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SEGMENT INFORMATION
 6 Months Ended
Jun. 30, 2014
SEGMENT INFORMATION

NOTE 15. SEGMENT INFORMATION

Beginning in January 2014, pursuant to certain management realignment, the Company revised its operating segments. Accordingly, the Company is now organized into four operating segments: (i) MIS, (ii) MA, (iii) Copal Amba and (iv) an immaterial operating segment that provides fixed income pricing services and research in the Asia-Pacific region. The Copal Amba and the immaterial operating segment have been aggregated with the MA operating segment to form the MA reportable segment based on the determination that all of the operating segments demonstrate similar economic characteristics. Accordingly, the Company continues to be organized into two reportable segments: (i) MIS and (ii) MA. The MIS segment is comprised of all of the Company’s ratings activities. All of Moody’s other non-rating commercial activities are included in the MA reportable segment. Revenue from the Copal Amba operating segment continues to be reported within the PS LOB while revenue from the immaterial operating segment that provides fixed income pricing services and research in the Asia-Pacific region continues to be reported within RD&A.

The MIS segment consists of four lines of business—corporate finance, structured finance, financial institutions and public, project and infrastructure finance—that generate revenue principally from fees for the assignment and ongoing monitoring of credit ratings on debt obligations and the entities that issue such obligations in markets worldwide.

The MA segment, which includes all of the Company’s non-rating commercial activities, develops a wide range of products and services that support the risk management activities of institutional participants in global financial markets. The MA segment consists of three lines of business – RD&A, ERS and PS.

Revenue for MIS and expenses for MA include an intersegment royalty charged to MA for the rights to use and distribute content, data and products developed by MIS. The royalty rate charged by MIS approximates the fair value of the aforementioned content, data and products and is generally based on comparable market transactions. Also, revenue for MA and expenses for MIS include an intersegment fee charged to MIS from MA for certain MA products and services utilized in MIS’s ratings process. These fees charged by MA are generally equal to the costs incurred by MA to produce these products and services. Additionally, overhead costs and corporate expenses of the Company which exclusively benefit only one segment, are fully charged to that segment. Overhead costs and corporate expenses of the Company which benefit both segments are allocated to each segment based on a revenue-split methodology. Overhead expenses include costs such as rent and occupancy, information technology and support staff such as finance, human resources and information technology. “Eliminations” in the table below represent intersegment revenue/expense.

Financial Information by Segment

The table below shows revenue, Adjusted Operating Income and operating income by reportable segment. Adjusted Operating Income is a financial metric utilized by the Company’s chief operating decision maker to assess the profitability of each reportable segment.

Three Months Ended June 30,
20142013
MISMAEliminationsConsolidatedMISMAEliminationsConsolidated
Revenue$ 643.6$ 255.1$ (25.2)$ 873.5$ 556.3$ 221.4$ (21.7)$ 756.0
Operating, SG&A 268.9 195.8 (25.2) 439.5 236.2 167.6 (21.7) 382.1
Adjusted Operating Income 374.7 59.3 - 434.0 320.1 53.8 - 373.9
Less:
Depreciation and amortization 11.4 10.9 - 22.3 11.5 11.6 - 23.1
Operating income$ 363.3$ 48.4$ -$ 411.7$ 308.6$ 42.2$ -$ 350.8
Six Months Ended June 30,
20142013
MISMAEliminationsConsolidatedMISMAEliminationsConsolidated
Revenue$ 1,190.9$ 499.8$ (50.0)$ 1,640.7$ 1,096.4$ 434.8$ (43.4)$ 1,487.8
Operating, SG&A 514.6 386.0 (50.0) 850.6 520.5 332.8 (43.4) 809.9
Adjusted Operating Income 676.3 113.8 - 790.1 575.9 102.0 - 677.9
Less:
Depreciation and amortization 22.8 22.6 - 45.4 22.8 23.9 - 46.7
Operating income$ 653.5$ 91.2$ -$ 744.7$ 553.1$ 78.1$ -$ 631.2

MIS and MA Revenue by Line of Business

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

Three Months Ended June 30,Six Months Ended June 30,
2014201320142013
MIS:
Corporate finance (CFG)$ 320.9$ 262.9$ 585.3$ 521.2
Structured finance (SFG) 110.6 97.2 205.9 190.2
Financial institutions (FIG) 92.2 84.5 177.6 171.0
Public, project and infrastructure finance (PPIF) 98.0 92.7 178.7 176.1
Total external revenue 621.7 537.3 1,147.5 1,058.5
Intersegment royalty 21.9 19.0 43.4 37.9
Total 643.6 556.3 1,190.9 1,096.4
MA:
Research, data and analytics (RD&A) 144.7 130.3 285.6 259.9
Enterprise risk solutions (ERS) 67.2 60.2 127.0 113.2
Professional services (PS) 39.9 28.2 80.6 56.2
Total external revenue 251.8 218.7 493.2 429.3
Intersegment revenue 3.3 2.7 6.6 5.5
Total 255.1 221.4 499.8 434.8
Eliminations (25.2) (21.7) (50.0) (43.4)
Total MCO$ 873.5$ 756.0$ 1,640.7$ 1,487.8
Consolidated Revenue Information by Geographic Area:
Three Months Ended June 30,Six Months Ended June 30,
2014201320142013
United States$ 461.1$ 408.4$ 886.7$ 818.3
International:
EMEA 263.3 222.5 483.9 429.6
Asia-Pacific 88.6 75.5 158.5 143.7
Americas 60.5 49.6 111.6 96.2
Total International 412.4 347.6 754.0 669.5
Total$ 873.5$ 756.0$ 1,640.7$ 1,487.8