Date of report (Date of earliest event reported): September 19, 2006
FactSet Research Systems Inc.
(Exact name of Registrant as specified in its charter)
| Delaware | 1-11869 | 13-3362547 |
| (State or other jurisdiction of | (Commission | (I.R.S. Employer |
| incorporation or organization) | File Number) | Identification Number) |
| 601 Merritt 7 | ||
| Norwalk, Connecticut 06851 | ||
| (Address of principal executive offices) | ||
| (203) 810-1000 | ||
| (Registrant’s telephone number, including area code) | ||
Check the appropriate box below if
the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On September 19, 2006, FactSet Research Systems Inc. issued a press release announcing its results for the three and twelve months ended August 31, 2006. The press release is attached as Exhibit 99.1 to this report on Form 8-K. This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| Exhibit | ||
| No. | Description | |
| ––––– | –––––––––––––––––––––––––––––– | |
| 99.1 | Press Release of FactSet Research Systems Inc., dated September 19, 2006 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| FACTSET RESEARCH SYSTEMS INC. | |||
| (Registrant) | |||
| By: | |||
| Date: | September 19, 2006 | /s/ Peter G. Walsh | |
| –––––––––––––––––––––––––––––––––– | |||
| Peter G. Walsh | |||
| Senior Vice President, | |||
| Chief Financial Officer and Treasurer |
EXHIBIT 99.1
EXHIBIT INDEX
| Exhibit | ||
| No. | Description of Document | |
| ––––– | –––––––––––––––––––––––––––––––––––––––––––––––––––––––– | |
| 99.1 | Press Release of Registrant, dated September 19, 2006 reporting the results of | |
| operations for the Registrant’s fourth fiscal quarter ended August 31, 2006. |
| FactSet Research Systems Inc. | Contact: |
| 601 Merritt 7 | Peter Walsh |
| Norwalk, Connecticut 06851 | FactSet Research Systems Inc. |
| 203.810.1000 / 203.810.1001 Fax | 203.810.1000 |
News Release
FOR IMMEDIATE RELEASE
FactSet Research Systems Surpasses $100 million in Revenues for the Fourth Quarter of Fiscal Year 2006
Norwalk, Connecticut – September 19, 2006—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 fourth quarter of fiscal 2006.
For the quarter ended August 31, 2006, GAAP revenues increased to $105.2 million, up 27% compared to the prior year period. GAAP operating income for the fourth quarter rose to $33.3 million from $28.8 million in the same period of fiscal 2005. GAAP net income advanced to $23.4 million as compared to GAAP net income of $18.6 million a year ago. GAAP diluted earnings per share increased to $0.46, up from $0.37 in the same period of fiscal 2005. The effective tax rate for the quarter was 32.5%. Included in the just completed fourth quarter were income tax benefits of $1.4 million or $0.03 per share. The income tax benefits resulted from the conclusion of an audit of the Company’s U.S. federal income tax returns for fiscal years 2003 and 2004.
GAAP financial measures including operating income, net income and diluted earnings per share have been adjusted to report non-GAAP financial measures that exclude charges related to stock-based compensation and incremental expenses incurred from consolidating office locations in London. Net income and diluted earnings per share have also been adjusted to reflect income tax benefits from the closure of previously filed tax returns. Non-GAAP operating income for the quarter was $36.7 million, up 27%. Non-GAAP net income advanced 31% to $24.5 million and non-GAAP diluted earnings per share increased 30% to $0.48. A reconciliation between GAAP and non-GAAP financial measures is presented on page 8 of this press release.
