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

Form 10-Q

(Mark one)
 
☒ 	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended March 31, 2019
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  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted 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 such files.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	 	☒	  	Accelerated filer	 	☐	
				
Non-accelerated filer	 	☐	  	Smaller reporting company	 	☐	
				
Emerging growth company	 	☐	  		 		
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
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, 2019	
Common Stock, par value $0.01 per share	  	189.6 million		

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

 	  	 	  	Page(s)	 	
	  	Glossary of Terms and Abbreviations	  	 	3-9	 	
	
PART I. FINANCIAL INFORMATION	 	
Item 1.	  	Financial Statements	  	 	10	 	
	  	Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2019 and 2018	  	 	10	 	
	  	Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended March  31, 2019 and 2018	  	 	11	 	
	  	Consolidated Balance Sheets (Unaudited) at March 31, 2019 and December 31, 2018	  	 	12	 	
	  	Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2019 and 2018	  	 	13	 	
	  	Consolidated Statements of Shareholders’ Equity (Unaudited) for the Three Months Ended March 31, 2019 and 2018	  	 	14-15	 	
	  	Notes to Condensed Consolidated Financial Statements (Unaudited)	  	 	16-43	 	
Item 2.	  	Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	 	44	 	
	  	The Company	  	 	44	 	
	  	Critical Accounting Estimates	  	 	44-45	 	
	  	Reportable Segments	  	 	45	 	
	  	Results of Operations	  	 	46-52	 	
	  	Liquidity and Capital Resources	  	 	52-57	 	
	  	Recently Issued Accounting Standards	  	 	57	 	
	  	Contingencies	  	 	57	 	
	  	Regulation	  	 	57-58	 	
	  	Forward-Looking Statements	  	 	58-59	 	
Item 3.	  	Quantitative and Qualitative Disclosures about Market Risk	  	 	59	 	
Item 4.	  	Controls and Procedures	  	 	60	 	
	
PART II. OTHER INFORMATION	 	
Item 1.	  	Legal Proceedings	  	 	61	 	
Item 1A.	  	Risk Factors	  	 	61	 	
Item 2.	  	Unregistered Sales of Equity Securities and Use of Proceeds	  	 	61	 	
Item 5.	  	Other Information	  	 	61	 	
Item 6.	  	Exhibits	  	 	62	 	
		
SIGNATURES	  	 	63	 	
Exhibits Filed Herewith	  				
10.1	  	Amendment to the Amended and Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan (as amended, December 18, 2017)	  				
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	
			
Acquisition-Related Amortization	  	Amortization of definite-lived intangible assets acquired by the Company from all business combination transactions		
			
Acquisition-Related Expenses	  	Consists of expenses incurred to complete and integrate the acquisition of Bureau van Dijk for which the integration will be a multi-year effort		
			
Adjusted Diluted EPS	  	Diluted EPS excluding the impact of certain items as detailed in the section entitled “Non-GAAP Financial Measures”		
			
Adjusted Net Income	  	Net Income excluding the impact of certain items as detailed in the section entitled “Non-GAAP Financial Measures”		
			
Adjusted Operating Income	  	Operating income excluding depreciation and amortization		
			
Adjusted Operating Margin	  	Adjusted Operating Income divided by revenue		
			
Americas	  	Represents countries within North and South America, excluding the U.S.		
			
AOCI	  	Accumulated other comprehensive income (loss); a separate component of shareholders’ equity (deficit)		
			
ASC	  	The FASB Accounting Standards Codification; the sole source of authoritative GAAP as of July 1, 2009 except for rules and interpretive releases of the SEC, which are also sources of authoritative GAAP for SEC registrants		
			
Asia-Pacific	  	Represents Australia and countries in Asia including but not limited to: China, India, Indonesia, Japan, Korea, Malaysia, Singapore, Sri Lanka and Thailand		
			
ASR	  	Accelerated Share Repurchase		
			
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		
			
Board	  	The board of directors of the Company		
			
BPS	  	Basis points		
			
Brexit	  	The withdrawal of the United Kingdom from the European Union		
			
Bureau van Dijk	  	Bureau van Dijk Electronic Publishing, B.V.; a global provider of business intelligence and company information; acquired by the Company on August 10, 2017 via the acquisition of Yellow Maple I B.V., an indirect parent of Bureau van Dijk		
			
CECL	  	Current expected credit losses		
			
CFG	  	Corporate finance group; an LOB of MIS		
			
CLO	  	Collateralized loan obligation		
 
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	TERM	  		DEFINITION	
			
CMBS	  	Commercial mortgage-backed securities; an asset class within SFG		
			
Common Stock	  	The Company’s common stock		
			
Company	  	Moody’s Corporation and its subsidiaries; MCO; Moody’s		
			
Content	  	A reporting unit within the MA segment that offers subscription based research, data and analytical products, including credit ratings produced by MIS, credit research, quantitative credit scores and other analytical tools, economic research and forecasts, business intelligence and company information products, and commercial real estate data and analytical tools		
			
CP	  	Commercial Paper		
			
CP Program	  	A program entered into on August 3, 2016 allowing the Company to privately place CP up to a maximum of $1 billion for which the maturity may not exceed 397 days from the date of issue and which is backstopped by the 2018 Facility		
			
CRAs	  	Credit rating agencies		
			
D&A	  	Depreciation and amortization		
			
DBPPs	  	Defined benefit pension plans		
			
EMEA	  	Represents countries within Europe, the Middle East and Africa		
			
EPS	  	Earnings per share		
			
ERS	  	Enterprise Risk Solutions; an LOB within MA, which offers risk management software solutions as well as related risk management advisory engagements services		
			
ESG	  	Environmental, Social, and Governance		
			
ESMA	  	European Securities and Markets Authority		
			
ETR	  	Effective tax rate		
			
EU	  	European Union		
			
EUR	  	Euros		
			
EURIBOR	  	The Euro Interbank Offered Rate		
			
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		
			
External Revenue	  	Revenue excluding any intersegment amounts		
 
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	TERM	  		DEFINITION	
			
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; now referred to as MALS		
			
FX	  	Foreign exchange		
			
GAAP	  	U.S. Generally Accepted Accounting Principles		
			
GBP	  	British pounds		
			
ICRA	  	ICRA Limited; a leading provider of credit ratings and research in India, for which the Company owns approximately 52%		
			
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		
			
KIS Research	  	Korea Investors Service Research; a Korean provider of financial research and consolidated subsidiary of the Company		
			
Korea	  	Republic of South Korea		
			
LIBOR	  	London Interbank Offered Rate		
			
LOB	  	Line of business		
			
M&A	  	Mergers and acquisitions		
			
MA	  	Moody’s Analytics – a reportable segment of MCO; 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		
			
MAKS	  	Moody’s Analytics Knowledge Services; formerly known as Copal Amba; provides offshore research and analytic services to the global financial and corporate sectors; part of the PS LOB and a reporting unit within the MA reportable segment		
			
MALS	  	Moody’s Analytics Learning Solutions; a reporting unit within the MA segment that includes on-line and classroom-based training services as well as credentialing and certification services; formerly known as FSTC		
			
MCO	  	Moody’s; Moody’s Corporation and its subsidiaries; the Company		
 
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	TERM	  		DEFINITION	
			
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		
			
Net Income	  	Net income attributable to Moody’s Corporation, which excludes net income from consolidated noncontrolling interests belonging to the minority interest holder		
			
New Lease Accounting Standard	  	Updates to the ASC pursuant to ASU No. 2016-02, “Leases (ASC Topic 842)”. This new accounting guidance requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses and cash flows depend on classification as either a finance or operating lease		
			
New Revenue Accounting Standard	  	Updates to the ASC pursuant to ASU No. 2014-09, “Revenue from Contracts with Customers (ASC Topic 606)”. This new accounting guidance significantly changes the accounting framework under U.S. GAAP relating to revenue recognition and to the accounting for the deferral of incremental costs of obtaining or fulfilling a contract with a customer		
			
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, which is a credit rating agency registered with the SEC.		
			
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 (in periods prior to January 1, 2018), certain gains and losses relating to pension and other retirement benefit obligations and foreign currency translation adjustments		
			
Omega Performance	  	A leading provider of online credit training, acquired by the Company in August 2018		
			
Operating segment	  	Term defined in the ASC relating to segment reporting; the ASC defines an operating segment as a component of a business entity that has each of the three following characteristics: i) the component engages in business activities from which it may recognize revenue and incur expenses; ii) the operating results of the component are regularly reviewed by the entity’s chief operating decision maker; and iii) discrete financial information about the component is available		
			
Other Retirement Plans	  	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		
 
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	TERM	  		DEFINITION	
			
PS	  	Professional Services, an LOB within MA consisting of MAKS and MALS that provides offshore analytical and research services as well as learning solutions and certification programs		
			
RD&A	  	Research, Data and Analytics; an LOB within MA that offers subscription based research, data and analytical products, including credit ratings produced by MIS, credit research, quantitative credit scores and other analytical tools, economic research and forecasts, business intelligence and company information products, and commercial real estate data and analytical tools		
			
Reform Act	  	Credit Rating Agency Reform Act of 2006		
			
REIT	  	Real Estate Investment Trust		
			
Reis, Inc. (Reis)	  	A leading provider of U.S. commercial real estate (CRE) data; acquired by the Company in October 2018		
			
Relationship Revenue	  	For MIS, represents recurring monitoring fees 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 revenue and software maintenance revenue		
			
Reporting unit	  	The level at which Moody’s evaluates its goodwill for impairment under U.S. GAAP; defined as an operating segment or one level below an operating segment		
			
RMBS	  	Residential mortgage-backed securities; an asset class within SFG		
			
ROU Asset	  	Assets recorded pursuant to the New Lease Accounting Standard which represent the Company’s right to use an underlying asset for the term of a lease		
			
SaaS	  	Software-as-a-Service		
			
SEC	  	U.S. Securities and Exchange Commission		
			
Securities Act	  	Securities Act of 1933, as amended		
			
SFG	  	Structured finance group; an LOB of MIS		
			
SG&A	  	Selling, general and administrative expenses		
			
Tax Act	  	The “Tax Cuts and Jobs Act” enacted into U.S. law on December 22, 2017, which significantly amends the tax code in the U.S.		
			
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 as well as data services, research and analytical engagements. For MA, represents perpetual software license fees and revenue from software implementation services, risk management advisory projects, training and certification services, and research and analytical engagements		
			
U.K.	  	United Kingdom		
 
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	TERM	  		DEFINITION	
			
U.S.	  	United States		
			
USD	  	U.S. dollar		
			
UTPs	  	Uncertain tax positions		
			
Vigeo Eiris	  	A global leader in ESG research, data and assessments, acquired by the Company on April 11, 2019.		
			
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		
			
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 pursuant to the 2014 Indenture; repaid in 2019		
			
2014 Senior Notes (30-Year)	  	Principal amount of $600 million, 5.25% senior unsecured notes due in July 2044 pursuant to the 2014 Indenture		
			
2015 Facility	  	Five-year unsecured revolving credit facility, with capacity to borrow up to $1 billion; backstops CP issued under the CP Program		
			
2015 Indenture	  	Supplemental indenture and related agreements dated March 9, 2015, relating to the 2015 Senior Notes		
			
2015 Senior Notes	  	Principal amount of €500 million, 1.75% senior unsecured notes issued March 9, 2015 pursuant to the 2015 Indenture ; repaid in 2018		
			
2017 Floating Rate Senior Notes	  	Principal amount of $300 million, floating rate senior unsecured notes due in September 2018 pursuant to the 2017 Indenture		
			
2017 Indenture	  	Collectively the Supplemental indenture and related agreements dated March 2, 2017, relating to the 2017 Floating Rate Senior Notes and 2017 Notes Due 2023 and 2028, and the supplemental indenture and related agreements dated June 12, 2017, relating to the 2017 Notes Due 2023 and 2028		
			
2017 Senior Notes Due 2023	  	Principal amount of $500 million, 2.625% senior unsecured notes due January 15, 2023 pursuant to the 2017 Indenture		
			
2017 Senior Notes Due 2028	  	Principal amount of $500 million, 3.25% senior unsecured notes due January 15, 2028 pursuant to the 2017 Indenture		
 
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	TERM	  		DEFINITION	
			
2017 Senior Notes Due 2021	  	Principal amount of $500 million, 2.75% senior unsecured notes due in December 2021		
			
2018 Facility	  	Five-year unsecured revolving credit facility, with capacity to borrow up to $1 billion; replaced the 2015 Facility; backstops CP issued under the CP Program		
			
2018 Senior Notes	  	Principal amount of $300 million, 3.25% senior unsecured notes due June 7, 2021		
			
2018 Senior Notes (10-year)	  	Principal amount of $400 million, 4.25% senior unsecured notes due February 1, 2029		
			
2018 Senior Notes (30-year)	  	Principal amount of $400 million, 4.875% senior unsecured notes December 17, 2048		
 
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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,	 	
   	 	2019	 	 	2018	 	
Revenue	 	$	1,142.1	 	 	$	1,126.7	 	
	 	 	 	 	 	 	 	 	
Expenses	 				 				
Operating	 	 	341.7	 	 	 	314.9	 	
Selling, general and administrative	 	 	281.5	 	 	 	271.1	 	
Restructuring	 	 	5.5	 	 	 	—  	 	
Depreciation and amortization	 	 	50.3	 	 	 	49.1	 	
Acquisition-Related Expenses	 	 	1.4	 	 	 	0.8	 	

Total expenses	 	 	680.4	 	 	 	635.9	 	

Operating income	 	 	461.7	 	 	 	490.8	 	
			
Non-operating (expense) income, net	 				 				
Interest expense, net	 	 	(52.5	) 	 	 	(50.7	) 	
Other non-operating income, net	 	 	2.3	 	 	 	1.0	 	

Non-operating expense, net	 	 	(50.2	) 	 	 	(49.7	) 	

Income before provision for income taxes	 	 	411.5	 	 	 	441.1	 	
Provision for income taxes	 	 	37.9	 	 	 	64.3	 	

Net income	 	 	373.6	 	 	 	376.8	 	
Less: Net income attributable to noncontrolling interests	 	 	0.7	 	 	 	3.9	 	
	 	 	 	 	 	 	 	 	
Net income attributable to Moody’s	 	$	372.9	 	 	$	372.9	 	

Earnings per share	 				 				
Basic	 	$	1.96	 	 	$	1.95	 	
	 	 	 	 	 	 	 	 	
Diluted	 	$	1.93	 	 	$	1.92	 	

Weighted average shares outstanding	 				 				
Basic	 	 	190.4	 	 	 	191.4	 	
	 	 	 	 	 	 	 	 	
Diluted	 	 	192.8	 	 	 	194.5	 	
	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
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MOODY’S CORPORATION
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(Amounts in millions)

 	 	Three Months Ended March 31,	 	
 	 	2019	 	 	2018	 	
 	 	Pre-tax
amounts	 	 	Tax
amounts	 	 	After-tax
amounts	 	 	Pre-tax
amounts	 	  	Tax
amounts	 	  	After-tax
amounts	 	
Net Income	 				 				 	$	373.6	 	 				  				  	$	376.8	 	

Other Comprehensive Income (Loss):	 				 				 				 				  				  				
Foreign Currency Adjustments:	 				 				 				 				  				  				
Foreign currency translation adjustments, net	 	$	(26.7	) 	 	$	—  	 	 	 	(26.7	) 	 	$	136.1	 	  	$	—  	 	  	 	136.1	 	
Net gains (losses) on net investment hedges	 	 	30.4	 	 	 	(6.9	) 	 	 	23.5	 	 	 	(14.5	) 	  	 	3.6	 	  	 	(10.9	) 	
Cash Flow Hedges:	 				 				 				 				  				  				
Net realized and unrealized gains on cash flow hedges	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	1.9	 	  	 	(0.4	) 	  	 	1.5	 	
Reclassification of gains included in net income	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(0.1	) 	  	 	—  	 	  	 	(0.1	) 	
Pension and Other Retirement Benefits:	 				 				 				 				  				  				
Amortization of actuarial losses and prior service costs included in net income	 	 	0.8	 	 	 	(0.2	) 	 	 	0.6	 	 	 	1.4	 	  	 	(0.4	) 	  	 	1.0	 	
Net actuarial gains and prior service costs	 	 	1.1	 	 	 	(0.3	) 	 	 	0.8	 	 	 	—  	 	  	 	—  	 	  	 	—  	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Total Other Comprehensive (Loss) Income	 	$	5.6	 	 	$	(7.4	) 	 	$	(1.8	) 	 	$	124.8	 	  	$	2.8	 	  	$	127.6	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Comprehensive Income	 				 				 	 	371.8	 	 				  				  	 	504.4	 	
Less: comprehensive income attributable to noncontrolling interests	 				 				 	 	8.2	 	 				  				  	 	8.9	 	
	 				 				 	 	 	 	 				  				  	 	 	 	
Comprehensive Income Attributable to Moody’s	 				 				 	$	363.6	 	 				  				  	$	495.5	 	
	 				 				 	 	 	 	 				  				  	 	 	 	
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,
2019	 	 	December 31,
2018	 	
ASSETS	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	1,196.6	 	 	$	1,685.0	 	
Short-term investments	  	 	114.0	 	 	 	132.5	 	
Accounts receivable, net of allowances of $46.0 in 2019 and $43.5 in 2018	  	 	1,301.2	 	 	 	1,287.1	 	
Other current assets	  	 	286.6	 	 	 	282.3	 	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	2,898.4	 	 	 	3,386.9	 	
Property and equipment, net of accumulated depreciation of $834.9 in 2019 and $790.2 in 2018	  	 	318.7	 	 	 	320.4	 	
Operating lease right-of-use assets	  	 	508.1	 	 	 	—  	 	
Goodwill	  	 	3,762.5	 	 	 	3,781.3	 	
Intangible assets, net	  	 	1,530.4	 	 	 	1,566.1	 	
Deferred tax assets, net	  	 	178.8	 	 	 	197.2	 	
Other assets	  	 	321.2	 	 	 	274.3	 	
	  	 	 	 	 	 	 	 	
Total assets	  	$	9,518.1	 	 	$	9,526.2	 	
	  	 	 	 	 	 	 	 	
LIABILITIES, NONCONTROLLING INTERESTS AND SHAREHOLDERS’ EQUITY	 	 				
Current liabilities:	  				 				
Accounts payable and accrued liabilities	  	$	537.1	 	 	$	695.2	 	
Current portion of operating lease liabilities	  	 	87.4	 	 	 	—  	 	
Commercial paper	  	 	318.8	 	 	 	—  	 	
Current portion of long-term debt	  	 	—  	 	 	 	449.9	 	
Deferred revenue	  	 	1,062.3	 	 	 	953.4	 	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	2,005.6	 	 	 	2,098.5	 	
Non-current portion of deferred revenue	  	 	120.9	 	 	 	122.3	 	
Long-term debt	  	 	5,228.6	 	 	 	5,226.1	 	
Deferred tax liabilities, net	  	 	353.4	 	 	 	351.7	 	
Uncertain tax positions	  	 	474.5	 	 	 	494.6	 	
Operating lease liabilities	  	 	523.5	 	 	 	—  	 	
Other liabilities	  	 	486.6	 	 	 	576.5	 	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	9,193.1	 	 	 	8,869.7	 	
	  	 	 	 	 	 	 	 	
Contingencies (Note 19)	  	 	—  	 	 	 	—  	 	
Shareholders’ equity:	  				 				
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, 2019 and December 31, 2018, respectively.	  	 	3.4	 	 	 	3.4	 	
Capital surplus	  	 	435.7	 	 	 	600.9	 	
Retained earnings	  	 	8,893.6	 	 	 	8,594.4	 	
Treasury stock, at cost; 153,299,621 and 151,598,695 shares of common stock at March 31, 2019 and December 31, 2018, respectively	  	 	(8,754.0	) 	 	 	(8,312.5	) 	
Accumulated other comprehensive loss	  	 	(455.5	) 	 	 	(426.3	) 	
	  	 	 	 	 	 	 	 	
Total Moody’s shareholders’ equity	  	 	123.2	 	 	 	459.9	 	
Noncontrolling interests	  	 	201.8	 	 	 	196.6	 	
	  	 	 	 	 	 	 	 	
Total shareholders’ equity	  	 	325.0	 	 	 	656.5	 	
	  	 	 	 	 	 	 	 	
Total liabilities, noncontrolling interests and shareholders’ equity	  	$	9,518.1	 	 	$	9,526.2	 	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
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MOODY’S CORPORATION
 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in millions)

   	  	Three Months Ended
March 31,	 	
   	  	2019	 	 	2018	 	
Cash flows from operating activities	  				 				
Net income	  	$	373.6	 	 	$	376.8	 	
Reconciliation of net income to net cash provided by operating activities:	  				 				
Depreciation and amortization	  	 	50.3	 	 	 	49.1	 	
Stock-based compensation	  	 	35.7	 	 	 	35.1	 	
Deferred income taxes	  	 	13.8	 	 	 	(4.2	) 	
Changes in assets and liabilities:	  				 				
Accounts receivable	  	 	(8.5	) 	 	 	(29.9	) 	
Other current assets	  	 	(5.9	) 	 	 	47.8	 	
Other assets	  	 	(13.5	) 	 	 	(14.5	) 	
Accounts payable and accrued liabilities	  	 	(179.5	) 	 	 	(224.1	) 	
Restructuring	  	 	(2.5	) 	 	 	(0.1	) 	
Deferred revenue	  	 	103.9	 	 	 	167.7	 	
Unrecognized tax benefits and other non-current tax liabilities	  	 	(21.9	) 	 	 	(17.9	) 	
Other liabilities	  	 	21.6	 	 	 	5.7	 	
	  	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	367.1	 	 	 	391.5	 	
	  	 	 	 	 	 	 	 	
Cash flows from investing activities	  				 				
Capital additions	  	 	(20.0	) 	 	 	(15.0	) 	
Purchases of investments	  	 	(37.8	) 	 	 	(50.3	) 	
Sales and maturities of investments	  	 	50.6	 	 	 	41.1	 	
Cash received upon disposal of a subsidiary, net of cash transferred to purchaser	  	 	—  	 	 	 	5.7	 	
	  	 	 	 	 	 	 	 	
