FactSet Research Systems Reports Adjusted EPS of $1.14, Up 12% for the Second Quarter of Fiscal 2013

Tue Mar 19, 2013 7:00am EDT

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NORWALK, Conn., March 19, 2013 (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 second quarter of fiscal
2013.

For the quarter ended February 28, 2013 revenues increased to $213.1 million, up 7% over the prior
year. Included in this total was $2.7 million of acquired revenues from StreetAccount. Operating
income was $56.2 million compared to $67.1 million in the second quarter of fiscal 2012. Net
income was $44.5 million versus $46.7 million a year ago. Diluted earnings per share was $1.00
compared to $1.02 in the same period of fiscal 2012.

Adjusted operating income for the quarter was $71.9 million, up 7% over the prior year. Adjusted
operating income excludes a non-cash pre-tax charge of $15.7 million for stock-based compensation
related to the performance-based options granted in connection with the acquisition of Market
Metrics in June 2010. These options vested in the second quarter of fiscal 2013 when the Market
Metrics business accelerated to achieve stretch revenue growth targets.

Adjusted net income advanced 8% to $50.6 million. Adjusted net income excludes the after-tax
charge of $11.0 million related to the Market Metrics performance-based stock options and $4.9
million in income tax benefits from the reenactment of the U.S. Federal R&D credit. This tax law
change was retroactive to January 1, 2012 and resulted in cumulative income tax benefits of $4.9
million in the second quarter of fiscal 2013.

Adjusted diluted EPS rose 12% to $1.14. Adjusted diluted EPS excludes the net effect of a $0.25
decrease for the vesting of performance-based options partially offset by an $0.11 increase in
diluted EPS from the reenactment of the U.S. Federal R&D credit.

A reconciliation between GAAP and adjusted financial measures is presented on page 8 of this press
release.

                                                                                
 (Condensed and Unaudited)              Three Months Ended                     
 (In thousands, except per share data)  Feb 28, 2013  Feb 29, 2012  Change   
 Revenues                               $213,083      $199,371      6.9%     
 Adjusted operating income              $71,860       $67,117       7.1%     
 Adjusted net income                    $50,631       $46,746       8.3%     
 Adjusted diluted earnings per share    $1.14         $1.02         11.8%    
 Diluted weighted average shares        44,455        45,707                 
                                                                                


"While we were pleased to achieve ASV growth of $17.3 million in the quarter, we continue to
operate in a challenging sell-side environment" said Philip A. Hadley, Chairman and CEO. "Our
second quarter results include growing adjusted EPS by 12% and free cash flow by 11%. I am also
proud to share that FactSet was recently named one of FORTUNE's 100 Best Companies to Work For,
marking our fifth appearance on that list in the last six years."

Annual Subscription Value ("ASV")

ASV advanced $17.3 million excluding the impact from foreign currency during the quarter and
totaled $863.2 million at February 28, 2013. 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. The increase in ASV during the past three months
was from buy-side clients, while sell-side client ASV contracted from a continuing volatile
environment.  

Financial Highlights - Second Quarter of Fiscal 2013

* ASV from U.S. operations was $592.6 million and $270.6 million was related to international
operations.
* U.S. revenues, including $2.7 million from StreetAccount, were $146.0 million, up 7% from the
year ago quarter.  
* Non-U.S. revenues also rose 7% to $67.1 million as compared to the same period in fiscal 2012.
* GAAP operating margin was 26.4%. Adjusted operating margin was 33.7%, consistent with a year
ago.
* The effective tax rate for the second quarter was 21.2% as compared to 30.9% a year ago.
Excluding income tax benefits from the reenactment of the U.S. Federal R&D credit, the annual
effective tax rate was 29.9%.
* Quarterly free cash flow was $43.4 million, up 11% over the year ago quarter.
* Accounts receivable increased $14 million over the last 12 months while ASV is up $60 million.

