MOODYS CORP /DE/ Annual Report, Year Ended Dec 31, 2002

Moody's Corporation (MCO) reported a strong financial performance for the fiscal year ended December 31, 2002, with total revenue reaching $1,023.3 million, a significant increase of 28.4% over the prior year. This growth was driven by robust performance in both its Moody's Investors Service (MIS) and the recently acquired Moody's KMV segments, with structured finance being a primary catalyst. The company demonstrated impressive operational leverage, with operating income growing by 35.0% to $538.1 million, resulting in an expanded operating margin of 52.6%. Net income increased to $288.9 million, translating to diluted earnings per share of $1.83. Moody's continues to focus on expanding its global reach and product offerings, particularly in structured finance and quantitative credit assessment services, positioning itself for continued growth in the evolving capital markets. Key financial strengths include solid operating cash flow and a significant share repurchase program. However, investors should be aware of the ongoing regulatory scrutiny faced by credit rating agencies and potential litigation risks, which are noted as contingent liabilities. The company's outlook for 2003 anticipates continued revenue growth in the mid-to-high single digits, with diluted EPS growth in the low double digits, before accounting for new stock-based compensation expense and insurance recoveries.