Item 15. Exhibits, Financial Statement Schedules

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Item 15. Exhibits, Financial Statement Schedules

(a)(1) Financial Statements

The financial statements begin on page F-1 of this Annual Report on Form 10-K.

(a)(2) Financial Statement Schedules

No financial statement schedules are provided because the information called for is not applicable or not required or is included in the consolidated financial statements or the notes thereto beginning on page F-1 of this Annual Report on Form 10-K.

(a)(3) Exhibits

The information required by this Item is set forth on the exhibit index that begins on page EX-1 of this Annual Report on Form 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


MSCI INC.

By:	/S/ HENRY A. FERNANDEZ
	Name:	Henry A. Fernandez
	Title:	Chairman, Chief Executive Officer and President

Date: February 26, 2016

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert Qutub, Frederick W. Bogdan and Cecilia Aza, and each or any one of them, his or her true and lawful attorneys-in-fact and agents, with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in the capacities indicated below, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming his or her signatures as they may be signed by his or her said attorneys-in-fact and agents, or their substitute or substitutes, to any and all amendments to this Annual Report on Form 10-K.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


Signature	Title	Date

/S/ HENRY A. FERNANDEZ Henry A. Fernandez	Chairman, Chief Executive Officer, and President (principal executive officer)	February 26, 2016

/S/ ROBERT QUTUB Robert Qutub	Chief Financial Officer (principal financial officer)	February 26, 2016

/S/ RICHARD J. NAPOLITANO Richard J. Napolitano	Global Controller (principal accounting officer)	February 26, 2016

/S/ ROBERT G. ASHE Robert G. Ashe	Director	February 26, 2016

/S/ BENJAMIN F. DUPONT Benjamin F. duPont	Director	February 26, 2016

/S/ WAYNE EDMUNDS Wayne Edmunds	Director	February 26, 2016

/S/ D. ROBERT HALE D. Robert Hale	Director	February 26, 2016


Signature	Title	Date

/S/ ALICE W. HANDY Alice W. Handy	Director	February 26, 2016

/S/ CATHERINE R. KINNEY Catherine R. Kinney	Director	February 26, 2016

/S/ WENDY E. LANE Wendy E. Lane	Director	February 26, 2016

/S/ LINDA H. RIEFLER Linda H. Riefler	Director	February 26, 2016

/S/ GEORGE W. SIGULER George W. Siguler	Director	February 26, 2016

/S/ PATRICK TIERNEY Patrick Tierney	Director	February 26, 2016

/S/ RODOLPHE M. VALLEE Rodolphe M. Vallee	Director	February 26, 2016

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Consolidated Financial Statements	Page
Reports of Independent Registered Public Accounting Firms		F-2
Consolidated Statements of Financial Condition as of December 31, 2015 and December 31, 2014		F-4
Consolidated Statements of Income for the Years Ended December 31, 2015, December 31, 2014, and December 31, 2013		F-5
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2015, December 31, 2014, and December 31, 2013		F-6
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2015, December 31, 2014, and December 31, 2013		F-7
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, December 31, 2014, and December 31, 2013		F-8
Notes to Consolidated Financial Statements		F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of MSCI Inc.

In our opinion, the accompanying consolidated statements of financial condition and the related consolidated statements of income, of comprehensive income, of shareholders’ equity and of cash flows present fairly, in all material respects, the financial position of MSCI Inc. and its subsidiaries at December 31, 2015 and December 31, 2014, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report On Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

New York, New York

February 26, 2016

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of MSCI Inc.

We have audited the consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows of MSCI Inc. and subsidiaries (the “Company”) for the year ended December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the results of operations and cash flows for MSCI Inc. and subsidiaries for the year ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

New York, New York

February 28, 2014 (February 27, 2015 as to the effects of discontinued operations as discussed in Note 3 and February 26, 2016 as to the change in segments as discussed in Note 13)

F-3

MSCI INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION


	As of
	December 31, 2015			December 31, 2014
	(in thousands, except per share and share data)
ASSETS
Current assets:
Cash and cash equivalents	$	777,706		$	508,799
Accounts receivable (net of allowances of $1,117 and $857 as of December 31, 2015 and 2014, respectively)		208,239			178,717
Deferred taxes		—			22,209
Prepaid income taxes		46,115			29,180
Prepaid and other assets		31,211			30,553

Total current assets		1,063,271			769,458
Property, equipment and leasehold improvements (net of accumulated depreciation of $114,680 and $92,808 at December 31, 2015 and 2014, respectively)		98,926			94,074
Goodwill		1,565,621			1,564,904
Intangible assets (net of accumulated amortization of $418,512 and $372,209 at December 31, 2015 and 2014, respectively)		391,490			433,628
Non-current deferred tax assets		9,180			3,944
Other non-current assets		18,499			16,525

Total assets	$	3,146,987		$	2,882,533


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,512		$	2,835
Accrued compensation and related benefits		116,619			111,408
Other accrued liabilities		61,433			47,894
Deferred revenue		317,552			310,775

Total current liabilities		498,116			472,912
Long-term debt		1,579,404			788,358
Deferred taxes		110,937			137,838
Other non-current liabilities		57,043			50,592

Total liabilities		2,245,500			1,449,700


Commitments and Contingencies (see Note 6 and Note 10)

Shareholders’ equity:
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 at December 31, 2015 and 2014; 128,200,189 and 126,637,390 common shares issued at December 31, 2015 and 2014, respectively; and 101,013,148 and 112,072,469 common shares outstanding at December 31, 2015 and 2014, respectively)		1,282			1,266
Treasury shares, at cost (27,187,041 and 14,564,921 shares at December 31, 2015 and 2014, respectively)		(1,395,695	)		(588,378	)
Additional paid in capital		1,173,183			1,022,221
Retained earnings		1,158,462			1,022,695
Accumulated other comprehensive loss		(35,745	)		(24,971	)

Total shareholders’ equity		901,487			1,432,833

Total liabilities and shareholders’ equity	$	3,146,987		$	2,882,533

See Notes to Consolidated Financial Statements.

F-4

MSCI INC.

CONSOLIDATED STATEMENTS OF INCOME


	Years Ended
	December 31, 2015			December 31, 2014			December 31, 2013
	(in thousands, except per share and share data)

Operating revenues	$	1,075,013		$	996,680		$	913,364

Operating expenses:
Cost of revenues		267,695			276,623			240,697
Selling and marketing		162,294			163,839			137,693
Research and development		77,320			71,095			61,003
General and administrative		86,007			76,369			68,458
Amortization of intangible assets		46,910			45,877			44,798
Depreciation and amortization of property, equipment and leasehold improvements		30,889			25,711			20,384


Total operating expenses		671,115			659,514			573,033


Operating income		403,898			337,166			340,331

Interest income		(1,166	)		(851	)		(889	)
Interest expense		62,387			31,820			26,256
Other expense (income)		(6,877	)		(2,141	)		2,136


Other expense (income), net		54,344			28,828			27,503


Income from continuing operations before provision for income taxes		349,554			308,338			312,828
Provision for income taxes		119,516			109,396			112,918

Income from continuing operations		230,038			198,942			199,910

Income (loss) from discontinued operations, net of income taxes		(6,390	)		85,171			22,647

Net income	$	223,648		$	284,113		$	222,557


Earnings per basic common share:

Earnings per basic common share from continuing operations	$	2.11		$	1.72		$	1.66

Earnings per basic common share from discontinued operations		(0.06	)		0.73			0.19

Earnings per basic common share	$	2.05		$	2.45		$	1.85


Earnings per diluted common share:

Earnings per diluted common share from continuing operations	$	2.09		$	1.70		$	1.64

Earnings per diluted common share from discontinued operations		(0.06	)		0.73			0.19

Earnings per diluted common share	$	2.03		$	2.43		$	1.83


Weighted average shares outstanding used in computing earnings per share:
Basic		109,124			115,737			120,100


Diluted		109,926			116,706			121,074


Dividends declared per common share	$	0.80		$	0.18		$	—

See Notes to Consolidated Financial Statements.

F-5

MSCI INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Years Ended
	December 31, 2015			December 31, 2014			December 31, 2013
	(in thousands)

Net income	$	223,648		$	284,113		$	222,557

Other comprehensive income (loss):

Foreign currency translation adjustments		(12,253	)		(18,053	)		1,295
Income tax effect		135			(132	)		(500	)

Foreign currency translation adjustments, net		(12,118	)		(18,185	)		795


Unrealized gains (losses) on cash flow hedges		—			—			1,364
Income tax effect		—			—			(524	)

Unrealized gains (losses) on cash flow hedges, net		—			—			840


Unrealized gains (losses) on available-for-sale securities		—			—			(5	)
Income tax effect		—			—			2

Unrealized gains (losses) on available-for-sale securities, net		—			—			(3	)


Pension and other post-retirement adjustments		1,872			(8,299	)		624
Income tax effect		(528	)		2,163			(110	)

Pension and other post-retirement adjustments, net		1,344			(6,136	)		514


Other comprehensive income (loss), net of tax		(10,774	)		(24,321	)		2,146


Comprehensive income	$	212,874		$	259,792		$	224,703

See Notes to Consolidated Financial Statements.

F-6

MSCI INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


	Common Stock		Treasury Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
	(in thousands)
Balance at December 31, 2012	$	1,240	$	(120,926	)	$	1,000,014		$	536,418		$	(2,796	)	$	1,413,950
Net income										222,557						222,557
Other comprehensive income (loss), net of tax													2,146			2,146
Common stock issued		8														8
Compensation payable in common stock and options							24,552									24,552
Common stock repurchased and held in treasury				(147,183	)		35,000									(112,183	)
Common stock issued to directors and held in treasury				(282	)											(282	)
Exercise of stock options		8					11,694									11,702
Excess tax benefits from employee stock incentive plans							1,897									1,897


Balance at December 31, 2013	$	1,256	$	(268,391	)	$	1,073,157		$	758,975		$	(650	)	$	1,564,347
Net income										284,113						284,113
Dividends				(4	)					(20,393	)					(20,397	)
Other comprehensive income (loss), net of tax													(24,321	)		(24,321	)
Common stock issued		5														5
Compensation payable in common stock and options							26,553									26,553
Common stock repurchased and held in treasury				(319,651	)		(90,000	)								(409,651	)
Common stock issued to directors and held in treasury				(332	)											(332	)
Exercise of stock options		5					9,676									9,681
Excess tax benefits from employee stock incentive plans							2,835									2,835


Balance at December 31, 2014	$	1,266	$	(588,378	)	$	1,022,221		$	1,022,695		$	(24,971	)	$	1,432,833
Net income										223,648						223,648
Dividends							29			(87,881	)					(87,852	)
Other comprehensive income (loss), net of tax													(10,774	)		(10,774	)
Common stock issued		6														6
Compensation payable in common stock and options							25,963									25,963
Common stock repurchased and held in treasury				(806,782	)		90,000									(716,782	)
Common stock issued to directors and held in treasury				(535	)		29									(506	)
Exercise of stock options		10					19,688									19,698
Excess tax benefits from employee stock incentive plans							15,253									15,253


Balance at December 31, 2015	$	1,282	$	(1,395,695	)	$	1,173,183		$	1,158,462		$	(35,745	)	$	901,487

See Notes to Consolidated Financial Statements.

F-7

MSCI INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended
	December 31, 2015			December 31, 2014			December 31, 2013
	(in thousands)
Cash flows from operating activities
Net income	$	223,648		$	284,113		$	222,557
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets		46,910			48,617			58,203
Stock-based compensation expense		28,558			26,585			25,004
Depreciation of property, equipment and leasehold improvements		30,889			25,930			22,302
Amortization of debt origination fees		2,135			7,748			3,348
Deferred taxes		(10,288	)		(4,960	)		(15,066	)
Amortization of discount on long-term debt		—			2,218			1,066
Excess tax benefits from share-based compensation		(15,253	)		(2,835	)		(1,897	)
Gain on disposition of subsidiary, net of costs		—			(84,620	)		—
Other non-cash adjustments		(2,067	)		1,847			(371	)
Changes in assets and liabilities, net of assets acquired and liabilities assumed:
Accounts receivable		(30,900	)		(26,821	)		(16,412	)
Prepaid income taxes		(1,972	)		(14,998	)		7,927
Prepaid and other assets		(1,217	)		(9,857	)		(4,459	)
Accounts payable		(298	)		2,128			(2,145	)
Deferred revenue		8,047			42,263			11,399
Accrued compensation and related benefits		5,087			88			7,057
Other accrued liabilities		17,165			8,428			(260	)
Other		5,550			(201	)		2,930


Net cash provided by operating activities		305,994			305,673			321,183


Cash flows from investing activities
Acquisitions, net of cash acquired		(6,500	)		(14,921	)		(23,268	)
Proceeds from sales of investments		6,736			—			—
Proceeds from redemption of short-term investments		—			—			70,900
Dispositions, net of cash provided		—			362,811			—
Capitalized software development costs		(8,500	)		(8,216	)		(3,285	)
Capital expenditures		(40,652	)		(42,659	)		(40,255	)
Proceeds from the sale of property, equipment and leasehold improvements		55			22			29


Net cash (used in) provided by investing activities		(48,861	)		297,037			4,121


Cash flows from financing activities:
Proceeds from borrowing		800,000			800,000			—
Repayment of long–term debt		—			(810,000	)		(48,000	)
Payment of issuance costs in connection with long–term debt		(10,477	)		(14,800	)		—
Repurchase of treasury shares		(700,715	)		(409,651	)		(112,183	)
Dividends paid		(87,743	)		(20,393	)		—
Proceeds from the exercise of stock options		3,631			9,681			11,702
Excess tax benefits from stock-based compensation		15,253			2,835			1,897


Net cash provided by (used in) financing activities		19,949			(442,328	)		(146,584	)


Effect of exchange rates changes		(8,175	)		(10,017	)		(3,595	)


Net increase in cash and cash equivalents		268,907			150,365			175,125
Cash and cash equivalents, beginning of period		508,799			358,434			183,309


Cash and cash equivalents, end of period	$	777,706		$	508,799		$	358,434


Supplemental disclosure of cash flow information:
Cash paid for interest	$	42,110		$	17,233		$	20,429


Cash paid for income taxes	$	129,534		$	120,419		$	128,167


Supplemental disclosure of non-cash investing activities:

Property, equipment and leasehold improvements in other accrued liabilities	$	3,644		$	6,731		$	3,396


Supplemental disclosure of non-cash financing activities:

Cash dividends declared, but not yet paid	$	84		$	—		$	—

See Notes to Consolidated Financial Statements.

