Welcome to the FactSetResearch Systems’ first quarter fiscal 2008 quarterly earnings conference call.At this time all participantsare in a listen-onlymode. During the question andanswer session please press *1 on your touchtone phone. Today’s conference isbeing recorded. If you have any objections you may disconnect at this time. Now I willturn the call over toMr. Peter Walsh, Chief Financial Officer. Sir, you may begin.

Thank you,Operator. Welcome, everyone, to your earnings call for the firstquarter of fiscal 2008. Joining me are Phil Hadley,Chairman and CEO,Mike DiChristina, President and Chief Operating Officer, Mike Frankenfield,Director of the U.S. InvestmentManagement Business, Kieran Kennedy, Head of Investment Banking, and ScottBeyer, Director of our non-U.S. business. Thisconference is being transcribed in real time byFactSet's CallStreet service and is being broadcast live via the Internet at FactSet.com.A replay ofthis call will also be available onour website. Our call willcontain forward-looking statements reflecting management's current expectationsbased on currently available information. Actual results may differ materially.More information about factors that could affect FactSet’s business andfinancial results are in FactSet’sfilings with the SEC. Lastly,FactSet undertakes no obligation to publicly update any forward-lookingstatements as a result ofnew information, future events, or otherwise. We’llorganize our call today around three topics. First, we’ll review first quarterresults. Second, I’ll move to guidancefor the upcomingquarter. Third, we’ll close with our management team addressing your questions. Before webegin I’d like to take a moment tohighlight one item. As you know, the U.S. dollarweakened significantly during the firstquarter, particularly against the Euro. The decline in value had the followingeffects in Q1 whenholding currencies constant from the recentlycompleted fourth quarter of fiscal 2007. Foreign exchange increasedrevenues by $400,000 and operating expenses by $900,000. It decreasedincome from operations by $500,000 and our operating margin by 50 basis points.EPS declined one penny from foreign exchange. To facilitatefactoring currency into your understanding of historical and future results on an annualbasis, FactSet currently has non-dollarexpenses of $110 million partially offset by non-dollar revenues of $44million. This translates to a net exposureof $66 million per year or $17million per quarter. Now let’s move on to firstquarter results. Overall FactSet turned in a very strongfinancial performance during the last threemonths. We again delivered record revenues in earnings.ASV…

Thank you.(Operator Instructions). Our first question will be from PeterAppert. Your line is open. Please state your company name. Peter Appert – Goldman Sachs: Thanks. It’sPeter Appert, Goldman. So, Peter, can you give us any additional colour in terms ofwhat you’re seeing currently in the businesstrends, sales trends buy-side versus sell-side?

I’ll passthat on. Thank you, Peter, I’m going to pass that on to Phil.

Hi, Peter.Good morning. Peter Appert – Goldman Sachs: Good morning.

I think thatif you take our business, obviously we’re a very diversebusiness in both U.S.and non-U.S. The buy-sidebusiness has historicallyalways been very stable and very rational in purchasedecisions. The sell-sidebusiness changeddramatically I would say three orfour years ago, in the last cycle, in that theybecame very precise in how theymange products like ours and other players in the space aswell. I would say that the good part ofour business is that we’re not in the part ofthose firms that are directlyaffected, for the most part. So our fixedincome exposure and even the product linewe have in fixed incomeisn’t a sell-sideproduct. And we’reprobably only affected to the extent thatthere’s just generic earnings pressure in some firms.Other firms, like yours, has done quitewell through this cycle. So I guess asyou look at it, and Ilook at our wholebusiness, we’re fortunate to have a very diversebusiness of which I’ve never in my careerever had every single piece in every singleregion of our business doing, on fire. But I feel very comfortable that becauseof our diverse product line and relationship with the clients and theopportunities we have that help them with costs savings and greaterfunctionality that we’re well positioned at this pointand very optimistic about our future. Peter Appert – Goldman Sachs: How about,Phil, physically, would the sell-sidecomponent of the business –and I don’t know what the metric weshould look at is, if itssubscribers or password count – is it running upon a year-to-yearbasis?

Yes. In fact, we hada very strongpassword count on the sell-side in the firstquarter. Peter Appert – Goldman Sachs: Okay. Great.

