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Article by DailyStocks_admin    (11-18-08 10:00 AM)

The Daily Magic Formula Stock for 11/17/2008 is FactSet Research Systems Inc. According to the Magic Formula Investing Web Site, the ebit yield is 11% and the EBIT ROIC is >100 %.

Dailystocks.com only deals with facts, not biased journalism. What is a better way than to go to the SEC Filings? It's not exciting reading, but it makes you money. We cut and paste the important information from SEC filings for you to get started on your research on a specific company.


Dailystocks.com makes NO RECOMMENDATIONS whatsoever, and provides this for informational purpose only.

BUSINESS OVERVIEW

Overview

FactSet Research Systems Inc. (the “Company” or “FactSet”) is a leading provider of integrated global financial and economic information, including fundamental financial data on tens of thousands of companies worldwide. FactSet offers access to financial data and analytics to thousands of investment professionals around the world. Combining hundreds of databases into its own dedicated online service, FactSet provides the tools to download, combine, and manipulate financial data for investment analysis. FactSet applications support and make more efficient workflows for buy and sell-side professionals. These professionals include portfolio managers, research and performance analysts, risk managers, marketing professionals, sell-side equity research professionals, investment bankers and fixed income professionals. FactSet applications provide users access to company analysis, multicompany comparisons, industry analysis, company screening, portfolio analysis, predictive risk measurements, alphatesting, portfolio optimization and simulation, real-time news and quotes and tools to value and analyze fixed income securities and portfolios. The Company generates 79% of its revenue from its investment management clients, while the remaining revenue is primarily derived from investment banking clients.

Focus

FactSet’s business model places a premium on client service at all layers of the Company. This combined with its unique blend of technology, content and applications have allowed the Company to achieve record levels in many of its key growth metrics. FactSet’s traditional focus has been on equity analysis. Increasingly, FactSet clients have encouraged the Company to expand its core competency to include additional asset classes such as fixed income and derivative securities. During 2008, FactSet continued to enhance its portfolio analysis application to offer the ability to analyze fixed income portfolios. Fixed income portfolio analysis provides reports and charts that help clients study the performance, composition and characteristics of a fixed income portfolio on an absolute basis or relative to a benchmark. This product is built into the same application foundation as FactSet’s industry-leading equity portfolio analytics capabilities. All the robust reporting and charting features available for equities are also available for fixed income. While this consistency lends itself to extremely powerful balanced fund analysis, FactSet also addresses investment grade, high yield and municipal bond analysis. The accuracy of single-bond analytics critically affects the client’s ability to trust reports and gain meaningful insights from its analysis. The contribution of fixed income portfolio analysis to revenue has been negligible, but the improvements have expanded the potential client community for the Company’s portfolio products beyond the traditional equity portfolio manager and into the balanced fund and fixed income portfolio management communities. Within its product creation departments, FactSet has teams of business analysts and software engineers dedicated to the financial information needs of key client user classes, such as portfolio managers, research analysts, and investment bankers. This focus on the information and tasks associated with each user type has translated into the ability to become a critical part of the work day for over tens of thousands of the world’s top financial professionals.

FactSet’s service-oriented culture is a reason why many of the world’s top financial firms deploy its services. The Company offers and delivers on a premium suite of applications and fully integrated content. Its service offerings include twenty-four hour access to well-trained, professional, and motivated FactSet employees. This includes many hundreds of employees dedicated to front-line support – answering phone calls, building spreadsheet models, and visiting clients, as well as its product creation and support teams. Acting as an extension of its clients staff is a core value that has allowed FactSet to prosper over the years.

Content

The Company combines more than 500 data sets, including content regarding tens of thousands of companies and securities from major markets across the globe, from industry-leading suppliers and clients’ own proprietary data into a single powerful online platform of information and analytics, making FactSet a one-stop source for financial information. Clients have simultaneous access to content from an array of sources, which they can combine and utilize in FactSet applications. FactSet is also fully integrated with Microsoft Office applications such as Excel ® , Word ® and PowerPoint ® and allows for the creation of extensive custom reports.

The Company aggregates third-party content from more than 85 data suppliers and over 100 exchanges and news sources. FactSet is the only source that integrates content from premier providers such as Thomson Reuters Inc. (“Thomson”), Standard and Poor’s (a division of The McGraw-Hill Companies), FTSE, IDC (Interactive Data Corporation), Dow Jones & Company Inc., Northfield Information Services, Inc., MSCI Barra, APT, Global Insight Inc., Morningstar, Inc., Russell Investments, SIX Telekurs Ltd. and Merrill Lynch. FactSet seeks to maintain contractual relationships with a minimum of two content providers for each type of financial data, when possible. Third-party content contracts have varying lengths and often can be terminated on one year’s notice at predefined dates. Third-party content fees are either billed directly to FactSet or the Company’s clients. Content fees billed to the Company may be on a fixed or royalty (per client) basis.

FactSet continues to invest capital to acquire and build proprietary content. Since 2001, the Company has acquired seven content businesses, Thomson Fundamentals (global fundamentals data), LionShares (global equity ownership data), Mergerstat (M&A data), CallStreet (events and transcripts), JCF (earnings and other estimates), TrueCourse (takeover defense intelligence) and Global Filings (equity and fixed income prospectus data). These content sets have been fully integrated into the Company’s product offerings, while at the same time FactSet has continued to invest in the development of third-party data feeds across all content areas. The Company has also expanded its proprietary content coverage of data, including private equity and private company data. The net effect of this strategy to date has been to increase the accessibility of data to the financial investment community and to improve the quality of the data for clients.

FactSet Fundamentals – In July 2008, FactSet acquired the Thomson Fundamentals business, including $2.0 million of annual revenues transferred from Thomson, copies of the Thomson Fundamental database, source documents, collection software, documentation and collection training materials. The Thomson Fundamentals database is a preeminent global financial database with coverage of over 43,000 companies and history back to 1980 and has been available and distributed by FactSet since 1991. The transaction extends FactSet’s competitive advantage of providing clients a choice of premium content sets over the FactSet system. FactSet Fundamentals expanded the selection of fundamental providers for clients and is ready for sale today. FactSet believes the transaction was valuable to the Company for four primary reasons:


1. The opportunity to buy a copy of a trusted premium, global fundamental database with history back to the 1980s was rare and unlikely to repeat itself in the foreseeable future.


2. Fundamentals is one of three core data sets (along with security prices and estimates) that all major providers require. FactSet now owns all three core content sets, on a global basis.


3. Fundamental data is used by all FactSet clients and prospective clients and nearly every user in its addressable universe.


4. The estimated market opportunity for fundamental data just among the Company’s existing client base is in excess of $100 million, representing a large new source of potential revenue growth for FactSet.

