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Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Welcome and thank you for standing by. At this time, all participants are in a listen only mode. Welcome to the FactSet Research Systems fourth- quarter fiscal 2007 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 will turn the meeting over Mr. Peter Walsh, Chief Financial Officer. Sir, you may begin.
PETER WALSH, CFO, FACTSET RESEARCH SYSTEMS: Thank you, Operator. Good morning and thanks to all of you for participating today. Welcome to FactSet's fourth-quarter earnings conference call. Joining me today are Phil Hadley, Chairman and CEO; Mike DiChristina, President and Chief Operating Officer; Mike Frankenfield, Director of our U.S. Investment Manager Business; and Karen Kennedy, Head of Investment Banking. This conference call is being transcribed in realtime by FactSet's CallStreet service and is being broadcast live via the Internet at 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. We'll divide our time today in three ways. First, we'll review fourth-quarter results. Then I'll cover guidance for the upcoming first quarter of fiscal 2008. Finally, we'll close with our management team addressing your questions.
Before covering results, I'd like to take a moment to highlight two items. 1) Included in a just completed fourth quarter were income tax benefits related to prior periods of $1.1 million or $0.02 per diluted share. This was a result of FactSet beginning to include in its estimated tax liability a benefit related to repatriation of foreign earnings to the U.S. 2) Like last year, we added a supplementary schedule in today's press release that summarized quarterly revenues related to FactSet services that are not included in our calculation of annual subscription value. These revenues are not material but were disclosed to aid an investor's ability to make more precise interpretations and forecasts of FactSet's revenues.
Overall, we had a very good quarter. We delivered solid revenue growth, healthy margins, strong earnings and another quarter of impressive free cash flow. Performance was driven by adding more users and selling existing clients additional applications and content. Deployment of Marquee, the PA Workstation, IB Central and our risk and quantitative services continue to expand across all geographies. Broad-based growth has been the catalyst to accelerating our growth rate by more than 200 basis points to 22% over the last 12 months. This has translated to a record level of free cash flows for the fourth quarter and for the just completed fiscal year.
Let's begin the highlights of the quarter with free cash flow. Free cash flow captures all the balance sheet and P&L movements. As a reminder, we define free cash flow as cash generated from operations which include the cash costs for taxes and changes in working capital, less capital spending. Free cash flows generated during the fourth quarter were $43 million, up 45% over a year ago. During fiscal 2007, free cash flows increased 20% to $117 million. One very interesting relationship is the comparison of earnings to our free cash flow. Fourth quarter free cash flow exceeded net income by 40%. Free cash flow for fiscal 2007 was 7% higher than net income. This illustrates the quality of our earnings since at many public companies free cash flow is less than net income.
Drivers of free cash flow during Q4 were record levels of net income and an $18.3 million improvement in working capital, partially offset by higher capital expenditures. Working capital was aided by increases in accounts payable and accrued expenses. When considering free cash flow for the upcoming first quarter, please factor in that FactSet pays variable employee compensation related to the previous fiscal year in the first quarter. This cash outlay will approximate $28 million in the first quarter of fiscal 2008. It's included in accrued compensation and represented as a liability on our balance sheet at August 31.
Capital expenditures in the fourth quarter were $30.8 million and $11.4 million net of landlord contributions for construction. Expenditures for computer …