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MSCI Inc. Reports Fourth Quarter and Fiscal Year 2011 Financial Results

Feb 02, 2012 at 7:30 AM EST

NEW YORK--(BUSINESS WIRE)-- MSCI Inc. (NYSE: MSCI), a leading global provider of investment decision support tools, including indices, portfolio risk and performance analytics and corporate governance services, today announced results for the fourth quarter and fiscal year ended December 31, 2011. For comparative purposes, selected pro forma results are also presented, as if MSCI had acquired RiskMetrics Group, Inc. ("RiskMetrics") on December 1, 2009. In December 2010, MSCI changed its fiscal year end from November 30 to December 31, effective with the fiscal year beginning January 1, 2011.

(Note: Percentage changes are referenced to the comparable fiscal period in fiscal year 2010, unless otherwise noted.)

  • Operating revenues increased 6.0% to $226.1 million in fourth quarter 2011 and 35.9% to $900.9 million for fiscal year 2011. Compared to pro forma 2010, fiscal year 2011 revenues rose 10.4%.
  • Net income increased 47.0% to $44.5 million in fourth quarter 2011 and 88.2% to $173.5 million for fiscal year 2011. Fiscal year 2011 Net income rose 56.5% compared to pro forma fiscal year 2010.
  • Adjusted EBITDA (defined below) grew by 4.8% to $103.6 million in fourth quarter 2011 and 36.1% to $418.7 million in fiscal year 2011. Compared to pro forma 2010, fiscal year 2011 Adjusted EBITDA grew by 17.4%. The Adjusted EBITDA margin was 45.8% in fourth quarter 2011 and 46.5% for fiscal year 2011.
  • Diluted EPS rose 44.0% to $0.36 in fourth quarter 2011 and 74.1% to $1.41 in fiscal year 2011.
  • Fourth quarter 2011 Adjusted EPS (defined below) rose 25.0% to $0.45. Fiscal year 2011 Adjusted EPS rose 37.0% to $1.85.

Henry A. Fernandez, Chairman and CEO, said, "In 2011, MSCI reported 10% growth in pro forma revenues, 17% growth in pro forma Adjusted EBITDA and 37% growth in Adjusted EPS in 2011 despite the difficult global economic environment. MSCI's fourth quarter revenues, Adjusted EBITDA and Adjusted EPS grew by 6%, 5% and 25%, respectively, and we recorded solid gains in new recurring subscription sales.

"We continued to invest in our businesses throughout 2011, including the addition of more than 300 employees. We look forward to realizing the benefits of these investments in the coming years," added Mr. Fernandez.

           
Table 1: MSCI Inc. Selected Financial Information (unaudited)
 
Three Months Ended Change from Twelve Months Ended Change from
December 31,   November 30, November 30, December 31,   November 30, November 30,
In thousands, except per share data 2011 2010 2010 2011 2010 2010
Operating revenues $ 226,134 $ 213,318 6.0% $ 900,941 $ 662,901 35.9%
Operating expenses 144,501 142,598 1.3% 578,943 456,778 26.7%
Net income 44,486 30,266 47.0% 173,454 92,170 88.2%
% Margin 19.7% 14.2% 19.3% 13.9%
Diluted EPS $ 0.36 $ 0.25 44.0% $ 1.41 $ 0.81 74.1%
 
Adjusted EPS1 0.45 0.36 25.0% 1.85 1.35 37.0%
 
Adjusted EBITDA2 $ 103,648 $ 98,914 4.8% $ 418,740 $ 307,603 36.1%
% Margin 45.8% 46.4% 46.5% 46.4%
 

1 Per share net income before after-tax impact of amortization of intangibles, non-recurring stock-based compensation, restructuring costs, third party transaction expenses associated with the

acquisition of RiskMetrics and debt repayment and refinancing expenses. See Table 15 titled "Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS" and information about the use of non-

GAAP financial information provided under "Notes Regarding the Use of Non-GAAP Financial Measures."

2 NetIncome before interest income, interest expense, other expense (income), provision for income taxes, depreciation, amortization, non-recurring stock-based compensation, restructuring costs,

and third party transaction expenses associated with the acquisition of RiskMetrics. See Table 13 titled "Reconciliation of Adjusted EBITDA to Net Income" and information about the use of non-

GAAP financial information provided under "Notes Regarding the Use of Non-GAAP Financial Measures."

 

Summary of Results for Fourth Quarter 2011 compared to Fourth Quarter 2010

Operating Revenues — See Table 4

Total operating revenues for the three months ended December 31, 2011 (fourth quarter 2011) increased $12.8 million, or 6.0%, to $226.1 million compared to $213.3 million for the three months ended November 30, 2010 (fourth quarter 2010). Total subscription revenues rose $13.0 million, or 7.3%, to $189.8 million and total asset-based fees increased $2.7 million, or 9.6%, to $31.1 million. Non-recurring revenues declined $2.9 million to $5.3 million.

By segment, Performance and Risk revenues rose $12.5 million, or 6.8%, to $197.6 million. The Performance and Risk segment is comprised of index and ESG (defined below) products, risk management analytics, portfolio management analytics, and energy and commodity analytics. Revenues for the Governance segment rose $0.3 million, or 1.0%, to $28.6 million.

Index and ESG products: Our index and ESG products primarily consist of index subscriptions, equity index asset-based fee products and environmental, social and governance ("ESG") products. Revenues related to index and ESG products increased $9.5 million, or 10.5%, to $100.7 million. Index and ESG subscription revenue grew by $8.5 million, or 13.9%, to $69.7 million driven by double digit growth in benchmark product revenues. Revenues attributable to equity index asset-based fees rose $1.0 million, or 3.4%, to $31.1 million. The increase in asset-based fees was driven primarily by revenues from exchange traded products linked to MSCI indices.

Also included in the index and ESG revenues were $1.8 million of non-recurring revenues, which fell from $4.9 million in fourth quarter 2010, partially as a result of the absence of $1.7 million in non-recurring asset-based fees.

At the end of the fourth quarter 2011, assets under management in ETFs linked to MSCI indices were $301.6 billion, down $9.4 billion, or 3.0%, from the end of fiscal year 2010 but up $11.5 billion, or 4.0%, from the end of the third quarter 2011. ETFs linked to MSCI indices attracted net inflows of $1.0 billion in fourth quarter 2011 and $21.9 billion for all of fiscal year 2011.

