msci-10q_20200930.htm

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 20, 2020, there were 82,895,040 shares of the registrant’s common stock, par value $0.01, outstanding.

MSCI Inc.’s website is www.msci.com. You can access MSCI Inc.’s Investor Relations homepage at http://ir.msci.com. MSCI Inc. makes available free of charge, on or through its Investor Relations homepage, its proxy statements, Annual Reports on Form 10‑K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. MSCI Inc. also makes available, through its Investor Relations homepage, via a link to the SEC’s website, statements of beneficial ownership of MSCI Inc.’s equity securities filed by its directors, officers, 5% or greater shareholders and others under Section 16 of the Exchange Act.

You can access information about MSCI Inc.’s corporate governance at http://ir.msci.com/corporate-governance, including copies of the following:

MSCI Inc.’s Code of Ethics and Business Conduct applies to all directors, officers and employees, including its Chief Executive Officer and its Chief Financial Officer. MSCI Inc. will post any amendments to the Code of Ethics and Business Conduct and any waivers that are required to be disclosed by the rules of either the SEC or the New York Stock Exchange LLC on its website. You can request a copy of these documents, excluding exhibits, at no cost, by contacting Investor Relations, MSCI Inc., 7 World Trade Center, 250 Greenwich Street, 49th Floor, New York, NY 10007; (212) 804-5306. The information on MSCI Inc.’s website is not incorporated by reference into this report or any other report filed or furnished by us with the SEC.

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking 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 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 MSCI’s 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 the 2019 Annual Report on Form 10-K filed with the SEC on February 18, 2020 and in quarterly reports on Form 10-Q and current reports on Form 8-K filed or furnished with the SEC. If any of these risks or uncertainties materialize, or if MSCI’s underlying assumptions prove to be incorrect, actual results may vary significantly from what MSCI projected. Any forward-looking statement in this report 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.

MSCI Inc. uses its website, including its quarterly updates, blog, podcasts and social media channels, including its corporate Twitter account (@MSCI_Inc) as channels of distribution of company information. The information MSCI Inc. posts through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following MSCI Inc.’s press releases, quarterly SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about MSCI Inc. when you enroll your email address by visiting the “Email Alerts Subscription” section of its Investor Relations homepage at http://ir.msci.com/email-alerts. The contents of MSCI Inc.’s website, including its quarterly updates, blog, podcasts and social media channels are not, however, incorporated by reference into this report or any other report filed or furnished by us with the SEC.

	As of
	September 30,			December 31,
	2020			2019
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,302,858		$	1,506,567
Accounts receivable, net of allowances		429,804			499,268
Prepaid income taxes		63,460			31,590
Prepaid and other assets		46,970			44,352
Total current assets		1,843,092			2,081,777
Property, equipment and leasehold improvements, net		78,965			90,708
Right of use assets		153,727			166,406
Goodwill		1,562,377			1,562,868
Intangible assets, net		240,858			261,487
Equity method investment		190,206			—
Deferred tax assets		23,773			20,911
Other non-current assets		18,721			20,282
Total assets	$	4,111,719		$	4,204,439

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	4,718		$	6,498
Income taxes payable		22,039			14,210
Accrued compensation and related benefits		127,605			166,273
Other accrued liabilities		149,005			139,149
Deferred revenue		531,487			574,656
Total current liabilities		834,854			900,786
Long-term debt		3,365,783			3,071,926
Long-term operating lease liabilities		152,812			164,144
Deferred tax liabilities		63,845			66,639
Other non-current liabilities		81,011			77,658
Total liabilities		4,498,305			4,281,153

Commitments and Contingencies (see Note 7)

Shareholders' equity (deficit):
Preferred stock (par value $0.01, 100,000,000 shares authorized; no shares issued)		—			—
Common stock (par value $0.01; 750,000,000 common shares authorized; 132,823,285 and 132,419,412 common shares issued and 83,041,856 and 84,794,930 common shares outstanding at September 30, 2020 and December 31, 2019, respectively)		1,328			1,324
Treasury shares, at cost (49,781,429 and 47,624,482 common shares held at September 30, 2020 and December 31, 2019, respectively)		(4,177,563	)		(3,565,784	)
Additional paid in capital		1,391,837			1,351,031
Retained earnings		2,463,108			2,199,294
Accumulated other comprehensive loss		(65,296	)		(62,579	)
Total shareholders' equity (deficit)		(386,586	)		(76,714	)
Total liabilities and shareholders' equity (deficit)	$	4,111,719		$	4,204,439

