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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 ending December 31, 2011 and other SEC filings.Today's earnings may also include discussion of certain non-GAAP financial measures, including adjusted EBITDA and adjusted EPS. Adjusted EBITDA and adjusted EPS exclude the following: Restructuring costs and nonrecurring stock-based expense. Adjusted EPS also excludes the amortization of intangibles resulting from acquisitions and debt repayment and refinancing expense. Please refer to today's earnings release in Pages 16 to 18 of 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 fees 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 licensed to our indices or changes in foreign currency rates. Please refer to Table 10 in our press release for a detailed explanation. Henry Fernandez will begin the discussion this morning with an overview of the second quarter operating results, and then David Obstler will provide some details on our financial results. I will now turn the call over to Mr. Henry Fernandez. Henry? Henry A. Fernandez Thank you, Edings, and good morning. MSCI reported second quarter 2012 revenues of $239 million, up 5% from the second quarter of 2011 and adjusted EBITDA of $108 million, up 1% year-over-year. MSCI's 2012 adjusted EPS rose 6% year-over-year to $0.15. MSCI had a solid second quarter despite a global operating environment that remained challenging. Our total run rate grew 4% to $920 million. Our subscription businesses grew at a healthy 6% to a run rate of $791 million. That growth was fueled by double-digit expansion in our index and ESG subscription run rate, as well as growth in our risk management analytics and governance units.
Our overall subscription sales were steady as weaker sales to asset managers and U.S. banks were partially offset by sales to hedge funds and asset owners.Our retention rate remains strong. This strength in our retention rate is especially gratifying to us because we have invested heavily over the past few years in our client service function and we continue to invest in improving our technology platforms that connect us with our clients. I would like to also importantly note that our sales pipeline for Q3 and Q4 remain solid. We are continuing to invest in our businesses despite a challenging environment. The pace of that investment has slowed though, versus 2011, but we continue to make targeted additions to our research, product development, client service, and administrative functions. To reduce the impact of those investment costs on our profitability, we are keenly focused on pipe expense management. Our continuing and key part of that strategy is our ability to leverage our emerging market centers, which has enabled us to manage our overall compensation levels by migrating certain operating and support functions on parts of our employee base away from a more costly developed market centers. During the second quarter, we moved proactively to our accelerate that ship, resulting in higher severance expense, which David will touch upon. The percentage of our employees in emerging market centers have gone from about 35% in Q2 '11 to 40% last quarter, to now 42% in this quarter. We're also working pretty hard to manage aggressively, all of our non-compensation expenses. In addition, we are focused on reducing our expenses below the EBITDA line. As we announced on our last call, we successfully refinanced our debt, enabling us to pay down $200 million of debt and lower our interest cost on the remaining $876 million. That should result in annualized interest savings of $16 million. Read the rest of this transcript for free on seekingalpha.com