Of the $301.6 billion in assets under management in ETFs linked to MSCI indices at the end of fourth quarter 2011, 39% were linked to emerging markets indices, 24% were linked to U.S. market indices, 34% were linked to other developed markets outside the U.S. and 3% were linked to other global indices.

See table 12 titled "ETF Assets Linked to MSCI Indices" for more details about assets under management in ETFs linked to MSCI indices.

Risk management analytics: Our risk management analytics products offer a consistent risk and performance assessment framework for managing and monitoring investments in a variety of asset classes and are based on our proprietary integrated fundamental multi-factor risk models, value-at-risk methodologies, performance attribution, and asset valuation models. Risk management analytics revenues were $62.0 million, up $4.1 million, or 7.0%, from fourth quarter 2010. Risk management analytics revenue growth was led by growth in revenues from the BarraOne and RiskManager product lines.

Portfolio management analytics: Our portfolio management analytics products consist of analytics tools for equity and fixed income portfolio management. Revenues related to portfolio management analytics decreased by $0.9 million, or 2.8%, to $30.1 million.

Energy and commodity analytics: Our energy and commodity analytics products consist of software applications that help users value and model physical assets and derivatives across a number of market segments that include energy and commodity assets. Revenues from energy and commodity analytics products declined by $0.2 million, or 4.6%, to $4.6 million.

Governance: Our governance products consist of corporate governance products and services, including proxy research, recommendation and voting services for asset owners and asset managers as well as governance advisory and compensation services for corporations. It also includes forensic accounting research as well as class action monitoring and claims filing services to aid institutional investors in the recovery of funds from securities litigation. Governance revenues increased $0.3 million, or 1.0%, to $28.6 million in fourth quarter 2011 as a $1.2 million increase in subscription revenue more than offset a $0.9 million decline in non-recurring revenues to $2.0 million.

Operating Expenses — See Table 6

Total operating expense increased $1.9 million, or 1.3%, to $144.5 million in fourth quarter 2011 compared to fourth quarter 2010. Increased compensation and non-compensation expenses were partially offset by declines in restructuring costs, non-recurring stock-based compensation and depreciation and amortization expense.

Compensation costs: Total compensation costs rose $3.6 million, or 4.3%, to $85.9 million in fourth quarter 2011. Excluding non-recurring stock-based compensation expense, total compensation costs rose $6.4 million, or 8.2%, to $84.8 million. The increase in compensation expense was driven, in part, by a 16.9% increase in MSCI's total number of employees compared to November 2010.

Non-compensation costs excluding depreciation and amortization: Total non-compensation operating expenses excluding depreciation and amortization and restructuring costs rose $1.6 million, or 4.5%, to $37.7 million in fourth quarter 2011. The growth was driven by increases in technology costs, marketing and travel and entertainment expenses, recruiting costs and professional fees.

Cost of services: Total cost of services expenses were flat at $69.1 million. Within costs of services, compensation expenses increased slightly to $50.6 million and non-compensation expenses declined slightly to $18.5 million.

Selling, general and administrative expense (SG&A): Total SG&A expense increased by $5.2 million, or 10.6%, to $54.5 million. Within SG&A, compensation expenses increased by $3.5 million, or 10.8%, and non-compensation expenses increased by $1.8 million, or 10.1%.

Amortization of intangibles: Amortization of intangibles expense totaled $16.3 million, down $0.4 million, or 2.6%, from fourth quarter 2010.

Depreciation and amortization of property, plant and leasehold improvements: Depreciation and amortization expense declined by $1.1 million, or 19.0%, to $4.5 million as a result of assets reaching the end of their depreciable lives.

Other Expense (Income), Net

Other expense (income), net for fourth quarter 2011 was $11.5 million, a decline of $8.1 million from fourth quarter 2010. Interest expense declined by $4.2 million versus the fourth quarter of 2010 as a result of both lower interest costs and a lower total level of outstanding indebtedness. The impact of foreign exchange movements resulted in a gain of $0.2 million in fourth quarter 2011 compared with a charge of $2.3 million in fourth quarter 2010.

During the fourth quarter, MSCI repaid $37.8 million of its term loan facility.

Provision for Income Taxes

The provision for income tax expense was $25.6 million for fourth quarter 2011, an increase of $4.8 million, or 23.2%, compared to $20.8 million for the same period in 2010, driven primarily by higher pre-tax income. The effective tax rate was 36.6% for fourth quarter 2011. The effective tax rate for fourth quarter 2010 was 40.7%.

Net Income and Earnings per Share — See Table 15

Net income increased $14.2 million, or 47.0%, to $44.5 million for fourth quarter 2011. The net income margin increased to 19.7% from 14.2% in fourth quarter 2010. Diluted EPS increased 44.0% to $0.36.

Adjusted net income, which excludes $11.1 million of after-tax impact of amortization of intangibles, non-recurring stock-based compensation expense, transaction expenses, restructuring costs and debt repayment and refinancing expenses, rose $11.2 million, or 25.4%, to $55.6 million. Adjusted EPS, which excludes the after-tax, per share impact of amortization of intangibles, non-recurring stock-based compensation expense, transaction expenses, restructuring costs and debt repayment and refinancing expenses totaling $0.09, rose 25.0% to $0.45.

See table 15 titled "Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS."

Adjusted EBITDA — See Table 13

Adjusted EBITDA, which excludes, among other things, the impact of non-recurring stock-based compensation and restructuring costs, was $103.6 million, an increase of $4.7 million, or 4.8%, from fourth quarter 2010. Adjusted EBITDA margin declined to 45.8% from 46.4%.

By segment, Adjusted EBITDA for the Performance and Risk segment increased $6.4 million, or 7.1%, to $97.0 million from fourth quarter 2010. Adjusted EBITDA margin for this segment rose slightly to 49.1% from 48.9% in fourth quarter 2010. Adjusted EBITDA for the Governance segment declined by 20.1% to $6.7 million and the Adjusted EBITDA margin fell to 23.4% from 29.6%.

See Table 13 titled "Reconciliation of Adjusted EBITDA to Net Income" and "Notes Regarding the Use of Non-GAAP Financial Measures" below.