FactSet Estimates – In addition, FactSet has continued to expand its proprietary content through FactSet Estimates and FactSet Research Connect, its repository of sell-side research reports. FactSet Estimates is the Company’s pre-eminent global broker estimates database that provides its users with insight into an industry where consistency and transparency are at a premium. The FactSet Estimates database covers approximately 24,000 companies globally with 500 contributors providing comprehensive consensus-level estimates and statistics with daily updates and history. FactSet Research Connect makes available hundreds of full text research reports from an estimated 500 contributors. These firms include not only the largest investment banks but also the leading regional and independent research providers. Continuous updates of premium global estimates, actual data and research reports from leading investment banks and research firms give clients real-time access to the most recent estimate data available.

FactSet now offers clients a product offering powered by its own proprietary content which can be integrated into the many FactSet applications for portfolio analysis.

Client Relationships

A significant part of the Company’s strategy to maintain long-term client relations involves both consulting services and client training. Clients are visited by company personnel for hands on training and service. The Company’s help desk operates virtually around the clock and sales and consulting personnel regularly visit clients to enhance support and the value of the FactSet products. The Company strongly encourages its clients to fully utilize it consulting services and online tools for training. FactSet’s consulting and training programs are designed to give clients a comprehensive understanding of the service at no additional charge.

Competition

FactSet competes in the global financial information services industry, which includes both large and well-capitalized companies, as well as smaller, niche firms. International and U.S. competitors include market data suppliers, news and information providers and many of the content providers that supply the Company with financial information included in the FactSet system. Competitors and competitive products in the United States include online database suppliers and integrators and their applications, such as Thomson Reuters Inc., Bloomberg L.P., Standard and Poor’s including its Capital IQ product line, (a division of The McGraw-Hill Companies), RiskMetrics Group Inc, Dealogic PLC, Bond Edge (owned by Interactive Data Corporation), Yield Book (owned by Citigroup), Polypaths LLC., and Wilshire Associates Incorporated. Many of these firms offer products or services which are similar to those sold by the Company.

Products

Investment in proprietary content and products continued to be a focus for FactSet during fiscal 2008. The Company released numerous enhancements to existing data sets and expanded into several new areas as well.

Marquee Global— the Company’s real-time quotes and news application, continued to grow in users and clients during fiscal 2008 with successes within the Company’s global investment management and banking client base. Marquee 3.2 was released in fiscal 2008 and provides more than 100 exchanges and news sources. All new clients receive Marquee as part of the standard workstation feature set, making the basic FactSet service even more valuable. Marquee was installed on hundreds of buy and sell-side research analyst desktops during fiscal 2008. The application works in concert with FactSet’s existing platform or can be installed as a stand-alone solution for professionals focused on real-time market movements. Client usage of Marquee increased more than 45% during fiscal 2008. Additionally, the application has emerged as a leading driver of new client sales. Marquee can streamline client daily workflows while optimizing client financial information budgets. Unique within the industry, FactSet’s Marquee offers the ability to access real-time information integrated with in-depth historical analysis tools on the same technology platform. The combined FactSet desktop also provides clients the ability to share client portfolio holdings automatically. Client portfolios may be made available for detailed study in the Portfolio Analytics applications as well as real-time monitoring in Marquee including intraday contribution to return.

Portfolio Analytics— Demand for the Portfolio Analytics suite of applications continues to rise. This suite is comprehensive and includes the applications for portfolio attribution, risk management and quantitative analysis. Portfolio Analysis continued to be the cornerstone of the offering to investment management clients and represents the largest revenue contributing component of the suite. At August 31, 2008, there were over 637 clients representing approximately 5,730 users who subscribed to this service, a user increase of 22% over the prior year.

One of the key features of the suite’s central application, Portfolio Analysis, is an attribution analysis report that enables portfolio managers to dissect and explain the performance of a portfolio through time. For many years, FactSet’s primary focus has been equity portfolios – those that are comprised of stock holdings of publicly traded companies. FactSet’s desire to enhance the attribution module to cover virtually all asset classes, including corporate and sovereign debt and sophisticated derivative securities such as mortgage-backed securities and credit default swaps was a major factor in acquiring Derivative Solutions in August 2005. The acquisition has enabled the Company to deliver an enhanced multi-asset class attribution module which creates new markets for its products and a potentially strong competitive advantage in the industry.

FactSet’s Portfolio Analytics suite was also enhanced through further integration of MSCI Barra’s products, the release of an application to conduct portfolio simulation, new enhancements to its portfolio publishing tools and release of portfolio dashboard monitoring tools.

During fiscal 2008, FactSet’s wireless capabilities were also enhanced to give users access to market, company and portfolio information through Blackberries. FactSet Wireless 2.0 delivers news, quotes, and customized global market and company intelligence in real time to users’ handheld devices.

FactSet Calendar , an application that displays events affecting financial professionals, including corporate earnings releases, event transcripts and macroeconomic data, was released in fiscal 2008. This new product enhances the user’s ability to track and monitor the financial markets.

Research Management Solutions , an application that empowers financial professionals to publish research ideas to colleagues using FactSet was introduced to the market in fiscal 2008 and has experienced growth throughout the year. Research Management Solutions give the user all the tools needed to submit, receive, analyze, and evaluate research ideas from internal analysts, external brokers, and corporate access meetings. FactSet’s Research Management Solutions are designed to bring the user a clear view of the entire research spectrum and provides a direct path from receiving internal and external research to finding actionable ideas to producing measurable results.

For FactSet’s sell-side clients, FactSet released new or expanded versions of the FactSet Private Equity, FactSet People, and FactSet Corporate New Issue databases in fiscal 2008.

Data Centers

FactSet’s business is dependent on its ability to process rapidly and efficiently substantial volumes of data and transactions on its computer-based networks and systems. During the second quarter of fiscal 2008, the Company completed its upgrade from Hewlett Packard (“HP”) Alpha mainframe machines to HP Integrity mainframe machines. The Company currently deploys 17 HP Integrity mainframe machines in each of its data centers. The HP Integrity mainframe machines improve overall data and transaction processing performance by 20%, increased the number of available users per machine (capacity) by 20%, reduced power consumption by a half and lowered ownership costs by at least 35% or $0.3 million per Integrity mainframe machine. In addition, each HP Integrity mainframe machine is 60% smaller than an Alpha mainframe machine thus reducing the Company’s required data center floor space. The Company upgraded every mainframe in a 12-month time period compared to the average lifespan of three years, thus incurred accelerated computer depreciation. In addition, significant internal engineering resources were temporarily reassigned to ensure timely completion of the transition. The Company has also established a vast private wide area network to provide clients access to the Company’s data centers.

FactSet’s wide area network provides a high-speed direct link between the client’s local network and the data content and powerful applications found on the Company’s mainframes.

Company Demographics

The number of employees of FactSet and its subsidiaries totaled 2,035 as of October 20, 2008. Employee count at August 31, 2008 was 1,934, up 17% from a year ago. The Company’s sales force grew at approximately the rate of revenues during fiscal 2008. Approximately 40% of the Company’s employees conduct sales and consulting services, another 30% are involved in product development, software and systems engineering and the remaining 30% of employees are involved with content collection or provide administrative support.

FactSet invests heavily in employee training. Upon starting at FactSet, nearly all employees go through a five-week training program. During those first few weeks, employees are given presentations by senior employees to learn the details of FactSet’s products and unique culture.