Operational Highlights - Second Quarter of Fiscal 2013

* Client count was 2,436 at February 28th, a net increase of 35 clients and the 13th consecutive
quarter of net client growth.
* Annual client retention was greater than 95% of ASV and 93% when expressed as a percentage of
clients.
* Users declined by 150 over the past three months and totaled 49,455 professionals at February
28th. Additions from buy-side clients were offset by user declines on the sell-side.
* Employee count was 6,048 at February 28th, up 10% over last year and a net increase of 28 in the
past three months.
* Capital expenditures were $3.0 million.
* A regular quarterly dividend of $13.5 million or $0.31 per share was paid on March 19, 2013 to
common stockholders of record as of February 28, 2013.
* The Company repurchased 1.2 million shares for $109 million during the second quarter under the
share repurchase program. At February 28th, $55.5 million remains authorized for future
repurchases.
* Common shares outstanding were 43.6 million at February 28, 2013.
* The integration of BlackRock Inc.'s iShares Fixed Income Exchange Traded Funds on the FactSet
platform was completed.
* FactSet was named one of FORTUNE's "100 Best Companies to Work For," marking our fifth
appearance on this list in the last six years.

Business Outlook

The following forward-looking statements reflect FactSet's expectations as of February 28, 2013.
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.

Third Quarter Fiscal 2013 Expectations

* Revenues are expected to range between $213 million and $216 million.      
* Operating margin is expected to range between 33% and 34%.     
* The annual effective tax rate is expected to range between 29.5% and 30.5%. 
* GAAP diluted EPS should range between $1.14 and $1.16, the midpoint of the range represents 10%
growth over last year's third quarter.

Conference Call

The Company will host a conference call today, March 19, 2013, at 11:00 a.m. (EDT) to review the
second quarter fiscal 2013 earnings release. To listen, please visit the investor relations
section of the Company's website at www.factset.com
http://www.globenewswire.com/newsroom/ctr?d=10025655&l=16&a=www.factset.com&u=http%3A%2F%2Fwww.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 Adjusted Financial Measures

Financial measures in accordance with U.S. generally accepted accounting principles ("GAAP")
including operating income, operating margin, net income and diluted earnings per share have been
adjusted. These adjusted financial measures exclude a pre-tax charge of $15.7 million related to
the vesting of Market Metrics performance-based stock options and $4.9 million of cumulative
income tax benefits related to the reenactment of the U.S. Federal R&D credit in January 2013. The
charge related to stock-based compensation reduced GAAP operating income by $15.7 million, GAAP
diluted earnings per share by $0.25 and GAAP operating margin by 730 basis points. The income tax
benefits reduced the Company's effective tax rate from 29.9% to 21.2% in the second quarter of
fiscal 2013. Together, the stock-based compensation charge and income tax benefits decreased GAAP
net income by $6.1 million and GAAP diluted EPS by $0.14 per share. FactSet uses these adjusted
financial measures, both in presenting its results to stockholders and the investment community,
and in its internal evaluation and management of the business. The Company believes that these
adjusted financial measures and the information they provide are useful to investors because it
permits investors to view the Company's performance using the same tools that management uses to
gauge progress in achieving its goals. Investors may benefit from referring to these adjusted
financial measures in assessing the Company's performance and when planning, forecasting and
analyzing future periods and may also facilitate comparisons to its historical performance. The
presentation of this financial information is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in accordance with GAAP. For more
information on these adjusted financial measures, please see page 8 of this release.

About Non-GAAP Free Cash Flow

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 second quarter was $46.4
million of net cash provided by operations and $3.0 million of capital expenditures. 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 GAAP. FactSet uses this
financial measure, both in presenting its results to stockholders and the investment community,
and in the Company's internal evaluation and management of the businesses. Management believes
that this financial measure is useful to investors because it permits investors to view the
Company's performance using the same metric that management uses to gauge progress in achieving
its goals and is an indication of cash flow that may be available to fund further investments in
future growth initiatives.

