SEC Filing – MSCI Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 4, 2011

MSCI Inc.

(Exact name of registrant as specified in its charter)


Delaware	001-33812	13-4038723
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


One Chase Manhattan Plaza, 44th Floor, New York, NY		10005
(Address of principal executive offices)		(Zip Code)

(212) 804-3900

(Registrant’s telephone number, including area code)

NOT APPLICABLE

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On August 4, 2011, MSCI Inc. (the “Registrant”) released financial information with respect to its second quarter ended June 30, 2011. A copy of the press release containing this information is annexed as Exhibit 99.1 to this Report.

The Registrant’s press release contains certain non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is also contained in Exhibit 99.1.

The information furnished under Item 2.02 of this Report, including Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.				Description
Exhibit 99.1				Press release of the Registrant dated August 4, 2011 containing financial information for the second quarter ended June 30, 2011.

SIGNATURE

Pursuant to the requirements of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MSCI Inc.


Date: August 4, 2011	By:	/s/ Henry A. Fernandez
	Name:	Henry A. Fernandez
	Title:	Chief Executive Officer, President and Chairman

MSCI Inc. Reports Second Quarter 2011 Financial Results

New York – August 4, 2011 – 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 second quarter and six months ended June 30, 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 calendar year reporting cycle beginning January 1, 2011.

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

·	Operating revenues increased 80.9% to $226.5 million in second quarter 2011 and 82.2% to $449.8 million for six months 2011. Compared to pro forma 2010, second quarter 2011 revenues grew by 12.0% and six months 2011 revenues rose 12.3%.

·	Net income increased 89.7% to $45.7 million in second quarter 2011 and 53.5% to $79.2 million for first six months 2011. Pro forma net income increased 48.2% to $45.7 million in second quarter 2011 and 33.4% to $79.2 million for first six months 2011.

Adjusted EBITDA (defined below) grew by 73.0% to $107.0 million in second quarter 2011 and 74.6% to $211.5 million in six months 2011. Compared to pro forma 2010, second quarter 2011 Adjusted EBITDA grew by 25.1% and six months 2011 Adjusted EBITDA grew by 24.4%. The Adjusted EBITDA margin was 47.2% in second quarter 2011 and 47.0% for six months 2011.

·	Diluted EPS for second quarter 2011 rose 68.2% to $0.37 and 33.3% to $0.64 for six months 2011.

·	Second quarter 2011 Adjusted EPS (defined below) rose 34.3% to $0.47 and 36.4% to $0.90 for six months 2011.

Henry A. Fernandez, Chairman and CEO, said, “MSCI continued to perform well in second quarter 2011. Compared to pro forma second quarter 2010, MSCI reported 12% growth in revenues and 25% growth in Adjusted EBITDA.

“Our run rate grew 3% sequentially and by 17% compared to pro forma second quarter of 2011. Our index and ESG and our risk management analytics businesses continued to drive our growth and we recorded double digit annual run rate growth in both product lines,” added Mr. Fernandez.

Table 1: MSCI Inc. Selected Financial Information (unaudited)

	Three Months Ended						Change from			Six Months Ended						Change from
	June 30,			May 31,			May 31,			June 30,			May 31,			May 31,
In thousands, except per share data	2011			2010			2010			2011			2010			2010
Operating revenues		$226,483			$125,170			80.9	%		$449,781			$246,850			82.2	%
Operating expenses		143,792			78,473			83.2	%		291,661			152,896			90.8	%
Net income		45,660			24,067			89.7	%		79,181			51,585			53.5	%
% Margin		20.2	%		19.2	%					17.6	%		20.9	%
Diluted EPS		$0.37			$0.22			68.2	%		$0.64			$0.48			33.3	%

Adjusted EPS1		$0.47			$0.35			34.3	%		0.90			0.66			36.4	%

Adjusted EBITDA2		$106,995			$61,834			73.0	%		$211,469			$121,083			74.6	%
% Margin		47.2	%		49.4	%					47.0	%		49.1	%

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 expenses. See Table 17 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 Net Income 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 15 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 Second Quarter 2011 compared to Second Quarter 2010

Operating Revenues – See Table 4

Total operating revenues for the three months ended June 30, 2011 (second quarter 2011) increased $101.3 million, or 80.9%, to $226.5 million compared to $125.2 million for the three months ended May 31, 2010 (second quarter 2010). The biggest driver of revenue growth was the acquisition of RiskMetrics, which closed on June 1, 2010 and contributed revenues of $80.3 million in second quarter 2011. Total subscription revenues rose $86.9 million, or 91.2%, to $182.3 million while asset-based fees increased $10.6 million, or 41.3%, to $36.3 million. Non-recurring revenues increased $3.8 million to $7.9 million.

Excluding the impact of the acquisitions of RiskMetrics and Measurisk LLC (“Measurisk”, an acquisition completed on July 30, 2010), total operating revenues grew by $17.0 million, or 13.6%, to $142.2 million. Subscription revenues grew $9.2 million, or 9.6%, to $104.5 million in second quarter 2011. Non-recurring revenues declined $1.9 million to $2.3 million.

By segment, Performance and Risk revenues rose $70.3 million, or 56.2%, to $195.5 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 were $31.0 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 $22.6 million, or 28.3%, to $102.6 million. Index and ESG subscription revenue grew by $12.0 million, or 22.2%, to $66.3 million, with $5.1 million of that coming from the addition of ESG products resulting from the acquisition of RiskMetrics. Also included in the index and ESG revenues were $2.0 million of non-recurring revenues, which fell $2.0 million from second quarter 2010.

Revenues attributable to equity index asset-based fees rose $10.6 million, or 41.3%, to $36.3 million. The increase in asset-based fees was driven primarily by an increase in assets under management in exchange traded funds (“ETFs”) linked to MSCI indices.

The quarterly average value of assets in ETFs linked to MSCI equity indices increased 41.4% to $356.8 billion for second quarter 2011 compared to $252.3 billion for the three months ended May 31, 2010. As of June 30, 2011, the value of assets in ETFs linked to MSCI equity indices was $360.5 billion, representing an increase of 51.4% from $238.1 billion as of May 31, 2010 and $10.4 billion, or 3.0%, from $350.1 billion as of March 31, 2010. We estimate that the $10.4 billion sequential increase in second quarter 2011 was attributable to $3.8 billion of net asset depreciation and cash inflows of $14.2 billion.

The three MSCI indices with the largest amount of ETF assets linked to them as of June 30, 2011 were the MSCI Emerging Markets, EAFE (an index of stocks in developed markets outside North America) and US Broad Market indices. The assets linked to these indices were $106.2 billion, $46.7 billion, and $20.1 billion, respectively, at the end of the quarter.

