Fourth quarter operating income of $77.0 million was up 11.8% from $68.9 million in the fourth quarter of 1999. Reported net income was $40.4 million for the three months ended December 31, 2000, compared with $38.2 million for the same period of 1999. Moody’s fourth quarter net income reflects net interest expense of $2.0 million after tax, representing interest expense on the $300 million private placement of debt that was completed in connection with its spin-off from The Dun & Bradstreet Corporation, net of interest income on invested cash.
Earnings per share for the fourth quarter of 2000 were $0.25 basic and diluted, compared with $0.24 basic and diluted for the fourth quarter of 1999. On a pro forma basis, including interest expense on the private placement debt (and excluding any interest income) for both periods, fourth quarter diluted earnings per share would have been $0.24 for 2000 compared with $0.22 for 1999, a gain of 9.1%.
Moody’s fourth quarter results reflected double-digit growth in global ratings revenue, driven by strong gains in worldwide structured finance ratings as well as improvements in U.S. ratings due to a more favorable capital markets environment. Moody’s Risk Management Services reported revenue growth of $5 million over the fourth quarter of 1999, in part due to the acquisition of a financial software products company in January 2000.
Revenue in the United States was $117.4 million for the fourth quarter of 2000, an increase of 16.7% from $100.6 million in the same period of 1999. This increase reflected strong growth in United States ratings revenue, principally in commercial mortgage-backed securities and credit derivatives, with a decline in high yield revenue.
Moody’s international revenue was $43.7 million in the final three months of 2000, an increase of 9.8% over $39.8 million in the fourth quarter of 1999. The fourth quarter growth reflected higher ratings revenue, due to strong growth in structured finance ratings in Europe and an increased number of first-time European corporate issuers; increased sales of research products; and strong growth in Moody’s Risk Management Services. Higher interest rates and wider yield spreads in Europe during the fourth quarter reduced revenue growth from the high 20% growth realized in the first three quarters of 2000.
Full-Year Results
Moody’s full-year revenue was $602.3 million in 2000, an increase of 6.8% from $564.2 million in 1999. Operating income of $288.5 million in 2000 was up 6.7% from $270.4 million in 1999. Reported net income was $158.5 million in 2000 compared with $155.6 million in 1999, an increase of 1.9%. Moody’s 2000 net income included the fourth quarter interest expense referred to above. 1999 net income included a $5.1 million after-tax gain related to the 1998 sale of the company’s Financial Information Services division (FIS).
Basic and diluted earnings per share in 2000 were $0.98 and $0.97, respectively, compared with $0.96 basic and $0.95 diluted in 1999. Excluding the gain related to the sale of FIS, and including interest expense on the private placement debt for both periods (but excluding any interest income), diluted earnings per share would have been $0.91 in 2000 compared with $0.84 in 1999, an increase of 8.3%.
2000 revenue in the United States was $428.9 million, an increase of 1.3% over $423.4 million in 1999. United States ratings revenue declined 1% in 2000 compared to the prior year, as the effects of lower issuance levels in the core corporate and public finance sectors were substantially offset by strong growth in asset-backed finance, credit derivatives and bank loan ratings. Double-digit revenue growth was achieved in United States research products, and Moody’s Risk Management Services revenue nearly doubled for the year.
Moody’s international revenue was $173.4 million in 2000 compared to $140.8 million in 1999, an increase of 23.2%. This performance reflected strong growth in ratings of international structured finance securities, particularly in Europe and Japan, as well an increased number of European corporate issuers. Strong growth was achieved in international research products, reflecting new products and geographic expansion, and in Moody’s Risk Management Services.
In October 2000, the Board of Directors of Moody’s Corporation authorized a share repurchase program of up to $250 million of Moody’s common stock. The program includes both special share repurchases and systematic repurchases of Moody’s common stock to offset the dilutive effect of share issuances under the company’s employee benefit arrangements. During the fourth quarter of 2000, the company repurchased 2.8 million shares of its common stock pursuant to this program, at a total cost of approximately $72 million. Approximately 0.6 million of these shares were repurchased to offset share issuance under the company’s employee benefit arrangements.
SOURCE: COMPANY PRESS RELEASE
