MSCI Inc. Reports Fourth Quarter and Full Year 2013 Financial Results

  MSCI Inc. Reports Fourth Quarter and Full Year 2013 Financial Results

Business Wire

NEW YORK -- February 6, 2014

MSCI Inc. (NYSE:MSCI), a leading global provider of investment decision
support tools, including indexes, portfolio risk and performance analytics and
corporate governance services, today announced results for the fourth quarter
and full year ended December 31, 2013.

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

  *Operating revenues increased 8.3% to $267.6 million for fourth quarter
    2013 and 9.0% to $1.0 billion for full year 2013.
  *Net income declined 13.2% to $47.3 million for fourth quarter 2013. Net
    income for the quarter was negatively impacted by higher income tax
    expense and non-recurring expenses. For full year 2013, net income grew
    20.8% to $222.6 million.
  *Diluted EPS for fourth quarter 2013 declined 11.4% to $0.39. Full year
    2013 Diluted EPS increased 23.6% to $1.83.
  *Adjusted EBITDA^1 fell 2.2% to $114.0 million for fourth quarter 2013,
    reflecting a margin of 42.6%. For full year 2013, Adjusted EBITDA grew
    4.4% to $453.5 million, reflecting a margin of 43.8%.
  *Fourth quarter 2013 Adjusted EPS^2 declined 7.7% to $0.48. Full year 2013
    Adjusted EPS rose 11.3% to $2.16.
  *Run Rate grew 8.6% to $1.1 billion for fourth quarter 2013, driven by
    subscription growth of 6.2%. Asset-based fees grew 24.6%.
  *MSCI will enter into another $100 million accelerated share repurchase
    (“ASR”) agreement, which will complete the December 2012 $300 million
    buyback authorization. The Board of Directors also authorized the
    repurchase of an additional $300 million in shares.

Table 1: MSCI Inc. Selected Financial Information (unaudited)
                                                                          
             Three Months Ended          Change     Year Ended                    Change
                                         from                                     From
             December      December      December   December 31,    December      December
             31,           31,           31,                        31,           31,
In
thousands,   2013        2012       2012       2013            2012       2012
except per
share data
Operating    $ 267,622     $ 247,080     8.3   %    $ 1,035,667     $ 950,141     9.0   %
revenues
Operating      176,251       151,773     16.1  %      664,161         603,205     10.1  %
expenses
Net income     47,257        54,452      (13.2 %)     222,557         184,238     20.8  %
% Margin       17.7    %     22.0    %                21.5      %     19.4    %
Diluted      $ 0.39        $ 0.44        (11.4 %)   $ 1.83          $ 1.48        23.6  %
EPS
                                                                                  
Adjusted     $ 0.48        $ 0.52        (7.7  %)   $ 2.16          $ 1.94        11.3  %
EPS^2
Adjusted     $ 113,994     $ 116,567     (2.2  %)   $ 453,467       $ 434,460     4.4   %
EBITDA^1
% Margin       42.6    %     47.2    %                43.8      %     45.7    %

^1 Net Income before income taxes, other expense (income), net, non-recurring
stock-based compensation, depreciation, amortization, strategic review
expenses, the lease exit charge and restructuring costs. 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."
^2 Per share net income before after-tax impact of non-recurring stock-based
compensation, amortization of intangibles, debt repayment and refinancing
expenses, strategic review expenses, the lease exit charge and restructuring
costs. 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."


“MSCI’s Run Rate grew by 9% in the fourth quarter, an indication that our
efforts to broaden our ETF relationships, introduce new factor indexes,
enhance our risk measurement analytics and deepen our engagement with clients
around the world are having an impact on our operating results,” Henry A.
Fernandez, Chairman and CEO, said.

“Our success resulted in part from the investments in our sales, client
service, and product development teams that we made over the course of 2013 as
well as in years past. As the operating environment continues to improve, we
believe our clients’ need for MSCI’s investment decision support tools will
only increase. Weintend to make the investments necessary to stay ahead of
their increasing demands and are confident that our investment program
willput MSCIon track for additional growth,” he added.

“We have repurchased more than $200 million of MSCI shares since December of
2012 and announced another $100 million share repurchase program today. We
remain committed to returning excess capital to our shareholders,” Mr.
Fernandez concluded.

  Summary of Results for Fourth Quarter 2013 Compared to Fourth Quarter 2012

Operating Revenues – See Table 4

Operating revenues for the three months ended December 31, 2013 (“fourth
quarter 2013”) increased $20.5 million, or 8.3%, to $267.6 million compared to
$247.1 million for the three months ended December 31, 2012 (“fourth quarter
2012”). For the purposes of analyzing revenue trends, organic growth
percentages are calculated using comparable operating results. Accordingly,
organic growth percentages for the fourth quarter 2013 reflect the results of
IPD Group Limited (“IPD”), which was acquired on November 30, 2012, for the
months of December 2012 and December 2013, and exclude the results of Investor
Force Holdings, Inc. (“InvestorForce”), which was acquired on January 29,
2013, and the CFRA product line, which was sold on March 31, 2013. On an
organic basis, operating revenues grew by 5.9%.

Fourth quarter 2013 recurring subscription revenues rose $19.7 million, or
9.8%, to $221.7 million and rose 6.8% on an organic basis. Asset-based fees
increased $1.1 million, or 2.8%, to $39.2 million and non-recurring revenues
fell $0.2 million to $6.7 million.

Performance and Risk segment revenues rose $20.9 million, or 9.7%, to $236.9
million and rose 5.8% on an organic basis. The increase was primarily driven
by higher revenues from index and environmental, social and governance (“ESG”)
products and risk management analytics.

  *Index and ESG products: Index and ESG product revenues increased $15.6
    million, or 13.3%, to $133.0 million. Subscription revenues grew by $14.5
    million, or 18.3%, to $93.8 million, driven by growth in revenues from
    equity index benchmark products and the acquisition of IPD. On an organic
    basis, index and ESG subscription revenue growth was 10.9%.

