MSCI Inc. Reports Third Quarter 2012 Financial Results

  MSCI Inc. Reports Third Quarter 2012 Financial Results

Business Wire

NEW YORK -- November 06, 2012

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 third quarter
and nine months ended September 30, 2012.

(Note: Percentage changes are referenced to the comparable period in 2011,
unless otherwise noted.)

  *Operating revenues increased 4.6% to $235.4 million in third quarter 2012
    and 4.2% to $703.1 million for nine months 2012.
  *Net income declined by 3.0% to $48.3 million in third quarter 2012. Net
    income grew 0.6% to $129.8 million for nine months 2012.
  *Adjusted EBITDA (defined below) grew by 4.3% to $108.1 million in third
    quarter 2012 despite the impact of higher severance expenses. For nine
    months 2012, Adjusted EBITDA grew by 0.9% to $317.9 million. Third quarter
    2012 Adjusted EBITDA margin declined slightly to 45.9% from 46.0% and nine
    months 2012 Adjusted EBITDA margin fell to 45.2% from 46.7%.
  *Diluted EPS for third quarter 2012 fell 2.5% to $0.39 and nine months 2012
    Diluted EPS was unchanged at $1.05.
  *Third quarter 2012 Adjusted EPS (defined below) was unchanged at $0.49.
    Nine months 2012 Adjusted EPS rose 2.9% to $1.43.

Henry A. Fernandez, Chairman and CEO, said, “MSCI continued to grow its
subscription revenues and run rate during the third quarter of 2012, despite
volatile financial markets. I am especially pleased that our index and ESG run
rate grew by 6% year-over-year, even after taking into account the impact of
the Vanguard announcement. The growth of index and ESG run rate is an
indication of the value that we provide to global investors. Our governance
revenues grew by 4%, reflecting the recent positive momentum we are seeing in
that business.

“We are confident in the long-term secular trends driving our growth and are
focused on how we can best position MSCI to capture these opportunities,”
added Mr. Fernandez.

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

                                                                         
             Three Months Ended          Change      Nine Months Ended           Change
                                         from                                    From
             September     September     September   September     September     September
             30,           30,           30,         30,           30,           30,
In
thousands,  2012          2011          2011        2012          2011          2011
except per
share data
Operating    $ 235,444     $ 225,026     4.6   %     $ 703,061     $ 674,807     4.2   %
revenues
Operating      151,915       142,781     6.4   %       451,432       434,442     3.9   %
expenses
Net income     48,274        49,787      (3.0  %)      129,786       128,968     0.6   %
   %           20.5    %     22.1    %                 18.5    %     19.1    %
   Margin
Diluted      $ 0.39        $ 0.40        (2.5  %)    $ 1.05        $ 1.05        0.0   %
EPS
                                                                                 
Adjusted     $ 0.49        $ 0.49        0.0   %     $ 1.43        $ 1.39        2.9   %
EPS^1
Adjusted     $ 108,074     $ 103,624     4.3   %     $ 317,893     $ 315,093     0.9   %
EBITDA^2
   %           45.9    %     46.0    %                 45.2    %     46.7    %
   Margin
                                                                                 

^1 Per share net income before after-tax impact of amortization of
intangibles, non-recurring stock-based compensation, restructuring costs, debt
repayment, refinancing expenses, and the lease exit charge. See Table 14
titled "Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income
and EPS (unaudited)" 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 income taxes, other net expense and income,
depreciation, amortization, non-recurring stock-based compensation,
restructuring costs, and the lease exit charge. See Table 13 titled
"Reconciliation of Adjusted EBITDA to Net Income (unaudited)" 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 Third Quarter 2012 compared to Third Quarter 2011

Operating Revenues – See Table 4

Total operating revenues for the three months ended September 30, 2012 (third
quarter 2012) increased $10.4 million, or 4.6%, to $235.4 million compared to
$225.0 million for the three months ended September 30, 2011 (third quarter
2011). Total third quarter 2012 subscription revenues rose $13.9 million, or
7.5%, to $197.6 million while asset-based fees declined $1.0 million, or 2.8%,
to $34.0 million.

Non-recurring revenues fell $2.5 million to $3.8 million. The decline in
non-recurring revenues was driven by a decline in index derivative license
revenues as well as a decline in non-recurring governance revenues.

Performance and Risk segment revenues rose $9.2 million, or 4.7%, to $205.4
million, primarily driven by growth in index and environmental, social and
governance (“ESG”) products, and risk management analytics.

  *Index and ESG products: Index and ESG products revenues increased $6.6
    million, or 6.5%, to $107.9 million. Subscription revenues grew by $7.6
    million, or 11.5%, to $73.9 million, driven by growth in revenues from
    MSCI’s ACWI (All Country World Index) core and other index modules as well
    as higher usage fees, offset, in part, by a $1.4 million decline in
    non-recurring subscription revenues.

Revenues attributable to equity index asset-based fees declined $1.0 million,
or 2.8%, to $34.0 million largely as a result of a change in the mix of funds
linked to our indices that more than offset the impact of higher assets under
management. The average assets under management in ETFs linked to MSCI indices
increased 4.7% to $344.7 billion from $329.1 billion in third quarter 2011.

