MSCI Inc. Reports First Quarter 2014 Financial Results

  MSCI Inc. Reports First Quarter 2014 Financial Results

Business Wire

NEW YORK -- April 30, 2014

MSCI Inc. (NYSE:MSCI), a leading global provider of investment decision
support tools, including indexes and portfolio risk and performance analytics
products and services, today announced results for the first quarter ended
March 31, 2014. Due to the announced sale of Institutional Shareholder
Services Inc. (“ISS”), results of the former Governance business are now
reflected as discontinued operations in the financial statements of MSCI in
the current quarter and for prior periods. The operating metrics for prior
periods have also been updated to exclude the Governance business.

(Note: Percentage changes are referenced to the comparable period in 2013,
unless otherwise noted.)

  *Operating revenues increased 9.2% to $239.7 million for first quarter
    2014.
  *Income from continuing operations declined 11.0% to $47.1 million for
    first quarter 2014. Diluted EPS from continuing operations for first
    quarter 2014 declined 7.0% to $0.40.
  *Adjusted EBITDA^1 fell 2.1% to $96.6 million for first quarter 2014.
    Adjusted EPS^2 decreased 8.0% to $0.46 for first quarter 2014, reflecting
    only the results of continuing operations.
  *Net income rose 36.4% to $80.4 million for first quarter 2014. Net income
    included an income tax benefit of $30.6 million related to our decision to
    sell ISS. Diluted EPS for first quarter 2014 was $0.68.
  *Run Rate ^  grew 9.5% to $955.3 million for first quarter 2014, driven by
    subscription growth of 7.5% and asset-based fee growth of 20.6%.
  *MSCI repurchased a total of 1.7 million shares as part of the February
    2014 $100 million accelerated share repurchase program.


Table 1: MSCI Inc. Selected Financial Information (unaudited)
                                                               
                                                                   
                                       Three Months Ended          Change from
                                       March 31,     March 31,     March 31,
In thousands, except per share data    2014          2013          2013
Operating revenues                     $ 239,688     $ 219,469     9.2     %
Operating expenses                       160,183       136,578     17.3    %
Income from continuing operations        47,146        52,958      (11.0   %)
% Margin from continuing operations      19.7    %     24.1    %
Net Income                               80,399        58,937      36.4    %
                                                                   
Diluted EPS from continuing            $ 0.40        $ 0.43        (7.0    %)
operations
Diluted EPS                            $ 0.68        $ 0.48        41.7    %
                                                                   
Adjusted EPS^2                         $ 0.46        $ 0.50        (8.0    %)
Adjusted EBITDA^1                      $ 96,603      $ 98,654      (2.1    %)
% Margin                                 40.3    %     45.0    %
                                                                   


^1 Net Income before income from discontinued operations, net of income taxes,
provision for income taxes, other expense (income), net, depreciation and
amortization. See Table 9 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 income from discontinued operations, net of
income taxes, and the after-tax impact of amortization of intangible assets.
See Table 10 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 had a strong start to 2014. Our Run Rate grew by 9.5% in the first
quarter, driven by the investments we have been making and a modest
improvement in our operating environment,” Henry A. Fernandez, Chairman and
CEO, said.

“With the sale of ISS, MSCI will be even more focused on providing
mission-critical tools that shed light on the performance and risk of our
clients’ portfolios across all major asset classes,” he added. “We believe the
role that our tools play in our clients’ investment process will only become
more important as the investment industry continues to evolve. In order to
maximize that importance, we are making targeted investments in our product
development, sales and marketing, and client service functions. While these
investments are reducing our margins in 2014, we expect that they will lead to
further acceleration in our revenue growth over the next several years,” Mr.
Fernandez concluded.

   Summary of Results for First Quarter 2014 Compared to First Quarter 2013

Operating Revenues – See Table 4

Operating revenues for the three months ended March 31, 2014 (“first quarter
2014”) increased $20.2 million, or 9.2%, to $239.7 million compared to $219.5
million for the three months ended March 31, 2013 (“first quarter 2013”).
First quarter 2014 recurring subscription revenues rose $15.3 million, or
8.5%, to $195.0 million, asset-based fees increased $4.4 million, or 12.0%, to
$40.9 million and non-recurring revenues rose $0.5 million to $3.8 million.

