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Criteria | Corporates | Industrials:

Key Credit Factors: Criteria ForRating The Global BrandedNondurable Consumer ProductsIndustryPrimary Credit Analyst:Jean C Stout, New York (1) 212-438-7865; [email protected]

Secondary Contacts:Anna Overton, London (44) 20-7176-3642; [email protected] Delz Lynch, New York (1) 212-438-7846; [email protected] Bedran, Sao Paulo (55) 11-3039-9758; [email protected] Amano, Tokyo (81) 3-4550-8659; [email protected]

Criteria Officer:Mark Puccia, New York (1) 212-438-7233; [email protected]

Table Of Contents

Scope Of The Criteria

Summary Of Criteria Update

Impact On Outstanding Ratings

Effective Date And Transition

Methodology

Part I--Business Risk Analysis

Part II--Financial Risk Analysis

Related Research

April 28, 2011

www.standardandpoors.com/ratingsdirect 1

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Criteria | Corporates | Industrials:

Key Credit Factors: Criteria For Rating TheGlobal Branded Nondurable ConsumerProducts Industry

1. Standard & Poor's Ratings Services is refining its criteria for the global nondurable branded consumer products

industry. We are publishing this article to help market participants better understand the key credit factors in this

industry subsector. This article is related to our criteria article, "Principles Of Credit Ratings," published Feb. 16,

2011, on RatingsDirect.

Scope Of The Criteria

2. These criteria apply to ratings on issuers in the global nondurable branded consumer products industry.

Summary Of Criteria Update

3. This article amends and supersedes "Key Credit Factors: Business And Financial Risks In The Branded Consumer

Products Industry," published on Sept. 10, 2008. The three newly established key credit factors categories are:

• Category one factors are in our view the most relevant factors; they ordinarily affect the rating outcome in a

meaningful way, and in many instances are critical to our rating conclusions.

• We view category two factors as being of lesser relevance, but they may in some instances still prove critical.

• Category three factors may be individually meaningful in a few instances, but ordinarily just shape the company's

overall profile in conjunction with the other factors.

Impact On Outstanding Ratings

4. We do not expect implementation of these criteria to cause rating changes.

Effective Date And Transition

5. These criteria are effective immediately.

Methodology

6. Our analytic framework for industrial companies in all sectors, including the global nondurable branded consumer

products industry, is divided into two major segments. The first is fundamental business risk analysis. This step

forms the basis and provides the industry and business contexts for the second segment of the analysis, a financial

risk analysis of the company. Business and financial risk profiles are the two components that form a corporate

rating. We employ a matrix approach to combine this into a rating outcome (see Criteria Methodology: Business

Risk/Financial Risk Matrix Expanded, published May 27, 2009).

Standard & Poors | RatingsDirect on the Global Credit Portal | April 28, 2011 2

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Summary of key credit factors:7. Our ratings methodology for evaluating the global branded nondurable consumer products industry risk and key

credit factors, as is the case for other aspects of our rating analysis, is based on fundamental analysis. The key credit

factors used in analyzing branded nondurable consumer products companies globally are listed below in paragraph

8, and divided into three categories.

• Category one factors are in our view the most relevant factors; they ordinarily affect the rating outcome in a

meaningful way, and in many instances are critical to our rating conclusions.

• We view category two factors as being of lesser relevance, but they may in some instances still prove critical.

• Category three factors may be individually meaningful in a few instances, but ordinarily just shape the company's

overall profile in conjunction with the other factors.

8. We also discuss industry risk factors pertinent to the ratings process in the Industry Risk section of this report. We

believe the branded consumer products industry involves less credit risk when compared to many other industries

and sectors as explained in Industry Risk and Characteristics below (paragraphs 12 though 22 and in the table.)

Category one factors:

• Market share, including its market position and the ability to sustain or increase share;

• Strength, breadth, and diversity of brands in the product portfolio;

• Degree of competition from private label and/or house-branded products within each product category and

country market;

• Product portfolio life cycle, i.e., the balance of well-established products and new product introductions;

• Degree of operating efficiency, including size and economies of scale, which in turn may translate into greater

purchasing power with suppliers;

• Extent of geographic diversification; and

• Management's track record of product innovation and brand building, including efficiency and effectiveness of

marketing spend.