Net cash used in investing activities	  	 	(7.2	) 	 	 	(18.5	) 	
	  	 	 	 	 	 	 	 	
Cash flows from financing activities	  				 				
Repayment of notes	  	 	(450.0	) 	 	 	—  	 	
Issuance of commercial paper	  	 	402.8	 	 	 	219.6	 	
Repayment of commercial paper	  	 	(85.0	) 	 	 	(259.6	) 	
Proceeds from stock-based compensation plans	  	 	14.2	 	 	 	28.5	 	
Repurchase of shares related to stock-based compensation	  	 	(50.6	) 	 	 	(42.0	) 	
Treasury shares	  	 	(448.2	) 	 	 	(43.4	) 	
Cash paid for ASR contract relating to shares retained by counterparty until final settlement	  	 	(125.3	) 	 	 	—  	 	
Dividends	  	 	(94.4	) 	 	 	(84.1	) 	
Dividends to noncontrolling interests	  	 	—  	 	 	 	(1.1	) 	
Payment for noncontrolling interest	  	 	(12.3	) 	 	 	—  	 	
Debt issuance costs, extinguishment costs and related fees	  	 	—  	 	 	 	(0.2	) 	
	  	 	 	 	 	 	 	 	
Net cash used in financing activities	  	 	(848.8	) 	 	 	(182.3	) 	
	  	 	 	 	 	 	 	 	
Effect of exchange rate changes on cash and cash equivalents	  	 	0.5	 	 	 	15.1	 	
	  	 	 	 	 	 	 	 	
(Decrease) increase in cash and cash equivalents	  	 	(488.4	) 	 	 	205.8	 	
Cash and cash equivalents, beginning of period	  	 	1,685.0	 	 	 	1,071.5	 	
	  	 	 	 	 	 	 	 	
Cash and cash equivalents, end of period	  	$	1,196.6	 	 	$	1,277.3	 	
	  	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the condensed consolidated financial statements
 
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MOODY’S CORPORATION
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
(Amounts in millions)

   	 	Shareholders of Moody’s Corporation	 	 	 	 	 	 	 	 	 	 	
   	 	Common Stock	 	 	Capital
Surplus	 	 	Retained
Earnings	 	 	Treasury Stock	 	 	Accumulated
Other
Comprehensive
Loss	 	 	Total
Moody’s
Shareholders’
(Deficit)
Equity	 	 	Non-Controlling
Interests	 	 	Total
Shareholders’
(Deficit)
Equity	 	
   	 	Shares	 	 	Amount	 							 	Shares	 	 	Amount	 													
Balance at December 31, 2017	 	 	342.9	 	 	$	3.4	 	 	$	528.6	 	 	$	7,465.4	 	 	 	(151.9	) 	 	$	(8,152.9	) 	 	$	(172.2	) 	 	$	(327.7	) 	 	$	212.8	 	 	$	(114.9	) 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 				 				 				 	 	372.9	 	 				 				 				 	 	372.9	 	 	 	3.9	 	 	 	376.8	 	
Dividends ($0.44 per share)	 				 				 				 	 	(83.7	) 	 				 				 				 	 	(83.7	) 	 	 	(1.4	) 	 	 	(85.1	) 	
Adoption of New Revenue Accounting Standard	 				 				 				 	 	156.1	 	 				 				 				 	 	156.1	 	 				 	 	156.1	 	
Adoption of ASU 2016-01 relating to financial instruments	 				 				 				 	 	2.3	 	 				 				 	 	(2.3	) 	 	 	—  	 	 				 	 	—  	 	
Stock-based compensation	 				 				 	 	35.2	 	 				 				 				 				 	 	35.2	 	 				 	 	35.2	 	
Shares issued for stock-based compensation plans at average cost, net	 				 				 	 	(57.2	) 	 				 	 	1.2	 	 	 	24.9	 	 				 	 	(32.3	) 	 				 	 	(32.3	) 	
Treasury shares repurchased	 				 				 				 				 	 	(0.3	) 	 	 	(43.4	) 	 				 	 	(43.4	) 	 				 	 	(43.4	) 	
Currency translation adjustment and net gain on net investment hedges (net of tax of $3.6 million)	 				 				 				 				 				 				 	 	120.2	 	 	 	120.2	 	 	 	5.0	 	 	 	125.2	 	
Amortization of prior service costs and actuarial losses, (net of tax of $0.4 million)	 				 				 				 				 				 				 	 	1.0	 	 	 	1.0	 	 				 	 	1.0	 	
Net realized gain on cash flow hedges (net of tax of $0.4 million)	 				 				 				 				 				 				 	 	1.4	 	 	 	1.4	 	 				 	 	1.4	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at March 31, 2018	 	 	342.9	 	 	$	3.4	 	 	$	506.6	 	 	$	7,913.0	 	 	 	(151.0	) 	 	$	(8,171.4	) 	 	$	(51.9	) 	 	$	199.7	 	 	$	220.3	 	 	$	420.0	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The accompanying notes are an integral part of the condensed consolidated financial statements.
 
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MOODY’S CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)
(Amounts in millions)

   	 	Shareholders of Moody’s Corporation	 	 	 	 	 	 	 	 	 	 	
   	 	Common Stock	 	 	Capital
Surplus	 	 	Retained
Earnings	 	 	Treasury Stock	 	 	Accumulated
Other
Comprehensive
Loss	 	 	Total
Moody’s
Shareholders’
(Deficit)
Equity	 	 	Non-Controlling
Interests	 	 	Total
Shareholders’
(Deficit)
Equity	 	
   	 	Shares	 	 	Amount	 							 	Shares	 	 	Amount	 													
Balance at December 31, 2018	 	 	342.9	 	 	$	3.4	 	 	$	600.9	 	 	$	8,594.4	 	 	 	(151.6	) 	 	$	(8,312.5	) 	 	$	(426.3	) 	 	$	459.9	 	 	$	196.6	 	 	$	656.5	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	 				 				 				 	 	372.9	 	 				 				 				 	 	372.9	 	 	 	0.7	 	 	 	373.6	 	
Dividends ($0.50 per share)	 				 				 				 	 	(93.5	) 	 				 				 				 	 	(93.5	) 	 	 	(0.2	) 	 	 	(93.7	) 	
Adoption of ASU 2018-02 (See Note 1)	 				 				 				 	 	19.8	 	 				 				 	 	(19.8	) 	 	 	—  	 	 				 	 	—  	 	
Stock-based compensation	 				 				 	 	35.8	 	 				 				 				 				 	 	35.8	 	 				 	 	35.8	 	
Shares issued for stock-based compensation plans at average cost, net	 				 				 	 	(66.3	) 	 				 	 	1.0	 	 	 	6.7	 	 				 	 	(59.6	) 	 				 	 	(59.6	) 	
Purchase of noncontrolling interest	 				 				 	 	(9.4	) 	 				 				 				 				 	 	(9.4	) 	 	 	(2.9	) 	 	 	(12.3	) 	
Treasury shares repurchased	 				 				 				 				 	 	(2.7	) 	 	 	(448.2	) 	 				 	 	(448.2	) 	 				 	 	(448.2	) 	
Accelerated Share Repurchase pending final settlement	 				 				 	 	(125.3	) 	 				 				 				 				 	 	(125.3	) 	 				 	 	(125.3	) 	
Currency translation adjustment and net gain on net investment hedges (net of tax of $6.9 million)	 				 				 				 				 				 				 	 	(10.8	) 	 	 	(10.8	) 	 	 	7.6	 	 	 	(3.2	) 	
Net actuarial gains and prior service cost (net of tax of $0.3 million)	 				 				 				 				 				 				 	 	0.8	 	 	 	0.8	 	 				 	 	0.8	 	
Amortization of prior service costs and actuarial losses, (net of tax of $0.2 million)	 				 				 				 				 				 				 	 	0.6	 	 	 	0.6	 	 				 	 	0.6	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at March 31, 2019	 	 	342.9	 	 	$	3.4	 	 	$	435.7	 	 	$	8,893.6	 	 	 	(153.3	) 	 	$	(8,754.0	) 	 	$	(455.5	) 	 	$	123.2	 	 	$	201.8	 	 	$	325.0	 	
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
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 that support financial risk management activities; (iv) quantitatively derived credit scores; (v) learning solutions and certification services; (vi) offshore financial research and analytical services; and (vii) company information and business intelligence products. Moody’s reports in 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 financial instrument pricing services in the Asia-Pacific region as well as revenue from ICRA’s non-ratings operations. The revenue from these operations is included in the MIS Other LOB and is not material to the results of the MIS segment.
MA provides financial intelligence and analytical tools to assist businesses in making decisions. MA’s portfolio of solutions consists of specialized research, data, software, and professional services, which are assembled to support the financial analysis and risk management activities of institutional customers worldwide.
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 2018 annual report on Form 10-K filed with the SEC on February 22, 2019. The results of interim periods are not necessarily indicative of results for the full year or any subsequent period. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation of financial position, results of operations and cash flows at the dates and for the periods presented have been included. The year-end consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
Certain reclassifications have been made to prior period amounts to conform to the current presentation.
Adoption of New Accounting Standards
On January 1, 2019, the Company adopted ASU No. 2016-02, “Leases (Topic 842)” and has elected to apply the provisions of the New Lease Accounting Standard on the date of adoption with adjustments to the assets and liabilities on its opening balance sheet, with no cumulative-effect adjustment to the opening balance of retained earnings required. Accordingly, the Company will not restate prior year comparative periods for the impact of the New Lease Accounting Standard. The New Lease Accounting Standard requires lessees to recognize an ROU Asset and lease liability for all leases with terms of more than 12 months. The Company has elected the package of practical expedients permitted under the transition guidance within the New Lease Accounting Standard, which permits the Company not to reassess the following for any expired or existing contracts: i) whether any contracts contain leases; ii) lease classification (i.e. operating lease or finance/capital lease); and iii) initial direct costs.
The adoption of the New Lease Accounting Standard resulted in the recognition of an ROU Asset and lease liabilities of approximately $518 million and $622 million, respectively, at January 1, 2019, consisting primarily of operating leases relating to office space. Pursuant to this transition adjustment, the Company also recognized approximately $150 million and approximately $125 million in additional deferred tax assets and liabilities, respectively. Compared to previous guidance, the New Lease Accounting Standard does not significantly change the method by which a lessee should recognize, measure and present expenses and cash flows arising from a lease. Refer to Note 2 for a more fulsome description of the Company’s accounting policy relating to the New Lease Accounting Standard, which includes a discussion relating to the pattern of operating lease expense recognition (both prior to and subsequent to an impairment of a ROU Asset).
In the first quarter of 2019, the Company adopted ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. Under current GAAP, adjustments to deferred tax assets and liabilities related to a change in tax laws or rates are included in income from continuing operations, even in situations where the related items were originally recognized in OCI (commonly referred to as a “stranded tax effect”). The provisions of this ASU permit the reclassification of the stranded tax effect related to the Tax Act from AOCI to retained earnings. In the first quarter of 2019, the Company reclassified approximately $20 million of tax benefits from AOCI to retained earnings relating to the aforementioned stranded tax effect of the Tax Act.
 
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On January 1, 2019, the Company adopted ASU No. 2018-16, “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes”. The amendments in this ASU permit the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under ASC 815, in addition to the currently permissible benchmark interest rates. This ASU provides the Company the ability to utilize the OIS rate based on SOFR as the benchmark interest rate on certain hedges of interest rate risk. The adoption of this ASU had no impact on the Company’s financial statements upon adoption.
Reclassification of Previously Reported Revenue by LOB
There were certain organizational/product realignments in both MIS and MA in the first quarter of 2019. Accordingly, in MIS, revenue from REITs, which was previously classified in the SFG LOB, is now classified in the CFG LOB. In MA, revenue relating to the Bureau van Dijk FACT product (a credit assessment and origination solution), which was previously classified in RD&A, is now classified in the ERS LOB. Accordingly, 2018 revenue by LOB was reclassified to conform with this new presentation, as follows:

														
	MIS	  	As
previously
reported	 	  	Reclassification	 	 	As
Reclassified	 	
CFG	  				  				 					
Q1	  	$	377.7	 	  	$	11.9	 	 	$	389.6	 		
Q2	  	 	377.6	 	  	 	13.4	 	 	 	391.0	 		
Q3	  	 	296.1	 	  	 	11.2	 	 	 	307.3	 		
Q4	  	 	282.7	 	  	 	8.6	 	 	 	291.3	 		
	  	 	 	 	  	 	 	 	 	 	 	 		
Full year 2018	  	$	1,334.1	 	  	$	45.1	 	 	$	1,379.2	 		
	  	 	 	 	  	 	 	 	 	 	 	 		
SFG	  				  				 					
Q1	  	$	129.7	 	  	$	(11.9	) 	 	$	117.8	 		
Q2	  	 	141.6	 	  	 	(13.4	) 	 	 	128.2	 		
Q3	  	 	125.4	 	  	 	(11.2	) 	 	 	114.2	 		
Q4	  	 	129.8	 	  	 	(8.6	) 	 	 	121.2	 		
	  	 	 	 	  	 	 	 	 	 	 	 		
Full year 2018	  	$	526.5	 	  	$	(45.1	) 	 	$	481.4	 		

														
	MA	  	As
previously
reported	 	  	Reclassification	 	 	As
Reclassified	 	
RD&A	  				  				 					
Q1	  	$	269.2	 	  	$	(2.1	) 	 	$	267.1	 		
Q2	  	 	279.9	 	  	 	(4.0	) 	 	 	275.9	 		
Q3	  	 	282.6	 	  	 	(2.3	) 	 	 	280.3	 		
Q4	  	 	302.4	 	  	 	(5.3	) 	 	 	297.1	 		
	  	 	 	 	  	 	 	 	 	 	 	 		
Full year 2018	  	$	1,134.1	 	  	$	(13.7	) 	 	$	1,120.4	 		
	  	 	 	 	  	 	 	 	 	 	 	 		
ERS	  				  				 					
Q1	  	$	100.1	 	  	$	2.1	 	 	$	102.2	 		
Q2	  	 	105.5	 	  	 	4.0	 	 	 	109.5	 		
Q3	  	 	113.0	 	  	 	2.3	 	 	 	115.3	 		
Q4	  	 	118.8	 	  	 	5.3	 	 	 	124.1	 		
	  	 	 	 	  	 	 	 	 	 	 	 		
Full year 2018	  	$	437.4	 	  	$	13.7	 	 	$	451.1	 		

 
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
On January 1, 2019, the Company adopted the New Lease Accounting Standard as more fully discussed in Note 1. Accordingly, the Company revised its lease accounting policy to reflect the provisions of the new standard, which is discussed below. All other significant accounting policies described in the Form 10-K for the year ended December 31, 2018 remain unchanged. Additionally, refer to Note 18 for additional disclosures relating to the Company’s lease obligations.
Leases
The Company has operating leases, of which substantially all relate to the lease of office space. The Company’s leases which are classified as finance leases are not material to the condensed consolidated financial statements.
The Company determines if an arrangement meets the definition of a lease at contract inception. The Company recognizes in its consolidated balance sheet a lease liability and an ROU Asset for all leases with a lease term greater than 12 months. In determining the length of the lease term, the Company utilizes judgment in assessing the likelihood of whether it is reasonably certain that it will exercise an option to extend or early-terminate a lease, if such options are provided in the lease agreement.
 
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ROU Assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU Assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As substantially all of the Company’s leases do not provide an implicit interest rate, the Company uses its estimated secured incremental borrowing rates at the lease commencement date in determining the present value of lease payments. These secured incremental borrowing rates are attributable to the currency in which the lease is denominated.
At commencement, the Company’s initial measurement of the ROU Asset is calculated as the present value of the remaining lease payments (i.e., lease liability), with additive adjustments reflecting: initial direct costs (e.g., broker commissions) and prepaid lease payments (if any); and reduced by any lease incentives provided by the lessor if: (i) received before lease commencement or (ii) receipt of the lease incentive is contingent upon future events for which the occurrence is both probable and within the Company’s control.
Lease expense for minimum operating lease payments is recognized on a straight-line basis over the lease term. This straight-line lease expense represents a single lease cost which is comprised of both an interest accretion component relating to the lease liability and amortization of the ROU Assets. The Company records this single lease cost in operating and SG&A expenses. However, in situations where an operating lease ROU Asset has been impaired, the subsequent amortization of the ROU Asset is then recorded on a straight-line basis over the remaining lease term and is combined with accretion expense on the lease liability to result in single operating lease cost (which subsequent to impairment will no longer follow a straight-line recognition pattern).
The Company has lease agreements which include lease and non-lease components. For the Company’s office space leases, the lease components (e.g., fixed rent payments) and non-lease components (e.g., fixed common-area maintenance costs) are combined and accounted for as a single lease component.
Variable lease payments (e.g. variable common-area-maintenance costs) are only included in the initial measurement of the lease liability to the extent those payments depend on an index or a rate. Variable lease payments not included in the lease liability are recognized in net income in the period in which the obligation for those payments is incurred.
 
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NOTE 3. REVENUES
Revenue by Category
The following table presents the Company’s revenues disaggregated by LOB:

 	  	Three Months Ended March 31,	 	
 	  	2019	 	  	2018	 	
MIS:	  				  				
Corporate finance (CFG) (1)	  				  				
Investment-grade	  	$	97.4	 	  	$	87.2	 	
High-yield	  	 	57.3	 	  	 	57.9	 	
Bank loans	  	 	72.6	 	  	 	110.1	 	
Other accounts (2)	  	 	128.1	 	  	 	134.4	 	
	  	 	 	 	  	 	 	 	
Total CFG	  	 	355.4	 	  	 	389.6	 	
	  	 	 	 	  	 	 	 	
Structured finance (SFG) (1)	  				  				
Asset-backed securities	  	 	23.2	 	  	 	28.2	 	
RMBS	  	 	23.5	 	  	 	24.3	 	
CMBS	  	 	17.7	 	  	 	21.3	 	
Structured credit	  	 	35.2	 	  	 	43.4	 	
Other accounts	  	 	1.1	 	  	 	0.6	 	
	  	 	 	 	  	 	 	 	
Total SFG	  	 	100.7	 	  	 	117.8	 	
	  	 	 	 	  	 	 	 	
Financial institutions (FIG)	  				  				
Banking	  	 	79.6	 	  	 	77.0	 	
Insurance	  	 	29.0	 	  	 	28.3	 	
Managed investments	  	 	4.0	 	  	 	5.7	 	
Other accounts	  	 	3.2	 	  	 	3.3	 	
	  	 	 	 	  	 	 	 	
Total FIG	  	 	115.8	 	  	 	114.3	 	
	  	 	 	 	  	 	 	 	
Public, project and infrastructure finance (PPIF)	  				  				
Public finance / sovereign	  	 	46.2	 	  	 	46.9	 	
Project and infrastructure	  	 	46.5	 	  	 	46.3	 	
	  	 	 	 	  	 	 	 	
Total PPIF	  	 	92.7	 	  	 	93.2	 	
	  	 	 	 	  	 	 	 	
Total ratings revenue	  	 	664.6	 	  	 	714.9	 	
	  	 	 	 	  	 	 	 	
MIS Other	  	 	5.5	 	  	 	5.0	 	
	  	 	 	 	  	 	 	 	
Total external revenue	  	 	670.1	 	  	 	719.9	 	
	  	 	 	 	  	 	 	 	
Intersegment royalty	  	 	32.3	 	  	 	29.8	 	
	  	 	 	 	  	 	 	 	
Total MIS	  	 	702.4	 	  	 	749.7	 	
	  	 	 	 	  	 	 	 	
MA:	  				  				
Research, data and analytics (RD&A) (3)	  	 	307.7	 	  	 	267.1	 	
Enterprise risk solutions (ERS) (3)	  	 	121.9	 	  	 	102.2	 	
Professional services (PS)	  	 	42.4	 	  	 	37.5	 	
	  	 	 	 	  	 	 	 	
Total external revenue	  	 	472.0	 	  	 	406.8	 	
	  	 	 	 	  	 	 	 	
Intersegment revenue	  	 	2.4	 	  	 	5.0	 	
	  	 	 	 	  	 	 	 	
Total MA	  	 	474.4	 	  	 	411.8	 	
	  	 	 	 	  	 	 	 	
Eliminations	  	 	(34.7	) 	  	 	(34.8	) 	
	  	 	 	 	  	 	 	 	
Total MCO	  	$	1,142.1	 	  	$	1,126.7	 	

(1)   	Pursuant to certain organizational realignments in the first quarter of 2019, MIS now reports revenue from REITs, which was previously classified in the SFG LOB, as a component of the CFG LOB. The amounts reclassified were not material and prior year revenue by LOB has been reclassified to conform to this new presentation.	
(2)  	Other includes: recurring monitoring fees of a rated debt obligation and/or entities that issue such obligations as well as fees from programs such as commercial paper, medium term notes, and ICRA corporate finance revenue.	
(3)  	Pursuant to organizational/product realignments in the first quarter of 2019, revenue relating to the Bureau van Dijk FACT product, a credit assessment and origination software solution, is now reported in the ERS LOB. This revenue was previously reported in the RD&A LOB. Prior year revenue by LOB has been reclassified to conform to this new presentation, and the amounts reclassified were not material.	
 