  *Index and ESG products: Index and ESG product revenues increased $16.8
    million, or 13.9%, to $138.2 million. Subscription revenues grew by $12.5
    million, or 14.7%, to $97.3 million, driven by growth in revenues from
    equity index benchmark products. Revenues also benefited from the timing
    of revenue recognition related to IPD products, which contributed to an
    increase in revenues of $5.2 million relative to first quarter 2013.

    Revenues attributable to equity index asset-based fees rose $4.4 million,
    or 12.0%, to $40.9 million driven by an increase in licensing revenues
    from non-ETF passive funds and ETFs linked to MSCI indexes. A change in
    the mix of ETFs linked to MSCI indexes more than offset a decline of $38.2
    billion, or 10.4%, in average assets under management (“AUM”) in ETFs
    linked to MSCI indexes. Excluding the $2.5 million in asset-based fees
    linked to certain Vanguard ETFs that transitioned during first quarter
    2013, asset-based fees would have grown by 20.3%.

  *Risk management analytics: Revenues related to risk management analytics
    products, which now include revenues previously reported separately as
    energy and commodity analytics products, increased $5.2 million, or 7.3%,
    to $75.6 million, driven by higher revenues from the RiskManager and
    BarraOne products. Results also benefited from one additional month of
    revenues from InvestorForce totaling $0.9 million, which was acquired on
    January 29, 2013.
  *Portfolio management analytics: Revenues related to portfolio management
    analytics products declined $1.8 million, or 6.4%, to $25.9 million as a
    result of lower sales of equity analytics products in prior periods as
    well as lower fixed income analytics revenues.

Operating Expenses – See Table 5

Total operating expenses from continuing operations rose $23.6 million, or
17.3%, to $160.2 million from first quarter 2013 reflecting increases in
product development, sales and marketing, client service and corporate
infrastructure.

  *Compensation costs: Total compensation costs rose $12.7 million, or 14.1%,
    to $102.4 million for first quarter 2014, driven by an increase in overall
    headcount of 17.5%. Employees located in emerging market centers represent
    47.1% of the workforce, up from 40.4% at the end of first quarter 2013.
  *Non-compensation costs excluding depreciation and amortization:
    Non-compensation costs rose $9.6 million, or 30.9%, to $40.7 million for
    first quarter 2014 reflecting increases in professional services,
    information technology, occupancy, market data fees, marketing and
    recruiting costs, among other items.
  *Depreciation and amortization: Amortization of intangible assets totaled
    $11.3 million for first quarter 2014, an increase of 0.9% compared to
    first quarter 2013. Depreciation and amortization of property, equipment
    and leasehold improvements rose $1.2 million, or 26.8%, to $5.8 million,
    primarily reflecting higher depreciation associated with investments in
    our information technology infrastructure.

Other Expense (Income), Net

Other expense (income), net for first quarter 2014 was $6.0 million, a decline
of $2.7 million from first quarter 2013, driven primarily by lower interest
expense associated with lower interest rates and indebtedness.

Provision for Income Taxes

The provision for income taxes was $26.4 million for first quarter 2014, up
$5.2 million, or 24.3%, from first quarter 2013. The effective tax rate for
first quarter 2014 was 35.9% versus 28.6% a year ago. First quarter 2013
income tax expense benefited from discrete items of $3.9 million, which were
primarily related to a reduction in state taxes and the reinstatement of the
2012 research and development credit. In addition, the current period reflects
a higher rate largely associated with the impact of the research and
development credit, which has not been renewed in 2014.

