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Moodys Global

Special Comment

Corporate Finance
December 2009

Table of Contents:
Summary 1 I. Data and Methodology 3 II. Metrics by Rating Category Aggregated Across All Industries 3 III. Industry Study 4 EBITA / Average Assets 5 EBITA / Interest Expense 6 EBITA Margin 7 Operating Margin 7 (FFO + Interest Expense) / Interest Expense 8 FFO / Debt 9 Retained Cash Flow / Net Debt 9 Debt / EBITDA 10 Debt / Book Capitalization 11 CAPEX / Depreciation 12 Revenue Volatility 13 IV. Discussion 13 Appendix A: Detailed Distributions by Credit Metric 16 Appendix B: Definition of Credit Ratios 28 Appendix C: Definition of Industry Aggregates 29 Moodys Related Research 30

Moody's Financial Metrics Key Ratios by Rating and Industry for Global NonFinancial Corporations: December 2009
Summary
This paper outlines key financial ratios across industries for each broad rating category for global non-financial non-utility corporations. The global category includes EMEA, Asia and the Americas and the ratios are based on the most recent fiscal year-end data. In addition to presenting these ratios by each rating and industry combination, we also focus on the Baa-rated issuers to deepen our analysis. The underlying data are taken from Moodys Financial Metrics, a data and analytics platform that provides as-reported and adjusted financial data, ratios, models and interactive rating methodologies. The adjustments are described in detail in Moodys Approach to Global Standard Adjustments in the Analysis of Financial Statements for Non-Financial Corporations - Parts I, II and III. For more information, see Moodys Financial Metrics homepage, www.MoodysFM.com.

Analyst Contacts:
New York
Qidong (Tony) Zhang Associate Analyst Jennifer Tennant Assistant Vice President Analyst Albert Metz Senior Vice President

The metrics presented are: 1.212.553.1653


EBITA / Average Assets EBITA / Interest Expense EBITA Margin (FFO + Interest Expense) / Interest Expense FFO / Debt RCF / Net Debt Debt / EBITDA Debt / Book Capitalization Operating Margin CAPEX / Depreciation Expense Revenue Volatility

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
These eleven ratios provide a useful and foundational set of metrics for comparative analysis, with broad applications both across regions and, pertinent to this study, across industries. Combinations of these ratios, sometimes further modified by non-public data, are used in our rating methodologies in conjunction with industryspecific measures and subjective judgments. The definitions of the ratios are presented in Appendix B. A companion spreadsheet containing the data presented in this report is available on the Moodys Financial Metrics homepage, www.MoodysFM.com. (Click here to view file). We stress however that this report is not intended to describe Moodys rating process. Ratio analysis is but one part of Moodys analytical process. Qualitative and forward-looking considerations are also important. Interested readers are referred to Moodys rating methodologies for detailed discussions of our analytical approach and core ratios for each industry. When Moodys does analyze financial ratios, it uses a multivariate approach. As a result, a simple monotonic relationship between ratings and any single ratio should not generally be expected at the industry level. Section I of the report describes details of the data and methodology. Section II presents a brief review of the distribution of these metrics in the aggregate by rating category that is, without regard to industry classification. Results for all Baa rated issuers by industry are presented in Section III, with subsections devoted to each of the eleven metrics. Section IV contains some brief discussion and analysis. Each exhibit in Appendix A focuses on a single financial metric and shows how its median values vary across industries and across rating categories. Definitions of the ratios are provided in Appendix B, while descriptions of the industry aggregates are presented in Appendix C. Our analysis shows the following:

In the aggregate, there exists a strong monotonic relationship between these metrics and ratings. (FFO + Interest Expense) / Interest Expense monotonically increases with ratings, as expected. Debt / Book Capitalization monotonically decreases. The median FFO / Debt, EBITA / Average Assets, EBITA / Interest Expense, EBITA Margin, Operating Margin and RCF / Net Debt are somewhat lower for Aa than A issuers; this may again be an artifact of the small Aa sample.

Industries with consistently better-than-average metrics for Baa rated issuers include: Metals & Mining, Energy & Environment, and Healthcare

Industries with consistently weaker-than-average metrics for Baa issuers include: Transportation, Automotive, and Retail & Distribution

The evidence suggests that more intrinsically risky industries are required to achieve better credit ratios to obtain a given rating. Put simply, those industries with more volatile revenues tend to be the same as those with otherwise better credit metrics. This result is consistent with prior research.
1

Table A.12 in Appendix A shows changes between the 2008 medians and latest available medians for Baa-rated issuers by industry. We plan to publish a new Special Comment that studies the percentage change in credit metrics at the end of first quarter in 2010.

See, for example, The Distribution of Common Financial Ratios by Rating and Industry for North American Non-Financial Corporations, Moodys Special Comment, July 2006.
December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

I. Data and Methodology


Financial data for this study are taken from the most recently available fiscal year-end filings in Moodys Financial Metrics. The metrics that we study include measures of coverage, leverage, cash flow-to-debt, profitability and revenue stability. Please consult Appendix B and the references for a detailed discussion and definitions. All the issuers in the sample are rated by Moodys. The reported ratings refer specifically to the issuers senior unsecured rating or, in the absence of such a rating, its estimated senior unsecured rating as of reporting date.
2

Government-Related Issuers (GRIs) are excluded from the sample.

Moody's Financial Metrics has expanded greatly recently. Therefore, our comparison of medians in Table A.12 is compared with the 2008 numbers from the current FM, not simply a comparison with the formerly published numbers. This paper, and its companion pieces, describes the latest available numbers for FM Issuers as of December 2009. So, December 2008 might be the most recent fiscal year end for some issuers. 3 Please note that this is the change of median numbers of financial metrics for each industry. It is also desirable to see the changes for a matched sample of Baa issuers. For this purpose, we are planning a new study on the more extensive change in credit metrics for each industry, which is expected to be published at the end of first quarter in 2010. Industry classifications are based on proprietary Moodys sector assignments. For descriptions, please see Appendix C.

II. Metrics by Rating Category Aggregated Across All Industries


In this section we examine some of the properties of these metrics in the aggregate, that is, without regard to industrial classification. In all cases, the statistics we report are medians. We consider the distribution of these metrics by broad rating category. Exhibit 1 summarizes our findings. We make the following observations:

Two metrics are strictly monotonic with ratings: (FFO + Interest Expense) / Interest Expense monotonically increases with ratings, as expected. Debt / Book Capitalization monotonically decreases.

