updated 12/14/2010 7:15:44 AM ET 2010-12-14T12:15:44

NORWALK, Conn., Dec. 14, 2010 (GLOBE NEWSWIRE) -- FactSet Research Systems Inc. (NYSE:FDS) (Nasdaq:FDS), a leading provider of integrated financial information and analytical applications to the global investment community, today announced its results for the first quarter of fiscal 2011.

For the quarter ended November 30, 2010, revenues were $173.3 million, up 12% compared to the prior year. Operating income for the first quarter increased to $59.4 million, a rise of 10% from $54.0 million in the same period of fiscal 2010. Net income advanced to $41.6 million as compared to $36.1 million a year ago. Diluted earnings per share increased to $0.88, up 19% from $0.74 in the same period of fiscal 2010. Included in this quarter's EPS were income tax benefits of $0.03 per share from adjustments to certain reserves to reflect settlements with taxing authorities regarding previously filed tax returns.

Consolidated Statements of Income  
(Condensed and Unaudited) Three Months Ended
  November 30,  
(In thousands, except per share data) 2010 2009 Change
Revenues $173,289 $155,243 11.6%
Operating income 59,429 54,047 10.0%
Other income 125 238 (47.5)%
Provision for income taxes 17,953 18,142 (1.0)%
Net income 41,601 36,143 15.1%
Diluted earnings per share $0.88 $0.74 18.9%
Diluted weighted average shares 47,487 48,876  

"Our first quarter results illustrate the strength of FactSet's business model. We continue to be able to provide superior workflow solutions to our clients and grow both our ASV and EPS," says Philip A. Hadley, Chairman and Chief Executive Officer. "We again delivered strong ASV growth, adding $11 million over the past three months while EPS was up 15%."

Annual Subscription Value ("ASV")

ASV advanced $10.9 million organically during the quarter. ASV was $695 million at November 30, 2010, up 10% 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 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 – First Quarter of Fiscal 2011

  • ASV from FactSet's U.S. operations was $474 million and $221 million related to international operations.
  • U.S. revenues were $118.2 million, up 12% from the year ago quarter.  
  • Non-U.S. revenues rose 10% to $55.1 million.
  • Operating margins were 34.3%, up 20 basis points from the fourth quarter.
  • Quarterly free cash flow was $14.2 million.
  • Free cash flow generated over the last twelve months was $186 million, up 8% over the prior year.
  • Cash and investments in marketable securities were $202 million at November 30, 2010.
  • The effective tax rate for the quarter was 30.1%. The components of the effective tax rate are 32.5% for the full fiscal 2011 year partially offset by income tax benefits of 2.4%.
  • Accounts receivable increased $4 million over the last 12 months while ASV is up $59 million over the same period.

Operational Highlights – First Quarter of Fiscal 2011

  • Professionals using FactSet increased to 43,600, up 800 users.
  • Client count was 2,123 at November 30, a net increase of 13 clients during the quarter.
  • Annual client retention rate was greater than 95% of ASV and 90% of clients.
  • Capital expenditures were $8.0 million, including $5.4 million for computer equipment and the remainder for office space expansion. Major expenditures included adding 12 Hewlett Packard Integrity Blade servers to the Company's data centers.
  • A regular quarterly dividend of $10.7 million or $0.23 per share was paid on December 21, to common stockholders of record as of November 30, 2010.
  • The Company repurchased 302,666 shares for $26.1 million during the first quarter. At November 30, $133 million remains authorized for future repurchases.
  • Common shares outstanding at November 30, 2010 were 46.3 million.
  • FactSet successfully relocated its New Hampshire data center to a new, state of the art facility in New Jersey.
  • FactSet released its Single Name Security Exposures application to enable clients to look across all portfolios or a subset of portfolios to quantify exposure to a security, an issuer, an industry, a country, or any user-defined set of securities.
  • FactSet Fundamentals was enhanced to deliver high quality standardized data within hours of public filings by U.S. companies.

Business Outlook

The following forward-looking statements reflect FactSet's expectations as of December 14, 2010. Given the number of risk factors, uncertainties and assumptions discussed below, actual results may differ materially. The Company does not intend to update its forward-looking statements until its next quarterly results announcement, other than in publicly available statements.

Second Quarter Fiscal 2011 Expectations

  • Revenues are expected to range between $174 million and $179 million.      
  • EPS should range between $0.85 and $0.87. Both ends of this range include a $0.02 reduction to reflect the lapse of the U.S. Federal R&D tax credit on January 1, 2010.

Full Year Fiscal 2011

  • The 2011 guidance for capital expenditures, net of landlord contributions, is $22 million to $28 million.

Conference Call

The Company will host a conference call today, December 14, 2010 at 11:00 a.m. (EST) to review the first quarter fiscal 2011 earnings release. To listen, please visit the investor relations section of the Company's website at www.factset.com.

Forward-looking statements

This news release contains forward-looking statements based on management's current expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Company's strategy for growth, product development, market position, subscriptions, expected expenditures and financial results are forward-looking statements. Forward-looking statements may be identified by words like "expected," "anticipates," "plans," "intends," "projects," "should," "indicates," "continues," "subscriptions" and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in FactSet's filings with the Securities and Exchange Commission, particularly its latest annual report on Form 10-K and quarterly reports on Form 10-Q, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, the current status of the global economy; the ability to integrate newly acquired companies and businesses; the stability of global securities markets; the ability to hire qualified personnel; the maintenance of the Company's leading technological position; the impact of global market trends on the Company's revenue growth rate and future results of operations; the negotiation of contract terms with corporate vendors, data suppliers and potential landlords; the retention of key clients; the successful resolution of ongoing audits by tax authorities; the continued employment of key personnel; the absence of U.S. or foreign governmental regulation restricting international business; and the sustainability of historical levels of profitability and growth rates in cash flow generation.

