FactSet Research Systems Reports Results for the Third Quarter of Fiscal 2011

For the quarter ended May 31, 2011 revenues increased to $183.6 million, up 15% compared to the prior year. Operating income for the third quarter rose to $61.8 million from $55.7 million in the same period of fiscal 2010. Net income advanced to $43.3 million as compared to $38.7 million a year ago. Diluted earnings per share increased to $0.92, up 14% from $0.81 in the same period of fiscal 2010. The results of the third quarter last year included income tax benefits of $0.03 per diluted share from finalizing prior years’ tax returns.

Non-GAAP diluted earnings per share increased 18% compared to the third quarter a year ago. GAAP diluted earnings per share in the third quarter of last year has been adjusted to exclude income tax benefits of $0.03 per diluted share. A reconciliation between GAAP and non-GAAP financial measures is presented on page 7 of the full press release.

“FactSet continued its strong performance during the third quarter as key operating metrics experienced healthy growth,” said Philip A. Hadley, Chairman and Chief Executive Officer. “It is gratifying to see our hard work and investments show such positive results.”

Annual Subscription Value (“ASV”)

ASV advanced $17 million organically during the quarter. ASV was $741 million at May 31, 2011, up 12% organically over the prior year. Of this total, 82% is derived from buy-side clients and the remainder is from the sell-side firms who perform M&A advisory work and equity research. ASV drivers during the quarter were purchases of advanced applications, growth in the number of clients and users, the expanded deployment of proprietary data and an increase in the client retention rate. ASV at any given point in time represents the forward-looking revenues for the next 12 months from all services currently being supplied to clients.

Financial Highlights – Third Quarter of Fiscal 2011

• ASV from U.S. operations was $507 million and $234 million related to international operations.
• U.S. revenues were $126 million, up 16% from the year ago quarter.
• Non-U.S. revenues rose 12% to $58 million as compared to the same period in fiscal 2010.
• Operating margin was 33.7%.
• Operating income was up 11% compared to the prior year.
• Non-GAAP diluted EPS advanced 18% to $0.92 per share.
• Free cash flow generated over the last twelve months was $177 million. Quarterly free cash flow was $57 million.
• Cash and investments in marketable securities were $209 million at May 31, 2011.
• Accounts receivable decreased $3 million over the last 3 months while ASV was up $17 million over the same period.
• The effective tax rate for the third quarter was 30.1% as compared to 30.7% a year ago.

Operational Highlights – Third Quarter of Fiscal 2011

• Professionals using FactSet increased to 45,600, up 800 users over the past three months.
• Client count was 2,187 at May 31, a net increase of 26 clients during the quarter.
• At May 31, annual client retention was greater than 95% of ASV, consistent with last year. On a client basis, annual retention rate improved to 92% of clients at May 31 as compared to 89% a year ago, reflecting a reduction in client turnover.
• Employee count was 4,805 at May 31, an increase of 37 employees during the quarter and up 32% over last year.
• Capital expenditures were $7.4 million with approximately $5.0 million for computer equipment and the remainder for office expansions.
• The regular quarterly dividend increased 17% from $0.23 to $0.27 per share, beginning with the Company’s dividend payment on June 21, 2011.
• On June 13, 2011, the Board of Directors approved a $200 million expansion to the existing share repurchase program. The Company repurchased 552,864 shares for $58 million during the third quarter. Including the expansion, $226 million remains authorized for future repurchases.
• Common shares outstanding were 45.8 million at May 31, 2011.
• For the third consecutive year, the Wall Street Journal partnered with FactSet to calculate its 2011 ranking of the best equity analysts.
• FactSet Europe was named one of the “UK’s 50 Best Workplaces.”

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