•~~Continued disintermediation~~Table of ~~fixed-income markets in both developed and emerging economies driving issuance and demand for new ratings products and services; and~~Contents

•~~Growth in first time rating mandates.~~

In addition to the factors noted above, growth in global fixed income markets in a given year is dependent on many macroeconomic and capital market factors including:

Interest rates

Business investment spending

Corporate refinancing needs

Merger and acquisition activity

Issuer financial health

Consumer borrowing levels

Securitization activity

Expansion of ratings coverage

Expansion into ~~geographies with developing debt capital~~emerging markets

Rating fees paid by debt issuers account for most of the revenue of MIS. Therefore, a substantial portion of MIS’s revenue is dependent upon the dollar-equivalent volume and number of ratable debt securities issued in the global capital markets.

~~MIS’s results can be affected by factors such as:~~

•~~Performance and prospects for growth of the major world economies;~~

•~~Fiscal and monetary policies pursued by their governments; and~~

•~~Whether issuers request MIS ratings to aid investors in making their investment decisions.~~

However, annual fee arrangements with frequent debt issuers, annual debt monitoring fees and annual fees from commercial paper and medium-term note programs, bank deposit ratings, insurance company financial strength ratings, mutual fund ratings, and other areas partially mitigate MIS’s dependence on the volume or number of new debt securities issued in the global fixed-income markets. ~~MIS’s global coverage positions it well to serve the needs of the global fixed income markets.~~

While already common in U.S. and Western European markets, an ongoing trend in the world’s capital markets is the disintermediation of financial systems. Issuers increasingly raise capital in the global public capital markets, in addition to, or in substitution for, traditional financial intermediaries. Moreover, financial intermediaries have sold assets in the global public capital markets, in addition to, or instead of, retaining those assets. Moody’s believes that issuer use of global debt capital markets offer advantages in capacity and efficiency compared to traditional banking systems and that the trend of increased disintermediation will continue. Further, disintermediation has continued because of the historically low interest rate environment and bank deleveraging, which has encouraged a number of corporations and other entities to seek alternative funding in the bond markets.

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Moody’s also observes disintermediation in key emerging markets where economic growth may outpace internal banking system capacity. Thus, disintermediation is expected to continue over the longer-term, with Moody’s targeting investment and resources to those markets where disintermediation and bond issuance is expected to remain robust.

MA Prospects for Growth

As an integrated risk assessment business, MA helps customers build resilience by providing tools to measure the financial implications of risk and capitalize on related opportunities. Growth in MA is likely to be driven by expansion across customer sectors fostered by a broadening of MA's data, analytics and ~~analytics~~software solutions to meet an expanded set of customer use cases.

MA’s business growth is ~~influenced~~driven by a number of factors, including:

~~Growth from data and analytics in adjacent markets, including ESG, KYC, and CRE~~STRONG CUSTOMER RETENTION RATES

~~Expansion of data sets and delivery options establishing a gateway that supports multiple stakeholders~~CROSS-SELLING, UPGRADES & PRICING

~~Ability to capitalize on demand for company data from a diverse set of use cases~~CONTINUED SAAS TRANSITION

~~Continued digital transformation of credit decisioning and analytical tools (e.g., shift to SaaS-based solutions)~~INCREASED DISTRIBUTION CAPACITY

~~Geographic expansion of actuarial and asset management solutions and continued investment in predictive analytics franchise~~NEW PRODUCT DEVELOPMENT

Moody’s expects that MA products and services that ~~improve efficiencies,~~measure and manage risk, provide business insights, and enable compliance with financial regulation, including AML, KYC, and accounting standards, will continue to be in demand from institutions worldwide. ~~In order to~~To respond to other sources of demand and drive growth, MA is actively investing in new ~~products, including~~product innovation, enhanced data sets and improved delivery services (e.g., software-as-a-service). These efforts should support broader distribution of MA’s capabilities, deepen relationships with existing customers and drive new customer acquisition.

~~COMPETITION~~Competition

MIS competes with other CRAs and with investment banks and brokerage firms that offer credit opinions and research. Many users of MIS’s ratings also have in-house credit research capabilities. There are also some rating markets, based on industry, geography and/or instrument type, in which Moody’s has made investments and obtained market positions superior to its competitors, while in other markets, the reverse is true.

MA competes broadly in the financial information ~~industry~~and enterprise risk software industries against various diversified competitors. MA’s main competitors within ~~RD&A~~Decision Solutions are providers of ~~fixed income analytics, valuations, economic data~~software and ~~research as well as a host of financial training and education firms.~~analytic solutions. In ~~ERS,~~Research & Insights, MA faces competition from ~~both large software~~ providers of economic data, financial research and ~~various other vendors as well as in-house solutions.~~analysis. MA's main competitors within Data & Information are providers of commercial and financial data.

~~REGULATION~~Regulation

MIS, certain of the Company's ~~ratings~~credit rating affiliates and many of the issuers and/or securities that ~~it rates~~MIS and the affiliates rate, are subject to extensive regulation in the U.S., EU and in other countries (including by state and local authorities). In addition, some of the services offered by MA and its affiliates are subject to regulation in ~~countries such as Canada, China and Australia.~~a number of countries. MA also derives a significant amount of its sales from banks and other financial services providers who are subject to regulatory oversight and who are required to pass through certain regulatory requirements to key suppliers such as MA. Existing and proposed laws and regulations can impact the Company’s operations, products and the markets in which the Company operates. Additional laws and regulations 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 Company’s operations, including the issuance of credit ratings, and may negatively impact the Company’s profitability and ability to compete, or result in changes in the demand for ~~credit ratings,~~the Company's products and services, in the manner in which ~~credit ratings~~the Company's products and services are utilized and in the manner in which the Company operates.

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~~The regulatory landscape continues to evolve.~~ In the U.S., CRAs are subject to extensive regulation primarily pursuant to the Reform Act and the Dodd-Frank Act. The Reform Act added Section 15E to the Exchange Act and provided the SEC with the authority to establish a registration and oversight program for CRAs registered as NRSROs. Among other things, the Reform Act requires the SEC to submit an annual report to Congress providing an overview of SEC activities with respect to NRSROs, and the SEC’s views on the state of competition, transparency and conflicts of interests among NRSROs. The Dodd-Frank Act enhanced the SEC’s oversight of the regulation of NRSROs, and includes a requirement that the SEC publish an annual report summarizing the results of its annual examinations of NRSROs. To date, through a series of rulemakings, the SEC has implemented several Exchange Actadded additional provisions ~~related~~ to NRSROs. These include, for example, provisions addressing disclosure of data and assumptions underlying credit ratings, conflicts of interest with respect to sales and marketing practices, disclosure of performance statistics, application and disclosure of credit rating methodologies, analyst training and testing and consistent application of rating symbols and definitions. The Dodd-Frank Act also changed the pleading standard for CRAs. The Company has made, and continues to make, substantial IT and other investments, and has implemented the relevant compliance obligations.Section 15E.

In the EU, the CRA industry is registered and supervised through a pan-EU regulatory framework. ~~The European Securities and Markets Authority (ESMA)~~ESMA has direct supervisory responsibility for registered CRAs throughout the ~~EU MIS’~~EU. MIS’s EU CRA subsidiaries are registered and are subject to ~~formal~~CRA regulation in the EU and periodic inspection. Applicable rules include, but are not limited to, procedural requirements with respect to use of credit ratings, independence and avoidance of conflicts of interest, conflicts of interest concerning investments in CRAs, methodologies, models and key rating assumptions, CRA rotation and use of multiple CRAs, outsourcing, disclosures, credit ratings of sovereign issuers, liability for intentional or grossly negligent failure to abideinspection by ~~applicable regulations, reporting requirements to ESMA regarding fees, and additional procedural and substantive requirements on the pricing of services.~~ESMA. From time to time, ESMA publishes interpretive guidance, or thematic reports regarding various aspects of the CRA regulation and, annually, sets out its work program for the forthcoming year. ESMA’s 2021 work program includes monitoring, identifying and assessing new risks such as those emanating from COVID-19 and ESG data and rating providers, assessing the drivers behind changes to credit rating methodologies, engaging with CRAs on IT and information security controls and ensuring that credit ratings are accessible and usable by investors.

In 2021, the European Commission is expected to publish its second Sustainable Finance Action Plan which may include a timeline for the adoption of legislative proposals regarding products and services in the ESG sector. The Commission is ~~also expected to publish a report~~moving forward with their sustainable finance strategy which was released in ~~2021 on~~July 2021. This includes further assessments in respect of both CRAs and ~~the integration of~~ sustainability ~~factors into their credit ratings. The Commission may also seek~~ratings and research, which might lead to ~~introduce a regulatory framework that may impact Moody’s ESG products and services.~~legislative action.

~~Separately, the U.K. left the EU on January~~On December 31, 2020, ~~and commenced the Brexit implementation period ending on December 31, 2020. After the Brexit implementation period,~~ the MIS U.K. registered CRA ceased to be registered with and regulated by ESMA and became subject to regulation by the U.K. Financial Conduct ~~Authority.~~Authority (FCA). Regulatory arrangements ~~were put in place by the relevant authorities~~also came into effect in both the U.K. and the EU to allow credit ratings to be available for regulatory use in both the EU and the U.K. ~~after the end of the Brexit implementation period.~~ MIS has put arrangements in place to endorse its U.K. credit ratings into the EU and its EU credit ratings into the U.K. ~~These arrangements are independent~~The FCA has recently stated that it intends to launch a review of competition in the ~~EU-U.K. Trade and Cooperation Agreement (“TCA”) that now governs the trading relationship between the EU and the U.K., subject to relevant ratification arrangements by each party.~~

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, regulatory authorities have, and will continue to, publish reports that describe their oversight activities. In addition, other legislation and/or interpretation of existing regulation relating to the Company’s operations, includingmarket for credit rating ~~ancillary~~data feeds during the first quarter of 2023. The U.K. Government is also considering bringing ESG data and ~~research services has been or is being considered by local, national~~ratings firms within the scope of FCA authorization 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 CRAs. 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 the Company.

~~MOODY'S~~ ~~2020 10-K 25~~

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~~INTELLECTUAL PROPERTY~~Intellectual Property

Moody’s and its affiliates own and control a variety of intellectual property, including but not limited to:

Proprietary information

Publications

Databases

Trademarks

Software tools and applications

Domain names

Research

Models and methodologies

Other proprietary materials that, in the aggregate, are of material importance to Moody’s business

Management of Moody’s believes that each of the trademarks and related corporate names, marks and logos relating to its businesses, including those containing the term “Moody’s”, are of material importance to the Company.

The Company, primarily through MA and its subsidiaries, licenses certain of its databases, software applications, credit risk models, ~~training courses in credit risk and capital markets,~~ research and other publications and services that contain intellectual property to its customers. In addition, the Company ~~primarily through Vigeo Eiris and Four Twenty Seven and their respective subsidiaries,~~ licenses certain databases, software applications, assessments, research and other publications and services relating to ESG and climate risks that contain intellectual property to its customers. These licenses are provided pursuant to standard agreements containing customary restrictions and intellectual property protections.

In addition, Moody’s licenses from third parties certain technology, data and other intellectual property rights. Specifically, Moody’s obtains licenses from third parties to use financial information (such as market and index data, financial statement data, research data, default data, and security identifiers) as well as software development tools and libraries. In addition, certain of the Company’s ~~Bureau van Dijk and RDC businesses~~subsidiaries obtain from third party information providers certain financial, credit risk, compliance, management, ownership, news and/or other data worldwide, which ~~Bureau van Dijk and RDC distribute~~are distributed through ~~its company~~certain of Moody's information products. The Company obtains such technology and intellectual property rights from generally available commercial sources. The Company also utilizes generally available open source software and libraries for internal use and subject to appropriately permissive open source licenses, to carry out routine functions in certain of the Company’s software products. Most of such technology and intellectual property is available from a variety of sources. Although certain financial information (particularly security identifiers, certain pricing or index data, and certain company financial data in selected geographic markets) is available from a limited number of sources, Moody’s does not believe it is dependent on any one data source for a material aspect of its business.

The names of Moody’s products and services referred to herein are trademarks, service marks or registered trademarks or service marks owned by or licensed to Moody’s or one or more of its affiliates. The Company owns ~~thirty eight patents.~~patents (including granted, allowed and pending patents). None of the Company's intellectual property is subject to a specific expiration date, except to the extent that the patents and the copyright in items that the Company creates (such as credit reports, research, software, and other written opinions) expire pursuant to relevant law.

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The Company considers its intellectual property to be proprietary, and Moody’s relies on a combination of copyright, trademark, trade secret, patent, non-disclosure and other contractual and technological safeguards for protection. Moody’s also pursues instances of third-party infringement of its intellectual property in order to protect the Company’s rights.

~~AVAILABLE INFORMATION~~Available Information

Moody’s investor relations internet website is ~~http:~~https://ir.moodys.com/. Under the “SEC Filings” tab at this website, the Company makes available free of charge its annual reports on Form 10-K, proxy and other information statements, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after they are filed with, or furnished to, the SEC.

The SEC maintains an internet site that contains annual, quarterly and current reports, proxy and other information statements that the Company files electronically with the SEC. The SEC’s internet site is ~~http:~~https://www.sec.gov/.

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~~INFORMATION ABOUT OUR EXECUTIVE OFFICERS~~Information About Our Executive Officers


						Name, Age, Position and Biographical Data

						Robert Fauber, 5052 President and Chief Executive Officer Mr. Fauber has served as the Company’s President and Chief Executive Officer since January 2021. Mr. Fauber joined the Board of Directors in October 2020 and he currently serves on the Executive Committee of the Board of Directors. Prior to serving as CEO, Mr. Fauber served as Chief Operating Officer from November 2019 to December 2020, as President of ~~Moody’s Investors Service, Inc.~~MIS from June 2016 to October 2019, as Senior Vice President—Corporate & Commercial Development of Moody’s Corporation from April 2014 to May 2016, and was Head of the MIS Commercial Group from January 2013 to May 2016. From April 2009 through April 2014, he served as Senior Vice President—Corporate Development of Moody’s Corporation. Mr. Fauber served as Vice President—Corporate Development from September 2005 to April 2009. Prior to joining Moody’s, Mr. Fauber served in several roles at Citigroup and its investment banking ~~subsidiary Salomon Smith Barney from 1999 to 2005. From 1992 to 1996, Mr. Fauber worked at NationsBank (now Bank of America) in the middle market commercial banking group.~~subsidiary.

						John J. Goggins, 6062 Executive Vice President and General Counsel Mr. Goggins has served as the Company’s Executive Vice President and General Counsel since April 2011 and the Company’s Senior Vice President and General Counsel from October 2000 until April 2011. Mr. Goggins joined Moody’s Investors Service, Inc. in February 1999 as Vice President and Associate General Counsel.

						~~Melanie Hughes, 58~~ ~~Senior Vice President and Chief Human Resources Officer~~ Ms. Hughes has served as the Company’s Senior Vice President—Chief Human Resources Officer since September 2017. Prior to joining the Company, Ms. Hughes was Chief Human Resource Officer and Executive Vice President, Human Resources at American Eagle Outfitters from July 2016 to September 2017 and served as Executive Vice President, Human Resources at Tribune Media from May 2013 to June 2016. She has held several senior management roles for many different companies such as Coach, Gilt Group, DoubleClick and UBS Warburg.

						Mark Kaye, 4143 ~~Senior~~Executive Vice President and Chief Financial Officer Mr. Kaye has served as the Company’s Executive Vice President—Chief Financial Officer since April 2021 and as Senior Vice President—Chief Financial Officer ~~since~~from August ~~2018.~~2018 to April 2021. Prior to joining the Company, Mr. Kaye was Senior Vice President and Head of Financial Planning and Analysis at Massachusetts Mutual Life Insurance Company (MassMutual) since February 2016, and Chief Financial Officer of MassMutual U.S. since July 2015. Prior to that, Mr. Kaye served as Chief Financial Officer and Senior Vice President, Retirement Solutions, at Voya Financial from 2011 to 2015. Mr. Kaye previously held various senior financial and risk reporting positions at ING U.S. and ING Group, and was in the investment banking division of Credit Suisse First Boston.

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						Name, Age, Position and Biographical Data

						Caroline Sullivan, 5254 ~~Senior Vice President~~Chief Accounting Officer and Corporate Controller Ms. Sullivan has served as the Company’s ~~Senior Vice President—~~Chief Accounting Officer and Corporate Controller since December 2018. Prior to joining the Company, Ms. Sullivan served in several roles at Bank of America from 2011 to 2018, where her last position held was Managing Director and Global Banking Controller. Prior to that role, Ms. Sullivan supported the Global Wealth & Investment Management business from 2015 to 2017 in a variety of positions including Controller. Ms. Sullivan, a CPA, previously held various senior positions at several banks and a major accounting firm, and is a member of the Board of Directors of Financial Executives International.

						Stephen Tulenko, 5355 President, ~~Moody’s~~Moody��s Analytics Mr. Tulenko has served as President of Moody’s Analytics since November 2019. Mr. Tulenko served as Executive Director of ~~Enterprise Risk Solutions~~ERS from 2013 to October 2019 and as Executive Director of Global Sales, Customer Service and Marketing from 2008 to 2013. Prior to the formation of Moody’s Analytics, he held various sales, product development and product strategy roles at Moody’s Investors Service, Inc. Mr. Tulenko joined Moody’s in 1990.

						Michael West, 5254 President, Moody’s Investors Service Mr. West has served as President of Moody’s Investors Service, Inc. since November 2019. Mr. West served as Managing Director—Head of MIS Ratings and Research from June 2016 to October 2019. Previously, Mr. West served as Managing Director—Head of Global Structured Finance from February 2014 to May 2016 and Managing Director—Head of Global Corporate Finance from January 2010 to January 2014. Earlier in his career, he was also responsible for the research strategy for the ratings businesses and before that led Corporate Finance for the EMEA Region, European Corporates and the EMEA leveraged finance business. Prior to joining Moody’s in 1998, Mr. West worked at Bank of America and HSBC in various credit roles.

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ITEM 1A. RISK FACTORS

Please carefully consider the following discussion of significant factors, events and uncertainties that make an investment in the Company’s securities risky and provide important information for the understanding of the “forward-looking” statements discussed in Item 7 of this Form 10-K and elsewhere. These risk factors should be read in conjunction with the other information in this annual report on Form 10-K.

The events and consequences discussed in these risk factors could, in circumstances the Company may not be able to accurately predict, recognize, or control, have a material adverse effect on Moody’s business, financial condition, operating results (including components of the Company’s financial results such as sales and profits), cash flows and stock price. These risk factors do not identify all risks that Moody’s faces. The Company could also be affected by factors, events, or uncertainties that are not presently known to the Company or that the Company currently does not consider to present significant risks. In addition to the effects of ~~the COVID-19 pandemic~~general economic conditions, including inflation and related monetary policy actions in response to inflation, and resulting global disruptions on our business and operations discussed in Item 7 of this Form 10-K and in the risk factors below, additional or unforeseen effects from ~~the COVID-19 pandemic and~~ the global economic climate may give rise to or amplify many of these risks discussed below.

A. Legal and Regulatory Risks

Moody’s Faces Risks Related to U.S. Laws and Regulations Affecting the Credit Rating Industry and Moody’s Customers.

