#1MOODY'S Investor Presentation 4Q and FY 2010 Updated on March 1, 2011 with information from 2010 10-K MARCH 2011#2Disclaimer Certain statements contained in this presentation are forward-looking statements and are based on future expectations, plans and prospects for Moody's business and operations that involve a number of risks and uncertainties. Moody's outlook for 2010 and other forward-looking statements are made as of February 3, 2011, and the Company disclaims any duty to supplement, update or revise such statements on a going-forward basis, whether as a result of subsequent developments, changed expectations or otherwise. In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company is identifying certain factors that could cause actual results to differ, perhaps materially, from those indicated by these forward-looking statements. Those factors include, but are not limited to, the current world-wide credit market disruptions and economic slowdown, which is affecting and could continue to affect the volume of debt securities issued in domestic and/or global capital markets; other matters that could affect the volume of debt securities issued, including credit quality concerns, changes in interest rates and other volatility in the financial markets; the uncertain effectiveness and possible collateral consequences of U.S. and foreign government initiatives to respond to the economic slowdown; possible loss of market share through competition; introduction of competing products or technologies by other companies; pricing pressures from competitors and/or customers; the potential emergence of government-sponsored credit rating agencies; both proposed and recently adopted U.S., foreign, state and local legislation and regulations, including the Dodd-Frank Wall Street Reform and Consumer Protection Act; regulations relating to the oversight of credit rating agencies; provisions in the Dodd-Frank Act modifying pleading and liability standards applicable to credit rating agencies in a manner adverse to rating agencies; possible judicial decisions in various jurisdictions regarding the status of and potential liabilities of credit rating agencies; the possible loss of key employees; the outcome of any review by controlling tax authorities of the Company's global tax planning initiatives; the outcome of those legacy tax and legal contingencies that relate to the Company, its predecessors and their affiliated companies for which Moody's has assumed portions of the financial responsibility; the outcome of other legal actions to which the Company, from time to time, may be named as a party; the ability of the Company to successfully integrate acquired businesses; a decline in the demand from financial institutions for credit risk management tools; and other risk factors as discussed in the Company's annual report on Form 10-K for the year ended December 31, 2010, quarterly reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010, and in other filings Imade by the Company from time to time with the Securities and Exchange Commission. This presentation includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, at the end of this slide presentation we have provided a reconciliation of those measures to the most directly comparable GAAP measures. A copy of this presentation, including the relevant reconciliation slides, is available on Moody's investor relations website http://ir.moodys.com. MOODY'S MARCH 1, 2011 2#3Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Highlights » Corporate overview >> Business conditions: Moody's Investors Service >> Business conditions: Moody's Analytics. >> Financial review and outlook MOODY'S MARCH 1, 2011 3#4Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Moody's Business Structure Leading global provider of credit rating opinions, insight and tools for credit risk measurement and management MOODY'S INVESTORS SERVICE Independent provider of credit rating opinions and related information for over 100 years 69% of MCO 2010 revenue: $1,405 million* MOODY'S ANALYTICS Research, data and software for credit risk analysis and related professional services 31% of MCO 2010 revenue: $627 million* Represents consolidated financials excluding intersegment royalty and eliminations MOODY'S MARCH 1, 2011 4#5Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Strength in Corporate and Public Finance Ratings and Growth Across Moody's Analytics Drove 4Q Revenue 4Q10 Revenue Year-Over-Year Percent Change $165m Corporate Finance $76m Structured Finance $66m Financial Institutions Moody's