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The following table presents the Company’s revenues disaggregated by LOB and geographic area:

 	  	Three Months Ended March 31, 2019	 	
 	  	U.S.	 	  	Non-U.S.	 	  	Total	 	
MIS:	  				  				  				
Corporate finance (CFG) (1)	  	$	242.6	 	  	$	112.8	 	  	$	355.4	 	
Structured finance (SFG) (1)	  	 	62.2	 	  	 	38.5	 	  	 	100.7	 	
Financial institutions (FIG)	  	 	46.0	 	  	 	69.8	 	  	 	115.8	 	
Public, project and infrastructure finance (PPIF)	  	 	60.2	 	  	 	32.5	 	  	 	92.7	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total ratings revenue	  	 	411.0	 	  	 	253.6	 	  	 	664.6	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
MIS Other	  	 	0.2	 	  	 	5.3	 	  	 	5.5	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total MIS	  	 	411.2	 	  	 	258.9	 	  	 	670.1	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
MA:	  				  				  				
Research, data and analytics (RD&A) (2)	  	 	134.8	 	  	 	172.9	 	  	 	307.7	 	
Enterprise risk solutions (ERS) (2)	  	 	48.4	 	  	 	73.5	 	  	 	121.9	 	
Professional services (PS)	  	 	17.7	 	  	 	24.7	 	  	 	42.4	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total MA	  	 	200.9	 	  	 	271.1	 	  	 	472.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total MCO	  	$	612.1	 	  	$	530.0	 	  	$	1,142.1	 	

 	  	Three Months Ended March 31, 2018	 	
 	  	U.S.	 	  	Non-U.S.	 	  	Total	 	
MIS:	  				  				  				
Corporate finance (CFG) (1)	  	$	257.3	 	  	$	132.3	 	  	$	389.6	 	
Structured finance (SFG) (1)	  	 	74.0	 	  	 	43.8	 	  	 	117.8	 	
Financial institutions (FIG)	  	 	48.5	 	  	 	65.8	 	  	 	114.3	 	
Public, project and infrastructure finance (PPIF)	  	 	53.4	 	  	 	39.8	 	  	 	93.2	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total ratings revenue	  	 	433.2	 	  	 	281.7	 	  	 	714.9	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
MIS Other	  	 	0.2	 	  	 	4.8	 	  	 	5.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total MIS	  	 	433.4	 	  	 	286.5	 	  	 	719.9	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
MA:	  				  				  				
Research, data and analytics (RD&A) (2)	  	 	112.6	 	  	 	154.5	 	  	 	267.1	 	
Enterprise risk solutions (ERS) (2)	  	 	38.5	 	  	 	63.7	 	  	 	102.2	 	
Professional services (PS)	  	 	13.2	 	  	 	24.3	 	  	 	37.5	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total MA	  	 	164.3	 	  	 	242.5	 	  	 	406.8	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total MCO	  	$	597.7	 	  	$	529.0	 	  	$	1,126.7	 	

(1)   	Pursuant to certain organizational realignments in the first quarter of 2019, MIS now reports revenue from REITs, which was previously classified in the SFG LOB, as a component of the CFG LOB. The amounts reclassified were not material and prior year revenue by LOB has been reclassified to conform to this new presentation.	
(2)  	Pursuant to organizational/product realignments in the first quarter of 2019, revenue relating to the Bureau van Dijk FACT product, a credit assessment and origination software solution, is now reported in the ERS LOB. This revenue was previously reported in the RD&A LOB. Prior year revenue by LOB has been reclassified to conform to this new presentation, and the amounts reclassified were not material.	
 
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The following table presents the Company’s reportable segment revenues disaggregated by segment and geographic region:

 	  	Three Months Ended March 31,	 	
 	  	2019	 	  	2018	 	
MIS:	  				  				
U.S.	  	$	411.2	 	  	$	433.4	 	
Non-U.S.	  				  				
EMEA	  	 	148.5	 	  	 	181.1	 	
Asia-Pacific	  	 	78.9	 	  	 	72.6	 	
Americas	  	 	31.5	 	  	 	32.8	 	
	  	 	 	 	  	 	 	 	
Total Non-U.S.	  	 	258.9	 	  	 	286.5	 	
	  	 	 	 	  	 	 	 	
Total MIS	  	 	670.1	 	  	 	719.9	 	
	  	 	 	 	  	 	 	 	
MA:	  				  				
U.S.	  	 	200.9	 	  	 	164.3	 	
Non-U.S.	  				  				
EMEA	  	 	184.1	 	  	 	166.2	 	
Asia-Pacific	  	 	53.3	 	  	 	47.6	 	
Americas	  	 	33.7	 	  	 	28.7	 	
	  	 	 	 	  	 	 	 	
Total Non-U.S.	  	 	271.1	 	  	 	242.5	 	
	  	 	 	 	  	 	 	 	
Total MA	  	 	472.0	 	  	 	406.8	 	
	  	 	 	 	  	 	 	 	
Total MCO	  	$	1,142.1	 	  	$	1,126.7	 	
	  	 	 	 	  	 	 	 	
The tables below summarize the split between transaction and relationship revenue. In the MIS segment, excluding MIS Other, transaction revenue represents the initial rating of a new debt issuance as well as other one-time fees while relationship revenue represents the recurring monitoring fees 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. In MIS Other, transaction revenue represents revenue from professional services and outsourcing engagements and relationship revenue represents subscription-based revenues. In the MA segment, relationship revenue represents subscription-based revenues and software maintenance revenue. Transaction revenue in MA represents perpetual software license fees and revenue from software implementation services, risk management advisory projects, training and certification services, and outsourced research and analytical engagements.

 	  	Three Months Ended March 31,	 	
 	  	2019	 	 	2018	 	
 	  	Transaction	 	 	Relationship	 	 	Total	 	 	Transaction	 	 	Relationship	 	 	Total	 	
Corporate Finance	  	$	249.5	 	 	$	105.9	 	 	$	355.4	 	 	$	283.4	 	 	$	106.2	 	 	$	389.6	 	
	  	 	70	% 	 	 	30	% 	 	 	100	% 	 	 	73	% 	 	 	27	% 	 	 	100	% 	
Structured Finance	  	$	57.3	 	 	$	43.4	 	 	$	100.7	 	 	$	74.6	 	 	$	43.2	 	 	$	117.8	 	
	  	 	57	% 	 	 	43	% 	 	 	100	% 	 	 	63	% 	 	 	37	% 	 	 	100	% 	
Financial Institutions	  	$	47.9	 	 	$	67.9	 	 	$	115.8	 	 	$	50.0	 	 	$	64.3	 	 	$	114.3	 	
	  	 	41	% 	 	 	59	% 	 	 	100	% 	 	 	44	% 	 	 	56	% 	 	 	100	% 	
Public, Project and Infrastructure Finance	  	$	54.7	 	 	$	38.0	 	 	$	92.7	 	 	$	54.4	 	 	$	38.8	 	 	$	93.2	 	
	  	 	59	% 	 	 	41	% 	 	 	100	% 	 	 	58	% 	 	 	42	% 	 	 	100	% 	
MIS Other	  	$	0.5	 	 	$	5.0	 	 	$	5.5	 	 	$	0.6	 	 	$	4.4	 	 	$	5.0	 	
	  	 	9	% 	 	 	91	% 	 	 	100	% 	 	 	12	% 	 	 	88	% 	 	 	100	% 	
Total MIS	  	$	409.9	 	 	$	260.2	 	 	$	670.1	 	 	$	463.0	 	 	$	256.9	 	 	$	719.9	 	
	  	 	61	% 	 	 	39	% 	 	 	100	% 	 	 	64	% 	 	 	36	% 	 	 	100	% 	
Moody’s Analytics	  	$	71.5	(1)    	 	$	400.5	 	 	$	472.0	 	 	$	60.8	(1)    	 	$	346.0	 	 	$	406.8	 	
	  	 	15	% 	 	 	85	% 	 	 	100	% 	 	 	15	% 	 	 	85	% 	 	 	100	% 	
Total Moody’s Corporation	  	$	481.4	 	 	$	660.7	 	 	$	1,142.1	 	 	$	523.8	 	 	$	602.9	 	 	$	1,126.7	 	
	  	 	42	% 	 	 	58	% 	 	 	100	% 	 	 	46	% 	 	 	54	% 	 	 	100	% 	
 
(1)	Revenue from software implementation services and risk management advisory projects, while classified by management as transactional revenue, is recognized over time under the New Revenue Accounting Standard (refer to the following table).	
 
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The following table presents the timing of revenue recognition:

 	  	Three Months Ended March 31, 2019	 	
 	  	MIS	 	  	MA	 	  	Total	 	
Revenue recognized at a point in time	  	$	409.9	 	  	$	30.4	 	  	$	440.3	 	
Revenue recognized over time	  	 	260.2	 	  	 	441.6	 	  	 	701.8	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	670.1	 	  	$	472.0	 	  	$	1,142.1	 	

 	  	Three Months Ended March 31, 2018	 	
 	  	MIS	 	  	MA	 	  	Total	 	
Revenue recognized at a point in time	  	$	463.0	 	  	$	15.5	 	  	$	478.5	 	
Revenue recognized over time	  	 	256.9	 	  	 	391.3	 	  	 	648.2	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	719.9	 	  	$	406.8	 	  	$	1,126.7	 	
	  	 	 	 	  	 	 	 	  	 	 	 	
Unbilled receivables, Deferred revenue and Remaining performance obligations
Unbilled receivables
At March 31, 2019 and December 31, 2018, accounts receivable included $364.9 million and $311.8 million, respectively, of unbilled receivables related to the MIS segment. Certain MIS arrangements contain contractual terms whereby the customers are billed in arrears for annual monitoring services, requiring revenue to be accrued as an unbilled receivable as such services are provided.
In addition, for certain MA arrangements, the timing of when the Company has the unconditional right to consideration and recognizes revenue occurs prior to invoicing the customer. Consequently, at March 31, 2019 and December 31, 2018, accounts receivable included $53.3 million and $59.5 million, respectively, of unbilled receivables related to the MA segment.
Deferred revenue
The Company recognizes deferred revenue when a contract requires a customer to pay consideration to the Company in advance of when revenue related to that contract is recognized. This deferred revenue is relieved when the Company satisfies the related performance obligation and revenue is recognized.
Significant changes in the deferred revenue balances during the three months ended March 31, 2019 are as follows:

 	  	Three Months Ended March 31, 2019	 	
 	  	MIS	 	 	MA	 	 	Total	 	
Balance at January 1, 2019	  	$	325.4	 	 	$	750.3	 	 	$	1,075.7	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Changes in deferred revenue	  				 				 				
Revenue recognized that was included in the deferred revenue balance at the beginning of the period	  	 	(92.8	) 	 	 	(306.7	) 	 	 	(399.5	) 	
Increases due to amounts billable excluding amounts recognized as revenue during the period	  	 	155.2	 	 	 	346.7	 	 	 	501.9	 	
Effect of exchange rate changes	  	 	0.5	 	 	 	4.6	 	 	 	5.1	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total changes in deferred revenue	  	 	62.9	 	 	 	44.6	 	 	 	107.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance at March 31, 2019	  	$	388.3	 	 	$	794.9	 	 	$	1,183.2	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Deferred revenue - current portion	  	$	271.6	 	 	$	790.7	 	 	$	1,062.3	 	
Deferred revenue - noncurrent portion	  	$	116.7	 	 	$	4.2	 	 	$	120.9	 	
 
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Significant changes in the deferred revenue balances during the three months ended March 31, 2018 are as follows:

 	  	Three Months Ended March 31, 2018	 	
 	  	MIS	 	 	MA	 	 	Total	 	
Balance at January 1, 2018 (after New Revenue Accounting Standard transition adjustment)	  	$	334.7	 	 	$	611.6	 	 	$	946.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Changes in deferred revenue	  				 				 				
Revenue recognized that was included in the deferred revenue balance at the beginning of the period	  	 	(93.4	) 	 	 	(252.0	) 	 	 	(267.3	) 	
Increases due to amounts billable excluding amounts recognized as revenue during the period	  	 	154.9	 	 	 	357.9	 	 	 	434.7	 	
Effect of exchange rate changes	  	 	1.3	 	 	 	11.5	 	 	 	12.8	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total changes in deferred revenue	  	 	62.8	 	 	 	117.4	 	 	 	180.2	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Balance at March 31, 2018	  	$	397.5	 	 	$	729.0	 	 	$	1,126.5	 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Deferred revenue - current portion	  	$	273.4	 	 	$	725.3	 	 	$	998.7	 	
Deferred revenue - noncurrent portion	  	$	124.1	 	 	$	3.7	 	 	$	127.8	 	
The increase in deferred revenue during both the three months ended March 31, 2019 and 2018 is primarily due to the significant portion of contract renewals that occur during the first quarter within both segments.
Remaining performance obligations
The following tables include the expected recognition period for the remaining performance obligations for each reportable segment as of March 31, 2019:

MIS	
Total	 	Less than 1 year	 	1 - 5 years	 	6 - 10 Years	 	11 - 15 years	 	16-20 years	 	Over 20 Years	
$ 151.2	 	$23.5	 	$ 70.2	 	$ 41.5	 	$ 6.5	 	$ 4.1	 	$ 5.4	
The balances in the MIS table above largely reflect deferred revenue related to monitoring fees for certain structured finance products, primarily CMBS, where the issuers can elect to pay the monitoring fees for the life of the security in advance. With respect to the remaining performance obligations for the MIS segment, the Company has applied a practical expedient set forth in ASC Topic 606 permitting the omission from the table above for unsatisfied performance obligations relating to contracts with an original expected length of one year or less.

MA	
        Total        	    	Less than 1 Year	    	1 - 2 Years	    	Over 2 Years	
$ 2,053.3	    	$ 1,334.0	    	$ 491.0	    	$ 228.3	
The balances in the MA table above include both amounts recorded as deferred revenue on the balance sheet as of March 31, 2019 as well as amounts not yet invoiced to customers as of March 31, 2019 largely reflecting future revenue related to signed multi-year arrangements for hosted and installed subscription-based products.
 
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NOTE 4. 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,	 	
 	  	2019	 	  	2018	 	
Stock-based compensation expense	  	$	35.7	 	  	$	35.1	 	
Tax benefit	  	$	7.8	 	  	$	7.2	 	
During the first three months of 2019, the Company granted 0.2 million employee stock options, which had a weighted average grant date fair value of $43.10 per share based on the Black-Scholes option-pricing model. The Company also granted 0.8 million shares of restricted stock in the first three months of 2019, which had a weighted average grant date fair value of $173.58 per share. Both the employee stock options and restricted stock generally vest ratably over a four-year period. Additionally, the Company granted 0.1 million shares of performance-based awards whereby the number of shares that ultimately vest is 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 $167.82 per share.
The following weighted average assumptions were used in determining the fair value for options granted in 2019:

Expected dividend yield	  	 	1.15	% 	
Expected stock volatility	  	 	23.62	% 	
Risk-free interest rate	  	 	2.60	% 	
Expected holding period	  	 	6.2 years	 	
Grant date fair value	  	$	43.10	 	
Unrecognized stock-based compensation expense at March 31, 2019 was $11.4 million and $239.2 million for stock options and unvested restricted stock, respectively, which is expected to be recognized over a weighted average period of 2.3 years and 2.7 years, respectively. Additionally, there was $40.8 million of unrecognized stock-based compensation expense relating to the aforementioned non-market based performance-based awards, which is expected to be recognized over a weighted average period of 2.2 years.
The following table summarize information relating to stock option exercises and restricted stock vesting:

 	  	Three Months Ended	 	
 	  	March 31,	 	
 	  	2019	 	  	2018	 	
Exercise of stock options:	  				  				
Proceeds from stock option exercises	  	$	11.9	 	  	$	26.6	 	
Aggregate intrinsic value	  	$	35.6	 	  	$	61.9	 	
Tax benefit realized upon exercise	  	$	8.5	 	  	$	15.0	 	
Number of shares exercised	  	 	0.3	 	  	 	0.5	 	
Vesting of restricted stock:	  				  				
Fair value of shares vested	  	$	146.5	 	  	$	146.7	 	
Tax benefit realized upon vesting	  	$	33.6	 	  	$	33.9	 	
Number of shares vested	  	 	0.8	 	  	 	0.9	 	
Vesting of performance-based restricted stock:	  				  				
Fair value of shares vested	  	$	47.5	 	  	$	23.0	 	
Tax benefit realized upon vesting	  	$	11.5	 	  	$	5.5	 	
Number of shares vested	  	 	0.3	 	  	 	0.1	 	
 
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NOTE 5. INCOME TAXES
Moody’s effective tax rate was 9.2% and 14.6% for the three months ended March 31, 2019 and 2018, respectively. The decrease in the ETR was primarily due to favorable IRS Regulations issued in the first quarter of 2019 and lower non-U.S. taxes on certain software development. The Company’s quarterly tax expense differs from the tax computed by applying its estimated annual effective tax rate to this quarter’s pre-tax earnings due to Excess Tax Benefits from stock compensation of $26.6 million and net reductions to tax positions of $37.3 million.
The Company classifies interest related to UTPs in interest expense, net in its consolidated statements of operations. Penalties, if incurred, would be recognized in other non-operating (expense) income, net. The Company had a decrease in its UTPs of $20.2 million ($20.2 million, net of federal tax) during the first quarter of 2019.
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 2015 through 2017 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 2014 is currently under examination. The Company’s U.K. tax return for 2012 is currently under examination and its returns for 2013 through 2017 remain open to examination.
For ongoing audits, it is possible the balance of UTPs could decrease in the next twelve months as a result of the settlement of 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 UTPs. 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 UTPs at this time. However, the Company believes that it has adequately provided for its financial exposure relating to all open tax years by tax jurisdiction in accordance with the applicable provisions of Topic 740 of the ASC regarding UTPs.
The following table shows the amount the Company paid for income taxes:

 	  	Three Months Ended	 	
 	  	March 31,	 	
 	  	2019	 	  	2018	 	
Income taxes paid	  	$	36.9	 	  	$	44.2	 	
NOTE 6. WEIGHTED AVERAGE SHARES OUTSTANDING
Below is a reconciliation of basic to diluted shares outstanding:

 	  	Three Months Ended	 	
 	  	March 31,	 	
 	  	2019	 	  	2018	 	
Basic	  	 	190.4	 	  	 	191.4	 	
Dilutive effect of shares issuable under stock-based compensation plans	  	 	2.4	 	  	 	3.1	 	
	  	 	 	 	  	 	 	 	
Diluted	  	 	192.8	 	  	 	194.5	 	
	  	 	 	 	  	 	 	 	
Anti-dilutive options to purchase common shares and restricted stock as well as contingently issuable restricted stock which are excluded from the table above	  	 	0.4	 	  	 	0.7	 	
	  	 	 	 	  	 	 	 	
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, 2019 and 2018.
NOTE 7. ACCELERATED SHARE REPURCHASE PROGRAM
On February 20, 2019, the Company entered into an ASR agreement with a financial institution counterparty to repurchase $500 million of its outstanding common stock. The Company paid $500 million to the counterparty and received an initial delivery of 2.2 million shares of its common stock. Final settlement of the ASR agreement was completed on April 26, 2019 and the Company received delivery of an additional 0.6 million shares of the Company’s common stock.
 
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In total, the Company repurchased 2.8 million shares of the Company’s common stock during the term of the ASR Agreement, based on the volume-weighted average price (net of discount) of $180.33/share over the duration of the program. The initial share repurchase and final share settlement were recorded as a reduction to shareholders’ equity.
NOTE 8. CASH EQUIVALENTS AND INVESTMENTS
The table below provides additional information on the Company’s cash equivalents and investments:

 	  	As of March 31, 2019	 	
 	  	 	 	  	Gross
Unrealized
Gains	 	  	 	 	  	Balance sheet location	 	
 	  	Cost	 				  	Fair
Value	 	  	Cash and  cash
equivalents	 	  	Short-term
investments	 	  	Other
assets	 	
Certificates of deposit and money market deposit accounts  (1)	  	$	551.0	 	  	$	—  	 	  	$	551.0	 	  	$	432.4	 	  	$	110.9	 	  	$	7.7	 	
Open-ended mutual funds	  	$	15.6	 	  	$	2.1	 	  	$	17.7	 	  	$	—  	 	  	$	3.1	 	  	$	14.6	 	
		
 	  	As of December 31, 2018	 	
 	  	 	 	  	Gross
Unrealized
Gains	 	  	 	 	  	Balance sheet location	 	
 	  	Cost	 				  	Fair
Value	 	  	Cash and cash
equivalents	 	  	Short-term
investments	 	  	Other
assets	 	
Money market mutual funds	  	$	15.2	 	  	$	—  	 	  	$	15.2	 	  	$	15.2	 	  	$	—  	 	  	$	—  	 	
Certificates of deposit and money market deposit accounts (1)	  	$	1,022.4	 	  	$	—  	 	  	$	1,022.4	 	  	$	904.3	 	  	$	115.8	 	  	$	2.3	 	
Open-ended mutual funds	  	$	29.5	 	  	$	3.8	 	  	$	33.3	 	  	$	—  	 	  	$	16.7	 	  	$	16.6	 	
 
(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 to 12 months at both March 31, 2019 and December 31, 2018. The remaining contractual maturities for the certificates of deposits classified in other assets are 13 to 32 months at March 31, 2019 and 14 to 36 months at December 31, 2018. Time deposits with a maturity of less than 90 days at time of purchase are classified as cash and cash equivalents.	
NOTE 9. ACQUISITIONS
Vigeo Eiris
On April 12, 2019, the Company acquired a majority stake in Vigeo Eiris, a global leader in Environmental, Social and Governance (ESG) research, data and assessments. The acquisition furthers Moody’s objective of promoting global standards for ESG for use by market participants. The aggregate purchase price was not material and the near term impact to the Company’s operations and cash flows is not expected to be material. Vigeo Eiris will operate in the MIS reportable segment and its revenue will be reported in the MIS Other LOB.
NOTE 10. 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:
Fair Value Hedges
Interest Rate Swaps
The Company has entered into interest rate swaps to convert the fixed interest rate on certain of its long-term debt to a floating interest rate based on the 3-month LIBOR. The purpose of these hedges is to mitigate the risk associated with changes in the fair value of the long-term debt, thus the Company has designated these swaps as fair value hedges. The fair value of the swaps is adjusted quarterly with a corresponding adjustment to the carrying value of the debt. The changes in the fair value of the swaps and the underlying hedged item generally offset and the net cash settlements on the swaps are recorded each period within interest expense, net in the Company’s consolidated statements of operations.
 
