Exhibit 99.1
FactSet Research Systems Inc.
Unaudited Pro Forma Condensed Consolidated Financial Information
On July 1, 2016, FactSet Research Systems Inc. (“FactSet” or the “Company”) completed the sale of its market research business, consisting of Market Metrics LLC and Matrix-Data Limited (collectively “Market Metrics” or the “disposal group”) to AI NewCo., a merger subsidiary of Asset International Inc. (“AI”)a portfolio company of Genstar Capital (the “Transaction”). The total purchase price was $165.0 million less estimated working capital and certain adjustments set forth in the definitive stock purchase agreement (the “Purchase Agreement”), including a $9.7 million bonus adjustment amount. Upon the achievement of certain growth targets over the next two years by the market research business that has been sold, FactSet would be entitled to an additional earn-out of $10 million.
The following unaudited pro forma condensed consolidated financial information (the “pro forma financial statements”) and accompanying notes as of and for the six months ended February 29, 2016 and for the fiscal year ended August 31, 2015, give effect to the disposition of Market Metrics by FactSet. The unaudited pro forma condensed consolidated balance sheet (the “pro forma balance sheet”) assumes the Transaction occurred on February 29, 2016. The unaudited pro forma condensed consolidated statement of operations (the “pro forma statement of operations”) for the six months ended February 29, 2016 and the fiscal year ended August 31, 2015, assume the Transaction occurred on the first day of the earliest fiscal period presented (September 1, 2014) and carried through all periods presented.
The pro forma financial statements are presented for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that would have actually been reported had the Transaction occurred on September 1, 2014, for purposes of the pro forma statement of operations and as of February 29, 2016, for purposes of the pro forma balance sheet, nor is it necessarily indicative of the future financial position or results of operations. The unaudited pro forma financial statements are derived from the historical consolidated financial statements of the Company. Adjustments are included to the extent they are directly attributable to the Transaction, factually supportable and, with respect to the pro forma statement of operations, expected to have a continuing impact on the Company’s operating results.
The adjustments reflected are based on currently available information and certain preliminary estimates and assumptions and, therefore, the actual effect of the Transaction, including any related tax impact, may differ from the effects reflected in the unaudited pro forma condensed consolidated financial statements.
The following pro forma financial statements should be read in conjunction with:
| | – | The accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information; |
| | – | The audited consolidated financial statements of FactSet as of and for the year ended August 31, 2015 included in FactSet’s Annual Report on Form 10-K for the year ended August 31, 2015; and |
| | – | The unaudited consolidated financial statements of FactSet as of and for the three and six months ended February 29, 2016 included in FactSet’s Quarterly Report on Form 10-Q for the quarter ended February 29, 2016. |
FactSet Research Systems Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of February 29, 2016
(In thousands)
| | | As Reported | | | Disposition ofMarket Metrics (A) | | | Other Adjustments | | | | Pro Forma | |
ASSETS | | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 175,170 | | | $ | (2,092 | ) | | $ | 154,660 | | (B) | | $ | 327,738 | |
Investments | | | 22,931 | | | | — | | | | — | | | | | 22,931 | |
Accounts receivable, net | | | 105,928 | | | | (6,946 | ) | | | — | | | | | 98,982 | |
Prepaid taxes | | | 2,107 | | | | — | | | | — | | | | | 2,107 | |
Deferred taxes | | | 3,397 | | | | — | | | | — | | | | | 3,397 | |
Prepaid expenses and other current assets | | | 17,808 | | | | (2,107 | ) | | | — | | | | | 15,701 | |
Total current assets | | | 327,341 | | | | (11,145 | ) | | | 154,660 | | | | | 470,856 | |
Property, equipment and leasehold improvements, at cost | | | 232,741 | | | | (598 | ) | | | — | | | | | 232,143 | |
