Moody's Corporation Reports Results for Fourth Quarter and Full-Year 2012

  Moody's Corporation Reports Results for Fourth Quarter and Full-Year 2012

  *4Q12 revenue of $754.2 million up 33% from 4Q11
  *4Q12 reported EPS of $0.70 up 63% from 4Q11
  *FY 2012 revenue of $2,730.3 million up 20% from FY 2011
  *FY 2012 reported EPS of $3.05 and FY 2012 pro-forma EPS of $2.99, both up
    22% from FY 2011
  *Projected FY 2013 EPS between $3.45 and $3.55

Business Wire

NEW YORK -- February 8, 2013

Moody’s Corporation (NYSE: MCO) today announced results for the fourth quarter
and full-year 2012.

SUMMARY OF RESULTS FOR FOURTH QUARTER AND FULL-YEAR 2012

Moody’s reported revenue of $754.2 million for the three months ended December
31, 2012, up 33% from $567.1 million for the fourth quarter of 2011. Operating
expenses for the fourth quarter of 2012 totaled $494.0 million, 25% higher
than in the prior-year period, and included a non-tax deductible goodwill
impairment charge of $12.2 million. Operating income for the quarter was
$260.2 million, a 51% increase from $172.1 million for the same period last
year. Adjusted operating income for the quarter was $296.2 million, a 54%
increase from $192.7 million last year. Diluted earnings per share of $0.70
for the fourth quarter of 2012 increased 63% from $0.43 in the fourth quarter
of 2011.

"Moody's delivered strong financial performance throughout 2012, with
double-digit revenue growth in most lines of business," said Raymond McDaniel,
President and Chief Executive Officer of Moody’s. "Despite ongoing economic
uncertainty, we anticipate generally favorable market conditions to remain in
place in 2013. As a result, Moody’s expects revenue growth across all areas of
the business, as well as earnings per share in the range of $3.45 to $3.55."

Moody’s Corporation revenue for full-year 2012 totaled $2,730.3 million, an
increase of 20% from $2,280.7 million for 2011. Operating expenses for
full-year 2012 totaled $1,652.9 million, 19% higher than a year ago. Operating
income of $1,077.4 million increased 21% from $888.4 million in 2011. Adjusted
operating income was $1,183.1 million for the year, 22% higher than 2011. The
operating margin was 39.5% for full-year 2012, up 50 basis points from
full-year 2011’s margin of 39.0 percent. Diluted earnings per share of $3.05
for full-year 2012 grew 22% from $2.49 in 2011 and included a legacy tax
benefit of $0.06 in the third quarter of 2012. Excluding legacy tax benefits
in both periods, diluted earnings per share of $2.99 for the full-year 2012
grew 22% from $2.46 in 2011.

FOURTH QUARTER AND FULL-YEAR 2012 REVENUE

For Moody’s Corporation overall, global revenue of $754.2 million for the
fourth quarter of 2012 was up 33% from the fourth quarter of 2011. U.S.
revenue of $400.9 million for the fourth quarter of 2012 increased 40% from
the fourth quarter of 2011, while revenue generated outside the U.S. of $353.3
million increased 26% from the prior-year period. Revenue generated outside
the U.S. represented 47% of Moody’s total revenue for the quarter, down
slightly from 50% in the year-ago period.

Global revenue for Moody’s Investors Service (“MIS”) for the fourth quarter of
2012 was $519.4 million, up 42% from the prior-year period. U.S. revenue of
$306.6 million for the fourth quarter of 2012 increased 49% from the fourth
quarter of 2011. Outside the U.S., revenue of $212.8 million increased 32%
from the year-ago period. Foreign currency translation unfavorably impacted
MIS revenue by 1 percent.

Within MIS, global corporate finance revenue of $244.9 million in the fourth
quarter of 2012 increased 73% from the prior-year period, reflecting strong
issuance in both investment-grade and speculative-grade markets. Corporate
finance revenue increased 72% in the U.S. and 76% outside the U.S.

Global structured finance revenue totaled $102.9 million for the fourth
quarter of 2012, an increase of 18% from a year earlier. U.S. structured
finance revenue grew 50% from the year-ago period, primarily due to strength
in ratings of commercial mortgage-backed securities and collateralized loan
obligations, while non-U.S. structured finance revenue declined 9% compared to
the prior-year period.