Most metrics are very nearly monotonic with ratings: Median FFO / Debt, EBITA / Interest Expense, and RCF / Debt are each less for Aa than A issuers, though this may be an artifact of the small Aa sample. EBITA / Average Assets, EBITA Margin and Operating Margin have Aa and Baa lower than Ba. Otherwise, these metrics behave as expected.

Only two metrics have weak relationships to ratings: Revenue Volatility is higher for Aaa issuers than Aa issuers, which of course is a small sample, and is not strictly increasing across speculative-grade ratings. CAPEX / DepExp is not strictly monotonic either.

2 3

Please see Moodys Senior Ratings Algorithm & Estimated Senior Ratings, Feb 2009 for a discussion of estimated senior unsecured ratings. Limiting the sample to 2009 numbers, rather than the latest available, would cut down the sample too much.
December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit 1

Aggregate Metrics by Rating Category


EBITA / Average Assets
Aaa Aa A Baa Ba B C 22.0% 7.4% 11.3% 9.5% 9.6% 6.9% 2.3%

Operating Margin
18.6% 9.7% 13.4% 11.0% 11.3% 7.8% 1.7%

EBITA Margin
21.9% 11.2% 14.0% 12.2% 12.9% 9.1% 2.5%

EBITA / Interest Expense


18.6 5.5 6.6 4.4 3.2 1.4 0.3

(FFO + IntExp) / IntExp


17.8 10.1 8.9 5.8 4.6 2.4 1.2

Debt / EBITDA
Aaa Aa A Baa Ba B C 0.9 2.1 2.0 2.8 3.2 5.3 7.7

Debt / Book Capitalization


30.2% 43.4% 44.7% 50.6% 54.3% 74.9% 103.9%

FFO / Debt
87.5% 35.5% 37.6% 25.4% 22.3% 10.9% 2.3%

Retained Cash Flow / Net Debt


164.0% 23.1% 26.7% 22.9% 21.1% 10.5% 2.3%

CAPEX / Depreciation
1.3 1.1 1.3 1.3 1.2 1.0 0.8

Revenue Volatility
13.0 11.5 15.0 16.0 22.0 17.0 15.0

Source: Moodys Financial Metrics

III. Industry Study


In this section, we study these financial metrics by industry. We compare ratios for Baa-rated issuers only. We do this not only to make the presentation tractable, but also because not all industries are represented in all rating categories. For instance, only five industries are represented in the Aaa category, and only nine in the Aa. The Baa category is the best represented investment-grade rating category. Exhibit 2 lists the industries covered in this report and the number of Baa rated issuers in each. For descriptions of these industry classifications, please see Appendix C.

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit 2

Industry Coverage
Industry
Aerospace & Defense Automotive Chemicals Consumer Products Energy & Environment Healthcare Manufacturing Media Metals & Mining Retail & Distribution Services Telecommunications Transportation
Source: Moodys Financial Metrics

Count of Baa issuers


10 15 32 68 76 11 60 25 23 34 7 58 23

EBITA / Average Assets


Exhibit 3 sorts the industries by their median Baa EBITA / Average Assets ratio. The complete distribution is presented in Appendix A. The median aggregate ratios at different rating categories are highlighted for comparison.

Exhibit 3
Median Baa EBITA / Average Assets
0% Aggregate Aaa Energy & Environment Metals & Mining Aggregate A Aerospace & Defense Services Telecommunications Consumer Products Healthcare Aggregate Ba Aggregate Baa Media Manufacturing Retail & Distribution Chemicals Aggregate Aa Aggregate B Transportation Automotive Aggregate Caa-C Source: Moodys Financial Metrics 5% 10% 15% 20% 25%

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
From Exhibit 3 we see that for Baa rated issuers, median EBITA / Average Assets is highest for the Energy & Environment and Metals & Mining industries, exceeding that of the aggregate A rated issuer set. At the other extreme, the median Baa ratio is lowest for the Automotive industry, ranking just above the aggregate Caa-C rated issuer set. While this ratio is nearly increasing across ratings in the aggregate up to A, this ratio is fully monotonic for only one industry.

EBITA / Interest Expense


Exhibit 4 presents median Baa EBITA / Interest Expense ratios by industry. Again, detailed distributions are reported in the Appendix. Aggregate ratios are monotonic except Aa, and that holds true for four industries.

Exhibit 4
Median Baa EBITA / Interest Expense
0 Aggregate Aaa Metals & Mining Healthcare Aggregate A Aggregate Aa Services Energy & Environment Manufacturing Aerospace & Defense Aggregate Baa Media Consumer Products Telecommunications Retail & Distribution Chemicals Aggregate Ba Transportation Automotive Aggregate B Aggregate Caa-C Source: Moodys Financial Metrics 2 4 6 8 10 12 14 16 18 20

Metals & Mining and Healthcare have the largest metrics, exceeding that of the aggregate Aa cohort. Automotive and Transportation have the lowest median EBITA / Interest Expense Ratio, falling slightly above the aggregate B issuer pool.

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009 EBITA Margin
Median Baa EBITA Margins are presented in Exhibit 5. This metric is strictly monotonic only in one industry. This metric is highest for the Energy & Environment, Media and Telecommunications industries and lowest for the Automotive and Retail & Distribution.

Exhibit 5
Median Baa EBITA Margin
0% Aggregate Aaa Energy & Environment Media Telecommunications Healthcare Aggregate A Metals & Mining Aggregate Ba Aggregate Baa Aerospace & Defense Consumer Products Aggregate Aa Manufacturing Aggregate B Chemicals Transportation Services Retail & Distribution Automotive Aggregate Caa-C Source: Moodys Financial Metrics 5% 10% 15% 20% 25%

Operating Margin
Median Baa Operating Margins are presented in Exhibit 6. This metric is strictly monotonic for only one industry. Just as was the case with median EBITA Margin, the Energy & Environment, Telecommunications and Media industries have the greatest median Baa Operating Margins. Automotive and Retail & Distribution are on the lower end.