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. Revenues related to risk management analytics increased $49.7 million, or 447.5%, to $60.8 million. The acquisitions of RiskMetrics and Measurisk added $47.4 million, or 427.0%, to growth in the second quarter. Excluding the impact of the acquisitions, risk management analytics revenues grew by $2.3 million, or 20.5%.

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 $1.1 million, or 3.5%, to $29.2 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 $0.9 million, or 23.9%, to $2.9 million. The decrease is driven in part by the timing of new and recurring sales.

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, all of which were acquired as part of our acquisition of RiskMetrics. Governance revenues were $31.0 million in second quarter 2011, including $4.2 million of non-recurring revenues.

Operating Expenses – See Table 6

Total operating expense increased $65.3 million, or 83.2%, to $143.8 million in second quarter 2011 compared to second quarter 2010. The increase is due mainly to the acquisition of RiskMetrics.

Compensation costs: Total compensation costs rose $40.4 million, or 90.2%, to $85.2 million in second quarter 2011. Excluding non-recurring stock-based compensation expense, total compensation costs rose $39.8 million, or 93.1%, to $82.5 million.

Non-recurring stock-based compensation expense rose $0.6 million, or 31.0% to $2.7 million, primarily as a result of the addition of the performance awards in the fiscal third quarter of 2010. Non-recurring stock-based compensation expenses for second quarter 2011 consisted of $0.7 million related to the founders grants awarded to certain employees at the time of MSCI’s initial public offering (“IPO”) and $2.0 million related to the performance awards granted to certain employees in connection with the acquisition of RiskMetrics. The aggregate value of the performance awards is being amortized through the end of 2012 and the aggregate value of the founders grant is being amortized through November 2011.

Non-compensation costs excluding depreciation and amortization: Total non-compensation operating expenses excluding depreciation and amortization, transaction costs associated with the acquisition of RiskMetrics and restructuring costs rose $16.4 million, or 79.5%, to $37.0 million in second quarter 2011. The acquisition of RiskMetrics was the biggest driver behind the increase.

Cost of services: Total cost of services expenses rose by $38.4 million, or 126.0%, to $68.8 million. Within costs of services, compensation expenses increased by $26.9 million, or 120.2%, and non-

compensation expenses increased by $11.5 million, or 141.9%. In both cases, the biggest driver behind the increase was the acquisition of RiskMetrics.

Selling, general and administrative expense (SG&A): Total SG&A expense rose $13.1 million, or 32.7%, to $53.3 million. Within SG&A, compensation expenses increased by $13.5 million, or 60.4%, and non-compensation expenses excluding transaction costs increased by $4.9 million, or 39.1%. In both cases, the biggest driver behind the increase was the acquisition of RiskMetrics.

Amortization of intangibles: Amortization of intangibles expense totaled $16.4 million compared to $4.3 million in second quarter 2010. The $12.1 million increase is associated intangible assets acquired in connection with the acquisitions of RiskMetrics and Measurisk.

Other Expense (Income), Net

Other expense (income), net for second quarter 2011 was $13.1 million, an increase of $4.3 million from second quarter 2010. An increase in interest expense resulted from the increased levels of indebtedness incurred in connection with the acquisition of RiskMetrics. In second quarter 2010, MSCI incurred $6.3 million of debt repayment expenses resulting from its decision to repay $297 million of its then-outstanding term loans.

Provision for Income Taxes

The provision for income tax expense was $24.0 million for second quarter 2011, an increase of $10.1 million, or 72.7%, compared to $13.9 million for the same period in 2010, driven primarily by higher income resulting from the acquisition of RiskMetrics. The effective tax rate was 34.4% for second quarter 2011. The effective tax rate benefited from several discrete items that lowered the rate. The effective tax rate for second quarter 2010 was 36.6%.

Net Income and Earnings per Share – See Table 17

Net income increased $21.6 million, or 89.7%, to $45.7 million for second quarter 2011. The net income margin increased to 20.2% versus 19.2% in second quarter 2010. Diluted EPS increased 68.2% to $0.37.

Adjusted net income, which excludes $12.5 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 $20.6 million, or 54.7%, to $58.2 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 $0.10, rose 34.3% to $0.47.

See table 17 titled “Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS.”

Adjusted EBITDA – See Table 15

Adjusted EBITDA, which excludes, among other things, the impact of non-recurring stock-based compensation and restructuring costs, was $107.0 million, an increase of $45.2 million, or 73.0%, from second quarter 2010. Adjusted EBITDA margin declined to 47.2% from 49.4% as a result of the dilutive impact of the acquisition of the lower margin RiskMetrics business.

By segment, Adjusted EBITDA for the Performance and Risk segment increased $37.7 million, or 61.0%, to $99.5 million from second quarter 2010. Adjusted EBITDA margin for this segment rose to 50.9% from 49.4% from second quarter 2010. Adjusted EBITDA for the Governance segment was $7.4 million and the Adjusted EBITDA margin was 24.0%.

See Table 15 titled “Reconciliation of Adjusted EBITDA to Net Income” and “Notes Regarding the Use of Non-GAAP Financial Measures” below.

Summary of Results for Six Months Ended June 30, 2011 compared to Six Months Ended May 31, 2010

Operating Revenues – See Table 5

Total operating revenues for the six months ended June 30, 2011 (six months 2011) increased $202.9 million, or 82.2%, to $449.8 million compared to $246.9 million for the six months ended May 31, 2010 (six months 2010). The acquisitions of RiskMetrics and Measurisk added revenues of $165.4 million in six months 2011. Total subscription revenue rose $169.4 million, or 89.3%, to $359.0 million, while asset-based fees rose $19.3 million, or 38.1%, to $69.9 million. Total non-recurring revenues increased $14.3 million, or 215.1%, to $20.9 million.

Excluding the impact of the acquisitions, total operating revenues grew by $37.5 million, or 15.2%, to $284.3 million. Subscription revenues grew by $17.0 million, or 9.0%, and asset-based fee revenues grew by $18.4 million, or 36.4%, to $69.1 million. Non-recurring revenues grew by $2.1 million, or 31.0%, from six months 2010. Excluding the impact of the acquisitions, index and ESG products and risk management analytics revenues grew 24.0% and 21.8%, respectively, in six months 2011. Portfolio management analytics revenues declined 5.3%. Energy and other commodity analytics revenues fell 15.5%, as a result of seasonal differences and a decline in non-recurring sales.

By segment, Performance and Risk revenues rose $140.7 million, or 57.0%, to $387.6 million for six months 2011. Governance revenues were $62.2 million.

Operating Expenses – See Table 7

Total operating expenses increased $138.8 million, or 90.8%, to $291.7 million in six months 2011 compared to six months 2010. Operating expenses in the six months 2011 included restructuring costs of $4.5 million and, in six months 2010, transaction expenses of $7.5 million. Excluding these expenses, total operating expenses would have risen by $141.8 million, or 97.5%. The increase reflects increases of $79.3 million, or 132.7%, in cost of services, $34.6 million, or 49.4%, in SG&A expense and $3.3 million, or 47.9% in depreciation and amortization expense.