Less accumulated depreciation and amortization | | | (157,074 | ) | | | 396 | | | | — | | | | | (156,678 | ) |
Property, equipment and leasehold improvements, net | | | 75,667 | | | | (202 | ) | | | — | | | | | 75,465 | |
| | | | | | | | | | | | | | | | | | |
Goodwill | | | 489,340 | | | | (32,406 | ) | | | — | | | | | 456,934 | |
Intangible assets, net | | | 106,753 | | | | (5,832 | ) | | | — | | | | | 100,921 | |
Deferred taxes | | | 17,744 | | | | (819 | ) | | | 3,465 | | (C) | | | 20,390 | |
Other assets | | | 4,860 | | | | (224 | ) | | | — | | | | | 4,636 | |
TOTAL ASSETS | | $ | 1,021,705 | | | $ | (50,628 | ) | | $ | 158,125 | | | | $ | 1,129,202 | |
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LIABILITIES | | | | | | | | | | | | | | | | | |
Accounts payable and accrued expenses | | $ | 39,210 | | | $ | (863 | ) | | $ | 2,879 | | (D) | | $ | 41,226 | |
Accrued compensation | | | 35,079 | | | | (2,315 | ) | | | 3,121 | | (D) | | | 35,885 | |
Deferred fees | | | 44,038 | | | | (11,279 | ) | | | — | | | | | 32,759 | |
Deferred taxes | | | 321 | | | | — | | | | — | | | | | 321 | |
Taxes payable | | | 3,345 | | | | — | | | | 29,607 | | (E) | | | 32,952 | |
Dividends payable | | | 18,044 | | | | — | | | | — | | | | | 18,044 | |
Total current liabilities | | | 140,037 | | | | (14,457 | ) | | | 35,607 | | | | | 161,187 | |
Long-term debt | | | 300,000 | | | | — | | | | — | | | | | 300,000 | |
Deferred taxes | | | 1,469 | | | | (3,465 | ) | | | 3,465 | | (C) | | | 1,469 | |
Taxes payable | | | 8,488 | | | | — | | | | — | | | | | 8,488 | |
Deferred rent and other non-current liabilities | | | 30,653 | | | | (87 | ) | | | — | | | | | 30,566 | |
TOTAL LIABILITIES | | $ | 480,647 | | | $ | (18,009 | ) | | $ | 39,072 | | | | $ | 501,710 | |
| | | | | | | | | | | | | | | | | | |
STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | | |
Common stock | | $ | 507 | | | $ | — | | | $ | — | | | | $ | 507 | |
Additional paid-in capital | | | 595,030 | | | | — | | | | (2,422 | ) | (F) | | | 592,608 | |
Treasury stock, at cost | | | (1,104,567 | ) | | | — | | | | — | | | | | (1,104,567 | ) |
Retained earnings | | | 1,113,126 | | | | (32,536 | ) | | | 121,475 | | (G) | | | 1,202,065 | |
Accumulated other comprehensive loss | | | (63,038 | ) | | | (83 | ) | | | — | | | | | (63,121 | ) |
TOTAL STOCKHOLDERS’ EQUITY | | $ | 541,058 | | | $ | (32,619 | ) | | $ | 119,053 | | | | $ | 627,492 | |
| | | | | | | | | | | | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 1,021,705 | | | $ | (50,628 | ) | | $ | 158,125 | | | | $ | 1,129,202 | |
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
FactSet Research Systems Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended August 31, 2015
(In thousands, except per share data)
| | | As Reported | | | Disposition of Market Metrics | | | | Pro Forma | |
Revenues | | $ | 1,006,768 | | | $ | (40,151 | ) | (H) | | $ | 966,617 | |
Operating expenses | | | | | | | | | | | | | |
Cost of services | | | 405,339 | | | | (21,310 | ) | (H) | | | 384,029 | |
Selling, general and administrative | | | 269,511 | | | | (7,790 | ) | (H) | | | 261,721 | |
Total operating expenses | | | 674,850 | | | | (29,100 | ) | | | | 645,750 | |
| | | | | | | | | | | | | | |
Operating income | | | 331,918 | | | | (11,051 | ) | | | | 320,867 | |
| | | | | | | | | | | | | | |
Other income | | | 1,836 | | | | (4 | ) | (H) | | | 1,832 | |
Income before income taxes | | | 333,754 | | | | (11,055 | ) | | | | 322,699 | |
| | | | | | | | | | | | | | |
Provision for income taxes | | | 92,703 | | | | (4,100 | ) | (I) | | | 88,603 | |
Net income | | $ | 241,051 | | | $ | (6,955 | ) | | | $ | 234,096 | |
| | | | | | | | | | | | | | |
Basic earnings per common share | | $ | 5.80 | | | | | | | | $ | 5.63 | |
Diluted earnings per common share | | $ | 5.71 | | | | | | | | $ | 5.54 | |
| | | | | | | | | | | | | | |
Basic weighted average common shares | | | 41,572 | | | | | | | | | 41,572 | |
Diluted weighted average common shares | | | 42,235 | | | | | | | | | 42,235 | |
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
FactSet Research Systems Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the six months ended February 29, 2016
(In thousands, except per share data)