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The following table summarizes the Company’s interest rate swaps designated as fair value hedges:

	Hedged Item	  	Nature of Swap	  	Notional Amount	 	  	Floating Interest Rate	 	
  				As of
March 31,
2019	 	  	As of
December 31,
2018	 					
2010 Senior Notes due 2020	  	Pay Floating/Receive Fixed	  	$	500.0	 	  	$	500.0	 	  	 	3-month USD LIBOR	 		
2012 Senior Notes due 2022	  	Pay Floating/Receive Fixed	  	 	330.0	 	  	 	330.0	 	  	 	3-month USD LIBOR	 		
2017 Senior Notes due 2021	  	Pay Floating/Receive Fixed	  	 	500.0	 	  	 	500.0	 	  	 	3-month USD LIBOR	 		
2017 Senior Notes due 2023	  	Pay Floating/Receive Fixed	  	 	250.0	 	  	 	—  	 	  	 	3-month USD LIBOR	 		
	  		  	 	 	 	  	 	 	 	  					
Total	  		  	$	1,580.0	 	  	$	1,330.0	 	  					
	  		  	 	 	 	  	 	 	 	  					
Refer to Note 17 for information on the cumulative amount of fair value hedging adjustments included in the carrying amount of the above hedged items.
The following table summarizes the impact to the statement of operations of the Company’s interest rate swaps designated as fair value hedges:

 	  	 	  	Amount of Income (Expense) Recognized in the
Statements of Operations	 		
Total amounts of financial statement line item presented in
the statements of operations in which the effects of fair value hedges are recorded	  	Three Months Ended
March 31,	 		
 	  	 	  	2019	 	 	2018	 		
Interest expense, net	  		  	$	(52.5	) 	 	$	(50.7	) 		
					
	Descriptions	  	Location on Consolidated Statements of Operations	  	 	 	 	 	 	
Net interest settlements and accruals on interest rate swaps	  	Interest expense, net	  	$	(0.2	) 	 	$	(0.1	) 		
Fair value changes on interest rate swaps	  	Interest expense, net	  	$	10.8	 	 	$	(9.2	) 		
Fair value changes on hedged debt	  	Interest expense, net	  	$	(10.8	) 	 	$	9.2	 		
Net investment hedges
The Company has designated €500 million of the 2015 Senior Notes Due 2027 as a net investment hedge to mitigate FX exposure related to a portion of the Company’s euro net investment in certain foreign subsidiaries against changes in euro/USD exchange rates. This hedge is designated as an accounting hedge under the applicable sections of ASC Topic 815 and will end upon the repayment of the notes in 2027, unless terminated early at the discretion of the Company.
The Company has also entered into cross-currency swaps to mitigate FX exposure related to a portion of the Company’s euro net investment in certain foreign subsidiaries against changes in euro/USD exchange rates.
The following table provides information on the cross-currency swaps designated as net investment hedges:

 	  	Pay	 	 	Receive	 		
	Nature of Swap	  	Notional
Amount	 	  	Weighted Average
Interest Rate	 	 	Notional
Amount	 	  	Weighted Average
Interest Rate	 	
Pay Fixed/Receive Fixed	  	€	663.6	 	  	 	1.51%	 	 	$	750.0	 	  	 	4.13%	 		
Pay Floating/Receive Floating	  	 	931.2	 	  	 	Based on 3-month EURIBOR	 	 	 	1,080.0	 	  	 	Based on 3-month USD LIBOR	 		
	  	 	 	 	  				 	 	 	 	  					
Total	  	€	1,594.8	 	  				 	$	1,830.0	 	  					

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These hedges were designated as net investment hedges under ASC Topic 815 and the purpose of these hedges is to mitigate FX exposure related to a portion of the Company’s euro net investments in certain foreign subsidiaries against changes in euro/USD exchange rates. These hedges will expire and be settled in 2021, 2022, 2023, and 2024 for €422.5 million, €287.7 million, €441.9 million and €442.6 million of the total notional amount, respectively, unless terminated early 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:

 	  	Amount of Gain/
(Loss) Recognized
in AOCI on
Derivative, net of
Tax	 	  	Amount of
Gain/(Loss)
Reclassified
from AOCI into
Income, net of
Tax	 	  	Gain/(Loss)
Recognized in
Income on
Derivative
(Amount
Excluded from
Effectiveness
Testing)	 	
Derivative and Non-Derivative Instruments in Net Investment Hedging
Relationships	  	Three Months
Ended March 31,	 	  	Three Months
Ended
March 31,	 	  	Three Months
Ended
March 31,	 	
 	  	2019	 	 	2018	 	  	2019	 	  	2018	 	  	2019  (2)	 	  	2018	 	
Cross currency swaps	  	$	15.2	 	 	$	—  	 	  	 	—  	 	  	 	—  	 	  	 	8.3	 	  	 	—  	 	
Long-term debt	  	 	8.3	(1)    	 	 	(10.9	) 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total net investment hedges	  	$	23.5	 	 	$	(10.9	) 	  	$	—  	 	  	$	—  	 	  	$	8.3	 	  	$	—  	 	

Derivatives in Cash Flow Hedging Relationships	  	 	 	 	 	 	  	 	 	  	 	 	  	 	 	  	 	 	
Cross currency swap	  	$	—  	 	 	$	1.5	 	  	$	0.1	 	  	$	0.1	 	  	$	—  	 	  	$	—  	 	
Interest rate contracts	  	 	—  	 	 	 	—  	 	  	 	(0.1	) 	  	 	—  	 	  	 	—  	 	  	 	—  	 	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total cash flow hedges	  	$	—  	 	 	$	1.5	 	  	$	—  	 	  	$	0.1	 	  	$	—  	 	  	$	—  	 	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	23.5	 	 	$	(9.4	) 	  	$	—  	 	  	$	0.1	 	  	$	8.3	 	  	$	—  	 	

(1)   	Due to the Company’s adoption of ASU 2018-02 during the first quarter of 2019, $2.5 million related to the tax effect of this net investment hedge was reclassified to retained earnings. Refer to Note 1 for further details.	
(2)  	Effective with the adoption of ASU 2017-12, the Company has elected to assess the effectiveness of its net investment hedges based on changes in spot exchange rates. Accordingly, amounts recognized directly into Net Income during the first quarter of 2019 related to its cross-currency swaps represent net periodic interest settlements and accruals, which are recognized in interest expense, net.	
The cumulative amount of net investment hedge and cash flow hedge gains (losses) remaining in AOCI is as follows:

 	  	Cumulative Gains/(Losses), net of tax	 	
 	  	March 31, 2019	 	  	December 31, 2018	 	
Net investment hedges	  				  				
Cross currency swaps	  	$	27.5	 	  	$	12.3	 	
FX forwards	  	 	23.5	 	  	 	23.5	 	
Long-term debt	  	 	2.7	 	  	 	(3.1	) 	
	  	 	 	 	  	 	 	 	
Total net investment hedges	  	$	53.7	 	  	$	32.7	 	
	  	 	 	 	  	 	 	 	
Cash flow hedges	  				  				
Interest rate contracts	  	$	(2.3	) 	  	$	(2.4	) 	
Cross currency swap	  	 	2.4	 	  	 	2.5	 	
	  	 	 	 	  	 	 	 	
Total cash flow hedges	  	 	0.1	 	  	 	0.1	 	
	  	 	 	 	  	 	 	 	
Total net gain in AOCI	  	$	53.8	 	  	$	32.8	 	
	  	 	 	 	  	 	 	 	
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 (expense) income, net in the Company’s consolidated statements of operations along with the FX gain or loss recognized on the assets and liabilities denominated in a currency other than the subsidiary’s functional currency. These contracts have expiration dates at various times through May 2019.
 
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The following table summarizes the notional amounts of the Company’s outstanding foreign exchange forwards:

 	  	March 31,
2019	 	  	December 31,
2018	 	
 	  	Sell	 	  	Buy	 	  	Sell	 	  	Buy	 	
Notional amount of currency pair:	  				  				  				  				
Contracts to sell USD for GBP	  	$	492.5	 	  	£	371.0	 	  	$	310.3	 	  	£	241.2	 	
Contracts to sell USD for Japanese Yen	  	$	14.4	 	  	¥	1,600.0	 	  	$	14.3	 	  	¥	1,600.0	 	
Contracts to sell USD for Canadian dollars	  	$	87.4	 	  	C$	115.0	 	  	$	99.0	 	  	C$	130.0	 	
Contracts to sell USD for Singapore dollars	  	$	35.7	 	  	S$	48.0	 	  	$	—  	 	  	S$	—  	 	
Contracts to sell USD for Euros	  	$	68.6	 	  	€	60.0	 	  	$	212.8	 	  	€	184.6	 	
NOTE: € = Euro, £ = British pound, $ = U.S. dollar, ¥ = Japanese Yen, C$ = Canadian dollar, S$= Singapore dollars
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 Statements of Operations	 	2019	 	  	2018	 	
Foreign exchange forwards	 	Other non-operating (expense) income, net	 	$	1.4	 	  	$	(52.3	) 		
The table below shows the classification between assets and liabilities on the Company’s consolidated balance sheets for the fair value of the derivative instrument as well as the carrying value of its non-derivative debt instruments designated and qualifying as net investment hedges:

 	  	Derivative and Non-Derivative Instruments	 	
 	  	Balance Sheet Location	 	  	March 31, 2019	 	  	December 31, 2018	 	
Assets:	  				  				  				
Derivatives designated as accounting hedges:	  				  				  				
Cross-currency swaps designated as net investment hedges	  	 	Other assets	 	  	$	36.7	 	  	$	19.4	 	
Interest rate swaps designated as fair value hedges	  	 	Other assets	 	  	 	15.3	 	  	 	7.5	 	
	  				  	 	 	 	  	 	 	 	
Total derivatives designated as accounting hedges	  				  	 	52.0	 	  	 	26.9	 	
	  				  	 	 	 	  	 	 	 	
Derivatives not designated as accounting hedges:	  				  				  				
FX forwards on certain assets and liabilities	  	 	Other current assets	 	  	 	0.3	 	  	 	1.4	 	
	  				  	 	 	 	  	 	 	 	
Total assets	  				  	$	52.3	 	  	$	28.3	 	
	  				  	 	 	 	  	 	 	 	
Liabilities:	  				  				  				
Derivatives designated as accounting hedges:	  				  				  				
Cross-currency swaps designated as net investment hedges	  	 	Other liabilities	 	  	 	—  	 	  	 	2.9	 	
Interest rate swaps designated as fair value hedges	  	 	Other liabilities	 	  	 	2.3	 	  	 	5.3	 	
	  				  	 	 	 	  	 	 	 	
Total derivatives designated as accounting hedges	  				  	 	2.3	 	  	 	8.2	 	
	  				  	 	 	 	  	 	 	 	
Non-derivative instrument designated as accounting hedge	  				  				  				
Long-term debt designated as net investment hedge	  	 	Long-term debt	 	  	 	561.4	 	  	 	571.6	 	
Derivatives not designated as accounting hedges:	  				  				  				
FX forwards on certain assets and liabilities	  	 	Accounts payable and
accrued liabilities	 
 	  	 	10.9	 	  	 	8.2	 	
	  				  	 	 	 	  	 	 	 	
Total liabilities	  				  	$	574.6	 	  	$	588.0	 	

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NOTE 11. GOODWILL AND OTHER ACQUIRED INTANGIBLE ASSETS
The following table summarizes the activity in goodwill for the periods indicated:

 	  	Three Months Ended March 31, 2019	 	
 	  	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	  	$	257.8	 	 	$	—  	 	  	$	257.8	 	 	$	3,535.7	 	 	$	(12.2	) 	 	$	3,523.5	 	 	$	3,793.5	 	 	$	(12.2	) 	 	$	3,781.3	 	
Foreign currency translation adjustments	  	 	9.4	 	 	 	—  	 	  	 	9.4	 	 	 	(28.2	) 	 	 	—  	 	 	 	(28.2	) 	 	 	(18.8	) 	 	 	—  	 	 	 	(18.8	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ending balance	  	$	267.2	 	 	$	—  	 	  	$	267.2	 	 	$	3,507.5	 	 	$	(12.2	) 	 	$	3,495.3	 	 	$	3,774.7	 	 	$	(12.2	) 	 	$	3,762.5	 	

 	  	Year ended December 31, 2018	 	
 	  	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	  	$	285.2	 	 	$	—  	 	  	$	285.2	 	 	$	3,480.2	 	 	$	(12.2	) 	 	$	3,468.0	 	 	$	3,765.4	 	 	$	(12.2	) 	 	$	3,753.2	 	
Additions/ adjustments	  	 	—  	 	 	 	—  	 	  	 	—  	 	 	 	211.5	 	 	 	—  	 	 	 	211.5	 	 	 	211.5	 	 	 	—  	 	 	 	211.5	 	
Foreign currency translation adjustments	  	 	(27.4	) 	 	 	—  	 	  	 	(27.4	) 	 	 	(156.0	) 	 	 	—  	 	 	 	(156.0	) 	 	 	(183.4	) 	 	 	—  	 	 	 	(183.4	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ending balance	  	$	257.8	 	 	$	—  	 	  	$	257.8	 	 	$	3,535.7	 	 	$	(12.2	) 	 	$	3,523.5	 	 	$	3,793.5	 	 	$	(12.2	) 	 	$	3,781.3	 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
The 2018 additions/adjustments for the MA segment in the table above primarily relate to the acquisitions of Reis and Omega Performance.
 
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Acquired intangible assets and related amortization consisted of:

 	  	March 31,
2019	 	  	December 31,
2018	 	
Customer relationships	  	$	1,360.7	 	  	$	1,367.5	 	
Accumulated amortization	  	 	(230.2	) 	  	 	(214.2	) 	
	  	 	 	 	  	 	 	 	
Net customer relationships	  	 	1,130.5	 	  	 	1,153.3	 	

Trade secrets	  	 	29.9	 	  	 	29.8	 	
Accumulated amortization	  	 	(28.3	) 	  	 	(28.2	) 	
	  	 	 	 	  	 	 	 	
Net trade secrets	  	 	1.6	 	  	 	1.6	 	

Software/product technology	  	 	349.2	 	  	 	353.3	 	
Accumulated amortization	  	 	(107.7	) 	  	 	(101.8	) 	
	  	 	 	 	  	 	 	 	
Net software/product technology	  	 	241.5	 	  	 	251.5	 	

Trade names	  	 	155.9	 	  	 	155.1	 	
Accumulated amortization	  	 	(36.5	) 	  	 	(34.1	) 	
	  	 	 	 	  	 	 	 	
Net trade names	  	 	119.4	 	  	 	121.0	 	

Other (1)	  	 	70.8	 	  	 	70.4	 	
Accumulated amortization	  	 	(33.4	) 	  	 	(31.7	) 	
	  	 	 	 	  	 	 	 	
Net other	  	 	37.4	 	  	 	38.7	 	

Total acquired intangible assets, net	  	$	1,530.4	 	  	$	1,566.1	 	

(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,	 	
 	  	2019	 	  	2018	 	
Amortization expense	  	$	26.4	 	  	$	25.7	 	
Estimated future amortization expense for acquired intangible assets subject to amortization is as follows:

	Year Ending December 31,	  	 	 	
2019 (after March 31)	  	$	71.0	 		
2020	  	 	100.5	 		
2021	  	 	100.3	 		
2022	  	 	100.3	 		
2023	  	 	97.3	 		
Thereafter	  	 	1,061.0	 		
	  	 	 	 		
Total estimated future amortization	  	$	1,530.4	 		

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NOTE 12 RESTRUCTURING
On October 26, 2018, the chief executive officer of Moody’s approved a restructuring program (the “2018 Restructuring Program”) that the Company estimates will result in annualized savings of approximately $40 to $50 million per year, a portion of which will benefit 2019. The 2018 Restructuring Program is estimated to result in total pre-tax charges of $70 to $80 million. The Program is expected to be substantially completed by June 30, 2019. The 2018 Restructuring Program includes relocation of certain functions from high-cost to lower-cost jurisdictions, a reduction of staff, including from recent acquisitions and pursuant to a review of the business criticality of certain positions, and the rationalization and exit of certain real estate leases due to consolidation of various business activities. The exit from certain leased office space began in the fourth quarter of 2018 and will entail approximately $35 to $40 million of the charges to either terminate or sublease the affected real estate leases. The 2018 Restructuring Program is also anticipated to represent approximately $35 to $40 million of personnel-related restructuring charges, an amount that includes severance and related costs primarily determined under the Company’s existing severance plans. Cash outlays associated with the employee termination cost component of the 2018 Restructuring Program are anticipated to be approximately $35 to $40 million, the majority of which will be paid in 2019.
Total expenses included in the accompanying consolidated statements of operations relating to the 2018 Restructuring Program are as follows:

 	  	Three Months Ended March 31,	 	
 	  	2019	 	  	2018	 	
2018 Restructuring Program	  	$	5.5	 	  	$	—  	 	
Changes to the restructuring liability during the first three months of 2019 were as follows:

 	  	Employee
Termination  Costs	 	  	Contract
Termination  Costs	 	 	Total
Restructuring
Liability	 	
Balance as of December 31, 2018	  	$	29.9	 	  	$	12.4	 	 	$	42.3	 	
2018 Restructuring Program:	  				  				 				
Adoption of New Lease Accounting Standard	  	 	—  	 	  	 	(10.9	)  (1)  	 	 	(10.9	)  (1)  	
Cost incurred and adjustments	  	 	1.8	 	  	 	2.2	   (2)    	 	 	4.0	   (2)    	
Cash payments and adjustments	  	 	(5.9	) 	  	 	(0.7	) 	 	 	(6.6	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	
Balance as of March 31, 2019	  	$	25.8	 	  	$	3.0	 	 	$	28.8	 	
	  	 	 	 	  	 	 	 	 	 	 	 	
2018 Restructuring Program:	  				  				 				
	  	 	 	 	  	 	 	 	 				
Cumulative expense incurred to date	  	$	34.6	 	  	$	19.6	 	 				

(1)   	Upon the adoption of the New Lease Accounting Standard, the Company recorded a reclassification of $10.9 million of liabilities for costs associated with certain real estate leases which were exited in previous years, as a reduction of the ROU Asset capitalized upon adoption.	
(2)  	Excludes $1.5 million of non-cash acceleration of amortization of leasehold improvements relating to the rationalization and exit of certain real estate leases.	
As of March 31, 2019, the majority of the remaining $28.8 million restructuring liability is expected to be paid out during the next 12 months.
 
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NOTE 13. FAIR VALUE
The table below presents information about items that are carried at fair value at March 31, 2019 and December 31, 2018:

 	  	Fair Value Measurement as of March 31, 2019	 		
	Description	  	Balance	 	  	Level 1	 	  	Level 2	 	
Assets:	  				  				  					
Derivatives (1)	  	$	52.3	 	  	$	—  	 	  	$	52.3	 		
Mutual funds	  	 	17.7	 	  	 	17.7	 	  	 	—  	 		
	  	 	 	 	  	 	 	 	  	 	 	 		
Total	  	$	70.0	 	  	$	17.7	 	  	$	52.3	 		
	  	 	 	 	  	 	 	 	  	 	 	 		
Liabilities:	  				  				  					
Derivatives (1)	  	$	13.2	 	  	$	—  	 	  	$	13.2	 		
	  	 	 	 	  	 	 	 	  	 	 	 		
Total	  	$	13.2	 	  	$	—  	 	  	$	13.2	 		

 	  	Fair Value Measurement as of December 31, 2018	 		
	Description	  	Balance	 	  	Level 1	 	  	Level 2	 	
Assets:	  				  				  					
Derivatives (1)	  	$	28.3	 	  	$	—  	 	  	$	28.3	 		
Money market mutual funds	  	 	15.2	 	  	 	15.2	 	  	 	—  	 		
Mutual funds	  	 	33.3	 	  	 	33.3	 	  	 	—  	 		
	  	 	 	 	  	 	 	 	  	 	 	 		
Total	  	$	76.8	 	  	$	48.5	 	  	$	28.3	 		
	  	 	 	 	  	 	 	 	  	 	 	 		
Liabilities:	  				  				  					
Derivatives (1)	  	$	16.4	 	  	$	—  	 	  	$	16.4	 		
	  	 	 	 	  	 	 	 	  	 	 	 		
Total	  	$	16.4	 	  	$	—  	 	  	$	16.4	 		

(1)  	Represents FX forwards on certain assets and liabilities as well as interest rate swaps and cross-currency swaps as more fully described in Note 10 to the condensed consolidated financial statements.	
The following are descriptions of the methodologies utilized by the Company to estimate the fair value of its derivative contracts, fixed maturity plans, and money market mutual funds:
Derivatives:
In determining the fair value of the derivative contracts in the table above, the Company utilizes industry standard valuation models. Where applicable, these models project future cash flows and discount the future amounts to a present value using spot rates, forward points, currency volatilities, interest rates as well as the risk of non-performance of the Company and the counterparties with whom it has derivative contracts. The Company established strict counterparty credit guidelines and only enters into transactions with financial institutions that adhere to these guidelines. Accordingly, the risk of counterparty default is deemed to be minimal.
Mutual funds and money market mutual funds:
The mutual funds in the table above are deemed to be equity securities with readily determinable fair values with changes in the fair value recognized through net income under ASC Topic 321. The fair value of these instruments is determined using Level 1 inputs as defined in the ASC.
 