Summary of Results for Fiscal Year 2011 compared to Fiscal Year 2010

Operating Revenues — See Table 5

Total operating revenues for the fiscal year ended December 31, 2011 (fiscal year 2011) increased $238.0 million, or 35.9%, to $900.9 million compared to $662.9 million for the fiscal year ended November 30, 2010 (fiscal year 2010). Total subscription revenue rose $194.7 million, or 36.2%, to $732.5 million, while asset-based fees rose $31.9 million, or 30.6%, to $136.0 million. Total non-recurring revenues increased $11.4 million, or 54.3%, to $32.5 million. Excluding the impact of the acquisitions of RiskMetrics and Measurisk, total revenues increased by $67.6 million, or 13.4%.

By product line, index and ESG products revenues grew 22.5% from fiscal year 2010. Risk management analytics revenues grew by 81.1%, driven largely by the acquisition of RiskMetrics. Portfolio management analytics revenues declined 3.5% and energy and other commodity analytics revenues fell 12.1%.

By segment, Performance and Risk revenues rose $177.0 million, or 29.3%, to $781.4 million for fiscal year 2011. Governance revenues rose $61.0 million, or 104.1%, to $119.6 million.

Operating Expenses — See Table 7

Total operating expenses increased $122.2 million, or 26.7%, to $578.9 million in fiscal year 2011 compared to fiscal year 2010. Operating expenses included restructuring costs of $3.6 million in fiscal year 2011 and $8.9 million in fiscal year 2010 as well as transaction expenses of $21.2 million in fiscal year 2010. Excluding these expenses, total operating expenses would have risen by $148.7 million, or 34.8%. The increase reflects increases of $78.5 million, or 39.5%, in cost of services, $22.7 million, or 11.9%, in SG&A expense, $2.0 million, or 11.6%, in depreciation and amortization expense and $24.2 million, or 58.2%, in amortization of intangibles.

Other Expense (Income), Net

Other expense (income), net for fiscal year 2011 was $58.6 million, an increase of $6.0 million from fiscal year 2010. The increase was driven by increased indebtedness resulting from our acquisition of RiskMetrics. Other expense (income), net includes debt repayment and refinancing expenses of $6.4 million in fiscal year 2011 and $8.3 million in fiscal year 2010.

Provision for Income Taxes

The provision for income tax expense was $90.0 million for fiscal year 2011, an increase of $28.6 million, or 46.7%, compared to $61.3 million for fiscal year 2010. Our effective tax rate for fiscal year 2011 was 34.2% compared to 40.0% for fiscal year 2010. The income tax provision for fiscal year 2011 was impacted by $4.2 million of certain non-recurring benefits relating to prior tax periods. Excluding that benefit, the effective tax rate was 35.7% in fiscal year 2011.

Net Income and Earnings per Share — See Table 15

Net income increased $81.3 million, or 88.2%, to $173.5 million and the net income margin increased to 19.3% from 13.9%. Diluted EPS rose by 74.1% to $1.41 from $0.81.

Adjusted net income, which excludes the after-tax impact of amortization of intangibles, non-recurring stock-based compensation expense, transaction expenses, debt repayment expenses and restructuring costs totaling $53.8 million, rose $72.9 million, or 47.3%, to $227.3 million. Adjusted EPS, which excludes the after-tax, per share impact of amortization of intangibles, non-recurring stock-based compensation expense, transaction expenses, debt repayment expenses and restructuring costs totaling $0.44, rose 37.0% to $1.85 in fiscal year 2011.

See table 15 titled "Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS."

Adjusted EBITDA — See Table 13

Adjusted EBITDA was $418.7 million, an increase of $111.1 million, or 36.1%, from fiscal year 2010. Adjusted EBITDA margin rose slightly to 46.5% from 46.4%.

By segment, Adjusted EBITDA for the Performance and Risk segment increased $95.8 million, or 32.9%, to $387.5 million from fiscal year 2010. Adjusted EBITDA margin rose to 49.6% from 48.3% in fiscal year 2010. Adjusted EBITDA for the Governance segment increased $15.3 million, or 96.0%, to $31.3 million and the Adjusted EBITDA margin fell to 26.2% from 27.2%.

See Table 13 titled "Reconciliation of Adjusted EBITDA to Net Income" and "Notes Regarding the Use of Non-GAAP Financial Measures" below.

Summary of Results for Fiscal Year 2011 compared to Pro Forma Fiscal Year 2010

Operating Revenues — See Table 5

Total operating revenues for fiscal year 2011 compared to pro forma fiscal year 2010 rose $84.5 million, or 10.4%, to $900.9 million. Excluding the impact of the acquisition of Measurisk, which was acquired in third quarter 2010, revenues grew 9.3%. Subscription revenue rose $53.5 million, or 7.9%, to $732.5 million, driven by growth in index and ESG subscriptions and risk management analytics. Asset-based fees rose $31.9 million, or 30.6%, to $136.0 million. Non-recurring revenues fell by $0.9 million, or 2.6%, to $32.5 million, as lower governance and lower index and ESG revenues more than offset growth in non-recurring risk management analytics revenues.

By segment, Performance and Risk revenues rose $88.2 million, or 12.7%, to $781.4 million. Governance revenues declined $3.7 million, or 3.0%, to $119.6 million.

Operating Expenses — See Table 7

Compared to pro forma fiscal year 2010, total operating expense for fiscal year 2011 increased $11.7 million, or 2.1%, to $578.9 million.

Total compensation expense excluding non-recurring stock-based compensation increased $19.0 million, or 6.0%, to $338.2 million. Non-compensation costs excluding depreciation and amortization and restructuring costs increased $3.3 million, or 2.4%, to $144.0 million.

Compared to pro forma fiscal year 2010, total cost of services rose $4.2 million, or 1.5%, to $277.1 million. The growth was driven by an increase of $2.0 million, or 1.0%, in compensation excluding non-recurring stock-based compensation expense and a $3.7 million, or 5.2%, increase in non-compensation expenses, partially offset by a decline in non-recurring stock-based compensation.

Total SG&A increased $13.7 million, or 6.9%, to $213.0 million in fiscal year 2011. The increase was driven by growth of $17.0 million, or 14.0%, in compensation excluding non-recurring stock-based compensation partially offset by a decline of $3.0 million in non-recurring stock-based compensation and a small decline in non-compensation expenses.