    Revenues attributable to equity index asset-based fees rose $1.1 million,
    or 2.8%, to $39.2 million, largely as a result of higher revenues from
    non-ETF passive funds. In addition, a change in the mix of ETFs linked to
    MSCI indexes more than offset a decline of $55.1 billion, or 14.6%, in
    average assets under management (“AUM”) in ETFs linked to MSCI indexes.
    Excluding the $5.9 million in asset-based fees linked to certain Vanguard
    ETFs that transitioned during 2013, asset-based fees would have grown by
    21.4%.
  *Risk management analytics: Revenues related to risk management analytics
    products increased $8.7 million, or 13.0%, to $75.3 million. On an organic
    basis, revenues grew by 9.1%, driven by higher revenues from the
    RiskManager product, reflecting higher sales and the timing of client
    implementations, and higher revenues from hedge fund transparency
    products.
  *Portfolio management analytics: Revenues related to portfolio management
    analytics products declined $3.1 million, or 10.8%, to $25.5 million as a
    result of lower sales and elevated cancellations of equity analytics
    products in prior periods as well as lower fixed income analytics
    revenues.
  *Energy and commodity analytics: Revenues from energy and commodity
    analytics products were $3.1 million, a decline of $0.2 million, or 6.2%.

Governance segment revenues fell $0.4 million, or 1.2%, to $30.8 million for
fourth quarter 2013, as the loss of revenues resulting from the sale of the
CFRA product line more than offset organic growth. On an organic basis,
Governance segment revenues rose 7.1%, driven by higher revenues from
executive compensation data and analytics products and securities class action
services.

Operating Expenses – See Table 6

Total operating expenses rose $24.5 million, or 16.1%, to $176.3 million.

  *Compensation costs: Total compensation costs rose $14.1 million, or 15.1%,
    to $108.0 million for fourth quarter 2013, driven primarily by increased
    costs from the acquisitions of IPD and InvestorForce and increased hiring,
    partly offset by the sale of the CFRA product line.
  *Non-compensation costs excluding depreciation and amortization, the lease
    exit charge and strategic review expenses: Non-compensation costs rose
    $8.6 million, or 23.2%, to $45.7 million for fourth quarter 2013. The
    increase in non-compensation costs reflects the impact of the acquisitions
    of IPD and InvestorForce as well as increased recruiting, information
    technology, occupancy and travel expenses, among other items.
  *Depreciation and amortization: Amortization of intangible assets expense
    totaled $14.8 million for fourth quarter 2013, a decline of 4.3% compared
    to fourth quarter 2012, 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, equipment and leasehold
    improvements rose $1.1 million, or 21.1%, to $6.0 million.
  *Strategic review expenses: MSCI incurred $1.8 million of expenses as a
    result of the previously announced decision to explore strategic
    alternatives for its Governance segment.

Other Expense (Income), Net

Other expense (income), net for fourth quarter 2013 was $6.8 million, a
decline of $0.2 million from fourth quarter 2012. Fourth quarter 2013 expense
included $1.4 million of debt refinancing expenses related to the credit
facility extension. Excluding the impact of the debt refinancing expenses,
other expense (income), net declined $1.6 million, driven primarily by lower
interest rates and lower indebtedness.

Provision for Income Taxes

The provision for income tax expense was $37.3 million for fourth quarter
2013, up $3.4 million, or 10.2%, from fourth quarter 2012. MSCI increased its
fourth quarter 2013 tax expense to reflect a higher than anticipated full year
2013 tax rate. As a result, the effective tax rate for fourth quarter 2013 was
44.1% versus 38.3% a year ago.

Net Income and Earnings per Share – See Table 14

Net income fell $7.2 million, or 13.2%, to $47.3 million for fourth quarter
2013. The net income margin fell to 17.7% from 22.0% as a result of the lower
operating profit. Diluted EPS was $0.39, down $0.05, or 11.4%, as a 2.5%
decline in weighted average shares outstanding partially offset the impact of
lower net income. Adjusted net income, which excludes the after-tax impact of
non-recurring stock-based compensation, amortization of intangible assets,
debt repayment and refinancing expenses, strategic review expenses, and the
lease exit charge fell $6.5 million, or 10.2%, to $57.7 million. Adjusted EPS,
which excludes the after-tax, per diluted share impact of non-recurring
stock-based compensation, amortization of intangible assets, debt repayment
and refinancing expenses, strategic review expenses, the lease exit charge and
restructuring costs totaling $0.09, fell $0.04, or 7.7%, to $0.48.

See Table 14 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 13

Adjusted EBITDA, which excludes income taxes, other expense (income), net,
non-recurring stock-based compensation, depreciation, amortization, strategic
review expenses, the lease exit charge and restructuring costs was $114.0
million, down $2.6 million, or 2.2%, from fourth quarter 2012. The Adjusted
EBITDA margin declined to 42.6% from 47.2%.

By segment, Adjusted EBITDA for the Performance and Risk segment declined $3.2
million, or 3.0%, to $104.3 million for fourth quarter 2013. The Adjusted
EBITDA margin for this segment fell to 44.0% from 49.8% as a result of the
impact of acquisitions and rising expenses resulting from MSCI’s investment
programs. Adjusted EBITDA for the Governance segment increased $0.6 million,
or 7.0%, to $9.7 million and the Adjusted EBITDA margin rose to 31.5% from
29.1%.

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

           Summary of Results for Full Year Ended December 31, 2013
                Compared to Full Year Ended December 31, 2012

Operating Revenues – See Table 5

Total operating revenues for the full year ended December 31, 2013 (“full year
2013”) increased $85.5 million, or 9.0%, to $1,035.7 million compared to
$950.1 million for the full year ended December 31, 2012 (“full year 2012”).
Subscription revenues rose $76.4 million, or 9.7%, to $860.7 million, while
asset-based fees rose $8.6 million, or 6.1%, to $149.5 million. Non-recurring
revenues rose $0.5 million to $25.5 million. On an organic basis, total
operating revenues grew by 4.4%.

Performance and Risk segment revenues rose $86.4 million, or 10.4%, to $913.4
million for full year 2013, and by 4.2% on an organic basis. Index and ESG
products and risk management analytics revenues grew 16.9% and 7.3%,
respectively, for full year 2013, or organically by 7.3% and 3.9%,
respectively. Portfolio management analytics revenues fell 9.2%. Energy and
other commodity analytics revenues increased $3.3 million, or 36.6%, primarily
as a result of a $5.2 million non-cash cumulative revenue reduction to correct
an error that was recorded in first quarter 2012.