Global financial institutions revenue of $86.2 million in the fourth quarter
of 2012 increased 29% compared to the prior-year period, primarily reflecting
increased banking issuance. U.S. financial institutions revenue was up 39%,
while non-U.S. revenue grew 23 percent.

Global public, project and infrastructure finance revenue was $85.4 million
for the fourth quarter of 2012, an increase of 19% from the fourth quarter of
2011. U.S. revenue was up 9% from the prior-year period, primarily due to
gains in project finance, while non-U.S. revenue increased 36%, reflecting
growth in infrastructure finance in Europe.

Global revenue for Moody’s Analytics (“MA”) for the fourth quarter of 2012 was
$234.8 million, up 17% from the fourth quarter of 2011. Excluding the impact
of foreign currency translation, revenue growth was 18 percent. Approximately
two-thirds of MA’s growth in the fourth quarter was organic. Revenue from
research, data and analytics of $126.3 million increased by 9% from the
prior-year period, reflecting solid growth from MA’s CreditView offering and
strong customer retention. Enterprise risk solutions revenue of $79.0 million
was up 31% over the prior-year period, driven by both strong growth in
products and services that support bank regulatory and compliance activities
and the acquisition of Barrie & Hibbert in December 2011. Revenue from
professional services of $29.5 million was up 21% from the prior-year period,
reflecting the acquisition of a majority stake in Copal Partners in November
2011.

In the U.S., MA revenue of $94.3 million for the fourth quarter of 2012
increased 16% from the prior-year period. Outside the U.S., revenue of $140.5
million grew 18% as compared with the same quarter of 2011.

For Moody’s Corporation overall, full-year 2012 global revenue of $2,730.3
million was up 20% from 2011. Excluding the impact of foreign currency
translation, revenue growth was 22 percent. U.S. revenue of $1,464.1 million
grew 24%, while non-U.S. revenue of $1,266.2 million rose 15% from the
prior-year period.

Revenue at MIS totaled $1,886.8 million for full-year 2012, an increase of 20%
from the prior-year period. U.S. revenue of $1,112.9 million grew 27%.
Non-U.S. revenue of $773.9 million was up 12% from the prior year and
represented 41% of MIS revenue, down from 44% in 2011.

MA revenue rose to $843.5 million for full-year 2012, up 19% from full-year
2011. Approximately half of MA’s 2012 revenue growth was organic. U.S. revenue
of $351.2 million increased 18 percent. Non-U.S. revenue of $492.3 million
increased 19% and represented 58% of MA revenue, essentially flat to 2011.

FOURTH QUARTER AND FULL-YEAR 2012 OPERATING EXPENSES, OPERATING INCOME, AND
EFFECTIVE TAX RATE

Fourth quarter 2012 operating expenses for Moody’s Corporation were $494.0
million, 25% higher than in the prior-year period, primarily due to higher
accruals for incentive compensation and Moody’s profit sharing plan,
reflecting the stronger full-year results, as well as incremental legal
defense costs. Operating expenses for the fourth quarter also included a
non-tax deductible goodwill impairment charge of $12.2 million. The impact of
foreign currency translation on operating expenses for the quarter was
negligible. Operating income of $260.2 million for the quarter increased 51%
from $172.1 million for the same period last year. Excluding the impact of
foreign currency translation, operating income grew 55 percent. Moody’s
reported operating margin for the fourth quarter of 2012 was 34.5%, up from
30.3% in the fourth quarter of 2011. Adjusted operating margin was 39.3% for
the fourth quarter of 2012, up from 34.0% for the same period last year.

Full-year 2012 operating expenses for Moody’s Corporation of $1,652.9 million
were 19% higher than the prior-year period. Excluding the impact of foreign
currency translation, operating expenses grew 20 percent. Operating income of
$1,077.4 million increased 21% from $888.4 million in 2011. Excluding the
impact of foreign currency translation, operating income grew 25 percent.
Moody’s reported operating margin for full-year 2012 was 39.5%, up from 39.0%
in 2011. Adjusted operating margin was 43.3% for full-year 2012, up from 42.4%
for the same period last year.