Investor Relations

FactSet was founded in Delaware in 1978, and its headquarters are in Norwalk, Connecticut. The mailing address of the Company’s headquarters is 601 Merritt 7, Norwalk, Connecticut 06851, and its telephone number at that location is (203) 810-1000. The Company’s website address is www.factset.com .

Through a link on the Investor Relations section of its website, the Company makes available the following filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”): the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. All such filings are available free of charge. In addition, the Company’s Code of Ethical Conduct for Financial Managers and Code of Business Conduct and Ethics are posted in the Investor Relations section of the Company’s website and the same information is available in print to any shareholder who submits a written request to the Company’s Investor Relations department at its corporate headquarters. Any amendments to or waivers of such code required to be publicly disclosed by the applicable exchange rules or the Securities and Exchange Commission will be posted on the Company’s website. The charters of each of the committees of the Company’s Board of Directors are available on the Investor Relations section of the Company’s website and the same information is available in print free of charge to any shareholder who submits a written request to the Company’s Investor Relations department at its corporate headquarters. The Company’s Chief Executive Officer timely submitted his certification on January 15, 2008, to the New York Stock Exchange (“NYSE”) that he was not aware of any violation by the Company of any NYSE corporate governance listing standards as of that date.


CEO BACKGROUND

Michael D. Frankenfield, Executive Vice President and Director of U.S. Investment Management Services. Mr. Frankenfield, age 43, joined the Company in 1989 within the Consulting Services Group. From 1990 to 1994, Mr. Frankenfield held the position of Vice President, Sales with the Company. From 1995 to 2000 Mr. Frankenfield was Director of Investment Banking Sales with the Company. From 2000 until 2005, Mr. Frankenfield was Director of Sales and Marketing with FactSet. During September 2005, Mr. Frankenfield was named to his current position of Director of Investment Management Services. Mr. Frankenfield received a B.A. in Economics and International Relations from the University of Pennsylvania and has earned the right to use the Chartered Financial Analyst designation and is a member of the CFA Institute.

Peter G. Walsh, Executive Vice President, Chief Financial Officer and Treasurer. Mr. Walsh, age 42, joined the Company in 1996 as Vice President, Planning and Control within the Company’s Finance group. Mr. Walsh held the position of Vice President, Director of Finance from 1999 until 2001. From late 2001 to February 28, 2005, Mr. Walsh occupied the position of Vice President, Regional Sales Manager of the U.S. Southeast Region. On March 1, 2005 he assumed the position of Chief Financial Officer and Treasurer. Prior to joining FactSet, Mr. Walsh held several positions at Arthur Anderson & Co. Mr. Walsh received a B.S. in Accounting from Fairfield University. He is a CPA licensed in the state of New York, has earned the right to use the Chartered Financial Analyst designation and is a member of the CFA Institute.

Kieran M. Kennedy, Senior Vice President and Director of Investment Banking and Brokerage Services. Mr. Kennedy, age 43 , joined the Company in 1990 within the Consulting Services Group. From 1993 to 1997, Mr. Kennedy held the position of Sales and Consulting Manager for the West Coast. Mr. Kennedy was Director of Consulting from 1997 until he assumed his current position as Director of Investment Banking and Brokerage Services in 2002. Prior to joining FactSet, Mr. Kennedy held a Currency Trading position at Goldman Sachs & Co. Mr. Kennedy received a B.A. in Economics from Syracuse University.

MANAGEMENT DISCUSSION FROM LATEST 10K

Executive Overview

FactSet is a leading provider of global financial and economic information, including fundamental financial data on tens of thousands of companies worldwide. Our applications support and make more efficient workflows for buy and sell-side professionals. These professionals include portfolio managers, research and performance analysts, risk managers, marketing professionals, sell-side equity research professionals, investment bankers and fixed income professionals. Our applications provide users access to company analysis, multicompany comparisons, industry analysis, company screening, portfolio analysis, predictive risk measurements, alphatesting, portfolio optimization and simulation, real-time news and quotes and tools to value and analyze fixed income securities and portfolios.

We combine more than 500 data sets, including content regarding tens of thousands of companies and securities from major markets all over the globe, into a single online platform of information and analytics. Clients have simultaneous access to content from an array of sources, which they can combine and utilize in nearly all of our applications. We are also fully integrated with Microsoft Office applications such as Excel, Word and PowerPoint. This integration allows our users to create extensive custom reports. Our revenues are derived from month-to-month subscriptions to services, databases and financial applications. We generate 79% of our revenue from our investment management clients, while the remaining revenue is primarily derived from investment banking clients.

Highlights in support of our strategic objectives in 2008 include:

Products


-

Released FactSet Fundamentals in August 2008, a preeminent global financial database with coverage of over 43,000 companies and history back to 1980.


-

Expanded product offerings and achieved record levels of usage from our clients.


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Introduced Marquee 3.2, the latest version of our real-time news and quotes application. Marquee has created enormous potential for us and has seen very high levels of acceptance for both the buy and sell-side. Client usage of Marquee worldwide increased more than 45% during fiscal 2008.


-

Released other key products such as FactSet Wireless 2.0 for wireless devices and FactSet Calendar, an application that displays events affecting financial professionals, including corporate earnings release, event transcripts and macro-economic data releases.


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Significant investment and enhancement to our Portfolio Analytics suite of products, particularly in the areas of fixed income portfolio analysis and risk.


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Portfolio Analysis and our suite of quantitative applications continue to make us a market leader for our investment management clients. PA 2.0 was deployed by 637 clients and 5,730 users as of August 31, 2008, a user increase of 22% over the prior year.

-

IBCentral, our application for bankers, and our proprietary content offerings have allowed us to continue our success on the sell-side.

Quality Improvements


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Over the past several years we have made the transition from having an almost exclusive focus on financial analytics into two new areas of opportunity: real-time financial information and proprietary content. We added these two new core competencies, while continuing to be a market leader in our traditional financial analytics space


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Continued to focus on our content strategy, which began in 2001 with the acquisition of LionShares and continued in fiscal 2008 with the acquisition of Thomson Fundamentals. Our sales teams can now present a product offering powered completely by FactSet content.

Employee Growth


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We employed 1,934 professionals at August 31, 2008, an increase of 17% over the past twelve months.


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Approximately 40% of our employees conduct sales and consulting services, another 30% are involved in product development, software and systems engineering and the remaining 30% of employees are involved with content collection or provide administrative support.


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FactSet was recognized on Fortunes’ “100 Best Companies to Work for” list and named by Business Week as one of the “Best Places to Launch a Career.”



Acquisitions


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Continue to successfully integrate recent acquisitions including the Thomson Fundamentals and DealMaven businesses, both of which have extended our reach in the financial services industry.

U.S. Operations


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Increased U.S. revenues 19% to $398.3 million in fiscal 2008.


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Revenues from U.S. operations accounted for 69% and 70% of our consolidated revenues for fiscal 2008 and 2007.