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit 6
Median Baa Operating Margin
0% Aggregate Aaa Energy & Environment Telecommunications Media Aggregate A Metals & Mining Healthcare Consumer Products Aggregate Ba Aggregate Baa Aerospace & Defense Aggregate Aa Manufacturing Chemicals Services Aggregate B Transportation Retail & Distribution Automotive Aggregate Caa-C Source: Moodys Financial Metrics 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

(FFO + Interest Expense) / Interest Expense


Exhibit 7 presents the median Baa (FFO + Interest Expense) / Interest Expense ratios by industry. In the aggregate, this metric strictly increases monotonically. That holds true for six industries as well. The Healthcare industry has median ratios that exceed the Aa aggregate. On the other hand, the Aerospace & Defense industry has median metrics just above that of the aggregate Ba cohort.

Exhibit 7
Median Baa (FFO + Interest Expense) / Interest Expense
0 Aggregate Aaa Healthcare Aggregate Aa Aggregate A Metals & Mining Services Telecommunications Energy & Environment Aggregate Baa Media Retail & Distribution Chemicals Transportation Automotive Manufacturing Consumer Products Aerospace & Defense Aggregate Ba Aggregate B Aggregate Caa-C Source: Moodys Financial Metrics 2 4 6 8 10 12 14 16 18

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009 FFO / Debt
Median Baa FFO / Debt ratios are presented in Exhibit 8. In the aggregate, this metric increases monotonically with ratings except for Aa. That continues to hold true for five industries. The Metals & Mining industry has median ratios exceeding that of the aggregate Aa cohort. The Transportation sector has the lowest median FFO / Debt ratio, slightly above that of the aggregate B issuer pool.

Exhibit 8
Median Baa FFO / Debt
0% Aggregate Aaa Metals & Mining Aggregate A Aggregate Aa Healthcare Telecommunications Energy & Environment Services Aerospace & Defense Media Aggregate Baa Chemicals Retail & Distribution Aggregate Ba Manufacturing Consumer Products Automotive Transportation Aggregate B Aggregate Caa-C Source: Moodys Financial Metrics 10% 20% 30% 40% 50% 60% 70% 80% 90%

Retained Cash Flow / Net Debt


Median Baa RCF / Net Debt ratios are presented in Exhibit 9. This metric monotonically increase with ratings in the aggregate except for Aa and is monotonic in two industry sectors. Metals & Mining and Services have median ratios in excess of the aggregate Aa pool. The Consumer Products, Transportation, Manufacturing and Media industries have RCF / Net Debt ratios below the aggregate Ba set.

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit 9
Median Baa RCF / Net Debt
0% Aggregate Aaa Metals & Mining Services Healthcare Telecommunications Aggregate A Aerospace & Defense Aggregate Aa Aggregate Baa Retail & Distribution Chemicals Automotive Energy & Environment Aggregate Ba Media Manufacturing Transportation Consumer Products Aggregate B Aggregate Caa-C Source: Moodys Financial Metrics 20% 40% 60% 80% 100% 120% 140% 160% 180%

Debt / EBITDA
Median Baa Debt / EBITDA is presented in Exhibit 10. In the aggregate this metric is monotonically decreasing with ratings, except for Aa, and is monotonic in six industries. Note that Metals & Mining industry has the lowest median ratios, below the A and Aa aggregate. On the other hand, the Automotive, Transportation and Retail & Distribution sector has the greatest Debt / EBITDA ratio, exceeding the Ba aggregate.

10

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit 10
Median Baa Debt / EBITDA
0 Aggregate Aaa Metals & Mining Aggregate A Aggregate Aa Energy & Environment Healthcare Telecommunications Services Chemicals Aerospace & Defense Aggregate Baa Manufacturing Media Consumer Products Aggregate Ba Retail & Distribution Transportation Automotive Aggregate B Aggregate Caa-C Source: Moodys Financial Metrics 1 2 3 4 5 6 7 8

Debt / Book Capitalization


Median Baa Debt / Book Capitalization is presented in Exhibit 11. This decreases with ratings in the aggregate, and seven industry groups are completely monotonic. The ordering of industries resembles that given by Debt / EBITDA ratios. The sectors with the least Debt / Book Cap metrics are Healthcare and Metals & Mining. The Transportation, Media, Retail & Distribution and services industries have the greatest Debt / Book Cap ratio, exceeding the Ba aggregate.

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December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit 11
Median Baa Debt / Book Capitalization
0% Aggregate Aaa Healthcare Metals & Mining Aggregate Aa Energy & Environment Aggregate A Manufacturing Chemicals Aerospace & Defense Aggregate Baa Telecommunications Consumer Products Automotive Aggregate Ba Services Retail & Distribution Media Transportation Aggregate B Aggregate Caa-C Source: Moodys Financial Metrics 20% 40% 60% 80% 100% 120%

CAPEX / Depreciation
Exhibit 12 presents median CAPEX / Depreciation ratios for Baa rated issuers. This metric does not strictly increase across ratings in the aggregate, but does so for three industries. Energy & Environment and Metals & Mining are among the strongest industry sectors, while Services is the weakest.

Exhibit 12
Median Baa CAPEX / Depreciation
0.0 Energy & Environment Metals & Mining Retail & Distribution Healthcare Transportation Aerospace & Aggregate A Aggregate Aaa Aggregate Baa Manufacturing Consumer Products Automotive Chemicals Aggregate Ba Telecommunications Media Aggregate Aa Services Aggregate B Aggregate Caa-C Source: Moodys Financial Metrics 0.5 1.0 1.5 2.0 2.5

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December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009 Revenue Volatility
Exhibit 13 presents median revenue volatility metrics for Baa rated issuers by industry. As discussed, this metric does not correlate well with ratings in the aggregate. And no industry exhibits the expected monotonic relationship. The Automotive industry has the least volatile revenues among Baa rated issuers. Other leading sectors include Consumer Products, Retail & Distribution and Chemicals, all with revenues less volatile than the Aaarated aggregate. On the other hand, revenue volatility for two industries exceed that of the Ba-rated aggregate. These include Metals & Mining and Energy & Environment.

