MSCI, INC. The following Management's Discussion and Analysis of Financial Condition and Results of Operations is a discussion and analysis of the financial condition and results of the operations ofMSCI Inc. and its consolidated subsidiaries for the year endedDecember 31, 2021 . This discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. As a result of changes to the presentation of our reportable segments effectiveJanuary 1, 2021 , we have included herein certain discussions summarizing the significant factors affecting the results of operations and financial condition ofMSCI for the year endedDecember 31, 2020 . The remaining discussions may be found in Part II, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year endedDecember 31, 2020 (the "2020 Annual Report"), which was filed with theSecurities and Exchange Commission onFebruary 12, 2021 . Overview We are a leading provider of critical decision support tools and solutions for the global investment community. Our mission-critical offerings help investors address the challenges of a transforming investment landscape and power better investment decisions. Leveraging our knowledge of the global investment process and our expertise in research, data and technology, we enable our clients to understand and analyze key drivers of risk and return and confidently and efficiently build more effective portfolios. We operate in four reportable segments as follows: Index, Analytics, ESG and Climate, and All Other - Private Assets. Certain prior period amounts have been reclassified to conform to the current period presentation. EffectiveJanuary 1, 2021 , the ESG and Climate operating segment is being presented as a separate reportable segment. The operating segments of Real Estate andThe Burgiss Group, LLC ("Burgiss") do not individually meet the segment reporting thresholds and have been combined and presented as part of the All Other - Private Assets reportable segment. Our growth strategy includes: (a) extending leadership in research-enhanced content across asset classes, (b) leading the enablement of ESG and climate investment integration, (c) enhancing distribution and content-enabling technology, (d) expanding solutions that empower client customization, (e) strengthening client relationships and growing into strategic partnerships with clients and (f) executing strategic relationships and acquisitions with complementary content and technology companies. For more information about our Company's operations, see "Item 1: Business".
Key Financial and Operating Metrics and Drivers
In evaluating our financial performance, we focus on revenue and profit growth, including results accounted for under generally accepted accounting principles inthe United States ("GAAP") as well as non-GAAP measures, for the Company as a whole and by operating segment. We present revenues disaggregated by types and by segments, which represent our major product lines. We also review expenses by activity, which provides more transparency into how resources are being deployed. In addition, we utilize operating metrics includingRun Rate , subscription sales and Retention Rate to manage and assess performance and to provide deeper insights into the recurring portion of our business. In the discussion that follows, we provide certain variances excluding the impact of foreign currency exchange rate fluctuations and acquisitions. Foreign currency exchange rate fluctuations reflect the difference between the current period results as reported compared to the current period results recalculated using the foreign currency exchange rates in effect for the comparable prior period. While operating revenues adjusted for the impact of foreign currency fluctuations includes asset-based fees that have been adjusted for the impact of foreign currency fluctuations, the underlying AUM, which is the primary component of asset-based fees, is not adjusted for foreign currency fluctuations. Approximately three-fifths of the AUM is invested in securities denominated in currencies other than theU.S. dollar, and accordingly, any such impact is excluded from the disclosed foreign currency-adjusted variances.
Revenues
Our revenues are presented by type and by reportable segment. For each reportable segment, we present revenues disaggregated by the nature of the revenues, which are recurring subscriptions, asset-based fees and non-recurring revenues.
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Recurring subscription revenues represent fees earned from clients primarily
under renewable contracts and are generally recognized ratably over the term of
the license or service pursuant to the contract terms. The fees are recognized
as we provide the product and service to the client over the license period and
are generally billed in advance, prior to the license start date.
Asset-based fees represent fees earned that are variable in nature, as they are
calculated based on the AUM linked to our indexes. Asset-based fees also include
revenues related to futures and options contracts linked to our indexes, which
are primarily based on trading volumes.
Non-recurring revenues primarily represent fees earned on products and services
where we do not have renewal contracts. Non-recurring revenues primarily include
revenues from licenses of historical data, indexed derivative financial
products, certain implementation services and other special client requests,
which are generally recognized at a point in time, but may also be recognized
over the license period.
Operating Expenses
We group our operating expenses into the following activity categories:
• Cost of revenues;
• Selling and marketing;
• Research and development ("R&D");
• General and administrative ("G&A");
• Amortization of intangible assets; and
• Depreciation and amortization of property, equipment and leasehold
improvements.
Costs are assigned to these activity categories based on the nature of the expense or, when not directly attributable, an estimated allocation based on the type of effort involved. Cost of revenues, selling and marketing, R&D and G&A all include both compensation as well as non-compensation related expenses
Cost of Revenues
Cost of revenues expenses consist of costs related to the production and servicing of our products and services and primarily includes related information technology costs, including data center, cloud service, platform and infrastructure costs; costs to acquire, produce and maintain market data information; costs of research to support and maintain existing products; costs of 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
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 and marketing teams, as well as costs incurred in other departments associated with acquiring new business, including product management, research, technology and sales operations.
Research and Development
R&D expenses consist of costs to develop new or enhance existing products and the costs to develop new or enhanced technologies and service platforms for the delivery of our products and services and primarily include the costs of development, research, product management, project management and the technology support directly associated with these activities.
General and Administrative
G&A expenses consist of costs primarily related to finance operations, human
resources, office of the CEO, legal, corporate technology, corporate
development, impairment charges associated with right of use assets and certain
other administrative costs that are not directly attributed, but are instead
allocated, to a product or service.
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--------------------------------------------------------------------------------Amortization of Intangible Assets
Amortization of intangible assets expense relates to definite-lived intangible assets arising from past acquisitions and capitalization of internally developed software projects. Intangibles arising from past acquisitions consist of customer relationships, proprietary data, trademarks and trade names and technology and software. We amortize definite-lived intangible assets over their estimated useful lives. We have no indefinite-lived intangible assets.
Depreciation and Amortization of Property, Equipment and Leasehold Improvements
Depreciation and amortization of property, equipment and leasehold improvements consists of expenses related to depreciating or amortizing the cost of computer and related equipment, leasehold improvements, software and furniture and fixtures over the estimated useful life of the assets.
Other Expense (Income), Net
Other expense (income), net consists primarily of interest we pay on our outstanding indebtedness, including losses on early extinguishment of debt, income and losses associated with our equity method investment, foreign currency exchange rate gains and losses, interest we collect on cash and short-term investments, as well as other non-operating income and expense items that may arise from time to time. Non-GAAP Financial Measures Adjusted EBITDA "Adjusted EBITDA," a non-GAAP measure used by management to assess operating performance, is defined as net income before (1) provision for income taxes, (2) other expense (income), net, (3) depreciation and amortization of property, equipment and leasehold improvements, (4) amortization of intangible assets and, at times, (5) certain other transactions or adjustments, including impairment related to sublease of leased property, certain non-recurring acquisition-related integration and transaction costs and the impact related to the vesting of multi-year restricted stock units granted in 2016 to certain senior executives that are subject to the achievement of multi-year total shareholder return targets, which are performance targets with a market condition (the "2016 Multi-Year PSUs"). "Adjusted EBITDA expenses," a non-GAAP measure used by management to assess operating performance, is defined as operating expenses less depreciation and amortization of property, equipment and leasehold improvements and amortization of intangible assets and, at times, certain other transactions or adjustments, including impairment related to sublease of leased property, certain non-recurring acquisition-related integration and transaction costs and the impact related to the vesting of the 2016 Multi-Year PSUs. Adjusted EBITDA and Adjusted EBITDA expenses are believed to be meaningful measures for management to assess the operating performance of the Company because they adjust for significant one-time, unusual or non-recurring items as well as eliminate the accounting effects of certain capital spending and acquisitions that do not directly affect what management considers to be the Company's ongoing operating performance in the period. All companies do not calculate adjusted EBITDA and adjusted EBITDA expenses in the same way. These measures can differ significantly from company to company depending on, among other things, long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. Accordingly, the Company's computation of the Adjusted EBITDA and Adjusted EBITDA expenses measures may not be comparable to similarly titled measures computed by other companies.Run Rate Run Rate is a key operating metric and is important because an increase or decrease in ourRun Rate ultimately impacts our future operating revenues over time. At the end of any period, we generally have subscription and investment product license agreements in place for a large portion of total revenues for the following 12 months. We measure the fees related to these agreements and refer to this as "Run Rate ." See "-Operating Metrics-Run Rate " below for additional information on the calculation of this metric. 37 --------------------------------------------------------------------------------
Subscription Sales
Subscription sales is a key operating metric and is important to management
because new subscription sales increase our
Retention Rate
Retention Rate is a key operating metric and is important to management because subscription cancellations decrease ourRun Rate and ultimately our future operating revenues over time. See "-Operating Metrics-Retention Rate" below for additional information on the calculation of this metric.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with GAAP. These accounting principles require us 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 revenues and expenses during the periods presented. Significant estimates and judgments made by management include such examples as assessment of impairment of goodwill and intangible assets and income taxes. We believe the estimates and judgments upon which we rely are reasonable based upon information available to us at the time these estimates and judgments are made. To the extent there are material differences between these estimates and actual results, our consolidated financial statements will be affected.
