10-KPeriod: FY2011

MOODYS CORP /DE/ Annual Report, Year Ended Dec 31, 2011

Filed February 27, 2012For Securities:MCO

Summary

Moody's Corporation (MCO) reported strong revenue growth in 2011, with total revenue reaching $2.28 billion, a 12% increase from 2010. This growth was driven by robust performance in both its Moody's Investors Service (MIS) segment, particularly in corporate finance and structured finance ratings, and its Moody's Analytics (MA) segment, fueled by acquisitions and increased demand for risk management solutions. The company navigated a complex economic environment, with international revenue showing significant growth, up 17%. Despite increased operating and SG&A expenses, largely due to higher compensation costs and investments in technology, Moody's maintained a healthy operating income of $888.4 million, a 15% increase year-over-year. Diluted Earnings Per Share (EPS) also saw a positive trend, reaching $2.49, up 16% from the previous year. Key risk factors highlighted include the rapidly evolving regulatory landscape for credit rating agencies, exposure to litigation, and the ongoing volatility in global capital markets. However, Moody's strategy to defend and enhance its core rating business while investing in growth areas within its analytics segment positions it to leverage long-term market trends.

Financial Highlights

54 data points
Beta

Revenue

$2.28B

Net Income

$571.40M

25.1% Net Margin

EPS (Diluted)

$2.49

Total Assets

$2.88B

Cash & Equivalents

$760.00M

Free Cash Flow

$735.60M

Financial Statements
Beta
Revenue$2.28B
R&D Expenses$29.80M
SG&A Expenses$629.60M
Operating Expenses$1.39B
Operating Income$888.40M
Net Income$571.40M
EPS (Basic)$2.52
EPS (Diluted)$2.49
Shares Outstanding (Basic)226.30M
Shares Outstanding (Diluted)229.40M

Key Highlights

  • 1Revenue increased by 12% to $2.28 billion in 2011, driven by growth in both Moody's Investors Service (MIS) and Moody's Analytics (MA) segments.
  • 2International revenue grew significantly by 17%, indicating strong global demand for Moody's services.
  • 3Operating income rose by 15% to $888.4 million, demonstrating effective cost management and revenue growth.
  • 4Diluted Earnings Per Share (EPS) increased by 16% to $2.49, reflecting improved profitability.
  • 5Acquisitions, particularly in the MA segment (Copal Partners, Barrie & Hibbert), contributed to revenue growth and expanded service offerings.
  • 6The company emphasized investments in technology infrastructure and talent to support future growth.
  • 7Significant risk factors identified include regulatory changes, litigation exposure, and market volatility, which Moody's is actively monitoring.

Frequently Asked Questions

Moody's reported a 12% increase in total revenue for 2011, reaching $2.28 billion, compared to $2.03 billion in 2010. This growth was primarily driven by strong performance in both its credit ratings business (MIS) and its analytics and data services (MA).

The Moody's Analytics segment experienced significant growth, particularly in its professional services line of business, which was bolstered by the acquisitions of CSI Global Education in late 2010 and Copal Partners and Barrie & Hibbert in late 2011. Demand for research, data, analytics, and risk management software also contributed positively.

Moody's identified several key risks, including the rapidly evolving regulatory environment for credit rating agencies in the U.S. and internationally, potential for increased litigation related to its rating opinions, exposure to market volatility and economic slowdowns affecting debt issuance volumes, and competitive pressures. The company is actively engaged in monitoring and responding to these regulatory and legal developments.

The acquisitions of CSI Global Education, Copal Partners, and Barrie & Hibbert significantly contributed to the revenue growth of the Moody's Analytics segment. These acquisitions expanded Moody's service offerings, particularly in professional services and risk management tools, and are expected to drive future growth.