Governance segment revenues were $122.3 million, down slightly versus full
year 2012. On an organic basis, revenue grew by 5.6%.

Operating Expenses – See Table 7

Total operating expenses increased $61.0 million, or 10.1%, to $664.2 million
for full year 2013 compared to full year 2012 driven primarily by the
acquisitions of IPD and InvestorForce. The increase largely reflects increases
of $46.5 million, or 12.5%, in total compensation expenses and $15.9 million,
or 10.8%, in total non-compensation expenses.

Other Expense (Income), Net

Other expense (income), net for full year 2013 was $25.9 million, a decline of
$31.6 million, or 55.0%, from full year 2012. Excluding the impact of debt
refinancing expenses of $1.4 million for full year 2013 and $20.6 million for
full year 2012, other expense (income), net declined $12.4 million, or 33.6%
primarily as a result of a lower cost of debt as well as lower levels of
indebtedness.

Provision for Income Taxes

The provision for income tax expense was $123.1 million for full year 2013, up
$17.9 million, or 17.0%, from full year 2012. The effective tax rate was 35.6%
for full year 2013, versus 36.3% a year ago.

Net Income and Earnings per Share – See Table 14

Net income increased $38.3 million, or 20.8%, to $222.6 million and the net
income margin increased to 21.5% from 19.4%. Diluted EPS rose 23.6% to $1.83
from $1.48.

Adjusted net income, which excludes the after-tax impact of non-recurring
stock-based compensation expense, amortization of intangible assets, debt
repayment and refinancing expenses, strategic review expenses, the lease exit
charge and restructuring costs totaling $39.3 million, rose $20.7 million, or
8.6%, to $261.9 million. Adjusted EPS, which excludes the after-tax, per
diluted share impact of non-recurring stock-based compensation, amortization
of intangible assets, debt repayment and refinancing expenses, strategic
review expenses, the lease exit charge and restructuring costs totaling $0.33,
rose 11.3% to $2.16 for full year 2013.

See Table 14 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 13

Adjusted EBITDA was $453.5 million, an increase of $19.0 million, or 4.4%,
from full year 2012. Adjusted EBITDA margin fell to 43.8% from 45.7%.

By segment, Adjusted EBITDA for the Performance and Risk segment increased
$14.6 million, or 3.6%, to $419.3 million from full year 2012. Adjusted EBITDA
margin declined to 45.9% for full year 2013 from 48.9% for full year 2012.
Adjusted EBITDA for the Governance segment rose $4.4 million, or 14.7%, to
$34.2 million for full year 2013. The Adjusted EBITDA margin for the
Governance segment was 28.0%, up from 24.2% for full year 2012.

See Table 13 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 10, 11, 12

Total Run Rate grew by $83.0 million, or 8.6%, to $1,050.4 million as of
December 31, 2013 compared to December 31, 2012. Total subscription Run Rate
grew by $51.7 million, or 6.2%, to $892.1 million as of December 31, 2013
compared to December 31, 2012. On an organic basis, which includes IPD and
excludes InvestorForce and CFRA product line, total subscription Run Rate grew
by 6.1%. Changes in foreign currency rates had only a nominal impact on the
change in total Run Rate during the fourth quarter and versus the prior year.

Performance and Risk segment Run Rate grew by $84.7 million, or 10.0%, to
$934.9 million. On an organic basis, Performance and Risk Run Rate grew by
8.8%.

  *Index and ESG products: Index and ESG subscription Run Rate grew by $33.5
    million, or 9.9%, to $371.5 million, driven primarily by growth in equity
    index benchmark and data products.

    Run Rate attributable to asset-based fees rose $31.2 million, or 24.6%, to
    $158.3 million. The increase was primarily driven by inflows and higher
    market performance in ETFs linked to MSCI indexes. The fourth quarter 2012
    asset-based fee Run Rate excludes those Vanguard ETFs that later switched
    benchmarks.

    As of December 31, 2013, AUM in ETFs linked to MSCI indexes were $332.9
    billion, down $69.4 billion, or 17.3%, from December 31, 2012 but up $30.3
    billion, or 10.0%, from September 30, 2013. Of that $30.3 billion
    sequential increase, net inflows added an additional $19.4 billion and
    market gains accounted for $10.9 billion.

    If the AUM in those Vanguard ETFs which transitioned earlier in 2013 were
    excluded from the December 31, 2012 balance, AUM in MSCI-linked ETFs would
    have risen $69.1 billion, or 26.2%, compared to December 31, 2012.

  *Risk management analytics: Run Rate related to risk management analytics
    products increased $28.5 million, or 10.9%, to $290.7 million. On an
    organic basis, risk management analytics Run Rate grew by 6.9%. MSCI
    benefited from solid growth in Run Rate from RiskManager and BarraOne.
    Changes in foreign currency positively benefited Run Rate by $1.2 million
    versus fourth quarter 2012 and by $0.7 million versus third quarter 2013.
  *Portfolio management analytics: Run Rate related to portfolio management
    analytics products declined $6.7 million, or 6.1%, to $103.1 million.
    Year-over-year Run Rate was negatively impacted, in part, by product swaps
    totaling $1.1 million and by changes in foreign currency rates which
    lowered Run Rate by an additional $2.4 million. On a sequential basis,
    changes in foreign currency rates reduced portfolio management analytics
    Run Rate by $0.7 million.
  *Energy and commodity analytics: Run Rate from energy and commodity
    analytics products declined to $11.3 million, down $1.8 million, or 13.9%,
    from fourth quarter 2012.

Governance Run Rate declined by $1.8 million, or 1.5%, to $115.5 million. On
an organic basis, Run Rate grew by 6.6%, reflecting strong growth in the Run
Rate of executive compensation data and analytics products and services.

Accelerated Share Repurchase Agreements

During fourth quarter 2013, MSCI settled the $100.0 million ASR agreement it
had entered into on August 2, 2013, taking delivery of 0.5 million
shares.MSCI repurchased a total of 5.4 million shares under the two ASR
agreements into which it had previously entered.

