[October 30, 2014] |
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MSCI Inc. Reports Financial Results for Third Quarter 2014
NEW YORK --(Business Wire)--
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 third
quarter and nine months ended September 30, 2014. As a result of the
sale of Institutional Shareholder Services Inc. ("ISS"), results of
MSCI's former Governance business are reflected as discontinued
operations in its financial statements. Financial results and operating
metrics presented below and in the accompanying tables have been
restated to reflect this classification.
(Note: Percentage changes refer to the comparable period in 2013,
unless otherwise noted.)
-
Operating revenues increased 10.1% to $251.7 million for third
quarter 2014.
-
Income from continuing operations increased 3.6% to $51.7 million
for third quarter 2014 and Diluted EPS from continuing operations
increased 4.8% to $0.44.
-
Net income declined 6.5% to $51.7 million for third quarter 2014,
and Diluted EPS decreased 4.3% to $0.44.
-
Adjusted EBITDA1 increased 1.4% to $102.0
million for third quarter 2014.
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Adjusted EPS2 increased 6.4% to $0.50 for
third quarter 2014.
-
Run Rate grew 9.7% to $1,001.2 million for
third quarter 2014.
-
MSCI's Board declared the company's first regular quarterly cash
dividend, of $0.18 per share of common stock.
-
MSCI increased its share repurchase authorization to $850 million.
As part of that authorization, MSCI entered into a $300 million
accelerated share repurchase agreement and received an initial
delivery of 4.5 million shares of common stock.
"We are pleased with the strong operating results MSCI generated in the
third quarter of 2014, reflecting solid execution of our strategy and
the investments we have been making in product development, sales and
marketing, and client service," said Henry A. Fernandez, Chairman and
CEO. "MSCI is benefiting from market leading flows into MSCI-linked
ETFs, which we attribute to our decision to increase our focus on ETF
providers. Another driver of our growth is the increase in retention
rates, which reflects our investments in client service."
"MSCI is focused intently on capital efficiency," Fernandez continued.
"During the quarter, we announced a plan to return $1 billion to
shareholders by 2016 via a regular dividend and a stepped up buy-back
program. We took the first step in implementing that program with a $300
million ASR that lowered our share count immediately by 4.5 million
shares."
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Table 1: MSCI Inc. Selected Financial Information (unaudited)
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Three Months Ended
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Change from
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Nine Months Ended
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Change From
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Sept. 30,
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Sept. 30,
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Sept. 30,
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Sept. 30,
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Sept. 30,
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Sept. 30,
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In thousands, except per share data
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|
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|
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2014
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2013
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2013
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2014
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2013
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2013
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Operating revenues
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$
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251,661
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$
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228,608
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10.1
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%
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$
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745,575
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$
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676,500
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10.2
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%
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Operating expenses
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167,625
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144,704
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15.8
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%
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493,503
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419,816
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17.6
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%
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Income from continuing operations
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51,724
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49,936
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3.6
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%
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155,673
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159,035
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(2.1
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%)
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% Margin from continuing operations
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20.6
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%
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21.8
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%
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20.9
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%
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23.5
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%
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Net Income
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51,714
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55,310
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(6.5
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%)
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239,773
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175,300
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36.8
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%
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Diluted EPS from continuing operations
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$
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0.44
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$
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0.42
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4.8
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%
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$
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1.32
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$
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1.31
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0.8
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%
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Diluted EPS
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$
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0.44
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$
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0.46
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(4.3
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%)
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$
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2.03
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$
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1.44
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41.0
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%
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Adjusted EPS2
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$
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0.50
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$
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0.47
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6.4
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%
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$
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1.51
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$
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1.49
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1.3
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%
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Adjusted EBITDA1
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$
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101,952
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$
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100,540
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1.4
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%
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$
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304,449
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$
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304,714
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(0.1
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%)
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% Margin
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40.5
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%
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44.0
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%
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40.8
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%
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45.0
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%
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1 Net Income before income from discontinued operations,
net of income taxes, provision for income taxes, other expense
(income), net, depreciation and amortization and the lease exit
charge. See Table 11 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."
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2 Per share net income before income from discontinued
operations, net of income taxes, and the after-tax impact of the
amortization of intangible assets and the lease exit charge. See
Table 12 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."
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Operating Revenues - See Table 4
Operating revenues for the three months ended September 30, 2014 ("third
quarter 2014") increased $23.1 million, or 10.1%, to $251.7 million
compared to $228.6 million for the three months ended September 30, 2013
("third quarter 2013"). Third quarter 2014 recurring subscription
revenues rose $10.7 million, or 5.6%, to $199.9 million, asset-based
fees increased $9.9 million, or 26.8%, to $46.7 million and
non-recurring revenues rose $2.5 million to $5.1 million.
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•
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Index and ESG products: Index and ESG product revenues
increased $18.8 million, or 14.5%, to $148.4 million. Subscription
revenues grew by 9.6% to $101.8 million, driven by growth in
revenues from equity index benchmark and ESG products. On an
organic basis, Index and ESG subscription revenues grew by 8.5%.
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Revenues attributable to equity index asset-based fees rose 26.8%.
The increase was primarily driven by an increase of $99.7 billion,
or 34.8%, in the average value of assets under management ("AUM") in
ETFs linked to MSCI indexes and growth in assets from non-ETF
passive funds.
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•
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Risk management analytics: Revenues related to risk
management analytics products increased 5.8% to $77.0 million,
driven by higher revenues from RiskManager as well as increases in
HedgePlatform, BarraOne and InvestorForce products.
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•
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Portfolio management analytics: Revenues related to
portfolio management analytics products were essentially unchanged
at $26.3 million.
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Operating Expenses - See Table 6
Total operating expenses from continuing operations rose $22.9 million,
or 15.8%, to $167.6 million from third quarter 2013. Much of the
increase in MSCI's operating expenses was the result of its ongoing
investment program.
-
Compensation costs: Total compensation costs rose 17.9% to
$105.9 million for third quarter 2014, driven by an increase in
overall headcount of 16.0%. Employees located in emerging market
centers represent 50% of the workforce, up from 45% at the end of
third quarter 2013.