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Expanded current office spaces in four different locations throughout the U.S., including a new office in Austin, Texas as well as a new lease in Boston, Massachusetts which will allow us to consolidate the Boston office locations into one during the second half of fiscal 2009.


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Employees within the U.S. grew 13% during fiscal 2008 and represented 66% of all employees at August 31, 2008.

International Operations


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Increased international revenues 26% to $177.2 million in fiscal 2008. Excluding the impact of foreign currency, international revenue growth was 24% year over year.


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Revenues from international operations accounted for 31% and 30% of our consolidated revenues for fiscal 2008 and 2007.


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Entered into new lease agreements to support operations in the Netherlands, Tokyo, Japan and Hyderabad, India. The new office space expanded existing international locations by 60,000 square feet. The new space in Hyderabad, India will accommodate approximately 500 professionals to support FactSet Fundamentals.


-

Employees overseas grew 25% during fiscal 2008 and represented 34% of all employees at August 31, 2008.

Significant Capital Expenditures


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$24.3 million or 70% of capital expenditures in fiscal 2008 was for computer equipment, including the purchase of Hewlett Packard Integrity mainframes to increase the processing speed of our data centers. The additional purchases in fiscal 2008 completed our transition to Hewlett Packard Integrity mainframes in both of our data centers well ahead of schedule.


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$11.5 million or 30% of capital expenditures in fiscal 2008 was for the build-out of new space in our Paris, Amsterdam, and Chicago and Norwalk office locations.

Achieved Records in Several Key Metrics


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Revenues grew 21% to $575.5 million.


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Diluted earnings per share rose 17% to $2.50.


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Excluding the acquisition of Thomson Fundamentals, free cash flow for fiscal 2008 was $116 million.


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Annual subscription value (“ASV”) was $615 million as of August 31, 2008, up 19% from a year ago.


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Client count increased to 2,085.


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The number of FactSet users advanced 15% to 40,100.


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FactSet was added to the Standard & Poor’s Midcap 400 Index.

Returning Value to Shareholders


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Expanded our existing share repurchase program by an additional $125 million in January 2008.


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Increased our quarterly dividend 50% from $0.12 to $0.18 per share in May 2008.

Results of Operations

For an understanding of the significant factors that influenced our performance during the past three fiscal years, the following discussion should be read in conjunction with the Consolidated Financial Statements and the Notes to Consolidated Financial Statements presented in this Annual Report.

Revenues

Revenues —Revenues in fiscal 2008 increased 21% to $575.5 million from $475.8 million in fiscal 2007. Excluding the $2.9 million increase in revenues attributable to the impact of foreign currency and $2.1 million from acquisitions owned less than one year, revenue growth was 20% year over year. The sale of additional services to existing investment management professionals was the primary catalyst of our revenue growth. Our investment management client base continues to experience strong growth across all geographies and represents approximately 79% of our total ASV as of August 31, 2008. The deepening engagement of existing FactSet users in our investment management business and the ability to consolidate multiple services into one through the FactSet platform resulted in revenue growth of 19% in our U.S. business and 24% in our international business when holding currencies constant in fiscal 2008. We continued to deliver world-class service to a global blue chip client base while developing products that are highly integrated into our clients’ workflow in fiscal 2008. Marquee, our suite of Portfolio Analysis services, IBCentral and our risk and quantitative services continued to expand across all geographies. The ability for our end users to access more than 85 premium third-party content providers and integrate their own data for use in FactSet applications continues to be a reason for our expanding number of users. We continue to appeal to larger institutions because of our ability to service many different users groups and our ability to deliver intensive computing power and analytics to end users. Incremental content for non-U.S. investors helped increase demand for our services outside the U.S.

Our Portfolio Analytics suite of applications continued to be a source of growth during fiscal 2008. Clients have been receptive to this suite, which is comprehensive and includes eight applications for portfolio attribution, risk and quantitative analysis. The portfolio analysis workstation is the largest revenue contributing member of the Portfolio Analytics suite. Approximately 637 clients consisting of 5,730 users subscribed to the PA 2.0 application as of August 31, 2008, a user increase of 22% over the prior year.

Revenues in fiscal 2007 increased 23% to $475.8 million from $387.4 million in fiscal 2006. Excluding the $2.9 million increase in revenues attributable to the impact of foreign currency and $1.7 million from the acquisition of Global Filings, revenue growth was 21% year over year. Signing on new clients and users kept the revenue growth rate of our U.S. business at 21% and our international business at 28% and 22% when holding currencies constant during fiscal 2007. Performance was driven by adding more users and selling existing clients additional applications and content. The broad-based growth enhanced users’ engagement with our products and caused clients, users and subscriptions to increase in fiscal 2007. Our clients continue to license our advanced applications such as Portfolio Analytics and Marquee. Revenue growth in fiscal 2007 is indicative of solid sequential quarterly growth in new subscriptions, users and clients and balanced growth from each major geographic region and buy and sell-side clients. New application features, incremental content, responsive client service and price increase contributed to our revenue growth. Our ability to consolidate multiple services into one through the FactSet platform has enabled our clients to recognize efficiencies in many instances.

Revenues from the U.S. business increased 19% to $398.3 million in fiscal 2008 compared to $335.3 million in the same period a year ago. Excluding the $2.1 million of revenues from acquisitions owned less than one year, revenue growth was 18% year over year. Revenues from the U.S. business increased 21% to $335.3 million in fiscal 2007 compared to $277.2 million in fiscal 2006.

International revenues in fiscal 2008 were $177.2 million, an increase of 26% from $140.5 million in the prior year period. Excluding the $2.9 million increase in revenues attributable to the impact of foreign currency, international revenue growth was 24% year over year. European revenues advanced 23% to $141.1 million, largely related to deployment of our portfolio analysis, risk and quantitative applications and a broader selection of global content. Asia Pacific revenues grew to $36.1 million, up 38% from the same period a year ago. Revenues from international operations accounted for 31% of our consolidated revenues for fiscal 2008 and 30% in fiscal 2007. Our growth rates in Europe and Asia Pacific reflect the macroeconomic environment in fiscal 2008 and a reallocation of sell-side investment professional to major non-U.S. money centers, especially in Asia. International revenues increased 28% in fiscal 2007, up from $110.2 million in the prior year period. Excluding $1.7 million from acquisitions owned less than one year and $2.9 million of revenues attributable to the impact of foreign currency, international revenue growth was 23% year over year. European revenues advanced 27% to $114.3 million and Asia Pacific revenues grew to $26.2 million, up 31% from the same period a year ago.