Moody’s effective tax rate was 31.5% for the fourth quarter of 2012, compared
with 37.0% for the prior-year period. The decrease in the effective tax rate
for the fourth quarter was primarily due to the favorable impact of tax
planning initiatives related to foreign income in 2012. The annual effective
tax rate for 2012 was 31.7% compared with 31.2% for 2011.

CAPITAL ALLOCATION AND LIQUIDITY

On December 11, 2012, Moody’s increased its quarterly dividend by 25% from
$0.16 to $0.20 per share of Moody’s common stock. During the fourth quarter of
2012, Moody’s repurchased 1.5 million shares at a total cost of $71.4 million
and issued 1.9 million shares under employee stock-based compensation plans.
For full-year 2012, Moody’s repurchased 4.8 million shares at a total cost of
$196.5 million, or $40.58 per share, and issued 6.0 million shares under
employee stock-based compensation plans. Outstanding shares as of December 31,
2012 totaled 223.3 million, essentially flat to the prior-year period. As of
December 31, 2012, Moody’s had $0.7 billion of share repurchase authority
remaining under its current program. At year-end, Moody’s had $1.7 billion of
outstanding debt and $1.0 billion of additional debt capacity available under
its revolving credit facility. Total cash and cash equivalents at year-end
were $1.8 billion, an increase of $995.4 million from a year earlier, due in
part to Moody’s August 2012 bond offering of $500 million of unsecured notes.
Full-year 2012 free cash flow was $778.1 million, an increase of $42.5 million
from a year ago.

ASSUMPTIONS AND OUTLOOK FOR FULL-YEAR 2013

Moody’s outlook for 2013 is based on assumptions about many macroeconomic and
capital market factors, including interest rates, corporate profitability and
business investment spending, merger and acquisition activity, consumer
borrowing and securitization, and the amount of debt issued. There is an
important degree of uncertainty surrounding these assumptions and, if actual
conditions differ, Moody’s results for the year may differ materially from the
current outlook. Our guidance assumes foreign currency translation at
end-of-quarter exchange rates.

For Moody’s overall, the Company expects full-year 2013 revenue to grow in the
high-single-digit percent range. Full-year 2013 operating expenses are
projected to increase in the low-single-digit percent range. Full-year 2013
operating margin is projected to be between 42 and 43 percent and adjusted
operating margin for the year is expected to be between 46 and 47 percent. The
effective tax rate is expected to be approximately 32 percent. The Company
expects diluted earnings per share for full-year 2013 in the range of $3.45 to
$3.55. Full-year 2013 share repurchases are expected to be approximately $500
million, subject to available cash, market conditions and other ongoing
capital allocation decisions. These repurchases are meant to substantially
offset the impact of employee stock-based compensation plans. Capital
expenditures are projected to be approximately $50 million. The Company
expects approximately $100 million in depreciation and amortization expense.

For the global MIS business, revenue for full-year 2013 is expected to
increase in the high-single-digit percent range. Within the U.S., MIS revenue
is expected to increase in the high-single-digit percent range, while non-U.S.
revenue is expected to increase in the mid-single-digit percent range.
Corporate finance revenue is projected to grow in the high-single-digit
percent range. Revenue from structured finance is expected to grow in the
mid-single-digit percent range, while revenue from financial institutions is
expected to grow in the low-single-digit range. Public, project and
infrastructure finance revenue is expected to increase in the low-double-digit
percent range.

For MA, full-year 2013 revenue is expected to increase in the
high-single-digit percent range. Within the U.S., MA revenue is expected to
increase in the high-single-digit percent range. Non-U.S. revenue is expected
to increase in the low-double-digit percent range. Revenue from research, data
and analytics is projected to grow in the high-single-digit percent range,
while revenue for enterprise risk solutions and professional services revenue
are each expected to grow in the low-double-digit percent range.

CONFERENCE CALL

A conference call to discuss fourth quarter and full-year 2012 results will be
held this morning, February 8, 2013, at 11:30 a.m. Eastern Time. Individuals
within the U.S. and Canada can access the call by dialing 1-877-400-0505.
Other callers should dial +1-719-234-7477. Please dial into the call by 11:20
a.m. Eastern Time. The passcode for the call is “Moody’s Corporation.”

The teleconference will be webcast with a slide presentation and can be
accessed on Moody's Investor Relations website, http://ir.moodys.com, until
11:59 p.m. Eastern Time, March 9, 2013.