Total Revenue 4Q 2010: $564 million $76m Public, Project and Infrastructure Finance -10% 10% 30% 50% 70% U.S. Non-U.S. ↑20% $109m Research, Data and Analytics 12% MOODY'S $58m Risk Management Software $14m Professional Services -25% 25% 75% 125% 175% MARCH 1, 2011 5#6Revenue $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Narrow Credit Spreads and Low All-in Yields Continue to Create a Favorable Environment for Corporate Issuance Revenue Mix: Corporate Finance Issuance: Global Investment Grade and High Yield Bonds and U.S. Bank Loans 200 600 20 20 500 150 100 50 Issuance $ Billions 15 400 300 10 200 LO 5 100 0 0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Other - including monitoring, CP, MTNS Investment Grade Speculative Grade Bank Loans Historical data has been adjusted to conform with current information 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Global Investment-Grade Bond Issuance Global Speculative-Grade Bond Issuance U.S. Bank Loan Origination Global Investment-Grade Bond Yield (%) Global Speculative-Grade Bond Yield (%) Source: Moody's Capital Markets Research Group, Dealogic U.S. Bank Loan issuance represents rated new U.S. bank loan programs Debt issuance categories do not directly correspond to Moody's revenue categorization >> Low yields drove record 2010 high-yield bond volumes and strong U.S. bank loan activity » Global investment grade issuance significantly eased from early 2009 volumes, which included government-backed transactions MOODY'S MARCH 1, 2011 6 Yield (%)#7Debt Maturities $ Billions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Demand for Financing Likely to Continue, Driven by Refunding, Pre-funding, M&A Activity and Capital Spending 250 Debt Maturities: U.S. Moody's-Rated Corporate Bonds and Loans 200 150 100 50 LLL 2011 2012 2013 Investment-Grade Bonds Speculative-Grade Bonds M&A Activity: U.S. Deal Volume ggggg Deal Volume $ Billions 600 0 500 400 100 200 300 200 100 300 400 500 0 600 2014 2015 1Q95 1Q97 1Q99 1Q01 1Q03 1Q05 1Q07 1Q09 U.S. Announced M&A •Baa Spread over 10 year Treasuries (inverted) Speculative-Grade Bank Loans Source: Moody's Investors Service, Feb 2011 Source: Goldman Sachs >> Refunding requirements over the next five years, particularly for speculative-grade loans, are significant and will help drive issuance activity >> Positive M&A trends have continued in early 2011 » Expect growth in corporate capital spending seen in late 2010 to continue MOODY'S MARCH 1, 2011 7 Baa Credit Spreads (bps)#8Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Market Conditions for Financial Institutions Are Improving Revenue Mix: Financial Institutions 100 Revenue $ Millions 80 60 60 40 40 20 20 Issuance $ Billions Issuance: Global Financial Institutions 800 14 12 600 400 200 10 8 CO 2 Yield (%) 1Q09 T 0 +0 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 ■Banking □ Insurance Managed Investments Historical data has been adjusted to conform with current information 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Global Financial Institution Issuance ($ billions) Global Banking Yield (%) Global Insurance Yield (%) Source: Moody's Capital Markets Research Group, Dealogic Debt issuance categories do not directly correspond to Moody's revenue categorization >> FIG revenue has a large recurring component and is relatively inelastic to issuance due to predominance of frequent-issuer contracts with larger financial institutions » Expect revenue growth in 2011 as smaller financial institutions are returning to market opportunistically due to more favorable financing costs MOODY'S MARCH 1, 2011 8#9Revenue $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Growth in Public, Project & Infrastructure Finance Revenue To Be Driven by Infrastructure Spending Revenue Mix: Public, Project & Infrastructure Issuance: U.S. Municipal Bonds 60 Finance 80 160 140 60 60 40 40 Issuance $ Billions 120 100 80 60 20 20 40 20 0 0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Public Finance Municipal Structured Products Project & Infrastructure Finance Historical data has been adjusted to conform with current information 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Build America Bond (BAB) Issuance Long-Term U.S. Municipal Bond Issuance (ex. BABS) Source: Bond Buyer Revenue from U.S. municipal finance bonds is included in the Public Finance segment. Debt issuance categories do not directly correspond to Moody's revenue categorization » Strong 2010 U.S. public finance activity was driven by economic stimulus plan-related issuance, including