About Non-GAAP Free Cash Flow

The presentation of free cash flow is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles ("GAAP"). The GAAP financial measure, cash flows provided by operating activities, has been adjusted to report non-GAAP free cash flow that includes the cash cost for taxes and changes in working capital, less capital expenditures. Included in the just completed first quarter was $22.2 million of net cash provided by operations and $8.0 million of capital expenditures. Non-GAAP free cash flow is not intended as an alternative measure of cash flows provided by operating activities, as determined in accordance with GAAP in the U.S. FactSet uses this financial measure, both in presenting its results to shareholders and the investment community, and in the Company's internal evaluation and management of the businesses. Management believes that this financial measure and the information FactSet provides are useful to investors because they permit investors to view the Company's performance using the same tools that management uses to gauge progress in achieving its goals. FactSet believes this measure is also useful to investors because it is an indication of cash flow that may be available to fund further investments in future growth initiatives.

About FactSet

FactSet Research Systems Inc. combines integrated financial information, analytical applications, and client service to enhance the workflow and productivity of the global investment community. The Company, headquartered in Norwalk, Connecticut, was formed in 1978 and now conducts operations along with its affiliates from more than twenty-four locations worldwide, including Boston, New York, Chicago, San Mateo, London, Frankfurt, Paris, Milan, Amsterdam, Dubai, Tokyo, Hong Kong, Mumbai and Sydney.

FactSet Research Systems Inc.  
Consolidated Statements of Income - Unaudited  
  Three Months Ended
   November 30,
(In thousands, except per share data) 2010 2009
Revenues $173,289 $155,243
Operating expenses    
Cost of services 56,785 50,407
Selling, general and administrative 57,075 50,789
Total operating expenses 113,860 101,196
Operating income 59,429 54,047
Other income   125  238
Income before income taxes 59,554 54,285
Provision for income taxes 17,953 18,142
Net income $41,601 $36,143
Diluted earnings per common share $0.88 $0.74
Weighted average common shares (Diluted) 47,487 48,876

FactSet Research Systems Inc.
Consolidated Statements of Financial Condition - Unaudited    
  November 30, August 31,
(In thousands) 2010 2010
Cash and cash equivalents   $202,351 $195,741
Accounts receivable, net of reserves  63,869 59,693
Deferred taxes  4,015 2,812
Other current assets   8,659 6,899
Total current assets  278,894  265,145
Property, equipment, and leasehold improvements, net   80,628 79,495
Goodwill   223,203 221,991
Intangible assets, net  50,584 52,179
Deferred taxes   19,507 19,601
Other assets   6,591 6,197
Total assets $659,407 $644,608
Accounts payable and accrued expenses $26,982 $23,976
Accrued compensation   16,861 48,607
Deferred fees   25,584 25,034
Taxes payable   5,425 1,073
Dividends payable   10,660 10,586
Total current liabilities   85,512 109,276
Deferred taxes 3,705 3,731
Taxes payable 6,376 7,346
Deferred rent and other non-current liabilities 21,256 21,849
Total liabilities $116,849 $142,202
Stockholders' Equity    
Common stock $608 $601
Additional paid-in capital 375,721 344,144
Treasury stock, at cost   (633,905) (607,798)
Retained earnings    817,786 786,844
Accumulated other comprehensive loss   (17,652) (21,385)
Total stockholders' equity 542,558 502,406
Total liabilities and stockholders' equity $659,407 $644,608
FactSet Research Systems Inc.    
Consolidated Statements of Cash Flows - Unaudited  
  Three Months Ended

 November 30,
(In thousands)   2010 2009
Net income   $41,601 $36,143
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 9,392 9,149
Stock-based compensation expense 3,677 2,957
Deferred income taxes (1,151) (321)
Gain on sale of assets (1) (157)
Tax benefits from share-based payment arrangements (7,505) (15,082)
Changes in assets and liabilities    
 Accounts receivable, net of reserves   (4,176) 2,544
 Accounts payable and accrued expenses   2,961 4,082
 Accrued compensation (32,087) (28,093)
 Deferred fees 550 (4,925)
 Taxes payable, net of prepaid taxes 10,992 16,620
 Prepaid expenses and other assets (2,023) 1,796
 Landlord contributions -- 213
 Other working capital accounts, net (46) 309
Net cash provided by operating activities   22,184 25,235
Purchases of property, equipment and leasehold improvements (8,021) (6,738)
Net cash used in investing activities (8,021) (6,738)
Dividend payments  (10,517) (9,282)
Repurchase of common stock (26,107) (52,118)
Proceeds from employee stock plans     20,145 28,529
Tax benefits from share-based payment arrangements     7,505 15,082
Net cash used in financing activities      (8,974) (17,789)
Effect of exchange rate changes on cash and cash equivalents   1,421 833
Net increase in cash and cash equivalents    6,610 1,541
Cash and cash equivalents at beginning of period   195,741 216,320
Cash and cash equivalents at end of period   $202,351 $217,861
CONTACT:  FactSet Research Systems Inc.
          Rachel Stern

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