Net Income and Adjusted EBITDA — See Table 14

Compared to pro forma fiscal year 2010, net income increased $62.6 million, or 56.5%, to $173.5 million from $110.8 million.

Compared to pro forma fiscal year 2010, fiscal year 2011 Adjusted EBITDA increased $62.2 million, or 17.4%, to $418.7 million and the Adjusted EBITDA margin expanded to 46.5% from 43.7%. By segment, Performance and Risk Adjusted EBITDA rose $63.2 million, or 19.5%, to $387.5 million. The margin expanded to 49.6% from 46.8%. Governance Adjusted EBITDA fell $1.0 million, or 3.1%, to $31.3 million and the Adjusted EBITDA margin was flat at 26.2%.

See Table 14 titled "Reconciliation of Pro Forma Adjusted EBITDA to Pro Forma Net Income" and "Notes Regarding the Use of Non-GAAP Financial Measures" below.

Conference Call Information

Investors will have the opportunity to listen to MSCI Inc.'s senior management review fourth quarter and fiscal year 2011 results on Thursday, February 2, 2012 at 11:00 am Eastern Time. To listen to the live event, visit the investor relations section of MSCI's website, http://ir.msci.com/events.cfm, or dial 1-877-312-9206 within the United States. International callers dial 1-408-774-4001.

An audio recording of the conference call will be available on our website approximately two hours after the conclusion of the live event and will be accessible through February 8, 2012. To listen to the recording, visit http://ir.msci.com/events.cfm, or dial 1-855-859-2056 (passcode: 43052585) within the United States. International callers dial 1-404-537-3406 (passcode: 43052585).

About MSCI Inc.

MSCI Inc. is a leading provider of investment decision support tools to investors globally, including asset managers, banks, hedge funds and pension funds. MSCI products and services include indices, portfolio risk and performance analytics, and governance tools.

The company's flagship product offerings are: the MSCI equity indices to which there are approximately $7 trillion in assets1 benchmarked worldwide; Barra portfolio risk and performance analytics covering global equity and fixed income markets; RiskMetrics market and credit risk analytics; ISS governance research and outsourced proxy voting and reporting services; FEA valuation models and risk management software for the energy and commodities markets; and CFRA forensic accounting risk research, legal/regulatory risk assessment, and due-diligence. MSCI is headquartered in New York, with research and commercial offices around the world. MSCI#IR

1 As of June 30, 2011. Estimate based on eVestment, Lipper and Bloomberg data

For further information on MSCI Inc. or our products please visit www.msci.com.

Forward-Looking Statements

This press release contains forward-looking statements. These statements relate to future events or to future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as "may," "could," "expect," "intend," "plan," "seek," "anticipate," "believe," "estimate," "predict," "potential," or "continue", or the negative of these terms or other comparable terminology. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and that could materially affect actual results, levels of activity, performance, or achievements.

Other factors that could materially affect actual results, levels of activity, performance or achievements can be found in MSCI's Annual Report on Form 10-K for the fiscal year ended November 30, 2010 and filed with the Securities and Exchange Commission (SEC) on January 31, 2011, and in quarterly reports on Form 10-Q and current reports on Form 8-K filed with the SEC. If any of these risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary significantly from what we projected. Any forward-looking statement in this release reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, whether as a result of new information, future events, or otherwise.

Notes Regarding the Use of Non-GAAP Financial Measures

MSCI has presented supplemental non-GAAP financial measures as part of this earnings release. A reconciliation is provided below that reconciles each non-GAAP financial measure with the most comparable GAAP measure. The presentation of non-GAAP financial measures should not be considered as alternative measures for the most directly comparable GAAP financial measures. These measures are used by management to monitor the financial performance of the business, inform business decision making and forecast future results.

Adjusted EBITDA is defined as net income before provision for income taxes, other net expense and income, depreciation and amortization, non-recurring stock-based compensation expense, restructuring costs, and third party transaction expenses related to the acquisition of RiskMetrics.

Adjusted net income and Adjusted EPS are defined as net income and EPS, respectively, before provision for non-recurring stock-based compensation expenses, amortization of intangible assets, third party transaction expenses related to the acquisition of RiskMetrics, restructuring costs, and the accelerated interest expense resulting from the termination of an interest rate swap and the accelerated amortization or write off of deferred financing and debt discount costs as a result of debt repayment (debt repayment expenses), as well as for any related tax effects.

We believe that adjustments related to restructuring costs, transaction expenses and debt repayment expenses are useful to management and investors because it allows for an evaluation of MSCI's underlying operating performance by excluding the costs incurred in connection with the acquisition of RiskMetrics. Additionally, we believe that adjusting for non-recurring stock-based compensation, debt repayment and refinancing expenses and the amortization of intangible assets may help investors compare our performance to that of other companies in our industry as we do not believe that other companies in our industry have as significant a portion of their operating expenses represented by these items. We believe that the non-GAAP financial measures presented in this earnings release facilitate meaningful period-to-period comparisons and provide a baseline for the evaluation of future results.

Adjusted EBITDA, Adjusted net income and Adjusted EPS are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies.

         
Table 2: MSCI Inc. Consolidated Statement of Income (unaudited)
Three Months Ended Fiscal Year Ended
December 31, November 30, September 30, December 31, November 30,
In thousands, except per share data 2011 2010 2011 2011 2010
 
Operating revenues $ 226,134 $ 213,318 $ 225,026 $ 900,941 $ 662,901
 
Operating expenses
Cost of services 69,121 69,131 68,968 277,147 198,626
Selling, general and administrative 54,509 49,300 53,724 212,972 190,244
Restructuring costs 125 1,943 (1,002) 3,594 8,896
Amortization of intangibles 16,268 16,694 16,422 65,805 41,599
Depreciation and amortization of property,
equipment and leasehold improvements   4,478   5,530   4,669   19,425   17,413
Total operating expenses $ 144,501 $ 142,598 $ 142,781 $ 578,943 $ 456,778
 
Operating income $ 81,633 $ 70,720 $ 82,245 $ 321,998 $ 206,123
Operating margin 36.1% 33.2% 36.5% 35.7% 31.1%
 
Interest income (335) (128) (184) (848) (993)
Interest expense 13,267 17,495 13,113 55,819 51,337
Other expense (income)   (1,427)   2,274   (983)   3,614   2,288
Other expenses (income), net $ 11,505 $ 19,641 $ 11,946 $ 58,585 $ 52,632
 