A big portion of the password countgrowth in the quarterhappened to be sell-sideclients. Peter Appert – Goldman Sachs: Okay. The pace ofbuy-back activity, you’ve been pretty aggressive. What should we be anticipatingover the course of the next 12months in that regard?

Thanks,Peter. It’s Peter. Yeah, we purchased, we deployed 105 million over the last 20,over the last 12months that we repurchased shares. For a company thathas $171 millioncash, no debt, and is generating more than $100 million of free cash flow a year, unlesswe become more aquisitional we’ll deploy our cash either in the form of dividendsor repurchases in order toavoid a drag onreturn of capital. Peter Appert – Goldman Sachs: Okay. And onthat front, that actually brings me to the nextquestion, which is, you haven’t actually been particularly active from anacquisitional standpoint in the last year orso having beenfairly active in the prior year.Should I read into that just lack of opportunity or are returns notthere in terms ofthings you’d like to buy, or you’re feeling comfortable with your internaldevelopment prospects?

I thinkinternally we’ve always had a very organicapproach to the marketplace.We’ve been opportunistic as opportunities have presented themselves. They kindof came in bunches, andas you’ve pointed out, there haven’t been any opportunities recently. Not thatwe wouldn’t, it’s just that there haven’t been any that have been interestingto us. Peter Appert – Goldman Sachs: M-hm. Andstill on that front, the fixed incomeproduct has been a particularfocus to accelerate or jump start the growth ofthat offering. Would acquisitions be part of the thoughtprocess?

I think we’dlook at anythingthat we think would be accretive toour business strategy in the long run, but Idon’t look at that particularproduct line with some greater needs than other areas of opportunity that wehave. So I’m verycomfortable with the pieces wehave to deliver thefunctionality to the marketplacewe’re currently approaching. Peter Appert – Goldman Sachs: Okay. Last questionand then I’ll let someone else speak. Again, you’ve been pretty aggressive in terms ofheadcount expansion the last coupleof years. Does the headcountgrowth slow just in the context ofsort of dicier macro-economic conditions?

I think the headcountgrowth is one where we’re always deploying capital with headcount or withtechnology or in lots ofareas of our firm and it reflects the level ofinvestment we have to do to grow ourbusiness. Peter Appert – Goldman Sachs: Okay, so you haven’tscaled back at this point in the context ofexpectations that growth decelerates given the marketenvironment.

Our headcountgrowth year over year first quarter was?

Twenty-threepercent.

Yeah. So it’s right in line withrevenue. Peter Appert – Goldman Sachs: Right. Okay.Great. Thanks very much.

Thank you.Our next question will come from Randy Hugen. Your line is open. Please stateyou company name. Randy Hugen – Piper Jaffray: PiperJaffray. Thanks. How do you think the company willfare if we see anotherdownturn in the equitymarkets? You guys managed to grow revenues by12% to 13% in 2002 through2004. If we enter a similarmarket environment in 2008 how do you think the company willperform?

Just toanswer the question in two parts.One, I’d have a hard timebelieving that we would enter that kind of cycle that we’d be that deep,just based on where we are and how the markets are currentlyaffected. And secondly, I think we’d be in a strongerposition this cycle than we were even last cycle based on the press of ourproduct line. Randy Hugen – Piper Jaffray: Okay. Andthen how long does it typicallytake for a change in marketdemand to really flow through yourmodel and have an impact on the business?

I think ourbusiness is a prettyreal-time business and we’re a subscriptionmodel, so clients canadjust their subscriptions up or down based on their current needs. So if you thinkthe market’salready been affected then you need to factor that in in our currentperformance and our current performance is still pretty strong. Randy Hugen – Piper Jaffray: Yup. Okay.And could you give us an update on theThomson-Reuters merger, how it’s impacting your business, how it’s affectingdemand for your products? And then also maybe some insights into if the company’sforced to divest in businessesis there anything out there that might be of interestto you?

So, the mergerhasn’t occurred yet. Randy Hugen – Piper Jaffray: Yes.

