MSCI Inc. Reports First Quarter 2013 Financial Results

  MSCI Inc. Reports First Quarter 2013 Financial Results

Business Wire

NEW YORK -- May 01, 2013

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 first quarter
ended March 31, 2013.

(Note: Percentage changes are referenced to the comparable period in 2012,
unless otherwise noted.)

  *Operating revenues increased 10.0% to $251.9 million in first quarter 2013
    and 5.8% on an organic basis.^1
  *Net income increased 34.1% to $58.9 million in first quarter 2013.
  *Adjusted EBITDA^2 grew by 8.0% to $110.1 million in first quarter 2013 and
    first quarter 2013 Adjusted EBITDA margin decreased to 43.7% from 44.5%.
  *Diluted EPS for first quarter 2013 rose 37.1% to $0.48 and first quarter
    2013 Adjusted EPS^3 rose 29.5% to $0.57.
  *MSCI’s run rate grew by 6.9% to $982.3 million in first quarter 2013,
    including organic subscription growth of 3.3%.^1

“MSCI reported 10% revenue growth in first quarter 2013, driven by a 7%
increase in organic subscription revenue and aided by contributions from IPD
and InvestorForce. Our Adjusted EBITDA grew by 8% and our decisions in 2012 to
repay and refinance our debt and repurchase our shares helped lift Adjusted
EPS by 30%,” Henry A. Fernandez, Chairman and CEO, said.

“MSCI is focused on innovation as a means of driving growth and I am excited
by the breadth of new products that we are launching across our business. We
are also focused on deepening the links between our product lines and
mobilizing our product development and sales efforts to deliver the full value
of MSCI’s unique data, analytics and research to our worldwide client base,”
added Mr. Fernandez.

                                                      
Table 1: MSCI Inc. Selected Financial Information (unaudited)
                                                                   
                                   Three Months Ended              Change from
                                   March 31,       March 31,       March 31,
In thousands,
except per share                   2013            2012            2012
data
Operating revenues                 $ 251,909       $ 229,052       10.0    %
Operating expenses                 $ 161,382       $ 148,073       9.0     %
Net income                         $ 58,937        $ 43,966        34.1    %
% Margin                             23.4    %       19.2    %
Diluted EPS                        $ 0.48          $ 0.35          37.1    %
                                                                   
Adjusted EPS^3                     $ 0.57          $ 0.44          29.5    %
Adjusted EBITDA^2                  $ 110,093       $ 101,907       8.0     %
% Margin                             43.7    %       44.5    %
                                                                   

^1 For the purposes of calculating organic revenue growth, comparisons exclude
revenues from the acquisitions of IPD and InvestorForce. For the purposes of
calculating organic run rate growth, comparisons exclude the run rate from the
acquisitions of IPD and InvestorForce as well as the run rate of the CFRA
product line which was sold.
^2 Net Income before income taxes, other net expense and income, depreciation,
amortization, non-recurring stock-based compensation and restructuring costs.
See Table 10 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.”
^3 Per share net income before after-tax impact of amortization of
intangibles, non-recurring stock-based compensation, restructuring costs and
debt repayment and refinancing expenses. See Table 11 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.”


Summary of Results for First Quarter 2013 compared to First Quarter 2012

Operating Revenues – See Table 4

Total operating revenues for the three months ended March 31, 2013 (“first
quarter 2013”) increased $22.9 million, or 10.0%, to $251.9 million compared
to $229.1 million for the three months ended March 31, 2012 (“first quarter
2012”). For the purposes of analyzing revenue trends, organic growth
comparisons exclude the impact of the acquisitions of IPD Group Limited
(“IPD”) and Investor Force Holdings, Inc. (“InvestorForce”), acquired on
November 30, 2012 and January 29, 2013, respectively. On an organic basis,
operating revenues grew by 5.8%.

Total first quarter 2013 recurring subscription revenues rose $22.0 million,
or 11.8%, to $208.6 million and 6.9% on an organic basis. Asset-based fees
increased $1.9 million, or 5.5%, to $36.5 million and non-recurring revenues
fell $1.0 million to $6.8 million.

Performance and Risk segment revenues rose $21.4 million to $219.5 million, an
increase of 10.8% and 6.0% on an organic basis. The increase was primarily
driven by increases in index and environmental, social and governance (“ESG”)
products.