Income before taxes 70,128 51,079 70,299 263,413 153,491
 
Provision for income taxes 25,642 20,813 20,512 89,959 61,321
         
Net income $ 44,486 $ 30,266 $ 49,787 $ 173,454 $ 92,170
Net Income Margin 19.7% 14.2% 22.1% 19.3% 13.9%
 
Earnings per basic common share $ 0.37 $ 0.25 $ 0.41 $ 1.43 $ 0.82
Earnings per diluted common share $ 0.36 $ 0.25 $ 0.40 $ 1.41 $ 0.81
 
Weighted average shares outstanding used
in computing earnings per share
Basic   121,146   119,309   120,831   120,717   112,074
Diluted   122,536   121,172   122,303   122,276   113,357
 
 

 

 

 

 

 

Table 3: MSCI Inc. Selected Balance Sheet Items (Unaudited)

 

 
 
As of
December 31, December 31,
2011 2010
 
Cash and cash equivalents $ 252,211 $ 269,423
Short-term investments 140,490 72,817
Trade receivables, net of allowances 180,566 137,988
 
Deferred revenue $ 289,217 $ 268,807
Current maturites of long-term debt 10,339 54,932
Long-term debt, net of current maturities 1,066,548 1,207,966
 

Table 4. Fourth Quarter 2011 Operating Revenues by Product Category and Revenue Type    
       
Three Months Ended % Change from
December 31, November 30, September 30, November 30, September 30,
2011 2010 2011 2010 2011
 
Index and ESG products
Subscriptions $ 69,677 $ 61,147 $ 66,279 13.9% 5.1%
Asset-based fees   31,057   30,041   35,030 3.4% (11.3%)
Index and ESG products total 100,734 91,188 101,309 10.5% (0.6%)
Risk management analytics 62,037 57,963 61,861 7.0% 0.3%
Portfolio management analytics 30,149 31,010 30,263 (2.8%) (0.4%)
Energy and commodity analytics   4,647   4,871   2,797 (4.6%) 66.1%
Total Performance and Risk revenues 197,567 185,032 196,230 6.8% 0.7%
 
Total Governance revenues   28,567   28,286   28,796 1.0% (0.8%)
 
Total operating revenues $ 226,134 $ 213,318 $ 225,026 6.0% 0.5%
 
Subscriptions 189,763 176,791 183,735 7.3% 3.3%
Asset-based fees 31,057 28,330 35,030 9.6% (11.3%)
Non-recurring revenues   5,314   8,197   6,261 (35.2%) (15.1%)
Total operating revenues $ 226,134 $ 213,318 $ 225,026 6.0% 0.5%
 
 
 
Table 5. Fiscal Year 2011 Operating Revenues by Product Category and Revenue Type
 
Fiscal Year Ended % Change from
December 31, November 30, Pro forma November 30, Pro forma
2011 2010 2010 2010 2010
 
Index and ESG products
Subscriptions $ 264,390 $ 224,600 $ 233,667 17.7% 13.1%
Asset-based fees   140,243   105,799   105,799 32.6% 32.6%
Index and ESG products total 404,633 330,399 339,466 22.5% 19.2%
Risk management analytics 243,570 134,521 214,327 81.1% 13.6%
Portfolio management analytics 118,889 123,159 123,159 (3.5%) (3.5%)
Energy and commodity analytics   14,263   16,228   16,226 (12.1%) (12.1%)
Total Performance and Risk revenues 781,355 604,307 693,178 29.3% 12.7%
 
Total Governance revenues   119,586   58,594   123,241 104.1% (3.0%)
 
Total operating revenues $ 900,941 $ 662,901 $ 816,419 35.9% 10.4%
 
Subscriptions 732,473 537,768 678,968 36.2% 7.9%
Asset-based fees 135,981 104,084 104,084 30.6% 30.6%
Non-recurring revenues   32,487   21,049   33,367 54.3% (2.6%)
Total operating revenues $ 900,941 $ 662,901 $ 816,419 35.9% 10.4%
 

  Table 6: Additional Fourth Quarter 2011 Operating Expense Detail  
       
Three Months Ended % Change from
December 31, November 30,

 

September 30, November 30, September 30,
In thousands 2011 2010 2011 2010 2011
 
Cost of services
Compensation $ 50,132 $ 48,849 $ 50,114 2.6% 0.0%
Non-recurring stock-based compensation   443   1,617   470 (72.6%) (5.8%)
Total compensation $ 50,575 $ 50,466 $ 50,584 0.2% (0.0%)
Non-compensation   18,546   18,665   18,384 (0.6%) 0.9%
Total cost of services $ 69,121 $ 69,131 $ 68,968 (0.0%) 0.2%
Selling, general and administrative
Compensation $ 34,672 $ 29,508 $ 34,874 17.5% (0.6%)
Non-recurring stock-based compensation   701   2,410   820 (70.9%) (14.5%)
Total compensation $ 35,373 $ 31,918 $ 35,694 10.8% (0.9%)
Transaction expenses - - - n/m n/m
Non-compensation   19,136   17,382   18,030 10.1% 6.1%
Total selling, general and administrative $ 54,509 $ 49,300 $ 53,724 10.6% 1.5%
Restructuring costs 125 1,943 (1,002) (93.6%) (112.4%)
Amortization of intangibles 16,268 16,694 16,422 (2.6%) (0.9%)
Depreciation and amortization   4,478   5,530   4,669 (19.0%) (4.1%)
Total operating expenses $ 144,501 $ 142,598 $ 142,781 1.3% 1.2%
 
 
In thousands          
Total non-recurring stock-based compensation $ 1,144 $ 4,027 $ 1,290 (71.6%) (11.3%)
Compensation excluding non-recurring comp 84,804 78,357 84,988 8.2% (0.2%)
Transaction expenses - - - n/m n/m
Non-compensation excluding transaction expenses 37,682 36,047 36,414 4.5% 3.5%
Restructuring costs 125 1,943 (1,002) (93.6%) (112.4%)
Amortization of intangibles 16,268 16,694 16,422 (2.6%) (0.9%)
Depreciation and amortization   4,478   5,530   4,669 (19.0%) (4.1%)
Total operating expenses $ 144,501 $ 142,598 $ 142,781 1.3% 1.2%
 

