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Special Comment
New YorkAlbert Metz 1.212.553.1653Richard Cantor
Contact Phone
August 2006
The Distribution of Common Financial Ratios by Rating and Industry For North American Non-Financial Corporations: July 2006
Summary
This paper summarizes the distribution of common financial ratios across industries for North American non-financialnon-utility corporations based on the most recent fiscal year-end data. The body of the text discusses differencesacross industries for Baa rated issuers; however, median financial ratios for each broad rating category for each industry- which may be the primary interest of some readers - are presented in the Appendices.
The metrics reported include interest coverage, asset coverage, leverage, cash flow-to-debt, liquidity, asset returns,profit and revenue stability. Precise definitions are presented in Appendix D. Data are taken from financial statementswith certain adjustments (based on publicly available information). See section I for details.
It must be stressed that this report is not intended to describe Moody's rating process or the particular ratiosfavored in rating committees, but rather uses standard ratios to explore the quantitative content of ratings by industry.Moreover, while some industry- and issuer-specific adjustments have been made to these ratios, they are not always theprecise ratios Moody's analysts use when evaluating a credit.
Ratio analysis is but one part of Moody's analytical process. Qualitative and forward-looking considerations arealso important. Interested readers are referred to Moody's Rating Methodologies for detailed discussions of our ana-lytical approach and core ratios for each industry. In any event, when Moody's does analyze financial ratios, it uses amultivariate approach. As a result, a simple monotonic relationship between ratings and any single ratio should notgenerally be expected.
The report is organized as follows. Section I describes details of the data and methodology. Section II presents abrief review of the distribution of these metrics in the aggregate by rating category - that is, without regard to industryclassification. Results for all Baa rated issuers by industry are presented in Section III, with subsections devoted toeach metric. Section IV contains some brief discussion and analysis.
The Appendices present the detailed statistics in three ways. Each exhibit in Appendix A focuses on a single finan-cial metric and shows how its median values vary across industries and across rating categories. Each exhibit in Appen-dix B focuses on a single industry and shows how its median financial ratios vary across rating categories. Each exhibitin Appendix C presents a single rating category and shows how median financial ratios vary across industries.
Finally, definitions of the credit metrics analyzed in this report are presented in Appendix D. Descriptions of theindustry aggregates are presented in Appendix E.
While it is difficult to draw many broad conclusions, some points to consider are the following:• In the aggregate, there exists a strong monotonic relationship between these metrics and ratings.
– The major exception is Revenue Stability: often weaker credits are characterized by weak (but stable)revenues.
– Liquidity also does not exhibit a strictly monotonic relationship with ratings.• Industries with consistently better-than-average metrics for Baa rated issuers include:
– Construction & Engineering,– Healthcare,– Metals & Mining,– Oil & Gas, and– Technology.
• Industries with consistently weaker than average metrics for Baa issuers include:– Aerospace & Defense,– Energy & Environment,– Media,– Packaging, and– Retail & Distribution.
• The evidence suggests that more intrinsically risky industries (as measured by revenue stability) arerequired to achieve better credit ratios to obtain a given rating.
2 Moody’s Special Comment
Table of ContentsPage
I Data and Methodology................................................................................................................. 4
II Metrics by Rating Category Aggregated Across All Industries ...................................................... 4
III Industry Study ........................................................................................................................... 5III.1 Interest Coverage............................................................................................................................ 6III.2 Asset Coverage............................................................................................................................... 7III.3 Leverage......................................................................................................................................... 8III.4 Cash Flow-to-Debt.......................................................................................................................... 9III.5 Return on Assets........................................................................................................................... 10III.6 Profit............................................................................................................................................. 11III.7 Liquidity........................................................................................................................................ 12III.8 Revenue Stability .......................................................................................................................... 13
IV Discussion............................................................................................................................... 14
Appendix A Detailed Distributions by Credit Metric....................................................................... 16
Appendix B Detailed Distributions by Industry.............................................................................. 24
Appendix C Detailed Distributions by Broad Rating Category........................................................ 35
Appendix D Definition of Financial Metrics ................................................................................... 43
Appendix E Definition of Industry Aggregates............................................................................... 44
Moody’s Special Comment 3
I Data and Methodology
Financial data for this study are taken from the most recently available fiscal year-end filings. The metrics that westudy include interest coverage, asset coverage, leverage, cash flow-to-debt, return on assets, net profit margin, liquid-ity, and revenue stability. Please see Appendix D for definitions. As mentioned above, these are not necessarily theratios that Moody's uses in credit analysis.
When possible, use financial data which incorporate the industry-specific adjustments routinely used by Moody'scredit analysts.1 When such adjusted data are not available for a particular issuer, we us unadjusted data per the defini-tions provided in Appendix D.
All the issuers in the sample carry Moody's bond ratings. The reported ratings refer specifically to the issuer'ssenior unsecured rating or, in the absence of such a rating, its estimated senior unsecured rating as of July 1, 2006.2
Industry classifications are based on proprietary Moody's assignments. For descriptions, please see Appendix E.
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 industrialclassification. In all cases, the statistics we report are medians. We consider the distribution of these metrics by broadrating category.
Exhibit 1 summarizes our findings. We make the following observations:• Most metrics are strictly monotonic with ratings:
– Interest coverage, asset coverage, cash flow-to-debt, return on assets, and profit are strictly increasingacross rating categories. Leverage is strictly decreasing, as expected.
• One metric is generally increasing in ratings:– Median liquidity ratios are slightly lower for Baa than Ba rated issuers, otherwise they are increasing
with ratings.• Only one metric has a weak relationship:
– Median revenue stability ratios peak at the top and bottom of the ratings distribution.
1. For details on particular industry adjustments, please refer to Moody's Global Rating Methodologies.2. Please see "Moody's Senior Ratings Algorithm & Estimated Senior Ratings," July 2005 for a discussion of estimated senior unsecured ratings.
Exhibit 1: Aggregate Metrics by Rating CategoryMedian Median
Aaa-Aa A Baa Ba B Caa-C IG SG
Interest Coverage 16.0 8.6 5.4 3.7 1.9 0.7 6.5 2.1Asset Coverage 3.7 2.4 2.3 2.0 1.3 1.0 2.4 1.4Leverage 31.6% 41.7% 44.8% 49.8% 68.7% 92.2% 43.6% 66.8%Cash Flow-to-Debt 52.4% 32.6% 25.8% 21.6% 12.1% 6.4% 28.4% 12.7%Return on Assets 11.6% 7.5% 5.3% 4.4% 1.7% -2.1% 6.3% 1.9%Profit 11.8% 9.0% 6.7% 5.0% 2.0% -2.6% 7.8% 2.1%Liquidity 7.8% 4.7% 4.0% 4.3% 3.9% 3.3% 4.6% 3.9%Revenue Stability 7.2 7.3 6.1 5.2 6.1 7.3 6.6 5.9
Source: Moody's ratings and financial database as of July 1, 2006
4 Moody’s Special Comment
III Industry Study
In this section, we study these financial metrics by industry. We compare ratios for Baa rated issuers only. We do thisnot only to make the presentation tractable, but also because not all industries are represented in all rating categories.For instance, only ten industries are represented in the Aaa-Aa category. The Baa category is the best representedinvestment-grade rating category.
Exhibit 2 lists the industries studies in this report and the number of Baa rated issuers. For descriptions of theseindustry classifications, please see Appendix E.
Exhibit 2: Industry CoverageIndustry Count of Baa Issuers
Aerospace & Defense 4Automotive 4Chemicals 13Construction & Engineering 8Consumer Products 20Energy & Environment 42Healthcare 14Leisure & Entertainment 9Manufacturing 21Media 18Metals & Mining 14Natural Products 7Oil & Gas 12Packaging 4Pharmaceuticals 3Retail & Distribution 21Services 7Technology 4Telecommunications 19Transportation Services 13
Source: Moody's ratings and financial database as of July 1, 2006
Moody’s Special Comment 5
III.1 Interest Coverage
Exhibit 3 sorts the industries by their median Baa interest coverage ratio. The complete distribution is presented inthe Appendices. The median aggregate coverage ratios at different rating categories are highlighted for comparison.
From Exhibit 3 we see that for Baa rated issuers, median interest coverage ratios are greatest for the Oil & Gas,Healthcare, and Construction & Engineering industries, exceeding that of the aggregate A rated issuer set. At theother extreme, the median Baa interest coverage ratio is least for the Pharmaceuticals, Telecommunications and Natu-ral Products industries.
While coverage ratios are strictly increasing across ratings in the aggregate, that is true for only nine industries.
Exhibit 3: Median Baa Interest Coverage Ratio
Source: Moody's ratings and financial database as of July 1, 2006
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Aggregate Aaa-AaOil & Gas
HealthcareConstruction & Engineering
Aggregate ATechnology
Metals & MiningAutomotive
ManufacturingChemicals
Consumer ProductsAggregate Baa
ServicesAerospace & Defense
Leisure & EntertainmentRetail & Distribution
Energy & EnvironmentMedia
Aggregate BaTransportation Services
PackagingNatural Products
TelecommunicationsPharmaceuticals
Aggregate BAggregate Caa-C
6 Moody’s Special Comment
III.2 Asset Coverage
Exhibit 4 presents median Baa asset coverage ratios by industry. Again, the detailed distributions are reported in theAppendices. Aggregate asset coverage ratios are monotonic within eight industries.
The Metals & Mining and Oil & Gas industries have median Baa asset coverage ratios greater than the Aaa-Aaaggregate. The Media industry has the lowest median asset coverage ratio.
Exhibit 4: Median Baa Asset Coverage Ratios
Source: Moody's ratings and financial database as of July 1, 2006
0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0
Metals & MiningOil & Gas
Aggregate Aaa-AaAutomotive
Construction & EngineeringTechnology
Transportation ServicesPharmaceuticalsNatural Products
Energy & EnvironmentAggregate A
ChemicalsHealthcare
Aggregate BaaTelecommunications
Leisure & EntertainmentRetail & Distribution
Aggregate BaManufacturing
ServicesPackaging
Consumer ProductsAerospace & Defense
Aggregate BMedia
Aggregate Caa-C
Moody’s Special Comment 7
III.3 Leverage
Median Baa leverage ratios are presented in Exhibit 5. For only three industries do median leverage ratios decreasemonotonically with ratings, as they do in the aggregate.
This metric is least for the Metals & Mining and Technology industries, being less than the Aaa-Aa aggregate.Aerospace & Defense and Retail & Distribution have the greatest median leverage ratios for Baa rated issuers.
Exhibit 5: Median Baa Leverage Ratios
Source: Moody's ratings and financial database as of July 1, 2006
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0%
Metals & MiningTechnology
Aggregate Aaa-AaOil & Gas
Transportation ServicesNatural Products
AutomotiveHealthcare
Aggregate APharmaceuticals
ManufacturingAggregate Baa
TelecommunicationsConstruction &
MediaServices
ChemicalsEnergy & Environment
Aggregate BaLeisure &
PackagingConsumer ProductsRetail & Distribution
Aerospace & DefenseAggregate B
Aggregate Caa-C
8 Moody’s Special Comment
III.4 Cash Flow-to-Debt
Exhibit 6 presents the median Baa cash flow-to-debt ratios by industry. In the aggregate, cash flow-to-debt increasesmonotonically with ratings. That holds true for ten industries.
