Good day, ladies and gentlemen, and welcome to your MSCI Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to hand the conference over to Mr. Edings Thibault, Head of Investor Relations. Sir, you may begin.

Thank you, Saeed. Good morning, everyone, and thank you for joining our fourth quarter and full year 2012 earnings call. Please note that earlier this morning, we issued a press release describing our results for fourth quarter and full year 2012, and a copy of that release may be viewed on our website at msci.com under the Investor Relations tab. You'll also find on our website, a slide presentation that we have prepared to accompany this call. This call may contain forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they are made, which reflect management's current estimates, projections, expectations or beliefs and which are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of additional risks and uncertainties that may affect MSCI's future results, please see the description of risk factors and forward-looking statements on our Form 10-K for our fiscal year ended December 31, 2011, and other SEC filings. Today's earnings call may also include discussion of certain non-GAAP financial measures, including adjusted EBITDA and adjusted EPS. Adjusted EBITDA and adjusted EPS exclude the following: lease exit charge, restructuring costs and non-recurring stock-based expense. Adjusted EPS also excludes the amortization of intangibles resulting from acquisitions and debt repayment and refinancing expenses. Please refer to today's earnings release and the relevant slides in the investor presentation for the required reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures and other related disclosures. We will be referring to run rate frequently in our discussion this morning, so let me remind you again that our run rate is an approximation at a given point in time of the forward-looking revenues for subscriptions and product licenses that we will record over the next 12 months, assuming no cancellations, new sales, changes in the assets and ETFs license to our indices or changes in foreign currency rates. Please refer to Table 10 in our press release for a detailed explanation. I will now turn the call over to Bob Qutub.

Thank you, Edings, and thank you, everyone, for joining us on this call. Earlier this morning, MSCI reported strong financial results for the fourth quarter of 2012. Our operating results were highlighted by another strong quarter for our Performance and Risk segment with the index and ESG subscription run rate increasing by 25%, aided by the acquisition of IPD, and 11% organic growth. Our Government segment continued to make progress on our path to sustainable growth. While there remains work to be done, we are pleased with the trend to results we have reported in the past 3 quarters. MSCI's results benefited from strong net inflows in the MSCI-linked ETFs during the fourth quarter. The vast majority of these flows came after Vanguard announced their decision to switch indices for certain ETFs. Since the switch was announced, MSCI has seen the assets under management and other ETFs linked to MSCI indices increase, as MSCI-linked ETFs gained almost 2/3 of all flows into U.S. listed cross-border ETFs. That kind of voted confidence in the value of MSCI indices is extremely gratifying. The run rate of our portfolio management analytics business, which accounted for 11% of our total, continued to decline with much of that decline in run rate can be traced to foreign currency moves and the impact of product swaps, the combination of tough conditions for our client and ongoing price competition improved to be a strong headwind. We do not believe that we are losing ground to our competitors and we will work to continue to harvest and stabilize this important product line. Another topic I want to highlight is the deployment of our capital. Over the course of 2012, we did a great deal of talking to our Board, investors and others about how we can deploy our…

Thanks, Bob. Before I speak to you about some of the initiatives we have underway for 2013, I would like to reflect a bit more on the past year. The operating environment was difficult for much of 2012, and the fourth quarter was no exception. MSCI experienced a slowdown in sales across our major product line as we saw clients delaying their decision-making process. This trend, which began in the middle of 2011, remained constant throughout 2012. Throughout that timeframe, however, our overall retention rate has remained largely stable, a trend that has also continued in the fourth quarter. So in our view, we think we are experiencing a broad hesitation on the part of the participants in the financial markets to make significant budgetary decisions. We continue to believe that this hesitation is largely a function of macroeconomic uncertainty and some of the more micro challenges faced by segments of the investment and banking industry. We believe that both confidence and spending will rebound at some point. It is important to keep in mind that MSCI's business is evolving, financial markets are becoming more integrated, both globally and across asset classes, increasing the complexity our clients face. Clients and regulators are demanding more transparency, both internally across portfolios and externally between managers. At the same time the cost of processing data is dropping fast, which is going to drive innovation and increase the value of unique data sets and analytical tools. All of these factors are driving underlying demand for tools, which can provide insight and linkage around performance and risks for single asset class and multi-asset class investors and managers. It is our goal at MSCI to meet that demand and to provide those tools. These same factors are also driving our need to invest both organically and…

[Operator Instructions] Our first question comes from Georgios Mihalos from Crédit Suisse. Georgios Mihalos - Crédit Suisse AG, Research Division: Just a couple of questions, you guys referenced the difficult selling environment that's been going on for about 1.5 years now. Are you sensing any sort of change in the environment early in the year, whether better or worse? And just to kind of jump on that point, what do you think are sort of -- how do you think about the long-term growth prospects for the risk management business in terms of growth and kind of the competitive profile that's out there?

