Welcome to the FactSet Research Systems first quarter fiscal 2009 quarterly earnings conference call. At this time all participants are in a listen-only mode. (Operator Instructions) Today’s conference is being recorded. If you have any objections, you may disconnect at this time. Now I’d like to turn the call over to Peter Walsh, Chief Financial Officer.

Welcome to FactSet’s fiscal 2009 first quarter earnings conference call. Joining me on this call are Phil Hadley, Chairman and CEO, Mike DiChristina, President and Chief Operating Officer, Mike Frankenfield, Director of the US Investment Management Services, and Kieran Kennedy, head of Investment Banking. This conference call is being transcribed in real time by FactSet’s call street service and is being broadcast live via the Internet at www.factset.com. A replay of this call will also be available on our website. Our call will contain forward-looking statements reflecting management’s current expectations based on currently available information. Actual results may differ materially. More information about factors that could affect FactSet’s business and financial results are in FactSet’s filings with the SEC. Lastly, FactSet undertakes no obligation to publicly update any forward-looking statements as a result of new information, future events or otherwise. Our call today will cover three topics. First, we’ll review first quarter results. Second, I’ll move to guidance for the upcoming second quarter. Third, we’ll close with our management team addressing your questions. Before I talk about results I’d like to take a moment to highlight two items. One. Included in this quarter’s EPS was an income tax benefit of $1.4 million which increased earnings by $0.03 per share. This income tax benefit resulted from re-enactment of the US Federal R&D credit in October 2008 retroactive to January 1, 2008. Two. This was the first full quarter of operations for FactSet Fundamentals. FactSet Fundamentals increased revenues by $800,000 and reduced earnings by $0.03 per share. Now let’s move on to first quarter results. If there is a theme to our call today, it’s earnings. Our earnings results in the first quarter were outstanding and clearly demonstrate the strength of FactSet’s business model. In an ailing economy many companies are unfortunately…

(Operator Instructions) Our first question comes from Kevin Doherty - Banc of America Securities.

I know there continues to be concerns there just about the lag affect from the job losses, the cost-cutting efforts with your customer base. I’m just trying to get a sense of how much of that impact you think has really worked its way already with your business and how much catch-up is left? I’m just trying to get a sense of how you get comfortable in this environment.

I guess there are a couple different ways to answer the question. You can look at our business over the last cycle or you can look at it over the different parts of our business. In the last cycle, depending on where you pick the start date but it doesn’t really matter, we were negative a couple thousand seats in the first 12 months of that cycle. So far we’ve actually been positive a couple thousand seats in this cycle. I think that’s certainly a testament to the fact that our product is positioned differently and provides a different solution than it did in the last cycle. If you look at the sell side of our business, they’ve been really in a challenging environment for more than a year now and with the exception of mergers, which is something that is really a macro effect that we don’t have any control over, the population’s really been quite stable over that period of time. If you look at the buy side, I think that as we look at that population there have been a lot of headlines where similar major firms have laid off a significant number of employees. From what we can tell it doesn’t seem to affect our user count as much and I think that has to do with the fact that our user count is with the financial professionals who are actually tied to the assets in those firms so that if those professionals are laid off that those assets with those firms become at risk. I think that our positive user count over the last 12 months is a sign of our strength as well as what we see coming forward as well.

How do you think about the revenue per user trends going forward? I know just by definition if your new users slow, they’re not coming in at those lower price points and that metric should continue to kind of tick up. But what are some of the other drivers there? I know when we just think generically about Marquee it seems like a product that customers can easily switch into, there’s not a lot of incremental cost but maybe that could eliminate a cost from one of your competitors. I’m just trying to get a sense of drivers of revenue per user and what products are actually contributing to that increase?

There are two parts to revenue per user. If you’re taking our total ASV and our total number of users, there’s the actual margin cost for the client for the seat that they purchase which is roughly $6,000 worldwide. Obviously if we had a very strong quarter in seats, the average revenue per user would go down just because they’re coming on at that rate and our average revenue per user as divided by total ASV is a much higher number. The other components obviously are the additional products we sell. So we’re really in the business of selling content and access to content; some of it is our own and third party; and then the business of selling applications, portfolio analytics being the largest in that family. As you can see portfolio analytic seats were up in the quarter even in a very challenging environment. It’s a metric internally that we really don’t spend much time focused on. We really focus just on the quantity of seats, the quantity of clients and total ASV and spend very little time with the ratios in between.

The specific products that would be maybe driving your wallet share?

Marquee and PA continue to be great drivers for us on the application side but FactSet content all the way across the entire suite is doing very well and helping drive that as well.

When we look at your cost structure the SG&A growth slowed down to about 9% this quarter so clearly well below the 16% revenue growth. Should we think about that same type of a relationship going forward in which there’s a meaningful delta between those two metrics?

