UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.20549
_____________________
FORM 10-K
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the Fiscal Year Ended August 31, 1997
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ____ to ____
__________________
Commission File Number: 1-11869
FACTSET RESEARCH SYSTEMS INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3362547
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Greenwich Plaza, Greenwich, Connecticut 06830
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (203) 863-1500
Securities registered pursuant to Section 12(b) of the Act: Common Stock
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes |X| No|_|
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in the definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. |_|
The aggregate market value of the common stock held by non-affiliates
of the registrant as of November 14, 1997 was $121,744,870
The number of shares outstanding of the registrant's common stock as
of November 14, 1997 was 9,574,432.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year
ended August 31, 1997 into Parts I, II and III.
Portions of the definitive Proxy Statement dated November 26, 1997
into Part III.
FACTSET RESEARCH SYSTEMS INC.
FORM 10-K
For The Fiscal Year Ended August 31, 1997
INDEX
Page
PART I
Item 1. Business............................................................2
Item 2. Properties..........................................................3
Item 3. Legal Proceedings...................................................3
Item 4. Submission of Matters to a Vote of Security Holders.................3
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters.................................................4
Item 6. Selected Financial Data.............................................4
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................4
Item 8. Financial Statements and Supplementary Data.........................4
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures................................4
PART III
Item 10. Directors and Executive Officers of the Registrant..................4
Item 11. Executive Compensation..............................................5
Item 12. Security Ownership of Certain Beneficial Owners and Management......6
Item 13. Certain Relationships and Related Transactions......................6
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.....6
Signatures ....................................................................7
PART I
ITEM 1. BUSINESS
FactSet Research Systems Inc. ("the Company" or "FactSet") changed its name
from FactSet Research Corporation in 1995. FactSet Research Corporation was
incorporated in the state of Delaware in 1984. FactSet commenced business in
1978 through FactSet Data Systems, Inc., now a wholly owned subsidiary of the
Company. FactSet Data Systems, Inc. was incorporated in the state of Delaware in
1978.
FactSet is a leading provider of on-line integrated database services
to the financial community. The Company's software technology combines
multiple large-scale databases into a single mainframe information system
accessible from clients' personal computers. Simultaneous access to over 85
databases creates a comprehensive, "one-stop" source for financial and
economic information, news and commentary on tens of thousands of companies
and securities worldwide.
The Company acquires data from over 30 information providers and seeks
to maintain, when possible, at least two sources for each item of data. The
Company contracts with database vendors on either a fixed fee or royalty
(per client) basis, with the contract generally renewable annually and
cancelable on one year's notice. FactSet is a significant distributor for
many of the databases provided by the Company.
FactSet has developed advanced proprietary communication and software
tools to enable users to access the Company's mainframe centers and its
integrated data library to create investment analyses using easy-to-use
Windows-based programs. The Company's proprietary software tools enable
clients to download, screen, manipulate, and analyze data in a virtually
infinite array of formats, allowing for custom reports and charts designed
by and for the user. By charging flat fees, FactSet encourages its clients
to make full use of the FactSet system. There are no extra usage charges
and FactSet includes extensive support and training at no additional
charges.
Providing superior consultative services is an integral part of the
Company's services. The Company's client support consultants strive to
maximize the utility of the FactSet system to clients and thereby promote
lasting and mutually profitable client relationships. Client support
consultants work with clients, often at client sites, to develop custom
applications tailored to clients' information needs. The Company also
conducts several dozen training seminars across the US and abroad annually
and maintains a client support hotline and around-the-clock emergency
service.
The Company's marketing efforts are focused on specific industry
segments, including investment managers, investment bankers and portfolio
managers, and on geographic expansion in Europe and the Pacific Rim. The
Company explores strategic acquisitions and alliances as such opportunities
arise.
Financial services professionals depend on a wide array of financial
data including current and historical security prices, historical and
estimated future company financial information, benchmark data and indices,
general economic data, news, commentary, and other financial data. In
addition, the Company believes that it is becoming increasingly important
for these professionals to integrate and analyze the historical
relationships between multiple types of financial information in forming
their investment decisions. Financial information is typically contained in
databases maintained by a wide variety of vendors and provided to clients
in both CD-ROM and online formats. In the absence of database integration,
in order to utilize data from a variety of sources, an individual user must
access and retrieve data from multiple separate databases, with data often
in varied formats, and then must manually integrate and tabulate the
accumulated data to suit his or her particular task.