  *Index and ESG products: Index and ESG products revenues increased $15.2
    million, or 14.3%, to $121.4 million. Subscription revenues grew by $13.2
    million, or 18.5%, to $84.9 million, driven by growth in revenues of index
    benchmark products and the acquisition of IPD. On an organic basis, index
    and ESG subscription revenue growth was 7.4%.

    IPD contributed $8.0 million of revenues to first quarter 2013 index and
    ESG subscription revenues. IPD recognizes revenue based on the delivery of
    its products to clients. While the first quarter is expected to be the
    lowest quarter for revenues, the second quarter is expected to be the
    highest, reflecting when a substantial portion of its annual report
    product is delivered to clients.

    Revenues attributable to equity index asset-based fees rose $1.9 million,
    or 5.5%, to $36.5 million, largely as a result of higher assets under
    management in both ETFs and passive funds. Included in first quarter 2013
    were revenues of $2.5 million related to the22 Vanguard ETFs that have
    switched or will switch away from MSCI indices in 2013 (“the Vanguard
    ETFs”). The average assets under management (“AUM”) in ETFs linked to MSCI
    indices increased 8.2% to $369.0 billion from $341.0 billion in first
    quarter 2012.

  *Risk management analytics: Revenues related to risk management analytics
    products increased $3.2 million, or 5.0%, to $67.3 million. On an organic
    basis, revenues grew by 2.6%. The increase in organic risk management
    analytics revenues was driven primarily by higher revenues from our
    BarraOne and RiskManager products.
  *Portfolio management analytics: Revenues related to portfolio management
    analytics products declined $1.4 million, or 4.9%, to $27.6 million as a
    result of lower sales of equity analytics products.
  *Energy and commodity analytics: Revenues from energy and commodity
    analytics products were $3.1 million, up $4.4 million from first quarter
    2012. First quarter 2012 revenues were negatively impacted by a $5.2
    million correction resulting from an error in our revenue recognition for
    this product category. Excluding the impact of the correction, energy and
    commodity analytics revenues would have declined $0.8 million.

Governance segment revenues rose $1.5 million, or 4.8%, to $32.4 million in
first quarter 2013, driven by higher revenues from advisory compensation data
and analytics products and higher revenues from proxy research and
distribution services. Non-recurring governance revenues declined by $0.3
million to $3.5 million.

Operating Expenses – See Table 5

Total operating expenses rose $13.3 million, or 9.0%, to $161.4 million,
substantially driven by higher costs from recent acquisitions.

  *Compensation costs: Total compensation costs rose $14.2 million, or 15.3%,
    to $106.8 million in first quarter 2013. Excluding non-recurring
    stock-based compensation expense, total compensation costs rose $14.8
    million, or 16.0%. Compensation costs were impacted by the additions of
    IPD and InvestorForce and to a lesser extent an overall increase in
    compensation and benefits expense.
  *Non-compensation costs excluding depreciation and amortization and
    restructuring costs were essentially flat at $35.0 million in first
    quarter 2013. Higher non-compensation costs associated with IPD and
    InvestorForce were offset by lower expenses across many areas including
    professional fees, technology, market data and other expenses.
  *Depreciation and amortization: Amortization of intangibles expense totaled
    $14.5 million compared to $16.0 million in first quarter 2012, a decline
    of 9.2%, primarily due to certain intangibles becoming fully amortized
    since the prior period, partially offset by additional amortization
    related to the IPD and InvestorForce acquisitions. Depreciation and
    amortization of property, plant and equipment rose $0.7 million, or 15.0%,
    to $5.1 million.

Other Expense (Income), Net

Other expense (income), net for first quarter 2013 was $7.0 million, a decline
of $5.8 million from first quarter 2012. Interest expense fell by $5.3 million
to $7.0 million as a result of lower levels of indebtedness and lower interest
rates following our second quarter 2012 refinancing. A modest gain from the
sale of CFRA was offset by the impact of foreign currency translation expense.

Provision for Income Taxes

Income tax expense was $24.6 million in first quarter 2013, up 1.4% from first
quarter 2012. First quarter 2013 income tax expense benefited from discrete
items of $3.8 million primarily related to a reduction in state taxes and the
reinstatement of the 2012 research and development credit. The effective tax
rate was 29.5% in first quarter 2013, down from 35.6% in first quarter 2012.