I think, on the first part -- I'll take the first one. Indications are we're seeing a continuation, George, on -- in terms of the pipeline remaining strong. It's just getting corporation to continue to spend the money. We indicated in the past quarter, we saw the cancels remain kind of seasonally reflective of what they've been before. We're looking at the macroeconomic environment to get more certainty. I think that Henry talked to it. And on that point, Henry, from your perspective, if you want to offer something up on that?

We are hopeful that the current rally in equity markets around the world and some lifting of the macroeconomic uncertainties will eventually benefit us. We have seen very, very early indications of some of that in the tone of dialogue with clients but nothing really to report. And we typically lag, companies like MSCI lag on the way up and lag on the way down in our subscription business. Obviously, the environment is beneficial to us on the AUM for the ETFs and other types of products, but we're currently not sitting still. We keep pushing ahead in many of the things that we're doing in order to see if we can push hard on sales and benefit from that this year and obviously maintain the stable retention rates that we've enjoyed in the past. With respect to the RMA business, as we've said in the past, this is a business that is always lumpy. It is -- there are some quarters in which it's going to be better and some quarters where it's not going to look as great. And I think the fourth quarter of last year was one of those in which many of the sales that were in the pipeline had slipped. We are pretty hopeful and confident that the pipeline remains healthy. If the macroeconomic uncertainty lifts more, we may be able to see some of those deals closing sooner rather than later, but it's too early to tell. We're also very confident that the fundamental demand for Risk Management Analytics around the world in all the various classes and client segments that we serve is still strong and healthy, from hedge funds to our pension plans and other forms of asset owners to asset managers, et cetera. But it's clearly a question of converting…

I think on the product swaps between Aegis and BPM into BarraOne will continue. And a lot of the reasons why that is the case is, one, BarraOne is fairly advanced in its functionality for both risk management and certain amount of portfolio management. That's the product line that we have been putting more investments in and so forth -- so on and so forth. So therefore, it is logical to see more -- some clients who have certain amount of risk analysis and risk management capabilities in their front equity portfolio management office put that in BarraOne. So we'll see some of that continue. That may get abated over time as we develop Barra Portfolio Manager more, and therefore, may benefit from that. Secondly is that there is, in certain parts of the world, especially in Europe and parts of Japan, a bit more of an integration going on between the front portfolio management office and the middle risk management office. And therefore, we may see some product swaps between Aegis, for example, and obviously Cosmos in fixed income, into BarraOne because people in those areas would like to have one system serving the front office of portfolio management and the middle office for risk management. So that's another aspect of product swaps that will continue. To be frank, to us, we're indifferent. At many times, the product swaps that take place between PMA and RMA are done at an uptick to sales in RMA, and a lot of this description that we have in terms of RMA and PMA is, at times, artificial. It may be confusing or misleading over time, but that's the way we've done it so far.

Yes, and George, and there's not much left on Cosmos to that specific point. [indiscernible] Georgios Mihalos - Crédit Suisse AG, Research Division: Okay. And just last question for me. You guys referenced investments in '13. Just sort of, in aggregate, should we be thinking that those investments will be roughly on par or at the same level of investment in 2012?

I think they will be, we're continuing an upward trend, George, we're trying to look more organically in what we're doing. We see that leveraging our existing platform. Henry cited ones that occurred in 2012, we've got more that -- that were completed in 2012 in data centers. But as we go into 2013, we're looking at the network and the platform. So we see that as an ongoing trend that's positive. It leverages our existing platform and obviously, those type of investments have great payback.

Our next question comes from David Togut from Evercore Partners.

A couple of quick questions. First, on client retention, even if we adjust for the negative FX and the product swap, wouldn't client retention in Portfolio Management Analytics still be down pretty significantly on a year-over-year basis?

We've seen -- like we said, we've seen pricing pressures come in through. The competitive market has been tough. We're not necessarily losing ground per se, but these contracts come up for repricing, it's competitive, there's other entrants in the market, that makes it challenging. But like I said earlier, the bulk of the decline in the run rate was driven by product swaps we talked a little but more extensively that Henry referred to, as well as the FX.

And just on the energy and commodity analytics, which was down about, I guess, [indiscernible] percentage points year-over-year, can you talk about the underlying drivers of that decline in client retention? To what extent is that one-time or something sustainable?