Other Expense (Income), Net

Other expense (income), net for six months 2011 was $35.1 million, an increase of $23.0 million from six months 2010. The increase was driven by increased indebtedness resulting from our acquisition of RiskMetrics. Other expense (income), net includes debt repayment expenses of $6.4 million in six months 2011 and $6.3 million in six months 2010.

Provision for Income Taxes

The provision for income tax expense was $43.8 million for six months 2011, an increase of $13.6 million, or 45.0%, compared to $30.2 million for six months 2010. Our effective tax rate for six months 2011 was 35.6% compared to 36.9% for six months 2010.

Net Income and Earnings per Share – See Table 17

Net income increased $27.6 million, or 53.5%, to $79.2 million and the net income margin decreased to 17.6% from 20.9%. Diluted EPS rose by 33.3% to $0.64 from $0.48.

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 $31.9 million, rose $40.0 million, or 56.3%, to $111.0 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 $0.26, rose 36.4% to $0.90 in six months 2011.

See table 17 titled “Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS.”

Adjusted EBITDA – See Table 15

Adjusted EBITDA was $211.5 million, an increase of $90.4 million, or 74.6%, from six months 2010. Adjusted EBITDA margin fell to 47.0% from 49.1%.

By segment, Adjusted EBITDA for the Performance and Risk segment increased $73.4 million, or 60.6%, to $194.5 million from six months 2010. Adjusted EBITDA margin rose to 50.2% from 49.1% in six months 2010. Adjusted EBITDA for the Governance segment was $17.0 million and the Adjusted EBITDA Margin was 27.3%.

See Table 15 titled “Reconciliation of Adjusted EBITDA to Net Income” and “Notes Regarding the Use of Non-GAAP Financial Measures” below.

Summary of Results for Second Quarter 2011 compared to Pro Forma Second Quarter 2010

Operating Revenues – See Table 9

Compared to pro forma second quarter 2010, total operating revenues increased $24.3 million, or 12.0%, to $226.5 million. Subscription revenues rose by $16.6 million, or 10.0%, to $182.3 million. Asset-based fees increased $10.6 million, or 41.3%, to $36.3 million. Non-recurring revenues declined $2.9 million to $7.9 million. By segment, Performance and Risk revenues rose $25.6 million, or 15.0%, to $195.5 million. Governance revenues declined $1.3 million, or 4.0%, to $31.0 million.

Index and ESG products: Compared to pro forma second quarter 2010, total index and ESG revenues rose $18.1 million, or 21.4%, to $102.6 million. Index and ESG subscription revenues rose by $7.5 million, or 12.7%, to $66.3 million from $58.8 million. The strong growth was driven by higher revenues from MSCI’s core benchmark indices and higher usage fees offset by a decline of $2.4 million of non-recurring revenues to $2.0 million. Revenues from asset-based fees increased $10.6 million, or 41.3%, to

$36.3 million, compared to pro forma second quarter 2010, driven by higher levels of assets under management in ETFs linked to MSCI indices.

Risk management analytics: Compared to pro forma second quarter 2010, risk management analytics revenues rose $9.5 million, or 18.5%, to $60.8 million, driven by growth in revenues from both BarraOne and RiskManager products. The acquisition of Measurisk contributed $4.0 million.

Governance: Compared to pro forma second quarter 2010, governance revenues declined $1.3 million, or 4.0%, to $31.0 million. Non-recurring governance revenues were $4.2 million in second quarter 2011 versus $5.8 million in the pro forma second quarter 2010.

The acquisition of RiskMetrics did not impact the revenues attributable to the asset-based fees sub-category of index and ESG products, portfolio management analytics and energy and commodity analytics and comparisons for these products are not presented. Comparisons to second quarter 2010 revenues are discussed in the Summary of Results for Second Quarter 2011 compared to Second Quarter 2010 above.

Operating Expenses – See Table 10

Compared to pro forma second quarter 2010, total operating expenses excluding restructuring costs rose $3.1 million to $143.8 million.

Compensation costs: Compared to pro forma second quarter 2010, compensation costs excluding non-recurring stock-based compensation expense rose $0.9 million, or 1.1%, to $82.5 million. Second quarter 2010 compensation costs includes $1.9 million of employer payroll taxes related to stock options exercised by RiskMetrics employees subsequent to the announced merger with MSCI. Second quarter 2011 non-recurring stock-based compensation expense rose by $0.6 million, or 31.0%, to $2.7 million.

Non-compensation costs excluding depreciation and amortization: Compared to pro forma second quarter 2010, total non-compensation costs excluding depreciation and amortization and restructuring costs increased $1.9 million, or 5.3%, to $37.0 million, led by an increase in professional fees partially offset by declines in tax and license fees, occupancy expenses and information technology costs.

Cost of services: Compared to pro forma second quarter 2010, total cost of services rose $0.4 million, or 0.6%, to $68.8 million. Compensation expenses excluding non-recurring stock-based compensation expense fell $2.0 million, or 3.9%, to $48.1 million. Non-compensation expenses rose by $2.0 million, or 11.3%, to $19.6 million, driven by seasonally higher costs of temporary contractors.

Selling, general and administrative expense (SG&A): Compared to pro forma second quarter 2010, total SG&A expense rose $3.0 million, or 6.0%, to $53.3 million. Within SG&A, compensation expenses excluding non-recurring stock-based compensation rose $2.9 million, or 9.3%, to $34.4 million. Non-compensation expenses fell $0.1 million, or 0.7%, to $17.4 million. The decrease in non-compensation expenses was driven by lower information technology expenses and lower taxes and license fees.

Net Income and Adjusted EBITDA – See Table 16

Compared to pro forma second quarter 2010, net income increased $14.8 million, or 48.2%, to $45.7 million from $30.8 million.

Compared to pro forma second quarter 2010, Adjusted EBITDA increased $21.5 million, or 25.1%, to $107.0 million and the margin expanded to 47.2% from 42.3%. Performance and Risk segment Adjusted EBITDA grew by $22.1 million, or 28.5%, to $99.5 million and the margin increased to 50.9% from 45.6%. Governance Adjusted EBITDA fell by $0.6 million, or 7.7%, to $7.4 million and the margin decreased to 24.0% from 25.0%.

See Table 16 titled “Reconciliation of Pro Forma Adjusted EBITDA to Pro Forma Net Income” and “Notes Regarding the Use of Non-GAAP Financial Measures” below.