F-8

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. INTRODUCTION AND BASIS OF PRESENTATION

Organization

MSCI Inc., together with its wholly-owned subsidiaries (the “Company” or “MSCI”), offers content, applications and services to support the needs of institutional investors throughout their investment processes. The Company’s flagship products are its global equity indexes, custom indexes, factor indexes and ESG indexes; its analytics products, including multi-factor models, pricing models, methodologies for performance attribution, models for statistical analysis, and tools for portfolio optimization, back testing and stress testing; its ESG research and ratings; and its real estate benchmarks, indexes, business intelligence and analytics.

On March 17, 2014, MSCI Inc. entered into a definitive agreement to sell Institutional Shareholder Services Inc. (“ISS”). As a result, the Company reported the operating results of ISS in “Income (loss) from discontinued operations, net of income taxes” in the Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013. Unless otherwise indicated, the disclosures accompanying these consolidated financial statements reflect the Company’s continuing operations. The Company completed the sale of ISS on April 30, 2014. See Note 3, “Dispositions and Discontinued Operations,” for further details.

Following the disposition of ISS during the year ended December 31, 2014, MSCI had maintained one reportable segment. During the year ended December 31, 2015, MSCI changed its reportable segments to Index, Analytics and All Other. These three segments reflect certain changes made to the management of the Company’s product lines. This presentation also better aligns the Company’s financial reporting with how its products and services are offered to its clients and offers additional insight into how the Company is being managed. See Note 13, “Segment Information,” for further information about MSCI’s reportable segments.

Basis of Presentation

The consolidated financial statements include the accounts of MSCI Inc. and its wholly-owned subsidiaries. The Company’s policy is to consolidate all entities in which it owns more than 50% of the outstanding voting stock unless it does not control the entity. It is also the Company’s policy to consolidate any variable interest entity for which the Company is the primary beneficiary, of which the Company has none, as required by the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 810-10, “Consolidations.” For investments in any entities in which the Company owns 20% or less of the outstanding voting stock and significant influence does not exist, such investments are carried at cost.

The Company changed its presentation of operating expenses during the year ended December 31, 2015 in order to provide more transparency into the underlying cost base of the Company, consistent with how it is managed. Prior to the change, operating expenses were grouped and presented as cost of services and selling, general and administrative. Cost of services included costs related to research, data management and production, software engineering and production management functions. Selling, general and administrative consisted of expenses for sales and marketing staff, finance, human resources, legal and compliance, information technology infrastructure and corporate administration personnel. Operating expenses are now grouped and presented in the following activity categories: cost of revenues, selling and marketing, research and development and general and administrative. Costs are assigned to these categories based on the nature of the expense, or, when not directly attributable, an estimate is allocated based on the type of effort involved.

Cost of revenues consists of costs related to the production and servicing of the Company’s products and services and primarily include information technology costs associated with the production and delivery of its products and services, including data center, platform and infrastructure costs; costs to acquire, produce and maintain market data information; costs of research to support, maintain and rebalance existing products; costs of

F-9

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

product management teams; costs of client service and consultant teams to support customer needs; as well as other support costs directly attributable to the cost of revenues including certain human resources, finance and legal costs.

Selling and marketing expenses consist of costs associated with acquiring new clients or selling new products or product renewals to existing clients and primarily includes the costs of our sales force and marketing teams as well as costs incurred in other groups associated with acquiring new business, including product management, research, technology and sales operations.

Research and development expenses consist of costs to develop new or enhance existing products and the costs to develop new or improved technology and service platforms for the delivery of our products and services and primarily includes the costs of application development, research, product management, project management and the technology support associated with supporting these efforts.

General and administrative expenses consist of costs primarily related to finance operations, human resources, office of the CEO, legal, corporate technology, corporate development and certain other administrative costs that are not directly attributed, but are instead allocated, to a product or service.

The recasting of previously issued financial information has been made to conform to the current presentation and does not represent a restatement of previously issued financial statements.

Significant Accounting Policies

Basis of Financial Statements and Use of Estimates

The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These accounting principles require the Company to make certain estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Significant estimates and assumptions made by management include the deferral and recognition of revenue, research and development and software capitalization, the allowance for doubtful accounts, impairment of long-lived assets, accrued compensation, income taxes and other matters that affect the consolidated financial statements and related disclosures. The Company believes that estimates used in the preparation of these consolidated financial statements are reasonable; however, actual results could differ materially from these estimates.

Inter-company balances and transactions are eliminated in consolidation.

Revenue Recognition

In general, the Company applies SEC Staff Accounting Bulletin No. 104 (“SAB 104”), “Revenue Recognition,” in determining revenue recognition. Accordingly, the Company recognizes revenue when all the following criteria are met:

	•		The Company has persuasive evidence of a legally binding arrangement,

	•		Delivery has occurred,

	•		Client fee is deemed fixed or determinable, and

	•		Collection is probable.

F-10

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

When a sales arrangement requires the delivery of more than one product and service, revenue is recognized pursuant to the requirements of ASC Subtopic 605-25, “Revenue Arrangements with Multiple Deliverables.” Under the provisions of ASC Subtopic 605-25, elements within a multi-deliverable arrangement should be considered separate units of accounting if both of the following criteria are met:

	•		The delivered items have value to the client on a standalone basis, which means they can be sold separately by any vendor or the client could resell the delivered items on a standalone basis; and

	•		If the arrangement includes a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and substantially in the control of the vendor.

The Company has signed contracts with substantially all clients that set forth the fees to be paid for its products and services. Further, the Company regularly assesses the receivable balances for each client for collectability. The Company’s application service license arrangements generally do not include acceptance provisions, which generally allow a client to test the solution for a defined period of time before committing to the license. If a license agreement includes an acceptance provision, the Company does not recognize subscription revenues until the earlier of the receipt of a written client acceptance or, if not notified by the client that it is cancelling the license agreement, the expiration of the acceptance period.

The Company’s subscription agreements for hosted services include provisions that, among other things, allow clients, for no additional fee, to receive updates and modifications that may be made from time to time when and if available, for the term of the agreement, which is typically one year. These arrangements do not provide the client with the right to take possession of the application at any time. For sales arrangements with multiple deliverables, which may include application service subscription and professional services associated with implementation and other services, the Company evaluates each deliverable in these multiple-element arrangements to determine whether it represents a separate unit of accounting and allocates revenue accordingly, based on the Company’s best estimated sales price.

In most cases, the Company recognizes revenues from subscription arrangements ratably over the term of the license agreement pursuant to contract terms. The contracts state the terms under which these fees are to be calculated. The fees are recognized as the Company supplies the product and service to the client over the license period and are generally billed in advance, prior to the license start date. When implementation services are included, the Company recognizes revenues allocated to the subscription ratably from the date the application is put into production to the end of the license period. Revenues associated with implementation services are recognized ratably over the useful life of those services from the date the application is put into production. For products and services whose fees are based on estimated assets under management linked to the Company’s indexes, or contract values related to futures and options, the Company recognizes revenues based on estimates from independent third-party sources or the most recently reported information from the client. Revenues from subscription agreements for the receipt of periodic benchmark reports, digests, and other publications, which are most often associated with the Company’s real estate operating segment, are recognized upon delivery of such reports or data updates.

The Company’s software-related arrangements do not require significant modification or customization of any underlying software applications being licensed. Accordingly, the Company recognizes software revenues pursuant to the requirements of ASC Subtopic 985-605, “Software-Revenue Recognition.” The Company’s subscription agreements for software products include provisions that, among other things, would allow clients to receive unspecified, when and if available, software upgrades for no additional fee as well as the right to use the software products with maintenance and technical support for the term of the agreement, which is typically one

F-11

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

year. Software agreements may include other consulting and professional services. In accordance with ASC Subtopic 985-605, “Software Revenue Recognition,” the Company does not have vendor specific objective evidence (“VSOE”) for these elements and therefore begins to recognize software related revenue ratably over the term of the license agreement once delivered.

Share-Based Compensation

Certain of the Company’s employees have received share-based compensation under certain compensation programs. The Company’s compensation expense reflects the fair value method of accounting for share-based payments under ASC Subtopic 718-10, “Compensation—Stock Compensation.” ASC Subtopic 718-10 requires measurement of compensation cost for equity-based awards at fair value and recognition of compensation cost over the service period, net of estimated forfeitures.

The fair value of MSCI restricted stock units (“RSUs”) is measured using the closing price of MSCI’s common stock on the date prior to grant. Restricted stock units subject to performance conditions (“PSUs”) are based on performance measures that impact the amount of shares that each recipient will receive upon vesting. The fair value of PSUs is measured using the closing price of MSCI’s common stock on the date prior to grant. Restricted stock units that are subject to the achievement of multi-year total shareholder return targets (“MSUs”) are performance awards with a market condition. The fair value of MSUs is determined using a Monte Carlo simulation model that creates a normal distribution of future stock prices, which is then used to value the awards based on their individual terms.

The fair value of MSCI standard stock options is determined using the Black-Scholes valuation model and the single grant life method. Under the single grant life method, option awards with graded vesting are valued using a single weighted-average expected option life. The fair value of MSCI stock options that contain stock price contingencies is determined using a Monte Carlo simulation model.

The Company recognizes the expense for an award granted to an employee who is not retirement-eligible utilizing the graded vesting method over the requisite service period. For all awards, the Company bases initial accruals of compensation cost on the estimated number of units for which the requisite service is expected to be rendered and, for PSUs, the performance targets expected to be achieved is also considered. If the estimated number of units or the number of units ultimately delivered changes from previous estimates, the cumulative effect on current and prior periods of a change is recognized in compensation cost in the period of the change. Because the probability of actual shares expected to be earned is reflected in the fair value of MSUs on the grant date, the expense to be recognized for these awards is not adjusted to reflect the actual shares earned.

Based on interpretive guidance related to share-based compensation, the Company’s policy is to accrue the estimated cost of share-based awards that are granted to retirement-eligible employees over the course of the prior year in which they were earned rather than expensing the awards on the date of grant. A portion of the awards granted to retirement-eligible employees consist of PSUs. For those PSUs, the Company bases initial accruals of compensation cost on the estimated number of units for which the requisite service is expected to be rendered. If the estimated number of units expected to convert changes from previous estimates based on the performance targets expected to be achieved, the cumulative effect of a change is recognized in compensation cost in the period of the change.

Research and Development

The Company accounts for research and development costs in accordance with several accounting pronouncements, including ASC Subtopic 730-10, “Research and Development.” ASC Subtopic 730-10 requires that research and development costs generally be expensed as incurred. The majority of the Company’s research

F-12

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and development costs are incurred in developing, reviewing and enhancing the methodologies and data models offered within its product portfolio by monitoring investment trends and drivers globally, as well as analyzing product-specific needs in areas such as capitalization-weighted, factor and specialized indexes, and instrument valuation, risk modeling, portfolio construction, asset allocation and value-at-risk simulation.

The Company applies the provisions of ASC Subtopic 350-40, “Internal Use Software,” and accounts for the cost of computer software developed for internal use by capitalizing qualifying costs, which are substantially incurred during the application development stage. The amounts capitalized include external direct costs of services used in developing internal-use software and payroll and payroll-related costs of employees directly associated with the development activities. Additionally, costs incurred relating to upgrades and enhancements to the software are capitalized if it is determined that these upgrades or enhancements provide additional functionality to the software.

For the year ended December 31, 2015, the Company capitalized $8.6 million of costs related to software developed for internal use and reversed $3.4 million of previously capitalized costs associated with the termination of a technology project in the Analytics segment. As a result, $5.2 million was the net amount capitalized in the Consolidated Statement of Financial Condition for the year ended December 31, 2015.

For the year ended December 31, 2014, the Company capitalized $8.3 million of costs related to software developed for internal use and reversed $1.0 million of previously capitalized costs associated with the termination of a technology project in the Analytics segment. As a result, $7.3 million was the net amount capitalized in the Consolidated Statement of Financial Condition for the year ended December 31, 2014.

Capitalized software development costs are amortized on a straight-line basis over the estimated useful life of the related product, which is typically three to five years, beginning with the date the software is placed into service.

Costs incurred in the preliminary and post-implementation stages of our products are expensed as incurred.

Income Taxes

Income tax expense is provided for using the asset and liability method, under which deferred tax assets and deferred tax liabilities are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities using currently enacted tax rates.

The Company regularly evaluates the likelihood of additional assessments in each of the taxing jurisdictions in which it is required to file income tax returns. The Company has recorded additional tax expense related to open tax years, which the Company’s management believes is adequate in relation to the potential for assessments. These amounts have been recorded in “Other non-current liabilities” on the Consolidated Statement of Financial Condition. The Company’s management believes the resolution of tax matters will not have a material effect on the Company’s consolidated financial condition. However, to the extent the Company is required to pay amounts in excess of its reserves, a resolution could have a material impact on its Consolidated Statement of Income for a particular future period. In addition, an unfavorable tax settlement could require use of cash and result in an increase in the effective tax rate in the period in which such resolution occurs.

As of December 31, 2015, the Company elected to change its policy prospectively regarding the classification of deferred tax assets and liabilities and related valuation allowance on the Company’s Consolidated Statements of Financial Condition. To comply with the amendments in ASU 2015-17 (see Note 2, “Recent Accounting Standards Updates” for further information), the Company will classify all deferred tax assets and liabilities as noncurrent. Prior periods were not retrospectively adjusted for the change in accounting principle.

F-13

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred Revenue

Deferred revenues represent amounts billed to customers for products and services in advance of delivery. The Company’s clients generally pay subscription fees annually or quarterly in advance. Deferred revenue is generally amortized ratably over the service period as revenue recognition criteria are met. Where the service period has not begun and the client has not paid or the contract has not been renewed, deferred revenues and accounts receivable are not recognized.

Goodwill

Goodwill is recorded as part of the Company’s acquisitions of businesses when the purchase price exceeds the fair value of the net tangible and separately identifiable intangible assets acquired. The Company’s goodwill is not amortized, but rather is subject to an impairment test each year, or more often if conditions indicate impairment may have occurred, pursuant to ASC Topic 350, “Intangibles—Goodwill and Other.”