Moody’s operates in a highly regulated industry and is subject to extensive regulation by federal, state and local authorities in the U.S., including the Reform Act and the ~~Financial Reform~~Dodd-Frank Act. These regulations are complex, continually evolving and have tended to become more stringent over time. Additionally, ~~the change in the Presidential administration and~~ changes in Congress may increase the uncertainty with regard to potential changes in these laws and regulations and the enforcement of any new or existing legislation or directives by government authorities. See “Regulation” in Part 1,I, Item 1 of this annual report on Form 10-K for more information. The current laws and regulations:

–seek to encourage, and may result in, increased competition among CRAs and in the credit rating business;

–may result in alternatives to credit ratings or changes in the pricing of credit ratings;

–restrict the use of information in the development or maintenance of credit ratings;

–increase regulatory oversight of the credit markets and CRA operations;

–provide the SEC with direct jurisdiction over CRAs that seek NRSRO status, and grant authority to the SEC to inspect the operations of CRAs; and

–provide for enhanced oversight standards and specialized pleading standards, which may result in increases in the number of legal proceedings claiming liability for losses suffered by investors on rated securities and aggregate legal defense costs.

If these laws and regulations, and any future rulemaking or court rulings, reduce demand for credit ratings or increase costs, Moody’s may be unable to pass such costs through to customers. In addition, there may be uncertainty over the scope, interpretation and administration of such laws and regulations. The Company’s compliance and efforts to mitigate the risk of fines, penalties or other sanctions can result in significant expenses. Legal proceedings that are increasingly lengthy can result in uncertainty over and exposure to liability.

It is difficult to accurately assess the future impact of legislative and regulatory requirements on Moody’s business and its customers’ businesses. For example, new laws and regulations may affect MIS’s communications with issuers as part of the rating assignment process, alter the manner in which MIS’s credit ratings are developed, assigned and communicated, affect the manner in which MIS or its customers or users of credit ratings operate, impact the demand for MIS’s credit ratings and alter the economics of the credit ratings business, including by restricting or mandating business models for CRAs. Further, speculation concerning the impact of legislative and regulatory initiatives and the increased uncertainty over potential liability and adverse legal or judicial determinations may negatively affect Moody’s stock price. Although these legislative and regulatory initiatives apply to CRAs and credit markets generally, they may affect Moody’s in a disproportionate manner. Each of these developments increase the costs and legal risk associated with the issuance of credit ratings and can have a material adverse effect on Moody’s operations, profitability and competitiveness, the demand for credit ratings and the manner in which such ratings are utilized.

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In addition, MA derives a significant amount of its sales from banks and other financial services providers who are subject to regulatory oversight. U.S. banking regulators, including the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the Federal Reserve System and the Consumer Financial Protection ~~Board,~~Bureau, as well as many state agencies, have issued guidance to insured depository institutions and other providers of financial services on assessing and managing risks associated with third-party relationships, which include all business arrangements between a financial services provider and another entity, by contract or otherwise, and generally requires banks and financial services providers to exercise comprehensive oversight throughout each phase of a bank or financial service provider’s business arrangement with third-party service providers, and instructs banks and financial service providers to adopt risk management processes commensurate with the level of risk and complexity of their third-party relationships. In light of this, MA’s existing or potential bank and financial services customers subject to this guidance have sought to and may further revise their third-party risk management policies and processes and the terms on which they do business with MA. This can result in delayed or reduced sales to such customers, adversely affect MA’s relationship with such customers, increase the costs of doing business with such customers and/or result in MA assuming greater financial and legal risk under service agreements with such customers.

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Moody’s Faces Risks Related to Financial Reforms Outside the U.S. Affecting the Credit Rating Industry and Moody’s Customers.

In addition to the extensive and evolving U.S. laws and regulations governing the industry, foreign jurisdictions have taken measures to regulate CRAs and the markets for credit ratings. In particular, the EU has adopted a common regulatory framework for CRAs operating in the EU and continues to monitor the credit rating industry and analyze approaches that may strengthen existing regulation. ~~Ratings~~Credit ratings emanating from outside the EU are subject to ESMA’s oversight if they are endorsed into the EU. Additionally, other foreign jurisdictions have ~~recently~~ taken measures to increase regulation of ~~rating agencies~~CRAs and markets for credit ratings. See “Regulation” in Part 1, Item 1 of this annual report on Form 10-K for more information.

The EU and other jurisdictions, as discussed further below, adopt legislation and engage in rulemaking on an ongoing basis that significantly impacts operations and the markets for the Company's products and services. Future laws and regulations could extend to products and services not currently regulated. These regulations could: (i) affect the need for debt securities to be rated, (ii) expand supervisory remits to include ~~non-EU~~credit ratings issued outside the home jurisdiction and used for regulatory purposes, (iii) increase the level of competition in the market for credit ratings, (iv) establish criteria for credit ratings or limit the entities authorized to provide credit ratings, ~~and (iv)~~(v) restrict the collection, use, accuracy, correction and sharing of personal information by CRAs, or ~~(v)~~(vi) regulate pricing ~~(such that~~(for example to require fees that are based on costs and are non-discriminatory) on products and services provided by MA such as those products that incorporate credit ratings and research originated by MIS. Future regulations could also affect products and services the Company offers in the ESG ~~sector (including those offered by Moody’s ESG Solutions Group).~~sector.

Additionally, as of the date of the filing of this annual report on Form 10-K, there remains uncertainty regarding the impact that Brexit will have on the credit rating industry within the U.K., the EU and other jurisdictions. The U.K. left the EU on January 31, 2020, thereby entering an 11-month implementation period. The Brexit implementation period ended on December 31, 2020. Following the Brexit implementation period that ended December 31, 2020 the MIS U.K. registered CRA ceased to be registered with and regulated by ESMA and became subject to regulation by the U.K. Financial Conduct Authority. Regulatory arrangements put in place in both the U.K. and the EU allow credit ratings to be available for regulatory use in both the EU and the U.K. after the end of the Brexit-implementation period.Authority ("FCA"). MIS ~~has~~ put arrangements in place to endorse its U.K. credit ratings into the EU and its EU credit ratings into the U.K. On December 31, 2020, the U.K. also onshored the EU CRA Regulation, with certain necessary modifications, into U.K. domestic law (the “U.K. CRA Regulation”). The U.K. CRA Regulation contains requirements for the registration, regulation and supervision of CRAs based in the U.K. It also sets out the circumstances in which U.K. financial institutions can use credit ratings for regulatory purposes, as well as specific obligations for issuers, originators and sponsors relating to structured finance instruments. It is unclear if the regulation of CRAs in the EU and the U.K. will differ over time, and divergent regulation between the EU and the U.K. over time or differing interpretations by the FCA and ESMA of CRA regulation could adversely affect MIS’s business through additional operating obligations and resulting increased cost.

In February 2022, the FCA published a portfolio letter on its CRA supervision strategy. Among other things, the FCA explained that it takes a holistic approach to supervising CRAs. This means that if a CRA or the group to which it belongs also carries on unregulated activities (for example, ESG ratings), the FCA may assess these unregulated activities as part of its supervision of regulated activities. CRAs need to be able to demonstrate that they have considered, and are ~~expected~~actively managing, potential risks from any unregulated activities. The FCA also identified its supervisory priorities for CRAs, which consist of: ratings process and methodologies; governance and oversight; market and perimeter risks; and operational resilience and resourcing. The FCA also identified some other priority areas where it will be carrying out work relevant to ~~agree by March 2021 to~~CRAs, including a ~~memorandum of understanding establishing the framework for structured regulatory cooperation~~market study on ~~financial services. The contents~~accessing and ~~extent of the memorandum of understanding are currently unclear,~~using wholesale data and ~~therefore the impact~~ongoing work on ~~Moody’s customers and other stakeholders is currently uncertain.~~ESG ratings.

Both of Moody’s segments face risks related to financial reforms outside the U.S. affecting the credit rating industry and Moody’s customers. MIS is a registered entity and is therefore subject to formal regulation and periodic or other inspections in the EU and other foreign jurisdictions, such as, but not limited to, Hong Kong and China, where it operates through registered subsidiaries. For example:

–In the EU and the U.K., 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, and restrictions on CRAs or their shareholders if certain ownership thresholds are crossed. Additional procedural and substantive requirements include conditions for the issuance of credit ratings, rules regarding the organization of CRAs, restrictions on activities deemed to create a conflict of interest, including requirements that fees ~~that are~~be based on costs and ~~are~~ non-discriminatory, and special requirements for ~~the rating~~credit ratings of structured finance instruments.

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–In Hong Kong, applicable rules include liability for the intentional or negligent dissemination of false and misleading information and procedural requirements for the notification of certain matters to regulators. In addition, MIS Hong Kong is subject to a code of conduct applicable to CRAs that ~~impose~~imposes procedural and substantive requirements on the preparation and issuance of credit ratings, restrictions on activities deemed to create a conflict of interest including the disclosure of its compensation arrangements with rated entities and special requirements for ~~the rating~~credit ratings of structured finance instruments. A failure to comply with these procedural and substantive requirements also exposes MIS Hong Kong to the risk of regulatory enforcement action which could result in financial penalties or, in serious cases, affect its ability to conduct credit rating activities in Hong Kong.

–In China, while MIS is not a licensed ~~credit rating agency,~~CRA, it does issue global credit ratings on Chinese issuers from offices outside of ~~China regarding Chinese issuers.~~China. In addition, the Company holds a 30% investment in CCXI, a ~~credit rating agency~~domestic CRA licensed in China. China has laws applicable to domestic ~~credit rating agencies~~CRAs as well as foreign investment in such entities and entities in general (including national security review). Such laws are broadly crafted and the implementation and interpretation of such laws are subject to the broad discretion of Chinese regulators, which could affect ~~our~~the Company's ability to conduct business in China.

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–In addition, U.S. economic sanctions have increasingly targeted Chinese persons. In response, China ~~recently~~ issued a blocking statute that establishes a framework for limiting the effect of foreign sanctions on Chinese persons. Blocking statutes typically create conflicts of law. An entity that is subject to conflicting laws in multiple jurisdictions may need to determine a means to comply with such laws. Such conflicts could eventually affect the ability of entities to adhere to applicable laws.

With respect to MA, regulators in Europe and other foreign markets in which MA is active have issued guidance similar to that issued in the U.S. relating to financial institutions’ assessment and management of risks associated with third-party relationships. In light of this, MA’s existing or potential bank and financial services customers subject to this guidance have sought and may further revise their third-party risk management policies and processes and the terms on which they do business with MA. This can result in delayed or reduced sales to such customers, adversely affect MA’s relationship with such customers, increase the costs of doing business with such customers and/or result in MA assuming greater financial and legal risk under service agreements with such customers.

Although Moody’s will monitor developments related to financial reforms outside the U.S. affecting the credit rating industry and Moody’s customers, Moody’s cannot predict the extent of such future laws and regulations, and the effect that they will have on Moody’s business or the potential for increased exposure to liability could be significant. For example, compliance with the EU, U.K. and other foreign regulations may increase costs of operations and could have a significant negative effect on Moody’s operations, profitability or ability to compete, or the markets for its products and services, including in ways that Moody’s presently is unable to predict. In addition, exposure to increased liability under the EU, U.K. regulations and regulations of other foreign jurisdictions may further increase costs and legal risks associated with the issuance of credit ratings and materially and adversely impact Moody’s results of operations. Financial reforms in the EU, U.K. and other foreign jurisdictions may have a material adverse effect on Moody’s business, operating results and financial condition.

The Company Faces Exposure to Litigation and Government Regulatory Proceedings, Investigations and Inquiries Related to Rating Opinions and Other Business Practices.

Moody’s faces exposure to litigation and government and regulatory proceedings, investigations and inquiries related to MIS’s ratings actions, as well as other business practices and products within both MIS and MA. IfWhen the market value of credit-dependent instruments ~~declines~~has declined or defaults have occurred, whether as a result of difficult economic times, turbulent markets or otherwise, the number of investigations and legal proceedings that Moody’s ~~faces could increase~~has faced has increased significantly. Parties who invest in securities rated by MIS ~~may pursue~~have pursued claims against MIS or Moody’s for losses they ~~face~~faced in their portfolios. For instance, Moody’s faced numerous class action lawsuits and other litigation, government investigations and inquiries concerning events linked to the U.S. subprime residential mortgage sector and broader deterioration in the credit markets during the financial crisis of 2007-2008. Evolving expectations on ESG disclosures and reporting could also result in new regulatory actions at a corporate and business unit level. Legal proceedings impose additional expenses on the Company and require the attention of senior management to an extent that may significantly reduce their ability to devote time to addressing other business issues, and any of these proceedings, investigations or inquiries could ultimately result in adverse judgments, damages, fines, penalties or activity restrictions. Risks relating to legal proceedings are heightened in foreign jurisdictions that lack the legal protections or liability standards comparable to those that exist in the U.S. In addition, new laws and regulations have been and may continue to be enacted that establish lower liability standards, shift the burden of proof or relax pleading requirements, thereby increasing the risk of successful litigations in the U.S. and in foreign jurisdictions. These litigation risks are often difficult to assess or quantify. Moody’s may not have adequate insurance or reserves to cover these risks, and the existence and magnitude of these risks often remains unknown for substantial periods of time. Furthermore, when Moody’s is unable to achieve dismissals at an early stage and litigation matters proceed to trial, the aggregate legal defense costs incurred by Moody’s increase substantially, as does the risk of an adverse outcome.

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~~Table of~~ ~~Contents~~

Additionally, as litigation or the process to resolve pending matters progresses, Moody’s will continue to review the latest information available and may change its accounting estimates, which could require Moody’s to record or increase liabilities in the consolidated financial statements in future periods. See Note 21 to the consolidated financial statements for more information regarding ongoing investigations and civil litigation that the Company currently faces. Due to the number of these proceedings and the significant amount of damages sought, there is a risk that Moody’s will be subject to judgments, settlements, fines, penalties or other adverse results that have a material adverse effect on its business, operating results and financial condition.

The Company Is Exposed to Risks Related to Its Compliance and Risk Management Programs.

Moody’s operates in a number of countries, and as a result the Company is required to comply with and quickly adapt ~~with~~to numerous international and U.S. federal, state and local laws and regulations. The Company’s ability to comply with applicable laws and regulations, including anti-corruption, antitrust and securities trading laws, is largely dependent on its establishment and maintenance of compliance, review and reporting systems, as well as its ability to attract and retain qualified compliance and risk management personnel. Moody’s policies and procedures to identify, evaluate and manage the Company’s risks, including risks resulting from acquisitions, may not be fully effective, and Moody’s employees or agents may engage in misconduct, fraud or other errors. It is not always possible to deter such errors, and the precautions the Company takes to prevent and detect this activity may not be effective in all cases. If Moody’s employees violate its policies or if the Company’s risk management methods are not effective, the Company may be subject to criminal and civil liability, the suspension of the Company’s employees, fines, penalties, regulatory sanctions, injunctive relief, exclusion from certain markets or other penalties, and may suffer harm to its reputation, financial condition and operating results.

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Moody’s Faces Risks Related to Protecting Its Intellectual Property Rights.

Moody’s considers many aspects of its products and services to be proprietary. Failure to protect the Company’s intellectual property adequately could harm its reputation and affect the Company’s ability to compete effectively. Businesses the Company acquires also involve intellectual property portfolios, which increase the challenges the Company faces in protecting its strategic advantage. In addition, the Company’s operating results can be adversely affected by inadequate or changing legal and technological protections for intellectual property and proprietary rights in some jurisdictions and markets. The lack of strong legal and technological intellectual property protections in foreign jurisdictions in which we operate may increase our vulnerability and may pose risks to our business. From time to time, laws are passed that require publication of certain information, in some cases at no cost, that the Company considers to be its intellectual property and that it currently sells or licenses for a fee, which could result in lost revenue.

Unauthorized third parties may also try to obtain and use technology or other information that the Company regards as proprietary. It is also possible that Moody’s competitors or other entities could obtain patents related to the types of products and services that Moody’s offers, and attempt to require Moody’s to stop developing or marketing the products or services, to modify or redesign the products or services to avoid infringing, or to obtain licenses from the holders of the patents in order to continue developing and marketing the products and services. Even if Moody’s attempts to assert or protect its intellectual property rights through litigation, it may require considerable cost, time and resources to do so, and there is no guarantee that the Company will be successful. The Company’s ability to establish, maintain and protect its intellectual property and proprietary rights against theft, misappropriation or infringement could be materially and adversely affected by insufficient and/or changing proprietary rights and intellectual property legal protections in some jurisdictions and markets. These risks, and the cost, time and resources needed to address them, may increase as the Company’s business grows and its profile rises in countries with intellectual property regimes that are less protective than the rules and regulations applied in the United States.

Moody’s Faces Risks Related to Tax Matters, Including Changes in Tax Rates or Tax Rules.

As a global company, Moody’s is subject to taxation in the United States and various other countries and jurisdictions. As a result, our effective tax rate is determined based on the taxable income and applicable tax rates in the various jurisdictions in which the Company operates. Moody’s future tax rates could be affected by changes in the composition of earnings in countries or states with differing tax rates or other factors, including by increased earnings in jurisdictions where Moody’s faces higher tax rates, losses incurred in jurisdictions for which Moody’s is not able to realize the related tax benefit, or changes in foreign currency exchange rates. Changes in the tax, accounting and other laws, treaties, regulations, policies and administrative practices, or changes to their interpretation or enforcement, including changes applicable to multinational corporations such as the Base Erosion Profit Shifting ~~initiative~~and the global minimum tax rate initiatives being ~~conducted~~led by the Organization for Economic Co-operation and Development, which requires companies to disclose more information to tax authorities on operations around the world, and the European Union’s state aid rulings, could have a material adverse effect on the Company’s effective tax rate, results of operations and financial condition and may lead to greater audit scrutiny of profits earned in various countries.

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For example, the Tax Act made significant changes to the U.S. federal tax laws. Many aspects of the legislation remain uncertain or unclear and may not be clarified for some time. As additional regulatory guidance is issued interpreting or clarifying the Tax Act or if the tax accounting rules are modified, there may be adjustments or changes to the Company’s determination of its mandatory one-time deemed repatriation tax liability (“transition tax”) on previously untaxed accumulated earnings of foreign subsidiaries recorded in 2017. Additional regulatory guidance may also affect the Company’s expected future effective tax rates and tax assets and liabilities, which could have a material adverse effect on Moody’s business, results of operations, cash flows and financial condition. Furthermore, the Tax Act may impact the volume of debt securities issued as discussed in the Risk Factor, Changes in the Volume of Debt Securities Issued in Domestic and/or Global Capital Markets, Asset Levels and Flows into Investment Levels and Changes in Interest Rates and Other Volatility in the Financial Markets May Negatively Impact the Nature and Economics of the Company’s Business. Additionally, a change in the Presidential administration and changes in Congress increase the uncertainty with regard to potential changes in the U.S. federal tax laws and the interpretation or enforcement of legislation or directives by tax authorities.

In addition, Moody’s is subject to regular examination of its income tax returns by the Internal Revenue Service and other tax authorities ~~and~~around the ~~Company is experiencing increased scrutiny as its business grows.~~world. Moody’s regularly assesses the likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of its provision for income taxes, including unrecognized tax benefits; however, developments in an audit or litigation could materially and adversely affect the Company. Although the Company believes its tax estimates and accruals are reasonable, there can be no assurance that any final determination will not be materially different than the treatment reflected in its ~~historical~~ income tax provisions, accruals and unrecognized tax benefits, which could materially and adversely affect the Company’s business, operating results, cash flows and financial condition.