Annual Subscription Value —ASV at a given point in time represents the forward-looking revenues for the next twelve months from all subscription services currently being supplied to our clients. With proper notice to us, our clients are generally able to add to, delete portions of, or terminate service at any time. At August 31, 2008, ASV was $615 million, up $98 million or 19% from the prior year total of $517 million. Excluding currency and ASV acquired from the acquisitions of DealMaven and Thomson Fundamentals, ASV increased $93 million over the last twelve months, up 18%. The $93 million increase in ASV over the last twelve months includes a reduction of $2.6 million from the collapse of Bear Stearns. ASV from overseas operations increased from $157 million at August 31, 2007 to $195 million at August 31, 2008, representing 32% of the company-wide total. ASV growth in fiscal 2008 was generated from strong performances in our global investment management client base and demonstrates our ability to deepen the engagement of existing FactSet users. Demand for Portfolio Analytics and Marquee continue at a healthy rate. Users of the PA 2.0 application grew 22% over the last 12 months. Marquee usage is up 45% year over year. Success with these applications partially offset the reduction of our ASV growth rate due to a difficult operating environment for investment banks since September 2007. The performance of portfolio analytics and our ability to license our proprietary content, including FactSet Estimates, enhanced our ASV growth. At August 31, 2008, the average ASV per client was $295,000, up from $265,000 at August 31, 2007 and $237,000 at August 31, 2006.

ASV at the end of fiscal 2007 was up $94 million or 22% from the prior year total of $423 million due to net addition of new clients, incremental subscriptions to our services by existing clients and increased users. The growth in fiscal 2007 demonstrates our ability to deploy solutions to service the global needs of large institutions. The performance of portfolio analytics and our ability to license our proprietary content, including events and transcripts, deal data and ownership data, enhanced our ASV growth. On a constant currency basis, subscriptions increased $93 million in fiscal 2007, up 22% over the prior year.

Users and Clients —At August 31, 2008, professionals using FactSet increased to 40,100, up 5,100 users from the beginning of the year. Client count was 2,085 as of August 31, 2008, a net increase of 132 clients during fiscal 2008. The combination of advanced FactSet applications including Marquee with a vast array of data supported by FactSet client service contributed to our user growth in fiscal 2008. In addition, over the past 12 months, the investment banking user base has grown 16%. While the overall franchise value of large investment banks have declined significantly in fiscal 2008, our user count has grown and signals that the business groups (M&A bankers and equity research professionals) utilizing FactSet is not where the problems lie for our sell-side clients.

At August 31, 2007, client count was 1,953, a net increase of 168 clients or 9% over the prior 12 months. The ability to consolidate multiple services into one through the FactSet platform has been a compelling opportunity for firms to recognize efficiencies. There were 35,000 users as of August 31, 2007, up 17.4% from 29,800 at the end of fiscal 2006. Advanced applications such as Marquee and IBCentral contributed to the increase in the number of FactSet users.

Our client retention remained at a rate in excess of 95% during each of the past three fiscal years, confirming breadth and depth of a product suite that is deployed to a high quality, institutional client base. No individual client accounted for more than 3% of total ASV as of August 31, 2008. ASV from the ten largest clients was 17% of total client subscriptions as of August 31, 2008.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

Results of Operations

For an understanding of the significant factors that influenced our performance during the three and nine months ended May 31, 2008 and 2007, respectively, the following discussion should be read in conjunction with the Consolidated Financial Statements and the Notes to Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q.

Revenues

Revenues for the three months ended May 31, 2008 increased 21.7% to $147.4 million from $121.1 million for the same period a year ago. Revenue growth in the third quarter is due to our combination of delivering world-class service to a global blue chip client base while developing products that are highly integrated into our clients’ workflow. The sale of additional services to existing investment management professionals was the primary catalyst of our revenue growth.

For the first nine months of fiscal 2008, revenues advanced 21.8% to $421.8 million from $346.3 million in the prior year period. Revenue growth was driven by the deepening engagement of existing FactSet users in our investment management business and the ability to consolidate multiple services into one through the FactSet platform. Our investment management client base continues to experience strong growth across all geographies and represents approximately 79% of our total ASV

as of May 31, 2008. Our clients continue to license our advanced applications such as Portfolio Analytics and Marquee. The ability for our end users to access more than one hundred premium third-party content providers and integrate their own data for use in FactSet applications continues to be a reason for our expanding number of users. We continue to appeal to larger institutions because of our ability to service many different users groups and our ability to deliver intensive computing power and analytics to end users. Incremental content for non-U.S. investors helped increase demand for our services outside the U.S.

Our Portfolio Analytics suite of applications continued to be a source of growth during the third quarter of fiscal 2008. Clients have been receptive to this suite, which is comprehensive and includes eight applications for portfolio attribution, risk and quantitative analysis. The portfolio analysis workstation is the largest revenue contributing member of the Portfolio Analytics suite. Approximately 607 clients consisting of over 5,487 users subscribed to the PA 2.0 application as of May 31, 2008, a net increase of 93 clients during the quarter.

Annual Subscription Value – ASV at a given point in time represent the forward-looking revenues for the next twelve months from all subscription services currently being supplied to our clients. With proper notice to us, our clients are generally able to add to, delete portions of, or terminate service at any time. At May 31, 2008, ASV was $590 million, up $101 million or 21% from the prior year total of $489 million. Excluding the acquisition of DealMaven and foreign currency exchange, ASV increased $96 million over the last twelve months, up 20%. ASV from overseas operations increased from $146 million at May 31, 2007 to $187 million at May 31, 2008, representing 32% of the Company-wide total.

ASV growth in the third quarter of fiscal 2008 was $14.7 million. Excluding $2.6 million from the cancellation of services to Bear Stearns in the third quarter and $0.9 million from foreign currency exchange, ASV increased $18.2 million since February 29, 2008. The ASV change in the third quarter was driven by our global investment management client base. Our overseas client base contributed strong ASV growth of 26%, excluding the impact from foreign currency. Investment banks continue to manage expenses during the current market conditions. The adverse ASV change from Bear Stearns was $2.6 million during the third quarter.

ASV growth in the three months ended May 31, 2008 demonstrates our ability to deepen the engagement of existing FactSet users. The ability to consolidate multiple services into one through the FactSet platform has proven to be a compelling opportunity for our clients to recognize efficiencies. Demand for Portfolio Analytics and Marquee continue at a healthy rate. Users of the PA 2.0 application grew 27% over the last 12 months. Marquee users are up 47% year over year. Success with these applications partially offset the reduction of our ASV growth rate due to a difficult operating environment for investment banks since September 2007. The ASV change from investment banking clients declined $4.2 million compared to the year ago quarter. The user count change for investment banking clients was flat in the third quarter including the cancellation of 300 seats from Bear Stearns.

Users and Clients – At May 31, 2008, professionals using FactSet increased to 39,600, up 500 users from the beginning of the quarter. Client count was 2,044 as of May 31, 2008, a net increase of 23 clients during the quarter. The moderate growth in user count reflects the difficult operating environment for investment banks. Net new client growth, while healthy, was 35% lower than the average of previous four quarters due to a reduction in new firm creation. At quarter-end, the average subscription per client was $290,000, up 10% from $265,000 at August 31, 2007 and up 14% from $256,000 at May 31, 2007.

At May 31, 2008, client retention remained at a rate in excess of 95%, confirming breadth and depth of a product suite that is deployed to a high quality, institutional client base. No individual client accounted for more than 3% of total ASV as of May 31, 2008. ASV from the ten largest clients is 16% of total client subscriptions.