Goodwill is recorded as a result of business combinations undertaken by the Company when the purchase price exceeds the fair value of the net tangible assets and separately identifiable intangible assets acquired. The Company tests goodwill for impairment on an annual basis onJuly 1st and on an interim basis when certain events and circumstances exist. The test for impairment is performed at the reporting unit level. In testing goodwill for impairment, the company used the income approach to estimate the fair value of each reporting unit. Under the income approach, we estimate the fair value of each reporting unit based on the present value of estimated future cash flows. Estimating discounted future cash flows requires significant management judgment including in estimating forecasted future cash flows and determining both discount rates and terminal growth rates. Forecasted future cash flows are estimated based on a combination of historical experience and assumptions regarding future growth and profitability of each reporting unit. Discount rates are selected based on discount rates of similar public companies to the reporting unit being valued and terminal growth rates are selected based on consideration of growth rates used during the reporting unit's forecast period in combination with economic conditions. These assumptions require management's judgment and changes to these estimates or assumptions could materially affect the determination of the reporting unit's fair value. Any impairment is measured as the difference between the carrying amount and its fair value. Based on our quantitative assessment as ofJuly 1, 2021 , we determined that the estimated fair value of the Company's reporting units substantially exceeded their respective carrying values, so no impairment of goodwill was recorded.
Definite Lived Intangible Assets
Definite-lived intangible assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying value of the asset may not
be recoverable. These events or circumstances include adverse changes in the
manner in which the asset will be used, adverse changes in legal factors related
to the asset or negative changes in expected financial performance of the asset,
including accumulation of costs and operating losses. Determining whether an
event or changes in circumstances warrant an impairment review involves
management judgment.
Once it is determined that an impairment review is necessary, determination of
recoverability is determined based on comparing the carrying amount of the asset
group to the estimated future undiscounted cash flows. If the carrying amount
exceeds the estimated future undiscounted cash flows, the asset grouping is
considered to be impaired. Measurement of impairment for intangible assets is
based on the amount the carrying value exceeds the fair value of the asset,
which is based on estimated discounted future cash flows. Estimated undiscounted
and discounted cash flows used in the determination and calculation of
impairments represent management forecasts and require significant management
judgment. While management believes that its forecasts are reasonable,
differences between forecasts and actual experience could materially affect the
valuations. There were no events or changes in
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--------------------------------------------------------------------------------circumstances that would indicate that the carrying value of the definite-lived intangible assets may not be recoverable during the years presented.
With respect to our acquisition of RCA onSeptember 13, 2021 , the initial valuation of intangible assets, as part of the acquisition method of accounting, is subjective and based, in part, on inputs that are unobservable. The significant assumptions used to estimate the fair value of the acquired intangible assets included, forecasted cash flows which were determined based on certain assumptions which included, among others, projected future revenues, and expected market royalty rate, technology obsolescence rates and discount rates. These estimates are inherently uncertain and unpredictable, and if different estimates were used, the purchase price for the acquisition could be allocated to the acquired assets and assumed liabilities differently from the allocation that we have made.
The Company amortizes its intangible assets over the estimated period of economic benefit. If the estimated period of economic benefit is changed, the prospective amortization of the intangible asset could materially change.
Income Taxes
The Company is subject to income taxes in the
Provision for income taxes 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. Deferred tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that all or some portion of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, management is required to estimate future taxable income which requires judgment. The Company must regularly assess the likelihood of additional assessments in each of the taxing jurisdictions in which it files income tax returns and adjust unrecognized tax benefits when additional information is available or when an event occurs. This assessment requires significant judgment in assessment of tax laws, frequency of tax examinations, and the nature of intercompany transactions and tax positions.
Factors Affecting the Comparability of Results
Acquisition of RCA
OnSeptember 13, 2021 ,MSCI completed the acquisition of RCA for an aggregate cash purchase price of$949.0 million , subject to working capital adjustments. See Note 5, "Acquisitions," of the Notes to the Consolidated Financial Statements included herein for additional information on the acquisition of RCA. Results of Operations Operating Revenues Our operating revenues are grouped by the following types: recurring subscriptions, asset-based fees and non-recurring. We also group operating revenues by major product or reportable segment as follows: Index, Analytics, ESG and Climate and All Other - Private Assets, which includes the Real Estate product line and our equity method investment in Burgiss. The following table presents operating revenues by type for the years indicated: Years Ended % Change December 31, December 31, December 31, December 31, December 31, 2021 2020
2019 2021 to 2020 2020 to 2019
(in thousands)
Recurring subscriptions $ 1,426,040 $ 1,248,175 $ 1,154,040 14.3 % 8.2 %
Asset-based fees 553,991 399,771 361,927 38.6 % 10.5 %
Non-recurring 63,513 47,444 41,829 33.9 % 13.4 %
Total operating revenues $ 2,043,544 $ 1,695,390 $ 1,557,796 20.5 % 8.8 %
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-------------------------------------------------------------------------------- Total operating revenues increased 20.5% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 . Adjusting for the impact of acquisitions and foreign currency exchange rate fluctuations, total operating revenues would have increased 18.7%. Operating revenues from recurring subscriptions increased 14.3% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 , primarily driven by strong growth in Index products, which increased$70.2 million , or 12.1%, strong growth in ESG and Climate products, which increased$52.7 million , or 47.9%, strong growth in All Other - Private Assets products, which increased$28.1 million , or 54.5%, and growth in Analytics products, which increased$26.9 million , or 5.3%. Adjusting for the impact of acquisitions and foreign currency exchange rate fluctuations, operating revenues from recurring subscriptions would have increased 11.8%. Operating revenues from asset-based fees increased 38.6% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 , driven by growth in operating revenues from all index-linked investment product categories. Operating revenues from ETFs linked toMSCI equity indexes increased by 41.9%, primarily driven by an increase in average AUM, partially offset by a decrease in average basis point fees. The increase in asset-based fees operating revenues was also driven by revenues from non-ETF indexed funds linked toMSCI indexes which increased by 39.4%, primarily driven by an increase in average AUM.
Total operating revenues grew 8.8% for the year ended
Operating revenues from recurring subscriptions increased 8.2% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 , primarily driven by growth in Index products, which increased$49.4 million , or 9.3%, growth in ESG and Climate products, which increased$20.4 million , or 22.8%, and growth in Analytics products, which increased$20.0 million , or 4.1%. Adjusting for the impact of foreign currency exchange rate fluctuations, operating revenues from recurring subscriptions would have increased 8.1%. Operating revenues from asset-based fees increased 10.5% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 . The increase in asset-based fees was driven by growth in revenues from all of our indexed investment product categories, including an increase in revenues from exchange traded futures and options contracts linked toMSCI indexes that were primarily driven by price increases. The increase in operating revenues from asset-based fees was also driven by higher revenues from non-ETF indexed funds linked toMSCI indexes, which was driven by price increases and an increase in average AUM. Revenues from ETFs linked toMSCI indexes also increased, driven by an 8.9% increase in average AUM in equity ETFs linked toMSCI indexes, partially offset by lower fees resulting from the impact of a change in product mix. The impact of foreign currency exchange rate fluctuations on operating revenues from asset-based fees was negligible. The following table presents the value of AUM in ETFs linked toMSCI equity indexes and the sequential change of such assets as of the end of each of the periods indicated: Period Ended 2020 2021 (in billions) March 31, June 30, September 30, December 31, March 31, June 30, September 30, December 31, AUM in ETFs linked toMSCI equity indexes(1), (2)$ 709.5 $ 825.4 $ 908.9$ 1,103.6 $ 1,209.6 $ 1,336.2 $ 1,336.6 $ 1,451.6 Sequential Change in Value Market Appreciation/(Depreciation)$ (216.5 ) $ 117.4 $ 57.0$ 135.7 $ 43.2 $ 73.7 $ (30.7 ) $ 56.5 Cash Inflows (8.4 ) (1.5 ) 26.5 59.0 62.8 52.9 31.1 58.5 Total Change$ (224.9 ) $ 115.9 $ 83.5$ 194.7 $ 106.0 $ 126.6 $ 0.4$ 115.0 40
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The following table presents the average value of AUM in ETFs linked to
Year-to-Date Average
2020 2021
March June September December March June September December
AUM in ETFs linked to
MSCI equity indexes(1),
(2) $ 877.1 $ 827.0 $ 849.1 $ 886.7 $ 1,169.2 $ 1,230.8 $ 1,274.5 $ 1,309.6 (1) The historical values of the AUM in ETFs linked to our equity indexes as of
the last day of the month and the monthly average balance can be found under
the link "AUM in ETFs Linked to
Relations homepage at http://ir.msci.com. This information is updated
mid-month each month. Information contained on our website is not
incorporated by reference into this Annual Report on Form 10-K or any other
report filed with the
Traded Notes, the value of which is less than 1.0% of the AUM amounts
presented.