The on-line information services industry is competitive and
characterized by rapid technological change and by large and
well-capitalized companies as well as smaller competitors. In a broad
sense, the Company competes or may compete directly and indirectly in the
United States and internationally with well-established news and
information providers, market data suppliers, as well as many of the
database providers from whom the Company obtains data for inclusion in the
FactSet system. The Company's most direct competitors include online and
CD-ROM database suppliers and integrators such as OneSource Inc.,
COMPUTSTAT PC Plus, Baseline Inc., StockVal Incorporated, Disclosure Inc.,
and IDD Information Services primarily in the United States and Datastream
and Randall-Helms primarily in international markets. Many of these
competitors offer databases and applications that, in one form or another,
are similar to the databases and applications offered by the Company, in
some cases at lower prices. While many of the Company's competitors offer
similar applications, the Company believes that none offer a package of
applications as comprehensive and powerful as those offered by the Company.
The number of employees of FactSet and its subsidiaries totaled 193 as
of August 31, 1997, up from 145 at August 31, 1996.
Additional information with respect to the Company's business is
included in FactSet's fiscal year 1997 Annual Report to Stockholders which
is incorporated herein by reference:
Five Year Summary of Selected Financial Data - - page 12
Management's Discussion and Analysis of Financial Condition
and Results of Operations- -pages 13-17
Note 1 to Consolidated Financial Statements entitled "Organization
and Nature of Business" - - page 26
Note 10 to Consolidated Financial Statements entitled "Net Capital" - - page 32
ITEM 2. PROPERTIES
The Company's principal executive offices are located in Greenwich,
Connecticut. The Company maintains redundant mainframe computer centers at
its Greenwich facility and at a facility in New York, New York. The
Greenwich facility consists of approximately 37,000 square feet of office
and computer center space. The Company and its subsidiaries also maintain
offices in San Mateo, California, London, England and Tokyo, Japan. The
Company and its subsidiaries lease all of their facilities.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during fiscal 1997.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The following information included in FactSet's fiscal year 1997
Annual Report to Stockholders is incorporated herein by reference:
Quarterly Financial Data, Common Stock and Quarterly Stock Prices - - page 36
ITEM 6. SELECTED FINANCIAL DATA
Refer to the Five Year Summary of Selected Financial Data included on
page 12 of FactSet's fiscal year 1997 Annual Report to Stockholders which
is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Refer to the Management's Discussion and Analysis of Financial Condition and
Results of Operations included on pages 13-17 of FactSet's fiscal year 1997
Annual Report to Stockholders which is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Refer to the following information included in FactSet's fiscal year
1997 Annual Report to Stockholders which is incorporated herein by reference:
Consolidated Statements of Income- -page 19
Consolidated Statements of Financial Condition- - page 20
Consolidated Statements of Changes in Stockholders' Equity- -pages 22-23
Consolidated Statements of Cash Flows- -pages 24-25
Notes to Consolidated Financial Statements- -pages 26-35
Report of Independent Accountants- -page 37
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Directors and Executive Officers of FactSet Research Systems Inc.
as of November 26, 1997 were as follows:
Name Age Position with the Company
- ---- --- -------------------------
Howard E. Wille 69 Chairman of the Board of Directors;
Chief Executive Officer and Director
Charles J. Snyder 55 President; Chief Technology Officer
and Director
Ernest S. Wong 43 Senior Vice President, Chief Financial
Officer and Secretary
David R. Korus 36 Director
Joseph E. Laird, Jr. 51 Director
Howard E. Wille, Chairman of the Board of Directors, Chief Executive
Officer and Director. Mr. Wille was a founder of the Company in 1978 and
has held his current positions with the Company since that time. From 1966
to 1977, Mr. Wille was a partner and Director of Research at Faulkner
Dawkins & Sullivan, a Wall Street investment firm, and held a managerial
position with Shearson Hayden Stone after its acquisition of Faulkner
Dawkins & Sullivan in 1977. He was President and Chief Investment Officer
of Piedmont Advisory Corporation from 1961 to 1966 and, prior to that time
served as a securities analyst, investment manager and investment counselor
for several firms. Mr. Wille received a B.A. in Philosophy from the City
College of New York. Mr. Wille has been a director of the Company since its
formation.
Charles J. Snyder, President, Chief Technology Officer and Director.
Mr. Snyder was a founder of the Company in 1978 and has held his current
positions with the Company since that time. From 1964 to 1977, Mr. Snyder
worked for Faulkner Dawkins & Sullivan, eventually becoming Director of
Computer Research, a position he retained with Shearson Hayden Stone after
its acquisition of Faulkner Dawkins & Sullivan in 1977. Mr. Snyder received
a B.S.E. in Electrical Engineering from Princeton University and an M.S. in
Mathematics from New York University. Mr. Snyder has been a director of the
Company since its formation.