Build America Bonds >> Higher infrastructure spending outside the U.S. expected to generate growth in 2011 MOODY'S MARCH 1, 2011 9#10Revenue $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Structured Finance Conditions Have Stabilized Revenue Mix: Structured Finance Issuance: Global Rated Structured Finance 300 800 250 200 150 100 50 0 T T Issuance $ Billions 600 400 200 0 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 ABS RMBS ■CREF Derivatives ABS RMBS CMBS □ CDO Historical data has been adjusted to conform with current information ABS includes asset-backed commercial paper and long-term asset-backed securities. CREF includes commercial mortgage-backed securities, real estate finance, and commercial real estate CDOs Source: AB Alert, CM Alert, Moody's Corporation Debt issuance categories do not directly correspond to Moody's revenue categorization » Regulatory uncertainty continues to weigh on overall structured finance activity » Expect near-term issuance growth in U.S. CMBS and European covered bonds, gradual return of CLO activity and stabilization in U.S. ABS » U.S. RMBS recovery unlikely if meaningful government role in housing finance continues MOODY'S MARCH 1, 2011 10#11Revenue $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Business Conditions in Moody's Analytics Are Improving » Research, data and analytics: - - Increasing capital markets activity is contributing to resumption of growth in customer demand Expect continued sales growth and improvement in renewal rates » Risk management software: - Strong performance expected to continue driven by new regulatory requirements and best practice adoption, including capital adequacy, liquidity and interest rate risk, risk management and reporting >> Professional services: - - 200 Renewed spending on activities deferred during crisis, including training and advisory projects CSI Global Education Acquisition and iRSQ initiative strengthen Moody's position as provider of standards for the financial services industry 150 100 50 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 MOODY'S Research, data & analytics Risk management software Professional services Total MA* Historical data has been adjusted to conform with current information *Represents revenue for MIS excluding intersegment royalty MARCH 1, 2011 11#12$ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Subscriptions Provide Stable Revenue Stream and Renewed Growth Prospects As Customer Demand Strengthens MA Revenue and U.S. Financial Industry Profits, 1Q 2005=100 250 200 150 100 50 -MA Revenue Domestic Financial Industry Profits 0 T 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 Source: NIPA Subscription-Based Revenue* and Sales 550 500 450 400 350 300 250 200 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Represents subscription-based revenue reported in the Research, Data and Analytics and Risk Management Software groupings † Represents annual contract value MOODY'S - Sales Constant $/ Excluding FX Salest Current $ -Trailing Twelve Month Revenue* MARCH 1, 2011 12#13Sales $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Strong Growth in Risk Management Software Reflects Solid Demand from Global Financial Institutions 70 60 50 40 30 20 RMS Sales by Type Revenue $ Millions RMS Revenue by Type 70 60 50 40 30 20 2854322 10 10 0 0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Maintenance Subscriptions License and Service Maintenance ☐ Subscriptions License and Service >> Mix of one-time and recurring revenue (recurring revenue approximately two thirds of total) One-time: License and service revenue recognized when implementation projects are completed, typically 12-24 months after contract Recurring: Subscription and maintenance revenue recognized over contract periods » Quarterly revenue tend to be "lumpy", reflecting recognition of revenue as large projects are completed - Expect smoother results in 2-3 years, as increased scale leads to higher proportion of recurring revenue from maintenance on installed base MOODY'S MARCH 1, 2011 13#14Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Positive Business Trends and Acquisitions Are Driving Professional Services Growth Offerings >> Risk Advisory and Professional Development - - Credit process reengineering and advisory for banks and insurance companies Professional and personal skills training for financial institution staff » Certification - iRSQ: Institute of Risk Standards & Qualifications, launched 2010 - - Applied risk management for bank professionals Endorsed by the UK Financial Services Skills