FactSet Research Systems EPS Up 14% for the Third Quarter of Fiscal 2012
NORWALK, Conn., June 12, 2012 (GLOBE NEWSWIRE) -- FactSet Research Systems Inc. (NYSE:FDS) (Nasdaq:FDS), a leading provider of integrated financial information and analytical applications to the global investment community, today announced its results for the third quarter of fiscal 2012. GAAP Results
For the quarter ended May 31, 2012 revenues increased to $202.3 million, up 10% compared to the prior year. Operating income for the third quarter rose to $68.5 million from $61.8 million in the same period of fiscal 2011. Net income advanced to $48.0 million compared to $43.3 million a year ago. Diluted earnings per share increased to $1.05, up from $0.92 in the same period of fiscal 2011. Non-GAAP Results
Non-GAAP net income advanced 9% to $52.8 million and non-GAAP diluted earnings per share increased 13% to $1.15. Quarterly free cash flow was $70.2 million during the third quarter of fiscal 2012 as compared to $57.1 million a year ago.
GAAP financial measures including net income and diluted earnings per share have been adjusted to exclude stock-based compensation expense and amortization of intangible assets. A reconciliation between GAAP and non-GAAP financial measures is presented on page 8 of this press release. Consolidated Statements of Income
"While the economy remains volatile, results indicate our philosophy of consistently investing for the future is paying off. Today we announced EPS growth of 14% and record free cash flow of $70 million generated in just the past three months," says Philip Hadley, Chairman and CEO. "In addition, our third quarter results mark yet another milestone for the Company as we surpassed $200 million in quarterly revenues." Annual Subscription Value ("ASV")
ASV was $811 million at May 31, 2012, up 9% over the prior year. Of this total, 80% is derived from buy-side clients and the remainder is from the sell-side firms who perform M&A advisory work and equity research. ASV advanced $8 million during the third quarter. Over the past three months, users increased by 1,100 to 48,400, primarily from additions at sell-side firms. ASV at any given point in time represents the forward-looking revenues for the next 12 months from all services currently being supplied to clients. Financial Highlights —Third Quarter of Fiscal 2012 Operational Highlights — Third Quarter of Fiscal 2012 Business Outlook
The following forward-looking statements reflect FactSet's expectations as of June 12, 2012. Given the number of risk factors, uncertainties and assumptions discussed below, actual results may differ materially. The Company does not intend to update its forward-looking statements until its next quarterly results announcement, other than in publicly available statements.
Fourth Quarter Fiscal 2012 Expectations Conference Call
The Company will host a conference call today, June 12, 2012, at 11:00 a.m. (EDT) to review the third quarter fiscal 2012 earnings release. To listen, please visit the investor relations section of the Company's website at www.factset.com. Forward-looking Statements
This news release contains forward-looking statements based on management's current expectations, estimates and projections. All statements that address expectations or projections about the future, including statements about the Company's strategy for growth, product development, market position, subscriptions, expected expenditures and financial results are forward-looking statements. Forward-looking statements may be identified by words like "expected," "anticipates," "plans," "intends," "projects," "should," "indicates," "continues," "subscriptions" and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in FactSet's filings with the Securities and Exchange Commission, particularly its latest annual report on Form
10-K and quarterly reports on Form 10-Q, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, the current status of the global economy; the ability to integrate newly acquired companies and businesses; the stability of global securities markets; the ability to hire qualified personnel; the maintenance of the Company's leading technological position; the impact of global market trends on the Company's revenue growth rate and future results of operations; the negotiation of contract terms with corporate vendors, data suppliers and potential landlords; the retention of key clients; the successful resolution of ongoing audits by tax authorities; the continued employment of key personnel; the absence of U.S. or foreign governmental regulation restricting international business; and the sustainability of historical levels
of profitability and growth rates in cash flow generation. About Non-GAAP Financial Measures