About FactSet

FactSet, a leading provider of financial information and analytics, helps the world's best
investment professionals outperform. More than 49,000 users stay ahead of global market trends,
access extensive company and industry intelligence, and monitor performance with FactSet's desktop
analytics, mobile applications, and comprehensive data feeds. The Company was named the 2012 Best
Research Provider at the Inside Market Data and Inside Reference Data Awards and has been included
in FORTUNE's Top 100 Best Companies to Work For, the United Kingdom's Great Places to Work and
France's Best Workplaces. FactSet is listed on the New York Stock Exchange and NASDAQ (NYSE:FDS)
(Nasdaq:FDS). Learn more at www.factset.com
http://www.globenewswire.com/newsroom/ctr?d=10025655&l=24&a=www.factset.com&u=http%3A%2F%2Fwww.factset.com%2F
, and follow us on Twitter: www.twitter.com/factset
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.

 FactSet Research Systems Inc.                                                                                 
 Consolidated Statements of Income - Unaudited                                                                 
                                                Three Months Ended                Six Months Ended             
 (In thousands, except per share data)          Feb 28, 2013       Feb 29, 2012  Feb 28, 2013  Feb 29, 2012  
                                                                                                                 
 Revenues                                       $213,083           $199,371      $424,167      $395,819      
                                                                                                                 
 Operating expenses                                                                                              
 Cost of services*                              75,842             67,531        149,427       134,364       
 Selling, general and administrative**          81,077             64,723        147,492       127,585       
 Total operating expenses                       156,919            132,254       296,919       261,949       
                                                                                                                 
 Operating income                               56,164             67,117        127,248       133,870       
                                                                                                                 
 Other income                                   357                496           785           773           
 Income before income taxes                     56,521             67,613        128,033       134,643       
                                                                                                                 
 Provision for income taxes                     11,982             20,867        33,726        42,353        
 Net income                                     $44,539            $46,746       $94,307       $92,290       
                                                                                                                 
 Diluted earnings per common share              $1.00              $1.02         $2.11         $2.01         
                                                                                                                 
 Diluted weighted average common shares         44,455             45,707        44,788        45,972        
                                                                                                            
 * Cost of services for the three months ended February 28, 2013 include an incremental $0.2 million from the vesting of performance-based stock options granted in connection with the acquisition of the Market Metrics business. 
                                                                                                                 
 ** Selling, general and administrative expenses for the three months ended February 28, 2013 include an incremental $15.5 million from the vesting of performance-based stock options granted in connection with the acquisition of the Market Metrics business. 
                                                                                                                 


                                                                                                                          
 FactSet Research Systems Inc.                                                                                            
 Consolidated Statements of Comprehensive Income - Unaudited  Three Months Ended           Six Months Ended             
 (In thousands)                                               Feb 28, 2013  Feb 29, 2012  Feb 28, 2013  Feb 29, 2012  
                                                                                                                          
 Net income                                                   $44,539       $46,746       $94,307       $92,290       
                                                                                                                          
 Other comprehensive income (loss), net of tax                                                                        
 Net unrealized gain (loss) on cash flow hedges               84            1,010         1,371         (1,106)       
 Foreign currency translation adjustments                     (4,731)       2,835         (1,657)       (8,813)       
 Other comprehensive (loss) income                            (4,647)       3,845         (286)         (9,919)       
 Comprehensive income                                         $39,892       $50,591       $94,021       $82,371       


 FactSet Research Systems Inc.                                                     
 Consolidated Balance Sheets - Unaudited                                           
                                                       February 28,  August 31,  
 (In thousands)                                        2013          2012        
                                                                                   
 ASSETS                                                                          
 Cash and cash equivalents                             $151,314      $189,044    
 Investments                                           14,827        13,919      
 Accounts receivable, net of reserves                  85,763        74,251      
 Prepaid taxes                                         14,962        2,485       
 Deferred taxes                                        3,655         5,085       
 Prepaid expenses and other current assets             14,040        14,341      
 Total current assets                                  284,561       299,125     
                                                                                 
