What were the primary drivers of Moody's revenue growth in this period?

Moody's revenue growth was driven by strong performance across several business sectors, including global structured finance, corporate finance, financial institutions, and research within the Moody's Investors Service segment. The Moody's KMV segment also contributed positively. International markets, particularly Europe, showed significant revenue increases.

How is Moody's managing its expenses and what is the impact on profitability?

Operating, selling, general and administrative expenses increased due to growth in compensation and benefits, staffing increases, higher stock-based compensation expenses, and investments in technology. Despite these investments, operating income grew by 20.2% for the first nine months, and the operating margin remained strong at 55.4%, indicating effective cost management and strong revenue growth.

What is the company's strategy for returning capital to shareholders?

Moody's is committed to returning capital to shareholders through a combination of dividend payments and share repurchases. The company declared a quarterly dividend and announced a new $1 billion share repurchase program, with systematic repurchases expected to form the majority of its repurchase activity.

Are there any significant legal or tax contingencies that investors should be aware of?

Moody's is involved in several legacy tax matters and legal proceedings, including tax audits and inquiries from regulatory bodies like the New York Attorney General's office. While management believes these will not have a material adverse effect on the company's financial position, the legacy tax matters, in particular, represent a potential exposure of up to $276 million. The company has established reserves for these matters and continues to monitor them closely.

MCO 10-Q Quarterly Report Q3 FY2005 — Revenue, Net Income, EPS

Summary

Moody's Corporation (MCO) reported strong financial performance for the nine months ended September 30, 2005, with revenue increasing by 20.2% to $1,258.4 million and net income rising by 35.8% to $410.7 million compared to the same period in 2004. This growth was primarily driven by robust performance in its Moody's Investors Service segment, particularly in structured finance, corporate finance, and financial institutions. The company also saw positive contributions from its Moody's KMV segment. Key financial highlights include significant revenue growth in both U.S. and international markets, with international revenue up 24.4%. The company's operating income also saw a substantial increase of 20.2%, reflecting effective cost management despite investments in compensation, staffing, and technology. Moody's continues to return capital to shareholders through share repurchases and dividends, announcing a new $1 billion share repurchase program. Despite ongoing legacy tax matters and regulatory reviews, management remains optimistic about the company's full-year performance, projecting revenue growth between 15%-18% and diluted EPS growth of 22%-26%.

Key Highlights

1Revenue increased by 20.2% to $1,258.4 million for the nine months ended September 30, 2005, compared to $1,046.7 million in the prior year.
2Net income grew by 35.8% to $410.7 million for the nine months ended September 30, 2005, compared to $302.5 million in the prior year.
3Diluted earnings per share rose to $1.34 for the nine months ended September 30, 2005, from $1.00 in the same period of 2004.
4Moody's Investors Service segment demonstrated strong revenue growth across structured finance, corporate finance, and financial institutions.
5International revenue increased by 24.4% for the first nine months of 2005.
6The company announced a new $1 billion share repurchase program, underscoring its commitment to returning capital to shareholders.
7Operating margin remained strong at 55.4% for the first nine months of 2005, consistent with the prior year.

MOODYS CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2005

Summary

Key Highlights

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