10-KPeriod: FY2012

MOODYS CORP /DE/ Annual Report, Year Ended Dec 31, 2012

Filed February 26, 2013For Securities:MCO

Summary

Moody's Corporation (MCO) reported strong revenue growth in 2012, with an increase of 20% year-over-year, driven by robust performance in both its Moody's Investors Service (MIS) and Moody's Analytics (MA) segments. The MIS segment saw significant growth across all lines of business, particularly in corporate finance, reflecting increased debt issuance activity. The MA segment also experienced growth across its divisions, boosted by recent acquisitions. The company's operating income grew by 21%, and diluted EPS saw a substantial increase, indicating improved profitability. Despite a $12.2 million goodwill impairment charge in the MA segment, Moody's demonstrated resilience, supported by its diversified business model and strategic investments. Looking ahead, Moody's expressed confidence in its long-term outlook, anticipating continued growth in global fixed-income markets and increased demand for its credit opinions, data, and risk management solutions. The company's strategic focus remains on defending and enhancing its core ratings business while expanding its analytics and risk management offerings. Moody's also reaffirmed its commitment to returning capital to shareholders through share repurchases and dividends.

Financial Highlights

54 data points
Beta

Revenue

$2.73B

Net Income

$690.00M

25.3% Net Margin

EPS (Diluted)

$3.05

Total Assets

$3.96B

Cash & Equivalents

$1.76B

Free Cash Flow

$778.10M

Financial Statements
Beta
Revenue$2.73B
R&D Expenses$16.10M
SG&A Expenses$752.20M
Operating Expenses$1.65B
Operating Income$1.08B
Net Income$690.00M
EPS (Basic)$3.09
EPS (Diluted)$3.05
Shares Outstanding (Basic)223.20M
Shares Outstanding (Diluted)226.60M

Key Highlights

  • 1Moody's Corporation reported a 20% increase in total revenue for 2012, reaching $2.73 billion, driven by strong performance across both MIS and MA segments.
  • 2Operating income rose by 21% to $1.08 billion, with an operating margin of 39.5%, indicating improved profitability.
  • 3Diluted EPS increased by 22% to $3.05, reflecting the positive impact of revenue growth on earnings.
  • 4Moody's Investors Service (MIS) saw revenue growth of 20%, with strong contributions from corporate finance due to increased debt issuance.
  • 5Moody's Analytics (MA) segment revenue grew by 18%, supported by acquisitions and growth in its Research, Data & Analytics (RD&A), Enterprise Risk Solutions (ERS), and Professional Services (PS) businesses.
  • 6The company repurchased $196.5 million of its common stock in 2012 and declared a quarterly dividend of $0.20 per share, demonstrating a commitment to shareholder returns.
  • 7Despite a challenging regulatory environment and ongoing litigation, Moody's maintained effective internal controls over financial reporting.

Frequently Asked Questions

Moody's revenue grew by 20% to $2.73 billion in 2012. This growth was primarily driven by strong performance in its Moody's Investors Service (MIS) segment, which benefited from increased debt issuance volumes, particularly in corporate finance. The Moody's Analytics (MA) segment also contributed positively, supported by acquisitions and growth across its various product and service lines.

Profitability improved significantly in 2012. Operating income increased by 21% to $1.08 billion, resulting in an operating margin of 39.5%. Diluted Earnings Per Share (EPS) grew by 22% to $3.05. These improvements reflect the strong revenue growth outpacing expense increases, despite a goodwill impairment charge of $12.2 million in the MA segment.

Moody's strategy focuses on defending and enhancing its core ratings business (MIS) while building its position as a leading provider of risk management solutions (MA). The company plans to invest in strategic growth opportunities, leverage its brand, expand its geographic presence in emerging markets, and develop additional data, research, and rating products to drive long-term demand for its services.

Key risks highlighted include evolving U.S. and international regulations affecting the credit rating industry, exposure to litigation related to rating opinions, potential for increased competition, changes in debt capital markets activity, cybersecurity threats, and reputational risks. The company also notes risks associated with economic conditions, currency fluctuations, and the loss of key employees.