You're seeing structural changes in the market with the OCC's exchanges and those things going on. Those are things that have to work themselves out over time. We continue to work on the models, we continue to upgrade and move through it. As certain things sort themselves out, we'll have a better position going forward.

I see. And then can you update us on the relationship with BlackRock? They said on their recent earnings call that they were very pleased with MSCI, and yet they want to keep their costs down as low as possible. So how are those discussions proceeding? Can you sustain the pricing with BlackRock over time?

I think, as we have said over and over and over again, we have a very strong and close relationship with all of BlackRock, but obviously, in this case specifically, iShares. The level of collaboration and discussion that we've had with them intensified quite significantly in the last quarter as we were trying to ensure that we were serving our mutual clients, it's mostly institutional clients, in their transition from many of the Vanguard funds to the iShares funds. So that relationship is very strong, and it continues to get stronger and the like. So I don't anticipate no significant changes of that. If anything, we continue to launch a lot of new products together. I don't think any month goes by without iShares introducing new MSCI-linked ETFs in the U.S., but in other locations around the world. And we're looking at the map of the world in terms of where are areas in which we are not yet doing as much as we should be doing. Ocana [ph] is one example of those and therefore, we are pushing hard together to see what else we can be launching together in many of these other places.

Final question for me on capital allocation. You've shown a lot more flexibility on the score in the last few months with the ASR. Should we expect you to start paying a dividend at some point in the near future?

I think Henry gave pretty clear guidance. With the $200 million authorized buyback, that's our vehicle right now, to return our capital back to our investors and shareholders.

And then we also have -- I don't think the flexibility, so to speak, around the fourth quarter was necessarily anything new. I think what we did throughout 2012, and many of our shareholders and analysts understand that we engaged in a discussion as to what is it that the right capital deployment of the company ought to be. We engaged our Board intensely during this summer in a strategy about the overall direction of the company and the areas we wanted to make investments, we worked pretty hard in creating a budgetary process in the Fall. And therefore, all of that ended up coinciding towards the end of the year for the end result that you saw. We always had a very significant amount of effort going on, on capital allocation and capital deployment in the company in terms of what is the right balance between organic investment, bolt-on acquisitions some pay down of debt if necessary and return of capital. So I think we achieved the right balance, we're pretty happy with it and I don't think we're going to add dramatically to that.

And our next question comes from Toni Kaplan from Morgan Stanley.

You typically implement the annual price increase in May, so I think this is my last chance to ask about it before next quarter. Can you give us some color on what you're thinking on the index side of the business? Is it the usual sort of 3% to 5%? And in the portfolio analytics side, is that still not really expecting price increases there because of the tough environment?

I don't think this year will be that significant the way we're looking at pricing in the index business. We haven't made any final decisions at this point. But so far a lot of our discussion have been not dramatically different. With respect to pricing on the RMA business, I think that, that's another -- I don't think there's going to be any significant or substantive changes to the pricing that we have on that product line in 2013 as it relates to 2012. And in PMA, I think the pricing there is looking at every client that renews. We want to keep the business with those clients. Sometimes we add functionality and there's an uptick and part of their -- many times in which the renewal gets done at a lower price point. So that will probably continue in 2013.

Okay. That's great. And just one other question on portfolio management analytics. You talked about the tough macro and customers not really wanting to spend. Are you changing your strategy at all in this business in particular? I know you mentioned some of the initiatives from a distribution side, et cetera, but is there anything in this business, in particular, that you're going to be changing?

I think, a lot of it is a continuation and mainly -- sometimes an acceleration of all the strategic moves that we're making in this business. One is how do we ensure our tools are in a lot of different software platforms, not only ours but other vendors. So we've done that and accelerated that. Secondly, how do we ensure we keep launching quite a lot of new risk models. And a lot of the sale that came in 2012 were because of these new risk models. And we have more -- many more risk models coming out in 2013 as well. Three, is the continued enhancement of Barra Portfolio Manager. This newer release that is coming out in the next few months of Barra Portfolio Manager is a very important one because it gives a great deal of back testing functionality to portfolio analysis. So that's -- there's one release in the next few months and another one towards the end of the year that continues to enhance that software and make it look and behave a lot more like Aegis, which is obviously desktop, older technology. So we're doing that. And I think, in addition to that, we're getting extremely close to clients in terms of training clients and client service and understanding what they're trying to do and how they use their tools, customize many of the tools that we provide to them, that's another significant effort. So I think it's a continuation but I wouldn't say an acceleration in 2013 of a lot of what we've been doing in the past. That's not to say that necessarily, the business or the environment or the client base will improve dramatically but we're hoping that these efforts that we have in place continue to soften any kind of problems and at some point, turn the business around.