The Oil & Gas and Technology industries have median cash flow-to-debt ratios that exceed the Aaa-Aa aggregate.On the other hand, the Energy & Environment, Media and Aerospace & Defense industries have the smallest medianratios.
Exhibit 6: Median Baa Cash Flow-to-Debt Ratios
Source: Moody's ratings and financial database as of July 1, 2006
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
Oil & GasTechnology
Aggregate Aaa-AaMetals & Mining
AutomotiveHealthcare
TelecommunicationsAggregate A
nstruction & EngineeringServices
ManufacturingAggregate Baa
Natural ProductsTransportation ServicesLeisure & Entertainment
ChemicalsAggregate Ba
Retail & DistributionPharmaceuticals
Consumer ProductsPackaging
Aerospace & DefenseMedia
Energy & EnvironmentAggregate B
Aggregate Caa-C
Moody’s Special Comment 9
III.5 Return on Assets
Median Baa asset returns are presented in Exhibit 7. In the aggregate, this metric increases monotonically with ratings.That continues to hold true for eight industries.
The Construction & Engineering industry has the highest median asset returns for Baa rated issuers, nearly equal-ing the Aaa-Aa aggregate. Oil & Gas also has much higher than average asset returns. On the other hand, the medianreturn on assets for Baa rated issuers was least in the Pharmaceuticals industry, nearly equal to the B rated aggregate.Media and Natural Products also had fairly low median asset returns.
Exhibit 7: Median Baa Return on Assets
Source: Moody’s ratings and financial database as of July 1, 2006
-4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
Aggregate Aaa-Aa
Construction & Engineering
Oil & Gas
Aggregate A
Metals & Mining
Technology
Leisure & Entertainment
Automotive
Healthcare
Manufacturing
Energy & Environment
Consumer Products
Services
Aggregate Baa
Chemicals
Retail & Distribution
Packaging
Aggregate Ba
Telecommunications
Transportation Services
Aerospace & Defense
Natural Products
Media
Pharmaceuticals
Aggregate B
Aggregate Caa-C
10 Moody’s Special Comment
III.6 Profit
Median Baa profit margins are presented in Exhibit 8. While profit margins are monotonically increasing with ratingsin the aggregate, that holds true for only six industries.
Once again, the Oil & Gas industry has the highest values for this metric, exceeding the Aaa-Aa aggregate. Tech-nology, Metals & Mining, and Construction & Engineering also have relatively high median profit margins. As withasset returns, the Pharmaceutical industry has the least median ratio for Baa rated issuers.
Exhibit 8: Median Baa Profit Margins
Source: Moody’s ratings and financial database as of July 1, 2006
-5.0% 0.0% 5.0% 10.0% 15.0% 20.0%
Oil & Gas
Aggregate Aaa-Aa
Technology
Metals & Mining
Construction & Engineering
Aggregate A
Energy & Environment
Healthcare
Services
Media
Transportation Services
Aggregate Baa
Telecommunications
Consumer Products
Manufacturing
Leisure & Entertainment
Automotive
Chemicals
Aggregate Ba
Aerospace & Defense
Packaging
Retail & Distribution
Natural Products
Pharmaceuticals
Aggregate B
Aggregate Caa-C
Moody’s Special Comment 11
III.7 Liquidity
Median Baa liquidity ratios are presented in Exhibit 9. While this metric is almost monotonically increasing in theaggregate, that holds true for only one industry: Automotive.
Note that the Pharmaceuticals, Technology, Metals & Mining and Healthcare industries have the greatest medianliquidity metrics, all exceeding the Aaa-Aa aggregate. The Media, Energy & Environment, Transportation Services,Oil & Gas, Telecommunications, Leisure & Entertainment industries are the least liquid among Baa rated issuers, withmedian liquidity actually below the Caa-C Aggregate.
Exhibit 9: Median Baa Liquidity Ratios
Source: Moody’s ratings and financial database as of July 1, 2006
0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
Pharmaceuticals
Technology
Metals & Mining
Healthcare
Aggregate Aaa-Aa
Automotive
Retail & Distribution
Manufacturing
Chemicals
Consumer Products
Natural Products
Services
Aggregate A
Aerospace & Defense
Packaging
Construction & Engineering
Aggregate Ba
Aggregate Baa
Aggregate B
Aggregate Caa-C
Leisure & Entertainment
Telecommunications
Oil & Gas
Transportation Services
Energy & Environment
Media
12 Moody’s Special Comment
III.8 Revenue Stability
Exhibit 10 presents median revenue stability metrics for Baa rated issuers by industry. Recall that this metric does notcorrelate well with ratings in the aggregate. No individual industry has a monotonic relationship.
The Transportation Services, Consumer Products, Services, Pharmaceuticals, Media, Chemicals, Leisure &Entertainment and Manufacturing industries have the most stable revenues in this rating category, while the Oil &Gas, Construction & Engineering, Metals & Mining, Automotive, Energy & Environment and Telecommunicationsindustries have the least. Of course, in some cases, revenues are less stable precisely because they have been growingvery fast recently.
Exhibit 10: Median Baa Revenue Stability Ratios
Source: Moody’s ratings and financial database as of July 1, 2006
0.0 2.0 4.0 6.0 8.0 10.0 12.0
Transportation Services
Consumer Products
Services
Pharmaceuticals
Media
Chemicals
Leisure & Entertainment
Manufacturing
Aggregate Caa-C
Aggregate A
Aggregate Aaa-Aa
Packaging
Natural Products
Aerospace & Defense
Retail & Distribution
Healthcare
Aggregate Baa
Aggregate B
Technology
Aggregate Ba
Telecommunications
Energy & Environment
Automotive
Metals & Mining
Construction & Engineering
Oil & Gas
Moody’s Special Comment 13
IV Discussion
Exhibit 11 summarizes the results presented above. For each metric, we report its standardized (mean 100, standarddeviation 1) value and sort the industries by their average score.3 The Oil & Gas, Technology, Metals & Mining,Healthcare and Construction & Engineering industries have the highest average score, while the Aerospace &Defense, Retail & Distribution, Media, Packaging and Energy & Environment industries have the lowest.
How shall we interpret these results? Recall that these are conditioned on ratings. In other words, Baa rated issu-ers in the Oil & Gas industry generally have stronger (sometimes substantially stronger) metrics than do Baa ratedissuers in the Aerospace & Defense industry.
One interpretation is that observing different levels of, for instance, coverage conditional on having a Baa rating isevidence of different methods or standards in assigning ratings: we observe higher coverage ratios in Oil & Gas thanAerospace & Defense because we hold the former to a higher standard than we do the latter.
The idea is that because one industry is “intrinsically riskier” than another, issuers in that industry must achievebetter credit ratios for a given rating. Consistent with previous research, we find evidence to suggest that this is true.
Using “revenue stability” as a proxy for “intrinsic risk,” the hypothesis is that we should observe better creditratios associated with lower stability within a rating category, in other words, we should observe a negative correlationbetween the credit ratios and sales stability.
Exhibit 12 reports the correlation of the standardized values of each ratio to sales stability. As expected, we obtainnegative correlations for interest coverage (-0.56), asset coverage (-0.61), leverage (-0.39),4 cash flow-to-debt (-0.56),return on assets (-0.63) and profit (-0.54). Liquidity is uncorrelated.
3. We normalize leverage to account for the fact that lesser values are preferable to greater values.
Exhibit 11: Summary of Standardized Baa Metrics
IndustryInterest
CoverageAsset
Coverage Leverage
CashFlow-to-
DebtReturn on
Assets Profit LiquidityRevenueStability Average
Oil & Gas 102.3 101.7 101.3 102.6 101.6 103.0 99.2 98.2 101.2Technology 101.2 100.5 101.9 102.2 100.7 101.3 101.9 99.7 101.2Metals & Mining 100.7 102.8 101.9 101.0 100.8 101.3 101.5 98.5 101.1Healthcare 101.6 99.9 100.4 100.5 100.5 100.3 100.3 99.9 100.4Construction & Engineering 101.3 100.5 100.0 100.1 102.5 100.5 99.6 98.4 100.4Automotive 100.5 100.7 100.4 100.8 100.5 99.5 100.1 99.0 100.2Manufacturing 100.4 99.3 100.1 99.9 100.4 99.8 100.1 100.4 100.0Services 99.6 99.3 99.6 100.0 99.8 100.1 99.8 101.5 100.0Transportation Services 99.2 100.5 100.5 99.5 99.3 100.0 99.1 101.6 100.0Pharmaceuticals 98.6 100.4 100.2 99.4 98.3 98.8 102.8 100.8 99.9Consumer Products 100.0 99.0 99.2 99.3 100.0 99.8 99.8 101.6 99.8Chemicals 100.1 99.9 99.5 99.5 99.8 99.4 99.9 100.5 99.8Leisure & Entertainment 99.5 99.6 99.4 99.5 100.6 99.6 99.3 100.4 99.7Natural Products 99.0 100.4 100.5 99.6 99.0 98.9 99.8 100.3 99.7Telecommunications 98.9 99.6 100.0 100.3 99.3 99.9 99.2 99.3 99.6Energy & Environment 99.4 100.0 99.5 98.9 100.0 100.3 99.1 99.1 99.5Packaging 99.1 99.3 99.2 99.2 99.4 99.2 99.6 100.3 99.4Media 99.4 98.5 100.0 99.2 98.7 100.1 99.0 100.5 99.4Retail & Distribution 99.5 99.4 98.3 99.4 99.6 99.0 100.1 99.9 99.4Aerospace & Defense 99.5 98.9 98.1 99.2 99.2 99.2 99.6 100.1 99.2
Source: Moody’s ratings and financial database as of July 1, 2006
4. Recall that these are correlations of the standardized values, hence this negative correlation is to be expected.
14 Moody’s Special Comment
This, of course, remains purely suggestive, but it does indicate that industries with less stable revenues arerequired to achieve stronger credit ratios in order to obtain the Baa rating.
