Microsoft Ofce tools to support the workow of investment bankers FactSet acquires DealMaven, Inc 2008 FactSet is named one of FORTUNE’S FactSet acquires“100 a copy Best of Thomson Companies Reuters Fundamentals to Work DatabaseFor” Access current, comprehensive, and comparative information on securities worldwide Mumbai, India ofce opens Austin, Texas ofce opens First Investment2007 Process FactSetSymposium inWireless Europe held is released Real-time market data on your handheld device Amsterdam ofce opens Analytics and data in an easy-to-use Microsoft Excel enviroment FactSet releases ExcelConnect First PMW User conference held2006 FactSet celebrates its 10th anniversary Full text, clause, and eld searching on debt, equity, and warrant as a public company on the NYSE:FDS prospectuses, programs, pricing supplements, and M&A transactionsFactSet Europe Ltd. headquarters opens in London FactSet acquires europrospectus.com limited FactSet acquires TrueCourse, Inc. Corporate takeover defense data Tools designed specically for investment bankers 2005 IBCentral is released FactSet acquires StreamVPN FactSet acquires Derivatives Solutions Productivity tool to ler, track, andevaluate high conviction investmentAnalytics ideas to xed income market participants FactSet opens a data center in Rston, Virginia FactSet acquires JCF Group 2004 FactSet headquarters move to a corporate Quartely earnings call transcripts campus in Norwalk, Connecticut FactSet acquires CallStreet, LLC Global broker estimates FactSet Application Service Technology is released Milan ofce opens First Application Development Conference held 2003FactSet celebrates its 25th anniversary Paris ofce opens FactSet acquires Mergerstat® Merger and acquisitions content Store, create, and manage proprietary time-series databases 2002 FactSet Marquee® and Data Central are released Combine traditional security-level analysis and streaming real-time news and quotes Wide scope of holdings data for the corporate /investor relations market 2001 FactSet acquires LionShares® Manchester, NH data center opens Frankfurt ofce opens Institutional ownership database State-of-the-art data storage Howard Wille retires from FactSet 2000 Phil Hadley is appointed CEO of FactSet Innovative database technology and analyticsFactSet acquires Insyte Fixed Income Explorer is released In-depth analysis on an extensive universe of debt securities Mike DiChristine is appointed President of FactSetState-of-the-art Web-based help and refernece systems FactSet Online Assistant® is released 1999 DIRECTIONS is released Chuck Synder retires from FactSet Easy-to-use interface Boston ofce and training facility open 24-hour live telephone support is available Access to a broad array of company informationOutstanding within client a single service window 1998 Company Explorer Quick,is released insightful snapshot of a company Hong Kong and Syndey ofces open FactSet expands its New York presence Increased presence in Asia Pacic Dedicated training facility Charting and report writing capabilities Expanded data center 1997 Portfolio Management Workstation (PMW) is released Analyze the market from a macro perspectiveSpecialized tools for the global portfolio manager 1996 FactSet completes its publicA secure offering link between and begins clients tradingand FactSet on the New York Stock Exchange, under the ticker symbol FDS FactSet provides WAN connectivity Gaugevia internet the performance of investment with appropriate benchmarks The rst benchmark database is released on FactSet 1995 FactSet launches IB link and Comp Builder Tokyo ofce opens Tools for the investment banking community Client support around the globe Analyze the relationship between multiple variables and subsequente investement returns over time London ofce opens1993 FactSet releases WAN connectivity Highly reliable All day, evry day connectionsSan Mateo ofce opens FactSet established client base in the Asia Pacic region Global client base extended Alpha Testing is released Technological achievement FactSet1992 stays FactSet in the forcutting Windows edge of is technology released 1991 FactSet establishes client base in Europe Real-Time earnings estimates databases are released on FactSet Reasearch a company’s protability 1990 FactSet headquarters move to Greenwich, Connecticut FactSet releases its rst non-U.S. data offerings Data available for the global incestor Store data among all FactSet Workstations within an account 1989 Private DatabaseUpload Service any lets numeric clients or storetextual and data to the FactSet main frame integrate proprietary data in their analysis Complete data security Customized screening criteria1988 Universal Screening™ is released Increased speed and reliability 1986 Mike DiChristina joins the FactSet engineering team Annual Report 2008 FactSet Research Systems Inc. FactSet Research Systems Inc. F i n a n c i a l H i gh l i gh ts (Thousands, except percentages and per share data) YEARS ENDED AUGUST 31 2008 2007 % Change Revenues $575,519 $475,801 21.0% Income from operations $183,887(1) $155,091(3) 18.6% Net income $125,017(2) $109,567(4) 14.1% PER SHARE DATA Diluted earnings per common share $2.50(2) $2.14(4) 16.8% Dividends declared per common share $0.60 $0.36 66.7% PERFORMANCE RATIOS Operating margin 32.0% 32.6% Pre-tax margin 32.8% 34.2% Net margin 21.7% 23.0% Return on average stockholders’ equity 14.3% 28.5% (1) Includes a pre-tax charge of $2.4 million related to an increase in the number of performance-based stock options that vested in August 2008 and $1.1 million of expenses related to the Thomson Fundamentals acquisition. Total pre-tax stock-based compensation was $13.7 million in fiscal year 2008. (2) Includes $9.7 million (after-tax) of stock-based compensation. (3) Includes $9.1 million (pre-tax) of stock-based compensation. (4) Includes $6.5 million (after-tax) of stock-based compensation and income tax benefits of $4.1 million, primarily from the re-enactment of the U.S. Federal R&D tax credit in December 2006 retroactive to January 1, 2006, a Section 199 tax deduction pertaining to fiscal 2006, and a benefit from the repatriation of foreign earnings to the U.S. OPERATIONAL METRICS AS OF AUGUST 31 2008 2007 % Change ASV (millions) $615 $517 19.0% Users 40,100 35,000 14.6% Clients 2,085 1,953 6.8% REVENUES (in millions) NET INCOME (in millions) DILUTED EARNINGS PER SHARE 125.0 2.50 $600 575.5 $125 $2.5 2.14 $500 475.8 109.6 $100 82.9 $2.0 1.64 $400 387.4 $75 71.8 $1.5 1.43 312.6 $300 58.0 251.9 1.15 $50 $1.0 $200 $25 $100 $0.5 0 0 0 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 1 FactSet Research Systems Inc. 2008 PRIORITIES Philip A. Hadley Chairman and Chief Executive Officer Last year, we presented the following priorities for fiscal 2008: 1. Further enhance the quality of our product offerings. Over the past several years FactSet has made the transition from having an almost exclusive focus on financial analytics into two new areas of opportunity: real-time financial information and proprietary content. Adding these two new core competencies, while continuing to be a market leader in our traditional financial analytics space, has been an amazing process to witness. Technology by technology, content set by content set, and exchange by exchange, we have built entire new lines of business within our company. It is difficult for companies to expand their horizons beyond an original mandate and succeed. Our growth has required a tremendous amount of investment in people and resources, and we are committed to further investment as we work to become a market leader in real-time news and quotes and proprietary content. To Our On both the buy- and sell-side, Marquee, our real-time news and quotes product, has created enormous potential for FactSet, achieving high levels of acceptance throughout the marketplace. Portfolio Analysis and our suite of quantitative applications continue Shar eho lder s to make us a market leader for our investment management clients. In parallel, IBCentral, our application for investment bankers, and We are pleased to present our annual report for the fiscal year our proprietary content offerings have driven our success on the ended August 31, 2008. In this, our 30th year of operation, we sell-side. recorded our 28th consecutive year of revenue growth. In a period of unprecedented volatility in the financial markets, our business Our Content strategy, which began in 2001 with the acquisition of performed exceptionally well, as revenues grew 21% to $576 million LionShares through this year’s release of FactSet Fundamentals, lets and diluted earnings per share grew 17% to $2.50. us present a product offering powered almost completely by FactSet Content, while continuing to offer the array of databases our The majority of our 21% revenue growth came from our global clients demand. investment management client base, as many of our investment banking clients were adversely impacted by market conditions. In FactSet is poised to become a major player in the financial this unsettled market environment, financial professionals have information industry during the coming years. We have a unique increasingly turned to FactSet for data and modeling tools, as combination of analytical software, real-time data, proprietary evidenced by a 15% increase in users during the year and, perhaps content, and industry experience to succeed, and we are passionate even more tellingly, record amounts of usage of our financial about enhancing the value of our solutions to support our clients. software products and solutions. Improvements to the quality of our solutions provide us with a In this letter we review the progress made on our top priorities multi-faceted, complex challenge. The composition and strategic and strategic goals for 2008, as well as share our priorities for the goals of our company have evolved over the years thanks to year ahead. positive feedback from the market and the flexibility and agility of our systems. Our clients must be assured that when they need real-time stock quotes or other services, we will always have them available.