NORWALK, Conn., June 19, 2007 (PRIME NEWSWIRE) -- FactSet Research Systems Inc. (NYSE:FDS), a leading provider of integrated financial information and analytical applications to the global investment community, today announced its results for the third quarter of fiscal 2007.
For the quarter ended May 31, 2007, revenues increased to $121.1 million, up 22.5% compared to the prior year. On a constant currency basis, revenue growth was 21.5%. Operating income for the third quarter rose 26.7% to $39.2 million from $31.0 million in the same period of fiscal 2006. Net income advanced to $28.6 million as compared to $21.0 million a year ago. Diluted earnings per share increased to $0.56, up from $0.41 in the same period of fiscal 2006. Included in the just completed third quarter were income tax benefits of $1.9 million or $0.04 per diluted share resulting primarily from a Section 199 tax deduction pertaining to fiscal 2006. The third quarter of fiscal 2006 included income tax benefits of $0.8 million or $0.01 per share primarily from the closure of previously filed tax returns.
Consolidated Statements of Income
---------------------------------------------------------------------
(Condensed and Three Month Ended Nine Months Ended
Unaudited) May 31, May 31,
-------------------------- --------------------------
(In thousands,
except per
share data) 2007 2006 Change 2007 2006 Change
-------------- ---- ---- ------ ---- ---- ------
Revenues $121,075 $98,815 22.5% $346,269 $282,134 22.7%
Total
operating
expenses 81,858 67,862 20.6 233,846 194,134 20.5
Income from
operations 39,217 30,953 26.7 112,423 88,000 27.8
Net income 28,575 21,036 35.8 78,851 59,473 32.6
Diluted
earnings
per
common
share $0.56 $0.41 36.6% $1.54 $1.18 30.5%
Diluted
weighted
average
common
shares 51,387 50,909 51,310 50,561
----------------------------------------------------------------------
Philip A. Hadley, Chairman and CEO said, "We are pleased to report a successful third quarter. We continued to experience subscription, workstation, and client growth due to momentum across many of our products and geographies."
Third Quarter Financial Highlights
Subscriptions increased $26.3 million during the quarter and were up $25.7 million excluding currency. On a constant currency basis, subscriptions advanced $88.8 million over the last twelve months, up 22.3% and were $489.2 million as of May 31, 2007. Of this total, subscriptions from FactSet's domestic operations were $342.7 million, while overseas operations were $146.4 million. Demand for FactSet's services continued unabated. Users rose to 33,300, up from 32,000 at the beginning of the quarter. Client count was 1,914 as of May 31, a net increase of 42 clients during the quarter.
"Subscriptions" at any given point in time represent the forward-looking revenues for the next 12 months from all subscription services currently being supplied to clients.
Other financial and operational highlights of the third quarter of fiscal 2007 include:
-- Client retention rate remained above 95%.
-- U.S. revenues were $86.0 million for the three months ended
May 31, 2007. Excluding non-subscription revenues, the growth
rate was 21.5%.
-- Revenues from non-U.S. operations increased 22.5% to
$35.1 million. On a constant currency basis and excluding
non-subscription revenues, revenues from non-U.S. operations
advanced 21.4%.
-- 515 clients, consisting of 4,300 users, subscribed to the PA 2.0
application at quarter-end.
-- Free cash flow was $40.8 million, up 31% over the year ago
quarter. This increase was aided by invoicing clients on the
first of the month, effective April 2007.
-- Capital expenditures during the quarter were $10.1 million, which
consisted of $3.4 million for computer-related equipment and the
remainder for the expansion of various office locations.
-- The Company repurchased 196,929 shares for $12.3 million. At
May 31, 2007, $103.2 million is authorized for future repurchases.
-- Employee count as of May 31, 2007 was 1,544, up 20% from a year
ago and up 14% since the beginning of the fiscal year.
-- During the just completed quarter, the Company increased its
quarterly cash dividend by 100% to $0.12 per share, or $0.48 per
share per annum. The cash dividend was paid on June 19, 2007 to
holders of record of FactSet's common stock on May 31, 2007.
Year-to-Date Results of Operations
For the nine months ended May 31 2007, revenues increased 22.7% to $346.3 million and operating income rose 27.8% to $112.4 million. Net income grew 33% to $78.9 million, while diluted earnings per share increased 31% to $1.54. Capital expenditures for the nine months ended May 31, 2007 were $25.4 million, which included a reduction of $0.4 million of landlord contributions received during the current fiscal year.
Recent Events and Business Outlook
The following forward-looking statements reflect FactSet's expectations as of June 19, 2007. 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.
Fourth Quarter Fiscal 2007 Expectations
-- FactSet's fourth quarter earnings release is scheduled for
September 25, 2007.
-- Revenues are expected to range between $126 million and
$130 million.
-- Operating margins are expected to range between 32.0% and 34.0%.
-- The effective tax rate is expected to range between 35.0% and
36.0%.
Full Year Fiscal 2007
-- Capital expenditures are expected to range between $35 million to
$39 million.
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 ability to integrate newly acquired companies; 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.