A replay of the teleconference will be available from 3:30 p.m. Eastern Time,
February 8, 2013 until 11:59 p.m. Eastern Time, March 9, 2013. The replay can
be accessed from within the U.S. and Canada by dialing 1-888-203-1112. Other
callers can access the replay at +1-719-457-0820. The replay confirmation code
is 5043660.

                                    *****

ABOUT MOODY'S CORPORATION

Moody's is an essential component of the global capital markets, providing
credit ratings, research, tools and analysis that contribute to transparent
and integrated financial markets. Moody’s Corporation (NYSE: MCO) is the
parent company of Moody's Investors Service, which provides credit ratings and
research covering debt instruments and securities, and Moody's Analytics,
which offers leading-edge software, advisory services and research for credit
and economic analysis and financial risk management. The Corporation, which
reported revenue of $2.7 billion in 2012, employs approximately 6,800 people
worldwide and maintains a presence in 28 countries. Further information is
available at www.moodys.com.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of
1995

Certain statements contained in this release are forward-looking statements
and are based on future expectations, plans and prospects for Moody’s business
and operations that involve a number of risks and uncertainties. Moody’s
outlook for 2013 and other forward-looking statements in this release are made
as of February 8, 2013, and the Company disclaims any duty to supplement,
update or revise such statements on a going-forward basis, whether as a result
of subsequent developments, changed expectations or otherwise. In connection
with the “safe harbor” provisions of the Private Securities Litigation Reform
Act of 1995, the Company is identifying certain factors that could cause
actual results to differ, perhaps materially, from those indicated by these
forward-looking statements. Those factors, risks and uncertainties include,
but are not limited to, the current world-wide credit market disruptions and
economic slowdown, which is affecting and could continue to affect the volume
of debt and other securities issued in domestic and/or global capital markets;
other matters that could affect the volume of debt and other securities issued
in domestic and/or global capital markets, including credit quality concerns,
changes in interest rates and other volatility in the financial markets; the
uncertain effectiveness and possible collateral consequences of U.S. and
foreign government initiatives to respond to the economic slowdown; concerns
in the marketplace affecting our credibility or otherwise affecting market
perceptions of the integrity or utility of independent agency ratings; the
introduction of competing products or technologies by other companies; pricing
pressure from competitors and/or customers; the impact of regulation as an
NRSRO, the potential for new U.S., state and local legislation and
regulations, including provisions in the Dodd-Frank Wall Street Reform and
Consumer Protection Act and anticipated regulations resulting from that law;
the potential for increased competition and regulation in the EU and other
foreign jurisdictions; new EU regulations adding a private right of action
against credit rating agencies for breaches of EU CRA regulations, requiring
rotation of rating agencies for re-securitizations rated within the EU and
imposing shareholder restrictions; exposure to litigation related to our
rating opinions, as well as any other litigation to which the Company may be
subject from time to time; the possible loss of key employees; failures or
malfunctions of our operations and infrastructure; any vulnerabilities to
cyber threats or other cybersecurity concerns; the outcome of any review by
controlling tax authorities of the Company’s global tax planning initiatives;
the outcome of those legacy tax matters and legal contingencies that relate to
the Company, its predecessors and their affiliated companies for which Moody’s
has assumed portions of the financial responsibility; the ability of the
Company to successfully integrate acquired businesses; currency and foreign
exchange volatility; a decline in the demand for credit risk management tools
by financial institutions; and other risk factors as discussed in the
Company’s annual report on Form 10-K for the year ended December 31, 2011 and
in other filings made by the Company from time to time with the Securities and
Exchange Commission.

