FACTSET RESEARCH SYSTEMS INC, S-1/A, 1996-06-26

FACTSET RESEARCH SYSTEMS INC
S-1/A, 1996-06-26
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 1996

REGISTRATION NO. 333-4238
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FACTSET RESEARCH SYSTEMS INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7374 13-3362547
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Number) Identification No.)
Incorporation or
Organization)
</TABLE>

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ONE GREENWICH PLAZA
GREENWICH, CONNECTICUT 06830
(203) 863-1500
(Addresss, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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HOWARD E. WILLE
CHAIRMAN & CHIEF EXECUTIVE OFFICER
FACTSET RESEARCH SYSTEMS INC.
ONE GREENWICH PLAZA
GREENWICH, CONNECTICUT 06830
(203) 863-1500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------

COPIES TO:

<TABLE>
<S> <C>
WILLIAM P. ROGERS, JR., ESQ. SARAH JONES BESHAR, ESQ.
CRAVATH, SWAINE & MOORE DAVIS POLK & WARDWELL
WORLDWIDE PLAZA 450 LEXINGTON AVENUE
825 EIGHTH AVENUE NEW YORK, NEW YORK 10017
NEW YORK, NEW YORK 10019 (212) 450-4131
(212) 474-1270
</TABLE>

-------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K

FORM S-1 ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
-------------------------------- ----------------------

<S> <C> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus... Facing Page; Cross-Reference Sheet;
Outside Front Cover Page

2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front and Outside Back Cover Pages;
Available Information

3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges....... Prospectus Summary; Risk Factors

4. Use of Proceeds........................... Prospectus Summary; Use of Proceeds

5. Determination of Offering Price........... Underwriting

6. Dilution.................................. Risk Factors; Dilution

7. Selling Security-Holders.................. Principal and Selling Stockholders

8. Plan of Distribution...................... Outside Front Cover Page; Underwriting

9. Description of Securities to be
Registered............................... Prospectus Summary; Description of Capital
Stock

10. Interests of Named Experts and Counsel.... Legal Matters; Experts

11. Information with Respect to the
Registrant............................... Inside Front and Outside Back Cover Pages;
Prospectus Summary; Risk Factors;
Dividend Policy; Capitalization;
Selected Historical Consolidated
Financial Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Business;
Management; Certain Transactions and
Relationships; Description of Capital
Stock; Shares Eligible for Future Sale;
Consolidated Financial Statements.

12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Part II, Item 17
</TABLE>
<PAGE>

SUBJECT TO COMPLETION, DATED JUNE 26, 1996

PROSPECTUS
, 1996
[FACTSET LOGO]

3,125,000 SHARES
FACTSET RESEARCH SYSTEMS INC.
COMMON STOCK

All of the shares of Common Stock (the "Common Stock") of FactSet Research
Systems Inc. ("FactSet" or the "Company") offered hereby (the "Offering") are
being sold by certain stockholders of the Company (the "Selling Stockholders").
The Company will not receive any of the proceeds from the Offering. See "Use of
Proceeds" and "Principal and Selling Stockholders."

Prior to the Offering, there has been no public market for the Common Stock.
It is currently estimated that the initial public offering price will be between
$15 and $17 per share. See "Underwriting" for information relating to the
factors considered in determining the initial public offering price.

The Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "FDS."

SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS TO
TO THE DISCOUNTS AND THE SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDERS(2)
<S> <C> <C> <C>
Per Share.......................................... $ $ $
Total(3)........................................... $ $ $
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, or to contribute to payments that the Underwriters
may be required to make in respect thereof.

(2) Before deducting expenses payable by the Selling Stockholders estimated at
$580,000. The Company has agreed to pay additional expenses of the Offering
estimated at $290,000.

(3) The Selling Stockholders have granted the Underwriters a 30-day option to
purchase up to 468,750 additional shares of Common Stock on the same terms
as set forth above solely to cover over-allotments, if any. See
"Underwriting." If such option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions and Proceeds to the Selling
Stockholders will be $ , $ and $ , respectively.

The shares of Common Stock are being offered by the several Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that certificates for the shares
of Common Stock offered hereby will be available for delivery in New York, New
York on or about , 1996.

DONALDSON, LUFKIN & JENRETTE ALEX. BROWN & SONS
SECURITIES CORPORATION INCORPORATED
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
[FACTSET LOGO AND LOGOS
OF VARIOUS DATABASE SUPPLIERS]

IN CONNECTION WITH THE OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET OF THE COMMON STOCK OF THE
COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

2
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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and related notes appearing elsewhere in
this Prospectus. Unless otherwise indicated, all information in this Prospectus
(x) reflects a four for one split with respect to the Common Stock effected June
4, 1996, (y) assumes an initial public offering price of $16.00 per share and
(z) assumes no exercise of the Underwriters' over-allotment option. See
"Description of Capital Stock" and "Underwriting." In addition, unless the
context requires otherwise, (i) references to the Company or FactSet refer to
FactSet Research Systems Inc., a Delaware Corporation, and its subsidiaries, and
(ii) references to a fiscal year refer to the fiscal year of the Company which
ends on August 31 of each year.

THE COMPANY

OVERVIEW

FactSet is a leading provider of on-line integrated database services to the
financial community. The Company, which markets its services in the United
States, Europe and the Pacific Rim, combines multiple large-scale databases into
a single, coherent mainframe computer information system accessible from
clients' personal computer terminals. The Company's aggregated data library
provides a broad variety of financial and economic information, including
fundamental data on more than 20,000 companies worldwide. By allowing clients
the ability to simultaneously access multiple databases as if they were part of
a single database and search for and download specific data directly into their
spreadsheets and other work products, FactSet provides investment managers,
investment banks and other financial institutions with a comprehensive,
"one-stop" source for financial information and analytics. The Company's
advanced, proprietary software tools enable clients to manipulate and analyze
the data provided by the Company and present it in a wide variety of formats,
including custom reports designed by the clients. At May 31, 1996, over 400
clients with more than 4,500 authorized workstations subscribed to the Company's
services, including many leading investment managers and investment banks.

The Company was formed in 1978 and has been profitable in each of the last
15 years. For the five fiscal years ended August 31, 1995, the Company sustained
compound annual growth rates of revenue, operating income and net income of
21.8%, 23.2% and 23.8%, respectively. For the first six months of fiscal 1996,
the Company's revenue, operating income and net income increased 17.6%, 21.0%
and 23.6%, respectively, from the comparable period in fiscal 1995.

FactSet currently acquires data from 30 information providers supplying over
50 databases, including COMPUSTATTM (fundamental data on North American
corporations), Interactive Data Corporation (U.S. and Canadian securities
prices), Exshare securities prices (international securities prices), FIRST
CALLTM (U.S. and international earnings estimates), Worldscope (fundamental data
on corporations in 37 countries), I/B/E/STM (U.S. and international earnings
estimates) and Value Line (fundamental corporate data and earnings estimates).
The Company maintains its databases on continually upgraded and fully redundant
Digital Equipment Corporation AlphaTM mainframe computers, a platform that
allows for monthly, daily, hourly and real-time refreshment of data. FactSet
seeks to maintain, when possible, at least two sources for each item of data.

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system regularly and thus to integrate the system into their decision-making
processes. FactSet does not enter into formal contracts with clients, a practice
which the Company believes enhances its marketing efforts by allowing clients to
use the FactSet system without the requirement of a long-term commitment. The
Company enjoys excellent client retention--FactSet's overall client retention
rate (on a revenue basis) has been over 95% in each of the past six years. See
Note 7 to the Summary Consolidated Financial and Operating Data.

FACTSET'S COMPETITIVE ADVANTAGES

Management believes that FactSet has several attributes that have been
significant to its growth and profitability and provide it with competitive
advantages over other financial data providers. These include (i) its ability to
integrate financial data from over 50 third-party databases into an aggregated
data library that allows users to access all data as if from one database; (ii)
its internally developed, proprietary software that allows extensive
manipulation of data, including downloading directly to custom spreadsheets
developed by clients for use on the FactSet system; (iii) its sophisticated
system architecture that allows users to access the computing power of its
mainframe computer platform through its easy-to-use Windows (R)*-based programs;
(iv) its advanced communications infrastructure, including its wide area network
("WAN"), through which approximately 25% of its clients and 50% of its
authorized workstations are now connected to the FactSet system; (v) the
proprietary structure of its integrated databases, which facilitates speed and
efficiency in data retrieval; (vi) its superior client services, including its
ability to work closely with clients to develop customized data solutions; and
(vii) its ability to recruit, train and retain highly talented engineering and
marketing personnel, as evidenced by the Company's greater than 85% average
employee retention rate over the past five years.

GROWTH STRATEGY

The Company intends to continue to expand its operations while maintaining
attractive levels of profitability. The Company plans to introduce new service
enhancements, applications and databases designed to increase penetration of
existing clients and attract new clients. The Company has recently expanded its
marketing efforts to focus on specific industry segments, including investment
banking and portfolio management, and on geographic expansion to Europe and the
Pacific Rim, each of which the Company believes present significant
opportunities for growth. The Company will also explore strategic acquisitions
and alliances as such opportunities arise. The principal components of the
Company's growth strategy are:

. INTRODUCING NEW SERVICE ENHANCEMENTS AND APPLICATIONS. The Company
continually seeks to develop and integrate new service enhancements and
applications that make its system more useful to current clients and more
attractive to new clients. In 1993, the Company deployed a wide area data
transmission network that greatly improves the speed and quality of
throughput to client sites and significantly enhances the ability of
clients to quickly and efficiently add authorized workstations to their
service subscriptions. FactSet's graphical user interface for Windows
makes the FactSet system available in a user-friendly point-and-click
screen environment familiar to most of today's personal computer users.
FactSet has recently introduced its Alpha Testing application, which
allows clients to analyze the relationship between a single or multiple
variables and subsequent investment returns over time, and Cornerstone, a
set of applications that allows quantitative analysts to quickly and
efficiently access large amounts of data directly from the FactSet system.
The Company is currently developing an interactive workstation application
designed specifically for portfolio managers, which will allow integration

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* Windows(R) is a registered trademark of the Microsoft Corporation.

4
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of data from user accounting systems into the FactSet system for manipulation
and presentation in FactSet reports.

. ATTRACTING NEW CLIENTS AND EXPANDING CLIENT RELATIONSHIPS. The Company
believes that substantial opportunities exist to both attract new clients
and increase its revenue from existing clients. While the Company has
achieved excellent penetration of the largest investment managers (84 of
the top 100 investment managers in the United States are FactSet clients),
only approximately 30% of the estimated 900 investment managers in the
United States with more than $500 million under management are FactSet
clients. In addition, while 20 of the largest investment banks in the
United States are FactSet clients, only approximately 44% of the estimated
151 securities firms in the United States with more than $20 million in
capital are FactSet clients. The Company also believes that it should be
able to increase revenue from exisiting clients through the introduction
of new applications, databases and technological innovations, many of
which are in response to client demand. In addition, the Company recently
formed an investment banking group to focus exclusively on sales and
marketing to the investment banking sector. FactSet also recently
established technical development groups focused on the development of
applications and services for specific user categories such as portfolio
managers and quantitative research analysts.

. INCREASING INTERNATIONAL PENETRATION. The Company is committed to the
international expansion of its customer base and established offices in
London in 1993 and Tokyo in 1994 to enhance its marketing efforts and its
ability to serve clients in Europe and the Pacific Rim. The Company is
supporting these efforts through the development of applications and the
addition of databases targeted at the international financial community.
The Company has been successful in the acquisition of a number of large
clients in these regions and, as a result, the annual indicated
subscription revenue from clients outside the United States increased
121.9% from $1.4 million at March 31, 1995 to $3.0 million at March 31,
1996.

. PROVIDING SUPERIOR CONSULTATIVE SERVICES. Providing superior client
support services is an integral part of the Company's business philosophy
and has contributed to a client retention rate of over 95% in each of the
past six years. The goal of the Company's 36 full-time client support
consultants is to maximize the utility of the FactSet system to clients
and thereby promote lasting and mutually-profitable client relationships.
Client support consultants work with clients, often at client sites, to
develop custom applications tailored to clients' information needs. The
Company also conducts approximately 50 training seminars across the nation
annually and maintains a client support hotline and a round-the-clock
emergency beeper service. Consulting and training services are provided to
clients free of charge.

. INTEGRATING NEW DATABASES. The Company regularly adds new databases to its
system. The integration of new databases, in addition to making the
Company's system more useful to existing clients, enables the Company to
tailor its services to the specific needs of additional user categories
and markets. Recent additions to the Company's library of databases
include EDGAR(R)* on FactSet, which provides access to continuously
updated text and data contained in EDGAR SEC filings, the Toyo Kezai
database, a source of fundamental corporate information on Japanese
companies, Morgan Stanley Capital International, which provides
performance data for non-United States stock markets and industry groups,
and Russell U.S. Equity Profiles, which provides benchmark data on company
investment styles and structure characteristics. The Company also is in
the process of providing United States security prices that are updated
within 20 minutes of their change (rather than once per day, as is the
current practice).

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* EDGAR(R) is a registered trademark of the Securities and Exchange Commission.

5
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THE OFFERING

<TABLE>
<S> <C>
Common Stock offered (1)..................... 3,125,000 shares
Common Stock to be outstanding after the
Offering (1)(2)............................. 9,526,300 shares
Proceeds of Offering......................... The Company will not receive any of the
proceeds of the Offering. Promptly following
the completion of the Offering, one of the
Selling Stockholders will apply a portion of
the proceeds to repay in full certain loans
outstanding from the Company totalling
$3,846,703. The Company has agreed to pay
certain expenses of the Offering in an amount
estimated at $290,000.
Listing...................................... The Common Stock has been approved for
listing on the New York Stock Exchange (the
"NYSE") under the symbol "FDS."
Risk Factors................................. Prospective investors should consider
carefully the matters set forth under the
caption "Risk Factors," as well as the other
information set forth in this Prospectus.
</TABLE>

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(1) Assumes the Underwriters do not exercise their option to purchase up to an
additional 468,750 shares of Common Stock to cover over-allotments.

(2) Excludes 1,451,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted to certain employees of the Company having
an average exercise price of $2.66. In addition, the Company has reserved
950,000 shares of Common Stock for issuance in connection with options
issuable under the Company's 1996 Stock Option Plan. See
"Management--Company Stock Option Plans."

6
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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31, SIX MONTHS ENDED
---------------------------------------------------- ----------------------------
FEBRUARY 28, FEBRUARY 29,
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND PER CLIENT DATA)

<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Subscription
revenue.............. $16,441 $19,279 $23,945 $29,019 $36,188 $ 17,597 $ 20,698
Expenses.............. 12,922 15,341 18,993 25,576 28,088 13,584 15,841
------- ------- ------- ------- ------- ------------ ------------
Operating income...... 3,519 3,938 4,952 3,443(1) 8,100 4,013 4,857
Other income.......... 230 313 208 251 570 241 430
------- ------- ------- ------- ------- ------------ ------------
Income before income
taxes................ 3,749 4,251 5,160 3,694 8,670 4,254 5,287
Income taxes.......... 1,648 1,916 2,281 1,747 3,731 1,810 2,265
------- ------- ------- ------- ------- ------------ ------------
Net income............ $ 2,101 $ 2,335 $ 2,879 $ 1,947(1) $ 4,939 $ 2,444 $ 3,022
------- ------- ------- ------- ------- ------------ ------------
------- ------- ------- ------- ------- ------------ ------------
Earnings per
share(2)............... $ 0.48 $ 0.28
Weighted average
number of shares
outstanding (in
thousands)(2)....... 10,254 10,755

STATEMENT OF FINANCIAL
CONDITION DATA:
Cash, cash equivalents
and investments...... $ 5,302 $ 7,521 $ 6,173 $ 7,539 $12,725 $ 8,146 $ 11,621(3)
Total assets.......... 11,397 13,708 20,435 22,345 28,663 21,565 30,731
Total liabilities..... 2,734 2,778 6,627 6,312 7,291 3,034 5,764
Stockholders'
equity............... 8,663 10,930 13,808 16,033 21,373 18,531 24,967(3)

OPERATING DATA:
EBITDA(4)............. $ 4,931 $ 5,521 $ 6,783 $ 5,640(1) $10,520 $ 5,260 $ 6,264
EBITDA as a percentage
of revenue........... 30.0% 28.6% 28.3% 19.4%(1) 29.1% 29.9% 30.3%
Number of
clients(5)........... 260 288 316 364 387 369 412
Average revenue per
client(6)............ $65,764 $70,361 $79,288 $85,350 $96,373 $ 48,343 $ 53,483
Annual client
retention rate(7)... 95.9% 96.7% 95.4% 95.5% 96.1% n/a n/a
Number of employees... 45 52 59 83 102 94 119
</TABLE>

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(1) Reflects the effect of special bonuses paid to certain executive officers of
the Company in 1994 in the aggregate amount of $2.5 million. Excluding the
special bonuses, operating income, net income, EBITDA and EBITDA as a
percentage of revenue for fiscal 1994 would have been approximately
$5,943,000, $3,264,000, $8,140,000, and 28.0%, respectively.

(2) See Note 2 to the Consolidated Financial Statements of the Company.

(3) On an adjusted basis, after deducting offering expenses payable by the
Company estimated at $290,000 and the repayment of certain loans by one of
the Selling Stockholders totalling $3,846,703, cash, cash equivalents and
investments and stockholders' equity at February 29, 1996 would have been
$15,177,845 and $24,676,505, respectively. See "Use of Proceeds."
Concurrently with the Offering, the Company will authorize 10,000,000 shares
of preferred stock, issuable in series.

(4) EBITDA represents operating income plus depreciation and amortization.
EBITDA is not a measure of financial performance under generally accepted
accounting principles and should not be considered an alternative to
operating or net income as an indicator of the Company's operating
performance or to net cash provided by operating activities as a measure of
liquidity.

(5) At December 31 of the given year.

(6) For each fiscal year, average revenue per client represents (i) revenue for
the fiscal year divided by (ii) the average of (x) the number of clients at
January 1 of such year and (y) the number of clients at December 31 of such
year. For the six month periods ended February 28, 1995 and February 29,
1996, average revenue per client represents (i) revenue for the period
divided by (ii) the number of clients at December 31, 1994 and 1995,
respectively.

(7) Based on calendar years ending December 31. The annual client retention rate
is determined by (i) subtracting from the aggregate indicated annual
subscription revenue as of January 1 of a given year that portion of such
revenue attributable to entities that are no longer clients as of December
31 of that year and (ii) dividing the result by the aggregate indicated
annual subscription revenue as of January 1 of such year. Indicated annual
subscription revenue for a particular client at a specified date means the
total amount of subscription revenue that would be payable to the Company by
such client over a twelve month period based on the FactSet services,
databases and authorized workstations provided to such client at such date.

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RISK FACTORS

EFFECTS OF RAPID TECHNOLOGICAL CHANGES

The Company's industry is characterized by rapidly changing technology and
evolving industry standards. The Company's future success will depend upon its
ability to continue to enhance its system and related products and to introduce
new services and databases that adequately anticipate and address technological
and market developments and the needs of its clients. While the Company has been
successful in this regard in the past, there can be no assurance that the
Company will be successful in such efforts in the future. Any failure by the
Company to anticipate or respond adequately to technological developments and
changing client requirements could have an adverse effect on the Company's
business, operating results or financial condition. See "--Risks Inherent in
Growth Strategy and International Expansion" and "Business--Engineering and
Product Development."

RISKS INHERENT IN GROWTH STRATEGY AND INTERNATIONAL EXPANSION

The Company has experienced significant growth during its operating history.
There can be no assurance that the Company will be able to maintain the levels
of growth and profitability that it has experienced in the past. Among other
things, there can be no assurance that the Company will be as successful in its
marketing efforts aimed at the investment banking and other industry sectors as
it has been with investment managers, or that such efforts will result in
revenue growth or profit margins comparable to those that the Company has
experienced in the past.

There can also be no assurance that the Company will be as successful in
marketing its services to clients in Europe and the Pacific Rim as it has been
in the United States or that the Company will be able to provide applications
and databases that meet the particular needs of financial services companies in
those regions. Furthermore, expansion into international markets may involve
additional risks to the Company, including exposure to fluctuations in exchange
rates and inflation, currency control regulations, local protection of
proprietary technology and political and economic risks associated with
international business transactions.

In addition, there can be no assurances that, if the Company continues to
grow internally or by way of strategic acquisitions, management will be
effective in attracting and retaining additional qualified personnel, expanding
the Company's physical facilities, integrating acquired businesses and otherwise
managing growth. Any failure to effectively manage growth could have an adverse
effect on the Company's business, operating results or financial condition. See
"--Effects of Rapid Technological Change," "--Dependence on Key Personnel,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business."

DEPENDENCE ON KEY PERSONNEL

The success of the Company's operations depend to a significant extent upon
the continued service of its executive officers and other key management, sales
and technical personnel, and on its ability to continue to attract, retain and
motivate qualified personnel. The competition for such employees is intense. The
Company has long-term employment contracts which include noncompete provisions
with Howard E. Wille, the Company's Chairman and Chief Executive Officer, and
Charles J. Snyder, its President and Chief Technology Officer. The loss of the
services of one or more of the Company's key personnel or the Company's
inability to recruit replacements for such personnel or to otherwise attract,
retain or motivate qualified personnel could have an adverse effect on the
Company's business, operating results or financial condition. The Company
maintains key-man life insurance on Mr. Wille and Mr. Snyder, and has noncompete
agreements with 19 other key employees. See "Business-- Employees" and
"Management--Executive Officers, Directors and Other Key Personnel" and
"--Employment Agreements."

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DEPENDENCE ON FINANCIAL DATABASE SUPPLIERS

The Company makes available to its clients financial information from
multiple databases provided to the Company pursuant to agreements between the
Company and 30 current database providers. Almost all of the Company's clients
subscribe to service packages that include fundamental corporate information
supplied by COMPUSTAT, Value Line and/or Worldscope, securities prices from
Interactive Data Corporation and/or Exshare, earnings estimates from FIRST CALL,
I/B/E/S and/or Value Line, business news information supplied by Standard &
Poors, PR Newswire and/or Business Wire and economic statistics supplied by the
Conference Board, OECD and/or IMF. The Company's agreements with financial
database providers are generally for a term of one year and cancelable on one
year's notice (although the Company does not have formal agreements with all of
its database suppliers). Many of these financial database providers compete with
one another and, to some extent, with the Company. While it is the Company's
policy to maintain, when possible, contractual relationships with at least two
database providers for each type of financial data, termination of one or more
of the Company's significant database provider agreements could decrease the
financial information which the Company can offer its clients and may have an
adverse effect on the Company's business, operating results or financial
condition. See "Business--The FactSet System--Databases."

DEPENDENCE ON AND ABILITY TO PROTECT PROPRIETARY TECHNOLOGY

The Company's services are highly dependent upon proprietary technology. The
Company relies on trade secrecy laws and non-compete agreements to protect its
proprietary rights in its technology. There can be no assurance that such
measures are or will be adequate to protect the Company's proprietary
technology. In addition, there can be no assurance that the Company's
competitors or potential competitors will not independently develop technologies
that are substantially equivalent or superior to the Company's technology.

LACK OF LONG TERM CLIENT CONTRACTS; FLUCTUATIONS IN REVENUE; CREDIT
CONCENTRATION

The Company does not regularly enter into written service contracts with
clients, and clients may cancel the Company's services at any time. While the
Company believes that this practice enhances its marketing efforts by allowing
clients to subscribe to the FactSet system without the requirement of a long
term commitment, the cancellation of the services of the Company by a
significant number of clients at any one time may have an adverse effect on the
Company's business, operating results or financial condition.

Although the Company has consistently recorded year-to-year increases in
revenue and net income, the acquisition of new clients during the course of any
year has not historically followed a recurring pattern. As a result, the Company
expects that on a quarter-to-quarter basis, there may be fluctuations in the
rate of revenue growth which may not be indicative of changes in the Company's
business or operations.

In addition, because the Company receives a significant portion of its
revenue (54.3% for the six months ended February 29, 1996) in the form of
commissions paid through two brokers, Bear, Stearns & Co. and Broadcort Capital
Corp. (an affiliate of Merrill Lynch & Co.), it has a significant concentration
of credit exposure to those brokers. See Note 13 to the Company's Consolidated
Financial Statements.