Financial measures in accordance with generally accepted accounting principles ("GAAP") including net income and diluted earnings per share have been adjusted to report non-GAAP financial measures. These measures exclude stock-based compensation expense and amortization of intangible assets. FactSet uses these non-GAAP financial measures, both in presenting its results to stockholders and the investment community, and in its internal evaluation and management of the businesses. The Company believes that these financial measures and the information they provide are useful to investors because it permits investors to view the Company's performance using the same tools that management uses to gauge progress in achieving its goals. Investors may benefit from referring to these non-GAAP financial measures in assessing the Company's performance and when planning, forecasting and analyzing
future periods and may also facilitate comparisons to its historical performance. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see page 8 of this release. About Non-GAAP Free Cash Flow
The GAAP financial measure, cash flows provided by operating activities, has been adjusted to report non-GAAP free cash flow that includes the cash cost for taxes and changes in working capital, less capital expenditures. Included in the just completed third quarter was $76.4 million of net cash provided by operations and $6.2 million of capital expenditures. The presentation of free cash flow is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. FactSet uses this financial measure, both in presenting its results to stockholders and the investment community, and in the Company's internal evaluation and management of the businesses. Management believes that this financial measure is useful to investors because it permits investors to view the Company's performance using the same metric that
management uses to gauge progress in achieving its goals and is an indication of cash flow that may be available to fund further investments in future growth initiatives. About FactSet
FactSet 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 26 locations worldwide, including Boston, New York, Chicago, San Mateo, London, Amsterdam, Frankfurt, Paris, Milan, Dubai, Tokyo, Hong Kong, Hyderabad, Mumbai, Manila, and Sydney. To learn more about FactSet, visit www.factset.com and follow us on Twitter:
www.twitter.com/factset.
Financial measures in accordance with GAAP including net income and diluted earnings per share have been adjusted in this earnings release to report non-GAAP financial measures. FactSet uses these non-GAAP financial measures, both in presenting its results to stockholders and the investment community, and in its internal evaluation and Company believes that these financial measures and the information they provide are useful to investors because it permits investors to view the Company's performance using the same tools that management uses to gauge progress in achieving its goals. Non-GAAP measures may also facilitate comparisons to FactSet's historical performance.
(a) For the purposes of calculating the non-GAAP measures above, stock-based compensation expense and amortization of intangible assets are taxed at the effective tax rates. For the three months ended May 31, 2012, the effective tax rate was 30.4%. For the three months ended May 31, 2011, the effective tax rate was 30.1%.
(b) The sum of the diluted earnings per share may not equal the totals above due to rounding.
(Condensed and Unaudited)
Three Months Ended
May 31,
Nine Months Ended
May 31,(In thousands, except per share data)
2012
2011
Change
2012
2011
Change
Revenues
$202,311
$183,647
10.2
%
$598,130
$534,571
11.9
%
Operating income
68,494
61,823
10.8
%
202,363
179,345
12.8
%
Provision for income taxes
20,997
18,684
12.4
%
63,349
49,608
27.7
%
Net income
$47,980
$43,311
10.8
%
$140,270
$130,166
7.8
%
Diluted earnings per share
$1.05
$0.92
14.1
%
$3.05
$2.75
10.9
%
Diluted weighted average shares
45,736
47,154
45,971
47,418
Non-GAAP net income
$52,823
$48,248
9.5
%
Non-GAAP diluted earnings per share
$1.15
$1.02
12.7
%
FactSet Research Systems Inc.
Consolidated Statements of Income - Unaudited
Three Months Ended
May 31,
Nine Months Ended
May 31,
(In thousands, except per share data)
2012
2011
2012
2011
Revenues
$202,311
$183,647
$598,130
$534,571
Operating expenses
Cost of services
68,878
62,224
203,243
179,146
Selling, general and administrative
64,939
59,600
192,524
176,080
Total operating expenses
133,817
121,824
395,767
355,226
Operating income
68,494
61,823
202,363
179,345
Other income
483
172
1,256
429
Income before income taxes
68,977
61,995
203,619
179,774
Provision for income taxes
20,997
18,684
63,349
49,608
Net income
$47,980
$43,311
$140,270
$130,166
Diluted earnings per common share
$1.05
$0.92
$3.05
$2.75
Diluted weighted average common shares
45,736
47,154
45,971
47,418
FactSet Research Systems Inc.