                                                                             
Moody's Corporation
Consolidated Statements of Operations (Unaudited)                            
                                                           
                                                                             
                                                                             
                             Three Months Ended      Year Ended
                             December 31,            December 31,
                                                                             
                             2012        2011        2012          2011
Amounts in millions,
except per                                            
share amounts
                                                                             
Revenue                    $ 754.2   $ 567.1   $ 2,730.3   $ 2,280.7
                                                                             
Expenses:
   Operating                   221.6       181.2       795.0         683.5
   Selling, general and        236.4       193.2       752.2         629.6
   administrative
   Restructuring               -           (0.1  )     -             -
   Goodwill impairment         12.2        -           12.2          -
   charge
   Depreciation and           23.8       20.7        93.5        79.2
   amortization
      Total expenses           494.0       395.0       1,652.9       1,392.3
                                                   
Operating income            260.2    172.1    1,077.4    888.4
Non-operating (expense)
income, net
   Interest (expense)          (21.6 )     (16.9 )     (63.8   )     (62.1   )
   income, net
   Other non-operating
   (expense)
   income, net                (2.2  )    0.4         10.4          13.5
      Total
      non-operating
      (expense) income,       (23.8 )    (16.5 )     (53.4   )     (48.6   )
      net
Income before provision
for                            236.4       155.6       1,024.0       839.8
income taxes
   Provision for income       74.4       57.5        324.3         261.8
   taxes
Net income                     162.0       98.1        699.7         578.0
   Less: net income
   attributable to
  noncontrolling           1.9      1.9      9.7        6.6
   interests
Net income attributable
to                           $ 160.1   $ 96.2      $ 690.0     $ 571.4
Moody's Corporation
                                                   
                                                                             
                                                                             
                                                   
Earnings per share attributable to Moody's
common
shareholders
   Basic                     $ 0.72      $ 0.43      $ 3.09        $ 2.52
  Diluted                 $ 0.70    $ 0.43    $ 3.05      $ 2.49
                                                                             
Weighted average number
of
shares outstanding
   Basic                       223.0       222.2       223.2         226.3
  Diluted                  227.3    225.7    226.6      229.4
                                                                             

                                                                             
Supplemental Revenue Information (Unaudited)
                                                            
                                                                             
                                                                             
                             Three Months Ended      Year Ended
                             December 31,            December 31,
                                                                             
Amounts in millions          2012        2011        2012          2011
                                                     
                                                                             
Moody's Investors
Service
  Corporate Finance          $ 244.9     $ 141.2     $ 857.6       $ 652.1
  Structured Finance           102.9       86.9        381.0         344.6
  Financial Institutions       86.2        66.8        325.5         294.9
  Public, Project and          85.4        72.0        322.7         277.3
  Infrastructure Finance
  Intersegment royalty        19.1       16.8       71.5         65.8
  Sub-total MIS                538.5       383.7       1,958.3       1,634.7
  Eliminations                (19.1 )    (16.8 )    (71.5   )    (65.8   )
  Total MIS revenue           519.4      366.9      1,886.8      1,568.9
                                                                             
Moody's Analytics
  Research, Data and           126.3       115.4       491.0         451.3
  Analytics
  Enterprise Risk              79.0        60.4        242.6         196.1
  Solutions
  Professional Services        29.5        24.4        109.9         64.4
  Intersegment revenue        2.8        2.8        11.8         10.6
  Sub-total MA                 237.6       203.0       855.3         722.4
  Eliminations                (2.8  )    (2.8  )    (11.8   )    (10.6   )
  Total MA revenue            234.8      200.2      843.5        711.8
                                                                             
Total Moody's                $ 754.2     $ 567.1     $ 2,730.3     $ 2,280.7
Corporation revenue
                                                                             
                                                      
                                                                             
Moody's Corporation revenue by geographic area
                                                                             
  United States              $ 400.9     $ 286.3     $ 1,464.1     $ 1,177.0
  International               353.3      280.8      1,266.2      1,103.7
                                                                             
                             $ 754.2     $ 567.1     $ 2,730.3     $ 2,280.7
                                                       

                                                                             
Non-operating (expense) income, net
                                                             
                                                                             
                                                                             
                                                                             
                             Three Months Ended          Year Ended
                             December 31,                December 31,
                                                                             
                             2012           2011         2012        2011
Amounts in millions                                     
                                                                             
                                                                             
                                                                             
