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Press release from GlobeNewswire (a Nasdaq OMX company)

FactSet Research Systems Reports Results for the First Quarter of Fiscal 2013

Tuesday, December 18, 2012

FactSet Research Systems Reports Results for the First Quarter of Fiscal 201304:51 EST Tuesday, December 18, 2012 ASV up 7% organically year over year Diluted EPS rose 12% to $1.11 NORWALK, Conn., Dec. 18, 2012 (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 2013.GAAP Results For the quarter ended November 30, 2012 revenues increased to $211.1 million, up 7.5% compared to the prior year. Included in this total was $2.7 million of revenue from StreetAccount. Operating income for the first quarter rose to $71.1 million from $66.8 million in the same period of fiscal 2012. Net income advanced 9.3% to $49.8 million compared to $45.5 million a year ago. Diluted earnings per share increased 12.1% to $1.11, up from $0.99 in the same period of fiscal 2012. The acquisition of StreetAccount in June 2012 did not have an impact on FactSet's fiscal 2013 first quarter diluted earnings per share.Consolidated Statements of Income   (Condensed and Unaudited) Three Months Ended   November 30,  (In thousands, except per share data) 2012 2011 Change Revenues $211,085 $196,448 7.5% Operating income 71,085 66,753 6.5% Provision for income taxes 21,744 21,486 1.2% Net income $49,769 $45,544 9.3% Diluted earnings per share $1.11 $0.99 12.1% Diluted weighted average shares  44,984 46,103     Philip A. Hadley, Chairman and CEO said, "Against the backdrop of a difficult selling environment, particularly for the sell-side, FactSet again delivered double-digit EPS growth. We continued our long track record of reinvesting back into the Company to position FactSet to be even stronger as I look ahead."Annual Subscription Value ("ASV") ASV advanced $5.0 million organically during the quarter. ASV totaled $847 million at November 30, 2012, up 7.0% organically over the prior year. Of this total, 81% 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 2013 ASV from U.S. operations was $578 million and $269 million was related to international operations. U.S. revenues were $143.9 million, up 7.0% from the year ago quarter.   Non-U.S. revenues rose 8.3% to $67.2 million as compared to the same period in fiscal 2012. Operating margin was 33.7% for the quarter, down 40 basis points due to the acquisition of StreetAccount. Quarterly free cash flow was $44.5 million. Cash and investments totaled $225.2 million at November 30, 2012. The effective tax rate for the first quarter was 30.4% as compared to 32.1% a year ago.Operational Highlights – First Quarter of Fiscal 2013 Client count was 2,401 at November 30th, a net increase of 9 clients and the 12th consecutive quarter of net client growth. Annual client retention was greater than 95% of ASV and 92% when expressed as a percentage of clients. Users increased by 105 over the past three months and totaled 49,605 professionals at November 30th. Additions from buy-side clients were partially offset by a decline from the sell-side. Employee count was 6,020 at November 30th, up 10% over last year and an increase of 285 employees in the first quarter. Capital expenditures were $6.1 million. A regular quarterly dividend of $13.7 million or $0.31 per share was paid on December 18, 2012 to common stockholders of record as of November 30, 2012. The Company repurchased 270,000 shares for $25.4 million during the first quarter. At November 30, 2012, $164.3 million remains authorized for future repurchases. Common shares outstanding were 44.3 million at November 30, 2012.Business Outlook The following forward-looking statements reflect FactSet's expectations as of December 18, 2012. 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 2013 Expectations Revenues are expected to range between $212 million and $215 million. Operating margin is expected to range between 33.5% and 34.0%. The effective tax rate is expected to range between 31.5% and 32.5%. GAAP diluted EPS should range between $1.11 and $1.13, the midpoint of the range represents 10% growth over last year's second quarter.Conference Call The Company will host a conference call today, December 18, 2012, at 11:00 a.m. (EST) to review the first quarter fiscal 2013 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 Financial Measures Financial measures in accordance with generally accepted accounting principles ("GAAP") including diluted earnings per share have been adjusted to report non-GAAP financial measures. These measures exclude stock-based compensation expense and amortization of intangible assets. FactSet uses these non-GAAP financial measures, both in presenting its results to stockholders and the investment community, and in its internal evaluation and management of the businesses. The Company believes that these 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 non-GAAP 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 non-GAAP 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 first quarter was $50.6 million of net cash provided by operations and $6.1 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 49,600 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, and follow us on Twitter: www.twitter.com/factset. FactSet Research Systems Inc. Consolidated Statements of Income - Unaudited       Three Months Ended  November 30, (In thousands, except per share data)  2012  2011       Revenues $211,085 $196,448       Operating expenses     Cost of services 73,586 66,833 Selling, general and administrative 66,414 62,862 Total operating expenses 140,000 129,695       Operating income 71,085 66,753 Other income  428 277 Income before income taxes 71,513 67,030       Provision for income taxes 21,744 21,486 Net income $49,769 $45,544       Diluted earnings per common share $1.11 $0.99       Diluted weighted average common shares 44,984 46,103     FactSet Research Systems Inc.  