The Company tests goodwill for impairment on an annual basis on July 1 and on an interim basis when certain events and circumstances exist. The testing for impairment is performed at the reporting unit level. Goodwill impairment is determined by comparing the estimated fair value of a reporting unit with its respective book value. If the estimated fair value exceeds the book value, goodwill at the reporting unit level is not deemed to be impaired. If the estimated fair value is below book value, however, further analysis is required to determine the amount of impairment. Additionally, if the book value of a reporting unit is zero or a negative value and it is determined that it is more likely than not that the goodwill is impaired, further analysis is required. As the estimated fair value of the Company’s reporting units exceeded their respective book value on the testing dates, no impairment of goodwill was recorded during the years ended December 31, 2015, 2014 and 2013.

The Company changed its reportable segments during the year ended December 31, 2015. Simultaneously, segment reporting and goodwill reporting units were updated in connection with this change. The Company reallocated its goodwill to its reporting units using a relative fair value allocation approach in accordance with applicable accounting guidance. The Company’s reporting units are the same as its operating segments. See Note 13, “Segment Information” for further information about MSCI’s operating segments.

Intangible Assets

The Company amortizes definite-lived intangible assets over their estimated useful lives. Definite-lived intangible assets are tested for impairment when impairment indicators are present, and, if impaired, written down to fair value based on either discounted cash flows or appraised values. No impairment of intangible assets has been identified during any of the periods presented. The Company has no indefinite-lived intangibles. The intangible assets have remaining useful lives ranging from one to 20 years.

Foreign Currency Translation

Assets and liabilities of operations having non-U.S. dollar functional currencies are translated at year-end exchange rates, and income statement accounts are translated at weighted average exchange rates for the year. Gains or losses resulting from translating foreign currency financial statements, net of related tax effects, are reflected in accumulated other comprehensive loss, a separate component of shareholders’ equity. Gains or losses resulting from foreign currency transactions incurred in currencies other than the local functional currency are included in non-operating “Other expense (income)” on the Consolidated Statement of Income.

Derivative Instruments

The Company applies ASC Subtopic 815-10, “Derivatives and Hedging,” which establishes accounting and reporting standards for derivative instruments and hedging activities. The Company may use interest rate swaps

F-14

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

and forward contracts on foreign currency to manage risks generally associated with interest rate and foreign exchange rate fluctuations, respectively. The Company’s derivative financial instruments are used as risk management tools and not for speculative or trading purposes.

For derivative instruments that are designated and qualify as hedging instruments for accounting purposes, the Company documents and links the relationships between the hedging instruments and hedged items. The Company also assesses and documents at the hedge’s inception whether the derivatives used in hedging transactions were effective in offsetting changes in fair values associated with the hedged items. ASC Subtopic 815-10 provides that, for derivative instruments that qualify for hedge accounting being used to hedge cash flows, changes in the fair value are recognized in accumulated other comprehensive income (loss), a separate component of shareholders’ equity, until the hedged item is recognized in earnings. In addition, the ineffective portion of a derivative’s change in fair value is immediately recognized in earnings.

The Company manages foreign currency exchange rate risk through the use of derivative financial instruments comprised principally of forward contracts on foreign currency which are not designated as hedging instruments for accounting purposes. The objective of the derivative instruments is to minimize the income statement impact associated with assets and liabilities that are denominated in certain foreign currencies. Derivative instruments that do not qualify for hedge accounting are carried at fair value on the Consolidated Statement of Financial Condition with gains and losses recorded in the Consolidated Statement of Income in the period in which they are realized.

Property, Equipment and Leasehold Improvements

Property, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation of furniture and fixtures and computer and communications equipment are amortized using the straight-line method over the estimated useful life of the asset. Estimates of useful lives are as follows: furniture & fixtures – seven years; and, computer and related equipment – two to five years. Leasehold improvements are amortized on a straight-line basis over one to 21 years, which represents the lesser of the estimated useful life of the asset or, where applicable, the remaining term of the lease.

Treasury Stock

The Company holds repurchased shares of common stock as treasury stock. The Company accounts for treasury stock under the cost method and includes treasury stock as a component of shareholders’ equity.

In accordance with ASC Subtopic 505-10, “Equity,” the Company accounts for the capped accelerated share repurchase (“ASR”) agreements into which it enters as two separate transactions: (a) as shares of common stock acquired in a treasury stock transaction recorded on the acquisition date of the shares and (b) as a forward contract indexed to the Company’s own common stock. As such, the Company accounts for the shares that it receives under capped ASR agreements during the period as a repurchase of its common stock for the purpose of calculating earnings per common share. The Company has determined that the forward contracts indexed to the Company’s common stock meet all the applicable criteria for equity classification in accordance with ASC Subtopic 815-10 and, therefore, the capped ASR agreements are not accounted for as derivative instruments.

Allowance for Doubtful Accounts

The Company primarily licenses its products and services to institutional investors mainly in the United States, Europe and Asia (primarily Hong Kong and Japan). The Company periodically reviews receivable balances and maintains an allowance on customer accounts where estimated losses may result from the inability of its customers to make required payments. The Company does not require collateral.

F-15

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

An allowance for doubtful accounts is recorded when it is probable and estimable that a receivable will not be collected. Changes in the allowance for doubtful accounts from December 31, 2012 to December 31, 2015 were as follows:


	Amount
	(in thousands)
Balance as of December 31, 2012	$	964
Addition to provision		876
Amounts written off, net of recoveries		(560	)

Balance as of December 31, 2013	$	1,280
Addition to provision		452
Amounts written off, net of recoveries		(875	)

Balance as of December 31, 2014	$	857
Addition to provision		940
Amounts written off, net of recoveries		(680	)

Balance as of December 31, 2015	$	1,117

Accrued Compensation

The Company makes significant estimates in determining its accrued non-stock based compensation and benefits expenses. A significant portion of the Company’s employee incentive compensation programs are discretionary. Each year end, the Company determines the amount of discretionary cash bonus expense. The Company also reviews compensation and benefits expenses throughout the year to determine how overall performance compares to management’s expectations. These and other factors, including historical performance, are taken into account in accruing discretionary cash compensation estimates quarterly.

Concentrations

For the years ended December 31, 2015 and 2014, BlackRock, Inc. accounted for 10.3% and 10.6%, respectively, of the Company’s consolidated operating revenues. For the year ended December 31, 2013, no single customer accounted for 10.0% or more of the Company’s consolidated operating revenues. For the years ended December 31, 2015, 2014 and 2013, BlackRock, Inc. accounted for 19.2%, 20.1% and 18.6%, respectively, of the Index segment operating revenues. No single customer accounted for 10.0% or more of revenues within the Analytics and All Other segments for the years ended December 31, 2015, 2014 and 2013.

2. RECENT ACCOUNTING STANDARDS UPDATES

In April 2014, the FASB issued Accounting Standards Update No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” or ASU 2014-08. The amendments in this update change the requirements for reporting discontinued operations under ASC Subtopic 205-20, “Presentation of Financial Statements—Discontinued Operations,” such as limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on an entity’s operations and financial results. The amendments in this update also require expanded disclosures in order to provide users of financial statements with more information about the assets, liabilities, revenues and expenses of discontinued operations. Further, the amendments require an entity to disclose the pretax profit or loss of an individually significant component of an entity that does not qualify for discontinued operations reporting. This

F-16

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

new guidance is to be applied prospectively for annual periods beginning on or after December 15, 2014, and interim periods within those years, with early adoption permitted. The adoption of ASU 2014-08 did not have a material effect on its consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers,” or ASU 2014-09. The objective of ASU 2014-09 is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The core principle of ASU 2014-09 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the new guidance, an entity will (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the contract’s performance obligations; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. Companies have the option of using either a full retrospective or modified approach to adopt ASU 2014-09. In August 2015, the FASB issued Accounting Standards Update No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” or ASU 2015-14. The amendments in ASU 2015-14 defer the effective date of the new revenue standard by one year by changing the effective date to be for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017 from December 15, 2016, with early adoption at the prior date permitted. The Company is continuing to evaluate the potential impact that the update will have on its consolidated financial statements.

In January 2015, the FASB issued Accounting Standards Update No. 2015-01, “Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items,” or ASU 2015-01. ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, a company will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. A reporting entity may apply the amendments prospectively or retrospectively to all prior periods presented in the financial statements. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. The new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2015, with early adoption permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of ASU 2015-01 is not expected to have a material effect on the Company’s consolidated financial statements.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03, “Interest—Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs,” or ASU 2015-03. The objective of ASU 2015-03 is to simplify the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. Prior to the issuance of ASU 2015-03, debt issuance costs were recognized and presented as a deferred charge (that is, an asset). The new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2015, with early adoption permitted for financial statements that have not been previously issued. The Company early adopted ASU 2015-03 retrospectively during the year ended December 31, 2015. As a result of the retrospective adoption, the Company reclassified unamortized deferred financing fees of $1.2 million from “Prepaid and other assets” and $10.4 million from “Other non-current assets” as of December 31, 2014 to be a reduction in “Long-term debt” on the Consolidated Statement of Financial Condition. Adoption of this standard only resulted in the reclassification of items on the Consolidated Statement of Financial Condition and did not impact results of operations, retained earnings or cash flows in the current or previous interim and annual reporting periods.

F-17

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In April 2015, the FASB issued Accounting Standards Update No. 2015-05, “Intangibles—Goodwill and Other—Internal-Use Software,” or ASU 2015-05. The amendments in ASU 2015-05 provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change GAAP for a customer’s accounting for service contracts. The new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2015, with early adoption permitted. The Company is evaluating the potential impact of the adoption of ASU 2015-05, but does not expect the adoption to have a material effect on its consolidated financial statements.

In August 2015, the FASB issued Accounting Standards Update No. 2015-15, “Interest—Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” or ASU 2015-15. ASU 2015-15 adds clarity from the SEC’s perspective on the presentation and subsequent measurement of debt issuance costs associated with line-of-credit arrangements. The Company’s adoption of ASU 2015-15 did not have a material impact on its consolidated financial statements.

In September 2015, the FASB issued Accounting Standards Update No. 2015-16, “Business Combinations,” or ASU 2015-16. ASU 2015-16 simplifies the accounting for adjustments made to provisional amounts recognized in a business combination by eliminating the requirement to account for adjustments retrospectively. The amendments in ASU 2015-16 require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2015, with early adoption permitted. The Company is evaluating the potential impact of the adoption of ASU 2015-16, but does not expect the adoption to have a material effect on its consolidated financial statements.

In November 2015, the FASB issued Accounting Standards Update No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” or ASU 2015-17. ASU 2015-17 simplifies the presentation of deferred income taxes by classifying current and noncurrent deferred tax assets and liabilities as noncurrent on the Consolidated Statement of Financial Condition. The new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2016, with early adoption permitted. The Company early adopted ASU 2015-17 prospectively for the year ended December 31, 2015. Prior periods have not been changed to reflect these change in classifications, Adoption of this standard only resulted in the reclassification of items on the Consolidated Statement of Financial Condition and did not impact results of operations, retained earnings or cash flows in the current or previous interim and annual reporting periods.

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, “Financial Instruments—Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10),”or ASU 2016-01. Changes primarily impact the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017. The adoption of ASU 2016-01 is not expected to have a material effect on the Company’s consolidated financial statements.

F-18

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. DISPOSITIONS AND DISCONTINUED OPERATIONS

Disposition of CFRA

On March 31, 2013, MSCI completed the sale of its CFRA product line. The value of the disposed assets and liabilities and the resulting gain on disposal were not material to the Company.

Disposition of ISS

On March 17, 2014, MSCI entered into a definitive agreement to sell ISS. The results of operations from ISS and the CFRA product line are reflected in “Income (loss) from discontinued operations, net of income taxes” in the Consolidated Statements of Income.

The sale of ISS was completed on April 30, 2014 for $367.4 million. The value of the assets and liabilities of ISS that were disposed, directly attributable transaction costs and the resulting gain on disposal that has been reported in “Income (loss) from discontinued operations, net of income taxes” for the year ended December 31, 2014 are as follows:


	Amount (in thousands)
Cash proceeds	$	367,355
Less: Initial working capital adjustments		(311	)

Total proceeds		367,044
Less assets sold and liabilities relieved resulting from disposal:
Cash and cash equivalents		(4,544	)
Accounts receivable		(15,765	)
Deferred taxes (current)		(3,174	)
Prepaid taxes		(617	)
Prepaid and other assets		(4,500	)
Property, equipment and leasehold improvements (net of accumulated depreciation and amortization of $4,213)		(8,544	)
Goodwill		(254,233	)
Intangible assets (net of accumulated amortization of $50,283)		(121,269	)
Other non-current assets		(1,645	)
Accounts payable		574
Accrued compensation and related benefits		6,783
Other accrued liabilities		4,034
Deferred revenue		51,767
Deferred taxes (non-current)		59,129
Other non-current liabilities		5,576
Other comprehensive income including currency translation adjustments and pension and other post-retirement adjustments		4,004

Net assets sold		(282,424	)
Less: Transaction costs		(5,946	)

Gain on sale of ISS	$	78,674

F-19

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income (loss) from discontinued operations. Amounts associated with discontinued operations reflected in the Consolidated Statements of Income for the years ended December 31, 2015, 2014 and 2013 are as follows:


	Years Ended
	December 31, 2015			December 31, 2014		December 31, 2013
	(in thousands)
Revenue from discontinued operations	$	—		$	43,122	$	122,303

Income (loss) from discontinued operations before provision (benefit) for income taxes	$	—		$	86,230	$	32,793
Provision for income taxes		6,390			1,059		10,146

Income (loss) from discontinued operations, net of income taxes	$	(6,390	)	$	85,171	$	22,647

The year ended December 31, 2015 reflects the impact of out-of-period income tax charges associated with the tax obligations triggered upon the sale of ISS.

4. RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

As required by ASC Subtopic 220-10, “Comprehensive Income_—_Overall,” the following table presents the amounts reclassified from accumulated other comprehensive income (loss) by the respective line item in the Consolidated Statement of Income:

Reclassifications Out of Accumulated Other Comprehensive Income (Loss)(1)


Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)									Affected Line Item in the Unaudited Condensed Consolidated Statements of Income
	Years Ended
	December 31, 2015			December 31, 2014			December 31, 2013
	(in thousands)
Unrealized losses on cash flow hedges
Interest rate contracts	$	—		$	—		$	(1,364	)	Interest expense
		—			—			524		Income tax benefit

	$	—		$	—		$	(840	)	Net of tax

Unrealized gains on available-for-sale securities
Short-term investments	$	—		$	—		$	5
		—			—			(2	)	Provision for income taxes

	$	—		$	—		$	3		Net of tax

Defined benefit pension plans
Amount recognized as a component of net periodic benefit expense for curtailments and settlements	$	(563	)	$	(104	)	$	(32	)(2)
		153			(15	)		6	(3)	Provision for income taxes

	$	(410	)	$	(119		$	(26	)(4)	Net of tax

Foreign currency translation adjustment	$	—		$	4,184		$	—	(5)

Total reclassifications for the period, net of tax	$	(410	)	$	4,065		$	(863	)

(1)	Amounts in parentheses indicate expenses or losses moved to the Consolidated Statements of Income.

(2)	Includes $(186,000) for the year ended December 31, 2014 that was reclassified to “Income (loss) from discontinued operations, net of taxes” as part of the gain on the disposition of ISS.

F-20

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3)	Includes $6,000 for the year ended December 31, 2014 that was reclassified to “Income (loss) from discontinued operations, net of taxes” as part of the gain on the disposition of ISS.

(4)	Includes $(180,000) for the year ended December 31, 2014 that was reclassified to “Income (loss) from discontinued operations, net of taxes” as part of the gain on the disposition of ISS.

(5)	This accumulated other comprehensive income component for the year ended December 31, 2014 was reclassified to “Income (loss) from discontinued operations, net of taxes” as part of the gain on the disposition of ISS.

5. EARNINGS PER COMMON SHARE

Basic earnings per share (“EPS”) is computed by dividing income available to MSCI common shareholders by the weighted average number of common shares outstanding during the period. Common shares outstanding include common stock and vested restricted stock unit awards where recipients have satisfied either the explicit vesting terms or retirement-eligible requirements. Diluted EPS reflects the assumed conversion of all dilutive securities. There were 3,778, 78,260 and 26,407, anti-dilutive securities excluded from the calculation of diluted EPS for the years ended December 31, 2015, 2014 and 2013, respectively, because of their anti-dilutive effect.

The Company computes EPS using the two-class method and determines whether instruments granted in share-based payment transactions are participating securities. The following table presents the computation of basic and diluted EPS:


	Years Ended
(in thousands, except per share data)	December 31, 2015			December 31 2014			December 31 2013
Income from continuing operations, net of income taxes	$	230,038		$	198,942		$	199,910
Income (loss) from discontinued operations, net of income taxes		(6,390	)		85,171			22,647

Net income	$	223,648		$	284,113		$	222,557
Less: Allocations of earnings to unvested restricted stock units (1)		—			(368	)		(633	)


Earnings available to MSCI common shareholders	$	223,648		$	283,745		$	221,924


Basic weighted average common shares outstanding		109,124			115,737			120,100

Effect of dilutive securities:
Stock options and restricted stock units		802			969			974


Diluted weighted average common shares outstanding		109,926			116,706			121,074

Earnings per basic common share from continuing operations	$	2.11		$	1.72		$	1.66
Earnings per basic common share from discontinued operations		(0.06	)		0.73			0.19


Earnings per basic common share	$	2.05		$	2.45		$	1.85

Earnings per diluted common share from continuing operations	$	2.09		$	1.70		$	1.64
Earnings per diluted common share from discontinued operations		(0.06	)		0.73			0.19


Earnings per diluted common share	$	2.03		$	2.43		$	1.83

F-21

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)	Restricted stock units granted to employees prior to 2013 and restricted stock units granted to independent directors of the Company prior to April 30, 2015 had a right to participate in all of the earnings of the Company in the computation of basic EPS and, therefore, these restricted stock units were not included as incremental shares in the diluted EPS computation.

6. COMMITMENTS AND CONTINGENCIES

Legal matters. From time to time, the Company is party to various litigation matters incidental to the conduct of its business. The Company is not presently party to any legal proceedings the resolution of which the Company believes would have a material effect on its business, operating results, financial condition or cash flows.

Leases. The Company leases facilities under non-cancelable operating lease agreements. The terms of certain lease agreements provide for rental payments on a graduated basis. The Company recognizes rent expense on the straight-line basis over the lease period and has accrued for rent expense incurred but not paid. Rent expense for the years ended December 31, 2015, 2014 and 2013 was $26.5 million, $27.0 million and $24.2 million, respectively.

Future minimum commitments for the Company’s operating leases in place as of December 31, 2015 are as follows:


Years Ending December 31,	Amount
	(in thousands)
2016	$	28,170
2017		26,416
2018		25,064
2019		20,369
2020		17,863
Thereafter		148,074


Total	$	265,956

Long-term debt****. On June 1, 2010, the Company entered into a senior secured credit facility (the “2010 Credit Facility”). On March 14, 2011, the Company completed the repricing of the 2010 Credit Facility pursuant to Amendment No. 2 to the 2010 Credit Facility. On May 4, 2012, the Company amended and restated its 2010 Credit Facility (the credit agreement as so amended and restated, the “Amended and Restated Credit Facility”). The Amended and Restated Credit Facility provided for the incurrence of a new senior secured five-year Term Loan A Facility in an aggregate amount of $880.0 million (the “2012 Term Loan”) and a $100.0 million senior secured revolving facility (the “2012 Revolving Credit Facility”). The Amended and Restated Credit Facility also amended certain negative covenants, including financial covenants.

On December 12, 2013, the Company entered into an agreement that extended the maturity of the Amended and Restated Credit Facility from May 2017 to December 2018 (the “2013 Amended and Restated Credit Facility”). The Company also amended the amortization schedule of required debt payments under the 2012 Term Loan.

On November 20, 2014, the Company completed its first private offering of $800.0 million aggregate principal amount of 5.25% senior unsecured notes due 2024 (the “2024 Senior Notes”) and also entered into a

F-22

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

$200.0 million senior unsecured revolving credit agreement (the “2014 Revolving Credit Agreement”) by and among the Company, as borrower, certain of its subsidiaries, as guarantors (the “subsidiary guarantors”), the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The Company used the net proceeds from the offering of the 2024 Senior Notes, together with cash on hand, to repay in full its then outstanding term loan indebtedness of $794.8 million, which bore interest at LIBOR plus a margin of 2.25%.

On August 13, 2015, the Company completed its second private offering of $800.0 million aggregate principal amount of 5.75% senior unsecured notes due 2025 (the “2025 Senior Notes”). The Company intends to use the $789.5 million of net proceeds from the offering of the 2025 Senior Notes for general corporate purposes, including, without limitation, repurchases of its common stock.

The 2024 Senior Notes are scheduled to mature and be paid in full on November 20, 2024. At any time prior to November 15, 2019, the Company may redeem all or part of the 2024 Senior Notes upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus (iii) accrued and unpaid interest and additional interest, if any, thereon, to the date of redemption. In addition, the Company may redeem all or part of the 2024 Senior Notes, together with accrued and unpaid interest, on or after November 15, 2019, at redemption prices set forth in the indenture governing the 2024 Senior Notes. At any time prior to November 15, 2017, the Company may use the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of the 2024 Senior Notes, including any permitted additional notes, at a redemption price equal to 105.25% of the principal amount.

The 2014 Revolving Credit Agreement has an initial term of five years that may be extended, at the Company’s request, for two additional one year terms.

The 2025 Senior Notes are scheduled to mature and be paid in full on August 15, 2025. At any time prior to August 15, 2020, the Company may redeem all or part of the 2025 Senior Notes upon not less than 30 nor more than 60 days’ prior notice at a redemption price equal to the sum of (i) 100% of the principal amount thereof, plus (ii) a make-whole premium as of the date of redemption, plus (iii) accrued and unpaid interest and additional interest, if any, thereon, to the date of redemption. In addition, the Company may redeem all or part of the 2025 Senior Notes, together with accrued and unpaid interest, on or after August 15, 2020, at redemption prices set forth in the indenture governing the 2025 Senior Notes. At any time prior to August 15, 2018, the Company may use the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of the 2025 Senior Notes, including any permitted additional notes, at a redemption price equal to 105.75% of the principal amount.

Interest payments attributable to the 2024 Senior Notes are due on May 15 and November 15 of each year. The first interest payment was made on May 15, 2015. The Company paid $41.4 million of interest attributable to the 2024 Senior Notes during the year ended December 31, 2015. Interest payments attributable to the 2025 Senior Notes are due on February 15 and August 15 of each year. The first interest payment was made on February 16, 2016.

Long-term debt at December 31, 2015 was $1,579.4 million, net of $20.6 million in deferred financing fees. Long-term debt at December 31, 2014 was $788.4 million, net of $11.6 million in deferred financing fees. See Note 2, “Recent Accounting Standards Updates,” for further information on the presentation of debt issuance costs in the Consolidated Statements of Financial Condition.

In connection with the closing of the 2024 Senior Notes and 2025 Senior Notes offerings and entering into the 2014 Revolving Credit Agreement, the Company paid certain fees which, together with the existing fees

F-23

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

related to prior credit facilities, are being amortized over the life of the 2024 Senior Notes, 2025 Senior Notes and the 2014 Revolving Credit Agreement. At December 31, 2015, $23.0 million of the deferred financing fees remain unamortized, $0.6 million of which is included in “Prepaid and other assets,” $1.8 million of which is included in “Other non-current assets” and $20.6 million of which is grouped and presented as part of “Long-term debt” on the Consolidated Statements of Financial Condition.

During the years ended December 31, 2015, 2014 and 2013, the Company amortized $2.1 million, $7.7 million, and $3.3 million of deferred financing fees in interest expense, respectively. There was no unamortized debt discount outstanding as of December 31, 2015 and 2014. Approximately $2.2 million and $1.1 million of debt discount was amortized in interest expense during the years ended December 31, 2014 and 2013, respectively.

At December 31, 2015 and 2014, the fair market value of the Company’s debt obligations were $1,638.0 million and $831.0 million, respectively. The fair market value is determined in accordance with accounting standards related to the determination of fair value and represents Level 2 valuations, which are based on one or more quoted prices in markets that are not considered to be active or for which all significant inputs are observable, either directly or indirectly. The Company utilizes the market approach and obtains security pricing from a vendor who uses broker quotes and third-party pricing services to determine fair values.

Derivatives and Hedging Activities. The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company had previously entered into derivative financial instruments to manage exposures that arose from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates, and may do so again in the future. The Company’s derivative financial instruments were used to manage differences in the amount, timing and duration of the Company’s known or expected cash payments principally related to the Company’s borrowings.

Certain of the Company’s foreign operations expose the Company to fluctuations of foreign exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency, the U.S. dollar. The Company enters into derivative financial instruments to protect the value or fix the amount of certain obligations in terms of its functional currency.

Cash Flow Hedges of Interest Rate Risk. As a result of the repayment of the Company’s then-outstanding term loans on May 4, 2012 and March 14, 2011, the Company discontinued prospective hedge accounting on its then-existing interest rate swaps as they no longer met hedge accounting requirements. The Company has not entered into new interest rate swaps to hedge its debt. The Company continued to report the net loss related to the discontinued cash flow hedges in accumulated other comprehensive income (loss) and reclassified this amount into earnings through the contractual term of the swap agreements which ended in August 2013.

Non-designated Hedges of Foreign Exchange Risk. Derivatives not designated as hedges are not speculative and are used to manage the Company’s economic exposure to foreign exchange rate movements but do not meet the strict hedge accounting requirements. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. As of December 31, 2015, the Company had outstanding foreign currency forwards with a notional amount of $25.0 million that were not designated as hedges in qualifying hedging relationships.

F-24

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the fair values of the Company’s derivative instruments and the location in which they are presented on the Company’s Consolidated Statements of Financial Condition:


	Consolidated Statements of Financial Condition Location		As of
(in thousands)		December 31, 2015				December 31, 2014
Derivatives designated as hedging instruments:
Asset derivatives:
Foreign exchange contracts	Prepaid and other assets		$	640			$	—
Liability derivatives:
Foreign exchange contracts	Other accrued liabilities		$	(2	)		$	(243	)

The following tables present the effect of the Company’s financial derivatives and the location in which they are presented on the Company’s Consolidated Statements of Financial Condition and Consolidated Statements of Income:


Derivatives in Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in Accumulated Other Comprehensive Income (Loss) on Derivatives (Effective Portion) for the Years Ended December 31,						Location of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)		Amount of Gain or (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (Effective Portion) for the Years Ended December 31,							Location of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)			Amount of Gain or (Loss) Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) for the Years Ended December 31,
(in thousands)	2015		2014		2013			2015		2014		2013			2015			2014			2013
Interest rate swaps	$	—	$	—	$	—		Interest expense	$	—	$	—	$	(1,364	)		Interest expense		$	—		$	—	$	—


Derivatives Not Designated as Hedging Instruments (in thousands)	Location of Gain or (Loss) Recognized in Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives for the Years Ended
	December 31, 2015			December 31, 2014			December 31, 2013
Foreign exchange contracts	Other expense (income)	$	366		$	(834	)	$	(139	)

Gain on sale of investment

During the year ended December 31, 2015, MSCI sold an investment accounted for under the cost method and recognized a $6.3 million gain which is included within the “Other expense (income), net” in the Consolidated Statements of Income.

F-25

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Property, equipment and leasehold improvements at December 31, 2015 and 2014 consisted of the following:


		As of
Type	Estimated Useful Lives	December 31, 2015			December 31, 2014
		(in thousands)
Computer & related equipment	2 to 5 years	$	143,499		$	118,537
Furniture & fixtures	7 years		9,870			9,569
Leasehold improvements	1 to 21 years		47,579			49,756
Work-in-process	—		12,658			9,020

Subtotal			213,606			186,882
Accumulated depreciation and amortization			(114,680	)		(92,808	)

Property, equipment and leasehold improvements, net		$	98,926		$	94,074

Depreciation and amortization expense of property, equipment and leasehold improvements was $30.9 million, $25.7 million and $20.4 million for the years ended December 31, 2015, 2014 and 2013, respectively.

8. GOODWILL AND INTANGIBLE ASSETS

Goodwill.