Net Income and Earnings per Share – See Table 11

Net income rose $15.0 million, or 34.1%, to $58.9 million for first quarter
2013. The net income margin increased to 23.4% from 19.2% as a result of the
higher operating profit margin, lower interest costs and a lower effective tax
rate. Diluted EPS rose by $0.13, or 37.1%, to $0.48, driven by higher net
income and a 1.1% decline in the number of diluted shares.

Adjusted net income, which excludes the after-tax impact of amortization of
intangibles, non-recurring stock-based compensation expense and restructuring
costs, rose $14.6 million, or 26.6%, to $69.2 million. Adjusted EPS, which
excludes the after-tax, per share impact of amortization of intangibles,
non-recurring stock-based compensation expense and restructuring costs
totaling $0.09, rose $0.13, or 29.5%, to $0.57.

See Table 11 titled “Reconciliation of Adjusted Net Income and Adjusted EPS to
Net Income and EPS (unaudited)” and “Notes Regarding the Use of Non-GAAP
Financial Measures” below.

Adjusted EBITDA – See Table 10

Adjusted EBITDA, which excludes income taxes, other net expense and income,
depreciation, amortization, non-recurring stock-based compensation and
restructuring costs, was $110.1 million, up $8.2 million, or 8.0%, from first
quarter 2012. The Adjusted EBITDA margin declined to 43.7% from 44.5%.

By segment, Adjusted EBITDA for the Performance and Risk segment increased
$7.8 million, or 8.3%, to $102.0 million in first quarter 2013. The Adjusted
EBITDA margin for this segment fell to 46.5% from 47.5%. Adjusted EBITDA for
the Governance segment increased $0.4 million, or 5.4%, to $8.1 million and
the Adjusted EBITDA margin for this segment remained flat at 25.1%.

See Table 10 titled “Reconciliation of Adjusted EBITDA to Net Income
(unaudited)” and “Notes Regarding the Use of Non-GAAP Financial Measures”
below.

Key Operating Metrics – See Tables 7, 8, 9

Total run rate grew by $63.1 million, or 6.9%, to $982.3 million as of March
31, 2013 compared to March 31, 2012. For the purposes of analyzing changes in
run rate, organic growth comparisons exclude the impact of the acquisitions of
IPD and InvestorForce as well as the disposition of CFRA, which was sold on
March 31, 2013. On an organic basis, total subscription run rate grew by 3.3%.
Changes in foreign currency rates negatively impacted run rate by $7.5 million
relative to first quarter 2012 and by $6.2 million relative to fourth quarter
2012.

Performance and Risk segment run rate grew by $65.9 million, or 8.2%, to
$872.1 million. On an organic basis, Performance and Risk run rate grew by
2.1%.

  *Index and ESG products: Index and ESG subscription run rate grew by $65.7
    million, or 23.6%, to $344.3 million. On an organic basis, run rate grew
    by 9.5%, driven by growth in equity index benchmark products and ESG
    products.

    Run rate attributable to asset-based fees declined by $2.8 million, or
    2.0%, to $134.2 million. The decline was primarily driven by the impact of
    the Vanguard ETFs, partially offset by higher overall levels of AUM in
    ETFs linked to MSCI indices. Excluding the run rate attributable to the
    Vanguard ETFs at March 31, 2012, asset-based fee run rate grew by $19.9
    million, or 17.4%.

    As of March 31, 2013, AUM in ETFs linked to MSCI indices were $357.3
    billion, up $2.6 billion, or 0.7%, from March 31, 2012 and down $45.0
    billion, or 11.2%, from December 31, 2012. Excluding the Vanguard ETFs,
    AUM in MSCI-linked ETFs was $285.4 billion, up $52.4 billion, or 22.5%,
    from March 31, 2012 and up $21.6 billion, or 8.2%, from December 31, 2012.

    During first quarter 2013, MSCI-linked ETFs attracted a total of $21.8
    billion of net inflows, including $13.8 billion in those ETFs that are
    expected to continue to be linked to MSCI indices, and benefited from
    $16.0 billion of positive market performance, offset by the loss of $82.8
    billion in AUM associated with those Vanguard ETFs that transitioned away
    from MSCI indices during the quarter. For the past twelve months, total
    inflows to MSCI-linked ETFs were $63.2 billion, of which $22.8 billion
    were into the Vanguard ETFs and $40.4 billion into all other ETFs, offset
    by the loss of $82.8 billion in AUM discussed above. As of March 31, 2013,
    $71.9 billion of AUM in 13 Vanguard ETFs remained to be transitioned.