  *Risk management analytics: Revenues related to risk management analytics
    increased $3.1 million, or 5.1%, to $65.0 million. The increase in risk
    management analytics revenues was driven by higher revenues from our
    primary risk management platforms, RiskManager and BarraOne.
  *Portfolio management analytics: Revenues related to portfolio management
    analytics declined $1.1 million, or 3.7%, to $29.1 million.
  *Energy and commodity analytics: Revenues from energy and commodity
    analytics were $3.3 million, up $0.5 million, or 18.6%, from third quarter
    2011. At the beginning of 2012, we corrected an error inour revenue
    recognition policy for our energy and commodity analytics products. The
    correction resulted in a greater proportion of annual revenue being
    recognized in third quarter 2012 than in third quarter 2011.

Governance segment revenues rose $1.3 million, or 4.4%, to $30.1 million in
third quarter 2012, driven by higher revenues from our compensation data and
analytic products and a higher renewal rate.

Operating Expenses – See Table 6

Total operating expenses rose $9.1 million, or 6.4%, to $151.9 million,
primarily driven by higher compensation costs and a lease exit charge.

Compensation costs: Total compensation costs rose $6.8 million, or 7.8%, to
$93.0 million in third quarter 2012. Excluding non-recurring stock-based
compensation expense, total compensation costs rose $7.4 million, or 8.7%, to
$92.4 million. Compensation costs were impacted by an increase in average
headcount and by higher severance costs, which rose $3.7 million to $4.1
million.

Non-compensation costs excluding the lease exit charge, depreciation and
amortization, and restructuring costs: Non-compensation operating expenses
excluding the lease exit charge, depreciation and amortization, and
restructuring costs declined $1.5 million, or 4.0%, to $35.0 million in third
quarter 2012. The biggest drivers of the decline were lower travel and
entertainment expenses, recruiting fees, and market data costs, partially
offset by higher occupancy costs.

Lease exit charge: The third quarter 2012 included $3.3 million associated
with a lease exit charge resulting from the consolidation of our New York
offices.

Depreciation and amortization: Amortization of intangibles expense totaled
$16.0 million compared to $16.4 million in third quarter 2011, a decline of
2.8%. Depreciation and amortization of property, plant and equipment was flat
at $4.6 million.

Other Expense (Income), Net

Other expense (income), net for third quarter 2012 was $7.9 million, a decline
of $4.0 million from third quarter 2011. Interest expense fell by $5.8 million
to $7.3 million as a result of lower levels of indebtedness and lower interest
rates following our second quarter 2012 refinancing.

Provision for Income Taxes

Income tax expense was $27.3 million in third quarter 2012, an increase of
$6.8 million, or 33.2%, from third quarter 2011. The effective tax rate in
third quarter 2012 was 36.1%. Third quarter 2011 income tax expense was
impacted by $4.2 million of certain non-recurring benefits relating to prior
tax periods, which resulted in an effective rate of 29.2%.

Net Income and Earnings per Share – See Table 14

Net income declined $1.5 million, or 3.0%, to $48.3 million for third quarter
2012. The net income margin fell to 20.5% from 22.1% as a result of the lower
operating profit margin and higher tax rate. Diluted EPS declined by one cent,
or 2.5%, to $0.39.

Adjusted net income, which excludes the after-tax impact of the lease exit
charge, amortization of intangibles, non-recurring stock-based compensation
expense, restructuring costs and debt repayment and refinancing expenses
totaling $12.6 million, was flat at $60.9 million. Adjusted EPS, which
excludes the after-tax, per share impact of the lease exit charge,
amortization of intangibles, non-recurring stock-based compensation expense,
restructuring costs and debt repayment and refinancing expenses totaling
$0.10, was unchanged at $0.49.

See Table 14 titled “Reconciliation of Adjusted Net Income and Adjusted EPS to
Net Income and EPS” and “Notes Regarding the Use of Non-GAAP Financial
Measures” below.

Adjusted EBITDA – See Table 13

Adjusted EBITDA, which excludes income taxes, other net expense and income,
depreciation, amortization, non-recurring stock-based compensation,
restructuring costs, and the lease exit charge, was $108.1 million, up $4.5
million, or 4.3%, from third quarter 2011. The Adjusted EBITDA margin declined
to 45.9% from 46.0%.

By segment, Adjusted EBITDA for the Performance and Risk segment increased
$4.4 million, or 4.6%, to $100.4 million in third quarter 2012. The Adjusted
EBITDA margin for this segment was unchanged at 48.9%. Adjusted EBITDA for the
Governance segment increased $0.1 million, or 1.0%, to $7.7 million and the
Adjusted EBITDA margin for this segment fell to 25.7% from 26.5%.

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 Nine Months Ended September 30, 2012 compared to Nine
Months Ended September 30, 2011

Operating Revenues – See Table 5

Total operating revenues for the nine months ended September 30, 2012 (nine
months 2012) increased $28.3 million, or 4.2%, to $703.1 million compared to
$674.8 million for the nine months ended September 30, 2011 (nine months
2011). Total subscription revenues rose $39.6 million, or 7.3%, to $582.3
million, while asset-based fees declined $2.2 million, or 2.1%, to $102.7
million. Total non-recurring revenues fell $9.2 million, or 33.8%, to $18.0
million.

Index and ESG products and risk management analytics revenues grew 6.6% and
6.7%, respectively, in nine months 2012. Portfolio management analytics
declined 1.4% and governance revenues rose 1.1%. Energy and other commodity
analytics revenues fell 39.7%, primarily as a result of a $5.2 million
non-cash cumulative revenue reduction in first quarter 2012 to correct an
error.

By segment, Performance and Risk revenues rose $27.3 million, or 4.7%, to
$611.1 million for nine months 2012. Governance revenues rose $1.0 million, or
1.1%, to $92.0 million.