The change to the Company’s goodwill was as follows:


(in thousands)	Goodwill
Goodwill at December 31, 2013	$	1,813,164
Changes to goodwill (1)		(244,299	)
Foreign exchange translation adjustment		(3,961	)

Goodwill at December 31, 2014	$	1,564,904
Changes to goodwill (2)		4,202
Foreign exchange translation adjustment		(3,485	)


Goodwill at December 31, 2015 (3)	$	1,565,621

(1)	Changes to goodwill reflect the disposition and addition of goodwill associated with the sale of ISS, which removed $254.2 million, and the acquisition of GMI Ratings, which contributed $9.9 million. See Note 3, “Dispositions and Discontinued Operations,” and Note 12, “Acquisitions,” for additional information.

(2)	Changes to goodwill reflect the addition of $4.2 million of goodwill associated with the acquisition of Insignis. See Note 12, “Acquisitions,” for additional information.

(3)	At December 31, 2015, the goodwill assigned to the Index, Analytics and All Other reportable segments was $1,210.4 million, $302.5 million and $52.7 million, respectively.

Intangible Assets.

Amortization expense related to intangible assets for the years ended December 31, 2015, 2014 and 2013, was $46.9 million, $45.9 million and $44.8 million, respectively.

F-26

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The gross carrying and accumulated amortization amounts related to the Company’s identifiable intangible assets were as follows:


	Estimated Useful Lives		As of
(in thousands)		December 31, 2015				December 31, 2014(1)
Gross intangible assets:
Customer relationships	5 to 21 years		$	361,746			$	360,835
Trademarks/trade names	5 to 21.5 years			223,382				223,382
Technology/software	3 to 8.5 years			199,889				193,681
Proprietary data	13 years			28,627				28,627
Covenant not to compete	2 years			1,225				900

Subtotal				814,869				807,425
Foreign exchange translation adjustment				(4,867	)			(1,588	)

Total gross intangible assets			$	810,002			$	805,837

Accumulated amortization:
Customer relationships			$	(143,325	)		$	(119,058	)
Trademarks/trade names				(93,476	)			(81,545	)
Technology/software				(175,209	)			(167,083	)
Proprietary data				(6,698	)			(4,589	)
Covenant not to compete				(665	)			(187	)

Subtotal				(419,373	)			(372,462	)
Foreign exchange translation adjustment				861				253

Total accumulated amortization			$	(418,512	)		$	(372,209	)


Net intangible assets:
Customer relationships			$	218,421			$	241,777
Trademarks/trade names				129,906				141,837
Technology/software				24,680				26,598
Proprietary data				21,929				24,038
Covenant not to compete				560				713

Subtotal				395,496				434,963
Foreign exchange translation adjustment				(4,006	)			(1,335	)

Total net intangible assets			$	391,490			$	433,628

(1)	Intangible assets and the associated accumulated amortization as of December 31, 2014 reflect the disposition and addition of intangible assets associated with the sale of ISS and acquisition of GMI Ratings, respectively. See Note 3, “Dispositions and Discontinued Operations,” and Note 12, “Acquisitions,” for additional information.

F-27

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Estimated amortization expense for succeeding years is presented below:


For the Years Ending December 31,	Amortization Expense
	(in thousands)
2016	$	47,965
2017		43,097
2018		39,863
2019		37,853
2020		36,106
Thereafter		186,606


Total	$	391,490

9. EMPLOYEE BENEFITS

The Company sponsors a 401(k) plan for eligible U.S. employees and defined contribution and defined benefit pension plans that cover substantially all of its non-U.S. employees. For the years ended December 31, 2015, 2014 and 2013, costs relating to 401(k), pension and post-retirement benefit expenses were $23.1 million, $22.2 million and $18.2 million, respectively. Amounts included in cost of revenues for the years ended December 31, 2015, 2014 and 2013 were $10.7 million, $9.9 million and $8.4 million, respectively. Amounts included in selling and marketing for the years ended December 31, 2015, 2014 and 2013 were $6.8 million, $7.2 million and $5.6 million, respectively. Amounts included in research and development for the years ended December 31, 2015, 2014 and 2013 were $4.0 million, $3.7 million and $3.0 million, respectively. Amounts included in general and administrative for the years ended December 31, 2015, 2014 and 2013 were $1.6 million, $1.3 million and $1.2 million, respectively.

401(k) and Other Defined Contribution Plans. Eligible employees may participate in the MSCI 401(k) plan (or any other regional defined contribution plan sponsored by MSCI) immediately upon hire. Eligible employees receive 401(k) and other defined contribution plan matching contributions, which are subject to vesting and certain other limitations. The Company’s expenses associated with the 401(k) plan and other defined contribution plans for the years ended December 31, 2015, 2014 and 2013 were $18.4 million, $19.3 million and $15.7 million, respectively.

Net Periodic Benefit Expense. Net periodic benefit expense incurred by the Company related to defined benefit pension plans was $4.7 million, $2.8 million and $2.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

The Company uses a measurement date of December 31 to calculate obligations under its pension and postretirement plans. As of December 31, 2015 and 2014, the Company carried a $17.1 million and $16.7 million, respectively, net liability in other non-current liabilities on its Consolidated Statement of Financial Condition related to its future pension obligations. The fair value of the defined benefit plan assets were $16.4 million and $14.3 million at December 31, 2015 and 2014, respectively.

10. SHAREHOLDERS’ EQUITY

The following note reflects the share repurchases and related activity as well as share-based compensation activity recognized by the Company, including the amounts recognized in both continuing operations and discontinued operations for all periods referenced.

F-28

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Return of capital. On December 13, 2012, the Board of Directors approved a stock repurchase program authorizing the purchase of up to $300.0 million worth of shares of MSCI’s common stock beginning immediately and continuing through December 31, 2014 (the “2012 Repurchase Program”).

Prior to 2014, the Company repurchased an aggregate of $200.0 million worth of shares through multiple accelerated share repurchase (“ASR”) agreements under the 2012 Repurchase Program. On February 6, 2014, MSCI utilized the remaining $100.0 million repurchase authorization provided by the 2012 Repurchase Program.

On February 4, 2014, the Board of Directors approved a stock repurchase program authorizing the purchase of up to $300.0 million worth of shares of MSCI’s common stock, which was increased to $850.0 million on September 17, 2014 (the “2014 Repurchase Program”). On October 14, 2015, the Company exhausted the $850.0 million share repurchase authorization under the 2014 Repurchase Program.

On October 28, 2015, the Board of Directors approved a new stock repurchase program authorizing the purchase of up to $1.0 billion worth of shares of MSCI’s common stock (the “2015 Repurchase Program”). Share repurchases made pursuant to the 2015 Repurchase Program may take place in the open market or in privately negotiated transactions from time to time based on market and other conditions. This authorization may be modified, suspended or terminated by the Board of Directors at any time without prior notice.

On September 18, 2014, as part of the 2014 Repurchase Program, the Company entered into an ASR agreement to initiate share repurchases aggregating $300.0 million (the “September 2014 ASR Agreement”). As a result of the September 2014 ASR Agreement, the Company received approximately 4.5 million shares of MSCI’s common stock on September 19, 2014 and approximately 1.2 million shares of MSCI’s common stock on May 21, 2015 for a combined average price of $52.79 per share.

On June 2, 2015, the Company began purchasing shares of its common stock on the open market in accordance with SEC Rule 10b5-1. Through December 31, 2015, the Company paid $670.8 million to receive approximately 10.7 million shares on the open market as part of both the 2014 Repurchase Program and the 2015 Repurchase Program.

Pursuant to the 2014 Repurchase Program and the 2015 Repurchase Program, as of December 31, 2015 the Company purchased a total of 16.4 million shares for an average purchase price of $59.22 per share.

Since the announcement of the September 2014 $1.0 billion capital return plan and through December 31, 2015, approximately $1.1 billion was returned through share repurchases and cash dividends and a total of $1.4 billion was returned to shareholders since 2012.

The following table presents cash dividends declared and distributed per common share for the periods indicated:


	Dividends Per Share		Amount (in thousands)
2014:
Fourth quarter	$	0.18	$	20,393


2015:
First quarter	$	0.18	$	20,411
Second quarter		0.18		20,442
Third quarter		0.22		24,152
Fourth quarter		0.22		22,792

Total cash dividends declared and distributed	$	0.80	$	87,797

F-29

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Common Stock.

The following table presents activity related to shares of common stock issued and repurchased for the periods indicated:


	Common Stock Issued		Treasury Stock			Common Stock Outstanding

Balance At December 31, 2012		124,033,980		(3,919,394	)		120,114,586
Common stock issued and exercise of stock options		1,517,381		—			1,517,381
Shares received for taxes and exercise price of stock awards		—		(352,086	)		(352,086	)
Shares received under stock repurchase programs		—		(3,197,371	)		(3,197,371	)
Stock issued to Directors and held in Treasury		3,907		(3,306	)		601

Balance At December 31, 2013		125,555,268		(7,472,157	)		118,083,111
Dividend payable/paid		99		(99	)		—
Common stock issued and exercise of stock options		1,076,751		—			1,076,751
Shares received for taxes and exercise price of stock awards		—		(233,163	)		(233,163	)
Shares received under stock repurchase programs		—		(6,856,866	)		(6,856,866	)
Stock issued to Directors and held in Treasury		5,272		(2,636	)		2,636

Balance At December 31, 2014		126,637,390		(14,564,921	)		112,072,469
Dividend payable/paid		802		(385	)		417
Common stock issued and exercise of stock options		1,558,965		—			1,558,965
Shares received for taxes and exercise price of stock awards		—		(763,558	)		(763,558	)
Shares received under stock repurchase programs		—		(11,856,169	)		(11,856,169	)
Stock issued to Directors and held in Treasury		3,032		(2,008	)		1,024

Balance At December 31, 2015		128,200,189		(27,187,041	)		101,013,148

Shared-Based Compensation. The Company regularly issues share-based compensation to its employees and directors who were not employees of the Company. The accounting guidance for share-based compensation requires measurement of compensation cost for share-based awards at fair value and recognition of compensation cost over the service period, net of estimated forfeitures.

In February 2016, the Company granted a portion of its employees with awards in the form of RSUs and MSUs. The total number of units granted was 711,329. The aggregate fair value of the awards was $42.5 million, of which approximately $9.8 million had been expensed in the year ended December 31, 2015 in relation to awards granted to retirement eligible employees under the award terms. A portion of the awards granted consisted of RSUs vesting over a three-year period, with one-third vesting on each anniversary of the grant in

F-30

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2017, 2018 and 2019. A smaller portion of the awards granted consisted of MSUs that will time-vest over a three year period and are subject to the achievement of the applicable absolute total shareholder return compounded annual growth rate and relative total shareholder return compounded annual growth rate performance metrics measured over a minimum three-year performance period. The performance period may also be extended for an additional period of six months only in the event that both of the performance metrics achieved by the Company are below specified threshold performance levels.

Certain MSU awards were also granted under an equity compensation plan that was approved by the Board, but remains subject to shareholder approval. As a result, these awards are not considered to have been granted in accordance with ASC Subtopic 718-10. If the plan is approved, the fair value of the target number of shares underlying such awards will be determined as of the grant date, which will coincide with shareholder approval of the equity compensation plan. These awards are subject to achievement of the same performance metrics as those for the MSUs granted in February 2016 and will vest at the same time.

For a small group of awards granted by the Company, all or a portion of the award may be cancelled in certain limited situations, including termination for cause, if employment is terminated before the end of the relevant restriction period. For the remainder of the awards granted by the Company, all or a portion of the award may be cancelled if employment is terminated for certain reasons before the end of the relevant restriction period for non-retirement-eligible employees.

In connection with awards under its equity-based compensation and benefit plans, the Company is authorized to use newly issued shares or certain shares of common stock held in treasury.

The components of share-based compensation expense related to the awards to Company employees and directors who are not employees of the Company of restricted stock units and restricted stock awards (representing shares of common stock) and options to purchase shares of common stock, as applicable, are presented below:


(in thousands)		Years Ended
	December 31, 2015				December 31, 2014			December 31, 2013

Deferred stock		$	27,549			$	25,830		$	23,910
Stock options			(73	)			1,201			1,643


Total		$	27,476			$	27,031		$	25,553

The following table presents the amount of share-based compensation expense by category for the periods indicated:


(in thousands)		Years Ended
	December 31, 2015			December 31, 2014			December 31, 2013

Cost of revenues		$	6,909		$	7,187		$	7,490
Selling and marketing			6,564			7,296			5,721
Research and development			2,823			3,128			2,283
General and administrative			11,180			8,005			7,277


Total share-based compensation expense		$	27,476		$	25,616		$	22,771

F-31

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There was no share-based compensation expense included in income (loss) from discontinued operations, net of income taxes for the year ended December 31, 2015. The amount included in income (loss) from discontinued operations, net of income taxes for the years ended December 31, 2014 and 2013 was $1.4 million and $2.8 million, respectively.

The tax benefits for share-based compensation expense related to deferred stock and stock options granted to Company employees and to directors who are not employees of the Company were $15.3 million, $2.8 million and $2.6 million for the years ended December 31, 2015, 2014 and 2013, respectively.

As of December 31, 2015, $14.5 million of compensation cost related to MSCI unvested share-based awards granted to the Company’s employees and to directors who are not employees of the Company had not yet been recognized. The unrecognized compensation cost relating to unvested stock-based awards expected to vest will be recognized primarily over the next one to three years.

In connection with awards under its equity-based compensation and benefit plans, the Company is authorized to issue shares of common stock. As of December 31, 2015, 6.7 million shares of common stock were available for future grants under these plans.

Deferred Stock Awards. Certain Company employees have been granted deferred stock awards pursuant to a share-based compensation plan. The plan provides for the deferral of a portion of certain employees’ discretionary compensation with awards made in the form of RSUs, PSUs and restricted stock awards (together, the “Deferred Stock Awards”). Recipients of RSUs, restricted stock awards and PSUs granted prior to January 2014 generally have rights to receive dividend equivalents that are not subject to vesting. Recipients of RSUs and PSUs granted in January 2014 and thereafter generally have rights to receive dividend equivalents that are subject to vesting. The Company reports the target number of PSUs granted unless it has determined, based on the actual achievement of performance measures, that an employee will receive a different amount of shares underlying the PSUs, in which case the Company reports the amount of shares employees are likely to receive.