Income and Earnings per Share from Continuing Operations – See Table 10

Income from continuing operations fell $5.8 million, or 11.0%, to $47.1
million for first quarter 2014. Diluted EPS from continuing operations was
$0.40, down $0.03, or 7.0%, as a 2.6% decline in weighted average shares
outstanding partially offset the impact of lower income. Adjusted Net Income,
which excludes the after-tax impact of discontinued operations and
amortization of intangible assets, fell $6.6 million, or 10.8%, to $54.4
million. Adjusted EPS, which excludes the after-tax, per diluted share impact
of discontinued operations and the amortization of intangible assets, fell
$0.04, or 8.0%, to $0.46.

See Table 10 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 9

Adjusted EBITDA, which excludes income from discontinued operations, net of
income taxes, provision for income taxes, other expense (income), net,
depreciation and amortization was $96.6 million, down $2.1 million, or 2.1%,
from first quarter 2013. The Adjusted EBITDA margin declined to 40.3% from
45.0%.

See Table 9 titled “Reconciliation of Adjusted EBITDA to Net Income
(unaudited)” and “Notes Regarding the Use of Non-GAAP Financial Measures”
below.

Sale of ISS and Discontinued Operations

On March 18, 2014, MSCI announced that it entered into a definitive agreement
to sell ISS to Vestar Capital Partners for cash consideration of $364.0
million, subject to working capital adjustments. The ISS business, previously
referred to as the Governance segment but excluding the impact of stranded
allocated costs, is reflected as discontinued operations in MSCI’s financial
statements. Prior periods have been updated to reflect this categorization.
Income from discontinued operations, net of income taxes, was $33.3 million
for first quarter 2014. This compares with income from discontinued
operations, net of income taxes of $6.0 million for first quarter 2013. First
quarter 2014 income included an income tax benefit of $30.6 million associated
with the creation of a net deferred tax asset on the difference between MSCI’s
tax and book basis in ISS. That tax asset is expected to be realized in the
second quarter of 2014 upon the closing of the sale. MSCI does not expect to
incur a cash tax liability on the proceeds from the sale.

Net Income and Earnings per Share

Net income was $80.4 million for first quarter 2014, up 36.4% from $58.9
million from first quarter 2013. Diluted EPS was $0.68 for first quarter, up
from $0.48 from first quarter 2013. The increase was driven by the income tax
benefit associated with discontinued operations as previously discussed.

Share Repurchase Activity

MSCI entered into a third ASR agreement with Morgan Stanley & Co. LLC (“Morgan
Stanley”) on February 6, 2014.Under this ASR agreement, MSCI paid Morgan
Stanley $100.0 million in cash and received a delivery of 1.7 million 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 in May 2014.

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.

Key Operating Metrics – See Tables 6, 7, 8

Total Run Rate grew by $83.2 million, or 9.5%, to $955.3 million as of March
31, 2014 compared to March 31, 2013. Total subscription Run Rate grew by $55.5
million, or 7.5%, to $793.4 million as of March 31, 2014 compared to March 31,
2013. Changes in foreign currency rates had only a nominal impact on the
change in total Run Rate during first quarter 2014 and increased Run Rate by
$5.5 million versus March 31, 2013.

  *Index and ESG products: Index and ESG subscription Run Rate grew by $38.1
    million, or 11.1%, to $382.4 million, driven primarily by growth in equity
    index benchmark and data products aided by strong growth in IPD and ESG
    products.

    Run Rate attributable to asset-based fees rose $27.7 million, or 20.6%, to
    $161.9 million. The increase was primarily driven by inflows and higher
    market performance in ETFs linked to MSCI indexes. The first quarter 2013
    asset-based fee Run Rate excludes those Vanguard ETFs that later switched
    benchmarks.

    As of March 31, 2014, AUM in ETFs linked to MSCI indexes were $340.8
    billion, down $16.5 billion, or 4.6%, from March 31, 2013 but up $7.9
    billion, or 2.4%, from December 31, 2013. Of that $7.9 billion sequential
    increase, net inflows added $6.6 billion and market gains accounted for
    $1.3 billion.