Obviouslyit’s with the regulators at this point.And I don’t think it’s really affected the marketplaceyet either. So the marketdynamics of the mergedidentity and how they’ll play out, their subscriptions with their clients isyet to come. We certainly are, obviously pay attention toit. It’s certainly in ourindustry. But we couldn’t comment and wouldn’t comment on any MNA activity thatwe have related to any of the assets thatwould be availablewith that merger with any specific MNA activity in the marketplace. Randy Hugen – Piper Jaffray: All right. Fairenough. And then the currentstate of the creditmarket, does that change youroutlook for growth in the fixed incomeproducts realizing that it’s a very smallcomponent now? And then also, does it change youroutlook for your level of investments there?

No. No. Ourproduct line is, in fact we justreleased our, or did a road show in Europe onour fixed-income TA product for the non-U.S.marketplace and feel very bullish about where we think we can go with thatproduct. Keeping in mind from an analyst perspectivethat it’s immaterial coming off an immaterialbase. So it would be years beforeit would be a true revenuedriver. But the way our productline is set up is really, it’s not on a part of the marketthat’s affected. Randy Hugen – Piper Jaffray: All right.Thanks.

Thank you.Our next question is from Kevin Doherty. Your line is open. Please state yourcompany name. Kevin Doherty – Banc of America Securities: Banc ofAmerica Securities. Good morning, guys. I just have a follow upquestion about the user groups.It’s really the first time in a few yearswhere it’s been a bit above20%. A couplequestions there. How sustainable is that basic growth going forward? Youmentioned that you didn’t really see much impactfrom constant voyeurs, but were there any large customer wins or migrations in the quarter?

So, when youlook at our revenuegrowth as a business the full ASV is the mostimportant number because obviously we can grow that throughsame-store sales of products to current clients, which is really the biggestdriver, plus incremental clients, the 40 newclients, plus the user count change. So as you pointout, it is lumpy. In thisparticular case it is a largedeployment at a couple firmsis the materialcomponent of that number. So is it sustainable?I think when you think about sustainability you always want to look at ASV as the driver in ourbusiness. Kevin Doherty – Banc of America Securities: Okay. And Iguess as a follow up,when I look at the revenue forsubscriber numbers that had been tracking a littlehigher. It looks likeit’s probably only up about 1% year over year. Were there any customer, maybeproduct mix-shift in the quarter, anypricing changes?

I think the way you haveto look at our productis that new clients and new fees always come on at lower than the average. So if we’revery successful at adding newclients in a quarter ornew fees in a quarter it will put pressureon the average.Because they’re not coming on at the average,they’re coming in below the average. So looking at our, at those fewmetrics, you want to look at them asgaining share on clients, gaining share on users and then step away from thatand look at it from the macro leveland saying are they gettingreal revenue on the marketplace. Kevin Doherty – Banc of America Securities: Okay. That’sfair. Maybe just to tie in, mighthave a possibilityimpact as well because I know you took down your margin range a bit andespecially at the well in there. Are there anyunusual expenses that you expect to incur next quarter or maybe, you know,maybe a possibilitydrag from all the new usersyou just got on this quarter?

Thanks,Kevin. First off, when you look at our marginsI think it’s important to know that our operating margin has declinedsubstantially from Q4 to Q1 in each of the past fiveyears. And you know, I outlined some of the reasons forthat decline during the call. The reasons whyour margin declined, our margin (inaudible) declined by 50 basis points on bothends of the range are just purelyrelated to currency. Because we think it’s obviously most appropriate to use the current exchange rate when you’re forecastingyour immediate expenses. There is no unusual items that we’re forecasting tooccur in Q2 relativeto year-ago periods or the immediateprevious periods. Kevin Doherty – Banc of America Securities: Well, I guessthat range would have excluded currency and I believe your range last quarterwould have been the same. Wasthere anything incremental?

Our rangelast quarter didn’t, included currency. We didn’t factor in the decline in the, duringour fiscal first quarter. Kevin Doherty – Banc of America Securities: But that’sjust wrong (inaudible).

I’m sorry? Kevin Doherty – Banc of America Securities: But that’sjust wrong for now this quarter. Got it.

Okay. Kevin Doherty – Banc of America Securities: Yeah.

Thank you.

Thank you.Our next question is from John Neff. Your line is open. Please state yourcompany. John Neff – William Blair & Company: Good morning,guys. I was just wondering if you could give us any kind of an update oncolour in terms ofhedge funds, clients, the percentageof overall wins or deployments. I know in the past it’sbeen a tailwind,but not a real driverof your growth. Can you just give us an update orany colour on what that represents (inaudible) percentage of clients or users?