Exhibit 12: Correlation of Median Baa Ratios to Revenue StabilityMetric Correlation
Interest Coverage -0.56Asset Coverage -0.61Leverage -0.39Cash Flow-to-Debt -0.56Return on Assets -0.63Profit -0.54Liquidity -0.01
Source: Moody’s ratings and financial database as of July 1, 2006
Moody’s Special Comment 15
Appendix A Detailed Distributions by Credit Metric
Source: Moody’s Ratings and Financial Database as of July 1, 2006
Exhibit A-1: Median Coverage Ratios
Aaa-Aa A Baa Ba B Caa-C IG SGAggregate 16.0 8.6 5.4 3.7 1.9 0.7 6.5 2.1
n= 22 102 220 186 333 76 344 595
Aerospace & Defense 8.1 4.3 4.3 3.4 0.3 5.8 3.56 4 3 9 1 10 13
Automotive 3.6 6.8 1.7 1.4 0.5 6.3 1.21 4 6 15 8 5 29
Chemicals 6.3 5.7 3.0 1.7 1.0 6.0 2.29 11 10 10 1 20 21
Construction & Engineering 6.3 8.6 5.6 3.7 0.7 8.0 5.01 8 10 3 1 9 14
Consumer Products 14.3 8.4 5.6 3.6 2.1 0.7 7.0 2.26 16 19 10 28 4 41 42
Energy & Environment 6.3 4.1 3.3 1.7 1.8 4.1 1.92 24 14 29 1 26 44
Healthcare 34.7 14.2 9.6 3.8 2.3 1.6 11.4 3.01 4 13 6 24 2 18 32
Leisure & Entertainment 6.4 4.3 2.7 1.3 0.9 5.0 1.82 9 15 30 3 11 48
Manufacturing 12.6 8.5 6.5 5.5 2.0 0.9 7.8 3.42 13 20 15 18 5 35 38
Media 8.7 3.9 1.6 1.4 0.7 5.0 1.26 15 14 20 8 21 42
Metals & Mining 18.0 15.9 7.2 7.1 3.1 -9.0 8.2 3.71 3 11 7 11 2 15 20
Natural Products 6.2 3.1 3.1 1.1 -0.5 3.7 1.33 7 4 11 2 10 17
Oil & Gas 21.7 18.6 11.3 4.9 5.9 2.6 13.7 5.62 6 12 14 18 2 20 34
Packaging 4.9 3.3 3.1 1.5 0.5 3.4 1.51 4 4 10 4 5 18
Pharmaceuticals 19.2 28.7 2.1 27.0 2.0 14.4 11.24 4 3 3 5 11 8
Retail & Distribution 8.2 7.9 4.3 3.9 2.1 1.1 5.3 2.43 7 21 25 36 13 31 74
Services 12.5 4.9 4.6 4.7 2.0 0.2 5.0 2.21 5 6 11 16 4 12 31
Technology 4.6 22.4 8.5 2.3 2.3 0.5 10.0 2.21 6 4 7 17 2 11 26
Telecommunications 4.8 2.9 3.3 0.8 0.2 3.5 0.85 14 3 13 7 19 23
Transportation Services 14.1 5.2 3.5 3.5 1.2 0.8 3.6 1.41 2 11 5 10 6 14 21
16 Moody’s Special Comment
Exhibit A-2: Median Asset Coverage Ratios
Aaa-Aa A Baa Ba B Caa-C IG SGAggregate 3.7 2.4 2.3 2.0 1.3 1.0 2.4 1.4
n= 22 116 255 211 465 134 393 810
Aerospace & Defense 2.6 1.6 1.7 1.4 -0.1 2.4 1.46 4 4 12 1 10 17
Automotive 3.4 3.0 2.1 1.5 1.0 3.0 1.51 4 7 20 11 5 38
Chemicals 2.2 2.4 1.8 1.7 1.0 2.2 1.79 13 12 19 4 22 35
Construction & Engineering 4.9 2.9 2.5 2.2 1.0 2.9 2.41 7 10 6 1 8 17
Consumer Products 2.0 1.8 1.7 1.8 1.0 0.6 1.9 1.16 16 20 12 36 9 42 57
Energy & Environment 2.5 2.5 2.3 1.7 1.6 2.5 1.84 41 16 36 2 45 54
Healthcare 3.6 2.8 2.4 1.6 1.1 1.0 2.4 1.21 4 14 7 30 3 19 40
Leisure & Entertainment 2.5 2.2 1.7 1.1 0.9 2.2 1.32 9 15 46 8 11 69
Manufacturing 4.6 2.2 1.9 2.1 1.0 0.8 2.1 1.12 13 21 16 33 12 36 61
Media 2.1 1.3 0.7 0.6 0.5 1.4 0.66 18 19 39 18 24 76
Metals & Mining 6.9 3.7 4.6 3.9 2.4 46.0 4.6 3.21 3 14 9 11 2 18 22
Natural Products 3.2 2.7 3.8 1.4 1.6 2.9 1.63 7 4 18 3 10 25
Oil & Gas 5.4 5.3 3.7 3.4 3.0 2.3 4.1 3.32 6 12 13 18 3 20 34
Packaging 1.9 1.9 1.6 1.3 0.8 1.9 1.21 4 5 12 6 5 23
Pharmaceuticals 3.5 3.1 2.8 2.8 1.3 2.9 1.64 4 3 3 6 11 9
Retail & Distribution 2.8 2.7 2.0 2.0 1.5 1.1 2.2 1.53 8 21 27 42 18 32 87
Services 15.5 2.8 1.9 1.8 1.1 0.8 2.6 1.11 6 7 13 29 11 14 53
Technology 2.0 9.4 2.9 3.6 2.2 2.0 4.8 2.51 6 4 8 21 2 11 31
Telecommunications 2.3 2.2 1.7 1.1 0.7 2.2 1.015 19 6 18 10 34 34
Transportation Services 3.8 2.8 2.8 1.6 1.8 1.3 2.9 1.51 2 13 5 13 10 16 28
Moody’s Special Comment 17
Exhibit A-3: Median Leverage Ratios
Aaa-Aa A Baa Ba B Caa-C IG SGAggregate 31.6% 41.7% 44.8% 49.8% 68.7% 92.2% 43.6% 66.8%
n= 22 116 257 212 468 134 395 814
Aerospace & Defense 52.6% 61.2% 55.7% 57.6% 132.2% 54.6% 57.4%6 4 4 12 1 10 17
Automotive 48.1% 41.3% 59.7% 82.0% 83.9% 43.6% 80.2%1 4 7 20 11 5 38
Chemicals 50.8% 49.3% 53.1% 78.0% 118.7% 50.3% 71.4%9 13 12 19 4 22 35
Construction & Engineering 42.0% 45.3% 49.4% 63.5% 120.6% 45.2% 50.1%1 8 10 6 1 9 17
Consumer Products 56.7% 55.4% 52.3% 51.2% 63.5% 107.8% 54.0% 63.5%6 16 20 12 36 9 42 57
Energy & Environment 46.5% 49.4% 46.2% 61.5% 54.7% 49.4% 58.0%4 42 16 37 2 46 55
Healthcare 38.2% 37.5% 41.4% 44.8% 60.7% 53.9% 39.9% 56.0%1 4 14 7 31 3 19 41
Leisure & Entertainment 43.7% 50.2% 64.1% 82.5% 90.3% 50.2% 76.2%2 9 15 46 8 11 69
Manufacturing 22.3% 41.5% 44.3% 44.0% 66.9% 88.3% 43.2% 66.0%2 13 21 16 33 12 36 61
Media 30.8% 45.4% 58.7% 76.0% 101.6% 39.6% 76.5%6 18 19 39 18 24 76
Metals & Mining 22.5% 38.6% 28.4% 42.4% 55.2% 43.6% 28.4% 51.6%1 3 14 9 11 2 18 22
Natural Products 40.4% 41.2% 33.9% 70.9% 81.3% 41.2% 67.6%3 7 4 18 3 10 25
Oil & Gas 25.2% 22.6% 34.2% 38.9% 44.7% 48.6% 28.5% 42.8%2 6 12 14 18 3 20 35
Packaging 53.5% 51.9% 66.7% 80.1% 116.4% 53.5% 80.7%1 4 5 12 6 5 23
Pharmaceuticals 28.3% 33.2% 43.0% 23.2% 56.0% 33.3% 44.9%4 4 3 3 6 11 9
Retail & Distribution 45.5% 46.5% 60.0% 56.4% 70.1% 81.9% 53.7% 67.8%3 8 21 27 42 18 32 87
Services 21.7% 41.2% 49.0% 45.6% 71.5% 115.3% 42.8% 68.7%1 6 7 13 29 11 14 53
Technology 53.6% 16.0% 28.5% 33.8% 45.2% 66.0% 25.1% 42.3%1 6 4 8 22 2 11 32
Telecommunications 54.8% 44.8% 67.6% 74.4% 116.1% 51.3% 84.4%15 19 6 18 10 34 34
Transportation Services 32.8% 41.3% 41.1% 58.2% 66.4% 93.3% 40.6% 70.1%1 2 13 5 13 10 16 28
18 Moody’s Special Comment
Exhibit A-4: Median Cash Flow-to-Debt Ratios
Aaa-Aa A Baa Ba B Caa-C IG SGAggregate 52.4% 32.6% 25.8% 21.6% 12.1% 6.4% 28.4% 12.7%
n= 22 116 257 212 468 134 395 814
Aerospace & Defense 32.7% 18.1% 19.1% 14.8% -9.1% 24.0% 14.5%6 4 4 12 1 10 17
Automotive 31.0% 40.2% 13.8% 10.1% 4.8% 39.3% 8.6%1 4 7 20 11 5 38
Chemicals 26.8% 22.1% 18.6% 9.4% 6.6% 26.7% 10.1%9 13 12 19 4 22 35
Construction & Engineering 27.7% 30.0% 26.7% 15.4% 2.4% 27.7% 22.3%1 8 10 6 1 9 17
Consumer Products 31.6% 24.7% 19.4% 17.4% 13.7% 1.7% 23.9% 12.8%6 16 20 12 36 9 42 57
Energy & Environment 31.1% 14.3% 18.2% 11.1% 15.6% 14.3% 12.8%4 42 16 37 2 46 55
Healthcare 56.7% 45.5% 35.5% 27.4% 17.4% 30.0% 40.7% 19.7%1 4 14 7 31 3 19 41
Leisure & Entertainment 26.8% 22.6% 14.9% 9.3% 6.2% 22.6% 9.9%2 9 15 46 8 11 69
Manufacturing 63.1% 33.2% 27.5% 24.0% 10.8% 6.7% 30.6% 12.8%2 13 21 16 33 12 36 61
Media 36.6% 17.9% 12.7% 7.8% 6.2% 21.6% 7.8%6 18 19 39 18 24 76
Metals & Mining 104.1% 50.8% 42.5% 40.8% 21.6% -25.5% 46.5% 24.7%1 3 14 9 11 2 18 22
Natural Products 27.0% 23.1% 22.3% 9.7% 2.3% 24.4% 9.9%3 7 4 18 3 10 25
Oil & Gas 80.5% 109.2% 64.9% 35.3% 36.2% 16.9% 67.2% 35.9%2 6 12 14 18 3 20 35
Packaging 20.0% 18.5% 15.7% 10.7% 4.2% 18.8% 9.1%1 4 5 12 6 5 23
Pharmaceuticals 41.3% 56.1% 20.4% 59.4% 11.8% 35.4% 48.5%4 4 3 3 6 11 9
Retail & Distribution 29.7% 34.0% 21.6% 21.0% 12.7% 8.1% 24.9% 13.6%3 8 21 27 42 18 32 87