Table 7: Additional Fiscal Year 2011 Operating Expense Detail

           
 
 
Fiscal Year Ended % Change from
December 31, November 30, Pro forma FY November 30, Pro forma FY
In thousands 2011 2010 2010 2010 2010
 
Cost of services
Compensation $ 199,447 $ 142,485 $ 197,417 40.0% 1.0%
Non-recurring stock-based compensation   3,150   4,639   4,639 (32.1%) (32.1%)
Total compensation $ 202,597 $ 147,124 $ 202,056 37.7% 0.3%
Non-compensation   74,550   51,502   70,883 44.8% 5.2%
Total cost of services $ 277,147 $ 198,626 $ 272,939 39.5% 1.5%
 
Selling, general and administrative
Compensation $ 138,722 $ 102,144 $ 121,722 35.8% 14.0%
Non-recurring stock-based compensation   4,768   7,727   7,727 (38.3%) (38.3%)
Total compensation $ 143,490 $ 109,871 $ 129,449 30.6% 10.8%
Transaction expenses - 21,206 - (100.0%) n/m
Non-compensation   69,482   59,167   69,841 17.4% (0.5%)
Total selling, general and administrative $ 212,972 $ 190,244 $ 199,290 11.9% 6.9%
Restructuring costs 3,594 8,896 8,896 (59.6%) (59.6%)
Amortization of intangibles 65,805 41,599 64,477 58.2% 2.1%
Depreciation and amortization   19,425   17,413   21,660 11.6% (10.3%)
Total operating expenses $ 578,943 $ 456,778 $ 567,262 26.7% 2.1%
 
 
In thousands          
 
Total non-recurring stock-based compensation $ 7,918 $ 12,366 $ 12,366 (36.0%) (36.0%)
Compensation excluding non-recurring comp 338,169 244,629 319,139 38.2% 6.0%
Transaction expenses - 21,206 - (100.0%) n/m
Non-compensation excluding transaction expenses 144,032 110,669 140,724 30.1% 2.4%
Restructuring costs 3,594 8,896 8,896 (59.6%) (59.6%)
Amortization of intangibles 65,805 41,599 64,477 58.2% 2.1%
Depreciation and amortization   19,425   17,413   21,660 11.6% (10.3%)
Total operating expenses $ 578,943 $ 456,778 $ 567,262 26.7% 2.1%
 

Table 8: Summary Fourth Quarter 2011 Segment Information      
   
Three Months Ended % Change from
December 31, November 30, September 30, November 30, September 30,
In thousands 2011 2010 2011 2010 2011
 
Revenues
Performance and Risk $ 197,567 $ 185,032 $ 196,230 6.8% 0.7%
Governance   28,567   28,286   28,796 1.0% (0.8%)
Total Operating revenues $ 226,134 $ 213,318 $ 225,026 6.0% 0.5%
 
Operating Income
Performance and Risk 79,046 67,743 78,957 16.7% 0.1%
Margin 40.0% 36.6% 40.2%
Governance 2,587 2,977 3,288 (13.1%) (21.3%)
Margin 9.1% 10.5% 11.4%
Total Operating Income $ 81,633 $ 70,720 $ 82,245 15.4% (0.7%)
Margin 36.1% 33.2% 36.5%
 
Adjusted EBITDA
Performance and Risk 96,964 90,552 99,549 7.1% (2.6%)
Margin 49.1% 48.9% 50.7%
Governance 6,684 8,362 7,446 (20.1%) (10.2%)
Margin 23.4% 29.6% 25.9%
Total Adjusted EBITDA $ 103,647 $ 98,914 $ 106,995 4.8% (3.1%)
Margin 45.8% 46.4% 47.5%
 
 
 
Table 9: Summary Fiscal Year 2011 Segment Information
 
Fiscal Year Ended % Change from
December 31, November 30, Pro forma FY November 30, Pro forma FY
In thousands   2011   2010   2010 2010 2010
 
Revenues
Performance and Risk $ 781,355 $ 604,307 $ 693,178 29.3% 12.7%
Governance   119,586   58,594   123,241 104.1% (3.0%)
Total Operating revenues $ 900,941 $ 662,901 $ 816,419 35.9% 10.4%
 
Operating Income
Performance and Risk 310,504 200,369 235,883 55.0% 31.6%
Margin 39.7% 33.2% 34.0%
Governance 11,494 5,754 13,274 99.7% (13.4%)
Margin 9.6% 9.8% 10.8%
Total Operating Income $ 321,998 $ 206,123 $ 249,157 56.2% 29.2%
Margin 35.7% 31.1% 30.5%
 
Adjusted EBITDA
Performance and Risk 387,459 291,642 324,283 32.9% 19.5%
Margin 49.6% 48.3% 46.8%
Governance 31,281 15,961 32,273 96.0% (3.1%)
Margin 26.2% 27.2% 26.2%
Total Adjusted EBITDA $ 418,740 $ 307,603 $ 356,556 36.1% 17.4%
Margin 46.5% 46.4% 43.7%
 

Table 10: Key Operating Metrics1          
  As of or For the Quarter Ended % Change from
December 31, September 30, December 31, September 30,
Dollars in thousands 2011 2010 2011 2010 2011
 
Run Rates 1
Index and ESG products
Subscriptions $ 269,780 $ 236,157 $ 264,722 14.2% 1.9%
Asset-based fees   119,706   117,866   117,928 1.6% 1.5%
Index and ESG products total 389,486 354,023 382,650 10.0% 1.8%
Risk management analytics 250,967 233,504 251,804 7.5% (0.3%)
Portfolio management analytics 118,354 115,158 119,220 2.8% (0.7%)
Energy and commodity analytics   14,928   15,288   15,343 (2.3%) (2.7%)
Total Performance and Risk Run Rate $ 773,735 $ 717,973 $ 769,017 7.8% 0.6%
 
Governance Run Rate   108,251   105,036   107,152 3.1% 1.0%
Total Run Rate $ 881,986 $ 823,009 $ 876,169 7.2% 0.7%
 
Subscription total 762,280 705,143 758,241 8.1% 0.5%
Asset-based fees total   119,706   117,866   117,928 1.6% 1.5%
Total Run Rate $ 881,986 $ 823,009 $ 876,169 7.2% 0.7%
 
Subscription Run Rate by region
% Americas 52% 53% 53%
% non-Americas 48% 47% 47%
 