I think we’vestated consistently over the years, it’snot a materialnumber in the aggregate ofour client base. Though if you took the hedge fundsthat our clients (inaudible) that they tend to be larger, morediverse funds in theirinvestment strategy. So nothing significantlyhas changed in this quarterversus any prior quarter. John Neff – William Blair & Company: And then,specifically on the gross marginline, you mentioned some of those factors there. One of them that wasinteresting was the moreproprietary data episode. Could you give us a little morecolour on those and how should we think about the trend or the outlook sortof remainder of the year at the gross marginline?

Sure. We havea number ofdifferent sources of proprietary data collection and they span the gamut.Particularly during, when you compare theyear-over-year period, we’ve been investing certainly more in our callstreet product and we’ve been moving towards putting out every transcriptthrough a verydetailed Q&A process versus making available a rawtranscript and that’s increased our cost-related, our investment and ourcost-related (inaudible) results that obviously increase the value in the eyes of the end users. We alsocontinue to expand our filings operations that are collectedthrough our global filings product and we continue to expand our operations in our offshore facility with respect to a variety ofcontent that particularly those that are desired byour investment banking clientele. John Neff – William Blair & Company: Okay. Great.And then also, could you give us a little bitof colour on capex? In years past it seemed like it was prettymuch every three years you’d have kind of a capex spike.Now between last year and this year it seems to be sort ofsustaining at a relativelyelevated level compared to prior years. Is that a temporaryphenomenon? Is that due to all the real estateconsolidation that’s taking place?

Well, firstoff let me say that highercapex is a great signof growth and access. Client usage of our products is the driver forexpanding computer power. Revenue growth drives our headcount increase, whichtranslate to a need formore real estate. Obviouslywhen you take our capex and you look at it in pieces, youknow, when you transition 100% of your mainframes from one version, you know, the Alphamachine to the Integritymachine it does have a temporaryincrease in capex. So over, from a time payingfrom August this year to sometime early in the calendar2008 we’ll have exchanged every mainframe. That said,they cost less than the Alphaversion. So the cost formainframe is down 35% and the cost fortechnology has been moving in our favour. The real estateprojects are definitelylumpy quarter to quarter and we had very little in this quarter.We do have plansfor several major real estate projects to accommodate our headcount growth overthe remaining nine months of the year. John Neff – William Blair & Company: And then Asia Pacific, Iwas just curious, you mentioned some of the growth there,following the money flows.But why the correction in terms of,what’s been happening in terms of the investmentmandate? What I’m trying to get a sense for isare you adding Asia Pacificregional content that would also be helping yougain that traction? (Inaudible) change in the productbecause it’s not, clearly it’s people investing in Asia Pacificcompanies as opposed to money in, moving in there andthen investing back in the U.S.

Hi, John.It’s Scott Beyer. I’ll take that question. You’re right. I would put it down toprobably three different factors. The interest in the region andhow a lot of the investmentand investment focus moves into the (inaudible)managers that are located in that region.That’d be one as Peterdescribed earlier. There are a few otherthings that are a little bitlonger coming and that’s just having the right peopleand being right sized for the opportunitythere. We’re certainly coming on stream in thatrespect. And finally, the thing that has the longest leadto it is the product. In Asia we’ve beeninvesting for several years now and we’re just starting to see the fruits ofthat (inaudible). John Neff – William Blair & Company: All right. Thankyou.

Thank you.Our next question will be from GiasoneSalati. Your line is open. Please state your company. Giasone Salati – Execution: Hi. Goodafternoon. It’s Giasone Salati from Execution in London. I’vegot three questions, please. The first on ison pricing. I imagine this is the time of yearwhere all of yourclients are preparingtheir IT budgets for the followingyear. What kind of environment are you findingto push through pricing increases for the whole of2008?

This isPhilip Hadley again. I think at this pointFactSet’s philosophy has really beento do nothing morethan inflation. Depending on what markets and where you are in the world the timing couldbe different,but nothing more than aninflation-range price increase. Giasone Salati – Execution: Let me try and get some more colouron that. How does that compare to the last fewyears and (inaudible) at the end of year2000? I would have expected that in, for the last coupleof years you could have pushed prices up a little bitmore than inflation. Is it that it’s low down in priceincrease or it’s just in line with(inaudible)?