B. Risks ~~Relating~~Related to our Business

The Company is Exposed to Legal, Economic, Operational and Regulatory Risks of Operating in Multiple Jurisdictions.

Moody’s conducts operations in various countries outside the U.S. and derives a significant portion of its revenue from foreign sources. Changes in the economic condition of the various foreign economies in which the Company operates have an impact on the Company’s business. For example, economic uncertainty in the Eurozone or elsewhere, including, but not limited to, in Latin America or China, affects the number of securities offerings undertaken within those particular areas. In addition to the risks addressed elsewhere in this section, operations abroad expose Moody’s to a number of legal, economic and regulatory risks such as:

–economic and geopolitical market conditions, including the effect of these conditions on customers and customer retention;

–exposure to exchange rate movements between foreign currencies and USD;

–restrictions on the ability to convert local currency into USD and the costs, including the tax impact, of repatriating cash held by entities outside the U.S.;

–U.S. laws affecting overseas operations, including domestic and foreign export and import restrictions, tariffs and other trade barriers and restrictions, such as those related to the U.S.’s relationship with China and embargoes and sanctions laws with respect to Russia, including the ongoing conflict between Ukraine and Russia, and Venezuela;

–differing and potentially conflicting legal or civil liability, compliance and regulatory ~~standards, including as a result~~standards;

26 MOODY'S 2022 10-K

Table of ~~Brexit;~~Contents

–~~uncertainty about the future relationship between the U.K. and the EU;~~

–current and future regulations relating to the imposition of mandatory rotation requirements on CRAs hired by issuers of securities;

–uncertain and evolving laws and regulations, including those applicable to the financial services industries, such as the European Union’s implementation of the Markets in Financial Instruments Directive II, MiFID II, in January 2018, and to the protection of intellectual property;

–the transition away from benchmark reference rates based on market participant judgements, such as LIBOR and EURIBOR, to rates based on observable transactions, such as the Secured Overnight Financing Rate (SOFR);

–uncertainty regarding the future relationship between the U.S. and China, which may result in further restrictions or actions by the U.S. government with respect to doing business in China and/or by the Chinese government with respect to business conducted by foreign entities in China;

–~~economic, political and geopolitical market conditions, including the effect of these conditions on customers and customer retention;~~

–the possibility of nationalization, expropriation, price controls and other restrictive governmental actions;

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~~Table of~~ ~~Contents~~

–competition with CRAs that have greater familiarity, longer operating histories and/or support from local governments or other institutions;

–uncertainties in obtaining data and creating products and services relevant to particular geographic markets;

–reduced protection for intellectual property rights;

–longer payment cycles and possible problems in collecting receivables;

–differing accounting principles and standards;

–difficulties in staffing and managing foreign ~~operations, including potential relocation and/or restaffing of employees as a result of Brexit;~~operations;

–difficulties and delays in translating documentation into foreign languages;

–potentially adverse tax consequences; and

–complexities of compliance with employment laws and new data and cybersecurity rules in numerous jurisdictions.

Additionally, Moody’s is subject to complex U.S., foreign and other local laws and regulations that are applicable to its operations abroad, such as laws and regulations governing economic and trade sanctions, tariffs, embargoes, and anticorruption ~~laws~~ including the Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act of 2010 and other similar local laws. The internal controls, policies and procedures and employee training and compliance programs to deter prohibited practices the Company has implemented may not be effective in preventing employees, contractors or agents from violating or circumventing such internal policies or from material violations of applicable laws and regulations. Any determination or allegations, even if unfounded, that the Company has violated sanctions, anti-bribery or anti-corruption laws could have a material adverse effect on Moody’s business, operating results and financial condition. Compliance with international and U.S. laws and regulations that apply to the Company’s international operations increases the cost of doing business in foreign jurisdictions. Violations of such laws and regulations may result in severe fines and penalties, criminal sanctions, administrative remedies, and restrictions on business conduct and could have a material adverse effect on Moody’s reputation, its ability to attract and retain employees, its business, operating results and financial condition.

Moody’s Operations are Exposed to Risks from Infrastructure Malfunctions or Failures.

Moody’s ability to conduct business may be materially and adversely impacted by a disruption in the infrastructure that supports its businesses and the communities in which Moody’s is located, ~~including~~including: (i) New York City, the location of Moody’s headquarters, (ii) major cities worldwide in which Moody’s has offices, (iii) locations in Europe that may be affected by the conflict in Russia/Ukraine; and (iv) locations in China used for certain Moody’s work. This may include a disruption involving physical or technological infrastructure (whether or not controlled by the Company), including the Company’s electronic delivery systems, the Company's data center facilities, or the Internet, used by the Company or third parties with or through whom Moody’s conducts business. Many of the Company’s products and services are delivered electronically and the Company’s customers depend on the Company’s ability to receive, store, process, transmit and otherwise rapidly handle very substantial quantities of data and transactions on computer-based networks. Some of Moody’s operations require complex processes and the Company’s extensive controls to reduce the risk of error inherent in our operations cannot eliminate such risk completely. To the extent the Company grows through acquisitions, newly acquired businesses may not have invested in technological infrastructure and disaster recovery to the same extent as Moody's has. As their systems are integrated into Moody's, a vulnerability could be introduced, which could impact platforms across the Company. The Company’s customers also depend on the continued capacity, reliability and security of the Company’s telecommunications, data centers, networks and other electronic delivery systems, including its websites and connections to the Internet. The Company’s employees also depend on these systems for internal use. Any significant failure, compromise, cyber-breach, interruption or a significant slowdown of operations of the Company’s infrastructure, whether due to human error, capacity constraints, hardware failure or defect, weather (including climate change), natural disasters, fire, power loss, telecommunication failures, break-ins, sabotage, intentional acts of vandalism, acts of terrorism, political unrest, pandemic (including the COVID-19 pandemic), war or otherwise, may impair the Company’s ability to deliver its products and services.

Moody’s efforts to secure and plan for potential disruptions of its major operating systems may not be successful. The Company relies on third-party providers, including, increasingly, cloud-based service providers, to provide certain essential services. While the Company believes that such providers are reliable, the Company has limited control over the performance of such providers. To the extent any of the Company’s third-party providers ceases to provide these services in an efficient, cost-effective manner or fails to adequately expand its services to meet the Company’s needs and the needs of the Company’s customers, ~~(including as a result of the COVID-19 pandemic),~~ the Company could

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experience lower revenues and higher costs. Additionally, although the Company maintains processes to prevent, detect and recover from a disruption, the Company also does not have fully redundant systems for most of its smaller office locations and low-risk systems, and its disaster recovery plan does not include restoration of non-essential services. If a disruption occurs in one of Moody’s locations or systems and its personnel in those locations or those who rely on such systems are unable to utilize other systems or communicate with or travel to other locations, such persons’ ability to service and interact with Moody’s customers will suffer. The Company cannot predict with certainty all of the adverse effects that could result from the Company’s failure, or the failure of a third party, to efficiently address and resolve these delays and interruptions. A disruption to Moody’s operations or infrastructure may have a material adverse effect on its reputation, business, operating results and financial condition.

34 ~~MOODY'S~~ ~~2020 10-K~~

~~Table~~The Economics of ~~Contents~~

~~Changes in~~the Company’s Business is Dependent on the Volume of Debt Securities Issued in Domestic and/or Global Capital ~~Markets,~~Markets. Recent Financial Market Conditions, Including Decreased Asset Levels and Flows into Investment ~~Levels and Changes~~Vehicles, Increases in Interest Rates and Other Volatility inHas Had, and May Continue to Have, a Material Adverse Impact on the ~~Financial Markets Can Negatively Impact the Nature and Economics~~Volume of ~~the Company’s Business.~~Debt Securities Issued.

Moody’s business is impacted by general economic conditions and volatility in ~~the U.S. and~~ world financial markets. Furthermore, issuers of debt securities ~~may elect~~have increasingly elected to issue securities without ratings or securities which are rated or evaluated by non-traditional parties such as financial advisors, rather than traditional CRAs, such as MIS. A majority of Moody’s credit-rating-based revenue is transaction-based, and therefore it is especially dependent on the number and dollar volume of debt securities issued in the capital markets. Market disruptions and economic slowdown and uncertainty have in the past, and may in the future, negatively impacted the volume of debt securities issued in global capital markets and the demand for credit ratings. Changes to U.S. tax laws and policy can negatively affect the volume of debt securities issued in the U.S. For example, the Tax Act limits deductibility on interest payments and significantly reduces the tax cost associated with the repatriation of cash held outside the U.S., both of which could negatively affect the volume of debt securities issued. Conditions that reduce issuers’ ability or willingness to issue debt securities, such as market volatility, declining growth, currency devaluations, changes in laws (including tax-related laws) or other adverse economic trends, reduce the number and dollar-equivalent volume of debt issuances for which Moody’s provides ratings services and thereby adversely affect the fees Moody’s earns in its ratings business.

~~Economic~~Current market, economic and government factors ~~such~~are negatively impacting the volume of debt securities issued in global capital markets and the demand for credit ratings, which is materially and adversely affecting the Company’s business, operating results and financial condition. These factors include increases in interest rates (as well as ~~a long-term continuation of difficult economic conditions,~~ the ~~scaling back, wind-down or termination~~related monetary policy by governments in the response to inflation), the withdrawal of COVID-19 economic stimulus, ~~and support programs, and current uncertainty in various other jurisdictions, may have an adverse impact on the Company’s business. Future debt issuances also could be negatively affected by~~inflationary pressures, increases in ~~interest~~mortgage rates, widening credit spreads, regulatory and political developments (including uncertainty in various jurisdictions where Moody's operates), difficult economic conditions, growth in the use of alternative sources of credit, and defaults by significant issuers. ~~Declines~~Further declines or other changes in the markets for debt securities may materially and adversely affect the Company’s business, operating results, financial condition, cash flows and ~~financial condition.~~prospects.

Moody’s initiatives to reduce costs to counteract a decline in its business, including the 2022 - 2023 Geolocation Restructuring Program, may not be ~~sufficient and cost~~sufficient. Cost reductions, including those associated with this program, may be difficult or impossible to obtain in the short term, due in part to rent, technology, compliance, compensation and other fixed costs associated with some of the Company’s operations as well as the need to monitor outstanding ratings. Further, cost-reduction initiatives, including those under-taken to date, could make it difficult for the Company to rapidly expand operations in order to accommodate any unexpected increase in the demand for ratings. ~~Volatility~~Further volatility in the financial markets, including ~~changes~~continued decreases in the volumes of debt securities and ~~changes~~increases in interest rates, may have a material adverse effect on the business, operating results and financial condition, which the Company may not be able to successfully offset with cost reductions.

The Company Faces Increased Pricing Pressure from Competitors and/or Customers.

There is price competition in the credit rating, research, and credit risk management markets, as well as in the market for research, business intelligence and analytical services offered by MA. Moody’s faces competition globally from other CRAs and from investment banks and brokerage firms that offer credit opinions in research, as well as from in-house research operations. Competition for customers and market share has spurred more aggressive tactics by some competitors in areas such as pricing and services, as well as increased competition from non-NRSROs that evaluate debt risk for issuers or investors. At the same time, a challenging business environment and consolidation among both competitors and customers, particularly those involved in structured finance products and commercial real estate, and other factors affecting demand may enhance the market power of competitors and reduce the Company’s customer base. ~~Weak~~Recent weak economic growth ~~intensifies~~has intensified competitive pricing pressures, ~~and can~~which may result in customers’ use of free or lower-cost information that is available from alternative sources or their development of alternative, proprietary systems for assessing credit risk that replace the products currently purchased from Moody’s. While Moody’s seeks to compete primarily on the basis of the quality of its products and services, it can lose market share when its pricing is not sufficiently competitive. In addition, the Reform Act was designed to encourage competition among rating agencies. The formation of additional NRSROs may increase pricing and competitive pressures. Furthermore, in some of the countries in which Moody’s operates, governments may provide financial or other support to local rating agencies. Any inability of Moody’s to compete successfully with respect to the pricing of its products and services will have a material adverse impact on its business, operating results and financial condition.

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The Company isIs Exposed to Reputation and Credibility Concerns.

Moody’s reputation and the strength of its brand are key competitive strengths. To the extent that the rating agency business as a whole or ~~Moody’s,~~Moody's, relative to its competitors, suffers a loss in credibility, Moody’s business will be significantly impacted. Factors that may have already affected credibility and could potentially continue to have an impact in this regard include the appearance of a conflict of interest, the performance of securities relative to the rating assigned to such securities, the timing and nature of changes in ratings, a major compliance failure, negative perceptions or publicity and increased criticism by users of ratings, regulators and legislative bodies, including as to the ratings process, including as to the Company’s recent ESG initiatives, and its implementation with respect to one or more securities and intentional, poor representation of our products and services by our partners or agents, manipulation of our products and services by third parties, or unintentional misrepresentations of Moody’s products and services in advertising materials, public relations information, social media or other external communications. Operational errors, whether by Moody’s or a Moody’s competitor, could also harm the reputation of the Company or the credit rating industry. Damage to reputation and credibility could have a material adverse impact on Moody’s business, operating results and financial condition, as well as on the Company’s ability to find suitable candidates for acquisition.

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~~Table of~~ ~~Contents~~

The Introduction of Competing Products, Technologies or Services by Other Companies Can Negatively Impact the Nature and Economics of the Company’s Business.

The markets for credit ratings, research, credit risk management services, ~~research,~~ business intelligence and analytical services are highly competitive and characterized by rapid technological change, changes in customer and investor demands, and evolving regulatory requirements, industry standards and market preferences. The ability to develop and successfully launch and maintain innovative products, technologies and services that anticipate customers’ and investors’ changing requirements and utilize emerging technological trends in a timely and cost-effective manner is a key factor in maintaining market share. Moody’s competitors include both established companies with significant financial resources, brand recognition, market experience and technological expertise, and smaller companies which may be better poised to quickly adopt new or emerging technologies or respond to customer requirements. Competitors may develop quantitative methodologies or related services for assessing credit risk that customers and market participants may deem preferable, more cost-effective or more valuable than the credit risk assessment methods currently employed by Moody’s, or may position, price or market their products in manners that differ from those utilized by Moody’s. Moody’s also competes indirectly against consulting firms and technology and information providers, some of whom are also suppliers to Moody’s; these indirect competitors could in the future choose to compete directly with Moody’s, cease doing business with Moody’s or change the terms under which ~~it does~~they do business with Moody’s in a way that could negatively impact our business. In addition, customers or others may develop alternative, proprietary systems for assessing risk, including credit and climate risk. Such developments could affect demand for Moody’s products and services and its growth prospects. Further, the increased availability in recent years of free or relatively inexpensive internet information may reduce the demand for Moody’s products and services. Moody’s growth prospects also could be adversely affected by Moody’s failure to make necessary or optimal capital infrastructure expenditures and improvements and the inability of its information technologies to provide adequate capacity and capabilities to meet increased demands of producing quality ratings and research products at levels achieved by competitors. Any inability of Moody’s to compete successfully may have a material adverse effect on its business, operating results and financial condition.

Moody’s Is Exposed to Risks Related to Loss of ~~Key~~Skilled Employees and Related Compensation Cost Pressures.

Moody’s success depends upon its ability to recruit, retain and motivate highly skilled, experienced professionals, including financial ~~analysts and other professionals.~~analysts. Competition for skilled individuals in the financial services industry is intense, and Moody’s ability to attract high quality employees could be impaired if it is unable to offer competitive compensation and other incentives or if the regulatory environment mandates restrictions on or disclosures about individual employees that would not be necessary in competing industries. Rising expenses including wage inflation, and global labor shortages could adversely affect Moody’s ability to attract and retain high-quality employees. As greater focus has been placed on executive compensation at public companies, in the future, Moody’s may be required to alter its compensation practices in ways that adversely affect its ability to attract and retain talented employees. Investment banks, investors and competitors may seek to attract analyst talent by providing more favorable working conditions or offering significantly more attractive compensation packages than Moody’s. Moody’s also may not be able to identify and hire the appropriate qualified employees in some markets outside the U.S. with the required experience or skills to perform sophisticated credit analysis. ~~Additionally, relocation and/~~We could also fail to effectively respond to evolving perceptions and goals of those in our workforce or ~~restaffing of employees due~~whom we might seek to ~~Brexit could adversely affect our ability~~hire, including in response to ~~attract and retain talent for our European operations.~~changes brought on by the COVID-19 pandemic, with respect to flexible working or other matters. There is a risk that even when the Company invests significant resources in attempting to attract, train and retain qualified personnel, it will not succeed in its efforts, and its business could be harmed. Further, employee expectations in areas such as environmental, social matters and corporate governance have been rapidly evolving and increasing. A failure to adequately meet employee expectations may result in an inability to attract and retain talented employees.

Moody’s is highly dependent on the continued services of Robert Fauber, the President and Chief Executive Officer, and other senior officers and key employees. The loss of the services of skilled personnel for any reason and Moody’s inability to replace them with suitable candidates quickly or at all, as well as any negative market perception resulting from such loss, could have a material adverse effect on Moody’s business, operating results and financial condition.

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Moody’s Acquisitions, Dispositions and Other Strategic Transactions or Investments May Not Produce Anticipated Results Exposing the Company to Future Significant Impairment Charges Relating to Its Goodwill, Intangible Assets or Property and Equipment.

Moody’s regularly evaluates and enters into ~~acquisition, disposition~~acquisitions, dispositions or other strategic transactions and investments to strengthen its business and grow the Company. For example, Moody’s acquired Bureau van Dijk in 2017, Reis in 2018, ~~and~~ Regulatory DataCorp (RDC) in ~~February 2020.~~2020, and RMS in 2021. Such transactions and investments present significant challenges and risks. The Company faces intense competition for acquisition targets, especially in light of industry consolidation, which may affect Moody’s ability to complete such transactions on favorable terms or at all. Additionally, the Company makes significant investments in technology, including software for internal use, which can be expensive, time-intensive and complex to develop and implement.

36 ~~MOODY'S~~ ~~2020 10-K~~

~~Table~~The anticipated growth, synergies and other strategic objectives of ~~Contents~~

completed transactions may not be fully realized, and a variety of factors may adversely affect any anticipated benefits from such transactions. Any strategic transaction involves a number of risks, including unanticipated challenges regarding integration of operations, technologies and new employees; the existence of liabilities or contingencies not disclosed to or otherwise known by the Company prior to closing a transaction; unexpected regulatory and operating difficulties and expenditures; scrutiny from competition and antitrust authorities; failure to retain key personnel of the acquired business; future developments that impair the value of purchased goodwill or intangible assets; diversion of management’s focus from other business operations; failure to implement or remediate controls, procedures and policies appropriate for a larger public company at acquired companies that prior to the acquisition lacked such controls, procedures and policies; disputes or litigation arising out of acquisitions or dispositions; challenges retaining the customers of the acquired business; coordination of product, sales, marketing and program and systems management functions; integration of employees from the acquired business into Moody’s organization; integration of the acquired business’s accounting, information technology, human resources, legal and other administrative systems with Moody’s; risks that acquired systems expose us to cybersecurity risks; and for foreign transactions, additional risks related to the integration of operations across different cultures and languages, and the economic, political, and regulatory risks associated with specific countries. The anticipated benefits from an acquisition or other strategic transaction or investment may not be realized fully, or may take longer to realize than expected. As a result, the failure of acquisitions, dispositions and other strategic transactions and investments to perform as expected may have a material adverse effect on Moody’s business, operating results and financial condition.