 Property, equipment, and leasehold improvements, net  71,083        76,530      
 Goodwill                                              243,638       245,791     
 Intangible assets, net                                39,145        43,371      
 Deferred taxes                                        26,845        23,113      
 Other assets                                          4,706         6,213       
 TOTAL ASSETS                                          $669,978      $694,143    
                                                                                   
 LIABILITIES                                                                      
 Accounts payable and accrued expenses                 $29,699       $27,680     
 Accrued compensation                                  19,205        41,274      
 Deferred fees                                         32,399        30,495      
 Dividends payable                                     13,510        13,727      
 Total current liabilities                             94,813        113,176     
                                                                                 
 Deferred taxes                                        2,501         2,593       
 Taxes payable                                         5,346         5,464       
 Deferred rent and other non-current liabilities       20,138        20,646      
 TOTAL LIABILITIES                                     $122,798      $141,879    
                                                                                   
 STOCKHOLDERS' EQUITY                                                             
 Common stock                                          $464          $456        
 Additional paid-in capital                            204,721       137,569     
 Treasury stock, at cost                               (261,759)     (122,749)   
 Retained earnings                                     626,766       559,714     
 Accumulated other comprehensive loss                  (23,012)      (22,726)    
 TOTAL STOCKHOLDERS' EQUITY                            547,180       552,264     
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY            $669,978      $694,143    


                                                                                                                                                          
                                                                                                                                                          
                                                                                                                                                          
 FactSet Research Systems Inc.                                                                                                                            
 Consolidated Statements of Cash Flows - Unaudited                                                                                                        
                                                                                                                                                          
 (In thousands)                                                                                  Six Months Ended                                          
                                                                                                 Feb 28, 2013                               Feb 29, 2012  
 CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                                     
 Net income                                                                                      $94,307                                    $92,290       
 Adjustments to reconcile net income to net cash provided by operating activities                                                                          
 Depreciation and amortization                                                                   18,010                                     16,692        
 Stock-based compensation expense                                                                26,373                                     11,925        
 Deferred income taxes                                                                           (2,394)                                    (91)          
 Gain on sale of assets                                                                          (2)                                        (1)           
 Tax benefits from share-based payment arrangements                                              (9,870)                                    (4,973)       
 Changes in assets and liabilities, net of effects of acquisition                                                                                         
 Accounts receivable, net of reserves                                                            (11,569)                                   3,545         
 Accounts payable and accrued expenses                                                           5,038                                      155           
 Accrued compensation                                                                            (22,061)                                   (16,298)      
 Deferred fees                                                                                   1,937                                      697           
 Taxes payable, net of prepaid taxes                                                             (3,295)                                    (3,372)       
 Prepaid expenses and other assets                                                               772                                        (456)         
 Deferred rent and other non-current liabilities                                                 (282)                                      (922)         
 Other working capital accounts, net                                                             74                                         (732)         
 Net cash provided by operating activities                                                       97,038                                     98,459        
                                                                                                                                                          
 CASH FLOWS FROM INVESTING ACTIVITIES                                                                                                                     
 Acquisition of business, net of cash and cash equivalents acquired                              (705)                                      --            
 Purchases of investments                                                                        (8,098)                                    (15,000)      
 Proceeds from sales of investments                                                              7,500                                      --            
 Purchases of property, equipment and leasehold improvements, net of proceeds from dispositions  (9,084)                                    (10,644)      
 Net cash used in investing activities                                                           (10,387)                                   (25,644)      
                                                                                                                                                          
 CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                                     
 Dividend payments                                                                               (27,280)                                   (24,182)      
 Repurchase of common stock                                                                      (139,010)                                  (59,795)      
 Proceeds from employee stock plans                                                              31,306                                     13,843        
 Tax benefits from share-based payment arrangements                                              9,870                                      4,973         
 Net cash used in financing activities                                                           (125,114)                                  (65,161)      
                                                                                                                                                          