Category two factors:

• Degree of concentration of manufacturing plants or operating lines and procurement, including high exposure to

particular raw materials or suppliers (this may be a critical factor for smaller, or more narrowly focused

companies);

• Customer concentration, (this may be a critical factor for smaller, or more narrowly focused companies);

• Reach and degree of penetration of distribution network, including costs of developing efficient distribution

networks in faster-growing emerging markets;

• Legal and regulatory environment, including taxation and restrictions on consumption and marketing of certain

products; and

• History of managing product liability, reputational risks, and business interruptions.

Category three factors:

• Ability to manage price volatility and availability of specific raw materials (especially agricultural commodities),

as well as volatile energy prices (this may be a critical factor for smaller, or more narrowly focused companies);

and

• Track record in mitigating earnings volatility caused by fluctuations of foreign currency exchange rates either

through matching revenues and costs (including funding costs) by currency or through hedging activity.


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Criteria | Corporates | Industrials: Key Credit Factors: Criteria For Rating The Global Branded NondurableConsumer Products Industry

Part I--Business Risk Analysis

9. We subdivide business risk into four categories: country and macroeconomic risk, industry risk, competitive position

(including management), and profitability/peer comparisons. We evaluate each category, and then determine a score

for overall business risk: Excellent, Strong, Satisfactory, Fair, Weak, or Vulnerable.

Country risk and macroeconomic factors (economic, political, and social environments)10. Country risk plays a critical role in determining all ratings on companies in a given country. Country-related risk

factors can have a substantial effect on company creditworthiness, both directly and indirectly.

11. While our sovereign credit ratings suggest the general risk local entities face, they may not fully capture the risk

applicable to the private sector. We look beyond the sovereign rating to evaluate the specific economic or other

country risks that may affect the entity's creditworthiness. Such risks could arise from government policies, legal

systems, security concerns, labor issues, and other factors, although there may be various strategies an entity can

pursue to try to mitigate certain of these risks. For example, in our liquidity analysis, we consider not only the

amount of cash that is deemed surplus, but also where cash is domiciled and restrictions, if any.

Industry Risk and Characteristics12. In establishing a view of the degree of credit risk in a given industry, we find it useful to consider how its profile

compares with those of other industries. Industry risk categories are broadly similar across industries, but the effect

of these factors can vary markedly among industries (see chart). The key industry factors are scored: High risk (H,

red), medium/high risk (M/H, red), medium risk (M, orange), low/medium risk (L/M, green), and low risk (L, green)

from a credit risk perspective.


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13. Broadly speaking, the lower the industry risk, the higher the potential rating on companies in that sector. We have

found that those sectors with lower industry risk will tend to have higher business risk profile scores than those

sectors with higher industry risk. However, a high industry risk profile does not automatically limit our rating on a

company. Companies can differentiate themselves regarding business risk, and may be able to mitigate certain

business risks with cautious financial strategies.

14. Industry risk analysis sets the stage for company-specific analysis. Once key country risk and industry risk

considerations are identified, our credit analysis process proceeds to a second phase--company-specific analysis. If,

for example, we view technology as a critical competitive factor, our analysis typically places greater weight on a

company's research and development (R&D) capabilities. If the industry produces a commodity, production cost is

of major importance. Our goal is to develop a robust understanding of the company's external operating

environment when evaluating its overall business position. Industry analysis focuses on industry prospects, and

identifying the competitive factors, risks, and challenges affecting participants in that industry. The degree of

business risk facing a company almost always depends on the dynamics of the industry in which it participates.

Different industries pose different risks and opportunities for the companies that operate in their sectors.

15. Our evaluation of a company's competitive position identifies those entities that we believe are best positioned to

take advantage of these key industry drivers--or to mitigate associated risks more effectively. These should show a

competitive advantage, and a stronger business risk profile compared with those companies lacking a strong

competitive value proposition or that are more vulnerable to sector risks. When combined, our view of a company's

competitive position is shaped by the industry risk of the sector in which it operates, establishing our overall view of

the enterprise's business risk profile.

16. We believe the branded nondurable consumer products sector (household and personal care products,

packaged/processed foods, tobacco products, and beverages) is less risky than many other industries, including the

branded durable consumer products segment (major home appliances/white goods, furniture, home improvement

products and small appliances), because many nondurable products are less discretionary and generally more

essential. The higher business risk assessment for durable consumer products companies primarily results from the

more discretionary nature of demand and the higher ticket price, which historically have made these products more

sensitive to economic cycles. Additional factors that render durable branded consumer products companies more

vulnerable are narrow product portfolios, relatively high operational leverage, and some seasonal demand patterns,

translating into longer working capital cycles.