To aid an investor’s ability to make more precise interpretations of FactSet’s financial results, a supplementary schedule is presented on page 11 of this press release to summarize revenues related to services that are not included in the calculation of FactSet’s subscription value.
| Consolidated Statements of Income | |||||||||||
| (Condensed and Unaudited) | Three Months Ended | Twelve Months Ended | |||||||||
| August 31, |
August 31, | ||||||||||
| (In thousands, except per share data) | 2006 | 2005 | Change | 2006 | 2005 | Change | |||||
| Revenues | $105,216 | $82,767 | 27.1 % | $387,350 | $312,644 | 23.9 % | |||||
| Total operating expenses | 71,928 | 53,990 | 33.2 | 266,062 | 203,623 | 30.7 | |||||
| Income from operations | 33,288 | 28,777 | 15.7 | 121,288 | 109,021 | 11.3 | |||||
| Net income | 23,443 | 18,647 | 25.7 | 82,916 | 71,765 | 15.5 | |||||
| Diluted earnings per common share | $0.46 | $0.37 | 24.3 | $1.64 | $1.43 | 14.7 | |||||
| Diluted weighted average common shares | 50,884 | 50,356 | 50,592 | 50,160 | |||||||
“We are pleased to report a successful fourth quarter,” said Philip A. Hadley, Chairman and CEO. “We experienced strong performance across all business segments throughout the year, with increased growth on the sell-side in the fourth quarter. Providing our clients with a broad array of integrated global financial information, customized analytical applications, and high quality client service continue to be key factors to our growth.”
Page 1 of 11
Fourth Quarter Financial Highlights
Subscriptions increased $23.2 million
during the quarter and totaled $422.6 million at August 31, 2006. On a constant currency
basis, the subscription increase was $23.3 million. Of this total, subscriptions from
FactSet’s domestic operations were $297.0 million, while overseas operations were
$125.6 million. Demand for FactSet’s services continued to rise. Users rose to
29,800, up from 27,900 at the beginning of the quarter. Client count was 1,785 at August
31, a net increase of 63 clients for the quarter. Approximately 475 clients consisting of
3,900 users subscribe to the PA 2.0 application as of August 31, 2006. FactSet’s
client retention rate continued to be above 95%. “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 operational highlights of the fourth quarter of fiscal 2006 include: |
| • | Organic revenue growth rate rose to 19%. |
| • | Revenues from non-US operations increased 38% to $31.0 million. Excluding the StreamVPN Limited and europrospectus.com Limited acquisitions and holding currencies constant, revenue growth from non-US operations advanced 22%. |
| • | The Company incurred incremental expenses of $1.3 million in connection with previously announced office consolidation in London. The new headquarters for its European operations opened in June 2006. |
| • | FactSet repurchased 205,500 shares at an average cost of $43.02 per share under the share repurchase program. $36.1 million remains authorized for future share repurchases at August 31, 2006. |
| Fiscal 2006 Highlights |
| • | Free cash flow for fiscal 2006 was $97.1 million, up 48% over the prior year. |
| • | FactSet increased its quarterly dividend 20% from $0.05 to $0.06 per share in May 2006. |
| • | In September 2005, FactSet acquired all the outstanding share capital of StreamVPN Limited (now known as FactSet Research Systems Limited, the "AlphaMetrics business") for a total purchase price of $27.1 million. |
| • | In February 2006, FactSet acquired all the outstanding share capital of europrospectus.com Limited (now known as FactSet Global Filings Limited, the "Global Filings business" ) for $7.5 million in cash. Global Filings provides access to equity, fixed income and derivatives prospectuses. |
| • | Employee count at September 1, 2006 was 1,368, up 17% from a year ago. The percentage increase in employee headcount breaks down into 15% from organic growth and 2% from acquisitions over the last twelve months. |
Year-to-Date Results of Operations
For the twelve months ended August 31, 2006, revenues increased 24% to $387.4 million and GAAP operating income rose 11% to
$121.3 million. GAAP net income grew 16% to $82.9 million while GAAP diluted earnings per
share increased 15% to $1.64.
For the twelve months ended August 31, 2006, non-GAAP operating income advanced 21% to $132.4 million and non-GAAP net income increased 25% to $86.9 million. Non-GAAP diluted earnings per share increased 22% to $1.70 during the twelve months of fiscal 2006 as compared to the same period a year ago. A reconciliation between GAAP and non-GAAP financial measures is presented on page 9 of this press release.