Exhibit 13
Median Baa Revenue Volatility
0 Automotive Aggregate Aa Consumer Products Retail & Distribution Chemicals Media Transportation Aggregate Aaa Services Telecommunications Aggregate A Aggregate Caa-C Healthcare Aggregate Baa Aggregate B Manufacturing Aerospace & Defense Aggregate Ba Metals & Mining Energy & Environment Source: Moodys Financial Metrics 5 10 15 20 25 30

IV. Discussion
Exhibit 14 summarizes the results presented above. For each metric, we report its standardized (mean 100, standard deviation 1) value and sort the industries by their average score. The Metals & Mining, Healthcare and Energy & Environment industries have the highest average score, while the Automotive, Transportation and Retail & Distribution sectors have the lowest. What are we to make of these results? Recall that these results are conditioned on ratings: Baa-rated issuers in the Metals & Mining industry generally have stronger (sometimes substantially stronger) metrics than do Baa rated issuers in the Retail & Distribution industry. One interpretation is that observing different values is evidence of different methods or standards in assigning ratings: we observe better metrics in Metals & Mining than Retail & Distribution because we hold the former to a higher standard than we do the latter, perhaps because one industry is intrinsically riskier than the other. Consistent with previous research, we find evidence to suggest that this is true. Using revenue volatility as a proxy for intrinsic risk, the hypothesis is that we should observe better credit ratios associated with greater volatility within a rating category. In other words, we should observe a negative correlation between the standardized credit ratios and standardized revenue volatility.
4

The average is taken with respect to all metrics except revenue volatility. Adjustments are made for those metrics (e.g. Debt / EBITDA) for which greater values are less desirable.
December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

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Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit 15 reports the correlation of the standardized values of each metric to revenue volatility. As expected, we obtain negative correlations for all metrics. The most significant correlations are with CAPEX / DepExp (0.88), EBITA / Average AT (-0.68) and Debt / EBITDA (-0.63). While purely suggestive, the results indicate that industries with more volatile revenues are required to achieve stronger credit metrics in order to obtain the Baa rating. Exhibit A-12 shows the percentage change in medians of Baa-rated issuers from 2008 to 2009. Many industries exhibit big decline in these key metrics, whereas last year there was only modest change, if any. For example, Automotive industry has significant decline in most of the metrics, underscoring its turmoil in the current environment. Aggregated Aaa issuers also show big metrics change.

Exhibit 14

Summary of Standardized Baa Metrics


Average EBITA / Average score Assets
Metals & Mining
Healthcare Energy & Environment Telecommunications Services Media Aerospace & Defense Chemicals Consumer Products Manufacturing Retail & Distribution Transportation Automotive

EBITA / IntExp
102.2
101.4 100.5 99.7 100.5 99.8 99.9 99.6 99.7 99.9 99.6 98.7 98.4

EBITA Margin
100.3
100.9 101.5 101.1 99.0 101.4 100.0 99.4 100.0 99.8 98.7 99.2 98.5

Operating (FFO + IntExp) Margin / IntExp


100.5
100.3 101.5 101.4 99.3 101.3 100.0 99.5 100.1 99.7 98.7 99.2 98.4

101.2
100.9 100.6 100.4 100.1 100.0 99.9 99.7 99.7 99.6 99.5 99.1 99.1

101.1
100.2 101.3 100.5 100.7 99.8 100.9 99.5 100.2 99.8 99.7 98.4 97.9

101.4
102.6 100.2 100.2 100.5 99.6 99.1 99.6 99.2 99.3 99.6 99.5 99.3

Average score
Metals & Mining Healthcare Energy & Environment Telecommunications Services Media Aerospace & Defense Chemicals Consumer Products Manufacturing Retail & Distribution Transportation Automotive 101.2 100.9 100.6 100.4 100.1 100.0 99.9 99.7 99.7 99.6 99.5 99.1 99.1

RCF / FFO / Debt NetDebt


102.5 100.9 100.4 100.8 100.4 99.8 99.8 99.7 99.2 99.3 99.3 98.7 99.2 102.0 101.0 99.5 100.8 101.4 99.2 100.1 99.7 98.8 99.1 99.7 99.0 99.7

Debt / EBITDA
101.6 100.9 101.0 100.8 100.5 99.8 100.1 100.2 99.6 99.8 99.4 98.3 98.1

Debt / BookCap
101.5 102.1 100.6 99.9 99.6 99.1 100.0 100.0 99.9 100.1 99.2 98.3 99.6

CAPEX / DepExp
101.7 100.0 102.6 99.3 99.1 99.2 99.8 99.5 99.6 99.6 100.1 100.0 99.6

Rev Vol
98.5 100.0 97.6 100.4 100.4 100.6 99.3 100.6 100.8 99.7 100.8 100.6 100.8

Source: Moodys Financial Metrics

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December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit 15

Correlation of Median Baa Metrics to Revenue Volatility


Metric
EBITA/Average AT EBITA/IntExp EBITA Margin Operating Margin (FFO + IntExp)/IntExp FFO/Debt RCF/NetDebt Debt/EBITDA Debt/BookCap CAPEX/DepExp
Source: Moodys Financial Metrics

Correlation
-0.68 -0.60 -0.50 -0.52 -0.29 -0.57 -0.28 -0.63 -0.55 -0.88

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December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Appendix A: Detailed Distributions by Credit Metric


Source: Moodys Financial Metrics

Exhibit A-1

Median EBITA / Average Assets


Aaa
Aggregate
n= Aerospace & Defense

Aa
0.0736 49

A
0.11325 222 0.1242 6

Baa
0.0946 442 0.11295 10 0.0502 15 0.08315 32 0.09865 68 0.1213 76 0.0986 11 0.08895 60 0.0897 25 0.1177 23 0.0882 34 0.1082 7 0.10365 58 0.0617 23

Ba
0.0959 546 0.1094 17 0.05595 12 0.1098 26 0.08225 98 0.10355 80 0.1013 33 0.089 63 0.09625 42 0.1271 22 0.0951 36 0.11875 28 0.09765 74 0.0974 15

B
0.0687 601 0.087 9 0.05235 30 0.06265 28 0.0627 137 0.0906 54 0.07405 32 0.0727 65 0.0748 44 0.0464 13 0.068 49 0.0804 34 0.0594 84 0.0458 22

C
0.0233 159 0.0541 1 0.009 9 -0.17445 2 0.03585 42 0.0148 13 0.0318 4 -0.0196 15 -0.002 16 0.00225 10 0.02555 10 0.042 4 0.0224 22 0.0133 11

0.2198 6

Automotive

-0.01385 2 0.13675 2 0.1309 9 0.2686 1 0.2218 1 0.1048 1 0.02795 14 0.1768 5 0.0345 5

0.0253 9 0.0924 21 0.146 27 0.1479 21 0.184 24 0.1021 41 0.1245 4 0.1804 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