  *Risk management analytics: Run rate related to risk management analytics
    products increased $16.6 million, or 6.4%, to $274.5 million. On an
    organic basis, risk management analytics run rate grew by 2.7%. MSCI
    continued to benefit from strong growth in run rate associated with its
    HedgePlatform products and from growth in its BarraOne and RiskManager
    risk management and reporting systems.
  *Portfolio management analytics: Run rate related to portfolio management
    analytics products declined $11.7 million, or 9.9%, to $106.1 million.
    Year-over-year run rate was negatively impacted by product swaps totaling
    $3.3 million and by changes in foreign currency rates which lowered run
    rate by an additional $2.3 million. The impact of product swaps and
    foreign currency changes reduced first quarter 2013 run rate sequentially
    by $1.8 million.
  *Energy and commodity analytics: Run rate from energy and commodity
    analytics products declined to $13.0 million, down $1.9 million, or 12.7%,
    from first quarter 2012. The decline was driven, in part, by weakness in
    demand for natural gas option pricing models.

Governance run rate declined by $2.9 million, or 2.5%, to $110.2 million. On
an organic basis, which excludes CFRA in both periods, run rate grew by 5.3%,
reflecting strong growth in the revenues from our advisory compensation data
and analytics products, as well as gains in our proxy research and voting
products.

Acquisition of Investor Force Holdings, Inc.

On January 29, 2013, MSCI completed the previously announced acquisition of
InvestorForce for a purchase price of approximately $23.5 million, funded
through existing cash. InvestorForce is a leading provider of performance
reporting solutions to the institutional investment community in the United
States, providing investment consultants with an integrated solution for daily
monitoring, analysis and reporting on institutional assets. The acquisition is
not expected to have a material impact on MSCI’s results of operations in
fiscal year 2013.

Sale of CFRA

On March 31, 2013, MSCI completed the previously announced sale of its CFRA
product line, a leading provider of forensic accounting research, to a private
investor for an undisclosed purchase price. The sale is not expected to have a
material impact on MSCI’s results of operations.

Conference Call Information

Investors will have the opportunity to listen to MSCI Inc.'s senior management
review first quarter 2013 results on Wednesday, May 1, 2013 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 May 3, 2013. To listen to the recording, visit
http://ir.msci.com/events.cfm, or dial 1-855-859-2056 (passcode: 36281274)
within the United States. International callers dial 1-404-537-3406 (passcode:
36281274).

About MSCI

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; IPD real estate information, indices and analytics; MSCI ESG
(environmental, social and governance) Research screening, analysis and
ratings; 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 September 30, 2012, as published by eVestment, Lipper and Bloomberg in
December 2012

For further information on MSCI, please visit our web site at 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, 2012 filed with the Securities and
Exchange Commission (SEC) on March 1, 2013, 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 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, 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 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
                                    March 31,      March 31,      December 31,
In thousands, except per         2013           2012           2012
share data
                                                                  
Operating revenues                  $ 251,909      $ 229,052      $  247,080
                                                                  
Operating expenses
Cost of services                      80,185         72,291          74,191
Selling, general and                  61,631         55,436          57,172
administrative
Restructuring costs                   -              (29     )       -
Amortization of intangible            14,486         15,959          15,421
assets
Depreciation and amortization
of property,
equipment and leasehold              5,080        4,416         4,989   
improvements
Total operating expenses            $ 161,382     $ 148,073     $  151,773 
                                                                  
Operating income                    $ 90,527       $ 80,979       $  95,307
Operating margin                      35.9    %      35.4    %       38.6    %
                                                                  
Interest income                       (268    )      (223    )       (242    )
Interest expense                      7,020          12,355          7,178
Other expense (income)               224          608           56      
Other expenses (income), net        $ 6,976       $ 12,740      $  6,992   
                                                                  
Income before taxes                   83,551         68,239          88,315
                                                                  
Provision for income taxes           24,614       24,273        33,863  
Net income                          $ 58,937      $ 43,966      $  54,452  
Net income margin                     23.4    %      19.2    %       22.0    %
                                                                  