Consolidated Statements of Financial Condition - Unaudited
May 31,
August 31,
(In thousands)
2012
2011
ASSETS
Cash and cash equivalents
$228,530
$181,685
Investments
13,566
--
Accounts receivable, net of reserves
66,568
75,004
Prepaid taxes
2,792
--
Deferred taxes
3,803
4,008
Prepaid expenses and other current assets
13,436
12,473 Total current assets
328,695
273,170
Property, equipment, and leasehold improvements, net
77,173
81,620
Goodwill
221,757
228,265
Intangible assets, net
38,298
46,310
Deferred taxes
22,34
20,166
Other assets
6,252
7,909
TOTAL ASSETS
$694,519
$657,440
LIABILITIES
Accounts payable and accrued expenses
$28,416
$24,603
Accrued compensation
33,980
41,536
Deferred fees
29,901
28,252
Taxes payable
--
2,867
Dividends payable
13,893
12,165 Total current liabilities
106,190
109,423
Deferred taxes
2,536
3,712
Taxes payable
5,249
7,204
Deferred rent and other non-current liabilities
20,158
21,913
TOTAL LIABILITIES
$134,133
$142,252
STOCKHOLDERS' EQUITY
Common stock
$455
$614
Additional paid-in capital
125,723
432,538
Treasury stock, at cost
(60,559)
(824,382)
Retained earnings
524,903
912,078
Accumulated other comprehensive loss
(30,136)
(5,660)
TOTAL STOCKHOLDERS' EQUITY
560,386
515,188
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$694,519
$657,440
FactSet Research Systems Inc.
Consolidated Statements of Cash Flows - Unaudited
(In thousands)
Nine Months Ended
May 31,
2012
2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$140,270
$130,166
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization
25,046
27,950
Stock-based compensation expense
17,074
15,352
Deferred income taxes
(3,149)
(483)
Gain on sale of assets
(1)
(3)
Tax benefits from share-based payment arrangements
(10,441)
(17,073)
Changes in assets and liabilities
Accounts receivable, net of reserves
8,331
(7,844)
Accounts payable and accrued expenses
939
(1,511)
Accrued compensation
(6,587)
(17,179)
Deferred fees
1,680
4,987
Taxes payable, net of prepaid taxes
3,093
8,919
Prepaid expenses and other assets
439
(5,150)
Deferred rent and other non-current liabilities
(1,180)
(166)
Other working capital accounts, net
(618)
(969)
Net cash provided by operating activities
174,896
136,996
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments
(15,000)
--
Purchases of property, equipment and leasehold improvements, net of proceeds from dispositions (16,863) (22,806)
Net cash used in investing activities
(31,863)
(22,806)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments
(36,183)
(31,655)
Repurchase of common stock
(87,112)
(132,951)
Proceeds from employee stock plans
27,476
37,936
Tax benefits from share-based payment arrangements 10,441 17,073
Net cash used in financing activities
(85,378)
(109,597)
Effect of exchange rate changes on cash and cash equivalents
(10,810)
8,334
Net increase in cash and cash equivalents
46,845
12,927
Cash and cash equivalents at beginning of period 181,685 195,741
Cash and cash equivalents at end of period
$228,530
$208,668
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Three Months Ended
May 31,
(In thousands, except per share data)
2012
2011
Change
GAAP Net income
$47,980
$43,311
Stock-based compensation, net of tax (a)
3,584
3,475
Amortization of intangible assets from acquisitions, net of tax (a)
1,259
1,462
Non-GAAP net income
$52,823
$48,248
9.5%
GAAP Diluted earnings per common share
$ 1.05
$ 0.92
Stock-based compensation, net of tax
0.08
0.07
Amortization of intangible assets from acquisitions, net of tax
0.03
0.03
Non-GAAP diluted earnings per share (b)
$ 1.15
$ 1.02
12.7
% CONTACT: Rachel Stern
FactSet Research Systems Inc.
203.810.1000