You may be correct in that weprobably could have pushed price increases historically. I think as a firm we’rejust kind of coming around to being part of the product.Frankly we really haven’t pushed price increases, even back in 2000. Giasone Salati – Execution: So can wequantify your price increases in at 3% for 2008?Is that fair?

In that range. Giasone Salati – Execution: Okay. My nextquestion is on your cost basis. Couldyou have theunderstanding how much of that would be fixed-costbasis moving into what could be a veryvolatile environment in 2008 in terms ofrevenues?

Thanks,Giasone. Our primary operating costs are people. And60% of our total costs relates to people. The next biggestcost after thatis depreciation related to our computer equipment and real estate costs. It’s all by CG. Ithink we have great visibility in our businessand we can adjust our investment in people tohandle any up or down turn that may be in front of us. Giasone Salati – Execution: And these are all staff? Theseare all employees?Or are theseworking as consultants?

The largemajority of our investment and compensation, I mean, the completelion’s share is staff. (Inaudible) staff. Giasone Salati – Execution: Okay. Andanother question on Thomson-Reuters. I don’t know if you want to answer this,but what we hear in Europe in terms of the latestdevelopment on the regulatoryapproval of the merger isthat Thomson-Reuters might have suggested, might have proposed to sell a copy ofdatabases in analytics.Without maybe asking your comment on whether you think this is right or not,would FactSet be interested in all in buying anyof the databasesfrom Thompson-Reuters?

I think Ihave to revert back to the way Ianswered the question the first time,and that is as a matter ofpolicy we don’t know that on any opportunities we have in the marketplacethat mergers or acquisitions. Giasone Salati – Execution: Okay. Let me thenconclude with a finalquestion. How many of your users will have (inaudible) along side with anyother source of financial information, any other terminal, from Bloomberger,Reuters, or other competitors? How many multiple terminal users do you have in yourcustomer base?

At the end of the quarter wehad 3,500 end users. It’s very difficult for us to know exactly what products(inaudible) vary dramatically by geography and client type. But I would guess,depending on how you define the product(inaudible) industry has mobileproducts of some mobile. As Newton quotes (inaudible) provider have multiplesources of financial analytics on every professional desktop. Giasone Salati – Execution: Okay. Thankyou.

Thank you.Our next question is from John Neff. Your line is open. Please state yourcompany name. John Neff – William Blair & Company: Hi. JohnNeff, William Blair. Phil, you mentioned something. I just want to get a little morecolour in response to a previousquestion about how (inaudible) would perform in another downturn. I think you said something to the effect likeyou didn’t expect a down turnbecause it’s deep into yourcustomer base. I’m just wondering if I heard you correctly, if you couldelaborate. Thank you.

I guess Iwould take two factors into account there. One just in the tenure thatI’ve been in the industry forthe last coupleof decades that that was an unusualevent that I thought was maybe aonce-in-a-lifetime event to that degree. The second was the factors in the last market,it was a very equitydriven ITO capital markets group environment with lots of M&A that got veryfrothy. So that was the site of the investmentfirms that got hammered. This particular cycle has nothing to do with thatside of the business andeverything to do with the credit sideof the business. So assumingthat eventually the credit sideof the businessgets things figured out, which the marketsalways do, sometimes it takes them a littlelonger than one might expect, I would expect things to stabilize and wouldn’texpect it to affectour side of the businessnearly as much as it did lasttime. John Neff – William Blair & Company: Thank you.

I guess I’dthrow out one thing on the end of that andit’s important for everybody to realize that in ourparticular client base that we’re 77% buy-side and 23% sell-side. Even in the sell-sidethere’s quite a bit ofdiversity in where thatrevenue comes from. The lion’sshare, the bulk of it is from corporatefinance professionals. But we’re also in many othersegments of investment bank or commercial bank.

Thank you.Operator?

Thank you.I’m showing no further questions.

Great.Thanks. Thanks, everyone. We’ll see you nextquarter. Happy Holidays.

Thank you.That will conclude our conference call for today. You may now disconnect.