Earnings per basic common           $ 0.49        $ 0.36        $  0.44    
share
Earnings per diluted common         $ 0.48        $ 0.35        $  0.44    
share
                                                                  
Weighted average shares
outstanding used in computing
earnings per share
                                                                  
Basic                                120,746      121,754       122,082 
Diluted                              121,702      123,113       122,995 
                                                                  

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

                                           As of
                                                    March 31,   December 31,
In thousands                               2013        2012
Cash and cash equivalents                           $ 263,029     $   183,309
Short-term investments                                -               70,898
Trade receivables, net of                             166,915         153,557
allowances
                                                                  
Deferred revenue                                    $ 350,470     $   308,022
Current maturities of long-term                       43,106          43,093
debt
Long-term debt, net of current                        785,856         811,623
maturities
                                                                  

Table 4: Quarterly Operating Revenues by Product Category and Revenue Type
(unaudited)
                                                                
                  Three Months Ended                          % Change from
                  March 31,     March 31,       December      March        December
                                                31,           31,          31,
In thousands    2013          2012            2012          2012         2012
Index and ESG
products
Subscriptions     $ 84,888      $ 71,639        $ 79,268      18.5  %      7.1   %
Asset-based        36,515       34,609        38,138      5.5   %      (4.3  %)
fees
Index and ESG
products            121,403       106,248         117,406     14.3  %      3.4   %
total
Risk
management          67,274        64,077          66,654      5.0   %      0.9   %
analytics
Portfolio
management          27,646        29,063          28,606      (4.9  %)     (3.4  %)
analytics
Energy and
commodity
analytics
Recurring
Energy and          3,146         3,904           3,270       (19.4 %)     (3.8  %)
commodity
analytics
Correction^1       -            (5,203  )      -           n/m          n/m
Energy and
commodity          3,146        (1,299  )      3,270       n/m          (3.8  %)
analytics
                                                                           
Total
Performance       $ 219,469     $ 198,089       $ 215,936     10.8  %      1.6   %
and Risk
revenues
                                                                           
Total
Governance         32,440       30,963        31,144      4.8   %      4.2   %
revenues
                                                                           
Total
operating         $ 251,909     $ 229,052      $ 247,080     10.0  %      2.0   %
revenues
                                                                           
Recurring         $ 208,625     $ 186,636       $ 202,001     11.8  %      3.3   %
subscriptions
Asset-based         36,515        34,609          38,138      5.5   %      (4.3  %)
fees
Non-recurring      6,769        7,807         6,941       (13.3 %)     (2.5  %)
revenue
Total
operating         $ 251,909     $ 229,052      $ 247,080     10.0  %      2.0   %
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.
n/m = not meaningful

                                                                    
Table 5: Quarterly Operating Expense Detail (unaudited)

                     Three Months Ended                          % Change from
                     March 31,     March 31,       December      March 31,     December
                                                   31,                         31,
In thousands         2013          2012            2012          2012          2012
Cost of services
Compensation         $ 61,149      $ 53,549        $ 55,982      14.2   %      9.2    %
Non-recurring
stock based           -            268           255         (100.0 %)     (100.0 %)
compensation
Total                $ 61,149      $ 53,817        $ 56,237      13.6   %      8.7    %
compensation
Non-compensation       19,036        18,474          17,735      3.0    %      7.3    %
Lease exit            -            -             219         n/m           (100.0 %)
charge^1
Total                 19,036       18,474        17,954      3.0    %      6.0    %
non-compensation
Total cost of        $ 80,185      $ 72,291        $ 74,191      10.9   %      8.1    %
services
                                                                               
Selling, general
and
administrative
Compensation         $ 45,656      $ 38,492        $ 37,475      18.6   %      21.8   %
Non-recurring
stock based           -            314           126         (100.0 %)     (100.0 %)
compensation
Total                $ 45,656      $ 38,806        $ 37,601      17.7   %      21.4   %
compensation
Non-compensation       15,975        16,630          19,321      (3.9   %)     (17.3  %)
Lease exit            -            -             250         n/m           (100.0 %)
charge^1
Total                 15,975       16,630        19,571      (3.9   %)     (18.4  %)
non-compensation
Total selling,
general and          $ 61,631      $ 55,436        $ 57,172      11.2   %      7.8    %
administrative
                                                                               