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Non-compensation costs excluding depreciation and amortization: Non-compensation
costs rose 14.6% to $43.8 million for third quarter 2014 primarily
reflecting increases in professional services, information technology
and occupancy costs, among other items.
-
Depreciation and amortization: Amortization of intangible
assets totaled $11.6 million for third quarter 2014, an increase of
3.4% compared to third quarter 2013. Depreciation and amortization of
property, equipment and leasehold improvements rose 16.5% to $6.3
million, primarily reflecting higher depreciation associated with
investment in information technology infrastructure.
Other Expense (Income), Net
Other expense (income), net for third quarter 2014 was $4.0 million, a
decline of $2.1 million from third quarter 2013, driven primarily by an
increase in non-recurring income.
Provision for Income Taxes - Continuing Operations
The provision for income tax expense was $28.3 million for third quarter
2014, compared with $27.8 million for third quarter 2013. The effective
tax rate for third quarter 2014 was 35.3% versus 35.8% a year ago.
Income and Earnings per Share from Continuing Operations - See Table
12
Income from continuing operations increased $1.8 million, or 3.6%, to
$51.7 million for third quarter 2014. Diluted EPS from continuing
operations was $0.44, up 4.8%, aided in part by a 2.8% decline in
weighted average shares outstanding.
Adjusted Net Income, which excludes the after-tax impact of discontinued
operations and the amortization of intangible assets, increased $2.1
million, or 3.6%, to $59.2 million. Adjusted EPS, which excludes the
after-tax, per diluted share impact of discontinued operations and the
amortization of intangible assets, increased 6.4%, to $0.50.
See Table 12 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 11
Adjusted EBITDA, which excludes income from discontinued operations, net
of income taxes, provision for income taxes, other expense (income),
net, and depreciation and amortization was $102.0 million, up 1.4% from
third quarter 2013. The Adjusted EBITDA margin decreased to 40.5% from
44.0%.
See Table 11 titled "Reconciliation of Adjusted EBITDA to Net Income
(unaudited)" and "Notes Regarding the Use of Non-GAAP Financial
Measures" below.
Acquisition of GMI
On August 11, 2014, MSCI completed the previously announced acquisition
of Governance Holdings Co. ("GMI") for a purchase price of $15.5
million. Results from the acquisition are now reported as part of the
Index and ESG product lines. The acquisition is not expected to have a
material impact on MSCI's results of operations.
Net Income and Earnings per Share
Net income was $51.7 million for third quarter 2014, down 6.5% from
third quarter 2013. Diluted EPS was $0.44 for third quarter 2014, down
from $0.46 for third quarter 2013. The decline was driven by the
disposition of ISS, which was sold in second quarter 2014 and
contributed $5.4 million to third quarter 2013 net income.
Enhanced Capital Return Plan
On September 17, 2014, MSCI's Board of Directors approved a plan to
initiate a quarterly cash dividend and significantly increased the
company's share repurchase authorization to $850 million from $300
million. This enhanced capital return plan is expected to return
approximately $1 billion to MSCI shareholders by the end of 2016.
-
Declaration of Dividend: The Board of Directors of MSCI
declared a regular quarterly cash dividend, the first in the company's
history, of $0.18 per share of common stock payable on October 31,
2014 to shareholders of record as of the close of trading on October
15, 2014. MSCI expects the initial annual dividend rate to be $0.72
per share.
-
Share Repurchase Activity: As part of the share repurchase
authorization discussed above, MSCI entered into an accelerated share
repurchase ("ASR") agreement with Goldman Sachs. Under this ASR
agreement, MSCI paid Goldman Sachs $300 million in cash and received
delivery of 4.5 million shares of its common stock. Additional shares
may be delivered to MSCI at or prior to maturity of the ASR agreement
in second quarter 2015.
Potential Refinancing of Existing Debt
MSCI is exploring refinancing its existing $795 million of variable
rate, senior secured, long-term debt due December 2018. The goal of the
potential refinancing would be to increase our financial flexibility,
take advantage of the current low interest rate environment and decrease
our exposure to interest rate changes. Assuming current market rates and
that MSCI refinances all of its outstanding debt, the Company expects
its annual interest expense to significantly increase from its third
quarter 2014 annualized expense of $22 million. Any such refinancing is
subject to market and other conditions, and there can be no assurance
that MSCI will be able to refinance on terms and conditions acceptable
to the Company.
Key Operating Metrics - See Tables 8, 9, 10
Total Run Rate grew by $88.3 million, or 9.7%, to $1,001.2 million as of
September 30, 2014 compared to September 30, 2013. Total subscription
Run Rate grew by $57.5 million, or 7.5%, to $823.4 million as of
September 30, 2014 compared to September 30, 2013. Excluding the impact
of foreign currency changes and GMI, subscription Run Rate grew by 7.6%
as the negative impact of changes in foreign currency were offset by the
acquisition of GMI.
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•
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Index and ESG products: Total Index and ESG Run Rate grew
by 15.0% to $583.2 million. Index and ESG subscription Run Rate
grew by 12.6%, to $405.4 million. Excluding the impact of foreign
currency changes and the acquisition of GMI, subscription Run Rate
rose 11.1%. The growth in Index and ESG products were driven
primarily by equity index benchmark and data products, and aided
by strong growth in ESG and real estate products.
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Run Rate attributable to asset-based fees rose 21.0% to $177.8
million compared to September 30, 2013 primarily reflecting higher
inflows into ETFs linked to MSCI indexes.
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As of September 30, 2014, AUM in ETFs linked to MSCI indexes were
$377.9 billion, an increase of $75.3 billion, or 24.9%, from
September 30, 2013, driven by higher inflows of $65.1 billion and
higher market performance of $10.2 billion. AUM in ETFs linked to
MSCI indexes were essentially flat from June 30, 2014.
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•
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Risk management analytics: Risk management analytics Run
Rate increased 3.3%, to $311.0 million. Excluding the impact of
foreign currency, Run Rate increased 4.8%, driven by growth from
RiskManager, InvestorForce and HedgePlatform products.