Summary of Results for Six Months Ended June 30, 2011 compared to Pro Forma Six Months Ended May 31, 2010

Operating Revenues – See Table 9

Total operating revenues for the pro forma six months 2011 compared to pro forma six months 2010 rose $49.4 million, or 12.3%, to $449.8 million. Subscription revenue rose $28.2 million, or 8.5%, to $359.0 million, driven by growth in index and ESG subscriptions and risk management analytics, which more than offset declines from portfolio management analytics and governance. Asset-based fees rose $19.3 million, or 38.1%, to $69.9 million. Non-recurring revenues increased by $2.0 million, or 10.3%, to $20.9 million, as higher risk management analytics and index and ESG products revenues offset a declines in non-recurring governance revenues. The acquisition of Measurisk contributed $7.1 million, or 1.8%, to growth for six months 2011.

The acquisition of RiskMetrics did not impact the revenues attributable to the asset-based fees sub-category of index and ESG products, portfolio management analytics and energy and commodity analytics and comparisons for these products are not presented. Comparisons to six months 2010 revenues are discussed in the Summary of Results for six months 2011 compared to six months 2010 above.

By segment, Performance and Risk revenues rose $51.8 million, or 15.4%, to $387.6 million. Governance revenues declined $2.4 million, or 3.7%, to $62.2 million.

Operating Expenses – See Table 10

Compared to pro forma six months 2010, total operating expense for pro forma six months 2011 increased $13.7 million, or 4.9%, to $291.7 million.

Total compensation expense excluding non-recurring stock-based compensation increased $8.2 million, or 5.1%, to $168.4 million. Non-compensation costs excluding depreciation and amortization and restructuring costs fell $0.2 million, or 0.3%, to $69.9 million.

Compared to pro forma six months 2010, total cost of services for pro forma six months 2011 rose $5.0 million, or 3.7%, to $139.1 million. The growth was driven by an increase of $0.9 million, or 1.0%, in compensation excluding non-recurring stock-based compensation expense and a $3.2 million, or 9.3%, increase in non-compensation expenses.

Total SG&A increased $4.4 million, or 4.3%, to $104.7 million in pro forma six months 2011. The increase was driven by growth of $7.2 million, or 11.7%, in compensation excluding non-recurring stock-based compensation partially offset by a decrease of $3.4 million, or 9.6%, in non-compensation expenses.

Net Income and Adjusted EBITDA – See Table 16

Compared to pro forma six months 2010, net income increased $19.8 million, or 33.4%, to $79.2 million from $59.3 million.

Compared to pro forma six months 2010, pro forma six months 2011 Adjusted EBITDA increased $41.4 million, or 24.4%, to $211.5 million and the margin expanded to 47.0% from 42.5%. By segment, Performance and Risk Adjusted EBITDA rose $41.1 million, or 26.8%, to $194.5 million. The margin expanded to 50.2% from 45.7%. Governance Adjusted EBITDA increased $0.3 million, or 1.8%, to $17.0 million and the margin rose to 27.3% from 25.8%.

See Table 16 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 second quarter 2011 results on Thursday, August 4, 2011 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 August 10, 2011. To listen to the recording, visit http://ir.msci.com/events.cfm, or dial 1-855-859-2056 (passcode: 84048648) within the United States. International callers dial 1-404-537-3406 (passcode: 84048648).

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 indices which include more than 145,000 daily indices covering more than 70 countries; 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; MSCI environmental, social and governance research; 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

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

MSCI Inc. Contact:

Edings Thibault, MSCI, New York

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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 costs 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 costs 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 of deferred financing and debt discount costs (debt repayment expenses), as well as for any related tax effects.

We believe that adjustments related to transaction costs 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 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 one-time non-recurring stock-based compensation expenses and amortization of intangible assets. 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									Six Months Ended
	June 30,			May 31,			March 31,			June 30,			May 31,
In thousands, except per share data	2011			2010			2011			2011			2010
Operating revenues	$	226,483		$	125,170		$	223,298		$	449,781		$	246,850

Operating expenses
Cost of services		68,840			30,463			70,218			139,058			59,754
Selling, general and administrative		53,321			40,177			51,418			104,739			77,638
Restructuring costs		40			-			4,431			4,471			-
Amortization of intangible assets		16,423			4,277			16,692			33,115			8,555
Depreciation and amortization of property,
equipment, and leasehold improvements		5,168			3,556			5,110			10,278			6,949
Total operating expenses	$	143,792		$	78,473		$	147,869		$	291,661		$	152,896

Operating income		82,691			46,697			75,429			158,120			93,954
Operating Margin		36.5	%		37.3	%		33.8	%		35.2	%		38.1	%

Interest income		(186	)		(343	)		(143	)		(329	)		(751	)
Interest expense		12,852			8,991			16,587			29,439			13,427
Other expense (income)		383			98			5,641			6,024			(510	)
Other expense, net	$	13,049		$	8,746		$	22,085		$	35,134		$	12,166

Income before income taxes		69,642			37,951			53,344			122,986			81,788

Provision for income taxes		23,982			13,884			19,823			43,805			30,203

Net income	$	45,660		$	24,067		$	33,521		$	79,181		$	51,585
Net Income Margin		20.2	%		19.2	%		15.0	%		17.6	%		20.9	%

Earnings per basic common share	$	0.38		$	0.23		$	0.28		$	0.65		$	0.48
Earnings per diluted common share	$	0.37		$	0.22		$	0.27		$	0.64		$	0.48

Weighted average shares outstanding used
in computing earnings per share
Basic		120,592			105,345			120,282			120,438			105,290
Diluted		122,235			106,003			122,013			122,125			105,923

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

	As of
	June 30,		November 30,
In thousands	2011		2010
Cash and cash equivalents	$	175,895	$	226,575
Short-term investments		111,167		73,891
Trade receivables, net of allowances		177,189		147,662

Deferred revenue	$	296,793	$	271,300
Current maturities of long-term debt		10,331		54,916
Long-term debt, net of current maturities		1,106,700		1,207,881

Table 4: Second Quarter 2011 Operating Revenues by Product Category and Revenue Type


	Three Months Ended						% Change from
	June 30,		May 31,		March 31,		May 31,			March 31,
In thousands	2011		2010		2011		2010			2011
Index and ESG products
Subscriptions	$	66,275	$	54,250	$	62,159		22.2	%		6.6	%
Asset-based fees		36,287		25,674		37,869		41.3	%		(4.2	%)
Index and ESG products total		102,562		79,924		100,028		28.3	%		2.5	%
Risk management analytics		60,806		11,105		58,866		447.5	%		3.3	%
Portfolio management analytics		29,193		30,266		29,284		(3.5	%)		(0.3	%)
Energy and commodity analytics		2,949		3,875		3,870		(23.9	%)		(23.8	%)
Total Performance and Risk revenues	$	195,510	$	125,170	$	192,048		56.2	%		1.8	%