Restructuring          -             (29     )       -           (100.0 %)     n/m
costs
Amortization of
intangible             14,486        15,959          15,421      (9.2   %)     (6.1   %)
assets
Depreciation and
amortization of
property,
equipment and
leasehold             5,080        4,416         4,989       15.0   %      1.8    %
improvements
Total operating      $ 161,382     $ 148,073      $ 151,773     9.0    %      6.3    %
expenses
                                                                               
                                                                          
Compensation         $ 106,805     $ 92,041        $ 93,457      16.0   %      14.3   %
Non-recurring
stock-based            -             582             381         (100.0 %)     (100.0 %)
compensation
Non-compensation       35,011        35,104          37,056      (0.3   %)     (5.5   %)
expenses
Lease exit             -             -               469         n/m           (100.0 %)
charge^1
Restructuring          -             (29     )       -           (100.0 %)     n/m
costs
Amortization of
intangible             14,486        15,959          15,421      (9.2   %)     (6.1   %)
assets
Depreciation and
amortization of
property,
equipment and
leasehold             5,080        4,416         4,989       15.0   %      1.8    %
improvements
Total operating      $ 161,382     $ 148,073      $ 151,773     9.0    %      6.3    %
expenses
                                                                               

^1Fourth quarter 2012 included a charge of $0.5 million associated with an
occupancy lease exit resulting from the consolidation of our New York offices.
n/m = not meaningful

                                                                    
Table 6: Summary Quarterly Segment Information (unaudited)
                                                                                   
                        Three Months Ended                              % Change from
                        March 31,       March 31,       December        March      December
                                                        31,             31,        31,
In                      2013            2012            2012            2012       2012
thousands
Revenues:
Performance             $ 219,469       $ 198,089       $ 215,936       10.8 %     1.6   %
and Risk
Governance               32,440        30,963        31,144       4.8  %     4.2   %
Total
Operating               $ 251,909       $ 229,052       $ 247,080       10.0 %     2.0   %
revenues
                                                                                   
Operating
Income:
Performance               86,699          77,475          90,620        11.9 %     (4.3  %)
and Risk
Margin                    39.5    %       39.1    %       42.0    %
Governance                3,828           3,504           4,687         9.2  %     (18.3 %)
Margin                    11.8    %       11.3    %       15.0    %
Total
Operating               $ 90,527        $ 80,979        $ 95,307        11.8 %     (5.0  %)
Income
Margin                    35.9    %       35.4    %       38.6    %
                                                                                   
Adjusted
EBITDA:
Performance               101,954         94,182          107,502       8.3  %     (5.2  %)
and Risk
Margin                    46.5    %       47.5    %       49.8    %
Governance                8,139           7,725           9,065         5.4  %     (10.2 %)
Margin                    25.1    %       24.9    %       29.1    %
Total
Adjusted                $ 110,093       $ 101,907       $ 116,567       8.0  %     (5.6  %)
EBITDA
Margin                    43.7    %       44.5    %       47.2    %
                                                                                   

                                                                      
Table 7: Key Operating Metrics^1 (unaudited)
                                                                                   
                      As of                                           % Change from
                      March 31,       March 31,       December        March        December
                                                      31,             31,          31,
Dollars in            2013            2012            2012            2012         2012
thousands
                                                                                   
Run Rates^1
Index and ESG
products
Subscription          $ 344,267       $ 278,541       $ 338,006       23.6  %      1.9     %
Asset-based            134,186       136,962       127,072      (2.0  %)     5.6     %
fees^2
Index and ESG
products                478,453         415,503         465,078       15.2  %      2.9     %
total
Risk
management              274,524         257,973         262,108       6.4   %      4.7     %
analytics
Portfolio
management              106,091         117,751         109,836       (9.9  %)     (3.4    %)
analytics
Energy and
commodity              13,030        14,926        13,128       (12.7 %)     (0.7    %)
analytics
Total
Performance             872,098         806,153         850,150       8.2   %      2.6     %
and Risk
                                                                                   
Governance             110,174       113,054       117,261      (2.5  %)     (6.0    %)
Total Run             $ 982,272      $ 919,207      $ 967,411      6.9   %      1.5     %
Rate
                                                                                   