Operating Expenses – See Table 7

Total operating expenses increased $17.0 million, or 3.9%, to $451.4 million
in nine months 2012 compared to nine months 2011, primarily driven by higher
compensation costs and the lease exit charge, partially offset by lower
depreciation, amortization, and restructuring expenses. Excluding
non-recurring stock-based compensation, compensation expenses were up $24.6
million, or 9.7%. Compensation costs were impacted by an increase in average
headcount and by higher severance costs, which rose $7.8 million to $8.4
million. Non-compensation expenses  costs excluding the lease exit charge,
depreciation and amortization, and restructuring costs rose by $0.9 million,
or 0.8%, to $107.2 million, mostly as a result of higher occupancy costs.
Restructuring costs declined by $3.5 million. Depreciation and amortization
expenses declined by $2.9 million, or 4.5%.

Other Expense (Income), Net

Other expense (income), net for nine months 2012 was $50.5 million, an
increase of $3.5 million from nine months 2011. Other expense (income), net
includes debt repayment and refinancing expenses of $20.6 million in nine
months 2012 and $6.4 million in nine months 2011. Excluding the change in debt
repayment and refinancing expenses, other expense declined by $10.7 million in
nine months 2012 as a result of a combination of lower levels of indebtedness
and a lower interest rates.

Provision for Income Taxes

The provision for income tax expense was $71.3 million in nine months 2012, up
$7.0 million, or 10.9% from nine months 2011. The effective tax rate was 35.5%
in nine months 2012, up from 33.3% in nine months 2011. Nine months 2011
income tax expense was impacted by $4.2 million of certain non-recurring
benefits relating to prior tax periods.

Net Income and Earnings per Share – See Table 14

Net income was essentially flat at $129.8 million. The net income margin
decreased to 18.5% from 19.1%. Diluted EPS was unchanged at $1.05.

Adjusted net income rose $5.3 million, or 3.1%, to $177.0 million. Adjusted
EPS rose 2.9% to $1.43 in nine months 2012.

See table 14 titled “Reconciliation of Adjusted Net Income and Adjusted EPS to
Net Income and EPS” and “Notes Regarding the Use of Non-GAAP Financial
Measures” below.

Adjusted EBITDA – See Table 13

Adjusted EBITDA, which excludes income taxes, other net expense and income,
depreciation, amortization, non-recurring stock-based compensation,
restructuring costs, and the lease exit charge, was $317.9 million, up $2.8
million, or 0.9%, from nine months 2011. Adjusted EBITDA margin fell to 45.2%
from 46.7%.

By segment, Adjusted EBITDA for the Performance and Risk segment increased
$6.6 million, or 2.3%, to $297.1 million from nine months 2011. The Adjusted
EBITDA margin for the Performance and Risk segment declined to 48.6% from
49.8% in nine months 2011. Adjusted EBITDA for the Governance segment declined
$3.8 million, or 15.6%, to $20.8 million in nine months 2012. The Adjusted
EBITDA margin for the Governance segment was 22.6%, down from 27.0% in nine
months 2011.

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

Key Operating Metrics – See Tables 10, 11, 12

Total run rate grew by $38.8 million, or 4.4%, to $915.0 million as of
September 30, 2012 versus September 30, 2011. Subscription run rate, which
excludes the impact of asset-based fees, grew by $42.2 million, or 5.6%, to
$800.4 million. Asset-based fee run rate declined by $3.4 million, or 2.8%, to
$114.6 million. The decline in asset-based fee run rate was driven by the
decision by Vanguard to switch the indices for 22 of its ETFs, the impact of
which lowered run rate by $24.4 million at September 30, 2012. Excluding the
impact of the Vanguard indices being switched, total run rate grew by $55.9
million, or 6.5%, and asset-based fee run rate grew by $13.7 million, or
13.6%.

At the end of third quarter 2012, assets under management (“AUM”) in ETFs
linked to MSCI indices were $363.7 billion, up $73.6 billion, or 25.4%, from
the end of third quarter 2011 and up $36.3 billion, or 11.1%, from the end of
second quarter 2012. Excluding AUM in Vanguard ETFs due to be switched, AUM in
MSCI-linked ETFs was $232.5 billion, up from $198.1 billion at the end of
third quarter 2011 and $210.1 billion as of June 30, 2012. ETFs linked to MSCI
indices attracted net inflows of $15.2 billion in third quarter 2012,
including $7.6 billion in the Vanguard ETFs.

As of September 30, 2012, 39.4% of assets under management in ETFs linked to
MSCI indices were linked to emerging markets indices, 32.5% were linked to
other developed markets outside the United States, 25.0% were linked to U.S.
market indices and 3.1% were linked to other global indices.

Acquisition of IPD Group

On October 31, 2012, MSCI announced that its subsidiary, MSCI Limited, entered
into a definitive agreement to acquire IPD Group Limited ("IPD"), a holding
company for the IPD Group, for a purchase price^1 of approximately $125
million^1 (£78 million), funded through existing cash. IPD is a leading
provider of real estate investment performance benchmarking, performance
analysis, market indices, risk management tools and market research to the
owners, institutional investors, managers, lenders on, and occupiers of, real
estate. For the year ended December 31, 2011 and the six month period ended
June 30, 2012, IPD had U.S. dollar equivalent revenues^2 of $47.7 million^2
(£29.7 million) and $26.4 million^2 (£16.7 million), respectively. The
acquisition is not expected to have a material impact on MSCI’s results of
operations in fiscal year 2012. The transaction is subject to customary
closing conditions for transactions of this nature and is expected to close
during the fourth quarter of 2012.