MSCI will enter into a third ASR agreement with Morgan Stanley & Co. LLC
(“Morgan Stanley”).Under this new ASR agreement, MSCI will pay Morgan Stanley
$100.0 million in cash and receive an initial delivery of shares of its common
stock on February 7, 2014. Additional shares may be delivered to MSCI at or
prior to maturity of the ASR agreement, which MSCI anticipates will be no
later than May 2014. This ASR agreement will complete the $300 million buyback
program authorized by the Board of Directors in December 2012.

On February 4, 2014, MSCI’s Board of Directors authorized the repurchase of up
to $300.0 million of additional shares. The $300.0 million authorization will
be available for utilization from time to time at management’s discretion.

December 2013 Extension of Senior Credit Facility

During fourth quarter 2013, MSCI extended the maturity of its credit facility
to December 12, 2018 from May 4, 2017. MSCI also amended the amortization
schedule of required debt payments to significantly reduce the amount of
scheduled repayments prior to maturity.

Conference Call Information

Investors will have the opportunity to listen to MSCI Inc.’s senior management
review fourth quarter and full year 2013 results on Thursday, February 6, 2014
at 11:00 am Eastern Time. To listen to the live event, visit the investor
relations section of MSCI's website, http://ir.msci.com/events.cfm, or dial
1-877-312-9206 within the United States. International callers dial
1-408-774-4001.

An audio recording of the conference call will be available on our website
approximately two hours after the conclusion of the live event and will be
accessible through February 8, 2014. To listen to the recording, visit
http://ir.msci.com/events.cfm, or dial 1-855-859-2056 (passcode: 35536571)
within the United States. International callers dial 1-404-537-3406 (passcode:
35536571).

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 indexes, portfolio risk and
performance analytics, and governance tools.

MSCI’s flagship product offerings are: the MSCI indexes with approximately
$7.5 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, indexes 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 March 31, 2013, as published by eVestment, Lipper and Bloomberg on
July 31, 2013

For further information on MSCI, please visit our website at www.msci.com

Forward-Looking Statements

This earnings release may contain 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, and may also include
the risks and uncertainties associated with the process of evaluating
strategic alternatives, including whether any appropriate alternatives will be
identified and, if identified, whether any such alternative will result in a
consummated transaction. If any of these risks or uncertainties materialize,
or if our underlying assumptions prove to be incorrect, actual results may
vary significantly from what MSCI projected. Any forward-looking statement in
this release reflects MSCI’s current views with respect to future events and
is subject to these and other risks, uncertainties and assumptions relating to
MSCI’s operations, results of operations, growth strategy and liquidity. MSCI
assumes 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, except as required by law.

Website and Social Media Disclosure

MSCI uses its website and corporate Twitter account (@MSCI_Inc) as channels of
distribution of company information. The information we post through these
channels may be deemed material. Accordingly, investors should monitor these
channels, in addition to following our press releases, SEC filings and public
conference calls and webcasts. In addition, you may automatically receive
email alerts and other information about MSCI when you enroll your email
address by visiting the “Email Alert Subscription” section at
http://ir.msci.com/alerts.cfm?. The contents of MSCI’s website and social
media channels are not, however, incorporated by reference into this earnings
release.

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 expense (income), net, non-recurring stock-based compensation,
depreciation and amortization of property, equipment and leasehold
improvements, amortization of intangible assets, strategic review expenses,
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,
amortization of intangible assets, debt repayment and refinancing costs,
strategic review expenses, the lease exit charge and restructuring costs, as
well as for any related tax effects.

We believe that adjusting for strategic review expenses, the lease exit
charge, restructuring costs and debt repayment and refinancing expenses is
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. Condensed Consolidated Statements of Income (unaudited)
                                                                    
                 Three Months Ended                        Year Ended
                 December      December      September     December 31,    December
                 31,           31,           30,                           31,
In thousands,
except per       2013        2012        2013        2013          2012    
share data
                                                                           
Operating        $ 267,622     $ 247,080     $ 258,238     $ 1,035,667     $ 950,141
revenues
                                                                           
Operating
expenses
Cost of            84,727        74,191        80,040        328,311         288,075
services
Selling,
general and        70,722        57,172        65,380        255,345         233,183
administrative
Restructuring      -             -             -             -               (51     )
costs
Amortization
of intangible      14,760        15,421        14,448        58,203          63,298
assets
Depreciation
and
amortization
of property,      6,042       4,989       5,934       22,302        18,700  
equipment and
leasehold
improvements
Total
operating        $ 176,251    $ 151,773    $ 165,802    $ 664,161      $ 603,205 
expenses
                                                                           
Operating        $ 91,371      $ 95,307      $ 92,436      $ 371,506       $ 346,936
income
Operating          34.1    %     38.6    %     35.8    %     35.9      %     36.5    %
margin
                                                                           
Interest           (261    )     (242    )     (265    )     (1,031    )     (954    )
income
Interest           6,914         7,178         5,827         26,265          56,428
expense
Other expense     154         56          627         651           2,053   
(income)
Other expenses   $ 6,807      $ 6,992      $ 6,189      $ 25,885       $ 57,527  
(income), net
                                                                           
Income before      84,564        88,315        86,247        345,621         289,409
taxes
                                                                           
Provision for     37,307      33,863      30,937      123,064       105,171 
income taxes
Net income       $ 47,257     $ 54,452     $ 55,310     $ 222,557      $ 184,238 
Net income         17.7    %     22.0    %     21.4    %     21.5      %     19.4    %
margin
                                                                           
Earnings per
basic common     $ 0.40       $ 0.44       $ 0.46       $ 1.85         $ 1.50    
share
Earnings per
diluted common   $ 0.39       $ 0.44       $ 0.46       $ 1.83         $ 1.48    
share

Weighted
average shares
outstanding
used in
computing
earnings per
share
                                                                           
Basic             118,828     122,082     119,607     120,100       122,023 
Diluted           119,877     122,995     120,578     121,074       123,204 
                                                                                     

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

                               As of
                                   December 31,  September 30,  December 31,
In thousands                    2013          2013           2012
                                                                  
Cash and cash equivalents          $   358,434    $   283,750     $   183,309
Short-term investments                 -              -               70,898
Accounts receivable, net of            169,490        179,920         153,557
allowances
                                                                  