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NOTE 14 OTHER BALANCE SHEET AND STATEMENT OF OPERATIONS INFORMATION
The following tables contain additional detail related to certain balance sheet captions:

 	  	March 31,	 	  	December 31,	 	
 	  	2019	 	  	2018	 	
Other current assets:	  				  				
Prepaid taxes	  	$	103.8	 	  	$	100.1	 	
Prepaid expenses	  	 	104.4	 	  	 	102.0	 	
Capitalized costs to obtain and fulfill sales contracts	  	 	76.4	 	  	 	77.2	 	
Other	  	 	2.0	 	  	 	3.0	 	
	  	 	 	 	  	 	 	 	
Total other current assets	  	$	286.6	 	  	$	282.3	 	

 	  	March 31,	 	  	December 31,	 	
 	  	2019	 	  	2018	 	
Other assets:	  				  				
Investments in non-consolidated affiliates	  	$	111.6	 	  	$	104.6	 	
Deposits for real-estate leases	  	 	13.7	 	  	 	13.5	 	
Indemnification assets related to acquisitions	  	 	16.2	 	  	 	16.1	 	
Mutual funds and fixed deposits	  	 	22.3	 	  	 	18.9	 	
Costs to obtain sales contracts	  	 	86.1	 	  	 	78.0	 	
Other	  	 	71.3	 	  	 	43.2	 	
	  	 	 	 	  	 	 	 	
Total other assets	  	$	321.2	 	  	$	274.3	 	

 	  	March 31,	 	  	December 31,	 	
 	  	2019	 	  	2018	 	
Accounts payable and accrued liabilities:	  				  				
Salaries and benefits	  	$	132.3	 	  	$	112.5	 	
Incentive compensation	  	 	51.0	 	  	 	154.5	 	
Customer credits, advanced payments and advanced billings	  	 	22.9	 	  	 	20.4	 	
Self-insurance reserves	  	 	9.3	 	  	 	10.6	 	
Dividends	  	 	4.0	 	  	 	6.5	 	
Professional service fees	  	 	58.1	 	  	 	47.7	 	
Interest accrued on debt	  	 	36.4	 	  	 	70.5	 	
Accounts payable	  	 	19.5	 	  	 	30.1	 	
Income taxes	  	 	65.4	 	  	 	71.4	 	
Pension and other retirement employee benefits	  	 	6.4	 	  	 	6.4	 	
Accrued royalties	  	 	14.0	 	  	 	25.1	 	
Foreign exchange forwards on certain assets and liabilities	  	 	10.9	 	  	 	8.2	 	
Restructuring liability	  	 	25.6	 	  	 	35.5	 	
Other	  	 	81.3	 	  	 	95.8	 	
	  	 	 	 	  	 	 	 	
Total accounts payable and accrued liabilities	  	$	537.1	 	  	$	695.2	 	

 	  	March 31,	 	  	December 31,	 	
 	  	2019	 	  	2018	 	
Other liabilities:	  				  				
Pension and other retirement employee benefits	  	$	256.5	 	  	$	249.2	 	
Deferred rent - non-current portion (1)	  	 	—  	 	  	 	94.3	 	
Interest accrued on UTPs	  	 	74.9	 	  	 	69.6	 	
Other tax matters	  	 	1.3	 	  	 	1.3	 	
Income tax liability - non-current portion (2)	  	 	125.3	 	  	 	125.3	 	
Interest rate swaps	  	 	2.3	 	  	 	5.3	 	
Restructuring liability	  	 	3.2	 	  	 	6.8	 	
Other	  	 	23.1	 	  	 	24.7	 	
	  	 	 	 	  	 	 	 	
Total other liabilities	  	$	486.6	 	  	$	576.5	 	

(1)   	Pursuant to the adoption of the New Lease Accounting Standard, deferred rent relating to operating leases was reclassified to operating lease ROU Asset.	
(2)  	Primarily reflects the transition tax pursuant to the Tax Act, which was enacted into law in December 2018.	
 
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Other Non-Operating Income (Expense):
The following table summarizes the components of other non-operating income (expense):

 	  	Three Months Ended March 31,	 	
 	  	2019	 	  	2018	 	
FX loss	  	$	(6.2	) 	  	$	(5.9	) 	
Net periodic pension costs - other component	  	 	4.5	 	  	 	2.3	 	
Income from investments in non-consolidated affiliates	  	 	1.2	 	  	 	1.3	 	
Other	  	 	2.8	 	  	 	3.3	 	
	  	 	 	 	  	 	 	 	
Total	  	$	2.3	 	  	$	1.0	 	
	  	 	 	 	  	 	 	 	
NOTE 15. COMPREHENSIVE INCOME AND ACCUMULATED OTHER COMPREHENSIVE INCOME
The following table provides details about the reclassifications out of AOCI:

 	  	Three Months Ended March 31,	 	 	Location in the consolidated statements  of
operations	 	
 	  	2019	 	 	2018	 				
Gains (losses) on cash flow hedges	  				 				 				
Cross-currency swap	  	$	(0.1	) 	 	$ 	0.1 	 	 	 	Other non-operating income
(expense), net	 
 	
Interest rate contract	  	 	0.1	 	 	 	—  	 	 	 	Interest expense, net	 	
	  	 	 	 	 	 	 	 	 				
Total before income taxes	  	 	—  	 	 	 	0.1	 	 				
Income tax effect of item above	  	 	—  	 	 	 	—  	 	 	 	Provision for income taxes	 	
	  	 	 	 	 	 	 	 	 				
Total net gains (losses) on cash flow hedges	  	 	—  	 	 	 	0.1	 	 				
	  	 	 	 	 	 	 	 	 				
Pension and other retirement benefits	  				 				 				
Amortization of actuarial losses and prior service costs included in net income	  	 	(0.5	) 	 	 	(0.9	) 	 	 	Operating expense	 	
Amortization of actuarial losses and prior service costs included in net income	  	 	(0.3	) 	 	 	(0.5	) 	 	 	SG&A expense	 	
	  	 	 	 	 	 	 	 	 				
Total before income taxes	  	 	(0.8	) 	 	 	(1.4 	)  	 				
Income tax effect of item above	  	 	0.2	 	 	 	0.4 	 	 	 	Provision for income taxes	 	
	  	 	 	 	 	 	 	 	 				
Total pension and other retirement benefits	  	 	(0.6	) 	 	 	(1.0	) 	 				
	  	 	 	 	 	 	 	 	 				
Total (losses) gains included in Net Income attributable to reclassifications out of AOCI	  	$	(0.6	) 	 	$	(0.9	) 	 				
	  	 	 	 	 	 	 	 	 				
The following table shows changes in AOCI by component (net of tax):

 	  	Three Months Ended March 31, 2019	 	
 	  	Pension
and Other
Retirement
Benefits	 	 	Gains /
(Losses) on
Cash Flow
Hedges	 	  	Foreign
Currency
Translation
Adjustments	 	 	Net Gains /
(Losses)  on
Net
Investment
Hedges	 	 	Total	 	
Balance December 31, 2018	  	$	(53.1	) 	 	$	0.1	 	  	$	(406.0	) 	 	$	32.7	 	 	$	(426.3	) 	
Other comprehensive income/(loss) before reclassifications	  	 	0.8	 	 	 	—  	 	  	 	(34.3	) 	 	 	23.5	 	 	 	(10.0	) 	
Amounts reclassified from AOCI	  	 	0.6	 	 	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	0.6	 	
Adoption of ASU 2018-02 (See Note 1)	  	 	(17.3	) 	 	 	—  	 	  	 	—  	 	 	 	(2.5	) 	 	 	(19.8	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income/(loss)	  	 	(15.9	) 	 	 	—  	 	  	 	(34.3	) 	 	 	21.0	 	 	 	(29.2	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Balance March 31, 2019	  	$	(69.0	) 	 	$	0.1	 	  	$	(440.3	) 	 	$	53.7	 	 	$	(455.5	) 	

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 	  	Three Months Ended March 31, 2018	 	
 	  	Pension
and Other
Retirement
Benefits	 	 	Gains /
(Losses)  on
Cash Flow
Hedges	 	 	Foreign
Currency
Translation
Adjustments	 	 	Net Losses
on Net
Investment
Hedges	 	 	Gains on
Available
for Sale
Securities	 	 	Total	 	
Balance December 31, 2017	  	$	(61.5	) 	 	$	0.9	 	 	$	(112.6	) 	 	$	(1.3	) 	 	$	2.3	 	 	$	(172.2	) 	
Adoption of ASU 2016-01 relating to financial instruments	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(2.3	) 	 	 	(2.3	) 	
Other comprehensive income/(loss) before reclassifications	  	 	—  	 	 	 	1.5	 	 	 	131.1	 	 	 	(10.9	) 	 	 	—  	 	 	 	121.7	 	
Amounts reclassified from AOCI	  	 	1.0	 	 	 	(0.1	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	0.9	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Other comprehensive income/(loss)	  	 	1.0	 	 	 	1.4	 	 	 	131.1	 	 	 	(10.9	) 	 	 	(2.3	) 	 	 	120.3	 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance March 31, 2018	  	$	(60.5	) 	 	$	2.3	 	 	$	18.5	 	 	$	(12.2	) 	 	$	—  	 	 	$	(51.9	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
NOTE 16. 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”. The non-U.S. defined benefit pension plan are immaterial.
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	 	
 	  	2019	 	  	2018	 	  	2019	 	  	2018	 	
Components of net periodic expense	  				  				  				  				
Service cost	  	$	4.3	 	  	$	4.8	 	  	$	0.7	 	  	$	0.7	 	
Interest cost	  	 	5.1	 	  	 	4.4	 	  	 	0.3	 	  	 	0.3	 	
Expected return on plan assets	  	 	(5.0	) 	  	 	(3.8	) 	  	 	—  	 	  	 	—  	 	
Amortization of net actuarial loss from earlier periods	  	 	0.9	 	  	 	1.6	 	  	 	—  	 	  	 	—  	 	
Amortization of net prior service costs from earlier periods	  	 	(0.1	) 	  	 	(0.1	) 	  	 	(0.1	) 	  	 	(0.1	) 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Net periodic expense	  	$	5.2	 	  	$	6.9	 	  	$	0.9	 	  	$	0.9	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The Company made payments of $2.4 million related to its unfunded U.S. DBPPs during the three months ended March 31, 2019. Additionally, the Company anticipates making payments of approximately $3 million and $1 million to its unfunded U.S. DBPPs and U.S. other retirement plans, respectively, during the remainder of 2019.
 
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NOTE 17. INDEBTEDNESS
The Company’s debt is recorded at its carrying amount, which represents the issuance amount plus or minus any issuance premium or discount, except for the 2010 Senior Notes, the 2012 Senior Notes, the 2017 Senior Notes due 2021 and the 2017 Senior Notes due 2023, which are recorded at the carrying amount adjusted for the fair value of an interest rate swap used to hedge the fair value of the note.
The following table summarizes total indebtedness:

 	  	March 31, 2019	 	
 	  	Principal
Amount	 	  	Fair Value of
Interest  Rate
Swaps (1)	 	 	Unamortized
(Discount)
Premium	 	 	Unamortized
Debt
Issuance
Costs	 	 	Carrying
Value	 	
Notes Payable:	  				  				 				 				 				
5.50% 2010 Senior Notes, due 2020	  	$	500.0	 	  	$	(1.5	) 	 	$	(0.5	) 	 	$	(0.6	) 	 	$	497.4	 	
4.50% 2012 Senior Notes, due 2022	  	 	500.0	 	  	 	4.8	 	 	 	(1.5	) 	 	 	(1.3	) 	 	 	502.0	 	
4.875% 2013 Senior Notes, due 2024	  	 	500.0	 	  	 	—  	 	 	 	(1.5	) 	 	 	(1.9	) 	 	 	496.6	 	
5.25% 2014 Senior Notes (30-Year), due 2044	  	 	600.0	 	  	 	—  	 	 	 	3.2	 	 	 	(5.4	) 	 	 	597.8	 	
1.75% 2015 Senior Notes, due 2027	  	 	561.4	 	  	 	—  	 	 	 	—  	 	 	 	(2.9	) 	 	 	558.5	 	
2.75% 2017 Senior Notes, due 2021	  	 	500.0	 	  	 	6.9	 	 	 	(0.9	) 	 	 	(2.2	) 	 	 	503.8	 	
2.625% 2017 Senior Notes, due 2023	  	 	500.0	 	  	 	2.8	 	 	 	(0.8	) 	 	 	(2.8	) 	 	 	499.2	 	
3.25% 2017 Senior Notes, due 2028	  	 	500.0	 	  	 	—  	 	 	 	(4.6	) 	 	 	(3.6	) 	 	 	491.8	 	
3.25% 2018 Senior Notes, due 2021	  	 	300.0	 	  	 	—  	 	 	 	(0.3	) 	 	 	(1.3	) 	 	 	298.4	 	
4.25% 2018 Senior Notes, due 2029	  	 	400.0	 	  	 	—  	 	 	 	(2.9	) 	 	 	(3.2	) 	 	 	393.9	 	
4.875% 2018 Senior Notes, due 2048	  	 	400.0	 	  	 	—  	 	 	 	(6.7	) 	 	 	(4.1	) 	 	 	389.2	 	
Commercial Paper	  	 	320.0	 	  	 	—  	 	 	 	(1.2	) 	 	 	—  	 	 	 	318.8	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total debt	  	$	5,581.4	 	  	$	13.0	 	 	$	(17.7	) 	 	$	(29.3	) 	 	$	5,547.4	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current portion	  				  				 				 				 	 	(318.8	) 	
	  				  				 				 				 	 	 	 	
Total long-term debt	  				  				 				 				 	$	5,228.6	 	

 	  	December 31, 2018	 	
 	  	Principal
Amount	 	  	Fair Value of
Interest  Rate
Swaps (1)	 	 	Unamortized
(Discount)
Premium	 	 	Unamortized
Debt
Issuance
Costs	 	 	Carrying
Value	 	
Notes Payable:	  				  				 				 				 				
5.50% 2010 Senior Notes, due 2020	  	$	500.0	 	  	$	(3.7	) 	 	$	(0.6	) 	 	$	(0.7	) 	 	$	495.0	 	
4.50% 2012 Senior Notes, due 2022	  	 	500.0	 	  	 	1.9	 	 	 	(1.6	) 	 	 	(1.4	) 	 	 	498.9	 	
4.875% 2013 Senior Notes, due 2024	  	 	500.0	 	  	 	—  	 	 	 	(1.5	) 	 	 	(2.0	) 	 	 	496.5	 	
2.75% 2014 Senior Notes (5-Year), due 2019	  	 	450.0	 	  	 	—  	 	 	 	(0.1	) 	 	 	—  	 	 	 	449.9	 	
5.25% 2014 Senior Notes (30-Year), due 2044	  	 	600.0	 	  	 	—  	 	 	 	3.2	 	 	 	(5.5	) 	 	 	597.7	 	
1.75% 2015 Senior Notes, due 2027	  	 	571.6	 	  	 	—  	 	 	 	—  	 	 	 	(3.1	) 	 	 	568.5	 	
2.75% 2017 Senior Notes, due 2021	  	 	500.0	 	  	 	4.0	 	 	 	(1.0	) 	 	 	(2.4	) 	 	 	500.6	 	
2.625% 2017 Senior Notes, due 2023	  	 	500.0	 	  	 	—  	 	 	 	(0.9	) 	 	 	(2.8	) 	 	 	496.3	 	
3.25% 2017 Senior Notes, due 2028	  	 	500.0	 	  	 	—  	 	 	 	(4.7	) 	 	 	(3.7	) 	 	 	491.6	 	
3.25% 2017 Senior Notes, due 2021	  	 	300.0	 	  	 	—  	 	 	 	(0.4	) 	 	 	(1.5	) 	 	 	298.1	 	
4.25% 2018 Senior Notes, due 2029	  	 	400.0	 	  	 	—  	 	 	 	(3.0	) 	 	 	(3.3	) 	 	 	393.7	 	
4.875% 2018 Senior Notes, due 2048	  	 	400.0	 	  	 	—  	 	 	 	(6.7	) 	 	 	(4.1	) 	 	 	389.2	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total debt	  	$	5,721.6	 	  	$	2.2	 	 	$	(17.3	) 	 	$	(30.5	) 	 	$	5,676.0	 	
	  	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Current portion	  				  				 				 				 	 	(449.9	) 	
	  				  				 				 				 	 	 	 	
Total long-term debt	  				  				 				 				 	$	5,226.1	 	

(1)   	The Company has entered into interest rate swaps on the 2010 Senior Notes, the 2012 Senior Notes, the 2017 Senior Notes due 2021 and the 2017 Senior Notes due 2023 which are more fully discussed in Note 10 above. These amounts represent the cumulative amount of fair value hedging adjustments included in the carrying amount of the hedged debt.	
 
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Commercial Paper
As of March 31, 2019, the Company has CP borrowings outstanding of $318.8 million with a weighted average maturity date at the time of issuance of 79 days. At March 31, 2019, the weighted average remaining maturity and interest rate on CP outstanding was 44 days and 3.03% respectively.
At March 31, 2019, the Company was in compliance with all covenants contained within all of the debt agreements. All the debt agreements contain cross default provisions which state that default under one of the aforementioned debt instruments could in turn permit lenders under other debt instruments to declare borrowings outstanding under those instruments to be immediately due and payable. As of March 31, 2019, there were no such cross defaults.
Notes Payable
On January 3, 2019, the Company fully repaid the $450 million 2014 Senior Notes (5-year).
The repayment schedule for the Company’s borrowings is as follows:

	Year
Ending
December 31,	  	2010
Senior
Notes
due
2020	 	  	2012
Senior
Notes
due
2022	 	  	2013
Senior
Notes
due
2024	 	  	2014
Senior
Notes
(30-year)
due 2044	 	  	2015
Senior
Notes
due
2027	 	  	2017
Senior
Notes
due
2021	 	  	2017
Senior
Notes
due
2023	 	  	2017
Senior
Notes
due
2028	 	  	2018
Senior
Notes
due
2021	 	  	2018
Senior
Notes
due
2029	 	  	2018
Senior
Notes
due
2048	 	  	Commercial
Paper	 	  	Total	 	
2019 (After March 31)	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	320.0	 	  	$	320.0	 		
2020	  	 	500.0	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 		
2021	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 	  	 	—  	 	  	 	—  	 	  	 	300.0	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	800.0	 		
2022	  	 	—  	 	  	 	500.0	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 		
2023	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 		
Thereafter	  	 	—  	 	  	 	—  	 	  	 	500.0	 	  	 	600.0	 	  	 	561.4	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 	  	 	—  	 	  	 	400.0	 	  	 	400.0	 	  	 	—  	 	  	 	2,961.4	 		
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 		
Total	  	$	500.0	 	  	$	500.0	 	  	$	500.0	 	  	$	600.0	 	  	$	561.4	 	  	$	500.0	 	  	$	500.0	 	  	$	500.0	 	  	$	300.0	 	  	$	400.0	 	  	$	400.0	 	  	$	320.0	 	  	$	5,581.4	 		
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 		
Interest expense, net
The following table summarizes the components of interest as presented in the consolidated statements of operations:

 	  	Three Months Ended March 31,	 	
 	  	2019	 	  	2018	 	
Income	  	$	5.0	 	  	$	3.2	 	
Expense on borrowings	  	 	(46.6	) 	  	 	(51.3	) 	
UTPs and other tax related liabilities	  	 	(5.6	) 	  	 	1.8	 	
Net periodic pension costs - interest component	  	 	(5.6	) 	  	 	(4.7	) 	
Capitalized	  	 	0.3	 	  	 	0.3	 	
	  	 	 	 	  	 	 	 	
Total	  	$	(52.5	) 	  	$	(50.7	) 	
	  	 	 	 	  	 	 	 	
The following table shows the cash paid for interest:

 	  	Three Months Ended March 31,	 	
 	  	2019	 	  	2018	 	
Interest paid	  	$	72.8	 	  	$	80.5	 	
 
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The fair value and carrying value of the Company’s debt (excluding commercial paper) as of March 31, 2019 and December 31, 2018 are as follows:

 	  	March 31, 2019	 	  	December 31, 2018	 	
 	  	Carrying
Amount	 	  	Estimated
Fair Value	 	  	Carrying
Amount	 	  	Estimated
Fair Value	 	
5.50% 2010 Senior Notes, due 2020	  	$	497.4	 	  	$	519.2	 	  	$	495.0	 	  	$	517.7	 	
4.50% 2012 Senior Notes, due 2022	  	 	502.0	 	  	 	526.0	 	  	 	498.9	 	  	 	513.7	 	
4.875% 2013 Senior Notes, due 2024	  	 	496.6	 	  	 	537.3	 	  	 	496.5	 	  	 	522.4	 	
2.75% 2014 Senior Notes (5-Year), due 2019	  	 	—  	 	  	 	—  	 	  	 	449.9	 	  	 	449.9	 	
5.25% 2014 Senior Notes (30-Year), due 2044	  	 	597.8	 	  	 	676.5	 	  	 	597.7	 	  	 	638.1	 	
1.75% 2015 Senior Notes, due 2027	  	 	558.5	 	  	 	592.3	 	  	 	568.5	 	  	 	585.3	 	
2.75% 2017 Senior Notes, due 2021	  	 	503.8	 	  	 	499.6	 	  	 	500.6	 	  	 	489.7	 	
2.625% 2017 Senior Notes, due 2023	  	 	499.2	 	  	 	492.3	 	  	 	496.3	 	  	 	476.9	 	
3.25% 2017 Senior Notes, due 2028	  	 	491.8	 	  	 	489.1	 	  	 	491.6	 	  	 	472.8	 	
3.25% 2018 Senior Notes, due 2021	  	 	298.4	 	  	 	302.6	 	  	 	298.1	 	  	 	298.6	 	
4.25% 2018 Senior Notes, due 2029	  	 	393.9	 	  	 	420.0	 	  	 	393.7	 	  	 	407.6	 	
4.875% 2018 Senior Notes, due 2048	  	 	389.2	 	  	 	435.4	 	  	 	389.2	 	  	 	409.8	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	5,228.6	 	  	$	5,490.3	 	  	$	5,676.0	 	  	$	5,782.5	 	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
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 18. LEASES
The Company has operating leases, substantially all of which relate to the lease of office space. The Company’s leases which are classified as finance leases are not material to the condensed consolidated financial statements. Certain of the Company’s leases include options to renew, with renewal terms that can extend the lease term from one to 20 years at the Company’s discretion.
The following table presents the components of the Company’s lease cost:

 	  	Three Months Ended
March 31, 2019	 	
Operating lease cost	  	$	24.6	 	
Short-term lease cost	  	 	0.4	 	
Variable least cost	  	 	3.6	 	
	  	 	 	 	
Total lease cost	  	$	28.6	 	
	  	 	 	 	
The following tables present other information related to the Company’s operating leases:

 	  	Three Months Ended
March 31, 2019	 	
Cash paid for amounts included in the measurement of operating lease liabilities	  	$	26.2	 	
Right-of-use assets obtained in exchange for new operating lease liabilities	  	$	9.0	 	
		
 	  	March 31, 2019	 	
Weighted-average remaining lease term	  	 	7.3 years	 	
Weighted-average discount rate applied to operating leases	  	 	3.6	% 	
 
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The following table presents a maturity analysis of the future minimum lease payments included within the Company’s operating lease liabilities at March 31, 2019:

	Year Ending December 31,	  	Operating
Leases	 	
2019 (After March 31)	  	$	80.7	 		
2020	  	 	104.8	 		
2021	  	 	98.2	 		
2022	  	 	85.1	 		
2023	  	 	80.6	 		
After 2023	  	 	245.1	 		
	  	 	 	 		