    If the AUM in those Vanguard ETFs which transitioned earlier in 2013 were
    excluded from the March 31, 2013 balance, AUM in MSCI-linked ETFs would
    have risen $55.4 billion, or 19.4%, compared to March 31, 2013.

  *Risk management analytics: Risk management analytics Run Rate now includes
    Run Rate previously reported separately as energy and commodity analytics
    products. Risk management analytics Run Rate increased $19.9 million, or
    6.9%, to $307.5 million, driven by strong growth from RiskManager
    products. Changes in foreign currency positively benefited Run Rate by
    $3.5 million versus first quarter 2013 and by $0.1 million versus fourth
    quarter 2013.
  *Portfolio management analytics: Run Rate related to portfolio management
    analytics products declined $2.6 million, or 2.4%, to $103.5 million.
    Relative to fourth quarter 2013, portfolio management analytics Run Rate
    increased slightly, as an increase in retention rates more than offset the
    impact of lower sales.

Conference Call Information

Investors will have the opportunity to listen to MSCI Inc.’s senior management
review first quarter and full year 2014 results on Wednesday, April 30, 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 May 2, 2014. To listen to the recording, visit
http://ir.msci.com/events.cfm, or dial 1-800-585-8367 (passcode: 31423282)
within the United States. International callers dial 1-404-537-3406 (passcode:
31423282).

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.

For equity investors, MSCI’s flagship performance and risk tools include: the
MSCI indexes with approximately $8 trillion estimated to be benchmarked to
them on a worldwide basis^1; Barra factor models, portfolio risk and
performance analytics; and ESG (environmental, social and governance) Research
screening, analysis and ratings. MSCI is also a leading provider of
multi-asset class risk management tools including RiskMetrics multi-asset
class market and credit risk analytics; Barra multi-asset class factor models,
portfolio risk and performance analytics. MSCI also provides IPD real estate
information, indexes and analytics for investors in and managers of commercial
real estate. MSCI also offers 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, 2013, as reported on January 31, 2014 by eVestment,
Lipper and Bloomberg

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, 2013 filed with the Securities and
Exchange Commission (“SEC”) on February 28, 2014, 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 a failure to consummate or
a delay in the consummation of the proposed ISS transaction, including as a
result of a failure to satisfy the conditions to closing in a timely manner or
at all. 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 income from discontinued
operations, net of income taxes, provision for income taxes, other expense
(income), net, depreciation and amortization.

Adjusted Net Income and Adjusted EPS are defined as net income and EPS,
respectively, before income from discontinued operations, net of income taxes,
and the after-tax impact of the provision for amortization of intangible
assets and debt repayment and refinancing costs.

We believe that adjusting for 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 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 of a portion of their operating expenses
represented by these items. Finally, we believe that adjusting for
discontinued operations, net of income tax, provides investors with a
meaningful trend of results for our continuing operations. 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 share data   2014          2013          2013
                                                                  
Operating revenues                    $ 239,688     $ 219,469     $  236,864
Operating expenses
Cost of services                        75,427        65,300         72,254
Selling, general and administrative     67,658        55,515         64,175
Amortization of intangible assets       11,270        11,166         11,218
Depreciation and amortization of
property,
equipment and leasehold                5,828       4,597        5,569   
improvements
Total operating expenses              $ 160,183    $ 136,578    $  153,216 
                                                                  
Operating income                      $ 79,505      $ 82,891      $  83,648
Operating margin                        33.2    %     37.8    %      35.3    %
                                                                  
Interest income                         (156    )     (237    )      (239    )
Interest expense                        5,059         7,016          6,914
Other expense (income)                 1,071       1,922        (20     )
Other expenses (income), net          $ 5,974      $ 8,701      $  6,655   
                                                                  
Income from continuing operations       73,531        74,190         76,993
before provision for income taxes
                                                                  
Provision for income taxes             26,385      21,232       36,120  
Income from continuing operations     $ 47,146     $ 52,958     $  40,873  
Income from continuing operations       19.7    %     24.1    %      17.3    %
margin
                                                                  
Income from discontinued              $ 33,253      $ 5,979       $  6,384
operations, net of income taxes
                                                                