Council CSI Global Education, acquired Nov. 2010 - - Exclusive and co-exclusive provider of Canadian securities industry certification Standards business that enhances Moody's brand and provides attractive cross-selling opportunities MOODY'S Revenue Drivers » Increased regulatory scrutiny and new mandates for strengthening risk management infrastructure » Need for addressing significant gaps in processes and capabilities that have come to light in the wake of the recent crisis » Improvement in business conditions and profitability of financial institutions » Capital markets growth, particularly in emerging markets MARCH 1, 2011 14#15Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Global Footprint and Breadth of Moody's Businesses Provide Diversification 4Q 2010 REVENUE BY BUSINESS 4Q 2010 REVENUE BY REGION TOTAL $564 MILLION TOTAL $564 MILLION Moody's Analytics Corporate Finance 32% U.S. 52% 29% 31% Public, Project & 14% Infrastructure Europe, Middle East and Africa 12% 13% Finance 17% Financial Institutions Structured Finance 4Q 2010 REVENUE BY TYPE TOTAL $564 MILLION MCO MIS MA 23% 48% 60% Transaction Recurring 77% 52% 40% MOODY'S Other International TRANSACTION AND RECURRING REVENUE MIS >>> Transaction revenue recognized when rating published » Recurring revenue recognized ratably over security life MA Transaction revenue recognized when service rendered >>> Recurring revenue recognized ratably over contract period MARCH 1, 2011 15#16Revenue $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Expect Potential Margin Expansion in 2011 as Expense Growth Moderates 2,400 55% 53% 54% 2,200 53% 54% 52% 50% 48% 2,000 1,800 1,600 1,400 1,200 1,000 2011 Guidance Range* Revenue: high-single-digit % Operating margin: 38-40 % 60% 50% 43% 39% 38% 40% 30% 800 20% 600 400 10% 200 $602 $797 $1,023 $1,247 $1,438 $1,732 $2,037 $2,259 $1,755 $1,797 $2,032 0 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F Revenue Operating Margin * Represents GAAP guidance provided on February 3, 2011 MOODY'S Operating margin excludes the gain on the sale of Moody's former NY headquarters building (2006); restructuring charges and related adjustments (2007-2009) MARCH 1, 2011 16 Operating Margin**#17Revenue $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Operating Margin Tends to Follow a Pattern Throughout the Year Due to Typical Quarterly Drivers 600 48% 50% 46% 43% 42% 41% 40% 500 39% 39% 40% 37% 37% 35% 400 300 200 31% 30% 20% 100 $431 $488 $433 $404 $409 $451 $452 $486 $477 $478 $513 $564 0 0% MOODY'S 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Revenue Operating Margin* * Operating margin excludes restructuring charges and related adjustments 10% Operating Margin MARCH 1, 2011 17#18Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Legislative and Regulatory Developments » United States - SEC is expected to propose rules between January and March 2011 and to adopt rules between April and July 2011 for the majority of provisions relevant to NRSROs under the Dodd-Frank Act » Outside the U.S. - Transfer of oversight of credit rating agencies to the European Securities and Markets Authority (ESMA) to be effective July 2011 Submitted application for registration of EU-based entities and for endorsement of non- European credit ratings Continue to advocate for globally consistent approaches that align with the G-20's statements as regulatory reviews and activity occur in other jurisdictions MOODY'S MARCH 1, 2011 18#19Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Full-Year 2011 Guidance as of February 3, 2011 Moody's Corporation >>> Revenue: - Increase in the high-single-digit percent range » Operating expenses: >>> - Increase in the mid- to high-single-digit percent range Operating margin: - In the range of 38 to 40 percent Effective tax rate: - Approximately 36 percent » Earnings per share: - In the range of $2.12 to $2.22 MOODY'S MARCH 1, 2011 19#20Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Moody's Has Robust Opportunities in an Improving Environment Principal Opportunities » Global credit market issuance driven by economic growth and financing needs. >> Disintermediation of financial institutions » Sustained role as credit opinion provider » Demand for risk management services Principal Challenges » Uneven pace of economic recovery and further macroeconomic risks in sovereign and public finance sectors » Changing regulatory landscape >> Limited financial innovation MOODY'S MCO Business Targets >> Long-term revenue growth: Double-digit percent » Long-term operating margin: Above 40 percent