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•
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Portfolio management analytics: Run Rate related to
portfolio management analytics products increased 2.0%, to $107.0
million. Excluding the impact of foreign currency, Run Rate grew
by 3.4%, driven by an increase in sales of new products and higher
retention rates.
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Business Outlook
The following forward-looking statements reflect MSCI's expectations as
of today's date. Given the number of risk factors, uncertainties and
assumptions discussed below, actual results may differ materially from
those presented. The Company does not intend to update its
forward-looking statements until its next quarterly results
announcement, other than in publicly available statements.
MSCI's forward looking guidance for fiscal year 2014 remains unchanged
from the previous guidance.
-
Full year 2014 Adjusted EBITDA Expenses, which include all operating
expenses except amortization of intangible assets and depreciation and
amortization of property, equipment and leasehold improvements, are
expected to be in the range of $595 million to $605 million. (See
Table 13 titled "Reconciliation of Adjusted EBITDA Expenses to
Operating Expenses (unaudited)" and "Notes Regarding the Use of
Non-GAAP Financial Measures".)
-
The effective tax rate for full year 2014 is expected to be
approximately 36%.
-
Full year 2014 capital expenditures, including software
capitalization, are expected to be in the range of $50 million to $55
million.
-
Full year 2014 cash flow from operations is expected to be in the
range of $275 million to $325 million.
-
Annual rate of Adjusted EBITDA Expenses growth is expected to decline
in 2015 versus the 17-19% growth implied by our 2014 Adjusted EBITDA
Expenses guidance.
Conference Call Information
Investors will have the opportunity to listen to MSCI Inc.'s senior
management review third quarter 2014 results on Thursday, October 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 November 1, 2014. To listen to the
recording, visit http://ir.msci.com/events.cfm,
or dial 1-800-585-8367 (passcode: 20929993) within the United States.
International callers dial 1-404-537-3406 (passcode: 20929993).
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 and portfolio
risk and performance analytics.
For equity investors, MSCI's flagship performance and risk tools
include: the MSCI indexes with over $9 trillion estimated to be
benchmarked to them on a worldwide basis1; 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 and Barra multi-asset class factor models,
portfolio risk and performance analytics to investors in multi-asset
class portfolios. MSCI also provides IPD real estate information,
indexes and analytics for investors in and managers of commercial real
estate. MSCI also offers 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, 2014, as reported on June 25, 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. 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 subscribe to the notification service
available through our website by visiting the "Email Alert Subscription"
webpage 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 and the lease exit
charge.
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 amortization of intangible assets
and the lease exit charge.
Adjusted EBITDA Expenses represent operating expenses, less depreciation
and amortization and the lease exit charge.
We believe that adjusting for 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. Additionally, we believe that adjusting for income from
discontinued operations, net of income tax, provides investors with a
meaningful trend of results for our continuing operations. Finally, we
believe that adjusting for one time and non-recurring expenses such as
the lease exit charge is useful to management and investors because it
allows for an evaluation of MSCI's underlying operating performance. 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 EBITDA Expenses, 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
|
|
Nine Months Ended
|
|
|
|
|
Sept. 30,
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30,
|
|
Sept. 30,
|
In thousands, except per share data
|
|
|
2014
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
$
|
251,661
|
|
|
$
|
228,608
|
|
|
$
|
254,226
|
|
|
$
|
745,575
|
|
|
$
|
676,500
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
|
|
|
78,876
|
|
|
|
68,151
|
|
|
|
76,816
|
|
|
|
231,119
|
|
|
|
203,147
|
|
|
Selling, general and administrative
|
|
|
|
70,833
|
|
|
|
59,917
|
|
|
|
71,516
|
|
|
|
210,007
|
|
|
|
168,274
|
|
|
Amortization of intangible assets
|
|
|
|
11,574
|
|
|
|
11,193
|
|
|
|
11,442
|
|
|
|
34,286
|
|
|
|
33,581
|
|
|
Depreciation and amortization of property,
|
|
|
|
|
|
|
|
|
|
|
|
|
equipment and leasehold improvements
|
|
|
|
6,342
|
|
|
|
5,443
|
|
|
|
5,921
