<PAGE>
FACTSET RESEARCH SYSTEMS 2000 ANNUAL REPORT
<PAGE>
FINANCIAL HIGHLIGHTS
Thousands, except per share data
<TABLE>
<CAPTION>
Years Ended August 31, 2000 1999 % Change
---------------------- ---- ---- --------
<S> <C> <C> <C>
Revenues ............................................................ $134,178 $103,831 29.2%
Income from operations before retirement bonus ...................... 39,169 28,630 36.8%
Income from operations .............................................. 36,419 28,630 27.2%
Income before income taxes .......................................... 39,576 30,617 29.3%
Nonrecurring tax benefit ............................................ 1,119 -- --
Net income .......................................................... 25,279 18,565 36.2%
Per Share Data
Diluted earnings per common share* .................................. $ 0.74 $ 0.56 32.1%
Diluted earnings per common share before retirement
bonus and nonrecurring tax benefit* ............................... $ 0.75*** $ 0.56 33.9%
Dividends declared per common share ................................. $ 0.12 $ 0.08
Weighted average common shares (diluted)* ........................... 34,390 33,302
Performance Ratios
Operating margin .................................................... 29.2%** 27.6%
Pretax margin ....................................................... 29.5% 29.5%
Net margin .......................................................... 18.8% 17.9%
Return on average stockholders' equity .............................. 28.0% 28.9%
</TABLE>
*Diluted earnings per share and number of shares outstanding give retroactive
effect to the 2-for-1 stock split that occurred on February 4, 2000 and the
3-for-2 stock split that occurred on February 5, 1999.
**Excludes retirement bonus of $2.75 million. Including the retirement bonus,
the operating margin is 27.1%.
***Excludes retirement bonus of $2.75 million (pre-tax) and nonrecurring tax
benefit of $1.1 million.
FactSet Research Systems Inc. supplies global economic and financial data to
analysts, portfolio managers, investment bankers and other financial
professionals. The Company combines more than 100 databases from multiple
suppliers into a single online source of information and analytics, including
fundamental data on tens of thousands of global companies and securities.
Clients have simultaneous access to a wide array of disparate data that
they can download directly into spreadsheets or other applications, including
their own custom-designed models, to combine with other data for investment
analysis.
FactSet is headquartered in Greenwich, Connecticut and employs more than
400 people in 11 locations in North America, Europe and the Pacific Rim. The
Company was formed in 1978 and since 1996 has been publicly traded on the New
York Stock Exchange under the symbol FDS.
About FactSet
Financial Highlights
Introduction 1
Dear Fellow Shareholders 3
A Human Face on Technology 6
Management's Discussion and Analysis 13
Consolidated Statements of Income 19
Consolidated Statements of Financial Condition 20
Consolidated Statements of Changes in Stockholders' Equity 22
Consolidated Statements of Cash Flows 24
Notes to Consolidated Financial Statements 26
Report of Independent Accountants 40
Directors and Management 43
Corporate Information 44
<PAGE>
At FactSet, we offer a comprehensive suite of financial and analytic products
and services, but it's the human component, especially our large, global staff
of consultants, that makes FactSet easy to use. In essence, we put a human face
on technology. We listened to the marketplace and responded with new
applications and services in 2000. We also made our first acquisition to better
serve existing clients and attract new ones. Our commitment to service, coupled
with our proven business philosophy, is the key to FactSet's extraordinary
growth. It is our people, some of whom you'll see on the pages that follow, who
define our business and, in turn, our success - today, and down the road.
<PAGE>
FactSet Research Systems Inc. is pleased to announce that it has been named as
one of the 200 Best Small Companies for the fourth consecutive year by Forbes
magazine. The criteria for this ranking is based on five-year average return on
equity, sales, profits and market value.
Revenues graph (Fiscal 1996 - Fiscal 2000)
Operating Margin graph (Fiscal 1996 - Fiscal 2000)
Earnings per Share graph (Fiscal 1996 - Fiscal 2000)
Stock Price from IPO graph (June 28, 1996 - August 31, 2000)
June 28, 1996 - August 31, 2000
<PAGE>
DEAR FELLOW SHAREHOLDERS
We are pleased to report another record performance for the fiscal year ended
August 31, 2000. This represents our 18th consecutive year of increasing
revenues and earnings. During the year, we continued to enhance our services and
build on our core capabilities of data integration and software applications for
the investment community. Client count grew to 745 and the number of users
increased to 24,500. We introduced several new applications and databases via
our Directions interface and began to deliver our product via the Web.
Revenues for the full year increased 29.2%, rising to $134.2 million from
$103.8 million. Income from operations, before a retirement bonus, rose 36.8% to
$39.2 million. Net income, before a retirement bonus and nonrecurring income tax
benefit, expanded 39.2% to $25.8 million, and per share earnings were up 33.9%
from $0.56 to $0.75.
Among the many contributors to this year's results were the success of our
portfolio analytics suite of applications and the performance of international
operations. Impressive demand for FactSet's Portfolio Analysis application
continued, with over 175 clients representing 1,300 users now subscribing to the
service. Commitments from FactSet's operations overseas grew 56% to $28.4
million, and now account for 17.9% of the consolidated total. When we refer to
"Commitments," we mean the forward-looking revenue for the next 12 months based
on all services currently supplied to clients. Historically, Commitments have
risen every month for the past ten years.
Milestones
Fiscal 2000 was also a year of change. In May of 2000, our friend and mentor
Howard Wille, cofounder of FactSet, retired from the position of Chief Executive
Officer after 22 years with the Company. Howard retired as Chairman at the end
of the fiscal year. Charles Snyder, cofounder and Vice Chairman of FactSet,
acted as interim Chief Executive Officer between May and early September while
the Board completed its appointment of the new CEO.
Beginning in 1978, Howard and Chuck pioneered a way to combine disparate
financial information in a manner that permitted clients to use it the way they
wanted. They built FactSet as a service-focused company. They chose neither to
require a written contract nor to charge for client service. Business was done
on a handshake.
There is still no charge for consulting services. And still no contract to
sign. Today, the global financial community looks to FactSet to provide timely,
accurate information and analytics in any format.
<PAGE>
Philip A. Hadley Michael F. DiChristina
Chairman and President and
Chief Executive Officer Chief Operating Officer
(picture) (picture)
We are forever indebted to Howard and Chuck for their vision and dedication
to building a company with strong values of service and integrity. We will
uphold these values as we lead FactSet into the future.
Initiatives
As the global marketplace continues to evolve, we recognize the need to develop
global strategies for building brand awareness while looking at how to better
solidify our clients' position as the center of our business model via sales and
marketing support.
Innovation. Responsiveness. Ease of use. These are the factors that
distinguish FactSet. In 2000, we made great strides in all three areas. We now
offer investment managers both holdings-based and returns-based analyses. We
offer investment bankers the opportunity to publish customized "pitch books" for
presentations that use the Microsoft Office Suite. We made our first
acquisition, Innovative Systems Techniques ("Insyte"), Inc., a provider of
database management and decision support systems, and expanded our data
warehousing capabilities. We completed development of a real-time pricing
center.
<PAGE>
The growth potential in our existing, as well as new, markets is immense. We can
now better assist clients by telephone with our Call Center, the result of
collaboration between FactSet and Cisco Systems. And by introducing Online
Assistant, a comprehensive online information resource, we can deliver helpful,
timely product support right to the client's desktop.
Fiscal 2000 was also a pivotal year in our incorporation of the Web into
future growth strategies. Early on, we completed the necessary technical
infrastructure to power client Web sites. By mid year we identified the key
products that were needed in the Web environment and began development.
Additionally, we made the decision to Web-enable next generations of all of our
applications. Web product rollouts will begin in the 2001 fiscal year. While the
Web brings us many benefits, the most compelling is our ability to extend our
reach both within clients and across the investment community.
Looking Ahead
It is our people as well as our technologies that have forged our success over
the past 22 years. We seek to attract, train and retain the very best. We look
for individuals who are bright, creative, curious and eager. We seek out people
diverse in background and experience. It's this diversity that makes each person
an important part of the Company. In fact, it's what makes FactSet unique.
We look forward to working with our entire staff as we continue to enhance
our leadership position and offer intelligent analytical products and services.
Most of all, we will continue to focus on the client. We'll continue to invest
in the technology that helps us do more for each member of the financial
community. We'll work together. Never forgetting to put a human face on
technology.
/s/Philip A. Hadley /s/Michael F. DiChristina
Philip A. Hadley Michael F. DiChristina
Chairman and President and
Chief Executive Officer Chief Operating Officer
<PAGE>
You see, we believe service isn't an "add-on" but, rather, part of the product.
If there's a problem, we'll make every attempt to fix it. If there's need, we'll
make every attempt to meet it. Our purpose is to help people use our products.
Our Help Desk is open 24 hours a day, 7 days a week, 365 days a year.
<PAGE>
In the summer of 2000, FactSet set a new standard in integration, functionality
and usability with the acquisition of Insyte and its flagship product,
Vision(TM). Clients will be able to store multi-dimensional sets of data, such
as portfolio holdings and company fundamentals, as well as other proprietary
information. This acquisition significantly enhanced FactSet's data warehousing
capabilities, providing clients with a way to store data locally.