Net Income                            $ 80,399     $ 58,937     $  47,257  
                                                                  
Earnings per basic common share
from:
Continuing operations                 $ 0.40        $ 0.44        $  0.34
Discontinued operations                0.28        0.05         0.06    
Earnings per basic common share       $ 0.68       $ 0.49       $  0.40    
                                                                  
Earnings per diluted common share
from:
Continuing operations                 $ 0.40        $ 0.43        $  0.34
Discontinued operations                0.28        0.05         0.05    
Earnings per diluted common share     $ 0.68       $ 0.48       $  0.39    
                                                                  
Weighted average shares outstanding
used
in computing earnings per share
                                                                  
Basic                                  117,582     120,746      118,828 
Diluted                                118,597     121,702      119,877 
                                                                  


Table 3: MSCI Inc. Selected Balance Sheet Items (unaudited)
                                         As of
                                          March 31,  December 31,  March 31,
In thousands                              2014        2013           2013
                                                                     
Cash and cash equivalents                 $ 260,450   $   358,434    $ 263,029
Accounts receivable, net of allowances      191,905       169,490      166,915
                                                                     
Deferred revenue                          $ 314,247   $   319,735    $ 350,470
Current maturities of long-term debt        19,775        19,772       43,106
Long-term debt, net of current              783,065       788,010      785,856
maturities
                                                                     


Table 4: Quarterly Operating Revenues by Product Category and Revenue Type
(unaudited)
                                                               
                   Three Months Ended                    % Change from
                   March 31,   March 31,   December      March 31,   December
                                           31,                       31,
In thousands       2014        2013        2013          2013        2013
Index and ESG
products
Subscriptions      $ 97,343    $ 84,888    $  93,771     14.7  %     3.8   %
Asset-based fees    40,900     36,515      39,200     12.0  %     4.3   %
Index and ESG        138,243     121,403      132,971    13.9  %     4.0   %
products total
Risk management      75,580      70,420       78,380     7.3   %     (3.6  %)
analytics
Portfolio
management           25,865      27,646       25,513     (6.4  %)    1.4   %
analytics
                                         
Total operating    $ 239,688   $ 219,469   $  236,864    9.2   %     1.2   %
revenues
                                                                     
Recurring          $ 194,972   $ 179,663   $  193,430    8.5   %     0.8   %
subscriptions
Asset-based fees     40,900      36,515       39,200     12.0  %     4.3   %
Non-recurring        3,816       3,291        4,234      16.0  %     (9.9  %)
revenue
                                         
Total operating    $ 239,688   $ 219,469   $  236,864    9.2   %     1.2   %
revenues
                                                                     


Table 5: Quarterly Operating Expense Detail (unaudited)
                                                                
                     Three Months Ended                    % Change from
                     March 31,   March 31,   December      March      December
                                             31,           31,        31,
In thousands         2014        2013        2013          2013       2013
Cost of services
Compensation         $ 56,282    $ 49,404    $  52,146     13.9  %    7.9   %
Non-compensation      19,145     15,896      20,108     20.4  %    (4.8  %)
Total cost of        $ 75,427    $ 65,300    $  72,254     15.5  %    4.4   %
services
                                                                      
Selling, general
and administrative
Compensation         $ 46,133    $ 40,350    $  41,824     14.3  %    10.3  %
Non-compensation      21,525     15,165      22,351     41.9  %    (3.7  %)
Total selling,
general and          $ 67,658    $ 55,515    $  64,175     21.9  %    5.4   %
administrative
                                                                      
Amortization of        11,270      11,166       11,218     0.9   %    0.5   %
intangible assets
Depreciation and
amortization of
property,
equipment and
leasehold             5,828      4,597       5,569      26.8  %    4.7   %
improvements
Total operating      $ 160,183   $ 136,578   $  153,216    17.3  %    4.5   %
expenses
                                                                      
