FactSet Q4 earnings jump

For the quarter ended August 31, 2007, revenues increased to $129.5 million, up 23.1% compared to the prior year. On a constant currency basis, revenue growth was 22.2%. Operating income for the fourth quarter rose 28.2% to $42.7 million from $33.3 million in the same period of fiscal 2006. Net income advanced to $30.7 million as compared to $23.4 million a year ago. Diluted earnings per share increased to $0.60, up from $0.46 in the same period of fiscal 2006. Included in the just completed fourth quarter were income tax benefits of $1.1 million or $0.02 per diluted share related to prior periods, as FactSet began to include a benefit from the repatriation of foreign earnings to the U.S. The fourth quarter of fiscal 2006 included income tax benefits of $1.4 million or $0.03 per share primarily from the conclusion of an audit of the Company's U.S. federal income tax returns for fiscal years 2003 and 2004.

Philip A. Hadley, Chairman and CEO said, "We are pleased to mark another milestone during the fourth quarter by surpassing $500 million in subscriptions. Our broad-based growth continued during the quarter and was the key to accelerating our revenue growth rate 200 basis points to 22% during fiscal 2007."

Fourth Quarter Financial Highlights

Subscriptions increased $27.7 million during the quarter and were up $27.0 million excluding currency. On a constant currency basis, subscriptions advanced $92.5 million over the last twelve months, up 21.9% and were $516.9 million as of August 31, 2007. Of this total, subscriptions from FactSet's domestic operations were $359.9 million, while overseas operations were $157.0 million. Demand for FactSet's services continued unabated. Users rose to 35,000, up from 33,300 at the beginning of the quarter. Client count was 1,953 as of August 31, a net increase of 39 clients during the quarter.

"Subscriptions" at any given point in time represent the forward-looking revenues for the next 12 months from all subscription serrvices currently being supplied to clients.

Other financial and operational highlights of the fourth quarter of fiscal 2007 include:

• Client retention rate remained above 95%.
• U.S. revenues were $91.1 million for the three months ended August 31, 2007. Excluding non-subscription revenues, the growth rate was 22.0%.
• Revenues from non-U.S. operations increased 23.9% to $38.4 million. On a constant currency basis and excluding non-subscription revenues, revenues from non-U.S. operations advanced 21.6%.
• Non-subscription revenues were $2.4 million, including workstations used by summer interns
• 540 clients, consisting of 4,700 users, subscribed to the PA 2.0 application at quarter-end.
• Free cash flow was $43.0 million, up 45% over the year ago quarter.
• Capital expenditures, net of landlord contributions for construction, were $11.4 million. Expenditures for computer equipment were $6.4 million and the remainder was for office space expansion.
• In August 2007, the Company granted 1.5 million employee stock options. Like fiscal 2006, up to 63% of the options granted vest if performance metrics are achieved in future fiscal years. Achievement of performance criteria could result in incremental stock option expense in future quarters.
• The Company repurchased 726,000 shares for $46.0 million. At August 31, 2007, $57.2 million is authorized for future repurchases. Common shares outstanding at August 31, 2007 was 48.3 million.
• The Company paid its quarterly cash dividend of $0.12 per share on September 18, 2007 to holders of record of FactSet's common stock on August 31, 2007.

Fiscal 2007 Highlights

• Revenues increased 22.8% to $475.8 million.
• Net income grew 32.1% to $109.6 million.
• Diluted earnings per share increased 30.5% to $2.14.
• Free cash flow for fiscal 2007 was $116.7 million, up 20% over the prior year.
• Employee count as of August 31, 2007 was 1,653, up 23% since the beginning of the fiscal year.
• FactSet increased its quarterly dividend 100% from $0.06 to $0.12 per share in May 2007.
• Capital expenditures, net of $2.9 million of landlord contributions, were $36.4 million for fiscal 2007.
• New lease agreements were executed to support operations in New York, Virginia, London and Connecticut. In New York, five office locations were consolidated into one.
• Joseph R. Zimmel, a retired Managing Director of Goldman, Sachs & Co., was elected to FactSet's Board of Directors.

Business Outlook

The following forward-looking statements reflect FactSet's expectations as of September 25, 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.

First Quarter Fiscal 2008 Expectations

• Revenues are expected to range between $131 million and $135 million. This includes a $1.2 million reduction primarily from workstations sold to summer interns only in the fourth quarter.
• Operating margins are expected to range between 31.5% and 33.0%.
• The effective tax rate is expected to range between 34.0% and 35.0%.

Full Year Fiscal 2008

Capital expenditures, net of landlord contributions, are expected to range between $38 million and $44 million. This includes the enhancement of FactSet's data centers by upgrading to Hewlett Packard Integrity mainframes.

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