This hybrid solution will allow clients to pick and choose any architecture and
build their own application or use FactSet to power the application. With tools
to download, combine and manipulate data for investment analysis, we've
empowered our clients.
It's expected that the investment manager, investment banker, or any financial
services professional for that matter, has the most current financial and
economic information at their fingertips. FactSet client do.
A successful investment decision is reliant on the timeliness of the data on
which it is based. We believe that data has to be more timely and more
accessible to be most useful. The data on FactSet is.
<PAGE>
Anticipating the need for more flexibility and ease of use in the interface, we
introduced ActivePublishing Workstation (APW) to the investment banking
community in the spring of 2000. Leading global investment banks have selected
the Directions interface and APW to leverage proprietary data and produce
high-impact, custom-made "pitch books." APW integrates Microsoft Office with our
databases, including over 2,000 financial formulas, for Excel, Word or
PowerPoint presentations that echo the client's corporate identity-in terms of
style, color or graphics. In other words, FactSet can deliver investment
information customized to a client's specific needs.
In the summer of 2000, we released SPAR, an application that helps analyze the
Style, Performance And Risk of a portfolio or a competitor's fund. It enables
investment managers to determine the most effective mix based on historical
returns. This returns-based analysis, which leverages our vast database of
benchmark and fund returns, is complemented by this year's release of the
Northfield Portfolio Optimizer, a holdings-based analysis, and other risk
models. As a result, we are the first and only company to offer both types of
analyses.
The Northfield Portfolio Optimizer suggests buys and sells to create a portfolio
that reflects user beliefs and preferences while delivering more return for each
level of risk. By incorporating this powerful analytical tool with FactSet's
robust suite of global databases and quantitative applications, our clients have
more flexibility in portfolio construction as well as risk management.
As we move beyond "data delivery" to applications service provider, our goal is
to Web-enable all of our existing applications, extending their reach and value.
It requires FactSet to take down the walls that separate us all. With the
integration of our technology into our clients' work flow, we become a part of
their process. This "merging" of client and FactSet allows us to deepen roots
that sustain profitable, long-term relationships.
<PAGE>
Few online financial and economic information services offer real-time data
merged with historical data. Most companies do one or the other. At FactSet you
get real-time prices to complement vast historical data libraries. FactSet
offers real-time data, news feeds and historical analysis in countless formats.
Valuation analysis can be performed at any point in time, including "right now."
With real-time price feeds, FactSet is on the way to becoming a one-stop shop.
<PAGE>
At FactSet we try hard not to say "no".
State-of-the-art technology and state-of-the-art service. One without the other
is simply unacceptable. In fiscal 2000, FactSet made great strides in both
camps. A prime example is how we made sure our clients were Y2K compliant. The
challenge? With clients customizing our products, it wasn't enough to look at
compliance from our perspective alone. We had to look at it from theirs. We
developed the Y2K Auditor to ensure that anything customized-reports, databases,
formulas or spreadsheets had been audited and corrected for compliance. The
result? There were no fires to put out. The Y2K Auditor was a success. In fact,
it worked so well we adapted the technology to alert clients to changes in
industry names and classification numbers based on the new economy. Today, it's
just called "Auditor."
We believe service isn't an "add-on" but, rather, part of the product. If
there's a problem, we'll make every attempt to fix it. If there's need, we'll
make every attempt to meet it. Our purpose is to help people use our products.
Our Help Desk is open 24 hours a day, 7 days a week, 365 days a year. In 2000,
we found a way to streamline the process as well as enhance our service.
Introduced in the fall of 2000, our Call Center automatically routes calls based
on the time of day to a consultant at one of our 11 locations. Eventually, calls
will be routed not only in their proper sequence, but by topic, to a consultant
who is a specialist in the matter at hand. Enhancing the "learnability" of our
products via the desktop has made FactSet even easier to use. Last fall, we
introduced Online Assistant, a wide-ranging resource for online training. It
provides access to almost 10,000 pages of information on our various
applications and databases, a reference section and a series of
multimedia-enhanced tutorials. And our training program continues to evolve with
new seminars and workshops on a whole host of topics held throughout the year.
But if our consultants are needed to conduct a training session onsite, we'll be
there. Just tell us when.
In late 2000, we introduced real-time price feeds. Few online financial and
economic information services offer real-time data merged with historical data.
Most companies do one or the other. At FactSet you get real-time prices to
complement vast historical data libraries. FactSet offers real-time data, news
feeds and historical analyses in countless formats. Valuation analysis can be
performed at any point in time, including "right now." With real-time price
feeds, FactSet is on the way to becoming a one-stop shop.
With all the innovations we've made in 2000, the way we work remains the same.
Having no written contract, our client is not obligated to use us. We have to
earn our client's business every day.
<PAGE>
FINANCIAL REVIEW
13 Management's Discussion and Analysis
19 Consolidated Statements of Income
20 Consolidated Statements of Financial Condition
22 Consolidated Statements of Changes in Stockholders' Equity
24 Consolidated Statements of Cash Flows
25 Notes to Consolidated Financial Statements
40 Report of Independent Accounts
<PAGE>
Five-year Summary of Selected Financial Data
Thousands, except per share data
The following section summarizes selected financial information of FactSet
Research Systems Inc. Further detail is available in the Company's Form 10-K,
filed with the U.S. Securities and Exchange Commission.
<TABLE>
<CAPTION>
Years Ended August 31, 2000 1999 1998 1997 1996
---------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues ......................................... $134,178 $103,831 $ 78,911 $ 58,358 $ 44,348
Income from operations ........................... 36,419(2) 28,630 20,883 14,862 10,633
Income before taxes and extraordinary gain........ 39,576(2) 30,617 22,439 15,733 11,384
Net income ....................................... 25,279(3) 18,565 12,851(1) 8,930 6,470
Diluted earnings per share(4) .................... 0.74(3) 0.56 0.39(1) 0.27 0.20
Wtd. avg. common shares (diluted)(4) ............. 34,390 33,302 32,940 32,514 32,302
Cash dividends declared per common share.......... 0.12 0.08 -- -- --
Total assets ..................................... 135,568 103,028 71,496 51,707 36,510
Stockholders' equity ............................. $103,002 $ 77,614 $ 51,024 $ 37,627 $ 28,197
</TABLE>
(1) Includes an extraordinary after-tax gain of $242,000.
(2) Includes a retirement bonus of $2.75 million.
(3) Includes a retirement bonus of $1.7 million (after taxes) and a nonrecurring
tax benefit of $1.1 million.
(4) Diluted earnings per share and weighted average number of common shares
outstanding give retroactive effect to the 2-for-1 stock split that occurred on
February 4, 2000 and the 3-for-2 stock split that occurred on February 5, 1999.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
<TABLE>
<CAPTION>
Revenues
Revenues and commitments in thousands
August 31, 2000 1999 % Change
---------- ---- ---- --------
<S> <C> <C> <C>
Revenues
Consolidated .................... $134,178 $103,831 29.2%
International ................... 22,377 14,869 50.5%
Growth Metrics
Commitments ..................... $158,472 $118,899 33.3%
Clients ......................... 745 658 13.2%
Passwords ....................... 24,500 20,200 21.3%
Client retention rate ........... >95% >95%
</TABLE>
Consolidated Revenues. Revenues increased 29.2% to a record $134.2 million in
fiscal 2000. In fiscal 1999, revenues rose 31.6% to $103.8 million from $78.9
million in fiscal 1998. Primary growth drivers in fiscal years 2000 and 1999
were new products and services, incremental subscriptions to applications and
databases by existing clients, as well as the addition of new clients.
International Revenues. Revenues from international operations grew 50.5% to
$22.4 million for fiscal 2000. Revenues from European operations increased
48.5%; Asia Pacific revenues grew 55.5%. Operations abroad accounted for 17% of
consolidated revenues, up from 14% in fiscal 1999. In fiscal 1999, overseas
revenues grew 49.1% to $14.9 million. Revenues from European operations rose
44.7%, while the Asia Pacific business grew 61.7%. More than 95% of the
Company's consolidated revenues are collected in U.S. dollars. The net monetary
assets held by the Company's foreign offices during fiscal 2000 were also
immaterial. Accordingly, the Company's exposure to foreign currency fluctuations
was not material.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Commitments. Client commitments rose to $158.5 million as of August 31, 2000, up
33.3% for the year. Commitments grew 28.6% in fiscal 1999 to $118.9 million. At
August 31, 2000, the average annual commitment per client was $213,000, up from
$181,000 and $164,000 for the comparable periods in fiscal 1999 and 1998,
respectively. ("Commitments" at a given point in time represent the
forward-looking revenues for the next 12 months from all services currently
being supplied to clients.) As a matter of policy, the Company does not seek to
enter into written contracts with its clients, and clients are free to add to,
delete from or terminate service at any time. Commitments have historically
grown in virtually every month.