|
|
|
|
18,091
|
|
|
|
14,814
|
|
Total operating expenses
|
|
|
$
|
167,625
|
|
|
$
|
144,704
|
|
|
$
|
165,695
|
|
|
$
|
493,503
|
|
|
$
|
419,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
$
|
84,036
|
|
|
$
|
83,904
|
|
|
$
|
88,531
|
|
|
$
|
252,072
|
|
|
$
|
256,684
|
|
Operating margin
|
|
|
|
33.4
|
%
|
|
|
36.7
|
%
|
|
|
34.8
|
%
|
|
|
33.8
|
%
|
|
|
37.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
(277
|
)
|
|
|
(227
|
)
|
|
|
(192
|
)
|
|
|
(625
|
)
|
|
|
(650
|
)
|
Interest expense
|
|
|
|
5,604
|
|
|
|
5,828
|
|
|
|
5,366
|
|
|
|
16,029
|
|
|
|
19,343
|
|
Other expense (income)
|
|
|
|
(1,287
|
)
|
|
|
563
|
|
|
|
(726
|
)
|
|
|
(942
|
)
|
|
|
2,157
|
|
Other expenses (income), net
|
|
|
$
|
4,040
|
|
|
$
|
6,164
|
|
|
$
|
4,448
|
|
|
$
|
14,462
|
|
|
$
|
20,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before
|
|
|
|
|
|
|
|
|
|
|
|
|
provision for income taxes
|
|
|
|
79,996
|
|
|
|
77,740
|
|
|
|
84,083
|
|
|
|
237,610
|
|
|
|
235,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
|
|
28,272
|
|
|
|
27,804
|
|
|
|
27,280
|
|
|
|
81,937
|
|
|
|
76,799
|
|
Income from continuing operations
|
|
|
$
|
51,724
|
|
|
$
|
49,936
|
|
|
$
|
56,803
|
|
|
$
|
155,673
|
|
|
$
|
159,035
|
|
Income from continuing operations margin
|
|
|
|
20.6
|
%
|
|
|
21.8
|
%
|
|
|
22.3
|
%
|
|
|
20.9
|
%
|
|
|
23.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of
|
|
|
|
|
|
|
|
|
|
|
|
|
income taxes
|
|
|
$
|
(10
|
)
|
|
$
|
5,374
|
|
|
$
|
50,857
|
|
|
$
|
84,100
|
|
|
$
|
16,265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
|
$
|
51,714
|
|
|
$
|
55,310
|
|
|
$
|
107,660
|
|
|
$
|
239,773
|
|
|
$
|
175,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per basic common share from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
0.44
|
|
|
$
|
0.42
|
|
|
$
|
0.48
|
|
|
$
|
1.33
|
|
|
$
|
1.32
|
|
|
Discontinued operations
|
|
|
|
-
|
|
|
|
0.04
|
|
|
|
0.44
|
|
|
|
0.72
|
|
|
|
0.13
|
|
|
Earnings per basic common share
|
|
|
$
|
0.44
|
|
|
$
|
0.46
|
|
|
$
|
0.92
|
|
|
$
|
2.05
|
|
|
$
|
1.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per diluted common share from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
$
|
0.44
|
|
|
$
|
0.42
|
|
|
$
|
0.48
|
|
|
$
|
1.32
|
|
|
$
|
1.31
|
|
|
Discontinued operations
|
|
|
|
-
|
|
|
|
0.04
|
|
|
|
0.43
|
|
|
|
0.71
|
|
|
|
0.13
|
|
|
Earnings per diluted common share
|
|
|
$
|
0.44
|
|
|
$
|
0.46
|
|
|
$
|
0.91
|
|
|
$
|
2.03
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding used
|
|
|
|
|
|
|
|
|
|
|
|
in computing earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
116,251
|
|
|
|
119,607
|
|
|
|
116,702
|
|
|
|
116,840
|
|
|
|
120,497
|
|
Diluted
|
|
|
|
117,163
|
|
|
|
120,578
|
|
|
|
117,664
|
|
|
|
117,803
|
|
|
|
121,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 3: MSCI Inc. Selected Balance Sheet Items (unaudited)
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
|
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30,
|
In thousands
|
|
|
|
|
|
2014
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
$
|
448,193
|
|
$
|
683,239
|
|
$
|
283,750
|
Accounts receivable, net of allowances
|
|
|
|
|
|
|
191,806
|
|
|
213,432
|
|
|
179,920
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenue
|
|
|
|
|
|
$
|
321,025
|
|
$
|
323,963
|
|
$
|
334,094
|
Current maturities of long-term debt
|
|
|
|
|
|
|
19,781
|
|
|
19,778
|
|
|
54,130
|
Long-term debt, net of current maturities
|
|
|
|
|
|
|
773,173
|
|
|
778,119
|
|
|
753,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 4: Quarterly Operating Revenues by Product Category and
Revenue Type (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
% Change From
|
|
|
|
|
Sept. 30,
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30,
|
|
June 30,
|
In thousands
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
Index and ESG products
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscriptions
|
|
|
$
|
101,757
|
|
$
|
92,815
|
|
$
|
106,162
|
|
9.6
|
%
|
|
(4.1
|
%)
|
|
Asset-based fees
|
|
|
|
46,657
|
|
|
36,801
|
|
|
44,095
|
|
26.8
|
%
|
|
5.8
|
%
|
Index and ESG products total
|
|
|
|
148,414
|
|
|
129,616
|
|
|
150,257
|
|
14.5
|
%
|
|
(1.2
|
%)
|
Risk management analytics
|
|
|
|
76,978
|
|
|
72,779
|
|
|
77,666
|
|
5.8
|
%
|
|
(0.9
|
%)
|
Portfolio management analytics
|
|
|
|
26,269
|
|
|
26,213
|
|
|
26,303
|
|
0.2
|
%
|
|
(0.1
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
|
$
|
251,661
|
|
$
|
228,608
|
|
$
|
254,226
|
|
10.1
|
%
|
|
(1.0
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring subscriptions
|
|
|
$
|
199,858
|
|
$
|
189,175
|
|
$
|
205,265
|
|
5.6
|
%
|
|
(2.6
|
%)
|
|
Asset-based fees
|
|
|
|
46,657
|
|
|
36,801
|
|
|
44,095
|
|
26.8
|
%
|
|
5.8
|
%
|
|
Non-recurring revenue
|
|
|
|
5,146
|
|
|
2,632
|
|
|
4,866
|
|
95.5
|
%
|
|
5.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
|
$
|
251,661
|
|
$
|
228,608
|
|
$
|
254,226
|
|