Deferred revenue                   $   319,735    $   334,094     $   308,022
Current maturities of                  19,772         54,130          43,093
long-term debt
Long-term debt, net of                 788,010        753,285         811,623
current maturities
                                                                      

Table 4: Quarterly Operating Revenues by Product Category and Revenue Type
(unaudited)
                                                               
                 Three Months Ended                       % Change from
                 December      December      September    December   September
                 31,           31,           30,          31,        30,
In thousands    2013          2012          2013         2012       2013
Index and ESG
products
Subscriptions    $  93,771     $  79,268     $  92,815    18.3  %    1.0   %
Asset-based        39,200       38,138       36,801    2.8   %    6.5   %
fees
Index and ESG       132,971       117,406       129,616   13.3  %    2.6   %
products total
Risk
management          75,314        66,654        69,666    13.0  %    8.1   %
analytics
Portfolio
management          25,513        28,606        26,213    (10.8 %)   (2.7  %)
analytics
Energy and
commodity          3,066        3,270        3,113     (6.2  %)   (1.5  %)
analytics
                                                                     
Total
Performance      $  236,864    $  215,936    $  228,608   9.7   %    3.6   %
and Risk
revenues
                                                                     
Total
Governance         30,758       31,144       29,630    (1.2  %)   3.8   %
revenues
                                                                     
Total
operating        $  267,622    $  247,080    $  258,238   8.3   %    3.6   %
revenues
                                                                     
Recurring        $  221,698    $  202,001    $  216,905   9.8   %    2.2   %
subscriptions
Asset-based         39,200        38,138        36,801    2.8   %    6.5   %
fees
Non-recurring      6,724        6,941        4,532     (3.1  %)   48.4  %
revenue
Total
operating        $  267,622    $  247,080    $  258,238   8.3   %    3.6   %
revenues
                                                                           

Table 5: Full Year Operating Revenues by Product Category and Revenue Type
(unaudited)
                                                            
                                   Year Ended                    % Change from
                                   December 31,  December 31,   December 31,
In thousands                     2013             2012       2012
Index and ESG products
Subscriptions                      $  366,674     $  300,630     22.0     %
Asset-based fees                     149,486       140,883    6.1      %
Index and ESG products total          516,160        441,513     16.9     %
Risk management analytics             279,353        260,276     7.3      %
Portfolio management analytics        105,461        116,133     (9.2     %)
Energy and commodity analytics
Recurring Energy and commodity        12,390         14,271      (13.2    %)
analytics
Correction^1                         -             (5,203  )   n/m
Net energy and commodity             12,390        9,068      36.6     %
analytics
                                                                 
Total Performance and Risk         $  913,364     $  826,990     10.4     %
revenues
                                                                 
Total Governance revenues            122,303       123,151    (0.7     %)
                                                                 
Total operating revenues           $  1,035,667   $  950,141    9.0      %
                                                                 
Recurring subscriptions            $  860,730     $  784,331     9.7      %
Asset-based fees                      149,486        140,883     6.1      %
Non-recurring revenue                25,451        24,927     2.1      %
Total operating revenues           $  1,035,667   $  950,141    9.0      %

n/m = not meaningful
^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
                    December      December    September   December   September
                    31,           31,         30,         31,        30,
In thousands        2013          2012        2013        2012       2013
Cost of services
Compensation        $  62,057     $ 55,982    $ 58,751    10.9  %    5.6    %
Non-recurring
stock based           -           255        -         n/m        n/m
compensation
Total               $  62,057     $ 56,237    $ 58,751    10.3  %    5.6    %
compensation
Non-compensation       22,670       17,735      21,289    27.8  %    6.5    %
Lease exit            -           219        -         n/m        n/m
charge^1
Total                 22,670      17,954     21,289    26.3  %    6.5    %
non-compensation
Total cost of       $  84,727     $ 74,191    $ 80,040    14.2  %    5.9    %
services
                                                                     
Selling, general
and
administrative
Compensation        $  45,904     $ 37,475    $ 44,495    22.5  %    3.2    %
Non-recurring
stock based           -           126        -         n/m        n/m
compensation
Total               $  45,904     $ 37,601    $ 44,495    22.1  %    3.2    %
compensation
Non-compensation       22,997       19,321      20,885    19.0  %    10.1   %
Strategic review       1,821        -           -         n/m        n/m
expenses^2
Lease exit            -           250        -         n/m        n/m
charge^1
Total                 24,818      19,571     20,885    26.8  %    18.8   %
non-compensation
Total selling,
general and         $  70,722     $ 57,172    $ 65,380    23.7  %    8.2    %
administrative
                                                                     
Restructuring          -            -           -         n/m        n/m
costs
Amortization of        14,760       15,421      14,448    (4.3  %)   2.2    %
intangible assets
Depreciation and
amortization of
property,             6,042       4,989      5,934     21.1  %    1.8    %
equipment and
leasehold
improvements
Total operating     $  176,251    $ 151,773   $ 165,802   16.1  %    6.3    %
expenses
                                                                     
                                                                
Compensation        $  107,961    $ 93,457    $ 103,246   15.5  %    4.6    %
Non-recurring
stock-based           -           381        -         n/m        n/m
compensation
Total               $  107,961    $ 93,838    $ 103,246   15.1  %    4.6    %
compensation
Non-compensation       45,667       37,056      42,174    23.2  %    8.3    %
expenses
Strategic review       1,821        -           -         n/m        n/m
expenses^2
Lease exit            -           469        -         n/m        n/m
charge^1
Total                 47,488      37,525     42,174    26.6  %    12.6   %
non-compensation
Restructuring          -            -           -         n/m        n/m
costs
Amortization of        14,760       15,421      14,448    (4.3  %)   2.2    %
intangible assets
Depreciation and
amortization of
property,             6,042       4,989      5,934     21.1  %    1.8    %
equipment and
leasehold
improvements
Total operating     $  176,251    $ 151,773   $ 165,802   16.1  %    6.3    %
expenses

n/m = not meaningful
^1 Fourth quarter 2012 included charges of $0.5 million, associated with an
occupancy lease exit charge resulting from the consolidation of MSCI's New
York offices.
^2 Fourth quarter 2013 included charges of $1.8 million associated with the
previously announced decision to explore strategic alternatives for MSCI's
Governance segment.


