This is a summary of the fourth quarter fiscal 2007 earnings call conducted by FactSet Research Systems, Inc. (FDS: chart) on September 25th, 2007.

Management:
Chairman and CEO: Philip A. Hadley
President, COO: Michael F. DiChristina
Sr. VP and Director of US Investment Management Services: Michael D. Frankenfield
Director of Investment Banking and Brokerage Services: Kieran Kennedy

Key Investor Issues

- Earnings for the quarter rose to $30.7 million, or 60 cents per share, from $23.4 million, or 46 cents per share, during the same quarter a year ago.
- Revenue increased 23% to $129.5 million, from $105.2 million a year ago.
- Subscriptions rose by $27.7 million and by $92.5 million from a year ago, up 22%.
- Total subscriptions amounted to $516.9 million, while users increased to 35,000, up from 33,300 at the beginning of the fourth quarter.

Outlook for Fiscal 2008 First Quarter

First quarter revenues are expected to range between $131 million and $135 million. This includes a $1.2 million reduction primarily from workstations sold to summer interns for use only during the fourth fiscal quarter.

Operating margins are expected to range between 31.5% and 33%.

The return to the normal guidance range versus the fourth quarter reflects the seasonal revenue benefit from workstations used by summer interns.

- The effective tax rate is expected to be between 34% and 35%.
- CapEx range net of landlord contributions for fiscal 2008 is $38 million to $44 million. This includes enhancements to FactSet''s data centers by upgrading to HP’s Integrity mainframes.

Fourth Quarter Highlights

Included in the just completed fourth quarter were income tax benefits related to prior periods of $1.1 million or 2 cents per diluted share. This was a result of FactSet beginning to include in an estimated tax liability, a benefit related to the repatriation of foreign earnings to the U. S.

The company delivered solid revenue growth, healthy margins, strong earnings and another quarter of impressive free cash flow.

Performance was driven by adding more users and selling the existing clients additional applications and content. Deployment of Marquee, the PA workstation, IBCentral and the company’s risk and quantitative services continued to expand across all geographies.

Broad-based growth has been the catalyst to accelerating the growth rate by more than 200 basis points, to 22% over the last 12 months. This is translated to a record level of free cash flows for the fourth quarter and for the just completed fiscal year.

Free cash flow captured all the balance sheet and P&L movements.

The company defines free cash flow as cash generated from operations which include the cash cost for taxes and changes in working capital less capital spending.

- Free cash flows generated during the quarter were $43 million, up 45% over a year ago.
- During fiscal 2007, free cash flows increased 20% to $170 million.
- Fourth quarter free cash flow exceeds net income by 40%.
- Free cash flow for fiscal 2007 was 7% higher than net income.

Drivers of free cash flow were record levels of net income and an $18.3 million improvement in working capital, partially offset by higher capital expenditures.

- Working capital was aided by increases in accounts payable and accrued expenses.
- When considering free cash flow for the upcoming first quarter, it should be factored in that FactSet pays variable employee compensation related to the previous fiscal year in the first quarter.
- This cash outlay will approximate $28 million in the first quarter of fiscal 2008. This is included in accrued compensation and represented as a liability on the company’s balance sheet at August 31.

Capital expenditures in the fourth quarter were $13.8 million and $11.4 million, net of landlord contribution for construction.

- Expenditures for computer equipment were $6.4 million, and the remainder was for office space expansion.
- Major expenditures included adding four HP Integrity mainframes to the company’s data centers, and building out new space to complete the consolidation of five New York City office locations to one.