Total lease payments (undiscounted)	  	 	694.5	 		
Less: Interest	  	 	83.6	 		
	  	 	 	 		
Present value of lease liabilities:	  	$	610.9	 		
	  	 	 	 		
Lease liabilities - current	  	$	87.4	 		
Lease liabilities - noncurrent	  	$	523.5	 		
NOTE 19. CONTINGENCIES
Given the nature of their activities, Moody’s and its subsidiaries are subject to legal and tax proceedings, governmental, regulatory and legislative investigations, subpoenas and other inquiries, and claims and litigation by governmental and private parties that are based on ratings assigned by MIS or that are otherwise incidental to the Company’s business. Moody’s and MIS also are subject to periodic reviews, inspections, examinations and investigations by regulators in the U.S. and other jurisdictions, any of which may result in claims, legal proceedings, assessments, fines, penalties or restrictions on business activities. Moody’s also is subject to ongoing tax audits as addressed in Note 5 to the financial statements.
In May 2013, the Company and five subsidiaries (collectively, the “Company Defendants”) were served with a qui tam complaint filed by a former employee (“Plaintiff”) in New York Supreme Court (the “Court”) on behalf of New York State (the “State”) and New York City (the “City”) asserting purported claims under the New York False Claims Act (“NYFCA”). Both the State and the City were given an opportunity to intervene as plaintiffs in the action but declined to do so. In August 2013, Plaintiff filed an Amended Complaint adding Marsh & McLennan Companies, Inc. as a defendant. Plaintiff’s central allegation against the Company Defendants is that their treatment of the Company’s wholly-owned captive insurance subsidiary, Moody’s Assurance Company, Inc. (“MAC”), in their State and City tax filings between 2002 and 2014 was contrary to the State and City tax codes. Plaintiff also asserts a cause of action for retaliation under the NYFCA and alleges that his employment was improperly terminated after he reported his concerns regarding MAC’s tax treatment internally. Plaintiff alleges that the Company underpaid State and City taxes by more than $120 million (which the Company believes is unsupported as a matter of fact and law), and requests statutory damages of triple that amount, as well as unspecified damages related to the retaliation claim. In December 2016, the Court issued a decision largely denying the Company Defendants’ motion to dismiss. The Company Defendants appealed, and in August 2018, the Appellate Division of the New York Supreme Court upheld the Court’s decision. Discovery is ongoing and, absent earlier disposition, the Company expects the case to go to trial no earlier than late 2019. The Company is unable to estimate a range of loss, and is contesting Plaintiff’s claims, which it believes are meritless.
Management periodically assesses the Company’s liabilities and contingencies in connection with these matters based upon the latest information available. For claims, litigation and proceedings and governmental investigations and inquiries not related to income taxes, the Company records liabilities in the consolidated financial statements when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated and periodically adjusts these as appropriate. When the reasonable estimate of the loss is within a range of amounts, the minimum amount of the range is accrued unless some higher amount within the range is a better estimate than another amount within the range. In instances when a loss is reasonably possible but uncertainties exist related to the probable outcome and/or the amount or range of loss, management does not record a liability but discloses the contingency if material. As additional information becomes available, the Company adjusts its assessments and estimates of such matters accordingly. Moody’s also discloses material pending legal proceedings pursuant to SEC rules and other pending matters as it may determine to be appropriate.
In view of the inherent difficulty of assessing the potential outcome of legal proceedings, governmental, regulatory and legislative investigations and inquiries, claims and litigation and similar matters and contingencies, particularly when the claimants seek large or indeterminate damages or assert novel legal theories or the matters involve a large number of parties, the Company often cannot predict what the eventual outcome of the pending matters will be or the timing of any resolution of such matters. The Company also may be unable to predict the impact (if any) that any such matters may have on how its business is conducted, on its competitive position or on its financial position, results of operations or cash flows. As the process to resolve any pending matters progresses, management will continue to review the latest information available and assess its ability to predict the outcome of such matters and the effects, if any, on its operations and financial condition and to accrue for and disclose such matters as and when required. However, because such matters are inherently unpredictable and unfavorable developments or resolutions can occur, the ultimate outcome of such matters, including the amount of any loss, may differ from those estimates.
 
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NOTE 20. SEGMENT INFORMATION
The Company is organized into two operating segments: MIS and MA and 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 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.
Overhead expenses include costs such as rent and occupancy, information technology and support staff such as finance, human resources and legal. Such costs and corporate expenses that exclusively benefit one segment are fully charged to that segment. For overhead and corporate expenses that benefit both segments, in years prior to 2019, the Company generally allocated costs ratably based on each segment’s share of total revenue.
Beginning in 2019, the Company refined its methodology such that costs allocated to each segment based on the segment’s share of 2018 revenue comprise a “Baseline Pool” that will remain fixed over time. In subsequent periods, incremental overhead costs (or reductions thereof) will be allocated to each segment based on the prevailing shares of total revenue represented by each segment. The Company believes that this allocation method will better align the amount of overhead costs consumed by each segment and contribute stability to each segment’s costs over time. The impact of this refined methodology would not have resulted in a material change to previously reported segment results.
“Eliminations” in the following table represent intersegment revenue/expense. Moody’s does not report the Company’s assets by reportable segment, as this metric is not used by the chief operating decision maker to allocate resources to the segments. Consequently, it is not practical to show assets by reportable segment.
 
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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. Refer to Note 3 for further details on the components of the Company’s revenue.

 	  	Three Months Ended March 31,	 	
 	  	2019	 	  	2018	 	
 	  	MIS	 	  	MA	 	  	Eliminations	 	 	Consolidated	 	  	MIS	 	  	MA	 	  	Eliminations	 	 	Consolidated	 	
Revenue	  	$	702.4	 	  	$	474.4	 	  	$	(34.7	) 	 	$	1,142.1	 	  	$	749.7	 	  	$	411.8	 	  	$	(34.8	) 	 	$	1,126.7	 	
Operating, SG&A	  	 	316.8	 	  	 	341.1	 	  	 	(34.7	) 	 	 	623.2	 	  	 	310.4	 	  	 	310.4	 	  	 	(34.8	) 	 	 	586.0	 	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Adjusted Operating Income	  	 	385.6	 	  	 	133.3	 	  	 	—  	 	 	 	518.9	 	  	 	439.3	 	  	 	101.4	 	  	 	—  	 	 	 	540.7	 	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Less:	  				  				  				 				  				  				  				 				
Restructuring	  	 	2.7	 	  	 	2.8	 	  	 	—  	 	 	 	5.5	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	
Depreciation and amortization	  	 	17.0	 	  	 	33.3	 	  	 	—  	 	 	 	50.3	 	  	 	16.8	 	  	 	32.3	 	  	 	—  	 	 	 	49.1	 	
Acquisition-Related Expenses	  	 	—  	 	  	 	1.4	 	  	 	—  	 	 	 	1.4	 	  	 	—  	 	  	 	0.8	 	  	 	—  	 	 	 	0.8	 	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
Operating income	  	$	365.9	 	  	$	95.8	 	  	$	—  	 	 	$	461.7	 	  	$	422.5	 	  	$	68.3	 	  	$	—  	 	 	$	490.8	 	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	
The cumulative restructuring charges related to the 2018 Restructuring Program, as more fully discussed in Note 12, for the MIS and MA reportable segments are $34.9 million and $19.3 million, respectively. The total costs expected to be incurred related to the 2018 Restructuring Program for MIS and MA are approximately $43 million to $48 million and $27 million to $32 million, respectively.
Consolidated Revenue Information by Geographic Area

 	  	Three Months Ended
March 31,	 	
 	  	2019	 	  	2018	 	
Revenue:	  				  				
U.S.	  	$	612.1	 	  	$	597.7	 	
Non-U.S.:	  				  				
EMEA	  	 	332.6	 	  	 	347.3	 	
Asia-Pacific	  	 	132.2	 	  	 	120.2	 	
Americas	  	 	65.2	 	  	 	61.5	 	
	  	 	 	 	  	 	 	 	
Total Non-U.S.	  	 	530.0	 	  	 	529.0	 	
	  	 	 	 	  	 	 	 	
Total	  	$	1,142.1	 	  	$	1,126.7	 	
	  	 	 	 	  	 	 	 	
NOTE 21. RECENTLY ISSUED ACCOUNTING STANDARDS
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The amendments in this ASU require the use of an “expected credit loss” impairment model for most financial assets reported at amortized cost, which will require entities to estimate expected credit losses over the lifetime of the instrument. This may result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, an allowance for credit losses will be recognized as a contra account to the amortized cost carrying value of the asset rather than a direct reduction to the carrying value, with changes in the allowance impacting earnings. In November 2018, the FASB issued ASU No. 2018-19 “Codification Improvements to Topic 326, Financial Instruments—Credit Losses,” which clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20, but instead should be accounted for in accordance with Topic 842, Leases.
 
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ASU No. 2016-13 is effective for annual and interim reporting periods beginning after December 15, 2019, with early adoption permitted in annual and interim reporting periods beginning after December 15, 2018. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company is currently evaluating the impact of this ASU on its financial statements. Currently, the Company believes that the most notable impact of this ASU will relate to its processes around the assessment of the adequacy of its allowance for doubtful accounts on accounts receivable.
In June 2018, the FASB issued ASU No. 2018-07, “Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”, which simplifies the accounting for nonemployee share-based payment transactions. The amendments specify that ASC Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company does not anticipate that the adoption of this ASU will have a significant impact on its condensed consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract”, which requires implementation costs incurred by customers in cloud computing arrangements (i.e., hosting arrangements) to be capitalized under the same premises of authoritative guidance for internal-use software, and deferred over the non-cancellable term of the cloud computing arrangements plus any option renewal periods that are reasonably certain to be exercised by the customer or for which the exercise is controlled by the service provider. The ASU is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its financial statements.
In August 2018, the FASB issued ASU No. 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans”. This ASU eliminates requirements for certain disclosures and requires additional disclosures under defined benefit pension plans and other postretirement plans. The ASU is effective for all entities for fiscal years beginning after December 15, 2020 on a retrospective basis to all periods presented, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its financial statements.
NOTE 22. SUBSEQUENT EVENT
On April 15, 2019, the Board approved the declaration of a quarterly dividend of $0.50 per share of Moody’s common stock, payable on June 10, 2019 to shareholders of record at the close of business on May 20, 2019.
 
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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 58 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, capital markets and economic research, data and analytical tools; (iii) software solutions that support financial risk management activities; (iv) quantitatively derived credit scores; (v) learning solutions and certification services; (vi) offshore financial research and analytical services; and (vii) company information and business intelligence products. Moody’s reports in 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 financial instrument pricing services in the Asia-Pacific region as well as revenue from ICRA’s non-ratings operations. The revenue from these operations is included in the MIS Other LOB and is not material to the results of the MIS segment.
MA provides financial intelligence and analytical tools to assist businesses in making decisions. MA’s portfolio of solutions consists of specialized research, data, software, and professional services, which are assembled to support the financial analysis and risk management activities of institutional customers worldwide.
Corporate Social Responsibility
Moody’s believes that knowledge fuels opportunity. The core of Moody’s business is to provide credit ratings, research, tools and analysis that help to equip participants in the global financial markets to understand risks and make important investment decisions with critical insight. Moody’s global corporate social responsibility (CSR) efforts are rooted in that same approach. Moody’s is committed to working to empower people with the knowledge, resources and confidence they need to create a better future – for themselves, their communities and the environment. In addition, Moody’s uses its expertise and assets to make a positive difference through technology tools, research and analytical services that help other organizations and the investor community better understand the links between environmental, social and governance (ESG) considerations and the global markets.
Moody’s own corporate CSR strategy seeks to address ESG issues that it determines could affect its business and operations in an impactful way. The CSR Council, chaired by President and CEO Raymond W. McDaniel, Jr. convenes senior management team members to oversee these efforts. The CSR Working Group then is charged with implementing the Company’s strategy. For more information on Moody’s approach to CSR, see moodys.com/csr.
 CRITICAL ACCOUNTING ESTIMATES
Moody’s discussion and analysis of its financial condition and results of operations are based on the Company’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. 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, 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, 2018, 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 other than the update below to the critical accounting estimate disclosures relating to lease accounting resulting from the adoption of the New Lease Accounting Standard.
 
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Leases
The discussion below outlines areas of the Company’s accounting for leases that require management judgment and estimates. Refer to Note 2 of the condensed consolidated financial statements for a comprehensive discussion regarding the Company’s lease accounting policies under the New Lease Accounting Standard.
As the Company’s operating leases do not provide an implicit interest rate, the Company must estimate the secured incremental borrowing rate attributable to the currency in which the lease is denominated. This secured incremental borrowing rate is based on the information available at the lease commencement date and is utilized in the determination of the present value of lease payments.
In addition, certain of Moody’s leases have the option to extend the lease beyond the initial term or terminate the lease prior to the end of the term. For these leases, Moody’s may be required to exercise significant judgment to determine when that option is reasonably certain of being exercised, which will impact the lease term and determination of the lease liability and corresponding ROU Asset.
 REPORTABLE SEGMENTS
The Company is organized into two reportable segments at March 31, 2019: MIS and MA, which are more fully described in the section entitled “The Company” above and in Note 20 to the condensed consolidated financial statements.
RECLASSIFICATION OF PREVIOUSLY REPORTED REVENUE BY LOB
There were certain organizational/product realignments in both MIS and MA in the first quarter of 2019. Accordingly, in MIS, revenue from REITs, which was previously classified in the SFG LOB, is now classified in the CFG LOB. In MA, revenue relating to the Bureau van Dijk FACT product (a credit assessment and origination solution), which was previously classified in RD&A, is now classified in the ERS LOB. Accordingly, 2018 revenue by LOB was reclassified to conform with this new presentation, as follows:

														
	MIS	 	As
previously
reported	 	 	Reclassification	 	 	As
Reclassified	 	
CFG	 				 				 					
Q1	 	$	377.7	 	 	$	11.9	 	 	$	389.6	 		
Q2	 	 	377.6	 	 	 	13.4	 	 	 	391.0	 		
Q3	 	 	296.1	 	 	 	11.2	 	 	 	307.3	 		
Q4	 	 	282.7	 	 	 	8.6	 	 	 	291.3	 		
	 	 	 	 	 	 	 	 	 	 	 	 		
Full year 2018	 	$	1,334.1	 	 	$	45.1	 	 	$	1,379.2	 		
	 	 	 	 	 	 	 	 	 	 	 	 		
SFG	 				 				 					
Q1	 	$	129.7	 	 	$	(11.9	) 	 	$	117.8	 		
Q2	 	 	141.6	 	 	 	(13.4	) 	 	 	128.2	 		
Q3	 	 	125.4	 	 	 	(11.2	) 	 	 	114.2	 		
Q4	 	 	129.8	 	 	 	(8.6	) 	 	 	121.2	 		
	 	 	 	 	 	 	 	 	 	 	 	 		
Full year 2018	 	$	526.5	 	 	$	(45.1	) 	 	$	481.4	 		

														
	MA	 	As
previously
reported	 	 	Reclassification	 	 	As
Reclassified	 	
RD&A	 				 				 					
Q1	 	$	269.2	 	 	$	(2.1	) 	 	$	267.1	 		
Q2	 	 	279.9	 	 	 	(4.0	) 	 	 	275.9	 		
Q3	 	 	282.6	 	 	 	(2.3	) 	 	 	280.3	 		
Q4	 	 	302.4	 	 	 	(5.3	) 	 	 	297.1	 		
	 	 	 	 	 	 	 	 	 	 	 	 		
Full year 2018	 	$	1,134.1	 	 	$	(13.7	) 	 	$	1,120.4	 		
	 	 	 	 	 	 	 	 	 	 	 	 		
ERS	 				 				 					
Q1	 	$	100.1	 	 	$	2.1	 	 	$	102.2	 		
Q2	 	 	105.5	 	 	 	4.0	 	 	 	109.5	 		
Q3	 	 	113.0	 	 	 	2.3	 	 	 	115.3	 		
Q4	 	 	118.8	 	 	 	5.3	 	 	 	124.1	 		
	 	 	 	 	 	 	 	 	 	 	 	 		
Full year 2018	 	$	437.4	 	 	$	13.7	 	 	$	451.1	 		

 
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 RESULTS OF OPERATIONS
Three months ended March 31, 2019 compared with three months ended March 31, 2018
Executive Summary
 
 	•	 	Moody’s completed the acquisitions of Reis and Omega Performance on August 16, 2018 and October 15, 2018, respectively. In the discussion below, reference to inorganic revenue and expense growth refers to Reis and Omega Performance revenue from January 1, 2019 through March 31, 2019.	
 
 	•	 	The following table provides an executive summary of key operating results for the quarter ended March 31, 2019. Following this executive summary is a more fulsome discussion of the Company’s operating results as well as a discussion of the operating results of the Company’s reportable segments.	

 	  	Three months ended
March 31,	  	 	
 	  	2019	 	  	2018	 	  	% Change	  	 	
Financial measure:	  	 	 	  	 	 	  	 	  	Key Drivers of Change Compared to Prior Year	
Moody’s total revenue	  	$	1,142.1	 	  	$	1,126.7	 	  	1%	  	•     strong growth in MA was offset by declines in MIS	
MIS External Revenue	  	$	670.1	 	  	$	719.9	 	  	(7%)	  	•     decline due to lower refinancing activity in the bank loan sector and CLO asset class primarily resulting from higher borrowing costs	
MA External Revenue	  	$	472.0	 	  	$	406.8	 	  	16%	  	•     strong growth in the credit research and ratings data feeds product lines within RD&A;
•     inorganic growth from the acquisitions of Reis and Omega Performance; and
•     growth from ongoing demand in ERS for SaaS-based solutions coupled with increased demand for actuarial modeling tools	
Total operating and SG&A expenses	  	$	623.2	 	  	$	586.0	 	  	6%	  	•     additional compensation expense resulting from hiring activity and merit increases in 2018; and
•     operating expenses attributable to Reis and Omega Performance	
Operating Margin	  	 	40.4	% 	  	 	43.6	% 	  	(320 BPS)	  	•     margin contraction was primarily due to aforementioned decline in MIS revenue	
Adjusted Operating Margin	  	 	45.4	% 	  	 	48.0	% 	  	(260 BPS)			
ETR	  	 	9.2	% 	  	 	14.6	% 	  	(540 BPS)	  	•     the decrease reflects regulations issued in the first quarter of 2019 relating to the Tax Act, as well as lower non-U.S. taxes relating to certain software development	
Diluted EPS	  	$	1.93	 	  	$	1.92	 	  	1%	  	•     modest growth includes the benefit of a lower ETR coupled with lower diluted shares outstanding resulting from the Company’s ASR executed in the first quarter of 2019	
Adjusted Diluted EPS	  	$	2.07	 	  	$	2.02	 	  	2%			
 
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Moody’s Corporation

 	  	Three Months Ended March 31,	 	 	% Change
Favorable
(Unfavorable)	 	
 	  	2019	 	 	2018	 	 	 	 	
Revenue:	  				 				 				
United States	  	$	612.1	 	 	$	597.7	 	 	 	2	% 	
	  	 	 	 	 	 	 	 	 				
Non-U.S.:	  				 				 				
EMEA	  	 	332.6	 	 	 	347.3	 	 	 	(4	%) 	
Asia-Pacific	  	 	132.2	 	 	 	120.2	 	 	 	10	% 	
Americas	  	 	65.2	 	 	 	61.5	 	 	 	6	% 	
	  	 	 	 	 	 	 	 	 				
Total Non-U.S.	  	 	530.0	 	 	 	529.0	 	 	 	—  	 	
	  	 	 	 	 	 	 	 	 				
Total	  	 	1,142.1	 	 	 	1,126.7	 	 	 	1	% 	
	  	 	 	 	 	 	 	 	 				
Expenses:	  				 				 				
Operating	  	 	341.7	 	 	 	314.9	 	 	 	(9	%) 	
SG&A	  	 	281.5	 	 	 	271.1	 	 	 	(4	%) 	
Restructuring	  	 	5.5	 	 	 	—  	 	 	 	NM	 	
Depreciation and amortization	  	 	50.3	 	 	 	49.1	 	 	 	(2	%) 	
Acquisition-Related Expenses	  	 	1.4	 	 	 	0.8	 	 	 	(75	%) 	
	  	 	 	 	 	 	 	 	 				
Total	  	 	680.4	 	 	 	635.9	 	 	 	(7	%) 	
	  	 	 	 	 	 	 	 	 				
Operating income	  	$	461.7	 	 	$	490.8	 	 	 	(6	%) 	
	  	 	 	 	 	 	 	 	 				
Adjusted Operating Income (1)	  	$	518.9	 	 	$	540.7	 	 	 	(4	%) 	
	  	 	 	 	 	 	 	 	 				
Interest expense, net	  	 	(52.5	) 	 	 	(50.7	) 	 	 	(4	%) 	
Other non-operating income, net	  	 	2.3	 	 	 	1.0	 	 	 	130	% 	
	  	 	 	 	 	 	 	 	 				
Non-operating expense, net	  	 	(50.2	) 	 	 	(49.7	) 	 	 	(1	%) 	
	  	 	 	 	 	 	 	 	 				
Net income attributable to Moody’s	  	$	372.9	 	 	$	372.9	 	 	 	—  	 	
Diluted weighted average shares outstanding	  	 	192.8	 	 	 	194.5	 	 	 	1	% 	
Diluted EPS attributable to Moody’s common shareholders	  	$	1.93	 	 	$	1.92	 	 	 	1	% 	
Adjusted Diluted EPS (1)	  	$	2.07	 	 	$	2.02	 	 	 	2	% 	
Operating margin	  	 	40.4	% 	 	 	43.6	% 	 				
Adjusted Operating Margin (1)	  	 	45.4	% 	 	 	48.0	% 	 				
Effective tax rate	  	 	9.2	% 	 	 	14.6	% 	 				
 
(1)   	Adjusted Operating Income, Adjusted Operating Margin and Adjusted Diluted EPS attributable to Moody’s common shareholders 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	 	
 	  	2019	 	 	2018	 	  	 	 	
United States	  	 	3,984	 	 	 	3,589	 	  	 	11	% 	
Non-U.S.	  	 	9,253	 	 	 	8,445	 	  	 	10	% 	
	  	 	 	 	 	 	 	 	  				
Total	  	 	13,237	 (1)    	 	 	12,034	 	  	 	10	% 	

(1)   	As a result of the acquisitions of Reis and Omega Performance, Moody’s global staffing increased by 275 employees.	
Global revenue of $1,142.1 million in the first quarter of 2019 increased $15.4 million, or 1%, compared to the same period in 2018 and reflected strong growth in MA being mostly offset by declines in MIS. Refer to the section entitled “Segment Results” of this MD&A for a more fulsome discussion of the Company’s segment revenue.
Transaction Revenue accounted for 42% of global MCO revenue in the first quarter of 2019 compared to 46% in 2018.
U.S. revenue of $612.1 million in the first quarter of 2019 increased $14.4 million over the same period in the prior year reflecting strong growth in MA being partially offset by declines in MIS.
 