COMPETITION

9
<PAGE>
Dialog, Disclosure, Dow Jones, Lexis/Nexis, Pearson, Reuters and Thomson, market
data suppliers such as ADP, Bloomberg and Telerate as well as many of the
database providers from whom the Company obtains data for inclusion in the
FactSet system. The Company's most direct competitors include on-line and CD-ROM
database suppliers and integrators such as OneSource Inc., COMPUSTAT PC PlusTM,
Baseline, DAIS Group, IDD Information Services and Track Data Corp. primarily in
the United States, and Datastream and Randall-Helms, primarily in international
markets. Many of these competitors offer databases and applications that, in one
form or another, are similar to the databases and applications offered by the
Company, in some cases at lower prices. The Company may also encounter new
entrants, including well capitalized information services companies and other
companies, as the markets for the Company's services develop. There can be no
assurances that the Company will be able to compete successfully against its
present or future competitors or that competitive pressures will not have an
adverse effect on the Company's business, operating results or financial
condition. See "--Effects of Rapid Technological Changes," "Business--Industry
Overview" and "Business--Competition."

CONTROL BY SELLING STOCKHOLDERS

The Selling Stockholders currently own approximately 79.1% of the
outstanding Common Stock of the Company. After the Offering, the Selling
Stockholders will own approximately 46.3% of the outstanding Common Stock (or
41.4% if the Underwriters' over-allotment option is exercised in full). As a
result, the Selling Stockholders will continue to have significant influence
over the policies and affairs of the Company and the outcome of corporate
actions requiring stockholder approval, including the election of directors, the
adoption of amendments to the Company's Restated Certificate of Incorporation
and the approval of mergers and sales of the Company's assets. See "Certain
Transactions and Relationships" and "Description of Capital Stock."

BENEFITS OF OFFERING TO SELLING STOCKHOLDERS

The Selling Stockholders will receive all of the proceeds of the Offering.
The Offering will establish a public market for the Common Stock and provide
increased liquidity to the Selling Stockholders for the shares of Common Stock
they will own after the Offering. In connection with the Offering, the Selling
Stockholders will also receive certain rights to require the Company to register
shares of Common Stock held by the Selling Stockholders to permit the public
sale of such shares. See "Shares Eligible for Future Sale." Upon completion of
the Offering, the Selling Stockholders will own approximately 46.3% (41.4% if
the Underwriters' over-allotment option is exercised in full) of the outstanding
Common Stock. See "Certain Transactions and Relationships."

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Restated Certificate of Incorporation
and By-laws may have the effect, either alone or in combination with each other,
of making more difficult or discouraging a tender offer or takeover attempt that
is opposed by the Company's Board of Directors. These provisions include (1)
certain supermajority voting requirements with respect to certain specified
business combinations; (2) a provision requiring that the Company's Board be
divided into three classes, each serving a staggered term with only one class
elected each year; (3) a provision that allows for shareholder action by written
consent only on the affirmative vote of the holders of 80% of the outstanding
shares of the Company; (4) certain restrictions on the persons eligible to call
a special meeting of shareholders; (5) certain limitations on the size of the
Company's Board of Directors; (6) the ability of the Board to authorize the
issuance of preferred stock in series; and (7) certain supermajority voting
requirements with respect to amending, altering or repealing any of the
foregoing provisions. See "Description of Capital Stock--Restated Certificate of
Incorporation and By-Laws--Certain Anti-Takeover Provisions." In addition, the
employment agreements between the Company and its executive

10
<PAGE>
officers provide for specified severance payments in the event an executive
officer is terminated following a change in control of the Company. See
"Management--Employment Agreements."

NO PRIOR PUBLIC MARKET FOR COMMON STOCK

There has been no public market for the Common Stock prior to the Offering.
Consequently, the offering price for the Common Stock has been determined by
negotiations between the Selling Stockholders and representatives of the
Underwriters. See "Underwriting" for a description of the factors considered in
determining the initial public offering price of the Common Stock. The Common
Stock has been approved for listing on the NYSE under the symbol "FDS." There
can be no assurance that an active public market will develop or that, if
developed, that it will be sustained. The market price of the Common Stock could
also be subject to significant fluctuation in response to variations in the
Company's results of operations and other factors.

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Upon completion of the Offering, the Company will have 9,526,300 outstanding
shares of Common Stock, including 4,409,100 shares of Common Stock beneficially
owned by the Selling Stockholders (3,940,350 shares if the Underwriters'
over-allotment option is exercised in full), 363,729 shares held beneficially by
certain other employees of the Company and 787,824 shares held in connection
with the Company's Employee Stock Ownership Plan ("ESOP"). The 3,125,000 shares
of Common Stock offered hereby (3,593,750 shares if the Underwriters'
over-allotment option is exercised in full) will be eligible for sale in the
public market after the completion of the Offering. The shares of Common Stock
held by the Selling Stockholders, certain employees of the Company and the ESOP
are subject to certain restrictions pursuant to Rule 144 under the Securities
Act of 1933, as amended (the "Securities Act"). In the Underwriting Agreement,
the Company, the ESOP and certain executive officers and key personnel of the
Company have agreed (subject to certain exceptions) not to sell any shares of
Common Stock for a period of 180 days after the date of this Prospectus without
the prior written consent of the Donaldson, Lufkin & Jenrette Securities
Corporation. See "Underwriting." Immediately after the expiration (or waiver) of
the restrictions contained in the Underwriting Agreement, the shares held by the
Selling Stockholders, certain employees of the Company and the ESOP (subject to
the provisions thereunder) will be available for sale pursuant to Rule 144 under
the Securities Act. In addition, the Selling Stockholders have the right to
require the Company to register their shares of Common Stock for sale under the
Securities Act to permit the public sale of such shares. See "Certain
Transactions and Relationships--Registration Rights Agreement." Significant
sales of shares of Common Stock under a registration statement, pursuant to Rule
144 or otherwise in the future, or the prospect of such sales, may depress the
price of the Common Stock on any market that may develop, may render difficult
the sale of the Common Stock purchased by investors hereunder and may adversely
affect the Company's ability to raise capital through the issuance and sale of
Common Stock. See "Shares Eligible for Future Sale."

IMMEDIATE AND SUBSTANTIAL DILUTION

Purchasers of Common Stock in the Offering will experience immediate and
substantial dilution in the net tangible book value of the Common Stock. At an
assumed initial public offering price of $16.00 per share, purchasers of shares
in the Offering will experience dilution in net tangible book value of $13.41
per share. See "Dilution."

DIVIDEND POLICY

The Company currently intends to retain its earnings for future growth,
including growth through potential strategic acquisitions or alliances, and,
therefore, does not anticipate paying any cash dividends in the foreseeable
future. The payment of any future dividends will be determined by the Board of
Directors in light of conditions then existing, including the Company's
earnings, financial condition and capital requirements, business conditions,
corporate law requirements and other factors.

11
<PAGE>
THE COMPANY

OVERVIEW

FactSet currently acquires data from 30 information providers supplying over
50 databases, including COMPUSTAT (fundamental data on North American
corporations), Interactive Data Corporation (U.S. and Canadian securities
prices), Exshare securities prices (international securities prices), FIRST CALL
(U.S. and international earnings estimates), Worldscope (fundamental data on
corporations in 37 countries), I/B/E/S (U.S. and international earnings
estimates) and Value Line (fundamental corporate data and earnings estimates).
The Company maintains its databases on continually upgraded and fully redundant
Digital Equipment Corporation Alpha mainframe computers, a platform that allows
for monthly, daily, hourly and real-time refreshment of data. FactSet seeks to
maintain, when possible, at least two sources for each item of data.

Unlike services that charge fees based on actual system usage time, the
Company charges fixed monthly amounts which vary among clients based on the
number of sites and workstations from which the FactSet system is available and
the number of accessible databases and specialized services to which a client
subscribes. The Company believes that this pricing policy encourages clients to
use the FactSet system regularly and thus to integrate the system into their
decision-making processes. FactSet does not enter into formal contracts with
clients, a practice which the Company believes enhances its marketing efforts by
allowing clients to use the FactSet system without the requirement of a long
term commitment. The Company enjoys excellent client retention--FactSet's
overall client retention rate (on a revenue basis) has been over 95% in each of
the past six years.

RECENT DEVELOPMENTS

Anticipated Results for the three months ended May 31, 1996. Based upon
preliminary information, the Company estimates that its revenue, operating
income and net income for the three months ended May 31, 1996 will be
approximately 26.1%, 44.3% and 38.4% higher, respectively, than for the
comparable

12
<PAGE>

period in fiscal 1995. The following table sets forth certain preliminary
financial information of the Company for the three months ended May 31, 1996.

<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C>
STATEMENT OF INCOME DATA:
Subscription revenue............................... $ 11,436
Operating income................................... 2,810
Net Income......................................... 1,675
AS A PERCENTAGE OF REVENUE:
Operating income................................... 24.6%
Net income......................................... 14.6
</TABLE>

The increase in subscription revenue of 26% resulted primarily from an
increase in the number of clients as well as increased penetration among
existing clients. The Company added approximately 50 new clients between May 31,
1995 and May 31, 1996. Although total expenses increased by 21.1% over the 1995
period due principally to increased employee headcount, as a percentage of
revenue, total expenses declined from 78.5% in the 1995 period to 75.4% in the
1996 period. This resulted in an approximately 44.3% increase in operating
income and an approximately 38.4% increase in net income.

The Company's principal executive offices are located at One Greenwich
Plaza, Greenwich, Connecticut 06830. The telephone number is (203) 863-1500.

DIVIDEND POLICY

DILUTION

As of February 29, 1996, the Company's net tangible book value was
$24,966,505 or $2.62 per share. After giving effect to estimated expenses of
$290,000 payable by the Company in connection with the Offering, the net
tangible book value of the Company at February 29, 1996, would have been
$24,676,505 or $2.59 per share of Common Stock. This represents an immediate
decrease in net tangible book value of $0.03 per share to existing stockholders.
Assuming an initial public offering price of $16.00 per share of Common Stock,
there would be an immediate dilution of $13.41 per share to purchasers of the
shares of Common Stock in the Offering ("New Investors"). Dilution is determined
by subtracting adjusted net tangible book value per share after the Offering
from the amount of cash paid by a New Investor for one common share. The
following table illustrates the per share dilution:

<TABLE>
<S> <C> <C>
Initial public offering price per share................... $16.00
------
Net tangible book value per share before the
Offering(1).............................................. $ 2.62
-------
Decrease in net tangible book value per share attributable
to the Offering......................................... ($ 0.03)
-------
Net tangible book value per share after the Offering...... $ 2.59
------
Dilution per share to New Investors....................... $13.41
------
------
</TABLE>

- ------------

(1) Net tangible book value per share as of a specific date represents net
tangible assets (total tangible assets less total liabilities) divided by
the number of shares of Common Stock assumed to be then outstanding, without
giving effect to unexercised options.

As of February 29, 1996, an aggregate of 1,451,000 shares of Common Stock
were issuable upon the exercise of outstanding options at a weighted average
exercise price of $2.66 per share. If all options outstanding at February 29,
1996 were exercised, the net tangible book value per share immediately after
completion of the Offering would be $2.60. This would represent an immediate
dilution of $13.40 per share to New Investors. See "Management--Company Stock
Option Plan."

13
<PAGE>
CAPITALIZATION

The following table sets forth at February 29, 1996, the historical
consolidated capitalization of the Company. The information set forth in the
table below should be read in conjunction with the consolidated financial
statements of the Company and the notes thereto included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
AS OF FEBRUARY 29, 1996
-----------------------
(IN THOUSANDS)
<S> <C>
Cash, cash equivalents and investments(1).............................. $11,621
--------
--------
Debt................................................................... --$
Stockholders' equity(1):
Preferred stock, par value $.01 per share, 10,000,000 shares
authorized,
none issued........................................................ --
Common Stock, par value $.01 per share, 40,000,000 shares authorized,
9,526,300 shares outstanding(2).................................... 96
Capital in excess of par value....................................... 1,730
Retained earnings and other(3)....................................... 23,305
Treasury stock (51,788 shares at cost)............................... (164)
--------
Total capitalization................................................... $24,967
--------
--------
</TABLE>

- ------------

(1) On an as adjusted basis, after deducting offering expenses payable by the
Company estimated at $290,000 and the repayment of certain loans by one of
the Selling Stockholders totalling $3,846,703, cash, cash equivalents and
investments and stockholders' equity at February 29, 1996 would have been
$15,177,845 and $24,676,505, respectively.

(2) Excludes 1,451,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted to certain employees of the Company. In
addition, the Company has reserved 950,000 shares of Common Stock for
issuance in connection with options issuable under the Company's 1996
Company Stock Option Plan. See "Management-- Company Stock Option Plan."

(3) Includes net unrealized gain on investments of $0.1 million.

USE OF PROCEEDS

The Selling Stockholders will receive all of the proceeds of the Offering.
Promptly following the completion of the Offering, one of the Selling
Stockholders will apply a portion of the proceeds to repay in full certain loans
outstanding from the Company totalling $3,846,703. The Company has agreed to pay
a portion of the expenses associated with the Offering. See "Certain
Transactions and Relationships."

14
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The following table sets forth selected consolidated statement of income and
statement of financial condition information and operating data for each of the
eight years in the period ended August 31, 1995 and the six month periods ended
February 28, 1995 and February 29, 1996. The statement of income and statement
of financial condition data have been derived from consolidated financial
statements of the Company that have been audited by Price Waterhouse LLP,
independent accountants, which, in the case of the three years ended August 31,
1995 and the six month periods ended February 28, 1995 and February 29, 1996,
have been included elsewhere in this Prospectus. The following data should be
read in conjunction with the Consolidated Financial Statements and the notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31, SIX MONTHS ENDED
------------------------------------------------------------------------- --------------------------
FEBRUARY 28, FEBRUARY 29,
1988 1989 1990 1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- ------- ------- ------- ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND PER CLIENT DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME
DATA:
Subscription revenue:
Commissions.......... $ 7,136 $ 9,819 $11,178 $12,549 $14,035 $15,992 $17,745 $21,559 $ 10,699 $ 11,241
Fees................. 1,428 1,929 2,869 3,892 5,244 7,953 11,274 14,629 6,898 9,457
------- ------- ------- ------- ------- ------- ------- ------- ------ ------------
Total revenue....... 8,564 11,748 14,047 16,441 19,279 23,945 29,019 36,188 17,597 20,698
------- ------- ------- ------- ------- ------- ------- ------- ------ ------------
Expenses:
Employee compensation
and benefits........ 2,633 3,960 4,067 3,980 5,486 6,667 11,115(1) 11,027 5,377 6,461
Clearing fees........ 1,719 2,398 2,579 2,875 3,069 3,158 3,422 4,270 2,098 2,112
Data costs........... 673 942 1,065 1,103 1,456 2,326 2,443 3,071 1,510 1,605
Communication
costs............... 78 87 112 190 941 1,321 2,030 2,431 1,227 1,429
Computer equipment... 529 551 887 1,856 1,398 1,582 2,297 2,195 1,085 1,290
Occupancy............ 510 544 1,188 1,480 1,288 1,616 1,898 2,052 977 1,120
Promotional costs.... 420 405 430 651 991 1,384 1,384 1,870 824 1,000
Other expenses....... 346 510 771 787 712 939 987 1,172 486 824
------- ------- ------- ------- ------- ------- ------- ------- ------ ------------
Total expenses...... 6,908 9,397 11,099 12,922 15,341 18,993 25,576 28,088 13,584 15,841
------- ------- ------- ------- ------- ------- ------- ------- ------ ------------
Operating income..... 1,656 2,351 2,948 3,519 3,938 4,952 3,443(1) 8,100 4,013 4,857
Other income......... 134 218 295 230 313 208 251 570 241 430
------- ------- ------- ------- ------- ------- ------- ------- ------ ------------
Income before income
taxes................ 1,790 2,569 3,243 3,749 4,251 5,160 3,694 8,670 4,254 5,287
Income taxes........... 840 1,253 1,588 1,648 1,916 2,281 1,747 3,731 1,810 2,265
------- ------- ------- ------- ------- ------- ------- ------- ------ ------------
Net income............. $ 950 $ 1,316 $ 1,655 $ 2,101 $ 2,335 $ 2,879 $ 1,947(1) $ 4,939 $ 2,444 $ 3,022
------- ------- ------- ------- ------- ------- ------- ------- ------ ------------
------- ------- ------- ------- ------- ------- ------- ------- ------ ------------
Earnings per
share(2).............. $ 0.48 $ 0.28
Weighted average number
of shares outstanding
(in thousands)(2).... 10,254 10,755
STATEMENT OF FINANCIAL
CONDITION DATA:
Cash, cash equivalents
and investments...... $ 2,068 $ 3,684 $ 3,173 $ 5,302 $ 7,521 $ 6,173 $ 7,539 $12,725 $ 8,146 $ 11,621(3)
Total assets........... 4,439 5,881 9,077 11,397 13,708 20,435 22,345 28,663 21,565 30,731
Total liabilities...... 1,462 1,275 2,505 2,734 2,778 6,627 6,312 7,291 3,034 5,764
Stockholders'
equity(4)............. 2,977 4,606 6,572 8,663 10,930 13,808 16,033 21,373 18,531 24,967(3)
OPERATING DATA:
EBITDA(5).............. $ 2,171 $ 2,862 $ 3,848 $ 4,931 $ 5,521 $ 6,783 $ 5,640(1) $10,520 $ 5,260 $ 6,264
EBITDA as a percentage
of revenue........... 25.4% 24.4% 27.4% 30.0% 28.6% 28.3% 19.4%(1) 29.1% 29.9% 30.3%
Number of clients(6)... 197 216 240 260 288 316 364 387 369 412
Average revenue per
client(7)............. $48,798 $56,891 $61,610 $65,764 $70,361 $79,288 $85,350 $96,373 $ 48,343 $ 53,483
Annual client retention
rate(8)............... 92.9% 93.1% 95.2% 95.9% 96.7% 95.4% 95.5% 96.1% n/a n/a
Number of employees.... 22 26 36 45 52 59 83 114 94 119
</TABLE>

(Footnotes on following page)

15
<PAGE>
(Footnotes for preceding page)

- ------------

(1) Reflects the effect of special bonuses paid to certain executive officers of
the Company in 1994 in the aggregate amount of $2.5 million. Excluding the
special bonuses, employee compensation and benefits, operating income, net
income, EBITDA and EBITDA as a percentage of revenue for fiscal 1994 would
have been approximately $8,615,311, $5,943,000, $3,264,000, $8,140,000, and
28.0% respectively.

(2) See Note 2 to the Consolidated Financial Statements of the Company.

(3) On an as adjusted basis, after deducting offering expenses payable by the
Company estimated at $290,000 and the repayment of certain loans by one of
the Selling Stockholders totalling $3,846,703, cash, cash equivalents and
investments and stockholders' equity at February 29, 1996 would have been
$15,177,845 and $24,676,505, respectively. See "Use of Proceeds."
Concurrently with the Offering, the Company will authorize 10,000,000 shares
of preferred stock, issuable in series.

(4) No dividends were paid during the reported periods. See "Dividend Policy."

(5) EBITDA represents operating income plus depreciation and amortization.
EBITDA is not a measure of financial performance under generally accepted
accounting principles and should not be considered an alternative to
operating or net income as an indicator of the Company's operating
performance or to net cash provided by operating activities as a measure of
liquidity.

(6) At December 31 of the given year.

(7) For each fiscal year, average revenue per client represents (i) revenue for
the fiscal year divided by (ii) the average of (x) the number of clients at
January 1 of such year and (y) the number of clients at December 31 of such
year. For the six months ended February 28, 1995 and February 29, 1996,
average revenue per client represents (i) revenue for the period divided by
(ii) the number of clients at December 31, 1994 and 1995, respectively.

(8) Based on calendar years ending December 31. The annual client retention rate
is determined by (i) subtracting from the aggregate indicated annual
subscription revenue as of January 1 of a given year that portion of such
revenue attributable to entities that are no longer clients as of December
31 of that year and (ii) dividing the result by the aggregate indicated
annual subscription revenue as of January 1 of such year. Indicated annual
subscription revenue for a particular client at a specified date means the
total amount of subscription revenue that would be payable to the Company by
such client over a twelve month period based on the FactSet services,
databases and authorized workstations provided to such client at such date.

16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

The Company is a leading provider of on-line integrated database services to
the financial community. The Company, which markets its services in the United
States, Europe and the Pacific Rim, was formed in 1978 and has been profitable
in each of the last 15 years. For the five fiscal years ended August 31, 1995,
the Company sustained compound annual growth rates of revenue, operating income
and net income of 21.8%, 23.2% and 23.8%, respectively. For the first six months
of fiscal 1996, the Company's revenue, operating income and net income increased
17.6%, 21.0% and 23.6%, respectively, from the comparable period in fiscal 1995.

The Company's revenue is derived from subscription charges. Solely at the
option of each client, these charges may be paid either in the form of
commissions on securities transactions (in which case subscription revenue is
recorded as Commissions) or on a cash basis (in which case subscription revenue
is recorded as Fees).

To facilitate the receipt of subscription revenue on a commission basis, the
Company's wholly owned subsidiary, FactSet Data Systems Inc. ("FDS"), is a
member of the National Association of Securities Dealers, Inc. and is a
registered broker-dealer under Section 15 of the Securities Exchange Act of
1934. FDS's only function is to facilitate the receipt of payments in respect of
subscription charges and it does not otherwise engage in the securities
business.

Subscription revenue paid in commissions is based on securities transactions
introduced and cleared on a fully disclosed basis through two clearing brokers,
Bear, Stearns & Co. and Broadcort Capital Corp. (an affiliate of Merrill Lynch &
Co.). Clearance is performed by these two brokers pursuant to annually renewable
contracts at volume discounted rates. A client paying subscription charges on a
commission basis directs the clearing broker, at the time the client executes a
securities transaction, to credit the commission on the transaction to FDS's
account.

Each client's choice of paying subscription charges through commissions or
cash is available regardless of the nature or amount of the services provided by
FactSet to such client. When a client elects to pay subscription charges in the
form of commissions, the dollar amount payable is higher than the fee that would
be payable for the same services on a cash basis because of the associated
clearing fee payable by the Company to the clearing broker on such transactions.
However, commissions net of related clearing fees are approximately equal to the
fees that would be paid by a client on a cash basis. Although the option to pay
subscription charges in the form of commissions is available to all clients, it
is impractical for clients that do not engage in securities transactions to
utilize this method of payment.

Over the last several years, there has been a trend by both existing and new
clients toward payment of subscription charges on a cash rather than commission
basis. As a percentage of total revenue, commissions represented 66.8%, 61.1%,
59.6% and 54.3%, respectively, for the three fiscal years ended August 31, 1993,
1994 and 1995, and the six month period ended February 29, 1996.

Subscription charges are quoted to clients on an annual basis, but are
earned as services are provided on a month to month basis. Subscription revenue
recorded as Commissions and subscription revenue recorded as Fees are each
recorded as earned each month, based on one-twelfth of the annual subscription
charge quoted to each client. Amounts that have been earned but not yet paid
through the receipt of commissions on securities transactions or through cash
payments are reflected on the consolidated statement of financial condition as
receivable from clients. Amounts that have been received through commissions on
securities transactions or through cash payments that are in excess of a
client's earned subscription revenue are reflected on the consolidated statement
of financial condition as deferred fees and commissions.

FactSet does not enter into formal contracts with clients, a practice which
the Company believes enhances its marketing efforts by allowing clients to use
the FactSet system without the requirement of

17
<PAGE>
a long term commitment. The Company enjoys excellent client retention--FactSet's
overall client retention rate (on a revenue basis) has been over 95% in each of
the past six years.

The basic FactSet subscription consists of: five databases including
fundamental corporate data, securities prices, business news and economic data;
two authorized workstations and companion home passwords; a basic application
package; and client support and training. Additional databases, workstations and
computer services (including enhanced and specialized applications) are
available at additional cost. Consulting and training services are provided to
clients free of charge.

Operating expenses include employee compensation and benefits, clearing
fees, data costs, communication costs, computer equipment expenses, occupancy
expenses, promotional costs and other expenses.

Employee compensation and benefits expenses include, in addition to employee
salaries and bonuses, payroll taxes, the Company's ESOP contributions, health
insurance costs and costs associated with the Company's key-man life insurance
policies.