0.0704 3

0.09385 16 0.0865 4

Services

Telecommunications

0.2437 2 0.119 1

0.1102 4 0.0674 5

0.1346 35 0.0637 9

Transportation

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December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-2

Median EBITA / Interest Expense


Aaa
Aggregate
n= Aerospace & Defense

Aa
5.52 49

A
6.64 221 6.875 6

Baa
4.37 442 4.375 10 2.28 15 4.035 32 4.18 68 5.28 76 6.64 11 4.425 60 4.36 25 7.76 23 4.07 34 5.34 7 4.14 58 2.72 23

Ba
3.215 546 4.4 17 1.785 12 4.06 26 2.34 98 3.515 80 3.67 33 3.12 63 2.21 42 5.465 22 3.035 36 3.815 28 3.595 74 2.68 15

B
1.37 599 1.98 9 1.295 30 1.21 27 1.16 137 2.475 54 1.71 32 1.35 64 1.31 44 1.37 13 1.54 49 1.485 34 1.2 84 0.935 22

C
0.31 159 0.79 1 0.14 9 -1.615 2 0.505 42 0.45 13 0.39 4 -0.56 15 0.11 16 0.16 10 0.53 10 0.505 4 0.325 22 0.19 11

18.59 6

Automotive

-3.29 2 50.555 2 13.74 9 26.54 1 21.15 1 6.22 1 2.21 14 24.34 5 10.28 5

2.95 8 5.76 21 5.81 27 6.4 21 16.505 24 7.29 41 8.1 4 21.05 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

3.93 3

4.65 16 5.135 4

Services

Telecommunications

74.015 2 3.49 1

18.43 4 2.68 5

6.64 35 6.01 9

Transportation

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December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-3

Median EBITA Margin


Aaa
Aggregate
n= Aerospace & Defense

Aa
0.1124 49

A
0.14025 222 0.12285 6

Baa
0.1216 441 0.12135 10 0.0452 15 0.09095 32 0.1209 68 0.1933 75 0.166 11 0.10695 60 0.1891 25 0.1342 23 0.056 34 0.0711 7 0.17475 58 0.0795 23

Ba
0.1292 546 0.1068 17 0.05565 12 0.09775 26 0.1104 98 0.1975 80 0.1402 33 0.0932 63 0.20195 42 0.1818 22 0.0548 36 0.17515 28 0.2136 74 0.1515 15

B
0.0913 599 0.109 9 0.0407 30 0.0815 27 0.07545 136 0.1875 54 0.112 32 0.0918 65 0.1978 44 0.0583 13 0.0643 49 0.1129 34 0.09315 84 0.0543 22

C
0.0249 157 0.0591 1 0.0064 9 -0.11675 2 0.0346 41 0.117 13 0.05095 4 -0.03285 14 -0.0103 16 0.002 10 0.0157 10 0.02935 4 0.03875 22 0.0211 11

0.21905 6

Automotive

-0.01345 2 0.15715 2 0.1882 9 0.193 1 0.2818 1 0.1449 1 0.07205 14 0.3269 5 0.0429 5

0.0376 9 0.1004 21 0.1473 27 0.1972 21 0.27935 24 0.0935 41 0.16535 4 0.1846 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

0.0583 3

0.0631 16 0.15175 4

Services

Telecommunications

0.3014 2 0.1606 1

0.17265 4 0.1907 5

0.2092 35 0.1159 9

Transportation

18

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-4

Median Operating Margin


Aaa
Aggregate
n= Aerospace & Defense

Aa
0.0972 49

A
0.13365 222 0.1149 6

Baa
0.11 441 0.10645 10 0.0386 15 0.08585 32 0.11285 68 0.1743 75 0.1216 11 0.09695 60 0.1674 25 0.1319 23 0.05135 34 0.079 7 0.1711 58 0.075 23

Ba
0.1126 546 0.0997 17 0.0529 12 0.0911 26 0.09435 98 0.1963 80 0.1273 33 0.084 63 0.1617 42 0.14885 22 0.0484 36 0.16025 28 0.14055 74 0.1465 15

B
0.078 599 0.1086 9 0.0358 30 0.0685 27 0.0685 136 0.1686 54 0.1029 32 0.0734 65 0.1613 44 0.0497 13 0.0614 49 0.0995 34 0.0647 84 0.0409 22

C
0.0173 157 0.0395 1 -0.0027 9 -0.1246 2 0.0353 41 0.0027 13 0.02695 4 -0.0357 14 0.08895 16 -0.0021 10 0.01045 10 0.0238 4 0.027 22 0.0063 11

0.1855 6

Automotive

-0.01465 2 0.14225 2 0.1772 9 0.155 1 0.2538 1 0.1386 1 0.0614 14 0.2609 5 0.0364 5

0.0323 9 0.0864 21 0.1428 27 0.2091 21 0.2176 24 0.0946 41 0.1637 4 0.1724 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

0.0576 3

0.05835 16 0.1297 4

Services

Telecommunications

0.2864 2 0.1185 1

0.15675 4 0.1844 5

0.1756 35 0.1131 9

Transportation

19

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-5

Median (FFO + Interest Expense) / Interest Expense


Aaa
Aggregate
n= Aerospace & Defense

Aa
10.1 49

A
8.89 221 8.22 6

Baa
5.76 442 4.7 10 5.01 15 5.445 32 4.825 68 6.465 76 10.58 11 4.955 60 5.55 25 8.53 23 5.545 34 7.11 7 6.58 58 5.4 23

Ba
4.575 546 5.4 17 3.38 12 4.645 26 3.75 98 5.23 80 5.6 33 4.98 63 3.215 42 7.275 22 4.95 36 4.205 28 5.315 74 4.24 15

B
2.42 599 2.81 9 2.045 30 2.27 27 2.12 137 4.205 54 3.07 32 2.3 64 2.02 44 3.74 13 2.66 49 2.405 34 2.865 84 2.465 22

C
1.23 159 1.2 1 1.2 9 1.065 2 1.005 42 2.87 13 1.455 4 0.9 15 1.005 16 1.17 10 1.99 10 1.32 4 1.61 22 1.18 11

17.8 6

Automotive

18.885 2 59.245 2 11.86 9 21.62 1 19.97 1 6.66 1 7.67 14 25.14 5 10.61 5

5.665 8 7.62 21 6.79 27 12.67 21 15.665 24 8.91 41 8.725 4 18.71 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