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Non-U.S. revenue of $530.0 million was flat compared to the same period in the prior year with strong growth in all regions within MA being offset by declines in MIS, most notably in the EMEA region.
Operating expenses were $341.7 million in the first quarter of 2019, up $26.8 million from the same period in 2018, primarily due to increases in compensation costs reflecting hiring activity and merit increases in 2018. The increase also reflects growth from the acquisitions of Reis and Omega Performance.
SG&A expenses of $281.5 million in the first quarter of 2019 increased $10.4 million from the same period in the prior year, primarily reflecting higher compensation costs. The increase in compensation costs primarily reflects hiring activity and merit increases in 2018 coupled with costs from the acquisitions of Reis and Omega Performance. Non-compensation costs were flat compared to the same period in 2018 and included the offsetting impacts of higher costs to support the Company’s initiative to enhance technology infrastructure to enable automation, innovation and efficiency, offset by lower legal costs.
Operating income of $461.7 million in the first quarter of 2019 decreased $29.1 million compared to the same period in 2018 and resulted in an operating margin of 40.4%, compared to 43.6% in the same period of the prior year. Adjusted Operating Income of $518.9 million in the first quarter of 2019 decreased $21.8 million compared to the same period in 2018, resulting in an Adjusted Operating Margin of 45.4% compared to 48.0% in the same period in the prior year.
Interest expense, net in the first quarter of 2019 was $52.5 million, a $1.8 million increase in expense compared to the same period in 2018, reflecting higher tax-related interest on UTPs being partially offset by lower interest on borrowings. The increase in tax-related interest of approximately $7 million included a higher benefit relating to the favorable resolution of UTPs in the first quarter of 2018 compared to the same period in 2019. This increase was partially offset by lower interest expense on borrowings of approximately $5 million primarily reflecting benefits from the interest element of cross-currency swaps that were executed in 2018 and first quarter of 2019 (more fully discussed in Note 10 to the condensed consolidated financial statements). Refer to the section entitled “Liquidity and Capital Resources” of this MD&A for further discussion regarding cash flows relating to the Company’s indebtedness.
The reduction in the ETR to 9.2% in the first quarter of 2019 primarily reflects regulations issued in the first quarter of 2019 relating to the Tax Act as well as lower non-U.S. taxes relating to certain software development.
Diluted EPS in the first quarter of 2019 of $1.93 increased modestly compared to the same period in 2018. Adjusted Diluted EPS of $2.07 in the first quarter of 2019 increased $0.05, compared to the same period in 2018 (refer to the section entitled “Non-GAAP Financial Measures” of this MD&A for items excluded in the derivation of Adjusted Diluted EPS). Diluted EPS and Adjusted Diluted EPS both benefited from a lower ETR coupled with lower diluted weighted average shares outstanding resulting from the Company’s ASR, which was executed in the first quarter of 2019.
 
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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)	 	
 	  	2019	 	 	2018	 				
Revenue:	  				 				 				
Corporate finance (CFG)	  	$	355.4	 	 	$	389.6	 	 	 	(9	%) 	
Structured finance (SFG)	  	 	100.7	 	 	 	117.8	 	 	 	(15	%) 	
Financial institutions (FIG)	  	 	115.8	 	 	 	114.3	 	 	 	1	% 	
Public, project and infrastructure finance (PPIF)	  	 	92.7	 	 	 	93.2	 	 	 	(1	%) 	
	  	 	 	 	 	 	 	 	 				
Total ratings revenue	  	 	664.6	 	 	 	714.9	 	 	 	(7	%) 	
	  	 	 	 	 	 	 	 	 				
MIS Other	  	 	5.5	 	 	 	5.0	 	 	 	10	% 	
	  	 	 	 	 	 	 	 	 				
Total external revenue	  	 	670.1	 	 	 	719.9	 	 	 	(7	%) 	
	  	 	 	 	 	 	 	 	 				
Intersegment royalty	  	 	32.3	 	 	 	29.8	 	 	 	8	% 	
	  	 	 	 	 	 	 	 	 				
Total	  	 	702.4	 	 	 	749.7	 	 	 	(6	%) 	
	  	 	 	 	 	 	 	 	 				
Expenses:	  				 				 				
Operating and SG&A (external)	  	 	314.4	 	 	 	305.4	 	 	 	(3	%) 	
Operating and SG&A (intersegment)	  	 	2.4	 	 	 	5.0	 	 	 	52	% 	
	  	 	 	 	 	 	 	 	 				
Adjusted Operating Income	  	 	385.6	 	 	 	439.3	 	 	 	(12	%) 	
	  	 	 	 	 	 	 	 	 				
Restructuring	  	 	2.7	 	 	 	—  	 	 	 	NM	 	
Depreciation and amortization	  	 	17.0	 	 	 	16.8	 	 	 	(1	%) 	
	  	 	 	 	 	 	 	 	 				
Operating income	  	$	365.9	 	 	$	422.5	 	 	 	(13	%) 	
	  	 	 	 	 	 	 	 	 				
Adjusted Operating Margin	  	 	54.9	% 	 	 	58.6	% 	 				
Operating margin	  	 	52.1	% 	 	 	56.4	% 	 				
The following is a discussion of external MIS revenue and operating expenses:
Pursuant to certain organizational realignments in the first quarter of 2019, revenue from REITs, which was previously classified in the SFG LOB, is now reported as a component of the CFG LOB. The amounts reclassified were not material and prior year revenue by LOB has been reclassified to conform to this new presentation.
Global MIS revenue of $670.1 million in the first quarter of 2019 was down 7% compared to the same period in 2018, primarily reflecting declines in CFG and SFG. Changes in FX rates unfavorably impacted MIS revenue by two percentage points.
Transaction Revenue for MIS was 61% in the first quarter of 2019, compared to 64% in the same period of 2018.
In the U.S., revenue was $411.2 million in the first quarter of 2019, down $22.2 million from the same period in 2018, reflecting declines in all ratings LOBs excluding PPIF.
Non-U.S. revenue was $258.9 million in the first quarter of 2019, a decrease of $27.6 million or 10%, compared to the same period in 2018, reflecting declines in all ratings LOBs excluding FIG.
Global CFG revenue of $355.4 million in the first quarter of 2019 declined 9% compared to a strong prior year comparative period, with both lower U.S. and non-U.S. revenue. In the U.S., revenue was $242.6 million, or 6% lower compared to the same period in the prior year, primarily reflecting a decline in rated issuance volumes in the bank loan sector as higher borrowing costs suppressed refinancing activity. These declines were partially offset by growth in corporate bond revenue (both investment-grade and speculative-grade) resulting from M&A-driven financing coupled with benefits from favorable changes in product mix and pricing increases. Non-U.S. revenue of $112.8 million declined 15% compared to the same period in the prior year, mainly due to lower leveraged finance rated issuance in EMEA resulting from issuers in the region being well funded coupled with unattractive pricing in the sector suppressing refinancing activity. Transaction Revenue represented 70% and 73% of total CFG revenue in the first quarter of 2019 and 2018, respectively.
 
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Global SFG revenue of $100.7 million in the first quarter of 2019 decreased $17.1 million, or 15%, compared to the same period in 2018. In the U.S., revenue of $62.2 million decreased $11.8 million compared to the same period in 2018, reflecting a decline in refinancing activity in the CLO asset class as wider credit spreads suppressed issuance. Additionally, the decline in U.S. revenue also reflected lower CMBS revenue primarily resulting from an unfavorable mix of deals. Non-U.S. revenue in the first quarter of 2019 of $38.5 million decreased $5.3 million compared to the same period in the prior year primarily reflecting declines across most asset classes in EMEA, as uncertainties relating to Brexit and the regulatory environment resulted in postponement of certain securitization transactions. Transaction Revenue was 57% of total SFG revenue in the first quarter of 2019 compared to 63% in the same period in 2018. Changes in FX translation rates unfavorably impacted SFG revenue by two percentage points.
Global FIG revenue of $115.8 million in the first quarter of 2019 increased modestly compared to the same period in the prior year, with growth in non-U.S. revenue being mostly offset by declines in the U.S. Non-U.S. revenue was $69.8 million in the first quarter of 2019, up 6% compared to the same period in 2018, mainly due to higher banking revenue in Asia-Pacific. In the U.S., revenue of $46.0 million decreased 5% compared to the same period in the prior year primarily reflecting lower rated issuance volumes in the insurance sector. Transaction revenue was 41% of total FIG revenue in the first quarter of 2019, compared to 44% in the same period in 2018. Changes in FX translation rates unfavorably impacted FIG revenue by two percentage points.
Global PPIF revenue was $92.7 million in the first quarter of 2019 and decreased modestly compared to the first quarter of 2018 with declines in non-U.S. revenue being mostly offset by growth in the U.S. Outside the U.S., PPIF revenue was $32.5 million in the first quarter of 2019 and declined $7.3 million compared to a strong prior year comparative period primarily due to declines in public and infrastructure finance in EMEA. In the U.S., revenue in the first quarter of 2019 was $60.2 million, an increase of $6.8 million compared to the same period in 2018, primarily due to higher public and infrastructure finance revenue relative to a challenging prior year period. Transaction Revenue was 59% in the first quarter of 2019, compared to 58% in the same period of 2018. Changes in FX translation rates unfavorably impacted PPIF revenue by two percentage points.
Operating and SG&A expenses in the first quarter of 2019 increased $9.0 million compared to the same period in 2018 and reflected an approximate $15 million increase in compensation costs partially offset by an approximate $6 million decrease in non-compensation costs. The increase in compensation costs primarily reflects higher salaries and employee benefits reflecting hiring activity and merit increases in 2018. The decline in non-compensation costs primarily reflects lower legal costs partially offset by higher costs to support the Company’s initiative to enhance technology infrastructure to enable automation, innovation and efficiency.
Adjusted Operating Income and operating income in the first quarter of 2019, which includes intersegment royalty revenue and intersegment expenses, were $385.6 million and $365.9 million, respectively, down $53.7 million and $56.6 million, respectively, compared to the same period in the prior year. Adjusted Operating Margin in the first quarter of 2019 was 54.9%, or 370BPS lower than the prior year. Operating margin was 52.1% in the first quarter of 2019, compared to 56.4% in the same period in the prior year.
 
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Moody’s Analytics
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)	 	
 	  	2019	 	 	2018	 				
Revenue:	  				 				 				
Research, data and analytics (RD&A)	  	$	307.7	 	 	$	267.1	 	 	 	15	% 	
Enterprise risk solutions (ERS)	  	 	121.9	 	 	 	102.2	 	 	 	19	% 	
Professional services (PS)	  	 	42.4	 	 	 	37.5	 	 	 	13	% 	
	  	 	 	 	 	 	 	 	 				
Total external revenue	  	 	472.0	 	 	 	406.8	 	 	 	16	% 	
	  	 	 	 	 	 	 	 	 				
Intersegment revenue	  	 	2.4	 	 	 	5.0	 	 	 	(52	%) 	
	  	 	 	 	 	 	 	 	 				
Total MA Revenue	  	 	474.4	 	 	 	411.8	 	 	 	15	% 	
	  	 	 	 	 	 	 	 	 				
Expenses:	  				 				 				
Operating and SG&A (external)	  	 	308.8	 	 	 	280.6	 	 	 	(10	%) 	
Operating and SG&A (intersegment)	  	 	32.3	 	 	 	29.8	 	 	 	(8	%) 	
	  	 	 	 	 	 	 	 	 				
Adjusted Operating Income	  	 	133.3	 	 	 	101.4	 	 	 	31	% 	
	  	 	 	 	 	 	 	 	 				
Restructuring	  	 	2.8	 	 	 	—  	 	 	 	NM	 	
Depreciation and amortization	  	 	33.3	 	 	 	32.3	 	 	 	(3	%) 	
Acquisition-Related Expenses	  	 	1.4	 	 	 	0.8	 	 	 	(75	%) 	
	  	 	 	 	 	 	 	 	 				
Operating income	  	$	95.8	 	 	$	68.3	 	 	 	40	% 	
	  	 	 	 	 	 	 	 	 				
Adjusted Operating Margin	  	 	28.1	% 	 	 	24.6	% 	 				
Operating margin	  	 	20.2	% 	 	 	16.6	% 	 				
The following is a discussion of external MA revenue and operating expenses:
Pursuant to organizational/product realignments in the first quarter of 2019, revenue relating to the Bureau van Dijk FACT product, a credit assessment and origination software solution, is now reported in the ERS LOB. This revenue was previously reported in the RD&A LOB. Prior year revenue by LOB has been reclassified to conform to this new presentation, and the amounts reclassified were not material.
Global MA revenue increased $65.2 million, or 16%, compared to the same period in 2018 reflecting strong growth across all LOBs. The acquisitions of Reis and Omega Performance contributed approximately $11 million of revenue, or three percentage points of the growth. Recurring revenue comprised 85% of total MA revenue in both the first quarter of 2019 and 2018, respectively. Changes in FX translation rates unfavorably impacted MA revenue by three percentage points.
In the U.S., revenue of $200.9 million in the first quarter of 2019 increased $36.6 million, reflecting growth across all LOBs, most notably in RD&A.
Non-U.S. revenue of $271.1 million in the first quarter of 2019 was $28.6 million higher than in the same period in 2018 reflecting growth in RD&A and ERS. Changes in FX translation rates unfavorably impacted non-U.S. MA revenue by five percentage points.
Global RD&A revenue of $307.7 million increased $40.6 million, or 15%, over the prior year period. RD&A revenue in the first quarter of 2019 included approximately $9 million of revenue, or three percentage points of the growth, from the Reis acquisition. RD&A revenue growth was also favorably impacted by a $10 million reduction of revenue in the prior year relating to a deferred revenue adjustment required as part of acquisition accounting for Bureau van Dijk. Organic RD&A revenue growth reflected strong results in the credit research and rating data feeds product lines, where enhanced content on the new CreditView platform and continued alignment of usage and licensing parameters have generated higher fees. Additionally, the growth in the first quarter of 2019 reflected higher revenue from Bureau van Dijk (notwithstanding the aforementioned deferred revenue adjustment) as a result of increased market demand for data to fulfill compliance requirements across multiple customer segments. U.S. revenue of $134.8 million and non-U.S. revenue of $172.9 million in the first quarter of 2019 increased 20% and 12%, respectively, compared to the same period in 2018. Changes in FX translation rates unfavorably impacted RD&A revenue by four percentage points.
 
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Global ERS revenue of $121.9 million in the first quarter of 2019 increased $19.7 million, or 19%, compared to the same period in 2018. The growth reflects increases across all regions primarily due to the ongoing demand for SaaS-based CECL solutions coupled with increased demand for actuarial modeling tools in support of certain international accounting standards relating to insurance contracts. The growth also reflects benefits from pricing increases in ERS’s recurring revenue base, which together resulted in an approximate $15 million increase in revenue from subscription-based products. Revenue from one-time licenses and services also grew by approximately $6 million mainly from the implementation of insurance modeling solutions. In the U.S., revenue of $48.4 million in the first quarter of 2019 increased 26% compared to the same period in the prior year. Non-U.S. revenue of $73.5 million in the first quarter of 2019 increased 15% compared to the same period in the prior year. Changes in FX translation rates unfavorably impacted ERS revenue by three percentage points.
Global PS revenue of $42.4 million in the first quarter of 2019 increased $4.9 million compared to the same period in 2018 with approximately half of the growth reflecting revenue from the acquisition of Omega Performance. The increase compared to the prior year also reflects organic growth in online learning solutions coupled with growth from outsourced analytical and research services. In the U.S., revenue in the first quarter of 2019 was $17.7 million, up 34% compared to the same period in 2018. Non-U.S. revenue in the first quarter of 2019 was $24.7 million, up 2% compared to the same period in 2018. Changes in FX translation rates unfavorably impacted PS revenue by three percentage points.
Operating and SG&A expenses in the first quarter of 2019 increased $28.2 million compared to the same period in 2018. This growth reflected increases in both compensation and non-compensation costs of approximately $22 million and $6 million, respectively, and included approximately $9 million in inorganic expense growth from the acquisitions of Reis and Omega Performance. Organic growth in compensation costs primarily reflects hiring activity and merit increases in 2018. Organic growth in non-compensation expenses primarily reflects higher costs to support the Company’s initiative to enhance technology infrastructure to enable automation, innovation and efficiency.
Adjusted Operating Income was $133.3 million in the first quarter of 2019 and increased $31.9 million compared to the same period in 2018. Operating income of $95.8 million in the first quarter of 2019 increased $27.5 million compared to the same period in 2018. Adjusted Operating Margin in the first quarter of 2019 was 28.1%, up 350BPS from the same period in 2018. Operating margin was 20.2% in the first quarter of 2019, up 360BPS from the same period 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, acquisitions and share repurchases from operating and financing cash flow. 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
Favorable
(Unfavorable)	 	
 	  	2019	 	  	2018	 				
Net cash provided by operating activities	  	$	367.1	 	  	$	391.5	 	  	$	(24.4	) 	
Net cash used in investing activities	  	$	(7.2	) 	  	$	(18.5	) 	  	$	11.3	 	
Net cash used in financing activities	  	$	(848.8	) 	  	$	(182.3	) 	  	$	(666.5	) 	
Free Cash Flow (1)	  	$	347.1	 	  	$	376.5	 	  	$	(29.4	) 	
 
(1)  	Free Cash Flow is a non-GAAP measure and is defined by the Company as net cash provided by operating activities minus cash paid for capital expenditures. Refer to “Non-GAAP Financial Measures” of this MD&A for further information on this financial measure.	
Net cash provided by operating activities
The decline in net cash flows from operating activities in the first quarter of 2019 was primarily due to the decrease in operating income compared to the same period in the prior year (see section entitled “Results of Operations” for further discussion).
 
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Net cash used in investing activities
The $11.3 million decrease in cash flows used in investing activities compared to 2018 primarily reflects $5.7 million in cash received in the first quarter of 2018 from a notes receivable issued in connection with a disposal of a subsidiary coupled with a $5.0 million increase in capital additions.
Net cash used in financing activities
The $666.5 million increase in cash used in financing activities was primarily attributed to:
 
 	•	 	the repayment of $450 million for the 2014 Senior Notes (5-year), partially offset by higher net issuance of CP of approximately $358 million; and	
 
 	•	 	higher cash paid for share repurchases in 2019 of approximately $530 million, which includes a $125 million payment for shares made under the ASR agreement that were retained by a financial institution counterparty until final settlement of the contract in April 2019.	
Cash and short-term investments held in non-U.S. jurisdictions
The Company’s aggregate cash and cash equivalents and short-term investments of $1.3 billion at March 31, 2019 consisted of approximately $1.1 billion located outside of the U.S. Approximately 33% of the Company’s aggregate cash and cash equivalents and short-term investments is denominated in euros and British pounds. The Company manages both its U.S. and international cash flow to maintain sufficient liquidity in all regions to effectively meet its operating needs.
As a result of the Tax Act, all previously net undistributed foreign earnings have now been subject to U.S. tax. The Company continues to evaluate which entities it will indefinitely reinvest earnings outside the U.S. The Company has provided deferred taxes for those entities whose earnings are not considered indefinitely reinvested. Accordingly, the Company has commenced repatriating a portion of its non-U.S. cash in these subsidiaries and will continue to repatriate certain of its offshore cash in a manner that addresses compliance with local statutory requirements, sufficient offshore working capital and any other factors that may be relevant in certain jurisdictions. Notwithstanding the Tax Act, which generally eliminated federal income tax on future cash repatriation to the U.S., cash repatriation may be subject to state and local taxes or withholding or similar taxes.
Indebtedness
At March 31, 2019, Moody’s had $5.5 billion of outstanding debt and approximately $680 million of additional borrowing capacity available under the Company’s CP program, which is backstopped by the 2018 Facility. At March 31, 2019, the Company was in compliance with all covenants contained within all of the debt agreements. All of the Company’s long-term debt agreements contain cross default provisions which state that default under one of the aforementioned debt instruments could in turn permit lenders under other debt instruments to declare borrowings outstanding under those instruments to be immediately due and payable. At March 31, 2019, there were no such cross defaults.
The repayment schedule for the Company’s borrowings outstanding at March 31, 2019 is as follows:

	Year Ending December 31,	  	2010
Senior
Notes
due
2020	 	  	2012
Senior
Notes
due
2022	 	  	2013
Senior
Notes
due
2024	 	  	2014
Senior
Notes
(30-year)
due 2044	 	  	2015
Senior
Notes
due
2027	 	  	2017
Senior
Notes
due
2021	 	  	2017
Senior
Notes
due
2023	 	  	2017
Senior
Notes
due
2028	 	  	2018
Senior
Notes
due
2021	 	  	2018
Senior
Notes
due
2029	 	  	2018
Senior
Notes
due
2048	 	  	Commercial
Paper	 	  	Total	 	
2019 (After March 31)	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	—  	 	  	$	320.0	 	  	$	320.0	 		
2020	  	 	500.0	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 		
2021	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 	  	 	—  	 	  	 	—  	 	  	 	300.0	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	800.0	 		
2022	  	 	—  	 	  	 	500.0	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 		
2023	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 		
Thereafter	  	 	—  	 	  	 	—  	 	  	 	500.0	 	  	 	600.0	 	  	 	561.4	 	  	 	—  	 	  	 	—  	 	  	 	500.0	 	  	 	—  	 	  	 	400.0	 	  	 	400.0	 	  	 	—  	 	  	 	2,961.4	 		
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 		
Total	  	$	500.0	 	  	$	500.0	 	  	$	500.0	 	  	$	600.0	 	  	$	561.4	 	  	$	500.0	 	  	$	500.0	 	  	$	500.0	 	  	$	300.0	 	  	$	400.0	 	  	$	400.0	 	  	$	320.0	 	  	$	5,581.4	 		

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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 dividends, all in a manner consistent with maintaining sufficient liquidity after giving effect to any additional indebtedness that may be incurred.
On April 15, 2019, the Board of Directors of the Company declared a quarterly dividend of $0.50 per share of Moody’s common stock, payable June 10, 2019 to shareholders of record at the close of business on May 20, 2019. The continued payment of dividends at this rate, or at all, is subject to the discretion of the Board.
Full-year 2019 total share repurchases (including shares repurchased via the aforementioned ASR) are expected to be approximately $1 billion, subject to available cash, market conditions and other ongoing capital allocation decisions.
The Company has future cash requirements, including operating leases and debt service and payments as noted in the tables that follow as well as future payments related to the transition tax under the Tax Act.
Off-Balance Sheet Arrangements
At March 31, 2019, 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, 2019:

 	  	 	 	  	Payments Due by Period	 		
	(in millions)	  	Total	 	  	Less Than 1 Year	 	  	1 - 3 Years	 	  	3 - 5 Years	 	  	Over 5 Years	 	
Indebtedness (1)	  	$	7,735.7	 	  	$	530.3	 	  	$	1,672.0	 	  	$	1,768.9	 	  	$	3,764.5	 		
Operating lease obligations	  	 	694.5	 	  	 	107.1	 	  	 	199.4	 	  	 	161.3	 	  	 	226.7	 		
Purchase obligations	  	 	171.4	 	  	 	104.1	 	  	 	67.3	 	  	 	—  	 	  	 	—  	 		
Pension obligations (2)	  	 	138.8	 	  	 	4.4	 	  	 	42.7	 	  	 	25.4	 	  	 	66.3	 		
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 		
Total (3)	  	$	8,740.4	 	  	$	745.9	 	  	$	1,981.4	 	  	$	1,955.6	 	  	$	4,057.5	 		

(1)   	Reflects principal payments, related interest and applicable fees due on all indebtedness outstanding as described in Note 17 to the condensed consolidated financial statements.	
(2)  	Reflects projected benefit payments relating to the Company’s U.S. unfunded DBPPs and Retirement and Other Plans described in Note 16 to the condensed consolidated financial statements.	
(3)  	The table above does not include the Company’s net long-term tax liabilities of $474.5 million relating to UTPs, since the expected cash outflow of such amounts by period cannot be reasonably estimated. The table above also does not include an additional $119.0 million relating to the remaining unpaid deemed repatriation liability resulting from the Tax Act enacted into law in the U.S. in December 2017, which the Company had elected to pay in eight annual installments.	
 