Clearing fees are directly related to commission revenue. Clearing fees for
executed transactions are recorded on a trade date basis as securities
transactions occur, with clearing fees related to commissions receivable
recorded simultaneously with the related receivable.

Data costs consist of fees and royalties paid by the Company to database
suppliers. Under agreements with certain database suppliers, the Company
collects database fees from clients and pays those fees to the database supplier
on the clients' behalf. In many cases, however, clients pay database suppliers
directly for access to databases. Such payments are not reflected on the
Company's financial statements.

Communication costs are charges paid by the Company for clients'
communication with the FactSet system, including long distance telephone
charges, charges associated with the Company's WAN and Internet access charges.

Computer equipment expenses consist of non-capitalized equipment acquisition
costs and depreciation expense relating to the Company's mainframe computers and
other related equipment, including communications equipment. The cost of
communications equipment provided to clients for use at client sites is
classified as an expense.

Occupancy expense includes costs related to the Company's leased facilities
in Greenwich, Connecticut, New York, New York, San Mateo, California, London,
England and Tokyo, Japan, as well as amortization expense relating to leasehold
improvements at those facilities.

Promotional expenses consist primarily of the cost of travel for the
Company's marketing personnel and consultants, costs associated with the
printing of operations manuals and promotional literature and expenses relating
to Company participation at industry trade shows and conventions.

Other expenses include professional expenses, office expenses and other
miscellaneous expenses.

Other income consists primarily of interest income.

The Company's revenue has grown in each of the last 16 fiscal years. As
discussed below, revenue for the first six months of fiscal 1996 increased 17.6%
over the comparable period in fiscal 1995. The Company's recent growth results
from the addition of new clients and growth in revenue from existing clients.
The Company's revenue from Europe and the Pacific Rim is currently growing more
rapidly on a percentage basis than revenue from the more established North
American market, and the Company

18
<PAGE>
expects revenue from those markets--which accounted for 5.0% of the Company's
total revenue in the first six months of fiscal 1996--to constitute a larger
percentage of the Company's revenue in future periods. See "Risk Factors--Risks
Inherent in Growth Strategy." At March 31, 1996, indicated annual subscription
revenue from clients outside the United States represented 6.8% of the Company's
aggregate indicated annual subscription revenue. Indicated annual subscription
revenue for a particular client at a specified date means the total amount of
subscription revenue that would be payable to the Company by such client over a
twelve month period based on the FactSet services, databases and authorized
workstations provided to such client at such date.

Several of the Company's European and Pacific Rim clients currently pay
subscription fees to the Company in foreign currency, principally British pounds
sterling and Japanese yen, and in the event that revenue from international
operations grows to represent a significantly larger percentage of the Company's
total revenue, the Company will evaluate appropriate strategies to manage risks
associated with foreign currency exchange fluctuations.

While the Company has consistently recorded year-to-year increases in
revenue and net income, the acquisition of new clients during the course of any
year has not historically followed a recurring pattern. As a result, the Company
expects that on a quarter-to-quarter basis, there may be fluctuations in the
rate of revenue growth which may not be indicative of changes in the Company's
business or operations.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain items
derived from the Company's consolidated statement of income as a percentage of
revenue. Totals may not add due to rounding.

<TABLE>
<CAPTION>
YEARS ENDED AUGUST 31, 6 MONTHS ENDED
----------------------- ----------------------------
FEBRUARY 28, FEBRUARY 29,
1993 1994 1995 1995 1996
----- ----- ----- ------------ ------------
<S> <C> <C> <C> <C> <C>
Subscription revenue:
Commissions.............................. 66.8% 61.1% 59.6% 60.8% 54.3%
Fees..................................... 33.2 38.9 40.4 39.2 45.7
----- ----- ----- ----- -----
100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Expenses:
Employee compensation and benefits....... 27.8 38.3(1) 30.5 30.6 31.2
Clearing fees............................ 13.2 11.8 11.8 11.9 10.2
Data costs............................... 9.7 8.4 8.5 8.6 7.8
Communication costs...................... 5.5 7.0 6.7 7.0 6.9
Computer equipment....................... 6.6 7.9 6.1 6.2 6.2
Occupancy................................ 6.7 6.5 5.7 5.6 5.4
Promotional costs........................ 5.8 4.8 5.2 4.7 4.8
Other expenses........................... 3.9 3.4 3.2 2.8 4.0
----- ----- ----- ----- -----
Total expenses............................. 79.3 88.1(1) 77.6 77.2 76.5
----- ----- ----- ----- -----
Operating income........................... 20.7 11.9(1) 22.4 22.8 23.5
Other income............................... 0.9 0.9 1.6 1.4 2.1
----- ----- ----- ----- -----
Income before income taxes................. 21.5 12.7(1) 24.0 24.2 25.5
Income taxes............................... 9.5 6.0 10.3 10.3 10.9
----- ----- ----- ----- -----
Net income................................. 12.0% 6.7%(1) 13.6% 13.9% 14.6%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>

- ------------

(1) Reflects the effect of special bonuses paid to certain executive officers of
the Company in 1994 in the aggregate amount of $2.5 million. Excluding the
effects of these special bonuses, the percentage of revenue represented by
each of the indicated items would be the amount specified: employee
compensation and benefits, 29.7%; total operating expenses, 79.5%; operating
income, 20.5%; income before income taxes, 21.3%; and net income, 11.2%.

19
<PAGE>
SIX MONTHS ENDED FEBRUARY 29, 1996 COMPARED WITH THE SIX MONTHS ENDED FEBRUARY
28, 1995

Subscription revenue. Subscription revenue increased from $17.6 million for
the six months ended February 28, 1995 to $20.7 million for the six months ended
February 29, 1996, or 17.6%. FactSet's revenue growth resulted from an increase
in the number of new clients as well as increased penetration among existing
clients. The number of clients increased 11.7% from 369 at February 28, 1995 to
412 at February 29, 1996. New clients consist of new international clients,
United States investment managers and United States investment banks. Average
revenue per client increased 10.6% from $48,343 in the 1995 period to $53,483 in
the 1996 period. Revenue growth from existing clients was attributable to an
increase in the number of authorized workstations and the addition of new
applications, databases and service offerings.

Employee compensation and benefits. Employee compensation and benefits
increased from $5.4 million to $6.5 million, or 20.2%, from the six months ended
February 28, 1995 to the six months ended February 29, 1996. As a percentage of
revenue, employee compensation and benefits increased from 30.6% in the 1995
period to 31.2% in the 1996 period. This increase was due to the net addition of
27 employees to support FactSet's continued growth and expansion in existing as
well as new industry segments and regions, such as Europe and the Pacific Rim,
which are in the early stages of business development. To a lesser extent, the
increase was due to increases in compensation and benefit costs for existing
personnel.

Clearing fees. Clearing fees remained relatively constant at $2.1 million
for the six months ended February 28, 1995 and six months ended February 29,
1996. Clearing fees, as a percentage of revenue, decreased from 11.9% in the
1995 period to 10.2% in the 1996 period. This decrease reflects a decrease in
clearing fees per transaction as well as a shift in payment form by clients from
a commission basis to a fee basis.

Data costs. Data costs increased from $1.5 million for the six months ended
February 28, 1995 to $1.6 million for the six months ended February 29, 1996, or
6.3%. As a percentage of revenue, data costs decreased from 8.6% in the 1995
period to 7.8% in the 1996 period. This decrease reflects improved terms from
certain database providers and economies of scale achieved from a larger client
base, partially offset by the higher data costs associated with additional
databases.

Communication costs. Communication costs increased from $1.2 million to $1.4
million, or 16.5%, from the six months ended February 28, 1995 to six months
ended February 29, 1996. Communication costs, as a percentage of revenue,
declined from 7.0% in the 1995 period to 6.9% in the 1996 period. This decline
reflects the continued cost savings associated with the implementation of the
Company's new communications network, partially offset by higher communication
costs associated with increased usage of the FactSet system and a greater
proportion of international clients.

Computer equipment. Computer equipment expenses increased from $1.1 million
to $1.3 million, or 18.9%, from the six months ended February 28, 1995 to the
six months ended February 29, 1996. The increase was primarily due to the higher
depreciation expense associated with increased capital expenditures as well as a
greater proportion of computer assets with shorter depreciable lives. As a
percentage of revenue, however, computer equipment expenses remained constant at
6.2%.

Occupancy. Occupancy costs increased from $1.0 million for the six months
ended February 28, 1995 to $1.1 million for the six months ended February 29,
1996, or 14.7%. As a percentage of revenue, occupancy costs decreased from 5.6%
to 5.4% from the 1995 period to the 1996 period. This decrease reflects improved
operating leverage from FactSet's revenue growth, partially offset by the costs
associated with the expansion of its Greenwich, Connecticut facilities to
accommodate the growth in its business and personnel.

Promotional costs. Promotional costs increased from $0.8 million to $1.0
million, or 21.4%, from the six months ended February 28, 1995 to the six months
ended February 29, 1996. Promotional costs, as a percentage of revenue,
increased slightly from 4.7% in the 1995 period to 4.8% in the 1996 period.

20
<PAGE>
This increase was due to increased travel expenses associated with marketing to
new industry segments and geographic regions as well as the additional expenses
associated with the Company's logo change at the end of fiscal 1995.

Other expenses. Other expenses increased from $0.5 million in the six months
ended February 28, 1995 to $0.8 million in the six months ended February 29,
1996, or 69.5%. As a percentage of revenue, other expenses increased from 2.8%
in the 1995 period to 4.0% in the 1996 period. The increase was due to increases
in miscellaneous taxes and other miscellaneous expenses.

Operating income. Operating income increased from $4.0 million for the six
months ended February 28, 1995 to $4.9 million for the six months ended February
29, 1996, representing growth of 21.0%. As a percentage of revenue, operating
income increased from 22.8% in the 1995 period to 23.5% in the 1996 period.

Other income. Other income increased from $0.2 million to $0.4 million, or
78.6%, from the six months ended February 28, 1995 to the six months ended
February 29, 1996. This growth was due to higher levels of cash, cash
equivalents and investments.

Income taxes. Income taxes increased from $1.8 million to $2.3 million, or
25.2%, from the six months ended February 28, 1995 to six months ended February
29, 1996, due to higher income before income taxes and an increase in the
effective tax rate from 42.5% in the 1995 period to 42.8% in the 1996 period.

Net income. Net income increased from $2.4 million for the six months ended
February 28, 1995 to $3.0 million for the six months ended February 29, 1996, or
23.6%. As a percentage of revenue, net income increased from 13.9% in the 1995
period to 14.6% in the 1996 period.

FISCAL YEAR ENDED AUGUST 31, 1995 COMPARED WITH FISCAL YEAR ENDED AUGUST 31,
1994

Subscription revenue. Subscription revenue increased from $29.0 million for
the fiscal year ended August 31, 1994 to $36.2 million for the fiscal year ended
August 31, 1995, or 24.7%. FactSet's revenue growth resulted from an increase in
the number of new clients as well as increased penetration among existing
clients. The number of clients increased 6.3% from 364 at August 31, 1994 to 387
at August 31, 1995. New clients consist of new international clients as well as
United States investment managers and United States investment banks. Average
revenue per client increased 12.9% from $85,350 in fiscal 1994 to $96,373 in
fiscal 1995. Revenue growth from existing clients was attributable to an
increase in the number of authorized workstations and the addition of new
applications, databases and service offerings.

Employee compensation and benefits. Employee compensation and benefits
decreased slightly from $11.1 million to $11.0 million, or 0.8%, from fiscal
1994 to fiscal 1995. Excluding the one-time special executive bonus of $2.5
million granted in 1994, employee compensation and benefits increased from $8.6
million to $11.0 million, an increase of 28.0%. Excluding such bonus, as a
percentage of revenue, employee compensation and benefits increased from 29.7%
in the 1994 period to 30.5% in the 1995 period. This increase was due primarily
to an increase in the number of employees and increases in compensation and
benefit costs of existing personnel in fiscal 1995.

Clearing fees. Clearing fees increased from $3.4 million for fiscal 1994 to
$4.3 million for fiscal 1995, or 24.8%. This increase was due to the
corresponding increase in commission revenue. Clearing fees, as a percentage of
revenue, remained relatively constant at 11.8% for fiscal years 1994 and 1995.

Data costs. Data costs increased from $2.4 million for fiscal 1994 to $3.1
million for fiscal 1995, or 25.7%. As a percentage of revenue, data costs
increased slightly from 8.4% in the 1994 period to 8.5% in the 1995 period. This
increase was due to the addition of databases and the slightly higher rates
charged by data suppliers.

21
<PAGE>
Communication costs. Communication costs increased from $2.0 million to $2.4
million, or 19.8%, from fiscal 1994 to fiscal 1995. Communication costs, as a
percentage of revenue, declined from 7.0% in the 1994 period to 6.7% in the 1995
period. This decline reflects the cost savings associated with the
implementation of the Company's new communications network, partially offset by
higher communication costs associated with increased usage of the FactSet
system.

Computer equipment. Computer equipment expenses decreased from $2.3 million
to $2.2 million, or 4.4%, from fiscal 1994 to fiscal 1995. Computer equipment
expenses, as a percentage of revenue, decreased from 7.9% in the 1994 period to
6.1% in the 1995 period. This decrease primarily reflects economies of scale
resulting from the Company's larger client base.

Occupancy. Occupancy costs increased from $1.9 million for the fiscal year
ended August 31, 1994 to $2.1 million for the fiscal year ended August 31, 1995,
representing an increase of 8.1%. As a percentage of revenue, occupancy costs
decreased from 6.5% to 5.7% from fiscal 1994 to fiscal 1995. This decrease
reflects improved operating leverage from the Company's revenue growth,
partially offset by the costs associated with expansion and opening a new office
in Tokyo.

Promotional costs. Promotional costs increased from $1.4 million to $1.9
million, or 35.1%, from fiscal 1994 to fiscal 1995. Promotional costs, as a
percentage of revenue, increased from 4.8% in the 1994 period to 5.2% in the
1995 period. This increase was due primarily to increased travel expenses
associated with marketing to new industry segments and geographic regions.

Other expenses. Other expenses increased from $1.0 million in fiscal 1994 to
$1.2 million in fiscal 1995, or 18.7%. As a percentage of revenue, other
expenses decreased from 3.4% in the 1994 period to 3.2% in the 1995 period. The
decrease was due to improved operating leverage from the Company's revenue
growth, partially offset by increases in miscellaneous taxes and other
miscellaneous expenses.

Operating income. Operating income increased from $3.4 million for the
fiscal year ended August 31, 1994 to $8.1 million for the fiscal year ended
August 31, 1995, or 135.2%. Excluding the one-time special executive bonus of
$2.5 million, operating income for fiscal 1994 was $5.9 million, and the growth
rate from fiscal 1994 to fiscal 1995 was 36.3%. Excluding the one-time bonus, as
a percentage of revenue, operating income increased from 20.5% in fiscal 1994 to
22.4% in fiscal 1995.

Other income. Other income increased from $0.3 million to $0.6 million, or
127.0%, in fiscal 1994 to fiscal 1995. This increase was due to higher levels of
cash, cash equivalents and investments, higher rates of return and the impact of
losses on investments in fiscal 1994.

Income taxes. Income taxes increased from $1.7 million to $3.7 million, or
113.5%, from fiscal 1994 to fiscal 1995. The effective tax rate decreased from
47.3% in the 1994 period to 43.0% in the 1995 period, reflecting a decrease in
non-deductible expenses, primarily premiums on executive officers' life
insurance policies.

Net income. Net income increased from $1.9 million for the fiscal year ended
August 31, 1994 to $4.9 million for the fiscal year ended August 31, 1995, or
153.7%. Excluding the one-time special executive bonus of $2.5 million, net
income for fiscal 1994 was approximately $3.3 million, and the growth rate of
net income from fiscal 1994 to fiscal 1995 was 51.3%. Excluding the one-time
bonus, as a percentage of revenue, net income increased from 11.2% in fiscal
1994 to 13.6% in fiscal 1995.

FISCAL YEAR ENDED AUGUST 31, 1994 COMPARED WITH FISCAL YEAR ENDED AUGUST 31,
1993

Subscription revenue. Subscription revenue increased from $23.9 million for
the fiscal year ended August 31, 1993 to $29.0 million for the fiscal year ended
August 31, 1994, or 21.2%. FactSet's revenue growth resulted from an increase in
the number of new clients as well as increased penetration among existing
clients. The number of clients increased 15.2% from 316 at August 31, 1993 to
364 at August 31, 1994. New clients consist of new international clients as well
as U.S. investment managers and U.S. investment banks. Average revenue per
client increased 7.6% from $79,288 in fiscal 1993 to $85,350 in fiscal 1994.
Revenue growth from existing clients was attributable to an increase in the

22
<PAGE>
number of authorized workstations and the addition of new applications,
databases and service offerings.

Employee compensation and benefits. Employee compensation and benefits
increased from $6.7 million to $11.1 million, or 66.7%, from fiscal 1993 to
fiscal 1994. Excluding the one-time special executive bonus of $2.5 million
granted in 1994, employee compensation and benefits increased from $6.7 million
to $8.6 million, or 29.2%. Excluding such bonus, as a percentage of revenue,
employee compensation and benefits increased from 27.8% in the 1993 period to
29.7% in the 1994 period. This increase was due to an increase in the number of
employees and increases in compensation and benefits costs for existing
personnel.

Clearing fees. Clearing fees increased from $3.2 million for fiscal 1993 to
$3.4 million for fiscal 1994, or 8.4%. This increase was due to the
corresponding increase in commission revenue. Clearing fees, as a percentage of
revenue, declined from 13.2% in the 1993 period to 11.8% in the 1994 period.
This decline reflects the shift in payment form by clients from a commission
basis to a fee basis.

Data costs. Data costs increased from $2.3 million for fiscal 1993 to $2.4
million for fiscal 1994, or 5.1%. As a percentage of revenue, data costs
decreased from 9.7% in the 1993 period to 8.4% in the 1994 period. This decrease
reflects improved terms from certain database providers and economies of scale
achieved from increased revenue and clients, partially offset by the higher data
costs associated the addition of databases.

Communication costs. Communication costs increased from $1.3 million to $2.0
million, or 53.7%, from fiscal 1993 to fiscal 1994. Communication costs, as a
percentage of revenue, increased from 5.5% in the 1993 period to 7.0% in the
1994 period. The increase was due to the increased usage of the FactSet system
by its existing and new clients, particularly international clients.

Computer equipment. Computer equipment expenses increased from $1.6 million
to $2.3 million, or 45.1%, from fiscal 1993 to fiscal 1994. As a percentage of
revenue, computer equipment expenses increased from 6.6% in the 1993 period to
7.9% in the 1994 period. This increase reflects the higher depreciation expense
associated with increased capital expenditures and computer equipment costs
associated with the implementation of the WAN.

Occupancy. Occupancy costs increased from $1.6 million for the fiscal year
ended August 31, 1993 to $1.9 million for the fiscal year ended August 31, 1994,
or 17.5%. As a percentage of revenue, occupancy costs decreased from 6.7% to
6.5% from the 1993 period to the 1994 period. This decrease reflects improved
operating leverage from the Company's revenue growth, partially offset by the
costs associated with expansion and opening of new offices in London and San
Mateo.

Promotional costs. Promotional costs remained constant at $1.4 million in
fiscal 1994 and fiscal 1993. Promotional costs, as a percentage of revenue,
decreased from 5.8% in the 1993 period to 4.8% in the 1994 period. This decrease
reflects improved operating leverage from the Company's revenue growth.

Other expenses. Other expenses increased from $0.9 million in fiscal 1993 to
$1.0 million in fiscal 1994, or 5.0%. As a percentage of revenue, other expenses
decreased from 3.9% in the 1993 period to 3.4% in the 1994 period. This decrease
was due to improved operating leverage from the Company's revenue growth,
partially offset by increases in miscellaneous expenses.

Operating income. Operating income decreased from $5.0 million for the
fiscal year ended August 31, 1993 to $3.4 million for the fiscal year ended
August 31, 1994, or 30.5%. Excluding the one-time special executive bonus of
$2.5 million granted in 1994, operating income for fiscal 1994 was $5.9 million,
and the growth rate from fiscal 1993 to fiscal 1994 was 20.0%. Excluding the
one-time bonus, as a percentage of revenue, operating income decreased from
20.7% in fiscal 1993 to 20.5% in fiscal 1994.

23
<PAGE>
Other income. Other income increased from $0.2 million to $0.3 million, or
20.6%, in fiscal 1993 to fiscal 1994. This increase was due to higher levels of
cash, cash equivalents and investments, offsetting an unrealized loss on the
investments in the limited partnership.

Income taxes. Income taxes decreased from $2.3 million to $1.7 million, or
23.4%, from fiscal 1993 to fiscal 1994 due to lower income before income taxes.
The effective tax rate increased from 44.2% in the 1993 period to 47.3% in the
1994 period due to an increase in non-deductible expenses, primarily premiums on
officers' life insurance policies.

Net income. Net income decreased from $2.9 million for the fiscal year ended
August 31, 1993 to $1.9 million for the fiscal year ended August 31, 1994, or
32.4%. Excluding the one-time special executive bonus of $2.5 million granted in
1994, net income for fiscal 1994 was approximately $3.3 million, and the growth
rate from fiscal 1993 to fiscal 1994 was 13.4%. Excluding the one-time bonus, as
a percentage of revenue, net income decreased from 12.0% in fiscal 1993 to 11.2%
in fiscal 1994.

QUARTERLY COMPARISONS

The following table sets forth certain quarterly financial information of
the Company for each quarter in fiscal 1995 and for the first two quarters of
fiscal 1996. The information has been derived from the quarterly financial
statements of the Company which are unaudited but which, in the opinion of
management, have been prepared on the same basis as the financial statements
included herein and include all adjustments (consisting only of normal recurring
items) necessary for a fair presentation of the financial results for such
periods. This information should be read in conjunction with the financial
statements and the notes thereto and other financial information appearing
elsewhere in this Prospectus. The operating results for any quarter are not
necessarily indicative of results for any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------
NOV. 30, FEB. 28, MAY 31, AUG. 31, NOV. 30, FEB. 29,
1994 1995 1995 1995 1995 1996
-------- -------- ------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Subscription revenue........................ $8,613 $ 8,984 $9,070 $9,521 $ 10,137 $ 10,561
Operating income............................ 1,958 2,055 1,948 2,139 2,323 2,534
Net income.................................. 1,171 1,273 1,210 1,285 1,464 1,558
AS A PERCENTAGE OF REVENUE:
Operating income............................ 22.7% 22.9% 21.5 % 22.5% 22.9% 24.0%
Net income.................................. 13.6 14.2 13.3 13.5 14.4 14.7
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

FactSet historically has met its liquidity and capital investment needs with
cash generated from operations. At February 29, 1996, FactSet had cash, cash
equivalents and investments of $11.6 million. The Company invests primarily in
short-term investments such as money market funds and treasury bills, and has an
investment in a limited investment partnership that invests primarily in
convertible bonds and preferred stocks.

FactSet's net cash provided by operating activities was $1.7 million, $4.0
million and $7.3 million in fiscal 1993, 1994 and 1995, respectively. The
increasing trend of positive net cash generated from operations was due to
increasing profitability and decreasing receivables as a percentage of revenue.
For the six months ended February 29, 1996, net cash provided by operating
activities was $1.3 million compared to $1.4 million for the comparable period
in 1995. This slight decrease was due to an increase in accounts receivable
associated with revenue growth as well as the timing of tax payments.

The Company's net cash used in investing activities was $4.0 million, $3.8
million and $1.0 million in fiscal 1993, 1994 and 1995, respectively, and $2.6
million for the first six months of 1996. Net cash provided by investing
activities was $45,000 in the first six months of 1995. The principal uses have
been for capital expenditures, primarily computer hardware and related equipment
and office equipment.

24
<PAGE>
The Company anticipates capital expenditures to be $5.7 million and $4.8 million
for fiscal 1996 and 1997, respectively.

The Company believes cash generated from operations will be sufficient to
satisfy working capital and capital expenditure requirements for the foreseeable
future. However, in the event the Company were to pursue strategic acquisitions
or alliances, it may require additional sources of debt or equity financing.