Subscription          $ 848,086       $ 782,245       $ 840,339       8.4   %      0.9     %
total
Asset-based            134,186       136,962       127,072      (2.0  %)     5.6     %
fees total^2
Total Run             $ 982,272      $ 919,207      $ 967,411      6.9   %      1.5     %
Rate
                                                                                   
New Recurring
Subscription          $ 30,928        $ 33,506        $ 29,742        (7.7  %)     4.0     %
Sales
Subscription           (16,691 )      (13,498 )      (28,725 )     23.7  %      (41.9   %)
Cancellations
Net New
Recurring             $ 14,237       $ 20,008       $ 1,017        (28.8 %)     1,299.9 %
Subscription
Sales
Non-recurring         $ 8,935        $ 9,338        $ 7,443        (4.3  %)     20.0    %
sales
                                                                                   
Employees               2,844           2,465           2,759         15.4  %      3.1     %
% Employees
by location
Developed
Market                  59      %       60      %       59      %
Centers
Emerging
Market                  41      %       40      %       41      %
Centers
                                                                                   

^1 The Run Rate at a particular point in time represents the forward-looking
revenues 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 currency exchange rates. For any license where 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. The Run Rate for IPD Group Limited was approximated using
the trailing 12 months of revenues primarily adjusted for estimates for
non-recurring sales, new sales and cancellations.
^2 The asset-based fee Run Rate as of December 2012 and March 2013 excludes
all Run Rate associated with the 22 Vanguard ETFs which have been switched or
will be switched in 2013 from MSCI indices.

                                                                                   
Table 8: ETF Assets Linked to MSCI Indices^1 (unaudited)
                                                                                                
                                                                                   Year         Three
                              Three Months Ended 2012                              Ended        Months
                                                                                                Ended
In Billions                   March     June        September   December     December     March
                                                                                   2012         2013
                                                                                                
Beginning Period AUM in
ETFs linked to MSCI           $ 301.6     $ 354.7       $  327.4      $  363.7     $  301.6     $ 402.3
Indices
Cash Inflow/Outflow^2           15.2        0.3            15.2          25.9         56.6        (61.0 )
Appreciation/Depreciation      37.9     (27.6 )     21.1       12.7        44.1       16.0  
Period End AUM in ETFs        $ 354.7     $ 327.4       $  363.7      $  402.3     $  402.3     $ 357.3
linked to MSCI Indices
Period Average AUM in
ETFs linked to MSCI           $ 341.0     $ 331.6       $  344.7      $  376.6     $  349.1     $ 369.0
Indices

^1 ETF assets under management calculation methodology is ETF net asset value
multiplied by shares outstanding. Source: Bloomberg and MSCI
^2 Cash Inflow/Outflow for the first quarter of 2013 includes the migration of
$82.8 billion of AUM in 9 Vanguard ETFs that transitioned to other indices
during the quarter.

                                                                                       
Table 9: Supplemental Operating Metrics (unaudited)
                                                                                                      
Sales & Cancellations
                                                                                                      Three
                      Three Months Ended 2012                                         Year Ended      Months
                                                                                                      Ended
In thousands          March         June          September     December        December        March 2013
                                                                                      2012
New Recurring
Subscription          $ 33,506        $ 28,453        $ 27,164        $ 29,742        $ 118,865       $ 30,928
Sales
Subscription           (13,498 )    (17,229 )    (19,134 )    (28,725 )      (78,586 )      (16,691 )
Cancellations
Net New
Recurring             $ 20,008     $ 11,224     $ 8,030      $ 1,017        $ 40,279       $ 14,237  
Subscription
Sales
                                                                                                      
Non-recurring          9,338       5,099       3,878       7,443         25,758        8,935   
sales
Total Sales           $ 42,844     $ 33,552     $ 31,042     $ 37,185       $ 144,623      $ 39,863  
                                                                                                      
                                                                                                      
Aggregate & Core Retention Rates
                                                                                                      Three
                      Three Months Ended 2012                                         Year Ended      Months
                                                                                                      Ended
                     March         June          September     December        December        March 2013
                                                                                      2012
Aggregate
Retention
Rate ^ 1
Index and ESG           94.5    %       94.9    %       94.0    %       90.4    %       93.4    %       95.0    %
products
Risk
management              93.9    %       90.0    %       88.5    %       84.4    %       89.0    %       93.5    %
analytics
Portfolio
management              91.9    %       84.2    %       84.9    %       78.0    %       84.7    %       81.7    %
analytics
Energy &
commodity               90.2    %       85.5    %       76.6    %       60.4    %       78.1    %       90.1    %
analytics
                                                                                                      