10.1
|
%
|
|
(1.0
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 5: Nine Months Operating Revenues by Product Category and
Revenue Type (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
% Change from
|
|
|
|
|
|
|
|
Sept. 30,
|
|
Sept. 30,
|
|
Sept. 30,
|
In thousands
|
|
|
|
|
|
2014
|
|
2013
|
|
2013
|
Index and ESG products
|
|
|
|
|
|
|
|
|
|
|
|
Subscriptions
|
|
|
|
|
|
$
|
305,262
|
|
$
|
272,903
|
|
11.9
|
%
|
|
Asset-based fees
|
|
|
|
|
|
|
131,652
|
|
|
110,286
|
|
19.4
|
%
|
Index and ESG products total
|
|
|
|
|
|
|
436,914
|
|
|
383,189
|
|
14.0
|
%
|
Risk management analytics
|
|
|
|
|
|
|
230,224
|
|
|
213,363
|
|
7.9
|
%
|
Portfolio management analytics
|
|
|
|
|
|
|
78,437
|
|
|
79,948
|
|
(1.9
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
|
|
|
|
$
|
745,575
|
|
$
|
676,500
|
|
10.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring subscriptions
|
|
|
|
|
|
|
600,095
|
|
|
555,171
|
|
8.1
|
%
|
|
Asset-based fees
|
|
|
|
|
|
|
131,652
|
|
|
110,286
|
|
19.4
|
%
|
|
Non-recurring revenue
|
|
|
|
|
|
|
13,828
|
|
|
11,043
|
|
25.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
|
|
|
|
$
|
745,575
|
|
$
|
676,500
|
|
10.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 6: Quarterly Operating Expense Detail (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
% Change from
|
|
|
|
|
|
Sept. 30,
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30,
|
|
June 30,
|
In thousands
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
Cost of services
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
$
|
59,546
|
|
$
|
49,300
|
|
$
|
56,668
|
|
20.8
|
%
|
|
5.1
|
%
|
Non-Compensation
|
|
|
|
19,330
|
|
|
18,851
|
|
|
20,148
|
|
2.5
|
%
|
|
(4.1
|
%)
|
Lease exit charge
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
n/m
|
|
|
n/m
|
|
Total non-compensation
|
|
|
|
19,330
|
|
|
18,851
|
|
|
20,148
|
|
2.5
|
%
|
|
(4.1
|
%)
|
Total cost of services
|
|
|
$
|
78,876
|
|
$
|
68,151
|
|
$
|
76,816
|
|
15.7
|
%
|
|
2.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
$
|
46,342
|
|
$
|
40,534
|
|
$
|
46,015
|
|
14.3
|
%
|
|
0.7
|
%
|
Non-Compensation
|
|
|
|
24,491
|
|
|
19,383
|
|
|
25,501
|
|
26.4
|
%
|
|
(4.0
|
%)
|
Lease exit charge
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
n/m
|
|
|
n/m
|
|
Total non-compensation
|
|
|
|
24,491
|
|
|
19,383
|
|
|
25,501
|
|
26.4
|
%
|
|
(4.0
|
%)
|
Total selling, general and administrative
|
|
|
$
|
70,833
|
|
$
|
59,917
|
|
$
|
71,516
|
|
18.2
|
%
|
|
(1.0
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
11,574
|
|
|
11,193
|
|
|
11,442
|
|
3.4
|
%
|
|
1.2
|
%
|
Depreciation and amortization of property,
|
|
|
|
|
|
|
|
|
|
|
|
equipment and leasehold improvements
|
|
|
|
6,342
|
|
|
5,443
|
|
|
5,921
|
|
16.5
|
%
|
|
7.1
|
%
|
Total operating expenses
|
|
|
$
|
167,625
|
|
$
|
144,704
|
|
$
|
165,695
|
|
15.8
|
%
|
|
1.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
$
|
105,888
|
|
$
|
89,834
|
|
$
|
102,683
|
|
17.9
|
%
|
|
3.1
|
%
|
Non-Compensation
|
|
|
|
43,821
|
|
|
38,234
|
|
|
45,649
|
|
14.6
|
%
|
|
(4.0
|
%)
|
Lease exit charge
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
11,574
|
|
|
11,193
|
|
|
11,442
|
|
3.4
|
%
|
|
1.2
|
%
|
Depreciation and amortization of property,
|
|
|
|
|
|
|
|
|
|
|
|
equipment and leasehold improvements
|
|
|
|
6,342
|
|
|
5,443
|
|
|
5,921
|
|
16.5
|
%
|
|
7.1
|
%
|
Total operation expenses
|
|
|
$
|
167,625
|
|
$
|
144,704
|
|
$
|
165,695
|
|
15.8
|
%
|
|
1.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
n/m = not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 7: Nine Months Operating Expense Detail (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
% Change from
|
|
|
|
|
|
|
|
Sept. 30,
|
|
Sept. 30,
|
|
Sept. 30,
|
In thousands
|
|
|
|
|
|
|
2014
|
|
2013
|
|
2014
|
Cost of services
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
$
|
172,496
|
|
$
|
150,373
|
|
|
14.7
|
%
|
Non-compensation
|
|
|
|
|
|
|
|
58,623
|
|
|
52,917
|
|
|
10.8
|
%
|
Lease exit charge1
|
|
|
|
|
|
|
|
-
|
|
|
(143
|
)
|
|
n/m
|
|
Total non-compensation
|
|
|
|
|
|
|
|
58,623
|
|
|
52,774
|
|
|
11.1
|
%
|
Total cost of services
|
|
|
|
|
|
|
$
|
231,119
|
|
$
|
203,147
|
|
|
13.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
$
|
138,490
|
|
$
|
116,835
|
|
|
18.5
|
%
|
Non-compensation
|
|
|
|
|
|
|
|
71,517
|
|
|
51,661
|
|
|
38.4
|
%
|
Lease exit charge1
|
|
|
|
|
|
|
|
-
|
|
|
(222
|
)
|
|
n/m
|
|
Total non-compensation
|
|
|
|
|
|
|
|
71,517
|
|
|
51,439
|
|
|
39.0
|
%
|
Total selling, general and administrative
|
|
|
|
|
|
|
$
|
210,007
|
|
$
|
168,274
|
|
|
24.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
|
34,286
|
|
|
33,581
|
|
|
2.1
|
%
|
Depreciation and amortization of property, equipment and leasehold
improvements
|
|
|
18,091
|
|
|
14,814
|
|
|
22.1
|
%
|
Total operating expenses
|
|
|
|
|
|
|
$
|
493,503
|
|
$
|
419,816
|
|
|
17.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