(2) The value of AUM in ETFs linked to
multiplying the equity ETF net asset value by the number of shares
outstanding.
For the year endedDecember 31, 2021 , the average value of AUM in ETFs linked toMSCI equity indexes was up$422.9 billion , or 47.7%, compared to the year endedDecember 31, 2020 .
The following table presents operating revenues by reportable segment and revenue type for the years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Operating revenues:
Index
Recurring subscriptions $ 650,629 $ 580,393 $ 530,968 12.1 % 9.3 %
Asset-based fees 553,991 399,771 361,927 38.6 % 10.5 %
Non-recurring 47,144 36,331 28,042 29.8 % 29.6 %
Index total 1,251,764 1,016,495 920,937 23.1 % 10.4 %
Analytics
Recurring subscriptions 533,178 506,301 486,282 5.3 % 4.1 %
Non-recurring 11,121 7,507 10,643 48.1 % (29.5 %)
Analytics total 544,299 513,808 496,925 5.9 % 3.4 %
ESG and Climate
Recurring subscriptions 162,609 109,945 89,563 47.9 % 22.8 %
Non-recurring 3,583 1,419 1,096 152.5 % 29.5 %
ESG and Climate total 166,192 111,364 90,659 49.2 % 22.8 %
All Other - Private Assets
Recurring subscriptions 79,624 51,536 47,227 54.5 % 9.1 %
Non-recurring 1,665 2,187 2,048 (23.9 %) 6.8 %
All Other - Private Assets total 81,289 53,723 49,275 51.3 % 9.0 %
Total operating revenues $ 2,043,544 $ 1,695,390 $ 1,557,796 20.5 % 8.8 %
Refer to the section titled "Segment Results" that follows for further discussion of segment revenues.
Operating Expenses
Total operating expenses increased 19.8% for the year ended
Total operating expenses increased 1.1% for the year ended
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The following table presents operating expenses by activity category for the
years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Operating expenses:
Cost of revenues $ 358,684 $ 291,704 $ 294,961 23.0 % (1.1 %)
Selling and marketing 243,185 216,496 219,298 12.3 % (1.3 %)
Research and development 111,564 101,053 98,334 10.4 % 2.8 %
General and administrative 147,893 114,627 110,093 29.0 % 4.1 %
Amortization of intangible
assets 80,592 56,941 49,410 41.5 % 15.2 %
Depreciation and
amortization of property,
equipment and leasehold
improvements 28,901 29,805 29,999 (3.0 %) (0.6 %)
Total operating expenses $ 970,819 $ 810,626 $ 802,095 19.8 % 1.1 %
Cost of Revenues
Cost of revenues increased 23.0% for the year ended December 31, 2021 compared
to the year ended December 31, 2020 , reflecting increases across all segments.
The change was driven by increases in compensation and benefits costs, primarily
relating to higher wages and salaries and incentive compensation and benefits
costs, as well as higher non-compensation costs, primarily reflecting higher
professional fees, information technology costs and market data costs.
Cost of revenues decreased 1.1% for the year ended December 31, 2020 compared to
the year ended December 31, 2019 . The change was driven by the absence of $7.0
million of payroll tax expense associated with the vesting of the 2016
Multi-Year PSUs recognized during the year ended December 31, 2019 , partially
offset by increases in other compensation and benefits costs, primarily relating
to higher wages and salaries, as well as higher non-compensation costs,
reflecting higher information technology costs, partially offset by lower travel
and entertainment costs. Cost of revenues reflects increases across the ESG and
Climate and Index reportable segments, partially offset by decreases in the
Analytics and All Other - Private Assets reportable segments.
Selling and Marketing
Selling and marketing expenses increased 12.3% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 , reflecting increases across all segments. The change was primarily driven by increases in compensation and benefits costs, including higher incentive compensation, wages and salaries and benefits costs, partially offset by a decline in severance costs. Selling and marketing expenses decreased 1.3% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 . The change was driven by lower non-compensation costs, including travel and entertainment costs, and the absence of$4.5 million of payroll tax expense associated with the vesting of the 2016 Multi-Year PSUs recognized during the year endedDecember 31, 2019 , partially offset by increases in compensation and benefits costs, primarily relating to higher wages and salaries. Selling and marketing expenses reflect increases across the ESG and Climate, Analytics and All Other - Private Assets reportable segments, partially offset by a decrease in the Index reportable segment.
Research and Development
R&D expenses increased 10.4% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 , primarily reflecting higher investment in the Index and ESG and Climate reportable segments, partially offset by lower investment in the Analytics reportable segment. The change was driven by increases in compensation and benefits costs, primarily relating to higher incentive compensation, as well as higher non-compensation costs, reflecting higher information technology costs. R&D expenses increased 2.8% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 . The change was driven by increases in compensation and benefits costs, including wages and salaries and benefits costs. R&D expenses reflect higher investments in the All Other - Private Assets, Index and ESG and Climate reportable segments, partially offset by lower investment in the Analytics reportable segment. 42
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General and Administrative
G&A expenses increased 29.0% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 , reflecting increases across all segments. The change was driven by increases in non-compensation costs, primarily relating to impairment charges associated with right of use assets, non-recurring transaction and integration costs related to the acquisition of RCA and higher information technology costs and professional fees. The change was also driven by higher compensation and benefits costs, primarily relating to higher wages and salaries and incentive compensation. G&A expenses increased 4.1% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 . The change was driven by increases in compensation and benefits costs, primarily relating to higher incentive compensation and wages and salaries, partially offset by the absence of$3.5 million of payroll tax expense associated with the vesting of the 2016 Multi-Year PSUs recognized during the year endedDecember 31, 2019 and lower non-compensation costs. G&A expenses reflect increases across the ESG and Climate, Analytics and Index reportable segments, partially offset by a decrease in the All Other - Private Assets reportable segment. The following table presents operating expenses using compensation and non-compensation categories, rather than using activity categories, for the years indicated: Years Ended % Change December 31, December 31, December 31, December 31, December 31, 2021 2020 2019 2021 to 2020 2020 to 2019 (in thousands)
Compensation and benefits
518,730 16.5 % 1.7 %
Non-compensation expenses 246,376 196,239 203,956 25.5 % (3.8 %)
Amortization of intangible
assets 80,592 56,941 49,410 41.5 % 15.2 %
Depreciation and amortization
of property, equipment and
leasehold
improvements 28,901 29,805 29,999 (3.0 %) (0.6 %)
Total operating expenses
802,095 19.8 % 1.1 %
A significant portion of the incentive compensation component of operating expenses is based on the achievement of a number of financial and operating metrics. In a scenario where operating revenue growth and profitability moderate, incentive compensation would be expected to decrease accordingly.
Fixed costs constitute a significant portion of the non-compensation component of operating expenses. The discretionary non-compensation component of operating expenses could, however, be reduced in the near-term in a scenario where operating revenue growth moderates. We had 4,303 employees as ofDecember 31, 2021 , compared to 3,633 employees as ofDecember 31, 2020 , reflecting a 18.4% growth in the number of employees. Continued growth of our emerging market centers around the world is an important factor in our ability to manage and control the growth of our compensation and benefits costs. As ofDecember 31, 2021 , 63.2% of our employees were located in emerging market centers compared to 64.6% as ofDecember 31, 2020 . Compensation and benefits costs increased 16.5% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 , primarily driven by headcount growth and higher incentive compensation. Non-compensation expenses increased 25.5% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 , primarily driven by higher information technology costs, professional fees, impairment charges associated with right of use assets, non-recurring transaction and integration costs related to the acquisition of RCA and market data costs. We had 3,633 employees as ofDecember 31, 2020 compared to 3,396 employees as ofDecember 31, 2019 , reflecting a 7.0% growth in the number of employees. Continued growth of our emerging market centers around the world is an important factor in our ability to manage and control the growth of our compensation and benefits costs. As ofDecember 31, 2020 , 64.6% of our employees were located in emerging market centers compared to 62.9% as ofDecember 31, 2019 . 43 -------------------------------------------------------------------------------- Compensation and benefits costs increased 1.7% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 , driven by higher wages and salaries, incentive compensation and benefits costs, partially offset by the absence of$15.4 million of payroll tax expense associated with the vesting of the 2016 Multi-Year PSUs recognized during the year endedDecember 31, 2019 . Non-compensation expenses decreased 3.8% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 , primarily driven by lower travel and entertainment and marketing costs, partially offset by higher information technology costs.
Amortization of Intangible Assets
Amortization of intangible assets expense increased 41.5% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 , primarily driven by a write-off of$16.0 million of certain internally developed capitalized software intangible assets following management's decision to discontinue development and cease related sales activities of certain Analytics segment products and transition existing customers to other product offerings, as well as additional amortization recognized on acquired intangible assets following the acquisition of RCA. Amortization of intangible assets expense increased 15.2% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 , primarily driven by higher amortization of internally-developed capitalized software.