Table 7: Full Year Operating Expense Detail (unaudited)
                                                            
                                   Year Ended                    % Change from
                                   December 31,   December 31,   December 31,
In thousands                         2013         2012       2012
Cost of services
Compensation                       $  243,725     $  215,134     13.3     %
Non-recurring stock based            -            884        (100.0   %)
compensation
Total compensation                 $  243,725     $  216,018     12.8     %
Non-compensation                      84,729         70,314      20.5     %
Lease exit charge^1                  (143    )     1,743      n/m
Total non-compensation               84,586       72,057     17.4     %
Total cost of services             $  328,311     $  288,075     14.0     %
                                                                 
Selling, general and
administrative
Compensation                       $  175,945     $  156,288     12.6     %
Non-recurring stock based            -            897        (100.0   %)
compensation
Total compensation                 $  175,945     $  157,185     11.9     %
Non-compensation                      77,801         73,945      5.2      %
Strategic review expenses^2           1,821          -           n/m
Lease exit charge^1                  (222    )     2,053      n/m
Total non-compensation               79,400       75,998     4.5      %
Total selling, general and         $  255,345     $  233,183     9.5      %
administrative
                                                                 
Restructuring costs                   -              (51     )   (100.0   %)
Amortization of intangible            58,203         63,298      (8.0     %)
assets
Depreciation and amortization of
property,
equipment and leasehold              22,302       18,700     19.3     %
improvements
Total operating expenses           $  664,161    $  603,205    10.1     %
                                                                 
                                                             
Compensation                       $  419,670     $  371,422     13.0     %
Non-recurring stock-based            -            1,781      (100.0   %)
compensation
Total compensation                 $  419,670     $  373,203     12.5     %
Non-compensation expenses             162,530        144,259     12.7     %
Strategic review expenses^2           1,821          -           n/m
Lease exit charge^1                  (365    )     3,796      n/m
Total non-compensation               163,986      148,055    10.8     %
Restructuring costs                   -              (51     )   (100.0   %)
Amortization of intangible            58,203         63,298      (8.0     %)
assets
Depreciation and amortization of
property,
equipment and leasehold              22,302       18,700     19.3     %
improvements
Total operating expenses           $  664,161    $  603,205    10.1     %

n/m = not meaningful
^1 Years ended 2013 and 2012 included a benefit of $0.4 million and a charge
of $3.8 million, respectively, associated with an occupancy lease exit
resulting from the consolidation of MSCI's New York offices.
^2 Full year 2013 included charges of $1.8 million associated with the
previously announced decision to explore strategic alternatives for MSCI's
Governance segment.


Table 8: Summary Quarterly Segment Information (unaudited)
                                                              
                Three Months Ended                        % Change from
                December      December      September     December   September
                31,           31,           30,           31,        30,
In thousands     2013        2012        2013       2012      2013
                                                                     
Revenues:
Performance     $ 236,864     $ 215,936     $ 228,608     9.7   %    3.6    %
and Risk
Governance       30,758      31,144      29,630     (1.2  %)   3.8    %
Total
Operating       $ 267,622     $ 247,080     $ 258,238     8.3   %    3.6    %
revenues
                                                                     
Operating
Income:
Performance       88,055        90,620        88,172      (2.8  %)   (0.1   %)
and Risk
Margin            37.2    %     42.0    %     38.6    %
Governance        3,316         4,687         4,264       (29.3 %)   (22.2  %)
Margin            10.8    %     15.0    %     14.4    %
Total
Operating       $ 91,371      $ 95,307      $ 92,436      -4.1  %    (1.2   %)
Income
Margin            34.1    %     38.6    %     35.8    %
                                                                     
Adjusted
EBITDA:
Performance       104,298       107,502       104,210     (3.0  %)   0.1    %
and Risk
Margin            44.0    %     49.8    %     45.6    %
Governance        9,696         9,065         8,608       7.0   %    12.6   %
Margin            31.5    %     29.1    %     29.1    %
Total
Adjusted        $ 113,994     $ 116,567     $ 112,818     (2.2  %)   1.0    %
EBITDA
Margin            42.6    %     47.2    %     43.7    %
                                                                     

Table 9: Summary Full Year Segment Information (unaudited)
                                                       
                           Year Ended                     % Change from
                           December 31,   December 31,   December 31,
In thousands                2013           2012       2012
                                                          
Revenues:
Performance and Risk       $ 913,364       $  826,990     10.4    %
Governance                  122,303        123,151    (0.7    %)
Total Operating revenues   $ 1,035,667     $  950,141     9.0     %
                                                          
Operating Income:
Performance and Risk         356,500          334,547     6.6     %
Margin                       39.0      %      40.5    %
Governance                   15,006           12,389      21.1    %
Margin                       12.3      %      10.1    %
Total Operating Income     $ 371,506       $  346,936     7.1     %
Margin                       35.9      %      36.5    %
                                                          
Adjusted EBITDA:
Performance and Risk         419,278          404,644     3.6     %
Margin                       45.9      %      48.9    %
Governance                   34,189           29,816      14.7    %
Margin                       28.0      %      24.2    %
Total Adjusted EBITDA      $ 453,467       $  434,460     4.4     %
Margin                       43.8      %      45.7    %
                                                          

Table 10: Key Operating Metrics ^  (unaudited)
                                                                     
                As of                                         % Change from
                December 31,    December      September 30,   December     September
                                31,                           31,          30,
Dollars in       2013          2012       2013            2012         2013
thousands
                                                                           
Run Rates^1
Index and ESG
products
Subscription    $ 371,511       $ 338,006     $ 360,042       9.9     %    3.2   %
Asset-based      158,305       127,072     146,979      24.6    %    7.7   %
fees
Index and ESG
products          529,816         465,078       507,021       13.9    %    4.5   %
total
Risk
management        290,655         262,108       288,452       10.9    %    0.8   %
analytics
Portfolio
management        103,125         109,836       104,938       (6.1    %)   (1.7  %)
analytics
Energy and
commodity        11,302        13,128      12,493       (13.9   %)   (9.5  %)
analytics
Total
Performance       934,898         850,150       912,904       10.0    %    2.4   %
and Risk
                                                                           