$
|
310,986
|
|
$
|
267,208
|
|
|
16.4
|
%
|
Non-compensation expenses
|
|
|
|
|
|
|
|
130,140
|
|
|
104,578
|
|
|
24.4
|
%
|
Lease exit charge1
|
|
|
|
|
|
|
|
-
|
|
|
(365
|
)
|
|
n/m
|
|
Amortization of intangible assets
|
|
|
|
|
|
|
|
34,286
|
|
|
33,581
|
|
|
2.1
|
%
|
Depreciation and amortization of property, equipment and leasehold
improvements
|
|
|
18,091
|
|
|
14,814
|
|
|
22.1
|
%
|
Total operation expenses
|
|
|
|
|
|
|
$
|
493,503
|
|
$
|
419,816
|
|
|
17.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
n/m = not meaningful
|
1 Nine months 2013 included a benefit of $0.4 million
associated with an occupancy lease exit charge resulting from the
consolidation of MSCI's New York offices.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 8: Key Operating Metrics (unaudited)1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
% Change from
|
|
|
|
|
Sept. 30,
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30,
|
|
June 30,
|
Dollars in thousands
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Run Rates2
|
|
|
|
|
|
|
|
|
|
|
|
Index and ESG products
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription
|
|
|
$
|
405,434
|
|
|
$
|
360,042
|
|
|
$
|
393,848
|
|
|
12.6
|
%
|
|
2.9
|
%
|
|
Asset-based fees
|
|
|
|
177,774
|
|
|
|
146,979
|
|
|
|
176,554
|
|
|
21.0
|
%
|
|
0.7
|
%
|
Index and ESG products total
|
|
|
|
583,208
|
|
|
|
507,021
|
|
|
|
570,402
|
|
|
15.0
|
%
|
|
2.2
|
%
|
Risk management analytics
|
|
|
|
311,019
|
|
|
|
300,945
|
|
|
|
309,619
|
|
|
3.3
|
%
|
|
0.5
|
%
|
Portfolio management analytics
|
|
|
|
106,993
|
|
|
|
104,938
|
|
|
|
106,486
|
|
|
2.0
|
%
|
|
0.5
|
%
|
|
Total
|
|
|
|
1,001,220
|
|
|
|
912,904
|
|
|
|
986,507
|
|
|
9.7
|
%
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription total
|
|
|
$
|
823,446
|
|
|
$
|
765,925
|
|
|
$
|
809,953
|
|
|
7.5
|
%
|
|
1.7
|
%
|
Asset-based fees total
|
|
|
|
177,774
|
|
|
|
146,979
|
|
|
|
176,554
|
|
|
21.0
|
%
|
|
0.7
|
%
|
Total Run Rate
|
|
|
$
|
1,001,220
|
|
|
$
|
912,904
|
|
|
$
|
986,507
|
|
|
9.7
|
%
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Recurring Subscription Sales
|
|
|
$
|
26,211
|
|
|
$
|
26,697
|
|
|
$
|
29,078
|
|
|
(1.8
|
%)
|
|
(9.9
|
%)
|
Subscription Cancellations
|
|
|
|
(10,479
|
)
|
|
|
(13,345
|
)
|
|
|
(13,173
|
)
|
|
(21.5
|
%)
|
|
(20.5
|
%)
|
|
Net New Recurring Subscription Sales
|
|
|
$
|
15,732
|
|
|
$
|
13,352
|
|
|
$
|
15,905
|
|
|
17.8
|
%
|
|
(1.1
|
%)
|
Non-recurring sales
|
|
|
$
|
4,626
|
|
|
$
|
2,970
|
|
|
$
|
5,671
|
|
|
55.8
|
%
|
|
(18.4
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees
|
|
|
|
2,876
|
|
|
|
2,480
|
|
|
|
2,762
|
|
|
16.0
|
%
|
|
4.1
|
%
|
% Employees by location
|
|
|
|
|
|
|
|
|
|
|
|
Developed Market Centers
|
|
|
|
50
|
%
|
|
|
55
|
%
|
|
|
51
|
%
|
|
|
|
|
Emerging Market Centers
|
|
|
|
50
|
%
|
|
|
45
|
%
|
|
|
49
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Operating metrics have been restated 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, for ETF fees, the market value on
the last trading day of the period, and for non-ETF funds and
futures and options, 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. The Run Rate at September 30, 2014 includes $7.5 million
related to the acquisition of GMI which was completed in the third
quarter of 2014.
|
|
|
|
|
Table 9: ETF Assets Linked to MSCI Indexes1
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended 2013
|
|
Three Months Ended 2014
|
|
Nine Months Ended
|
In Billions
|
|
|
March
|
|
June
|
|
Sept.
|
|
Dec.
|
|
March
|
|
June
|
|
Sept.
|
|
Sept. 2013
|
|
Sept. 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Period AUM in ETFs linked to MSCI Indexes
|
|
|
$
|
402.3
|
|
|
$
|
357.3
|
|
|
$
|
269.7
|
|
$
|
302.6
|
|
$
|
332.9
|
|
$
|
340.8
|
|
$
|
378.7
|
|
|
$
|
402.3
|
|
|
$
|
332.9
|
|
Cash Inflow/Outflow2
|
|
|
|
(61.0
|
)
|
|
|
(74.4
|
)
|
|
|
12.7
|
|
|
19.4
|
|
|
6.6
|
|
|
22.7
|
|
|
16.4
|
|
|
|
(122.7
|
)
|
|
|
45.7
|
|
Appreciation/Depreciation
|
|
|
|
16.0
|
|
|
|
(13.2
|
)
|
|
|
20.2
|
|
|
10.9
|
|
|
1.3
|
|
|
15.2
|
|
|
(17.2
|
)
|
|
|
23.0
|
|
|
|
(0.7
|
)
|
Period End AUM in ETFs linked to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSCI Indexes
|
|
|
$
|
357.3
|
|
|
$
|
269.7
|
|
|
$
|
302.6
|
|
$
|
332.9
|
|
$
|
340.8
|
|
$
|
378.7
|
|
$
|
377.9
|
|
|
$
|
302.6
|
|
|
$
|
377.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Average AUM in ETFs linked to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MSCI Indexes
|
|
|
$
|
369.0
|
|
|
$
|
324.1
|
|
|
$
|
286.2
|
|
$
|
321.5
|
|
$
|
330.8
|
|
$
|
359.6
|
|
$
|
385.9
|
|
|
$
|
326.4
|
|
|
$
|
358.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 10: Supplemental Operating Metrics (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales & Cancellations
|
|
|
|
Three Months Ended 2013
|
|
Three Months Ended 2014
|
|
Nine Months Ended
|
In thousands
|
|
March
|
|
June
|
|
Sept.