17. The following are major industry dynamics in the global branded nondurable consumer products sector:

• Low cyclicality translating into lower volatility of earnings and cash flow;

• Favorable long-term sociodemographic trends, such as gradually rising incomes in the developed markets, and

more rapid income and population growth (including growth in the middle class) in many developing and

emerging markets;

• Brand equity acting as a barrier to entry;

• Relatively low capital intensity;

• Low technological risks;

• Moderate operating leverage; and

• Limited customer and supplier concentration. However, customer and supplier concentration is more of a risk for

smaller, or more narrowly focused consumer products companies.


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18. By contrast, the branded durable consumer products sector exhibits:

• Higher cyclicality;

• Higher capital intensity;

• Higher customer concentration because of the more narrow channels of distribution; and

• More product and/or geographical concentration.

19. The branded consumer products industry is highly competitive. It has experienced rapid globalization and

consolidation during the past decade. This is shown by the increasing scale of large global companies, in line with

the consolidation of retailers in mature markets, leading to rising industry bifurcation, with a few very large

multinational companies on one side and a number of local market/brand competitors on the other. Besides adding

scale, mergers and acquisitions have provided these large, multinational companies entrance into new markets, new

product categories and distribution channels.

20. In developed markets, demand for nondiscretionary consumer products is largely recession-resistant and closely tied

with population growth and household formation, so high percentage sales gains generally are limited in these

regions. Factors influencing demand include innovation, brand loyalty, demographics, household incomes, and

price. New products and innovation generally protect a company's profits and deter consumers from trading down

to lower-priced value products. However, luxury items and certain other nondurable consumer products (more

discretionary and with alternative brand options at various price points such as cosmetics, fragrances and apparel)

are much more susceptible to economic cyclicality and fashion risk.

21. We believe developing and emerging markets, particularly in Asia and Latin America, offer considerable growth

prospects for branded nondurable consumer products companies. Indeed, economies in both regions are growing

quickly and consumer incomes and education levels are rising. In addition, the pervasiveness of media has made

consumers world-wide more aware of Western type tastes/styles, products and brands. Growth in the middle-class

consumer segment in developing markets, which embraced Western brands, has translated into rising demand for

branded nondurable consumer products (that previously were unaffordable). Nondurable consumer products

companies leverage their brands' equity to these regions, although sometimes products are reworked, i.e., smaller

packaging, to meet these consumers' unique needs. In addition, competition from private-label products is less

prevalent in these markets.

22. Most consumer products in mature markets (and increasingly, in developing markets) are distributed through

modern retail (i.e., supermarkets and hypermarkets) systems, which are increasingly becoming concentrated.

However, some nondurable consumer products (e.g., beer, cosmetics, and spirits) enjoy alternative distribution. As

retailers try to differentiate themselves through pricing and through the quality of their store brand offerings, they

often negatively affect consumer products companies' ability to pass on cost increases to the consumer, or to earn

adequate returns on brand investments especially in times of rising commodity costs and extended weak

macroeconomic conditions. Retailers have increasingly taken steps to concentrate suppliers, to gain distribution

efficiency and purchasing power, and allocate shelf space to the products generating the highest margins (for

retailers). However, not stocking consumer-preferred brands or limiting product variety can hurt a retailer's

customer store traffic, reducing sales per customer store visit. Alternative channels (such as convenience, dollar, and

club stores that offer a wide range of primarily nondurable consumer products) have emerged in the U.S., providing

both branded consumer products companies and consumers an alternate sales outlet.


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Company-specific analysis23. Once key industry and country risk considerations have been identified, including industry-specific key credit

factors, the credit analysis proceeds to company-specific analysis. The business risk part of this analysis is divided

into three parts: company's competitive position (including market position, diversification, operating efficiency and

technology/R&D); management assessment; and profitability (incorporating industry peer group company

comparisons).

Competitive position24. We consider the key credit factors outlined above as being important in evaluating the competitive position of

branded consumer products companies. The success of a consumer products company depends heavily on its ability

to develop--or acquire—brands, including perceived quality of product, and loyalty. Industry participants with an

established market position, that are well-diversified, focused on attractive markets, and have operating cost

advantages can mitigate industry risk sufficiently to achieve more consistent profitability and stronger business risk

profiles. We generally expect to see these characteristics in companies we rate in the mid-investment grade or higher

categories, given prudent financial policies and leverage, among other things.