Total Governance revenues		30,973		-		31,250		n/m			(0.9	%)
Total operating revenues	$	226,483	$	125,170	$	223,298		80.9	%		1.4	%

Subscriptions	$	182,251	$	95,317	$	176,724		91.2	%		3.1	%
Asset-based fees		36,287		25,674		33,607		41.3	%		8.0	%
Non-recurring revenues		7,945		4,179		12,967		90.1	%		(38.7	%)
Total operating revenues	$	226,483	$	125,170	$	223,298		80.9	%		1.4	%

Table 5: Six Months 2011 Operating Revenues by Product Category and Revenue Type


	Six Months Ended				% Change from
	June 30,		May 31,		May 31,
In thousands	2011		2010		2010
Index and ESG products
Subscriptions	$	128,434	$	104,474		22.9	%
Asset-based fees		74,156		50,620		46.5	%
Index and ESG products total		202,590		155,094		30.6	%
Risk management analytics		119,672		21,964		444.9	%
Portfolio management analytics		58,477		61,725		(5.3	%)
Energy and commodity analytics		6,819		8,067		(15.5	%)
Total Performance and Risk revenues	$	387,558	$	246,850		57.0	%

Total Governance revenues		62,223		-		n/m
Total operating revenues	$	449,781	$	246,850		82.2	%

Subscriptions	$	358,976	$	189,593		89.3	%
Asset-based fees		69,894		50,620		38.1	%
Non-recurring revenues		20,911		6,637		215.1	%
Total operating revenues	$	449,781	$	246,850		82.2	%

Table 6: Additional Second Quarter 2011 Operating Expense Detail


	Three Months Ended						% Change from
	June 30,		May 31,		March 31,		May 31,			March 31,
In thousands	2011		2010		2011		2010			2011
Cost of services
Compensation	$	48,118	$	21,639	$	51,082		122.4	%		(5.8	%)
Non-Recurring Stock Based Comp		1,108		715		1,130		54.8	%		(2.0	%)
Total Compensation	$	49,226	$	22,354	$	52,212		120.2	%		(5.7	%)
Non-Compensation		19,614		8,109		18,006		141.9	%		8.9	%
Total cost of services	$	68,840	$	30,463	$	70,218		126.0	%		(2.0	%)
Selling, general and administrative
Compensation		34,370		21,085		34,805		63.0	%		(1.2	%)
Non-Recurring Stock Based Comp		1,565		1,325		1,683		18.1	%		(7.0	%)
Total Compensation	$	35,935	$	22,410	$	36,488		60.4	%		(1.5	%)
Transaction expenses		-		5,264		-		(100.0	%)		n/m
Non-compensation excl. transaction expenses		17,386		12,503		14,930		39.1	%		16.5	%
Total selling, general and administrative	$	53,321	$	40,177	$	51,418		32.7	%		3.7	%
Restructuring costs		40		-		4,431		n/m			(99.1	%)
Amortization of intangible assets		16,423		4,277		16,692		284.0	%		(1.6	%)
Depreciation and amortization		5,168		3,556		5,110		45.4	%		1.1	%
Total operating expenses	$	143,792	$	78,473	$	147,869		83.2	%		(2.8	%)

In thousands
Total non-recurring stock based comp		2,673	$	2,040	$	2,813		31.0	%		(5.0	%)
Compensation excluding non-recurring comp		82,488		42,724		85,887		93.1	%		(4.0	%)
Transaction expenses		-		5,264		-		(100.0	%)		n/m
Non-compensation excluding transaction expenses		37,000		20,612		32,936		79.5	%		12.3	%
Restructuring charges		40		-		4,431		n/m			(99.1	%)
Amortization of intangible assets		16,423		4,277		16,692		284.0	%		(1.6	%)
Depreciation and amortization		5,168		3,556		5,110		45.4	%		1.1	%

Total operating expenses	$	143,792	$	78,473	$	147,869		83.2	%		(2.8	%)

Table 7: Additional Six Months 2011 Operating Expense Detail

	Six Months Ended
	June 30,		May 31,
In thousands	2011		2010		$ Change			% Change
Cost of services
Compensation	$	99,201	$	43,324		55,878			129.0	%
Non-Recurring Stock Based Comp		2,238		1,397		841			60.2	%
Total Compensation	$	101,439	$	44,721		56,718			126.8	%
Non-compensation		37,619		15,033		22,586			150.2	%
Total cost of services	$	139,058	$	59,754		79,304			132.7	%
Selling, general and administrative
Compensation		69,175		42,355		26,820			63.3	%
Non-Recurring Stock Based Comp		3,247		2,714		533			19.7	%
Total Compensation	$	72,422	$	45,069		27,354			60.7	%
Transaction expenses		-		7,514		(7,514	)		n/m
Non-compensation excl. transaction expenses		32,317		25,055		7,262			29.0	%
Total selling, general and administrative	$	104,739	$	77,638		27,101			34.9	%
Restructuring costs		4,471		-		4,471			n/m
Amortization of intangible assets		33,115		8,555		24,559			287.1	%
Depreciation and amortization		10,278		6,949		3,329			47.9	%
Total operating expenses	$	291,661	$	152,896		138,765			90.8	%

In thousands					$ Change			% Change
Total non-recurring stock based comp	$	5,485	$	4,111		1,374			33.4	%
Compensation excluding non-recurring comp		168,376		85,679		82,697			96.5	%
Transaction expenses		-		7,514		(7,514	)		n/m
Non-compensation excluding transaction expenses		69,936		40,088		29,849			74.5	%
Restructuring charges		4,471		-		4,471			n/m
Amortization of intangible assets		33,115		8,555		24,559			287.1	%
Depreciation and amortization		10,278		6,949		3,329			47.9	%

Total operating expenses	$	291,661	$	152,896		138,765			90.8	%

Table 8: Summary Second Quarter 2011 Segment Information

	Three Months Ended									Six Months Ended						% Change from
	June 30,			May 31,			March 31,			June 30,			May 31,			Second Quarter			Six Months
In thousands	2011			2010			2011			2011			2010			2010			2010
Revenues:
Performance and Risk	$	195,510		$	125,170		$	192,048		$	387,558		$	246,850			56.2	%		57.0	%
Governance		30,973			-			31,250			62,223			-			n/m			n/m
Total Operating revenues	$	226,483		$	125,170		$	223,298		$	449,781		$	246,850			80.9	%		82.2	%
Operating Income
Performance and Risk		79,855			46,697			72,646			152,501			93,954			71.0	%		62.3	%
Margin		40.8	%		37.3	%		37.8	%		39.3	%		38.1	%
Governance		2,836			-			2,783			5,619			-			n/m			n/m
Margin		9.2	%					8.9	%		9.0	%
Total Operating Income	$	82,691		$	46,697		$	75,429		$	158,120		$	93,954			77.1	%		68.3	%
Margin		36.5	%		37.3	%		33.8	%		35.2	%		38.1	%
Adjusted EBITDA
Performance and Risk		99,549			61,834			94,962			194,510			121,083			61.0	%		60.6	%
Margin		50.9	%		49.4	%		49.4	%		50.2	%		49.1	%
Governance		7,446			-			9,513			16,959			-			n/m			n/m
Margin		24.0	%					30.4	%		27.3	%
Total Adjusted EBITDA	$	106,995		$	61,834		$	104,475		$	211,469		$	121,083			73.0	%		74.6	%
Margin		47.2	%		49.4	%		46.8	%		47.0	%		49.1	%