Services 83.8% 38.3% 28.4% 26.7% 12.5% 7.2% 37.0% 13.3%1 6 7 13 29 11 14 53
Technology 28.7% 155.0% 59.2% 23.1% 21.9% 14.5% 97.3% 21.4%1 6 4 8 22 2 11 32
Telecommunications 28.0% 33.3% 21.3% 9.8% 8.2% 29.3% 10.4%15 19 6 18 10 34 34
Transportation Services 54.9% 26.1% 22.6% 22.1% 13.4% 8.4% 23.0% 12.6%1 2 13 5 13 10 16 28
Moody’s Special Comment 19
Exhibit A-5: Median Asset Returns
Aaa-Aa A Baa Ba B Caa-C IG SGAggregate 11.6% 7.5% 5.3% 4.4% 1.7% -2.1% 6.3% 1.9%
n= 22 116 257 212 466 133 395 811
Aerospace & Defense 6.8% 3.9% 4.7% 3.6% -14.1% 5.8% 3.8%6 4 4 12 1 10 17
Automotive 8.5% 6.8% 0.5% 1.0% -4.9% 7.5% 0.3%1 4 7 20 11 5 38
Chemicals 6.3% 5.1% 4.3% 1.9% 0.8% 6.1% 2.2%9 13 12 19 4 22 35
Construction & Engineering 5.0% 11.1% 8.8% 2.3% -3.0% 10.7% 6.4%1 8 10 6 1 9 17
Consumer Products 14.5% 10.0% 5.5% 3.9% 2.4% -3.5% 8.0% 2.2%6 16 20 12 36 9 42 57
Energy & Environment 6.4% 5.6% 4.0% 2.6% -3.8% 5.6% 2.8%4 42 16 37 2 46 55
Healthcare 16.5% 11.7% 6.6% 4.9% 2.6% 0.6% 8.2% 2.7%1 4 14 7 31 3 19 41
Leisure & Entertainment 6.4% 6.9% 4.8% 1.5% 0.2% 6.9% 1.9%2 9 15 45 7 11 67
Manufacturing 8.6% 8.6% 6.5% 4.8% 2.3% -0.3% 7.2% 3.2%2 13 21 16 33 12 36 61
Media 5.4% 2.7% 1.7% 0.1% -4.3% 3.7% 0.0%6 18 19 39 18 24 76
Metals & Mining 18.8% 16.4% 7.4% 10.9% 0.6% -9.8% 7.7% 5.5%1 3 14 9 11 2 18 22
Natural Products 8.6% 3.4% 3.9% 0.4% -6.5% 4.1% 0.1%3 7 4 18 3 10 25
Oil & Gas 11.9% 13.7% 9.1% 6.5% 6.8% 3.7% 10.4% 6.7%2 6 12 14 18 3 20 35
Packaging 5.5% 4.4% 3.7% 0.0% -3.6% 5.1% -0.3%1 4 5 12 6 5 23
Pharmaceuticals 11.8% 11.5% 2.0% 8.7% -2.0% 10.2% 6.5%4 4 3 3 5 11 8
Retail & Distribution 8.0% 6.7% 4.7% 3.7% 2.4% -0.1% 5.9% 2.6%3 8 21 27 42 18 32 87
Services 3.5% 5.7% 5.3% 4.7% 1.9% -3.1% 5.3% 1.6%1 6 7 13 29 11 14 53
Technology 6.7% 10.7% 7.2% 0.7% -0.1% -3.2% 9.9% 0.0%1 6 4 8 22 2 11 32
Telecommunications 5.0% 4.2% 3.7% -0.6% -3.8% 4.8% -1.2%15 19 6 18 10 34 34
Transportation Services 9.3% 5.6% 4.1% 5.2% 1.3% -0.5% 4.2% 1.0%1 2 13 5 13 10 16 28
20 Moody’s Special Comment
Exhibit A-6: Median Profit Margins
Aaa-Aa A Baa Ba B Caa-C IG SGAggregate 11.8% 9.0% 6.7% 5.0% 2.0% -2.6% 7.8% 2.1%
n= 22 116 257 212 467 133 395 812
Aerospace & Defense 6.0% 4.5% 4.5% 4.2% -19.9% 4.7% 4.0%6 4 4 12 1 10 17
Automotive 7.1% 5.5% 0.4% 0.8% -6.3% 5.5% 0.2%1 4 7 20 11 5 38
Chemicals 7.8% 5.4% 5.2% 1.4% 0.7% 7.0% 1.7%9 13 12 19 4 22 35
Construction & Engineering 1.7% 9.0% 6.6% 1.4% -2.2% 8.9% 6.0%1 8 10 6 1 9 17
Consumer Products 12.6% 9.0% 6.6% 4.1% 2.6% -3.9% 8.3% 2.4%6 16 20 12 36 9 42 57
Energy & Environment 9.2% 8.4% 10.1% 3.3% -8.2% 8.4% 4.3%4 42 16 37 2 46 55
Healthcare 15.2% 14.2% 8.3% 6.3% 2.7% 0.6% 9.6% 3.8%1 4 14 7 31 3 19 41
Leisure & Entertainment 14.8% 5.8% 9.2% 2.0% -3.9% 6.8% 3.0%2 9 15 45 7 11 67
Manufacturing 10.2% 8.2% 6.4% 3.8% 2.1% -0.6% 7.7% 2.9%2 13 21 16 33 12 36 61
Media 9.4% 7.6% 2.6% 0.3% -9.4% 7.8% 0.0%6 18 19 39 18 24 76
Metals & Mining 27.1% 10.3% 11.6% 9.2% 0.7% -17.2% 11.6% 4.3%1 3 14 9 11 2 18 22
Natural Products 4.7% 3.4% 3.5% 0.1% -5.5% 3.5% 0.1%3 7 4 18 3 10 25
Oil & Gas 8.3% 29.7% 17.5% 17.4% 20.3% 15.4% 17.5% 19.1%2 6 12 14 18 3 20 35
Packaging 4.6% 4.4% 3.6% -0.1% -3.1% 4.6% -0.4%1 4 5 12 6 5 23
Pharmaceuticals 20.0% 17.0% 3.3% 13.9% -0.1% 17.4% 8.4%4 4 3 3 6 11 9
Retail & Distribution 3.5% 5.4% 3.9% 2.6% 1.7% -0.2% 4.4% 1.4%3 8 21 27 42 18 32 87
Services 10.8% 6.7% 7.7% 5.0% 2.9% -3.1% 7.3% 2.7%1 6 7 13 29 11 14 53
Technology 9.1% 10.5% 11.6% 0.5% -0.1% -4.2% 9.1% -0.1%1 6 4 8 22 2 11 32
Telecommunications 11.0% 6.7% 7.4% -2.6% -9.8% 10.2% -1.9%15 19 6 18 10 34 34
Transportation Services 8.8% 16.3% 7.1% 3.3% 2.5% -0.8% 8.7% 1.1%1 2 13 5 13 10 16 28
Moody’s Special Comment 21
Exhibit A-7: Median Liquidity Ratios
Aaa-Aa A Baa Ba B Caa-C IG SGAggregate 7.8% 4.7% 4.0% 4.3% 3.9% 3.3% 4.6% 3.9%
n= 22 116 257 212 468 134 395 814
Aerospace & Defense 7.0% 4.7% 2.8% 11.7% 0.3% 4.9% 7.2%6 4 4 12 1 10 17
Automotive 25.7% 7.2% 6.4% 3.6% 2.3% 11.3% 3.2%1 4 7 20 11 5 38
Chemicals 1.8% 6.0% 2.6% 3.1% 2.9% 5.1% 2.7%9 13 12 19 4 22 35
Construction & Engineering 16.1% 4.4% 3.4% 16.1% 0.0% 5.2% 4.6%1 8 10 6 1 9 17
Consumer Products 11.6% 4.7% 5.7% 5.1% 3.1% 1.1% 5.7% 3.1%6 16 20 12 36 9 42 57
Energy & Environment 6.7% 1.7% 2.5% 4.6% 1.0% 1.8% 3.9%4 42 16 37 2 46 55
Healthcare 5.7% 14.1% 8.2% 6.2% 4.4% 4.6% 9.9% 4.6%1 4 14 7 31 3 19 41
Leisure & Entertainment 7.3% 3.1% 3.6% 5.4% 4.7% 4.1% 4.7%2 9 15 46 8 11 69
Manufacturing 3.7% 5.9% 7.1% 5.2% 2.5% 3.6% 6.6% 4.2%2 13 21 16 33 12 36 61
Media 2.2% 1.2% 0.7% 2.0% 3.7% 1.3% 1.8%6 18 19 39 18 24 76
Metals & Mining 8.5% 3.9% 14.3% 12.6% 4.8% 21.8% 13.3% 9.7%1 3 14 9 11 2 18 22
Natural Products 2.7% 5.5% 5.1% 2.2% 0.8% 5.1% 2.4%3 7 4 18 3 10 25
Oil & Gas 9.0% 5.0% 2.1% 1.1% 1.1% 1.0% 3.4% 1.0%2 6 12 14 18 3 20 35
Packaging 2.0% 4.5% 1.3% 1.8% 1.0% 3.2% 1.4%1 4 5 12 6 5 23
Pharmaceuticals 22.9% 18.5% 21.3% 18.7% 9.2% 20.0% 15.8%4 4 3 3 6 11 9
Retail & Distribution 3.7% 2.7% 7.1% 5.9% 2.2% 3.8% 4.2% 3.8%3 8 21 27 42 18 32 87
Services 5.7% 9.3% 5.5% 5.7% 4.2% 3.2% 6.2% 4.2%1 6 7 13 29 11 14 53
Technology 3.9% 28.3% 16.7% 16.8% 19.8% 19.1% 20.0% 19.4%1 6 4 8 22 2 11 32
Telecommunications 1.6% 2.4% 4.9% 4.5% 9.1% 1.9% 5.7%15 19 6 18 10 34 34
Transportation Services 7.4% 5.7% 1.9% 4.3% 2.7% 8.0% 2.1% 4.4%1 2 13 5 13 10 16 28
22 Moody’s Special Comment
Exhibit A-8: Median Revenue Stability
Aaa-Aa A Baa Ba B Caa-C IG SGAggregate 7.2 7.3 6.1 5.2 6.1 7.3 6.6 5.9
n= 22 104 222 186 322 77 348 585
Aerospace & Defense 9.0 6.7 3.1 3.8 2.8 7.7 3.36 4 3 9 1 10 13
Automotive 4.0 4.2 8.6 8.2 14.1 4.1 9.51 4 6 15 9 5 30
Chemicals 6.6 7.6 7.1 6.2 1.5 6.9 6.19 11 10 12 1 20 23
Construction & Engineering 5.6 2.8 2.7 5.1 5.5 2.9 3.01 7 10 3 1 8 14
Consumer Products 12.0 12.7 10.2 8.2 8.4 7.0 11.8 8.26 16 20 10 24 5 42 39
Energy & Environment 4.4 4.3 4.3 4.8 1.1 4.3 4.32 24 14 26 1 26 41
Healthcare 8.2 7.6 6.2 6.5 4.8 19.5 6.6 5.51 4 13 6 24 2 18 32
Leisure & Entertainment 4.9 7.4 6.1 7.1 12.8 7.3 6.82 9 15 30 3 11 48
Manufacturing 7.5 9.3 7.4 5.3 4.7 5.4 7.4 5.12 13 20 15 20 5 35 40
Media 9.1 7.7 4.2 7.1 4.6 9.0 6.56 15 14 20 9 21 43
Metals & Mining 2.5 2.5 2.9 2.9 4.6 6.6 2.7 4.01 3 12 6 8 1 16 15
Natural Products 7.3 7.1 6.1 7.1 3.2 7.2 6.43 7 4 10 2 10 16
Oil & Gas 3.5 2.2 2.3 3.1 2.4 3.4 2.3 2.42 6 12 14 17 2 20 33
Packaging 8.0 7.1 10.2 9.4 9.9 8.0 9.61 4 4 9 4 5 17
Pharmaceuticals 5.0 3.9 8.4 5.7 5.9 5.5 5.84 4 3 3 5 11 8
Retail & Distribution 5.9 6.2 6.2 5.4 9.3 8.4 6.2 8.33 7 21 25 35 14 31 74
Services 11.0 6.7 9.9 5.9 5.4 19.5 8.2 6.11 5 6 10 15 3 12 28
Technology 8.9 4.3 5.7 7.0 6.5 4.9 4.4 6.21 6 4 7 17 2 11 26