Market position25. Our evaluation of market position focuses primarily on the following factors (from most to least important):

• Ability to maintain or increase its market share and to grow revenues profitably (category 1);

• Strength of brands, measured through brand loyalty in the face of price changes and economic cycles (category 1);

• Degree of competition from private-label (nonbranded) products (category 1);

• Product portfolio characteristics in terms of consumer demand trends, organic growth potential and strategy

(category 1);

• Competitor activity and basis of competition (pricing, quality differentiation or combined product and service

offering, category 1);

• Negotiating power vis-à-vis large retailers in developed markets (category 2); and

• Reach and degree of penetration of distribution network (category 2).

26. Market share, leadership, and growth. We use company and industry market-share data by industry subsegment,

when available, as part of our assessment of a company's competitive position. We compare not only a company's

market share, but also volume and pricing changes to those of other competitors, industry trends, and the given

company's period-over-period trends. Trends in pricing, including the level and absolute amount of promotion and

discounts also are analyzed. We believe the level and extent of promotion and discounts usually is an indication of

strength or weakness of a company's competitive position. Monitoring of trends, particularly in volume and pricing,

is important in our analysis because demand for even well-established products and brands can erode over time

because of changes in consumer preferences, including health and wellness considerations, shifting consumer tastes,

and lifestyles.

27. Marketing costs typically absorb 10%-15% of consumer products manufacturers' revenues and are essential for

maintaining volumes and pricing power. The success of a consumer brand also depends on the quality of the

marketing execution (including advertising and product definition). In our view, companies that closely monitor

advertising and marketing budgets to assess their effectiveness in cultivating demand and boosting sales, market

share, and brand loyalty, typically are more successful in establishing strong consumer brands. Private-label

products are lower priced as compared to branded products because they tend to have little marketing or advertising

resources allocated to them, but benefit from the point-of-sale advantage of favorable in-store presentation, because


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they are more profitable for the retailer. Furthermore, private-label products are available--especially in mature

markets--at a variety of price points, appealing to more price-conscious consumers, especially during periods of

weak economic conditions. We compare a company's marketing expenditures to organic revenue growth, market

share evolution and margin progression over time, key aspects of our peer-group analysis.

28. Although brands ensure some sales resilience and adequate access to the consumer through retailers, they do not

necessarily guarantee a superior profit margin in mature markets. We believe this is because of the quality and

availability of private-label alternatives at lower price points for the majority of, but not all nondurable consumer

product categories. In our experience, EBITDA margin strength is an important predictor of cash flow generation in

the branded consumer products industry, given the importance of on-going brand investment and support. In our

view, branded consumer products industry leaders have demonstrated an ability to maintain or increase market

share, by differentiating their products from the consumers' perspective. Creating strong brands through successful

marketing execution and regular product innovation or refreshing is critical to achieving this result. Success in

increasing market share also depends on the company's distribution network's reach and degree of penetration.

Competition on brand/product attributes, rather than competition based on price alone29. While discounters and private label producers compete primarily on price, branded consumer products

manufacturers attempt to compete more on other attributes of value and differentiation, reflected in their brand

image. Consumer products companies' ability to compete on nonprice attributes provide some price flexibility to

offset pricing pressure from retailers, as well as from competitive products, including private label or store branded

products.

30. In environments where commodity prices rise rapidly, it usually has been difficult for the manufacturers to fully pass

through cost increases, leading to margin compression in the near term. However, multiple price increases may be

possible over time. In addition, large diversified companies are better able to pass through price increases than a

one-market, one-product company because larger, more diversified companies typically have greater consumer

brand loyalty, which in turn, equates to greater negotiating power vis-à-vis retailers.

31. Branded consumer products for which price competition is the major differentiating factor usually have limited or

no pricing flexibility. These companies generally have a less favorable business risk profile than those whose

products compete on a mix of attributes.

Diversification32. In analyzing a branded nondurable consumer products company's diversification, we usually consider the following

factors (from most to least important) as part of our ratings process:

• Number and size of brands and brand extensions (category 1);

• Diversity of product offerings (category 1);

• Geographic diversification (e.g., global without regional concentration; global/regionally concentrated; national;

regional; or local)(category 1);

• Diversity of manufacturing, as well as sourcing (category 2); and

• Degree of diversification of customer and distribution channels; usually, the more concentrated the retail

distribution, the lower the pricing flexibility (category 2).