Table 9: Pro Forma Operating Revenues by Product Category and Revenue Type

									% Change from
	Second Quarter				Six Months				Second Quarter			Six Months
In thousands	2011			20101		2011		20102		2010			2010
Index and ESG products
Subscriptions	$	66,275	$	58,809	$	128,434	$	113,539		12.7	%		13.1	%
Asset-based fees		36,287		25,674		74,156		50,620		41.3	%		46.5	%
Index and ESG products total		102,562		84,483		202,590		164,159		21.4	%		23.4	%
Risk management analytics		60,806		51,321		119,672		101,770		18.5	%		17.6	%
Portfolio management analytics		29,193		30,266		58,477		61,725		(3.5	%)		(5.3	%)
Energy and commodity analytics		2,949		3,875		6,819		8,067		(23.9	%)		(15.5	%)
Total Performance and Risk revenues	$	195,510	$	169,945	$	387,558	$	335,721		15.0	%		15.4	%

Total Governance revenues		30,973		32,271		62,223		64,647		(4.0	%)		(3.7	%)

Total operating revenues	$	226,483	$	202,216	$	449,781	$	400,368		12.0	%		12.3	%

Subscriptions	$	182,251	$	165,662	$	358,976	$	330,794		10.0	%		8.5	%
Asset-based fees		36,287		25,674		69,894		50,620		41.3	%		38.1	%
Non-recurring revenues		7,945		10,880		20,911		18,954		(27.0	%)		10.3	%
Total operating revenues	$	226,483	$	202,216	$	449,781	$	400,368		12.0	%		12.3	%

1Includes MSCI's results for the second quarter ended May 31, 2010 and RiskMetrics' first quarter ended March 31, 2010
2Includes MSCI's results for the six months ended May 31, 2010 and RiskMetrics' fourth quarter ended December 31, 2009 and first quarter ended March 31, 2010.

Table 10: Pro Forma Operating Expense Detail


									% Change from
	Second Quarter				Six Months				Second Quarter			Six Months
In thousands	2011			20101		2011		20102		2010			2010
Cost of services
Compensation	$	48,118	$	50,095	$	99,201	$	98,256		(3.9	%)		1.0	%
Non-Recurring Stock Based Comp		1,108		715		2,238		1,397		54.8	%		60.2	%
Total Compensation	$	49,226	$	50,810	$	101,439	$	99,653		(3.1	%)		1.8	%
Non-compensation		19,614		17,619		37,619		34,414		11.3	%		9.3	%
Total cost of services	$	68,840	$	68,429	$	139,058	$	134,067		0.6	%		3.7	%
Selling, general and administrative
Compensation		34,370		31,460		69,175		61,932		9.3	%		11.7	%
Non-Recurring Stock Based Comp		1,565		1,325		3,247		2,714		18.1	%		19.7	%
Total Compensation	$	35,935	$	32,785	$	72,422	$	64,646		9.6	%		12.0	%
Transaction expenses		-		-		-		-		-			-
Non-compensation excl. transaction expenses		17,386		17,506		32,317		35,730		(0.7	%)		(9.6	%)
Total selling, general and administrative	$	53,321	$	50,291	$	104,739	$	100,376		6.0	%		4.3	%
Restructuring costs		40		-		4,471		-		n/m			n/m
Amortization of intangible assets		16,423		16,180		33,115		32,360		1.5	%		2.3	%
Depreciation and amortization		5,168		5,707		10,278		11,196		(9.4	%)		(8.2	%)
Total operating expenses	$	143,792	$	140,607	$	291,661	$	277,999		2.3	%		4.9	%

In thousands
Total non-recurring stock based comp	$	2,673	$	2,040	$	5,485	$	4,111		31.0	%		33.4	%
Compensation excluding non-recurring comp		82,488		81,555		168,376		160,188		1.1	%		5.1	%
Transaction expenses		-		-		-		-		-			-
Non-compensation excluding transaction expenses		37,000		35,125		69,936		70,144		5.3	%		(0.3	%)
Restructuring charges		40		-		4,471		-		n/m			n/m
Amortization of intangible assets		16,423		16,180		33,115		32,360		1.5	%		2.3	%
Depreciation and amortization		5,168		5,707		10,278		11,196		(9.4	%)		(8.2	%)

Total operating expenses	$	143,792	$	140,607	$	291,661	$	277,999		2.3	%		4.9	%

1Includes MSCI's results for the second quarter ended May 31, 2010 and RiskMetrics' first quarter ended March 31, 2010

2Includes MSCI's results for the six months ended May 31, 2010 and RiskMetrics' fourth quarter ended December 31, 2009 and first quarter ended March 31, 2010.

Table 11: Pro Forma Summary Segment

													% Change from
	Second Quarter						Six Months						Second Quarter			Six Months
In thousands	2011				20101			2011			20102			2010			2010

Revenues:
Performance and Risk	$	195,510		$	169,945		$	387,558		$	335,721			15.0	%		15.4	%
Governance		30,973			32,271			62,223			64,647			(4.0	%)		(3.7	%)
Total Operating revenues	$	226,483		$	202,216		$	449,781		$	400,368			12.0	%		12.3	%

Operating Income
Performance and Risk		79,855			58,027			152,501			114,560			37.6	%		33.1	%
Margin		40.8	%		34.1	%		39.3	%		34.1	%
Governance		2,836			3,582			5,619			7,809			(20.8	%)		(28.0	%)
Margin		9.2	%		11.1	%		9.0	%		12.1	%
Total Operating Income	$	82,691		$	61,609		$	158,120		$	122,369			34.2	%		29.2	%
Margin		36.5	%		30.5	%		35.2	%		30.6	%

Adjusted EBITDA
Performance and Risk		99,549			77,465			194,510			153,375			28.5	%		26.8	%
Margin		50.9	%		45.6	%		50.2	%		45.7	%
Governance		7,446			8,071			16,959			16,661			(7.7	%)		1.8	%
Margin		24.0	%		25.0	%		27.3	%		25.8	%
Total Adjusted EBITDA	$	106,995		$	85,536		$	211,469		$	170,036			25.1	%		24.4	%
Margin		47.2	%		42.3	%		47.0	%		42.5	%

1Includes MSCI's results for the second quarter ended May 31, 2010 and RiskMetrics' first quarter ended March 31, 2009

2Includes MSCI's results for the six months ended May 31, 2010 and RiskMetrics' fourth quarter ended December 31, 2009 and first quarter ended March 31, 2010.