Telecommunications 17.6 4.9 3.7 4.7 6.1 7.9 4.77 15 5 13 6 22 24
Transportation Services 7.2 6.2 10.2 2.5 7.0 7.7 8.0 6.91 2 11 5 10 6 14 21
Moody’s Special Comment 23
Appendix B Detailed Distributions by Industry
Source: Moody’s ratings and financial database as of July 1, 2006
Exhibit B-1: Aggregate
Exhibit B-2: Aerospace & Defense
Aaa-Aa 16.0 3.7 31.6% 52.4% 11.6% 11.8% 7.8% 7.2n = 22 22 22 22 22 22 22 22
A 8.6 2.4 41.7% 32.6% 7.5% 9.0% 4.7% 7.3102 116 116 116 116 116 116 104
Baa 5.4 2.3 44.8% 25.8% 5.3% 6.7% 4.0% 6.1220 255 257 257 257 257 257 222
Ba 3.7 2.0 49.8% 21.6% 4.4% 5.0% 4.3% 5.2186 211 212 212 212 212 212 186
B 1.9 1.3 68.7% 12.1% 1.7% 2.0% 3.9% 6.1333 465 468 468 466 467 468 322
Caa-C 0.7 1.0 92.2% 6.4% -2.1% -2.6% 3.3% 7.376 134 134 134 133 133 134 77
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Aaa-Aan =
A 8.1 2.6 52.6% 32.7% 6.8% 6.0% 7.0% 9.06 6 6 6 6 6 6 6
Baa 4.3 1.6 61.2% 18.1% 3.9% 4.5% 4.7% 6.74 4 4 4 4 4 4 4
Ba 4.3 1.7 55.7% 19.1% 4.7% 4.5% 2.8% 3.13 4 4 4 4 4 4 3
B 3.4 1.4 57.6% 14.8% 3.6% 4.2% 11.7% 3.89 12 12 12 12 12 12 9
Caa-C 0.3 -0.1 132.2% -9.1% -14.1% -19.9% 0.3% 2.81 1 1 1 1 1 1 1
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
24 Moody’s Special Comment
Exhibit B-3: Automotive
Exhibit B-4: Chemicals
Aaa-Aan =
A 3.6 3.4 48.1% 31.0% 8.5% 7.1% 25.7% 4.01 1 1 1 1 1 1 1
Baa 6.8 3.0 41.3% 40.2% 6.8% 5.5% 7.2% 4.24 4 4 4 4 4 4 4
Ba 1.7 2.1 59.7% 13.8% 0.5% 0.4% 6.4% 8.66 7 7 7 7 7 7 6
B 1.4 1.5 82.0% 10.1% 1.0% 0.8% 3.6% 8.215 20 20 20 20 20 20 15
Caa-C 0.5 1.0 83.9% 4.8% -4.9% -6.3% 2.3% 14.18 11 11 11 11 11 11 9
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Aaa-Aan =
A 6.3 2.2 50.8% 26.8% 6.3% 7.8% 1.8% 6.69 9 9 9 9 9 9 9
Baa 5.7 2.4 49.3% 22.1% 5.1% 5.4% 6.0% 7.611 13 13 13 13 13 13 11
Ba 3.0 1.8 53.1% 18.6% 4.3% 5.2% 2.6% 7.110 12 12 12 12 12 12 10
B 1.7 1.7 78.0% 9.4% 1.9% 1.4% 3.1% 6.210 19 19 19 19 19 19 12
Caa-C 1.0 1.0 118.7% 6.6% 0.8% 0.7% 2.9% 1.51 4 4 4 4 4 4 1
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Moody’s Special Comment 25
Exhibit B-5: Construction & Engineering
Exhibit B-6: Consumer Products
Aaa-Aan =
A 6.3 4.9 42.0% 27.7% 5.0% 1.7% 16.1% 5.61 1 1 1 1 1 1 1
Baa 8.6 2.9 45.3% 30.0% 11.1% 9.0% 4.4% 2.88 7 8 8 8 8 8 7
Ba 5.6 2.5 49.4% 26.7% 8.8% 6.6% 3.4% 2.710 10 10 10 10 10 10 10
B 3.7 2.2 63.5% 15.4% 2.3% 1.4% 16.1% 5.13 6 6 6 6 6 6 3
Caa-C 0.7 1.0 120.6% 2.4% -3.0% -2.2% 0.0% 5.51 1 1 1 1 1 1 1
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Aaa-Aa 14.3 2.0 56.7% 31.6% 14.5% 12.6% 11.6% 12.0n = 6 6 6 6 6 6 6 6
A 8.4 1.8 55.4% 24.7% 10.0% 9.0% 4.7% 12.716 16 16 16 16 16 16 16
Baa 5.6 1.7 52.3% 19.4% 5.5% 6.6% 5.7% 10.219 20 20 20 20 20 20 20
Ba 3.6 1.8 51.2% 17.4% 3.9% 4.1% 5.1% 8.210 12 12 12 12 12 12 10
B 2.1 1.0 63.5% 13.7% 2.4% 2.6% 3.1% 8.428 36 36 36 36 36 36 24
Caa-C 0.7 0.6 107.8% 1.7% -3.5% -3.9% 1.1% 7.04 9 9 9 9 9 9 5
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
26 Moody’s Special Comment
Exhibit B-7: Energy & Environment
Exhibit B-8: Healthcare
Aaa-Aan =
A 6.3 2.5 46.5% 31.1% 6.4% 9.2% 6.7% 4.42 4 4 4 4 4 4 2
Baa 4.1 2.5 49.4% 14.3% 5.6% 8.4% 1.7% 4.324 41 42 42 42 42 42 24
Ba 3.3 2.3 46.2% 18.2% 4.0% 10.1% 2.5% 4.314 16 16 16 16 16 16 14
B 1.7 1.7 61.5% 11.1% 2.6% 3.3% 4.6% 4.829 36 37 37 37 37 37 26
Caa-C 1.8 1.6 54.7% 15.6% -3.8% -8.2% 1.0% 1.11 2 2 2 2 2 2 1
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Aaa-Aa 34.7 3.6 38.2% 56.7% 16.5% 15.2% 5.7% 8.2n = 1 1 1 1 1 1 1 1
A 14.2 2.8 37.5% 45.5% 11.7% 14.2% 14.1% 7.64 4 4 4 4 4 4 4
Baa 9.6 2.4 41.4% 35.5% 6.6% 8.3% 8.2% 6.213 14 14 14 14 14 14 13
Ba 3.8 1.6 44.8% 27.4% 4.9% 6.3% 6.2% 6.56 7 7 7 7 7 7 6
B 2.3 1.1 60.7% 17.4% 2.6% 2.7% 4.4% 4.824 30 31 31 31 31 31 24
Caa-C 1.6 1.0 53.9% 30.0% 0.6% 0.6% 4.6% 19.52 3 3 3 3 3 3 2
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Moody’s Special Comment 27
Exhibit B-9: Leisure & Entertainment
Exhibit B-10: Manufacturing
Aaa-Aan =
A 6.4 2.5 43.7% 26.8% 6.4% 14.8% 7.3% 4.92 2 2 2 2 2 2 2
Baa 4.3 2.2 50.2% 22.6% 6.9% 5.8% 3.1% 7.49 9 9 9 9 9 9 9
Ba 2.7 1.7 64.1% 14.9% 4.8% 9.2% 3.6% 6.115 15 15 15 15 15 15 15
B 1.3 1.1 82.5% 9.3% 1.5% 2.0% 5.4% 7.130 46 46 46 45 45 46 30
Caa-C 0.9 0.9 90.3% 6.2% 0.2% -3.9% 4.7% 12.83 8 8 8 7 7 8 3
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Aaa-Aa 12.6 4.6 22.3% 63.1% 8.6% 10.2% 3.7% 7.5n = 2 2 2 2 2 2 2 2
A 8.5 2.2 41.5% 33.2% 8.6% 8.2% 5.9% 9.313 13 13 13 13 13 13 13
Baa 6.5 1.9 44.3% 27.5% 6.5% 6.4% 7.1% 7.420 21 21 21 21 21 21 20
Ba 5.5 2.1 44.0% 24.0% 4.8% 3.8% 5.2% 5.315 16 16 16 16 16 16 15
B 2.0 1.0 66.9% 10.8% 2.3% 2.1% 2.5% 4.718 33 33 33 33 33 33 20
Caa-C 0.9 0.8 88.3% 6.7% -0.3% -0.6% 3.6% 5.45 12 12 12 12 12 12 5
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
28 Moody’s Special Comment
Exhibit B-11: Media
Exhibit B-12: Metals & Mining
Aaa-Aan =
A 8.7 2.1 30.8% 36.6% 5.4% 9.4% 2.2% 9.16 6 6 6 6 6 6 6
Baa 3.9 1.3 45.4% 17.9% 2.7% 7.6% 1.2% 7.715 18 18 18 18 18 18 15
Ba 1.6 0.7 58.7% 12.7% 1.7% 2.6% 0.7% 4.214 19 19 19 19 19 19 14
B 1.4 0.6 76.0% 7.8% 0.1% 0.3% 2.0% 7.120 39 39 39 39 39 39 20
Caa-C 0.7 0.5 101.6% 6.2% -4.3% -9.4% 3.7% 4.68 18 18 18 18 18 18 9
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Aaa-Aa 18.0 6.9 22.5% 104.1% 18.8% 27.1% 8.5% 2.5n = 1 1 1 1 1 1 1 1
A 15.9 3.7 38.6% 50.8% 16.4% 10.3% 3.9% 2.53 3 3 3 3 3 3 3
Baa 7.2 4.6 28.4% 42.5% 7.4% 11.6% 14.3% 2.911 14 14 14 14 14 14 12
Ba 7.1 3.9 42.4% 40.8% 10.9% 9.2% 12.6% 2.97 9 9 9 9 9 9 6
B 3.1 2.4 55.2% 21.6% 0.6% 0.7% 4.8% 4.611 11 11 11 11 11 11 8
Caa-C -9.0 46.0 43.6% -25.5% -9.8% -17.2% 21.8% 6.62 2 2 2 2 2 2 1
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Moody’s Special Comment 29
Exhibit B-13: Natural Products
Exhibit B-14: Oil & Gas
Aaa-Aan =
A 6.2 3.2 40.4% 27.0% 8.6% 4.7% 2.7% 7.33 3 3 3 3 3 3 3
Baa 3.1 2.7 41.2% 23.1% 3.4% 3.4% 5.5% 7.17 7 7 7 7 7 7 7
Ba 3.1 3.8 33.9% 22.3% 3.9% 3.5% 5.1% 6.14 4 4 4 4 4 4 4
B 1.1 1.4 70.9% 9.7% 0.4% 0.1% 2.2% 7.111 18 18 18 18 18 18 10
Caa-C -0.5 1.6 81.3% 2.3% -6.5% -5.5% 0.8% 3.22 3 3 3 3 3 3 2
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Aaa-Aa 21.7 5.4 25.2% 80.5% 11.9% 8.3% 9.0% 3.5n = 2 2 2 2 2 2 2 2
A 18.6 5.3 22.6% 109.2% 13.7% 29.7% 5.0% 2.26 6 6 6 6 6 6 6
Baa 11.3 3.7 34.2% 64.9% 9.1% 17.5% 2.1% 2.312 12 12 12 12 12 12 12
Ba 4.9 3.4 38.9% 35.3% 6.5% 17.4% 1.1% 3.114 13 14 14 14 14 14 14
B 5.9 3.0 44.7% 36.2% 6.8% 20.3% 1.1% 2.418 18 18 18 18 18 18 17
Caa-C 2.6 2.3 48.6% 16.9% 3.7% 15.4% 1.0% 3.42 3 3 3 3 3 3 2
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
30 Moody’s Special Comment
Exhibit B-15: Packaging