Okay, great. And just one last one for me. Can you talk about your strategy for the sales force this year? How much would you expect to increase it by? And which areas are you going to bulk up and are there areas that you're going to scale down?

I don't think we're scaling down anything on the sales organization. If anything, now, there is quite a significant incremental expansion of our client organization in many fronts. We're adding sales people in all of these centers where we operate. We're opening up more centers to go into -- deeper into other our client bases in Canada. We're pushing hard in Taiwan. We're pushing hard in many of the emerging markets. We've created a dedicated sales force for the emerging markets of EMEA, Eastern Europe, Russia, Middle East, Turkey and Sub-Saharan Africa. There's money there, there are big sovereign wealth funds there that we're not covering as effectively, so we're pushing hard on that. We are adding to our consultants, these are the people that help train our clients on our analytics. And we're establishing larger client service centers in the emerging markets, adding into Monterrey, in Budapest and Mumbai, in Shanghai. But especially, we're adding significantly to the client service team in Manila. We established a front there that we didn't have before and that's also something that we're expanding on. We're going to have a night shift there to cover the world as well. All of these efforts have been very, very effective in keeping our retention stable. Don't underestimate the challenges that are facing investment organizations wanting to cut costs and the like. And the reason, one of the primary reasons why our retention rates have remained stable is because of a lot of these client service and consultant outreach that we have and we're using quite a lot of technology to do that. And we're positioning -- we're -- in terms of the sales additions, we are trying to grow faster if we can. And it positions us also extremely well that when a lot of this uncertainty lifts and the client's budget begin to get released, we'll be there to capture significant upside in growth.

Our next question comes from Bill Warmington from Raymond James. William A. Warmington - Raymond James & Associates, Inc., Research Division: A couple of housekeeping questions if I might. The first, I just want to double check if we have on the index and ESG revenue run rate, the subscription organic growth at 11%, the AUM at 6%, what was the total division organic growth for the run rate on an organic basis?

For the overall subscription run rate or just on the index and ESG? William A. Warmington - Raymond James & Associates, Inc., Research Division: The latter, just on the index and ESG. On an organic...

Organic was 11% on the overall. William A. Warmington - Raymond James & Associates, Inc., Research Division: So was -- it was subscription at 11%, right? And then...

Subscription was 10% overall. And so the organic -- on an organic basis, it grew by 5%. William A. Warmington - Raymond James & Associates, Inc., Research Division: Okay. But I'm saying, for -- if you take the index and ESG piece and you look at the run rate and you look at it just organic for that, it looks like subscription organic within index and ESG was 11%. And it looks like AUM was up 6%, and that's all organic. I just want to double check the total subscription -- sorry, the total index and ESG revenue run rate organic growth? If it's in the slide, just point me to it. I didn't see it.

Bill, good little feedback. I just want to make sure we're clear on it. William A. Warmington - Raymond James & Associates, Inc., Research Division: Okay. Not a problem. And then, I wanted to ask if you have updated your thinking around a target debt level?

We are always evaluating. As Henry said, we talked to our Board and our investors, we're looking at -- constantly looking at our capital structure. As you know, we've got the $850 million outstanding, we've got scheduled payments of $44 million this year, the step up that matures in 2017. We'll be evaluating our levels of debt along with all other factors that would be a part of our invested capital for the company here, but we're always looking at it. William A. Warmington - Raymond James & Associates, Inc., Research Division: Okay. And then on the acquisition front, just wanted to ask if you felt you had any holes that you needed to fill, whether you are still aggressively reviewing opportunities? I just want to get your thoughts there.

Bill, we are always reviewing opportunities that are what I would call acceleration of organic investment through acquisitions in our backyard, the same product line and on the like. So that continues. And largely, these are largely things that are bolt-on. We're not proactively looking at anything that is big or transformational, anything like that. You never know when those things come. But a lot of what we're trying to look is what specific holes do we have. In the asset classes per se, in the single asset classes, we feel pretty good about equities. Hedge funds for a bit, obviously real estate. We are actually -- good that you asked, we're actually about to announce a consultation process with our clients on private equities. We've been working with another vendor on private equities to see if we can join forces to create private equity indices on performance and risk management systems for that asset class. So that also is ongoing. I think, clearly, the area where we are strong for multi-asset classes is fixed income but we're not as strong in fixed income as a single asset class. I don't think we're going to launch fixed income indices at this point. We are having a good partnership with Barclays on ESG for fixed income but we're not going to go into that space directly. And I think, we haven't been able to earmark investment for fixed income Portfolio Management Analytics. That's an area that we keep looking but I'm not sure that -- we keep saying that every year, I'm not sure we're going to do anything necessarily, unless we find something interesting at the right price.

