I’d like to turn the discussion over now to Peter Walsh, Chief Operating Officer.Peter Walsh Thank you, Rachel, and good morning, everyone. Here’s how I plan to spend our time today. First, we’ll talk about two housekeeping items. Second, we’ll review our first quarter results. Third, I’ll provide guidance for the second quarter. Finally, we’ll end with Q&A. For housekeeping, please note we expect the US federal R&D tax credit to expire on December 31, 2011. While the R&D tax credit has been in place for 30 years, accounting rules mandate that it can’t be factored into your effective tax rate unless it’s part of currently enacted tax laws. Accordingly, EPS and non-GAAP EPS include a $0.02 reduction for both Q1 and future quarters. In addition, to be more consistent with information provided by other public companies, we added to our regular quarterly process by defining and breaking out non-GAAP EPS. While investors could manually assemble the same information, we wanted to make it easier and more straightforward because we believe the information is relevant when valuing companies. Before we dive into details of the first quarter, it’s valuable to cover current market conditions and why FactSet can be very successful in the near term. Volatility in the financial markets did interrupt short-term buying patterns from our clients dampening our ASV growth this quarter. Sell side clients were quick to react as they always do, tightening up user deployment. Our share in buy side clients did expand and was in line with previous quarters. Our Q2 guidance implies more ASV growth is ahead. Our clients are well organized and efficient at managing their vendor spend, much better than a few years ago. This is a positive for three reasons. One, clients’ unexamined spending is at an all-time low. Clients’ worked out inefficiencies in ‘08 and ‘09 and have not overspent since then.
Two, improved management and more careful spending means clients can be quicker to react in both directions, adding services more quickly when the market conditions are less volatile.Three, we often benefit in periods of consolidation. FactSet is tiny to the market leaders in our industry. We offer clients cost savings relative to these leaders and the best product line among them to manage portfolios and risk. Simply put, we do not have to rely on a growing market to prosper. Now let’s turn to our first quarter results. ASV was $782 million at November 30th, 2011, up 12.5% year-over-year. ASV advanced 3.5 million during the first quarter. We exceeded quarterly EPS guidance after factoring out the expiration of the R&D tax credit. Free cash flow, which is defined as cash generated from operations less capital spending, was 49 million during the first quarter, more than triple the same period last year. Higher levels of net income and client payments contributed to free cash flow. Over the last 12 months, our free cash flow grew 14%. Free cash flow was also 21% higher than net income, which we believe illustrates the high quality of our earnings. Accounts receivable declined by 10 million compared to the end of the fourth quarter. Our DSOs were an industry leading and record low 30 days at quarter end compared to 33 days a year ago. As of November 30, our cash and investment balance was 208 million, up 26 million from Q4 2011. During the first quarter, CapEx expenditures were 6 million, and 15 million was spent on share repurchases. At quarter end, 128 million remains authorized for future share repurchases. During the first quarter, we paid a regular quarterly dividend of $0.27 per share for a total of 12 million. Aggregating dividends with share repurchases, we returned 251 million to shareholders over the past 12 months. Read the rest of this transcript for free on seekingalpha.com