Table 12: Key Operating Metrics1

	As of or For the Quarter Ended									% Change from
	June 30,						March 31,			June 30,			March 31,
Dollars in thousands	2011			2010			2011			2010			2011
Run Rates 2
Index and ESG products
Subscriptions	$	257,470		$	221,174		$	247,870			16.4	%		3.9	%
Asset-based fees		140,144			94,496			134,257			48.3	%		4.4	%
Index and ESG products total		397,614			315,670			382,127			26.0	%		4.1	%
Risk management analytics		249,048			200,161			243,853			24.4	%		2.1	%
Portfolio management analytics		118,452			121,525			116,839			(2.5	%)		1.4	%
Energy and commodity analytics		15,074			15,344			15,047			(1.8	%)		0.2	%
Total Performance and Risk Run Rate	$	780,188		$	652,700		$	757,866			19.5	%		2.9	%

Governance Run Rate		107,755			105,448			105,870			2.2	%		1.8	%
Total Run Rate	$	887,943		$	758,148		$	863,736			17.1	%		2.8	%

Subscription total		747,799			663,652			729,479			12.7	%		2.5	%
Asset-based fees total		140,144			94,496			134,257			48.3	%		4.4	%
Total Run Rate	$	887,943		$	758,148		$	863,736			17.1	%		2.8	%

Subscription Run Rate by region
% Americas		52	%		52	%		52	%
% non-Americas		48	%		48	%		48	%

Subscription Run Rate by client type
% Asset Management		57	%		57	%		56	%
% Banking & Trading		16	%		16	%		17	%
% Alternative Invt Mgmt		11	%		10	%		11	%
% Asset Owners & Consultants		9	%		9	%		9	%
% Corporate		2	%		2	%		2	%
% Others		5	%		6	%		5	%

New Recurring Subscription Sales	$	30,298		$	33,847		$	34,612			(10.5	%)		(12.5	%)
Subscription Cancellations		(14,965	)		(18,222	)		(14,402	)		(17.9	%)		3.9	%
Net New Recurring Subscription Sales	$	15,333		$	15,624		$	20,210			(1.9	%)		(24.1	%)
Non-recurring sales		8,415			6,292			13,648			33.7	%		(38.3	%)

Employees		2,133			2,055			2,049			3.8	%		4.1	%

% Employees by location
Developed Market Centers		65	%		73	%		68	%
Emerging Market Centers		35	%		27	%		32	%

1 Reflects combined legacy MSCI and RiskMetrics results in June 2010.

2 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 13: Supplemental Operating Metrics

Recurring Subscription Sales & Subscription Cancellations
		Three Months Ended 2010												Three Months Ended 2011						Six Months Ended
		March			June			September			December			March			June			June 2010			June 2011
New Recurring Subscription Sales	$	26,831		$	33,847		$	35,373		$	33,742		$	34,612		$	30,298		$	60,677		$	64,910
Subscription Cancellations		(19,379	)		(18,222	)		(19,654	)		(30,174	)		(14,402	)		(14,965	)		(37,601	)		(29,367	)
Net New Recurring Subscription Sales	$	7,452		$	15,625		$	15,719		$	3,568		$	20,210		$	15,333		$	23,077		$	35,543

Aggregate & Core Retention Rates
	Three Months Ended 2010												Three Months Ended 2011						Six Months Ended
	March			June			September			December			March			June			June 2010			June 2011
Aggregate Retention Rate 1
Index and ESG products		94.4	%		90.2	%		92.4	%		89.8	%		95.0	%		92.8	%		92.3	%		93.9	%
Risk management analytics		83.4	%		92.0	%		87.7	%		85.6	%		94.2	%		92.2	%		87.7	%		93.0	%
Portfolio management analytics		88.9	%		84.5	%		82.2	%		63.1	%		88.6	%		91.4	%		86.7	%		90.0	%
Energy & commodity analytics		80.7	%		86.8	%		90.3	%		81.7	%		76.9	%		88.8	%		83.7	%		82.9	%
Total Performance and Risk		88.7	%		89.4	%		88.3	%		82.1	%		93.0	%		92.2	%		89.1	%		92.5	%
Total Governance		84.8	%		85.6	%		87.1	%		80.1	%		85.0	%		90.4	%		85.2	%		87.7	%

Total Aggregate Retention Rate		88.1	%		88.8	%		88.1	%		81.8	%		91.8	%		91.9	%		88.4	%		91.8	%
Core Retention Rate 1
Index and ESG products		95.1	%		90.7	%		92.6	%		90.1	%		95.2	%		92.8	%		92.9	%		94.0	%
Risk management analytics		85.2	%		92.5	%		90.0	%		85.6	%		94.2	%		92.7	%		88.8	%		93.5	%
Portfolio management analytics		90.9	%		86.7	%		86.0	%		64.1	%		89.9	%		93.2	%		88.8	%		91.5	%
Energy & commodity analytics		80.7	%		86.8	%		90.3	%		81.2	%		76.9	%		88.8	%		83.7	%		82.9	%
Total Performance and Risk		90.1	%		90.3	%		90.1	%		82.4	%		93.4	%		92.7	%		90.2	%		93.0	%
Total Governance		84.8	%		85.6	%		87.1	%		80.1	%		85.0	%		90.4	%		85.2	%		87.7	%

Total Core Retention Rate		89.2	%		89.5	%		89.6	%		82.0	%		92.1	%		92.4	%		89.4	%		92.2	%

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. Aggregate Retention Rates are generally higher during the first three quarters and lower in the fourth quarter. 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 14: ETF Assets Linked to MSCI Indices1

	Three Months Ended 2010									Three Months Ended 2011					Six Months Ended
In Billions	March		June			September		December		March		June			June 2010			June 2011
Beginning Period AUM in ETFs linked to MSCI Indices	$	243.0	$	255.4		$	236.8	$	290.7	$	333.3	$	350.1		$	243.0		$	333.3
Cash Inflow/ Outflow		4.9		11.8			14.9		21.9		6.7		14.2			16.7			20.9
Appreciation/Depreciation		7.5		(30.4	)		39.0		20.7		10.1		(3.8	)		(22.9	)		6.3
Period End AUM in ETFs linked to MSCI Indices	$	255.4	$	236.8		$	290.7	$	333.3	$	350.1	$	360.5		$	236.8		$	360.5
Period Average AUM in ETFs linked to MSCI Indices	$	242.8	$	249.6		$	263.7	$	317.0	$	337.6	$	356.8		$	246.9		$	348.1

1Our ETF assets under management calculation methodology is ETF net asset value (NAV) multiplied by shares outstanding.