As far as our overall expense base, we’re really managing at the total operating income level. We’re really managing our expenses for our operating margins to be flat and again when I say flat, I mean flat with Q1’s total. Currency obviously was a factor that reduced the overall SG&A expense and the currency rates really came back down to there they were two years ago. The reduction in the strength of the US dollar has essentially reduced our expense base as we view it going forward.

We should think about less of an impact from your internal cost saving efforts and that it’s been more of an fx benefit?

A company of our size always has opportunities to make improvements on how we spend our own capital internally on expenses and we’ve been focusing those in all environments and especially today. But if you looked at the main factor in Q1, there was a $2.1 million improvement in operating income from currency and that was [inaudible].

Our next question comes from Randy Hugen - Piper Jaffray.

To kind of continue with the margins, you guys have traditionally reinvested in the business and kept the margins flat. Is there a chance that if revenue growth slows, you might cut back on the reinvestment and maintain your earnings growth above revenue growth? Also what kind of level of top line growth do you feel that you need in order to maintain margins going forward?

Our game plan right now is to keep our margins flat. We’re still a company that’s willing to invest in future growth. FactSet Fundamentals would be an example of that. Certainly our 2009 headcount plan shows positive employee growth. We’re still confident that the ASV that’s growing at today’s rates and the revenue growth that it’s throwing off that we’ll be investing more in the future growth of our business. If different circumstances present themselves in the future, then we’ll certainly react accordingly to provide our shareholders the best long-term return on the capital deployed.

Currently we’re basing our investment plans on flat operating rates.

Are price increases still on the table? And how do you think the stronger dollar’s going to impact international sales?

On the price side we will be executing a price increase in Q2. Like last year the impact on ASV was a positive $6 million. We would expect that it would be of a similar size. That’s already been communicated to clients. The feedback was minimal which really indicates to us that we have meaningful pricing power.

As for the second part of your question, I don’t think we’ve really noticed both a pickup in demand when the dollar was weak as well as a falloff in demand when the dollar is strong on international sales. I would expect international opportunities to stay a constant.

Obviously most of what we’ve heard out of the buy side so far has been more to do with operational people but now we are starting to hear some pending rumors on actual analyst cutbacks. Is this something you’re hearing from clients and how would a sizable reduction in headcounts in investment professionals with the clients impact your results?

As I mentioned before, the marginal cost for a FactSet work station is $6,000. That’s not the average cost so on the margin a 1% reduction in users is not a 1% reduction in our subscription value. I think one of the great things about FactSet’s business model is that we are a subscription business and the visibility of our revenues are cleaner and very easy for us to use as professional managers and very easy for investors to react to as well. In this environment we’re clearly one of those services where our clients fine-tune their services daily. Some are growing in this environment and some will be shrinking but I think that we’ll have a very strong positive story as we come through this cycle.

Our next question comes from David Lewis - J.P. Morgan.

Peter, you cited that the exposure to Merrill/Bank of America that you guys mentioned last call was under 1% of ASV. I just wanted to confirm that because that would be less than $6 million. You guys are estimating now it’s going to come in under $10 million? Is that fair to say?

The words I used were significantly less than 1% of ASV.

The $10 million was for the combination of the four of them.

Could you provide a little bit of color of penetration of Marquee on the buy side? It’s obviously something that’s taken off since the introduction of the upgraded platform there and that’s fueling growth right now. Could you just give us a sense for how big the opportunity on the buy side still exists? I know it’s substantial but a little more color there would be helpful.

I would characterize the growth as explosive. The charts that we have internally that monitor its penetration both in availability to the client as well as just in the usage at the end user level would be explosive. It certainly still has huge opportunity left through the current client base as well as future users within our current clients.

Can you give us a little bit more color on the international business? It’s obviously doing very strong. The penetration there is a lot less than it is in the US. Do you expect it to hold up as well as it has going forward?

The client opportunity in our market penetration outside of the United States I’ve always believed that our business is a 50/50 business. I think the opportunity in the United States is 50% of the opportunity versus the non-US. At the non-US we’re 32% at this point so it’s gained some share over time. I would characterize the international business as one that’s definitely a market-by-market business, meaning that what’s happening in Asia isn’t necessarily what’s happening in Europe and even within Europe there are different markets there. But overall the opportunity for us there is still substantial and I believe it to be a greater-than-US potential for us as far as growth.

When do you guys mute going through the existing client base and presenting them with FactSet Fundamentals? When does that cycle? How long are those contracts for where somebody might be using [Copycat] or Worldscope? And then can you give us a little bit of sense on what the win rate has been thus far?