Page 2 of 11
Recent Events and Business Outlook
The following forward-looking
statements reflect FactSet’s expectations as of September 19, 2006. 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 2007 Expectations |
| • | Revenues are expected to range between $106 million and $109 million. |
| • | Operating margins are expected to range between 31.5% and 33.5%, including the impact from FAS 123(R). |
| • | The effective tax rate is expected to range between 36.0% and 36.8%. |
| Full Year Fiscal 2007 |
| • | Capital expenditures should total approximately $29 million to $35 million. Approximately 55% relates to computer-related equipment and the remainder for the expansion of various office locations. |
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.
About non-GAAP Financial Measures
GAAP financial measures including
income from operations, net income, diluted earnings per common share and cash flows
provided by operating activities have been adjusted to exclude charges related to
stock-based compensation, incremental expenses incurred in the London real estate
consolidation, a gain from the sale of Company-owned real estate and tax benefits from the
closure of previously filed tax returns. FactSet’s management believes that these
non-GAAP financial measures provide meaningful supplemental information regarding its
financial results and investors benefit from referring to these non-GAAP financial
measures in assessing FactSet’s performance and when planning, forecasting and
analyzing future periods. These non-GAAP financial measures also facilitate comparisons to
FactSet’s historical performance.
Page 3 of 11
FactSet uses measures defined as non-GAAP financial measures by the SEC including non-GAAP operating income, non-GAAP net income, non-GAAP diluted earnings per share and non-GAAP cash flows from operations. 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 the tables beginning on page 8 of this release captioned “Reconciliation of GAAP and non-GAAP Financial Measures.”
Conference Call
The Company will host a conference call today, September 19, 2006 at 11:00 a.m. (EST) to review the fourth quarter
fiscal 2006 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, Tokyo, Hong Kong, and Sydney.
Page 4 of 11
| FactSet Research Systems Inc. | |||||
| Consolidated Statements of Financial Condition | |||||
| (In thousands) | August 31, | August 31, | |||
| 2006 | 2005 | ||||
| (unaudited) | |||||
| ASSETS | |||||
| Cash and cash equivalents | $126,549 | $ 59,457 | |||
| Investments | 16,641 | 16,566 | |||
| Receivables from clients and clearing broker, net | 59,190 | 54,029 | |||
| Deferred taxes | 1,600 | 5,277 | |||
| Other current assets | 3,000 | 3,819 | |||
| Total current assets | 206,980 | 139,148 | |||
| Property, equipment and leasehold improvements, net | 59,812 | 52,359 | |||
| Goodwill | 141,354 | 110,793 | |||
| Intangible assets, net | 43,074 | 41,660 | |||
| Deferred taxes | 3,554 | 722 | |||
| Other assets | 2,454 | 2,847 | |||
| Total assets | $457,228 | $347,529 | |||
| ======= | ======= | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||
| Accounts payable and accrued expenses | $ 18,110 | $ 20,400 | |||
| Accrued compensation | 21,407 | 18,726 | |||
| Deferred fees | 25,322 | 17,835 | |||
| Dividends payable | 2,933 | 2,417 | |||
| Taxes payable | 9,689 | 4,307 | |||
| Notes payable | 1,840 | –– | |||
| Total current liabilities | 79,301 | 63,685 | |||
| Deferred taxes | 8,536 | 6,657 | |||
| Deferred rent and other non-current liabilities | 10,703 | 9,079 | |||
| Total liabilities | 98,540 | 79,421 | |||