Governance       115,482       117,261     112,911      (1.5    %)   2.3   %
Total Run       $ 1,050,380    $ 967,411    $ 1,025,815    8.6     %    2.4   %
Rate
                                                                           
Subscription    $ 892,075       $ 840,339     $ 878,836       6.2     %    1.5   %
total
Asset-based      158,305       127,072     146,979      24.6    %    7.7   %
fees total
Total Run       $ 1,050,380    $ 967,411    $ 1,025,815    8.6     %    2.4   %
Rate
                                                                           
New Recurring
Subscription    $ 36,145        $ 29,742      $ 30,157        21.5    %    19.9  %
Sales
Subscription     (23,756   )    (28,725 )    (16,458   )   (17.3   %)   44.3  %
Cancellations
Net New
Recurring       $ 12,389       $ 1,017      $ 13,699       1,118.2 %    (9.6  %)
Subscription
Sales
Non-recurring   $ 7,157        $ 7,443      $ 4,359        (3.8    %)   64.2  %
sales
                                                                           
Employees         3,261           2,759         3,123         18.2    %    4.4   %
% Employees
by location
Developed
Market            53        %     59      %     55        %
Centers
Emerging
Market            47        %     41      %     45        %
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 or
agreements assuming all contracts or agreements 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 December 31, 2012 Run Rate for
IPD products was approximated using the trailing 12 months of revenues
primarily adjusted for estimates for non-recurring sales, new sales and
cancellations. 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 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.


Table 11: ETF Assets Linked to MSCI Indexes^1 (unaudited)                                                                       
                                                                                                    
                            Three Months Ended 2012                      Three Months Ended 2013                        Year Ended
In Billions                 March    June       September  December   March      June       September  December   December  December
                                                                                                                        2012       2013
                                                                                                                                   
Beginning Period AUM in
ETFs linked to MSCI         $ 301.6   $ 354.7     $  327.4    $  363.7   $ 402.3     $ 357.3     $  269.7    $  302.6   $  301.6   $ 402.3
Indexes
Cash Inflow/Outflow^2         15.2      0.3          15.2        25.9      (61.0 )     (74.4 )      12.7        19.4       56.6      (103.3 )
Appreciation/Depreciation    37.9    (27.6 )    21.1      12.7     16.0     (13.2 )    20.2      10.9      44.1    33.9   
Period End AUM in ETFs      $ 354.7   $ 327.4     $  363.7    $  402.3   $ 357.3     $ 269.7     $  302.6    $  332.9   $  402.3   $ 332.9
linked to MSCI Indexes
                                                                                                                                   
Period Average AUM in
ETFs linked to MSCI         $ 341.0   $ 331.6     $  344.7    $  376.6   $ 369.0     $ 324.1     $  286.2    $  321.5   $  349.1   $ 325.0
Indexes

^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 and second quarter of 2013 includes the
migration of $82.8 billion of AUM in 9 Vanguard ETFs and $74.8 billion of AUM
in 13 Vanguard ETFs, respectively, that transitioned to other indexes during
each quarter.


Table 12: Supplemental Operating Metrics (unaudited)                                                                                        
                                                                                                                     
                Sales & Cancellations
                Three Months Ended 2012                                 Three Months Ended 2013                                 Year Ended
In thousands    March        June         September    December      March        June         September    December      December     December
                                                                                                                                2012          2013
New Recurring
Subscription    $ 33,506      $ 28,453      $ 27,164      $ 29,742      $ 30,928      $ 31,133      $ 30,157      $ 36,145      $ 118,865     $ 128,363
Sales
Subscription     (13,498 )   (17,229 )   (19,134 )   (28,725 )    (16,691 )   (16,082 )   (16,458 )   (23,756 )    (78,586 )    (72,987 )
Cancellations
Net New
Recurring       $ 20,008    $ 11,224    $ 8,030     $ 1,017      $ 14,237    $ 15,051    $ 13,699    $ 12,389     $ 40,279    $ 55,376  
Subscription
Sales
                                                                                                                                              
Non-recurring    9,338      5,099      3,878      7,443       8,935      6,664      4,359      7,157       25,758     27,115  
sales
Total Sales     $ 42,844    $ 33,552    $ 31,042    $ 37,185     $ 39,863    $ 37,797    $ 34,516    $ 43,302     $ 144,623   $ 155,478 
                                                                                                                                              
                                                                                                                                              
                Aggregate & Core Retention Rates
                Three Months Ended 2012                                 Three Months Ended 2013                                 Year Ended
              March        June         September    December      March        June         September    December      December     December
                                                                                                                                2012          2013
Aggregate
Retention
Rate^1
Index and ESG     94.5    %     94.9    %     94.0    %     90.4    %     95.0    %     94.0    %     94.7    %     90.7    %     93.4    %     93.6    %
products
Risk
management        93.9    %     90.0    %     88.5    %     84.4    %     93.5    %     92.5    %     92.3    %     87.2    %     89.0    %     91.4    %
analytics
Portfolio
management        91.9    %     84.2    %     84.9    %     78.0    %     81.7    %     87.0    %     89.1    %     88.9    %     84.7    %     86.7    %
analytics
Energy &
commodity         90.2    %     85.5    %     76.6    %     60.4    %     90.1    %     86.0    %     80.2    %     54.5    %     78.1    %     77.7    %
analytics
                                                                                                                                              
Total
Performance       93.7    %     90.9    %     89.8    %     85.2    %     92.4    %     92.3    %     92.7    %     88.5    %     89.8    %     91.5    %
and Risk
                                                                                                                                              
Total             88.7    %     92.1    %     91.1    %     83.6    %     90.0    %     92.9    %     88.5    %     90.1    %     88.9    %     90.4    %
Governance
                                                                                                                              
Total
Aggregate        93.0    %   91.0    %   90.0    %   84.9    %    92.1    %   92.3    %   92.2    %   88.7    %    89.7    %   91.3    %
Retention
Rate
                                                                                                                                              
