For the quarter ended February 28, 2007, revenues increased to $116.3 million, up 24% compared to the prior year. Operating income for the second quarter rose to $37.8 million from $29.6 million in the same period of fiscal 2006. Net income advanced 38% to $26.5 million as compared to $19.2 million a year ago. Diluted earnings per share increased to $0.52, up from $0.38 in the same period of fiscal 2006. The effective tax rate for the quarter was 33.1%, down from 36.3% a year ago. Included in the second quarter was an income tax benefit of $1.1 million, resulting in an increase in diluted earnings of $0.03 per share. The tax benefit was caused by the reenactment of the U.S. Federal R&D tax credit in December 2006, retroactive to January 1, 2006.
To aid an investor's ability to make more precise interpretations of FactSet's financial results, a supplementary schedule is presented on page 7 of this press release to summarize revenues related to services that are not included in the calculation of FactSet's subscription value.
The Company also announced today that its Board of Directors approved increasing the quarterly cash dividend by 100% to $0.12 per share, or $0.48 per share per annum, beginning with the Companyâs next dividend payment in June 2007.
The Board also approved an expansion of the existing share repurchase program by an additional $100 million. There is no timeframe to complete the repurchase program and it is expected that share repurchases and cash dividends will be paid using existing and future cash generated by operations.
Philip A. Hadley, Chairman and CEO said, âWeâre pleased with our second quarter results and our record of delivering strong performance over the last ten years. The dividend increase and additional share repurchase authorization reflect the consistency of our subscription business model, our historical free cash flow and our continued focus to enhance longterm shareholder value.â
Second Quarter Financial Highlights
Subscriptions increased $23.3 million during the quarter and up $23.4 million excluding currency. On a constant currency basis, subscriptions advanced $79.5 million over the last twelve months, up 21%. As of February 28, 2007, subscriptions totaled $462.8 million. Of this total, subscriptions from FactSetâs domestic operations were $324.4 million, while overseas operations were $138.4 million. Demand for FactSetâs services continued to rise. Users rose to 32,000, up from 31,000 at the beginning of the quarter. Client count was 1,872 as of February 28, a net increase of 42 clients during the quarter.
âSubscriptionsâ at any given point in time represent the forward-looking revenues for the next 12 months from all subscription services currently being supplied to clients.
Other financial and operational highlights of the second quarter of fiscal 2007 include:
â¢ Client retention rate remained above 95%.
â¢ 500 clients, consisting of 4,200 users, subscribed to the PA 2.0 application at quarter-end.
â¢ Revenues from U.S. business produced revenues of $81.9 million for the three months ended February 28, 2007, up 22% over the prior year.
â¢ Revenues from non-U.S. operations increased 30% to $34.4 million. On a constant currency basis and excluding
non-subscription revenues, revenues from non-U.S. operations advanced 21%.
â¢ Cash provided by operating activities of $25.1 million less capital expenditures of $7.3 million resulted in $17.8 million of free cash flow.
â¢ New lease agreements were executed to support operations in New York and London. New space will accommodate approximately 315 professionals. In New York, five office locations will be consolidated into one.
â¢ Shares repurchased totaled 271,900 shares. Including the increase in the share repurchase program, $115.2 million is authorized for future repurchases.
â¢ Joseph R. Zimmel, a private investor and retired Managing Director of Goldman, Sachs & Co., was elected to the FactSet Board of Directors.
â¢ Employee count as of February 28, 2007 was 1,486, up 17% from a year ago and up 10% since the beginning of the fiscal year.