Source: Bloomberg and MSCI

Table 15: Reconciliation of Adjusted EBITDA to Net Income

		Three Months Ended June 30, 2011							Three Months Ended May 31, 2010
		Performance							Performance
		and Risk		Governance			Total		and Risk		Governance		Total
Net Income								$45,660						$24,067
Plus:	Provision for income taxes							23,982						13,884
Plus:	Other expense (income), net							13,049						8,746
Operating income			$79,855		$2,836			$82,691		$46,697		$-		$46,697
Plus:	Non-recurring stock based comp		2,508		165			2,673		2,040		-		2,040
Plus:	Transaction costs		-		-			-		5,264		-		5,264
Plus:	Depreciation and amortization		4,041		1,127			5,168		3,556		-		3,556
Plus:	Amortization of intangible assets		13,073		3,350			16,423		4,277		-		4,277
Plus:	Restructuring costs		72		(32	)		40		-		-		-
Adjusted EBITDA			$99,549		$7,446			$106,995		$61,834		$-		$61,834

		Six Months Ended June 30, 2011						Six Months Ended May 31, 2010
		Performance						Performance
		and Risk		Governance		Total		and Risk		Governance		Total
Net Income						$	79,181					$	51,585
Plus:	Provision for income taxes						43,805						30,203
Plus:	Other expense (income), net						35,134						12,166
Operating income		$	152,501	$	5,619	$	158,120	$	93,954	$	-	$	93,954
Plus:	Non-recurring stock based comp		5,186		299		5,485		4,111		-		4,111
Plus:	Transaction costs		-		-		-		7,514		-		7,514
Plus:	Depreciation and amortization		8,020		2,258		10,278		6,949		-		6,949
Plus:	Amortization of intangible assets		26,415		6,700		33,115		8,555		-		8,555
Plus: Restructuring costs			2,388		2,083		4,471		-		-		-
Adjusted EBITDA		$	194,510	$	16,959	$	211,469	$	121,083	$	-	$	121,083

Table 16: Reconciliation of Pro Forma Adjusted EBITDA to Pro Forma Net Income

			Three Months Ended June 30, 2011								Second Quarter 20101
		Performance								Performance
			and Risk		Governance			Total			and Risk		Governance			Total
Net Income								$	45,660							$	30,813
Plus:	Provision for income taxes								23,982								12,915
Plus:	Other expense (income), net								13,049								17,881
Operating income			$	79,855	$	2,836		$	82,691		$	58,027		$	3,582	$	61,609
Plus:	Non-recurring stock based comp			2,508		165			2,673			2,040			-		2,040
Plus:	Transaction costs			-		-			-			-			-		-
Plus:	Depreciation and amortization			4,041		1,127			5,168			4,568			1,139		5,707
Plus:	Amortization of intangible assets			13,073		3,350			16,423			12,830			3,350		16,180
Plus: Restructuring costs				72		(32	)		40			-			-		-
Adjusted EBITDA			$	99,549	$	7,446		$	106,995		$	77,465		$	8,071	$	85,536


			Six Months Ended June 30, 2011									Six Months 20102
		Performance								Performance
			and Risk		Governance			Total			and Risk		Governance			Total
Net Income								$	79,181							$	59,347
Plus:	Provision for income taxes								43,805								28,096
Plus:	Other expense (income), net								35,134								34,926
Operating income			$	152,501	$	5,619		$	158,120		$	114,560		$	7,809	$	122,369
Plus:	Non-recurring stock based comp			5,186		299			5,485			4,111			-		4,111
Plus:	Transaction costs			-		-			-			-			-		-
Plus:	Depreciation and amortization			8,020		2,258			10,278			9,044			2,152		11,196
Plus:	Amortization of intangible assets			26,415		6,700			33,115			25,660			6,700		32,360
Plus: Restructuring costs				2,388		2,083			4,471			-			-		-
Adjusted EBITDA			$	194,510	$	16,959		$	211,469		$	153,375		$	16,661	$	170,036

1Includes MSCI's results for the second quarter ended May 31, 2010 and RiskMetrics' first quarter ended March 31, 2010

2Includes MSCI's results for the six months ended May 31, 2010 and RiskMetrics' fourth quarter ended December 31, 2009 and first quarter ended March 31, 2010.

Table 17: Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS

	Three Months Ended									Six Months Ended
	June 30,			May 31,			March 31,			June 30,			May 31,
	2011			2010			2011			2011			2010
GAAP - Net income	$	45,660		$	24,067		$	33,521		$	79,181		$	51,585
Plus: Non-recurring stock based comp		2,673			2,040			2,813			5,485			4,111
Plus: Amortization of intangible assets		16,423			4,277			16,692			33,115			8,555
Plus: Transaction costs1		-			5,264			-			-			7,514
Plus: Debt repayment and refinancing expenses2		-			6,280			6,404			6,404			6,280
Plus: Restructuring costs	$	40		$	-		$	4,431		$	4,471		$	-
Less: Income tax effect3		(6,590	)		(4,315	)		(11,275	)		(17,622	)		(6,997	)
Adjusted net income	$	58,206		$	37,613		$	52,585		$	111,034		$	71,048
GAAP - EPS	$	0.37		$	0.22		$	0.27		$	0.64		$	0.48
Plus: Non-recurring stock based comp		0.02			0.02			0.02			0.04			0.04
Plus: Amortization of intangible assets		0.13			0.04			0.14			0.27			0.08
Plus: Transaction costs1		0.00			0.05			0.00			0.00			0.07
Plus: Debt repayment and refinancing expenses2		0.00			0.06			0.05			0.05			0.06
Plus: Restructuring costs		0.00			0.00			0.04			0.04			0.00
Less: Income tax effect3		(0.05	)		(0.04	)		(0.09	)		(0.14	)		(0.07	)
Adjusted EPS	$	0.47		$	0.35		$	0.43		$	0.90		$	0.66

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 deferred financing expense related to the $88 million repayment. MSCI also incurred $6.3 million of expenses in second quarter 2010 resulting from its decision to repay $297 million of its then outstanding term loans.

3For the purposes of calculating Adjusted EPS, non-recurring stock based compensation, amortization of intangible assets, debt repayment and refinancing expenses, and restructuri costs are assumed to be taxed at the effective tax rate excluding transaction costs. For the second quarter 2011, the rate is 34.4%. For the second quarter 2010, the effective tax rate excluding transaction costs was 36.6%. For the six months 2011, the rate is 35.6% and for six months 2010, the rate was 36.9%.