Exhibit B-16: Pharmaceuticals
Aaa-Aan =
A 4.9 1.9 53.5% 20.0% 5.5% 4.6% 2.0% 8.01 1 1 1 1 1 1 1
Baa 3.3 1.9 51.9% 18.5% 4.4% 4.4% 4.5% 7.14 4 4 4 4 4 4 4
Ba 3.1 1.6 66.7% 15.7% 3.7% 3.6% 1.3% 10.24 5 5 5 5 5 5 4
B 1.5 1.3 80.1% 10.7% 0.0% -0.1% 1.8% 9.410 12 12 12 12 12 12 9
Caa-C 0.5 0.8 116.4% 4.2% -3.6% -3.1% 1.0% 9.94 6 6 6 6 6 6 4
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Aaa-Aa 19.2 3.5 28.3% 41.3% 11.8% 20.0% 22.9% 5.0n = 4 4 4 4 4 4 4 4
A 28.7 3.1 33.2% 56.1% 11.5% 17.0% 18.5% 3.94 4 4 4 4 4 4 4
Baa 2.1 2.8 43.0% 20.4% 2.0% 3.3% 21.3% 8.43 3 3 3 3 3 3 3
Ba 27.0 2.8 23.2% 59.4% 8.7% 13.9% 18.7% 5.73 3 3 3 3 3 3 3
B 2.0 1.3 56.0% 11.8% -2.0% -0.1% 9.2% 5.95 6 6 6 5 6 6 5
Caa-C
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Moody’s Special Comment 31
Exhibit B-17: Retail & Distribution
Exhibit B-18: Services
Aaa-Aa 8.2 2.8 45.5% 29.7% 8.0% 3.5% 3.7% 5.9n = 3 3 3 3 3 3 3 3
A 7.9 2.7 46.5% 34.0% 6.7% 5.4% 2.7% 6.27 8 8 8 8 8 8 7
Baa 4.3 2.0 60.0% 21.6% 4.7% 3.9% 7.1% 6.221 21 21 21 21 21 21 21
Ba 3.9 2.0 56.4% 21.0% 3.7% 2.6% 5.9% 5.425 27 27 27 27 27 27 25
B 2.1 1.5 70.1% 12.7% 2.4% 1.7% 2.2% 9.336 42 42 42 42 42 42 35
Caa-C 1.1 1.1 81.9% 8.1% -0.1% -0.2% 3.8% 8.413 18 18 18 18 18 18 14
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Aaa-Aa 12.5 15.5 21.7% 83.8% 3.5% 10.8% 5.7% 11.0n = 1 1 1 1 1 1 1 1
A 4.9 2.8 41.2% 38.3% 5.7% 6.7% 9.3% 6.75 6 6 6 6 6 6 5
Baa 4.6 1.9 49.0% 28.4% 5.3% 7.7% 5.5% 9.96 7 7 7 7 7 7 6
Ba 4.7 1.8 45.6% 26.7% 4.7% 5.0% 5.7% 5.911 13 13 13 13 13 13 10
B 2.0 1.1 71.5% 12.5% 1.9% 2.9% 4.2% 5.416 29 29 29 29 29 29 15
Caa-C 0.2 0.8 115.3% 7.2% -3.1% -3.1% 3.2% 19.54 11 11 11 11 11 11 3
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
32 Moody’s Special Comment
Exhibit B-19: Technology
Exhibit B-20: Telecommunications
Aaa-Aa 4.6 2.0 53.6% 28.7% 6.7% 9.1% 3.9% 8.9n = 1 1 1 1 1 1 1 1
A 22.4 9.4 16.0% 155.0% 10.7% 10.5% 28.3% 4.36 6 6 6 6 6 6 6
Baa 8.5 2.9 28.5% 59.2% 7.2% 11.6% 16.7% 5.74 4 4 4 4 4 4 4
Ba 2.3 3.6 33.8% 23.1% 0.7% 0.5% 16.8% 7.07 8 8 8 8 8 8 7
B 2.3 2.2 45.2% 21.9% -0.1% -0.1% 19.8% 6.517 21 22 22 22 22 22 17
Caa-C 0.5 2.0 66.0% 14.5% -3.2% -4.2% 19.1% 4.92 2 2 2 2 2 2 2
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Aaa-Aan =
A 4.8 2.3 54.8% 28.0% 5.0% 11.0% 1.6% 17.65 15 15 15 15 15 15 7
Baa 2.9 2.2 44.8% 33.3% 4.2% 6.7% 2.4% 4.914 19 19 19 19 19 19 15
Ba 3.3 1.7 67.6% 21.3% 3.7% 7.4% 4.9% 3.73 6 6 6 6 6 6 5
B 0.8 1.1 74.4% 9.8% -0.6% -2.6% 4.5% 4.713 18 18 18 18 18 18 13
Caa-C 0.2 0.7 116.1% 8.2% -3.8% -9.8% 9.1% 6.17 10 10 10 10 10 10 6
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Moody’s Special Comment 33
Exhibit B-21: Transportation Services
Aaa-Aa 14.1 3.8 32.8% 54.9% 9.3% 8.8% 7.4% 7.2n = 1 1 1 1 1 1 1 1
A 5.2 2.8 41.3% 26.1% 5.6% 16.3% 5.7% 6.22 2 2 2 2 2 2 2
Baa 3.5 2.8 41.1% 22.6% 4.1% 7.1% 1.9% 10.211 13 13 13 13 13 13 11
Ba 3.5 1.6 58.2% 22.1% 5.2% 3.3% 4.3% 2.55 5 5 5 5 5 5 5
B 1.2 1.8 66.4% 13.4% 1.3% 2.5% 2.7% 7.010 13 13 13 13 13 13 10
Caa-C 0.8 1.3 93.3% 8.4% -0.5% -0.8% 8.0% 7.76 10 10 10 10 10 10 6
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
34 Moody’s Special Comment
Appendix C Detailed Distributions by Broad Rating Category
Source: Moody’s ratings and financial database as of July 1, 2006
Exhibit C-1: Rating Aaa - Aa
Aggregate 16.0 3.7 31.6% 52.4% 11.6% 11.8% 7.8% 7.2n= 22 22 22 22 22 22 22 22
Aerospace & Defense
Automotive
Chemicals
Construction & Engineering
Consumer Products 14.3 2.0 56.7% 31.6% 14.5% 12.6% 11.6% 12.06 6 6 6 6 6 6 6
Energy & Environment
Healthcare 34.7 3.6 38.2% 56.7% 16.5% 15.2% 5.7% 8.21 1 1 1 1 1 1 1
Leisure & Entertainment
Manufacturing 12.6 4.6 22.3% 63.1% 8.6% 10.2% 3.7% 7.52 2 2 2 2 2 2 2
Media
Metals & Mining 18.0 6.9 22.5% 104.1% 18.8% 27.1% 8.5% 2.51 1 1 1 1 1 1 1
Natural Products
Oil & Gas 21.7 5.4 25.2% 80.5% 11.9% 8.3% 9.0% 3.52 2 2 2 2 2 2 2
Packaging
Pharmaceuticals 19.2 3.5 28.3% 41.3% 11.8% 20.0% 22.9% 5.04 4 4 4 4 4 4 4
Retail & Distribution 8.2 2.8 45.5% 29.7% 8.0% 3.5% 3.7% 5.93 3 3 3 3 3 3 3
Services 12.5 15.5 21.7% 83.8% 3.5% 10.8% 5.7% 11.01 1 1 1 1 1 1 1
Technology 4.6 2.0 53.6% 28.7% 6.7% 9.1% 3.9% 8.91 1 1 1 1 1 1 1
Telecommunications
Transportation Services 14.1 3.8 32.8% 54.9% 9.3% 8.8% 7.4% 7.21 1 1 1 1 1 1 1
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Moody’s Special Comment 35
Exhibit C-2: Rating A
Aggregate 8.6 2.4 41.7% 32.6% 7.5% 9.0% 4.7% 7.3n= 102 116 116 116 116 116 116 104
Aerospace & Defense 8.1 2.6 52.6% 32.7% 6.8% 6.0% 7.0% 9.06 6 6 6 6 6 6 6
Automotive 3.6 3.4 48.1% 31.0% 8.5% 7.1% 25.7% 4.01 1 1 1 1 1 1 1
Chemicals 6.3 2.2 50.8% 26.8% 6.3% 7.8% 1.8% 6.69 9 9 9 9 9 9 9
Construction & Engineering 6.3 4.9 42.0% 27.7% 5.0% 1.7% 16.1% 5.61 1 1 1 1 1 1 1
Consumer Products 8.4 1.8 55.4% 24.7% 10.0% 9.0% 4.7% 12.716 16 16 16 16 16 16 16
Energy & Environment 6.3 2.5 46.5% 31.1% 6.4% 9.2% 6.7% 4.42 4 4 4 4 4 4 2
Healthcare 14.2 2.8 37.5% 45.5% 11.7% 14.2% 14.1% 7.64 4 4 4 4 4 4 4
Leisure & Entertainment 6.4 2.5 43.7% 26.8% 6.4% 14.8% 7.3% 4.92 2 2 2 2 2 2 2
Manufacturing 8.5 2.2 41.5% 33.2% 8.6% 8.2% 5.9% 9.313 13 13 13 13 13 13 13
Media 8.7 2.1 30.8% 36.6% 5.4% 9.4% 2.2% 9.16 6 6 6 6 6 6 6
Metals & Mining 15.9 3.7 38.6% 50.8% 16.4% 10.3% 3.9% 2.53 3 3 3 3 3 3 3
Natural Products 6.2 3.2 40.4% 27.0% 8.6% 4.7% 2.7% 7.33 3 3 3 3 3 3 3
Oil & Gas 18.6 5.3 22.6% 109.2% 13.7% 29.7% 5.0% 2.26 6 6 6 6 6 6 6
Packaging 4.9 1.9 53.5% 20.0% 5.5% 4.6% 2.0% 8.01 1 1 1 1 1 1 1
Pharmaceuticals 28.7 3.1 33.2% 56.1% 11.5% 17.0% 18.5% 3.94 4 4 4 4 4 4 4
Retail & Distribution 7.9 2.7 46.5% 34.0% 6.7% 5.4% 2.7% 6.27 8 8 8 8 8 8 7
Services 4.9 2.8 41.2% 38.3% 5.7% 6.7% 9.3% 6.75 6 6 6 6 6 6 5
Technology 22.4 9.4 16.0% 155.0% 10.7% 10.5% 28.3% 4.36 6 6 6 6 6 6 6
Telecommunications 4.8 2.3 54.8% 28.0% 5.0% 11.0% 1.6% 17.65 15 15 15 15 15 15 7
Transportation Services 5.2 2.8 41.3% 26.1% 5.6% 16.3% 5.7% 6.22 2 2 2 2 2 2 2
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
36 Moody’s Special Comment
Exhibit C-3: Rating Baa
Aggregate 5.4 2.3 44.8% 25.8% 5.3% 6.7% 4.0% 6.1n= 220 255 257 257 257 257 257 222
Aerospace & Defense 4.3 1.6 61.2% 18.1% 3.9% 4.5% 4.7% 6.74 4 4 4 4 4 4 4
Automotive 6.8 3.0 41.3% 40.2% 6.8% 5.5% 7.2% 4.24 4 4 4 4 4 4 4
Chemicals 5.7 2.4 49.3% 22.1% 5.1% 5.4% 6.0% 7.611 13 13 13 13 13 13 11
Construction & Engineering 8.6 2.9 45.3% 30.0% 11.1% 9.0% 4.4% 2.88 7 8 8 8 8 8 7
Consumer Products 5.6 1.7 52.3% 19.4% 5.5% 6.6% 5.7% 10.219 20 20 20 20 20 20 20
Energy & Environment 4.1 2.5 49.4% 14.3% 5.6% 8.4% 1.7% 4.324 41 42 42 42 42 42 24