5.89 3

6.54 16 6.67 4

Services

Telecommunications

69.995 2 6.19 1

27.835 4 4.96 5

10.03 35 6.38 9

Transportation

20

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-6

Median FFO / Debt


Aaa
Aggregate
n= Aerospace & Defense

Aa
0.3547 49

A
0.37635 222 0.3717 6

Baa
0.25415 442 0.2658 10 0.2133 15 0.25155 32 0.21655 68 0.31555 76 0.3526 11 0.21895 60 0.2611 25 0.4817 23 0.223 34 0.312 7 0.3454 58 0.1708 23

Ba
0.2227 546 0.2864 17 0.1336 12 0.25485 26 0.1777 98 0.2858 80 0.273 33 0.2359 63 0.15925 42 0.38055 22 0.1995 36 0.22545 28 0.27195 74 0.1649 15

B
0.10945 600 0.1297 9 0.086 29 0.1009 28 0.0963 137 0.2405 54 0.1453 32 0.1044 65 0.07825 44 0.2129 13 0.1061 49 0.11935 34 0.15125 84 0.0947 22

C
0.0231 159 0.0153 1 0.0287 9 0.00395 2 0.00035 42 0.1652 13 0.04275 4 -0.0093 15 0 16 0.01725 10 0.06205 10 0.03755 4 0.05935 22 0.011 11

0.8746 6

Automotive

0.46055 2 3.3059 2 0.4724 9 1.1257 1 0.9064 1 0.6549 1 0.10935 14 1.1047 5 0.4489 5

0.2019 9 0.2664 21 0.3009 27 0.6429 21 0.59345 24 0.2521 41 0.37805 4 0.6436 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

0.1923 3

0.24315 16 0.31905 4

Services

Telecommunications

1.62395 2 0.2704 1

0.8986 4 0.1128 5

0.4611 35 0.1433 9

Transportation

21

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-7

Median Retained Cash Flow / Net Debt


Aaa
Aggregate
n= Aerospace & Defense

Aa
0.2313 49

A
0.26715 222 0.31005 6

Baa
0.22925 442 0.25615 10 0.2256 15 0.2275 32 0.1681 68 0.21475 76 0.314 11 0.1828 60 0.1898 25 0.3794 23 0.229 34 0.3422 7 0.2969 58 0.177 23

Ba
0.21065 546 0.3012 17 0.1522 12 0.17565 26 0.1712 98 0.26525 80 0.2506 33 0.2113 63 0.14845 42 0.3529 22 0.18985 36 0.24655 28 0.3149 74 0.1512 15

B
0.1053 601 0.1395 9 0.08655 30 0.0967 28 0.0947 137 0.226 54 0.13425 32 0.1039 65 0.0729 44 0.0343 13 0.1052 49 0.09825 34 0.15355 84 0.08415 22

C
0.0226 159 0.0157 1 0.0415 9 0.0128 2 -0.0001 42 0.1712 13 0.04385 4 -0.01 15 0.0013 16 0.01945 10 0.06475 10 0.0287 4 0.06745 22 0.0123 11

1.64005 6

Automotive

-2.4264 2 -0.5958 2 0.3971 9 2.1972 1 1.0829 1 0.2405 1 0.1061 14 0.3593 5 0.3964 5

0.2143 9 0.2288 21 0.2395 27 0.5775 21 0.4384 24 0.2505 41 0.36895 4 0.9088 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

0.2313 3

0.23615 16 0.253 4

Services

Telecommunications

11.3673 2 0.3108 1

0.43465 4 0.1093 5

0.3471 35 0.1088 9

Transportation

22

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-8

Median Debt / EBITDA


Aaa
Aggregate
n= Aerospace & Defense

Aa
2.05 49

A
2.015 222 2.22 6

Baa
2.825 442 2.81 10 4.2 15 2.775 32 3.195 68 2.215 76 2.29 11 3.03 60 3.04 25 1.79 23 3.335 34 2.55 7 2.295 58 4.08 23

Ba
3.23 546 2.89 17 5.415 12 2.61 26 3.83 98 2.685 80 3.29 33 2.73 63 4.53 42 1.995 22 3.745 36 2.885 28 2.93 74 4.48 15

B
5.26 600 4.23 9 5.615 30 5.59 27 5.87 137 2.72 54 5.055 32 4.47 65 6.46 44 3.42 13 5.99 49 5.395 34 4.685 84 6.715 22

C
7.7 159 10.79 1 7.24 9 3.215 2 9.09 42 3.5 13 7.745 4 5.04 15 9.12 16 6.67 10 10.34 10 7.025 4 6.595 22 10.54 11

0.905 6

Automotive

2.09 2 1.005 2 1.57 9 0.57 1 0.88 1 1.26 1 8.31 14 0.84 5 1.61 5

3.14 9 2.86 21 2.47 27 1.17 21 1.14 24 2.36 41 1.84 4 1.2 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

3.55 3

3.04 16 2.895 4

Services

Telecommunications

0.64 2 3.26 1

1.13 4 5.82 5

1.74 35 4.46 9

Transportation

23

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-9

Median Debt / Book Capitalization


Aaa
Aggregate
n= Aerospace & Defense

Aa
0.4335 49

A
0.4472 222 0.5092 6

Baa
0.50635 442 0.50435 10 0.5426 15 0.5031 32 0.5165 68 0.4466 76 0.3063 11 0.4919 60 0.5836 25 0.3609 23 0.57905 34 0.5434 7 0.51475 58 0.6641 23

Ba
0.54265 546 0.4955 17 0.6986 12 0.60155 26 0.59765 98 0.47995 80 0.4928 33 0.4715 63 0.75775 42 0.4845 22 0.65105 36 0.55915 28 0.56075 74 0.694 15

B
0.7494 601 0.549 9 0.8216 30 0.8016 28 0.7629 137 0.537 54 0.6591 32 0.6414 65 0.891 44 0.5949 13 0.7829 49 0.73965 34 0.7467 84 0.86715 22

C
1.0386 159 1.1191 1 0.8705 9 1.3829 2 1.21855 42 0.7319 13 1.62895 4 0.8347 15 1.436 16 0.86185 10 1.01345 10 1.14455 4 1.32725 22 1.0171 11