Revenues from the domestic business increased 18.2% to $101.7 million during the three months ended May 31, 2008 compared to $86.0 million in the same period a year ago. International revenues in the third quarter of fiscal 2008 were $45.7

million, an increase of 30.4% from $35.1 million in the prior year period. Excluding $0.6 million of revenues attributable to the impact of foreign currency, international revenue growth was 28.7% year over year. Revenues from international operations accounted for 31% and 29% of our consolidated revenues for the third quarter of fiscal 2008 and 2007, respectively. European revenues advanced 25.5% to $36.3 million. Asia Pacific revenues grew to $9.4 million, up 47.8% from the same period a year ago. Our growth rates in Europe and Asia Pacific reflect a robust macroeconomic environment and a reallocation of investment to outside the U.S.

Operating Expenses

Cost of Services

For the three months ended May 31, 2008, cost of services increased 22.1% to $48.1 million from $39.4 million in the comparable prior year period. During the first nine months of fiscal 2008, cost of services advanced 26.5% to $140.6 million from $111.1 million in the first nine months of fiscal 2007. Cost of services expressed as a percentage of revenues increased 10 basis points to 32.7% during the third quarter of fiscal 2008 from 32.6% a year ago. The rise in cost of services as a percentage of revenues was 120 basis points for the first nine months of fiscal 2008. The increase during the third quarter was driven by higher employee compensation and additional data costs partially offset by lower computer depreciation and maintenance and lower amortization of intangible assets.

Employee compensation and benefits for our software engineering and consulting departments increased 0.7% and 1.7%, respectively, as a percentage of revenues during the three and nine months ended May 31, 2008 compared to the same period a year ago. Employee additions as well as normal merit increases accounted for the rise in employee compensation. Data costs as a percentage of revenues rose by 0.9% and 0.8%, respectively, for the three and nine months ended May 31, 2008 compared to the same periods in fiscal 2007. This increase was driven by variable payments to data vendors from additional content subscriptions and higher levels of proprietary data content collection.

A reduction in computer related expenses and amortization of intangible assets partially offset these component increases of cost of services. Computer depreciation and maintenance decreased 1.1% and 0.8%, respectively, as a percentage of revenues during the three and nine months ended May 31, 2008 compared to the same period a year ago. Computer depreciation declined from utilizing a shorter useful life for mainframes in the third quarter of fiscal 2007 to account for our transition to Hewlett Packard’s new Integrity mainframe machines. The decrease in computer maintenance is a result of replacing the older existing Hewlett Packard Alpha mainframe machines with new Hewlett Packard Integrity mainframe machines in fiscal 2008. In the initial year of purchase, the maintenance on the new Hewlett Packard Integrity mainframe machines is less, thus incurring lower maintenance expense as compared to the older Alpha machines. Amortization expense as a percentage of revenues declined 0.3% and 0.4%, respectively, for the three and nine months ended May 31, 2008 compared to the same periods in fiscal 2007 due to a decline in acquisition activity compared to previous years and intangible assets became fully amortized.

Selling, General and Administrative

For the three months ended May 31, 2008, selling, general, and administrative (“SG&A”) expenses advanced 21.0% to $51.3 million from $42.4 million in the third quarter of fiscal 2007. During the first nine months of fiscal 2008, SG&A advanced 20.2% to $147.6 million from $122.7 million in the first nine months of fiscal 2007. SG&A expenses expressed as a percentage of revenues declined to 34.8% during the third quarter of fiscal 2008 from 35.0% a year ago. The decrease in SG&A as a percentage of revenues was 50 basis points for the first nine months of fiscal 2008. The decrease in SG&A expenses as a percentage of revenues of 20 and 50 basis points for the three and nine months May 31, 2008, respectively, was driven by lower occupancy costs partially offset by our global engineering conference held in May 2008.

Occupancy costs, including rent and depreciation of furniture and fixtures, decreased 0.5% and 0.2%, respectively, as a percentage of revenues during the three and nine months ended May 31, 2008 compared to the same period a year ago. Lower occupancy costs are temporary and are being driven by the timing of acquiring new space to support a growing employee base. Our global engineering conference was held in May 2008 with over 500 internal engineer attendees. The conference was not held in the prior year and reduced our SG&A margin by 50 basis points.

Income from Operations and Operating Margin

Operating income advanced 22.2% to $47.9 million for the three months ended May 31, 2008 as compared to the prior year period. Our operating margin during the third quarter of fiscal 2008 was 32.5%, up 10 basis points from 32.4% a year ago. For the nine months ended May 31, 2008, income from operations advanced 18.9% to $133.7 million as compared to $112.4 million in the same period a year ago. Our operating margin during the first nine months of fiscal 2008 was 31.7%, down 80 basis points from 32.5% a year ago. However, excluding the pre-tax charge of $2.4 million from performance-based stock options recorded in the second quarter of fiscal 2008, non-GAAP operating margin improves to 32.3% for the first nine months of fiscal 2008.

Other Income, Income Taxes, Net Income and Earnings per Share

Other Income

During the three months ended May 31, 2008, other income decreased $1.3 million or 60.2%, year over year. Other income declined $1.1 million or 20.3% during the first nine months of fiscal 2008 as compared to the same period a year ago. The decline in other income during fiscal 2008 was a result of the Federal Reserve lowering U.S. interest rates by 3.5% over the last nine months and our reallocation of investments to U.S. government backed securities.

Income Taxes

For the three months ended May 31, 2008, the provision for income taxes increased to $16.2 million from $12.8 million in the comparable prior year period. For the nine months ended May 31, 2008, the provision for income taxes increased to $46.5 million from $39.0 million in the comparable prior year period. Our effective tax rate for the three months ended May 31, 2008 was 33.3%, an increase of 2.4% from an effective tax rate of 30.9% in the same period a year ago. Our effective tax rate during the third quarter of fiscal 2007 was lower due to $1.9 million of tax benefits primarily related to deductions for fiscal 2006. In addition, the fiscal 2008 effective tax rate has been adversely impacted from the expiration of the U.S. Federal R&D tax credit on December 31, 2007. The expiration caused our effective tax rate to increase in fiscal 2008.

Net Income and Earnings per Share

Net income rose 13.9% to $32.5 million and diluted earnings per share increased 16.1% to $0.65 for the three months ended May 31, 2008. During the first nine months of fiscal 2008, net income advanced 16.0% to $91.4 million and diluted earnings per share increased 18.2% to $1.82 as compared to same period a year ago. Excluding the $1.9 million of tax benefits recorded in the year ago third quarter, non-GAAP net income and non-GAAP diluted earnings per share increased 22.0% and 25.0%, respectively, in the third quarter of fiscal 2008 as compared to the same period a year ago. Excluding the pre-tax charge of $2.4 million in the second quarter of fiscal 2008 related to an increase in the estimate of the number of performance-based stock options that will vest in August 2008, non-GAAP net income and non-GAAP diluted earnings per share advanced 19.0% and 21.4%, respectively, for the nine months ended May 31, 2008 as compared to the same period a year ago.