Consolidated Statements of Comprehensive Income - Unaudited           Three Months Ended    November 30, (In thousands) 2012 2011       Net income $49,769 $45,544       Other comprehensive income (loss), net of tax     Net unrealized gain (loss) on cash flow hedges 1,287  (2,116) Foreign currency translation adjustments  3,074  (11,648) Other comprehensive income (loss) 4,361  (13,764)       Comprehensive income $54,130 $31,780     FactSet Research Systems Inc. Consolidated Balance Sheets - Unaudited   November 30, August 31, (In thousands) 2012 2012       ASSETS     Cash and cash equivalents $210,712 $189,044 Investments 14,527 13,919 Accounts receivable, net of reserves 78,895 74,251 Prepaid taxes -- 2,485 Deferred taxes 4,357 5,085 Prepaid expenses and other current assets 11,555 14,341Total current assets 320,046 299,125       Property, equipment, and leasehold improvements, net 75,521 76,530 Goodwill 246,734 245,791 Intangible assets, net 41,854 43,371 Deferred taxes 22,064 23,113 Other assets 5,637 6,213 TOTAL ASSETS $711,856 $694,143       LIABILITIES     Accounts payable and accrued expenses $28,538 $27,680 Accrued compensation  14,934 41,274 Deferred fees  30,893 30,495 Taxes payable  7,222 -- Dividends payable 13,746 13,727Total current liabilities 95,333 113,176       Deferred taxes  2,582 2,593 Taxes payable 5,699 5,464 Deferred rent and other non-current liabilities 21,729 20,646 TOTAL LIABILITIES $125,343 $141,879       STOCKHOLDERS' EQUITY     Common stock $460 $456 Additional paid-in capital 159,672 137,569 Treasury stock, at cost  (150,990)  (122,749) Retained earnings 595,736 559,714 Accumulated other comprehensive loss  (18,365)  (22,726) TOTAL STOCKHOLDERS' EQUITY 586,513 552,264 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $711,856 $694,143     FactSet Research Systems Inc. Consolidated Statements of Cash Flows -- Unaudited    Three Months Ended (In thousands)  November 30,   2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES     Net income $49,769 $45,544 Adjustments to reconcile net income to net cash provided by operating activities     Depreciation and amortization  8,917  8,403 Stock-based compensation expense  5,203  5,880 Deferred income taxes  1,766  57 Gain on sale of assets  (2)  (1) Tax benefits from share-based payment arrangements  (4,032)  (3,178) Changes in assets and liabilities     Accounts receivable, net of reserves  (4,655)  10,171 Accounts payable and accrued expenses  2,851  2,839 Accrued compensation  (26,501)  (24,523) Deferred fees  410  (1,279) Taxes payable, net of prepaid taxes  13,709  10,979 Prepaid expenses and other assets  2,613  539 Deferred rent and other non-current liabilities  997  (611) Other working capital accounts, net  (409)  (66) Net cash provided by operating activities  50,636  54,754       CASH FLOWS FROM INVESTING ACTIVITIES     Purchases of investments  (7,795)  (15,000) Proceeds from sales of investments  7,500  --  Purchases of property, equipment and leasehold improvements, net of proceeds from dispositions  (6,097)  (6,054) Net cash used in investing activities  (6,392)  (21,054)       CASH FLOWS FROM FINANCING ACTIVITIES     Dividend payments  (13,631)  (12,084) Repurchase of common stock  (28,241)  (14,732) Proceeds from employee stock plans  13,102  7,420 Tax benefits from share-based payment arrangements   4,032  3,178 Net cash used in financing activities  (24,738)  (16,218)       Effect of exchange rate changes on cash and cash equivalents  2,162  (5,413)       Net increase in cash and cash equivalents 21,668 12,069       Cash and cash equivalents at beginning of period 189,044 181,685 Cash and cash equivalents at end of period $210,712 $193,754    Non-GAAP Financial Measures Financial measures in accordance with GAAP including diluted earnings per share have been adjusted to report non-GAAP financial measures. FactSet uses these non-GAAP financial measures, both in presenting its results to stockholders and the investment community, and in its internal evaluation and Company believes that these 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. Non-GAAP measures may also facilitate comparisons to FactSet's historical performance.            Three Months Ended     November 30,    (Unaudited) 2012 2011 Change         GAAP Diluted earnings per common share $1.11 $0.99   Stock-based compensation, net of tax (a)  0.08 0.09   Amortization of intangible assets from acquisitions, net of tax (a) 0.03 0.03   Non-GAAP diluted earnings per share (b) $1.22 $1.10 11%           (a)  For the purposes of calculating non-GAAP diluted earnings per share above, stock-based compensation expense and amortization of intangible assets are taxed at the effective tax rates. For the three months ended November 30, 2012, the effective tax rate was 30.4%. For the three months ended November 30, 2011, the effective tax rate was 32.1%.         (b)  The sum of the diluted earnings per share may not equal the totals above due to rounding.CONTACT: Rachel Stern FactSet Research Systems Inc. 203.810.1000