At December 31, ~~2020,~~2022, Moody’s had ~~$4,556~~$5,839 million of goodwill and ~~$1,824~~$2,210 million of intangible assets on its balance sheet. Approximately ~~93%~~94% of the goodwill and intangible assets reside in the MA business, including those related to Bureau van Dijk and RMS, and are allocated to the ~~five~~two reporting units within ~~MA: Content; ERS; MALS; Bureau van Dijk; and Reis.~~MA. The remaining 7%6% of goodwill and intangible assets reside in MIS and primarily relate to ICRA. Failure to achieve business objectives and financial projections in any of these reporting units could result in a significant asset impairment charge, which would result in a non-cash charge to operating expenses. Goodwill and intangible assets are tested for impairment on an annual basis and also when events or changes in circumstances indicate that impairment may have occurred. Determining whether an impairment of goodwill exists can be especially difficult in periods of market or economic uncertainty and turmoil, and requires significant management estimates and judgment. In addition, the potential for goodwill impairment is increased during periods of economic uncertainty. An asset impairment charge could have a material adverse effect on Moody’s business, operating results and financial condition.

The ~~global~~Global COVID-19 ~~pandemic may have~~Pandemic May Have a ~~material adverse impact on our operations and financial performance, and is having a material adverse impact~~Material Adverse Impact on the ~~operations~~Company’s Operations and financial performance of many of our customers. It is difficult to predict the extent to which the pandemic and related impacts will adversely impact our business operations, financial performance, results of operations, financial position and the achievement of our strategic objectives.Financial Performance.

~~Our~~The Company’s operations and financial performance could be negatively impacted by the COVID-19 pandemic that has caused, and is expected to continue to cause, the global slowdown of economic activity and significant volatility and disruption in financial markets. Because the severity, magnitude and durationfuture effects of the COVID-19 pandemic. The future impact of the pandemic ~~and its economic consequences continue to be uncertain, rapidly changing and difficult to predict,~~on the ~~pandemic’s impact on our~~Company’s operations and financial performance as well as ~~its impact on~~the performance of our ability to successfully execute our business strategies and initiatives, remains uncertain and difficult to predict. Further, the ultimate impact of the COVID-19 pandemic on our operations and financial performancecustomers, depends on many factors that are not within our control, including, but not limited, to: governmental, business and individuals’ actions ~~that have been and continue to be taken in response to the pandemic~~ (including restrictions on travel and workforce pressures); ~~the impact of the pandemic and~~ actions taken in response onto global and regional economies, travel, and economic activity; the availability of federal, state, local or non-U.S. funding programs; general economic uncertainty in key global markets and financial market volatility; global economic conditions and levels of economic growth; the potential emergence of new COVID-19 variants; uncertainty presented by approved vaccines, corresponding rollout and unanticipated consequences of such ~~vaccine;~~vaccines; and the pace of recovery ~~when~~as the ~~COVID-19~~ pandemic subsides.

~~The COVID-19 pandemic has subjected our operations and financial performance to a number of risks, including, but not limited to, those discussed below:~~

–The global credit market disruptions and economic stimulus measures led to robust U.S. investment grade and U.S. speculative grade issuance that may not continue as government programs are scaled back, wound down or terminated and as issuers reassess their capital position and liquidity needs.

–We continue to publish research and issue credit ratings in accordance with our public credit rating methodologies in a highly uncertain, rapidly changing environment where it is difficult to predict the impact the COVID-19 pandemic has had on the operations and financial performance of many of our rated issuers. Given these unprecedented events, and our prior experience during periods of volatility and economic uncertainty, it is likely that our ratings and research will be challenged around the globe by the press, rated entities, investors and government agencies and officials. Such scrutiny has impacted and may continue to impact our reputation, brand and credibility and result in These future ~~government and regulatory proceedings, investigations, inquiries and litigation.~~

–Likewise, MA continues to offer quantitative analytics in a highly uncertain, rapidly changing environment where it is difficult to accurately capture the impact of the COVID-19 pandemic within its analytical models across different business sectors and geographies. Any failure of MA’s models to sufficiently account for COVID-19 impacts ~~may impact MA”s reputation, brand and credibility and could result in customer dissatisfaction and/or contract cancellations.~~

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~~Table of~~ ~~Contents~~

–Illness, travel restrictions or workforce disruptions could result in reduced sales opportunities for both MIS and MA and result in an extension of the MA sales cycles on existing opportunities as well as higher attrition rates and/or lower yields on renewable contracts.

–The COVID-19 pandemic may decrease demand for the financial intelligence and analytical tools MA provides, in particular in the event that MA’s customers come under financial pressure and reduce spending for the types of products and services offered by MA.

–Our customers are being impacted and will be impacted by the COVID-19 pandemic to differing degrees. Some of our customers may go out of business or lose access to market-based sources of capital, or experience significant spending constraints and layoffs, reducing the number of issuers in the market, issuance volume and demand for our products and services. As a result, we may face pricing pressure on our products, delayed renewals for certain subscription based products, and challenges to new sales which would in turn reduce revenue, ultimately impacting our results of operations.

–The COVID-19 pandemic has increased volatility in the capital markets. The Company might not be able to continue to access preferred sources of liquidity when we would like, and our borrowing costs could increase.

–While we have transitioned to remote work for all employees globally, maintaining such a state for an extended period of time may have a material adverse effect on our productivity, our ability to meet the needs of our customers and may expose us to both operational and security risks. In addition, maintaining an infrastructure that supports a prolonged remote working environment may limit information technology resources available for other projects.

–~~As the COVID-19 pandemic continues to affect the global economy, it~~ may have the effect of heightening many of the other risks, such as those surrounding cybersecurity due to increased remote work, described in our risk factors in this Form 10-K. ~~Further,~~

Our business could be negatively impacted by climate change.

As a global company, our employees and offices are subject to risks related to the ~~COVID-19 pandemic~~impact of climate change. We have offices in locations that are vulnerable to the effects of climate change and extreme weather. In addition, continued reliable energy sources are critical for business continuity globally and those sources too can be impacted by extreme weather. The frequency and impact of extreme weather events on critical infrastructure has the potential to disrupt the Company’s ongoing operations, as well as the operations of our vendors and customers, and may ~~also affect our operating~~result in losses and ~~financial results in a manner that is not presently known~~additional costs to usmaintain or ~~that we currently do not expect to present significant risks to our operations or financial results.~~resume operations.

C. Technology Risks

The Company isIs Exposed to Risks Related to Cybersecurity and Protection of Confidential Information.

The Company’s operations rely on the secure processing, storage and transmission of confidential, sensitive, proprietary and other types of information relating to its business operations and confidential and sensitive information about its customers and employees in the Company’s computer systems and networks, and in those of its third party vendors. Unauthorized disclosure of

30 MOODY'S 2022 10-K

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this information could cause our customers to lose faith in our ability to protect their confidential information and therefore cause customers to cease doing business with us. The risks the Company faces range from cyber-attacks common to most industries, to more advanced threats that target the Company because of its prominence in the global marketplace, or due to its ratings of sovereign debt. Breaches of Moody’s or Moody’s vendors’ technology and systems, whether from circumvention of security systems, denial-of-service attacks or other cyber-attacks some of which may be carried out by state-sponsored actors, hacking, “phishing” attacks, computer viruses, social media impersonation, ransomware, or malware, employee or insider error, malfeasance, social engineering, physical breaches or other actions, may result in manipulation or corruption of sensitive data, material interruptions or malfunctions in the Company’s or such vendors’ web sites or systems, applications, data processing, or disruption of other business operations, or may compromise the confidentiality and integrity of material information held by the Company (including information about Moody’s business, employees or customers), as well as sensitive personally identifiable information (PII), the disclosure of which could lead to identity theft. Measures that Moody’s takes to avoid, detect, mitigate or recover from material incidents can be expensive, and may be insufficient, circumvented, or may become ineffective. ~~Further,~~Additionally, the Company may be exposed to additional threats as the Company migrates its data from legacy systems to cloud-based solutions, and increased dependence on third parties to store cloud-based data subjects the Company to further cyber risks.

38 ~~MOODY'S~~ ~~2020 10-K~~

~~Table~~ Further, many of ~~Contents~~

our employees work remotely, which magnifies the importance of the integrity of our remote access security measures and may expose the Company to additional cyber risks.

The Company has invested and continues to invest in risk management and information security measures in order to protect its systems and data, including employee training, disaster plans, and technical defenses. The cost and operational consequences of implementing, maintaining and enhancing further data or system protection measures could increase significantly to overcome increasingly intense, complex, and sophisticated global cyber threats. Despite the Company’s best efforts, it is not fully insulated from, and has in the past experienced, security threats and system disruptions. Although past incidents have not had a material adverse effect on the Company's operating results, there can be no assurance of a similar result in the future. Because the methods used for these systems cyberattacks are rapidly changing, the Company, despite significant focus and investment, may be unable to anticipate/deploy sufficient protections against such incidents. Further, the extent of a particular security incident and the steps needed to investigate may not be immediately clear, and it may take a significant amount of time before such an investigation can be completed and full and reliable information about the incident, including the extent of the harm and how best to remediate it, is known. Recent well-publicized security breaches at other companies have led to enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyber-attacks, and may in the future result in heightened cybersecurity compliance requirements, including additional regulatory expectations for oversight of vendors and service providers. Cybersecurity incidents, including the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data, could cause reputational harm, loss of customers and revenue, fines, regulatory actions and scrutiny, sanctions or other statutory penalties, litigation, liability for failure to safeguard the Company’s customers’ information, or financial losses that are either not insured against or not fully covered through any insurance maintained by the Company. In addition, disclosure or media reports of actual or perceived security vulnerabilities to the Company’s systems or those of the Company’s third parties, even if no breach has been attempted or occurred, could lead to reputational harm, loss of customers and revenue, or increased regulatory actions oversight and scrutiny.

Any of the foregoing may have a material adverse effect on Moody’s business, operating results and financial condition.

The Company isIs Exposed to Risks Related to Protection of ~~Confidential~~Personal Information

To conduct its operations, the Company regularly moves data across national borders, and consequently is subject to a variety of continuously evolving and developing laws and regulations in the United States and abroad regarding privacy, data protection and data ~~security.~~security such as the Federal Trade Commission Act in the United States, the General Data Protection Regulation (“GDPR”) in the European Union, the General Data Protection Regulation in the U.K., the Cyber Security Law, the Data Security Law, and the Personal Information Protection Law in China and various other international, federal, state and local laws and regulations. The scope of the laws that may be applicable to Moody’s is often uncertain and may be conflicting, particularly with respect to foreign laws. For example, ~~the European Union’s General Data Protection Regulation (“GDPR”),~~GDPR, which became effective in May 2018, greatly increased the jurisdictional reach of European Union privacy law and added a broad array of requirements for processing personal data, including the public disclosure of significant data breaches. Failure to comply with GDPR requirements could result in penalties of up to 4% of annual worldwide revenue. Additionally, other countries have enacted or are enacting data localization laws that require data to stay within their borders. Further, laws such as the California Consumer Privacy Act ~~enacted in January 2020, will,~~of 2018 ("CCPA"), require among other things, ~~require~~ covered companies to provide ~~new~~ disclosures to consumers, and affords consumers ~~new abilities~~the ability to opt-out of certain sales of personal information. The California Privacy Rights Act of 2020 (“CPRA”) became effective on January 1, 2023. The effects of non-compliance with the CCPA, CPRA and other similar data privacy laws in other jurisdictions are significant, ~~however,~~ and may require usthe Company to modify ~~our~~its data processing practices and policies and to incur additional costs and expenses. All of these evolving compliance and operational requirements have required changes to certain business practices, thereby increasing costs, requiring significant management time and attention, and subjecting the Company to negative publicity, as well as remedies that may harm its business, including fines, modified demands or ~~orders.~~orders, the cessation of existing business practices, and exposure to litigation, regulatory actions, sanctions or other statutory penalties.

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The Company Is Dependent on the Use of Third-Party Software, Data, Hosted Solutions, Data Centers, Cloud and Network Infrastructure (Together, “Third Party Technology”), and Any Reduction in Third-Party Product Quality or Service Offerings, Could Have a Material Adverse Effect on the Company’s Business, Financial Condition or Results of Operations.

Moody’s relies on Third Party Technology in connection with its product development and offerings and operations. The Company depends on the ability of Third Party Technology providers to deliver and support reliable products, enhance their current products, develop new products on a timely and cost-effective basis, provide data necessary to develop and maintain its products and respond to emerging industry standards and other technological changes. The Third Party Technology Moody’s uses can become obsolete or restrictive, incompatible with future versions of the Company’s products, fail to be comprehensive or accurate, unavailable or fail to operate effectively, ~~(including as a result of the COVID-19 pandemic),~~ and Moody’s business could be adversely affected when the Company is unable to timely or effectively replace such Third Party Technology.

The Company also monitors its use of Third Party Technology to comply with applicable license and other contractual requirements. Despite the Company’s efforts, the Company cannot ensure that such third parties will permit Moody’s use in the future, resulting in increased Third Party Technology acquisition costs and loss of rights. In addition, the Company’s operating costs could increase if license or other usage fees for Third Party Technology increase or the efforts to incorporate enhancements to Third Party Technology are substantial. In the ordinary course, our third-parties, including our vendors, are subject to various forms of cyber attacks. To date, such attacks have not resulted in a material adverse impact to our business operations, but there can be no guarantee we will not experience such an impact. Some of these third-party suppliers are also Moody’s competitors, increasing the risks noted above. When any of these risks materialize, they could have a material adverse effect on the Company’s business, financial condition or results of operations.

~~MOODY'S~~ ~~2020 10-K 39~~

~~Table of~~ ~~Contents~~

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Moody’s corporate headquarters is located at 7 World Trade Center at 250 Greenwich Street, New York, New York ~~10007, with approximately 797,537 square feet of leased space.~~10007. As of December 31, ~~2020,~~2022, Moody’s operations were conducted from 2629 U.S. offices and 9889 non-U.S. office locations, all of which are leased. These properties are geographically distributed to meet operating and sales requirements worldwide. These properties are generally considered to be both suitable and adequate to meet current operating requirements.

ITEM 3. LEGAL PROCEEDINGS

For information regarding legal proceedings, see Part II, Item 8 –“Financial Statements”, Note 21 “Contingencies” in this Form 10-K.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

40 ~~MOODY'S~~ ~~2020 10-K~~

~~Table of~~ ~~Contents~~

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Information in response to this Item is set forth under the captions below.

MOODY’S PURCHASES OF EQUITY SECURITIES

For the three months ended December 31, ~~2020:~~

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)
October 1- 31 2,306 $ — — $1,081 million
November 1- 30 396,164 $ 277.73 395,735 $971 million
December 1- 31 511,332 $ 278.92 502,196 $831 million
Total 909,802 $ 278.40 897,931
2022:


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)
October 1- 31	8,398	$	—	—	$848 million
November 1- 30	529	$	—	—	$848 million
December 1- 31	493	$	—	—	$848 million
Total	9,420	$	—	—

(1)Includes surrender to the Company of ~~2,306, 429~~8,398, 529 and ~~9,136~~493 shares of common stock in October, November and December, respectively, to satisfy tax withholding obligations in connection with the vesting of restricted stock issued to employees.

(2)AsAmounts shown are as of the last day of each of the months. On ~~October 22, 2018,~~February 9, 2021, the Board ~~approved~~authorized $1 billion in share repurchase authority ~~which was fully utilized during 2020. On December 16, 2019,~~and on February 7, 2022, the Board of Directors approved an additional ~~$1 billion in~~$750 million of share repurchase authority. At December 31, 2022, there was approximately $848 million of combined share repurchase authority ~~which at December 31, 2020 had approximately $831 million of remaining authority. Additionally, on February 9, 2021, the Board approved an additional $1.0 billion of share repurchase authority.~~remaining. There is no established expiration date for ~~either of~~ the ~~aforementioned~~ remaining ~~authorizations.~~authorization.

During the fourth quarter of ~~2020,~~2022, Moody’s issued ~~0.2 million~~a net 38 thousand shares under employee stock-based compensation plans.

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COMMON STOCK INFORMATION

The Company’s common stock trades on the New York Stock Exchange under the symbol “MCO”. The number of registered shareholders of record at January 31, ~~2021~~2023 was ~~1,721.~~1,555. A substantially greater number of the Company’s common stock is held by beneficial holders whose shares of record are held by banks, brokers and other financial institutions.

EQUITY COMPENSATION PLAN INFORMATION

The table below sets forth, as of December 31, ~~2020,~~2022, certain information regarding the Company’s equity compensation plans.

Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2)
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding Securities Reflected in Column (a))
(a) (b) (c)
Equity compensation plans approved by security holders 3,167,939 (1) $ 133.95 17,620,777 (3)
Equity compensation plans not approved by security holders — $ — —
Total 3,167,939 $ 133.95 17,620,777


Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding Securities Reflected in Column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders	3,035,203	(1)	$	181.35	16,415,492	(3)
Equity compensation plans not approved by security holders	—		$	—	—
Total	3,035,203		$	181.35	16,415,492

(1)Includes ~~2,505,011~~2,269,406 options and unvested restricted shares outstanding under the Company's 2001 Key Employees' Stock Incentive Plan, 104,033 options and ~~5,418~~unvested restricted shares outstanding under the Risk Management Solutions, Inc. 2015 Equity Incentive Plan and 6,370 unvested restricted shares outstanding under the 1998 Non-Employee Directors' Stock Incentive Plan. This number also includes a maximum of ~~657,510~~655,394 performance shares outstanding under the Company's 2001 Key Employees' Stock Incentive Plan, which is the maximum number of shares issuable pursuant to performance share awards assuming the maximum payout of 200% of the target award for performance shares granted in ~~2018, 2019~~2020, 2021 and ~~2020.~~2022. Assuming payout at target, the number of shares to be issued upon the vesting of outstanding performance share awards is ~~328,755.~~327,697.

(2)Does not reflect unvested restricted shares or performance share awards included in column (a) because these awards have no exercise price.