MARCH 1, 2011 20#21MOODY'S Appendix#22Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Moody's Is a Global Organization United States Canada France United Kingdom Germany Czech Republic Russia Spain Italy Mexico Cyprus Colombia Egypt Dubai India Peru Israel Brazil Singapore MOODY'S Argentina South Africa >> More than 1,200 analysts >> Approximately 4,500 employees >> Presence in 26 countries Moody's Global Staffing U.S. Non U.S. Total 12/31/2010 2,333 12/31/2009 2,144 2,128 4,461 1,834 3,978 China Korea Japan Hong Kong Australia MARCH 1, 2011 22#23Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Moody's International Growth International Revenue, $ Millions 1,000 2000-2010 INTERNATIONAL REVENUE CAGR = 900 800 40% 37% 37% 37% 36% 34% 700 30% 29% 600 500 400 18% 49% 48% 50% 46% 40% 30% 20% 300 10% 200 100 $173 $236 $343 $451 $527 $646 $759 $897 $845 $876 $943 0 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 MOODY'S International Revenue % of Total Revenue MARCH 1, 2011 23 International Revenue % of Total#24Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Geographic Revenue Distribution Corporate Finance 100% 80% 59% 62% 63% 68% 65% 66% 66% 60% 40% 20% 41% 38% 37% 32% 35% 34% 34% U.S. Non-U.S. Structured Finance 100% 80% 46% 47% 51% 50% 49% 47% 49% 60% 40% 54% 53% 49% 50% 51% 53% 51% 20% 90 0% 90 FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 0% Analytics FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 100% 80% 48% 44% 39% 46% 45% 46% 44% 60% 40% 61% 52% 56% 54% 55% 54% 56% 20% 0% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 Financial Institutions Public, Project & Infrastructure Finance 100% 80% 45% 42% 42% 41% 40% 41% 41% 60% 40% 55% 58% 58% 59% 60% 59% 59% 20% 0% 100% 80% 70% 66% 67% 70% 70% 70% 69% 60% 40% 20% 30% 34% 33% 30% 30% 30% 31% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 Historical data has been adjusted to conform with current information 0% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 MOODY'S MARCH 1, 2011 24#25Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Moody's Investors Service Revenue Mix by Business Line Transaction vs. Recurring Recurring Transaction Corporate Finance Structured Finance 100% 100% 29% 30% 26% 25% 27% 80% 36% 46% 80% 50% 53% 54% 59% 59% 60% 57% 60% 60% 40% 71% 70% 74% 75% 73% 40% 64% 54% 50% 20% 47% 46% 20% 41% 41% 40% 43% 0% 0% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 Financial Institutions Public, Project & Infrastructure Finance 100% 100% 80% 80% 41% 41% 45% 42% 40% 36% 41% 57% 67% 69% 68% 63% 66% 63% 60% 60% 40% 40% 59% 59% 55% 58% 60% 64% 59% 20% 43% 37% 33% 31% 32% 34% 37% 20% 0% 0% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 Historical data has been adjusted to conform with current information MOODY'S MARCH 1, 2011 25#26Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Moody's Investors Service Revenue Distribution by Line of Business 100% 25% 34% 80% 38% 39% 40% 40% 43% 60% 34% 25% 21% 22% 20% 21% 20% 40% 22% 21% 23% 19% 21% 17% 20% 20% 19% 20% 18% 20% 19% 20% 19% 0% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 MOODY'S Public, Project and Infrastructure Finance Financial Institutions Structured Finance Corporate Finance Historical data has been adjusted to conform with current information Represents revenue for MIS excluding intersegment royalty MARCH 1, 2011 26#27Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Corporate Finance Revenue Distribution by Product 100% 7% 12% 14% 15% 20% 18% 17% 9% 20% 80% 27% 26% 25% 21% 22% 26% 60% 29% 20% 16% 21% 19% 20% 40% 58% 44% 20% 39% 42% 37% 35% 38% 0% FY08 FY09 1Q10 MOODY'S 2Q10 3Q10 Other - including monitoring, CP, MTNS Investment Grade ■Speculative Grade Bank Loans Historical data has been adjusted to conform with current information 4Q10 FY10 MARCH 1, 2011 27#28Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Structured Finance Revenue Distribution by Asset Class 100% 29% 33% 33% 32% 31% 33% 32% 80% 60% 18% 19% 20% 22% 24% 22% 23% 14% 40% 15% 17% 18% 17% 20% 18% 20% 35% 33% 31% 29% 27% 26% 28% 0% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 Derivatives Commercial Real Estate Finance** □ Residential Mortgage-backed Securities Asset-backed Securities* Historical data has been adjusted to conform with current information ABS includes asset-backed commercial paper and long-term asset-backed securities ** CREF includes commercial mortgage-backed securities, real estate finance, and commercial real estate CDOs MOODY'S MARCH 1, 2011 28#29Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Financial Institutions