                                                                      
Compensation         $ 102,415   $ 89,754    $  93,970     14.1  %    9.0   %
Non-compensation       40,670      31,061       42,459     30.9  %    (4.2  %)
expenses
Amortization of        11,270      11,166       11,218     0.9   %    0.5   %
intangible assets
Depreciation and
amortization of
property,
equipment and
leasehold             5,828      4,597       5,569      26.8  %    4.7   %
improvements
Total operation      $ 160,183   $ 136,578   $  153,216    17.3  %    4.5   %
expenses
                                                                      


Table 6: Key Operating Metrics ^  (unaudited)^1
                                                                
                                                                      
                                                                      
                 As of                                      % Change from
                 March 31,     March 31,     December 31,   March     December
                                                            31,       31,
Dollars in       2014          2013          2013           2013      2013
thousands
                                                                      
Run Rates^2
Index and ESG
products
Subscription     $ 382,383     $ 344,267     $  371,511     11.1 %    2.9   %
Asset-based       161,882     134,186      158,305    20.6 %    2.3   %
fees
Index and ESG      544,265       478,453        529,816     13.8 %    2.7   %
products total
Risk
management         307,460       287,554        301,957     6.9  %    1.8   %
analytics
Portfolio
management        103,531     106,091      103,125    (2.4 %)   0.4   %
analytics
Total              955,256       872,098        934,898     9.5  %    2.2   %
                                                                      
                                                                      
Subscription     $ 793,374     $ 737,912     $  776,593     7.5  %    2.2   %
total
Asset-based       161,882     134,186      158,305    20.6 %    2.3   %
fees total
Total Run Rate   $ 955,256    $ 872,098    $  934,898    9.5  %    2.2   %
                                                                      
New Recurring
Subscription     $ 30,422      $ 25,676      $  31,082      18.5 %    (2.1  %)
Sales
Subscription      (13,978 )    (13,995 )     (21,077 )   (0.1 %)   (33.7 %)
Cancellations
Net New
Recurring        $ 16,444     $ 11,681     $  10,005     40.8 %    64.4  %
Subscription
Sales
Non-recurring    $ 4,798      $ 5,117      $  4,107      (6.2 %)   16.8  %
sales
                                                                      
Employees          2,623         2,233          2,580       17.5 %    1.7   %
% Employees by
location
Developed          53      %     60      %      54      %
Market Centers
Emerging           47      %     40      %      46      %
Market Centers
                                                                      


^1 Operating metrics have been updated for previous periods to solely reflect
continuing operations.
^2 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 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 7: ETF Assets Linked to MSCI Indexes^1 (unaudited)
                                                                                 
                                                                                        Three
                            Three Months Ended 2013                        Year Ended   Months
                                                                                        Ended
In Billions                 March      June       September  December   December     March
                                                                           2013         2014
                                                                                        
Beginning Period AUM in
ETFs linked to MSCI         $ 402.3     $ 357.3     $  269.7    $  302.6   $ 402.3      $ 332.9
Indexes
Cash Inflow/Outflow^2         (61.0 )     (74.4 )      12.7        19.4      (103.3 )     6.6
Appreciation/Depreciation    16.0     (13.2 )    20.2      10.9     33.9       1.3
Period End AUM in ETFs
linked to                   $ 357.3     $ 269.7     $  302.6    $  332.9   $ 332.9      $ 340.8
MSCI Indexes
                                                                                        
Period Average AUM in
ETFs linked to              $ 369.0     $ 324.1     $  286.2    $  321.5   $ 325.0      $ 330.8
MSCI 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 8: Supplemental Operating Metrics (unaudited)
                                                                               
                                                                                      
                Sales & Cancellations
                                                                                      Three
                Three Months Ended 2013                                 Year Ended    Months
                                                                                      Ended
In thousands    March        June         September    December      December      March 2014
                                                                        2013
New Recurring
Subscription    $ 25,676      $ 27,526      $ 26,697      $ 31,082      $ 110,981     $ 30,422
Sales
Subscription     (13,995 )   (14,154 )   (13,345 )   (21,077 )    (62,571 )    (13,978 )
Cancellations
Net New
Recurring       $ 11,681    $ 13,372    $ 13,352    $ 10,005     $ 48,410     $ 16,444  
Subscription
Sales
                                                                                      