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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 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 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:
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. Adjusted Operating Income excludes depreciation and amortization, restructuring, and Acquisition-Related Expenses. Depreciation and amortization are excluded because companies utilize productive assets of different ages and use different methods of acquiring and depreciating productive assets. Restructuring charges are excluded as the frequency and magnitude of these charges may vary widely across periods and companies. Acquisition-Related Expenses consist of expenses incurred to complete and integrate the acquisition of Bureau van Dijk and are excluded due to the material nature of these expenses on an annual basis in both the current and prior years, which are not expected to recur at this dollar magnitude subsequent to the completion of the multi-year integration effort. Acquisition-related expenses from other acquisitions were not material. Management believes that the exclusion of depreciation and amortization, restructuring charges, and Acquisition-Related Expenses, as detailed in the reconciliation below, allows for an additional perspective on the Company’s operating 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,	 	
 	  	2019	 	 	2018	 	
Operating income	  	$	461.7	 	 	$	490.8	 	
Adjustments:	  				 				
Restructuring	  	 	5.5	 	 	 	—  	 	
Depreciation and amortization	  	 	50.3	 	 	 	49.1	 	
Acquisition-Related Expenses	  	 	1.4	 	 	 	0.8	 	
	  	 	 	 	 	 	 	 	
Adjusted Operating Income	  	$	518.9	 	 	$	540.7	 	
	  	 	 	 	 	 	 	 	
Operating margin	  	 	40.4	% 	 	 	43.6	% 	
Adjusted Operating Margin	  	 	45.4	% 	 	 	48.0	% 	
Adjusted Net Income and Adjusted Diluted EPS attributable to Moody’s common shareholders:
The Company presents Adjusted Net Income and Adjusted Diluted EPS because management deems these metrics to be useful measures to provide additional perspective on the operating performance of Moody’s. Adjusted Net Income and Adjusted Diluted EPS exclude the impact of amortization of acquired intangible assets, Acquisition-Related Expenses and restructuring charges.
The Company excludes the impact of amortization of acquired intangible assets as companies utilize intangible assets with different ages and have different methods of acquiring and amortizing intangible assets. Furthermore, the timing and magnitude of business combination transactions are not predictable and the purchase price allocated to amortizable intangible assets and the related amortization period are unique to each acquisition and can vary significantly from period to period and across companies. Also, management believes that excluding acquisition-related amortization expense provides additional perspective when comparing operating results from period to period, and with both acquisitive and non-acquisitive peer companies. Additionally, Acquisition-Related Expenses are excluded due to the material nature of these expenses on an annual basis, which are not expected to recur at this dollar magnitude subsequent to the completion of the multi-year integration effort relating to Bureau van Dijk. Acquisition-related expenses from other acquisitions were not material.
 
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Below is a reconciliation of this measure to its most directly comparable U.S. GAAP amount:

 	  	Three Months Ended
March 31,	 	
Amounts in millions	  	2019	 	  	2018	 	
Net income attributable to Moody’s common shareholders	  				  	$	372.9	 	  				  	$	372.9	 	
Pre-Tax Acquisition-Related Expenses	  	$	1.4	 	  				  	$	0.8	 	  				
Tax on Acquisition-Related Expenses	  	 	(0.3	) 	  				  	 	(0.2	) 	  				
	  	 	 	 	  				  	 	 	 	  				
Net Acquisition-Related Expenses (1)	  				  	 	1.1	 	  				  	 	0.6	 	
Pre-Tax Acquisition-Related Intangible Amortization Expenses	  	$	26.4	 	  				  	$	25.7	 	  				
Tax on Acquisition-Related Intangible Amortization Expenses	  	 	(6.1	) 	  				  	 	(5.9	) 	  				
	  	 	 	 	  				  	 	 	 	  				
Net Acquisition-Related Intangible Amortization Expenses	  				  	 	20.3	 	  				  	 	19.8	 	
Pre-Tax Restructuring	  	$	5.5	 	  				  	$	—  	 	  				
Tax on Restructuring	  	 	(1.4	) 	  				  	 	—  	 	  				
	  	 	 	 	  				  	 	 	 	  				
Net Restructuring	  				  	 	4.1	 	  				  	 	—  	 	
	  				  	 	 	 	  				  	 	 	 	
Adjusted Net Income	  				  	$	398.4	 	  				  	$	393.3	 	

																	
 	  	Three Months Ended
March 31,	 	
 	  	2019	 	  	2018	 	
Earnings per share attributable to Moody’s common shareholders	  				  	$	1.93	 	  				  	$	1.92	 	
Pre-Tax Acquisition-Related Expenses	  	$	0.01	 	  				  	$	—  	 	  				
Tax on Acquisition-Related Expenses	  	 	—  	 	  				  	 	—  	 	  				
	  	 	 	 	  				  	 	 	 	  				
Net Acquisition-Related Expenses (1)	  				  	 	0.01	 	  				  	 	—  	 	
Pre-Tax Acquisition-Related Intangible Amortization Expenses	  	$	0.14	 	  				  	$	0.13	 	  				
Tax on Acquisition-Related Intangible Amortization Expenses	  	 	(0.03	) 	  				  	 	(0.03	) 	  				
	  	 	 	 	  				  	 	 	 	  				
Net Acquisition-Related Intangible Amortization Expenses	  				  	 	0.11	 	  				  	 	0.10	 	
Pre-Tax Restructuring	  	$	0.03	 	  				  	$	—  	 	  				
Tax on Restructuring	  	 	(0.01	) 	  				  	 	—  	 	  				
	  	 	 	 	  				  	 	 	 	  				
Net Restructuring	  				  	 	0.02	 	  				  	 	—  	 	
	  				  	 	 	 	  				  	 	 	 	
Adjusted Diluted EPS	  				  	$	2.07	 	  				  	$	2.02	 	

(1)   	Certain of these Acquisition-Related Expenses are not deductible for tax	
The tax impacts in the table above were calculated using tax rates in effect in the jurisdiction for which the item relates.
 
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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,	 	
 	  	2019	 	  	2018	 	
Net cash provided by operating activities	  	$	367.1	 	  	$	391.5	 	
Capital additions	  	 	(20.0	) 	  	 	(15.0	) 	
	  	 	 	 	  	 	 	 	
Free Cash Flow	  	$	347.1	 	  	$	376.5	 	
	  	 	 	 	  	 	 	 	
Net cash used in investing activities	  	$	(7.2	) 	  	$	(18.5	) 	
Net cash used in financing activities	  	$	(848.8	) 	  	$	(182.3	) 	
 Recently Issued Accounting Standards
Refer to Note 21 to the condensed consolidated financial statements located in Part I on this Form 10-Q for a discussion on the impact to the Company relating to recently issued accounting pronouncements.
 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 19 “Contingencies.”
 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 (ESMA) has direct supervisory responsibility for the registered CRA industry throughout the EU. MIS is a registered entity and is subject to formal regulation and periodic inspection. Applicable rules include procedural requirements with respect to credit 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 credit 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. In 2016, the European Commission published a report concluding that no new EU legislation was needed for the industry at that time, but that it would continue to monitor the credit rating industry and analyze approaches that may strengthen existing regulation. In addition, from time to time, ESMA publishes interpretive guidance, or thematic reports regarding various aspects of the regulation. In the first quarter of 2019, ESMA published final guidelines on the submission of periodic information to ESMA by CRAs as well as its work program for 2019. In its work program, ESMA identified its supervisory priorities for 2019 to include the quality of the rating process, portfolio risk (defined by ESMA as the ability of a CRA to rank-order rated issuers or instruments by relative credit risk) and cybersecurity. This will be in addition to its ongoing work on Brexit and fees charged by CRAs. Finally, ESMA published, for comment, proposed guidelines on disclosure requirements for CRAs, including a chapter with the objective of improving transparency in disclosures where Environmental, Social and Governance (ESG) factors are key underlying elements of a credit rating.
 
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Separately, on June 23, 2016, the U.K. voted through a referendum to exit the EU. The U.K. officially launched the exit process by submitting its Article 50 letter to the EU, informing it of the U.K.’s intention to exit. The submission of this letter started the clock on the negotiation of the terms of exit, which originally was expected to take up to two years, but is taking longer.
The longer-term impacts of the decision to leave the EU on the overall regulatory framework for the U.K. will depend, in part, on the relationship that the U.K. negotiates with the EU. In the interim, the EU CRA regulatory framework will remain in place and firms must continue to abide by their existing obligations with ESMA as the regulator of EU-registered CRAs. Legislation is currently in place in the U.K that would come into force in the event of the U. K’s withdrawal from the EU without an agreement, and which would substantially mirror the EU CRA legislation under the supervision of the Financial Conduct Authority, which has been designated to be the U.K. regulator for U.K. CRAs after exit.
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), periodically 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 credit rating agencies. For example, governments may from time to time establish official CRAs 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 CRAs 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 sections entitled “Contingencies” under Item 2 “MD&A”, commencing on page 44 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”, “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, except as required by law. 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, credit market disruptions or economic slowdowns, which could 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 regulation, credit quality concerns,
 
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changes in interest rates and other volatility in the financial markets such as that due to the U.K.’s planned withdrawal from the EU; 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 actions affecting credit markets, international trade and economic policy; 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 and the expansion of supervisory remit to include non-EU ratings used for regulatory purposes; 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; 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 data protection and privacy laws, 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 such 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, 2018, 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 3.	 Quantitative and Qualitative Disclosures about Market Risk	
The following discussion outlines changes in Moody’s derivative instrument portfolio subsequent to the filing of the Company’s Form 10-K for the year ended December 31, 2018:    
Cross-currency swaps designated as a net investment hedges:
In March 2019, the Company entered into cross-currency swaps to exchange an aggregate amount of €663.6 million with corresponding EUR fixed interest rates for an aggregate amount of $750.0 million with corresponding USD fixed interest rates. Additionally, the Company entered into cross-currency swaps to exchange an aggregate amount of €221.0 million with corresponding interest based on the floating 3-month EURIBOR for an aggregate amount of $250.0 million with corresponding interest based on the floating 3-month USD LIBOR. Both types of swaps were designated as net investment hedges under ASC Topic 815. The purpose of these cross-currency swaps is to mitigate FX exposure related to a portion of the Company’s euro net investments in certain foreign subsidiaries against changes in euro/USD exchange rates. If the euro were to strengthen 10% relative to the U.S. dollar, there would be an approximate $101 million unfavorable impact to the fair value of the cross-currency swaps recognized in OCI, which would be offset by favorable currency translation gains on the Company’s euro net investment in foreign subsidiaries.
Interest rate swaps designated as fair value hedges:
Furthermore, in the first quarter of 2019, the Company entered into interest rate swaps with a notional amount of $250 million to convert the fixed rate of interest on the 2.625% 2017 Senior Notes due 2023 to a floating interest rate based on the 3-month USD LIBOR. A hypothetical change of 100 BPS in the USD LIBOR-based swap rate would result in an approximate $10 million change to the fair value of the swap, which would be offset by the change in fair value of the hedged item.
Refer to Note 10 to the condensed consolidated financial statements in this Form 10-Q and Item 7A. “Quantitative and Qualitative Disclosures about Market Risk”, contained in the Company’s annual report on Form 10-K for the year ended December 31, 2018 for further discussion on the Company’s derivative financial instruments.
 
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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.
Except as described below, 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 three-month period ended March 31, 2019.
During the first quarter of 2019, the Company implemented internal controls relating to the New Lease Accounting Standard, which was adopted by Moody’s on January 1, 2019.
 
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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 19 “Contingencies” in this Form 10-Q.
 
Item 1A.	 Risk Factors	
There have been no material changes since December 31, 2018 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, 2018.
 
Item 2.	 Unregistered Sales of Equity Securities and Use of Proceeds	
MOODY’S PURCHASES OF EQUITY SECURITIES
For the Three Months Ended March 31, 2019

	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) (3)	 	
January 1 - 31	  	 	356,523	 	  	$	149.12	 	  	 	356,523	 	  	$	 	 	  	 	1,271.1 million	 		
February 1 - 28	  	 	2,338,101	 	  	$	168.94	 	  	 	2,337,846	 	  	$	 	 	  	 	751.1 million	 		
March 1 - 31	  	 	419,487	 	  	$	—  	 	  	 	—  	 	  	$	 	 	  	 	751.1 million	 		
	  	 	 	 	  				  	 	 	 	  				  					
Total	  	 	3,114,111	 	  	$	166.32	 	  	 	2,694,369	 	  				  					

(1)  	Includes surrender to the Company of 255 and 419,487 shares of common stock in 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. On December 15, 2015, the Board authorized a $1 billion share repurchase program. Additionally, in October 2018, the Board authorized an additional $1.0 billion share repurchase program which commenced during the first quarter of 2019 following the completion of the 2015 repurchase program. There is no established expiration date for the remaining authorization.	
(3)  	Pursuant to an ASR executed in February 2019, the Company paid $500 million to a counterparty and received an initial delivery of 2.2 million shares of its common stock.	
During the first quarter of 2019, Moody’s issued 1.4 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	  	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.		
			
  .2	  	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).		
			
 10	  	MATERIAL CONTRACTS		
			
  .1*	  	Amendment to the Amended and Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan (as amended, December 18, 2017)		
			
 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	  	XBRL	
		
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 / MARK KAYE	
	 		 		 	Mark Kaye	
	 		 		 	Senior Vice President and Chief Financial Officer
(principal financial officer)	
				
	 		 	By:	 	/ S / CAROLINE SULLIVAN	
	 		 		 	Caroline Sullivan	
	 		 		 	Senior Vice President and Corporate Controller
(principal accounting officer)	
				
Date: May 1, 2019	 		 		 		

63

Exhibit 10.1
AMENDMENT TO THE
AMENDED AND RESTATED 2001 MOODY’S CORPORATION
KEY EMPLOYEES’ STOCK INCENTIVE PLAN
(as amended, December 18, 2017)
WHEREAS , Moody’s Corporation, a Delaware corporation (the “ Company ”) maintains the Amended and Restated 2001 Moody’s Corporation Key Employees’ Stock Incentive Plan, as amended December 18, 2017 (as amended, the “ Plan ”); and
WHEREAS , the Company has determined the Plan should be amended to mandate a vesting period of at least one year for all equity awards issued under the Plan on or after April 15, 2019, subject to certain limited exceptions.
NOW, THEREFORE , the Plan is hereby amended effective as of April 15, 2019 as follows:
1.    Section 6 is hereby amended and restated to read as follows:
No Award may be granted under the Plan after the tenth anniversary of the Effective Date, but Awards theretofore granted may extend beyond that date. No portion of any Award granted on or after April 17, 2019 shall vest, in whole or in part, prior to the first anniversary of the date of grant of the Award; provided, that up to 5% of the shares authorized for issuance pursuant to Section 3 may, if so determined by the Committee, vest prior to the first anniversary of the date of grant of the Award.
2.    Section 7(g) is hereby amended and restated to read as follows:
(g)     Effect of Other Termination of Employment. Upon a Termination of Employment for any reason (other than death, Disability or Retirement after the first anniversary of the date of grant of an Option as described above), an unexercised Option may thereafter be exercised during the period ending 30 days after the date of such Termination of Employment, but only to the extent to which such Option was exercisable at the time of such Termination of Employment. Notwithstanding the foregoing and subject to Section 6, the Committee may, in its sole discretion, either by prior written agreement with the Participant or upon the occurrence of a Termination of Employment, accelerate the vesting of unvested Options held by a Participant if such Participant’s Termination of Employment is without “cause” (as such term is defined by the Committee in its sole discretion) by the Company.
3.    Section 9(a) is hereby amended and restated to read as follows:
(a)     Generally . The Committee, in its sole discretion, may grant Awards of unrestricted Shares, Restricted Stock, Restricted Stock Units and other Awards that are valued in whole or in part by reference to, or are otherwise based on the Fair Market Value of, Shares (collectively, “Other Stock-Based Awards”). Such Other Stock-Based Awards shall

be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition to any other Awards granted under the Plan. Subject to the provisions of the Plan, the Committee shall determine to whom and when Other Stock-Based Awards will be made; the number of Shares to be awarded under (or otherwise related to) such Other Stock-Based Awards; whether such Other Stock-Based Awards shall be settled in cash, Shares or a combination of cash and Shares; and all other terms and conditions of such Awards (including, without limitation, the vesting provisions thereof). Notwithstanding anything herein to the contrary, the grant, issuance, retention, vesting and/or settlement of Shares under any Other Stock-Based Award that is based on performance criteria and level of achievement versus such criteria will be subject to a performance period of not less than twelve months, and the grant, issuance, retention, vesting and/or settlement of Shares under any Other Stock-Based Award that is based solely upon continued employment and/or the passage of time may not vest or be settled in full prior to the thirty-sixth month following its date of grant, but may, subject to Section 6 hereof, be subject to pro-rata vesting over such period. Further, subject to Section 6 hereof, the Committee may provide for the satisfaction and/or lapse of all conditions under any such Other Stock-Based Award in the event of the Participant’s death, Disability or Retirement or in connection with a Change in Control, and the Committee may provide that any such restriction or limitation will not apply in the case of an Other Stock-Based Award that is issued in payment or settlement of compensation that has been earned by the Participant.
4.    Section 9(c)(iv) is hereby amended and restated to read as follows:
(iv)     Effect of Termination of Employment or Death. Upon a Termination of Employment by reason of death, Disability or Retirement, in each case after the first anniversary of the date of the Award of Restricted Stock or Restricted Stock Units, the Restricted Stock or Restricted Stock Units shall immediately vest in full and all restrictions on such Awards shall terminate. Upon a Termination of Employment for any reason other than death, Disability or Retirement after the first anniversary of the date of the Award of Restricted Stock or Restricted Stock Units, a Participant’s unvested Restricted Stock and Restricted Stock Units shall be forfeited. Notwithstanding the foregoing, subject to Section 6 and Section 9(a), the Committee may, in its sole discretion, either by prior written agreement with the Participant or upon the occurrence of a Termination of Employment, accelerate the vesting of unvested Restricted Stock or Restricted Stock Units held by the Participant if such Participant’s Termination of Employment is without “cause” (as such term is defined by the Committee in its sole discretion) by the Company.
5.    Section 9(d)(iii) is hereby amended and restated to read as follows:
(iii)     Effect of Termination of Employment. Subject to Section 6, upon a Termination of Employment by reason of death, Disability or Retirement, a Participant shall have such rights in his or her Performance Shares, if any, as may be prescribed by the Award agreement. Upon a Termination of Employment for any reason other than death, Disability or Retirement prior to the end of any applicable performance period, a Participant’s Performance Shares shall be forfeited, unless, subject to Section 6 and Section 9(a), the Committee, in its sole discretion, shall determine otherwise.

Exhibit 31.1
CHIEF EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Raymond W. McDaniel, Jr., 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 /    RAYMOND W. MCDANIEL, JR.	
Raymond W. McDaniel, Jr.	
President and Chief Executive Officer	
May 1, 2019

Exhibit 31.2
CHIEF FINANCIAL OFFICER CERTIFICATION
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I , Mark Kaye, 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 /    MARK KAYE                	
Mark Kaye      
Senior Vice President and Chief Financial Officer	
May 1, 2019

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, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Raymond W. McDaniel, Jr., 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 /    RAYMOND W. MCDANIEL, JR. 	
Raymond W. McDaniel, Jr.	
President and Chief Executive Officer	
May 1, 2019

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, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Kaye, 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 / MARK KAYE            	
Mark Kaye
Senior Vice President and Chief Financial Officer	
May 1, 2019