More clients, additional subscriptions to workstations by existing clients
and new products and services aimed at portfolio managers were key contributors
to the commitment increase in both fiscal 2000 and 1999. The acquisition of
Innovative Systems Techniques, Inc. ("Insyte") and new services for investment
bankers also helped propel commitments in fiscal 2000.
Clients and Passwords. At August 31, 2000, clients totaled 745, a net addition
of 87 clients during the fiscal year. In fiscal 1999, 94 net new clients were
added, 42% more than the 66 net client additions in fiscal 1998. Passwords, an
indication of users, increased to 24,500 at August 31, 2000, up from 20,200 and
16,600, respectively, for the prior two years. Strong demand for Portfolio
Analytics applications continued with both clients and users nearly doubling
over the past year. At August 31, 2000, over 175 clients, representing 1,300
users, subscribed to these services.
On July 31, 2000, the Company acquired Insyte, adding approximately $4.0
million to commitments. During fiscal 2000, a leading investment bank also
agreed to subscribe to nearly 1,000 ActivePublishing Workstations for worldwide
installation.
Client Retention. Client retention for fiscal years 2000 and 1999 continued at a
rate in excess of 95%.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
<TABLE>
Operating Expenses
<CAPTION>
Thousands, except percentages
August 31, 2000 1999 % Change
---------- ---- ---- --------
<S> <C> <C> <C>
Operating expenses:
Cost of services ......................... $45,491 $37,335 21.8%
Selling, general and administrative ...... 49,518 37,866 30.8%
Retirement bonus ......................... 2,750 -- --
------- ------- ----
Total operating expenses .................... $97,759 $75,201 30.0%
------- ------- ----
Operating margin ............................ 27.1% 27.6%
Effective tax rate .......................... 36.1% 39.4%
</TABLE>
Cost of Services. Cost of services rose 22% in both fiscal 2000 and 1999 to
$45.5 million and to $37.3 million, respectively. These increases were largely
due to increased employee compensation and benefits, higher clearing fees and
additional depreciation on computer equipment.
Employee compensation and benefits for the applications engineering and
consulting groups rose $4.5 million in fiscal 2000 and $4.9 million in fiscal
1999. To sustain current revenue growth levels, employees in the aforementioned
groups grew by 22% and by 33% in fiscal 2000 and 1999, respectively.
Clearing fees increased $1.2 million in fiscal 2000 and by $650,000 in
fiscal 1999. Increases resulted from higher commission revenues including more
commission revenues from international clients, which bear a higher clearing
rate than U.S.-based sources.
Depreciation expense on computer-related equipment increased $1.5 million
for fiscal 2000 and $2.0 million in fiscal 1999. Increased depreciation expense
in fiscal 2000 related to computer-related capital spending of $6.8 million was
partially offset by a decrease in depreciation expense caused by computer
equipment becoming fully depreciated. In fiscal 1999 depreciation expense
increased primarily as a result of higher levels of capital spending to upgrade
and increase capacity of the Company's data centers.
Selling, General and Administrative (SG&A). In fiscal 2000, SG&A grew 30.8% to
$49.5 million, compared to the prior year period. In fiscal 1999, SG&A rose
38.1% to $37.9 million. Increases were mainly the result of higher employee
compensation, travel and entertainment expenses (T&E), rent expense and
amortization of leasehold improvements.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Employee compensation and benefits for the sales, product development and
various other support departments grew $6.5 million in fiscal 2000. In fiscal
1999, employee compensation and benefits increased $4.6 million over the prior
year. The number of employees in the sales, product development and various
other support departments increased by 19% and 38.7% in fiscal 2000 and 1999,
respectively.
T&E expense increased $1.8 million in fiscal 2000. In fiscal 1999, T&E grew
$1.0 million. T&E expense rose in both fiscal years as a result of servicing an
expanding global client base.
Rent expense and amortization of leasehold improvements were up $1.6 million
in fiscal 2000 and up $2.7 million in fiscal 1999. These increases were the
result of office openings in Frankfurt, Germany; Sydney, Australia; Stamford,
Connecticut and Boston, Massachusetts and office expansions in San Mateo,
California and London, United Kingdom during the past two fiscal years.
Retirement Bonus. Howard E. Wille, cofounder of the Company, retired as Chief
Executive Officer and Chairman of the Board in fiscal 2000. Mr. Wille remains a
director of the Company. In recognition of his service and contributions for the
past 22 years, the Board of Directors awarded Mr. Wille a retirement bonus
resulting in a one-time, pre-tax charge of $2.75 million.
Income from operations rose 27.2% to $36.4 million in fiscal 2000 compared
with an increase of 37.1% in fiscal 1999 to $28.6 million. Excluding the charge
from the retirement bonus, income from operations increased 36.8% in fiscal
2000.
Operating Margin. Operating margins were 27.1%, 27.6% and 26.5% in fiscal 2000,
1999 and 1998, respectively. The decline in fiscal 2000 was the result of the
retirement bonus partially offset by three factors: first, a reduction in
depreciation expense on computer related equipment as a percent of revenues;
second, commission revenues as a percentage of total revenues dropped 2.9% to
35.6% causing lower clearing costs on a percentage basis; and third, data costs
declined as a percentage of revenues. Not including the retirement bonus, the
operating margin would have been 29.2%, an increase of 1.6% over fiscal 1999.
Operating margin improvement in fiscal 1999 compared to fiscal 1998 was largely
due to declining clearing fees, communication expenses and data costs as a
percentage of revenues, partially offset by increased compensation costs and
amortization expenses.
Effective Tax Rate. The effective tax rate for fiscal 2000 was 36.1%. Included
in the 2000 effective tax rate was a nonrecurring tax benefit of $1.1 million,
which has been presented as a separate component of the provision for income
taxes on the Consolidated Statements of Income. Without this one-time benefit,
the effective tax rate would have been 38.9% for fiscal 2000. The effective tax
rate in fiscal 1999 was 39.4%, down from 43.8% in fiscal 1998. Included in the
1999 effective tax rate was the favorable net effect of concluding two state
income tax audits in the amount of $776,000. Excluding the impact of the two
state income tax audits, the 1999 effective tax rate would have been 41.9%.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Net income in fiscal 2000 grew by 36.2% to $25.3 million and diluted
earnings per share advanced 32.1% to $0.74. Without inclusion of the retirement
bonus and nonrecurring tax benefit (disclosed in Notes 5, 6 and 10 respectively,
to the Consolidated Financial Statements), net income and diluted earnings per
share would have increased 39.2% and 33.9%, respectively. In fiscal 1999, net
income grew 47.2% to $18.6 million and diluted earnings per share were up 47.4%
to $0.56 excluding the effect of the recognition of an extraordinary gain in
fiscal 1998.
Liquidity
Cash generated by operating activities was $30.6 million for fiscal 2000
compared to $33.1 million in fiscal 1999. This decline was primarily the result
of lower income tax benefit related to stock option exercises and a higher
receivable balance from clients and clearing brokers partially offset by
increases in net income and depreciation and amortization expenses.
Capital expenditures in fiscal 2000 were $11.3 million and related primarily
to purchases of computer and communications equipment. Expenditures included the
purchase of a new computer telephony integration system which, when fully
operational, will allow for more efficient servicing of client support calls.
Other purchases included computer equipment supporting the Company's two data
centers. Each data center consists of six Compaq Alpha GS 140 mainframe systems,
containing a total of 48 700-megahertz/64-bit CPUs, 96 gigabytes of RAM and over
3.3 terabytes of disk space. Furniture and fixture and leasehold improvements to
support office expansion in North America and Europe accounted for $4.5 million
of the fiscal 2000 capital expenditure total.
Cash, cash equivalents and investments totaled $62.3 million and represented
47% of total assets at August 31, 2000. All capital and operating expenses were
financed with cash from operations. The Company has no debt.
The Company is a party to two revolving credit facilities totaling $25
million for working capital and general corporate purposes. The Company has not
drawn on either facility to date.
Forward-Looking Factors
Dividend Payment
On August 17, 2000, the Company announced a regular quarterly dividend of $0.03
per share. The cash dividend was paid on September 21, 2000 to common
stockholders of record on August 31, 2000.
Income Taxes
In the normal course of business, the Company's tax filings are subject to audit
by federal and state tax authorities. Audits by four taxing authorities are
currently ongoing. There is inherent uncertainty contained in the audit process,
but the Company has no reason to believe that such audits will result in
additional tax payments that would have a material adverse effect on its results
of operation or financial position.
Market Sensitivities
In the ordinary course of business, the Company is exposed to financial risks
involving equity and foreign currency markets and interest rates.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
During the past three fiscal years, the U.S. and European equity markets
achieved record highs. Through October 2000, major indices (Dow Jones 30
Industrials, Russell 2000, NASDAQ Composite, MSCI European Index) have
experienced significant declines from their calendar 2000 year-to-date highs.
Traditionally, the correlation between results of the Company's operations and
the performance of global equity markets has been very low. Nevertheless, a
prolonged decline in the various worldwide markets could negatively impact a
large number of the Company's clients (investment management firms and
investment banks) and increase the probability of personnel and spending
reductions among FactSet's existing and potential clients.