RECENTLY ISSUED ACCOUNTING STANDARDS

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, Accounting for Stock Based
Compensation ("SFAS 123"). SFAS 123, the disclosure provisions of which must be
implemented for fiscal years beginning subsequent to December 15, 1995,
establishes a fair value based method of accounting for stock based compensation
plans, the effect of which can either be disclosed or recorded. The Company will
adopt the disclosure provisions of SFAS 123 in the fiscal year which begins on
September 1, 1996. The Company intends to retain the intrinsic value method of
accounting for stock based compensation which it currently follows.

25
<PAGE>
BUSINESS

OVERVIEW

INDUSTRY OVERVIEW

The worldwide market for financial information is estimated to have grown
13% in 1995 to approximately $10.0 billion. The primary users of financial
information of the type provided by the Company are investment managers and
investment banks. In the United States alone, there are currently an estimated
900 investment managers with over $500 million under management and 151
investment banks with over $20 million in capital. The market for financial
information, both in the United States and worldwide, is expected to continue to
demonstrate strong growth for the foreseeable future. Factors which the Company
believes contribute to this industry growth include (i) the underlying growth of
the investment management business with its requisite information needs; (ii)
improved technology providing end users with substantially increased analytic
capabilities and the ability to inexpensively and rapidly store, access and
transfer large amounts of data; (iii) the increasingly competitive investment
environment requiring immediate access to accurate information; (iv) the growth
of alternative investment institutions such as hedge funds and limited
partnerships; and (v) the development of complex financial instruments with
large associated information requirements.

The market for financial information services is undergoing significant
change, driven by rapid growth in the amount of available information and
increasingly competitive global capital markets. Financial services
professionals depend on a wide array of financial data including current and
historical security prices, historical and estimated future company financial
information, benchmark data and indices, general economic data and other
financial data. In addition, the Company believes that it is becoming
increasingly important for these professionals to integrate and analyze the
historical relationships between multiple types of financial information in
forming their investment decisions. Financial information is typically contained
in databases maintained by a wide variety of vendors and provided to customers
in both CD-ROM and on-line formats. In the absence of database integration, in
order to utilize data from a variety of sources, an individual user must access
and retrieve data from multiple separate databases, with data often in varied
formats, and then must manually integrate and tabulate the accumulated data to
suit his or her particular task.

Since its inception, FactSet has experienced competition from a number of
financial information providers supplying data in a variety of formats. In the
1980s, the Company's primary competitors were "time-sharing" services, which
sold financial data based on customers' on-line time. Although many of

26
<PAGE>
these competitors were established, well-capitalized companies, the Company
believes that it was able to compete successfully due to the financial services
industry's need for a comprehensive and efficient source of financial data.
Currently, the Company competes against a variety of news and information
providers. See "--Competition." The Company believes that it will continue to
compete effectively in the market for financial information based on the
competitive advantages described below.

FACTSET'S COMPETITIVE ADVANTAGES

The FactSet system integrates financial data from over 50 separate databases
to form an aggregated data library that allows users to search, download and
manipulate all available data as if from one source without having to make
adjustments for differing formats or presentations. Management believes that
this attribute of the FactSet system, as well as the Company's (i) internally
developed, proprietary software that allows extensive manipulation of data,
including downloading directly to custom spreadsheets developed by clients for
use on the FactSet system; (ii) sophisticated system architecture that allows
users to access the computing power of its mainframe computer platform through
its easy-to-use Window-based programs; (iii) advanced communications
infrastructure, including its wide area network ("WAN"), through which
approximately 25% of its clients and 50% of its authorized workstations are now
connected to the FactSet system; (iv) proprietary integrated database structure,
which facilitates speed and efficiency in data retrieval; (v) superior client
services, including its ability to work closely with clients to develop
customized data solutions; and (vi) ability to recruit, train and retain highly
talented engineering and marketing personnel, have been significant to the
Company's growth and profitability and provide competitive advantages over other
financial data providers.

GROWTH STRATEGY

The Company intends to continue to expand its operations while maintaining
attractive levels of profitability. The Company plans to introduce new service
enhancements, applications and databases designed to increase penetration of
existing clients and attract new clients. Growth in the Company's client base is
expected to result both from an expansion of the market for financial
information and from increased market share achieved in competition with other
database providers. The Company has recently expanded its marketing efforts to
focus on specific industry segments, including investment banking and portfolio
management, and on geographic expansion to Europe and the Pacific Rim, each of
which the Company believes present significant opportunities for growth. The
Company will also explore strategic acquisitions and alliances as such
opportunities arise. The principal components of the Company's growth strategy
are:

. ATTRACTING NEW CLIENTS AND EXPANDING CLIENT RELATIONSHIPS. The Company
believes that substantial opportunities exist to both attract new clients
and increase its revenues from existing

27
<PAGE>

clients. While the Company has achieved excellent penetration of the
largest equity investment managers (84 of the top 100 investment managers
in the United States are FactSet clients), only approximately 30% of the
estimated 900 investment managers in the United States with more than $500
million under management are currently FactSet clients. In addition, while
20 of the largest investment banks in the United States are FactSet
clients, only approximately 44% of the estimated 151 securities firms in
the United States with more than $20 million in capital are currently
FactSet clients. The Company also believes that it should be able to
increase revenues from its existing clients through the introduction of
new applications, databases and technological innovations, many of which
are in response to client demand. In addition, The Company recently formed
an investment banking group to focus exclusively on sales and marketing to
the investment banking sector. FactSet also recently established technical
development groups focused on the development of applications and services
for specific user categories such as portfolio managers and quantitative
research analysts. See "--Sales and Marketing" and "--Engineering and
Product Development."

. INCREASING INTERNATIONAL PENETRATION. The Company is committed to the
international expansion of its customer base and established offices in
London in 1993 and Tokyo in 1994 to enhance its marketing efforts and its
ability to serve clients in Europe and the Pacific Rim. The Company is
supporting these efforts through the development of applications and the
addition of databases targeted at the international financial community.
The Company has been successful in the acquisition of a number of large
clients in these regions and, as a result, the annual indicated
subscription revenues from clients outside the United States increased
121.9% from $1.4 million at March 31, 1995 to $3.0 million at March 31,
1996. See "--Sales and Marketing."

. PROVIDING SUPERIOR CONSULTATIVE SERVICES. Providing superior consultative
services is an integral part of the Company's business philosophy and has
contributed to a client retention rate of over 95% in each of the past six
years. The goal of the Company's 36 full-time client support consultants
is to maximize the utility of the FactSet system to clients and thereby
promote lasting and mutually-profitable client relationships. Client
support consultants work with clients, often at client sites, to develop
custom applications tailored to clients' information needs. The Company
also conducts approximately 50 training seminars across the nation
annually and maintains a client support hotline and a round-the-clock
emergency beeper service. Consulting and training services are provided to
clients free of charge. See "--Client Support Services."

. INTEGRATING NEW DATABASES. The Company regularly adds new databases to its
system. The integration of new databases, in addition to making the
Company's system more useful to existing clients, enables the Company to
tailor its services to the specific needs of additional user categories
and markets. Recent additions to the Company's library of databases
include EDGAR on FactSet, which provides access to both continuously
updated text and data contained in EDGAR SEC filings, the Toyo Kezai
database, a source of fundamental corporate information on Japanese
companies, Morgan Stanley Capital International, which provides
performance data for non-United States stock markets and industry groups,
and Russell U.S. Equity Profile, which provides benchmark data on company
investment styles and structure characteristics. The Company also is in
the process of providing United States security prices that are updated
within 20 minutes of their change (rather than once per day, as is the
current practice). See "-- Databases."

APPLICATIONS

FactSet has developed advanced proprietary software tools to enable users to
create investment analyses using the Company's mainframe computer and integrated
data library. This software allows clients, utilizing easy-to-use Windows-based
programs, to access the power of the FactSet mainframe computer to manipulate
the data provided by the Company and to present that data in a wide variety of
formats, including standard FactSet reports, high-speed screening, stock price
reports and charts. Reports can be tailored to formats designed by or for
individual clients. While many of the Company's

28
<PAGE>
competitors offer similar applications, the Company believes that none offer a
package of applications as comprehensive and user-friendly as those offered by
the Company. See "--Competition."

FACTSET'S WINDOWS INTERFACE

Recognizing the need for a Windows interface, FactSet developed a
sophisticated proprietary system, FactSet's Windows interface which makes the
FactSet system available in a user-friendly point-and-click screen environment
familiar to most of today's personal computer users. The Company believes that
FactSet's Windows interface will enable the Company to extend its client base
significantly within investment managers and investment banks.

In addition to a familiar environment, FactSet's Windows interface allows
Microsoft Excel and Lotus 1-2-3 users to access data and most FactSet
applications from within their spreadsheet without leaving the spreadsheet. The
FactSet-Excel Link, for example, allows Excel to interact seamlessly with the
FactSet system by adding the FactSet system menu to the Excel menu bar. This
pull-down menu currently enables clients to log on to the FactSet system, search
for company identifiers and download data from within the Excel environment. In
addition to saving time, this product allows the Company's clients to analyze
data using their own customized reports and to create, produce and print charts
and graphs automatically. The Company believes that client usage of the FactSet
system has increased significantly since the introduction of its Windows
interface.

DATA DOWNLOADING

Data Downloading allows clients to simultaneously access disparate sources
of information and place data in discrete and selected spreadsheet cells. Using
a combination of a personal computer spreadsheet program (Microsoft Excel or
Lotus 1-2-3) and the Company's mainframe library, clients are able to create a
complete custom report incorporating data from any FactSet database as well as
from any private databases clients maintain on the FactSet system or their own
computers.

To perform Data Downloading, a client creates a spreadsheet template
containing request codes in FactSet syntax. The client then downloads the data
into the template through the FactSet system and can then manipulate the data
locally in his spreadsheet.

In addition to downloading individual data points, the FactSet system can
perform calculations on several data items and download the result directly
rather than using a spreadsheet formula to calculate the cells of information.
This is particularly useful for calculating complex statistical functions
requiring vast amounts of data.

UNIVERSAL SCREENING

The Company's Universal Screening utility allows clients to determine,
across all the data contained in the Company's integrated data library, which
companies or particular securities meet certain fundamental or market criteria.
There are two primary applications for Universal Screening. Analysts or
portfolio managers, for example, can use the FactSet system to calculate such
indicators as the market-weighted price/earning ratios of selected industry
groups. Similarly, users can select a group of companies, such as those
comprising the S&P 500, calculate their average return on equity and then rank
companies or sectors relative to that average. In each case, the calculations
are performed by the mainframe, requiring no downloading of data.

Universal Screening is also frequently used by clients to define a universe
of companies or security issues. Beginning with the 20,000 companies for which
fundamental data is provided on the FactSet system, a client can quickly narrow
the list using a combination of parameters chosen by the client. Results can be
sorted according to one of the selected criteria, a weighting of multiple
factors or upon a set of entirely new parameters. The FactSet system also
provides a number of report writing tools that permit clients to customize the
output. Output and reports may be saved on the FactSet system and rerun
regularly or at specified later dates.

The Company also maintains a library containing thousands of pre-programmed
formulas commonly used by analysts to measure corporate size, profitability,
growth and valuation. Each of these screening items is recalculated nightly.
Clients may also create their own formulas, store them in the

29
<PAGE>
system's Formula Library, and retrieve them using a mnemonic. In addition,
clients can save "Private Ticker Lists" to capture a particular corporate
universe.

STANDARDIZED ANALYTIC REPORTS

The Company offers three preformatted analytic reports: The Company FactSet,
the Business Segment Analysis and the Industry FactSet. Each of these reports
provides a detailed analysis of a company or industry in a brief, standardized
format.

. The Company FactSet. The Company FactSet provides financial ratio, stock
performance and capital structure analysis for an individual company for
the last twelve months and for ten prior years. Introduced in 1979, the
Company FactSet was the Company's first product.

. The Business Segment Analysis. The Business Segment Analysis displays data
on a company's reported lines of business, providing a seven year history
of sales, operating profits, assets and capital expenditures for each
segment and concluding with a composite analysis.

. The Industry FactSet. The Industry FactSet is a four page report showing
detailed financial data for the companies in a particular industry.
Individual company size, profitability and growth characteristics are
displayed in a comparative format. All income accounts, balance sheets and
profitability factors are then combined to create an industry aggregate.

The FactSet system also includes a series of pre-formatted display screens
which facilitate the examination of raw data in the various FactSet databases.
These screen reports are either unique to the particular database or common to a
class of databases (e.g., securities prices, whether from IDC or Exshare). In
most cases, a ticker symbol is all that is required for information retrieval.

INVESTMENT GRAPHICS

The Company has preprogrammed a set of charts which can be displayed
on-screen and printed. FactSet system graphs present earnings power, growth
rates and stock valuation, and include quarterly earnings and sales changes,
price/earnings and price/book ratios and relative profitability charted against
price/earning ratios. Clients can select from one or more price or valuation
charts and vary the start date, currency or scaling, display a relative price
line, add volume or moving averages or include other display options.

PRIVATE DATABASE SERVICE

The Company offers clients the ability to store their own databases on the
FactSet system and access those databases from multiple locations. Using the
Private Database Service, clients can store portfolio and investment
information, as well as subsets of the FactSet database, on the Company's
mainframe computers.

ALPHA TESTING

Alpha Testing is a service offered to clients by the Company that allows
clients to analyze the relationship between a single or multiple variables and
subsequent investment returns over time. The Company's alpha testing model
contains a large number of preprogrammed specifications and formulas, or clients
can input their own. Clients can place results directly into a variety of report
formats as well as their own spreadsheets or other work products.

CORNERSTONE

Cornerstone is a set of applications that allows quantitative analysts to
quickly and efficiently access large amounts of data directly from the FactSet
system. Cornerstone provides the tools those analysts need to specify the
sources of data and the layout of the resulting data sets. Freshly updated data
sets can then be transferred, at dates and times specified by the client,
directly to client workstations for further processing.

30
<PAGE>
SALES AND MARKETING

SALES

The FactSet system is sold and marketed through the Company's direct sales
and marketing staff, which as of March 31, 1996, consisted of 24 full time
employees based at the Company's Greenwich, Connecticut headquarters and at its
offices in San Mateo, California, London and Tokyo. Marketing the Company's
services requires a skill set which includes knowledge of financial information,
information technology and the financial services industry. FactSet has been
successful in recruiting, training and retaining talented marketing
professionals that meet these criteria. On average, the Company's sales and
marketing personnel have been with the Company in excess of five years and,
with few exceptions, spent their first several years in training with FactSet as
technical support consultants.

The Company believes that substantial opportunities exist to both attract
new clients and increase its revenues from existing clients. While the Company
has achieved excellent penetration of the largest equity investment managers (84
of the top 100 investment managers in the United States are FactSet clients),
only approximately 30% of the estimated 900 investment managers in the United
States with more than $500 million under management are currently FactSet
clients. In addition, while 20 of the largest investment banks in the United
States are FactSet clients, only approximately 44% of the estimated 151
securities firms in the United States with more than $20 million in capital are
currently FactSet clients. The Company believes that it should be able to
increase revenue from its existing clients through the introduction of new
applications, databases and technological innovations, many of which are in
response to client demand. The Company recently formed an investment banking
group to focus exclusively on sales and marketing to the investment banking
sector. FactSet also recently established technical development groups focused
on the development of applications and services for specific user categories
such as portfolio managers, quantitative research analysts and investment
bankers. See "-- Engineering and Product Development."

Between 1988 and 1995, average revenue per client increased from $48,798 to
$96,373. This growth resulted to a significant degree from an expansion in the
number of databases offered, the addition of new services and growth in the
number of workstations per client. As described above, the Company is continuing
to develop new applications and services, as well as focused marketing and
technical development groups, in order to increase revenues through a further
increase in the number of databases and workstations within its clients.

The Company believes that significant opportunities also exist to market its
services internationally. In 1992, the Company began adding databases to the
FactSet system--such as Extel and Worldscope--that broadened the system's
international scope and enhanced its appeal to international financial services
companies. This globalization of the FactSet system's data is ongoing.

The Company opened its London office in 1993 and, as of March 31, 1996, the
Company had 28 clients in Europe with aggregate indicated annual subscription
revenues of over $2.4 million. The London office currently includes 11
personnel, including five sales personnel and five client support consultants.
The Company's strategy for the European market is to obtain additional clients
by increasing potential clients' knowledge of the Company's services and by
adding applications and databases to the FactSet system that are particularly
suited to those clients' needs.

The Company began to market its services in the Pacific Rim (principally
Japan, Hong Kong and Singapore) in 1993 and now operates an office in Tokyo with
two sales personnel and two client support consultants. The Tokyo office is
fully linked to FactSet's global communications network, and the Company's
bilingual staff provide both telephone and on-site marketing and technical
support for the region.

The Company is focusing its marketing efforts in Japan on the international
and domestic sections of large Japanese institutional investment firms, the
Japanese divisions of non-Japanese institutional money managers and the research
departments of both Japanese and non-Japanese securities firms. The Company has
invested considerable resources in developing relationships with potential
Japanese clients and studying the particular needs of Japanese financial
services companies. Currently, FactSet has 11

31
<PAGE>
Pacific Rim clients--including two of the four largest trust banks in
Japan--with over $800,000 in aggregate indicated annual subscription revenues.
In Hong Kong and Singapore, the Company is focusing on marketing to regional
money management and securities firms, which are often the local operations of
global entities that already have an existing relationship with FactSet.

The Company's strategy is to increase its client base in the Pacific Rim by
continuing to adapt its services to the needs of those markets. For example, the
Company recently added the Toyo Kezai database, a source of fundamental
corporate information on Japanese companies. In addition, the Company believes
it will benefit from the increasing use by Pacific Rim financial services
companies of LAN-based office computer information systems, which the Company
believes will lead to a shift from in-house mainframe environments to one where
the focus is an interactive desktop.

PRICING

The Company seeks to make its services integral to its clients' investment
decision processes. Thus, unlike services that charge fees based in whole or
part on actual system usage time, the Company charges fixed monthly amounts
which vary among clients based on the number of sites and workstations from
which the FactSet system is available and the number of accessible databases and
specialized services to which a client subscribes. The Company believes that
this pricing policy encourages clients to use the FactSet system regularly. The
Company does not enter into formal contracts with clients, a practice which the
Company believes enhances its marketing efforts by allowing clients to use the
FactSet system without the requirement of a long term commitment.

Although the Company's subscription charges are quoted to clients in annual
amounts, they are earned as services are provided on a month to month basis. The
basic FactSet subscription consists of: five databases including fundamental
corporate data, securities prices, business news and economic data; two
authorized workstations and companion home passwords; a basic application
package; and client support and training. Additional databases, passwords and
services (including enhanced and specialized applications) are available at
additional cost. Over 90% of existing FactSet clients subscribe to additional
system services. In many instances, clients must also pay access fees directly
to the database providers.

Each FactSet client has the option to pay subscription charges to the
Company either in the form of commissions on securities transactions or on a
cash basis. This choice is available regardless of the nature or amount of the
services provided by FactSet to such client. When a client elects to pay
subscription fees in the form of commissions, the dollar amount payable is
higher than the fee that would be payable on a cash basis because of the
associated clearing fees payable by the Company on such transactions. However,
commissions net of related clearing fees are approximately equal to the fees
that would be paid by a client on a cash basis. In addition, although the option
to pay subscription charges in the form of commissions is available to all
clients, it is impractical for clients that do not engage in securities
transactions to utilize this method of payment.

CLIENTS

The Company's client base consists of investment managers, investment banks
and, to a very limited extent, corporations and accounting firms. The Company
currently has over 400 clients, the substantial majority of which are located in
the United States. For fiscal 1995, average revenue per client was $96,373, with
over 30% of the Company's clients producing more than $100,000 of annual
revenue. The Company's top ten clients accounted for approximately 11% of
revenues and revenue from the largest client was approximately $900,000.

Investment managers (including the trust departments of commercial banks)
make up the Company's largest client group. As of March 31, 1996, approximately
324 of the Company's clients were investment managers, representing
approximately 79% of the Company's total client base. For the fiscal year ended
August 31, 1995, investment management clients accounted for approximately 82%
of the Company's revenue.

32
<PAGE>
Investment banking firms and broker-dealers (as distinguished from their
asset management affiliates) constitute the Company's second largest client
group. As of March 31, 1996, approximately 71 of the Company's clients were
investment banks. While the Company has achieved moderate penetration of the
major firms in this sector, the Company believes that the investment banking
area continues to represent an opportunity for growth.

The Company's major clients have spent increasing amounts on the Company's
services. The following table sets forth the aggregate indicated annual
subscription revenue from the Company's top ten current clients (with minimum
five year history) at December 31 of each year and the compound annual growth
rate of such revenue over the period depicted.

AGGREGATE INDICATED ANNUAL SUBSCRIPTION REVENUE
FROM THE COMPANY'S TOP TEN CLIENTS

COMPOUND ANNUAL
1990 1991 1992 1993 1994 1995 GROWTH RATE
- ------ ------ ------ ------ ------ ------ ---------------
(DOLLARS IN THOUSANDS)
$1,209 $1,714 $2,026 $2,500 $3,249 $4,036 27.3%

The Company's revenue per client has sustained consistent growth, growing
from $65,764 per client at December 31, 1991 to $96,373 per client at December
31, 1995. The Company enjoys excellent client retention--FactSet's overall
client retention rate (on a revenue basis) has been over 95% in each of the past
six years.

CONSULTATIVE SERVICES

Providing superior consultative services is an integral part of the
Company's business philosophy and has contributed to a client retention rate of
over 95% in each of the past six years. The goal of the Company's 36 full-time
client support consultants is to maximize the utility of the FactSet system to
clients and thereby promote lasting and mutually-profitable client
relationships. Client support consultants work with clients, often at client
sites, to develop custom applications tailored to clients' information needs.
The Company also conducts several dozen training seminars across the nation
annually and maintains a client support hotline and a round-the-clock emergency
beeper service. Consulting and training services are provided to clients free of
charge.

SYSTEM STRUCTURE

The design of the FactSet information system is based on the Company's
belief that time sensitive information and complex searches and data
manipulations can be best managed and delivered from a mainframe hub out to
client networks and workstations. The linkage of the Company's mainframe
computer power, speed and storage capacity with client terminals and networks
results in a highly capable and efficient information delivery system.

MAINFRAME PLATFORM

The Company maintains its databases on continually upgraded and fully
redundant Digital Equipment Corporation Alpha mainframe computer platforms. To
minimize the risk of interrupted operation, the Company maintains redundant
mainframe data centers in Greenwich, Connecticut and New York City. On a
day-to-day basis, the New York data center handles New York City clients and
those clients situated west of the Mississippi, while the Greenwich data center
handles the entire East Coast except New York City. The Company has designed the
capacity of its mainframe and data storage facilities so that in the event
either data center were to cease operation, the other could immediately begin
serving all clients from a single location.

33
<PAGE>
The Company's mainframe platform allows for monthly, daily, hourly and even
real-time refreshment of data. The Company believes that this system provides
advantages as opposed to alternative systems, including CD ROM based systems,
which generally cannot be updated with the same frequency. The Company's
databases are updated with a combination of on-line and tape input. For example,
securities prices are wire-fed from both IDC and Extel, as are newswires, EDGAR
SEC Filings and FIRST CALL Earnings Estimates. Other databases are tape feeds,
with updates conducted overnight.

The Company has developed an advanced, proprietary file structure that
allows the FactSet system to provide faster data access speeds. In addition, as
part of its database integration function, the Company continually screens for
and corrects anomalous data received from suppliers. Adjustments for corporate
actions, such as stock splits, are made across all databases to ensure
continuity of the data. All screening libraries, involving billions of
calculations, are recalculated whenever data are refreshed.

TELECOMMUNICATIONS

The Company's communications system is designed to provide a high-speed
platform for the delivery of financial and other information. The system is
capable of delivering bandwidth-consuming graphics as well as numerical data and
can be extended to serve as a distribution vehicle for other financial
information products.

Clients communicate with the Company's system via traditional dial-up
telephone modem, direct hardwire with the client, WAN or the Internet. In mid
1993, the Company put into operation a wide area network, or WAN, utilizing
frame relay protocols and the SprintNet and NYNEX telecommunications networks.
This network configuration allows higher speed data transmission to clients'
local area networks and is compatible with all standard local area network
protocols. Advantages to clients include data transfer at 56 kilobits per
second, unlimited access time without log-outs and the ability to quickly and
efficiently add authorized workstations to their service subscriptions. As of
March 31, 1996, approximately 25% of FactSet's clients (representing 50% of the
Company's authorized workstations) were linked to FactSet via the WAN.