 Effect of exchange rate changes on cash and cash equivalents                                    733                                        (4,341)       
                                                                                                                                                          
 Net (decrease) increase in cash and cash equivalents                                            (37,730)                                   3,313         
                                                                                                                                                          
 Cash and cash equivalents at beginning of period                                                189,044                                    181,685       
 Cash and cash equivalents at end of period                                                      $151,314                                   $184,998      


Reconciliation of Adjusted and Non-GAAP Financial Measures

Financial measures in accordance with U.S. GAAP including operating income, operating margin, net
income and diluted earnings per share have been adjusted. FactSet uses these adjusted financial
measures, both in presenting its results to stockholders and the investment community, and in its
internal evaluation and management of the business. The Company believes that these adjusted
financial measures and the information they provide are useful to investors because it permits
investors to view the Company's performance using the same tools that management uses to gauge
progress in achieving its goals. Adjusted measures may also facilitate comparisons to FactSet's
historical performance.

 Three Months Ended February 28, 2013                                                                                                                                                                                               
                                                                                                                                                                                                                                        
 (Condensed and Unaudited)  GAAP        Vesting Market Metrics Performance-Based Stock Options (a)(b)  U.S. Federal R&D Credit Reinstated (b)  Adjusted  YoY        Stock-Based    Amortization of Intangible Assets  Non-GAAP  
                                                                                                                                                         % Change   Compensation                                                
 Operating Income           $ 56,164    $ 15,696                                                       --                                      $ 71,860  7.1%       $ 5,474        $ 1,862                            $ 79,196  
 Operating Margin           26.4%       7.3%                                                           --                                      33.7%     --         --             --                                 --        
 Net Income (c)             $ 44,539    $ 11,004                                                       $ (4,912)                               $ 50,631  8.3%       $ 3,838        $ 1,305                            $ 55,774  
 Diluted EPS (d)            $  1.00     $  0.25                                                        $  (0.11)                               $  1.14   11.8%      $  0.09        $  0.03                            $  1.25   
 Weighted Average Shares    44,455                                                                                                             44,455                                                                 44,455    
                                                                                                                                                                                                                                        
 (a) GAAP operating income was adjusted to exclude a non-cash pre-tax charge of $15.7 million for stock-based compensation related to the performance-based options granted in connection with the acquisition of Market Metrics in June 2010. These options vested in the second quarter of fiscal 2013 when the Market Metrics business accelerated to achieve stretch revenue growth targets established on the date of grant. The vesting of the Market Metrics related performance-based stock options increased stock-based 
 compensation, net of tax by $11.0 million and reduced diluted earnings per share by $0.25.                                                                                                                                             
                                                                                                                                                                                                                                        
 (b) GAAP net income was adjusted to exclude the after-tax charge of $11.0 million related to the vesting of Market Metrics performance-based stock options and $4.9 million related to cumulative income tax benefits from the reenactment of the U.S. Federal R&D credit. This tax law change was retroactive to January 1, 2012. GAAP diluted EPS was adjusted to exclude a $0.25 decrease for the vesting of Market Metrics performance-based stock options and an $0.11 increase from the reenactment of the U.S. Federal 
 R&D credit. The net effect of these two adjustments in the current second quarter was a $0.14 reduction in GAAP diluted EPS of $1.00.                                                                                                  
                                                                                                                                                                                                                                        
 (c) For the purposes of calculating non-GAAP net income and non-GAAP diluted EPS, stock-based compensation expense and the amortization of intangible assets were taxed at the annual effective tax rate of 29.9%.                     
                                                                                                                                                                                                                                        
 (d) The sum of the non-GAAP diluted earnings per share may not equal the totals above due to rounding.                                                                                                                                 


CONTACT: Rachel Stern
         FactSet Research Systems Inc.
         203.810.1000

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