Depreciation and Amortization of Property, Equipment and Leasehold Improvements
Depreciation and amortization of property, equipment and leasehold improvements decreased 3.0% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 . The decrease was primarily the result of lower amortization on software and depreciation on computer and related equipment, partially offset by impairment charges on leasehold improvements.
Depreciation and amortization of property, equipment and leasehold improvements
for the year ended
Other Expense (Income), Net
The following table shows our other expense (income), net for the years
indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Interest income $ (1,497 ) $ (5,030 ) $ (16,403 ) 70.2 % 69.3 %
Interest expense 159,614 156,324 148,041 2.1 % 5.6 %
Other expense (income) 56,472 47,245 20,745 19.5 % 127.7 %
Total other expense
(income), net $ 214,589 $ 198,539 $ 152,383 8.1 % 30.3 %
Other expense (income), net increased 8.1% for the year ended December 31, 2021
compared to the year ended December 31, 2020 . The increase in net expenses was
primarily driven by the approximately $37.3 million loss on debt extinguishment
associated with the redemption of all of the $500.0 million aggregate principal
amount of the 2027 Senior Notes (the "2027 Senior Notes Redemption") and $21.8
million expense from the redemption of all of the $500.0 million aggregate
principal amount of the 2026 Senior Notes (the "2026 Senior Notes Redemption")
during the year ended December 31, 2021 .
The loss on debt extinguishment associated with the 2027 Senior Notes Redemption
included an applicable premium of approximately $33.6 million (as set forth in
the indenture governing the terms of the 2027 Senior Notes) and the write-off of
approximately $3.7 million of unamortized debt issuance costs associated with
the 2027 Senior Notes. The loss on debt extinguishment associated with the 2026
Senior Notes Redemption included an applicable premium of approximately $18.2
million (as set forth in the indenture governing the terms of the 2026 Senior
Notes) and the write-off of approximately $3.6 million of unamortized debt
issuance costs associated with the 2026 Senior Notes.
44
--------------------------------------------------------------------------------
The increase in net expenses was partially offset by the absence of the $35.0
million and $10.0 million loss on debt extinguishment associated with the
redemption of all of the outstanding $800.0 million aggregate principal amount
of the 2025 Senior Notes and the redemption of all of the remaining $300.0
million of the 5.250% Senior Notes due 2024 during the year ended December 31,
2020 , respectively, and by a one-time gain of $7.0 million related to the gain
resulting from changes in our ownership interest of Burgiss.
Other expense (income), net increased 30.3% for the year ended December 31, 2020
compared to the year ended December 31, 2019 . The increase in net expenses was
primarily driven by the $35.0 million and $10.0 million loss on debt
extinguishment associated with the redemption of all of the outstanding $800.0
million aggregate principal amount of the 2025 Senior Notes ("2025 Senior Notes
Redemption") and the redemption of all of the remaining $300.0 million of the
2024 Senior Notes ("2024 Senior Notes Redemption"), respectively.
The loss on debt extinguishment associated with the 2025 Senior Notes Redemption
included an applicable premium of approximately $29.5 million (as defined in the
indenture governing the terms of the 2025 Senior Notes) and the write-off of
approximately $5.5 million of unamortized debt issuance costs. The loss on debt
extinguishment associated with the 2024 Senior Notes Redemption included
a redemption price of approximately $7.9 million (as set forth in the indenture
governing the terms of the 2024 Senior Notes) and the write-off of approximately
$2.1 million of unamortized debt issuance costs.
In addition, the increase in net expenses reflects higher interest expense
associated with the higher outstanding debt and lower interest income due to
lower rates earned on cash balances, offset by the absence of the $16.8 million
loss on extinguishment associated with the partial pre-maturity redemption of
the 2024 Senior Notes recognized during the year ended December 31, 2019 .
Income Taxes
The following table shows our income tax provision and effective tax rate for
the years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Provision for income taxes $ 132,153 $ 84,403 $ 39,670 56.6 % 112.8 %
ETR 15.4 % 12.3 % 6.6 % 25.2 % 87.1 %
The effective tax rate of 15.4% for the year ended December 31, 2021 , reflects
the impact of certain favorable discrete items totaling $28.3 million , in
relation to pretax income, primarily related to $22.7 million of excess tax
benefits recognized on share-based compensation vested during the period, a $5.1
million benefit related to prior year settlements, a $2.3 million benefit
related to the revaluation of deferred taxes as a result of the enactment of an
increase in the UK corporate tax rate and a $2.0 million benefit related to the
filing of prior year refund claims, partially offset by a $3.8 million expense
related to other prior year items. In addition, the effective tax rate was
impacted by the level of earnings.
The effective tax rate of 12.3% for the year ended December 31, 2020 , reflects
the impact of certain discrete items totaling $47.9 million . These discrete
items primarily relate to $22.2 million of excess tax benefits recognized on the
vesting of equity awards during the period and $20.8 million released during the
year related to the favorable impact on prior years from final regulations
clarifying certain provisions of the Tax Cuts and Jobs Act that was enacted on
December 22, 2017 ("Tax Reform"). Also included in the discrete items is a $6.3
million benefit related to the revaluation of the cost of deemed repatriation of
foreign earnings.
The effective tax rate of 6.6% for the year ended December 31, 2019 , reflects
the impact of certain favorable discrete items totaling $85.7 million . These
discrete items primarily relate to $66.6 million of excess tax benefits
recognized upon vesting of the 2016 Multi-Year PSUs and $16.1 million of excess
tax benefits on other share-based compensation recognized during the period. In
addition, the effective tax rate was impacted by a beneficial geographic mix of
earnings.
45
--------------------------------------------------------------------------------
Net Income
The following table shows our net income for the years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Net income $ 725,983 $ 601,822 $ 563,648 20.6 % 6.8 %
As a result of the factors described above, net income increased 20.6% for the
year ended
As a result of the factors described above, net income increased 6.8% for the
year ended
Weighted Average Shares and Common Shares Outstanding
The following table shows our weighted average shares and common shares outstanding for the years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Weighted average shares
outstanding:
Basic 82,508 83,716 84,644 (1.4 %) (1.1 %)
Diluted 83,479 84,517 85,536 (1.2 %) (1.2 %)
Common shares outstanding 82,439 82,573 84,795 (0.2 %) (2.6 %)
The decrease in weighted average shares and common shares outstanding primarily
reflects the impact of share repurchases made pursuant to the stock repurchase
program.
Adjusted EBITDA
The following table presents the calculation of the non-GAAP Adjusted EBITDA measure for the years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Operating revenues: $ 2,043,544 $ 1,695,390 $ 1,557,796 20.5 % 8.8 %
Adjusted EBITDA expenses 846,754 723,880 707,297 17.0 % 2.3 %
Adjusted EBITDA $ 1,196,790 $ 971,510 $ 850,499 23.2 % 14.2 %
Adjusted EBITDA margin % 58.6 % 57.3 % 54.6 %
Operating margin % 52.5 % 52.2 % 48.5 %
The increase in Adjusted EBITDA and Adjusted EBITDA margin reflects a higher rate of growth in operating revenues as compared to the rate of growth of Adjusted EBITDA expenses, driven by the factors previously described.
46
--------------------------------------------------------------------------------Reconciliation of Adjusted EBITDA to Net Income and Adjusted EBITDA Expenses to Operating Expenses
The following table presents the reconciliation of Adjusted EBITDA to net income
for the years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Index Adjusted EBITDA $ 951,312 $ 766,493 $ 670,188 24.1 % 14.4 %
Analytics Adjusted EBITDA 198,799 172,924 152,113 15.0 % 13.7 %
ESG and Climate Adjusted EBITDA 29,748 22,851 21,813 30.2 % 4.8 %
All Other - Private Assets
Adjusted EBITDA 16,931 9,242 6,385 83.2 % 44.7 %
Consolidated Adjusted EBITDA 1,196,790 971,510 850,499 23.2 % 14.2 %
Amortization of intangible
assets 80,592 56,941 49,410 41.5 % 15.2 %
Depreciation and amortization of
property, equipment and
leasehold
improvements 28,901 29,805 29,999 (3.0 %) (0.6 %)
Impairment related to sublease
of leased property 7,702 - - n/a n/a
Acquisition-related integration
and
transaction costs (1) 6,870 - - n/a n/a
2016 Multi-Year PSUs grant
payroll tax expense - - 15,389 n/a (100.0 %)
Operating income 1,072,725 884,764 755,701 21.2 % 17.1 %
Other expense (income), net 214,589 198,539 152,383 8.1 % 30.3 %
Provision for income taxes 132,153 84,403 39,670 56.6 % 112.8 %
Net income $ 725,983 $ 601,822 $ 563,648 20.6 % 6.8 %
(1) Incremental and non-recurring costs attributable to acquisitions directly
related to the execution of the transaction and integration of the acquired
business that have occurred no later than 12 months after the close of the
transaction.