Revenue Distribution by Product 100% 80% 67% 68% 69% 70% 70% 68% 69% 60% 40% 20% 27% 26% 24% 23% 25% 26% 25% 6% 6% 7% 7% 5% 6% 6% 0% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 MOODY'S Managed Investments Insurance Banking Historical data has been adjusted to conform with current information MARCH 1, 2011 29#30Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Public, Project & Infrastructure Revenue Distribution by Product 100% 10% 8% 8% 8% 7% 8% 17% 80% 41% 40% 42% 42% 41% 42% 38% 60% 40% 51% 52% 50% 51% 51% 48% 45% 20% 0% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 Public Finance MOODY'S Project & Infrastructure Finance Municipal Structured Products Historical data has been adjusted to conform with current information MARCH 1, 2011 30#31Revenue $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Historical MIS Revenue and Issuance Corporate Finance Revenue Mix: Corporate Finance Issuance: Global Investment Grade and High Yield Bonds and U.S. Bank Loans 600 1,600 1,400 500 1,200 400 300 200 Issuance $ Billions 1,000 800 600 400 100 200 0 0 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 MOODY'S Other - including monitoring, CP, MTNS Investment Grade Speculative Grade Bank Loans Historical data has been adjusted to conform with current information Global Investment-Grade Bond Issuance ■Global Speculative-Grade Bond Issuance U.S. Bank Loans Source: Moody's Capital Markets Research Group, Dealogic U.S. Bank Loan issuance represents rated new U.S. bank loan programs Debt issuance categories do not directly correspond to Moody's revenue categorization MARCH 1, 2011 31#32Revenue $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Historical MIS Revenue and Issuance Financial Institutions Revenue Mix: Financial Institutions Issuance: Global Financial Institutions 300 2,500 250 200 150 100 50 0 2005 2006 2007 2008 2009 2010 Banking MOODY'S Issuance $ Billions 2,000 1,500 1,000 500 2005 2006 2007 2008 2009 2010 Global Financial Institution Issuance ($ billions) □ Insurance Managed Investments Historical data has been adjusted to conform with current information Source: Moody's Capital Markets Research Group, Dealogic Debt issuance categories do not directly correspond to Moody's revenue categorization MARCH 1, 2011 32#33Revenue $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Historical MIS Revenue and Issuance Public, Project and Infrastructure Finance 300 250 200 150 100 50 50 Revenue Mix: Public, Project & Infrastructure 0 2005 MOODY'S 2006 Finance Issuance $ Billions Issuance: U.S. Municipal Bonds 500 400 300 200 100 0 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 Build America Bond (BAB) Issuance Public Finance Municipal Structured Products Project & Infrastructure Finance Historical data has been adjusted to conform with current information Long-Term U.S. Municipal Bond Issuance ex. BABS Source: Bond Buyer Revenue from U.S. municipal finance bonds is included in the Public Finance segment. Debt issuance categories do not directly correspond to Moody's revenue categorization MARCH 1, 2011 33#34Revenue $ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Historical MIS Revenue and Issuance Structured Finance Revenue Mix: Structured Finance Issuance: Global Rated Structured Finance 1000 3,000 800 2,500 600 Billions 2,000 400 200 Issuance 1,500 1,000 500 0 0 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 □ABS RMBS ■CREF Derivatives ABS RMBS CMBS □ CDO Historical data has been adjusted to conform with current information ABS includes asset-backed commercial paper and long-term asset-backed securities. CREF includes commercial mortgage-backed securities, real estate finance, and commercial real estate CDOS Source: AB Alert, CM Alert, Moody's Corporation Debt issuance categories do not directly correspond to Moody's revenue categorization MOODY'S MARCH 1, 2011 34#35Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Regulatory Uncertainty Continues to Weigh on New Securitization Conditions Adopted Proposed >>> FAS 166/167 >>> SEC rule 17g-5 » Dodd-Frank Act >>> Requirement to consolidate ABCP on sponsor banks' balance sheet may lead to lower ABCP outstanding levels, when combined with potentially higher regulatory capital costs. Also affects credit card safe harbor provisions. May make sale treatment harder to achieve for CMBS. Requires NRSROS hired by arrangers to rate SF products to disclose information about rating engagement to other NRSROs so that they can develop unsolicited ratings » Requires retention of an unhedged (and untransferable) 5% credit risk of SF