ENGINEERING AND PRODUCT DEVELOPMENT

The Company recognizes that its continued success depends upon its ability
to enhance the FactSet system and to introduce new services that adequately
anticipate and address technological and market developments and the needs of
the Company's clients. The Company maintains an extensive staff of engineers
focusing on both new and improved software applications and system structure and
operations.

The Company is continually refining the process by which new and disparate
databases are integrated into the FactSet system. The Company is developing a
generalized integration system that it believes will significantly reduce the
lead time and costs associated with the addition of new databases. The Company
is also developing sophisticated tools for monitoring and maintaining the
quality and integrity of data in the FactSet system as such data is routinely
updated via feeds from database providers.

The Company's software engineers are developing applications designed to
enhance and leverage the success of FactSet's Windows interface. In connection
with this interface, the Company has developed sophisticated system architecture
that allows FactSet to centrally control the screen environment of and on-screen
special service options available to individual users, thereby eliminating the
need to continually upgrade FactSet software on clients' personal computers and
workstations. The Company's engineers are also focusing on the needs of the
Company's various client groups, and the product development cycle often
involves consultation with and feedback from clients. The Company is currently
developing an interactive graphics package for portfolio managers that will
allow the

34
<PAGE>
integration of data from user accounting systems into the FactSet system so that
such data can be readily used and presented in client reports.

DATABASES

As of March 31, 1996, the Company acquired data from 30 information
providers supplying over 50 databases. The Company seeks to maintain, when
possible, at least two sources for each item of data. The Company contracts with
database vendors on either a fixed fee or royalty (per client) basis, with the
contracts generally renewable annually and cancelable on one year's notice.
FactSet is a significant distributor for many of the databases provided by the
Company.

Currently, the databases offered by the Company as part of its basic
subscription package include fundamental corporate data, securities prices,
business news and economic data.

As of March 31, 1996, 91% of the Company's clients subscribed for databases
in addition to those offered with the Company's basic service. The Company
charges clients based on a fixed annual surcharge for each additional database
to which a client desires access. For most databases, the client must also pay
an annual fee directly to the database provider.

The integration of new databases, in addition to making the FactSet system
more useful to existing clients, enables the Company to tailor its services to
the specific needs of additional user categories and markets. In 1993, the
Company added a number of new databases to its library, including earnings
estimates from I/B/E/S International, international fundamental corporate data
from GLOBAL Vantage and portfolio data from BARRA and F.T. Actuaries. Additions
in 1994 included data from Morgan Stanley Capital International and EDGAR SEC
filings. In 1995, the Company added International Finance Corporation ("IFC")
industry data. The IFC, a subsidiary of the World Bank, is a provider of indices
covering emerging markets. The Company also recently introduced the Toyo Kezai
database, a source of fundamental corporate information on Japanese companies,
CDA Signal and the Russell U.S. Equity Profile, a comprehensive four-page report
that computes attribution characteristics of selected portfolios and benchmarks.

The table below lists the universe of data sources available on the FactSet
system.

<TABLE>
<CAPTION>
NUMBER OF
COMPANIES
DATABASE SUPPLIER OR ISSUES LENGTH OF HISTORY UPDATE CYCLE
--------------------- --------------- ---------------------- ----------------
<S> <C> <C> <C> <C>

CORPORATE AND MARKET

FINANCIAL DATA COMPUSTAT Annual 10,000 20 Years Weekly
Industrials
COMPUSTAT Quarterly 10,000 48 Quarters Weekly
Industrials
COMPUSTAT GLOBAL 11,000 Up to 12 years Biweekly/Monthly
Vantage
COMPUSTAT Business 8,000 7 Years Weekly
Segment
COMPUSTAT Geographic 8,000 7 Years Weekly
Segment
COMPUSTAT Bank 150 20 Years/40 Quarters Weekly
COMPUSTAT 100 20 Years/40 Quarters Weekly
Telecommunications
COMPUSTAT Utility 300 20 Years/40 Quarters Weekly
COMPUSTAT Research 7,700 20 Years Weekly
Annual
COMPUSTAT Research 7,700 48 Quarters Weekly
Quarterly
COMPUSTAT SIC Code 10,000 Current Weekly
COMPUSTAT Canadian 600 20 Years/20 Quarters Weekly
Annual, Quarterly,
PDE
Ford Investor Service 3,360 Since 1970 Weekly
</TABLE>

35
<PAGE>

<TABLE>
<CAPTION>
NUMBER OF
COMPANIES
DATABASE SUPPLIER OR ISSUES LENGTH OF HISTORY UPDATE CYCLE
--------------------- --------------- ---------------------- ----------------
<S> <C> <C> <C> <C>
Morgan Stanley 4,200 7 years Daily/Monthly
Capital
International
Toyo Keizai Inc. 2,900 15 years Weekly
Value Line 5,000 Since 1969 Weekly
Fundamental
Databases
Worldscope Global 12,500 Since 1980 Weekly
Worldscope Emerging 2,500 Since 1990 Weekly
Markets

SECURITIES PRICES

I.D.C. Stock & Option 36,000 Since November 1984 Daily
Prices
I.D.C. Bond Prices 15,000 Since July 1987 Daily
Exshare Global Equity 30,000 Since March 1985 Daily
Prices
FactSet Historical 25,000 Since 1972 Daily
Prices
COMPUSTAT 10,000 Since January 1962 Monthly
Price/Dividends/Earnings
COMPUSTAT Research 7,700 Since January 1962 Monthly
Price/Dividend/Earnings

BUSINESS
NEWS/CORPORATE FIRST CALL Notes 15,000 Since 1993 Real-Time
DESCRIPTIONS S&P Corporation 12,000 Since 1988 Biweekly
Records
S&P Daily News 12,000 Since 1988 Daily
PR Newswire 15,000 Since 1990 Real-Time
Business Wire 10,000 Since October 1992 Real-Time
CDA/Investnet Signal 6,500 Since 1985 Weekly
II
Information Access 180,000 Since 1990 Monthly
Private Companies

SEC

INFORMATION EDGAR SEC Filings 20,000 Since April 1993 Real-Time

EARNINGS

ESTIMATES FactSet/FIRST CALL 6,500 Since June 1989 Real-Time
RTEE
I/B/E/S U.S. Earnings over 5,000 3 Years Daily
Estimates (annual &
quarterly)
I/B/E/S U.S. 10,500 20 Years Weekly
Historical Estimates
(annual & quarterly)
I/B/E/S International 11,000 3 Years Weekly
Estimates
I/B/E/S International 16,000 9 Years Weekly
Historical Estimates
Value Line 1,600 Since May 1992 Weekly
Estimates/Projections

BENCHMARK DATA

Standard & Poor's 9 Indices; Current Daily
Indices 1,500 Companies
Russell U.S. Equity 18 Indexes Since 1990 Monthly
Profiles
Russell Indexes 18 Indexes; Current Monthly
3,000 Companies
Morgan Stanley 92 Indices Up to 28 Years Daily
Capital
International
Indices
FT/S&P Actuaries 39 Indices; Up to 10 years Daily/Monthly
World Indices 2,300 Companies
IFC (Emerging 60 Indices; Since 1975 Daily/Weekly/Monthly
Markets) 1,650 Companies
FT-SE U.K. Series 5 Indices; Current Daily
950 Companies
CAC (France) 40 Companies Current Daily
DAX (Germany) 30 Companies Current Daily

FIXED
INCOME Moody's Ratings 30,000 10 Years Daily
DATA Duff & Phelps Credit 4,300 Since 1973 Daily
Ratings Co.
</TABLE>

36
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
COMPANIES
DATABASE SUPPLIER OR ISSUES LENGTH OF HISTORY UPDATE CYCLE
--------------------- --------------- ---------------------- ----------------
<S> <C> <C> <C> <C>
Fitch Investor 325 Current Monthly
Services
I.D.C. Call/Put/ 18,000 Current Monthly
Sinking Fund
Features

ECONOMIC

DATA BCI Economic Series 200 Since 1945 Monthly
OECD Main Economic over 2,000 Since 1960 Monthly
Indicators

OTHER

SERVICES BARRA U.S. Equity 7,000 Current Monthly
Model
Columbine Capital 12,000 Current Weekly
Services
Invest/Net Insider 8,000 Since 1985 Daily
Trading
Trinity Multiplex 1,000 Since 1994 Monthly
Forecast
</TABLE>

- ------------
All database names are trademarks or registered trademarks of their respective
companies.

FUNDAMENTAL CORPORATE AND MARKET FINANCIAL DATA

Fundamental corporate and market data is a core basic service of the FactSet
system. These databases allow retrieval of information as broad as the
historical price/earnings ratios of the S&P 500 or the current CPI-U deflator or
as strictly defined as the comparative returns on assets of Japanese and French
telecommunications companies. The majority of FactSet system usage comes from
clients downloading and screening the fundamental and price performance of
investment securities. The major databases integrated by the Company in this
category are:

. COMPUSTAT. The COMPUSTAT database, produced by the Standard & Poors
subsidiary of McGraw-Hill, provides financial, statistical and market
information covering more than 10,000 publicly-traded companies in North
America. COMPUSTAT's GLOBAL Vantage product, introduced in the FactSet
system in 1993, provides fundamental and market-related data for more than
11,000 industrial and financial companies in 70 countries worldwide.

. Value Line. The Value Line databases contain comprehensive annual and
quarterly income statement, balance sheet, and cash flow data for more
than 5,000 industrial, transportation, utility, retail, bank, insurance
and savings and loan companies. The Value Line database also provides a
number of pre-computed and commonly used ratios and investment ratings.

. Worldscope. The Worldscope database, produced by Disclosure/Wright
Investor Services, provides financial information on 12,000 companies in
38 developed countries and 2,500 companies in 27 emerging market
countries.

SECURITY PRICES

The FactSet system offers securities prices from the following sources:

. I.D.C. Daily Stock, Option and Bond Prices. The Company receives nightly
security pricing and related information for each trading day. The
database contains daily high, low and closing prices and volume for over
36,000 securities. In addition to common stocks, the price database
contains preferred stock, convertible bonds, convertible preferreds,
warrants, indices and options. In addition, over 15,000 corporate bond
issues, treasuries, agencies, and bond indices are updated daily.

. Exshare Global Equity Prices. Global equity prices are transmitted to the
Company daily. The database contains daily prices from January 1985 for
more than 30,000 non-U.S. securities and indices.

. FactSet Historical Prices. The Company maintains historical prices on
25,000 U.S. securities back to 1972.

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<PAGE>
. COMPUSTAT Monthly Price/Dividend/Earnings Database. The
Price/Dividend/Earnings data-base is a library of financial and market
information for over 10,000 industrial and non-industrial companies and
approximately 120 industry indices and composites.

BUSINESS/CORPORATE DESCRIPTIONS

The Company offers several databases which transmit corporate news or
actions:

. FIRST CALL Notes. First Call Notes provides real-time transmission of
analyst morning meeting notes, earnings announcements, industry reports
and corporate news. More than 30 investment banks, covering more than
5,000 companies, contribute to this service.

. S&P Corporation Records/S&P Daily News. This database contains corporate
descriptions and daily updated news covering over 12,000 companies.

. PR Newswire. PR Newswire is a real-time news feed containing press
releases from more than 15,000 companies. PR Newswire is included in the
basic FactSet subscription.

. Business Wire. Business Wire provides real-time corporate news including
product announcements, financial results and employee changes. Business
Wire is included in the basic FactSet subscription.

. CDA Investnet. CDA Investnet contains nightly updated transactions by more
than 100,000 individuals and 8,000 companies dating back to 1985.

Each of these databases allow the user to search for individual companies or
to create a watch list to monitor specific companies. Items can be viewed,
printed, or downloaded. With the exception of PR Newswire and Business Wire,
these databases carry a surcharge.

SEC INFORMATION

During 1994, the Company introduced EDGAR on FactSet. This service provides
access to EDGAR SEC Filings which are updated continuously. EDGAR on FactSet
provides clients with access to the latest SEC filings as well as an archive of
those documents filed through EDGAR since April 1993. EDGAR on FactSet allows
clients to view, print, download (to a spreadsheet) or capture (to a text file)
Form 10-K's, Form 10-Q's, proxy statements and Form 8-K's among other SEC
documents, keep track of that day's filing activity for any portfolio of
companies and search for SEC documents by issuer, date or full text search.

The EDGAR database is currently comprised of 10,232 companies and is
scheduled to include all U.S. publicly reporting companies as well as thousands
of trusts and mutual funds by mid-1996.

EARNINGS ESTIMATES

Earnings estimates are important to the investment decision process at many
investment managers. Earnings estimates, which are generated primarily by
brokerage research analysts, are supplied on the FactSet system by three
services.

. FactSet/FIRST CALL Real Time Earnings Estimates. FactSet/FIRST CALL
provides a chronology of nearly 200 brokers' individual estimates on over
5,000 companies, with information updated continuously throughout the day
so that the latest estimate changes are immediately available to all
subscribers. Annual and quarterly estimates are available for the current
and next fiscal year. Long-term growth rate estimates are also included.
The information is continuously updated throughout the day. Data is
available from June 1989.

. I/B/E/S U.S. Earnings Estimates. I/B/E/S International Inc. is a service
that monitors earnings estimates produced by brokerage firm analysts on
companies of interest to institutional investors. The Company receives
daily updates from I/B/E/S and maintains a database

38
<PAGE>
comprised of more than 5,000 companies. Estimates include the annual
estimate for the current and next fiscal years, quarterly estimates for
the current and three ensuing quarters, and the long-term growth rate. The
Company provides three years of history for the annual estimate and the
long-term growth rate. In addition, I/B/E/S U.S. Historical Estimates
provides the same estimate information for over 10,500 companies
(including companies that no longer trade) annually from 1976 and
quarterly from 1984.

. I/B/E/S International Inc. I/B/E/S International delivers consensus
earnings estimates for more than 11,000 publicly traded companies in 44
countries. In addition, I/B/E/S International Historical Estimates
provides the same estimate information for over 16,000 international
companies (including companies that no longer trade) annually since 1987.

. Value Line Estimates and Projections. The Value Line Estimates and
Projections database is, with few exceptions, comprised of the same
universe of companies that Value Line follows in its historical database.
The estimates, projections and ratings contained in this database
correspond with the most recently published information in the Value Line
Investment Survey. All data is reviewed and updated at least once a
quarter. However, new earnings and dividend information is added whenever
reported by the company.

BENCHMARK DATA

Benchmark data permits clients to measure the performance of their
investments against relevant indices. The Company offers the following sources
of benchmark data:

. Standard & Poor's Indices. This database provides daily changes in
constituents and weights for the major S&P indices, including the 500
Industrials, 100 Transports, Financials, Utilities, Mid Cap, Small Cap and
Super Composite.

. Russell Equity Profiles. The Russell U.S. Equity Profiles calculates
investment style and structure characteristics for clients' portfolios,
allowing them to measure their portfolio's performance against relevant
benchmark indices.

. Morgan Stanley Capital International Indices. The Morgan Stanley Capital
International Indices are designed to measure the performance of the stock
markets around the world. Among the indices calculated daily are indices
of 46 countries, 38 industries and 8 economic sectors. Regional and global
indices are also calculated for the developed and emerging markets, and
the combination of the two.

. FT/S&P Actuaries World Indices. The FT/S&P Actuaries World Indices
provides rigorous global performance benchmarks covering 26 countries, 12
regions, 7 economic sectors, and 36 industries. More than 1,700 index
levels measure each performance category globally and by country, and
region.

. IFC (Emerging Markets). The IFC database provides emerging marked indices
and detailed market data for 27 stock markets globally.

COMPETITION

The financial information services industry is competitive and characterized
by rapid technological change and the entry into the field of large and
well-capitalized companies as well as smaller competitors. In a broad sense, the
Company competes or may compete directly and indirectly in the United States and
internationally with large, well-established news and information providers such
as Dialog, Disclosure, Dow Jones, Lexis/Nexis, Pearson, Reuters and Thomson,
market data suppliers such as ADP, Bloomberg and Telerate, as well as many of
the database providers from whom the Company obtains data for inclusion in the
FactSet system. The Company's most direct competitors

39
<PAGE>
include on-line and CD-ROM database suppliers and integrators such as OneSource
Inc., COMPUSTAT PC Plus, Baseline, DAIS Group, IDD Information Services and
Track Data Corp. primarily in the United States and Datastream and Randall-Helms
primarily in international markets. Many of these competitors offer databases
and applications that, in one form or another, are similar to the databases and
applications offered by the Company, in some cases at lower prices. While many
of the Company's competitors offer similar applications, the Company believes
that none offer a package of applications as comprehensive and user-friendly as
those offered by the Company.

GOVERNMENT REGULATION

To facilitate the receipt of revenues on a commission basis, the Company's
wholly owned subsidiary, FDS, is a member of the National Association of
Securities Dealers, Inc. and is a registered broker-dealer under Section 15 of
the Securities and Exchange Act of 1934 (the "Exchange Act"). See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Overview". Rule 15c3-1 under the Exchange Act requires that FDS maintain minimum
net capital equal to the greater of $5,000 or 6.67% of aggregate indebtedness
and a ratio of aggregate indebtedness to net capital of not more than 15 to 1.
FDS may be prohibited from paying cash dividends to the Company if such
dividends would result in its net capital falling below the minimum requirement
or its ratio of aggregate indebtedness to net capital exceeding 15 to 1. In
addition, Rule 15c3-1 requires that FDS notify the Securities and Exchange
Commission ("SEC") and the appropriate self-regulatory organization two business
days before a withdrawal of excess net capital if the withdrawal would exceed
the greater of $500,000 or 30% of the FDS's net capital, and two business days
after a withdrawal that exceeds the greater of $500,000 and 20% of net capital.
Finally, Rule 15c3-1 authorizes the SEC to order a freeze on the transfer of
capital if FDS plans a withdrawal of more than 30% of its excess net capital and
the SEC believes that such a withdrawal would be detrimental to the financial
integrity of FDS. Compliance with Rule 15c3-1 could limit the Company's ability
to undertake certain capital expenditures. At February 29, 1996, FDS had net
capital of $2,104,657, which was $1,788,716 in excess of its minimum net capital
requirement of $315,941, and a ratio of aggregate indebtedness to net capital of
2.25 to 1.

EMPLOYEES

The Company had 116 full time employees as of May 31, 1996. The Company's
employees are not represented by any collective bargaining organization and the
Company has never experienced a work stoppage. The Company's philosophy is to
reward employees for outstanding performance and continued service to the
Company. The Company believes that its relationships with its employees are
good.

PROPERTIES

The Company's principal executive offices are located in Greenwich,
Connecticut. The Company maintains redundant mainframe computer centers at its
Greenwich facility and at a facility in New York City. The Greenwich facility
consists of approximately 37,000 square feet of office and computer center
space, 11,000 square feet of which the Company acquired in late 1995 and is in
the process of renovating. The Company also maintains offices in San Mateo,
California, London, England and Tokyo, Japan. The Company is currently expanding
its facilities in San Mateo. The Company leases all of its facilities.

LEGAL PROCEEDINGS

The Company is not a party to any material legal proceedings.

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<PAGE>
MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND ADDITIONAL KEY PERSONNEL

Set forth below is information concerning the current executive officers and
directors of the Company. The Board of Directors currently has three members,
one of whom is not also an employee of the Company. The Company anticipates that
it will add two additional outside directors shortly after the Offering.

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Howard E. Wille........................... 68 Chairman of the Board of Directors, Chief
Executive Officer and Director
Charles J. Snyder......................... 53 President, Chief Technology Officer and
Director
Ernest S. Wong............................ 41 Senior Vice President and Chief Financial
Officer
Joseph E. Laird, Jr....................... 50 Director
</TABLE>

Set forth below is information concerning certain other key additional
personnel of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ------------------------------------------ --- ------------------------------------------
<S> <C> <C>
Timothy J. Aune........................... 33 Director of Pacific Rim Operations and
President of FactSet Pacific Inc.
Jon D. Carlson............................ 29 Director of PC Software Development
Nathaniel B. Day.......................... 58 Senior Sales Executive
Michael F. DiChristina.................... 33 Director of Engineering
William F. Faulkner....................... 40 Director of Product Development
Philip A. Hadley.......................... 33 Director of Sales and Marketing
Edward A. Martin.......................... 33 Director of Information Research
Kristen L. McCutcheon..................... 29 Director of Consulting Services
Adelaide P. McManus....................... 40 Chief Administrative Officer
Townsend Thomas........................... 32 Director of Systems Engineering
Susan L. Warzek........................... 33 Director of Communications
Merle E. Yoder............................ 37 Director of European Operations and
Managing Director of FactSet Limited
</TABLE>

Howard E. Wille, Chairman of the Board of Directors, Chief Executive Officer
and Director. Mr. Wille was a founder of the Company in 1978 and has held his
current positions with the Company since that time. From 1966 to 1977, Mr. Wille
was a partner and Director of Research at Faulkner Dawkins & Sullivan, a Wall
Street investment firm, and held a managerial position with Shearson Hayden
Stone after its acquisition of Faulkner Dawkins & Sullivan in 1977. He was
President and Chief Investment Officer of Piedmont Advisory Corporation from
1961 to 1966 and, prior to that time, served as a securities analyst, investment
manager and investment counselor for several firms. Mr. Wille received a B.A. in
Philosophy from the City College of New York. Mr. Wille has been a director of
the Company since its formation.

Charles J. Snyder, President, Chief Technology Officer and Director. Mr.
Snyder was a founder of the Company in 1978 and has held his current positions
with the Company since that time. From 1964 to 1977, Mr. Snyder worked for
Faulkner Dawkins & Sullivan, eventually becoming Director of Computer Research,
a position he retained with Shearson Hayden Stone after its acquisition of
Faulkner Dawkins & Sullivan in 1977. Mr. Snyder received a B.S.E. in Electrical
Engineering from Princeton University and an M.S. in Mathematics from New York
University. Mr. Snyder has been a director of the Company since its formation.

Ernest S. Wong, Senior Vice President and Chief Financial Officer. Mr. Wong
joined the Company as Vice President and Chief Financial Officer in June 1996.
Between 1991 and 1996, he held

41
<PAGE>
several positions with Montedison, S.P.A., including Vice President, Finance and
Treasurer of Montedison U.S.A. and Director of Corporate Finance of Montedison
Corporation of America. Mr. Wong received a B.A. in Social Psychology from
Cornell University and an M.B.A. in Finance from Columbia University Graduate
School of Business.

Joseph E. Laird, Jr., Director. Mr. Laird has been a Managing Director of
Veronis, Suhler & Associates, the leading specialty investment bank exclusively
serving the media and information industries, since 1989. From 1982 to 1989, he
was an institutional equity salesman and a senior securities analyst of database
information services for Hambrecht & Quist. From 1975 to 1982, Mr. Laird was an
institutional equity salesman and then investment strategist for Paine Webber
Mitchell Hutchins. Mr. Laird has been a director of the Company since 1993.

Timothy J. Aune, Director of Pacific Rim Operations and President of FactSet
Pacific Inc. Mr. Aune joined the Company in 1987 as a sales representative and
has held his current positions since 1995. Prior to joining the Company, he was
a sales engineer with Tektronix, Inc. Mr. Aune received a B.S. in Electrical
Engineering from the Massachusetts Institute of Technology.

Jon D. Carlson, Director of PC Software Development. Mr. Carlson joined the
Company in 1988 as a technical consultant and has been Director of PC Software
Development since 1992. He received a B.S. in Mechanical Engineering from
Stanford University.

Nathaniel B. Day, Senior Sales Executive. Mr. Day joined the Company in 1981
and has held his current position since 1988. Previously, he was an
institutional securities salesman with Faulkner Dawkins & Sullivan, prior to
which he was a member of the New York Stock Exchange between 1966 and 1969. Mr.
Day received a B.A. in Marketing from Lehigh University.

Michael F. DiChristina, Director of Engineering. Mr. DiChristina joined the
Company in 1986 and has held his current position since 1991. Prior to joining
the Company, he was a software engineer at Morgan Stanley & Co. Mr. DiChristina
received a B.S. in Electrical Engineering from the Massachusetts Institute of
Technology.

William F. Faulkner, Director of Product Development. Mr. Faulkner joined
the Company in 1986 and has held his current position since 1990. Previously, he
served as an analyst at Delafield Harvey Tabell, an investment management firm.
Mr. Faulkner received a B.A. in Psychology from Boston University and an M.S. in
Biopsychology from Rutgers University.