The following table presents the reconciliation of Adjusted EBITDA expenses to operating expenses for the years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Index Adjusted EBITDA expenses
250,749 20.2 % (0.3 %)
Analytics Adjusted EBITDA
expenses 345,500 340,884 344,812 1.4 % (1.1 %)
ESG and Climate Adjusted EBITDA
expenses 136,444 88,513 68,846 54.2 % 28.6 %
All Other - Private Assets
Adjusted EBITDA expenses 64,358 44,481 42,890 44.7 % 3.7 %
Consolidated Adjusted EBITDA
expenses 846,754 723,880 707,297 17.0 % 2.3 %
Amortization of intangible
assets 80,592 56,941 49,410 41.5 % 15.2 %
Depreciation and amortization of
property, equipment and
leasehold
improvements 28,901 29,805 29,999 (3.0 %) (0.6 %)
Impairment related to sublease
of leased property 7,702 - - n/a n/a
Acquisition-related integration
and
transaction costs (1) 6,870 - - n/a n/a
2016 Multi-Year PSUs grant
payroll tax expense - - 15,389 n/a (100.0 %)
Total operating expenses $ 970,819 $ 810,626 $ 802,095 19.8 % 1.1 %
(1) Incremental and non-recurring costs attributable to acquisitions directly
related to the execution of the transaction and integration of the acquired
business that have occurred no later than 12 months after the close of the
transaction.
Segment Results
The results for each of our four reportable segments for the years ended
47
--------------------------------------------------------------------------------Index Segment
The following table presents the results for the Index segment for the years
indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Operating revenues:
Recurring subscriptions $ 650,629 $ 580,393 $ 530,968 12.1 % 9.3 %
Asset-based fees 553,991 399,771 361,927 38.6 % 10.5 %
Non-recurring 47,144 36,331 28,042 29.8 % 29.6 %
Operating revenues total 1,251,764 1,016,495 920,937 23.1 % 10.4 %
Adjusted EBITDA expenses 300,452 250,002 250,749 20.2 % (0.3 %)
Adjusted EBITDA $ 951,312 $ 766,493 $ 670,188 24.1 % 14.4 %
Adjusted EBITDA margin % 76.0 % 75.4 % 72.8 %
Index operating revenues increased 23.1% for the year ended December 31, 2021
compared to the year ended December 31, 2020 , primarily driven by growth from
asset-based fees and recurring subscriptions. Revenues from recurring
subscriptions increased 12.1%, primarily driven by growth from market
cap-weighted index products and factor, ESG and climate index products. The
impact of foreign currency exchange rate fluctuations on Index operating
revenues was negligible.
Operating revenues from asset-based fees increased 38.6% for the year ended
December 31, 2021 compared to the year ended December 31, 2020 , driven by growth
in operating revenues from all index-linked investment product categories.
Operating revenues from ETFs linked to MSCI equity indexes increased by 41.9%,
primarily driven by an increase in average AUM, partially offset by a decrease
in average basis point fees. The increase in asset-based fees operating revenues
was also driven by revenues from non-ETF indexed funds linked to MSCI indexes
which increased by 39.4%, primarily driven by an increase in average AUM.
Non-recurring operating revenues increased 29.8% for the year ended December 31,
2021 compared to the year ended December 31, 2020 , primarily driven by client
license and usage fees related to prior periods, as well as licenses to
derivatives products.
Index segment Adjusted EBITDA expenses increased 20.2% for the year ended
Index operating revenues increased 10.4% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 . Revenues from recurring subscriptions were up 9.3%. The increase was primarily driven by growth in market cap-weighted index products, strong growth in factor, ESG and climate and in custom index products. The impact of foreign currency exchange rate fluctuations on revenues from recurring subscriptions was negligible. Operating revenues from asset-based fees increased 10.5% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 . The increase in asset-based fees was driven by growth in revenues from all of our indexed investment product categories, including an increase in revenues from exchange traded futures and options contracts linked toMSCI indexes that were primarily driven by price increases. The increase in revenues from asset-based fees was also driven by higher revenues from non-ETF indexed funds linked toMSCI indexes, which was driven by price increases and an increase in average AUM. Revenues from ETFs linked toMSCI indexes also increased, driven by an 8.9% increase in average AUM in equity ETFs linked toMSCI indexes, partially offset by a change in fee levels of certain products as well as change in product mix. The impact of foreign currency exchange rate fluctuations on operating revenues from asset-based fees was negligible.
Index segment Adjusted EBITDA expenses decreased 0.3% for the year ended
48
--------------------------------------------------------------------------------Adjusting for the impact of foreign currency exchange rate fluctuations, Index segment Adjusted EBITDA expenses would have increased 0.2%.
Analytics Segment
The following table presents the results for the Analytics segment for the years
indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Operating revenues:
Recurring subscriptions $ 533,178 $ 506,301 $ 486,282 5.3 % 4.1 %
Non-recurring 11,121 7,507 10,643 48.1 % (29.5 %)
Operating revenues total 544,299 513,808 496,925 5.9 % 3.4 %
Adjusted EBITDA expenses 345,500 340,884 344,812 1.4 % (1.1 %)
Adjusted EBITDA $ 198,799 $ 172,924 $ 152,113 15.0 % 13.7 %
Adjusted EBITDA margin % 36.5 % 33.7 % 30.6 %
Analytics operating revenues increased 5.9% for the year ended December 31, 2021
compared to the year ended December 31, 2020 , primarily driven by growth from
recurring subscriptions related to Multi-Asset Class and Equity Analytics
products. The impact of foreign currency exchange rate fluctuations on Analytics
operating revenues was negligible.
Analytics segment Adjusted EBITDA expenses increased 1.4% for the year ended
December 31, 2021 compared to the year ended December 31, 2020 , reflecting
higher compensation expenses primarily driven by the impact of foreign currency
exchange rate fluctuations on compensation expenses and higher market data
costs, partially offset by lower R&D expenses. Adjusting for the impact of
foreign currency exchange rate fluctuations, Analytics segment Adjusted EBITDA
expenses would have increased 0.1%.
Analytics operating revenues increased 3.4% for the year ended December 31, 2020
compared to the year ended December 31, 2019 , primarily driven by growth in
Multi-Asset Class Analytics products. Adjusting for the impact of foreign
currency exchange rate fluctuations, Analytics operating revenues would have
increased 3.3%.
Analytics segment Adjusted EBITDA expenses decreased 1.1% for the year ended
December 31, 2020 compared to the year ended December 31, 2019 , primarily driven
by lower expenses across the cost of revenues and R&D expense activity
categories, partially offset by higher expenses across the selling and marketing
and G&A expense activity categories. Adjusting for the impact of foreign
currency exchange rate fluctuations, Analytics segment Adjusted EBITDA expenses
would have decreased 0.4%.
ESG and Climate Segment
The following table presents the results for the ESG and Climate segment for the
years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Operating revenues:
Recurring subscriptions $ 162,609 $ 109,945 $ 89,563 47.9 % 22.8 %
Non-recurring 3,583 1,419 1,096 152.5 % 29.5 %
Operating revenues total 166,192 111,364 90,659 49.2 % 22.8 %
Adjusted EBITDA expenses 136,444 88,513 68,846 54.2 % 28.6 %
Adjusted EBITDA $ 29,748 $ 22,851 $ 21,813 30.2 % 4.8 %
Adjusted EBITDA margin % 17.9 % 20.5 % 24.1 %
ESG and Climate operating revenues increased 49.2% for the year ended
49
--------------------------------------------------------------------------------and Screening products. Adjusting for the impact of foreign currency exchange rate fluctuations, ESG and Climate operating revenues would have increased 43.4%.
ESG and Climate segment Adjusted EBITDA expenses increased 54.2% for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 , reflecting higher compensation expenses to support growth, reflected across all expense activity categories. Adjusting for the impact of foreign currency exchange rate fluctuations, ESG and Climate segment Adjusted EBITDA expenses would have increased 51.8%. ESG and Climate operating revenues increased 22.8% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 , primarily driven by strong growth from recurring subscriptions related to Ratings, Climate, and Screening products. Adjusting for the impact of foreign currency exchange rate fluctuations, ESG and Climate operating revenues would have increased 22.3%. ESG and Climate segment Adjusted EBITDA expenses increased 28.6% for the year endedDecember 31, 2020 compared to the year endedDecember 31, 2019 , reflecting higher compensation expenses to support growth, reflected across all expense activity categories. Adjusting for the impact of foreign currency exchange rate fluctuations, ESG and Climate segment Adjusted EBITDA expenses would have increased 28.4%.