^1 Purchase price shown in U.S. dollars assumes a GBP / USD exchange rate of
1.60. Purchase price excludes certain employee retention payments and
expenses.

^2 Revenues shown in U.S. dollars based on average exchange rates over the
applicable periods.

Conference Call Information

Investors will have the opportunity to listen to MSCI Inc.'s senior management
review third quarter 2012 results on Tuesday, November 6, 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 November 8, 2012. To listen to the recording, visit
http://ir.msci.com/events.cfm, or dial 1-855-859-2056 (passcode: 43175268)
within the United States. International callers dial 1-404-537-3406 (passcode:
43175268).

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 with
approximately USD 7 trillion estimated to be benchmarked to them on a
worldwide basis^1; Barra multi-asset class factor models, portfolio risk and
performance analytics; RiskMetrics multi-asset class market and credit risk
analytics; ISS governance research and outsourced proxy voting and reporting
services; and FEA valuation models and risk management software for the energy
and commodities markets. MSCI is headquartered in New York, with research and
commercial offices around the world. MSCI#IR

^1As of March 31, 2012, 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 earnings release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. 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 December 31, 2011 and filed with the Securities and
Exchange Commission (SEC) on February 29, 2012, 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 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, the lease exit charge and restructuring
costs.

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, lease exit charge, restructuring
costs and the accelerated amortization or write off of deferred financing and
debt discount costs as a result of debt repayment (debt repayment and
refinancing expenses), as well as for any related tax effects.

We believe that adjustments related to the lease exit charge, restructuring
costs and debt repayment and refinancing expenses are useful to management and
investors because it allows for an evaluation of MSCI’s underlying operating
performance. Additionally, we believe that adjusting for non-recurring
stock-based compensation expenses, debt repayment and refinancing expenses and
depreciation and amortization 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                       Nine Months Ended
                   September    September    June 30,      September    September
                   30,           30,                         30,           30,
In thousands,
except per share  2012          2011          2012          2012          2011
data
                                                                           
Operating          $ 235,444     $ 225,026     $ 238,565     $ 703,061     $ 674,807
revenues
                                                                           
Operating
expenses
  Cost of            68,350        68,968        73,243        213,884       208,026
  services
  Selling,
  general and        62,973        53,724        57,602        176,011       158,463
  administrative
  Restructuring      -             (1,002  )     (22     )     (51     )     3,469
  costs
  Amortization       15,959        16,422        15,959        47,877        49,537
  of intangibles
  Depreciation
  and
  amortization
  of property,
  equipment and
  leasehold         4,633       4,669       4,662       13,711      14,947  
  improvements
Total operating    $ 151,915    $ 142,781    $ 151,444    $ 451,432    $ 434,442 
expenses
                                                                           
Operating income   $ 83,529      $ 82,245      $ 87,121      $ 251,629     $ 240,365
Operating margin     35.5    %     36.5    %     36.5    %     35.8    %     35.6    %
                                                                           
Interest income      (252    )     (184    )     (237    )     (712    )     (513    )
Interest expense     7,314         13,113        29,581        49,250        42,552
Other expense       873         (983    )    516         1,997       5,041   
(income)
Other expenses     $ 7,935      $ 11,946     $ 29,860     $ 50,535     $ 47,080  
(income), net
                                                                           
Income before        75,594        70,299        57,261        201,094       193,285
taxes
                                                                           
Provision for       27,320      20,512      19,715      71,308      64,317  
income taxes
Net income         $ 48,274     $ 49,787     $ 37,546     $ 129,786    $ 128,968 
Net income           20.5    %     22.1    %     15.7    %     18.5    %     19.1    %
margin
                                                                           
Earnings per
basic common       $ 0.39       $ 0.41       $ 0.31       $ 1.06       $ 1.06    
share
Earnings per
diluted common     $ 0.39       $ 0.40       $ 0.30       $ 1.05       $ 1.05    
share
                                                                           
Weighted average
shares
outstanding used
in computing
earnings per
share
                                                                           
Basic               122,261     120,831     122,030     122,016     120,570 
Diluted             123,450     122,303     123,295     123,287     122,186 
                                                                                     

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

                                          As of
                                                  September 30,  December 31,
In thousands                               2012            2011
                                                                  
Cash and cash equivalents                         $   340,458     $  252,211
Short-term investments                                93,885         140,490
Trade receivables, net of                             124,309        180,566
allowances
                                                                  
Deferred revenue                                  $   323,503     $  289,217
Current maturities of long-term                       43,082         10,339
debt
Long-term debt, net of current                        822,401        1,066,548
maturities
                                                                     

Table 4: Quarterly Operating Revenues by Product Category and Revenue Type
(unaudited)

                                                          
                 Three Months Ended                   
                                                          % Change from
                   September    September   June 30,    September  June 30,
                   30,           30,                      30,
In thousands      2012          2011         2012        2011        2012
Index and ESG
products
  Subscriptions    $  73,894     $  66,279    $ 75,829    11.5   %    (2.6  %)
  Asset-based        34,042       35,030     34,094    (2.8   %)   (0.2  %)
  fees
Index and ESG         107,936       101,309     109,923   6.5    %    (1.8  %)
products total
Risk management       64,998        61,861      64,547    5.1    %    0.7   %
analytics
Portfolio
management            29,138        30,263      29,326    (3.7   %)   (0.6  %)
analytics
Energy and
commodity            3,317        2,797      3,780     18.6   %    (12.2 %)
analytics
                                                                      
