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SEGMENT INFORMATION
9 Months Ended
Sep. 30, 2012
SEGMENT INFORMATION

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 in deciding how to allocate resources and in assessing performance. MSCI’s Chief Executive Officer, who is considered to be its chief operating decision maker, or CODM, reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance. MSCI operates under two segments, the Performance and Risk business and the Governance business. These designations have been made as the discrete operating results of these segments are reviewed by the Company’s CODM for purposes of making operating decisions and assessing financial performance.

The Performance and Risk business is a leading global provider of investment decision support tools, including indices, portfolio risk and performance analytics, credit analytics and ESG products. The business provides clients with a broad suite of products and services to assist them with managing equity, fixed income and multi-asset class portfolios. The products are used in many areas of the investment process, including portfolio construction and rebalancing, performance benchmarking and attribution, risk management and analysis, index-linked investment product creation, asset allocation, assessment of social responsibility, environmental stewardship and the effects of climate change on investments, investment manager selection and investment research.

The Governance business is a leading provider of corporate governance products and specialized financial research and analysis services to institutional shareholders and corporations around the world. Among other things, the Governance business facilitates the voting of proxies by institutional investors and provides in-depth research and analysis to help inform their voting decisions and identify issuer-specific risk. It offers both global security coverage and fully integrated products and services, including proxy voting, policy creation, research, vote recommendations, vote execution, post-vote disclosure and reporting and analytical tools. Within a firewall, a separate unit of the Governance business also provides products and services to corporate clients who may use those products and services to learn about and improve their governance and executive compensation practices.

Revenues and expenses directly associated with each respective 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, net revenues and other relevant usage measures.

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 following table presents MSCI’s operating segments’ results for the three and nine months ended September 30, 2012 and 2011:

 

     Three Months Ended      Nine Months Ended  
   September 30,      September 30,  
     2012      2011      2012      2011  
     (in thousands)  

Operating revenues

           

Performance and Risk

   $ 205,389       $ 196,230       $ 611,054       $ 583,788   

Governance

     30,055         28,796         92,007         91,019   
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated

   $ 235,444       $ 225,026       $ 703,061       $ 674,807   
  

 

 

    

 

 

    

 

 

    

 

 

 

Amortization of intangible assets and depreciation and amortization of property, equipment and leasehold improvements

           

Performance and Risk

   $ 16,393       $ 16,601       $ 49,053       $ 51,036   

Governance

     4,199         4,490         12,535         13,448   
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated

   $ 20,592       $ 21,091       $ 61,588       $ 64,484   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

           

Performance and Risk

   $ 80,472       $ 78,957       $ 243,927       $ 231,458   

Governance

     3,057         3,288         7,702         8,907   
  

 

 

    

 

 

    

 

 

    

 

 

 

Consolidated

   $ 83,529       $ 82,245       $ 251,629       $ 240,365   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

Revenue by geography is based on the shipping address of the customer. The following table sets forth revenue for the periods indicated by geographic area:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
  

 

 

       

 

 

    

 

 

 
     2012      2011      2012      2011  
            (in thousands)                

Revenues

  

Americas:

           

United States

   $ 122,199       $ 116,511       $ 362,464       $ 340,611   

Other

     8,418         7,450         24,313         23,620   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Americas

     130,617         123,961         386,777         364,231   
  

 

 

    

 

 

    

 

 

    

 

 

 

Europe, Middle East and Africa (“EMEA”):

           

United Kingdom

     28,127         26,959         84,337         79,364   

Other

     45,639         44,361         139,559         143,519   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total EMEA

     73,766         71,320         223,896         222,883   
  

 

 

    

 

 

    

 

 

    

 

 

 

Asia & Australia:

           

Japan

     14,403         14,655         43,222         42,480   

Other

     16,658         15,090         49,166         45,213   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Asia & Australia

     31,061         29,745         92,388         87,693   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 235,444       $ 225,026       $ 703,061       $ 674,807   
  

 

 

    

 

 

    

 

 

    

 

 

 

Long-lived assets consist of property, equipment, leasehold improvements, goodwill and intangible assets, net of accumulated depreciation and amortization.

 

The following table sets forth long-lived assets on the dates indicated by geographic area:

 

     As of  
     September 30,
2012
     December 31,
2011
 
     (in thousands)  

Long-lived assets

  

Americas:

     

United States

   $ 2,348,440       $ 2,369,997   

Other

     4,844         5,145   
  

 

 

    

 

 

 

Total Americas

     2,353,284         2,375,142   
  

 

 

    

 

 

 

EMEA:

     

United Kingdom

     4,183         5,107   

Other

     7,852         5,617   
  

 

 

    

 

 

 

Total EMEA

     12,035         10,724   
  

 

 

    

 

 

 

Asia & Australia:

     

Japan

     354         364   

Other

     3,928         4,859   
  

 

 

    

 

 

 

Total Asia & Australia

     4,282         5,223   
  

 

 

    

 

 

 

Total

   $ 2,369,601       $ 2,391,089