All Other - Private Assets Segment
The following table presents the results for the All Other - Private Assets segment for the years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Operating revenues:
Recurring subscriptions $ 79,624 $ 51,536 $ 47,227 54.5 % 9.1 %
Non-recurring 1,665 2,187 2,048 (23.9 %) 6.8 %
Operating revenues total 81,289 53,723 49,275 51.3 % 9.0 %
Adjusted EBITDA expenses 64,358 44,481 42,890 44.7 % 3.7 %
Adjusted EBITDA $ 16,931 $ 9,242 $ 6,385 83.2 % 44.7 %
Adjusted EBITDA margin % 20.8 % 17.2 % 13.0 %
All Other - Private Assets operating revenues increased 51.3% for the year ended
December 31, 2021 compared to the year ended December 31, 2020 , primarily driven
by revenues attributable to the acquisition of RCA included as of September 13,
2021 (the date we completed the acquisition). Excluding the acquisition of RCA,
the increase in operating revenues was primarily driven by growth from recurring
subscriptions related to both Enterprise Analytics and Global Intel products and
benefits from foreign currency exchange rate fluctuations. Adjusting for both
the impact of acquisitions and foreign currency exchange rate fluctuations, All
Other - Private Assets operating revenues would have increased 4.0%. All Other -
Private Assets operating revenues would have increased 10.0% when excluding the
impact of acquisitions and increased 45.3% when excluding the impact of foreign
currency exchange rate fluctuations.
All Other - Private Assets segment Adjusted EBITDA expenses increased 44.7% for
the year ended December 31, 2021 compared to the year ended December 31, 2020 ,
primarily driven by the acquisition of RCA. All Other - Private Assets segment
Adjusted EBITDA expenses would have decreased 0.2% when excluding the impact of
acquisitions and increased 41.9% when excluding the impact of foreign currency
exchange rate fluctuations.
All Other - Private Assets operating revenues increased 9.0% for the year ended
December 31, 2020 compared to the year ended December 31, 2019 , primarily driven
by growth from recurring subscriptions related to both Enterprise Analytics and
Global Intel products. Adjusting for the impact of foreign currency exchange
rate fluctuations, All Other - Private Assets operating revenues would have
increased 9.2%.
All Other - Private Assets segment Adjusted EBITDA expenses increased 3.7% for
the year ended December 31, 2020 compared to the year ended December 31, 2019 ,
primarily driven by higher expenses across the R&D and selling and marketing
expense activity categories, partially offset by lower expenses across the cost
of revenues and
50
-------------------------------------------------------------------------------- G&A expense activity categories. Adjusting for the impact of foreign currency exchange rate fluctuations, All Other - Private Assets segment Adjusted EBITDA expenses would have increased 4.8%. Operating MetricsRun Rate "Run Rate" estimates at a particular point in time the annualized value of the recurring revenues under our client license agreements ("Client Contracts") for the next 12 months, assuming all Client Contracts that come up for renewal, or reach the end of the committed subscription period, are renewed and assuming then-current currency exchange rates, subject to the adjustments and exclusions described below. For any Client Contract where fees are linked to an investment product's assets or trading volume/fees, the Run Rate calculation reflects, for ETFs, the market value on the last trading day of the period, for futures and options, the most recent quarterly volumes and/or reported exchange fees, and for other non-ETF products, the most recent client-reported assets.Run Rate does not include fees associated with "one-time" and other non-recurring transactions. In addition, we add toRun Rate the annualized fee value of recurring new sales, whether to existing or new clients, when we execute Client Contracts, even though the license start date, and associated revenue recognition, may not be effective until a later date. We remove fromRun Rate the annualized fee value associated with products or services under any Client Contract with respect to which we have received a notice of termination, non-renewal or an indication the client does not intend to continue their subscription during the period and have determined that such notice evidences the client's final decision to terminate or not renew the applicable products or services, even though such notice is not effective until a later date. Changes in our recurring revenues typically lag changes inRun Rate . The actual amount of recurring revenues we will realize over the following 12 months will differ fromRun Rate for numerous reasons, including: • fluctuations in revenues associated with new recurring sales; • modifications, cancellations and non-renewals of existing Client Contracts, subject to specified notice requirements;
• differences between the recurring license start date and the date the
Client Contract is executed due to, for example, contracts with
onboarding periods or fee waiver periods;
• fluctuations in asset-based fees, which may result from changes incertain investment products' total expense ratios, market movements,
including foreign currency exchange rates, or from investment inflows
into and outflows from investment products linked to our indexes;
• fluctuations in fees based on trading volumes of futures and options
contracts linked to our indexes;
• fluctuations in the number of hedge funds for which we provide investment
information and risk analysis to hedge fund investors;
• price changes or discounts;
• revenue recognition differences under
to the timing of implementation and report deliveries for certain of our
products and services;
• fluctuations in foreign currency exchange rates; and
• the impact of acquisitions and divestitures.
51
--------------------------------------------------------------------------------
The following table presents
As of % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Index:
Recurring subscriptions
559,257 12.3 % 10.6 % Asset-based fees 589,320 464,108 396,140 27.0 % 17.2 % Index total 1,283,911 1,082,499 955,397 18.6 % 13.3 % Analytics 585,223 555,145 526,845 5.4 % 5.4 % ESG and Climate 199,597 138,317 101,423 44.3 % 36.4 % All Other - Private Assets 135,150 56,499 50,824 139.2 % 11.2 % Total Run Rate$ 2,203,881 $ 1,832,460 $ 1,634,489 20.3 % 12.1 % Recurring subscriptions total$ 1,614,561 $ 1,368,352 $ 1,238,349 18.0 % 10.5 % Asset-based fees 589,320 464,108 396,140 27.0 % 17.2 % Total Run Rate$ 2,203,881 $ 1,832,460 $ 1,634,489 20.3 % 12.1 %
Total
Run Rate from Index asset-based fees increased 27.0%, primarily driven by higher AUM in ETFs and non-ETF indexed funds linked toMSCI indexes, partially offset by a 0.13 average basis point fee decrease in ETFs.Run Rate from Index recurring subscriptions increased 12.3%, primarily driven by growth from market cap-weighted index products and strong growth from factor, ESG and climate index products and reflected growth across all regions and client segments.Run Rate from Analytics products increased 5.4%, primarily driven by growth in both Multi-Asset Class and Equity Analytics products. Adjusting for the impact of foreign currency exchange rate fluctuations, AnalyticsRun Rate would have increased 6.8%.Run Rate from ESG and Climate products increased 44.3%, driven by growth in all products, primarily driven by growth in Ratings, Climate and Screening products. Adjusting for the impact of foreign currency, ESG and ClimateRun Rate would have increased 47.1%.Run Rate from All Other - Private Assets increased 139.2%, primarily driven by the acquisition of RCA and growth in the Global Intel products. Adjusting for both the impact of acquisitions and foreign currency exchange rate fluctuations, All Other - Private AssetsRun Rate would have increased 7.6%. Adjusting for the impact of acquisitions or foreign currency exchange rate fluctuations, All Other - Private AssetsRun Rate would have increased 4.7% and 143.5%, respectively.
Total
52
--------------------------------------------------------------------------------
Run Rate from asset-based fees increased 17.2%, driven by higher AUM in equity
ETFs linked to MSCI indexes, higher prices in futures and options and higher
prices in non-ETF indexed funds linked to MSCI indexes. Partially offsetting the
impact of the increase in AUM in equity ETFs linked to MSCI indexes was a change
in fee levels of certain products as well as change in product mix, which was
the primary driver of a decline in average basis point fees to 2.67 at
December 31, 2020 from 2.82 at December 31, 2019 . As of December 31, 2020 , the
value of AUM in equity ETFs linked to MSCI indexes was $1,103.6 billion , up
$169.2 billion , or 18.1%, from $934.4 billion as of December 31, 2019 . The
increase of $169.2 billion consisted of market appreciation of $93.6 billion and
net inflows of $75.6 billion .
Index recurring subscription
Run Rate from All Other - Private Assets increased 11.2%, primarily driven by growth in both Enterprise Analytics and Global Intel products. Adjusting for the impact of foreign currency exchange rate fluctuations, All Other - Private AssetsRun Rate would have increased 6.6%.
Sales
Sales represents the annualized value of products and services clients commit to purchase fromMSCI and will result in additional operating revenues. Non-recurring sales represent the actual value of the customer agreements entered into during the period and are not a component ofRun Rate . New recurring subscription sales represent additional selling activities, such as new customer agreements, additions to existing agreements or increases in price that occurred during the period and are additions toRun Rate . Subscription cancellations reflect client activities during the period, such as discontinuing products and services and/or reductions in price, resulting in reductions toRun Rate . Net new recurring subscription sales represent the amount of new recurring subscription sales net of subscription cancellations during the period, which reflects the net impact toRun Rate during the period.
Total gross sales represent the sum of new recurring subscription sales and non-recurring sales. Total net sales represent the total gross sales net of the impact from subscription cancellations.