The fair market value of the Company's investment portfolio at August 31,
2000 was $22.7 million. The fair market value of the portfolio is expected to
continue to be minimally impacted by fluctuations in interest rates. The
portfolio of fixed income investments is managed to preserve principal. Under
the investment guidelines established by the Company, third-party managers
construct portfolios to achieve high levels of credit quality, liquidity and
diversification. The weighted average duration of short-term investments
included in the Company's portfolios is not to exceed 18 months. Investments
such as puts, calls, strips, short sales, straddles, options, futures or
investments on margin are not permitted by the Company's investment guidelines.
For these reasons, in addition to the fact that the Company has no outstanding
debt, financial exposure to changes in interest rates is expected to continue to
be minimal.
All investments are held in U.S. dollars and over 95% of the Company's
revenues are paid in U.S. dollars.
Forward-Looking Statements
This Management's Discussion and Analysis contains forward-looking statements
that are based on management's current expectations and beliefs. The phrases
"commitments," "would have," "could," "will result," "believe," and "is
expected," are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions which are difficult to predict ("future factors").
Therefore, actual results may differ materially from what is expressed or
forecasted in such forward-looking statements. The Company undertakes no
obligation to publicly update any forward-looking statements as a result of new
information, future events or otherwise.
Future factors include the ability to hire qualified personnel; maintenance
of the Company's leading technological position; the impact of global market
trends on the Company's revenue growth rate and future results of operations;
the negotiation of contract terms supporting new and existing databases; the
successful resolution of ongoing audits by tax authorities; the continued
employment of key personnel; the absence of U.S. or foreign governmental
regulation restricting international business; successful integration of the
Insyte acquisition and the sustainability of historical levels of profitability,
revenue and operating income growth rates and cash flow generation.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENTS OF INCOME
Thousands, except per share data
<TABLE>
<CAPTION>
Years Ended August 31, 2000 1999 1998
---------------------- ---- ---- ----
<S> <C> <C> <C>
Subscription Revenues
Commissions ......................................................... $ 47,795 $ 39,982 $33,581
Cash fees ........................................................... 86,383 63,849 45,330
------- ------- ------
Total subscription revenues ......................................... 134,178 103,831 78,911
------- ------- ------
Expenses
Cost of services .................................................... 45,491 37,335 30,605
Selling, general and administrative ................................. 49,518 37,866 27,423
Retirement bonus (See Note 5) ....................................... 2,750 -- --
------ ------ ------
Total operating expenses ............................................ 97,759 75,201 58,028
------ ------ ------
Income from operations .............................................. 36,419 28,630 20,883
Other income ........................................................ 3,157 1,987 1,556
----- ----- -----
Income before income taxes and extraordinary gain ................... 39,576 30,617 22,439
Provision for income taxes .......................................... 15,416 12,052 9,830
Nonrecurring tax benefit (see Note 10) .............................. (1,119) -- --
------ ------ -----
Total provision for income taxes .................................... 14,297 12,052 9,830
------ ------ -----
Net income before extraordinary gain ................................ 25,279 18,565 12,609
Extraordinary gain, net of $191 of taxes ............................ -- -- 242
-------- ------- --------
Net income .......................................................... $ 25,279 $18,565 $ 12,851
======== ======= ========
Weighted average common shares (basic) .............................. 32,177 30,810 28,890
Weighted average common shares (diluted) ............................ 34,390 33,302 32,940
Basic earnings per common share ..................................... $ 0.79 $ 0.60 $ 0.44
Diluted earnings per common share ................................... $ 0.74 $ 0.56 $ 0.39
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Thousands
<TABLE>
<CAPTION>
Assets
At August 31, 2000 1999
------------- ---- ----
<S> <C> <C>
Current Assets
Cash and cash equivalents .............................................................. $ 39,629 $ 31,837
Investments ............................................................................ 22,704 22,934
Receivables from clients and clearing brokers .......................................... 28,449 15,463
Receivables from employees ............................................................. 789 614
Deferred taxes ......................................................................... 7,365 6,437
Other current assets ................................................................... 937 833
------ ------
Total current assets ................................................................... 99,873 78,118
------ ------
Long-Term Assets
Property, equipment and leasehold improvements, at cost ................................ 66,637 55,334
Less accumulated depreciation and amortization ......................................... (45,749) (33,951)
------- -------
Property, equipment and leasehold improvements, net (See Note 9) ....................... 20,888 21,383
------- ------
Other Non-Current Assets
Intangible assets, net (See Note 4) .................................................... 10,734 --
Deferred taxes ......................................................................... 2,232 1,785
Other assets ........................................................................... 1,841 1,742
Total Assets ........................................................................... $135,568 $103,028
======== ========
</TABLE>
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Thousands, except per share data
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
At August 31, 2000 1999
------------- ---- ----
<S> <C> <C>
Current Liabilities
Accounts payable and accrued expenses ........................................................ $ 9,874 $ 6,657
Accrued compensation ......................................................................... 9,576 7,558
Deferred cash fees and commissions ........................................................... 9,656 8,448
Dividends payable ............................................................................ 985 788
Current taxes payable ........................................................................ 1,854 1,522
----- -----
Total current liabilities .................................................................... 31,945 24,973
Non-Current Liabilities
Deferred rent ................................................................................ 621 441
------ ------
Total liabilities ............................................................................ 32,566 25,414
------ ------
Lease commitments (see Note 12)
Stockholders' Equity
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued ................... -- --
Common stock, $.01 par value, 40,000,000 shares authorized,
33,075,797 and 31,764,818 shares issued;
32,820,690 and 31,538,632 shares outstanding at
August 31, 2000 and 1999, respectively .................................................. 328 316
Capital in excess of par value ............................................................... 19,015 14,160
Retained earnings ............................................................................ 86,011 64,452
Unrealized gain on investments, net of taxes ................................................. 5 7
------- ------
105,359 78,935
Less treasury stock-255,107 and 226,186 shares at
August 31, 2000 and 1999, respectively, at cost ......................................... (2,357) (1,321)
------- ------
Total stockholders' equity ................................................................... 103,002 77,614
------- ------
Total Liabilities and Stockholders' Equity ................................................... $135,568 $103,028
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Thousands
<TABLE>
<CAPTION>
Years Ended August 31, 2000 1999 1998
---------------------- ---- ---- ----
<S> <C> <C> <C>
Common Stock
Balance, beginning of year ................................................ $ 316 $ 296 $ 294
Exercise of stock options ................................................. 12 20 2
--- --- ---
Balance, end of year ...................................................... 328 316 296
--- --- ---
Capital in Excess of Par
Balance, beginning of year ................................................ 14,160 2,933 1,995
Additional stock issued for ESOP .......................................... 1,259 874 600
Exercise of stock options ................................................. 2,372 2,861 338
Income tax benefits from option exercises ................................. 1,224 7,492 --
----- ----- -----
Balance, end of year ...................................................... 19,015 14,160 2,933
------ ------ -----
Retained Earnings
Balance, beginning of year ................................................ 64,452 48,240 35,389
Net income ................................................................ 25,279 18,565 12,851
Dividends ................................................................. (3,720) (2,353) --
------ ------ ------
Balance, end of year ...................................................... 86,011 64,452 48,240
------ ------ ------
Unrealized Gain on Investments, Net of Taxes
Balance, beginning of year ................................................ 7 -- 239
Change in unrealized gain on investments, net of taxes .................... (2) 7 (239)
----- ----- ----
Balance, end of year ...................................................... 5 7 --
----- ----- ----
</TABLE>
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Thousands
<TABLE>
<CAPTION>
Years Ended August 31, 2000 1999 1998
---------------------- ---- ---- ----
<S> <C> <C> <C>
Treasury Stock
Balance, beginning of year ....................................... (1,321) (445) (291)
Repurchase of common stock ....................................... (1,036) (876) (154)
------ ------ ----
Balance, end of year ............................................. (2,357) (1,321) (445)
------ ------ ----
Total Equity
Balance, beginning of year ....................................... 77,614 51,024 37,626
Additional stock issued for ESOP ................................. 1,259 874 600
Repurchase of common stock ....................................... (1,036) (876) (154)
Exercise of stock options ........................................ 2,384 2,881 340
Change in unrealized gain on investments,
net of taxes ................................................ (2) 7 (239)
Income tax benefits from option exercises ........................ 1,224 7,492 --
Net income ....................................................... 25,279 18,565 12,851
Dividends ........................................................ (3,720) (2,353) --
------ ------ -------
Balance, end of year ............................................. $103,002 $ 77,614 $51,024
-------- -------- -------
Comprehensive Income
Net income ....................................................... $ 25,279 $18,565 $12,851
Change in unrealized gain on investments,
net of taxes ................................................ (2) 7 --
-------- -------- -------
Comprehensive income ............................................. $ 25,277 $ 18,572 $12,851
-------- -------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Thousands
