8K-3q2003

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


Form 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported):   June 17, 2003


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)
     
     
One Greenwich Plaza
Greenwich, Connecticut   06830-6352
(Address of principal executive offices)
     
     
(203) 863-1500
(Registrant’s telephone number, including area code)
     
     
     
Not Applicable
(Former name or former address, if changed since last report)

 


 

Item 7.    Financial Statements and Exhibits 


                 (c)         Exhibits


 
Exhibit    
 No.   Description
 –––––   ––––––––––––––––––––––––––––––
 99.1    Press Release, dated as of June 16, 2003

 

Item 12.    Results of Operations and Financial Condition

On June 16, 2003, FactSet Research Systems Inc. issued a press release announcing its results for the three and nine months ended May 31, 2003. 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.

 

 

SIGNATURES

 

       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 thereunto duly authorized.

 
FACTSET RESEARCH SYSTEMS INC.
      (Registrant)
       By:
     
Date: August 1, 2003         /s/ ERNEST S. WONG
        ––––––––––––––––––––––––––––––––––
        Ernest S. Wong,
        Senior Vice President, Chief Financial Officer,
        Treasurer and Secretary

 

 

 

EXHIBIT 99.1

EXHIBIT INDEX


 
Exhibit    
 No.   Description of Document
 –––––   ––––––––––––––––––––––––––––––––––––––––––––––––––––––––
 99.1    Press Release of Registrant, dated June 16, 2003 reporting the results of
      operations for the Registrant’s third fiscal quarter ended May 31, 2003.

 

 

FactSet Research Systems Inc.
One Greenwich Plaza
Greenwich, Connecticut   06830-6352
203.863.1500/ 203.863.1501 Fax



News Release


FOR IMMEDIATE RELEASE

FactSet Research Systems Reports Record Revenues for Third Quarter of Fiscal 2003

Greenwich, Conn. — June 17, 2003 — FactSet Research Systems Inc. (NYSE: FDS), a major supplier of computer-based financial and economic data to the investment community, today announced record results for its fiscal third quarter ended May 31, 2003. Revenues for the quarter grew 12.8% to $59.1 million while operating income rose 21.0% to $19.5 million. Net income increased 37.8% to $14.3 million and diluted earnings per share increased 41.4% to $0.41 for the quarter ended May 31, 2003. Included in the third quarter of fiscal 2003 is an income tax benefit of $1.3 million which increased diluted earnings per share by $0.04.

For the nine months ending May 31, revenues advanced 12.4% to $170.6 million and operating income increased 26.2% to $56.3 million. Net income rose to $38.0 million while earnings per share grew 29.4% to $1.10. The income tax benefit of $1.3 million recognized in the third quarter of fiscal 2003 resulted in a $0.04 increase in earnings per share the first nine months of fiscal 2003. During the first nine months of fiscal 2002, FactSet incurred a data center relocation charge of $904,000 and also recorded an income tax benefit of $893,000 which together resulted in a net $0.01 increase in diluted earnings per share.


                       
FactSet Research Systems Inc.
Consolidated Statements of Income (Condensed and Unaudited)
 
  Three Months Ended Nine Months Ended
  May 31,
 May 31,
(In thousands, except per share data) 2003   2002   Change   2003   2002   Change
Revenues $59,106   $52,416       12.8 %   $170,574   $151,792       12.4 %
Operating income 19,503   16,121       21.0   56,255   44,578       26.2
Net Income 14,268   10,352       37.8   37,951   29,680       27.9
Diluted earnings per share $0.41   $0.29       41.4   $1.10   $0.85       29.4
Diluted weighted average common shares 34,607   35,221       34,626   34,913    

“We are pleased to report that our business continued to expand during this past fiscal quarter despite continued weakness in the financial services industry,” said Philip A. Hadley, Chairman and CEO. “Our operating results and client retention, which remained in excess of 95%, confirm the value of FactSet’s services to our clients.”