Use of non-GAAP Financial Measures

Financial measures in accordance with generally accepted accounting principles (“GAAP”) including operating margins, net income and diluted earnings per share have been adjusted to report non-GAAP financial measures that exclude $1.9 million of tax benefits and a charge of $2.4 million related to an increase in the estimate of the number of performance-based stock options that will vest in August 2008. We use these non-GAAP financial measures, both in presenting our results to shareholders and the investment community, and in our internal evaluation and management of the businesses. We believe that these financial measures and the information we provide are useful to investors because it permits investors to view our performance using the same tool that management uses to gauge progress in achieving our goals. Investors may benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods and may also facilitate comparisons to our historical performance.

Foreign Currency

Certain wholly owned subsidiaries within the European and Asia Pacific segments operate under a functional currency different from the U.S. dollar. The financial statements of these foreign subsidiaries are translated into U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates for the period for revenues and expenses. Translation gains (losses) that arise from translating assets, liabilities, revenues and expenses of foreign operations are recorded in accumulated other comprehensive income as a component of stockholders’ equity.

Our primary foreign currency exchange exposures are related to our operating expense base in countries outside the U.S., where approximately 30% of our employees are located. To limit our financial exposure related to the effects of foreign exchange rate fluctuations, we may utilize derivatives (foreign currency contracts). We do not enter into foreign currency forward contracts for trading or speculative purposes.

We entered into foreign currency forward contracts to reduce the short-term effects of foreign currency fluctuations during fiscal 2008. At May 31, 2008, the aggregated notional amount of all foreign currency forward contracts outstanding was 1.0 million Euros, a decrease from 3.5 million Euros as of the beginning of the fiscal third quarter. These transactions are designated as cash flow hedges. The effective portion of the derivative’s gain or loss is initially reported as a component of accumulated other comprehensive income and subsequently reclassified into earnings when the hedged exposure affects earnings. We did not enter into any new foreign currency forward contracts during the third quarter of fiscal 2008.

CONF CALL

Peter Walsh

Welcome to FactSet’s fourth quarter earnings conference call. Joining me today are Phil Hadley, Chairman and CEO, Mike DiChristina, President and Chief Operating Officer, Mike Frankenfield, Director of our US Investment Management business, and Scott Beyer, Head of our non-US business.

This conference call is being transcribed in real time by FactSet’s call-free service and is being broadcast live via the Internet at factset.com. A replay of this call will also be available on our website.

Our call will contain forward-looking statements reflecting management’s current expectation based on currently available information. Actual results may differ materially. More information about factors that could affect FactSet’s business and financial results are in FactSet’s filings with the SEC. Lastly, FactSet undertakes no obligation to publicly update any forward-looking statements as a result of new information, future events, or otherwise.

We’ll divide our time today in three ways. First, we’ll review fourth quarter results. Then I’ll cover guidance for the upcoming first quarter of fiscal 2009, including our current thinking on the AAC [sic] impact from historic changes and consolidation in the financial services industry. Finally, we’ll close with our management team addressing your questions.

Before covering results I’d like to take a moment to highlight two items. One, on July 24th FactSet completed its acquisition of a copy of the Thomson Fundamentals database. Our product line is now branded as FactSet Fundamentals and resulted in EPS dilution of one penny per share in Q4. We reported in our earnings release GAAP and non-GAAP financial measures. Operating income, net income, and EPS have been adjusted where appropriate to exclude the acquisition of Thomson Fundamentals and the $1.1 million tax benefit in Q4 last year. Reconciliations between GAAP and non-GAAP financial measures are also included in the earnings press release, which can be found at our website under the investor relations section.

Two, like last year, we added a supplementary schedule in today’s press release that summarizes revenues related to FactSet services that are not included in our calculation of ASV, or annual subscription value. These revenues are not material, but we disclosed it to aid in investors’ ability to make more precise interpretations and forecasts of FactSet’s revenue.

Moving on to the fourth quarter. Overall we had a strong quarter. We delivered revenue growth of 19%, operating margins of 33%, and another quarter of impressive free cash flow. Performance was driven by our investment management business. During Q4 our US investment management team added more clients on a net basis than any quarter since February 2007. Our non-US IM business continued to expand its presence using Marquee and PA, which contributed to the 23% revenue growth rate outside the US.

On the sell side, while the positive ASV change was not significant, user accounts rose again on a net basis during the quarter. Since the turmoil in the credit markets commenced more than a year ago, our IB team has increased users by 16%. This performance contrasts very favourably to the last period of prolonged disorder in the world financial markets. During a similar time, post-9/11, we lost 3,000 cell site users resulting in a decline of users of 22%. The increase in users this year demonstrates the significant improvement in our product offerings and that our sales and consulting talent continues to deliver superlative service that synonymous with FactSet.

Finally, we continue to invest for the future in areas very familiar to us. FactSet Fundamentals was released in August and our buy-and-sell site teams have begun to chip away at what we believe is a $100 million annual revenue opportunity just among our existing clients.

Let’s begin the highlights of the quarter with free cash flow. Free cash flow captures all the balance sheet and P&L movements. As a reminder, we define free cash flow as cash generated from operations, which includes the cash cost for taxes and changes in working capital less capital spending. Excluding FactSet Fundamentals, free cash flows generated during the fourth quarter were $39 million and $116 million over the fiscal year. Drivers of free cash flow during Q4 were record levels of net income, a 19% increase in non-cash expenses, a $6 million improvement in working capital partially offset by a $10 million of capital expenditures.

When considering free cash flow for the upcoming first quarter please factor in that FactSet pays variable employee compensation related to the previous fiscal year in the first quarter. This cash outlay will approximate $33 million in the first quarter of fiscal 2009. It is included in the crude compensation and is represented as a liability on our balance sheet at August 31st.

Capital expenditures net of landlord contributions in the fourth quarter were $9.6 million. Expenditures for computer equipment were $5.7 million and the remainder covered office space expansion. Major expenditures included adding four HP Integrity mainframes to our data centres and building up new space in Paris, Chicago, and Norwalk.

Our ending cash and marketable security balances was $143 million, down $49 million over the past three months. During Q4 we invested $67 million in connection with the purchase of Thomson Fundamentals, $12 million to repurchase common stock, and paid a dividend of $9 million, up 50% from Q3. At quarter end there was $105 million in remaining share repurchase authorization and share outstanding were $48 million.

Now moving to the P&L. Revenues were $153.7 million, up 19% versus a year ago. Our revenue growth rate was unaffected by FactSet Fundamentals. Excluding FactSet Fundamentals, non-GAAP operating income advanced 20% to $51.3 million and non-GAAP net income rose 16% to $34.3 million in the fourth quarter. The growth rate of net income was tempered by a 65% decline in interest income from lower US interest rates over the past 12 months.