<TABLE>
<CAPTION>
Years Ended August 31, 2000 1999 1998
---------------------- ---- ---- ----
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income ............................................................. $ 25,279 $ 18,565 $ 12,851
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization ..................................... 11,865 9,792 6,557
Deferred tax benefit .............................................. (2,098) (2,938) (1,208)
Accrued ESOP contribution ......................................... 1,300 1,000 750
Gain on sale of investment ........................................ -- -- (433)
------ ------ ------
Net income adjusted for non-cash items ................................. 36,346 26,419 18,517
Changes in assets and liabilities,
net of acquired working capital
Receivables from clients and clearing brokers ..................... (12,506) (3,638) (3,832)
Receivables from employees ........................................ (175) (81) 16
Accounts payable and accrued expenses ............................. 3,076 1,810 2,539
Accrued compensation .............................................. 1,718 1,153 2,329
Deferred cash fees and commissions ................................ 713 2,962 115
Current taxes payable ............................................. 178 (1,991) 1,086
Other working capital accounts, net ............................... (12) (1,067) 486
Income tax benefits from stock option exercises ........................ 1,224 7,492 --
----- ----- ------
Net cash provided by operating activities .............................. 30,562 33,059 21,256
Cash Flows from Investing Activities
Sales (Purchases) of investments, net .................................. 227 (22,923) 1,389
Purchase of Insyte, net of cash acquired ............................... (9,778) -- --
Purchases of property, equipment and
leasehold improvements, net of retirements .......................... (11,303) (16,495) (12,015)
------- ------- -------
Net cash used in investing activities .................................. (20,854) (39,418) (10,626)
</TABLE>
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Thousands
<TABLE>
<CAPTION>
Years Ended August 31, 2000 1999 1998
---------------------- ---- ---- ----
<S> <C> <C> <C>
Cash Flows from Financing Activities
Dividend payments ...................................................... (3,264) (1,430) --
Repurchase of common stock from employees .............................. (1,036) (876) (154)
Proceeds from exercise of stock options ................................ 2,384 2,871 339
----- ------ ------
Net cash (used in) provided by financing activities .................... (1,916) 565 185
Net increase (decrease) in cash and cash equivalents ................... 7,792 (5,794) 10,815
Cash and cash equivalents at beginning of year ......................... 31,837 37,631 26,816
------ ------ ------
Cash and cash equivalents at end of year ............................... $39,629 $31,837 $37,631
======= ======= =======
Supplemental Disclosure of
Cash Flow Information
Cash paid during the year for income taxes ............................. $15,952 $11,868 $10,134
======= ======= =======
Supplemental Disclosure of
Non-Cash Transactions
Dividends declared, not paid ........................................... $ 985 $ 788 --
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
1. Organization and Nature of Business
FactSet Research Systems Inc.(the "Company") provides online integrated database
services to the investment community. The Company's revenues are derived from
subscription charges. Solely at the option of each client, these charges may be
paid either in commissions on securities transactions (in which case
subscription revenues are recorded as commissions) or in cash (in which case
subscription revenues are recorded as cash fees).
To facilitate the receipt of subscription revenues 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 and Exchange Act of
1934.
Subscription revenues paid in commissions are derived from securities
transactions introduced and cleared on a fully disclosed basis primarily 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.
FactSet Limited and FactSet Pacific Inc. are wholly-owned subsidiaries of the
Company and are U.S. corporations with foreign branch operations in London,
Frankfurt, Tokyo, Hong Kong and Sydney.
2. Accounting Policies
The significant accounting policies of the Company and its 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. Certain prior year amounts have been
reclassified to conform to current year presentation.
Cost of services is composed of employee compensation and benefits for the
applications engineering and consulting groups, clearing fees, data costs,
amortization of identifiable intangible assets, computer maintenance and
depreciation expenses and communication costs. Selling, general and
administrative expenses include employee compensation and benefits for the
sales, product development and various other support departments, promotional
expenses, rent, amortization of goodwill and leasehold improvements,
depreciation of furniture and fixtures, office expenses, professional fees and
other expenses.
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. Significant estimates have been made in areas including
deferred tax
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
assets, depreciable lives of fixed assets, accrued liabilities, income tax
provision, allowances for doubtful accounts and allocation of purchase price to
assets and liabilities acquired. Actual results could differ from those
estimates.
Revenue Recognition. Subscription charges are quoted to clients on an annual
basis, but are earned monthly as services are provided. Subscription revenues
are 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 Statements of Financial Condition as
receivables from clients and clearing brokers. Amounts that have been received
through commissions on securities transactions or through cash payments that are
in excess of earned subscription revenues are reflected on the Consolidated
Statements of Financial Condition as deferred cash 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 to execute and settle clients' securities transactions. Clearing fees
are recorded when the related subscription revenues recorded as commissions are
earned.
Cash and Cash Equivalents. Cash and cash equivalents consist of demand deposits
and money market investments with maturities of 90 days or less.
Investments. Investments have original maturities greater than 90 days, are
classified as available-for-sale securities and are reported at fair value. Fair
value is determined for most investments from readily available quoted market
prices. Unrealized gains and losses on available-for-sale securities are
recognized as a separate component of stockholders' equity, net of tax.
Property, Equipment and Leasehold Improvements. Computers and related equipment
are depreciated on a straight-line basis over estimated useful lives of three
years. Depreciation of furniture and fixtures is recognized 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.
Intangibles. Intangible assets consist of goodwill and acquired technology.
Amortization of goodwill and acquired technology is calculated on a
straight-line basis using estimated useful lives of fifteen and seven years,
respectively.
<PAGE>
FACTSET RESEARCH SYTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
Income and Deferred Taxes. Deferred taxes are determined by calculating the
future tax consequences associated with differences between financial accounting
and tax bases of assets and liabilities. A valuation allowance is established to
the extent management considers it more likely than not that some portion or all
of the deferred tax assets will not be realized. The effect on deferred taxes
from income tax law changes is recognized immediately upon enactment. The
deferred tax provision is derived from changes in deferred taxes on the balance
sheet and reflected on the Consolidated Statements of Income as a component of
income taxes.
Income tax benefits derived from the exercise of non-qualified stock options
or the disqualifying disposition of incentive stock options are recorded
directly to capital in excess of par value.
Earnings Per Share. The computation of basic earnings per share in each year is
based on the weighted average number of common shares outstanding. The weighted
average number of common shares outstanding includes shares issued to the
Company's employee stock ownership plan at the date authorized by the Board of
Directors.
Earnings per share and number of shares outstanding give retroactive effect for
all years presented for the 2-for-1 stock split that occurred on February 4,
2000 and for the 3-for-2 stock split that occurred on February 5, 1999. Diluted
earnings per share is based on the weighted average number of common shares and
potentially dilutive common shares outstanding. Shares available pursuant to
grants made under the Company's stock option plans are included as common share
equivalents using the treasury stock method.
Stock-Based Compensation. As discussed in Note 14,"Stock Option Plans", the
Company follows the disclosure-only provisions of SFAS No. 123, Accounting for
Stock-Based Compensation.
New Accounting Pronouncements. On September 1, 1999, the Company adopted
Statement of Position 98-1, Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use. The impact on the Company's results of
operations and financial position was not material. In December 1999, Staff
Accounting Bulletin ("SAB") No. 101, Revenue Recognition in Financial
Statements, was issued. The Company is evaluating SAB No. 101 but does not
expect the impact of adopting SAB 101 to be material to the Company's financial
condition or results of operations.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
3. Common Stock and Earnings per Share
Shares of common stock and related per share amounts give retroactive effect for
stock splits. A 2-for-1 stock split, effected as a stock dividend, occurred on
February 4, 2000. A 3-for-2 stock split, effected as a stock dividend, occurred
on February 5, 1999. Shares of common stock outstanding were as follows:
<TABLE>
<CAPTION>
Thousands
Years Ended August 31, 2000 1999 1998
---------------------- ---- ---- ----
<S> <C> <C> <C>
Balance, beginning of year .............. 31,539 29,020 28,706
Additional stock issued for ESOP ........ 49 81 66
Exercise of stock options ............... 1,262 2,474 264
Repurchase of common stock .............. (29) (36) (16)
------ ------ ------
Balance, end of year .................... 32,821 31,539 29,020
====== ====== ======
</TABLE>
A reconciliation between the weighted average shares outstanding used in the
basic and diluted EPS computations is as follows:
<TABLE>
<CAPTION>
Thousands, except per share data
At August 31, Net Income (Numerator) Shares (Denominator) Per Share Amount
------------- ---------------------- -------------------- ----------------
2000 1999 1998 2000 1999 1998 2000 1999 1998
---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to common stockholders $25,279 $18,565 $12,851 32,177 30,810 28,890 $0.79 $0.60 $0.44
Diluted EPS
Dilutive effect of stock options 2,213 2,492 4,050
----- ----- -----
Income available to common stockholders $25,279 $18,565 $12,851 34,390 33,302 32,940 $0.74 $0.56 $0.39
======= ======= ======= ====== ====== ======
</TABLE>
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
4. Business Combination
On July 31, 2000, the Company acquired all the outstanding stock of Innovative
Systems Techniques, Inc. ("Insyte") for cash. Insyte, a provider of database
management and decision support systems, was acquired to enhance the Company's
data warehousing service offerings. The acquisition was accounted for as a
purchase transaction, and operating results of Insyte are included in the
Company's financial statements from the date of acquisition. Pro forma
statements of income have not been presented because the effects of the
acquisition were not material to the Company's consolidated financial results.