Core
Retention
Rate^1
Index and ESG     94.6    %     95.0    %     94.0    %     90.5    %     95.0    %     94.1    %     94.8    %     90.9    %     93.5    %     93.7    %
products
Risk
management        94.0    %     92.0    %     89.3    %     84.4    %     93.9    %     93.1    %     92.3    %     87.3    %     89.8    %     91.6    %
analytics
Portfolio
management        92.2    %     87.0    %     86.5    %     83.6    %     82.8    %     87.5    %     90.3    %     90.1    %     87.3    %     87.7    %
analytics
Energy &
commodity         90.7    %     85.5    %     77.1    %     60.4    %     90.1    %     86.0    %     80.2    %     54.5    %     78.4    %     77.7    %
analytics
                                                                                                                                                
Total
Performance       93.8    %     92.2    %     90.5    %     86.2    %     92.7    %     92.6    %     92.9    %     88.8    %     90.6    %     91.8    %
and Risk
                                                                                                                                              
Total             88.7    %     92.2    %     91.2    %     83.8    %     90.2    %     92.9    %     88.5    %     90.1    %     89.0    %     90.4    %
Governance
                                                                                                                              
Total Core
Retention        93.1    %   92.2    %   90.6    %   85.9    %    92.4    %   92.6    %   92.4    %   89.0    %    90.4    %   91.6    %
Rate

^1 The 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 Rates
the same methodology is used except the amount of cancellations in the quarter
is reduced by the amount of product swaps.


Table 13: Reconciliation of Adjusted EBITDA to Net Income (unaudited)
                                                                                   
                      Three Months Ended December 31, 2013     Three Months Ended December 31, 2012
In thousands          Performance  Governance  Total         Performance  Governance  Total
                      and Risk                                 and Risk
Net Income                                       $ 47,257                                 $ 54,452
Plus: Provision for                                37,307                                   33,863
      income taxes
Plus: Other expense                           6,807                              6,992   
      (income), net
Operating income      $ 88,055    $ 3,316    $ 91,371     $ 90,620    $ 4,687    $ 95,307  
      Non-recurring
Plus: stock-based       -             -            -             342           39           381
      compensation
      Depreciation
Plus: and
      amortization
      of property,
      equipment and
      leasehold         5,025         1,017        6,042         4,028         961          4,989
      improvements
      Amortization
Plus: of intangible     11,218        3,542        14,760        12,101        3,320        15,421
      assets
      Strategic
Plus: review            -             1,821        1,821         -             -            -
      expenses
Plus: Lease exit        -             -            -             411           58           469
      charge
Plus: Restructuring    -          -         -           -          -         -       
      costs
Adjusted EBITDA       $ 104,298   $ 9,696    $ 113,994    $ 107,502   $ 9,065    $ 116,567 
                                                                                          
                                                                                          
                      Year Ended December 31, 2013             Year Ended December 31, 2012
In thousands          Performance  Governance  Total         Performance  Governance  Total
                      and Risk                                 and Risk
Net Income                                       $ 222,557                                $ 184,238
Plus: Provision for                                123,064                                  105,171
      income taxes
Plus: Other expense                           25,885                             57,527  
      (income), net
Operating income      $ 356,500   $ 15,006   $ 371,506    $ 334,547   $ 12,389   $ 346,936 
      Non-recurring
Plus: stock-based       -             -            -             1,611         170          1,781
      compensation
      Depreciation
Plus: and
      amortization
      of property,
      equipment and
      leasehold         18,288        4,014        22,302        15,165        3,535        18,700
      improvements
      Amortization
Plus: of intangible     44,798        13,405       58,203        50,017        13,281       63,298
      assets
      Strategic
Plus: review            -             1,821        1,821         -             -            -
      expenses
Plus: Lease exit        (308    )     (57    )     (365    )     3,336         460          3,796
      charge
Plus: Restructuring    -          -         -           (32     )   (19    )   (51     )
      costs
Adjusted EBITDA       $ 419,278   $ 34,189   $ 453,467    $ 404,644   $ 29,816   $ 434,460 
                                                                                                    

Table 14: Reconciliation of Adjusted Net Income and Adjusted EPS to Net Income and EPS
(unaudited)
                                                                     
                      Three Months Ended                     Year Ended
                      December     December     September    December      December
                      31,          31,          30,          31,           31,
In thousands,
except per share       2013       2012       2013       2013        2012    
data
Net Income            $ 47,257     $ 54,452     $ 55,310     $ 222,557     $ 184,238
      Non-recurring
Plus: stock-based       -            381          -            -             1,781
      compensation
      Amortization
Plus: of intangible     14,760       15,421       14,448       58,203        63,298
      assets
      Debt
Plus: repayment and     1,405        -            -            1,405         20,639
      refinancing
      expenses
      Strategic
Plus: review            1,821        -            -            1,821         -
      expenses
Plus: Lease exit        -            469          -            (365    )     3,796
      charge
Plus: Restructuring     -            -            -            -             (51     )
      costs
Less: Income tax        (7,591 )     (6,556 )     (5,172 )     (21,742 )     (32,510 )
      effect
                                                                       
Adjusted net income   $ 57,652    $ 64,167    $ 64,586    $ 261,879    $ 241,191 
                                                                           
Diluted EPS           $ 0.39       $ 0.44       $ 0.46       $ 1.83        $ 1.48
      Non-recurring
Plus: stock-based       -            -            -            -             0.01
      compensation
      Amortization
Plus: of intangible     0.12         0.12         0.12         0.48          0.51
      assets
      Debt
Plus: repayment and     0.01         -            -            0.01          0.17
      refinancing
      expenses
      Strategic
Plus: review            0.02         -            -            0.01          -
      expenses
Plus: Lease exit        -            -            -            -             0.03
      charge
Plus: Restructuring     -            -            -            -             -
      costs
Less: Income tax       (0.06  )    (0.04  )    (0.05  )    (0.17   )    (0.26   )
      effect
Adjusted EPS          $ 0.48      $ 0.52      $ 0.53      $ 2.16       $ 1.94    

Contact:

MSCI Inc.
W. Edings Thibault, MSCI, New York + 1.212.804.5273
or
Media Inquiries:
Jo Morgan, MSCI, London + 44.20.7618.2224
W. Edings Thibault, MSCI, New York + 1.212.804.5273
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