Philip A. Hadley, Director of Sales and Marketing. Mr. Hadley joined the
Company in 1985 and has held his current position since 1989. Prior to joining
the Company, he was a staff auditor for Cargill Corporation. Mr. Hadley received
a B.B.A. in Accounting from the University of Iowa and is a Chartered Financial
Analyst.

Edward A. Martin, Director of Information Research. Mr. Martin joined the
Company as a systems programmer in 1988 and has held his current position since
1995. Previously, he was a staff scientist at the Massachusetts Institute of
Technology's Lincoln Laboratory. Mr. Martin received a B.S. and an M.S. in
Digital Signal Processing from the Massachusetts Institute of Technology.

Kristen M. McCutcheon, Director of Consulting Services. Ms. McCutcheon
joined the Company in 1992 and has held her current position since 1993.
Previously, she served as a financial analyst at Capricorn Management and as a
research analyst at Chemical Bank. Ms. McCutcheon received a B.A. in Economics
from the State University of New York at Binghamton and an M.B.A from the
University of Connecticut.

Adelaide P. McManus, Chief Administrative Officer. Ms. McManus joined the
Company in 1980 and has held her current position since 1985. She received a
B.A. in Economics from Marymount College and an M.B.A in Finance from Fordham
University.

42
<PAGE>
Townsend Thomas, Director of Systems Engineering. Mr. Thomas joined the
Company in 1985 and has held his current position since 1991. He received a B.S.
in Electrical Engineering from the Massachusetts Institute of Technology.

Susan L. Warzek, Director of Communications. Ms. Warzek joined the Company
in 1989 and has held her current position since 1993. Prior to joining the
Company, she was a research associate with Wheat First, Butcher & Singer, where
she followed the retail and consumer products industries and published a weekly
analyst commentary for institutional clients. Ms. Warzek received an A.B. in
Government & Law from Lafayette College.

Merle E. Yoder, Director of European Operations and Managing Director of
FactSet Limited. Mr. Yoder joined the Company in 1983 as a Sales Representative
and has held his current positions since 1993. He received a B.S. in Electrical
Engineering from Purdue University.

ELECTION AND COMPENSATION OF DIRECTORS

The Board of Directors is divided into three classes, each class as nearly
equal in number as possible. The term of office of one class of directors
expires each year in rotation so that one class is elected at each annual
meeting of stockholders for a full three year term. Directors may be removed
only for cause by the affirmative vote of the holders of a majority of the
outstanding shares of the Company then entitled to vote generally in the
election of directors, voting as a single group at a meeting of the stockholders
called and held for that purpose. See "Description of Capital Stock."

Directors who are also employees of the Company are not separately
compensated for serving on the Board of Directors. Following the Offering,
non-employee directors will be compensated through cash payments for attendance
at Board and committee meetings and will be reimbursed for related travel
expenses. Non-employee directors will receive an annual retainer of $15,000 plus
$1,000 for attending each meeting of a committee of the Board of Directors ($500
for participating by telephone). In addition, committee chairmen will receive an
annual fee of $2,500. Mr. Laird has not in the past received any cash
compensation for his services as a director of the Company. However, Mr. Laird's
firm, Veronis, Suhler & Associates ("Veronis") has received FactSet services for
which it has not been separately charged. In 1995, the value of such services
was $93,973. In connection with the Offering, the Company is entering into a
consulting agreement with Veronis pursuant to which Veronis will receive up to
$100,000 per year of FactSet services, as requested by Veronis. In return, the
Company will be entitled to receive certain consulting and investment banking
services from Veronis.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended August 31, 1995, the Company had no separate
compensation committee or other committee performing similar functions.
Decisions concerning compensation of executive officers were made by the Board
of Directors which, in fiscal 1995, consisted of Messrs. Wille, Snyder and
Laird. It is expected that following the Offering, the Board of Directors will
establish a compensation committee, a majority of the members of which will
consist of outside directors.

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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS

The following table summarizes the compensation paid by the Company to its
executive officers for the fiscal year ended August 31, 1995.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION SECURITIES
--------------------------------------- UNDERLYING
OTHER COMPANY
NAME AND PRINCIPAL ANNUAL OPTIONS/SAR ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(1) GRANTS COMPENSATION
- ------------------ ---- -------- -------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Howard E. Wille, Chairman
and Chief Executive
Officer................ 1995 $607,500 -- $ 71,163 -- $452,000(2)
Charles J. Snyder,
President and Chief
Technology Officer....... 1995 545,000 -- 20,516 -- 40,000(3)
John S. Gross, former
Chief Financial
Officer(4)............. 1995 141,346 $ 25,000 11,925 -- --
</TABLE>

- ------------
(1) Represents (i) tax payments made by the Company on behalf of Messrs. Wille
and Snyder and (ii) ESOP contributions of $41,325 on behalf of all executive
officers.

(2) Includes compensation of $340,000, gross of related taxes, paid by the
Company to Mr. Wille to pay interest payable on a note due to the Company
(see Note 5 to the Company's Consolidated Financial Statements) and
approximately $112,000 representing premiums paid by the Company on key man
life insurance policies for Mr. Wille.

(3) Represents approximately $40,000 of premiums paid by the Company on key man
life insurance policies for Mr. Snyder.

(4) Effective January 3, 1995, Mr. Gross was granted options representing 30,000
shares of Common Stock under the Company's 1994 Stock Option Plan. In
February, 1996, Mr. Gross resigned from the Company, at which time he
exercised the vested portion of his options (representing 6,000 shares) and
forfeited the unvested portion (representing 24,000 shares).

Option Exercises and Holdings. The following table sets forth certain
information as of August 31, 1995 concerning exercisable and unexercisable stock
options held by the Company's executive officers. There were no option exercises
in fiscal 1995 by such executive officer.

<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
--------------------------------------------------------------------------
NUMBER OF SECURITIES UNDERLYING
UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED IN-THE-MONEY
FISCAL YEAR END OPTIONS AT FISCAL YEAR END(1)
----------------------------------- -----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>

John S. Gross.................. -- 30,000 $-- $ 399,000
</TABLE>

- -------------------
(1) The value of "in-the-money" options represents the difference between the
exercise price of such option and the assumed initial public offering price
of $16.00 per share of the Common Stock.

EMPLOYMENT AGREEMENTS

The Company has entered into employment contracts with Howard E. Wille, the
Company's Chairman and Chief Executive Officer, and Charles J. Snyder, the
Company's President and Chief Technology Officer. Under the agreements, Messrs.
Wille and Snyder will be employed in their current positions for three year
terms that renew annually and are terminable by the Company or the executive on
one year's notice. The agreements provide for annual base salaries of $300,000
for Mr. Wille and $300,000 for Mr. Snyder and entitle each to participate in any
bonus or employee benefit plans and arrangements from time to time in effect. In
the event the employment of Mr. Wille or Mr. Snyder is terminated by the Company
for reasons other than their disability or Cause, as defined in the

44
<PAGE>
agreements, Mr. Wille or Mr. Snyder, as the case may be, will be entitled to
receive (i) a lump sum payment of three times the sum of his base salary and the
average bonus paid to him over the prior three calendar years, (ii) three years
of continuing participation in the Company's benefit plans (or, if not possible
for any reason, comparable arrangements providing substantially similar
benefits) and (iii) in the event such termination of employment is in connection
with a change of control (within the meaning of Section 280G of the Internal
Revenue Code of 1986) of the Company reimbursement for any excise taxes incurred
as a result of the termination payments described herein. Also under the
agreements, Messrs. Wille and Snyder will agree not to engage in certain
activities in competition with the Company, including directly or indirectly
owning, managing, operating, joining, controlling, employment by or
participation in or consulting for any business which is similar to or competes
with the Company or its subsidiaries, during the term of their respective
employment with the Company and for two years thereafter.

The Company has also entered into a letter agreement with Ernest S. Wong,
the Company's new Vice President and Chief Financial Officer, relating to the
terms of his employment. Under the agreement, Mr. Wong will receive a base
salary of $175,000 per year and a minimum bonus of $50,000 following his first
full year of employment. In future years, Mr. Wong's bonus will be at the
discretion of the Board of Directors. Mr. Wong also received a one-time sign-on
bonus of $25,000 in June 1996 and will receive options to purchase up to 40,000
shares of Common Stock. In addition, in the event Mr. Wong is terminated by the
Company at any time for reasons other than good cause, as set forth in the
agreement, the Company will continue to pay his base salary and standard
employment benefits for twelve months following the date of such termination. In
the event Mr. Wong is terminated for any reason within one year following a
change in control of the Company, as defined in the agreement, Mr. Wong will be
entitled to continue receiving his base salary and standard employment benefits
for two years from the date of such termination.

COMPANY STOCK OPTION PLANS

The Company's 1994 Stock Option Plan (the "1994 Plan") was adopted by the
Board of Directors on December 21, 1994 and approved by the Company's
stockholders on December 22, 1994. Under the 1994 Plan, incentive stock options
("ISOs") and non-qualified stock options to purchase up to 1,481,000 shares of
Common Stock were granted to employees of the Company. Options granted under the
1994 Plan expire not more than 10 years from the date of grant and generally
vest at a rate of 20% per year beginning one year after the grant date. As of
February 29, 1996, options to purchase 1,451,000 shares of Common Stock were
outstanding under the 1994 Plan.

The 1994 Plan is administered by the Board of Directors. Options granted
under the plan are not transferrable or assignable other than by will or the
laws of decent and distribution and may be exercised, during the grantee's
lifetime, only by the grantee. In addition, most grantees under the 1994 Plan
are subject to a noncompetition provision prohibiting the grantee from engaging
in certain acts in competition with the Company during the grantee's employment
and for two years thereafter or, if longer, such period as the grantee continues
to own stock acquired pursuant to the exercise of an option granted under the
1994 Plan.

Prior to the Offering, the Company will adopt the 1996 Stock Option Plan
(the "1996 Plan"). The 1996 Plan will be substantially similar to the 1994 Plan
and will provide for the issuance of options to purchase up to 950,000 shares of
Common Stock at the market price of the shares on the date such options are
granted. The 40,000 options to be granted pursuant to the employment agreement
between the Company and Ernest S. Wong, the Company's Vice President and Chief
Financial Officer, will be granted under the 1996 Plan.

45
<PAGE>
EMPLOYEE STOCK OWNERSHIP PLAN

The FactSet Employee Stock Ownership Plan ("ESOP") was adopted in 1985 for
the purpose of enabling eligible employees of the Company and its subsidiaries
to acquire a proprietary interest in the Company and to provide economic
benefits to such employees upon their retirement or disability or to their
beneficiaries upon their death. Employees who have completed one "Year of
Service" (as defined in the plan) with the Company are eligible to participate
in the ESOP. As of February 29, 1996, there were 75 participants.

The ESOP, which is administered by a Plan Committee appointed by the Board
of Directors, is a defined contribution plan designed to invest primarily in the
Common Stock of the Company. Under the plan, an account is established for each
participant. The Company may contribute to the ESOP, in any "Plan Year" (defined
as the twelve-month period beginning on September 1, and ending on August 31,
i.e. the fiscal year of the Company), cash, securities of the Company or other
property of any kind as and when determined by the Board of Directors. Amounts
contributed by the Company are initially held in a trust fund (the "Trust Fund")
established by a trust agreement between the Company and a Trustee appointed by
the Board of Directors.

Company contributions to the Trust Fund with respect to any Plan Year are
allocated, as of the last day of such Plan Year, among individual accounts of
eligible participants. Such allocations are made pro rata in the proportion that
each eligible participant's compensation bears to the aggregate compensation of
all eligible participants during such Plan Year. Dividends, distributions and
other income and earnings received during a Plan Year on shares of Common Stock
or other assets credited to a participant's account are invested in shares of
Common Stock and allocated as of the last day of such Plan Year to each
participant's account in proportion to the respective balances in such accounts
as of the first day of the Plan Year, after giving effect to distributions from
such accounts made during such Plan Year.

Each participant's account generally vests in accordance with such
participant's number of years of service, with full vesting after seven years of
service. ESOP participants who leave employment with the Company prior to
complete vesting of their accounts forfeit amounts allocated to their accounts
that are not yet vested. Forfeited amounts are reallocated pro rata among other
ESOP participants based on their respective compensation amounts.

The vested interests of plan participants and former participants are
distributed in a lump sum upon such participant reaching the age of 65. A
participant who reaches the age of 65 but remains employed by the Company may
elect to receive the distribution of his or her vested interest as of the last
day in any subsequent Plan Year, provided that the distribution shall begin no
later than April 1 following the calendar year in which the participant attains
the age of 70 1/2. In the event of the death of a participant or former
participant prior to distribution, the entire balance in the participant's
account or the vested interest in a former participant's account, as of the last
day of the Plan Year in which the death occurs is distributed to the
participant's or former participant's beneficiary. In the event of the
Disability (as defined in the plan) of a participant or former participant, the
entire balance in the participant's account or the vested interest in a former
participant's account as of the last day of the Plan Year in which the
disability occurs is distributed to such participant or former participant.
Distributions of benefits under the plan may be made in whole shares of Common
Stock or in cash, or in a combination thereof, provided that a participant or
former participant has the right to demand that the distribution be made in
Common Stock.

The ESOP is intended to constitute a "qualified plan" within the meaning of
Sections 401(a) and 501(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and to qualify as an "employee stock ownership plan" under Section
4975(e)(7) of the Code.

46
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 29, 1996 and as adjusted
to reflect the sale of the shares offered hereby by (i) each person who is known
by the Company to own beneficially more than 5% of the outstanding shares of the
Common Stock, (ii) each director and the Named Executive Officers of the
Company, (iii) all directors and executive officers of the Company as a group
and (iv) each Selling Stockholder.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERINGS AFTER OFFERINGS
-------------------- SHARES BEING --------------------
NAME SHARES PERCENT OFFERED SHARES PERCENT
---- --------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Howard E. Wille(1)(2)..................... 3,863,300 40.6% 1,562,500 2,300,800 24.2%
Charles J. Snyder(1)(3)................... 3,670,800 38.5 1,562,500 2,108,300 22.1
FactSet Research Systems Inc. Employee
Stock Ownership Plan(1)................... 787,824 8.3 -- 787,824 8.3
All directors and executive officers of
the Company as a Group.................. 7,534,100 79.1 3,125,000 4,409,100 46.3
</TABLE>

- ------------
(1) The address for each of these beneficial owners is FactSet Research Systems
Inc., One Greenwich Plaza, Greenwich, CT 06830.

(2) In addition to the shares of Common Stock held beneficially by Mr. Wille,
Mr. Wille's adult children own beneficially an aggregate of 306,700 shares
of Common Stock and Adelaide P. McManus, Mr. Wille's spouse and the
Company's Chief Administrative Officer, holds options to purchase 60,000
shares of Common Stock. Mr. Wille disclaims beneficial ownership of such
shares.

(3) In addition to the shares of Common Stock held beneficially by Mr. Snyder,
Mr. Snyder's adult children own beneficially an aggregate of 499,200 shares
of Common Stock. Mr. Snyder disclaims beneficial ownership of such shares.

47
<PAGE>
CERTAIN TRANSACTIONS AND RELATIONSHIPS

REGISTRATION RIGHTS

Pursuant to a registration rights agreement between the Selling Stockholders
and the Company (the "Registration Agreement"), the Selling Stockholders and
certain transferees (the "Sellers") have the right to require that the Company
register under the Securities Act or qualify for sale (in either case, a "demand
registration") any securities of the Company that they own, including shares of
Common Stock, and the Company is required to use reasonable efforts to cause
such registration to occur, subject to certain limitations and conditions,
including that the Company shall not be obligated to register or qualify such
securities more than two times in any 12 month period and then only if the
request is to register at least 3% of the total number of shares of Common Stock
at the time issued and outstanding. In addition, if the Company proposes to
register shares of Common Stock under the Securities Act, the Sellers have the
right to request the inclusion of their securities in such registration
statement, subject to certain limitations and conditions, among them the right
of the underwriters of such registered offering to exclude or limit the number
of their shares included in such offering. The Company will bear the entire cost
of the first three demand registrations attributable to each Selling Stockholder
and the Sellers will each bear one-half of the costs of any subsequent demand
registrations. These costs include legal fees and expenses of counsel for the
Company, registration fees, printing expenses and other related costs. The
Sellers will pay any underwriting discounts and commissions associated with the
sale of their securities and the fees and expenses of their counsel.

The Company has agreed that in the event of any registration of securities
pursuant to the Registration Agreement, it will indemnify the Sellers against
certain liabilities incurred in connection with such registration, including
liabilities under the Securities Act. The Sellers will provide a similar
indemnity for liabilities incurred as a result of information jointly identified
in writing by the Company and the Sellers as concerning the Sellers and their
security holdings in the Company and as identified for use in such registrations
statement by the Sellers.

Subject to certain limitations and conditions, the registration rights held
by the Selling Stockholders may be transferred with their securities. The
Registration Agreement also contains various covenants imposing certain
obligations upon the Company in connection with its performance under such
agreement including, among other things, furnishing copies of any prospectus to
the Selling Stockholders, entering into an underwriting agreement, listing the
securities as requested and taking such other necessary actions.

LOANS TO SELLING STOCKHOLDER

As of February 29, 1996, the Company had loans outstanding to Howard E.
Wille, the Chairman of the Board and Chief Executive Officer of the Company and
one of the Selling Stockholders, in the aggregate amount of $3,846,703. These
loans, in the form of a promissory note in the amount of $3,250,000 bearing
interest at a rate of 5.8% per anum and a non-interest-bearing advance in the
amount of $596,703, will be repaid in full promptly following the completion of
the Offering. See Note 5 to the Company's Consolidated Financial Statements.

RELATIONSHIP BETWEEN THE COMPANY AND CERTAIN UNDERWRITERS

Certain affiliates of Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ") and Alex. Brown & Sons Incorporated ("Alex. Brown"), who are acting as
representatives for the underwriters in connection with the Offering, are, have
been and after the Offering will continue to be clients of the Company.
Affiliates of DLJ and Alex. Brown paid $313,767 and $57,500, respectively, in
subscription fees to the Company in the fiscal year ended August 31, 1995.
Certain of the other underwriters who will participate in the Offering or their
affiliates may also be clients of the Company.

48
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 10,000,000 shares of
Preferred Stock, $.01 par value per share, and 40,000,000 shares of Common
Stock, $.01 par value per share. After the Offering there will be no shares of
Preferred Stock and 9,526,300 shares of Common Stock outstanding. In addition,
1,451,000 shares of Common Stock are reserved for issuance upon the exercise of
existing options granted under the Company's 1994 Stock Option Plan. After the
offering, the Selling Stockholders will hold 4,409,100 shares, or 46.3%, of the
outstanding Common Stock (3,940,350 shares, or 41.4%, if the Underwriters'
over-allotment option is exercised in full). See "Risk Factors--Control by
Selling Stockholders" and "Principal and Selling Stockholders." In addition,
950,000 shares will be reserved for issuance in connection with options that may
be granted under the Company's 1996 Stock Option Plan. Holders of Common Stock
are entitled to one vote per share.

COMMON STOCK

DIVIDENDS

Each share of Common Stock is entitled to receive dividends if, as and when
declared by the Board of Directors of the Company. Under the Delaware General
Corporation Law, the Company may declare and pay dividends only out of its
surplus, or in case there shall be no such surplus, out of its net profits for
the fiscal year in which the dividend is declared and/or the preceding year.
Under the Delaware General Corporation Law, surplus is defined as the excess, if
any, at any given time, of the net assets of the Company over the amount
determined to be capital. Capital represents the aggregate par value of the
Company's capital stock. No dividends may be declared, however, if the capital
of the Company has been diminished by depreciation, losses or otherwise to an
amount less than the aggregate amount of capital represented by any issued and
outstanding stock having a preference on distribution. The Company does not
presently intend to pay any dividends on the Common Stock in the foreseeable
future.

OTHER PROVISIONS

There are no preemptive rights to subscribe for any additional securities
which the Company may issue, and there are no redemption provisions or sinking
fund provisions applicable to the Common Stock subject to calls or assessments
by the Company. All outstanding shares are, and all shares to be outstanding
upon completion of the Offerings will be, legally issued, fully paid and
nonassessable.

PREFERRED STOCK

The Board of Directors has the authority to issue 10,000,000 shares of
preferred stock in one or more series and to fix the preferences, limitations
and relative rights of the shares of each such series, including dividend rates,
conversion rights, voting rights, terms of redemption and liquidation
preferences, and the number of shares constituting each such series, without any
further vote or action by the shareholders. The issuance of preferred stock
could decrease the amount of earnings and assets available for distribution to
holders of Common stock or adversely affect the rights and powers, including
voting rights, of the holder of Common Stock.

RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS: CERTAIN ANTI-TAKEOVER
PROVISIONS

Certain provisions of the Restated Certificate of Incorporation and the
By-laws may have the effect, either alone or in combination with each other, of
making more difficult or discouraging a tender offer or takeover attempt that is
opposed by the Company's Board of Directors but that a stockholder might
consider to be in its best interest. See "Risk Factors--Certain Anti-Takeover
Provisions." The Company believes that such provisions are necessary to enable
the Company to develop its business in a

49
<PAGE>
manner that will foster its long-term growth without disruption caused by the
threat of a takeover not deemed by the Board of Directors to be in the best
interests of the Company and its stockholders. These provisions are summarized
in the following paragraphs.

CLASSIFIED BOARD

The Restated Certificate of Incorporation and the By-laws provide that the
Board of Directors will be divided into three classes of directors, each class
to be as nearly equal in number as possible. The term of office of one class of
directors expires each year in rotation so that one class is elected at each
annual meeting of stockholders for a full three year term.

NUMBER OF DIRECTORS; REMOVAL OF DIRECTORS; VACANCIES

The By-laws provide that the number of directors of the Company shall be a
number between three and 15 which shall be fixed by resolution adopted by two
thirds of the entire Board of Directors. The Restated Certificate of
Incorporation and the By-laws also provide that directors may be removed only
for cause by the affirmative vote of the holders of a majority of the
outstanding shares of the Company then entitled to vote generally in the
election of directors, voting as a single voting group at a meeting of the
stockholders called and held for that purpose.

ACTION BY WRITTEN CONSENT

The Restated Certificate of Incorporation and the By-laws provide that an
action required or permitted to be taken at an annual or special meeting of
shareholders may be taken with the written consent, setting forth the action so
taken, signed by the holders of at least 80% of the outstanding shares entitled
to vote thereon.

SPECIAL MEETING OF STOCKHOLDERS

The By-laws provide that special meetings of shareholders may be called only
by the Chairman of the Board, the President of the Company or a majority of the
Board.

SUPERMAJORITY VOTING

The Restated Certificate of Incorporation and the By-laws require the
approval of the holders of at least 80% of the voting power of all of the shares
entitled to vote to alter, amend, repeal or adopt any provision inconsistent
with or limiting the effect of provisions of certain enumerated anti-takeover
provisions in the Restated Certificate of Incorporation and By-laws. The Board
of Directors may amend, supplement or repeal the By-laws at any time, except as
limited by law.

AUTHORIZED BUT UNISSUED PREFERRED STOCK

The Restated Certificate of Incorporation grants the Board of Directors
broad power to establish the rights and preferences of authorized and unissued
preferred stock. Currently, the Board of Directors has the authority to issue
10,000,000 such shares of preferred stock in one or more series and to fix the
preferences, limitations and relative rights of the shares of each such series.
The issuance of preferred stock could decrease the amount of earnings and assets
available for distribution to holders of Common Stock or adversely affect the
rights and powers, including the voting rights, of the holders of Common Stock.
The issuance of preferred stock could have the effect of delaying, deferring or
preventing a change in control of the Company without further action by the
shareholders. The Company has no present plans to issue any preferred stock.