The purchase price was allocated to tangible and intangible assets and
liabilities based on estimated fair values. The difference between the purchase
price and the fair values of tangible and intangible assets less liabilities was
recorded as goodwill. A summary of the allocation consists of the following:
Thousands July 31, 2000
--------- -------------
Tangible assets ............................................. $ 499
Acquired technology ......................................... 1,826
Goodwill .................................................... 8,975
Tangible liabilities ........................................ (790)
Deferred tax liability related to acquired technology........ (732)
------
Purchase price, net of cash acquired ........................ $9,778
======
5. Retirement Bonus
In May 2000, Howard E. Wille retired as Chief Executive Officer of the Company
and on August 31, 2000 retired as Chairman of the Board. Mr. Wille remains a
director of the Company. In recognition of his service and contributions for the
past 22 years, a retirement bonus was awarded to Mr. Wille. This resulted in a
one-time, pre-tax charge of $2.75 million in the third fiscal quarter. This
charge was equivalent to a $0.05 charge per common share, after tax. The bonus
amount was paid on August 31, 2000.
6. Receivables from Clients and Clearing Brokers
Receivables from clients and clearing brokers consist of the following:
<TABLE>
<CAPTION>
Thousands
At August 31, 2000 1999
------------- ---- ----
<S> <C> <C>
Receivables from clients ........................... $26,852 $13,718
Receivables from clearing brokers .................. 1,597 1,745
------- -------
$28,449 $15,463
======= =======
</TABLE>
Receivables from clients are reflected net of aggregate allowances for
doubtful accounts of $1.65 million and $927,000 at August 31, 2000 and 1999,
respectively. No receivables were written off as uncollectable in fiscal 2000
and 1999.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
7. Investments
The Company maintains a portfolio of investments that is managed to preserve
principal. Under the investment guidelines established by the Company,
third-party managers construct portfolios to achieve liquidity, credit quality
and diversification. The weighted average duration of the Company's portfolios
are managed to not exceed 18 months. Eligible investments include obligations
issued by the United States Treasury and other governmental agencies, money
market securities and highly rated commercial paper. Investments such as puts,
calls, strips, straddles, short sales, futures, options, commodities, precious
metals or investments on margin are not permitted under the Company's investment
guidelines. All investments are held in U.S. dollars and recorded at their
approximate fair value.
The Company held an investment in a limited partnership that invested
primarily in convertible bonds and preferred stocks. During fiscal 1998, this
investment was sold and a $242,000 after-tax extraordinary gain was recorded.
Investments, classified as available-for-sale securities, totaled $22.7
million in fiscal 2000 and $22.9 million in fiscal 1999.
8. Receivables from Employees
Receivables from employees consist of the following interest-bearing and
non-interest-bearing promissory notes and advances to employees of the Company:
<TABLE>
<CAPTION>
Thousands
At August 31, 2000 1999
------------- ---- ----
<S> <C> <C>
Non-interest-bearing promissory demand notes
and advances to employees ............................. $ 63 $ 32
6% demand notes from employees ........................... 726 582
---- ----
$789 $614
==== ====
</TABLE>
9. Property, Equipment and Leasehold Improvements
<TABLE>
Property, equipment and leasehold improvements consist of the following:
<CAPTION>
Thousands
At August 31, 2000 1999
------------- ---- ----
<S> <C> <C>
Computers and related equipment .............. $ 46,673 $ 39,844
Leasehold improvements ....................... 11,105 8,516
Furniture, fixtures and other ................ 8,859 6,974
------ ------
Subtotal ..................................... 66,637 55,334
Less accumulated depreciation
and amortization ........................ (45,749) (33,951)
------- -------
$ 20,888 $ 21,383
======== ========
</TABLE>
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
10. Income Taxes
<TABLE>
The provision for income taxes consists of the following:
<CAPTION>
Thousands
Years Ended August 31, 2000 1999 1998
---------------------- ---- ---- ----
<S> <C> <C> <C>
Current tax expense
U.S. federal ....................... $ 14,235 $12,190 $ 7,691
State and local .................... 3,279 2,800 3,347
Nonrecurring tax benefit ........... (1,119)
------ ------ ------
Total current taxes ................ 16,395 14,990 11,038
Deferred tax benefit
U.S. federal ..................... (1,707) (2,195) (842)
State and local .................. (391) (743) (366)
------ ------ ------
Total deferred taxes ............. (2,098) (2,938) (1,208)
------ ------ ------
Total tax provision ................. $ 14,297 $ 12,052 $ 9,830
======== ======== =======
</TABLE>
<TABLE>
Deferred tax assets (liabilities) consist of the following:
<CAPTION>
Thousands
Years Ended August 31, 2000 1999
---------------------- ---- ----
<S> <C> <C>
Deferred tax assets
Current
Deferred fees and commissions .................. $3,097 $2,918
Accrued liabilities ............................ 4,268 3,519
----- -----
Total current deferred taxes ................... 7,365 6,437
----- -----
Non-current
Property, equipment and leasehold
improvements, net ............................ 2,667 1,575
Deferred rent .................................. 288 210
Acquired technology ............................ (723) --
---- -----
Total non-current deferred taxes ............... 2,232 1,785
----- -----
Net deferred tax assets ........................... 9,597 8,222
Deferred tax asset valuation allowance ............ -- --
------ ------
$9,597 $8,222
====== ======
</TABLE>
Included in accounts payable and accrued expenses are accrued taxes other
than income taxes of $1.9 million and $3.7 million at August 31, 2000 and 1999,
respectively.
In the normal course of business, the Company's tax filings are subject to
audit by federal and state tax authorities. Audits by four taxing authorities
are currently ongoing. There is inherent uncertainty contained in the audit
process, but the Company has no reason to believe that audits will result in
additional tax payments that would have a material adverse effect on its results
of operations or financial position.
The provisions for income taxes differ from the amount of income tax
determined by applying the U.S. statutory federal income tax rate to income
before income taxes as a result of the following factors:
<TABLE>
<CAPTION>
Expressed as a percentage of income
before income taxes 2000 1999 1998
------------------- ---- ---- ----
<S> <C> <C> <C>
Tax at statutory U.S. tax rate ............. 35.0% 35.0% 35.0%
Increase (decrease) in taxes resulting from:
State and local taxes, net of U.S.
federal income tax benefit ......... 4.9% 6.6% 7.4%
Refunds from income tax audits,
net of payments .................... -- (2.5%) --
Nonrecurring tax benefit .............. (2.8%) -- --
Other, net ............................ (1.0%) 0.3% 1.4%
----- ----- -----
Total provision for income taxes .......... 36.1% 39.4% 43.8%
===== ===== =====
</TABLE>
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
Included in fiscal 2000 income taxes was a nonrecurring tax benefit of
approximately $1.1 million from amendments to prior years' federal and state
income tax returns, which has been presented as a separate component of the
provision for income taxes on the Consolidated Statements of Income. Excluding
the effect of this one-time benefit, the effective tax rate for fiscal 2000
would have been 38.9%. Included in the 1999 effective tax rates was the
favorable net effect of concluding two state income tax audits in the amount of
$776,000. Excluding this item, the 1999 effective tax rate would have been
41.9%.
11. Net Capital
As a registered broker-dealer, FDS is subject to Rule 15c3-1 under the
Securities and 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
(the "minimum net capital requirement"). FDS may be prohibited from paying cash
dividends to the Company if such dividends would result in its net capital
falling below the minimum net capital requirement or its ratio of aggregate
indebtedness to net capital exceeding 15 to 1.
At all times during the years presented, FDS had net capital in excess of its
minimum net capital requirement. At August 31, 2000, FDS had net capital of $5.4
million, which was $4.6 million in excess of its minimum net capital requirement
of $768,745. The ratio of aggregate indebtedness to net capital was 2.13 to 1.
12. Lease Commitments
The Company leases office space in Greenwich and Stamford, Connecticut; Boston
and Newton, Massachusetts; New York, New York; San Mateo, California; London;
Tokyo; Hong Kong; Sydney and Frankfurt. The leases expire on various dates
through July 2009. Total minimum rental payments associated with the leases are
recorded as rent (a component of selling, general and administrative expenses)
on a straight-line basis over the period of the lease term.
At August 31, 2000, the Company's lease commitments for office space provide
for the following future minimum rental payments under non-cancelable operating
leases with remaining terms in excess of one year:
Thousands
Years Ended August 31,
----------------------
2001 ......................... $ 5,171
2002 ......................... 5,105
2003 ......................... 4,946
2004 ......................... 2,596
2005 ......................... 1,062
Thereafter ................... 2,872
-------
Minimum lease payments ....... $21,752
=======
During fiscal 2000, 1999 and 1998, rental expense for all operating leases
amounted to approximately $4.6 million, $3.9 million and $2.9 million,
respectively.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
13. Employee Retirement 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 amounts as designated by the Board of Directors.