The following table presents activity concerning the Company’s vested and unvested deferred stock awards applicable to its employees (share data in thousands) for the period indicated:


For the Year Ended December 31, 2015	Number of Shares			Weighted Average Grant Date Fair Value
Vested and unvested deferred stock awards at December 31, 2014 (1)		1,213		$	37.82
Granted		634		$	55.20
Conversion to common stock		(640	)	$	36.55
Canceled		(132	)	$	47.47


Vested and unvested deferred stock awards at December 31, 2015		1,075		$	47.70

(1)	As of December 31, 2015, 1,054 restricted stock units and restricted stock awards, with a weighted average price of $47.60, were vested or expected to vest.

The total fair value of Deferred Stock Awards held by the Company’s employees that converted to MSCI common stock during the years ended December 31, 2015, 2014 and 2013 was $34.1 million, $24.5 million and $28.2 million, respectively.

F-32

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents activity concerning the Company’s unvested deferred stock awards related to its employees (share data in thousands):


For the Year Ended December 31, 2015	Number of Shares			Weighted Average Grant Date Fair Value
Unvested deferred stock awards at December 31, 2014		883		$	37.99
Granted		499		$	55.45
Vested		(453	)	$	37.18
Canceled		(129	)	$	47.81


Unvested deferred stock awards at December 31, 2015		800		$	47.83


Unvested deferred stock awards expected to vest		779		$	47.69

Stock Option Awards. No MSCI stock options were issued during the years ended December 31, 2015 and 2014. During the year ended December 31, 2013, the Company awarded stock options to certain of its employees. The award was valued using a Black-Scholes valuation model. The weighted average fair value of MSCI stock options issued by the Company in the year ended December 31, 2013 was $19.18 utilizing the following assumptions:


	Assumptions
Risk free interest rate		1.87	%
Expected option life in years		6.50
Expected stock price volatility		46.07	%
Expected dividend yield		—

The expected stock price volatility assumption was determined using the historical volatility of the Company.

The following table presents activity concerning MSCI stock options granted to the Company’s employees for the year ended December 31, 2015 (option data and dollar values in thousands, except exercise price):


For the Year Ended December 31, 2015	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Life (Years)		Aggregated Intrinsic Value
Options outstanding at December 31, 2014		1,487		$	22.69		3.76		N/A
Granted or assumed		—		$	—		N/A		N/A
Forfeited		(63	)	$	40.14		N/A		N/A
Conversion to common stock		(939	)	$	20.97		N/A		N/A


Options outstanding at December 31, 2015		485		$	23.77		2.40	$	23,432


Options exercisable at December 31, 2015		435		$	22.29		2.68	$	21,669


Options vested or expected to vest		485		$	23.77		2.40	$	23,432

F-33

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table presents information relating to the Company’s outstanding stock options as of December 31, 2015 (number of options outstanding and aggregate intrinsic value data in thousands):


As of December 31, 2015	Options Outstanding
Range of Exercise Prices	Number Outstanding		Weighted Average Exercise Price		Average Remaining Life (Years)		Aggregate Intrinsic Value
$9.92 to $16.48		55	$	15.54		2.80	$	3,109
$18.00		134	$	18.00		1.87	$	7,260
$20.45 to $24.11		153	$	22.45		1.95	$	7,581
$25.64 to $40.23		143	$	33.75		3.23	$	5,482


Total		485					$	23,432

The following table presents information relating to the Company’s exercisable stock options as of December 31, 2015 (number of options outstanding and aggregate intrinsic value data in thousands):


As of December 31, 2015	Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted Average Exercise Price		Average Remaining Life (Years)		Aggregate Intrinsic Value
$9.92 to $16.48		55	$	15.54		2.80	$	3,109
$18.00		134	$	18.00		1.87	$	7,260
$20.45 to $24.11		153	$	22.45		1.95	$	7,581
$25.64 to $40.23		93	$	32.18		2.31	$	3,719


Total		435					$	21,669

The intrinsic value of the stock options exercised by the Company’s employees during the years ended December 31, 2015, 2014 and 2013 was $37.3 million, $12.8 million and $13.9 million, respectively.

F-34

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. INCOME TAXES

The provision for income taxes (benefits) by taxing jurisdiction consisted of:


	Years Ended
	December 31, 2015			December 31, 2014			December 31, 2013
	(in thousands)
Current
U.S. federal	$	85,540		$	84,959		$	97,739
U.S. state and local		22,108			13,929			16,820
Non U.S.		22,156			18,505			18,270


		129,804			117,393			132,829

Deferred
U.S. federal		(10,546	)		(2,606	)		(14,362	)
U.S. state and local		1,460			(3,356	)		(3,802	)
Non U.S.		(1,202	)		(2,035	)		(1,747	)


		(10,288	)		(7,997	)		(19,911	)


Provision for income taxes from continuing operations	$	119,516		$	109,396		$	112,918


Provision for income taxes from discontinued operations	$	6,390		$	1,059		$	10,146

The following table reconciles the provision to the U.S. federal statutory income tax rate for income from continuing operations:


	Years Ended
	December 31, 2015			December 31, 2014			December 31, 2013
U.S. federal statutory income tax rate		35.00	%		35.00	%		35.00	%
U.S. state and local income taxes, net of U.S. federal income tax benefits		4.44	%		2.72	%		3.05	%
Change in tax rates applicable to non-U.S. earnings		(2.73	%)		(1.88	%)		(0.93	%)
Domestic tax credits and incentives		(2.62	%)		(0.86	%)		(0.95	%)
Other		0.10	%		0.50	%		(0.07	%)


Effective income tax rate		34.19	%		35.48	%		36.10	%

F-35

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2015 and 2014, were as follows:


	As of
	December 31, 2015			December 31, 2014
	(in thousands)
Deferred tax assets:
Employee compensation and benefit plans	$	23,700		$	24,765
Deferred rent		7,485			7,229
State taxes		—			2,322
Pension		2,030			2,494
Unearned revenue		1,555			1,117
Loss carryforwards – current		—			1,667
Loss carryforwards – non-current		33,389			34,249
Other		678			1,979

Subtotal		68,837			75,822
Less: valuation allowance		(21,052	)		(21,232	)


Total deferred tax assets	$	47,785		$	54,590

Deferred tax liabilities:
Intangible assets	$	(138,832	)	$	(154,965	)
Foreign currency translation		(352	)		(629	)
Property, equipment and leasehold improvements, net		(10,358	)		(10,435	)
Other		—			(246	)


Total deferred tax liabilities	$	(149,542	)	$	(166,275	)


Net deferred tax liabilities	$	(101,757	)	$	(111,685	)

As presented in the table above, the Company has certain loss carryforward items. The tax value of the capital loss carryforward is $21.1 million which is set to expire in 2019. There is a full valuation allowance against this item. The tax value of the United States portion of the net operating loss carryforwards is $10.2 million which is subject to an annual limitation on utilization and will begin to expire in 2020.

The following table presents the components of income before provision for income taxes generated by domestic or foreign operations for the periods indicated:


	Years Ended
	December 31, 2015		December 31, 2014		December 31, 2013
	(in thousands)
Domestic	$	282,764	$	269,944	$	276,549
Foreign (1)		66,790		38,394		36,279

Total income before provision for income taxes	$	349,554	$	308,338	$	312,828

(1)	Foreign income before provision for income taxes is defined as income generated from operations located outside the U.S., which includes income from foreign branches of U.S. companies.

F-36

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cumulative earnings attributable to foreign subsidiaries were $224.8 million, $149.1 million and $188.6 million for the years ended December 31, 2015, 2014, and 2013, respectively. No provisions for income tax that could occur upon repatriation have been recorded on these earnings which the Company intends to permanently reinvest abroad. At this time, it is not practicable to determine the amount of income taxes payable in the event all such foreign earnings are repatriated.

The Company regularly assesses the likelihood of additional assessments in each of the taxing jurisdictions in which it files income tax returns. The Company has established unrecognized tax benefits that the Company believes are adequate in relation to the potential for additional assessments. Once established, the Company adjusts unrecognized tax benefits only when more information is available or when an event occurs necessitating a change. As part of the Company’s periodic review of unrecognized tax benefits and based on new information regarding the status of federal and state examinations, the Company’s unrecognized tax benefits were remeasured. It is reasonably possible that significant changes in the balance of unrecognized tax benefits may occur within the next 12 months. At this time, however, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits and the impact on the effective tax rate over the next 12 months.

The Company believes the resolution of tax matters will not have a material effect on the Consolidated Statement of Financial Condition of the Company, although a resolution could have a material impact on the Company’s Consolidated Statement of Income for a particular future period and on the Company’s effective tax rate for any period in which such resolution occurs.

The following table presents a reconciliation of the beginning and ending amount of the gross unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2015, 2014 and 2013:


	Years Ended
Gross unrecognized tax benefits	December 31, 2015			December 31, 2014			December 31, 2013
(in thousands)
Beginning balance	$	6,525		$	7,089		$	6,827
Increases based on tax positions related to the current period		536			292			194
Increases based on tax positions related to prior periods		2,131			1,969			2,690
Decreases based on tax positions related to prior periods		(500	)		(346	)		(2,474	)
Increases/ (Decreases) related to settlements with taxing authorities		—			(1,652	)		—
Increases/(Decreases) related to a lapse of applicable statute of limitations		—			(827	)		(148	)


Ending balance	$	8,692		$	6,525		$	7,089

The total amount of unrecognized tax benefits was $7.8 million, net of federal benefit of state issues, competent authority and foreign tax credit offsets, as of December 31, 2015, which, if recognized, would favorably affect the effective tax rate in future periods. The Company recognizes the accrual of interest and penalties related to unrecognized tax benefits in the Provision for Income Taxes in the Consolidated Statement of Income. For the year ended December 31, 2015, the Company recognized $0.3 million of interest in the Consolidated Statement of Income. No significant penalties were recognized in the Consolidated Statement of Income for the year ended December 31, 2015.

F-37

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company is under examination by the IRS and other tax authorities in certain jurisdictions, including foreign jurisdictions, such as India, and states in which the Company has significant business operations, such as New York. The tax years currently under examination vary by jurisdiction but include years ranging from 2005 through 2014. As a result of having previously been a member of the Morgan Stanley consolidated group, the Company may have future settlements with Morgan Stanley related to the ultimate disposition of their New York State and New York City examination relating to the tax years 2007 and 2008 and their IRS examination relating to the tax years 2006 through 2008. The Company does not believe it has any material exposure to the New York State and New York City examinations. Additionally, the Company believes it has adequate reserves for any tax issues that may arise out of the IRS examination relating to the tax years 2006 through 2008 and therefore does not believe any related settlement with Morgan Stanley will have a material impact.

12. ACQUISITIONS

The acquisition method of accounting is based on ASC Subtopic 805-10, “Business Combinations,” and uses the fair value concepts defined in ASC Subtopic 820-10, “Fair Value Measurements and Disclosures,” which the Company has adopted as required. The total purchase price is allocated to the net tangible and intangible assets based upon their fair values as of the acquisition dates. The excess of the purchase price over the fair values of the net tangible assets and intangible assets was recorded as goodwill. The allocation of the purchase price was based upon a valuation and is subject to change within the one-year measurement period following the acquisition. MSCI expects to continue to obtain information to assist it in determining the fair value of the net assets acquired at the acquisition date during the measurement period.

Acquisition of Insignis

On October 16, 2015, the Company completed the purchase of Insignis for $6.5 million through its subsidiary InvestorForce. Insignis is a financial data provider, including data on positions, transactions and complex instruments such as exchange-traded futures and options, OTC swaps and foreign exchange spot and forward contracts. Financial results for Insignis will be included within the Analytics segment from the time of acquisition.

As of December 31, 2015, the preliminary purchase price allocations for the Insignis acquisition were $4.2 million for goodwill, $2.2 million for identifiable intangible assets and $0.1 million for assets other than identifiable intangible assets.

Acquisition of GMI Ratings

On August 11, 2014, the Company completed the acquisition of GMI Ratings for $15.5 million in cash through its subsidiary MSCI ESG Research Inc. GMI Ratings is a provider of corporate governance research and ratings on companies worldwide. Clients of GMI Ratings include institutional investors, banks, insurers, auditors, regulators and corporations seeking to incorporate ESG factors into risk assessment and decision-making.

The purchase price allocations for the GMI Ratings acquisition were $9.9 million for goodwill, $3.6 million for identifiable intangible assets, $6.7 million for assets other than identifiable intangible assets and $4.7 million for other liabilities.

F-38

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. SEGMENT INFORMATION

ASC Subtopic 280-10, “Segment Reporting,” establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or CODM, in deciding how to allocate resources and assess performance. MSCI’s Chief Executive Officer and Chief Operating Officer, who are considered to be its CODM, review financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance.

The CODM measures and evaluates reportable segments based on segment operating revenues as well as Adjusted EBITDA and other measures. The Company excludes the following items from segment Adjusted EBITDA: income (loss) from discontinued operations, net of income taxes, provision for income taxes, other expense (income), net, depreciation and amortization of property, equipment and leasehold improvements, amortization of intangible assets and certain transactions or adjustments that the CODM does not consider for the purposes of making decisions to allocate resources among segments or to assess segment performance. Although these amounts are excluded from segment Adjusted EBITDA, they are included in reported consolidated net income and are included in the reconciliation that follows.

The Company’s computation of segment Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies because all companies do not calculate segment Adjusted EBITDA in the same fashion.

Revenues and expenses directly associated with each segment are included in determining its operating results. Other expenses that are not directly attributable to a particular segment are allocated based upon allocation methodologies, including time estimates, headcount, sales targets, data center consumption and other relevant usage measures. Due to the integrated structure of our business, certain costs incurred by one segment may benefit other segments. A segment may use the content and data produced by another segment without incurring an arm’s length intersegment charge.

The CODM does not review any information regarding total assets on an operating segment basis. Operating segments do not record intersegment revenue, and, accordingly, there is none to be reported. The accounting policies for segment reporting are the same as for MSCI as a whole.

The Company has four operating segments: Index, Analytics, ESG and Real Estate.

The Index operating segment is a provider of investment decision support tools, including equity indexes and equity index benchmarks. The products are used in many areas of the investment process, including portfolio construction and rebalancing, asset allocation, performance benchmarking and attribution, regulatory and client reporting and index-linked investment product creation.