  Total
  Performance      $  205,389    $  196,230   $ 207,576   4.7    %    (1.1  %)
  and Risk
  revenues
                                                                      
  Total
  Governance         30,055       28,796     30,989    4.4    %    (3.0  %)
  revenues
                                                                      
Total operating    $  235,444    $  225,026   $ 238,565   4.6    %    (1.3  %)
revenues
                                                                      
  Recurring        $  197,591    $  183,735   $ 198,104   7.5    %    (0.3  %)
  subscriptions
  Asset-based         34,042        35,030      34,094    (2.8   %)   (0.2  %)
  fees
  Non-recurring      3,811        6,261      6,367     (39.1  %)   (40.1 %)
  revenue
Total operating    $  235,444    $  225,026   $ 238,565   4.6    %    (1.3  %)
revenues
                                                                            

Table 5: Nine Months Operating Revenues by Product Category and Revenue Type
(unaudited)

                             Nine Months Ended              % Change from
                                 September 30,  September 30,   September 30,
In thousands                 2012            2011            2011
Index and ESG products
  Subscriptions                  $  221,362      $   194,713     13.7     %
  Asset-based fees                 102,745        109,186     (5.9     %)
Index and ESG products              324,107          303,899     6.6      %
total
Risk management                     193,622          181,533     6.7      %
analytics
Portfolio management                87,527           88,740      (1.4     %)
analytics
Energy and commodity
analytics
  Recurring Energy and              11,001           9,616       14.4     %
  commodity analytics
  Correction^1                     (5,203   )      -           n/m
Net energy and                     5,798          9,616       (39.7    %)
commodity analytics
                                                                 
  Total Performance and          $  611,054      $   583,788     4.7      %
  Risk revenues
                                                                 
  Total Governance                 92,007         91,019      1.1      %
  revenues
                                                                 
Total operating                  $  703,061     $   674,807     4.2      %
revenues
                                                                 
  Recurring                      $  582,330      $   542,711     7.3      %
  subscriptions
  Asset-based fees                  102,745          104,924     (2.1     %)
  Non-recurring revenue            17,986         27,172      (33.8    %)
Total operating                  $  703,061     $   674,807     4.2      %
revenues
                                                                          

^1 In first quarter 2012, MSCI recorded a non-cash $5.2 million cumulative
revenue reduction to correct an error related to energy and commodity
analytics revenues previously reported prior to January 1, 2012. MSCI’s
previous policy had resulted in the immediate recognition of a substantial
portion of the revenue related to a majority of its contracts rather than
amortizing that revenue over the life of that contract, which is now the
method of recognition.


Table 6: Quarterly Operating Expense Detail (unaudited)

                   Three Months Ended                     % Change from
                     September  September    June 30,      September  June 30,
                     30,         30,                         30,
In thousands         2012        2011          2012          2011        2012
Cost of services
  Compensation       $ 50,111    $ 50,114      $ 55,492      (0.0   %)   (9.7  %)
  Non-recurring
  stock based         267        470         94         (43.2  %)   184.0 %
  compensation
  Total              $ 50,378    $ 50,584      $ 55,586      (0.4   %)   (9.4  %)
  compensation
  Non-compensation     16,448      18,384        17,657      (10.5  %)   (6.8  %)
  Lease exit          1,524      -           -          n/m         n/m
  charge^1
  Total               17,972     18,384      17,657     (2.2   %)   1.8   %
  non-compensation
Total cost of        $ 68,350    $ 68,968      $ 73,243      (0.9   %)   (6.7  %)
services
                                                                         
Selling, general
and administrative
  Compensation       $ 42,296    $ 34,874      $ 38,025      21.3   %    11.2  %
  Non-recurring
  stock based         359        820         98         (56.2  %)   266.3 %
  compensation
  Total              $ 42,655    $ 35,694      $ 38,123      19.5   %    11.9  %
  compensation
  Non-compensation     18,515      18,030        19,479      2.7    %    (4.9  %)
  Lease exit          1,803      -           -          n/m         n/m
  charge^1
  Total               20,318     18,030      19,479     12.7   %    4.3   %
  non-compensation
Total selling,
general and          $ 62,973    $ 53,724      $ 57,602      17.2   %    9.3   %
administrative
                                                                         
Restructuring          -           (1,002  )     (22     )   n/m         n/m
costs
Amortization of        15,959      16,422        15,959      (2.8   %)   0.0   %
intangibles
Depreciation and      4,633      4,669       4,662      (0.8   %)   (0.6  %)
amortization
Total operating      $ 151,915   $ 142,781    $ 151,444    6.4    %    0.3   %
expenses
                                                                         
                                                                   
Compensation         $ 92,407    $ 84,988      $ 93,517      8.7    %    (1.2  %)
Non-recurring
stock-based            626         1,290         192         (51.5  %)   226.0 %
compensation
Non-compensation       34,963      36,414        37,136      (4.0   %)   (5.9  %)
expenses
Lease exit             3,327       -             -           n/m         n/m
charge^1
Restructuring          -           (1,002  )     (22     )   n/m         n/m
costs
Amortization of        15,959      16,422        15,959      (2.8   %)   0.0   %
intangibles
Depreciation and      4,633      4,669       4,662      (0.8   %)   (0.6  %)
amortization
 Total operating    $ 151,915   $ 142,781    $ 151,444    6.4    %    0.3   %
  expenses
                                                                               

^1The third quarter 2012 included a total $3.3 million charge associated with
a lease exit resulting from the consolidation of our New York offices.