Interest (expense) /
income, net:
    Expense on               $  (21.7 )     $  (16.6 )   $ (73.8 )   $ (65.5 )
    borrowings
    Income                      1.5            1.4         5.2         5.3
    Legacy Tax, UTPs
    and other
    tax related                 (1.4  )        (2.6  )     4.8         (5.0  )
    liabilities ^(a)
    Capitalized                -             0.9        -          3.1
        Total interest
        (expense)            $  (21.6 )     $  (16.9 )   $ (63.8 )   $ (62.1 )
        income, net
Other non-operating
(expense) income, net:
    FX gain/(loss)           $  0.1         $  (0.7  )   $ (5.9  )   $ 2.6
    Legacy Tax ^ (b)            -              -           12.8        6.4
    Joint venture               (2.1  )        1.5         4.8         6.8
    income (loss)
    Other                      (0.2  )       (0.4  )    (1.3  )    (2.3  )
        Other
        non-operating          (2.2  )       0.4        10.4       13.5
        (expense)
        income, net
Total non-operating          $  (23.8 )     $  (16.5 )   $ (53.4 )   $ (48.6 )
(expense) income, net
                                                                             
                                                                             
(a) The years ended December 31, 2012 and December 31, 2011 both contain
approximately $4 million in benefits from                                    
Legacy Tax Matters. Additionally, the amount for the year ended December 31,
2012 contains a benefit of approximately                                     
$7 million related to the settlement of state and local income tax audits
                                                                             
(b) The amounts represent favorable resolutions of Legacy Tax Matters
                                                                             

                                                                             
Selected Consolidated Balance Sheet Data (Unaudited)
                                                         
                                                                             
                                                                             
                                         December 31,          December 31,
                                         2012                  2011
Amounts in millions
                                                                             
Cash and cash equivalents                $      1,755.4        $   760.0
Short-term investments                          17.9               14.8
Total current assets                            2,525.7            1,424.4
Non-current assets                              1,435.2            1,451.7
Total assets                                    3,960.9            2,876.1
Total current liabilities                       1,164.9            1,134.0
Total debt ^(1)                                 1,671.2            1,243.8
Other long-term liabilities                     719.7              667.5
Total shareholders'                             400.0              (158.4    )
equity(deficit)
Redeemable noncontrolling                       68.9               60.5
interest*
Total liabilities, redeemable noncontrolling
interest and shareholders'                      3,960.9            2,876.1
equity(deficit)
                                                                             
Actual number of shares                         223.3              222.4
outstanding
                                                                             
* Represents a noncontrolling interest related to the November 2011
acquisition of Copal Partners
                                                                             
                                         December 31,          December 31,
^(1) Total debt consists of              2012                  2011
the following:
Series 2005-1 Notes due 2015             $      313.8          $   311.5
^ (a)
Series 2007-1 Notes due 2017                    300.0              300.0
2008 Term Loan due 2013 ^                       63.8               135.0
(b)
2010 Senior Notes due 2020 ^                    497.4              497.3
(c)
2012 Senior Notes due 2022                     496.2             -
^(d)
Total debt ^(e)                          $      1,671.2        $   1,243.8
                                                                             
^(a)Includes a $13.8 million and $11.5 million fair value adjustment on an
interest rate hedge at December 31,
2012 and December 31, 2011, respectively
                                                                             
^(b) Various payments through 2013
                                                                             
^(c) Represents $500 million of 5.5% publicly traded Senior Notes which
mature on September 1, 2020; the                                             
notes were offered to the public at 99.374% of the face amount
                                                                             
^(d) Represents $500 million of 4.5% publicly traded Senior Notes which
mature on September 1, 2022; the notes
were offered to the public at 99.218% of the face amount
                                                                             
^(e) Of the total debt shown in the table above, $63.8 million and $71.3
million are classified within total
current liabilities at December 31, 2012 and 2011, respectively, and consist
of the current portion of borrowings under                                   
the 2008 Term Loan
                                                                             

                      Financial Information by Segment:

The table below presents revenue, adjusted operating income and operating
income by reportable segment. The Company defines adjusted operating income as
operating income excluding depreciation and amortization, a goodwill
impairment charge and restructuring-related items.