As of May 31st, the Company’s 942 clients, representing approximately 19,000 users, subscribed to services totaling $235.9 million in subscriptions, an increase of 10.8% over the past 12 months. At the end of the third fiscal quarter of 2003, the Company had 743 employees servicing its clients. “Subscriptions” at any given point in time represent the forward-looking revenues for the next 12 months from all services currently being supplied to clients.

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Other operational highlights of the third quarter of fiscal 2003 include:

  •   Demand for FactSet’s Portfolio Managers Workstation (PMW) applications continued to advance, with 340 clients, consisting of approximately 2,500 users, subscribing to the service as of May 31, 2003.
  •   Revenues from FactSet’s European and Pacific Rim operations were $8.7 million and $2.5 million, an increase of 13% and 4%, respectively, from the same period in fiscal 2002.
  •   During the third quarter of fiscal 2003, the Mergerstat publication revenue resulted in an additional $400,000 in revenue. Revenue from Mergerstat publications is not included in the Company’s annual subscription total.
  •   Included in the fiscal third quarter of 2003 is an income tax benefit of $1.3 million resulting from additional federal tax planning and certain changes in estimates relating to fiscal 2002. In addition, the tax planning is also the primary reason for the Company’s reduced annualized effective tax rate of 36.7% expected for fiscal 2003.
  •   FactSet held its first Application Development Conference in Boston, Massachusetts on May 8, 2003. The conference focused on the issues surrounding the development of analytical applications for the financial industry.

Business Outlook
The following forward-looking statements reflect FactSet’s expectations as of June 17, 2003. 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 2003 Expectations  
  •   Revenues are expected to range between $58.5 million and $60.0 million.
  •   Operating margins should be comparable with the first nine months of fiscal 2003.
  •   The effective tax rate should be approximately 36.7%.

Full Year Fiscal 2003    
  •   Capital expenditures should total approximately $9 million, a reduction of $3 million from guidance previously
given by the Company.

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 and 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, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, the ability to hire qualified personnel; 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 supporting new and existing databases; 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.

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Conference Call
The Company will host a conference call today, June 17th, at 11:00 a.m. (EST) to review the third quarter 2003 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. is a leading provider of global financial and economic information, including fundamental data on tens of thousands of companies worldwide. Combining more than 200 databases into its own dedicated online service, the Company also provides the tools to download, combine and manipulate the data for investment analysis.
The Company, headquartered in Greenwich, Connecticut, was formed in 1978 and now conducts operations from seventeen locations worldwide including Boston, New York, Chicago, San Mateo, London, Tokyo, Hong Kong, Sydney and Frankfurt.

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FactSet Research Systems Inc.
Consolidated Statements of Financial Condition
       
       
(In thousands and unaudited) May 31,    August 31,   
ASSETS 2003    2002   
 
Cash and cash equivalents $  39,808     $  44,819  
Investments 113,188     86,017  
Receivables from clients and clearing brokers, net 36,564     33,164  
Receivables from employees 206     399  
Deferred taxes 6,245     6,085  
Other current assets     1,828         1,579  
       Total current assets 197,839     172,063  
Property, equipment and leasehold improvements, net 20,195     27,555  
Goodwill 13,677     9,861  
Intangible assets, net 5,385     1,589  
Deferred taxes 4,172     4,333  
Other assets       2,108           2,010  
       Total Assets $243,376     $217,411  
  =======     =======  
LIABILITIES AND STOCKHOLDERS’ EQUITY    
     
Accounts payable and accrued expenses $  13,901     $  11,427  
Accrued compensation 12,841     13,590  
Deferred fees and commissions 10,229     11,669  
Dividends payable 2,012     1,689  
Current taxes payable    4,053        1,523  
       Total current liabilities 43,036     39,898  
Other non-current liabilities      575          547  
       Total liabilities 43,611   40,445
  =====   =====
Stockholders’ Equity:  
       Common stock 343   340
       Capital in excess of par value 40,441   33,803
       Retained earnings 182,144   149,561
       Treasury stock   ( 23,309 )     ( 6,880 )
       Accumulated other comprehensive income        146          142
       Total stockholders’ equity 199,765   176,966
       