Total
Performance             93.7    %       90.9    %       89.8    %       85.2    %       89.8    %       92.4    %
and Risk
                                                                                                      
Total                  88.7    %    92.1    %    91.1    %    83.6    %      88.9    %    90.0    %
Governance
Total
Aggregate              93.0    %    91.0    %    90.0    %    84.9    %      89.7    %      92.1    %
Retention
Rate
                                                                                                      
Core
Retention
Rate ^1
Index and ESG           94.6    %       95.0    %       94.0    %       90.5    %       93.5    %       95.0    %
products
Risk
management              94.0    %       92.0    %       89.3    %       84.4    %       89.8    %       93.9    %
analytics
Portfolio
management              92.2    %       87.0    %       86.5    %       83.6    %       87.3    %       82.8    %
analytics
Energy &
commodity               90.7    %       85.5    %       77.1    %       60.4    %       78.4    %       90.1    %
analytics
                                                                                                      
Total
Performance             93.8    %       92.2    %       90.5    %       86.2    %       90.6    %       92.7    %
and Risk
                                                                                                      
Total                  88.7    %    92.2    %    91.2    %    83.8    %      89.0    %      90.2    %
Governance
Total Core
Retention              93.1    %    92.2    %    90.6    %    85.9    %      90.4    %      92.4    %
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. 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 10: Reconciliation of Adjusted EBITDA to Net Income (unaudited)
                                                                                                            
                                Three Months Ended March 31, 2013            Three Months Ended March 31, 2012
                                Performance                                  Performance
In thousands                    and Risk      Governance   Total         and Risk      Governance   Total
Net Income                                                     $ 58,937                                     $ 43,966
Plus:         Provision for                                      24,614                                       24,273
              income taxes
Plus:         Other expense                               6,976                                 12,740  
              (income), net
Operating income                $  86,699     $   3,828    $ 90,527      $  77,475    $  3,504    $ 80,979  
              Non-recurring
Plus:         stock-based          -                -            -              522             60            582
              compensation
              Depreciation
Plus:         and
              amortization
              of property,
              equipment and
              leasehold            4,089            991          5,080          3,565           851           4,416
              improvements
              Amortization
Plus:         of intangible        11,166           3,320        14,486         12,639          3,320         15,959
              assets
Plus:         Restructuring       -             -         -             (19    )     (10   )    (29     )
              costs
Adjusted EBITDA                 $  101,954    $   8,139    $ 110,093     $  94,182    $  7,725    $ 101,907 
                                                                                                            

                                                         
Table 11: Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income
and EPS (unaudited)
                                                                  
                                    Three Months Ended
                                    March 31,      March 31,      December 31,
In thousands, except per share      2013           2012           2012
data
Net Income                          $ 58,937       $ 43,966       $  54,452
             Non-recurring
Plus:        stock-based              -              582             381
             compensation
Plus:        Amortization of          14,486         15,959          15,421
             intangible assets
Plus:        Lease exit charge        -              -               469
Plus:        Restructuring            -              (29    )        -
             costs
Less:        Income tax effect       (4,268 )      (5,873 )       (6,556  )
Adjusted net income                 $ 69,155      $ 54,605      $  64,167  
                                                                  
Diluted EPS                         $ 0.48         $ 0.35         $  0.44
             Non-recurring
Plus:        stock-based            $ -            $ 0.01         $  -
             compensation
Plus:        Amortization of        $ 0.12         $ 0.13         $  0.12
             intangible assets
Plus:        Lease exit charge      $ -            $ -            $  -
Plus:        Restructuring          $ -            $ -            $  -
             costs
Less:        Income tax effect      $ (0.03  )     $ (0.05  )     $  (0.04   )
Adjusted EPS                        $ 0.57        $ 0.44        $  0.52    
                                                                  

Contact:

MSCI Inc.
MSCI, New York
W. Edings Thibault, + 1-212-804-5273
or
Media Inquiries:
MSCI, London
Jo Morgan, +44.20.7618.2224
or
MSCI, New York
Kristin Meza, +1-212-804-5330
or
MHP Communications, London
Sally Todd | Christian Pickel, + 44.20.3128.8100
 
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