(3)Includes ~~14,102,262~~12,577,447 shares available for issuance as under the 2001 Stock Incentive Plan, of which all may be issued as options and ~~8,032,220~~6,718,549 may be issued as restricted stock, performance shares or other stock-based awards under the 2001 Stock Incentive Plan, 442,093 shares available for issuance as options, shares of restricted stock or performance shares under the Risk Management Solutions, Inc. 2015 Equity Incentive Plan, and ~~887,433~~873,572 shares available for issuance as options, shares of restricted stock or performance shares under the 1998 Directors Plan, and ~~2,631,082~~2,522,380 shares available for issuance under the Company’s Employee Stock Purchase Plan. ~~No new grants may be made under the 1998 Stock Incentive Plan, which expired by its terms in June 2008.~~

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PERFORMANCE GRAPH

The following graph compares the total cumulative shareholder return of the Company to the performance of Standard & Poor’s 500 Composite Index and the Russell 3000 Financial Services Index. ~~Both of the aforementioned indexes are easily accessible to the Company’s shareholders in newspapers, the internet and other readily available sources for purposes of the following graph.~~

The comparison assumes that $100.00 was invested in the Company’s common stock and in each of the foregoing indices on December 31, ~~2015.~~2017. The comparison also assumes the reinvestment of dividends, if any. The total return for the Company's common stock was ~~206%~~98% during the performance period as compared with a total return during the same period of ~~103%~~57% and ~~84%~~48% for the S&P 500 Composite Index and the Russell 3000 Financial Services Index, respectively.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN

Among Moody’s Corporation, the ~~S&P~~Standard & Poor’s 500 Composite Index, and

~~and~~ the Russell 3000 Financial Services Index

Year Ended December 31,
2015 2016 2017 2018 2019 2020
Moody’s Corporation $ 100.00 $ 95.41 $ 151.24 $ 145.03 $ 248.37 $ 306.18
S&P 500 Composite Index $ 100.00 $ 111.96 $ 136.40 $ 130.42 $ 171.49 $ 203.04
Russell 3000—Financial Services Index $ 100.00 $ 117.96 $ 141.49 $ 129.67 $ 172.37 $ 183.75


	Year Ended December 31,
	2017		2018		2019		2020		2021		2022
Moody’s Corporation	$	100.00	$	95.90	$	164.22	$	202.45	$	274.46	$	197.60
S&P 500 Composite Index	$	100.00	$	95.62	$	125.72	$	148.85	$	191.58	$	156.89
Russell 3000—Financial Services Index	$	100.00	$	91.65	$	121.82	$	129.87	$	174.77	$	147.73

The comparisons in the graph above are provided in response to disclosure requirements of the SEC and are not intended to forecast or be indicative of future performance of the Company’s common stock.

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ITEM 7. 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 consolidated financial statements and notes thereto included elsewhere in this annual report on Form 10-K.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains Forward-Looking Statements. See “Forward-Looking Statements” commencing on page 7161 and Item 1A. “Risk Factors” commencing on page 2923 for a discussion of uncertainties, risks and other factors associated with these statements.

~~THE COMPANY~~The Company

Moody’s is a global integrated risk assessment firm that empowers organizations and investors to make better decisions. Moody’s reports in two segments: MIS and MA.

MIS publishes credit ratings and provides assessment services on a wide range of debt obligations, programs and facilities, and the entities that issue such obligations in markets worldwide, including various corporate, financial institution and governmental obligations, and structured finance securities. 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, revenue from providing ESG research, data and assessments and 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 is a global provider ofof: i) data and ~~analytic~~information; ii) research and insights; and iii) decision solutions, which help companies make better and faster decisions. ~~MA’s analytic models,~~MA leverages its industry ~~insights, software tools~~expertise across multiple risks such as credit, market, financial crime, supply chain, catastrophe and ~~proprietary data assets allow companies~~climate to ~~inform~~deliver integrated risk assessment solutions that enable business leaders to identify, measure and perform many critical business activities with trust and confidence. MA’s approach to aggregating, broadening and deepening available data, research, analytic tools and software solutions fosters a more integrated and efficient delivery to MA's customers resulting in better decisions aroundmanage the implications of interrelated risks and opportunities.

~~COVID-19~~

Current Matters Impacting Moody's Business

Current Macroeconomic Uncertainties/Market Volatility

The Company is monitoring current macroeconomic and geopolitical uncertainties that have contributed to declines in rated issuance volumes in 2022. A substantial portion of MIS’s revenue is impacted by the level of issuance activity in the fixed income capital markets, both in the U.S. and internationally. While market volatility in 2022 has resulted in declines in rated issuance volumes, the Company believes that these declines are predominantly cyclical in nature. However, due to various uncertainties, Moody's is unable to predict the severity and duration of current macroeconomic and geopolitical uncertainties and their potential impact on future ratings issuance volumes. Refer to Item 1A. “Risk Factors” for further disclosure relating to these risks.

Russia/Ukraine Conflict

The Company is closely monitoring the impact of the ongoing Russia/Ukraine conflict on all aspects of its business. In response to the conflict, the Company is no longer conducting commercial operations in Russia for both MIS and MA and is complying with all applicable regulatory restrictions set forth by the jurisdictions in which Moody's operates. Furthermore, the Company also has withdrawn MIS credit ratings on Russian entities.

While Moody's Russian operations and net assets are not material, broader global market volatility, which partially relates to uncertainties surrounding the conflict, has contributed to an adverse impact on rated issuance volumes in 2022. This impact to rated issuance volumes is more fully discussed in the "Results of Operations" section of this MD&A. The Company is unable to predict either the near-term or longer-term impact that the conflict may have on its financial position and operating results due to numerous uncertainties regarding the severity and duration of the conflict and its broader potential macroeconomic impact.

COVID-19

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business. ~~While the Company has selectively reopened certain of its offices, Moody’s continues to require remote work for most employees globally and has operated effectively to date.~~ The Company continues to monitor regional developments relating to the COVID-19 pandemic to inform decisions ~~on the reopening of~~regarding its ~~offices.~~

~~The Company experienced disruption in certain sectors of~~offices and its business ~~beginning late in the first quarter~~travel policies. As of ~~2020 resulting from market volatility associated with the COVID-19 crisis. However, at~~ the date of the filing of this annual report on Form 10-K, the Company has reopened all of its offices for employees to access.

The COVID-19 pandemic has not had a material adverse impact on the Company's reported results to date and is ~~unable~~currently not expected to ~~predict either the potential near-term or longer-term~~have a material adverse impact ~~that the COVID-19 crisis may have~~ on its financial ~~position and operating results due~~outlook. Refer to ~~numerous uncertainties regarding~~Item 1A. “Risk Factors” for further disclosure relating to the ~~duration and severity~~risks of the ~~crisis, including~~COVID-19 pandemic on the length of time to distribute a vaccine. As a result, it is reasonably possible that the Company could experience material impacts including, but not limited to: reductions in revenue and cash flows; additional credit losses related to accounts receivables; asset impairment charges; and changes in the funded status of defined benefit pension plans. While it is reasonably possible that the COVID-19 crisis could impact the results of operations and cash flows of the Company in the near term, Moody's believes that it has adequate liquidity to maintain its operations with minimal disruption and to maintain compliance with its debt covenants.

In 2020, in order to maximize liquidity and to increase available cash on hand through this period of uncertainty, the Company added $700 million in additional long-term borrowings as more fully discussed in the section entitled "Liquidity and Capital Resources" below and in Note 18 to the consolidated financial statements. In addition, the Company reduced discretionary spending, including temporarily suspending its share repurchase program beginning late in the first quarter of 2020 and spanning through the third quarter. The Company resumed its share repurchase program in the fourth quarter of 2020.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States. The Company utilized certain provisions in the CARES Act and other IRS guidance which permit the deferral of certain income and payroll tax remittances.

~~MOODY'S~~ ~~2020 10-K 43~~

Company's business.

~~Table of~~ ~~Contents~~

~~CRITICAL ACCOUNTING ESTIMATES~~Critical Accounting Estimates

Moody’s discussion and analysis of its financial condition and results of operations are based on the Company’s consolidated financial statements, which have been prepared in accordance with 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, long-lived assets (including acquired intangible assets), leases, pension and other retirement benefits and income taxes.critical accounting estimates. Actual results may differ from these estimates under different assumptions or conditions. The following accounting estimates are considered critical because they are particularly dependent on management’s judgment about matters that are uncertain at the time the accounting estimates are made and changes to those estimates could have a material impact on the Company’s consolidated results of operations or financial condition.

~~Goodwill~~

MOODY'S 2022 10-K 35

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OnGoodwill and Other Acquired Intangible Assets

At July 31st of each year, Moody’s evaluates its goodwill for impairment at the reporting unit level, defined as an operating segment (i.e., MIS and MA), or one level below an operating segment (i.e., a component of an operating segment).

The Company has ~~seven primary~~four reporting ~~units at December 31, 2020:~~units: two within the Company’s ratings business (one for the ICRA business and one that encompasses all of Moody’s other ratings operations) and ~~five~~two reporting units within ~~MA: Content, ERS, MALS, Bureau van Dijk and Reis. The Content reporting unit offers subscription-based research,~~MA consisting of businesses that offer: i) data and data-driven analytical ~~products, including credit ratings produced by MIS, credit research, quantitative credit scores~~solutions; and ~~other analytical tools, economic research~~ii) risk-management software, workflow and forecasts, business intelligence and company information products. The ERS reporting unit provides products and services that support the credit risk management and regulatory compliance activities of financial institutions and also provides advanced actuarial software for the life insurance industry. These products and services are primarily delivered via software that is licensed on a perpetual basis or sold on a subscription basis. The MALS reporting unit consists of the portion of the MA business that offers both credit training as well as other professional development training. The Bureau van Dijk reporting unit primarily consists of the Bureau van Dijk business and the newly acquired RDC and AM businesses, and provides business intelligence and company information products. The Reis reporting unit, which consists of the Reis business and newly acquired Catylist business, provides commercial real estate market information and analytical tools.CRE solutions.

The Company evaluates the recoverability of goodwill using a two-step impairment test approach at the reporting unit level. In the first step, the Company assesses various qualitative factors to determine whether the fair value of a reporting unit may be less than its carrying amount. If a determination is made based on the qualitative factors that an impairment does not exist, the Company is not required to perform further testing. If the aforementioned qualitative assessment results in the Company concluding that it is more likely than not that the fair value of a reporting unit may be less than its carrying amount, the fair value of the reporting unit will be quantitatively determined and compared to its carrying value including goodwill. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not ~~impaired.~~impaired, and the Company is not required to perform further testing. If the fair value of the reporting unit is less than the carrying value, the Company will record a goodwill impairment charge for the amount by which the carrying value exceeds the reporting unit’s fair value. The Company evaluates its reporting units on an annual basis, or more frequently if there are changes in the reporting structure of the Company due to acquisitions, realignments ~~of reporting units~~ or if there are indicators of potential impairment. For the reporting units where the Company is consistently able to conclude that no impairment exists using only a qualitative approach, the Company’s accounting policy is to perform the second step of the aforementioned goodwill impairment assessment at least once every three years.

~~Interim goodwill impairment~~The Company last performed quantitative assessments ~~performed in 2020 in advance of the Company's annual assessment~~

~~During the first half of 2020, the observable market capitalization of ICRA declined~~on all reporting units at July 31, 2021, pursuant to a ~~level that resulted~~change in ~~a significant decline in headroom (the amount by which the fair value of a~~ reporting unit ~~exceeds its carrying value) from amounts reported~~structure in the Company's Form 10-K for the year ended December 31, 2019. ICRA is a publicly traded company in India, and accordingly the Company is able to derive its fair value based on its observable average market capitalization (plus a control premium) over a relatively short duration of time. While the estimate of the fair value of the ICRA reporting unit resulted in no impairment of goodwill in the first half of 2020, further declines in ICRA's average market capitalization could result in impairment in future quarters. As of the date of the filing of this annual report on Form 10-K, the ICRA market capitalization reflects a level that does not result in impairment.

As discussed in further detail in Note 10 to the Company's consolidated financial statements, ICRA has disclosed that it completed the internal examinations it conducted into anonymous allegations that were forwarded to ICRA by SEBI, certain additional allegations made during the course of that examination, and a separate anonymous complaint. ICRA reported that its Board of Directors have taken appropriate actions based on the findings of the completed examinations. As of the date of this annual report on Form 10-K, the Company is unable to estimate the financial impact, if any, that may result from a potential unfavorable conclusion of these matters or any other ICRA inquiry. An unfavorable resolution of such matters may negatively impact ICRA’s future operating results, which could result in an impairment of goodwill and amortizable intangible assets in future quarters.

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~~At June 30, 2020, the Company performed an interim~~MA reportable segment. The quantitative goodwill impairment assessment on the Reis reporting unit (acquired in October 2018), which resulted in no impairment of goodwill. The Company performed this quantitative assessment in response to a decline in projected cash flows relative to Reis' acquisition case projections and included the estimated impact of the COVID-19 crisis on the business. While the fair value at June 30, 2020 of the Reis reporting unit exceeded its carrying value, further declines in its financial projections could result in impairment in future quarters.

~~Annual goodwill impairment assessment~~assessments performed at July 31, ~~2020~~

~~At July 31, 2020, the Company performed qualitative assessment for each of the reporting units. The qualitative analyses~~2021 resulted in ~~the Company determining~~fair values that ~~it was not more likely than not that the fair value of any~~significantly exceeded carrying values for all reporting ~~unit was less than its carrying amount.~~units.

Determining the fair value of a reporting unit ~~or an indefinite-lived acquired intangible asset~~ involves the use of significant estimates and assumptions, which are more fully described below. In addition, the Company also makes certain judgments and assumptions in allocating shared assets and liabilities to determine the carrying values for each of its reporting units.

Other assets and liabilities, including applicable corporate assets, are allocated to the extent they are related to the operation of respective reporting units.

~~Sensitivity Analysis and Key Assumptions~~Annual goodwill impairment assessment performed at July 31, 2022

At July 31, 2022, the Company performed qualitative assessments for ~~Deriving~~each of the ~~Fair Value of a Reporting Unit~~

~~The following table identifies~~four reporting units. These qualitative assessments resulted in the ~~amount of goodwill allocated to each reporting unit as of December 31, 2020 and the amount by which the net assets of each reporting unit would exceed~~Company determining that it was not more likely than not that the fair value ~~under Step 2~~ of ~~the goodwill impairment test as prescribed in ASC Topic 350, assuming hypothetical reductions in their fair values as of the date of the last quantitative goodwill impairment assessment for each~~any reporting unit ~~(June 30, 2020 for ICRA and Reis; July 31, 2019 for all remaining reporting units).~~

Sensitivity Analysis
Deficit Caused by a Hypothetical Reduction to Fair Value
Goodwill 10 % 20 % 30 % 40 %
MIS $ 99 $ — $ — $ — $ —
Content 381 — — — —
ERS 800 — — — —
MALS 127 — — (12) (37)
ICRA 212 — (2) (44) (85)
Bureau van Dijk 2,746 — — — (266)
Reis 191 — (22) (48) (74)
Totals $ 4,556 $ — $ (24) $ (104) $ (462)

was less than its carrying amount.

Methodologies and significant estimates utilized in determining the fair value of reporting units:

The following is a discussion regarding the Company’s methodology for determining the fair value of its reporting units, asexcluding ICRA, at July 31, 2021 (the date of the ~~date of each reporting unit’s~~ last quantitative ~~assessment (June 30, 2020 for Reis and ICRA; and July 31, 2019 for the remaining reporting units)~~assessment). As ICRA is a publicly traded company in India, the Company ~~estimates~~was able to observe its fair value ~~using~~based on its ~~observable~~ market capitalization.

The fair value of each reporting unit, excluding ICRA, was estimated using a discounted cash flow methodology and comparable public company and precedent transaction multiples. The discounted cash flow analysis requires significant estimates, including projections of future operating results and cash flows of each reporting unit that are based on internal budgets and strategic plans, expected long-term growth rates, terminal values, weighted average cost of capital and the effects of external factors and market conditions. Changes in these estimates and assumptions could materially affect the estimated fair value of each reporting unit that could result in an impairment charge to reduce the carrying value of goodwill, which could be material to the Company’s financial position and results of operations. Moody’s allocates newly acquired goodwill to reporting units based on the reporting unit expected to benefit from the acquisition.

The sensitivity ~~analysis~~analyses on the future cash flows and WACC assumptions are described ~~below are as of each reporting unit’s last quantitative goodwill impairment assessment. The following discusses the~~below. These key assumptions utilized in the discounted cash flow valuation methodology ~~that~~ require significant management judgment:

–Future cash flow assumptions - The projections for future cash flows utilized in the models are derived from historical experience and assumptions regarding future growth and profitability of each reporting unit. These projections are consistent with the Company’s operating budget and strategic plan. Cash flows for the five years subsequent to the date of the quantitative goodwill impairment test were utilized in the determination of the fair value of each reporting unit. The growth rates assumed a gradual increase in revenue based on new customer acquisition and new products. Beyond ~~the forecasted period,~~five years, a terminal value was determined using a perpetuity growth rate based on inflation and real GDP growth rates. A sensitivity analysis of the revenue growth rates was performed on all reporting units. For each reporting unit analyzed, a 10% reduction in the revenue growth rates used would ~~not have resulted~~still result in ~~its~~fair values that significantly exceeded carrying ~~value exceeding its estimated fair value.~~values.

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–WACC - The WACC is the rate used to discount each reporting unit’s estimated future cash flows. The WACC is calculated based on the proportionate weighting of the cost of debt and equity. The cost of equity is based on a risk-free interest rate and an equity risk factor, which is derived from public companies similar to the reporting unit and which captures the perceived risks and uncertainties associated with the reporting unit’s cash flows. The cost of debt component is calculated as the

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weighted average cost associated with all of the Company’s outstanding borrowings as of the date of the impairment test and was immaterial to the computation of the WACC. The cost of debt and equity is weighted based on the debt to market capitalization ratio of publicly traded companies with similarities to the reporting unit being tested. The WACC ~~applied in each~~for all reporting ~~unit's last quantitative test~~units ranged from 8.0% to 8.5% ~~to 9.0%.~~as of July 31, 2021. Differences in the WACC used between reporting units is primarily due to distinct risks and uncertainties regarding the cash flows of the different reporting units. A sensitivity analysis of the WACC was performed on all reporting ~~units. For~~units as of July 31, 2021 for each reporting ~~unit analyzed,~~unit. For all reporting units, an increase in the WACC of one percentage point would ~~not~~still result in ~~the~~fair values that significantly exceeded carrying ~~value of the reporting unit exceeding its fair value.~~values.

Long-lived assets

Long-lived assets, which consist primarily of amortizable intangible assets, operating lease ROU assets and property and equipment, are reviewed for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Under the first step of the recoverability assessment, Moody's compares the estimated undiscounted future cash flows attributable to the asset or asset group to its carrying value. If the undiscounted future cash flows are greater than the carrying value, no further assessment is required. If the undiscounted future cash flows are less than the carrying value, Moody's proceeds with step two of the assessment. Under step two of this assessment, Moody's is required to determine the fair value of the asset or asset group and recognize an impairment loss if the carrying amount exceeds its fair value. In performing this assessment, Moody's must include assumptions that market participants would use in their estimates of fair value, including the estimated future cash flows and discount rate. Moody's must apply judgment in developing estimated future cash flows and in the determination of market participant assumptions.

Income Taxes

The Company is subject to income taxes in the U.S. and various foreign jurisdictions. The Company’s tax assets and liabilities are affected by the amounts charged for services provided and expenses incurred as well as other tax matters such as intercompany transactions. The Company accounts for income taxes under the asset and liability method in accordance with ASC Topic 740. Therefore, income tax expense is based on reported income before income taxes, and deferred income taxes reflect the effect of temporary differences between the amounts of assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes.

The Company is subject to tax audits in various jurisdictions. The Company regularly assesses the likely outcomes of such audits in order to determine the appropriateness of liabilities for UTPs. The Company classifies interest related to income taxes as a component of interest expense in the Company’s consolidated financial statements and associated penalties, if any, as part of other non-operating expenses.