53
--------------------------------------------------------------------------------The following table presents our recurring subscription sales, cancellations and non-recurring sales by reportable segment for the years indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
New recurring subscription
sales
Index $ 99,686 $ 85,411 $ 78,325 16.7 % 9.0 %
Analytics 71,656 61,538 66,992 16.4 % (8.1 %)
ESG and Climate 69,964 40,786 24,877 71.5 % 64.0 %
All Other - Private Assets 14,142 6,121 7,675 131.0 % (20.2 %)
New recurring subscription
sales total 255,448 193,856 177,869 31.8 % 9.0 %
Subscription cancellations
Index (24,399 ) (27,398 ) (21,767 ) (10.9 %) 25.9 %
Analytics (34,291 ) (40,003 ) (31,623 ) (14.3 %) 26.5 %
ESG and Climate (4,811 ) (5,593 ) (3,928 ) (14.0 %) 42.4 %
All Other - Private Assets (6,737 ) (2,787 ) (2,540 ) 141.7 % 9.7 %
Subscription cancellations
total (70,238 ) (75,781 ) (59,858 ) (7.3 %) 26.6 %
Net new recurring
subscription sales
Index 75,287 58,013 56,558 29.8 % 2.6 %
Analytics 37,365 21,535 35,369 73.5 % (39.1 %)
ESG and Climate 65,153 35,193 20,949 85.1 % 68.0 %
All Other - Private Assets 7,405 3,334 5,135 122.1 % (35.1 %)
Net new recurring
subscription sales total 185,210 118,075 118,011 56.9 % 0.1 %
Non-recurring sales
Index 54,030 41,463 30,262 30.3 % 37.0 %
Analytics 12,407 10,996 15,947 12.8 % (31.0 %)
ESG and Climate 4,135 1,134 1,587 264.6 % (28.5 %)
All Other - Private Assets 1,694 1,442 1,303 17.5 % 10.7 %
Non-recurring sales total 72,266 55,035 49,099 31.3 % 12.1 %
Gross sales
Index $ 153,716 $ 126,874 $ 108,587 21.2 % 16.8 %
Analytics 84,063 72,534 82,939 15.9 % (12.5 %)
ESG and Climate 74,099 41,920 26,464 76.8 % 58.4 %
All Other - Private Assets 15,836 7,563 8,978 109.4 % (15.8 %)
Total gross sales $ 327,714 $ 248,891 $ 226,968 31.7 % 9.7 %
Net sales
Index $ 129,317 $ 99,476 $ 86,820 30.0 % 14.6 %
Analytics 49,772 32,531 51,316 53.0 % (36.6 %)
ESG and Climate 69,288 36,327 22,536 90.7 % 61.2 %
All Other - Private Assets 9,099 4,776 6,438 90.5 % (25.8 %)
Total net sales $ 257,476 $ 173,110 $ 167,110 48.7 % 3.6 %
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Retention Rate
Another key metric is our "Retention Rate." The following table presents our Retention Rate by reportable segment for the periods indicated:
All Other -
Private
Index Analytics ESG and Climate Assets Total
2021
Three Months Ended March 31, 96.6% 95.8% 97.0% 95.1% 96.3%
Three Months Ended June 30, 95.6% 92.7% 96.4% 93.7% 94.4%
Three Months Ended September 30, 96.0% 93.4% 96.1% 91.0% (1) 94.5%
Three Months Ended December 31, 96.0% 93.4% 96.6% 88.1% (1) 94.4%
Year Ended December 31, 96.1% 93.8% 96.5% 90.5% (1) 94.7%
2020
Three Months Ended March 31, 96.3% 93.7% 94.1% 95.7% 95.0% Three Months Ended June 30, 94.7% 92.0% 93.1% 96.2% 93.5% Three Months Ended September 30, 95.0% 93.8% 95.2% 94.8% 94.5% Three Months Ended December 31, 94.4% 90.1% 95.6% 91.4% 92.6% Year Ended December 31, 95.1% 92.4% 94.5% 94.5% 93.9% 2019 Three Months Ended March 31, 96.5% 93.7% 96.0% 95.7% 95.2% Three Months Ended June 30, 97.1% 94.2% 94.2% 93.4% 95.5% Three Months Ended September 30, 96.0% 93.6% 96.6% 97.1% 95.0% Three Months Ended December 31, 93.0% 92.8% 93.4% 91.5% 92.9% Year Ended December 31, 95.7% 93.6% 95.1% 94.4% 94.7%
(1) Includes RCA's
13, 2021. Retention rate for All Other - Private Assets excluding the impact
of RCA was 93.7%, 87.0% and 92.4% for the three months ended
2021, three months ended
respectively.
Retention Rate is an important metric because subscription cancellations
decrease our Run Rate and ultimately our future operating revenues over time.
The annual Retention Rate represents the retained subscription Run Rate
(subscription Run Rate at the beginning of the fiscal year less actual cancels
during the year) as a percentage of the subscription Run Rate at the beginning
of the fiscal year.
The Retention Rate for a non-annual period is calculated by annualizing the
cancellations for which we have received a notice of termination or for which we
believe there is an intention not to renew or discontinue the subscription
during the non-annual period, and we believe that such notice or intention
evidences the client's final decision to terminate or not renew the applicable
agreement, even though such notice is not effective until a later date. This
annualized cancellation figure is then divided by the subscription Run Rate at
the beginning of the fiscal year to calculate a cancellation rate. This
cancellation rate is then subtracted from 100% to derive the annualized
Retention Rate for the period.
For example, in the fourth quarter of 2021, we recorded cancellations of $20.3
million . To derive the Retention Rate for the fourth quarter, we annualized the
actual cancellations during the quarter of $20.3 million to derive $81.4 million
of annualized cancellations. This $81.4 million was then divided by the $1,444.2
million subscription Run Rate at the beginning of the year, which included RCA's
Run Rate as of the date of acquisition, to derive a cancellation rate of 5.6%.
The 5.6% was then subtracted from 100.0% to derive a Retention Rate of 94.4% for
the fourth quarter.
Retention Rate is computed by operating segment on a
product/service-by-product/service basis. In general, if a client reduces the
number of products or services to which it subscribes within a segment, or
switches between products or services within a segment, we treat it as a
cancellation for purposes of calculating our Retention Rate except in the case
of a product or service switch that management considers to be a replacement
product or service. In those replacement cases, only the net change to the
client subscription, if a decrease, is reported as a cancel. In the Analytics
and the ESG and Climate operating segments, substantially all product or service
switches are treated as replacement products or services and netted in this
manner, while in our Index and Real Estate operating segments, product or
service switches that are treated as replacement products or services and
receive netting treatment occur
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only in certain limited instances. In addition, we treat any reduction in fees
resulting from a down-sell of the same product or service as a cancellation to
the extent of the reduction. We do not calculate Retention Rate for that portion
of our Run Rate attributable to assets in index-linked investment products or
futures and options contracts, in each case, linked to our indexes.
For the year ended December 31, 2021 , 29.0% of our cancellations occurred in the
fourth quarter. In our product lines, Retention Rate is generally higher during
the first three quarters and lower in the fourth quarter, as the fourth quarter
is traditionally the largest renewal period in the year.
Liquidity and Capital Resources
We require capital to fund ongoing operations, internal growth initiatives and acquisitions. Our primary sources of liquidity are cash flows generated from our operations, existing cash and cash equivalents and credit capacity under our existing credit facility. In addition, we believe we have access to additional funding in the public and private markets. We intend to use these sources of liquidity to, among other things, service our existing and future debt obligations, fund our working capital requirements for capital expenditures, investments, acquisitions and dividend payments, and make repurchases of our common stock. In connection with our business strategy, we regularly evaluate acquisition and strategic partnership opportunities. We believe our liquidity, along with other financing alternatives, will provide the necessary capital to fund these transactions and achieve our planned growth.
Senior Notes and Credit Agreement
We have an aggregate of$4,200.0 million in senior unsecured notes (collectively, the "Senior Notes") outstanding and a$500.0 million undrawn Revolving Credit Agreement with a syndicate of banks as ofDecember 31, 2021 . See Note 6, "Commitments and Contingencies," of the Notes to Consolidated Financial Statements included herein for additional information on the Senior Notes and Revolving Credit Agreement. The Senior Notes and the Revolving Credit Agreement are fully and unconditionally, and jointly and severally, guaranteed by our direct or indirect wholly owned domestic subsidiaries that account for more than 5% of our and our subsidiaries' consolidated assets, other than certain excluded subsidiaries (the "subsidiary guarantors"). Amounts due under the Revolving Credit Agreement are our and the subsidiary guarantors' senior unsecured obligations and rank equally with the Senior Notes and any of our other unsecured, unsubordinated debt, senior to any of our subordinated debt and effectively subordinated to our secured debt to the extent of the assets securing such debt. The indentures governing our Senior Notes (the "Indentures") among us, each of the subsidiary guarantors, andWells Fargo Bank, National Association , as trustee, contain covenants that limit our and certain of our subsidiaries' ability to, among other things, incur liens, enter into sale/leaseback transactions and consolidate, merge or sell all or substantially all of our assets. In addition, the Indentures restrict our non-guarantor subsidiaries' ability to create, assume, incur or guarantee additional indebtedness without such non-guarantor subsidiaries guaranteeing the Senior Notes on a pari passu basis. The Revolving Credit Agreement contains affirmative and restrictive covenants that, among other things, limit our ability and/or the ability of our existing or future subsidiaries to:
• incur liens and further negative pledges;
• incur additional indebtedness or prepay, redeem or repurchase indebtedness;
• make loans or hold investments; • merge, dissolve, liquidate, consolidate with or into another person; • enter into acquisition transactions; • enter into sale/leaseback transactions; • issue disqualified capital stock; • sell, transfer or dispose of assets;
• pay dividends or make other distributions in respect of our capital stock
or engage in stock repurchases, redemptions and other restricted
payments;
• create new subsidiaries;
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• permit certain restrictions affecting our subsidiaries;
• change the nature of our business, accounting policies or fiscal periods;
• enter into any transactions with affiliates other than on an arm's-length
basis; and
• amend our organizational documents or amend, modify or change the terms
of certain agreements relating to our indebtedness.