New Recurring Subscription Sales $ 35,444 $ 33,742 $ 31,661 5.0% 11.9%
Subscription Cancellations   (27,245)   (30,174)   (15,364) (9.7%) 77.3%
Net New Recurring Subscription Sales $ 8,199 $ 3,568 $ 16,297 129.8% (49.7%)
Non-recurring sales $ 7,459 $ 11,819 $ 6,561 (36.9%) 13.7%
 
Employees 2,429 2,099 2,277 15.7% 6.7%
 
% Employees by location
Developed Market Centers 61% 70% 62%
Emerging Market Centers 39% 30% 38%
 
1 The run rate at a particular point in time represents the forward-looking fees for the next 12 months from all subscriptions and investment product licenses we currently provide to our clients under renewable contracts assuming all contracts that come up for renewal are renewed and assuming then-current exchange rates. For any subscription or license whose fees are linked to an investment product's assets or trading volume, the run rate calculation reflects an annualization of the most recent periodic fee earned under such license or subscription. The run rate does not include fees associated with "one-time" and other non-recurring transactions. In addition, we remove from the run rate the fees associated with any subscription or investment product license agreement with respect to which we have received a notice of termination or non-renewal during the period and we have determined that such notice evidences the client's final decision to terminate or not renew the applicable subscription or agreement, even though the notice is not effective until a later date.
 

Table 11: Supplemental Operating Metrics
                   
Recurring Subscription Sales & Subscription Cancellations
Three Months Ended 2010 Three Months Ended 2011 Year ended
  March June September December March June September December   Dec. 2010 Dec. 2011
New Recurring Subscription Sales $ 26,831 $ 33,847 $ 35,373 $ 33,742 $ 34,612 $ 30,298 $ 31,661 $ 35,444 $ 129,793 $ 132,015
Subscription Cancellations   (19,379)   (18,222)   (19,654)   (30,174)   (14,402)  

(14,965)

  (15,364)   (27,245)   (87,429)   (71,976)
Net New Recurring Subscription Sales $ 7,452 $ 15,625 $ 15,719 $ 3,568 $ 20,210 $ 15,333 $ 16,297 $ 8,199 $ 42,364 $ 60,039
 
Aggregate & Core Retention Rates
Three Months Ended 2010 Three Months Ended 2011 Year Ended
  March June September December March June September December Dec. 2010 Dec. 2011
Aggregate Retention Rate 1
Index and ESG products 94.4% 90.2% 92.4% 89.8% 95.0% 92.8% 95.2% 89.3% 91.7% 93.1%
Risk management analytics 83.4% 92.0% 87.7% 85.6% 94.2% 92.2% 92.1% 80.8% 87.5% 89.5%
Portfolio management analytics 88.9% 84.5% 82.2% 63.1% 88.6% 91.4% 86.6% 87.2% 79.7% 88.4%
Energy & commodity analytics 80.7% 86.8% 90.3% 81.7% 76.9% 88.8% 89.3% 75.0% 84.9% 82.5%
 
Total Performance and Risk 88.7% 89.4% 88.3% 82.1% 93.0% 92.2% 92.2% 85.2% 87.3% 90.5%
 
Total Governance 84.8% 85.6% 87.1% 80.1% 85.0% 90.4% 86.2% 80.6% 84.4% 85.6%
                   
Total Aggregate Retention Rate   88.1%   88.8%   88.1%   81.8%   91.8%   91.9%   91.3%   84.5%   86.8%   89.8%
 
Core Retention Rate 1
Index and ESG products 95.1% 90.7% 92.6% 90.1% 95.2% 92.8% 95.2% 89.3% 92.1% 93.1%
Risk management analytics 85.2% 92.5% 90.0% 85.6% 94.2% 92.7% 92.1% 81.0% 88.6% 90.0%
Portfolio management analytics 90.9% 86.7% 86.0% 64.1% 89.9% 93.2% 88.3% 88.3% 81.9% 89.9%
Energy & commodity analytics 80.7% 86.8% 90.3% 81.2% 76.9% 88.8% 91.3% 75.0% 84.7% 83.0%
 
Total Performance and Risk 90.1% 90.3% 90.1% 82.4% 93.4% 92.7% 92.6% 85.5% 88.3% 91.0%
 
Total Governance 84.8% 85.6% 87.1% 80.1% 85.0% 90.4% 86.3% 80.6% 84.4% 85.6%
                   
Total Core Retention Rate   89.2%   89.5%   89.6%   82.0%   92.1%   92.4%   91.6%   84.8%   87.7%   90.2%
 
1The quarterly Aggregate Retention Rates are calculated by annualizing the cancellations for which we have received a notice of termination or non-renewal during the quarter and we have determined that such notice evidences the client's final decision to terminate or not renew the applicable subscription or agreement, even though such notice is not effective until a later date. This annualized cancellation figure is then divided by the subscription Run Rate at the beginning of the year to calculate a cancellation rate. This cancellation rate is then subtracted from 100% to derive the annualized Retention Rate for the quarter. The Aggregate Retention Rate is computed on a product-by-product basis. Therefore, if a client reduces the number of products to which it subscribes or switches between our products, we treat it as a cancellation. In addition, we treat any reduction in fees resulting from renegotiated contracts as a cancellation in the calculation to the extent of the reduction. For the calculation of the Core Retention Rate the same methodology is used except the amount of cancellations in the quarter is reduced by the amount of product swaps.
 