Table 7: Nine Months Operating Expense Detail (unaudited)

                               Nine Months Ended              % Change from
                                 September 30,  September 30,   September 30,
In thousands                     2012            2011            2012
Cost of services
    Compensation                 $  159,152      $   149,316     6.6      %
    Non-recurring stock based      629            2,707       (76.8    %)
    compensation
    Total compensation           $  159,781      $   152,023     5.1      %
    Non-compensation                52,579           56,003      (6.1     %)
    Lease exit charge^1            1,524          -           n/m
    Total non-compensation         54,103         56,003      (3.4     %)
Total cost of services           $  213,884      $   208,026     2.8      %
                                                                 
Selling, general and
administrative
    Compensation                 $  118,813      $   104,049     14.2     %
    Non-recurring stock based      771            4,068       (81.0    %)
    compensation
    Total compensation           $  119,584      $   108,117     10.6     %
    Non-compensation                54,624           50,346      8.5      %
    Lease exit charge^1            1,803          -           n/m
    Total non-compensation         56,427         50,346      12.1     %
Total selling, general and       $  176,011      $   158,463     11.1     %
administrative
                                                                 
Restructuring costs                 (51      )       3,469       (101.5   %)
Amortization of intangibles         47,877           49,537      (3.4     %)
Depreciation and amortization      13,711         14,947      (8.3     %)
Total operating expenses         $  451,432     $   434,442     3.9      %
                                                                 
                                                             
Compensation                     $  277,965      $   253,365     9.7      %
Non-recurring stock-based           1,400            6,775       (79.3    %)
compensation
Non-compensation expenses           107,203          106,349     0.8      %
Lease exit charge^1                 3,327            -           n/m
Restructuring costs                 (51      )       3,469       (101.5   %)
Amortization of intangibles         47,877           49,537      (3.4     %)
Depreciation and amortization      13,711         14,947      (8.3     %)
   Total operating expenses     $  451,432     $   434,442     3.9      %
                                                                          

^1The third quarter 2012 included a total $3.3 million charge associated with
a lease exit resulting from the consolidation of our New York offices.


Table 8: Summary Quarterly Segment Information (unaudited)

             Three Months Ended                        % Change from
               September     September    June 30,      September  June 30,
               30,            30,                         30,
In thousands   2012           2011          2012          2011       2012
                                                                      
Revenues:
Performance    $  205,389     $ 196,230     $ 207,576     4.7   %     (1.1  %)
and Risk
Governance       30,055      28,796      30,989     4.4   %     (3.0  %)
   Total
   Operating   $  235,444     $ 225,026     $ 238,565     4.6   %     (1.3  %)
   revenues
                                                                      
Operating
Income:
Performance       80,472        78,957        85,980      1.9   %     (6.4  %)
and Risk
   Margin         39.2    %     40.2    %     41.4    %
Governance        3,057         3,288         1,141       (7.0  %)    167.9 %
   Margin         10.2    %     11.4    %     3.7     %
   Total
   Operating   $  83,529      $ 82,245      $ 87,121      1.6   %     (4.1  %)
   Income
   Margin         35.5    %     36.5    %     36.5    %
                                                                      
Adjusted
EBITDA:
Performance       100,362       95,986        102,595     4.6   %     (2.2  %)
and Risk
   Margin         48.9    %     48.9    %     49.4    %
Governance        7,712         7,638         5,317       1.0   %     45.0  %
   Margin         25.7    %     26.5    %     17.2    %
   Total
   Adjusted    $  108,074     $ 103,624     $ 107,912     4.3   %     0.2   %
   EBITDA
   Margin         45.9    %     46.0    %     45.2    %
                                                                      

Table 9: Summary Nine Months Segment Information (unaudited)

                             Nine Months Ended              % Change from
                                 September 30,  September 30,   September 30,
In thousands                   2012            2011            2011
                                                                 
Revenues:
Performance and Risk             $  611,054      $  583,788      4.7      %
Governance                         92,007        91,019      1.1      %
  Total Operating revenues       $  703,061      $  674,807      4.2      %
                                                                 
Operating Income:
Performance and Risk                243,927         231,458      5.4      %
  Margin                            39.9     %      39.6     %
Governance                          7,702           8,907        (13.5    %)
  Margin                            8.4      %      9.8      %
  Total Operating Income         $  251,629      $  240,365      4.7      %
  Margin                            35.8     %      35.6     %
                                                                 
Adjusted EBITDA:
Performance and Risk                297,142         290,496      2.3      %
  Margin                            48.6     %      49.8     %
Governance                          20,751          24,597       (15.6    %)
  Margin                            22.6     %      27.0     %
  Total Adjusted EBITDA          $  317,893      $  315,093      0.9      %
  Margin                            45.2     %      46.7     %
                                                                 

Table 10:Key Operating Metrics

                                                                     
                                                                             
                   As of                                         % Change from
  In thousands     September         September     June          September   June
                   2012              2011          2012          2011        2012
                                                                             
  Run Rates^1
  Index and ESG
  products
    Subscription   $ 292,787         $ 264,722     $ 285,604     10.6   %    2.5   %
    Asset based     114,576  (2)    117,928     129,045    (2.8   %)   (11.2 %)
    fees
  Index and ESG      407,363           382,650       414,649     6.5    %    (1.8  %)
  products total
  Risk
  management         261,776           251,804       258,995     4.0    %    1.1   %
  analytics
  Portfolio
  management         115,958           119,220       117,153     (2.7   %)   (1.0  %)
  analytics
  Energy and
  commodity         14,040          15,343      14,839     (8.5   %)   (5.4  %)
  analytics
    Total
    Performance      799,137           769,017       805,636     3.9    %    (0.8  %)
    and Risk
                                                                             