|
|
Dec.
|
|
March
|
|
June
|
|
Sept.
|
|
Sept. 2013
|
|
Sept. 2014
|
New Recurring Subscription Sales
|
|
$
|
25,676
|
|
|
$
|
27,526
|
|
|
$
|
26,697
|
|
|
$
|
31,082
|
|
|
$
|
30,422
|
|
|
$
|
29,078
|
|
|
$
|
26,211
|
|
|
$
|
79,899
|
|
|
$
|
85,711
|
|
Subscription Cancellations
|
|
|
(13,995
|
)
|
|
|
(14,154
|
)
|
|
|
(13,345
|
)
|
|
|
(21,077
|
)
|
|
|
(13,978
|
)
|
|
|
(13,173
|
)
|
|
|
(10,479
|
)
|
|
|
(41,494
|
)
|
|
|
(37,630
|
)
|
Net New Recurring Subscription Sales
|
|
$
|
11,681
|
|
|
$
|
13,372
|
|
|
$
|
13,352
|
|
|
$
|
10,005
|
|
|
$
|
16,444
|
|
|
$
|
15,905
|
|
|
$
|
15,732
|
|
|
$
|
38,405
|
|
|
$
|
48,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-recurring sales
|
|
|
5,117
|
|
|
|
5,714
|
|
|
|
2,970
|
|
|
|
4,107
|
|
|
|
4,798
|
|
|
|
5,671
|
|
|
|
4,626
|
|
|
|
13,801
|
|
|
|
15,095
|
|
Total Sales
|
|
$
|
30,793
|
|
|
$
|
33,240
|
|
|
$
|
29,667
|
|
|
$
|
35,189
|
|
|
$
|
35,220
|
|
|
$
|
34,749
|
|
|
$
|
30,837
|
|
|
$
|
93,700
|
|
|
$
|
100,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate & Core Retention Rates
|
|
|
|
Three Months Ended 2013
|
|
Three Months Ended 2014
|
|
Nine Months Ended
|
|
|
|
March
|
|
June
|
|
Sept.
|
|
Dec.
|
|
March
|
|
June
|
|
Sept.
|
|
Sept. 2013
|
|
Sept. 2014
|
Aggregate Retention Rate1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Index and ESG products
|
|
|
95.0
|
%
|
|
|
94.0
|
%
|
|
|
94.7
|
%
|
|
|
90.7
|
%
|
|
|
94.9
|
%
|
|
|
94.1
|
%
|
|
|
95.1
|
%
|
|
|
94.6
|
%
|
|
|
94.7
|
%
|
|
Risk management analytics
|
|
|
93.4
|
%
|
|
|
92.2
|
%
|
|
|
91.7
|
%
|
|
|
85.7
|
%
|
|
|
91.0
|
%
|
|
|
91.6
|
%
|
|
|
94.4
|
%
|
|
|
92.4
|
%
|
|
|
92.3
|
%
|
|
Portfolio management analytics
|
|
|
81.7
|
%
|
|
|
87.0
|
%
|
|
|
89.1
|
%
|
|
|
88.9
|
%
|
|
|
90.6
|
%
|
|
|
94.8
|
%
|
|
|
93.6
|
%
|
|
|
85.9
|
%
|
|
|
93.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Aggregate Retention Rate
|
|
|
92.4
|
%
|
|
|
92.3
|
%
|
|
|
92.7
|
%
|
|
|
88.5
|
%
|
|
|
92.8
|
%
|
|
|
93.2
|
%
|
|
|
94.6
|
%
|
|
|
92.4
|
%
|
|
|
93.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Retention Rate1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Index and ESG products
|
|
|
95.0
|
%
|
|
|
94.1
|
%
|
|
|
94.8
|
%
|
|
|
90.9
|
%
|
|
|
94.9
|
%
|
|
|
94.1
|
%
|
|
|
95.2
|
%
|
|
|
94.7
|
%
|
|
|
94.8
|
%
|
|
Risk management analytics
|
|
|
93.7
|
%
|
|
|
92.8
|
%
|
|
|
91.7
|
%
|
|
|
85.8
|
%
|
|
|
91.0
|
%
|
|
|
91.6
|
%
|
|
|
94.6
|
%
|
|
|
92.7
|
%
|
|
|
92.4
|
%
|
|
Portfolio management analytics
|
|
|
82.8
|
%
|
|
|
87.5
|
%
|
|
|
90.3
|
%
|
|
|
90.1
|
%
|
|
|
93.4
|
%
|
|
|
95.8
|
%
|
|
|
94.8
|
%
|
|
|
86.9
|
%
|
|
|
94.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Core Retention Rate
|
|
|
92.7
|
%
|
|
|
92.6
|
%
|
|
|
92.9
|
%
|
|
|
88.8
|
%
|
|
|
93.2
|
%
|
|
|
93.3
|
%
|
|
|
94.9
|
%
|
|
|
92.7
|
%
|
|
|
93.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 The Aggregate Retention Rates for a period are
calculated by annualizing the cancellations for which we have
received a notice of termination or for which we believe there is an
intention to not renew during the period and we believe that such
notice or intention evidences the client's final decision to
terminate or not renew the applicable 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 Aggregate Retention Rate for the period. The Aggregate
Retention Rate is computed on a product-by-product basis. Therefore,
if a client reduces the number of products to which it subscribes or
switches between our products, we treat it as a cancellation. In
addition, we treat any reduction in fees resulting from renegotiated
contracts as a cancellation in the calculation to the extent of the
reduction. For the calculation of the Core Retention Rate, the same
methodology is used except the cancellations in the period are
reduced by the amount of product swaps.