| | | As Reported | | | Disposition of Market Metrics | | | | Pro Forma | |
Revenues | | $ | 552,300 | | | $ | (18,991 | ) | (H) | | $ | 533,309 | |
Operating expenses | | | | | | | | | | | | | |
Cost of services | | | 238,647 | | | | (10,787 | ) | (H) | | | 227,860 | |
Selling, general and administrative | | | 141,001 | | | | (3,967 | ) | (H) | | | 137,034 | |
Total operating expenses | | | 379,648 | | | | (14,754 | ) | | | | 364,894 | |
| | | | | | | | | | | | | | |
Operating income | | | 172,652 | | | | (4,237 | ) | | | | 168,415 | |
| | | | | | | | | | | | | | |
Other expense | | | (331 | ) | | | — | | | | | (331 | ) |
Income before income taxes | | | 172,321 | | | | (4,237 | ) | | | | 168,084 | |
| | | | | | | | | | | | | | |
Provision for income taxes | | | 44,594 | | | | (1,728 | ) | (I) | | | 42,866 | |
Net income | | $ | 127,727 | | | $ | (2,509 | ) | | | $ | 125,218 | |
| | | | | | | | | | | | | | |
Basic earnings per common share | | $ | 3.10 | | | | | | | | $ | 3.04 | |
Diluted earnings per common share | | $ | 3.06 | | | | | | | | $ | 3.00 | |
| | | | | | | | | | | | | | |
Basic weighted average common shares | | | 41,252 | | | | | | | | | 41,252 | |
Diluted weighted average common shares | | | 41,799 | | | | | | | | | 41,799 | |
See accompanying notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
FactSet Research Systems Inc.
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information
PRO FORMA ADJUSTMENTS
The pro forma adjustments are based on the Company's preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed consolidated financial information:
A. | These adjustments reflect the elimination of the assets and liabilities of the disposal group. The total net assets of the disposal group are $32.6 million and reduce the gain on sale as calculated in Note G. |
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B. | This adjustment represents the receipt of $165.0 million in cash at the close of the Transaction less a $9.7 million bonus adjustment amount and a $0.6 million estimated working capital adjustment. |
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C. | This adjustment reclasses the deferred tax liability related to the Market Metrics LLC entity to the deferred tax asset line for presentation purposes. |
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D. | These adjustments represent Transaction-related expenses that have been accrued for as of the close of the Transaction, including bonuses and professional fees. |
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E. | This adjustment represents the taxes payable attributable to the gain on sale. The taxes payable amount was calculated using an estimated blended U.S. Federal and state rate of 37.0%. Excluded from this calculation was $31.0 million which reflects the fair value assigned to the U.K.-based entity, Matrix-Data Limited, whose disposal was tax-exempt under local tax law. |
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F. | This adjustment represents the reversal of additional paid in capital (“APIC”) recorded for restricted stock awards related to the disposal group that remained unvested as of July 1, 2016. As such, the historical amount charged to APIC has been reversed with an offsetting adjustment to retained earnings. |
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G. | This adjustment includes the estimated after-tax gain on the sale of $88.9 million. This estimated gain has not been reflected in the pro forma statement of operations as it is considered to be nonrecurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the Purchase Agreement. |
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H. | These adjustments reflect the elimination of the historical revenues and expenses of the disposal group for the periods presented.Not included in the pro forma results are anticipated savings due to costs that may be reduced or eliminated. |
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I. | This adjustment represents the estimated income tax effect of the pro forma adjustments. The tax effect of the pro forma adjustments was calculated using the estimated blended U.S. Federal and state rate of 37.0% for Market Metrics LLC and the U.K. statutory tax rate of 20.0% for Matrix-Data Limited. |