Non-recurring    5,117      5,714      2,970      4,107       17,908      4,798   
sales
Total Sales     $ 30,793    $ 33,240    $ 29,667    $ 35,189     $ 128,889    $ 35,220  
                                                                                      
                                                                                      
                Aggregate & Core Retention Rates
                                                                                      Three
                Three Months Ended 2013                                 Year Ended    Months
                                                                                      Ended
               March        June         September    December      December      March 2014
                                                                        2013
Aggregate
Retention
Rate^1
Index and ESG     95.0    %     94.0    %     94.7    %     90.7    %     93.6    %     94.9    %
products
Risk
management        93.4    %     92.2    %     91.7    %     85.7    %     90.8    %     91.0    %
analytics
Portfolio
management        81.7    %     87.0    %     89.1    %     88.9    %     86.7    %     90.6    %
analytics
                                                                              
Total
Aggregate        92.4    %   92.3    %   92.7    %   88.5    %    91.5    %    92.8    %
Retention
Rate
                                                                                      
Core
Retention
Rate^1
Index and ESG     95.0    %     94.1    %     94.8    %     90.9    %     93.7    %     94.9    %
products
Risk
management        93.7    %     92.8    %     91.7    %     85.8    %     91.0    %     91.0    %
analytics
Portfolio
management        82.8    %     87.5    %     90.3    %     90.1    %     87.7    %     93.4    %
analytics
                                                                            
Total Core
Retention        92.7    %   92.6    %   92.9    %   88.8    %    91.8    %    93.2    %
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 9: Reconciliation of Adjusted EBITDA to Net Income (unaudited)
                                                                  
                                                                  
                                       Three Months Ended
In thousands                           March 31,     March 31,    December 31,
                                       2014          2013         2013
Net Income                             $ 80,399      $ 58,937     $  47,257
                                                                  
Less: Income from discontinued         $ (33,253 )   $ (5,979 )   $  (6,384  )
operations, net of income taxes
                                                                  
Income from continuing operations      $ 47,146      $ 52,958     $  40,873
                                                                  
Plus: Provision for income taxes         26,385        21,232        36,120
Plus: Other expense (income), net       5,974       8,701       6,655   
Operating income                       $ 79,505     $ 82,891    $  83,648  
Plus: Depreciation and amortization
of property,
equipment and leasehold improvements     5,828         4,597         5,569
Plus: Amortization of intangible        11,270      11,166      11,218  
assets
Adjusted EBITDA                        $ 96,603     $ 98,654    $  100,435 
                                                                  


Table 10: 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 data    2014          2013         2013
Net Income                             $ 80,399      $ 58,937     $  47,257
                                                                  
Less: Income from discontinued         $ (33,253 )   $ (5,979 )   $  (6,384  )
operations, net of income taxes
                                                                  
Income from continuing operations      $ 47,146      $ 52,958     $  40,873
Plus: Amortization of intangible         11,270        11,166        11,218
assets
Plus: Debt repayment and refinancing     -             -             1,405
expenses
Less: Income tax effect                  (4,044  )     (3,196 )      (5,732  )
                                                                
Adjusted net income                    $ 54,372     $ 60,928    $  47,764  
                                                                  
Diluted EPS                            $ 0.68        $ 0.48       $  0.39
                                                                  
Less: Earnings per diluted common       (0.28   )    (0.05  )     (0.05   )
share from discontinued operations
                                                                  
Earnings per diluted common share        0.40          0.43          0.34
from continuing operations
Plus: Amortization of intangible         0.09          0.09          0.09
assets
Plus: Debt repayment and refinancing     -             -             0.01
expenses
Less: Income tax effect                 (0.03   )    (0.02  )     (0.04   )
Adjusted EPS                           $ 0.46       $ 0.50      $  0.40    
                                                                  

Contact:

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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