|
|
|
Table 11: Reconciliation of Adjusted EBITDA to Net Income
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
Sept. 30,
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30,
|
|
Sept. 30,
|
In thousands
|
|
|
2014
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
Net Income
|
|
|
$
|
51,714
|
|
$
|
55,310
|
|
|
$
|
107,660
|
|
|
$
|
239,773
|
|
|
$
|
175,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
Income from discontinued operations, net of
|
|
|
|
|
|
|
|
|
|
|
|
income taxes
|
|
|
$
|
10
|
|
$
|
(5,374
|
)
|
|
$
|
(50,857
|
)
|
|
$
|
(84,100
|
)
|
|
$
|
(16,265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
$
|
51,724
|
|
$
|
49,936
|
|
|
$
|
56,803
|
|
|
$
|
155,673
|
|
|
$
|
159,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus:
|
Provision for income taxes
|
|
|
|
28,272
|
|
|
27,804
|
|
|
|
27,280
|
|
|
|
81,937
|
|
|
|
76,799
|
|
Plus:
|
Other expense (income), net
|
|
|
|
4,040
|
|
|
6,164
|
|
|
|
4,448
|
|
|
|
14,462
|
|
|
|
20,850
|
|
Operating income
|
|
|
$
|
84,036
|
|
$
|
83,904
|
|
|
$
|
88,531
|
|
|
$
|
252,072
|
|
|
$
|
256,684
|
|
Plus:
|
Depreciation and amortization of property,
|
|
|
|
|
|
|
|
|
|
|
|
equipment and leasehold improvements
|
|
|
|
6,342
|
|
|
5,443
|
|
|
|
5,921
|
|
|
|
18,091
|
|
|
|
14,814
|
|
Plus:
|
Amortization of intangible assets
|
|
|
|
11,574
|
|
|
11,193
|
|
|
|
11,442
|
|
|
|
34,286
|
|
|
|
33,581
|
|
Plus:
|
Lease exit charge
|
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(365
|
)
|
Adjusted EBITDA
|
|
|
$
|
101,952
|
|
$
|
100,540
|
|
|
$
|
105,894
|
|
|
$
|
304,449
|
|
|
$
|
304,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 12: Reconciliation of Adjusted Net Income and Adjusted
EPS to Net Income and EPS (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
|
Sept. 30,
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30,
|
|
Sept. 30,
|
In thousands, except per share data
|
|
|
2014
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
Net Income
|
|
|
$
|
51,714
|
|
|
$
|
55,310
|
|
|
$
|
107,660
|
|
|
$
|
239,773
|
|
|
$
|
175,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
Income from discontinued operations, net of
|
|
|
|
|
|
|
|
|
|
|
|
|
income taxes
|
|
|
$
|
10
|
|
|
$
|
(5,374
|
)
|
|
$
|
(50,857
|
)
|
|
$
|
(84,100
|
)
|
|
$
|
(16,265
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
$
|
51,724
|
|
|
$
|
49,936
|
|
|
$
|
56,803
|
|
|
$
|
155,673
|
|
|
$
|
159,035
|
|
Plus:
|
Amortization of intangible assets
|
|
|
|
11,574
|
|
|
|
11,193
|
|
|
|
11,442
|
|
|
|
34,286
|
|
|
|
33,581
|
|
Plus:
|
Lease exit charge
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(365
|
)
|
Less:
|
Income tax effect
|
|
|
|
(4,090
|
)
|
|
|
(3,990
|
)
|
|
|
(3,689
|
)
|
|
|
(11,823
|
)
|
|
|
(10,815
|
)
|
Adjusted net income
|
|
|
$
|
59,208
|
|
|
$
|
57,139
|
|
|
$
|
64,556
|
|
|
$
|
178,136
|
|
|
$
|
181,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS
|
|
|
$
|
0.44
|
|
|
$
|
0.46
|
|
|
$
|
0.91
|
|
|
$
|
2.03
|
|
|
$
|
1.44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
Earnings per diluted common share from
|
|
|
|
|
|
|
|
|
|
|
|
|
discontinued operations
|
|
|
|
-
|
|
|
|
(0.04
|
)
|
|
|
(0.43
|
)
|
|
|
(0.71
|
)
|
|
|
(0.13
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per diluted common share from
|
|
|
|
|
|
|
|
|
|
|
|
|
continuing operations
|
|
|
|
0.44
|
|
|
|
0.42
|
|
|
|
0.48
|
|
|
|
1.32
|
|
|
|
1.31
|
|
Plus:
|
Amortization of intangible assets
|
|
|
|
0.10
|
|
|
|
0.09
|
|
|
|
0.10
|
|
|
|
0.29
|
|
|
|
0.28
|
|
Plus:
|
Lease exit charge
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Less:
|
Income tax effect
|
|
|
|
(0.04
|
)
|
|
|
(0.04
|
)
|
|
|
(0.03
|
)
|
|
|
(0.10
|
)
|
|
|
(0.10
|
)
|
Adjusted EPS
|
|
|
$
|
0.50
|
|
|
$
|
0.47
|
|
|
$
|
0.55
|
|
|
$
|
1.51
|
|
|
$
|
1.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table 13: Reconciliation of Adjusted EBITDA Expenses to
Operating Expenses (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
Full Year
|
|
|
|
Sept. 30,
|
|
Sept. 30,
|
|
June 30,
|
|
Sept. 30,
|
|
Sept. 30,
|
|
2014
|
In thousands
|
|
2014
|
|
2013
|
|
2014
|
|
2014
|
|
2013
|
|
|
Outlook
|
Total operating expenses
|
|
$
|
167,625
|
|
$
|
144,704
|
|
$
|
165,695
|
|
$
|
493,503
|
|
$
|
419,816
|
|
|
$
|
665,000 - $677,000
|
Less:
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of property, equipment and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
leasehold improvements, and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
17,916
|
|
|
16,636
|
|
|
17,363
|
|
|
52,377
|
|
|
48,395
|
|
|
|
70,000 - 72,000
|
Less:
|
Lease exit charge
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(365
|
)
|
|
|
-
|
Adjusted EBITDA expenses
|
|
$
|
149,709
|
|
$
|
128,068
|
|
$
|
148,332
|
|
$
|
441,126
|
|
$
|
371,786
|
|
|
$
|
595,000 - $605,000
|
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|