For UTPs, ASC Topic 740 requires a company to first determine whether it is more-likely-than-not (defined as a likelihood of more than fifty percent) that a tax position will be sustained based on its technical merits as of the reporting date, assuming that taxing authorities will examine the position and have full knowledge of all relevant information. A tax position that meets this more-likely-than-not threshold is then measured and recognized at the largest amount of benefit that is greater than fifty percent likely to be realized upon effective settlement with a taxing authority. As the determination of liabilities related to UTPs and associated interest and penalties requires significant estimates to be made by the Company, there can be no assurance that the Company will accurately predict the outcomes of these audits, and thus the eventual outcomes could have a material impact on the Company’s operating results or financial condition.

On December 22, 2017, the Tax Act was signed into law, which resulted in significant changes to U.S. corporate tax laws. The Tax Act includes a mandatory one-time deemed repatriation tax (“transition tax”) on previously untaxed accumulated earnings of foreign subsidiaries and reduces the statutory federal corporate income tax rate from 35% to 21%. From enactment of the Tax Act through December 31, 2018, the Company recorded a provision of $236 million related to the transition tax. In addition, the Company has recorded a deferred tax asset of $50 million related to potential foreign tax credits which could be realized if certain UTPs resulted in tax assessments. The transition tax liability reported on the Company’s 2017 and 2018 tax returns is payable over eight years starting in 2018 and will not accrue interest.

Pursuant to the Tax Act being signed into law, all previously undistributed foreign earnings became subject to U.S. tax. In light of U.S. tax reform, the Company has reassessed its capital allocation strategy, including reevaluating its global cash position and revising its plans for repatriating or reinvesting foreign earnings. The Company regularly evaluates in 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 outside of the U.S.

Revenue Recognition and Costs to Obtain a Contract with a Customer

Revenue is recognized when control of promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

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The discussion below outlines areas of the Company’s revenue recognition process that require significant management judgment and estimates. Refer to Note 2 of the consolidated financial statements for a comprehensive discussion regarding the Company’s accounting policies relating to the recognition of revenue and costs to obtain a contract with a customer.

~~Determination of performance obligations:~~

~~When contracts with customers contain multiple performance obligations, the Company accounts for individual performance obligations separately if they are distinct.~~

In the Company’s MIS segment, revenue arrangements with multiple elements are generally comprised of two distinct performance obligations; the initial rating and the related monitoring services. Revenue attributed to initial ratings of issued securities is generally recognized when the rating is delivered to the issuer, whereas revenue from monitoring related to MIS’s ratings is recognized ratably over the period in which the monitoring is performed.

In the MA segment, contracts with customers often include promises to transfer multiple products and services to a customer. When arrangements for software, content or SaaS licenses also include related implementation services, the Company may be required to exercise significant judgment in determining the level of integration and interdependency between the promise to grant the software license and the promise to deliver the related implementation services. This determination influences whether the software license is considered distinct and accounted for separately (with revenue generally being recognized at the time the product master or first copy is delivered or transferred to the customer), or not distinct and accounted for together with the implementation services (with revenue being recognized on a percentage-of-completion basis as implementation services are performed).

Allocating consideration to performance obligations:

Management judgment is ~~also~~ required in the determination of the SSP, which is utilized to allocate the transaction price to each distinct performance obligation at contract inception when the contract includes multiple distinct performance obligations.

In the MIS segment, the SSP for both ratings and monitoring services is generally based upon directly observable selling prices where the rating or monitoring service is sold separately.

In the MA segment, for performance obligations where an observable price exists, such as PCS, the observable price is utilized. If an observable price does not currently exist, the Company will utilize management’s best estimate of SSP for that good or service using estimation methods that maximize the use of observable data points.

The SSP in both segments is usually apportioned along the lines of class of customer, nature of product/services, and other attributes related to those products and services. Once SSP is determined for each performance obligation, the transaction price, including any discount, is allocated based on the relative SSP of the separate performance obligations.

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Costs to Obtain a Contract with a Customer:

Costs incurred to obtain customer contracts, such as sales commissions, are deferred and recorded within other current assets and other assets when such costs are determined to be incremental to obtaining a contract, would not have been incurred otherwise and the Company expects to recover those costs. These costs are amortized to expense on a systematic basis consistent with the transfer of products or services to the customer for which the asset relates. Depending on the line of business to which the contract relates, this amortization period may be based upon the average economic life of the products sold or average period for which services are provided, inclusive of anticipated contract renewals.

Contingencies

Accounting for contingencies, including those matters described in Note 21 to the consolidated financial statements, is highly subjective and requires the use of judgments and estimates in assessing their magnitude and likely outcome. In many cases, the outcomes of such matters will be determined by third parties, including governmental or judicial bodies. The provisions made in the consolidated financial statements, as well as the related disclosures, represent management’s best estimates of the current status of such matters and their potential outcome based on a review of the facts and in consultation with outside legal counsel where deemed appropriate. The Company regularly reviews contingencies and as new information becomes available may, in the future, adjust its associated liabilities.

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.

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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.

~~Accounts Receivable Allowances~~

On January 1, 2020, the Company adopted ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” as more fully described in Note 1 to the consolidated financial statements. As the Company's accounts receivable are short-term in nature, the adoption of this ASU did not have a material impact to the Company's allowance for bad debts or its policies and procedures for determining the allowance.

In order to determine an estimate of expected credit losses, receivables are segmented based on similar risk characteristics including historical credit loss patterns and industry or class of customers to calculate reserve rates. The Company uses an aging method for developing its allowance for credit losses by which receivable balances are grouped based on aging category. A reserve rate is calculated for each aging category which is generally based on historical information, and is adjusted, when necessary, for current conditions (e.g., macroeconomic or industry related) and reasonable and supportable forecasts about the future. The Company also considers customer specific information (e.g., bankruptcy or financial difficulty) when estimating its expected credit losses, as well as the economic environment of the customers, both from an industry and geographic perspective, in evaluating the need for allowances. Expected credit losses are reflected as additions to the accounts receivable allowance. Actual uncollectible account write-offs are recorded against the allowance.

In 2020, Moody's assessment included consideration of the current COVID-19 pandemic and its estimated impact on the Company's accounts receivable allowances. This assessment involved the utilization of significant judgment regarding the severity and duration of the market disruption caused by the pandemic, as well as judgment regarding which industries, classes of customers and geographies would be most significantly impacted.

Pension and Other Retirement Benefits

The expenses, assets and liabilities that Moody’s reports for its Retirement Plans are dependent on many assumptions concerning the outcome of future events and circumstances. These significant assumptions include the following:

–future compensation increases based on the Company’s long-term actual experience and future outlook;

–long-term expected return on pension plan assets based on historical portfolio results and the expected future average annual return for each major asset class within the plan’s portfolio (which is principally comprised of equity and fixed-income investments); and

–discount rates based on current yields on high-grade corporate long-term bonds.

The discount rates used to measure the present value of the Company’s benefit obligation for its Retirement Plans as of December 31, ~~2020~~2022 were derived using a cash flow matching method whereby the Company compares each plan’s projected payment obligations by year with the corresponding yield on the FTSE pension discount curve. The cash flows by plan are then discounted back to present value to determine the discount rate applicable to each plan.

Moody’s major assumptions vary by plan and assumptions used are set forth in Note 15 to the consolidated financial statements. In determining these assumptions, the Company consults with third-party actuaries and other advisors as deemed appropriate. While the Company believes that the assumptions used in its calculations are reasonable, differences in actual experience or changes in assumptions could have a significant effect on the expenses, assets and liabilities related to the Company’s Retirement Plans. Additionally, the Company has updated its mortality assumption by adopting the newly released mortality improvement scale MP-2020 to accompany the Pri2012 mortality tables to reflect the latest information regarding future mortality expectations by the Society of Actuaries.

When actual plan experience differs from the assumptions used, actuarial gains or losses arise. Excluding differences between the expected long-term rate of return assumption and actual returns on plan assets, the Company amortizes, as a component of annual pension expense, total outstanding actuarial gains or losses over the estimated average future working lifetime of active plan participants to the extent that the gain/loss exceeds 10% of the greater of the beginning-of-year projected benefit obligation or the market-related value of plan assets. For Moody’s Retirement Plans, the total actuarial losses as of December 31, ~~2020~~2022 that have not been recognized in annual expense are ~~$152~~$68 million, and Moody’s expects ~~to recognize a~~the net periodic expense ~~of $11 million in 2021~~ related to the amortization of net actuarial ~~losses.~~(losses)/gains will be immaterial in 2023.

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For Moody’s funded U.S. pension plan, the differences between the expected long-term rate of return assumption and actual returns could also affect the net periodic pension expense. As permitted under ASC Topic 715, the Company amortizes the

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impact of asset returns over a five-year period for purposes of calculating the market-related value of assets that is used in determining the expected return on assets’ component of annual expense and in calculating the total unrecognized gain or loss subject to amortization. As of December 31, ~~2020,~~2022, the Company has an unrecognized ~~asset gain~~loss of ~~$49~~$106 million, of which ~~$13~~$19 million will be recognized in the market-related value of assets that is used to calculate the expected return on assets component of ~~2021~~2023 expense.

The table below shows the estimated effect that a one percentage-point decrease in each of these assumptions will have on Moody’s ~~2021~~2023 income before provision for income taxes. These effects have been calculated using the Company’s current projections of ~~2021~~2023 expenses, assets and liabilities related to Moody’s Retirement Plans, which could change as updated data becomes available.

(dollars in millions) Assumptions Used for 2021 Estimated Impact on 2021 Income before Provision for Income Taxes (Decrease)/Increase
Weighted Average Discount Rates (1)
2.24%/2.30% $ (11)
Weighted Average Assumed Compensation Growth Rate 3.62 % $ 2
Assumed Long-Term Rate of Return on Pension Assets 5.45 % $ (5)


(dollars in millions)	Assumptions Used for 2023	Estimated Impact on 2023 Income before Provision for Income Taxes (Decrease)/Increase
Weighted Average Discount Rates (1)	4.93%/4.90%	$	(1)
Weighted Average Assumed Compensation Growth Rate	3.63%	$	1
Assumed Long-Term Rate of Return on Pension Assets	6.55%	$	(5)

(1)Weighted average discount rates of ~~2.24%~~4.93% and ~~2.30%~~4.90% for pension plans and Other Retirement Plans, respectively.

Based on current projections, the Company estimates that expenses related to Retirement Plans will be ~~approximately $31 million~~immaterial in ~~2021, an increase compared~~2023.

Investments in Non-consolidated Affiliates

Equity method investments are reviewed for indicators of other-than-temporary impairment on a quarterly basis. These investments are written down to ~~the $27 million recognized~~fair value if there is evidence of a loss in ~~2020.~~value that is other-than-temporary.

~~Leases~~

~~The Company’s operating leases do not provide an implicit interest rate. Accordingly,~~For equity investments without a readily determinable fair value for which the Company ~~must estimate the secured incremental borrowing rate attributable~~does not have significant influence, Moody's generally elects to the currency in which the lease is denominated in the derivation of operating lease liabilities and related operating lease ROU Assets. This secured incremental borrowing rate is based on the information availablemeasure these investments at ~~the lease commencement date and is utilized in the determination~~cost, less impairment, adjusted for subsequent observable price changes as 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 whendate that ~~option is reasonably certain of being exercised, which will impact the lease term and determination of the lease liability and corresponding ROU Asset.~~

~~Restructuring~~an observable transaction takes place.

The Company ~~has engaged, and may continue~~performs an assessment on a quarterly basis to ~~engage,~~determine if there are indicators of impairment for its investments in ~~restructuring actions, which require management to utilize significant estimates related to expenses for severance and other employee benefit costs, contract termination costs and asset impairments.~~non-consolidated affiliates. If there are indicators of impairment, the ~~actual amounts differ from these~~Company estimates the ~~amount~~investment’s fair value and records an impairment if the carrying value of the ~~restructuring charge could be impacted. For a full description~~investment exceeds its fair value.

In situations where estimation of ~~Moody’s restructuring actions, refer to Note 11 to~~fair value is required for investments in non-consolidated affiliates, the ~~consolidated financial statements.~~Company considers various factors, including: recent observable investee equity transactions, comparable public company/precedent transaction multiples and discounted cash flow models. The estimation of fair value for these investments may involve significant judgment.

Other Estimates

In addition to the critical accounting estimates described above, there are other accounting estimates within Moody’s consolidated financial ~~statements, including recoverability of deferred tax assets, valuation of investments in affiliates and the estimated lives of amortizable intangible assets.~~statements. Management believes the current assumptions and other considerations used to estimate amounts reflected in Moody’s consolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerations used in estimating amounts reflected in Moody’s consolidated financial statements, the resulting changes could have a material adverse effect on Moody’s consolidated results of operations or financial condition.

See Note 2 to the consolidated financial statements for further information on significant accounting policies that impact Moody’s.

~~REPORTABLE SEGMENTS~~Reportable Segments

The Company is organized into two reportable segments at December 31, ~~2020:~~2022: MIS and MA, which are more fully described in the section entitled “The Company” above and in Note 22 to the consolidated financial statements.

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~~RESULTS OF OPERATIONS~~Results of Operations

This section of this Form 10-K generally discusses year ended December 31, ~~2020~~2022 and ~~2019~~2021 financial results and year-to-year comparisons between these years. Discussions related to the year ended December 31, ~~2018~~2020 financial results and year-to-year comparisons between the years ended December 31, ~~2019~~2021 and ~~2018~~2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2021.

~~Potential Impact of COVID-19 on the Company's future operating results~~

–The Company is closely monitoring the impact of COVID-19 on all aspects of its business (refer to the section above entitled "COVID-19" for further detail). The operating results discussed below may not be indicative of future results of the Company due to uncertainties relating to the duration and severity of the pandemic and its potential impact on Moody's. The Company remains committed to disciplined cost management through this period of uncertainty.

–~~As of the date of the filing of this annual report on Form 10-K, the Company believes that the most significant risks to its 2021 financial results relating to COVID-19 uncertainties are as follows:~~

–~~MIS:~~ ~~within the MIS segment, the most notable risks to near-term financial performance may be:~~

–the potential for continued volatility in issuance. The Company observed significant market disruption and a widening of credit spreads late in the first quarter of 2020, followed by strong corporate bond issuance activity during the remainder of 2020. Future market volatility and widening of credit spreads could have a material impact on MIS's near-term operating results;

–corporate debt issuance (both investment-grade and speculative-grade) may moderate compared to issuance levels observed in 2020. While issuance was strong in 2020, a portion of the 2020 activity was elevated as a result of corporate issuers bolstering their balance sheets in light of uncertainties regarding the COVID-19 pandemic; and

– ~~declines in leveraged loan issuance could result in a decrease in availability of collateral for securitization activity, which could then result in further declines in CLO activity.~~

–~~MA:~~ ~~within the MA segment, the most notable risks to near-term financial performance may be:~~

–reductions in discretionary spending by MA’s customer base and social distancing measures could result in fewer new sales opportunities being identified and an extension of sales cycles on existing opportunities, particularly related to software sales; and

–~~higher attrition rates and/or lower yields on renewable contracts.~~

Impact of acquisitions/divestitures on comparative results

–Moody’s completed the following acquisitions, which impact the Company's year-over-year comparative results:


–~~Vigeo Eiris on April 12, 2019;~~			–~~Regulatory DataCorp on February 13, 2020;~~
–~~Four Twenty Seven on July 22, 2019;~~			–~~Acquire Media on October 21, 2020;~~
–~~RiskFirst on July 25, 2019;~~
–~~ABS Suite on October 1, 2019;~~

–On November 8, 2019, the Company sold its MAKS business to Equistone Partners Europe Limited, a European private equity firm. The operating results of MAKS are reported within the MA segment (and PS LOB) through the November 8, 2019 closing of the transaction. Beginning in 2020, revenue from the MALS unit, which previous to 2020 was reported in the PS LOB, is now reported as part of the RD&A LOB. Prior periods have not been reclassified as the amounts were not material.Cortera on March 19, 2021;

–RMS on September 15, 2021;

–RealXData on September 17, 2021;

–PassFort on November 30, 2021; and

–kompany on February 28, 2022.

Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for the definitions of how the Company determines certain organic growth measures used in this MD&A that exclude the impact of ~~acquisition/divestiture~~acquisition activity.

The following footnotes are applicable throughout the discussion of the Company's results of operations:

(1)Refer to the section entitled "Non-GAAP Financial Measures" of this MD&A for the definition and methodology that the Company utilizes to calculate this metric.

(2)Refer to the section entitled "Key Performance Metrics" of this MD&A for the definition and methodology that the Company utilizes to calculate this metric.

5040 MOODY'S ~~2020~~2022 10-K

Table of Contents

Year ended December 31, ~~2020~~2022 compared with year ended December 31, ~~2019~~2021

Executive Summary

–The following table provides an executive summary of key operating results for the year ended December 31, ~~2020.~~2022. Following this executive summary is a more detailed discussion of the Company’s operating results as well as a discussion of the operating results of the Company’s reportable segments.