When we’re out selling FactSet Fundamentals there are lots of considerations. There are contractual issues that we need to work through and we sit down with clients and analyze the contracts and figure out migration plans, and there are conversion issues. It requires a lot of our consulting resource to successfully convert clients to using FactSet Fundamentals. Overall the entire process I would say is exceeding my expectation. We’re making great progress and look forward to a lot more conversions.

Our next question comes from Jonathan Maietta - Needham & Company. Jonathan Maietta - Needham & Company: Phil, I was just wondering if you could comment on how you think about allocating resources in the sales force with regard to the US market opportunity versus international if pockets of international are growing a little bit faster? Will you reallocate more resources there going forward over the next couple of quarters or how do you think about that?

We actually have a very sophisticated headcount allocation internal product that we’ve created that spreads our business across content, software, sales and consulting, and allows us to change our allocation at headcount based on where we think the pockets of opportunity are. So clearly in a cycle like this you’re always fine-tuning the models that produce the best return for the company but we have the ability to invest in a particular country, region or a particular product. Inside of FactSet there are certainly products that are stable or flat for this year and there are certainly products that have substantial growth in investment. To more particularly answer your question, on the non-US side we monitor those staffing levels to match the opportunity. We’ve certainly grown the staff heavily over the last three years and some markets will grow more than others. But we feel very comfortable that we’re well positioned to take advantage of the current opportunities. Jonathan Maietta - Needham & Company: Peter, just to piggyback off that margin question when you said that the plan is to manage that flat. Is that for the fiscal year or is that in perpetuity? What’s the time horizon associated with that?

The reference was I was using flat margins was what our margin was in Q1. Why we’re excited about that is obviously that our margins improved Q1 year-over-year by 150 basis points.

Our next question comes from John Neff - William Blair & Company, LLC. John Neff - William Blair & Company, LLC: Peter, could you refresh us on what percentage of what total ASV or revenue is from soft dollar arrangements?

That percentage is approximately just slightly below 25% of the total. John Neff - William Blair & Company, LLC: Can you give us a sense of what the ASV for the Fundamentals subscriptions are at the end of the quarter? If it’s $0.8 million in revenue, should we assume it’s about $3.2 million in kind of an ASV run rate?

I think that’s very fair math. John Neff - William Blair & Company, LLC: I think Mike you had mentioned part of the conversion process there for moving people to the FactSet Fundamentals offering was the existing contractual arrangement that the client would have. Is there a typical period? Is there a calendar fourth quarter renewal period typical for a lot of those customers that we might see a pickup in that ASV for you guys heading into this next calendar year?

It’s probably weighted a little bit towards the fourth quarter but overall the contracts are spread out all over the entire calendar quarter. John Neff - William Blair & Company, LLC: Peter, there was a sequential decline in goodwill of about $12 million?

That was revaluing the goodwill at base currency rates. All of that decline goes through equity because our functional currency’s the local currency. John Neff - William Blair & Company, LLC: You talked about the opportunity as part of the sales pitch and how you guys are managing to grow in an environment and I think a lot of people are scratching their heads as to how that was possible this last quarter. Can you walk through maybe a hypothetical pitch to a client that maybe is a partial existing FactSet user or maybe they have some other system as to how you’re going to go about saving them money by consolidating on the FactSet platform?

If you’re talking about a current client, it’s certainly an environment where people are sharpening their pencils and looking for opportunities and I think it’s one where you have to wind the clock back and position FactSet where it was five years ago. Five years ago we didn’t really have a news and quotes product so that entire functionality inside of a firm was a market place we weren’t even participating in. Five years ago we really didn’t have any content that was able to displace content in the market place. Today if you’re a buy-side firm, we can offer you fundamentals, estimates, broker research, call transcripts and petitional voting and really provide them with a huge opportunity to go through and rationalize on which platforms they want to receive that content and which content works best for them. So we’re still in the business obviously of distributing other players content but we certainly are trying to be competitive with ours as well. But you combine the content offering with the Marquee news and quotes offering and it really puts us in a very strong position in the buy side. In terms of the sell side, the same thing exists. If you went back to five years ago, we really were in the business of distributing prices, estimates and fundamentals through just corporate financing. Today if you look at the breadth of content that’s available to those firms and what they can do with that content both in the equity research department as well as in the corporate finance department, it’s a much broader solution and allows them to really scale FactSet and get a lot more for it. I think that’s really the cost savings part of it. On the new clients we still sold many new clients. We…

It is definitely a growth driver for us. It’s an interesting one. The content business as you can see with the Fundamentals business, in the beginning it is not a very profitable business but once you finely get scaled it’s turned into a wonderful business. Some of our content sets are more mature and systemically contribute very positively to our margin. The younger ones you work to get them to that point.