Healthcare 9.6 2.4 41.4% 35.5% 6.6% 8.3% 8.2% 6.213 14 14 14 14 14 14 13
Leisure & Entertainment 4.3 2.2 50.2% 22.6% 6.9% 5.8% 3.1% 7.49 9 9 9 9 9 9 9
Manufacturing 6.5 1.9 44.3% 27.5% 6.5% 6.4% 7.1% 7.420 21 21 21 21 21 21 20
Media 3.9 1.3 45.4% 17.9% 2.7% 7.6% 1.2% 7.715 18 18 18 18 18 18 15
Metals & Mining 7.2 4.6 28.4% 42.5% 7.4% 11.6% 14.3% 2.911 14 14 14 14 14 14 12
Natural Products 3.1 2.7 41.2% 23.1% 3.4% 3.4% 5.5% 7.17 7 7 7 7 7 7 7
Oil & Gas 11.3 3.7 34.2% 64.9% 9.1% 17.5% 2.1% 2.312 12 12 12 12 12 12 12
Packaging 3.3 1.9 51.9% 18.5% 4.4% 4.4% 4.5% 7.14 4 4 4 4 4 4 4
Pharmaceuticals 2.1 2.8 43.0% 20.4% 2.0% 3.3% 21.3% 8.43 3 3 3 3 3 3 3
Retail & Distribution 4.3 2.0 60.0% 21.6% 4.7% 3.9% 7.1% 6.221 21 21 21 21 21 21 21
Services 4.6 1.9 49.0% 28.4% 5.3% 7.7% 5.5% 9.96 7 7 7 7 7 7 6
Technology 8.5 2.9 28.5% 59.2% 7.2% 11.6% 16.7% 5.74 4 4 4 4 4 4 4
Telecommunications 2.9 2.2 44.8% 33.3% 4.2% 6.7% 2.4% 4.914 19 19 19 19 19 19 15
Transportation Services 3.5 2.8 41.1% 22.6% 4.1% 7.1% 1.9% 10.211 13 13 13 13 13 13 11
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Moody’s Special Comment 37
Exhibit C-4: Rating Ba
Aggregate 3.7 2.0 49.8% 21.6% 4.4% 5.0% 4.3% 5.2n= 186 211 212 212 212 212 212 186
Aerospace & Defense 4.3 1.7 55.7% 19.1% 4.7% 4.5% 2.8% 3.13 4 4 4 4 4 4 3
Automotive 1.7 2.1 59.7% 13.8% 0.5% 0.4% 6.4% 8.66 7 7 7 7 7 7 6
Chemicals 3.0 1.8 53.1% 18.6% 4.3% 5.2% 2.6% 7.110 12 12 12 12 12 12 10
Construction & Engineering 5.6 2.5 49.4% 26.7% 8.8% 6.6% 3.4% 2.710 10 10 10 10 10 10 10
Consumer Products 3.6 1.8 51.2% 17.4% 3.9% 4.1% 5.1% 8.210 12 12 12 12 12 12 10
Energy & Environment 3.3 2.3 46.2% 18.2% 4.0% 10.1% 2.5% 4.314 16 16 16 16 16 16 14
Healthcare 3.8 1.6 44.8% 27.4% 4.9% 6.3% 6.2% 6.56 7 7 7 7 7 7 6
Leisure & Entertainment 2.7 1.7 64.1% 14.9% 4.8% 9.2% 3.6% 6.115 15 15 15 15 15 15 15
Manufacturing 5.5 2.1 44.0% 24.0% 4.8% 3.8% 5.2% 5.315 16 16 16 16 16 16 15
Media 1.6 0.7 58.7% 12.7% 1.7% 2.6% 0.7% 4.214 19 19 19 19 19 19 14
Metals & Mining 7.1 3.9 42.4% 40.8% 10.9% 9.2% 12.6% 2.97 9 9 9 9 9 9 6
Natural Products 3.1 3.8 33.9% 22.3% 3.9% 3.5% 5.1% 6.14 4 4 4 4 4 4 4
Oil & Gas 4.9 3.4 38.9% 35.3% 6.5% 17.4% 1.1% 3.114 13 14 14 14 14 14 14
Packaging 3.1 1.6 66.7% 15.7% 3.7% 3.6% 1.3% 10.24 5 5 5 5 5 5 4
Pharmaceuticals 27.0 2.8 23.2% 59.4% 8.7% 13.9% 18.7% 5.73 3 3 3 3 3 3 3
Retail & Distribution 3.9 2.0 56.4% 21.0% 3.7% 2.6% 5.9% 5.425 27 27 27 27 27 27 25
Services 4.7 1.8 45.6% 26.7% 4.7% 5.0% 5.7% 5.911 13 13 13 13 13 13 10
Technology 2.3 3.6 33.8% 23.1% 0.7% 0.5% 16.8% 7.07 8 8 8 8 8 8 7
Telecommunications 3.3 1.7 67.6% 21.3% 3.7% 7.4% 4.9% 3.73 6 6 6 6 6 6 5
Transportation Services 3.5 1.6 58.2% 22.1% 5.2% 3.3% 4.3% 2.55 5 5 5 5 5 5 5
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
38 Moody’s Special Comment
Exhibit C-5: Rating B
Aggregate 1.9 1.3 68.7% 12.1% 1.7% 2.0% 3.9% 6.1n= 333 465 468 468 466 467 468 322
Aerospace & Defense 3.4 1.4 57.6% 14.8% 3.6% 4.2% 11.7% 3.89 12 12 12 12 12 12 9
Automotive 1.4 1.5 82.0% 10.1% 1.0% 0.8% 3.6% 8.215 20 20 20 20 20 20 15
Chemicals 1.7 1.7 78.0% 9.4% 1.9% 1.4% 3.1% 6.210 19 19 19 19 19 19 12
Construction & Engineering 3.7 2.2 63.5% 15.4% 2.3% 1.4% 16.1% 5.13 6 6 6 6 6 6 3
Consumer Products 2.1 1.0 63.5% 13.7% 2.4% 2.6% 3.1% 8.428 36 36 36 36 36 36 24
Energy & Environment 1.7 1.7 61.5% 11.1% 2.6% 3.3% 4.6% 4.829 36 37 37 37 37 37 26
Healthcare 2.3 1.1 60.7% 17.4% 2.6% 2.7% 4.4% 4.824 30 31 31 31 31 31 24
Leisure & Entertainment 1.3 1.1 82.5% 9.3% 1.5% 2.0% 5.4% 7.130 46 46 46 45 45 46 30
Manufacturing 2.0 1.0 66.9% 10.8% 2.3% 2.1% 2.5% 4.718 33 33 33 33 33 33 20
Media 1.4 0.6 76.0% 7.8% 0.1% 0.3% 2.0% 7.120 39 39 39 39 39 39 20
Metals & Mining 3.1 2.4 55.2% 21.6% 0.6% 0.7% 4.8% 4.611 11 11 11 11 11 11 8
Natural Products 1.1 1.4 70.9% 9.7% 0.4% 0.1% 2.2% 7.111 18 18 18 18 18 18 10
Oil & Gas 5.9 3.0 44.7% 36.2% 6.8% 20.3% 1.1% 2.418 18 18 18 18 18 18 17
Packaging 1.5 1.3 80.1% 10.7% 0.0% -0.1% 1.8% 9.410 12 12 12 12 12 12 9
Pharmaceuticals 2.0 1.3 56.0% 11.8% -2.0% -0.1% 9.2% 5.95 6 6 6 5 6 6 5
Retail & Distribution 2.1 1.5 70.1% 12.7% 2.4% 1.7% 2.2% 9.336 42 42 42 42 42 42 35
Services 2.0 1.1 71.5% 12.5% 1.9% 2.9% 4.2% 5.416 29 29 29 29 29 29 15
Technology 2.3 2.2 45.2% 21.9% -0.1% -0.1% 19.8% 6.517 21 22 22 22 22 22 17
Telecommunications 0.8 1.1 74.4% 9.8% -0.6% -2.6% 4.5% 4.713 18 18 18 18 18 18 13
Transportation Services 1.2 1.8 66.4% 13.4% 1.3% 2.5% 2.7% 7.010 13 13 13 13 13 13 10
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Moody’s Special Comment 39
Exhibit C-6: Rating Caa-C
Aggregate 0.7 1.0 92.2% 6.4% -2.1% -2.6% 3.3% 7.3n= 76 134 134 134 133 133 134 77
Aerospace & Defense 0.3 -0.1 132.2% -9.1% -14.1% -19.9% 0.3% 2.81 1 1 1 1 1 1 1
Automotive 0.5 1.0 83.9% 4.8% -4.9% -6.3% 2.3% 14.18 11 11 11 11 11 11 9
Chemicals 1.0 1.0 118.7% 6.6% 0.8% 0.7% 2.9% 1.51 4 4 4 4 4 4 1
Construction & Engineering 0.7 1.0 120.6% 2.4% -3.0% -2.2% 0.0% 5.51 1 1 1 1 1 1 1
Consumer Products 0.7 0.6 107.8% 1.7% -3.5% -3.9% 1.1% 7.04 9 9 9 9 9 9 5
Energy & Environment 1.8 1.6 54.7% 15.6% -3.8% -8.2% 1.0% 1.11 2 2 2 2 2 2 1
Healthcare 1.6 1.0 53.9% 30.0% 0.6% 0.6% 4.6% 19.52 3 3 3 3 3 3 2
Leisure & Entertainment 0.9 0.9 90.3% 6.2% 0.2% -3.9% 4.7% 12.83 8 8 8 7 7 8 3
Manufacturing 0.9 0.8 88.3% 6.7% -0.3% -0.6% 3.6% 5.45 12 12 12 12 12 12 5
Media 0.7 0.5 101.6% 6.2% -4.3% -9.4% 3.7% 4.68 18 18 18 18 18 18 9
Metals & Mining -9.0 46.0 43.6% -25.5% -9.8% -17.2% 21.8% 6.62 2 2 2 2 2 2 1
Natural Products -0.5 1.6 81.3% 2.3% -6.5% -5.5% 0.8% 3.22 3 3 3 3 3 3 2
Oil & Gas 2.6 2.3 48.6% 16.9% 3.7% 15.4% 1.0% 3.42 3 3 3 3 3 3 2
Packaging 0.5 0.8 116.4% 4.2% -3.6% -3.1% 1.0% 9.94 6 6 6 6 6 6 4
Pharmaceuticals
Retail & Distribution 1.1 1.1 81.9% 8.1% -0.1% -0.2% 3.8% 8.413 18 18 18 18 18 18 14
Services 0.2 0.8 115.3% 7.2% -3.1% -3.1% 3.2% 19.54 11 11 11 11 11 11 3
Technology 0.5 2.0 66.0% 14.5% -3.2% -4.2% 19.1% 4.92 2 2 2 2 2 2 2
Telecommunications 0.2 0.7 116.1% 8.2% -3.8% -9.8% 9.1% 6.17 10 10 10 10 10 10 6
Transportation Services 0.8 1.3 93.3% 8.4% -0.5% -0.8% 8.0% 7.76 10 10 10 10 10 10 6
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
40 Moody’s Special Comment
Exhibit C-7: All Investment-Grade
Aggregate 6.5 2.4 43.6% 28.4% 6.3% 7.8% 4.6% 6.6n= 344 393 395 395 395 395 395 348
Aerospace & Defense 5.8 2.4 54.6% 24.0% 5.8% 4.7% 4.9% 7.710 10 10 10 10 10 10 10
Automotive 6.3 3.0 43.6% 39.3% 7.5% 5.5% 11.3% 4.15 5 5 5 5 5 5 5
Chemicals 6.0 2.2 50.3% 26.7% 6.1% 7.0% 5.1% 6.920 22 22 22 22 22 22 20
Construction & Engineering 8.0 2.9 45.2% 27.7% 10.7% 8.9% 5.2% 2.99 8 9 9 9 9 9 8