		Year Ended December 31,										Year Ended December 31,
Financial measure:	Financial measure:	2020			2019			% Change Favorable / (Unfavorable)		Insight and Key Drivers of Change Compared to Prior Year	Financial measure:	2022			2021			% Change Favorable / (Unfavorable)		Insight and Key Drivers of Change Compared to Prior Year
Moody's total revenue	Moody's total revenue	$	5,371		$	4,829		11	%	— reflects strong growth in both segments	Moody's total revenue	$	5,468		$	6,218		(12	%)	— reflects lower MIS revenue partially offset by growth in MA
MIS External Revenue		$	3,292		$	2,875		15	%	— primary driver of growth reflects higher corporate debt issuance (both investment-grade and high-yield) as issuers bolstered liquidity positions in response to COVID-19 uncertainties and issued opportunistically for refinancing needs
MA External Revenue		$	2,079		$	1,954		6	%	— strong renewals and new sales of credit research and data feeds, as well as demand for KYC and compliance solutions; — demand for insurance compliance products along with credit assessment and loan origination solutions in ERS; and — inorganic growth from acquisitions.
MIS external revenue											MIS external revenue	$	2,699		$	3,812		(29	%)	— credit market activity remained muted across all sectors given ongoing market volatility, central bank actions, high levels of balance sheet cash, as well as heightened inflationary and recessionary concerns
MA external revenue											MA external revenue	$	2,769		$	2,406		15	%	— inorganic growth from acquisitions; and — strong organic growth across all LOBs, most notably for KYC and compliance solutions coupled with continued strong retention and demand for credit research, analytics and models
Total operating and SG&A expenses	Total operating and SG&A expenses	$	2,704		$	2,554		(6	%)	— additional compensation expense resulting from hiring activity and merit increases coupled with higher incentive compensation aligned with financial and operating performance; — higher costs to support strategic initiatives to enhance technology infrastructure to enable automation, innovation and efficiency as well as to support business growth; partially offset by: — lower travel costs and disciplined expense management in light of the COVID-19 crisis coupled with benefits from the 2018 Restructuring Program	Total operating and SG&A expenses	$	3,140		$	3,117		(1	%)	— operational and integration costs associated with recent acquisitions; and — increases in hiring and salary growth; mostly offset by: — lower incentive compensation accruals and performance-based equity compensation; and — favorable changes in FX translation rates

										Depreciation and amortization											Depreciation and amortization	$	331	$	257	(29	%)	— higher amortization of intangible assets reflecting recent M&A activity (most notably RMS); and — amortization of internally developed software, primarily related to the development of MA SaaS solutions
Restructuring	Restructuring	$	50		$	60		17	%	— charges are pursuant to the Company's restructuring programs, more fully discussed in Note 11 to the consolidated financial statements	Restructuring	$	114		$	—		NM		— relates to the Company's 2022 - 2023 Geolocation Restructuring Program, more fully discussed in Note 11 to the consolidated financial statements

Total non-operating (expense) income, net											Total non-operating (expense) income, net	$	(123)		$	(89)		(38	%)	— a $45 million benefit in 2021 related to the reversal of tax-related interest accruals pursuant to the resolution of uncertain tax positions; — a $36 million non-cash gain in 2021 relating to the exchange of the Company's minority investment in VisibleRisk for shares of BitSight; — a $31 million increase in interest expense in 2022 primarily due to debt issued late in 2021 and in 2022; and — $20 million in FX translation losses reclassified to earnings in 2022 resulting from the Company no longer conducting commercial operations in Russia; partially offset by: — a $70 million gain on extinguishment of debt in 2022, as more fully discussed in Note 18 to the consolidated financial statements
Operating Margin	Operating Margin	44.5		%	41.4		%	310BPS		— margin expansion reflects strong revenue growth partially offset by growth in operating expenses	Operating Margin	34.4		%	45.7		%	(1,130BPS)		— margin declines are primarily due to the aforementioned decrease in MIS revenue
Adjusted Operating Margin		49.7		%	47.4		%	230BPS
Adjusted Operating Margin(1)											Adjusted Operating Margin(1)	42.6		%	49.9		%	(730BPS)		— margin declines are primarily due to the aforementioned decrease in MIS revenue
ETR	ETR	20.3		%	21.0		%	70BPS		— decrease primarily due to a deferred tax benefit in 2020 resulting from a non-U.S. corporate reorganization	ETR	21.9		%	19.6		%	(230BPS)
Diluted EPS	Diluted EPS	$	9.39		$	7.42		27	%	— increase reflects strong operating income/Adjusted Operating Income growth as described above	Diluted EPS	$	7.44		$	11.78		(37)	%	— primarily due to declines in MIS revenue
Adjusted Diluted EPS		$	10.15		$	8.29		22	%
Adjusted Diluted EPS(1)											Adjusted Diluted EPS(1)	$	8.57		$	12.29		(30)	%	— primarily due to declines in MIS revenue

MOODY'S ~~2020~~2022 10-K 5141

Table of Contents

Moody’s Corporation

Year Ended December 31, % Change Favorable
(Unfavorable)
2020 2019
Revenue:
United States $ 2,955 $ 2,544 16 %
Non-U.S.:
EMEA 1,545 1,446 7 %
Asia-Pacific 571 551 4 %
Americas 300 288 4 %
Total Non-U.S. 2,416 2,285 6 %
Total 5,371 4,829 11 %
Expenses:
Operating 1,475 1,387 (6 %)
SG&A 1,229 1,167 (5 %)
Restructuring 50 60 17 %
Depreciation and amortization 220 200 (10 %)
Acquisition-Related Expenses — 3 100 %
Loss pursuant to the divestiture of MAKS 9 14 36 %
Total 2,983 2,831 (5 %)
Operating income 2,388 1,998 20 %
Adjusted Operating Income (1)
2,667 2,291 16 %
Interest expense, net (205) (208) 1 %
Other non-operating income, net 46 20 130 %
Non-operating (expense) income, net (159) (188) 15 %
Net income attributable to Moody’s $ 1,778 $ 1,422 25 %
Diluted weighted average shares outstanding 189.3 191.6 1 %
Diluted EPS attributable to Moody’s common shareholders $ 9.39 $ 7.42 27 %
Adjusted Diluted EPS (1)
$ 10.15 $ 8.29 22 %
Operating margin 44.5 % 41.4 %
Adjusted Operating Margin (1)
49.7 % 47.4 %
Effective tax rate 20.3 % 21.0 %

~~(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.

52 ~~MOODY'S~~ ~~2020 10-K~~

~~Table of~~ ~~Contents~~


	Year Ended December 31,						% Change Favorable (Unfavorable)
	2022			2021
Revenue:
United States	$	2,873		$	3,383		(15	%)
Non-U.S.:
EMEA	1,682			1,885			(11	%)
Asia-Pacific	556			603			(8	%)
Americas	357			347			3	%
Total Non-U.S.	2,595			2,835			(8	%)
Total	5,468			6,218			(12	%)
Expenses:
Operating	1,613			1,637			1	%
SG&A	1,527			1,480			(3	%)
Depreciation and amortization	331			257			(29	%)
Restructuring	114			—			NM
Total	3,585			3,374			(6	%)
Operating income	1,883			2,844			(34	%)
Adjusted Operating Income (1)	2,328			3,101			(25	%)
Interest expense, net	(231)			(171)			(35	%)
Other non-operating income, net	38			82			(54	%)
Gain on extinguishment of debt	70			—			NM
Non-operating (expense) income, net	(123)			(89)			(38	%)
Net income attributable to Moody’s	$	1,374		$	2,214		(38	%)
Diluted weighted average shares outstanding	184.7			187.9			2	%
Diluted EPS attributable to Moody’s common shareholders	$	7.44		$	11.78		(37	%)
Adjusted Diluted EPS (1)	$	8.57		$	12.29		(30	%)
Operating margin	34.4		%	45.7		%
Adjusted Operating Margin (1)	42.6		%	49.9		%
Effective tax rate	21.9		%	19.6		%

GLOBAL REVENUE

~~2020~~2022~~----------------------------------------------------------------------------------------------------------------------~~---------------------------------------------------------------------------------------~~2019~~2021

~~__________________________________________________________________________~~__________________________________________________________~~_______________________________________________________________________~~______________________________________________

Global revenue ⇑ ~~$542~~⇓ $750 million

U.S. Revenue ⇑ ~~$411~~⇓ $510 million

Non-U.S. Revenue ⇑ ~~$131~~⇓ $240 million

The ~~increase~~decrease in global revenue reflected declines in MIS in all regions, partially offset by growth in ~~both reportable segments.~~MA in all regions. Refer to the section entitled “Segment Results” of this MD&A for a more fulsome discussion of the Company’s segment revenue.

42 MOODY'S 2022 10-K

Table of Contents

Changes in foreign currency translation rates unfavorably impacted global revenue by three percent.

Organic constant currency revenue(1) for MCO decreased 13%.

Operating Expense ⇑ ~~$88~~⇓ $24 million

SG&A Expense ⇑ ~~$62~~$47 million

~~------------------------------------------------~~


Compensation expenses ~~increased $69~~decreased $83 million with the most notable drivers reflecting:	Compensation expenses increased ~~$43~~$57 million with the most notable drivers reflecting:
— ~~hiring activity~~lower incentive compensation accruals and ~~salary increases;~~performance-based equity compensation of approximately $120 million, which aligns with actual/projected financial and operating performance; and	— higher salaries and benefits of approximately $100 million primarily reflecting hiring ~~activity~~ and salary increases in MA's sales organization to support continued growth in the business as well as in shared services support functions; and
— approximately $55 million in higher compensation costs capitalized in 2022 reflecting certain product development in the MA operating segment;	— inorganic growth from acquisitions of approximately $45 million; partially offset ~~by benefits from the 2018 Restructuring Program; and~~by:
partially offset by: — ~~higher~~inorganic growth from acquisitions of approximately $100 million.	— lower incentive compensation accruals ~~aligned~~and performance-based equity compensation of approximately $70 million, which aligns with actual/projected financial and operating performance.	~~— an increase in incentive compensation aligned with financial and operating performance.~~


Non-compensation expenses increased ~~$19~~$59 million with the most notable drivers reflecting:	Non-compensation expenses ~~increased $19~~decreased $10 million with the most notable drivers reflecting:
— inorganic growth from acquisitions of approximately $35 million; and	— lower consulting and other professional fees of approximately $75 million, which includes deal-related costs associated with acquisitions that closed in 2021;
— higher costs of approximately $15 million relating to ~~support~~ strategic initiatives to ~~enhance~~support business growth coupled with enhancements to technology infrastructure to enable automation, innovation and ~~efficiency as well as to support business growth;~~efficiency.
	partially offset by: — inorganic growth from acquisitions of approximately $30 million; and
	— higher travel costs ~~to support the Company’s initiative to enhance technology infrastructure to enable automation, innovation and efficiency; and~~

~~partially offset by:~~		~~— higher estimates for credit losses~~ of approximately ~~$18~~$20 million ~~primarily resulting from~~compared to minimal travel in the ~~anticipated impact of the COVID-19 crisis on the Company's customers;~~
~~— lower travel costs and disciplined expense management~~prior year in light of ~~the COVID-19 crisis.~~
		~~partially offset by:~~
		~~— lower travel costs and disciplined expense management in light of the COVID-19 crisis; and~~
		~~— a $16 million captive insurance company settlement in 2019.~~COVID-19.

~~MOODY'S~~ ~~2020 10-K 53~~

~~Table of~~ ~~Contents~~


~~Other Expenses~~Depreciation and amortization

The increase in depreciation and amortization expense is driven by higher amortization of intangible assets reflecting recent M&A activity (most notably RMS) coupled with amortization of internally developed software, which is primarily related to the development of MA SaaS solutions.


Restructuring

The restructuring charge ~~of $50 million~~ in ~~2020 primarily~~2022 relates ~~to:~~

▪~~the non-cash impairment of certain leased real estate assets (ROU Assets and leasehold improvements) pursuant~~ to the ~~rationalization of certain real estate in response to the COVID-19 pandemic; and~~

▪~~severance costs associated with a strategic realignment in the MA segment.~~

~~The $60 million restructuring charge in 2019 relates to actions pursuant to the Company’s 2018~~Company's 2022 - 2023 Geolocation Restructuring Program which consisted of relocation of certain functions from high-cost to lower-cost jurisdictions, a reduction of staff, including from acquisitions and pursuant to a review of the business criticality of certain positions, and the rationalization and exit of certain real estate due to consolidation of various business activities.

~~Further detail on the Company's restructuring programs are~~as more fully discussed in Note 11 to the consolidated financial statements.

~~The loss pursuant to the divestiture of MAKS in both years relates to the Company's strategic divestiture of this business.~~

Operating margin ~~44.5%~~34.4%, ~~up 310~~down 1,130 BPS

Adjusted Operating Margin ~~49.7%~~42.6%, ~~up 230~~down 730 BPS

Overall, margin declines primarily resulted from the aforementioned decrease in MIS revenue.

MOODY'S 2022 10-K 43

~~Operating margin and Adjusted Operating Margin expansion reflects strong revenue growth partially offset by growth in expenses.~~

Table of Contents


Delaware			13-3998945
(STATE OF INCORPORATION)			(I.R.S. EMPLOYER IDENTIFICATION NO.)


		Page(s)
	Glossary of Terms and Abbreviations	4-9
PART I.
Item 1.	BUSINESS	10
	Background	10
	The Company	10~~-15~~-13
	Human Capital	1614-16
	Climate	~~-19~~16
	Moody’s Strategy	2017~~-21~~
	Prospects for Growth	2218~~-24~~-19
	Competition	2419
	Regulation	2419~~-25~~-20
	Intellectual Property	2620-21

	Available Information	2621
	Executive Officers of the Registrant	2721~~-28~~-22
Item 1A.	RISK FACTORS	2923~~-39~~-32
Item 1B.	UNRESOLVED STAFF COMMENTS	4032
Item 2.	PROPERTIES	4032
Item 3.	LEGAL PROCEEDINGS	4032
Item 4.	MINE SAFETY DISCLOSURES	4032
PART II.
Item 5.	MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	4132
	Moody’s Purchases of Equity Securities	4132
	Common Stock Information	4133
	Equity Compensation Plan Information	4133
	Performance Graph	4234

Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	4335
	The Company	4335
	Current Matters Impacting Moody's Business	35
	Critical Accounting Estimates	4435~~-49~~-39
	Reportable Segments	4939
	Results of Operations	5040~~-63~~-53
	Market Risk	6353~~-64~~-54
	Liquidity and Capital Resources	6555~~-70~~-61
	Recently Issued Accounting Pronouncements	7161
	Contingencies	7161
	Forward-Looking Statements	7161-62
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	7263
Item 8.	FINANCIAL STATEMENTS	7363~~-130~~
~~Item 9.~~	~~CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE~~	~~131~~
~~Item 9A.~~	~~CONTROLS AND PROCEDURES~~	~~131~~-120


		Page(s)
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	121
Item 9A.	CONTROLS AND PROCEDURES	121
Item 9B.	OTHER INFORMATION	~~131~~121
Item 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	121
PART III.
Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND ~~CORPORATION~~CORPORATE GOVERNANCE	~~132~~121
Item 11.	EXECUTIVE COMPENSATION	~~132~~121
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	~~132~~121
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	~~132~~121
Item 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	~~132~~122
PART IV.
Item 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	~~133~~122

INDEX TO EXHIBITS		~~133~~122~~-137~~-125
Item 16.	FORM 10-K SUMMARY	~~137~~125
SIGNATURES		~~138~~126


TERM						DEFINITION

~~ABS Suite~~						~~Business acquired by the Company in October 2019 which includes a software platform used by issuers and trustees for administration of asset-backed and mortgage-backed securities programs~~

Acquire Media (AM)						An aggregator and distributor of curated real-time news, multimedia, data, and alerts; acquired by the Company onin October ~~21,~~ 2020

Acquisition-Related Intangible Amortization Expense						Amortization ofexpense relating to definite-lived intangible assets acquired by the Company from all business combination transactions

~~Acquisition-Related Expenses~~						~~Consists of expenses incurred over a multi-year period to complete and integrate the acquisition of Bureau van Dijk~~

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 the impact of certain items as detailed in the section entitled "Non-GAAP Financial Measures"

Adjusted Operating Margin						Adjusted Operating Income divided by revenue

Americas						Represents countries within North and South America, excluding the U.S.

AML						Anti-money laundering

~~AOCI~~AOCI(L)						Accumulated other comprehensive income (loss); a separate component of shareholders’ equity ~~(deficit)~~

~~API~~Annualized Recurring Revenue (ARR)						~~Application Programming Interface~~A supplemental performance metric to provide additional insight on the estimated value of MA's recurring revenue contracts at a given point in time, excluding the impact of FX and contracts related to acquisitions

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, Republic of South Korea, Malaysia, Singapore, Sri Lanka and Thailand

ASR						Accelerated Share Repurchase

ASU						The FASB Accounting Standards Update to the ASC. ~~It also provides~~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

~~B&H~~BitSight						~~Barrie & Hibbert Limited, an acquisition completed~~A provider that helps global market participants understand cyber risk through ratings, analytics, and performance management tools; the Company acquired a minority investment in ~~December 2011; part of the MA segment, a leading provider of risk management modeling tools for insurance companies worldwide~~BitSight in 2021

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 (BvD)						Bureau van Dijk Electronic Publishing, B.V.; a global provider of business intelligence and company information; acquired by the Company onin August ~~10,~~ 2017 via the acquisition of Yellow Maple I B.V., an indirect parent of Bureau van ~~Dijk; part of the RD&A LOB and a reporting unit within the MA reportable segment~~Dijk.

Catylist						A provider of commercial real estate (CRE) solutions for brokers; acquired by the Company onin December ~~30,~~ 2020

CCXI						China Cheng Xin International Credit Rating Co. Ltd.; China’s first and largest domestic credit rating agency approved by the People’s Bank of China; the Company acquired a 49% interest in 2006; currently Moody’s owns 30% of ~~CCXI.~~CCXI


~~TERM~~CDP						~~DEFINITION~~An international nonprofit organization that helps companies, cities, states and regions to manage their environmental impact through a global disclosure system

CFG						Corporate finance group; an LOB of MIS

CLO						Collateralized loan obligation


TERM						DEFINITION

CMBS						Commercial mortgage-backed securities; an asset class within SFG

COLI						Corporate-Owned Life Insurance

Commission						European Commission

Common Stock						The Company’s common stock

Company						Moody’s Corporation and its subsidiaries; MCO; Moody’s

~~Content~~Cortera						A ~~reporting unit within the MA segment that offers subscription based research,~~provider of North American credit data and ~~analytical products, including credit ratings produced~~workflow solutions; acquired by ~~MIS, credit research, quantitative credit scores and other analytical tools, economic research and forecasts~~the Company in March 2021

COVID-19						An outbreak of a novel strain of coronavirus resulting in an international public health crisis and a global pandemic

CP						Commercial Paper

CP Notes						Unsecured commercial paper issued under the CP Program

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.~~2021 Facility

CRAs						Credit rating agencies

CRE						Commercial Real Estate

Data and Information (D&I)						LOB within MA which provides vast data sets on companies and securities via data feeds and data applications products

DBPPs						Defined benefit pension plans

Decision Solutions (DS)						LOB within MA that provides software and workflow tools for specific use cases (banking, insurance, KYC/KYS, CRE and structured finance solutions). This LOB utilizes components from the Data & Information and Research & Insights LOBs to provide integrated risk solutions

DE&I						Diversity, Equity & Inclusion

Dodd-Frank Act						Dodd-Frank Wall Street Reform and Consumer Protection Act

EBITDA						Earnings before interest, taxes, depreciation and amortization




EMEA						Represents countries within Europe, the Middle East and Africa

EPS						Earnings per share

ERS						Enterprise Risk Solutions; anformer LOB within MA, which ~~offers~~offered risk management software solutions as well as related risk management advisory engagements ~~services~~

~~ESA~~						~~Economics~~services. As of January 1, 2022, the MA LOBs have been realigned from RD&A and ~~Structured Analytics; part of the RD&A line of business within MA~~ERS to Decision Solutions, Research and Insights, and Data and Information

ESG						Environmental, Social and Governance

ESMA						European Securities and Markets Authority

ESTR						Euro Short-Term Rate

ESPP						Employee stock purchase plan

ETR						Effective tax rate

EU						European Union

EUR						Euros

EURIBOR						The Euro Interbank Offered Rate

Eurozone						Monetary union of the EU member states which have adopted the euro as their common currency

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


TERM						DEFINITION

Exchange Act						The Securities Exchange Act of 1934, as amended

External Revenue						Revenue excluding any intersegment amounts

FASB						Financial Accounting Standards Board

~~Fermat~~						~~Fermat International; an acquisition completed in October 2008; part of the MA segment; a provider of risk and performance management software to the global banking industry~~


~~TERM~~						~~DEFINITION~~

FIG						Financial institutions group; an LOB of MIS



~~Four Twenty Seven~~						~~A provider of data, intelligence, and analysis related to physical climate risks; acquired by the Company in July 2019~~

Free Cash Flow						Net cash provided by operating activities less cash paid for capital additions

FTSE						Financial Times Stock Exchange

FX						Foreign exchange

GAAP						U.S. Generally Accepted Accounting Principles

GBP						British pounds

GDP						Gross domestic product

GRI						Global Reporting Initiative, an international independent standards organization that helps organizations understand and disclose their impact on climate change, human rights and corruption

GDPR						European Union’s General Data Protection Regulation

HM Treasury						His Majesty's Treasury; the department of the Government of the United Kingdom responsible for developing and executing the government's public finance policy and economic policy

ICRA						ICRA Limited; a provider of credit ratings and research in India.

