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Msci Annual Report, Year Ended Nov 30, 2007

Filing Date
Filed February 28, 2008
Period End
November 30, 2007
Security
MSCI
In the record · 2016–202610-K1110-Q338-K133

MSCI filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 133 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Material agreement8-K · Nov ’19Nov ’19
  3. Leadership change8-K · Jan ’22Jan ’22
  4. Leadership change8-K · Nov ’25Nov ’25

01—Abstract

Summary

Summary of the 10-K filed February 28, 2008. Cited figures are marked; the original filing is the authoritative source.

MSCI Inc. (formerly Morgan Stanley Capital International Inc.) reports fiscal 2007 (year ended November 30, 2007) results as a provider of investment decision support tools, including equity indices under the MSCI brand and equity portfolio analytics under the Barra brand.

Operating revenues rose 19.1% to $369.9 milliona, driven by equity indices (up 27.6% to $200.0 million), with net income of $81.1 million ($0.96 per diluted share). Operating income increased to $129.3 million from $83.3 million. The company had over 2,900 clients in 66 countries, a 92% aggregate Retention Rate, and Barclays accounted for 12.6% of revenues.

The company completed its initial public offering of 16.1 million class A shares in November 2007, with net proceeds of $265.0 millionb. Prior to the IPO, it paid a $973.0 million dividend ($325.0 million in cash and $648.0 million in demand notes) to its parent and shareholders. It also entered a $500.0 million senior secured Credit Facility, of which $425.0 million was outstanding as of November 30, 2007, leaving total indebtedness at $425.0 million against cash and related-party cash of $171.4 million.

Total shareholders' equity fell to $200.0 millionc from $825.7 million a year earlier. Morgan Stanley owns approximately 96.6% of the class B common stock, which represents about 93.02% of the combined voting power, making MSCI a controlled company.

The company does not intend to pay dividends in the foreseeable future, and it is transitioning to standalone operations with service agreements from Morgan Stanley for up to 12 months after Morgan Stanley's ownership falls below 50%d. Investors should weigh its high leverage, dependence on Morgan Stanley, and asset-based fee concentration in ETF licensing, particularly the Barclays relationship.

02—Key points

Key Highlights

  1. Operating revenues rose 19.1% to $369.9 million in fiscal 2007, with equity indices up 27.6% to $200.0 million.
  2. Net income was $81.1 million, or $0.96 per diluted share, compared with $71.4 million in fiscal 2006.
  3. Run Rate increased 26.2% to $397.5 million as of November 30, 2007; the aggregate Retention Rate was 92%.
  4. IPO completed November 2007: 16.1 million class A shares, net proceeds of $265.0 million; class A shares began trading on the NYSE under 'MXB' on November 15, 2007.
  5. Total indebtedness was $425.0 million at year-end, against $171.4 million of cash and cash equivalents plus cash deposited with related parties.
  6. Morgan Stanley controls about 93.02% of combined voting power, and the company is a 'controlled company' under NYSE rules.
  7. Barclays accounted for 12.6% of fiscal 2007 revenues, with about 91.5% of its revenue from fees on assets of ETFs linked to MSCI equity indices.

03—Questions

Frequently Asked Questions

  1. How much did MSCI's revenue and profit grow in fiscal 2007?

    Operating revenues increased 19.1% to $369.9 million, and operating income rose to $129.3 million from $83.3 million. Net income was $81.1 million ($0.96 per diluted share), versus $71.4 million in fiscal 2006.

  2. What is the company's debt position after the IPO and dividend?

    As of November 30, 2007, MSCI had $425.0 million outstanding under its $500.0 million Credit Facility, comprising a $200.0 million term loan A and a $225.0 million term loan B, with $75.0 million available under the revolving facility. Interest on the term loans was 7.24% and 7.74% at year-end, and the company entered interest rate swaps covering $251.7 million of notional principal.

  3. How concentrated is the company's revenue base?

    Revenues from the ten largest clients were 31% of total revenues in fiscal 2007. Barclays alone accounted for 12.6%, and about 91.5% of Barclays' revenue came from fees on assets of ETFs linked to MSCI equity indices. Asset-based fees made up 18.6% of revenues in fiscal 2007.

  4. What control does Morgan Stanley retain after the IPO?

    Morgan Stanley owns approximately 96.6% of the class B common stock, representing about 93.02% of combined voting power. Class B shares carry five votes each, so Morgan Stanley can elect all directors. The company is a controlled company under NYSE rules and does not intend to have a majority of independent directors.

  5. Will MSCI pay dividends to shareholders?

    No. The company stated it does not intend to pay any cash dividends on its common stock for the foreseeable future and plans to retain available funds for operations, growth and acquisitions. Its Credit Facility also restricts dividend payments.

04—Continue

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