Consumer Products 7.0 1.9 54.0% 23.9% 8.0% 8.3% 5.7% 11.841 42 42 42 42 42 42 42
Energy & Environment 4.1 2.5 49.4% 14.3% 5.6% 8.4% 1.8% 4.326 45 46 46 46 46 46 26
Healthcare 11.4 2.4 39.9% 40.7% 8.2% 9.6% 9.9% 6.618 19 19 19 19 19 19 18
Leisure & Entertainment 5.0 2.2 50.2% 22.6% 6.9% 6.8% 4.1% 7.311 11 11 11 11 11 11 11
Manufacturing 7.8 2.1 43.2% 30.6% 7.2% 7.7% 6.6% 7.435 36 36 36 36 36 36 35
Media 5.0 1.4 39.6% 21.6% 3.7% 7.8% 1.3% 9.021 24 24 24 24 24 24 21
Metals & Mining 8.2 4.6 28.4% 46.5% 7.7% 11.6% 13.3% 2.715 18 18 18 18 18 18 16
Natural Products 3.7 2.9 41.2% 24.4% 4.1% 3.5% 5.1% 7.210 10 10 10 10 10 10 10
Oil & Gas 13.7 4.1 28.5% 67.2% 10.4% 17.5% 3.4% 2.320 20 20 20 20 20 20 20
Packaging 3.4 1.9 53.5% 18.8% 5.1% 4.6% 3.2% 8.05 5 5 5 5 5 5 5
Pharmaceuticals 14.4 2.9 33.3% 35.4% 10.2% 17.4% 20.0% 5.511 11 11 11 11 11 11 11
Retail & Distribution 5.3 2.2 53.7% 24.9% 5.9% 4.4% 4.2% 6.231 32 32 32 32 32 32 31
Services 5.0 2.6 42.8% 37.0% 5.3% 7.3% 6.2% 8.212 14 14 14 14 14 14 12
Technology 10.0 4.8 25.1% 97.3% 9.9% 9.1% 20.0% 4.411 11 11 11 11 11 11 11
Telecommunications 3.5 2.2 51.3% 29.3% 4.8% 10.2% 1.9% 7.919 34 34 34 34 34 34 22
Transportation Services 3.6 2.9 40.6% 23.0% 4.2% 8.7% 2.1% 8.014 16 16 16 16 16 16 14
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
Moody’s Special Comment 41
Exhibit C-8: All Speculative-Grade
Aggregate 2.1 1.4 66.8% 12.7% 1.9% 2.1% 3.9% 5.9n= 595 810 814 814 811 812 814 585
Aerospace & Defense 3.5 1.4 57.4% 14.5% 3.8% 4.0% 7.2% 3.313 17 17 17 17 17 17 13
Automotive 1.2 1.5 80.2% 8.6% 0.3% 0.2% 3.2% 9.529 38 38 38 38 38 38 30
Chemicals 2.2 1.7 71.4% 10.1% 2.2% 1.7% 2.7% 6.121 35 35 35 35 35 35 23
Construction & Engineering 5.0 2.4 50.1% 22.3% 6.4% 6.0% 4.6% 3.014 17 17 17 17 17 17 14
Consumer Products 2.2 1.1 63.5% 12.8% 2.2% 2.4% 3.1% 8.242 57 57 57 57 57 57 39
Energy & Environment 1.9 1.8 58.0% 12.8% 2.8% 4.3% 3.9% 4.344 54 55 55 55 55 55 41
Healthcare 3.0 1.2 56.0% 19.7% 2.7% 3.8% 4.6% 5.532 40 41 41 41 41 41 32
Leisure & Entertainment 1.8 1.3 76.2% 9.9% 1.9% 3.0% 4.7% 6.848 69 69 69 67 67 69 48
Manufacturing 3.4 1.1 66.0% 12.8% 3.2% 2.9% 4.2% 5.138 61 61 61 61 61 61 40
Media 1.2 0.6 76.5% 7.8% 0.0% 0.0% 1.8% 6.542 76 76 76 76 76 76 43
Metals & Mining 3.7 3.2 51.6% 24.7% 5.5% 4.3% 9.7% 4.020 22 22 22 22 22 22 15
Natural Products 1.3 1.6 67.6% 9.9% 0.1% 0.1% 2.4% 6.417 25 25 25 25 25 25 16
Oil & Gas 5.6 3.3 42.8% 35.9% 6.7% 19.1% 1.0% 2.434 34 35 35 35 35 35 33
Packaging 1.5 1.2 80.7% 9.1% -0.3% -0.4% 1.4% 9.618 23 23 23 23 23 23 17
Pharmaceuticals 11.2 1.6 44.9% 48.5% 6.5% 8.4% 15.8% 5.88 9 9 9 8 9 9 8
Retail & Distribution 2.4 1.5 67.8% 13.6% 2.6% 1.4% 3.8% 8.374 87 87 87 87 87 87 74
Services 2.2 1.1 68.7% 13.3% 1.6% 2.7% 4.2% 6.131 53 53 53 53 53 53 28
Technology 2.2 2.5 42.3% 21.4% 0.0% -0.1% 19.4% 6.226 31 32 32 32 32 32 26
Telecommunications 0.8 1.0 84.4% 10.4% -1.2% -1.9% 5.7% 4.723 34 34 34 34 34 34 24
Transportation Services 1.4 1.5 70.1% 12.6% 1.0% 1.1% 4.4% 6.921 28 28 28 28 28 28 21
Revenue Stability
Return on Assets Profit Liquidity
Interest Coverage
Asset Coverage Leverage
Cash Flow-to-Debt
42 Moody’s Special Comment
Appendix D Definition of Financial Metrics
• Interest Coverage:– (EBIT - Interest Capitalized + (1/3)*Rental Expense) / (Interest Expense + (1/3)*Rental Expense +
Preferred Dividends/0.65)• Asset Coverage:
– (Total Assets - Goodwill - Intangibles) / Total Debt• Leverage:
– (Total Debt + 8*Rental Expense) / (Total Debt + 8*Rental Expense + Deferred Taxes + MinorityInterest + Total Equity)
• Cash Flow/Debt:– (Net After-Tax Income Before X-Items + Depreciations - Dividends) / (Total Debt + 8*Rental
Expense)• Return on Assets:
– Net After-Tax Income Before X-Items / 2 Year Average Assets• Profit:
– Net After-Tax Income Before X-Items / Net Sales• Liquidity:
– Cash & Market Securities / Total Assets• Revenue Stability:
– 5 Year Average Net Sales / 5 Year Standard Deviation Net Sales
Moody’s Special Comment 43
Appendix E Definition of Industry Aggregates
In this report we study the distribution of financial ratios across 20 industry aggregates. These aggregates are based onproprietary Moody’s 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.• Construction & Engineering
– Commercial and residential construction, homebuilding.• Consumer Products
– Packaged food and beverage, household and personal care products, apparel and shoes, textiles anddurable consumer products.
• Energy & Environment– (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 medicalservice providers.
• Leisure & Entertainment– Casinos, lodging, restaurants and general amusements.
• Manufacturing– Heavy machinery, building materials, (low technology) component equipment, (non-consumer)
finished products, and transportation equipment manufacturers.• 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.• Natural Products
– Pulp and (non-packaging) paper, wood products, agriculture, protein and tobacco processors.• Oil & Gas
– Oil & gas exploration and production, refining and marketing, and integrated oil companies.• Packaging
– Paper, glass, metal and plastic packaging.• Pharmaceuticals
– General and specialty.• Retail & Distribution
– Grocery stores, drug stores, department stores, general and specialty merchandise retailers, and variouswholesale distributors.
• Services– Business services, consumer services, technology services, and defense services.
• Technology– Computer hardware, software, component equipment, consumer electronics, semiconductor and
contract manufacturers.
44 Moody’s Special Comment
• Telecommunications– Wireless, wireline, towers, satellite equipment and services, equipment manufacturers and integrated
telecommunications companies.• Transportation Services
– Equipment leasing, airlines, air freight, railroad and maritime shipping, commuter transportation.
Moody’s Special Comment 45
References
Hamilton, D. (2005), “Moody’s Senior Ratings Algorithm & Estimated Senior Ratings,” Moody’s Global CreditResearch, July 2005.Metz, A., et. al. (2004), “The Distribution of Common Financial Ratios by Rating and Industry for North AmericanNon-Financial Corporations,” Moody’s Special Comment, December 2004.Metz, A., et. al. (2006), “The Distribution of Common Financial Ratios by Rating and Industry for North AmericanNon-Financial Corporations,” Moody’s Special Comment, February 2006.
46 Moody’s Special Comment
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48 Moody’s Special Comment
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