IASB

						International Accounting Standards Board

~~INR~~IFRS						~~Indian Rupee~~International Financial Reporting Standards

IRS						Internal Revenue Service

ITkompany						~~Information technology~~

~~KIS~~						~~Korea Investors Service, Inc.~~360kompany AG (kompany); a ~~Korean rating agency~~Vienna, Austria-based platform for business verification and ~~consolidated subsidiary of~~Know Your Customer (KYC) technology solutions; acquired by the Company

~~KIS Pricing~~						~~Korea Investors Service Pricing, Inc.; a 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~~ in February 2022

KYC						Know-your-customer



LIBOR						London Interbank Offered Rate

LOB						Line of business

MA						Moody’s ~~Analytics—~~Analytics - a reportable segment of MCO; ~~a global provider of data and analytic solutions which help companies make better and faster decisions;~~ consists of ~~two LOBs—RD&A~~three LOBs - Decision Solutions; Research and ~~ERS~~Insights; and Data and Information

Make Whole ~~Amount~~						The prepayment penalty amount relating to certain Senior Notes, which is a premium based on the excess, if any, of the discounted value of the remaining scheduled payments over the prepaid principal

MAKS						Moody’s Analytics Knowledge Services; formerly known as Copal Amba; ~~provides~~provided offshore research and analytic services to the global financial and corporate sectors; ~~formerly part of the PS LOB within the MA reportable segment; this~~ business was divested in ~~November~~the fourth quarter of 2019

~~MALS~~						~~Moody’s Analytics Learning Solutions;~~ and a reporting unit within the MA ~~segment that includes on-line and classroom-based training services as well as credentialing and certification services~~reportable segment.

MCO						~~Moody’s;~~ Moody’s Corporation and its subsidiaries; the ~~Company~~Company; Moody’s

MD&A						Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~MESG~~						~~Moody's ESG Solutions Group~~

MIS						Moody’s Investors ~~Service—~~Service - a reportable segment of MCO; consists of five ~~LOBs—SFG, CFG, FIG, PPIF~~LOBs - SFG; CFG; FIG; PPIF; and MIS Other

MIS Other						Consists of financial instruments pricing services in the Asia-Pacific region, ICRA non-ratings revenue ~~from ICRA, KIS Pricing~~ and ~~KIS Research revenue as well as~~ revenue from providing ESG research, data and assessments. These businesses are components of MIS; MIS Other is an LOB of MIS

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


~~TERM~~Moody's Local						~~DEFINITION~~A ratings platform focused on providing credit rating services in Latin American capital markets

MSS						Moody's Shared Services; primarily consists of information technology and support staff such as finance, human resources and legal that support both MIS and MA.


TERM						DEFINITION

NAV						Net asset value

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

~~New~~ Credit Losses Accounting Standard						Updates to the ASC pursuant to ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This ~~new~~ accounting guidance requires the use of an “expected credit loss” impairment model for most financial assets reported at amortized cost, which ~~will require~~requires entities to estimate expected credit losses over the lifetime of the instrument.

~~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

~~N/A~~						~~Not applicable~~

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, certain gains and losses relating to pension and other retirement benefit obligations and foreign currency translation adjustments

~~Omega Performance~~						~~A 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

PassFort						A U.K. SaaS-based workflow platform for identity verification, customer onboarding, and risk analysis; acquired by the Company in November 2021

PCS						Post-Contract Customer Support

POC						People of color; includes those who identify as Asian, Hispanic, Black, American Indian/Alaskan Native, Hawaiian/Other Pacific Island or two or more races

PPIF						Public, project and infrastructure finance; an LOB of MIS

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

PS						Professional Services, a former LOB within MA which consisted of MAKS and MALS that provided offshore analytical and research services as well as learning solutions and certification programs. Subsequent to the divestiture of MAKS in 2019, revenue from the MALS reporting unit, which previous to 2020 was reported in the PS LOB, is now reported as part of the RD&A LOB. Prior periods have not been reclassified as the amounts were not material.

RD&A						Research, Data and Analytics; anformer LOB within MA that ~~offers: subscription based~~offered subscription-based research, data and analytical products, ~~including~~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; commercial real estate data and analytical tools; and ~~on-line~~learning solutions. As of January 1, 2022, the MA LOBs have been realigned from RD&A and ~~classroom-based training services as well as credentialing~~ERS to Decision Solutions, Research and ~~certification services~~Insights, and Data and Information

~~Redeemable Non-controlling Interest~~RealXData						~~Represents minority shareholders' interest~~A provider of CRE lease-level portfolio management with benchmarking and rent forecasting capabilities; acquired by the Company in ~~entities which are controlled but not wholly-owned by Moody's and for which Moody's obligation to redeem the minority shareholders' interest is represented by a put/call relationship~~


~~TERM~~						~~DEFINITION~~September 2021

~~Reform Act~~						~~Credit Rating Agency Reform Act of 2006~~

~~Regulatory Data Corporation (RDC)~~						~~A provider of anti-money laundering (AML) and know-your-customer (KYC) data and due diligence services; the Company acquired RDC in February 2020~~

~~REIT~~						~~Real Estate Investment Trust~~

~~Reis, Inc. (Reis)~~						~~A provider of U.S. commercial real estate (CRE) data; acquired by the Company in October 2018; part of the RD&A LOB and a reporting unit within the MA reportable segment.~~

~~Relationship~~Recurring 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

Reform Act						Credit Rating Agency Reform Act of 2006

Regulatory Data Corporation (RDC)						A provider of anti-money laundering (AML) and know-your-customer (KYC) data and due diligence services; acquired by the Company in February 2020

Reis, Inc. (Reis)						A provider of U.S. commercial real estate (CRE) data; acquired by the Company in October 2018


TERM						DEFINITION

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

Research and Insights (R&I)						LOB within MA thatprovides models, scores, expert insights and commentary. This LOB includes credit research; credit models and analytics; and economics data and models

Retirement Plans						Moody’s funded and unfunded pension plans, the healthcare plans and life insurance plans

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~~changed 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

~~RiskFirst~~						~~A company providing risk analytic solutions for the asset management and pension fund communities; acquired by the Company in July 2019~~

RMBS						Residential mortgage-backed securities; an asset class within SFG

RMS						A global provider of climate and natural disaster risk modeling and analytics; acquired by the Company in September 2021

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

SASB						Sustainability Accounting Standards Board

SBTi						Science Based Targets initiative; a partnership between CDP, the United Nations Global Compact, World Resources Institute and the World Wide Fund for Nature created to encourage the private sector to take the lead on urgent climate action

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

SOFR						Secured Overnight Financing Rate

SSP						Standalone selling price

T&M						Time-and-Material

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.

TCFD						Task Force on Climate-Related Financial Disclosures

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, and training and certification services ~~and research and analytical engagements~~

U.K.						United Kingdom

U.S.						United States

USD						U.S. dollar

UTPs						Uncertain tax positions

~~Vigeo Eiris (VE)~~WEF						World Economic Forum

YTD						Year-to-date

VisibleRisk						A ~~provider of Environmental, Social~~cyber risk ratings joint venture created by Moody’s and ~~Governance (ESG) research, data and assessments; acquired by the Company in April 2019~~Team8, a global venture group

WACC						Weighted Average Cost of Capital


~~TERM~~						~~DEFINITION~~

ZM Financial Systems (ZMFS)						A provider of risk and financial management software for the U.S. banking sector; acquired by the Company in December 2020


TERM						DEFINITION

2018 Restructuring Program						Restructuring program approved by the chief executive officer of Moody’s on October 26, 2018. This program included relocation of certain functions from high-cost to lower-cost jurisdictions, a reduction of staff, including from 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.

2020 MA Strategic Reorganization Restructuring Program						Restructuring program approved by the chief executive officer of Moody’s on December 22, 2020, relating to a strategic reorganization in the MA reportable ~~segment.~~segment

2020 Real Estate Rationalization Restructuring Program						Restructuring program approved by the chief executive officer of Moody’s on July 29, 2020, primarily in response to the COVID-19 pandemic which revolves around the rationalization and exit of certain real estate leases.

~~2012 Senior Notes~~2022 - 2023 Geolocation Restructuring Program						~~Principal amount~~Restructuring program approved by the chief executive officer of ~~$500 million, 4.50% senior unsecured notes due~~Moody’s on June 30, 2022 and expanded on October 24, 2022, relating to the Company's post-COVID-19 geolocation strategy and includes the rationalization and exit of certain real estate leases and a reduction in ~~September 2022~~staff, including the relocation of certain job functions from their current locations

2013 Senior Notes Due 2024						Principal amount of $500 million, 4.875% senior unsecured notes due in February 2024

2014 Senior Notes Due 2044						Principal amount of $600 million, 5.25% senior unsecured notes due in July 2044

2015 Senior Notes Due 2027						Principal amount of €500 million, 1.75% senior unsecured notes due in March 2027

2017 Senior Notes Due 2023						Principal amount of $500 million, 2.625% senior unsecured notes due January 15, 2023, but early repaid by the Company in 2022

2017 Senior Notes Due 2028						Principal amount of $500 million, 3.25% senior unsecured notes due January 15, 2028

~~2017 Senior Notes Due 2021~~						~~Principal amount of $500 million, 2.75% senior unsecured notes originally due in December 2021, but early repaid by the Company in 2020.~~

~~2018 Facility~~						~~Five-year unsecured revolving credit facility, with capacity to borrow up to $1 billion; backstops CP issued under the CP Program~~

~~2018 Senior Notes~~						~~Principal amount of $300 million, 3.25% senior unsecured notes originally due in June 2021, but early repaid by the Company in 2020.~~

2018 Senior Notes Due 2029						Principal amount of $400 million, 4.25% senior unsecured notes due February 1, 2029

2018 Senior Notes Due 2048						Principal amount of $400 million, 4.875% senior unsecured notes due December 17, 2048

2019 Senior Notes Due 2030						Principal amount of €750 million, 0.950% senior unsecured notes due in February 25, 2030

2020 Senior Notes Due 2025						Principal amount of $700 million, 3.75% senior unsecured notes due March 24, 2025

2020 Senior Notes Due 2050						Principal amount of $300 million, 3.25% senior unsecured notes due May 20, 2050

2020 Senior Notes Due 2060						Principal amount of $500 million, 2.55% senior unsecured notes due August 18, ~~2060~~2060; the Company early redeemed $200 million of these notes in the fourth quarter of 2022

~~7WTC~~2021 Facility						~~The Company’s corporate headquarters located at 7 World Trade Center in New York, NY~~Five-year unsecured revolving credit facility, with capacity to borrow up to $1.25 billion; backstops CP issued under the CP Program

2021 Senior Notes Due 2031						Principal amount of $600 million, 2.00% senior unsecured notes due August 19, 2031

2021 Senior Notes Due 2041						Principal amount of $600 million, 2.75% senior unsecured notes due August 19, 2041

2021 Senior Notes Due 2061						Principal amount of $500 million, 3.10% senior unsecured notes due November 15, 2061

2022 Senior Notes Due 2052						Principal amount of $500 million, 3.75% senior unsecured notes due February 25, 2052

2022 Senior Notes Due 2032						Principal amount of $500 million, 4.25% senior unsecured notes due January 15, 2032


		December 31,		Change
		2022	2021	%
MIS	U.S.	1,538	1,459	5	%
	Non-U.S.	3,981	3,836	4	%
	Total	5,519	5,295	4	%
MA	U.S.	2,789	2,647	5	%
	Non-U.S.	4,333	3,882	12	%
	Total	7,122	6,529	9	%
MSS	U.S.	741	728	2	%
	Non-U.S.	1,044	908	15	%
	Total	1,785	1,636	9	%
Total MCO	U.S.	5,068	4,834	5	%
	Non-U.S.	9,358	8,626	8	%
	Total	14,426	13,460	7	%


Global Headcount
		December 31,		Change
		2020	2019	%

MIS
	U.S.	1,512	1,453	4	%
	Non-U.S.	3,564	3,358	6	%
	Total	5,076	4,811	6	%

MA
	U.S.	2,004	1,810	11	%
	Non-U.S.	2,963	3,023	(2)	%
	Total	4,967	4,833	3	%

MSS
	U.S.	709	645	10	%
	Non-U.S.	738	792	(7)	%
	Total	1,447	1,437	1	%

Total MCO
	U.S.	4,225	3,908	8	%
	Non-U.S.	7,265	7,173	1	%
	Total	11,490	11,081	4	%


	Year Ended December 31,
	2015		2016		2017		2018		2019		2020
Moody’s Corporation	$	100.00	$	95.41	$	151.24	$	145.03	$	248.37	$	306.18
S&P 500 Composite Index	$	100.00	$	111.96	$	136.40	$	130.42	$	171.49	$	203.04
Russell 3000—Financial Services Index	$	100.00	$	117.96	$	141.49	$	129.67	$	172.37	$	183.75


			Sensitivity Analysis
			Deficit Caused by a Hypothetical Reduction to Fair Value
	Goodwill		10		%	20		%	30		%	40		%
MIS	$	99	$	—		$	—		$	—		$	—
Content	381		—			—			—			—
ERS	800		—			—			—			—
MALS	127		—			—			(12)			(37)
ICRA	212		—			(2)			(44)			(85)
Bureau van Dijk	2,746		—			—			—			(266)
Reis	191		—			(22)			(48)			(74)
Totals	$	4,556	$	—		$	(24)		$	(104)		$	(462)


(dollars in millions)	Assumptions Used for 2021		Estimated Impact on 2021 Income before Provision for Income Taxes (Decrease)/Increase
Weighted Average Discount Rates (1)	2.24%/2.30%		$	(11)
Weighted Average Assumed Compensation Growth Rate	3.62	%	$	2
Assumed Long-Term Rate of Return on Pension Assets	5.45	%	$	(5)


Diluted EPS in 2020 of $9.39 increased $1.97 compared to 2019, with both periods including the aforementioned restructuring charges. The growth in EPS is mainly due to the aforementioned growth in operating income.						Adjusted Diluted EPS of $10.15 in 2020 increased $1.86 compared to 2019 (refer to the section entitled “Non-GAAP Financial Measures” of this MD&A for items excluded in the derivation of Adjusted Diluted EPS). The growth in Adjusted Diluted EPS is primarily due to the aforementioned growth in Adjusted Operating Income.⇓ $3.72


MIS: Global revenue ⇑ ~~$417~~⇓ $1,113 million			U.S. Revenue ⇑ ~~$347~~⇓ $710 million			Non-U.S. Revenue ⇑ ~~$70~~⇓ $403 million


CFG: Global revenue ⇑ ~~$360~~⇓ $818 million			U.S. Revenue ⇑ ~~$323~~⇓ $552 million			Non-U.S. Revenue ⇑ ~~$37~~⇓ $266 million


SFG: Global revenue ⇓ ~~$65~~$98 million			U.S. Revenue ⇓ ~~$56~~$56 million			Non-U.S. Revenue ⇓ $9$42 million


FIG: Global revenue ⇑ ~~$54~~⇓ $111 million			U.S. Revenue ⇑ ~~$50~~⇓ $66 million			Non-U.S. Revenue ⇑ $4⇓ $45 million


PPIF: Global revenue ⇑ ~~$50~~⇓ $90 million			U.S. Revenue ⇑ ~~$29~~⇓ $38 million			Non-U.S. Revenue ⇑ ~~$21~~⇓ $52 million


						MIS: Operating and SG&A Expense ⇑ ~~$115~~⇓ $119 million


Compensation costs		Non-compensation costs
The ~~increase~~decrease is primarily due to:		The increase is primarily due to:
— ~~annual salary increases and hiring;~~		~~— approximately $27 million in higher costs to support the~~ ~~Company’s initiative to enhance technology infrastructure to enable automation, innovation and efficiency as well as to support business growth;~~
	~~— higher~~lower incentive compensation ~~aligned~~accruals and performance-based equity compensation of approximately $165 million, which aligns with actual/projected financial and operating ~~performance;~~
~~— inorganic expense growth from the aforementioned~~ ~~acquisitions;~~ ~~partially offset by~~ performance.		— higher ~~estimates for~~ bad debt reserves of ~~$11~~approximately $20 million ~~primarily~~ resulting from the ~~anticipated~~ impact of the ~~COVID-19 crisis on the Company's customers;~~ Russia/Ukraine conflict; and~~partially~~ ~~offset by:~~
	— ~~benefits from~~higher travel costs of approximately $10 million compared to minimal travel in the ~~2018 Restructuring Program~~prior year in light of COVID-19.


MA: Global revenue ⇑ ~~$125~~$363 million			U.S. Revenue ⇑ ~~$64~~$200 million			Non-U.S. Revenue ⇑ ~~$61~~$163 million


~~RD&A:~~DS: Global revenue ⇑ ~~$241~~$313 million			U.S. Revenue ⇑ ~~$110~~$148 million			Non-U.S. Revenue ⇑ ~~$131~~$165 million


~~ERS: Global revenue~~ ⇑ ~~$43 million~~			~~U.S. Revenue~~ ⇑ ~~$18 million~~			~~Non-U.S. Revenue~~ ⇑ ~~$25 million~~


R&I: Global revenue ⇑ $36 million			U.S. Revenue ⇑ $28 million			Non-U.S. Revenue ⇑ $8 million


D&I: Global revenue ⇑ $14 million			U.S. Revenue ⇑ $24 million			Non-U.S. Revenue ⇓ $10 million


	Year Ended December 31,				$ Change Favorable (unfavorable)
	2020		2019
Net cash provided by operating activities	$	2,146	$	1,675	$	471
Net cash (used in) provided by investing activities	$	(1,077)	$	36	$	(1,113)
Net cash used in financing activities	$	(351)	$	(1,563)	$	1,212
Free Cash Flow (1)	$	2,043	$	1,606	$	437


	Year Ended December 31,				$ Change Favorable/ (unfavorable)
	2022		2021
Net cash provided by operating activities	$	1,474	$	2,005	$	(531)
Net cash used in investing activities	$	(262)	$	(2,619)	$	2,357
Net cash used in financing activities	$	(1,208)	$	(122)	$	(1,086)
Free Cash Flow (1)	$	1,191	$	1,866	$	(675)


			Payments Due by Period
(in millions)	Total		Less Than 1 Year		1-3 Years		3-5 Years		Over 5 Years
Indebtedness (1)	$	9,167	$	192	$	1,373	$	1,492	$	6,110
Operating lease obligations	579		110		192		160		117
Purchase obligations	224		108		107		9		—
Pension obligations (2)	149		46		22		21		60
Total (3)	$	10,119	$	456	$	1,694	$	1,682	$	6,287


	Year ended December 31,
Amounts in millions	2020				2019
Net income attributable to Moody’s common shareholders			$	1,778			$	1,422




Pre-Tax Acquisition-Related Expenses	$	—			$	3
Tax on Acquisition-Related Expenses	—				—
Net Acquisition-Related Expenses			—				3
Pre-Tax Acquisition-Related Intangible Amortization Expenses	$	124			$	103
Tax on Acquisition-Related Intangible Amortization Expenses	(28)				(24)
Net Acquisition-Related Intangible Amortization Expenses			96				79
Pre-Tax Restructuring	$	50			$	60
Tax on Restructuring	(12)				(15)
Net Restructuring			38				45
Pre-tax captive insurance company settlement	$	—			$	16
Tax on captive insurance company settlement	—				(4)
Net captive insurance company settlement			—				12
Tax charge pursuant to the divestiture of MAKS			—				13
Loss pursuant to the divestiture of MAKS			9				14



Adjusted Net Income			$	1,921			$	1,588