33. Diversification helps companies mitigate the risk of stagnating or falling demand for a given product or dependence

on a single geographic market or customer. Diversity of manufacturing and/or sourcing locations often results in


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uninterrupted product availability in the event of a natural disaster, catastrophic condition, or labor unrest. We view

revenue and cash flow derived from a variety of sources as a positive credit factor. We measure that variety as a

percentage of exposure by geography, brands, product category, customer, and manufacturing/sourcing locations.

We then consider the competitive environment of the markets in which a company operates. This is important to

our analysis because of the cyclicality and differing growth prospects of various regional and local markets, even

though downturns can be correlated, as experienced in 2008 and 2009. Exposure to a mix of emerging, developing

and mature markets may offer consumer product companies not only good growth prospects, but also some

protection from cyclicality or other causes of revenue decline to the extent that the markets served are sufficiently

uncorrelated. We also consider a company's exposures to foreign currency and the degree of mismatch between the

currency of operations, sales, and financing. Overall, most branded consumer nondurable and durable products

companies are highly focused on a particular product segment or category. Examples include packaged food,

nonalcoholic beverages, apparel, and major home appliance manufacturers. While a company's size is often highly

correlated with, and an outgrowth of its diversification, branded consumer products companies may not score high

in all aspects of diversification.

Operating efficiency34. In analyzing a branded nondurable consumer products company's operating position, we usually consider the

following factors (from most to least important) as part of our ratings process:

• Degree of operating efficiency, fixed compared to variable costs, and the ability to realize scale benefits in product

development and production (category 1); and

• Sensitivity to raw material and energy costs volatility, and the ability to either mitigate or offset exposure to

significant commodity prices swings (category 3).

35. Size often translates into greater purchasing power, while economies of scale can improve operating efficiency.

Operating efficiency enables re-investment of cost savings into product development and marketing. Operating scale

is important because, despite the benefits of brands, virtually all branded consumer products companies face some

pricing pressures because their largest market served is typically mature. A company's scale can help enhance its

purchasing power for raw materials. The ability to pass through costs of materials is subject to retailer and

consumer resistance and is typically limited. Another important factor we consider is the company's ability to adjust

costs through internal efficiencies or outsourcing.

36. We also consider risks to a company's mid- to long-term competitive position which might come from "squeezing"

its marketing and new product development budgets. This could result in a short-term boost in cash flows, but also

lead to a slowdown in future new product launches, which in turn could result in lower sales. In addition, our

analysis of operating efficiency considers the company's production capacity utilization levels, as well as the degree

of outsourcing employed.

Management and strategy37. See Standard & Poor's "2008 Corporate Criteria: Analytical Methodology," April 15, 2008, for a discussion of how

we evaluate managements. Aside from factors we consider when evaluating the management of any company, for

branded consumer products companies we focus in particular on management's rationale for and tactics to pursue

growth, including the role of acquisitions in its overall strategy. A company's ownership can become more

important in our analysis if it is owned by a financial sponsor, which may be focused more on financial returns at

the expense of a company's growth.


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Profitability analysis38. See "2008 Corporate Criteria: Analytical Methodology," April 15, 2008, and "2008 Corporate Criteria: Ratios And

Adjustments," April 15, 2008 for how we analyze profitability.

39. Similar to evaluating the profitability for any company, for a branded nondurable consumer products company's

profitability, we consider the following factors (from most to least important) as part of our ratings process:

• Ability to generate consistent profits;

• Degree of volatility of demand in the company's key markets; and

• Analysis of historical and prospective operating performance via comparisons to its peers and/or rated companies

outside of the industry segment that have similar ratings.

40. We analyze margin levels and return on capital, the sources of profitability, consider whether profits are

broad-based or concentrated in certain products or regions, and the degree of volatility of profits. Capital intensity

and operating leverage is typically quite low for branded nondurable consumer products manufacturers (in part

because of the degree of outsourcing employed), relative to consumer durables, airlines, and autos. Still, branded

nondurable consumer product companies, like companies in other sectors generally, potentially are subject to the

effects of operating leverage arising from a cyclical downturn which would negatively affect profitability to some

degree.

41. Historically, branded nondurable consumer products sector companies generally have had relatively stable

profitability and cash flow profiles compared with most other industries, including the branded durable consumer

products segment.