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
	(unaudited)
Operating revenues	$	425,333		$	394,251		$	1,251,729		$	1,151,190

Operating expenses:
Cost of revenues		70,704			70,486			215,769			224,807
Selling and marketing		52,668			52,107			159,834			159,812
Research and development		24,901			24,310			73,997			71,234
General and administrative		27,613			26,559			86,755			80,434
Amortization of intangible assets		14,333			12,361			42,171			36,167
Depreciation and amortization of property, equipment and leasehold improvements		7,494			7,209			22,524			22,464
Total operating expenses		197,713			193,032			601,050			594,918

Operating income		227,620			201,219			650,679			556,272

Interest income		(475	)		(3,673	)		(4,729	)		(11,104	)
Interest expense		37,536			35,922			118,994			107,752
Other expense (income)		1,516			222			45,355			2,839

Other expense (income), net		38,577			32,471			159,620			99,487

Income before provision for income taxes		189,043			168,748			491,059			456,785
Provision for income taxes		6,685			31,765			45,453			15,920
Net income	$	182,358		$	136,983		$	445,606		$	440,865

Earnings per basic common share	$	2.18		$	1.62		$	5.30		$	5.21

Earnings per diluted common share	$	2.16		$	1.60		$	5.26		$	5.15

Weighted average shares outstanding used in computing earnings per share
Basic		83,602			84,765			84,044			84,591
Diluted		84,479			85,550			84,789			85,533

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020			2019			2020			2019
	(unaudited)
Net income	$	182,358		$	136,983		$	445,606		$	440,865
Other comprehensive (loss) income:
Foreign currency translation adjustments		7,058			(5,533	)		(3,743	)		(4,853	)
Income tax effect		(1,124	)		1,124			965			1,085
Foreign currency translation adjustments, net		5,934			(4,409	)		(2,778	)		(3,768	)

Pension and other post-retirement adjustments		(245	)		134			(27	)		103
Income tax effect		83			(64	)		88			(34	)
Pension and other post-retirement adjustments, net		(162	)		70			61			69
Other comprehensive (loss) income, net of tax		5,772			(4,339	)		(2,717	)		(3,699	)
Comprehensive income	$	188,130		$	132,644		$	442,889		$	437,166

											Accumulated
						Additional					Other
	Common		Treasury			Paid in		Retained			Comprehensive
	Stock		Stock			Capital		Earnings			Income (Loss)			Total
	(unaudited)
Balance at December 31, 2019	$	1,324	$	(3,565,784	)	$	1,351,031	$	2,199,294		$	(62,579	)	$	(76,714	)
Net income									148,125						148,125
Cumulative-effect adjustment									631						631
Dividends declared ($0.68 per common share)									(59,233	)					(59,233	)
Dividends paid in shares							78								78
Other comprehensive income (loss), net of tax												(9,625	)		(9,625	)
Common stock issued		4													4
Shares withheld for tax withholding				(47,195	)										(47,195	)
Compensation payable in common stock							15,333								15,333
Common stock repurchased and held in treasury				(325,699	)										(325,699	)
Common stock issued to Directors and (held in)/released from treasury				(36	)										(36	)

Balance at March 31, 2020		1,328		(3,938,714	)		1,366,442		2,288,817			(72,204	)		(354,331	)
Net income									115,123						115,123
Dividends declared ($0.68 per common share)									(57,360	)					(57,360	)
Dividends paid in shares							36								36
Other comprehensive income (loss), net of tax												1,136			1,136
Shares withheld for tax withholding and exercises				(603	)										(603	)
Compensation payable in common stock							14,294								14,294
Common stock repurchased and held in treasury				(31,071	)										(31,071	)
Common stock issued to Directors and (held in)/released from treasury				1,844											1,844

Balance at June 30, 2020		1,328		(3,968,544	)		1,380,772		2,346,580			(71,068	)		(310,932	)
Net income									182,358

Delaware		13-4038723
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

7 World Trade Center 250 Greenwich Street, 49^th Floor New York, New York		10007
(Address of Principal Executive Offices)		(Zip Code)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.01 per share		MSCI		New York Stock Exchange

		Page
	Part I – Financial Information
Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	44

	Part II – Other Information
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults Upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