The Board of Directors authorized contributions in the amounts of $1.3 million,
$1.0 million and $750,000, for the years ended August 31, 2000, 1999 and 1998,
respectively. Such contributions are recorded in cost of services and selling,
general and administrative as compensation expense. Issuance of the related
common shares occurs shortly after contributions are authorized, generally in
the following fiscal year.
Employees of the Company and its subsidiaries who have performed at least
1,000 hours of service during the year are generally eligible 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%
in each successive year of service. Forfeited non-vested interests in the Plan
are allocated to the other participants' accounts.
The Plan held 2,174,951, 2,455,642 and 2,486,502 shares of the Company's
common stock at August 31, 2000, 1999 and 1998, respectively.
14. Stock Option Plans
Options granted under the the Company's Stock Option Plans (the "Plans") expire
not more than ten years from the date of grant and vest at a rate of 20% per
year beginning one year after the grant date. Option exercise prices equal the
fair market value of the Company's stock on the date of the option grant.
Options generally are not transferable or assignable other than by will or the
laws of descent and distribution. During the grantee's lifetime, they may be
exercised only by the grantee.
In fiscal years 2000, 1999 and 1998, incentive and non-qualified stock
options to purchase 825,500, 781,600 and 1.0 million shares of common stock,
respectively, at prices which ranged from $6.25 to $34.625 were granted to
employees and non-employee directors of the Company. Option shares and exercise
prices give retroactive effect to the 2-for-1 stock split on February 4, 2000
and the 3-for-2 stock split on February 5, 1999, respectively.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
A summary of the status of the Company's stock option plans at August 31,
2000, 1999 and 1998, and changes during each of the years then ended is
presented below:
<TABLE>
<CAPTION>
2000 1999 1998
---- ---- ----
Weighted Average Weighted Average Weighted Average
Thousands, except per share data Shares Exercise Price Shares Exercise Price Shares Exercise Price
-------------------------------- ------ -------------- ------ -------------- ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning fiscal year.... 4,036 $ 7.48 5,778 $ 3.18 5,006 $1.66
Granted .............................. 826 $33.08 784 $19.34 1,072 $9.94
Exercised ............................ (1,262) $ 1.92 (2,474) $ 1.16 (264) $1.33
Forfeited ............................ (170) $15.99 (52) $ 8.43 (36) $7.13
----- ----- -----
Outstanding at fiscal year end ....... 3,430 $15.26 4,036 $ 7.48 5,778 $3.18
----- ----- -----
Exercisable at fiscal year end ....... 1,273 $ 6.23 1,366 $ 2.88 2,946 $1.16
===== ===== =====
</TABLE>
The following table summarized information about stock options outstanding at
August 31, 2000 (shares in thousands):
<TABLE>
<CAPTION>
Options Outstanding Option Exercisable
---------------------------------------------------- -------------------------------
Weighted Average Weighted Weighted
Range of Number Remaining Years of Average Number Average
Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
--------------- ----------- ---------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 0.90-$10.00 ........................ 1,956 6.6 $ 6.40 1,139 $ 4.65
$10.01-$20.00 ........................ 604 8.6 19.41 121 19.41
$20.01-$34.63 ........................ 870 9.5 32.31 13 21.77
----- --- ------ ----- ------
3,430 7.7 $15.26 1,273 $ 6.23
===== === ====== ===== ======
</TABLE>
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
The Company follows the disclosure-only provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. As permitted by SFAS No. 123, the
Company accounts for the Plans under APB Opinion No. 25, under which no
compensation cost has been recorded. Had compensation cost for the Plans been
determined pursuant to the measurement principles under SFAS No. 123, the
Company's net income and earnings per share would have been reduced to the
following pro forma amounts for fiscal years 2000, 1999 and 1998.
<TABLE>
<CAPTION>
2000 1999 1998
Years Ended August 31, ---------------------- ---------------------- ----------------------
Thousands, except per share data As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma
-------------------------------- ----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income .............................. $25,279 $22,273 $18,565 $17,110 $12,851 $12,142
Earnings per share ...................... $ 0.74 $ 0.65 $ 0.56 $ 0.51 $ 0.39 $ 0.37
Wtd. avg. fair value of option grants.... $ 13.84 $ 7.68 $ 3.51
</TABLE>
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
Disclosure of the pro forma impact from the method of accounting prescribed
by SFAS No. 123 is effective for fiscal years beginning after December 15, 1994.
As such, options granted in fiscal 1995 are excluded from the calculations of
compensation costs included in the pro forma net income and earnings per share
amounts above.
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted average
assumptions used for grants in fiscal years 2000, 1999 and 1998:
<TABLE>
<CAPTION>
Years Ended August 31, 2000 1999 1998
---------------------- ---- ---- ----
<S> <C> <C> <C>
Risk-free interest rate ..... 6.52% 5.24% 5.51%
Expected lives of options.... 4.0 years 4.1 years 4.2 years
Expected volatility ......... 45% 43% 38%
Dividend yield .............. 0.4% 0.4% --
</TABLE>
15. Segments
The Company has three reportable segments based on geographic operations: the
United States, Europe and Asia Pacific. Each segment markets online integrated
database services to investment managers, investment banks and other financial
services professionals. The U.S. segment services financial institutions
throughout North America while the European and Asia Pacific segments serve
investment professionals located in Europe and other non-U.S. regions.
The European segment is headquartered in London, United Kingdom and maintains
an office presence in Frankfurt, Germany. The Asia Pacific segment is
headquartered in Tokyo, Japan with office locations in Hong Kong and Sydney,
Australia. Mainly sales and consulting personnel staff each of these foreign
branch operations. Segment revenues reflect direct sales of products and
services to clients based in their geographic location. There are no
intersegment or intercompany sales. Each segment records compensation, travel,
office and other direct expenses related to its employees. Expenses for software
development, expenditures related to the Company's computing centers, data
costs, clearing fees, income taxes and corporate headquarters charges are
recorded by the U.S. segment and are not allocated to the European and Asia
Pacific segments. The accounting policies of the segments are the same as those
described in Note 2, "Accounting Policies."
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
<TABLE>
Segment Information
<CAPTION>
Thousands U.S. Europe Asia Pacific Total
--------- ---- ------ ------------ -----
<S> <C> <C> <C> <C>
Year Ended August 31, 2000
Revenues from external clients........ $111,801 $15,878 $6,499 $134,178
Other income ......................... 3,146 11 -- 3,157
Depreciation and amortization......... 10,931 685 249 11,865
Segment operating profit*............. 26,995 6,773 2,651 36,419
Provision for income taxes ........... 14,297 -- -- 14,297
Total assets ......................... 125,427 8,449 1,692 135,568
Capital expenditures ................. 8,506 2,704 93 11,303
Year Ended August 31, 1999
Revenues from external clients........ $88,962 $10,690 $4,179 $103,831
Other income ......................... 1,977 10 -- 1,987
Depreciation and amortization ........ 9,118 331 343 9,792
Segment operating profit*............. 22,579 4,900 1,151 28,630
Provision for income taxes ........... 12,052 -- -- 12,052
Total assets ......................... 96,861 4,574 1,593 103,028
Capital expenditures ................. 15,572 467 456 16,495
Year Ended August 31, 1998
Revenues from external clients........ $68,938 $ 7,388 $2,585 $ 78,911
Other income ......................... 1,543 13 -- 1,556
Depreciation and amortization ........ 6,239 235 83 6,557
Segment operating profit*............. 16,155 4,016 712 20,883
Provision for income taxes ........... 9,830 -- -- 9,830
Extraordinary gain ................... 242 -- -- 242
Total assets ......................... 67,798 2,710 988 71,496
Capital expenditures ................. 11,573 294 148 12,015
</TABLE>
*Expenses are not allocated or charged between segments. Expenditures associated
with the Company's computer centers, software development costs, clearing fees,
data fees, income taxes and corporate headquarters charges are recorded by the
U.S. segment.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
August 31, 2000, 1999 and 1998
<TABLE>
Geographic Information
<CAPTION>
Thousands
Years Ended August 31, 2000 1999 1998
---------------------- ---- ---- ----
<S> <C> <C> <C>
Revenues
United States ...................... $111,801 $ 88,962 $68,938
United Kingdom ..................... 11,240 8,049 6,045
Other European countries ........... 4,638 2,641 1,343
Asia Pacific countries ............. 6,499 4,179 2,585
-------- -------- -------
Total revenues ..................... $134,178 $103,831 $78,911
======== ======== =======
Long-lived Assets
United States ...................... $ 17,925 $ 20,283 $13,829
United Kingdom ..................... 2,764 745 608
Other European countries ........... -- -- --
Asia Pacific countries ............. 199 355 243
-------- -------- -------
Total long-lived assets $ 20,888 $ 21,383 $14,680
======== ======== =======
</TABLE>
Fees quoted by the Company are based on subscriptions to its products and
services. Around-the-clock consulting, unlimited client training and payment of
daily communication costs are significant services provided to all clients. Fees
for these services are included in subscription charges and are not separately
stated in client invoices or in the Company's accounting records. Accordingly,
disclosure of revenues by products and services is not practicable.