Part II--Financial Risk Analysis

42. Having evaluated a branded consumer products company's business risk, we next look at several financial

categories. The company's business risk profile generally determines the financial risk we expect to see for any rating

category. We assess financial risk largely through quantitative means, particularly by using financial ratios.

43. We analyze five risk categories: accounting characteristics; financial governance/policies and risk tolerance; cash

flow adequacy; capital structure and leverage; and liquidity/short-term factors. We then determine a score for overall

financial risk: Minimal, Modest, Intermediate, Significant, Aggressive, or Highly Leveraged.

Accounting characteristics44. Our accounting adjustments for branded consumer products companies follow our methodologies applied to

companies in other industries, and mainly relate to our key adjustments for operating leases and post-retirement

obligations, but may also include adjustments for restructurings or other one-time items.

Financial governance/policies and risk tolerance45. Similar to companies in other industries, our evaluation of a branded nondurable consumer products companies'

financial strategies and historical results are essential to our understanding management's intent. In instances where

we conclude financial policies are overly aggressive and risk tolerance is not prudent, these considerations can be

material negative rating factors. We attach great importance in our analysis to management's and/or financial

sponsors' philosophies and policies involving financial risk. In evaluating a consumer products company's financial

policies, we review management's and owner's (in the case of financial sponsors or other privately held entities)


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views on funding dividends, share repurchases, acquisitions, and capital expenditures. Their views on a target

capital structure and concrete steps to achieve the target also are important. For example, we review new debt

financing, and particularly aggressively leveraged financed deals, and evaluate the burden debt service will place on a

company's cash flow and other liquid sources of funding.

46. The extent of derivatives use is also a component of our risk tolerance assessment. Because currency fluctuations,

raw material costs, and energy costs, are often key influences on profitability and cash flows for branded consumer

products companies, we analyze risk management practices including hedging policies and positions. These

companies often use derivatives to manage interest rate, currency, or other risks that arise in their funding strategies.

However, some crucial commodities, particularly resin, cannot easily be hedged.

47. We comment below on financial risk factors and characteristics specific to the global branded nondurable consumer

products industry. For an explanation of factors and ratios we use in analyzing the financial risk for corporate

issuers including branded nondurable consumer product companies please refer to Standard & Poor's "2008

Corporate Criteria: Analytical Methodology", April 15, 2008, and "2008 Corporate Criteria: Ratios And

Adjustments", April 15, 2008.

Capital structure, cash-flow adequacy, and relevant ratios48. For highly seasonal branded consumer products companies, we focus on average debt balances and calculate these

ratios using average total debt.

Liquidity/short-term factors49. See "Standard & Poor’s Standardizes Liquidity Descriptors For Global Corporate Issuers," published July, 2, 2010,

for purposes of our liquidity analysis. A consumer products company's cash flow cycle and its resulting working

capital and liquidity needs can serve, in our view, as an important differentiator of credit quality, especially at the

lower end of the rating scale. On average, producers of nondurable consumer products have a much faster working

capital turnover (or shorter cash flow cycle) than producers of durable consumer products. Durable consumer

products manufacturers tend to have more pronounced seasonal demand peaks than the producers of nondurable

consumer products, although exceptions do exist, e.g., lawn and garden nondurable consumer products sector is

quite seasonal. The combination of their sensitivity to economic cycles and seasonal sales means that in an economic

downturn constrained liquidity can prevent these companies from building up inventory ahead of expected peak

demand periods, aggravating an already negative sales environment and also potentially sending negative signals to

suppliers and customers. As their earnings weaken, these companies may become unable to meet the liquidity needs

of their operations until an eventual upturn in demand.

Related Research

• Standard & Poor’s Standardizes Liquidity Descriptors For Global Corporate Issuers," published July, 2, 2010

• Criteria Methodology: Business Risk/Financial Risk Matrix Expanded, May 27, 2009

• 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

• 2008 Corporate Criteria: Ratios And Adjustments, April 15, 2008

• Principles Of Credit Ratings, Feb. 16, 2011

These criteria represent the specific application of fundamental principles that define credit risk and ratings

opinions. Their use is determined by issuer- or issue-specific attributes as well as Standard & Poor's Ratings


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Services' assessment of the credit and, if applicable, structural risks for a given issuer or issue rating. Methodology

and assumptions may change from time to time as a result of market and economic conditions, issuer- or

issue-specific factors, or new empirical evidence that would affect our credit judgment.


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