DELAWARE GENERAL CORPORATION LAW

Certain transactions with the Company may be subject to Section 203 of the
Delaware General Corporation Law. Section 203 prohibits certain "business
combinations" between an "interested

50
<PAGE>
stockholder" and a corporation for three years after a stockholder becomes
interested, unless one of the statute's exceptions applies. Section 203(c)(5)
defines an interested stockholder as a person, broadly defined to include a
group, who owns at least 15% of a company's outstanding voting stock. The
statute defines business combinations expansively to include any merger or
consolidation of, with, or caused by the interested stockholder. Section 203(a)
provides three exceptions to the business combination prohibition. First, there
is no constraint if the interested stockholder obtains prior board approval for
the business combination or the transaction resulting in ownership of 15% of the
target's voting stock. Second, the statute does not apply if, in completing the
transaction that crosses the 15% threshold, the stockholder becomes the owner of
85% of the corporation's voting stock outstanding as of the time the transaction
commenced. Any shares owned by directors who are officers, and shares owned by
certain stock option plans are excluded from the calculation. This exception
applies most particularly to a tender offeror who has less than 15% of the
target's stock and receives tenders that satisfy the 85% requirement. Finally,
the statute does not apply if the interested stockholder's business combination
is approved by the board of directors and affirmed by at least 66 2/3% of the
outstanding voting stock not owned by the interested stockholder.

LISTING

The Common Stock has been approved for listing on the NYSE under the symbol
"FDS."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is The Bank of New
York.

SHARES ELIGIBLE FOR FUTURE SALE

The shares of Common Stock sold in the Offering will be freely tradable
without restriction under the Securities Act.

The shares of Common Stock that will continue to be held by the Selling
Stockholders, certain executive officers of the Company and the Company ESOP
after the Offering constitute "restricted securities" within the meaning of Rule
144 under the Securities Act ("Rule 144") and will be eligible for sale in the
open market after the Offering, subject to the applicable requirements of Rule
144 described below. Generally, Rule 144 provides that a person who has
beneficially owned "restricted" shares of Common Stock for at least two years
will be entitled to sell on the open market in brokers' transactions within any
three-month period a number of shares that does not exceed the greater of (1) 1%
of the then outstanding shares of Common Stock, or (2) the average weekly
trading volume in the Common Stock on the open market during the four calendar
weeks preceding such sale. Sales under Rule 144 are also subject to certain
notice requirements and the availability of current public information about the
Company. A person who has beneficially owned "restricted" shares of Common Stock
for at least three years (other than affiliates) can freely trade such shares
without restriction under the Securities Act. The SEC has proposed to reduce the
holding period requirements of Rule 144 to permit sales in accordance with such
rule after two years and one year, respectively, as opposed to the three year
and two year periods currently permitted, as referenced above.

The Selling Stockholders will be able to cause the Company to register
Common Stock owned by them under the Securities Act pursuant to the Registration
Agreement described above under "Certain Transaction and Relationships," in
which event the Selling Stockholders will be able to sell such shares upon the
effectiveness of any such registration. The Selling Stockholders, the Company,
the ESOP and certain executive officers and key personnel of the Company have
agreed that, for a period of 180 days after the date of this Prospectus, they
will not offer, sell or otherwise dispose of any shares of Common Stock, in the
open market or otherwise, without the prior consent of DLJ.

51
<PAGE>
UNDERWRITING

Subject to the terms and conditions contained in the Underwriting Agreement
(the "Underwriting Agreement"), the underwriters named below (the
"Underwriters"), for whom Donaldson, Lufkin & Jenrette Securities Corporation
and Alex. Brown & Sons Incorporated are acting as representatives (the
"Representatives"), have severally agreed to purchase from the Selling
Stockholders an aggregate of 3,125,000 shares of Common Stock. The number of
shares of Common Stock that each Underwriter has agreed to purchase is set forth
opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Donaldson, Lufkin & Jenrette Securities Corporation.............
Alex. Brown & Sons Incorporated.................................

---------
Total..................................................... 3,125,000
---------
---------
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to purchase and accept delivery of the shares of Common Stock
offered hereby are subject to approval of certain legal matters by counsel and
to certain other conditions. If any shares of Common Stock are purchased by the
Underwriters pursuant to the Underwriting Agreement, all such shares (other than
shares covered by the over-allotment option described below) must be purchased.

Prior to the Offering, there has been no established trading market for the
Common Stock. The initial price to the public for the shares of Common Stock
offered hereby will be determined by negotiation among the Selling Stockholders
and the Representatives. The factors considered in determining the initial price
to the public include the history of and the prospects for the industry in which
the Company competes, the past and present operations of the Company, the
historical results of operations of the Company, the prospects for future
earnings of the Company, the recent market prices of securities of generally
comparable companies and the general condition of the securities markets at the
time of the Offering.

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that the Underwriters may be
required to make in respect thereof.

The Underwriters have advised the Company and the Selling Stockholders that
they propose to offer the shares of Common Stock to the public initially at a
price to the public set forth on the cover page of this Prospectus and to
certain dealers (who may include the Underwriters) at such price less a
concession not to exceed $ per share. The Underwriters may allow, and
such dealers may reallow, discounts not in excess of $ per share to any
other Underwriter and certain other dealers.

The Selling Stockholders have granted to the Underwriters an option to
purchase up to an aggregate of 468,750 additional shares of Common Stock, at the
initial public offering price net of underwriting discounts and commissions,
solely to cover over-allotments. Such option may be exercised at any time within
30 days after the date of this Prospectus. To the extent that the Underwriters
exercise such option, each of the Underwriters will be committed, subject to
certain conditions, to purchase a number of option shares proportionate to such
Underwriter's initial commitment as indicated in the preceding table.

52
<PAGE>
At the request of the Company, the Underwriters have reserved 100,000 shares
of Common Stock for sale to employees of the Company at the public offering
price set forth on the cover page of this Prospectus. Any shares not so
purchased will be offered to the public at such price.

Subject to certain exceptions, the Selling Stockholders, the Company, the
ESOP and certain executive officers and key personnel of the Company have agreed
not to sell any shares of Common Stock (except for the shares offered hereby)
for a period of either 180 days after the date of this Prospectus without the
prior written consent of DLJ. See "Shares Eligible for Future Sale."

Certain affiliates of DLJ and Alex. Brown are, have been and after the
Offering will continue to be clients of the Company. Affiliates of DLJ and Alex.
Brown paid $313,767 and $57,500, respectively, in subscription fees to the
Company in the fiscal year ended August 31, 1995. Certain of the other
underwriters who will participate in the Offering or their affiliates may also
be clients of the Company.

LEGAL MATTERS

The validity of the shares of Common Stock will be passed upon for the
Company by Cravath, Swaine & Moore, New York, New York. Certain legal matters
will be passed upon for the Underwriters by Davis Polk & Wardwell, New York, New
York.

EXPERTS

The consolidated financial statements as of August 31, 1994 and 1995 and for
each of the three years in the period ended August 31, 1995 and as of February
28, 1995 and February 29, 1996 and for each of the six month periods then ended,
included in this Prospectus, have been so included in reliance on the report of
Price Waterhouse LLP, independent accountants, appearing elsewhere herein, given
upon the authority of said firm as experts in auditing and accounting.

AVAILABLE INFORMATION

The Company has filed with the Commission a registration statement (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are contained in schedules and exhibits to the Registration
Statement as permitted by the rules and regulations of the Commission. While all
material terms of the Company's material contracts and agreements are summarized
in this Prospectus, statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference. Items of information
omitted from this Prospectus but contained in the Registration Statement may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may
also be obtained from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Commission also maintains a WEB site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of that site is
http://www.sec.gov.

53
<PAGE>
INDEX TO FINANCIAL STATEMENTS
FACTSET RESEARCH SYSTEMS INC.

Report of Price Waterhouse LLP, Independent Accountants.............. F-2
Consolidated Statement of Financial Condition........................ F-3
Consolidated Statement of Income..................................... F-4
Consolidated Statement of Changes in Stockholders' Equity............ F-5
Consolidated Statement of Cash Flows................................. F-6
Notes to Consolidated Financial Statements........................... F-7

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Stockholders of
FactSet Research Systems Inc.

In our opinion, the accompanying consolidated statement of financial
condition and the related consolidated statements of income, changes in
stockholders' equity and cash flows present fairly, in all material respects,
the financial position of FactSet Research Systems Inc. and its subsidiaries at
August 31, 1994 and 1995, and February 29, 1996, and the results of their
operations and their cash flows for each of the three years ended August 31,
1993, 1994 and 1995 and each of the six month periods ended February 28, 1995
and February 29, 1996 in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

PRICE WATERHOUSE LLP

New York, New York
April 26, 1996, except as to Note 2
which is as of June 4, 1996

F-2
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
AUGUST 31, AUGUST 31, FEBRUARY 29,
1994 1995 1996
----------- ----------- ------------
ASSETS

<S> <C> <C> <C>
Current assets
Cash and cash equivalents......................... $ 5,264,792 $11,587,919 $ 10,350,216
Investments....................................... 2,274,698 1,136,723 1,270,926
Receivable from clients and clearing brokers...... 3,659,048 4,101,945 4,589,763
Receivable from officers and employees............ 3,771,038 4,182,116 4,163,728
Prepaid expenses.................................. 29,802 131,922 196,735
Prepaid taxes..................................... 131,425 - 1,288,204
Deferred taxes.................................... 1,426,085 1,599,892 1,294,286
Other assets...................................... 8,862 - 100,206
----------- ----------- ------------
Total current assets.......................... 16,565,750 22,740,517 23,254,064
Furniture, equipment and leasehold improvements,
net................................................ 5,264,635 4,945,947 6,140,686
Deferred taxes...................................... 329,900 379,442 361,395
Other assets........................................ 185,060 597,450 974,751
----------- ----------- ------------
TOTAL ASSETS.................................. $22,345,345 $28,663,356 $ 30,730,896
----------- ----------- ------------
----------- ----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable and accrued expenses............. $ 1,552,734 $ 1,628,908 $ 1,867,223
Accrued compensation payable...................... 425,000 980,000 505,000
Accrued ESOP contribution......................... 400,000 480,000 290,000
Deferred fees and commissions..................... 3,333,018 2,850,847 2,550,956
Current taxes payable............................. - 768,420 -
Deferred rent..................................... 110,178 118,219 118,219
----------- ----------- ------------
Total current liabilities..................... 5,820,930 6,826,394 5,331,398
Deferred taxes...................................... - - 35,412
Deferred rent....................................... 491,348 464,202 397,581
----------- ----------- ------------
TOTAL LIABILITIES............................. 6,312,278 7,290,596 5,764,391
----------- ----------- ------------
Commitments (Note 10)
Stockholders' equity
Preferred stock, par value $.01--10,000,000 shares
authorized, none issued..........................
Common stock, par value $.01--40,000,000 shares
authorized; 9,385,000, 9,479,788 and 9,578,088
shares issued; and 9,337,600, 9,428,552 and
9,526,300 shares outstanding at August 31, 1994,
August 31, 1995 and February 29, 1996,
respectively................................... 93,850 94,798 95,781
Capital in excess of par value.................... 836,150 1,235,202 1,730,419
Retained earnings................................. 15,249,036 20,187,802 23,209,862
Unrealized gain on investments, net of taxes...... - 16,538 94,344
----------- ----------- ------------
16,179,036 21,534,340 25,130,406
Treasury stock--47,400, 51,236 and 51,788 shares
at August 31, 1994, August 31, 1995 and February
29, 1996, respectively, at cost..................... 145,969 161,580 163,901
----------- ----------- ------------
TOTAL STOCKHOLDERS' EQUITY.................... 16,033,067 21,372,760 24,966,505
----------- ----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.... $22,345,345 $28,663,356 $ 30,730,896
----------- ----------- ------------
----------- ----------- ------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENT OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED
----------------------------------------- ----------------------------
AUGUST 31, AUGUST 31, AUGUST 31, FEBRUARY 28, FEBRUARY 29,
1993 1994 1995 1995 1996
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
SUBSCRIPTION REVENUE
Commissions............ $15,992,099 $17,744,572 $21,558,829 $ 10,698,714 $ 11,240,771
Fees................... 7,952,523 11,274,444 14,628,903 6,898,413 9,457,368
----------- ----------- ----------- ------------ ------------
23,944,622 29,019,016 36,187,732 17,597,127 20,698,139
----------- ----------- ----------- ------------ ------------
EXPENSES
Employee compensation
and benefits.......... 6,667,070 11,115,311 11,027,318 5,377,179 6,461,570
Clearing fees.......... 3,158,066 3,421,863 4,270,126 2,097,660 2,111,892
Data costs............. 2,325,818 2,443,297 3,070,588 1,510,467 1,605,365
Communication costs.... 1,320,568 2,029,466 2,431,463 1,226,746 1,428,703
Computer equipment..... 1,582,455 2,296,777 2,195,256 1,085,312 1,290,313
Occupancy.............. 1,615,757 1,898,391 2,052,009 976,799 1,119,901
Promotional costs...... 1,384,128 1,384,217 1,870,218 823,707 999,850
Other expenses......... 939,541 986,592 1,171,254 485,981 823,786
----------- ----------- ----------- ------------ ------------
TOTAL EXPENSES....... 18,993,403 25,575,914 28,088,232 13,583,851 15,841,380
----------- ----------- ----------- ------------ ------------
OPERATING INCOME..... 4,951,219 3,443,102 8,099,500 4,013,276 4,856,759
Other income............. 208,445 251,333 570,588 241,138 430,702
----------- ----------- ----------- ------------ ------------
INCOME BEFORE INCOME
TAXES............... 5,159,664 3,694,435 8,670,088 4,254,414 5,287,461
Income taxes............. 2,281,217 1,747,483 3,731,322 1,809,988 2,265,401
----------- ----------- ----------- ------------ ------------
NET INCOME........... $ 2,878,447 $ 1,946,952 $ 4,938,766 $ 2,444,426 $ 3,022,060
----------- ----------- ----------- ------------ ------------
----------- ----------- ----------- ------------ ------------
Earnings per common
share................... $ 0.31 $ 0.21 $ 0.48 $ 0.25 $ 0.28
Weighted average common
shares used in
computing earnings per
common share........... 9,269,900 9,341,925 10,253,647 9,843,515 10,755,407
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED AUGUST 31, 1993, 1994, 1995
AND THE SIX MONTHS ENDED FEBRUARY 29, 1996

<TABLE>
<CAPTION>
CAPITAL IN UNREALIZED TOTAL
COMMON STOCK EXCESS OF GAIN RETAINED TREASURY STOCK STOCKHOLDERS'
SHARES AMOUNT PAR VALUE ON INVESTMENTS EARNINGS SHARES AMOUNT EQUITY
--------- ------- ---------- -------------- ----------- ------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at August 31,
1992..................... 9,300,000 $93,000 $ 497,000 $ - $10,423,637 30,100 $ (83,879) $ 10,929,758
Net income................ - - - - 2,878,447 - - 2,878,447
--------- ------- ---------- ------ ----------- ------ --------- -------------
Balance at August 31,
1993..................... 9,300,000 93,000 497,000 - 13,302,084 30,100 (83,879) 13,808,205
--------- ------- ---------- ------ ----------- ------ --------- -------------
Additional stock issued
for ESOP................. 85,000 850 339,150 - - - - 340,000
Repurchase of common
stock.................... - - - - - 17,300 (62,090) (62,090)
Net income................ - - - - 1,946,952 - - 1,946,952
--------- ------- ---------- ------ ----------- ------ --------- -------------
Balance at August 31,
1994..................... 9,385,000 93,850 836,150 - 15,249,036 47,400 (145,969) 16,033,067
--------- ------- ---------- ------ ----------- ------ --------- -------------
Additional stock issued
for ESOP................. 94,788 948 399,052 - - - - 400,000
Repurchase of common
stock.................... - - - - - 3,836 (15,611) (15,611)
Unrealized gain on
investments.............. - - - 16,538 - - - 16,538
Net income................ - - - - 4,938,766 - - 4,938,766
--------- ------- ---------- ------ ----------- ------ --------- -------------
Balance at August 31,
1995..................... 9,479,788 94,798 1,235,202 16,538 20,187,802 51,236 (161,580) 21,372,760
--------- ------- ---------- ------ ----------- ------ --------- -------------
Additional stock issued
for ESOP................. 92,300 923 479,077 - - - - 480,000
Repurchase of common
stock.................... - - - - - 552 (2,321) (2,321)
Exercise of stock
options.................. 6,000 60 16,140 - - - - 16,200
Change in net unrealized
gain on investments...... - - - 77,806 - - - 77,806
Net income................ - - - - 3,022,060 - - 3,022,060
--------- ------- ---------- ------ ----------- ------ --------- -------------
Balance at February 29,
1996..................... 9,578,088 $95,781 $1,730,419 $ 94,344 $23,209,862 51,788 $(163,901) $ 24,966,505
--------- ------- ---------- ------ ----------- ------ --------- -------------
--------- ------- ---------- ------ ----------- ------ --------- -------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE><CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED
--------------------------------------- ---------------------------
AUGUST 31, AUGUST 31, AUGUST 31, FEBRUARY 28, FEBRUARY 29,
1993 1994 1995 1995 1996
----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net income......................... $ 2,878,447 $ 1,946,952 $ 4,938,766 $ 2,444,426 $ 3,022,060

Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation and amortization.... 1,831,317 2,196,421 2,420,830 1,246,307 1,407,106
Deferred tax expense............. (1,182,189) (204,531) (223,349) (411,522) 371,537
(Gain) loss on investments....... -- 98,321 (18,106) -- --
(Gain) loss on disposal of
equipment...................... -- 144,855 42,295 42,295 (103,536)
----------- ----------- ----------- ------------ ------------

NET INCOME ADJUSTED FOR NON-CASH
ITEMS........................... 3,527,575 4,182,018 7,160,436 3,321,506 4,697,167

(Increase) decrease in assets:
Receivable from clients and
clearing brokers............... (2,278,705) (225,511) (442,897) 80,865 (487,818)
Receivable from officers and
employees...................... (3,407,638) 279,297 (411,078) (209,661) 18,388
Prepaid expenses................. (18,896) 21,529 (102,120) (155,033) (64,813)
Prepaid taxes.................... -- (131,425) 131,425 131,425 (1,288,204)
Other assets..................... (16,087) (172,439) (403,528) (490,374) (477,507)

Increase (decrease) in liabilities:
Accounts payable and accrued
expenses....................... 646,269 866,405 556,174 571,192 528,315
Accrued compensation payable..... (36,000) 331,000 555,000 (105,000) (475,000)
Deferred fees and commissions.... 2,775,116 333,497 (482,171) (1,555,472) (299,891)
Current taxes payable............ 523,062 (1,481,367) 768,420 (140,180) (768,420)
Deferred rent.................... (59,041) (24,378) (19,105) (12,190) (66,621)
----------- ----------- ----------- ------------ ------------

NET CASH PROVIDED BY OPERATING
ACTIVITIES..................... 1,655,655 3,978,626 7,310,556 1,437,078 1,315,596
----------- ----------- ----------- ------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investments........... (1,780,223) (2,118,142) (870,595) (870,595) (191,689)
Proceeds from sales or maturities
of investments................... 746,270 779,076 2,043,215 1,789,794 198,399
Purchases of furniture, equipment
and leasehold improvements....... (3,003,962) (2,523,689) (2,314,539) (1,044,108) (2,813,888)
Proceeds from disposal of
equipment........................ -- 72,060 170,101 170,101 240,000
----------- ----------- ----------- ------------ ------------

NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES............ (4,037,915) (3,790,695) (971,818) 45,192 (2,567,178)
----------- ----------- ----------- ------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock from
employees........................ -- (62,090) (15,611) (6,203) (2,321)
Proceeds from exercise of stock
options.......................... -- -- -- -- 16,200
----------- ----------- ----------- ------------ ------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES............ -- (62,090) (15,611) (6,203) 13,879
----------- ----------- ----------- ------------ ------------
Net increase (decrease) in cash and
cash equivalents................... (2,382,260) 125,841 6,323,127 1,476,067 (1,237,703)
Cash and cash equivalents at
beginning of period............... 7,521,211 5,138,951 5,264,792 5,264,792 11,587,919
----------- ----------- ----------- ------------ ------------
Cash and cash equivalents at end of
period............................ $ 5,138,951 $ 5,264,792 $11,587,919 $ 6,740,859 $ 10,350,216
=========== =========== =========== ============ ============

Supplemental disclosures of cash
flow information
Cash paid during the period for
income taxes..................... $ 2,962,025 $ 3,563,226 $ 3,067,302 $ 1,393,295 $ 4,021,658
=========== =========== =========== ============ ============

Supplemental disclosures of non-cash
flow information
Issuance of stock for purchase of
shares for ESOP.................. $ -- $ 340,000 $ 400,000 $ 400,000 $ 480,000
=========== =========== =========== ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994 AND 1995 AND FEBRUARY 29, 1996

1. ORGANIZATION AND NATURE OF BUSINESS

FactSet Research Systems Inc. (the "Company") provides on-line integrated
database services to the financial community. The Company's revenue is derived
from subscription charges. Solely at the option of each client, these charges
may be paid either in commissions on securities transaction (in which case
subscription revenue is recorded as Commissions) or on a cash basis (in which
case subscription revenue is recorded as Fees).

Subscription revenue paid in commissions is based on securities transactions
introduced and cleared on a fully disclosed basis through two clearing brokers.
That is, a client paying subscription charges on a commission basis directs the
clearing broker, at the time the client executes a securities transaction, to
credit the commission on the transaction to FDS's account.

As stated above, each client has the option to pay subscription charges
either in the form of commissions on securities transactions or on a cash basis,
regardless of the nature or amount of the services provided by FactSet to such
client. When a client elects to pay subscription charges in the form of
commissions, the dollar amount payable is higher than the fee that would be
payable for the same services on a cash basis because of the associated clearing
fees payable by the Company to the clearing broker on such transactions.
However, commissions net of related clearing fees are approximately equal to the
fees that would be paid by a client on a cash basis.

FactSet Pacific Inc. and FactSet Limited are wholly owned subsidiaries of
the Company and are U.S. corporations with branches in Tokyo and London,
respectively.

Effective June 12, 1995, the Company changed its name from FactSet Research
Corporation.

2. ACCOUNTING POLICIES

The significant accounting policies of the Company and subsidiaries are
summarized below.

FINANCIAL STATEMENT PRESENTATION

The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries. All significant intercompany activity and
balances have been eliminated from the consolidated financial statements.

During fiscal 1995, the Company increased the number of shares of common
stock authorized from one million to five million, and on December 21, 1994,
effected a twenty-five for one stock split. Furthermore, on June 4, 1996, the
Company increased the number of shares of common stock authorized from five
million to forty million, authorized 10,000,000 shares of Preferred Stock
issuable in series and effected a four for one stock split with respect to the
Common Stock. In connection with the stock splits, the par value of the common
stock was reduced from $1.00 to $.01 per share. For purposes

F-7
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. ACCOUNTING POLICIES--(CONTINUED)
of these financial statements, all common stock and per share amounts have been
restated to reflect the stock splits.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

REVENUE RECOGNITION

Subscription charges are quoted to clients on an annual basis, but are
earned as services are provided on a month to month basis. Subscription revenue
recorded as commissions and subscription revenue recorded as fees are each
recorded as earned each month, based on one-twelfth of the annual subscription
charge quoted to each client. Amounts that have been earned but not yet paid
through the receipt of commissions on securities transactions or through cash
payments are reflected on the consolidated statement of financial condition as
receivable from clients. Amounts that have been received through commissions on
securities transactions or through cash payments that are in excess of a
client's earned subscription revenue are reflected on the consolidated statement
of financial condition as deferred fees and commissions.

CLEARING FEES

When subscription charges are paid on a commission basis, the Company incurs
clearing fees, which are the charges imposed by the clearing brokers used to
execute and settle trades. Clearing fees for executed transactions are recorded
on a trade date basis as securities transactions occur. Clearing fees related to
accounts receivable--commissions (a component of receivable from clients) are
recorded simultaneously with the related receivable.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consists of cash, money-market investments and
certificates of deposit with original maturities of three months or less.

INVESTMENTS

Effective September 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115 ("SFAS 115"), Accounting for Certain Investments in
Debt and Equity Securities.

Investment securities are classified as available-for-sale securities in
accordance with SFAS 115 and are reported at market value or fair value as
determined by management. Unrealized gains and losses on available-for-sale
securities are recognized as a separate component of stockholders' equity.

Prior to the adoption of SFAS 115, investment securities were recorded at
lower of cost or market.

F-8
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

2. ACCOUNTING POLICIES--(CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of financial instruments on the statement of financial
condition approximates fair value as determined by management of the Company.

FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Depreciation of computers and related equipment acquired before September 1,
1994 is computed using the double declining balance method over estimated useful
lives of five years. Computer and related equipment acquired after September 1,
1994 is provided on a straight-line basis over estimated useful lives of three
years. Depreciation of furniture and fixtures is computed using the double
declining balance method over estimated useful lives of five years. Leasehold
improvements are amortized on a straight-line basis over the terms of the
related leases or estimated useful lives of the improvements, whichever period
is shorter.

EARNINGS PER SHARE

The computation of earnings per share in each year is based on the weighted
average number of shares outstanding. The weighted average number of shares
outstanding includes shares issued to the ESOP at the date authorized by the
Board of Directors. Stock options are included as share equivalents using the
treasury stock method.

3. RECEIVABLE FROM CLIENTS AND CLEARING BROKERS

Receivable from clients and clearing brokers consists of the following:

<TABLE>
<CAPTION>
AUGUST 31, AUGUST 31, FEBRUARY 29,
1994 1995 1996
---------- ---------- ------------
<S> <C> <C> <C>
Accounts receivable--fees.............................. $1,166,523 $1,207,240 $ 2,362,907
Accounts receivable--commissions....................... 1,829,496 2,364,529 1,756,856
Receivable from clearing brokers....................... 663,029 530,176 470,000
---------- ---------- ------------
$3,659,048 $4,101,945 $ 4,589,763
---------- ---------- ------------
---------- ---------- ------------
</TABLE>

Accounts receivable--fees and accounts receivable--commissions are reflected
net of aggregate allowances for doubtful accounts of $0, $250,000 and $250,000,
respectively, at August 31, 1994, August 31, 1995 and February 29, 1996.

F-9
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

4. INVESTMENTS

Investments, classified as available-for-sale securities, consist of the
following:

<TABLE>
<CAPTION>
GROSS
COST UNREALIZED
BASIS FAIR VALUE GAINS
---------- ---------- ----------
<S> <C> <C> <C>
AT AUGUST 31, 1995
Time deposits with bank, due 12/7/95..................... $ 110,869 $ 110,869 $ -
Investment limited partnership........................... 912,767 941,781 29,014
Investment in treasury bills, due 12/14/95............... 84,073 84,073 -
---------- ---------- ----------
$1,107,709 $1,136,723 $ 29,014
---------- ---------- ----------
---------- ---------- ----------
AT FEBRUARY 29, 1996
Time deposits with bank, due 12/7/96..................... $ 113,772 $ 113,772 $ -
Investment limited partnership........................... 912,767 1,078,286 165,519
Investment in treasury bills, due 12/14/96............... 78,868 78,868 -
---------- ---------- ----------
$1,105,407 $1,270,926 $ 165,519
---------- ---------- ----------
---------- ---------- ----------
</TABLE>

The investment limited partnership invests primarily in convertible bonds
and preferred stocks.

At August 31, 1995 and February 29, 1996, there were net unrealized gains of
$16,538 and $94,344 after related deferred income taxes of $12,476 and $71,175,
respectively, which are included as a separate valuation component of
stockholders' equity.

Investments at August 31, 1994, which were recorded at lower of cost or
market, are as follows:

<TABLE>
<CAPTION>
<S> <C>
Time deposits with bank, due 12/7/94........................... $ 216,992
Investment limited partnership................................. 912,767
Investment in municipal bond portfolio......................... 1,066,015
Investment in treasury bills, due 12/19/94..................... 78,924
----------
$2,274,698
----------
----------
</TABLE>

5. RECEIVABLE FROM OFFICERS AND EMPLOYEES

Receivable from officers and employees consists of the following interest
bearing and noninterest-bearing promissory notes and advances to officers and
employees of the Company:

<TABLE>
<CAPTION>
AUGUST 31, AUGUST 31, FEBRUARY 29,
1994 1995 1996
---------- ---------- ------------
<S> <C> <C> <C>
5.8% promissory note from principal stockholder........ $3,250,000 $3,250,000 $ 3,250,000
Noninterest-bearing advances to principal
stockholder........................................... 423,488 626,703 596,703
Noninterest-bearing promissory demand notes and
advances to employees................................. 97,550 305,413 317,025
---------- ---------- ------------
$3,771,038 $4,182,116 $ 4,163,728
---------- ---------- ------------
---------- ---------- ------------
</TABLE>

F-10
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

5. RECEIVABLE FROM OFFICERS AND EMPLOYEES--(CONTINUED)
The notes and advances outstanding to the principal stockholder are expected
to be paid in full promptly following the completion of a public offering of a
portion of the common stock owned by such stockholder from a portion of the
proceeds thereof.

6. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Furniture, equipment and leasehold improvements consist of the following:

<TABLE>
<CAPTION>
AUGUST 31, AUGUST 31, FEBRUARY 29,
1994 1995 1996
--------------- --------------- ------------
<S> <C> <C> <C>
Computers and related equipment................... $ 9,063,394 $ 9,877,855 $ 11,859,249
Leasehold improvements............................ 2,363,600 2,499,217 2,538,738
Furniture, fixtures and other..................... 2,506,053 2,773,740 2,890,509
--------------- --------------- ------------
13,933,047 15,150,812 17,288,496
Less--Accumulated depreciation and amortization... (8,668,412) (10,204,865) (11,147,810)
--------------- --------------- ------------
$ 5,264,635 $ 4,945,947 $ 6,140,686
--------------- --------------- ------------
--------------- --------------- ------------
</TABLE>

7. DEFERRED FEES AND COMMISSIONS

Deferred fees and commissions consist of the following:

<TABLE>
<CAPTION>
AUGUST 31, AUGUST 31, FEBRUARY 29,
1994 1995 1996
---------- ---------- ------------
<S> <C> <C> <C>
Deferred fees.......................................... $ 415,657 $ 568,129 $ 487,886
Deferred commissions................................... 2,917,361 2,282,718 2,063,070
---------- ---------- ------------
$3,333,018 $2,850,847 $ 2,550,956
---------- ---------- ------------
---------- ---------- ------------
</TABLE>

8. INCOME TAXES

The provision for income taxes was as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED
-------------------------------------- ----------------------------
AUGUST 31, AUGUST 31, AUGUST 31, FEBRUARY 28, FEBRUARY 29,
1993 1994 1995 1995 1996
---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Current tax expense
U.S. federal................. $2,385,239 $1,330,515 $2,788,446 $ 954,371 $ 1,382,210
State and local.............. 1,078,167 621,499 1,178,701 422,935 582,825
---------- ---------- ---------- ------------ ------------
Total current.................. 3,463,406 1,952,014 3,967,147 1,377,306 1,965,035
---------- ---------- ---------- ------------ ------------
Deferred tax expense (benefit)
U.S. federal................. (829,059) (147,877) (173,007) 296,149 208,526
State and local.............. (353,130) (56,654) (62,818) 136,533 91,840
---------- ---------- ---------- ------------ ------------
Total deferred................. (1,182,189) (204,531) (235,825) 432,682 300,366
---------- ---------- ---------- ------------ ------------
Total provision................ $2,281,217 $1,747,483 $3,731,322 $ 1,809,988 $ 2,265,401
---------- ---------- ---------- ------------ ------------
---------- ---------- ---------- ------------ ------------
</TABLE>

F-11
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

8. INCOME TAXES--(CONTINUED)
Deferred tax assets (liabilities) are comprised of the following:

<TABLE>
<CAPTION>
AUGUST 31, AUGUST 31, FEBRUARY 29,
1994 1995 1996
---------- ---------- ------------
<S> <C> <C> <C>
Deferred tax assets:
Current:
Deferred commission income......................... $1,248,240 $ 953,341 $ 873,770
Deferred fee income................................ 177,845 237,270 206,634
Accrued bonuses.................................... - 409,281 213,882
---------- ---------- ------------
Total current deferred taxes..................... 1,426,085 1,599,892 1,294,286
---------- ---------- ------------
Noncurrent:
Depreciation/amortization.......................... 224,502 236,837 261,357
Deferred rent...................................... 95,441 113,495 100,038
Other.............................................. 9,957 29,110 -
---------- ---------- ------------
Total noncurrent deferred taxes.................. 329,900 379,442 361,395
---------- ---------- ------------
Gross deferred tax assets.............................. 1,755,985 1,979,334 1,655,681
---------- ---------- ------------
Deferred tax liabilities:
Other................................................ - - (35,412)
---------- ---------- ------------
Deferred tax assets valuation allowance................ - - -
---------- ---------- ------------
$1,755,985 $1,979,334 $ 1,620,269
---------- ---------- ------------
---------- ---------- ------------
</TABLE>

The provisions for income taxes differ from the amount of income tax
determined by applying the applicable U.S. statutory federal income tax rate to
pretax income as a result of the following differences:

9. NET CAPITAL

As a registered broker-dealer, FDS is subject to Rule 15c3-1 under the
Securities Exchange Act of 1934, which requires that FDS maintain minimum net
capital equal to the greater of $5,000 or 6.67% of aggregate indebtedness and a
ratio of aggregate indebtedness to net capital of not more than 15 to 1. FDS may
be prohibited from paying cash dividends to the Company if such dividends would
result in its net capital falling below the minimum requirement or its ratio of
aggregate indebtedness to net capital exceeding 15 to 1.

F-12
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

9. NET CAPITAL--(CONTINUED)
At all times during the periods presented, FDS had net capital in excess of
its minimum net capital requirements. At February 29, 1996, FDS had net capital
of $2,104,657, which was $1,788,716 in excess of its minimum net capital
requirement of $315,941. The ratio of aggregate indebtedness to net capital was
2.25 to 1.

10. COMMITMENTS

The Company leases office space in Greenwich, Connecticut under a lease
agreement which expires in August 2000 and which contains certain escalation
clauses. The Company is required to pay minimum annual rental of $1,186,866
through the end of the lease. The total minimum rental payments associated with
the lease are being recorded as occupancy costs on a straight-line basis over
the period commencing with the occupancy of the premises in August 1990 through
the end of the lease. Deferred rent at August 31, 1994, August 31, 1995 and
February 29, 1996 includes $228,728, $271,756, and $236,202, respectively, for
recorded occupancy expenses which will be paid in future years.

The cost of certain leasehold improvements, above and beyond normal
improvements, was reimbursed to the Company by the lessor. These leasehold
improvements are included in deferred rent and are being amortized to occupancy
costs on a straight-line basis over the term of the lease. The unamortized
balance of such leasehold improvements was $372,798, $310,665 and $279,598 at
August 31, 1994, August 31, 1995 and February 29, 1996, respectively.

The Company, through its subsidiaries, has lease agreements for other office
space which expire at various dates through the period ended December 2003.

At February 29, 1996, the Company's lease commitments for office space under
leases having noncancelable lease terms in excess of one year provide for the
following minimum annual rentals:

<TABLE>
<CAPTION>
<S> <C>
For the six months ending August 31, 1996...................................... $ 1,068,783
For the years ending August 31,
1997......................................................................... 1,517,152
1998......................................................................... 1,474,000
1999......................................................................... 1,481,891
2000......................................................................... 1,379,025
Thereafter................................................................... 606,484
-----------
Minimum lease payments....................................................... $ 7,527,335
-----------
-----------
</TABLE>

At February 29, 1996, the Company has standby letters of credit aggregating
approximately $261,916, which serve as security deposits for leased premises.

11. EMPLOYEE STOCK OWNERSHIP PLAN

The Company sponsors an Employee Stock Ownership Plan (the "Plan" or
"ESOP"). The Company may make optional annual contributions for the benefit of
participating employees in such amount or amounts as designated by the Board of
Directors. The Company made contributions in the amounts of $340,000, $400,000
and $480,000 for the years ended August 31, 1993, 1994 and 1995, respectively.
Such contributions are recorded in compensation expense and accrued liabilities
at the

F-13
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

11. EMPLOYEE STOCK OWNERSHIP PLAN--(CONTINUED)
time they are authorized; issuance of the related shares occurs shortly
thereafter, generally in the following fiscal year. The principal stockholders
of the Company are the Trustees of the Plan.

Employees of the Company and its subsidiaries who have performed at least
1,000 hours of service during the year are generally able to participate in the
Plan. The Company contribution allocated to an individual account begins to vest
upon completion of the employee's third year of service at the rate of 20% each
successive year of service. Forfeited non-vested interests in the Plan are
allocated to the other participants' accounts.

The Plan owned 607,000, 696,024, and 787,824 shares of the Company's common
stock at August 31, 1994, August 31, 1995 and February 29, 1996, respectively.

The consolidated statement of financial condition at February 29, 1996
includes an accrual of $290,000 for the proportional estimate of a contribution
for the current fiscal year. Any such contribution is subject to approval of the
Board of Directors.

12. STOCK OPTION PLAN

The Company's 1994 Stock Option Plan (the "1994 Plan") was adopted by the
Board of Directors on December 21, 1994 and approved by the Company's
stockholders on December 22, 1994. Under the 1994 Plan, effective January 3,
1995 incentive stock options ("ISOs") and non-qualified stock options to
purchase up to 1,481,000 shares of common stock at prices which range from $2.50
to $2.70 per share have been granted to employees of the Company. Options
granted under the 1994 Plan expire not more than 10 years from the date of grant
and, in most cases, vest at a rate of 20% per year beginning one year after the
grant date.

The 1994 Plan is administered by the Compensation Committee of the Board of
Directors. Options granted under the plan are not transferrable or assignable
other than by will or the laws of decent and distribution and may be exercised,
during the grantee's lifetime, only by the grantee.

As of August 31, 1995, no options had been exercised under the 1994 Plan.
During the six months ended February 29, 1996, options representing 6,000 shares
of common stock were exercised, at which time unvested options representing
24,000 shares of common stock were forfeited. At February 29, 1996, options to
purchase up to 1,451,000 shares remained outstanding.

13. OFF-BALANCE SHEET RISK AND CONCENTRATIONS OF CREDIT RISK

In the normal course of business, securities transactions of customers of
FDS are introduced and cleared through correspondent brokers. Pursuant to
agreements between FDS and its correspondent brokers, the correspondents have
the right to charge FDS for unsecured losses that result from a customer's
failure to complete such transactions. The Company seeks to control the credit
risk of nonperformance by its customers by evaluating the creditworthiness of
its customers and by reviewing their trading activity on a periodic basis.

Receivable from clearing brokers represents a concentration of credit risk
and relates to securities transactions cleared through two correspondent
brokers.

F-14
<PAGE>

- ------------------------------------------- -------------------------------
- ------------------------------------------- -------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESEN- 3,125,000 SHARES
TATION IN CONNECTION WITH THIS OFFERING
BEING MADE HEREBY NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE UNDERWRITERS OR ANY
OTHER PERSON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A FACTSET RESEARCH
SOLICITATION OF AN OFFER TO BUY ANY SYSTEMS INC.
SECURITIES OFFERED HEREBY IN ANY JURIS-
DICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT COMMON STOCK
INFORMATION CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

-------------------
TABLE OF CONTENTS
PAGE [FACTSET LOGO]
----
Prospectus Summary.................... 3
Risk Factors.......................... 8
The Company........................... 12
Dividend Policy....................... 12
Dilution.............................. 13
Capitalization........................ 14 ----------------
Use of Proceeds....................... 14
Selected Historical Consolidated PROSPECTUS
Financial Information............... 15
Management's Discussion and Analysis ----------------
of Financial Condition and Results
of Operations......................... 17
Business................................ 26
Management.............................. 41
Principal and Selling Stockholders...... 47 DONALDSON, LUFKIN & JENRETTE
Certain Transactions and SECURITIES CORPORATION
Relationships........................... 48
Description of Capital Stock............ 49
Shares Eligible for Future Sale......... 51
Underwriting............................ 52 ALEX. BROWN & SONS
Legal Matters........................... 53 INCORPORATED
Experts............................... 53
Available Information................. 53
Index to Financial Statements......... F-1

UNTIL , 1996 (25 DAYS AFTER
THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED
1996 SECURITIES, WHETHER OR NOT PARTICI-
PATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION , 1996
TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

- ------------------------------------------- -------------------------------
- ------------------------------------------- -------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the expenses incurred in connection with the
sale and distribution of the securities being registered which will be paid
solely by the Company. All the amounts shown are estimates, except the
Commission registration fee, the listing fee and the NASD filing fee.

Commission registration fee..................................... $ 20,690
NASD filing fee................................................. 6,500
NYSE listing fee................................................ 102,100
Blue sky fees and expenses...................................... 20,000
Transfer agent and registrar fees and expenses.................. 7,500
Accounting fees and expenses.................................... 185,000
Legal fees and expenses......................................... 350,000
Printing and engraving expenses................................. 175,000
Miscellaneous expenses.......................................... 3,210
--------
Total..................................................... $870,000
--------
--------

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the General Corporation Law of the State of Delaware provides
that under certain circumstances a corporation may indemnify any person who or
is a party or is threatened to be made a party any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at its request in such
capacity in another corporation or business association, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.

The Certificate and By-laws of the registrant provide that (a) the
registrant shall indemnify to the full extent permitted by law any person made,
or threatened to be made, a party to any action, suit or proceeding (whether
civil, criminal, administrative or investigative) by reason of the fact that he
is or was a director, officer or employee of the registrant serving at its
request as a director, officer, employee, trustee or agent of another enterprise
and (b) the registrant shall pay the expenses, including attorney's fees,
incurred by a director or officer in defending or investigating a threatened or
pending action, suit or proceeding, in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount by the registrant. The Certificate
of Incorporation also provides that, to the extent permitted by law, the
directors of the registrant shall have no liability to the registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director.

The Company intends to purchase policies of insurance under which the
registrant's directors and officers are insured, within the limits and subject
to the limitations of the policies, against certain expenses in connection with
the defense of actions, suits or proceedings, and certain liabilities which
might be imposed as a result of such actions, suits or proceedings, to which
they are parties by reason of being or having been such directors or officers.

II-1
<PAGE>
The form of Underwriting Agreement filed a Exhibit 1.1 provides for the
indemnification of the registrant, its controlling persons, its directors and
certain of its officers by the Underwriters against certain liabilities under
the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

In February 1996, the Company sold 1,500 shares of Common Stock to John S.
Gross, the Company's former Chief Financial Officer, upon his exercise of
employee stock options granted pursuant to the Company's 1994 Stock Option Plan.
Such sale was not registered under the Securities Act of 1933 (the "Act") in
reliance upon the exemption from registration contained in Section 3(b) of the
Act and Rule 701 promulgated thereunder.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement*
3.1 Restated Certificate of Incorporation*
3.2 By-laws*
4.1 Form of Certificate for Common Stock
5.1 Opinion of Cravath, Swaine & Moore
10.1 Form of Registration Rights Agreement among the Company, Howard E. Wille and Charles
J. Snyder*
10.2 Form of Employment Agreement between the Company and Howard E. Wille and the Company
and Charles J. Snyder*
10.3 Letter Agreement between the Company and Ernest S. Wong*
10.4 Company Employee Stock Ownership Plan*
10.5 1994 Stock Option Plan*
10.6 Form of Stock Option Agreement under 1994 Stock Option Plan*
10.7 Form of 1996 Stock Option Plan*
21.1 Subsidiaries of the Company*
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Cravath, Swaine & Moore (appears in Exhibit 5.1)
24.1 Powers of Attorney*
</TABLE>

- ------------

* Filed previously

ITEM 17. UNDERTAKINGS

(1) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement,
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.

(2) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a

II-2
<PAGE>
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by a final adjudication of such issue.

(3) The undersigned Registrant hereby undertakes that:

(a) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(b) For the purpose of determining liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Greenwich, Connecticut, on June 26,
1996.

FACTSET RESEARCH SYSTEMS INC.

By: /s/ HOWARD E. WILLE
..................................
Howard E. Wille
Chairman of the Board of Directors
and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES TITLES DATES
---------- ------ -----

<S> <C> <C>
/s/ HOWARD E. WILLE Chairman of the Board of Directors and June 26, 1996
.................................... Chief Executive Officer (Principal
Howard E. Wille Executive Officer)

* President and Director June 26, 1996
....................................
Charles J. Snyder

/s/ ERNEST S. WONG Chief Financial Officer (Principal June 26, 1996
.................................... Accounting Officer)
Ernest S. Wong

* Director June 26, 1996
....................................
Joseph E. Laird, Jr.
</TABLE>

* By: /s/ HOWARD E. WILLE
..............................
Howard E. Wille
Attorney-in-fact

II-4
<PAGE>
INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
<C> <S> <C>
1.1 Form of Underwriting Agreement*
3.1 Restated Certificate of Incorporation*
3.2 By-laws*
4.1 Form of Certificate for Common Stock
5.1 Opinion of Cravath, Swaine & Moore
10.1 Form of Registration Rights Agreement among the Company, Howard E. Wille
and Charles J. Snyder*
10.2 Form of Employment Agreement between the Company and Howard E. Wille and
the Company and Charles J. Snyder*
10.3 Letter Agreement between the Company and Ernest S. Wong*
10.4 Company Employee Stock Ownership Plan*
10.5 1994 Stock Option Plan*
10.6 Form of Stock Option Agreement under 1994 Stock Option Plan*
10.7 Form of 1996 Stock Option Plan*
21.1 Subsidiaries of the Company*
23.1 Consent of Price Waterhouse LLP
23.2 Consent of Cravath, Swaine & Moore (appears in Exhibit 5.1)
24.1 Powers of Attorney*
</TABLE>

- ------------

* Filed previously

Exhibit 4.1

<TABLE>

<S> <C> <C>
Temporary Certificate - Exchangeable for Definitive Engraved Certificate - When Ready for Delivery

COMMON STOCK COMMON STOCK

[LOGO]
FDS
FACTSET RESEARCH SYSTEMS INC.

INCORPORATED UNDER THE LAWS CUSIP 303075 10 5
OF THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS

This is to Certify that

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES, PAR VALUE $.01 EACH, OF THE COMMON STOCK OF
=============================================FACTSET RESEARCH SYSTEMS INC.==================================
transferable only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed. This certificate
is not valid until countersigned by the Transfer Agent and registered by the Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

Dated: [CORPORATE SEAL]

/s/ W.E. Wells /s/ Charles J. Snyder
SECRETARY PRESIDENT

COUNTERSIGNED AND REGISTERED:

BANK OF NEW YORK
(New York, New York)

Traveler Agent
and Registrar

By: /s/
Authorized Officer

</TABLE>

Exhibit 5.1

[CRAVATH, SWAINE & MOORE LETTERHEAD]

June 25, 1996

Ladies and Gentlemen:

Reference is made to the initial public offering by FactSet Research
Systems Inc., a Delaware corporation (the "Company"), of up to 3,593,750 shares
of the Company's Common Stock, par value $0.01 per share (the "Shares"),
pursuant to a Registration Statement on Form S-1 under the Securities Act of
1933, as amended (the "Registration Statement"). The Shares include 468,000
shares which are subject to an over-allotment option granted by the selling
stockholders (the "Selling Stockholders") to the Underwriters named in the
Registration Statement.

As counsel for the Company, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
corporate records, and other instruments as we have deemed necessary or
appropriate for the purposes of this opinion, including: (a) the Restated
Certificate of Incorporation, as amended; (b) the By-Laws of the Company, as
amended; (c) various corporate records and proceedings relating to the
organization of the Company and the issuance of the Shares; and (d) a specimen
certificate representing the Shares.

Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized and validly issued and are fully-paid, non-assessable and
not subject to any preemptive or similar rights.

We are furnishing this opinion solely for the benefit of the Company.
This opinion may not be relied upon
<PAGE>

by any other person or for any other purpose or used, circulated, quoted or
otherwise referred to for any other purpose.

We consent to the use of this opinion as an Exhibit to the
Registration Statement, and we consent to the reference to our firm under the
caption "Legal Matters" in the Prospectus forming a part of the Registration
Statement.

Very truly yours,

FactSet Research Systems Inc.
One Greenwich Plaza
Greenwich, Connecticut 06830

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated April 26, 1996, except
as to Note 2 which is as of June 4, 1996, relating to the financial statements
of FactSet Research Systems Inc., which appears in such Prospectus. We also
consent to the references to us under the headings "Experts" and "Selected
Historical Consolidated Financial Information" in such Prospectus. However,
it should be noted that Price Waterhouse LLP has not prepared or certified such
"Selected Historical Consolidated Financial Information."

/s/ Price Waterhouse LLP

PRICE WATERHOUSE LLP

New York, New York
June 26, 1996