Our next question comes from [Eric Rittener - George Weiss Associates]. [Eric Rittener - George : Can you break out the number of new clients and users that you got from adding Thomson Fundamentals? Associates]: Can you break out the number of new clients and users that you got from adding Thomson Fundamentals?

We don’t have that detail and it’s probably not something we would ultimately disclose in that level of detail. [Eric Rittener - George : Can you discuss the decline that you saw in deferred fees? Associates]: Can you discuss the decline that you saw in deferred fees?

As far as deferred fees, I think the decline there is that there are some clients that pay us in advance of the year and they do that throughout the year. As the year comes to a conclusion they’re just working those deferred fees off of our monthly service. I wouldn’t attribute it to any significance or change in the business at all. [Eric Rittener - George : I’m just having trouble understanding how the cuts that we’re seeing of large buy-side clients even announced since the end of the quarter won’t affect your ASV in the future. Can you help me just try to understand that dynamic? Associates]: I’m just having trouble understanding how the cuts that we’re seeing of large buy-side clients even announced since the end of the quarter won’t affect your ASV in the future. Can you help me just try to understand that dynamic?

I guess I can articulate it this way. The one thing about FactSet is you get to see a real time view of our ASV. Those cuts occurred in our fiscal quarter so if those were users of FactSet, they’re gone and they’re not in our ASV and would not show up in our user count. Certainly the health of our business whether it’s buy-side or sell-side, I would certainly prefer a tailwind than a headwind but what you’re seeing really is a gain in share at the user level. There’s really no other explanation for it.

Our next question comes from [Shane Dineen - Pershing Square]. [Shane Dineen - Pershing Square]: I just had a clarifying question on the revenue guidance that you’ve given and one of the previous questions. Somebody asked about what you expected next quarter from pricing. Does that $156 million to $159 million guidance include the $6 million of pricing increases?

It does. [Shane Dineen - Pershing Square]: I’m looking back over your historical client numbers. Can you confirm that this was the first time I guess in the last decade where the amount of clients you had declined sequentially?

I just want to make sure I clarify that price increase. The price increase that Peter was talking about is an ASV number, an annualized number. So you’d have to divide that number by 12. [Shane Dineen - Pershing Square]: So it’s $1.5 million and the $156 million basically.

That would assume that we did it on December 1, which is not when it’s effective. It’s affect in the first quarter is actually two months of the $6 million.

As far as the net client count, you might be right. It’s one where I’ve been here for almost 24 years at this point. I would have to say that in probably ‘90/’91 we went negative client growth but we weren’t a public company back then. I’d have to say before that our records weren’t clean enough to be able to break things out on a fiscal basis to know exactly where we stood. [Shane Dineen - Pershing Square]: But during the last downturn you never had a sequential decline in clients; is that right?

No. Honestly it’s not surprising to me. I would certainly believe that our buy side clients and our sell side clients had much more on their minds than making a purchase decision in a fiscal quarter like this for us. The first fiscal quarter is kind of an odd quarter in this industry anyway because many of the decisions start to move to become January decisions so it’s really not that surprising to me that it happened this quarter.

Our next question comes from Anne Griffin - Aragon Global Management.

On product and pricing, Bloomberg is putting a lot of free applications on its platform at a fixed price. I’m thinking of things like events and some additional earnings estimate functions. Has that had any impact on the way that you’re pricing things or have you seen any cancellations for some of the additional features on FactSet as a result? This is a fairly new policy so you may not have seen anything yet.

Bloomberg’s product is a one-price-fits-all price [inaudible] product so every time they enhance functionality it’s really free by that definition though it’s a very expensive terminal. FactSet has roughly 600 people in the product development software side of our business. We create new features for our clients every single day. Sometimes it’s new content features. Sometimes it’s new application features. That specific event that you mentioned, the transcripts and events actually come from FactSet so it’s a nice revenue stream for us. It’s actually a positive.

Do you happen to know what percentage of your users are also Bloomberg users?

I’m not sure I have that number off the top of my head. Bloomberg has roughly 280,000 terminals. We have roughly 40,000 terminals. I’m sure there are some that overlap.

Our next question comes from David Lewis - J.P. Morgan.

I just wanted to dig a little bit deeper in terms of the average contract on the buy side. If you consider that the average contract is in the service fee, data, PA and the non-PA users, it’s fair to say that if you have a non-PA user that’s dropping off and that’s $6,000, the other components of the contract, the service fee and data fees in many cases are going to stay where they are. Is that accurate?

Do you mean if they’re just reducing a user?

That’s right, yes.

Correct. It’s a very frontend loaded product from that respect.

I’m showing no further questions at this time.

Thank you very much.

This does conclude today’s conference. You may disconnect at this time. Thank you for your participation.