                
                    Three Months Ended December 31,
                    2012                                                      2011
                    MIS         MA        Eliminations    Consolidated     MIS          MA        Eliminations    Consolidated
Revenue             $ 538.5       $ 237.6     $    (21.9   )   $   754.2        $ 383.7       $ 203.0     $    (19.6   )   $   567.1
Operating,
selling,
general and          283.1        196.8         (21.9   )      458.0         227.5        166.5         (19.6   )      374.4
administrative
expense
Adjusted
operating            255.4        40.8          -              296.2         156.2        36.5          -              192.7
income
                                                                                                                                        
    Depreciation
    and               11.4          12.4           -               23.8           10.3          10.4           -               20.7
    amortization
    Restructuring     -             -              -               -              (0.1    )     -              -               (0.1     )
    Goodwill
    impairment       -            12.2          -              12.2          -            -             -              -
    charge
Operating income    $ 244.0       $ 16.2      $    -           $   260.2        $ 146.0       $ 26.1      $    -           $   172.1
Adjusted
operating             47.4%         17.2%                          39.3%          40.7%         18.0%                          34.0%
margin
Operating margin      45.3%         6.8%                           34.5%          38.1%         12.9%                          30.3%
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                    Year Ended December 31,
                    2012                                                        2011
                    MIS           MA          Eliminations     Consolidated     MIS           MA          Eliminations     Consolidated
Revenue             $ 1,958.3     $ 855.3     $    (83.3   )   $   2,730.3      $ 1,634.7     $ 722.4     $    (76.4   )   $   2,280.7
Operating,
selling,
general and          967.1        663.4         (83.3   )      1,547.2       833.6        555.9         (76.4   )      1,313.1
administrative
expense
Adjusted
operating            991.2        191.9         -              1,183.1       801.1        166.5         -              967.6
income
                                                                                                                                        
    Depreciation
    and               44.3          49.2           -               93.5           41.3          37.9           -               79.2
    amortization
    Goodwill
    impairment       -            12.2          -              12.2          -                         -              -
    charge
Operating income    $ 946.9       $ 130.5     $    -           $   1,077.4      $ 759.8       $ 128.6     $    -           $   888.4
Adjusted
operating             50.6%         22.4%                          43.3%          49.0%         23.0%                          42.4%
margin
Operating margin      48.4%         15.3%                          39.5%          46.5%         17.8%                          39.0%
                                                                                                                                        

                    Transaction and Relationship Revenue:

The tables below summarize the split between transaction and relationship
revenue. In the MIS segment, transaction revenue represents the initial rating
of a new debt issuance as well as other one-time fees while relationship
revenue represents the recurring monitoring of a rated debt obligation and/or
entities that issue such obligations, as well as revenue from programs such as
commercial paper, medium-term notes and shelf registrations. In the MA
segment, relationship revenue represents subscription-based revenues and
software maintenance revenue. Transaction revenue in MA represents software
license fees and revenue from risk management advisory projects, training and
certification services, and knowledge outsourcing engagements.

               
                  Transaction and Relationship Revenue
                                                                                
                                                                                                 
                  Three Months Ended December 31,
                  2012                                        2011
                  Transaction     Relationship     Total      Transaction     Relationship     Total
Corporate              76%              24%          100%          65%              35%          100%
Finance
Structured             62%              38%          100%          54%              46%          100%
Finance
Financial              40%              60%          100%          23%              77%          100%
Institutions
Public,
Project and            62%              38%          100%          60%              40%          100%
Infrastructure
Finance
Total MIS              65%              35%          100%          54%              46%          100%
                                                                                                 
Moody's                28%              72%          100%          25%              75%          100%
Analytics
                                                                                                 
Total Moody's          54%              46%          100%          44%              56%          100%
Corporation
                                                                                                 
                                                                                                 
                  Year Ended December 31,
                  2012                                        2011
                  Transaction     Relationship     Total      Transaction     Relationship     Total
Corporate              74%              26%          100%          71%              29%          100%
Finance
Structured             58%              42%          100%          52%              48%          100%
Finance
Financial              37%              63%          100%          34%              66%          100%
Institutions
Public,
Project and            61%              39%          100%          58%              42%          100%
Infrastructure
Finance
Total MIS              62%              38%          100%          58%              42%          100%
                                                                                                 
Moody's                23%              77%          100%          20%              80%          100%
Analytics
                                                                                                 
Total Moody's          50%              50%          100%          46%              54%          100%
Corporation
                                                                                                 

Non-GAAP Financial Measures:

The tables below reflect certain adjusted results that the SEC defines as
“non-GAAP financial measures” as well as a reconciliation of each non-GAAP
measure to its most directly comparable GAAP measure. Management believes that
such non-GAAP financial measures, when read in conjunction with the Company’s
reported results, can provide useful supplemental information for investors
analyzing period-to-period comparisons of the Company’s performance,
facilitate comparisons to competitors’ operating results and to provide
greater transparency to investors of supplemental information used by
management in its financial and operational decision-making. These non-GAAP
measures, as defined by the Company, are not necessarily comparable to
similarly defined measures of other companies. Furthermore, these non-GAAP
measures should not be viewed in isolation or used as a substitute for other
GAAP measures in assessing the operating performance or cash flows of the
Company.

