What were the main drivers of Moody's revenue growth in 2006?

Moody's revenue growth in 2006 was primarily driven by strong performance in its Moody's Investors Service segment. Key contributors included increased issuance across most structured asset classes, corporate bonds, and bank loans, particularly in the U.S. structured finance and corporate finance businesses. International revenue also saw significant growth, especially in Europe.

How did the sale of the headquarters building impact Moody's financial results?

The sale of Moody's corporate headquarters at 99 Church Street in the fourth quarter of 2006 resulted in a pre-tax gain of $160.6 million. This gain significantly boosted operating income and net income for the year, and also increased the company's operating margin.

What is Moody's strategy for future growth?

Moody's strategy focuses on several key areas: expanding its presence in financial centers globally, developing new rating products and services, capitalizing on opportunities in structured finance, enhancing its internet-based products, expanding credit research and analytic tools, and growing its quantitative credit risk assessment services. The company also plans to continue expanding into developing markets through joint ventures and acquisitions.

What are the main risks facing Moody's, as identified in the filing?

Key risks include changes in the volume of debt securities issued in capital markets, increased competition (from established players like S&P and Fitch, as well as potential new entrants), introduction of competing products or technologies, pricing pressure, potential loss of key employees, exposure to litigation related to rating opinions, and the evolving regulatory environment in the credit rating industry.

MCO 10-K FY2006 Annual Report — Revenue, Net Income, EPS

Summary

Moody's Corporation's 2006 10-K filing reveals a strong year characterized by significant revenue growth and healthy profitability. The company, a leading provider of credit ratings and related research, saw its revenue increase by 17.6% to $2.04 billion, driven primarily by robust performance in its Investors Service segment, particularly in structured finance and corporate finance. The company also benefited from a one-time gain of $160.6 million from the sale of its headquarters, contributing to a substantial increase in operating income and net income. Moody's continues to invest in global expansion and new product development, evidenced by acquisitions in emerging markets and investments in analytical tools. The company's financial position remains solid, supported by strong operating cash flows and a significant share repurchase program. While Moody's acknowledges potential risks from competition and evolving regulations, its strategic focus on expanding its credit opinion franchise and enhancing its quantitative risk assessment services positions it for continued growth.

Key Highlights

1Revenue grew by 17.6% to $2.04 billion in 2006, driven by strong performance in Moody's Investors Service, especially in structured and corporate finance.

2Operating income increased by 34.0% to $1.26 billion, boosted by a $160.6 million gain from the sale of the company's headquarters.

3Net income rose by 34.4% to $753.9 million, resulting in diluted earnings per share of $2.58.

4The company actively repurchased shares, spending $1.09 billion on share repurchases in 2006 under an authorized $2 billion program.

5Moody's continued its global expansion, with international revenue growing 17.5% and strategic acquisitions in emerging markets like China and Indonesia.

6The company is navigating a changing regulatory landscape, including the Credit Rating Agency Reform Act of 2006, and is adapting its processes and disclosures accordingly.

7Despite increased operating expenses (up 18.8%), primarily due to higher compensation and benefits from increased staffing, Moody's maintained a strong operating margin of 61.8% (or 54.3% excluding the headquarters sale gain).

MOODYS CORP /DE/ Annual Report, Year Ended Dec 31, 2006

Summary

Key Highlights

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