAB*	  	XBRL Taxonomy Extension Labels Linkbase Document	
		
101.PRE*	  	XBRL Taxonomy Extension Presentation Linkbase Document	
 
*	Filed herewith	
 
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 SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	 		 	MOODY’S CORPORATION	
			
	 	By:	 	/s/ L INDA S. H UBER	
	 		 	Linda S. Huber	
	 		 	Executive Vice President and Chief Financial Officer
(principal financial officer)	
			
Date: May 3, 2016	 		 		
			
	 	By:	 	/s/ J OSEPH M C C ABE	
	 		 	Joseph McCabe	
	 		 	Senior Vice President and Corporate Controller
(principal accounting officer)	
 
51

Exhibit 10.1
SECOND AMENDMENT TO THE
PROFIT PARTICIPATION PLAN OF
MOODY’S CORPORATION
The Profit Participation Plan of Moody’s Corporation (as amended and restated as of January 1, 2014) is hereby amended, effective as of the date this Second Amendment is adopted, to add the following new Appendix B:
APPENDIX B
TREATMENT OF GGY EMPLOYEES
The following provisions shall apply to GGY Eligible Participants (as defined below):
1. Application of Plan Provisions to GGY Eligible Participants . Except as specifically noted herein, all provisions of the Plan shall apply to Eligible Employees who were employed under the GGY payroll as of the day before they transfer to the Moody’s payroll (“GGY Eligible Employees”).
2. Participating Contributions and Investment Plan Contributions . GGY Eligible Employees shall be eligible to make Participating Contributions and Investment Plan Contributions under the Plan commencing with the first payroll after they become Eligible Employees (the “Eligibility Date”).
3. Special Contributions for 2016 . Effective as of March 1, 2016, each GGY Eligible Employee shall be eligible to receive Company contributions pursuant to Section 4.2 of the Plan, based on their Compensation earned on and after such date, subject to the GGY Eligible Employee’s continued employment through the Eligibility Date. Such contributions shall be made by the Company no later than as soon as reasonably practicable following the Eligibility Date.
4. Vesting Service . For purposes of the Plan, each GGY Eligible Employee’s Vesting Service shall include the period from the GGY Eligible Employee’s most recent hire date with GGY through the Eligibility Date (in addition to service thereafter determined in accordance with the terms of the Plan).

Exhibit 31.1
CHIEF EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Raymond W. McDaniel, Jr., President and Chief Executive Officer of Moody’s Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Moody’s Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ R AYMOND W. M C D ANIEL , J R .	
Raymond W. McDaniel, Jr.	
President and Chief Executive Officer	
May 3, 2016

Exhibit 31.2
CHIEF FINANCIAL OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Linda S. Huber, Executive Vice President and Chief Financial Officer of Moody’s Corporation, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Moody’s Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periods covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ L INDA S. H UBER	
Linda S. Huber	
Executive Vice President and Chief Financial Officer	
May 3, 2016

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Moody’s Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Raymond W. McDaniel, Jr., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ R AYMOND W. M C D ANIEL , J R .	
Raymond W. McDaniel, Jr.	
President and Chief Executive Officer	
May 3, 2016

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Moody’s Corporation (the “Company”) on Form 10-Q for the period ended March 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Linda S. Huber, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ L INDA S. H UBER	
Linda S. Huber	
Executive Vice President and Chief Financial Officer	
May 3, 2016