The Analytics operating segment consists of products and services used for portfolio construction, risk management and reporting. The products enable institutional investors to monitor, analyze and report on the risk and return of investments across a variety of asset classes. They are based on proprietary, integrated fundamental multi-factor risk models, value-at-risk methodologies, performance attribution frameworks and asset valuation models. In addition, the Analytics segment includes products that help investors value, model and hedge physical assets and derivatives across a number of market segments, including energy and commodity assets.

The ESG operating segment offers products institutional investors use for assessing risks and opportunities arising from environmental, social and governance issues. ESG tools are used to evaluate both individual securities and investment portfolios.

F-39

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Real Estate operating segment is a provider of real estate performance analysis for funds, investors, managers, lenders and occupiers. It provides index products and offers services that include research, reporting and benchmarking.

The operating segments of ESG and Real Estate do not individually meet the segment reporting thresholds and have been combined and presented as part of All Other for disclosure purposes.

The following table presents operating revenue by reportable segment for the periods indicated:


	Years Ended
	December 31, 2015		December 31, 2014		December 31, 2013
	(in thousands)
Operating revenues
Index	$	558,964	$	503,892	$	448,414
Analytics		433,424		414,085		397,203
All Other		82,625		78,703		67,747

Total	$	1,075,013	$	996,680	$	913,364

The following table presents segment profitability and a reconciliation to net income for the periods indicated:


	Years Ended
	December 31, 2015			December 31, 2014			December 31, 2013
	(in thousands)
Index Adjusted EBITDA	$	392,987		$	349,685		$	323,558
Analytics Adjusted EBITDA		95,468			72,173			97,806
All Other Adjusted EBITDA		(6,758	)		(13,104	)		(16,216	)

Total operating segment profitability		481,697			408,754			405,148
Lease exit charge		—			—			(365	)
Amortization of intangible assets		46,910			45,877			44,798
Depreciation and amortization of property, equipment and leasehold improvements		30,889			25,711			20,384

Operating income		403,898			337,166			340,331
Other expense (income), net		54,344			28,828			27,503
Provision for income taxes		119,516			109,396			112,918


Income from continuing operations		230,038			198,942			199,910
Income (loss) from discontinued operations, net of income taxes		(6,390	)		85,171			22,647

Net income	$	223,648		$	284,113		$	222,557

F-40

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue by geography is based on the shipping address of the ultimate customer utilizing the product. The following table presents revenue by geographic area for the periods indicated:


	Years Ended
(in thousands)	December 31, 2015		December 31, 2014		December 31, 2013
Revenues
Americas:
United States	$	519,429	$	471,145	$	416,999
Other		41,552		37,189		34,547


Total Americas		560,981		508,334		451,546


Europe, the Middle East and Africa (“EMEA”):
United Kingdom		166,019		154,308		141,938
Other		215,192		209,893		202,664


Total EMEA		381,211		364,201		344,602


Asia & Australia:
Japan		45,371		46,642		46,752
Other		87,450		77,503		70,464


Total Asia & Australia		132,821		124,145		117,216


Total	$	1,075,013	$	996,680	$	913,364

F-41

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-lived assets consist of property, equipment, leasehold improvements, goodwill and intangible assets, net of accumulated depreciation and amortization. The following table presents long-lived assets by geographic area on the dates indicated:


	As of
(in thousands)	December 31, 2015		December 31, 2014
Long-lived assets
Americas:
United States	$	1,916,689	$	1,944,433
Other		2,279		3,293


Total Americas		1,918,968		1,947,726


EMEA:
United Kingdom		110,261		120,781
Other		16,849		13,345


Total EMEA		127,110		134,126


Asia & Australia:
Japan		570		837
Other		9,389		9,917


Total Asia & Australia		9,959		10,754


Total	$	2,056,037	$	2,092,606

F-42

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. QUARTERLY RESULTS OF OPERATIONS (unaudited):


	2015												2014
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except per share data)
Operating revenues	$	262,769		$	270,580		$	268,771		$	272,893		$	239,688		$	254,226		$	251,661		$	251,105

Cost of revenues		69,904			67,394			65,593			64,804			66,802			70,212			69,770			69,839
Selling and marketing		41,648			42,028			38,809			39,809			41,126			40,506			41,402			40,805
Research and development		23,189			20,807			15,548			17,776			17,465			17,374			19,021			17,235
General and administrative		20,377			22,080			19,960			23,590			17,692			20,240			19,516			18,921
Amortization of intangible assets		11,702			11,695			11,710			11,803			11,270			11,442			11,574			11,591
Depreciation and amortization of property, equipment and leasehold improvements		7,207			8,065			8,049			7,568			5,828			5,921			6,342			7,620

Total operating expenses		174,027			172,069			159,669			165,350			160,183			165,695			167,625			166,011

Operating income		88,742			98,511			109,102			107,543			79,505			88,531			84,036			85,094
Interest income		(204	)		(185	)		(285	)		(492	)		(156	)		(192	)		(277	)		(226	)
Interest expense (1)		11,108			11,116			17,267			22,896			5,059			5,366			5,604			15,791
Other expense (income)		178			164			(6,922	)		(297	)		1,071			(726	)		(1,287	)		(1,199	)

Other expense (income), net		11,082			11,095			10,060			22,107			5,974			4,448			4,040			14,366

Income from continuing operations before provision for income taxes		77,660			87,416			99,042			85,436			73,531			84,083			79,996			70,728
Provision for income taxes		28,036			31,399			34,644			25,437			26,385			27,280			28,272			27,459

Income from continuing operations		49,624			56,017			64,398			59,999			47,146			56,803			51,724			43,269
Income (loss) from discontinued operations, net of income taxes		(5,797	)		—			—			(593	)		33,253			50,857			(10	)		1,071

Net income	$	43,827		$	56,017		$	64,398		$	59,406		$	80,399		$	107,660		$	51,714		$	44,340

Earnings per basic common share
From continuing operations	$	0.44		$	0.50		$	0.59		$	0.59		$	0.40		$	0.48		$	0.44		$	0.38
From discontinued operations		(0.05	)		—			—			(0.01	)		0.28			0.44			—			0.01

Earnings per basic common share	$	0.39		$	0.50		$	0.59		$	0.58		$	0.68		$	0.92		$	0.44		$	0.39

Earnings per diluted common share
From continuing operations	$	0.44		$	0.50		$	0.59		$	0.58		$	0.40		$	0.48		$	0.44		$	0.38
From discontinued operations		(0.05	)		—			—			(0.01	)		0.28			0.43			—			0.01

Earnings per diluted common share	$	0.39		$	0.50		$	0.59		$	0.57		$	0.68		$	0.91		$	0.44		$	0.39

Weighted average shares outstanding used in computing per share data
Basic		112,520			112,143			108,773			102,837			117,582			116,702			116,251			112,299


Diluted		113,522			112,931			109,440			103,589			118,597			117,664			117,163			113,289

(1)	Increased interest expense during the fourth quarter of 2014 compared to the first three quarters of 2014 was primarily the result of the debt discount and deferred financing fees written off in connection with the 2024 Senior Notes offering and the 2014 Revolving Facility.

F-43

MSCI INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. SUBSEQUENT EVENTS

On February 2, 2016, the Board of Directors of the Company declared a quarterly dividend of $0.22 per share of common stock to be paid on March 11, 2016 to shareholders of record as of the close of trading on February 19, 2016.

Subsequent to the year ended December 31, 2015 and through February 19, 2016, an additional 2.6 million shares of common stock were repurchased for a total value of $170.6 million.

F-44

EXHIBIT INDEX


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

3.1	Third Amended and Restated Certificate of Incorporation	10-Q	001-33812	3.1	5/4/2012

3.2	Amended and Restated By-laws	10-Q	001-33812	3.2	5/4/2012

4.1	Form of Senior Indenture	S-3	333-206232	4.1	8/7/2015

4.2	Form of Subordinated Indenture	S-3	333-206232	4.2	8/7/2015

4.3	Form of Common Stock Certificate	10-Q	001-33812	4.1	5/4/2012

4.4	Indenture, dated as of November 20, 2014, among MSCI Inc., each of the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee	8-K	001-33812	4.1	11/20/2014

4.5	Form of Note for MSCI Inc. 5.250% Senior Notes due November 15, 2024 (included in Exhibit 4.4)	8-K	001-33812	4.2	11/20/2014

4.6	Indenture, dated as of August 13, 2015, among MSCI Inc., each of the Subsidiary Guarantors party thereto and Wells Fargo Bank, National Association, as Trustee	8-K	001-33812	4.1	8/13/2015

4.7	Form of Note for MSCI Inc. 5.750% Senior Notes due August 13, 2025 (included in Exhibit 4.6)	8-K	001-33812	4.2	8/13/2015

10.1†	Index License Agreement for Funds, dated as of March 18, 2000, between Morgan Stanley Capital International and Barclays Global Investors, N.A.	10-K	001-33812	10.1	2/27/2015

10.2†	Amendment to Index License Agreement for Funds between Morgan Stanley Capital International and Barclays Global Investors, N.A.	10-K	001-33812	10.2	2/29/2012

10.3†	Letter Agreement to Amend MSCI-BGI Fund Index License Agreement, dated as of June 21, 2001, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.	10-K	001-33812	10.3	1/31/2011

10.4†	Addendum to the Index License Agreement for Funds, dated as of September 18, 2002, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.	S-1/A	333-144975	10.4	9/26/2007

10.5†	Amendment to the Index License Agreement for Funds, dated as of December 3, 2004, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.	S-1/A	333-144975	10.5	10/26/2007

10.6†	Amendment to the Index License Agreement for Funds, dated as of May 1, 2005, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.	S-1/A	333-144975	10.6	9/26/2007

EX-1


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.7†	Amendment to the Index License Agreement for Funds, dated as of July 1, 2006, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.	S-1/A	333-144975	10.7	10/26/2007

10.8	Amendment to Index License Agreement for Funds, dated as of June 5, 2007, between Morgan Stanley Capital International Inc. and Barclays Global Investors, N.A.	10-K	001-33812	10.8	1/31/2011

10.9	Amendment to Index License Agreement for Funds, dated as of November 7, 2008, between MSCI Inc. and Barclays Global Investors, N.A.	10-K	001-33812	10.9	2/29/2012

10.10†	Amendment to Index License Agreement for Funds, dated as of December 9, 2008, between MSCI Inc. and Barclays Global Investors, N.A.	10-Q	001-33812	10.2	7/2/2010

10.11	Amendment to Index License Agreement for Funds, dated as of April 1, 2009, between MSCI Inc. and Barclays Global Investors, N.A.	10-K	001-33812	10.11	1/29/2010

10.12†	Amendment to Index License Agreement for Funds, dated as of May 21, 2009, between MSCI Inc. and Barclays Global Investors, N.A.	10-Q	001-33812	10.3	7/2/2010

10.13	Amendment to Index License Agreement for Funds, dated as of September 30, 2009, between MSCI Inc. and Barclays Global Investors, N.A.	10-Q	001-33812	10.4	7/2/2010

10.14	Amendment to Index License Agreement for Funds, dated as of October 6, 2009, between MSCI Inc. and Barclays Global Investors, N.A.	10-K	001-33812	10.14	1/29/2010

10.15†	Amendment to the Index License Agreement for Funds, dated as of October 4, 2011, by and between MSCI Inc. and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.). Replaces in its entirety the Amendment to Index License Agreement for Funds, dated as of October 27, 2009, between MSCI Inc. and Barclays Global Investors, N.A. filed as Exhibit 10.15 to Form 10-K (001-33812) filed with the SEC on February 29, 2012	10-K	001-33812	10.15	3/1/2013

10.16	Trademark License Agreement, dated as of March 18, 2002, between Morgan Stanley Dean Witter & Co. and Morgan Stanley Capital International Inc.	S-1	333-144975	10.9	9/26/2007

10.17	Amendment No. 1 to Trademark License Agreement, dated July 21, 2008, between Morgan Stanley and MSCI Inc.	10-Q	001-33812	10.6	10/6/2008

EX-2


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.18	Intellectual Property Agreement, dated as of November 20, 2007, between Morgan Stanley and MSCI Inc.	10-K	001-33812	10.10	2/28/2008

10.19	Amendment No. 1 to Intellectual Property Agreement, dated as of July 21, 2008, between Morgan Stanley and MSCI Inc.	10-Q	001-33812	10.4	10/6/2008

10.20	Services Agreement, dated as of November 20, 2007, between Morgan Stanley and MSCI Inc.	10-K	001-33812	10.11	2/28/2008

10.21	Amendment No. 1 to Services Agreement, dated as of July 21, 2008, between Morgan Stanley and MSCI Inc.	10-Q	001-33812	10.5	10/6/2008

10.22	Letter Agreement to Services Agreement, dated as of May 22, 2009, between Morgan Stanley and MSCI Inc.	8-K	001-33812	10.3	5/22/2009

10.23	Tax Sharing Agreement, dated as of November 20, 2007, between Morgan Stanley and MSCI Inc.	10-K	001-33812	10.12	2/28/2008

10.24	Shareholder Agreement, dated as of November 20, 2007, between Morgan Stanley and MSCI Inc.	10-K	001-33812	10.13	2/28/2008

10.25	Amended and Restated Shareholder Agreement, dated as of July 21, 2008, between Morgan Stanley and MSCI Inc.	10-Q	001-33812	10.3	10/6/2008

10.26	Asset Purchase Agreement, dated as of July 22, 2008, between MSCI Inc. and Morgan Stanley	10-Q	001-33812	10.7	10/6/2008

10.27	Separation Agreement, dated as of May 22, 2009, between Morgan Stanley and MSCI Inc.	8-K	001-33812	10.1	5/22/2009

10.28	Employee Matters Agreement, dated as of May 22, 2009, between Morgan Stanley and MSCI Inc.	8-K	001-33812	10.2	5/22/2009

10.29*	MSCI Inc. Amended and Restated 2007 Equity Incentive Compensation Plan	10-K	001-33812	10.30	3/1/2013

10.30*	MSCI Independent Directors’ Equity Compensation Plan as amended and restated on January 12, 2011	10-K	001-33812	10.39	1/31/2011

10.31*	MSCI Inc. Performance Formula and Incentive Plan	Proxy	001-33812	Annex C	2/28/2008

10.32*	MSCI Equity Incentive Compensation Plan 2007 Founders Grant Award Certificate for Stock Options	10-K	001-33812	10.19	2/28/2008