Total liabilities and stockholders’ equity $243,376   $217,411
  =======   =======


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FactSet Research Systems Inc.
Consolidated Statements of Income
 
Three Months Ended Nine Months Ended
May 31,
 May 31,
(In thousands, except per share data and unaudited)      2003      2002        2003      2002
 
Commissions $17,109   $15,598     $49,404   $44,477  
Cash fees 41,997   36,818     121,170   107,315  
       Total subscription revenues 59,106   52,416     170,574   151,792  
                   
Cost of services 18,947   17,339     54,653   50,238  
Selling, general and administrative 20,656   18,956     59,666   56,072  
Data center relocation charge       ––         ––           ––        904  
                   
Total operating expenses 39,603   36,295     114,319   107,214  
                   
Income from operations 19,503   16,121     56,255   44,578  
                   
Other income       509         522       1,651     1,704  
                   
Income before income taxes 20,012   16,643     57,906   46,282  
                   
Provision for income taxes     5,744       6,291     19,955   16,602  
                   
Net income $14,268   $10,352     $37,951   $29,680  
  ======   ======     ======   ======  
                   
Basic earnings per common share $0.43   $0.31     $1.13   $0.88  
  ====   ====     ====   ====  
Diluted earnings per common share $0.41   $0.29     $1.10   $0.85  
  ====   ====     ====   ====  
Weighted average common shares (Basic) 33,455   33,746     33,624   33,590  
  =====   =====     =====   =====  
Weighted average common shares (Diluted) 34,607   35,221     34,626   34,913  
  =====   =====     =====   =====  


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FactSet Research Systems Inc.  
Consolidated Statements of Cash Flows       Nine Months Ended
          May 31,
(In thousands and unaudited) 2003     2002  
CASH FLOWS FROM OPERATING ACTIVITIES          
Net income $37,951     $29,680  
Adjustments to reconcile net income to net cash provided by operating activities        
     Depreciation and amortization 13,010     13,848  
     Deferred tax benefit (expense) 1     ( 1,493 )
     Accrued ESOP contribution   1,746       1,620  
Net income adjusted for non-cash items 52,708     43,655  
Changes in assets and liabilities      
     Receivables from clients and clearing brokers ( 3,400 )   2,010  
     Receivables from employees 193     20  
     Accounts payable and accrued expenses 2,474     3,831  
     Accrued compensation ( 335 )   1,070  
     Deferred fees and commissions ( 1,984 )   67  
     Current taxes payable 2,530     ( 2,543 )
     Other working capital accounts, net ( 279 )   80  
Income tax benefits from stock option exercises      841       1,638
Net cash provided by operating activities 52,748   49,828
           
CASH FLOWS FROM INVESTING ACTIVITIES  
Acquisition of business, net of acquired assets ( 7,702 )   100  
Purchases of investments, net of sales ( 27,167 )   ( 29,175 )
Purchases of property, equipment and leasehold improvements, net of retirements ( 5,047 )   ( 7,117 )
Net cash used in investing activities ( 39,916 )   ( 36,192 )
           
CASH FLOWS FROM FINANCING ACTIVITIES  
Dividend payments  ( 4,772 )    ( 3,780 )
Repurchase of common stock ( 16,429 )   ( 2,282 )
Proceeds from employee stock plans   3,358     3,409
Net cash used in financing activities ( 17,843 )   ( 2,653 )
           
Net (decrease) increase in cash and cash equivalents ( 5,011 )   10,983  
Cash and cash equivalents at beginning of period   44,819       38,583  
Cash and cash equivalents at end of period $39,808     $49,566  
  ======     ======  


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