Let’s take a look at the revenue drivers during Q4. ASV increased $25.5 million organically when excluding currency and $2 million acquired from Thomson. The increase during the quarter was derived from strong performance from both the US and non-US investment management businesses. At August 31, 2008, ASV was $615 million, up 19% from a year ago. Excluding acquisitions and currency ASV grew 18% organically or $92.6 million over the last year. As a reminder, we define annual subscription value, or ASV, as the forward-looking revenues for the next 12 months from all subscription services currently being supplied to our clients.

Professionals using FactSet increased to 40,100, up 500 users during the quarter. Find count rose to 2,085 as of August 31st, a net increase of 41 clients.

Let’s turn to the trends we see in our client base. On the sell side, obviously these are the most difficult times in recent history. Nevertheless, while the positive ASV change was not significant, user count rose again on the net basis during the quarter. Over the last 12 months, FactSet’s sell-side user base has grown 16%. We’re very proud of that growth and the effort our product development sales and consulting teams have put forth to improve our market share. While the overall franchise value of large investment banks has declined significantly, our user count signals that the business groups at FactSet services is not where the problems lie for our sell-side clients. As a reminder, our services are focused on MNA bankers and equity research professionals, both long-time, low-risk activities that we expect will continue far into the future.

A company is normally impacted by the fortune of their clients and FactSet is no difference. While our guidance for Q1 quantifies the short-term ASV exposure from the disruption among sell-site firms, it also indicates that our correlation is not one-to-one. Our investment management business had a very strong quarter and is 79% of total ASV. In the United States the sequential quarterly change in ASV doubled compared to the just-completed third quarter. New clients were a significant contributor. In Q4, US IM business registered the highest quarterly change in net new clients since the February 2007 quarter. FactSet’s ability to offer firms the opportunity to consolidate services and recognize cost savings is real.

The combination of advanced applications, including Marquee and PA2.0, with a vast array of data supported by Blue Chip services, appeals to both existing and prospective clients.

Outside the US the story is similar. Our investment management business delivered healthy growth driven by Portfolio Analytics, Risk, and Marquee. We’re beginning to see demand for Marquee from managers focused on global equity. Marquee users outside the US more than doubled over the past year. Looking ahead, we think FactSet Fundamentals will simplify the sales process. The number of instances where a competitor to FactSet is entangled in a new sales opportunity is likely to decline.

Worldwide, Marquee users are up 45% year over year. Demand for advanced services in computing power related to portfolio analysis, risk, and quantitative analysis also continues throughout the client base. At quarter end, PA2.0 was deployed by 637 clients, up 18% over the prior year. There were 5,730 users of PA at quarter end, an increase of 22%. We are also pleased with the sales of access proprietary content, particularly FactSet estimates.

The US business produced revenues of $106 million in the fourth quarter, up 16%. Revenues from overseas increased to $48 million. Keeping currencies constant in the growth rate from the non-US operations was 23%. By region, quarterly revenues from our European and Pacific Rim operations were $38 million and $10 million respectively.

ASV by non-US based clients grew to $195 million, representing 32% of the company-wide total. Client retention remained above 95%, once again confirming the high quality of our product suite and of our client base.

Moving to expenses for the quarter, operating expenses were $103.5 million and our operating margin was 32.7%. Excluding FactSet Fundamentals, operating margins were 33.4%, a 90 basis increase from Q3. This margin increase is temporary and primarily the result of workstations sold to summer interns in the fourth quarter.

The change in expenses that I will now reference excludes the impact of FactSet Fundamentals. At the end I’ll sum up the financial effect of FactSet Fundamentals on the fourth quarter.

Cost of sales as a percentage of revenues was very consistent with Q4 last year, up just 10 basis points. Higher compensation was partially offset by lower computer maintenance and amortization of intangibles. The decrease in computer maintenance is a result of replacing all mainframes and both data centres over the past year. The decrease in amortization expense was caused by the full amortization of certain assets from previous acquisitions compared to previous years. The increase in compensation was driven by new employees.

SG&A expressed as a percentage of revenues declined 50 basis points year over year. This decrease was driven by lower occupancy costs and marketing expenses partially offset by higher compensation costs. The decrease in occupancy costs was caused by leveraging our existing space. Lower marketing costs were the result of keeping our investment levels consistent with last year while growing our revenue base. Higher compensation costs were driven by more employees.

Employee count as of August 31st, 2008, was 1,934, up 6% during Q4. Excluding acquisitions, head count rose 16% from a year ago.

Regarding FactSet Fundamentals, these activities reduce Q4 operating income by $1.1 million and EPS by a penny. The EPS dilution was lower than guidance provided on last quarter’s call due to the transaction closing in late July. As mentioned earlier, the revenue was immaterial and did not impact our overall revenue growth rate. The majority of costs were from amortization of deal costs, including the daily database updates. We did add incremental employees, but the large majority of hiring will occur over the next 12 months.

Lower US interest rates causes interest income to decrease 65% to $800,000 versus prior year. This decline is the reason why our growth rates in revenues and operating income were higher than net income in EPS. At no time during the year did a competent of FactSet’s cash investments encounter a write off or a decline in value due to a ratings change, default, or increase in counter party credit risks.

Our effective tax rate for the quarter was 34.2%. This rate is consistent with the prior year, excluding the $1.1 million tax benefit in Q4 last year.

Let’s now turn to the outlook for fiscal 2009’s first quarter. Revenues are expected to range between $154 million and $157 million. The high and low end of the range has been decreased to account for a potential future reductions in services to Lehman Brothers, Merrill Lynch, AIG, and Washington Mutual. FactSet believes the related exposure is approximately 1.5% of ASV or $10 million. The mid-point of this range represents 16% revenue growth year over year. Also, as a reminder, the just completed fourth quarter also included $1.4 million in non-subscription revenues from workstations sold for summer interns.

Operating margins, excluding FactSet Fundamentals, are expected to range between 31.5% and 33%. This guidance assumes a reduction in sequential quarterly margins of 90 basis points due to workstations sold to summer interns in the fourth quarter. Other income is expected to be between $600,000 and $1 million.

The effective tax rate is expected to range between 33.8% and 34.6% and assumes the US federal R&D tax credit is not re-enacted.

EPS dilution from FactSet Fundamentals remains at $0.04 per share. The primary expense drivers are the amortization of deal costs, including the database updates from Thomson and new employee growth to support the collection operations.

For the full year of fiscal 2009, capital expenditures net of landlord contributions are expected to range between $32 million and $38 million.

In closing, as a public company we have reported results for 50 fiscal quarters. Our revenues and ASV have grown sequentially every quarter for the last 12 years. There are only three other US public companies that can state that claim. Our model is fuelled by broad-based growth along several vectors. We’re not relying on a single client, application, database, or geography.

Today, FactSet’s base of 40,000 users represents a single-digit percentage of the total professional investment user community. It will remain that way after the dust settles on the recently announced mergers involving several large financial service firms. Our largest competitors produce revenues in aggregate that exceed $12 billion, an amount that is 20 times our trailing 12-month revenues of $575 million.

To sum it up, the good news for our shareholders and our employees is that we’re not relying on a growing market to be successful. Thank you. We’re now ready for your questions.

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