Pro forma diluted earnings per share attributable to Moody's common
shareholders:
The Company presents this non-GAAP measure to exclude the impacts of Legacy
Tax to allow for a more meaningful comparison of Moody’s Net Income and
diluted earnings per share from period to period. Below is a reconciliation of
this measure to its most directly comparable U.S. GAAP amount.

                                                   
                                         Year Ended December 31,
                                           2012        2011
Diluted earnings per share
attributable to Moody's common           $  3.05         $ 2.49
shareholders
Legacy Tax                               $  (0.06  )     $ (0.03 )
Pro forma diluted earnings per share
attributable to Moody's common           $  2.99         $ 2.46
shareholders
                                                                 

Adjusted Operating Income and Adjusted Operating Margin:
The table below reflects a reconciliation of the Company’s operating income
and operating margin to adjusted operating income and adjusted operating
margin. The Company defines adjusted operating income as operating income
excluding depreciation and amortization, goodwill impairment charges and
restructuring-related items. The Company presents adjusted operating income
because management deems this metric to be a useful measure of assessing the
operating performance of Moody’s, measuring the Company's ability to service
debt, fund capital expenditures, and expand its business. Adjusted operating
income excludes depreciation and amortization as well as goodwill impairment
charges because companies utilize productive assets of different ages and use
different methods of acquiring productive assets including goodwill. Companies
also have different methods of depreciating and amortizing productive assets
as well as different methods of valuing goodwill. Management believes that the
exclusion of certain items, detailed in the reconciliation below, allows for a
more meaningful comparison of the Company’s results from period to period and
across companies. The Company defines adjusted operating margin as adjusted
operating income divided by revenue.


                                 Three Months Ended        Year Ended
                                                    
                                 December 31,              December 31,
                                  2012      2011        2012        2011
Operating income                 $ 260.2     $ 172.1     $ 1,077.4     $ 888.4
  Depreciation &                   23.8        20.7        93.5          79.2
  amortization
  Restructuring                    -           (0.1  )     -             -
  Goodwill impairment charge      12.2     -          12.2       -
Adjusted operating income        $ 296.2   $ 192.7     $ 1,183.1   $ 967.6
Operating margin                   34.5%       30.3%       39.5%         39.0%
Adjusted operating margin          39.3%       34.0%       43.3%         42.4%
                                                                         
                                                                         
                                   Full-Year Ended
                                   December 31,
                                   2013
Operating Margin Guidance          42 - 43%
Depreciation and                   4%
amortization
Adjusted Operating Margin          46 - 47%
Guidance
                                                                         

Free Cash Flow:
The table below reflects a reconciliation of the Company’s net cash flows from
operating activities to free cash flow. The Company defines free cash flow as
net cash provided by operating activities minus payments for capital
additions. Management believes that free cash flow is a useful metric in
assessing the Company’s cash flows to service debt, pay dividends and to fund
acquisitions and share repurchases. Management deems capital expenditures
essential to the Company’s product and service innovations and maintenance of
Moody’s operational capabilities. Accordingly, capital expenditures are deemed
to be a recurring use of Moody’s cash flow.


                                                      Year Ended
                                              
                                                      December 31,
                                                       2012        2011
Net cash flows from operating activities              $  823.1     $ 803.3
      Capital additions                                 (45.0 )    (67.7  )
Free cash flow                                        $  778.1     $ 735.6
Net cash used in investing activities                 $   (50.2 )   $ (267.6 )
Net cash provided by (used in) financing              $   202.6     $ (417.7 )
activities
                                                                             

Contact:

Michael Adler
Vice President
Corporate Communications
212.553.4667
michael.adler@moodys.com
or
Salli Schwartz
Global Head of Investor Relations
212.553.4862
sallilyn.schwartz@moodys.com