securities potentially dampening U.S. SF issuance. This may cause the SPV to stay on securitizer's balance sheet under FAS 167 if the securitizer manages the SPV in a way that substantially affects its performance >>> FDIC "safe harbor" treatment >>> >>> Basel II >>> Revised SEC Regulation AB FASB/IASB joint financial instruments accounting projects MOODY'S >>> Limited issuance impact, depends on how economical bank-sponsors of securitizations will consider safe harbor compliance, as compared to alternative financing sources Increases bank capital requirements for securitizations: - Triples capital requirements for resecuritizations in banking book Treats securitization exposures in trading book as if those were held in banking book, potentially resulting in significantly higher market risk capital charges Increases disclosure and may reduce issuance volume - Requires originators to file loan-level information with the SEC New requirements for shelf registrations, including 5% risk retention Requirement to disclose credit rating in registration statements was waived indefinitely » Requires nearly all financial instruments, including loans, to be carried at fair value. May create disincentive to hold securitized assets but conversely also would incentivize banks to securitize more of their loan portfolios MARCH 1, 2011 35#36Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Moody's Analytics Revenue Mix Transaction vs. Recurring 100% 80% 77% 60% 91% 89% 88% 86% 85% 92% 40% 20% 23% 9% 11% 12% 14% 15% 8% 0% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 Revenue: $551m $580m $141m $149m $155m $182m $627m MOODY'S Transaction ■Recurring MARCH 1, 2011 36#37Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Moody's Analytics Revenue Distribution by Line Segment 100% 80% 60% 71% 71% 68% 68% 74% 60% 76% 40% 32% 20% 28% 28% 25% 26% 20% 24% 8% 4% 4% 0% 2% 3% 4% 5% FY08 FY09 1Q10 2Q10 3Q10 4Q10 FY10 MOODY'S Professional Services Risk Management Software Research, Data and Analytics Historical data has been adjusted to conform with current information MARCH 1, 2011 37#38$ Millions Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Balance Sheet Remains Strong 1,600 1,400 1,200 1,000 800 600 400 200 0 2005 2006 2007 2008 2009 Cash and Cash Equivalents Total Debt Outstanding -1,400 -1,200 -1,000 -800 -600 -400 -200 0 200 2010 (Net Debt) or Net Cash $ Millions (Net Debt) or Net Cash >> Cash flow generation continues to be strong and reflects improvement in fundamentals » Issued $500 million 10-year senior unsecured notes on Aug. 19, 2010 for general corporate purposes » Over $1 billion of additional capacity available under revolving credit facility » No major debt repayment due until 2013 MOODY'S MARCH 1, 2011 38#39Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Limited Capital Expenditures to Support Business Needs $ Millions 200 180 160 140 120 100 80 Guidance Range* $70-$80 60 40 20 $31 $31 $182 $84 $91 $79 0 2005 2006 2007 2008 2009 2010 2011F * 2010 forecast represents guidance provided on February 3, 2011 >> Near-term spending on technology for compliance and process improvement » 2007-2010 figures include costs associated with build-out of New York and London offices » Normalized long-term CapEx expected in the $70 to $90 million range MOODY'S MARCH 1, 2011 39#40Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Share Repurchases to Continue at Modest Pace in 2011 $ Millions $2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2003 2004 2005 2006 2007 2008 2009 2010 Dividends Share Repurchases » Balancing return of capital with other capital allocation decisions and liquidity needs » Declared 9.5% dividend increase in December 2010 MOODY'S MARCH 1, 2011 40#41Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix MCO Non-GAAP Earnings Per Share Non-GAAP Earnings per Share $2.50 2.00 $1.79 1.50 1.00 0.50 0.00 2005 MOODY'S $2.50 $2.25 2006 2007 Guidance Range* $2.12 - $2.22 $2.13 $1.82 $1.70 2008 2009 2010 2011F* Represents GAAP guidance provided on February 3, 2011 2010 EPS includes $0.15 of tax benefits associated with foreign earnings and state taxes EPS is shown on a non-GAAP basis. Non-GAAP basis excludes: certain legacy tax matters and adjustments (2005-2010); restructuring charges and related adjustments (2007-2009); the gain on sale of Moody's former NY headquarters building (2006). 