0.30165 6

Automotive

0.1999 2 0.2496 2 0.3733 9 0.2471 1 0.308 1 0.2953 1 0.72925 14 0.1592 5 0.3043 5

0.4633 9 0.4575 21 0.6181 27 0.3354 21 0.27945 24 0.4258 41 0.35685 4 0.3002 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

0.4971 3

0.55335 16 0.40625 4

Services

Telecommunications

0.24195 2 1.0486 1

0.26385 4 0.7744 5

0.4384 35 0.5698 9

Transportation

24

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-10

Median CAPEX / Depreciation


Aaa
Aggregate
n= Aerospace & Defense

Aa
1.1236 49

A
1.3497 222 1.3712 6

Baa
1.32985 440 1.35915 10 1.2709 15 1.26055 32 1.278 68 2.32245 74 1.4166 11 1.2989 60 1.1347 25 2.008 23 1.45715 34 1.1188 7 1.1627 58 1.4072 23

Ba
1.2377 543 1.2662 17 1.19835 12 1.12805 26 1.20345 98 2.0834 80 1.2797 33 1.16585 62 1.0485 41 1.7032 22 1.143 36 1.1429 28 1.105 73 1.3336 15

B
1.01955 598 1.0392 9 0.94395 30 0.9336 26 0.9765 137 1.6752 53 1.1449 32 0.8977 65 0.9329 44 1.6638 13 1.0174 49 1.07185 34 0.9704 84 1.20155 22

C
0.8041 156 0.946 1 0.8018 9 0.44305 2 0.7583 41 1.6602 13 0.83365 4 0.70355 14 0.74955 16 0.9397 9 0.8902 10 0.9442 4 0.67475 22 1.2341 11

1.3332 6

Automotive

1.0323 2 1.30485 2 1.299 9 1.2342 1 1.3889 1 2.1923 1 1.20235 14 0.8822 5 0.9722 5

1.408 9 1.327 21 1.2013 27 1.8928 21 1.18415 24 1.3532 41 0.9857 4 2.1043 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

1.1236 3

1.4738 16 1.22015 4

Services

Telecommunications

1.38965 2 0.9614 1

1.2274 4 1.069 5

1.2162 35 2.2467 9

Transportation

25

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-11

Median Revenue Volatility


Aaa
Aggregate
n= Aerospace & Defense

Aa
11.5 46

A
15.0 205 17.5 6

Baa
16.0 399 20.0 9 11.5 14 13.0 31 12.0 60 30.0 70 16.0 9 18.0 56 13.0 21 25.0 17 12.0 30 14.0 5 14.0 56 13.0 21

Ba
22.0 455 26.5 12 10.0 9 22.0 25 17.0 85 37.5 66 19.0 23 28.0 57 20.5 34 42.0 17 18.5 30 28.0 23 19.0 61 21.0 13

B
17.0 471 16.5 6 13.0 25 20.0 20 13.5 110 38.5 46 27.0 27 21.0 53 14.0 35 26.5 10 13.0 35 17.0 29 16.0 59 19.0 16

C
15.0 127 40.0 1 8.0 7 8.0 1 12.0 31 22.5 10 14.0 4 17.0 12 11.0 15 24.0 6 6.0 9 10.5 4 16.5 18 20.0 9

13.0 5

Automotive

11.5 2 19.5 2 15.0 8 17.0 1 13.0 1 12.0 1 10.5 14 14.0 5 10.0 5

13.5 8 15.0 19 12.0 26 23.5 20 16.5 20 15.0 39 9.0 3 24.0 5

Chemicals

Consumer Products

Energy & Environment

Healthcare

Manufacturing

Media

Metals & Mining

Retail & Distribution

18.0 2

14.5 16 16.0 4

Services

Telecommunications

13.5 2

4.0 3 9.0 5

12.5 32 17.0 7

Transportation

26

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Exhibit A-12

Percentage change in medians of Baa-rated issuers, 2008-2009


EBITA / Average Assets Aerospace & Defense Automotive Chemicals Consumer Products Energy & Environment Healthcare Manufacturing Media Metals & Mining Retail & Distribution Services Telecommunications Transportation Aggregate Aaa Aggregate Aa Aggregate A Aggregate Baa Aggregate Ba Aggregate B Aggregate C -1.3% -35.6% -9.6% 0.5% -0.1% -21.8% -15.4% 7.7% -13.9% -3.0% 8.4% -6.0% -25.8% 88.5% -22.5% -4.4% -3.6% 1.3% -2.7% -19.7% EBITA / Interest Expense -29.1% -49.8% -38.3% -7.7% -15.2% 28.2% -22.6% 10.5% -29.0% -6.2% -3.9% -16.8% -24.4% -24.1% -38.0% -20.7% -12.4% 0.3% -2.8% -24.4% (FFO + Interest Expense) / Interest Expense -33.5% -36.4% -28.4% -11.1% -20.4% 40.1% -21.0% 12.3% -11.7% 0.5% 5.9% -10.2% -6.1% -22.9% -3.1% -7.4% -10.6% -1.0% 0.8% -2.4% Retained Cash Flow FFO / / Net Debt / Debt Debt EBITDA -34.5% -31.4% -5.4% -10.0% -7.7% 16.5% -21.0% 4.9% -16.5% 4.3% -3.5% -15.7% -24.7% -33.0% -22.0% -6.4% -10.1% -0.7% 2.1% -10.3% -51.8% -22.4% -6.6% -4.1% 11.9% 14.2% -24.1% 0.2% -37.8% 1.1% -1.0% -18.8% -19.0% -41.8% 50.0% -20.8% -7.2% -2.1% 2.8% -4.0% 40.1% 66.0% 10.1% 7.2% 9.1% -7.3% 20.2% -0.8% 67.3% 5.9% 7.1% 26.8% 9.4% 61.6% 25.4% 8.3% 8.9% 3.7% -1.3% 2.0% DEBT / Book Capitalization 30.8% 16.2% 20.7% 8.7% 13.3% -31.8% 8.7% 6.5% 37.4% 3.8% 5.6% 8.3% 7.8% 46.5% 15.3% 11.7% 11.1% 4.1% 3.3% 2.2% CAPEX / Depreciation 10.0% 3.4% 9.1% 5.6% 10.7% 2.2% -2.7% -2.6% 8.9% 4.8% 1.7% 12.1% -8.4% -5.6% -11.1% 0.4% 0.8% 0.1% -0.5% 4.9%