| ===== | ===== | ||||
| Stockholders’ Equity: | |||||
| Common stock | 554 | 545 | |||
| Capital in excess of par value | 130,033 | 98,989 | |||
| Retained earnings | 377,846 | 305,636 | |||
| Treasury stock | ( 153,073 | ) | ( 136,820 | ) | |
| Accumulated other comprehensive income (loss) | 3,328 | ( 242 | ) | ||
| Total stockholders’ equity | 358,688 | 268,108 | |||
| Total liabilities and stockholders’ equity | $457,228 | $347,529 | |||
| ======= | ======= | ||||
Page 5 of 11
| FactSet Research Systems Inc. | |||||||||
| Consolidated Statements of Income | |||||||||
| Three Months Ended | Twelve Months Ended | ||||||||
| August 31, | August 31, | ||||||||
| (In thousands, except per share data) | 2006 | 2005 | 2006 | 2005 | |||||
| (unaudited) | (unaudited) | ||||||||
| Revenues | $105,216 | $82,767 | $387,350 | $312,644 | |||||
| Operating expenses | |||||||||
| Cost of services | 31,972 | 24,731 | 118,701 | 91,801 | |||||
| Stock-based compensation expense | 651 | –– | 2,651 | –– | |||||
| Total cost of services | 32,623 | 24,731 | 121,352 | 91,801 | |||||
| Selling, general and administrative | 37,921 | 29,259 | 138,970 | 111,822 | |||||
| Stock-based compensation expense | 1,384 | –– | 5,740 | –– | |||||
| Total selling, general and administrative | 39,305 | 29,259 | 144,710 | 111,822 | |||||
| Total operating expenses | 71,928 | 53,990 | 266,062 | 203,623 | |||||
| Income from operations | 33,288 | 28,777 | 121,288 | 109,021 | |||||
| Other income | 1,420 | 442 | 4,744 | 1,142 | |||||
| Income before income taxes | 34,708 | 29,219 | 126,032 | 110,163 | |||||
| Provision for income taxes | 11,265 | 10,572 | 43,116 | 38,398 | |||||
| Net income | $23,443 | $18,647 | $82,916 | $71,765 | |||||
| ====== | ====== | ====== | ====== | ||||||
| Basic earnings per common share | $0.48 | $0.39 | $1.70 | $1.50 | |||||
| ==== | ==== | ==== | ==== | ||||||
| Diluted earnings per common share | $0.46 | $0.37 | $1.64 | $1.43 | |||||
| ==== | ==== | ==== | ==== | ||||||
| Weighted average common shares (Basic) | 48,959 | 48,067 | 48,688 | 47,904 | |||||
| ===== | ===== | ===== | ===== | ||||||
| Weighted average common shares (Diluted) | 50,884 | 50,356 | 50,592 | 50,160 | |||||
| ===== | ===== | ===== | ===== | ||||||
Page 6 of 11
| FactSet Research Systems Inc. | |||||
| Consolidated Statements of Cash Flows | Twelve Months Ended | ||||
| August 31, | |||||
| (In thousands) | 2006 | 2005 | |||
| (unaudited) | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||
| Net income | $82,916 | $71,765 | |||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||
| Depreciation and amortization | 24,256 | 18,318 | |||
| Stock-based compensation expense | 8,391 | –– | |||
| Deferred income taxes | 505 | 3,029 | |||
| Gain on sale of Company-owned real estate | ( 1,342 | ) | –– | ||
| Changes in assets and liabilities, net of effects of acquisitions | |||||
| Receivables from clients and clearing broker, net | ( 4,008 | ) | ( 2,984 | ) | |
| Accounts payable and accrued expenses | ( 2,997 | ) | ( 4,284 | ) | |
| Accrued compensation | 1,163 | 2,204 | |||
| Deferred fees | 6,032 | 20 | |||
| Taxes payable | 3,497 | ( 3,482 | ) | ||
| Landlord contributions | 548 | 965 | |||
| Other working capital accounts, net | 1,861 | 1,808 | |||
| Income tax benefits from stock option exercises | –– | 6,987 | |||
| Net cash provided by operating activities | 120,822 | 94,346 | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||
| Purchases of investments, net of proceeds from sales | ( 62 | ) | 3,033 | ||