Conference Call
The Company will host a conference call today, June 19, 2007 at 11:00 a.m. (EST) to review the third quarter fiscal 2007 earnings release. To listen, please visit the investor relations section of the Company's website at www.factset.com.
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-two locations worldwide, including Boston, New York, Chicago, San Mateo, London, Frankfurt, Paris, Milan, Tokyo, Hong Kong, and Sydney.
FactSet Research Systems Inc.
Consolidated Statements of Financial Condition
May 31, August 31,
(In thousands and unaudited) 2007 2006
---- ----
ASSETS
Cash and cash equivalents $172,045 $126,549
Investments 17,135 16,641
Receivables from clients and clearing broker,
net 55,039 59,190
Deferred taxes 1,718 1,600
Other current assets 5,142 3,000
------- -------
Total current assets 251,079 206,980
Property, equipment, and leasehold
improvements, net 70,314 59,812
Goodwill 144,728 141,354
Intangible assets, net 38,375 43,074
Deferred taxes 6,490 3,554
Other assets 2,571 2,454
-------- --------
Total assets $513,557 $457,228
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $16,056 $18,110
Accrued compensation 19,954 21,407
Deferred fees 25,872 25,322
Dividends payable 5,864 2,933
Taxes payable 4,401 9,689
Note payable -- 1,840
------ ------
Total current liabilities 72,147 79,301
Deferred taxes 6,706 8,536
Deferred rent and other non-current
liabilities 14,049 10,703
------ ------
Total liabilities 92,902 98,540
Stockholders' Equity
Common stock 559 554
Capital in excess of par value 153,998 130,033
Retained earnings 444,966 377,846
Treasury stock (186,810) (153,073)
Accumulated other comprehensive income 7,942 3,328
------- -------
Total stockholders' equity 420,655 358,688
------- -------
Total liabilities and stockholders'
equity $513,557 $457,228
======== ========
FactSet Research Systems Inc.
Consolidated Statements of Income
Three Months Ended Nine Months Ended
(In thousands, except per May 31, May 31,
share data and unaudited) 2007 2006 2007 2006
---- ---- ---- ----
Revenues $121,075 $98,815 $346,269 $282,134
Operating expenses
Cost of services 39,429 31,543 111,100 88,729
Selling, general and
administrative 42,429 36,319 122,746 105,405
------ ------ ------- -------
Total operating expenses 81,858 67,862 233,846 194,134
------ ------ ------- -------
Income from operations 39,217 30,953 112,423 88,000
Other income 2,143 1,060 5,427 3,324
------ ------ ------- -------
Income before income taxes 41,360 32,013 117,850 91,324
Provision for income taxes 12,785 10,977 38,999 31,851
------ ------ ------ ------
Net income $28,575 $21,036 $78,851 $59,473
======= ======= ======= =======
Basic earnings per common
share $0.58 $0.43 $1.61 $1.22
===== ===== ===== =====
Diluted earnings per common
share $0.56 $0.41 $1.54 $1.18
===== ===== ===== =====
Weighted average common
shares (Basic) 48,911 48,849 48,942 48,597
====== ====== ====== ======
Weighted average common
shares (Diluted) 51,387 50,909 51,310 50,561
====== ====== ====== ======
FactSet Research Systems Inc.
Consolidated Statements of Cash Flows
Nine Months Ended
May 31,
(In thousands and unaudited) 2007 2006
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $78,851 $59,473
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 21,172 17,749
Stock-based compensation expense 6,827 6,356
Deferred income taxes (5,428) 1,177
Net gain realized on sale of
available-for-sale securities (62) --
Gain on sale of Company-owned real estate -- (1,342)
Depreciation of asset retirement obligations 51 --
Changes in assets and liabilities, net of
effects of acquisitions
Receivables from clients and clearing broker,
net 4,265 (7,119)
Accounts payable and accrued expenses (1,809) 2,405
Accrued compensation (1,589) (4,667)
Deferred fees 178 6,190
Taxes payable (5,299) 3,560
Landlord contributions 432 548
Other working capital accounts, net 1,473 3,742
----- -----
Net cash provided by operating activities 99,062 88,072
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of businesses, net of cash acquired -- (28,280)
Proceeds from sales of investments 12,984 83,638
Purchases of investments (13,490) (83,523)
Proceeds from sale of Company-owned real estate -- 2,910
Purchases of property, equipment and
leasehold improvements (25,407) (20,526)
-------- --------
Net cash used in investing activities (25,913) (45,781)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments (8,792) (7,150)
Repurchase of common stock (33,737) (7,365)
Repayment of note (2,258) --
Proceeds from employee stock plans 11,436 11,701
Income tax benefits from stock option exercises 5,365 4,001
------- -------
Net cash (used in) provided by financing
activities (27,986) 1,187
Effect of exchange rate changes on cash and cash
equivalents 333 (751)
------- -------
Net increase in cash and cash equivalents 45,496 42,727
Cash and cash equivalents at beginning of period 126,549 59,457
------- ------
Cash and cash equivalents at end of period $172,045 $102,184
======== ========
IR_FDS