Summary
Moody's Corporation (MCO) announced a significant restructuring plan on March 26, 2009, aimed at reducing costs in response to a strategic review and challenging global economic and market conditions. The company anticipates a restructuring charge of approximately $10 million to $16 million, with the majority to be recognized in the first quarter of 2009. This plan involves headcount reductions and the closure of offices in South Bend, Indiana, Indonesia, and Taiwan. Investors should note that the restructuring charge will result in cash outlays over the next twelve months. The plan entails a global headcount reduction of 120-170 positions, representing 3-4% of its workforce as of the end of 2008. While this indicates a proactive approach to cost management, it also signals the difficult operating environment faced by Moody's during this period.
Key Highlights
- 1Moody's Corporation approved a restructuring plan to reduce costs due to strategic review and weak economic conditions.
- 2Estimated restructuring charge of $10-$16 million, with a majority booked in Q1 2009.
- 3Plan includes headcount reductions of 120-170 employees (3-4% of workforce).
- 4Office closures planned in South Bend, Indiana; Indonesia; and Taiwan.
- 5Restructuring charges will result in cash outlays over the next twelve months.
- 6Headcount reductions comprise $9-$12 million of the estimated charge.
- 7Other charges, including contract termination and potential divestitures, total $1-$4 million.