| Acquisition of businesses, net of cash acquired | ( 28,280 | ) | ( 92,224 | ) | |
| Proceeds from sale of Company-owned real estate | 2,910 | –– | |||
| Purchases of property, equipment and leasehold improvements | ( 23,689 | ) | ( 21,935 | ) | |
| Net cash used in investing activities | ( 49,121 | ) | ( 111,126 | ) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||
| Dividend payments | ( 10,043 | ) | ( 8,837 | ) | |
| Repurchase of common stock | ( 16,253 | ) | ( 13,509 | ) | |
| Proceeds from employee stock plans | 16,629 | 20,223 | |||
| Income tax benefits from stock option exercises | 5,614 | –– | |||
| Net cash used in financing activities | ( 4,053 | ) | ( 2,123 | ) | |
| Effect of exchange rate changes on cash and cash equivalents | ( 556 | ) | ( 220 | ) | |
| Net increase (decrease) in cash and cash equivalents | 67,092 | ( 19,123 | ) | ||
| Cash and cash equivalents at beginning of period | 59,457 | 78,580 | |||
| Cash and cash equivalents at end of period | $126,549 | $59,457 | |||
| ======= | ====== | ||||
Page 7 of 11
Reconciliation of GAAP and non-GAAP Financial Measures
The Company’s financial statements for prior periods have not been restated for the effect of FAS 123(R). The
Company consolidated four office locations in London into one headquarters facility in
June 2006. Net income and earnings per share have also been adjusted to reflect tax
benefits primarily from the closure of previously filed tax returns. FactSet’s
management believes that these non-GAAP financial measures provide meaningful supplemental
information regarding its financial results and that investors may benefit from referring
to these non-GAAP financial measures in assessing FactSet’s performance and when
planning, forecasting and analyzing future periods. These non-GAAP financial measures may
also facilitate comparisons to FactSet’s historical performance.
| I. Consolidated Statements of Income (unaudited) | |||||||||||
| Three Months Ended | |||||||||||
| August 31, | |||||||||||
| (In thousands, except per share data) | 2006 | 2005 | Change | ||||||||
| GAAP Income from operations | $33,288 | $28,777 | 15.7 % | ||||||||
| FAS 123(R) (a) | 2,035 | – – | |||||||||
| London real estate consolidation (b) | 1,342 | – – | |||||||||
| Non-GAAP Income from operations | $36,665 | $28,777 | 27.4 % | ||||||||
| ====== | ====== | ||||||||||
| GAAP Net income | $23,443 | $18,647 | 25.7 % | ||||||||
| FAS 123(R), net of tax (a) | 1,530 | – – | |||||||||
| London real estate consolidation, net of tax (b) | 939 | – – | |||||||||
| Tax benefits (c) | ( 1,407 | ) | – – | ||||||||
| Non-GAAP Net income | $24,505 | $18,647 | 31.4 % | ||||||||
| ====== | ====== | ||||||||||
| GAAP Diluted weighted average common shares | 50,884 | 50,356 | 1.0 % | ||||||||
| FAS 123(R) (d) | 608 | – – | |||||||||
| Non-GAAP Diluted weighted average common shares | 51,492 | 50,356 | 2.3 % | ||||||||
| ====== | ====== | ||||||||||
| Non-GAAP Diluted earnings per common share | $0.48 | $0.37 | 29.7 % | ||||||||
(a) To add-back stock-based compensation charges, net of tax when indicated
(b) To add-back incremental expenses due to a significant short-term increase in
occupancy costs from a redundancy of leased office space in London, net of tax when indicated
(c) To add-back income tax benefits primarily from the closure of previously filed tax returns
(d) To add-back common shares outstanding for the period. Under the treasury stock method, the after-tax charge for stock-based
compensation related to unvested options is included in the proceeds utilized for the calculation of assumed shares repurchased.