    Governance      115,840         107,152     113,976    8.1    %    1.6   %
  Total Run Rate   $ 914,977        $ 876,169    $ 919,612    4.4    %    (0.5  %)
                                                                             
  Subscription     $ 800,401         $ 758,241     $ 790,567     5.6    %    1.2   %
  total
  Asset-based       114,576  (2)    117,928     129,045    (2.8   %)   (11.2 %)
  fees total
  Total Run Rate   $ 914,977        $ 876,169    $ 919,612    4.4    %    (0.5  %)
                                                                             
  New Recurring
  Subscription     $ 27,164          $ 31,661      $ 28,453      (14.2  %)   (4.5  %)
  Sales
  Subscription      (19,134 )        (15,364 )    (17,229 )   24.5   %    11.1  %
  Cancellations
    Net New
    Recurring      $ 8,030           $ 16,297      $ 11,224      (50.7  %)   (28.5 %)
    Subscription
    Sales
  Non-recurring    $ 3,878           $ 6,560       $ 5,099       (40.9  %)   (23.9 %)
  sales
                                                                             
  Employees          2,416             2,277         2,384       6.1    %    1.3   %
  % Employees by
  location
  Developed          56      %         62      %     58      %
  Market Centers
  Emerging           44      %         38      %     42      %
  Market Centers
                                                                             

^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.
^2 The asset-based fee run rate for third quarter 2012 includes the reduction
of $24.4 million in run rate associated with 22 Vanguard ETFs due to be
switched from MSCI indices.

Table 11: ETF Assets Linked to MSCI Indices^1 (unaudited)

                                                                                                  Nine Months
                            Three Months Ended 2011                      Three Months Ended 2012           Ended September
In Billions                 March    June       September  December   March    June       September   2011       2012
                                                                                                                     
Beginning Period AUM in
ETFs linked to MSCI         $ 333.3   $ 350.1     $ 360.5     $  290.1   $ 301.6   $ 354.7     $  327.4    $ 333.3     $ 301.6
Indices
Cash Inflow/ Outflow          6.7       14.2        (0.0  )      1.0       15.2      0.3          15.2       20.9        30.7
Appreciation/Depreciation    10.1    (3.8  )   (70.4 )    10.5     37.9    (27.6 )    21.1      (64.1 )   31.4
Period End AUM in ETFs      $ 350.1   $ 360.5     $ 290.1     $  301.6   $ 354.7   $ 327.4     $  363.7    $ 290.1     $ 363.7
linked to MSCI Indices
                                                                                                                       
Period Average AUM in
ETFs linked to MSCI         $ 337.6   $ 356.8     $ 329.1     $  305.0   $ 341.0   $ 331.6     $  344.7    $ 340.1     $ 339.2
Indices ^2
                                                                                                                         

^1 ETF assets under management calculation methodology is ETF net asset value
multiplied by shares outstanding. Source: Bloomberg and MSCI

^2 September 2012 period end assets under management includes $131 billion of
AUM in 22 Vanguard ETFs due to be switched from MSCI indices.


Table 12: Supplemental Operating Metrics

                                                                                                                                  
                     Recurring Subscription Sales & Subscription Cancellations
                     Three Months Ended 2011                                 Three Months Ended 2012                    Nine Months Ended
  In thousands        March        June         September    December       March        June          September      Sept. 2011    Sept. 2012
  New Recurring       $ 34,612      $ 30,298      $ 31,661      $ 35,444       $ 33,506      $ 28,453      $ 27,164       $ 96,571      $ 89,123
  Subscription Sales
  Subscription         (14,402 )    (14,965 )    (15,364 )    (27,245 )     (13,498 )    (17,229 )    (19,134 )     (44,731 )    (49,861 )
  Cancellations
  Net New Recurring   $ 20,210     $ 15,333     $ 16,297     $ 8,199       $ 20,008     $ 11,224     $ 8,030       $ 51,840     $ 39,262  
  Subscription Sales
                                                                                                                                        
  Non-recurring        13,647      8,415       6,560       7,460        9,338       5,099       3,878        28,622      18,315  
  sales
  Total Sales         $ 48,259     $ 38,713     $ 38,221     $ 42,904      $ 42,844     $ 33,552     $ 31,042      $ 125,193    $ 107,438 
                                                                                                                                        
                                                                                                                                        
                                                                                                                                        
                                               Aggregate Retention Rates
                      Three Months Ended 2011                                  Three Months Ended 2012                    Nine Months Ended
                    March         June          September     December       March         June          September      Sept. 2011    Sept. 2012
  Aggregate
  Retention Rate ^ 1
          Index and
          ESG           95.0    %     92.8    %     95.2    %     89.3    %      94.5    %     94.9    %     94.0    %      94.3    %     94.4    %
          products
          Risk
          management    94.2    %     92.2    %     92.1    %     80.8    %      93.9    %     90.0    %     88.5    %      92.6    %     90.7    %
          analytics
          Portfolio
          management    88.6    %     91.4    %     86.6    %     87.2    %      91.9    %     84.2    %     84.9    %      88.8    %     87.0    %
          analytics
          Energy &
          commodity     76.9    %     88.8    %     89.3    %     75.0    %      90.2    %     85.5    %     76.6    %      85.0    %     84.1    %
          analytics
                                                                                                                                        
  Total Performance     93.0    %     92.2    %     92.2    %     85.2    %      93.7    %     90.9    %     89.8    %      92.3    %     91.4    %
  and Risk
                                                                                                                                        
  Total Governance      85.0    %     90.4    %     86.2    %     80.6    %      88.7    %     92.1    %     91.1    %      87.2    %     90.7    %
                                                                                                                                
          Total
          Aggregate    91.8    %    91.9    %    91.3    %    84.5    %     93.0    %    91.0    %    90.0    %     91.6    %    91.3    %
          Retention
          Rate
                                                                                                                                        

^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.