EBITA Margin -6.7% -31.2% -11.7% -3.4% -22.0% -5.3% -12.6% -3.8% -24.9% 0.7% 17.2% -17.3% -41.2% 15.7% -19.9% -5.1% -9.7% -2.9% -8.5% -7.4%

Operating Margin -6.1% -38.1% -7.4% 7.7% -21.1% -10.1% -10.3% 5.1% -8.2% -0.9% 45.1% -5.8% -40.3% 21.6% -23.7% -2.9% -9.9% -2.8% -7.6% -4.4%

Revenue Volatility -9.1% -25.8% 0.0% 9.1% -9.1% 6.7% 0.0% -16.1% -19.4% -7.7% -26.3% 7.7% -16.1% -7.1% 43.8% -6.3% -5.9% 0.0% -5.6% -3.2%

27

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Appendix B: Definition of Credit Ratios


Below we define the ratios presented in this study. Please note that these definitions are applied to adjusted financial numbers. For a detailed discussion of Moodys global adjustments, please consult the references.

EBITA / Average Assets

EBITA / Average of Current and Previous Year Assets

EBITA / Interest Expense

EBITA / Interest Expense

EBITA Margin

EBITA / Net Revenue

(FFO + Interest Expense) / Interest Expense

(Funds From Operations + Interest Expense) / Interest Expense

FFO / Debt

Funds From Operations / (Short-Term Debt + Long-Term Debt)

RCF / Debt

(FFO Preferred Dividends Common Dividends Minority Dividends) / (Short-Term Debt + Long-Term Debt)

Debt / EBITDA

(Short-Term Debt + Long-Term Debt) / EBITDA

Debt / Book Capitalization

(Short-Term Debt + Long-Term Debt) / (Short-Term Debt + Long-Term Debt + Deferred Taxes + Minority Interest + Book Equity)

Operating Margin

Operating Profit / Net Revenue

CAPEX / Depreciation Expense

CAPEX / Depreciation Expense

Revenue Volatility

Standard Deviation of Trailing Five Years of Net Revenue Growth

28

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Appendix C: Definition of Industry Aggregates


In this report we study the distribution of financial ratios across 13 industry aggregates. These aggregates are based on proprietary Moodys coding of broad and specific industry categories. They may generally be described as follows:

Aerospace & Defense

Aircraft, aerospace and defense equipment and parts manufacturers.

Automotive

Commercial and passenger automotive and parts manufacturers.

Chemicals

Agricultural, commodity and specialty chemicals producers.

Consumer Products

Packaged food and beverage, household and personal care products, apparel and shoes, textiles and durable consumer products. Casinos, lodging, restaurants and general amusements. Pulp and (nonpackaging) paper, wood products, agriculture, protein and tobacco processors. Paper, glass, metal and plastic packaging.

Energy & Environment

Oil & gas exploration and production, refining and marketing, and integrated oil companies. (Non-utility) electricity production, merchant energy, oil service and pipeline operators, environmental services and waste management.

Healthcare

Hospitals, long-term care facilities, outpatient facilities, medical device manufacturers and medical service providers. General and specialty pharmaceuticals.

Manufacturing

Heavy machinery, building materials, (low technology) component equipment, (non-consumer) finished products, and transportation equipment manufacturers. Commercial and residential construction, homebuilding.

Media

Book and newspaper publishing, broadcast and subscription radio and television, and diversified media.

Metals & Mining

Coal and metal mining, aluminum and steel production and recycling.

Retail & Distribution

Grocery stores, drug stores, department stores, general and specialty merchandise retailers, and various wholesale distributors.

Services

Business services, consumer services, technology services, and defense services.

Telecommunications

Computer hardware, software, component equipment, consumer electronics, semiconductor and contract manufacturers. Wireless, wireline, towers, satellite equipment and services, equipment manufacturers and integrated telecommunications companies.

29

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009
Transportation

Equipment leasing, airlines, air freight, railroad and maritime shipping, commuter transportation.

Moodys Related Research


Special Comment:

Moody's Financial Metrics Key Ratios By Rating and Industry For Global Non-Financial Corporations: 2008, January 2009 (113940) Moody's Financial MetricsTM Key Ratios By Rating And Industry For European, Middle Eastern And African Non-Financial Corporations: 2008, January 2009 (113942) Moodys Financial MetricsTM Key Ratios by Rating and Industry for North American Non-Financial Corporations: 2008, January 2009 (113941) The Distribution of Common Financial Ratios by Rating and Industry for North American Non-Financial Corporations: 2008, July 2006 (98551) Moodys Senior Ratings Algorithm & Estimated Senior Ratings, February 2009 (114614)

Rating Methodology:

Moody's Approach to Global Standard Adjustments in the Analysis of Financial Statements for NonFinancial Corporations - Part I, February 2006 (96760) Moodys Approach to Global Standard Adjustments in the Analysis of Financial Statements for NonFinancial Corporations - Part II, February 2006 (96729) Moodys Approach to Global Standard Adjustments in the Analysis of Financial Statements for NonFinancial Corporations - Part III , September 2006 (98842)

Special Report:

Moodys Basic Definitions for Credit Statistics, June 2007 (78480)

To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of this report and that more recent reports may be available. All research may not be available to all clients.

30

December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Special Comment

Moodys Global Corporate Finance

Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009

Report Number: 121772 Authors Jennifer Tennant Albert Metz Senior Production Associate Wing Chan

CREDIT RATINGS ARE MOODY'S INVESTORS SERVICE, INC.'S (MIS) CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. Copyright 2009, Moodys Investors Service, Inc., and/or its licensors and affiliates (together, "MOODY'S). All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODYS PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODYS from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided as is without warranty of any kind and MOODYS, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall MOODYS have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODYS or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODYS is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODYS IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling. MOODYS hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODYS have, prior to assignment of any rating, agreed to pay to MOODYS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,400,000. Moodys Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moodys Investors Service (MIS), also maintain policies and procedures to address the independence of MISs ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moodys website at www.moodys.com under the heading Shareholder Relations Corporate Governance Director and Shareholder Affiliation Policy.

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December 2009 Special Comment Moodys Global Corporate Finance - Moody's Financial Metrics Key Ratios by Rating and Industry for Global Non-Financial Corporations: December 2009