Page 8 of 11
Reconciliation of GAAP and non-GAAP Financial Measures (continued)
| I. Consolidated Statements of Income (unaudited) | |||||||||||
| Twelve Months Ended | |||||||||||
| August 31, | |||||||||||
| (In thousands, except per share data) | 2006 | 2005 | Change | ||||||||
| GAAP Income from operations | $121,288 | $109,021 | 11.3 % | ||||||||
| FAS 123(R) (e) | 8,391 | – – | |||||||||
| London real estate consolidation (f) | 2,674 | – – | |||||||||
| Non-GAAP Income from operations | $132,353 | $109,021 | 21.4 % | ||||||||
| ====== | ====== | ||||||||||
| GAAP Net income | $82,916 | $71,765 | 15.5 % | ||||||||
| FAS 123(R), net of tax (e) | 5,981 | – – | |||||||||
| London real estate consolidation, net of tax (f) | 1,872 | – – | |||||||||
| Gain from sale of Company-owned real estate, net of tax (g) | ( 939 | ) | – – | ||||||||
| Tax benefit (h) | ( 2,913 | ) | ( 1,930 | ) | |||||||
| Non-GAAP Net income | $86,917 | $69,835 | 24.5 % | ||||||||
| ====== | ====== | ||||||||||
| GAAP Diluted weighted average common shares | 50,592 | 50,160 | 0.9 % | ||||||||
| FAS 123(R) (i) | 678 | – – | |||||||||
| Non-GAAP Diluted weighted average common shares | 51,270 | 50,160 | 2.2 % | ||||||||
| ====== | ====== | ||||||||||
| Non-GAAP Diluted earnings per common share | $1.70 | $1.39 | 22.3 % | ||||||||
(e) To add-back stock-based compensation charges, net of tax when indicated
(f) To add-back incremental expenses due to a significant short-term increase in
occupancy costs from a redundancy of leased office space in London, net of tax when indicated
(g) To eliminate after-tax gain on sale of Company-owned real estate
(h) To add-back income tax benefits primarily from the closure of previously filed tax returns
(i) To add-back common shares outstanding for the period. Under the treasury stock method, the after-tax charge for stock-based
compensation related to unvested options is included in the proceeds utilized for the calculation of assumed shares repurchased.
Page 9 of 11
Reconciliation of GAAP and non-GAAP Financial Measures (continued)
| II. Consolidated Statements of Cash Flows | |||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||
| August 31, |
August 31, | ||||||||||
| (In thousands and unaudited) | 2006 | 2005 | % Change | 2006 | 2005 | % Change | |||||
| GAAP Net Cash provided by operations | $32,750 | $31,511 | $120,822 | $94,346 | |||||||
| Income tax benefits from stock option exercises (j) | – – | ( 1,099 | ) | – – | ( 6,987 | ) | |||||
| Non-GAAP Net Cash provided by operations | 32,750 | 30,412 | 120,822 | 87,359 | |||||||
| Capital expenditures | ( 3,163 | ) | ( 4,948 | ) | ( 23,689 | ) | ( 21,935 | ) | |||
| Free cash flow | $29,587 | $25,464 | 16% | $97,133 | $65,424 | 48% | |||||
| ====== | ====== | ====== | ====== | ||||||||
(j) To eliminate income tax benefits from stock option exercises for the three and twelve months ended August 31, 2005. Commencing in fiscal 2006, income tax benefits from stock option exercises are reported in cash flows from financing activities in accordance with FAS 123(R). Previously, income tax benefits from stock option exercises were included in cash flows provided by operations. There is no impact on the net change in cash during each respective period.
Page 10 of 10
Supplementary Schedule to the Fourth Quarter Earnings Press Release
For the Quarter Ended August 31, 2006
To aid an investor’s ability to make more precise interpretations of FactSet’s financial results, the supplementary schedule below summarizes revenues related to services that are not included in the calculation of FactSet’s subscription value. Although the impact individually and in the aggregate has been immaterial to FactSet’s annual results, this table might enhance an investor’s overall understanding of quarterly revenues.
| Non-Subscription Revenues | |||||||||||
| Non-subscription revenues (1) | |||||||||||
| (In thousands and unaudited) | Fiscal 2006 | Fiscal 2005 | $ Change | % Change | |||||||
| Q1 | $463 | $990 | $ (527 | ) | (53 | ) % | |||||
| Q2 | 620 | 910 | (290 | ) | (32 | ) | |||||
| Q3 | 1,138 | 886 | 252 | 28 | |||||||
| Q4 | 1,704 | 791 | 913 | 115 | |||||||
| Total | $3,925 | $3,577 | $348 | 10 | % | ||||||
| ===== | ===== | ==== | == | ||||||||
(1) Revenues from workstations purchased for use by summer interns and for FactSet services that are not sold on a subscription basis and are excluded from FactSet’s reported annual subscription value (“ASV”). The aforementioned amounts were included in FactSet’s reported revenues each quarter.