Table 13: Reconciliation of Adjusted EBITDA to Net Income (unaudited)

                      Three Months Ended September 30, 2012   Three Months Ended September 30, 2011
                       Performance                              Performance
In thousands           and          Governance  Total         and          Governance  Total
                       Risk                                     Risk
Net Income                                      $ 48,274                               $ 49,787
Plus:   Provision for                               27,320                                   20,512
        income taxes
Plus:   Other expense                          7,935                              11,946  
        (income), net
Operating income       $ 80,472    $ 3,057    $ 83,529     $ 78,957    $ 3,288    $ 82,245  
        Non-recurring
Plus:   stock-based      572           54           626           1,246         44           1,290
        compensation
        Depreciation
Plus:   and              3,755         878          4,633         3,529         1,140        4,669
        amortization
        Amortization
Plus:   of intangible    12,638        3,321        15,959        13,072        3,350        16,422
        assets
Plus:   Lease exit       2,925         402          3,327         -             -            -
        charge
Plus:   Restructuring   -          -         -           (818    )   (184   )   (1,002  )
        costs
Adjusted EBITDA        $ 100,362   $ 7,712    $ 108,074    $ 95,986    $ 7,638    $ 103,624 
                                                                                           
                                                                                           
                                                                                           
                       Nine Months Ended September 30, 2012     Nine Months Ended September 30, 2011
                       Performance                              Performance
In thousands           and          Governance  Total         and          Governance  Total
                       Risk                                     Risk
Net Income                                        $ 129,786                                $ 128,968
Plus:   Provision for                               71,308                                   64,317
        income taxes
Plus:   Other expense                          50,535                             47,080  
        (income), net
Operating income       $ 243,927   $ 7,702    $ 251,629    $ 231,458   $ 8,907    $ 240,365 
        Non-recurring
Plus:   stock-based      1,269         131          1,400         6,432         343          6,775
        compensation
        Depreciation
Plus:   and              11,137        2,574        13,711        11,549        3,398        14,947
        amortization
        Amortization
Plus:   of intangible    37,916        9,961        47,877        39,487        10,050       49,537
        assets
Plus:   Lease exit       2,925         402          3,327         -             -            -
        charge
Plus:   Restructuring   (32     )   (19    )   (51     )    1,570      1,899     3,469   
        costs
Adjusted EBITDA        $ 297,142   $ 20,751   $ 317,893    $ 290,496   $ 24,597   $ 315,093 
                                                                                                     

Table 14: Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income
and EPS (unaudited)

                      Three Months Ended                     Nine Months Ended
                        September   September   June 30,      September    September
                        30,          30,                        30,           30,
In thousands            2012         2011         2012          2012          2011
Net Income              $ 48,274     $ 49,787     $ 37,546      $ 129,786     $ 128,968
        Non-recurring
Plus:   stock-based       626          1,290        192           1,400         6,775
        compensation
        Amortization
Plus:   of intangible     15,959       16,422       15,959        47,877        49,537
        assets
        Debt
Plus:   repayment and     -            -            20,639        20,639        6,404
        refinancing
        expenses
Plus:   Lease exit        3,327        -            -             3,327         -
        charge
Plus:   Restructuring     -            (1,002 )     (22     )     (51     )     3,469
        costs
Less:   Income tax        (7,280 )     (5,585 )     (12,775 )     (25,954 )     (23,450 )
        effect
                                                                          
Adjusted net income     $ 60,906    $ 60,912    $ 61,539     $ 177,024    $ 171,703 
                                                                              
Diluted EPS             $ 0.39       $ 0.40       $ 0.30        $ 1.05        $ 1.05
        Non-recurring
Plus:   stock-based     $ 0.01       $ 0.01       $ -           $ 0.01        $ 0.05
        compensation
        Amortization
Plus:   of intangible   $ 0.13       $ 0.13       $ 0.13        $ 0.39        $ 0.40
        assets
        Debt
Plus:   repayment and   $ -          $ -          $ 0.17        $ 0.17        $ 0.05
        refinancing
        expenses
Plus:   Lease exit      $ 0.03       $ -          $ -           $ 0.03        $ -
        charge
Plus:   Restructuring   $ -          $ (0.01  )   $ -           $ (0.00   )   $ 0.03
        costs
Less:   Income tax      $ (0.07  )   $ (0.04  )   $ (0.10   )   $ (0.22   )   $ (0.19   )
        effect
Adjusted EPS            $ 0.49      $ 0.49      $ 0.50       $ 1.43       $ 1.39    
                                                                                        

Contact:

MSCI Inc. Contact:
MSCI, New York
Edings Thibault, + 1.212.804.5273
or
For media inquiries please contact:
Abernathy MacGregor, New York
Patrick Clifford | Nick Connors, + 1.212.371.5999
or
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Sally Todd | Jennifer Spivey, + 44.20.3128.8100
 
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