Ernest S. Wong, Senior Vice President, Chief Financial Officer and
Secretary. Mr. Wong joined the Company in his current position in June
1996. Between 1991 and 1996, he held several positions with Montedison SpA
including Vice President, Finance and Treasurer of Montedison USA, Inc. and
Director of Corporate Finance of Montedison Corporation of America. From
1988 to 1991, he was Vice President in the North American Banking Group of
The First National Bank of Chicago, and prior to that time served as
Manager of Domestic Finance at PepsiCo, Inc. and Second Vice President in
the Corporate Bank of The Chase Manhattan Bank. Mr. Wong received a B.A. in
Psychology from Cornell University and an M.B.A. in Finance from Columbia
University Graduate School of Business.
David R. Korus., Director. Mr. Korus is a partner and portfolio manger
with Westcliff Capital Management LLC ("Westcliff"). Prior to joining
Westcliff in 1996, Mr. Korus managed technology assets for Kingdon Capital
Management, a large, diversified hedge fund. Mr. Korus began his career in
1983 with Kidder, Peabody & Co. ("Kidder") researching technology stocks.
Later he became Chairman of Kiddder's Research Steering Committee and was
responsible for managing the technology research department. During his 11
year tenure with Kidder, Mr. Korus followed over 100 companies in the
software and hardware industries. Mr. Korus is a member of the compensation
and audit committees and has been a director of the Company since July 1997.
Joseph E. Laird, Jr., Director. Mr. Laird has been a Managing Director
of Veronis, Suhler & Associates, the leading specialty investment bank
exclusively serving the media and information industries, since 1989. From
1982 to 1989, he was an institutional equity salesman and a senior
securities analyst of database information services for Hambrecht & Quist.
From 1975 to 1982, Mr. Laird was an institutional equity salesman and then
investment strategist for Paine Webber Mitchell Hutchins. Mr. Laird is a
member of the compensation and audit committees and has been a director of
the Company since 1993.
ITEM 11. EXECUTIVE COMPENSATION
The information set forth under the caption "Information Regarding
Executive Officer Compensation" contained in the definitive Proxy
Statement dated November 26,1997 is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Information Regarding
Beneficial Ownership of Principal Shareholders, Directors, and Management"
contained in the definitive Proxy Statement dated November 26, 1997 is
incorporated herein by reference
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the captions "nformation Regarding
the Board of Directors and Related Committees" on page 2 and "Certain
Transactions" on page 8 of the definitive Proxy Statement dated November
26, 1997 is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
The following information from FactSet Research Systems Inc.'s fiscal
year 1997 Annual Report to Stockholders is incorporated by reference under
Items 1, 5, 6, 7, and 8 and are filed as part of this report as part of
Exhibit 13.1:
Five Year Summary of Selected Financial Data - - page 12
Management's Discussion and Analysis of Results of Operations
and Financial Condition - - pages 13-17
Consolidated Statements of Income- -page 19
Consolidated Statements of Financial Condition- - page 20
Consolidated Statements of Changes in Stockholders'Equity- -pages 22-23
Consolidated Statements of Cash Flows- -pages 24-25
Notes to Consolidated Financial Statements- -pages 26-35
Quarterly Financial Data, Common Stock and Quarterly Stock Prices- -page 36
Report of Independent Accountants- -page 37
(b) Reports on Form 8-K
No reports on Form 8-K were filed during fiscal 1997.
(c) Exhibit Listing
Exhibit
Number Description
3.1 Restated Certificate of Incorporation (1)
3.2 By-laws (1)
4.1 Form of Common Stock (1)
10.1 Form of Employment Agreement between the Company
and Howard E. Wille and Charles J.Snyder (1)
10.2 Letter Agreement between the Company and
Ernest S. Wong (1)
13.1 The Company's fiscal 1997 Annual Report to Shareholders
________________________________________________________________________________
(1) Incorporated by reference to the Company's Registration Statement
on Form S-1 (File No.333-4238)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Greenwich, State of Connecticut, on November 20, 1997.
FACTSET RESEARCH SYSTEMS INC.
By /s/ ERNEST S. WONG
.....................
Ernest S. Wong,
Senior Vice President,
Chief Financial Officer
and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
Registrant and in the capacities indicated on November 20, 1997.
Signature Title
/s/ HOWARD E. WILLE Chairman of the Board of Directors
........................ and Chief Executive Officer and Director
Howard E. Wille
/s/ CHARLES J. SNYDER President,Chief Technology Officer
........................ and Director
Charles J. Snyder
/s/ DAVID R. KORUS Director
........................
David R. Korus
/s/ JOSEPH E. LAIRD, JR. Director
........................
Joseph E. Laird, Jr.
/s/ ERNEST S. WONG Senior Vice President,
........................ Chief Financial Officer
Ernest S. Wong and Secretary