 
 
 
Table 12: ETF Assets Linked to MSCI Indices1
 
Three Months Ended 2010 Three Months Ended 2011 Year Ended
In Billions March June September December March June September December Dec. 2010 Dec. 2011
 
Beginning Period AUM in ETFs linked to MSCI Indices $ 243.0 $ 255.4 $ 236.8 $ 290.7 $ 333.3 $ 350.1 $ 360.5 $ 290.1 $ 243.0 $ 333.3
Cash Inflow/ Outflow 4.9 11.9 14.9 21.9 6.7 14.2 (0.0) 1.0 53.6 21.9
Appreciation/Depreciation   7.5   (30.5)   39.0   20.7   10.1   (3.8)   (70.4)   10.5   36.7   (53.6)
Period End AUM in ETFs linked to MSCI Indices $ 255.4 $ 236.8 $ 290.7 $ 333.3 $ 350.1 $ 360.5 $ 290.1 $ 301.6 $ 333.3 $ 301.6
 
Period Average AUM in ETFs linked to MSCI Indices $ 242.8 $ 249.6 $ 263.7 $ 317.0 $ 337.6 $ 356.8 $ 329.1 $ 305.0 $ 270.7 $ 333.5
 
1 ETF assets under management calculation methodology is ETF net asset value multiplied by shares outstanding.
Source: Bloomberg and MSCI
 

Table 13: Reconciliation of Adjusted EBITDA to Net Income          
 
 
 
Three Months Ended December 31, 2011 Three Months Ended November 30, 2010

Performance

and Risk

  Governance   Total

Performance

and Risk

  Governance   Total
Net Income $ 44,486 $ 30,266
Plus: Provision for income taxes 25,642 20,813
Plus: Other expense (income), net           11,505           19,641
Operating income $ 79,046   $ 2,587   $ 81,633 $ 67,743   $ 2,977   $ 70,720
Plus: Non-recurring stock-based comp 1,015 129 1,144 4,027 - 4,027
Plus: Transaction costs - - - - - -
Plus: Depreciation and amortization 3,595 883 4,478 4,797 733 5,530
Plus: Amortization of intangible assets 12,927 3,341 16,268 13,344 3,350 16,694
Plus: Restructuring costs   381     (256)     125   641     1,302     1,943
Adjusted EBITDA $ 96,964   $ 6,684   $ 103,648 $ 90,552   $ 8,362   $ 98,914
 
 
 
Year Ended December 31, 2011 Year Ended November 30, 2010

Performance

and Risk

  Governance   Total

Performance

and Risk

  Governance   Total
Net Income $ 173,454 $ 92,170
Plus: Provision for income taxes 89,959 61,321
Plus: Other expense (income), net           58,585           52,632
Operating income $ 310,504   $ 11,494   $ 321,998 $ 200,369   $ 5,754   $ 206,123
Plus: Non-recurring stock-based comp 7,446 472 7,918 12,366 - 12,366
Plus: Transaction costs - - - 21,206 - 21,206
Plus: Depreciation and amortization 15,144 4,281 19,425 16,129 1,284 17,413
Plus: Amortization of intangible assets 52,414 13,391 65,805 34,899 6,700 41,599
Plus: Restructuring costs   1,951     1,643     3,594   6,673     2,223     8,896
Adjusted EBITDA $ 387,459   $ 31,281   $ 418,740 $ 291,642   $ 15,961   $ 307,603
 

Table 14: Reconciliation of Fiscal Year 2010 Pro Forma Adjusted EBITDA to Pro Forma Net Income

     
 
 
Pro Forma Fiscal Year 2010

Performance

and Risk

Governance

Total
Net Income $ 110,831
Plus: Provision for income taxes 66,896
Plus: Other expense (income), net       71,430
Operating income $ 235,883 $ 13,274 $ 249,157
Plus: Non-recurring stock-based comp 12,366 - 12,366
Plus: Transaction costs - - -
Plus: Depreciation and amortization 18,224 3,436 21,660
Plus: Amortization of intangible assets 51,137 13,340 64,477
Plus: Restructuring costs   6,673   2,223   8,896
Adjusted EBITDA $ 324,283 $ 32,273 $ 356,556
 

Table 15: Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS

         
Three Months Ended Twelve Months Ended
December 31, November 30, September 30, December 31, November 30,
2011 2010 2011 2011 2010
GAAP - Net income $ 44,486 $ 30,266 $ 49,786 $ 173,454 $ 92,170
Plus: Non-recurring stock-based comp 1,144 4,027 1,290 7,918 12,366
Plus: Amortization of intangible assets 16,268 16,694 16,422 65,805 41,599
Plus: Transaction costs1 - - - - 22,040
Plus: Debt repayment and refinancing expenses2 - - - 6,404 8,274
Plus: Restructuring costs 126 1,943 (1,003) 3,594 8,896
Less: Income tax effect3   (6,463)   (8,610)   (5,585)   (29,913)   (31,015)
Adjusted net income $ 55,561 $ 44,320 $ 60,910 $ 227,262 $ 154,330
 
Adjusted EPS - diluted
 
GAAP - EPS $ 0.36 $ 0.25 $ 0.40 $ 1.41 $ 0.81
Plus: Non-recurring stock-based comp 0.01 0.03 0.01 0.06 0.11
Plus: Amortization of intangible assets 0.13 0.14 0.13 0.54 0.36
Plus: Transaction costs1 0.00 0.00 0.00 0.00 0.19
Plus: Debt repayment and refinancing expenses2 0.00 0.00 0.00 0.05 0.07
Plus: Restructuring costs 0.00 0.02 (0.01) 0.03 0.08
Less: Income tax effect3   (0.05)   (0.08)   (0.04)   (0.24)   (0.27)
Adjusted EPS $ 0.45 $ 0.36 $ 0.49 $ 1.85 $ 1.35
 

1Third party transaction expenses related to the acquisition of RiskMetrics.

2In the first quarter of 2011, MSCI repaid $88.0 million of its outstanding term loan. At the same time, MSCI repriced the remaining $1.125 million loan. As a result, MSCI recorded $6.1 million of underwriting fees in conjunction with the repricing and $0.3 million of accelerated write-down of deferred financing expense related to the $88 million repayment. MSCI also incurred $8.3 million of expenses in fiscal year 2010 resulting from the refinancing of its indebtedness to complete the acquisition of RiskMetrics.

3For the purposes of calculating Adjusted EPS, non-recurring stock based compensation, amortization of intangible assets, debt repayment and refinancing expenses, and restructuring costs are assumed to be taxed at the effective tax rate excluding transaction costs and, in 2011, non-recurring benefits of $4.2 million. For fourth quarter 2011, the rate is 36.6%. For fourth quarter 2010, the effective tax rate excluding transaction costs was 39.9%. For fiscal year 2011, the rate is 35.7% and for fiscal year 2010, the rate was 37.4%.

MSCI Inc.:
Edings Thibault, + 1-212-804-5273
New York
or
Media Inquiries:
Abernathy MacGregor
Patrick Clifford, + 1-212-371-5999
New York
or
MHP Communications
Sally Todd or Kristy Fitzpatrick, + 44.20.3128.8100
London

Source: MSCI Inc.

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