The Revolving Credit Agreement and the Indentures also contain customary events of default, including those relating to non-payment, breach of representations, warranties or covenants, cross-default and cross-acceleration, and bankruptcy and insolvency events, and, in the case of the Revolving Credit Agreement, invalidity or impairment of loan documentation, change of control and customary ERISA defaults in addition to the foregoing. None of the restrictions above are expected to impact our ability to effectively operate the business. The Revolving Credit Agreement also requires us and our subsidiaries to achieve financial and operating results sufficient to maintain compliance with the following financial ratios on a consolidated basis through the termination of the Revolving Credit Agreement: (1) the maximum Consolidated Leverage Ratio (as defined in the Revolving Credit Agreement) measured quarterly on a rolling four-quarter basis shall not exceed 4.25:1.00 (or 4.50:1.00 for two fiscal quarters following a material acquisition) and (2) the minimum Consolidated Interest Coverage Ratio (as defined in the Revolving Credit Agreement) measured quarterly on a rolling four-quarter basis shall be at least 4.00:1.00. As ofDecember 31, 2021 , our Consolidated Leverage Ratio was 3.28:1.00 and our Consolidated Interest Coverage Ratio was 8.27:1.00. As ofDecember 31, 2021 , there were no amounts drawn and outstanding under the Revolving Credit Agreement. Our non-guarantor subsidiaries under the Senior Notes consist of: (i) domestic subsidiaries of the Company that account for 5% or less of consolidated assets of the Company and its subsidiaries and (ii) any foreign or domestic subsidiary of the Company that is deemed to be a controlled foreign corporation within the meaning of Section 957 of the Internal Revenue Code of 1986, as amended. Our non-guarantor subsidiaries as ofDecember 31, 2021 , accounted for approximately$1,258.4 million , or 61.6%, of our total revenue for the 12 months endedDecember 31, 2021 , approximately$452.2 million , or 42.2%, of our consolidated operating income for the 12 months endedDecember 31, 2021 , and approximately$2,334.9 million , or 42.4%, of our consolidated total assets (excluding intercompany assets) and$1,004.6 million , or 17.7%, of our consolidated total liabilities, in each case as ofDecember 31, 2021 .
Share Repurchases
Our Board of Directors has approved a stock repurchase program for the purchase of shares of the Company's common stock in the open market. See Note 11, "Shareholders' Equity (Deficit)," of the Notes to Consolidated Financial Statements included herein for additional information on our stock repurchase program.
As of trade date
Cash Dividends
OnSeptember 17, 2014 , our Board of Directors approved a plan to initiate a regular quarterly cash dividend to our shareholders. OnOctober 30, 2014 , we began paying regular quarterly cash dividends and have paid such dividends each quarter thereafter. OnJanuary 24, 2022 , the Board of Directors declared a quarterly dividend of$1.04 per share of common stock to be paid onFebruary 28, 2022 to shareholders of record as of the close of trading onFebruary 18, 2022 . 57 --------------------------------------------------------------------------------
Cash Flows
The following table presents the Company's cash and cash equivalents as of the
dates indicated:
As of
December 31, December 31, December 31,
2021 2020 2019
(in thousands)
Cash and cash equivalents $ 1,421,449 $ 1,300,521 $ 1,506,567
The following table presents the breakdown of the Company's cash flows for the
periods indicated:
Years Ended % Change
December 31, December 31, December 31, December 31, December 31,
2021 2020 2019 2021 to 2020 2020 to 2019
(in thousands)
Net cash provided by
operating activities $ 936,069 $ 811,109 $ 709,523 15.4 % 14.3 %
Net cash used in investing
activities (1,035,713 ) (241,791 ) (71,937 ) nm (236.1 %)
Net cash provided by (used
in) financing activities 229,505 (779,038 ) (36,667 ) 129.5 % nm
Effect of exchange rate
changes (8,933 ) 3,674 1,472 nm 149.6 %
Net increase (decrease) in
cash $ 120,928 $ (206,046 ) $ 602,391 158.7 % (134.2 %)
nm: not meaningful
Cash and Cash Equivalents
We typically seek to maintain minimum cash balances globally of approximately
$200.0 million to $250.0 million for general operating purposes. As of
December 31, 2021 and 2020, $542.2 million and $423.4 million , respectively, of
the cash and cash equivalents were held by foreign subsidiaries. Repatriation of
some foreign cash may be subject to certain withholding taxes in local
jurisdictions and other distribution restrictions. We believe the global cash
and cash equivalent balances that are maintained will be available to meet our
global needs whether for general corporate purposes or other needs, including
acquisitions or expansion of our products.
Cash Flows From Operating Activities
Cash flows from operating activities consist of net income adjusted for certain
non-cash items and changes in assets and liabilities. The year-over-year
increase for the year ended
Our primary uses of cash from operating activities are for the payment of cash compensation expenses, interest expenses, income taxes, technology costs, market data costs and office rent. Historically, the payment of cash for compensation and benefits is at its highest level in the first quarter when we pay discretionary employee compensation related to the previous fiscal year.
Cash Flows From Investing Activities
The year-over-year change for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 was primarily driven by the acquisition of RCA, partially offset by the absence of the$190.8 million equity method investment in Burgiss.
Cash Flows From Financing Activities
The year-over-year change for the year endedDecember 31, 2021 compared to the year endedDecember 31, 2020 was primarily driven by the impact of lower share repurchases and higher proceeds from the senior notes offerings made during the year endedDecember 31, 2021 . 58
-------------------------------------------------------------------------------- We believe that global cash flows from operations, together with existing cash and cash equivalents and funds available under our existing revolving credit facility and our ability to access the debt and capital markets for additional funds, will continue to be sufficient to fund our global operating activities and cash commitments for investing and financing activities, such as material capital expenditures and share repurchases, for at least the 12 months following issuance of this Form 10-K and for the foreseeable future thereafter. In addition, we expect that foreign cash flows from operations, together with existing cash and cash equivalents, will continue to be sufficient to fund our foreign operating activities and cash commitments for investing activities, such as material capital expenditures, for at least the 12 months following issuance of this Form 10-K and for the foreseeable future thereafter.
Contractual Obligations
Our contractual obligations consist primarily of our debt obligations arising from the issuance of the Senior Notes, leases for office space, leases for equipment and other operating leases and obligations to vendors arising out of market data contracts. The following table summarizes our contractual obligations for the periods indicated as ofDecember 31, 2021 : Years Ending December 31, (in thousands) Total 2022 2023 2024 2025 2026 Thereafter Senior Notes (1) 5,660,948 155,875 155,875 155,875 155,875 155,875 4,881,573 Operating leases 198,325 28,271 29,427 23,924 22,717 20,447 73,539 Vendor obligations 201,628 72,818 43,196 35,137 18,796 17,134 14,547 Other obligations (2) 19,392 - 1,465 7,968 9,959 - -
Total contractual obligations
$ 222,904 $ 207,347 $ 193,456 $ 4,969,659
(1) Includes the impact of payments for the principal amount on the 2029 Senior
Notes, the 2030 Senior Notes, the 3.875% Senior Notes due 2031, the 3.625%
Senior Notes due 2031 and the 2033 Senior Notes plus interest based on the
4.000%, 3.625%, 3.875%, 3.625% and 3.250% coupon interest rates,
respectively.
(2) Primarily includes amounts payable related to an estimated one-time tax on
deemed repatriation of historic earnings of foreign subsidiaries (the "Toll
Charge") imposed after Tax Reform was enacted. The Toll Charge is included
within "Other non-current liabilities" in our Consolidated Statements of
Financial Condition.
The obligations related to our uncertain tax positions, which are not considered material, have been excluded from the table above because of the uncertainty surrounding the timing and final amounts of any settlement.
Recent Accounting Standards Updates
See Note 2, "Recent Accounting Standards Updates," of the Notes to the Consolidated Financial Statements included herein for further information.
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