For the fiscal year ended August 31, 2000, no individual client accounted for
more than 3% of total revenues. Revenues from the top ten clients did not exceed
20%.
16. Revolving Credit
Facilities In fiscal 2000, the Company renewed its 364-day revolving credit
facility and continued to maintain its existing three-year revolving credit
facility. Both credit facilities ("the facilities") are available in an
aggregate principal amount of up to $25 million for working capital and general
corporate purposes, with the facilities split into two equal tranches of $12.5
million. The Company has not drawn on either of the facilities. The Company is
obligated to pay a commitment fee on the unused portion of the facilities at a
weighted average annual rate of 0.175%. The facilities also contain covenants
that require the Company to maintain minimum levels of consolidated net worth
and certain leverage and fixed charge ratios. The Company has complied with all
covenants during fiscal 2000.
17. Off-Balance Sheet Risk and Concentrations of Credit Risk
In the normal course of business, securities transactions of commission clients
are introduced and cleared through clearing brokers. Pursuant to agreements
between FDS and its clearing brokers, the clearing brokers have the right to
charge FDS for unsecured losses that result from a client's failure to complete
such transactions. The Company seeks to control the credit risk of
nonperformance by evaluating the credit worthiness of its clients and by
reviewing their trading activity on a periodic basis.
Receivables from clearing brokers represents a concentration of credit risk
and relates to securities transactions cleared through two clearing brokers.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
REPORT OF INDEPENDENT ACCOUNTS
To the Board of Directors and Stockholders of FactSet Research Systems Inc.
In our opinion, the accompanying consolidated statements 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,
2000 and 1999, and the results of their operations and their cash flows for each
of the three years in the period ended August 31, 2000, in conformity with
accounting principles generally accepted in the United States. 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
auditing standards generally accepted in the United States, 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 express above.
/s/PricewaterhouseCoopers LLP
New York, New York
September 11, 2000
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
QUARTERLY FINANCIAL DATA
(Unaudited)
<TABLE>
Quarterly results of operations and earnings per common share for fiscal 2000
and 1999 are as follows:
<CAPTION>
Thousands, except per share data First Second Third Fourth
-------------------------------- ----- ------ ----- ------
<S> <C> <C> <C> <C>
2000*
Revenues .......................... $30,284 $32,485 $34,295 $37,114
Cost of services .................. 10,560 11,562 11,415 11,954
Selling, general and administrative 11,042 11,676 12,700 14,100
Retirement bonus .................. -- -- 2,750 --
Income from operations ............ 8,682 9,247 7,430 11,060
Net income ........................ 5,526 7,314 5,150 7,289
Diluted earnings per common share . $ 0.16 $ 0.21 $ 0.15 $ 0.21
Wtd. avg. common shares (diluted) . 34,580 34,659 34,505 34,586
1999**
Revenues .......................... $23,830 $25,235 $26,451 $28,315
Cost of services .................. 8,511 9,053 9,503 10,268
Selling, general and administrative 8,725 9,228 9,641 10,272
Income from operations ............ 6,594 6,954 7,307 7,775
Net income ........................ 4,320 4,515 4,846 4,884
Diluted earnings per common share . $ 0.13 $ 0.13 $ 0.14 $ 0.14
Wtd. avg. common shares (diluted) . 33,226 33,610 34,090 34,266
</TABLE>
*Earnings per share and shares outstanding give retroactive effect to the
2-for-1 stock split that occurred on February 4, 2000.
**Earnings per share and shares outstanding give retroactive effect to the
2-for-1 stock split that occurred on February 4, 2000 and the 3-for-2 stock
split that occurred on February 5, 1999.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
STOCK INFORMATION
Common Stock
The principal stock exchange on which the Company's common stock (par value
$0.01 per share) is listed is the New York Stock Exchange. At October 4, 2000,
there were approximately 5,500 shareholders of the Company's common stock.
Quarterly Stock Prices
Quarterly stock prices reflect the high and low prices for FactSet's common
stock on the New York Stock Exchange composite tape for the last two fiscal
years.
<TABLE>
<CAPTION>
First Second Third Fourth
----- ------ ----- ------
<S> <C> <C> <C> <C>
2000*
High ............... $37.00 $41.75 $35.50 $35.88
Low ................ 23.09 26.88 18.00 25.82
1999**
High ............... $14.33 $27.00 $25.63 $29.69
Low ................ 8.67 13.46 18.34 21.09
</TABLE>
* Share prices give retroactive effect to the 2-for-1 stock split that occurred
on February 4, 2000.
** Share prices give retroactive effect to the 3-for-2 stock split that occurred
on February 5, 1999 and to the 2-for-1 stock split that occurred on February 4,
2000.
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
DIRECTORS AND MANAGEMENT
Directors
Philip A. Hadley
Chairman of the Board and
Chief Executive Officer
Charles J. Snyder
Vice Chairman of the Board and
Retired President
FactSet Research Systems Inc.
Michael F. DiChristina
President and Chief Operating Officer
John D.Connolly
Retired Partner
Miller, Anderson & Sherrerd
West Conshohocken, Pennsylvania
David R. Korus
Managing Member
Owenoke Capital Management, LLC
New York, New York
Joseph E. Laird, Jr.
Chairman and Chief Executive Officer
Laird Squared, LLC
New York, New York
John C. Mickle
President
Sullivan, Morrissey & Mickle
Capital Management Corporation
New York, New York
Walter F. Siebecker
Managing Director
Depository Trust and Clearing Corporation
New York, New York
Howard E. Wille
Retired Chairman of the Board and
Chief Executive Officer
FactSet Research Systems Inc.
Management
Philip A. Hadley
Chairman of the Board and
Chief Executive Officer
Michael F. DiChristina
President and Chief Operating Officer
Ernest S. Wong
Senior Vice President and
Chief Financial Officer and Secretary
Scott L. Beyer
Director, European Operations and
Managing Director, FactSet Limited
William F. Faulkner
Director, Business Development
Michael D. Frankenfield
Director, Sales
David W. Hill
Director, Business Development
Kieran M. Kennedy
Director, Consulting Services
Edward A. Martin
Director, Quality Assurance and
Information Research
Maurizio Nicolelli
Comptroller
Laura C. Ruhe
Director, Product Development
Townsend Thomas
Director, Engineering and
Chief Technology Officer
Scott C. Yasharian
Director, Pacific Rim Operations and
President, FactSet Pacific, Inc.
Merle E. Yoder
Director, Web Development and Strategy
<PAGE>
FACTSET RESEARCH SYSTEMS INC.
CORPORATE INFORMATION
Headquarters
FactSet Research Systems Inc.
One Greenwich Plaza
Greenwich, Connecticut 06830
203.863.1500/203.863.1501 fax
Internet Address
www.factset.com
Offices
FactSet Research Systems Inc.
One Cummings Point Road
Stamford, Connecticut 06902
203.356.3700
FactSet Research Systems Inc.
300 First Stamford Place
Stamford, Connecticut 06902
203.905.7000
FactSet Research Systems Inc.
90 Park Avenue
New York, New York 10016
212.476.4300
FactSet Research Systems Inc.
One Federal Street
Boston, Massachusetts 02110
617.757.1100
FactSet Research Systems Inc.
One Gateway Center
Newton, Massachusetts 02458
617.965.8450
FactSet Research Systems Inc.
2600 Campus Drive
San Mateo, California 94403
650.286.4900
FactSet Limited
One Angel Court
London EC2R 7HJ
United Kingdom
44.(0)20.7606.0001
FactSet Limited
Trianon-Gebaeude
Mainzer Landstrasse 16
60325 Frankfurt
Germany
49.69.97168.101
FactSet Pacific Inc.
Daini Okamotoya Building 8F
1-22-16 Toranomon
Minato-ku, Tokyo 105-0001
Japan
813.5512.7700
FactSet Pacific Inc.
25/F Bank of China Tower
One Garden Road
Central, Hong Kong
852.2251.1833
FactSet Pacific Inc.
14 Martin Place, Level 7
Sydney, NSW 2001
Australia
61.2.9224.8930
Additional information, including the Form 10-K, can be obtained from
our Web site or by contacting Investor Relations at 203.863.1500.
Independent Public Accountants
PricewaterhouseCoopers LLP
New York, New York
Legal Counsel
Cravath, Swaine & Moore
New York, New York
Stock Transfer Agent/Registrar
The Bank of New York
800.524.4458
[email protected]
Common Stock Information
FactSet trades on the New York Stock Exchange under the ticker symbol "FDS".
Annual Meeting
The annual meeting of stockholders will
be held at 10:00 a.m. on Thursday,
January 11, 2001 at the FactSet Corporate Office, One Greenwich Plaza,
Greenwich, Connecticut.
On November 22, 2000, proxy material
was sent to stockholders of record as of November 10, 2000.
<PAGE>
www.factset.com
ONE GREENWICH PLAZA . GREENWICH, CT 06830
FACTSET RESEARCH SYSTEMS INC.
