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SEGMENT INFORMATION
 9 Months Ended
Sep. 30, 2015
SEGMENT INFORMATION

NOTE 15. SEGMENT INFORMATION

The Company is organized into three operating segments: (i) MIS, (ii) MA and (iii) Copal Amba. The Copal Amba operating segment has been aggregated with the MA operating segment based on the fact that it has similar economic characteristics to MA. Accordingly, the Company reports in two reportable segments: MIS and MA.

In January 2014, the Company revised its operating segments to create the new Copal Amba operating segment.  The new operating segment consists of all operations from Copal and the operations of Amba, which was acquired in December 2013.  The Copal Amba operating segment provides offshore research and analytic services to the global financial and corporate sectors.  The Company has determined that the Copal Amba and MA operating segments have similar economic characteristics as set forth in ASC 280. As such, Copal Amba has been combined with MA to form the MA reportable segment and Copal Amba’s revenue is reported in the PS LOB.

In the fourth quarter of 2014, pursuant to the acquisition of ICRA, Moody’s realigned certain components of its reportable segments to better align with the current management structure of the Company. The effect of this realignment was to combine non-ratings ICRA operations with certain immaterial research and fixed income pricing operations in the Asia-Pacific region that were previously reported in the RD&A LOB of MA. All of these operations are managed by MIS and their revenue is now reported in the new MIS Other LOB. All operating expenses from these operations are reported in the MIS reportable segment. The impact of this realignment did not have a significant impact on previously reported results for the reportable segments and all prior year comparative periods have been restated to reflect this realignment.

The MIS segment now consists of five LOBs. The corporate finance, structured finance, financial institutions and public, project and infrastructure finance LOBs generate revenue principally from fees for the assignment and ongoing monitoring of credit ratings on debt obligations and the entities that issue such obligations in markets worldwide. The MIS Other LOB primarily consists of the distribution of research and fixed income pricing services in the Asia-Pacific region as well as ICRA non-ratings revenue.

The MA segment develops a wide range of products and services that support the risk management activities of institutional participants in global financial markets. The MA segment consists of three LOBs – RD&A, ERS and PS.

In July 2014, a subsidiary of the Company acquired WebEquity, a leading provider of cloud-based loan origination solutions for financial institutions. WebEquity is part of the MA reportable segment and its revenue is included in the ERS LOB. In October 2014, the Company acquired Lewtan, a leading provider of analytical tools and data for the global structured finance market. Lewtan is part of the MA reportable segment and its revenue is included in the RD&A LOB.

Revenue for MIS and expenses for MA include an intersegment royalty charged to MA for the rights to use and distribute content, data and products developed by MIS. The royalty rate charged by MIS approximates the fair value of the aforementioned content, data and products and is generally based on comparable market transactions. Also, revenue for MA and expenses for MIS include an intersegment fee charged to MIS from MA for certain MA products and services utilized in MIS’s ratings process. These fees charged by MA are generally equal to the costs incurred by MA to produce these products and services. Additionally, overhead costs and corporate expenses of the Company that exclusively benefit only one segment are fully charged to that segment. Overhead costs and corporate expenses of the Company that benefit both segments are allocated to each segment based on a revenue-split methodology. Overhead expenses include costs such as rent and occupancy, information technology and support staff such as finance, human resources and information technology. “Eliminations” in the table below represent intersegment revenue/expense. Moody’s does not report the Company’s assets by reportable segment, as this metric is not used by the chief operating decision maker to allocate resources to the segments. Consequently, it is not practical to show assets by reportable segment.

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 September 30,
20152014
MISMAEliminationsConsolidatedMISMAEliminationsConsolidated
Revenue$571.6$290.1$(26.8)$834.9$568.8$273.0$(25.7)$816.1
Operating, SG&A268.1215.6(26.8)456.9263.4205.5(25.7)443.2
Adjusted Operating Income303.574.5-378.0305.467.5-372.9
Less:
Depreciation and amortization16.911.4-28.311.611.6-23.2
Operating income$286.6$63.1$-$349.7$293.8$55.9$-$349.7
Nine Months Ended September 30,
20152014
MISMAEliminationsConsolidatedMISMAEliminationsConsolidated
Revenue$1,859.1$838.7$(79.2)$2,618.6$1,766.3$766.2$(75.7)$2,456.8
Operating, SG&A836.4636.3(79.2)1,393.5783.7585.8(75.7)1,293.8
Adjusted Operating Income1,022.7202.4-1,225.1982.6180.4-1,163.0
Less:
Depreciation and amortization48.736.1-84.834.434.2-68.6
Operating income$974.0$166.3$-$1,140.3$948.2$146.2$-$1,094.4

MIS and MA Revenue by Line of Business

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

Three Months Ended September 30,Nine Months Ended September 30,
2015201420152014
MIS:
Corporate finance (CFG)$248.3$260.7$866.6$846.0
Structured finance (SFG)112.5102.1335.0308.0
Financial institutions (FIG)89.591.8273.7269.4
Public, project and infrastructure finance (PPIF)90.688.5291.2267.2
Total ratings revenue540.9543.11,766.51,690.6
MIS Other7.23.523.110.1
Total external revenue548.1546.61,789.61,700.7
Intersegment royalty23.522.269.565.6
Total571.6568.81,859.11,766.3
MA:
Research, data and analytics (RD&A)157.9143.3465.0422.3
Enterprise risk solutions (ERS)92.281.1252.5208.1
Professional services (PS)36.745.1111.5125.7
Total external revenue286.8269.5829.0756.1
Intersegment revenue3.33.59.710.1
Total290.1273.0838.7766.2
Eliminations(26.8)(25.7)(79.2)(75.7)
Total MCO$834.9$816.1$2,618.6$2,456.8

Consolidated Revenue Information by Geographic Area:
Three Months Ended September 30,Nine Months Ended September 30,
2015201420152014
United States$482.1$449.1$1,527.8$1,335.8
International:
EMEA215.4231.4660.4715.3
Asia-Pacific85.579.3270.8237.8
Americas51.956.3159.6167.9
Total International352.8367.01,090.81,121.0
Total$834.9$816.1$2,618.6$2,456.8