Our next question comes from Chris Shutler from William Blair. Christopher Shutler - William Blair & Company L.L.C., Research Division: In the ETF business, just curious to get your thoughts on why the MSCI emerging market's ETF EAM has seen such a good pickup inflows while some of the other ETFs, I mean, some of the other ETFs with Vanguard products that switched to FTSE haven't suffered as much or have actually continued to see inflows? So just curious to get your take there? And then also, what's your sense of how sustainable the trends in the EAM ETF are?

Sorry, your second question, what's... Christopher Shutler - William Blair & Company L.L.C., Research Division: It was just how sustainable do you think the trends in the MSCI emerging market's ETF are, I guess, relative to the competition?

Yes. No, I think, what happened in the last quarter, since the announcement by Vanguard, is a testimony and a complete understanding of what we've been saying since the announcement of the Vanguard switch. And that is MSCI is the leading index for global institutional investors in the way they allocate the assets and give out mandates for their portfolios. And it's just not only American but European and Asian, institutional investors of all types. So when the announcement was made, you saw that there were a lot of institutional investors around the world that had found their way into Vanguard ETFs because they wanted to be invested in an MSCI index. And when they saw those ETFs switching indices, they looked around to what other ETFs with MSCI indices were available and you saw that massive switch that took place in the fourth quarter and continues today. Now, this was very pronounced, even more so in the emerging markets because if MSCI is strong in terms of -- as an index in terms of general investment in all markets, it is strongest as an index of the emerging market. We have a very pronounced reputation in market share in indices that cover the emerging markets. So that was it. The other part of it is that the Vanguard emerging market ETF was the largest of all the ETFs -- the quarterly [ph] ETF that were being switched to another index. And therefore, it is likely and logical to have seen the largest amount of assets in that ETF going to iShares and others. So I think that, that's the explanation. Now that trend continues. Obviously, it may not continue at the same pace that it did in the fourth quarter because there are diminishing returns as to how much of that money really switches but it does continue today.

Our next question comes from Ed Ditmire from Macquarie.

My question is how firm is your conviction at the product portfolio in a broad sense? And what I mean is index risk, portfolio analytics and governance is the right product set to take advantage of the next step turn in client demand when it materializes? In particular, have management moves to decentralize overhead functions like finance over the last year and push some of that overhead management into the segments, has that given you a better flexibility to make the most of your options in case you felt that one of the units would enjoy special synergies with a strategic partner, et cetera?

I think, one way to think about our business, I mean, -- let me back up. The way we describe our business typically is in the form of index and risk and portfolio and governance and all of that. The other way to describe it, which is more logical, because that's what we're trying to achieve, is to say what are all the things that we're doing for the equity investment asset class? And put aside the brands and all of that, but what are we doing? So we create performance measurements in the form indices. We create performance attribution models. We create the risk analysis. And we create portfolio construction and portfolio optimization and so on and so forth. And we create -- we overlay a form of ESG investing on that equity -- on those equity portfolios and we have tools that bought -- that people bought their shares on those equity portfolios. So that's the vast majority of what we do. The vast majority of what we do is very synergistic because the infrastructure, all the databases, and our understanding of the companies, understanding of corporate events and corporate actions and the growth of those companies, the value of those companies and all of that is the same underlying structure that goes into an index or into a risk model or in an ESG or whatever. At the front-end, our distribution people are talking to the same people. They're talking to equity portfolio managers, they're talking to chief investment officers for equities, the head analysts for equities and so on and so forth. And therefore, it is highly, highly synergistic. We -- our view is that in a multi-asset class world in which all these asset classes are really converging with one another and the asset owner…

And to further your point, your opening question, we have a lot of integrated infrastructure whether it's from how we support product lines, whether it's from the functional units like finance that are in data support, those have been quite integrated.

Well, thank you very much everyone. Is that the last call?

I'm showing no further questions.

One thing of clarification for Bill. Just to come back and to save you a call with Edings, is that organic growth for overall index was 9%. That was, as I said earlier, 11% on the subscription side, and 6% on ABS. Just for clarification on that.

Thank you, Saeed. And thank you, everyone, for joining us on the call today. Feel free to call me with any additional questions. Have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes our program. You may all disconnect and have a wonderful day.