2005 reflects impact of stock compensation expense determined as if FAS123 was adopted on its effective date All figures adjusted to reflect 2-for-1 stock split effective May 2005 MARCH 1, 2011 41#42Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Financial Information by Segment Year Ended December 31, 2010 Total Revenue: External revenue Intersegment royalty revenue Total Expense: Operating and SG&A Depreciation and amortization Operating Income - including royalty Operating Income -excluding royalty Operating Margin - including royalty Operating Margin - excluding royalty MIS MA Eliminations Consolidated $ 1,466 $ 627 $ (61) $ 2,032 1,405 627 2,032 61 (61) 817 503 (61) 1,259 783 471 (61) 1,193 34 32 66 649 124 773 588 185 773 44% 20% 38% 42% 30% 38% Excludes restructuring charges and related adjustments Intersegment royalty relates to revenue for MIS and expense charged to MA for the rights to use and distribute content, data and products developed by MIS "Eliminations" in the table above represents intersegment royalty revenue/expense MOODY'S MARCH 1, 2011 42#43Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix Reconciliation of Non-GAAP EPS Measures to GAAP GAAP diluted EPS as reported Non-GAAP adjustments (a): Impact of restructuring Impact of legacy tax items Non-GAAP diluted EPS Shares used in diluted EPS calculation (millions) 2010 2009 2008 2.15 $ 1.69 $ 1.87 0.05 (0.01) (0.02) (0.04) (0.04) 2.13 $ 1.70 $ 1.82 236.6 237.8 245.3 (a) Non-GAAP EPS adjustments may differ from figures disclosed in earnings releases due to rounding MOODY'S MARCH 1, 2011 43#44Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix 2008 Revenue MIS Business Line Reclassification in $millions Reporting as per 2008 filings Structured Finance 1Q 2Q 3Q 4Q FY08** 107.2 $ 120.1 $ 97.7 $ 92.2 $ 417.2 Corporate Finance 71.5 97.4 75.0 56.6 300.5 Financial Institutions 64.0 72.1 64.4 56.5 257.0 Public, Project & Infrastructure Finance 55.5 66.2 59.7 48.6 230.0 Total Moody's Investors Service* 298.2 355.8 296.8 253.9 1,204.7 Total Moody's Analytics 132.5 131.8 136.6 149.8 550.7 Total Moody's Corporation $ 430.7 $ 487.6 $ 433.4 $ 403.7 $ 1,755.4 Reclass for 2008 and 2009 Business Change: Managed Investments, Credit Estimates Structured Finance $ Corporate Finance Financial Institutions Public, Project & Infrastructure Finance Total Moody's Investors Service Total Moody's Analytics Total Moody's Corporation $ (4.8) $ 1.8 3.0 $ (4.5) $ 1.6 (2.0) $ (1.2) $ 2.0 1.1 (12.5) 6.5 3.0 6.0 $ $ 2009 (Current) Business Line Reporting 1Q 2Q 3Q 4Q FY08 Structured Finance 102.4 $ 115.6 $ 95.7 $ 91.0 $ 404.7 Corporate Finance 73.3 99.0 77.0 57.7 307.0 Financial Institutions 67.0 75.1 64.4 56.5 263.0 Public, Project & Infrastructure Finance 55.5 66.2 59.7 48.6 230.0 Total Moody's Investors Service* 298.2 355.9 296.8 253.8 1,204.7 Total Moody's Analytics 132.5 131.8 136.6 149.8 550.7 Total Moody's Corporation $ 430.7 $ 487.7 $ 433.4 $ 403.6 $ 1,755.4 * Excludes intersegment royalty ** FY08 "Reporting as per 2008 filings" represents cumulative total of 10Q filings In August 2008, the global managed investments ratings group which was previously part of Structured Finance, was moved to the Financial Institutions business. In 2009, credit estimates was moved to Corporate Finance. MOODY'S MARCH 1, 2011 44#45Corporate Overview | MIS Business Conditions | MA Business Conditions | Financial Review and Outlook | Appendix 2009 Moody's Analytics Revenue Reclassification in $millions Reporting as per filings in year 2008 2009 Subscriptions 475.9 n/a Software 49.2 n/a Professional Services 25.6 n/a Total Moody's Analytics 550.7 n/a Reclass for 2009 Realignment*: Subscriptions Software Professional Services Total Moody's Analytics 2009 (Current) Reporting Research, Data and Analytics Risk Management Software Professional Services Total Moody's Analytics (57.2) n/a 59.6 n/a (2.4) n/a n/a 2008 2009 418.7 $ 413.6 108.8 145.1 23.2 20.8 550.7 $ 579.5 *During the fourth quarter of 2009 the Moody's Analytics ("MA") groupings were realigned and renamed to reflect the reporting unit structure for the MA segment at December 31, 2009. Pursuant to this realignment the Subscriptions grouping was renamed Research, Data and Analytics and the Software grouping was renamed Risk Management Software. The revised groupings classify certain subscription-based risk management software revenue and advisory services relating to software sales to the MOODY'S MARCH 1, 2011 45#46MOODY'S Website: Email: http://ir.moodys.com [email protected] moodys.com#47© 2009 Moody's Corporation and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. 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("MIS"), a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation Policy." MOODY'S MARCH 1, 2011 47