10.33*	Form of Award Agreement for Restricted Stock Units for Directors under the MSCI Inc. Independent Directors’ Equity Compensation Plan	10-K	001-33812	10.34	3/1/2013

EX-3


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.34*	RiskMetrics Group, Inc. 2000 Stock Option Plan	S-8	333-165888	99.1	6/3/2010

10.35*	RiskMetrics Group, Inc. 2004 Stock Option Plan	S-8	333-165888	99.2	6/3/2010

10.36*	RiskMetrics Group, Inc. 2007 Omnibus Incentive Compensation Plan	10-K	001-33812	10.38	3/1/2013

10.37*	Form of Performance Award Agreement for Restricted Stock Units for Named Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.44	1/31/2011

10.38*	Form of Performance Award Agreement for Restricted Stock Units for Employees under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.45	1/31/2011

10.39*	Form of Award Agreement for Restricted Stock Units for Employees under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.46	1/31/2011

10.40*	Form of Award Agreement for Restricted Stock Units for Named Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.47	1/31/2011

10.41*	Form of Performance Award Agreement for Performance Stock Units for Employees under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.50	1/31/2011

10.42*	Form of Performance Award Agreement for Performance Stock Units for Named Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.51	1/31/2011

10.43*	Award Agreement for 2010 Price Vested Stock Option Award for the Chief Executive Officer under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.54	1/31/2011

10.44*	Form of Performance Award Agreement for Performance Stock Units for Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.46	3/1/2013

10.45*	Form of Performance Award Agreement for Performance Stock Units for Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.47	3/1/2013

10.46†	Amendment to Index License Agreement for Funds, dated as of December 15, 2009, between MSCI Inc. and Blackrock Institutional Trust Company, N.A.	10-K	001-33812	10.57	1/31/2011

EX-4


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.47	Amendment to Index License Agreement for Funds, dated as of June 13, 2011, between MSCI Inc. and BlackRock Institutional Trust Company, N.A.	10-K	001-33812	10.58	2/29/2012

10.48	Amendment to Index License Agreement for Funds, dated as of May 20, 2010	10-K	001-33812	10.59	1/31/2011

10.49†	Schedule No. 11043 to the Master Index License Agreement for Index Based Funds, between MSCI Inc. and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.), dated as of September 1, 2010	10-K	001-33812	10.60	1/31/2011

10.50†	Amendment to the Index License Agreement for Funds, dated as of November 19, 2010, between MSCI Inc. and Barclays Global Investors, N.A.	10-K	001-33812	10.50	2/27/2015

10.51	Amendment to the Index License Agreement for Funds, dated as of June 21, 2011, by and between MSCI Inc. and BlackRock Institutional Trust Company, N.A. (formerly known as Barclays Global Investors, N.A.)	10-K	001-33812	10.62	2/29/2012

10.52†	Amendment to the Index License Agreement for Funds, dated as of July 1, 2011, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and Blackrock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K/A	001-33812	10.63	7/20/2012

10.53†	Amendment to the Index License Agreement for Funds, dated as of August 23, 2011, by and between MSCI Inc. and Blackrock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.53	2/27/2015

10.54	Amendment to the Index License Agreement for Funds, dated as of October 4, 2011, by and between MSCI Inc. and BlackRock Institutional Trust Company, N.A. (formerly known as Barclays Global Investors, N.A.)	10-K	001-33812	10.65	2/29/2012

10.55†	Amendment to the Index License Agreement for Funds, dated as of October 4, 2011, by and between MSCI Inc. and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.57	3/1/2013

10.56	Amendment to the Index License Agreement for Funds, dated as of December 16, 2011, by and between MSCI Inc. (formerly, Morgan Stanley Capital International, Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.67	2/29/2012

EX-5


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.57	Agreement of Lease dated September 16, 2011, by and between 7 World Trade Center, LLC and MSCI Inc.	8-K	001-33812	10.1	9/22/2011

10.58*	Director Deferral Plan	10-Q	001-33812	10.1	8/5/2011

10.59*	Offer Letter, executed May 25, 2012, between MSCI Inc. and Robert Qutub	8-K	001-33812	10.1	5/30/2012

10.60*	Change of Employment Status and Release Agreement, executed August 2, 2012, between MSCI Inc. and David M. Obstler	10-Q	001-33812	10.2	8/3/2012

10.61	Fixed Dollar Capped Accelerated Share Repurchase Transaction, dated as of December 13, 2012, between MSCI Inc. and Morgan Stanley & Co. LLC	10-K	001-33812	10.65	3/1/2013

10.62†	Amendment to the Index License Agreement for Funds, dated as of February 16, 2012, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.66	2/28/2014

10.63†	Amendment to the Index License Agreement for Funds, dated as of April 9, 2012, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.63	2/27/2015

10.64†	Amendment to the Index License Agreement for Funds, dated as of June 1, 2012, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.68	3/1/2013

10.65†	Amendment to the Index License Agreement for Funds, dated as of August 17, 2012, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.69	3/1/2013

10.66†	Amendment to the Index License Agreement for Funds, dated as of August 20, 2012, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.70	2/28/2014

EX-6


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.67†	Amendment to the Index License Agreement for Funds, dated as of November 6, 2012, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.71	2/28/2014

10.68†	Amendment to the Index License Agreement for Funds, dated as of November 15, 2012, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.72	3/1/2013

10.69†	Amendment to the Index License Agreement for Funds, dated as of February 21, 2013, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.73	2/28/2014

10.70†	Amendment to the Index License Agreement for Funds, dated as of March 20, 2013, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.74	2/28/2014

10.71†	Amendment to the Index License Agreement for Funds, dated as of September 11, 2013, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.71	2/27/2015

10.72†	Amendment to the Index License Agreement for Funds, dated as of December 10, 2013, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.72	2/27/2015

10.73†	Amendment to the Index License Agreement for Funds, dated as of December 16, 2013, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.72	2/27/2015

10.74*	Form of Performance Award Agreement for Performance Stock Units for Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.79	2/28/2014

EX-7


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.75*	Form of Performance Award Agreement for Performance Stock Units for Chief Executive Officer under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.80	2/28/2014

10.76*	Form of Performance Award Agreement for Performance Stock Units for Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.81	2/28/2014

10.77*	Form of Award Agreement for Restricted Stock Units for Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.82	2/28/2014

10.78*	Form of Award Agreement for Restricted Stock Units for Chief Executive Officer under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.83	2/28/2014

10.79*	Form of Award Agreement for Restricted Stock Units for Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.84	2/28/2014

10.80*	Award Agreement for 2013 Non-Qualified Stock Option Award	10-K	001-33812	10.85	2/28/2014

10.81	Fixed Dollar Capped Accelerated Share Repurchase Transaction, dated as of August 1, 2013, between MSCI Inc. and Morgan Stanley & Co. LLC	10-Q	001-33812	10.1	11/1/2013

10.82†	Amendment to the Index License Agreement for Funds, dated as of January 23, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.82	2/27/2015

10.83†	Amendment to the Index License Agreement for Funds, dated as of January 23, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.83	2/27/2015

10.84	Stock Purchase Agreement, dated as of March 17, 2014, among MSCI Inc., RiskMetrics Group Holdings, LLC and VISS Acquisition Corp.	8-K	001-33812	2.1	4/20/2014

10.85†	Letter Agreement to amend the Amendment to the Index License Agreement for Funds, dated as of March 18, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	10-K	001-33812	10.85	2/27/2015

EX-8


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.86	Letter Agreement regarding a Fixed Dollar Capped Accelerated Share Repurchase Transaction, dated as of February 6, 2014, between MSCI Inc. and Morgan Stanley & Co. LLC	10-Q	001-33812	10.1	5/2/2014

10.87*	Form of Award Agreement for Restricted Stock Units for Directors under the MSCI Inc. Independent Directors’ Equity Compensation Plan, as amended	10-Q	001-33812	10.2	5/2/2014

10.88*	Summary of Non-Employee Director Compensation	10-Q	001-33812	10.3	5/2/2014

10.89†	Amendment to the Index License Agreement for Funds, dated as of July 9, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	10-K	001-33812	10.89	2/27/2015

10.90†	Amendment to the Index License Agreement for Funds, dated as of July 16, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	10-K	001-33812	10.90	2/27/2015

10.91†	Amendment to the Index License Agreement for Funds, dated as of August 15, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	10-K	001-33812	10.91	2/27/2015

10.92†	Amendment to the Index License Agreement for Funds, dated as of September 9, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	10-K	001-33812	10.92	2/27/2015

10.93†	Amendment to the Index License Agreement for Funds, dated as of September 17, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	10-K	001-33812	10.93	2/27/2015

10.94	Master and Supplemental Confirmations regarding Accelerated Stock Buyback, dated as of September 18, 2014, between MSCI Inc. and Goldman, Sachs & Co.	10-Q	001-33812	10.1	10/30/2014

EX-9


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.95†	Amendment to the Index License Agreement for Funds, dated as of September 22, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	10-K	001-33812	10.95	2/27/2015

10.96†	Amendment to the Index License Agreement for Funds, dated as of October 30, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

10.97	Revolving Credit Agreement, dated as of November 20, 2014, among MSCI Inc., as the Borrower, each of the Subsidiary Guarantors party thereto, JPMorgan Chase Bank, N.A., as the Administrative Agent and L/C Issuer, the Lenders party thereto and J.P. Morgan Securities LLC, as Lead Arranger and Bookrunner	8-K	001-33812	10.1	11/20/2014

10.98	Cooperation Agreement, dated as of January 29, 2015	8-K	001-33812	99.1	1/30/2015

10.99*	Form of Award Agreement for Restricted Stock Units for Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-K	001-33812	10.101	2/27/2015

10.100*	Form of Annual Performance Award Agreement for Performance Stock Units for Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	Filed Herewith

10.101*	Form of Award Agreement for Restricted Stock Units for Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	Filed Herewith

10.102††	Amendment to the Index License Agreement for Funds, dated as of February 4, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

10.103††	Amendment to the Index License Agreement for Funds, dated as of February 25, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

EX-10


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.104††	Letter Agreement (to amend the Amendment dated December 10, 2013) to the Index License Agreement for Funds, dated as of March 17, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	Filed Herewith

10.105††	Amendment to the Index License Agreement for Funds, dated as of April 20, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

10.106††	Amendment to the Index License Agreement for Funds, dated as of April 20, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

10.107*	Form of Award Agreement for Restricted Stock Units for Directors under the MSCI Inc. Independent Directors’ Equity Compensation Plan, as amended	10-Q	001-33812	10.1	5/1/2015

10.108*	Change of Employment Status and Release Agreement for Roveen Bhansali	10-Q	001-33812	10.1	5/1/2015

10.109*	MSCI Inc. Change in Control Severance Plan	8-K	001-33812	10.1	5/29/2015

10.110††	Amendment (to amend the Amendment dated February 21, 2013) to the Index License Agreement for Funds, dated as of June 1, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

10.111††	Amendment to the Index License Agreement for Funds, dated as of June 1, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

10.112††	Amendment (to amend the Amendment dated November 6, 2012) to the Index License Agreement for Funds, dated as of June 4, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

EX-11


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.113††	Amendment (to amend the Amendments dated January 23, 2014 and April 15, 2014) to the Index License Agreement for Funds, dated as of June 4, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

10.114*	Form of Performance Award Agreement for Performance Stock Units for Executive Officers under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-Q	001-33812	10.2	7/31/2015

10.115*	Form of Special Performance Award Agreement for Performance Stock Units under the MSCI Inc. 2007 Amended and Restated Equity Incentive Compensation Plan	10-Q	001-33812	10.3	7/31/2015

10.116††	Amendment to the Index License Agreement for Funds, dated as of August 1, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

10.117††	Amendment (to amend the Amendment dated October 4, 2011) to the Index License Agreement for Funds, dated as of August 3, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

10.118††	Amendment (to amend the Amendment dated January 23, 2014) to the Index License Agreement for Funds, dated as of August 3, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

10.119††	Amendment (to amend the Amendment dated August 15, 2014) to the Index License Agreement for Funds, dated as of August 3, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

EX-12


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

10.120††	Letter Agreement (to amend the Amendment dated August 15, 2014) to the Index License Agreement for Funds, dated as of August 3, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	Filed Herewith

10.121††	Letter Agreement (to amend the Amendment dated April 20, 2015) to the Index License Agreement for Funds, dated as of October 9, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	Filed Herewith

10.122††	Letter Agreement (to amend the Amendment dated December 10, 2013) to the Index License Agreement for Funds, dated as of December 17, 2015, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Institutional Trust Company, N.A. (formerly, Barclays Global Investors, N.A.)	Filed Herewith

10.123*	Transition and Release Agreement, dated as of February 10, 2016, by and between MSCI Inc. and Robert Qutub	Filed Herewith

10.124*	Form of Multi-Year EICP PSU Award Agreement	8-K	001-33812	10.1	2/12/2016

10.125*	Form of Multi-Year Omnibus PSU Award Agreement	8-K	001-33812	10.2	2/12/2016

10.126	Amendment (to amend the Amendment dated January 23, 2014) to the Index License Agreement for Funds, dated as of April 15, 2014, by and between MSCI Inc. (formerly, Morgan Stanley Capital International Inc.) and BlackRock Fund Advisors (as successor to Barclays Global Investors, N.A.)	Filed Herewith

21.1	Subsidiaries of the Registrant	Filed Herewith

23.1	Consent of PricewaterhouseCoopers LLP	Filed Herewith

23.2	Consent of Deloitte & Touche LLP	Filed Herewith

24.1	Powers of Attorney (included as part of Signature Page)	Filed Herewith

31.1	Rule 13a-14(a) Certification of Chief Executive Officer	Filed Herewith

EX-13


Exhibit Number	Description	Form	File No.	Exhibit No.	Filing Date

31.2	Rule 13a-14(a) Certification of Chief Financial Officer	Filed Herewith

32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer	Furnished Herewith

101.INS	XBRL Instance Document.	Filed Herewith

101.SCH	XBRL Taxonomy Extension Schema Document.	Filed Herewith

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.	Filed Herewith

101.LAB	XBRL Taxonomy Extension Label Linkbase Document.	Filed Herewith

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.	Filed Herewith

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.	Filed Herewith

*	Indicates a management compensation plan, contract or arrangement.

†	Confidential treatment has been granted for a portion of this exhibit.

††	Confidential treatment requested.

EX-14

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